STOCK PURCHASE AGREEMENT
BY AND AMONG
TWINLAB CORPORATION,
TWIN LABORATORIES INC.,
▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
AND
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Dated as of August 19, 1998
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of August 19, 1998 (the
"Agreement"), among Twinlab Corporation, a corporation organized under the laws
of the State of Delaware ("TWINLAB"), Twin Laboratories Inc., a corporation
organized under the laws of the State of Utah (the "Purchaser"), ▇▇▇▇▇▇▇ ▇▇▇▇▇,
an individual residing at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ("▇▇▇▇▇"), ▇▇▇▇▇ ▇▇▇▇▇, an individual residing at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ("Sears"), and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, an individual
residing at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ("▇▇▇▇▇▇▇▇"
and together with ▇▇▇▇▇ and Sears, the "Sellers").
W I T N E S S E T H:
The Sellers collectively hold 175,000 shares (the "Shares") of common
stock, no par value (the "Common Stock"), of PR Nutrition, Inc. (the "Company"),
a corporation organized under the laws of the State of California (the
"Company"), which shares of Common Stock constitute all of the issued and
outstanding shares of Common Stock of the Company;
The Purchaser desires to acquire from the Sellers, and the Sellers
collectively desire to sell to the Purchaser, for the consideration hereinafter
provided, the Shares;
Purchaser and Sellers intend that the sale and purchase of the Shares
provided for herein be accounted for as a pooling-of-interests for financial
reporting purposes and constitute a reorganization within the meaning of Section
368 of the Code (as hereinafter defined); and
Unless otherwise defined in this Agreement, capitalized terms used in
this Agreement are defined in Section 12.2 of this Agreement.
NOW, THEREFORE, in consideration of the promises and mutual covenants
and agreements hereinafter contained, the parties hereto, intending to be
legally bound, hereby agree as follows:
1. Sale and Purchase of Shares; the Closing.
1.1. Sale and Purchase of Shares. Subject to the terms and conditions
of this Agreement and on the basis of the representations, warranties, covenants
and agreements herein contained, on the Closing Date, each Seller shall sell,
assign and convey to the Purchaser, and the Purchaser shall purchase, acquire
and accept from each Seller, the Shares of such Seller set forth opposite such
Seller's name on Schedule 1.1 of the Disclosure Schedules. At the Closing, each
Seller shall deliver one or more stock certificates representing the Shares of
such Seller duly endorsed for transfer to the Purchaser.
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1.2. The Closing. Subject to the termination of this Agreement as
provided in Section 9 hereof, the consummation of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of Kramer,
Levin, Naftalis & ▇▇▇▇▇▇▇, New York, New York, as promptly as practicable after
satisfaction (or waiver) of all conditions to closing, and in no event later
than two (2) business days thereafter, or at such other time and date as the
parties hereto mutually agree (the "Closing Date").
1.3. Tax and Accounting Treatment. It is intended by the parties hereto
that the purchase and sale of the Shares contemplated by this Agreement shall
constitute a reorganization with the meaning of Section 368 of the Code. It is
intended by the parties hereto that the purchase and sale of the Shares
contemplated by this Agreement shall, subject to applicable accounting
standards, qualify for accounting treatment as a pooling of interests.
2. Consideration.
2.1. Consideration. The aggregate consideration for the Shares shall be
1,150,000 shares of common stock, par value $1.00 per share, of TWINLAB (the
"Twinlab Shares").
2.2. Delivery of Twinlab Shares. At the Closing, the Purchaser shall
deliver to each Seller one or more stock certificates representing the Twinlab
Shares allocated to such Seller on a pro rata basis with the other Sellers based
on the number of Shares sold by each Seller. Such stock certificates shall be
registered in the respective names of each of the Sellers.
3. Representations and Warranties of the Sellers. The Sellers, jointly
and severally, hereby represent and warrant to the Purchaser as follows:
3.1. Organization and Good Standing. (a) The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California and has full corporate power and authority to own, lease and
operate its properties and to carry on its business as it is now conducted and
as it is proposed to be conducted. The Company is duly qualified or authorized
to do business as a foreign corporation and is in good standing under the laws
of (i) each jurisdiction in which it leases real property and (ii) each other
jurisdiction in which the conduct of its business or the ownership of its
properties requires such qualification or authorization, except where the
failure to so qualify would not result in a Material Adverse Change.
(b) The minute books of the Company, as previously made available to
the Purchaser and its counsel, contain accurate records of all meetings and all
other material corporate action of the Company's board of directors (including
any committees thereof) and its stockholders since the date of the Company's
incorporation.
3.2. Authorization of Agreement. Each of the Sellers has all requisite
capacity, power and authority to execute and deliver this Agreement, the
Employment
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Agreement, the Non-competition Agreement and each other agreement, document,
instrument or certificate contemplated by this Agreement or to be executed by
such Seller in connection with the consummation of the transactions contemplated
by this Agreement (this Agreement, the Employment Agreement, the Non-competition
Agreement, the Registration Rights Agreement and the other agreements,
documents, instruments or certificates delivered pursuant to this Agreement are
hereinafter referred to as the "Transaction Documents"), and to perform fully
his obligations hereunder and thereunder. This Agreement has been, and each of
the other Transaction Documents will be (when executed and delivered by the
Sellers), duly and validly authorized, executed and delivered by each of the
Sellers and (assuming the due authorization, execution and delivery of the other
parties hereto and thereto) this Agreement constitutes, and each of the other
Transaction Documents will constitute (when executed and delivered by the
Sellers), legal, valid and binding obligations of each of the Sellers,
enforceable against each of the Sellers in accordance with their respective
terms, subject, as to enforceability, to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
3.3. Subsidiaries. The Company has no subsidiaries and does not own any
other capital stock or other proprietary interest, directly or indirectly, in
any corporation, association, trust, partnership, joint venture or other entity
or have any agreement to acquire any such capital stock or other proprietary
interest.
3.4. No Conflicts; Consents of Third Parties. (a) Except as set forth
in SCHEDULE 3.4(A) of the Disclosure Schedule, the execution and delivery by
each of the Sellers of this Agreement and the other Transaction Documents, the
consummation of the transactions contemplated hereby or thereby, and the
compliance by each of the Sellers with any of the provisions hereof or thereof
does not and will not (i) conflict with, or result in the breach of, any
provision of the certificate of incorporation or by-laws of the Company; (ii)
conflict with, violate, result in the breach or termination of, or constitute a
default or give rise to any "takeback" right or right of termination or
acceleration or right to increase the obligations or otherwise modify the terms
thereof under any Contract, license, Permit or Order to which the Company or any
of the Sellers is a party or by which the Company or any of the Sellers or the
properties or assets of any of the Sellers or the Company are bound; (iii) con
stitute a violation of any Law applicable to the Company or any of the Sellers;
or (iv) result in the creation of any Lien upon the properties or assets of the
Company or any of the Sellers. Except as set forth on SCHEDULE 3.4 of the
Disclosure Schedule, no consent, waiver, approval, Order, Permit or
authorization of, or declaration or filing (other than compliance with the "HSR"
(as defined in Section 6.7)) with, or notification to, any Person or
Governmental Body is required on the part of the Company or any of the Sellers
in connection with the execution and delivery of this Agreement or the other
Transaction Documents, or the compliance by any of the Sellers, with any of the
provisions hereof or thereof.
(b) Except as set forth on SCHEDULE 3.4(B) of the Disclosure Schedule,
neither the Company nor any of the Sellers is a party to any agreement, contract
or covenant limiting the freedom of the Company or any of the Sellers to compete
in any line of
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business or with any person or other entity in any geographic region within or
outside of the United States of America.
3.5. Capitalization. (a) The authorized capital stock of the Company
consists of 1,000,000 shares of Common Stock. As of the date hereof, 175,000
shares of Common Stock are issued and outstanding, all of which are owned of
record and beneficially by the Sellers and constitute the Shares. The number of
shares held by each Seller is as set forth opposite such Seller's name on
Schedule 1.1. The Shares are validly issued, fully paid and non-assessable.
Except as set forth on SCHEDULE 3.5 of the Disclosure Schedule, there is no
existing option, warrant, call, right, commitment or other agreement of any
character to which the Company is a party requiring, and there are no securities
of the Company outstanding which upon conversion or exchange would require, the
issuance, sale or transfer of any additional shares of capital stock or other
equity securities of the Company or other securities convertible into,
exchangeable for or evidencing the right to subscribe for or purchase shares of
capital stock or other equity securities of the Company. Neither the Company nor
any of the Sellers is a party to any voting trust or other voting agreement with
respect to any shares of capital stock or to any agreement relating to the
issuance, sale, redemption, transfer or other disposition of capital stock of
the Company.
(b) The Shares purchased by the Purchaser will, at the Closing,
constitute all of the issued and outstanding capital stock of the Company on a
fully diluted basis.
3.6. Financial Statements. Sellers have delivered to the Purchaser (i)
copies of the Company's reviewed balance sheet as at December 31, 1996 and
December 31, 1997 and the related reviewed statement of income and of cash flows
for the years ended December 31, 1996 and December 31, 1997 (the "Reviewed
Statements"), and its compiled balance sheet as at December 31, 1995 and the
related statements of income and of cash flows for the year ended December 31,
1995 (the "Compiled Statements") and (ii) copies of its unaudited balance sheet
at June 30, 1998 and the related statements of income and cash flows for the six
month period ended June 30, 1998 (the "Latest Financials") (the Latest
Financials, including the related notes and schedules thereto, the Compiled
Statements and the Reviewed Statements, are referred to herein as the "Financial
Statements"). Each of the Financial Statements was prepared in good faith from
the books and records of the Company, is, except as set forth on SCHEDULE 3.6 of
the Disclosure Schedule, complete and correct in all material respects, has been
prepared in accordance with generally accepted accounting principles
consistently applied by the Company (except with respect to normal and customary
year-end adjustments and the preparation of notes) and presents fairly the
financial position, results of operations and cash flows of the Company as at
the dates and for the periods indicated. The books of account and other
financial records of the Company from which the Financial Statements have been
prepared are complete and correct.
3.7. No Undisclosed Liabilities. Except to the extent set forth in the
Financial Statements, or as set forth on SCHEDULE 3.7 of the Disclosure Schedule
which sets forth with specificity each liability of the Company in excess of
$25,000 (whether accrued,
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absolute, contingent or otherwise, and whether due or to become due or asserted
or unasserted), the Company has no Indebtedness and, to each Seller's knowledge,
there is no basis for the assertion of any claim or material liability of any
nature against the Company, except obligations under Contracts described on
SCHEDULE 3.13 of the Disclosure Schedule or under Contracts that are not
required to be disclosed thereon as a result of dollar thresholds specified in
Section 3.13 or which liabilities are in the aggregate less than $100,000.
3.8. Absence of Certain Developments. Except as expressly set forth on
SCHEDULE 3.8 of the Disclosure Schedule, since December 31, 1997:
(a) There has not been any Material Adverse Change nor has any event
occurred which could result in any Material Adverse Change;
(b) There has not been any damage, destruction or loss, whether or
not covered by insurance, with respect to the property and assets of the Company
having a replacement cost of more than $25,000 for any single loss or $100,000
for all such losses;
(c) There has not been (i) any declaration, setting aside or
authorizing the payment of, any dividend or other distribution in respect of any
shares of capital stock of the Company or any repurchase, redemption or other
acquisition by the Company of any of the outstanding shares of capital stock or
other securities of, or other ownership interest in, the Company or (ii) any
amount or asset paid or otherwise distributed to any of the Sellers, whether as
compensation (except for salaries paid in the ordinary course of business
consistent with past practice) or otherwise;
(d) The Company has not (i) awarded or paid any bonuses to (A) any
of the Sellers or (B) other employees of the Company in excess of $10,000
individually, or $25,000 in the aggregate, (ii) entered into any employment
agreement or arrangement providing for potential compensation in excess of
$75,000 or modified or amended any employment, deferred compensation, severance
or similar agreement, (iii) increased or agreed to increase the compensation
payable or to become payable by it to any of the Company's (A) employees, agents
or Representatives outside the ordinary course of business consistent with past
practice, and which increases in the aggregate have not resulted in a material
increase in the benefits compensation or similar expense of more than $75,000 or
(B) directors or officers, or (iv) increased or agreed to increase the coverage
or benefits available under any severance pay, termination pay, vacation pay,
company awards, salary continuation for disability, sick leave, deferred
compensation, bonus or other incentive compensation, insurance, pension or other
employee benefit plan, payment or arrangement made to, for or with such
directors, officers, employees, agents or Representatives (in each case, other
than normal increases in the ordinary course of business consistent with past
practice and that in the aggregate have not resulted in a material increase in
the benefits or compensation expense of the Company);
(e) There has not been any change by the Company in accounting
principles, methods or policies;
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(f) The Company has not entered into any Contract requiring payments
in excess of $50,000, or conducted its business other than in the ordinary
course of business consistent with past practice;
(g) The Company has not (i) incurred or repaid any Indebtedness,
(ii) made any loans, advances or capital contributions to any other Person or
(iii) assumed, guaranteed, endorsed or otherwise became liable for the
obligations of any other Person.
(h) The Company has not failed to promptly pay and discharge any
current liabilities except in the ordinary course of business, consistent with
past practice, or where disputed in good faith by appropriate proceedings;
(i) The Company has not mortgaged, pledged or subjected to any Lien
any of its assets, or acquired any assets or sold, assigned, transferred,
conveyed, leased or otherwise disposed of any assets including any Intellectual
Property Assets (as hereinafter defined) of the Company (other than the sale of
inventory in the ordinary course of business consistent with past practice);
(j) The Company has not discharged or satisfied any Lien, or paid
any obligation or liability (fixed or contingent), except in the ordinary course
of business consistent with past practice and which, in the aggregate, would not
be material to the Company;
(k) The Company has not canceled or compromised any debt or claim or
amended, cancelled, terminated, relinquished, waived or released any (i)
Contract to which any of the Sellers or any Affiliate of any of the Sellers is a
party or (ii) any other Contract or right except (in the case of this clause
(ii)) in the ordinary course of business consistent with past practice and
which, in the aggregate, would not be material to the Company;
(l) The Company has not suffered any Extraordinary Loss or
Extraordinary Losses (as defined in Opinion No. 30 of the Accounting Principles
Board of the American Institute of Certified Public Accountants and any
amendments thereto);
(m) The Company has not transferred or granted any rights under any
concessions, leases, licenses, agreements, Patents (as defined in Section 3.12),
Marks (as defined in Section 3.12), Copyrights (as defined in Section 3.12),
trade secrets, know how, manufacturing processes or technologies, formulae,
recipes, proprietary food formulations, inventions, designs, web sites, computer
programs or other tangible or intangible proprietary information, or
Intellectual Property Assets, owned or used by the Company in its business;
(n) The Company has not made or committed to make any capital
expenditures or capital additions or betterments in excess of $25,000
individually or $50,000 in the aggregate;
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(o) The Company has not instituted or settled any Legal Proceeding;
(p) There have not been any amendments or changes in the certificate
of incorporation or the by-laws of the Company;
(q) The Company has not entered into any Contract to take any action
which, if taken prior to the date hereof, would have made any representation or
warranty set forth in this Agreement untrue or incorrect as of the date when
made;
(r) The Company has caused to be done all things necessary to
maintain, preserve and renew its corporate existence and all material licenses,
authorizations and permits necessary to the conduct of its business;
(s) The Company has maintained and kept its properties in good
repair, working order and condition, normal wear and tear excepted; and
(t) There has not been any change in the treatment and protection of
trade secrets or other confidential information of the Company.
(u) There has not been any change in any tax elections with respect
to the Company.
3.9. Taxes. Except as set forth on SCHEDULE 3.9 of the Disclosure
Schedule:
(a) The Company (i) has timely, completely and accurately filed, or
caused to be filed, with all appropriate U.S. federal, state or local or foreign
governmental agencies all required tax and information returns, of whatever
nature, related to the Company for taxable periods ending prior to the Closing
Date or requests for extensions have been timely filed and any such request
shall have been granted and not expired, (ii) has duly paid, caused to be paid,
or made adequate provision in the balance sheet included in the Latest
Financials for, all taxes (including, but not limited to, income, sales,
property, payroll, employment, gross receipts, excise and franchise taxes),
assessments, charges, penalties and interest, of whatever nature ("Taxes"), due
and payable with respect to all periods ending on or prior to December 31, 1997,
and (iii) has made adequate provision for all Taxes with respect to all periods
subsequent to the periods covered by such returns.
(b) Neither the Sellers nor the Company have received, directly or
indirectly, notice of, or are otherwise aware of, any pending, threatened,
ongoing or past audit or examination by any Governmental Body with respect to
Taxes relating to the Company; nor are the Sellers or the Company a party,
directly or indirectly, to any action or proceeding by any Governmental Body for
assessment or collection of Taxes relating to the Company; nor has any claim for
assessment and collection, or any notice of deficiency, been asserted or
proposed against the Sellers or the Company, directly or indirectly, with
respect thereto; nor have the Sellers or the Company executed a waiver of any
statute of limitations with respect thereto; nor are there any statutes of
limitations with respect to Taxes relating to the Company that have not expired.
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(c) The Company has made, and each of the Sellers has consented to,
a valid election under Section 1362(a) of the Code to be taxed as an "S
Corporation" under Sections 1361 through 1379 of the Code (an "S Election") as
of the date of the Company's incorporation, which election has not been revoked
or terminated or otherwise become ineffective. Similar valid elections, which
have not been revoked or terminated or otherwise become ineffective, have been
made to be taxed in a comparable fashion under comparable state laws. All other
material elections with respect to Taxes affecting the Company as of the date
hereof are set forth on SCHEDULE 3.9 of the Disclosure Schedule. At the time the
Company made the S Election, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ was not married.
(d) The Company is not liable for Taxes of any other Person, is not
currently under any contractual obligation to indemnify any Person with respect
to Taxes, and is not a party to any tax sharing agreement or any other agreement
providing for payments by the Company with respect to Taxes.
(e) The Company is not a party to any joint venture, partnership or
other arrangement or contract which could be treated as a partnership for United
States federal income tax purposes.
(f) The Company will not be required, as a result of a change in
method of accounting for any period prior to the Closing Date, to include any
adjustment under Section 481 of the Code (or any corresponding provision of
local or foreign law) in taxable income for any period after the Closing Date.
(g) Section 3.9 of the Disclosure Schedule contains a list of all
jurisdictions in which a tax or information return has been filed by the
Company, and no claim has ever been made by any tax authority in any other
jurisdiction that the Company is subject to taxation or required to file a tax
or information return in such jurisdiction.
3.10. Real Property.
(a) SCHEDULE 3.10 of the Disclosure Schedule sets forth a complete
list of all real property and interests in real property owned by the Company
("Owned Properties"). The Company has good, marketable and insurable title in
fee simple to all Owned Properties, in each case free and clear of all Liens of
any nature whatsoever except as set forth on SCHEDULE 3.10 of the Disclosure
Schedule.
(b) SCHEDULE 3.10 of the Disclosure Schedule sets forth a complete
list of all real property and interests in real property leased by the Company
(individually, a "Real Property Lease") and identifies, for each Real Property
Lease, the parties thereto, the address of the property subject thereto, the
rent payable thereunder, the terms of any renewal options, the substance of any
amendments or modifications thereto and any reciprocal easement or operating
agreements relating thereto.
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(c) None of the Real Property Leases is subject to any lease,
sublease, license or other agreement granting to any other Person any right to
the use, occupancy or enjoyment of the Real Property Leases or any part thereof.
(d) Each of the Real Property Leases is valid and enforceable in
accordance with its terms, and there is no default under any Real Property Lease
either by the Company or, to each Seller's knowledge, any other party thereto,
and no event has occurred that with the lapse of time or the giving of notice or
both would constitute a default thereunder. Each of the Real Property Leases,
upon the consummation of the transactions contemplated hereby and by the other
Transaction Documents, will continue to entitle the Company, as the case may be,
to the use, occupancy and possession of the real property specified in such Real
Property Lease. The Company has delivered or otherwise made available to the
Purchaser true, correct and complete copies of the Real Property Leases,
together with all amendments, modifications, supplements or side letters
affecting the obligations of any party thereunder.
(e) To each Seller's knowledge, no previous or current party to any
Real Property Lease has given notice of or made a claim with respect to any
breach or default thereunder.
3.11. Tangible Personal Property.
(a) SCHEDULE 3.11(A) of the Disclosure Schedule sets forth all
leases of personal property ("Personal Property Leases") involving annual
payments in excess of $25,000 relating to personal property used in the business
of the Company or to which the Company is a party or by which the Company or any
of its respective properties or assets is bound. The Company has delivered or
otherwise made available to the Purchaser true, correct and complete copies of
the Personal Property Leases, together with all amendments, modifications,
supplements or side letters affecting the obligations of any party thereunder.
(b) Each of the Personal Property Leases is in full force and effect
and is valid, binding and enforceable in accordance with its terms, and there is
no default under any Personal Property Lease either by the Company or, to each
Seller's knowledge, by any other party thereto, and no event has occurred that
with the lapse of time or the giving of notice or both would constitute a
default thereunder.
(c) The Company has good and marketable title to all of the material
items of tangible personal property that are owned and used by it, free and
clear of any and all Liens other than those set forth in SCHEDULE 3.11(C) of the
Disclosure Schedule. All items of tangible personal property which, individually
or in the aggregate, are material to the operation of the business of the
Company are in good condition and in a state of good maintenance and repair
(ordinary wear and tear excepted) and are suitable for the purposes used for the
operation of the business of the Company.
3.12. Intellectual Property. (a) SCHEDULE 3.12(A) of the Disclosure
Schedule contains an accurate and complete list of all domestic and foreign (i)
patents, pending patent
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applications and patent applications in process but not yet filed, owned by,
assignable to, or licensed to the Company (the "Patents"); registered trademarks
and service marks and pending applications therefor and trade names owned by or
licensed to the Company (the "Marks"); and copyright registrations and pending
applications therefor owned by or licensed to the Company (the "Copyrights");
(ii) written licenses or agreements relating to the Company's Intellectual
Property Assets, including, but not limited to, Patents, Marks and Copyrights,
and any other written licenses and other agreements relating to trade secrets
and know-how, and (iii) any other manufacturing, process, other technology
transferor, license, or other agreements which are material to the conduct of
the business of the Company. Except as set forth in SCHEDULE 3.12(A) of the
Disclosure Schedule, the Company owns, or has a valid, binding and enforceable
license, or otherwise possesses legally enforceable rights to use all the
Intellectual Property Assets owned or used by the Company, including, but not
limited to, all Patents, Marks, Copyrights, and any applications therefor,
technology, inventions, designs, know-how, trade secrets, recipes, formulae,
manufacturing technology and processes, proprietary food formulations, computer
software programs or applications, web sites and tangible or intangible
proprietary information or material that are used in the businesses of the
Company as currently conducted.
(b) Except as disclosed in SCHEDULE 3.12(B) of the Disclosure
Schedule, the Company is not, nor will it be as a result of the execution and
delivery of this Agreement or the performance of the obligations of the Sellers
hereunder, in violation of any licenses, sublicenses and other agreements as to
which the Company is a party and pursuant to which the Company is authorized to
use any third-party intellectual property, including, but not limited to, trade
secrets, know-how, recipes, formulae, manufacturing technology or processes,
proprietary food formulations, Patents, Marks and Copyrights ("Third-Party
Intellectual Property Rights"). No claims with respect to the Company
Intellectual Property Assets, including, but not limited to Patents, registered
and material unregistered Marks, registered Copyrights, and any applications
therefor owned by the Company, any trade secret of the Company, or Third Party
Intellectual Property Rights to the extent arising out of any use, reproduction
or distribution of such Third Party Intellectual Property Rights by or through
the Company, are currently pending or, to the knowledge of each of the Sellers,
are threatened by any person, including, but not limited to, ▇▇▇▇▇ ▇▇▇▇▇. None
of the Sellers knows of any valid grounds for any bona fide claims (i) to the
effect that the manufacture, sale, licensing or use of any product as now
manufactured, used, sold or licensed or proposed for manufacture, use, sale or
license by the Company, infringes on any Third-Party Intellectual Property
Rights, including, without limitation, any Copyrights, Patents, Marks or trade
secrets; (ii) against the use by the Company, of any Intellectual Property
Assets, including, but not limited to, any recipes, formulae, manufacturing
technology or processes, proprietary food formulations, trademarks, trade names,
trade secrets, copyrights, patents, technology, inventions, designs, know-how or
computer software programs and applications and web sites used in the business
of the Company as currently conducted or as proposed to be conducted; (iii)
challenging the ownership, validity or effectiveness of any of the Company
Intellectual Property Assets or other trade secret material to the Company; or
(iv) challenging the license or legally enforceable right to use of the Third
Party Intellectual Rights by the Company.
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(c) To the best knowledge of each of the Sellers, all material
Intellectual Property Assets, including, but not limited to, any recipes,
formulae, proprietary food formulations, manufacturing technology, methodology
or processes, Patents, Marks and Copyrights held by the Company are valid and
subsisting. Except as set forth in SCHEDULE 3.12(C) of the Company Disclosure
Schedule, to the best knowledge of each of the Sellers, there is no material
unauthorized use, infringement or misappropriation of any of the Intellectual
Property Assets of the Company by any third party, including any employee or
consultant or former employee or consultant of the Company.
(d) The Company has taken all steps necessary to safeguard and
maintain the secrecy and confidentiality of, and the Company's proprietary
rights in, the Intellectual Property Assets including, without limitation, trade
secrets, know-how, recipes, formulae, manufacturing technologies and processes
and proprietary food formulations. SCHEDULE 3.12(D) of the Disclosure Schedule
attaches the Documentation (or describes documentation delivered to Purchaser)
containing the Company's procedures and policies concerning the protection and
maintenance of the secrecy and confidentiality of, and the Company's proprietary
rights in, the Intellectual Property Assets. All officers, employees and
consultants of the Company having access to or developing any Intellectual
Property Assets of the Company have executed and delivered an agreement
regarding the protection of proprietary information and the license or
assignment to the Company of all proprietary rights arising from the services
performed by such persons, and such proprietary rights are licensed or assigned
to the Company or are works made-for-hire, and the Company is the author and
owner of all such rights under the Copyright Act of 1976, as amended. No current
or prior officers, employees, or consultants of the Company (i) claims or has a
right to claim an ownership interest in any Intellectual Property Assets as a
result of having been involved in the development or licensing of any such
property while employed by or consulting to the company, or otherwise, or (ii)
owns any Intellectual Property Assets directly or indirectly competitive with
those of the Company.
(e) To each Seller's knowledge, no third party has attempted to
reverse engineer any of the Intellectual Property Assets including, without
limitation, the trade secrets, know-how, recipes, formulae, the proprietary food
formulations, so that the proprietary rights of the Company in and to such an
Intellectual Property Asset are lost or diminished in any way.
(f) SCHEDULE 3.12(F) of the Disclosure Schedule lists all of the
software used by the Company. None of the Sellers are aware of need for any
material capital expenditures in order to address the Year 2000 compliance issue
with respect to the Company's software.
11
3.13. Material Contracts.
(a) Except as set forth on SCHEDULE 3.13 of the Disclosure Schedule,
neither the Company nor any of its properties or assets is a party to or bound
by any (i) Contract not made in the ordinary course of business; (ii) employment
or consulting agreement providing for potential compensation in excess of
$50,000, or non-competition, severance, golden parachute or indemnification
Contract (including, without limitation, in each case any Contract to which the
Company is a party involving employees of the Company); (iii) advertising,
public relations, franchise, distributorship or sales agency Contract not
terminable without penalty on 90 days notice; (iv) Contract involving the
commitment, payment or receipt of in excess of $50,000 in the aggregate; (v)
Contract granting a right of first refusal for the acquisition, sale or lease of
any assets or capital stock of the Company; (vi) Contract with any Person
involving a sharing of profits; (vii) mortgage, pledge, conditional sales
contract, security agreement, factoring agreement or other similar Contract with
respect to any real or tangible personal property of the Company; (viii) loan
agreement, credit agreement, promissory note, guarantee, subordination
agreement, letter of credit or any other similar type of Contract evidencing
Indebtedness; (ix) Contract with any Governmental Body; (x) Contract with
respect to the inspection, removal or remediation of Hazardous Materials; (xi)
retainer Contract with attorneys, accountants, actuaries, appraisers, investment
bankers or other professional advisers; or (xiii) commitment or agreement to
enter into any of the foregoing. The Company has delivered or otherwise made
available to the Purchaser true, correct and complete copies of the Contracts
listed on SCHEDULE 3.13 of the Disclosure Schedule, together with all
amendments, modifications, supplements or side letters affecting the obligations
of any party thereunder.
(b) (i) Each of the Contracts listed on SCHEDULE 3.13 of the
Disclosure Schedule is valid and enforceable in accordance with its terms, and,
to each Seller's knowledge, there is no default under any Contract listed on
SCHEDULE 3.13 of the Disclosure Schedule by the Company or by, to each Seller's
knowledge, any other party thereto, and no event has occurred that with the
lapse of time or the giving of notice or both would constitute a default
thereunder.
(ii) To each Seller's knowledge, no previous or current party to
any Contract listed on SCHEDULE 3.13 of the Disclosure Schedule has given notice
of or made a claim with respect to any breach or default thereunder.
3.14. Employees; Independent Contractors.
(a) To each Seller's knowledge, the Company has satisfactory
relationships with its employees and with its distributors, independent
contractors (including, but not limited to, independent manufacturers) and
independent representatives (collectively, the "Independent Contractors").
12
(b) To each Seller's knowledge, no condition or state of facts or
circumstances exists which could materially adversely affect the Company's
relations with its employees or Independent Contractors, including, without
limitation, the consummation of the transactions contemplated by this Agreement
or by the other Transaction Documents.
(c) The Company is in compliance with all applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours and is not engaged in any unfair labor practice.
(d) No collective bargaining agreement with respect to the business
of the Company is currently in effect or being negotiated. The Company has not
encountered any labor union or collective bargaining organizing activity with
respect to its employees. The Company has no obligation to negotiate any such
collective bargaining agreement, and, to the best knowledge of each of the
Sellers, there is no indication that the employees of the Company desire to be
covered by a collective bargaining agreement.
(e) There are no strikes, slowdowns or work stoppages pending or, to
the best knowledge of each of the Sellers, threatened with respect to the
employees of the Company or any Independent Contractor of the Company, nor has
any such strike, slowdown or work stoppage occurred or, to the best knowledge of
each of the Sellers, been threatened.
(f) Neither the Company nor any of the Sellers has received notice
of the intent of any government, body or agency responsible for the enforcement
of labor or employment laws to conduct an investigation of the Company, and, to
the best knowledge of each of the Sellers, no such investigation is in progress.
(g) A true and correct copy of a schedule listing, as of December
31, 1998, the annual base salary or annualized wages of each employee of the
Company whose annual base compensation is more than $50,000 has been provided to
the Purchaser by Sellers.
(h) To each Seller's knowledge, no employee of the Company is, and
the Company is not in violation of any term of any employment agreement,
non-disclosure agreement, non-compete agreement or any other agreement regarding
an employee's employment with the Company.
(i) A true and correct copy of a schedule listing, each Independent
Contractor of the Company (i) to whom the Company made payments in the year
ended December 31, 1997 of in excess of $25,000 or (ii) that generated in excess
of $50,000 of the Company's revenues for the year ended December 31, 1997 has
been provided to Purchaser by Sellers.
3.15. Employee Benefits. Except as disclosed on SCHEDULE 3.15 of the
Disclosure Schedule, the Company has no collective bargaining, labor, stock
option, profit sharing, pension, retirement, stock bonus, thrift-savings,
incentive, benefit or other similar
13
Contract, plan, policy or arrangement in connection with the conduct of its
operations, and the Company is not in default under any such Contract, plan,
policy or arrangement.
3.16. Litigation.
(a) There are no Legal Proceedings pending or, to each Seller's
knowledge, threatened that question the validity of this Agreement or any of the
other Transaction Documents or any action taken or to be taken in connection
with the consummation of the transactions contemplated hereby or thereby.
SCHEDULE 3.16 of the Disclosure Schedule sets forth a true, correct and complete
list of all Legal Proceedings pending or threatened against or affecting the
Company or any of the Sellers, or any properties or assets of the Company or any
of the Sellers, at law or in equity.
(b) Except as set forth on SCHEDULE 3.16(B) of the Disclosure
Schedule, there is no outstanding or, to each Seller's knowledge, threatened
Order of any Governmental Body against, affecting or naming the Company or
affecting any of the business, properties or assets of the Company.
3.17. Compliance with Laws; Permits.
(a) Except as set forth in SCHEDULE 3.17 of the Disclosure Schedule,
the Company is and at all times has been in compliance in all material respects
with all Laws and Orders promulgated by any Governmental Body applicable to the
Company or to the conduct of the business or operations of the Company or the
use of the properties (including any leased properties) and assets of the
Company. The Company has not received, and to the best knowledge of each of the
Sellers there has been no issuance of, any notice of a violation or alleged
violation by the Company of any such Law or Order. Except as set forth in
SCHEDULE 3.17 of the Disclosure Schedule, there is no investigation or review by
any Governmental Body with respect to the Company pending, or to the best
knowledge of each of the Sellers, threatened, nor has any Governmental Body
notified the Company or any of the Sellers of its intention to conduct the same.
(b) To the best knowledge of each of the Sellers, no legislative or
regulatory proposal of any Governmental Body has been adopted or is pending
which could result in a Material Adverse Change.
(c) Except as set forth on SCHEDULE 3.17(C) of the Disclosure
Schedule, the Company is not subject to any Legal Proceeding, inquiry, Order,
settlement, or, to each Seller's knowledge, investigation, alleging or
addressing a violation of, or liability under, any Law, including: (1) FTC or
state consent decrees relating to advertising or labeling claims; (2) FDA or
related state food and drug administrative decrees; and (3) decisions of the
National Advertising Division, Better Business Bureau.
14
(d) SCHEDULE 3.17 of the Disclosure Schedule lists all Permits of
the Company of all Governmental Bodies, indicating, in each case, the expiration
date thereof, which Permits constitute, to each Seller's knowledge, all Permits
required by the nature of the operations of the Company to permit its operations
in the manner in which they are currently conducted. Such Permits have been
validly issued to the Company by the appropriate Governmental Bodies in
compliance with all applicable Laws, and the Company has complied in all
material respects with all conditions of such Permits applicable to it. No
default or violation, or event that with the lapse of time or giving of notice
or both would become a default or violation, has occurred in the due observance
of any such Permit. All such Permits are in full force and effect without
further consent or approval of any Person.
3.18. Environmental Matters. To each Seller's knowledge, the operations
of the Company have been conducted and are in compliance with all Environmental
Laws. Neither the Company nor any of the Sellers has received any notice from
any source, or has otherwise obtained knowledge, to the effect that there is
lacking any Environmental Permit required in connection with the Company's
operations and Real Property Leases. To each Seller's knowledge, the Company and
all of its past and current Facilities and operations are not subject to any
outstanding Order or Contract, including Environmental Liens, with any
Governmental Body or Person, or subject to any federal, state or local
investigation respecting (A) Environmental Laws, (B) any Remedial Action or (C)
any Environmental Claim. The Company is not subject to any Legal Proceeding
alleging the violation of any Environmental Law or Environmental Permit. The
Company has not received (nor, to the best knowledge of each of the Sellers, has
there been issued) any communication, whether from a Governmental Body,
citizens' group, employee or any other Person, that alleges that the Company is
not in compliance with any Environmental Law or Environmental Permit. The
Company has not caused or permitted any Hazardous Materials to remain or be
disposed of, either on or under real property legally or beneficially owned or
operated by the Company or on any real property not permitted to accept, store
or dispose of such Hazardous Materials. To each Seller's knowledge, the Company
has no liabilities with respect to Hazardous Materials, and, to each Seller's
knowledge, no facts or circumstances exist which, in the aggregate, could give
rise to liabilities with respect to Hazardous Materials. None of the operations
of the Company involves the generation, transportation, treatment, storage or
disposal of Hazardous Materials and there is not now, to each Seller's
knowledge, on or in any property leased by Company (1) any underground storage
tanks or surface tanks, dikes or impoundments; (2) any asbestos containing
materials or (3) any polychlorinated biphenyls.
3.19. Insurance. SCHEDULE 3.19 of the Disclosure Schedule sets forth a
list of all policies of insurance of any kind or nature covering the Company or
any of its employees, properties, assets, or operations, including, without
limitation, policies of life, disability, fire, theft, workers compensation,
employee fidelity, product liability and other casualty and liability insurance.
All such policies are in full force and effect. Such insurance is adequate to
cover risks of such types and in such amounts as is customary for Persons
engaged in similar lines of business. All policies of such insurance (identified
on SCHEDULE 3.19 of the Disclosure Schedule) are binding and effective upon the
issuers thereof (each of whom is reputable and creditworthy) in accordance with
their respective terms.
15
3.20. Inventory; Receivables; Payables.
(a) The inventory of the Company (including that reflected on the
Financial Statements) is in good and merchantable condition, and suitable and,
except as set forth on SCHEDULE 3.20(A) of the Disclosure Schedule, usable or
saleable in the ordinary course of business, consistent with past practice, and
has been reflected on the Financial Statements and carried on the books of
account of the Company in accordance with generally accepted accounting
principles, consistently applied. Without limiting the generality of the
foregoing, such inventory does not include any obsolete, below standard quality
or defective materials or any excess stock items, except as have been reserved
against as reflected on the Financial Statements. The Company's assets include a
sufficient but not an excessive quantity of each type of inventory in order to
meet the normal requirements of the Company's business.
(b) All accounts receivable of the Company have arisen from bona
fide transactions in the ordinary course of business consistent with past
practice and are legally binding. To each Seller's knowledge, all accounts
receivable of the Company reflected on the Latest Financials, or arising after
the date thereof, are good and collectible at the aggregate recorded amounts
thereof, net of any applicable reserve for returns or doubtful accounts
reflected thereon, which reserves are adequate and were calculated in accordance
with generally accepted accounting principles consistently applied. Since
December 31, 1997, to the best knowledge of each of the Sellers, there has been
no event that could materially increase the ratio of uncollectible accounts
receivable ("Uncollectible Receivables") to the accounts receivable or cause the
Company's reserve, if any, for Uncollectible Receivables to be inadequate. None
of such accounts receivable is, or will at the Closing Date be, subject to any
defense, chargeback, coupon, counterclaim or setoff, except as reserved for and
reflected in the latest Financial Statements and as set forth on SCHEDULE
3.20(B) of the Disclosure Schedule, which reserves are to each Seller's
knowledge adequate. All such reserves were calculated in conformity with
generally accepted accounting principles, consistently applied.
(c) All accounts payable of the Company reflected in the Latest
Financials or arising after the date thereof are the result of bona fide
transactions in the ordinary course of business consistent with past practice
and have been paid or are not yet due and payable.
3.21. Major Suppliers and Customers.
(a) Except as set forth on SCHEDULE 3.21(A) of the Disclosure
Schedule, since December 31, 1997, there has not been any Material Adverse
Change in the business relationship of the Company with its any of its
suppliers, and none of the Sellers has any knowledge that there will be any such
change.
(b) Since December 31, 1997, there has not been any Material Adverse
Change in the business relationship of the Company with its customers, and none
of the Sellers has any knowledge that there will be any such change. Except as
disclosed on SCHEDULE 3.21 of the Disclosure Schedule, the Company has no
customer which purchased
16
products that accounted for more than 5% of the Company's sales during the
fiscal year ended December 31, 1997 or during the six (6) month period ended
June 30, 1998.
3.22. Related Party Transactions. Except as set forth on SCHEDULE 3.22
of the Disclosure Schedule, no officer, director or Affiliate (or any relative
of any of them) of the Company nor any of the Sellers (or any relative of any
Seller) has entered into any transaction with or is a party to any Contract with
the Company. No officer, director or Affiliate (or any relative of any of them)
nor any of the Sellers (or any relative of any Seller) of the Company owns any
direct or indirect interest of any kind in, or controls or is a director,
officer, employee or partner of, or consultant to, or lender to or borrower from
or has the right to participate in the profits of, any Person which is a
competitor, supplier, customer, landlord, tenant, creditor or debtor of the
Company.
3.23. Entire Business. The assets, properties and rights which will be
owned or leased by the Company as of the Closing will constitute all of the
tangible and intangible property used by and necessary to the Company in
connection with the conduct of its business.
3.24. No Misrepresentation. No representation or warranty of any of the
Sellers contained in this Agreement (including the Disclosure Schedules hereto)
or in any other Transaction Document furnished to the Purchaser pursuant to the
terms hereof contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make the statements
contained herein or therein, in light of the circumstances under which they were
made, not misleading. None of the Sellers knows of any facts which have caused
or in the future are reasonably likely to cause a Material Adverse Change which
has not been disclosed herein or in a Disclosure Schedule hereto. The
representations and warranties contained in this Section 3.24 or elsewhere in
this Agreement or in any other Transaction Document shall not be affected or
deemed waived by reason of the fact that the Purchaser and/or its
Representatives know or should have known that any such representation or
warranty is or might be inaccurate in any respect.
3.25. Product Liability and Recalls. (a) Except as disclosed on
SCHEDULE 3.25 of the Disclosure Schedule, none of the Sellers is aware of any
claim, or the basis of any claim, against the Company for injury to person or
property of employees or any third parties suffered as a result of the
manufacture, sale or distribution of any product or the performance of any
service by the Company, including claims arising out of the allegedly defective
or unsafe nature of the products sold or distributed by the Company.
(b) Except as disclosed on SCHEDULE 3.25 of the Disclosure Schedule,
there is no pending or, to the best knowledge of each of the Sellers, threatened
recall or investigation of any product sold or distributed by the Company.
(c) There are no liabilities or, to each Seller's knowledge,
threatened claims for (a) product returns, (b) warranty obligations or (c)
product services other than those arising in the ordinary course of business
consistent with past practice.
17
3.26. Financial Advisors. Except as disclosed on SCHEDULE 3.26 of the
Disclosure Schedule, no Person has acted directly or indirectly as a broker,
finder or financial advisor for the Company or any of the Sellers in connection
with the negotiations relating to the transactions contemplated by this
Agreement or by the other Transaction Documents, and no Person is entitled to
any fee or commission or like payment in respect thereof based in any way on
agreements, arrangements or understandings made by or on behalf of the Company
or any of the Sellers.
3.27. Arrangements with Dresdner Kleinwort ▇▇▇▇▇▇. The Company has not
paid, and will not be required, as a result of the execution, delivery or
performance of this Agreement or otherwise, to pay any fees to Dresdner
Kleinwort ▇▇▇▇▇▇ under that certain agreement by and among the Company and
Dresdner Kleinwort ▇▇▇▇▇▇, dated as of September 26, 1996 (the "Dresdner
Agreement"). Sellers shall have the right, at their cost, to defend any claims
related thereto.
3.28. Pooling Matters. Based upon consultation with its independent
accountants, the Sellers have provided to Purchaser and its independent
accountants all information requested concerning actions taken or agreed to be
taken by Sellers, the Company or any Affiliate of Sellers or the Company on or
before the date of this Agreement that could reasonably be expected to adversely
affect the ability of the Purchaser to account for the purchase of the Shares as
a pooling of interests.
3.29. Excluded Assets. Notwithstanding anything to the contrary
contained herein, the parties acknowledge and agree that the assets of the
Company shall not include any correspondence, memoranda, notes or other
materials which constitute communications between Sellers (solely in their
capacity as individuals and not in their capacity as officers, directors,
employees or agents of the Company), on the one hand, and their counsel, on the
other hand, or which reflect the legal conclusions, recommendations or attorney
work-product of counsel for any of the Sellers (solely in their capacity as
individuals and not their capacity as officers, directors, employees or agents
of the Company).
3.30. Dividends. The Company has not declared, set aside, paid or
authorized the payment of any dividend or other distribution in respect of any
shares of capital stock of the Company in respect of any income earned by the
Company from and including the period commencing on June 1, 1998.
3.31. Cash Flow Statement. Simultaneously with the execution and
delivery of this Agreement, Sellers have delivered to Purchaser a schedule of
Projected Combined Working Capital and Cash Calculation as of the Closing, a
copy of which is attached hereto as EXHIBIT 3.31 (the "Closing Statement"). The
actual Combined Working Capital and cash position of the Company, determined on
a basis consistent with the accounting used in preparing the Latest Financials,
shall not be less than $850,000 and $100,000, respectively, on the Closing Date.
As used herein, "Working Capital" means the Current Assets minus the Current
Liabilities of the Company, as reflected on the Closing Statement.
18
3.32. Sole and Separate Property; Spousal Consent of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
The Shares to be sold by ▇▇▇▇▇▇▇▇ hereunder are the sole and separate property
of ▇▇▇▇▇▇▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ has all requisite capacity power and authority to
execute and deliver the Spousal Consent to Stock Purchase Agreement attached
hereto as EXHIBIT 3.32 (the "Spousal Consent"). The Spousal Consent has been
duly executed and delivered by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and constitutes her legal valid
and binding obligation, enforceable against her in accordance with its terms.
4. Representations and Warranties of the Purchaser. The Purchaser
hereby represents and warrants to the Sellers that:
4.1. Organization and Good Standing. The Purchaser is duly organized,
validly existing and in good standing under the laws of the State of Delaware.
4.2. Authorization of Agreement. The Purchaser has all requisite
corporate power and authority to execute and deliver this Agreement and each of
the other Transaction Documents to be executed by the Purchaser in connection
with the consummation of the transactions contemplated hereby and thereby, and
to perform fully its obligations hereunder and thereunder. The execution,
delivery and performance by the Purchaser of this Agreement and each of the
other Transaction Documents to be executed by the Purchaser has been duly
authorized by all necessary action on behalf of the Purchaser. This Agreement
has been, and each of the other Transaction Documents will be (when executed and
delivered by the Purchaser), duly and validly executed and delivered by the
Purchaser and (assuming the due authorization, execution and delivery by the
other parties hereto and thereto) this Agreement constitutes, and each of the
other Transaction Documents will constitute (when executed and delivered by the
Purchaser), legal, valid and binding obligations of the Purchaser, enforceable
against the Purchaser in accordance with their respective terms, subject, as to
enforceability, to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors' rights and remedies generally and subject
to general principles of equity (regardless of whether enforcement is sought in
a proceeding at law or in equity).
4.3. No Conflicts; Consents of Third Parties. The execution and
delivery by the Purchaser of this Agreement and the other Transaction Documents
to be executed by the Purchaser, the consummation of the transactions
contemplated hereby or thereby, and the compliance by the Purchaser with any of
the provisions hereof or thereof does not and will not (a) conflict with, or
result in the breach of, the certificate of incorporation or by-laws of the
Purchaser, (b) conflict with, violate, result in the breach of, or constitute a
default under any Contract or Order to which the Purchaser is a party or by
which the Purchaser or its properties or assets are bound or (c) constitute a
violation by the Purchaser of any Law applicable to the Purchaser. Except as set
forth on SCHEDULE 4.3 of the Disclosure Schedule, no consent, waiver, approval,
Order, Permit or authorization of, or declaration or filing with, or
notification to, any Person or Governmental Body is required on the part of the
Purchaser in connection with the execution and delivery of this Agreement or the
other Transaction Documents to be executed by the Purchaser or the compliance by
the Purchaser with any of the provisions hereof or thereof which has not been
made or obtained.
19
4.4. Litigation. There are no Legal Proceedings against the Purchaser
pending or, to the best knowledge of the Purchaser, threatened that question the
validity of this Agreement or any of the other Transaction Documents or any
action taken or to be taken by the Purchaser in connection with the consummation
of the transactions contemplated hereby or thereby.
5. Representations and Warranties of TWINLAB. TWINLAB hereby represents
and warrants to the Sellers that:
5.1. Organization and Good Standing. TWINLAB is duly organized, validly
existing and in good standing under the laws of the State of Delaware.
5.2. Authorization of Agreement. TWINLAB has all requisite power and
authority to execute and deliver this Agreement and each of the other
Transaction Documents to be executed by TWINLAB in connection with the
consummation of the transactions contemplated hereby and thereby, and to perform
fully its obligations hereunder and thereunder. The execution, delivery and
performance by TWINLAB of this Agreement and each of the other Transaction
Documents to be executed by TWINLAB has been duly authorized by all necessary
action on behalf of TWINLAB. This Agreement has been and each of the other
Transaction Documents will be (when executed and delivered by TWINLAB) duly and
validly executed and delivered by TWINLAB and (assuming the due authorization,
execution and delivery by the other parties hereto and thereto) this Agreement
constitutes and each of the other Transaction Documents will constitute (when
executed and delivered by TWINLAB) legal, valid and binding obligations of
TWINLAB, enforceable against TWINLAB in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and subject, as
to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
5.3. No Conflicts; Consents of Third Parties. The execution and
delivery by TWINLAB of this Agreement and of the other Transaction Documents to
be executed by TWINLAB, the consummation of the transactions contemplated hereby
or thereby, and the compliance by TWINLAB with any of the provisions hereof or
thereof does not and will not (a) conflict with, or result in the breach of, the
certificate of incorporation or by-laws of TWINLAB, (b) conflict with, violate,
result in the breach of, or constitute a default under any Contract or Order to
which TWINLAB is a party or by which TWINLAB or its properties or assets are
bound or (c) constitute a violation by TWINLAB of any Law applicable to TWINLAB.
Except as set forth in SCHEDULE 5.3 of the Disclosure Schedule, no consent,
waiver, approval, Order, Permit or authorization of, or declaration or filing
with, or notification to, any Person or Governmental Body is required on the
part of TWINLAB in connection with the execution and delivery of this Agreement
or the other Transaction Documents to be executed by TWINLAB or the compliance
by TWINLAB with any of the provisions hereof or thereof.
20
5.4. Litigation. There are no Legal Proceedings against TWINLAB pending
or, to the best knowledge of TWINLAB, threatened that question the validity of
this Agreement or any of the other Transaction Documents or any action taken or
to be taken by TWINLAB in connection with the consummation of the transactions
contemplated hereby or thereby.
5.5. Financial Statements. The financial statements of TWINLAB which
have been included in the Twinlab Disclosure Documents referred to in Section
5.6 and provided to the Seller were prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved (except as may have been indicated in the notes thereto) and fairly
present, in all material respects, the consolidated financial position of
TWINLAB as at the respective dates thereof and the consolidated results of its
operations and cash flows for the periods then ended.
5.6. SEC Documents. TWINLAB has furnished to the Seller a complete copy
of (i) TWINLAB's Annual Report to Stockholders on Form 10-K for the fiscal year
ended December 31, 1997 (the "Annual Report"), and (ii) Twinlab's Quarterly
Report to Stockholders on Form 10-Q for the quarter, ended March 31, 1998, filed
with the Securities and Exchange Commission (collectively, the "Twinlab
Disclosure Documents"). The Twinlab Disclosure Documents, at the respective time
each such document was issued, (a) complied as to form in all material respects
with the rules and regulations of the Securities and Exchange Commission under
the Securities Exchange Act of 1934, as amended; and (b) did not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
5.7. Title to Twinlab Shares. The Twinlab Shares have been duly
authorized for issuance and when issued and delivered in accordance with and
pursuant to the terms of this Agreement will be validly issued, fully paid and
non-assessable.
5.8. Material Adverse Change. Since March 31, 1998, there has not been
any change in the condition (financial or otherwise), assets, liabilities,
earnings, prospects or business of TWINLAB and its subsidiaries, taken as a
single enterprise, other than changes in the ordinary course of business, which
in any one case or in the aggregate have not been materially adverse.
5.9. S-3 Eligibility. TWINLAB satisfies, and upon the Closing Date will
satisfy, all conditions under the Act for the use of Form S-3 for the
registration of the Twinlab Shares pursuant to the terms of the Registration
Rights Agreement.
6. Additional Representations, Warranties and Covenants of the Sellers.
6.1. Title and Investment Representations. Each Seller represents and
warrants to, and covenants and agrees with, the Purchaser that, such Seller (a)
has good and marketable title to the Shares of such Seller, free and clear of
all Liens of any kind or nature
21
whatsoever and that at the Closing, the Purchaser will obtain good and
marketable title to such Shares, free and clear as aforesaid, (b) is an
"accredited investor" within the meaning of Rule 501 under the Securities Act of
1933, as amended, (c) by reason of such Seller's business and financial
experience, and the business and financial experience of those persons retained
by such Seller to advise him with respect to his investment in the Twinlab
Shares, such Seller, together with such advisors, has such knowledge,
sophistication and experience in business and financial matters so as to be
capable of evaluating the merits and the risks of an investment in the Twinlab
Shares and is able to bear the economic risk of holding the Twinlab Shares for
an indefinite period and (d) is acquiring the Twinlab Shares for his own account
and for investment and with no intention of distributing or reselling the
Twinlab Shares or any part thereof in any transaction that would be in violation
of the securities laws of the United States or any state.
6.2. Information Representations. Each Seller represents and warrants
that (i) such Seller, and his Representatives as deemed necessary by such Seller
(including such Seller's professional, tax and other advisors), have carefully
reviewed the materials (the "Materials") furnished by the Purchaser to such
Seller in connection with the transactions contemplated by this Agreement,
including without limitation, the Twinlab Disclosure Documents and (ii) such
Seller, and such Seller's Representatives, have been granted the opportunity to
ask questions of, and receive answers from, Representatives of TWINLAB
concerning TWINLAB, the Purchaser and the Twinlab Shares and to obtain any
additional information that such Seller deemed necessary to verify the accuracy
of the information contained in the Materials.
6.3. Resignation of Directors and Officers of the Company. Each of the
Sellers agrees at the Closing (if requested by the Purchaser), to resign from
his respective positions as an officer and director of the Company effective as
of the Closing Date and to cause the other officers and directors of the
Company, if any, to resign (if requested by the Purchaser) at the Closing.
6.4. Advice of Changes. During the period from the date of this
Agreement until the earlier of the Closing Date or the termination of this
Agreement in accordance with its terms, each Seller will promptly advise the
Purchaser in writing (a) of any event occurring subsequent to the date of this
Agreement that would render any representation or warranty of the Sellers
contained in this Agreement, if made on or as of the date of such event or the
Closing Date, untrue or inaccurate, (b) of any Material Adverse Change, and (c)
of any breach by any Seller of any covenant or agreement contained in any
Transaction Document.
6.5. Maintenance of Business. From the date hereof until the earlier of
the Closing Date and the termination of this Agreement in accordance with its
terms, the Sellers shall cause the Company to:
(a) cause to be done all things necessary to maintain, preserve and
renew its (i) corporate existence and all material licenses, authorizations and
permits necessary
22
to the conduct of its businesses and (ii) relationships with customers,
suppliers, employees and others in substantially the same manner as it has prior
to the date hereof;
(b) comply in all material respects with all applicable Laws; and
(c) maintain proper books of record and account which present fairly
in all material respects its financial condition and results of operations and
make provisions on its financial statements for all such proper reserves as in
each case are required in accordance with generally accepted accounting
principles, consistently applied.
6.6. Conduct of Business. During the period from the date of this
Agreement until the earlier of the Closing Date or the termination of this
Agreement in accordance with its terms, the Sellers will cause the Company to
continue to conduct the business of the Company and maintain the Company's
business relationships in the ordinary and usual course and will not permit the
Company, without the prior written consent of the Purchaser to:
(a) (i) declare, set aside or authorize the payment of, any dividend
or other distribution in respect of any shares of capital stock of the Company
or repurchase, redeem or acquire any of the outstanding shares of any class of
capital stock, except for dividends equal to 50% of the net earnings of the
Company from the period commencing on June 1, 1998 and ending on the Closing
Date (which dividends shall be paid in full within thirty (30) days of the
Closing Date and shall be paid primarily for the purpose of assisting Sellers in
meeting their estimated tax obligations in connection with the net earnings of
the Company during such period), or (ii) pay or otherwise distribute any other
amounts or assets to any Seller, whether as compensation or otherwise other than
salaries in the ordinary course of business consistent with past practice;
(b) split or combine the outstanding shares of its capital stock of
any class or enter into any recapitalization or agreement affecting the number
or rights of outstanding shares of any class of its capital stock;
(c) (i) award or pay any bonuses to employees of the Company in
excess of $5,000 to any person or $35,000 in the aggregate, (ii) enter into or
modify or amend any employment, deferred compensation, severance or similar
agreement, (iii) increase or agree to increase the compensation payable or to
become payable by it to any of the Company's (A) employees in excess of $5,000
to any person or $35,000 in the aggregate, or (B) directors or officers, agents
or Representatives or (iv) increase or agree to increase the coverage or
benefits available under any severance pay, termination pay, vacation pay,
company awards, salary continuation for disability, sick leave, deferred
compensation, bonus or other incentive compensation, insurance, pension or other
employee benefit plan, payment or arrangement made to, for or with such (A)
employees(B) directors, officers, agents or Representatives or (B) employees, in
excess of $5,000 to any person or $35,000 in the Aggregate;
(d) change accounting principles, methods or policies;
23
(e) enter into any Contract requiring payments in excess of $25,000,
or conduct its business other than in the ordinary course of business consistent
with past practice;
(f) (i) incur or repay any Indebtedness other than the repayment of
indebtedness to Scripps Bank under that certain loan agreement dated June 15,
1998, which shall be repaid in full prior to the Closing Date, (ii) make any
loans, advances or capital contributions to any other Person or (iii) assume,
guarantee, endorse or otherwise become liable for the obligations of any other
Person.
(g) fail to maintain and keep its properties in good repair, working
order and condition, normal wear and tear excepted;
(h) fail to comply with all other obligations which it incurred
pursuant to any Contract or promptly pay or discharge any current liabilities,
as such obligations become due, unless and to the extent that the same are being
contested in good faith and by appropriate proceedings and adequate reserves (as
determined in accordance with generally accepted accounting principles,
consistently applied) have been established on its books with respect thereto,
except in the ordinary course of business consistent with past practice and
which, in the aggregate, would not be material to the Company;
(i) mortgage, pledge or subject to any Lien any of its assets, or
acquire any assets or sell, assign, transfer, convey, lease or otherwise dispose
of any assets of the Company (other than the sale of inventory in the ordinary
course of business consistent with past practice);
(j) discharge or satisfy any Lien, or pay any obligation or
liability (fixed or contingent), except in the ordinary course of business
consistent with past practice and which, in the aggregate, would not be material
to the Company;
(k) cancel or compromise any debt or claim or amend, cancel,
terminate, relinquish, waive or release (i) any Contract to which any Seller or
any of his Affiliates is a party or (ii) any other Contract or right except (in
the case of this clause (ii)) in the ordinary course of business consistent with
past practice and which, in the aggregate, would not be material to the Company;
(l) transfer or grant any rights under any concessions, leases,
licenses, agreements or Intellectual Property used by the Company in its
business;
(m) make or commit to make any capital expenditures or capital
additions or betterments in excess of $10,000;
(n) institute or settle any Legal Proceeding;
(o) amend its certificate of incorporation or by-laws;
24
(p) issue, sell or transfer any shares of its capital stock of any
class or any other of its securities, or issue or create any options, warrants,
calls, rights, commitments, subscriptions, convertible securities or other
agreements of any character requiring the Company to issue, sell or transfer any
shares of capital stock, or accelerate the vesting of any outstanding security;
(q) merge, consolidate or reorganize with, or acquire, any entity;
(r) agree to any audit assessment by any Tax authority or fail to
pay and discharge when payable all Taxes, assessments and governmental charges
imposed upon its properties or upon the income or profits therefrom (in each
case before the same becomes delinquent and before penalties accrue thereon) and
all claims for labor, materials or supplies which if unpaid would by law become
a Lien upon any of its property;
(s) change any insurance coverage, issue any certificates of
insurance or fail to continue in force with its current insurance companies
adequate insurance covering risks of such types and in such amounts as are
customary for Persons engaged in similar lines of business;
(t) enter into any transaction with, or become party to any Contract
with, any officer, director, or Affiliate (or any relative of any of them) of
the Company;
(u) agree to do, or enter into negotiations with respect to, any of
the things described in the preceding clauses in this Section 6.6; or
(v) make any change with respect to any tax election or terminate
the S Corporation status of the Company.
6.7. Regulatory Approvals. Each Seller will, and will cause the Company
to, promptly execute and file, or join in the execution and filing, of any
application or other document that may be necessary in order to obtain the
authorization, approval or consent of any Governmental Body which may be
reasonably required, or which the Purchaser may reasonably request, including
filings pursuant to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976
("HSR"), in connection with the consummation of the transactions contemplated by
this Agreement. The Sellers will use their, and will cause the Company to use
its, best efforts to promptly obtain all such authorizations, approvals and
consents.
6.8. Necessary Consents. During the period from the date of this
Agreement until the earlier of the Closing Date or the termination of this
Agreement in accordance with its terms, the Sellers will use their, and will
cause the Company to use its, best efforts to obtain such written consents and
take such other actions as may be necessary or appropriate to facilitate the
consummation of the transactions contemplated hereby and by the other
Transaction Documents and to allow the Purchaser to carry on the Company's
business after the Closing Date.
25
6.9. Access to Information. During the period from the date of this
Agreement until the earlier of the Closing Date or the termination of this
Agreement in accordance with its terms, the Sellers will, and shall cause the
Company to, upon reasonable notice, during normal business hours, and so as not
to interfere with the normal business operations of the Company, (i) allow the
Purchaser and its Representatives reasonable access to the files, books,
records, personnel and offices of the Company, including, without limitation,
any and all information relating to the Company's Taxes, commitments, Contracts,
and real, personal and intangible property and financial condition, (ii) furnish
promptly to the Purchaser all information concerning the Company's business,
properties and personnel as the Purchaser may reasonably request, and (iii) make
available to the Purchaser the appropriate individuals (including attorneys,
accountants and other professionals) for discussion of the Company's business,
properties and personnel as the Purchaser may reasonably request. The Sellers
will cause the Company's accountants to cooperate with the Purchaser and its
Representatives in making available to the Purchaser all financial information
reasonably requested, including, without limitation, the right to examine all
working papers pertaining to all Tax returns and financial statements prepared,
reviewed or audited by such accountants.
6.10. Satisfaction of Conditions Precedent. During the period from the
date of this Agreement until the earlier of the Closing Date or the termination
of this Agreement in accordance with its terms, the Sellers will use their, and
will cause the Company to use its, best efforts to satisfy or cause to be
satisfied all the conditions precedent that are set forth in Section 9.
6.11. No Other Negotiations. From and after the date of this Agreement
until the earlier of the Closing Date or the termination of this Agreement in
accordance with its terms, the Sellers shall not, and shall cause the Company to
not, directly or indirectly, (a) solicit, initiate discussions or engage in
negotiations with any Person (whether such negotiations are initiated by the
Seller or otherwise) or take any other action intended or designed to facilitate
the efforts of any Person, other than the Purchaser, relating to the acquisition
of the Company (whether by way of merger, purchase of capital stock, purchase of
assets or otherwise) or any material portion of its capital stock or assets (any
such efforts by any such Person, including any proposal to make such an
acquisition, are referred to as an "Acquisition Proposal"), (b) provide
non-public information with respect to the Company to any Person, other than the
Purchaser or (c) enter into any agreement, understanding, commitment or other
arrangement with any Person, other than the Purchaser, relating to an
Acquisition Proposal. If the Company or any Seller receives any unsolicited
offer or proposal to enter negotiations or discussions relating to an
Acquisition Proposal, the Sellers shall immediately notify the Purchaser, which
notice shall include information as to the identity of the Person making any
such offer or proposal and the specific terms of such offer or proposal, as the
case may be.
6.12. Pooling Accounting Treatment. (a) From and after 30 days prior to
the Closing Date, none of the Sellers will sell, transfer or otherwise, directly
or indirectly, dispose of any securities of the Company or TWINLAB until after
such time as TWINLAB has published financial results covering at least 30 days
of combined operations of TWINLAB and
26
the Company after the Closing Date. Each of the Sellers understands that the
certificates representing the Twinlab Shares to be received by Sellers pursuant
to this Agreement will be placed on the "stop-transfer list" maintained by
TWINLAB'S transfer agent and will remain so listed until the publication of such
financial results and that there will be placed on the certificates representing
the Twinlab Shares, or any certificates delivered in substitution therefor, a
legend stating in substance:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED
ONLY IN COMPLIANCE WITH SECTIONS 6.12 AND 10 OF THE STOCK PURCHASE
AGREEMENT, DATED AUGUST 19, 1998, RELATING THERETO, A COPY OF WHICH
IS ON FILE WITH THE SECRETARY OF TWINLAB CORPORATION."
(b) Each of the Sellers will not, and will cause the Company not to,
take any action that would reasonably be expected to adversely affect the
ability of the Purchaser to account for the purchase of the Shares to be
effected by this Agreement as a pooling of interests, and each of the Sellers
shall use their, and shall cause the Company to use its, best efforts to take
such action as may be reasonably required to negate the impact of any past
actions by the Sellers, the Company or their respective Affiliates which would
reasonably be expected to adversely impact the ability of the Purchaser to treat
the purchase of the Shares as a pooling of interests.
6.13. Taxes. (a) The Sellers agree that they will pay all Taxes of the
Company attributable to periods ending on or prior to the Closing Date, and,
with respect to periods that end after the Closing Date, they will pay the
portion of the Taxes attributable to the portions of such taxable periods
through and including the Closing Date, as determined when possible based on a
closing of the books method. The Sellers shall prepare and file, subject to
review by the Purchaser, all tax and information returns of the Company with
respect to periods ending on or prior to the Closing Date. The Purchaser shall
prepare and file all other tax and information returns of the Company, subject
to a right of review by the Sellers with respect to any such returns for periods
that begin prior to the Closing Date, provided, however, notwithstanding
anything herein to the contrary, the Sellers shall prepare and file, subject to
review by the Purchaser, the Federal S Corporation income tax return (and
similar state S Corporation returns) for the period ending on the close of the
day on or prior to the Closing Date.
6.14. Termination of Shareholders Agreements. Sellers (i) shall validly
terminate the agreement, dated March 7, 1997, and effective as of January 1,
1997, by and among the Sellers regarding, among other things, the sale of the
Company, and (ii) shall validly terminate those provisions of the Shareholders
Agreement and Minutes of the First Meeting of the Board of Directors of PR
Nutrition, Inc., dated March 3, 1993, regarding (A) any right of first refusal
of a shareholder, (B) loans from ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and (C) board approval of
transactions which would result in the Company paying $5,000 or more to any
party.
27
6.15. Access to Books and Records. Sellers shall have access to the
books and records of the Company for the period ending on the Closing Date.
6.16. Compliance with Securities Laws. Sellers will comply with all
federal and state securities laws in connection with the offer, sale, transfer
or pledge or hypothecation of any of the Twinlab Shares.
7. Covenants of the Purchaser.
7.1. Advice of Changes. During the period from the date of this
Agreement until the earlier of the Closing Date or the termination of this
Agreement in accordance with its terms, the Purchaser or TWINLAB, as the case
may be, will promptly advise the Seller in writing (a) of any event occurring
subsequent to the date of this Agreement that would render any representation or
warranty of the Purchaser or TWINLAB, as the case may be, contained in this
Agreement, if made on or as of the date of such event or the Closing Date,
untrue or inaccurate in any material respect, and (b) of any breach by the
Purchaser or TWINLAB, as the case may be, of any covenant or agreement contained
in this Agreement.
7.2. Regulatory Approvals. The Purchaser will promptly execute and
file, or join in the execution and filing, of any application or other document
that may be necessary in order to obtain the authorization, approval or consent
of any Governmental Body, or which the Seller may reasonably request, including
filings pursuant to the HSR, in connection with the consummation of the
transactions contemplated by this Agreement. The Purchaser or TWINLAB, as the
case may be, will use its best efforts to promptly obtain all such
authorizations, approvals and consents.
7.3. Necessary Consents. During the term of this Agreement, the
Purchaser or TWINLAB, as the case may be, will use its best efforts to obtain
such written consents and take such other actions as may be necessary or
appropriate to facilitate the consummation of the transactions contemplated
hereby and by the other Transaction Documents.
7.4. Release of Sellers as Guarantors. The Purchaser shall use its best
efforts to obtain the release of the Sellers as personal guarantors of the Real
Property lease within 6 months of the Closing.
7.5. Satisfaction of Conditions Precedent. During the term of this
Agreement, the Purchaser and TWINLAB will use their respective best efforts to
satisfy or cause to be satisfied all the conditions precedent that are set forth
in Section 8.
8. Conditions.
28
8.1. Conditions Precedent to Each Party's Obligations.
The respective obligations of each party hereunder are subject to the
fulfillment or satisfaction on or before the Closing Date of each of the
following conditions (any one or more of which may be waived in writing by all
of the parties to this Agreement):
(a) Compliance with Law. There shall be no Law enacted, entered,
enforced or deemed applicable to the transactions contemplated hereby or by the
other Transaction Documents which would prohibit or render illegal the
transactions contemplated hereby or thereby.
(b) No Legal Proceedings or Orders. There shall not have been
instituted, pending or threatened any Legal Proceeding by or before any
Governmental Body, nor shall there be in effect any Order issued by any
Governmental Body, or threat of any Order, that (i) prevents or seeks to
prevent, or (ii) questions the validity of this Agreement or the other
Transaction Documents or any action taken or to be taken in connection with the
consummation of the transactions contemplated hereby or thereby.
(c) HSR. All waiting periods under the HSR applicable to the
consummation of the transactions contemplated by this Agreement shall have
expired or been terminated.
(d) Other Agreements. Each of the Sellers and the Purchaser shall have
executed and delivered such Seller's Employment Agreement in the form of
Exhibits 8.1A and 8.1B hereto, respectively.
8.2. Conditions Precedent to Obligations of the Sellers.
The obligations of each of the Sellers hereunder are subject to the
fulfillment or satisfaction on or before the Closing Date of each of the
following conditions (any one or more of which may be waived in writing by the
Seller):
(a) Accuracy of Representations and Warranties. The representations and
warranties of the Purchaser and TWINLAB set forth in Sections 4 and 5 shall be
true and accurate in all material respects on and as of the Closing Date with
the same force and effect as if they had been made at the Closing, and the
Seller shall receive a certificate to such effect signed by an officer of the
Purchaser.
(b) Covenants. The Purchaser shall have performed and complied in all
material respects with all of its covenants required to be performed by it under
this Agreement on or before the Closing Date, and the Seller shall receive a
certificate to such effect signed by an officer of the Purchaser.
(c) Registration Rights Agreement. Purchaser shall have executed and
delivered the Registration Rights Agreement in the form attached hereto as
Exhibit 8.2(c).
29
8.3. Conditions Precedent To Obligations of the Purchaser.
The obligations of the Purchaser hereunder are subject to the
fulfillment or satisfaction on or before the Closing Date of each of the
following conditions (any one or more of which may be waived in writing by the
Purchaser):
(a) Accuracy of Representations and Warranties. The representations and
warranties of each of the Sellers set forth in Section 3 shall be true and
accurate in all material respects on and as of the Closing Date with the same
force and effect as if they had been made at the Closing, and the Purchaser
shall receive a certificate to such effect signed by each of the Sellers.
(b) Covenants. Each of the Sellers shall have performed and complied in
all material respects with all of the covenants required to be performed by such
Seller under this Agreement on or before the Closing Date, and the Purchaser
shall receive a certificate to such effect signed by each of the Sellers.
(c) Absence of Material Adverse Change. There shall not have been any
Material Adverse Change, and the Purchaser shall receive a certificate to such
effect signed by each of the Sellers.
(d) Opinion of Seller's Counsel. The Purchaser and TWINLAB shall have
received from ▇▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel to the Sellers
and the Company, an opinion in the form of Exhibit 8.3A hereto.
(e) Documents. The Purchaser shall have received all written consents,
assignments, waivers, authorizations or other certificates reasonably deemed
necessary by the Purchaser's legal counsel to provide for the continuation in
full force and effect of any and all material Contracts of the Company and for
each of the Sellers to consummate the transactions contemplated hereby and by
the other Transaction Documents.
(f) Government Consents. There shall have been obtained on or before
the Closing Date such material Permits and there shall have been taken such
other action, as may be required to consummate the transactions contemplated
hereby and by the other Transaction Documents by any Government Body having
jurisdiction over the parties and the actions herein proposed to be taken,
including but not limited to requirements under applicable federal and state
securities laws.
(g) Other Agreements. Each Seller shall have executed and delivered (i)
a Non-competition Agreement and a General Release in the forms of Exhibits 8.3B
and 8.3C hereto, respectively.
(h) Opinion of Accountant. The Purchaser shall have received an opinion
of Deloitte & Touche, LLP, independent certified public accountants, to the
effect that the
30
purchase and sale of the Shares, to the best of its knowledge after due inquiry,
qualifies for pooling of interests accounting treatment if consummated in
accordance with this Agreement. Such opinion shall be in form and substance
reasonably satisfactory to Purchaser.
(i) Agreements with MLO Products, Inc.
(A) The Purchaser shall have entered into a Supply Agreement with
MLO Products, Inc. ("MLO") in form and substance satisfactory to the Purchaser
in its sole discretion (including all schedules and exhibits thereto), whereby
MLO will, among other things, agree to formulate, process and manufacture the
products sold, and to be sold, by the Company.
(B) The Purchaser shall have entered into an Assignment Agreement
with MLO in form and substance satisfactory to the Purchaser in its sole
discretion (including all schedules and exhibits thereto), whereby MLO will,
among other things, assign to Purchaser all of MLO's right, title and interest
in and to the Trade Secrets (as defined in the Requirements Agreement, dated as
of May 14, 1996, between MLO and the Company).
9. Termination of Agreement.
9.1. Termination. This Agreement may be terminated at any time prior to
the Closing Date:
(a) by mutual written consent duly executed by each of the Sellers
and the Purchaser; or
(b) by either the Purchaser or the Sellers, if all the conditions
for Closing shall not have been satisfied or waived on or before September 15,
1998 (the "Final Date"); provided, however, that the right to terminate this
Agreement under this Section 9.1(b) shall not be available to any party whose
breach of this Agreement or failure to fulfill any obligation under this
Agreement has been the cause of or resulted in the failure of any condition for
Closing; or
(c) by either the Purchaser or the Sellers, if a Governmental Body
shall have issued a nonappealable final Order or taken any other action having
the effect of permanently restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated hereby or in the other Transaction
Documents; provided however, that the right to terminate this Agreement under
this Section 9.1(c) shall not be available to any party which has not complied
with its respective obligations under Sections 6.7 or 7.2 and such noncompliance
materially contributed to the issuance of any such Order or the taking of such
action; provided further that the party seeking to terminate this Agreement
pursuant to this clause 9.1(c) shall have used all reasonable efforts to remove
such Order or action; or
(d) by either the Purchaser or the Sellers, if any representation or
warranty of the Purchaser or any of the Sellers, respectively, set forth in this
Agreement shall
31
be untrue in any material respect such that the conditions set forth in Sections
8.3(a) or 8.2(a)), as the case may be, would not be satisfied; provided,
however, that if such representation or warranty is curable prior to the Final
Date by the Purchaser or the Sellers, as the case may be, through the exercise
of reasonable best efforts and for so long as the Purchaser or the Sellers, as
the case may be, continues to exercise such reasonable best efforts, neither the
Purchaser nor the Sellers, respectively, may terminate this Agreement under this
Section 9.1(d); or
(e) by either the Purchaser or the Sellers, upon a breach of any
covenant or agreement on the part of the Purchaser or the Seller, respectively,
set forth in this Agreement such that the conditions set forth in Sections
8.3(b) or 8.2(b), as the case may be, would not be satisfied; provided, however,
that if such covenant or agreement is curable prior to the Final Date by the
Purchaser or the Sellers, as the case may be, through the exercise of reasonable
best efforts and for so long as the Purchaser or the Sellers, as the case may
be, continue to exercise such reasonable best efforts, neither the Purchaser nor
the Sellers, respectively, may terminate this Agreement under this Section
9.1(e).
9.2. Notice of Termination. Any termination of this Agreement under
Section 9.1 above will be effective by the delivery of written notice (in
accordance with the provisions of Section 12.10 hereof) of the terminating party
to the other parties hereto.
9.3. Effect of Termination. In the case of any termination of this
Agreement as provided in this Section 9, this Agreement shall be of no further
force and effect (except for Sections 12.3, 12.6, 12.8 and 12.13); provided,
however, that a termination of this Agreement shall not relieve any party from
liability for any breach of this Agreement or defeat or impair the right of any
party to pursue such relief as may otherwise be available to it as a result of
any breach of this Agreement or any of the representations, warranties,
covenants or agreements contained herein.
10. Legend on Certificates. Each stock certificate issued to represent
the Twinlab Shares shall bear the following (or a substantially equivalent)
conspicuous legend on the face or reverse side thereof:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR THE SECURITIES LAWS OF ANY JURISDICTION. SUCH SECURITIES MAY NOT
BE SOLD EXCEPT PURSUANT TO (I) A REGISTRATION STATEMENT WITH RESPECT
TO SUCH SECURITIES THAT IS EFFECTIVE UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAW, OR (II) ANY EXEMPTION FROM REGISTRATION UNDER
SUCH ACT, OR APPLICABLE STATE SECURITIES LAW, RELATING TO THE
DISPOSITION OF SECURITIES, INCLUDING RULE 144 UNDER THE ACT;
PROVIDED THAT, AN OPINION OF COUNSEL IS FURNISHED, REASONABLY
SATISFACTORY IN
32
FORM AND SUBSTANCE TO TWINLAB CORPORATION, THAT AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND/OR APPLICABLE STATE
SECURITIES LAW IS AVAILABLE.
Any stock certificate issued at any time in exchange or substitution for any
certificate bearing such legend shall also bear such legend. TWINLAB shall not
transfer on its books any certificate for the Twinlab Shares in violation of the
provisions of this Agreement. TWINLAB shall give appropriate stop transfer
instructions to its stock transfer agent with respect to the TWINLAB Shares.
11. Further Agreements of the Parties.
11.1. Indemnity. (a) Subject to Section 11.2, each Seller, jointly and
severally, agrees to indemnify, defend and hold harmless the Purchaser (and each
officer, director, shareholder, affiliate, agent and permitted assign thereof)
from and against any and all losses, liabilities, damages, deficiencies, costs
or expenses (including interest, penalties, and attorneys' fees, disbursements
and related charges) (collectively, "Losses") based upon, arising out of or
otherwise in respect of any inaccuracy in or breach of any representations,
warranties, covenants or agreements of any of the Sellers contained in this
Agreement or the other Transaction Documents.
(b) Each Seller, jointly and severally, agrees to indemnify, defend
and hold harmless the Purchaser (and each officer, director, shareholder,
affiliate, agent and permitted assign thereof) from and against any and all
Losses based upon or arising out of (i) the adulteration or defect of any
product of the Company sold prior to the Closing Date, (ii) the Settlement
Agreement and Mutual Release dated July 7, 1998 between the Company and ▇▇▇▇▇▇
▇▇▇▇▇▇, (iii) the Dresdner Agreement, (iv) the actions of ▇▇▇▇▇▇▇ ▇▇▇▇▇ that
formed the basis of the complaint of discrimination under the California Fair
Employment and Housing Act, dated February 20, 1998, made against ▇▇▇▇▇▇▇ ▇▇▇▇▇
by ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and (v) the representations and warranties contained in
Section 3.31.
(c) The Purchaser agrees to indemnify, defend and hold harmless each
of the Sellers from and against any and all Losses based upon, arising out of or
otherwise in respect of any inaccuracy in or breach of any representations,
warranties, covenants or agreements of the Purchaser contained in this Agreement
or the other Transaction Documents.
11.2. Limits on Indemnification. Sellers shall not be liable for any
indemnification obligations under Section 11.1(a) unless and until the
cumulative aggregate amount of such Losses incurred exceeds $200,000, whereupon
Sellers shall be obligated to indemnify Purchaser for the full amount of any
such Losses. In no event will Sellers' aggregate liability under Sections 11.1
(a) or (b) exceed the market value of the Twinlab Shares as of the Closing Date
(the "Maximum Liability") reduced at the end of each one year
33
anniversary following the Closing Date, by an amount equal to twenty percent
(20%) of the Maximum Liability.
12. Miscellaneous.
12.1. Survival of Representations and Warranties. (i) The
representations and warranties of Sellers contained in Section 3.27 of this
Agreement shall survive the Closing for the benefit of Purchaser for a period of
four years following the Closing Date, (ii) the representations and warranties
of Sellers contained in Section 3.31 shall survive the Closing for the benefit
of Purchaser for a period of three months following the Closing Date, and (iii)
all other representations and warranties of the Sellers contained in this
Agreement shall survive the Closing for the benefit of the Purchaser for a
period of one year following the Closing Date; provided, however, that there
shall be no termination of any representation or warranty as to which a claim
for indemnification has been asserted prior to the termination of the survival
period for such representation or warranty. The representations and warranties
of the Purchaser and TWINLAB shall survive the Closing for the benefit of the
Seller until one year following the Closing Date; provided, however, that there
shall be no termination of any representation or warranty as to which a claim
for indemnification has been asserted prior to the termination of the survival
period for such representation or warranty.
12.2. Certain Definitions.
"Affiliate" shall have the meaning specified by Rule 12b-2 under the
Securities Exchange Act of 1934.
"Closing" shall have the meaning set forth in Section 1 hereof.
"Closing Date" shall have the meaning set forth in Section 1 hereof.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" shall mean confidential records and
information, including, but not limited to, development, marketing, purchasing,
organizational, strategic, financial, managerial, administrative, manufacturing,
production, distribution and sales information, distribution methods, data,
specifications and processes presently owned or at any time hereafter developed
by a Person or its agents or consultants or used presently or at any time
hereafter in the course of the business of such Person, that are not otherwise
part of the public domain.
"Contract" means any contract, agreement, indenture, note, bond,
loan, instrument, lease, conditional sale contract, mortgage, license,
franchise, insurance policy. commitment or other arrangement or agreement,
whether written or oral.
"Disclosure Schedule" means the Disclosure Schedule annexed hereto
as Schedule I.
34
"Environmental Claim" means any accusation, allegation, notice of
violation, action, claim, Lien, demand, abatement or other Order or direction
(conditional or otherwise) by any Governmental Body or any Person for personal
injury (including sickness, disease or death), tangible or intangible property
damage, damage to the environment, nuisance, pollution, contamination or other
adverse effects on the environment, or for fines, penalties or restrictions
resulting from or based upon (i) the existence, or the continuation of the
existence, of a Release (including, without limitation, sudden or non-sudden
accidental or non-accidental Releases) of, or exposure to, any Hazardous
Material or other substance, clinical, material, pollutant, contaminant, odor,
audible noise, or other Release in, into or onto the environment (including,
without limitation, the air soil, soil, surface water or Groundwater) at, in,
by, from or related to the Facilities or any activities conducted thereon-, (ii)
the environmental aspects of the transportation, storage, treatment or disposal
of Hazardous Materials in connection with the operation of the Facilities; or
(iii) the violation, or alleged violation, of any Environmental Laws, Orders or
Permits of or from any Governmental Body relating to environmental matters
connected with the Facilities.
"Environmental Law" means any Law concerning the environment, or
activities that might threaten or result in damage to the environment or human
health, or any Law that is concerned in whole or in part with the environment
and with protecting or improving the quality of the environment and human and
employee health and safety and includes, but is not limited to, the
Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA")
(42 U.S.C. ss. 9601 et seq.) the Hazardous Materials Transportation Act (49
U.S.C. ss. 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C.
ss. 6901 et seq), the Clean Water Act (33 U.S.C. ss. 1251 et seq), the Clean Air
Act (33 U.S.C. ss. 7401 et seq.), the Toxic Substances Control Act (15 U.S.C.
ss. 2601 et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7
U.S.C. ss. 136 et seq.) and the Occupational Safety and Health Act (29 U.S.C.
ss. 651 et seq.) ("OSHA"), as such laws have been amended or supplemented, and
the regulations promulgated pursuant thereto, and any and all analogous state or
local statutes, and the regulations promulgated pursuant thereto, and any and
all treaties, conventions and environmental public and employee health and
safety statutes and regulations or analogous requirements of non-United States
jurisdictions in which the Company conducts any business.
"Environmental Matters" means any matter arising out of or relating
to human and employee health and safety or the environment which could give rise
to liability or require the expenditure of money to address, and shall include,
without limitation, investigating and remediating costs, any fines and penalties
arising in connection therewith, and any claim in respect thereof for damages or
injunctive relief for alleged personal injury, property damage or damage to
natural resources under common law or other Environmental Law.
"Environmental Permit" means any Permit, approval, authorization,
license variance, registration, or permission required under any applicable
Environmental Laws and all supporting documents associated therewith.
35
"Facilities" means real property, leased or operated by the Company.
"Governmental Body" means any governmental or regulatory body
(including the Food and Drug Administration (the "FDA"), the Federal Trade
Commission (the "FTC"), the Consumer Product Safety Commission (the "CPSC") the
United States Department of Agriculture (the "USDA") and the Federal Trade
Commission, or political subdivision thereof, whether federal, state, local or
foreign, or any agency, instrumentality or authority thereof, or any court or
arbitrator (public or private).
"Hazardous Materials" means any substance, material or waste which
is regulated by any local, state or federal Governmental Body in the
Jurisdiction in which the Company conducts business, or the United States,
including, without limitation, any material or substance which is defined as a
"hazardous waste," "hazardous material," "hazardous substance," "extremely
hazardous waste" or restricted hazardous waste," "subject waste," "contaminant,"
"toxic waste" or "toxic substance" under any provision of Environmental Law,
including but not limited to, petroleum products, asbestos and polychlorinated
biphenyls.
"Indebtedness" means at a particular time, without duplication, (i)
any indebtedness for borrowed money or issued in substitution for or exchange of
indebtedness for borrowed money, including any bank overdraft or other similar
extension of credit, (ii) any indebtedness evidenced by any note, bond,
debenture or other debt security, (iii) any indebtedness for the deferred
purchase price of property or services with respect to which a Person is liable,
contingently or otherwise, as obligor or otherwise (other than trade payables
and other current liabilities incurred in the ordinary course of business which
are not more than 30 days past due), (iv) any commitment by which a Person
assures a creditor against loss (including, without limitation, contingent
reimbursement obligations with respect to letters of credit), (v) any
indebtedness guaranteed in any manner by a Person (including, without
limitation, guarantees in the form of an agreement to repurchase or reimburse),
(vi) any obligations under capitalized leases with respect to which a Person is
liable, contingently or otherwise, as obligor, guarantor or otherwise, or with
respect to which obligations a Person assures a creditor against loss, (vii) any
indebtedness secured by a Lien on a Person's assets and (viii) any unsatisfied
obligation for "withdrawal liability" to a multiemployer plan" as such terms are
defined under ERISA.
"Intellectual Property Assets" means all worldwide intellectual
property rights, including, without limitation, patents, patent applications,
patent rights, trademarks, trademark applications, trademark rights, service
marks, service ▇▇▇▇ applications, service ▇▇▇▇ rights, copyrights, copyrights
applications, trade names, unfair competition rights, franchises, licenses,
inventories, know-how, trade secrets, moral rights, rights of publicity,
customer lists, proprietary information, technologies, processes and formulae,
proprietary food formulations, all source and object code, algorithm,
architecture, structure, display screens, layouts, inventions, development
tools, and all documentation and media constituting, describing or relating to
any of the above, including, without limitation, manuals, memoranda and records
in any format, whether hard copy or machine-readable only.
36
"Law" means any federal, state, local or foreign law (including
common law), statute, code, ordinance, rule, regulation or other requirement or
guideline (including FDA Over the Counter ("OTC") Monographs and cosmetic
ingredient safety and color additive rules and regulations, cosmetic labeling
requirements under the Fair Packaging and Labeling Act (the "FPLA"), federal and
state food, drug and false advertising Laws, and rules and regulations of the
FTC, the CPSC and the USDA).
"Legal Proceeding" means any judicial, administrative or arbitral
actions, suits, proceedings (public or private), claims or governmental
proceedings.
"Lien" means any lien, pledge, hypothecation, levy, mortgage, deed
of trust, security interest, claim, lease, charge, option, right of first
refusal, easement, or other real estate declaration, covenant, condition,
restriction or servitude, transfer restriction under any shareholder or similar
agreement, encumbrance or any other restriction or limitation whatsoever.
"Material Adverse Change" means any material adverse change in the
business, properties, results of operations, prospects or condition (financial
or otherwise) of the Company.
"Order" means any order, consent, consent order, injunction,
judgment, decree, consent decree, ruling, writ, assessment or arbitration award.
"Permits" means any approvals, authorizations, registrations,
consents, licenses, permits or certificates by any Governmental Body.
"Person" means any individual, corporation, partnership, firm, joint
venture, association, joint-stock company, trust, unincorporated organization,
Governmental Body or other entity.
"Release" means any release, spill, effluent, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching, or
migration into the indoor or outdoor environment, or into or out of any property
owned, operated or leased by the Company, including the movement of any
Hazardous Material or other substance through or in the air, soil, surface
water, groundwater, or property.
"Remedial Action" means all actions, including, without limitation,
any capital expenditures, required or voluntarily undertaken to (i) clean up,
remove, treat, or in any other way address any Hazardous Material or other
substance in the indoor or outdoor environment; (ii) prevent the Release or
threat of Release, or minimize the further Release of any Hazardous Material or
other substance so it does not migrate or endanger or threaten to endanger
public health or welfare of the indoor or outdoor environment; (iii) perform
pre-remedial studies and investigations or post-remedial monitoring and care; or
(iv) bring any Facility into compliance with all Environmental Laws and
Environmental Permits.
37
"Representatives" of a Person means its officers, employees, agents,
legal advisors and accountants.
"Shares" means the Common Stock to be purchased hereunder.
12.3. Expenses. Each party shall bear its own expenses in connection
with the negotiation and execution of this Agreement and the transactions
contemplated hereby and by the other Transaction Documents. None of Seller's
costs or expenses (including the fees payable to any brokers, finders or
financial advisors) shall be charged to the Company. The Company shall pay the
reasonable expenses of the Company's accountants and attorneys incurred in
connection with the preparation and negotiation of this Agreement and the
Transaction Documents.
12.4. Specific Performance. Each Seller acknowledges and agrees that
the breach or threatened breach of this Agreement would cause irreparable damage
to the Purchaser and that the Purchaser will not have an adequate remedy at law.
Accordingly, each Seller expressly acknowledges that the Purchaser shall be
entitled to specific performance, injunctive relief or any other equitable
remedy against each of the Sellers, without the posting of a bond, in the event
of any breach or threatened breach of any provision of this Agreement by any of
the Sellers. The rights and remedies of the parties hereto are cumulative and
shall not be exclusive, and each such party shall be entitled to pursue all
legal and equitable rights and remedies and to secure performance of the
obligations and duties of the other under this Agreement, and the enforcement of
one or more of such rights and remedies by a party shall in no way preclude such
party from pursuing, at the same time or subsequently, any and all other rights
and remedies available to it.
12.5. Further Assurances. Each Seller, TWINLAB and the Purchaser each
agree to execute and deliver such other reasonable documents or agreements as
may be necessary or desirable for the implementation of this Agreement and the
consummation of the transactions contemplated hereby or by the other Transaction
Documents.
12.6. Submission to Jurisdiction; Waiver of Jury Trial; and Consent to
Service of Process.
(a) The parties hereto hereby irrevocably submit to the exclusive
jurisdiction of any federal or state court located within the State of New York
over any dispute arising out of or relating to this Agreement or any of the
transactions contemplated hereby or by the other Transaction Documents and each
party hereby irrevocably agrees that all claims in respect of such dispute or
any suit, action or proceeding related thereto may be heard and determined in
such courts. The parties hereby irrevocably waive, to the fullest extent
permitted by applicable law, any objection which they may now or hereafter have
to the laying of venue of any such dispute brought in such court or any defense
of inconvenient forum for the maintenance of such dispute. Each of the parties
hereto agrees that a judgment in any such dispute may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
38
(b) THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT AND ANY OF THE OTHER TRANSACTION DOCUMENTS, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY
PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES' ACCEPTANCE OF
THIS AGREEMENT.
(c) Each of the parties hereto hereby consents to process being
served by any party to this Agreement in any suit, action or proceeding, by the
mailing of a copy thereof in accordance with the provisions of Section 12.10.
12.7. Entire Agreement; Amendments and Waivers. This Agreement
(including the schedules and exhibits hereto) represents the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof and can be amended, supplemented or changed, and any
provision hereof can be waived, only by written instrument making specific
reference to this Agreement signed by the parties hereto. No action taken
pursuant to this Agreement, including without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representation, warranty, covenant or
agreement contained herein. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a further or
continuing waiver of such breach or as a waiver of any other or subsequent
breach. No failure on the part of any party to exercise, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or remedy
by such party preclude any other or further exercise thereof or the exercise of
any other right, power or remedy. All remedies hereunder are cumulative and are
not exclusive of any other remedies provided by law.
12.8. Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York without giving
effect to the principles of conflict of laws thereunder.
12.9. Table of Contents and Headings. The table of contents and section
headings of this Agreement are for reference purposes only and are to be given
no effect in the construction or interpretation of this Agreement.
12.10. Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when delivered
personally, upon delivery to a nationally recognized overnight courier service,
or when mailed by certified mail, return receipt requested, to the parties at
the following addresses (or to such other address as a party may have specified
by notice given to the other party pursuant to this provision):
If to ▇▇▇▇▇, to: ▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
39
(if by mail);
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(if by courier)
With a copy to:
▇▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Sears toP.O. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(if by mail);
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(if by courier)
With a copy to:
▇▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to ▇▇▇▇▇▇▇▇ to: ▇▇▇▇ ▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇, #▇▇▇
▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(if by mail)
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(if by courier);
With a copy to:
▇▇▇▇▇▇▇▇, ▇▇▇▇, Hargreaves & Savitch LLP
▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Purchaser or to TWINLAB, to:
Twinlab Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Twinlab Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
All notices are effective upon receipt or upon refusal if properly delivered.
12.11. Severability. If any term, provision, covenant or condition of
this Agreement or part thereof, or the application thereof to any Person, place
or circumstance shall be held to be invalid, unenforceable or void by a court of
competent jurisdiction, the remainder of this Agreement and such term,
provision, covenant or condition shall remain in full force and effect, and any
such invalid, unenforceable or void term, provision, covenant or condition shall
be deemed, without further action on the part of the parties hereto, modified,
amended and limited, and the court shall have the power to modify, amend, and
limit such term, provision, covenant or condition, to the extent necessary to
render the same and the remainder of this Agreement valid, enforceable and
lawful.
12.12. Binding Effect, Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. Nothing in this Agreement shall create or be deemed to create
any third party beneficiary rights or any other rights of any kind in any Person
or entity not a party to this Agreement except as provided below. No assignment
of this Agreement or of any rights or obligations hereunder may be made by any
Seller (by operation of law or otherwise) without the prior written consent of
the Purchaser and any attempted assignment without such required consent shall
be void. The Purchaser may assign this Agreement and any or all rights and
obligations hereunder, in whole or in part, to any Affiliate of the Purchaser,
any purchaser of all or
41
substantially all of the Purchaser's business or assets, any successor to the
Purchaser or any assignee thereof (each, a "Successor"), whether direct or
indirect, by purchase, merger, consolidation, operation of law or otherwise. The
Purchaser will require any such Successor to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Purchaser would be required to perform it if no such purchase, succession or
assignment had taken place. Upon any such permitted assignment, the references
in this Agreement to the Purchaser shall also apply to any Successor unless the
context otherwise requires.
12.13. Confidential Information. All Confidential Information with
respect to any party hereto is considered secret and will be disclosed in
confidence. Each party hereto acknowledges that, it may have access to and
become acquainted with Confidential Information of another party. Each party
hereto agrees that it will not prior to the Closing Date (or in the event of the
termination of this Agreement in accordance with its terms) and at all times
thereafter, directly or indirectly for any reason whatsoever, disclose or use
any such Confidential Information. All records, files, drawings, documents,
equipment and other tangible items, wherever located, relating in any way to or
containing Confidential Information, which any party has prepared or shall in
the future prepare, shall be and remain the sole and exclusive property of such
party and shall be included in the Confidential Information. Upon termination of
this Agreement in accordance with its terms, the parties shall promptly deliver
any and all of the Confidential Information and copies thereof of any other
party, not previously delivered to such party, that may be in its possession or
under its control. The foregoing restrictions shall not apply to the use,
divulgence, disclosure or grant of access to Confidential Information to the
extent, but only to the extent, (i) expressly permitted or required pursuant to
any other written agreement between the parties, (ii) such Confidential
Information has been publicly disclosed (not due to a breach by any party of its
obligations hereunder, or by breach of any other Person, of a fiduciary or
confidential obligation to a party) or (iii) a party is required to disclose
Confidential Information by or to any court of competent jurisdiction or any
other Governmental Body; provided, however, that the party required to disclose
such Confidential Information shall, prior to any such disclosure, immediately
notify the party which owns the Confidential Information of such requirement and
provided further, that such party shall have the right, at its expense, to
object to such disclosures and to seek confidential treatment of any
Confidential Information to be so disclosed on such terms as it shall determine.
12.14. Public Announcement. The parties shall cooperate with respect to
any public announcement relating to the transactions contemplated hereby or by
the other Transaction Documents; and neither party will issue any public
statement announcing such transaction without the prior consent of the others,
except as such party in good faith (based upon advice of counsel) believes is
required by law and following notice to the other party.
12.15. Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
42
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the date first written above.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
TWINLAB CORPORATION
By: /s/▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
TWIN LABORATORIES INC.
By: /s/▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
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