As filed with the Securities and Exchange Commission on May 13, 1998
Registration No. 333 - 50745
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
POST-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
REXALL SUNDOWN, INC.
(Exact Name of Registrant as Specified in its Charter)
--------------
Florida 59-1688986
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
851 Broken Sound Parkway, NW
Boca Raton, Florida 33487
(561) 241-9400
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
----------------
Richard Werber, Esq.
Vice President,
General Counsel and Secretary
Rexall Sundown, Inc.
851 Broken Sound Parkway, NW
Boca Raton, Florida 33487
(561) 241-9400
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
----------------
Copies of communications to:
Paul Berkowitz, Esq.
Greenberg, Traurig, Hoffman,
Lipoff, Rosen & Quentel, P.A
1221 Brickell Avenue
Miami, Florida 33131
(305) 579-0500
------------------
Approximate date of commencement of proposed
sale to the public: As soon as practicable after
this Registration Statement becomes effective.
-------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933 (the "Securities Act"), other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box.|X|
<PAGE>
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_| _______________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
|-| ---------------
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. |_|
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
- --------------------------------------------------------------------------------
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Post-Effective
Amendment No. 1 to Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boca Raton, State of
Florida, on this 13th day of May, 1998.
REXALL SUNDOWN, INC.
By: *
---------------------------------------
Christian Nast, Chief Executive Officer
and Director
Pursuant to the requirements of the Securities Act, this
Plost-Effective Amendment No. 1 to Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Carl DeSantis Chairman of the Board May 13, 1998
- ----------------------------------------------
Carl DeSantis
* Director and Chief Executive Officer May 13, 1998
- ----------------------------------------------
Christian Nast
* Director and President May 13, 1998
- ----------------------------------------------
Damon DeSantis
* Vice President - Finance, Chief May 13, 1998
- ---------------------------------------------- Financial Officer, Treasurer and Chief
Geary Cotton Accounting Officer
* Director and President - May 13, 1998
- ---------------------------------------------- Sundown Vitamins
Nickolas Palin
* Director May 13, 1998
- ----------------------------------------------
Dean DeSantis
II-3
<PAGE>
* Director and President of May 13, 1998
- ---------------------------------------------- Richardson Labs, Inc.
John Priddy
* Director May 13, 1998
- ----------------------------------------------
Stanley Leedy
Director May __, 1998
- ----------------------------------------------
Raymond Monteleone
* Director May 13, 1998
- ----------------------------------------------
Melvin Stith
* By: /s/ Carl DeSantis
-----------------
Attorney-In-Fact
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
Number Description
5.1 Opinion of Greenberg, Traurig, Hoffman, Lipoff, Rosen &
Quentel, P.A. (1)
10.1 Underwriting Agreement dated May 5, 1998 between Rexall
Sundown, Inc. and Smith Barney Inc.
23.1 Consent of Greenberg, Traurig, Hoffman, Lipoff, Rosen &
Quentel, P.A. (contained in Exhibit 5.1
hereto)(1)
23.2 Consent of Coopers & Lybrand L.L.P.(1)
24.1 Power of Attorney (Reference is made to page II-3 of this
Registration Statement)(1)
- ------------------
(1) Previously Filed
1,442,308 Shares
Rexall Sundown, Inc.
Common Stock
Underwriting Agreement
New York, New York
May 5, 1998
Salomon Smith Barney
Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
Abraham & Sons, LLC, a Nevada limited liability company, and
Priddy Brothers Holdings, Inc., a Delaware corporation (collectively, the
"Selling Shareholders"), acting severally and not jointly, propose, subject to
the terms and conditions stated herein, to sell an aggregate of 1,442,308 shares
(the "Shares") of the common stock, par value $.01 per share (the "Common
Stock") of Rexall Sundown, Inc., a Florida corporation (the "Company"), to Smith
Barney Inc. (the "Underwriters") in the respective amounts set forth opposite
their names in Schedule I. Each of the Company and each Selling Shareholder
agrees with the Underwriters as follows:
SECTION 1. REGISTRATION STATEMENT AND PROSPECTUS. The Company
has prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Act"), a registration statement on Form S-3 (File No.
333-50745), including a prospectus subject to completion, relating to the
Shares. Such registration statement (including all financial schedules and
exhibits), as amended at the time when it becomes effective and as thereafter
amended by any post-effective amendment, together with any documents
incorporated by reference therein and any registration statement filed by the
Company with respect to the foregoing pursuant to
<PAGE>
2
Rule 462(b) under the Act, is referred to in this Agreement as the "Registration
Statement." The term "Prospectus" as used in this Agreement means (i) the
prospectus in the form included in the Registration Statement together with the
Prospectus Supplement dated May 5, 1998 filed with the Commission pursuant to
Rule 424(b) under the Act, including in each case any documents incorporated by
reference therein. The prospectus subject to completion in the form included in
the Registration Statement at the time of the initial filing of such
Registration Statement with the Commission and as such prospectus is amended
from time to time until the date upon which the Registration Statement was
declared effective by the Commission, together with any documents incorporated
by reference therein, is referred to in this Agreement as the "Prepricing
Prospectus."
SECTION 2. AGREEMENTS TO SELL AND PURCHASE. Each Selling
Shareholder hereby agrees to sell the number of Shares set forth opposite such
Selling Shareholder's name on Schedule I hereto to the Underwriters and, upon
the basis of the representations, warranties and agreements of the Company and
the Selling Shareholders herein contained and subject to all the terms and
conditions set forth herein, the Underwriters agree to purchase from each of the
Selling Shareholders such number of Shares at a purchase price of $30.3125 per
Share (the "purchase price per Share").
SECTION 3. TERMS OF PUBLIC OFFERING. The Company and the
Selling Shareholders have been advised by you that the Underwriters propose to
make a public offering of the Shares as soon after this Agreement has become
effective as in your judgment is advisable upon the terms set forth in the
Prospectus.
SECTION 4. DELIVERY OF THE SHARES AND PAYMENT THEREFOR.
Certificates for the Shares to be purchased by the Underwriters hereunder, in
definitive form and in such denominations and registered in such names as the
Underwriters may request shall be delivered by or on behalf of the Selling
Shareholders to the Underwriters, against payment by the Underwriters as
provided herein. Payment shall be made to each Selling Shareholder by wire
transfer of same-day funds against delivery of the certificates for the Shares
purchased from each such Selling Shareholder.
Delivery to the Underwriters of and payment for the Shares shall be made
at the offices of Smith Barney Inc. at 10:00 a.m., New York City time, on May 8,
1998, or at such other time and date not later than five business days
thereafter as you and the Selling Shareholders shall agree (the "Closing Date").
<PAGE>
3
SECTION 5. COVENANTS AND AGREEMENTS OF THE
COMPANY. The Company covenants and agrees with the Underwriters as follows:
(a) The Company will prepare and timely file with the
Commission under Rule 424(b) of the Act a Prospectus containing information
previously omitted at the time of effectiveness of the Registration Statement in
reliance on Rule 430A under the Act. The Company will advise you promptly and,
if requested by you, will confirm such advice in writing (i) of any request by
the Commission for amendments or supplements to the Registration Statement or
the Prospectus or for additional information, (ii) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or the use of the Prospectus or of the suspension of qualification of
the Shares for offering or sale in any jurisdiction or the initiation (or
threatened initiation) of any proceeding for such purposes, and (iii) within the
period of time referred to in Section 5(c) below, of any change in the Company's
condition (financial or other), business, prospects, properties, net worth or
results of operations, or of any event that comes to the attention of the
Company that makes any statement made in the Registration Statement or the
Prospectus (as then amended or supplemented) untrue in any material respect or
that requires the making of any additions thereto or changes therein in order to
make the statements therein not misleading in any material respect, or of the
necessity to amend or supplement the Prospectus to comply with the Act or any
other law. If at any time the Commission shall issue any stop order suspending
the effectiveness of the Registration Statement or the use of the Prospectus,
the Company will make every reasonable effort to obtain the withdrawal or
lifting of such order at the earliest possible time.
(b) As soon after the execution and delivery of this Agreement
as is practicable and thereafter from time to time for such period as in the
reasonable opinion of counsel for the Underwriters a prospectus is required by
the Act to be delivered in connection with sales by the Underwriters or a
dealer, and for so long a period as you may request for the distribution of the
Shares, the Company will deliver to the Underwriters and each dealer, without
charge, as many copies of the Prospectus (and of any amendment or supplement
thereto) as they may reasonably request. The Company consents to the use of the
Prospectus (and of any amendment or supplement thereto) in accordance with the
Act and the securities or blue sky laws of the jurisdictions in which the Shares
are offered by the Underwriters and by all dealers to whom Shares may be sold,
both in connection with
<PAGE>
4
the offering and sale of the Shares and for such period of time thereafter as
the Prospectus is required by the Act to be delivered in connection with sales
by any Underwriter or dealer. If at any time prior to the later of (i) the
completion of the distribution of the Shares pursuant to the offering
contemplated by the Registration Statement or (ii) the expiration of prospectus
delivery requirements with respect to the Shares under Section 4(3) of the Act
and Rule 174 thereunder, any event shall occur that in the judgment of the
Company or in the opinion of counsel for the Underwriters is required to be set
forth in the Prospectus (as then amended or supplemented) or should be set forth
therein in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, or if it is necessary to supplement
or amend the Prospectus to comply with the Act or any other law, the Company
will promptly prepare and, subject to Sections 5(a) and 5(c), file with the
Commission an appropriate supplement or amendment thereto, and will furnish to
each Underwriter and to each dealer who has previously requested Prospectuses,
without charge, a reasonable number of copies thereof.
(c) The Company will cooperate with you and counsel for the
Underwriters in connection with the registration or qualification of the Shares
for offering and sale by the Underwriters and by dealers under the securities or
blue sky laws of such jurisdictions as you may reasonably designate and will
file such consents to service of process or other documents as may be reasonably
necessary in order to effect and maintain such registration or qualification for
so long as required to complete the distribution of the Shares; provided that in
no event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action which would
subject it to service of process in suits, other than those arising out of the
offering or sale of the Shares, in any jurisdiction where it is not now so
subject. In each jurisdiction in which the Shares shall have been qualified as
above provided, the Company will make and file such statements and reports in
each year as are or may be required by the laws of such jurisdiction. In the
event that the qualification of the Shares in any jurisdiction is suspended, the
Company shall so advise you promptly in writing.
(d) The Company will comply with all provisions of any
undertakings contained in the Registration Statement.
(e) The Company will not, directly or indirectly, take any
action that would constitute or any action
<PAGE>
5
designed, or which might reasonably be expected to cause or result in or
constitute, under the Act or otherwise, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Shares.
(f) The Company will use its best efforts to qualify or
register its Common Stock for sale in non-issuer transactions under (or obtain
exemptions from the application of ) the blue sky laws of each state where
necessary to permit market making transactions and secondary trading, and will
comply with such blue sky laws and will continue such qualifications,
registrations and exemptions in effect for a period of five years after the date
hereof.
(g) For so long as the Company's Common Stock is listed
therewith, the Company will comply with the filing and other requirements of the
Nasdaq National Market. The Company will use its best efforts to list, subject
to notice of issuance, the Shares on the Nasdaq National Market.
(h) The Company shall direct Greenberg, Traurig, Hoffman,
Lipoff, Rosen & Quental, P.A., counsel for the Company, to deliver to the
Underwriters on, or as soon as reasonably practicable after, the Closing Date, a
letter, dated the Closing Date and satisfactory to Underwriters' counsel, to the
effect that during the course of the preparation of the Registration Statement
and the Prospectus, and any amendments or supplements thereto, nothing has come
to the attention of such counsel which has caused it to believe that the
Registration Statement, as of the time it became effective under the Act, the
Prospectus or any amendment or supplement thereto, on the date it was filed
pursuant to Rule 424(b), as of the respective dates when such documents were
filed with the Commission, and the Registration Statement and the Prospectus, or
any amendment or supplement thereto, as of the Closing Date (except for the
financial statements and other financial and statistical information contained
therein or omitted therefrom as to which no opinion need be expressed),
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading.
(i) The Company shall direct Coopers & Lybrand, independent
certified public accountants, to deliver to the Underwriters on, or as soon as
reasonably practicable after, the Closing Date, a letter dated the Closing Date
confirming that they are independent accountants within the meaning of the Act
and the Exchange Act and the respective applicable published rules and
regulations thereunder and stating in
<PAGE>
6
effect that:
(i) in their opinion the audited financial statements and
financial statement schedules and pro forma financial statements
included or incorporated by reference in the Registration Statement and
the Prospectus and reported on by them comply as to form in all
material respects with the applicable accounting requirements of the
Act and the Exchange Act and the related published rules and
regulations;
(ii) on the basis of a reading of the latest unaudited
financial statements made available by the Company and its
subsidiaries; carrying out certain specified procedures (but not an
examination in accordance with generally accepted auditing standards)
which would not necessarily reveal matters of significance with respect
to the comments set forth in such letter; a reading of the minutes of
the meetings of the shareholders, directors and audit committees of the
Company and its Subsidiaries; and inquiries of certain officials of the
Company who have responsibility for financial and accounting matters of
the Company and its subsidiaries as to transactions and events
subsequent to August 31, 1997, nothing came to their attention which
caused them to believe that:
(1) any unaudited financial statements included or
incorporated by reference in the Registration Statement and
the Prospectus do not comply as to form in all material
respects with applicable accounting requirements of the Act
and with the published rules and regulations of the Commission
with respect to financial statements included or incorporated
by reference in quarterly reports on Form 10-Q under the
Exchange Act; and said unaudited financial statements are not
in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the
audited financial statements included or incorporated by
reference in the Registration Statement and the Prospectus;
(2) with respect to the period subsequent to August
31, 1997, there were any changes, at a specified date not more
than five days prior to the date of the letter, in the
long-term debt of the Company and its subsidiaries or capital
stock of the Company or decreases in the shareholders' equity
of the Company as compared with the amounts shown on the
August 31, 1997, consolidated balance
<PAGE>
7
sheet included or incorporated by reference in the
Registration Statement and the Prospectus, or for the period
from September 1, 1997 to such specified date there were any
decreases, as compared with August 31, 1997, in net revenues
or income before income taxes or in total or per share amounts
of net income of the Company and its subsidiaries, except in
all instances for changes or decreases set forth in such
letter, in which case the letter shall be accompanied by an
explanation by the Company as to the significance thereof
unless said explanation is not deemed necessary by the
Underwriters;
(3) the information included or incorporated by
reference in the Registration Statement and Prospectus in
response to Regulation S-K, Item 301 (Selected Financial
Data), Item 302 (Supplementary Financial Information) and Item
402 (Executive Compensation) is not in conformity with the
applicable disclosure requirements of Regulation S-K;
(iii) they have performed certain other specified procedures
as a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company and its subsidiaries) set
forth in the Registration Statement and the Prospectus, the information
included or incorporated by reference in the Company's Annual Report on
Form 10-K, incorporated by reference in the Registration Statement and
the Prospectus, and the information included in the "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" included or incorporated by reference in the Company's
Quarterly Reports on Form 10-Q, incorporated by reference in the
Registration Statement and the Prospectus, agrees with the accounting
records of the Company and its subsidiaries, excluding any questions of
legal interpretation.
References to the Prospectus in this paragraph (j) include any
supplement thereto at the date of the letter.
SECTION 5A. COVENANTS AND AGREEMENTS OF THE
SELLING SHAREHOLDERS. Each Selling Shareholder covenants and agrees with the
Underwriters as follows:
<PAGE>
8
(a) Such Selling Shareholder will review the Prospectus and
will comply with all agreements and satisfy all conditions on its part to be
complied with or satisfied pursuant to this Agreement on or prior to the Closing
Date and will advise the Underwriters prior to the Closing Date if any
representation or warranty made by the Selling Shareholders herein is not true
or correct in any material respect on the Closing Date or any Selling
Shareholder has not complied with any obligation or satisfied any condition
which is required to be performed or satisfied by the Selling Shareholders on or
prior to the Closing Date.
(b) On the Closing Date, all stock transfer and other taxes
(other than income taxes) which are required to be paid in connection with the
sale and transfer of the Shares to be sold by such Selling Shareholder to the
Underwriters hereunder will have been fully paid for by such Selling Shareholder
and all laws imposing such taxes will have been fully complied with.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE
COMPANY. The Company hereby represents and warrants to, and
agrees with, the Underwriters that:
(a) Each Prepricing Prospectus included as part of the
Registration Statement as originally filed or as part of any amendment or
supplement thereto, or filed pursuant to Rule 424(a) under the Act, complied
when so filed in all material respects with the provisions of the Act. The
Commission has not issued any order preventing or suspending the use of any
Prepricing Prospectus. The Company has satisfied all conditions to the use of
Form S-3 with respect to the offering of the Shares for sale to the public.
(b) The Registration Statement, in the form in which it became
effective and also in such form as it may be when any post-effective amendment
thereto shall become effective, and any registration statement filed pursuant to
Rule 462(b) under the Act, complies and will comply in all material respects
with the provisions of the Act and does not and will not at any such times
contain 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, except that this representation and warranty does not apply to
statements in or omissions from the Registration Statement (or any amendment or
supplement thereto) made in reliance upon and in conformity with information
relating to any Underwriter or the Selling Shareholders furnished to the Company
in writing by or on behalf of any Underwriter or the Selling Shareholders
through you expressly for use therein. The
<PAGE>
9
Prospectus, and any supplement or amendment thereto, when filed with the
Commission under Rule 424(b) under the Act, complies and will comply in all
material respects with the provisions of the Act and does not and will not at
any such times contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, except that this
representation and warranty does not apply to statements in or omissions from
the Prospectus (or any amendment or supplement thereto) made in reliance upon
and in conformity with information relating to any Underwriter or the Selling
Shareholders furnished to the Company in writing by or on behalf of any
Underwriter or Selling Shareholder through you expressly for use therein.
(c) The capitalization of the Company is as set forth in the
Prospectus as of the date set forth therein. All the outstanding shares of
Common Stock (including without limitation the Shares) have been, and on the
Closing Date will be, duly authorized and validly issued, fully paid and
nonassessable and free of any preemptive or similar rights to subscribe for or
purchase any shares of capital stock issued by the Company; except as described
in the Prospectus, there are no outstanding securities or obligations of the
Company convertible into, exercisable for or exchangeable for any capital stock
of the Company; the securities of the Company conform to the description thereof
included or incorporated by reference in the Registration Statement and the
Prospectus (or any amendment or supplement thereto). The certificates for the
Shares are in valid and sufficient form. All offers and sales of the Company's
capital stock or other securities prior to the date hereof were made in
compliance with the registration provisions of the Act and all other applicable
state and federal securities laws or regulations, or applicable exemptions
therefrom.
(d) The Company is a corporation duly organized and validly
existing in good standing under the laws of the State of Florida, with full
corporate power and authority to own, lease and operate its properties and to
conduct its business as presently conducted and as described in the Registration
Statement and the Prospectus (and any amendment or supplement thereto), and is
duly registered and qualified to conduct its business and is in good standing in
each jurisdiction or place where the nature of its properties or the conduct of
its business requires such registration or qualification, except where the
failure to so register or qualify does not have a material adverse effect on the
condition (financial or other), business, properties, net
<PAGE>
10
worth or results of operations of the Company and its Subsidiaries, taken as a
whole (a "Material Adverse Effect").
(e) Except for Rexall Showcase International, Inc., a Florida
corporation (the "Significant Subsidiary"), Rexall Showcase International de
Mexico, S.A. de C.V., Importadora Rexall Showcase International de Mexico, S.A.
de C.V., Servicios Rexall Showcase International de Mexico, S.A. de C.V.,
Asociacion de Vendedores Independientes en Rexall, A.C., Rexall Korea Limited
and RSL Holdings, Inc., Rexall Hong Kong Limited, Rexall Showcase Taiwan, Inc.,
RXSD Inc. and Richardson Labs, Inc. (collectively, the "Subsidiaries"), the
Company does not own a material interest in or control, directly or indirectly,
any other corporation, partnership, joint venture, association, trust or other
business organization. The Significant Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida with full corporate power and authority to own, lease and operate its
properties and to conduct its business as presently conducted and as described
in the Registration Statement and the Prospectus, and is duly registered and
qualified to conduct its businesses and is in good standing in each jurisdiction
or place where the nature of its properties or the conduct of its business
requires such registration or qualification, except where the failure to so
register or qualify does not have a Material Adverse Effect. All of the equity
interests of each Subsidiary have been duly authorized and validly issued, are
fully paid and nonassessable, and are owned by the Company directly, free and
clear of any lien, adverse claim, security interest, equity or other
encumbrance.
(f) There are no legal or governmental proceedings pending or,
to the knowledge of the Company, threatened, against the Company or any
Subsidiary, or to which the Company or any Subsidiary, or to which its
respective properties, is subject, that are required to be described in the
Registration Statement or the Prospectus (or any amendment or supplement
thereto) or any document required to be incorporated by reference therein but
are not described as required. Except as described in the Prospectus, there is
no action, suit, inquiry, proceeding, or investigation by or before any court or
governmental or other regulatory or administrative agency or commission pending
or, to the knowledge of the Company, threatened against or involving the Company
or any Subsidiary (including without limitation any such action, suit, inquiry,
proceeding or investigation relating to any product alleged to have been
manufactured or sold by the Company or
<PAGE>
11
any Subsidiary and alleged to have been unreasonably hazardous, defective, or
improperly designed or manufactured), the adverse resolution of which could have
a Material Adverse Effect, nor to the knowledge of the Company is there any
basis for any such action, suit, inquiry, proceeding, or investigation which
action, suit, inquiry, preceeding or investigation could have a Material Adverse
Effect. There are no agreements, contracts, indentures, leases or other
instruments that are required to be described in the Registration Statement or
the Prospectus (or any amendment or supplement thereto) or to be filed (except
for this Agreement which will be filed by post effective amendment) as an
exhibit to the Registration Statement that are not described or filed as
required or incorporated by reference as permitted by the Act. All such
contracts to which the Company or any Subsidiary is a party have been duly
authorized, executed and delivered by the Company or the respective Subsidiary,
constitute valid and binding agreements of the Company or the respective
Subsidiary and are enforceable against the Company or the respective Subsidiary
in accordance with the terms thereof, except as enforceability thereof may be
limited by (A) the application of bankruptcy, reorganization, insolvency and
other laws affecting creditors' rights generally, and (B) equitable principles
being applied at the discretion of a court before which any proceeding may be
brought.
(g) Neither the Company nor any Subsidiary is in violation of
its articles of incorporation or bylaws or other charter documents. Neither the
Company nor any Subsidiary is in violation of any law, ordinance, administrative
or governmental rule or regulation applicable to the Company or any Subsidiary
or of any decree of any court or governmental agency or body having jurisdiction
over the Company or any Subsidiary, or in default in any material respect in the
performance of any obligation, agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in any material
agreement, indenture, lease or other instrument to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary or any of their
respective properties may be bound, which violation or default would have a
Material Adverse Effect.
(h) The execution and delivery of this Agreement, and the
performance by the Company of its obligations under this Agreement, have been
duly and validly authorized by the Company, and this Agreement has been duly
executed and delivered by the Company and constitutes the valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms, except as
<PAGE>
12
enforceability thereof may be limited by (A) the application of bankruptcy,
reorganization, insolvency and other laws affecting creditors' rights generally,
and (B) equitable principles being applied at the discretion of a court before
which any proceeding may be brought.
(i) Neither the execution, delivery or performance of this
Agreement by the Company nor the consummation by the Company of the transactions
contemplated hereby (i) is or may be void or voidable by any person or entity,
(ii) requires any consent, approval, authorization or other order of or
registration or filing with, any court, regulatory body, administrative agency
or other governmental body, agency or official (except such as may be required
for the registration of the Shares under the Act and compliance with the
securities or blue sky laws of various jurisdictions, all of which will be, or
have been, effected in accordance with this Agreement) or conflicts or will
conflict with or constitutes or will constitute a breach of, or a default under,
the articles of incorporation or bylaws or other charter documents, of the
Company or any Subsidiary, or (iii) conflicts or will conflict with or
constitutes a breach of, or a default under, any agreement, indenture, lease or
other instrument to which the Company or any Subsidiary is a party or by which
the Company or any Subsidiary or any of their respective properties may be
bound, or violates any statute, law, regulation or filing or judgment,
injunction, order or decree applicable to the Company or any Subsidiary or any
of their respective properties, or results in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or any
Subsidiary pursuant to the terms of any agreement or instrument to which the
Company or any Subsidiary is a party or by which the Company or any Subsidiary
may be bound or to which the property or assets of the Company or any Subsidiary
is subject, which conflict, violation or default in this clause (iii) would have
a Material Adverse Effect.
(j) No person or entity has any right, not effectively
satisfied or waived, to require the Company to include any securities with the
Common Stock registered pursuant to the Registration Statement; and except as
described in the Prospectus, no person or entity has any right to require the
Company to file a registration statement under the Act with respect to any
securities of the Company owned or to be owned by such person or to require the
Company to include such securities with securities to be registered pursuant to
any other registration statement filed by the Company under the Act.
<PAGE>
13
(k) Coopers & Lybrand, the certified public accountants who
have certified the consolidated financial statements filed as part of the
Registration Statement and the Prospectus (and any amendment or supplement
thereto), are independent public accountants as required by the Act. The
consolidated financial statements, together with related schedules and notes,
forming part of the Registration Statement and the Prospectus (and any amendment
or supplement thereto), present fairly the consolidated financial position,
results of operations and changes in financial position of the Company and the
Subsidiaries on the bases stated therein at the respective dates or for the
respective periods to which they apply; such statements and related schedules
and notes have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved and all
adjustments necessary for a fair presentation of the results for such period
have been made; and the other financial and statistical information and data set
forth in the Registration Statement and Prospectus (and any amendment or
supplement thereto) is accurately presented and prepared on a basis consistent
with such financial statements and the books and records of the Company. No
financial statements or schedules are required to be included in or incorporated
by reference into the Registration Statement that have not been so included or
incorporated.
(l) Subsequent to the respective dates as of which such
information is given in the Registration Statement and the Prospectus (or any
amendment or supplement thereto), neither the Company nor any Subsidiary has
incurred any liability or obligation, direct or contingent, or entered into any
transaction, whether or not in the ordinary course of business, that is material
to the Company and the Subsidiaries, taken as a whole, and there has not been
any material change in or dividend paid on the capital stock, or material
increase in the short-term debt or long-term debt, of the Company or any
Subsidiary, or any event resulting in, or any development involving or which may
reasonably be expected to involve a potential future, Material Adverse Effect.
(m) The Company and the Subsidiaries have good and marketable
title to all property (real and personal) described in the Registration
Statement and the Prospectus (or any amendment or supplement thereto) or any
document required to be incorporated by reference therein as being owned by the
Company or such Subsidiary, free and clear of all liens, claims, security
interests or other encumbrances except such as are described in the Registration
Statement and the Prospectus (or any amendment or supplement thereto)
<PAGE>
14
or such as are not materially burdensome and do not interfere in any material
respect with the use of the property or the conduct of the business of the
Company and the Subsidiaries, taken as a whole, and the property (real and
personal) held under lease by the Company or any Subsidiary, as applicable, is
held by them under valid, subsisting and enforceable leases with only such
exceptions as in the aggregate are not materially burdensome and do not
interfere in any material respect with the conduct of the business of the
Company and the Subsidiaries, taken as a whole.
(n) The Company has not distributed and will not distribute
prior to the Closing Date any offering material in connection with the offering
and sale of the Shares other than the Prepricing Prospectus and the Registration
Statement, the Prospectus or other materials permitted by the Act and
distributed with the prior written approval of the Underwriters. The Company has
not taken, directly or indirectly, any action which constituted or any action
designed, or which might reasonably be expected to cause or result in or
constitute, under the Act or otherwise, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Shares. The Company acknowledges that the Underwriters may engage in passive
market making transactions in the Common Stock on The Nasdaq Stock Market in
accordance with Rule 10b-6A under the Exchange Act.
(o) Neither the Company nor any Subsidiary is an "investment
company," an "affiliated person" of, or "promoter" or "principal underwriter"
for an investment company within the meaning of the Investment Company Act of
1940, as amended.
(p) The Company and the Significant Subsidiary have all
permits, licenses, franchises, approvals, consents and authorizations of
governmental or regulatory authorities or private persons or entities
(hereinafter "permit or "permits") as are necessary to own their respective
properties and to conduct their respective businesses in the manner described in
the Registration Statement and the Prospectus (or any amendment or supplement
thereto), subject to such qualifications as may be set forth therein, except
where the failure to have obtained any such permit has not had and will not have
a Material Adverse Effect; the Company and the Significant Subsidiary have
fulfilled and performed all of their material obligations with respect to each
such permit and no event has occurred which allows, or after notice or lapse of
time would allow, revocation or termination of any such permit or result in any
other
<PAGE>
15
material impairment of the rights of the holder of any such permit, subject in
each case to such qualification as may be set forth in the Prospectus; and,
except as described in the Prospectus, such permits contain no restrictions that
are materially burdensome to the Company and the Subsidiaries, taken as a whole
where the same would have a Material Adverse Effect.
(q) The Company and the Significant Subsidiary are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the business in which they
are engaged; and the Company has no reason to believe that the Company and the
Significant Subsidiary will not be able to renew their existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue their respective businesses at
a comparable cost.
(r) The Company and the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or specific
authorizations; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(s) To the Company s knowledge, neither the Company nor any
Subsidiary has, directly or indirectly, at any time during the past five years
(i) made any unlawful contribution to any candidate for political office, or
failed to disclose fully any contribution in violation of law, or (ii) made any
payment to any federal, state or foreign governmental official, or other person
charged with similar public or quasi-public duties, other than payments required
or permitted by the laws of the United States or any jurisdiction thereof or
applicable foreign jurisdictions.
(t) Except as set forth in the Registration Statement and the
Prospectus, to the knowledge of the Company neither the Company nor any
Subsidiary has violated any safety or similar law applicable to their respective
businesses, nor any federal or state law relating to discrimination in the
hiring, promotion or pay of employees
<PAGE>
16
nor any applicable federal or state wages and hours laws, nor any provisions of
the Employee Retirement Income Security Act or the rules and regulations
promulgated thereunder, which in each case might result in a Material Adverse
Effect. To the best of the Company's knowledge, no labor disturbance by the
employees of the Company or any of the Subsidiaries exists or is imminent. No
collective bargaining agreement exists with any of the Company's or any
Subsidiary's employees and, to the Company's knowledge, no such agreement is
imminent. To the Company s knowledge, neither the employment by the Company or
any Subsidiary of their key personnel nor the activities of such individuals at
the Company or any Subsidiary conflicts with, constitutes a breach of, or
otherwise violates any employment, noncompetition, nondisclosure or similar
agreement or covenant by which such individuals may be bound.
(u) The Company and the Subsidiaries own and have full right,
title and interest in and to, or have the right to use, each material trade
name, trademark, service mark, patent, copyright, license, and other rights and
all know-how (including trade secrets and other unpatented and/or proprietary or
confidential information, systems, or procedures) (collectively, "Intellectual
Property Rights") under which the Company and such Subsidiaries conduct all or
any portion of their respective businesses, which Intellectual Property Rights
are adequate to conduct such businesses as conducted or as proposed to be
conducted or as described in the Registration Statement and the Prospectus (or
any amendment or supplement thereto) except where the failure to have such full
right, title and interest would not have a Material Adverse Effect; except as
otherwise disclosed in the Registration Statement and the Prospectus (or any
amendment or supplement thereto), neither the Company nor its Subsidiaries has
created any lien or encumbrance on, its respective Intellectual Property Rights;
there is no claim pending against the Company or any Subsidiary with respect to
any of their respective Intellectual Property Rights; neither the Company nor
any Subsidiary has received notice that, nor is the Company aware that, any
Intellectual Property Right which they use or have used in the conduct of their
respective businesses infringed or infringes upon or conflicted or conflicts
with the rights of any third party, which infringement of conflict could have a
Material Adverse Effect; and the Company is not aware of any facts which, with
the passage of time or otherwise, would cause the Company or any Subsidiary to
infringe upon or otherwise violate the Intellectual Property Rights of any third
party.
(v) The Company and the Subsidiaries have filed
<PAGE>
17
with the U. S. Food and Drug Administration (the "FDA"), and all applicable
foreign, state and local regulatory bodies, for and received approval of, all
registrations, applications, licenses, requests for exemptions, permits and
other regulatory authorizations material to the conduct of the respective
businesses of the Company and the Significant Subsidiary as they are now
conducted except for such registrations, applications, licenses, requests for
exemptions, permits and other regulatory authorizations of which the failure to
so obtain would not have a Material Adverse Effect; the Company and the
Significant Subsidiary are in compliance in all material respects with all such
registrations, applications, licenses, requests for exemptions, permits and
other regulatory authorizations, and all applicable FDA, foreign, state and
local rules and regulations except when the failure to be in compliance would
not have a Material Adverse Effect; and the Company has no reason to believe
that any party granting any such registration, application, license, request for
exemption, permit or other authorization is considering limiting, suspending or
revoking the same except where such limitations, suspensions or revocation would
not have a Material Adverse Effect.
(w) The Common Stock is registered pursuant to Section 12(g)
of the Exchange Act. The Company has timely and properly filed with the
Commission all reports and other documents required to have been filed with the
Commission. The documents incorporated by reference in the Registration
Statement or the Prospectus (or any amendment or supplement thereto), when the
Registration Statement became effective under the Act and when such documents
were filed with the Commission under the Exchange Act, conformed in all material
respects with the requirements of the Act or the Exchange Act, as applicable,
and the rules and regulations of the Commission thereunder. The Common Stock has
been and continues to be listed on the Nasdaq National Market ("NNM") under the
symbol "RXSD" and the Company has complied and will continue to comply with the
maintenance and designation criteria applicable to NNM issuers. The Company has
taken no action designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or delisting the Common
Stock from the NNM, nor has the Company received any notification that the
Commission or the NASD is contemplating terminating such registration or
listing.
(x) All federal, state, local and foreign tax returns required
to be filed by or on behalf of the Company and the Significant Subsidiary with
respect to all periods ended prior to the date of this Agreement have been filed
<PAGE>
18
(or are the subject of valid extension) with the appropriate federal, state,
local and foreign authorities and all such tax returns, as filed, are accurate
in all material respects. All federal, state, local and foreign taxes (including
estimated tax payments) required to be shown on all such tax returns or claimed
to be due from or with respect to the respective businesses of the Company and
the Subsidiaries have been paid or reflected as a liability on the consolidated
financial statements of the Company for appropriate periods. All deficiencies
asserted as a result of any federal, state, local or foreign tax audits have
been paid or finally settled and no issue has been raised in any such audit
which, by application of the same or similar principles, reasonably could be
expected to result in a proposed deficiency for any other period not so audited.
No state of facts exist or has existed which would constitute grounds for the
assessment of any material tax liability with respect to the periods that have
not been audited by appropriate federal, state local or foreign authorities.
There are no outstanding agreements or waivers extending the statutory period of
limitation applicable to any federal, state, local or foreign tax return for any
period.
(y) The Company and the Subsidiaries have obtained all
required permits, licenses, and other authorizations, if any, which are required
under federal, state, local and foreign statutes, ordinances and other laws
relating to pollution or protection of the environment, including laws relating
to emissions, discharges, releases, or threatened releases of pollutants,
contaminants, chemicals, or industrial, hazardous, or toxic materials or wastes
into the environment (including, without limitation, ambient air, surface water,
ground water, land surface, or subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, chemicals, or industrial,
hazardous, or toxic materials or wastes, or any regulation rule, code, plan,
order, decree, judgment, injunction, notice, or demand letter issued, entered,
promulgated, or approved thereunder ("Environmental Laws") the failure of which
to obtain would have a Material Adverse Effect. The Company and the Subsidiaries
are in material compliance with all terms and conditions of all required
permits, licenses and authorizations, and are also in material compliance with
all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables contained in the
Environmental Laws. There is no pending or, to the knowledge of the Company,
threatened, civil or criminal litigation, notice of violation, or administrative
proceeding relating in any way to the Environmental Laws
<PAGE>
19
(including notices, demand letters, or claims under the Resource Conservation
and Recovery Act of 1976, as amended ("RCRA"), the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), and
similar foreign, state, or local laws) involving the Company or any Subsidiary.
There have not been and there are not any past, present, or foreseeable future
events, conditions, circumstances, activities, practices, incidents, actions, or
plans which may interfere with or prevent continued compliance, or which may
give rise to any common law or legal liability, or otherwise form the basis of
any claim, action, demand, suit, proceeding, hearing, study, or investigation,
based on or related to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling, or the emission,
discharge, release, or threatened release into the environment, of any
pollutant, contaminant, chemical, or industrial, hazardous, or toxic material or
waste, including, without limitation, any liability arising, or any claim,
action, demand, suit, proceeding, hearing, study, or investigation which may be
brought, under RCRA, CERCLA, or similar foreign, state or local laws, in each
case which individually or in the aggregate would have a Material Adverse
Effect.
(z) The Company and the Subsidiaries are in compliance with
all provisions of Section 1 of Laws of Florida, Chapter 92-198, An Act Relating
to Disclosure of doing Business with Cuba; if the Company or any Subsidiary
commences engaging in business with the government of Cuba or with any person or
affiliate located in Cuba after the date the Registration Statement becomes or
has become effective with the Commission or with the Florida Department of
Banking and Finance (the "Department"), whichever date is later, or if the
information reported or incorporated by reference in the Prospectus, if any,
concerning the business of the Company or any Subsidiary with Cuba or with any
person or affiliate located in Cuba changes in any material way, the Company
will provide the Department notice of such business or change, as appropriate in
a form acceptable to the Department.
SECTION 6A. REPRESENTATIONS AND WARRANTIES OF THE SELLING
SHAREHOLDERS. Each Selling Shareholder, severally and not jointly, represents
and warrants to the Underwriters and the Company on the date hereof, and shall
be deemed to represent and warrant to each Underwriter and the Company on the
Closing Date, that:
(a) The Selling Shareholders are the owners of
the Shares and upon delivery of the Shares hereunder and
<PAGE>
20
payment of the purchase price per Share as herein contemplated, the Underwriters
will obtain good and valid title to the Shares, free and clear of all pledges,
liens, security interests, encumbrances, claims, equitable interests or adverse
claims or claims of any adverse party (other than any imposed by the securities
or blue sky laws of certain states), including any liability to or claims of any
creditor of the Selling Shareholders.
(b) All authorizations, approvals, consents and orders
necessary for the execution and delivery by or on behalf of the Selling
Shareholders of this Agreement and the sale and delivery of the Shares under
this Agreement (other than such authorizations, approvals or consents as may be
necessary under state or other securities or blue sky laws) have been obtained
and are in full force and effect; each Selling Shareholder has been duly
organized and is validly existing and in good standing under the laws of the
jurisdiction of its organization as the type of entity that it purports to be;
and each Selling Shareholder has full right, power, and authority to enter into
and perform its obligations under this Agreement, and to sell, assign, transfer
and deliver the Shares to be sold by such Selling Shareholder under this
Agreement.
(c) (i) This Agreement has been duly executed and delivered by
or on behalf of the Selling Shareholders and constitutes the valid and binding
agreement of each Selling Shareholder, enforceable against each Selling
Shareholder in accordance with its terms, except as enforceability thereof may
be limited by (A) the application of bankruptcy, reorganization, insolvency and
other laws affecting creditors' rights generally, and (B) equitable principles
being applied at the discretion of a court before which any proceeding may be
brought; (ii) the performance of this Agreement and the consummation of the
transactions herein contemplated will not: (I) conflict with or result in a
breach of or default under any material bond, debenture, note or other evidence
of indebtedness, or any material contract, indenture, mortgage, deed of trust,
loan agreement, lease or other agreement or instrument to which either Selling
Shareholder is a party or by which either Selling Shareholder or any Shares may
be bound or (II) to the best of the Selling Shareholders' knowledge, (x) result
in the violation of any law, order, rule or regulation applicable to the Selling
Shareholders, or (y) the violation of any writ, injunction or decree of any
court or governmental agency or body having jurisdiction over the Selling
Shareholders, or (III) result in the violation of any provisions of the charter,
bylaws or other organizational documents of the Selling Shareholders.
<PAGE>
21
(d) The Selling Shareholders have not taken and will not take,
directly or indirectly, any action designed to, or which might reasonably be
expected to, cause or result in stabilization or manipulation of the price of
the Common Stock to facilitate the sale or resale of the Shares.
(e) The Selling Shareholders have not distributed and will not
distribute any prospectus or other offering material in connection with the
offering and sale of the Shares.
(f) The information furnished by or on behalf of the Selling
Shareholders relating to the Selling Shareholders and the Shares to be sold by
the Selling Shareholders under this Agreement that is set forth in the
Registration Statement and the Prospectus is, and on the Closing Date will be,
true and correct, and does not, and on the Closing Date will not, contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make such statements not misleading.
(g) The Selling Shareholders do not own any capital stock of
the Company or warrants, options or similar rights to acquire, and does not have
any right or arrangement to acquire, any capital stock, rights, warrants,
options or other securities from the Company, other than those described in the
Registration Statement and the Prospectus.
(h) The Selling Shareholders are familiar with the
Registration Statement, the Prepricing Prospectus and the Prospectus and have no
present knowledge of any material fact or condition not set forth therein with
respect to Richardson Labs, Inc. (and which the Company is not aware of) which
has adversely affected the financial condition or the results of operations of
the Company, and the sale of the Shares proposed to be sold by such Selling
Shareholder is not prompted by any such knowledge.
SECTION 7. EXPENSES. The Company and the Selling Shareholders
hereby agree with the Underwriters that the Company will pay or cause to be paid
the costs and expenses associated with the following: (1) the preparation,
printing or reproduction, and filing with the Commission of the Registration
Statement (including financial statements and exhibits thereto), each Prepricing
Prospectus, the Prospectus, each registration statement filed pursuant to Rule
462(b) under the Act, and each amendment or supplement to any of them; (ii) the
printing (or reproduction) and delivery (including postage, air freight charges
and charges
<PAGE>
22
for counting and packaging) of such copies of the Registration Statement, each
Prepricing Prospectus, the Prospectus, each registration statement filed
pursuant to Rule 462(b) under the Act, and all amendments or supplements to any
of them, as may be reasonably requested for use in connection with the offering
and sale of the Shares; provided, however, that any such expenses incurred after
May 4, 1998, shall be paid by the Underwriters; (iii) the preparation, printing,
authentication, issuance and delivery of certificates for the Shares, including
any stamp taxes in connection with the offering of the Shares; (iv) the listing
of the Shares on the Nasdaq National Market; (v) the fees and expenses of the
Company's accountants and the fees and expenses of counsel (including local and
special counsel) for the Company; provided, however, that any such expenses
incurred after May 4, 1998 shall be paid by the Underwriters; and (vi) the
performance by the Company of its other obligations under this Agreement. If the
transactions contemplated hereby are not consummated by reason of any failure,
refusal or inability on the part of the Company to perform any agreement on its
part to be performed hereunder or to fulfill any condition of the Underwriters'
obligations hereunder, the Company will reimburse the Underwriters for all
reasonable out-of-pocket expenses (including fees and disbursements of counsel
for the Underwriters) incurred by the Underwriters in investigating, preparing
to market or marketing the Shares. The provisions of this Section 7 are intended
to relieve the Underwriters from the payment of the expenses and costs which the
Company hereby agrees to pay, but shall not affect any agreement which the
Selling Shareholders and the Company may make, or may have made, for the sharing
of such expenses and costs. Notwithstanding anything to the contrary contained
herein, the Underwriters shall pay on the Closing Date the reasonable fees and
expenses of Pillsbury, Madison & Sutro LLP incurred in connection with the
transactions contemplated hereby.
SECTION 8. INDEMNIFICATION AND CONTRIBUTION. The Company
agrees to indemnify and hold harmless the Underwriters and each person, if any,
who controls the Underwriters within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages, liabilities and expenses (including reasonable costs of investigation)
arising out of or based upon any breach of any representation, warranty,
agreement or covenant of the Company contained herein or any untrue statement or
alleged untrue statement of a material fact contained in any Prepricing
Prospectus, the Registration Statement, the Prospectus, any amendment or
supplement thereto, or in any Registration Statement filed pursuant to Rule
462(b) under the Act, or arising out of or based upon
<PAGE>
23
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses arise
out of or are based upon an untrue statement or omission or alleged untrue
statement or omission which has been made therein or omitted therefrom in
reliance upon and in conformity with the information relating to the
Underwriters furnished in writing to the Company by or on behalf of the
Underwriters through you or the information furnished by the Selling
Shareholders expressly for use in connection therewith or arise out of materials
prepared solely by the Underwriters based upon material information obtained
from sources other than, directly or indirectly, the Company or its
representatives. This indemnification shall be in addition to any liability that
the Company may otherwise have.
Each Selling Shareholder, severally and not jointly, agrees to
indemnify and hold harmless the Underwriters, the Company and each person, if
any, who controls the Underwriters within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act, from and against any and all losses, claims,
damages, liabilities and expenses (including reasonable costs of investigation)
arising out of or based upon any breach of any representation or warranty of
such Selling Shareholder contained herein or any untrue statement or alleged
untrue statement of a material fact (but only with reference to information
related to the Selling Shareholders furnished to the Company by or on behalf of
the Selling Shareholders specifically for inclusion in such documents) contained
in any Prepricing Prospectus, the Registration Statement, the Prospectus, any
amendment or supplement thereto, or in any Registration Statement filed pursuant
to Rule 462(b) under the Act, except insofar as such losses, claims, damages,
liabilities or expenses arise out of or are based upon an untrue statement or
omission or alleged untrue statement or omission which has been made therein or
omitted therefrom in reliance upon and in conformity with the information
relating to the Underwriters furnished in writing to the Company by or on behalf
of the Underwriters through you expressly for use in connection therewith or
arise out of materials prepared by the Underwriters based upon material
information obtained from sources other than, directly or indirectly, the
Company or its representatives. This indemnification shall be in addition to any
liability that the Selling Shareholders or any Selling Shareholder may otherwise
have. Notwithstanding anything to the contrary herein, in no event shall any
Selling Shareholder's obligation under this Section exceed the total net
proceeds
<PAGE>
24
from the offering received by such Selling Shareholder (computed without
deduction for any taxes).
If any action or claim shall be brought against the
Underwriters or any person controlling the Underwriters in respect of which
indemnity may be sought against the Company or any Selling Shareholder, the
Underwriters or such controlling person shall promptly notify in writing the
party(s) against whom indemnification is being sought (the "indemnifying party"
or "indemnifying parties"), and such indemnifying party(s) shall assume the
defense thereof, including the employment of counsel reasonably acceptable to
the Underwriters or such controlling person and payment of all fees and
expenses. The Underwriters or any such controlling person shall have the right
to employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
the Underwriters or such controlling person unless (i) the indemnifying party(s)
has (have) agreed in writing to pay such fees and expenses, (ii) the
indemnifying party(s) has (have) failed to assume the defense and employ counsel
reasonably acceptable to the Underwriters or such controlling person, or (iii)
the named parties to any such action (including any impleaded parties) include
both the Underwriters or such controlling person and the indemnifying party(s),
and the Underwriters or such controlling person shall have been advised by its
counsel that representation of such indemnified party and any indemnifying
party(s) by the same counsel would be inappropriate under applicable standards
of professional conduct (whether or not such representation by the same counsel
has been proposed) due to actual or potential differing interests between them
(in which case the indemnifying party(s) shall not have the right to assume the
defense of such action on behalf of such Underwriter or such controlling
person). The indemnifying party(s) shall not be liable for any settlement of any
such action effected without its (their) written consent, but if settled with
such written consent, or if there be a final judgment for the plaintiff in any
such action, the indemnifying party(s) agrees to indemnify and hold harmless the
Underwriters and any such controlling person from and against any loss, claim,
damage, liability or expense by reason of such settlement or judgment, but only
to the extent stated in the immediately preceding paragraph.
The Underwriters agree to indemnify and hold harmless the
Company, its directors, its officers who sign the Registration Statement, and
any person who controls the Company within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act, and each Selling
<PAGE>
25
Shareholder, to the same extent as the foregoing indemnity from the Company and
each Selling Shareholder to the Underwriters, but only with respect to
information relating to the Underwriters furnished in writing by or on behalf of
the Underwriters through you expressly for use in the Registration Statement,
the Prospectus or any Prepricing Prospectus, any amendment or supplement
thereto, or any Registration Statement filed pursuant to Rule 462(b) under the
Act. If any action or claim shall be brought or asserted against the Company,
any of its directors, any such officers, or any such controlling person or any
Selling Shareholder based on the Registration Statement, the Prospectus or any
Prepricing Prospectus, any amendment or supplement thereto, or any Registration
Statement filed pursuant to Rule 462(b) under the Act, and in respect of which
indemnity may be sought against the Underwriters pursuant to this paragraph, the
Underwriters shall have the rights and duties given to the Company and the
Selling Shareholders by the preceding paragraph (except that if the Company or
any Selling Shareholder shall have assumed the defense thereof the Underwriters
shall not be required to do so, but may employ separate counsel therein and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the Underwriters' expense), and the Company, its directors, any such
officers, and any such controlling persons and the Selling Shareholders shall
have the rights and duties given to the Underwriters by the immediately
preceding paragraph. This indemnification shall be in addition to any liability
the Underwriters may otherwise have.
If the indemnification provided for in this Section 8 is
unavailable to an indemnified party under the first, second or fourth paragraph
hereof in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then an indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company or the Selling Shareholders, as applicable, on
the one hand and the Underwriters on the other hand from the offering of the
Shares or (ii) if the allocation provided by clause (i) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company or the Selling Shareholders, as applicable, on the one hand and the
Underwriters on the other in connection with the statements or omissions that
resulted in such losses, claims, damages, liabilities or expenses, as
<PAGE>
26
well as any other relevant equitable considerations. The relative benefits
received by the Company or the Selling Shareholders, as applicable, on the one
hand and the Underwriters on the other hand shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Shares (before
deducting expenses) received by the Selling Shareholders bear to the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the Prospectus; provided
that, in the event that the Underwriters shall have purchased any Additional
Shares hereunder, any determination of the relative benefits received by the
Company or the Selling Shareholders, as applicable, or the Underwriters from the
offering of the Shares shall include the net proceeds (before deducting
expenses) received by the Company, and the underwriting discounts and
commissions received by the Underwriters, from the sale of such Additional
Shares, in each case computed on the basis of the respective amounts set forth
on the cover page of the Prospectus. The relative fault of the Company or the
Selling Shareholders, as applicable on the one hand and the Underwriters on the
other hand 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 Company
or the Selling Shareholders, as applicable, on the one hand or by the
Underwriters on the other hand and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
In any event, neither the Company nor the Selling Shareholders
will, without the prior written consent of the Underwriters, settle or
compromise or consent to the entry of any judgment in any proceeding or
threatened claim, action, suit or proceeding in respect of which indemnification
may be sought hereunder (whether or not the Underwriters or any person who
controls the Underwriters within the meaning of Section 15 of the Act or Section
20 of the Exchange Act is a party to such claim, action, suit or proceeding)
unless such settlement, compromise or consent includes an unconditional release
of the Underwriters and such controlling persons from all liability arising out
of such claim, action, suit or proceeding.
The Company, the Selling Shareholders and the Underwriters
agree that it would not be just and equitable if contribution pursuant to this
Section 8 was determined by a pro rata allocation or by any other method of
allocation that does not take account of the equitable considerations referred
to in the fifth paragraph of this Section 8. The
<PAGE>
27
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in the fifth paragraph of
this Section 8 shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8, the Underwriters shall not be
required to contribute any amount in excess of the amount by which the total
price of the Shares distributed to the public exceeds the amount of any damages
which the Underwriters have otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus, any supplement or amendment thereto, or
any registration statement filed pursuant to Section 462(b) of the Act, each
party against whom contribution may be sought under this Section 8 hereby
consents to the jurisdiction of any court having jurisdiction over any other
contributing party, agrees that process issuing from such court may be served
upon him or it by any other contributing party and consents to the service of
such process and agrees that any other contributing party may join him or it as
an additional defendant in any such proceeding in which such other contributing
party is a party.
Any losses, claims, damages, liabilities or expenses for which
an indemnified party is entitled to indemnification or contribution under this
Section 8 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Company and the Selling Shareholders set
forth in this Agreement, as well as in any certificate delivered pursuant
hereto, shall remain operative and in full force and effect, regardless of (i)
any investigation made by or on behalf of the Underwriters or any person
controlling the Underwriters, the Company, its directors or officers or any
person controlling the Company or any Selling Shareholder, (ii) acceptance of
any Shares and payment therefor hereunder, and (iii) any termination of this
Agreement. A successor to the Underwriters or any person controlling the
Underwriters, to the Company, its directors or officers, or any person
controlling the
<PAGE>
28
Company, or any Selling Shareholder, shall be entitled to the benefits of the
indemnity, contribution and reimbursement agreements contained in this Section
8.
SECTION 9. CONDITIONS OF UNDERWRITER'S OBLIGATIONS. The
obligation of the Underwriters to purchase the Shares hereunder are subject to
the following conditions:
(a) The Registration Statement has become effective, and all
filings required by Rules 424(b) and 430A under the Act shall have been timely
made; and any request of the Commission for additional information (to be
included in the Registration Statement or otherwise) shall have been disclosed
to the Underwriters and complied with to their reasonable satisfaction.
(b) Subsequent to the effective date of the Registration
Statement there shall not have occurred any change, or any development
involving, or which might reasonably be expected to involve, a potential future
material adverse change, in the condition (financial or other), business,
properties, net worth or results of operations of the Company and the
Subsidiaries, taken as a whole, not contemplated by the Prospectus (or any
supplement thereto), that in your reasonable opinion would materially and
adversely affect the market for the Shares.
(c) You shall have received on the Closing Date an opinion of
Richard Werber, Esq., Vice President, General Counsel and Secretary of the
Company, dated the Closing Date, satisfactory to you and your counsel, to the
effect
that:
(i) The Company is a corporation duly incorporated under the
laws of the State of Florida, and validly existing in good standing,
with full corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Registration
Statement and the Prospectus (and any amendment or supplement thereto),
and is duly registered and qualified to conduct its business as a
foreign corporation and is in good standing in each jurisdiction or
place where the nature of its properties or the conduct of its business
requires such registration or qualification, except where the failure
to so register or qualify does not have a Material Adverse Effect.
(ii) The Significant Subsidiary is a corporation duly
organized and validly existing in good standing
<PAGE>
29
under the laws of the State of Florida, with full corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and the Prospectus
(and any amendment or supplement thereto), and is duly registered and
qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the conduct
of its business requires such registration or qualification, except
where the failure to so register or qualify does not have a Material
Adverse Effect. All issued and outstanding equity interests of the
Significant Subsidiary have been validly issued and are fully paid and
nonassessable and are owned by the Company directly, free and clear of
all liens, encumbrances, equities and claims. To such counsel's
knowledge, the Company does not own or control, directly or indirectly,
any corporation, association or other entity other than the
Subsidiaries.
(iii) The authorized capital stock and other securities of the
Company conform in all material respects as to legal matters to the
description thereof incorporated by reference in the Prospectus.
(iv) All outstanding shares of capital stock or other
securities of the Company (including the Shares) have been duly
authorized and validly issued, are fully paid and nonassessable and
have not been issued in violation of any registration right, right of
first refusal, preemptive right, or other similar right.
(v) To such counsel's knowledge, all offers and sales of the
Company's capital stock or other securities prior to the date hereof
were made in compliance with the registration provisions of the Act and
all other applicable state and federal securities laws or regulations,
or applicable exemptions therefrom.
(vi) The form of certificates for the Shares conforms to the
requirements of the applicable corporate laws of the State of Florida.
(vii) The Registration Statement has become effective under
the Act and, to the knowledge of such counsel after reasonable inquiry,
no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose are
pending before or threatened by the Commission.
<PAGE>
30
(viii) The Company has all requisite corporate power and
authority to enter into this Agreement and this Agreement has been duly
authorized, executed and delivered by the Company.
(ix) Neither the Company nor any Subsidiary is in violation of
its respective articles of incorporation or bylaws or other charter
documents, and to the knowledge of such counsel after reasonable
inquiry, neither the Company nor any Subsidiary is in default in the
performance of any material obligation, agreement or condition
contained in any bond, indenture, note or other evidence of
indebtedness or in any other agreement material to the Company and the
Subsidiaries, taken as a whole, known to such counsel after reasonable
inquiry.
(x) Neither the execution, delivery or performance of this
Agreement, compliance by the Company with all provisions hereof nor
consummation by the Company of the transactions contemplated hereby
conflicts or will conflict with or constitutes or will constitute a
breach of, or a default under, articles of incorporation or bylaws or
other charter documents, of the Company or any Subsidiary, or any
agreement, indenture, lease or other instrument to which the Company or
any Subsidiary, or any of their respective properties, is bound, that
is or was required to be filed by the Company with the Commission, or
is known to such counsel after reasonable inquiry, or will result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any Subsidiary under any such
document, nor will any such action result in any violation of any
existing law (other than Section 16 of the Securities Exchange Act of
1934, as to which such counsel need express no opinion), regulation,
ruling (assuming compliance with all applicable state securities and
blue sky laws), judgment, injunction, order or decree known to such
counsel after reasonable inquiry, applicable to the Company or any
Subsidiary, or any of their respective properties.
(xi) No consent, approval, authorization or other order of, or
registration or filing with, any court, regulatory body, administrative
agency or other governmental body, agency or official is required on
the part of the Company (except such as have been obtained under the
Act or such as may be required under state securities or blue sky laws
governing the
<PAGE>
31
purchase and distribution of the Shares) for the valid sale of the
Shares to the Underwriters under this Agreement.
(xii) The Registration Statement and the Prospectus and any
supplements or amendments thereto (except for the financial statements
and the notes thereto and the schedules and other financial and
statistical data included or incorporated by reference therein, as to
which such counsel need not express any opinion) comply as to form in
all material respects with the requirements of the Act, and the
conditions to the use of Form S-3 have been satisfied by the Company.
(xiii) To the knowledge of such counsel after reasonable
inquiry, (A) there are no legal or governmental proceedings pending or
threatened against the Company or any Subsidiary, or to which the
Company or any Subsidiary, or any of their respective properties, are
subject, that are required to be described in the Registration
Statement or Prospectus (or any amendment or supplement thereto) or any
document incorporated by reference therein that are not described as
required therein, and (B) there are no agreements, contracts,
indentures, leases or other instruments, that are required to be
described in the Registration Statement or the Prospectus (or any
amendment or supplement thereto) or any document incorporated by
reference therein or to be filed as an exhibit to the Registration
Statement or incorporated by reference therein that are not described
or filed as required, as the case may be.
(xiv) To the knowledge of such counsel after reasonable
inquiry, neither the Company nor any Subsidiary is in violation of any
law, ordinance, administrative or governmental rule or regulation
applicable to the Company or any Subsidiary or of any decree of any
court or governmental agency or body having jurisdiction over the
Company or any Subsidiary, except where such violation does not and
will not have a Material Adverse Effect.
(xv) To the knowledge of such counsel after reasonable
inquiry, the Company and the Significant Subsidiary have such permits,
licenses, franchises, approvals, consents and authorizations of
governmental or regulatory authorities ("permits"), as are necessary to
own their respective properties and to conduct their respective
businesses in the manner described in the Registration Statement and
the Prospectus (or any
<PAGE>
32
amendment or supplement thereto), subject to such qualifications as may
be set forth therein; the Company and the Significant Subsidiary have
fulfilled and performed all of their respective material obligations
with respect to such permits and no event has occurred which allows, or
after notice or lapse of time would allow, revocation or termination
thereof or result in any other material impairment of the rights of the
holder of any such permit, subject in each case to such qualification
as may be set forth in the Registration Statement and the Prospectus
(or any amendment or supplement thereto); and except as described in
the Registration Statement and the Prospectus (or any amendment or
supplement thereto), such permits contain no restrictions that are
materially burdensome to the Company and its Subsidiaries, taken as a
whole.
(xvi) The property described in the Registration Statement and
the Prospectus (or any amendment or supplement thereto) as held under
lease by the Company or any Subsidiary is held under valid, subsisting
and enforceable leases, with only such exceptions as in the aggregate
are not material and do not interfere in any material respect with the
conduct of the business of the Company and the Subsidiaries, taken as a
whole.
(xvii) Such counsel has reviewed all agreements, contracts,
indentures, leases or other documents or instruments referred to in the
Registration Statement and the Prospectus (or any amendment or
supplement thereto) (other than routine contracts entered into by the
Company or any Subsidiary for the purchase of materials or the sale of
products, entered into in the normal course of business) and such
agreements, contracts, indentures, leases or other documents or
instruments are fairly summarized or disclosed therein, and filed as
exhibits thereto or incorporated by reference therein as required, and
such counsel does not know, after reasonable inquiry, of any
agreements, contracts, indentures, leases or other documents or
instruments required to be so summarized or disclosed or filed which
have not been so summarized or disclosed or filed.
(xviii) Such counsel has no reason to believe that the
descriptions in the Registration Statement and the Prospectus (or any
amendment or supplement thereto) of statutes, regulations or legal or
governmental proceedings are other than accurate or fail to present
fairly the information required to be shown.
<PAGE>
33
(xix) Neither the Company nor any Subsidiary is, nor will any
of them become, as a result of the consummation of the transactions
contemplated hereby, an "investment company" or an "affiliated person"
of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of
1940, as amended.
In rendering such opinion, counsel may rely upon an opinion or
opinions, each dated the Closing Date, of other counsel as to the laws of a
jurisdiction other than the State of Florida or the United States, or as to
matters involving regulation of the Company by the United States Food and Drug
Administration, provided that (1) each such local counsel is acceptable to you,
(2) each such opinion so relied upon is addressed to counsel and you, (3) such
reliance is expressly authorized by each opinion so relied upon and a copy of
each such opinion is delivered to you and is in form and substance satisfactory
to you, and (4) counsel shall state in their opinion that they believe that they
and you are justified in relying thereon. In rendering such opinion, local
counsel may rely, to the extent they deem such reliance proper, as to matters of
fact upon certificates of government officials. Copies of all such certificates
shall be furnished to you and your counsel on the Closing Date. In rendering
such opinion, such counsel may assume as to matters involving the application of
laws of any jurisdiction other than the State of Florida, the general
corporation laws of the State of Delaware or the Federal laws of the United
States that the laws of such jurisdiction are the same as the laws of the State
of Florida.
In addition to the opinion set forth above, such counsel shall
state that during the course of the preparation of the Registration Statement
and the Prospectus, and any amendments or supplements thereto, nothing has come
to the attention of such counsel which has caused him to believe that the
Registration Statement, as of the time it became effective under the Act, the
Prospectus or any amendment or supplement thereto, on the date it was filed
pursuant to Rule 424(b), as of the respective dates when such documents were
filed with the Commission, and the Registration Statement and the Prospectus, or
any amendment or supplement thereto, as of the Closing Date (except for the
financial statements and other financial and statistical information contained
therein or omitted therefrom as to which no opinion need be expressed),
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading. With respect to such
<PAGE>
34
statement, counsel shall state that although such counsel did not undertake to
determine independently the accuracy, completeness and fairness of the
statements contained in the Registration Statement or in the Prospectus and
takes no responsibility therefor (except to the extent specifically set forth
herein), such counsel did participate in discussions and meetings with officers
and other representatives of the Company and discussions with the auditor for
the Company in connection with the preparation of the Registration Statement and
the Prospectus, and it is on the basis of the foregoing (relying as to certain
factual matters on the information provided to such counsel and not on an
independent investigation) that such counsel is making such statement.
(d) You shall have received on the Closing Date an opinion of
Pillsbury, Madison & Sutro, counsel for the Selling Shareholders, dated the
Closing Date, substantially
to the effect that:
(i) This Agreement has been duly authorized, executed and
delivered by the Selling Shareholders.
(ii) Each of the Selling Shareholders is an entity duly
organized and validly existing under the laws of its jurisdiction of
organization. Each of the Selling Shareholders has full right, power
and authority to enter into and to perform its obligations under this
Agreement and to sell, assign, transfer and deliver the Shares to be
sold by such Selling Shareholder hereunder (except that no opinion
needs to be expressed with respect to permits and similar
authorizations under the securities or blue sky laws of certain
states).
(iii) The delivery by or on behalf of the Selling Shareholders
to the Underwriters of certificates for the shares of Common Stock
being sold by the Selling Shareholders pursuant to this Agreement
against payment therefor as provided herein will convey good and valid
title to such shares of Common Stock to the Underwriters, free and
clear of all security interests, pledges, liens, encumbrances,
equitable interests and adverse claims. For purposes of such opinion,
such counsel shall be entitled to assume that (a) the Underwriters are
without notice of any "adverse claim," as such term is defined in
Section 8-302(2) of the New York Uniform Commercial Code, (b) the
Underwriters are purchasers for value in good faith for purposes of
Section 8-302 of the New York Uniform Commercial Code, and (c) the
rights of the Underwriters are not limited by the provisions of Section
8-302(4) of the New York
<PAGE>
35
Uniform Commercial Code.
(iv) Execution and delivery of this Agreement and performance
by the Selling Shareholders of their obligations hereunder do not: (A)
conflict with or result in a breach or a default under any material
bond, debenture, note or other evidence of indebtedness, or any
material contract, indenture, mortgage, deed of trust, loan agreement,
lease or other agreement or instrument known to such counsel by which
such Selling Shareholder or any Shares may be bound, or (B) to such
counsel's knowledge, result in the violation of any law, order, rule or
regulation (other than ordinances and regulations or counties and
political subdivisions thereof) applicable to the Selling Shareholders
or the violation of any writ, injunction or decree of any court or
arbitrator known to such counsel and specifically directed to the
Selling Shareholders, or result in the violation of any provisions of
the charter, bylaws or other organizational documents of either of the
Selling Shareholders.
(v) No consent, approval, authorization or order of, or filing
with, any court or governmental agency or bodies is required for the
consummation of the transactions contemplated by this Agreement in
connection with the sale of the Shares by the Selling Shareholders
hereunder except such as have been obtained under the Act and such as
may be required under state securities laws in connection with the
purchase and distribution of such Shares by the Underwriters.
In rendering such opinion, such counsel may assume as to
matters involving the application of laws of any jurisdiction other than the
State of California, the general corporation laws of the State of Delaware or
the Federal laws of the United States that the laws of such jurisdiction are the
same as the laws of the State of Delaware and may rely, to the extent they deem
such reliance proper, as to matters of fact upon certificates of government
officials.
(e) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been taken or, to the knowledge of the Company, shall be
contemplated by the Commission at or prior to the Closing Date; (ii) there shall
not have been any change in the capital stock or other securities of the Company
nor any material increase in the short-term or long-term debt of the
<PAGE>
36
Company (other than in the ordinary course of business) from that set forth or
contemplated in the Registration Statement or the Prospectus (or any amendment
or supplement thereto); (iii) there shall not have been since the respective
dates as of which information is given in the Registration Statement and the
Prospectus (or any amendment or supplement thereto), except as may otherwise be
stated in the Registration Statement and Prospectus (or any amendment or
supplement thereto), any development involving, or which may reasonably be
expected to involve a potential future, Material Adverse Effect; and (iv) all of
the representations and warranties of the Company contained in this Agreement
shall be true and correct in all material respects on and as of the date hereof
and on and as of the Closing Date as if made on and as of the Closing Date.
(f) The Company shall not have failed in any material respect
at or prior to the Closing Date to have performed or complied with any of its
agreements herein contained and required to be performed or complied with by it
hereunder at or prior to the Closing Date.
(g) The Company and the Selling Shareholders shall have
furnished or caused to have been furnished to you such further certificates and
documents as you shall be reasonably requested.
All such opinions, certificates, letters and other documents
will be in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to you and your counsel.
SECTION 10. EFFECTIVE DATE OF AGREEMENT. This
Agreement shall become effective upon the execution and
delivery hereof by the parties hereto.
SECTION 11. TERMINATION OF AGREEMENT. This Agreement shall be
subject to termination in your absolute discretion, without liability on the
part of the Underwriters to the Selling Shareholders or the Company, by notice
to the Company, if prior to the Closing Date, (i) trading in securities
generally on the New York Stock Exchange, American Stock Exchange or The Nasdaq
Stock Market shall have been suspended or materially limited, (ii) trading of
any securities of the Company, including the Shares, on the New York Stock
Exchange, American Stock Exchange or The Nasdaq Stock Market shall have been
suspended or materially limited, whether as the result of a stop order by the
Commission or otherwise, (iii) a general moratorium on commercial banking
activities in New York or Florida shall have been declared by either federal or
state
<PAGE>
37
authorities, (iv) there shall have occurred any outbreak or escalation of
hostilities or other international or domestic calamity, crisis or change in
political, financial or economic conditions or other material event the effect
of which on the financial markets of the United States is such as to make it, in
your judgment, impracticable or inadvisable to market the Shares or to enforce
contracts for the sale of the Shares, or (v) the Company or any Subsidiary shall
have, in the sole judgment of the Underwriters, sustained any loss or
interference, material to the Company and the Subsidiaries, taken as a whole,
with their respective businesses or properties from fire, flood, hurricane,
accident, or other calamity, whether or not covered by insurance, or from any
labor disputes or any legal or governmental proceeding, or there shall have been
any material adverse change (including, without limitation, a material change in
management or control of the Company) in the condition (financial or otherwise),
business prospects, net worth, or results of operations of the Company and the
Subsidiaries, taken as a whole, except in each case as described in, or
contemplated by, the Prospectus (excluding any amendment or supplement thereto).
Notice of such cancellation shall be promptly given to the Company and its
counsel by telegraph, telecopy or telephone and shall be subsequently confirmed
by letter.
SECTION 12. INFORMATION FURNISHED BY THE UNDERWRITERS. The
statements set forth under the caption "Underwriting" in any Prepricing
Prospectus and in the Prospectus and in the fifth and seventh paragraphs of the
cover page of the Prospectus Supplement dated May 5, 1998, constitute all the
information furnished by or on behalf of the Underwriters through you or on your
behalf as such information is referred to in Section 8 hereof.
SECTION 13. NOTICES; SUCCESSORS AND ASSIGNS. Except as
otherwise provided herein, notice given pursuant to any of the provisions of
this Agreement shall be in writing and shall be delivered (i) if to the Company,
at the office of the Company at 851 Broken Sound Parkway, Boca Raton, Florida,
33487, Attention: Richard Werber, Esq. (with a copy to Greenberg, Traurig,
Hoffman, Lipoff, Rosen & Quentel, P.A. at 1221 Brickell Avenue, Miami, Florida
33131; Attn: Paul Berkowitz, Esq.); or (ii) if to you, as the Underwriters, to
General Counsel, Salomon Smith Barney, at 388 Greenwich Street, New York, New
York 10013; or (iii) if to one or more of the Selling Shareholders, to it at
3475 Commercial Court, Meridian, Idaho 83642 (with a copy to Pillsbury, Madison
& Sutro LLP, 725 South Figueroa Street, Los Angeles, California 90017, Attn:
Margaret Milam, Esq.).
<PAGE>
38
This Agreement has been and is made solely for the benefit of
the Underwriters, the Company, its directors and officers and the other
controlling persons referred to in Section 8 hereof, and the Selling
Shareholders, and their respective successors and assigns, to the extent
provided herein, and no other person shall acquire or have any right under or by
virtue of this Agreement. Neither of the terms "successor" and "successors and
assigns" as used in this Agreement shall include a purchaser from you of any of
the Shares in his status as such purchaser.
SECTION 14. APPLICABLE LAW; COUNTERPARTS; ENTIRE AGREEMENT.
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York without reference to choice of law principles thereunder.
This Agreement may be signed in various counterparts which together shall
constitute one and the same instrument. This Agreement shall be effective when,
but only when, at least one counterpart hereof shall have been executed on
behalf of each party hereto. This Agreement shall constitute the entire
agreement among the parties with respect to the subject matter hereof. Except
with respect to the reduction in the number of shares that the Selling
Shareholders have the right to register as a result of the shares sold pursuant
to this Agreement, this Agreement shall not affect the rights and obligations of
the Company and the Selling Shareholders as set forth in the Agreement and Plan
of Merger dated December 24, 1997, by and between the Company, the Selling
Shareholders, RAC Acquisition Corporation, Richardson Labs Inc., Edward Priddy,
Mark Priddy and John Priddy and any exhibits or ancillary
<PAGE>
39
agreements executed in connection therewith, including, but
not limited to, the Registration Rights Agreement.
If the foregoing correctly sets forth our understanding,
please indicate your acceptance thereof in the space provided below for that
purpose, whereupon this letter and your acceptance shall constitute a binding
agreement between us.
Very truly yours,
REXALL SUNDOWN, INC.
By: /s/ Damon DeSantis
-------------------------
Damon DeSantis
President
ABRAHAM & SONS, LLC
By: /s/ Ed Priddy
-------------------------
Ed Priddy
President
PRIDDY BROTHERS HOLDINGS, INC.
By: /s/ John Priddy
-------------------------
John Priddy
Secretary
CONFIRMED as of the date first Above mentioned:
SMITH BARNEY INC.
By: /s/ Michael A. Peak
-------------------------
Michael A. Peak
Managing Director
<PAGE>
40
SCHEDULE I
SELLING SHAREHOLDERS
Name Number of Shares
Abraham & Sons, LLC 721,154
Priddy Brothers Holdings, Inc. 721,154
TOTAL 1,442,308
