Exhibit 10(zz)
EXECUTION COPY
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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
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS.................................................................................................1
ARTICLE II THE MERGER................................................................................................14
2.1 THE MERGER.........................................................................................14
2.2 EFFECTIVE TIME.....................................................................................14
2.3 EFFECT OF THE MERGER...............................................................................14
2.4 ARTICLES OF INCORPORATION AND BYLAWS...............................................................14
2.5 DIRECTORS AND OFFICERS.............................................................................15
2.6 EFFECT OF MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS..............................15
2.7 DISSENTING SHARES..................................................................................17
2.8 SURRENDER OF CERTIFICATES..........................................................................17
2.9 NO FURTHER OWNERSHIP RIGHTS IN FP1096 CAPITAL STOCK................................................19
2.10 LOST, STOLEN OR DESTROYED CERTIFICATES.............................................................19
2.11 CLOSING DATE DELIVERIES OF FP1096 AND FEMMEPHARMA..................................................19
2.12 CLOSING DATE DELIVERIES OF K-V.....................................................................20
2.13 TAKING OF NECESSARY ACTION; FURTHER ACTION.........................................................21
ARTICLE III REPRESENTATIONS AND WARRANTIES OF FP1096 AND FEMMEPHARMA.................................................21
3.1 ORGANIZATION.......................................................................................21
3.2 FP1096 CAPITAL STRUCTURE...........................................................................21
3.3 SUBSIDIARIES.......................................................................................23
3.4 AUTHORITY..........................................................................................23
3.5 NO CONFLICT........................................................................................23
3.6 CONSENTS...........................................................................................23
3.7 REGULATORY MATTERS.................................................................................24
3.8 FP1096 FINANCIAL STATEMENTS........................................................................25
3.9 NO UNDISCLOSED LIABILITIES.........................................................................26
3.10 NO CHANGES.........................................................................................26
3.11 TAX MATTERS........................................................................................27
3.12 RESTRICTIONS ON BUSINESS ACTIVITIES................................................................28
3.13 TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES; SUFFICIENCY OF ASSETS......................29
3.14 INTELLECTUAL PROPERTY..............................................................................30
3.15 AGREEMENTS, CONTRACTS AND COMMITMENTS..............................................................32
3.16 INTERESTED PARTY TRANSACTIONS......................................................................32
3.17 GOVERNMENTAL AUTHORIZATION.........................................................................32
3.18 LITIGATION.........................................................................................32
3.19 MINUTE BOOKS.......................................................................................33
3.20 ENVIRONMENTAL MATTERS..............................................................................33
3.21 BROKERS' AND FINDERS' FEES.........................................................................34
3.22 EMPLOYEE BENEFIT PLANS AND COMPENSATION............................................................34
3.23 INSURANCE..........................................................................................35
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TABLE OF CONTENTS
(CONTINUED)
PAGE
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3.24 COMPLIANCE WITH LAWS...............................................................................36
3.25 WARRANTIES; INDEMNITIES............................................................................36
3.26 COPIES OF MATERIALS................................................................................36
3.27 FULL DISCLOSURE....................................................................................36
3.28 INFORMATION STATEMENT..............................................................................36
3.29 OWNERSHIP OF FP1096 CAPITAL STOCK..................................................................37
3.30 ABSENCE OF CLAIMS BY THE SHAREHOLDERS..............................................................37
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF K-V AND K-V SUB.........................................................37
4.1 ORGANIZATION, STANDING AND POWER...................................................................37
4.2 AUTHORITY..........................................................................................37
4.3 CONSENTS...........................................................................................38
4.4 CAPITAL RESOURCES..................................................................................38
4.5 BROKER'S AND FINDERS' FEES.........................................................................38
4.6 NO CONFLICTS.......................................................................................38
4.7 INTERIM OPERATIONS OF K-V SUB......................................................................38
ARTICLE V ADDITIONAL AGREEMENTS......................................................................................38
5.1 CONFIDENTIALITY....................................................................................38
5.2 EXPENSES...........................................................................................40
5.3 FIRPTA COMPLIANCE..................................................................................40
5.4 ADDITIONAL DOCUMENTS AND FURTHER ASSURANCES........................................................40
5.5 RETAINED EMPLOYMENT LIABILITIES....................................................................40
5.6 ADDITIONAL INFORMATION.............................................................................41
5.7 NON-COMMERCIALIZATION..............................................................................41
5.8 TAX MATTERS........................................................................................41
ARTICLE VI CONDITIONS TO THE MERGER..................................................................................43
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER.......................................43
6.2 CONDITIONS TO THE OBLIGATIONS OF K-V AND K-V SUB...................................................43
6.3 CONDITIONS TO OBLIGATIONS OF FP1096, FEMMEPHARMA AND THE SHAREHOLDERS..............................46
ARTICLE VII SURVIVAL; INDEMNIFICATION................................................................................47
7.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.........................................................47
7.2 INDEMNIFICATION....................................................................................48
7.3 PROCEDURE..........................................................................................49
7.4 LIMITATION ON INDEMNIFICATION; ESCROW..............................................................50
7.5 EXCLUSIVE REMEDY...................................................................................52
7.6 ESCROW AND ESCROW RELEASE AMOUNT...................................................................52
7.7 SELLER REPRESENTATIVE..............................................................................52
ARTICLE VIII GENERAL PROVISIONS......................................................................................53
8.1 TERMINATION........................................................................................53
8.2 EFFECT OF TERMINATION..............................................................................53
8.3 NOTICES............................................................................................53
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TABLE OF CONTENTS
(CONTINUED)
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8.4 INTERPRETATION.....................................................................................54
8.5 COUNTERPARTS.......................................................................................55
8.6 AMENDMENT..........................................................................................55
8.7 ENTIRE AGREEMENT; ASSIGNMENT.......................................................................55
8.8 SEVERABILITY.......................................................................................55
8.9 OTHER REMEDIES.....................................................................................55
8.10 GOVERNING LAW; VENUE...............................................................................55
8.11 RULES OF CONSTRUCTION..............................................................................56
8.12 WAIVER OF JURY TRIAL...............................................................................56
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INDEX OF EXHIBITS
EXHIBIT DESCRIPTION
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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
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THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
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entered into as of May 4, 2005 by and among K-V Pharmaceutical Company, a
Delaware corporation ("K-V"), Kestrel-Falcon Acquisition Corporation, a
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Delaware corporation and a wholly-owned subsidiary of K-V Pharmaceutical
("K-V Sub"), FP1096, Inc., a Pennsylvania corporation ("FP1096"), and
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FemmePharma Holding Company, Inc., a Delaware corporation and a wholly-owned
subsidiary of FP1096 ("FemmePharma").
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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").
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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
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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:
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(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
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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
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this Agreement.
"Anti-infective Product" means any local regional, topical or
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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
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Agreement.
"Asset Contribution Agreement" means the Asset Contribution
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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).
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"Balance Sheet Date" has the meaning given to it in Section 3.8(a).
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"Books and Records" of any Person means all files, documents,
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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
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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
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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.
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"Charter Documents" has the meaning given to it in Section 3.1.
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"Claim" has the meaning given to it in Section 7.3(b).
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"Claim Notice" has the meaning given to it in Section 7.3(b).
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"Clinical Trials" means, with respect to a product, any and all
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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
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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.
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"Closing Date" has the meaning given to it in Section 2.2.
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"Closing Instructions" has the meaning given to it in Section
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2.8(g).
"Closing Payments" has the meaning given to it in Section 2.8(g).
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"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of
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1985, as amended.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Confidential Information" has the meaning given to it in Section
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5.1(c).
"Conflict" has the meaning given to it in Section 3.5.
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"Consideration Per Share" means $6.0990 per share, subject to the
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last paragraph of Section 2.6(a).
"Contract" means any agreement, joint venture agreement,
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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
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Intellectual Property Rights.
"Current Balance Sheet" has the meaning given to it in Section
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3.8(a).
"Damage" means any loss, damage, deficiency, cost, expense or other
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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
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Edition (2001).
"Danazol Product" has the meaning given to it under the definition
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of K-V Product.
"Data" means, with respect to a K-V Product developed by or on
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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
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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
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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
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2.7(c).
"Dissenting Shares" has the meaning given to it in Section 2.7(a).
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"DOL" means the United States Department of Labor.
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"Effective Time" has the meaning given to it in Section 2.2.
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"Employee" means any current or former employee, consultant or
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director of FP1096 or any ERISA Affiliate.
"Employee Agreement" means each management, employment, severance,
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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,
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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.
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"Environmental Laws" means all applicable rules, regulations,
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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,
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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,
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as amended.
"ERISA Affiliate" means any other Person that is or has been under
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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.
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"Escrow Agreement" means the Escrow Agreement by and among K-V,
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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
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by the Escrow Agent from time to time following the investment thereof.
"Escrow Amount Per Share" means $0.4339 per share, being the
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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
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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
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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).
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"FP1096" has the meaning given to it in the first paragraph of this
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Agreement.
"FP1096 Authorizations" has the meaning given to it in Section
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3.17.
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"FP1096 Business" means (i) the K-V Products developed by or on
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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 XX0000 Xxxxxx Xxxxx, XX0000 Preferred
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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
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Section 3.9.
"FP1096 Common Shareholder" means a holder of FP1096 Common Stock,
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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,
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of FP1096.
"FP1096 Disclosure Letter" means the letter entitled FP1096
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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,
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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
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Section 3.8(a).
"FP1096 Options" means all issued and outstanding options,
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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
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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,
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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
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Series A Preferred Stock, each of whom is listed in the FP1096 Disclosure
Letter.
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"FP1096 Series A Preferred Stock" means the Series A Preferred
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Stock, no par value, of FP1096.
"FP1096 Series B Preferred Shareholder" means a holder of FP1096
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Series B Preferred Stock, each of whom is listed in the FP1096 Disclosure
Letter.
"FP1096 Series B Preferred Stock" means the Series B Preferred
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Stock, no par value, of FP1096.
"FP1096 Series C Preferred Shareholder" means a holder of FP1096
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Series C Preferred Stock, each of whom is listed in the FP1096 Disclosure
Letter.
"FP1096 Series C Preferred Stock" means the Series C Preferred
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Stock, no par value, of FP1096.
"FP1096 Series D Preferred Shareholder" means a holder of FP1096
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Series D Preferred Stock, each of whom is listed in the FP1096 Disclosure
Letter.
"FP1096 Series D Preferred Stock" means the Series D Preferred
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Stock, no par value, of FP1096.
"FP1096 Stock Certificates" has the meaning given to it in Section
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2.8(c).
"FP1096 Warrants" means all issued and outstanding warrants or
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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
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this Agreement.
"FemmePharma Affiliate" means, with respect to FemmePharma, any
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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
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Agreement.
"FDA" means the United States Food and Drug Administration and any
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successor agency or authority thereto.
"FFDCA" means the United States Federal Food, Drug and Cosmetic Act
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and rules and regulations thereunder and any successor thereto.
"FICA" has the meaning given to it in Section 3.11(a)(ii).
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"FIRPTA Compliance Certificate" has the meaning given to it in
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Section 5.3.
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"FUTA" has the meaning given to it in Section 3.11(a)(ii).
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"GAAP" means United States generally accepted accounting principles
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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
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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,
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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.
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"Indemnified Party" has the meaning given to it in Section 7.2(b).
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"Indemnifying Party" has the meaning given to it in Section 7.2(b).
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"Initial Danazol Product" means the intravaginally administered
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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
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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, xxxxx 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
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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
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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,
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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
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Employee Agreement that has been adopted or maintained by FP1096 or any
ERISA Affiliate, whether
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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.
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"K-V" has the meaning given to it in the first paragraph of this
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Agreement.
"K-V Material Adverse Effect" has the meaning given to it in
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Section 4.1.
"K-V Product" means any: (i) local regional or intravaginally
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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 Xxxxxxxx X.
XxXxxxx, Xxxxxxx X. XxXxxxx, Xx., Xxxxx Xxxx and Xxxxxxx Xxxxxxx.
"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 Xxxxxx
Xxxxxxx Xxxxxxxx & Xxxxxx, 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;
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(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.
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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
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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 directors of, and consultants to,
FP1096 upon the issuance of stock or the exercise of options granted under
the Plans or any other plan, agreement or arrangement (whether written or
oral, formal or informal), of which (i) 375,199 shares are issuable as of
the date hereof upon the exercise of outstanding, unexercised options, and
(ii) 1,215,000 shares have been issued upon the exercise of options
previously granted and remain outstanding as of the date hereof. Except for
FP1096 Options and FP1096 Warrants scheduled in the FP1096 Disclosure Letter
(which schedule shows for each FP1096 Option and FP1096 Warrant the date of
grant, the exercise price, whether each such FP1096 Option is an "incentive
stock option" within the meaning of Section 422 of the Code, and the vesting
schedule for such FP1096 Option and FP1096 Warrant, including the extent
vested to date and whether the vesting will be accelerated by the
transactions contemplated by this Agreement), all of which are to be
exercised or cancelled at or prior to the Effective Time, there are no
options, warrants, calls, rights, convertible securities, commitments or
agreements of any character, written or oral, to which FP1096 is a party or
by which FP1096 is bound obligating FP1096 to issue, deliver, sell,
repurchase or redeem, or cause to be issued, delivered, sold, repurchased or
redeemed, any shares of FP1096 Capital Stock or obligating FP1096 to grant,
extend, accelerate the vesting of, change the price of, or otherwise amend
or enter into any such option, warrant, call, right, commitment or
agreement. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation or other similar rights with respect to
FP1096. Except as contemplated hereby, there are no voting trusts, proxies
or other agreements or understandings with respect to the voting stock of
FP1096. There are no agreements to which FP1096 is a party relating to the
registration, sale or transfer (including agreements relating to rights of
first refusal, co-sale rights or "drag-along" rights) of any FP1096 Capital
Stock. As a result of the Merger, K-V will be the sole record and beneficial
holder of all issued and outstanding FP1096 Capital Stock and all rights to
acquire or receive any shares of FP1096 Capital Stock, whether or not such
shares of FP1096 Capital Stock are outstanding.
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(c) The allocation of the Merger Consideration set forth
in Section 2.6(a) is consistent with the articles of incorporation of FP1096
immediately prior to the Effective Time.
3.3 SUBSIDIARIES. Other than FemmePharma, FP1096 has had no
subsidiaries. At the Effective Time, FP1096 will have no subsidiaries.
3.4 AUTHORITY. Each of FP1096 and FemmePharma has all requisite
power and authority to enter into this Agreement, the License Agreement and
any Related Agreements to which it is a party and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement, the License Agreement and any Related Agreements to which
each of FP1096 and FemmePharma is a party and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action on the part of FP1096 and FemmePharma, as
applicable, and no further action is required on the part of FP1096 or
FemmePharma to authorize the Agreement, the License Agreement and any
Related Agreements to which it is a party and the transactions contemplated
hereby and thereby. This Agreement, the License Agreement, the Related
Agreements, the Merger and the Spin Off have been approved by the Board of
Directors of FP1096. This Agreement, the License Agreement, each of the
Related Agreements, the Merger and the Spin Off shall have been approved
prior to Closing by a majority of the holders of FP1096 Capital Stock (the
"Requisite Shareholder Vote"). The Spin Off has been approved by the Board
--------------------------
of Directors of FemmePharma. This Agreement, the License Agreement and each
of the Related Agreements to which each of FP1096 and FemmePharma is a party
has been duly executed and delivered by FP1096 and FemmePharma, as
applicable, and assuming the due authorization, execution and delivery by
the other parties hereto and thereto, constitute the valid and binding
obligations of FP1096 and FemmePharma, as applicable, enforceable against it
in accordance with their respective terms, except as such enforceability may
be subject to the laws of general application relating to bankruptcy,
insolvency, and the relief of debtors and rules of Law governing specific
performance, injunctive relief or other equitable remedies.
3.5 NO CONFLICT. The execution and delivery by FP1096 and
FemmePharma, as applicable, of this Agreement, the License Agreement and any
Related Agreement to which it is a party, and the consummation of the
transactions contemplated hereby and thereby, will not: (i) conflict with or
result in any violation of or default under, with or without notice or lapse
of time, or both, or give rise to a right of termination, cancellation,
modification or acceleration of any obligation or loss of any benefit under
(any such event, a "Conflict") (A) any provision of the Charter Documents,
--------
(B) any Contract to which FP1096 or FemmePharma is a party or by which
either of them is bound, or (C) any Law or Order applicable to FP1096,
FemmePharma or any of their properties whether tangible or intangible or
assets, or (ii) result in the imposition of any Lien (other than a Permitted
Lien).
3.6 CONSENTS. Except as set forth on Section 3.6 of the FP1096
Disclosure Letter, no consent, notice, waiver, approval, order or
authorization of, or registration, declaration or filing with any Person is
required by, or with respect to, FP1096 or FemmePharma in connection with
the execution and delivery of this Agreement, the License Agreement and any
Related Agreement to which FP1096 or FemmePharma is a party or the
consummation of the transactions contemplated hereby and thereby, except for
the filing of the Merger Certificate or like instrument with the Secretary
of the Commonwealth of Pennsylvania.
-23-
3.7 REGULATORY MATTERS.
(a) To the extent that they have conducted or been
responsible for such activities, whether directly or indirectly (including
through any third party other than K-V), FP1096, FemmePharma and their
Affiliates have performed all human Clinical Trials with the Initial Danazol
Product in accordance with all applicable Laws and all filings with, and
approvals, licenses and authorizations by, Regulatory Authorities, including
Marketing Authorization Applications and Regulatory Approvals. Except as set
forth in Section 3.7 of the FP1096 Disclosure Letter, to the extent that
they have conducted or been responsible for such activities, whether
directly or indirectly (including through any third party other than K-V),
FP1096, FemmePharma and their Affiliates have performed all Development and
Manufacturing, use and disposition of the Initial Danazol Product in
accordance with all applicable Laws, including applicable good manufacturing
practices, good laboratory practices and other regulations, and all filings
with, and approvals, licenses and authorizations by, Regulatory Authorities,
including Marketing Authorization Applications, and Regulatory Approvals. No
Initial Danazol Product has been marketed or commercially distributed by
FP1096, FemmePharma or their Affiliates. All Regulatory Authorities with
which FP1096 has had any filing, correspondence or other communications
concerning the Initial Danazol Product are listed in Section 3.7(a) of the
FP1096 Disclosure Letter, including a brief description of the nature of
each related item of Regulatory Documentation in its possession or control.
FP1096 has not had any filing, correspondence or other communications with
Regulatory Authorities concerning any K-V Products other than the Initial
Danazol Product. As of the Closing Date, FP1096, FemmePharma and their
Affiliates have delivered to K-V all Regulatory Documentation in its
possession or control related to the Initial Danazol Product.
(b) None of FP1096, FemmePharma and their Affiliates have
(i) made an untrue statement of a material fact, (ii) failed to disclose a
material fact, or (iii) submitted inaccurate or misleading Regulatory
Documentation to any Regulatory Authority with respect to the Initial
Danazol Product or any component of the Initial Danazol Product.
(c) The FP1096 Disclosure Letter sets forth a list of all
Marketing Authorization Applications and Regulatory Approvals sought or
received and Clinical Trials that are being or have been conducted prior to
the Closing Date by FP1096, FemmePharma and their Affiliates, for the
Initial Danazol Product. As of the Closing Date, FP1096 is the exclusive
sponsor of all such Clinical Trials and owns all right, title and interest
in and to all such Marketing Authorization Applications, Regulatory
Approvals, and other Regulatory Documentation. As of the Closing Date, there
have been no Marketing Authorization Applications and Regulatory Approvals
sought or received or Clinical Trials that are being or have been conducted
prior to the Closing Date by FP1096, FemmePharma and their Affiliates, for
K-V Products other than the Initial Danazol Product. FP1096 shall give K-V
notice and copies (if applicable) of all future correspondence, notices and
other communications received from the FDA or other Regulatory Authorities
relating to the Initial Danazol Product and, unless requested by K-V in
writing, will no longer communicate with the FDA or such other Regulatory
Authorities with respect to the Initial Danazol Product.
(d) As of the Closing Date, FP1096 has given the FDA (and
any applicable Regulatory Authorities outside the United States) written
notice of the change of control of the
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Marketing Authorization Applications for the Initial Danazol Product,
authorizing FP1096, K-V and its Affiliates to communicate with the FDA and
such Regulatory Authorities with respect to all matters related thereto. As
of the Closing Date, FP1096 has given written notice (to the extent
necessary) to all Regulatory Authorities of the transfer to FemmePharma of
all human Clinical Trials and any Marketing Authorization Applications for
all products other than the K-V Products and has transferred to FemmePharma
all Clinical Trials and any Marketing Authorization Applications and all
Liabilities associated with such other products under all applicable Laws.
(e) The FP1096 Disclosure Letter lists all significant
event(s) and circumstances that, to FP1096's Knowledge, will have a material
adverse effect on achieving Regulatory Approval for the Initial Danazol
Product, including, but not limited to, adverse drug experiences, clinical
holds or suspensions, and governmental inquiries, competitive products, and
materials, supply and use factors. Without limiting the foregoing,
FemmePharma has disclosed to K-V prior to the date hereof in writing all
failures, and allegations by any Regulatory Authority of failure of FP1096,
FemmePharma or their Affiliates to comply with the provisions of applicable
Laws in any manner which affects or could affect the Manufacture,
Development, marketing or other commercialization of the Initial Danazol
Product, the performance by FP1096 or FemmePharma of its obligations under
this Agreement, or the use and other exploitation of the Retained Assets or
performance of the FP1096 Business by or under authority of Surviving
Corporation and K-V, or otherwise expose Surviving Corporation to Liability
that, to FP1096's Knowledge, will have a material adverse effect on
achieving Regulatory Approval for the Initial Danazol Product.
(f) Other than with respect to the Initial Danazol
Product, FP1096 has not (i) sponsored or conducted any Clinical Trials, nor
commenced any Development or Manufacturing activities relating to any K-V
Product or (ii) sought or received any Regulatory Approvals relating to any
K-V Product developed by or on behalf of FP1096.
3.8 FP1096 FINANCIAL STATEMENTS.
(a) The FP1096 Disclosure Letter sets forth FP1096's (i)
audited balance sheet as of December 31, 2003, and the related statements of
operations, cash flows and stockholders' equity for the twelve (12) month
period then ended, (ii) FP1096's unaudited balance sheet as of December 31,
2004, (the "Balance Sheet Date") and the related statements of operations
------------------
and cash flows for the twelve (12) month period then ended (the "Current
-------
Balance Sheet") and (iii) the unaudited FP1096 Closing Balance Sheet (the
-------------
financial statements in clauses (i),(ii) and (iii) jointly, the "FP1096
------
Financial Statements").
--------------------
(b) The FP1096 Financial Statements (i) have been prepared
in accordance with GAAP consistently applied on a consistent basis
throughout the periods indicated and consistent with each other and (ii)
present fairly in all material respects FP1096's financial condition,
operating results and cash flows as of the dates and during the periods
indicated therein, subject in the case of the Current Balance Sheet and the
FP1096 Closing Balance Sheet to the omission of footnote information and to
normal year-end adjustments, which are not material in amount or
significance in any individual case or in the aggregate.
-25-
3.9 NO UNDISCLOSED LIABILITIES. FP1096 has no Liability that has
not been reflected in the unaudited balance sheet (the "FP1096 Closing
--------------
Balance Sheet") dated as of the date of this Agreement and set forth in the
-------------
FP1096 Disclosure Letter or as otherwise listed in Section 3.9 of the FP1096
Disclosure Letter.
3.10 NO CHANGES. Since the Balance Sheet Date:
(a) except as provided in the Asset Contribution Agreement
or with respect to the Spin Off, FP1096 has carried on activities affecting
the FP1096 Business in the ordinary course of business, consistent with past
practices.
(b) there have not been any amendments or changes to the
Charter Documents;
(c) there has not been any employment dispute, including
but not limited to, claims or matters raised by any individuals or any
workers' representative organization, bargaining unit or union regarding
labor trouble or claim of wrongful discharge or other unlawful employment or
labor practice or action with respect to FP1096;
(d) there has not been any change in any material election
in respect of Taxes, adoption or change in any accounting method in respect
of Taxes, agreement or settlement of any claim or assessment in respect of
Taxes, or extension or waiver of the limitation period applicable to any
claim or assessment in respect of Taxes;
(e) there has not been any revaluation by FP1096 of any of
its assets, whether tangible or intangible, including without limitation,
writing down the value of inventory or writing off notes or Accounts
Receivable;
(f) there has not been any split, combination or
reclassification in respect of any shares of FP1096 Capital Stock, or any
issuance or authorization of any issuance of any other securities in respect
of, in lieu of or in substitution for shares of FP1096 Capital Stock;
(g) FP1096 has not amended the terms of any outstanding
loan agreement, guaranteed any indebtedness, issued or sold any debt
securities or guaranteed any debt securities of others;
(h) FP1096 has not created or permitted the creation of a
Lien, other than a Permitted Lien;
(i) no Retained Asset has been damaged or destroyed;
(j) there has not been any commencement or settlement of
any lawsuit by FP1096, the commencement, settlement, notice or, to the
Knowledge of FP1096, FemmePharma or the Shareholders, threat of any lawsuit
or proceeding or other investigation against FP1096 or its affairs, or any
reasonable basis for any of the foregoing;
(k) Except as set forth in the FP1096 Disclosure Letter,
there has not been any issuance or sale, or contract or agreement to issue
or sell, by FP1096 of any shares of FP1096
-26-
Capital Stock or securities convertible into, or exercisable or exchangeable
for, shares of FP1096 Capital Stock, or any securities, warrants, options or
rights to purchase any of the foregoing;
(l) there has not been any event or condition of any
character that has had or is reasonably likely to have a material adverse
effect on the FP1096 Business; and
(m) there has not been any agreement by FP1096, or any
Person on behalf of FP1096, to do any of the things described in the
preceding clauses (a) through (k) of this Section 3.10.
3.11 TAX MATTERS.
(a) TAX RETURNS AND AUDITS.
(i) Each of FP1096 and FemmePharma has: (a)
prepared and timely filed all required federal, state, local and foreign
returns, estimates, information statements and reports ("Returns") relating
-------
to any and all Taxes concerning or attributable to FP1096 or FemmePharma,
and such Returns are true and correct and have been completed in accordance
with applicable Law and (b) timely paid all Taxes it is required to pay.
(ii) Each of FP1096 and FemmePharma has timely
paid or withheld with respect to its Employees and other third parties, all
federal, state and foreign income taxes and social security charges and
similar fees, Federal Insurance Contribution Act ("FICA"), Federal
Unemployment Tax Act ("FUTA") and other Taxes required to be paid or
withheld, and has timely paid over any such Taxes withheld to the
appropriate authorities.
(iii) FP1096 has not been delinquent in the
payment of any Tax, nor is there any Tax deficiency outstanding, assessed or
proposed against FP1096 or FemmePharma, nor has FP1096 or FemmePharma
executed any waiver of any statute of limitations on or extending the period
for the assessment or collection of any Tax.
(iv) No audit or other examination of any Return
of FP1096 is presently in progress, nor has FP1096 been notified of any
request for such an audit or other examination. No adjustment relating to
any Return filed by FP1096 has been proposed formally or, to the Knowledge
of FP1096, informally by any Tax authority to FP1096 or any representative
thereof. No claim has ever been made by an authority in a jurisdiction where
FP1096 does not file Returns that FP1096 is or may be subject to taxation by
that jurisdiction.
(v) As of the Balance Sheet Date, FP1096 had no
liabilities for unpaid Taxes which had not been accrued or reserved on the
Current Balance Sheet, whether asserted or unasserted, contingent or
otherwise, and neither FP1096 nor FemmePharma has incurred any liability for
Taxes since the date of the Balance Sheet Date other than in the ordinary
course of business.
(vi) FP1096 has provided K-V or its legal counsel
copies of all Returns for FP1096 filed for the last three (3) calendar
years.
-27-
(vii) There are (and immediately following the
Effective Time there will be) no Liens on the assets of FP1096 relating or
attributable to Taxes. FP1096 has no Knowledge of any basis for the
assertion of any claim relating or attributable to Taxes which, if adversely
determined, would result in any Lien on the assets of FP1096 or FemmePharma.
(viii) FP1096 has not: (A) been a member of an
affiliated group (within the meaning of Code Section 1504(a)) filing a
consolidated federal income Tax Return (other than a group the common parent
of which was FP1096), (B) been a party to any Tax sharing, indemnification,
allocation or similar agreement, (C) any liability for the Taxes of any
Person under Treasury Regulation Section 1.1502-6 (or any similar provision
of Law), as a transferee or successor, by contract, agreement or otherwise
or (D) been a party to any joint venture, partnership or other arrangement
that could be treated as a partnership for Tax purposes.
(ix) FP1096 is not, nor has been at any time, a
"United States Real Property Holding Corporation" within the meaning of
Section 897(c)(2) of the Code.
(x) FP1096 has not constituted either a
"distributing corporation" or a "controlled corporation" in a distribution
of stock intended to qualify for tax-free treatment under Section 355 of the
Code.
(xi) Any and all amounts realized by FP1096 in
connection with the Spin Off will be fully offset by FP1096's current year
expenses and available net operating loss carryforwards, and FP1096 will not
be liable for any Taxes in connection with the Spin Off.
(xii) FP1096 has not engaged in a reportable
transaction under Treas. Reg. Section 1.6011-4(b) or in a transaction that
is the same as or substantially similar to one of the types of transactions
that the Internal Revenue Service has determined to be a tax avoidance
transaction and identified by notice, regulation, or other form of published
guidance as a listed transaction, as set forth in Treas. Reg. Section
1.6011-4(b)(2).
(xiii) FP1096 is and has at all times been
resident for Tax purposes in its place of incorporation or formation and is
not and has not at any time been treated as resident in any other
jurisdiction for any Tax purpose (including any arrangement for the
avoidance of double taxation). FP1096 is not subject to Tax in any
jurisdiction other than its place of incorporation or formation by virtue of
having a permanent establishment or other place of business or by virtue of
having a source of income in that jurisdiction. FP1096 is not liable for any
tax as the agent of any other person, business or enterprise and does not
constitute a permanent establishment or other place of business of any other
person, business or enterprise for any Tax purpose.
(xiv) FP1096 will not be required to include any
income or gain or exclude any deduction or loss in Tax periods (or portions
thereof) that begin on or after the Closing as a result of (A) any change in
method of accounting under Section 481(a) of the Code, (B) a closing
agreement as defined under Section 7121 of the Code, (C) an installment sale
or open transaction disposition, or (D) prepaid amount.
3.12 RESTRICTIONS ON BUSINESS ACTIVITIES. Except as set forth in the
FP1096 Disclosure Letter, there is no Contract, non-competition or
otherwise, commitment or Order to which
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FP1096 is a party or otherwise binding upon FP1096 which has the effect of
prohibiting or impairing the FP1096 Business, the conduct of the FP1096
Business by FP1096, or otherwise limiting the freedom of FP1096 to engage in
any line of business or to compete with any Person, including without
limitation any Contract containing any non-compete, right of refusal, right
of offer, right of negotiation, exclusivity, obligation to assign, or other
material restriction on the operation or scope of its businesses, or the use
or exploitation of any Intellectual Property Right or Technology, including
without limitation in the case of each of the foregoing with respect to the
FP1096 Business or the Retained Assets. Without limiting the generality of
the foregoing, FP1096 has not entered into any Contract under which FP1096
is restricted from selling, licensing, Manufacturing, Developing, importing,
exporting, using or otherwise distributing, exploiting or disposing of any
of FP1096's Technology, Patent Rights or products or from providing services
to customers or potential customers or any class of customers, in any
geographic area, during any period of time or in any segment of the market.
3.13 TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES;
SUFFICIENCY OF ASSETS.
(a) FP1096 does not own nor has it ever owned any real
property. Each Contract pursuant to which real property is currently leased,
subleased or licensed by or from FP1096 or otherwise used or occupied by
FP1096 (the "Lease Agreements") constitutes Transferred Assets and/or
----------------
Transferred Liabilities and does not constitute Retained Assets or Retained
Contracts. FP1096 has not received any notice of a default, alleged failure
to perform, or any offset or counterclaim with respect to any such Lease
Agreement which has not been fully remedied and withdrawn.
(b) Neither the operation of FP1096 or the FP1096 Business
in the Leased Real Property nor, to the Knowledge of FP1096 or FemmePharma,
such Leased Real Property, including the improvements thereon, has violated
in any material respect any applicable building code, zoning requirement or
statute relating to such property or operations thereon, and any such
non-violation is not dependent on so-called non-conforming use exceptions.
(c) FP1096 has sole and exclusive ownership, free and
clear of any Liens, of all Retained Assets, and no Person other than FP1096
possesses any claims or rights with respect to the Retained Assets.
(d) The Retained Assets comprise all of the assets,
properties and rights of every type and description (other than Intellectual
Property Rights or Technology), used in, related to, arising out of, or
reasonably necessary for the FP1096 Business as has been conducted by FP1096
prior to the Closing Date.
(e) The Transferred Assets and Retained Assets constitute
all of the properties, interests, titles, estates, remedies, powers, claims,
causes of action, Regulatory Documentation, Intellectual Property Rights,
Technology, other privileges and rights, and other assets of every nature,
kind and description, tangible and intangible, including goodwill, whether
real, personal or mixed, whether accrued, contingent or otherwise, wherever
located, of FP1096 as of the date hereof. Other than the Transferred
Liabilities and Retained Contracts, as of the date hereof FP1096 has no
Liabilities of any sort, whether known or unknown, fixed or contingent,
accrued or not accrued, suspected or not suspected.
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3.14 INTELLECTUAL PROPERTY.
(a) Section 3.14(a) of the FP1096 Disclosure Letter lists,
under separate headings: (i) all Patent Rights and (ii) any proceedings or
actions before any court, tribunal (including the PTO or equivalent
authority anywhere in the world, such as oppositions, interferences,
reexaminations, reissues, nullity actions and the like) related to any
Patent Rights to which FP1096, FemmePharma or their Affiliates is a party
(and identifies the applicable party). To FP1096's Knowledge, each of the
Patent Rights is valid, enforceable and subsisting and FP1096, FemmePharma
and their Affiliates Know of no acts, omissions, information, material facts
or circumstances, including any information or fact that would constitute
prior art, that would render any claim of any Patent Right invalid or
unenforceable. To FP1096's Knowledge, all necessary registration,
maintenance and renewal fees in connection with the Patent Rights have been
paid and all necessary documents and certificates in connection therewith
have been filed with the relevant patent authorities in the United States
and foreign jurisdictions, as the case may be, for the purposes of
maintaining the Patent Rights.
(b) Except as set forth in Section 3.14(a) of the FP1096
Disclosure Letter, to FP1096's Knowledge, no licenses, authorizations,
consents or notices are required from or to any third party (including
Governmental Entities) to permit or authorize K-V, Surviving Corporation and
their Affiliates to fully assign, license, transfer and otherwise exploit
the Retained Assets.
(c) As of the Closing Date, the Retained Assets and
FP1096's rights and licenses under the License Agreement constitute all of
the Intellectual Property Rights and Technology that at any time have been
owned or controlled by any of FP1096, FemmePharma and their Affiliates
related to the Initial Danazol Product or reasonably necessary for the
FP1096 Business.
(d) Other than the Retained Contracts, none of FP1096,
FemmePharma or their Affiliates is, or was prior to the Closing Date, a
party to any Contract involving the Initial Danazol Product or the
Anti-infective Product, including without limitation any Contracts under
which any rights or licenses have been obtained, acquired or granted with
respect to such products developed by or on behalf of FP1096 (e.g.,
Contracts in which any marketing or distribution rights or options, or any
exclusive rights, rights of refusal or offer, rights of negotiation, or the
like, have been granted involving the Initial Danazol Product or the
Anti-infective Product and Contracts involving contract research
organizations, scientific advisory boards, study centers, consulting
agreements or other Development or Manufacturing services related to the
Initial Danazol Product or the Anti-infective Product that resulted in a
grant of rights to such Persons.
(e) FP1096, FemmePharma or their Affiliates have not
transferred whole or partial ownership of, granted any license of or right
to use, or otherwise transferred any right, title or interest with respect
to any Patent Rights or FemmePharma Technology, nor has FP1096 taken any
action nor granted any right that would breach or be breached by the rights
and licenses granted to FP1096 in the License Agreement. No third party has
any right, title or interest in or to any Patent Rights made by or under
authority of FP1096, FemmePharma or their Affiliates.
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(f) The operation of the business of FP1096, as has been
and is now being conducted as of immediately prior to the Spin Off,
including the design, development, use, and manufacture and sale of the
Initial Danazol Product (and to the Knowledge of FP1096, any other K-V
Products), has not and does not infringe or misappropriate, and in the case
of the FP1096 Business when conducted by K-V and/or Surviving Corporation
immediately following the Closing in the same manner as FP1096 as of
immediately prior to the Spin Off, will not infringe or misappropriate, the
Intellectual Property Rights of any Person, and neither FP1096, FemmePharma
or their Affiliates has received any written notice from any Person, or has
Knowledge of, any actual or threatened claim or assertion to the contrary or
of any facts or alleged facts which are likely to serve as the basis for any
such claim or assertion. Without limiting the foregoing, FP1096 and
FemmePharma have disclosed to K-V prior to the Closing Date the date,
author, recipient and subject matter of all patentability, validity,
infringement and noninfringement opinions obtained by or Known to FP1096 or
FemmePharma, related to the K-V Products or any Patent Rights or FemmePharma
Technology or third party Patents and provided a copy of each of them to
K-V.
(g) To the Knowledge of FP1096, FemmePharma and its
Affiliates, no Person has infringed or misappropriated or is infringing or
misappropriating any Patent Rights or FemmePharma Technology.
(h) FP1096, FemmePharma and their Affiliates have taken
all commercially reasonable steps that are required or necessary to protect
their rights in their confidential information and Trade Secrets or the
confidential information and Trade Secrets of others that they have
received. FP1096, FemmePharma and their Affiliates have, and enforce, a
policy requiring each employee and, to the extent applicable each consultant
and contractor, to execute proprietary information, confidentiality and
assignment agreements ("Proprietary Information Agreements") substantially
----------------------------------
in FP1096's standard forms (in the forms set forth on EXHIBIT K), and all
current and former employees, consultants and contractors of FP1096,
FemmePharma and their Affiliates (each of whom is listed in Section 3.14(h)
of the FP1096 Disclosure Letter) have executed such an agreement in
substantially FP1096's standard form. FP1096, FemmePharma and their
Affiliates have not delivered, and will not deliver, to K-V, Surviving
Corporation or their Affiliates any confidential or proprietary information
or Trade Secrets of any third party without disclosing to K-V, in writing in
advance of such disclosure, the source thereof and FP1096's, FemmePharma's
or their Affiliates' right to make such disclosure, as the case may be.
(i) No government funding, facilities or resources, or
facilities or resources of a university, college, other educational
institution or research center, or funding from third parties, was used in
the FP1096 Business, and, to FP1096's Knowledge, no Governmental Entity,
university, college, other educational institution or research center has
any rights thereto. To FP1096's Knowledge, no current or former employee,
consultant or independent contractor of FP1096 who was involved in, or who
contributed to, the creation or development of any Retained Assets, K-V
Products or Patent Rights or FemmePharma Technology, has performed services
for the government, a university, college or other educational institution,
or a research center, during a period of time during which such employee,
consultant or independent contractor was at the same time performing
services for FP1096, FemmePharma, or their Affiliates.
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3.15 AGREEMENTS, CONTRACTS AND COMMITMENTS.
(a) Except for the Retained Contracts, all other Contracts
shall be, and have been, transferred by FP1096 to FemmePharma prior to the
Closing Date. Other than the Retained Contracts, FP1096 and Surviving
Corporation shall have no Liability under or as a result of any Contract,
and FP1096 has no Knowledge of any event that would give rise to any such
Liability with the lapse of time, giving of notice or both. Each Retained
Contract is in full force and effect, and to the Knowledge of FP1096, no
party obligated to FP1096 thereunder is in default pursuant to any such
Retained Contract.
(b) The FP1096 Disclosure Letter sets forth all necessary
consents and notices to, parties to any Contracts as are required thereunder
in connection with the Merger, including to authorize the transfer of all
Contracts, other than the Retained Contracts, from FP1096 to FemmePharma or
for any Retained Contract to remain in full force and effect without
limitation, modification or alteration after the Effective Time so as to
preserve all rights of, and benefits to, FP1096 under such Retained
Contracts from and after the Effective Time. Following the Effective Time,
the Surviving Corporation will be permitted to exercise all of its rights
under the Retained Contracts in accordance with the terms and conditions
thereof.
3.16 INTERESTED PARTY TRANSACTIONS. No officer, director or
Shareholder of FP1096 or its Affiliates, nor any ancestor, sibling,
descendant or spouse of any of such persons, has: (i) any material interest
in any entity which furnished or sold, or furnishes or sells, services,
products, Technology or Intellectual Property Rights that FP1096 also
furnishes or sells, or proposes to furnish or sell, or (ii) a material
beneficial interest in any entity that purchases from or sells or furnishes
to FP1096 any goods or services, or (iii) any material beneficial interest
in any Retained Contract. No Shareholder has any loans outstanding from
FP1096 or its Affiliates.
3.17 GOVERNMENTAL AUTHORIZATION. Each governmental consent,
license, permit, grant or other authorization which is or was obtained by or
on behalf of FP1096 in connection with its Manufacture or Development of K-V
Products, including all Regulatory Approvals (collectively, "FP1096
------
Authorizations"), has been issued or granted to FP1096. Section 3.17 of the
--------------
FP1096 Disclosure Letter lists all FP1096 Authorizations. The FP1096
Authorizations are in full force and effect and constitute all consents,
licenses, permits, grants and other authorizations obtained or required as
of the Closing Date in connection with the Manufacture and Development by or
on behalf of FP1096 of K-V Products.
3.18 LITIGATION. There is no action, suit, claim or proceeding of
any nature pending or, to the Knowledge of FP1096, threatened against
FP1096, its properties (tangible or intangible, including any products and
all Technology and Intellectual Property Rights) or any of its officers or
directors, nor to the Knowledge of FP1096 is there any reasonable basis
therefor. There is no investigation or other proceeding pending or, to the
Knowledge of FP1096, threatened against FP1096, any of its properties
(tangible or intangible, including the K-V Products and all Technology and
Intellectual Property Rights) or any of its officers or directors by or
before any Governmental Entity, nor to the Knowledge of FP1096 is there any
reasonable basis therefor. No Governmental Entity has at any time challenged
or questioned the legal right of FP1096 to conduct its operations as
presently or previously conducted or as presently contemplated to be
conducted. The FP1096 Disclosure Letter contains a list of all actions,
suits and proceedings in
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which FP1096 has been involved. The FP1096 Disclosure Letter lists all
notices, allegations, claims, demands and papers concerning or alleging
wrongful death or personal injury from the use of any Product or Technology
owned or used by FP1096, or concerning any related lawsuit or similar
proceeding relating thereto.
3.19 MINUTE BOOKS. The minutes of FP1096 and FemmePharma provided
to counsel for K-V contain complete (except to the extent reasonably
redacted) and accurate records of all actions taken, and summaries, in all
material respects, of all meetings held, by the shareholders, the Board of
Directors of each of FP1096 (and any committees thereof) and FemmePharma
since the time of incorporation of FP1096 and FemmePharma, as applicable.
3.20 ENVIRONMENTAL MATTERS.
(a) CONDITION OF PROPERTY. As of the Closing, except in
compliance with Environmental Laws and in a manner that could not reasonably
be expected to subject FP1096 to Liability, no Hazardous Materials are
present on any Business Facility currently operated, occupied, controlled or
leased by FP1096, or were present on any other Business Facility at the time
it ceased to be operated, occupied, controlled or leased by FP1096. There
are no underground storage tanks, asbestos which is friable or likely to
become friable or PCBs present on any Business Facility currently owned,
operated, occupied, controlled or leased by FP1096, or as a consequence of
the acts of FP1096 or its agents.
(b) HAZARDOUS MATERIALS ACTIVITIES. FP1096 has conducted
all Hazardous Materials Activities in compliance in all material respects
with all applicable Environmental Laws. The Hazardous Materials Activities
of FP1096 prior to the Closing have not resulted in the exposure of any
person to a Hazardous Material in a manner which has caused or could
reasonably be expected to cause an adverse health effect to any such person.
(c) PERMITS. FP1096 holds all Environmental Permits
necessary for the conduct of its business as currently being conducted and
as currently contemplated to be conducted. All such Environmental Permits
are valid and in full force and effect. FP1096 has complied in all material
respects with all covenants and conditions of any Environmental Permit which
is or has been in force with respect to its Hazardous Materials Activities.
No circumstances exist which could cause any Environmental Permit to be
revoked, modified or rendered non-renewable upon payment of the permit fee.
All Environmental Permits and all other consents and clearances required by
any Environmental Law or any agreement to which FP1096 is bound as a
condition to the performance and enforcement of this Agreement have been
obtained or will be obtained prior to the Closing at no cost to K-V.
(d) ENVIRONMENTAL LITIGATION. No action, proceeding,
revocation proceeding, amendment procedure, writ, injunction or claim is
pending, or to the best Knowledge of FP1096, threatened, concerning or
relating to any Environmental Permit, Hazardous Materials Activity or any
Business Facility.
(e) ENVIRONMENTAL LIABILITIES. FP1096 does not Know of any
fact or circumstance, which could result in any Environmental Liabilities
which could reasonably be expected to result in material liability to the
business or financial status of FP1096. FP1096 has
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not entered into any agreement that may require it to guarantee, reimburse,
pledge, defend, hold harmless or indemnify any other party with respect to
liabilities arising out of Environmental Laws or Hazardous Materials
Activities.
(f) REPORTS AND RECORDS. FP1096 and FemmePharma have
delivered to K-V or made available for inspection by K-V and its agents,
representatives and employees all records in FP1096 and FemmePharma's
possession concerning their Hazardous Materials Activities and all
environmental audits and environmental assessments of any Business Facility
conducted at the request of, or otherwise in the possession of, FP1096 or
FemmePharma. FP1096 and FemmePharma have complied with all environmental
disclosure obligations imposed by applicable law with respect to the
transactions contemplated by this Agreement.
3.21 BROKERS' AND FINDERS' FEES. FP1096 has not incurred, nor will
it incur, directly or indirectly, any liability for brokerage or finders'
fees or agents' commissions, fees related to investment banking or similar
advisory services or any similar charges in connection with the Agreement or
any transaction contemplated hereby.
3.22 EMPLOYEE BENEFIT PLANS AND COMPENSATION.
(a) SCHEDULE. Each FP1096 Employee Plan, each Employee
Agreement, each Employment Liability and all other Liabilities related to
the foregoing constitute Transferred Assets and/or Transferred Liabilities
and do not constitute Retained Assets or Retained Contracts.
(b) EMPLOYEE PLAN COMPLIANCE. FP1096 has performed, in all
material respects, all obligations required to be performed by it under each
FP1096 Employee Plan, and each FP1096 Employee Plan has been established and
maintained in material compliance with its terms and in material compliance
with all applicable laws, statutes, orders, rules and regulations, including
but not limited to ERISA or the Code. No "prohibited transaction," within
the meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA,
and not otherwise exempt under Section 408 of ERISA, has occurred with
respect to any FP1096 Employee Plan. There are no actions, suits or claims
pending or, to the Knowledge of FP1096, FemmePharma or the Shareholders,
threatened or reasonably anticipated (other than routine claims for
benefits) against any FP1096 Employee Plan or against the assets of any
FP1096 Employee Plan. There are no audits, inquiries or proceedings pending
or to the Knowledge of FP1096, FemmePharma or the Shareholders or any ERISA
Affiliates, threatened by the IRS, DOL or any other Governmental Entity with
respect to any FP1096 Employee Plan. Neither FP1096 nor any ERISA Affiliate
is subject to any penalty or tax with respect to any FP1096 Employee Plan
under Section 502(i) of ERISA or Sections 4975 through 4980 of the Code.
FP1096 has timely made all contributions and other payments required by and
due under the terms of each FP1096 Employee Plan.
(c) NO PENSION PLANS. Neither FP1096 nor any ERISA
Affiliate has ever maintained, established, sponsored, participated in, or
contributed to any Pension Plans subject to Title IV of ERISA. At no time
has FP1096 or any ERISA Affiliate contributed to or been obligated to
contribute to any Multiemployer Plan. Neither FP1096 nor any ERISA Affiliate
has
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at any time ever maintained, established, sponsored, participated in or
contributed to any multiple employer plan or to any plan described in
Section 413 of the Code.
(d) NO SELF-INSURED PLANS. Neither FP1096 nor any ERISA
Affiliate has ever maintained, established sponsored, participated in or
contributed to any self-insured plan that provides benefits to employees
(including, without limitation, any such plan pursuant to which a stop-loss
policy or contract applies).
(e) NO POST-EMPLOYMENT OBLIGATIONS. No FP1096 Employee
Plan or Employee Agreement provides, or reflects or represents any liability
to provide, retiree life insurance, retiree health or other retiree employee
welfare benefits to any Person for any reason, except as may be required by
COBRA or other applicable statute, and FP1096 has never represented,
promised or contracted (whether in oral or written form) to any Employee
(either individually or to Employees as a group) or any other Person that
such Employee(s) or other Person would be provided with retiree life
insurance, retiree health or other retiree employee welfare benefits.
(f) EMPLOYMENT MATTERS. FP1096 is in material compliance
with all applicable foreign, federal, state and local laws, rules and
regulations respecting employment, employment practices, terms and
conditions of employment, employee safety and wages and hours. There are no
actions, suits, claims, labor disputes or grievances pending or threatened
or reasonably anticipated relating to any labor matters involving any
Employee, including, without limitation, charges of unfair labor practices.
FP1096 is not presently, nor has it been in the past, a party to, or bound
by, any collective bargaining agreement or union contract with respect to
Employees and no collective bargaining agreement is being negotiated by
FP1096.
(g) NO INTERFERENCE OR CONFLICT. Neither the execution nor
delivery of this Agreement, the License Agreement or the Related Agreements,
nor the carrying on of FP1096's, FemmePharma's and their Affiliates'
business, as presently conducted or proposed to be conducted, nor any
activity of such officers, directors, Employees or consultants in connection
with the carrying on of FP1096's, FemmePharma's and their Affiliates'
business as presently conducted or currently proposed to be conducted will,
to the Knowledge of FP1096, FemmePharma and the Shareholders, conflict with
or result in a breach of the terms, conditions, or provisions of, or
constitute a default under, any contract or agreement under which any of
such officers, directors, Employees or consultants is now bound.
(h) INTERNATIONAL EMPLOYEE PLAN. Neither FP1096 nor any
ERISA Affiliate currently has, nor has it ever had, the obligation to
maintain, establish, sponsor, participate in, be bound by or contribute to
any International Employee Plan.
3.23 INSURANCE. The FP1096 Disclosure Letter lists all insurance
policies and fidelity bonds covering the assets, business, equipment,
properties, operations, employees, officers and directors of FP1096,
including the type of coverage, the carrier, the amount of coverage, the
term and the annual premiums of such policies. There is no claim pending
under any of such policies or bonds as to which coverage has been
questioned, denied or disputed or that FP1096 has a reason to believe will
be denied or disputed by the underwriters of such policies or bonds. In
addition, there is no pending claim of which its total value (inclusive of
defense expenses) will
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exceed the policy limits. All premiums due and payable under all such
policies and bonds have been paid, (or if installment payments are due, will
be paid if incurred prior to the Closing Date) and FP1096 is otherwise in
material compliance with the terms of such policies and bonds (or other
policies and bonds providing substantially similar insurance coverage). Such
policies and bonds (or other policies and bonds providing substantially
similar coverage) have been in effect since the incorporation of FP1096 and
remain in full force and effect. FP1096 has no Knowledge or reasonable
belief of threatened termination of, or premium increase with respect to,
any of such policies. FP1096 has never maintained, established, sponsored,
participated in or contributed to any self-insurance plan.
3.24 COMPLIANCE WITH LAWS. FP1096 has complied with, is not in
violation of, and has not received any notices of violation with respect to,
any Law. Notwithstanding the foregoing, regulatory matters are exclusively
addressed in Section 3.7.
3.25 WARRANTIES; INDEMNITIES. Except as set forth in Section 3.25
of the FP1096 Disclosure Letter and warranties implied by law, FP1096 has
not given any warranties or indemnities relating to products or technology
sold or services rendered by FP1096.
3.26 COPIES OF MATERIALS. Prior to the Closing Date, K-V has been
provided copies of, and access to, all regulatory materials, Regulatory
Documentation and Data filed by or under authority of FP1096 with Regulatory
Authorities and the supporting Data therefor relevant to the K-V Products,
as required to support the Development, Manufacture and Regulatory Approval
of the K-V Products, as has been developed by or on behalf of FP1096, and
FP1096 has at all relevant times, and Surviving Corporation has as of the
Closing Date, the right to disclose such subject matter to K-V and any other
Person.
3.27 FULL DISCLOSURE. To the Knowledge of FP1096, neither this
Agreement, the License Agreement or the Related Agreements, including all
exhibits, schedules and certificates thereto furnished by FP1096 or
FemmePharma, contains, or will contain at the Effective Time, any untrue
statement of a material fact, or omits or will omit at the Effective Time to
state any material fact necessary in order to make the statements contained
herein or therein, in the light of the circumstances under which made, not
misleading.
3.28 INFORMATION STATEMENT. The information furnished on or in any
document mailed, delivered or otherwise furnished to Shareholders by FP1096
in connection with the solicitation of their consent to this Agreement, the
License Agreement, the Related Agreements and the transactions contemplated
hereby and thereby: (a) did not contain, at or prior to the Effective Time,
any untrue statement of a material fact, (b) complied in all respects with
the Charter Documents, Pennsylvania Law and all other applicable Law, (c)
specified the approval by the Shareholders of the appointment of the Seller
Representative, (d) included a description of the Merger, this Agreement,
the License Agreement, the Related Agreements and the transactions
contemplated hereby and thereby, (e) included a statement that appraisal
rights are available for FP1096 Capital Stock pursuant to Pennsylvania Law
in accordance with the terms thereof, (f) were submitted to and approved by
K-V prior to their distribution and (g) included the recommendation of the
Board of Directors of FP1096 in favor of the Merger, this Agreement, the
License Agreement, the Related Agreements and the transactions contemplated
hereby and
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thereby, and the conclusion of FP1096's Board of Directors that the terms
and conditions of the Merger are fair and reasonable to the Shareholders.
3.29 OWNERSHIP OF FP1096 CAPITAL STOCK. Each Shareholder is the
sole record and beneficial owner of FP1096 Capital Stock designated as being
owned by such Shareholder opposite such Shareholder's name in the FP1096
Disclosure Letter. Such FP1096 Capital Stock is not subject to any Liens or
to any rights of first refusal of any kind, and such Shareholder has not
granted any rights to purchase such FP1096 Capital Stock to any other
Person. Such FP1096 Capital Stock constitutes all of the FP1096 Capital
Stock owned, beneficially or of record, by such Shareholder, and such
Shareholder has no other options, warrants or other rights to acquire FP1096
Capital Stock. At the Effective Time, in exchange for the consideration paid
pursuant to Article II, K-V will receive good title to such FP1096 Capital
Stock, subject to no Liens retained, granted or permitted by such
Shareholder or FP1096.
3.30 ABSENCE OF CLAIMS BY THE SHAREHOLDERS. None of the
Shareholders have any claim against FP1096, whether present or future,
contingent or unconditional, fixed or variable, under any contract or on any
other basis whatsoever, whether in equity or at law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF K-V AND K-V SUB
Each of K-V and K-V Sub jointly and severally hereby represents and
warrants to FP1096 as follows:
4.1 ORGANIZATION, STANDING AND POWER. K-V is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware. K-V Sub is a corporation duly organized, validly existing and
in good standing under the laws of Pennsylvania. Each of K-V and K-V Sub has
the corporate power to own its properties and to carry on its business as
now being conducted and is duly qualified or licensed to do business and is
in good standing in each jurisdiction in which the failure to be so
qualified or licensed would have a material adverse effect on the business,
assets, including intangible assets, condition, financial or otherwise,
results of operation or capitalization of K-V, taken as a whole (a "K-V
---
Material Adverse Effect"); provided, however, that in no event shall any
----------------------- -----------------
occurrence relating to the industry in which K-V operates as a whole, other
than that which affects K-V disproportionately, be considered a K-V Material
Adverse Effect.
4.2 AUTHORITY. Each of K-V and K-V Sub has all requisite corporate
power and authority to enter into this Agreement, the License Agreement and
any Related Agreements to which it is a party and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement, the License Agreement and any Related Agreements to which it
is a party and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action on the
part of K-V and K-V Sub. This Agreement, the License Agreement and any
Related Agreements to which K-V and K-V Sub are parties have been duly
executed and delivered by K-V and K-V Sub and constitute the
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valid and binding obligations of K-V and K-V Sub, enforceable against each
of K-V and K-V Sub in accordance with their terms, except as such
enforceability may be limited by principles of public policy and subject to
the laws of general application relating to bankruptcy, insolvency and the
relief of debtors and rules of Law governing specific performance,
injunctive relief or other equitable remedies.
4.3 CONSENTS. No consent, waiver, approval, order or authorization
of, or registration, declaration or filing with, any Governmental Entity, is
required by or with respect to K-V or K-V Sub in connection with the
execution and delivery of this Agreement, the License Agreement and any
Related Agreements to which K-V or K-V Sub is a party or the consummation of
the transactions contemplated hereby and thereby, except for (i) such
consents, waivers, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable securities
laws, (ii) such consents, waivers, approvals, orders, authorizations,
registrations, declarations and filings which, if not obtained or made,
would not have a K-V Material Adverse Effect, and (iii) the filing of the
Merger Certificate or like instrument with the Secretary of the Commonwealth
of Pennsylvania.
4.4 CAPITAL RESOURCES. K-V has sufficient capital resources to pay
the Merger Consideration.
4.5 BROKER'S AND FINDERS' FEES. Neither K-V nor K-V Sub has
incurred, nor will it incur, directly or indirectly, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with this Agreement or any transaction contemplated hereby.
4.6 NO CONFLICTS. The execution and delivery of this Agreement, the
License Agreement and any Related Agreement to which K-V or K-V Sub is a
party do not, and the consummation of the transactions contemplated hereby
and thereby will not, conflict with or result in any conflict with: (i) any
provision of the articles or certificate of incorporation or bylaws of K-V
or K-V Sub, as amended, (ii) any mortgage, indenture, lease, contract or
other agreement or instrument, permit, concession, franchise or license to
which K-V or any of its respective properties or assets are subject, or
(iii) any Law or Order applicable to K-V or K-V Sub or their respective
properties or assets, except in each case where such conflict will not have
a K-V Material Adverse Effect.
4.7 INTERIM OPERATIONS OF K-V SUB. K-V Sub was formed solely for
the purpose of engaging in the transactions contemplated by this Agreement
and has engaged in no business activities other than as contemplated by this
Agreement.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 CONFIDENTIALITY.
(a) The terms, conditions, subject matter and transactions
contemplated by this Agreement, including, if applicable, the termination of
this Agreement and the reasons therefor, shall be considered "Confidential
Information" (as further defined in paragraph (d)
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below) that each party will maintain as confidential. Notwithstanding
anything herein to the contrary, each of the parties hereto has the right to
disclose the terms and conditions of this Agreement, without the prior
written consent of the other party hereto: (i) in confidence to its
directors, officers, employees, accountants, legal counsel, agents,
advisors, lenders, investors and on a need-to-know basis to others under
conditions which reasonably ensure the confidentiality thereof; (ii) as
required by any court or other governmental body, or by the New York Stock
Exchange; (iii) as otherwise required by Law; (iv) in confidence, in
connection with the enforcement of this Agreement or rights under this
Agreement; or (v) as required in connection with any government or
regulatory filings, including without limitation filings with the SEC. In
addition, (i) FemmePharma may issue a press release generally announcing the
transaction contemplated hereby provided it obtains the prior written
consent of K-V to such press release, which consent shall not be
unreasonably withheld, and (ii) K-V may issue a press release generally
announcing the transaction contemplated hereby with or without such consent.
(b) FP1096 recognizes that by reason of FP1096's ownership
of the Transferred Assets and the Transferred Liabilities prior to the
Closing, FP1096 may acquire FemmePharma Confidential Information.
Accordingly, FP1096 and K-V covenant and agree that, following the Closing,
FP1096 and K-V shall treat such FemmePharma Holding Company Confidential
Information in the same manner that it treats its own valuable confidential
information and shall not disclose such FemmePharma Confidential Information
on terms differently than it treats its own confidential information, except
to the extent: (i) such information becomes generally known to the public
through no fault of FP1096 or K-V, (ii) FP1096 or K-V; is advised in writing
by counsel that disclosure is required by Law or the order of any
Governmental Entity, or (iii) FP1096 or K-V reasonably believes that such
disclosure is required in connection with the defense of a lawsuit;
provided, that prior to disclosing any information pursuant to clause (i),
(ii) or (iii) above, FP1096 and K-V shall give prior written notice thereof
to FemmePharma and provide FemmePharma with the opportunity to contest such
disclosure and to seek confidential treatment thereof, and shall reasonably
cooperate with such efforts of FemmePharma. "FemmePharma Holding Company
Confidential Information" means written information identified as
"FemmePharma Holding Company Confidential Information" that has not been
disclosed to the public and that does not relate to the FP1096 Business or
the Retained Assets.
(c) FemmePharma recognizes that by reason of FP1096's
ownership of the FP1096 Business and the Retained Assets prior to the
Closing, FemmePharma has acquired Confidential Information related to
FP1096, the FP1096 Business and the Retained Assets, the use or disclosure
of which after the Closing could cause FP1096 or its Affiliates substantial
loss and damages that could not be readily calculated and for which no
remedy at law would be adequate. Accordingly, FemmePharma covenants and
agrees that, following the Closing, it shall treat such Confidential
Information in the same manner that it treats its own valuable confidential
information, and shall not use or disclose such Confidential Information,
except as expressly authorized in this Agreement and except to the extent:
(i) such information becomes generally known to the public through no fault
of FemmePharma, (ii) FemmePharma is advised in writing by counsel that
disclosure is required by Law or the order of any Governmental Entity, or
(iii) FemmePharma reasonably believes that such disclosure is required in
connection with the defense of a lawsuit; provided, that prior to disclosing
any information pursuant to clause (i), (ii) or (iii) above, FemmePharma
shall give prior written notice thereof to K-V and provide K-V
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with the opportunity to contest such disclosure and to seek confidential
treatment thereof, and shall reasonably cooperate with such efforts of K-V.
FemmePharma also covenants and agrees that following the Closing Date it
shall monitor compliance under and enforce the terms of its Proprietary
Information Agreements as reasonably necessary to prevent the misuse or
disclosure of such Confidential Information.
(d) In addition to the provisions of Section 5.3(a), the
term "Confidential Information" means information that has not been
disclosed to the public with respect to the present or future business,
operations, services, products or Technology relating to the FP1096 Business
and the Retained Assets, including confidential and proprietary information
and trade secrets of third parties learned in confidence pursuant to a
written confidentiality agreement. Notwithstanding anything to the contrary,
all Confidential Information within the FP1096 Business and the Retained
Assets (which, as set forth in the Asset Contribution Agreement, is all
information (including Data) "to the extent related to the K-V Products and
the FP1096 Business") shall be deemed to be the Confidential Information of
K-V and Surviving Corporation under this Agreement, and not the Confidential
Information of FemmePharma or its Affiliates, for purposes of this
Agreement, the License Agreement and the Related Agreements, including
Section 5.3(a). For the avoidance of doubt, the parties acknowledge and
agree that, as set forth in the Asset Contribution Agreement, all
information (including Data) of FP1096 to the extent not related to the K-V
Products or the FP1096 Business is included in the Transferred Assets now
owned by FemmePharma and is not Confidential Information.
5.2 EXPENSES. Whether or not the Merger is consummated, all fees
and expenses incurred in connection with the Merger including, without
limitation, all legal, financial advisory, consulting and all other fees and
expenses of third parties and severance/termination fees and expenses
incurred by a party in connection with the negotiation and effectuation of
the terms and conditions of this Agreement and the transactions contemplated
hereby ("Third Party Expenses"), shall be the obligation of the respective
--------------------
party incurring such fees and expenses; provided, however, that all Third
-----------------
Party Expenses of FP1096 incurred prior to the Effective Time, including the
cost of the Appraisal, shall be either paid by FP1096 prior to such time or
be borne by FemmePharma.
5.3 FIRPTA COMPLIANCE. On the Closing Date, FP1096 shall deliver to
K-V a properly executed statement (a "FIRPTA Compliance Certificate") in a
-----------------------------
form reasonably acceptable to K-V for purposes of satisfying K-V's
obligations under Treasury Regulation Section 1.1445-2(c)(3).
5.4 ADDITIONAL DOCUMENTS AND FURTHER ASSURANCES. Each party hereto,
at the request of another party hereto, shall execute and deliver such other
instruments and do and perform such other acts and things as may be
necessary or desirable for effecting completely the consummation of the
Merger and the transactions contemplated hereby.
5.5 RETAINED EMPLOYMENT LIABILITIES. From and after the Closing
Date, FemmePharma shall assume, and be solely responsible for: (i) all
Employment Liabilities whether incurred before, on or after the Closing
Date, and (ii) providing continuation coverage under COBRA to those
individuals who are M&A qualified beneficiaries of FP1096 (as defined
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in Treasury Regulation Section 54.4980B-9, Q&A-4(a)) with respect to the
transactions contemplated by this Agreement (collectively, the "Retained
--------
Employment Liabilities").
----------------------
5.6 ADDITIONAL INFORMATION. FemmePharma shall promptly supply K-V
and K-V Sub with any information, statements and certificates that may be
required in order to effectuate filings, notices, petitions or statements
required by any Governmental Entity in connection with the Merger and the
transactions contemplated hereby, including, without limitation, any filings
required under the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, or any rules and regulations of the SEC or
the New York Stock Exchange. FemmePharma shall give K-V notice and copies
(if applicable) of all future correspondence, notices and other
communications received from the FDA or other Regulatory Authorities
relating to the Initial Danazol Product and, unless requested by K-V in
writing, will no longer communicate with the FDA or such other Regulatory
Authorities with respect to the Initial Danazol Product.
5.7 NON-COMMERCIALIZATION.
(a) FemmePharma agrees that, on a country by country basis
in any country in the world, neither FemmePharma, nor Xxxxxxxx X. XxXxxxx
("XxXxxxx"), nor any FemmePharma Affiliate (but not including any bona fide
-------
third party that acquires all or substantially all of FemmePharma's assets
or equity interests) shall directly or indirectly (for example, through
licensees or in collaboration with third parties) commercialize any K-V
Product during the Non-Commercialization Period.
(b) The parties agree that the relevant public policy
aspects of the non-commercialization covenant set forth in this Section 5.7
have been discussed, and that every effort has been made to limit the
restrictions placed upon FemmePharma, XxXxxxx or any FemmePharma Affiliate
to those that are reasonable and necessary to protect the legitimate
interests of K-V and the Surviving Corporation. The restrictions contained
in this Section 5.7 are necessary for the protection of the business and
goodwill of K-V and the Surviving Corporation and are considered by
FemmePharma and XxXxxxx to be reasonable for such purposes. FemmePharma and
XxXxxxx acknowledge that the non-commercialization covenant set forth in
this Section 5.7 will not prevent FemmePharma or XxXxxxx from operating as
successful businesses, earning a livelihood and/or supporting themselves
during the relevant time periods.
(c) If any restriction set forth in this Section 5.7 is
found by any court of competent jurisdiction to be unenforceable because it
extends for too long a period of time or over too great a range of
activities or geographic area, it shall be interpreted to extend over the
maximum period of time, range of activities or geographic areas as to which
it may be enforceable.
5.8 TAX MATTERS.
(a) FINAL RETURNS. Subject to Section 5.8(d) below,
FemmePharma shall timely prepare or cause to be prepared any Returns to be
filed by FP1096 or FemmePharma for a period that (i) ends on or before
Closing or (ii) begins before Closing and ends after Closing (each a "Final
Return"), whenever due. All Final Returns shall be prepared consistently
with (i)
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FP1096's past practice (except to the extent FemmePharma and FP1096 mutually
agree that deviations from past practices are required by applicable law),
(ii) the financial statements attached in the FP1096 Disclosure Letter
hereto, and (ii) the asset valuation set forth in an appraisal of
FemmePharma obtained by FP1096 prior to the date hereof. FemmePharma shall
deliver a draft of each Final Return to FP1096 for its review and comments
at least twenty (20) business days prior to the due date (including
applicable extensions) thereof, along with written notice of the due date
(including applicable extensions)of the Return. FemmePharma shall consider
in good faith any comments provided, or changes suggested, by FP1096
relating to any such Final Return to the extent the comments or changes are
provided to FemmePharma at least ten (10) business days prior to the due
date (including applicable extensions) of the Final Return, and will use its
reasonable efforts to revise the Final Return to incorporate such changes or
suggestions, to the extent they either do not materially adversely affect
FemmePharma or are consistent with the second sentence of this Section
5.8(a). FP1096 shall timely file the Final Returns for FP1096 prepared in
accordance with this Section 5.8(a). FemmePharma shall be responsible for
and shall pay (or shall reimburse FP1096 if it is required by law to pay)
all Taxes attributable to the taxable period or portion thereof ending on or
prior to the Closing Date (the "Pre-Closing Tax Period"), with property and
similar taxes allocated to the Pre-Closing Tax Period on a per diem basis.
For the avoidance of doubt, the Transferred Liabilities (as defined in the
Asset Contribution Agreement) shall be attributable to the Pre-Closing Tax
Period. FemmePharma shall be responsible for the timely preparation, filing
and delivery of all forms W-2 and 1099 with respect to employees and
contractors of FP1096 for the Pre-Closing Tax Period, and will provide
FP1096 with copies of such forms within ten (10) days after the filing with
the Internal Revenue Service. FemmePharma shall be responsible for the
withholding of the appropriate taxes on compensation realized by employees
and former employees on the exercise of any options prior to Closing, and
will timely pay such amounts to the appropriate tax authorities.
(b) COOPERATION. FP1096 and its Affiliates shall cooperate
fully with FemmePharma in the preparation of the Final Returns and any
Audits (as defined below), including allowing FemmePharma and its
representatives access to the books and records of the FP1096, and the
employees of FP1096 or K-V and it affiliates as reasonably needed.
(c) AUDITS. If FP1096 or an Affiliate receives a notice of
a an intention of a Tax authority to audit FP1096 for periods (or a portion
of period ) that began before Closing, FP1096 shall notify FemmePharma
within five (5) business days of the receipt of the notice. For this
purpose, an audit includes any request by a Tax authority or other
Governmental Entity for information with respect to Taxes or Returns, and
any related administrative or judicial proceedings (an "Audit"). FemmePharma
-----
shall have the right to control any Audit and any related administrative or
judicial proceedings that relate solely to any taxable period that ends on
or prior to the Closing Date. FP1096 may reasonably participate in such
proceedings at its own expense. FP1096 shall have the right to control any
Audit of FP1096 and any related administrative or judicial proceedings that
relate to any taxable period that begins before the Closing Date and ends
after the Closing Date or that begins after the Closing Date. FemmePharma
may reasonably participate in such proceedings at its own expense if the
resolution of such proceedings would give rise to an indemnification
obligation on the part of the Shareholders or FemmePharma. FP1096 may not
settle, compromise or conclude any Audits that include a period that begins
before Closing without the prior written consent of
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FemmePharma, which shall not be unreasonably withheld, conditioned or
delayed. To the extent this Section 5.8(c) is inconsistent with Section
7.3(b), this Section shall control any claims for indemnification with
respect to Taxes.
(d) AMENDED RETURNS. FP1096 shall not file any amended
Returns for periods beginning prior to the Closing Date, without the prior
written consent of FemmePharma which consent shall not be unreasonably
withheld, conditioned or delayed.
(e) NET OPERATING LOSSES. Notwithstanding any other
provision of this Agreement to the contrary, FemmePharma and FP1096 make no
representations as to the amount or the availability of FP1096's net
operating loss carryforward to offset any income of attributable to any
taxable period or portion thereof beginning after the Closing Date. For the
avoidance of doubt, the preceding sentence is not intended to limit FP1096's
representation set forth in Section 3.11(a)(xi) of this Agreement, FP1096
will take no action after Closing that would limit the ability of FP1096 to
claim the net operating loss as a deduction on a Final Return, or any
amended Final Return, or in an audit of a Final Return. Without limiting the
foregoing sentence, K-V shall not make an election pursuant to Section 338
of the Code with respect to the Merger.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER.
The respective obligations of FP1096, K-V and K-V Sub to effect the Merger
shall be subject to the satisfaction, at or prior to the Effective Time, of
the condition that no Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive
order, decree, injunction or other order, whether temporary, preliminary or
permanent, which is in effect and which has the effect of making the Merger
illegal or otherwise prohibiting consummation of the Merger.
6.2 CONDITIONS TO THE OBLIGATIONS OF K-V AND K-V SUB. The
obligations of K-V and K-V Sub to consummate and effect this Agreement and
the transactions contemplated hereby shall be subject to the satisfaction at
or prior to the Effective Time of each of the following conditions, any of
which may be waived, in writing, by K-V and K-V Sub:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. (i) The
representations and warranties made in this Agreement by FP1096, FemmePharma
and the Shareholders shall be true, correct and complete as of the date
hereof and as of the Closing Date, except for those representations and
warranties that refer to facts existing at a specific date, which shall be
true, correct and complete as of such date, and (ii) FP1096, FemmePharma and
the Shareholders shall have performed or complied in all respects with all
obligations and covenants required by this Agreement to be performed or
complied with by FP1096, FemmePharma and the Shareholders, as the case may
be, at or prior to the Closing.
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(b) THIRD PARTY CONSENTS. FP1096 shall have obtained and
delivered to K-V all consents, waivers and approvals listed on Schedule
6.2(b) (the "Third Party Consents"), which Third Party Consents shall be in
--------------------
a form reasonably acceptable to K-V.
(c) TERMINATION OF AGREEMENTS. FP1096 shall have
terminated each of those agreements listed on Schedule 6.2(c) to this
Agreement and each such agreement shall be of no further force or effect.
(d) RELEASE OF LIENS. K-V shall have received from FP1096
a duly and validly executed copy of all agreements, instruments,
certificates and other documents, in form and substance reasonably
satisfactory to K-V, that are necessary or appropriate to evidence the
release of all Liens set forth in Schedule 6.2(d) to this Agreement.
(e) RESIGNATION OF OFFICERS AND DIRECTORS. K-V shall have
received a written resignation from each of the officers and directors of
FP1096 effective as of the Effective Time.
(f) APPRAISAL RIGHTS. No Shareholder shall continue to
have a right to exercise appraisal, dissenters' or similar rights under
applicable Law with respect to their FP1096 Capital Stock by virtue of the
Merger.
(g) CERTIFICATE OF FP1096. K-V shall have received a
certificate, validly executed by the Chief Executive Officer of FP1096 for
and on FP1096's behalf, to the effect that, as of the Closing:
(i) all representations and warranties made by
FP1096 in this Agreement (other than the representations and warranties of
FP1096 as of a specified date, which were true and correct as of such date)
were true and correct on the date they were made and are true and correct on
and as of the Closing Date as though such representations and warranties
were made on and as of such time;
(ii) all covenants and obligations under this
Agreement to be performed or complied with by FP1096 on or before the
Closing have been performed or complied with; and
(iii) the conditions to the obligations of K-V
and K-V Sub set forth in this Section 6.2 have been satisfied in full
(unless otherwise waived in accordance with the terms hereof).
(h) CERTIFICATE OF FEMMEPHARMA. K-V shall have received a
certificate, validly executed by the Chief Executive Officer of FemmePharma
for and on FemmePharma's behalf, to the effect that, as of the Closing:
(i) all representations and warranties made by
FemmePharma in this Agreement (other than the representations and warranties
of FemmePharma as of a specified date, which were true and correct as of
such date) were true and correct on the date they were made and are true and
correct on and as of the Closing Date as though such representations and
warranties were made on and as of such time;
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(ii) all covenants and obligations under this
Agreement to be performed or complied with by FemmePharma on or before the
Closing have been performed or complied with; and
(iii) the conditions to the obligations of K-V
and K-V Sub set forth in this Section 6.2 have been satisfied in full
(unless otherwise waived in accordance with the terms hereof).
(i) CERTIFICATE OF SECRETARY OF FP1096. K-V shall have
received a certificate, validly executed by the Secretary of FP1096,
certifying as to: (i) the continuing effectiveness of the Charter Documents
of FP1096, and (ii) the valid adoption of resolutions of the Board of
Directors of FP1096 (whereby the Merger and the transactions contemplated
hereunder, under the License Agreement and under the Related Agreements were
approved by the Board of Directors) and (iii) that the shareholders of
FP1096 constituting the Requisite Shareholder Vote have approved this
Agreement and the consummation of the transactions contemplated hereby.
(j) CERTIFICATE OF SECRETARY OF FEMMEPHARMA. K-V shall
have received a certificate, validly executed by the Secretary of
FemmePharma, certifying as to: (i) the continuing effectiveness of the
Charter Documents of FemmePharma, and (ii) the valid adoption of resolutions
of the Board of Directors of FemmePharma (whereby the transactions
contemplated hereunder, under the License Agreement and under the Related
Agreements, as applicable to FemmePharma, were approved by its Board of
Directors) and (iii) that the sole stockholder of FemmePharma immediately
prior to the Spin Off has approved this Agreement, the License Agreement and
the Related Agreements and the consummation of the transactions contemplated
hereby and thereby.
(k) CERTIFICATES OF GOOD STANDING. K-V shall have received
a certificate of good standing regarding FP1096 from the Secretary of State
of the Commonwealth of Pennsylvania, and a good standing certificate from
each jurisdiction in which FP1096 is qualified to do business, each of which
is dated within a reasonable period prior to Closing.
(l) FIRPTA CERTIFICATE. K-V shall have received a copy of
the FIRPTA Compliance Certificate, validly executed by a duly authorized
officer of FP1096.
(m) EMPLOYEES. On the Closing Date, FP1096 shall have no
employees.
(n) EXERCISE OR TERMINATION OF FP1096 OPTIONS AND FP1096
WARRANTS. K-V shall have received evidence reasonably satisfactory to it
that all outstanding FP1096 Options and FP1096 Warrants have been exercised
in full or terminated immediately prior to the Effective Time.
(o) ASSET CONTRIBUTION AGREEMENT. The assignment and
transfer from FP1096 to FemmePharma of all of the Transferred Assets and the
assumption by FemmePharma of all of the Transferred Liabilities of FP1096
shall have occurred immediately prior to the Effective Time in accordance
with the terms of the Asset Contribution Agreement.
(p) SPIN OFF. The Spin Off shall have been completed to
the satisfaction of K-V. Without limiting the foregoing, FP1096 shall have
issued as a dividend to each of its
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shareholders other than K-V, which exclusion of K-V may be accomplished
through the waiver of receipt by K-V of such dividend or some other method
that complies with all applicable Laws, all of the issued and outstanding
capital stock of FemmePharma in a manner that does not result in the
imposition of any Tax on K-V.
(q) LICENSE AGREEMENT. The License Agreement shall have
been executed and shall be in full force and effect, and FemmePharma shall
not be in breach of any provision thereof.
(r) RELEASE AGREEMENT. The Release Agreement shall have
been executed and shall be in full force and effect, and FemmePharma shall
not be in breach of any provision thereof.
(s) TRANSITION AGREEMENT. The Transition Agreement shall
have been executed and shall be in full force and effect, and FemmePharma
shall not be in breach of any provision thereof.
(t) ESCROW AGREEMENT. The Escrow Agreement shall have been
executed and shall be in full force and effect, and FemmePharma shall not be
in breach of any provision thereof.
(u) APPRAISAL. FP1096, at its expense, shall have: (i)
hired an independent appraiser of recognized standing mutually agreeable to
K-V and FP1096 to perform an appraisal of the value of FemmePharma's
business, including the Transferred Assets and Transferred Liabilities (the
"Appraisal"), and (ii) delivered the Appraisal to FP1096. The Appraisal
---------
shall have resulted in an appraised value of the FemmePharma business,
including the value of the Transferred Assets and Transferred Liabilities,
of no greater than $4,000,000. FP1096 and FemmePharma shall report the Spin
Off for all Tax purposes consistent with the Appraisal.
(v) DELIVERY OBLIGATIONS. FP1096 and FemmePharma shall
have fulfilled all of their delivery obligations set forth in Section 2.11
hereof.
(w) NO GOVERNMENTAL OR OTHER ORDER. No court order or
regulation shall have been enacted, promulgated, issued or entered against
K-V or FP1096 that prohibits consummation of the Merger and the other
terminations contemplated by this Agreement.
(x) SHAREHOLDER APPROVAL. The Shareholders of FP1096 shall
have duly approved and adopted the Merger, this Agreement and the
transactions contemplated hereby in accordance with the provisions of
applicable Law and FP1096's articles of incorporation and bylaws.
6.3 CONDITIONS TO OBLIGATIONS OF FP1096, FEMMEPHARMA AND THE
SHAREHOLDERS. The obligations of FP1096, FemmePharma and each of the
Shareholders to consummate and effect this Agreement and the transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Effective Time of each of the following conditions, any of which may be
waived, in writing, exclusively by FP1096:
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(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. (i) The
representations and warranties of K-V and K-V Sub made in this Agreement
shall be true, correct and complete as of the date hereof and as of the
Closing Date, as though made on such date, except for those representations
and warranties that refer to facts existing at a specific date, which shall
be true, correct and complete as of such date, and (ii) K-V and K-V Sub
shall have performed or complied with all obligations and covenants required
by this Agreement to be performed or complied with by K-V and K-V Sub, as
the case may be, at or prior to the Closing.
(b) CERTIFICATE OF K-V. FP1096 shall have received a
certificate, validly executed on behalf of K-V by a Vice President for and
on its behalf to the effect that, as of the Closing:
(i) all representations and warranties made by
K-V and K-V Sub in this Agreement (other than the representations and
warranties of K-V and K-V Sub as of a specified date, which were true and
correct as of such date) were true and correct on the date they were made
and are true and correct on and as of the Closing Date as though such
representations and warranties were made on and as of such time; and
(ii) all covenants and obligations under this
Agreement to be performed by K-V and K-V Sub on or before the Closing have
been so performed.
(c) DELIVERY OBLIGATIONS. K-V shall have fulfilled all of
its delivery obligations set forth in Section 2.12 hereof.
(d) NO GOVERNMENTAL OR OTHER ORDER. No court order or
regulation shall have been enacted, promulgated, issued or entered against
K-V or FP1096 prohibits consummation of the Merger and the other
terminations contemplated by this Agreement.
(e) SHAREHOLDER APPROVAL. FP1096's shareholders shall have
duly approved and adopted the Merger, this Agreement and the transactions
contemplated hereby in accordance with the provisions of applicable Law and
FP1096's articles of incorporation and bylaws.
ARTICLE VII
SURVIVAL; INDEMNIFICATION
7.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of FP1096 and FemmePharma contained in this
Agreement, in the License Agreement, in any Related Agreement or in any
document, certificate or other instrument required to be delivered hereunder
or thereunder, shall survive the Closing Date and remain in full force and
effect as follows: (a) until the date that is thirty (30) days after the end
date of the longest applicable statute of limitations, including extensions
thereof, with respect to representations and warranties made in Section 3.11
(Tax Matters), and (b) until the date that is two (2) years following the
Closing Date, with respect to all other representations and warranties
provided, however, that if a Claim Notice is given prior to the applicable
-----------------
termination date, then
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any representation or warranty that is related to such Claim Notice that
would otherwise terminate in accordance with clause (a) or (b) of this
Section 7.1 will continue to survive indefinitely only with respect to such
Claim until the Claim is finally resolved. The representations and
warranties of K-V and K-V Sub contained in this Agreement, or in any
certificate or other instrument delivered pursuant to this Agreement, shall
terminate two (2) years following the Closing Date.
7.2 INDEMNIFICATION.
(a) INDEMNIFICATION BY FEMMEPHARMA. Subject to the terms
and conditions of this Article VII, FemmePharma (the "Purchaser Indemnifying
----------------------
Party") agrees to indemnify, defend, save and hold harmless K-V and the
-----
Surviving Corporation and their respective officers, directors, agents and
assigns (the "Purchaser Indemnified Parties"), against all Damages incurred
-----------------------------
in connection with, arising out of, resulting from or incident to:
(i) any breach or inaccuracy of a representation
or warranty of FP1096 or FemmePharma contained in this Agreement or the
Contribution Agreement or in any certificate delivered pursuant hereto or
thereto;
(ii) any breach or any failure to fulfill,
perform or comply with any covenant or agreement made by FP1096 or
FemmePharma in this Agreement or the Contribution Agreement or any schedule,
exhibit, document, certificate or other instrument delivered pursuant hereto
or thereto; provided, however, that with respect to FP1096 only, this clause
-----------------
(ii) shall apply only to such breaches and failures to fulfill, perform or
comply that occur on or prior to the Closing Date, and such breaches and
failures on the part of FP1096 occurring on or prior to the Closing Date
shall be part of and included in the Transferred Liabilities;
(iii) the Transferred Assets or the Transferred
Liabilities, including the failure to obtain consents and waivers to
transfer the same; and
(iv) the amount of any Dissenting Share Payments.
For purposes of clarity, notwithstanding anything to the contrary
contained herein, from and after the Closing Date, FemmePharma and the
Shareholders shall have no right of contribution or any other right to
receive payment or indemnification from FP1096 with respect to any Damage
claimed by an Indemnified Party.
Payments by a Purchaser Indemnified Party of amounts for which such
Purchaser Indemnified Party is indemnified hereunder shall not be a
condition precedent to recovery.
(b) INDEMNIFICATION BY K-V. Subject to the terms and
conditions of this Article VII, K-V (the "Seller Indemnifying Party") agrees
-------------------------
to indemnify, defend, save and hold harmless FemmePharma and its officers,
directors, agents and assigns (the "Seller Indemnified Party"), against all
------------------------
Damages incurred in connection with, arising out of, resulting from or
incident to:
(i) any breach or inaccuracy of a representation
or warranty of K-V contained in this Agreement or in any certificate
delivered pursuant hereto; and
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(ii) any breach or any failure to fulfill,
perform or comply with any covenant or agreement made by K-V in this
Agreement, or any schedule, exhibit, document, certificate or other
instrument delivered pursuant hereto or thereto.
For purposes of this Article VII, (i) each of the Purchaser
Indemnifying Party and the Seller Indemnifying Party may be referred to from
time to time, as appropriate, as an "Indemnifying Party" or the
------------------
"Indemnifying Parties" and (ii) each of the Purchaser Indemnified Parties
--------------------
and the Seller Indemnified Party may be referred to from time to time, as
appropriate, as an "Indemnified Party" or the "Indemnified Parties."
----------------- -------------------
7.3 PROCEDURE.
(a) The Indemnified Parties shall cooperate in all
reasonable respects with the Indemnifying Parties in the investigation,
trial and defense of any lawsuit or action related to a third party Claim
and any appeal arising therefrom; provided, however, that the Indemnified
-----------------
Parties may at their own cost, participate in negotiations, arbitrations and
the investigation, trial and defense of any such lawsuit or action and any
appeal arising therefrom. The parties shall cooperate with each other in any
notifications to insurers. Notwithstanding anything to the contrary
contained herein, an Indemnified Party shall have the right to make a Claim
directly against an Indemnifying Party, and seek indemnification directly
from such Indemnifying Party under this Article VII for Damages arising out
of, attributable to, or resulting from any inaccuracy in or breach of any of
the representations, warranties, covenants or agreements of the Indemnifying
Party. The Indemnified Party shall be entitled to seek satisfaction of its
Claim against the Indemnifying Party in a court of law.
(b) If a claim for Damages (a "Claim") is to be made by an
-----
Indemnified Party against an Indemnifying Party, the Indemnified Party shall
give written notice (a "Claim Notice") to the Indemnifying Party as soon as
------------
reasonably practicable after the Indemnified Party obtains actual knowledge
of any fact, condition or event which is reasonably likely to give rise to
Damages for which indemnification may be sought under this Article VII. If
any lawsuit or enforcement action is filed against an Indemnified Party,
written notice thereof shall be given to the Indemnifying Party as promptly
as practicable (and in any event within thirty (30) calendar days after the
service of the citation or summons). Notwithstanding the foregoing, the
failure of the Indemnified Party to give timely notice hereunder for any
purpose shall not affect the Indemnified Party's rights to indemnification
hereunder, except to the extent that the Indemnifying Party has been damaged
by such failure. After such notice, except as provided in the remainder of
this paragraph (b), if the Indemnifying Party shall acknowledge in writing
to the Indemnified Party that the Indemnifying Party shall be obligated
under the terms of the indemnity hereunder in connection with, or otherwise
elects to defend, such lawsuit or action, then the Indemnifying Party shall
be entitled, at its own election and cost, risk and expense: (i) to take
control of the defense and investigation of such lawsuit or action, (ii) to
employ and engage attorneys of its own choice to handle and defend the same
unless the named parties to such action or proceeding, including any
impleaded parties, include both an Indemnifying Party and an Indemnified
Party and the Indemnified Party has been advised by counsel that there may
be one or more legal defenses available to such Indemnified Party that are
different from or additional to those available to the Indemnifying Party or
advised that there is a conflict or potential conflict of interest of such
counsel, in which event the affected Indemnified Party shall
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be entitled, at its own cost, risk and expense, to separate counsel of its
own choosing and (iii) to compromise or settle such lawsuit or action, which
compromise or settlement shall be made only with the prior written consent
of the Indemnified Party(ies), such consent not to be unreasonably withheld
or delayed; provided, however, that the Indemnifying Parties shall be
-----------------
entitled, without consent, to compromise or settle any Claim solely for
money damages provided that: (x) such amounts are available under the Escrow
Fund pursuant to the Escrow Agreement and (y) the Indemnified Parties are
unconditionally released from any further liability with respect to such
Claim.
(c) If the Indemnifying Party fails to assume the defense
of a lawsuit or action within fifteen (15) calendar days after receipt of
the Claim Notice, the Indemnified Party against which such lawsuit or action
has been asserted will (upon delivering notice to such effect to the
Indemnifying Party) have the right to undertake the defense, compromise or
settlement of such lawsuit or action on behalf of and for the account and
risk of the Indemnifying Party, and the Indemnifying Party shall, upon
request of the Indemnified Party, promptly pay to such Indemnified Party, in
accordance with the terms of this Article VII, the amount of any Damages
resulting from such lawsuit or action, including the amount of Damages
incurred by the Indemnified Party in the defense, compromise or settlement
thereof, including without limitation attorneys' fees; provided, however,
-----------------
that such lawsuit or action shall not be compromised or settled without the
written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed. In the event the Indemnified Party assumes
the defense of the lawsuit or action, the Indemnified Party will keep the
Indemnifying Party informed of the progress of any such defense, compromise
or settlement. Subject to the provisions of this Section 7.3 and Section
7.4, the Indemnifying Party shall be liable for any settlement of any action
effected pursuant to and in accordance with this Article VII and for any
final judgment, subject to any right of appeal, and the Indemnifying Party
agrees to indemnify and hold harmless the Indemnified Party from and against
any Damages by reason of such settlement or judgment.
7.4 LIMITATION ON INDEMNIFICATION; ESCROW.
(a) The indemnification obligations under this Agreement
shall be limited to claims for Damages made on or prior to the last date of
survival thereof referred to in Section 7.1. The indemnification obligations
with respect to any breach of any covenant or agreement pursuant to Section
7.2, shall survive indefinitely with respect to Claims made pursuant to the
terms of this Agreement, subject to the provisions of this Section 7.4.
(b) Subject to the terms and conditions of this Agreement,
the Indemnifying Party shall not be liable for Damages incurred by any
Indemnified Party pursuant to Section 7.2 unless and until the aggregate
amount of Damages relating to such Claims for which the Indemnified Parties,
in the aggregate, are seeking indemnification under Section 7.2 exceeds
$150,000 (the "Threshold); provided, however, that in the event the
--------- -----------------
aggregate amount of Damages for which the Indemnified Party is seeking
indemnification pursuant to Section 7.2 exceeds the Threshold, such party
may recover the full amount of such Damages up to, and not in excess of,
$1,750,000 (the "Cap"); provided, however, that the Cap shall not apply to
---
Claims by the Purchaser Indemnified Party relating to or arising from the
Transferred Liabilities, and the Purchaser Indemnified Party may recover the
full amount of Damages relating to any such Claim. Notwithstanding the
foregoing, nothing contained herein shall limit the amount of
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recovery or constitute a waiver by any Indemnifying Party or a limitation of
any of the rights or remedies of an Indemnified Party arising as a result of
FemmePharma's fraud.
(c) The Indemnified Parties shall have the right to make a
Claim hereunder prior to the time at which the Threshold that is applicable
to such Claim has been surpassed for the purposes of asserting such claim
within the relevant survival period of the applicable indemnification
obligation. Any such Claim made within such period shall, to the extent such
Threshold ultimately is met, survive until its final resolution.
(d) The Purchaser Indemnified Parties further agree that
if for any reason the amount of the Escrow Fund under the Escrow Agreement
is insufficient to cover the indemnification claims of the Purchaser
Indemnified Parties, the Purchaser Indemnified Parties shall have no
recourse whatsoever to any Shareholders for any of such Damages; provided,
however, that this provision shall not constitute a waiver by the Purchaser
Indemnified Parties or a limitation or restriction of any of the rights or
remedies of the Purchaser Indemnified Parties arising as a result of any
action, claim or lawsuit based on fraud of a Shareholder.
(e) K-V and the Surviving Corporation acknowledge that
they are not relying upon any financial forecasts or projections from FP1096
or FemmePharma in connection with the consummation of the transactions
contemplated by this Agreement.
(f) Each Indemnified Party shall use reasonable commercial
efforts to mitigate its losses upon and after having actual knowledge of any
event giving rise to an indemnification claim.
(g) Any claim for Damages shall be net of any third party
payments, tax benefits actually recognized (including tax benefits
associated with reclassification of an expense deduction which changes the
timing of such deduction) and insurance proceeds actually received by the
Indemnified Party. Each Indemnified Party shall be obligated in any claim
for indemnification hereunder to make a claim under any applicable insurance
policy maintained by it.
(h) Notwithstanding any other provision of this Agreement,
FemmePharma shall not be considered to be in breach of any of its
representations or warranties under this Agreement if and to the extent any
such representation or warranty is rendered inaccurate as a result of, and
FemmePharma shall not be obligated to provide indemnification with respect
to any Taxes or other Damages arising from, either:
(i) the breach by K-V of any agreements contained
in Section 5.8; or
(ii) any transactions taken by or with respect to
FP1096 or any of its Subsidiaries on the Closing Date after the Effective
Time, other than transactions that are (A) taken in the ordinary course of
business and (B) properly allocable to tax periods of FP1096 and its
Subsidiaries ending on the Closing Date.
(i) Amounts payable in respect of the indemnification
obligations under Sections 7.2 hereof shall be treated by the parties as
adjustments to the Merger Consideration to the extent not prohibited by law.
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7.5 EXCLUSIVE REMEDY. Indemnification pursuant to this Article VII,
including claims under the Escrow Agreement, is the sole remedy of the
Indemnified Parties for claims arising out of this Agreement or the
Contribution Agreement. Notwithstanding any provision in this Agreement to
the contrary, in no event shall the Shareholders have any liability under
this Agreement except indirectly and only to the extent of such
Shareholder's respective interest in the Escrow Fund.
7.6 ESCROW AND ESCROW RELEASE AMOUNT. The parties and the
Shareholders hereby agree that any indemnification claims made by Purchaser
Indemnified Parties against Purchaser Indemnifying Parties hereunder, to the
extent properly made and not disputed hereunder, shall be paid first from
the Escrow Fund (notwithstanding that the Purchaser Indemnifying Party was
not the only Persons on whose behalf funds were contributed to the Escrow
Fund) until the Escrow Fund is exhausted in its entirety or has been
released in its entirety in accordance with the terms of the Escrow
Agreement, and thereafter, to the extent any amount remains unpaid under
Section 8.1(a), shall be paid by FemmePharma; provided, however, that the
foregoing clause shall not apply to claims made by Purchaser Indemnified
Parties against FemmePharma relating to or arising from the Transferred
Liabilities. With respect to any such claim payable from the Escrow Fund,
following compliance with the procedures set forth in this Article VII, K-V
shall promptly, and in any event not later than ten (10) business days
thereafter, give notice to the Escrow Agent of such claim, as provided in
the Escrow Agreement. Neither the exercise of nor the failure to exercise
such right to give notice of a claim in accordance with the Escrow Agreement
will limit any Purchaser Indemnified Party in any manner in the enforcement
of any remedies that may be available to it hereunder unless FemmePharma is
materially prejudiced by such failure.
7.7 SELLER REPRESENTATIVE.
(a) By virtue of the approval of the Merger and this
Agreement by the requisite vote of the Shareholders, each of the
Shareholders shall be deemed to have agreed to appoint Xxxxxxx X. XxXxxxx,
Xx. as its agent and attorney-in-fact, as the "Seller Representative" for
and on behalf of each of the Shareholders, to give and receive notices and
communications, to authorize payment to any Purchaser Indemnified Party
pursuant to the terms of this Article VII and the Escrow Agreement, to
object to such payments, to agree to, negotiate, enter into settlements and
compromises of, and comply with orders of courts with respect to such
claims, to negotiate, investigate and resolve all matters relating to this
Article VII or the Escrow Agreement, to assert, negotiate, enter into
settlements and compromises of, and comply with orders of courts with
respect to, any other claim by any Purchaser Indemnified Party against any
Shareholder or by any such Shareholder against any Purchaser Indemnified
Party or any dispute between any Purchaser Indemnified Party and any such
Shareholder, in each case relating to this Agreement, the License Agreement
or the Related Agreements or the transactions contemplated hereby or
thereby, and to take all other actions that are either: (i) necessary or
appropriate in the judgment of the Seller Representative for the
accomplishment of the foregoing or (ii) specifically mandated by the terms
of this Agreement. No bond shall be required of the Seller Representative,
and the Seller Representative shall not receive any compensation for its
services. Notices or communications to or from the Seller Representative
shall constitute notice to or from the Shareholders.
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(b) The Seller Representative shall not be liable for any
act done or omitted to be done hereunder as Seller Representative while
acting in good faith and in the exercise of reasonable judgment. A decision,
act, consent or instruction of the Seller Representative, including but not
limited to an amendment, extension or waiver of this Agreement, shall
constitute a decision of the Shareholders, individually and collectively,
and shall be final, binding and conclusive upon the Shareholders; and K-V
may rely upon any such decision, act, consent or instruction of the Seller
Representative as being the decision, act, consent or instruction of the
Shareholders. K-V is hereby relieved from any liability to any Person for
any acts done by it in accordance with any such decision, act, consent or
instruction of the Seller Representative.
ARTICLE VIII
GENERAL PROVISIONS
8.1 TERMINATION. This Agreement may be terminated by written notice
of termination only as follows: (a) by mutual consent of K-V and FP1096; (b)
by either K-V or FP1096 if the Closing has not occurred on or before May 4,
2005, unless the reason that the Closing has not occurred shall be the
failure of the party seeking to terminate this Agreement to fulfill its
obligations hereunder; or (c) by either K-V or FP1096 if there has been a
material misrepresentation or material breach on the part of the other party
in the representations, warranties, covenants or agreements contained herein
which is not cured within ten business days after such other party has been
notified of the intent to terminate this Agreement pursuant to this Section
8.1. Each party expressly (x) acknowledges and agrees that termination of
this Agreement pursuant to this Section 8.1 is its exclusive remedy if the
events specified in Sections 8.1(a) or (c) shall occur, (y) waives and
releases any other rights or remedies it may have in connection with any
such events specified in Sections 8.1(a) or (c), at law, in equity, under
this Agreement or otherwise, and (z) acknowledges and agrees that in the
event of any such termination no party shall have any liability or
obligation with respect to any loss, liability or expense (including without
limitation reasonable attorneys' fees and expenses) of any other party
hereto.
8.2 EFFECT OF TERMINATION. In the event of the termination hereof
as expressly permitted under Section 8.1, this Agreement shall forthwith
become void and have no effect, and there shall be no liability in respect
of this Agreement on the part of any of K-V, FP1096 or their respective
officers, directors, or shareholders. In the event of termination hereunder
without Closing, each party hereto shall return promptly to the other
parties hereto all documents, work papers and other material of the other
party furnished or made available to such parties or their representatives
or agents, and all copies thereof, and agrees that no information received
by any such party or such party's representatives or agents shall be
revealed by such party or such party's representatives or agents to any
third party or used for the advantage of such party or any other person.
8.3 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally or by
commercial messenger or courier service, or mailed by registered or
certified mail (return receipt requested) or sent via facsimile (with
acknowledgment of transmission) to the parties at the following addresses
(or at such other
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address for a party as shall be specified by like notice); provided,
---------
however, that notices sent by mail will not be deemed given until received:
-------
(a) if to K-V or K-V Sub, to:
K-V Pharmaceutical Company
0000 Xxxxx Xxxxxx Xxxx
Xx. Xxxxx, XX 00000
Attention: Xxxx Xxxxxxx,
Senior Vice President, Strategic Planning and
Corporate Growth
Facsimile No.: (000) 000-0000
with a copy to:
K-V Pharmaceutical Company
0000 Xxxxx Xxxxxx Xxxx
Xx. Xxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx,
Vice Chairman of the Board and Chief Executive
Officer
Facsimile No.: (000) 000-0000
and to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Professional Corporation
00 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxx Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
(b) if to FP1096 or the Seller Representative, to:
FP1096
00 Xxxx Xxxxxx, Xxxxxx Xxxxx
Xxxxx, XX 00000
Attention: Chief Executive Officer
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxx, Xxxxx & Bockius LLP
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
8.4 INTERPRETATION. The words "include," "includes" and "including"
when used herein shall be deemed in each case to be followed by the words
"without limitation." The table
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of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
of this Agreement.
8.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other party, it being understood
that all parties need not sign the same counterpart.
8.6 AMENDMENT. This Agreement may be amended by the parties hereto
at any time by execution of an instrument in writing.
8.7 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement, the License
Agreement, the Related Agreements, the Exhibits hereto, the FP1096
Disclosure Letter and the documents and instruments and other agreements
among the parties hereto referenced herein: (i) constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings both written and oral,
among the parties with respect to the subject matter hereof, (ii) are not
intended to confer upon any other Person any rights or remedies hereunder,
and (iii) shall not be assigned by operation of law or otherwise, except
that K-V may without consent delegate its obligations hereunder to its
Affiliates as long as K-V remains ultimately liable for all of K-V's
obligations hereunder and may assign and otherwise transfer its rights and
obligations hereunder, in whole or in part, including without limitation its
rights under Section 5.7.
8.8 SEVERABILITY. In the event that any provision of this Agreement
or the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further
agree to replace such void or unenforceable provision of this Agreement with
a valid and enforceable provision that will achieve, to the extent possible,
the economic, business and other purposes of such void or unenforceable
provision.
8.9 OTHER REMEDIES. Any and all remedies herein expressly conferred
upon a party will be deemed cumulative with and not exclusive of any other
remedy conferred hereby, or by law or equity upon such party, and the
exercise by a party of any one remedy will not preclude the exercise of any
other remedy.
8.10 GOVERNING LAW; VENUE. This Agreement and all rights and
obligations hereunder, including matters of construction, validity and
performance, shall be governed by and construed under the laws of the State
of Delaware, without giving effect to conflict of law principles which would
cause the laws of any other jurisdiction to be applicable hereto, except for
the corporate acts of the Merger and Spin Off which shall be governed by and
construed under the laws of the Commonwealth of Pennsylvania. With respect
to any suit, action or proceeding relating to this Agreement (each a
"Proceeding"), each of the parties hereto: (i) irrevocably agrees and
----------
consents to the exclusive jurisdiction and venue of the United States
District Court for the District of Delaware, in connection with any matter
based upon or arising out of this Agreement or the matters contemplated
herein, (ii) agrees that process may be served
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upon it in any manner authorized by the laws of the State of Delaware, and
(iii) waives and covenants not to assert or plead any objection which it may
have at any time to the laying of venue in any Proceeding brought in any
such court, waives any claim that such Proceeding has been brought in an
inconvenient forum and further waives the right to object, with respect to
such Proceeding, that such court does not have jurisdiction over such party.
8.11 RULES OF CONSTRUCTION. The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefor, waive the application of any Law or rule of
construction providing that ambiguities in an agreement or other document
will be construed against the party drafting such agreement or document.
8.12 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF ANY PARTY HERETO IN
NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF, K-V, K-V Sub, FP1096 and FemmePharma have
caused this Agreement to be signed, all as of the date first written above.
K-V PHARMACEUTICAL COMPANY
By:
---------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Senior Vice President
KESTREL-FALCON ACQUISITION CORPORATION
By:
---------------------------------------
Name: Xxxx X. Xxxxxxx
Title: President, Secretary and Treasurer
FP1096, INC.
By:
---------------------------------------
Name: Xxxxxxxx X. Xxxxxxxx XxXxxxx
Title: President
FEMMEPHARMA HOLDING COMPANY, INC.
By:
---------------------------------------
Name: Xxxxxxxx X. Xxxxxxxx XxXxxxx
Title: President
SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER
