Exhibit 10.61
STOCK PURCHASE AGREEMENT
This stock purchase agreement (this "Agreement") is dated as of June 1,
2001 and is between Xxxxx Xxxxxxxx, an individual residing at 00 Xxxxx Xxxx
Xxxx, Xxxxxxx, Xxx Xxxx 00000 (the "Purchaser"), and Twin Laboratories Inc., a
Utah corporation with its principal place of business at 000 Xxxxx Xxxxxxx,
Xxxxxxxxx, Xxx Xxxx 00000 (the "Seller"). All capitalized terms used herein
shall have the meaning set forth in Exhibit A to the Agreement.
The Seller is the beneficial owner of ten (10) shares of common stock, par
value $0.01 per share (the "Common Stock") of Advanced Research Press, Inc., a
New York corporation with its principal place of business at 000 Xxxxx Xxxxxxx,
Xxxxxxxxx, Xxx Xxxx 00000 ("ARP"), which Common Stock represents all the issued
and outstanding common stock of ARP;
The Purchaser is the Chief Executive Officer, President and a director of
ARP and in such capacity, the Purchaser has maintained the day-to-day
responsibility for the operations and management of ARP;
The Purchaser is also an Executive Vice President and a member of the
board of directors of the Seller, Twinlab Corporation, a Delaware corporation
("Twinlab Corporation"), Xxxxxxx Laboratories, Inc., a Delaware corporation,
Health Factors International, Inc., a Delaware corporation and a Vice President
of Twinlab FSC, Inc. a Barbados corporation (collectively, the "Executive
Positions"); and
The Purchaser and the Seller entered into a Letter of Intent, dated May
22, 2001 (the "Letter of Intent") pursuant to which the Purchaser agreed to
purchase the Common Stock from the Seller upon the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the premises and the respective mutual
covenants, representations and warranties herein contained, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF STOCK
1.1 Purchase and Sale of Stock; Adjustments.
(a) Subject to the terms of this Agreement, on the date hereof, the
Seller shall sell to the Purchaser, and the Purchaser shall purchase from the
Seller, the Common Stock, for an aggregate purchase price of One Million Dollars
($1,000,000), in cash (the "Purchaser Price").
(b) In addition to the Purchase Price, within thirty-one (31) days
after the Effective Date (the "Pre-paid Expenses Resolution Date"), the Seller
shall deliver to the Purchaser a certificate (the "Pre-paid Expenses
Certificate") indicating the amount of the Pre-paid Expenses. The amount of such
Pre-paid Expenses shall be delivered by the Purchaser to the Seller within
thirty (30) Business Days after the Pre-paid Expenses Resolution Date; provided,
however, that if the Purchaser reasonably disputes the computation of the
Pre-Paid Expenses set forth in the Pre-paid Expenses Certificate, the Purchaser
shall give written notice to the Seller within five (5) Business Days after the
Pre-paid Expenses Resolution Date, setting forth the Purchaser's computation of
the Pre-Paid Expenses (the "Purchaser Dispute Notice"), and within five (5)
Business Days thereafter, the Seller and the Purchaser will attempt in good
faith to agree on the amount of the Pre-Paid Expenses. To the extent the parties
cannot agree on the amount of the Pre-paid Expenses within five (5) Business
Days after receipt of the Purchaser Dispute Notice, the items remaining in
dispute shall be submitted for resolution to Deloitte & Touche, LLP
("Deloitte"). Any fees and expenses of Deloitte in resolving such dispute shall
be shared equally by the Seller and the Purchaser. The Seller and the Purchaser
shall be bound by the computation of such items as determined by Deloitte, who
shall make any such determination within thirty (30) Business Days after
submission of the remaining disputed items.
1.2 Closing. The parties shall hold the closing of the Purchaser's
purchase of the Common Stock (the "Closing") at the offices of Xxxxxx Xxxxx
Xxxxxxxx & Xxxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, on the date
hereof, or at such other date or place that the parties agree to in writing.
1.3 Payment and Delivery.
(a) At the Closing, the Seller shall deliver the following to the
Purchaser:
(1) a certificate or certificates representing the Common
Stock together with stock powers separate from the
certificates duly executed by the Seller in blank and
sufficient to convey to the Purchaser good and
marketable title to all of the Common Stock free and
clear of any and all Liens;
(2) an executed counterpart to this Agreement and the
Transition Services Agreement;
(3) a fairness opinion from Xxxxxxx, Xxxxx and Co.,
addressed to the Seller and dated the date hereof;
(4) a consent from The CIT Group/Business Credit, Inc. to
the sale of the Common Stock, including documentation
necessary to release any security interest in the ARP
Property or the Common Stock;
(5) documentation necessary to transfer to the Purchaser
good, valid and legal title to the ARP Property,
including but not limited to codes, identification
numbers or other materials necessary to operate or
utilize the ARP Property, free and clear of any Liens,
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except for those contained in any documentation to which
ARP is a party or as otherwise set forth in Exhibit B;
(6) a good standing certificate of ARP dated on or about the
date hereof;
(7) documentation evidencing the resignation of all
executive officers and directors of ARP as of the date
hereof, except the Purchaser;
(8) copies of the articles of incorporation, bylaws and
stock transfer ledger of ARP;
(9) an officer's certificate of the Seller, as applicable,
stating that the sale of the Common Stock to the
Purchaser is permitted under the terms of the Indenture
between the Seller and Fleet National Bank dated as of
May 6, 1996; and
(10) with respect to the approval of the transactions
contemplated hereby (i) a copy of the unanimous written
consent of the Board of Directors of Twinlab Corporation
dated as of the date hereof setting forth the authorized
resolutions adopted by Twinlab Corporation and (ii) a
written consent of the Seller, as the sole shareholder
of ARP.
(b) At the Closing, the Purchaser shall deliver the following to the
Seller:
(1) the Purchase Price, by wire transfer, to one or more
bank accounts designated to the Purchaser by the Seller
in writing;
(2) an executed counterpart to this Agreement and the
Transition Services Agreement; and
(3) a letter, dated the date hereof, from the Purchaser,
stating that the Purchaser is resigning, effective the
date hereof, from each Executive Position other than as
a director of Twinlab Corporation.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations of the Seller. The Seller hereby represents and
warrants to the Purchaser as follows:
(a) Due Organization. ARP is a corporation validly existing and in
good standing under the laws of the State of New York with the power to own all
of its properties and assets and to carry on its business as it is currently
being conducted.
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(b) Ownership of Securities.
(i) The Seller owns, of record and beneficially, and has good,
valid and indefeasible title to and the right to transfer the Common Stock, free
and clear of any and all Liens of any kind or nature whatsoever. The Common
Stock constitutes all of the issued and outstanding capital stock of ARP. There
are no voting trusts, shareholder agreements or any other Contracts or
understandings to which ARP, the Seller or any of its Affiliates is a party with
respect to the sale or transfer of the Common Stock.
(ii) There are no outstanding securities of the Seller,
including without limitation debt securities, common or preferred stock,
options, warrants, rights or other securities convertible or exercisable into,
or exchangeable for, capital stock of ARP.
(c) Authority; No Conflict.
(i) The Seller has the corporate power and authority to
execute and deliver this Agreement and the Transition Services Agreement, to
consummate the other transactions contemplated hereby and thereby and to perform
its obligations under this Agreement and the Transition Services Agreement. This
Agreement and Transition Services Agreement have been duly authorized and
approved, executed and delivered by the Seller and have been duly authorized and
approved by the Seller's sole shareholder and constitute the legal, valid and
binding obligation of the Seller, enforceable against the Seller in accordance
with their respective terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting the
enforcement of creditors' rights in general, or by general principles of equity.
(ii) The Seller's execution and delivery of this Agreement and
the Transition Services Agreement and performance of its obligations under this
Agreement and the Transition Services Agreement do not, to the Seller's
reasonable knowledge (A) conflict with, result in a breach of, constitute a
default under (or an event which, with notice or lapse of time or both, would
constitute a default under), accelerate the performance required by, result in
the creation of any Lien upon any of the properties or assets of the Seller or
ARP under, or create in any party the right to accelerate, terminate, modify, or
cancel, or require any notice under, any Contract to which the Seller or ARP is
a party or by which any properties or assets of the Seller or ARP are bound, or
(B) violate any Law or Order currently in effect to which the Seller or APR is
subject. Notwithstanding the foregoing, the Seller's knowledge and opinion
herein is exclusive of any obligations of ARP with respect to its publishing
activities.
(d) Post-Closing Obligations. Since January 1, 2001, the Seller has
not (i) taken any action or entered into any agreement, whether oral or in
writing, with any Person, to compromise, forgive or modify any obligation (in an
amount which individually or in the aggregate exceeds $5,000) of ARP after the
date hereof or (ii) entered into any agreement to which ARP is not a party that
creates an obligation or claim against ARP following the Closing.
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(e) Rights of Third Parties. The Seller has not granted any right,
option or license to any Person in connection with the assets of APR; provided,
however, that ARP entered into an agreement, attached hereto as Exhibit E, to
make royalty payments to the American Botanical Counsel with respect to sale of
the "Consumer's Guide to Herbal Medicine."
2.2 Representations of the Purchaser. The Purchaser hereby represents to
the Seller as follows:
(a) Authority; No Conflict.
(i) The Purchaser has the power and authority to execute and
deliver this Agreement and the Transition Services Agreement, to consummate the
other transactions contemplated hereby and thereby and to perform his
obligations under this Agreement and the Transition Services Agreement. This
Agreement and Transition Services Agreement constitutes the legal, valid and
binding obligation of the Purchaser, enforceable against the Purchaser in
accordance with their respective terms, except as enforcement thereof may be
limited by bankruptcy, insolvency, moratorium or other similar laws affecting
the enforcement of creditors' rights in general, or by general principles of
equity.
(ii) The Purchaser's execution and delivery of this Agreement
and the Transition Services Agreement and the performance of his obligations
under this Agreement and the Transition Services Agreement do not (A) conflict
with, result in a breach of, constitute a default under (or an event which, with
notice or lapse of time or both, would constitute a default under), accelerate
the performance required by, result in the creation of any Lien upon any of the
properties or assets of the Purchaser under, or create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under, any
Contract to which the Purchaser is a party or by which any properties or assets
of the Purchaser are bound, or (B) violate any Law or Order currently in effect
to which the Purchaser is subject.
(b) Consents. The Purchaser is not required to obtain the Consent of
any Person, including the Consent of any party to any Contract to which the
Purchaser is a party, in connection with execution and delivery of this
Agreement and performance of his obligations under this Agreement.
(c) Pre-Closing Obligations. Since January 1, 2001, the Purchaser
has not (i) taken any action or entered into any agreement, whether oral or in
writing, with any Person, to compromise, forgive or modify any obligation, which
individually or in the aggregate exceeds $5,000, of ARP or the Seller prior to
the date hereof or (ii) entered into any agreement to which the Seller is not a
party that creates an obligation or claim against the Seller prior to the date
hereof.
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(d) Relinquishment of Books and Records. Except for the ARP Property
and any materials received by the Purchaser in his capacity as a director of
Twinlab Corporation, the Purchaser has returned to the Seller all property owned
by the Seller or any of its Affiliates that was made available to and was in the
possession or control of the Purchaser in connection with and during the term of
the Purchaser's employment in the Executive Positions, including, but not
limited to any and all files, correspondence, memorandum, financial data, and
other materials or documents and any and all library books or other materials
purchased by ARP or the Seller.
(e) Investment Representations of the Purchaser.
(i) The Common Stock is being acquired by the Purchaser for
its own account, and not for any other Person, for investment only and with no
intention of distributing or reselling (and the Purchaser will not distribute or
resell) the Common Stock or any part thereof or interest therein in any
transaction that would violate the securities Laws of the United States of
America, or any state, or any other jurisdiction without prejudice, however, to
the rights of the Purchaser at all times to sell or otherwise dispose of all or
any part of the Common Stock under an effective registration statement or
applicable exemption from registration under the Securities Act and any
applicable state or other securities Law, subject to this Agreement and any
other Contract to which the Purchaser is a party. The Purchaser has no Contract
or arrangement with any Person to sell, transfer or pledge to such Person the
Common Stock, any interest therein, or any part thereof, and such Purchaser has
no present plans to enter into any such Contract or arrangement.
(ii) The Purchaser is an accredited investor as that term is
defined in Rule 501 under the Securities Act and has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of an investment in the Common Stock. The Purchaser is able
to bear the risks associated with an investment in the Common Stock.
(iii) The Purchaser has read this Agreement and Twinlab
Corporation's SEC Reports and fully understands the terms under which the Common
Stock is being sold to the Purchaser pursuant hereto. The Seller has made
available to the Purchaser the opportunity to ask questions of and receive
answers from the Seller concerning the Seller and the terms and conditions under
which the Common Stock will be sold to the Purchaser and to obtain any
additional information which the Seller may possess or can acquire without
unreasonable effort or expense that is necessary to verify the accuracy of
information furnished in connection with this Agreement or in response to any
request for information. The Purchaser is satisfied with such answers and
information.
(iv) The Purchaser agrees that, so long as required by Law,
certificates evidencing the Common Stock and any securities issued in exchange
for or in respect thereof shall bear a legend to the following effect:
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"THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT
BE SOLD OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS OR
PURSUANT TO AN APPLICABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND SUCH LAWS."
ARTICLE III
COVENANTS AND OTHER ARRANGEMENTS
3.1 Seller's Employment Agreement.
(a) The Purchaser and the Seller are parties to an employment
agreement, dated January 1, 2000, attached hereto as Exhibit D (the "Employment
Agreement"). Except as otherwise set forth herein, the Seller and the Purchaser
agree that the Employment Agreement, and the benefits derived thereunder, shall
be terminated as of the date hereof; provided, however, that the Seller and the
Purchaser agree that the provisions set forth in Sections 5, 6, 7, 10(a), 10(b),
10(i) and 10(k) of the Employment Agreement are valid, binding and enforceable
and shall survive the termination of the Employment Agreement after the date
hereof for the periods set forth and upon the same terms and conditions as set
forth therein, including, without limitation, the payment of the Purchaser's
Base Salary in accordance with the terms set forth in Section 5. The parties
also agree that the Purchaser shall be entitled to receive any potential bonus
for 2001, with the amount determined in accordance with Section 3(b) of the
Employment Agreement on the basis that the financial results of Twinlab
Corporation for the first five (5) months of 2001 will be annualized in
determining the Purchaser's eligibility to receive a bonus.
(b) Notwithstanding the foregoing, so long as the Purchaser remains
a member of the board of directors of Twinlab Corporation, the Purchaser shall
be entitled to receive compensation for serving as a director in accordance with
the terms and conditions of the Outside Director Plans as in effect from time to
time after the date hereof.
(c) If the Purchaser is not in breach of the non-competition
provision set forth in Section 5 of the Employment Agreement:
(i) the Seller waives the scope of the non-competition
provision set forth therein solely to the extent necessary to permit the
Purchaser to publish MD or any other books, magazines, web sites or other media
consistent with past practice in the ordinary course of the business of ARP;
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(ii) Notwithstanding anything to the contrary contained in
this Agreement, the Purchaser shall not directly or indirectly manage, operate,
join, control, participate in, invest in or otherwise be connected or associated
with, in any manner, including, without limitation, as an officer, director,
employee, distributor, independent contractor, independent representative,
partner, consultant, advisor, agent, proprietor, trustee, investor in, any
business or other enterprise that publishes any catalog, direct mail order or
other related publication, book, magazine, web site or other media that sells or
distributes or purports to sell or distribute vitamins, minerals, nutritional
supplements (including, without limitation, amino acids and proteins), herbal
products, phytonutrients, herb teas or food bars or any other products that are
produced, sold and/or distributed by Twinlab Corporation or any of its
Subsidiaries as of the date hereof or any other business engaged in or being
developed by Twinlab Corporation or any of its Subsidiaries, or being actively
considered by management of Twinlab Corporation or any of its Subsidiaries as of
the date hereof; and
(iii) the Purchaser shall be permitted to make investments in
and enter into agreements with other Persons; provided, however, that any such
investments or agreements entered into between the Purchaser and such Person are
consistent with the provisions set forth in this Section 2.1(c) and do not
conflict with or violate any other terms of this Agreement or the provisions of
Section 5 of the Employment Agreement.
(d) During the term of the non-competition provisions set forth in
Section 5 of the Employment Agreement, and provided that the Purchaser is not in
breach of such provisions, the Seller agrees to arrange for the Purchaser's
medical coverage to the extent so authorized under the Purchaser's Medical
Coverage Plans as in effect from time to time and on the same terms and
conditions comparable to those generally provided to employees of the Seller on
the date hereof.
(e) In addition to the foregoing, by virtue of the termination of
the Employment Agreement, as of the date hereof, the Purchaser agrees to forego
any and all of his right to a car allowance and agrees to promptly return to the
Seller the automobile (Lease No. 01-0002-578872) or any contractual rights
thereto, including, without limitation, the lease.
3.2 Retained Liabilities of ARP. Notwithstanding the sale of the Common
Stock to the Purchaser, the Seller shall retain the liabilities of ARP (the
"Retained Liabilities") set forth in Schedule 3.2 hereto.
3.3 Retained Assets of ARP.
(a) Notwithstanding the sale of the Common Stock to the Purchaser,
all accounts receivables (including any inter-company receivables) and revenues
that are derived from (i) the publication of MD and any other publication of ARP
prior to the date hereof and (ii) the publication of the July and August 2001
issues of MD (whenever any such revenues or other amounts are realized in
respect of such publications) are being retained by the Seller and are not being
sold, transferred, assigned, conveyed or delivered by the Seller to the
Purchaser by reason of the purchase and sale of the Common Stock hereunder or
otherwise.
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(b) Notwithstanding the foregoing, the parties agree, for purposes
of this Section 3.3, that as of the date hereof, MD has twelve thousand (12,000)
customers on its subscription list. The parties further agree that as of the
date hereof, the average fulfillment obligation of ARP to such customers is six
(6) months (6 issues of MD) at a fulfillment cost per issue of one dollar
($1.00), for a total cost of seventy two thousand dollars ($72,000). Each party
agrees to contribute equally to this subscription fulfillment obligation.
Accordingly, the Purchaser will be entitled to a thirty six thousand dollar
($36,000) credit with respect to the invoices rendered by the Seller in
accordance with the terms of the Transition Services Agreement.
(c) After the Closing, the Purchaser agrees to deliver to the Seller
any and all Misdirected Funds and to perform any and all acts as reasonably
requested by the Seller to minimize the occurrence of Misdirected Funds. Any
Misdirected Funds shall be received in trust for the benefit of the Seller, and
shall be promptly delivered to the Seller in the exact form received (except for
endorsement of instruments in favor of the Seller, as directed by the Seller).
3.4 Non-Disparagement.
(a) The Purchaser agrees not to (i) in any way publicly disparage
the Seller, its Subsidiaries, their Affiliates, their shareholders or any of the
Seller's past, present, and future officers, directors, or employees, (ii) cause
embarrassment or public humiliation to such entities or persons or (iii) make
any public statement or take any action that is adverse, inimical or otherwise
detrimental to the interests of such entities or persons, except to the extent
required by applicable law.
(b) The Seller agrees not to (i) in any way publicly disparage the
Purchaser or ARP, (ii) cause embarrassment or public humiliation to such
entities or persons or (iii) make any public statement or take any action that
is adverse, inimical or otherwise detrimental to the interests of such entities
or persons.
3.5 Material Non-Public Information. The Purchaser hereby acknowledges
that he is aware (and that any Representative of the Purchaser who has been
apprised of this matter has or will be advised) that the United States
securities laws restrict persons with material non-public information about a
company obtained directly or indirectly from that company from purchasing or
selling securities of such company and from communicating such information to
any other person under circumstances in which it is reasonably foreseeable that
such person is likely to purchase or sell such securities.
3.6 Statements about Products of Twinlab Corporation. The Purchaser agrees
that in future issues of MD, or any other publication produced or distributed by
ARP or its Affiliates, the Purchaser shall not discuss and shall cause any and
all employees of ARP or its Affiliates not to discuss, any products manufactured
or sold by Twinlab Corporation or any of its Subsidiaries in a manner that would
violate any legal or regulatory obligations of Twinlab Corporation or any of its
Subsidiaries, if such statement were made by Twinlab Corporation or any of its
Subsidiaries itself. In particular, the benefits of a product of Twinlab
Corporation or any of its Subsidiaries shall only be discussed if such benefits
are scientifically substantiated.
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3.7 Further Assurances.
(i) At any time and from time to time after the Closing, upon the
request of the Seller or the Purchaser to the other party, such party shall use
commercially reasonable efforts to execute, acknowledge and/or deliver, and
cause to be done, executed, acknowledged and/or delivered, such further acts,
deeds, assignments, transfers, conveyances, powers of attorney, endorsements as
may be reasonably required to facilitate the consummation of this Agreement and
the Transition Services Agreement.
(ii) In addition to the foregoing, the Purchaser agrees to make
himself available for depositions, trial testimony or other related matters in
connection with products developed by Twinlab Corporation or its Subsidiaries
while the Purchaser was employed by the Seller. The Seller agrees to reimburse
the Purchaser for all reasonable out-of-pocket expenses incurred in connection
with the satisfaction of the Purchaser's obligations under this Section 3.7(ii).
ARTICLE IV
INDEMNIFICATION
4.1 Survival of Representations, Warranties and Agreements.
(a) Except as otherwise provided in this Section 4.1, the
representations, warranties, covenants and agreements of each party hereto shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of any other party hereto, any Affiliate of such party or
any of their officers, directors or representatives, whether prior to or after
the execution of this Agreement.
(b) The parties' representations and warranties in this Agreement or
in any document or instrument delivered pursuant to this Agreement shall survive
the Closing and continue until 5:00 p.m., New York time, on the date that is two
(2) years following the date hereof.
4.2 Indemnification.
(a) The Seller agrees to indemnify and hold harmless the Purchaser
against Indemnifiable Losses arising out of any material breach by the Seller of
any of the representations, warranties or covenants of the Seller made herein.
In addition, notwithstanding any other provision set forth herein, the Seller
agrees that as to the Purchaser, the indemnification provisions set forth in the
articles of incorporation and/or bylaws of Seller shall remain in full force and
effect to the extent set forth therein.
(b) The Purchaser agrees to indemnify and hold harmless the Seller,
each Affiliate of the Seller, each Representative of the Seller, and the heirs,
executors, successors, and assigns of any of the foregoing, against
Indemnifiable Losses arising out of any material breach by the Purchaser of any
of the representations, warranties or covenants of the Purchaser made herein or
any other liability (excluding the Retained Liabilities) that the Seller incurs
or may
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incur by reason of the operation of the business of ARP or its Affiliates by the
Purchaser following the date hereof.
4.3 Procedures Relating to Indemnification.
(a) In order to be entitled to indemnification under this Article V
in connection with a claim made by any Person against any other Person with
respect to which that other Person (an "Indemnified Party") is entitled to
indemnification pursuant to this Article V (any such claim, a "Third Party
Claim"), that Indemnified Party must do the following:
(1) notify the Person or Persons obligated to indemnify it
(the "Indemnifying Party") in writing, and in reasonable
detail, of that Third Party Claim as soon as possible
but in any event within ten (10) Business Days after
receipt of notice of that Third Party Claim, except that
any failure to give any such notification will only
affect the Indemnifying Party's obligation to indemnify
the Indemnified Party if the Indemnifying Party has been
prejudiced as a result of that failure; and
(2) deliver to the Indemnifying Party as soon as possible
but in any event within ten (10) Business Days after the
Indemnified Party receives them a copy of all notices
and documents (including court papers) delivered to that
Indemnified Party relating to that Third Party Claim.
(b) In the event of a Third Party Claim against one or more
Indemnified Parties, the Indemnifying Party may participate in the defense of
that Third Party Claim and, if it so chooses, assume at its expense the defense
of that Third Party Claim with counsel selected by the Indemnifying Party and
reasonably satisfactory to the Indemnified Party. If the Indemnifying Party so
elects to assume the defense of a Third Party Claim, the Indemnifying Party will
not be liable to the Indemnified Party for any legal expenses subsequently
incurred by the Indemnified Party in connection with the defense of that Third
Party Claim, except that if, under applicable standards of professional conduct,
there exists a conflict on any significant issue between the Indemnified Party
and the Indemnifying Party in connection with that Third Party Claim, the
Indemnifying Party shall pay the reasonable fees and expenses of one additional
counsel to act with respect to that issue to the extent necessary to resolve
that conflict. If the Indemnifying Party assumes defense of any Third Party
Claim, the Indemnified Party will be entitled to participate in the defense of
that Third Party Claim and to employ counsel, at its own expense, separate from
counsel employed by the Indemnifying Party, it being understood that the
Indemnifying Party will be entitled to control that defense. If the Indemnifying
Party chooses to defend or prosecute a Third Party Claim, all the parties shall
cooperate in the defense or prosecution of that Third Party Claim, including by
retaining and providing to the Indemnifying Party records and information
reasonably relevant to that Third Party Claim, and making employees available on
a reasonably convenient basis. If the Indemnifying Party chooses to defend or
prosecute any Third Party Claim, the Indemnified Party will agree to any
settlement, compromise or discharge of that Third Party Claim that the
Indemnifying Party recommends, except that the Indemnifying Party may not
without the Indemnified Party's prior written consent
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agree to entry of any judgment or enter into any settlement that provides for
injunctive or other nonmonetary relief affecting the Indemnified Party or that
does not include as an unconditional term that each claimant or plaintiff give
to the Indemnified Party a release from all liability with respect to that Third
Party Claim. Whether or not the Indemnifying Party has assumed the defense of a
Third Party Claim, the Indemnified Party shall not admit any liability with
respect to, or settle, compromise or discharge, that Third Party Claim without
the Indemnifying Party's prior written consent.
(c) In order for any Indemnified Party to be entitled to any
indemnification under this Agreement in respect of a claim that does not involve
a Third Party Claim (a "Claim"), the Indemnified Party must reasonably promptly
notify the Indemnifying Party of that Claim, and describe in reasonable detail
the basis for that Claim, except that any failure to give any such notification
will only affect the Indemnifying Party's obligation to indemnify the
Indemnified Party if the Indemnifying Party has been prejudiced as a result of
that failure. If the Indemnifying Party does not dispute that the Indemnified
Party is entitled to indemnification with respect to that Claim by notice to the
Indemnified Party prior to the expiration of a thirty (30) Business Day period
following receipt by the Indemnifying Party of notice of that Claim from the
Indemnified Party, that Claim will be conclusively deemed a liability of the
Indemnifying Party and the Indemnifying Party shall pay the amount of that
liability to the Indemnified Party on demand or, in the case of any notice in
which the amount of the Claim (or any portion thereof) is estimated, on such
later date as the amount of the Claim (or any portion thereof) becomes finally
determined. If the Indemnifying Party has timely disputed its liability with
respect to the Claim, the Indemnifying Party and the Indemnified Party shall
proceed in good faith to negotiate a resolution of the Claim and, if the Claim
is not resolved through negotiations within thirty (30) Business Days following
receipt by the Indemnifying Party of notice of that Claim from the Indemnified
Party, the Indemnified Party may pursue such remedies as may be available to
enforce its rights under this Agreement.
ARTICLE V
MISCELLANEOUS
5.1 Notices. Every notice or other communication required or contemplated
by this agreement must be in writing and sent by one of the following methods:
(1) personal delivery, in which case delivery is deemed to occur the day of
delivery; (2) certified or registered mail, postage prepaid, return receipt
requested, in which case delivery is deemed to occur the day it is officially
recorded by the U.S. Postal Service as delivered to the intended recipient; or
(3) next-day delivery to a U.S. address by recognized overnight delivery service
such as Federal Express, in which case delivery is deemed to occur upon receipt.
In each case, a notice or other communication sent to a party must be directed
to the address for that party set forth below, or to another address designated
by that party by written notice:
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If to the Purchaser, to:
Xxxxx Xxxxxxxx
00 Xxxxx Xxxx Xxxx
Xxxxxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000 (c/o Xxxxxx X. Xxxxxxxxx, Esq.)
with a copy to:
Xxxxxx X. Xxxxxxxxx, Esq.
Ruskin, Moscou, Xxxxx & Faltischek, P.C.
000 Xxx Xxxxxxx Xxxx
Xxxxxxx, Xxx Xxxx 00000
Telecopier No. (000) 000-0000
If to the Seller, to:
Twin Laboratories Inc.
000 Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxx, Chief Executive Officer
Telecopier No. (000) 000-0000
with a copy to:
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Telecopier No.: (000) 000-0000
5.2 Governing Law. This Agreement is governed by the laws of the State of
New York, without giving effect to principles of conflict of laws
5.3 Jurisdiction; Service of Process. Any action or proceeding seeking to
enforce any provision of, or based on any right arising out of, this Agreement
must be brought against any of the parties in the courts of the State of New
York, Country of Suffolk, or, if it has or can acquire jurisdiction, in the U.S.
District Court for the Eastern District of New York, and each of the parties
consents to the jurisdiction of those courts (and of the appropriate appellate
courts) in any such action or proceeding and waives any objection to venue laid
therein. Process in any such action or proceeding may be served by sending or
delivering a copy of the process to the party to be served at the address and in
the manner provided for the giving of notices in Section 5.1. Nothing in this
Section 5.3, however, affects the right of any party to serve legal process in
any other manner permitted by law.
5.4 Successors and Assigns. This Agreement is binding upon the parties and
each of their respective successors, heirs and permitted assigns.
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5.5 No Assignment. Neither party may assign to any Person any of his
rights or obligations under this Agreement without the prior written consent of
the other party, except that the Seller may assign this Agreement to any of its
Subsidiaries without the prior written consent of the Purchaser and the
Purchaser may assign this Agreement to a wholly-owned subsidiary of ARP formed
after the date hereof without the prior written consent of the Purchaser.
5.6 Counterparts; Facsimile Transmissions. This Agreement and the
Transition Services Agreement may be executed in any number of counterparts,
each of which when so executed, then delivered or transmitted by telefax, shall
be deemed to be an original and all of which taken together shall constitute but
one and the same instrument.
5.7 Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
5.8 Waivers and Amendments. This Agreement may be amended, superceded,
canceled, renewed or extended, and the terms hereof may be waived, only by
written instrument signed by the Purchaser and the Seller. No delay on the part
of any party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any waiver on the part of any party of any such
right, power or privilege, nor any single or partial exercise of any such right,
power or privilege, preclude any further exercise thereof or the exercise of any
other such right, power or privilege.
5.9 Entire Agreement. Except as otherwise set forth herein, this Agreement
and the other agreements referred to in this Agreement (including the Employment
Agreement) constitute the entire agreement among the parties pertaining to the
subject matter hereof and supersede all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the parties,
including, but not limited to the Letter of Intent.
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5.10 Announcements; Confidentiality.
(a) Neither the Seller nor the Purchaser shall issue any press
release or otherwise make any public statement with respect to this Agreement
and the transactions contemplated hereby without the prior written consent of
the other party (which shall not be unreasonably withheld), except as may be
required by applicable law.
(b) In addition, except as provided in the immediately preceding
paragraph or as required by law, without the prior written consent of the
Seller, the Purchaser agrees that it will not, and will direct its
representatives not to, disclose to any Person any of the terms, conditions or
other facts with respect to this Agreement, including, but not limited to the
resignation of the Purchaser.
5.11 Rules of Construction. Unless the context otherwise requires: (a)
"or" is not exclusive; (b) words in the singular include the plural, and words
in the plural include the singular; (c) "herein," "hereof," "hereto" and other
words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision; (d) any gender used in this
Agreement shall be deemed to include the neuter, masculine and feminine genders;
and (e) any reference to an Article, Section, Schedule or Exhibit is a reference
to a Section of this Agreement or a Schedule or Exhibit attached to this
Agreement unless the context otherwise provides.
5.12 Expenses. Each party will be responsible for paying any costs
incurred by it in connection with the transactions contemplated by this
Agreement.
[SIGNATURE PAGE FOLLOWS]
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The parties are signing this Agreement on the date stated in the
introductory clause.
TWIN LABORATORIES INC.,
as Seller
By:
-------------------------------
Name:
Title:
-----------------------------------
XXXXX XXXXXXXX,
as Purchaser
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Exhibit A
DEFINITIONS
(a) "Affiliate" shall mean, with respect to any Person, the
subsidiaries, executive officers, directors, and partners of such Person and any
other Person which directly or indirectly controls, is controlled by or is under
common control with such Person
(b) "ARP" has the meaning set forth in the preamble.
(c) "ARP Property" means all property of ARP that is being acquired
by the Purchaser pursuant to this Agreement and that is not the property of
Twinlab Corporation or any of its Subsidiaries, specifically as set forth in
Exhibit B hereto.
(d) "Business Day" means any Monday, Tuesday, Wednesday, Thursday,
or Friday that is not a day on which banking institutions in the State of New
York are authorized by law, regulation or executive order to close.
(e) "Claim" shall have the meaning set forth in Section 4.3(c).
(f) "Closing" shall have the meaning set forth in Section 1.2.
(g) "Common Stock" shall have the meaning set forth in the preamble.
(h) "Consent" means any approval, consent, ratification, waiver, or
other authorization.
(i) "Contract" means any agreement, contract, obligation, promise,
or undertaking (whether written or oral and whether express or implied) that is
legally binding.
(j) "Deloitte" shall have the meaning set forth in Section 1.1(b).
(k) "Effective Date" means May 31, 2001.
(l) "Employment Agreement" has the meaning set forth in Section
3.1(a).
(m) "Executive Positions" shall have the meaning set forth in the
preamble.
(n) "GAAP" means generally accepted accounting principles
consistently applied as in effect in the United States as of the date hereof.
(o) "Governmental Body" means any (1) nation, state, county, city,
town, village, district, or other jurisdiction of any nature, (2) federal,
state, local, municipal, foreign, or other government, (3) governmental or
quasi-governmental authority of any nature (including any governmental agency,
branch, department, official, or entity and any court or other tribunal,
including an arbitral tribunal), (4) multi-national organization or body, or (5)
body exercising, or entitled to exercise, any administrative, executive,
judicial, legislative, police, regulatory, or taxing authority or power of any
nature.
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(p) "Indemnifiable Losses" means all losses, liabilities, taxes,
damages, deficiencies, obligations, fines, expenses, claims, demands, actions,
suits, proceedings, judgments or settlements, whether or not resulting from
Third Party Claims, incurred or suffered by an Indemnified Party, including
interest and penalties with respect thereto and out-of-pocket expenses and
reasonable attorneys' and accountants' and experts' fees and expenses incurred
in the investigation or defense of any of the same or in asserting, preserving
or enforcing any of the Indemnified Party's rights hereunder, net of any amounts
recovered under any insurance policy.
(q) "Law" means any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
(r) "Letter of Intent" means the Letter of Intent dated May 22, 2001
between the Purchaser and the Seller.
(s) "Lien" means any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right of
first refusal, or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income, or exercise of any other attribute of
ownership.
(t) "Medical Coverage Plans" means the medical plans offered to
employees of Twinlab Corporation in Hauppauge, New York through General American
and the dental plan offered by Cigna; provided, however, that the Medical
Coverage Plans shall not include the Executive Medical Plan.
(u) "Misdirected Funds" means and includes any revenues, collections
or other amounts received by the Purchaser or any of its Affiliates in respect
of (i) the publication of MD and any other publication of ARP prior to the date
hereof and (ii) the publication of the July and August 2001 issues of MD.
(v) "MD" means Muscular Development magazine, published monthly by
ARP.
(w) "Order" means any award, decision, injunction, judgment, order,
ruling, subpoena, or verdict entered, issued, made, or rendered by any court,
arbitral tribunal, administrative agency, or other Governmental Body.
(x) "Outside Director Plans" means the Twinlab Corporation 1999
Stock Incentive Plan for Outside Directors and the Twinlab Corporation Deferred
Compensation Plan for Outside Directors.
(y) "Person" means any individual, corporation (including any
non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, labor union,
Governmental Body or other entity.
(z) "Pre-paid Expenses" means any and all pre-paid expenses
determined in accordance with GAAP and reflected in the financial statements of
the Seller as of the Effective Date that relate to the operations of ARP and
which do not constitute Retained Expenses.
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(aa) "Pre-paid Expenses Certificate" shall have the meaning set
forth in Section 1.1(b).
(bb) "Pre-paid Expenses Resolution Date" shall have the meaning set
forth in Section 1.1(b).
(cc) "Purchase Price" shall have the meaning set forth in Section
1.1(a).
(dd) "Purchaser" shall have the meaning set forth in the preamble.
(ee) "Purchaser Dispute Notice" shall have the meaning set forth in
Section 1.1(b).
(ff) "Representative" means, with respect to a particular Person,
any director, officer, employee, agent, consultant, advisor, or other
representative of that Person, including legal counsel, accountants, and
financial advisors.
(gg) "Retained Expenses" shall have the meaning set forth in
Schedule 3.2.
(hh) "Retained Liabilities" shall have the meaning set forth in
Section 3.2(a).
(ii) "SEC" means the Securities and Exchange Commission of the
United States.
(jj) "Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
(kk) "Seller" shall have the meaning set forth in the preamble.
(ll) "Subsidiary" means with respect to any Person, any corporation,
joint venture, limited liability company, partnership, association or other
business entity of which more than 50% of the total voting power of stock or
other equity entitled to vote generally in the election of directors or managers
or equivalent persons thereof is owned or controlled, directly or indirectly, by
such Person; provided, however, as used in the Agreement, a Subsidiary of
Twinlab Corporation shall not include ARP.
(mm) "Third Party Claim" shall have the meaning set forth in Section
4.3(a).
(nn) "Transition Services Agreement" means the Transition Services
Agreement, between the Seller and the Purchaser of even date herewith, as the
same may be amended, supplemented, restated, or otherwise modified from time to
time, in the form attached hereto as Exhibit C.
(oo) "Twinlab Corporation" shall have the meaning set forth in the
preamble.
19
Exhibit A
Transition Services Agreement
20
Exhibit B
ARP Property
2 G4 Macintosh Computers
1 G3 Macintosh Computer
1 Umax Astra 2200 Scanner
1 CD burner
1 Jaz Drive
1 HP Laserjet 8100
2 HP Laserjet 6 MP
2 21" Apple Monitors
1 35x20 Lightbox
2 Illustrator 8.0
1 Dreamweaver
2 Quark 4.0
2 Photoshops 5.5
1 HP Laserjet 4000N
1 HP Office jet (combo printer and fax)
1 Titanium Laptop
2 Mac Power PCs & Monitors
1 StudioStar AGFA scanner
1 Canon Laser Class 8500 fax
1 Canon 6551 copier
All operating systems software for the computers set forth on this Schedule 3.2.
1 Reception Table
1 Paper Storage Cabinet
2 Long Tables (Creative Services)
2 Corner Desks with File Cabinets and Accompanying Chairs
1 Large Cutting Board
1 Small Cutting Board
1 Adding Machine
1 Credit Card Machine
21
Exhibit C
Transition Services Agreement
22
Exhibit D
Employment Agreement
23
Exhibit E
Agreement with American Botanical Counsel
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Schedule 3.2
Retained Liabilities
The following liabilities of ARP shall be retained by the Seller:
1. Any actual out-of-pocket cash costs and expenses payable by ARP in the
ordinary course of business solely to the extent that such costs and
expenses are directly related to (i) the publication of MD and any other
publication of ARP prior to the date hereof and (ii) the publication of
the July and August 2001 issues of MD (the "Retained Expenses").
2. All compensation and benefit obligations of employees of ARP prior to the
date hereof.
3. The lawsuit captioned Xxxxxxx and Midajah X'Xxxxx v. Advanced Research
Press, Inc. Case No. INC019177, Superior Court of California (concerning
an alleged violation of the O'Hearn's publicity rights). Notwithstanding
anything to the contrary contained in this Agreement, the Purchaser
covenants and agrees to use his best efforts to assist the Seller in
defending the above-referenced lawsuit.
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