STOCK PURCHASE AGREEMENT
among
ABBOTT LABORATORIES,
and
SELLERS PARTY HERETO
Dated as of November 5,
2006
TABLE OF CONTENTS
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Page
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ARTICLE I
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Purchase and Sale of Shares; Closing
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1
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SECTION 1.01.
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Purchase and Sale of the Shares
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1
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SECTION 1.02.
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Closing
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2
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SECTION 1.03.
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Escrow
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2
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SECTION 1.04.
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Transactions To Be Effected at the Closing;
Payment of Purchase Price
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2
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ARTICLE II
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Representations and Warranties of
Sellers
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3
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SECTION 2.01.
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Execution and Delivery;
Enforceability
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3
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SECTION 2.02.
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No Conflicts; Consents
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3
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SECTION 2.03.
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The Shares
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4
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SECTION 2.04.
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Organization, Standing and Power
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4
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SECTION 2.05.
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Assets
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4
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SECTION 2.06.
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Capitalization of Kos Investments and Kos
Holdings
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5
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SECTION 2.07.
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Liabilities; Financial Information; SEC
Reporting; Books and Records
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5
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SECTION 2.08.
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Contracts
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6
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SECTION 2.09.
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No Operations
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6
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SECTION 2.10.
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Taxes
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6
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SECTION 2.11.
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Employment Matters
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7
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SECTION 2.12.
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Litigation
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7
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SECTION 2.13.
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Compliance with Applicable Laws
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7
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SECTION 2.14.
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Accounts; Safe Deposit Boxes; Powers of
Attorney; Officers and Directors
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7
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SECTION 2.15.
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Brokers; Schedule of Fees and
Expenses
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8
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SECTION 2.16.
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Private Offering
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8
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SECTION 2.17.
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Information
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8
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SECTION 2.18.
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Full Disclosure
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8
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SECTION 2.19.
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Reliance
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8
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i
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ARTICLE III
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Representations and Warranties Relating to
Acquiror
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9
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SECTION 3.01.
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Organization, Standing and Power
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9
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SECTION 3.02.
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Authority; Execution and Delivery;
Enforceability
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9
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SECTION 3.03.
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No Conflicts; Consents
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9
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SECTION 3.04.
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Securities Act
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10
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SECTION 3.05.
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Available Funds
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10
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SECTION 3.06.
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No Other Representations
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10
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ARTICLE IV
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Covenants and Agreements
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10
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SECTION 4.01.
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Covenants Relating to Conduct of
Business
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10
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SECTION 4.02.
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Contracts; Affiliate Transactions; Powers of
Attorney
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11
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SECTION 4.03.
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Access to Information;
Confidentiality
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11
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SECTION 4.04.
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Further Action; Efforts
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12
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SECTION 4.05.
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Fees and Expenses
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12
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SECTION 4.06.
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Public Announcements
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12
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SECTION 4.07.
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Preparation and Filing of Tax Returns
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12
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SECTION 4.08.
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Amended Tax Returns for Preclosing
Periods
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13
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SECTION 4.09.
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Tax Cooperation
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13
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SECTION 4.10.
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Post-closing Cooperation
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13
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SECTION 4.11.
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Transfers of Shares
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14
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SECTION 4.12.
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Alternative Transaction Payment.
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14
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SECTION 4.13.
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Non-Solicitation
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15
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SECTION 4.14.
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Appraisal Rights
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16
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ARTICLE V
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Conditions Precedent
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16
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SECTION 5.01.
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Conditions to Each Party’s Obligation To
Effect the Acquisition
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16
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SECTION 5.02.
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Conditions to Obligation of Acquiror
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16
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SECTION 5.03.
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Condition to Obligation of Sellers
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17
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ARTICLE VI
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Termination, Amendment and Waiver
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17
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SECTION 6.01.
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Termination
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17
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SECTION 6.02.
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Effect of Termination
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17
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SECTION 6.03.
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Amendments
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18
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ii
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ARTICLE VII
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Indemnification
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18
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SECTION 7.01.
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Indemnification by Sellers
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18
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SECTION 7.02.
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Indemnification by Acquiror
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18
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SECTION 7.03.
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Calculation of Losses
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19
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SECTION 7.04.
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Term of Indemnification
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20
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SECTION 7.05.
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Procedures
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20
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SECTION 7.06.
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Survival
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23
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ARTICLE VIII
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General Provisions
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23
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SECTION 8.01.
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Notices
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23
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SECTION 8.02.
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Definitions
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24
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SECTION 8.03.
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Severability
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26
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SECTION 8.04.
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Entire Agreement; Third Parties;
Assignment
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27
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SECTION 8.05.
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Governing Law
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27
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SECTION 8.06.
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Headings
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27
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SECTION 8.07.
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Counterparts
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27
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SECTION 8.08.
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Specific Performance; Jurisdiction
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27
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SECTION 8.09.
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Interpretation
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28
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SECTION 8.10.
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Waiver of Jury Trial
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28
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SECTION 8.11.
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Disclosure Schedule
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29
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SECTION 8.12.
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Legends
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29
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iii
Defined Terms Cross-Reference
Table
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Acquiror
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1
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Acquiror Indemnified Parties
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18
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Acquisition
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1
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affiliate
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24
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Affiliate
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24
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Agreement
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1
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Business Day
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24
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Closing
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2
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Closing Date
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2
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Closing Payment
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24
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Closing Payment Certificate
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25
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Code
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25
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Company
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1
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Company Common Stock
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1
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Confidentiality Agreement
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11
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Contract
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25
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control
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24
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controlled by
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24
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controlling
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24
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Disclosure Schedule
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3
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Exchange Act
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3
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GAAP
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25
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Governmental Entity
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4
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HSR Act
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3
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Indemnification Expiration Dates
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20
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Indemnified Parties
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19
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Jaharis Family
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1
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Kos Holdings
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1
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Kos Investments
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1
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Law
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3
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Liens
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25
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Losses
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18
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Merger Agreement
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1
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Merger Sub
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1
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Permitted Liens
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25
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person
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25
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Preclosing Period
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19
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Pro Rata Portion
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25
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Purchase Price
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2
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SEC
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26
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Securities Act
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26
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Seller
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1
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Seller Indemnified Parties
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18
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Seller’s Closing Certificate
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16
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Sellers
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1
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Shareholders Agreement
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1
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Shares
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1
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Straddle Period
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20
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subsidiary
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26
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Tax Claim
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20
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Tax Return
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26
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Taxes
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26
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Taxing Authority
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26
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Third Party Claim
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21
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Transfer
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12
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under common control with
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24
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iv
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as
of November 5, 2006 (this “ Agreement ”), among
ABBOTT LABORATORIES, an Illinois corporation (“
Acquiror ”), and Michael Jaharis, Kathryn Jaharis,
Steven Jaharis, Daniel Bell and Steven K. Aronoff (each a “
Seller ” and collectively, “ Sellers
”). Capitalized terms used but not defined herein shall
have the meanings given to such terms in the Merger
Agreement.
WHEREAS, Sellers legally and
beneficially own all the issued and outstanding shares of common
stock, par value $0.01 per share (the “ Shares
”), of Kos Investments, Inc., a Delaware corporation (“
Kos Investments ”);
WHEREAS, Kos Investments legally and
beneficially owns all of the issued and outstanding capital stock
of Kos Holdings, Inc., a Delaware corporation (“ Kos
Holdings ”);
WHEREAS, Kos Investments, directly
or indirectly through Kos Holdings legally and beneficially owns
8,570,069 shares of common stock, par value $0.01 per share (the
“ Company Common Stock ”), of Kos
Pharmaceuticals, Inc., a Florida corporation (the “
Company ”);
WHEREAS, Acquiror, S&G
Nutritionals, Inc., a direct wholly-owned subsidiary of Acquiror
(“ Merger Sub ”), and the Company are,
concurrently with the execution and delivery of this Agreement,
entering into an Agreement and Plan of Merger dated the date hereof
(the “ Merger Agreement ”);
WHEREAS, Acquiror and certain
shareholders of the Company (collectively, the “ Jaharis
Family ”) are, concurrently with the execution and
delivery of the Merger Agreement, entering into a Shareholders
Agreement dated the date hereof (the “ Shareholders
Agreement ”); and
WHEREAS, as a condition to their
willingness to enter into the Shareholders Agreement, the Jaharis
Family has requested that Acquiror enter into this Agreement with
Sellers pursuant to which Acquiror shall purchase the Shares
subject to the terms and conditions hereof (such purchase and sale
of the Shares is referred to in this Agreement as the “
Acquisition ”), which Acquisition is intended to be
consummated immediately subsequent to the consummation of the
Offer.
NOW, THEREFORE, in consideration of
the foregoing and the mutual covenants, agreements and
representations herein contained, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
ARTICLE
I
Purchase and
Sale of Shares; Closing
SECTION
1.01. Purchase and Sale of the
Shares . On the terms and subject to the conditions of
this Agreement, at the Closing, each Seller shall sell, transfer
and deliver to Acquiror, and Acquiror shall purchase from such
Seller, the Shares owned by such Seller free and clear of all Liens
for a purchase price to such Seller (with respect to each such
Seller, the “ Purchase Price ”), in cash,
without interest, equal to the product of (a) the Closing Payment
and (b) the Pro Rata Portion of such Seller.
SECTION
1.02. Closing . Subject
to the provisions of Article V, the closing (the “
Closing ”) of the Acquisition shall take place at the
offices of Cravath, Swaine & Moore LLP, 825 Eighth Avenue,
New York, New York 10019, on the date of payment by Acquiror for
shares of Company Common Stock tendered pursuant to the Offer, or
if the conditions set forth in Article V are not satisfied or
waived at such time, as soon as practicable thereafter. The
date on which the Closing occurs is referred to in this Agreement
as the “ Closing Date ”.
SECTION
1.03. Escrow .
Simultaneously with the execution of this Agreement, (x) Acquiror,
each Seller and an escrow agent to be mutually agreed (the “
Escrow Agent ”) shall enter into an Escrow Agreement
in the form attached hereto as Exhibit A (the “ Escrow
Agreement ”) and (y) each Seller shall (and Sellers shall
cause Kos Investments and Kos Holdings to) deposit with the Escrow
Agent (collectively, the “ Share Certificates ”)
(i) certificates representing the Shares owned by Sellers, which
certificates shall be duly endorsed in blank or accompanied by
stock powers duly endorsed in blank in proper form for transfer,
with appropriate transfer tax stamps, if any, affixed, (ii)
certificates representing all of the issued and outstanding capital
stock of Kos Holdings and (iii) certificates representing the
5,960,069 shares of Company Common Stock directly or indirectly
owned by Kos Investments.
SECTION
1.04.
Transactions To Be Effected at the Closing; Payment of Purchase
Price .
(a)
At or prior to noon (New York City time) on the Expiration Date,
Sellers shall deliver (or caused to be delivered) (i) to Acquiror
(x) each Seller’s Closing Certificate, (y) the Resignation
Letters and (z) the Payoff Letters and (ii) to Acquiror and the
Escrow Agent, the Closing Payment Certificate.
(b)
Pursuant to the Escrow Agreement, upon receipt by the Escrow Agent
of a notice that the Offer has been consummated and that payment of
the Purchase Price has been received by the Sellers, the Escrow
Agent shall release and deliver the Share Certificates to
Acquiror.
(c)
The Acquiror and the Sellers shall give effect to the arrangements
negotiated between them prior to the closing for the payment to
Wachovia Bank N.A. of the aggregate amount of all indebtedness of
Kos Investments to Wachovia Bank N.A. (as reflected
2
on the Payoff
Closing Certificate) and the termination and release of any pledge
or other security interests in favor of Wachovia Bank N.A. (or its
affiliates) encumbering shares of Company Common Stock held
directly or indirectly by Kos Investments.
ARTICLE
II
Representations and
Warranties of Sellers
Except as set forth in the
corresponding sections or subsections of the disclosure letter
delivered to Acquiror by Sellers on the date hereof (the “
Disclosure Schedule ”) (it being understood that each
item in a particular section of the Disclosure Schedule applies
only to such section and to any other section to which its
relevance is readily apparent), each Seller hereby jointly and
severally represents and warrants to Acquiror that as of the date
hereof and as of the Closing Date, except to the extent such
representations and warranties relate to an earlier date (in which
case such representations and warranties are made as of such
earlier date):
SECTION
2.01. Execution and Delivery;
Enforceability . Each Seller has the legal capacity to
execute and deliver this Agreement and to consummate the
transactions contemplated hereby. Each of the persons
executing this Agreement on behalf of each Seller has full power
and authority to execute and deliver this Agreement on behalf of
such Seller and to thereby bind such Seller. The execution
and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary action on the part of each Seller. This Agreement
has been duly executed and delivered by each Seller and constitutes
its valid and binding obligation, enforceable against it in
accordance with its terms (except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors’ rights generally and general
equity principles). If a Seller is married and the Shares set
forth below such Seller’s signature to this Agreement
constitute community property under applicable laws, this Agreement
has been duly authorized, executed and delivered by, and
constitutes the valid and binding agreement of, such Seller’s
spouse.
SECTION
2.02. No Conflicts; Consents
.
(a)
Except as set forth in Section 2.02(a) of the Disclosure
Schedule, the execution, delivery and performance of this Agreement
by each Seller does not and will not (i) conflict with or violate
the articles of incorporation or bylaws of Kos Investments or Kos
Holdings, (ii) assuming that all applicable requirements under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the “ HSR Act ”), and the Securities Exchange
Act of 1934, as amended (the “ Exchange Act ”),
have been satisfied, conflict with or violate any federal, state,
local or foreign statute, law, ordinance, rule, regulation, order,
judgment, decree or legal requirement (“ Law ”)
applicable to the Sellers, Kos Investments or Kos Holdings or by
which any of their respective properties are bound or (iii) (A)
result in any breach or violation of or constitute a default (or an
event which with notice or lapse of time or both would become a
default), or (B) result in the loss of a benefit under, or give
rise to any right of termination, cancellation, amendment or
acceleration of, or (C) result in the creation of any Lien on any
of the
3
Shares or any
other properties or assets of any Seller, Kos Investments or Kos
Holdings under, any Contract to which any Seller, Kos Investments
or Kos Holdings is a party or by which and Seller, Kos Investments
or Kos Holdings or any of their respective properties are
bound.
(b)
Except pursuant to the applicable requirements under the HSR Act
and the Exchange Act, no consent, approval, authorization or permit
of, action by, filing with or notification to, any federal, state,
local or foreign governmental or regulatory (including stock
exchange) authority, agency, court, commission, or other
governmental body (a “ Governmental Entity ”) or
any other person (including with respect to individuals, any
spouse, and with respect to trusts, any co-trustee or beneficiary)
is required to be obtained or made by Sellers, Kos Investments or
Kos Holdings in connection with the execution, delivery and
performance of this Agreement or the consummation of the
transactions contemplated hereby.
SECTION
2.03. The Shares .
Except as set forth in Section 2.03 of the Disclosure
Schedule, each Seller owns and has good and valid title to the
number of Shares set forth below such Seller’s signature to
this Agreement, free and clear of all Liens other than Permitted
Liens. Assuming Acquiror has the requisite power and
authority to be the lawful owner of the Shares, upon delivery to
Acquiror at the Closing of certificates representing the Shares
owned by Seller, duly endorsed by Seller for transfer to Acquiror,
and upon Seller’s receipt of the applicable portion of the
Closing Payment, good and valid title to such Shares will pass to
Acquiror, free and clear of any Liens, other than those arising
from acts of Acquiror or its Affiliates. Other than this
Agreement, the Shares are not subject to any voting trust agreement
or other Contract, including any Contract restricting or otherwise
relating to the voting, dividend rights or disposition of the
Shares, and no proxies with respect to the Shares have been granted
by Sellers.
SECTION
2.04. Organization, Standing and
Power . Each of Kos Investments and Kos Holdings is duly
organized, validly existing and in good standing under the laws of
Delaware and has all requisite corporate power and authority to own
the Assets. Sellers have delivered to Acquiror true and
complete copies of the certificate of incorporation and by-laws of
Kos Investments and Kos Holdings, in each case as amended through
the date of this Agreement.
SECTION
2.05. Assets .
(a)
Kos Investments owns and has good and valid title to (i) 960,069
shares of Company Common Stock and (ii) all of the issued and
outstanding capital stock of Kos Holdings, in each case, free and
clear of all Liens other than as set forth in Section 2.05(a)
of the Disclosure Schedule.
(b)
Kos Holdings owns and has good and valid title to 7,610,000 shares
of Company Common Stock, free and clear of all Liens other than as
set forth in Section 2.05(b) of the Disclosure
Schedule.
(c)
Except for (i) 960,069 shares of Company Common Stock owned by
Kos Investments, (ii) the shares of Kos Holdings owned by Kos
Investments and (iii) 7,610,000
4
shares of Company
Common Stock owned by Kos Holdings (collectively, the “
Assets”) , neither Kos Investments nor Kos Holdings
(A) owns, directly or indirectly, any capital stock,
partnership interest, limited liability company interest, joint
venture interest or any other equity in any person or any other
asset or (B) has since January 1, 1999, directly or indirectly
owned any other asset, in each case except as set forth in
Section 2.05(c) of the Disclosure Schedule. Other than
the Merger Agreement, the Shareholders Agreement and the other
agreement set forth in Section 2.05(c) of the Disclosure
Schedule, the Assets are not subject to any voting trust agreement
or other Contract, including any Contract restricting or otherwise
relating to the voting, dividend rights or disposition of the
Assets, and no proxies have been granted in respect of the
Assets.
SECTION
2.06. Capitalization of Kos
Investments and Kos Holdings .
(a)
The authorized capital stock of Kos Investments consists of 50,000
shares of common stock, par value $0.01 per share, of which only
27,200 shares, constituting the Shares, are issued and
outstanding. All of the Shares were validly issued, fully
paid and nonassessable and were issued free of preemptive rights
and in accordance with all applicable Laws.
(b)
Except as set forth in clause (a) of this Section 2.06 or as set
forth in Section 2.06(b) of the Disclosure Schedules, (i) there are
not outstanding or authorized any (A) shares of capital stock or
other voting securities of Kos Investments, (B) securities of Kos
Investments convertible into or exchangeable for shares of capital
stock or voting securities of Kos Investments or (C) options or
other rights to acquire from Kos Investments, or any obligation of
Kos Investments to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or
voting securities of Kos Investments; and (ii) there are no other
options, calls, warrants or other rights, agreements, arrangements
or commitments of any character relating to the issued or unissued
capital stock or other voting securities of Kos Investments to
which Kos Investments or any Seller is a party.
(c)
The authorized capital stock of Kos Holdings consists of
50,000 shares of common stock, par value $0.01 per share, of
which only 10,000 shares are issued and outstanding. All
of the shares of Kos Holdings were validly issued, fully paid and
nonassessable, were issued free of preemptive rights and are owned
beneficially and of record by Kos Investments.
(d)
Except as set forth in clause (c) of this Section 2.06, (i) there
are not outstanding or authorized any (A) shares of capital stock
or other voting securities of Kos Holdings, (B) securities of Kos
Holdings convertible into or exchangeable for shares of capital
stock or voting securities of Kos Holdings or (C) options or other
rights to acquire from Kos Holdings, or any obligation of Kos
Holdings to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or
voting securities of Kos Holdings; and (ii) there are no other
options, calls, warrants or other rights, agreements, arrangements
or commitments of any character relating to the issued or unissued
capital stock or other voting securities of Kos Holdings to which
Kos Holdings, Kos Investments or any Seller is a party.
5
SECTION
2.07. Taxes . Except as
set forth in Section 2.07 of the Disclosure Schedules, since July
1, 1997 (i) all Tax Returns required to be filed by or with respect
to Kos Investments and Kos Holdings have been timely filed and such
Tax Returns are true, correct and complete in all material
respects, (ii) all Taxes of Kos Investments and Kos Holdings that
are due and payable have been paid, (iii) since July 1, 1997,
neither Kos Investments nor Kos Holdings has received written
notice of any Proceeding against or audit of, or with respect to,
any Taxes of Kos Investments or Kos Holdings that has not been
finally resolved, (iv) there are no liens for Taxes (other than
statutory liens for Taxes not yet due and payable) upon any of the
assets of Kos Investments or Kos Holdings, (v) since July 1,
1997, neither Kos Investments nor Kos Holdings has been a
“distributing corporation” or a “controlled
corporation” in a distribution intended to qualify under
Section 355(a) of the Code or otherwise as part of a “plan
(or series of related transactions)” (within the meaning of
Section 355(e) of the Code) of which the Merger is also a part,
(vi) neither Kos Investments nor Kos Holdings is a party to or is
bound by any Tax sharing, allocation or indemnification agreement
or arrangement (other than solely between Kos Investments and Kos
Holdings), (vii) for any period beginning on or after July 1, 1997,
neither Kos Investments nor Kos Holdings (A) has been a member of a
group filing a consolidated, combined or unitary Tax Return (other
than a group consisting solely of Kos Investments and Kos Holdings
or (B) has any liability for the Taxes of any person under Treasury
regulation section 1.1502-6 (or any similar provision of state,
local or foreign Law), (viii) Kos Investments is an S corporation
as defined in Section 1361 of the Code and has been since
July 1, 1997, Kos Holdings is a qualified subchapter S
subsidiary as defined in Section 1361(b)(3)(B) of the Code and has
been since July 1, 1997, (ix) neither Kos Investments nor Kos
Holdings has been a party to a transaction that, as of the date of
this Agreement, constitutes a “reportable transaction”
for purposes of Section 6011 of the Code and applicable Treasury
regulations thereunder (or a similar provision of state Law), (x)
Kos Investments and Kos Holdings have properly and timely withheld
all Taxes required to be withheld, and properly remitted to the
applicable Taxing Authorities all Taxes required to be remitted
for, with respect to amounts paid or owed to any employee,
independent contractor, stockholder or other party , and (xi)
neither Kos Investments nor Kos Holdings will be required to
include in a taxable period ending after the Closing Date
taxable income attributable to income that accrued in a prior
taxable period (or portion of a taxable period) but was not
recognized for tax purposes in any prior taxable period as a result
of (A) a disposition by Kos Investments, nor Kos Holdings made by
on or before the Closing Date that was accounted for as an
“open transaction”, (B) a prepaid amount received on or
prior to the Closing Date, (C) the installment method of
accounting, (D) the completed contract method of accounting, (E)
the long-term contract method of accounting, (F) the cash method of
accounting or Section 481 of the Code or (G) any comparable
provisions of state, local, or foreign tax law.
SECTION
2.08. Accounts; Safe Deposit
Boxes; Powers of Attorney; Officers and Directors .
Section 2.08 of the Disclosure Schedule sets forth (i) a true
and correct list of all bank and savings accounts, certificates of
deposit and safe deposit boxes of Kos Investments and Kos Holdings
and those persons authorized to sign thereon, (ii) a true and
correct list of all powers of attorney granted by Kos Investments
or Kos Holdings and those persons authorized to act thereunder and
(iii) a true and correct list of all officers and directors of
Kos Investments and Kos Holdings.
6
SECTION
2.09.
Brokers; Schedule of Fees and Expenses . Except as set
forth in Section 2.09 of the Disclosure Schedule, no broker,
finder or investment banker is entitled to any brokerage,
finder’s or other fee or commission in connection with the
Acquisition and the other transactions contemplated by the Merger
Agreement based upon arrangements made by or on behalf of or with
respect to Kos Investments or Kos Holdings.
SECTION
2.10.
Private Offering . None of the Sellers, Kos
Investments, Kos Holdings, their affiliates and their
representatives has issued, sold or offered any security of Kos
Investments or Kos Holdings to any person under circumstances that
would cause the sale of the Shares, as contemplated by this
Agreement, to be subject to the registration requirements of the
Securities Act. None of the Sellers, Kos Investments, Kos
Holdings, their affiliates and their representatives will offer the
Shares or any part thereof or any similar securities for issuance
or sale to, or solicit any offer to acquire any of the same from,
anyone so as to make the issuance and sale of the Shares subject to
the registration requirements of Section 5 of the Securities
Act. Assuming the representations of Acquiror contained in
Section 3.04 are true and correct, the sale and delivery of
the Shares hereunder are exempt from the registration and
prospectus delivery requirements of the Securities Act.
SECTION
2.11. Information . None
of the information relating to Kos Investments, Kos Holdings or the
Sellers provided by or on behalf of the Sellers for inclusion in
the Offer Documents, the Schedule 14D-9 or any Proxy Statement
will, at the respective times such documents are filed with the SEC
or are first published, sent or given to shareholders of the
Company, contain any untrue statement of material fact or omit to
state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the
circumstances under which they were made, not
misleading.
SECTION
2.12. Reliance . Sellers
understand and acknowledge that Acquiror is entering into the
Merger Agreement and the Shareholders Agreement in reliance upon
the Sellers’ execution and delivery of this
Agreement.
ARTICLE
III
Representations and
Warranties Relating to Acquiror
Acquiror represents and warrants to
Sellers that:
SECTION
3.01. Organization, Standing and
Power . Acquiror is a corporation duly organized, validly
existing and in good standing or active status under the laws of
the jurisdiction in which it is incorporated and has all requisite
corporate power and authority to own, operate and lease its
properties and to carry on its business as it is now being
conducted. Acquiror is duly qualified or licensed to do
business, and is in good standing, in each jurisdiction where the
character of the properties owned, leased or operated by it or the
nature of its activities makes such qualification or licensing
necessary.
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SECTION
3.02. Authority; Execution and
Delivery; Enforceability . Acquiror has all requisite
power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The
execution and delivery by Acquiror of this Agreement and the
consummation by it of the transactions contemplated hereby have
been duly authorized by all necessary action of Acquiror, and no
other corporate proceedings on the part of Acquiror are necessary
to authorize this Agreement, to perform its obligations hereunder,
or to consummate the transactions contemplated hereby.
Neither the approval or adoption of this Agreement nor the
consummation of the transactions contemplated hereby requires any
approval of the shareholders of Acquiror. This Agreement has
been duly executed and delivered by Acquiror and constitutes its
valid and binding obligation, enforceable against it in accordance
with its terms (except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors’ rights generally and general
equity principles).
SECTION
3.03. No Conflicts; Consents
.
(a)
The execution, delivery and performance of this Agreement by
Acquiror does not and will not (i) conflict with or violate the
articles of incorporation or bylaws of Acquiror, (ii) assuming that
all applicable requirements under the HSR Act and the Exchange
Act have been satisfied, conflict with or violate any Law
applicable to Acquiror or by which any of its properties are bound
or (iii) (A) result in any breach or violation of or constitute a
default (or an event which with notice or lapse of time or both
would become a default), or (B) result in the loss of a benefit
under, or give rise to any right of termination, cancellation,
amendment or acceleration of, or (C) result in the creation of any
Lien on any of the properties or assets of Acquiror under, any
Contract to which Acquiror or its subsidiaries is a party or by
which Acquiror or its subsidiaries or any of their respective
properties are bound.
(b)
Except pursuant to applicable requirements under the HSR Act and
the Exchange Act, no consent, approval, authorization or permit of,
action by, filing with or notification to, any Governmental Entity
is required to be obtained or made by Acquiror in connection with
the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby.
SECTION
3.04. Securities Act .
Acquiror is an Accredited Investor, as defined in Regulation 501
under the Securities Act. The Shares purchased by Acquiror
pursuant to this Agreement are being acquired for investment only
and not with a view to any public distribution thereof, and
Acquiror shall not offer to sell or otherwise dispose of the Shares
so acquired by it in violation of any of the registration
requirements of the Securities Act.
SECTION
3.05.
Available Funds . Acquiror has sufficient funds to
(i) consummate the Acquisition, (ii) pay the applicable
Purchase Price to each Seller and (iii) pay any and all fees
and expenses incurred by Acquiror in connection with the
Acquisition or the financing thereof.
8
SECTION
3.06. No Other Representations
. Acquiror is not relying on any statement or representation
made by or on behalf of Sellers with respect to its acquisition of
the Shares other than the representations made in this
Agreement.
ARTICLE
IV
Covenants and
Agreements
SECTION
4.01. Covenants Relating to
Conduct of Business . Sellers covenant and agree that,
during the period from the date hereof until the Closing or earlier
termination of this Agreement, neither Kos Investments nor Kos
Holdings shall (and Sellers shall cause neither of Kos Investments
nor Kos Holdings to) (i) acquire any additional assets or (ii)
carry on any business or conduct any operations other than (A)
those actions incidental to holding the Assets that are consistent
with past practice and (B) performing its obligations under, and
consummating the transactions contemplated by, this Agreement
(including engaging counsel and other advisors the fees of which
will be paid by Sellers) and repaying or causing to be repaid the
following indebtedness: (a) a $75,000,000 line of credit between
Kos Investments and Wachovia Bank N.A. (on which approximately
$60,000,000 is outstanding as of the date hereof) and (b) a
$25,000,000 Promissory Note dated August 2, 2006 between Kos
Investments and Mary Jaharis. Without limiting the generality
of the foregoing, between the date of this Agreement and the
Closing, Sellers covenant and agree that none of Sellers shall, and
Sellers shall cause Kos Investments or Kos Holdings to not, without
the prior written consent of Acquiror:
(a)
amend or otherwise change the articles of incorporation or bylaws
or any similar governing instruments of Kos Investments or Kos
Holdings;
(b)
issue, deliver, sell, pledge, dispose of or encumber (whether by
merger or otherwise by operation of law) any shares of capital
stock, voting securities, or other equity interests, or any
options, warrants, convertible securities or other rights of any
kind to acquire or receive any shares of capital stock, voting
securities, or other equity interests, of Kos Investments or Kos
Holdings;
(c)
adjust, recapitalize, reclassify, combine, split, subdivide,
redeem, purchase or otherwise acquire any shares of capital stock
of Kos Investments or Kos Holdings;
(d)
in the case of Kos Investments and Kos Holdings only (i) enter into
any business or (ii) make any capital contribution or investment in
any other person;
(e)
(i) grant any proxies or enter into a voting trust or other
agreement or arrangement with respect to the voting of any of the
Assets or (ii) Transfer, grant a Lien on, or enter into any
Contract, option or other arrangement or understanding with respect
to any Transfer (whether by actual disposition or effective
economic disposition) of any of the Assets or any rights thereto or
therein;
9
(f) in the
case of Kos Investments or Kos Holdings only, acquire any asset, or
enter into, modify or amend any Contract (other than in accordance
with Section 4.02);
(g)
in the case of Kos Investments or Kos Holdings only, incur any
indebtedness or other liability that will not be discharged at
Closing;
(h)
in the case of or with respect to Kos Investments or Kos Holdings
only, (i) make, change or revoke any material Tax election or,
except as required by applicable Law, change any method of Tax
accounting, (ii) enter into any settlement or compromise of any
material Tax liability, (iii) file any amended Tax Return with
respect to any material Tax, (iv) change any annual Tax accounting
period, (v) enter into any closing agreement relating to any
material Tax, (vi) claim or surrender any right to claim a material
Tax refund or (vii) become a party to a transaction that
constitutes a “reportable transaction” for purposes of
Section 6011 of the Code and applicable Treasury regulations
thereunder (or a similar provision of state Law); or
(i) commit
or agree to take any of the actions described in Sections 4.01(a)
through 4.01(g).
SECTION
4.02. Contracts; Affiliate
Transactions; Powers of Attorney . On or prior to the
Closing Date, Sellers shall cause to be terminated, effective no
later than the Closing, (a) all Contracts between Kos Investments
or Kos Holdings, on the one hand, and any other person (including
any Seller or any of their respective Affiliates), on the other
hand, (other than this Agreement), (b) any interest any Seller or
any of its Affiliates has in any asset (real or personal, tangible
or intangible) (including the Assets) or Contract of Kos
Investments or Kos Holdings and (c) all powers of attorney to any
person granted by Kos Investments or Kos Holdings. Sellers
shall cause the Stockholder’s Agreement dated as of
July 1, 1988 among Kos Investments and the Sellers to be
terminated effective as of the Closing Date.
SECTION
4.03. Access to Information;
Confidentiality . (a) From the date hereof to the Closing
or the earlier termination of this Agreement, upon reasonable prior
written notice, Sellers shall cause Kos Investments and Kos
Holdings to afford the officers, employees, auditors and
representatives of Acquiror reasonable access, consistent with
applicable Law, at all reasonable times to all books and records,
all officers, directors, representatives, properties, and to all
books and records of Kos Investments and Kos Holdings, and shall
furnish Acquiror with all financial and other data and information
as Acquiror, through its officers, employees or authorized
representatives, may from time to time reasonably request in
writing. Neither Kos Investments nor Kos Holdings shall be
required to provide access to or to disclose information where such
access or disclosure would jeopardize the attorney-client privilege
of Kos Investments or Kos Holdings or contravene any Law. No
investigation pursuant to this Section 4.03 or otherwise shall
affect any representation or warranty in this Agreement or any
condition to the obligations of the parties hereto.
(b)
Acquiror will hold and treat and will cause its officers,
employees, auditors and other authorized representatives to hold
and treat in confidence all documents and information concerning
Kos Investments or Kos Holdings or its shareholders furnished
to
10
Acquiror in
connection with the transactions contemplated by this Agreement in
accordance with the Confidentiality Agreement, dated September 26,
2006, between the Kos Investments, Kos Holdings, Oikos
Ventures LLC and Acquiror (the “ Confidentiality
Agreement ”).
SECTION
4.04. Further Action; Efforts
. Subject to the terms and conditions of this Agreement, each
party will use reasonable best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws
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