SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
Amendment No. 1
to
FORM 10-K
FOR ANNUAL AND TRANSITIONAL REPORTS
PURSUANT TO SECTIONS 13 AND 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[X]
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to _____________
Commission File Number: 0-21003
TWINLAB CORPORATION
(Exact name of Registrant as Specified in Its Charter)
Delaware 11-3317986
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2120 Smithtown Avenue 11779
Ronkonkoma, New York (Zip Code)
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (516) 467-3140
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, $1.00
par value
-----------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of shares of Common Stock of the registrant
held by non-affiliates based on the closing sale price of the Common Stock on
March 19, 1998 as reported on the Nasdaq National Market was $393,116,829.
As of March 19, 1998, the registrant had 27,321,500 shares of Common Stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
<PAGE>
Portions of the registrant's definitive proxy statement for the 1998
Annual Meeting of Stockholders are incorporated by reference into Part III of
this Report.
2
<PAGE>
AMENDMENT NO. 1
TO THE FORM 10-K FILED BY
TWINLAB CORPORATION ON MARCH 20, 1998
The following Exhibits were omitted from the Form 10-K filed by Twinlab
Corporation on March 20, 1998, and such Form 10-K is hereby amended to include
such exhibits as hereinafter set forth.
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(c) Exhibits:
Exhibit
Number Description of Exhibit
2.1 -- Stock Purchase and Sale Agreement, dated as of March 5, 1996, among
David Blechman, Jean Blechman, Brian Blechman, Neil Blechman, Ross
Blechman, Steve Blechman, Dean Blechman, Stephen Welling, the
Registrant, Natur-Pharma Inc. and GEI (the "Stock Purchase and Sale
Agreement") (incorporated by reference to Exhibit 2.1 to the
Registration Statement on Form S-1, dated June 4, 1996, as amended,
filed by the Registrant, Registration No. 333-05191; "Twinlab S-1").
2.1.1 -- Amendment to the Stock Purchase and Sale Agreement, dated May 6,
1996 (incorporated by reference to Exhibit 2.1.1 to Twinlab S-1).
3.1 -- Second Amended and Restated Certificate of Incorporation of the
Registrant (incorporated by reference to Exhibit 3.4 to the
Registration Statement on Form S-4, dated June 25, 1996, as amended,
filed by Twin, Registration No. 333-06781; "Twin S-4").
3.2 -- Amended and Restated By-laws of the Registrant (incorporated by
reference to Exhibit 3.5 to Twin S-4).
4.1 -- Indenture, dated May 7, 1996, among Twin, and ARP and the Registrant
(together, the "Guarantors"), and Fleet National Bank as Trustee,
Registrar, Paying Agent and Securities Agent, regarding Twin's 10
1/4% Senior Subordinated Notes due 2006 and the 10 1/4% Senior
Subordinated Notes due 2006 issued in exchange therefor
(incorporated by reference to Exhibit 4.2 to Twin S-1).
4.2 -- First Supplemental Indenture, dated as of December 1, 1997, to the
Indenture dated as of May 7, 1996, among Twin and ARP, Changes
International and the
3
<PAGE>
Registrant, as Guarantors and State Street Bank and Trust Company
(as successor to Fleet National Bank), as Trustee regarding Twin's
10 1/4% Senior Subordinated Notes due 2006 (incorporated by
reference to Exhibit 4.2 to the Registration Statement on Form S-3,
dated March 17, 1998, Registration No. 333-48091).
10.1 -- Credit and Guarantee Agreement, dated May 7, 1996, among Twin, the
Registrant, the financial institutions named therein, Chemical Bank
as Administrative Agent and The Bank of New York as Documentation
Agent (incorporated by reference to Exhibit 4.3 to Twinlab S-1).
10.2 -- Amended and Restated Credit and Guarantee Agreement, dated November
15, 1996, among Twin, the Registrant, the financial institutions
named therein, The Chase Manhattan Bank as Administrative Agent and
The Bank of New York as Documentation Agent (incorporated by
reference to Exhibit 10.2 to the Registrant's 1996 Annual Report on
Form 10-K; the "1996 Annual Report").
10.3 -- Guarantee and Collateral Agreement, dated May 7, 1996, among the
Registrant, Twin, and ARP in favor of Chemical Bank, as
Administrative Agent (incorporated by reference to Exhibit 10.1 to
Twinlab S-1).
10.4 -- Form of Revolving Credit Note (incorporated by reference to Exhibit
10.4 to the 1996 Annual Report).
10.5 -- Form of Swing Line Note (incorporated by reference to Exhibit 10.5
to the 1996 Annual Report).
10.6 -- Deed of Trust, dated May 7, 1996 (the "Deed of Trust"), from Twin to
First American Title Company of Utah, Trustee for the use and
benefit of Chemical Bank, as Administrative Agent, Beneficiary
(incorporated by reference to Exhibit 10.6 to Twinlab S-1).
10.7 -- Amendment to Deed of Trust, dated November 20, 1996, among Twin and
The Chase Manhattan Bank (incorporated by reference to Exhibit 10.7
to the 1996 Annual Report).
10.8 -- Stockholders Agreement, dated May 7, 1996, among Brian Blechman,
Neil Blechman, Ross Blechman, Steve Blechman, Dean Blechman and
Stephen Welling, the Registrant and GEI (incorporated by reference
to Exhibit 10.8 to Twinlab S-1).
10.9 -- Secondary Stockholders Agreement among Brian Blechman, Neil
Blechman, Ross Blechman, Steve Blechman, Dean Blechman and Stephen
Welling, the Registrant, GEI, DLJ Investment Funding, Inc., DLJ
Investment Partners, L.P., Chase Equity Associates, L.P., PMI
Mezzanine Fund, L.P. and State Treasurer of the State of Michigan,
Custodian of the Michigan Public School Employees' Retirement
System, State Employees' Retirement System, Michigan State Police
Retirement System, and Michigan Judges Retirement System
(incorporated by reference to Exhibit 10.9 to Twinlab S-1).
10.10 -- Employment Agreement, dated May 7, 1996, between Twin and Brian
Blechman (incorporated by reference to Exhibit 10.10 to Twinlab
S-1).
10.11 -- Employment Agreement, dated May 7, 1996, between Twin and Neil
Blechman (incorporated by reference to Exhibit 10.11 to Twinlab
S-1).
10.12 -- Employment Agreement, dated May 7, 1996, between Twin and Ross
Blechman (incorporated by reference to Exhibit 10.12 to Twinlab
S-1).
10.13 -- Employment Agreement, dated May 7, 1996, between Twin and Steve
Blechman (incorporated by reference to Exhibit 10.13 to Twinlab
S-1).
10.14 -- Employment Agreement, dated May 7, 1996, between Twin and Dean
Blechman (incorporated by reference to Exhibit 10.14 to Twinlab
S-1).
10.15 -- Employment Agreement, dated May 7, 1996, between Twin and Stephen
Welling (incorporated by reference to Exhibit 10.15 to Twinlab S-1).
10.16 -- Consulting Agreement, dated May 7, 1996, between Twin and David
Blechman (incorporated by reference to Exhibit 10.16 to Twinlab
S-1).
4
<PAGE>
10.17 -- Consulting Agreement, dated May 7, 1996, between Twin and Jean
Blechman (incorporated by reference to Exhibit 10.17 to Twinlab
S-1).
10.18 -- Noncompetition Agreement, dated May 7, 1996, between Twin and David
Blechman (incorporated by reference to Exhibit 10.18 to Twinlab
S-1).
10.19 -- Noncompetition Agreement, dated May 7, 1996, between Twin and Jean
Blechman (incorporated by reference to Exhibit 10.19 to Twinlab
S-1).
10.20 -- Noncompetition Agreement, dated May 7, 1996, between Twin and Brian
Blechman (incorporated by reference to Exhibit 10.20 to Twinlab
S-1).
10.21 -- Noncompetition Agreement, dated May 7, 1996, between Twin and Neil
Blechman (incorporated by reference to Exhibit 10.21 to Twinlab
S-1).
10.22 -- Noncompetition Agreement, dated May 7, 1996, between Twin and Ross
Blechman (incorporated by reference to Exhibit 10.22 to Twinlab
S-1).
10.23 -- Noncompetition Agreement, dated May 7, 1996, between Twin and Steve
Blechman (incorporated by reference to Exhibit 10.23 to Twinlab
S-1).
10.24 -- Noncompetition Agreement, dated May 7, 1996, between Twin and Dean
Blechman (incorporated by reference to Exhibit 10.24 to Twinlab
S-1).
10.25 -- Noncompetition Agreement, dated May 7, 1996, between Twin and
Stephen Welling (incorporated by reference to Exhibit 10.25 to
Twinlab S-1).
10.26 -- Management Services Agreement, dated May 7, 1996, between Twin and
Leonard Green & Partners, L.P. (incorporated by reference to Exhibit
10.26 to Twinlab S-1).
10.27 -- Form of Restated Standard Indemnity Agreement, dated August 1992,
between Twin and Showa Denko America, Inc. (incorporated by
reference to Exhibit 10.28 to Twinlab S-1).
10.28 -- Form of SDR Guaranty Agreement, dated August 1992, between Twin and
Showa Denko K.K. (incorporated by reference to Exhibit 10.29 to
Twinlab S-1).
10.29 -- Twinlab Corporation 1996 Stock Incentive Plan (incorporated by
reference to Exhibit 10.30 to Twinlab S-1).
10.30 -- Stock Option Agreement, dated November 5, 1997, between the
Registrant and John McCusker.***
10.31 -- Letter, dated October 7, 1997, between the Registrant and John
McCusker.***
10.32 -- Construction Contract, dated February 27, 1998, between Twin and
Interwest Construction Company, Inc.**
10.33 -- Lease, dated January 16, 1998, between Twin and Reckson Operating
Partnership, L.P.*
10.34 -- Asset Purchase Agreement, dated as of March 17, 1998, among Jones
Medical Industries, Inc., JMI-Phoenix Laboratories, Inc., Twin and
Bronson Laboratories, Inc.***
21.1 -- List of Registrant's Subsidiaries.*
23.1 -- Consent of Deloitte & Touche LLP.*
27 -- Financial Data Schedule.*
- ------------
* Previously filed.
** Paper copy filed; EDGAR copy to be filed by amendment.
*** Filed herewith.
5
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 to
Form 10-K to be signed on its behalf by the undersigned thereunto duly
authorized.
TWINLAB CORPORATION
By: /s/ Ross Blechman
-----------------------
Ross Blechman
Chairman of the Board, Chief
Executive Officer and
President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Amendment No. 1 to Form 10-K has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates indicated.
Signature Title(s) Date
/s/ Ross Blechman Chairman of the Board, Chief March 24, 1998
- -------------------------- Executive Officer, President
Ross Blechman and Director (Principal
Executive Officer)
/s/ Neil Blechman Executive Vice President, Secretary March 24, 1998
- -------------------------- and Director
Neil Blechman
/s/ Brian Blechman Executive Vice President, Treasurer March 24, 1998
- -------------------------- and Director
Brian Blechman
/s/ Steve Blechman Executive Vice President and March 24, 1998
- -------------------------- Director
Steve Blechman
/s/ Dean Blechman Executive Vice President and March 24, 1998
- -------------------------- Director
Dean Blechman
/s/ John McCusker Chief Financial Officer (Principal March 24, 1998
- -------------------------- Financial and Accounting Officer)
John McCusker
/s/ Stephen L. Welling Director March 24, 1998
- --------------------------
Stephen L. Welling
/s/ Jonathan D. Sokoloff Director March 24, 1998
- --------------------------
Jonathan D. Sokoloff
/s/ Jennifer Holden Dunbar Director March 24, 1998
- --------------------------
Jennifer Holden Dunbar
/s/ John G. Danhakl Director March 24, 1998
- --------------------------
John G. Danhakl
Exhibit 10.30
NONQUALIFIED STOCK OPTION AGREEMENT
FOR JOHN MCCUSKER
Twinlab Corporation
1996 STOCK INCENTIVE PLAN
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT (the "Agreement"), dated as of November 5, 1997
between Twinlab Corporation, a Delaware corporation (the "Company"), and John
McCusker, an employee of the Company (the "Optionee"). Notwithstanding anything
herein to the contrary, (i) until the Board of Directors shall appoint the
members of the Committee (as defined below) or (ii) if the Board, in its sole
discretion, resolves to administer the Plan (as defined below), the term
"Committee" as used herein shall be deemed to mean the Board. Capitalized terms
used herein without definition shall have the meanings ascribed thereto in the
Plan.
The Company's Stock Option Committee (the "Committee") has determined
that the objectives of the Company's 1996 Stock Incentive Plan, as amended (the
"Plan") will be furthered by granting to the Optionee a stock option pursuant to
the Plan.
In consideration of the foregoing and of the mutual undertakings set
forth in this Agreement, the Company and the Optionee agree as follows:
SECTION 1. Grant of Option.
The Company hereby grants to the Optionee a stock option (the "Option")
to purchase 50,000 shares (the "Shares") of common stock of the Company, $1.00
par value per share (the "Common Stock") at a purchase price of $19.375 per
share. It is intended that the Option shall not qualify as an "incentive stock
option" as defined in section 422 of the Internal Revenue Code of 1986, as
amended.
SECTION 2. Exercisability.
2.1 Subject to the further terms of this Agreement, the Option shall
become exercisable in five substantially equal installments, one on each of the
first, second, third, fourth and fifth anniversaries of the date of this
Agreement.
2.2 Notwithstanding any other provision of this Agreement or the Plan,
in the event of an Acquisition of Control, the Option shall become fully vested
and immediately exercisable upon the subsequent involuntary termination of the
Optionee's employment by the Company or its successors for any reason other than
Cause within one year of such Acquisition of Control. For purposes of this
Agreement, the following terms shall have the following meanings: "Cause" shall
mean: (a) conviction of any crime (whether or not involving the Company)
constituting a felony in the jurisdiction involved; (b) conduct related to the
Optionee's employment for which either criminal or civil penalties against the
Optionee or the Company may be sought; (c) material violation of the Company's
policies, including, without limitation, those relating to sexual harassment,
the disclosure or misuse of confidential information, or those set forth in
Company manuals or statements of policy; (d) serious neglect or misconduct in
the performance of the Optionee's duties for the Company or willful or repeated
failure or refusal to perform such duties; in each case as determined by the
Committee, which determination shall be final, binding and conclusive.
"Acquisition of Control" shall mean: (x) any person, including a group, without
the approval of a majority of the Incumbent Directors, becoming the beneficial
owner of, or acquiring the power to direct the exercise
<PAGE>
of voting power with respect to, directly or indirectly, securities which
represent fifty percent (50%) or more of thecombined voting power of the
Company's outstanding securities thereafter, or (y) the Incumbent Directors
cease at any time to constitute a majority of the Board. "Incumbent Director"
shall mean any director of the Company serving at October 1, 1997 or elected
thereafter if nominated or approved by at least two thirds of the then incumbent
Directors.
2.3 Unless earlier terminated pursuant to the provisions of the Plan,
the unexercised portion of the Option shall expire and cease to be exercisable
at 12:01 a.m. on the tenth anniversary of the date of this Agreement.
SECTION 3. Method of Exercise.
The Option or any part thereof may be exercised only by the giving of
notice to the Company in such manner as the Committee shall prescribe. Such
written notice must be accompanied by payment of the full purchase price for the
number of shares being purchased. Such payment may be made by one or a
combination of the following methods: (a) by a certified or official bank check
(or the equivalent thereof acceptable to the Company); (b) with the consent of
the Committee, by delivery of shares of Common Stock acquired at least six
months prior to the option exercise date and having a Fair Market Value on the
exercise date equal to part or all of the purchase price; or (c) at the
discretion of the Committee and to the extent permitted by law, by such other
method as the Committee may authorize. The date of exercise of the Option shall
be the date on which notice of exercise is delivered to the Company, during
normal business hours, at its address as provided in Section 8 of this
Agreement.
SECTION 4. Termination of Employment; Death.
4.1 Upon termination of the Optionee's employment with the Company or
any subsidiary, for any reason, the Option shall terminate and expire except as
provided in Section 4.2 or 4.3 of this Agreement.
4.2 If the Optionee's employment with the Company or any subsidiary is
involuntarily terminated by the Company for any reason other than Cause (as
defined in Section 2.2 of this Agreement), the Option shall be exercisable but
only to the extent it was exercisable at the time of such termination and only
until the expiration of 90 days following employment termination (but not beyond
the expiration date of the Option, specified in Section 2.3 of this Agreement).
If the Optionee dies in such 90 day period, the Option shall be exercisable for
one year from the date of death (but not beyond the expiration date of the
Option).
4.3 If the Optionee's employment with the Company or any subsidiary
terminates by reason of the Grantee's death, disability or retirement (as such
terms are defined in the Plan) while an employee of the Company or any
subsidiary, the Option shall be exercisable, but only to the extent it was
exercisable at the time of death, disability or retirement and only until the
first anniversary of the date of the Optionee's employment termination (but not
beyond the expiration date of the Option, specified in Section 2.3 of this
Agreement).
SECTION 5. Plan Provisions to Prevail.
This Agreement is subject to all of the terms and provisions of the
Plan. Without limiting the generality of the foregoing, by entering into this
Agreement the Optionee agrees that no member of the Committee shall be liable
for any action or determination made in good faith with respect to the Plan or
any award thereunder or this Agreement. In the event that there is any
inconsistency between the provisions of this Agreement and of the Plan, the
provisions of the Plan shall govern.
SECTION 6. Nontransferability.
The Option shall not be assignable or transferable, voluntarily or
involuntarily, by operation of law, or otherwise, and any such assignment or
transfer which may be attempted shall be null and void and of no effect;
<PAGE>
provided, however, that this Section 6 shall not prevent transfers by will or by
the laws of descent and distribution. During the lifetime of the Optionee, the
Option shall be exercisable only by the Optionee or the Optionee's legal
representative.
SECTION 7. Forfeiture of Option Gains.
IF AT ANY TIME WITHIN ONE YEAR AFTER THE EXERCISE OF ALL OR ANY PORTION
OF AN OPTION THE OPTIONEE EITHER (A) IS TERMINATED FOR CAUSE OR (B) ENGAGES IN
ANY ACTIVITY DETERMINED IN THE SOLE DISCRETION OF THE COMMITTEE TO BE IN
COMPETITION WITH ANY ACTIVITY OF THE COMPANY, OR OTHERWISE INIMICAL, CONTRARY OR
HARMFUL TO THE INTERESTS OF THE COMPANY (INCLUDING, BUT NOT LIMITED TO ACCEPTING
EMPLOYMENT WITH OR SERVING AS A CONSULTANT, ADVISER OR IN ANY OTHER CAPACITY TO
AN ENTITY THAT IS IN COMPETITION WITH OR ACTING AGAINST THE INTERESTS OF THE
COMPANY), THEN ANY OPTION GAIN REALIZED BY THE OPTIONEE FROM EXERCISING SUCH
OPTION SHALL BE PAID BY THE OPTIONEE TO THE COMPANY UPON NOTICE FROM THE
COMPANY. FOR PURPOSES OF THIS SECTION, "OPTION GAIN" MEANS THE EXCESS OF THE
FAIR MARKET VALUE OF A SHARE OF COMMON STOCK ON THE DATE OF EXERCISE OF THE
OPTION OVER THE OPTION EXERCISE PRICE, MULTIPLIED BY THE NUMBER OF SHARES WITH
RESPECT TO WHICH THE OPTION WAS EXERCISED, WITHOUT REGARD TO ANY SUBSEQUENT
DECREASE OR INCREASE IN THE FAIR MARKET VALUE OF SUCH SHARES. THE COMPANY SHALL
HAVE THE RIGHT TO OFFSET SUCH OPTION GAIN AGAINST ANY AMOUNTS OTHERWISE OWED TO
THE OPTIONEE BY THE COMPANY (WHETHER AS WAGES, VACATION PAY, OR PURSUANT TO ANY
BENEFIT PLAN OR OTHER COMPENSATORY ARRANGEMENT).
SECTION 8. Notices.
All notices required or permitted hereunder shall be given in writing
by personal delivery, by confirmed facsimile transmission (with a copy
dispatched by express delivery or registered or certified mail), or by express
delivery via express mail or any reputable express courier service. Notices
shall be addressed (a) to Twinlab Corporation, 2120 Smithtown Avenue,
Ronkonkoma, New York 11779, Attention: Ross Blechman; Fax: (516) 471- 2395;
Confirm: ; and (b) to the Optionee at the address set forth on the signature
page; or (c) as to either party, at such other address as may be designated by
notice in the manner set forth herein. Notices which are delivered personally,
by confirmed facsimile transmission, or by courier as aforesaid, shall be
effective on the date of delivery.
SECTION 9. Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and the successors and assigns of the Company and, to the extent
consistent with Sections 4 and 6 of this Agreement and with the Plan, the heirs
and personal representatives of the Optionee.
SECTION 10. Governing Law.
This Agreement shall be interpreted, construed and administered in
accordance with the laws of the State of New York as they apply to contracts
made, delivered and performed in the State of New York.
SECTION 11. Severability.
If any provision of this Agreement (including any provision of the Plan
that is incorporated herein by reference) shall hereafter be held to be invalid,
unenforceable or illegal in whole or in part, in any jurisdiction under any
circumstances for any reason, (i) such provision shall be reformed to the
minimum extent necessary to cause such provision to be valid, enforceable and
legal while preserving the intent of the parties as expressed in, and the
benefits to the parties provided by, this Agreement and the Plan or (ii) if such
provision cannot be so reformed, such provision shall be severed from this
Agreement and an equitable adjustment shall be made to this Agreement
(including, without limitation, addition of necessary further provisions to this
Agreement) so as to give effect to the intent as so expressed and the benefits
so provided. Such holding shall not affect or impair the validity,
enforceability or legality of such provision in any other jurisdiction or under
any other circumstances. Neither such holding nor such reformation or severance
shall affect or impair the legality, validity or enforceability of any other
<PAGE>
provision of this Agreement or the Plan.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first written above.
Twinlab Corporation
By /s/ Brian Blechman
------------------
Name: Brian Blechman
Title:
OPTIONEE
/s/ John McCusker
-------------
John McCusker
Address:_____________________
_____________________________
_____________________________
Social Security Number
Exhibit 10.31
October 7, 1997
VIA AIRBORNE EXPRESS
- --------------------
Mr. John McCusker
4 Harbor View Drive
Huntington Bay, NY 11743
Dear John:
We are pleased to provide this letter to confirm our understanding in
connection with your new employment, to begin on November 3, 1997, as the Chief
Financial Officer of Twinlab Corporation (the "Company"). For your convenience,
we have included an annex containing the definitions of certain capitalized
terms used in this letter.
If subsequent to the date hereof there is an Acquisition of Control of
the Company, and at any time within one year thereafter your employment with the
Company is terminated without Cause, then you shall be entitled to receive
severance pay equal to your base salary at the time of termination for a period
of one year. Such severance shall be paid commencing with your termination date
and at the times and in the amounts such base salary would have been paid had
your employment not been terminated. The stock option agreement, covering the
options to be granted to you in connection with your employment, will provide
for an acceleration of the vesting of such options upon the circumstances
described above.
We look forward to a long and prosperous relationship. Please sign and
return to me the enclosed copy of this letter.
Very truly yours,
TWINLAB CORPORATION
By: /s/ Brian Blechman
------------------
Brian Blechman
Executive Vice President
Accepted and Agreed this 9th day of October, 1997
/s/ John McCusker
-----------------
John McCusker
<PAGE>
ANNEX
For the purposes of the letter to which this Annex is attached, the
following shall have the meanings set forth below:
"ACQUISITION OF CONTROL" shall mean:
(i) any person, including group, without the approval of a majority of the
Incumbent Directors, becoming the beneficial owner of, or acquiring the
power to direct the exercise of voting power with respect to, directly or
indirectly, securities which represent fifty percent (50%) or more of the
combined voting power of the Company's outstanding securities thereafter; or
(ii) the Incumbent Directors cease at any time to constitute a majority of
the Board of Directors of the Company.
"CAUSE" shall mean (a) conviction of any crime (whether or not involving the
Company) constituting a felony in the jurisdiction involved; (b) conduct related
to your employment for which either criminal or civil penalties against you or
the Company may be sought; (c) material violation of the Company's policies,
including, without limitation, those relating to sexual harassment, the
disclosure or misuse of confidential information, or those set forth in Company
manuals or statements of policy; (d) serious neglect or misconduct in the
performance of your duties for the Company or willful or repeated failure or
refusal to perform such duties; in each case as determined by the Board of
Directors of the Company which determination shall be final, binding and
conclusive.**
"INCUMBENT DIRECTOR" shall mean any director of the Company serving at October
__, 1997 or one elected thereafter if nominated or approved by at least
two-thirds of the then Incumbent Directors.
- --------
* This definition is identical to the definition contained in the Company's 1996
Stock Incentive Plan.
Exhibit 10.33
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made and entered into as
of the 17th day of March, 1998, by and among JONES MEDICAL INDUSTRIES, INC., a
Delaware corporation ("JMED"), JMI-PHOENIX LABORATORIES, INC., an Arizona
corporation ("JMI-Phoenix"), TWIN LABORATORIES INC., a Utah corporation ("Twin
Labs"), and BRONSON LABORATORIES, INC., a Delaware corporation ("BLI"). JMED and
JMI-Phoenix are sometimes referred to herein individually as "Seller" and
collectively as "Sellers", and Twin Labs and BLI are sometimes referred to
herein individually as "Buyer" and collectively as "Buyers."
RECITALS:
A. JMED markets and distributes the branded vitamin and nutritional
supplement products set forth on Schedule A of the Disclosure Schedule ("Branded
Vitamin Products") under the Bronson Pharmaceutical and MD Pharmaceutical
tradenames.
B. JMI-Phoenix, a wholly-owned subsidiary of JMED, manufactures for JMED
those Branded Vitamin Products set forth on Schedule B of the Disclosure
Schedule, and performs contract manufacturing of vitamin and nutritional
supplement products and herbal teas for others ("Contract Manufactured
Products") in two adjacent buildings consisting of approximately 30,000 square
feet and located in Tempe, Arizona (the "JMI-Phoenix Facility"). The
manufacturers set forth on Schedule C of the Disclosure Schedule manufacture for
JMED those Branded Vitamin Products set forth on Schedule C of the Disclosure
Schedule.
<PAGE>
C. Sellers desire to sell, and BLI, a wholly-owned subsidiary of Twin
Labs, desires to purchase, (i) the entire line of Branded Vitamin Products and
herbal teas; (ii) substantially all of the assets utilized by JMI-Phoenix and
JMED in blending, tableting, encapsulating, manufacturing, selling, packaging,
marketing or distributing (collectively, "Manufacturing") the Branded Vitamin
Products and the Contract Manufactured Products; and (iii) the JMI-Phoenix
Facility, all pursuant to the provisions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants contained herein, the parties agree as follows:
1. SALE OF ASSETS
1.01 Transfer of Assets. Subject to and upon the terms and
conditions of this Agreement, Sellers shall sell, convey, transfer, assign and
deliver to BLI, and BLI shall purchase (and Twin Labs shall cause BLI to
purchase) from Sellers, on the Closing Date (as hereinafter defined), all of
Sellers' right, title and interest in and to the following described assets
(collectively, the "Acquired Assets"):
(a) All trade accounts receivable and credit card receivables in
existence on the Closing Date with respect to sales of Branded Vitamin Products
and sales and manufacture of Contract Manufactured Products to all parties other
than JMED and its Affiliates set forth on Schedule 1.01(a) of the Disclosure
Schedule (collectively, the "Receivables");
(b) All raw material (including packaging materials), work in
process and finished goods inventory in existence on the Closing Date wherever
located with respect to the Business (collectively, the "Inventory");
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(c) All machinery, equipment, tooling, supplies and related
assets: (i) of JMED which are specifically set forth on Schedule 1.01(c)(i) of
the Disclosure Schedule; and (ii) located at the JMI-Phoenix Facility or the
Leased Property, including those assets which are specifically set forth on
Schedule 1.01(c)(ii) of the Disclosure Schedule (the assets described in items
(i) and (ii) are hereinafter collectively referred to as the "Fixed Assets");
(d) All contract rights (including those Receivables identified
in Section 1.01(a) above), open sale orders from third parties and invoices to
third parties, license agreements, distributor agreements, royalty agreements
and other agreements of Sellers, if any, to the extent relating to the Business,
including those set forth on Schedule 1.01(d) of the Disclosure Schedule (the
"Contract Rights");
(e) (i) The registered United States trademarks, trade names and
service marks set forth on Schedule 1.01(e)(i) attached hereto, the
registrations thereof and all goodwill and all rights of Sellers of every kind,
nature and description connected therewith, and (ii) all United States and
foreign unregistered trademarks, trade names, service marks, patents and
copyrights, other than those set forth on Schedule 1.01(e)(ii) of the Disclosure
Schedule, to the extent relating to the Business (the "Intellectual Property");
(f) Except as set forth on Schedule 1.01(f) of the Disclosure
Schedule, all know-how, trade secrets, technology, methods of operation,
procedures, systems, computer programs, computer data, software, processes,
production details, inventions, recipes, formulas, designs, literature, artwork,
brochures, sales material, toll-free telephone numbers, specifications,
advertising and promotional materials and other proprietary rights of Sellers of
every kind, nature and description, to the extent relating to the Business;
(g) All customer and supplier lists, files, records, data bases,
claim substantiation materials, software and other similar information to the
extent relating to the Business;
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(h) All real property, leaseholds, improvements, fixtures,
easements, rights of way and other appurtenants relating to the JMI-Phoenix
Facility as set forth on Schedule 1.01(h) of the Disclosure Schedule (the "Real
Property").
1.02 Excluded Assets. Notwithstanding anything contained herein
to the contrary, Sellers are not selling, conveying, assigning or transferring
to Buyers, and Buyers are not purchasing from Sellers, (i) any right, title or
interest in or to the products Panthoderm, Therevac and the Derma Soap line (the
"Excluded Products") and all files, records, data, customer lists and other
materials to the extent pertaining to the Excluded Products, (ii) any and all
retained lab samples of Products Manufactured by Sellers prior to the Closing
Date (the "Retention Samples"), and (iii) any and all manufacturing and batch
records pertaining to Products Manufactured by Sellers prior to the Closing Date
(collectively, "Batch Records"), and (iv) any other assets of Sellers not
identified or referred to in Section 1.01 hereof.
1.03 Assumption of Liabilities and Obligations. As of the Closing
Date, and subject to the provisions of this Agreement, Buyers expressly agree to
assume and discharge, or perform, in a timely manner, the contracts, obligations
and liabilities of Sellers specifically identified on Schedule 1.03 of the
Disclosure Schedule (the "Assumed Liabilities"). Buyers expressly do not, and
shall not, assume or be deemed to assume, under this Agreement or otherwise by
reason of the transactions contemplated by this Agreement or otherwise, any
liabilities or obligations of Sellers: (i) other than the Assumed Liabilities;
or (ii) that relate in any way to plantain used in Products Manufactured by
either Seller prior to the Closing Date.
2. PURCHASE PRICE
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2.01 Purchase Price.
(a) Within sixty (60) calendar days following the Closing Date,
Sellers shall deliver to Buyers an unaudited balance sheet relating solely to
the Business dated as of the Closing Date ("Closing Balance
Sheet-Nutritionals"). The Closing Balance Sheet-Nutritionals shall be prepared
in accordance with generally accepted accounting principles applied consistent
with the accounting principles utilized in the preparation of the Audited
Financial Statements-Nutritionals (as defined in Section 5.09), for the purpose
of determining Net Working Capital (as defined below). For purposes of this
Article 2, "Net Working Capital" shall mean the amount by which the "Current
Assets" of the Business (as classified on the Closing Balance
Sheet-Nutritionals) exceed the "Current Liabilities" of the Business (as
classified on the Closing Balance Sheet-Nutritionals). For purposes hereof,
"Current Assets" shall mean Total Assets (as classified on the Closing Balance
Sheet - Nutritionals) less the sum of (i) cash, (ii) intangibles, and (iii) net
property, plant and equipment, and "Current Liabilities" shall mean the sum of
(x) accounts payable, (y) unused credits, and (z) accrued vacation/salaries.
(b) The purchase price ("Purchase Price") to be paid by Buyers to
Sellers for the Acquired Assets is Fifty-Five Million and No/100 Dollars
($55,000,000.00), subject to adjustments as provided in Section 2.02 below.
2.02 Purchase Price Adjustments. (a) The Purchase Price shall be
reduced in the event that the Net Working Capital as determined by reference to
the Closing Balance Sheet-Nutritionals is less than Eight Million Five Hundred
Thousand dollars ($8,500,000) and the amount of any such aggregate adjustment
shall be a dollar for dollar reduction equal to the dollar amount of any such
deficiency ("Purchase Price Adjustment - Net Working Capital"). For example, if
the Net Working Capital shown on the Closing Balance Sheet-Nutritionals
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is $8,400,000, then the Purchase Price shall be reduced by $100,000 and said
$100,000 shall be paid by Sellers to Buyers as hereinafter set forth.
(b) The Purchase Price shall be reduced in the event that
Operating Income Before Amortization as shown on the Audited Operating Statement
(as hereinafter defined in Section 5.09 hereof) (the "Audited OIBA") is less
than Ten Million Dollars ($10,000,000), and the amount of any such aggregate
adjustment shall be a reduction equal to five (5) times the dollar amount by
which Audited OIBA is less than Ten Million One Hundred Thousand Dollars
($10,100,000). For example, (i) if Audited OIBA is $10,050,000, then the
Purchase Price will not be adjusted, and (ii) if Audited OIBA is $9,900,000,
than the Purchase Price shall be reduced by $1,000,000 (5 x $200,000) and either
(A) if Closing has not yet occurred, then the Purchase Price shall be reduced at
Closing, and (B) if Closing has occurred, then the amount of the reduction shall
be paid by Sellers to Buyers within ten (10) days after Sellers receipt of the
Audited Operating Statement.
(c) Subject to the provisions of Section 2.06 hereof, the
Purchase Price Adjustment-Net Working Capital shall be paid by the Sellers to
the Buyers within five (5) days after expiration of the Dispute Period (as
defined in Section 2.06 below).
2.03 Payment of Purchase Price. The Purchase Price shall be paid
by Buyers to Sellers at Closing by wire transfer of immediately available funds
to an account designated in writing by JMED (the "Closing Payment").
2.04 Transfer Taxes. Buyers shall be liable for and shall pay all
state and local sales and use taxes, if any, payable in connection with the
conveyance and transfer of the Acquired Assets by Sellers to Buyers.
2.05 Allocation. The Purchase Price shall be allocated among the
Acquired Assets, as set forth on Schedule 2.05 of the Disclosure Schedule
attached hereto.
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2.06 Disputes Regarding Net Working Capital.
(a) Buyers shall have thirty (30) days after receipt of the
Closing Balance Sheet-Nutritionals ("Dispute Period") to dispute any of the
elements of or amounts reflected in the Closing Balance Sheet-Nutritionals (a
"Dispute"). If the Buyers have a Dispute, Buyers shall deliver to the Sellers
written notice ("Dispute Notice") within the Dispute Period, setting forth a
description of the Dispute. Within ten (10) days after the receipt by Sellers of
any Dispute Notice, Sellers and Buyers shall meet at a mutually acceptable time
and place and shall, in good faith, cooperate in an attempt to resolve such
Dispute. If Buyers do not give Sellers a Dispute Notice within the Dispute
Period, then there shall be no adjustment to the Purchase Price.
(b) If any Dispute is not finally resolved within twenty (20)
days after the receipt by Sellers of a Dispute Notice, then the Dispute shall be
referred to the St. Louis office of Price Waterhouse, LLP (or its successor)
(the "Arbitrator") for resolution in accordance with the terms hereof (the
"Arbitration"), and in any event as soon as practicable.
(c) The Arbitrator shall hold a hearing within thirty (30) days
of the submission of the Dispute for Arbitration (the "Hearing") and shall
render a written decision to each party hereto within thirty (30) days of the
conclusion of the Hearing ("Arbitrator's Decision"). The Arbitrator shall have
the same access as the Buyers to any documentation used in the calculation of
the Net Working Capital. Any decision made by the Arbitrator within the scope of
its authority shall be final, binding and non-appealable.
(d) The fees and expenses of the Arbitrator shall be borne (A) by
the Buyers in the event that Sellers' calculation of Net Working Capital as
shown on the Closing Balance Sheet-Nutritionals was closer in dollar amounts to
the Arbitrator's determination than was Buyers' calculation thereof, and (B) by
Sellers in the event that Buyers' calculation of Net
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Working Capital was closer in dollar amounts to the Arbitrator's determination
than was Sellers' calculation thereof. Notwithstanding the foregoing, each of
the parties shall bear their own costs and expenses related to any such
Arbitration.
(e) If the Arbitrator determines that a Purchase Price Adjustment
is required, then such Purchase Price Adjustment as determined by the Arbitrator
shall be paid by the Sellers to the Buyers within five (5) days after Sellers'
receipt of the Arbitrator's Decision.
3. TRANSITION SERVICES AGREEMENT. At the Closing (as hereinafter
defined) of the transactions contemplated by this Agreement, JMED and Buyers
shall enter into a Transition Services Agreement in the form of Exhibit A
attached hereto.
4. CLOSING.
4.01 Date, Place and Time. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Greensfelder, Hemker & Gale, P.C., 10 South Broadway, Suite 2000, St. Louis,
Missouri 63102, commencing at 10:00 a.m. (local time) on the third business day
following the satisfaction or waiver of all conditions to the obligations of the
parties to consummate the transactions contemplated hereby or at such other
place or time as the parties shall mutually determine (the "Closing Date").
4.02 Sellers' Deliveries at Closing. At Closing, Sellers shall
deliver or cause to be delivered to Buyers in accordance with this Agreement:
(a) a Bill of Sale in the form of Exhibit B attached hereto, duly
executed; (b) an Assignment of Trademarks in the form of Exhibit C attached
hereto, duly executed;
(c) the Transition Services Agreement, duly executed;
(d) a Special Warranty Deed in the form of Exhibit D attached
hereto, duly executed;
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(e) all such certificates, affidavits, consents, assignments and
other documents deemed reasonably necessary by Buyers to effectively sell,
assign and transfer the Acquired Assets to Buyers and to comply with the
provisions of this Agreement; and
(f) the Noncompete Agreement in the form of Exhibit H attached
hereto, duly executed.
4.03 Buyers' Deliveries at Closing. At the Closing, Buyers shall
deliver or cause to be delivered to Sellers in accordance with this Agreement:
(a) the Closing Payment;
(b) an Assignment and Assumption Agreement in the form of Exhibit
E attached hereto, duly executed;
(c) the Transition Services Agreement, duly executed;
(d) all such certificates, affidavits, consents, assignments and
other documents deemed reasonably necessary by Sellers to effectively sell,
assign and transfer the Acquired Assets to Buyers and to comply with the
provisions of this Agreement; and
(e) the Noncompete Agreement, duly executed.
5. REPRESENTATIONS AND WARRANTIES OF SELLERS. Sellers represent and
warrant to Buyers that the statements contained in this Section 5 are true and
correct in all material respects as of the date of this Agreement and will be
true and correct in all material respects as of the Closing Date (as though made
then and as though the Closing Date were substituted for the date of this
Agreement throughout this Section 5), except as specifically set forth in the
corresponding section of the disclosure schedule accompanying this Agreement
(the "Disclosure Schedule"). The Disclosure Schedule will be arranged in
paragraphs corresponding to the numbered and lettered Sections and paragraphs of
this Agreement.
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5.01 Organization and Good Standing. Each of JMED and JMI-Phoenix
is a corporation duly incorporated, validly existing and in good standing under
the laws of the States of Delaware and Arizona, respectively, and each has all
requisite corporate power and lawful authority to carry out all of the
provisions of this Agreement and the transactions contemplated hereby on its
part to be performed.
5.02 Authorization of Transaction. Each Seller has full corporate
power and authority to execute and deliver this Agreement and all other
documents executed incident hereto or in connection herewith (collectively the
"Transaction Documents") and to perform its respective obligations hereunder and
thereunder. Without limiting the generality of the foregoing, the board of
directors of each Seller has duly authorized the execution, delivery and
performance of the Transaction Documents. The Transaction Documents constitute
the valid and legally binding obligations of each Seller, enforceable against
each Seller in accordance with their respective terms and conditions.
5.03 Noncontravention. (a) Except as set forth in Schedule
5.03(a) of the Disclosure Schedule, the execution and delivery by each of the
Sellers of this Agreement and the other Transaction Documents, and the
transactions contemplated hereby or thereby, and compliance by each of the
Sellers with any of the provisions hereof or thereof does not and will not (i)
conflict with, or result in the breach of, any provision of the Certificate of
Incorporation or Bylaws of either Seller; (ii) conflict with, violate, result in
the breach or termination of, or constitute a default or give rise to any right
of termination or acceleration or right to increase the obligations or otherwise
modify the terms thereof under any Contract or Order to which either Seller is a
party or by which either Seller or the properties or assets of either Seller are
bound; (iii) constitutes a violation of any Law applicable to either Seller; or
(iv) result in the creation of any Lien upon the properties or assets of either
Seller in each case that relate to
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the Business or Acquired Assets. Except as set forth on Schedule 5.03(a) of the
Disclosure Schedule, no consent, waiver, approval, registration, license, permit
or authorization of , or declaration or filing (other than for compliance with
the HSR Act) with, or notification to, any Person or Governmental Body is
required on the part of either Seller in connection with the execution and
delivery of this Agreement or the other Transaction Documents, or the compliance
by either Seller with any of the provisions hereof or thereof.
(b) Except as set forth on Schedule 5.03(b) of the Disclosure
Schedule, neither Seller is a party to any agreement, contract or covenant
limiting the freedom of either Seller to compete in any line of business or with
any Person in any geographic region within or outside the United States of
America, in each case that relates to the Business or Acquired Assets.
5.04 Title, Delivery of Assets. Sellers are the sole, true and
lawful owners of the Acquired Assets and have all necessary power and authority
to sell the Acquired Assets to Buyer, free and clear of all Liens, other than
those set forth on Schedule 5.04 of the Disclosure Schedule. Upon delivery to
Buyer of the Bill of Sale, the Special Warranty Deed and the Assignment of
Trademarks, Buyer will acquire good and valid title to the Acquired Assets, free
and clear of all Liens, other than those restrictions of record with respect to
the Real Property.
5.05 Compliance with Laws. (a) Except as set forth on Schedule
5.05(a) of the Disclosure Schedule, each Seller is and at all times has been in
compliance in all material respects with all Laws and Orders promulgated by any
Governmental Body applicable to the Sellers (including all applicable Food and
Drug Administration ("FDA"), Federal Trade Commission ("FTC"), Consumer Products
Safety Commission ("CPSC") and the United States Department of Agriculture
("USDA") rules and regulations), or to the conduct of the business or operations
of Sellers or the use of the properties (including any leased properties) and
assets of Sellers, in each case that relate to the Business or the Acquired
Assets. Except as set forth
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on Schedule 5.05(a) of the Disclosure Schedule, neither Seller has received, and
to the Knowledge of Sellers there has been no issuance of, any notices or
violation or alleged violation by either Seller of any such Law or Order during
the last three (3) years, in each case relating to the Business or the Acquired
Assets. Except as set forth on Schedule 5.05(a), there is no investigation or
review by any Governmental Body with respect to either Seller pending, or to the
Knowledge of Sellers, threatened, nor has any Governmental Body notified either
Seller of its intention to conduct the same, in each case as the same may relate
to the Business or Acquired Assets.
(b) Schedule 5.05(b) of the Disclosure Schedule lists all Permits
of Sellers of all Governmental Bodies (including the FDA, the FTC, the CPSC,
OSHA and the USDA) which Permits constitute, to each Seller's Knowledge, all
Permits required by the nature of the operations of Sellers to permit the
respective operations in the manner in which they are currently conducted, in
each case as they relate to the Business or the Acquired Assets. Such Permits
have been validly issued to Sellers by the appropriate Governmental Bodies in
compliance with all applicable Laws, and Sellers have complied in all material
respects with all conditions of such Permits applicable to them. All such
Permits are in full force and effect. Sellers have not received any written, or
to the Knowledge of Sellers, oral notice of violation of any Permit except as
set forth on Schedule 5.05(b) of the Disclosure Schedule.
5.06 Actions and Proceedings. There are no Legal Proceedings
pending or to the Knowledge of either Seller threatened, that question the
validity of this Agreement or the other Transaction Documents or any action
taken or to be taken in connection with the consummation of the transactions
contemplated hereby or thereby. Schedule 5.06 of the Disclosure Schedule sets
forth a true, correct and complete list of all Legal Proceedings pending or to
the Knowledge of either Seller threatened, against or affecting either Seller,
or any
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properties or assets of either Seller, at law or in equity in each case that
relate to the Business or the Acquired Assets. There is no outstanding, nor to
Sellers' Knowledge, threatened, Order of any Governmental Body against,
affecting or naming either Seller or affecting any of the business, properties
or assets of either Seller, in each case that relate to the Business or Acquired
Assets.
5.07 Intellectual Property. Except as set forth on Schedule 5.07
of the Disclosure Schedule or in Section 8.06 of this Agreement: (i) the
Intellectual Property is owned by Sellers free and clear of all Liens; (ii) the
Intellectual Property is not subject to any license, royalty arrangement,
restriction or dispute of any kind; (iii) to the Knowledge of Sellers, Sellers'
use of the Intellectual Property does not infringe, and is not infringing, on
any trademark, trade name, copyright, service mark or patent (or any application
therefor) of any Person, and Sellers have not received any claim or assertion to
such effect from any third party; and (iv) there exists no restriction on the
use or transfer of the Intellectual Property. To the Knowledge of Sellers, there
are no uses of the Intellectual Property by any third party that infringes upon
Sellers' rights in the Intellectual Property.
5.08 Brokers and Finders. Sellers have not retained any broker or
finder with respect to any of the transactions contemplated by this Agreement.
5.09 Financial Information.
(a) Attached to Schedule 5.09 of the Disclosure Schedule are
copies of: (i) the unaudited Balance Sheet-Nutritionals as of December 31, 1997
("Unaudited Balance Sheet-Nutritionals"); and (ii) the related unaudited
Operating Results-Nutritionals for the year ended December 31, 1997 ("Unaudited
Operating Results-Nutritionals"). The Unaudited Balance Sheet-Nutritionals and
Unaudited Operating Results-Nutritionals are hereinafter referred to as the
"Latest Financials." The Latest Financials are true and complete in all material
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respects and were prepared in good faith from the books and records of the
Sellers in accordance with generally accepted accounting principles consistently
applied (except with respect to normal and customary year-end adjustments and
the preparation of notes). The Sellers have arranged for the Latest Financials
to be audited by Ernst & Young LLP, and the resulting audited balance sheet is
herein referred to as the "Audited Balance Sheet" and the resulting audited
statement of operating results is herein referred to as the "Audited Operating
Statement".
(b) Since December 31, 1997, there has been no Material Adverse
Change: (i) with respect to the financial condition, assets or liabilities of
the Sellers as such relates to the Business except for a reduction in Net
Working Capital due to increased payables and a reduction in receivables and
inventory in the ordinary course of business consistent with past practice
except for the unusually high level of Net Working Capital at the end of 1997;
and (ii) with respect to the business of the Sellers as such relates to the
Business.
5.10 No Undisclosed Liabilities. Sellers do not have any
liabilities, debts or claims against them with respect to the Business or the
Acquired Assets except: (i) to the extent indicated in the Latest Financials or
the Audited Balance Sheet; or (ii) those that have occurred or arisen in the
ordinary course of business consistent with past practice since December 31,
1997.
5.11 Contracts. Except as set forth on Schedule 5.11 of the
Disclosure Schedule, neither Seller nor any of their respective properties or
assets which pertain to the Business or Acquired Assets, is a party to or bound
by any (i) Contract not made in the ordinary course of business; (ii)
advertising, public relations, franchise, distributorship or sales agency
Contract that cannot be terminated on thirty (30) days notice; (iii) Contact
involving a commitment or payment in excess of $50,000.00 in the aggregate; (iv)
Contract granting a right of first refusal for the acquisition, sale or lease of
any assets or a material portion of the capital
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stock of either Seller; (v) Contract with any Person involving a sharing of
profits; (vi) mortgage, pledge, conditional sales contract, security agreement,
factoring agreement or other similar contract with respect to any real or
tangible personal property of either Seller; (vii) Contract ith any Governmental
Body; (viii) Contract with respect to the discharge, storage or removal of
Hazardous Materials; or (ix) commitment or agreement to enter into any of the
foregoing. Sellers have delivered or otherwise made available to Buyer true,
correct and complete copies of the written Contracts listed in Schedule 5.11 of
the Disclosure Schedule, together with all amendments, modifications,
supplements or side letters affecting the obligations of any party thereunder.
(b) Each of the Contracts listed on Schedule 5.11 of the
Disclosure Schedule is valid and enforceable in accordance with its terms, and
to each Seller's Knowledge, there is no default under any such Contract by
either Seller or by any other party thereto, and to each Seller's Knowledge, no
event has occurred that with the lapse of time or the giving of notice or both
would constitute a default thereunder.
(c) No previous or current party to any Contract listed on
Schedule 5.11 of the Disclosure Schedule has given notice to have or made a
claim to either Seller with respect to any breach or default thereunder.
5.12 Customers and Suppliers. Except as set forth in Schedule
5.12 of the Disclosure Schedule, to each Seller's Knowledge, each Seller's
relationship with its respective customers and suppliers as the same pertains to
the Business, is a good commercial working relationship and neither Seller has
any Knowledge that any such customer or supplier intends to cancel or otherwise
modify in a material way, its relationship with the Business or to decrease
materially or limit its usage or purchase of any products manufactured in
connection with the Business.
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5.13 Inventory. The Inventory (other than obsolete or short dated
items which do not exceed $60,000) is of a type and quality usable and saleable
in the ordinary course of each Seller's respective business.
5.14 Receivables. The Receivables have arisen in the ordinary
course of business consistent with past practice, and represent valid
obligations due each respective Seller enforceable in accordance with their
terms.
5.15 Fixed Assets. The Fixed Assets which are material to the
operation of the Business and the Acquired Assets are in working order and are
suitable for the purposes used for the operation by Sellers of the Business and
the Acquired Assets.
5.16 Labor Matters. Attached hereto as Schedule 5.16 of the
Disclosure Schedule is a listing of those employees of Sellers employed
primarily in connection with the JMI-Phoenix Facility, together with a listing
of the wages, salaries, bonuses or other compensation or benefit arrangements
for each respective employee as of the dates indicated (the "Transferred
Employees"). There is no pending, or to either Seller's Knowledge, threatened
controversy, labor dispute, strike or work stoppage by any Transferred
Employee(s). The Transferred Employees are not represented by any union or
collective bargaining unit, and neither Seller is aware of any attempt to
organize any of the Transferred Employees into a collective bargaining unit.
5.17 Insurance. Schedule 5.17 of the Disclosure Schedule sets
forth a list of all policies of insurance of any kind or nature covering Sellers
or any of the respective employees, properties, assets or operations in each
case that relate to the Business or Acquired Assets, including without
limitation, policies of life, disability, fire, theft, workers compensation,
employee fidelity, product liability and other casualty and liability insurance.
All such policies are in full force and effect.
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5.18 Real Property. Attached to Schedule 5.18 is a true and
complete copy of the Lease (the "Lease") dated August 20, 1997, between
University-Smith Partners, as Landlord, and JMED, as Tenant, for space at 227
South Smith Road, #103, Tempe, Arizona the "Leased Property"), and the same is
in full force and effect and has not been modified, amended or extended in any
manner. Sellers are not in default under any terms of the Lease and have made
payment of all rent and other charges due thereunder through the date hereof;
and Sellers have not sent any notice of default to the Landlord under the Lease
and, to the Knowledge of Sellers, the Landlord under the Lease is not in
default. Except as set forth on Schedule 5.18 of the Disclosure Schedule:
(a) There is no owned or leased real property utilized by either
Seller with respect to the manufacture, packaging or sale of Branded Vitamin
Products or Contract Manufactured Products;
(b) There are no pending or, to the Knowledge of Sellers,
threatened condemnation proceedings, lawsuits or administrative actions relating
to the Real Property or other matters affecting materially and adversely the
current use or occupancy thereof;
(c) There are no leases, subleases, licenses or other agreements,
written or oral, granting to any party or parties the right or use or occupy any
portion of the Real Property;
(d) There no parties other than Sellers in possession of the Real
Property; and
(e) All facilities located on each parcel of Real Property are
supplied with utilities and other services necessary for the operations of the
facilities as currently being operated in accordance with all applicable Laws.
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5.19 Disclosures. None of this Agreement, any other Transaction
Document, or any Schedule or Exhibit attached hereto, or any Transaction
Document, contains any untrue statement of a material fact or omits any material
fact necessary in order to make the statements contained herein or therein not
misleading. There is no fact that has not been disclosed to Buyer n writing that
materially and adversely affects the Business or the ability of Sellers to
perform the transactions contemplated by this Agreement. The representations and
warranties contained in this Agreement or in any other Transaction Document
shall not be affected or deemed waived by reason of the fact that either Buyer
knew or should have known that any such representation or warranty is or might
be inaccurate in any respect.
5.20 Environmental Matters. Except as set forth on Schedule 5.20
of the Disclosure Schedule: (i) to the Knowledge of Sellers, the operations of
Sellers relating to the Business or the Acquired Assets have been and presently
are in compliance with all Environmental Laws; (ii) neither Seller has received
any written notice from any source, or has otherwise obtained Knowledge, to the
effect that there is lacking any Environmental Permit required in connection
with the current use or operation of any of their respective facilities relating
to the Business or the Acquired Assets; (iii) Sellers and their respective
facilities and operations relating to the Business or the Acquired Assets are
not subject to any outstanding written Order or Contract with any Governmental
Body or Person, or subject to any federal, state or local investigation
respecting (A) Environmental Laws, (B) any Remedial Action, or (C) any
Environmental Claim arising from the Release or threatened Release of a
Hazardous Material by either Seller; (iv) neither Seller has caused or permitted
with respect to the Business or the Acquired Assets, any Hazardous Material to
remain or be disposed of, except in accordance with all applicable Laws; (v) the
Sellers are not aware of any facts, conditions or circumstances which could
reasonably be expected to form the basis of an Environmental Claim
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against Sellers or Buyers except as set forth on Schedule 5.20 of the Disclosure
Schedule; and (vi) the operations of Sellers relating to the Business or the
Acquired Assets do not involve the generation, transportation, treatment,
storage or disposal of Hazardous Waste as defined under 40 C.F.R. Parts 260 -
270 (in effect as of the date of this Agreement), except in accordance with ll
applicable Laws. To the Knowledge of Sellers and except as disclosed at
disclosure 7 on Schedule 5.05(a), there are no material capital expenditures
that would be required to bring the JMI-Phoenix Facility into compliance with
applicable Environmental Laws or Environmental Permits. To Sellers' Knowledge
and except as disclosed on the Phase I study ordered by Buyers, with respect to
the JMI-Phoenix Facility, there is not now on the property any underground
storage tank or surface tank, any asbestos containing material, or any
polychlorinated biphenyls in violation of applicable Laws.
5.21 Entire Business. Except as set forth on Schedule 5.21 of the
Disclosure Schedule, the Acquired Assets constitute all of the material tangible
and intangible assets necessary for Buyers to conduct the Business in
substantially the same manner as conducted by Sellers prior to Closing. The
Branded Vitamin Products constitute all branded vitamin, herb and nutritional
supplement products Manufactured by either Seller under the Bronson
Pharmaceutical or MD Pharmaceutical tradenames.
5.22 Product Liability and Recalls. (a) Except as disclosed on
Schedule 5.22(a) of the Disclosure Schedule, neither Seller is aware of any
claims which are in excess of $25,000 individually, or $100,000 in the
aggregate, or the basis of any material claims which are reasonably likely to be
in excess of $25,000 individually or $100,000 in the aggregate, against either
Seller for injury to person or property of employees or any third parties
suffered as a result of the Manufacture of any Products or the performance of
any service by either Seller,
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including claims arising out of the allegedly defective or unsafe nature of the
Products sold or distributed by either Seller, in each case that relate to the
Business or the Acquired Assets.
(b) Except as disclosed on Schedule 5.22(b) of the Disclosure
Schedule, there is no pending or, to the Knowledge of either Seller, threatened
recall or investigation of any Product.
(c) There are no material liabilities or to each Seller's
Knowledge, threatened claims for returns or warranty obligations with respect to
any Product.
5.23 Conduct of Business. Except as set forth on Schedule 5.23 of
the Disclosure Schedule, since December 31, 1997, Sellers, with respect to the
Business or the Acquired Assets, have not done, nor have either of them agreed
to do, any of the following:
(a) enter into any material transaction not in the ordinary
course of business;
(b) dispose of any of their assets, except in the ordinary course
of business consistent with past practice;
(c) enter into any material lease or contract for the purchase or
sale or license of any property, real or personal, except in the ordinary course
of business consistent with past practice;
(d) fail to maintain their equipment and other assets in working
condition according to the standards they have maintained to the date of this
Agreement, subject only to ordinary wear and tear;
(e) amend or terminate any contract, agreement or license to
which they are a party, except those amended or terminated in the ordinary
course of business, consistent with past practice, and which are not material in
amount or effect;
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(f) waive or release any right or claim except for the waiver or
release of non-material claims in the ordinary course of business, consistent
with past practice;
(g) extend or otherwise modify the payment terms for Inventory,
except in the ordinary course of business, consistent with past practice; or
(h) make any material changes in their accounting methods or
practice; or
(i) materially change any of their business practices. 5.24 Year
2000 Compliance. Attached hereto as Schedule 5.24 of the Disclosure Schedule is
a memo received by Sellers with respect to year 2000 compliance. No
representation or warranty is made by Sellers with respect to year 2000
compliance.
6. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyers represent and warrant
to Sellers that the statements contained in this Section 6 are true and correct
in all material respects as of the date of this Agreement and will be true and
correct in all material respects as of the Closing Date (as though made then and
as though the Closing Date were substituted for the date of this Agreement
throughout this Section 6).
6.01 Organization; Corporate Power. Twin Labs is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Utah, and has all requisite corporate power and lawful authority to
carry out all of the provisions of this Agreement on its part to be performed.
BLI is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware, and has all requisite corporate power and
lawful authority to carry out all of the provisions of this Agreement on its
part to be performed. BLI is a wholly-owned subsidiary of Twin Labs.
6.02 Authorization of Transaction. Each Buyer has full corporate
power and authority to execute and deliver the Transaction Documents and to
perform their respective
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obligations hereunder and thereunder. Without limiting the generality of the
foregoing, the board of directors of each Buyer has duly authorized the
execution, delivery and performance of the Transaction Documents by each Buyer.
The Transaction Documents constitute the valid and legally binding obligations
of each Buyer, enforceable against each Buyer in accordance with their
respective terms and conditions.
6.03 Noncontravention. Neither the execution of the Transaction
Documents, nor the performance of the transactions contemplated thereby, by
either Buyer: (i) violates any provision of any Law; or (ii) requires any
approval, consent, waiver, registration, license, permit, authorization, or
withholding of objections on the part of any Person (except for compliance with
the HSR Act); or (iii) conflicts with, results in a breach of or constitutes a
default under any indenture, mortgage, agreement, note, lease or other
instrument or document of which each Buyer is a party; or (iv) violates the
Certificate of Incorporation or By-Laws of either Buyer.
6.04 Brokers and Finders. Neither Buyer has retained any broker
or finder except for W. E. Meyers & Company with respect to the transactions
contemplated by this Agreement. Each Buyer shall be jointly and severally
responsible for, and shall indemnify Sellers with respect to any and all fees,
commissions, remuneration or other monies owing to W. E. Meyers & Company with
respect to the transactions contemplated by this Agreement.
7. PRE-CLOSING COVENANTS. Sellers and Buyers agree as follows with
respect to the period between the execution of this Agreement and the Closing
Date.
7.01 General. Each of the parties will use its reasonable best
efforts to take all commercially reasonable action and to do all commercially
reasonable things necessary, proper or advisable in order to consummate and make
effective the transactions contemplated by this
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Agreement (including satisfaction, but not waiver, of the Closing conditions set
forth in Article 9 below).
7.02 Notice and Consents. Each of the parties will give any
notices to, make any filings with and use its reasonable best efforts to obtain
any authorizations, consents and approvals of any Governmental Body in
connection with the matters referred to in Sections 5.03 and 6.03 above. Without
limiting the generality of the foregoing, each of the parties will: (i) ile any
notification and report forms and related material that may be required to be
filed with the Federal Trade Commission and the Antitrust Division of the United
States Department of Justice under the Hart-Scott-Rodino Act (the "HSR Act") so
that the filing is deemed received, and the applicable waiting period will begin
to run as of, March 19, 1998; (ii) use its reasonable best efforts to obtain an
early termination of the applicable waiting period thereunder; and (iii) make
any further filings pursuant thereto that may be necessary, proper or advisable
in connection therewith. The parties will coordinate and cooperate with one
another in exchanging information and providing reasonable assistance as the
other may request in connection with the foregoing. Except to the extent
required by any Law, Sellers will not introduce any new Products or materially
modify any existing Products Manufactured in the Business without consulting
with Buyers on a reasonable basis prior to taking any such action.
7.03 Operation and Preservation of Business. Sellers will not
engage in any practice, take any action, or enter into any transaction outside
the ordinary course of business in connection with the Business. Sellers will
keep their respective business and properties related to the Business
substantially intact, including the present operations, physical facilities,
working conditions and relationships with suppliers, customers and employees
related thereto.
7.04 Access. Sellers will permit representatives of Buyers to
have access, after giving reasonable notice, at all reasonable times and in a
manner so as to not interfere with the
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normal business operations of each Seller, to the premises, properties, books,
records, contracts and documents of Sellers pertaining to the Business, provided
that Buyers shall not have the right to copy or make records of any such items.
7.05 Notice of Developments. Each party will give prompt written
notice to the other party of any material adverse development causing a breach
of any of its own representations and warranties contained in this Agreement. No
disclosure by any party pursuant o this Section 7.05, however, shall be deemed
to amend or supplement the Disclosure Schedule or to prevent or cure any
misrepresentation, breach of warranty or breach of covenant.
7.06 Confidentiality. From and after the date of this Agreement
until the Closing Date, Buyers shall use the same efforts to maintain the
confidentiality of any proprietary or confidential information regarding the
Business as Buyers use to maintain the confidentiality of their own proprietary
information. In the event that there is no Closing Date under this Agreement,
Buyers shall return all information regarding the Business to Sellers, retaining
no copies, excerpts or other analysis or redactions of such information, and
Buyers covenant and agree that no such information shall be disclosed to any
third party or utilized in any way by Buyers in the conduct of their own
businesses.
7.07 Advice of Changes. During the period from the date of this
Agreement until the earlier of the Closing and the termination of this Agreement
in accordance with its terms, Sellers will promptly advise Buyers in writing,
and Buyers will promptly advise Sellers in writing (a) of any event occurring
subsequent to the date of this Agreement that would render any representation or
warranty of such party contained in this Agreement, if made on or as of the date
of such event or the Closing Date, untrue or inaccurate, (b) of any Material
Adverse Change, and (c) of any breach by such party of any covenant or agreement
contained in this Agreement or any other Transaction Document.
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7.08 Maintenance of Business. From the date hereof until the
earlier of the Closing Date and the termination of this Agreement in accordance
with its terms, each Seller shall:
(a) cause to be done all things necessary to maintain,
preserve and renew (i) all material licenses, authorizations and permits
necessary to the conduct of the usiness and (ii) its relationships with clients,
customers, suppliers, employees and others in substantially the same manner as
it has prior to the date hereof;
(b) comply in all material respects with all applicable
Laws, including, but not limited to, Environmental Laws, in each case that
relate to the Business or the Acquired Assets;
(c) maintain proper books of record and account which
present fairly in all material respects its financial condition and results of
operations and make provisions on its financial statements for all such proper
reserves as in each case are required in accordance with generally accepted
accounting principles, consistently applied, in each case that relate to the
Business or the Acquired Assets; and
(d) insofar as it may relate to the Business or the Acquired
Assets, not enter into any material transaction not in the ordinary course of
its business;
(e) not dispose of any of its assets related to the Business
or the Acquired Assets, except in the ordinary course of business consistent
with past practice;
(f) not enter into any material lease or contract for the
purchase or sale or license of any property, real or personal, in connection
with the Business or the Acquired Assets, except in the ordinary course of
business consistent with past practice;
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(g) maintain the equipment and other assets that are
Acquired Assets in working condition according to the standards it has
maintained to the date of this Agreement, subject only to ordinary wear and
tear;
(h) not amend or terminate any contract, agreement or
license to which it is a party that relates to the Business or the Acquired
Assets, except those amended or terminated in the ordinary course of business,
consistent with past practice, and which are not material in amount or effect;
(i) not waive or release any right or claim in connection
with the Business or the Acquired Assets, except for the waiver or release of
non-material claims in the ordinary course of business, consistent with past
practice;
(j) not extend the payment terms for Inventory, except in
the ordinary course of business, consistent with past practice;
(k) not make any material change in its accounting methods
or practices with respect to the Business; or
(l) not materially change any business practices with
respect to the Business.
7.09 Securing Permits. Buyers shall use commercially reasonable
efforts to secure and obtain, as soon as reasonably practicable after the
signing of this Agreement, all Permits (other than those that require an OTC or
prescription drug license or registration) required to operate the Business and
Manufacture the Products in substantially the same manner as is currently being
operated by Sellers, so as to satisfy the condition to close set forth in
Section 9.01(i) of this Agreement. From and after the signing of this Agreement,
Buyers shall keep Sellers informed with respect to Buyers' progress in obtaining
such Permits.
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7.10 Securing Title Insurance. As soon as reasonably practicable
after the signing of this Agreement, Buyers shall use commercially reasonable
efforts to secure and obtain, at customary rates, a title insurance commitment
(to be followed by a title insurance policy at Closing) from a reputable title
insurance company licensed to do business in the State of Arizona, committing to
insure (and ultimately insuring at Closing) the fee interest title in the Real
Property to be acquired hereunder by BLI, free and clear of all Liens other than
those disclosed on Schedule 5.04 of the Disclosure Schedule (provided that the
same will not interfere with the use of the Real Property or the structures
thereon to the extent currently used by ellers), so as to satisfy the condition
to close set forth in Section 9.01(k) of this Agreement. From and after the
signing of this Agreement, Buyers shall keep Sellers informed with respect to
Buyers' progress in obtaining such title insurance.
8. COVENANTS AND AGREEMENTS.
8.01 Employee Matters. Buyers covenant and agree to offer
employment on the Closing Date on an "at will" basis to all Transferred
Employees. As of the Closing Date, all Transferred Employees will be eligible to
participate in all benefit programs maintained by Buyers, including without
limitation, benefit programs relating to medical insurance, dental insurance,
life insurance and disability (collectively, "Health Plans") and 401(k) plans or
such other retirements plans (collectively, "Retirement Plans"). The Transferred
Employees will be eligible to participate in such Health Plans of Buyers without
regard to any waiting period or pre-existing condition exclusion period.
Transferred Employees will receive credit under the Retirement Plans for service
(i.e., time worked) as an employee of either Seller prior to the Closing Date to
the extent permitted by such Retirement Plans. If the Retirement Plans do not
allow for the crediting of such service, then Buyers shall use their best
efforts to amend the Retirement Plans as soon as practicable so as allow the
Transferred Employees to receive credit
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for such service with Sellers. Buyers covenant and agree to credit the
Transferred Employees with respective accrued sick leave and vacation benefits
set forth on Schedule 8.01 of the Disclosure Schedule, with respect to service
as an employee of Seller prior to the Closing Date and to allow the Transferred
Employees to use such accrued leave and benefits in accordance with Buyer's
existing policies regarding the use of paid time off. 8.02 Notification Acts.
All notices required pursuant to the Federal Worker Adjustment and Retraining
Notification Act of 1988 (the "WARN Act"), with respect to acts taken by or
omissions of Buyers subsequent to the Closing Date, shall be the responsibility
of uyers, as well as all liability with respect thereto. Buyers shall indemnify
and hold Sellers harmless from and against any and all loss or liability imposed
under the WARN Act resulting from Buyers' failure to offer employment to, or the
subsequent termination of employment of, the Transferred Employees.
8.03 Expenses. The parties to this Agreement shall bear their
respective expenses incurred in connection with the preparation, negotiation,
execution and performance of this Agreement, including, without limitation, all
fees and expenses of agents, consultants, representatives, counsel and
accountants.
8.04 Further Assurance. Each of the parties shall execute such
documents and other papers and take such further commercially reasonable actions
as may be reasonably required or desirable to carry out the provisions of this
Agreement and the transactions contemplated hereby. With respect to licenses,
Permits and Contracts which cannot be transferred or assigned effectively
without the consent of another Person, and if said consents have not been
obtained prior to Closing, Sellers shall cooperate with Buyers in a commercially
reasonably manner in obtaining such consents promptly. If such consents are not
obtained,
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Sellers shall use commercially reasonable efforts to assist Buyers in obtaining
the benefits thereof in some other manner.
8.05 Books, Records and Information. Sellers agree that all
documents and other tangible things that are retained by Sellers pursuant to
this Agreement and that are related to the Business, if any, shall be open for
reasonable inspection by representatives of Buyers on reasonable notice during
regular business hours for a period of twelve (12) months following the Closing
and that Buyers may, during such period, at their expense make such copies
thereof as they may reasonably request. Similarly, Buyers agree that Sellers and
their representatives shall have access, on reasonable notice during regular
business hours, for a period of twelve (12) onths following the Closing, to any
and all records and documents transferred to Buyers hereunder for either
Sellers' tax purposes and as may be necessary for either Seller to file other
reports or information with any Governmental Body, and that either Seller may,
during such period, at its expense make such copies thereof as it may reasonably
request. Sellers also agree that Buyers shall have reasonable access to all
Retention Samples and Batch Records retained by Sellers for a period of one (1)
year beyond any expiration date pertaining to any applicable Products, but only
to the extent not needed by Sellers.
8.06 Restrictive Use of "M.D. Pharmaceutical Vitamins". Buyers
shall not use the name "M.D. Pharmaceutical Vitamins" or any variation thereof,
other than for the sale of vitamin products to United States military commissary
and exchange outlets ("Military Outlets"). Buyers acknowledge and agree that the
rights being transferred hereunder by Sellers to Buyers with respect to the use
of the name "M.D. Pharmaceutical Vitamins" are limited to the sale of vitamin
products to said Military Outlets and for no other use.
8.07 Use of Seller's Address. JMED shall permit Buyers to use its
mailing address as the same appears on any packaging or labeling or other
similar material of the
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Branded Vitamin Products to the extent necessary in connection with the sale of
any inventory (but in no event later than the earlier of (i) December 31, 1998,
and (ii) the expiration of the Transition Services Agreement); provided that
Buyers shall not order any new packaging which bears JMED's address.
8.08 Forwarding of Purchase Orders. In the event that after the
Closing, Buyers receive any purchaser orders or requests concerning any of the
Excluded Products, Buyers shall promptly notify JMED of such purchase orders or
requests. Any and all purchase orders or written materials received at any time
by Buyers with respect to the Excluded Products shall be promptly forwarded to
JMED.
8.09 Manufacturing by JMED Affiliates. For a period of six (6)
months following the Closing Date, JMED will cause its Affiliate, JMI Canton
Pharmaceuticals, Inc. ("JMI Canton"), to continue manufacturing for Buyers,
those Products previously manufactured by JMI Canton for Sellers prior to the
Closing Date, on reasonable terms agreed to by the parties. Notwithstanding the
foregoing, the obligations under this Section 8.09 shall terminate if JMED sells
or discontinues the business of JMI Canton in any manner whatsoever.
9. CONDITIONS TO OBLIGATION TO CLOSE.
9.01 Conditions to Obligation of Buyers. The obligations of
Buyers hereunder are subject to the fulfillment or satisfaction at or prior to
the Closing of each of the following conditions (any one or more of which may be
waived by Buyers, but only in writing):
(a) The representations and warranties of Sellers set forth
in Article 5 above shall be true and correct in all material respects at and as
of the Closing Date with the same force and effect as if such representations
and warranties were made at and as of the Closing Date, provided that the
receipt of such evidence and the closing of the transactions contemplated herein
shall not be, nor be deemed to be, a waiver of the representations and
warranties contained in this Agreement;
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(b) All of the terms, covenants and conditions of this
Agreement to be
complied with or performed by Sellers at or before Closing shall have been
complied with or performed in all material respects;
(c) Other than as disclosed herein or contemplated hereby,
there shall have been no Material Adverse Change since the date of this
Agreement: (i) with respect to the financial condition, assets or liabilities of
the Sellers as such relates to the Business except for a reduction in Net
Working Capital due to increased payables and a reduction in receivables and
inventory in the ordinary course of business consistent with past practice
except for the unusually high Net Working Capital at the end of 1997; and (ii)
with respect to the business of the Sellers as such relates to the Business;
(d) Sellers shall have delivered to Buyers a certificate to
the effect that each of the conditions specified in Sections 9.01(a) - (c) is
satisfied in all material respects; (e) All applicable waiting periods (and any
extensions thereof) under the HSR Act shall have expired or otherwise been
terminated;
(f) Buyers shall have received from Greensfelder, Hemker &
Gale, P.C., counsel of Sellers, an opinion in form and substance as set forth in
Exhibit F attached hereto, addressed to Buyers and dated as of the Closing Date;
(g) No action or proceeding by any Governmental Body or any
Person shall be pending or threatened to enjoin, restrict or prohibit the
purchase and sale of the Acquired Assets contemplated hereby;
(h) All actions to be taken by Sellers in connection with
the consummation of the transactions contemplated hereby, and all certificates,
opinions, instruments
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and other documents required to effect the transactions contemplated hereby will
be reasonably satisfactory in form and substance to Buyers;
(i) Buyers shall have received all Permits (other than those
that require an OTC or prescription drug license or registration) reasonably
required to operate the Business and Manufacture the Products in substantially
the same manner as operated by Sellers prior to Closing;
(j) Buyers shall have received the consent of the landlord
to the assignment of the Lease;
(k) BLI shall have obtained, at customary rates, a title
insurance policy from a reputable title insurance company licensed to do
business in the State of Arizona, insuring the fee interest title in the Real
Property to be acquired hereunder by BLI, free and clear of all Liens other than
those disclosed on Schedule 5.04 of the Disclosure Schedule, none of which
interferes with the current use by Sellers of such Real Property or the
structures thereon; and
(l) The Certificate of Occupancy currently in existence with
respect to the JMI-Phoenix Facility will be in existence on the Closing Date.
9.02 Conditions to Obligation of Sellers. The obligations of
Sellers hereunder are subject to the fulfillment or satisfaction at or prior to
the Closing of each of the following conditions (any one or more which may be
waived by Sellers, but only in writing):
(a) The representations and warranties of Buyers set forth
in Article 6 above shall be true and correct in all material respects at and as
of the Closing Date with the same force and effect as if such representations
and warranties were made at and as of the Closing Date, provided that the
receipt of such evidence and the closing of the transactions
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contemplated herein shall not be, nor be deemed to be, a waiver of the
representations and warranties contained in this Agreement;
(b) All of the terms, covenants and conditions of this
Agreement to be complied with or performed by Buyers at or before Closing shall
have been complied with or performed in all material respects;
(c) Buyers shall have delivered to the Sellers a certificate
to the effect that each of the conditions specified in Sections 9.02(a) - (b) is
satisfied in all material respects; (d) All applicable waiting periods (and any
extensions thereof) under the HSR Act shall have expired or otherwise been
terminated;
(e) Sellers shall have received from Kramer, Levin, Naftalis
& Frankel, counsel for Buyers, an opinion in form and substance as set forth in
Exhibit G attached hereto, addressed to Sellers, and dated as of the Closing
Date;
(f) No action or proceeding by any Governmental Body shall
be pending or threatened by any Person to enjoin, restrict or prohibit the
purchase and sale of the Acquired Assets contemplated hereby; and
(g) All actions to be taken by Buyers in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to
Sellers.
10. INDEMNIFICATION.
10.01 Survival of Representations and Warranties. The
representations and warranties of Sellers contained in this Agreement shall
survive the Closing for the benefit of Buyers as follows: (i) as to the
representations and warranties contained in Section 5.20 of this Agreement, for
five (5) years following the Closing; and (ii) as to all other representations
and
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warranties, for two (2) years following the Closing. The representations and
warranties of Buyers shall survive the Closing for the benefit of Sellers until
two (2) years following the Closing.
10.02 Indemnification by Sellers. Subject to the applicable
limitations set forth in Section 10.05 hereof, Sellers shall, jointly and
severally, indemnify Buyers and their respective Affiliates, directors,
officers, employees, and their respective heirs, personal representatives,
successors and assigns (collectively, the "Buyer Indemnified Parties") against
and hold each of them harmless from any and all damage, claim, action, suit,
proceeding, judgment, loss, liability, cost and expense (including reasonable
attorneys' fees and expenses) collectively, "Losses") incurred or suffered by
any Buyer Indemnified Party arising out of or relating to: (i) any breach of any
representation, warranty, covenant or agreement of Sellers contained in this
Agreement or in any Transaction Document; or (ii) the operations of Sellers in
connection with the Business prior to the Closing Date (except for the Assumed
Liabilities which will be the joint and several responsibility of each Buyer);
or (iii) the failure of either Seller to perform any of its respective
obligations or covenants under this Agreement or any Transaction Document; or
(iv) the failure of Sellers to comply with any applicable Law with respect to
this Agreement or any Transaction Document; or (v) any product liability claim
for Product Manufactured by either Seller prior to the Closing Date, regardless
of when any such claim accrues, arises or is asserted, provided, however, that
Sellers shall not be responsible to the extent such claim results from (A) any
negligent acts or omissions of either Buyer, (B) any marketing or promotional
statements, claims or assertions of either Buyer with respect to Products sold
after the Closing Date, or (C) any change, modification or manipulation of the
Products in any way by either Buyer or by any third party; or (vi) the presence,
or alleged presence, of digitalis or any other contaminant in plantain which is
an ingredient in any Product
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Manufactured by either Seller prior to the Closing Date; or (vii) any statement
made prior to the Closing Date by or on behalf of either Seller that any
Governmental Body asserts created drug status for any Product that did not
comply with all requirements of Law applicable to drugs, provided, however, that
Sellers shall not be responsible for any statements made in catalogs or other
marketing materials released or distributed after the Closing Date.
Notwithstanding anything herein to the contrary, Sellers shall be responsible
for any Products Manufactured by Sellers prior to Closing to the extent that
said Products were contaminated, misbranded or adulterated prior to Closing.
10.03 Obligation of Buyer to Indemnify. Buyers shall, jointly and
severally, indemnify Sellers and their respective Affiliates, directors,
officers and employees, and their respective heirs, personal representatives,
successors and assigns (collectively, the "Seller Indemnified Parties") against
and hold each of them harmless from any and all Losses incurred or suffered by
any Seller Indemnified Party arising out of or relating to (i) any breach of any
representation, warranty, covenant or agreement of either Buyer contained in
this Agreement or in any Transaction Document; or (ii) claims with respect to
the use of the Acquired Assets by either Buyer or the operations of either Buyer
with respect to the Business subsequent to the Closing Date; or (iii) the
failure of either Buyer to perform any of its respective obligations or
covenants under this Agreement or any Transaction Document, including without
limitation, either Buyer's failure to pay or perform, in a timely manner, the
Assumed Liabilities, or (iv) failure of Buyer to comply with the WARN Act with
respect to the JMI-Facility, if applicable; or (v) product liability claims for
any Product Manufactured by either Buyer after the Closing Date; or (vi) any
statement made after the Closing Date and any statement made in catalogs or
other marketing materials (whether said catalogs and marketing materials are
newly printed or were previously printed by JMED) which are released or
distributed after the Closing Date by
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or on behalf of either Buyer that any Governmental Body asserts creates drug
status for any Product that does not comply with all requirements of Law
applicable to drugs.
10.04 Indemnification: Notice and Settlements. A Person seeking
indemnification pursuant to Section 10.02 or 10.03 (an "Indemnified Party") with
respect to a claim, action, suit or proceeding by a Person who is not a Buyer
Indemnified Party or a Seller Indemnified Party shall give prompt written notice
to the party from which such indemnification is sought (the "Indemnifying
Party") of the assertion of any claim, or the commencement of any action, suit
or proceeding, in respect of which indemnity may be sought hereunder, provided
that the failure to give such notice shall not affect the Indemnified Party's
rights to indemnification hereunder unless such failure shall prejudice in any
material respect the Indemnifying Party's ability to defend such claim, action,
suit or proceeding. The Indemnifying Party shall have the right to assume the
defense of any such action, suit or proceeding at its expense. If the
Indemnifying Party shall elect not to assume the defense of any such action,
suit or proceeding or fails to make such an election within thirty (30) days
after it receives such notice pursuant to the first sentence of this Section
10.04, the Indemnified Party may assume such defense with counsel of its choice
and at the expense of the Indemnifying Party and shall defend such claim,
action, suit or proceeding diligently and in good faith. The Indemnified Party
shall have a right to participate in (but not control) the defense of an action,
suit or proceeding defended by the Indemnifying Party hereunder and to retain
its own counsel in connection with such action, suit or proceeding, but the fees
and expenses of such counsel shall be at the Indemnified Party's expense;
provided, however, that the Indemnifying Party shall bear the expenses as
incurred of counsel to the Indemnified Party if (i) the Indemnifying Party and
the Indemnified Party have mutually agreed in writing to the retention of such
counsel and the payment of such counsel's fees and expenses by the Indemnifying
Party, or (ii) the named parties in any such action, suit
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or proceeding (including impleaded parties) include the Indemnifying Party and
the Indemnified Party, and representation of the Indemnifying Party and the
Indemnified Party by the same counsel would create a conflict, provided further
that if the Indemnifying Party is obligated to pay the fees and expenses of such
counsel, the Indemnifying Party shall be obligated to pay only the fees and
expenses associated with one attorney or law firm, as applicable, for the
Indemnified Party, as reasonably approved by the Indemnifying Party. An
Indemnifying Party shall not be liable under Section 10.02 or 10.03 for any
settlement affected without its written consent, which consent will not be
unreasonably withheld or delayed, of any claim, action, suit or proceeding in
respect of which indemnity may be sought hereunder.
10.05 Limitations on Indemnification. (a) Except as otherwise
provided herein, Buyers shall not be entitled to indemnification by Sellers for
Losses under Section 10.02, unless and until the aggregate amount of such Losses
incurred exceeds Three Hundred Seventy-Five Thousand Dollars ($375,000.00),
whereupon Sellers shall be obligated to indemnify the Buyer Indemnified Party
for the full amount of any such Losses. Notwithstanding the foregoing, Sellers'
obligation to indemnify the Buyer Indemnified Party shall be limited to the
aggregate amount of the Purchase Price (the "Maximum Liability") reduced at the
end of each one year anniversary following the Closing Date, by an amount equal
to twenty percent (20%) of the Maximum Liability. Notwithstanding anything to
the contrary contained in this Section 10.05, none of the limitations contained
in this Section 10.05 shall apply to any Losses under items (vi) and (vii) of
Section 10.02.
(b) The amount of any Losses for which indemnification is
provided under this Article 10 shall be reduced by the amount of any insurance
proceeds received by the Indemnified Party with respect to any Losses.
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11. TERMINATION.
11.01 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned prior to the Closing Date: (i)
by the mutual consent of JMED and Twin Labs; (ii) by JMED if events occur (other
than events caused by either Seller) which render impossible the satisfaction of
one or more of the conditions set forth in Section 9.02; (iii) by Twin Labs if
events occur (other than events caused by either Buyer) which render impossible
the satisfaction of one or more of the conditions set forth in Section 9.01; or
(iv) by JMED or Twin Labs if the Closing has not occurred on or before April 30,
1998.
11.02 Procedure Upon Termination. In the event of the termination
of this Agreement by either party as provided in Section 11.01 (other than
pursuant to clause (i) of Section 11.01), written notice thereof shall forthwith
be given to the other party to this Agreement, and this Agreement (other than
the provisions of Sections 8.03, 10.02, 10.03 and 12.09) shall terminate without
further action by Sellers or Buyers.
12. MISCELLANEOUS.
12.01 Certain Definitions. As used in this Agreement, the
following terms shall have the meanings set forth below:
(a) "Affiliates" of a Person means any other Person directly
or indirectly, through one or more intermediaries, controlled by, controlling or
under common control with said first Person.
(b) "Business" means and includes the blending, tableting,
encapsulating, manufacturing, packaging, distribution, marketing and sale of the
Branded Vitamin Products and the Contract Manufactured Products by either Seller
and the operation of the JMI-Phoenix Facility and the Leased Property.
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(c) "Contract" means any contract, agreement, indenture,
note, bond, loan, instrument, lease, conditional sale contract, mortgage,
license, franchise, commitment or other arrangement or agreements, whether
written or oral.
(d) "Environmental Claim" means any accusation, allegation,
notice of violation, action, claim, Lien, demand, abatement or other Order or
direction (conditional or otherwise) by any Governmental Body or any Person for
personal injury (including sickness, disease or death), property damage, damage
to the environment, nuisance, pollution, contamination or other adverse effects
on the environment, or for fines, penalties or restrictions resulting from or
based upon (i) the existence, or the continuation of the existence, of a Release
by JMI-Phoenix (including, without limitation, sudden or non-sudden accidental
or non-accidental Releases) of any Hazardous Material into or onto the
environment (including, without limitation, the air, soil, surface water or
groundwater) at, in, by, from or related to the JMI-Phoenix Facility or any
activity conducted thereon by JMI-Phoenix, (ii) the environmental aspects of the
transportation, storage, treatment or disposal of Hazardous Materials in
connection with the operation of the JMI-Phoenix Facility by JMI-Phoenix; or
(iii) the violation, or alleged violation, of any Environmental Laws or Orders
of or from any Governmental Body by JMI-Phoenix relating to environmental
matters connected with the JMI-Phoenix Facility.
(e) "Environmental Law" means any Law concerning Releases
into any part of the natural environment, or activities that might result in
damage to the natural environment, or any Law that is concerned in whole or in
part with the natural environment and with protecting or improving the quality
of the natural environment and protecting public and employee health and safety
and includes, but is not limited to, the Comprehensive Environmental Response,
Compensation, and Liability Act ("CERCLA") (42 U.S.C. ss. 9601 et seq.) the
Hazardous Materials Transportation Act (49 U.S.C. ss.1801 et seq.), the Resource
Conservation
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and Recovery Act (42 U.S.C. ss. 6901 et seq.), the Clean Water Act (33 U.S.C.
ss. 1251 et seq.), the Clean Air Act (33 U.S.C. ss. 7401 et seq.), the Toxic
Substances Control Act (15 U.S.C. ss. 2601 et seq.), the Federal Insecticide,
Fungicide and Rodenticide Act (7 U.S.C. ss. 136 et seq.) and the Occupational
Safety and Health Act (29 U.S.C. ss. 651 et seq.) ("OSHA"), as such laws have
been amended or supplemented, and the regulations promulgated pursuant thereto,
and any and all analogous state or local statutes, and the regulations
promulgated pursuant thereto.
(f) "Environmental Matters" means any matter arising out of
or relating to the production, storage, transportation, disposal or Release of
any Hazardous Material or otherwise arising out of or relating to safety, health
or the environment which could give rise to liability or require the expenditure
of money to address, and shall include, without limitation, the costs of
investigating and remediating any of the foregoing matters, any fines and
penalties arising in connection therewith, and any claim in respect thereof for
damages or injunctive relief for alleged personal injury, property damage or
damage to natural resources under common law or other Environmental Law.
(g) "Environmental Permit" means any Permit, approval,
authorization, license, variance, registration, or permission required under any
applicable Environmental Laws and all supporting documents associated therewith.
(h) "Governmental Body" means any governmental or regulatory
body, or political subdivision thereof, whether federal, state, local or
foreign, or any agency, instrumentality or authority thereof, or any court or
arbitrator (public or private).
(i) "Hazardous Materials" means any substance, material or
waste which is regulated by any local, state or federal Governmental Body in the
jurisdiction in which either of the Sellers conduct business, or the United
States, including, without limitation, any material or substance which is
defined as a "hazardous waste," "hazardous material,"
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"hazardous substance," "extremely hazardous waste" or "restricted hazardous
waste," "subject waste," "contaminant," "toxic waste" or "toxic substance" under
any provision of Environmental Law, including but not limited to, petroleum
products, asbestos and polychlorinated biphenyls.
(j) "Knowledge" means, with respect to an individual, the
actual present knowledge of such individual. A Person (other than an individual)
will be deemed to have "Knowledge" of a particular fact or other matter if any
individual who serves as a director, officer, partner, executor or trustee of
such Person (or in any similar capacity) has, or at any time had, Knowledge of
such fact or matter.
(k) "Law" means any federal, state, local or foreign law
(including common law), statute, code, ordinance, rule, regulation or other
requirement or guideline.
(l) "Legal Proceeding" means any judicial, administrative or
arbitral actions, suits, proceedings (public or private), claims or governmental
proceedings or investigations.
(m) "Lien" means any lien, pledge, hypothecation, levy,
mortgage, deed of trust, security interest, claim, lease, option, right of first
refusal, easement, or other real estate declaration, covenant, condition,
restriction or servitude, transfer restriction under any shareholder or similar
agreement, encumbrance or any other restriction or limitation whatsoever.
(n) "Material Adverse Change" means any material adverse
change in the business, properties, results of operations, prospects or
condition (financial or otherwise) of either of the Sellers, in each case that
relate to the Business or the Acquired Assets.
(o) "Order" means any order, injunction, judgment, decree,
ruling, writ, assessment or arbitration award.
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(p) "Permits" means any approvals, authorizations,
registrations, consents, licenses, permits or certificates by any Governmental
Body.
(q) "Person" means any individual, corporation, partnership,
firm, joint venture, association, joint-stock company, trust, unincorporated
organization, Governmental Body or other entity.
(r) "Products" means the Branded Vitamin Products and the
Contract Manufactured Products.
(s) "Release" means any release, spill, effluent, emission,
leading, pumping, injection, deposit, disposal, discharge, dispersal, leaching,
or migration into the environment, or into or out of any property owned,
operated or leased by JMI-Phoenix, including the movement of any Hazardous
Material through or in the air, soil, surface water, groundwater, or property.
(t) "Remedial Action" means all actions, including, without
limitation, any capital expenditures, required or voluntarily undertaken to (i)
clean up, remove, treat, or in any other way address any Hazardous Material or
other substance in the indoor or outdoor environment; (ii) prevent the Release
or threat of Release, or minimize the further Release of any Hazardous Material
so it does not migrate or endanger or threaten to endanger public health or
welfare of the indoor or outdoor environment; or (iii) perform pre-remedial
studies and investigations or post-remedial monitoring and care.
12.02 Notices. All notices and other communications made pursuant
to this Agreement shall be in writing and shall be deemed to have been given or
delivered upon receipt if given by hand, or three (3) business days after being
mailed by registered or certified mail, postage prepaid, return receipt
requested, in each case addressed as follows:
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(i) If to either Seller:
Jones Medical Industries, Inc.
1945 Craig Road
St. Louis, Missouri 63146
Attention: Dennis M. Jones
with a copy to:
Greensfelder, Hemker & Gale, P.C.
10 South Broadway, Suite 2000
St. Louis, Missouri 63102
Attention: Edward A. Chod, Esq.
(ii) If to either Buyer:
Twin Laboratories Inc.
2120 Smithtown Avenue
Ronkokoma, New York 11779
Attention: Philip M. Kazin, Esq.
with a copy to:
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022-3903
Attention: Howard A. Sobel, Esq.
Any party may, by notice given in accordance with this Section 12.02 to the
other party, designate another address or Person for receipt of notices
hereunder.
12.03 Construction. The headings of the Sections of this
Agreement and in the Schedules and Exhibits to this Agreement are inserted for
convenience of reference only and shall not be used in interpreting this
Agreement. Unless specifically stated otherwise, references to Sections,
paragraphs, Exhibits and Schedules refer to the Sections, paragraphs, Exhibits
and Schedules to this Agreement. Terms which are defined in this Agreement shall
have the same meanings when used in the Schedules and Exhibits to this
Agreement.
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12.04 Schedules and Exhibits. The Disclosure Schedule and all of
the Schedules and Exhibits to this Agreement constitute an integral part of this
Agreement and are hereby incorporated in and made a part of this Agreement.
12.05 Entire Agreement. This Agreement and the agreements,
documents and instruments to be delivered under it constitute the entire
understanding and agreement between Buyer and Sellers concerning the subject
matter covered hereby and supersede all prior agreements, understandings and
commitments with respect to such subject matter.
12.06 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns;
provided, however, that no party shall assign any of its rights or obligations
hereunder without the prior written consent of the others, except that Buyers
may assign their rights (but not their obligations) hereunder to any
wholly-owned subsidiary of Twin Labs by giving notice thereof to JMED.
12.07 Governing Law. This Agreement shall be construed and
enforced in accordance with and governed by the internal substantive laws of the
State of Delaware without regard to conflict of laws principles.
12.08 Waivers and Amendments; Preservation of Remedies. This
Agreement may be amended, superseded or canceled, and the terms hereof may be
waived, only by a written instrument signed by all parties hereto. No delay on
the part of any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof. Nor shall any waiver on the part of any party
of any such right, power or privilege, nor any single or partial exercise of any
such right, power or privilege, preclude any further exercise thereof or the
exercise of any other such right, power or privilege. The rights and remedies
herein provided are cumulative and are not exclusive of any rights or remedies
that any party may otherwise have at law or in equity.
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12.09 Public Announcements. The parties hereto agree that no
disclosure or public announcement with respect to this Agreement, its contents
or any of the transactions contemplated by this Agreement shall be made by any
party hereto without the prior written consent of the other parties hereto,
provided, however, that nothing contained herein shall restrict Sellers or Buyer
from making any public announcement of the transactions contemplated by this
Agreement to the extent that it, in its sole discretion reasonably exercised, is
of a view that such announcement is required or deemed advisable in order to
meet its obligations under the securities laws or stock exchange requirements in
the United States; provided further that prior to making such announcement, the
party making it shall provide particulars thereof in writing to the other
parties.
12.10 Counterparts; Facsimile Delivery. More than one counterpart
of this Agreement may be executed by the parties hereto, each of which shall be
deemed an original, but all of which shall constitute one and the same document.
This Agreement may be delivered by facsimile and when so delivered will be
binding as though a manually signed document has been delivered. The parties
agree to cooperate to provide each other with original signature pages to any
document delivered by facsimile.
12.11 Variations and Pronouns. All pronouns and any variations
thereof refer to the masculine, feminine, neuter, singular or plural, as the
context may require.
12.12 Severability. If any provision of this Agreement is found
or declared to be invalid or unenforceable by any court or other competent
authority having jurisdiction, such finding or declaration shall not invalidate
any other provision hereof, and this Agreement shall thereafter continue in full
force and effect except that such invalid or unenforceable provision, and (if
necessary) other provisions thereof, shall be reformed by a court of competent
jurisdiction so as to effect insofar as is practicable, the intention of the
parties as set forth in this
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Agreement, provided that if such court is unable or unwilling to effect such
reformation, the invalid or unenforceable provision shall be deemed deleted to
the same extent as if it had never existed.
12.13 Preparation of Agreement. Buyer and Sellers have
participated in the preparation and drafting of this Agreement and no inference,
assumption or presumption shall be drawn from the fact that a party hereto or an
attorney for such party prepared and/or drafted this Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
("Buyers") ("Sellers")
TWIN LABORATORIES INC. JONES MEDICAL INDUSTRIES, INC.
By: /s/ Ross Blechman By: /s/ Michael Bramblett
--------------------- ----------------------------
Name: Ross Blechman Name: Michael Bramblett
--------------------- ----------------------------
Title: President Title: Executive Vice President
--------------------- ----------------------------
BRONSON LABORATORIES, INC. JMI-PHOENIX LABORATORIES, INC.
By: /s/ Ross Blechman By: /s/ Dennis M. Jones
--------------------- ----------------------------
Name: Ross Blechman Name: Dennis M. Jones
--------------------- ----------------------------
Title: President Title: President
--------------------- ----------------------------
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