UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
NBTY, INC.
- -------------------------------------------------------------------------------
(Name of Issuer)
Common Stock
- -------------------------------------------------------------------------------
(Title of Class of Securities)
Irwin A. Kishner, Esq.
Herrick, Feinstein LLP
2 Park Avenue
New York, New York 10016
(212) 592-1400
- -------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
April 20, 1998
- -------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
[ ] If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d- 1(g),
check the following box .
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss. 240.13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filed out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
CUSIP No. 628782104
Page 1 of 12 Pages
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
MICHAEL C. SLADE
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- -------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 4,093,639 shares of Common Stock
BENEFICIALLY -------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH None
REPORTING -------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 4,093,639 shares of Common Stock
-------------------------------------------------------
10 SHARED DISPOSITIVE POWER
None
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,093,639 shares of Common Stock
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.33%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- -------------------------------------------------------------------------------
Page 2 of 12 Pages
<PAGE>
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
RUTH L. SLADE, individually and as trustee and beneficiary of the
Abraham Feldman Trust F/B/O Ruth Slade U/A 1/21/91 (referred to
herein as the "Ruth Trust")
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America (Ruth L. Slade); New Jersey (Ruth Trust)
- -------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 2,339,222 shares of Common Stock
BENEFICIALLY -------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH None
REPORTING -------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 2,339,222 shares of Common Stock
-------------------------------------------------------
10 SHARED DISPOSITIVE POWER
None
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,339,222 shares of Common Stock
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.19%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- -------------------------------------------------------------------------------
Page 3 of 12 Pages
<PAGE>
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
E. STEVEN LENGER, individually and as trustee and beneficiary of
the Abraham Feldman Trust F/B/O E. Steven Lenger U/A 1/21/91
(referred to herein as the "Lenger Trust")
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America (E. Steven Lenger);
New Jersey (Lenger Trust)
- -------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 2,339,223 shares of Common Stock
BENEFICIALLY -------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH None
REPORTING -------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 2,339,223 shares of Common Stock
-------------------------------------------------------
10 SHARED DISPOSITIVE POWER
None
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,339,223 shares of Common Stock
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.19%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- -------------------------------------------------------------------------------
Page 4 of 12 Pages
PART II TO SCHEDULE 13D
Item 1. Security and Issuer
-------------------
Shares of Common Stock, par value $0.008 per share
NBTY, Inc.
90 Orville Drive
Bohemia, NY 11716
(referred to herein as the "Issuer")
Item 2. Identity and Background
-----------------------
(1) (a) Name: Michael C. Slade.
(b) Business Address:
Nutrition Headquarters (DE), Inc.
90 Orville Drive
Bohemia, New York 11716-2510
(c) Principal Occupation:
President
Nutrition Headquarters (DE), Inc.
90 Orville Drive
Bohemia, New York 11716-2510
Manufacturer and distributer of vitamins and
nutritional supplements
(d) Information required by Item 2(d): None.
(e) Information required by Item 2(e): None.
(f) Citizenship: United States of America.
(2) (a) Name: Ruth L. Slade and The Abraham Feldman Trust
F/B/O Ruth Slade U/A 1/21/91.
(b) Business Address of Ruth L. Slade:
c/o Herrick, Feinstein LLP
2 Park Avenue
New York, New York 10016
Attn: Irwin A. Kishner, Esq.
State of Organization of the Ruth Trust: New Jersey.
(c) Principal Occupation of Ruth L. Slade: Homemaker.
Principal Business of the Ruth Trust:
Ownership and management of investments.
Page 5 of 12 Pages
Address of Principal Business and of Principal Office of:
(i) Ruth L. Slade
c/o Herrick, Feinstein LLP
2 Park Avenue
New York, New York 10016
Attn: Paul Herman, Esq.
(ii) The Ruth Trust
c/o Herrick, Feinstein LLP
2 Park Avenue
New York, New York 10016
Attn: Paul Herman, Esq.
(d) Ruth L. Slade and the Ruth Trust Information required by
Item 2(d): None.
(e) Ruth L. Slade and the Ruth Trust Information required by
Item 2(e): None.
(f) Citizenship of Ruth L. Slade: United States of America.
(3) (a) Name: E. Steven Lenger and The Abraham Feldman Trust
F/B/O E. Steven Lenger 1/21/91.
(b) Business Address of E. Steven Lenger:
579 Cranberry Road
East Brunswick, New Jersey 08816
State of Organization of the Lenger Trust: New Jersey.
(c) Principal Occupation of E. Steven Lenger: Physician.
Principal Business of the Lenger Trust:
Ownership and management of investments.
Address of Principal Business and of Principal Office of:
(i) E. Steven Lenger:
579 Cranberry Road
East Brunswick, New Jersey 08816
(ii) The Lenger Trust:
c/o Herrick, Feinstein LLP
2 Park Avenue
New York, New York 10016
Attn: Paul Herman, Esq.
(d) E. Steven Lenger and the Lenger Trust Information
required by Item 2(d): None.
(e) E. Steven Lenger and the Lenger Trust Information
required by Item 2(e): None.
(f) Citizenship of E. Steven Lenger:
United States of America.
Page 6 of 12 Pages
Item 3. Source and Amount of Funds or Other Consideration
-------------------------------------------------
(1) Michael C. Slade:
-----------------
Michael C. Slade acquired such shares of the common stock of
NBTY, Inc., par value $0.008 per share ("NBTY Stock"), by
tendering 33 shares of common stock of Nutrition
Headquarters, Inc., a Delaware corporation ("Nutrition"), 33
shares of common stock of Lee Nutrition, Inc., a Delaware
corporation ("Lee"), and 100 shares of common stock of Nutro
Laboratories, Inc., a New Jersey corporation ("Nutro), to
Nutrition Headquarters (DE), Inc., a Delaware corporation
and a wholly owned subsidiary of the Issuer ("Merger Sub"),
in accordance with the terms and provisions of the Merger
Agreement (as defined in Item 4 below).
(2) Ruth L. Slade and The Ruth Trust:
---------------------------------
The Ruth Trust acquired such shares of NBTY Stock by
tendering 33 shares of common stock of Nutrition and 33
shares of common stock of Lee to Merger Sub in accordance
with the terms and provisions of the Merger Agreement. Ruth
L. Slade is the trustee of the Ruth Trust with the sole
voting power and investment power with respect to the assets
of such trust.
(3) E. Steven Lenger and The Lenger Trust:
--------------------------------------
The Lenger Trust acquired such shares NBTY Stock by
tendering 33 shares of common stock of Nutrition and 33
shares of common stock of Lee to Merger Sub in accordance
with the terms and provisions of the Merger Agreement. E.
Steven Lenger is the trustee of the Lenger Trust with the
sole voting power and investment power with respect to the
assets of such trust.
Item 4. Purpose of Transaction
----------------------
(a)-(j) The securities of the Issuer were acquired pursuant to the
terms and provisions of that certain Agreement and Plan of
Merger dated as of April 1, 1998 (as amended, the "Merger
Agreement") by and among Nutrition, Lee, Nutro, Michael C.
Slade, the Ruth Trust and the Lenger Trust, the Issuer and
Merger Sub. The purpose of the transaction was for the
Issuer to acquire each of Nutrition, Lee and Nutro in
exchange for shares of NBTY stock. In accordance with the
terms and provisions of the Merger Agreement, each of
Nutrition, Lee and Nutro was merged with and into Merger
Sub. The merger was consummated on April 20, 1998.
Section 5.01 of the Merger Agreement provides, inter alia,
for (i) the issuance and delivery of additional shares of
NBTY Stock by the Issuer to each of Michael C. Slade, the
Ruth Trust and the Lenger Trust, pro rata on the basis of
the securities tendered to Merger Sub in accordance with the
Merger Agreement, if the combined working capital of
Nutrition, Lee and Nutro exceeds $7,400,000; and (ii) for
the return of shares of NBTY Stock to the Issuer by each of
Michael C. Slade, the Ruth Trust and the Lenger Trust, pro
rata on the basis of the securities tendered to Merger Sub
in accordance with the Merger Agreement, if the combined
working capital of Nutrition, Lee and Nutro is less than
$7,400,000. The aggregate number of shares of NBTY Stock to
be so issued and delivered by the Issuer (or returned to the
Issuer) is equal to the difference between the amount of
such combined working capital and $7,400,000 divided by the
lesser of the closing bid price of such shares (x) on
Page 7 of 12 Pages
April 20, 1998 or (y) the date such shares are delivered.
The Merger Agreement provides that the combined working
capital of Nutrition, Lee and Nutro shall be computed by the
independent public accountants for such entities on or prior
to June 4, 1998.
In connection with the Merger Agreement, Michael C. Slade,
the Ruth Trust, the Lenger Trust and the Issuer entered into
that certain Registration Rights Agreement dated as of April
1, 1998 (the "Registration Rights Agreement"). Subject to
the terms and conditions of the Registration Rights
Agreement, Slade, the Ruth Trust and the Lenger Trust may
demand the registration under the Securities Act of 1933, as
amended, of any or all of their shares of NBTY Stock.
Additionally, subject to the terms and conditions of the
Registration Rights Agreement, each of Michael C. Slade, the
Ruth Trust and the Lenger Trust has the right to include
their shares for registration under the Securities Act of
1933, as amended, in any registration statement filed by the
Issuer.
Item 5. Interest in Securities of the Issuer
------------------------------------
(a) 1. Michael C. Slade acquired 4,093,639 shares of NBTY Stock,
representing approximately 7.3% of such class of securities
of the Issuer.
2. The Ruth Trust acquired 2,339,222 shares of NBTY Stock,
representing approximately 4.2% of such class of securities
of the Issuer.
3. The Lenger Trust acquired 2,339,223 shares of NBTY Stock of
the Issuer, representing approximately 4.2% of such class of
securities of the Issuer.
(b) 1. Michael C. Slade has the sole power to vote or to direct to
vote and the sole power to dispose or to direct the
disposition of the shares of NBTY Stock owned by him.
2. Ruth L. Slade, as trustee of the Ruth Trust, has the sole
power to vote or to direct to vote and the sole power to
dispose or to direct the disposition of the shares of NBTY
Stock owned by the Ruth Trust.
3. E. Steven Lenger, as trustee of the Lenger Trust, has the
sole power to vote or to direct to vote and the sole power
to dispose or to direct the disposition of the shares of
NBTY Stock owned by the Lenger Trust.
(c) None.
(d) None.
(e) N/A.
(f) The transactions described above constitute the only
transactions in the shares of Common Stock of the Issuer
which have been effected by any of the above persons during
the past 60 days.
Each reporting person herein hereby disclaims membership in a group
or the existence of a group with respect to shares of NBTY Stock; and
each such person disclaims any beneficial ownership in the shares of
Common Stock of the Issuer owned by the others for the purpose of
Section 13(d) or 13(g) of the Securities Exchange Act of 1934, as
amended.
Page 8 of 12 Pages
If all securities owned by Michael C. Slade, the Ruth Trust and the
Lenger Trust were combined as a group, the aggregate amount of such
shares would equal 8,772,084 or approximately 15.7% of such class of
securities of the Issuer.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer
---------------------------------------------------------------------
The shares of NBTY Stock issued to the Reporting Persons are not
registered under the Securities Act of 1933, as amended. Such shares of NBTY
Stock are subject to the Registration Rights Agreement. Subject to the terms
and conditions of the Registration Rights Agreement, Michael C. Slade, the Ruth
Trust and the Lenger Trust may demand the registration under the Securities Act
of 1933, as amended, of any or all of their shares of NBTY Stock. Additionally,
subject to the terms and conditions of the Registration Rights Agreement, each
of Michael C. Slade, the Ruth Trust and the Lenger Trust has the right to
include their shares for registration under the Securities Act of 1933, as
amended, in any registration statement filed by the Issuer.
Michael C. Slade and Ruth L. Slade are husband and wife. Ruth L. Slade
and E. Steven Lenger are sister and brother. Michael C. Slade and Ruth L. Slade
are trustees of the Ruth Trust; and Ruth L. Slade has the exclusive right to
control or direct the control of the voting power and investment power of the
assets of the Ruth Trust. E. Steven Lenger and his spouse, Sandy Lenger, are
trustees of the Lenger Trust; and E. Steven Lenger has the exclusive right to
control or direct the control of the voting power and investment power of the
assets of the Lenger Trust.
Item 7. Materials to be Filed as Exhibits
---------------------------------
99.1 Agreement and Plan of Merger, dated as of April 1, 1998,
among Nutrition Headquarters, Inc., a Delaware corporation,
Lee Nutrition, Inc., a Delaware corporation, Nutro
Laboratories, Inc., a New Jersey corporation, Michael C.
Slade, Abraham Feldman Trust F/B/O Ruth Slade U/A 1/21/91 and
Abraham Feldman Trust F/B/O E. Steven Lenger U/A 1/21/91 and
NBTY, Inc., a Delaware corporation, and Nutrition
Headquarters (DE), Inc.
99.2 Amendment, dated as of April 14, 1998, to the Agreement and
Plan of Merger among Nutrition Headquarters, Inc., a Delaware
corporation, Lee Nutrition, Inc., a Delaware corporation,
Nutro Laboratories, Inc., a New Jersey corporation, Michael
C. Slade, Abraham Feldman Trust F/B/O Ruth Slade U/A 1/21/91
and Abraham Feldman Trust F/B/O E. Steven Lenger U/A 1/21/91
and NBTY, Inc., a Delaware corporation, and Nutrition
Headquarters (DE), Inc.
99.3 Registration Rights Agreement, dated as of April 1, 1998,
among NBTY, Inc. and Michael C. Slade, Abraham Feldman Trust
F/B/O Ruth Slade U/A 1/21/91 and Abraham Feldman Trust F/B/O
E. Steven Lenger U/A 1/21/91.
99.4 Joint Filing Agreement, dated as of April 24, 1998, among
Michael C. Slade, Ruth L. Slade, the Abraham Feldman Trust
F/B/O Ruth Slade U/A 1/21/91, E. Steven Lenger and the
Abraham Feldman Trust F/B/O E. Steven Lenger U/A 1/21/91.
Page 9 of 12 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
April 24, 1998 /s/ Michael C. Slade
- ----------------------------- -----------------------------------
Date Signature
Name: Michael C. Slade
Page 10 of 12 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
April 24, 1998 /s/ Ruth L. Slade
- ----------------------------- -----------------------------------
Date Signature
Name: Ruth L. Slade, individually and
as trustee of The Abraham Feldman
Trust F/B/O Ruth Slade U/A 1/21/91
Page 11 of 12 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
April 24, 1998 /s/ E. Steven Lenger
- ----------------------------- -----------------------------------
Date Signature
Name: E. Steven Lenger, individually and
as trustee of the Abraham Feldman
Trust F/B/O E. Steven Lenger U/A
1/21/91
Page 12 of 12 Pages
============================================================================
----------------------------
AGREEMENT AND PLAN OF MERGER
----------------------------
dated as of April 1, 1998
among
NUTRITION HEADQUARTERS, INC.
LEE NUTRITION, INC.
NUTRO LABORATORIES, INC.
and
MICHAEL C. SLADE,
ABRAHAM FELDMAN TRUST
F/B/O RUTH SLADE
U/A 1/21/91
and
ABRAHAM FELDMAN TRUST
F/B/O E. STEVEN LENGER
U/A 1/21/91
and
NBTY, INC.
and
NUTRITION HEADQUARTERS (DE), INC.
============================================================================
TABLE OF CONTENTS
Page
----
Preamble 1
ARTICLE I
DEFINITIONS 2
SECTION 1.01 Certain Defined Terms 2
SECTION 1.02 Certain Additional Defined Terms 5
ARTICLE II
CLOSING; MERGER; MERGER CONSIDERATION 7
SECTION 2.01 The Closing 7
SECTION 2.02 The Merger 7
SECTION 2.03 Certain Effects of the Merger 8
SECTION 2.04 Corporate Organization 8
SECTION 2.05 Conversion of Shares 9
SECTION 2.06 Surrender and Payment 9
ARTICLE III
REPRESENTATIONS AND WARRENTIES OF THE SHAREHOLDERS 10
SECTION 3.01 Authority of the Companies and the Shareholders 10
SECTION 3.02 Incorporation and Qualification of the Companies 11
SECTION 3.03 Capital Stock of the Companies; Ownership
of the Shares 11
SECTION 3.04 Subsidiaries 11
SECTION 3.05 No Conflict 12
SECTION 3.06 Consents and Approvals 12
SECTION 3.07 Financial Information 12
SECTION 3.08 Absence of Undisclosed Liabilities 13
SECTION 3.09 Litigation 13
SECTION 3.10 Compliance with Laws; Licenses and Permits 13
SECTION 3.11 Environmental Compliance 14
SECTION 3.12 Intellectual Property Rights 14
SECTION 3.13 Real Property 14
SECTION 3.14 Tangible Personal Property 15
SECTION 3.15 Material Contracts 15
SECTION 3.16 Employee Benefit Matters; Retirement Plans 15
SECTION 3.17 Labor Matters 17
SECTION 3.18 Taxes 17
SECTION 3.19 Insurance 17
SECTION 3.20 Disclaimer of Warranties 17
SECTION 3.21 Customer Mailing List 18
SECTION 3.22 Brokers 18
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NBTY AND MERGER SUB 18
SECTION 4.01 Authority of NBTY and Merger Sub 18
SECTION 4.02 Incorporation and Qualification of NBTY
and Merger Sub 19
SECTION 4.03 Capital Stock of NBTY and Merger Sub;
Aggregate Exchanged Stock 19
SECTION 4.04 Subsidiaries 19
SECTION 4.05 No Conflict 19
SECTION 4.06 Consents and Approvals 20
SECTION 4.07 Financial Information 20
SECTION 4.08 Absence of Undisclosed Liabilities 20
SECTION 4.09 Litigation 20
SECTION 4.10 Compliance with Laws; Licenses and Permits 21
SECTION 4.11 Environmental Compliance 21
SECTION 4.12 Intellectual Property Rights 22
SECTION 4.13 Real Property 22
SECTION 4.14 Tangible Personal Property 23
SECTION 4.15 Material Contracts 23
SECTION 4.16 Employee Benefit Matters 23
SECTION 4.17 Labor Matters 25
SECTION 4.18 Taxes 25
SECTION 4.19 Insurance 25
SECTION 4.20 Brokers 25
SECTION 4.21 Investment Purpose 25
ARTICLE V
ADDITIONAL AGREEMENTS 26
SECTION 5.01 Conduct of Business Prior to the Closing 26
SECTION 5.02 Investigation 29
SECTION 5.03 Access to Information 29
SECTION 5.04 Books and Records 30
SECTION 5.05 Confidentiality 31
SECTION 5.06 Regulatory and Other Authorizations; Consents 31
SECTION 5.07 Issuance of NBTY Stock 32
SECTION 5.08 Slade Employment Agreement 32
SECTION 5.09 Further Action 32
SECTION 5.10 Satisfaction of PNC Bank Indebtedness 33
ARTICLE VI
EMPLOYEE MATTERS 33
SECTION 6.01 Employees 33
SECTION 6.02 Establishment of Trust 34
SECTION 6.03 Welfare Arrangements 34
SECTION 6.04 Indemnity 34
ARTICLE VII
TAX MATTERS 35
SECTION 7.01 Indemnity 35
SECTION 7.02 Refunds 35
SECTION 7.03 Contests 35
SECTION 7.04 Payments for Certain Audit Adjustments 36
SECTION 7.05 Tax Benefits Resulting From the Merger 37
SECTION 7.06 Cooperation and Exchange of Information 37
SECTION 7.07 Tax Intent 38
SECTION 7.08 Payments by NBTY and Merger Sub 38
SECTION 7.09 Payments by the Shareholders 38
SECTION 7.10 Survival 39
ARTICLE VIII
CONDITIONS TO CLOSINGS 39
SECTION 8.01 Conditions to Obligations of the Shareholders 39
SECTION 8.02 Conditions to Obligations of NBTY and Merger Sub 40
ARTICLE IX
INDEMNIFICATION 41
SECTION 9.01 Survival 41
SECTION 9.02 Indemnification by NBTY 42
SECTION 9.03 Indemnification by the Shareholders 44
ARTICLE X
TERMINATION, AMENDMENTS AND WAIVER 47
SECTION 10.01 Termination 47
SECTION 10.02 Effect of Termination 47
SECTION 10.03 Waiver 47
ARTICLE XI
GENERAL PROVISIONS 47
SECTION 11.01 Expenses 47
SECTION 11.02 Notices 48
SECTION 11.03 Public Announcements 49
SECTION 11.04 Headings 49
SECTION 11.05 Severability 49
SECTION 11.06 Entire Agreement 49
SECTION 11.07 Assignment 49
SECTION 11.08 No Third-Party Beneficiaries 49
SECTION 11.09 Amendment; Waiver 49
SECTION 11.10 Governing Law 50
SECTION 11.11 Consent to Jurisdiction 50
SECTION 11.12 Counterparts 50
SECTION 11.13 Shares of NBTY Stock 50
EXHIBITS
A Form of Registration Rights Agreement.
B Form of the Remediation Agreement.
SHAREHOLDERS SCHEDULES
Schedule 3.05 Conflicts
Schedule 3.06 Consents and Approvals
Schedule 3.09 Litigation
Schedule 3.12 Intellectual Property Rights
Schedule 3.13(a) Owned Real Property
Schedule 3.13(b) Leased Real Property
Schedule 3.14 Tangible Personal Property
Schedule 3.15 Material Contracts
Schedule 3.16 Employee Benefit Plans
Schedule 3.19 Insurance
Schedule 3.21 Customer Mailing Lists
Schedule 5.01(b)(iv) Exclusive Compensation Adjustments
Schedule 5.08 Terms and Conditions of Slade Employment Agreement
Schedule 6.01 Employees to be Considered for Stock Options
NBTY SCHEDULES
Schedule 4.04 Subsidiaries
Schedule 4.05 Conflicts
Schedule 4.06 Consents and Approvals
Schedule 4.09 Litigation
Schedule 4.12 Intellectual Property Rights
Schedule 4.13(a) Owned Real Property
Schedule 4.13(b) Leased Real Property
Schedule 4.14 Tangible Personal Property
Schedule 4.15 Material Contracts
Schedule 4.16 Employee Benefit Plans
Schedule 4.19 Insurance
Schedule 5.01(d)(iv) Executive Compensation Adjustments
AGREEMENT AND PLAN OF MERGER, dated as of April 1, 1998, among
NUTRITION HEADQUARTERS, INC., a Delaware corporation ("Nutrition"), LEE
NUTRITION, INC., a Delaware corporation ("Lee"), NUTRO LABORATORIES, INC., a
New Jersey corporation ("Nutro" and, together with Nutrition and Lee
collectively, the "Companies" and each individually a "Company"), MICHAEL C.
SLADE ("Slade"), ABRAHAM FELDMAN TRUST F/B/O RUTH SLADE U/A 1/21/91 ("Ruth
Trust") and ABRAHAM FELDMAN TRUST F/B/O E. STEVEN LENGER U/A 1/21/91
("Steven Trust" and, together with Slade and Ruth Trust collectively, the
"Shareholders" and each individually a "Shareholder"), and NBTY, INC., a
Delaware corporation ("NBTY"), and NUTRITION HEADQUARTERS (DE), INC., a
Delaware corporation and a wholly owned subsidiary of NBTY ("Merger Sub").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Shareholders own all the authorized, issued and
outstanding shares of capital stock of each of Nutrition and Lee;
WHEREAS, Slade owns all the authorized, issued and outstanding shares
of capital stock of Nutro;
WHEREAS, the authorized, issued and outstanding capital stock of the
Companies consists of: (i) ninety-nine (99) shares of Common Stock, par
value $1.00 per share of Nutrition (the "Nutrition Shares"); (ii) ninety-
nine (99) shares of Common Stock of Lee, par value $1.00 per share (the "Lee
Shares"); and (iii) one hundred (100) shares of Common Stock of Nutro, no
par value per share (the "Nutro Shares" and, together with the Nutrition
Shares and the Lee Shares collectively, the "Shares");
WHEREAS, the Shareholders desire to cause the merger of each of the
Companies with and into Merger Sub whereby, as a result of such merger
transactions, each of the Shareholders receives shares of Common Stock of
NBTY, par value $0.008 per share (the "NBTY Stock");
WHEREAS, NBTY has announced and declared a stock split of NBTY Stock
(the "NBTY Stock Split") payable in the form of a stock dividend to
stockholders of record on March 23, 1998, whereby a dividend of two shares
of NBTY Stock shall be distributed to the holder of each share of NBTY
Stock;
WHEREAS, NBTY has organized Merger Sub for the purpose of effecting
the merger contemplated by this Agreement;
WHEREAS, the assets of Merger Sub include the Merger Consideration (as
defined below); and
WHEREAS, simultaneously with the execution and delivery of this
Agreement, the Shareholders and NBTY have executed and delivered that
certain Registration Rights Agreement, dated as of even date herewith in the
form attached hereto as Exhibit A (the "Registration Rights Agreement"),
providing the Shareholders with the right to cause NBTY to register their
shares of NBTY Stock acquired pursuant to the Merger in accordance with the
terms and provisions set forth in the Registration Rights Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants hereinafter set forth, NBTY, Merger Sub, the
Companies and the Shareholders hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such definitions to be
equally applicable to both the singular and plural forms of the terms
defined):
"Aggregate Exchanged Stock" means the number of shares of NBTY Stock
to be delivered to the Shareholders at the Closing as the Merger
Consideration, computed as follows:
(i) if the NBTY Stock FMV on the Closing Date is equal to or
less than the Benchmark Price, then the Aggregate Exchanged Stock
shall be equal to 9,000,000 shares (it being acknowledged and agreed
that such number has been adjusted for the NBTY Stock Split and shall
be appropriately adjusted to reflect any change, modification or
revocation of the NBTY Stock Split); or
(ii) if the NBTY Stock FMV on the Closing Date is greater than
the Benchmark Price, then the Aggregate Exchanged Stock shall be equal
to:
(A) 9,000,000, less
(B) the number of shares equal to the product of:
(1) fifty percent (50%) multiplied by
(2) the quotient obtained when dividing (x) the
product of 9,000,000 multiplied by the NBTY
Stock FMV on the Closing Date less 180,000,000,
by (y) the NBTY Stock FMV on the Closing Date.
The following example illustrates the computation of the Aggregate
Exchanged Stock if the NBTY Stock FMV on the Closing Date is greater than
the Benchmark Price:
Assuming that the NBTY Stock FMV on the Closing Date is equal to
$25.00 and that there has not been any change, modification or revocation of
the NBTY Stock Split, the Aggregate Exchanged Stock would be equal to
8,100,000 shares of NBTY Stock, computed as follows:
9,000,000 - [0.5 X [(9,000,000 X 25) - 180,000,000]
--------------------------------
25]
or 9,000,000 - [0.5 X (225,000,000 - 180,000,000)
---------------------------
25]
or 9,000,000 - [0.5 X (45,000,000/25)]
or 9,000,000 - .5 X 1,800,000
or 9,000,000 - 900,000
or 8,100,000.
"Basket Amount" means FIVE HUNDRED THOUSAND and 00/100 ($500,000) for
all matters; except that the "Basket Amount" shall mean ONE HUNDRED THOUSAND
and 00/100 ($100,000) DOLLARS for liabilities or damages arising from the
remediation of Hazardous Substances required by the NJDEP under the
Remediation Agreement.
"Benchmark Price" means a price per share of the NBTY Stock equal to
$20.00 (it being acknowledged and agreed that such price has been adjusted
for the NBTY Stock Split and shall be appropriately adjusted to reflect any
change, modification or revocation of the NBTY Stock Split).
"Business" means the vitamin and nutritional supplement and related
products production and distribution business, including, without
limitation, the related research, development, manufacturing, wholesale,
mail order and retail operations, which are conducted by the Companies.
"Business Day" means a day on which banks generally are not required
or authorized to be closed in New York, New York.
"Company Accounting Policies" means United States generally accepted
accounting principles, consistently applied, except as are referred to in
the notes to the Latest Audited Balance Sheet or in the report of the
independent certified accountants presented therewith, applied on a basis
consistent with the preparation of the Latest Audited Balance Sheet.
"Environmental Laws" means any federal, state or local law relating
to: (a) releases or threatened releases of Hazardous Substances; (b) the
manufacture, handling, transport, use, treatment, storage or disposal of
Hazardous Substances or materials containing Hazardous Substances; or (c)
otherwise relating to pollution of the environment or the protection of
human health.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Hazardous Substances" means (a) substances which contain substances
defined in or regulated under the following federal statutes and their state
counterparts, as well as implementing regulations of such statutes as
amended through the date hereof and as interpreted by administering agencies
through the date hereof: the Hazardous Materials Transportation Act, the
Resource Conservation and Recovery Act, the Comprehensive Environmental
Response, Compensation and Liability Act, the Clean Water Act, the Safe
Drinking Water Act, the Atomic Energy Act, the Toxic Substances Control Act,
the Federal Insecticide, Fungicide, and Rodenticide Act, and the Clean Air
Act; (b) petroleum and petroleum products including crude oil and any
fractions thereof; (c) natural gas, synthetic gas and any mixtures thereof;
and (d) any substances with respect to which a federal, state or local
agency requires environmental investigation, monitoring, reporting or
remediation as of the date hereof.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder.
"Gross-Up for Taxes" means an amount equal to the sum of all Taxes
imposed in connection with the specified payment; accordingly, a payment to
be made without a "Gross-Up for Taxes" under Articles VII or IX is the
amount of liabilities and damages of the indemnified party excluding any
amount of Taxes payable by such indemnified party as a result of receiving
such specified payment.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended.
"ISRA" means the Industrial Site Recovery Act of the State of New
Jersey, N.J.S.A. 13:1K-6 et. seq.
"Knowledge" means to the best knowledge of the specified person after
reasonable inquiry and, with respect to the Knowledge of Slade, including
due inquiry to the operating management of the Companies.
"Latest Audited Balance Sheet" means, collectively, the audited
balance sheet of each of the Companies as of September 30, 1997, including
the notes thereto and the report thereon by the Companies' independent
certified public accountants.
"Material Adverse Effect" means any change in, or effect on, the
Business as currently conducted by the Companies that is or is reasonably
likely to be materially adverse to the results of operations or the
financial condition of the Business, taken as a whole, after giving effect
to this Agreement and the transactions contemplated hereby.
"Material Adverse NBTY Effect" means any change in, or effect on, the
business of NBTY, Merger Sub and their respective subsidiaries that is or is
reasonably likely to be materially adverse to the results of operations or
the financial condition of the business of NBTY, Merger Sub and their
respective subsidiaries, taken as a whole, after giving effect to this
Agreement and the transactions contemplated hereby.
"NBTY Disclosure Schedule" means the NBTY Disclosure Schedule dated as
of the date hereof delivered to the Shareholders by NBTY and Merger Sub on
or prior to the date that is not less than five (5) business days prior to
the Closing Date.
"NBTY Stock FMV" means, for one (1) share of NBTY Stock, the lesser
of: (i) the closing bid price, as reported by the National Association of
Securities Dealers automated quotations system, on the Business Day
immediately preceding the Closing Date, and (ii) the average of the closing
bid prices, as reported by the National Association of Securities Dealers
automated quotations system, for the ten (10) Business Days immediately
preceding (but excluding) the date of determination (it being acknowledged
and agreed that, to the extent applicable, the NBTY Stock FMV shall be
appropriately adjusted for the NBTY Stock Split or any change, modification
or revocation of the NBTY Stock Split).
"Shareholder Disclosure Schedule" means the Shareholder Disclosure
Schedule dated as of the date hereof delivered to NBTY by the Shareholders
on the date this Agreement is executed and delivered.
"Tax" or "Taxes" means all income, gross receipts, sales, use,
employment, franchise, profits, property or other taxes, fees, stamp taxes
and duties, assessments or charges of any kind whatsoever (whether payable
directly or by withholding), together with any interest and any penalties,
additions to tax or additional amounts imposed by any taxing authority with
respect thereto.
"Transferred Employees" means the employees of the Companies who are
on the Companies' respective payrolls as of the Closing Date. In addition,
the term "Transferred Employees" shall also include those current employees
of the Companies who are on vacation, sick, disability, maternity leave or
other authorized leave of absence, and those employees who at the Effective
Time are subject to a Company layoff, in each case, whether or not such
employees return to active employment with any Company.
"Transferred Former Employees" means previously employed employees of
the Companies.
"Working Capital of the Companies" means the balance of the combined
current assets of the Companies less the balance of the combined current
liabilities of the Companies, in each case, as of the specified date and
computed in accordance with the Company Accounting Policies.
SECTION 1.02 Certain Additional Defined Terms. In addition to terms
defined in Section 1.01, the following capitalized terms are used as defined
in the Sections set forth opposite such terms:
Defined Terms Section Reference
------------- -----------------
Adjustment Section 7.04(a)
Advisor Section 3.21
Aggregate Exchanged Stock Section 1.01
Benchmark Price Section 1.01
Business Section 1.01
Business Day Section 1.01
Certificates of Merger Section 2.02
Closing Section 2.01
Closing Date Section 2.01
Commission Section 4.22
Companies Recitals
Company Recitals
Company Accounting Policies Section 1.01
Company Retirement Plans Section 6.02
Confidentiality Agreement Section 5.05
Constituent Corporations Section 2.03
Contemplated Stock Section 5.07
Contest Section 7.03(b)
Corporate Law Section 2.02
DGCL Section 2.02
Effective Time Section 2.02
Environmental Laws Section 1.01
ERISA Section 1.01
Final Working Capital of
the Companies Section 5.01(c)
Financial Statements Section 3.07
Hazardous Substances Section 1.01
HSR Act Section 1.01
Intellectual Property Rights Section 3.12
Internal Revenue Code Section 1.01
IRS Section 3.16(a)
ISRA Section 1.01
Knowledge Section 1.01
Latest Audited Balance Sheet Section 1.01
Lee Recitals
Lee Shares Recitals
Material Adverse Effect Section 1.01
Material Adverse NBTY Effect Section 1.01
Material Contracts Section 3.15
Merger Section 2.02
Merger Consideration Section 2.05(a)
Merger Sub Recitals
Minimum Capital Amount Section 5.01(c)
Multiemployer Plan Section 3.16(b)
Multiple Employer Plan Section 3.16(b)
NBTY Recitals
NBTY Board Section 5.09
NBTY Disclosure Schedule Section 1.01
NBTY Multiemployer Plan Section 4.16(b)
NBTY Multiple Employer Plan Section 4.16(b)
NBTY Plans Section 4.16(a)
NBTY Trusts Section 6.02
NBTY Stock Recitals
NBTY Stock FMV Section 1.01
NBTY Stock Split Recitals
NJBCA Section 2.02
NJDEP Section 5.06(a)
Nutrition Recitals
Nutrition Shares Recitals
Nutro Recitals
Nutro Price Section 2.02(a)
Nutro Shares Recitals
Plans Section 3.16(a)
PNC Section 5.10
Registration Rights Agreement Recitals
Remediation Agreement Section 5.10(a)
Ruth Trust Recitals
SEC Reports Section 4.22
Shareholder Disclosure
Schedule Section 1.01
Shares Recitals
Shareholder Recitals
Shareholders Recitals
Slade Recitals
Steven Trust Recitals
Surviving Corporation Section 2.02
Tax Section 1.01
Taxes Section 1.01
Tax Reserves Section 7.01
Transaction Expenses Section 11.01
WARN Act Section 6.01(c)
1933 Act Section 4.22
1934 Act Section 4.22
ARTICLE II
CLOSING; MERGER; MERGER CONSIDERATION
SECTION 2.01 The Closing. Upon the terms and subject to the
conditions of this Agreement, the closing (the "Closing") of the
transactions contemplated by this Agreement shall take place at 10:00 A.M.
(local time) on the Business Day following the satisfaction, or if
permissible, the waiver of the conditions set forth in Article VIII
(including, without limitation the expiration or termination of the
applicable waiting periods under the HSR Act) at the offices of Herrick,
Feinstein LLP, 2 Park Avenue, New York, New York 10016, or at such other
time, date and place as may be agreed upon by Slade and Merger Sub.
(Hereinafter, the date on which the Closing shall take place is referred to
as the "Closing Date").
SECTION 2.02 The Merger. Upon the terms and subject to the
conditions of this Agreement and in accordance with the Delaware General
Corporation Law (the "DGCL") and the New Jersey Business Corporation Act
(the "NJBCA" and, together with the DGCL, the "Corporate Law"), at the
Effective Time, each of the Companies shall be merged with and into Merger
Sub (the "Merger"). Merger Sub shall continue its existence as the
surviving corporation (the "Surviving Corporation") in the Merger and the
separate corporate existence of each of the Companies shall terminate at the
Effective Time. The Merger shall become effective (the "Effective Time") at
such time as duly prepared and executed certificates of merger
(collectively, the "Certificates of Merger"), each in form and substance
reasonably satisfactory to Slade and Merger Sub, providing for the merger of
each of the Companies with and into Merger Sub, is filed with, and accepted
by, the Secretary of State of the State of Delaware in accordance with the
relevant provisions of the DGCL (to the extent applicable) and the Secretary
of State of the State of New Jersey in accordance with the relevant
provisions of the NJBCA (to the extent applicable). Each Certificate of
Merger shall be filed in accordance with the applicable Corporate Law at the
Closing.
SECTION 2.03 Certain Effects of the Merger. At the Effective Time:
(i) the Surviving Corporation shall thereafter, consistently with its
certificate of incorporation, possess all the rights, privileges,
immunities, powers and purposes (both of a public and private nature), and
assume and be liable for all the liabilities, obligations and penalties
(both of a public and private nature), of each of the Companies and Merger
Sub (sometimes hereinafter referred to as the "Constituent Corporations");
(ii) all property, real, personal and mixed, and all debts due to any of the
Constituent Corporations on whatever account shall be vested in the
Surviving Corporation; and (iii) all property, rights, privileges, powers
and franchises and all and every other interest shall be the property of the
Surviving Corporation. In furtherance of the immediately preceding
sentence, at the Effective Time title to any real estate, vested by deed or
otherwise, under the laws of the State of Delaware or elsewhere in any of
the Constituent Corporations, shall not revert or in any way be impaired by
reason of the Merger, but any claim existing or action or proceeding pending
by or against any Constituent Corporation may be prosecuted as if the Merger
had not taken place, or the Surviving Corporation may be substituted in its
place, and all rights of creditors and liens upon any property of any of the
Constituent Corporations shall be preserved unimpaired and all debts,
liabilities and duties of each of the Constituent Corporations shall
thenceforth attach to the Surviving Corporation, and may be enforced against
it to the same extent as if said debts, liabilities and duties had been
incurred or contracted by it.
SECTION 2.04 Corporate Organization.
(a) Immediately subsequent to the Effective Time, the Surviving
Corporation shall (i) continue its separate corporate existence under the
laws of the State of Delaware with all its purposes, objects, rights,
privileges, powers, certificates and franchises unimpaired by the Merger
under the laws of the State of Delaware, and (ii) succeed to all rights,
assets, liabilities and obligations of each of the Companies and Merger Sub
in accordance with the Corporate Law.
(b) The Certificate of Incorporation and By-laws of Merger Sub at the
Effective Time shall be the Certificate of Incorporation and By-laws,
respectively, of the Surviving Corporation after the Effective Time.
(c) All corporate acts, plans, policies, approvals and authorizations
of the Constituent Corporations and their respective Boards of Directors,
committees appointed by such Boards of Directors and their officers and
agents, which were valid and effective immediately prior to the Effective
Time, shall be taken for all purposes as the acts, plans, policies,
approvals and authorizations of the Surviving Corporation and shall be as
effective and binding thereon to the same extent as the same were with
respect to the Companies.
(d) Until otherwise determined by NBTY the employees of the Companies
shall become the employees of the Surviving Corporation or, at the
discretion of NBTY, of NBTY or its other subsidiaries.
SECTION 2.05 Conversion of Shares. At the Effective Time:
(a) All of the Nutrition Shares, Lee Shares and Nutro Shares,
immediately prior to the Effective Time shall, by reason of the Merger and
without any action by the holders thereof, be converted into the right to
receive that number of NBTY Stock equal to the Aggregate Exchanged Stock
multiplied by the percentage of the Aggregate Exchanged Stock specified
below (collectively the "Merger Consideration").
Percentage of the
Aggregate Exchanged Stock
-------------------------
The Nutro Shares 20.00%
The Lee Shares 20.00%
The Nutrition Shares 60.00%
(b) All Shares held in the treasury of any Company immediately prior
to the Effective Time shall, by virtue of the Merger, cease to be
outstanding and shall be canceled and retired without payment of any
consideration therefor.
(c) At the Effective Time, the stock transfer books of each of the
Companies shall be closed, and no transfer of any Shares shall thereafter be
made.
SECTION 2.06 Surrender and Payment. Promptly after the Effective
Time, Merger Sub shall deliver, or cause to be delivered, to each holder of
record of a certificate or certificates which immediately prior to the
Effective Time represented Shares (the "Certificates") who surrenders the
Certificates in exchange for the Merger Consideration the Certificate or
Certificates representing the Merger Consideration for each Share formerly
represented by such Certificate, and the Certificate so surrendered shall
forthwith be canceled. Until surrendered as contemplated by this Section
2.06, from and after the Effective Time each Certificate shall be deemed to
represent only the right to receive the Merger Consideration for each Share
formerly represented by such Certificate, and shall not evidence any
interest in, or any right to exercise the rights of a shareholder of, the
Surviving Corporation. If a payment of any Merger Consideration is to be
made to a person other than the one in whose name the Certificate
surrendered in exchange therefor is registered, it shall be a condition to
such issuance or payment that such Certificate be properly endorsed (or
accompanied by an appropriate instrument of transfer) and accompanied by
evidence that any applicable stock transfer taxes have been paid or provided
for.
SECTION 2.07 Other Closing Documents.
(a) At the Closing, each of the Shareholders shall deliver or cause
to be delivered to Merger Sub: (i) the stock certificates evidencing each of
the Nutrition Shares, the Lee Shares and the Nutro Shares owned by such
Shareholder, each duly endorsed in blank or accompanied by stock powers duly
executed in blank, in proper form for transfer together with any applicable
state stock transfer tax stamps duly attached; (ii) the certificate referred
to in Section 8.02(a); (iii) the legal opinion referred to in Section
8.02(e); and (iv) a receipt for the Aggregate Exchanged Stock received by
such Shareholder.
(b) At the Closing, NBTY and Merger Sub shall deliver, or cause to be
delivered, to Slade on behalf of, and for the benefit of, each Shareholder
(i) the stock certificates representing the correct number of Aggregate
Exchanged Stock each Shareholder is entitled to receive pursuant to the
terms and conditions of this Agreement, in each case, registered in the name
or names previously specified by Slade; (ii) the certificate referred to in
Section 8.01(a); (iii) the legal opinion referred to in Section 8.01(e); and
(iv) a receipt for the Nutrition Shares, the Lee Shares and the Nutro
Shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Subject to the limitations of Section 3.20, Slade, with respect to
himself and each Company, and each other Shareholder, solely with respect to
such Shareholder's authority to enter into and perform under this Agreement,
represents and warrants to NBTY as follows:
SECTION 3.01 Authority of the Companies and the Shareholders. Each
Company and such Shareholder has all necessary capacity or power and
authority (as the case may be) to enter into this Agreement and to carry out
his or its obligations hereunder and to consummate the transactions
contemplated hereby and thereby. Such Shareholder has all necessary
capacity or power and authority to enter into the Registration Rights
Agreement, to carry out his or its obligations thereunder and to consummate
the transactions contemplated thereby. The execution and delivery of this
Agreement by the Companies and the execution and delivery of this Agreement
and the Registration Rights Agreement by such Shareholder, the performance
by the Companies and such Shareholder of his or its obligations hereunder
and thereunder and the consummation by the Companies and such Shareholder of
the transactions contemplated hereby and thereby have been, or prior to
Closing will be, duly authorized by all requisite action on the part of the
Companies and such Shareholder. Each of this Agreement and the Registration
Rights Agreement has been duly executed and delivered by the Companies and
such Shareholder (as the case may be), and, assuming due authorization,
execution and delivery by NBTY and Merger Sub, each of this Agreement and
the Registration Rights Agreement constitutes a legal, valid and binding
obligation of the Companies and such Shareholder enforceable against such
party in accordance with its terms.
SECTION 3.02 Incorporation and Qualification of the Companies. Each
of the Companies is a corporation duly incorporated and validly existing
under the laws of the state of its incorporation and has the corporate power
and authority to own, operate or lease the properties and assets now owned,
operated or leased by such Company and to carry on the Business as it is now
being conducted by such Company. Each such Company is duly qualified as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned, operated or leased
or the nature of its activities makes such qualification necessary, except
where the failure to so qualify would not have a Material Adverse Effect.
SECTION 3.03 Capital Stock of the Companies; Ownership of the Shares.
The Nutrition Shares, the Lee Shares and the Nutro Shares constitute all the
authorized, issued and outstanding shares of capital stock of Nutrition, Lee
and Nutro, respectively. The Shares have been duly authorized and validly
issued, are fully paid and nonassessable and were not issued in violation of
any pre-emptive rights. There are no options, calls, warrants or rights of
conversion or other rights, agreements, arrangements or commitments relating
to the capital stock of any such Company obligating any of such Company or
such Shareholder to issue or sell any shares of the capital stock of any
such Company. Such Shareholder owns the Shares to be tendered in the Merger
by such Shareholder hereunder free and clear of all pledges, security
interests and all other material liens, encumbrances and adverse claims.
SECTION 3.04 Subsidiaries. Other than Life's Finest Inc., a Delaware
corporation which is a wholly owned subsidiary of Nutrition, and Brunswick
Laboratories, Inc., an inactive Illinois corporation organized by Nutrition,
there is no other company or business entity which is a subsidiary.
SECTION 3.05 No Conflict. Assuming all consents, approvals,
exemptions, authorizations and other actions described in Section 3.06 have
been obtained and all filings and notifications listed in Schedule 3.06 have
been made, the execution, delivery and performance of this Agreement by the
Companies and by such Shareholder do not and will not (a) violate or
conflict with the Certificate of Incorporation or By-laws of any of the
Companies, (b) except as would not, individually or in the aggregate, have a
Material Adverse Effect or as otherwise disclosed in Schedule 3.05, conflict
with or violate any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award applicable to such Shareholder,
any of the Companies or the Business, or (c) except as would not have a
Material Adverse Effect or as otherwise disclosed in Schedule 3.05, result
in any breach of, or constitute a default (or event which with the giving of
notice or lapse of time, or both, would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation
of, or result in the creation of any lien or other encumbrance on any of the
Shares or any of the assets or properties of any of such Companies pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument relating to such assets or
properties to which such Shareholder or any of such Companies is a party or
by which such Shares or any of such assets or properties is bound or
affected.
SECTION 3.06 Consents and Approvals. The execution and delivery of
each of this Agreement by the Companies and the execution and delivery of
each of this Agreement and the Registration Rights Agreement by such
Shareholder does not, and the performance of this Agreement by the Companies
and the performance of each of this Agreement and the Registration Rights
Agreement by such Shareholder will not, require any consent, approval,
exemption, authorization or other action by, or filing with or notification
to, any court, administrative agency or other governmental or regulatory
authority, except (a) as described in Schedule 3.06, (b) the notification
requirements of the HSR Act, (c) the requirements of ISRA, (d) where failure
to obtain such consent, approval, exemption, authorization or action, make
such filing or give such notice would not have a Material Adverse Effect and
(e) as may be necessary as a result of any facts or circumstances relating
solely to NBTY, Merger Sub or their respective subsidiaries.
SECTION 3.07 Financial Information. Slade has provided to NBTY true
and complete copies of the audited balance sheets and income statements for
each Company as of, and for the years ended, September 30, 1995, 1996 and
1997 and the unaudited balance sheet and income statement for each Company
as of, for the three-month period ended December 31, 1997 (collectively, the
"Financial Statements"). The Financial Statements present fairly the
financial condition and results of operations of each of the Companies as of
the dates thereof or for the periods covered thereby and have been prepared
in accordance with the Company Accounting Policies applied on a basis
consistent with past practice, except as described in the notes thereto and
except that the unaudited balance sheet and income statement as of, and for
the three-month period ended, December 31, 1997, are condensed, do not
contain the footnotes required by United States generally accepted
accounting principles and are subject to normal year-end and other non-
material adjustments.
SECTION 3.08 Absence of Undisclosed Liabilities. As of the Closing
Date, there shall be, to Slade's Knowledge, no liability of any such Company
which would be required to be reflected on a balance sheet prepared in
accordance with Company Accounting Policies, except liabilities (i)
disclosed in the Shareholder Disclosure Schedule or otherwise addressed by
any of the representations, warranties or covenants made by the Companies or
the Shareholders in this Agreement, (ii) as, and to the extent, reflected or
reserved against in the Financial Statements, (iii) under this Agreement,
(iv) covered by insurance, indemnification, contribution or comparable
arrangements benefitting the applicable Company, (v) with respect to the
matters addressed in Section 3.18 and Article VII (which shall be governed
solely by the terms of such Section 3.18 and Article VII, respectively),
(vi) incurred in the ordinary course of business after the date hereof and
prior to the Closing, or (vii) which, individually and in the aggregate, are
not reasonably expected to have a Material Adverse Effect.
SECTION 3.09 Litigation. Except as set forth in Schedule 3.09 and
except for claims substantially covered by insurance, indemnification,
contribution or comparable arrangements benefitting the applicable Company,
there are no claims, actions, proceedings or investigations pending against
any Company or any of its assets or properties, before any federal, state or
municipal court, or administrative, governmental or regulatory authority or
body that, individually or in the aggregate, are reasonably expected to have
a Material Adverse Effect. Except as set forth in Schedule 3.09, no Company
nor any of its assets or properties is subject to any order, writ, judgment,
injunction, decree, determination or award having a Material Adverse Effect.
SECTION 3.10 Compliance with Laws; Licenses and Permits. On the
Closing Date, no Company will be in material violation of any law, rule,
regulation, order, judgment or decree applicable to it or by which any of
its properties is bound or affected, except for violations the existence of
which would not be reasonably expected to have a Material Adverse Effect.
To the Knowledge of Slade, each Company has, has applied for, or is in the
process of applying for, all governmental licenses, franchises, permits,
approvals, authorizations, exemptions, certificates, registrations and
similar documents or instruments (including, without limitation, all food
and drug licenses, permits and authorizations) necessary to carry on the
Business as it is now being conducted by such Company, except for such
governmental licenses, permits and authorizations the absence of which would
not be reasonably expected to have a Material Adverse Effect. To the
Knowledge of Slade, there is no existing practice, action or plan of any
Company and no existing condition of the assets of any Company which would
reasonably be expected to give rise to any civil or criminal liability
under, or prevent compliance with, any food and drug, health or occupational
safety statute, regulation, ordinance or decree other than those the
existence of which are not reasonably expected to have a Material Adverse
Effect.
SECTION 3.11 Environmental Compliance. Each Company currently holds,
has applied for, or is in the process of applying for, all the permits,
licenses and approvals of governmental authorities and agencies required
under Environmental Laws for the current use, occupancy or operation of its
assets and that portion of the Business conducted by it, except for such
permits, licenses and approvals the absence of which would not be reasonably
expected to have a Material Adverse Effect. To the Knowledge of Slade, no
Company is in violation of any Environmental Laws or any such licenses,
permits and approvals, except for such violations which would not be
reasonably expected to have a Material Adverse Effect.
SECTION 3.12 Intellectual Property Rights. Each Company owns or
otherwise has a right to use all patented inventions, trade secrets,
trademarks, trade names, service marks and copyrights (collectively
"Intellectual Property Rights") as are necessary to conduct the Business as
it is now being conducted by it, except for those Intellectual Property
Rights the lack of which would not reasonably be expected to have a Material
Adverse Effect. The patents, trademarks, service marks and copyrights
described in Schedule 3.12 are owned by the Company as indicated thereon
and, except as described in Schedule 3.12, no rights have been granted to
third parties with respect thereto. To the Knowledge of Slade, no claims
are pending that relate to the use by any such Company of any Intellectual
Property Rights and with respect to which there is a reasonable likelihood
of an adverse determination that would have a Material Adverse Effect.
SECTION 3.13 Real Property. Each parcel of real property, including,
without limitation, those properties set forth on Schedule 3.13(a) (which
lists owned properties) and Schedule 3.13(b) (which lists leased
properties), owned or leased by any Company is owned or leased, free and
clear of all liens, security interests, claims and other charges and
encumbrances, except: (a) as disclosed in the Latest Audited Balance Sheet;
(b) as disclosed in Schedule 3.13(a) or in Schedule 3.13(b); (c) all liens
for Taxes, assessments, both general and special, and other governmental
charges which are not due and payable as of the Closing Date; (d) all
building codes, zoning ordinances, planning restrictions and other laws,
ordinances, regulations, rules, orders or determinations of any federal,
state, county, municipal or other governmental authority heretofore, now or
hereafter enacted, made or issued by any such authority affecting the
property, none of which materially restrict the current use of such
property; (e) all easements, rights-of-way, covenants, conditions,
restrictions, reservations, licenses, agreements, and other similar matters
granted in the usual course of business; (f) all encroachments, overlaps,
boundary line disputes, shortages in area, drainage and other easements,
cemeteries and burial grounds and other similar matters not of record which
would be disclosed by an accurate survey or inspection of the property;
(g) all electric power, telephone, gas, sanitary sewer, storm sewer, water
and other utility lines, pipelines', service lines and facilities of any
nature now located on, over or under the property, and all licenses,
easements, rights-of-way and other similar agreements relating thereto
granted in the ordinary course of business; (h) all existing public and
private roads and streets (whether dedicated or undedicated), and all
railroad lines and rights-of-way affecting the property; (i) inchoate
mechanic's and materialmen's liens for construction in progress and
workmen's, repairmen's, warehousemen's and carrier's liens arising in the
ordinary course of business and (j) imperfections of title, liens, security
interests, claims and other charges and encumbrances the existence of which,
individually and in the aggregate, would not be reasonably expected to have
a Material Adverse Effect.
SECTION 3.14 Tangible Personal Property. Except as otherwise
disclosed on Schedule 3.14, each material item of equipment, machinery or
other tangible personal property reflected on the Latest Audited Balance
Sheet is either: (a) owned by the applicable Company, free and clear of all
liens, security interests, claims and other charges and encumbrances,
except: (i) liens, security interests, claims and other charges and
encumbrances incurred in the ordinary operation of the Business; (ii) liens
for Taxes and assessments not yet payable; (iii) liens for Taxes,
assessments and charges and other claims, the validity of which is being
contested in good faith; (iv) liens, security interests and encumbrances
securing debt which is reflected as a liability on the Latest Audited
Balance Sheet or relating to liabilities or obligations which are to be
assumed or satisfied by NBTY or Merger Sub pursuant to this Agreement
(including, without limitation pursuant to Section 5.11 hereof); and (v)
liens, security interests, imperfections of title, claims and other charges
and encumbrances the existence of which, individually and in the aggregate,
would not be reasonably expected to have a Material Adverse Effect; or (b)
leased pursuant to one or more valid and enforceable lease agreements that
have not been breached by a Company. Such tangible personal property is in
normal operating condition, except for ordinary wear and tear.
SECTION 3.15 Material Contracts. Schedule 3.15 lists each executory
contract (collectively, the "Material Contracts") to which a Company is a
party that requires, in accordance with its terms, future payments in excess
of $500,000 and that is not cancellable upon not more than 60 days' notice.
No Company is in default in the payment of any principal or interest on any
indebtedness for borrowed money, except for defaults which, individually and
in the aggregate, would not be reasonably expected to have a Material
Adverse Effect.
SECTION 3.16 Employee Benefit Matters; Retirement Plans. (a)
Schedule 3.16 contains a true and complete list of all employee benefit
plans (within the meaning of Section 3(3) of ERISA) and all bonus, stock
option, stock purchase, restricted stock, incentive, deferred compensation,
retiree medical or life insurance, supplemental retirement, severance or
other benefit plans, programs or arrangements, and all employment,
termination, severance or other contracts or agreements with respect to
which any Company has any obligation or which are maintained, contributed to
or sponsored by it or any of its affiliates for the benefit of any of its
current employees, officers or directors or any of its former employees who
was previously employed in the Business, other than plans, programs,
arrangements, contracts or agreements for which no benefits are payable
after the Closing (the "Plans"). Except as disclosed in Schedule 3.16, each
Plan is in writing and the Shareholders have previously made available to
NBTY and Merger Sub a true and complete copy of each Plan and a true and
complete copy of each of the following documents, to the extent applicable,
prepared in connection with each such Plan: (i) a copy of each trust or
other funding arrangement, (ii) the most recently filed Internal Revenue
Service ("IRS") Form 5500, (iii) the most recently received IRS
determination letter, and (iv) the most recently prepared actuarial report
and financial statement. Except as otherwise disclosed in Schedule 3.16,
neither any Shareholder nor any Company has any express or implied
commitment to modify, change or terminate any Plan, other than with respect
to a modification, change or termination required by ERISA or the Internal
Revenue Code.
(b) Except as otherwise disclosed in Schedule 3.16, none of the Plans
(i) is a multiemployer plan, within the meaning of Section 3(37) or
4001(a)(3) of ERISA (a "Multiemployer Plan") or a single employer pension
plan, within the meaning of Section 4001(a)(15) of ERISA, for which a
Company could incur liability under Section 4063 or 4064 of ERISA (a
"Multiple Employer Plan"), or (ii) provides or promises to provide retiree
medical or life insurance benefits.
(c) With respect to each Plan, neither any Shareholder nor any
Company is currently liable for any material tax arising under Section 4971,
4972, 4975, 4979, 4980 or 4980B of the Internal Revenue Code, and no fact or
event exists which could reasonably give rise to any such liability.
Neither any Shareholder nor any Company has incurred any material liability
under, arising out of or by operation of Title IV of ERISA (other than
liability for premiums to the Pension Benefit Guaranty Corporation arising
in the ordinary course), including, without limitation, any liability in
connection with (i) the termination or reorganization of any employee
pension benefit plan subject to Title IV of ERISA or (ii) the withdrawal
from any Multiemployer Plan or Multiple Employer Plan. None of the assets
of any Company is the subject of any lien arising under Section 302(f) of
ERISA or Section 412(n) of the Internal Revenue Code and neither any
Shareholder nor any Company has been required to post any security under
Section 307 of ERISA or Section 401(a)(29) of the Internal Revenue Code with
respect to any Plan, and no fact or event exists which could reasonably give
rise to any such lien or requirement to post any such security.
(d) Except as otherwise disclosed by Schedule 3.16, each Plan has
been operated in all material respects in accordance with the requirements
of applicable laws, including, without limitation, ERISA and the Internal
Revenue Code. Except as otherwise disclosed by Schedule 3.16, no Plan has
incurred an "accumulated funding deficiency" (within the meaning of Section
302 of ERISA or Section 412 of the Internal Revenue Code), whether or not
waived. Except as otherwise disclosed by Schedule 3.16, all prior
contributions, premiums or payments made with respect to any Plan have been
deducted for income tax purposes and no such deduction previously claimed
has been challenged by any government entity. The Latest Audited Balance
Sheet reflects accruals of all material amounts of employer contributions
and premiums accrued but unpaid with respect to the Plans as of the date of
the Latest Audited Balance Sheet.
SECTION 3.17 Labor Matters. No Company is a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by it and, to the Knowledge of Slade, there are currently no
strikes, slowdowns, work stoppages or lockouts, by or with respect to any
employees of any Company, or any pending labor controversies which would
reasonably be expected to have a Material Adverse Effect.
SECTION 3.18 Taxes. (a) Each Company has timely filed or been
included in, or will timely file or be included in, all returns required to
be filed by it or in which it is to be included with respect to Taxes for
any period ending on or before the Closing Date, taking into account any
extension of time to file granted to or obtained on behalf of such Company,
(b) all Taxes shown to be payable on such returns have been paid or will be
paid and (c) no deficiency for any material amount of Tax has been asserted
or assessed by a taxing authority against such Company.
SECTION 3.19 Insurance. All material properties and material
insurable risks of each Company is covered by valid and currently effective
insurance policies or binders of insurance or programs of self-insurance in
such types and amounts as are consistent with the reasonable business
judgment of the operating management of such Company. Schedule 3.19
contains a complete list of all material liability, property, accident,
casualty, fire, flood, workers' compensation, key man, group life or health
and other insurance policies and arrangements affecting or relating to each
Company, their respective assets or the Business which are in full force and
effect on the date hereof.
SECTION 3.20 Disclaimer of Warranties. Each of NBTY and Merger Sub
acknowledge and agree that Slade is the only Shareholder who is active in
the Business on a daily basis and who is familiar with details of the
Business and that the Shareholders other than Slade make no representations
and warranties except (i) as set forth in Sections 3.01 and 3.03 and (ii)
that no such Shareholder has any actual knowledge (without any independent
investigation) that any representation or warranty of a Shareholder herein
is not true and complete.
SECTION 3.21 Customer Mailing Lists. The customer mailing lists of
the Companies, as of February 28, 1998, consists of approximately 1,741,175
customer names which are maintained on the Companies HP 3000 computer
storage drive, disk or device located at the 1 Nutrition Plaza, Carbondale,
Illinois facility. Set forth on Schedule 3.21 is an analysis of such
customer names indicating the aging of orders or activities of such names in
an operational report regularly generated by the Companies. To Slade's
Knowledge no Company has sold, leased or rented such customer mailing lists
and there have been no authorized copies of such customer mailing lists
other than specifically for use in the furtherance of the Business.
SECTION 3.22 Brokers. Except for Furman Selz LLC (the "Advisor"), no
broker, finder or investment banker is entitled to any brokerage, finder's
or other fee or commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of the
Companies or such Shareholder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NBTY AND MERGER SUB
NBTY and Merger Sub, jointly and severally, represent and warrant to
the Shareholders and each of the Companies as follows:
SECTION 4.01 Authority of NBTY and Merger Sub. Each of NBTY and
Merger Sub has all necessary power and authority to enter into this
Agreement, to carry out its obligations hereunder and to consummate the
transactions contemplated hereby. NBTY has all the necessary power and
authority to enter into the Registration Rights Agreement, to carry out its
obligations thereunder and to consummate the transactions contemplated
thereby. The execution and delivery of this Agreement by Merger Sub and the
execution and delivery of this Agreement and the Registration Rights
Agreement by NBTY, the performance by Merger Sub and NBTY of their
respective obligations hereunder and thereunder and the consummation by
Merger Sub and NBTY of the transactions contemplated hereby and thereby have
been, or prior to the Closing will be, duly authorized by all requisite
action on the part of Merger Sub and NBTY. The execution and delivery of
this Agreement by NBTY and Merger Sub, the performance by NBTY and Merger
Sub of their obligations hereunder and the consummation by NBTY and Merger
Sub of the transactions contemplated hereby have been, or prior to Closing
will be, duly authorized by all requisite action on the part of NBTY and
Merger Sub. Each of this Agreement and the Registration Rights Agreement
has been duly executed and delivered by NBTY and Merger Sub (as the case may
be), and, assuming due authorization, execution and delivery by each of the
Companies and the Shareholders (as the case may be), each of this Agreement
and the Registration Rights Agreement constitutes a legal, valid and binding
obligation of NBTY and Merger Sub enforceable against NBTY and Merger Sub in
accordance with its terms.
SECTION 4.02 Incorporation and Qualification of NBTY and Merger Sub.
Each of NBTY and Merger Sub is a corporation duly incorporated and validly
existing under the laws of the State of Delaware and has the corporate power
and authority to own, operate or lease the properties and assets now owned,
operated or leased by such corporations and to carry on the business of such
corporations as it is now being conducted by such corporations. Each of
NBTY and Merger Sub is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character
of its respective properties owned, operated or leased or the nature of its
respective activities makes such qualification necessary, except where the
failure to so qualify would not have a Material Adverse NBTY Effect.
SECTION 4.03 Capital Stock of NBTY and Merger Sub; Aggregate
Exchanged Stock. The authorized, issued and outstanding shares of capital
stock of NBTY is as described in the most recently filed SEC Report (as
hereinafter defined). The authorized, issued and outstanding shares of the
capital stock of Merger Sub consists solely of 1,000 shares of common stock,
par value $0.01 per share. All of the issued and outstanding shares of
common stock of Merger Sub are owned beneficially and of record by NBTY. At
the Effective Time, each share of NBTY Stock comprising the Aggregate
Exchanged Stock delivered to the Shareholders in consideration of the Shares
shall be owned beneficially and of record by the Shareholders and shall have
been duly authorized and validly issued, fully paid and nonassessable, not
issued in violation of any pre-emptive rights and shall be free and clear of
all pledges, security interests and all other liens, encumbrances and
adverse claims of any character or description.
SECTION 4.04 Subsidiaries. All financial transactions involving NBTY
and its subsidiaries are reflected in NBTY's consolidated financial
statements.
SECTION 4.05 No Conflict. Assuming all consents, approvals,
exemptions, authorizations and other actions described in Section 4.06 have
been obtained and all filings and notifications described in Section 4.06
have been made, the execution, delivery and performance of this Agreement
and the Registration Rights Agreement by NBTY and the execution, delivery
and performance of this Agreement by Merger Sub does not and will not
(a) violate or conflict with the Certificate of Incorporation or By-laws of
NBTY or Merger Sub, (b) except as would not, individually or in the
aggregate, have a Material Adverse NBTY Effect or as otherwise disclosed on
Schedule 4.05, conflict with or violate any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award applicable to
NBTY, Merger Sub or their respective subsidiaries or the business of NBTY,
Merger Sub or their respective subsidiaries, or (c) except as would not have
a Material Adverse NBTY Effect, result in any breach of, or constitute a
default (or event which with the giving of notice or lapse of time, or both,
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of any
lien or other encumbrance on any of the Aggregate Exchanged Stock or any of
the assets or properties of NBTY, Merger Sub or their respective
subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument relating to
such assets or properties to which NBTY, Merger Sub or their respective
subsidiaries is a party or by which any of their respective shares of
capital stock or any of their respective assets or properties is bound or
affected.
SECTION 4.06 Consents and Approvals. The execution and delivery of
each of this Agreement by NBTY and Merger Sub and the execution and delivery
of this Agreement and the Registration Rights Agreement by NBTY does not,
and the performance of this Agreement by Merger Sub and NBTY and the
performance of each of this Agreement and the Registration Rights Agreement
by NBTY will not, require any consent, approval, exemption, authorization or
other action by, or filing with or notification to, any court,
administrative agency or other governmental or regulatory authority, except
(a) as described in Schedule 4.06, (b) the notification requirements of the
HSR Act, (c) the requirements of ISRA, (d) where failure to obtain such
consent, approval, exemption, authorization or action, make such filing or
give such notice would not have a Material Adverse NBTY Effect and (e) as
may be necessary as a result of any facts or circumstances relating solely
to the Companies and the Shareholders.
SECTION 4.07 Financial Information. NBTY and Merger Sub have
provided to Slade a true and complete copy of each SEC Report, including,
without limitation, reports on Form 10-K, Form 10-Q, Form 8-K and
preliminary and definitive proxies and amendments thereto. Neither NBTY nor
Merger Sub intends to amend, supplement or modify any SEC Reports filed
pursuant to the requirements of the 1934 Act.
SECTION 4.08 Absence of Undisclosed Liabilities. As of the Closing
Date, there shall be, to NBTY's and Merger Sub's knowledge, no liability of
NBTY, Merger Sub or their respective subsidiaries which would be required to
be reflected on a balance sheet prepared in accordance with generally
accepted accounting principles, consistently applied, except liabilities (i)
disclosed in the SEC Reports or otherwise addressed by any of the
representations, warranties or covenants made by NBTY or Merger Sub in this
Agreement, (ii) as, and to the extent, reflected or reserved against in the
financial statements included in the latest SEC Report, (iii) under this
Agreement, (iv) covered by insurance, indemnification, contribution or
comparable arrangements benefitting NBTY, Merger Sub or their respective
subsidiaries, (v) with respect to the matters addressed in Section 4.18,
(vi) incurred in the ordinary course of business after the date hereof and
prior to the Closing, or (vii) which, individually and in the aggregate, are
not reasonably expected to have a Material Adverse NBTY Effect.
SECTION 4.09 Litigation. Except as set forth in Schedule 4.09 and
except for claims substantially covered by insurance, indemnification,
contribution or comparable arrangements benefitting NBTY, Merger Sub or
their respective subsidiaries, there are no claims, actions, proceedings or
investigations pending against NBTY, Merger Sub or their respective
subsidiaries or any of their respective assets or properties, before any
federal, state or municipal court, or administrative, governmental or
regulatory authority or body that, individually or in the aggregate, are
reasonably expected to have a Material Adverse NBTY Effect. Except as
described in Schedule 4.09, neither NBTY, Merger Sub or their respective
subsidiaries nor any of their respective assets or properties is subject to
any order, writ, judgment, injunction, decree, determination or award having
a Material Adverse NBTY Effect.
SECTION 4.10 Compliance with Laws; Licenses and Permits. On the
Closing Date, neither NBTY or Merger Sub nor any of their respective
subsidiaries shall be in material violation of any law, rule, regulation,
order, judgment or decree applicable to it or by which any of its properties
is bound or affected, except for violations the existence of which would not
be reasonably expected to have a Material Adverse NBTY Effect. To the
Knowledge of NBTY and Merger Sub, NBTY, Merger Sub and each of their
respective subsidiaries has or has applied for all governmental licenses,
franchises, permits, approvals, authorizations, exemptions, certificates,
registrations and similar documents or instruments (including, without
limitation, all food and drug licenses, permits and authorizations)
necessary to carry on their respective businesses as now being conducted by
such company, except for such governmental licenses, permits and
authorizations the absence of which would not be reasonably expected to have
a Material Adverse NBTY Effect. To the Knowledge of NBTY and Merger Sub,
there is no existing practice, action or plan of NBTY, Merger Sub or any of
their respective subsidiaries and no existing condition of the assets of any
such entity which would reasonably be expected to give rise to any civil or
criminal liability under, or prevent compliance with, any food and drug,
health or occupational safety statute, regulation, ordinance or decree other
than those the existence of which are not reasonably expected to have a
Material Adverse NBTY Effect.
SECTION 4.11 Environmental Compliance. NBTY, Merger Sub and each of
their respective subsidiaries currently holds or has applied for all the
permits, licenses and approvals of governmental authorities and agencies
required under Environmental Laws for the current use, occupancy or
operation of their respective assets and the conduct of their respective
business, except for such permits, licenses and approvals the absence of
which would not be reasonably expected to have a Material Adverse NBTY
Effect. To the Knowledge of NBTY and Merger Sub, neither NBTY, Merger Sub
nor any of their respective subsidiaries is in violation of any
Environmental Laws or any such licenses, permits and approvals, except for
such violations which would not be reasonably expected to have a Material
Adverse NBTY Effect.
SECTION 4.12 Intellectual Property Rights. NBTY, Merger Sub and
each of their respective subsidiaries owns or otherwise has a right to use
all Intellectual Property Rights as are necessary to conduct their respective
businesses as now being conducted, except for those Intellectual Property
Rights the lack of which would not reasonably be expected to have a Material
Adverse NBTY Effect. The patents, trademarks, service marks and copyrights
described in Schedule 4.12 are owned by NBTY, Merger Sub or their respective
subsidiaries as indicated therein and, except as described therein, no
rights have been granted to third parties with respect thereto. To the
Knowledge of NBTY and Merger Sub, no claims are pending that relate to the
use by NBTY, Merger Sub or any of their respective subsidiaries of any
Intellectual Property Rights and with respect to which there is a reasonable
likelihood of an adverse determination that would have a Material Adverse
NBTY Effect.
SECTION 4.13 Real Property. Each parcel of real property, including,
without limitation, those properties set forth on Schedule 4.13(a) (which
lists owned properties) and Schedule 4.13(b) (which lists leased
properties), owned or leased by NBTY, Merger Sub or any of their respective
subsidiaries is owned or leased, free and clear of all liens, security
interests, claims and other charges and encumbrances, except: (a) as
disclosed in the financial statements included in the latest SEC Reports;
(b) as disclosed in Schedule 4.13(a) or in Schedule 4.13(b); (c) all liens
for Taxes, assessments, both general and special, and other governmental
charges which are not due and payable as of the Closing Date; (d) all
building codes, zoning ordinances, planning restrictions and other laws,
ordinances, regulations, rules, orders or determinations of any federal,
state, county, municipal or other governmental authority heretofore, now or
hereafter enacted, made or issued by any such authority affecting the
property, none of which materially restrict the current use of such
property; (e) all easements, rights-of-way, covenants, conditions,
restrictions, reservations, licenses, agreements, and other similar matters
granted in the usual course of business; (f) all encroachments, overlaps,
boundary line disputes, shortages in area, drainage and other easements,
cemeteries and burial grounds and other similar matters not of record which
would be disclosed by an accurate survey or inspection of the property; (g)
all electric power, telephone, gas, sanitary sewer, storm sewer, water and
other utility lines, pipelines', service lines and facilities of any nature
now located on, over or under the property, and all licenses, easements,
rights-of-way and other similar agreements relating thereto granted in the
ordinary course of business; (h) all existing public and private roads and
streets (whether dedicated or undedicated), and all railroad lines and
rights-of-way affecting the property; (i) inchoate mechanic's and
materialmen's liens for construction in progress and workmen's, repairmen's,
warehousemen's and carrier's liens arising in the ordinary course of
business and (j) imperfections of title, liens, security interests, claims
and other charges and encumbrances the existence of which, individually and
in the aggregate, would not be reasonably expected to have a Material
Adverse NBTY Effect.
SECTION 4.14 Tangible Personal Property. Except as otherwise disclosed
on Schedule 4.14, each material item of equipment, machinery or other tangible
personal property described in the SEC Reports is either: (a) owned by NBTY,
Merger Sub or their respective subsidiaries, free and clear of all liens,
security interests, claims and other charges and encumbrances, except: (i)
liens, security interests, claims and other charges and encumbrances
incurred in the ordinary operation of the business of NBTY; (ii) liens for
Taxes and assessments not yet payable; (iii) liens for Taxes, assessments
and charges and other claims, the validity of which is being contested in
good faith; (iv) liens, security interests and encumbrances securing debt
which is reflected as a liability on the financial statements included in
the latest SEC Report; and (v) liens, security interests, imperfections of
title, claims and other charges and encumbrances the existence of which,
individually and in the aggregate, would not be reasonably expected to have
a Material Adverse NBTY Effect; or (b) leased pursuant to one or more valid
and enforceable lease agreements that have not been breached by NBTY, Merger
Sub or their respective subsidiaries. Such tangible personal property is in
normal operating condition, except for ordinary wear and tear.
SECTION 4.15 Material Contracts. Schedule 4.15 lists each executory
contract to which NBTY, Merger Sub or their respective subsidiaries is a
party that is required to be filed as an exhibit to an SEC Report. Neither
NBTY, Merger Sub nor any of their respective subsidiaries is in default in
the payment of any principal or interest on any indebtedness for borrowed
money, except for defaults which, individually and in the aggregate, would
not be reasonably expected to have a Material Adverse NBTY Effect.
SECTION 4.16 Employee Benefit; Retirement Plans. (a) Schedule 4.16
contains a true and complete list of all employee benefit plans (within the
meaning of Section 3(3) of ERISA) and all bonus, stock option, stock
purchase, restricted stock, incentive, deferred compensation, retiree
medical or life insurance, supplemental retirement, severance or other
benefit plans, programs or arrangements, and all employment, termination,
severance or other contracts or agreements with respect to which NBTY,
Merger Sub or their respective subsidiaries has any obligation or which are
maintained, contributed to or sponsored by any such entity or any of their
respective affiliates for the benefit of any of their respective current
employees, officers or directors or any of their respective former employees
who were previously employed in their respective businesses, other than
plans, programs, arrangements, contracts or agreements for which no benefits
are payable after the Closing (the "NBTY Plans"). Except as disclosed in
Schedule 4.16, each NBTY Plan is in writing and NBTY and Merger Sub have
previously made available to the Shareholders a true and complete copy of
each NBTY Plan and a true and complete copy of each of the following
documents, to the extent applicable, prepared in connection with each such
NBTY Plan: (i) a copy of each trust or other funding arrangement, (ii) the
most recently filed IRS Form 5500, (iii) the most recently received IRS
determination letter, and (iv) the most recently prepared actuarial report
and financial statement. Except as otherwise disclosed in Schedule 4.16,
neither NBTY, Merger Sub, nor any of their respective subsidiaries or
affiliates has any express or implied commitment to modify, change or
terminate any NBTY Plan, other than with respect to a modification, change
or termination required by ERISA or the Internal Revenue Code.
(b) Except as otherwise disclosed in Schedule 4.16, none of NBTY
Plans (i) is a multiemployer plan, within the meaning of Section 3(37) or
4001(a)(3) of ERISA (a "NBTY Multiemployer Plan") or a single employer
pension plan, within the meaning of Section 4001(a)(15) of ERISA, for which
any of NBTY, Merger Sub or any of their respective subsidiaries or
affiliates could incur liability under Section 4063 or 4064 of ERISA (a
"NBTY Multiple Employer Plan"), or (ii) provides or promises to provide
retiree medical or life insurance benefits.
(c) With respect to each NBTY Plan, neither NBTY, Merger Sub nor any
of their respective subsidiaries is currently liable for any material tax
arising under Section 4971, 4972, 4975, 4979, 4980 or 4980B of the Internal
Revenue Code, and no fact or event exists which could reasonably give rise
to any such liability. Neither NBTY, Merger Sub nor any of their respective
subsidiaries has incurred any material liability under, arising out of or by
operation of Title IV of ERISA (other than liability for premiums to the
Pension Benefit Guaranty Corporation arising in the ordinary course),
including, without limitation, any liability in connection with (i) the
termination or reorganization of any employee pension benefit plan subject
to Title IV of ERISA or (ii) the withdrawal from any NBTY Multiemployer Plan
or NBTY Multiple Employer Plan. None of the assets of NBTY, Merger Sub or
any of their respective subsidiaries is the subject of any lien arising
under Section 302(f) of ERISA or Section 412(n) of the Internal Revenue Code
and neither NBTY, Merger Sub nor any of their respective subsidiaries has
been required to post any security under Section 307 of ERISA or Section
401(a)(29) of the Internal Revenue Code with respect to any NBTY Plan, and
no fact or event exists which could reasonably give rise to any such lien or
requirement to post any such security.
(d) Except as otherwise disclosed in Schedule 4.16, each NBTY Plan
has been operated in all material respects in accordance with the
requirements of applicable laws, including, without limitation, ERISA and
the Internal Revenue Code. Except as otherwise disclosed in Schedule 4.16
no NBTY Plan has incurred an "accumulated funding deficiency" (within the
meaning of Section 302 of ERISA or Section 412 of the Internal Revenue
Code), whether or not waived. Except as otherwise disclosed by Schedule
4.16, all prior contributions, premiums or payments made with respect to any
NBTY Plan have been deducted for income tax purposes and no such deduction
previously claimed has been challenged by any government entity. The latest
financial statement in the SEC Reports reflects accruals of all material
amounts of employer contributions and premiums accrued but unpaid with
respect to the NBTY Plans as of the date of such financial statement.
SECTION 4.17 Labor Matters. Except as disclosed in Schedule 4.16,
neither NBTY, Merger Sub or any of their respective subsidiaries is a party
to any collective bargaining agreement or other labor union contract
applicable to persons employed by any of such entities and, to the Knowledge
of NBTY and Merger Sub there are currently no strikes, slowdowns, work
stoppages or lockouts, by or with respect to any employees of NBTY, Merger
Sub or their respective subsidiaries, or any pending labor controversies
which would reasonably be expected to have a Material Adverse NBTY Effect.
SECTION 4.18 Taxes. (a) NBTY, Merger Sub and each of their respective
subsidiaries has timely filed or been included in, or will timely file or be
included in, all returns required to be filed by it or in which it is to be
included with respect to Taxes for any period ending on or before the
Closing Date, taking into account any extension of time to file granted to
or obtained on behalf of such company, (b) all Taxes shown to be payable on
such returns have been paid or will be paid and (c) no deficiency for any
material amount of Tax has been asserted or assessed by a taxing authority
against such company.
SECTION 4.19 Insurance. All material properties and material
insurable risks of NBTY, Merger Sub and each of their respective
subsidiaries is covered by valid and currently effective insurance policies
or binders of insurance or programs of self-insurance in such types and
amounts as are consistent with the reasonable business judgment of the
operating management of such company. Schedule 4.19 contains a complete
list of all material liability, property, accident, casualty, fire, flood,
workers' compensation, key man, group life or health and other insurance
policies and arrangements affecting or relating to NBTY, Merger Sub and each
of their respective subsidiaries, their respective assets or the business of
NBTY, Merger Sub and their respective subsidiaries which are in full force
and effect on the date hereof.
SECTION 4.20 Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of NBTY or Merger Sub.
SECTION 4.21 Investment Purpose. NBTY and Merger Sub are acquiring
the Companies solely for the purpose of investment and not with a view to,
or for offer or sale in connection with, any distribution, resale or other
disposition of the Companies or any portion thereof.
SECTION 4.22 SEC Reports. NBTY, Merger Sub and each of their
respective subsidiaries have filed all reports, notices and forms
(collectively, the "SEC Reports") required to be filed or submitted to the
Securities and Exchange Commission (the "Commission") under the requirements
of the Securities Act of 1933, as amended (including the rules and
regulations promulgated thereunder, the "1933 Act"), and the Securities
Exchange Act of 1934, as amended (including the rules and regulations
promulgated thereunder, the "1934 Act") since December 31, 1993, all of
which have complied in all respects with all applicable requirements of the
1933 Act and the 1934 Act. As of their respective dates of filing in final
or definitive form (or, if amended or superseded by a subsequent filing,
then on the date of such subsequent filing), none of the SEC Reports of
NBTY, Merger Sub or their respective subsidiaries, including without
limitation, any financial statements or schedules included therein,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances in which they were
made, not misleading. Any and all of the financial statements (including
the related notes) included in the SEC Reports of NBTY, Merger Sub or their
respective subsidiaries fairly present the consolidated financial position
of NBTY, Merger Sub and their respective subsidiaries as of the respective
dates thereof and the consolidated results of operations and changes in
financial position of NBTY, Merger Sub and their respective subsidiaries for
the respective periods indicated, except, in the case of interim financial
statements, for year-end audit adjustments, consisting only of normal
recurring accruals, in accordance with generally accepted accounting
principles except as otherwise noted therein or, in the case of the
unaudited financial statements, as permitted by the applicable rules and
regulations of the Commission.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01 Conduct of Business Prior to the Closing. (a) Slade,
with respect to himself and each Company, and each other Shareholder, solely
with respect to such Shareholder and the Shares which such Shareholder is
tendering in the Merger hereby, covenants and agrees that, subject to
Section 5.01(b) below, between the date hereof and the Closing Date, he or
it shall use his or its commercially reasonable efforts to cause each of the
Companies to (i) except for the payment of Transaction Expenses related to
the transactions contemplated herein, conduct the Business in the ordinary
course and consistent with its prior practice in all material respects and
(ii) use its commercially reasonable efforts to (A) preserve substantially
intact the business organization of the Business, (B) keep available the
services of the employees of each of the Companies and (C) preserve the
current relationships of each of the Companies with their respective
material customers and suppliers and other persons with which they have
significant business relationships which are material to the Business.
(b) Slade, with respect to himself and each Company, and each other
Shareholder solely with respect to such Shareholder and the Shares which
such Shareholder is exchanging hereby, covenants and agrees that between the
date hereof and the Closing Date, without the prior written consent of NBTY,
he or it will not permit any such Company, prior to the Closing, to (i)
materially change its accounting methods, principles or practices, (ii)
subject to the provisions of Section 5.01(c) below, declare, set aside or
pay any dividend (other than regularly scheduled dividends declared and paid
in accordance with past practice including, without limitation, dividends of
an amount sufficient for the payment by each of the Shareholders of all
income taxes for the taxable income allocated to the Shareholders as a
result of the Companies for all periods through the Closing) or other
distribution (whether in cash, stock, property or any combination thereof)
in respect of any of the Shares or redeem, repurchase or otherwise acquire
any equity securities issued by any such Company, (iii) amend its
certificate of incorporation or by-laws or merge or consolidate, or obligate
itself to do so, with or into any other entity, except as contemplated
hereby, (iv) except as set forth in Schedule 5.01(b)(iv), establish or
materially increase any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option (including, without
limitation, the granting of stock options, stock appreciation rights,
performance awards, or restricted stock awards), stock purchase or other
employee benefit plan, or otherwise increase the compensation payable or to
become payable to any officers or key employees of any such Company, except
in the ordinary course of business consistent with past practice or as may
be required by law, or (v) enter into any employment or severance agreement
with any of its employees or establish, adopt or enter into any collective
bargaining agreement, except in the ordinary course of business consistent
with past practice or as may be required by law.
(c) (i) Slade, with respect to himself and each Company, and each
other Shareholder solely with respect to such Shareholder, covenants and
agrees that, between the date hereof and the Closing Date, without the prior
written consent of NBTY, neither he nor it shall willfully take any action
to cause the Working Capital of the Companies as of the Closing to be less
than SEVEN MILLION FOUR HUNDRED THOUSAND and 00/100 ($7,400,000) DOLLARS
(the "Minimum Capital Amount"), it being acknowledged and agreed that the
Shareholders may cause a dividend to the Shareholders from any of the
Companies on or prior to the Closing to the extent that the Working Capital
of the Companies, computed as of the Closing, is in excess of the Minimum
Capital Amount.
(ii) Each of the Shareholders agrees to pay, pro rata in the
proportion of the Shares of the applicable Company tendered by such
Shareholder in the Merger, to NBTY the amount, if any, that the Final
Working Capital of the Companies (as defined below) is less than the
Minimum Capital Amount in shares of NBTY Stock within ten (10)
Business Days after the Final Working Capital of the Companies has
been determined, such payment to be in accordance with the provisions
of Section 9.03(g) (payment of indemnified amount in cash or NBTY
Stock).
(iii) NBTY agrees to pay to the Shareholders, pro rata in the
proportion of the Shares of the applicable Company tendered by such
Shareholder in the Merger, the amount, if any, that the Final Working
Capital of the Companies is greater than the Minimum Capital Amount by
delivering to the Shareholders the number of shares of NBTY Stock
equal to the amount of such excess divided by the lesser of the NBTY
Stock FMV as of the Closing Date or the average of the closing bid
prices, as reported by the National Association of Securities Dealers
automated quotations system, for the ten (10) Business Days prior to
the date of such delivery.
(iv) For the purposes of this Agreement, the term "Final
Working Capital of the Companies" shall mean the Working Capital of
the Companies as of the Closing Date as determined by Coopers and
Lybrand LLP's St. Louis office and Amper, Politzner & Mattia P.A., it
being agreed that such accountants shall be instructed to compute the
dollar amount of such Working Capital of the Companies within forty-
five (45) days after the Closing Date and, absent manifest error or
gross negligence, such determination shall be final, binding and
conclusive upon the parties hereto.
(d) Each of NBTY and Merger Sub covenants and agrees that, between
the date hereof and the Closing Date, NBTY and Merger Sub shall (i) conduct
their respective businesses in the ordinary course and consistent with prior
practice in all material respects and (ii) use commercially reasonable
efforts to (A) preserve substantially intact the business organization of
NBTY, Merger Sub and their respective subsidiaries, (B) keep available to
NBTY, Merger Sub or their respective subsidiaries, as the case may be, the
services of the employees of NBTY, Merger Sub and their respective
subsidiaries, and (C) preserve the current relationships of NBTY, Merger Sub
and their respective subsidiaries with their respective material customers
and suppliers and other persons with which they have significant business
relationships which are material to NBTY's, Merger Sub's or their respective
subsidiaries' businesses.
(e) Each of NBTY and Merger Sub hereby covenants and agrees that,
between the date hereof and the Closing Date, without the prior written
consent of the Shareholders, neither NBTY, Merger Sub nor any of their
respective subsidiaries will (i) materially change their respective
accounting methods, principles or practices, (ii) declare, set aside or pay
any dividend (other than regularly scheduled dividends declared and paid in
accordance with past practice including, without limitation, the NBTY Stock
Split) or other distribution (whether in cash, stock, property or any
combination thereof) in respect of any of the Shares or redeem, repurchase
or otherwise acquire any equity securities issued by NBTY, Merger Sub nor
any of their respective subsidiaries, (iii) amend their respective
certificates of incorporation or by-laws or merge or consolidate, or
obligate themselves to do so, with or into any other entity except as
contemplated hereby, (iv) except as set forth in Schedule 5.01(d)(iv),
establish or materially increase any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option (including,
without limitation, the granting of stock options, stock appreciation
rights, performance awards, or restricted stock awards), stock purchase or
other employee benefit plan, or otherwise increase the compensation payable
or to become payable to any officers or key employees of NBTY, Merger Sub or
their respective subsidiaries, except in the ordinary course of business
consistent with past practice or as may be required by law, or (v) enter
into any employment or severance agreement with any of their respective
employees or establish, adopt or enter into any collective bargaining
agreement, except in the ordinary course of business consistent with past
practice or as may be required by law.
SECTION 5.02 Investigation. (a) Each of NBTY and Merger Sub
acknowledges and agrees that it (i) has made its own inquiry and
investigation into, and, based thereon, has formed an independent judgment
concerning, the Shares, the Companies, the assets and liabilities of the
Companies and the Business and (ii) has been furnished with or given
adequate access to such information about the Shares, the Companies, the
assets and liabilities of the Companies and the Business, as it has
requested.
(b) In connection with NBTY's and Merger Sub's investigation of the
Companies and the Business, NBTY and Merger Sub have received from the
Shareholders certain estimates, projections and other forecasts for the
Companies, including, without limitation, estimated income statement and
balance sheet information for the fiscal period ending on 9/30/98, projected
income statement and balance sheet information for the fiscal periods ending
in September 30, 1999, 2000 and 2001 and certain plan and budget
information. Each of NBTY and Merger Sub acknowledges and agrees that there
are uncertainties inherent in attempting to make such estimates,
projections, forecasts, plans and budgets, that NBTY and Merger Sub are
familiar with such uncertainties, that NBTY and Merger Sub are taking full
responsibility for making their own evaluation of the adequacy and accuracy
of all estimates, projections, forecasts, plans and budgets so furnished to
them, and that neither NBTY nor Merger Sub will assert any claim against any
of the Shareholders or any of their respective agents, trustees, affiliates,
consultants, investment bankers, attorneys or representatives, or hold any
of the Shareholders or any such persons liable with respect thereto.
Accordingly, no Shareholder makes any representation or warranty with
respect to any estimates, projections, forecasts, plans or budgets referred
to in this Section 5.02.
SECTION 5.03 Access to Information. (a) From the date hereof until
the Closing, upon reasonable notice, the Shareholders shall, and shall cause
each Company's officers, directors, employees, certified accountants and
agents to, (i) afford the officers, employees and authorized agents and
representatives of NBTY and Merger Sub reasonable access, during normal
business hours, to the offices, properties, books and records of the
Companies and (ii) furnish to the officers, employees and authorized agents
and representatives of NBTY and Merger Sub such additional financial and
operating data and other information regarding the assets, properties,
goodwill and business of the Companies as NBTY or Merger Sub may from time
to time reasonably request; provided, however, that such investigation shall
be conducted in a manner as not to interfere unreasonably with any of the
businesses or operations of any of the Companies.
(b) From the date hereof until the Closing, upon reasonable notice,
NBTY and Merger Sub shall, and shall cause each of NBTY's and Merger Sub's
officers, directors, employees, certified accountants and agents to, (i)
afford the Shareholders and the authorized agents and representatives of the
Shareholders reasonable access, during normal business hours, to the
offices, properties, books and records of NBTY, Merger Sub and their
respective subsidiaries and (ii) furnish to the Shareholders and the
authorized agents and representatives of the Shareholders such additional
financial and operating data and other information regarding the assets,
properties, goodwill and business of NBTY, Merger Sub and their respective
subsidiaries as the Shareholders may from time to time reasonably request;
provided, however, that such investigation shall be conducted at the
Shareholders' expense and in a manner as not to interfere unreasonably with
any of the businesses or operations of NBTY, Merger Sub or their respective
subsidiaries.
(c) In order to facilitate the resolution of any claims made by or
against or incurred by the Shareholders prior to the Closing, after the
Closing, upon reasonable notice, each of NBTY and Merger Sub shall, and each
of NBTY and Merger Sub shall cause their respective subsidiaries to: (i)
afford the Shareholders and the authorized agents and representatives of the
Shareholders reasonable access, during normal business hours, to the
offices, properties, books and records of NBTY, Merger Sub, the Companies,
and any of their respective successors, subsidiaries or affiliates with
respect to the Companies, including any successors, and the Business, (ii)
furnish to the Shareholders and the authorized agents and representatives of
the Shareholders such additional financial and other information regarding
the Companies, including any successors, the assets, properties, goodwill
and business of the Companies and any successors, and the Business as any of
the Shareholders may from time to time reasonably request and (iii) make
available to the Shareholders, the employees of the Companies, NBTY, Merger
Sub or any of their respective subsidiaries whose assistance, testimony or
presence is necessary to assist any of the Shareholders in evaluating any
such claims and in defending such claims, including the presence of such
persons as witnesses in hearings or trials for such purposes; provided,
however, that such investigation shall be conducted in a manner as not to
interfere unreasonably with any of the businesses or operations of NBTY,
Merger Sub or any of their respective affiliates or subsidiaries.
SECTION 5.04 Books and Records. (a) Each of NBTY and Merger Sub
covenants and agrees that it shall preserve and keep all books and records
of the Companies for a period of at least seven years from the Closing Date.
After such seven-year period, before NBTY, Merger Sub or any of their
respective subsidiaries or affiliates shall dispose of any of such books
and records, at least 90 calendar days' prior written notice to such effect
shall be given by NBTY to Slade, and Slade, on behalf of the Shareholders,
shall be given an opportunity, at their cost and expense, to remove and
retain all or any part of such books and records as Slade may select.
During such seven-year period, the Shareholders and duly authorized
representatives of the Shareholders shall, upon reasonable notice, have
access thereto during normal business hours to examine, inspect and copy
such books and records.
(b) If, in order properly to prepare documents required to be filed
with governmental authorities or its financial statements, it is necessary
that any of the parties hereto or any successors be furnished with
additional information relating to the Companies, the Business, NBTY, Merger
Sub or any of their respective subsidiaries or affiliates, and such
information is in the possession of any party hereto, such party agrees to
use commercially reasonable efforts to furnish such information to the
requesting party, at the cost and expense of the party being furnished such
information.
SECTION 5.05 Confidentiality. The terms of the letter agreement
dated as of October 30, 1997 (the "Confidentiality Agreement") between the
Shareholders and NBTY are hereby incorporated by reference and shall
continue in full force and effect until the Closing, at which time such
Confidentiality Agreement and the obligations of NBTY under this Section
5.05 shall terminate; provided, however, that the Confidentiality Agreement
shall terminate only in respect of that portion of the confidential
information (as described in the Confidentiality Agreement) exclusively
relating to the transactions contemplated by this Agreement. If this
Agreement is, for any reason, terminated prior to the Closing, the
Confidentiality Agreement shall continue in full force and effect in respect
of such information.
SECTION 5.06 Regulatory and Other Authorizations; Consents. (a) Each
party hereto will use its commercially reasonable efforts to obtain all
authorizations, consents, orders and approvals of all Federal, state and
local regulatory bodies and officials that may be or become necessary for
its execution and delivery of, and the performance of its obligations
pursuant to, this Agreement and will cooperate fully with the other party in
promptly seeking to obtain all such authorizations, consents, orders and
approvals, including, without limitation, authorizations, consents, orders
and approvals required under ISRA or by the New Jersey Department of
Environmental Protection ("NJDEP"). Each party hereto agrees to make an
appropriate filing of a Notification and Report Form pursuant to the HSR Act
with respect to the transactions contemplated hereby within five (5)
Business Days of the date hereof and to supply promptly any additional
information and documentary material that may be requested pursuant to the
HSR Act. The parties hereto will not take any action that will have the
effect of delaying, impairing or impeding the receipt of any required
approvals.
(b) Each of NBTY and Merger Sub will use their commercially
reasonable efforts to assist the Shareholders in obtaining the consents of
persons or entities referred to in Section 3.06, including, without
limitation, (i) providing to such persons or entities (A) guarantees,
effective as of the Closing, by NBTY and Merger Sub of the obligations of a
Company under any such lease and license agreements and (B) such financial
statements and other financial information with respect to NBTY, Merger Sub
or their respective subsidiaries as such persons or entities may reasonably
request and (ii) agreeing to such adjustments to the terms of any such lease
and license agreements as would not, in the aggregate, have a Material
Adverse Effect.
SECTION 5.07 Issuance of NBTY Stock. The parties hereto acknowledge
and agree that the calculation of the number of the Aggregate Exchanged
Stock was determined in consideration of the number of shares of NBTY Stock
issued and outstanding on the date hereof, the additional shares of NBTY
Stock to be issued and distributed as contemplated by the NBTY Stock Split,
the number of shares of NBTY Stock which may be issued in accordance with
the terms and provisions of stock option plans and similar arrangements in
effect on the date hereof and approximately 6,000,000 (such number including
the effect of the NBTY Stock Split) additional shares of NBTY Stock
(collectively, the "Contemplated Stock").
SECTION 5.08 Slade Employment Agreement. NBTY covenants and agrees
that on or prior to the Closing Date, NBTY shall enter into a binding
employment agreement with Slade containing terms and conditions which are no
less favorable to Slade than those which are set forth on Schedule 5.08
attached hereto.
SECTION 5.09 Further Action.
(a) Each of the parties hereto shall execute and deliver such
documents and other papers and take such further actions as may be
reasonably required to carry out the provisions hereof and give effect to
the transactions contemplated hereby. In accordance with this Section 5.09,
each party hereto shall cooperate fully with the Companies and the
Shareholders in securing clearance for the transactions contemplated by this
Agreement from the NJDEP pursuant to ISRA and to file the Premerger
Notification and Report Form for Certain Mergers and Acquisitions under the
HSR Act and to obtain notification of the expiration of the waiting period
under the HSR Act. All costs, obligations and financial security
requirements of the Shareholders arising under this Section shall be the
responsibility of the Companies. The parties hereto acknowledge and agree
that, in connection with the transactions contemplated hereby, the NJDEP, in
accordance with ISRA, may require or request NBTY and/or Merger Sub to enter
into a remediation agreement relating to the New Jersey property and
operations of Nutro substantially in the form attached hereto as Exhibit B
(the "Remediation Agreement") or in such other form as is accepted by the
NJDEP. In connection with such remediation agreement, NBTY and Merger Sub
covenant and agree that, to the extent required by the NJDEP or the
Shareholders or the Companies, NBTY and Merger Sub shall execute and deliver
such Remediation Agreement and perform all of their respective obligations
thereunder.
(b) Each of NBTY and Merger Sub covenants and agrees that promptly
following the Closing, Merger Sub take any and all action to duly qualify as
a foreign corporation to do business, and be in good standing, in each
jurisdiction where the character of its properties owned, operated or leased
or the nature of its activities makes such qualification necessary,
including, without limitation, in each jurisdiction in which any of the
Companies is qualified to conduct its business as of the date hereof.
SECTION 5.10 Satisfaction of PNC Bank Indebtedness. Each of NBTY and
Merger Sub covenant and agree that at the Closing, NBTY shall satisfy any
and all existing indebtedness owed by the Companies to PNC Bank, National
Association (successor by merger to Midlantic Bank, N.A., "PNC"), it being
acknowledged and agreed however that, notwithstanding such covenant, NBTY or
Merger Sub may assume the obligations of the Companies under such
indebtedness if PNC (i) consents to such assumption, (ii) waives any
default, breach or conflict arising from or related to the Merger and the
transactions contemplated herein and (iii) unconditionally releases all
liens, security interests, encumbrances and obligations of any of the
Shareholders (or Ruth Slade and E. Steven Lenger) under the terms and
conditions of the applicable agreements, documents and instruments
evidencing (or related to) such indebtedness.
ARTICLE VI
EMPLOYEE MATTERS
SECTION 6.01 Employees. (a) Each of NBTY and Merger Sub hereby
acknowledges, on behalf of themselves and their respective subsidiaries and
affiliates, that they have no present intention to close or shut down or
reduce the operations or production of any facility of any of the Companies.
To the extent commercially practical, NBTY and Merger Sub agrees with the
Shareholders to offer the Transferred Employees whose employment with the
applicable Company is terminated in connection with the transactions
contemplated by this Agreement with the option to transfer to a similar
position with NBTY, Merger Sub or any of their respective subsidiaries to
the extent commercially practical. Additionally, NBTY and Merger Sub, to
the extent commercially practical, shall continue the employee benefits of
the Transferred Employees and the Transferred Former Employees under the
Plans or provide such Transferred Employees and Transferred Former Employees
with the employee benefits which are similar in nature to their current
employee benefits provided to the employees of NBTY under NBTY Plans; it
being acknowledged and agreed that, to the extent that service is relevant
for purposes of eligibility, vesting or benefit accrual under any employee
benefit plan, program or arrangement established or maintained by NBTY, its
subsidiaries or any of the Companies for the benefit of Transferred
Employees and Transferred Former Employees, such plan, program or
arrangement shall credit such employees or former employees for service on
or prior to the Closing with any of the Companies or any affiliate thereof.
(b) Each of NBTY and Merger Sub covenants and agrees that the
employees of the Companies listed on Schedule 6.01 shall participate in the
stock option plan of NBTY, it being acknowledged and agreed that the extent
of participation of such employees in the stock option plan shall be
negotiated by Slade and NBTY in good faith so that the contribution of such
employees to the financial performance and business prospects of NBTY is
appropriately compensated.
(c) Each of NBTY and Merger Sub shall comply in all respects to the
provisions of the Worker Adjustment and Retraining Notification Act of 1988,
as amended the (the "WARN Act").
SECTION 6.02. Establishment of Trust. As soon as practicable after
the Closing, NBTY agrees to establish or designate one or more trusts, or
cause Merger Sub to so establish or designate such trusts (the "NBTY
Trusts"), for the purpose of holding the assets attributable to benefits for
Transferred Employees and Transferred Former Employees under the the plans
listed on Schedule 3.16 (the "Company Retirement Plans"). Upon
establishment or designation of the NBTY Trusts, NBTY shall cause the assets
attributable to the Company Retirement Plans to be transferred from the
applicable Company Retirement Plan to the NBTY Trusts.
SECTION 6.03 Welfare Arrangements. Subject to Section 6.01 above, to
the extent that any medical, dental, hospitalization, life or similar-type
insurance benefits are provided to Transferred Employees or Transferred
Former Employees through one or more Plans of a Company, NBTY agrees to
designate or establish, or to cause Merger Sub to establish, effective as of
the Closing, one or more benefit plans, programs or arrangements for the
purpose of providing such benefits to Transferred Employees or Transferred
Former Employees.
SECTION 6.04 Indemnity. Anything in this Agreement to the contrary
notwithstanding, NBTY and Merger Sub hereby agree, jointly and severally, to
indemnify the Shareholders against and hold the Shareholders harmless from
any and all claims, losses, damages, expenses, obligations and liabilities
(including costs of collection, attorney's fees and other costs of defense)
arising out of or otherwise in respect of any of the following from and
after the Closing (i) any claim made by any Transferred Employee against any
Shareholder for any severance or termination benefits pursuant to the
provisions of any plan, program or arrangement or any applicable Federal or
state law, (ii) any suit or claim of violation brought against any
Shareholder under the WARN Act, or any similar state or local statutes or
ordinances, or any rules, regulations or orders promulgated or issued
thereunder, for any actions taken by NBTY or Merger Sub on or after the
Closing Date with respect to any facility, site of employment, operating
unit or Transferred Employee, (iii) any action taken on or after the Closing
Date by NBTY or Merger Sub with respect to any Plan, (iv) any claim for
payments or benefits by Transferred Employees, Transferred Former Employees
or their respective beneficiaries under any Plan, and (v) any failure of
NBTY or Merger Sub to discharge their respective obligations under this
Article VI. The provisions of Sections 9.02(b) and 9.02(c) shall apply to
NBTY and Merger Sub's indemnification obligations under this Section 6.06.
ARTICLE VII
TAX MATTERS
SECTION 7.01 Indemnity. (a) The Shareholders, severally but not
jointly, pro rata in the proportion of the Shares of the applicable Company
tendered by such Shareholder in the Merger, agree to indemnify NBTY and
Merger Sub, without Gross-Up for Taxes, against all Taxes of the Companies,
with respect to any period or portion thereof that ends on or before the
Closing Date, in excess of the amount reserved for Taxes (the "Tax
Reserves") in the financial statements of such Company, including without
limitation, the Financial Statements of such Company or the financial
records of such Company as of the Closing prepared in accordance with the
Company Accounting Policies. NBTY and Merger Sub shall be responsible for
Taxes to the extent of the Tax Reserves and all Taxes with respect to any
period or portion thereof that begins on or after the Closing Date.
SECTION 7.02 Refunds. Any refunds received by NBTY, Merger Sub or
their respective subsidiaries or successors (and any equivalent benefit to
any such company through a reduction in Tax liability for a post-Closing
Date period) of Taxes relating to taxable periods or portions thereof ending
on or before the Closing Date shall be for the account of the Shareholders,
and NBTY and Merger Sub shall pay over to the Shareholders pro rata in the
proportion of the Shares of the applicable Company tendered by such
Shareholder in the Merger any such refund or the amount of any such benefit
within five Business Days of the earlier of receipt or entitlement thereto.
NBTY shall, if Slade so requests and at NBTY's expense, cause the relevant
entity to file for and obtain any refunds or equivalent amounts to which the
Shareholders are entitled under this Section 7.02. NBTY and Merger Sub shall
permit Slade to control (at the Shareholders' expense) the prosecution of
any such refund claimed, and shall cause the relevant entity to authorize by
appropriate power of attorney such persons as Slade shall designate to
represent such entity with respect to such refund claimed.
SECTION 7.03 Contests. (a) After the Closing, NBTY or Merger Sub
shall promptly notify Slade in writing of the commencement of any Tax audit
or administrative or judicial proceeding or of any demand or claim on NBTY
or Merger Sub which, if determined adversely to the taxpayer or after the
lapse of time would be grounds for indemnification under Section 7.01. Such
notice shall contain factual information (to the extent known to NBTY or
Merger Sub) describing the asserted Tax liability in reasonable detail and
shall include copies of any notice or other document received from any
taxing authority in respect of any such asserted Tax liability. If NBTY or
Merger Sub fails to give Slade prompt notice of an asserted Tax liability as
required by this Section 7.03, then (i) if the Shareholders are precluded by
the failure to give prompt notice from contesting the asserted Tax liability
in both the administrative and judicial forums, then the Shareholders shall
not have any obligation to indemnify for any loss arising out of such
asserted Tax liability, and (ii) if the Shareholders are not so precluded
from contesting but such failure to give prompt notice results in a
detriment to the Shareholders, then any amount which the Shareholders are
otherwise required to pay NBTY pursuant to Section 7.01 with respect to such
liability shall be reduced by the amount caused by such detriment.
(b) The Shareholders may elect to direct, through counsel chosen by
Slade and at their own expense, any audit, claim for refund and
administrative or judicial proceeding involving any asserted liability with
respect to which indemnity may be sought under Section 7.01 (any such audit,
claim for refund or proceeding relating to an asserted Tax liability are
referred to herein collectively as a "Contest"). If any of the Shareholders
elect to direct the Contest of an asserted Tax liability, Slade shall within
ninety (90) calendar days of receipt of the notice of asserted Tax liability
notify NBTY or Merger Sub of their intent to do so, and NBTY and Merger Sub
shall fully cooperate in each phase of such Contest. If any of the
Shareholders elect not to direct the Contest, Slade fails to notify NBTY or
Merger Sub of their election as herein provided or contests their obligation
to indemnify under Section 7.01, NBTY or Merger Sub may pay, compromise or
contest, at its own expense, such asserted liability. However, in such
case, neither NBTY nor Merger Sub may settle or compromise any asserted
liability over the objection of Slade; provided, however, that consent to
settlement or compromise shall not be unreasonably withheld. In any event,
each of NBTY or Merger Sub and the Shareholders may participate, at such
Shareholder's own expense, in the Contest. If any of the Shareholders
choose to direct the Contest, NBTY and Merger Sub shall promptly empower (by
power of attorney and such other documentation as may be appropriate) such
representatives of the Shareholders as they may designate to represent NBTY
or Merger Sub or any successor thereto in the Contest insofar as the Contest
involves an asserted Tax liability for which the Shareholders would be
liable under Section 7.01.
(c) After the Closing, NBTY and Merger Sub shall promptly notify
Slade in writing of any intention by NBTY or Merger Sub to amend or restate
the tax return for any of the Companies for any period prior to the Closing
and shall not effect any such amendment or restatement without the prior
written consent of Slade, which consent shall not be unreasonably withheld.
SECTION 7.04 Payments for Certain Audit Adjustments. (a) If an audit
adjustment, claim for refund or amended return ("Adjustment") after the date
hereof shall both increase a Tax liability which is allocated to the
Shareholders under Section 7.01 (or reduce losses or credits otherwise
available to the Shareholders) for a period ending on or before the Closing
Date and decrease a Tax liability of NBTY or Merger Sub for a period ending
after the Closing Date, then, when and to the extent that NBTY or Merger Sub
derives a benefit from such decrease (through a reduction of Taxes, refund
of Taxes paid or credit against Taxes due), NBTY or Merger Sub shall
promptly pay to the Shareholders, pro rata in proportion to the Shares of
the applicable Company tendered by such Shareholder in the Merger, an amount
equal to the amount of such refund, reduction or credit. Similarly, if an
Adjustment shall both decrease a Tax liability which is allocated to the
Shareholders under Section 7.01 for a period ending on or before the Closing
Date and increase the Tax liability of NBTY or Merger Sub (or reduce losses
or credits otherwise available to any such corporation) for a period ending
after the Closing Date, then, when and to the extent that a Shareholder
derives a benefit from such decrease (through a refund or reduction of Taxes
paid or credit against Taxes due), the Shareholders, pro rata in proportion
to the Shares of the applicable Company tendered by such Shareholder in the
Merger, shall promptly pay to NBTY or Merger Sub an amount equal to the
amount of such refund, reduction or credit.
(b) If State or local Taxes imposed on the Shareholders with respect
to any of the Companies for taxable periods or portions thereof ending on or
before the Closing Date are increased as the result of an adjustment on an
audit or other examination by a taxing authority, NBTY or Merger Sub shall
promptly pay the Shareholders pro rata in proportion to the Shares of the
applicable Company tendered by such Shareholder in the Merger an amount
equal to such increase in Taxes, to the extent that such increase does not
exceed the amount reserved for Taxes in the Financial Statements not
previously taken into account under Section 7.01.
SECTION 7.05 Tax Benefits Resulting From the Merger. Notwithstanding
any provision of this Article VII to the contrary, any Tax refund or Tax
benefit derived from any net operating loss, net capital loss, investment
tax credit, foreign tax credit or charitable deduction or any other Tax
attribute (including deductions of credits relating to alternative minimum
taxes) allocable under applicable Federal, State or local income or
franchise Tax law to any of the Companies or Merger Sub, accruing to the
benefit of any of the Companies, Merger Sub or NBTY as a direct result of
the Merger or the transactions contemplated herein or by actions directly
taken by NBTY or Merger Sub in furtherance of the Merger shall remain with
NBTY or Merger Sub, as the case may be, and not paid to the Shareholders.
SECTION 7.06 Cooperation and Exchange of Information. The
Shareholders and NBTY and Merger Sub will provide each other with such
cooperation and information as either of them reasonably may request of the
other in filing any Tax return, amended return or claim for refund,
determining a liability for Taxes or a right to a refund of Taxes or
participating in or conducting any audit or other proceeding in respect of
Taxes. Such cooperation and information shall include providing copies of
relevant Tax returns or portions thereof, together with accompanying
schedules and related work papers and documents relating to rulings or other
determinations by taxing authorities. Each party shall make its employees,
agents or representatives available on a mutually convenient basis to
provide explanations of any documents or information provided hereunder.
Each party will retain all returns, schedules and work papers and all
material records or other documents relating to Tax matters of the Companies
for the taxable period first ending after the Closing Date and for all prior
taxable periods until the later of (i) the expiration of the statute of
limitations of the taxable periods to which such returns and other documents
relate, without regard to extensions except to the extent notified by the
other party in writing of such extensions for the respective Tax periods, or
(ii) six years following the due date (without extension) for such returns.
Any information obtained under this Section 7.06 shall be kept confidential,
except as may be otherwise necessary in connection with the filing of
returns or claims for refund or in conducting an audit or other proceeding.
SECTION 7.07 Tax Intent. The parties hereto intend that the Merger
and the transactions contemplated herein qualify as a reorganization under
the provisions of Section 368(a)(1)(A) and Section 368(a)(2)(D) of the
Internal Revenue Code, and that the parties hereto will be "parties to the
reorganization" within the meaning of Section 368(b) of the Internal Revenue
Code. In furtherance of the immediately preceding sentence, each of the
parties hereto agree that for all purposes they will act consistent with the
intended tax treatment described in this Section 7.07, will report the
transactions contemplated hereby for all tax purposes consistent with such
intent, and will not take a position, for tax or other purposes, contrary to
such intent.
SECTION 7.08 Payments by NBTY and Merger Sub. Notwithstanding any
provision of this Article VII to the contrary, it is acknowledged and agreed
that any payment required to be made by NBTY or Merger Sub to the
Shareholders under this Article VII shall be paid and satisfied in full
within ten (10) Business Days after demand therefor together with all
appropriate supporting documentation by delivering to the Shareholders the
number of shares of NBTY Stock equal to the amount of such obligation
divided by the lesser of the NBTY Stock FMV as of the Closing Date or the
average of the closing bid prices, as reported by the National Association
of Securities Dealers automated quotations system, for the ten (10) Business
Days prior to the date of such delivery.
SECTION 7.09 Payments by the Shareholders. Notwithstanding any
provision of this Article VII to the contrary, it is acknowledged and agreed
that any payment required to be made by the Shareholders to NBTY or Merger
Sub under this Article VII may, in the sole discretion of the Shareholders,
be paid and satisfied in full within ten (10) Business Days after demand
therefor together with all appropriate supporting documentation in
accordance with Section 9.03(g) (payment by delivering shares of NBTY Stock
or cash).
SECTION 7.10 Survival. The covenants and agreements of the parties
hereto contained in this Article VII shall survive and remain in full force
and effect, regardless of any investigation made by or on behalf of the
Shareholders, on the one hand, or NBTY and Merger Sub, on the other hand,
for a period not to extend beyond the issuance of the first independent
audited financial statements of NBTY, but in any event not later than
December 31, 1998.
ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.01 Conditions to Obligations of the Shareholders. No
Shareholder shall have any obligation to consummate the transactions
contemplated by this Agreement unless the following conditions are
satisfied, fulfilled or waived by NBTY and Merger Sub at or prior to the
Closing:
(a) Representations and Warranties; Covenants. The
representations and warranties of NBTY and Merger Sub contained in
this Agreement shall be true and correct in all material respects as
of the Closing, with the same force and effect as if made as of the
Closing, other than such representations and warranties as are made as
of another date, and all the covenants contained in this Agreement to
be complied with by NBTY and Merger Sub on or before the Closing shall
have been complied with in all material respects, and each Shareholder
shall have received a certificate of NBTY and Merger Sub to such
effect signed by a duly authorized officer thereof;
(b) No Order. No United States or state governmental authority
or other agency or commission or United States or state court of
competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, injunction or other
order (whether temporary, preliminary or permanent) which is in effect
and has the effect of making such transactions contemplated by this
Agreement illegal or otherwise restraining or prohibiting consummation
of such transactions; provided, however, that the parties hereto shall
use their commercially reasonable efforts to have any such statute,
rule or regulation declared invalid or inapplicable and any such order
or injunction vacated;
(c) HSR Act; ISRA. Any waiting period (and any extension
thereof) under the HSR Act applicable to the Merger contemplated
hereby shall have expired or shall have been terminated and the
Companies shall have received one of the following with respect to the
transactions contemplated by this Agreement: (i) a determination of
non-applicability from the NJDEP, (ii) a cleanup plan approved by the
NJDEP, (iii) an affidavit approved by the NJDEP for a de minimis
quantity exception or limited conveyance, (iv) an Administrative
Consent Order issued by the NJDEP, or (v) such other action which
permits the Merger to be consummated without a violation under ISRA
(including, without limitation, a duly executed and delivered
Remediation Agreement), in each case with respect to the Companies'
real property located in New Jersey;
(d) Consents. The Shareholders shall have received written
consents regarding the matters disclosed in Schedule 3.06 to the
transactions contemplated by this Agreement in form and substance
satisfactory the Shareholders from the persons specified in such
Schedule;
(e) Legal Opinion. The Shareholders shall have received from
NBTY's and Merger Sub's counsel a legal opinion, addressed to the
Shareholders and dated the Closing Date, in form and substance
reasonably acceptable to Shareholders as to the matters described in
Sections 4.01, 4.02, 4.03, 4.05 and 4.06;
(f) Registration Rights Agreement. The Shareholders and NBTY
shall have entered into the Registration Rights Agreement and the
Registration Rights Agreement shall be in full force and effect and
the legal, valid binding obligation of NBTY;
(g) Slade Employment Agreement. Slade and NBTY shall have
entered into the Slade Employment Agreement and the Slade Employment
Agreement shall be in full force and effect and legal, valid and
binding obligation of NBTY; and
(h) NBTY Disclosure Schedule. NBTY and Merger Sub shall have
delivered the NBTY Disclosure Schedule to the Shareholders and the
NBTY Disclosure Schedule shall not reveal any circumstances or facts
which have, or are reasonably likely to have, a Material Adverse NBTY
Effect.
SECTION 8.02 Conditions to Obligations of NBTY and Merger Sub.
Neither NBTY nor Merger Sub shall have any obligation to consummate the
transactions contemplated by this Agreement unless the following conditions
are satisfied, fulfilled or waived by Slade at or prior to the Closing:
(a) Representations and Warranties; Covenants. The
representations and warranties of each of the Shareholders contained
in this Agreement shall be true and correct in all material respects
as of the Closing, with the same force and effect as if made as of the
Closing, other than such representations and warranties as are made as
of another date, and all the covenants contained in this Agreement to
be complied with by each of the Shareholders on or before the Closing
shall have been complied with in all material respects, and NBTY and
Merger Sub shall have received a certificate of each Shareholder to
such effect;
(b) No Order. No United States or state governmental authority
or other agency or commission or United States or state court of
competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, injunction or other
order (whether temporary, preliminary or permanent) which is in effect
and has the effect of making such transactions contemplated by this
Agreement illegal or otherwise restraining or prohibiting consummation
of such transactions; provided, however, that the parties hereto shall
use their commercially reasonable efforts to have any such statute,
rule or regulation declared invalid or inapplicable and any such order
or injunction vacated;
(c) HSR Act; ISRA. Any waiting period (and any extension
thereof) under the HSR Act applicable to the Merger contemplated
hereby shall have expired or shall have been terminated and the
Companies shall have received one of the following with respect to the
transactions contemplated by this Agreement: (i) a determination of
non-applicability from the NJDEP, (ii) a cleanup plan approved by the
NJDEP, (iii) an affidavit approved by the NJDEP for a de minimis
quantity exception or limited conveyance, (iv) an Administrative
Consent Order issued by the NJDEP, or (v) such other action which
permits the Merger to be consummated without a violation under ISRA
(including, without limitation, a duly executed and delivered
Remediation Agreement), in each case with respect to the Companies'
real property located in New Jersey;
(d) Consents. The Shareholders shall have received written
consents regarding the matters disclosed in Schedule 3.06 to the
transactions contemplated by this Agreement in form and substance
reasonably satisfactory to NBTY from the persons specified in such
Schedule; and
(e) Legal Opinion. NBTY shall have received from the
Shareholders' counsel a legal opinion, addressed to NBTY and dated the
Closing Date, in form and substance reasonably acceptable to NBTY as
to the matters described in Sections 3.01, 3.02, 3.03, 3.05 and 3.06.
ARTICLE IX
INDEMNIFICATION
SECTION 9.01 Survival. Subject to the limitations and other
provisions of this Agreement, the representations, warranties, covenants and
agreements of the parties hereto contained herein shall survive and remain
in full force and effect, regardless of any investigation made by or on
behalf of the Shareholders, on the one hand, or NBTY and Merger Sub, on the
other hand, for a period not to extend beyond the issuance of the first
independent audited financial statements of NBTY, but in any event not later
than December 31, 1998; provided, however, that the agreements set forth in
Sections 5.03(b), 5.03(c), 5.04, 5.05, 5.06, 5.07, 5.08, 5.09 and 5.10 and
Articles VI, IX and XI shall remain in full force and effect until the
applicable period under the statute of limitations therefor has expired.
SECTION 9.02 Indemnification by NBTY and Merger Sub. (a) NBTY and
Merger Sub agree, subject to the other terms and conditions of this
Agreement and without Gross-Up for Taxes, to jointly and severally indemnify
the Shareholders against and hold any such Shareholders harmless from all
liabilities of and damages to the Shareholders arising out of (i) the
material breach of any material representation, warranty, covenant or
agreement of NBTY or Merger Sub herein (other than Articles VI and VII, it
being understood that the sole remedy for breach thereof shall be pursuant
to Articles VI and VII, as the case may be) and (ii) the conduct of the
Business by NBTY or Merger Sub following the Closing. Anything in Section
9.01 to the contrary notwithstanding, no claim may be asserted nor may any
action be commenced against NBTY or Merger Sub for breach of any
representation, warranty, covenant or agreement contained herein, unless
written notice of such claim or action is received by NBTY or Merger Sub
describing in detail the facts and circumstances with respect to the subject
matter of such claim or action on or prior to the date on which the
representation, warranty, covenant or agreement on which such claim or
action is based ceases to survive as set forth in Section 9.01, irrespective
of or whether the subject matter of such claim or action shall have occurred
before or after such date; provided, however, that a claim may be asserted
and an action may be commenced against NBTY or Merger Sub for breach of the
agreements set forth in Sections 5.03(b), 5.03(c), 5.04, 5.05, 5.06, 5.07,
5.08, 5.09 and 5.10 and Articles VI, VII, IX and XI until the applicable
period under the statute of limitations therefor has expired.
Notwithstanding any provision of this Section 9.02 to the contrary, the
general market risk of the ownership of NBTY Stock shall remain with the
Shareholders.
(b) No claim may be made against NBTY or Merger Sub for
indemnification pursuant to this Section 9.02 with respect to any individual
item of liability or damage, unless such item exceeds $100,000 and unless
the aggregate of all such liabilities and damages of the Shareholders with
respect to this Section 9.02 shall exceed $500,000, and NBTY and Merger Sub
shall not be required to pay or be liable for the first $500,000 in
aggregate amount of any such liabilities and damages. The Shareholders
shall not be indemnified pursuant to this Section 9.02 with respect to any
individual item of liability or damage if the aggregate of all liabilities
and damages of the Shareholders for which the Shareholders have received
indemnification pursuant to this Section 9.02 shall have exceeded an amount
equal to $25,000,000. For the purposes of this Section 9.02(b), in
computing such individual or aggregate amounts of claims, the amount of each
claim shall be deemed to be an amount (i) net of any Tax benefit to the
Shareholders or any affiliate thereof and (ii) net of any insurance proceeds
and any indemnity, contribution or other similar payment recoverable by the
Shareholders or any affiliate from any third party with respect thereto.
(c) Payments by NBTY or Merger Sub pursuant to Section 9.02(a) shall
be limited to the amount of any liability or damage that remains after
deducting therefrom, (i) any Tax benefit to the Shareholders or any
affiliates thereof, and (ii) any insurance proceeds and any indemnity,
contribution or other similar payment recoverable by any Shareholder from
any third party with respect thereto. A Tax benefit will be considered to
be recognized by a Shareholder or any affiliate for purposes of this Section
9.02 in the tax period in which the indemnity payment occurs, and the amount
of the Tax benefit shall be determined by assuming that each Shareholder and
any affiliate is in the maximum applicable statutory tax bracket after any
deductions or other allowances reportable with respect to a payment
hereunder.
(d) Each of the Shareholders agrees to give NBTY and Merger Sub
prompt written notice of any claim, assertion, event or proceeding by or in
respect of a third party of which it has knowledge concerning any liability
or damage as to which it may request indemnification hereunder. NBTY and
Merger Sub shall have the right to direct, through competent counsel of
their own choosing, the defense or settlement of any such claim or
proceeding at their own expense. If NBTY or Merger Sub elects to assume the
defense of any such claim or proceeding, the Shareholders may participate in
such defense, but in such case the expenses of any such Shareholder shall be
paid by such Shareholder. The Shareholders shall provide NBTY and Merger
Sub with access to his or its records relating to any such claim, assertion,
event or proceeding during normal business hours and shall otherwise
cooperate with NBTY and Merger Sub in the defense or settlement thereof, and
NBTY and Merger Sub shall, jointly and severally, reimburse the Shareholders
for all his or its reasonable out-of-pocket expenses in connection
therewith. If NBTY or Merger Sub elects to direct the defense of any such
claim or proceeding, the Shareholders shall not pay, or permit to be paid,
any part of any claim or demand arising from such asserted liability, unless
NBTY and Merger Sub consent in writing to such payment or unless NBTY and
Merger Sub, subject to the last sentence of this Section 9.02(c), withdraws
from the defense of such asserted liability, or unless a final judgment from
which no appeal may be taken by or on behalf of NBTY and Merger Sub is
entered against such Shareholder for such liability. If NBTY or Merger Sub
shall fail to defend, or if, after commencing or undertaking any such
defense, NBTY and Merger Sub fails to prosecute or withdraws from such
defense, the Shareholders shall have the right to undertake the defense or
settlement thereof, at NBTY's and Merger Sub's joint and several expense.
If any of the Shareholders assumes the defense of any such claim or
proceeding pursuant to this Section 9.02(c) and proposes to settle such
claim or proceeding prior to a final judgment thereon or to forego appeal
with respect thereto, then such Shareholder shall give NBTY and Merger Sub
prompt written notice thereof and NBTY and Merger Sub shall have the right
to participate in the settlement or assume or reassume the defense of such
claim or proceeding.
(e) Neither NBTY nor Merger Sub shall have any liability under any
provision of this Agreement for any liabilities and damages to the extent
that such liabilities and damages relate to actions taken by the
Shareholders or their affiliates, after the Closing Date and in no event
shall NBTY or Merger Sub be liable for consequential damages. The
Shareholders shall take all reasonable steps to mitigate all such
liabilities and damages upon and after becoming aware of any event which
could reasonably be expected to give rise to such liabilities and damages.
(f) Except as set forth in this Agreement, neither NBTY nor Merger
Sub is making any representation, warranty, covenant or agreement with
respect to the matters contained herein. Anything herein to the contrary
notwithstanding, no breach of any representation, warranty, covenant or
agreement contained herein shall give rise to any right on the part of any
Shareholder, after the consummation of the Merger contemplated by this
Agreement, to rescind this Agreement or any of the transactions contemplated
hereby.
SECTION 9.03 Indemnification by the Shareholders. (a) The
Shareholders, severally but not jointly pro rata in proportion to the Shares
of the applicable Company tendered by such Shareholder in the Merger, agree,
subject to the other terms and conditions of this Agreement and without
Gross-Up for Taxes, to indemnify NBTY and Merger Sub against and hold them
harmless from all liabilities of and damages to NBTY or Merger Sub arising
out of the material breach of any material representation, warranty,
covenant or agreement of such Shareholder herein (other than Section 3.18
and Article VII, it being understood that the sole remedy for breach thereof
shall be pursuant to Section 3.18 and Article VII). Anything in Section
9.01 to the contrary notwithstanding, no claim may be asserted nor any
action commenced against any of the Shareholders for breach of any
representation, warranty, covenant or agreement contained herein, unless
written notice of such claim or action is received by such Shareholder
describing in detail the facts and circumstances with respect to the subject
matter of such claim or action on or prior to the date on which the
representation, warranty, covenant or agreement on which such claim or
action is based ceases to survive as set forth in Section 9.01, irrespective
of whether the subject matter of such claim or action shall have occurred
before or after such date; provided, however, that a claim may be asserted
and an action may be commenced against any of the Shareholders for breach of
such Shareholder's representations and warranties set forth in Sections 3.03
and 3.18 and the agreements of such Shareholder in Articles VII, IX and XI
until the applicable period under the statute of limitations therefor has
expired.
(b) No claim may be made against any of the Shareholders for
indemnification pursuant to this Section 9.03 with respect to any individual
item of liability or damage, unless such item exceeds $100,000 and unless
the aggregate of all such liabilities and damages of NBTY and Merger Sub
with respect to this Section 9.03 shall exceed Basket Amount and the
Shareholders shall not be required to pay or be liable for the aggregate
amount of any such liabilities and damages which are less than the Basket
Amount. Neither NBTY nor Merger Sub shall be indemnified pursuant to this
Section 9.03 with respect to any individual item of liability or damage if
the aggregate of all liabilities and damages of NBTY or Merger Sub for which
NBTY or Merger Sub has received indemnification pursuant to this Section
9.03 shall have exceeded an amount equal to $25,000,000. For the purposes
of this Section 9.03(b), in computing such individual or aggregate amounts
of claims, the amount of each claim shall be deemed to be an amount (i) net
of any Tax benefit to NBTY, Merger Sub or any affiliate or subsidiary
thereof, and (ii) net of any insurance proceeds and any indemnity,
contribution or other similar payment recoverable by NBTY, Merger Sub or any
affiliate or subsidiary from any third party with respect thereto.
(c) Payments by any of the Shareholders pursuant to Section 9.03(a)
shall be limited to the amount of any liability or damage that remains after
deducting therefrom (i) any Tax benefit to NBTY, Merger Sub or any affiliate
or subsidiary thereof, (ii) any insurance proceeds and any indemnity,
contribution or other similar payment recoverable by NBTY, Merger Sub or any
affiliate or subsidiary from any third party with respect thereto and (iii)
any reserves provided for the item in question in the Financial Statements.
A Tax benefit will be considered to be recognized by NBTY, Merger Sub or any
affiliate or subsidiary for purposes of this Section 9.03 in the tax period
in which the indemnity payment occurs, and the amount of the Tax benefit
shall be determined by assuming that each of NBTY, Merger Sub and any
affiliate or subsidiary is in the maximum applicable statutory tax bracket
after any deductions or other allowances reportable with respect to a
payment hereunder.
(d) Each of NBTY and Merger Sub agrees to give Slade prompt written
notice of any claim, assertion, event or proceeding by or in respect of any
claim, assertion, event or proceeding by or in respect of a third party of
which any such party has knowledge concerning any liability or damage as to
which any such party may request indemnification hereunder. The
Shareholders shall have the right to direct, through competent counsel
chosen by Slade, the defense or settlement of any such claim or proceeding
at their own expense. If any of the Shareholders elect to assume the
defense of any such claim or proceeding, NBTY and Merger Sub may participate
in such defense, but in such case the expenses of NBTY and Merger Sub shall
be paid by NBTY and Merger Sub. NBTY and Merger Sub shall provide the
Shareholders with access to their respective records and personnel relating
to any such claim, assertion, event or proceeding during normal business
hours and shall otherwise cooperate with the Shareholders in the defense or
settlement thereof, and the Shareholders shall reimburse NBTY and Merger Sub
for all of its reasonable out-of-pocket expenses in connection therewith.
If the Shareholders elect to direct the defense of any such claim or
proceeding, NBTY and Merger Sub shall not pay, or permit to be paid, any
part of any claim or demand arising from such asserted liability unless such
Shareholders consent in writing to such payment or unless such Shareholders,
subject to the last sentence of this Section 9.03(d), withdraw from the
defense of such asserted liability or unless a final judgment from which no
appeal may be taken by or on behalf of such Shareholders is entered against
NBTY and Merger Sub for such liability. If the Shareholders shall fail to
defend, or if after commencing or undertaking any such defense, fail to
prosecute or withdraws from such defense, NBTY and Merger Sub shall have the
right to undertake the defense or settlement thereof, at the Shareholders'
expense. If NBTY or Merger Sub assumes the defense of any such claim or
proceeding pursuant to this Section 9.03(d) and proposes to settle such
claim or proceeding prior to a final judgment thereon or to forego any
appeal with respect thereto, then NBTY and Merger Sub shall give the
Shareholders prompt written notice thereof and the Shareholders shall have
the right to participate in the settlement or assume or reassume the defense
of such claim or proceeding.
(e) Except as set forth in this Agreement, none of the Shareholders
are making any representation, warranty, covenant or agreement with respect
to the matters contained herein. Anything herein to the contrary
notwithstanding, no breach of any representation, warranty, covenant or
agreement contained herein shall give rise to any right on the part of NBTY
or Merger Sub, after the consummation of the Merger contemplated by this
Agreement, to rescind this Agreement or any of the transactions contemplated
hereby.
(f) The Shareholders shall have no liability under any provision of
this Agreement for any liabilities and damages to the extent that such
liabilities and damages relate to actions taken by NBTY, Merger Sub or their
affiliates or subsidiaries, after the Closing Date and in no event shall the
Shareholders be liable for consequential damages. Each of NBTY and Merger
Sub shall take all reasonable steps to mitigate all such liabilities and
damages upon and after becoming aware of any event which could reasonably be
expected to give rise to such liabilities and damages.
(g) Notwithstanding any provision of this Section 9.03 to the
contrary, it is acknowledged and agreed that until three Business Days after
the effective date of the first public offering that the Shareholders sell
any of their Aggregate Exchanged Stock in accordance with the terms and
provisions of the Registration Rights Agreement, any of the Shareholders may
pay and satisfy in full any obligation of such Shareholder to indemnify NBTY
or Merger Sub hereunder in cash or by delivering to NBTY or Merger Sub the
number of shares of NBTY Stock equal to the amount of such obligation
divided by the greater of the NBTY Stock FMV as of the Closing Date or the
average of the closing bid prices, as reported by the National Association
of Securities Dealers automated quotations system, for the ten (10) Business
Days prior to the date of such delivery.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.01 Termination. This Agreement may be terminated at any
time prior to the Closing:
(a) by the mutual written consent of the Shareholders and NBTY;
(b) by the Shareholders, if the Closing shall not have occurred
within 45 calendar days after the date hereof;
(c) by either the Shareholders or NBTY, if the Closing shall
not have occurred prior to the 120th day after the date hereof;
provided, however, that the right to terminate this Agreement under
this Section 10.01(c) shall not be available to any party whose
failure to fulfill any obligation under this Agreement shall have been
the cause of, or shall have resulted in, the failure of the Closing to
occur prior to such date; or
(d) by any of the Shareholders or the Companies if the NBTY
Stock FMV multiplied by the Aggregate Exchanged Stock to be delivered
to the Shareholders on the Closing Date is less than ONE HUNDRED
THIRTY-FIVE MILLION and 00/100 ($135,000,000) DOLLARS.
SECTION 10.02 Effect of Termination. In the event of termination of
this Agreement as provided in Section 10.01, this Agreement shall forthwith
become void and there shall be no liability on the part of any party hereto
(a) except as set forth in Section 5.05 and Section 11.01 and (b) nothing
herein shall relieve any party hereto from liability for any wilful breach
hereof.
SECTION 10.03 Waiver. At any time prior to the Closing, any party
hereto may (a) extend the time for the performance of any of the obligations
or other acts of the other party hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto or (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid if
set forth in an instrument in writing signed by the party to be bound
thereby.
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01 Expenses. Unless otherwise indicated in this
Agreement, including, without limitation, in the two immediately following
sentences, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby, including, without limitation,
fees and disbursements of counsel, financial advisors and accountants, shall
be paid by the party incurring such costs and expenses, whether or not the
Closing shall have occurred. It is acknowledged and agreed that the
Companies shall pay all fees, costs and disbursements in connection with:
(i) the HSR Act required to be paid by any Shareholder defined as an
Acquired Person under the HSR Act, (ii) ISRA, (iii) one-half (1/2) of the
legal fees of Herrick, Feinstein LLP from and after March 12, 1998 which
pertain to the preparation, negotiation and consummation of the transactions
contemplated hereunder, (iv) one-half (1/2) of the fees of the Advisor, (v)
one-half (1/2) of the accounting fees of Coopers and Lybrand LLP's St. Louis
office relating to the preparation, negotiations and consummation of the
transactions contemplated hereunder, and (vi) one-half (1/2) of the accounting
fees of Amper, Politzner & Mattia P.A. relating to the preparation,
negotiation and consummation of the transactions contemplated hereunder
(collectively, the "Transaction Expenses").
SECTION 11.02 Notices. All notices, requests, claims, demands and
other communications given or made pursuant hereto shall be in writing (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by cable, by telecopy (with confirmation copy of such telecopied
material delivered in person or by registered or certified mail, postage
prepaid, return receipt requested) or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be
specified in a notice given in accordance with this Section 11.02):
(a) if to the Shareholders or any of the Companies:
To: Michael C. Slade, The Abraham Feldman Trust
F/B/O Ruth Slade U/A 1/21/91 and The Abraham Feldman Trust
F/B/O E. STEVEN LENGER U/A 1/21/91
c/o Herrick, Feinstein LLP
2 Park Avenue
New York, N.Y. 10016
Attention: Michael Heitner, Esq.
and
Irwin A. Kishner, Esq.
(b) if to NBTY or Merger Sub:
To: NBTY, Inc.
90 Orville Drive
Bohemia, New York 11716
Attention: Scott Rudolph
and Harvey Kamil
with a copy to:
Michael C. Duban, P.C.
81 Main Street, Suite 205
White Plains, New York 10601
Attention: Michael C. Duban, Esq.
SECTION 11.03 Public Announcements. No party to this Agreement shall
make any public announcement in respect of this Agreement or the
transactions contemplated herein or otherwise communicate with any news
media without prior consent of the other parties hereto. It is acknowledged
and agreed that Slade and NBTY shall cooperate to promptly distribute a
public press release with respect to the transactions contemplated hereby in
a form and substance agreeable to Slade and NBTY.
SECTION 11.04 Headings. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement.
SECTION 11.05 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic
or legal substance of the transactions contemplated hereby is not affected
in any manner materially adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated hereby be consummated as originally contemplated to the
greatest extent possible.
SECTION 11.06 Entire Agreement. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and undertakings, both written
and oral, between the parties hereto with respect to the subject matter
hereof.
SECTION 11.07 Assignment. This Agreement shall not be assigned by
any party hereto without the prior written consent of all of the parties
hereto, which consent shall not be unreasonably withheld.
SECTION 11.08 No Third-Party Beneficiaries. Except as otherwise
specifically provided herein, this Agreement is for the sole benefit of the
parties hereto and their permitted assigns and nothing herein, express or
implied, is intended to or shall confer upon any other person or entity any
legal or equitable right, benefit or remedy of any nature whatsoever under
or by reason of this Agreement.
SECTION 11.09 Amendment; Waiver. This Agreement may not be amended
or modified except by an instrument in writing duly executed by all of the
parties hereto. Waiver of any term or condition of this Agreement shall
only be effective if in writing and shall not be construed as a waiver of
any subsequent breach or waiver of the same term or condition, or a waiver
of any other term or condition of this Agreement.
SECTION 11.10 Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York
applicable to contracts executed and to be wholly performed in that State.
SECTION 11.11 Consent to Jurisdiction. Each party hereto hereby
irrevocably submits to the jurisdiction of any New York State or Federal
court sitting in the City of New York in any action or proceeding arising
out of or relating to this Agreement, and each party hereto hereby
irrevocably agrees that all claims in respect of such action or proceeding
may be heard and determined in such New York State or Federal court. Each
party hereto irrevocably waives, to the fullest extent it may effectively do
so, the defense of an inconvenient forum to the maintenance of such action
or proceeding. Each party hereto irrevocably agrees that any service of
process with respect to any claim or matter arising from or in connection
with this Agreement may be made by mailing or delivering a copy of such
process to such party at the address specified in Section 11.02.
SECTION 11.12 Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original
but all of which taken together shall constitute one and the same agreement.
SECTION 11.03 Shares of NBTY Stock. The parties hereto acknowledge
and agree that, unless the context otherwise requires, each reference in
this Agreement to a number of shares of NBTY Stock accounts for the NBTY
Stock Split and, accordingly, any such reference to a number of shares of
NBTY Stock shall be appropriately adjusted for any change, modification or
revocation of the NBTY Stock Split.
[The next page is the Signature Page]
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above.
NUTRITION HEADQUARTERS, INC.
By: /s/ Michael C. Slade
------------------------------
Name: Michael C. Slade
Title: Chairman, President and
Chief Executive Officer
LEE NUTRITION, INC.
By: /s/ Michael C. Slade
------------------------------
Name: Michael C. Slade
Title: Chairman, President and
Chief Executive Officer
NUTRO LABORATORIES, INC.
By: /s/ Michael C. Slade
------------------------------
Name: Michael C. Slade
Title: Chairman, President and
Chief Executive Officer
/s/ Michael C. Slade
-----------------------------
MICHAEL C. SLADE
ABRAHAM FELDMAN TRUST
F/B/O RUTH SLADE U/A 1/21/91
By: /s/ Ruth Slade
------------------------------
Name: Ruth Slade
Title: Trustee of Abraham Feldman
Trust F/B/O Ruth Slade
U/A 1/21/91 (the "RS Trust").
The Trustee is signing this
document solely in her
fiduciary capacity, and
recourse against the RS Trust
shall be limited solely to
the assets of the RS Trust,
and no recourse shall be had
against the Trustee thereof.
ABRAHAM FELDMAN TRUST
F/B/O E. STEVEN LENGER U/A 1/21/91
By: /s/ E. Steven Lenger
------------------------------
Name: E. Steven Lenger
Title: Trustee, of Abraham Feldman
Trust F/B/O E. Steven Lenger
U/A/ 1/21/91 (the "ESL
Trust"). The Trustee is
signing this document solely
in his fiduciary capacity,
and recourse against the ESL
Trust shall be limited solely
to the assets of the ESL
Trust, and no recourse shall
be had against the Trustee
thereof.
NBTY, INC.
By /s/ Scott Rudolph
-------------------------------
Name: Scott Rudolph
Title: President and Chief
Executive Officer
NUTRITION HEADQUARTERS (DE), INC.
By /s/ Scott Rudolph
-------------------------------
Name: Scott Rudolph
Title: President and CEO
Amendment to Merger Agreement
Amendment to the Agreement and Plan of Merger made this 14th day of
April, 1998 by the undersigned parties hereto.
Reference is hereby made to that certain Agreement and Plan of Merger
dated as of April 1, 1998 (the "Merger Agreement") among NUTRITION
HEADQUARTERS, INC., a Delaware corporation, LEE NUTRITION, INC., a Delaware
corporation, NUTRO LABORATORIES, INC., a New Jersey corporation, MICHAEL C.
SLADE, ABRAHAM FELDMAN TRUST F/B/O RUTH SLADE U/A 1/21/91 and ABRAHAM FELDMAN
TRUST F/B/O E. STEVEN LENGER U/A 1/21/91, and NBTY, INC., a Delaware
corporation ("NBTY"), and NUTRITION HEADQUARTERS (DE), INC., a Delaware
corporation and a wholly owned subsidiary of NBTY.
Each of the undersigned hereby agrees that the definition of the term
"Working Capital of the Companies" provided in Section 1.01 of the Merger
Agreement shall be amended and restated in its entirety as set forth below:
"Working Capital of the Companies" means the balance of the
combined current assets of the Companies less the balance of the
combined current liabilities of the Companies, in each case, as of
the specified date and computed in accordance with the Company
Accounting Policies; provided, however, that such assets shall be
increased and such liabilities shall be decreased, as the case may
be, by the aggregate amount of the Transaction Expenses paid, or to
be paid, by the Companies.
Except as specifically provided above, each of the undersign hereby
ratifies and confirms all of the terms and provisions of the Merger Agreement
and confirms that such agreement shall continue to be in full force and effect
as amended and modified hereby. This Amendment to the Merger Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York applicable to contracts executed and to be wholly performed in that State.
[The next page is the Signature Page]
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first written above.
NUTRITION HEADQUARTERS, INC.
By: /s/ Michael C. Slade
---------------------------------------
Name: Michael C. Slade
Title: Chairman, President and Chief
Executive Officer
LEE NUTRITION, INC.
By: /s/ Michael C. Slade
---------------------------------------
Name: Michael C. Slade
Title: Chairman, President and Chief
Executive Officer
NUTRO LABORATORIES, INC.
By: /s/ Michael C. Slade
---------------------------------------
Name: Michael C. Slade
Title: Chairman, President and Chief
Executive Officer
/s/ Michael C. Slade
---------------------------------------
MICHAEL C. SLADE
ABRAHAM FELDMAN TRUST
F/B/O RUTH SLADE U/A 1/21/91
By: /s/ Ruth Slade
---------------------------------------
Name: Ruth Slade
Title: Trustee of Abraham Feldman
Trust F/B/O Ruth Slade U/A
1/21/91 (the "RS Trust"). The
Trustee is signing this
document solely in her fiduciary
capacity, and recourse against
the RS Trust shall be limited
solely to the assets of the RS
Trust, and no recourse shall be
had against the Trustee thereof.
ABRAHAM FELDMAN TRUST
F/B/O E. STEVEN LENGER U/A 1/21/91
By: /s/ E. Steven Lenger
---------------------------------------
Name: E. Steven Lenger
Title: Trustee, of Abraham Feldman
Trust F/B/O E. Steven Lenger
U/A/ 1/21/91 (the "ESL Trust").
The Trustee is signing this
document solely in his fiduciary
capacity, and recourse against
the ESL Trust shall be limited
solely to the assets of the ESL
Trust, and no recourse shall be
had against the Trustee thereof.
NBTY, INC.
By: /s/ Scott Rudolph
---------------------------------------
Name: Scott Rudolph
Title: President
NUTRITION HEADQUARTERS (DE), INC.
By: /s/ Scott Rudolph
---------------------------------------
Name: Scott Rudolph
Title: President
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of April 1, 1998, among NBTY,
INC., a Delaware corporation (the "Corporation"), and the INVESTORS (as
hereinafter defined).
The Investors own or have the right to purchase or otherwise acquire
shares of the Common Stock (as hereinafter defined) of the Corporation. The
Corporation and the Investors deem it to be in their respective best interests
to set forth the rights of the Investors in connection with public offerings
and sales of the Common Stock and are entering into this Agreement as a
condition to and in connection with the Agreement and Plan of Merger (as
hereinafter defined).
NOW, THEREFORE, in consideration of the premises and mutual covenants and
obligations hereinafter set forth, the Corporation and the Investors hereby
agree as follows:
SECTION 1. Definitions. As used in this Agreement, the following terms
shall have the following meanings:
(a) "Agreement and Plan of Merger" means the Agreement and Plan of
Merger, dated as of April 1, 1998, among the Corporation, the Investors and the
other parties thereto, as the same may be amended from time to time.
(b) "Commission" means the Securities and Exchange Commission or any
other Federal agency at the time administering the Securities Act.
(c) "Common Stock" means the common stock, $0.008 par value per share,
of the Corporation.
(d) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor Federal statute, and the rules and regulations of the
Commission promulgated thereunder, all as the same shall be in effect from time
to time.
(e) "Investors" means each of MICHAEL C. SLADE, ABRAHAM FELDMAN TRUST
F/B/O RUTH SLADE U/A 1/21/91 and ABRAHAM FELDMAN TRUST F/B/O E. STEVEN LENGER
U/A 1/21/91 and each additional person who shall execute a counterpart
signature page hereto, and includes any successor to, or assignee or transferee
of, any such person who or which agrees in writing to be treated as an Investor
hereunder and to be bound by the terms and comply with all applicable
provisions hereof.
(f) "Other Shares" means at any time securities (as defined by the
Securities Act) of the Corporation or any of its subsidiaries which do not
constitute Primary Shares or Registrable Shares.
(g) "Primary Shares" means at any time the authorized but unissued
shares of Common Stock and shares of Common Stock held by the Corporation in
its treasury.
(h) "Registrable Shares" means Restricted Shares which constitute
Common Stock or any security or right into which such Common Stock is or may be
converted or exchanged into, whether or not such right to convert or exchange
is contingent upon the payment of money or any other event.
(i) "Restricted Shares" means shares of Common Stock held by the
Investors. As to any particular Restricted Shares, such Restricted Shares shall
cease to be Restricted Shares when: (i) such shares have been registered under
the Securities Act and the registration statement in connection therewith has
been declared effective; or (ii) such shares shall have ceased to be issued and
outstanding.
(j) "Rule 144" means Rule 144 promulgated under the Securities Act or
any successor rule thereto or any complementary rule thereto (such as Rule
144A).
(k) "Securities Act" means the Securities Act of 1933, as amended, or
any successor Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.
SECTION 2. Required Registration. From and after the date hereof, if
the Corporation shall be requested by any Investor to effect the registration
under the Securities Act of Registrable Shares, the Corporation shall promptly
effect the registration under the Securities Act of the Registrable Shares
which the Corporation has been so requested to register; provided, however,
that the Corporation shall not be obligated to effect any registration under
the Securities Act except in accordance with the following provisions:
(a) the Corporation shall not be obligated to file and cause to become
effective more than three (3) registration statements initiated pursuant to
this Section 2 if under such registration statements all of the Registrable
Shares requested to be included therein have been effectively distributed and
sold thereunder;
(b) subject to Section 2(d) below, the Corporation may delay the filing
or effectiveness of any registration statement for a period of up to 60 days
after the date of a request for registration pursuant to this Section 2 if at
the time of such request (i) the Corporation is engaged, or has fixed plans to
engage within 60 days of the time of such request, in a firm commitment
underwritten public offering of Primary Shares in which the holders of
Registrable Shares shall include the Registrable Shares that the Investors
requested to be so registered pursuant to Section 3 below, or (ii) the
Corporation reasonably determines that such registration and offering would
interfere with any material transaction that requires disclosure under the
Securities Act involving the Corporation, as approved by the Board of
Directors; provided, that the Corporation may only so delay the filing or
effectiveness of a registration statement once pursuant to clause (i) above and
once pursuant to clause (ii) above; and
(c) with respect to any registration pursuant to this Section 2, the
Corporation shall give notice of such registration to the Investors who do not
request registration hereunder and to the holders of all Registrable Shares and
Other Shares which are entitled to registration rights and the Corporation may
include in such registration any Primary Shares, Registrable Shares or Other
Shares; provided, however, that, subject to Section 2(d) hereof, with respect
to any registration statement, if the managing underwriter advises the
Corporation in writing that the inclusion of all Registrable Shares, Primary
Shares and/or Other Shares proposed to be included in such registration would
interfere with the successful marketing (including pricing) of the Registrable
Shares proposed to be included in such registration, then the number of
Registrable Shares, Primary Shares and/or Other Shares proposed to be included
in such registration shall be included in the following order:
(i) first, the Registrable Shares of the Investors requested to
be included in such registration (or, if necessary, such Registrable
Shares pro rata among the Investors thereof based upon the number of
Registrable Shares requested to be registered by each such Investor);
(ii) second, the Primary Shares and the other Registrable Shares
held by stockholders other than the Investors which are requested to be
included in such registration (or, if necessary, such securities pro rata
among the Corporation and the holders thereof based upon the estimated
initial offering price of such securities proposed to be included in such
registration statement); and
(iii) third, the Other Shares which are entitled to registration
rights.
(d) Notwithstanding any provision of this Section 2 to the contrary,
with respect to the first registration statement initiated pursuant to this
Section 2, unless otherwise agreed by the Investors holding a majority of the
Registrable Shares requested to be included in such registration statement, all
of such Registrable Shares of the Investors requested to be included in such
registration statement shall be so included in such registration statement. The
Corporation hereby agrees that, with respect to the first registration
statement initiated pursuant to this Section 2, the Corporation shall use its
best efforts to successfully market (including pricing) and distribute such
Registrable Shares of the Investors within 45 days after the date of a request
for registration pursuant to this Section 2.
(e) If the method of disposition requested by the holders, pursuant to
this Section 2, is a firm commitment underwritten public offering, the
Corporation shall have the right to designate the managing underwriter of such
offering, which underwriter shall be (i) a top 15 investment bank as rated by
Securities Data Corp. at the time of such designation and (ii) acceptable to
the holders of the Registration Shares holding a majority of such securities,
it being acknowledged and agreed that the investment banks listed on Schedule A
or their successors shall be acceptable to the Investors.
(f) At any time before the registration statement covering Registrable
Shares becomes effective, the Investors holding a majority of such securities
may request the Corporation to withdraw, amend or not to file the registration
statement with respect to the proposed sale of the Investor's Registrable
Shares. In that event, if such request of withdrawal or amendment shall not
have been caused by, or made in response to, the material adverse effect of an
event on the business, properties, condition, financial or otherwise, or
operations of the Corporation, the Investors shall have used one of their
demand registration rights under this Section 2 and the Corporation shall no
longer be obligated to register Registrable Shares pursuant to the exercise of
such one registration right pursuant to this Section 2 unless either (x) such
Registration Statement includes Other Shares not held by the Investors or
Primary Shares or (y) the remaining Investors shall pay to the Corporation the
expenses incurred by the Corporation through the date of such request.
SECTION 3. Piggyback Registration. If the Corporation or any of its
subsidiaries at any time proposes for any reason to register Primary Shares,
Registrable Shares held by stockholders other than the Investors or Other
Shares under the Securities Act, it shall promptly give written notice to the
Investors of its intention to so register such Primary Shares, Registrable
Shares or Other Shares and, upon the written request, delivered to the
Corporation within 30 days after delivery of any such notice by the
Corporation, of the Investors to include in such registration their Registrable
Shares (which request shall specify the number of Registrable Shares proposed
to be included in such registration), the Corporation shall cause all such
Registrable Shares to be included in such registration on the same terms and
conditions as the Common Stock included in such registration, if such
securities are included; provided, however, that, subject to Section 3(c)
hereof, if the managing underwriter advises the Corporation in writing that the
inclusion of all Registrable Shares requested to be included in such
registration would interfere with the successful marketing (including pricing)
of the Primary Shares, Registrable Shares or Other Shares proposed to be
registered, then the number of Primary Shares, Registrable Shares and Other
Shares proposed to be included in such registration shall be included in the
following order:
(a) if the Corporation proposes to register Primary Shares:
(i) first, the Primary Shares;
(ii) second, the Registrable Shares (or, if necessary, such
Registrable Shares pro rata among the holders thereof based upon the
number of Registrable Shares requested to be registered by each such
holder; and
(iii) third, the Other Shares requested to be included in such
registration (or, if necessary, such Other Shares pro rata among the
holders thereof based upon the estimated initial offering price of the
Other Shares requested to be registered by each such holder); or
(b) if the Corporation does not propose to register Primary Shares:
(i) first, the Registrable Shares and the Other Shares held by
the parties demanding such registration (or, if necessary, first the
Other Shares and then the Registrable Shares, in each case, pro rata
among the Corporation and the holders thereof based on the estimated
initial offering price of such securities requested to be registered by
the Corporation and each such holder); and
(ii) second, the Registrable Shares and Other Shares (other than
shares registered pursuant to Section 3(b)(i) hereof) requested to be
registered by the holders thereof (or, if necessary, first the Other
Shares and then the Registrable Shares, in each case, pro rata among the
Corporation and the holders thereof based on the number of Registrable
Shares and Other Shares requested to be registered by the Corporation and
such holders); and
(c) Notwithstanding any provision of this Section 3 to the contrary,
with respect to the first registration statement which includes the Registrable
Shares of the Investors (whether such first registration statement is the
result of a request or demand by the Investors under Section 2 or Section 3),
all of the Registrable Shares of the Investors which have been requested or
demanded to be included in the such registration statement shall be included in
such registration statement. The Corporation hereby agrees that, with respect
to the first registration statement including Registrable Shares of the
Investors, the Corporation shall use its best efforts to successfully market
(including pricing) and distribute such Registrable Shares within 90 days after
the Investors delivered the notice by the Investors requesting that Registrable
Shares be included in a registration statement.
SECTION 4. Registrations on Form S-3. Anything contained in Section 2
to the contrary notwithstanding, the Investors shall have the right to request
in writing one registration per twelve month period on Form S-3 or any
successor form of Registrable Shares, which request or requests shall (i)
specify the number of Registrable Shares intended to be sold or disposed of and
the holders thereof and (ii) state the intended method of disposition of such
Registrable Shares which method may include a delayed or continuous offering. A
requested registration on Form S-3 or any such successor form in compliance
with this Section 4 shall count as a registration statement initiated pursuant
to Section 2 and shall otherwise be treated as a registration initiated
pursuant to, and shall, except as otherwise expressly provided in this Section
4, be subject to Section 2.
SECTION 5. Preparation and Filing. If and whenever the Corporation is
under an obligation pursuant to the provisions of this Agreement to effect the
registration of any Registrable Shares, the Corporation shall, as expeditiously
as practicable:
(a) cause a registration statement that registers such Registrable
Shares to become and remain effective until all of such Registrable Shares have
been distributed;
(b) furnish, at least five business days before filing a registration
statement that registers such Registrable Shares, a prospectus relating thereto
or any amendments or supplements relating to such a registration statement or
prospectus, to one counsel selected by the Investors (the "Investors'
Counsel"), copies of all such documents proposed to be filed (it being
understood that such five-business-day period need not apply to successive
drafts of the same document proposed to be filed so long as such successive
drafts are supplied to the Investors' Counsel in advance of the proposed filing
by a period of time that is customary and reasonable under the circumstances);
(c) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective until all of such Registrable Shares have been distributed and to
comply with the provisions of the Securities Act with respect to the sale or
other disposition of such Registrable Shares;
(d) notify in writing the Investors' Counsel promptly (i) of the
receipt by the Corporation of any notification with respect to any comments by
the Commission with respect to such registration statement or prospectus or any
amendment or supplement thereto or any request by the Commission for the
amending or supplementing thereof or for additional information with respect
thereto, (ii) of the receipt by the Corporation of any notification with
respect to the issuance by the Commission of any stop order suspending the
effectiveness of such registration statement or prospectus or any amendment or
supplement thereto or the initiation or threatening of any proceeding for that
purpose and (iii) of the receipt by the Corporation of any notification with
respect to the suspension of the qualification of such Registrable Shares for
sale in any jurisdiction or the initiation or threatening of any proceeding for
such purposes;
(e) register or qualify such Registrable Shares under such other
securities or blue sky laws of such jurisdictions as the Investors reasonably
request and do any and all other acts and things which may be reasonably
necessary or advisable to enable the Investors to consummate the disposition in
such jurisdictions of the Registrable Shares owned by the Investors; provided,
however , that the Corporation will not be required to qualify generally to do
business, subject itself to general taxation or consent to general service of
process in any jurisdiction where it would not otherwise be required to do so
but for this paragraph (e) or to provide any material undertaking or make any
changes in its By-laws or Certificate of Incorporation which the Board of
Directors determines to be contrary to the best interests of the Corporation;
(f) furnish to the Investors holding such Registrable Shares such
number of copies of a summary prospectus, if any, or other prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as such Investors may reasonably
request in order to facilitate the public sale or other disposition of such
Registrable Shares;
(g) cause such Registrable Shares to be registered with or approved by
such other governmental agencies or authorities as may be necessary by virtue
of the business and operations of the Corporation to enable the Investors
holding such Registrable Shares to consummate the disposition of such
Registrable Shares;
(h) notify the Investors holding such Registrable Shares on a timely
basis at any time when a prospectus relating to such Registrable Shares is
required to be delivered under the Securities Act within the appropriate period
mentioned in subparagraph (a) of this Section 5, of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing
and, at the request of the Investors, prepare and furnish to such Investors a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the offerees
of such shares, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing;
(i) make available upon reasonable notice and during normal business
hours, for inspection by the Investors holding such Registrable Shares, any
underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by the Investors
or underwriter (collectively, the "Inspectors"), all pertinent financial and
other records, pertinent corporate documents and properties of the Corporation
(collectively, the "Records"), as shall be reasonably necessary to enable them
to exercise their due diligence responsibility, and cause the Corporation's
officers, directors and employees to supply all information (together with the
Records, the "Information") reasonably requested by any such Inspector in
connection with such registration statement. Any of the Information which the
Corporation determines in good faith to be confidential, and of which
determination the Inspectors are so notified, shall not be disclosed by the
Inspectors unless (i) the disclosure of such Information is necessary to avoid
or correct a misstatement or omission in the registration statement, (ii) the
release of such Information is ordered pursuant to a subpoena or other order
from a court of competent jurisdiction or (iii) such Information has been made
generally available to the public through no breach or default of any third
party with an obligation of confidentiality to the Corporation;
(j) obtain from its independent certified public accountants "cold
comfort" letters in customary form and at customary times and covering matters
of the type customarily covered by cold comfort letters;
(k) obtain from its counsel an opinion or opinions in customary form;
(l) continue to provide a nationally recognized transfer agent and
nationally recognized registrar for such Registrable Shares;
(m) issue to any underwriter to which the Investors holding such
Registrable Shares may sell shares in such offering certificates evidencing
such Registrable Shares;
(n) list such Registrable Shares on any national securities exchange on
which any shares of the Common Stock are listed or, if the Common Stock is not
listed on a national securities exchange, qualify such Registrable Shares for
inclusion on the automated quotation system of the National Association of
Securities Dealers, Inc. (the "NASD"), or such other national securities
exchange as the holders of a majority of such Registrable Shares shall
reasonably request;
(o) comply with all applicable rules and regulations of the Commission
and make available to its securityholders, as soon as reasonably practicable,
audited earnings statements covering a period of 12 months beginning within
three months after the effective date of the registration statement, which
earnings statements shall satisfy the provisions of Section 11(a) of the
Securities Act; and
(p) take all other steps necessary to effect the registration of such
Registrable Shares contemplated hereby.
Each holder of the Registrable Shares, upon receipt of any notice from
the Corporation of any event of the kind described in Section 5(h) hereof,
shall forthwith discontinue disposition of the Registrable Shares pursuant to
the registration statement covering such Registrable Shares until such holder's
receipt of the copies of the supplemented or amended prospectus contemplated by
Section 5(h) hereof, and, if so directed by the Corporation, such holder shall
deliver to the Corporation all copies, other than permanent file copies then in
such holder's possession, of the prospectus covering such Registrable Shares at
the time of receipt of such notice.
SECTION 6. Expenses. All expenses (other than underwriting discounts
and commissions relating to the Registrable Shares, as provided in the
succeeding clause of this Section 6) incurred by the Corporation in complying
with Section 5, including, without limitation, all registration and filing fees
(including all expenses incident to filing with the NASD), fees and expenses of
complying with securities and blue sky laws, printing expenses, fees and
expenses of the Corporation's counsel and accountants and reasonable fees and
expenses of the Investors' Counsel, shall be paid by the Corporation; provided,
however, that all underwriting discounts and selling commissions applicable to
the Registrable Shares and Other Shares shall be borne by the holders selling
such Registrable Shares and Other Shares, in proportion to the number of
Registrable Shares and Other Shares sold by each such holder.
SECTION 7. Indemnification.
(a) In connection with any registration of any Registrable Shares under
the Securities Act pursuant to this Agreement, the Corporation shall indemnify
and hold harmless the holders of Registrable Shares, each underwriter, broker
or any other person acting on behalf of the holders of Registrable Shares and
each other person, if any, who controls any of the foregoing persons within the
meaning of the Securities Act against any losses, claims, damages or
liabilities, joint or several (or actions in respect thereof), to which any of
the foregoing persons may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or allegedly untrue
statement of a material fact contained in the registration statement under
which such Registrable Shares were registered under the Securities Act, any
preliminary prospectus or final prospectus contained therein or otherwise filed
with the Commission, any amendment or supplement thereto or any document
incident to registration or qualification of any Registrable Shares, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading or, with respect to any prospectus, necessary to make
the statements therein in light of the circumstances under which they were made
not misleading, or any violation by the Corporation of the Securities Act or
state securities or blue sky laws applicable to the Corporation and relating to
action or inaction required of the Corporation in connection with such
registration or qualification under such state securities or blue sky laws; and
shall reimburse the holders of Registrable Shares, such underwriter, such
broker or such other person acting on behalf of the holders of Registrable
Shares and each such controlling person for any legal or other expenses
reasonably incurred by any of them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Corporation shall not be liable in any such case to the extent that
any such loss, claim, damage, liability or action (including any legal or other
expenses incurred) arises out of or is based upon an untrue statement or
omission made in said registration statement, preliminary prospectus, final
prospectus, amendment, supplement or document incident to registration or
qualification of any Registrable Shares in reliance upon and in conformity with
written information furnished to the Corporation through an instrument duly
executed by the holders of Registrable Shares or their counsel or underwriter
specifically for use in the preparation thereof; provided further, however,
that the foregoing indemnity agreement is subject to the condition that,
insofar as it relates to any untrue statement or omission made in any
preliminary prospectus but eliminated or remedied in the final prospectus
(filed pursuant to Rule 424 of the Securities Act), such indemnity agreement
shall not inure to the benefit of any Investor, underwriter, broker or other
person acting on behalf of holders of the Restricted Shares from whom the
person asserting any loss, claim, damage, liability or expense purchased the
Restricted Shares which are the subject thereof, if a copy of such final
prospectus had been made available to such person and such Investor,
underwriter, broker or other person acting on behalf of holders of the
Registrable Shares and such final prospectus was delivered to such person with
or prior to the written confirmation of the sale of such Registrable Shares to
such person.
(b) In connection with any registration of Registrable Shares under the
Securities Act pursuant to this Agreement, each holder of Registrable Shares
shall severally and not jointly indemnify and hold harmless (in the same manner
and to the same extent as set forth in the preceding paragraph of this Section
7) the Corporation, each director of the Corporation, each officer of the
Corporation who shall sign such registration statement, each underwriter,
broker or other person acting on behalf of the holders of Registrable Shares
and each person who controls any of the foregoing persons within the meaning of
the Securities Act with respect to any statement or omission from such
registration statement any preliminary prospectus or final prospectus contained
therein or otherwise filed with the Commission, any amendment or supplement
thereto or any document incident to registration or qualification of any
Registrable Shares, if such statement or omission was made in reliance upon and
in conformity with written information furnished to the Corporation or such
underwriter specifically for use in connection with the preparation of such
registration statement, preliminary prospectus, final prospectus, amendment,
supplement or document; provided, however, that no Investor shall have any
obligation under this Section 7(b) except for statements made by the Investor
with respect to the title of the Registrable Shares and the name and
information regarding the Investor required to be disclosed in such
registration statement; and provided further, however, that the maximum amount
of liability in respect of such indemnification shall be limited, in the case
of each seller of Registrable Shares, to an amount equal to the net proceeds
actually received by such seller from the sale of Registrable Shares effected
pursuant to such registration.
(c) Promptly after receipt by an indemnified party of notice of the
commencement of any action involving a claim referred to in the preceding
paragraphs of this Section 7, such indemnified party will, if a claim in
respect thereof is made against an indemnifying party, give written notice to
the latter of the commencement of such action. In case any such action is
brought against an indemnified party, the indemnifying party will be entitled
to participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be responsible for
any legal or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof; provided, however, that if any indemnified
party shall have reasonably concluded that there may be one or more legal or
equitable defenses available to such indemnified party which are additional to
or conflict with those available to the indemnifying party, or that such claim
or litigation involves or could have an effect upon matters beyond the scope of
the indemnity agreement provided in this Section 7, the indemnifying party
shall not have the right to assume the defense of such action on behalf of such
indemnified party and such indemnifying party shall reimburse such indemnified
party and any person controlling such indemnified party for that portion of the
fees and expenses of any counsel retained by the indemnified party which is
reasonably related to the matters covered by the indemnity agreement provided
in this Section 7.
(d) If the indemnification provided for in this Section 7 is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, claim, damage, liability or action referred to herein,
then the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amounts paid or payable by such indemnified
party as a result of such loss, claim, damage, liability or action in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions which resulted in such loss, claim, damage,
liability or action as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the indemnifying party
or by the indemnified party and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission.
SECTION 8. Information by Holder. The Investors shall furnish to the
Corporation such written information regarding the Investors and the
distribution proposed by the Investors as the Corporation may reasonably
request in writing and as shall be reasonably required in connection with any
registration, qualification or compliance referred to in this Agreement.
SECTION 9. Exchange Act Compliance. The Corporation shall comply with
all of the reporting requirements of the Exchange Act applicable to it and
shall comply with all other public information reporting requirements of the
Commission which are conditions to the availability of Rule 144 for the sale of
the Common Stock. The Corporation shall cooperate with the Investors in
supplying such information as may be necessary for the Investors to complete
and file any information reporting forms presently or hereafter required by the
Commission as a condition to the availability of Rule 144. The Corporation
shall not take any action which would not require it to be subject to the
provisions of the Exchange Act.
SECTION 10. No Conflict of Rights. The Corporation shall not, after
the date hereof, grant any registration rights which conflict with or impair
the registrations rights granted hereby.
SECTION 11. Termination. This Agreement shall terminate and be of no
further force or effect when there shall no longer be any Registrable Shares
which have not been registered under the Securities Act and distributed to the
public in the manner described in the registration statement or registration
statements which registered such securities.
SECTION 12. Successors and Assigns. This Agreement shall bind and
inure to the benefit of the Corporation and the Investors and the respective
successors and assigns of the Investors.
SECTION 13. Assignment. Each Investor may assign his or its rights
hereunder; provided, however, that such purchaser or transferee shall, as a
condition to the effectiveness of such assignment, be required to execute a
counterpart to this Agreement agreeing to be treated as an Investor whereupon
such purchaser or transferee shall have the benefits of, and shall be subject
to the restrictions contained in, this Agreement as if such purchaser or
transferee was originally included in the definition of an Investor herein and
had originally been a party hereto.
SECTION 14. Entire Agreement. This Agreement contains the entire
agreement among the Corporation and the Investors with respect to the subject
matter hereof and supersedes all prior and contemporaneous arrangements or
understandings with respect thereto.
SECTION 15. Notices. All notices, requests, claims, demands and other
communications given or made pursuant hereto shall be in writing (and shall be
deemed to have been duly given or made upon receipt) by delivery in person, by
cable, by telecopy (with confirmation copy of such telecopied material
delivered in person or by registered or certified mail, postage prepaid, return
receipt requested) or by registered or certified mail (postage prepaid, return
receipt requested) to the respective parties at the following addresses (or at
such other address for a party as shall be specified in a notice given in
accordance with this Section 15):
(i) if to any Investor:
To: Michael C. Slade
c/o Herrick, Feinstein LLP
2 Park Avenue
New York, N.Y. 10016
Attention: Michael Heitner, Esq. and
Irwin A. Kishner, Esq.
(ii) if to the Corporation:
To: NBTY, Inc.
90 Orville Drive
Bohemia, New York 11716
Attention: Scott Rudolph and Harvey Kamil
with a copy to:
Michael C. Duban, P.C.
81 Main Street, Suite 205
White Plains, New York 10601
Attention: Michael C. Duban, Esq.
SECTION 16. Modifications; Amendments; Waivers. The terms and
provisions of this Agreement may not be modified or amended, nor may any
provision be waived, except pursuant to a writing signed by the Corporation and
the holders of at least a majority of the Registrable Shares then outstanding;
provided, however, that any amendment to or modification of this Agreement
which would not have an adverse affect on the rights of any Investor shall not
require the written consent of such Investor.
SECTION 17. Counterparts; Facsimile Signatures. This Agreement may be
executed in any number of counterparts, and each such counterpart hereof shall
be deemed to be an original instrument, but all such counterparts together
shall constitute but one agreement. Facsimile counterpart signatures to this
Agreement shall be acceptable if the originally executed counterpart is
delivered within a reasonable period thereafter.
SECTION 18. Headings. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be a part of this Agreement.
SECTION 19. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed wholly therein.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Registration Rights Agreement on the date first written above.
/s/ Michael C. Slade
MICHAEL C. SLADE
ABRAHAM FELDMAN TRUST
F/B/O RUTH SLADE
By: /s/ Ruth Slade
------------------------------------------
Name: Ruth Slade
Title: Trustee of the Abraham Feldman
Trust F/B/O Ruth Slade U/A 1/21/91
(the "RS Trust"), is signing this
document solely in his fiduciary
capacity, and recourse against the
RS Trust shall be limited solely
to the assets of the RS Trust, and
no recourse shall be had against
the Trustee thereof.
ABRAHAM FELDMAN TRUST
F/B/O E. STEVEN LENGER
By: /s/ E. Steven Lenger
------------------------------------------
Name: E. Steven Lenger
Title: Trustee of the Abraham Feldman
Trust F/B/O E. Steven Lenger U/A/
1/21/91 (the "ESL Trust"), is
signing this document solely in
his fiduciary capacity, and
recourse against the ESL Trust
shall be limited solely to the
assets of the ESL Trust, and no
recourse shall be had against the
Trustee thereof.
NBTY, INC.
By: /s/ Scott Rudolph
------------------------------------------
Name: Scott Rudolph
Title: President and Chief Executive
Officer
JOINT FILING AGREEMENT
Each of the undersigned hereby agree that the Statement on Schedule
13D, dated as of April 20, 1998 (the "Schedule 13D"), with respect to the
Common Stock, par value $0.008 per share, of NBTY, Inc., a Delaware
corporation, is, and any amendments thereto executed by each of us shall
be, filed on behalf of each of us pursuant to and in accordance with the
provisions of Rule 13d-1(f)(1) under the Securities and Exchange Act of
1934, as amended, and that this Agreement shall be included as an Exhibit
to the Schedule 13D and each such amendment. Each of the undersigned
agrees to be responsible for the timely filing of the Schedule 13D and any
amendments thereto, and for the completeness and accuracy of the
information concerning itself contained therein. This Agreement may be
executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the 23rd day of April, 1998.
/s/ Michael C. Slade
------------------------------------
MICHAEL C. SLADE
/s/ Ruth L. Slade
------------------------------------
RUTH L. SLADE
ABRAHAM FELDMAN TRUST
F/B/O RUTH SLADE U/A 1/21/91
By: /s/ Ruth L. Slade
-------------------------------
Ruth L. Slade, Trustee
/s/ E. Steven Lenger
------------------------------------
E. STEVEN LENGER
ABRAHAM FELDMAN TRUST
F/B/O E. STEVEN LENGER U/A 1/21/91
By: /s/ E. Steven Lenger
-------------------------------
E. Steven Lenger, Trustee
