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AGREEMENT AND PLAN OF MERGER
Between
PDK ACQUISITION CORP.
and
PDK LABS, INC.
Dated as of
August 3, 2000
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AGREEMENT AND PLAN OF MERGER, dated as of August 3 , 2000 (this
"Agreement") between PDK Acquisition Corp., a New York corporation
("Purchaser"), and PDK Labs, Inc., a New York corporation (the "Company").
WHEREAS, prior to organizing Purchaser, the shareholders of
Purchaser (the "Continuing Shareholders") owned, in the aggregate, 672,500
shares of Common Stock, par value $.01 per share (the "Common Stock"), and 0
shares of Preferred Stock, par value $.01 per share (the "Preferred Stock," and
together with the Common Stock, the "Shares"), of the Company, representing
approximately 28.8% of the shares of Common Stock outstanding (excluding
treasury stock) and the right to vote 33.0% of the shares of common stock
outstanding (excluding treasury shares). As the Preferred Stock is convertible
into Common Stock at a ratio of 0.3-1, the Continuing Shareholders owned, in the
aggregate, 30.5% of the Shares of the Company on a fully diluted basis; and
WHEREAS, the Continuing Shareholders have transferred all of their
Shares to the Purchaser in exchange for all the issued and outstanding shares of
capital stock of the Purchaser; and
WHEREAS, it is proposed that the Continuing Shareholders, through
their ownership of Purchaser, acquire the remaining issued and outstanding
Shares; and
WHEREAS, it is proposed that Purchaser be merged with and into the
Company (the "Merger") upon the terms and subject to the conditions set forth in
this Agreement and in the certificate of merger (the "Certificate of Merger"),
in substantially the form attached hereto as Exhibit A, and in accordance with
New York Law (as hereafter defined); and
WHEREAS, JW Genesis Capital Markets, Inc. ("Bank") has delivered to
the Special Committee of Independent Directors (the "Special Committee") of the
Board of Directors of the Company (the "Board"), for the Special Committee's
consideration, its written opinion that, subject to the various assumptions and
limitations set forth therein as of the date of such opinion, the cash
consideration to be received in the Merger by the stockholders of the Company
other than Purchaser or it affiliates is fair to such stockholders from a
financial point of view; and
WHEREAS, the Special Committee, at a meeting duly called and held on
July 26, 2000, has (A) unanimously determined that (x) $5.00 is a fair price for
a share of Common Stock and (y) $8.00 plus accrued and unpaid dividends thereon
through the Effective Time is a fair price for a share of Preferred Stock, (B)
determined that this Agreement and the transactions contemplated by this
Agreement (the "Transactions") are fair to the stockholders of the Company
(other than Purchaser and its affiliates), and (C) on the basis of the foregoing
and the opinion of Bank, unanimously recommended that the Board approve and
authorize the Merger and this Agreement; and
WHEREAS, the Board, at a meeting duly called and held on August 3,
2000, has (A) approved and adopted this Agreement and the Transactions,
including the Merger in accordance with the New York Business Corporations Law
("New York Law") and upon the
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terms and subject to the conditions set forth in this Agreement, and (B)
resolved to recommend that the stockholders of the Company approve and adopt
this Agreement and the Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Purchaser and the Company hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with New York Law, at the
Effective Time (as hereinafter defined) Purchaser shall be merged with and into
the Company. As a result of the Merger, the separate corporate existence of
Purchaser shall cease and the Company shall continue as the surviving
corporation of the Merger (the "Surviving Corporation"). Notwithstanding
anything to the contrary contained in this Section 1.01, Purchaser may elect
instead, at any time prior to the fifth business day immediately preceding the
date on which the Proxy Statement (as hereinafter defined) is mailed initially
to the Company's stockholders, to merge the Company into Purchaser or another
corporation controlled by, controlling or under common control with Purchaser.
In such event, the parties agree to execute an appropriate amendment to this
Agreement in order to reflect the foregoing and to provide, as the case may be,
that Purchaser or such other corporation controlled by Purchaser shall be the
Surviving Corporation.
SECTION 1.02 Effective Time; Closing. As promptly as practicable after
the satisfaction or, if permissible, waiver of the conditions set forth in
Article V, the parties hereto shall cause the Merger to be consummated by filing
this Agreement or a certificate of merger (in either case, the "Certificate of
Merger") with the Secretary of State of the State of New York, in such form as
is required by, and executed in accordance with the relevant provisions of, New
York Law (the date and time of such filing being the "Effective Time"). Prior to
such filing, a closing shall be held at the offices of Morrison Cohen Singer &
Weinstein, LLP, 750 Lexington Avenue, New York, New York, 10022, or such other
place as the parties shall agree, for the purpose of confirming the satisfaction
or waiver, as the case may be, of the conditions set forth in Article V.
SECTION 1.03 Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of New York Law.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time all the property, rights, privileges, powers and franchises of
the Company and Purchaser shall vest in the Surviving Corporation, and all
debts, liabilities, obligations, restrictions, disabilities and duties of the
Company and Purchaser shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
SECTION 1.04 Certificate of Incorporation; By-laws. (a) Unless
otherwise determined by Purchaser prior to the Effective Time, at the Effective
Time the Certificate of Incorporation of the Company shall be amended and
restated as set forth in Exhibit 1.04 hereto
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and such Certificate of Incorporation, as amended and restated, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by law and such Certificate of Incorporation.
(b) Unless otherwise determined by Purchaser prior to the Effective
Time, the By-laws of the Company, as in effect immediately prior to the
Effective Time, shall be the By-laws of the Surviving Corporation until
thereafter amended as provided by law, the Certificate of Incorporation of the
Surviving Corporation and such By-laws.
SECTION 1.05 Directors and Officers. The directors of Purchaser
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-laws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
SECTION 1.06 Conversion of Securities. At the Effective Time, by virtue
of the Merger and without any action on the part of Purchaser, the Company or
the holders of any of the following securities:
(a) Each share of Common Stock issued and outstanding immediately
prior to the Effective Time (other than any shares of Common Stock to be
canceled pursuant to Section 1.06(c) and any Dissenting Shares (as hereinafter
defined)) shall be canceled and shall be converted automatically into the right
to receive an amount equal to $5.00 in cash (the "Common Stock Merger
Consideration") payable, without interest, to the holder of such share of Common
Stock, upon surrender, in the manner provided in Section 1.09, of the
certificate that formerly evidenced such share of Common Stock;
(b) Each share of Preferred Stock issued and outstanding immediately
prior to the Effective Time (other than shares to be cancelled pursuant to
Section 1.06(c) and any Dissenting Shares) shall be cancelled and shall be
converted automatically into the right to receive an amount equal to $8.00 plus
accrued and unpaid dividends thereon through the Effective Time, in cash (the
"Preferred Stock Merger Consideration" and, together with the Common Stock
Merger Consideration, the "Merger Consideration") payable, without interest, to
the holder of such share of Preferred Stock upon surrender, in the manner
provided in Section 1.09, of the certificate that formerly evidenced such share
of Preferred Stock.
(c) Each Share held in the treasury of the Company and each Share
owned by Purchaser, any Affiliate of Purchaser or any direct or indirect
subsidiary of the Company, immediately prior to the Effective Time shall be
canceled without any conversion thereof and no payment or distribution shall be
made with respect thereto; and
(d) Each share of Common Stock, par value $.01 per share, of
Purchaser issued and outstanding immediately prior to the Effective Time shall
be converted into and exchanged for one validly issued, fully paid and
nonassessable share of Common Stock, par value $.01 per share, of the Surviving
Corporation.
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SECTION 1.07 Stock Options. Each stock option (a "Company Stock
Option") outstanding, whether or not exercisable and whether or not vested, at
the Effective Time under the PDK Labs, Inc. Non-Qualified Stock Option Plan, as
amended (the "Company Stock Option Plan"), shall be canceled by the Company
immediately prior to the Effective Time, and each holder of a canceled Company
Stock Option shall be entitled to receive at the Effective Time or as soon as
practicable thereafter from the Surviving Corporation in consideration for the
cancellation of such Company Stock Option an amount (the "Option Spread") equal
to the product of (i) the number of Shares previously subject to such Company
Stock Option and (ii) the excess, if any, of the Common Stock Merger
Consideration over the exercise price per share of Company Common Stock
previously subject to such Company Stock Option. The Option Spread, after
reduction for applicable tax withholding, if any, shall be paid in cash without
interest.
SECTION 1.08 Dissenting Shares. Notwithstanding any provision of this
Agreement to the contrary, Shares that are outstanding immediately prior to the
Effective Time and which are held by stockholders who shall have not voted in
favor of the Merger or consented thereto in writing and who shall have demanded
properly in writing appraisal for such Shares in accordance with Section 623 of
New York Law (collectively, the "Dissenting Shares") shall not be converted into
or represent the right to receive the Merger Consideration. Such stockholders
shall be entitled to receive payment of the appraised value of such Shares held
by them in accordance with the provisions of such Section 623, except that all
Dissenting Shares held by stockholders who shall have failed to perfect or who
effectively shall have withdrawn or lost their rights to appraisal of such
Shares under such Section 623 shall thereupon be deemed to have been converted
into and to have become exchangeable for, as of the Effective Time, the right to
receive the Merger Consideration, without any interest thereon, upon surrender,
in the manner provided in Section 1.09, of the certificate or certificates that
formerly evidenced such Shares.
SECTION 1.09 Surrender of Shares; Stock Transfer Books. (a) Prior to
the Effective Time, Purchaser shall designate a bank or trust company to act as
agent (the "Paying Agent") for the holders of Shares in connection with the
Merger to receive the funds to which holders of Shares shall become entitled
pursuant to Sections 1.06(a) and (b). At the Effective Time, Purchaser shall
cause to be deposited with the Paying Agent in immediately available funds the
aggregate amount of the Merger Consideration. Such funds shall be invested by
the Paying Agent as directed by the Surviving Corporation, provided that such
investments shall be in obligations of or guaranteed by the United States of
America or of any agency thereof and backed by the full faith and credit of the
United States of America, in commercial paper obligations rated A-1 or P-1 or
better by Moody's Investors Services, Inc. or Standard & Poor's Corporation,
respectively, or in deposit accounts, certificates of deposit or banker's
acceptances of, repurchase or reverse repurchase agreements with, or Eurodollar
time deposits purchased from, commercial banks with capital surplus and
undivided profits aggregating in excess of $50 million (based on the most recent
financial statements of such bank which are then publicly available at the SEC
or otherwise).
(b) Promptly after the Effective Time, the Surviving Corporation
shall cause to be mailed to each person who was, at the Effective Time, a holder
of record of Shares entitled to receive Common Stock Merger Consideration and/or
Preferred Stock Merger Consideration
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pursuant to Section 1.06(a) or (b), as applicable, a form of letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the certificates evidencing such Shares (the "Certificates")
shall pass, only upon proper delivery of the Certificates to the Paying Agent)
and instructions for use in effecting the surrender of the Certificates pursuant
to such letter of transmittal. Upon surrender to the Paying Agent of a
Certificate, together with such letter of transmittal, duly completed and
validly executed in accordance with the instructions thereto, and such other
documents as may be required pursuant to such instructions, the holder of such
Certificate shall be entitled to receive in exchange therefor the Common Stock
Merger Consideration and/or Preferred Stock Merger Consideration, as the case
may be, for each Share formerly evidenced by such Certificate, and such
Certificate shall then be canceled. No interest shall accrue or be paid on the
Common Stock Merger Consideration or the Preferred Stock Merger Consideration
payable upon the surrender of any Certificate for the benefit of the holder of
such Certificate. If payment of the Common Stock Merger Consideration and/or
Preferred Stock Merger Consideration, as the case may be, is to be made to a
person other than the person in whose name the surrendered Certificate is
registered on the stock transfer books of the Company, it shall be a condition
of payment that the Certificate so surrendered shall be endorsed properly or
otherwise be in proper form for transfer and that the person requesting such
payment shall have paid all transfer and other taxes required by reason of the
payment of the Common Stock Merger Consideration and/or Preferred Stock Merger
Consideration, as the case may be, to a person other than the registered holder
of the Certificate surrendered or shall have established to the satisfaction of
the Surviving Corporation that such taxes either have been paid or are not
applicable.
(c) At any time following the sixth month after the Effective Time,
the Surviving Corporation shall be entitled to require the Paying Agent to
deliver to it any funds which had been made available to the Paying Agent and
not disbursed to holders of Shares (including, without limitation, all interest
and other income received by the Paying Agent in respect of all funds made
available to it), and thereafter such holders shall be entitled to look to the
Surviving Corporation (subject to abandoned property, escheat and other similar
laws) only as general creditors thereof with respect to any Merger Consideration
that may be payable upon due surrender of the Certificates held by them.
Notwithstanding the foregoing, neither the Surviving Corporation nor the Paying
Agent shall be liable to any holder of a Share for any Merger Consideration
delivered in respect of such Share to a public official pursuant to any
abandoned property, escheat or other similar law.
(d) At the close of business on the day of the Effective Time, the
stock transfer books of the Company shall be closed and thereafter there shall
be no further registration of transfers of Shares on the records of the Company.
From and after the Effective Time, the holders of Shares outstanding immediately
prior to the Effective Time shall cease to have any rights with respect to such
Shares except as otherwise provided herein or by applicable law.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Purchaser that:
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SECTION 2.01 Organization and Qualification; Subsidiaries. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of New York and has the requisite power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as it is now being conducted, except where the failure to be so
organized, existing or in good standing or to have such power, authority and
governmental approvals would not, individually or in the aggregate, have a
Material Adverse Effect (as defined below). The Company is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its business makes such qualification or
licensing necessary, except for such failures to be so qualified or licensed and
in good standing that would not, individually or in the aggregate, have a
Material Adverse Effect. When used in connection with the Company, the term
"Material Adverse Effect" means any change or effect that, when taken together
with all other adverse changes and effects that are within the scope of the
representations and warranties made by the Company in this Agreement and which
are not individually or in the aggregate deemed to have a Material Adverse
Effect, is or is reasonably likely to be materially adverse to the business,
operations, properties, condition (financial or otherwise), assets or
liabilities (including, without limitation, contingent liabilities) or prospects
of the Company. Except as set forth on Schedule 2.01, the Company does not
directly or indirectly own any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for, any equity or similar
interest in, any corporation, partnership, joint venture or other business
association or entity.
SECTION 2.02 Authority Relative to this Agreement. The Company has all
necessary power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the Transactions. The execution and
delivery of this Agreement by the Company and the consummation by the Company of
the Transactions have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the Transactions
(other than, with respect to the Merger, the approval and adoption of this
Agreement by the holders of two-thirds of the then outstanding shares, and the
filing and recordation of appropriate merger documents as required by New York
Law). This Agreement has been duly and validly executed and delivered by the
Company and, assuming the due authorization, execution and delivery by
Purchaser, constitutes a legal, valid and binding obligation of the Company. The
Board of Directors has approved the Merger and the Transactions in accordance
with the provisions of Section 902 of the New York Law.
SECTION 2.03 Capitalization. The authorized capital stock of the
Company consists of 30,000,000 shares of Common Stock, par value $.01 per share
("Common Stock"), and 5,000,0000 shares of Preferred Stock, par value $.01 per
share ("Preferred Stock"). As of the date hereof, (i) 2,320,007 shares of Common
Stock and 447,466 shares of Preferred Stock are issued and outstanding, all of
which are validly issued, fully paid and nonassessable, (ii) 1,487,146 shares of
Common Stock are held in the treasury of the Company and (iii) 0 shares of
Preferred Stock were held in the treasury of the Company. Except as set forth in
this Section 2.03, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of the Company or obligating the Company to issue or sell any
shares of capital stock of, or other equity interests in,
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the Company. All Shares subject to issuance as aforesaid, upon issuance on the
terms and conditions specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid and nonassessable.
SECTION 2.04 No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by the Company does not, and the
performance of this Agreement by the Company will not, (i) conflict with or
violate the Certificate of Incorporation or By-laws or equivalent organizational
documents of the Company, (ii) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to the Company by which any
property or asset of the Company is bound or affected, or (iii) result in any
breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of the Company
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation.
(b) The execution and delivery of this Agreement by the Company does
not, and the performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, domestic or foreign, except for
applicable requirements, if any, of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), state securities or "blue sky" laws ("Blue Sky
Laws") and state takeover laws, and filing and recordation of appropriate merger
documents as required by New York Law and (ii) where failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay consummation of Merger, or otherwise
prevent the Company from performing its obligation under this Agreement, and
would not, individually or in the aggregate, have a Material Adverse Effect.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Company that:
SECTION 3.01 Corporate Organization. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York and has the requisite power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as it is now being conducted, except where the failure to be so
organized, existing or in good standing or to have such power, authority and
governmental approvals would not, individually or in the aggregate, have a
material adverse effect on the business or operations of Purchaser.
SECTION 3.02 Capitalization. As of the date hereof, 1,000 shares of
Purchaser's Common Stock, par value $.01 per share, are issued and outstanding,
all of which have been issued to the Continuing Shareholders in consideration of
the respective transfer to Purchaser by each such Continuing Shareholder of all
of his or her Shares.
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SECTION 3.03 Authority Relative to this Agreement. Purchaser has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the Transactions. The
execution and delivery of this Agreement by Purchaser and the consummation by
Purchaser of the Transactions have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of
Purchaser are necessary to authorize this Agreement or to consummate the
Transactions (other than, with respect to the Merger, the filing and recordation
of appropriate merger documents as required by New York Law). This Agreement has
been duly and validly executed and delivered by Purchaser and, assuming the due
authorization, execution and delivery by the Company, constitutes a legal, valid
and binding obligation of Purchaser, enforceable against Purchaser in accordance
with its terms.
SECTION 3.04 No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by Purchaser do not, and the
performance of this Agreement by Purchaser will not, (i) conflict with or
violate the Certificate of Incorporation or By-laws of Purchaser, (ii) conflict
with or violate any law, rule, regulation, order, judgment or decree applicable
to Purchaser or by which any of its property or assets is bound or affected, or
(iii) result in any breach of or constitute a default (or an event which with
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 a lien or other encumbrance on any property or asset of
Purchaser pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
Purchaser is a party or by which Purchaser or any property or asset of Purchaser
is bound or affected, except for any such conflicts, violations, breaches,
defaults or other occurrences which would not, individually or in the aggregate,
have a material adverse effect on the business or operations of Purchaser.
(b) The execution and delivery of this Agreement by Purchaser do
not, and the performance of this Agreement by Purchaser will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, domestic or foreign, except (i)
for applicable requirements, if any, of the Exchange Act, Blue Sky Laws and
state takeover laws, and filing and recordation of appropriate merger documents
as required by New York Law and (ii) where failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not prevent or delay consummation of the Merger, or otherwise prevent
Purchaser from performing its obligations under this Agreement.
SECTION 3.05 No Current Intent to Sell Business. Purchaser has no
current intention to sell, transfer or otherwise dispose of the business of the
Company or any material part thereof following the consummation of the Merger,
but there can be no assurance that the Surviving Corporation will not determine
to cause such a transfer in the future.
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ARTICLE IV
ADDITIONAL AGREEMENTS
SECTION 4.01 Stockholders' Meeting. The Company, acting through the
Board, shall, in accordance with applicable law and the Company's Certificate of
Incorporation and By-laws, duly call, give notice of, convene and hold an annual
or special meeting of its stockholders as soon as practicable for the purpose of
considering and approving this Agreement and the Merger (the "Special Meeting").
In connection with the Special Meeting, the Board shall recommend that the
shareholders of the Company vote to approve this Agreement and the Merger unless
the Special Committee has determined at any time prior to the Special Meeting in
good faith, after consultation with and based upon the reasonably concluded
advice of (i) Bank that this Agreement or the Merger is no longer in the best
interest of the shareholders of the Company and (ii) counsel to the Special
Committee that the modification or withdrawal of its recommendation is required
to satisfy the fiduciary duties of the Board under applicable law.
SECTION 4.02 Proxy Materials and Schedule 13E-3. (a) In connection with
the Special Meeting, the Company shall prepare and file a preliminary proxy
statement relating to the transactions contemplated by this Agreement and the
Merger (the "Preliminary Proxy Statement") with the United States Securities and
Exchange Commission (the "SEC") and shall use its reasonable best efforts to
respond to the comments of the SEC and to cause a definitive proxy statement to
be mailed to the Company's shareholders (the "Definitive Proxy Statement") all
as soon as reasonably practicable; provided, that prior to the filing of each of
the Preliminary Proxy Statement and the Definitive Proxy Statement, the Company
shall consult with Purchaser with respect to such filings and shall afford
Purchaser reasonable opportunity to comment thereon. Purchaser shall provide the
Company with any information for inclusion in the Preliminary Proxy Statement
and the Definitive Proxy Statement that may be required under applicable law and
is reasonably requested by the Company.
(b) The Company and Purchaser shall, and shall cause any other
Person that may be deemed to be an affiliate of the Company to, prepare and file
concurrently with the filing of the Preliminary Proxy Statement a Statement on
Schedule 13E-3 ("Schedule 13E-3") with the SEC. If at any time prior to the
Special Meeting any event should occur that is required by applicable law to be
set forth in an amendment of, or supplement to, the Schedule 13E-3, the Company
and Purchaser shall, and shall cause such Person to, file such amendments or
supplements.
SECTION 4.03 Directors' and Officers' Indemnification and Insurance.
(a) The Certificate of Incorporation of the Surviving Corporation shall contain
provisions no less favorable with respect to indemnification than are set forth
in the Certificate of Incorporation of the Company, which provisions shall not
be amended, repealed or otherwise modified for a period of ten years from the
Effective Time in any manner that would affect adversely the rights thereunder
of individuals who at the Effective Time were directors, officers, employees,
fiduciaries or agents of the Company, unless such modification shall be required
by law.
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(b) The Company shall, to the fullest extent permitted under
applicable law and regardless of whether the Merger becomes effective, indemnify
and hold harmless, and, after the Effective Time, the Surviving Corporation
shall, to the fullest extent permitted under applicable law, indemnify and hold
harmless, each present and former director, officer, employee, fiduciary and
agent of the Company (collectively, the "Indemnified Parties") against all costs
and expenses (including attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in connection with any
claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time), whether civil, criminal, administrative or
investigative, arising out of or pertaining to any action or omission in their
capacity as an officer, director, employee, fiduciary or agent, whether
occurring before or after the Effective Time, for a period of ten years after
the date hereof. In the event of any such claim, action, suit, proceeding or
investigation, (i) the Company or the Surviving Corporation, as the case may be,
shall pay the reasonable fees and expenses of counsel selected by the
Indemnified Parties, which counsel shall be reasonably satisfactory to the
Company or the Surviving Corporation, promptly after statements therefor are
received and (ii) the Company and the Surviving Corporation shall cooperate in
the defense of any such matter; provided, however, that neither the Company nor
the Surviving Corporation shall be liable for any settlement effected without
its written consent (which consent shall not be unreasonably withheld); and
provided, further, that neither the Company nor the surviving Corporation shall
be obligated pursuant to this Section 4.03(b) to pay the fees and expenses of
more than one counsel for all Indemnified Parties in any single action except to
the extent that two or more of such Indemnified Parties shall have conflicting
interests in the outcome of such action; and provided, further, that, in the
event that any claim for indemnification is asserted or made within such
ten-year period, all rights to indemnification in respect of such claim shall
continue until the disposition of such claim.
(c) The Surviving Corporation shall use its best efforts to maintain
in effect for six years from the Effective Time, if available, the current
directors' and officers' liability insurance policies maintained by the Company
(provided that the Surviving Corporation may substitute therefor policies of at
least the same coverage containing terms and conditions which are not materially
less favorable) with respect to matters occurring prior to the Effective Time;
provided, however, that in no event shall the Surviving Corporation be required
to expend pursuant to this Section 4.03(c): (i) for period beginning at the
Effective Time and ending three years thereafter, more than an amount per year
equal to 300% of current annual premiums (the "Current Annual Premiums") paid by
the Company for such insurance (which premiums the Company represents and
warrants to be approximately $75,000 in the aggregate), and (ii) for the period
beginning on the third anniversary of the Effective Time and ending three years
thereafter, more than an amount per year equal to 200% of the Current Annual
Premiums..
SECTION 4.04 Financing. Purchaser shall use its reasonable best efforts
to obtain the financing required to satisfy the condition to closing set forth
in Section 5.02(d). The Company shall cooperate with, and use its reasonable
best efforts to assist, Purchaser in obtaining such financing. Purchaser shall
keep the Company reasonably informed of the status of its efforts to obtain such
financing and shall promptly deliver to the Company any fully executed
commitment letters entered into by Purchaser for such financing.
<PAGE>
SECTION 4.05 Further Action; Reasonable Best Efforts. Upon the terms
and subject to the conditions hereof, each of the parties hereto shall use its
reasonable best efforts to take, or cause to be taken, all appropriate action,
and to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
Transactions, including, without limitation, using its reasonable best efforts
to obtain all licenses, permits (including, without limitation, Environmental
Permits), consents, approvals, authorizations, qualifications and orders of
governmental authorities and parties to contracts with the Company as are
necessary for the consummation of the Transactions and to fulfill the conditions
to the Offer and the Merger. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party to this Agreement
shall use their reasonable best efforts to take all such action.
SECTION 4.06 New York Real Property Transfer Taxes. Either Purchaser or
the Surviving Corporation shall pay the New York State Tax on real estate
transfers and the New York City Real Property Transfer Tax and any similar tax
in any other jurisdiction, if any (and any penalties or interest with respect to
such taxes), payable in connection with the Merger or the acquisition of a
controlling interest in the Company by Purchaser, and shall indemnify and hold
harmless the stockholders of the Company from and against any liability with
respect to such taxes (including any penalties, interest and professional fees).
The Company and Purchaser shall cooperate in the preparation and filing of any
required returns with respect to such taxes (including returns on behalf of the
stockholders of the Company).
SECTION 4.07 NASDAQ Listing. Until the Effective Time, the Company
shall use all commercially reasonable efforts to maintain the listing of the
Common Stock on the NASDAQ system; maintain the registration of such securities
under the Securities Exchange Act of 1934, as amended; and comply with the rules
and regulations of the SEC.
SECTION 4.08 Conduct of Business by the Company Pending the Merger. The
Company covenants and agrees that, prior to the Effective Time or earlier
termination of this Agreement as provided herein, unless Purchaser shall
otherwise agree in writing and except as contemplated by this Agreement:
(a) The Company shall, and shall cause each of its subsidiaries to,
act and carry on its respective business in the ordinary course of business
substantially consistent with past practice and use its respective reasonable
best efforts to preserve substantially intact its current material business
organizations, keep available the services of its current officers and employees
(except for terminations of employees in the ordinary course of business) and
preserve its material relationships with others having significant business
dealings with it;
(b) The Company shall not (i) amend its certificate of incorporation
or bylaws, or (ii) declare, set aside or pay any dividend or other distribution
or payment in cash, stock or property in respect of any of its shares of capital
stock;
<PAGE>
(c) Neither the Company nor any of its subsidiaries shall (i) issue,
grant, sell, pledge or transfer or agree or propose to issue, grant, sell,
pledge or transfer any shares of capital stock, stock options, warrants,
securities or rights of any kind or rights to acquire any such shares,
securities or rights of the Company, any of its subsidiaries or any successor
thereto, or (ii) enter into or modify any contract, agreement, commitment or
arrangement with respect to any of the foregoing; and
(d) Neither the Company nor any of its subsidiaries shall split,
combine or reclassify any capital stock of the Company or any subsidiary or
issue or authorize the issuance of any other securities in respect of, in lieu
of or substitution for shares of capital stock of the Company or any subsidiary.
SECTION 4.09 Notification of Certain Matters. Each of the parties
hereto shall, promptly upon obtaining knowledge of any of the following
occurring subsequent to the date of this Agreement and prior to the Effective
Time, notify all other parties to this Agreement of: (a) any material claims,
actions, proceedings, tax audits or investigations commenced or, to its
knowledge, threatened in writing, involving or affecting such party or any of
its subsidiaries or any of their properties or assets, that if adversely
resolved could have a Material Adverse Effect on such party or could prevent,
hinder or materially delay the ability of such party to consummate the Merger or
the transactions contemplated by this Agreement, (b) any notice of, or other
communication relating to, a default or event that, with notice or lapse of time
or both, would become a default, received by such party or any of its
subsidiaries, under any agreement, lease, indenture or instrument to which such
party or any of its subsidiaries is a party or is subject where such a default
could have a Material Adverse Effect on such party, or (c) any notice or other
communication from any third party alleging that the consent of such third party
is or may be required in connection with the transactions contemplated by this
Agreement. As used in this Section 4.09, with respect to the Company, the term
"Material Adverse Effect" shall have the meaning given to it in Section 2.01,
and, with respect to Purchaser, the term "Material Adverse Effect" shall mean
any effect that is materially adverse to the business, assets, prospects,
operations, properties, financial condition or results of operations of
Purchaser and its subsidiaries taken as a whole.
SECTION 4.10 Access to The Company's Books and Records. Upon reasonable
notice, the Company shall afford Purchaser and its representatives and
representatives of all prospective sources of Financing reasonable access during
normal business hours to the properties, books, records and personnel of The
Company and its subsidiaries and such additional information concerning the
business and properties of The Company and its subsidiaries as Purchaser and its
representatives may reasonably request.
SECTION 4.11 Acquisition Proposals. Any offer or proposal by any Person
or group concerning any tender or exchange offer, proposal for a merger, share
exchange, recapitalization, consolidation or other business combination
involving the Company or any of its subsidiaries or divisions, or any proposal
or offer to acquire in any manner, directly or indirectly, a significant equity
interest in, or a substantial portion of the assets of, the Company or any of
its subsidiaries, other than pursuant to the transactions contemplated by this
Agreement, is hereby defined as an "Acquisition Proposal". The Company shall
not, nor shall it permit any of its
<PAGE>
officers, directors, affiliates, representatives or agents to, directly or
indirectly, (a) take any action to solicit, initiate or encourage any
Acquisition Proposal, or (b) participate in any discussions or negotiations with
or encourage any effort or attempt by any other Person or take any other action
to facilitate an Acquisition Proposal. From and after the date hereof, the
Company, its subsidiaries and all officers, directors, employees of, and all
investment bankers, attorneys and other advisors and representatives of, the
Company and its subsidiaries shall cease doing any of the foregoing.
Notwithstanding the foregoing, the Company or any such Persons may, directly or
indirectly, subject to a confidentiality agreement containing customary terms,
furnish to any party information and access in response to a request for
information or access made incident to an Acquisition Proposal made after the
date hereof and may participate in discussions and negotiate with such party
concerning any written Acquisition Proposal made after the date hereof (provided
that neither the Company nor any such Person, after the date hereof, solicited,
initiated or encouraged such Acquisition Proposal), if the Committee shall have
determined in good faith based upon the reasonably concluded advice of (i) Bank
that such Acquisition Proposal is reasonably likely to lead to a transaction
that is materially more favorable to the Company's stockholders and (ii) counsel
to the Special Committee that the taking of such action is necessary to
discharge the Company's board of directors' fiduciary duties under applicable
law. During the term of this Agreement, the board of directors of the Company
shall notify Purchaser immediately if any Acquisition Proposal is made and shall
in such notice indicate in reasonable detail the identity of the offeror and the
terms and conditions of such Acquisition Proposal and shall keep Purchaser
promptly advised of all material developments that could culminate in the board
of directors withdrawing, modifying or amending its recommendation of the Merger
and the other transactions contemplated by this Agreement. During the term of
this Agreement, the Company shall not waive or modify any provisions contained
in any confidentiality agreement entered into relating to a possible acquisition
(whether by merger, stock purchase, asset purchase or otherwise) or
recapitalization of the Company unless the Committee shall have determined in
good faith based on reasonably concluded advice of counsel to the Special
Committee that the taking of such action is necessary to discharge the Company's
board of directors' fiduciary duties under applicable law. Notwithstanding the
foregoing, the Company may make the disclosure contemplated by Rule 14e-2(a)
under the Exchange Act to the extent that such disclosure is required to be
taken and made by such Rule; provided, that the Company may only recommend a
tender offer giving rise to such obligation as contemplated by such Rule if the
Committee has made the good faith determination described in the third preceding
sentence.
ARTICLE V
CONDITIONS TO THE MERGER
SECTION 5.01 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Stockholder Approval. This Agreement and the Transactions shall
have been approved and adopted by the affirmative vote of the stockholders of
the Company to the extent required by New York Law and the Certificate of
Incorporation of the Company;
<PAGE>
(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
law, rule, regulation, executive order, decree, injunction or other order
(whether temporary, preliminary or permanent) which is then in effect and has
the effect of making the consummation of the Merger unlawful or preventing,
prohibiting consummation of the Transactions or, with respect to any litigation
in connection with the Merger, result in an award of damages that could have a
Material Adverse Effect; and
(c) Fairness Opinion. The Fairness Opinion of Bank referenced in the
recitals to this Agreement shall not have been withdrawn at or prior to the
Effective Time.
SECTION 5.02 Conditions to Obligations of Purchaser to Effect the
Merger. The obligations of Purchaser to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following additional
conditions, unless waived by Purchaser:
(a) The representations and warranties of the Company set forth in
Article II hereof shall be true and correct in all material respects (except
that any such representation and warranty that is qualified as to materiality by
reference to "Material Adverse Effect" or any similar term shall be true and
correct) as of the date of this Agreement and as of the Effective Time as though
all of such representations were made on and as of the Effective Time by the
Company, and Purchaser shall have received a certificate of the Company signed
by the Chief Financial Officer or a Vice President of the Company to that
effect, provided that such signatory or signatories shall not have any personal
liability in connection therewith;
(b) The Company shall have performed in all material respects all
obligations required to be performed by it under this Agreement prior to the
Effective Time and Purchaser shall have received a certificate of the Company
signed by the Chief Financial Officer or a Vice President of the Company to that
effect, provided that such signatory or signatories shall not have any personal
liability in connection therewith;
(c) No change, condition, event or development shall have occurred
that has a Material Adverse Effect; and
(d) Purchaser shall have obtained financing of at least $10 million
to enable it to pay the aggregate Merger Consideration to be paid by it pursuant
hereto and to pay fees and expenses of the Merger, including, without
limitation, fees and expenses incurred or to be incurred in connection with the
financing on terms reasonably acceptable to Purchaser.
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER
SECTION 6.01 Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, notwithstanding
any requisite approval and adoption of this Agreement and the Transactions by
the stockholders of the Company:
<PAGE>
(a) By mutual written consent duly authorized by the Board of
Directors of Purchaser and the Board of Directors of the Company; or
(b) If any court of competent jurisdiction in the United States or
other United States governmental authority shall have issued an order, decree,
ruling or taken any other action restraining, enjoining or otherwise prohibiting
or delaying the Merger and such order, decree, ruling or other action shall have
become final and nonappealable; provided, however that each of the parties shall
have used reasonable best efforts to prevent the entry of any such injunction or
other order and to appeal as promptly as possible any injunction or other order
that may be entered; or
(c) By Purchaser if the Board or any committee thereof shall have
withdrawn or modified in a manner adverse to Purchaser its approval or
recommendation of this Agreement, the Merger or any other Transaction or shall
have recommended another merger, consolidation, business combination with, or
acquisition of, the Company or its assets or a tender offer for Shares, or shall
have resolved to do any of the foregoing;
(d) By the Company, upon approval of the Board, if the Board shall
have withdrawn or modified in a manner adverse to Purchaser its approval or
recommendation of this Agreement, the Merger or any other Transaction or shall
have recommended another merger, consolidation, business combination with, or
acquisition of, the Company or its assets or a tender offer for Shares, or shall
have resolved to do any of the foregoing;
(e) By Purchaser (i) in the event the Company has breached any
representation, warranty, or covenant contained in this Agreement in any
material respect, Purchaser has notified the Company of the breach and such
breach cannot be or has not been cured within 15 days after the giving of such
notice, or (ii) if the Closing shall not have occurred on or before December 31,
2000 and any condition precedent in Article V hereof shall not have been met or
fulfilled (unless the failure results primarily from Purchaser breaching any
representation, warranty or covenant contained in this Agreement);
(f) By the Company (i) in the event Purchaser has breached any
representation, warranty, or covenant contained in this Agreement in any
material respect, the Company has notified Purchaser of the breach and such
breach cannot be or has not been cured within 15 days after the giving of such
notice, or (ii) if the Closing shall not have occurred on or before December 31,
2000 and any condition precedent in Article V hereof shall not have been met or
fulfilled (unless the failure results primarily from the Company breaching any
representation, warranty, or covenant contained in this Agreement); or
(g) By the Company or Purchaser if upon a vote at the Special
Meeting, any approval of the shareholders of the Company necessary to consummate
the Merger and the transactions contemplated hereby shall not have been
obtained.
SECTION 6.02 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 6.01, this Agreement shall forthwith become
void, and there shall
<PAGE>
be no liability on the part of any party hereto, except (i) as set forth in
Sections 6.03 and 7.01 and (ii) nothing herein shall relieve any party from
liability for any willful breach hereof.
SECTION 6.03 Fees and Expenses. (a) If this Agreement is terminated
pursuant to of Section 6.01 (c), (d) or (e)(i) and Purchaser is not in material
breach of its material covenants and agreements contained in this Agreement or
its representations and warranties contained in this Agreement, the Company
shall reimburse Purchaser (and its stockholders and Affiliates) not later than
one business day after submission of statements therefor for all out-of-pocket
expenses and fees up to $1 million in the aggregate (including, without
limitation, fees and expenses payable to all banks, investment banking firms,
other financial institutions and other persons and their respective agents and
counsel, for arranging, committing to provide or providing any financing for the
Transactions or structuring the Transactions and all fees of counsel,
accountants, experts and consultants to Purchaser and its respective
stockholders and Affiliates, and all printing and advertising expenses) actually
incurred or accrued by it or on its behalf in connection with the Transactions,
including, without limitation, the financing thereof, and actually incurred or
accrued by banks, investment banking firms, other financial institutions and
other persons and assumed by Purchaser (or its stockholders or Affiliates) in
connection with the negotiation, preparation, execution and performance of this
Agreement, the structuring and financing of the Transactions and any financing
commitments or agreements relating thereto (all (the foregoing being referred to
herein collectively as the "Expenses").
(b) If this Agreement is terminated pursuant to of Section
6.01(f)(ii), but only if such failure results solely from the failure of the
condition precedent set forth in Section 5.02 (d), and if the Company is not in
material breach of its material covenants and agreements contained in this
Agreement or its representations and warranties contained in this Agreement, the
Purchaser shall reimburse the Company, not later than one business day after
submission of statements therefor, for all out-of-pocket expenses and fees up to
$250,000 in the aggregate, actually incurred or accrued by the Company or on its
behalf in connection with the Transactions.
(c) Except as set forth in this Section 6.03, all cost Except as set
forth in this Section 6.03, all costs and expenses incurred in connection with
this Agreement and the Transactions shall be paid by the party incurring such
expenses, whether or not any Transaction is consummated.
(d) In the event that the Company shall fail to pay any Expenses
when due, the term "Expenses" shall be deemed to include the costs and expenses
actually incurred or accrued by Purchaser (and its stockholders and Affiliates)
(including, without limitation, fees and expenses of counsel) in connection with
the collection under and enforcement of this Section 6.03, together with
interest on such unpaid Expenses, commencing on the date that such Expenses
became due, at a rate equal to the rate of interest publicly announced by The
Chase Manhattan Bank, from time to time, in the City of New York, as such bank's
Base Rate plus 2%.
SECTION 6.04 Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of the Board of Directors of Purchaser
and the Board of Directors of the Company at any time prior to the Effective
Time; provided, however, that, after the approval and adoption of this Agreement
and the Transactions by the stockholders of the
<PAGE>
Company, no amendment may be made which would reduce the amount or change the
type of consideration into which each Share shall be converted upon consummation
of the Merger. This Agreement may not be amended except by an instrument in
writing signed by the parties hereto.
SECTION 6.05 Waiver. At any time prior to the Effective Time, any party
hereto may (i) extend the time for the performance of any obligation or other
act of any other party hereto, (ii) waive any inaccuracy in the representations
and warranties contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any agreement or condition contained herein. Any
such extension or waiver shall be valid if (a) it is the result of action taken
by or on behalf of the Board of Directors of Purchaser, if Purchaser is the
party granting the extension or waiver, or the Board of Directors of the
Company, if the Company if the party granting the extension or waiver, and (b)
it is set forth in an instrument in writing signed by the party or parties to be
bound thereby.
SECTION 6.06 Special Committee. Any action permitted or required to be
taken under this Agreement by the Board, including without limitation any
termination of this Agreement pursuant to Section 6.01 hereof, any amendment of
this Agreement pursuant to Section 6.04 or any waiver pursuant to Section 6.05,
and any consent, approval or determination permitted or required to be made or
given by the Company pursuant to this Agreement, shall be made, taken or given,
as the case may be, only with the concurrence, or at the direction, of the
Special Committee, as the Special Committee may determine, from time to time, in
its sole discretion.
ARTICLE VII
GENERAL PROVISIONS
SECTION 7.01 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 6.01, as the case may be, except that the agreements set
forth in Article I shall survive the Effective Time indefinitely and those set
forth in Section 6.03 shall survive termination indefinitely.
SECTION 7.02 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy, telegram or telex 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 7.02):
if to Purchaser:
PDK Acquisition Corp.
145 Ricefield Lane
Hauppauge, New York 11788
Telecopier No: (631) 273-1582
Attention: Reginald Spinello
<PAGE>
with a copy to:
Morrison Cohen Singer & Weinstein, LLP
-
750 Lexington Avenue
New York, New York 10022
Telecopier No.: (212) 735-8708
Attention: Robert H. Cohen
if to the Company:
PDK Labs, Inc.
145 Ricefield Lane
Hauppauge, New York 11788
Telecopier No: (631) 273-1582
Attention: Corporate Secretary
with a copy to:
Berlack, Israels & Liberman LLP
120 West 45th Street
New York, New York 10036
Telecopier No.: (212) 704-0196
Attention: Steven F. Wasserman
SECTION 7.03 Certain Definitions. For purposes of this Agreement, the
term:
(a) "Affiliate" of a specified person means a person who directly or
indirectly through one or more intermediaries controls, is controlled by, or is
under common control with, such specified person;
(b) "beneficially own" or any variation thereon with respect to a
person holding Shares means that such person shall be deemed to be the
beneficial owner of such Shares (i) which such person or any of its Affiliates
or associates (as such term is defined in Rule 12b-2 promulgated under the
Exchange Act) beneficially owns, directly or indirectly, (ii) which such person
or any of its Affiliates or associates has, directly or indirectly, (A) the
right to acquire (whether such right is exercisable immediately or subject only
to the passage of time), pursuant to any agreement, arrangement or understanding
or upon the exercise of consideration rights, exchange rights, warrants or
options, or otherwise, or (B) the right to vote pursuant to any agreement,
arrangement or understanding or (iii) which are beneficially owned, directly or
indirectly, by any other persons with whom such person or any of its Affiliates
or associates or person with whom such person or any of its Affiliates or
associates has any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any Shares;
<PAGE>
(c) "business day" means any day on which the principal offices of
the SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized to close in the City of New York;
(d) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting securities, as
trustee or executor, by contract or credit arrangement or otherwise;
(e) "person" means an individual, corporation, partnership, limited
partnership, syndicate, person (including, without limitation, a "person" as
defined in Section 13(d)(3) of the Exchange Act), trust, association or entity
or government, political subdivision, agency or instrumentality of a government;
and
(f) "subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation, or any other person means an Affiliate controlled by such person,
directly or indirectly, through one or more intermediaries.
SECTION 7.04 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 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 be consummated as originally contemplated to the
fullest extent possible.
SECTION 7.05 Entire Agreement; Assignment. This Agreement constitutes
the entire agreement among the parties with respect to the subject matter hereof
and supersedes all prior agreements and undertakings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof.
This Agreement shall not be assigned by operation of law or otherwise, except
that Purchaser may assign all or any of its rights and obligations hereunder to
any Affiliate of Purchaser provided that no such assignment shall relieve the
assigning party of its obligations hereunder if such assignee does not perform
such obligations.
SECTION 7.06 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement.
SECTION 7.07 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in
<PAGE>
accordance with the terms hereof and that the parties shall be entitled to
specific performance of the terms hereof, in addition to any other remedy at law
or equity.
SECTION 7.08 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 in and to be performed in that State. All actions and
proceedings arising out of or relating to this Agreement shall be heard and
determined in any New York state or federal court sitting in the City of New
York.
SECTION 7.09 Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 7.10 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.
<PAGE>
IN WITNESS WHEREOF, Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
PDK ACQUISITION CORP.
Attest:
By: s/Reginald Spinello
------------------------------ ---------------------------------
Title: President
PDK LABS, INC.
Attest:
By: s/Reginald Spinello
------------------------------ ---------------------------------
Title: Chairman
