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Exhibit 2.4
CONFORMED COMPOSITE COPY
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KBI ASSET CONTRIBUTION AGREEMENT
Dated as of June 19, 1998
Between
[TR],
[KB],
[KBI]
and
[KBI SUB]
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TABLE OF CONTENTS
Page
ARTICLE 1 - DEFINITIONS
1.1 Definitions.......................................................... 2
ARTICLE 2 - EQUAL KNOWLEDGE; WARRANTY DISCLAIMER
2.1 Equal Knowledge...................................................... 6
2.2 Warranty Disclaimer.................................................. 6
ARTICLE 3 - CONVEYANCE OF THE BUSINESS AND ACQUIRED ASSETS, ETC.
3.1 Agreement to Convey.................................................. 7
3.2 Business............................................................. 7
3.3 Acquired Assets...................................................... 7
3.4 Excluded Assets...................................................... 9
3.5 Assumption of Liabilities............................................ 11
3.6 Excluded Liabilities................................................. 12
3.7 Closing.............................................................. 13
3.8 Deliveries by KBI.................................................... 13
3.9 Deliveries by KBI Sub................................................ 13
3.10 Consent of Third Parties............................................. 13
ARTICLE 4 - INTERIM COVENANTS
4.1 Conduct of Business.................................................. 14
ARTICLE 5 - CERTAIN ADDITIONAL COVENANTS
5.1 Certain Tax Matters.................................................. 15
5.2 Records.............................................................. 15
5.3 Discharge of Obligations............................................. 16
5.4 Delivery of Funds.................................................... 16
ARTICLE 6 - EMPLOYEE MATTERS
6.1 KBI Employees........................................................ 16
6.2 Employee Benefit Plans............................................... 16
6.3 Plan Amendments and Terminations..................................... 17
6.4 Severance and WARN Act Liabilities................................... 17
6.5 Employment Records and Taxes......................................... 17
ARTICLE 7 - SURVIVAL
7.1 Survival............................................................. 18
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TABLE OF CONTENTS
(continued)
Page
ARTICLE 8 - TERMINATION; MISCELLANEOUS
8.1 Termination.......................................................... 18
8.2 Assignment and Release............................................... 18
8.3 Bulk Transfer........................................................ 19
8.4 Indemnity............................................................ 19
8.5 Third Party Rights................................................... 19
8.6 Specific Performance................................................. 19
8.7 Certain Related Provisions in the Master Restructuring
Agreement............................................................ 19
Exhibit A Assignment and Assumption Agreement
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KBI ASSET CONTRIBUTION AGREEMENT
ASSET CONTRIBUTION AGREEMENT, dated as of June 19, 1998, by and
between [TR], a New Jersey corporation ("TR"), [KB], a company limited by shares
organized and existing under the laws of Sweden ("KB"), [KB TR] INC., a Delaware
corporation ("KBI"), and [KBI SUB], a Delaware corporation and a direct
wholly-owned subsidiary of KBI ("KBI Sub").
RECITALS
WHEREAS, TR, KB, KBI, KBI Sub and certain related entities are
parties to that certain Master Restructuring Agreement of even date herewith
(the "Master Restructuring Agreement");
WHEREAS, KB Pharmaceuticals, L.P., a Delaware limited partnership
(the "Partnership"), has been formed and, at the Closing (as defined below),
shall be capitalized by KBLP, a Delaware limited partnership, as general
partner, and KBI Sub, as limited partner, as provided, and upon the terms and
subject to the conditions set forth, in the Master Restructuring Agreement;
WHEREAS, KBI and KBI Sub are parties to that certain Selected
Compounds Contribution Agreement (as defined below) of even date herewith,
pursuant to which, upon the terms and subject to the conditions set forth
therein and in the Master Restructuring Agreement, at the Closing, KBI shall
assign to KBI Sub all of KBI's rights with respect to certain Compounds (as
defined below) and rights with respect to certain uses of Compounds under the
Amended and Restated KBI License (as defined below);
WHEREAS, pursuant to the Master Restructuring Agreement and upon the
terms and subject to the conditions set forth therein, at the Closing, KBI and
KBI Sub shall enter into the Trademark Rights Contribution Agreement (as defined
below), pursuant to which KBI shall assign to KBI Sub all of KBI's rights under
the Amended and Restated KBI License with respect to Trademarks (as such term is
defined in the Amended and Restated KBI License);
WHEREAS, KBI desires to grant to KBI Sub as a contribution to the
capital of KBI Sub, and KBI Sub desires to acquire from KBI, the right to
acquire the business and certain assets and liabilities of KBI (as provided
herein);
WHEREAS, pursuant to the Master Restructuring Agreement and upon the
terms and subject to the conditions set forth therein, at the Closing, KBI Sub
shall assign to the Partnership all of KBI Sub's rights under this Agreement as
part of KBI Sub's Original Capital Contribution (as defined in the Partnership
Agreement defined below), subject to the assumption by the Partnership of KBI
Sub's obligations hereunder, and the Partnership shall accept such assignment
and shall assume the obligations of KBI Sub hereunder; and
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WHEREAS, pursuant to the Master Restructuring Agreement and upon the
terms and subject to the conditions set forth therein and in this Agreement,
subsequent to the assignment of KBI Sub's rights under this Agreement and the
assumption by the Partnership of KBI Sub's obligations hereunder and effective
as of the Effective Time (as defined below), KBI shall transfer the aforesaid
business and assets to the Partnership, subject to the assumption by the
Partnership of KBI Sub's obligations hereunder;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements contained herein and in the other
Initial Agreements (as defined below), the parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. As used in this Agreement the following terms shall
have the following respective meanings:
"Acquired Assets" shall have the meaning set forth in Section 3.3.
"Affiliate" shall have the meaning set forth in the Master
Restructuring Agreement.
"Agreement" shall mean this KBI Asset Contribution Agreement, as the
same may be amended from time to time in accordance with the terms hereof.
"Amended and Restated KBI License" shall have the meaning set forth
in the Master Restructuring Agreement.
"Ancillary Agreements" shall have the meaning set forth in the
Master Restructuring Agreement.
"Assignment Agreement" shall have the meaning set forth in
Section 8.2.
"Assumed Liabilities" shall have the meaning set forth in Section
3.5.
"Business" shall have the meaning set forth in Section 3.2.
"business day" shall have the meaning set forth in the Master
Restructuring Agreement.
"Butterfly Loan Agreements" shall have the meaning set forth in the
Master Restructuring Agreement.
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"Closing" shall have the meaning set forth in the Master
Restructuring Agreement.
"Closing Date" shall have the meaning set forth in the Master
Restructuring Agreement.
"Compound" shall have the meaning set forth in the Master
Restructuring Agreement.
"Contracts" shall mean all (i) written and oral contracts, licenses,
commitments, agreements and instruments, including all customer contracts,
operating contracts and distribution contracts relating to the Business, (ii)
sales and purchase orders and supply agreements and other agreements relating to
the Business, (iii) leases of Equipment and Real Property relating to the
Business, (iv) all agency, clinical research, credit, confidentiality,
consulting, development, grant, license, market share rebate, reporting,
services, sales technology and other contracts and (v) other contracts,
licenses, agreements and instruments relating to the Business.
"Effective Time" shall have the meaning set forth in the Master
Restructuring Agreement.
"Equipment" shall have the meaning set forth in Section 3.3(b).
"Excluded Assets" shall have the meaning set forth in Section 3.4.
"Excluded Liabilities" shall have the meaning set forth in
Section 3.6.
"FDA" shall have the meaning set forth in the Master
Restructuring Agreement.
"GAAP" shall mean U.S. generally accepted accounting principles,
applied on a consistent basis.
"Governmental Entity" shall mean (i) any multinational, federal,
provincial, state, municipal, local or other governmental or public department,
court, commission, board, bureau, agency or instrumentality, domestic or
foreign; (ii) any subdivision, agent, commission, board, or Governmental Entity
of any of the foregoing; or (iii) any quasi-governmental or private body
exercising any regulatory, expropriation or taxing governmental authority under
or for the account of any of the foregoing.
"Income Taxes" shall mean any federal, state and local income taxes,
including any interest, penalty or addition thereto, whether disputed or not.
"Indemnity Losses" shall have the meaning set forth in the Master
Restructuring Agreement.
"Initial Agreements" shall have the meaning set forth in the
Master Restructuring Agreement.
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"Intellectual Property" shall mean all patents (including all
reissues, divisions, continuations and extensions thereof), patent rights,
service marks, trademarks and trade names, all product names, all assumed or
fictitious names and the logos associated therewith (except for those
trademarks, tradenames, product names, assumed or fictitious names and the logos
associated therewith which contain "TR"), copyrights, registrations and
applications for the foregoing, licenses and other contractual rights with
respect to the foregoing and other such property and intangible rights.
"Inter-Affiliate License Agreement" shall have the meaning set forth
in the Master Restructuring Agreement.
"Inventory" shall have the meaning set forth in Section 3.4(b).
"KBI Shared Liabilities" shall mean the Excluded Liabilities
referred to in Section 3.6(e).
"KBI Sub Shares" shall mean all of the outstanding shares of capital
stock of KBI Sub.
"KBI-E Shares" shall mean all of the outstanding shares of capital
stock of KBI-E, a Delaware corporation and a wholly-owned subsidiary of KBI.
"KBI-P Shares" shall mean all of the outstanding shares of common
stock of [KB TR] Pharmaceuticals, Inc., a Delaware corporation and a
wholly-owned subsidiary of KBI.
"KB USA" shall have the meaning set forth in the Master
Restructuring Agreement.
"Liabilities" shall mean, as to any Person, all commitments,
obligations or liabilities of any kind or nature, whether known or unknown,
absolute or contingent, matured or unmatured whether accrued, vested or
otherwise, and whether or not actually reflected, or required by GAAP to be
reflected, in such Person's balance sheets or other books or records.
"Master Restructuring Agreement" shall have the meaning set forth
in the Recitals.
"Material Adverse Effect" shall mean a change or effect (or series
of related changes or effects) which has or is reasonably likely to have a
material adverse change in or effect upon the business, assets, liabilities,
condition (financial or otherwise), or results of operations of the Business or
the Acquired Assets, taken as a whole.
"Partnership Agreement" shall have the meaning set forth in the
Master Restructuring Agreement.
"Permits" shall have the meaning set forth in Section 3.3(j).
"Person" shall have the meaning set forth in the Master
Restructuring Agreement.
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"Plan" shall mean (i) any employee benefit plan, arrangement or
policy (whether or not written and whether or not subject to the Employee
Retirement Income Security Act of 1974, as amended), including, without
limitation, any stock option, stock purchase, stock award, retirement, pension,
deferred compensation, profit sharing, savings, incentive, bonus, health,
dental, hearing, vision, drug, life insurance, cafeteria, flexible spending,
dependent care, fringe benefit, vacation pay, holiday pay, disability, sick pay,
workers compensation, unemployment, severance pay, employee loan, educational
assistance plan, policy or arrangement, and (ii) any employment,
indemnification, change-in-control, consulting or severance agreement, under
which any current or former employee, consultant or director of KBI has any
present or future right to benefits or under which KBI has any present or future
liability.
"P&G Agreements" shall mean the License Agreement by and among KBI
and KBI-E and The Procter & ▇▇▇▇▇▇ Co. ("P&G") dated as of November 20, 1997,
and all amendments and agreements relating thereto, the Supply Agreement between
KB and TR dated as of November 20, 1997, and all amendments and agreements
relating thereto, and the Co-promotion Agreement dated as of December 8, 1997
between KBI and The Procter & ▇▇▇▇▇▇ Distributing Co. and all amendments and
agreements relating thereto, except for those terminated pursuant to Section 2.8
of the Master Restructuring Agreement.
"Real Property" shall mean all real property, together with all
fixtures, fittings, buildings, structures and other improvements erected
thereon, and easements, rights of way, water lines, rights of use, licenses,
hereditaments, tenements, privileges and other appurtenances thereto (such as
appurtenant rights in and to public streets).
"Selected Compounds Contribution Agreement" shall have the meaning
set forth in the Master Restructuring Agreement.
"Taxes" shall mean any federal, state and local income, payroll,
withholding, excise, sales, use, lease, personal and other property, use and
occupancy, business and occupation, mercantile, real estate, gross receipts,
license, employment, severance, stamp, premium, windfall profits, social
security (or similar unemployment), disability, transfer, registration, value
added, alternative, or add-on minimum, estimated, or capital stock and franchise
and other tax of any kind whatsoever, including any interest, penalty or
addition thereto, whether disputed or not.
"Technical Information" shall mean all scientific and technical
information, data, and know-how, including, without limitation, (i) research and
preclinical and clinical data; (ii) information, data and know-how relating to
any device for the administration of any Compound or which is used in the
marketing of any Compound; and (iii) information, data and know-how relating to
any manufacturing process.
"Technology" shall mean all formulae, processes, procedures,
designs, ideas, research records, inventions, records of inventions, test
information, technical information, engineering data, marketing know-how,
proprietary information, manufacturing information, know-how, and trade secrets
(and all related manuals, books, files, journals, models, instructions,
patterns, drawings, blueprints, plans, designs specifications, equipment lists,
parts lists,
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descriptions, data, art work, software, computer programs and source code data
related thereto including all current and historical data bases).
"Third Party" shall have the meaning set forth in the Master
Restructuring Agreement.
"Trademark Rights Contribution Agreement" shall have the meaning set
forth in the Master Restructuring Agreement.
"Transfer" shall have the meaning set forth in the Master
Restructuring Agreement.
"Transferred Contracts" shall have the meaning set forth in
Section 3.3(i).
"Transferred Employees" shall mean employees of KBI who are employed
by KBI Sub following the Closing.
"WARN Act" shall mean the Worker Adjustment and Retraining
Notification Act, as codified at 29 U.S.C. Sections 2102-2109, as amended.
"1982 JV Agreement" shall have the meaning set forth in the Master
Restructuring Agreement.
All capitalized terms used herein and not otherwise defined shall
have the respective meanings set forth in the Master Restructuring Agreement.
Unless otherwise expressly specified herein, defined terms in the singular shall
also include the plural and vice versa.
ARTICLE 2
EQUAL KNOWLEDGE; WARRANTY DISCLAIMER
2.1 Equal Knowledge. KB and TR hereby acknowledge and agree that
each of them has equal knowledge regarding KBI, the Business, the Acquired
Assets and the Assumed Liabilities.
2.2 Warranty Disclaimer. TR AND KBI MAKE NO REPRESENTATIONS OR
WARRANTIES OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, EITHER HEREIN OR
OTHERWISE, AS TO THE BUSINESS, THE ACQUIRED ASSETS, THE ASSUMED LIABILITIES, THE
TRANSACTIONS CONTEMPLATED HEREBY OR ANY OTHER MATTER PERTAINING TO ANY OF THE
FOREGOING. WITHOUT LIMITING THE FOREGOING, THE ACQUIRED ASSETS ARE BEING
CONVEYED, TRANSFERRED, ASSIGNED AND DELIVERED AND THE ASSUMED LIABILITIES ARE
BEING ASSUMED "AS IS" AND "WHERE IS", AND TR AND KBI HEREBY DISCLAIM ALL
REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, AS TO THE
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CONDITION OF THE BUSINESS AND THE ACQUIRED ASSETS, INCLUDING, WITHOUT
LIMITATION, THE WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
OR OTHERWISE.
ARTICLE 3
CONVEYANCE OF THE BUSINESS AND ACQUIRED ASSETS, ETC.
3.1 Agreement to Convey. Upon the terms and subject to the
conditions set forth in this Agreement and the Master Restructuring Agreement
and upon the written demand of KBI Sub, which may be made at any time after the
purchase by TR Holdings of the KBI Common Shares as provided in Section 2.4(b)
of the Master Restructuring Agreement, and effective as of the Effective Time
(except with respect to the assets described in Section 3.3(d), which shall be
contributed to KBI Sub at the Closing), KBI shall, and TR shall cause KBI to,
convey, grant, transfer, set over, assign and deliver to KBI Sub, and KBI Sub
shall accept and acquire from KBI, all of KBI's right, title and interest in and
to the Business and the Acquired Assets; provided, however, that nothing in this
Agreement shall require KBI to convey, grant, transfer, set over, assign or
deliver any right, title or interest in or to the Excluded Assets.
3.2 Business. The "Business" shall mean the entire business
conducted by KBI at the date hereof.
3.3 Acquired Assets. "Acquired Assets" shall mean all of the assets,
properties and rights owned, used or held for use in connection with, or that
are required for the conduct of, the Business of every kind, nature and
description, wherever such assets, properties and rights are located and whether
such assets, properties and rights are real, personal or mixed, tangible or
intangible, and whether or not any of such assets, properties and rights have
any value for accounting purposes or are carried or reflected on or specifically
referred to in KBI's books or financial statements, other than the Excluded
Assets. The Acquired Assets shall include, without limitation, all of the
assets, properties and rights set forth below that are not Excluded Assets:
(a) all Real Property owned or leased by KBI;
(b) to the extent not included in clause (a) above, all
tangible assets and properties owned, used or held for use by KBI in
connection with the Business, including cars, trucks and other
transportation equipment, all laboratory testing and other machinery
and equipment, tools, spare parts, furniture, office equipment,
furnishings and fixtures and machinery and equipment under order or
construction (the "Equipment");
(c) all administrative and other supplies owned, used or
held for use by KBI with respect to the Business;
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(d) cash in the amount determined in accordance with
Section 2.5(a) of the Master Restructuring Agreement;
(e) all billed and unbilled accounts receivable and all
notes receivable relating to the Business including without
limitation all billed and unbilled accounts receivable and notes
receivable from Merck-Medco Managed Care L.L.C.;
(f) all credits, prepaid expenses, deferred charges,
advance payments, security deposits and deposits owned, used or held
for use by KBI with respect to the Business;
(g) all Intellectual Property owned, used or held for
use by KBI with respect to the Business, but specifically excluding
the Contracts identified in Section 3.4 and the Intellectual
Property licensed to KBI pursuant thereto;
(h) all Technical Information and Technology owned, used
or held for use by KBI with respect to the Business, but
specifically excluding the Contracts identified in Section 3.4
hereof and the Technical Information and Technology licensed to KBI
pursuant thereto;
(i) except for the Contracts referred to in Section 3.4
hereof, all Contracts (including without limitation the P&G
Agreements and the Research Agreement made and entered into as of
November 1, 1994 between TR and KBI with respect to the product
consisting of the combination of enalapril and felodipine) (the
"Transferred Contracts");
(j) all franchises, approvals, permits, authorizations,
governmental licenses, orders, registrations, certificates,
variances, and other similar permits or rights obtained from any
Governmental Entity relating to the conduct of the Business or the
Real Property owned or leased by KBI and all pending applications
therefor, in each case to the extent transferable (the "Permits"),
including without limitation all IND's and NDA's (as such terms are
defined in the Amended and Restated KBI License) and all other FDA
and other registrations which relate to the development,
manufacture, use or sale of Compounds, as such term is defined in
the Amended and Restated KBI License;
(k) all books and records, including books of account,
general, financial, accounting and personnel records, ledgers,
files, invoices, documents (including originally executed copies of
written Contracts, customer and supplier lists (past, present or
future), correspondence, memoranda, forms, lists, plats,
architectural plans, drawings and specifications (including
engineering drawings, plans, specifications and other documents
related to capital improvements related to Equipment expansions and
modifications), copies of documents evidencing Intellectual
Property, Technical Information or Technology, new product
development materials, creative materials, advertising and
promotional materials,
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catalogs, price lists, mailing lists, studies, reports, sales
materials and records, purchasing materials and records, records
relating to the Transferred Employees, photographs, records of plant
operations and materials used, quality control records and
procedures, equipment maintenance records, manuals and warranty
information, research and development files, data and laboratory
books, inspection processes, in each case, whether in hard copy or
magnetic format, in each instance, to the extent used or held for
use with respect to the Businesses;
(l) all rights or choses in action arising out of
occurrences before, on or after the Closing Date and related to the
Business, including Third Party warranties and guarantees and all
related claims, credits, rights of recovery and set-off and other
similar contractual rights, as to Third Parties held by or in favor
of KBI and arising out of, resulting from or relating to the
Business or the Acquired Assets; and
(m) all rights to insurance and condemnation proceeds
relating to the damage, destruction, taking or other impairment of
the Acquired Assets which damage, destruction, taking or other
impairment occurs on or prior to the Closing Date.
3.4 Excluded Assets.(1) Notwithstanding any other provision of this
Agreement, the following assets, properties and rights (the "Excluded Assets")
are not included in the Acquired Assets, and KBI shall not convey to KBI Sub,
and KBI Sub shall not acquire from KBI, any rights in or to any of the
following:
(a) cash and cash equivalents in excess of the
amount provided for in Section 3.3(d) hereof;
(b) all inventories, including without limitation
finished goods, work-in-progress, raw materials, packaging
materials, and goods held for sale or to be furnished under
Contracts, owned, used or held for use by KBI with respect to the
Business (the "Inventory");
(c) the Butterfly Loan Agreements and the
Inter-Affiliate License Agreement, which are to be terminated at the
Closing in accordance with Sections 2.2(a) and 2.8, respectively, of
the Master Restructuring Agreement;
(d) the following Contracts:
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(1) Pursuant to paragraph 2 of the letter agreement dated July 1, 1998
(concerning the settlement of intercompany accounts) and
notwithstanding anything to the contrary in the Master Restructuring
Agreement (including without limitation Section 2.2(a) thereof) or this
Agreement, Parent Balances (as defined in Exhibit B to such letter
agreement) (i) shall be settled in accordance with the procedures set
forth in such Exhibit B and (ii) shall be deemed to be Excluded Assets
or Excluded Liabilities, as the case may be, pursuant to this Agreement.
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(i) the 1982 JV Agreement and the Ancillary
Agreements referred to therein, as such agreements have been
amended or amended and restated prior to the date hereof;
(ii) the Consolidated Income Tax Return Tax
Sharing Agreement to which KBI is a party; and
(iii) (x) the License Agreement made and entered
into as of January 1, 1992 by and between TR and ▇▇▇▇▇ ▇▇, (y)
the License Agreement made and entered into as of November 1,
1994 between TR and KBI, and (z) the Supply Agreement made and
entered into as of November 1, 1994 between TR and KBI, each
with respect to the product consisting of the combination of
enalapril and felodipine.
(e) the Master Restructuring Agreement, the other
Initial Agreements and the Ancillary Agreements (as such terms are
defined in the Master Restructuring Agreement);
(f) the following securities:
(i) the KBI-E Shares;
(ii) the KBI-P Shares;
(iii) the KBI Sub Shares; and
(iv) the outstanding shares of any other
subsidiary of KBI;
(g) all Intellectual Property, Technology or Technical
Information licensed to KBI under or pursuant to any of the
Contracts included in the Excluded Assets;
(h) assets conveyed by KBI pursuant to the Trademark
Rights Contribution Agreement or the Selected Compounds
Contribution Agreement;
(i) all claims, rights, credits and interests arising
under, resulting from or related to any Excluded Asset, including
without limitation warranties and guarantees;
(j) all rights, choses in action, claims, counterclaims,
credits, rights of recovery and set-off and other similar rights
related to any Excluded Liability, including without limitation
warranties and guarantees, held by or in favor of KBI;
(k) any rights to refunds, credits, overpayments or
other adjustments with respect to Income Taxes;
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(l) any right, title or interest in the "TR" name or the
TR logo and any derivation of such name or logo, subject to the
limited and temporary right to use such name as specifically
permitted by Section 3.4 of the Master Restructuring Agreement; and
(m) KBI's corporate seal, minute books, stock ledger,
Income Tax returns and duplicate copies of all books and records.
3.5 Assumption of Liabilities. Subject to the terms and conditions
set forth in this Agreement and the Master Restructuring Agreement and except as
set forth in Section 3.6 hereof, effective as of the Effective Time, KBI Sub
shall assume and agree to perform when due all of the Liabilities of KBI,
including without limitation:
(a) Liabilities arising out of the Transferred Contracts
(whether before, on or after the Closing Date), including without
limitation, all liabilities arising out of or relating to the P&G
Agreements, and any and all Liabilities arising out of or resulting
from the assignment of any Transferred Contract to KBI Sub or the
further assignment of any such Contract to, and the performance of
any such Contract by, the Partnership;
(b) Liabilities associated with returns in respect of or
otherwise associated with or arising out of products sold by KBI on
or prior to the Closing Date, including without limitation
obligations with respect to rebates, chargebacks and similar
arrangements;
(c) Liabilities described in Article 6 hereof to be
paid, assumed or borne by KBI Sub;
(d) all billed and unbilled accounts payable and notes
payable to Merck-Medco Managed Care L.L.C.; and
(e) Liabilities otherwise arising out of the
consummation of the transactions contemplated by this Agreement or
the Master Restructuring Agreement (other than Liabilities with
respect to Income Taxes);
provided, however, that nothing in this Agreement shall require KBI Sub to
assume or perform any of the Excluded Liabilities. The Liabilities assumed
hereby are referred to herein as the "Assumed Liabilities."
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3.6 Excluded Liabilities.(2) Notwithstanding anything to the
contrary contained in this Agreement, KBI Sub shall not assume or be bound by or
be obligated or responsible for any of the following Liabilities (the "Excluded
Liabilities"):
(a) Liabilities of KBI arising under or out of the
Master Restructuring Agreement, the other Initial Agreements and the
Ancillary Agreements;
(b) Liabilities, if any, for dividends on the capital
stock of KBI declared but unpaid as of the Closing Date;
(c) any Liability for Income Taxes;
(d) Obligations to be performed by KBI before, on or
after the Closing Date under the Contracts identified in Sections
3.4(d) and 3.4(e) hereof;
(e) all contingent Liabilities (other than contingent
Liabilities arising out of or relating to the P&G Agreements which
shall be Assumed Liabilities) arising out of acts, omissions,
conditions or circumstances existing at or prior to the Effective
Time that are not recorded or reserved against or required to be
recorded or reserved against in accordance with GAAP on the balance
sheet of KBI as of the Closing Date, which balance sheet shall be
prepared in accordance with Section 2.5(e) of the Master
Restructuring Agreement (the "KBI Closing Date Balance Sheet")
(except Liabilities for Income Taxes which shall remain Excluded
Liabilities pursuant to Section 3.6(c) above whether or not there
are amounts recorded or reserved against on the KBI Closing Date
Balance Sheet); provided, however, that in the event any Liability
(other than Liabilities for Income Taxes) is so disclosed or
reserved against or required to be disclosed or reserved against
with respect to any matter, all Liabilities with respect to or
resulting from or arising out of such matter shall be Assumed
Liabilities rather than Excluded Liabilities; and
(f) any Liabilities or obligations in respect of the
Excluded Assets.
KBI shall provide to TR, KB and KBI Sub at the Closing a listing of all
contingent Liabilities which have been reserved against or are required to be
reserved against in accordance with GAAP on the balance sheet of KBI as of May
31, 1998 and of each actual or threatened claim, demand, suit, action or
proceeding of which KBI has received notice as of the Closing Date.
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(2) Pursuant to paragraph 2 of the letter agreement dated July 1, 1998
(concerning the settlement of intercompany accounts) and
notwithstanding anything to the contrary in the Master Restructuring
Agreement (including without limitation Section 2.2(a) thereof) on this
Agreement, Parent Balances (as defined in Exhibit B to such letter
agreement) (i) shall be settled in accordance with the procedures set
forth in such Exhibit B and (ii) shall be deemed to be Excluded Assets
or Excluded Liabilities, as the case may be, pursuant to this Agreement.
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3.7 Closing. Upon the terms and subject to the conditions of this
Agreement and the Master Restructuring Agreement, the closing of the
transactions contemplated hereby shall take place at the Closing at the time
provided for in the Master Restructuring Agreement. Notwithstanding any other
provisions of this Agreement or the Master Restructuring Agreement, the results
of all operations of the Business on the Closing Date shall be for the account
and benefit of KBI Sub.
3.8 Deliveries by KBI. At the Closing, KBI shall, and TR shall cause
KBI to, deliver to KBI Sub the following documents, each to be effective as of
the Effective Time:
(a) bills of sale and instruments of assignment to evidence
the transfer to KBI Sub of the Acquired Assets (other than the Real Property
owned by KBI, if any) in accordance herewith, duly executed by KBI;
(b) one or more quitclaim deeds of conveyance to KBI Sub of
the Real Property owned by KBI sufficient to transfer to KBI Sub all of KBI's
right, title and interest in and to such Real Property in accordance herewith,
duly executed and acknowledged by KBI, and in recordable form; and
(c) all such other documents and instruments of conveyance, if
any, as shall be necessary to transfer to KBI Sub the Acquired Assets in
accordance herewith and, where necessary or desirable, in recordable form.
3.9 Deliveries by KBI Sub. At the Closing, KBI Sub shall deliver to
KBI instruments of assumption, effective as of the Effective Time, with respect
to the Assumed Liabilities to evidence the assumption by KBI Sub of the Assumed
Liabilities in accordance herewith, duly executed by KBI Sub.
3.10 Consent of Third Parties. Anything in this Agreement to the
contrary notwithstanding, this Agreement shall not constitute an agreement to
assign any of the Contracts or Permits or any claim or right or any benefit
arising thereunder or resulting therefrom if an attempted assignment thereof,
without the consent of a Third Party thereto, would constitute a breach or other
contravention thereof or in any way adversely affect the rights of KBI or KBI
Sub as assignee thereunder. KBI shall, and TR shall cause KBI to, cooperate with
KBI Sub in a mutually agreeable manner to obtain, at the cost and expense of KBI
Sub, the consent of the other parties to any such Contract or Permit for the
assignment thereof to KBI Sub. If such consent is not obtained prior to the
Effective Time, or if an attempted assignment thereof would be ineffective or
would adversely affect the rights of KBI or KBI Sub as assignee thereunder so
that KBI Sub would not in fact receive all such rights, KBI and KBI Sub will
cooperate in a mutually agreeable arrangement under which KBI Sub would obtain
the benefits and assume the obligations thereunder from and after the Effective
Time in accordance with this Agreement, including subcontracting, sublicensing
or subleasing to KBI Sub, or under which KBI would enforce for the benefit of
KBI Sub, with KBI Sub assuming the obligations of KBI to the same extent as if
it would have constituted an Assumed Liability and any and all rights of KBI
against a Third Party thereto. TR hereby consents, and shall cause any of its
Affiliates that is a party to any Contract to consent, to the assignment of any
of such Contract or any claim or right or any
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benefit arising thereunder or resulting therefrom to KBI Sub. KBI shall and TR
shall cause KBI to, pay promptly to KBI Sub when received all monies received by
KBI after the Effective Time under any of the Contracts or any claim or right or
any benefit arising thereunder to the extent that KBI Sub would be entitled
thereto pursuant to this Agreement.
ARTICLE 4
INTERIM COVENANTS
4.1 Conduct of Business. Except (i) as otherwise specifically
permitted by this Agreement, (ii) as contemplated by the Master Restructuring
Agreement, the other Initial Agreements, the Ancillary Agreements or the
Partnership Agreement or (iii) with the prior written consent of KB and TR, from
and after the date of this Agreement and until the Effective Time, KBI covenants
that:
(a) KBI shall conduct the Business as currently conducted and
only in the ordinary course of business consistent with past practice;
(b) KBI shall use its reasonable business efforts to preserve
the business organization of the Business substantially intact, to keep
available to KBI Sub the services of the employees of KBI, and to preserve for
KBI Sub the goodwill of the suppliers, distributors, customers and others having
business relationships with the Business;
(c) KBI shall promptly inform KB and TR in writing of any
specific event or circumstance of which it is aware, or of which it receives
notice, that has or is likely to have, individually or in the aggregate, taken
together with the other events or circumstances, a Material Adverse Effect;
(d) KBI shall convert into cash not less than two (2) business
days prior to the Closing all marketable securities and financial instruments
owned or held by KBI; and
(e) KBI shall not:
(i) sell, lease, or otherwise transfer any assets
necessary or otherwise material to the conduct of the Business which would
constitute Acquired Assets, other than sales of Inventory and payment for goods
and services in the customary course of business; or
(ii) change its method of accounting or keeping its
books of account or accounting practices with respect to the Business.
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ARTICLE 5
CERTAIN ADDITIONAL COVENANTS
5.1 Certain Tax Matters.
(a) Taxes. KBI Sub shall be responsible for all state and
local sales, use, transfer, real property transfer, documentary stamp, recording
and other similar Taxes arising from and with respect to the transfer of the
Acquired Assets (including any intermediate transfer or deemed transfer between
KBI and any of its Affiliates).
(b) Tax Returns and Records. KBI Sub shall (i) provide KBI
with such assistance as may reasonably be requested by KBI in connection with
the preparation of any Tax return, any audit or other examination by any taxing
Governmental Entity or any judicial or administrative proceeding with respect to
Taxes, (ii) retain and provide KBI with any records or other information which
may be relevant to such return, audit, examination or proceeding, and (iii)
provide KBI with any final determination of any such audit or examination,
proceeding or determination that affects any amount required to be shown on any
Tax return of KBI for any period (which shall be maintained confidentially).
Without limiting the generality of the foregoing, KBI Sub shall retain, until
the applicable statutes of limitations (including all extensions) have expired,
copies of all Tax returns, supporting workpapers, and other books and records or
information which may be relevant to such returns for all Tax periods or
portions thereof ending before or including the Closing Date, and shall not
destroy or dispose of such records or information without first providing KBI
with a reasonable opportunity to review and copy the same. With respect to Taxes
incurred in connection with, relating to or arising out of the Business prior to
the Closing Date that are not yet due or owing as of the Closing Date, KBI shall
(i) timely file when due all returns and reports for such Taxes, including
information returns, that are required to be filed, (ii) timely pay when due the
Taxes that are shown to be due pursuant to such returns or reports, and (iii)
timely pay when due all other Taxes not required to be reported on returns.
5.2 Records. KBI may retain copies of such business, financial, tax
and legal books and records as it deems appropriate for its tax, accounting and
legal purposes. In addition, KBI Sub covenants and agrees that for a period of
eight (8) years after the Closing Date, it shall retain all books and records
conveyed to it hereunder in substantially their condition at the time of the
Closing and shall give KBI and its representatives full and complete access to
such books and records and shall permit KBI and such representatives to make
copies of any of such books and records. None of such books and records shall be
destroyed or discarded during such eight-year period without the prior written
approval of KBI or without first offering such books and records to KBI upon at
least 30 days' prior written notice, during which time KBI shall have the right
(subject to the provisions hereof) to examine and to remove any such files,
books and records prior to their destruction. The access to files, books and
records contemplated by this Section 5.2 shall be during normal business hours
and upon not less than two (2) business days prior written request.
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5.3 Discharge of Obligations. KBI covenants and agrees, subsequent
to the Effective Time, to promptly pay and to otherwise fulfill and discharge
(including, where necessary, by obtaining any necessary releases or
terminations) any and all obligations and liabilities of KBI which are not
Assumed Liabilities hereunder, including, without limitation, liabilities and
obligations arising under any bulk sale transfer or tax laws, when due and
payable and otherwise prior to the time at which any of such obligations or
liabilities could in any way result in or give rise to a claim against the
Acquired Assets, or KBI Sub, or adversely affect KBI Sub's title to or use of
any of the Acquired Assets.
5.4 Delivery of Funds. Subsequent to the Effective Time, KBI shall
deliver to KBI Sub any funds and any checks, notes, drafts and other instruments
for the payment of money, duly endorsed to KBI Sub, received by KBI, at or after
the Effective Time, comprising payment of any amounts due from others pursuant
to accounts receivable or otherwise, which such payment comprises a part of the
Acquired Assets.
ARTICLE 6
EMPLOYEE MATTERS
6.1 KBI Employees. (a) KBI Sub shall offer employment as of the
Effective Time to all individuals who are KBI employees on the Closing Date
(including without limitation any persons on long-term or short-term disability
or leave of absence). KBI shall reasonably cooperate with KBI Sub in its efforts
to cause KBI employees to become employees of KBI Sub. Nothing in this Agreement
shall be construed to limit KBI Sub's right to terminate the employment of any
KBI employee who becomes an employee of KBI Sub. All employees who terminate
employment with KBI prior to the Closing Date or do not accept offers of
employment by KBI Sub will be deemed to have voluntarily resigned from KBI.
(b) KBI Sub shall credit the service of Transferred Employees with
KBI (including service with TR credited by KBI) as service with KBI Sub for
purposes of eligibility and vesting, and benefit accrual, under each employee
benefit plan or policy of KBI Sub which covers Transferred Employees.
(c) Between the date hereof and the Closing Date and for a two-year
period from and after the Closing Date, neither TR nor any of its Affiliates
shall solicit for employment without KB's consent any individual employed by KBI
on the date hereof or any other individual employed by KBI Sub on or after the
Closing Date. Between the date hereof and the Closing Date and for a one-year
period after the Closing Date, neither TR nor any of its Affiliates shall employ
without KB's consent any such individual. The foregoing restrictions shall not
apply to any such individual dismissed by the Partnership.
6.2 Employee Benefit Plans. (a) Effective as of the Effective Time,
KBI Sub shall adopt and assume each Plan of KBI and shall assume all of KBI's
rights, responsibilities and obligations under or related to such Plan. KBI Sub
shall be solely responsible for ensuring
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that all benefits payable under the Plans from or after the Effective Time
(including severance or other benefits payable as a result of the transactions
contemplated by this Agreement), and all contributions, insurance premiums and
administrative expenses payable with respect to the Plans for periods beginning
on or after the Effective Time, are paid when due, regardless of when such
benefits accrued. KBI Sub shall indemnify TR and KBI against any and all claims
for such benefits, contributions, insurance premiums and expenses. Effective as
of or as soon as practicable after the Effective Time, KBI shall use its
reasonable efforts to cause all assets attributable to any Plan and any
insurance policies or other agreements related to any Plan to be assigned to KBI
Sub. All Transferred Employees who are participants in any Plan shall be
entitled to continue to participate in such Plan from and after the Effective
Time, subject to Section 6.3.
(b) The parties agree to furnish each other with such information
concerning employees and the Plans, and to take all such other actions as are
necessary and appropriate to implement the transactions contemplated by this
Section 6.2. The costs and expenses of taking the actions prescribed by this
Section 6.2 shall be borne equally by KBI and KBI Sub, provided that such
expenses do not exceed $20,000; and provided further, that KBI Sub alone shall
bear all such costs in excess of $20,000.
6.3 Plan Amendments and Terminations. Nothing in this Agreement
shall be construed to limit KBI Sub's right to amend or terminate any employee
benefit plan or policy or related insurance policy (including any Plan assumed
from KBI). KBI Sub shall bear and be solely responsible for any and all
Liabilities arising out of the termination, modification or amendment of any
Plan.
6.4 Severance and WARN Act Liabilities. For the six-month period
beginning as of the Effective Time, KBI Sub shall provide severance and
termination indemnity payments, salary continuation, special bonuses and like
benefits to the Transferred Employees that are no less favorable than those
provided under KBI's severance pay plans, policies or arrangements, whichever is
more generous to such employees or former employees. KBI Sub agrees to pay and
to be responsible for all Liabilities, costs and expenses for such severance,
termination indemnity payments, salary continuation, special bonuses and like
costs with respect to any of the Transferred Employees that arise from the
subsequent termination of employment of an employee by KBI Sub after the
Effective Time. KBI Sub agrees to pay and be responsible for all liabilities,
costs, expenses and sanctions resulting from any failure of KBI to give any
required notices or notifications under or otherwise to comply with, the WARN
Act, and the regulations promulgated thereunder arising out of, based upon or
resulting from the transactions contemplated by this Agreement.
6.5 Employment Records and Taxes. (a) The parties agree that, to the
extent permissible under applicable law, (i) KBI Sub shall be a successor
employer for purposes of the Federal Insurance Contributions Act and the Federal
Unemployment Tax Act and (ii) at KBI Sub's request, KBI Sub shall be a successor
employer for purposes of any applicable state unemployment compensation, workers
compensation, and disability laws.
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(b) Pursuant to Section 5.01 of Revenue Procedure 96-60, KBI shall
be relieved from furnishing U.S. Internal Revenue Service Forms W-2 to KBI
employees for the calendar year in which the Closing occurs, and KBI Sub shall
timely furnish such forms for such year reflecting wages paid and taxes withheld
by both KBI Sub and KBI.
(c) The parties agree to furnish each other with such wage, tax and
other information concerning owners, principals, employees and employee benefit
plans, and to take all such other action, as is necessary and appropriate to
effect the transactions contemplated by this Article 6, and to enable the
parties to make any required governmental filings.
ARTICLE 7
SURVIVAL
7.1 Survival. All covenants and agreements contained in this
Agreement shall survive (and not be affected in any respect by) the Closing
indefinitely and any investigation conducted by any party hereto.
ARTICLE 8
TERMINATION; MISCELLANEOUS
8.1 Termination. This Agreement shall terminate automatically in the
event that, prior to the Closing, the Master Restructuring Agreement terminates
in accordance with the terms thereof.
8.2 Assignment and Release. (a) None of the parties hereto may
assign this Agreement or any of its rights or obligations hereunder, except that
KBI Sub may assign this Agreement and its rights and obligations hereunder to
the Partnership pursuant to the Assignment and Assumption Agreement attached
hereto as Exhibit A (the "Assignment Agreement"), and upon such assignment, all
references to KBI Sub or to a "party" in this Agreement (other than this Section
8.2) shall be deemed thereafter to refer to the Partnership in lieu of KBI Sub.
This Agreement shall inure to the benefit of KBI Sub and, upon the assignment of
this Agreement to the Partnership pursuant to the Assignment Agreement, the
Partnership. Any assignment or other Transfer of this Agreement not expressly
permitted by this Section shall be void.
(b) Upon the assignment by KBI Sub of this Agreement to the
Partnership and the assumption by the Partnership of the obligations of KBI Sub
hereunder pursuant to the Assignment Agreement, KBI Sub shall automatically and
without any further action by any Person be released from all of its obligations
hereunder, including without limitation from all liability and obligation with
respect to the Assumed Liabilities.
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8.3 Bulk Transfer. The parties hereto hereby waive compliance with
the provisions of any applicable bulk sales law of any jurisdiction in
connection with the transactions contemplated hereby and no representation,
warranty or covenant contained in this Agreement shall be deemed to have been
breached as a result of such non-compliance.
8.4 Indemnity. KBI Sub agrees to indemnify, defend and hold harmless
KBI and its Affiliates and each of their respective officers, directors,
employees and agents from and against any and all Indemnity Losses arising out
of, based upon or resulting from the Assumed Liabilities. KBI agrees to
indemnify, defend and hold harmless KBI Sub and its Affiliates and KB and its
Affiliates and each of their respective officers, directors, employees and
agents from and against any and all Indemnity Losses arising out of, based upon
or resulting from the Excluded Liabilities. Any claim for indemnification
hereunder shall be on a net-after tax basis in accordance with, and shall be
subject to the procedures set forth in, Section 10.3 of the Master Restructuring
Agreement.
8.5 Third Party Rights. Except as otherwise provided in Section 8.4
hereof with respect to the indemnification obligations for the benefit of
officers, directors, employees and agents, the provisions of this Agreement
shall not inure to the benefit of any present or former director, officer,
employee or agent of any of the parties hereto either as a third party
beneficiary or otherwise.
8.6 Specific Performance. KBI acknowledges and agrees that the
Business and the Acquired Assets are unique and not available on the open market
and that each of KBI Sub and KB shall have, in addition to all other legal
remedies available to it, the right (i) to enforce the terms of this Agreement
by a decree of specific performance and (ii) to obtain an injunction restraining
any violation or threatened violation of this Agreement. KBI will cooperate with
KBI Sub and KB to the extent KBI Sub or KB may reasonably request in the defense
of any proceeding seeking to restrain, prohibit, invalidate or set aside the
conveyance of the Business or the Acquired Assets to the Partnership as assignee
of KBI Sub pursuant to Section 8.2 hereof.
8.7 Certain Related Provisions in the Master Restructuring
Agreement. This Agreement is subject to Articles 9, 10 and 12 of the Master
Restructuring Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
TR
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President and
Chief Financial Officer
KB
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
KBI
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Authorized Signatory
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Authorized Signatory
KBI SUB INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President