SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(C)
OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14c-5(d)(2))
[ ] Definitive Information Statement
DYNAMIC HEALTH PRODUCTS, INC.
------------------------------------------------
(Name of Registrant As Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and
0-11.
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction
applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the amount
on which the filing fee is calculated and state how it was
determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
DYNAMIC HEALTH PRODUCTS, INC.
6950 BRYAN DAIRY ROAD
LARGO, FL 33777
Dear Fellow Shareholders:
This Information Statement is being furnished in connection with the
approval of the sale of Becan Distributors, Inc. ("Becan"), a wholly-owned
subsidiary of Dynamic Health Products, Inc. ("Dynamic" or the "Company") and the
re-election of Dr. Rakesh K. Sharma and Martin A. Traber to Dynamic's Board of
Directors, all of which were approved by the Written Consent of the record
holders of more than a majority of the issued and outstanding shares of voting
securities of the Company. Dynamic, a Florida corporation, has entered into a
letter of intent to sell 100% of the capital stock of Becan, an Ohio
corporation, to Nutriceuticals.com Corporation, a Nevada corporation. This
Information Statement is being provided to you pursuant to Rule 14c-2 under the
Securities Exchange Act of 1934.
Dated: September , 1999.
Sincerely,
DYNAMIC HEALTH PRODUCTS, INC.
By: /s/ JUGAL K. TANEJA
------------------------------------
As Chairman of the Board
<PAGE>
TABLE OF CONTENTS
PAGE
----
Letter to Shareholders.......................................... Cover
General......................................................... 1
Voting Securities............................................... 2
Executive and Director Compensation............................. 2
Principal Shareholders.......................................... 3
Matters Acted Upon.............................................. 5
Sale of Becan............................................ 5
Re-election of Directors................................. 6
Attachments:
Notice of Shareholder Written Consent to Action.......... A-1
Shareholder Written Consent to Action.................... A-2
o Letter of Intent: "Exhibit "A" to Shareholder Written Consent
to Action."
<PAGE>
PRELIMINARY
INFORMATION STATEMENT
WITH REGARD TO WRITTEN CONSENT OF SHAREHOLDERS
DYNAMIC HEALTH PRODUCTS, INC.
THIS INFORMATION STATEMENT IS PROVIDED TO YOU TO COMPLY
WITH THE REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED
NOT TO SEND US A PROXY.
GENERAL
The date of this Information Statement is September , 1999. This
Information Statement is first being mailed to shareholders on or about
September , 1999.
The principal executive offices of Dynamic Health Products, Inc. (the
"Company") are located at 6950 Bryan Dairy Road, Largo, FL 33777.
Management of the Company has determined that it is beneficial for the
Company and its shareholders to sell Becan Distributors, Inc. ("Becan"), a
wholly-owned subsidiary of the Company, to Nutriceuticals.com Corporation
("Nutriceuticals"). The Company has entered into a Letter of Intent to sell all
of the shares of capital stock of Becan to Nutriceuticals upon the terms
described under "Matters to be Acted Upon - Sale of Becan," below.
The Company's Bylaws provide that its directors are divided into three
classes, with one class being up for re-election each year. Management has also
nominated Dr. Rakesh K. Sharma and Martin A. Traber, whose terms as directors
expire at the annual meeting for the fiscal year ended March 31, 1999, for
re-election to the Board of Directors.
The consent of the holders of a majority of the total outstanding
voting shares was necessary to elect the directors. The Company does not believe
that the sale of Becan constitutes the sale of all or substantially all of the
assets of the Company which would require the approval of the Company's
shareholders. If the approval of the Company's shareholders had been required,
the affirmative vote of a majority of all votes entitled to be cast would have
been required. The owners of 2,340,541 shares of Common Stock, or approximately
60.87% of the issued and outstanding voting shares of the Company have approved
by Written Consent to Action (the "Consent") the sale of Becan and the election
of the directors. The Consent is not effective until twenty calendar days after
this Information Statement is mailed to the remaining shareholders who are not
signatories to the Consent. A copy of the executed form of the Consent is
attached to the Notice of Shareholder Written Consent to Action, which is
attached to this Information Statement as Attachment "A." A copy of the
Company's Annual Report on Form 10-KSB, for the fiscal year ended March 31,
1999, accompanies this Information Statement.
1
<PAGE>
VOTING SECURITIES
The outstanding classes of voting securities of the Company are its
common stock, $.01 par value (the "Common Stock") and its Series A Convertible
Preferred Stock, $.01 par value (the "Series A Preferred Stock"). The holders of
Common Stock and the holders of Series A Preferred Stock vote as one class on
all matters upon which they are entitled to vote. Each share of Common Stock and
each share of Series A Preferred Stock are entitled to one vote on all matters
upon which the shareholders are entitled to vote. At the close of business on
August 20, 1999, 3,845,224 shares of Common Stock and 310,000 shares of Series A
Preferred Stock were issued, outstanding, and entitled to vote.
No record date was established for the determination of shareholders
entitled to give their consent because none of the Company's voting securities
are traded publicly. The determination of the security holders entitled to give
consent was made based on the shareholder records of the Company and its
transfer agent.
EXECUTIVE AND DIRECTOR COMPENSATION
The following table sets forth certain information regarding
compensation earned by Jugal K. Taneja, William L. LaGamba, Paul A. Santostasi,
and Kotha S. Sekharam, the "Named Executive Officers." Mr. Taneja served as the
Company's Chief Executive Officer until June, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------
NAME AND PRINCIPAL POSITION FISCAL
--------------------------- YEAR SALARY BONUS
------ ------ ------
<S> <C> <C> <C>
Jugal K. Taneja, Chairman...................... 1999 $ 75,000 $ -0-
1998 $ 75,000 $5,414
1997 $ -0- $ -0-
William L. LaGamba, CEO........................ 1999 $106,735 $ -0-
1998 $110,485 $ -0-
Paul A. Santostasi............................. 1999 $121,711 $ -0-
Kotha S. Sekharam.............................. 1999 $ 75,000 $ -0-
1998 $ 75,000 $5,414
1997 $ 52,500 $ -0-
</TABLE>
The Company's Articles of Incorporation provide that the Company will
indemnify its officers, directors and other eligible persons to the fullest
extent permitted under the laws of the
2
<PAGE>
State of Florida. The Company has also entered into indemnification agreements
with each of its current directors and executive officers which will provide for
indemnification of, and advancement of expenses to, such persons for expenses
and liability incurred by them by reason of the fact that they are or were a
director, officer, shareholder of the Company including indemnification under
circumstances in which indemnification and advancement of expenses are
discretionary under Florida law.
The Company believes that it is the position of the Securities and
Exchange Commission that, insofar as the foregoing provisions may be invoked to
disclaim liability for damages arising under the Securities Act of 1933, the
provisions are against public policy as expressed in the Securities Act of 1933
and are, therefore, unenforceable.
PRINCIPAL SHAREHOLDERS
The following table sets forth the beneficial ownership of Company
voting securities as of August 23, 1999, by (i) each person known by the Company
to beneficially own 5% or more of the outstanding shares of voting securities,
(ii) each director of the Company, (iii) the Named Executive Officers of the
Company, and (iv) all directors and executive officers of the Company as a
group. The information set forth in the table and accompanying footnotes has
been furnished by the named beneficial owners. An asterisk denotes beneficial
ownership of less than 1%. The Company's voting securities are its common stock
and its Series A Convertible Preferred Stock, which vote together as one voting
group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL
OWNERSHIP(2) PERCENT
TITLE OF CLASS NAME OF BENEFICIAL OWNER(1) ------------- OF CLASS
-------------- --------------------------- --------
<S> <C> <C> <C>
Common Stock Jugal K. Taneja(3)....................... 1,172,927 30.5%
Common Stock Manju Taneja(4).......................... 432,851 11.3%
Common Stock William L. LaGamba(5).................... 435,000 11.3%
Common Stock Michele LaGamba(6) 435,000 11.3%
Common Stock Mihir K. Taneja.......................... 369,999 9.6%
Common Stock Mandeep Taneja........................... 369,999 9.6%
Common Stock EuroFactores International, Inc. 200,000 5.2%
c/o Kraus
140 Birmensdorfer Str.
Zurich 8003 Switzerland
Common Stock Kotha S. Sekharam(7)..................... 115,616 3.0%
Common Stock Martin A. Traber......................... 10,000 *
100 N. Tampa Street, 27th floor
Tampa, FL 33602
Common Stock All executive officers and directors..... 2,103,542 54.7%
as a group (8 persons)(8)
</TABLE>
3
<PAGE>
<TABLE>
<S> <C> <C> <C>
Preferred Stock U.S. Diversified Technologies, Inc. 310,000 8.1%
c/o Paul A. Santostasi
6950 Bryan Dairy Road
Largo, FL 33777
</TABLE>
- --------------
(1) Except as otherwise indicated, the address of each beneficial owner is
c/o the Company at 6950 Bryan Dairy Road, Largo, FL 33777.
(2) Beneficial ownership is determined in accordance with the rules of the
Commission and generally includes voting or investment power with respect
to the shares shown. Except where indicated by footnote and subject to
community property laws where applicable, the persons named in the table
have sole voting and investment power with respect to all shares of
voting securities shown as beneficially owned by them.
(3) Includes 413,185 shares beneficially owned by Manju Taneja, Mr. Taneja's
wife, as to which Mr. Taneja exercises no investment or voting power and
disclaims beneficial ownership. Also includes (i) 670,076 shares owned by
Carnegie Capital, Ltd. and (ii) 70,000 shares owned by First Delhi Family
Partnership, Ltd. Mr. Taneja is the general partner of Carnegie Capital,
Ltd. and of First Delhi Family Partnership, Ltd. As such, Mr. Taneja
holds sole voting and investment power with respect to the shares held of
record by Carnegie Capital, Ltd. and First Delhi Family Partnership, Ltd.
Additionally, Mr. Taneja holds options to purchase 500,000 shares of
common stock, none of which may be exercised within 60 days.
(4) Includes 19,666 shares beneficially owned by Jugal K. Taneja, Mrs.
Taneja's husband, as to which Mrs. Taneja exercises no investment or
voting power and disclaims beneficial ownership. Excludes (i) 670,076
shares owned by Carnegie Capital, Ltd., and (ii) 70,000 shares owned by
First Delhi Family Partnership, Ltd., as to which Mrs. Taneja exercises
no investment or voting power and disclaims beneficial ownership.
(5) Includes 196,000 shares owned by Michele LaGamba, Mr. LaGamba's wife, as
to which Mr. LaGamba exercises no investment or voting power and
disclaims beneficial ownership. Also includes 126,000 shares held by
Mr. LaGamba as custodian for their minor children.
(6) Includes 113,000 shares owned by William L. LaGamba, Mrs. LaGamba's
husband and 126,000 shares held by Mr. LaGamba as custodian for their
minor children, as to which Mrs. LaGamba exercises no investment or
voting power and disclaims beneficial ownership.
(7) Includes 10,000 shares owned by Dr. Sekharam's wife, as to which Dr.
Sekharam exercises no investment or voting power and disclaims beneficial
ownership.
(8) Paul A. Santostasi, a director and the Vice chairman of the Company, does
not beneficially own any common stock. Mr. Santostasi holds options to
purchase 200,000 shares of
4
<PAGE>
common stock, none of which may be exercised within 60 days.
Mr. Santostasi is a director, the president and the owner of 30% of the
outstanding voting securities of U.S. Diversified Technologies, Inc.
U.S. Diversified Technologies, Inc. owns 310,000 shares of Company Series
A Preferred Stock, each of which is entitled to one vote. As such,
Mr. Santostasi shares investment and voting power with respect
to the shares of Series A Preferred Stock held of record by U.S.
Diversified Technologies, as to which he disclaims beneficial ownership.
Rakesh K. Sharma, M.D., a director of the Company, does not own any
common shares.
MATTERS ACTED UPON
The sale of Becan and the election of the directors were approved by
the written consent of the holders of record of approximately 60.87% of the
Company's issued and outstanding shares of Common Stock and Series A Preferred
Stock, voting as one class.
The Company is required, pursuant to Section 607.0704 of the Florida
Business Corporation Act to give notice to those shareholders who have not
consented in writing to the matters described herein. That notice is attached
hereto as Attachment "A."
SALE OF BECAN
Management of the Company has determined that it is beneficial for the
Company and all of its shareholders to sell all of the capital stock of Becan
to Nutriceuticals. The Company's Board of Directors has approved the Company
entering into a Letter of Intent providing for the sale upon the following
terms:
o The purchase price would consist of the following consideration, paid
in the following manner:
a) at the Closing, Nutriceuticals would pay Dynamic the sum of
$2,000,000 in cash;
b) at the Closing, Nutriceuticals would issue to Dynamic
4,000,000 shares of Nutriceuticals common stock (the "Common
Stock") par value $.001 per share (or 2,000,000 shares after
the buyer effects a one-for-two reverse stock split approved
by the Board of Directors);
c) at the Closing, Nutriceuticals would deposit with a mutually
acceptable escrow agent 2,000,000 shares of Common Stock,
(or 1,000,000 shares after Nutriceuticals effects a
one-for-two reverse stock split approved by its Board of
Directors) which shares (the "Additional Consideration")
would be issuable at a future date to Dynamic upon the
attainment by Nutriceuticals of certain projected revenues
and gross margins for the years ending 2000 and 2001.
If Beacon has a gross margin of at least 2.6% for the fiscal year
ending March 31, 2000 and 2.7% for the fiscal year ending March 31, 2001, then
the Additional Consideration shall be computed as follows:
a) For the fiscal year ending March 31, 2000, the Additional
Consideration shall be the number of shares which is the
product 500,000 multiplied by the quotient obtained from an
equation in which the numerator shall be any amount, if
any, by which Dynamic's actual net revenues for the fiscal
year ended March 31, 2000 exceeds the Minimum Net Revenues
(as defined below), and the denominator shall be $31.5
million.
b) For the fiscal year ended March 31, 2001, the Additional
Consideration shall be that number of shares which is the
product 500,000 multiplied by the quotient obtained from an
equation in which the numerator shall be the amount, if
any, by which the Dymanic's actual net revenues for the
fiscal year ended March 31, 2001 exceeds the Minimum Net
Revenues, and the demoninator shall be $27.5 million.
c) Minumum Net Revenues shall be $31 million and $62.5 million
for the fiscal years ending March 31, 2000 and March 31,
2001, respectively. The term "Net Revenues" means sales
less sales discounts.
The Company's Board of Directors authorized a negotiating committee
consisting of Mr. LaGamba and Dr. Sharma to negotiate the terms of a definitive
acquisition agreement, which will be submitted to the Company's Board of
Directors for approval before execution by the Company.
5
<PAGE>
RE-ELECTION OF DIRECTORS
The Restated Articles (a) classify the Board of Directors into three
classes, as nearly equal in number as possible, each of which, after an interim
arrangement, will serve for three years, with one class being elected each year.
This being the case, management also seeks shareholder approval to elect Dr.
Sharma and Mr. Traber, who were up for re-election during the annual meeting for
the fiscal year ended March 31, 1999, to the Board.
_____________________________
6
<PAGE>
ATTACHMENT "A" TO INFORMATION STATEMENT
NOTICE OF SHAREHOLDER WRITTEN CONSENT TO ACTION
OF
THE SHAREHOLDERS
OF
DYNAMIC HEALTH PRODUCTS, INC.
To: Shareholders of Dynamic Health Products, Inc.
The attached copy of the Shareholder Written Consent to Action
("Consent") was signed by persons holding at least a majority of the issued and
outstanding shares of voting stock of Dynamic Health Products, Inc. (the
"Corporation"). The Consent approved (i) Sale of Becan Distributors, Inc., a
wholly-owned subsidiary of the Company, to Nutriceuticals.com Corporation, and
(ii) the re-election of Dr. Sharma and Mr. Traber to the Corporation's Board of
Directors.
The Consent is subject to and the actions taken pursuant thereto are
not effective until twenty days after the Corporation has filed with the
Securities and Exchange Commission an Information Statement describing the
actions taken in the Consent.
Dated this 23rd day of August, 1999.
DYNAMIC HEALTH PRODUCTS, INC.
By: /s/JUGAL K. TANEJA
-------------------------------------
Jugal K. Taneja, Chairman of the Board
A-1
<PAGE>
SHAREHOLDER WRITTEN CONSENT TO ACTION
The undersigned, as the holders of at least a majority of the issued
and outstanding shares of Common Stock and Series A Convertible Preferred Stock,
of Dynamic Health Products, Inc., a Florida corporation (the "Company") voting
as one class, agree, adopt, consent to, and take the following actions under
Section 607.0704 of the Florida Business Corporation Act (the "Act"):
1. The undersigned waive all formal requirements, including the necessity
of holding a formal or informal meeting and any requirement that notice of such
meeting be given.
2. The undersigned take the following corporate actions:
WHEREAS, it has been determined that it is in the
best interests of the Company for it to (i) approve the sale to
Nutriceuticals.com Corporation of Becan Distributors, Inc., an Ohio
corporation ("Becan") upon the terms set forth in the Letter of Intent
attached hereto as Exhibit "A".
WHEREAS, two of the Company's directors are up for
election in 1999.
NOW, THEREFORE:
BE IT RESOLVED, that the sale of Becan to
Nutriceuticals is approved.
BE IT FURTHER RESOLVED, that this Written Consent
shall constitute the Company's 1999 annual meeting of shareholders and
that Dr. Rakesh K. Sharma and Martin A. Traber be re-elected to the
Board for a term which will expire at the 2002 annual meeting of
shareholders.
A-2
<PAGE>
SIGNATURE PAGE TO SHAREHOLDER WRITTEN CONSENT TO ACTION
The undersigned execute the foregoing Shareholder Action by Written
Consent for the purpose of giving their consent as of the 20th day of August,
1999.
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES
---- COMMON STOCK
OWNED OF RECORD
---------------
<S> <C> <C>
/s/ MANJU TANEJA 413,185
- -------------------------
Manju Taneja
/s/ JUGAL K. TANEJA 19,666
- -------------------------
Jugal K. Taneja
/s/ MIHIR K. TANEJA 369,999
- -------------------
Mihir K. Taneja
/s/ MANDEEP TANEJA 369,999
- -------------------
Mandeep Taneja
/s/ WILLIAM L. LAGAMBA 196,000
- ----------------------
William L. LaGamba
/s/ WILLIAM L. LAGAMBA, 126,000
- -----------------------
William L. LaGamba, as custodian
Carnegie Capital, Ltd.
By: /s/ JUGAL K. TANEJA 670,076
--------------------
Jugal K. Taneja, general partner
First Delhi Family Partnership, Ltd.
By: /s/ JUGAL K. TANEJA 70,000
--------------------
Jugal K. Taneja, general partner
/s/ KOTHA S. SEKHARAM 105,616
- --------------------- ---------
Kotha S. Sekharam
% OF VOTING SECURITIES
----------------------
Total 2,340,541 60.87%
=========
Total issued and outstanding shares of common stock as of March 31, 1999: 3,535,224
Total issued and outstanding shares of Series A Convertible Preferred stock as
of March 31, 1999: 310,000
----------
Total voting securities: 3,845,224
=========
</TABLE>
<PAGE>
EXHIBIT "A" TO SHAREHOLDER WRITTEN CONSENT TO ACTION
LETTER OF INTENT
September 2, 1999
Dynamic Health Products, Inc.
6950 Bryan Dairy Road
Largo, Florida 33777
Re: Proposal to Purchase Stock of Becan Distributors, Inc.
Gentlemen:
This letter is intended to summarize the principal terms of a proposal
being considered by Nutriceuticals.com Corporation, a Nevada corporation (the
"Buyer"), regarding its possible acquisition of all of the outstanding capital
stock of Becan Distributors, Inc. (the "Company") from Dynamic Health Products,
Inc., a Florida corporation that is the Company's sole stockholder (the
"Seller"). In this letter, (i) the Buyer and the Seller are sometimes called the
"Parties," (ii) the Company and its subsidiary are sometimes called the "Target
Companies," and (iii) the Buyer's possible acquisition of the stock of the
Company is sometimes called the "Possible Acquisition." This letter supercedes
the August 12, 1999 Letter of Intent.
PART ONE
The Parties wish to commence negotiating a definitive written
acquisition agreement providing for the Possible Acquisition (a "Definitive
Agreement"). To facilitate the negotiation of a Definitive Agreement, the
Parties request that the Buyer's counsel prepare an initial draft. The execution
of any such Definitive Agreement would be subject to the satisfactory completion
of the Buyer's ongoing investigation of the Target Companies' business, and
would also be subject to approval by the Buyer's Board of Directors.
Based on the information currently known to the Buyer, it is proposed
that the Definitive Agreement include the following terms:
1. BASIC TRANSACTION
The Seller would sell all of the outstanding capital stock of the
Company to the Buyer at the price (the "Purchase Price") set forth in Paragraph
2 below.
1
<PAGE>
2. PURCHASE PRICE
The Purchase Price would consist of the following consideration, paid
in the following manner:
(a) at the Closing, the Buyer would pay the Seller the sum of $
2,000,000 in cash;
(b) at the Closing, the Buyer would issue to the Seller 4,000,000
shares of the Buyer's Common Stock, par value $.001 per share (or
2,000,000 shares after the Buyer effects a one-for-two reverse
stock split approved by its Board of Directors);
(c) at the Closing, the Buyer would deposit with a mutually acceptable
escrow agent 2,000,000 shares of Common Stock (or 1,000,000 shares
after the Buyer effects a one-for-two reverse stock split approved
by its Board of Directors), which shares would be issuable at a
future date to Seller upon the attainment by the Target Companies
of certain projected revenues and gross margins for the fiscal
years ending 2000 and 2001.
3. OTHER TERMS
The Seller would make comprehensive representations and warranties to
the Buyer, and would provide comprehensive covenants, indemnities and other
protections for the benefit of the Buyer. The consummation of the contemplated
transactions by the Buyer would be subject to the satisfaction of various
customary and other conditions, including but not limited to the approval of the
Possible Acquisition by the Parties' respective Boards of Directors, and by
their respective shareholders, if required.
PART TWO
The following paragraphs of this letter (the "Binding Provisions") are
the legally binding and enforceable agreements of the Buyer and each Seller.
1. ACCESS
During the period from the date this letter is signed by the Seller
(the "Signing Date") until the date on which either Party provides the other
Party with written notice that negotiations toward a Definitive Agreement are
terminated (the "Termination Date"), the Seller will afford the Buyer full and
free access to each Target Company, its personnel, properties, contracts, books
and records, and all other documents and data.
2. EXCLUSIVE DEALING
Until the later of (1) 90 days after the Signing Date or (ii) the
Termination Date:
2
<PAGE>
(a) the Seller will not and will cause the Target Companies not to,
directly or indirectly, through any representative or otherwise,
solicit or entertain offers from, negotiate with or in any manner
encourage, discuss, accept, or consider any proposal of any other
person relating to the acquisition of the Shares or the Target
Companies, their assets or business, in whole or in part, whether
directly or indirectly, through purchase, merger, consolidation,
or otherwise (other than sales of inventory in the ordinary
course); and
(b) The Seller will immediately notify the Buyer regarding any contact
between the Sellers, any Target Company or their respective
representatives and any other person regarding any such offer or
proposal or any related inquiry.
3. BREAK-UP EXPENSES
(a) If (i) the Seller breaches Paragraph 2 of this Part II or the
Seller provides to the Buyer written notice that negotiations
toward a Definitive Agreement are terminated, and (ii) within six
months after the date of such breach or the Termination Date, as
the case may be, either Seller or one or more of the Target
Companies signs a letter of intent or other agreement relating to
the acquisition of a material portion of the Shares or of the
Target Companies, their assets, or business, in whole or in part,
whether directly or indirectly, through purchase, merger,
consolidation, or otherwise (other than sales of inventory or
immaterial portions of the Target Companies' assets in the
ordinary course) and such transaction is ultimately consummated
(an "Alternative Transaction"), or (iii) if Seller terminates the
Possible Acquisition for any reason other than the failure of the
Company's proposed public offering that is the subject of a
Registration Statement on Form SB-2, filed with the Securities and
Exchange Commission on June 29, 1999, relating to the sale of
shares of Common Stock (the "Offering"), then, immediately upon
the closing of such Alternative Transaction or immediately upon
such termination of the Possible Acquisition, the Seller will pay,
or cause the Target Companies to pay, to the Buyer all of Buyer's
legal, accounting and other expenses incurred in connection with
the Possible Acquisition. This will not serve as the exclusive
remedy to the Buyer under this letter in the event of a breach by
the Sellers of Paragraph 2 of this Part Two or any other of the
Binding Provisions, and the Buyer will be entitled to all other
rights and remedies provided by law or in equity.
(b) If Buyer provides to Seller written notice that negotiations
toward a Definitive Agreement are terminated, except where such
termination is due to the fault of the Seller, or due to the
Seller's failure to satisfy the material terms of and conditions
to the consummation of the Possible Acquisition, then, Buyer will
be responsible for and bear Seller's expenses incurred in
connection with the audit and the appraisal of the Target
Companies, and all of Seller's legal expenses incurred in
connection with the Possible Acquisition.
3
<PAGE>
4. CONDUCT OF BUSINESS
During the period from the Signing Date until the Termination Date, the
Seller shall cause the Target Companies to operate its business in the ordinary
course and to refrain from any extraordinary transactions.
5. CONFIDENTIALITY
Except as and to the extent required by law, the Buyer will not
disclose or use, and will direct its representatives not to disclose or use to
the detriment of the Seller or the Target Companies, any Confidential
Information (as defined below) with respect to the Target Companies furnished,
or to be furnished, by either Seller, the Target Companies, or their respective
representatives to the Buyer or its representatives at any time or in any manner
other than in connection with its evaluation of the transaction proposed in this
letter. For purposes of this Paragraph, "Confidential Information" means any
information about the Target Companies stamped "confidential" or identified in
writing as such to the Buyer by the Seller promptly following its disclosure,
unless (a) such information is already known to the Buyer or its representatives
or to others not bound by a duty of confidentiality or such information becomes
publicly available through no fault of the Buyer or its representatives, (b) the
use of such information is necessary or appropriate in making any filing or
obtaining any consent or approval required for the consummation of the Possible
Acquisition, or (c) the furnishing or use of such information is required by or
necessary or appropriate in connection with legal proceedings. Upon the written
request of the Seller, the Buyer will promptly return to the Seller or the
Target Companies or destroy any Confidential Information in its possession and
certify in writing to the Seller that it has done so.
6. DISCLOSURE
Except as and to the extent required by law, without the prior written
consent of the other Party, neither the Buyer nor either Seller will, and each
will direct its representatives not to make, directly or indirectly, any public
comment, statement, or communication with respect to, or otherwise to disclose
or to permit the disclosure of the existence of discussions regarding, a
possible transaction between the Parties or any of the terms, conditions, or
other aspects of the transaction proposed in this letter. If a Party is required
by law to make any such disclosure, it must first provide to the other Party the
content of the proposed disclosure, the reasons that such disclosure is required
by law, and the time and place that the disclosure will be made.
7. COSTS
Subject to the provisions of Paragraph 3 of this Part II, the Buyer and
the Seller will each be responsible for and bear all of its own costs and
expenses incurred at any time in connection with pursuing or consummating the
Possible Acquisition.
8. ENTIRE AGREEMENT
The Binding Provisions constitute the entire agreement between the
Parties, and supersede all prior oral or written agreements, understandings,
representations and warranties, and courses of conduct and dealing between the
Parties on the subject matter hereof. Except as otherwise provided herein, the
Binding Provisions may be amended or modified only by a writing executed by each
of the Parties.
4
<PAGE>
9. GOVERNING LAW
The Binding Provisions will be governed by and construed under the laws
of the State of Florida, without regard to conflicts of laws principles.
10. JURISDICTION: SERVICE OF PROCESS
Any action or proceeding seeking to enforce any provision of, or based
on any right arising out of, this letter may be brought against any of the
Parties in the courts of the State of Florida County of Hillsborough, or, if it
has or can acquire jurisdiction, in the United States District Court for the
Middle District of Florida, and each of the Parties consents to the jurisdiction
of such courts (and of the appropriate appellate courts) in any 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.
11. TERMINATION
The Binding Provisions will automatically terminate on and may be
terminated earlier upon written notice by either party to the other party
unilaterally, for any reason or no reason, with or without cause, at any time;
provided, however, that the termination of the Binding Provisions will not
affect the liability of a party for breach of any of the Binding Provisions
prior to the termination. Upon termination of the Binding Provisions, the
Parties will have no further obligations hereunder, except as stated in
Paragraphs 2,3, 5, 7, 9, 10, 11, 12, and 13 of this Part Two, which will survive
any such termination.
12. COUNTERPARTS
This letter may be executed in one or more counterparts, each of which
will be deemed to be an original copy of this letter and all of which, when
taken together, will be deemed to constitute one and the same agreement.
13. NO LIABILITY
The paragraphs and provisions of Part One of this letter do not
constitute and will not give rise to any legally binding obligation on the part
of any of the Parties or the Target Companies. Moreover, except as expressly
provided in the Binding Provisions (or as expressly provided in any binding
written agreement that the Parties may enter into in the future), no past or
future action, course of conduct, or failure to act relating to the Possible
Acquisition, or relating to the negotiation of the terms of the Possible
Acquisition or any Definitive Agreement, will give rise to or serve as a basis
for any obligation or other liability on the part of the Parties or the Target
Companies.
5
<PAGE>
If you are in agreement with the foregoing, please sign and return one
copy of this letter agreement, which thereupon will constitute our agreement
with respect to its subject matter.
Very truly yours,
BUYER:
NUTRICEUTICALS.COM CORPORATION
By: ______________________________
Name: Stephen M. Watters
Title: President
Duly executed and agreed as to the Binding
Provisions on August ____ , 1999.
PROSPECTIVE SELLER:
DYNAMIC HEALTH PRODUCTS, INC.
By: ______________________________________
Name: Jugal K. Taneja
Title: Chairman of the Board of Directors
6
