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Exhibit 2.2
CONFORMED COMPOSITE COPY
KB USA ASSET CONTRIBUTION AGREEMENT
Dated as of June 19, 1998
Between
[KB],
[KB USA],
[TR]
and
[KBLP]
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TABLE OF CONTENTS
Page
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ARTICLE 1 - CERTAIN DEFINITIONS
1.1 Definitions....................................................... 2
ARTICLE 2 - CONVEYANCE OF THE BUSINESS AND
ACQUIRED ASSETS, ETC.
2.1 Agreement to Convey............................................... 8
2.2 Business.......................................................... 8
2.3 Acquired Assets................................................... 8
2.4 Excluded Assets................................................... 10
2.5 Assumption of Liabilities......................................... 11
2.6 Excluded Liabilities.............................................. 11
2.7 Closing........................................................... 12
2.8 Deliveries........................................................ 12
2.9 Deliveries to KB USA.............................................. 13
2.10 Consents of Third Parties and KB Parties.......................... 13
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF
KB PARTIES
3.1 Interests in Other Entities....................................... 14
3.2 Financial Statements.............................................. 14
3.3 No Changes........................................................ 14
3.4 Contracts......................................................... 15
3.5 Permits and Compliance With Laws Generally........................ 16
3.6 KB USA Compounds and Products..................................... 16
3.7 Investigations and Proceedings.................................... 17
3.8 Patents and Intellectual Property Rights.......................... 18
3.9 Title; All Assets................................................. 19
3.10 Consistency with Appraisal........................................ 19
3.11 Contingent Liabilities............................................ 20
3.12 Sources of Supply................................................. 20
3.13 Disclosure of All Material Facts.................................. 20
3.14 Disclaimer of Other Representations and Warranties;
Best Knowledge; Disclosure........................................ 20
ARTICLE 4 - INTERIM COVENANTS
4.1 Conduct of Business............................................... 21
ARTICLE 5 - EMPLOYEE MATTERS
5.1 KB USA Employees.................................................. 21
5.2 Employee Benefit Plans............................................ 22
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TABLE OF CONTENTS
(continued)
Page
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5.3 Plan Amendments and Terminations.................................. 22
5.4 Employment Records and Taxes...................................... 23
ARTICLE 6 - CERTAIN ADDITIONAL COVENANTS
6.1 Certain Tax Matters............................................... 23
6.2 Maintenance of Books and Records.................................. 24
6.3 Discharge of Obligations.......................................... 24
6.4 Delivery of Funds................................................. 24
ARTICLE 7 - SURVIVAL
7.1 Survival.......................................................... 24
ARTICLE 8 - TERMINATION; MISCELLANEOUS
8.1 Termination....................................................... 25
8.2 Assignment and Release............................................ 25
8.3 Bulk Transfer..................................................... 25
8.4 Indemnity......................................................... 25
8.5 Third Party Rights................................................ 26
8.6 Specific Performance.............................................. 26
8.7 Certain Related Provisions in the Master
Restructuring Agreement........................................... 26
Schedule 2.4(e)
Schedule 2.4(i)
Schedule 2.5(f)
Schedule 2.6(i)
Schedule 3.2 - Part A
Schedule 3.2 - Part B
Schedule 3.4(d)
Schedule 3.6(a) Part A
Schedule 3.6(a) Part B
Schedule 3.6(d)
Schedule 3.7(a) Part A
Schedule 3.7(a) Part B
Schedule 3.8(a)
Schedule 3.10
Schedule 3.11
Schedule 3.12
Schedule 3.14
Exhibit A
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KB USA ASSET CONTRIBUTION AGREEMENT
ASSET CONTRIBUTION AGREEMENT, dated as of June 19, 1998, between
[KB], a company limited by shares organized and existing under the laws of
Sweden ("KB"), [KB] USA, INC., a New York corporation and an indirect
wholly-owned subsidiary of KB ("KB USA"), [TR] a New Jersey corporation ("TR"),
and [KB USA], L.P., a Delaware limited partnership ("KBLP").
RECITALS:
WHEREAS, KB, KB USA, KBLP, TR, and certain related entities are
parties to that certain Master Restructuring Agreement of even date herewith
(the "Master Restructuring Agreement");
WHEREAS, KB Pharmaceuticals, L.P., a Delaware limited partnership
(the "Partnership"), has been formed and, at the Closing (as defined below),
shall be capitalized by KBLP, a Delaware limited partnership, as general
partner, and KBI Sub, as limited partner, as provided, and upon the terms and
subject to the conditions set forth, in the Master Restructuring Agreement;
WHEREAS, KB USA desires to grant to KBLP as a contribution to the
capital of KBLP, and KBLP desires to acquire from KB USA, the right to acquire
the business and certain assets and liabilities of KB USA (as provided herein);
WHEREAS, pursuant to the Master Restructuring Agreement and upon the
terms and subject to the conditions set forth therein, at the Closing, KBLP
shall assign to the Partnership all of KBLP's rights under this Agreement as
part of KBLP's Original Capital Contribution (as defined in the Partnership
Agreement defined below), subject to the assumption by the Partnership of KBLP's
obligations hereunder, and the Partnership shall accept such assignment and
shall assume the obligations of KBLP hereunder; and
WHEREAS, pursuant to the Master Restructuring Agreement and upon the
terms and subject to the conditions set forth therein and in this Agreement,
subsequent to the assignment of KBLP's rights under this Agreement and the
assumption by the Partnership of KBLP's obligations hereunder and effective as
of the Effective Time (as defined below), KB USA shall transfer the aforesaid
business and assets to the Partnership, subject to the assumption by the
Partnership of KBLP's obligations hereunder;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements contained herein and in the other
Initial Agreements (as defined below), the parties agree as follows:
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ARTICLE 1
CERTAIN DEFINITIONS
1.1 Definitions. As used in this Agreement the following terms shall
have the following respective meanings:
"Acquired Assets" shall have the meaning set forth in Section 2.3.
"Affiliate" shall have the meaning set forth in the Master
Restructuring Agreement.
"Agreement" shall mean this KB USA Asset Contribution Agreement,
together with the Schedules attached hereto, as the same may be amended from
time to time in accordance with the terms hereof.
"Amended and Restated KBI License" shall have the meaning set forth
in the Master Restructuring Agreement.
"Ancillary Agreements" shall have the meaning set forth in the
Master Restructuring Agreement.
"Assignment Agreement" shall have the meaning set forth in
Section 8.2.
"Assumed Liabilities" shall have the meaning set forth in Section
2.5.
"Business" shall have the meaning set forth in Section 2.2.
"business day" shall have the meaning set forth in the Master
Restructuring Agreement.
"Closing" shall have the meaning set forth in the Master
Restructuring Agreement.
"Closing Date" shall have the meaning set forth in the Master
Restructuring Agreement.
"Compound" shall have the meaning set forth in the Master
Restructuring Agreement.
"Contaminant" shall mean any substance which is deemed by any
Governmental Entity to be, alone or in any combination, hazardous, hazardous
waste (as defined in the Resource Conservation and Recovery Act, 42 U.S.C.
Sections 6901 et seq.), toxic, radioactive, or a pollutant, or is
otherwise regulated by or the subject of Environmental Laws.
"Contamination" means the uncontained presence of any Contaminant,
including the degradation of naturally occurring water, air or soil quality
which is either the direct or indirect result of human activity.
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"Contracts" shall mean all (i) written and oral contracts, licenses
(including, without limitation, licenses and supply agreements with respect to
KB USA Compounds and Products), commitments, agreements and instruments,
including all customer contracts, operating contracts and distribution contracts
relating to the Business, (ii) sales and purchase orders and supply agreements
and other agreements relating to the Business, (iii) leases of Equipment and
Real Property relating to the Business, (iv) all agency, clinical research,
credit, confidentiality, consulting, development, grant, license, market share
rebate, reporting, services, sales technology and other contracts and (v) other
contracts, licenses, agreements and instruments relating to the Business.
"Debt" shall have the meaning set forth in the Partnership
Agreement.
"Effective Time" shall have the meaning set forth in the Master
Restructuring Agreement.
"Environmental Laws" shall mean all applicable Laws now or hereafter
enacted concerning (i) on-site or off-site Contamination, (ii) occupational
health and safety, (iii) Releases of Contaminants into the environment, (iv) the
using, generating, manufacturing, refining, treating, transporting, storing,
handling, labeling, documenting, recycling, disposing of, depositing,
transferring, producing or processing of any chemical substances, products, or
Contaminants or the contracting to do any of the foregoing, and (v) reclamation
and restoration of real property.
"Environmental Liabilities" shall mean all losses, costs, expenses,
damages (including without limitation compensatory, exemplary, or punitive
damages), Taxes, penalties, fines, charges, demands, liabilities, obligations
and claims of any kind (including interest, penalties and reasonable attorneys'
and consultants' fees, expenses and disbursements) imposed by, incurred under or
pursuant to or as a result of Environmental Laws (regardless of the existence of
a violation of Environmental Laws) or attributable to any matter (i) arising out
of, relating to, or resulting from (A) pollution, Contamination, protection of
the environment, human health or safety, health or safety of employees,
sanitation, or (B) Releases or threatened Releases of Contaminants into the air,
surface water, groundwater, soil, land surface or subsurface, buildings or
facilities or (ii) otherwise arising out of, relating to, or resulting from the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Contaminants; and including without limitation any cost
or expense incurred in connection with any action undertaken to (x) clean up,
remove, treat or in any other way respond to any presence, Release or threat of
Release of any Contaminants, (y) prevent any Release of Contaminants where such
Release would violate any Environmental Laws or would endanger or threaten to
endanger public health or welfare or the environment, or (z) perform studies,
investigations or monitoring related to the foregoing.
"Equipment" shall have the meaning set forth in Section 2.3(c).
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
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"Excluded Assets" shall have the meaning set forth in Section 2.4.
"Excluded Liabilities" shall have the meaning set forth in
Section 2.6.
"Exclusive Distributorship Agreement" shall have the meaning set
forth in the Master Restructuring Agreement.
"FDA" shall have the meaning set forth in the Master
Restructuring Agreement.
"FDCA" shall have the meaning set forth in Section 3.5(b).
"Financial Statements" shall have the meaning set forth in
Section 3.2.
"GAAP" shall mean U.S. generally accepted accounting principles,
applied on a consistent basis.
"Governmental Entity" shall mean (i) any multinational, federal,
provincial, state, municipal, local or other governmental or public department,
court, commission, board, bureau, agency or instrumentality, domestic or
foreign; (ii) any subdivision, agent, commission, board, or Governmental Entity
of any of the foregoing; or (iii) any quasi-governmental or private body
exercising any regulatory, expropriation or taxing governmental authority under
or for the account of any of the foregoing.
"Guarantee", with respect to KB USA, shall mean any obligation
(except the endorsement in the ordinary course of business of negotiable
instruments for deposit or collection) of KB USA guaranteeing or in effect
guaranteeing any Debt, dividend or other obligation of any other Person in any
manner, whether directly or indirectly, including without limitation obligations
incurred through an agreement, contingent or otherwise, by such Person.
"Income Taxes" shall mean any federal, state and local income taxes,
including any interest, penalty or addition thereto, whether disputed or not.
"Indemnity Losses" shall have the meaning set forth in the Master
Restructuring Agreement.
"Initial Agreements" shall have the meaning set forth in the
Master Restructuring Agreement.
"Intellectual Property" shall mean, with respect to the KB USA
Compounds and Products (and, solely for purposes of Sections 2.3(g) and 2.3(k)
hereof, all other Compounds and products comprising the Business), all patents
(including all reissues, divisions, continuations and extensions thereof),
patent rights, service marks, trademarks, trade dress and trade names, all
product names, all assumed or fictitious names and the logos associated
therewith, copyrights, registrations and applications for the foregoing,
licenses and other contractual rights with respect to the foregoing and other
such property and intangible rights.
"Interim Balance Sheet" shall have the meaning set forth in
Section 3.2.
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"Inventory" shall have the meaning set forth in Section 2.3(b).
"KB Parties" shall have the meaning set forth in the Master
Restructuring Agreement.
"KB USA Compound" shall have the meaning set forth in the Master
Restructuring Agreement.
"KB USA Compounds and Products" shall mean the KB USA Compounds and
the KB USA Products, collectively.
"KB USA Marketed Products" shall have the meaning set forth in
Section 3.6(a).
"KB USA Pipeline Products" shall have the meaning set forth in
Section 3.6(a).
"KB USA Product" shall have the meaning set forth in the Master
Restructuring Agreement.
"Label" shall mean, for any KB USA Product, the packaging, product
brochure or product monograph filed with the appropriate Governmental Entity (or
Governmental Entities), including the FDA, in the United States having authority
to approve the marketing of such KB USA Product and any package insert directed
to physicians that has been approved by such Governmental Entity (or
Governmental Entities) for such KB USA Product; including, in each case, the
indications, claims, uses and dosages appearing therein.
"Laws" shall mean all statutes, codes, ordinances, decrees, rules,
regulations, municipal by-laws, judicial or arbitral or administrative or
ministerial or departmental or regulatory judgments, orders, decisions, rulings
or awards, policies, voluntary restraints, guidelines, or any provisions or
interpretations of the foregoing, including general principles of common and
civil law and equity, binding on or affecting the Person referred to in the
context in which such word is used.
"Liabilities" shall mean, as to any Person, all commitments,
obligations or liabilities of any kind or nature, whether known or unknown,
absolute or contingent, matured or unmatured whether accrued, vested or
otherwise, and whether or not actually reflected, or required by GAAP to be
reflected, in such Person's balance sheets or other books or records.
"Lien" shall have the meaning set forth in the Master
Restructuring Agreement.
"Master Restructuring Agreement" shall have the meaning set forth
in the Recitals.
"Material Adverse Effect" shall mean a change or effect (or series
of related changes or effects) which has or is reasonably likely to have a
material adverse change in or effect upon the business, assets, liabilities,
condition (financial or otherwise), or results of operations of the Business or
the Acquired Assets, taken as a whole.
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"Partnership Agreement" shall have the meaning set forth in the
Master Restructuring Agreement.
"Permits" shall have the meaning set forth in Section 2.3(j).
"Permitted Liens" shall mean (i) Liens securing taxes, assessments,
governmental charges or levies, all of which are not yet due and payable, (ii)
Liens (other than any Lien imposed by ERISA) incurred or deposits made in the
ordinary course of the Business and on a basis consistent with past practice in
connection with worker's compensation, unemployment insurance or other types of
social security or (iii) such other Liens which, individually and in the
aggregate, do not and would not have a Material Adverse Effect.
"Person" shall have the meaning set forth in the Master
Restructuring Agreement.
"Plan" shall mean (i) any employee benefit plan, arrangement or
policy (whether or not written and whether or not subject to the Employee
Retirement Income Security Act of 1974, as amended), including, without
limitation, any stock option, stock purchase, stock award, retirement, pension,
deferred compensation, profit sharing, savings, incentive, bonus, health,
dental, hearing, vision, drug, life insurance, cafeteria, flexible spending,
dependent care, fringe benefit, vacation pay, holiday pay, disability, sick pay,
workers compensation, unemployment, severance pay, employee loan, educational
assistance plan, policy or arrangement, and (ii) any employment,
indemnification, change-in-control, consulting or severance agreement, under
which any current or former employee, consultant or director of KB USA has any
present or future right to benefits or under which KB USA has any present or
future liability.
"Product Registrations" shall mean all product applications,
marketing authorizations, manufacturing authorizations, registrations, licenses,
permits, approvals and similar items granted or issued by any Governmental
Entity for any of the KB USA Compounds and Products (and, solely for purposes of
Section 2.3(j) hereof, any of the other Compounds and products comprising the
Business), including without limitation all IND's and NDA's (as such terms are
defined in the Amended and Restated KBI License) and all other FDA and other
registrations which relate to the development, manufacture, use or sale of the
KB USA Compounds and Products.
"Real Property" shall mean all real property, together with all
fixtures, fittings, buildings, structures and other improvements erected
thereon, and easements, rights of way, water lines, rights of use, licenses,
hereditaments, tenements, privileges and other appurtenances thereto (such as
appurtenant rights in and to public streets).
"Release" shall mean any spill, leak, emission, deposit, discharge,
leaching, migration, disposal, dumping, injection, placement, pumping, pouring,
emptying, or ejection into the environment.
"Taxes" shall mean any federal, state, local and foreign income,
payroll, withholding, excise, sales, use, lease, personal and other property,
use and occupancy, business and occupation, mercantile, real estate, gross
receipts, license, employment, severance, stamp,
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premium, windfall profits, social security (or similar unemployment),
disability, transfer, registration, value added, alternative, or add-on minimum,
estimated, or capital stock and franchise and other tax of any kind whatsoever,
including any interest, penalty or addition thereto, whether disputed or not.
"Technical Information" shall mean, with respect to the KB USA
Compounds and Products (and, solely for purposes of Sections 2.3(h) and 2.3(k)
hereof, all other Compounds and products comprising the Business), all
scientific and technical information, data, and know-how, including, without
limitation, (i) research and preclinical and clinical data; (ii) information,
data and know-how relating to any device for the administration of any of the KB
USA Compounds and Products or which is used in the marketing of any of the KB
USA Compounds and Products and (iii) information, data and know-how relating to
any manufacturing process.
"Technology" shall mean, with respect to the KB USA Compounds and
Products (and, solely for purposes of Sections 2.3(h) and 2.3(k) hereof, all
other Compounds and products comprising the Business), all formulae, processes,
procedures, designs, ideas, research records, inventions, records of inventions,
test information, technical information, engineering data, marketing know-how,
proprietary information, manufacturing information, know-how, and trade secrets
(and all related manuals, books, files, journals, models, instructions,
patterns, drawings, blueprints, plans, designs specifications, equipment lists,
parts lists, descriptions, data, art work, software, computer programs and
source code data related thereto including all current and historical data
bases).
"Territory" shall mean the United States of America, its
territories and possessions.
"Third Party" shall have the meaning set forth in the Master
Restructuring Agreement.
"Transfer" shall have the meaning set forth in the Master
Restructuring Agreement.
"Transferred Contracts" shall have the meaning set forth in
Section 2.3(i).
"Transferred Employees" shall mean employees of KB USA who are
employed by KBLP following the Closing.
All capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Master Restructuring Agreement. Unless
otherwise expressly specified herein, defined terms in the singular shall also
include the plural and vice versa.
ARTICLE 2
CONVEYANCE OF THE BUSINESS AND ACQUIRED ASSETS, ETC.
2.1 Agreement to Convey. Upon the terms and subject to the
conditions set forth in this Agreement and the Master Restructuring Agreement
and upon the written demand of
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KBLP, which may be made at any time after the purchase by TR Holdings of the KBI
Common Shares as provided in Section 2.4(b) of the Master Restructuring
Agreement, and effective as of the Effective Time, KB USA shall, and KB shall
cause KB USA to, convey, grant, transfer, set over, assign and deliver to KBLP,
and KBLP shall accept and acquire from KB USA, all of KB USA's right, title and
interest in and to the Business and the Acquired Assets; provided, however, that
nothing in this Agreement shall require KB USA to convey, grant, transfer, set
over, assign or deliver any right, title or interest in or to the Excluded
Assets.
2.2 Business. The "Business" shall mean the entire business
conducted by KB USA at the date hereof.
2.3 Acquired Assets. "Acquired Assets" shall mean all of the assets,
properties and rights owned, used or held for use in connection with, or that
are required for the conduct of, the Business of every kind, nature and
description, wherever such assets, properties and rights are located and whether
such assets, properties and rights are real, personal or mixed, tangible or
intangible, and whether or not any of such assets, properties and rights have
any value for accounting purposes or are carried or reflected on or specifically
referred to in KB USA's books or financial statements, other than the Excluded
Assets. The Acquired Assets shall include, without limitation, all of the
assets, properties and rights set forth below that are not Excluded Assets:
(a) all Real Property owned or leased by KB USA;
(b) all inventories, including without limitation
finished goods, work-in-progress, raw materials, packaging
materials, and goods held for sale or to be furnished under
Contracts, owned, used or held for use by KB USA with respect to the
Business (the "Inventory");
(c) to the extent not included in clause (a) above, all
tangible assets and properties owned, used or held for use by KB USA
in connection with the Business, including cars, trucks and other
transportation equipment, all laboratory testing and other machinery
and equipment, tools, spare parts, furniture, office equipment,
furnishings and fixtures and machinery and equipment under order or
construction (the "Equipment");
(d) all administrative and other supplies owned, used or
held for use by KB USA with respect to the Business;
(e) all billed and unbilled accounts receivable and all
notes receivable relating to the Business;
(f) all credits, prepaid expenses, deferred charges,
advance payments, security deposits and deposits owned, used or held
for use by KB USA with respect to the Business;
(g) all Intellectual Property owned, used or held for
use by KB USA with respect to the Business (it being acknowledged
that ownership of any
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patent or trademark owned by KB shall not be contributed hereby, but
all rights of KB USA with respect to such patent or trademark shall
be Acquired Assets);
(h) all Technical Information and Technology owned, used
or held for use by KB USA with respect to the Business (it being
acknowledged that ownership of any Technical Information or
Technology owned by KB shall not be contributed hereby, but all
rights of KB USA with respect to such Technical Information or
Technology shall be Acquired Assets);
(i) except for the Contracts referred to in Section 2.4
hereof, all Contracts (including without limitation the Exclusive
Distributorship Agreement) (the "Transferred Contracts");
(j) all franchises, approvals, permits, authorizations,
governmental licenses, orders, registrations, certificates,
variances, and other similar permits or rights obtained from any
Governmental Entity relating to the conduct of the Business or the
Real Property owned or leased by KB USA and all pending applications
therefor, in each case to the extent transferable (the "Permits"),
including without limitation all Product Registrations;
(k) all books and records, including books of account,
general, financial, accounting and personnel records, ledgers,
files, invoices, documents (including originally executed copies of
written Contracts, customer and supplier lists (past, present or
future), correspondence, memoranda, forms, lists, plats,
architectural plans, drawings and specifications (including
engineering drawings, plans, specifications and other documents
related to capital improvements related to Equipment expansions and
modifications), copies of documents evidencing Intellectual
Property, Technical Information or Technology, new product
development materials, creative materials, advertising and
promotional materials, catalogs, price lists, mailing lists,
studies, reports, sales materials and records, purchasing materials
and records, records relating to the Transferred Employees,
photographs, records of plant operations and materials used, quality
control records and procedures, equipment maintenance records,
manuals and warranty information, research and development files,
data and laboratory books, inspection processes, in each case,
whether in hard copy or magnetic format, in each instance, to the
extent used or held for use with respect to the Businesses;
(l) all rights or choses in action arising out of
occurrences before, on or after the Closing Date and related to any
portion of the Business, including Third Party warranties and
guarantees and all related claims, credits, rights of recovery and
set-off and other similar contractual rights, as to Third Parties
held by or in favor of KB USA and arising out of, resulting from or
relating to the Business or the Acquired Assets; and
(m) all rights to insurance and condemnation proceeds
relating to the damage, destruction, taking or other impairment of
the Acquired Assets
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which damage, destruction, taking or other impairment occurs on or
prior to the Closing Date.
2.4 Excluded Assets. Notwithstanding any other provision of this
Agreement, the following assets, properties and rights (the "Excluded Assets")
are not included in the Acquired Assets, and KB USA shall not convey to KBLP,
and KBLP shall not acquire from KB USA, any rights in or to any of the
following:
(a) cash and cash equivalents;
(b) KB USA's corporate seal, minute books, stock ledger,
Income Tax returns and duplicate copies of all books and records;
(c) the 1982 JV Agreement and the Ancillary Agreements
referred to therein, as such agreements have been amended or amended
and restated prior to the date hereof;
(d) the Master Restructuring Agreement, the other
Initial Agreements and the Ancillary Agreements (as such terms are
defined in the Master Restructuring Agreement);
(e) the patents and patent applications, identified on
Schedule 2.4(e) hereto;
(f) all claims, rights, credits and interests arising
under, resulting from or related to any Excluded Asset, including
without limitation warranties and guarantees;
(g) all rights, choses in action, claims, counterclaims,
credits, rights of recover and set-off and other similar rights
related to any Excluded Liability, including without limitation
warranties and guarantees, held by or in favor of KB USA;
(h) any rights to refunds, credits, overpayments or
other adjustments with respect to Income Taxes; and
(i) all rights of KB USA with respect to the litigation
described in Schedule 2.4(i).
2.5 Assumption of Liabilities. Subject to the terms and conditions
set forth in this Agreement and the Master Restructuring Agreement and except as
set forth in Section 2.6, effective as of the Effective Time, KBLP shall assume
and agree to perform when due all of the Liabilities of KB USA, including
without limitation:
(a) Liabilities recorded or reserved against on the
Interim Balance Sheet;
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(b) Liabilities arising out of the Transferred Contracts
(whether before, on or after the Closing Date) and any and all
Liabilities arising out of or resulting from the assignment of any
Transferred Contract to KBLP or the further assignment of any such
Contract to, and the performance of any such Contract by, the
Partnership;
(c) Liabilities associated with returns in respect of or
otherwise associated with or arising out of products sold by KB USA
on or prior to the Closing Date, including without limitation
obligations with respect to rebates, chargebacks and similar
arrangements;
(d) Liabilities described in Article 5 hereof to be
paid, assumed or borne by KBLP;
(e) Liabilities otherwise arising out of the
consummation of the transactions contemplated by this Agreement or
the Master Restructuring Agreement (other than Liabilities with
respect to Income Taxes); and
(f) Liabilities described or arising with respect to the
matters described on Schedule 2.5(f) hereto;
provided, however, that nothing in this Agreement shall require KBLP to
assume or perform any of the Excluded Liabilities. The Liabilities assumed
hereby are referred to herein as the "Assumed Liabilities."
2.6 Excluded Liabilities.
Notwithstanding anything to the contrary contained in this
Agreement, KBLP shall not assume or be bound by or be obligated or responsible
for any of the following Liabilities (the "Excluded Liabilities"):
(a) Liabilities of KB USA arising under or out of the
Master Restructuring Agreement, the other Initial Agreements and the
Ancillary Agreements;
(b) except as specifically set forth in Schedule 2.5(f),
(i) any Liability to the extent (but only to the extent) not
recorded or reserved against on the Interim Balance Sheet, other
than Liabilities arising since the date thereof in the ordinary
course of business consistent with past practice not in excess of
$15 million ($15,000,000) in the aggregate and (ii) any other
Liability to KB or any of its Affiliates that is not specifically
identified as such on such balance sheet;
(c) any Guarantee by KB USA that is not fully reflected
and disclosed in the Interim Balance Sheet;
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(d) Liabilities, if any, for dividends on the capital
stock of KB USA declared but unpaid as of the Closing Date;
(e) any Liability for Income Taxes;
(f) Obligations to be performed by KB USA before, on or
after the Closing Date under the Contracts identified in Sections
2.4(c) and 2.4(d);
(g) any Liability, which, if incurred by the
Partnership, would be inconsistent with Section 3.2 of the
Partnership Agreement and any Liability that is inconsistent with
the representations and warranties set forth in Article 3 (on the
basis set forth in clause (ii) of Section 10.1 of the Master
Restructuring Agreement);
(h) any Liabilities or obligations in respect of
the Excluded Assets; and
(i) the liabilities described on Schedule 2.6(i).
2.7 Closing. Upon the terms and subject to the conditions of this
Agreement and the Master Restructuring Agreement, the closing of the
transactions contemplated hereby shall take place at the Closing at the time
provided for in the Master Restructuring Agreement. Notwithstanding any other
provision of this Agreement, the results of all operations of the Business on
the Closing Date shall be for the account and benefit of KBLP.
2.8 Deliveries. At the Closing, KB USA shall, and KB shall cause KB
USA to, deliver to KBLP the following documents, each to be effective as of the
Effective Time:
(a) bills of sale and instruments of assignment to evidence
the transfer to KBLP of the Acquired Assets (other than the Real Property owned
by KB USA, if any) in accordance herewith, duly executed by KB USA;
(b) one or more warranty deeds of conveyance to KBLP of the
Real Property owned by KB USA, if any, sufficient to transfer to KB USA good and
marketable fee simple title to such Real Property in accordance herewith, duly
executed and acknowledged by KB USA, and in recordable form;
(c) the Foreign Investment in Real Property Tax Act
Certification and Affidavit for each parcel of Real Property owned by KB USA,
duly executed by KB and/or KB USA, as the case may be; and
(d) all such other documents and instruments of conveyance, if
any, as shall be necessary to transfer to KBLP the Acquired Assets in accordance
herewith and, where necessary or desirable, in recordable form.
2.9 Deliveries to KB USA. At the Closing, KBLP shall deliver to KB
USA instruments of assumption, effective as of the Effective Time, with respect
to the Assumed
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Liabilities to evidence the assumption by KBLP of the Assumed Liabilities in
accordance herewith, duly executed by KBLP.
2.10 Consents of Third Parties and KB Parties. Anything in this
Agreement to the contrary notwithstanding, this Agreement shall not constitute
an agreement to assign any of the Contracts or Permits or any claim or right or
any benefit arising thereunder or resulting therefrom if an attempted assignment
thereof, without the consent of a Third Party thereto, would constitute a breach
or other contravention thereof or in any way adversely affect the rights of KB
USA or KBLP as assignee thereunder. KB USA shall, and KB shall cause KB USA to,
cooperate with KBLP in a mutually agreeable manner to obtain, at the cost and
expense of KB USA, the consent of the other parties to any such Contract or
Permit for the assignment thereof to KBLP. If such consent is not obtained prior
to the Effective Time, or if an attempted assignment thereof would be
ineffective or would adversely affect the rights of KB USA or KBLP as assignee
thereunder so that KBLP would not in fact receive all such rights, KB USA and
KBLP will cooperate in a mutually agreeable arrangement under which KBLP would
obtain the benefits and assume the obligations thereunder from and after the
Effective Time in accordance with this Agreement, including subcontracting,
sublicensing or subleasing to KBLP, or under which KB USA would enforce for the
benefit of KBLP, with KBLP assuming the obligations of KB USA to the same extent
as if it would have constituted an Assumed Liability and any and all rights of
KB USA against a Third Party thereto. KB hereby consents, and shall cause any of
its Affiliates that is a party to any Contract to consent, to the assignment of
any of such Contract or any claim or right or any benefit arising thereunder or
resulting therefrom to KBLP. KB USA shall, and KB shall cause KB USA to, pay
promptly to KBLP when received all monies received by KB USA after the Effective
Time under any of the Contracts or any claim or right or any benefit arising
thereunder to the extent that KBLP would be entitled thereto pursuant to this
Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF KB PARTIES
KB and KB USA, jointly and severally, represent and warrant as of
the date of this Agreement and (except as specifically provided otherwise
herein) as of the Effective Time, to each of TR, the KBI Parties and KBLP that:
3.1 Interests in Other Entities. No shares of any corporation or any
ownership or other investment interest, either of record, beneficially or
equitably, in any Person are included in the Acquired Assets.
3.2 Financial Statements. True, correct and complete copies of the
audited balance sheet of KB USA as of December 31, 1997 and the related audited
statement of income and retained earnings and cash flows for the twelve-month
period then ended are attached hereto as Part A of Schedule 3.2 hereto; true,
correct and complete copies of the unaudited balance sheet of KB USA (the
"Interim Balance Sheet") as of March 31, 1998 and the related unaudited
statement of income and retained earnings and cash flows for the three-month
period then ended are attached hereto as Part B of Schedule 3.2 hereto (all the
foregoing financial statements are referred to herein collectively as the
"Financial Statements"). The Financial Statements are in
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accordance with the books and records of KB USA and fairly present the financial
position and results of operations of the Business as of the dates and for the
periods indicated, in each case in conformity with International Accounting
Standards throughout the periods specified, except as expressly set forth
therein and except that the Interim Balance Sheet is subject to normal year-end
adjustments which are not, in the aggregate, material.
3.3 No Changes. Since December 31, 1997, KB USA has conducted the
Business only in the ordinary course of business consistent with past practice
and there has not been:
(a) any change or, to the best knowledge of KB, any threat of
any change in any of KB USA's relations with, or any loss or, to the best
knowledge of KB, threat of loss of, any of the suppliers, distributors,
customers or employees of the Business which, individually or in the aggregate,
has had or may have a Material Adverse Effect;
(b) any cancellation or waiver of any right material to the
Business or any cancellation or waiver of any debts of or claims of the Business
against KB or any of its Affiliates (other than KB USA) which, individually or
in the aggregate, has had or may have a Material Adverse Effect;
(c) any disposition of or failure to keep in effect any rights
in, to or for the use of any Permit which individually or in the aggregate would
have a Material Adverse Effect or any disposition or any failure to keep in
effect any right in, to or for any IND or NDA contemplated in Section 2.3(j)
hereof with respect to any of the KB USA Compounds and Products;
(d) any disposition or any failure to keep in effect any right
in, to or for any of the Intellectual Property, Technology or Technical
Information of the type referred to in Sections 2.3(g) or (h) hereof with
respect to any of the KB USA Compounds and Products;
(e) any damage, destruction or loss affecting the Business
which individually or in the aggregate would have a Material Adverse Effect
whether or not covered by insurance;
(f) any material change by KB USA in its method of accounting
or keeping its books of account or accounting practices;
(g) any sale, transfer or other disposition of any material
assets, properties or rights of the Business;
(h) any Guarantee or agreement by KB USA to Guarantee any
obligations or liabilities of any other Person or Persons in excess of $5
million ($5,000,000) in the aggregate;
(i) any material action taken, or agreed to be taken, by KB
USA out of the ordinary course of business; or
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(j) any other event, condition or circumstance, which
individually or in the aggregate, has had or may have a Material Adverse Effect.
3.4 Contracts.
(a) To the best knowledge of KB, with respect to each
Transferred Contract necessary to conduct the business of the research,
development, manufacture and/or sale of the KB USA Compounds and Products,
neither KB USA nor any other party thereto is in breach or default and no event
has occurred which with notice or lapse of time would constitute a breach or
default, or permit termination, modification, or acceleration, under such
Transferred Contract, except for such breaches, terminations, modifications,
accelerations or defaults which, individually and in the aggregate, are not
reasonably likely to have a Material Adverse Effect. To the best knowledge of
KB, there are no disputes pending or threatened under or in respect of any of
such Transferred Contracts other than those that, individually and in the
aggregate, are not reasonably likely to have a Material Adverse Effect.
(b) To the best knowledge of KB, each of the Transferred
Contracts necessary to conduct the business of the research, development,
manufacture and/or sale of the KB USA Compounds and Products is fully assignable
to KBLP and the Partnership without the consent, approval or waiver of any other
Person, except for such Transferred Contracts which, if not assigned hereunder,
would not individually or in the aggregate have a Material Adverse Effect.
(c) To the best knowledge of KB, none of the Transferred
Contracts contains any non-competition or other restrictive covenant or
limitation on the rights granted thereunder which prevents or limits operations
or sales or other activities or conduct by the Business in the Territory as of
the date of this Agreement or hereafter.
(d) To the best knowledge of KB, Schedule 3.4(d) hereto sets
forth a true and complete list of all Contracts between KB USA and KB or any of
KB's other Affiliates. All Transferred Contracts between KB USA and KB (or any
Affiliate of KB) are on terms no less favorable to KB USA than those KB USA
would obtain in a comparable arm's length transaction with a Person not an
Affiliate.
3.5 Permits and Compliance With Laws Generally.
(a) To the best knowledge of KB, KB USA possesses and is in
compliance with all Permits required to operate the Business as currently
operated and to own, lease or otherwise hold the Acquired Assets under all
applicable Laws, except to the extent that any failure to possess, or to comply
with, any Permits or Laws would not, individually or in the aggregate, have a
Material Adverse Effect. To the best knowledge of KB, all Permits of KB USA
relating to the operation of the Business are in full force and effect, other
than those the failure of which to be in full force and effect would not
individually or in the aggregate have a Material Adverse Effect. To the best
knowledge of KB, there are no proceedings pending or threatened that seek the
revocation, cancellation, suspension or any adverse modification of any such
Permits currently possessed by KB USA other than those revocations,
cancellations,
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suspensions or modifications which would not individually or in the aggregate
have a Material Adverse Effect. To the best knowledge of KB, no consent of any
Governmental Entity is required in connection with the transfer of Permits
pursuant to the transactions contemplated hereby.
(b) To the best knowledge of KB, the Business is being
conducted by KB USA in compliance with all applicable Laws, except for such
failures to comply which do not individually or in the aggregate have a Material
Adverse Effect. Without limiting the generality of the foregoing, the research,
development, manufacture, formulation, packaging, marketing and/or sale by KB
USA of each of the KB USA Compounds and Products is being conducted in all
material respects in compliance with the Food, Drug and Cosmetic Act and the
rules and regulations promulgated thereunder (the "FDCA").
3.6 KB USA Compounds and Products.
(a) Schedule 3.6(a) hereto lists all of the KB USA Products,
which are either currently being marketed in the Territory by KB USA ("KB USA
Marketed Products") or being developed by KB USA or any of its Affiliates for
sale in the Territory ("KB USA Pipeline Products"). Part A of Schedule 3.6(a)
hereto lists all of the KB USA Marketed Products and, for each KB USA Marketed
Product, sets forth (i) all of its indicated Therapeutic Categories, (ii) the
active ingredient(s) contained in such KB USA Marketed Product, (iii) the list
of patents and patent applications applicable to each such active ingredient or
otherwise related to such product or any device for the administration thereof
and (iv) each trademark, trade name and service mark used or intended to be used
in connection with such KB USA Marketed Product and any line extensions with
respect thereto. Part B of Schedule 3.6(a) hereto lists all of the KB USA
Pipeline Products and, for each KB USA Pipeline Product, sets forth (i) all of
its indicated Therapeutic Categories, (ii) the active ingredient(s) contained or
to be contained in such KB USA Pipeline Product, (iii) the list of patents and
patent applications applicable to each such active ingredient or otherwise
related to such product or any device for the administration thereof and (iv)
each trademark, tradename and service mark used or intended to be used in
connection with such KB USA Pipeline Product.
(b) Since December 31, 1996, there has been not been any
recall, withdrawal or suspension (as such terms, or words of similar import, are
used in the regulations promulgated under the FDCA or similar food and drug laws
promulgated by any Governmental Entity) with respect to any of the KB USA
Compounds and Products, sales of which exceed or have exceeded $5 million
($5,000,000) in any consecutive twelve-month period. To the best knowledge of
KB, there is no reasonable basis in fact or circumstance (i) for the recall,
withdrawal or suspension by any Governmental Entity of any of the KB USA
Compounds and Products or (ii) which would reasonably be expected to cause KB
USA to withdraw, recall or suspend any of the KB USA Compounds and Products (or
Product Registration with respect thereto) from the market or to terminate or
suspend the manufacturing or testing of such product.
(c) Since December 31, 1996, (i) none of the KB USA Compounds
and Products has experienced any material safety or efficacy problems that would
materially change the general risk/benefit assessment upon which any of such KB
USA Compounds and
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Products is prescribed or used for its approved indications as a result of any
adverse experience reports received by KB USA or any of its Affiliates prior to,
on or after such date and (ii) no material change in any Label of any of the KB
USA Compounds and Products has been required by any Governmental Entity
(including the FDA), and neither KB nor KB USA has determined to implement any
such change as a result of such reports.
(d) Schedule 3.6(d) hereto sets forth, as of the date hereof,
and whether currently in force or pending, all Product Registrations relating to
the KB USA Compounds and Products. To the best knowledge of KB, all Product
Registrations have been duly filed, and all those Product Registrations that are
not pending approval have been duly registered and issued and have been
maintained so as to avoid a lapse, revocation or termination, and are in full
force and effect. Neither KB nor KB USA nor any of their Affiliates has granted
any license or other rights to any Person with respect to any such Product
Registrations. To the best knowledge of KB, no consent of any Governmental
Entity is required in connection with the transfer of Product Registrations
pursuant to the transactions contemplated hereby.
3.7 Investigations and Proceedings.
(a) Except as set forth on Part A of Schedule 3.7(a) hereto,
to the best knowledge of KB, there are no investigations or reviews by any
Governmental Entity are pending against or affecting or threatened against, KB
USA or any of its Affiliates regarding any alleged violation by KB USA or any of
its Affiliates relating to the Business of any Law (including the FDCA, the
United States Safe Medical Devices Act or the Medical Device Amendments of
1976), nor has any Governmental Entity indicated to any KB Party an intention to
conduct the same, which, if concluded in a manner adverse to KB USA or its
Affiliates, would individually or in the aggregate constitute a Material Adverse
Effect. Part B of Schedule 3.7(a) hereto sets forth a list of all such
investigations and reviews conducted since December 31, 1996 (to the best
knowledge of KB) and includes, for completed matters, a general description of
the results thereof (including any penalties or other relief assessed against KB
USA or any of its Affiliates).
(b) To the best knowledge of KB, there are no claims, actions,
suits or proceedings pending or threatened against KB USA or any of its
Affiliates in connection with the operations of the Business or otherwise
affecting the Business or any of the Acquired Assets, at law or in equity,
before or by any Governmental Entity or arbitrator, except for any matter as to
which no injunctive or like equitable relief has been requested or granted and
the amount of damages claimed or threatened is less than $1 million
($1,000,000).
(c) To the best knowledge of KB, (i) there is no outstanding
judgment, order, injunction or decree of any Governmental Entity against or
affecting the Business or any of the Acquired Assets and (ii) since December 31,
1996, neither KB USA nor any of its Affiliates with respect to the Business has
been a party to, or bound by, any such judgment, order, injunction or decree,
except any such matters involving the settlement or adjudication of claims by
non-governmental Third Parties where no injunctive or like equitable relief was
granted and which resulted in the payment of damages by KB USA and any of its
Affiliates of
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less than $1 million ($1,000,000) individually and less than $5 million
($5,000,000) in the aggregate.
3.8 Patents and Intellectual Property Rights.
(a) To the best knowledge of KB, except as set forth on
Schedule 3.8(a) hereto, KB USA is the sole and exclusive owner of the rights to
use the Intellectual Property, Technology and Technical Information in the
Territory.
(b) To the best knowledge of KB, the Intellectual Property is
valid and enforceable and all maintenance fees with respect to the Intellectual
Property have been paid in full.
(c) To the best knowledge of KB, at the Closing, effective as
of the Effective Time, KB USA shall transfer to KBLP all of the Intellectual
Property, Technology and Technical Information without any obligation to pay
royalties to any Person or Persons, and free and clear of any Liens.
(d) To the best knowledge of KB, there are no licenses or
other agreements from or with Third Parties under which KB USA uses or exercises
any rights with respect to the research, development, manufacturing,
distribution or sale of KB USA Compounds, KB USA Products, any of the
Intellectual Property, Technology or Technical Information and no obligation to
enter into any such license or agreement.
(e) Neither KB USA nor any of its Affiliates is, nor during
the preceding three (3) years has been, a party to or the subject of any
infringement, interference, opposition, cancellation, reexamination or similar
action, suit or proceeding, administrative or judicial, challenging to the right
or title to or use by KB USA of any of the Intellectual Property, Technology or
Technical Information, and no such action, suit or proceeding has, to the best
knowledge of KB, been threatened during such three (3) year period, nor, to the
best knowledge of KB, is there any basis for the bringing of such action, suit
or proceeding.
(f) No licenses or other rights have been granted by KB USA or
any of its Affiliates, and neither KB USA nor any of its Affiliates has any
obligation to grant licenses or other rights, with respect to any of the
Intellectual Property, Technology or Technical Information. No claims have been
made by KB USA or any of its Affiliates of any violation or infringement by
others of rights with respect to any of the Intellectual Property, Technology or
Technical Information, and, to the best knowledge of KB, there is no basis for
the making of any such claim.
(g) The Intellectual Property, Technology and Technical
Information includes all such rights necessary to conduct the business of the
research, development, manufacture, marketing and/or sale of the KB USA
Compounds and Products as now conducted and, with respect to them and any KB USA
Pipeline Products, as proposed to be conducted, and such rights shall not be
materially adversely affected by the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby.
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(h) There are no licenses or service, maintenance or other
agreements or obligations of any nature whatsoever regarding the Intellectual
Property, Technology or Technical Information between or among KB USA, on the
one hand, and any Affiliate of KB USA, on the other hand.
(i) To the best knowledge of KB, all statements and
representations made by KB USA or any of its Affiliates in any pending patent,
copyright and trademark applications with respect to the Intellectual Property
were true in all material respects as of the time they were made.
3.9 Title; All Assets.
(a) KB USA has, and shall convey to KBLP effective as of the
Effective Time, (i) good and valid title to all of the Acquired Assets
constituting personal property (to the best knowledge of KB), (ii) good and
marketable title in fee simple to all of the Real Property owned by KB USA and
(iii) good and valid leasehold title to all of the Real Property (other than the
Real Property owned by KB USA) leased or otherwise held or used by KB USA, in
each case, free and clear of all Liens (other than Permitted Liens).
(b) No other Person has any interest in any of the Acquired
Assets and KB USA has not granted any such rights to any such Third Party.
(c) To the best knowledge of KB, except for the Excluded
Assets, the Acquired Assets constitute all the assets, properties and rights
required for the conduct of the Business as currently conducted and, with
respect to the KB USA Compounds and Products and any KB USA Pipeline Products,
as proposed to be conducted by KB USA.
3.10 Consistency with Appraisal. The assets and liabilities to be
contributed by KB USA to KBLP, including without limitation those reflected in
the Interim Balance Sheet and the Pro Forma Balance Sheet do not differ in any
material respect from the assets and liabilities taken into account by Deloitte
& Touche in rendering the appraisal of the business and assets of KB USA dated
November 27, 1997, a true and complete copy of which is attached hereto as
Schedule 3.10, and the statements of income and cash flows included in the
Financial Statements are consistent with the projections taken into account by
such firm for such purpose.
3.11 Contingent Liabilities. To the best knowledge of KB, Schedule
3.11 hereto sets forth a true and complete list of each matter as to which
reserves have been created and are included under the caption "Accrued Expenses
& Prepaid Income" on the Interim Balance Sheet.
3.12 Sources of Supply. To the best knowledge of KB, Schedule 3.12
hereto sets forth a true and complete list of the Persons who have at any time
during the last eighteen (18) months supplied KB USA with any of the KB USA
Compounds and Products.
3.13 Disclosure of All Material Facts. None of the representations
and warranties of the KB Parties in this Agreement contains any material
misrepresentation relating to the KB USA Compounds and Products or the Business
or, to the best knowledge of KB, omits
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to state any material fact relating to the KB USA Compounds and Products which
is necessary in order to make such representations and warranties not
misleading.
3.14 Disclaimer of Other Representations and Warranties; Best
Knowledge; Disclosure.
(a) None of the KB Parties makes any representations or
warranties relating to KB USA, the Business, the Acquired Assets or otherwise in
connection with the transactions contemplated hereby other than those expressly
set forth herein.
(b) Whenever a representation or warranty made by any of the
KB Parties herein refers to the best knowledge of KB, such knowledge shall be
deemed to consist only of the actual knowledge of any of those persons listed on
Schedule 3.14 hereto. The KB Parties have not undertaken, nor shall they have
any duty to undertake, any investigation concerning any matter as to which a
representation or warranty is made as to KB's best knowledge.
(c) Notwithstanding anything to the contrary contained in this
Agreement or in any of the Schedules hereto, any information disclosed on one
Schedule shall be deemed to be disclosed on any other Schedule on which it was
required to be disclosed.
ARTICLE 4
INTERIM COVENANTS
4.1 Conduct of Business. Except (i) as otherwise specifically
permitted by this Agreement, or (ii) with the prior written consent of TR, from
and after the date of this Agreement and until the Effective Time, KB and KB USA
jointly and severally covenant that:
(a) KB USA shall conduct the Business diligently, as currently
conducted and only in the ordinary course of business consistent with past
practice;
(b) KB USA shall use its reasonable business efforts to
preserve the business organization of the Business substantially intact, to keep
available to KBLP the services of the employees of KB USA, and to preserve for
KBLP the goodwill of the suppliers, distributors, customers and others having
business relationships with the Business;
(c) each of the KB Parties shall promptly inform TR in writing
of any specific event or circumstance of which it is aware, or of which it
receives notice, that has or is likely to have, individually or in the
aggregate, taken together with the other events or circumstances, a Material
Adverse Effect; and
(d) KB USA shall not:
(i) sell, lease, license, or otherwise transfer any
assets necessary or otherwise material to the conduct of the Business which
would constitute Acquired
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Assets, other than sales of Inventory and payment for goods and services in the
customary course of business;
(ii) change its method of accounting or keeping its
books of account or accounting practices with respect to the Business, except
as required by GAAP; or
(iii) take or omit to take, nor shall KB or KBLP take
or omit to take, any action which if taken or omitted prior to the date hereof
would constitute or result in a breach of any representations or warranties of
the KB Parties set forth herein.
ARTICLE 5
EMPLOYEE MATTERS
5.1 KB USA Employees. (a) KBLP shall offer employment as of the
Effective Time to all individuals who are KB USA employees on the Closing Date
(including without limitation any persons on long-term or short-term disability
or leave of absence). Nothing in this Agreement shall be construed to limit
KBLP's right to terminate the employment of any KB USA employee who becomes an
employee of KBLP.
(b) KBLP shall credit the service of Transferred Employees with KB
as service with KBLP for purposes of eligibility and vesting under each employee
benefit plan or policy of KBLP which covers Transferred Employees.
5.2 Employee Benefit Plans. Effective as of the Effective Time, KBLP
shall adopt and assume each Plan of KB USA and shall assume all of KB USA's
rights, responsibilities and obligations under or related to such Plan. KBLP
shall be solely responsible for ensuring that all benefits payable under the
Plans from or after the Effective Time (including severance or other benefits
payable as a result of the transactions contemplated by this Agreement), and all
contributions, insurance premiums and administrative expenses payable with
respect to the Plans for periods beginning from or after the Effective Time, are
paid when due. Effective as of or as soon as practicable after the Effective
Time, KB USA shall use its reasonable efforts to cause all assets attributable
to any Plan and any insurance policies or other agreements related to any Plan
to be assigned to KBLP. All Transferred Employees who are participants in any
Plan shall be entitled to continue to participate in such Plan from and after
the Effective Time, subject to Section 5.3.
5.3 Plan Amendments and Terminations. Nothing in this Agreement
shall be construed to limit KBLP's right to amend or terminate any employee
benefit plan or policy or related insurance policy (including any Plan assumed
from KB USA). KBLP shall bear and be solely responsible for any and all
Liabilities arising out of the termination, modification or amendment of any
Plan.
5.4 Employment Records and Taxes. (a) The parties agree that, to the
extent permissible under applicable law, (i) KBLP shall be a successor employer
for purposes of the Federal Insurance Contributions Act and the Federal
Unemployment Tax Act and (ii) at KBLP's
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request, KBLP shall be a successor employer for purposes of any applicable state
unemployment compensation, workers compensation, and disability laws.
(b) Pursuant to Section 5.01 of Revenue Procedure 96-60, KB USA
shall be relieved from furnishing U.S. Internal Revenue Service Forms W-2 to KB
USA employees for the calendar year in which the Closing occurs, and KBLP shall
timely furnish such forms for such year reflecting wages paid and taxes withheld
by both KBLP and KB USA.
(c) The parties agree to furnish each other with such wage, tax and
other information concerning owners, principals, employees and employee benefit
plans, and to take all such other action, as is necessary and appropriate to
effect the transactions contemplated by this Article 5, and to enable the
parties to make any required governmental filings.
ARTICLE 6
CERTAIN ADDITIONAL COVENANTS
6.1 Certain Tax Matters.
(a) Taxes. KBLP shall be responsible for all state and local
sales, use, transfer, real property transfer, documentary stamp, recording and
other similar Taxes arising from and with respect to the transfer of the
Acquired Assets (including any intermediate transfer or deemed transfer between
KB USA and any of its Affiliates).
(b) Tax Returns and Records. KBLP shall (i) provide KB USA
with such assistance as may reasonably be requested by KB USA in connection with
the preparation of any Tax return, any audit or other examination by any taxing
Governmental Entity or any judicial or administrative proceeding with respect to
Taxes, (ii) retain and provide KB USA with any records or other information
which may be relevant to such return, audit, examination or proceeding, and
(iii) provide KB USA with any final determination of any such audit or
examination, proceeding or determination that affects any amount required to be
shown on any Tax return of KB USA for any period (which shall be maintained
confidentially). Without limiting the generality of the foregoing, KBLP shall
retain, until the applicable statutes of limitations (including all extensions)
have expired, copies of all Tax returns, supporting workpapers, and other books
and records or information which may be relevant to such returns for all Tax
periods or portions thereof ending before or including the Closing Date, and
shall not destroy or dispose of such records or information without first
providing KB USA with a reasonable opportunity to review and copy the same. With
respect to Taxes incurred in connection with, relating to or arising out of the
Business prior to the Closing Date that are not yet due or owing as of the
Closing Date, KB USA shall (i) timely file when due all returns and reports for
such Taxes, including information returns, that are required to be filed, (ii)
timely pay when due the Taxes that are shown to be due pursuant to such returns
or reports, and (iii) timely pay when due all other Taxes not required to be
reported on returns.
6.2 Maintenance of Books and Records. KB USA may retain copies of
such business, financial, tax and legal books and records as it deems
appropriate for its tax, accounting
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and legal purposes. In addition, KBLP covenants and agrees that for a period of
eight (8) years after the Closing Date, it shall retain all books and records
conveyed to it hereunder in substantially their condition at the time of the
Closing and shall give KB USA and its representatives full and complete access
to such books and records and shall permit KB USA and such representatives to
make copies of any of such books and records. None of such books and records
shall be destroyed or discarded during such eight-year period without the prior
written approval of KB USA or without first offering such books and records to
KB USA upon at least 30 days' prior written notice, during which time KB USA
shall have the right (subject to the provisions hereof) to examine and to remove
any such files, books and records prior to their destruction. The access to
files, books and records contemplated by this Section 6.2 shall be during normal
business hours and upon not less than two (2) business days prior written
request.
6.3 Discharge of Obligations. KB USA covenants and agrees,
subsequent to the Effective Time, if any, to promptly pay and to otherwise
fulfill and discharge (including, where necessary, by obtaining any necessary
releases or terminations) any and all obligations and liabilities of KB USA
which are not Assumed Liabilities hereunder, including, without limitation,
liabilities and obligations arising under any bulk sale transfer or tax laws,
when due and payable and otherwise prior to the time at which any of such
obligations or liabilities could in any way result in or give rise to a claim
against the Acquired Assets, or KBLP, or adversely affect KBLP's title to or use
of any of the Acquired Assets.
6.4 Delivery of Funds. Subsequent to the Effective Time, KB USA
shall promptly deliver to KBLP any funds and any checks, notes, drafts and other
instruments for the payment of money, duly endorsed to KBLP, received by KB USA,
at or after the Effective Time, comprising payment of any amounts due from
others pursuant to accounts receivable or otherwise, which such payment
comprises a part of the Acquired Assets.
ARTICLE 7
SURVIVAL
7.1 Survival. Except as set forth in the following sentence, all
representations, warranties, covenants and agreements contained in this
Agreement shall survive (and not be affected in any respect by) the Closing
indefinitely and any investigation conducted by any party hereto. The
representations and warranties contained in or made pursuant to this Agreement
and the related indemnity obligations set forth in Article 10 of the Master
Restructuring Agreement, which obligations are hereby expressly incorporated
herein, shall terminate on, and no claim or action with respect thereto may be
brought after, the date that is eighteen (18) months after the Closing Date,
except that the representations and warranties contained in Sections 3.6, 3.8,
3.9, 3.10 and 3.11 hereof, and the related indemnity obligations contained in
Article 10 of the Master Restructuring Agreement, shall survive until the
expiration of the applicable statute of limitations. The representations and
warranties which terminate on the date that is eighteen (18) months after the
Closing Date, and the liability of any party hereto with respect thereto
pursuant to this Article 7, shall not terminate with respect to any claim
whether or not fixed as to liability or liquidated as to amount, with respect to
which the Indemnifying Party has been given written notice setting forth the
facts upon which the claim for indemnification is based and, if possible, a
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reasonable estimate of the amount of the claims prior to the date eighteen (18)
months after the Closing Date.
ARTICLE 8
TERMINATION; MISCELLANEOUS
8.1 Termination. This Agreement shall terminate automatically in the
event that, prior to the Closing, the Master Restructuring Agreement terminates
in accordance with the terms thereof.
8.2 Assignment and Release. (a) None of the parties hereto may
assign this Agreement or any of its rights or obligations hereunder, except that
(i) KBLP may assign this Agreement and its rights and obligations hereunder to
the Partnership pursuant to the Assignment and Assumption Agreement attached
hereto as Exhibit A (the "Assignment Agreement"), and upon such assignment, all
references to KBLP or to a "party" in this Agreement (other than this Section
8.2) shall be deemed thereafter to refer to the Partnership in lieu of KBLP.
This Agreement shall inure to the benefit of KBLP and, upon the assignment of
this Agreement to the Partnership pursuant to the Assignment Agreement, the
Partnership. Any assignment or other Transfer of this Agreement not expressly
permitted by this Section shall be void.
(b) Upon the assignment by KBLP of this Agreement to the Partnership
and the assumption by the Partnership of the obligations of KBLP hereunder
pursuant to the Assignment Agreement, KBLP shall automatically and without any
further action by any Person be released from all of its obligations hereunder,
including without limitation from all liability and obligation with respect to
the Assumed Liabilities.
8.3 Bulk Transfer. The parties hereto hereby waive compliance with
the provisions of any applicable bulk sales law of any jurisdiction in
connection with the transactions contemplated hereby and no representation,
warranty or covenant contained in this Agreement shall be deemed to have been
breached as a result of such non-compliance.
8.4 Indemnity. (a) KBLP agrees to indemnify, defend and hold
harmless TR, KB USA and their Affiliates and each of their respective officers,
directors, employees and agents from and against any and all Indemnity Losses
arising out of, based upon or resulting from the Assumed Liabilities. KB and KB
USA, jointly and severally, agree to indemnify, defend and hold harmless KBLP
and each of its officers, directors, employees, partners and agents from and
against any and all Indemnity Losses arising out of, based upon or resulting
from the Excluded Liabilities. Any claim for indemnification hereunder shall be
on a net-after tax basis in accordance with, and shall be subject to the
procedures set forth in, Section 10.3 of the Master Restructuring Agreement.
(b) In the event of the assignment of this Agreement to the
Partnership, TR shall be entitled to enforce for the benefit of the Partnership
all representations, warranties and covenants of KB and KB USA contained in this
Agreement, except that in the event of any inaccuracy of any representation or
warranty or any breach of any covenant (other than
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representations, warranties and covenants set forth in Section 2.1, 3.6 or 3.8),
TR shall not be entitled to enforce this Agreement in respect of such inaccuracy
or breach unless the amount of the Indemnity Losses incurred by the Partnership
as a result of all such inaccuracies or breaches exceeds $50 million
($50,000,000) in the aggregate. TR shall be entitled to enforce for its own
benefit all representations, warranties and covenants of KB and KB USA contained
in Sections 2.1, 3.4, 3.6, 3.8 and 3.13, in which case TR's Indemnity Losses
shall include, without limitation, and without limiting any other remedies that
may be available at law or in equity, an amount equal to the difference in the
contingent amounts computed pursuant to Section 3.7 of the Master Restructuring
Agreement and the contingent amounts that would have been achievable had there
been no such inaccuracy or breach.
8.5 Third Party Rights. Except as otherwise provided in Section 8.4
hereof with respect to the indemnification obligations for the benefit of
officers, directors, employees and agents, the provisions of this Agreement
shall not inure to the benefit of any present or former director, officer,
employee or agent of any of the parties hereto either as a third party
beneficiary or otherwise.
8.6 Specific Performance. KB and KB USA each acknowledge and agree
that the Business and the Acquired Assets are unique and not available on the
open market and that each of KBLP and TR shall have, in addition to all other
legal remedies available to it, the right (i) to enforce the terms of this
Agreement by a decree of specific performance and (ii) to obtain an injunction
restraining any violation or threatened violation of this Agreement. KB and KB
USA will cooperate with KBLP and TR to the extent KBLP or TR may reasonably
request in the defense of any proceeding seeking to restrain, prohibit,
invalidate or set aside the conveyance of the Business or the Acquired Assets to
the Partnership as assignee of KBLP pursuant to Section 8.2.
8.7 Certain Related Provisions in the Master Restructuring
Agreement. This Agreement is subject to Articles 9, 10 and 12 of the Master
Restructuring Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
KB
By: /s/ Goran Lerenius
-------------------------------------
Name: Goran Lerenius
Title: General Counsel
KB USA
By: /s/ Christian Onfelt
-------------------------------------
Name: Christian Onfelt
Title: Vice President
KBLP
By KB, General Partner
By: /s/ Robin L. Spear
-------------------------------------
Name: Robin L. Spear
Title: Attorney-in-fact
TR
By: /s/ Judy C. Lewent
-------------------------------------
Name: Judy C. Lewent
Title: Senior Vice President and
Chief Financial Officer