AGREEMENT AND PLAN OF MERGER

Exhibit 10(zz) EXECUTION COPY -------------- AGREEMENT AND PLAN OF MERGER BY AND AMONG K-V PHARMACEUTICAL COMPANY, KESTREL-FALCON ACQUISITION CORPORATION, FP1096, INC., AND FEMMEPHARMA HOLDING COMPANY, INC. DATED AS OF MAY 4, 2005  

-iii-   INDEX OF EXHIBITS EXHIBIT DESCRIPTION ------- ----------- Exhibit A Asset Contribution Agreement Exhibit B Form of Escrow Agreement Exhibit C Form of License Agreement Exhibit D Form of Release Agreement Exhibit E Retained Contracts Exhibit F List of Shareholders Exhibit G Form of Transition Agreement Exhibit H1 Form of Merger Certificate Exhibit H2 Form of Certificate of Merger of Domestic Corporation into Foreign Corporation Exhibit I Letter of Transmittal Exhibit J Closing Instructions Exhibit K Form(s) of Proprietary Information, Confidentiality and Assignment Agreement SCHEDULES ---------   THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and --------- entered into as of May 4, 2005 by and among K-V Pharmaceutical Company, a Delaware corporation ("K-V"), Kestrel-Falcon Acquisition Corporation, a --- Delaware corporation and a wholly-owned subsidiary of K-V Pharmaceutical ("K-V Sub"), FP1096, Inc., a Pennsylvania corporation ("FP1096"), and ------- ------ FemmePharma Holding Company, Inc., a Delaware corporation and a wholly-owned subsidiary of FP1096 ("FemmePharma"). ----------- RECITALS A. K-V and FP1096 believe it is in the best interests of each company and its respective shareholders that K-V acquire FP1096 through the statutory merger of K-V Sub with and into FP1096 (the "Merger"). ------ B. Immediately prior to the Merger, FP1096 will have executed and delivered the Asset Contribution Agreement (as defined in Article I) and the License Agreement (as defined in Article I) as a condition to K-V to consummate the transactions pursuant to this Agreement. C. Immediately prior to the Merger, FP1096 will have consummated the Spin Off (as defined in Article I) as a condition to FP1096 to consummate the transactions pursuant to this Agreement. Therefore, in consideration of the premises and mutual covenants and conditions set forth herein and intending to be legally bound, the parties hereto hereby agree as follows: ARTICLE I DEFINITIONS ----------- The terms defined in this Article I, whenever used in this Agreement, including without limitation in the exhibits and schedules hereto and the disclosure letters delivered in connection herewith, unless otherwise specified, shall have the following meanings: "Accounts Receivable" means, in the ordinary course of business: ------------------- (i) all trade accounts receivable and other rights to payment from customers of FP1096 and the full benefit of all security for such accounts or rights to payment, (ii) all other accounts or notes receivable of FP1096, and the full benefit of all security for such accounts or notes, and (iii) any claim, remedy or other right related to any of the foregoing. "Affiliate" means with respect to any Person, any other Person that --------- directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such first Person. The term "control" of such first Person (including the terms "controlling," "controlled by" and "under common control with" such first Person) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such first Person, whether through the ownership of voting securities, by contract, or otherwise. "Agreement" has the meaning given to it in the first paragraph of --------- this Agreement.   "Anti-infective Product" means any local regional, topical or ---------------------- intravaginally administered product that is delivered to the pelvic region used for the treatment of candidiasis, bacterial vaginosis or trichomoniasis, whether such conditions are described by such terms or any other terminology. "Appraisal" has the meaning given to it in Section 6.2(u) of this --------- Agreement. "Asset Contribution Agreement" means the Asset Contribution ---------------------------- Agreement dated as of the date hereof by and between FP1096 and FemmePharma in substantially the form of EXHIBIT A. "Audit" has the meaning given to it in Section 5.8(c). ----- "Balance Sheet Date" has the meaning given to it in Section 3.8(a). ------------------ "Books and Records" of any Person means all files, documents, ----------------- correspondence, instruments, papers, books and records relating to the business, operations, condition, financial or other results of operations, and assets of such Person, including without limitation, financial statements and information; employment and personnel records, including employee medical surveillance records; tax returns; budgets, business plans, projections, prospects, opportunities and strategies; reliability and cost data; pricing lists, formulas and guidelines; ledgers, journals, deeds, title policies, minute books, stock certificates and books, stock transfer ledgers and legal matters; customer lists; advertising and promotions; computer files and programs; retrieval programs; operating data and plans; environmental studies and plans; and all employee rosters and other employee related documents and copies of all personnel records required by Law to be retained. "Business Day" means each day that is not a Saturday, Sunday or ------------ holiday on which banking institutions located in New York, New York are authorized or obligated by Law to close. "Business Facility" means any real property that is or at any time ----------------- has been owned, operated, occupied, controlled or leased by either FP1096 or FemmePharma in connection with the operation of its business. "Cap" has the meaning given to it in Section 7.4. --- "Charter Documents" has the meaning given to it in Section 3.1. ----------------- "Claim" has the meaning given to it in Section 7.3(b). ----- "Claim Notice" has the meaning given to it in Section 7.3(b). ------------ "Clinical Trials" means, with respect to a product, any and all --------------- animal, non-human, and non-clinical trials and human clinical trials performed by or under authority of FP1096 or its Affiliate prior to the Closing Date, and the foreign equivalents of such trials, performed prior to or following the filing of a Marketing Authorization Application for purposes of obtaining approval therefore, including phase I, phase II and phase III clinical trials in the United States as -2-   defined under the FFDCA and their foreign equivalents, and any clinical studies performed after such approval is obtained. "Closing" has the meaning given to it in Section 2.2. ------- "Closing Date" has the meaning given to it in Section 2.2. ------------ "Closing Instructions" has the meaning given to it in Section -------------------- 2.8(g). "Closing Payments" has the meaning given to it in Section 2.8(g). ---------------- "COBRA" means the Consolidated Omnibus Budget Reconciliation Act of ----- 1985, as amended. "Code" means the Internal Revenue Code of 1986, as amended. ---- "Confidential Information" has the meaning given to it in Section ------------------------ 5.1(c). "Conflict" has the meaning given to it in Section 3.5. -------- "Consideration Per Share" means $6.0990 per share, subject to the ----------------------- last paragraph of Section 2.6(a). "Contract" means any agreement, joint venture agreement, -------- partnership agreement, assignment, lease, sublease or other occupancy agreement, license, sublicense, settlement agreement, consent decree, stipulation, promissory note, evidence of indebtedness, loan agreement, credit agreement or document, indenture, security agreement, insurance policy, purchase order, or other contract, arrangement, understanding or conduct giving rise to any binding commitment, whether written or oral, including any amendments, supplements or modifications thereto. "Copyrights" has the meaning given to it in the definition of ---------- Intellectual Property Rights. "Current Balance Sheet" has the meaning given to it in Section --------------------- 3.8(a). "Damage" means any loss, damage, deficiency, cost, expense or other ------ Liability, including attorneys' fees and expenses of investigation and defense and all other amounts paid in investigation, defense or settlement of any of the foregoing, in each case whether or not arising out of third-party claims. Damage shall not include a reduction in amount or limitation on the use of FP1096's net operating loss carryforward to offset income attributable to any taxable period (or portion thereof) beginning after the Closing Date. "Danazol" has the meaning given to it in The Merck Index, 13th ------- Edition (2001). "Danazol Product" has the meaning given to it under the definition --------------- of K-V Product. "Data" means, with respect to a K-V Product developed by or on ---- behalf of FP1096, all data, analyses, opinions, results, reports, clinical Development tests and results, and other information, in FP1096's possession or control and generated or used in or for or material to the -3-   Development of a K-V Product developed by or on behalf of FP1096, including such data and information with respect to a K-V Product developed by or on behalf of FP1096 that relates to: (i) any screening, optimization, and in vitro and in vivo testing and studies, (ii) the pharmacological properties, including pharmacokinetic, toxicological and metabolic properties or composition of the K-V Product or any of its components, (iii) protocols and methods for Development, and protocol and process changes and amendments, (iv) safety data and information, adverse effects, adverse reactions and events, clinical databases, case report forms, and patient records, and (v) all other data and information included in any Marketing Authorization Application, other Regulatory Documentation, or otherwise provided or made available to, or received from, any Regulatory Authority, or developed or obtained in order to meet the requirements of any applicable Laws or to seek Regulatory Approval with respect to a K-V Product as developed by or on behalf of FP1096. "Development," and with correlative meaning "Develop," means, with ----------- ------- respect to a product, all formulation development, process development, stability studies, Manufacturing development, production of clinical product batches, validation studies, qualification, quality assurance/quality control testing, regulatory affairs (including meetings with and other communications to and from Regulatory Authorities), and other development and preparation for the Manufacture, supply and commercialization of or for the product in any and all countries, including all activities for pre-clinical testing and studies, the evaluation of toxicological, pharmacological, metabolic or other clinical aspects of the product, Clinical Trials and activities otherwise related to the submission of Marketing Authorization Applications and seeking Regulatory Approvals. "Dissenting Share Payments" has the meaning given to it in Section ------------------------- 2.7(c). "Dissenting Shares" has the meaning given to it in Section 2.7(a). ----------------- "DOL" means the United States Department of Labor. --- "Effective Time" has the meaning given to it in Section 2.2. -------------- "Employee" means any current or former employee, consultant or -------- director of FP1096 or any ERISA Affiliate. "Employee Agreement" means each management, employment, severance, ------------------ consulting, relocation, repatriation, expatriation, visa, work permit or other agreement, or contract (including, without limitation, any offer letter or any agreement providing for acceleration of FP1096 Options, or any other agreement providing for compensation or benefits) between FP1096 or any ERISA Affiliate and any Employee. "Employment Liabilities" means any and all claims, debts, ---------------------- commitments, obligations or other Liabilities whether fixed, contingent or absolute, matured or unmatured, liquidated or unliquidated, accrued or unaccrued, known or unknown, whenever or however arising, including all costs and expenses relating thereto, and including those debts, obligations and other Liabilities arising under Law, rule, regulation, permits, actions or proceedings before any Governmental Entity, order or consent decree or any award of any arbitrator of any kind relating to any FP1096 Employee Plan, International Employee Plan, or otherwise to an Employee. -4-   "Environmental Laws" means all applicable rules, regulations, ------------------ orders, treaties, statutes, and codes and other Laws promulgated by any Governmental Entity which prohibit, regulate or control any Hazardous Material or any Hazardous Material Activity, including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, the Resource Recovery and Conservation Act of 1976, the Federal Water Pollution Control Act, the Clean Air Act, the Hazardous Materials Transportation Act, the Occupational Safety and Health Act, the Clean Water Act, comparable laws, rules, regulations, ordinances, orders, treaties, statutes, and codes of other Governmental Entities, the regulations promulgated to any of the foregoing, and all amendments and modifications of any of the foregoing. "Environmental Permit" means any approval, permit, license, -------------------- clearance or consent required to be obtained from any private person or any Governmental Entity with respect to a Hazardous Materials Activity which is or was conducted by FP1096 or FemmePharma. "ERISA" means the Employee Retirement Income Security Act of 1974, ----- as amended. "ERISA Affiliate" means any other Person that is or has been under --------------- common control with FP1096 or a subsidiary of FP1096 within the meaning of Section 414(b), (c), (m) or (o) of the Code, and the regulations issued thereunder. "Escrow Agent" means U.S. Bank National Association. ------------ "Escrow Agreement" means the Escrow Agreement by and among K-V, ---------------- FP1096, FemmePharma, the Seller Representative and the Escrow Agent in substantially the form attached hereto as EXHIBIT B. "Escrow Amount" means $1,750,000 and any interest thereon received ------------- by the Escrow Agent from time to time following the investment thereof. "Escrow Amount Per Share" means $0.4339 per share, being the ----------------------- quotient obtained by dividing (i) $1,750,000 by (ii) the Total Outstanding Shares, less the Excluded Shares, measured on an as-converted to FP1096 Common Stock basis as of the Effective Time. "Escrow Fund" means the Escrow Amount deposited by K-V with the ----------- Escrow Agent under the terms of this Agreement and the Escrow Agreement, which shall be subject to increase and decrease over time, as provided under the Escrow Agreement. "Excluded Shares" means the 87,412.5 shares of FP1096 Series C --------------- Preferred Stock held by K-V as of the date hereof, as the same may be adjusted for stock splits, stock dividends, stock combinations and the like, or as converted into FP1096 Common Stock. "Final Return" has the meaning given to it in Section 5.8(a). ------------ "FP1096" has the meaning given to it in the first paragraph of this ------ Agreement. "FP1096 Authorizations" has the meaning given to it in Section --------------------- 3.17. -5-   "FP1096 Business" means (i) the K-V Products developed by or on --------------- behalf of FP1096, (ii) all Development, Clinical Trials, Manufacture, marketing, distribution, sale, use and other commercialization and exploitation of the K-V Products developed by or on behalf of FP1096, and (iii) all Data and Regulatory Documentation for the K-V Products developed by or on behalf of FP1096; each in any and all countries and only to the extent conducted by or on behalf of FP1096 and any of its Affiliates prior to the Closing. "FP1096 Capital Stock" means FP1096 Common Stock, FP1096 Preferred -------------------- Stock and any other shares of capital stock, if any, of FP1096, taken together. "FP1096 Closing Balance Sheet" has the meaning given to it in ---------------------------- Section 3.9. "FP1096 Common Shareholder" means a holder of FP1096 Common Stock, ------------------------- each of whom is listed on Section 3.2(a)(1) of the FP1096 Disclosure Letter. "FP1096 Common Stock" means shares of common stock, no par value, ------------------- of FP1096. "FP1096 Disclosure Letter" means the letter entitled FP1096 ------------------------ Disclosure Letter to be delivered by FP1096 and FemmePharma to K-V concurrently with the execution and delivery of this Agreement, addressing certain matters specifically called for by this Agreement. "FP1096 Employee Plan" means any plan, program, policy, practice, -------------------- contract, agreement or other arrangement providing for compensation, severance, termination pay, deferred compensation, retirement benefits, performance awards, stock or stock-related awards, including the Plans, fringe benefits or other employee benefits or remuneration of any kind, whether written, unwritten or otherwise, funded or unfunded, including without limitation, each "employee benefit plan," within the meaning of Section 3(3) of ERISA which is or has been maintained, contributed to, or required to be contributed to, by FP1096 or any ERISA Affiliate for the benefit of any Employee, or with respect to which FP1096 or any ERISA Affiliate has or may have any liability or obligation. "FP1096 Financial Statements" has the meaning given to it in --------------------------- Section 3.8(a). "FP1096 Options" means all issued and outstanding options, -------------- including commitments to grant options, to purchase or otherwise acquire FP1096 Capital Stock, whether or not vested, held by any Person, each of which FP1096 Options and the Persons in whose name the same are recorded are listed on Section 3.2(b) of the FP1096 Disclosure Letter. "FP1096 Preferred Shareholder" means a holder of FP1096 Preferred ---------------------------- Stock, each of whom is listed on Section 3.2(a)(1) of the FP1096 Disclosure Letter. "FP1096 Preferred Stock" means FP1096 Series A Preferred Stock, ---------------------- FP1096 Series B Preferred Stock, FP1096 Series C Preferred Stock and FP1096 Series D Preferred Stock, taken together. "FP1096 Series A Preferred Shareholder" means a holder of FP1096 ------------------------------------- Series A Preferred Stock, each of whom is listed in the FP1096 Disclosure Letter. -6-   "FP1096 Series A Preferred Stock" means the Series A Preferred ------------------------------- Stock, no par value, of FP1096. "FP1096 Series B Preferred Shareholder" means a holder of FP1096 ------------------------------------- Series B Preferred Stock, each of whom is listed in the FP1096 Disclosure Letter. "FP1096 Series B Preferred Stock" means the Series B Preferred ------------------------------- Stock, no par value, of FP1096. "FP1096 Series C Preferred Shareholder" means a holder of FP1096 ------------------------------------- Series C Preferred Stock, each of whom is listed in the FP1096 Disclosure Letter. "FP1096 Series C Preferred Stock" means the Series C Preferred ------------------------------- Stock, no par value, of FP1096. "FP1096 Series D Preferred Shareholder" means a holder of FP1096 ------------------------------------- Series D Preferred Stock, each of whom is listed in the FP1096 Disclosure Letter. "FP1096 Series D Preferred Stock" means the Series D Preferred ------------------------------- Stock, no par value, of FP1096. "FP1096 Stock Certificates" has the meaning given to it in Section ------------------------- 2.8(c). "FP1096 Warrants" means all issued and outstanding warrants or --------------- other rights, including commitments to grant warrants or other rights, but excluding FP1096 Options, to purchase or otherwise acquire FP1096 Capital Stock, whether or not vested, held by any Person, each of which FP1096 Warrants and the Persons in whose name the same are recorded are listed on Section 3.2(b) of the FP1096 Disclosure Letter. "FemmePharma" has the meaning given to it in the first paragraph of ----------- this Agreement. "FemmePharma Affiliate" means, with respect to FemmePharma, any --------------------- other entity that, directly or indirectly, controls, or is controlled by, or is under common control with, FemmePharma. The term "control" (including the terms "controlling," "controlled by" and "under common control with") means the possession of the power to direct or cause the direction of the management and policies of such entity. "FemmePharma Technology" has the meaning given to it in the License ---------------------- Agreement. "FDA" means the United States Food and Drug Administration and any --- successor agency or authority thereto. "FFDCA" means the United States Federal Food, Drug and Cosmetic Act ----- and rules and regulations thereunder and any successor thereto. "FICA" has the meaning given to it in Section 3.11(a)(ii). ---- "FIRPTA Compliance Certificate" has the meaning given to it in ------ Section 5.3. -7-   "FUTA" has the meaning given to it in Section 3.11(a)(ii). ---- "GAAP" means United States generally accepted accounting principles ---- consistently applied. "Governmental Entity" means any court, administrative agency or ------------------- commission or other federal, state, county, local, foreign or other governmental authority, instrumentality, agency or commission. "Hazardous Material" means any material, chemical, substance or ------------------ waste that has been designated by any Governmental Entity to be radioactive, toxic, hazardous or otherwise a danger to health, reproduction or the environment or the disposal, treatment, transfer, storage or manufacture of which is regulated in any manner by a Governmental Entity. "Hazardous Materials Activity" means the transportation, transfer, ---------------------------- recycling, storage, use, treatment, manufacture, removal, remediation, release or threat of release, exposure of others to, sale, or distribution of any Hazardous Material or any product containing a Hazardous Material. "IND" means an Investigational New Drug submission under the FFDCA. --- "Indemnified Party" has the meaning given to it in Section 7.2(b). ----------------- "Indemnifying Party" has the meaning given to it in Section 7.2(b). ------------------ "Initial Danazol Product" means the intravaginally administered ----------------------- Danazol product that has been Developed by or on behalf of FP1096, including but not limited to as described in IND 51,223 (and any amendments thereto) as filed with the FDA prior to the Closing Date. "Intellectual Property Rights" means any and all of the following ---------------------------- and all statutory and common law rights throughout the world in, arising out of, or associated therewith: (i) patents and patent applications in the world, including but not limited to any and all equivalents, provisional applications, non-provisional applications, continuations, continuations-in-part, divisionals, reissues, reexaminations, substitutions, international applications, national phase applications, regional phase applications, registrations, confirmations, renewals, petty patent applications, and utility model applications, that may be filed in the United States and every foreign country, and the patents, extensions (including, without limitation, patent term extensions and supplementary protection certificates), counterparts or derivations thereof, both foreign and domestic (collectively, "Patents"), (ii) all inventions (whether ------- patentable or not), invention disclosures, improvements, data, all trade secrets, confidential information, proprietary information, know how and technology (collectively, "Trade Secrets"), (iii) all copyrights, copyright ------------- registrations and applications, including moral rights, and all other grants for the protection of industrial designs and any registrations and applications therefor (collectively, "Copyrights"), and (iv) any similar, ---------- corresponding or equivalent rights to any of the foregoing or other intellectual property or proprietary rights anywhere in the world. "International Employee Plan" means each FP1096 Employee Plan or --------------------------- Employee Agreement that has been adopted or maintained by FP1096 or any ERISA Affiliate, whether -8-   formally or informally or with respect to which FP1096 or any ERISA Affiliate will or may have any liability with respect to Employees who perform services outside the United States. "IRS" means the United States Internal Revenue Service. --- "K-V" has the meaning given to it in the first paragraph of this --- Agreement. "K-V Material Adverse Effect" has the meaning given to it in --------------------------- Section 4.1. "K-V Product" means any: (i) local regional or intravaginally ----------- administered product containing Danazol, or any analogue, salt, ester, prodrug, isomer, derivative or metabolite of Danazol, that is delivered directly to the vagina, cervix, uterus, ovaries or fallopian tubes (a "Danazol Product"), including, without limitation, the Initial Danazol --------------- Product, or (ii) Anti-infective Product. "K-V Sub" has the meaning given to it in the first paragraph of ------- this Agreement. "Knowledge," "Know" or "Known" means, with respect to FP1096, --------- ---- ----- FemmePharma, the Shareholders and/or their Affiliates, the actual knowledge (after review of this Agreement and the Schedules hereto) of Gerianne M. DiPiano, Michael A. DiPiano, Jr., Peter Mays and Jessica Donahue. "Law" means all laws, statutes, ordinances, regulations and other --- pronouncements having the effect of law of the United States, or any other country or territory, or domestic or foreign state, prefecture, province, commonwealth, city, county, municipality, territory, protectorate, possession, court, tribunal, agency, government, department, commission, arbitrator, board, bureau or instrumentality thereof. "Lease Agreements" has the meaning given to it in Section 3.13(a). ---------------- "Leased Real Property" has the meaning given to it in Section -------------------- 3.13(b). "Letter of Transmittal" has the meaning given to it in Section --------------------- 2.8(c). "Liability" means any liability, obligation, responsibility, --------- indebtedness, expense, claim, deficiency, Lien, or guaranty of any type, whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, whether incurred or consequential, whether matured or unmatured, whether due or to become due and whether or not required to be reflected in financial statements prepared in accordance with GAAP, including any liability for Taxes. "License Agreement" means the License Agreement by and between ----------------- FemmePharma and FP1096 in substantially the form attached hereto as EXHIBIT C. "Lien" means any mortgage, pledge, lien, statutory or other, ---- security interest, charge, claim, encumbrance, restriction on transfer, restriction on conveyance, assignment, license, exclusivity, right of refusal, right of offer, conditional sale, obligation to assign, or other title retention device or arrangement, including, without limitation, a capital lease, of any kind or any -9-   nature whatsoever, or restriction on the creation of any of the foregoing, whether relating to any property or right or the income or profits therefrom. "Manufacture," and with correlative meaning "Manufacturing," means, ----------- ------------- with respect to a product, making the product and related activities, including synthesis, formulation, filling, processing, testing, finishing, packaging, labeling, storing, warehousing, quality control, quality assurance, releasing, handling, shipping and all other activities undertaken or required to be undertaken in order to manufacture and supply the product. "Marketing Authorization Application" means, with respect to a ----------------------------------- product and any jurisdiction, a pre-marketing application (including and comparable to an IND) and a marketing authorization application (including and comparable to an NDA in the United States), including all supporting documentation and data submitted for such application to be accepted for review or approval, filed with the requisite Regulatory Authority of such jurisdiction, and requesting approval for marketing and/or commercialization of the product, including, if applicable, approval of pricing or reimbursement. "Merger" has the meaning given to it in the Recital A at the ------ beginning of this Agreement. "Merger Certificate" has the meaning given to it in Section 2.2. ------------------ "Merger Consideration" means an amount equal to $25,000,000. -------------------- "Multiemployer Plan" means any Pension Plan which is a ------------------ "multiemployer plan," as defined in Section 3(37) of ERISA. "NDA" means a New Drug Application filed with the FDA seeking --- permission to market the applicable product in interstate commerce in the United States which meets the requirements of the FFDCA. "Non-Commercialization Period" means, on a country by country ---------------------------- basis, the period commencing on the Closing Date and terminating on the later to occur of (x) or (y), where: (x) is the date that is ten (10) years after the Regulatory Approval has been obtained in the country that is necessary to market, sell, and commercialize the first K-V Product in such country (including, if applicable, approval of pricing and reimbursement), and (y) is the first to occur of (i) the date of the last expiration or invalidation of all of the Patent Rights in the particular country or (ii) the date when K-V (or its sublicensees or assignees) ceases development or commercialization of any K-V Product in such country. "Order" means any ruling, judgment, order, decree or ordinance of a ----- Governmental Entity. "Patent Rights" has the meaning given to it in the License ------------- Agreement. "Patents" has the meaning given to it in the definition of ------- Intellectual Property Rights. "PBGC" means the United States Pension Benefit Guaranty ---- Corporation. -10-   "PCB" means Polychlorinated Biphenyls as defined in 40 CFR 761.3, --- (Polychlorinated Biphenyls (PCBs) Manufacturing, Processing, Distribution in Commerce and Use Prohibitions). "Pennsylvania Law" means the Corporations Code of the Consolidated ---------------- Statutes of the Commonwealth of Pennsylvania. "Pension Plan" means each FP1096 Employee Plan that is an "employee ------------ pension benefit plan," within the meaning of Section 3(2) of ERISA. "Permitted Liens" means such of the following as to which no --------------- enforcement, collection, execution, levy or foreclosure proceeding has been commenced: (i) Liens for Taxes, assessments and governmental charges or levies not yet due and payable, (ii) Liens imposed by Law, such as materialmen's, mechanics', carriers', workmen's and repairmen's liens and other similar Liens arising in the ordinary course of business securing obligations that: (A) are not overdue for a period of more than 30 days and (B) are not in excess of $5,000 in the case of a single property or $10,000 in the aggregate at any time, and (iii) pledges or deposits to secure obligations under workers' compensation laws or to secure public or statutory obligations. "Person" means an individual, a partnership, whether general or ------ limited, a corporation, a limited liability company, a business trust, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or other business enterprise or entity, or a Governmental Entity, or any department, agency or political subdivision thereof. The term "Person" as used solely for purposes of the definition of an "Affiliate" of such Person includes, in addition to such Person, all of the following Persons: (i) any relative or spouse of such Person, or any relative of such spouse, any one of whom has the same home as such Person; (ii) any trust or estate in which such Person or any of the Persons specified in clause (i) collectively own ten percent or more of the total beneficial interest or of which any of such Persons serve as trustee, executor or in any similar capacity; and (iii) any corporation or other organization (other than FP1096 or FemmePharma) in which such Person or any of the Persons specified in clause (i) are the beneficial owners collectively of ten percent or more of any class of equity securities or ten percent or more of the equity interest. "Plans" means FP1096's 2002 Stock Option Plan. ----- "Proceeding" has the meaning given to it in Section 8.10. ---------- "Proprietary Information Agreements" has the meaning given to it in ---------------------------------- Section 3.14(h). "PTO" means the United States Patent and Trademark Office. --- "Purchaser Indemnified Parties" has the meaning given to it in ----------------------------- Section 7.2(a). "Purchaser Indemnifying Party" has the meaning given to it in ---------------------------- Section 7.2(a). "Regulatory Approval" means, with respect to a particular ------------------- pharmaceutical product and jurisdiction, all approvals and authorizations by the applicable Regulatory Authorities in such jurisdiction which are required for the Development, Manufacture, use, import, export, -11-   marketing, promotion, pricing, offer for sale, sale and distribution of the product in such jurisdiction, including by way of example, approval by the FDA of an NDA. "Regulatory Authority" means, in respect of a jurisdiction, any -------------------- agency, department, bureau or other Governmental Entity with authority over the Development, Manufacture, use, marketing or sale (including approval of NDAs and other Marketing Authorization Applications) with respect to any product in the jurisdiction, including the FDA. "Regulatory Documentation" means, with respect to a pharmaceutical ------------------------ product, all filings submitted to, or written communications to or received from any and all Regulatory Authorities relating to the product, and all supporting documents, including any INDs (or any equivalent submissions in other countries), Marketing Authorization Applications (including NDAs), drug master files, investigator's brochures, correspondence to and from Regulatory Authorities, notes, memoranda and minutes from teleconferences and meetings with Regulatory Authorities, registrations and licenses, regulatory drug lists, advertising and promotion documents submitted to Regulatory Authorities, product labeling, adverse event files, complaint files, patient consent forms and Manufacturing records. "Related Agreements" means the Asset Contribution Agreement (and ------------------ ancillary agreements expressly referenced therein), the Escrow Agreement, the Release Agreement, the Transition Agreement and the Merger Certificates. "Release Agreement" means the Release Agreement by and among K-V, ----------------- FP1096, FemmePharma and Kestrel-Falcon Acquisition Corporation, in substantially the form attached hereto as EXHIBIT D. "Requisite Shareholder Vote" has the meaning given to it in Section -------------------------- 3.4. "Retained Assets" has the meaning given to it in the Asset --------------- Contribution Agreement. "Retained Contracts" means the Contracts listed on EXHIBIT E. ------------------ "Retained Employment Liabilities" has the meaning given to it in ------------------------------- Section 5.5. "Returns" has the meaning given to it in Section 3.11(a)(i). ------- "SEC" means the United States Securities and Exchange Commission. --- "Seller Indemnified Party" has the meaning given to it in Section ------------------------ 7.2(b). "Seller Indemnifying Party" has the meaning given to it in Section ------------------------- 7.2(b). "Seller Representative" has the meaning given to it in the Escrow --------------------- Agreement. "Shareholder" means each holder of FP1096 Capital Stock, FP1096 ----------- Options and FP1096 Warrants immediately prior to the Effective Time, excluding K-V, which Shareholders are listed on EXHIBIT F. -12-   "Spin Off" means the distribution by FP1096 to all of its -------- Shareholders other than K-V of all of the issued and outstanding capital stock of FemmePharma prior to the consummation of the Merger. "Surviving Corporation" has the meaning given to it in Section 2.1. --------------------- "Tax" or, collectively, "Taxes" means: (i) any and all federal, --- ----- state, local and foreign taxes, assessments and other governmental charges, duties, impositions and Liabilities, including taxes based upon or measured by gross receipts, income, profits, sales, use and occupation, value added, ad valorem, transfer, franchise, withholding, payroll, recapture, employment, excise and property taxes, as well as public imposts, fees and social security charges (including but not limited to health, unemployment and pension insurance), together with all interest, penalties and additions imposed with respect to such amounts, (ii) any liability for the payment of any amounts of the type described in clause (i) of this definition as a result of being a member of an affiliated, consolidated, combined or unitary group for any period, and (iii) any liability for the payment of any amounts of the type described in clause (i) or (ii) of this definition as a result of any express or implied obligation to indemnify any other Person or as a result of any obligation under any agreement or arrangement with any other Person with respect to such amounts and including any liability for taxes of a predecessor entity. "Technology" means public and nonpublic technical or other ---------- information, Trade Secrets, know-how, research, processes, formulations, concepts, ideas, preclinical, clinical, pharmacological or other Data and testing results, all experimental or test methods, laboratory notebooks, results, assays, descriptions, all scientific plans, depictions, inventions, processes, Manufacturing methods, physical and analytical safety, testing and quality control data and results, customer lists, marketing information, sales information, and any other written, printed or electronically stored information and materials and any and all other technology, of any nature whatsoever. "Third Party Consents" has the meaning given to it in Section -------------------- 6.2(b). "Third Party Expenses" has the meaning given to it in Section 5.2. -------------------- "Threshold" has the meaning given to it in Section 7.4. --------- "Total Outstanding Shares" means the FP1096 Capital Stock issued ------------------------ and outstanding immediately prior to the Effective Time, including all FP1096 Options and FP1096 Warrants on an as-exercised basis. "Trade Secrets" has the meaning given to it in the definition of ------------- Intellectual Property Rights. "Transferred Assets" has the meaning given to it in the Asset ------------------ Contribution Agreement. "Transferred Liabilities" has the meaning given to it in the Asset ----------------------- Contribution Agreement. -13-   "Transition Agreement" means the Transition Agreement by and among -------------------- K-V, FP1096 and Surviving Corporation, in substantially the form attached hereto as EXHIBIT G. ARTICLE II THE MERGER 2.1 THE MERGER. At the Effective Time and subject to and upon the terms and conditions of this Agreement and the applicable provisions of Pennsylvania Law, K-V Sub shall be merged with and into FP1096, the separate corporate existence of K-V Sub shall cease, and FP1096 shall continue as the surviving corporation and as a wholly-owned subsidiary of K-V. The surviving corporation after the Merger is sometimes referred to herein as the "Surviving Corporation." --------------------- 2.2 EFFECTIVE TIME. The closing of the Merger (the "Closing") will ------- take place at 2:00 p.m., New York City time, at the offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation, 12 East 49th Street, 30th Floor, New York, New York, on the later of April 29, 2005 and the first Business Day following the fulfillment of the conditions set forth in Sections 6.2(x), 6.2(b), and 6.3(e), or at such other time or place or on such other date as may be agreed upon in writing by the parties hereto. The date upon which the Closing actually occurs shall be referred to herein as the "Closing Date." On the Closing Date, the parties hereto shall cause the ------------ Merger to be consummated by (i) filing the Articles of Merger in substantially the form attached hereto as EXHIBIT H1 (the "Merger ------ Certificate") or like instrument with the Secretary of the Commonwealth of ----------- Pennsylvania, in accordance with the relevant provisions of Pennsylvania Law and (ii) filing the Certificate of Merger of Domestic Corporation into Foreign Corporation, in substantially the form attached hereto as EXHIBIT H2 (the "Delaware Certificate of Merger") or like instrument with the Secretary ------------------------------ of the State of Delaware, in accordance with the relevant provisions of the Delaware General Corporation Law (the time of acceptance by the Secretary of the Commonwealth of Pennsylvania of the filing of the Merger Certificate, or such later time and date as may be mutually agreed and set forth in the Merger Certificate, being referred to herein as the "Effective Time"). -------------- 2.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the Merger shall be as provided in the applicable provisions of Pennsylvania Law. 2.4 ARTICLES OF INCORPORATION AND BYLAWS. (a) The articles of incorporation of the Surviving Corporation, as in effect immediately prior to the Effective Time, shall be amended and restated in their entirety to be identical to the articles of incorporation of K-V Sub, as in effect immediately prior to the Effective Time, with such amendments as may be required in accordance with Pennsylvania Law, until thereafter amended in accordance with Pennsylvania Law and as provided in such articles of incorporation. (b) The bylaws of K-V Sub, as in effect immediately prior to the Effective Time, shall be the bylaws of the Surviving Corporation at the Effective Time, until thereafter -14-   amended in accordance with Pennsylvania Law and as provided in the articles of incorporation of the Surviving Corporation and such bylaws. 2.5 DIRECTORS AND OFFICERS. (a) DIRECTORS OF FP1096. The directors of K-V Sub immediately prior to the Effective Time shall be the directors of the Surviving Corporation immediately after the Effective Time, each to hold the office of a director of the Surviving Corporation in accordance with the provisions of Pennsylvania Law and the articles of incorporation and bylaws of the Surviving Corporation until their successors are duly elected and qualified. (b) OFFICERS OF FP1096. The officers of K-V Sub immediately prior to the Effective Time shall be the officers of the Surviving Corporation immediately after the Effective Time, each to hold office in accordance with the provisions of the bylaws of the Surviving Corporation. 2.6 EFFECT OF MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS. (a) EFFECT ON CAPITAL STOCK OF FP1096. At the Effective Time, by virtue of the Merger and without any further action on the part of K-V Sub, FP1096 or the Shareholders: (i) each share of FP1096 Capital Stock issued and outstanding immediately prior to the Effective Time (other than (x) Dissenting Shares and (y) Excluded Shares), upon the terms and subject to the conditions set forth in this Section 2.6, will be cancelled and extinguished and be converted automatically into the right to receive, upon surrender of the certificate representing such shares of FP1096 Capital Stock in the manner provided in Section 2.8, an amount of cash, without interest, equal to the product of (A) the number of shares of FP1096 Common Stock into which such share of FP1096 Capital Stock is convertible as of the Effective Time (which, in the case of a share of FP1096 Common Stock, shall be one (1)) multiplied by (B) the Consideration Per Share less the Escrow Amount Per Share. (ii) each Excluded Share issued and outstanding immediately prior to the Effective Time will be cancelled and extinguished and be converted automatically into the right to receive, upon surrender of the certificate representing such Excluded Share in the manner provided in Section 2.8, one validly issued, fully paid and nonassessable share of Preferred Stock of the Surviving Corporation. (iii) each share of treasury stock of FP1096 will be cancelled and extinguished. For purposes of clarity, in no event shall the Excluded Shares receive any payment; nor shall K-V be obligated under this Section 2.6 to pay to the holders of FP1096 Capital Stock, FP1096 Options or FP1096 Warrants and any other holder of securities or rights of any kind exercisable for, exchangeable for or convertible into FP1096 Capital Stock an aggregate amount in excess of the Merger Consideration less the Escrow Amount, and, if necessary, the Consideration Per Share shall be adjusted accordingly to effectuate the intent of this paragraph. -15-   (b) TERMINATION OF FP1096 OPTIONS AND WARRANTS. (i) K-V shall not assume any FP1096 Options or FP1096 Warrants. FP1096 shall cause the termination, effective immediately prior to the Effective Time, of all outstanding FP1096 Options and FP1096 Warrants, in each case whether or not vested, that then remain unexercised so that no FP1096 Options or FP1096 Warrants remain outstanding immediately prior to the Effective Time. In connection with such termination, holders of FP1096 Options and FP1096 Warrants shall receive, in respect of each share of capital stock subject thereto, an amount equal to the sum of (i) the Consideration Per Share, less (ii) the Escrow Amount Per Share, less (iii) the applicable exercise price theretofore not otherwise paid. Thereafter, the holders of FP1096 Options and FP1096 Warrants shall, as of the Effective Time, cease to have any further right or entitlement to acquire any FP1096 Capital Stock or any shares of capital stock of K-V or the Surviving Corporation under the terminated FP1096 Options or FP1096 Warrants. (ii) FP1096 shall cause the termination, effective immediately prior to the Effective Time, of all Plans. (iii) FP1096 shall obtain all consents and take all action necessary to cause the termination or exercise of all FP1096 Options and FP1096 Warrants as provided under subparagraph (i) above. FP1096 shall take all other actions necessary or appropriate so that, as of the Effective Time and as a result of the Merger: (A) no options, warrants or other rights to acquire any FP1096 Capital Stock or any securities, debt or other rights convertible into or exchangeable or exercisable for FP1096 Capital Stock are outstanding, (B) no Person holding FP1096 Capital Stock, FP1096 Options or FP1096 Warrants shall, on and after the Closing, have any right, title or interest in or to FP1096 or the Surviving Corporation or any securities of FP1096 or the Surviving Corporation, other than, in the case of the holders of FP1096 Capital Stock, FP1096 Options and FP1096 Warrants, the right to payments of cash in the manner described in this Agreement, and (C) no Person holding FP1096 Capital Stock, FP1096 Options or FP1096 Warrants shall by virtue of any such securities have any right to acquire any securities of K-V. (c) WITHHOLDING TAXES. Notwithstanding any other provision in this Agreement, K-V, FP1096, K-V Sub, and FemmePharma (and its subsidiaries) shall have the right to deduct and withhold Taxes from any payments to be made hereunder if such withholding is required by Law and to request any necessary Tax forms, including Form W-9 or the appropriate series of Form W-8, as applicable, or any similar information, from the recipients of payments hereunder. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes of this Agreement as having been delivered and paid to the recipient of the payment in respect of which such deduction and withholding was made. (d) CAPITAL STOCK OF K-V SUB. Each share of Common Stock of K-V Sub issued and outstanding immediately prior to the Effective Time shall be converted into and exchanged for one validly issued, fully paid and nonassessable share of Common Stock of the Surviving Corporation. Each stock certificate of K-V Sub evidencing ownership of any such shares shall continue to evidence ownership of such shares of capital stock of the Surviving Corporation. -16-   2.7 DISSENTING SHARES. (a) Notwithstanding any other provisions of this Agreement to the contrary, any shares of FP1096 Capital Stock, other than Excluded Shares, held by a holder who (notwithstanding that such holder may have previously approved this Agreement, the Related Agreements, the License Agreement and the transactions contemplated hereby and thereby) has exercised and perfected appraisal rights for such shares in accordance with Pennsylvania Law and who, as of the Effective Time, has not effectively withdrawn or lost such holder's appraisal rights (collectively, the "Dissenting Shares") shall not be converted into or represent a right to ----------------- receive the applicable consideration for FP1096 Capital Stock set forth in Section 2.6, but the holder thereof shall only be entitled to such rights as are provided by Pennsylvania Law. (b) Notwithstanding the provisions of Section 2.7(a), if any holder of Dissenting Shares shall effectively withdraw or lose, through failure to perfect or otherwise, such holder's appraisal rights under Pennsylvania Law, then, as of the occurrence of such event, such holder's shares shall automatically be converted into and represent only the right to receive the consideration for FP1096 Capital Stock, as applicable, set forth in Section 2.6 hereof, without interest thereon, upon surrender of the certificate representing such shares. (c) FP1096 shall give K-V: (i) prompt notice of any written demand for appraisal received by FP1096 pursuant to the applicable provisions of Pennsylvania Law, and (ii) the opportunity to participate in all negotiations and proceedings with respect to such demands. FP1096 shall not, except with the prior written consent of K-V, make any payment with respect to any such demands or offer to settle or settle any such demands. Notwithstanding the foregoing, to the extent that K-V or FP1096: (i) is required to make any payment or payments in respect of any Dissenting Shares in excess of the consideration that otherwise would have been payable in respect of such shares in accordance with this Agreement or (ii) reasonably incurs any other costs or expenses, (including specifically, but without limitation, reasonable attorneys' fees, costs and expenses in connection with any action or proceeding) in respect of any Dissenting Shares (excluding payments for such shares) (together "Dissenting Share Payments"), ------------------------- K-V shall be entitled to recover under the terms of Article VII the amount of such Dissenting Share Payments without regard to the Threshold. 2.8 SURRENDER OF CERTIFICATES. (a) [INTENTIONALLY OMITTED.] (b) K-V TO PROVIDE CASH; DEPOSIT OF ESCROW AMOUNT. Except as provided in subsection (g) below, at the Effective Time, K-V shall make available for exchange in accordance with this Article II the cash payable at the Effective Time pursuant to Section 2.6 hereof in exchange for outstanding shares of FP1096 Capital Stock, and shall deposit the Escrow Amount with the Escrow Agent, to be held, invested and disbursed in accordance with the terms of the Escrow Agreement. Such funds shall be treated in accordance with the Escrow Agreement. (c) EXCHANGE PROCEDURES. Except as provided in subsection (g) below, on the Closing Date, K-V shall provide a letter of transmittal in the form of EXHIBIT I hereto (the -17-   "Letter of Transmittal") to each Shareholder at the address set forth --------------------- opposite each such Shareholder's name in Section 3.2(a)(1) of the FP1096 Disclosure Letter. In the Letter of Transmittal, the Shareholders will be instructed to surrender the certificates representing their shares of FP1096 Capital Stock (the "FP1096 Stock Certificates") for cancellation together ------------------------- with a duly completed and validly executed Letter of Transmittal. Upon surrender of a FP1096 Stock Certificate for cancellation to K-V, together with the Letter of Transmittal, duly completed and validly executed in accordance with the instructions thereto, subject to the terms of Section 2.8(d), the holder of such FP1096 Stock Certificate shall be entitled to receive in exchange therefor the cash amounts to which such holder is entitled pursuant to Section 2.6, and the FP1096 Stock Certificate so surrendered shall be cancelled. Until so surrendered, each FP1096 Stock Certificate outstanding after the Effective Time will be deemed, for all corporate purposes thereafter, to evidence only the right to receive the cash amounts payable in exchange for shares of FP1096 Capital Stock, without interest, into which such shares of FP1096 Capital Stock shall have been so converted. No portion of the Merger Consideration will be paid to the holder of any unsurrendered FP1096 Stock Certificate with respect to shares of FP1096 Common Stock formerly represented thereby until the holder of record of such FP1096 Stock Certificate shall surrender such FP1096 Stock Certificate pursuant hereto. (d) TRANSFERS OF OWNERSHIP. If any cash amounts are to be disbursed pursuant to Section 2.6 to a Person other than the Person whose name is reflected on the FP1096 Stock Certificate surrendered in exchange therefor, it will be a condition of the issuance or delivery thereof that the certificate so surrendered will be properly endorsed and otherwise in proper form for transfer and that the Person requesting such exchange will have paid to K-V any transfer or other Taxes required by reason of the disbursement of cash amounts to a Person other than the registered holder of the certificate surrendered, or established to the satisfaction of K-V that such Tax has been paid or is not payable. (e) RETURN OF CASH CONSIDERATION. At any time following the last day of the sixth (6th) month following the Effective Time, K-V shall be entitled to all cash amounts, and any and all interest thereon or other income or proceeds thereof, not disbursed to the holders of FP1096 Stock Certificates pursuant to Section 2.8(c), and thereafter the holders of FP1096 Stock Certificates shall be entitled to look only to K-V (subject to the terms of Section 2.8(f)) only as general creditors thereof with respect to any and all cash amounts that may be payable to such holders of FP1096 Stock Certificates pursuant to Section 2.6 upon the due surrender of such FP1096 Stock Certificates in the manner provided in Section 2.8(c). (f) NO LIABILITY. Notwithstanding anything to the contrary in this Section 2.8, neither the Surviving Corporation nor any party hereto shall be liable to a holder of shares of FP1096 Capital Stock for any amount paid to a public official pursuant to any applicable abandoned property, escheat or similar Law. (g) CLOSING PAYMENTS. Notwithstanding any provision in this section or Section 2.12 to the contrary, K-V shall pay directly to the Shareholders (other than with respect to Excluded Shares) the cash payable under Section 2.6 for whom executed payment and delivery instructions in the form of EXHIBIT J hereto (the "Closing Instructions"), a Letter of -------------------- Transmittal, and their FP1096 Stock Certificate (FP1096 Option or FP1096 Warrant, as applicable) shall have been delivered by FemmePharma at the Closing; such payment to be made -18-   at the Effective Time by wire transfer of immediately available funds to each such Shareholder pursuant to the wire transfer instructions in the applicable Closing Instructions. Such payments to Shareholders shall be referred to as the "Closing Payments." ---------------- 2.9 NO FURTHER OWNERSHIP RIGHTS IN FP1096 CAPITAL STOCK. The cash amounts paid in respect of the surrender for exchange of shares of FP1096 Capital Stock in accordance with the terms hereof shall be deemed to be full satisfaction of all rights pertaining to such shares of FP1096 Capital Stock, and there shall be no further registration of transfers on the records of the Surviving Corporation of shares of FP1096 Capital Stock which were outstanding immediately prior to the Effective Time. If, after the Effective Time, FP1096 Stock Certificates are presented to the Surviving Corporation for any reason, they shall be canceled and exchanged as provided in this Article II. 2.10 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any FP1096 Stock Certificates shall have been lost, stolen or destroyed, K-V shall issue in exchange for such lost, stolen or destroyed certificates, upon the making of an affidavit of that fact by the holder thereof, such amount, if any, as may be required pursuant to Section 2.6; provided, -------- however, that K-V may, in its discretion and as a condition precedent to the ------- issuance thereof, require the Shareholder who is the owner of such lost, stolen or destroyed certificates to: (i) deliver a bond in such amount as it may reasonably direct and/or (ii) provide an indemnification agreement in a form and substance reasonably acceptable to K-V against any claim that may be made against K-V or the Surviving Corporation with respect to the certificates alleged to have been lost, stolen or destroyed. 2.11 CLOSING DATE DELIVERIES OF FP1096 AND FEMMEPHARMA. At the Closing, FP1096 or FemmePharma, as applicable, shall deliver to K-V: (a) all Third Party Consents; (b) a written resignation from each of the officers, directors and employees of FP1096 effective as of the Effective Time; -19-   (c) a certificate of the Chief Executive Officer of FP1096 as provided for in Section 6.2; (d) a certificate of the Chief Executive Officer of FemmePharma as provided for in Section 6.2; (e) a certificate of the Secretary of FP1096 as provided for in Section 6.2; (f) a certificate of the Secretary of FemmePharma as provided for in Section 6.2; (g) a certificate of good standing for FP1096 from the Secretary of State of the Commonwealth of Pennsylvania to be dated within a reasonable period prior to Closing with respect to FP1096; (h) a copy of the FIRPTA Compliance Certificate, validly executed by a duly authorized officer of FP1096; (i) all Books and Records and Data included in the Retained Assets; (j) the Appraisal; (k) a complete, accurate and legible copy of each of the Retained Contracts (including all amendments and supplements thereto); (l) all FP1096 Options and FP1096 Warrants and evidence of the cancellation thereof to the extent the same are not exercised at or prior to the Effective Time; and (m) final, original copies of the Escrow Agreement, the License Agreement, the Release Agreement and the Transition Agreement duly executed by FP1096, FemmePharma, the Escrow Agent and the Seller Representative, as applicable. 2.12 CLOSING DATE DELIVERIES OF K-V. At the Closing: (i) K-V shall pay by wire transfer of immediately available funds, as set forth in the Closing Instructions: (A) to the Shareholders identified on the Closing Instructions the amounts payable to the holders of shares of FP1096 Capital Stock pursuant to Section 2.6(a), (B) to the Escrow Agent the Escrow Amount (C) to FemmePharma Global Healthcare, Inc. $400,225 for the costs and expenses incurred by FP1096 and FemmePharma in connection with the transactions contemplated by this Agreement and (D) to FemmePharma Global Healthcare, Inc. $473,621 for employee tax withholding on compensation realized by employees and former employees on the exercise of any options prior to Closing, and (ii) K-V shall deliver to FP1096 and FemmePharma: (a) a certificate of a Vice President of K-V as provided for in Section 6.3; and (b) final, original copies of the Escrow Agreement, the License Agreement, the Release Agreement and the Transition Agreement executed by K-V and K-V Sub, as applicable. -20-   2.13 TAKING OF NECESSARY ACTION; FURTHER ACTION. If at any time after the Effective Time, any further action is necessary or desirable to carry out the purposes of this Agreement and to vest the Surviving Corporation with full right, title and possession to all Retained Assets, rights, privileges, powers and franchises of FP1096, K-V, K-V Sub and the Surviving Corporation and the officers and directors of FP1096, K-V, K-V Sub and the Surviving Corporation are fully authorized in the name of their respective corporations or otherwise to take, and may take, any and all such lawful and necessary actions. ARTICLE III REPRESENTATIONS AND WARRANTIES OF FP1096 AND FEMMEPHARMA FP1096 and FemmePharma, jointly and severally, hereby represent and warrant to K-V and K-V Sub as of the Effective Time as follows: 3.1 ORGANIZATION. FP1096 is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania. FemmePharma is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Each of FP1096 and FemmePharma has the corporate power to own, operate or lease its properties and to carry on its business as currently conducted. Each of FP1096 and FemmePharma is duly authorized and qualified to conduct business and in good standing as a foreign corporation in each jurisdiction in which it conducts business, except where a failure to be so qualified or in good standing would not have a material adverse effect on the business, assets or financial condition of FP1096. Each of FP1096 and FemmePharma has delivered to K-V a true, correct and complete copy of its articles or certificate of incorporation, as the case may be, and bylaws, each as amended to date and in full force and effect on the date hereof (collectively, the "Charter ------- Documents"). Section 3.1 of the FP1096 Disclosure Letter lists the directors --------- and officers of each of FP1096 and FemmePharma as of the date hereof. The operations now being conducted by each of FP1096 and FemmePharma are not now and have never been conducted by FP1096 and FemmePharma, respectively, under any other name, except "Meridian Pharmaceuticals, Inc." and "FemmePharma, Inc." Section 3.1 of the FP1096 Disclosure Letter lists every state or foreign jurisdiction in which each of FP1096 and FemmePharma has employees, assets or facilities or otherwise carries on business. 3.2 FP1096 CAPITAL STRUCTURE. (a) The authorized capital stock of FP1096 consists of 19,000,000 shares of Common Stock, of which 2,249,792 shares are issued and outstanding, 2,000,000 shares of Preferred Stock, of which 713,500 shares have been designated Series A Preferred Stock, 713,375 shares of which are issued and outstanding, 713,500 shares have been designated Series B Preferred Stock, all of which are issued and outstanding, 130,000 shares have been designated Series C Preferred Stock, 87,412.5 shares of which are issued and outstanding, and 300,000 shares have been designated Series D Preferred Stock, 132,736 shares of which are issued and outstanding. As of the date hereof, the capitalization of FP1096 is as set forth in Section 3.2(a)(1) of the FP1096 Disclosure Letter, which capitalization schedule shows for the shares of FP1096 Preferred Stock that number of shares of FP1096 Common Stock into which such shares of FP1096 Preferred Stock are convertible as of the Effective Time. FP1096 Capital -21-   Stock is held by the persons with the domicile addresses and in the amounts set forth in Section 3.2(a)(1) of the FP1096 Disclosure Letter. All outstanding shares of FP1096 Capital Stock are duly authorized, validly issued, fully paid and non-assessable and not subject to preemptive rights created by statute, the Charter Documents of FP1096, or any Contract to which FP1096 is a party or by which it is bound, and have been issued in compliance with federal and state securities laws. All outstanding shares of FP1096 Capital Stock, FP1096 Options and FP1096 Warrants have been issued and, in the case of shares that were outstanding and repurchased by FP1096 or any Shareholder of FP1096, repurchased, in compliance with all applicable Laws, including federal and state securities laws. FP1096 has not, and will not have, suffered or incurred any Liability relating to or arising out of the issuance or repurchase of any FP1096 Capital Stock or options or warrants to purchase FP1096 Capital Stock, or out of any agreements or arrangements relating thereto (including any amendment of the terms of any such agreement or arrangement). There are no declared or accrued but unpaid dividends with respect to any shares of FP1096 Capital Stock. FP1096 has no other capital stock authorized, issued or outstanding. There are no shares of FP1096 Capital Stock that are unvested or subject to a repurchase option, risk of forfeiture or other condition under any applicable stock restriction agreement or other agreement with FP1096. (b) Except for the Plans, or as noted in the FP1096 Disclosure Letter, FP1096 has never adopted, sponsored or maintained any stock option plan or any other plan or agreement providing for equity compensation to any Person. FP1096 has reserved 475,000 shares of FP1096 Common Stock for issuance to employees and