UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) March 23, 2000
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Commission File Number 0-21884
REXALL SUNDOWN, INC.
(Exact Name of Registrant as Specified in its Charter)
FLORIDA 59-1688986
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
6111 Broken Sound Parkway, NW, Boca Raton, Florida 33487
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (561) 241-9400
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N/A
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(Former Name or Former Address,
if Changed Since Last Report)
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Item 2. Acquisition of Assets
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On March 23, 2000, Rexall Sundown, Inc. (the "Registrant"), a Florida
corporation, consummated its acquisition (the "Transaction") of Worldwide Sport
Nutritional Supplements Inc. ("Worldwide"), a New York corporation, in
accordance with the Stock Purchase Agreement dated February 23, 2000 (the "Stock
Purchase Agreement") by and between the Registrant, Worldwide and the
shareholders of Worldwide. The Stock Purchase Agreement is filed as Exhibit 2.1
to this Current Report on Form 8-K and is expressly incorporated by reference
herein.
Based in Largo, Florida, Worldwide is best known for its leading branded
sports nutrition supplements including Pure Protein(R) food bars, Burn-IT(TM)
food bars, Pure Protein Cookie(TM), Ultra Pure Protein Shake(TM), Extreme Pure
Protein(TM) drinks, and the recently introduced Protein Revolution(TM)low-carb
bars, among others.
The aggregate purchase price for the Transaction was $71.5 million,
subject to certain adjustments. The amount of consideration was determined
through arm's length negotiations between the parties. The Registrant funded the
Transaction, in part, through its line of credit pursuant to that certain Credit
Agreement dated January 7, 2000 (the "Credit Agreement") by and among Registrant
as Borrower, Bank Of America, N.A., as Administrative Agent and as Lender and
the Lenders Party Thereto From Time To Time. The Credit Agreement is filed as
Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated January 13,
2000 and is expressly incorporated by reference herein. The Transaction was
accounted for as a purchase.
The press release dated March 23, 2000 announcing the consummation of
the Transaction is filed as Exhibit 99.1 to this Current Report on Form 8-K and
is expressly incorporated by reference herein.
Item 7. Financial Statements, Pro-Forma Financial Information and Exhibits
(a) Financial Statements of Business Acquired.
Pursuant to Rule 3-05 of Regulation S-X, the Registrant is not
required to file financial statements of the acquired business.
(b) Pro Forma Financial Information.
Pursuant to Article 11 of Regulation S-X, the Registrant is not
required to file pro forma financial information with respect
to the acquired business.
(c) Exhibits
2.1 Stock Purchase Agreement dated February 23, 2000 by and
between Rexall Sundown, Inc., Worldwide Sport
Nutritional Supplements Inc. and the shareholders of
Worldwide Sport Nutritional Supplements Inc.
99.1 Press Release dated March 23, 2000.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
REXALL SUNDOWN, INC.
Date: March 29, 2000 /s/ Damon DeSantis
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Name: Damon DeSantis
Title: President and Chief Executive Officer
Exhibit 2.1
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STOCK PURCHASE AGREEMENT
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by and among
REXALL SUNDOWN, INC.,
WORLDWIDE SPORT NUTRITIONAL SUPPLEMENTS INC.
and
THE SHAREHOLDERS OF
WORLDWIDE SPORT NUTRITIONAL SUPPLEMENTS INC.
February 23, 2000
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
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<S> <C>
ARTICLE I. - SALE AND PURCHASE OF SHARES..........................................................................1
1.01 Sale and Purchase of Shares.....................................................................1
1.02 Payment for Shares..............................................................................1
1.03 Purchase Price Adjustment.......................................................................1
ARTICLE II. - CLOSING.............................................................................................1
2.01 Closing.........................................................................................2
2.02 Deliveries by the Shareholders..................................................................2
2.03 Deliveries by Buyer.............................................................................2
2.04 Termination in Absence of Closing...............................................................3
2.05 Section 338(h)(10) Election.....................................................................3
ARTICLE III. - REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDERS.................................3
3.01 Corporate Existence and Qualification...........................................................3
3.02 Authority, Approval and Enforceability..........................................................4
3.03 Capitalization and Corporate Records............................................................4
3.04 Capital Stock; Title to Shares..................................................................4
3.05 No Shareholder Defaults or Consents.............................................................4
3.06 No Default or Consents..........................................................................5
3.07 No Proceedings..................................................................................5
3.08 Employee Benefit Matters........................................................................5
3.09 Financial Statements; Liabilities; Accounts Receivable..........................................7
3.10 Absence of Certain Changes......................................................................8
3.11 Compliance with Laws............................................................................9
3.12 Litigation......................................................................................9
3.13 Ownership of Company Assets....................................................................10
3.14 Commitments....................................................................................11
3.15 Insurance......................................................................................12
3.16 Inventories....................................................................................12
3.17 Regulatory Compliance..........................................................................12
3.18 Permits; Environmental Matters.................................................................12
3.19 Banks..........................................................................................13
3.20 Suppliers and Customers........................................................................13
3.21 Products and Services..........................................................................14
3.22 Absence of Certain Business Practices..........................................................14
3.23 Transactions With Affiliates...................................................................14
3.24 Other Information..............................................................................15
ARTICLE IV. - REPRESENTATIONS AND WARRANTIES OF BUYER............................................................15
4.01 Corporate Existence and Qualification..........................................................15
4.02 Authority, Approval and Enforceability.........................................................15
4.03 No Default or Consents.........................................................................15
4.04 No Proceedings.................................................................................16
ARTICLE V. - OBLIGATIONS PRIOR TO CLOSING........................................................................16
5.01 Buyer's Access to Information and Assets.......................................................16
5.02 Company's Conduct of Business and Operations...................................................16
5.03 General Restrictions...........................................................................16
5.04 Notice Regarding Changes.......................................................................18
5.05 Ensure Conditions Met..........................................................................18
5.06 Casualty Loss..................................................................................18
ARTICLE VI. - CONDITIONS TO SELLER'S AND BUYER'S OBLIGATIONS.....................................................19
6.01 Conditions to Obligations of the Shareholders..................................................19
6.02 Conditions to Obligations of Buyer.............................................................19
ARTICLE VII. - POST-CLOSING OBLIGATIONS.........................................................................21
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7.01 Further Assurances.............................................................................21
7.02 Publicity......................................................................................21
7.03 Post-Closing Indemnity by the Shareholders.....................................................21
7.04 Non-Competition................................................................................21
ARTICLE VIII. - TAX MATTERS......................................................................................22
8.01 Representations and Obligations Regarding Taxes................................................22
8.02 Indemnification for Taxes......................................................................23
ARTICLE IX. - MISCELLANEOUS......................................................................................24
9.01 Limitation on Liability........................................................................24
9.02 Confidentiality................................................................................25
9.03 Brokers........................................................................................26
9.04 Costs and Expenses.............................................................................26
9.05 Notices........................................................................................26
9.06 No Negotiations................................................................................27
9.07 Governing Law..................................................................................27
9.08 Entire Agreement; Amendments and Waivers.......................................................28
9.09 Binding Effect and Assignment..................................................................28
9.10 Remedies.......................................................................................28
9.11 Counterparts...................................................................................28
9.12 Survival.......................................................................................28
9.13 Attorneys' Fees................................................................................28
9.14 Risk of Loss...................................................................................28
ARTICLE X. - DEFINITIONS.........................................................................................29
10.01 Affiliate......................................................................................29
10.02 Assets.........................................................................................29
10.03 Business.......................................................................................29
10.04 Collateral Agreements..........................................................................29
10.05 Contracts......................................................................................29
10.06 Damages........................................................................................29
10.07 Environmental Laws.............................................................................29
10.08 Financial Statements...........................................................................29
10.09 Governmental Authorities.......................................................................29
10.10 Hazardous Material.............................................................................30
10.11 Knowledge of the Company and any of the Shareholders...........................................30
10.12 Legal Requirements.............................................................................30
10.13 Material Adverse Effect........................................................................30
10.14 Permits........................................................................................30
10.15 Proportionate Share............................................................................30
10.16 Real Property..................................................................................30
10.17 Regulations....................................................................................30
10.18 Used...........................................................................................30
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LIST OF SCHEDULES
Schedule 3.01........................................Qualifications as Foreign Corporation
Schedule 3.04(a).....................................Stock Ownership
Schedule 3.05........................................Shareholder Defaults or Consents
Schedule 3.06........................................Company Defaults or Consents
Schedule 3.08(a).....................................Employee Arrangements
Schedule 3.08(c).....................................Benefit Plan Liabilities
Schedule 3.08(e).....................................Current Employees
Schedule 3.09(a).....................................Financial Statements
Schedule 3.09(b).....................................Scheduled Liabilities
Schedule 3.09(c).....................................Accounts Receivable
Schedule 3.10(a).....................................Certain Changes
Schedule 3.10(b).....................................Certain Actions
Schedule 3.11(1).....................................Compliance with Law
Schedule 3.11(2).....................................Citations
Schedule 3.12........................................Litigation
Schedule 3.13(a).....................................Encumbrances
Schedule 3.13(b).....................................Leased Premises Matters
Schedule 3.13(c).....................................Intangible Rights
Schedule 3.14........................................Commitments
Schedule 3.14(c).....................................Non-Arm's Length Contracts
Schedule 3.15........................................Insurance
Schedule 3.16(1).....................................Inventory Condition
Schedule 3.16(2).....................................Inventory Accounting
Schedule 3.18(a).....................................Permits
Schedule 3.18(b).....................................Environmental Claims
Schedule 3.18(c).....................................Storage of Hazardous Materials
Schedule 3.18(d).....................................Noncompliance with Environmental Laws
Schedule 3.19........................................Banks, Accounts and Authorized Signatories
Schedule 3.20........................................Suppliers and Customers
Schedule 3.21(a).....................................Product Listing
Schedule 3.21(b).....................................Recalls
Schedule 3.23........................................Affiliate Transactions
Schedule 4.03........................................Buyer Defaults or Consents
Schedule 8.01(a).....................................Tax Returns
Schedule 8.01(b).....................................Tax Claims
Schedule 8.01(c).....................................Tax Extensions
</TABLE>
EXHIBITS
Exhibit A - Form of Employment Agreement of David McCabe
Exhibit B - Form of Employment Agreement of William R. Kemp
Exhibit C - Form of Opinion of Annis, Mitchell, Cockey, Edwards & Roehn, P.A.
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of February 23, 2000, by and among (i) Rexall Sundown, Inc., a Florida
corporation (the "Buyer"), (ii) Worldwide Sport Nutritional Supplements Inc., a
New York corporation (the "Company"), and (iii) the Shareholders of the Company
as set forth on Schedule 3.04(a) (collectively, the "Shareholders" and each
individually, a "Shareholder").
Recitals
A. The Shareholders own of record and beneficially all of the
outstanding capital stock of the Company (the "Shares").
B. Buyer desires to purchase the Shares, and the Shareholders desire to
sell such Shares, upon the terms and subject to the conditions set forth herein.
Agreement
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants contained herein, the parties agree as follows:
ARTICLE I. - SALE AND PURCHASE OF SHARES
1.01 Sale and Purchase of Shares.
(a) On the terms and subject to the conditions of this
Agreement, at the Closing referred to in Section 2.01, the Shareholders shall
sell, convey, assign, transfer and deliver to Buyer, and Buyer shall purchase,
acquire and accept delivery of, the Shares, free and clear of any and all liens,
mortgages, adverse claims, charges, security interests, encumbrances or other
restrictions or limitations whatsoever ("Liens").
(b) To effect the transfers contemplated by Section 1.01(a),
at the Closing, each Shareholder shall deliver or cause to be delivered to
Buyer, against payment therefor in accordance with Section 1.02, stock
certificates representing that portion of the Shares being sold by such
Shareholder hereunder, accompanied by stock powers duly executed in blank and
otherwise in form acceptable to Buyer for transfer on the books of the Company.
1.02 Payment for Shares. As payment for the Shares being acquired by
the Buyer hereunder, Buyer shall deliver to each Shareholder at Closing, by wire
transfer in next day funds, an amount equal to such Shareholder's Proportionate
Share of Seventy One Million Five Hundred Thousand Dollars ($71,500,000) (the
"Cash Consideration"). The Cash Consideration shall be subject to the
post-Closing purchase price adjustment described in Section 1.03. The Cash
Consideration, as adjusted for such post-Closing purchase price adjustment, is
referred to herein as the "Purchase Price."
1.03 Purchase Price Adjustment. The Cash Consideration payable to the
Shareholders shall be adjusted as provided in Sections 5.03(xiv) and (xviii);
provided, however, that amounts payable to William R. Kemp pursuant to the last
clause of Section 5.03(xviii) shall not reduce the Cash Consideration.
ARTICLE II. - CLOSING
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2.01 Closing. Subject to the conditions stated in Article VI of this
Agreement, the closing of the transactions contemplated hereby (the "Closing")
shall be held at 9:00 a.m., Miami time, on March 23, 2000, or, if the conditions
set forth in Sections 6.01 and 6.02 have not been satisfied or waived on such
date, no later than seven days after all such conditions shall have been
satisfied or waived, at the offices of Greenberg Traurig, P.A., 1221 Brickell
Avenue, Miami, Florida. The date upon which the Closing occurs is hereinafter
referred to as the "Closing Date."
2.02 Deliveries by the Shareholders. At or prior to the Closing, the
Shareholders shall deliver, or cause the Company to deliver, to Buyer:
(i) certificates representing all of the Shares, duly
endorsed in blank for transfer, or with appropriate stock powers in blank
attached;
(ii) the resignations of all the officers and
directors of the Company;
(iii) the stock book, stock ledger, minute books and
corporate seal of the Company;
(iv) a certificate executed by each of the
Shareholders to the effect that the conditions set forth in Sections 6.02(a)
through (d) have been satisfied;
(v) an Employment Agreement between the Company and
David McCabe, in substantially the form attached hereto as Exhibit A (the
"McCabe Employment Agreement"), duly executed by David McCabe;
(vi) an Employment Agreement between the Company and
William R. Kemp, in substantially the form attached hereto as Exhibit B (the
"Kemp Employment Agreement"), duly executed by William R. Kemp;
(vii) an opinion of Annis, Mitchell, Cockey, Edwards
& Roehn, PA, counsel to the Company and the Shareholders, dated as of the
Closing Date, addressed to the Buyer and in form and substance reasonably
satisfactory to the Buyer, to the effect set forth on Exhibit C;
(viii) possession of all originals and copies of
agreements, instruments, documents, deeds, books, records, files and other data
and information within the possession of the Shareholders or any Affiliate of
any Shareholder pertaining to the Company (collectively, the "Records");
provided, however, that the Shareholders may retain: (1) copies of any tax
returns and copies of Records relating thereto; (2) copies of any Records that
the Shareholders are reasonably likely to need for complying with requirements
of law; and (3) copies of any Records that in the reasonable opinion of the
Shareholders will be required in connection with the performance of its
obligations under Article VIII;
(ix) evidence satisfactory to Buyer that the
Company's assets are owned free and clear of any Liens;
(x) evidence satisfactory to Buyer that Buyer's
designees shall be the only authorized signatories with respect to the Company's
various accounts, credit lines, safe deposit boxes or vaults set forth or
required to be set forth in Schedule 3.19; and
(xi) such other instruments or documents as shall be
reasonably requested by Buyer to vest in the Buyer title in and to the Shares
and to consummate the transactions contemplated by the provisions hereof.
2.03 Deliveries by Buyer. At or prior to the Closing, Buyer shall
deliver to each Shareholder:
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(i) such Shareholder's Proportionate Share of the
Purchase Price;
(ii) a certificate executed by an authorized officer
of the Buyer, on behalf of the Buyer, to the effect that the conditions set
forth in Section 6.01(a) and (b) have been satisfied;
(iii) the McCabe Employment Agreement duly executed
by the Company;
(iv) the Kemp Employment Agreement duly executed by
the Company; and
(v) such other instruments or documents as shall be
reasonably requested by the Shareholders to consummate the transactions
contemplated by the provisions hereof.
2.04 Termination in Absence of Closing.
(a) If by the close of business on April 30, 2000, the Closing
has not occurred, then any party hereto may thereafter terminate this Agreement
by written notice to such effect, to the other parties hereto, without liability
of or to any party to this Agreement or any shareholder, director, officer,
employee or representative of such party unless the reason for Closing having
not occurred is (i) such party's willful breach of the provisions of this
Agreement, or (ii) if all of the conditions to such party's obligations set
forth in Article VI have been satisfied or waived in writing by the date
scheduled for the Closing pursuant to Section 2.01; provided, however, that the
provisions of Sections 9.02, 9.03, 9.04, 9.07 and 9.08 shall survive any such
termination.
(b) Notwithstanding the approval of the Board of Directors of
Buyer, this Agreement and the transactions contemplated herein may be terminated
and abandoned at any time on or prior to the Closing Date by the Buyer if:
(i) any representations or warranties made herein for
the benefit of Buyer, or any certificate, schedule or document furnished to
Buyer pursuant to this Agreement is untrue in any material respect; or
(ii) the Company or any Shareholder shall have
defaulted in any material respect in the performance of any material obligation
under this Agreement.
2.05 Section 338(h)(10) Election. At the Buyer's option, each of the
Shareholders will join (and will cause the Company to join) with Buyer in making
an election under Code Section 338(h)(10)(and any corresponding election under
state, local, and foreign Tax law) with respect to the purchase and sale of the
Shares pursuant to the terms of this Agreement (a "Section 338(h)(10)
Election"). The Shareholders will include any income, gain, loss, deduction or
other Tax item resulting from the Section 338(h)(10) Election on their Tax
Returns to the extent permitted by applicable law. The Shareholders shall also
pay any Tax imposed on the Company or the Subsidiaries attributable to making
the Section 338(h)(10) Election.
ARTICLE III. - REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE SHAREHOLDERS
The Company and the Shareholders, jointly and severally, hereby
represent and warrant to Buyer that:
3.01 Corporate Existence and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of New York. The Company and the Subsidiaries (as defined in
Section 3.04) have the corporate power to carry on their business as is
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presently conducted; the Company and the Subsidiaries are not required to be
duly qualified to do business as a foreign corporation in any jurisdiction
outside those identified in Schedule 3.01 attached hereto, and the Company and
the Subsidiaries are qualified as foreign corporations and in good standing in
each listed jurisdiction except where the failure to be so qualified would not
have a Material Adverse Effect.
3.02 Authority, Approval and Enforceability. This Agreement has been
duly executed and delivered by the Company and the Shareholders, and the Company
and the Shareholders have all requisite power and legal capacity to execute and
deliver this Agreement and all Collateral Agreements to be executed and
delivered in connection with the transactions contemplated hereby, to consummate
the transactions contemplated hereby and by the Collateral Agreements, and to
perform its obligations hereunder and under the Collateral Agreements. This
Agreement and each Collateral Agreement to which the Company and/or the
Shareholders are parties constitute, or upon execution and delivery will
constitute, the legal, valid and binding obligation of such party, enforceable
in accordance with its terms, except as such enforcement may be limited by
general equitable principles or by applicable bankruptcy, insolvency,
moratorium, or similar laws and judicial decisions from time to time in effect
which affect creditors' rights generally.
3.03 Capitalization and Corporate Records. The entire authorized
capital stock of the Company consists of 200 shares of common stock, no par
value per share, of which 178 shares are issued and outstanding as of the date
of this Agreement and no more than 194 shares of common stock will be issued and
outstanding as of the Closing Date. All of the issued and outstanding shares of
the Company's capital stock are owned beneficially and of record by the
Shareholders, free and clear of any and all Liens. The copies of the Certificate
of Incorporation and Bylaws of the Company provided to Buyer are true, accurate,
and complete and reflect all amendments made through the date of this Agreement.
The Company's minute books made available to Buyer for review were correct and
complete as of the date of such review, no further entries have been made
through the date of this Agreement, and such minute books contain an accurate
record of all material corporate actions of the Shareholders and directors (and
any committees thereof) of the Company taken by written consent or at a meeting
since the date of the Company's incorporation. All corporate actions taken by
the Company have been duly authorized or ratified. All accounts, books, ledgers
and official and other records of the Company fairly and accurately reflect all
of the Company's transactions, properties, assets and liabilities.
3.04 Capital Stock; Title to Shares.
(a) All of the issued and outstanding shares of the Company
are owned beneficially and of record by the Shareholders in the amounts and
percentages as set forth on Schedule 3.04(a). Except as otherwise set forth in
Schedule 3.04, the Company does not have any subsidiaries or participate in any
partnership or joint venture or own any outstanding capital stock of any other
corporation (each a "Subsidiary" and collectively, the "Subsidiaries"). All of
the issued and outstanding shares of any Subsidiaries are owned beneficially and
of record by the Company. All such issued and outstanding shares have been duly
authorized and validly issued and are fully paid and nonassessable. There are no
outstanding rights (including, without limitation, preemptive rights), warrants
or options to acquire, or instruments convertible into or exchangeable for, any
shares of capital stock or other equity interest in the Company or any
Subsidiary, or any contract, commitment, agreement, understanding or arrangement
of any kind relating to the issuance of any capital stock of the Company or any
Subsidiary, or any such convertible or exchangeable securities or any such
rights, warrants or options.
(b) The Shareholders have, and on the Closing Date will have,
good and marketable title to and unrestricted power to vote and sell the Shares,
free and clear of any Lien and, upon purchase and payment therefor by the Buyer,
in accordance with the terms of this Agreement, the Buyer will obtain good and
marketable title to all the Shares, free and clear of any Liens.
3.05 No Shareholder Defaults or Consents. Except as otherwise set forth
in Schedule 3.05, the execution and delivery of this Agreement and the
Collateral Agreements by the Company and the Shareholders and the performance by
such parties of their respective obligations hereunder and thereunder
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will not violate any provision of law or any judgment, award or decree or any
indenture, agreement or other instrument to which any Shareholder is a party, or
by which Company, the Subsidiaries or any properties or assets of any
Shareholder is bound or affected, or conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under, any such
indenture, agreement or other instrument, in each case except to the extent that
such violation, default or breach could not reasonably be expected to delay or
otherwise significantly impair the ability of the parties to consummate the
transactions contemplated hereby.
3.06 No Default or Consents. Except as otherwise set forth in Schedule
3.06, neither the execution and delivery of this Agreement nor the carrying out
of any of the transactions contemplated hereby will:
(i) violate or conflict with any of the terms,
conditions or provisions of the charter or bylaws of the Company or the
Subsidiaries;
(ii) violate any Legal Requirements applicable to the
Company or the Subsidiaries;
(iii) violate, conflict with, result in a breach of,
constitute a default under (whether with or without notice or the lapse of time
or both), or accelerate or permit the acceleration of the performance required
by, or give any other party the right to terminate, any Contract or Permit
binding upon or applicable to the Company or the Subsidiaries, the violation,
conflict, breach, default or termination would have a Material Adverse Effect;
(iv) result in the creation of any Lien on any Assets
of the Company or the Subsidiaries; or
(v) require the Company or the Subsidiaries to obtain
or make any waiver, consent, action, approval or authorization of, or
registration, declaration, notice or filing with, any private non-governmental
third party or any Governmental Authority.
3.07 No Proceedings. No suit, action or other proceeding is pending or,
to the Knowledge of the Company or any of the Shareholders, threatened before
any Governmental Authority seeking to restrain the Company, the Subsidiaries or
the Shareholders or prohibit their entry into this Agreement or prohibit the
Closing, or seeking damages against the Company or the Subsidiaries as a result
of the consummation of this Agreement.
3.08 Employee Benefit Matters.
(a) Schedule 3.08(a) provides a description of each of the
following, if any, which is sponsored, maintained or contributed to by the
Company for the benefit of the employees or agents of the Company or the
Subsidiaries, or has been so sponsored, maintained or contributed to at any time
during the Company's or the Subsidiaries' existence:
(i) each "employee benefit plan", as such term is
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974
("ERISA") (including, but not limited to, employee benefit plans, such as
foreign plans, which are not subject to the provisions of ERISA) ("Plan"),
(ii) each personnel policy, employee manual or other
written statements of rules or policies concerning employment, stock option
plan, collective bargaining agreement, bonus plan or arrangement, incentive
award plan or arrangement, vacation and sick leave policy, severance pay policy
or agreement, deferred compensation agreement or arrangement, consulting
agreement, employment contract and each other employee benefit plan, agreement,
arrangement, program, practice or understanding which is not described in
Section 3.08(a)(i) ("Benefit Program or Agreement").
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(b) True, correct and complete copies of each of the Plans (if
any), and related trusts, if applicable, including all amendments thereto, have
been furnished to Buyer. There has also been furnished to Buyer, with respect to
each Plan required to file such report and description, the three most recent
reports on Form 5500 and the summary plan description. True, correct and
complete copies or descriptions of all Benefit Programs or Agreements have also
been furnished to Buyer.
(c) Except as otherwise set forth in Schedule 3.08(c),
(i) Neither the Company nor the Subsidiaries
contribute to or has an obligation to contribute to a multi-employer plan within
the meaning of Section 3(37) of ERISA ("Multi-employer Plan") or a multiple
employer plan within the meaning of Section 413(b) and (c) of the Code.
(ii) The Company and the Subsidiaries have
substantially performed all obligations, whether arising by operation of law or
by contract, required to be performed by it in connection with the Plans and the
Benefit Programs and Agreements, and to the Knowledge of the Company or any of
the Shareholders, there have been no defaults or violations by any other party
to the Plans or Benefit Programs or Agreements;
(iii) All reports and disclosures relating to the
Plans required to be filed with or furnished to governmental agencies, Plan
participants or Plan beneficiaries have been filed or furnished in accordance
with applicable law in a timely manner, and each Plan and each Benefit Program
or Agreement has been administered in substantial compliance with its governing
documents;
(iv) Each of the Plans intended to be qualified under
Section 401 of the Code satisfies the requirements of such Section and has
received a favorable determination letter from the Internal Revenue Service
regarding such qualified status and has not, since receipt of the most recent
favorable determination letter, been amended or operated in a way which could
adversely affect such qualified status;
(v) There are no actions, suits or claims pending
(other than routine claims for benefits) or, to the Knowledge of the Company or
any of the Shareholders, threatened against, or with respect to, any of the
Plans or Benefit Programs or Agreements or their assets;
(vi) All contributions required to be made to the
Plans pursuant to their terms and provisions and applicable law have been made
timely;
(vii) As to any Plan subject to Title IV of ERISA,
there has been no event or condition which presents the material risk of Plan
termination, no accumulated funding deficiency, whether or not waived, within
the meaning of Section 302 of ERISA or Section 412 of the Code has been
incurred, no reportable event within the meaning of Section 4043 of ERISA (for
which the disclosure requirements of Regulation 2615.3 promulgated by the
Pension Benefit Guaranty Corporation ("PBGC") have not been waived) has
occurred, no notice of intent to terminate the Plan has been given under Section
4041 of ERISA, no proceeding has been instituted under Section 4042 of ERISA to
terminate the Plan, there has been no termination or partial termination of the
Plan within the meaning of Section 411(d)(3) of the Code, no liability to the
PBGC has been incurred, and the assets of the Plan equal or exceed the aggregate
present value of the benefit liabilities (within the meaning of Section
4001(a)(16) of ERISA) under the Plan, computed on a "plan termination basis"
based upon reasonable actuarial assumptions and the asset valuation principles
established by the PBGC;
(viii) None of the Plans nor any trust created
thereunder or with respect thereto has engaged in any "prohibited transaction"
or "party-in-interest transaction" as such terms are defined in Section 4975 of
the Code and Section 406 of ERISA which could subject any Plan, the Company or
any officer, director or employee thereof to a tax or penalty on prohibited
transactions or party-in-interest transactions pursuant to Section 4975 of the
Code or Section 502(i) of ERISA;
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(ix) To the Knowledge of the Company and the
Shareholders, there is no matter pending (other than routine qualification
determination filings) with respect to any of the Plans or Benefit Programs or
Agreements before the Internal Revenue Service, the Department of Labor or the
PBGC;
(x) Each trust funding a Plan, which trust is
intended to be exempt from federal income taxation pursuant to Section 501(c)(9)
of the Code, satisfies the requirements of such section and has received a
favorable determination letter from the Internal Revenue Service regarding such
exempt status and has not, since receipt of the most recent favorable
determination letter, been amended or operated in a way which would adversely
affect such exempt status.
(xi) Each of the Company and the Subsidiaries does
not have any obligation to provide health benefits to former employees, except
as specifically required by law;
(xii) Neither the execution and delivery of this
Agreement nor the consummation of any or all of the transactions contemplated
hereby will: (A) entitle any current or former employee of the Company or any
Subsidiary to severance pay, unemployment compensation or any similar payment,
(B) accelerate the time of payment or vesting or increase the amount of any
compensation due to any such employee or former employee, or (C) directly or
indirectly result in any payment made to or on behalf of any person to
constitute a "parachute payment" within the meaning of Section 280G of the Code;
(xiii) The Company has not incurred any liability or
taken any action, and no action or event has occurred that could cause the
Company to incur any liability (A) under Section 412 of the Code or Title IV of
ERISA with respect to any "single-employer plan" within the meaning of Section
4001(a)(15) of ERISA that is not a Plan, or (B) to any Multiemployer Plan,
including without limitation an account of a partial or complete withdrawal
within the meaning of Sections 4203 and 4205 of ERISA.
(xiv) Since the date of the Company's incorporation,
there have not been any (i) work stoppages, labor disputes or other significant
controversies between the Company and the Subsidiaries and their respective
employees, (ii) labor union grievances or organizational efforts, or (iii)
unfair labor practice or labor arbitration proceedings pending or threatened.
(d) Except as set forth in Schedule 3.08(a), neither the
Company nor any Subsidiary is a party to any agreement, and has not established
any policy or practice, requiring the payment or provision of any other form of
compensation or benefit to any person performing services for the Company or any
Subsidiary upon termination of such services which would not be payable or
provided in the absence of the consummation of the transactions contemplated by
this Agreement.
(e) Schedule 3.08(e) sets forth by number and employment
classification the approximate numbers of employees employed by the Company and
each Subsidiary as of the date of this Agreement, and, except as set forth
therein, none of said employees are subject to union or collective bargaining
agreements with the Company or any Subsidiary.
(f) Neither the Buyer nor any of its Affiliates shall have any
liability or obligations under or with respect to the Workers Adjustment
Retraining Notification Act in connection with any of the transactions
contemplated in connection herewith.
3.09 Financial Statements; Liabilities; Accounts Receivable.
(a) The Company has delivered to Buyer true and complete
copies of the unaudited Financial Statements with respect to the Company and the
Subsidiaries as of and for the years ended December 31, 1997, 1998 and 1999,
copies of which unaudited Financial Statements are attached hereto as Schedule
3.09(a). All of such Financial Statements present fairly the financial condition
and results of operations of the Company and the Subsidiaries for the dates or
periods indicated thereon. All of such
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Financial Statements have been prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods indicated.
(b) Except for (i) the liabilities reflected on the Company's
December 31, 1999 balance sheet included with the Financial Statements, (ii)
trade payables and accrued expenses incurred since December 31, 1999 (the
"Balance Sheet Date") in the ordinary course of business, (iii) executory
contract obligations, and (iv) the liabilities set forth in Schedule 3.09(b)
attached, the Company does not have any liabilities or obligations (whether
accrued, absolute, contingent, known, unknown or otherwise, and whether or not
of a nature required to be reflected or reserved against in a balance sheet in
accordance with GAAP).
(c) Except as otherwise set forth in Schedule 3.09(c), the
accounts receivable reflected on the December 31, 1999 balance sheet included in
the Financial Statements and all of the Company's accounts receivable arising
since the Balance Sheet Date arose from bona fide transactions in the ordinary
course of business, and the goods and services involved have been sold,
delivered and performed to the account obligors, and no further filings (with
governmental agencies, insurers or others) are required to be made, no further
goods are required to be provided and no further services are required to be
rendered in order to complete the sales and fully render the services and to
entitle the Company to collect the accounts receivable in full. Except as set
forth in Schedule 3.09(c), no such account has been assigned or pledged to any
other person, firm or corporation, and, except only to the extent fully reserved
against as set forth in the December 31, 1999 balance sheet included in such
Financial Statements, no defense or set-off to any such account has been
asserted by the account obligor or exists.
3.10 Absence of Certain Changes.
(a) Except as otherwise set forth in Schedule 3.10(a)
attached hereto, since December 31, 1999, there has not been:
(i) any event, circumstance or change that had or
might have a Material Adverse Effect;
(ii) any damage, destruction or loss (whether or not
covered by insurance) that had or might have a Material Adverse Effect; or
(iii) any material adverse change in the Company's or
the Subsidiaries' sales patterns, pricing policies, accounts receivable or
accounts payable.
(b) Except as otherwise set forth in Schedule 3.10(b) attached
hereto, since December 31, 1999, the Company or either of the Subsidiaries has
not:
(i) merged into or with or consolidated with, any
other corporation or acquired the business or assets of any person;
(ii) purchased any securities of any person;
(iii) created, incurred, assumed, guaranteed or
otherwise become liable or obligated with respect to any indebtedness, or made
any loan or advance to, or any investment in, any person, except in each case in
the ordinary course of business;
(iv) made any change in any existing election, or
made any new election, with respect to any tax law in any jurisdiction which
election could have an effect on the tax treatment of the Company or the
Subsidiaries' or their respective business operations;
(v) entered into, amended or terminated any material
agreement;
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(vi) sold, transferred, leased, mortgaged, encumbered
or otherwise disposed of, or agreed to sell, transfer, lease, mortgage, encumber
or otherwise dispose of, any Assets except (i) in the ordinary course of
business, or (ii) pursuant to any agreement specified in Schedule 3.14;
(vii) settled any claim or litigation, or filed any
motions, orders, briefs or settlement agreements in any proceeding before any
Governmental Authority or any arbitrator;
(viii) incurred or approved, or entered into any
agreement or commitment to make, any expenditures in excess of $10,000 (other
than those required pursuant to any agreement specified in Schedule 3.14);
(ix) maintained its books of account other than in
the usual, regular and ordinary manner in accordance with generally accepted
accounting principles and on a basis consistent with prior periods or made any
change in any of its accounting methods or practices that would be required to
be disclosed under generally accepted accounting principles;
(x) adopted any Plan or Benefit Program or Agreement,
or granted any increase in the compensation payable or to become payable to
directors, officers or employees (including, without limitation, any such
increase pursuant to any bonus, profit-sharing or other plan or commitment),
other than merit increases to non-officer employees in the ordinary course of
business and consistent with past practice;
(xi) suffered any extraordinary losses or waived any
rights of material value;
(xii) made any payment (including any dividends or
distributions with respect to the Company's capital stock) to any Shareholder
(other than compensation payable in the ordinary course of business) or forgiven
any indebtedness due or owing from any Shareholder to the Company;
(xiii) (A) except in the ordinary course of business,
liquidated inventory or accepted product returns, (B) accelerated receivables,
(C) delayed payables, or (D) changed in any material respect the Company's
practices in connection with the payment of payables and/or the collection of
receivables;
(xiv) engaged in any one or more activities or
transactions with an Affiliate or outside the ordinary course of business; or
(xv) committed to do any of the foregoing.
3.11 Compliance with Laws. Except as otherwise set forth in Schedule
3.11(1), the Company and the Subsidiaries are and have been in compliance in all
respects with any and all applicable Legal Requirements, other than failures to
so comply that would not have a Material Adverse Effect. Except as otherwise set
forth in Schedule 3.11(2), neither the Company nor the Subsidiaries (x) has
received or entered into any citations, complaints, consent orders, compliance
schedules, or other similar enforcement orders or received any written notice
from any Governmental Authority, except for failures to so comply that would not
have a Material Adverse Effect, and (y) is in default under, and no condition
exists (whether covered by insurance or not) that with or without notice or
lapse of time or both would constitute a default under, or breach or violation
of, any Legal Requirement or Permit applicable to the Company or the
Subsidiaries, which default, breach or violation would have a Material Adverse
Effect.
3.12 Litigation. Except as otherwise set forth in Schedule 3.12, there
are no claims, actions, suits, investigations or proceedings against the Company
or the Subsidiaries pending or, to the Knowledge of the Company or any of the
Shareholders, threatened in any court or before or by any Governmental
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Authority, or before any arbitrator, that might have a Material Adverse Effect
and, to the Knowledge of the Company or any of the Shareholders, there is no
basis for any such claim, action, suit, investigation or proceeding. Schedule
3.12 also includes a true and correct listing of all material actions, suits,
investigations, claims or proceedings that were pending, settled or adjudicated
since January 1, 1999.
3.13 Ownership of Company Assets.
(a) Except as provided under the provisions of the agreements
described in Schedule 3.13(a), the Company has and will have as of the Closing
Date legal and beneficial ownership of its Assets, free and clear of any and all
Liens.
(b) The Company does not own, and has never owned, any real
property or any interest therein (including without limitation any option or
other right or obligation to purchase any real property or any interest
therein). Schedule 3.13(b) sets forth a list of all leases, licenses or similar
agreements ("Leases") relating to the Company's use or occupancy of real estate
owned by a third party (the "Leased Premises"), true and correct copies of which
have previously been furnished to Buyer. The Leases are in full force and effect
and have not been amended, and, to the Knowledge of the Company or any of the
Shareholders, no party thereto is in default or breach under any such Lease. No
event has occurred which, with the passage of time or the giving of notice or
both, would cause a material breach of or default under any of such Leases. With
respect to each such Leased Premises: (i) the Company has a valid leasehold
interest in the Leased Premises, free and clear of any Liens, covenants and
easements or title defects that have had or would have an adverse effect on the
Company's use and occupancy of the Leased Premises; (ii) the portions of the
buildings located on the Leased Premises that are used in the business of the
Company are each in good repair and condition, normal wear and tear excepted,
and are in the aggregate sufficient to satisfy the Company's current and
reasonably anticipated normal business activities as conducted thereat; (iii)
each of the Leased Premises (a) has direct access to public roads or access to
public roads by means of a perpetual access easement, such access being
sufficient to satisfy the current transportation requirements of the business
presently conducted at such parcel; and (b) is served by all utilities in such
quantity and quality as are sufficient to satisfy the current normal business
activities conducted at such parcel; and (iv) the Company has not received
notice of (a) any condemnation, eminent domain or similar proceeding affecting
any portion of the Leased Premises or any access thereto, and, to the Knowledge
of the Company or any of the Shareholders, no such proceedings are contemplated,
or (b) any special assessment which may affect any of the Leased Premises.
(c) Set forth on Schedule 3.13(c) is a list and description
of all material foreign and domestic patents, patent rights, trademarks, service
marks, trade names, brands and copyrights (whether or not registered and, if
applicable, including pending applications for registration) ("Tangible Rights")
owned, Used, licensed or controlled by the Company and all goodwill associated
therewith. The Company owns or has the right to use and shall as of the Closing
Date own or have the right to use any and all information, know-how, trade
secrets, patents, copyrights, trademarks, tradenames, software, formulae,
methods, processes and other intangible properties that are necessary or
customarily Used by the Company for the ownership, management or operation of
the Business and Assets ("Intangible Rights") including, but not limited to, the
Intangible Rights listed on Schedule 3.13(c). Except as set forth on Schedule
3.13(c): (i) the Company is the sole and exclusive owner of all right, title and
interest in and to all of the Tangible and Intangible Rights, and has the
exclusive right to use and license the same, free and clear of any claim or
conflict with the Tangible or Intangible Rights of others; (ii) no royalties,
honorariums or fees are payable by the Company to any person by reason of the
ownership or use of any of the Tangible or Intangible Rights; (iii) there have
been no claims made against the Company asserting the invalidity, abuse, misuse,
or unenforceability of any of the Tangible or Intangible Rights and, to the
Knowledge of the Company or any of the Shareholders, no grounds for any such
claims exist; (iv) the Company has not made any claim of any violation or
infringement by others of any of its Tangible or Intangible Rights or interests
therein and, to the Knowledge of the Company or any of the Shareholders, no
grounds for any such claims exist; (v) the Company has not received any notice
that it is in conflict with or infringing upon the asserted intellectual
property rights of others in connection with the Tangible or Intangible Rights,
and neither the
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use of the Tangible or Intangible Rights nor the operation of the Company's
businesses is infringing or has infringed upon any intellectual property rights
of others, except for such infringements or violations that would not have a
Material Adverse Effect; (vi) the Tangible or Intangible Rights are sufficient
and include all intellectual property rights necessary for the Company to
lawfully conduct its businesses as presently being conducted; (vii) no interest
in any of the Company's Intangible Rights has been assigned, transferred,
licensed or sublicensed by the Company to any person other than the Buyer
pursuant to this Agreement; (viii) to the extent that any item constituting part
of the Tangible or Intangible Rights has been registered with, filed in or
issued by, any Governmental Authority, such registrations, filings or issuances
are listed on Schedule 3.13(c) and were duly made and remain in full force and
effect; and (ix) to the Knowledge of the Company or any of the Shareholders,
there has not been any act or failure to act by the Company or any of its
directors, officers, employees, attorneys or agents during the prosecution or
registration of, or any other proceeding relating to, any of the Tangible or
Intangible Rights or of any other fact which could render invalid or
unenforceable, or negate the right to issuance of any of the Tangible or
Intangible Rights. To the extent any of the Tangible or Intangible Rights
constitutes proprietary or confidential information, the Company has adequately
safeguarded such information from disclosure. All of the Tangible or Intangible
Rights are assignable to the Buyer without alteration or impairment.
3.14 Commitments.
(a) Except as otherwise set forth in Schedule 3.14, neither
the Company nor any Subsidiary is a party to or bound by any of the following,
whether written or oral:
(i) any Contract that cannot by its terms be
terminated by the Company or such Subsidiary, as the case may be, with 30 days'
or less notice without penalty or whose term continues beyond one year after the
date of this Agreement;
(ii) contract or commitment for capital expenditures
by the Company or such Subsidiary in excess of $5,000 per calendar quarter in
the aggregate;
(iii) lease or license with respect to any Assets,
real or personal, whether as landlord, tenant, licensor or licensee;
(iv) agreement, contract, indenture or other
instrument relating to the borrowing of money or the guarantee of any obligation
or the deferred payment of the purchase price of any Assets;
(v) partnership agreement;
(vi) contract with any Affiliate of the Company or
such Subsidiary (including the Shareholders) relating to the provision of goods
or services by or to the Company or such Subsidiary;
(vii) agreement for the sale of any assets that in
the aggregate have a net book value on the Company's or such Subsidiary's books
of greater than $5,000;
(viii) agreement that purports to limit the Company's
or such Subsidiary's freedom to compete freely in any line of business or in any
geographic area;
(ix) preferential purchase right, right of first
refusal, or similar agreement; or
(x) other Contract that is material to the business
of the Company or any Subsidiary.
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(b) All of the Contracts listed or required to be listed in
Schedule 3.14 are valid, binding and in full force and effect, and neither the
Company nor any Shareholder has been notified or advised by any party thereto of
such party's intention or desire to terminate or modify any such Contract in any
respect, except as disclosed in Schedule 3.14. Neither the Company nor, to the
Knowledge of the Company or any of the Shareholders, any other party is in
breach of any of the terms or covenants of any Contract listed or required to be
listed in Schedule 3.14. Following the Closing, Buyer will be entitled to all of
the benefits of the Company under each Contract listed or required to be listed
in Schedule 3.14.
(c) Except as otherwise set forth in Schedule 3.14(c), neither
the Company nor any Shareholder is a party to or bound by any Contract or
Contracts the terms of which were arrived at by or otherwise reflect
less-than-arm's-length negotiations or bargaining.
3.15 Insurance. Schedule 3.15 is a complete and correct list of all
insurance policies presently in effect that relate to the Company or its Assets,
all of which have been in full force and effect from and after the date(s) set
forth on Schedule 3.15. None of the insurance carriers has indicated to the
Company an intention to cancel any such policy. The Company has no claim pending
or anticipated against any of the insurance carriers under any of such policies
and, to the Knowledge of the Company or any Shareholder , there has been no
actual or alleged occurrence of any kind which could reasonably be expected to
give rise to any such claim.
3.16 Inventories. Except as otherwise set forth in Schedule 3.16(1),
the inventories of the Company and the Subsidiaries consist of items of a
quality, condition and quantity consistent with normal seasonally-adjusted
inventory levels of the Company and the Subsidiaries and be usable and saleable
in the ordinary and usual course of business for the purposes for which
intended. Except as otherwise set forth in Schedule 3.16(2), such inventory is
carried on the Company's books of account in accordance with GAAP.
3.17 Regulatory Compliance. The Company and the Subsidiaries
have received approval of all registrations, applications, licenses, requests
for exemptions, permits and other regulatory authorizations necessary or
desirable to the conduct of the business of the Company and the Subsidiaries as
they are now conducted with the United States Food and Drug Administration
("FDA"), the Federal Trade Commission ("FTC"), the Consumer Product Safety
Commission ("CPSC") and the United States Department of Agriculture ("USDA"), as
applicable, 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
Subsidiaries are in compliance in all respects with all such registrations,
applications, licenses, requests for exemptions, permits and other regulatory
authorizations and all applicable FDA, FTC, CPSC, USDA, federal, state and local
rules and regulations, except where the failure to so comply would not have a
Material Adverse Effect. The Company and the Shareholders have not received any
notice and have 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.
3.18 Permits; Environmental Matters.
(a) Except as otherwise set forth in Schedule 3.18(a), the
Company and the Subsidiaries have all Permits necessary for each of them to
construct, own, operate, use and/or maintain their respective Assets and to
conduct their respective Businesses and operations as presently conducted and as
expected to be conducted in the future. Except as otherwise set forth in
Schedule 3.18(a), all such Permits are in effect, no proceeding is pending or,
to the Knowledge of the Company or any of the Shareholders, threatened to
modify, suspend or revoke, withdraw, terminate, or otherwise limit any such
Permits, and no administrative or governmental actions have been taken or, to
the Knowledge of the Company or any of the Shareholders, threatened in
connection with the expiration or renewal of such Permits which could adversely
affect the ability of the Company and/or the Subsidiaries to own, operate, use
or maintain any of their respective Assets or to conduct their respective
businesses and operations as presently conducted and as expected to be conducted
in the future. Except as otherwise set forth in
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Schedule 3.18(a), (i) no violations have occurred that remain uncured, unwaived,
or otherwise unresolved, or are occurring in respect of any such Permits, other
than inconsequential violations, and (ii) no circumstances exist that would
prevent or delay the obtaining of any requisite consent, approval, waiver or
other authorization of the transactions contemplated hereby with respect to such
Permits that by their terms or under applicable law may be obtained only after
Closing.
(b) Except as set forth on Schedule 3.18(b), there are no
claims, liabilities, investigations, litigation, administrative proceedings,
whether pending or, to the Knowledge of the Company or any of the Shareholders,
threatened, or judgments or orders relating to any Hazardous Materials
(collectively called "Environmental Claims") asserted or threatened against the
Company or relating to any real property currently or formerly owned, leased or
otherwise Used by the Company. Neither the Company nor, to the Knowledge of the
Company or any of the Shareholders, any prior owner, lessee or operator of said
real property, has caused or permitted any Hazardous Material to be used,
generated, reclaimed, transported, released, treated, stored or disposed of in a
manner which could form the basis for an Environmental Claim against the
Company, the Buyer or the Business. Except as set forth on Schedule 3.18(b), the
Company has not assumed any liability of any Person for cleanup, compliance or
required capital expenditures in connection with any Environmental Claim.
(c) Neither the Company nor any Subsidiary stores or has
stored Hazardous Materials on real property currently or formerly owned, leased
or Used by the Company or any such Subsidiary during the Company's or the
Subsidiary's ownership or occupancy thereof and, to the Knowledge of the Company
or any of the Shareholders, no part of such real property, including the
groundwater located thereon, is presently contaminated by Hazardous Materials.
(d) Except as set forth on Schedule 3.18(d), the Company has
been and is currently in compliance with all applicable Environmental Laws,
including obtaining and maintaining in effect all Permits required by applicable
Environmental Laws.
3.19 Banks. Schedule 3.19 sets forth (i) the name of each bank, trust
company or other financial institution and stock or other broker with which the
Company or the Subsidiaries have an account, credit line or safe deposit box or
vault, (ii) the names of all persons authorized to draw thereon or to have
access to any safe deposit box or vault, (iii) the purpose of each such account,
safe deposit box or vault, and (iv) the names of all persons authorized by
proxies, powers of attorney or other like instrument to act on behalf of the
Company and/or the Subsidiaries in matters concerning any of its or their
business or affairs. Except as otherwise set forth in Schedule 3.19, no such
proxies, powers of attorney or other like instruments are irrevocable.
3.20 Suppliers and Customers. Schedule 3.20 sets forth (i) the ten
principal suppliers of the Company and its Subsidiaries during each of calendar
years 1998 and 1999, together with the dollar amount of goods purchased by the
Company and its Subsidiaries from each such supplier during each such period,
and (ii) the ten principal customers of the Company and its Subsidiaries during
each of calendar years 1998 and 1999, together with the dollar amount of goods
and/or services sold by the Company and its Subsidiaries to each such customer
during each such period. Except as otherwise set forth in Schedule 3.20, to the
Knowledge of the Company or any of the Shareholders, the Company and its
Subsidiaries maintain good relations with all suppliers and customers listed or
required to be listed in Schedule 3.20 as well as with governments, partners,
financing sources and other parties with whom the Company and its Subsidiaries
have significant relations, and no such party or any other supplier or customer
which accounted for two percent or more of the consolidated revenues of the
Company and its Subsidiaries during such periods has canceled, terminated or
made any threat to the Company and its Subsidiaries to cancel or otherwise
terminate its relationship with the Company and its Subsidiaries or to
materially decrease its services or supplies to the Company and its Subsidiaries
or its direct or indirect purchase or usage of the products or services of the
Company and its Subsidiaries.
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3.21 Products and Services.
(a) Schedule 3.21(a) lists each product under development,
developed, manufactured, licensed, distributed or sold by the Company and its
Subsidiaries and any other products in which the Company and its Subsidiaries
have any proprietary rights or beneficial interest (collectively, the
"Products"). Each Product has been designed and manufactured in accordance with
(A) the specifications under which the Product is normally and has normally been
manufactured, and (B) the provisions of all applicable laws, policies,
guidelines and any other governmental requirements, the violation of which would
have a Material Adverse Effect.
(b) Schedule 3.21(b) sets forth (A) a list of all Products
which at any time have been recalled, withdrawn or suspended by the Company and
its Subsidiaries, whether voluntarily or otherwise, including the date recalled,
withdrawn or suspended and a brief description of all completed or pending
proceedings seeking the recall, withdrawal, suspension or seizure of any
Product, (B) a brief description of all completed or pending proceedings seeking
the recall, withdrawal, suspension or seizure of any Product, and (C) a list of
all regulatory letters received by the Company and its Subsidiaries or the
Shareholders or any of their agents relating to the Company and its Subsidiaries
or any of the Products or the Company and its Subsidiaries' establishments.
(c) Except as set forth on Schedule 3.21(c), there exists no
set of facts which could reasonably be expected to furnish a basis for the
recall, withdrawal or suspension of any product registration, product license,
manufacturing license, export license or other license, approval or consent of
any governmental or regulatory authority with respect to the Company and its
Subsidiaries or any of the Products.
(d) Schedule 3.21(d) sets forth the warranty provided by the
Company for each of the Products. There are no claims existing or, to the
Knowledge of the Company or any of the Shareholders, threatened under or
pursuant to any warranty, whether express or implied, on products or services
sold by the Company and its Subsidiaries. There are no claims existing and, to
the Knowledge of the Company or any of the Shareholders, there is no basis for
any claim against the Company and its Subsidiaries for injury to persons,
animals or property as a result of the sale, distribution or manufacture of any
product or performance of any service by the Company and its Subsidiaries,
including, but not limited to, claims arising out of the defective or unsafe
nature of its products or services.
3.22 Absence of Certain Business Practices. Neither the Company, any of
its Subsidiaries, any Seller nor any other Affiliate or agent of the Company, or
any other person acting on behalf of or associated with the Company, acting
alone or together, has: (a) received, directly or indirectly, any rebates,
payments, commissions, promotional allowances or any other economic benefits,
regardless of their nature or type, from any customer, supplier, employee or
agent of any customer or supplier, official or employee of any government
(domestic or foreign), or any political party or candidate for office (domestic
or foreign) or other person; or (b) directly or indirectly, given or agreed to
give any money, gift or similar benefit to any customer, supplier, employee or
agent of any customer or supplier, official or employee of any government
(domestic or foreign), or any political party or candidate for office (domestic
or foreign), or other person who was, is or may be in a position to help or
hinder the business of the Company (or assist the Company in connection with any
actual or proposed transaction) which (i) may subject the Company to any damage
or penalty in any civil, criminal or governmental litigation or proceeding, (ii)
if not given in the past, may have had a Material Adverse Effect, or (iii) if
not continued in the future, may have a Material Adverse Effect.
3.23 Transactions With Affiliates
(a) Except as set forth on Schedule 3.23 and except for normal
advances to employees consistent with past practices, and participation in
scheduled Plans or Benefit Programs and Agreements by employees, the Company has
not purchased, acquired or leased any property or services from, or sold,
transferred or leased any property or services
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to, or loaned or advanced any money to, or borrowed any money from, or entered
into or been subject to any management, consulting or similar agreement with, or
engaged in any other significant transaction with either Shareholder or any
other officer, director or shareholder of the Company or any of their respective
Affiliates. Except as set forth on Schedule 3.23, no Shareholder or other
Affiliate of the Company is indebted to the Company for money borrowed or other
loans or advances, and the Company is not indebted to any such Affiliate.
(b) Except as set forth on Schedule 3.23 hereto, no
Shareholder possesses, directly or indirectly, any financial interest in (other
than the direct or indirect ownership of no more than 5% of any class of
securities of a public company registered under Section 12 of the Securities
Exchange Act of 1934, as amended), or is a director, officer or employee of, any
corporation, firm, association or business organization which is a client,
supplier, customer, lessor, lessee, or competitor or potential competitor of the
Company.
3.24 Other Information. The information with respect to the Company and
the Subsidiaries furnished to Buyer pursuant to this Agreement (including,
without limitation, information contained in the Collateral Documents, the
Schedules identified herein, and other documents to be executed or delivered
pursuant hereto by Company at or prior to the Closing) is not, nor at the
Closing will be, false or misleading in any material respect, or contains, or
contain any misstatement of material fact, or omits to state any material fact
required to be stated in order to make the statements therein not misleading.
ARTICLE IV. - REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Shareholders that:
4.01 Corporate Existence and Qualification. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida; has the power to own, manage, lease and hold its properties and to
carry on its business as and where such properties are presently located and
such business is presently conducted; and is duly qualified to do business and
is in good standing as a foreign corporation in each of the jurisdictions where
the character of its properties or the nature of its business requires it to be
so qualified.
4.02 Authority, Approval and Enforceability. This Agreement has been
duly executed and delivered by Buyer and Buyer has all requisite corporate power
and legal capacity to execute and deliver this Agreement and all Collateral
Agreements, to consummate the transactions contemplated hereby and thereby, and
to perform its obligations hereunder and thereunder. The execution and delivery
of this Agreement and the Collateral Agreements and the performance of the
transactions contemplated hereby and thereby have been duly and validly
authorized and approved by all corporate action necessary on behalf of Buyer.
This Agreement and each Collateral Agreement to which Buyer is a party
constitutes, or upon execution and delivery will constitute, the legal, valid
and binding obligation of Buyer, enforceable in accordance with its terms,
except as such enforcement may be limited by general equitable principles or by
applicable bankruptcy, insolvency, moratorium, or similar laws and judicial
decisions from time to time in effect which affect creditors' rights generally.
4.03 No Default or Consents. Except as otherwise set forth in Schedule
4.03, neither the execution and delivery of this Agreement nor the carrying out
of the transactions contemplated hereby will:
(i) violate or conflict with any of the terms,
conditions or provisions of Buyer's Articles of Incorporation or bylaws;
(ii) violate any Legal Requirements applicable to
Buyer;
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(iii) violate, conflict with, result in a breach of,
constitute a default under (whether with or without notice or the lapse of time
or both), or accelerate or permit the acceleration of the performance required
by, or give any other party the right to terminate, any Contract or Permit
applicable to Buyer;
(iv) result in the creation of any Lien on any
property of Buyer; or
(v) require Buyer to obtain or make any waiver,
consent, action, approval or authorization of, or registration, declaration,
notice or filing with, any private non-governmental third party or any
Governmental Authority.
4.04 No Proceedings. No suit, action or other proceeding is pending or,
to Buyer's knowledge, threatened before any Governmental Authority seeking to
restrain Buyer or prohibit its entry into this Agreement or prohibit the
Closing, or seeking Damages against Buyer or its properties as a result of the
consummation of this Agreement.
ARTICLE V. - OBLIGATIONS PRIOR TO CLOSING
From the date of this Agreement through the Closing:
5.01 Buyer's Access to Information and Assets. The Company shall permit
Buyer and its authorized employees, agents, accountants, legal counsel and other
representatives to have access to the books, records, employees, counsel,
accountants, engineers and other representatives of the Company during the
Company's normal business hours for the purpose of conducting an investigation
of the Company's financial condition, corporate status, operations, prospects,
business and Assets. The Company shall make available to Buyer for examination
and reproduction all documents and data of every kind and character relating to
the Company in possession or control of, or subject to reasonable access by, the
Company, including, without limitation, all files, records, data and information
relating to the Assets (whether stored in paper, magnetic or other storage
media) and all agreements, instruments, contracts, assignments, certificates,
orders, and amendments thereto.
5.02 Company's Conduct of Business and Operations. The Company and the
Shareholders shall keep Buyer advised as to all material operations and proposed
material operations relating to the Company. The Company shall (a) conduct its
business in the ordinary course consistent with past practices, (b) use
commercially reasonable efforts to keep available the services of present
employees, (c) maintain and operate its Assets in a good and workmanlike manner,
(d) pay or cause to be paid all costs and expenses (including but not limited to
insurance premiums) incurred in connection therewith in a timely manner, (e) use
commercially reasonable efforts to keep all Contracts listed or required to be
listed on Schedule 3.14 in full force and effect, (f) comply with all of the
covenants contained in all such Contracts, (g) maintain in force until the
Closing Date insurance policies equivalent to those in effect on the date
hereof, and (h) comply in all material respects with all applicable Legal
Requirements. Except as otherwise contemplated in this Agreement, each
Shareholder will use commercially reasonable efforts to preserve the present
relationships of the Company with persons having significant business relations
therewith.
5.03 General Restrictions. Except as otherwise expressly permitted in
this Agreement, without the prior written consent of Buyer, which consent shall
not be unreasonably withheld, the Company shall not and shall not permit the
Subsidiaries to:
(i) merge into or with or consolidate with, any other
corporation or acquire the business or assets of any person;
(ii) purchase any securities of any person;
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(iii) create, incur, assume, guarantee or otherwise
become liable or obligated with respect to any indebtedness, or make any loan or
advance to, or any investment in, any person, except in each case in the
ordinary course of business;
(iv) make any change in any existing election, or
make any new election, with respect to any tax law in any jurisdiction which
election could have an effect on the tax treatment of the Company or the
Company's business operations;
(v) enter into, amend or terminate any material
agreement;
(vi) sell, transfer, lease, mortgage, encumber or
otherwise dispose of, or agree to sell, transfer, lease, mortgage, encumber or
otherwise dispose of, any Assets except (i) in the ordinary course of business,
or (ii) pursuant to any agreement specified in Schedule 3.14;
(vii) settle any material claim or litigation, or
file any material motions, orders, briefs or settlement agreements in any
proceeding before any Governmental Authority or any arbitrator;
(viii) incur or approve, or enter into any agreement
or commitment to make, any expenditures in excess of $10,000 outside the
ordinary course of business (other than those required pursuant to any agreement
specified in Schedule 3.14);
(ix) maintain its books of account other than in the
usual, regular and ordinary manner in accordance with GAAP and on a basis
consistent with prior periods or make any change in any of its accounting
methods or practices;
(x) adopt any Plan or Benefit Program or Agreement,
or grant any increase in the compensation payable or to become payable to
directors, officers or employees (including, without limitation, any such
increase pursuant to any bonus, profit-sharing or other plan or commitment),
other than merit increases to non-officer employees in the ordinary course of
business and consistent with past practice;
(xi) accelerate or delay collection of any notes or
accounts receivable in advance of or beyond their regular due dates or the dates
when the same would have been collected in the ordinary course of business
consistent with past practices;
(xii) delay or accelerate payment of any account
payable or other liability beyond or in advance of its due date or the date when
such liability would have been paid in the ordinary course of business
consistent with past practices;
(xiii) allow its levels of inventory to vary in any
material respect from the levels customarily maintained;
(xiv) declare or pay any dividend or other
distribution (whether in cash, stock or other property) with respect to its
capital stock; provided, however, the Company may declare and pay dividends or
make any distributions in an amount not to exceed the amount of taxes payable by
the Shareholders (based upon the standard rate) with respect to the Company's
taxable income, net of any prior distributions made with respect to such taxable
income, for the calendar year 1999 and for period commencing on January 1, 2000
and continuing through the Closing Date, so long as (A) such dividends and/or
distributions do not exceed the Company's available cash at the time of such
dividend payment or distribution and (B) no other provision of this Section 5.03
is violated; provided further, however, the Company may issue sixteen (16)
shares of the Company's common stock to William R. Kemp provided that the Cash
Consideration payable pursuant to Section 1.02 hereof shall be reduced by an
amount equal
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to the out-of-pocket expenses incurred by the Company in connection with such
capital stock issuance including, but not limited to, Federal withholding, FICA
and Medicare;
(xv) apply any of its Assets to the direct or
indirect payment, prepayment, discharge, satisfaction or reduction of any amount
payable, directly or indirectly, to or for the benefit of either Shareholder or
any other Affiliate of the Company (except for salary and benefits as currently
in effect and except in accordance with existing agreements and arrangements
which have been disclosed to the other parties hereto in writing);
(xvi) engage in any one or more activities or
transactions with an Affiliate or outside the ordinary course of business;
(xvii) enter into any transaction or make any
commitment which could result in any of the representations, warranties or
covenants of the Company or the Shareholders contained in this Agreement not
being true and correct after the occurrence of such transaction or event;
(xviii) adopt any agreement or increase the
compensation payable to any employee (including, without limitation, any
increase pursuant to any bonus, profit sharing or other incentive plan or
commitment); provided, however, the Company may declare and pay bonuses to its
employees provided that any amounts declared and paid by the Company in respect
of such bonuses shall reduce the Cash Consideration payable pursuant to Section
1.02 hereof on a dollar for dollar basis (net of any tax benefit to the
Company); provided further, however, the Company may pay a bonus to William R.
Kemp in an amount equal to 0.5% of the Company's net sales for the period
commencing on January 1, 2000 and continuing through the Closing Date; or
(xix) commit to do any of the foregoing.
5.04 Notice Regarding Changes. The Company and each Shareholder shall
promptly inform Buyer in writing of any change in facts and circumstances that
could render any of the representations and warranties made herein by the
Company or any Shareholder inaccurate or misleading. The Buyer shall promptly
inform the Company and each Shareholder in writing of any change in facts and
circumstances that could render any of the representations and warranties made
herein by it inaccurate or misleading.
5.05 Ensure Conditions Met. Each party hereto shall use all reasonable
commercial efforts to take or cause to be taken all actions and do or cause to
be done all things required under applicable Legal Requirements in order to
consummate the transactions contemplated hereby, including, without limitation,
(i) obtaining all Permits, authorizations, consents and approvals of any
Governmental Authority or other person which are required for or in connection
with the consummation of the transactions contemplated hereby and by the
Collateral Agreements, including, without limitation, complying with any
applicable provisions of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended ("Hart-Scott-Rodino"), (ii) taking any and all reasonable
actions necessary to satisfy all of the conditions to such party's obligations
hereunder as set forth in Article VI, and (iii) executing and delivering all
agreements and documents required by the terms hereof to be executed and
delivered by such party on or prior to the Closing.
5.06 Casualty Loss. If, between the date of this Agreement and the
Closing, any Assets of the Company (the loss of which will have a Material
Adverse Effect) shall be destroyed or damaged in whole or in part by fire,
earthquake, flood, other casualty or any other cause, then the Shareholders
shall, in the event such loss, damage or destruction is not fully covered by
applicable insurance (after application of any applicable deductibles or self
retentions or coinsurance), at Buyer's election, (i) cause such Assets to be
repaired or replaced prior to the Closing with Assets of substantially the same
condition and function, (ii) deposit in a separate account an amount sufficient
to cause such Assets to be so repaired or replaced, or (iii) enter into
contractual arrangements satisfactory to Buyer so that the Company will have at
the Closing the same economic value as if such casualty had not occurred.
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ARTICLE VI. - CONDITIONS TO SHAREHOLDERS' AND BUYER'S OBLIGATIONS
6.01 Conditions to Obligations of the Shareholders. The obligations of
the Shareholders to carry out the transactions contemplated by this Agreement
are subject to the satisfaction or waiver of the following conditions:
(a) All representations and warranties of Buyer contained in
this Agreement shall be true and correct in all material respects at and as of
the Closing as if such representations and warranties were made at and as of the
Closing, and Buyer shall have performed and satisfied in all material respects
all covenants and agreements required by this Agreement to be performed and
satisfied by Buyer at or prior to the Closing.
(b) As of the Closing Date, no suit, action, injunction or
other proceeding shall be pending or threatened before any Governmental
Authority seeking to restrain the Company or prohibit the Closing or seeking
Damages against the Company as a result of the consummation of this Agreement.
(c) The Buyer shall have delivered to the Company and the
Shareholders a certificate to the effect that each of the conditions specified
above in Sections 6.016.01(a) and (b) has been satisfied in all respects.
(d) The Company shall have executed and delivered the McCabe
and Kemp Employment Agreements.
(e) All actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to the
Company and the Sellers.
(f) Buyer shall have furnished the Shareholders with a
certified copy of all necessary corporate action on its behalf approving its
execution, delivery and performance of this Agreement.
(g) All applicable waiting periods (and any extensions
thereof) under the Hart-Scott-Rodino Act shall have expired or otherwise been
terminated and the Buyer, the Company and its Shareholders shall have received
all other material authorizations, consents, and approvals of governments and
governmental agencies.
The Company and the Shareholders may waive any condition
specified in this Section 6.01 if they execute a writing so stating at or prior
to the Closing.
6.02 Conditions to Obligations of Buyer. The obligations of Buyer to
carry out the transactions contemplated by this Agreement are subject to the
satisfaction or waiver by Buyer, of the following conditions:
(a) All representations and warranties of the Company and the
Shareholders contained in this Agreement shall be true and correct in all
material respects at and as of the Closing as if such representations and
warranties were made at and as of the Closing, and the Company and the
Shareholders shall have performed and satisfied in all material respects all
agreements and covenants required by this Agreement to be performed and
satisfied by it at or prior to the Closing.
(b) As of the Closing Date, no suit, action, injunction or
other proceeding shall be pending or threatened before any court or governmental
agency seeking to restrain Buyer, the Company or the Shareholders or prohibit
the Closing or seeking Damages against Buyer, the Company, the Assets or the
Shareholders as a result of the consummation of the transactions contemplated by
this Agreement.
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(c) The Company and the Shareholders shall have performed and
complied with all of the covenants hereunder in all material respects through
the Closing.
(d) Except for matters disclosed in Schedule 3.10(a) or
3.10(b) attached hereto, since December 31, 1999 and up to and including the
Closing, there shall not have been any event, circumstance, change or effect
that, individually or in the aggregate, may have a Material Adverse Effect.
(e) The Company and the Shareholders shall have delivered to
Buyer a certificate to the effect that each of the conditions specified above in
Sections 6.02 6.02(a)-(d) has been satisfied in all respects.
(f) The Company shall have furnished Buyer with a certified
copy of all necessary corporate action on its behalf approving the Company's
execution, delivery and performance of this Agreement.
(g) the Company and the Shareholders shall have delivered the
opinion of Annis, Mitchell, Cockey, Edwards & Roehn, P.A., dated the Closing
Date.
(h) McCabe shall have executed and delivered the McCabe
Employment Agreement.
(i) Kemp shall have executed and delivered the Kemp Employment
Agreement.
(j) All applicable waiting periods (and any extensions
thereof) under the Hart-Scott-Rodino Act shall have expired or otherwise been
terminated and the Buyer, the Company and its Shareholders shall have received
all other material authorizations, consents, and approvals of governments and
governmental agencies;
(k) All agreements, commitments and understandings between the
Company and the Shareholders (or any Affiliate thereof) shall have been
terminated in all respects on terms satisfactory to Buyer, and all obligations,
claims or entitlements thereunder shall be unconditionally waived and released
by the Shareholders and/or such Affiliates, as applicable, and written evidence
thereof satisfactory in form and substance to Buyer shall have been delivered to
Buyer.
(l) Buyer shall have completed its due diligence
investigation, and the results thereof shall not have revealed that any of the
representations of the Company and the Shareholders set forth herein are untrue
or incorrect in any respect or otherwise be unsatisfactory to Buyer.
(m) All proceedings to be taken by the Company and the
Shareholders in connection with the transactions contemplated hereby and all
documents incident thereto shall be satisfactory in form and substance to the
Buyer, and Buyer shall have received all such counterpart originals or certified
or other copies of such documents as it may reasonably request.
(n) Buyer shall have received written evidence, in form and
substance satisfactory to it, of the consent to the transactions contemplated by
this Agreement of all governmental, quasi-governmental and private third parties
where the absence of any such consent would result in a violation of law or a
breach or default under any agreement to which the Company is subject.
(o) Buyer shall have received the audit report of
PriceWaterhouseCoopers with respect to the audited Financial Statements of the
Company as of and for the year ended December 31, 1999, which audit report shall
be without qualification and which audited Financial Statements shall not
reflect any material adjustments from those referred to in Section 3.09.
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(p) No proceeding in which the Shareholders or the Company
shall be a debtor, defendant or party seeking an order for its own relief or
reorganization shall have been brought or be pending by or against such person
under any United States or state bankruptcy or insolvency law.
The Buyer may waive any condition specified in this Section 6.02 if it
executes a writing so stating at or prior to the Closing.
ARTICLE VII. - POST-CLOSING OBLIGATIONS
7.01 Further Assurances. Following the Closing, the Company, the
Shareholders and the Buyer shall execute and deliver such documents, and take
such other action, as shall be reasonably requested by any other party hereto to
carry out the transactions contemplated by this Agreement.
7.02 Publicity. None of the parties hereto shall cause to have issued
or made any public release or announcement concerning this Agreement or the
transactions contemplated hereby, without the advance approval in writing of the
form and substance thereof by each of the other parties, except as required by
law or by the rules of the National Association of Securities Dealers or the
United States Securities Exchange Commission, and the parties shall endeavor
jointly to agree on the text of any announcement or circular so approved or
required.
7.03 Post-Closing Indemnity by the Shareholders. Subject to the
provisions of Section 9.01, from and after the Closing, each of the Shareholders
shall indemnify and hold harmless the Company, Buyer and their respective
Affiliates, directors, officers and employees from and against his or her
Proportionate Share of any and all Damages arising out of, resulting from or in
any way related to a breach of, or the failure to perform or satisfy any of, the
representations, warranties, covenants and agreements made by the Shareholders
in this Agreement or in any document or certificate delivered by the
Shareholders at the Closing pursuant hereto. Any payment made to Buyer by the
Shareholders pursuant to the indemnification obligations under this Section 7.03
shall constitute a reduction in the Purchase Price hereunder.
7.04 Non-Competition.
(a) General. In consideration of the payment of the Purchase
Price, and in order to induce the Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, each of the Shareholders hereby
severally covenants and agrees as follows:
(i) Such Shareholder, without the prior written
consent of Buyer, shall not for a period of one year from and after the Closing
Date, directly or indirectly, for himself or herself or for any other person,
firm, corporation, partnership, association or other entity, employ or attempt
to employ any employee of the Company or Buyer or any of Buyer's Affiliates
until at least six months after the date such employee was no longer employed by
the Buyer or any of its Affiliates.
(ii) Neither such Shareholder nor any of its
Affiliates shall, without the prior written consent of the Buyer and for a
period of three years from and after the Closing Date (A) directly or indirectly
acquire or own in any manner any interest in any person, firm, partnership,
corporation, association or other entity which is engaged in any facet of the
Business or which competes in any way with the existing business of Buyer or any
of its subsidiaries or Affiliates, anywhere in United States (the "Territory");
provided, however, that for these purposes, a Shareholder's direct and/or
indirect ownership of securities of a public company not in excess of 5% of any
class of securities registered pursuant to Section 12 of the Securities Exchange
Act of 1934, as amended, shall not be considered to be competition with the
Buyer or any of its subsidiaries or Affiliates; or (B) be employed by or serve
as an employee, agent, officer, director of, or as a consultant to, any person,
firm, partnership, corporation,
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association or other entity which is engaged in any facet of the Business or
which competes in any way with the Buyer or any of its subsidiaries or
Affiliates within the Territory.
(b) Nondisclosure. Such Shareholder shall not at any time,
disclose, directly or indirectly, to any person, firm, corporation, partnership,
association or other entity, any confidential information relating to the
Company or to Buyer, its subsidiaries or Affiliates, or any information
concerning their respective financial condition, customers, sources of leads and
methods of obtaining new business or the methods generally of doing and
operating their respective businesses, except to the extent that such
information is a matter of public knowledge or is required to be disclosed by
law of judicial or administrative process.
(c) Injunction. It is recognized and hereby acknowledged by
the parties hereto that a breach or violation by any Shareholder or any of their
respective Affiliates of any or all of the covenants and agreements contained in
this Agreement may cause irreparable harm and damage to Buyer in a monetary
amount which may be virtually impossible to ascertain. As a result, each
Shareholder recognizes and hereby acknowledges that Buyer shall be entitled to
an injunction from any court of competent jurisdiction enjoining and restraining
any breach or violation of any or all of the covenants and agreements contained
in this Agreement by such Shareholder and/or his associates, Affiliates,
partners or agents, either directly or indirectly, and that such right to
injunction shall be cumulative and in addition to whatever other rights or
remedies the Buyer may possess hereunder, at law or in equity. Nothing contained
in this Section 7.04 shall be construed to prevent Buyer from seeking and
recovering from a Shareholder damages sustained by it as a result of any breach
or violation by such Shareholder of any of the covenants or agreements of the
Shareholders and/or the Company contained herein.
ARTICLE VIII. - TAX MATTERS
8.01 Representations and Obligations Regarding Taxes. The Shareholders
jointly and severally represent and warrant to and agree with the Buyer as
follows:
(a) Except as set forth in Schedule 8.01(a), (i) all returns
and reports, including without limitation, information and withholding returns
and reports ("Tax Returns") of or relating to any foreign, federal, state or
local tax assessment or other governmental charge (all herein referred to
collectively as "Taxes" or singularly as a "Tax") that are required to be filed
on or before the Closing Date by or with respect to the income, business,
operations or property of the Company have been duly and timely filed, (ii) all
items of income, gain, loss, deduction and credit or other items required to be
included in such Tax Returns have been so included, (iii) all information
provided in such Tax Returns is true, correct and complete, (iv) all Taxes that
have become due with respect to the taxable years covered by such Tax Returns
have been timely paid in full, (v) no penalty, interest or other charge is or
will become due with respect to the late filing of any such Tax Return or late
payment of any such Tax, and (vi) all withholding Tax requirements imposed on
the Company for all taxable periods through the close of business on the Closing
Date have been satisfied in full in all respects.
(b) There is no claim against the Company with respect to any
Taxes and no assessment, deficiency or adjustment has been asserted or proposed
with respect to any Tax Return of or with respect to the Company, other than
those disclosed (and to which are attached true and complete copies of all audit
or similar reports) in Schedule 8.01(b).
(c) Except as set forth in Schedule 8.01(c), there is not in
force any extension of time with respect to the date on which any Tax Return of
or with respect to the Company is due to be or have been filed, or any waivers
or agreements by or with respect to the Company or the Shareholders of or for
any extension of time for the assessment or payment of any Tax.
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(d) The total amounts set up as liabilities for Taxes in the
Financial Statements are sufficient to cover the payment of all Taxes, including
any penalties or interest thereon and whether or not assessed or disputed, which
are, or are hereafter found to be, or to have been, due with respect to the
conduct of the business of the Company for the taxable periods covered thereby.
(e) The Company has been an S corporation (as defined in
Section 1361 of the Code) at all times since January 1, 1995 pursuant to an
election to be treated as an S corporation properly made by the Company.
(f) Buyer shall (i) grant to the Shareholders access at all
reasonable times to all of its books and records (including tax workpapers and
returns and correspondence with tax authorities) insofar as they relate to the
operations of the Company, including the right to take extracts therefrom and
make copies thereof, to the extent that such books and records relate to taxable
periods ending on or prior to the Closing Date, and (ii) otherwise cooperate
with Shareholders in connection with any audit of Taxes that relate to the
business of the Company prior to Closing.
8.02 Indemnification for Taxes.
(a) The Shareholders hereby agree to indemnify the Company,
Buyer and its Affiliates (each herein sometimes referred to as an "Indemnified
Taxpayer") against, and agree to protect, save and hold harmless each
Indemnified Taxpayer from, his or her Proportionate Share of any and all claims,
damages, deficiencies, losses (including Taxes, interest and penalties) and all
expenses, including attorneys' and accountants' fees and disbursements (all
herein referred to as "Losses") resulting from:
(i) A claim by any taxing authority for (A) any Taxes
of the Company allocable to any period ending on or prior to the Closing Date,
and (B) any Taxes of the Shareholders;
(ii) A claim by any taxing authority for any Taxes
arising from or occasioned by the consummation of the transactions contemplated
by this Agreement; or
(iii) Any misrepresentation or breach of any
representation, warranty or obligation set forth in this Article VIII.
(b) Subject to the resolution of any Tax contest pursuant to
Section 8.02(c), upon notice from Buyer to the Shareholders that an Indemnified
Taxpayer is entitled to an indemnification payment for a Loss pursuant to
Section 8.02(a), the Shareholders shall thereupon pay to the Indemnified
Taxpayer an amount that, net of any Taxes imposed on the Indemnified Taxpayer
with respect to such payment, will indemnify and hold the Indemnified Taxpayer
harmless from such Loss.
(c) (i) If a claim shall be made by any taxing authority that,
if successful, would result in the indemnification of an Indemnified Taxpayer,
the Indemnified Taxpayer shall promptly notify the Shareholders in writing of
such fact; provided, however, that any failure to give such notice will not
waive any rights of the Indemnified Taxpayer except to the extent the rights of
the indemnifying party are actually prejudiced.
(ii) The Indemnified Taxpayer shall take such action
in connection with contesting such claim as the Shareholders shall reasonably
request in writing from time to time; provided that (A) within 30 days (or such
earlier date that any payment of Taxes is due by the Indemnified Taxpayer) after
the notice described in (i) above has been delivered, the Shareholders request
that such claim be contested, (B) the Shareholders shall have agreed to pay to
the Indemnified Taxpayer on demand all costs and expenses that the Indemnified
Taxpayer may incur in connection with contesting such claim, including, without
limitation, reasonable attorneys' and accountants' fees and disbursements, and
(C) if the Indemnified Taxpayer is requested to pay the Tax claimed and sue for
a refund, the Shareholder shall have advanced to the Indemnified Taxpayer, on an
interest free basis, the amount of such claim. In the case of
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any such claim referred to above, the Indemnified Taxpayer shall not make
payment of such claim for at least 30 days (or such shorter period as may be
required by applicable law) after the giving of the notice required by (i)
above, shall give to the Shareholders any information reasonably requested
relating to such claim and otherwise shall cooperate with the Shareholders in
good faith in order to contest effectively any such claim.
(iii) Subject to the provisions of paragraph (ii)
above, the Indemnified Taxpayer shall prosecute such contest to a determination
in a court of initial jurisdiction, and if the Shareholders shall reasonably
request, the Indemnified Taxpayer shall prosecute such contest to a
determination in an appellate court.
(iv) If, after actual receipt by the Indemnified
Taxpayer of an amount advanced by the Shareholders pursuant to paragraph (ii)(C)
above, the extent of the liability of the Indemnified Taxpayer with respect to
the indemnified matter shall be established by the final judgment or decree of a
court or a final or binding settlement with an administrative agency having
jurisdiction thereof, the Indemnified Taxpayer shall promptly pay to the
Shareholders any refund received by or credited to the Indemnified Taxpayer with
respect to the indemnified matter (together with any interest paid or credited
thereon by the taxing authority and any recovery of legal fees from such taxing
authority). Notwithstanding the foregoing, the Indemnified Taxpayer shall not be
required to make any payment hereunder before such time as the Shareholders
shall have made all payments or indemnities then due with respect to Indemnified
Taxpayer pursuant to this Article VIII.
(d) Anything to the contrary in this Agreement
notwithstanding, the indemnification obligations of the Shareholders under this
Article VIII shall survive the Closing until the expiration of the applicable
statutes of limitations.
ARTICLE IX. - MISCELLANEOUS
9.01 Limitation on Liability.
(a) All representations and warranties made by the Company and
the Shareholders in this Agreement and in the Schedules hereto shall survive the
Closing Date for a period of two (2) years, provided that the representations
and warranties contained in Section 3.04 (Capital Stock; Title to Shares) shall
survive without limitation and the representations and warranties contained in
Section 8.01 (Taxes) shall survive until the applicable statute of limitations
shall have expired. All representations and warranties related to any claim
asserted in writing prior to the expiration of the applicable survival period
shall survive (but only with respect to such claim) until such claim shall be
resolved and payment in respect thereof, if any is owing, shall be made.
(b) For purposes of this Section 9.01, a party making a claim
for indemnity under Section 7.03 is hereinafter referred to as an "Indemnified
Party" and the party against whom such claim is asserted is hereinafter referred
to as the "Indemnifying Party". All claims by any Indemnified Party under
Section 7.03 hereof shall be asserted and resolved in accordance with the
following provisions. If any claim or demand for which an Indemnifying Party
would be liable to an Indemnified Party is asserted against or sought to be
collected from such Indemnified Party by such third party, said Indemnified
Party shall with reasonable promptness notify in writing the Indemnifying Party
of such claim or demand stating with reasonable specificity the circumstances of
the Indemnified Party's claim for indemnification; provided, however, that any
failure to give such notice will not waive any rights of the Indemnified Party
except to the extent the rights of the Indemnifying Party are actually
prejudiced or to the extent that any applicable period set forth in Section
9.01(a) has expired without such notice being given. After receipt by the
Indemnifying Party of such notice, then upon reasonable notice from the
Indemnifying Party to the Indemnified Party, or upon the request of the
Indemnified Party, the Indemnifying Party shall defend, manage and conduct any
proceedings, negotiations or communications involving any claimant whose
24
<PAGE>
claim is the subject of the Indemnified Party's notice to the Indemnifying Party
as set forth above, and shall take all actions necessary, including but not
limited to the posting of such bond or other security as may be required by any
Governmental Authority, so as to enable the claim to be defended against or
resolved without expense or other action by the Indemnified Party. Upon request
of the Indemnifying Party, the Indemnified Party shall, to the extent it may
legally do so and to the extent that it is compensated in advance by the
Indemnifying Party for any costs and expenses thereby incurred,
(i) take such action as the Indemnifying Party may
reasonably request in connection with such action,
(ii) allow the Indemnifying Party to dispute such
action in the name of the Indemnified Party and to conduct a defense to such
action on behalf of the Indemnified Party, and
(iii) render to the Indemnifying Party all such
assistance as the Indemnifying Party may reasonably request in connection with
such dispute and defense.
(c) Any claim for indemnification under Section 7.03 and this
Section 9.01 must be asserted by written notice by a date which is no more than
two years following the Closing Date, except that (i) any claim based upon a
breach of the representations and warranties contained in Section 8.01 (Taxes)
may be asserted until the expiration of the applicable statute of limitations
and (ii) any claim based upon (A) a breach of the representations and warranties
contained in Section 3.04 (Capital Stock) and (B) a claim relating to fraud, may
be asserted with no such time limitation.
(d) Notwithstanding anything to the contrary contained in this
Agreement, none of the Shareholders shall have any obligation to indemnify the
Buyer pursuant to Section 7.03:
(i) unless the aggregate amount of Damages incurred
by the Buyer to which Buyer has the right to be indemnified exceeds $250,000, at
which point each of the Shareholders will be obligated to indemnify the Buyer
from and against his or her Proportionate Share of such Damages relating back to
the first dollar (the "Shareholder Basket"); and
(ii) for any amount of Damages in excess of
$25,000,000 (the "Shareholder Cap"); provided, however, that the Shareholder
Basket and the Shareholder Cap shall not apply to any Damages relating to the
breach of any representation and/or warranty contained in Section 3.04 (Capital
Stock; Title to Shares) and Section 8.01 (Taxes); provided further, however,
that the Shareholder Basket and the Shareholder Cap shall not apply to any
Damages based upon a claim relating to (A) the breach of any covenant contained
in Section 7.04, and (B) fraud.
9.02 Confidentiality.
(a) Prior to the Closing, Buyer shall, and shall cause its
Affiliates and its and their employees, agents, accountants, legal counsel and
other representatives and advisers to, hold in strict confidence all, and not
divulge or disclose any, information of any kind concerning the Company and its
business; provided, however, that the foregoing obligation of confidence shall
not apply to (i) information that is or becomes generally available to the
public other than as a result of a disclosure by Buyer or its Affiliates or any
of its or their employees, agents, accountants, legal counsel or other
representatives or advisers, (ii) information that is or becomes available to
Buyer or its Affiliates or any of its or their employees, agents, accountants,
legal counsel or other representatives or advisers on a non-confidential basis
prior to its disclosure by Buyer or its Affiliates or any of its or their
employees, agents, accountants, legal counsel or other representatives or
advisers and (iii) information that is required to be disclosed as a result of
any applicable law, rule or regulation of any Governmental Authority.
(b) Each Shareholder shall, and shall cause its or his
Affiliates and their respective employees, agents, accountants, legal counsel
and other representatives and advisers to, hold in strict
25
<PAGE>
confidence all, and not divulge or disclose any, information of any kind
concerning the transactions contemplated by this Agreement, the Company, Buyer
or their respective businesses; provided, however, that the foregoing obligation
of confidence shall not apply to (i) information that is or becomes generally
available to the public other than as a result of a disclosure by the Buyer or
its Affiliates or any of their respective employees, agents, accountants, legal
counsel or other representatives or advisers, (ii) information that is or
becomes available to such Shareholders or his Affiliates or any of his
respective employees, agents, accountants, legal counsel or other
representatives or advisers after the Closing on a non-confidential basis prior
to its disclosure by such Shareholder or his Affiliates or any of his respective
employees, agents, accountants, legal counsel or other representatives or
advisers and (iii) information that is required to be disclosed as a result of
any applicable law, rule or regulation of any Governmental Authority.
9.03 Brokers. Regardless of whether the Closing shall occur, (i) the
Shareholders shall jointly and severally indemnify and hold harmless Buyer from
and against any and all liability for any brokers or finders' fees arising with
respect to brokers or finders retained or engaged by the Company or the
Shareholders in respect of the transactions contemplated by this Agreement, and
(ii) Buyer shall indemnify and hold harmless the Shareholders from and against
any and all liability for any brokers' or finders' fees arising with respect to
brokers or finders retained or engaged by Buyer in respect of the transactions
contemplated by this Agreement.
9.04 Costs and Expenses. Each of the parties to this Agreement shall
bear his or its own expenses incurred in connection with the negotiation,
preparation, execution and closing of this Agreement and the transactions
contemplated hereby (the "Transaction Expenses"); provided, however, that the
Company will be responsible for and discharge all Transaction Expenses incurred
by or on behalf of the Company and the Shareholders up to $100,000. Any
Transaction Expenses incurred by the Company and/or Shareholders in excess of
such $100,000 limit shall be paid and discharged by the Shareholders.
Notwithstanding the foregoing, the filing fee required to be paid in connection
with the premerger notification and report forms to be made under
Hart-Scott-Rodino shall be borne equally by the Buyer, on the one hand, and the
Company, on the other hand.
9.05 Notices. Any notice, request, instruction, correspondence or other
document to be given hereunder by any party hereto to another (herein
collectively called "Notice") shall be in writing and delivered personally or
mailed by registered or certified mail, postage prepaid and return receipt
requested, or by telecopier, or by recognized overnight business courier as
follows:
<TABLE>
<CAPTION>
<S> <C> <C>
BUYER: Rexall Sundown, Inc.
6111 Broken Sound Parkway, N.W.
Boca Raton, Florida 33487
Attention: Geary Cotton, Chief Financial Officer
Telecopy No. (561) 999-4715
26
<PAGE>
With copies to:
--------------
Rexall Sundown, Inc.
6111 Broken Sound Parkway, N.W.
Boca Raton, Florida 33487
Attention: Geary Cotton, Chief Financial Officer
Telecopy No. (561) 999-4715
Greenberg Traurig, P.A.
1221 Brickell Avenue
Miami, Florida 33131
Attention: Paul Berkowitz
Telecopy No. (305) 579-0717
THE COMPANY AND THE SHAREHOLDERS: c/o Worldwide Sport Nutritional Supplements Inc.
10540 72nd Street
Largo, Florida 33777
Attention: David McCabe and William R. Kemp
Telecopy No. ______________
With a copy to:
--------------
Annis Mitchell Cockey Edwards & Roehn, P.A.
One Tampa City Center, 22nd Floor
Tampa, Florida 33601
Attention: Joseph Rugg
Telecopy No. (813) 223-9067
</TABLE>
Each of the above addresses for notice purposes may be changed by
providing appropriate notice hereunder. Notice given by personal delivery or
registered mail shall be effective upon actual receipt. Notice given by
telecopier shall be effective upon receipt of confirmation of successful
transmission. All Notices by telecopier shall be confirmed by the sender thereof
promptly after transmission in writing by registered mail or personal delivery.
Notices by overnight business courier shall be effective on the next business
day following delivery to the courier provided such delivery was made prior to
the deadline for such next business day delivery.
9.06 No Negotiations. The Shareholders shall not themselves, and shall
cause the Company, its other Affiliates and all of its and its Affiliates'
respective officers, directors, employees, partners, agents and advisors not to,
directly or indirectly, encourage, solicit or engage in discussions or
negotiations with, or provide any information to, or consider any proposal or
offer presented by, any party concerning any sale of the Company or any of its
Assets or any similar transaction or enter into any agreement or take any action
that by its terms or effect could reasonably be expected to affect adversely the
ability of the parties hereto to consummate the transactions contemplated
hereby.
9.07 Governing Law. The provisions of this agreement and the documents
delivered pursuant hereto shall be governed by and construed in accordance with
the laws of the State of Florida (excluding any conflict of law rule or
principle that would refer to the laws of another jurisdiction). Each party
hereto irrevocably submits to the jurisdiction of the Circuit Courts of the
State of Florida, Miami-Dade, Broward and Palm Beach Counties, in any action or
proceeding arising out of or relating to this Agreement or any of the Collateral
Agreements, and each party hereby irrevocably agrees that all claims in respect
of any such action or proceeding must be brought and/or defended in such court;
provided, however, that matters which are under the exclusive jurisdiction of
the Federal courts shall be brought in the Federal District Court for the
Southern District of Florida. Each party hereto consents to service of process
by any means authorized
27
<PAGE>
by the applicable law of the forum in any action brought under or arising out of
this Agreement or any of the Collateral Agreements, and each party irrevocably
waives, to the fullest extent each may effectively do so, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court. EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, TRIAL BY JURY IN ANY SUIT,
ACTION OR PROCEEDING ARISING HEREUNDER.
9.08 Entire Agreement; Amendments and Waivers. This Agreement, together
with all exhibits and schedules attached hereto, constitutes the entire
agreement between and among the parties hereto pertaining to the subject matter
hereof and supersedes all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the parties, and there are no
warranties, representations or other agreements between the parties in
connection with the subject matter hereof except as set forth specifically
herein or contemplated hereby. No supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provision hereof (regardless of whether
similar), nor shall any such waiver constitute a continuing waiver unless
otherwise expressly provided.
9.09 Binding Effect and Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
permitted successors and assigns; but neither this Agreement nor any of the
rights, benefits or obligations hereunder shall be assigned, by operation of law
or otherwise, by any party hereto without the prior written consent of the other
party, provided, however, that nothing herein shall prohibit the assignment of
Buyer's rights and obligations to any direct or indirect subsidiary or prohibit
the assignment of Buyer's rights (but not obligations) to any lender. Nothing in
this Agreement, express or implied, is intended to confer upon any person or
entity other than the parties hereto and their respective permitted successors
and assigns, any rights, benefits or obligations hereunder.
9.10 Remedies. The rights and remedies provided by this Agreement are
cumulative, and the use of any one right or remedy by any party hereto shall not
preclude or constitute a waiver of its right to use any or all other remedies.
Such rights and remedies are given in addition to any other rights and remedies
a party may have by law, statute or otherwise.
9.11 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.12 Survival. Any provision of this Agreement which contemplates
performance or the existence of obligations after the Closing Date, and any and
all representations and warranties set forth in this Agreement, shall not be
deemed to be merged into or waived by the execution and delivery of the
instruments executed at the Closing, but shall expressly survive Closing and
shall be binding upon the party or parties obligated thereby in accordance with
the terms of this Agreement, subject to any limitations expressly set forth in
this Agreement.
9.13 Attorneys' Fees. In the event any suit or other legal proceeding
is brought for the enforcement of any of the provisions of this Agreement, the
parties hereto agree that the prevailing party or parties shall be entitled to
recover from the other party or parties upon final judgment on the merits
reasonable attorneys' fees (and sales taxes thereon, if any), including
attorneys' fees for any appeal, and costs incurred in bringing such suit or
proceeding.
9.14 Risk of Loss. Prior to the Closing, the risk of loss of damage to,
or destruction of, any and all of the Assets shall remain with the Shareholders,
and the legal doctrine known as the "Doctrine of Equitable Conversion" shall not
be applicable to this Agreement or to any of the transactions contemplated
hereby.
28
<PAGE>
ARTICLE X. - DEFINITIONS
Capitalized terms used in this Agreement are used as defined in this
Article X or elsewhere in this Agreement.
10.01 Affiliate. The term "Affiliate" shall mean, with respect to any
person, any other person controlling, controlled by or under common control with
such person. The term "Control" as used in the preceding sentence means, with
respect to a corporation, the right to exercise, directly or indirectly, more
than 50% of the voting rights attributable to the shares of the controlled
corporation and, with respect to any person other than a corporation, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such person.
10.02 Assets. The term "Assets" shall mean all of the assets, rights
and properties used or useful by the Company and its Subsidiaries in the
operation of the Business.
10.03 Business. The term "Business" shall mean the business in which
the Company and its Subsidiaries is engaged on the date hereof.
10.04 Collateral Agreements. The term "Collateral Agreements" shall
mean any or all of the exhibits to this Agreement and any and all other
agreements, instruments or documents required or expressly provided under this
Agreement to be executed and delivered in connection with the transactions
contemplated by this Agreement.
10.05 Contracts. The term "Contracts", when described as being those of
or applicable to any person, shall mean any and all contracts, agreements,
franchises, understandings, arrangements, leases, licenses, registrations,
authorizations, easements, servitudes, rights of way, mortgages, bonds, notes,
guaranties, liens, indebtedness, approvals or other instruments or undertakings
to which such person is a party or to which or by which such person or the
property of such person is subject or bound, excluding any Permits.
10.06 Damages. The term "Damages" shall mean any and all damages,
liabilities, obligations, penalties, fines, judgments, claims, deficiencies,
losses, costs, expenses and assessments (including without limitation income and
other taxes, interest, penalties and attorneys' and accountants' fees and
disbursements).
10.07 Environmental Laws. The term "Environmental Laws" shall mean all
federal, state and local statutes, regulations, ordinances and other provisions
having the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning public
health and safety, worker health and safety, and pollution and protection of the
environment, including without limitation, all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
control, or cleanup of any hazardous materials, substances or wastes, chemical
substances or mixtures, pesticides, pollutants, contaminants, toxic chemicals,
petroleum products or by products, asbestos, polychlorinated biphenyls, noise or
radiation, each as amended and as now or hereafter in effect.
10.08 Financial Statements. The term "Financial Statements" shall mean
any or all of the financial statements, including balance sheets and related
statements of income and statements of changes in financial position and the
accompanying notes thereto, of the Company's business prepared in accordance
with generally accepted accounting principles consistently applied, except as
may be otherwise provided herein.
10.09 Governmental Authorities. The term "Governmental Authorities"
shall mean any nation or country (including but not limited to the United
States) and any commonwealth, territory or possession
29
<PAGE>
thereof and any political subdivision of any of the foregoing, including but not
limited to courts, departments, commissions, boards, bureaus, agencies,
ministries or other instrumentalities.
10.10 Hazardous Material. The term "Hazardous Material" means all or
any of the following: (a) substances that are defined or listed in, or otherwise
classified pursuant to, any applicable laws or regulations as "hazardous
substances," "hazardous materials," "Hazardous wastes," "toxic substances" or
any other formulation intended to define, list or classify substances by reason
of deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, reproductive toxicity or "EP toxicity"; (b) oil, petroleum or
petroleum derived substances, natural gas, natural gas liquids or synthetic gas
and drilling fluids, produced waters and other wastes associated with the
exploration, development or production of crude oil, natural gas or geothermal
resources; (c) any flammable substances or explosives or any radioactive
materials; and (d) asbestos in any form or electrical equipment which contains
any oil or dielectric fluid containing levels of polychlorinated biphenyls in
excess of fifty parts per million.
10.11 Knowledge of the Company or any of the Shareholders. The term
"Knowledge of the Company or any of the Shareholders" shall mean the actual
knowledge of (i) with respect to the Company, any of its directors and officers
or (ii) with respect to the Shareholders, any of the Shareholders with respect
to the matter in question.
10.12 Legal Requirements. The term "Legal Requirements", when described
as being applicable to any person, shall mean any and all laws (statutory,
judicial or otherwise), ordinances, regulations, judgments, orders, directives,
injunctions, writs, decrees or awards of, and any Contracts with, any
Governmental Authority, in each case as and to the extent applicable to such
person or such person's business, operations or properties.
10.13 Material Adverse Effect. The term "Material Adverse Effect" shall
mean a material adverse change in, or the occurrence of any event which would be
likely to have a material adverse effect on, the business, financial condition,
operations, assets, prospects or results of operations of the Company and its
Subsidiaries taken as a whole.
10.14 Permits. The term "Permits" shall mean any and all permits, legal
status, orders or Contracts under any Legal Requirement or otherwise granted by
any Governmental Authority.
10.15 Proportionate Share The term "Proportionate Share" shall mean (a)
14.9% with respect to William R. Kemp and (b) 85.1% with respect to David McCabe
and Dawn McCabe, jointly.
10.16 Real Property. The term "Real Property" shall mean the real
property Used by the Company in the conduct of its business.
10.17 Regulations. The term "Regulations" shall mean any and all
regulations promulgated by the Department of the Treasury pursuant to the Code.
10.18 Used. The term "Used" shall mean, with respect to the Assets,
Contracts or Permits of the Company, those owned, leased, licensed or otherwise
held by the Company which were acquired for use or held for use by the Company
in connection with the Company's business and operations, whether or not
reflected on the Company's books of account.
30
<PAGE>
EXECUTED as of the date first written above.
BUYER:
-----
REXALL SUNDOWN, INC.
By: /s/ Damon DeSantis
---------------------------------------
Name: Damon DeSantis
------------------------------
Title: President and Chief Executive Officer
-------------------------------------
COMPANY:
-------
WORLDWIDE SPORT NUTRITIONAL SUPPLEMENTS INC.
By: /s/ David J. McCabe
---------------------------------------
Name: David J. McCabe
--------------------------------
Title: President and Chief Executive Officer
---------------------------------------
SHAREHOLDERS:
------------
/s/ David J. McCabe
---------------------------------------------
David McCabe
/s/ Dawn McCabe
---------------------------------------------
Dawn McCabe
/s/ William R. Kemp
---------------------------------------------
William R. Kemp
31
Exhibit 99.1
AT THE COMPANY AT THE FINANCIAL RELATIONS BOARD:
- -------------- ---------------------------------
Investors: General Information:
Donna Conners Karen Griffiths
Press: Analyst Information:
Carol Walters Vanessa Schwartz
(561)241-9400 (212)661-8030
FOR IMMEDIATE RELEASE
REXALL SUNDOWN COMPLETES WORLDWIDE SPORT NUTRITION PURCHASE
Boca Raton, FL - March 23, 2000 - Rexall Sundown, Inc. (Nasdaq: RXSD) today
announced that it has completed its previously announced $71.5 million
acquisition of Worldwide Sport Nutritional Supplements, Inc., a leader in the
sports nutrition category.
The transaction was financed by Rexall Sundown's current line of credit and is
expected to be slightly accretive to the Company's earnings in the current
fiscal year ending August 31, 2000. Based in Largo, Florida, Worldwide is best
known for its leading branded sports nutrition supplements including Pure
Protein(R) food bars, Burn-IT(TM) food bars, Pure Protein Cookie(TM), Ultra Pure
Protein Shake(TM), Extreme Pure Protein(TM) drinks, and the recently introduced
Protein Revolution(TM)low-carb bars, among others.
"We are pleased to have Worldwide Nutrition join the Rexall team," stated Damon
DeSantis, President and Chief Executive Officer of Rexall Sundown. "As an
innovator in its field, Worldwide is recognized as a key player in the sports
and active nutrition segment of the industry and will play a significant role in
continuing the dominance we now have achieved in this fast-growing segment of
the business."
Rexall Sundown, Inc. develops, manufactures, markets and sells vitamins,
herbals, nutritional supplements and other consumer health products. Visit the
Company's website at www.rexallsundown.com.
###
This Press Release may contain "forward-looking statements" as such term is
defined in the Private Securities Litigation Reform Act of 1995 or by the
Securities and Exchange Commission in its rules, regulations and releases, which
represents the Company's interpretation or beliefs. These forward-looking
statements, by their nature, involve substantial risks and uncertainties,
certain of which may be beyond the Company's control and actual results may
differ materially depending on a variety of important factors including
uncertainties related to acquisitions, government regulation, managing and
maintaining growth, the effect of adverse publicity, litigation, reliance on
independent distributors of Rexall Showcase International, competition and other
factors described in the Company's filings with the Securities and Exchange
Commission.
