SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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)
July 13, 1999
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IVC INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
0-23624 22-1567481
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(Commission file number) (IRS employer identification number)
500 Halls Mill Road, Freehold, New Jersey 07728
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(Address of principal executive offices)
Registrant's telephone number: (732) 308-3000
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On July 13, 1999, IVC Industries, Inc., a Delaware corporation ("IVC"),
completed the sale of all of the issued and outstanding shares of capital stock
and thereby the business of Vitamin Specialties Corp. ("VSC"), a Pennsylvania
corporation and wholly-owned subsidiary of IVC, to Archon Vitamin Corporation, a
New Jersey corporation ("Archon").
The assets of VSC consist primarily of leases for its 16 retail stores
located in New Jersey and Pennsylvania, its mail order operations and its
inventory located in the retail stores and IVC's warehouse in Freehold, New
Jersey. As VSC represents less than 10% of the total assets of IVC, pro forma
financial information is not required to be submitted with this report.
The purchase price for all of the issued and outstanding shares of VSC was
$1.8 million, which will be paid in monthly installments equal to 5% of VSC's
gross sales until such time as the aggregate payments total $1.8 million;
provided, however, that for each of the first 36 months following the closing,
Archon must pay to IVC the greater of $10,000 or 5% of VSC's gross sales.
VSC will pay IVC for the inventory located at the retail stores at cost,
offset by the amount of VSC's accounts payable owed to third parties at the time
of closing, in twelve equal monthly installments The cost of the retail
inventory supplied to VSC by parties not related to IVC will be the amount paid
by IVC to such third party and the cost of the retail inventory supplied to VSC
by IVC will be IVC's manufacturing cost. In addition, VSC will pay IVC's
manufacturing cost for the inventory specific to VSC located in IVC's warehouse
in Freehold, New Jersey in twenty-four equal monthly installments.
ITEM. 7 EXHIBITS
1. Stock Purchase Agreement, dated as of July 13, 1999, between Archon
Vitamin Corporation, a New Jersey corporation, and IVC Industries, Inc., a
Delaware corporation.
2. Closing Agreement, dated as of July 13, 1999, between Archon Vitamin
Corporation, a New Jersey corporation, and IVC Industries, Inc., a
Delaware corporation.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, IVC
Industries, Inc. has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
IVC INDUSTRIES, INC.
By: /s/ Domenic Golato
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Domenic Golato
Chief Financial Officer
Date: July 28, 1999
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EXHIBIT INDEX
Exhibit Description
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1. Stock Purchase Agreement, dated as of July 13, 1999, between Archon
Vitamin Corporation, a New Jersey Corporation and IVC Industries,
Inc., a Delaware corporation.
2. Closing Agreement, dated as of July 13, 1999, between Archon Vitamin
Corporation, a New Jersey corporation, and IVC Industries, Inc., a
Delaware corporation.
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SCHEDULE
The schedules and exhibits to the Stock Purchase Agreement are omitted pursuant
to Rule 601(b)(2) of Regulation S-K. This schedule contains summary information
extracted from the schedules to the Stock Purchase Agreement and is qualified in
its entirety by reference to such schedules. Capitalized terms used herein
without definition shall have the respective meanings assigned to such terms in
the Stock Purchase Agreement.
Schedules attached to Stock Purchase Agreement
Schedule A: Retail Stores
Lists the addresses of each of the Retail Stores.
Schedule B: Payables Schedule
Lists VSC's accounts payable owed to third parties at Closing.
Schedule C: Vitamin Specialties Corporation's Specific Inventory in Freehold
Warehouse
Lists the inventory specific to VSC in IVC's warehouse in Freehold, New
Jersey.
Schedule D: Opinion of Seller's Counsel
Schedule E: Disclosure Letter
Discloses certain information with respect to VSC as such information
relates to the representations and warranties made by IVC in the Stock
Purchase Agreement.
Schedule F: July Rent
Sets forth payments made by IVC for the rent of the Retail Stores during
the month of July.
5
Stock Purchase Agreement
This Stock Purchase Agreement ("Agreement") is made as of July 13, 1999, between
Archon Vitamin Corporation, a New Jersey corporation ("Buyer") and IVC
Industries, Inc., a Delaware corporation ("Seller") for the acquisition of
Vitamin Specialties Corp., a Pennsylvania corporation ("Company").
RECITALS
Seller desires to sell, and Buyer desires to purchase, all of the issued and
outstanding shares (the "Shares") of capital stock of the Company and thereby
the business of the Company consisting of the Retail Stores and the Mail Order
Division (the "Business") for the consideration and on the terms set forth in
this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1 DEFINITIONS
All Capitalize words used and appearing in this Agreement are defined herein.
Certain common terms are defined in this section. Transaction specific terms are
generally defined in the context where they are used.
1.1 Applicable Contract means any contract (a) under which the Company has or
may acquire any rights, (b) under which the Company has or may become
subject to any obligation or liability, or (c) by which the Company or any
of the assets owned or used by the Company is or may become bound.
1.2 Contemplated Transactions means all of the transactions contemplated by
this Agreement.
1.3 Encumbrance means any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest,
right of first refusal, or restriction of any kind, including any
restriction on use, voting, transfer, or exercise of any other attribute
of ownership.
1.4 "Environmental, Health, and Safety Liabilities"--any cost, damages,
expense, liability, obligation, or other responsibility arising from or
under Environmental Law or Occupational Safety and Health Law and
consisting of or relating to:
1.4.1 any environmental, health, or safety matters or conditions
(including on-site or off- site contamination, occupational safety
and health, and regulation of chemical substances or products);
1.4.2 fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and
response, investigative, remedial, or inspection costs and expenses
arising under Environmental Law or
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Occupational Safety and Health Law;
1.4.3 financial responsibility under Environmental Law or Occupational
Safety and Health Law for cleanup costs or corrective action,
including any investigation, cleanup, removal, containment, or other
remediation or response actions ("Cleanup") required by applicable
Environmental Law or Occupational Safety and Health Law (whether or
not such Cleanup has been required or requested by any Governmental
Body or any other Person) and for any natural resource damages; or
1.4.4 any other compliance, corrective, investigative, or remedial
measures required under Environmental Law or Occupational Safety and
Health Law.
1.4.5 The terms "removal," "remedial," and "response action," include the
types of activities covered by the United States Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C.
ss. 9601 et seq., as amended ("CERCLA").
1.5 Environmental Law means Legal Requirements designed to minimize, prevent,
punish, or remedy the consequences of actions that damage or threaten the
environment or public health or safety.
1.6 Facilities means the premises of the Retail Stores.
1.7 Governmental Authorization means any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant
to any Legal Requirement.
1.8 Governmental Body means any (a) nation, state, county, city, town,
village, district or other jurisdiction of any nature; (b) federal, state,
local, municipal, foreign, or other government; (c) governmental or
quasi-governmental authority of any nature (including any governmental
agency, branch, department, official, or entity and any court or other
tribunal); (d) multi-national organization or body; or (e) body
exercising, or entitled to exercise, any administrative, executive,
judicial, legislative, police, regulatory, or taxing authority or power of
any nature.
1.9 "Hazardous Activity" means the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
release, storage, transfer, transportation, treatment, or use of Hazardous
Materials in, on, under, about, or from the Facilities or any part thereof
into the Environment.
1.10 "Hazardous Materials"means any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be,
hazardous, radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Law.
1.11 Legal Requirement means any federal, state, local, municipal, or other
administrative order, constitution, law, ordinance, principle of common
law, regulation, statute or treaty.
1.12 "Occupational Safety and Health Law"--any Legal Requirement designed to
provide safe and healthful working conditions, to reduce occupational
safety and health hazards.
1.13 Order means any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator in
binding arbitration.
1.14 Organizational Documents means for a corporation the articles or
certificate of
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incorporation, the bylaws, and any amendment to the foregoing.
1.15 Person means any individual, corporation, general or limited partnership,
limited liability company, joint venture, estate, trust, association,
organization, or other entity or Governmental Body.
1.16 Proceeding means any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, or administrative)
commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body.
1.17 "Related Person"--with respect to a particular individual:
1.17.1 each other member of such individual's Family;
1.17.2 any Person that is directly or indirectly controlled by such
individual or one or more members of such individual's Family;
1.17.3 any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a
Material Interest; and
1.17.4 any Person with respect to which such individual or one or more
members of such individual's Family serves as a director,
officer, partner, executor, or trustee (or in a similar
capacity).
With respect to a specified Person other than an individual:
1.17.5 any Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under
common control with such specified Person;
1.17.6 any Person that holds a Material Interest in such specified
Person;
1.17.7 each Person that serves as a director, officer, partner,
executor, or trustee of such specified Person (or in a similar
capacity);
1.17.8 any Person in which such specified Person holds a Material
Interest;
1.17.9 any Person with respect to which such specified Person serves as
a general partner or a trustee (or in a similar capacity); and
1.17.10 any Related Person of any individual described in clause (b) or
(c).
For purposes of this definition, (a) the "Family" of an individual
includes (i) the individual, (ii) the individual's spouse [and former
spouses], and (iii) any other natural person who is related to the
individual or the individual's spouse within the second degree, and (b)
"Material Interest" means direct or indirect beneficial ownership (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934) of voting
securities or other voting interests representing at least 25% of the
outstanding voting power of a Person or equity securities or other equity
interests representing at least 25% of the outstanding equity securities
or equity interests in a Person.
1.18 Tax means any tax (including any income tax, capital gains tax, value
added tax, sales tax property tax, gift tax, or estate tax), levy,
assessment, tariff, duty (including any customs duty), deficiency, or
other fee, and any related charge or amount (including any fine, penalty,
interest, or addition to tax), imposed, assessed, or collected by or under
the authority of any Governmental Body or payable pursuant to any
tax-sharing agreement or any other contract relating to the sharing or
payment of any such tax, levy, assessment, tariff, duty, deficiency, or
fee.
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1.19 Tax Returns means any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment,
collection, or payment of any Tax or in connection with the
administration, implementation, or enforcement of or compliance with any
Legal Requirement relating to any Tax.
2 PURCHASE TERMS
2.1 Stock and Business. The Seller will sell and deliver to Buyer, free and
clear of all liens and encumbrances, all of the issued and outstanding
shares ("Shares") of capital stock of Company.
2.2 Purchase Price. Following the Closing, the Company shall pay Seller a
royalty of five percent (5%) of the Company's gross sales of the Business
until such time as the aggregate royalty paid under this provision totals
One Million Eight Hundred Thousand Dollars ($1,800,000) (the "Purchase
Price"). Notwithstanding the foregoing, for each of the first thirty-six
months following the Closing, the Company shall pay to Seller the greater
of the following amounts (a) $10,000.00 (the "Minimum Payment") or (b) 5%
of the month's gross retail sales of the Business (the "Royalty").
2.3 Payment Terms. All payments to be made under Section 2.2 will be monthly,
beginning on the 15th day of the first month following the Closing and on
the 15th day of each month thereafter in accordance with Section 2.2. The
Company shall provide Seller on a quarterly basis with complete and
accurate gross sales reports for the Business upon which the Royalty
payments are made. The first gross sales report hereunder shall be
provided by the Company by or before October 15, 1999, and quarterly
thereafter.
2.4 Company May Terminate Operations. The Company is under no obligation to
continue or to pursue operations of the Business. In the event that the
Company terminates operation of the Business any time during the first
thirty six months, the Company must nonetheless make the Minimum Payments
of $10,000.00 per month for the first thirty-six months as provided in
Section 2.2 and the Additional Payments specified in Section 3, but
Company is not required to make any other payments of Royalty to Seller.
For the purpose of this provision, the Company will not be considered to
have terminated operations if Company, Buyer, or an affiliate of Buyer
continues the Business or any substantially similar business under one or
more different trade names. In such cases, termination has not occurred,
and Seller is still entitled to Royalty payments or Minimum Payments from
the newly named entity in accordance with the terms hereof.
3 ADDITIONAL PAYMENTS
Subject to the terms and conditions of this Agreement, the Company agrees to
make the
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following additional payments (the "Additional Payments"):
3.1 Accounts Payables. The Company shall be responsible for any and all of
Company's accounts payable owed to third parties at Closing ("Accounts
Payable"), provided:
3.1.1 the Accounts Payable are disclosed to Buyer at or before the Closing
on Schedule A ("Payables Schedule",);
3.1.2 the Accounts Payable are trade accounts payable;
3.1.3 the total amount of the Accounts Payable does not exceed the cost of
the Retail Inventory as provided in section 3.3; and
3.1.4 the Accounts Payable are not owed to Seller or affiliates of Seller.
The term trade Accounts Payable as used in this section references
payments for purchases of inventory and excludes other debts of Company
such as, without limitation, tort claims, loans, rent, utility costs or
payroll obligations. The Accounts Payable meeting the conditions of 3.1.1.
through and 3.1.4 are referred to herein as the "Assumed Payables".
The Assumed Payables will be excluded from Seller's indemnity provided in
section 9. Buyer indemnifies in section 9 Seller for liability for the
Assumed Payables.
3.2 AP Offset. The Company is entitled to offset the amount of the Assumed
Payables against its obligation to pay for the Retail Inventory (as
provided in section 3.3). The amount of the offset for the Assumed
Payables will be determined based upon the amount reflected on Schedule A.
3.3 Inventory Located in Retail Stores.
3.3.1 In addition to the Purchase Price and other payments required
herein, the Company will pay Seller for the inventory of the Company
that is located in the Retail Stores (the "Retail Inventory") at
Cost. Cost of the Retail Inventory will be determined as follows:
(a) for inventory supplied by parties not related to Seller or the
Company, the Cost will be the amount paid by or on behalf of the
Company to such third party vendor for the product; (b) for
inventory supplied to the Company by Seller, the Cost will be
determined by Seller's "Manufacturing Cost" as currently reflected
by the books and records of the Seller, subject to the review and
consent of the Buyer.
3.3.2 The amount of the payment to be made by the Company to Seller under
Section 3.3.1 for the Retail Inventory shall be determined by first
subtracting the amount of the Assumed Payables from the total Cost
of Retail Inventory and dividing the remaining amount into twelve
equal payments. The first payment to be made hereunder shall be due
on the first day of the third month following the Closing
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and subsequent payments shall be due on each successive first day of
the month until the twelve payments are completed. No interest will
be charged in connection with timely payments. A penalty shall be
assessed against and paid by the Company for any monthly payment due
under this section that is not received by Seller by the 15th of
each month. The amount of the penalty shall be equal to 5% of the
amount of the overdue payment. The Seller shall be deemed to be in
receipt of any payment as of the date the payment is deposited in
the U.S. mail or upon physical receipt by Seller.
3.3.3 The inventory contained in the Retail Stores shall be counted and
identified by an inventory inspection (the "Inspection") conducted
within five (5) days of the date of the Closing by employees of the
Company. The Inspection shall be conducted in accordance with the
standards and methodologies previously employed by the Company when
conducting, in the ordinary course of business, annual and or
periodic inventory counts. The results of the inventory inspection
shall be adjusted as necessary to account for sales taking place
prior to, during or after the Inspection, as the case may be. Items
which are out of date or physically damaged will be deducted from
the inventory and returned to Seller.
3.4 Inventory Located in Seller's Warehouse in Freehold, New Jersey. Within
fifteen (15) days of the Closing, Buyer shall inspect the inventory
specific to the Company located in Seller's warehouse in Freehold, New
Jersey, identified on Schedule B. Any and all inventory that is listed on
Schedule B but not physically present in Seller's warehouse at the time of
the inspection and inventory that is out of date or physically damaged as
identified and agreed upon by Buyer and Seller shall be excluded from the
inventory to be purchased under this section ("Subject Inventory"). Only
inventory listed on Schedule B will be included in Subject Inventory.
Within ten (10) days of the completion of the inspection and upon Seller's
receipt of proof of insurance, as provided herein, the Seller shall ship
to Buyer's warehouse located in Irvington, New Jersey the Subject
Inventory.
The Company shall pay Seller an amount equal to the Manufacturing Cost of
the Subject Inventory as shown on Schedule B. The Company shall pay for
such inventory in twenty four (24) equal payments beginning on the first
day of the third month following shipment of the Subject Inventory. Prior
to shipment, the Company will provide Seller with proof of property,
casualty and fire insurance providing coverage against damage to the
Subject Inventory while located in Buyer's warehouse in an amount equal to
the total payment to be made under this section 3.4. In the event of a
damage to the Subject Inventory while in Buyer's warehouse that is an
insured loss covered under the Buyer's policy of insurance, Buyer and
Company agree to endorse over and assign to Seller any payment and/or
benefit received or to be received by Buyer and/or Company from the
insurer relating to such loss to the extent of the amount of the remaining
payment due under this section 3.4 as of the date of such insurance
payment or benefit.
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3.5 Leases. The Seller agrees that for each of the Retail Store premises under
the sixteen leases furnished to Buyer in connection with the Disclosure
Letter the Company will have (subject to the limitations of the lease
terms relating to the use thereof) full access to and use to the premises
on a month-to-month basis from the day of Closing until the earlier of: 1)
the expiration of such Retail Store lease term (including renewals); or 2)
the Retail Store lease has been assigned or the lessor has consented to
the continuation of such lease consistent with the provisions of section
3.6. The Seller represents that such use shall be sufficient to carry on
the present business of the Company (with the Seller holding Buyer
harmless from any liability asserted by the lessors of the Retail Stores
for any lease defaults resulting from Seller permitting the Company such
access and use) Company agrees to pay Seller rent equal to the rent
charged by the lessor under the terms of the current leases to Seller for
each of the Retail Stores occupied by the Company after the Closing.
Company agrees to direct such payments to the lessors, if so requested by
the Seller.
3.6 Assignment of Leases. Following the Closing, Seller will use its best
efforts to obtain from with all the lessors of the Retail Stores any or
all consents required under the lease terms in the event of the sale of
the Company by Seller to a third party. In any case, no change in the
lease adverse to Buyer's interests will be permitted at the time of the
assignment. Seller will pay all costs of seeking such assignments or
consents, including, without limitation, any administrative, legal, tax or
other charges in connection with any such assignment.
In the event that Seller is unable within six months to arrange the
necessary lease assignment, on terms no less favorable than under the
current lease, Company shall be free to: 1) negotiate with lessor a new
lease acceptable to Company; or 2) vacate the premises. If Company
exercises the second option in the preceding sentence, Company will be
under no further obligation to pay Seller rent for such premises or any
liability of Seller under the lease agreement for such premises. Seller
will not be required to pay damages, increased rent, lost profits or any
other liability to Company and/or Buyer as a result of the failure to
obtain the necessary lease assignment. Seller shall cooperate with Buyer
in Buyer's efforts to continue such leases under terms favorable to Buyer.
Buyer agrees to cooperate with Seller in its efforts to obtain an
assignment for the leases, to provide Seller with such financial information as
may be required by the lessors, and to use reasonable efforts to otherwise
assist with such transfer. Company agrees, at completion of the assignment to
Company of each lease to reimburse Seller for all security deposits on that
lease, and provided further that Seller expressly represents that after due
inquiry there are no known or anticipated claims relating to the period before
the Closing against such deposits.
3.7 Adjustment Amounts. Within five (5) business days of the Closing, the
Company will pay Seller a Rent Adjustment Amount for the rent of the
Retail Stores for the portion of July falling after the Closing. Schedule
F shows the July rent payments by Seller and such
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payment will be prorated to the period after the Closing based upon the
number of days in July falling after the Closing. On or before August 30,
1999 the Seller and the Buyer will calculate a Health Insurance adjustment
amount representing the Seller's health insurance expense for the Company
employees for the portion of July after the Closing. Company shall pay
Seller the Adjustment Amount within five (5) business days of it being
determined.
4 CLOSING
The purchase and sale (the "Closing") provided for in this Agreement will take
place at the offices of Buyer's counsel at 44 Pittsford Way, New Providence, New
Jersey, at 2:00 p.m. (local time) on July 12, 1999 or at such other time and
place as the parties may agree.
4.1 CLOSING OBLIGATIONS
At the Closing, Seller will deliver to Buyer certificates representing the
Shares, duly endorsed (or accompanied by duly executed stock powers) ("Stock
Certificates") and free of any restrictive legends.
5 REPRESENTATIONS OF SELLER
Seller represents and warrants to Buyer as follows:
5.1 ORGANIZATION AND GOOD STANDING
5.1.1 The Company name is "Vitamin Specialties Corp."
5.1.2 The Company is organized under the laws of the State of
Pennsylvania.
5.1.3 The Company is authorized to do business in Pennsylvania and in New
Jersey.
5.1.4 The Company is a corporation duly organized, validly existing, and
in good standing under the laws of its jurisdiction of
incorporation, with full corporate power and authority to conduct
its business as it is now being conducted, and to perform all its
obligations under the Agreement and other contracts or agreements
necessary to the Contemplated Transaction.
5.1.5 Under the laws of each state or other jurisdiction in which either
the ownership or use of the properties owned or used by it, or the
nature of the activities conducted by it, requires such
qualification, the Company is both (a) duly qualified to do business
as a foreign corporation, and (b) in good standing.
5.1.6 Seller has delivered to Buyer or will within ten days of the date of
the Agreement deliver to Buyer copies of the Organizational
Documents of the Company, as currently in effect.
5.2 AUTHORITY; NO CONFLICT
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5.2.1 The Agreement constitutes the legal, valid, and binding obligation
of Seller, enforceable against Seller in accordance with its terms.
Seller has the right, power, authority, and capacity to execute and
deliver the Agreement and the Stock Certificates ("Seller's Closing
Documents") and to perform its obligations under the Agreement and
the Seller's Closing Documents.
5.2.2 Except as set forth in section 5.2.2 of the Disclosure Letter,
neither the execution and delivery of the Agreement nor the
consummation or performance of any of the Contemplated Transactions
will, directly or indirectly (with or without notice or lapse of
time):
5.2.2.1 contravene, conflict with, or result in a violation of (A)
any provision of the Organizational Documents of the Seller,
or (B) any resolution adopted by the board of directors or
the stockholders of the Seller;
5.2.2.2 contravene, conflict with, or result in a violation of, or
give any Governmental Body or other Person the right to
challenge any of the Contemplated Transactions or to
exercise any remedy or obtain any relief under, any Legal
Requirement or any Order to which the Company or Seller, or
any of the assets owned or used by the Company, may be
subject;
5.2.2.3 contravene, conflict with, or result in a violation of any
of the terms or requirements of, or give any Governmental
Body the right to revoke, withdraw, suspend, cancel,
terminate, or modify, any Governmental Authorization that is
held by the Company or that otherwise relates to the
business of, or any of the assets owned or used by, the
Company;
5.2.2.4 contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to
declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel,
terminate, or modify, any Applicable Contract; or
5.2.2.5 result in the imposition or creation of any Encumbrance upon
or with respect to any of the assets owned or used by the
Company.
Except as set forth in part 5.2 of the Disclosure Letter, neither the
Seller nor the Company is or will be required to give any notice to or
obtain any consent from any Person in connection with the execution and
delivery of the Agreement or the consummation or performance of any of the
Contemplated Transactions.
5.3 CAPITALIZATION
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The authorized equity securities of the Company consist of one thousand shares
of common stock, par value $0.01 per share, of which one thousand (1,000) shares
are issued and outstanding and constitute the Shares. Seller is and will be on
the Closing the record and beneficial owner and holder of the Shares, free and
clear of all Encumbrances other than the liens of Chase Manhattan Bank and
Hoffman LaRoche, Inc. The Seller owns all of the Shares. All of the outstanding
equity securities of the Company have been duly authorized and validly issued
and are fully paid and non assessable. There are no contracts relating to the
issuance, sale, or transfer of any equity securities or other securities of the
Company. None of the outstanding equity securities or other securities of the
Company was issued in violation of the Securities Act of 1933, or any successor
or any other Legal Requirement.
5.4 FINANCIAL STATEMENTS
Seller has delivered to Buyer or will within ten days of the date of the
Agreement deliver to Buyer:
(a) segregated balance sheets of the Company as at July 31, 1997 and the related
statement of income and expense for the fiscal year then ended,
(b) a segregated balance sheet of the Company as at July 31, 1998 (the "Balance
Sheet"), and the related statement of income and expense for the fiscal year
then ended, and
(c) a segregated balance sheet of the Company as at May 31, 1999 (the "Interim
Balance Sheet") and the related statements of income and expense for the fiscal
year to date.
Such financial statements fairly present the financial condition and the results
of operations of the Company as at the respective dates of and for the periods
referred to in such financial statements, all in accordance with GAAP, subject,
in the case of interim financial statements, to normal recurring year-end
adjustments (the effect of which will not, individually or in the aggregate, be
materially adverse) and the absence of notes (that, if presented, would not
differ materially from those included in the Balance Sheet); the financial
statements referred to in this Section 5.4 reflect the consistent application of
such accounting principles throughout the periods involved.
5.5 BOOKS AND RECORDS
The books of account, stock record books, and other records of the Company are
complete and correct and have been maintained in accordance with sound business
practices, including the maintenance of an adequate system of internal controls.
The Company does not have any minutes of meetings of the stockholders or the
Board of Directors. Within ten (10) days of the Closing, all of those books and
records will be in the possession of the Company.
5.6 TITLE TO PROPERTIES; ENCUMBRANCES
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The Company owns no real property. Other than the leases for the Retail Stores
listed in Schedule A, the Company has no leases of real property. The Company
owns all the personal properties and intangible assets that they purport to own
including those located in the Retail Stores leased by the Company or reflected
as owned in the books and records of the Company, including all of the assets
reflected in the Balance Sheet and the Interim Balance Sheet (except for
personal property sold since the date of the Balance Sheet and the Interim
Balance Sheet, as the case may be, in the ordinary course of business), and all
of the assets purchased or otherwise acquired by the Company since the date of
the Balance Sheet (except for personal property acquired and sold since the date
of the Balance Sheet in the ordinary course of business and consistent with past
practice). Except as specified in section 5.6 of the Disclosure Letter, all
material assets reflected in the Balance Sheet and the Interim Balance Sheet are
free and clear of all Encumbrances.
5.7 Section intentionally omitted.
5.8 ACCOUNTS RECEIVABLE
The Company has no accounts receivables of a material amount or otherwise.
5.9 Section intentionally omitted.
5.10 NO UNDISCLOSED LIABILITIES
Except as set forth in Part 5.10 of the Disclosure Letter, the Company has no
liabilities or obligations of any nature ( whether absolute, accrued,
contingent, or otherwise) except for current liabilities incurred in the
ordinary course of business.
5.11 TAXES
5.11.1 Except as set forth in section 5.11.1 of the Disclosure Letter,
the Company has filed or caused to be filed on a timely basis all
Tax Returns that are or were required to be filed by or with
respect to it, either separately or as a member of a group of
corporations, pursuant to applicable Legal Requirements. All such
Tax Returns are listed in the Disclosure Letter. Sellers have
delivered to Buyer or will within ten days of the date of the
Agreement deliver to Buyer copies of all Tax Returns listed in the
Disclosure Letter, except as noted in the Disclosure Letter. The
Company has paid, or made provision for the payment of, all Taxes
that have or may have become due pursuant to those Tax Returns or
otherwise, or pursuant to any assessment received by Sellers or
the Company.
5.11.2 There exists no proposed tax assessment against the Company or
Seller. Except as provided in the Disclosure Letter, all Taxes
that the Company is or was required by Legal Requirements to
withhold or collect have been duly withheld or
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collected and, to the extent required, have been paid to the
proper Governmental Body or other Person.
5.11.3 Except as stated in part 5.11.3 of the Disclosure Letter, all Tax
Returns filed by (or that include on a consolidated basis) the
Company are true, correct, and complete. There is no tax sharing
agreement that will require any payment by the Company after the
date of the Agreement.
5.12 NO MATERIAL ADVERSE CHANGE
Since the date of the Balance Sheet, there has not been any material adverse
change in the business, operations, assets, or condition of the Company, and no
event has occurred or circumstance exists that may result in such a material
adverse change.
5.13 EMPLOYEE BENEFIT
5.13.1 The only Employee Benefit Plans as that term is defined in Section
3(3) of the Employment Retirement Income Security Act of 1974, as
amended ("Employee Benefit Plans") are maintained, administered or
contributed to by the Company for the benefit of any employee of the
Company are:
(a) IVC Industries, Inc. 401k Retirement Savings Plan
(b) IVC Industries Employee Health Care Plan
5.13.2 Except as provided in the Disclosure Letter, upon the consummation
of the Contemplated Transactions, after Closing neither the Buyer
nor the Company will have any obligation or liabilities to or with
respect to any employee, officer, director, consultant or agent of
the Company that accrued prior to the Closing (i) for payment of
wages, commissions, salaries, fees, bonuses, reimbursable employee
expenses, pensions or contributions under any Employee Benefit Plans
or any other compensation, bonus or perquisites, current or
deferred; (ii) under any health, profit sharing, pension, deferred
compensation, stock option, stock purchase, severance, retainer,
consulting, health, welfare or incentive plan or agreement, any
written or unwritten plan, policy, arrangement or commitment
providing for "fringe benefits" to employees, including, personal
leave, employee discount, perquisites, educational benefit or
similar programs.
5.13.3 No retired employee of the Company is entitled to receive benefits
from the Company or scheduled to receive benefits from the Company
in the future.
5.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS
5.14.1 The Company is in full compliance with each Legal Requirement that
is or was
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applicable to it or to the conduct or operation of its business or
the ownership or use of any of its assets. At all times since June
13, 1997 the Company has been, or upon discovery of any failure to
comply has promptly brought itself into full compliance with each
Legal Requirement that is or was applicable to it or to the conduct
or operation of its business or the ownership or use of any of its
assets
5.14.2 No event has occurred since June 13, 1997 or circumstance exists
that (with or without notice or lapse of time) (A) may constitute or
result in a violation by the Company of, or a failure on the part of
the Company to comply with, any Legal Requirement, or (B) may give
rise to any obligation on the part of the Company to undertake, or
to bear all or any portion of the cost of, any remedial action of
any nature; and
5.14.3 The Company has not received, at any time since June 13, 1997, any
notice or other communication (whether oral or written) from any
Governmental Body or any other Person regarding (A) any actual,
alleged, possible, or potential violation of, or failure to comply
with, any Legal Requirement, or (B) any actual, alleged, possible,
or potential obligation on the part of the Company to undertake, or
to bear all or any portion of the cost of, any remedial action of
any nature.
5.14.4 The Company has obtained any and all required Governmental
Authorization to permit the Company to lawfully conduct and operate
its businesses in the manner they currently conduct and operate such
businesses and to permit the Company to own and use its assets in
the manner in which they currently own and use such assets.
5.15 LEGAL PROCEEDINGS; ORDERS
5.15.1 Other than the Proceedings disclosed in Section 5.15.1 of the
Disclosure Letter (and any Proceeding that may occur as a result of
the Company's delay in paying the Accounts Payable listed on
Schedule B, there is no pending Proceeding:
5.15.1.1 that has been commenced by or against the Company or that
otherwise relates to or may affect the business of, or any
of the assets owned or used by, the Company where the
affect on the business or assets has a potential value
in excess of $30,000; or
5.15.1.2 that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise
interfering with, any of the Contemplated Transactions.
To the Knowledge of Sellers and the Company, (1) no such Proceeding has
been threatened, and (2) no event has occurred or circumstance exists that
may give rise to or
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serve as a basis for the commencement of any such Proceeding.
5.15.2 there is no Order to which the Company, or any of the assets owned
or used by the Company, is subject;
5.15.3 Seller is not subject to any Order that relates to the business of,
or any of the assets owned or used by, the Company; and
5.15.4 no officer, director, agent, or employee of the Company is subject
to any Order that prohibits such officer, director, agent, or
employee from engaging in or continuing any conduct, activity, or
practice relating to the business of the Company.
5.16 ABSENCE OF CERTAIN CHANGES AND EVENTS
Since the date of the Balance Sheet, the Company has conducted its businesses
only in the ordinary course of business and there has not been any:
5.16.1 change in the Company's authorized or issued capital stock; grant
of any stock option or right to purchase shares of capital stock
of the Company; issuance of any security convertible into such
capital stock; grant of any registration rights; purchase,
redemption, retirement, or other acquisition by the Company of any
shares of any such capital stock; or declaration or payment of any
dividend or other distribution or payment in respect of shares of
capital stock;
5.16.2 amendment to the Organizational Documents of the Company;
5.16.3 except in the ordinary course of business, payment or increase by
the Company of any bonuses, salaries, or other compensation to any
stockholder, director, officer, or employee or entry into any
employment, severance, or similar contract with any director,
officer, or employee;
5.16.4 adoption of, or increase in the payments to or benefits under, any
profit sharing, bonus, deferred compensation, savings, insurance,
pension, retirement, or other employee benefit plan for or with
any employees of the Company;
5.16.5 damage to or destruction or loss of any asset or property of the
Company, whether or not covered by insurance, materially and
adversely affecting the properties, assets, business, financial
condition, or prospects of the Company, taken as a whole;
5.16.6 entry into, termination of, or receipt of notice of termination of
(i) any license, distributorship, dealer, sales representative,
joint venture, credit, or similar
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agreement, or (ii) any contract or transaction involving a total
remaining commitment by or to the Company of at least $30,000;
5.16.7 sale (other than sales of inventory in the ordinary course of
business), lease, or other disposition of any asset or property of
the Company or , other than as disclosed in section 5.16.7 of the
Disclosure Letter and mortgage, pledge, or imposition of any lien
or other encumbrance on any material asset or property of the
Company, including the sale, lease, or other disposition of any of
the Intellectual Property Assets;
5.16.8 cancellation or waiver of any existing claims or rights with a
value to the Company in excess of $30,000;
5.16.9 material change in the accounting methods used by the Company;
5.16.10 agreement, whether oral or written, by the Company to do any of
the foregoing, or
5.16.11 increase in inventory levels that is inconsistent with the
Company's ordinary course of business.
5.17 CONTRACTS; NO DEFAULTS
5.17.1 The only Applicable Contracts of the Company that involve
obligations with a value in excess of $1,000 are the leases for the
Retail Stores listed in Exhibit A and an employment contract with
Bill Evans.
5.18 This Section intentionally omitted.
5.19 ENVIRONMENTAL MATTERS
5.19.1 The Company is, and at all times has been since June 13, 1997, in
full compliance with, and has not been and is not in violation of
or liable under, any applicable Environmental Law. Neither the
Seller nor the Company has any basis to expect, nor has any of
them or any other Person for whose conduct they are or may be held
to be responsible received, any actual or threatened order,
notice, or other communication from (i) any Governmental Body or
private citizen acting in the public interest, or (ii) the current
or prior owner or operator of any Facilities, of any actual or
potential violation or failure to comply with any Environmental
Law, or of any actual or threatened obligation to undertake or
bear the cost of any Environmental, Health, and Safety Liabilities
with respect to any of the Facilities or any other properties or
assets (whether real, personal, or mixed) in which the
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Company has had an interest, or with respect to any property or
Facility at or to which Hazardous Materials were generated,
manufactured, refined, transferred, imported, used, or processed
by the Company, or any other Person for whose conduct they are or
may be held responsible, or from which Hazardous Materials have
been transported, treated, stored, handled, transferred, disposed,
recycled, or received.
5.19.2 There are no Hazardous Materials present in the Retail Store.
Neither the Seller, the Company, or any other Person for whose
conduct they are or may be held responsible, has permitted or
conducted, or is aware of, any Hazardous Activity conducted with
respect to the Retail Stores.
5.19.3 The Company is not an "Industrial Establishment" as that term is
defined in the Industrial Site Recovery Act, N.J. Stat. Ann. ss.
13.1K-6 et seq.
5.20 EMPLOYEES
5.20.1 Section 5.20 of the Disclosure Letter contains a complete and
accurate list of the following information for each employee of
the Company, including each employee on leave of absence or layoff
status: name; department, type, rate, status and hire date. Within
10 days of the Closing, the Seller will provide the Buyer with
information for each employee concerning vacation accrued; and
service credited for purposes of vesting and eligibility to
participate under the Company's Employee Benefit Plans.
5.20.2 No employee of the Company is a party to, or is otherwise bound
by, any agreement or arrangement, including any confidentiality,
non competition, or proprietary rights agreement, between such
employee or director and any other Person ("Proprietary Rights
Agreement") that in any way adversely affects or will affect (i)
the performance of his duties as an employee of the Company, or
(ii) the ability of the Company to conduct its business, including
any Proprietary Rights Agreement with Seller or the Company by any
such employee. To Seller's Knowledge, no key employee of the
Company intends to terminate his employment with the Company.
5.21 LABOR RELATIONS; COMPLIANCE
The Company has not been, and is not currently a party to any collective
bargaining or other labor contract.
5.22 INTELLECTUAL PROPERTY
5.22.1 Intellectual Property Assets--The term "Intellectual Property
Assets" includes the
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trademark "Vitamin Specialties" and design, registration
number1880352 issued February 28, 1995, and the trademark "Vitamin
Specialties", registration number 1, 880353 issued February 28,
1995 ("Trademarks"), and trademark rights, if any, acquired
through use by the Company ("Use Marks").
5.22.2 Except as provided in the Disclosure Letter, the Company is the
owner of all right, title, and interest in and to each of the
Intellectual Property Assets, free and clear of all liens,
security interests, charges, encumbrances, equities, and other
adverse claims, and has the right to use without payment to a
third party all of the Intellectual Property Assets.
5.22.3 Trademarks
5.22.3.1 To Seller's knowledge, there is no potentially
interfering trademark or trademark application of any
third party.
5.22.3.2 To Seller's knowledge, no Intellectual Property Right
is infringed or, to Seller's knowledge, has been
challenged or threatened in any way. To Seller's
knowledge none of the Trade Marks or Use Marks used
by the Company infringes or is alleged to infringe
any trade name, trademark, or service mark of any
third party.
5.23 This Section Intentionally Omitted.
5.24 DISCLOSURE
5.24.1 All representations or warranties of Seller in the Agreement,
including, without limitation those made in this section 5, and
all statements in the Disclosure Letter state all material facts
necessary to make the statements herein or therein, in light of
the circumstances in which they were made, not misleading.
5.24.2 There is no fact known to Seller that has specific application to
either Seller or the Company (other than general economic or
industry conditions) that materially adversely affects the assets,
business, financial condition, or results of operations of the
Company that has not been set forth in the Agreement, the
Disclosure Letter, the Balance Sheets, the Interim Financial
Statements, the Leases prior to Closing.
5.25 BROKERS OR FINDERS
Seller and its agents have not incurred any obligation or liability, contingent
or otherwise, for brokerage or finders' fees or agents' commissions or other
similar payment in connection with the Agreement.
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6 REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
6.1 ORGANIZATION AND GOOD STANDING
Buyer is a corporation duly organized, validly existing, and in good standing
under the laws of the State of New Jersey.
6.2 AUTHORITY; NO CONFLICT
6.2.1 The Agreement constitutes the legal, valid, and binding obligation
of Buyer, enforceable against Buyer in accordance with its terms.
Buyer has the absolute and unrestricted right, power, and authority
to execute and deliver the Agreement and to perform its obligations
under the Agreement.
6.2.2 Neither the execution and delivery of the Agreement by Buyer nor the
consummation or performance of any of the Contemplated Transactions
by Buyer will give any Person the right to prevent, delay, or
otherwise interfere with any of the Contemplated Transactions
pursuant to:
6.2.2.1 any provision of Buyer's Organizational Documents;
6.2.2.2 any resolution adopted by the board of directors or the
stockholders of Buyer;
6.2.2.3 any Legal Requirement or Order to which Buyer may be
subject; or
6.2.2.4 any contract to which Buyer is a party or by which Buyer may
be bound.
Buyer is not and will not be required to obtain any consent from any Person and
in connection with the execution and delivery of the Agreement or the
consummation or performance of any of the Contemplated Transactions that will
not have been obtained prior to Closing.
6.3 CERTAIN PROCEEDINGS
There is no pending Proceeding that has been commenced against Buyer and that
challenges, or may have the effect of preventing, delaying, making illegal, or
otherwise interfering with, any of the Contemplated Transactions. To Buyer's
Knowledge, no such Proceeding has been threatened.
6.4 BROKERS OR FINDERS
Buyer and its officers and agents have incurred not incurred any obligation or
liability, contingent
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or otherwise, for brokerage or finders' fees or agents' commissions or other
similar payment in connection with the Agreement and will indemnify and hold
Seller harmless from any such payment alleged to be due by or through Buyer as a
result of the action of Buyer or its officers or agents.
7 CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares and to take the other actions required
to be taken by Buyer at the Closing is subject to the satisfaction, at or prior
to the Closing, of each of the following conditions (any of which may be waived
by Buyer, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS
7.1.1 All of Seller's Representations and Warranties in section 5
(considered collectively), and each of these Representations and
Warranties (considered individually), must be accurate in all
material respects as of the Closing.
7.2 SELLER'S PERFORMANCE
7.2.1 Each document required to be delivered pursuant to Section 4.1 and
7.4 must have been delivered.
7.3 CONSENTS
An agreement satisfactory to the Buyer must be in place by which Seller
agrees that the Closing is contingent upon promptly getting the consents
identified in the Disclosure Letter.
7.4 ADDITIONAL DOCUMENTS
Each of the following documents must have been delivered to Buyer:
7.4.1 a list of the Retail Stores in the form of Schedule A;
7.4.2 a list of Assumed Payables in the form of Schedule B;
7.4.3 a list of the inventory in the Seller's warehouse in Freehold, New
Jersey in the form of Schedule C;
7.4.4 an opinion of Seller's counsel in the form of Schedule D;
7.4.5 the Disclosure Letter complete with appendices in the form of
Schedule E; and
7.4.6 such other documents as Buyer may reasonably request for the purpose
of (i) evidencing the accuracy of any of Seller's Representations
and Warranties, (ii) evidencing the performance by Seller of, or the
compliance by Seller with, any covenant or obligation required to be
performed or complied with by Seller, (iii) evidencing the
satisfaction of any condition referred to in this Section 7, or (iv)
otherwise facilitating the consummation or performance of any of the
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Contemplated Transactions.
8 ADDITIONAL DOCUMENTS OF BUYER
Buyer must have caused the following documents to be delivered to Seller:
8.0.1 such documents as Seller may reasonably request for the purpose of
(i) enabling their counsel to provide the opinion referred to in
Section 7.4. (ii) evidencing the accuracy of any representation or
warranty of Buyer, (iii) evidencing the performance by Buyer of, or
the compliance by Buyer with, any covenant or obligation required to
be performed or complied with by Buyer, (ii) evidencing the
satisfaction of any condition referred to in this Section 8, or (v)
otherwise facilitating the consummation of any of the Contemplated
Transactions.
9 INDEMNIFICATION; REMEDIES
9.1 With the exception of the liabilities listed in Section 5.10 and the
Assumed Payables, Seller does hereby agree to indemnify, defend and save
Company and Buyer harmless of and from any and all claims, demands,
losses, damage (including incidental and consequential damages),
diminution of value, expenses, reasonable attorney fees, causes of
actions, judgments, and liability (collectively, "Damages") arising,
directly or indirectly, from or in connection with:
9.1.1 any breach, misrepresentation or inaccuracy of any representation,
warranty, covenant, or obligation of or made by Seller in the
Agreement, any Exhibit to the Agreement, any supplement to the
Disclosure Letter, or any other certificate or document delivered by
Seller pursuant to the Agreement;
9.1.2 the assignment of the leases following the Closing;
9.1.3 any claim relating to the occupancy, use or operation of the Retail
Stores prior to the Closing;
9.1.4 any product sold or shipped by Company prior to the Closing or any
Retail Inventory or Subject Inventory whenever sold or shipped by
Company unless directly arising from any action of the Company after
the Closing;
9.1.5 any liability of the Company with respect to any Tax year or period
or portion thereof ending on or before the Closing (or for any Tax
year or period beginning before and ending after the Closing to the
extent allocable to the portion of such period beginning before and
ending on the Closing) or for the unpaid Taxes of any Person as a
transferee or successor by contract, or otherwise;
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9.1.6 any other activity or conduct relating to the Business by the
Company or Seller and their Representatives prior to the Closing.
Buyer must inform Seller in writing immediately upon receiving any
knowledge of a claim under this Indemnity Agreement. This obligation of
Seller shall terminate, and Seller shall not be responsible to Buyer for
any indemnification under this Indemnity Agreement after, the date which
is six years after the Closing, provided Buyer has not notified Seller of
any unpaid claim prior to that date.
9.2 Buyer does hereby agree to indemnify, defend and save Seller harmless of
and from any and all claims, demands, losses, damage (including incidental
and consequential damages), diminution of value, expenses, reasonable
attorney fees, causes of actions, judgments, and liability (collectively,
"Damages") arising, directly or indirectly, from or in connection with:
9.2.1 The Assumed Payables, the accrued unpaid vacation as set forth in
the Disclosure Letter, and the retroactive CAM charges as set forth
in the Disclosure Letter.
Seller must inform Buyer in writing immediately upon receiving any
knowledge of a claim under this Indemnity Agreement. This obligation of
Buyer shall terminate, and Buyer shall not be responsible to Seller for
any indemnification under this Indemnity Agreement after, the date which
is six years after the Closing, provided Seller has not notified Buyer of
any unpaid claim prior to that date.
10 BUYER'S GUARANTEE.
Buyer unconditionally guarantees:
10.1 the Company's royalty payment of $10,000 a month for the first thirty six
(36) months, if the conditions for the payment of such minimum royalty
under Section 2.2 are met;
10.2 the Company's payment for the Retail Inventory as called for under Section
3.3 (including any late penalty called for under Section 3.3.2); and
10.3 the Company's payment for the Subject Inventory as called for under
Section 3.4.
irrespective of whether Company terminates the operations of the Business.
11 SELLER'S RELEASE.
Seller in order to induce Buyer to purchase the outstanding capital stock of the
Company pursuant to the Agreement, hereby agrees as follows:
11.1 Seller, on behalf of itself, hereby releases and forever discharges the
Buyer and the Company and each of their respective stockholders
(individually, a "Releasee" and
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collectively, "Releasees") from any and all claims, demands, Proceedings,
causes of action, Orders, obligations, contracts, agreements, debts and
liabilities whatsoever, whether known or unknown, suspected or
unsuspected, both at law and in equity, which Seller or any of its
affiliates now has, have ever had or may hereafter have against the
respective Releasees arising contemporaneously with or prior to the
Closing or on account of or arising out of any matter, cause or event
occurring contemporaneously with or prior to the Closing, including, but
not limited to, any rights to indemnification or reimbursement from the
Company, whether pursuant to their respective Organizational Documents,
contract or otherwise and whether or not relating to claims pending on, or
asserted after, the Closing Date; provided, however, that nothing
contained herein shall operate to release any obligations of Buyer arising
under the Agreement or any obligation which obligation has been disclosed
in the Disclosure Letter.
11.2 Seller hereby irrevocably covenants to refrain from, directly or
indirectly, asserting any claim or demand, or commencing, instituting or
causing to be commenced, any proceeding of any kind against any Releasee,
based upon any matter purported to be released hereby.
11.3 Without in any way limiting any of the rights and remedies otherwise
available to any Releasee, Seller shall indemnify and hold harmless each
Releasee from and against all loss, liability, claim, damage (including
incidental and consequential damages) or expense (including costs of
investigation and defense and reasonable attorney's fees) whether or not
involving third party claims, arising directly or indirectly from or in
connection with (i) the assertion by or on behalf of the Seller or any of
its Related Persons of any claim or other matter purported to be released
pursuant to this Release and (ii) the assertion by any third party of any
claim or demand against any Releasee which claim or demand arises directly
or indirectly from, or in connection with, any assertion by or on behalf
of the Seller or any of their Affiliates against such third party of any
claims or other matters purported to be released pursuant to this Release.
12 This section intentionally omitted.
13 GENERAL PROVISIONS
13.1 EXPENSES
Except as otherwise expressly provided in this Agreement, each party to this
Agreement will bear its respective expenses incurred in connection with the
preparation, execution, and performance of this Agreement and the Contemplated
Transactions, including all fees and expenses of agents, representatives,
counsel, and accountants. In the event of termination of this Agreement, the
obligation of each party to pay its own expenses will be subject to any rights
of such party arising from a breach of this Agreement by another party.
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13.2 PUBLIC ANNOUNCEMENTS
Any public announcement or similar publicity with respect to this Agreement or
the Contemplated Transactions will be issued, if at all, at such time and in
such manner as Buyer and Seller jointly determine. Seller and Buyer will consult
with each other concerning the means by which the Company's employees,
customers, and suppliers and others having dealings with the Company will be
informed of the Contemplated Transactions, and Buyer will have the right to be
present for any such communication.
13.3 This section intentionally omitted.
13.4 NOTICES
All notices, consents, waivers, and other communications under this Agreement
must be in writing and will be deemed to have been duly given when (a) delivered
by hand (with written confirmation of receipt), (b) sent by telecopier (with
written confirmation of receipt), provided that a copy is mailed by registered
mail, return receipt requested, or (c) when received by the addressee, if sent
by a nationally recognized overnight delivery service (receipt requested), in
each case to the appropriate addresses and telecopier numbers set forth below
(or to such other addresses and telecopier numbers as a party may designate by
notice to the other parties):
Seller: IVC Industries, Inc.
500 Halls Mill Road
Freehold, New Jersey 07728
Attention: Mr. E. Joseph Edell, Chief Executive Officer
Facsimile No.: (732) 308-9793
Buyer: Archon Vitamin Corporation
209 40th Street
Irvington, New Jersey 07111
Attention: Mr. Thomas F. Pugsley, Presdent
Facsimile No.: (973) 371-1277
13.5 JURISDICTION; SERVICE OF PROCESS
Any action or proceeding seeking to enforce any provision of, or based on any
right arising out of, this Agreement may be brought against any of the parties
in the courts of the State of New Jersey (state and federal) and each of the
parties consents to the jurisdiction of such courts in any
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such action or proceeding and waives any objection to venue laid therein.
Process in any action or proceeding referred to in the preceding sentence may be
served on any party anywhere in the world. In the event of judicial intervention
seeking enforcement of this Agreement, the prevailing party shall be entitled to
collect from the other party any and all attorneys' fees and costs relating to
such action.
13.6 FURTHER ASSURANCES
The parties agree (a) to furnish upon request to each other such further
information, (b) to execute and deliver to each other such other documents, and
(c) to do such other acts and things, all as the other party may reasonably
request for the purpose of carrying out the intent of this Agreement and the
documents referred to in this Agreement.
13.7 WAIVER
The rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by any party in exercising any
right, power, or privilege under this Agreement or the documents referred to in
this Agreement will operate as a waiver of such right, power, or privilege, and
no single or partial exercise of any such right, power, or privilege will
preclude any other or further exercise of such right, power, or privilege or the
exercise of any other right, power, or privilege.
13.8 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements between the parties with respect
to its subject matter (including the Letter of Intent between Buyer and Seller
dated April 15, 1999) and constitutes (along with the documents referred to in
this Agreement) a complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter. This Agreement may not
be amended except by a written agreement executed by the party to be charged
with the amendment.
13.9 DISCLOSURE LETTER
13.9.1 The disclosures in the Disclosure Letter must relate only to the
Representations and Warranties in section 5 of this Agreement to
which they expressly relate and not to any other Representation or
Warranty in this Agreement.
13.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
Neither party may assign any of its rights under this Agreement without the
prior written consent of the other parties, which will not be unreasonably
withheld. Subject to the preceding sentence, this Agreement will apply to, be
binding in all respects upon, and inure to the benefit of the successors and
permitted assigns of the parties. Nothing expressed or referred to in this
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Agreement will be construed to give any Person other than the parties to this
Agreement any legal or equitable right, remedy, or claim under or with respect
to this Agreement or any provision of this Agreement. This Agreement and all of
its provisions and conditions are for the sole and exclusive benefit of the
parties to this Agreement and their successors and assigns.
13.11 SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by any court
of competent jurisdiction, the other provisions of this Agreement will remain in
full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
13.12 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided for convenience only and
will not affect its construction or interpretation. All references to "Section"
or "Sections" refer to the corresponding Section or Sections of this Agreement.
All words used in this Agreement will be construed to be of such gender or
number as the circumstances require. Unless otherwise expressly provided, the
word "including" does not limit the preceding words or terms.
13.13 This section intentionally removed.
13.14 GOVERNING LAW
This Agreement will be governed by the laws of the State of New Jersey without
regard to conflicts of laws principles.
13.15 COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first written above.
Buyer: Archon Vitamin Corporation
By: /s/ Thomas F. Pugsley
---------------------------------
Thomas F. Pugsley
President
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Seller: IVC Industries, Inc.
By: /s/ E. Joseph Edell
---------------------------------
E. Joseph Edell
Chief Executive Officer
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List of Schedules
A. Retail Stores
B. Payables Schedule
C. Vitamin Specialties Specific Inventory in Freehold Warehouse
D. Opinion of Seller's Counsel
E. Disclosure Letter
F. July Rent
Closing Agreement
This Agreement ("Closing Agreement") dated July 13, 1999 by and between
IVC Industries, Inc. ("Seller"), a Delaware Corporation and Archon Vitamin
Corporation ("Buyer"), a New Jersey Corporation. This Closing Agreement is an
amendment to the Stock Purchase Agreement dated July 13, 1999 between Buyer and
Seller for the acquisition of Vitamin Specialties Corp. Any capitalized terms
not defined herein have the definitions given to them in the Stock Purchase
Agreement.
The parties, intending to be legally bound, agree as follows:
A. Acquisition Closed Subject to Conditions. Seller and Buyer agree
that the acquisition of Vitamin Specialties Corp. pursuant to the
Stock Purchase Agreement shall be treated as effective as of
midnight tonight, with Buyer assuming operations as of that time,
but that such acquisition is conditional and shall, to the extent
possible be unwound, if the following post Closing Conditions set
forth below are not satisfied. For purposes of the Closing of the
Stock Purchase Agreement the conditions set forth below are waived
by Buyer subject to the terms of this Closing Agreement.
1. Unwind. If the parties are unable to satisfy the Post-Closing
Conditions by the time indicated herein, or as otherwise extended by
the parties:
a. the Stock Purchase Agreement shall be null and void;
b. Seller shall return all payments received from Buyer, less
amounts representing Seller's Manufacturing Cost of inventory
sold by the Company since Closing;
c. Buyer shall return all assets of the Company acquired from
Seller free and clear of any Encumbrance placed on the
property after July 13, 1999 unrelated to the Business of the
Company less inventory sold during the ordinary course of
business;
d. Seller shall be entitled to all revenues of the Business from
the Closing Date until the date the Stock Purchase Agreement
is determined to be null and void;
e. Buyer shall be entitled to a reimbursement of all
contributions made to or on behalf of the Company since the
Closing Date;
f. Seller shall be responsible for all outstanding liabilities of
the Company and shall indemnify Buyer for any and all
guarantees Buyer has extended on behalf of the Company.
2. Post -Closing Conditions
a. Seller shall provide Buyer with written evidence of Seller's
right to
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terminate the liens of Chase Manhattan Bank and/or Hoffman-La
Roche with respect to the stock of Vitamin Specialties Corp.
and all of Vitamin Specialties Corp.'s assets by July 31,
1999. Promptly thereafter the Seller shall removed said liens
and take all necessary steps taken to terminate UCC filings in
connection therewith.
b. Seller will deliver to Buyer certificates representing the
Shares, duly endorsed (or accompanied by duly executed stock
powers) and free of any restrictive legends by August 15,
1999.
c. Seller will provide Buyer with a UCC-3 termination statement
with respect to Seller's lien on Buyer's assets by July 16,
1999.
d. The requirement of notice, consent, approval, release or other
authorization listed in section 5.2 of the Disclosure Letter,
with the exception of any consents, approvals or releases of
any landlord of any Retail Store, shall be complied with by
December 1, 1999.
e. Seller will have completed all necessary actions to cancel the
assignment of the Company trademarks to The Chase Manhattan
Bank and to transfer all rights in the trademarks to the
Company by December 1, 1999.
3. Waiver of Condition. Buyer agrees to waive the following conditions
to Closing contained in the Stock Purchase Agreement:
a. Delivery of the Stock Certificates and all of the assets of
the Company free and clear of all Encumbrances at Closing.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first written above.
Buyer: Archon Vitamin Corporation
By: /s/ Thomas F. Pugsley
----------------------------------
Thomas F. Pugsley
President
Seller: IVC Industries, Inc.
By: /s/ E. Joseph Edell
----------------------------------
E. Joseph Edell
Chief Executive Officer
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