UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE TO

Tender Offer Statement under Section 14(d)(1) or 13(e)(1)
of the Securities Exchange Act of 1934

KOS PHARMACEUTICALS, INC.

(Name of Subject Company (Issuer))

PARTHENON ACQUISITION CORP.

(Offeror)

A Wholly Owned Subsidiary of

ABBOTT LABORATORIES

(Parent of Offeror)

(Names of Filing Persons (identifying status as offeror, issuer or other person))

Common Stock, $0.01 par value

(Title of Class of Securities)

500648100

(CUSIP Number of Class of Securities)

Laura J. Schumacher
Senior Vice President, Secretary and General Counsel
Abbott Laboratories
100 Abbott Park Road
Abbott Park, Illinois 60064-6020
(847) 937-5726

(Name, address, and telephone numbers of person authorized to receive notices and communications on behalf of filing persons)

Copies to:

Catherine J. Dargan

Covington & Burling LLP

1201 Pennsylvania Avenue, NW

Washington, D.C. 20004

(202) 662-5567

(1) Estimated for purposes of calculating the filing fee only.  This amount is determined by multiplying 47,630,852 shares of Kos common stock (which represents the number of shares outstanding as of November 2, 2006, the most recent practicable date) by $78.00 per share.

(2) The filing fee was calculated in accordance with Rule 0-11 under the Securities Exchange Act of 1934 and Fee Rate Advisory #3 for fiscal year 2007, issued September 29, 2006, by multiplying the transaction value by .000107.

o Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.

o                                   Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.

Check the appropriate boxes below to designate any transactions to which the statement relates:

x                                  Third-party tender offer subject to Rule 14d-1.

o                                   Issuer tender offer subject to Rule 13e-4.

o                                   Going-private transaction subject to Rule 13e-3.

o                                   Amendment to Schedule 13D under Rule 13d-2.

Check the following box if the filing is a final amendment reporting the results of the tender offer.     o

This Tender Offer Statement on Schedule TO (which, together with any amendments and supplements thereto, collectively constitute this “Schedule TO”) is filed by (i) Parthenon Acquisition Corp., a Florida corporation (the “Purchaser”), and wholly owned subsidiary of Abbott Laboratories, an Illinois corporation (“Abbott”), and (ii) Abbott.  This Schedule TO relates to the offer (the “Offer”) by the Purchaser to purchase all of the outstanding shares of common stock, par value $0.01 per share (including shares subject to vesting or other restrictions, the “Shares”), of Kos Pharmaceuticals, Inc., a Florida corporation (“Kos”), at a purchase price of $78.00 per Share net to the seller in cash without interest thereon, less any required withholding taxes, upon the terms and subject to the conditions set forth in the Offer to Purchase dated November 14, 2006 (which, together with any amendments and supplements thereto, collectively constitute the “Offer to Purchase”) and in the related Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(1)(A) and (a)(1)(B).

Item 1. Summary Term Sheet.

The information set forth in the section of the Offer to Purchase entitled “Summary Term Sheet” is incorporated herein by reference.

Item 2. Subject Company Information.

(a)           The name of the subject company and the issuer of the securities to which this Schedule TO relates is Kos Pharmaceuticals, Inc., a Florida corporation. Kos’ principal executive offices are located at 1 Cedar Brook Drive, Cranbury, New Jersey 08512-3618. Kos’ telephone number at such address is (609) 495-0500.

(b)           This Schedule TO relates to the outstanding shares of common stock, par value $0.01 per share, of Kos.  Kos has advised Abbott that, on November 2, 2006, there were 47,630,852 Shares outstanding.

(c)           The information set forth in the section in the Offer to Purchase entitled “Price Range of Shares; Dividends” is incorporated herein by reference.

Item 3. Identity and Background of Filing Person.

(a) through (c)      This Schedule TO is filed by Abbott and the Purchaser. The information set forth in the sections of the Offer to Purchase entitled “Certain Information Concerning Abbott and the Purchaser” and in Schedule I are incorporated herein by reference.

Item 4. Terms of the Transaction.

The information set forth in the Offer to Purchase is incorporated herein by reference.

Item 5. Past Contacts, Transactions, Negotiations and Agreements.

The information set forth in the sections of the Offer to Purchase entitled “Summary Term Sheet,” “Introduction”, “Certain Information Concerning Abbott and the Purchaser,” “Background of the Offer; Past Contacts or Negotiations with Kos,” “Purpose of the Offer; Plans for Kos” and “The Transaction Documents,” respectively, is incorporated herein by reference.

Except as set forth therein, there have been no material contacts, negotiations or transactions during the past two years which would be required to be disclosed in this Item 5 between any of Abbott, the Purchaser, or any of their respective affiliates or subsidiaries or any of the persons listed on Schedule I to the Offer to Purchase, on the one hand, and Kos or any of its affiliates, on the other hand, concerning any merger, consolidation or acquisition, a tender offer or other acquisition of securities of Kos, an election of directors of Kos or sale or transfer of a material amount of assets of Kos.

Item 6. Purposes of the Transaction and Plans or Proposals.

The information set forth in the sections of the Offer to Purchase entitled “Summary Term Sheet,” “Introduction,” “Price Range of Shares; Dividends,” “Certain Effects of the Offer,” “Purpose of the Offer; Plans for Kos,” and “The Transaction Documents,” respectively, is incorporated herein by reference.

Item 7. Source and Amount of Funds or Other Consideration.

The information set forth in the section of the Offer to Purchase entitled “Source and Amount of Funds” is incorporated herein by reference.

Item 8. Interest in Securities of the Subject Company.

The information set forth in the sections of the Offer to Purchase entitled “Certain Information Concerning Abbott and the Purchaser,” “Purpose of the Offer; Plans for Kos,” and “The Transaction Documents” is incorporated herein by reference.

Item 9. Persons/Assets Retained, Employed, Compensated or Used.

The information set forth in the section of the Offer to Purchase entitled “Fees and Expenses” is incorporated herein by reference.

Item 10. Financial Statements.

Not applicable.

Item 11. Additional Information.

(a)(1)       The information set forth in the sections of the Offer to Purchase entitled “Certain Information Concerning Abbott and the Purchaser,” “Background of the Offer; Past Contacts or Negotiations with Kos,” “Purpose of the Offer; Plans for Kos” and “The Transaction Documents,” respectively, is incorporated herein by reference.

(a)(2)       The information set forth in the sections of the Offer to Purchase entitled “Purpose of the Offer; Plans for Kos,” “Certain Conditions of the Offer” and “Certain Legal Matters; Regulatory Approvals,” respectively, is incorporated herein by reference.

(a)(3)       The information set forth in the sections of the Offer to Purchase entitled “Certain Conditions of the Offer” and “Certain Legal Matters; Regulatory Approvals,” respectively, is incorporated herein by reference.

(a)(4)       The information set forth in the sections of the Offer to Purchase entitled “Certain Effects of the Offer,” “Source and Amount of Funds” and “Certain Legal Matters; Regulatory Approvals,” respectively, is incorporated herein by reference.

(a)(5)       None.

(b)           The information set forth in the Offer to Purchase is incorporated herein by reference.

Item 12. Exhibits.

Item 13. Information required by Schedule 13E-3.

Not applicable.

SIGNATURE

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Exhibit 99(a)(1)(a)

Offer To Purchase For Cash
All Outstanding Shares of Common Stock
of
KOS PHARMACEUTICALS, INC.
at
$78.00 NET PER SHARE
by
PARTHENON ACQUISITION CORP.
a wholly owned subsidiary of

ABBOTT LABORATORIES

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON  TUESDAY, DECEMBER 12, 2006, UNLESS THE OFFER IS EXTENDED.

The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of November 5, 2006, as amended (the “Merger Agreement”), by and among Abbott Laboratories (“Abbott”), Parthenon Acquisition Corp. (the “Purchaser”) and Kos Pharmaceuticals, Inc. (“Kos”). The Offer is conditioned upon, among other things, (i) the satisfaction of the Minimum Tender Condition (as defined herein) and (ii) the expiration or termination of all statutory waiting periods (and any extensions thereof) applicable to the Offer and Abbott’s acquisition of all of the outstanding shares of Kos Investments, Inc. (“Kos Investments,” and such acquisition, the “Kos Investments Stock Purchase”) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”). The term “Minimum Tender Condition” is defined in Section 15 (“Certain Conditions of the Offer”) and generally requires that (A) the number of shares of common stock, par value $0.01 per share, of Kos (including shares subject to vesting or other restrictions, the “Shares”) which have been validly tendered and not withdrawn prior to the expiration of the Offer plus (B) if the Kos Investments Stock Purchase is consummated concurrently with or immediately subsequent to the Offer, the number of Shares held by Kos Investments and its subsidiaries, together represent at least a majority of the fully diluted Shares. However, if the Board of Directors of Kos (the “Kos Board”) withdraws or adversely modifies its recommendation of the Offer or the merger contemplated by the Merger Agreement (the “Merger”) in accordance with the Merger Agreement, the term “Minimum Tender Condition” requires, in addition to the foregoing, that holders of a majority of the Shares owned by shareholders other than Michael Jaharis and certain other shareholders related to or controlled by him have validly tendered and not withdrawn their Shares prior to the expiration of the Offer. The Offer is also subject to other conditions set forth in this Offer to Purchase. See Section 15—“Certain Conditions of the Offer.”

In connection with the Merger Agreement, Abbott entered into a Shareholders Agreement (the “Shareholders Agreement”) with the Jaharis Shareholders (as defined herein), Kos Investments and Kos Holdings, Inc. In the Shareholders Agreement, the Jaharis Shareholders have agreed to accept the Offer and to tender in the Offer all Shares beneficially owned by them, which represent approximately 35% of the outstanding Shares. In addition, concurrently with the execution of the Merger Agreement, Abbott entered into a Stock Purchase Agreement with Michael Jaharis, Kathryn Jaharis, Steven Jaharis, Daniel Bell and Steven K. Aronoff, pursuant to which, concurrently with the closing of the Offer, Abbott has agreed to purchase 100% of the outstanding stock of Kos Investments, which directly and through a wholly owned subsidiary owns approximately 18% of the Shares. The total purchase price for the Kos Investments Stock Purchase will equal the cash amount that would otherwise have been payable in the Offer for the Shares owned by Kos Investments minus any liabilities of Kos Investments. The tender of Shares into the Offer by the Jaharis Shareholders, combined with the consummation of the Kos Investments Stock Purchase, will satisfy the Minimum Tender Condition unless the Kos Board has withdrawn or adversely modified its recommendation of the Offer.

The Kos Board, among other things, (i) approved, adopted and declared advisable, the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, (ii) determined that the terms of the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, are fair to and in the best interests of Kos and the shareholders of Kos, and (iii) recommended that the holders of the Shares accept the Offer and tender their Shares pursuant to the Offer, and approve the Merger Agreement and the transactions contemplated thereby, including the Merger.

IMPORTANT

Any shareholder of Kos wishing to tender Shares in the Offer must (i) complete and sign the letter of transmittal (or a facsimile thereof) that accompanies this Offer to Purchase (the “Letter of Transmittal”) in accordance with the instructions in the Letter of Transmittal and mail or deliver the Letter of Transmittal and all other required documents to the Depositary (as defined herein) together with certificates representing the Shares tendered or follow the procedure for book-entry transfer set forth in Section 3—“Procedures for Accepting the Offer and Tendering Shares” or (ii) request such shareholder’s broker, dealer, commercial bank, trust company or other nominee to effect the transaction for the shareholder. A shareholder whose Shares are registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such person if such shareholder wishes to tender such Shares.

Any shareholder of Kos who wishes to tender Shares and cannot deliver certificates representing such Shares and all other required documents to the Depositary on or prior to the Expiration Date (as defined herein) or who cannot comply with the procedures for book-entry transfer on a timely basis may tender such Shares pursuant to the guaranteed delivery procedure set forth in Section 3—“Procedures for Accepting the Offer and Tendering Shares.”

Questions and requests for assistance may be directed to the Information Agent (as defined herein) or the Dealer Manager (as defined herein) at their respective addresses and telephone numbers set forth on the back cover of this Offer to Purchase. Additional copies of this Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and other related materials may also be obtained from the Information Agent or the Dealer Manager. Shareholders may also contact their broker, dealer, commercial bank, trust company or other nominee for copies of these documents.

The Dealer Manager for the Offer is:

Banc of America Securities LLC

November 14, 2006

SUMMARY TERM SHEET

Parthenon Acquisition Corp., a wholly owned subsidiary of Abbott Laboratories, is offering to purchase all of the outstanding Shares of common stock of Kos Pharmaceuticals, Inc. for $78.00 per Share net in cash. The following are answers to some of the questions you, as a shareholder of Kos, may have about the Offer. We urge you to read carefully the remainder of this Offer to Purchase and the Letter of Transmittal and the other documents to which we have referred you because this summary may not contain all of the information that is important to you. Additional important information is contained in the remainder of this Offer to Purchase and the Letter of Transmittal.

Who is offering to buy my securities?

We are Parthenon Acquisition Corp., a Florida corporation formed for the purpose of making this Offer. We are a wholly owned subsidiary of Abbott Laboratories, an Illinois corporation. See the “Introduction” to this Offer to Purchase and Section 8—“Certain Information Concerning Abbott and the Purchaser.”

What are the classes and amounts of securities sought in the Offer?

We are seeking to purchase all of the outstanding Shares of Kos common stock, including all outstanding restricted stock. See the “Introduction” to this Offer to Purchase and Section 1—“Terms of the Offer.”

How much are you offering to pay? What is the form of payment? Will I have to pay any fees or commissions?

We are offering to pay $78.00 per Share net to you, in cash. If you are the record owner of your Shares and you directly tender your Shares to us in the Offer, you will not have to pay brokerage fees or similar expenses. If you own your Shares through a broker, banker or other nominee, and your broker tenders your Shares on your behalf, your broker, banker or other nominee may charge you a fee for doing so. You should consult your broker, banker or other nominee to determine whether any charges will apply. See the “Introduction” to this Offer to Purchase.

Do you have the financial resources to make payment?

Abbott, our parent company, will provide us with sufficient funds to purchase all Shares successfully tendered in the Offer and to provide funding for our Merger with Kos, which is expected to follow the successful completion of the Offer in accordance with the terms and conditions of the Merger Agreement. The Offer is not conditioned upon any financing arrangements. Abbott intends to provide us with the necessary funds from cash on hand and the issuance of commercial paper or other short term borrowings. See Section 9—“Source and Amount of Funds.”

Is your financial condition relevant to my decision to tender my Shares in the Offer?

No. We do not think our financial condition is relevant to your decision whether to tender Shares and accept the Offer because:

·       the Offer is being made for all outstanding Shares solely for cash;

·       we, through our parent company, Abbott, will have sufficient funds available to purchase all Shares successfully tendered in the Offer in light of our financial capacity in relation to the amount of consideration payable;

·       the Offer is not subject to any financing condition; and

i

·       if we consummate the Offer, we expect to acquire any remaining Shares for the same cash price in the Merger.

See Section 9—“Source and Amount of Funds.”

How long do I have to decide whether to tender my Shares in the Offer?

You will have at least until 12:00 midnight, New York City time, on Tuesday, December 12, 2006 (which is the end of the day on December 12, 2006), to tender your Shares in the Offer. Furthermore, if you cannot deliver everything required to make a valid tender by that time, you may still participate in the Offer by using the guaranteed delivery procedure that is described later in this Offer to Purchase prior to that time. See Sections 1—“Terms of the Offer” and
3—“Procedures for Accepting the Offer and Tendering Shares.”

Can the Offer be extended and under what circumstances?

Yes. We have agreed in the Merger Agreement that:

·       If the initial offering period has expired, we must, at the request of Kos, extend the Offer beyond the initial expiration date of the Offer or any subsequent expiration date, if any of the conditions to our obligation to accept for payment and pay for the Shares are not satisfied or waived, for one or more consecutive increments of not more than five business days each.

·       If the initial offering period has expired, we must, if requested by Kos, make available a subsequent offering period in accordance with Rule 14d-11 under the Securities Exchange Act of 1934 (the “Exchange Act”) of not less than 10 business days, except that we shall not be so required if, prior to the commencement of such subsequent offering period, we directly or indirectly own more than 80% of the fully diluted Shares.

·       We may, without the consent of Kos, (i) extend the Offer for one or more consecutive increments of not more than five business days each, if at any otherwise scheduled expiration date of the Offer any of the conditions to our obligation to purchase Shares are not satisfied or waived, until such time as such conditions are satisfied or waived, (ii) extend the Offer for the minimum period required by any rule, regulation, interpretation or position of the Securities and Exchange Commission (the “SEC”) or the staff thereof applicable to the Offer or (iii) make available a subsequent offering period in accordance with Rule 14d-11 under the Exchange Act.

See Section 1—“Terms of the Offer” of this Offer to Purchase for more details on our obligation and ability to extend the Offer.

How will I be notified if the Offer is extended?

If we extend the Offer, we will inform American Stock Transfer & Trust Company, the depositary for the Offer (the “Depositary”), of any extension and will issue a press release announcing the extension not later than 9:00 a.m., New York City time, on the next business day after the day on which the Offer was scheduled to expire. See Section 1—“Terms of the Offer.”

What are the most significant conditions to the Offer?

The Offer is conditioned upon, among other things,

·       satisfaction of the Minimum Tender Condition, and

·       expiration or termination of all statutory waiting periods (and any extensions thereof) applicable to the purchase of Shares in the Offer and the Kos Investments Stock Purchase under the HSR Act.

ii

The term “Minimum Tender Condition” is defined in Section 15—“Certain Conditions of the Offer” and generally requires that (A) the number of Shares which have been validly tendered and not withdrawn prior to the expiration of the Offer plus (B) if the Kos Investments Stock Purchase is consummated concurrently with or immediately subsequent to the Offer, the number of Shares held by Kos Investments and its subsidiaries, together represent at least a majority of the fully diluted Shares. However, if the Kos Board withdraws or adversely modifies its recommendation of the Offer or the Merger in accordance with the Merger Agreement, the term “Minimum Tender Condition” requires, in addition to the foregoing, that holders of a majority of the Shares owned by shareholders other than Michael Jaharis and certain other shareholders related to or controlled by him have validly tendered and not withdrawn their Shares prior to the expiration of the Offer.

The Offer is also subject to a number of other important conditions. We can waive some of these conditions without Kos’ consent. We cannot, however, waive the Minimum Tender Condition without the consent of Kos. See Section 15—“Certain Conditions of the Offer.”

How do I tender my Shares?

To tender your Shares, you must deliver the certificates representing your Shares or confirmation of a book-entry transfer of such Shares into the Depositary’s account at The Depository Trust Company,  together with a completed Letter of Transmittal and any other documents required by the Letter of Transmittal, to the Depositary, prior to the expiration of the Offer. If your Shares are held in street name (that is, through a broker, dealer or other nominee), they can be tendered by your nominee through The Depository Trust Company. If you are unable to deliver any required document or instrument to the Depositary by the expiration of the Offer, you may still participate in the Offer by having a broker, a bank or other fiduciary that is an eligible institution guarantee on or prior to the expiration of the Offer that the missing items will be received by the Depositary within three Nasdaq Global Select Market trading days after the expiration of the Offer. For the tender to be valid, however, the Depositary must receive the missing items within that three trading day period. See Section 3—“Procedures for Accepting the Offer and Tendering Shares.”

Until what time may I withdraw previously tendered Shares?

You may withdraw your previously tendered Shares at any time until the Offer has expired and, if we have not accepted your Shares for payment by January 13, 2007, you may withdraw them at any time after that date until we accept Shares for payment. This right to withdraw will not apply to Shares tendered in any subsequent offering period, if one is provided. See Section 4—“Withdrawal Rights.”

How do I withdraw previously tendered Shares?

To withdraw previously tendered Shares, you must deliver a written notice of withdrawal, or a facsimile of one, with the required information to the Depositary while you still have the right to withdraw Shares. If you tendered Shares by giving instructions to a broker, banker or other nominee, you must instruct the broker, banker or other nominee to arrange for the withdrawal of your Shares. See Section 4—“Withdrawal Rights.”

What does the Kos Board think of the Offer?

The Kos Board, among other things, (i) approved, adopted and declared advisable, the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, (ii) determined that the terms of the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, are fair to and in the best interests of Kos and the shareholders of Kos, and (iii) recommended that the holders of the Shares accept the Offer and tender their Shares

iii

pursuant to the Offer, and approve the Merger Agreement and the transactions contemplated thereby, including the Merger. A more complete description of the reasons of the Kos Board’s approval of the Offer and the Merger is set forth in Kos’ Solicitation Recommendation Statement on Schedule 14D-9 that is being mailed to its shareholders together with this Offer to Purchase. See the “Introduction” to this Offer to Purchase.

Have any shareholders previously agreed to tender their Shares?

Yes. The Jaharis Shareholders, who collectively beneficially own approximately 35% of the outstanding Shares, have agreed to tender their Shares in the Offer. In addition, the owners of Kos Investments, which directly and indirectly owns approximately 18% of the outstanding Shares, have agreed to sell us all of the outstanding shares of Kos Investments in the Kos Investments Stock Purchase if the Offer is consummated. The tender of Shares into the Offer by the Jaharis Shareholders, combined with the consummation of the Kos Investments Stock Purchase, will satisfy the Minimum Tender Condition unless the Kos Board withdraws or adversely modifies its recommendation of the Offer. See Section 11—“The Transaction Documents.”

If a majority of the Shares are tendered and accepted for payment, will Kos continue as a public company?

No. Following the purchase of Shares in the Offer, we expect to consummate the Merger. If the Merger takes place, Kos no longer will be publicly owned. Even if for some reason the Merger does not take place, if we purchase all of the tendered Shares, there may be so few remaining shareholders and publicly held Shares that Kos’ common stock will no longer be eligible to be traded through the Nasdaq Global Select Market or other securities exchanges, there may not be an active public trading market for Kos common stock, and Kos may no longer be required to make filings with the SEC or otherwise comply with the SEC rules relating to publicly held companies. See Section 13—“Certain Effects of the Offer.”

Will the tender offer be followed by a Merger if all of the Shares are not tendered in the Offer?

Yes. If we accept for payment and pay for at least 51% of the Shares on a fully diluted basis (including Shares acquired as part of the Kos Investments Stock Purchase), we expect to effect our Merger with and into Kos. If that Merger takes place, Abbott will own all of the Shares and all remaining shareholders of Kos (other than any subsidiaries of Kos or Abbott and any of its subsidiaries) will receive $78.00 per Share in cash (or any higher price per Share that is paid in the Offer). See the “Introduction” to this Offer to Purchase.

If I decide not to tender, how will the Offer affect my Shares?

If you decide not to tender your Shares in the Offer and the Merger occurs, you will subsequently receive the same amount of cash per Share that you would have received had you tendered your Shares in the Offer, without any interest being paid on such amount. Therefore, if the Merger takes place, the only difference to you between tendering your Shares and not tendering your Shares is that you will be paid earlier if you tender your Shares. The tender of Shares into the Offer by the Jaharis Shareholders, combined with the consummation of the Kos Investments Stock Purchase, will satisfy the Minimum Tender Condition unless the Kos Board withdraws or adversely modifies its recommendation of the Offer. If you decide not to tender your Shares in the Offer and we purchase the tendered Shares, but the Merger does not occur, there may be so few remaining shareholders and publicly traded Shares that Kos common stock will no longer be eligible to be traded through the Nasdaq Global Select Market or other securities exchanges and there may not be an active public trading market for Kos common stock. Also, as described above, Kos may no longer be required to make filings with the SEC or otherwise comply with the SEC

iv

rules relating to publicly held companies. See the “Introduction” to this Offer to Purchase and Section 13—“Certain Effects of the Offer.”

What is the market value of my Shares as of a recent date?

On November 3, 2006, the last trading day before we announced the Offer, the last sale price of Kos common stock reported on the Nasdaq Global Select Market was $50.09 per Share. On November 10, 2006, the second to last trading day before we commenced the Offer, the last sale price of Kos common stock reported on the Nasdaq Global Select Market was $77.31 per share. We encourage you to obtain a recent quotation for Shares of Kos common stock in deciding whether to tender your Shares. See Section 6—“Price Range of Shares; Dividends.”

Who should I call if I have questions about the Offer?

You may call Georgeson Inc. at (866) 425-8129 (toll free) or Banc of America Securities LLC at (888) 583-8900 ext. 8502 (toll free). Georgeson Inc. is acting as the information agent (the “Information Agent”) and Banc of America Securities LLC is acting as the dealer manager (the “Dealer Manager”) for our tender offer. See the back cover of this Offer to Purchase.

v

TABLE OF CONTENTS

vi

To the Holders of Shares of
Common Stock of Kos Pharmaceuticals, Inc.:

INTRODUCTION

Parthenon Acquisition Corp., a Florida corporation (the “Purchaser”) and a wholly owned subsidiary of Abbott Laboratories, an Illinois corporation (“Abbott”), hereby offers to purchase (the “Offer”) all outstanding shares of common stock, par value $0.01 per share (including shares subject to vesting or other restrictions, the “Shares”), of Kos Pharmaceuticals, Inc., a Florida corporation (“Kos”), at a price of $78.00 per Share net to the seller in cash (the “Offer Price”), upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal.

The Offer is being made pursuant to the Agreement and Plan of Merger, dated as of November 5, 2006, as amended (the “Merger Agreement”), by and among Abbott, the Purchaser and Kos. The Offer is conditioned upon, among other things, (i) the satisfaction of the Minimum Tender Condition (as described below) and (ii) the expiration or termination of all statutory waiting periods (and any extensions thereof) applicable to the Offer and Abbott’s acquisition of all of the outstanding Shares of Kos Investments, Inc. (“Kos Investments,” and such acquisition, the “Kos Investments Stock Purchase”) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”). The term “Minimum Tender Condition” is defined in Section 15—“Certain Conditions of the Offer” and generally requires that (A) the number of Shares which have been validly tendered and not withdrawn prior to the expiration of the Offer plus (B) if the Kos Investments Stock Purchase is consummated concurrently with or immediately subsequent to the Offer, the number of Shares held by Kos Investments and its subsidiaries, together represent at least a majority of the fully diluted Shares. However, if the Board of Directors of Kos (the “Kos Board”) withdraws or adversely modifies its recommendation of the Offer or the merger contemplated by the Merger Agreement (the “Merger”) in accordance with the Merger Agreement, the term “Minimum Tender Condition” requires, in addition to the foregoing, that holders of a majority of the Shares owned by shareholders other than Michael Jaharis and certain other shareholders related to or controlled by him have validly tendered and not withdrawn their Shares prior to the expiration of the Offer. The Offer is also subject to other conditions set forth in this Offer to Purchase. See Section 15—“Certain Conditions of the Offer.”

For purposes of the Offer, the words “fully diluted,” when referring to Shares or other securities, mean all outstanding securities entitled generally to vote in the election of directors of Kos on a fully diluted basis, after giving effect to the exercise or conversion of all options, rights, warrants and securities exercisable or convertible into such voting securities. Kos has advised Abbott that, as of November 2, 2006, 47,630,852 Shares were issued and outstanding, and 10,867,047 Shares were subject to stock option grants, restricted shares, outstanding warrants or subject to issuance under Kos’ 401(k) plan which are, or will be as a result of the Offer, the Merger and the transactions contemplated thereby, exercisable for Shares.

Concurrently with the execution of the Merger Agreement, Abbott entered into the Shareholders Agreement, dated as of November 5, 2006 (the “Shareholders Agreement”), with Michael Jaharis, Mary Jaharis, Kathryn Jaharis, Steven Jaharis, Wilson Point Holdings, LP, Cubs Management, LLC, Jaharis Holdings, LLC, Steven Jaharis Generational Trust, 2002 Mary Jaharis Grantor Retained Annuity Trust 2, Michael and Mary Jaharis Alaska Community Property Trust, Kathryn Jaharis and Richard Ledes Joint Account, the Jaharis Family Foundation, Inc. and Michael Steven Jaharis Trust 1 (collectively, the “Jaharis Shareholders”), and Kos Investments and Kos Holdings, Inc. (“Kos Holdings”). In this agreement, the Jaharis Shareholders have agreed to accept the Offer and to tender in the Offer all Shares of Kos beneficially owned by them, which represents approximately 35% of Kos’ outstanding Shares.

In addition, concurrently with the execution of the Merger Agreement, Abbott entered into a Stock Purchase Agreement, dated as of November 5, 2006 (the “Stock Purchase Agreement”), with Michael Jaharis, Kathryn Jaharis, Steven Jaharis, Daniel Bell and Steven K. Aronoff in order to effect the Kos

1

Investments Stock Purchase. Under this agreement, Abbott has agreed to purchase 100% of the outstanding stock of Kos Investments concurrently with the closing of the Offer. Kos Investments, directly and through a wholly owned subsidiary, owns approximately 18% of the Shares. The total purchase price for the Kos Investments Stock Purchase will equal the cash amount that would otherwise have been payable in the Offer for the Shares owned by Kos Investments Stock Purchase minus any liabilities of Kos Investments.

The tender of Shares into the Offer by the Jaharis Shareholders, combined with the consummation of the Kos Investments Stock Purchase, will satisfy the Minimum Tender Condition unless the Kos Board has withdrawn or adversely modified its recommendation of the Offer.

The Merger Agreement, the Shareholders Agreement and the Stock Purchase Agreement are more fully described in Section 11—“The Transaction Documents.”

Tendering shareholders who are record owners of their Shares and tender directly to the Depositary (as defined below) will not be obligated to pay brokerage fees or commissions or, except as otherwise provided in Instruction 6 of the Letter of Transmittal, stock transfer taxes with respect to the purchase of Shares by the Purchaser pursuant to the Offer. Shareholders who hold their Shares through a broker, banker or other nominee should consult such institution as to whether it charges any service fees or commissions.

The Kos Board, among other things, (i) approved, adopted and declared advisable, the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, (ii) determined that the terms of the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, are fair to and in the best interests of Kos and the shareholders of Kos, and (iii) recommended that the holders of the Shares accept the Offer and tender their Shares pursuant to the Offer, and approve the Merger Agreement and the transactions contemplated thereby, including the Merger.

The Merger Agreement provides, among other things, that subject to certain conditions, the Purchaser will be merged with and into Kos with Kos continuing as the surviving corporation, wholly owned by Abbott. Pursuant to the Merger Agreement, at the Effective Time of the Merger (the “Effective Time”), each Share outstanding immediately prior to the Effective Time (other than (i) Shares held by Kos as treasury stock or owned by Abbott or the Purchaser, all of which will be cancelled and retired and shall cease to exist and (ii) Shares owned by Kos Investments or Kos Holdings, all of which will be converted into a number of Shares equal to the same percentage of the fully-diluted outstanding stock of Kos as the surviving corporation in the Merger as such Shares currently represent of the fully diluted Shares), will be converted into the right to receive $78.00 or any greater per Share price paid in the Offer net in cash.

The Merger is subject to the satisfaction or waiver of certain conditions, including, if required, the approval and adoption of the Merger Agreement by the affirmative vote of the holders of a majority of the outstanding Shares. If the Minimum Tender Condition is satisfied, the Purchaser would have sufficient voting power to approve the Merger without the affirmative vote of any other shareholder of Kos. Kos has agreed, if required by law, to cause, at Abbott’s request, a meeting of its shareholders to be held following the Purchaser’s acceptance for payment of, and payment for, the Shares tendered pursuant to the Offer for the purposes of considering and taking action upon the approval and adoption of the Merger Agreement. Abbott and the Purchaser have agreed to vote their Shares in favor of the approval and adoption of the Merger Agreement. Upon the consummation of the Offer Abbott and the Purchaser by virtue of the Minimum Tender Condition will own a number of Shares sufficient, even if no other Shares are tendered in the Offer, to cause the Merger to occur without the affirmative vote of any other holder of Shares. See Section 11—“The Transaction Documents.”

This Offer to Purchase and the related Letter of Transmittal contain important information that should be read carefully before any decision is made with respect to the Offer.

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THE TENDER OFFER

1.   Terms of the Offer.

Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of such extension or amendment), the Purchaser will accept for payment and pay for all Shares validly tendered prior to the Expiration Date and not properly withdrawn as permitted under Section 4—“Withdrawal Rights.”  The term “Expiration Date” means 12:00 midnight, New York City time, on Tuesday, December 12, 2006, unless the Purchaser, in accordance with the Merger Agreement, extends the period during which the Offer is open, in which event the term “Expiration Date” means the latest time and date at which the Offer, as so extended, expires.

The Offer is conditioned upon, among other things, (i) the satisfaction of the Minimum Tender Condition (as described below) and (ii) the expiration or termination of all statutory waiting periods (and any extensions thereof) applicable to the purchase of Shares pursuant to the Offer and the Kos Investments Stock Purchase under the HSR Act. The term “Minimum Tender Condition” is defined in Section 15—“Certain Conditions of the Offer” and generally requires that (A) the number of Shares which have been validly tendered and not withdrawn prior to the expiration of the Offer plus (B) if the Kos Investments Stock Purchase is consummated concurrently with or immediately subsequent to the Offer, the number of Shares held by Kos Investments and its subsidiaries, together represent at least a majority of the fully diluted Shares. However, if the Kos Board withdraws or adversely modifies its recommendation of the Offer or the Merger in accordance with the Merger Agreement, the term “Minimum Tender Condition” requires, in addition to the foregoing, that holders of a majority of the Shares owned by shareholders other than Michael Jaharis and certain other shareholders related to or controlled by him have validly tendered and not withdrawn their Shares prior to the expiration of the Offer. The Offer is also subject to other conditions set forth in this Offer to Purchase. See Section 15—“Certain Conditions of the Offer.”

The Merger Agreement provides that the Purchaser must, at the request of Kos, extend the Offer beyond the initial Expiration Date or any subsequent Expiration Date, if any of the conditions to its obligations to accept for payment and pay for the Shares is not satisfied or waived, for one or more consecutive increments of not more than five business days each. In addition, the Merger Agreement provides that Purchaser shall, if the initial offering period has expired and if requested by Kos, make available a subsequent offering period  (a “Subsequent Offering Period”) in accordance with Rule 14d-11 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) of not less than 10 business days, except that Purchaser shall not be so required if, prior to the commencement of such Subsequent Offering Period, Abbott and the Purchaser directly or indirectly own more than 80% of the fully diluted Shares. In addition, the Purchaser may, without the consent of Kos, (i) extend the Offer for one or more consecutive increments of not more than five business days each, if at any otherwise scheduled Expiration Date of the Offer any of the conditions to Purchaser’s obligation to purchase Shares are not satisfied or waived, until such time as such conditions are satisfied or waived, (ii) extend the Offer for the minimum period required by any rule, regulation, interpretation or position of the Securities and Exchange Commission (the “SEC”) or the staff thereof applicable to the Offer or (iii) if the initial offering period has expired, make available a Subsequent Offering Period in accordance with Rule 14d-11 under the Exchange Act.

Any extension, delay, termination, waiver or amendment to the Offer will be followed as promptly as practicable by a public announcement. Such announcement, in the case of an extension, will be made no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. During any such extension, all Shares previously tendered and not withdrawn will remain subject to the Offer, subject to the rights of a tendering shareholder to withdraw such shareholder’s Shares except during the Subsequent Offering Period. Shares tendered pursuant to the Offer may be withdrawn at

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any time prior to the Expiration Date and, unless theretofore accepted for payment by the Purchaser pursuant to the Offer, may also be withdrawn at any time after January 13, 2007. If the initial offering period has expired and Purchaser elects to include a Subsequent Offering Period, Shares tendered during the Subsequent Offering Period may not be withdrawn. For a withdrawal to be effective, a written, telegraphic or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder of such Shares, if different from that of the person who tendered such Shares. If Share certificates evidencing Shares to be withdrawn have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such Share certificates, the serial numbers shown on such Share certificates must be submitted to the Depositary and the signature(s) on the notice of withdrawal must be guaranteed by an Eligible Institution (as defined in Section 3 below), unless such Shares have been tendered for the account of an Eligible Institution. If Shares have been tendered pursuant to the procedure for book-entry transfer as set forth in Section 2 below, any notice of withdrawal must also specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares. All questions as to validity, form, eligibility (including time of receipt) and acceptance for payment of any tendered Shares will be determined by the Purchaser, in its sole discretion, which determination shall be final and binding on all parties.

Subject to the applicable rules and regulations of the SEC and the provisions of the Merger Agreement, the Purchaser expressly reserves the right (x) if the Minimum Tender Condition has not been satisfied or if an Adverse Recommendation Change, as described below, has been made, to increase the Offer Price and (y) to waive any condition of the Offer or modify the terms of the Offer, except that without the consent of Kos, Purchaser shall not (i) reduce the number of Shares subject to the Offer, (ii) reduce the Offer Price, (iii) waive the Minimum Tender Condition, (iv) add to the conditions to closing or modify any condition to closing in any manner adverse to the holders of Kos’ common stock, (v) except as otherwise summarized below, extend the Offer, (vi) change the form of consideration payable in the Offer or (vii) otherwise amend the Offer in any manner adverse to the holders of Kos’ common stock.

The rights reserved by the Purchaser by the preceding paragraph are in addition to the Purchaser’s rights pursuant to Section 15—“Certain Conditions of the Offer.” Any extension, delay, termination, waiver or amendment will be followed as promptly as practicable by public announcement if required. Such announcement, in the case of an extension, will be made no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date, in accordance with the public announcement requirements of Rule 14e-1(d) under the Exchange Act. Subject to applicable law (including Rules 14d-4(d) and 14d-6(c) under the Exchange Act, which require that material changes be promptly disseminated to shareholders in a manner reasonably designed to inform them of such changes), and without limiting the manner in which the Purchaser may choose to make any public announcement, the Purchaser shall have no obligation to publish, advertise or otherwise communicate any such public announcement other than by issuing a press release to a national news service.

If the Purchaser extends the Offer, is delayed in its acceptance for payment of Shares or is unable to accept Shares for payment pursuant to the Offer for any reason, then, without prejudice to the Purchaser’s rights under the Offer, the Depositary may, nevertheless, on behalf of the Purchaser, retain tendered Shares, and such Shares may not be withdrawn except to the extent that tendering shareholders are entitled to withdrawal rights as described herein under Section 4—“Withdrawal Rights.” However, the ability of the Purchaser to delay the payment for Shares that the Purchaser has accepted for payment is limited by Rule 14e-1(c) under the Exchange Act, which requires that a bidder pay the consideration offered or return the securities deposited by or on behalf of shareholders promptly after the termination or withdrawal of such bidder’s offer.

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If the Purchaser makes a material change in the terms of the Offer or the information concerning the Offer, or if it waives a material condition of the Offer, the Purchaser will disseminate additional tender offer materials and extend the Offer to the extent required by Rules 14d-4(d), 14d-6(c) and 14e-1 under the Exchange Act. The minimum period during which an offer must remain open following a material change in the terms of the Offer, other than a change in price, percentage of securities sought or inclusion of or changes to a dealer’s soliciting fee, will depend upon the facts and circumstances, including the materiality, of the change. In the SEC’s view, an offer should remain open for a minimum of five business days from the date the material change is first published, sent or given to shareholders and, if a material change is made with respect to information that approaches the significance of price and share levels, a minimum of 10 business days may be required to allow for adequate dissemination and investor response. Accordingly, if, prior to the Expiration Date, the Purchaser decreases the number of Shares being sought or increases the consideration offered pursuant to the Offer, and if the Offer is scheduled to expire at any time earlier than the tenth business day from the date that notice of such increase or decrease is first published, sent or given to shareholders, the Offer will be extended at least until the expiration of such tenth business day. As used in this Offer to Purchase, “business day” has the meaning set forth in Rule 14d-1 under the Exchange Act.

Kos has provided the Purchaser with Kos’ shareholder list and security position listings for the purpose of disseminating the Offer to holders of Shares. This Offer to Purchase and the related Letter of Transmittal, together with the Schedule 14D-9, will be mailed to record holders of Shares whose names appear on Kos’ shareholder list and will be furnished, for subsequent transmittal to beneficial owners of Shares, to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the shareholder list or, if applicable, who are listed as participants in a clearing agency’s security position listing.

2.   Acceptance for Payment and Payment for Shares.

Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment) and the satisfaction or waiver of all the conditions to the Offer set forth in Section 15—“Certain Conditions of the Offer,” the Purchaser will accept for payment, and promptly following the Expiration Date will pay for, all Shares validly tendered prior to the Expiration Date and not properly withdrawn prior to the Expiration Date. Subject to the terms of the Merger Agreement and compliance with Rule 14e-1(c) under the Exchange Act, the Purchaser expressly reserves the right to delay payment for Shares in order to comply in whole or in part with any applicable law, including, without limitation, the HSR Act and any applicable pre-merger notification laws or regulations of foreign jurisdictions. See Section 16—“Certain Legal Matters; Regulatory Approvals.” If Purchaser decides to include a Subsequent Offering Period, Purchaser will accept for payment, and promptly pay for all validly tendered Shares as they are received during the Subsequent Offering Period. See Section 1—“Terms of the Offer.”

In all cases (including during any Subsequent Offering Period), payment for Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) the certificates evidencing such Shares (the “Share Certificates”) or confirmation of a book-entry transfer of such Shares (a “Book-Entry Confirmation”) into the Depositary’s account at The Depository Trust Company (the “Book-Entry Transfer Facility”) pursuant to the procedures set forth in Section 3—“Procedures for Accepting the Offer and Tendering Shares,” (ii) the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees or, in the case of a book-entry transfer, an Agent’s Message (as defined below) in lieu of the Letter of Transmittal and (iii) any other documents required by the Letter of Transmittal. Accordingly, tendering shareholders may be paid at different times depending upon when Share Certificates or Book-Entry Confirmations with respect to Shares are actually received by the Depositary.

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The term “Agent’s Message” means a message, transmitted by the Book-Entry Transfer Facility to and received by the Depositary and forming a part of a Book-Entry Confirmation, that states that the Book-Entry Transfer Facility has received an express acknowledgment from the participant in the Book-Entry Transfer Facility tendering the Shares that are the subject of such Book-Entry Confirmation, that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that the Purchaser may enforce such agreement against such participant.

For purposes of the Offer (including during any Subsequent Offering Period), the Purchaser will be deemed to have accepted for payment, and thereby purchased, Shares validly tendered and not properly withdrawn as, if and when the Purchaser gives oral or written notice to the Depositary of the Purchaser’s acceptance for payment of such Shares pursuant to the Offer. Upon the terms and subject to the conditions of the Offer, payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the Offer Price for such Shares with the Depositary, which will act as agent for tendering shareholders for the purpose of receiving payments from the Purchaser and transmitting such payments to tendering shareholders whose Shares have been accepted for payment. If the Purchaser extends the Offer, is delayed in its acceptance for payment of Shares or is unable to accept Shares for payment pursuant to the Offer for any reason, then, without prejudice to the Purchaser’s rights under the Offer, the Depositary may, nevertheless, on behalf of the Purchaser, retain tendered Shares, and such Shares may not be withdrawn except to the extent that tendering shareholders are entitled to withdrawal rights as described herein under Section 4—“Withdrawal Rights” and as otherwise required by Rule 14e-1(c) under the Exchange Act.

If any tendered Shares are not accepted for payment for any reason pursuant to the terms and conditions of the Offer, or if Share Certificates are submitted evidencing more Shares than are tendered, Share Certificates evidencing unpurchased Shares will be returned, without expense to the tendering shareholder (or, in the case of Shares tendered by book-entry transfer into the Depositary’s account at the Book-Entry Transfer Facility pursuant to the procedure set forth in Section 3—“Procedures for Accepting the Offer and Tendering Shares,” such Shares will be credited to an account maintained at the Book-Entry Transfer Facility), as promptly as practicable following the expiration or termination of the Offer.

3.   Procedures for Accepting the Offer and Tendering Shares.

Valid Tenders.   In order for a shareholder validly to tender Shares pursuant to the Offer, either (i) the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, together with any required signature guarantees (or, in the case of a book-entry transfer, an Agent’s Message in lieu of the Letter of Transmittal) and any other documents required by the Letter of Transmittal must be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase and either (A) the Share Certificates evidencing tendered Shares must be received by the Depositary at such address or (B) such Shares must be tendered pursuant to the procedure for book-entry transfer described below and a Book-Entry Confirmation must be received by the Depositary, in each case prior to the Expiration Date (except with respect to any Subsequent Offering Period, if one is provided), or (ii) the tendering shareholder must comply with the guaranteed delivery procedures described below under “Guaranteed Delivery.”

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Book-Entry Transfer.   The Depositary will establish an account with respect to the Shares at the Book-Entry Transfer Facility for purposes of the Offer within two business days after the date of this Offer to Purchase. Any financial institution that is a participant in the system of the Book-Entry Transfer Facility may make a book-entry delivery of Shares by causing the Book-Entry Transfer Facility to transfer such Shares into the Depositary’s account at the Book-Entry Transfer Facility in accordance with the Book-Entry Transfer Facility’s procedures for such transfer. However, although delivery of Shares may be effected through book-entry transfer at the Book-Entry Transfer Facility, either the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, together with any required signature guarantees, or an Agent’s Message in lieu of the Letter of Transmittal, and any other required documents, must, in any case, be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Expiration Date (except with respect to any Subsequent Offering Period, if one is provided), or the tendering shareholder must comply with the guaranteed delivery procedure described below. Delivery of documents to the Book-Entry Transfer Facility does not constitute delivery to the Depositary.

For Shares to be validly tendered during any Subsequent Offering Period, the tendering shareholder must comply with the foregoing procedures, except that required documents and certificates must be received during the Subsequent Offering Period.

Signature Guarantees.   No signature guarantee is required on the Letter of Transmittal (i) if the Letter of Transmittal is signed by the registered holder(s) (which term, for purposes of this Section 3, includes any participant in the Book-Entry Transfer Facility’s systems whose name appears on a security position listing as the owner of the Shares) of the Shares tendered therewith, unless such holder has completed either the box entitled “Special Delivery Instructions” or the box entitled “Special Payment Instructions” on the Letter of Transmittal or (ii) if the Shares are tendered for the account of a financial institution (including most commercial banks, savings and loan associations and brokerage houses) that is a participant in the Security Transfer Agents Medallion Program or any other “eligible guarantor institution,” as such term is defined in Rule 17Ad-15 of the Exchange Act (each an “Eligible Institution” and collectively “Eligible Institutions”). In all other cases, all signatures on a Letter of Transmittal must be guaranteed by an Eligible Institution. See Instruction 1 of the Letter of Transmittal. If a Share Certificate is registered in the name of a person or persons other than the signer of the Letter of Transmittal, or if payment is to be made or delivered to, or a Share Certificate not accepted for payment or not tendered is to be issued in, the name(s) of a person other than the registered holder(s), then the Share Certificate must be endorsed or accompanied by appropriate duly executed stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear on the Share Certificate, with the signature(s) on such Share Certificate or stock powers guaranteed by an Eligible Institution as provided in the Letter of Transmittal. See Instructions 1 and 5 of the Letter of Transmittal.

Guaranteed Delivery.   If a shareholder desires to tender Shares pursuant to the Offer and the Share certificates evidencing such shareholder’s Shares are not immediately available or such shareholder cannot deliver the Share Certificates and all other required documents to the Depositary prior to the Expiration Date, or such shareholder cannot complete the procedure for delivery by book-entry transfer on a timely basis, such Shares may nevertheless be tendered, provided that all of the following conditions are satisfied:

·       such tender is made by or through an Eligible Institution;

·       a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form made available by the Purchaser, is received prior to the Expiration Date by the Depositary as provided below; and

·       the Share Certificates (or a Book-Entry Confirmation) evidencing all tendered Shares, in proper form for transfer, in each case together with the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry transfer, an Agent’s Message), and any other documents required by

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the Letter of Transmittal are received by the Depositary within three (3) trading days after the date of execution of such Notice of Guaranteed Delivery.

The Notice of Guaranteed Delivery may be delivered by hand or transmitted by manually signed facsimile transmission or mailed to the Depositary and must include a guarantee by an Eligible Institution in the form set forth in the form of Notice of Guaranteed Delivery made available by the Purchaser.

Notwithstanding any other provision of this Offer, payment for Shares accepted pursuant to the Offer will in all cases only be made after timely receipt by the Depositary of (i) certificates evidencing such Shares or a Book-Entry Confirmation of a book-entry transfer of such Shares into the Depositary’s account at the Book-Entry Transfer Facility pursuant to the procedures set forth in this Section 3, (ii) the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees or, in the case of a book-entry transfer, an Agent’s Message in lieu of the Letter of Transmittal and (iii) any other documents required by the Letter of Transmittal. Accordingly, tendering shareholders may be paid at different times depending upon when Share Certificates or Book-Entry Confirmations with respect to Shares are actually received by the Depositary.

The method of delivery of Share Certificates, the Letter of Transmittal and all other required documents, including delivery through the Book-Entry Transfer Facility, is at the option and risk of the tendering shareholder, and the delivery will be deemed made only when actually received by the Depositary (including, in the case of a book-entry transfer, receipt of a Book-Entry Confirmation). If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to ensure timely delivery.

The tender of Shares pursuant to any one of the procedures described above will constitute the tendering shareholder’s acceptance of the Offer, as well as the tendering shareholder’s representation and warranty that such shareholder has the full power and authority to tender and assign the Shares tendered, as specified in the Letter of Transmittal. The Purchaser’s acceptance for payment of Shares tendered pursuant to the Offer will constitute a binding agreement between the tendering shareholder and the Purchaser upon the terms and subject to the conditions of the Offer.

Determination of Validity.   All questions as to the validity, form, eligibility (including time of receipt) and acceptance for payment of any tender of Shares will be determined by the Purchaser, in its sole discretion, which determination shall be final and binding on all parties. The Purchaser reserves the absolute right to reject any and all tenders determined by it not to be in proper form or the acceptance for payment of which may, in the opinion of its counsel, be unlawful. The Purchaser also reserves the absolute right to waive any defect or irregularity in the tender of any Shares of any particular shareholder, whether or not similar defects or irregularities are waived in the case of other shareholders. No tender of Shares will be deemed to have been validly made until all defects and irregularities have been cured or waived to the satisfaction of the Purchaser. None of the Purchaser, the Depositary, the Dealer Manager, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. The Purchaser’s interpretation of the terms and conditions of the Offer (including the Letter of Transmittal and the instructions thereto) will be final and binding.

Appointment.   By executing the Letter of Transmittal as set forth above, the tendering shareholder will irrevocably appoint designees of the Purchaser as such shareholder’s attorneys-in-fact and proxies in the manner set forth in the Letter of Transmittal, each with full power of substitution, to the full extent of such shareholder’s rights with respect to the Shares tendered by such shareholder and accepted for payment by the Purchaser and with respect to any and all other Shares or other securities or rights issued or issuable in respect of such Shares. All such powers of attorney and proxies will be considered irrevocable and coupled with an interest in the tendered Shares. Such appointment will be effective when, and only to the extent that, the Purchaser accepts for payment Shares tendered by such shareholder as provided herein. Upon such appointment, all prior powers of attorney, proxies and consents given by such

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shareholder with respect to such Shares or other securities or rights will, without further action, be revoked and no subsequent powers of attorney, proxies, consents or revocations may be given by such shareholder (and, if given, will not be deemed effective). The designees of the Purchaser will thereby be empowered to exercise all voting and other rights with respect to such Shares and other securities or rights, including, without limitation, in respect of any annual, special or adjourned meeting of Kos’ shareholders, actions by written consent in lieu of any such meeting or otherwise, as they in their sole discretion deem proper. The Purchaser reserves the right to require that, in order for Shares to be deemed validly tendered, immediately upon the Purchaser’s acceptance for payment of such Shares, the Purchaser must be able to exercise full voting, consent and other rights with respect to such Shares and other related securities or rights, including voting at any meeting of shareholders.

Backup Withholding.   Under the “backup withholding” provisions of United States federal income tax law, the Depositary may be required to withhold and pay over to the Internal Revenue Service a portion of the amount of any payments pursuant to the Offer. In order to prevent backup federal income tax withholding with respect to payments to certain shareholders of the Offer Price for Shares purchased pursuant to the Offer, each such shareholder must provide the Depositary with such shareholder’s correct taxpayer identification number (“TIN”) and certify that such shareholder is not subject to backup withholding by completing the Substitute Form W-9 in the Letter of Transmittal. Certain shareholders (including, among others, all corporations and certain foreign individuals and entities) may not be subject to backup withholding. If a shareholder does not provide its correct TIN or fails to provide the certifications described above, the Internal Revenue Service may impose a penalty on the shareholder and payment to the shareholder pursuant to the Offer may be subject to backup withholding. All shareholders surrendering Shares pursuant to the Offer who are U.S. persons (as defined for U.S. federal income tax purposes) should complete and sign the Substitute Form W-9 included in the Letter of Transmittal to provide the information necessary to avoid backup withholding. Foreign shareholders should complete and sign the appropriate Form W-8 (a copy of which may be obtained from the Depositary) in order to avoid backup withholding. Such shareholders should consult a tax advisor to determine which Form W-8 is appropriate. See Instruction 8 of the Letter of Transmittal.

4.   Withdrawal Rights.

Except as otherwise provided in this Section 4, tenders of Shares made pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date and, unless theretofore accepted for payment by the Purchaser pursuant to the Offer, may also be withdrawn at any time after January 13, 2007.

For a withdrawal to be effective, a written, telegraphic or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover page of this Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder of such Shares, if different from that of the person who tendered such Shares. If Share certificates evidencing Shares to be withdrawn have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such Share certificates, the serial numbers shown on such Share certificates must be submitted to the Depositary and the signature(s) on the notice of withdrawal must be guaranteed by an Eligible Institution, unless such Shares have been tendered for the account of an Eligible Institution. If Shares have been tendered pursuant to the procedure for book-entry transfer as set forth in Section 3—“Procedures for Accepting the Offer and Tendering Shares,” any notice of withdrawal must also specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares.

If the Purchaser extends the Offer, is delayed in its acceptance for payment of Shares or is unable to accept Shares for payment pursuant to the Offer for any reason, then, without prejudice to the Purchaser’s rights under the Offer, the Depositary may, nevertheless, on behalf of the Purchaser, retain tendered

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Shares, and such Shares may not be withdrawn except to the extent that tendering shareholders are entitled to withdrawal rights as described herein.

Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn will thereafter be deemed not to have been validly tendered for purposes of the Offer. However, withdrawn Shares may be re-tendered by again following one of the procedures described in Section 3—“Procedures for Accepting the Offer and Tendering Shares” at any time prior to the Expiration Date or during the Subsequent Offering Period, if any.

No withdrawal rights will apply to Shares tendered into a Subsequent Offering Period and no withdrawal rights apply during the Subsequent Offering Period with respect to Shares tendered in the Offer and accepted for payment. See Section 1—“Terms of the Offer.”

All questions as to the form and validity (including time of receipt) of any notice of withdrawal will be determined by the Purchaser, in its sole discretion, whose determination will be final and binding. None of the Purchaser, the Depositary, the Dealer Manager, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification.

5.   Certain United States Federal Income Tax Consequences.

The following is a summary of certain United States federal income tax consequences of the Offer and the Merger to shareholders of Kos whose Shares are tendered and accepted for payment pursuant to the Offer or whose Shares are converted into the right to receive cash in the Merger. The discussion is for general information only and does not purport to consider all aspects of United States federal income taxation that might be relevant to shareholders of Kos. The discussion is based on current provisions of the Internal Revenue Code of 1986, as amended (the “Code”), existing, proposed and temporary regulations thereunder and administrative and judicial interpretations thereof, all of which are subject to change, possibly with a retroactive effect. The discussion applies only to shareholders of Kos in whose hands Shares are capital assets within the meaning of Section 1221 of the Code. This discussion does not apply to Shares received pursuant to the exercise of employee stock options or otherwise as compensation, or to certain types of shareholders (such as insurance companies, tax-exempt organizations, financial institutions and broker-dealers) who may be subject to special rules. This discussion does not discuss the United States federal income tax consequences to any shareholder of Kos who, for United States federal income tax purposes, is a nonresident alien individual, a foreign corporation, a foreign partnership or a foreign estate or trust, nor does it consider the effect of any foreign, state or local tax laws.

Because individual circumstances may differ, each shareholder should consult its, his or her own tax advisor to determine the applicability of the rules discussed below and the particular tax effects of the Offer and the Merger on a beneficial holder of Shares, including the application and effect of the alternative minimum tax and any state, local and foreign tax laws and of changes in such laws.

The exchange of Shares for cash pursuant to the Offer or the Merger will be a taxable transaction for United States federal income tax purposes. In general, a shareholder who sells Shares pursuant to the Offer or receives cash in exchange for Shares pursuant to the Merger will recognize gain or loss for United States federal income tax purposes in an amount equal to the difference, if any, between the amount of cash received and the shareholder’s adjusted tax basis in the Shares sold pursuant to the Offer or exchanged for cash pursuant to the Merger. Gain or loss will be determined separately for each block of Shares (that is, Shares acquired at the same cost in a single transaction) tendered pursuant to the Offer or exchanged for cash pursuant to the Merger. Such gain or loss will be long-term capital gain or loss provided that a shareholder’s holding period for such Shares is more than one year at the time of consummation of the Offer or the Merger, as the case may be. Capital gains recognized by an individual upon a disposition of a Share that has been held for more than one year generally will be subject to a maximum United States federal income tax rate of 15%. In the case of a Share that has been held for one

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year or less, such capital gains generally will be subject to tax at ordinary income tax rates. Certain limitations apply to the use of a shareholder’s capital losses.

A shareholder whose Shares are purchased in the Offer or exchanged for cash pursuant to the Merger may be subject to backup withholding unless certain information is provided to the Depositary or an exemption applies. See Section 3—“Procedures for Accepting the Offer and Tendering Shares.”

6.   Price Range of Shares; Dividends.

The Shares trade on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “KOSP.” The following table sets forth, for the periods indicated, the high and low sale prices per Share for the periods indicated. Share prices are as reported on Nasdaq based on published financial sources.

On November 3, 2006, the last full day of trading before the public announcement of the execution of the Merger Agreement, the closing price of the Shares on Nasdaq was $50.09 per Share. On November 10, 2006, the second to last full day of trading before the commencement of the Offer, the closing price of the Shares on Nasdaq was $77.31 per Share. Kos has never paid any dividends on the Shares.

Shareholders are urged to obtain a current market quotation for the Shares.

7.   Certain Information Concerning Kos.

General.   Kos is a Florida corporation with its principal offices located at 1 Cedar Brook Drive, Cranbury, NJ 08512-3618. The telephone number for Kos is (609) 495-0500. According to Kos’ Annual Report on Form 10-K/A for the fiscal year ended December 31, 2005, Kos is a fully-integrated specialty pharmaceutical company engaged in the development and commercialization of proprietary prescription products for the treatment of chronic cardiovascular, metabolic and respiratory diseases. Kos manufactures its lead products, Niaspan® and Advicor®, and currently markets them directly through its own sales force and co-promotion partners in the United States, through its commercialization partner in Canada and through its commercialization partner and license arrangements outside of the United States, Canada and Japan.

Available Information.   The Shares are registered under the Exchange Act. Accordingly, Kos is subject to the information reporting requirements of the Exchange Act and, in accordance therewith, is required to file periodic reports, proxy statements and other information with the SEC relating to its business, financial condition and other matters. Such reports, proxy statements and other information can be inspected and copied at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549-0213. Information regarding the public reference facilities may be obtained from the SEC by

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telephoning 1-800-SEC-0330. Kos’ filings are also available to the public on the SEC’s internet site (http://www.sec.gov). Copies of such materials may also be obtained by mail from the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549-0213 at prescribed rates.

Summary Financial Information.   Set forth below is certain summary financial information for Kos and its consolidated subsidiaries excerpted from Kos’ Annual Report on Form 10-K/A for the fiscal year ended December 31, 2005 and its Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2006. More comprehensive financial information is included in such reports and other documents filed by Kos with the SEC, and the following summary is qualified in its entirety by reference to such reports and other documents and all of the financial information and notes contained therein. Copies of such reports and other documents may be examined at or obtained from the SEC in the manner set forth above.

(i)    As of September 30, 2006, includes $30 million of debt to Michael Jaharis, Chairman Emeritus of the Company’s Board of Directors and its principal shareholder, which matures on June 30, 2008, and as of December 31, 2004, includes $19 million of debt to Michael Jaharis which matured on June 30, 2005.

(ii)   Balance sheet data as of September 30, 2005 have been derived from Kos’ internal records as restated amounts for this period were not available from Kos’ Annual Report on Form 10-K/A for the fiscal year ended December 31, 2005 and its Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2006.

8.   Certain Information Concerning Abbott and the Purchaser.

General.   Abbott is an Illinois corporation with its principal offices located at 100 Abbott Park Road, Abbott Park, Illinois 60064-6400. The telephone number of Abbott is (847) 937-6100. Abbott’s principal business is the discovery, development, manufacture and sale of a broad and diversified line of health care products.

The Purchaser is a Florida corporation with its principal offices located at 100 Abbott Park Road, Abbott Park, Illinois 60064-6400. The telephone number of the Purchaser is (847) 937-6100. The Purchaser is a wholly owned subsidiary of Abbott. The Purchaser was formed for the purpose of making a tender offer for all of the common stock of Kos and has not engaged, and does not expect to engage, in any business other than in connection with the Offer and the Merger.

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The name, citizenship, business address, business phone number, present principal occupation or employment and past material occupation, positions, offices or employment for at least the last five years for each director and the name, citizenship, business address, business phone number, present principal occupation or employment and material occupation, positions, offices or employment for the past five years of each of the executive officers of Abbott and the Purchaser and certain other information are set forth in Schedule I hereto.

Except as described in this Offer to Purchase and in Schedule I hereto, (i) none of Abbott, the Purchaser or, to the best knowledge of Abbott and the Purchaser, any of the persons listed in Schedule I to this Offer to Purchase or any associate or majority-owned subsidiary of Abbott or the Purchaser or any of the persons so listed beneficially owns or has any right to acquire, directly or indirectly, any Shares and (ii) none of Abbott, the Purchaser or, to the best knowledge of Abbott and the Purchaser, any of the persons or entities referred to above nor any director, executive officer or subsidiary of any of the foregoing has effected any transaction in the Shares during the past 60 days.

Except as provided in the Merger Agreement, the Shareholders Agreement or as otherwise described in this Offer to Purchase, none of Abbott, the Purchaser or, to the best knowledge of Abbott and the Purchaser, any of the persons listed in Schedule I to this Offer to Purchase, has any contract, arrangement, understanding or relationship with any other person with respect to any securities of Kos, including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or voting of such securities, finder’s fees, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss, guarantees of profits, division of profits or loss or the giving or withholding of proxies.

Except as set forth in this Offer to Purchase, none of Abbott, the Purchaser or, to the best knowledge of Abbott and the Purchaser, any of the persons listed on Schedule I hereto, has had any business relationship or transaction with Kos or any of its executive officers, directors or affiliates that is required to be reported under the rules and regulations of the SEC applicable to the Offer. Except as set forth in this Offer to Purchase, there have been no contacts, negotiations or transactions between Abbott or any of its subsidiaries or, to the best knowledge of Abbott, any of the persons listed in Schedule I to this Offer to Purchase, on the one hand, and Kos or its affiliates, on the other hand, concerning a merger, consolidation or acquisition, tender offer or other acquisition of securities, an election of directors or a sale or other transfer of a material amount of assets during the past two years. None of the persons listed in Schedule I has, during the past five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). None of the persons listed in Schedule I has, during the past five years, been a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws.

Available Information.   Pursuant to Rule 14d-3 under the Exchange Act, Abbott and the Purchaser filed with the SEC a Tender Offer Statement on Schedule TO (the “Schedule TO”), of which this Offer to Purchase forms a part, and exhibits to the Schedule TO. Additionally, Abbott is subject to the information reporting requirements of the Exchange Act and, in accordance therewith, is required to file periodic reports, proxy statements and other information with the SEC relating to its business, financial condition and other matters. The Schedule TO and the exhibits thereto, and such reports, proxy statements and other information, can be inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549-0213. Information regarding the public reference facilities may be obtained from the SEC by telephoning 1-800-SEC-0330. Abbott filings are also available to the public on the SEC’s internet site (http://www.sec.gov). Copies of such materials may also be obtained by mail from the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549-0212 at prescribed rates.

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9.   Source and Amount of Funds.

The Offer is not conditioned upon Abbott’s or the Purchaser’s ability to finance the purchase of Shares pursuant to the Offer. Abbott and the Purchaser estimate that the total amount of funds required to purchase all of the Shares pursuant to the Offer and the Merger, make payments to holders of outstanding options and warrants to purchase Kos common stock as required by the Merger Agreement, and consummate the Kos Investments Stock Purchase will be a net cash amount of approximately $3.7 billion (such amount is net of cash held by Kos, which was approximately $542,493,000 as of September 30, 2006 according to Kos’ quarterly report on Form 10-Q for the quarter ended September 30, 2006), plus approximately $35 million in fees and expenses of Abbott and Kos relating to the transactions. Abbott will have sufficient funds to consummate the purchase of Shares in the Offer and the Merger and the other transactions described above, and will cause the Purchaser to have sufficient funds available to consummate such transactions. Abbott expects to obtain the necessary funds from existing cash balances and the issuance of commercial paper or other short term borrowings. Abbott’s weighted average interest rate on short-term borrowings at September 30, 2006 was 5.22%. After consummation of the transactions, Abbott may refinance a portion of such funds through the issuance of debt securities in public or private offerings.

The Purchaser does not think its financial condition is relevant to the holders’ of Shares decision whether to tender Shares and accept the Offer because:

·       the Offer is being made for all outstanding Shares solely for cash;

·       the Purchaser, through its parent company, Abbott, will have sufficient funds available to purchase all Shares successfully tendered in the Offer in light of the Purchaser’s financial capacity in relation to the amount of consideration payable;

·       the Offer is not subject to any financing condition; and

·       if the Purchaser consummates the Offer, it expects to acquire any remaining Shares for the same cash price in the Merger.

10.   Background of the Offer; Past Contacts or Negotiations with Kos.

On September 22, 2006, representatives of Greenhill & Co., LLC, Kos’ financial advisor (“Greenhill”), contacted Sean Murphy of Abbott, to assess Abbott’s interest in evaluating a possible acquisition of Kos.

On September 26, 2006, Kos and Abbott executed a confidentiality agreement in connection with Abbott’s evaluation of a possible acquisition of Kos.

On September 29, 2006, members of Kos’ senior management met with Mary Szela, Eugene Sun, and Lawrence Kraus, members of Abbott management. During that meeting, representatives of Kos provided representatives of Abbott with an overview of Kos’ business. Following these sessions, Abbott was invited to submit an initial indication of interest.

From September 29, 2006 to October 12, 2006, Abbott conducted an internal strategic assessment and evaluation of Kos, and on October 13, 2006, made a preliminary recommendation to Abbott’s board of directors to pursue a possible transaction involving Kos.

On October 10, 2006, representatives of Kos, including Michael Jaharis, its founder and largest individual shareholder, and Greenhill met with Richard Gonzalez, William Dempsey and Mr. Murphy of Abbott.

In mid-October, 2006, Abbott provided an initial valuation range of $60 to $65 per Share in cash for the acquisition of Kos.

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From October 20, 2006 to November 2, 2006, representatives of Abbott and certain of its advisors conducted due diligence regarding Kos including through attending additional management presentations, accessing Kos’ electronic data room containing due diligence material regarding Kos, and holding teleconferences by functional area.

In October 2006, Abbott was informed that formal acquisition proposals would be due with a bid deadline of November 1. On October 27, 2006, Abbott was provided forms of a proposed merger agreement, shareholders agreement and stock purchase agreement, and was informed that Kos’ advisors were available to discuss the proposed transaction agreements prior to the bid deadline.

Thereafter, Abbott continued its due diligence of Kos and had a number of conversations with representatives of Kos and its advisors.

On November 1, 2006, Abbott submitted a written proposal to acquire all of the outstanding shares of common stock of Kos at $72 per share in cash through a merger, subject to, among other things, the Jaharis Shareholders agreeing to vote all of their shares in favor of the proposed merger. This proposal included a preliminary mark-up of Kos’ proposed transaction agreements.

On November 2, 2006, representatives of Abbott and Kos and their respective legal advisors and Greenhill discussed the proposed terms of the proposal. Later that day, Greenhill contacted Abbott requesting a revised proposal by 9 a.m. on November 3, 2006.

On November 3, 2006, Abbott submitted a revised merger proposal to acquire all of Kos’ shares for $74 per share in cash, but did not otherwise alter its acquisition proposal submitted on November 1, 2006. Later that morning, Greenhill informed Abbott that Kos had decided to seek to finalize negotiations with another party.

On November 4, 2006, representatives of Abbott expressed to Kos management Abbott’s desire to submit a revised proposal to acquire Kos. Greenhill informed Abbott that Kos would consider a revised offer received by 9 a.m. the following morning if it reflected a meaningful increase in proposed price per share and was made on the basis of proposed transaction agreements that would be provided to Abbott later that day. Greenhill also informed Abbott that another party would be given the opportunity to match any increased Abbott price. Later that day, Greenhill provided Abbott revised transaction agreements in a form that Kos would find acceptable.

Later that day, the executive committee of the board of directors of Abbott met to consider revising its November 3, 2006 proposal to acquire Kos, and after deliberation, the executive committee of the board of directors of Abbott approved a revision of the November 3, 2006 proposal to acquire all of Kos’ shares for $78 per Share in cash. On the evening of November 4, 2006, Abbott and Greenhill agreed to meet in New York at 8:30 a.m. on November 5, 2006.

On November 5, 2006, Messrs. Dempsey and Murphy and James Tyree of Abbott and its legal advisors met with Greenhill at its office in New York, and with representatives of Kos management and other advisors, as well as representatives of Mr. Jaharis, by telephone to discuss Abbott’s revised proposal. At this meeting, Abbott indicated that it was willing to sign the transaction agreements substantially in the form proposed by Kos at a price per share of $78. Later that morning representatives of Greenhill advised Abbott that Kos’ board of directors had accepted the Abbott proposal. Thereafter, Kos, Abbott and the various parties to the related agreements executed the transaction agreements.

On November 6, 2006, Abbott and Kos issued a joint press release announcing their execution of the Merger Agreement. On November 14, 2006, the Purchaser commenced the Offer. During the pendency of the Offer, Abbott and the Purchaser intend to have ongoing contacts with Kos and its directors, officers and shareholders.

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11.   The Transaction Documents.

The Merger Agreement

The following is a summary of the material provisions of the Merger Agreement. The following description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement as amended by the Assignment, Assumption and Amendment Agreement, copies of which are attached hereto as Annex A and Annex B, respectively, and are incorporated herein by reference. For a complete understanding of the Merger Agreement, you are encouraged to read the full text of the Merger Agreement.

The Offer.   The Merger Agreement provides for the commencement of the Offer as promptly as practicable, but in no event later than the later of (a) six business days after the date of the Merger Agreement and (b) the first business day following publication in the Federal Register of certain amendments to Exchange Act Rule 14d-10 (which were published on November 8, 2006). The obligations of the Purchaser to (and the obligations of Abbott to cause the Purchaser to) commence the Offer and to accept for payment, and pay for, Shares tendered pursuant to the Offer are subject to the satisfaction of certain conditions that are described in Section 15—“Certain Conditions of the Offer.”  The Purchaser reserves the right (x) if the Minimum Tender Condition has not been satisfied or if an Adverse Recommendation Change, as described below, has been made, to increase the Offer Price and (y) to waive any condition to the Offer or modify the terms of the Offer, except that, without the consent of Kos, the Purchaser shall not (i) reduce the number of Shares subject to the Offer, (ii) reduce the Offer Price, (iii) waive the Minimum Tender Condition, (iv) add to the conditions to closing or modify any condition to closing in any manner adverse to the holders of Kos’ common stock, (v) except as otherwise summarized below, extend the Offer, (vi) change the form of consideration payable in the Offer or (vii) otherwise amend the Offer in any manner adverse to the holders of Kos’ common stock.

Notwithstanding the foregoing, the Purchaser may, in its discretion and without the consent of Kos, (a) extend the Offer for one or more consecutive periods of not more than five business days each, if at any otherwise scheduled Expiration Date of the Offer any of the conditions to the Purchaser’s obligation to purchase Shares are not satisfied or waived, until such time as such conditions are satisfied or waived, (b) extend the Offer for the minimum period required by any rule, regulation, interpretation or position of the SEC applicable to the Offer or (c) if the initial offering period has expired, make available a Subsequent Offering Period. In addition, if at any otherwise scheduled Expiration Date of the Offer any condition to the Offer is not satisfied or waived, the Purchaser agreed that it will, and Abbott agreed that it will cause the Purchaser to, extend the Offer at the request of Kos for one or more consecutive increments of not more than five business days each. In addition, the Purchaser agreed that it will, if the initial offering period has expired and if requested by Kos, make available a Subsequent Offering Period of not less than 10 business days, but the Purchaser is not required to make available such a Subsequent Offering Period if, prior to the commencement of the Subsequent Offering Period, Abbott and the Purchaser directly or indirectly own more than 80% of the fully diluted Shares.

Top-Up Option.   Kos granted Abbott and the Purchaser an option to purchase, at a price per Share equal to the Offer Price, newly issued Shares of Kos’ common stock in an amount up to the lowest number of Shares of Kos’ common stock that, when added to the number of Shares of Kos’ common stock that is then directly or indirectly owned by Abbott and the Purchaser constitutes one Share more than 80% of the fully diluted Shares after the issuance of the new Shares sold to Abbott and the Purchaser. This option is exercisable only once, at such time as Abbott and the Purchaser, directly or indirectly, own at least 70% of the fully diluted Shares, and only prior to the fifth business day after the Expiration Date or the expiration date of any Subsequent Offering Period. Kos’ obligation to deliver the newly issued Shares upon the exercise of this option is subject to the conditions that no provision of any applicable law and no judgment, injunction, order or decree prohibits the exercise of the option or the delivery of the Shares in respect of such exercise.

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The Merger.   The Merger Agreement provides that, at the Effective Time, the Purchaser will be merged with and into Kos with Kos being the surviving corporation (the “Surviving Corporation”). Following the Merger, the separate existence of the Purchaser will cease, and Kos will continue as the Surviving Corporation, wholly owned by Abbott. The directors of the Purchaser immediately prior to the Effective Time will be the directors of the Surviving Corporation.

Pursuant to the Merger Agreement, each Share outstanding at the Effective Time  will be converted into the right to receive the Merger Consideration (other than Shares owned by Abbott or the Purchaser or held by Kos as treasury stock, all of which will be canceled and retired and will cease to exist, and other than Shares owned by Kos Investments or Kos Holdings, which will be converted into an aggregate number of shares of the Surviving Corporation equal to the same percentage of the fully diluted stock of the Surviving Corporation as the Shares held by Kos Investments and Kos Holdings currently represent of the fully diluted Shares).

Kos Options, Employee Stock Purchase Plan, Restricted Stock and Warrants.   The Merger Agreement provides that, promptly after the consummation of the Offer, each outstanding and unexercised option to purchase Shares granted under any Kos stock plan will vest in full and be canceled immediately prior to such time and will be converted into the right to receive an amount in cash (less applicable withholding taxes and without interest) equal to the excess, if any, of (a) the Offer Price over (b) the per Share exercise price of such option, multiplied by the number of Shares subject to such option.

On the date immediately prior to the Effective Time, the Kos Employee Stock Purchase Plan (the “ESPP”) will be terminated, and each purchase right under the ESPP will be automatically exercised by applying the payroll deductions of each participant in the ESPP for the applicable offering period (as defined in the ESPP) to the purchase of a number of whole Shares (subject to the ESPP provisions regarding the number of shares purchasable) at the exercise price per Share specified in the ESPP, and that number of Shares will then be cancelled and converted into the right to receive the Merger Consideration. Any excess payroll deductions will be distributed to the ESPP participants without interest.

The Merger Agreement also provides that, immediately after consummation of the Offer, all outstanding awards of restricted stock not acquired by the Purchaser in the Offer will vest in full and the holders of such awards will be entitled to receive the Merger Consideration.

The Merger Agreement further provides for payments to be made in respect of certain outstanding warrants to purchase Shares, in amounts with respect to each warrant equal to the aggregate amount of cash that would be deliverable to the holder of such warrant had it been exercised immediately prior to the Offer or the Merger, as applicable, minus the aggregate exercise price of the warrants. In accordance with the Shareholders Agreement, immediately following consummation of the Offer, the exercise price in respect of warrants held by a Jaharis Shareholder shall be deemed to have been paid through the conversion of the principal and interest outstanding under specified loan agreements with the holder of such warrants.

Representations and Warranties.   In the Merger Agreement, Kos has made customary representations and warranties to Abbott and the Purchaser, including representations relating to: organization and qualification of Kos; subsidiaries and joint ventures; Kos’ articles of incorporation, bylaws and capital structure; authorization for, validity of and necessary action with respect to the Merger Agreement; no conflicts with or consents required in connection with the Merger Agreement; compliance with applicable laws and regulatory compliance; Kos’ SEC filings, financial statements, and undisclosed liabilities; absence of certain changes or events and litigation; benefit plans; labor and employment matters; insurance; title to properties; taxes; information provided by Kos for inclusion in the Offer documents, the Schedule 14D-9; the opinion of Kos’ financial advisor; brokers; takeover laws; intellectual property; environmental matters; material contracts; and transactions with affiliates.

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In the Merger Agreement, Abbott and the Purchaser have made customary representations and warranties to Kos, including representations relating to: organization, standing and power of Abbott and the Purchaser; authorization for, validity of and necessary action with respect to the Merger Agreement; no conflicts with or consents required in connection with the Merger Agreement; information supplied by Abbott and the Purchaser for inclusion in the Offer documents or the Schedule 14D-9; brokers; operations of the Purchaser; ownership of Kos’ common stock by Abbott and the Purchaser; litigation; and the availability of funds.

Operating Covenants.   The Merger Agreement provides that, from the date of the Merger Agreement to the Effective Time, except as contemplated by the Merger Agreement (including in Kos’ disclosure schedule) or as required by law, and unless Abbott otherwise consents in writing, the business of Kos and its subsidiaries will be conducted in the ordinary course and Kos shall use its reasonable best efforts to preserve intact its business organization, and to preserve its present relationships with customers, suppliers, employees, licensees, licensors, partners and other persons with which it has significant business relations. In addition, between the date of the Merger Agreement and the Effective Time, Kos is subject to customary operating covenants and restrictions, including restrictions relating to the issuance, sale or pledge of stock; declaration or payment of dividends; acquisitions and joint ventures; sales of assets or properties; entry into or amendment of material contracts; capital expenditures; indebtedness; employee compensation, benefits and retirement plans; changes to accounting methods or tax elections; satisfaction or settlement of claims; sale or abandonment of intellectual property; entry into confidentiality agreements, and enforcement of confidentiality agreements and standstill agreements.

Shareholders Meeting.   The Merger Agreement provides that Kos will, at Abbott’s request and if the approval of the Merger Agreement by Kos’ shareholders is required by law, hold a meeting of its shareholders for the purpose of approving the Merger Agreement.

No Solicitation Provisions.   The Merger Agreement contains provisions prohibiting each of Kos and its subsidiaries, as well as their respective officers, directors, agents and representatives, from:

·       directly or indirectly, initiating, soliciting or knowingly encouraging or facilitating (including by way of furnishing information) any inquiries or the making of an “Acquisition Proposal” (as described below);

·       directly or indirectly, engaging in any discussions or negotiations concerning, providing access to its properties or furnishing or providing access to its books and records or any confidential information or data to, any person relating to an Acquisition Proposal; or

·       otherwise cooperating in any way with, or assisting or participating in, facilitating or encouraging, any effort or attempt by any other Person to do or seek to do any of the foregoing.

However, if the Kos Board in good faith, and after consultation with outside counsel and financial advisors, determines that the failure to take such action would be reasonably likely to result in a breach of its fiduciary duties to Kos’ shareholders under applicable law, then at any time prior to the acceptance for payment of Shares pursuant to the Offer, Kos and its representatives may, in response to a written Acquisition Proposal that the Kos Board determines, in good faith, after consultation with outside counsel and financial advisors, constitutes, or would reasonably be expected to lead to, a Superior Proposal (as defined below), and which Acquisition Proposal did not result from a breach of the no solicitation provisions of the Merger Agreement, (1) provide access or furnish information with respect to Kos and its subsidiaries to the person making such Acquisition Proposal (and its representatives) pursuant to a customary confidentiality agreement that is no less restrictive than the confidentiality agreement between Abbott and Kos in respect of the Merger (including with respect to standstill provisions) and (2) engage in discussions or negotiations with the person making such Acquisition Proposal (and its representatives) regarding such Acquisition Proposal, provided that, subject to the right of Kos to withhold information where its disclosure would contravene any law, Kos agreed to promptly provide to Abbott any non-public

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information that is provided to the person making such Acquisition Proposal or its representatives which was not previously provided to Abbott or the Purchaser.

The Merger Agreement also provides that Kos and its subsidiaries will and will cause their respective agents and representatives, to immediately cease and cause to be terminated any existing activities, discussions or negotiations with any persons conducted before the date of the Merger Agreement with respect to any Acquisition Proposal. Kos must also promptly (within 24 hours and, in any event, prior to taking any action contemplated by the specified exceptions to the no solicitation provisions) notify Abbott of the receipt of any Acquisition Proposal or any inquiry, proposal or offer that is reasonably likely to lead to an Acquisition Proposal after the date of the Merger Agreement, including the identity of the person making the Acquisition Proposal or other inquiry, proposal or offer and the material terms and conditions thereof, and must keep Abbott promptly and reasonably apprised of any related material developments, discussions and negotiations related thereto.

The Merger Agreement prohibits the Kos Board from (i) withdrawing or modifying in a manner adverse to Abbott or the Purchaser, or proposing publicly to withdraw or modify in a manner adverse to Abbott or the Purchaser, its recommendations regarding the Offer or the Merger (or resolving, agreeing or proposing publicly to take any such action) (an “Adverse Recommendation Change”), unless at any time prior to the acceptance for payment of Shares pursuant to the Offer, the Kos Board determines in good faith and after consultation with its outside counsel that the failure to take such action would be reasonably likely to result in a breach of its fiduciary duties to Kos’ shareholders; and Kos provides Abbott with no less than two business days (or, if shorter, such number of business days remaining prior to the Expiration Date) notice of any expected Adverse Recommendation Change prior to any such change, (ii) recommending, adopting, or approving any Acquisition Proposal or proposing publicly to recommend, adopt or approve any Acquisition Proposal or resolving or agreeing to take any such action or (iii) causing or permitting Kos to enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement, option agreement, joint venture agreement, partnership agreement or other agreement constituting or related to, or which is intended to or is reasonably likely to lead to, any Acquisition Proposal (other than a confidentiality agreement entered into in accordance with the no solicitation provisions) or resolving, agreeing or publicly proposing to take any such action.

The Merger Agreement does not prohibit Kos from (i) taking and disclosing to its shareholders a position contemplated by Rule 14d-9 and Rule 14e-2(a) promulgated under the Exchange Act or (ii) making any disclosure to its shareholders if, in the good faith judgment of the Kos Board, after receipt of advice from its outside counsel, failure so to disclose would be inconsistent with its fiduciary duties or applicable law, provided that these actions will not affect the obligations of Kos and the Kos Board under the other no solicitation provisions of the Merger Agreement, and that (x) any such disclosure (other than a “stop, look and listen” letter or similar communication of the type contemplated by Rule 14d-9(f) under the Exchange Act) will not be deemed to be an Adverse Recommendation Change so long as the Kos Board expressly reaffirms in such disclosure its recommendations regarding the Offer and the Merger and (y) Kos provides Abbott with no less than one business day’s (or, if shorter, such number of hours remaining prior to the Expiration Date) notice of such disclosure prior to making any such disclosure.

As used in the Merger Agreement, an “Acquisition Proposal” is any proposal or offer with respect to the direct or indirect acquisition, including by way of a tender offer, exchange offer, merger, consolidation or other business combination, of (x) an equity interest representing a 15% or greater economic or voting interest in Kos, (y) the assets, securities or other ownership interests of or in Kos or its subsidiaries representing 15% or more of the consolidated assets of Kos and its subsidiaries or (z) any other transaction the consummation of which would reasonably be expected to prevent or materially delay Kos from performing its obligations under the Merger Agreement in any material respect or materially delay

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consummating the transactions contemplated by the Merger Agreement (other than, in the case of clauses (x), (y) and (z), the transactions contemplated by the Merger Agreement).

As used in the Merger Agreement, a “Superior Proposal” means any written offer that did not result from a breach of the no solicitation provisions made by a third party that the Kos Board reasonably determines to be bona fide for a transaction that if consummated, would result in such third party (or in the case of a direct merger between such third party and Kos, the shareholders of such third party) acquiring, directly or indirectly, more than 60% of the voting power of Kos’ common stock (or, in the case of a direct merger, the common stock of the resulting company) or all or substantially all the consolidated assets of Kos and its subsidiaries for consideration consisting of cash and/or securities payable to holders of Shares of Kos’ common stock that the Kos Board determines in good faith, after consultation with its financial advisors, to be more favorable to holders of Kos’ common stock than the Merger, taking into account all financial, regulatory, legal and other aspects of such offer and transaction (including the likelihood of prompt completion) and any changes to the terms of the Merger Agreement proposed by Abbott in response to such Superior Proposal or otherwise.

Employment and Employee Benefits.   In the Merger Agreement, Abbott agreed to cause the Surviving Corporation and its subsidiaries, for a period of 12 months following the Effective Time, to maintain for and provide employees of Kos the compensation and employee benefits maintained and provided to those employees by Kos immediately prior to the date of the Merger Agreement (subject to modifications and increases between the date of the Merger Agreement and the Effective Time as permitted by the Merger Agreement) and at levels in the aggregate that are no less valuable than those provided immediately prior to the date of the Merger Agreement (subject to modifications and increases between the date of the Merger Agreement and the Effective Time as permitted by the Merger Agreement), except for incentive compensation, which will be discretionary based on performance.

For purposes of eligibility and vesting and benefit accruals (but not for purposes of benefit accruals under defined benefit pension plans or to the extent it would result in duplication of benefits) under any employee benefit plans maintained for employees of Kos and its subsidiaries as of and after the Effective Time, Abbott, its subsidiaries or the Surviving Corporation will give such employees full credit for their service with Kos, its subsidiaries and their successors prior to the Effective Time to the same extent recognized by Kos immediately prior to the Effective Time. With respect to any welfare benefit plans, Abbott and its subsidiaries also will waive any preexisting condition or eligibility limitations to the same extent waived by Kos or its subsidiaries under their benefit plans and will give effect in determining deductibles and out-of-pocket limitations with respect to the plan year in which the Effective Time occurs to claims incurred and amounts paid by, and amounts reimbursed to, the employees of Kos and its subsidiaries under similar plans maintained immediately prior to the Effective Time by Kos and its subsidiaries.

Insurance and Indemnification.   The Merger Agreement provides that the Surviving Corporation will, from and after the Effective Time, indemnify and hold harmless each person who, as of the Effective Time, was a present or former officer or director of Kos or its subsidiaries to the fullest extent permitted by applicable law and Kos’ articles of incorporation and bylaws as of the Effective Time. Abbott, the Purchaser and Kos agreed in the Merger Agreement that all rights to indemnification and exculpation for acts or omissions occurring at or prior to the Effective Time (including rights for advancement of expenses) that existed in favor of current or former directors or officers of Kos and its subsidiaries as of the Effective Time as provided for in their respective organizational documents will be assumed by the Surviving Corporation in the Merger.

Abbott agreed pursuant to the Merger Agreement that it or the Surviving Corporation will obtain a six year “tail” insurance policy that provides coverage on terms no less favorable than the coverage provided under Kos’ directors and officers insurance policy as in effect on the date of the Merger Agreement for events occurring prior to the Effective Time. Neither Abbott nor the Surviving Corporation

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is required to pay more than $5 million to purchase this “tail” policy, and Abbott or the Surviving Corporation may, as an alternative, purchase a substitute policy with a term of six years from the Effective Time, covering those persons who are currently covered by the Kos’ directors’ and officers’ insurance policy in effect as of the date of the Merger Agreement for actions and omissions occurring on or prior to the Effective Time, and with terms and conditions no less favorable to the insured than the coverage provided under Kos’ directors’ and officers’ insurance policy as in effect on the date of the Merger Agreement.

Obligations to Cause Merger to Occur.   The Merger Agreement requires each party to use its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate the Offer, the Merger, the Kos Investments Stock Purchase and the other transactions contemplated by the Merger Agreement as promptly as practicable and no party thereto shall take or cause to be taken any action which would reasonably be expected to prevent, impede or delay the consummation of the Offer, the Merger or the Kos Investments Stock Purchase.

Hart-Scott-Rodino (HSR) and other Antitrust Approvals.   The Merger Agreement requires the parties to file a Notification and Report Form pursuant to the HSR Act, and to make other filings as appropriate under antitrust laws as promptly as practicable, to supply as promptly as reasonably practicable any additional information that may be requested pursuant to the HSR Act, and to take all other actions necessary, proper or advisable to cause the expiration or termination of the applicable waiting periods under the HSR Act as soon as practicable.

Directors.   The Merger Agreement provides that, promptly upon the acceptance for payment of, and the payment by Abbott or the Purchaser for, any Shares pursuant to the Offer, Abbott or the Purchaser will be entitled to designate that number of directors of the Kos Board as will give the Purchaser, subject to compliance with Section 14(f) of the Exchange Act, pro rata representation on the Kos Board (based on the ratio of (i) the number Shares that are so accepted for payment and paid for pursuant to the Offer plus the number of Shares owned by Abbott, the Purchaser or any other subsidiary of Abbott to (ii) the total number of Shares outstanding), and provided that, until the Effective Time, the Kos Board will have at least three independent directors. Kos is obligated pursuant to the Merger Agreement, and at Abbott’s option, to either increase the size of the Kos Board or obtain the resignation of current members of the Kos Board in order to enable the election or appointment of the Abbott and Purchaser directors. Following the election or appointment of the members of the Kos Board by Abbott or the Purchaser, any amendment or termination of the Merger Agreement approved by Kos, any extension for the performance or waiver of the obligations of Abbott and the Purchaser and any waiver of Kos’ rights under the Merger Agreement will require the concurrence of a majority of the independent directors on the Kos Board.

Conditions to the Merger.   The Merger Agreement provides that the respective obligations of each party to effect the Merger are subject to the satisfaction or waiver at or prior to the Effective Time of the following conditions:

·       if required by law, the Merger Agreement shall have been approved by the holders of at least a majority in combined voting power of the outstanding Shares;

·       no law (whether temporary, preliminary or permanent) shall have been enacted, entered, promulgated or enforced, nor shall any injunction have been issued and be in effect, by any United States court or any state court, or by a United States governmental entity, which prohibits, restrains or enjoins the consummation of the Merger, subject to compliance by the parties with their obligations to consummate the Merger as provided for in the Merger Agreement; and

·       all statutory waiting periods (and any extension thereof) applicable to the Merger under the HSR Act shall have been terminated or shall have expired.

In addition, the obligations of Abbott and the Purchaser to effect the Merger are subject to the condition that Abbott or the Purchaser shall have accepted Shares for payment pursuant to the Offer.

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Termination.   The Merger Agreement may be terminated and the Merger contemplated by the Merger Agreement may be abandoned at any time prior to the Effective Time, notwithstanding the approval of the holders of Kos’ common stock:

·       by mutual written consent of Abbott, the Purchaser and Kos;

·       by Abbott or Kos if any court of competent jurisdiction or other governmental entity located or having jurisdiction within the United States has issued a final, nonappealable order, decree or ruling or taken any other final action restraining, enjoining or otherwise prohibiting the Merger;

·       by either Abbott or Kos if the Effective Time has not occurred on or before the date which is nine months from the date of the Merger Agreement (the “Termination Date”), provided that this termination right is not exercisable by a party whose breach of the Merger Agreement is the cause of, or results in, the failure of the Merger to be consummated by such date; and provided further that the Merger Agreement may not be terminated pursuant to this provision after Abbott or the Purchaser accepts Shares for payment pursuant to the Offer;

·       by Kos if Abbott or the Purchaser has breached or failed to perform any representation, warranty, covenant or agreement contained in the Merger Agreement (without regard to any materiality qualification therein) and (i) such breach has not been cured prior to the earlier to occur of the 30th day following notice of such breach to Abbott and the Termination Date and (ii) such breach has, or would reasonably be expected to individually or in the aggregate, prevent or materially delay Abbott from performing its obligations under the Merger Agreement in any material respect or materially delay consummation of the transactions contemplated by the Merger Agreement, provided that Kos shall not have the right to terminate the Merger Agreement as a result of such breach if Kos is then in material breach of any of its representations, warrants, covenants or agreements contained in the Merger Agreement; provided further that the Merger Agreement may not be terminated pursuant to this provision after Abbott or the Purchaser accepts Shares for payment pursuant to the Offer;

·       by Abbott if there has been a breach of any representation, warranty, covenant or agreement on the part of Kos contained in the Merger Agreement such that certain of the conditions to Abbott’s obligations to consummate the Offer would not be satisfied and such breach shall not have been cured prior to the earlier to occur of the 30th day following notice of such breach to Kos and the Termination Date, provided that Abbott shall not have the right to terminate the Merger Agreement as a result of such breach if Abbott or Purchaser is then in material breach of any of its representations, warranties, covenants or agreements contained in the Merger Agreement; provided further that the Merger Agreement may not be terminated pursuant to this provision after Abbott or the Purchaser accepts Shares for payment pursuant to the Offer;

·       by Abbott in the event that an Adverse Recommendation Change has occurred or in the event that a willful and material breach of the no solicitation provisions has occurred; or

·       by Abbott or Kos after the 20th business day following an Adverse Recommendation Change if (x) the Majority Tender Condition (as defined in Section 15—“Certain Conditions of the Offer” has not then been satisfied and (y) Abbott has not increased the Offer Price in an amount sufficient to permit the Kos Board to reinstate its recommendations regarding the Offer and the Merger in accordance with its fiduciary duties.

Termination Fee.   The Merger Agreement contemplates that a termination fee of $126,000,000 (the “Termination Fee”) will be payable by Kos to Abbott under any of the following circumstances:

·       the Merger Agreement is terminated by Abbott in the event that an Adverse Recommendation Change has occurred;

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·       the Kos Board effects an Adverse Recommendation Change and the Merger Agreement is subsequently terminated by Abbott or Kos after the 20th business day following such Adverse Recommendation Change if (x) the Majority Tender Condition has not then been satisfied and (y) Abbott has not increased the Offer Price in an amount sufficient to permit the Kos Board to reinstate its recommendations regarding the Offer and the Merger in accordance with its fiduciary duties;

·       the Merger Agreement is terminated by Abbott as a result of a breach by Kos of any representation, warranty, covenant or agreement contained in the Merger Agreement following an Adverse Recommendation Change or receipt or public disclosure of a bona fide Acquisition Proposal after the date of the Merger Agreement and, within 12 months after the termination date, Kos or its affiliates enters into a definitive agreement or consummates an Acquisition Proposal or Superior Proposal; however, Kos will not be required to pay the Termination Fee to Abbott if the per Share consideration payable under such Acquisition Proposal or Superior Proposal is less than the Offer Price; or

·       the Merger Agreement is terminated by Abbott as a result of a willful and material breach of the no solicitation provisions and Kos Board recommendation and, within 12 months after the termination date, Kos or its affiliates enters into a definitive agreement for or consummates an Acquisition Proposal or Superior Proposal.

Under the Merger Agreement, Kos will also reimburse Abbott’s fees and expenses in an amount not to exceed $10 million upon termination of the Merger Agreement under the circumstances described above.

For purposes of the provisions regarding payment of the Termination Fee, references to 15% in the definition of “Acquisition Proposal” are replaced with a reference to 50%.

Amendment.   The Merger Agreement may be amended by the parties to the agreement at any time before or after approval of the Merger Agreement by the holders of a majority of the outstanding Shares; however, after approval of the Merger Agreement by the shareholders of Kos, there may not be made any amendment that by law requires further approval by such shareholders without the further approval of such shareholders. Following the election or appointment of Abbott’s or the Purchaser’s designees to the board of directors of Kos and prior to the Effective Time, any amendment or termination of the Merger Agreement approved by Kos, extension for the performance or waiver of the obligations of Abbott or Purchaser or waiver of Kos’ rights under the Merger Agreement shall require the concurrence of a majority of the independent directors.

The Shareholders Agreement

The following is a summary of the material provisions of the Shareholders Agreement. The following description of the Shareholders Agreement does not purport to be complete and is qualified in its entirety by reference to the Shareholders Agreement, a copy of which is filed as an exhibit to the Schedule TO and is incorporated herein by reference. For a complete understanding of the Shareholders Agreement, you are encouraged to read the full text of the Shareholders Agreement attached to the Schedule TO.

Under the Shareholders Agreement, which is among Abbott and the Jaharis Shareholders, Kos Holdings and Kos Investments, the Jaharis Shareholders have agreed to accept the Offer and to tender in the Offer all Shares beneficially owned by them, which represents approximately 35% of Kos’ outstanding Shares. The Jaharis Shareholders also agreed that they will not withdraw any Shares tendered pursuant to the Offer unless the Shareholders Agreement is terminated.

The Jaharis Shareholders further agreed that they will appear at any meeting of the Kos shareholders with respect to any actions relating to the Merger Agreement, and will vote, in person or by proxy, the

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Shares beneficially owned by them in favor of approval of the Merger Agreement and against any action or agreement (i) that would reasonably be expected to result in a breach of any representation, warranty, covenant or agreement by Kos contained in the Merger Agreement, by the Jaharis Shareholders contained in the Shareholders Agreement or by Kos Investments contained in the Stock Purchase Agreement relating to the Kos Investment Stock Purchase (the “Stock Purchase Agreement”), (ii) that would reasonably be expected to materially impede, interfere with or delay the consummation of the Offer or the Merger, or (iii) that would constitute an Acquisition Proposal.

The Shareholders Agreement contains customary representations, warranties, covenants and agreements, and provides that it will terminate automatically upon the earliest to occur of the Effective Time and termination of the Merger Agreement.

The Shareholders Agreement further provides, in the event that the Merger Agreement is terminated in certain circumstances, and Kos enters into a definitive agreement for or consummates an Acquisition Proposal or Superior Proposal with a person other than Abbott or any of Abbot’s affiliates (an “Alternative Disposition”), that each Jaharis Shareholder shall pay to, or shall cause to be paid to, Abbott, or its designee, in immediately available funds, 50% of the excess profits realized by such shareholder for the Alternative Disposition.

The Stock Purchase Agreement

The following is a summary of the material provisions of the Stock Purchase Agreement. The following description of the Stock Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the Stock Purchase Agreement, a copy of which is filed as an exhibit to the Schedule TO and is incorporated herein by reference. For a complete understanding of the Stock Purchase Agreement, you are encouraged to read the full text of the Stock Purchase Agreement attached to the Schedule TO.

The Stock Purchase Agreement provides that, concurrently with the closing of the Offer, Abbott will purchase 100% of the outstanding shares of Kos Investments, which directly and through Kos Holdings, a wholly owned subsidiary, owns approximately 18% of the Shares. The total purchase price for the Kos Investments Stock Purchase will equal the cash amount that would otherwise have been payable in the Offer for Kos Shares owned by Kos Investments, minus any liabilities of Kos Investments.

The Stock Purchase Agreement contains customary representations, warranties, covenants and agreements, including provisions providing for indemnification by the sellers thereunder and by Abbott, as the purchaser, and provides that it will terminate automatically upon the termination of the Merger Agreement. Subsequent to the consummation of the Kos Investments Stock Purchase, Abbott plans to cause the Merger of Kos Holdings and Kos Investments with and into the Purchaser.

The Stock Purchase Agreement contains equivalent provisions to those contained in the Shareholders Agreement with respect to payment to Abbott or its designee of 50% of the excess profits realized through an Alternative Disposition.

12.   Purpose of the Offer; Plans for Kos.

Purpose of the Offer.   The purpose of the Offer is to acquire control of, and the entire equity interest in, Kos. The purpose of the Merger is to acquire all outstanding Shares not tendered and purchased pursuant to the Offer or acquired in the Kos Investments Stock Purchase. If the Offer is successful, the Purchaser intends to consummate the Merger as promptly as practicable.

Approval.   Under the Florida Business Corporation Act, or FBCA, the approval of the Kos Board is required to approve and adopt the Merger Agreement and the transactions contemplated thereby including the Merger. The Kos Board, among other things, (i) approved, adopted and declared advisable,

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the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, (ii) determined that the terms of the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, are fair to and in the best interests of Kos and the shareholders of Kos, and (iii) recommended that the holders of the Shares accept the Offer and tender their Shares pursuant to the Offer, and approve the Merger Agreement and the transactions contemplated thereby, including the Merger. If the Minimum Tender Condition is satisfied, the Purchaser will take all necessary and appropriate action to cause a short-form merger under the FBCA as described below, assuming the Purchaser then owns at least 80% of the outstanding Shares. After the Kos Investments Stock Purchase, Abbott intends to merge Kos Investments and Kos Holdings with and into the Purchaser.

Short-form Merger.   Under Section 607.1104 of the FBCA, if the Purchaser acquires at least 80% of the outstanding Shares, the Purchaser will be able to approve the Merger after consummation of the Offer without a vote of Kos’ shareholders. In such event, Abbott and the Purchaser anticipate that they will take all necessary and appropriate action to cause the Merger to become effective as soon as reasonably practicable after such acquisition, but no earlier than 30 days from the date of this Offer, without a vote of Kos’ shareholders.

Plans for Kos.   Except as otherwise provided herein, it is expected that, initially following the Merger, the business and operations of Kos will, except as set forth in this Offer to Purchase, be continued substantially as they are currently being conducted. Abbott will continue to evaluate the business and operations of Kos during the pendency of the Offer and after the consummation of the Offer and the Merger and will take such actions as it deems appropriate under the circumstances then existing. Thereafter, Abbott intends to review such information as part of a comprehensive review of Kos’ business, operations, capitalization and management with a view to optimizing development of Kos’ potential in conjunction with Abbott’s existing business.

We have been informed that on November 5, 2006, the Kos Board authorized Kos to enter into change in control severance agreements with each member of Kos’ senior executive management team (the “Change in Control Severance Agreements”) and a change in control severance plan covering each of Kos’ employees other than employees party to a Change in Control Severance Agreement (the “Change in Control Severance Plan”). In general, these arrangements provide that in the event of a change in control of Kos and the subsequent termination of the covered party without “cause” (or in the event of his or her resignation for “good reason”) (as each term is defined in the respective arrangement), the employee would receive certain benefits, including lump-sum cash severance payments and vesting and accelerated vesting of options and restricted stock awards. In addition, on November 5, 2006, Kos entered into a change in control agreement with Michael Jaharis which, following the occurrence of a change in control of Kos, entitles Mr. Jaharis to health, welfare, and certain fringe benefits for a period of three years. In addition, Kos will make tax “gross-up” payments to address excise taxes that may be imposed under applicable tax laws to participants under the Change in Control Severance Agreements, the Change in Control Service Plan and the Change in Control Agreement between Kos and Michael Jaharis.

Except as set forth in this Offer to Purchase, the Purchaser and Abbott have no present plans or proposals that would relate to or result in (i) any extraordinary corporate transaction involving Kos or any of its subsidiaries (such as a merger, reorganization, liquidation, relocation of any operations or sale or other transfer of a material amount of assets), (ii) any sale or transfer of a material amount of assets of Kos or any of its subsidiaries, (iii) any change in the Kos Board or management of Kos, (iv) any material change in Kos’ capitalization or dividend policy, or (v) any other material change in Kos’ corporate structure or business.

Appraisal Rights.   Shareholders do not have appraisal or dissenters’ rights as a result of the Offer. Shareholders will not have appraisal or dissenters’ rights in connection with the Merger provided that, if the Kos shareholders are required to vote on the Merger, the Shares continue to be listed on Nasdaq on

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the record date for determining the shareholders entitled to vote on the Merger (or another exception under the FBCA applies).

Going Private Transactions.   The SEC has adopted Rule 13e-3 under the Exchange Act which is applicable to certain “going private” transactions and which may under certain circumstances be applicable to the Merger or another business combination following the purchase of Shares pursuant to the Offer in which the Purchaser seeks to acquire the remaining Shares not held by it. The Purchaser believes that Rule 13e-3 will not be applicable to the Merger because it is anticipated that the Merger will be effected within one (1) year following the consummation of the Offer and, in the Merger, shareholders will receive the same price per Share as paid in the Offer. Rule 13e-3 requires, among other things, that certain financial information concerning Kos and certain information relating to the fairness of the proposed transaction and the consideration offered to minority shareholders be filed with the SEC and disclosed to shareholders prior to consummation of the transaction.

13.   Certain Effects of the Offer.

Market for the Shares.   The purchase of Shares pursuant to the Offer will reduce the number of holders of Shares and the number of Shares that might otherwise trade publicly, which could adversely affect the liquidity and market value of the remaining Shares held by shareholders other than the Purchaser. The Purchaser cannot predict whether the reduction in the number of Shares that might otherwise trade publicly would have an adverse or beneficial effect on the market price for, or marketability of, the Shares or whether such reduction would cause future market prices to be greater or less than the Offer Price.

Stock Quotation.   The Shares are listed on Nasdaq. According to the published guidelines of Nasdaq, the Shares might no longer be eligible for listing on Nasdaq if, among other things, the number of publicly held Shares falls below 750,000 or the number of record holders of round lots falls below 400. Shares held by officers or directors of Kos or their immediate families, or by any beneficial owner of 10% or more of the Shares, ordinarily will not be considered to be publicly held for this purpose.

If the Shares cease to be listed on Nasdaq, the market for the Shares could be adversely affected. It is possible that the Shares would be traded on other securities exchanges (with trades published by such exchanges), the Nasdaq SmallCap Market, the OTC Bulletin Board or in a local or regional over-the-counter market. The extent of the public market for the Shares would, however, depend upon the number of holders of Shares and the aggregate market value of the Shares remaining at such time, the interest in maintaining a market in the Shares on the part of securities firms, the possible termination of registration of the Shares under the Exchange Act, as described below, and other factors.

Margin Regulations.   The Shares are currently “margin securities” under the Regulations of the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”), which has the effect, among other things, of allowing brokers to extend credit on the collateral of the Shares. Depending upon factors similar to those described above regarding the market for the Shares and stock quotations, it is possible that, following the Offer, the Shares would no longer constitute “margin securities” for the purposes of the margin regulations of the Federal Reserve Board and, therefore, could no longer be used as collateral for loans made by brokers.

Exchange Act Registration.   The Shares are currently registered under the Exchange Act. Such registration may be terminated upon application of Kos to the SEC if the Shares are neither listed on a national securities exchange nor held by 300 or more holders of record. Termination of registration of the Shares under the Exchange Act would substantially reduce the information required to be furnished by Kos to its shareholders and to the SEC and would make certain provisions of the Exchange Act no longer applicable to Kos, such as the short-swing profit recovery provisions of Section 16(b) of the Exchange Act, the requirement of furnishing a proxy statement pursuant to Section 14(a) of the Exchange Act in

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connection with shareholders’ meetings and the related requirement of furnishing an annual report to shareholders and the requirements of Rule 13e-3 under the Exchange Act with respect to “going private” transactions. Furthermore, the ability of “affiliates” of Kos and persons holding “restricted securities” of Kos to dispose of such securities pursuant to Rule 144 promulgated under the Securities Act of 1933, as amended, may be impaired or eliminated. If registration of the Shares under the Exchange Act were terminated, the Shares would no longer be “margin securities” or be eligible for listing on Nasdaq. Abbott and the Purchaser currently intend to seek to cause Kos to terminate the registration of the Shares under the Exchange Act as soon after consummation of the Offer as the requirements for termination of registration are met.

14.   Dividends and Distributions.

The Merger Agreement provides that from the date of the Merger Agreement to the Effective Time, without the prior written approval of Abbott, Kos will not, and will not allow its subsidiaries to, declare, set aside, make or pay any dividends on or make any distribution in respect of any of its capital stock, other than dividends and distributions by a direct or indirect wholly owned subsidiary of Kos to such subsidiary’s parent.

15.   Certain Conditions of the Offer.

For the purposes of this Section 15, capitalized terms used but not defined herein will have the meanings set forth in the Merger Agreement. Notwithstanding any other term of the Offer or the Merger Agreement, neither Abbott nor the Purchaser shall be required to accept for payment or, subject to any applicable rules and regulations of the SEC, including Rule 14e-l(c) under the Exchange Act (relating to Abbott’s or the Purchaser’s obligation to pay for or return tendered Shares promptly after the termination or withdrawal of the Offer), to pay for any Shares tendered pursuant to the Offer unless (i) the Minimum Tender Condition has been satisfied and (ii) all statutory waiting periods (and any extensions thereof) applicable to the purchase of Shares pursuant to the Offer and the Kos Investments Stock Purchase under the HSR Act shall have terminated or shall have expired. The term “Minimum Tender Condition” shall mean (x)(A) the number of Shares which have been validly tendered and not withdrawn prior to the expiration of the Offer plus (B) if the Kos Investments Stock Purchase will be consummated concurrently with or immediately subsequent to the Offer, the number of Shares held by Kos Investments and its subsidiaries, together represent at least a majority of the Fully Diluted Shares and (y) in the event an Adverse Recommendation Change has been effected (and not subsequently withdrawn), the number of Shares (other than Shares held by the Controlling Shareholder) which have been validly tendered and not withdrawn prior to the expiration of the Offer equals at least a majority of the Shares owned directly or indirectly by Persons other than the Controlling Shareholder (the “Majority Tender Condition”). The term “Fully Diluted Shares” means all outstanding securities entitled generally to vote in the election of directors of Kos on a fully diluted basis, after giving effect to the exercise or conversion of all options, rights and securities exercisable or convertible into such voting securities. The term “Controlling Shareholder” means the Jaharis Family, Kos Investments and Kos Holdings.

Furthermore, notwithstanding any other term of the Offer or the Merger Agreement, neither Abbott nor the Purchaser shall be required to commence the Offer or accept for payment or, subject as aforesaid, to pay for, and may delay the acceptance for payment of, any Shares tendered pursuant to the Offer if, at any time on or after the date of the Merger Agreement and before the expiration or termination of the Offer, any of the following conditions exists:

(a)  any law (whether temporary, preliminary or permanent) exists or shall have been enacted, entered, promulgated or enforced, or any injunction shall have been issued and be in effect, by any United States or state court or United States Governmental Entity which prohibits, restrains or enjoins the consummation of the Offer, the Merger or the Investments Stock Purchase;

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(b)  there shall have occurred any change, occurrence or development that, individually or in the aggregate, has had or would reasonably be expected to have, a Material Adverse Effect on Kos;

(c)  (i) the representations and warranties of Kos contained in the Merger Agreement (other than those set forth in Sections 3.3 and 3.4 of the Merger Agreement) shall not be true and correct (without giving effect to any limitation on any representation or warranty indicated by the words “Material Adverse Effect”, “in all material respects”, “in any material respect”, “material” or “ materially”) at such time (except to the extent expressly made as of an earlier date, in which case as of such earlier date), in each case except where the failure of any such representations and warranties to be so true and correct would not, or would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect on Kos and (ii) the representations and warranties of Kos set forth in Sections 3.3 and 3.4 of the Merger Agreement shall not be true and correct in all material respects at such time;

(d)  Kos shall have failed to perform in any material respect any obligation or to comply in any material respect with any agreement or covenant of Kos required to be performed or complied with by it under the Merger Agreement;

(e)  there shall not be pending any Proceeding by a Governmental Entity which does or would be reasonably likely to prevent the consummation of the transactions contemplated by the Merger Agreement;

(f)  the Merger Agreement shall have been terminated in accordance with its terms; or

(g) Kos shall have failed to perform any obligation set forth in Section 6.14 of the Merger Agreement.

At the request of Abbott, Kos shall deliver to Abbott a certificate executed on behalf of Kos by the chief executive officer or chief financial officer of Kos certifying that the matters set forth in sections (b), (c) and (d) above have not occurred.

The foregoing conditions shall be in addition to, and not a limitation of the rights of Abbott and the Purchaser to extend, terminate and/or modify the Offer pursuant to the terms and conditions of the Merger Agreement.

The foregoing conditions are for the sole benefit of Abbott and the Purchaser and subject to the terms and conditions of the Merger Agreement, may be waived by Abbott or the Purchaser, in whole or in part, at any time, at the sole discretion of Abbott or the Purchaser. The failure by Abbott, the Purchaser or any other affiliate of Abbott at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right, the waiver of any such right with respect to particular facts and circumstances shall not be deemed a waiver with respect to any other facts and circumstances and each such right shall be deemed an ongoing right that may be asserted at any time and from time to time.

16.   Certain Legal Matters; Regulatory Approvals.

General.   The Purchaser is not aware of any pending legal proceeding relating to the Offer. Except as described in this Section 16, based on its examination of publicly available information filed by Kos with the SEC and other publicly available information concerning Kos, the Purchaser is not aware of any governmental license or regulatory permit that appears to be material to Kos’ business that might be adversely affected by the Purchaser’s acquisition of Shares as contemplated herein or of any approval or other action by any governmental, administrative or regulatory authority or agency, domestic or foreign, that would be required for the acquisition or ownership of Shares by the Purchaser or Abbott as contemplated herein. Should any such approval or other action be required, the Purchaser currently contemplates that, except as described below under “State Takeover Statutes,” such approval or other

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action will be sought. While the Purchaser does not currently intend to delay acceptance for payment of Shares tendered pursuant to the Offer pending the outcome of any such matter, there can be no assurance that any such approval or other action, if needed, would be obtained or would be obtained without substantial conditions or that if such approvals were not obtained or such other actions were not taken, adverse consequences might not result to Kos’ business, any of which under certain conditions specified in the Merger Agreement, could cause the Purchaser to elect to terminate the Offer without the purchase of Shares thereunder under certain conditions. See Section 15—“Certain Conditions of the Offer.”

State Takeover Statutes.   A number of states have adopted laws that purport, to varying degrees, to apply to attempts to acquire corporations that are incorporated in, or that have substantial assets, shareholders, principal executive offices or principal places of business or whose business operations otherwise have substantial economic effects in, such states. Kos, directly or through subsidiaries, conducts business in a number of states throughout the United States, some of which have enacted such laws.

In Edgar v. MITE Corp., the Supreme Court of the United States invalidated on constitutional grounds the Illinois Business Takeover Statute which, as a matter of state securities law, made takeovers of corporations meeting certain requirements more difficult. However, in 1987, in CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that the State of Indiana could, as a matter of corporate law, constitutionally disqualify a potential acquirer from voting shares of a target corporation without the prior approval of the remaining shareholders where, among other things, the corporation is incorporated in, and has a substantial number of shareholders in, the state. Subsequently, in TLX Acquisition Corp. v. Telex Corp., a Federal District Court in Oklahoma ruled that the Oklahoma statutes were unconstitutional insofar as they apply to corporations incorporated outside Oklahoma in that they would subject such corporations to inconsistent regulations. Similarly, in Tyson Foods, Inc. v. McReynolds, a Federal District Court in Tennessee ruled that four Tennessee takeover statutes were unconstitutional as applied to corporations incorporated outside Tennessee. This decision was affirmed by the United States Court of Appeals for the Sixth Circuit.

Florida Anti-Takeover Statute.   Kos is incorporated under the laws of the State of Florida. Under Section 607.0902 of the FBCA, unless there is a provision in the articles of incorporation or bylaws electing not to be governed by this provision or certain exceptions apply, “control shares” (shares that would otherwise have voting power for the election of directors in certain ranges of ownership over 20%) acquired in a control-share acquisition have the same voting rights as were accorded to the shares before such acquisition only to the extent granted by a resolution approved by the majority of all the votes entitled to be cast by each class or series of the shareholders of the issuing corporation entitled to vote on the matter. Kos has not opted out of this provision.

Section 607.0901 of the FBCA provides that, unless a specified exception is met, an interested shareholder (i.e., a person owning 10% or more of a corporation’s outstanding voting stock) may not engage in an affiliated transaction (including a merger or other significant corporate transactions) with a Florida corporation unless such transaction is approved by two-thirds of the voting shares of the corporation excluding the shares beneficially owned by the interested shareholder.

This provision is not applicable under certain circumstances, including when:

·       a majority of the disinterested directors approve the transaction (which has occurred in the case of the Offer and the Merger),

·       the corporation has not had more than 300 shareholders of record at any time during the three years prior to the date on which the affiliated transaction was announced,

·       the interested shareholder has beneficially owned at least 80% of the outstanding voting shares of the corporation for at least five years prior to the date on which the affiliated transaction was announced,

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·       the interested shareholder is the beneficial owner of at least 90% of the outstanding voting shares of the corporation exclusive of shares acquired directly from the corporation in a transaction not approved by a majority of the disinterested directors,

·       the corporation is an investment company registered under the Investment Company Act of 1940, or

·       in the affiliated transaction, “fair price” consideration is paid to the holders of each class or series of voting shares and certain other conditions are met.

The Purchaser is not aware of any state takeover laws or regulations which are applicable to the Offer or the Merger and has not attempted to comply with any state takeover laws or regulations. If any government official or third party should seek to apply any state takeover law to the Offer or the Merger or other business combination between the Purchaser or any of its affiliates and Kos, the Purchaser will take such action as then appears desirable, which action may include challenging the applicability or validity of such statute in appropriate court proceedings. In the event it is asserted that one or more state takeover statutes is applicable to the Offer or the Merger and an appropriate court does not determine that it is inapplicable or invalid as applied to the Offer or the Merger, the Purchaser might be required to file certain information with, or to receive approvals from, the relevant state authorities or holders of Shares, and the Purchaser might be unable to accept for payment or pay for Shares tendered pursuant to the Offer, or be delayed in continuing or consummating the Offer or the Merger. See Section 15—“Certain Conditions of the Offer.”

United States Antitrust Compliance.   Under the HSR Act, and the related rules and regulations that have been issued by the Federal Trade Commission (the “FTC”), certain acquisition transactions may not be consummated until certain information and documentary material has been furnished for review by the FTC and the Antitrust Division of the Department of Justice (the “Antitrust Division”) and certain waiting period requirements have been satisfied. These requirements apply to Purchaser’s acquisition of the Shares in the Offer and the Merger.

Under the HSR Act, the purchase of Shares in the Offer may not be completed until the expiration of a 15-calendar day waiting period following the filing of certain required information and documentary material concerning the Offer with the FTC and the Antitrust Division, unless the waiting period is earlier terminated by the FTC and the Antitrust Division. Abbott and the Purchaser expect to file a Premerger Notification and Report Form under the HSR Act with the FTC and the Antitrust Division in connection with the purchase of Shares in the Offer and the Merger on November 24, 2006, and the required waiting period with respect to the Offer and the Merger will expire at 11:59 p.m., New York City time, on or about December 11, 2006, unless earlier terminated by the FTC or the Antitrust Division, or Kos receives a request for additional information or documentary material prior to that time. If within the 15-calendar day waiting period either the FTC or the Antitrust Division requests additional information or documentary material from Kos, the waiting period with respect to the Offer and the Merger would be extended for an additional period of 10-calendar days following the date of Kos’ substantial compliance with that request. Only one extension of the waiting period pursuant to a request for additional information is authorized by the HSR Act rules. After that time, the waiting period may be extended only by court order or with Kos’ consent. The FTC or the Antitrust Division may terminate the additional 10-calendar day waiting period before its expiration. In practice, complying with a request for additional information or documentary material can take a significant period of time. In the event that the number of Shares validly tendered and not withdrawn in the Offer represent less than 50% of the outstanding Shares, consummation of the Merger will not occur until after Abbott purchases the Shares pursuant to the Stock Purchase Agreement, which purchase will not occur until the 30-calendar day waiting period applicable to the Stock Purchase Agreement has expired or been terminated.

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The FTC and the Antitrust Division frequently scrutinize the legality under the antitrust laws of proposed transactions such as Purchaser’s acquisition of Shares in the Offer and the Merger. At any time before or after the purchase of Shares by the Purchaser, the FTC or the Antitrust Division could take any action under the antitrust laws that it either considers necessary or desirable in the public interest, including seeking to enjoin the purchase of Shares in the Offer and the Merger, the divestiture of Shares purchased in the Offer or the divestiture of substantial assets of Abbott, Kos or any of their respective subsidiaries or affiliates. Private parties as well as state attorneys general also may bring legal actions under the antitrust laws under certain circumstances.

Other Applicable Foreign Antitrust Laws.   Other than the filings with the Antitrust Division and the FTC, Abbott does not believe that any additional material pre-merger antitrust filings are required with respect to the Offer or the Merger. To the extent that any additional antitrust filings are required pursuant to other applicable foreign antitrust laws, Abbott, the Purchaser, Abbott’s other subsidiaries and Kos, as appropriate, will make such filings.

17.   Fees and Expenses.

Banc of America Securities LLC is acting as Dealer Manager in connection with the Offer and has provided certain financial advisory services to Abbott in connection with the proposed acquisition of Kos, for which services Banc of America Securities will receive customary compensation. Abbott and the Purchaser have agreed to reimburse Banc of America Securities for reasonable fees and expenses, including reasonable fees and disbursements of Banc of America Securities’ counsel, incurred in connection with Banc of America Securities’ engagement, and to indemnify Banc of America Securities and certain related parties against specified liabilities, including liabilities under the federal securities laws. In the ordinary course of Banc of America Securities’ businesses, Banc of America Securities and its affiliates may actively trade or hold securities or loans of Abbott and Kos for Banc of America Securities’ own accounts or for the accounts of customers and, accordingly, Banc of America Securities or its affiliates may at any time hold long or short positions in these securities or loans.

Abbott and the Purchaser have retained Georgeson Inc. to be the Information Agent and American Stock Transfer & Trust Company to be the Depositary in connection with the Offer. The Information Agent may contact holders of Shares by mail, telephone, telecopy, telegraph and personal interview and may request banks, brokers, dealers and other nominees to forward materials relating to the Offer to beneficial owners of Shares.

The Information Agent and the Depositary each will receive reasonable and customary compensation for their respective services in connection with the Offer, will be reimbursed for reasonable out-of-pocket expenses and will be indemnified against certain liabilities and expenses in connection therewith, including certain liabilities under federal securities laws.

Neither Abbott nor the Purchaser will pay any fees or commissions to any broker or dealer or to any other person (other than to the Depositary and the Information Agent) in connection with the solicitation of tenders of Shares pursuant to the Offer. Brokers, dealers, commercial banks and trust companies will, upon request, be reimbursed by the Purchaser for customary mailing and handling expenses incurred by them in forwarding offering materials to their customers. In those jurisdictions where applicable laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Purchaser by the Dealer Manager or one or more registered brokers or dealers licensed under the laws of such jurisdiction to be designated by the Purchaser.

18.   Miscellaneous.

The Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Shares in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance

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with the securities, blue sky or other laws of such jurisdiction. In those jurisdictions where applicable laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Purchaser by the Dealer Manager or one or more registered brokers or dealers licensed under the laws of such jurisdiction to be designated by the Purchaser.

No person has been authorized to give any information or to make any representation on behalf of Abbott or the Purchaser not contained herein or in the Letter of Transmittal, and, if given or made, such information or representation must not be relied upon as having been authorized. No broker, dealer, bank, trust company, fiduciary or other person shall be deemed to be the agent of the Purchaser, the Depositary, the Dealer Manager or the Information Agent for the purpose of the Offer.

The Purchaser has filed with the SEC a Tender Offer Statement on Schedule TO pursuant to Rule 14d-3 of the General Rules and Regulations under the Exchange Act, together with exhibits furnishing certain additional information with respect to the Offer, and may file amendments thereto. In addition, Kos has filed with the SEC a Schedule 14D-9, together with exhibits, pursuant to Rule 14d-9 under the Exchange Act, setting forth the recommendation of the Kos Board with respect to the Offer and the reasons for such recommendation and furnishing certain additional related information. A copy of such documents, and any amendments thereto, may be examined at, and copies may be obtained from, the SEC in the manner set forth under Section 7—“Certain Information Concerning Kos” above.

Parthenon Acquisition Corp.
November 14, 2006

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SCHEDULE I

DIRECTORS AND EXECUTIVE OFFICERS OF
ABBOTT AND THE PURCHASER

1.   Directors and Executive Officers of Abbott.   The following table sets forth the name, present principal occupation or employment and past material occupations, positions, offices or employment for at least the past five years for each director and the name, present principal occupation or employment and material occupations, positions, offices or employment for at least the past five years for each executive officer of Abbott. The current business address of each person is 100 Abbott Park Road, Abbott Park, Illinois 60064-6400 and the current phone number is (847) 937-6100. Unless otherwise indicated, each such person is a citizen of the United States of America.

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2.   Directors and Executive Officers of the Purchaser.   The following table sets forth the name, present principal occupation or employment and past material occupations, positions, offices or employment for at least the past five years for each director and the name, citizenship, business address, business phone number, present principal occupation or employment and material occupations, positions, offices or employment for at least the past five years for each executive officer of the Purchaser. The current business address of each person is 100 Abbott Park Road, Abbott Park, Illinois 60064-6400 and the current phone number is (847) 937-6100. Unless otherwise indicated, each such person is a citizen of the United States of America.

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AGREEMENT AND PLAN OF MERGER

among

ABBOTT LABORATORIES,

S&G NUTRITIONALS, INC.

and

KOS PHARMACEUTICALS, INC.

Dated as of November 5, 2006

TABLE OF CONTENTS

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A-ii

INDEX OF DEFINED TERMS

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AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER, dated as of November 5, 2006 (this “Agreement”) among ABBOTT LABORATORIES, an Illinois corporation (“Parent”), S&G Nutritionals, Inc., a Delaware corporation and a direct wholly owned Subsidiary of Parent (“Merger Sub”), and KOS PHARMACEUTICALS, INC., a Florida corporation (the “Company”).

WHEREAS the respective Boards of Directors of Parent, Merger Sub and the Company have approved the acquisition of the Company by Parent on the terms and subject to the conditions set forth in this Agreement;

WHEREAS, in furtherance of the acquisition of the Company by Parent on the terms and subject to the conditions set forth in this Agreement, Parent proposes to cause Merger Sub to make a tender offer (as it may be amended from time to time as permitted under this Agreement, the “Offer”) to purchase all the outstanding shares of common stock, par value $0.01 per share (a “Share”), of the Company (the “Company Common Stock”), at a price per Share of Company Common Stock of $78.00 (such amount, or any other amount per Share paid pursuant to the Offer and this Agreement, the “Offer Price”), net to the seller in cash, on the terms and subject to the conditions set forth in this Agreement;

WHEREAS, the Board of Directors of the Company has (i) determined that this Agreement and the transactions contemplated hereby, including the Offer and the merger (the “Merger”) of Merger Sub with and into the Company in accordance with the Business Corporation Act of the State of Florida (the “FBCA”), are advisable, fair to and in the best interests of the Company and its Shareholders, (ii) adopted and approved this Agreement and the transactions contemplated hereby, including the Offer and the Merger, in accordance with the FBCA, upon the terms and subject to the conditions set forth herein, and (iii) resolved to recommend the Offer and the approval of this Agreement and the other transactions contemplated hereby (including the Merger) by the shareholders of the Company;

WHEREAS, the Boards of Directors of Parent and Merger Sub have each adopted and approved, and Parent, as the sole shareholder of Merger Sub has approved this Agreement and declared it advisable, fair to and in the best interests of Parent and Merger Sub, respectively to enter into this Agreement providing for the Offer and Merger in accordance with the FBCA, upon the terms and subject to the conditions set forth herein;

WHEREAS, as an inducement to and condition of Parent’s willingness to enter into this Agreement, certain shareholders (collectively, the “Jaharis Family”) will enter into a shareholders agreement dated as of the date hereof (the “Shareholders Agreement”), the form of which is attached as Annex 1, and the Board of Directors of the Company has approved the entry by the Jaharis Family into the Shareholders Agreement. The Shareholders Agreement will be entered into concurrently with the execution and delivery of this Agreement; and

WHEREAS, as an inducement to and condition of the Jaharis Family entering into the Shareholders Agreement, Parent and certain persons have entered into a stock purchase agreement dated as of the date hereof (the “Stock Purchase Agreement”), the form of which is attached as Annex 2, providing for the purchase by Parent of all outstanding shares of Kos Investments, Inc. (the “Investments Stock Purchase”).

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants, agreements and representations herein contained, and intending to be legally bound hereby, Parent, Merger Sub and the Company hereby agree as follows:

ARTICLE I

THE OFFER AND THE MERGER

SECTION 1.1   The Offer.   (a) Subject to the conditions of this Agreement, as promptly as practicable but in no event later than the later of (x) six Business Days after the date of this Agreement and (y) the first Business Day following publication in the Federal Register of SEC Release Number 34-54684 relating to the amendments to Rule 14d-10 promulgated under the Exchange Act (the date of such

publications referred to as the “Publication Date”), Merger Sub shall, and Parent shall cause Merger Sub to, commence the Offer within the meaning of the applicable rules and regulations of the Securities and Exchange Commission (the “SEC”). The obligations of Merger Sub to, and of Parent to cause Merger Sub to, commence the Offer and accept for payment, and pay for, any Shares tendered pursuant to the Offer are subject to the conditions set forth in Exhibit A. The initial expiration date of the Offer shall be midnight New York City time on the later of (x) the 30th day (or if such day is not a Business Day, the first Business Day thereafter) following the Publication Date and (y) the 20th Business Day following the commencement of the Offer (determined using Exchange Act Rule 14d-1(g)(3) of the SEC) (the initial “Expiration Date” and any expiration time and date established pursuant to an extension of the Offer as so extended, also an “Expiration Date”). Merger Sub expressly reserves the right (x) if the Minimum Tender Condition has not been satisfied or if an Adverse Recommendation Change has been made, to increase the Offer Price and (y) to waive any condition to the Offer or modify the terms of the Offer, except that, without the consent of the Company, Merger Sub shall not (i) reduce the number of Shares subject to the Offer, (ii) reduce the Offer Price, (iii) waive the Minimum Tender Condition (as defined in Exhibit A), (iv) add to the conditions set forth in Exhibit A or modify any condition set forth in Exhibit A in any manner adverse to the holders of Company Common Stock, (v) except as otherwise provided in this Section 1.1(a), extend the Offer, (vi) change the form of consideration payable in the Offer or (vii) otherwise amend the Offer in any manner adverse to the holders of Company Common Stock. Notwithstanding the foregoing, Merger Sub may, in its discretion, without the consent of the Company, (i) extend the Offer for one or more consecutive increments of not more than five Business Days each, if at any otherwise scheduled Expiration Date of the Offer any of the conditions to Merger Sub’s obligation to purchase Shares are not satisfied or waived, until such time as such conditions are satisfied or waived, (ii) extend the Offer for the minimum period required by any rule, regulation, interpretation or position of the SEC or the staff thereof applicable to the Offer or (iii) make available a “subsequent offering period” in accordance with Exchange Act Rule 14d-11. In addition, if at any otherwise scheduled Expiration Date of the Offer any condition to the Offer is not satisfied or waived, Merger Sub shall, and Parent shall cause Merger Sub to, extend the Offer at the request of the Company for one or more consecutive increments of not more than five Business Days each. In addition, Merger Sub shall, if requested by the Company, make available a subsequent offering period in accordance with Exchange Act Rule 14d-11 of not less than ten Business Days; provided that Merger Sub shall not be required to make available such a subsequent offering period in the event that, prior to the commencement of such subsequent offering period, Parent and Merger Sub, directly or indirectly own more than 80% of the Fully Diluted Shares. On the terms and subject to the conditions of the Offer and this Agreement, Merger Sub shall, and Parent shall cause Merger Sub to, accept and pay for all Shares validly tendered and not withdrawn pursuant to the Offer that Merger Sub becomes obligated to purchase pursuant to the Offer as soon as practicable after the expiration of the Offer. For the avoidance of doubt, the parties hereto agree that shares of Restricted Company Common Stock may be tendered in the Offer and be acquired by Parent or Merger Sub pursuant to the Offer.

(b)   On the date of commencement of the Offer, Parent and Merger Sub shall file with the SEC a Tender Offer Statement on Schedule TO with respect to the Offer, which shall contain an offer to purchase and a related letter of transmittal and summary advertisement (such Schedule TO and the documents included therein pursuant to which the Offer will be made, together with any supplements or amendments thereto, the “Offer Documents”). Each of Parent, Merger Sub and the Company shall promptly correct any information provided by it for use in the Offer Documents if and to the extent that such information shall have become false or misleading in any material respect, and each of Parent and Merger Sub shall take all steps necessary to amend or supplement the Offer Documents and to cause the Offer Documents as so amended or supplemented to be filed with the SEC and the Offer Documents as so amended or supplemented to be disseminated to the Company’s shareholders, in each case as and to the extent required by applicable federal securities laws. Parent, Merger Sub and the Company will cooperate and consult with each other and their respective counsel in the preparation of the Offer Documents.

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Without limiting the generality of the foregoing, the Company will furnish to Parent the information relating to it required by the Exchange Act and the rules and regulations promulgated thereunder to be set forth in the Offer Documents. Parent and Merger Sub shall (i) provide the Company and its counsel in writing with any comments Parent, Merger Sub or their counsel may receive from the SEC or its staff with respect to the Offer Documents promptly after the receipt of such comments, (ii) consult with the Company and its counsel prior to responding to any such comments, and (iii) provide the Company and its counsel in writing with any comments or responses thereto of Parent, Merger Sub or their counsel. Parent and Merger Sub shall give the Company a reasonable opportunity to review and comment on the Offer Documents and any amendments thereto.

(c)   Parent shall provide or cause to be provided to Merger Sub on a timely basis the funds necessary to purchase any Shares that Merger Sub becomes obligated to purchase pursuant to the Offer.

(d)   The Company hereby grants to Parent and Merger Sub an irrevocable option (the “Top-Up Option”) to purchase at a price per share equal to the Offer Price up to that number of newly issued shares of the Company Common Stock (the “Top-Up Shares”) equal to the lowest number of shares of Company Common Stock that, when added to the number of shares of Company Common Stock, directly or indirectly, owned by Parent and Merger Sub at the time of exercise of the Top-Up Option shall constitute one share more than eighty percent (80%) of the Fully Diluted Shares immediately after the issuance of the Top-Up Share. The Top-Up Option shall be exercisable only once, at such time as Parent and Merger Sub, directly or indirectly, own at least 70% of the Fully Diluted Shares and prior to the fifth Business Day after the Expiration Date or the expiration date of any subsequent offering period. Such Top-Up Option shall not be exercisable to the extent the number of shares of Company Common Stock subject thereto (taken together with the number of Fully Diluted Shares outstanding at such time) exceeds the number of authorized shares of Company Common Stock available for issuances. The obligation of the Company to deliver the Top-Up Shares upon the exercise of the Top-Up Option is subject to the condition that no provision of any applicable Law and no Judgment, injunction, order or decree shall prohibit the exercise of the Top-Up Option or the delivery of the Top-Up Shares in respect of such exercise. The parties shall cooperate to ensure that the issuance of the Top-Up Shares is accomplished consistent with all applicable legal requirements of all Governmental Entities, including compliance with an applicable exemption from registration of the Top-Up Shares under the Securities Act. In the event Parent and Merger Sub wish to exercise the Top-Up Option, Merger Sub shall give the Company one (1) Business Day prior written notice specifying the number of shares of the Company Common Stock that are or will be, directly or indirectly, owned by Parent and Merger Sub immediately preceding the purchase of the Top-Up Shares and specifying a place and a time for the closing of such purchase. The Company shall, as soon as practicable following receipt of such notice, deliver written notice to Merger Sub specifying the number of Top-Up Shares. At the closing of the purchase of Top-Up Shares, the portion of the purchase price owed by Parent or Merger Sub upon exercise of such Top-Up Option shall be paid to the Company (i) in cash by wire transfer or cashier’s check or (ii) by issuance by Merger Sub to the Company of a promissory note on terms reasonably satisfactory to the Company.

SECTION 1.2   Company Actions.   (a) The Company hereby approves of and consents to the Offer, the Merger and the other transactions contemplated by this Agreement.

(b)   On the date the Offer Documents are filed with the SEC or as soon as practicable thereafter, the Company shall file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended from time to time, the “Schedule 14D-9”) containing the recommendations referred to in Section 3.4(b) and shall mail the Schedule 14D-9 to the holders of Company Common Stock. Each of the Company, Parent and Merger Sub shall promptly correct any information provided by it for use in the Schedule 14D-9 if and to the extent that such information shall have become false or misleading in any material respect, and the Company shall take all steps necessary to amend or supplement the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or

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supplemented to be filed with the SEC and disseminated to the Company’s shareholders, in each case as and to the extent required by applicable federal securities laws. Parent, Merger Sub and the Company will cooperate and consult with each other and their respective counsel in the preparation of the Schedule 14D-9. Without limiting the generality of the foregoing, Parent will furnish to the Company the information relating to it required by the Exchange Act and the rules and regulations promulgated thereunder to be set forth in the Schedule 14D-9. The Company shall (i) provide Parent and its counsel in writing with any comments the Company or its counsel may receive from the SEC or its staff with respect to the Schedule 14D-9 promptly after the receipt of such comments, (ii) consult with Parent and Merger Sub and their counsel prior to responding to any such comments, and (iii) provide Parent and Merger Sub and their counsel in writing with any comments or responses thereto of the Company or its counsel. The Company shall give Parent and Merger Sub a reasonable opportunity to review and comment on the Schedule 14D-9 and any amendments thereto.

(c)   In connection with the Offer, the Company shall cause its transfer agent to furnish Merger Sub promptly with mailing labels containing the names and addresses of the record holders of Company Common Stock as of a recent date and of those persons becoming record holders subsequent to such date, together with copies of all lists of shareholders, security position listings and computer files and all other information in the Company’s possession or control regarding the beneficial owners of Company Common Stock, and shall furnish to Merger Sub such information and assistance (including updated lists of shareholders, security position listings and computer files) as Parent may reasonably request in communicating the Offer to the Company’s shareholders. Subject to the requirements of applicable Law, and except for such steps as are necessary to disseminate the Offer Documents and any other documents necessary to consummate the transactions contemplated by this Agreement, Parent and Merger Sub shall hold in confidence the information contained in any such labels, listings and files, shall use such information only in connection with the Offer and the Merger and, if this Agreement shall be terminated, shall, upon request, deliver to the Company all copies of such information then in their possession.

SECTION 1.3   Treatment of Options; MJ Warrant.   (a) Promptly after consummation of the Offer, by virtue of the consummation of the Offer and without any action on the part of any holder, each option to purchase Shares (an “Option”) granted under any Company Plan that is outstanding and unexercised (whether or not then exercisable) immediately prior to the consummation of the Offer shall vest in full and be canceled immediately prior to such time and shall be converted into the right to receive, promptly thereafter, an amount in cash (less any applicable withholding taxes and without interest) equal to the product of (i) the number of Shares subject to such Option and (ii) the excess, if any, of (A) the highest price per Share paid pursuant to the Offer over (B) the per share exercise price in effect for such Option (the “Option Consideration”).

(b)   Promptly after consummation of the Offer, by virtue of consummation of the Offer and without any action on the part of the holder of each Non-Detachable Common Stock Purchase Warrant dated as of December 19, 2002 by and between Mary Jaharis and the Company (the “MJ Warrant”), the holder of the MJ Warrant shall be entitled to receive an amount in cash equal to the amount of cash that the holder of the Company Common Stock deliverable upon exercise of the MJ Warrant would have been entitled to receive in the Offer if the MJ Warrant had been exercised immediately before the Offer.

SECTION 1.4   The Merger.   Upon the terms and subject to the conditions of this Agreement and in accordance with the FBCA, at the Effective Time, Merger Sub shall be merged with and into the Company. As a result of the Merger, the separate corporate existence of Merger Sub shall cease and the Company shall continue as the surviving corporation of the Merger (the “Surviving Corporation”).

SECTION 1.5   Closing; Effective Time.   Subject to the provisions of Article VII, the closing of the Merger (the “Closing”) shall take place at the offices of Cravath, Swaine & Moore LLP, Worldwide Plaza, 825 Eighth Avenue, New York, New York 10019, as soon as practicable, but in no event later than the

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second Business Day, after the satisfaction or waiver (to the extent permitted by Law) of the conditions set forth in Article VII (excluding conditions that, by their terms, cannot be satisfied until the Closing, but subject to the satisfaction or waiver (to the extent permitted by Law) of such conditions at the Closing), or at such other place or on such other date as Parent and the Company may mutually agree; provided, however, that if all the conditions set forth in Article VII shall not have been satisfied or waived (to the extent permitted by Law) on such second Business Day, then the Closing shall take place on the first Business Day on which all such conditions shall have been satisfied or waived (to the extent permitted by Law). The date on which the Closing actually occurs is hereinafter referred to as the “Closing Date”. At the Closing, the parties hereto shall cause the Merger to be consummated by filing articles of merger (the “Articles of Merger”) with the Florida Department of State, Division of Corporations and the Secretary of State of the State of Delaware, in such form as required by, and executed in accordance with, the relevant provisions of the FBCA (the date and time of the acceptance of the filing of the Articles of Merger by the Florida Department of State, Division of Corporations, or such later time as is specified in the Articles of Merger and as is agreed to by the parties hereto, being hereinafter referred to as the “Effective Time”) and shall make all other filings or recordings required under the FBCA in connection with the Merger.

SECTION 1.6   Effects of the Merger.   The Merger shall have the effects set forth herein and in the applicable provisions of the FBCA. Without limiting the generality of the foregoing and subject thereto, at the Effective Time, all the property, rights, privileges, immunities, powers and franchises of the Company and Merger Sub shall vest in the Surviving Corporation and all debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities and duties of the Surviving Corporation.

SECTION 1.7   Articles of Incorporation; Bylaws.   (a) Pursuant to the Merger, the articles of incorporation of the Company shall be amended and restated to be in the form of the articles of incorporation of Merger Sub in effect immediately prior to the Effective Time and, as so amended, such articles of incorporation shall be the articles of incorporation of the Surviving Corporation until thereafter amended in accordance with its terms and as provided by law, except that the name of the Surviving Corporation shall be changed to a name to be specified by Parent.

(b)   Pursuant to the Merger, the bylaws of Merger Sub in effect immediately prior to the Effective Time shall be the bylaws of the Surviving Corporation until thereafter amended in accordance with their terms and the articles of incorporation of the Surviving Corporation and as provided by Law.

SECTION 1.8   Directors and Officers.   The directors of Merger Sub immediately prior to the Effective Time and the officers of the Company immediately prior to the Effective Time shall be the directors and officers, respectively, of the Surviving Corporation, in each case until the earlier of his or her resignation or removal or until his or her successors are duly elected and qualified.

ARTICLE II

EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS

SECTION 2.1   Conversion of Securities.   At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company or the holders of any of the following securities, the following shall occur:

(a)   subject to Section 2.3, each Share issued and outstanding immediately prior to the Effective Time (other than any Shares to be canceled pursuant to Section 2.1(b) or to be converted pursuant to Section 2.1(c), but including Shares subject to vesting or other restrictions (the “Restricted Company Common Stock”)) shall be converted into the right to receive the highest price per Share paid pursuant to the Offer in cash without interest (the “Merger Consideration”);

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(b)   each Share held in the treasury of the Company and each Share owned by Parent or Merger Sub immediately prior to the Effective Time shall be canceled and retired without any conversion thereof, and no payment or distribution shall be made with respect thereto;

(c)   all of the Shares owned by Kos Investments, Inc. or Kos Holdings, Inc. immediately prior to the Effective Time shall be converted, in the aggregate, into a number of shares equal to the same percentage of the fully-diluted outstanding stock of the Surviving Corporation as such shares currently represent of the Fully Diluted Shares; and

(d)   each share of common stock of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into one share of common stock of the Surviving Corporation.

Except as set forth in Sections 2.1(b) and (c), (i) at the Effective Time, all Shares of Company Common Stock shall cease to be outstanding, shall automatically be cancelled and shall cease to exist and (ii) each holder of a certificate that immediately prior to the Effective Time represented any such Shares of Company Common Stock (a “Certificate”) shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration.

SECTION 2.2   Treatment of ESPP, Warrants, etc.   (a) The Company shall take any and all actions with respect to the Company’s Employee Stock Purchase Plan (the “ESPP”) as are necessary to provide that, subject to consummation of the Merger, the ESPP shall terminate, effective on the date immediately prior to the Closing Date (the “ESPP Termination Date”). On the ESPP Termination Date, each purchase right under the ESPP as of the ESPP Termination Date shall be automatically exercised by applying the payroll deductions of each participant in the ESPP for the applicable Offering Period (as defined in the ESPP) to the purchase of a number of whole Shares (subject to the provisions of the ESPP regarding the number of shares purchasable) at the exercise price per Share specified in the ESPP, which number of shares will then be canceled and converted into the right to receive the Merger Consideration in accordance with Section 2.1(a) hereof. Any excess payroll deductions not used as a result of ESPP share limitations shall be distributed to each participant without interest. If a fractional number of Shares results, then such number shall be rounded down to the next whole number, and the excess payroll deductions shall be distributed to the applicable participant without interest.

(b)   Immediately after the consummation of the Offer, each outstanding award of Restricted Company Common Stock granted under the Company’s 1996 Stock Option Plan or the Kos Incentive Plan, or otherwise, not acquired by Parent or Merger Sub pursuant to the Offer shall vest in full and cease to be subject to restrictions and the holders of such awards of Restricted Company Common Stock outstanding immediately prior to the Effective Time shall be entitled to receive the Merger Consideration pursuant to Section 2.1(a).

(c)   At the Effective Time, the holder of the Warrant Agreement dated as of January 1, 2002, by and between the Company and PharmaBio Development Inc. (the “PharmaBio Warrant”) shall be entitled to receive upon exercise of the PharmaBio Warrant, if not already exercised prior to the Effective Time, during the period specified therein the amount in cash, without interest, equal to (i) the amount of cash that a holder of the Company Common Stock deliverable upon exercise of the PharmaBio Warrant would have been entitled to receive in the Merger if the PharmaBio Warrant had been exercised immediately before the Merger minus (ii) the exercise price of the PharmaBio Warrant, in accordance with the terms and conditions of the PharmaBio Warrant.

SECTION 2.3   Surrender of Shares.   (a) Prior to the Effective Time, Merger Sub shall enter into an agreement with a paying agent reasonably acceptable to the Company to act as its paying agent (the “Paying Agent”) for the payment of the Merger Consideration to which the shareholders of the Company shall become entitled pursuant to this Article II. At or prior to the Effective Time, Parent shall, or shall cause the Surviving Corporation to, deposit with the Paying Agent to be held in trust for the benefit of

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holders of Certificates all the cash necessary to pay for the Shares converted into the right to receive the Merger Consideration pursuant to Section 2.1(a) (such cash being hereinafter referred to as the “Exchange Fund”).

(b)   Promptly after the Effective Time, Parent shall cause to be mailed to each record holder, as of the Effective Time, of a Certificate which immediately prior to the Effective Time represented Shares, a form of letter of transmittal (which shall be in customary form and shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates to the Paying Agent) and instructions for use in effecting the surrender of the Certificates for payment of the Merger Consideration. Upon surrender to the Paying Agent of a Certificate, together with such letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, and such other documents as may be required pursuant to such instructions, the holder of such Certificate shall be entitled to receive upon such surrender of such Certificate the Merger Consideration pursuant to Section 2.1(a) and such Certificate shall then be canceled. If payment of the Merger Consideration is to be made to a Person other than the Person in whose name the Certificate is registered, it shall be a condition of payment that the Certificate so surrendered shall be properly endorsed or shall be otherwise in proper form for transfer and that the Person requesting such payment shall have paid any transfer and other Taxes required by reason of the payment of the Merger Consideration to a Person other than the registered holder of the Certificate surrendered or shall have established to the satisfaction of the Surviving Corporation that such Tax either has been paid or is not applicable. Until surrendered as contemplated by this Section 2.3(b), each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender of such Certificate the Merger Consideration pursuant to Section 2.1(a). No interest shall be paid or accrue on the cash payable upon surrender of any Certificate.

(c)   At any time following the date that is twelve months after the Effective Time, the Surviving Corporation shall be entitled to require the Paying Agent to deliver to it any portion of the Exchange Fund which have been made available to the Paying Agent and which have not been disbursed to holders of Certificates and thereafter such holders shall be entitled to look to Parent and the Surviving Corporation (subject to abandoned property, escheat or other similar laws) only as general creditors thereof with respect to the Merger Consideration payable upon due surrender of their Certificates. The Surviving Corporation shall pay all charges and expenses, including those of the Paying Agent, incurred by it in connection with the exchange of Shares for the Merger Consideration and other amounts contemplated by this Article II. None of Parent, Merger Sub, the Company or the Paying Agent shall be liable to any person in respect of any cash delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. The Merger Consideration paid in accordance with the terms of this Article II in respect of Certificates that have been surrendered in accordance with the terms of this Agreement shall be deemed to have been paid in full satisfaction of all rights pertaining to the Shares of Company Common Stock represented thereby.

(d)   After the Effective Time, the stock transfer books of the Company shall be closed and thereafter there shall be no further registration of transfers of Shares that were outstanding prior to the Effective Time. After the Effective Time, Certificates presented to the Surviving Corporation for transfer shall be canceled and exchanged for the consideration provided for, and in accordance with the procedures set forth in, this Article II.

(e)   In the event that any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Certificate to be lost, stolen or destroyed, and, if reasonably requested, the posting by the holder of a bond in customary amount as indemnity against any claim that may be made against it with respect to the Certificate, the Paying Agent will deliver in exchange for the lost, stolen or destroyed Certificate the Merger Consideration payable in respect of the Shares represented by such Certificate pursuant to this Article II.

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(f)    The Paying Agent shall invest the cash included in the Exchange Fund, as directed by Parent, on a daily basis in (i) obligations of or guaranteed by the United States of America or any agency or instrumentality thereof, (ii) money market accounts, certificates of deposit, bank repurchase agreement or banker’s acceptances of, or demand deposits with, commercial banks having a combined capital and surplus of at least $5,000,000,000, or (iii) commercial paper obligations rated P-1 or A-1 or better by Standard & Poor’s Corporation or Moody’s Investor Services, Inc. Any profit or loss resulting from, or interest and other income produced by, such investments shall be for the account of Parent. If for any reason (including losses) the cash in the Exchange Fund shall be insufficient to fully satisfy all of the payment obligations to be made in cash by the Exchange Agent hereunder (but subject to Section 2.4), Parent shall promptly deposit cash into the Exchange Fund in an amount which is equal to the deficiency in the amount of cash required to fully satisfy such cash payment obligations.

SECTION 2.4   Withholding Taxes.   Notwithstanding anything in this Agreement to the contrary, Parent, the Surviving Corporation and the Paying Agent shall be entitled to deduct and withhold from the consideration otherwise payable to any former holder of Shares pursuant to this Agreement any amount as may be required to be deducted and withheld with respect to the making of such payment under applicable tax Laws. To the extent that amounts are so properly withheld by the Paying Agent, the Surviving Corporation or Parent, as the case may be, and are paid over to the appropriate Governmental Entity in accordance with applicable Law, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the Shares in respect of which such deduction and withholding was made by the Paying Agent, the Surviving Corporation or Parent, as the case may be.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to Parent and Merger Sub that, except as identified in the SEC Reports or as set forth on the Company Disclosure Schedule delivered by the Company to the Parent and Merger Sub prior to the execution of this Agreement (the “Company Disclosure Schedule”), it being understood and agreed that (i) each item in a particular section of the Company Disclosure Schedule applies only to such section and to any other section to which its relevance is readily apparent and (ii) each item in the SEC Reports applies only to such section of this Agreement to which its relevance is readily apparent:

SECTION 3.1   Organization and Qualification; Subsidiaries; Joint Ventures.   (a) Each of the Company and its Subsidiaries is a corporation duly organized, validly existing and in good standing or active status under the laws of the jurisdiction in which it is incorporated (in the case of good standing, to the extent the concept is recognized by such jurisdiction) and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted, except where any failure to be so organized, existing or in good standing or active status or to have such power or authority would not, or would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect. Each of the Company and its Subsidiaries is duly qualified or licensed to do business, and is in good standing, in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its activities makes such qualification or licensing necessary, except for any failure to be so qualified or licensed or in good standing which would not, or would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect. “Material Adverse Effect” means any change, effect, event or occurrence that (A) has a material adverse effect on the assets, business, financial condition or results of operations of the Company and its Subsidiaries taken as a whole or (B) prevents, or materially delays the Company from performing its obligations under this Agreement in any material respect or materially delays consummating the transactions contemplated hereby or would reasonably be expected to have such effect; provided, however, that no change, effect, event or occurrence to the extent arising or resulting from any of the following, either alone or in combination, shall constitute or be taken into account in determining whether there has been or will be, a

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Material Adverse Effect: (i) general economic or market conditions or general changes or developments in the pharmaceutical industry or affecting participants in the pharmaceutical industry, (ii) acts of war or terrorism or natural disasters, (iii) the announcement or performance of this Agreement and the transactions contemplated hereby, including compliance with the covenants set forth herein and the identity of Parent as the acquiror of the Company, or any action taken or omitted to be taken by the Company at the written request or with the prior written consent of Parent or Merger Sub, (iv) changes in GAAP, (v) changes in the price or trading volume of the Company’s stock (provided that any change, effect, event or occurrence that may have caused or contributed to such change in market price or trading volume shall not be excluded), (vi) any failure by the Company to meet revenue or earnings projections, in and of itself (provided that any change, effect, event or occurrence that may have caused or contributed to such failure to meet published revenue or earnings projections shall not be excluded) or (vii) the Submission, unless, in the case of clause (i) or (ii), such change, effect, event or occurrence has a materially disproportionate effect on the Company and its Subsidiaries, taken as a whole, compared with other companies operating in the pharmaceutical industry.

(b)   Section 3.1(b) of the Company Disclosure Schedule sets forth, for each Company Joint Venture, the interest held by the Company and the jurisdiction in which such Company Joint Venture is organized. The term “Company Joint Venture” means any corporation or other entity (including partnership, limited liability company and other business association) that is not a Subsidiary of the Company and in which the Company or one or more of the Company’s Subsidiaries owns an equity interest (other than equity interests held for passive investment purposes which are less than 10% of any class of the outstanding voting securities or other equity of any such entity and equity interests in which the invested capital associated with the Company’s or its Subsidiaries’ interest is less than $1,000,000, as reasonably determined by the Company). Interests in the Company Joint Ventures held by the Company are held directly by the Company or one of its Subsidiaries, free and clear of all security interests, liens, claims, pledges, agreements, limitations in voting or transfer rights, charges or other encumbrances of any nature whatsoever (“Liens”), except any such Liens that would not, or would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect. Neither the Company nor any Subsidiary thereof has any obligation or commitment to make any capital contribution to any Company Joint Venture.

SECTION 3.2   Articles of Incorporation and Bylaws.   The Company has heretofore furnished to Parent a complete and correct copy of the amended and restated articles of incorporation dated as of May 2, 2005 (the “Articles of Incorporation”) and the amended and restated bylaws dated as of October 16, 2003 (the “Bylaws”) of the Company as in effect on the date hereof and all minutes of the Board of Directors of the Company since January 1, 2005 other than those with respect to consideration and approval of the Offer and the Merger and related transactions. The Articles of Incorporation of the Company and the Bylaws are in full force and effect and no other organizational documents are applicable to or binding upon the Company. The Company is not in violation of any provisions of its Articles of Incorporation or Bylaws in any material respect.

SECTION 3.3   Capitalization.   (a) The authorized capital stock of the Company consists of (i) 100,000,000 Shares, and (ii) 10,000,000 shares of preferred stock, par value $0.01 per share (the “Preferred Stock”).

(b)   As of November 2, 2006: (i) 47,630,852 Shares were issued and outstanding, all of which were validly issued, fully paid and nonassessable and were issued free of preemptive rights; (ii) an aggregate of 10,001,300 Shares was reserved for issuance upon or otherwise deliverable in connection with the grant of equity-based awards or the exercise of outstanding Options issued pursuant to the Company’s 1996 Stock Option Plan, the Kos Incentive Plan, the Kos 401K Plan (together with the ESPP, the “Company Stock Plans”); (iii) no shares of Preferred Stock were outstanding and (iv) an aggregate of 782,111 Shares was reserved for issuance or delivery upon the exercise of the non-detachable warrants granted in connection with the Revolving Credit and Loan Agreement by and between the Company and Mary Jaharis, dated as

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of December 19, 2002 and the warrants granted in connection with the PharmaBio Warrant. Since the close of business on November 2, 2006, until the date hereof, no options to purchase shares of Company Common Stock (including any phantom stock rights, stock appreciation rights or similar rights), Restricted Company Common Stock or Preferred Stock have been granted and no shares of Company Common Stock or Preferred Stock have been issued, except for Shares issued pursuant to the exercise of Options, the Kos Incentive Plan, the Kos 401K Plan and the ESPP, in each case in accordance with their terms. Section 3.3(b) of the Company Disclosure Schedule sets forth, as of the date specified thereon, each equity-based award (including Restricted Company Common Stock) and Option outstanding whether or not under the Company Stock Plans (specifying whether under the Company Stock Plans or outside of the Company Stock Plans), the number of Shares issuable thereunder and the expiration date and exercise or conversion price relating thereto.

(c)   As of the date of this Agreement, except as set forth in clauses (a) and (b) of this Section 3.3: (i) there are not outstanding or authorized any (A) shares of capital stock or other voting securities of the Company, (B) securities of the Company convertible into or exchangeable for shares of capital stock or voting securities of the Company or (C) options (including any phantom stock rights, stock appreciation rights or similar rights) or other rights to acquire from the Company, or any obligation of the Company to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of the Company (collectively, “Company Securities”); (ii) there are no outstanding obligations of the Company to repurchase, redeem or otherwise acquire any Company Securities; and (iii) there are no statutory or contractual preemptive rights, other options, calls, warrants or other rights, agreements, arrangements or commitments of any character relating to the issued or unissued capital stock or other voting securities of the Company to which the Company is a party. No Subsidiary of the Company owns any Shares.

(d)   Each of the outstanding shares of capital stock and voting securities of the Company’s Subsidiaries is duly authorized, validly issued, fully paid and nonassessable and all such shares are owned by the Company, free and clear of all Liens, except any such Liens that would not, or would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect. There are no (i) outstanding options or other rights of any kind which obligate the Company or its Subsidiaries to issue or deliver any shares of capital stock, voting securities or other equity interests of the Subsidiaries of the Company or any securities or obligations convertible into or exchangeable into or exercisable for any shares of capital stock, voting securities or other equity interests of such Subsidiaries, (ii) outstanding obligations of the Company or its Subsidiaries to repurchase, redeem or otherwise acquire any securities or obligations convertible into or exchangeable into or exercisable for any shares of capital stock, voting securities or other equity interests of such Subsidiaries; or (iii) other options, calls, warrants or other rights, agreements, arrangements or commitments of any character relating to the issued or unissued capital stock or other equity interests or voting securities of the Subsidiaries of the Company to which the Company or its Subsidiaries is a party.

SECTION 3.4   Authority.   (a) The Company has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action on the part of the Company, subject, in the case of the Merger, to the approval of this Agreement by the holders of at least a majority in combined voting power of the outstanding Shares if required by applicable Law (the “Company Requisite Vote”), and the filing with the Florida Department of State, Division of Corporations and the Secretary of State of the State of Delaware of the Articles of Merger as required by the FBCA and the Delaware General Corporation Law. The affirmative vote of a majority of the outstanding Company Common Stock is the only vote required of the Company’s capital stock necessary in connection with the approval and consummation of the Merger. No other vote of the Company’s shareholders is necessary in connection with this Agreement, the Shareholders Agreement, or the consummation of any of the transactions

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contemplated hereby. This Agreement has been duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery hereof by Parent and Merger Sub, constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and any implied covenant of good faith and fair dealing.

(b)   The Board of Directors of the Company has, by resolutions duly adopted, at a meeting duly called and held (i) authorized the execution, delivery and performance of this Agreement and all of the transactions contemplated hereby, (ii) approved, adopted and declared advisable, this Agreement and the transactions contemplated hereby, including the Offer and the Merger, in accordance with the FBCA, (iii) determined that the terms of this Agreement and the transactions contemplated hereby, including the Offer and the Merger, are fair to and in the best interests of the Company and the shareholders of the Company, (iv) recommended that the holders of Company Common Stock accept the Offer and tender their Shares pursuant to the Offer (the “Offer Recommendation”) and that the holders of Company Common Stock approve this Agreement and the transactions contemplated hereby, including the Merger (the “Merger Recommendation”).

(c)   The Board of Directors of the Company has, by resolutions duly adopted at a meeting duly called and held, approved and declared advisable, the Shareholders Agreement and the Stock Purchase Agreement and, prior to the execution of the Shareholders Agreement and this Agreement, has taken all necessary actions to exempt the Investments Stock Purchase, the Shareholders Agreement and this Agreement and the transactions contemplated hereby and thereby from any and all applicable antitakeover statutes including FBCA § 607.0901 (“affiliated transactions” statute) and FBCA § 607.0902 (“control-share acquisitions” statute).

SECTION 3.5   No Conflict; Required Filings and Consents.   (a) The execution, delivery and performance of this Agreement by the Company do not and will not (i) conflict with or violate the Articles of Incorporation or Bylaws of the Company or its Subsidiaries, (ii) assuming that all consents, approvals and authorizations contemplated by clauses (i) through (vii) of subsection (b) below have been obtained, and all filings described in such clauses have been made, conflict with or violate any federal, state, local or foreign statute, law, ordinance, rule, regulation, order, judgment, decree or legal requirement (“Law”) applicable to the Company or its Subsidiaries or by which any of their respective properties are bound or (iii) (A) require notice to any third party, result in any breach or violation of or constitute a default (or an event which with notice or lapse of time or both would become a default), or (B) result in the loss of a benefit under, or give rise to any right of termination, cancellation, amendment or acceleration of, or (C) result in the creation of any Lien on any of the properties or assets of the Company or its Subsidiaries under, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit or other instrument or obligation (each, a “Contract”) to which the Company or its Subsidiaries is a party or by which the Company or its Subsidiaries or any of their respective properties are bound, except, in the case of clauses (ii) and (iii), for any such notice, conflict, violation, breach, default, loss, right or other occurrence which would not, or would not reasonably be expected to, (A) materially delay consummating the transactions contemplated hereby on a timely basis or (B) individually or in the aggregate, have a Material Adverse Effect.

(b)   The execution, delivery and performance of this Agreement by the Company and the consummation of the Offer, the Merger or the Investments Stock Purchase do not and will not require any notice, consent, approval, authorization or permit of, action by, filing with or notification to, any federal, state, local or foreign governmental or regulatory (including stock exchange) authority, agency, court, commission, or other governmental body (each, a “Governmental Entity”) to be obtained or made by the Company, except for (i) applicable requirements of the Securities Act of 1933, as amended (the “Securities Act”) and the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and

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regulations promulgated thereunder (including the filing of the Schedule 14D-9, the proxy statement to be sent to shareholders of the Company in connection with the Shareholders Meeting (the “Proxy Statement”) and any information statement (the “Information Statement”) required under Rule 14f-1 in connection with the Offer), and state securities, takeover and “blue sky” laws, (ii) the applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), (iii) the applicable requirements of antitrust or other competition laws of jurisdictions other than the United States or investment laws relating to foreign ownership (“Foreign Antitrust and Investment Laws”), (iv) the applicable requirements of the NASDAQ Stock Market LLC (“Nasdaq”), (v) the filing with the Florida Department of State, Division of Corporations and the Secretary of State of the State of Delaware of the Articles of Merger as required by the FBCA and the Delaware General Corporation Law, (vi) any notices required under the U.S. Federal Food, Drug, and Cosmetic Act, as amended (the “FDA Act”) or similar laws of jurisdictions other than the United States, and (vii) any such consent, approval, authorization, permit, action, filing or notification the failure of which to make or obtain would not (A) prevent or materially delay the Company from performing its obligations under this Agreement in any material respect, (B) materially delay consummating the transactions contemplated hereby on a timely basis, or (C) individually or in the aggregate, have or reasonably be expected to have, a Material Adverse Effect.

SECTION 3.6   Compliance.   (a) Neither the Company nor its Subsidiaries is in violation of any Law applicable to the Company or its Subsidiaries or by which any of their respective properties are bound or any regulation issued under any of the foregoing or has been notified in writing by any Governmental Entity of any violation, or any investigation with respect to any such Law, including Laws enforced by the United States Food and Drug Administration (“FDA”) and comparable foreign Governmental Entities (collectively, “Drug Law”), except for any such violation which would not, or would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect.

(b)   The Company and its Subsidiaries have all registrations, applications, licenses, requests for approvals, exemptions, permits and other regulatory authorizations (“Authorizations”) from Governmental Entities required to conduct their respective businesses as now being conducted, except for any such Authorizations the absence of which would not, or would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect. Except for any failures to be in compliance that would not, or would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect, the Company and its Subsidiaries are in compliance with all such Authorizations. The Company has made available to Parent all material Authorizations from the FDA.

(c)   None of the Company, any of its Subsidiaries or any officers, employees or agents of the Company or any of its Subsidiaries is currently, or has been, excluded, debarred or otherwise made ineligible to participate in federal health care programs. The Company has no Knowledge of any facts concerning the Company, any of its Subsidiaries or any officers, employees or agents of the Company or any of its Subsidiaries that are reasonably likely to form the basis for an exclusion or debarment of any such entities.

(d)   The Company and its Subsidiaries have not been notified in writing of any material failure (or any material investigation with respect thereto) by them or any licensor, licensee, partner or distributor to comply with, or maintain systems and programs to ensure compliance with any Drug Law pertaining to programs or systems regarding product quality, notification of facilities and products, corporate integrity, pharmacovigilance and conflict of interest including Current Good Manufacturing Practice Requirements, Good Laboratory Practice Requirements, Good Clinical Practice Requirements, Establishment Registration and Product Listing requirements, requirements applicable to the debarment of individuals, requirements applicable to the conflict of interest of clinical investigators and Adverse Drug Reaction Reporting requirements, in each case with respect to any products of the Company or its Subsidiaries.

(e)   The Company and its Subsidiaries have not been notified in writing of any material failure (or any material investigation with respect thereto) by them or any licensor, licensee, partner or distributor to have at all times complied with their obligations to report accurate pricing information for the Company’s

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or its Subsidiaries’ products to a Governmental Entity and to pricing services relied upon by a Governmental Entity or other payors for such products, including their obligations to report accurate Best Prices and Average Manufacturers’ Prices under the Medicaid Rebate Statute and accurate Average Sales Prices under the Medicare Modernization Act of 2003 and their obligations to charge accurate Federal Ceiling Prices to purchasers entitled to those prices.

(f)    No product or product candidate manufactured, tested, distributed, held and/or marketed by the Company or any of its Subsidiaries has been recalled, withdrawn, suspended or discontinued (whether voluntarily or otherwise) since January 1, 2005. No proceedings (whether completed or pending) seeking the recall, withdrawal, suspension or seizure of any such product or product candidate or pre-market approvals or marketing authorizations are pending, or to the Knowledge of the Company, threatened, against the Company or any of its Affiliates, nor have any such proceedings been pending at any time since January 1, 2005. The Company has, prior to the execution of this Agreement, provided or made available to Parent all current U.S. annual periodic reports and all information about adverse drug experiences, in each case since January 1, 2005 obtained or otherwise received by the Company from any source, in the United States or outside the United States, including information derived from clinical investigations prior to any market authorization approvals, commercial marketing experience, postmarketing clinical investigations, postmarketing epidemiological/surveillance studies, reports in the scientific literature, and unpublished scientific papers relating to any product or product candidate manufactured, tested, distributed, held and/or marketed by the Company, any of its Subsidiaries or any of their licensors or licensees in the possession of the Company or any of its Subsidiaries (or to which any of them has access), except for any adverse drug experiences or reports which would not, or would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect.

(g)   None of the Company, any of its Subsidiaries or any officers, employees or agents of the Company or any of its Subsidiaries has with respect to any product that is manufactured, tested, distributed, held and/or marketed by the Company or any of its Subsidiaries made an untrue statement of a material fact or fraudulent statement to the FDA or other Governmental Entity, failed to disclose a material fact required to be disclosed to the FDA or any other Governmental Entity, or committed an act, made a statement, or failed to make a statement that, at the time such disclosure was made, could reasonably be expected to provide a basis for the FDA or any other Governmental Entity to invoke its policy respecting “Fraud, Untrue Statements of Material Facts, Bribery, and Illegal Gratuities” set forth in 56 Fed. Reg. 46191 (September 10, 1991) or any similar policy.

SECTION 3.7   SEC Filings; Financial Statements.   (a) The Company has filed or otherwise transmitted all forms, reports, statements, certifications and other documents (including all exhibits, amendments and supplements thereto) required to be filed or otherwise transmitted by it with the SEC) since January 1, 2005 and prior to the date hereof (such documents filed since January 1, 2005 and prior to the date hereof, the “SEC Reports”). As of their respective dates, each of the SEC Reports complied as to form in all material respects with the applicable requirements of the Securities Act and the rules and regulations promulgated thereunder and the Exchange Act and the rules and regulations promulgated thereunder, each as in effect on the date so filed. Except to the extent amended or superseded by a subsequent filing with the SEC made prior to the date hereof, as of their respective dates (and if so amended or superseded, then on the date of such subsequent filing), none of the SEC Reports contained any untrue statement of a material fact or omitted to state a material fact required to be stated or incorporated by reference therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

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(b)   The audited consolidated financial statements of the Company (including any related notes thereto) included in the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2005 filed with the SEC have been prepared in accordance with GAAP in all material respects applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto) and fairly present in all material respects the consolidated financial position of the Company and its Subsidiaries at the respective dates thereof and the consolidated statements of operations, cash flows and changes in shareholders’ equity for the periods indicated therein. The unaudited consolidated financial statements of the Company (including any related notes thereto) for all interim periods included in the Company’s quarterly reports on Form 10-Q or Form 10-Q/A filed with the SEC since January 1, 2006 have been prepared in accordance with GAAP in all material respects applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto or may be permitted by the SEC under the Exchange Act) and fairly present in all material respects the consolidated financial position of the Company and its Subsidiaries as of the respective dates thereof and the consolidated statements of operations and cash flows for the periods indicated therein (subject to normal period-end adjustments).

(c)   The Company’s disclosure controls and procedures are reasonably designed to ensure that material information relating to the Company, including its Subsidiaries, is made known to the chief executive officer and the chief financial officer of the Company by others within those entities.

(d)   Since December 31, 2005, the Company has not disclosed to the Company’s independent registered accounting firm and the audit committee of the Company’s Board of Directors and to Parent (i) any significant deficiencies and material weaknesses in the design or operation of its internal control over financial reporting or (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

(e)   Since December 31, 2005, the Company has not identified any material weaknesses in the design or operation of its internal control over financial reporting. To the Knowledge of the Company, there is no reason to believe that its auditors and its chief executive officer and chief financial officer will not be able to give the certifications and attestations required pursuant to the rules and regulations adopted pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 when next due. The Company maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iii) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

(f)    Neither the Company nor its Subsidiaries has any liabilities of any nature, except liabilities that (i) are accrued or reserved against in the most recent financial statements included in the SEC Reports filed prior to the date hereof or are reflected in the notes thereto, (ii) were incurred in the ordinary course of business since the date of such financial statements, (iii) are incurred in connection with the transactions contemplated by this Agreement, (iv) have been discharged or paid in full prior to the date of this Agreement in the ordinary course of business, or (v) would not, or would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect. Section 3.7(f) of the Company Disclosure Schedule sets forth a list of all outstanding debt for money borrowed, the applicable lender, interest rate and the applicable payment dates.

SECTION 3.8   Absence of Certain Changes or Events.   Since January 1, 2006, until the date of this Agreement, (i) except as contemplated by this Agreement, the Company and its Subsidiaries have conducted their business in the ordinary course consistent with past practice, and (ii) there has not been (a) any change, event or occurrence which has had or would reasonably be expected to have a Material Adverse Effect or (b) (A) any declaration, setting aside or payment of any dividend or other distribution in cash, stock, property or otherwise in respect of the Company’s or its Subsidiaries’ capital stock; (B) any

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redemption, repurchase or other acquisition of any shares of capital stock of the Company or its Subsidiaries (other than in connection with the forfeiture or exercise of equity based awards, Options and Restricted Company Common Stock in accordance with existing agreements or terms); (C) except as contemplated by this Agreement (1) any granting by the Company or its Subsidiaries to any of their directors, officers or employees of any material increase in compensation or benefits, except for increases in the ordinary course of business consistent with past practice or that are required under any Company Plan; (2) any granting to any director, officer or employee of the right to receive any severance or termination pay, except as provided for under any plan or agreement in effect prior to January 1, 2006 or (3) any entry by the Company or its Subsidiaries into any employment, consulting, indemnification, termination, change of control or severance agreement or arrangement with any present or former director, officer or employee of the Company or its Subsidiaries, or any amendment to or adoption of any Company Plan or collective bargaining agreement; (D) any material change by the Company in its accounting principles, except as may be required to conform to changes in statutory or regulatory accounting rules or GAAP or regulatory requirements with respect thereto; (E) any material Tax election made by the Company or its Subsidiaries or any settlement or compromise of any material Tax liability by the Company or its Subsidiaries; or (F) any material change in Tax accounting principles by the Company or its Subsidiaries, except insofar as may have been required by applicable Law.

SECTION 3.9   Absence of Litigation.   There are no suits, claims, actions, proceedings, arbitrations, mediations or, to the Company’s Knowledge, governmental investigations (“Proceedings”) pending or, to the Company’s Knowledge, threatened against the Company or its Subsidiaries, other than any Proceeding that would not, or would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect. Neither the Company nor its Subsidiaries nor any of their respective properties is or are subject to any order, writ, judgment, injunction, decree or award except for those that would not, or would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect.

SECTION 3.10   Employee Benefit Plans.   (a) Section 3.10(a) of the Company Disclosure Schedule contains a true and complete list of each material Company Plan. “Company Plans” means each “employee benefit plan” (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), but excluding any plan that is a “multiemployer plan,” as defined in Section 3(37) of ERISA (“Multiemployer Plan”)), and each other cash-based or equity-based plan, program, agreement or arrangement, vacation or sick pay policy, fringe benefit plan, and compensation, severance or employment agreement contributed to, sponsored or maintained by the Company or its Subsidiaries or with respect to which the Company or any of its Subsidiaries has any liabilities or obligations as of the date hereof for the benefit of any current, former or retired employee, officer, consultant, independent contractor or director of the Company or its Subsidiaries (collectively, the “Company Employees”).

(b)   With respect to each Company Plan, the Company has made available to the Parent a current, accurate and complete copy thereof (or, if a plan is not written, a written description thereof), including all amendments and, to the extent applicable, (i) any related trust agreement or similar agreement, insurance policy or other funding instrument, (ii) the most recent determination or prototype opinion letter, and any pending request for such a determination, from the Internal Revenue Service (the “IRS”) relating to a Company Plan, (iii) any summary plan description and (iv) for the most recent year that a filing has been made (A) the Form 5500 and attached schedules, (B) audited financial statements and (C) actuarial valuation reports, if any. Except as specifically provided in the foregoing documents, there are no material amendments to any Company Plans that have been adopted or approved, nor has the Company or any of its Subsidiaries undertaken to make any such amendments or to adopt or approve any new Company Plan.