-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DsXM/+dXg9uEQWEnu88jqqLCjjPFMTUyK28fN6lB3OkLsml0jGuSWfcoMe/X5cTT Ut7RC3IoLcrFbfRvwVVh8g== 0000910647-98-000140.txt : 19980505 0000910647-98-000140.hdr.sgml : 19980505 ACCESSION NUMBER: 0000910647-98-000140 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19980504 SROS: NASD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: NBTY INC CENTRAL INDEX KEY: 0000070793 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 112228617 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-35192 FILM NUMBER: 98609694 BUSINESS ADDRESS: STREET 1: 90 ORVILLE DR CITY: BOHEMIA STATE: NY ZIP: 11716 BUSINESS PHONE: 5165679500 MAIL ADDRESS: STREET 1: 90 ORVILLE DRIVE CITY: BOHEMIA STATE: NY ZIP: 11716 FORMER COMPANY: FORMER CONFORMED NAME: NATURES BOUNTY INC DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: NBTY INC CENTRAL INDEX KEY: 0000070793 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 112228617 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 90 ORVILLE DR CITY: BOHEMIA STATE: NY ZIP: 11716 BUSINESS PHONE: 5165679500 MAIL ADDRESS: STREET 1: 90 ORVILLE DRIVE CITY: BOHEMIA STATE: NY ZIP: 11716 FORMER COMPANY: FORMER CONFORMED NAME: NATURES BOUNTY INC DATE OF NAME CHANGE: 19920703 SC 13D/A 1 BODY OF SCHEDULE 13D/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Schedule 13D/A Under the Securities Exchange Act of 1934 (Amendment No. 1)* AMENDED AND RESTATED SCHEDULE 13D NBTY, INC. - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock - -------------------------------------------------------------------------------- (Title of Class of Securities) Irwin A. Kishner, Esq. Herrick, Feinstein LLP 2 Park Avenue New York, New York 10016 (212) 592-1400 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) April 20, 1998 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box [ ]. NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See ss. 240.13d-7(b) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filed out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). CUSIP No. 628782104 Page 1 of 13 Pages - ------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON MICHAEL C. SLADE - ------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* PF 00 - ------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States of America - ------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 4,105,639 shares of Common Stock BENEFICIALLY ------------------------------------------------------- OWNED BY 8 SHARED VOTING POWER EACH None REPORTING ------------------------------------------------------- PERSON 9 SOLE DISPOSITIVE POWER WITH 4,105,639 shares of Common Stock ------------------------------------------------------- 10 SHARED DISPOSITIVE POWER None - ------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 4,105,639 shares of Common Stock - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.35% - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN - ------------------------------------------------------------------------------- Page 2 of 13 Pages - ------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON RUTH L. SLADE, individually and as trustee and beneficiary of the Abraham Feldman Trust F/B/O Ruth Slade U/A 1/21/91 (referred to herein as the "Ruth Trust") - ------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [x] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* 00 - ------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States of America (Ruth L. Slade); New Jersey (Ruth Trust) - ------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 2,339,222 shares of Common Stock BENEFICIALLY ------------------------------------------------------- OWNED BY 8 SHARED VOTING POWER EACH None REPORTING ------------------------------------------------------- PERSON 9 SOLE DISPOSITIVE POWER WITH 2,339,222 shares of Common Stock ------------------------------------------------------- 10 SHARED DISPOSITIVE POWER None - ------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,339,222 shares of Common Stock - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 3.62% - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN - ------------------------------------------------------------------------------- Page 3 of 13 Pages - ------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON E. STEVEN LENGER, individually and as trustee and beneficiary of the Abraham Feldman Trust F/B/O E. Steven Lenger U/A 1/21/91 (referred to herein as the "Lenger Trust") - ------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [x] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - ------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States of America (E. Steven Lenger); New Jersey (Lenger Trust) - ------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 2,339,223 shares of Common Stock BENEFICIALLY ------------------------------------------------------- OWNED BY 8 SHARED VOTING POWER EACH None REPORTING ------------------------------------------------------- PERSON 9 SOLE DISPOSITIVE POWER WITH 2,339,223 shares of Common Stock ------------------------------------------------------- 10 SHARED DISPOSITIVE POWER None - ------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,339,223 shares of Common Stock - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 3.62% - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN - ------------------------------------------------------------------------------- Page 4 of 13 Pages PART II TO SCHEDULE 13D/A AMENDED AND RESTATED SCHEDULE 13D Item 1. Security and Issuer ------------------- Shares of Common Stock, par value $0.008 per share, of NBTY, Inc. NBTY, Inc. 90 Orville Drive Bohemia, NY 11716 (referred to herein as the "Issuer") Item 2. Identity and Background ----------------------- (1) (a) Name: Michael C. Slade. (b) Business Address: Nutrition Headquarters (DE), Inc. 90 Orville Drive Bohemia, New York 11716-2510 (c) Principal Occupation: President Nutrition Headquarters (DE), Inc. 90 Orville Drive Bohemia, New York 11716-2510 Manufacturer and distributer of vitamins and nutritional supplements (d) Information required by Item 2(d): None. (e) Information required by Item 2(e): None. (f) Citizenship: United States of America. (2) (a) Name: Ruth L. Slade and The Abraham Feldman Trust F/B/O Ruth Slade U/A 1/21/91. (b) Business Address of Ruth L. Slade: c/o Herrick, Feinstein LLP 2 Park Avenue New York, New York 10016 Attn: Irwin A. Kishner, Esq. State of Organization of the Ruth Trust: New Jersey. (c) Principal Occupation of Ruth L. Slade: Homemaker. Principal Business of the Ruth Trust: Ownership and management of investments. Page 5 of 13 Pages Address of Principal Business and of Principal Office of: (i) Ruth L. Slade c/o Herrick, Feinstein LLP 2 Park Avenue New York, New York 10016 Attn: Paul Herman, Esq. (ii) The Ruth Trust c/o Herrick, Feinstein LLP 2 Park Avenue New York, New York 10016 Attn: Paul Herman, Esq. (d) Ruth L. Slade and the Ruth Trust Information required by Item 2(d): None. (e) Ruth L. Slade and the Ruth Trust Information required by Item 2(e): None. (f) Citizenship of Ruth L. Slade: United States of America. (3) (a) Name: E. Steven Lenger and The Abraham Feldman Trust F/B/O E. Steven Lenger 1/21/91. (b) Business Address of E. Steven Lenger: 579 Cranberry Road East Brunswick, New Jersey 08816 State of Organization of the Lenger Trust: New Jersey. (c) Principal Occupation of E. Steven Lenger: Physician. Principal Business of the Lenger Trust: Ownership and management of investments. Address of Principal Business and of Principal Office of: (i) E. Steven Lenger: 579 Cranberry Road East Brunswick, New Jersey 08816 (ii) The Lenger Trust: c/o Herrick, Feinstein LLP 2 Park Avenue New York, New York 10016 Attn: Paul Herman, Esq. (d) E. Steven Lenger and the Lenger Trust Information required by Item 2(d): None. (e) E. Steven Lenger and the Lenger Trust Information required by Item 2(e): None. (f) Citizenship of E. Steven Lenger: United States of America. Page 6 of 13 Pages Item 3. Source and Amount of Funds or Other Consideration ------------------------------------------------- (1) Michael C. Slade: ----------------- Michael C. Slade acquired 4,093,639 shares of the common stock of NBTY, Inc., par value $0.008 per share ("NBTY Stock"), by tendering 33 shares of common stock of Nutrition Headquarters, Inc., a Delaware corporation ("Nutrition"), 33 shares of common stock of Lee Nutrition, Inc., a Delaware corporation ("Lee"), and 100 shares of common stock of Nutro Laboratories, Inc., a New Jersey corporation ("Nutro), to Nutrition Headquarters (DE), Inc., a Delaware corporation and a wholly owned subsidiary of the Issuer ("Merger Sub"), in accordance with the terms and provisions of the Merger Agreement (as defined in Item 4 below). Michael C. Slade had purchased 4,000 shares of NBTY Stock (12,000 shares after the effect of the Issuer's stock dividend) on or before December 31, 1997 which is prior to the commencement of discussions with respect to the merger described in Item 4 below. Such 4,000 shares of NBTY Stock were purchased from personal funds for investment purposes. (2) Ruth L. Slade and The Ruth Trust: --------------------------------- The Ruth Trust acquired such 2,339,222 shares of NBTY Stock by tendering 33 shares of common stock of Nutrition and 33 shares of common stock of Lee to Merger Sub in accordance with the terms and provisions of the Merger Agreement. Ruth L. Slade is the trustee of the Ruth Trust with the sole voting power and investment power with respect to the assets of such trust. (3) E. Steven Lenger and The Lenger Trust: -------------------------------------- The Lenger Trust acquired such 2,339,223 shares NBTY Stock by tendering 33 shares of common stock of Nutrition and 33 shares of common stock of Lee to Merger Sub in accordance with the terms and provisions of the Merger Agreement. E. Steven Lenger is the trustee of the Lenger Trust with the sole voting power and investment power with respect to the assets of such trust. Item 4. Purpose of Transaction ---------------------- This Schedule 13D/A amends and restates in its entirety the Schedule 13D filed by the reporting persons herein with respect to the merger hereinafter described. The purpose of this Schedule 13D/A is to supplement the disclosure of the shares of NBTY Stock beneficially owned by Michael C. Slade and his son, Scott Slade. (a)-(j) 8,772,084 shares of NBTY Stock were acquired from the Issuer pursuant to the terms and provisions of that certain Agreement and Plan of Merger dated as of April 1, 1998 (as amended, the "Merger Agreement") by and among Nutrition, Lee, Nutro, Michael C. Slade, the Ruth Trust and the Lenger Trust, the Issuer and Merger Sub. The purpose of the transaction was for the Issuer to acquire each of Nutrition, Lee and Nutro in exchange for shares of NBTY stock. In accordance with the terms and provisions of the Merger Agreement, each of Nutrition, Lee and Nutro was merged with and into Merger Sub. The merger was consummated on April 20, 1998. In addition, on or before December 31, 1997 Michael C. Slade had purchased 4,000 shares of NBTY Stock (12,000 shares after the effect of the Issuer's stock dividend) in separate purchase transactions which are unrelated to the merger. Such 4,000 shares of NBTY Stock were purchased from personal funds for investment purposes. Page 7 of 13 Pages Section 5.01 of the Merger Agreement provides, inter alia, for (i) the issuance and delivery of additional shares of NBTY Stock by the Issuer to each of Michael C. Slade, the Ruth Trust and the Lenger Trust, pro rata on the basis of the securities tendered to Merger Sub in accordance with the Merger Agreement, if the combined working capital of Nutrition, Lee and Nutro exceeds $7,400,000; and (ii) for the return of shares of NBTY Stock to the Issuer by each of Michael C. Slade, the Ruth Trust and the Lenger Trust, pro rata on the basis of the securities tendered to Merger Sub in accordance with the Merger Agreement, if the combined working capital of Nutrition, Lee and Nutro is less than $7,400,000. The aggregate number of shares of NBTY Stock to be so issued and delivered by the Issuer (or returned to the Issuer) is equal to the difference between the amount of such combined working capital and $7,400,000 divided by the lesser of the closing bid price of the NBTY Stock (x) on April 20, 1998 or (y) the date such shares are delivered. The Merger Agreement provides that the combined working capital of Nutrition, Lee and Nutro shall be computed by the independent public accountants for such entities on or prior to June 4, 1998. In connection with the Merger Agreement, Michael C. Slade, the Ruth Trust, the Lenger Trust and the Issuer entered into that certain Registration Rights Agreement dated as of April 1, 1998 (the "Registration Rights greement"). Subject to the terms and conditions of the Registration Rights Agreement, Slade, the Ruth Trust and the Lenger Trust may demand the registration under the Securities Act of 1933, as amended, of any or all of their unregistered shares of NBTY Stock. Additionally, subject to the terms and conditions of the Registration Rights Agreement, each of Michael C. Slade, the Ruth Trust and the Lenger Trust has the right to include their unregistered shares for registration under the Securities Act of 1933, as amended, in any registration statement filed by the Issuer. Item 5. Interest in Securities of the Issuer ------------------------------------ (a) 1. Michael C. Slade acquired 4,093,639 shares of NBTY Stock, representing approximately 6.34% of such class of securities of the Issuer in connection with the merger described in Item 4 in addition to 12,000 shares of NBTY Stock representing approximately 0.02% of such class of securities of the Issuer in connection purchases for investment purposes in transactions which are unrelated to the merger described in Item 4. 2. The Ruth Trust acquired 2,339,222 shares of NBTY Stock, representing approximately 4.2% of such class of securities of the Issuer. 3. The Lenger Trust acquired 2,339,223 shares of NBTY Stock of the Issuer, representing approximately 4.2% of such class of securities of the Issuer. (b) 1. Michael C. Slade has the sole power to vote or to direct to vote and the sole power to dispose or to direct the disposition of the shares of NBTY Stock owned by him. 2. Ruth L. Slade, as trustee of the Ruth Trust, has the sole power to vote or to direct to vote and the sole power to dispose or to direct the disposition of the shares of NBTY Stock owned by the Ruth Trust. 3. E. Steven Lenger, as trustee of the Lenger Trust, has the sole power to vote or to direct to vote and the sole power to dispose or to direct the disposition of the shares of NBTY Stock owned by the Lenger Trust. Page 8 of 13 Pages (c) None. (d) None. (e) N/A. (f) The transactions described above constitute the only transactions in the shares of Common Stock of the Issuer which have been effected by any of the above persons during the past 60 days. Each reporting person herein hereby disclaims membership in a group or the existence of a group with respect to shares of NBTY Stock; and each such person disclaims any beneficial ownership in the shares of Common Stock of the Issuer owned by the others for the purpose of Section 13(d) or 13(g) of the Securities Exchange Act of 1934, as amended. If all securities owned by Michael C. Slade, the Ruth Trust and the Lenger Trust were combined as a group, the aggregate amount of shares of NBTY Stock would equal 8,784,084 or approximately 13.6% of such class of securities of the Issuer. In addition to such 8,784,084 shares of NBTY Stock, Scott Slade, the son of Michael and Ruth Slade, owns 600 shares of NBTY Stock. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer ---------------------------------------------------------------------- The shares of NBTY Stock issued to the Reporting Persons in connection with the merger described in Item 4 are not registered under the Securities Act of 1933, as amended. Such unregistered shares of NBTY Stock are subject to the Registration Rights Agreement. Subject to the terms and conditions of the Registration Rights Agreement, Michael C. Slade, the Ruth Trust and the Lenger Trust may demand the registration under the Securities Act of 1933, as amended, of any or all of their unregistered shares of NBTY Stock. Additionally, subject to the terms and conditions of the Registration Rights Agreement, each of Michael C. Slade, the Ruth Trust and the Lenger Trust has the right to include their unregistered shares for registration under the Securities Act of 1933, as amended, in any registration statement filed by the Issuer. Michael C. Slade and Ruth L. Slade are husband and wife. Ruth L. Slade and E. Steven Lenger are sister and brother. Michael C. Slade and Ruth L. Slade are trustees of the Ruth Trust; and Ruth L. Slade has the exclusive right to control or direct the control of the voting power and investment power of the assets of the Ruth Trust. E. Steven Lenger and his spouse, Sandy Lenger, are trustees of the Lenger Trust; and E. Steven Lenger has the exclusive right to control or direct the control of the voting power and investment power of the assets of the Lenger Trust. Item 7. Materials to be Filed as Exhibits --------------------------------- 99.1 Agreement and Plan of Merger, dated as of April 1, 1998, among Nutrition Headquarters, Inc., a Delaware corporation, Lee Nutrition, Inc., a Delaware corporation, Nutro Laboratories, Inc., a New Jersey corporation, Michael C. Slade, Abraham Feldman Trust F/B/O Ruth Slade U/A 1/21/91 and Abraham Feldman Trust F/B/O E. Steven Lenger U/A 1/21/91 and NBTY, Inc., a Delaware corporation, and Nutrition Headquarters (DE), Inc. 99.2 Amendment, dated as of April 14, 1998, to the Agreement and Plan of Merger among Nutrition Headquarters, Inc., a Delaware corporation, Lee Nutrition, Inc., a Delaware corporation, Nutro Laboratories, Inc., a New Jersey corporation, Michael C. Slade, Abraham Feldman Trust F/B/O Ruth Slade U/A 1/21/91 and Abraham Feldman Trust F/B/O E. Steven Lenger U/A 1/21/91 and NBTY, Inc., a Delaware corporation, and Nutrition Headquarters (DE), Inc. Page 9 of 13 Pages 99.3 Registration Rights Agreement, dated as of April 1, 1998, among NBTY, Inc. and Michael C. Slade, Abraham Feldman Trust F/B/O Ruth Slade U/A 1/21/91 and Abraham Feldman Trust F/B/O E. Steven Lenger U/A 1/21/91. 99.4 Joint Filing Agreement, dated as of April 24, 1998, among Michael C. Slade, Ruth L. Slade, the Abraham Feldman Trust F/B/O Ruth Slade U/A 1/21/91, E. Steven Lenger and the Abraham Feldman Trust F/B/O E. Steven Lenger U/A 1/21/91. Page 10 of 13 Pages SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. April 28, 1998 /s/ Michael C. Slade - ----------------------------- ----------------------------------- Date Signature Name: Michael C. Slade Page 11 of 13 Pages SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. April 28, 1998 /s/ Ruth L. Slade - ----------------------------- ----------------------------------- Date Signature Name: Ruth L. Slade, individually and as trustee of The Abraham Feldman Trust F/B/O Ruth Slade U/A 1/21/91 Page 12 of 13 Pages SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. April 28, 1998 /s/ E. Steven Lenger - ----------------------------- ----------------------------------- Date Signature Name: E. Steven Lenger, individually and as trustee of the Abraham Feldman Trust F/B/O E. Steven Lenger U/A 1/21/91 Page 13 of 13 Pages EX-99.1 2 AGREEMENT AND PLAN OF MERGER ============================================================================ ---------------------------- AGREEMENT AND PLAN OF MERGER ---------------------------- dated as of April 1, 1998 among NUTRITION HEADQUARTERS, INC. LEE NUTRITION, INC. NUTRO LABORATORIES, INC. and MICHAEL C. SLADE, ABRAHAM FELDMAN TRUST F/B/O RUTH SLADE U/A 1/21/91 and ABRAHAM FELDMAN TRUST F/B/O E. STEVEN LENGER U/A 1/21/91 and NBTY, INC. and NUTRITION HEADQUARTERS (DE), INC. ============================================================================ TABLE OF CONTENTS Page ---- Preamble 1 ARTICLE I DEFINITIONS 2 SECTION 1.01 Certain Defined Terms 2 SECTION 1.02 Certain Additional Defined Terms 5 ARTICLE II CLOSING; MERGER; MERGER CONSIDERATION 7 SECTION 2.01 The Closing 7 SECTION 2.02 The Merger 7 SECTION 2.03 Certain Effects of the Merger 8 SECTION 2.04 Corporate Organization 8 SECTION 2.05 Conversion of Shares 9 SECTION 2.06 Surrender and Payment 9 ARTICLE III REPRESENTATIONS AND WARRENTIES OF THE SHAREHOLDERS 10 SECTION 3.01 Authority of the Companies and the Shareholders 10 SECTION 3.02 Incorporation and Qualification of the Companies 11 SECTION 3.03 Capital Stock of the Companies; Ownership of the Shares 11 SECTION 3.04 Subsidiaries 11 SECTION 3.05 No Conflict 12 SECTION 3.06 Consents and Approvals 12 SECTION 3.07 Financial Information 12 SECTION 3.08 Absence of Undisclosed Liabilities 13 SECTION 3.09 Litigation 13 SECTION 3.10 Compliance with Laws; Licenses and Permits 13 SECTION 3.11 Environmental Compliance 14 SECTION 3.12 Intellectual Property Rights 14 SECTION 3.13 Real Property 14 SECTION 3.14 Tangible Personal Property 15 SECTION 3.15 Material Contracts 15 SECTION 3.16 Employee Benefit Matters; Retirement Plans 15 SECTION 3.17 Labor Matters 17 SECTION 3.18 Taxes 17 SECTION 3.19 Insurance 17 SECTION 3.20 Disclaimer of Warranties 17 SECTION 3.21 Customer Mailing List 18 SECTION 3.22 Brokers 18 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF NBTY AND MERGER SUB 18 SECTION 4.01 Authority of NBTY and Merger Sub 18 SECTION 4.02 Incorporation and Qualification of NBTY and Merger Sub 19 SECTION 4.03 Capital Stock of NBTY and Merger Sub; Aggregate Exchanged Stock 19 SECTION 4.04 Subsidiaries 19 SECTION 4.05 No Conflict 19 SECTION 4.06 Consents and Approvals 20 SECTION 4.07 Financial Information 20 SECTION 4.08 Absence of Undisclosed Liabilities 20 SECTION 4.09 Litigation 20 SECTION 4.10 Compliance with Laws; Licenses and Permits 21 SECTION 4.11 Environmental Compliance 21 SECTION 4.12 Intellectual Property Rights 22 SECTION 4.13 Real Property 22 SECTION 4.14 Tangible Personal Property 23 SECTION 4.15 Material Contracts 23 SECTION 4.16 Employee Benefit Matters 23 SECTION 4.17 Labor Matters 25 SECTION 4.18 Taxes 25 SECTION 4.19 Insurance 25 SECTION 4.20 Brokers 25 SECTION 4.21 Investment Purpose 25 ARTICLE V ADDITIONAL AGREEMENTS 26 SECTION 5.01 Conduct of Business Prior to the Closing 26 SECTION 5.02 Investigation 29 SECTION 5.03 Access to Information 29 SECTION 5.04 Books and Records 30 SECTION 5.05 Confidentiality 31 SECTION 5.06 Regulatory and Other Authorizations; Consents 31 SECTION 5.07 Issuance of NBTY Stock 32 SECTION 5.08 Slade Employment Agreement 32 SECTION 5.09 Further Action 32 SECTION 5.10 Satisfaction of PNC Bank Indebtedness 33 ARTICLE VI EMPLOYEE MATTERS 33 SECTION 6.01 Employees 33 SECTION 6.02 Establishment of Trust 34 SECTION 6.03 Welfare Arrangements 34 SECTION 6.04 Indemnity 34 ARTICLE VII TAX MATTERS 35 SECTION 7.01 Indemnity 35 SECTION 7.02 Refunds 35 SECTION 7.03 Contests 35 SECTION 7.04 Payments for Certain Audit Adjustments 36 SECTION 7.05 Tax Benefits Resulting From the Merger 37 SECTION 7.06 Cooperation and Exchange of Information 37 SECTION 7.07 Tax Intent 38 SECTION 7.08 Payments by NBTY and Merger Sub 38 SECTION 7.09 Payments by the Shareholders 38 SECTION 7.10 Survival 39 ARTICLE VIII CONDITIONS TO CLOSINGS 39 SECTION 8.01 Conditions to Obligations of the Shareholders 39 SECTION 8.02 Conditions to Obligations of NBTY and Merger Sub 40 ARTICLE IX INDEMNIFICATION 41 SECTION 9.01 Survival 41 SECTION 9.02 Indemnification by NBTY 42 SECTION 9.03 Indemnification by the Shareholders 44 ARTICLE X TERMINATION, AMENDMENTS AND WAIVER 47 SECTION 10.01 Termination 47 SECTION 10.02 Effect of Termination 47 SECTION 10.03 Waiver 47 ARTICLE XI GENERAL PROVISIONS 47 SECTION 11.01 Expenses 47 SECTION 11.02 Notices 48 SECTION 11.03 Public Announcements 49 SECTION 11.04 Headings 49 SECTION 11.05 Severability 49 SECTION 11.06 Entire Agreement 49 SECTION 11.07 Assignment 49 SECTION 11.08 No Third-Party Beneficiaries 49 SECTION 11.09 Amendment; Waiver 49 SECTION 11.10 Governing Law 50 SECTION 11.11 Consent to Jurisdiction 50 SECTION 11.12 Counterparts 50 SECTION 11.13 Shares of NBTY Stock 50 EXHIBITS A Form of Registration Rights Agreement. B Form of the Remediation Agreement. SHAREHOLDERS SCHEDULES Schedule 3.05 Conflicts Schedule 3.06 Consents and Approvals Schedule 3.09 Litigation Schedule 3.12 Intellectual Property Rights Schedule 3.13(a) Owned Real Property Schedule 3.13(b) Leased Real Property Schedule 3.14 Tangible Personal Property Schedule 3.15 Material Contracts Schedule 3.16 Employee Benefit Plans Schedule 3.19 Insurance Schedule 3.21 Customer Mailing Lists Schedule 5.01(b)(iv) Exclusive Compensation Adjustments Schedule 5.08 Terms and Conditions of Slade Employment Agreement Schedule 6.01 Employees to be Considered for Stock Options NBTY SCHEDULES Schedule 4.04 Subsidiaries Schedule 4.05 Conflicts Schedule 4.06 Consents and Approvals Schedule 4.09 Litigation Schedule 4.12 Intellectual Property Rights Schedule 4.13(a) Owned Real Property Schedule 4.13(b) Leased Real Property Schedule 4.14 Tangible Personal Property Schedule 4.15 Material Contracts Schedule 4.16 Employee Benefit Plans Schedule 4.19 Insurance Schedule 5.01(d)(iv) Executive Compensation Adjustments AGREEMENT AND PLAN OF MERGER, dated as of April 1, 1998, among NUTRITION HEADQUARTERS, INC., a Delaware corporation ("Nutrition"), LEE NUTRITION, INC., a Delaware corporation ("Lee"), NUTRO LABORATORIES, INC., a New Jersey corporation ("Nutro" and, together with Nutrition and Lee collectively, the "Companies" and each individually a "Company"), MICHAEL C. SLADE ("Slade"), ABRAHAM FELDMAN TRUST F/B/O RUTH SLADE U/A 1/21/91 ("Ruth Trust") and ABRAHAM FELDMAN TRUST F/B/O E. STEVEN LENGER U/A 1/21/91 ("Steven Trust" and, together with Slade and Ruth Trust collectively, the "Shareholders" and each individually a "Shareholder"), and NBTY, INC., a Delaware corporation ("NBTY"), and NUTRITION HEADQUARTERS (DE), INC., a Delaware corporation and a wholly owned subsidiary of NBTY ("Merger Sub"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, the Shareholders own all the authorized, issued and outstanding shares of capital stock of each of Nutrition and Lee; WHEREAS, Slade owns all the authorized, issued and outstanding shares of capital stock of Nutro; WHEREAS, the authorized, issued and outstanding capital stock of the Companies consists of: (i) ninety-nine (99) shares of Common Stock, par value $1.00 per share of Nutrition (the "Nutrition Shares"); (ii) ninety- nine (99) shares of Common Stock of Lee, par value $1.00 per share (the "Lee Shares"); and (iii) one hundred (100) shares of Common Stock of Nutro, no par value per share (the "Nutro Shares" and, together with the Nutrition Shares and the Lee Shares collectively, the "Shares"); WHEREAS, the Shareholders desire to cause the merger of each of the Companies with and into Merger Sub whereby, as a result of such merger transactions, each of the Shareholders receives shares of Common Stock of NBTY, par value $0.008 per share (the "NBTY Stock"); WHEREAS, NBTY has announced and declared a stock split of NBTY Stock (the "NBTY Stock Split") payable in the form of a stock dividend to stockholders of record on March 23, 1998, whereby a dividend of two shares of NBTY Stock shall be distributed to the holder of each share of NBTY Stock; WHEREAS, NBTY has organized Merger Sub for the purpose of effecting the merger contemplated by this Agreement; WHEREAS, the assets of Merger Sub include the Merger Consideration (as defined below); and WHEREAS, simultaneously with the execution and delivery of this Agreement, the Shareholders and NBTY have executed and delivered that certain Registration Rights Agreement, dated as of even date herewith in the form attached hereto as Exhibit A (the "Registration Rights Agreement"), providing the Shareholders with the right to cause NBTY to register their shares of NBTY Stock acquired pursuant to the Merger in accordance with the terms and provisions set forth in the Registration Rights Agreement. NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereinafter set forth, NBTY, Merger Sub, the Companies and the Shareholders hereby agree as follows: ARTICLE I DEFINITIONS SECTION 1.01 Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings (such definitions to be equally applicable to both the singular and plural forms of the terms defined): "Aggregate Exchanged Stock" means the number of shares of NBTY Stock to be delivered to the Shareholders at the Closing as the Merger Consideration, computed as follows: (i) if the NBTY Stock FMV on the Closing Date is equal to or less than the Benchmark Price, then the Aggregate Exchanged Stock shall be equal to 9,000,000 shares (it being acknowledged and agreed that such number has been adjusted for the NBTY Stock Split and shall be appropriately adjusted to reflect any change, modification or revocation of the NBTY Stock Split); or (ii) if the NBTY Stock FMV on the Closing Date is greater than the Benchmark Price, then the Aggregate Exchanged Stock shall be equal to: (A) 9,000,000, less (B) the number of shares equal to the product of: (1) fifty percent (50%) multiplied by (2) the quotient obtained when dividing (x) the product of 9,000,000 multiplied by the NBTY Stock FMV on the Closing Date less 180,000,000, by (y) the NBTY Stock FMV on the Closing Date. The following example illustrates the computation of the Aggregate Exchanged Stock if the NBTY Stock FMV on the Closing Date is greater than the Benchmark Price: Assuming that the NBTY Stock FMV on the Closing Date is equal to $25.00 and that there has not been any change, modification or revocation of the NBTY Stock Split, the Aggregate Exchanged Stock would be equal to 8,100,000 shares of NBTY Stock, computed as follows: 9,000,000 - [0.5 X [(9,000,000 X 25) - 180,000,000] -------------------------------- 25] or 9,000,000 - [0.5 X (225,000,000 - 180,000,000) --------------------------- 25] or 9,000,000 - [0.5 X (45,000,000/25)] or 9,000,000 - .5 X 1,800,000 or 9,000,000 - 900,000 or 8,100,000. "Basket Amount" means FIVE HUNDRED THOUSAND and 00/100 ($500,000) for all matters; except that the "Basket Amount" shall mean ONE HUNDRED THOUSAND and 00/100 ($100,000) DOLLARS for liabilities or damages arising from the remediation of Hazardous Substances required by the NJDEP under the Remediation Agreement. "Benchmark Price" means a price per share of the NBTY Stock equal to $20.00 (it being acknowledged and agreed that such price has been adjusted for the NBTY Stock Split and shall be appropriately adjusted to reflect any change, modification or revocation of the NBTY Stock Split). "Business" means the vitamin and nutritional supplement and related products production and distribution business, including, without limitation, the related research, development, manufacturing, wholesale, mail order and retail operations, which are conducted by the Companies. "Business Day" means a day on which banks generally are not required or authorized to be closed in New York, New York. "Company Accounting Policies" means United States generally accepted accounting principles, consistently applied, except as are referred to in the notes to the Latest Audited Balance Sheet or in the report of the independent certified accountants presented therewith, applied on a basis consistent with the preparation of the Latest Audited Balance Sheet. "Environmental Laws" means any federal, state or local law relating to: (a) releases or threatened releases of Hazardous Substances; (b) the manufacture, handling, transport, use, treatment, storage or disposal of Hazardous Substances or materials containing Hazardous Substances; or (c) otherwise relating to pollution of the environment or the protection of human health. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "Hazardous Substances" means (a) substances which contain substances defined in or regulated under the following federal statutes and their state counterparts, as well as implementing regulations of such statutes as amended through the date hereof and as interpreted by administering agencies through the date hereof: the Hazardous Materials Transportation Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Clean Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the Toxic Substances Control Act, the Federal Insecticide, Fungicide, and Rodenticide Act, and the Clean Air Act; (b) petroleum and petroleum products including crude oil and any fractions thereof; (c) natural gas, synthetic gas and any mixtures thereof; and (d) any substances with respect to which a federal, state or local agency requires environmental investigation, monitoring, reporting or remediation as of the date hereof. "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder. "Gross-Up for Taxes" means an amount equal to the sum of all Taxes imposed in connection with the specified payment; accordingly, a payment to be made without a "Gross-Up for Taxes" under Articles VII or IX is the amount of liabilities and damages of the indemnified party excluding any amount of Taxes payable by such indemnified party as a result of receiving such specified payment. "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended. "ISRA" means the Industrial Site Recovery Act of the State of New Jersey, N.J.S.A. 13:1K-6 et. seq. "Knowledge" means to the best knowledge of the specified person after reasonable inquiry and, with respect to the Knowledge of Slade, including due inquiry to the operating management of the Companies. "Latest Audited Balance Sheet" means, collectively, the audited balance sheet of each of the Companies as of September 30, 1997, including the notes thereto and the report thereon by the Companies' independent certified public accountants. "Material Adverse Effect" means any change in, or effect on, the Business as currently conducted by the Companies that is or is reasonably likely to be materially adverse to the results of operations or the financial condition of the Business, taken as a whole, after giving effect to this Agreement and the transactions contemplated hereby. "Material Adverse NBTY Effect" means any change in, or effect on, the business of NBTY, Merger Sub and their respective subsidiaries that is or is reasonably likely to be materially adverse to the results of operations or the financial condition of the business of NBTY, Merger Sub and their respective subsidiaries, taken as a whole, after giving effect to this Agreement and the transactions contemplated hereby. "NBTY Disclosure Schedule" means the NBTY Disclosure Schedule dated as of the date hereof delivered to the Shareholders by NBTY and Merger Sub on or prior to the date that is not less than five (5) business days prior to the Closing Date. "NBTY Stock FMV" means, for one (1) share of NBTY Stock, the lesser of: (i) the closing bid price, as reported by the National Association of Securities Dealers automated quotations system, on the Business Day immediately preceding the Closing Date, and (ii) the average of the closing bid prices, as reported by the National Association of Securities Dealers automated quotations system, for the ten (10) Business Days immediately preceding (but excluding) the date of determination (it being acknowledged and agreed that, to the extent applicable, the NBTY Stock FMV shall be appropriately adjusted for the NBTY Stock Split or any change, modification or revocation of the NBTY Stock Split). "Shareholder Disclosure Schedule" means the Shareholder Disclosure Schedule dated as of the date hereof delivered to NBTY by the Shareholders on the date this Agreement is executed and delivered. "Tax" or "Taxes" means all income, gross receipts, sales, use, employment, franchise, profits, property or other taxes, fees, stamp taxes and duties, assessments or charges of any kind whatsoever (whether payable directly or by withholding), together with any interest and any penalties, additions to tax or additional amounts imposed by any taxing authority with respect thereto. "Transferred Employees" means the employees of the Companies who are on the Companies' respective payrolls as of the Closing Date. In addition, the term "Transferred Employees" shall also include those current employees of the Companies who are on vacation, sick, disability, maternity leave or other authorized leave of absence, and those employees who at the Effective Time are subject to a Company layoff, in each case, whether or not such employees return to active employment with any Company. "Transferred Former Employees" means previously employed employees of the Companies. "Working Capital of the Companies" means the balance of the combined current assets of the Companies less the balance of the combined current liabilities of the Companies, in each case, as of the specified date and computed in accordance with the Company Accounting Policies. SECTION 1.02 Certain Additional Defined Terms. In addition to terms defined in Section 1.01, the following capitalized terms are used as defined in the Sections set forth opposite such terms: Defined Terms Section Reference ------------- ----------------- Adjustment Section 7.04(a) Advisor Section 3.21 Aggregate Exchanged Stock Section 1.01 Benchmark Price Section 1.01 Business Section 1.01 Business Day Section 1.01 Certificates of Merger Section 2.02 Closing Section 2.01 Closing Date Section 2.01 Commission Section 4.22 Companies Recitals Company Recitals Company Accounting Policies Section 1.01 Company Retirement Plans Section 6.02 Confidentiality Agreement Section 5.05 Constituent Corporations Section 2.03 Contemplated Stock Section 5.07 Contest Section 7.03(b) Corporate Law Section 2.02 DGCL Section 2.02 Effective Time Section 2.02 Environmental Laws Section 1.01 ERISA Section 1.01 Final Working Capital of the Companies Section 5.01(c) Financial Statements Section 3.07 Hazardous Substances Section 1.01 HSR Act Section 1.01 Intellectual Property Rights Section 3.12 Internal Revenue Code Section 1.01 IRS Section 3.16(a) ISRA Section 1.01 Knowledge Section 1.01 Latest Audited Balance Sheet Section 1.01 Lee Recitals Lee Shares Recitals Material Adverse Effect Section 1.01 Material Adverse NBTY Effect Section 1.01 Material Contracts Section 3.15 Merger Section 2.02 Merger Consideration Section 2.05(a) Merger Sub Recitals Minimum Capital Amount Section 5.01(c) Multiemployer Plan Section 3.16(b) Multiple Employer Plan Section 3.16(b) NBTY Recitals NBTY Board Section 5.09 NBTY Disclosure Schedule Section 1.01 NBTY Multiemployer Plan Section 4.16(b) NBTY Multiple Employer Plan Section 4.16(b) NBTY Plans Section 4.16(a) NBTY Trusts Section 6.02 NBTY Stock Recitals NBTY Stock FMV Section 1.01 NBTY Stock Split Recitals NJBCA Section 2.02 NJDEP Section 5.06(a) Nutrition Recitals Nutrition Shares Recitals Nutro Recitals Nutro Price Section 2.02(a) Nutro Shares Recitals Plans Section 3.16(a) PNC Section 5.10 Registration Rights Agreement Recitals Remediation Agreement Section 5.10(a) Ruth Trust Recitals SEC Reports Section 4.22 Shareholder Disclosure Schedule Section 1.01 Shares Recitals Shareholder Recitals Shareholders Recitals Slade Recitals Steven Trust Recitals Surviving Corporation Section 2.02 Tax Section 1.01 Taxes Section 1.01 Tax Reserves Section 7.01 Transaction Expenses Section 11.01 WARN Act Section 6.01(c) 1933 Act Section 4.22 1934 Act Section 4.22 ARTICLE II CLOSING; MERGER; MERGER CONSIDERATION SECTION 2.01 The Closing. Upon the terms and subject to the conditions of this Agreement, the closing (the "Closing") of the transactions contemplated by this Agreement shall take place at 10:00 A.M. (local time) on the Business Day following the satisfaction, or if permissible, the waiver of the conditions set forth in Article VIII (including, without limitation the expiration or termination of the applicable waiting periods under the HSR Act) at the offices of Herrick, Feinstein LLP, 2 Park Avenue, New York, New York 10016, or at such other time, date and place as may be agreed upon by Slade and Merger Sub. (Hereinafter, the date on which the Closing shall take place is referred to as the "Closing Date"). SECTION 2.02 The Merger. Upon the terms and subject to the conditions of this Agreement and in accordance with the Delaware General Corporation Law (the "DGCL") and the New Jersey Business Corporation Act (the "NJBCA" and, together with the DGCL, the "Corporate Law"), at the Effective Time, each of the Companies shall be merged with and into Merger Sub (the "Merger"). Merger Sub shall continue its existence as the surviving corporation (the "Surviving Corporation") in the Merger and the separate corporate existence of each of the Companies shall terminate at the Effective Time. The Merger shall become effective (the "Effective Time") at such time as duly prepared and executed certificates of merger (collectively, the "Certificates of Merger"), each in form and substance reasonably satisfactory to Slade and Merger Sub, providing for the merger of each of the Companies with and into Merger Sub, is filed with, and accepted by, the Secretary of State of the State of Delaware in accordance with the relevant provisions of the DGCL (to the extent applicable) and the Secretary of State of the State of New Jersey in accordance with the relevant provisions of the NJBCA (to the extent applicable). Each Certificate of Merger shall be filed in accordance with the applicable Corporate Law at the Closing. SECTION 2.03 Certain Effects of the Merger. At the Effective Time: (i) the Surviving Corporation shall thereafter, consistently with its certificate of incorporation, possess all the rights, privileges, immunities, powers and purposes (both of a public and private nature), and assume and be liable for all the liabilities, obligations and penalties (both of a public and private nature), of each of the Companies and Merger Sub (sometimes hereinafter referred to as the "Constituent Corporations"); (ii) all property, real, personal and mixed, and all debts due to any of the Constituent Corporations on whatever account shall be vested in the Surviving Corporation; and (iii) all property, rights, privileges, powers and franchises and all and every other interest shall be the property of the Surviving Corporation. In furtherance of the immediately preceding sentence, at the Effective Time title to any real estate, vested by deed or otherwise, under the laws of the State of Delaware or elsewhere in any of the Constituent Corporations, shall not revert or in any way be impaired by reason of the Merger, but any claim existing or action or proceeding pending by or against any Constituent Corporation may be prosecuted as if the Merger had not taken place, or the Surviving Corporation may be substituted in its place, and all rights of creditors and liens upon any property of any of the Constituent Corporations shall be preserved unimpaired and all debts, liabilities and duties of each of the Constituent Corporations shall thenceforth attach to the Surviving Corporation, and may be enforced against it to the same extent as if said debts, liabilities and duties had been incurred or contracted by it. SECTION 2.04 Corporate Organization. (a) Immediately subsequent to the Effective Time, the Surviving Corporation shall (i) continue its separate corporate existence under the laws of the State of Delaware with all its purposes, objects, rights, privileges, powers, certificates and franchises unimpaired by the Merger under the laws of the State of Delaware, and (ii) succeed to all rights, assets, liabilities and obligations of each of the Companies and Merger Sub in accordance with the Corporate Law. (b) The Certificate of Incorporation and By-laws of Merger Sub at the Effective Time shall be the Certificate of Incorporation and By-laws, respectively, of the Surviving Corporation after the Effective Time. (c) All corporate acts, plans, policies, approvals and authorizations of the Constituent Corporations and their respective Boards of Directors, committees appointed by such Boards of Directors and their officers and agents, which were valid and effective immediately prior to the Effective Time, shall be taken for all purposes as the acts, plans, policies, approvals and authorizations of the Surviving Corporation and shall be as effective and binding thereon to the same extent as the same were with respect to the Companies. (d) Until otherwise determined by NBTY the employees of the Companies shall become the employees of the Surviving Corporation or, at the discretion of NBTY, of NBTY or its other subsidiaries. SECTION 2.05 Conversion of Shares. At the Effective Time: (a) All of the Nutrition Shares, Lee Shares and Nutro Shares, immediately prior to the Effective Time shall, by reason of the Merger and without any action by the holders thereof, be converted into the right to receive that number of NBTY Stock equal to the Aggregate Exchanged Stock multiplied by the percentage of the Aggregate Exchanged Stock specified below (collectively the "Merger Consideration"). Percentage of the Aggregate Exchanged Stock ------------------------- The Nutro Shares 20.00% The Lee Shares 20.00% The Nutrition Shares 60.00% (b) All Shares held in the treasury of any Company immediately prior to the Effective Time shall, by virtue of the Merger, cease to be outstanding and shall be canceled and retired without payment of any consideration therefor. (c) At the Effective Time, the stock transfer books of each of the Companies shall be closed, and no transfer of any Shares shall thereafter be made. SECTION 2.06 Surrender and Payment. Promptly after the Effective Time, Merger Sub shall deliver, or cause to be delivered, to each holder of record of a certificate or certificates which immediately prior to the Effective Time represented Shares (the "Certificates") who surrenders the Certificates in exchange for the Merger Consideration the Certificate or Certificates representing the Merger Consideration for each Share formerly represented by such Certificate, and the Certificate so surrendered shall forthwith be canceled. Until surrendered as contemplated by this Section 2.06, from and after the Effective Time each Certificate shall be deemed to represent only the right to receive the Merger Consideration for each Share formerly represented by such Certificate, and shall not evidence any interest in, or any right to exercise the rights of a shareholder of, the Surviving Corporation. If a payment of any Merger Consideration is to be made to a person other than the one in whose name the Certificate surrendered in exchange therefor is registered, it shall be a condition to such issuance or payment that such Certificate be properly endorsed (or accompanied by an appropriate instrument of transfer) and accompanied by evidence that any applicable stock transfer taxes have been paid or provided for. SECTION 2.07 Other Closing Documents. (a) At the Closing, each of the Shareholders shall deliver or cause to be delivered to Merger Sub: (i) the stock certificates evidencing each of the Nutrition Shares, the Lee Shares and the Nutro Shares owned by such Shareholder, each duly endorsed in blank or accompanied by stock powers duly executed in blank, in proper form for transfer together with any applicable state stock transfer tax stamps duly attached; (ii) the certificate referred to in Section 8.02(a); (iii) the legal opinion referred to in Section 8.02(e); and (iv) a receipt for the Aggregate Exchanged Stock received by such Shareholder. (b) At the Closing, NBTY and Merger Sub shall deliver, or cause to be delivered, to Slade on behalf of, and for the benefit of, each Shareholder (i) the stock certificates representing the correct number of Aggregate Exchanged Stock each Shareholder is entitled to receive pursuant to the terms and conditions of this Agreement, in each case, registered in the name or names previously specified by Slade; (ii) the certificate referred to in Section 8.01(a); (iii) the legal opinion referred to in Section 8.01(e); and (iv) a receipt for the Nutrition Shares, the Lee Shares and the Nutro Shares. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS Subject to the limitations of Section 3.20, Slade, with respect to himself and each Company, and each other Shareholder, solely with respect to such Shareholder's authority to enter into and perform under this Agreement, represents and warrants to NBTY as follows: SECTION 3.01 Authority of the Companies and the Shareholders. Each Company and such Shareholder has all necessary capacity or power and authority (as the case may be) to enter into this Agreement and to carry out his or its obligations hereunder and to consummate the transactions contemplated hereby and thereby. Such Shareholder has all necessary capacity or power and authority to enter into the Registration Rights Agreement, to carry out his or its obligations thereunder and to consummate the transactions contemplated thereby. The execution and delivery of this Agreement by the Companies and the execution and delivery of this Agreement and the Registration Rights Agreement by such Shareholder, the performance by the Companies and such Shareholder of his or its obligations hereunder and thereunder and the consummation by the Companies and such Shareholder of the transactions contemplated hereby and thereby have been, or prior to Closing will be, duly authorized by all requisite action on the part of the Companies and such Shareholder. Each of this Agreement and the Registration Rights Agreement has been duly executed and delivered by the Companies and such Shareholder (as the case may be), and, assuming due authorization, execution and delivery by NBTY and Merger Sub, each of this Agreement and the Registration Rights Agreement constitutes a legal, valid and binding obligation of the Companies and such Shareholder enforceable against such party in accordance with its terms. SECTION 3.02 Incorporation and Qualification of the Companies. Each of the Companies is a corporation duly incorporated and validly existing under the laws of the state of its incorporation and has the corporate power and authority to own, operate or lease the properties and assets now owned, operated or leased by such Company and to carry on the Business as it is now being conducted by such Company. Each such Company is duly qualified as a foreign corporation to do business, and is in good standing, in each jurisdiction where the character of its properties owned, operated or leased or the nature of its activities makes such qualification necessary, except where the failure to so qualify would not have a Material Adverse Effect. SECTION 3.03 Capital Stock of the Companies; Ownership of the Shares. The Nutrition Shares, the Lee Shares and the Nutro Shares constitute all the authorized, issued and outstanding shares of capital stock of Nutrition, Lee and Nutro, respectively. The Shares have been duly authorized and validly issued, are fully paid and nonassessable and were not issued in violation of any pre-emptive rights. There are no options, calls, warrants or rights of conversion or other rights, agreements, arrangements or commitments relating to the capital stock of any such Company obligating any of such Company or such Shareholder to issue or sell any shares of the capital stock of any such Company. Such Shareholder owns the Shares to be tendered in the Merger by such Shareholder hereunder free and clear of all pledges, security interests and all other material liens, encumbrances and adverse claims. SECTION 3.04 Subsidiaries. Other than Life's Finest Inc., a Delaware corporation which is a wholly owned subsidiary of Nutrition, and Brunswick Laboratories, Inc., an inactive Illinois corporation organized by Nutrition, there is no other company or business entity which is a subsidiary. SECTION 3.05 No Conflict. Assuming all consents, approvals, exemptions, authorizations and other actions described in Section 3.06 have been obtained and all filings and notifications listed in Schedule 3.06 have been made, the execution, delivery and performance of this Agreement by the Companies and by such Shareholder do not and will not (a) violate or conflict with the Certificate of Incorporation or By-laws of any of the Companies, (b) except as would not, individually or in the aggregate, have a Material Adverse Effect or as otherwise disclosed in Schedule 3.05, conflict with or violate any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award applicable to such Shareholder, any of the Companies or the Business, or (c) except as would not have a Material Adverse Effect or as otherwise disclosed in Schedule 3.05, result in any breach of, or constitute a default (or event which with the giving of notice or lapse of time, or both, would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of any lien or other encumbrance on any of the Shares or any of the assets or properties of any of such Companies pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument relating to such assets or properties to which such Shareholder or any of such Companies is a party or by which such Shares or any of such assets or properties is bound or affected. SECTION 3.06 Consents and Approvals. The execution and delivery of each of this Agreement by the Companies and the execution and delivery of each of this Agreement and the Registration Rights Agreement by such Shareholder does not, and the performance of this Agreement by the Companies and the performance of each of this Agreement and the Registration Rights Agreement by such Shareholder will not, require any consent, approval, exemption, authorization or other action by, or filing with or notification to, any court, administrative agency or other governmental or regulatory authority, except (a) as described in Schedule 3.06, (b) the notification requirements of the HSR Act, (c) the requirements of ISRA, (d) where failure to obtain such consent, approval, exemption, authorization or action, make such filing or give such notice would not have a Material Adverse Effect and (e) as may be necessary as a result of any facts or circumstances relating solely to NBTY, Merger Sub or their respective subsidiaries. SECTION 3.07 Financial Information. Slade has provided to NBTY true and complete copies of the audited balance sheets and income statements for each Company as of, and for the years ended, September 30, 1995, 1996 and 1997 and the unaudited balance sheet and income statement for each Company as of, for the three-month period ended December 31, 1997 (collectively, the "Financial Statements"). The Financial Statements present fairly the financial condition and results of operations of each of the Companies as of the dates thereof or for the periods covered thereby and have been prepared in accordance with the Company Accounting Policies applied on a basis consistent with past practice, except as described in the notes thereto and except that the unaudited balance sheet and income statement as of, and for the three-month period ended, December 31, 1997, are condensed, do not contain the footnotes required by United States generally accepted accounting principles and are subject to normal year-end and other non- material adjustments. SECTION 3.08 Absence of Undisclosed Liabilities. As of the Closing Date, there shall be, to Slade's Knowledge, no liability of any such Company which would be required to be reflected on a balance sheet prepared in accordance with Company Accounting Policies, except liabilities (i) disclosed in the Shareholder Disclosure Schedule or otherwise addressed by any of the representations, warranties or covenants made by the Companies or the Shareholders in this Agreement, (ii) as, and to the extent, reflected or reserved against in the Financial Statements, (iii) under this Agreement, (iv) covered by insurance, indemnification, contribution or comparable arrangements benefitting the applicable Company, (v) with respect to the matters addressed in Section 3.18 and Article VII (which shall be governed solely by the terms of such Section 3.18 and Article VII, respectively), (vi) incurred in the ordinary course of business after the date hereof and prior to the Closing, or (vii) which, individually and in the aggregate, are not reasonably expected to have a Material Adverse Effect. SECTION 3.09 Litigation. Except as set forth in Schedule 3.09 and except for claims substantially covered by insurance, indemnification, contribution or comparable arrangements benefitting the applicable Company, there are no claims, actions, proceedings or investigations pending against any Company or any of its assets or properties, before any federal, state or municipal court, or administrative, governmental or regulatory authority or body that, individually or in the aggregate, are reasonably expected to have a Material Adverse Effect. Except as set forth in Schedule 3.09, no Company nor any of its assets or properties is subject to any order, writ, judgment, injunction, decree, determination or award having a Material Adverse Effect. SECTION 3.10 Compliance with Laws; Licenses and Permits. On the Closing Date, no Company will be in material violation of any law, rule, regulation, order, judgment or decree applicable to it or by which any of its properties is bound or affected, except for violations the existence of which would not be reasonably expected to have a Material Adverse Effect. To the Knowledge of Slade, each Company has, has applied for, or is in the process of applying for, all governmental licenses, franchises, permits, approvals, authorizations, exemptions, certificates, registrations and similar documents or instruments (including, without limitation, all food and drug licenses, permits and authorizations) necessary to carry on the Business as it is now being conducted by such Company, except for such governmental licenses, permits and authorizations the absence of which would not be reasonably expected to have a Material Adverse Effect. To the Knowledge of Slade, there is no existing practice, action or plan of any Company and no existing condition of the assets of any Company which would reasonably be expected to give rise to any civil or criminal liability under, or prevent compliance with, any food and drug, health or occupational safety statute, regulation, ordinance or decree other than those the existence of which are not reasonably expected to have a Material Adverse Effect. SECTION 3.11 Environmental Compliance. Each Company currently holds, has applied for, or is in the process of applying for, all the permits, licenses and approvals of governmental authorities and agencies required under Environmental Laws for the current use, occupancy or operation of its assets and that portion of the Business conducted by it, except for such permits, licenses and approvals the absence of which would not be reasonably expected to have a Material Adverse Effect. To the Knowledge of Slade, no Company is in violation of any Environmental Laws or any such licenses, permits and approvals, except for such violations which would not be reasonably expected to have a Material Adverse Effect. SECTION 3.12 Intellectual Property Rights. Each Company owns or otherwise has a right to use all patented inventions, trade secrets, trademarks, trade names, service marks and copyrights (collectively "Intellectual Property Rights") as are necessary to conduct the Business as it is now being conducted by it, except for those Intellectual Property Rights the lack of which would not reasonably be expected to have a Material Adverse Effect. The patents, trademarks, service marks and copyrights described in Schedule 3.12 are owned by the Company as indicated thereon and, except as described in Schedule 3.12, no rights have been granted to third parties with respect thereto. To the Knowledge of Slade, no claims are pending that relate to the use by any such Company of any Intellectual Property Rights and with respect to which there is a reasonable likelihood of an adverse determination that would have a Material Adverse Effect. SECTION 3.13 Real Property. Each parcel of real property, including, without limitation, those properties set forth on Schedule 3.13(a) (which lists owned properties) and Schedule 3.13(b) (which lists leased properties), owned or leased by any Company is owned or leased, free and clear of all liens, security interests, claims and other charges and encumbrances, except: (a) as disclosed in the Latest Audited Balance Sheet; (b) as disclosed in Schedule 3.13(a) or in Schedule 3.13(b); (c) all liens for Taxes, assessments, both general and special, and other governmental charges which are not due and payable as of the Closing Date; (d) all building codes, zoning ordinances, planning restrictions and other laws, ordinances, regulations, rules, orders or determinations of any federal, state, county, municipal or other governmental authority heretofore, now or hereafter enacted, made or issued by any such authority affecting the property, none of which materially restrict the current use of such property; (e) all easements, rights-of-way, covenants, conditions, restrictions, reservations, licenses, agreements, and other similar matters granted in the usual course of business; (f) all encroachments, overlaps, boundary line disputes, shortages in area, drainage and other easements, cemeteries and burial grounds and other similar matters not of record which would be disclosed by an accurate survey or inspection of the property; (g) all electric power, telephone, gas, sanitary sewer, storm sewer, water and other utility lines, pipelines', service lines and facilities of any nature now located on, over or under the property, and all licenses, easements, rights-of-way and other similar agreements relating thereto granted in the ordinary course of business; (h) all existing public and private roads and streets (whether dedicated or undedicated), and all railroad lines and rights-of-way affecting the property; (i) inchoate mechanic's and materialmen's liens for construction in progress and workmen's, repairmen's, warehousemen's and carrier's liens arising in the ordinary course of business and (j) imperfections of title, liens, security interests, claims and other charges and encumbrances the existence of which, individually and in the aggregate, would not be reasonably expected to have a Material Adverse Effect. SECTION 3.14 Tangible Personal Property. Except as otherwise disclosed on Schedule 3.14, each material item of equipment, machinery or other tangible personal property reflected on the Latest Audited Balance Sheet is either: (a) owned by the applicable Company, free and clear of all liens, security interests, claims and other charges and encumbrances, except: (i) liens, security interests, claims and other charges and encumbrances incurred in the ordinary operation of the Business; (ii) liens for Taxes and assessments not yet payable; (iii) liens for Taxes, assessments and charges and other claims, the validity of which is being contested in good faith; (iv) liens, security interests and encumbrances securing debt which is reflected as a liability on the Latest Audited Balance Sheet or relating to liabilities or obligations which are to be assumed or satisfied by NBTY or Merger Sub pursuant to this Agreement (including, without limitation pursuant to Section 5.11 hereof); and (v) liens, security interests, imperfections of title, claims and other charges and encumbrances the existence of which, individually and in the aggregate, would not be reasonably expected to have a Material Adverse Effect; or (b) leased pursuant to one or more valid and enforceable lease agreements that have not been breached by a Company. Such tangible personal property is in normal operating condition, except for ordinary wear and tear. SECTION 3.15 Material Contracts. Schedule 3.15 lists each executory contract (collectively, the "Material Contracts") to which a Company is a party that requires, in accordance with its terms, future payments in excess of $500,000 and that is not cancellable upon not more than 60 days' notice. No Company is in default in the payment of any principal or interest on any indebtedness for borrowed money, except for defaults which, individually and in the aggregate, would not be reasonably expected to have a Material Adverse Effect. SECTION 3.16 Employee Benefit Matters; Retirement Plans. (a) Schedule 3.16 contains a true and complete list of all employee benefit plans (within the meaning of Section 3(3) of ERISA) and all bonus, stock option, stock purchase, restricted stock, incentive, deferred compensation, retiree medical or life insurance, supplemental retirement, severance or other benefit plans, programs or arrangements, and all employment, termination, severance or other contracts or agreements with respect to which any Company has any obligation or which are maintained, contributed to or sponsored by it or any of its affiliates for the benefit of any of its current employees, officers or directors or any of its former employees who was previously employed in the Business, other than plans, programs, arrangements, contracts or agreements for which no benefits are payable after the Closing (the "Plans"). Except as disclosed in Schedule 3.16, each Plan is in writing and the Shareholders have previously made available to NBTY and Merger Sub a true and complete copy of each Plan and a true and complete copy of each of the following documents, to the extent applicable, prepared in connection with each such Plan: (i) a copy of each trust or other funding arrangement, (ii) the most recently filed Internal Revenue Service ("IRS") Form 5500, (iii) the most recently received IRS determination letter, and (iv) the most recently prepared actuarial report and financial statement. Except as otherwise disclosed in Schedule 3.16, neither any Shareholder nor any Company has any express or implied commitment to modify, change or terminate any Plan, other than with respect to a modification, change or termination required by ERISA or the Internal Revenue Code. (b) Except as otherwise disclosed in Schedule 3.16, none of the Plans (i) is a multiemployer plan, within the meaning of Section 3(37) or 4001(a)(3) of ERISA (a "Multiemployer Plan") or a single employer pension plan, within the meaning of Section 4001(a)(15) of ERISA, for which a Company could incur liability under Section 4063 or 4064 of ERISA (a "Multiple Employer Plan"), or (ii) provides or promises to provide retiree medical or life insurance benefits. (c) With respect to each Plan, neither any Shareholder nor any Company is currently liable for any material tax arising under Section 4971, 4972, 4975, 4979, 4980 or 4980B of the Internal Revenue Code, and no fact or event exists which could reasonably give rise to any such liability. Neither any Shareholder nor any Company has incurred any material liability under, arising out of or by operation of Title IV of ERISA (other than liability for premiums to the Pension Benefit Guaranty Corporation arising in the ordinary course), including, without limitation, any liability in connection with (i) the termination or reorganization of any employee pension benefit plan subject to Title IV of ERISA or (ii) the withdrawal from any Multiemployer Plan or Multiple Employer Plan. None of the assets of any Company is the subject of any lien arising under Section 302(f) of ERISA or Section 412(n) of the Internal Revenue Code and neither any Shareholder nor any Company has been required to post any security under Section 307 of ERISA or Section 401(a)(29) of the Internal Revenue Code with respect to any Plan, and no fact or event exists which could reasonably give rise to any such lien or requirement to post any such security. (d) Except as otherwise disclosed by Schedule 3.16, each Plan has been operated in all material respects in accordance with the requirements of applicable laws, including, without limitation, ERISA and the Internal Revenue Code. Except as otherwise disclosed by Schedule 3.16, no Plan has incurred an "accumulated funding deficiency" (within the meaning of Section 302 of ERISA or Section 412 of the Internal Revenue Code), whether or not waived. Except as otherwise disclosed by Schedule 3.16, all prior contributions, premiums or payments made with respect to any Plan have been deducted for income tax purposes and no such deduction previously claimed has been challenged by any government entity. The Latest Audited Balance Sheet reflects accruals of all material amounts of employer contributions and premiums accrued but unpaid with respect to the Plans as of the date of the Latest Audited Balance Sheet. SECTION 3.17 Labor Matters. No Company is a party to any collective bargaining agreement or other labor union contract applicable to persons employed by it and, to the Knowledge of Slade, there are currently no strikes, slowdowns, work stoppages or lockouts, by or with respect to any employees of any Company, or any pending labor controversies which would reasonably be expected to have a Material Adverse Effect. SECTION 3.18 Taxes. (a) Each Company has timely filed or been included in, or will timely file or be included in, all returns required to be filed by it or in which it is to be included with respect to Taxes for any period ending on or before the Closing Date, taking into account any extension of time to file granted to or obtained on behalf of such Company, (b) all Taxes shown to be payable on such returns have been paid or will be paid and (c) no deficiency for any material amount of Tax has been asserted or assessed by a taxing authority against such Company. SECTION 3.19 Insurance. All material properties and material insurable risks of each Company is covered by valid and currently effective insurance policies or binders of insurance or programs of self-insurance in such types and amounts as are consistent with the reasonable business judgment of the operating management of such Company. Schedule 3.19 contains a complete list of all material liability, property, accident, casualty, fire, flood, workers' compensation, key man, group life or health and other insurance policies and arrangements affecting or relating to each Company, their respective assets or the Business which are in full force and effect on the date hereof. SECTION 3.20 Disclaimer of Warranties. Each of NBTY and Merger Sub acknowledge and agree that Slade is the only Shareholder who is active in the Business on a daily basis and who is familiar with details of the Business and that the Shareholders other than Slade make no representations and warranties except (i) as set forth in Sections 3.01 and 3.03 and (ii) that no such Shareholder has any actual knowledge (without any independent investigation) that any representation or warranty of a Shareholder herein is not true and complete. SECTION 3.21 Customer Mailing Lists. The customer mailing lists of the Companies, as of February 28, 1998, consists of approximately 1,741,175 customer names which are maintained on the Companies HP 3000 computer storage drive, disk or device located at the 1 Nutrition Plaza, Carbondale, Illinois facility. Set forth on Schedule 3.21 is an analysis of such customer names indicating the aging of orders or activities of such names in an operational report regularly generated by the Companies. To Slade's Knowledge no Company has sold, leased or rented such customer mailing lists and there have been no authorized copies of such customer mailing lists other than specifically for use in the furtherance of the Business. SECTION 3.22 Brokers. Except for Furman Selz LLC (the "Advisor"), no broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Companies or such Shareholder. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF NBTY AND MERGER SUB NBTY and Merger Sub, jointly and severally, represent and warrant to the Shareholders and each of the Companies as follows: SECTION 4.01 Authority of NBTY and Merger Sub. Each of NBTY and Merger Sub has all necessary power and authority to enter into this Agreement, to carry out its obligations hereunder and to consummate the transactions contemplated hereby. NBTY has all the necessary power and authority to enter into the Registration Rights Agreement, to carry out its obligations thereunder and to consummate the transactions contemplated thereby. The execution and delivery of this Agreement by Merger Sub and the execution and delivery of this Agreement and the Registration Rights Agreement by NBTY, the performance by Merger Sub and NBTY of their respective obligations hereunder and thereunder and the consummation by Merger Sub and NBTY of the transactions contemplated hereby and thereby have been, or prior to the Closing will be, duly authorized by all requisite action on the part of Merger Sub and NBTY. The execution and delivery of this Agreement by NBTY and Merger Sub, the performance by NBTY and Merger Sub of their obligations hereunder and the consummation by NBTY and Merger Sub of the transactions contemplated hereby have been, or prior to Closing will be, duly authorized by all requisite action on the part of NBTY and Merger Sub. Each of this Agreement and the Registration Rights Agreement has been duly executed and delivered by NBTY and Merger Sub (as the case may be), and, assuming due authorization, execution and delivery by each of the Companies and the Shareholders (as the case may be), each of this Agreement and the Registration Rights Agreement constitutes a legal, valid and binding obligation of NBTY and Merger Sub enforceable against NBTY and Merger Sub in accordance with its terms. SECTION 4.02 Incorporation and Qualification of NBTY and Merger Sub. Each of NBTY and Merger Sub is a corporation duly incorporated and validly existing under the laws of the State of Delaware and has the corporate power and authority to own, operate or lease the properties and assets now owned, operated or leased by such corporations and to carry on the business of such corporations as it is now being conducted by such corporations. Each of NBTY and Merger Sub is duly qualified as a foreign corporation to do business, and is in good standing, in each jurisdiction where the character of its respective properties owned, operated or leased or the nature of its respective activities makes such qualification necessary, except where the failure to so qualify would not have a Material Adverse NBTY Effect. SECTION 4.03 Capital Stock of NBTY and Merger Sub; Aggregate Exchanged Stock. The authorized, issued and outstanding shares of capital stock of NBTY is as described in the most recently filed SEC Report (as hereinafter defined). The authorized, issued and outstanding shares of the capital stock of Merger Sub consists solely of 1,000 shares of common stock, par value $0.01 per share. All of the issued and outstanding shares of common stock of Merger Sub are owned beneficially and of record by NBTY. At the Effective Time, each share of NBTY Stock comprising the Aggregate Exchanged Stock delivered to the Shareholders in consideration of the Shares shall be owned beneficially and of record by the Shareholders and shall have been duly authorized and validly issued, fully paid and nonassessable, not issued in violation of any pre-emptive rights and shall be free and clear of all pledges, security interests and all other liens, encumbrances and adverse claims of any character or description. SECTION 4.04 Subsidiaries. All financial transactions involving NBTY and its subsidiaries are reflected in NBTY's consolidated financial statements. SECTION 4.05 No Conflict. Assuming all consents, approvals, exemptions, authorizations and other actions described in Section 4.06 have been obtained and all filings and notifications described in Section 4.06 have been made, the execution, delivery and performance of this Agreement and the Registration Rights Agreement by NBTY and the execution, delivery and performance of this Agreement by Merger Sub does not and will not (a) violate or conflict with the Certificate of Incorporation or By-laws of NBTY or Merger Sub, (b) except as would not, individually or in the aggregate, have a Material Adverse NBTY Effect or as otherwise disclosed on Schedule 4.05, conflict with or violate any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award applicable to NBTY, Merger Sub or their respective subsidiaries or the business of NBTY, Merger Sub or their respective subsidiaries, or (c) except as would not have a Material Adverse NBTY Effect, result in any breach of, or constitute a default (or event which with the giving of notice or lapse of time, or both, would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of any lien or other encumbrance on any of the Aggregate Exchanged Stock or any of the assets or properties of NBTY, Merger Sub or their respective subsidiaries pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument relating to such assets or properties to which NBTY, Merger Sub or their respective subsidiaries is a party or by which any of their respective shares of capital stock or any of their respective assets or properties is bound or affected. SECTION 4.06 Consents and Approvals. The execution and delivery of each of this Agreement by NBTY and Merger Sub and the execution and delivery of this Agreement and the Registration Rights Agreement by NBTY does not, and the performance of this Agreement by Merger Sub and NBTY and the performance of each of this Agreement and the Registration Rights Agreement by NBTY will not, require any consent, approval, exemption, authorization or other action by, or filing with or notification to, any court, administrative agency or other governmental or regulatory authority, except (a) as described in Schedule 4.06, (b) the notification requirements of the HSR Act, (c) the requirements of ISRA, (d) where failure to obtain such consent, approval, exemption, authorization or action, make such filing or give such notice would not have a Material Adverse NBTY Effect and (e) as may be necessary as a result of any facts or circumstances relating solely to the Companies and the Shareholders. SECTION 4.07 Financial Information. NBTY and Merger Sub have provided to Slade a true and complete copy of each SEC Report, including, without limitation, reports on Form 10-K, Form 10-Q, Form 8-K and preliminary and definitive proxies and amendments thereto. Neither NBTY nor Merger Sub intends to amend, supplement or modify any SEC Reports filed pursuant to the requirements of the 1934 Act. SECTION 4.08 Absence of Undisclosed Liabilities. As of the Closing Date, there shall be, to NBTY's and Merger Sub's knowledge, no liability of NBTY, Merger Sub or their respective subsidiaries which would be required to be reflected on a balance sheet prepared in accordance with generally accepted accounting principles, consistently applied, except liabilities (i) disclosed in the SEC Reports or otherwise addressed by any of the representations, warranties or covenants made by NBTY or Merger Sub in this Agreement, (ii) as, and to the extent, reflected or reserved against in the financial statements included in the latest SEC Report, (iii) under this Agreement, (iv) covered by insurance, indemnification, contribution or comparable arrangements benefitting NBTY, Merger Sub or their respective subsidiaries, (v) with respect to the matters addressed in Section 4.18, (vi) incurred in the ordinary course of business after the date hereof and prior to the Closing, or (vii) which, individually and in the aggregate, are not reasonably expected to have a Material Adverse NBTY Effect. SECTION 4.09 Litigation. Except as set forth in Schedule 4.09 and except for claims substantially covered by insurance, indemnification, contribution or comparable arrangements benefitting NBTY, Merger Sub or their respective subsidiaries, there are no claims, actions, proceedings or investigations pending against NBTY, Merger Sub or their respective subsidiaries or any of their respective assets or properties, before any federal, state or municipal court, or administrative, governmental or regulatory authority or body that, individually or in the aggregate, are reasonably expected to have a Material Adverse NBTY Effect. Except as described in Schedule 4.09, neither NBTY, Merger Sub or their respective subsidiaries nor any of their respective assets or properties is subject to any order, writ, judgment, injunction, decree, determination or award having a Material Adverse NBTY Effect. SECTION 4.10 Compliance with Laws; Licenses and Permits. On the Closing Date, neither NBTY or Merger Sub nor any of their respective subsidiaries shall be in material violation of any law, rule, regulation, order, judgment or decree applicable to it or by which any of its properties is bound or affected, except for violations the existence of which would not be reasonably expected to have a Material Adverse NBTY Effect. To the Knowledge of NBTY and Merger Sub, NBTY, Merger Sub and each of their respective subsidiaries has or has applied for all governmental licenses, franchises, permits, approvals, authorizations, exemptions, certificates, registrations and similar documents or instruments (including, without limitation, all food and drug licenses, permits and authorizations) necessary to carry on their respective businesses as now being conducted by such company, except for such governmental licenses, permits and authorizations the absence of which would not be reasonably expected to have a Material Adverse NBTY Effect. To the Knowledge of NBTY and Merger Sub, there is no existing practice, action or plan of NBTY, Merger Sub or any of their respective subsidiaries and no existing condition of the assets of any such entity which would reasonably be expected to give rise to any civil or criminal liability under, or prevent compliance with, any food and drug, health or occupational safety statute, regulation, ordinance or decree other than those the existence of which are not reasonably expected to have a Material Adverse NBTY Effect. SECTION 4.11 Environmental Compliance. NBTY, Merger Sub and each of their respective subsidiaries currently holds or has applied for all the permits, licenses and approvals of governmental authorities and agencies required under Environmental Laws for the current use, occupancy or operation of their respective assets and the conduct of their respective business, except for such permits, licenses and approvals the absence of which would not be reasonably expected to have a Material Adverse NBTY Effect. To the Knowledge of NBTY and Merger Sub, neither NBTY, Merger Sub nor any of their respective subsidiaries is in violation of any Environmental Laws or any such licenses, permits and approvals, except for such violations which would not be reasonably expected to have a Material Adverse NBTY Effect. SECTION 4.12 Intellectual Property Rights. NBTY, Merger Sub and each of their respective subsidiaries owns or otherwise has a right to use all Intellectual Property Rights as are necessary to conduct their respective businesses as now being conducted, except for those Intellectual Property Rights the lack of which would not reasonably be expected to have a Material Adverse NBTY Effect. The patents, trademarks, service marks and copyrights described in Schedule 4.12 are owned by NBTY, Merger Sub or their respective subsidiaries as indicated therein and, except as described therein, no rights have been granted to third parties with respect thereto. To the Knowledge of NBTY and Merger Sub, no claims are pending that relate to the use by NBTY, Merger Sub or any of their respective subsidiaries of any Intellectual Property Rights and with respect to which there is a reasonable likelihood of an adverse determination that would have a Material Adverse NBTY Effect. SECTION 4.13 Real Property. Each parcel of real property, including, without limitation, those properties set forth on Schedule 4.13(a) (which lists owned properties) and Schedule 4.13(b) (which lists leased properties), owned or leased by NBTY, Merger Sub or any of their respective subsidiaries is owned or leased, free and clear of all liens, security interests, claims and other charges and encumbrances, except: (a) as disclosed in the financial statements included in the latest SEC Reports; (b) as disclosed in Schedule 4.13(a) or in Schedule 4.13(b); (c) all liens for Taxes, assessments, both general and special, and other governmental charges which are not due and payable as of the Closing Date; (d) all building codes, zoning ordinances, planning restrictions and other laws, ordinances, regulations, rules, orders or determinations of any federal, state, county, municipal or other governmental authority heretofore, now or hereafter enacted, made or issued by any such authority affecting the property, none of which materially restrict the current use of such property; (e) all easements, rights-of-way, covenants, conditions, restrictions, reservations, licenses, agreements, and other similar matters granted in the usual course of business; (f) all encroachments, overlaps, boundary line disputes, shortages in area, drainage and other easements, cemeteries and burial grounds and other similar matters not of record which would be disclosed by an accurate survey or inspection of the property; (g) all electric power, telephone, gas, sanitary sewer, storm sewer, water and other utility lines, pipelines', service lines and facilities of any nature now located on, over or under the property, and all licenses, easements, rights-of-way and other similar agreements relating thereto granted in the ordinary course of business; (h) all existing public and private roads and streets (whether dedicated or undedicated), and all railroad lines and rights-of-way affecting the property; (i) inchoate mechanic's and materialmen's liens for construction in progress and workmen's, repairmen's, warehousemen's and carrier's liens arising in the ordinary course of business and (j) imperfections of title, liens, security interests, claims and other charges and encumbrances the existence of which, individually and in the aggregate, would not be reasonably expected to have a Material Adverse NBTY Effect. SECTION 4.14 Tangible Personal Property. Except as otherwise disclosed on Schedule 4.14, each material item of equipment, machinery or other tangible personal property described in the SEC Reports is either: (a) owned by NBTY, Merger Sub or their respective subsidiaries, free and clear of all liens, security interests, claims and other charges and encumbrances, except: (i) liens, security interests, claims and other charges and encumbrances incurred in the ordinary operation of the business of NBTY; (ii) liens for Taxes and assessments not yet payable; (iii) liens for Taxes, assessments and charges and other claims, the validity of which is being contested in good faith; (iv) liens, security interests and encumbrances securing debt which is reflected as a liability on the financial statements included in the latest SEC Report; and (v) liens, security interests, imperfections of title, claims and other charges and encumbrances the existence of which, individually and in the aggregate, would not be reasonably expected to have a Material Adverse NBTY Effect; or (b) leased pursuant to one or more valid and enforceable lease agreements that have not been breached by NBTY, Merger Sub or their respective subsidiaries. Such tangible personal property is in normal operating condition, except for ordinary wear and tear. SECTION 4.15 Material Contracts. Schedule 4.15 lists each executory contract to which NBTY, Merger Sub or their respective subsidiaries is a party that is required to be filed as an exhibit to an SEC Report. Neither NBTY, Merger Sub nor any of their respective subsidiaries is in default in the payment of any principal or interest on any indebtedness for borrowed money, except for defaults which, individually and in the aggregate, would not be reasonably expected to have a Material Adverse NBTY Effect. SECTION 4.16 Employee Benefit; Retirement Plans. (a) Schedule 4.16 contains a true and complete list of all employee benefit plans (within the meaning of Section 3(3) of ERISA) and all bonus, stock option, stock purchase, restricted stock, incentive, deferred compensation, retiree medical or life insurance, supplemental retirement, severance or other benefit plans, programs or arrangements, and all employment, termination, severance or other contracts or agreements with respect to which NBTY, Merger Sub or their respective subsidiaries has any obligation or which are maintained, contributed to or sponsored by any such entity or any of their respective affiliates for the benefit of any of their respective current employees, officers or directors or any of their respective former employees who were previously employed in their respective businesses, other than plans, programs, arrangements, contracts or agreements for which no benefits are payable after the Closing (the "NBTY Plans"). Except as disclosed in Schedule 4.16, each NBTY Plan is in writing and NBTY and Merger Sub have previously made available to the Shareholders a true and complete copy of each NBTY Plan and a true and complete copy of each of the following documents, to the extent applicable, prepared in connection with each such NBTY Plan: (i) a copy of each trust or other funding arrangement, (ii) the most recently filed IRS Form 5500, (iii) the most recently received IRS determination letter, and (iv) the most recently prepared actuarial report and financial statement. Except as otherwise disclosed in Schedule 4.16, neither NBTY, Merger Sub, nor any of their respective subsidiaries or affiliates has any express or implied commitment to modify, change or terminate any NBTY Plan, other than with respect to a modification, change or termination required by ERISA or the Internal Revenue Code. (b) Except as otherwise disclosed in Schedule 4.16, none of NBTY Plans (i) is a multiemployer plan, within the meaning of Section 3(37) or 4001(a)(3) of ERISA (a "NBTY Multiemployer Plan") or a single employer pension plan, within the meaning of Section 4001(a)(15) of ERISA, for which any of NBTY, Merger Sub or any of their respective subsidiaries or affiliates could incur liability under Section 4063 or 4064 of ERISA (a "NBTY Multiple Employer Plan"), or (ii) provides or promises to provide retiree medical or life insurance benefits. (c) With respect to each NBTY Plan, neither NBTY, Merger Sub nor any of their respective subsidiaries is currently liable for any material tax arising under Section 4971, 4972, 4975, 4979, 4980 or 4980B of the Internal Revenue Code, and no fact or event exists which could reasonably give rise to any such liability. Neither NBTY, Merger Sub nor any of their respective subsidiaries has incurred any material liability under, arising out of or by operation of Title IV of ERISA (other than liability for premiums to the Pension Benefit Guaranty Corporation arising in the ordinary course), including, without limitation, any liability in connection with (i) the termination or reorganization of any employee pension benefit plan subject to Title IV of ERISA or (ii) the withdrawal from any NBTY Multiemployer Plan or NBTY Multiple Employer Plan. None of the assets of NBTY, Merger Sub or any of their respective subsidiaries is the subject of any lien arising under Section 302(f) of ERISA or Section 412(n) of the Internal Revenue Code and neither NBTY, Merger Sub nor any of their respective subsidiaries has been required to post any security under Section 307 of ERISA or Section 401(a)(29) of the Internal Revenue Code with respect to any NBTY Plan, and no fact or event exists which could reasonably give rise to any such lien or requirement to post any such security. (d) Except as otherwise disclosed in Schedule 4.16, each NBTY Plan has been operated in all material respects in accordance with the requirements of applicable laws, including, without limitation, ERISA and the Internal Revenue Code. Except as otherwise disclosed in Schedule 4.16 no NBTY Plan has incurred an "accumulated funding deficiency" (within the meaning of Section 302 of ERISA or Section 412 of the Internal Revenue Code), whether or not waived. Except as otherwise disclosed by Schedule 4.16, all prior contributions, premiums or payments made with respect to any NBTY Plan have been deducted for income tax purposes and no such deduction previously claimed has been challenged by any government entity. The latest financial statement in the SEC Reports reflects accruals of all material amounts of employer contributions and premiums accrued but unpaid with respect to the NBTY Plans as of the date of such financial statement. SECTION 4.17 Labor Matters. Except as disclosed in Schedule 4.16, neither NBTY, Merger Sub or any of their respective subsidiaries is a party to any collective bargaining agreement or other labor union contract applicable to persons employed by any of such entities and, to the Knowledge of NBTY and Merger Sub there are currently no strikes, slowdowns, work stoppages or lockouts, by or with respect to any employees of NBTY, Merger Sub or their respective subsidiaries, or any pending labor controversies which would reasonably be expected to have a Material Adverse NBTY Effect. SECTION 4.18 Taxes. (a) NBTY, Merger Sub and each of their respective subsidiaries has timely filed or been included in, or will timely file or be included in, all returns required to be filed by it or in which it is to be included with respect to Taxes for any period ending on or before the Closing Date, taking into account any extension of time to file granted to or obtained on behalf of such company, (b) all Taxes shown to be payable on such returns have been paid or will be paid and (c) no deficiency for any material amount of Tax has been asserted or assessed by a taxing authority against such company. SECTION 4.19 Insurance. All material properties and material insurable risks of NBTY, Merger Sub and each of their respective subsidiaries is covered by valid and currently effective insurance policies or binders of insurance or programs of self-insurance in such types and amounts as are consistent with the reasonable business judgment of the operating management of such company. Schedule 4.19 contains a complete list of all material liability, property, accident, casualty, fire, flood, workers' compensation, key man, group life or health and other insurance policies and arrangements affecting or relating to NBTY, Merger Sub and each of their respective subsidiaries, their respective assets or the business of NBTY, Merger Sub and their respective subsidiaries which are in full force and effect on the date hereof. SECTION 4.20 Brokers. No broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of NBTY or Merger Sub. SECTION 4.21 Investment Purpose. NBTY and Merger Sub are acquiring the Companies solely for the purpose of investment and not with a view to, or for offer or sale in connection with, any distribution, resale or other disposition of the Companies or any portion thereof. SECTION 4.22 SEC Reports. NBTY, Merger Sub and each of their respective subsidiaries have filed all reports, notices and forms (collectively, the "SEC Reports") required to be filed or submitted to the Securities and Exchange Commission (the "Commission") under the requirements of the Securities Act of 1933, as amended (including the rules and regulations promulgated thereunder, the "1933 Act"), and the Securities Exchange Act of 1934, as amended (including the rules and regulations promulgated thereunder, the "1934 Act") since December 31, 1993, all of which have complied in all respects with all applicable requirements of the 1933 Act and the 1934 Act. As of their respective dates of filing in final or definitive form (or, if amended or superseded by a subsequent filing, then on the date of such subsequent filing), none of the SEC Reports of NBTY, Merger Sub or their respective subsidiaries, including without limitation, any financial statements or schedules included therein, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances in which they were made, not misleading. Any and all of the financial statements (including the related notes) included in the SEC Reports of NBTY, Merger Sub or their respective subsidiaries fairly present the consolidated financial position of NBTY, Merger Sub and their respective subsidiaries as of the respective dates thereof and the consolidated results of operations and changes in financial position of NBTY, Merger Sub and their respective subsidiaries for the respective periods indicated, except, in the case of interim financial statements, for year-end audit adjustments, consisting only of normal recurring accruals, in accordance with generally accepted accounting principles except as otherwise noted therein or, in the case of the unaudited financial statements, as permitted by the applicable rules and regulations of the Commission. ARTICLE V ADDITIONAL AGREEMENTS SECTION 5.01 Conduct of Business Prior to the Closing. (a) Slade, with respect to himself and each Company, and each other Shareholder, solely with respect to such Shareholder and the Shares which such Shareholder is tendering in the Merger hereby, covenants and agrees that, subject to Section 5.01(b) below, between the date hereof and the Closing Date, he or it shall use his or its commercially reasonable efforts to cause each of the Companies to (i) except for the payment of Transaction Expenses related to the transactions contemplated herein, conduct the Business in the ordinary course and consistent with its prior practice in all material respects and (ii) use its commercially reasonable efforts to (A) preserve substantially intact the business organization of the Business, (B) keep available the services of the employees of each of the Companies and (C) preserve the current relationships of each of the Companies with their respective material customers and suppliers and other persons with which they have significant business relationships which are material to the Business. (b) Slade, with respect to himself and each Company, and each other Shareholder solely with respect to such Shareholder and the Shares which such Shareholder is exchanging hereby, covenants and agrees that between the date hereof and the Closing Date, without the prior written consent of NBTY, he or it will not permit any such Company, prior to the Closing, to (i) materially change its accounting methods, principles or practices, (ii) subject to the provisions of Section 5.01(c) below, declare, set aside or pay any dividend (other than regularly scheduled dividends declared and paid in accordance with past practice including, without limitation, dividends of an amount sufficient for the payment by each of the Shareholders of all income taxes for the taxable income allocated to the Shareholders as a result of the Companies for all periods through the Closing) or other distribution (whether in cash, stock, property or any combination thereof) in respect of any of the Shares or redeem, repurchase or otherwise acquire any equity securities issued by any such Company, (iii) amend its certificate of incorporation or by-laws or merge or consolidate, or obligate itself to do so, with or into any other entity, except as contemplated hereby, (iv) except as set forth in Schedule 5.01(b)(iv), establish or materially increase any bonus, insurance, severance, deferred compensation, pension, retirement, profit sharing, stock option (including, without limitation, the granting of stock options, stock appreciation rights, performance awards, or restricted stock awards), stock purchase or other employee benefit plan, or otherwise increase the compensation payable or to become payable to any officers or key employees of any such Company, except in the ordinary course of business consistent with past practice or as may be required by law, or (v) enter into any employment or severance agreement with any of its employees or establish, adopt or enter into any collective bargaining agreement, except in the ordinary course of business consistent with past practice or as may be required by law. (c) (i) Slade, with respect to himself and each Company, and each other Shareholder solely with respect to such Shareholder, covenants and agrees that, between the date hereof and the Closing Date, without the prior written consent of NBTY, neither he nor it shall willfully take any action to cause the Working Capital of the Companies as of the Closing to be less than SEVEN MILLION FOUR HUNDRED THOUSAND and 00/100 ($7,400,000) DOLLARS (the "Minimum Capital Amount"), it being acknowledged and agreed that the Shareholders may cause a dividend to the Shareholders from any of the Companies on or prior to the Closing to the extent that the Working Capital of the Companies, computed as of the Closing, is in excess of the Minimum Capital Amount. (ii) Each of the Shareholders agrees to pay, pro rata in the proportion of the Shares of the applicable Company tendered by such Shareholder in the Merger, to NBTY the amount, if any, that the Final Working Capital of the Companies (as defined below) is less than the Minimum Capital Amount in shares of NBTY Stock within ten (10) Business Days after the Final Working Capital of the Companies has been determined, such payment to be in accordance with the provisions of Section 9.03(g) (payment of indemnified amount in cash or NBTY Stock). (iii) NBTY agrees to pay to the Shareholders, pro rata in the proportion of the Shares of the applicable Company tendered by such Shareholder in the Merger, the amount, if any, that the Final Working Capital of the Companies is greater than the Minimum Capital Amount by delivering to the Shareholders the number of shares of NBTY Stock equal to the amount of such excess divided by the lesser of the NBTY Stock FMV as of the Closing Date or the average of the closing bid prices, as reported by the National Association of Securities Dealers automated quotations system, for the ten (10) Business Days prior to the date of such delivery. (iv) For the purposes of this Agreement, the term "Final Working Capital of the Companies" shall mean the Working Capital of the Companies as of the Closing Date as determined by Coopers and Lybrand LLP's St. Louis office and Amper, Politzner & Mattia P.A., it being agreed that such accountants shall be instructed to compute the dollar amount of such Working Capital of the Companies within forty- five (45) days after the Closing Date and, absent manifest error or gross negligence, such determination shall be final, binding and conclusive upon the parties hereto. (d) Each of NBTY and Merger Sub covenants and agrees that, between the date hereof and the Closing Date, NBTY and Merger Sub shall (i) conduct their respective businesses in the ordinary course and consistent with prior practice in all material respects and (ii) use commercially reasonable efforts to (A) preserve substantially intact the business organization of NBTY, Merger Sub and their respective subsidiaries, (B) keep available to NBTY, Merger Sub or their respective subsidiaries, as the case may be, the services of the employees of NBTY, Merger Sub and their respective subsidiaries, and (C) preserve the current relationships of NBTY, Merger Sub and their respective subsidiaries with their respective material customers and suppliers and other persons with which they have significant business relationships which are material to NBTY's, Merger Sub's or their respective subsidiaries' businesses. (e) Each of NBTY and Merger Sub hereby covenants and agrees that, between the date hereof and the Closing Date, without the prior written consent of the Shareholders, neither NBTY, Merger Sub nor any of their respective subsidiaries will (i) materially change their respective accounting methods, principles or practices, (ii) declare, set aside or pay any dividend (other than regularly scheduled dividends declared and paid in accordance with past practice including, without limitation, the NBTY Stock Split) or other distribution (whether in cash, stock, property or any combination thereof) in respect of any of the Shares or redeem, repurchase or otherwise acquire any equity securities issued by NBTY, Merger Sub nor any of their respective subsidiaries, (iii) amend their respective certificates of incorporation or by-laws or merge or consolidate, or obligate themselves to do so, with or into any other entity except as contemplated hereby, (iv) except as set forth in Schedule 5.01(d)(iv), establish or materially increase any bonus, insurance, severance, deferred compensation, pension, retirement, profit sharing, stock option (including, without limitation, the granting of stock options, stock appreciation rights, performance awards, or restricted stock awards), stock purchase or other employee benefit plan, or otherwise increase the compensation payable or to become payable to any officers or key employees of NBTY, Merger Sub or their respective subsidiaries, except in the ordinary course of business consistent with past practice or as may be required by law, or (v) enter into any employment or severance agreement with any of their respective employees or establish, adopt or enter into any collective bargaining agreement, except in the ordinary course of business consistent with past practice or as may be required by law. SECTION 5.02 Investigation. (a) Each of NBTY and Merger Sub acknowledges and agrees that it (i) has made its own inquiry and investigation into, and, based thereon, has formed an independent judgment concerning, the Shares, the Companies, the assets and liabilities of the Companies and the Business and (ii) has been furnished with or given adequate access to such information about the Shares, the Companies, the assets and liabilities of the Companies and the Business, as it has requested. (b) In connection with NBTY's and Merger Sub's investigation of the Companies and the Business, NBTY and Merger Sub have received from the Shareholders certain estimates, projections and other forecasts for the Companies, including, without limitation, estimated income statement and balance sheet information for the fiscal period ending on 9/30/98, projected income statement and balance sheet information for the fiscal periods ending in September 30, 1999, 2000 and 2001 and certain plan and budget information. Each of NBTY and Merger Sub acknowledges and agrees that there are uncertainties inherent in attempting to make such estimates, projections, forecasts, plans and budgets, that NBTY and Merger Sub are familiar with such uncertainties, that NBTY and Merger Sub are taking full responsibility for making their own evaluation of the adequacy and accuracy of all estimates, projections, forecasts, plans and budgets so furnished to them, and that neither NBTY nor Merger Sub will assert any claim against any of the Shareholders or any of their respective agents, trustees, affiliates, consultants, investment bankers, attorneys or representatives, or hold any of the Shareholders or any such persons liable with respect thereto. Accordingly, no Shareholder makes any representation or warranty with respect to any estimates, projections, forecasts, plans or budgets referred to in this Section 5.02. SECTION 5.03 Access to Information. (a) From the date hereof until the Closing, upon reasonable notice, the Shareholders shall, and shall cause each Company's officers, directors, employees, certified accountants and agents to, (i) afford the officers, employees and authorized agents and representatives of NBTY and Merger Sub reasonable access, during normal business hours, to the offices, properties, books and records of the Companies and (ii) furnish to the officers, employees and authorized agents and representatives of NBTY and Merger Sub such additional financial and operating data and other information regarding the assets, properties, goodwill and business of the Companies as NBTY or Merger Sub may from time to time reasonably request; provided, however, that such investigation shall be conducted in a manner as not to interfere unreasonably with any of the businesses or operations of any of the Companies. (b) From the date hereof until the Closing, upon reasonable notice, NBTY and Merger Sub shall, and shall cause each of NBTY's and Merger Sub's officers, directors, employees, certified accountants and agents to, (i) afford the Shareholders and the authorized agents and representatives of the Shareholders reasonable access, during normal business hours, to the offices, properties, books and records of NBTY, Merger Sub and their respective subsidiaries and (ii) furnish to the Shareholders and the authorized agents and representatives of the Shareholders such additional financial and operating data and other information regarding the assets, properties, goodwill and business of NBTY, Merger Sub and their respective subsidiaries as the Shareholders may from time to time reasonably request; provided, however, that such investigation shall be conducted at the Shareholders' expense and in a manner as not to interfere unreasonably with any of the businesses or operations of NBTY, Merger Sub or their respective subsidiaries. (c) In order to facilitate the resolution of any claims made by or against or incurred by the Shareholders prior to the Closing, after the Closing, upon reasonable notice, each of NBTY and Merger Sub shall, and each of NBTY and Merger Sub shall cause their respective subsidiaries to: (i) afford the Shareholders and the authorized agents and representatives of the Shareholders reasonable access, during normal business hours, to the offices, properties, books and records of NBTY, Merger Sub, the Companies, and any of their respective successors, subsidiaries or affiliates with respect to the Companies, including any successors, and the Business, (ii) furnish to the Shareholders and the authorized agents and representatives of the Shareholders such additional financial and other information regarding the Companies, including any successors, the assets, properties, goodwill and business of the Companies and any successors, and the Business as any of the Shareholders may from time to time reasonably request and (iii) make available to the Shareholders, the employees of the Companies, NBTY, Merger Sub or any of their respective subsidiaries whose assistance, testimony or presence is necessary to assist any of the Shareholders in evaluating any such claims and in defending such claims, including the presence of such persons as witnesses in hearings or trials for such purposes; provided, however, that such investigation shall be conducted in a manner as not to interfere unreasonably with any of the businesses or operations of NBTY, Merger Sub or any of their respective affiliates or subsidiaries. SECTION 5.04 Books and Records. (a) Each of NBTY and Merger Sub covenants and agrees that it shall preserve and keep all books and records of the Companies for a period of at least seven years from the Closing Date. After such seven-year period, before NBTY, Merger Sub or any of their respective subsidiaries or affiliates shall dispose of any of such books and records, at least 90 calendar days' prior written notice to such effect shall be given by NBTY to Slade, and Slade, on behalf of the Shareholders, shall be given an opportunity, at their cost and expense, to remove and retain all or any part of such books and records as Slade may select. During such seven-year period, the Shareholders and duly authorized representatives of the Shareholders shall, upon reasonable notice, have access thereto during normal business hours to examine, inspect and copy such books and records. (b) If, in order properly to prepare documents required to be filed with governmental authorities or its financial statements, it is necessary that any of the parties hereto or any successors be furnished with additional information relating to the Companies, the Business, NBTY, Merger Sub or any of their respective subsidiaries or affiliates, and such information is in the possession of any party hereto, such party agrees to use commercially reasonable efforts to furnish such information to the requesting party, at the cost and expense of the party being furnished such information. SECTION 5.05 Confidentiality. The terms of the letter agreement dated as of October 30, 1997 (the "Confidentiality Agreement") between the Shareholders and NBTY are hereby incorporated by reference and shall continue in full force and effect until the Closing, at which time such Confidentiality Agreement and the obligations of NBTY under this Section 5.05 shall terminate; provided, however, that the Confidentiality Agreement shall terminate only in respect of that portion of the confidential information (as described in the Confidentiality Agreement) exclusively relating to the transactions contemplated by this Agreement. If this Agreement is, for any reason, terminated prior to the Closing, the Confidentiality Agreement shall continue in full force and effect in respect of such information. SECTION 5.06 Regulatory and Other Authorizations; Consents. (a) Each party hereto will use its commercially reasonable efforts to obtain all authorizations, consents, orders and approvals of all Federal, state and local regulatory bodies and officials that may be or become necessary for its execution and delivery of, and the performance of its obligations pursuant to, this Agreement and will cooperate fully with the other party in promptly seeking to obtain all such authorizations, consents, orders and approvals, including, without limitation, authorizations, consents, orders and approvals required under ISRA or by the New Jersey Department of Environmental Protection ("NJDEP"). Each party hereto agrees to make an appropriate filing of a Notification and Report Form pursuant to the HSR Act with respect to the transactions contemplated hereby within five (5) Business Days of the date hereof and to supply promptly any additional information and documentary material that may be requested pursuant to the HSR Act. The parties hereto will not take any action that will have the effect of delaying, impairing or impeding the receipt of any required approvals. (b) Each of NBTY and Merger Sub will use their commercially reasonable efforts to assist the Shareholders in obtaining the consents of persons or entities referred to in Section 3.06, including, without limitation, (i) providing to such persons or entities (A) guarantees, effective as of the Closing, by NBTY and Merger Sub of the obligations of a Company under any such lease and license agreements and (B) such financial statements and other financial information with respect to NBTY, Merger Sub or their respective subsidiaries as such persons or entities may reasonably request and (ii) agreeing to such adjustments to the terms of any such lease and license agreements as would not, in the aggregate, have a Material Adverse Effect. SECTION 5.07 Issuance of NBTY Stock. The parties hereto acknowledge and agree that the calculation of the number of the Aggregate Exchanged Stock was determined in consideration of the number of shares of NBTY Stock issued and outstanding on the date hereof, the additional shares of NBTY Stock to be issued and distributed as contemplated by the NBTY Stock Split, the number of shares of NBTY Stock which may be issued in accordance with the terms and provisions of stock option plans and similar arrangements in effect on the date hereof and approximately 6,000,000 (such number including the effect of the NBTY Stock Split) additional shares of NBTY Stock (collectively, the "Contemplated Stock"). SECTION 5.08 Slade Employment Agreement. NBTY covenants and agrees that on or prior to the Closing Date, NBTY shall enter into a binding employment agreement with Slade containing terms and conditions which are no less favorable to Slade than those which are set forth on Schedule 5.08 attached hereto. SECTION 5.09 Further Action. (a) Each of the parties hereto shall execute and deliver such documents and other papers and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated hereby. In accordance with this Section 5.09, each party hereto shall cooperate fully with the Companies and the Shareholders in securing clearance for the transactions contemplated by this Agreement from the NJDEP pursuant to ISRA and to file the Premerger Notification and Report Form for Certain Mergers and Acquisitions under the HSR Act and to obtain notification of the expiration of the waiting period under the HSR Act. All costs, obligations and financial security requirements of the Shareholders arising under this Section shall be the responsibility of the Companies. The parties hereto acknowledge and agree that, in connection with the transactions contemplated hereby, the NJDEP, in accordance with ISRA, may require or request NBTY and/or Merger Sub to enter into a remediation agreement relating to the New Jersey property and operations of Nutro substantially in the form attached hereto as Exhibit B (the "Remediation Agreement") or in such other form as is accepted by the NJDEP. In connection with such remediation agreement, NBTY and Merger Sub covenant and agree that, to the extent required by the NJDEP or the Shareholders or the Companies, NBTY and Merger Sub shall execute and deliver such Remediation Agreement and perform all of their respective obligations thereunder. (b) Each of NBTY and Merger Sub covenants and agrees that promptly following the Closing, Merger Sub take any and all action to duly qualify as a foreign corporation to do business, and be in good standing, in each jurisdiction where the character of its properties owned, operated or leased or the nature of its activities makes such qualification necessary, including, without limitation, in each jurisdiction in which any of the Companies is qualified to conduct its business as of the date hereof. SECTION 5.10 Satisfaction of PNC Bank Indebtedness. Each of NBTY and Merger Sub covenant and agree that at the Closing, NBTY shall satisfy any and all existing indebtedness owed by the Companies to PNC Bank, National Association (successor by merger to Midlantic Bank, N.A., "PNC"), it being acknowledged and agreed however that, notwithstanding such covenant, NBTY or Merger Sub may assume the obligations of the Companies under such indebtedness if PNC (i) consents to such assumption, (ii) waives any default, breach or conflict arising from or related to the Merger and the transactions contemplated herein and (iii) unconditionally releases all liens, security interests, encumbrances and obligations of any of the Shareholders (or Ruth Slade and E. Steven Lenger) under the terms and conditions of the applicable agreements, documents and instruments evidencing (or related to) such indebtedness. ARTICLE VI EMPLOYEE MATTERS SECTION 6.01 Employees. (a) Each of NBTY and Merger Sub hereby acknowledges, on behalf of themselves and their respective subsidiaries and affiliates, that they have no present intention to close or shut down or reduce the operations or production of any facility of any of the Companies. To the extent commercially practical, NBTY and Merger Sub agrees with the Shareholders to offer the Transferred Employees whose employment with the applicable Company is terminated in connection with the transactions contemplated by this Agreement with the option to transfer to a similar position with NBTY, Merger Sub or any of their respective subsidiaries to the extent commercially practical. Additionally, NBTY and Merger Sub, to the extent commercially practical, shall continue the employee benefits of the Transferred Employees and the Transferred Former Employees under the Plans or provide such Transferred Employees and Transferred Former Employees with the employee benefits which are similar in nature to their current employee benefits provided to the employees of NBTY under NBTY Plans; it being acknowledged and agreed that, to the extent that service is relevant for purposes of eligibility, vesting or benefit accrual under any employee benefit plan, program or arrangement established or maintained by NBTY, its subsidiaries or any of the Companies for the benefit of Transferred Employees and Transferred Former Employees, such plan, program or arrangement shall credit such employees or former employees for service on or prior to the Closing with any of the Companies or any affiliate thereof. (b) Each of NBTY and Merger Sub covenants and agrees that the employees of the Companies listed on Schedule 6.01 shall participate in the stock option plan of NBTY, it being acknowledged and agreed that the extent of participation of such employees in the stock option plan shall be negotiated by Slade and NBTY in good faith so that the contribution of such employees to the financial performance and business prospects of NBTY is appropriately compensated. (c) Each of NBTY and Merger Sub shall comply in all respects to the provisions of the Worker Adjustment and Retraining Notification Act of 1988, as amended the (the "WARN Act"). SECTION 6.02. Establishment of Trust. As soon as practicable after the Closing, NBTY agrees to establish or designate one or more trusts, or cause Merger Sub to so establish or designate such trusts (the "NBTY Trusts"), for the purpose of holding the assets attributable to benefits for Transferred Employees and Transferred Former Employees under the the plans listed on Schedule 3.16 (the "Company Retirement Plans"). Upon establishment or designation of the NBTY Trusts, NBTY shall cause the assets attributable to the Company Retirement Plans to be transferred from the applicable Company Retirement Plan to the NBTY Trusts. SECTION 6.03 Welfare Arrangements. Subject to Section 6.01 above, to the extent that any medical, dental, hospitalization, life or similar-type insurance benefits are provided to Transferred Employees or Transferred Former Employees through one or more Plans of a Company, NBTY agrees to designate or establish, or to cause Merger Sub to establish, effective as of the Closing, one or more benefit plans, programs or arrangements for the purpose of providing such benefits to Transferred Employees or Transferred Former Employees. SECTION 6.04 Indemnity. Anything in this Agreement to the contrary notwithstanding, NBTY and Merger Sub hereby agree, jointly and severally, to indemnify the Shareholders against and hold the Shareholders harmless from any and all claims, losses, damages, expenses, obligations and liabilities (including costs of collection, attorney's fees and other costs of defense) arising out of or otherwise in respect of any of the following from and after the Closing (i) any claim made by any Transferred Employee against any Shareholder for any severance or termination benefits pursuant to the provisions of any plan, program or arrangement or any applicable Federal or state law, (ii) any suit or claim of violation brought against any Shareholder under the WARN Act, or any similar state or local statutes or ordinances, or any rules, regulations or orders promulgated or issued thereunder, for any actions taken by NBTY or Merger Sub on or after the Closing Date with respect to any facility, site of employment, operating unit or Transferred Employee, (iii) any action taken on or after the Closing Date by NBTY or Merger Sub with respect to any Plan, (iv) any claim for payments or benefits by Transferred Employees, Transferred Former Employees or their respective beneficiaries under any Plan, and (v) any failure of NBTY or Merger Sub to discharge their respective obligations under this Article VI. The provisions of Sections 9.02(b) and 9.02(c) shall apply to NBTY and Merger Sub's indemnification obligations under this Section 6.06. ARTICLE VII TAX MATTERS SECTION 7.01 Indemnity. (a) The Shareholders, severally but not jointly, pro rata in the proportion of the Shares of the applicable Company tendered by such Shareholder in the Merger, agree to indemnify NBTY and Merger Sub, without Gross-Up for Taxes, against all Taxes of the Companies, with respect to any period or portion thereof that ends on or before the Closing Date, in excess of the amount reserved for Taxes (the "Tax Reserves") in the financial statements of such Company, including without limitation, the Financial Statements of such Company or the financial records of such Company as of the Closing prepared in accordance with the Company Accounting Policies. NBTY and Merger Sub shall be responsible for Taxes to the extent of the Tax Reserves and all Taxes with respect to any period or portion thereof that begins on or after the Closing Date. SECTION 7.02 Refunds. Any refunds received by NBTY, Merger Sub or their respective subsidiaries or successors (and any equivalent benefit to any such company through a reduction in Tax liability for a post-Closing Date period) of Taxes relating to taxable periods or portions thereof ending on or before the Closing Date shall be for the account of the Shareholders, and NBTY and Merger Sub shall pay over to the Shareholders pro rata in the proportion of the Shares of the applicable Company tendered by such Shareholder in the Merger any such refund or the amount of any such benefit within five Business Days of the earlier of receipt or entitlement thereto. NBTY shall, if Slade so requests and at NBTY's expense, cause the relevant entity to file for and obtain any refunds or equivalent amounts to which the Shareholders are entitled under this Section 7.02. NBTY and Merger Sub shall permit Slade to control (at the Shareholders' expense) the prosecution of any such refund claimed, and shall cause the relevant entity to authorize by appropriate power of attorney such persons as Slade shall designate to represent such entity with respect to such refund claimed. SECTION 7.03 Contests. (a) After the Closing, NBTY or Merger Sub shall promptly notify Slade in writing of the commencement of any Tax audit or administrative or judicial proceeding or of any demand or claim on NBTY or Merger Sub which, if determined adversely to the taxpayer or after the lapse of time would be grounds for indemnification under Section 7.01. Such notice shall contain factual information (to the extent known to NBTY or Merger Sub) describing the asserted Tax liability in reasonable detail and shall include copies of any notice or other document received from any taxing authority in respect of any such asserted Tax liability. If NBTY or Merger Sub fails to give Slade prompt notice of an asserted Tax liability as required by this Section 7.03, then (i) if the Shareholders are precluded by the failure to give prompt notice from contesting the asserted Tax liability in both the administrative and judicial forums, then the Shareholders shall not have any obligation to indemnify for any loss arising out of such asserted Tax liability, and (ii) if the Shareholders are not so precluded from contesting but such failure to give prompt notice results in a detriment to the Shareholders, then any amount which the Shareholders are otherwise required to pay NBTY pursuant to Section 7.01 with respect to such liability shall be reduced by the amount caused by such detriment. (b) The Shareholders may elect to direct, through counsel chosen by Slade and at their own expense, any audit, claim for refund and administrative or judicial proceeding involving any asserted liability with respect to which indemnity may be sought under Section 7.01 (any such audit, claim for refund or proceeding relating to an asserted Tax liability are referred to herein collectively as a "Contest"). If any of the Shareholders elect to direct the Contest of an asserted Tax liability, Slade shall within ninety (90) calendar days of receipt of the notice of asserted Tax liability notify NBTY or Merger Sub of their intent to do so, and NBTY and Merger Sub shall fully cooperate in each phase of such Contest. If any of the Shareholders elect not to direct the Contest, Slade fails to notify NBTY or Merger Sub of their election as herein provided or contests their obligation to indemnify under Section 7.01, NBTY or Merger Sub may pay, compromise or contest, at its own expense, such asserted liability. However, in such case, neither NBTY nor Merger Sub may settle or compromise any asserted liability over the objection of Slade; provided, however, that consent to settlement or compromise shall not be unreasonably withheld. In any event, each of NBTY or Merger Sub and the Shareholders may participate, at such Shareholder's own expense, in the Contest. If any of the Shareholders choose to direct the Contest, NBTY and Merger Sub shall promptly empower (by power of attorney and such other documentation as may be appropriate) such representatives of the Shareholders as they may designate to represent NBTY or Merger Sub or any successor thereto in the Contest insofar as the Contest involves an asserted Tax liability for which the Shareholders would be liable under Section 7.01. (c) After the Closing, NBTY and Merger Sub shall promptly notify Slade in writing of any intention by NBTY or Merger Sub to amend or restate the tax return for any of the Companies for any period prior to the Closing and shall not effect any such amendment or restatement without the prior written consent of Slade, which consent shall not be unreasonably withheld. SECTION 7.04 Payments for Certain Audit Adjustments. (a) If an audit adjustment, claim for refund or amended return ("Adjustment") after the date hereof shall both increase a Tax liability which is allocated to the Shareholders under Section 7.01 (or reduce losses or credits otherwise available to the Shareholders) for a period ending on or before the Closing Date and decrease a Tax liability of NBTY or Merger Sub for a period ending after the Closing Date, then, when and to the extent that NBTY or Merger Sub derives a benefit from such decrease (through a reduction of Taxes, refund of Taxes paid or credit against Taxes due), NBTY or Merger Sub shall promptly pay to the Shareholders, pro rata in proportion to the Shares of the applicable Company tendered by such Shareholder in the Merger, an amount equal to the amount of such refund, reduction or credit. Similarly, if an Adjustment shall both decrease a Tax liability which is allocated to the Shareholders under Section 7.01 for a period ending on or before the Closing Date and increase the Tax liability of NBTY or Merger Sub (or reduce losses or credits otherwise available to any such corporation) for a period ending after the Closing Date, then, when and to the extent that a Shareholder derives a benefit from such decrease (through a refund or reduction of Taxes paid or credit against Taxes due), the Shareholders, pro rata in proportion to the Shares of the applicable Company tendered by such Shareholder in the Merger, shall promptly pay to NBTY or Merger Sub an amount equal to the amount of such refund, reduction or credit. (b) If State or local Taxes imposed on the Shareholders with respect to any of the Companies for taxable periods or portions thereof ending on or before the Closing Date are increased as the result of an adjustment on an audit or other examination by a taxing authority, NBTY or Merger Sub shall promptly pay the Shareholders pro rata in proportion to the Shares of the applicable Company tendered by such Shareholder in the Merger an amount equal to such increase in Taxes, to the extent that such increase does not exceed the amount reserved for Taxes in the Financial Statements not previously taken into account under Section 7.01. SECTION 7.05 Tax Benefits Resulting From the Merger. Notwithstanding any provision of this Article VII to the contrary, any Tax refund or Tax benefit derived from any net operating loss, net capital loss, investment tax credit, foreign tax credit or charitable deduction or any other Tax attribute (including deductions of credits relating to alternative minimum taxes) allocable under applicable Federal, State or local income or franchise Tax law to any of the Companies or Merger Sub, accruing to the benefit of any of the Companies, Merger Sub or NBTY as a direct result of the Merger or the transactions contemplated herein or by actions directly taken by NBTY or Merger Sub in furtherance of the Merger shall remain with NBTY or Merger Sub, as the case may be, and not paid to the Shareholders. SECTION 7.06 Cooperation and Exchange of Information. The Shareholders and NBTY and Merger Sub will provide each other with such cooperation and information as either of them reasonably may request of the other in filing any Tax return, amended return or claim for refund, determining a liability for Taxes or a right to a refund of Taxes or participating in or conducting any audit or other proceeding in respect of Taxes. Such cooperation and information shall include providing copies of relevant Tax returns or portions thereof, together with accompanying schedules and related work papers and documents relating to rulings or other determinations by taxing authorities. Each party shall make its employees, agents or representatives available on a mutually convenient basis to provide explanations of any documents or information provided hereunder. Each party will retain all returns, schedules and work papers and all material records or other documents relating to Tax matters of the Companies for the taxable period first ending after the Closing Date and for all prior taxable periods until the later of (i) the expiration of the statute of limitations of the taxable periods to which such returns and other documents relate, without regard to extensions except to the extent notified by the other party in writing of such extensions for the respective Tax periods, or (ii) six years following the due date (without extension) for such returns. Any information obtained under this Section 7.06 shall be kept confidential, except as may be otherwise necessary in connection with the filing of returns or claims for refund or in conducting an audit or other proceeding. SECTION 7.07 Tax Intent. The parties hereto intend that the Merger and the transactions contemplated herein qualify as a reorganization under the provisions of Section 368(a)(1)(A) and Section 368(a)(2)(D) of the Internal Revenue Code, and that the parties hereto will be "parties to the reorganization" within the meaning of Section 368(b) of the Internal Revenue Code. In furtherance of the immediately preceding sentence, each of the parties hereto agree that for all purposes they will act consistent with the intended tax treatment described in this Section 7.07, will report the transactions contemplated hereby for all tax purposes consistent with such intent, and will not take a position, for tax or other purposes, contrary to such intent. SECTION 7.08 Payments by NBTY and Merger Sub. Notwithstanding any provision of this Article VII to the contrary, it is acknowledged and agreed that any payment required to be made by NBTY or Merger Sub to the Shareholders under this Article VII shall be paid and satisfied in full within ten (10) Business Days after demand therefor together with all appropriate supporting documentation by delivering to the Shareholders the number of shares of NBTY Stock equal to the amount of such obligation divided by the lesser of the NBTY Stock FMV as of the Closing Date or the average of the closing bid prices, as reported by the National Association of Securities Dealers automated quotations system, for the ten (10) Business Days prior to the date of such delivery. SECTION 7.09 Payments by the Shareholders. Notwithstanding any provision of this Article VII to the contrary, it is acknowledged and agreed that any payment required to be made by the Shareholders to NBTY or Merger Sub under this Article VII may, in the sole discretion of the Shareholders, be paid and satisfied in full within ten (10) Business Days after demand therefor together with all appropriate supporting documentation in accordance with Section 9.03(g) (payment by delivering shares of NBTY Stock or cash). SECTION 7.10 Survival. The covenants and agreements of the parties hereto contained in this Article VII shall survive and remain in full force and effect, regardless of any investigation made by or on behalf of the Shareholders, on the one hand, or NBTY and Merger Sub, on the other hand, for a period not to extend beyond the issuance of the first independent audited financial statements of NBTY, but in any event not later than December 31, 1998. ARTICLE VIII CONDITIONS TO CLOSING SECTION 8.01 Conditions to Obligations of the Shareholders. No Shareholder shall have any obligation to consummate the transactions contemplated by this Agreement unless the following conditions are satisfied, fulfilled or waived by NBTY and Merger Sub at or prior to the Closing: (a) Representations and Warranties; Covenants. The representations and warranties of NBTY and Merger Sub contained in this Agreement shall be true and correct in all material respects as of the Closing, with the same force and effect as if made as of the Closing, other than such representations and warranties as are made as of another date, and all the covenants contained in this Agreement to be complied with by NBTY and Merger Sub on or before the Closing shall have been complied with in all material respects, and each Shareholder shall have received a certificate of NBTY and Merger Sub to such effect signed by a duly authorized officer thereof; (b) No Order. No United States or state governmental authority or other agency or commission or United States or state court of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, injunction or other order (whether temporary, preliminary or permanent) which is in effect and has the effect of making such transactions contemplated by this Agreement illegal or otherwise restraining or prohibiting consummation of such transactions; provided, however, that the parties hereto shall use their commercially reasonable efforts to have any such statute, rule or regulation declared invalid or inapplicable and any such order or injunction vacated; (c) HSR Act; ISRA. Any waiting period (and any extension thereof) under the HSR Act applicable to the Merger contemplated hereby shall have expired or shall have been terminated and the Companies shall have received one of the following with respect to the transactions contemplated by this Agreement: (i) a determination of non-applicability from the NJDEP, (ii) a cleanup plan approved by the NJDEP, (iii) an affidavit approved by the NJDEP for a de minimis quantity exception or limited conveyance, (iv) an Administrative Consent Order issued by the NJDEP, or (v) such other action which permits the Merger to be consummated without a violation under ISRA (including, without limitation, a duly executed and delivered Remediation Agreement), in each case with respect to the Companies' real property located in New Jersey; (d) Consents. The Shareholders shall have received written consents regarding the matters disclosed in Schedule 3.06 to the transactions contemplated by this Agreement in form and substance satisfactory the Shareholders from the persons specified in such Schedule; (e) Legal Opinion. The Shareholders shall have received from NBTY's and Merger Sub's counsel a legal opinion, addressed to the Shareholders and dated the Closing Date, in form and substance reasonably acceptable to Shareholders as to the matters described in Sections 4.01, 4.02, 4.03, 4.05 and 4.06; (f) Registration Rights Agreement. The Shareholders and NBTY shall have entered into the Registration Rights Agreement and the Registration Rights Agreement shall be in full force and effect and the legal, valid binding obligation of NBTY; (g) Slade Employment Agreement. Slade and NBTY shall have entered into the Slade Employment Agreement and the Slade Employment Agreement shall be in full force and effect and legal, valid and binding obligation of NBTY; and (h) NBTY Disclosure Schedule. NBTY and Merger Sub shall have delivered the NBTY Disclosure Schedule to the Shareholders and the NBTY Disclosure Schedule shall not reveal any circumstances or facts which have, or are reasonably likely to have, a Material Adverse NBTY Effect. SECTION 8.02 Conditions to Obligations of NBTY and Merger Sub. Neither NBTY nor Merger Sub shall have any obligation to consummate the transactions contemplated by this Agreement unless the following conditions are satisfied, fulfilled or waived by Slade at or prior to the Closing: (a) Representations and Warranties; Covenants. The representations and warranties of each of the Shareholders contained in this Agreement shall be true and correct in all material respects as of the Closing, with the same force and effect as if made as of the Closing, other than such representations and warranties as are made as of another date, and all the covenants contained in this Agreement to be complied with by each of the Shareholders on or before the Closing shall have been complied with in all material respects, and NBTY and Merger Sub shall have received a certificate of each Shareholder to such effect; (b) No Order. No United States or state governmental authority or other agency or commission or United States or state court of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, injunction or other order (whether temporary, preliminary or permanent) which is in effect and has the effect of making such transactions contemplated by this Agreement illegal or otherwise restraining or prohibiting consummation of such transactions; provided, however, that the parties hereto shall use their commercially reasonable efforts to have any such statute, rule or regulation declared invalid or inapplicable and any such order or injunction vacated; (c) HSR Act; ISRA. Any waiting period (and any extension thereof) under the HSR Act applicable to the Merger contemplated hereby shall have expired or shall have been terminated and the Companies shall have received one of the following with respect to the transactions contemplated by this Agreement: (i) a determination of non-applicability from the NJDEP, (ii) a cleanup plan approved by the NJDEP, (iii) an affidavit approved by the NJDEP for a de minimis quantity exception or limited conveyance, (iv) an Administrative Consent Order issued by the NJDEP, or (v) such other action which permits the Merger to be consummated without a violation under ISRA (including, without limitation, a duly executed and delivered Remediation Agreement), in each case with respect to the Companies' real property located in New Jersey; (d) Consents. The Shareholders shall have received written consents regarding the matters disclosed in Schedule 3.06 to the transactions contemplated by this Agreement in form and substance reasonably satisfactory to NBTY from the persons specified in such Schedule; and (e) Legal Opinion. NBTY shall have received from the Shareholders' counsel a legal opinion, addressed to NBTY and dated the Closing Date, in form and substance reasonably acceptable to NBTY as to the matters described in Sections 3.01, 3.02, 3.03, 3.05 and 3.06. ARTICLE IX INDEMNIFICATION SECTION 9.01 Survival. Subject to the limitations and other provisions of this Agreement, the representations, warranties, covenants and agreements of the parties hereto contained herein shall survive and remain in full force and effect, regardless of any investigation made by or on behalf of the Shareholders, on the one hand, or NBTY and Merger Sub, on the other hand, for a period not to extend beyond the issuance of the first independent audited financial statements of NBTY, but in any event not later than December 31, 1998; provided, however, that the agreements set forth in Sections 5.03(b), 5.03(c), 5.04, 5.05, 5.06, 5.07, 5.08, 5.09 and 5.10 and Articles VI, IX and XI shall remain in full force and effect until the applicable period under the statute of limitations therefor has expired. SECTION 9.02 Indemnification by NBTY and Merger Sub. (a) NBTY and Merger Sub agree, subject to the other terms and conditions of this Agreement and without Gross-Up for Taxes, to jointly and severally indemnify the Shareholders against and hold any such Shareholders harmless from all liabilities of and damages to the Shareholders arising out of (i) the material breach of any material representation, warranty, covenant or agreement of NBTY or Merger Sub herein (other than Articles VI and VII, it being understood that the sole remedy for breach thereof shall be pursuant to Articles VI and VII, as the case may be) and (ii) the conduct of the Business by NBTY or Merger Sub following the Closing. Anything in Section 9.01 to the contrary notwithstanding, no claim may be asserted nor may any action be commenced against NBTY or Merger Sub for breach of any representation, warranty, covenant or agreement contained herein, unless written notice of such claim or action is received by NBTY or Merger Sub describing in detail the facts and circumstances with respect to the subject matter of such claim or action on or prior to the date on which the representation, warranty, covenant or agreement on which such claim or action is based ceases to survive as set forth in Section 9.01, irrespective of or whether the subject matter of such claim or action shall have occurred before or after such date; provided, however, that a claim may be asserted and an action may be commenced against NBTY or Merger Sub for breach of the agreements set forth in Sections 5.03(b), 5.03(c), 5.04, 5.05, 5.06, 5.07, 5.08, 5.09 and 5.10 and Articles VI, VII, IX and XI until the applicable period under the statute of limitations therefor has expired. Notwithstanding any provision of this Section 9.02 to the contrary, the general market risk of the ownership of NBTY Stock shall remain with the Shareholders. (b) No claim may be made against NBTY or Merger Sub for indemnification pursuant to this Section 9.02 with respect to any individual item of liability or damage, unless such item exceeds $100,000 and unless the aggregate of all such liabilities and damages of the Shareholders with respect to this Section 9.02 shall exceed $500,000, and NBTY and Merger Sub shall not be required to pay or be liable for the first $500,000 in aggregate amount of any such liabilities and damages. The Shareholders shall not be indemnified pursuant to this Section 9.02 with respect to any individual item of liability or damage if the aggregate of all liabilities and damages of the Shareholders for which the Shareholders have received indemnification pursuant to this Section 9.02 shall have exceeded an amount equal to $25,000,000. For the purposes of this Section 9.02(b), in computing such individual or aggregate amounts of claims, the amount of each claim shall be deemed to be an amount (i) net of any Tax benefit to the Shareholders or any affiliate thereof and (ii) net of any insurance proceeds and any indemnity, contribution or other similar payment recoverable by the Shareholders or any affiliate from any third party with respect thereto. (c) Payments by NBTY or Merger Sub pursuant to Section 9.02(a) shall be limited to the amount of any liability or damage that remains after deducting therefrom, (i) any Tax benefit to the Shareholders or any affiliates thereof, and (ii) any insurance proceeds and any indemnity, contribution or other similar payment recoverable by any Shareholder from any third party with respect thereto. A Tax benefit will be considered to be recognized by a Shareholder or any affiliate for purposes of this Section 9.02 in the tax period in which the indemnity payment occurs, and the amount of the Tax benefit shall be determined by assuming that each Shareholder and any affiliate is in the maximum applicable statutory tax bracket after any deductions or other allowances reportable with respect to a payment hereunder. (d) Each of the Shareholders agrees to give NBTY and Merger Sub prompt written notice of any claim, assertion, event or proceeding by or in respect of a third party of which it has knowledge concerning any liability or damage as to which it may request indemnification hereunder. NBTY and Merger Sub shall have the right to direct, through competent counsel of their own choosing, the defense or settlement of any such claim or proceeding at their own expense. If NBTY or Merger Sub elects to assume the defense of any such claim or proceeding, the Shareholders may participate in such defense, but in such case the expenses of any such Shareholder shall be paid by such Shareholder. The Shareholders shall provide NBTY and Merger Sub with access to his or its records relating to any such claim, assertion, event or proceeding during normal business hours and shall otherwise cooperate with NBTY and Merger Sub in the defense or settlement thereof, and NBTY and Merger Sub shall, jointly and severally, reimburse the Shareholders for all his or its reasonable out-of-pocket expenses in connection therewith. If NBTY or Merger Sub elects to direct the defense of any such claim or proceeding, the Shareholders shall not pay, or permit to be paid, any part of any claim or demand arising from such asserted liability, unless NBTY and Merger Sub consent in writing to such payment or unless NBTY and Merger Sub, subject to the last sentence of this Section 9.02(c), withdraws from the defense of such asserted liability, or unless a final judgment from which no appeal may be taken by or on behalf of NBTY and Merger Sub is entered against such Shareholder for such liability. If NBTY or Merger Sub shall fail to defend, or if, after commencing or undertaking any such defense, NBTY and Merger Sub fails to prosecute or withdraws from such defense, the Shareholders shall have the right to undertake the defense or settlement thereof, at NBTY's and Merger Sub's joint and several expense. If any of the Shareholders assumes the defense of any such claim or proceeding pursuant to this Section 9.02(c) and proposes to settle such claim or proceeding prior to a final judgment thereon or to forego appeal with respect thereto, then such Shareholder shall give NBTY and Merger Sub prompt written notice thereof and NBTY and Merger Sub shall have the right to participate in the settlement or assume or reassume the defense of such claim or proceeding. (e) Neither NBTY nor Merger Sub shall have any liability under any provision of this Agreement for any liabilities and damages to the extent that such liabilities and damages relate to actions taken by the Shareholders or their affiliates, after the Closing Date and in no event shall NBTY or Merger Sub be liable for consequential damages. The Shareholders shall take all reasonable steps to mitigate all such liabilities and damages upon and after becoming aware of any event which could reasonably be expected to give rise to such liabilities and damages. (f) Except as set forth in this Agreement, neither NBTY nor Merger Sub is making any representation, warranty, covenant or agreement with respect to the matters contained herein. Anything herein to the contrary notwithstanding, no breach of any representation, warranty, covenant or agreement contained herein shall give rise to any right on the part of any Shareholder, after the consummation of the Merger contemplated by this Agreement, to rescind this Agreement or any of the transactions contemplated hereby. SECTION 9.03 Indemnification by the Shareholders. (a) The Shareholders, severally but not jointly pro rata in proportion to the Shares of the applicable Company tendered by such Shareholder in the Merger, agree, subject to the other terms and conditions of this Agreement and without Gross-Up for Taxes, to indemnify NBTY and Merger Sub against and hold them harmless from all liabilities of and damages to NBTY or Merger Sub arising out of the material breach of any material representation, warranty, covenant or agreement of such Shareholder herein (other than Section 3.18 and Article VII, it being understood that the sole remedy for breach thereof shall be pursuant to Section 3.18 and Article VII). Anything in Section 9.01 to the contrary notwithstanding, no claim may be asserted nor any action commenced against any of the Shareholders for breach of any representation, warranty, covenant or agreement contained herein, unless written notice of such claim or action is received by such Shareholder describing in detail the facts and circumstances with respect to the subject matter of such claim or action on or prior to the date on which the representation, warranty, covenant or agreement on which such claim or action is based ceases to survive as set forth in Section 9.01, irrespective of whether the subject matter of such claim or action shall have occurred before or after such date; provided, however, that a claim may be asserted and an action may be commenced against any of the Shareholders for breach of such Shareholder's representations and warranties set forth in Sections 3.03 and 3.18 and the agreements of such Shareholder in Articles VII, IX and XI until the applicable period under the statute of limitations therefor has expired. (b) No claim may be made against any of the Shareholders for indemnification pursuant to this Section 9.03 with respect to any individual item of liability or damage, unless such item exceeds $100,000 and unless the aggregate of all such liabilities and damages of NBTY and Merger Sub with respect to this Section 9.03 shall exceed Basket Amount and the Shareholders shall not be required to pay or be liable for the aggregate amount of any such liabilities and damages which are less than the Basket Amount. Neither NBTY nor Merger Sub shall be indemnified pursuant to this Section 9.03 with respect to any individual item of liability or damage if the aggregate of all liabilities and damages of NBTY or Merger Sub for which NBTY or Merger Sub has received indemnification pursuant to this Section 9.03 shall have exceeded an amount equal to $25,000,000. For the purposes of this Section 9.03(b), in computing such individual or aggregate amounts of claims, the amount of each claim shall be deemed to be an amount (i) net of any Tax benefit to NBTY, Merger Sub or any affiliate or subsidiary thereof, and (ii) net of any insurance proceeds and any indemnity, contribution or other similar payment recoverable by NBTY, Merger Sub or any affiliate or subsidiary from any third party with respect thereto. (c) Payments by any of the Shareholders pursuant to Section 9.03(a) shall be limited to the amount of any liability or damage that remains after deducting therefrom (i) any Tax benefit to NBTY, Merger Sub or any affiliate or subsidiary thereof, (ii) any insurance proceeds and any indemnity, contribution or other similar payment recoverable by NBTY, Merger Sub or any affiliate or subsidiary from any third party with respect thereto and (iii) any reserves provided for the item in question in the Financial Statements. A Tax benefit will be considered to be recognized by NBTY, Merger Sub or any affiliate or subsidiary for purposes of this Section 9.03 in the tax period in which the indemnity payment occurs, and the amount of the Tax benefit shall be determined by assuming that each of NBTY, Merger Sub and any affiliate or subsidiary is in the maximum applicable statutory tax bracket after any deductions or other allowances reportable with respect to a payment hereunder. (d) Each of NBTY and Merger Sub agrees to give Slade prompt written notice of any claim, assertion, event or proceeding by or in respect of any claim, assertion, event or proceeding by or in respect of a third party of which any such party has knowledge concerning any liability or damage as to which any such party may request indemnification hereunder. The Shareholders shall have the right to direct, through competent counsel chosen by Slade, the defense or settlement of any such claim or proceeding at their own expense. If any of the Shareholders elect to assume the defense of any such claim or proceeding, NBTY and Merger Sub may participate in such defense, but in such case the expenses of NBTY and Merger Sub shall be paid by NBTY and Merger Sub. NBTY and Merger Sub shall provide the Shareholders with access to their respective records and personnel relating to any such claim, assertion, event or proceeding during normal business hours and shall otherwise cooperate with the Shareholders in the defense or settlement thereof, and the Shareholders shall reimburse NBTY and Merger Sub for all of its reasonable out-of-pocket expenses in connection therewith. If the Shareholders elect to direct the defense of any such claim or proceeding, NBTY and Merger Sub shall not pay, or permit to be paid, any part of any claim or demand arising from such asserted liability unless such Shareholders consent in writing to such payment or unless such Shareholders, subject to the last sentence of this Section 9.03(d), withdraw from the defense of such asserted liability or unless a final judgment from which no appeal may be taken by or on behalf of such Shareholders is entered against NBTY and Merger Sub for such liability. If the Shareholders shall fail to defend, or if after commencing or undertaking any such defense, fail to prosecute or withdraws from such defense, NBTY and Merger Sub shall have the right to undertake the defense or settlement thereof, at the Shareholders' expense. If NBTY or Merger Sub assumes the defense of any such claim or proceeding pursuant to this Section 9.03(d) and proposes to settle such claim or proceeding prior to a final judgment thereon or to forego any appeal with respect thereto, then NBTY and Merger Sub shall give the Shareholders prompt written notice thereof and the Shareholders shall have the right to participate in the settlement or assume or reassume the defense of such claim or proceeding. (e) Except as set forth in this Agreement, none of the Shareholders are making any representation, warranty, covenant or agreement with respect to the matters contained herein. Anything herein to the contrary notwithstanding, no breach of any representation, warranty, covenant or agreement contained herein shall give rise to any right on the part of NBTY or Merger Sub, after the consummation of the Merger contemplated by this Agreement, to rescind this Agreement or any of the transactions contemplated hereby. (f) The Shareholders shall have no liability under any provision of this Agreement for any liabilities and damages to the extent that such liabilities and damages relate to actions taken by NBTY, Merger Sub or their affiliates or subsidiaries, after the Closing Date and in no event shall the Shareholders be liable for consequential damages. Each of NBTY and Merger Sub shall take all reasonable steps to mitigate all such liabilities and damages upon and after becoming aware of any event which could reasonably be expected to give rise to such liabilities and damages. (g) Notwithstanding any provision of this Section 9.03 to the contrary, it is acknowledged and agreed that until three Business Days after the effective date of the first public offering that the Shareholders sell any of their Aggregate Exchanged Stock in accordance with the terms and provisions of the Registration Rights Agreement, any of the Shareholders may pay and satisfy in full any obligation of such Shareholder to indemnify NBTY or Merger Sub hereunder in cash or by delivering to NBTY or Merger Sub the number of shares of NBTY Stock equal to the amount of such obligation divided by the greater of the NBTY Stock FMV as of the Closing Date or the average of the closing bid prices, as reported by the National Association of Securities Dealers automated quotations system, for the ten (10) Business Days prior to the date of such delivery. ARTICLE X TERMINATION, AMENDMENT AND WAIVER SECTION 10.01 Termination. This Agreement may be terminated at any time prior to the Closing: (a) by the mutual written consent of the Shareholders and NBTY; (b) by the Shareholders, if the Closing shall not have occurred within 45 calendar days after the date hereof; (c) by either the Shareholders or NBTY, if the Closing shall not have occurred prior to the 120th day after the date hereof; provided, however, that the right to terminate this Agreement under this Section 10.01(c) shall not be available to any party whose failure to fulfill any obligation under this Agreement shall have been the cause of, or shall have resulted in, the failure of the Closing to occur prior to such date; or (d) by any of the Shareholders or the Companies if the NBTY Stock FMV multiplied by the Aggregate Exchanged Stock to be delivered to the Shareholders on the Closing Date is less than ONE HUNDRED THIRTY-FIVE MILLION and 00/100 ($135,000,000) DOLLARS. SECTION 10.02 Effect of Termination. In the event of termination of this Agreement as provided in Section 10.01, this Agreement shall forthwith become void and there shall be no liability on the part of any party hereto (a) except as set forth in Section 5.05 and Section 11.01 and (b) nothing herein shall relieve any party hereto from liability for any wilful breach hereof. SECTION 10.03 Waiver. At any time prior to the Closing, any party hereto may (a) extend the time for the performance of any of the obligations or other acts of the other party hereto, (b) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto or (c) waive compliance with any of the agreements or conditions contained herein. Any such extension or waiver shall be valid if set forth in an instrument in writing signed by the party to be bound thereby. ARTICLE XI GENERAL PROVISIONS SECTION 11.01 Expenses. Unless otherwise indicated in this Agreement, including, without limitation, in the two immediately following sentences, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby, including, without limitation, fees and disbursements of counsel, financial advisors and accountants, shall be paid by the party incurring such costs and expenses, whether or not the Closing shall have occurred. It is acknowledged and agreed that the Companies shall pay all fees, costs and disbursements in connection with: (i) the HSR Act required to be paid by any Shareholder defined as an Acquired Person under the HSR Act, (ii) ISRA, (iii) one-half (1/2) of the legal fees of Herrick, Feinstein LLP from and after March 12, 1998 which pertain to the preparation, negotiation and consummation of the transactions contemplated hereunder, (iv) one-half (1/2) of the fees of the Advisor, (v) one-half (1/2) of the accounting fees of Coopers and Lybrand LLP's St. Louis office relating to the preparation, negotiations and consummation of the transactions contemplated hereunder, and (vi) one-half (1/2) of the accounting fees of Amper, Politzner & Mattia P.A. relating to the preparation, negotiation and consummation of the transactions contemplated hereunder (collectively, the "Transaction Expenses"). SECTION 11.02 Notices. All notices, requests, claims, demands and other communications given or made pursuant hereto shall be in writing (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by cable, by telecopy (with confirmation copy of such telecopied material delivered in person or by registered or certified mail, postage prepaid, return receipt requested) or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 11.02): (a) if to the Shareholders or any of the Companies: To: Michael C. Slade, The Abraham Feldman Trust F/B/O Ruth Slade U/A 1/21/91 and The Abraham Feldman Trust F/B/O E. STEVEN LENGER U/A 1/21/91 c/o Herrick, Feinstein LLP 2 Park Avenue New York, N.Y. 10016 Attention: Michael Heitner, Esq. and Irwin A. Kishner, Esq. (b) if to NBTY or Merger Sub: To: NBTY, Inc. 90 Orville Drive Bohemia, New York 11716 Attention: Scott Rudolph and Harvey Kamil with a copy to: Michael C. Duban, P.C. 81 Main Street, Suite 205 White Plains, New York 10601 Attention: Michael C. Duban, Esq. SECTION 11.03 Public Announcements. No party to this Agreement shall make any public announcement in respect of this Agreement or the transactions contemplated herein or otherwise communicate with any news media without prior consent of the other parties hereto. It is acknowledged and agreed that Slade and NBTY shall cooperate to promptly distribute a public press release with respect to the transactions contemplated hereby in a form and substance agreeable to Slade and NBTY. SECTION 11.04 Headings. The descriptive headings contained in this Agreement are for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. SECTION 11.05 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible. SECTION 11.06 Entire Agreement. This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and undertakings, both written and oral, between the parties hereto with respect to the subject matter hereof. SECTION 11.07 Assignment. This Agreement shall not be assigned by any party hereto without the prior written consent of all of the parties hereto, which consent shall not be unreasonably withheld. SECTION 11.08 No Third-Party Beneficiaries. Except as otherwise specifically provided herein, this Agreement is for the sole benefit of the parties hereto and their permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. SECTION 11.09 Amendment; Waiver. This Agreement may not be amended or modified except by an instrument in writing duly executed by all of the parties hereto. Waiver of any term or condition of this Agreement shall only be effective if in writing and shall not be construed as a waiver of any subsequent breach or waiver of the same term or condition, or a waiver of any other term or condition of this Agreement. SECTION 11.10 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts executed and to be wholly performed in that State. SECTION 11.11 Consent to Jurisdiction. Each party hereto hereby irrevocably submits to the jurisdiction of any New York State or Federal court sitting in the City of New York in any action or proceeding arising out of or relating to this Agreement, and each party hereto hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such New York State or Federal court. Each party hereto irrevocably waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding. Each party hereto irrevocably agrees that any service of process with respect to any claim or matter arising from or in connection with this Agreement may be made by mailing or delivering a copy of such process to such party at the address specified in Section 11.02. SECTION 11.12 Counterparts. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. SECTION 11.03 Shares of NBTY Stock. The parties hereto acknowledge and agree that, unless the context otherwise requires, each reference in this Agreement to a number of shares of NBTY Stock accounts for the NBTY Stock Split and, accordingly, any such reference to a number of shares of NBTY Stock shall be appropriately adjusted for any change, modification or revocation of the NBTY Stock Split. [The next page is the Signature Page] IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first written above. NUTRITION HEADQUARTERS, INC. By: /s/ Michael C. Slade ------------------------------ Name: Michael C. Slade Title: Chairman, President and Chief Executive Officer LEE NUTRITION, INC. By: /s/ Michael C. Slade ------------------------------ Name: Michael C. Slade Title: Chairman, President and Chief Executive Officer NUTRO LABORATORIES, INC. By: /s/ Michael C. Slade ------------------------------ Name: Michael C. Slade Title: Chairman, President and Chief Executive Officer /s/ Michael C. Slade ----------------------------- MICHAEL C. SLADE ABRAHAM FELDMAN TRUST F/B/O RUTH SLADE U/A 1/21/91 By: /s/ Ruth Slade ------------------------------ Name: Ruth Slade Title: Trustee of Abraham Feldman Trust F/B/O Ruth Slade U/A 1/21/91 (the "RS Trust"). The Trustee is signing this document solely in her fiduciary capacity, and recourse against the RS Trust shall be limited solely to the assets of the RS Trust, and no recourse shall be had against the Trustee thereof. ABRAHAM FELDMAN TRUST F/B/O E. STEVEN LENGER U/A 1/21/91 By: /s/ E. Steven Lenger ------------------------------ Name: E. Steven Lenger Title: Trustee, of Abraham Feldman Trust F/B/O E. Steven Lenger U/A/ 1/21/91 (the "ESL Trust"). The Trustee is signing this document solely in his fiduciary capacity, and recourse against the ESL Trust shall be limited solely to the assets of the ESL Trust, and no recourse shall be had against the Trustee thereof. NBTY, INC. By /s/ Scott Rudolph ------------------------------- Name: Scott Rudolph Title: President and Chief Executive Officer NUTRITION HEADQUARTERS (DE), INC. By /s/ Scott Rudolph ------------------------------- Name: Scott Rudolph Title: President and CEO EX-99.2 3 AMENDMENT TO MERGER AGREEMENT Amendment to Merger Agreement Amendment to the Agreement and Plan of Merger made this 14th day of April, 1998 by the undersigned parties hereto. Reference is hereby made to that certain Agreement and Plan of Merger dated as of April 1, 1998 (the "Merger Agreement") among NUTRITION HEADQUARTERS, INC., a Delaware corporation, LEE NUTRITION, INC., a Delaware corporation, NUTRO LABORATORIES, INC., a New Jersey corporation, MICHAEL C. SLADE, ABRAHAM FELDMAN TRUST F/B/O RUTH SLADE U/A 1/21/91 and ABRAHAM FELDMAN TRUST F/B/O E. STEVEN LENGER U/A 1/21/91, and NBTY, INC., a Delaware corporation ("NBTY"), and NUTRITION HEADQUARTERS (DE), INC., a Delaware corporation and a wholly owned subsidiary of NBTY. Each of the undersigned hereby agrees that the definition of the term "Working Capital of the Companies" provided in Section 1.01 of the Merger Agreement shall be amended and restated in its entirety as set forth below: "Working Capital of the Companies" means the balance of the combined current assets of the Companies less the balance of the combined current liabilities of the Companies, in each case, as of the specified date and computed in accordance with the Company Accounting Policies; provided, however, that such assets shall be increased and such liabilities shall be decreased, as the case may be, by the aggregate amount of the Transaction Expenses paid, or to be paid, by the Companies. Except as specifically provided above, each of the undersign hereby ratifies and confirms all of the terms and provisions of the Merger Agreement and confirms that such agreement shall continue to be in full force and effect as amended and modified hereby. This Amendment to the Merger Agreement shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts executed and to be wholly performed in that State. [The next page is the Signature Page] IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first written above. NUTRITION HEADQUARTERS, INC. By: /s/ Michael C. Slade --------------------------------------- Name: Michael C. Slade Title: Chairman, President and Chief Executive Officer LEE NUTRITION, INC. By: /s/ Michael C. Slade --------------------------------------- Name: Michael C. Slade Title: Chairman, President and Chief Executive Officer NUTRO LABORATORIES, INC. By: /s/ Michael C. Slade --------------------------------------- Name: Michael C. Slade Title: Chairman, President and Chief Executive Officer /s/ Michael C. Slade --------------------------------------- MICHAEL C. SLADE ABRAHAM FELDMAN TRUST F/B/O RUTH SLADE U/A 1/21/91 By: /s/ Ruth Slade --------------------------------------- Name: Ruth Slade Title: Trustee of Abraham Feldman Trust F/B/O Ruth Slade U/A 1/21/91 (the "RS Trust"). The Trustee is signing this document solely in her fiduciary capacity, and recourse against the RS Trust shall be limited solely to the assets of the RS Trust, and no recourse shall be had against the Trustee thereof. ABRAHAM FELDMAN TRUST F/B/O E. STEVEN LENGER U/A 1/21/91 By: /s/ E. Steven Lenger --------------------------------------- Name: E. Steven Lenger Title: Trustee, of Abraham Feldman Trust F/B/O E. Steven Lenger U/A/ 1/21/91 (the "ESL Trust"). The Trustee is signing this document solely in his fiduciary capacity, and recourse against the ESL Trust shall be limited solely to the assets of the ESL Trust, and no recourse shall be had against the Trustee thereof. NBTY, INC. By: /s/ Scott Rudolph --------------------------------------- Name: Scott Rudolph Title: President NUTRITION HEADQUARTERS (DE), INC. By: /s/ Scott Rudolph --------------------------------------- Name: Scott Rudolph Title: President EX-99.3 4 REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT dated as of April 1, 1998, among NBTY, INC., a Delaware corporation (the "Corporation"), and the INVESTORS (as hereinafter defined). The Investors own or have the right to purchase or otherwise acquire shares of the Common Stock (as hereinafter defined) of the Corporation. The Corporation and the Investors deem it to be in their respective best interests to set forth the rights of the Investors in connection with public offerings and sales of the Common Stock and are entering into this Agreement as a condition to and in connection with the Agreement and Plan of Merger (as hereinafter defined). NOW, THEREFORE, in consideration of the premises and mutual covenants and obligations hereinafter set forth, the Corporation and the Investors hereby agree as follows: SECTION 1. Definitions. As used in this Agreement, the following terms shall have the following meanings: (a) "Agreement and Plan of Merger" means the Agreement and Plan of Merger, dated as of April 1, 1998, among the Corporation, the Investors and the other parties thereto, as the same may be amended from time to time. (b) "Commission" means the Securities and Exchange Commission or any other Federal agency at the time administering the Securities Act. (c) "Common Stock" means the common stock, $0.008 par value per share, of the Corporation. (d) "Exchange Act" means the Securities Exchange Act of 1934, as amended, or any successor Federal statute, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be in effect from time to time. (e) "Investors" means each of MICHAEL C. SLADE, ABRAHAM FELDMAN TRUST F/B/O RUTH SLADE U/A 1/21/91 and ABRAHAM FELDMAN TRUST F/B/O E. STEVEN LENGER U/A 1/21/91 and each additional person who shall execute a counterpart signature page hereto, and includes any successor to, or assignee or transferee of, any such person who or which agrees in writing to be treated as an Investor hereunder and to be bound by the terms and comply with all applicable provisions hereof. (f) "Other Shares" means at any time securities (as defined by the Securities Act) of the Corporation or any of its subsidiaries which do not constitute Primary Shares or Registrable Shares. (g) "Primary Shares" means at any time the authorized but unissued shares of Common Stock and shares of Common Stock held by the Corporation in its treasury. (h) "Registrable Shares" means Restricted Shares which constitute Common Stock or any security or right into which such Common Stock is or may be converted or exchanged into, whether or not such right to convert or exchange is contingent upon the payment of money or any other event. (i) "Restricted Shares" means shares of Common Stock held by the Investors. As to any particular Restricted Shares, such Restricted Shares shall cease to be Restricted Shares when: (i) such shares have been registered under the Securities Act and the registration statement in connection therewith has been declared effective; or (ii) such shares shall have ceased to be issued and outstanding. (j) "Rule 144" means Rule 144 promulgated under the Securities Act or any successor rule thereto or any complementary rule thereto (such as Rule 144A). (k) "Securities Act" means the Securities Act of 1933, as amended, or any successor Federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect from time to time. SECTION 2. Required Registration. From and after the date hereof, if the Corporation shall be requested by any Investor to effect the registration under the Securities Act of Registrable Shares, the Corporation shall promptly effect the registration under the Securities Act of the Registrable Shares which the Corporation has been so requested to register; provided, however, that the Corporation shall not be obligated to effect any registration under the Securities Act except in accordance with the following provisions: (a) the Corporation shall not be obligated to file and cause to become effective more than three (3) registration statements initiated pursuant to this Section 2 if under such registration statements all of the Registrable Shares requested to be included therein have been effectively distributed and sold thereunder; (b) subject to Section 2(d) below, the Corporation may delay the filing or effectiveness of any registration statement for a period of up to 60 days after the date of a request for registration pursuant to this Section 2 if at the time of such request (i) the Corporation is engaged, or has fixed plans to engage within 60 days of the time of such request, in a firm commitment underwritten public offering of Primary Shares in which the holders of Registrable Shares shall include the Registrable Shares that the Investors requested to be so registered pursuant to Section 3 below, or (ii) the Corporation reasonably determines that such registration and offering would interfere with any material transaction that requires disclosure under the Securities Act involving the Corporation, as approved by the Board of Directors; provided, that the Corporation may only so delay the filing or effectiveness of a registration statement once pursuant to clause (i) above and once pursuant to clause (ii) above; and (c) with respect to any registration pursuant to this Section 2, the Corporation shall give notice of such registration to the Investors who do not request registration hereunder and to the holders of all Registrable Shares and Other Shares which are entitled to registration rights and the Corporation may include in such registration any Primary Shares, Registrable Shares or Other Shares; provided, however, that, subject to Section 2(d) hereof, with respect to any registration statement, if the managing underwriter advises the Corporation in writing that the inclusion of all Registrable Shares, Primary Shares and/or Other Shares proposed to be included in such registration would interfere with the successful marketing (including pricing) of the Registrable Shares proposed to be included in such registration, then the number of Registrable Shares, Primary Shares and/or Other Shares proposed to be included in such registration shall be included in the following order: (i) first, the Registrable Shares of the Investors requested to be included in such registration (or, if necessary, such Registrable Shares pro rata among the Investors thereof based upon the number of Registrable Shares requested to be registered by each such Investor); (ii) second, the Primary Shares and the other Registrable Shares held by stockholders other than the Investors which are requested to be included in such registration (or, if necessary, such securities pro rata among the Corporation and the holders thereof based upon the estimated initial offering price of such securities proposed to be included in such registration statement); and (iii) third, the Other Shares which are entitled to registration rights. (d) Notwithstanding any provision of this Section 2 to the contrary, with respect to the first registration statement initiated pursuant to this Section 2, unless otherwise agreed by the Investors holding a majority of the Registrable Shares requested to be included in such registration statement, all of such Registrable Shares of the Investors requested to be included in such registration statement shall be so included in such registration statement. The Corporation hereby agrees that, with respect to the first registration statement initiated pursuant to this Section 2, the Corporation shall use its best efforts to successfully market (including pricing) and distribute such Registrable Shares of the Investors within 45 days after the date of a request for registration pursuant to this Section 2. (e) If the method of disposition requested by the holders, pursuant to this Section 2, is a firm commitment underwritten public offering, the Corporation shall have the right to designate the managing underwriter of such offering, which underwriter shall be (i) a top 15 investment bank as rated by Securities Data Corp. at the time of such designation and (ii) acceptable to the holders of the Registration Shares holding a majority of such securities, it being acknowledged and agreed that the investment banks listed on Schedule A or their successors shall be acceptable to the Investors. (f) At any time before the registration statement covering Registrable Shares becomes effective, the Investors holding a majority of such securities may request the Corporation to withdraw, amend or not to file the registration statement with respect to the proposed sale of the Investor's Registrable Shares. In that event, if such request of withdrawal or amendment shall not have been caused by, or made in response to, the material adverse effect of an event on the business, properties, condition, financial or otherwise, or operations of the Corporation, the Investors shall have used one of their demand registration rights under this Section 2 and the Corporation shall no longer be obligated to register Registrable Shares pursuant to the exercise of such one registration right pursuant to this Section 2 unless either (x) such Registration Statement includes Other Shares not held by the Investors or Primary Shares or (y) the remaining Investors shall pay to the Corporation the expenses incurred by the Corporation through the date of such request. SECTION 3. Piggyback Registration. If the Corporation or any of its subsidiaries at any time proposes for any reason to register Primary Shares, Registrable Shares held by stockholders other than the Investors or Other Shares under the Securities Act, it shall promptly give written notice to the Investors of its intention to so register such Primary Shares, Registrable Shares or Other Shares and, upon the written request, delivered to the Corporation within 30 days after delivery of any such notice by the Corporation, of the Investors to include in such registration their Registrable Shares (which request shall specify the number of Registrable Shares proposed to be included in such registration), the Corporation shall cause all such Registrable Shares to be included in such registration on the same terms and conditions as the Common Stock included in such registration, if such securities are included; provided, however, that, subject to Section 3(c) hereof, if the managing underwriter advises the Corporation in writing that the inclusion of all Registrable Shares requested to be included in such registration would interfere with the successful marketing (including pricing) of the Primary Shares, Registrable Shares or Other Shares proposed to be registered, then the number of Primary Shares, Registrable Shares and Other Shares proposed to be included in such registration shall be included in the following order: (a) if the Corporation proposes to register Primary Shares: (i) first, the Primary Shares; (ii) second, the Registrable Shares (or, if necessary, such Registrable Shares pro rata among the holders thereof based upon the number of Registrable Shares requested to be registered by each such holder; and (iii) third, the Other Shares requested to be included in such registration (or, if necessary, such Other Shares pro rata among the holders thereof based upon the estimated initial offering price of the Other Shares requested to be registered by each such holder); or (b) if the Corporation does not propose to register Primary Shares: (i) first, the Registrable Shares and the Other Shares held by the parties demanding such registration (or, if necessary, first the Other Shares and then the Registrable Shares, in each case, pro rata among the Corporation and the holders thereof based on the estimated initial offering price of such securities requested to be registered by the Corporation and each such holder); and (ii) second, the Registrable Shares and Other Shares (other than shares registered pursuant to Section 3(b)(i) hereof) requested to be registered by the holders thereof (or, if necessary, first the Other Shares and then the Registrable Shares, in each case, pro rata among the Corporation and the holders thereof based on the number of Registrable Shares and Other Shares requested to be registered by the Corporation and such holders); and (c) Notwithstanding any provision of this Section 3 to the contrary, with respect to the first registration statement which includes the Registrable Shares of the Investors (whether such first registration statement is the result of a request or demand by the Investors under Section 2 or Section 3), all of the Registrable Shares of the Investors which have been requested or demanded to be included in the such registration statement shall be included in such registration statement. The Corporation hereby agrees that, with respect to the first registration statement including Registrable Shares of the Investors, the Corporation shall use its best efforts to successfully market (including pricing) and distribute such Registrable Shares within 90 days after the Investors delivered the notice by the Investors requesting that Registrable Shares be included in a registration statement. SECTION 4. Registrations on Form S-3. Anything contained in Section 2 to the contrary notwithstanding, the Investors shall have the right to request in writing one registration per twelve month period on Form S-3 or any successor form of Registrable Shares, which request or requests shall (i) specify the number of Registrable Shares intended to be sold or disposed of and the holders thereof and (ii) state the intended method of disposition of such Registrable Shares which method may include a delayed or continuous offering. A requested registration on Form S-3 or any such successor form in compliance with this Section 4 shall count as a registration statement initiated pursuant to Section 2 and shall otherwise be treated as a registration initiated pursuant to, and shall, except as otherwise expressly provided in this Section 4, be subject to Section 2. SECTION 5. Preparation and Filing. If and whenever the Corporation is under an obligation pursuant to the provisions of this Agreement to effect the registration of any Registrable Shares, the Corporation shall, as expeditiously as practicable: (a) cause a registration statement that registers such Registrable Shares to become and remain effective until all of such Registrable Shares have been distributed; (b) furnish, at least five business days before filing a registration statement that registers such Registrable Shares, a prospectus relating thereto or any amendments or supplements relating to such a registration statement or prospectus, to one counsel selected by the Investors (the "Investors' Counsel"), copies of all such documents proposed to be filed (it being understood that such five-business-day period need not apply to successive drafts of the same document proposed to be filed so long as such successive drafts are supplied to the Investors' Counsel in advance of the proposed filing by a period of time that is customary and reasonable under the circumstances); (c) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective until all of such Registrable Shares have been distributed and to comply with the provisions of the Securities Act with respect to the sale or other disposition of such Registrable Shares; (d) notify in writing the Investors' Counsel promptly (i) of the receipt by the Corporation of any notification with respect to any comments by the Commission with respect to such registration statement or prospectus or any amendment or supplement thereto or any request by the Commission for the amending or supplementing thereof or for additional information with respect thereto, (ii) of the receipt by the Corporation of any notification with respect to the issuance by the Commission of any stop order suspending the effectiveness of such registration statement or prospectus or any amendment or supplement thereto or the initiation or threatening of any proceeding for that purpose and (iii) of the receipt by the Corporation of any notification with respect to the suspension of the qualification of such Registrable Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for such purposes; (e) register or qualify such Registrable Shares under such other securities or blue sky laws of such jurisdictions as the Investors reasonably request and do any and all other acts and things which may be reasonably necessary or advisable to enable the Investors to consummate the disposition in such jurisdictions of the Registrable Shares owned by the Investors; provided, however , that the Corporation will not be required to qualify generally to do business, subject itself to general taxation or consent to general service of process in any jurisdiction where it would not otherwise be required to do so but for this paragraph (e) or to provide any material undertaking or make any changes in its By-laws or Certificate of Incorporation which the Board of Directors determines to be contrary to the best interests of the Corporation; (f) furnish to the Investors holding such Registrable Shares such number of copies of a summary prospectus, if any, or other prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as such Investors may reasonably request in order to facilitate the public sale or other disposition of such Registrable Shares; (g) cause such Registrable Shares to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Corporation to enable the Investors holding such Registrable Shares to consummate the disposition of such Registrable Shares; (h) notify the Investors holding such Registrable Shares on a timely basis at any time when a prospectus relating to such Registrable Shares is required to be delivered under the Securities Act within the appropriate period mentioned in subparagraph (a) of this Section 5, of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing and, at the request of the Investors, prepare and furnish to such Investors a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the offerees of such shares, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; (i) make available upon reasonable notice and during normal business hours, for inspection by the Investors holding such Registrable Shares, any underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other agent retained by the Investors or underwriter (collectively, the "Inspectors"), all pertinent financial and other records, pertinent corporate documents and properties of the Corporation (collectively, the "Records"), as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Corporation's officers, directors and employees to supply all information (together with the Records, the "Information") reasonably requested by any such Inspector in connection with such registration statement. Any of the Information which the Corporation determines in good faith to be confidential, and of which determination the Inspectors are so notified, shall not be disclosed by the Inspectors unless (i) the disclosure of such Information is necessary to avoid or correct a misstatement or omission in the registration statement, (ii) the release of such Information is ordered pursuant to a subpoena or other order from a court of competent jurisdiction or (iii) such Information has been made generally available to the public through no breach or default of any third party with an obligation of confidentiality to the Corporation; (j) obtain from its independent certified public accountants "cold comfort" letters in customary form and at customary times and covering matters of the type customarily covered by cold comfort letters; (k) obtain from its counsel an opinion or opinions in customary form; (l) continue to provide a nationally recognized transfer agent and nationally recognized registrar for such Registrable Shares; (m) issue to any underwriter to which the Investors holding such Registrable Shares may sell shares in such offering certificates evidencing such Registrable Shares; (n) list such Registrable Shares on any national securities exchange on which any shares of the Common Stock are listed or, if the Common Stock is not listed on a national securities exchange, qualify such Registrable Shares for inclusion on the automated quotation system of the National Association of Securities Dealers, Inc. (the "NASD"), or such other national securities exchange as the holders of a majority of such Registrable Shares shall reasonably request; (o) comply with all applicable rules and regulations of the Commission and make available to its securityholders, as soon as reasonably practicable, audited earnings statements covering a period of 12 months beginning within three months after the effective date of the registration statement, which earnings statements shall satisfy the provisions of Section 11(a) of the Securities Act; and (p) take all other steps necessary to effect the registration of such Registrable Shares contemplated hereby. Each holder of the Registrable Shares, upon receipt of any notice from the Corporation of any event of the kind described in Section 5(h) hereof, shall forthwith discontinue disposition of the Registrable Shares pursuant to the registration statement covering such Registrable Shares until such holder's receipt of the copies of the supplemented or amended prospectus contemplated by Section 5(h) hereof, and, if so directed by the Corporation, such holder shall deliver to the Corporation all copies, other than permanent file copies then in such holder's possession, of the prospectus covering such Registrable Shares at the time of receipt of such notice. SECTION 6. Expenses. All expenses (other than underwriting discounts and commissions relating to the Registrable Shares, as provided in the succeeding clause of this Section 6) incurred by the Corporation in complying with Section 5, including, without limitation, all registration and filing fees (including all expenses incident to filing with the NASD), fees and expenses of complying with securities and blue sky laws, printing expenses, fees and expenses of the Corporation's counsel and accountants and reasonable fees and expenses of the Investors' Counsel, shall be paid by the Corporation; provided, however, that all underwriting discounts and selling commissions applicable to the Registrable Shares and Other Shares shall be borne by the holders selling such Registrable Shares and Other Shares, in proportion to the number of Registrable Shares and Other Shares sold by each such holder. SECTION 7. Indemnification. (a) In connection with any registration of any Registrable Shares under the Securities Act pursuant to this Agreement, the Corporation shall indemnify and hold harmless the holders of Registrable Shares, each underwriter, broker or any other person acting on behalf of the holders of Registrable Shares and each other person, if any, who controls any of the foregoing persons within the meaning of the Securities Act against any losses, claims, damages or liabilities, joint or several (or actions in respect thereof), to which any of the foregoing persons may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or allegedly untrue statement of a material fact contained in the registration statement under which such Registrable Shares were registered under the Securities Act, any preliminary prospectus or final prospectus contained therein or otherwise filed with the Commission, any amendment or supplement thereto or any document incident to registration or qualification of any Registrable Shares, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or, with respect to any prospectus, necessary to make the statements therein in light of the circumstances under which they were made not misleading, or any violation by the Corporation of the Securities Act or state securities or blue sky laws applicable to the Corporation and relating to action or inaction required of the Corporation in connection with such registration or qualification under such state securities or blue sky laws; and shall reimburse the holders of Registrable Shares, such underwriter, such broker or such other person acting on behalf of the holders of Registrable Shares and each such controlling person for any legal or other expenses reasonably incurred by any of them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Corporation shall not be liable in any such case to the extent that any such loss, claim, damage, liability or action (including any legal or other expenses incurred) arises out of or is based upon an untrue statement or omission made in said registration statement, preliminary prospectus, final prospectus, amendment, supplement or document incident to registration or qualification of any Registrable Shares in reliance upon and in conformity with written information furnished to the Corporation through an instrument duly executed by the holders of Registrable Shares or their counsel or underwriter specifically for use in the preparation thereof; provided further, however, that the foregoing indemnity agreement is subject to the condition that, insofar as it relates to any untrue statement or omission made in any preliminary prospectus but eliminated or remedied in the final prospectus (filed pursuant to Rule 424 of the Securities Act), such indemnity agreement shall not inure to the benefit of any Investor, underwriter, broker or other person acting on behalf of holders of the Restricted Shares from whom the person asserting any loss, claim, damage, liability or expense purchased the Restricted Shares which are the subject thereof, if a copy of such final prospectus had been made available to such person and such Investor, underwriter, broker or other person acting on behalf of holders of the Registrable Shares and such final prospectus was delivered to such person with or prior to the written confirmation of the sale of such Registrable Shares to such person. (b) In connection with any registration of Registrable Shares under the Securities Act pursuant to this Agreement, each holder of Registrable Shares shall severally and not jointly indemnify and hold harmless (in the same manner and to the same extent as set forth in the preceding paragraph of this Section 7) the Corporation, each director of the Corporation, each officer of the Corporation who shall sign such registration statement, each underwriter, broker or other person acting on behalf of the holders of Registrable Shares and each person who controls any of the foregoing persons within the meaning of the Securities Act with respect to any statement or omission from such registration statement any preliminary prospectus or final prospectus contained therein or otherwise filed with the Commission, any amendment or supplement thereto or any document incident to registration or qualification of any Registrable Shares, if such statement or omission was made in reliance upon and in conformity with written information furnished to the Corporation or such underwriter specifically for use in connection with the preparation of such registration statement, preliminary prospectus, final prospectus, amendment, supplement or document; provided, however, that no Investor shall have any obligation under this Section 7(b) except for statements made by the Investor with respect to the title of the Registrable Shares and the name and information regarding the Investor required to be disclosed in such registration statement; and provided further, however, that the maximum amount of liability in respect of such indemnification shall be limited, in the case of each seller of Registrable Shares, to an amount equal to the net proceeds actually received by such seller from the sale of Registrable Shares effected pursuant to such registration. (c) Promptly after receipt by an indemnified party of notice of the commencement of any action involving a claim referred to in the preceding paragraphs of this Section 7, such indemnified party will, if a claim in respect thereof is made against an indemnifying party, give written notice to the latter of the commencement of such action. In case any such action is brought against an indemnified party, the indemnifying party will be entitled to participate in and to assume the defense thereof, jointly with any other indemnifying party similarly notified to the extent that it may wish, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be responsible for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof; provided, however, that if any indemnified party shall have reasonably concluded that there may be one or more legal or equitable defenses available to such indemnified party which are additional to or conflict with those available to the indemnifying party, or that such claim or litigation involves or could have an effect upon matters beyond the scope of the indemnity agreement provided in this Section 7, the indemnifying party shall not have the right to assume the defense of such action on behalf of such indemnified party and such indemnifying party shall reimburse such indemnified party and any person controlling such indemnified party for that portion of the fees and expenses of any counsel retained by the indemnified party which is reasonably related to the matters covered by the indemnity agreement provided in this Section 7. (d) If the indemnification provided for in this Section 7 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, claim, damage, liability or action referred to herein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amounts paid or payable by such indemnified party as a result of such loss, claim, damage, liability or action in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions which resulted in such loss, claim, damage, liability or action as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. SECTION 8. Information by Holder. The Investors shall furnish to the Corporation such written information regarding the Investors and the distribution proposed by the Investors as the Corporation may reasonably request in writing and as shall be reasonably required in connection with any registration, qualification or compliance referred to in this Agreement. SECTION 9. Exchange Act Compliance. The Corporation shall comply with all of the reporting requirements of the Exchange Act applicable to it and shall comply with all other public information reporting requirements of the Commission which are conditions to the availability of Rule 144 for the sale of the Common Stock. The Corporation shall cooperate with the Investors in supplying such information as may be necessary for the Investors to complete and file any information reporting forms presently or hereafter required by the Commission as a condition to the availability of Rule 144. The Corporation shall not take any action which would not require it to be subject to the provisions of the Exchange Act. SECTION 10. No Conflict of Rights. The Corporation shall not, after the date hereof, grant any registration rights which conflict with or impair the registrations rights granted hereby. SECTION 11. Termination. This Agreement shall terminate and be of no further force or effect when there shall no longer be any Registrable Shares which have not been registered under the Securities Act and distributed to the public in the manner described in the registration statement or registration statements which registered such securities. SECTION 12. Successors and Assigns. This Agreement shall bind and inure to the benefit of the Corporation and the Investors and the respective successors and assigns of the Investors. SECTION 13. Assignment. Each Investor may assign his or its rights hereunder; provided, however, that such purchaser or transferee shall, as a condition to the effectiveness of such assignment, be required to execute a counterpart to this Agreement agreeing to be treated as an Investor whereupon such purchaser or transferee shall have the benefits of, and shall be subject to the restrictions contained in, this Agreement as if such purchaser or transferee was originally included in the definition of an Investor herein and had originally been a party hereto. SECTION 14. Entire Agreement. This Agreement contains the entire agreement among the Corporation and the Investors with respect to the subject matter hereof and supersedes all prior and contemporaneous arrangements or understandings with respect thereto. SECTION 15. Notices. All notices, requests, claims, demands and other communications given or made pursuant hereto shall be in writing (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by cable, by telecopy (with confirmation copy of such telecopied material delivered in person or by registered or certified mail, postage prepaid, return receipt requested) or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 15): (i) if to any Investor: To: Michael C. Slade c/o Herrick, Feinstein LLP 2 Park Avenue New York, N.Y. 10016 Attention: Michael Heitner, Esq. and Irwin A. Kishner, Esq. (ii) if to the Corporation: To: NBTY, Inc. 90 Orville Drive Bohemia, New York 11716 Attention: Scott Rudolph and Harvey Kamil with a copy to: Michael C. Duban, P.C. 81 Main Street, Suite 205 White Plains, New York 10601 Attention: Michael C. Duban, Esq. SECTION 16. Modifications; Amendments; Waivers. The terms and provisions of this Agreement may not be modified or amended, nor may any provision be waived, except pursuant to a writing signed by the Corporation and the holders of at least a majority of the Registrable Shares then outstanding; provided, however, that any amendment to or modification of this Agreement which would not have an adverse affect on the rights of any Investor shall not require the written consent of such Investor. SECTION 17. Counterparts; Facsimile Signatures. This Agreement may be executed in any number of counterparts, and each such counterpart hereof shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement. Facsimile counterpart signatures to this Agreement shall be acceptable if the originally executed counterpart is delivered within a reasonable period thereafter. SECTION 18. Headings. The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement. SECTION 19. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed wholly therein. [THE NEXT PAGE IS THE SIGNATURE PAGE] IN WITNESS WHEREOF, the parties hereto have executed and delivered this Registration Rights Agreement on the date first written above. /s/ Michael C. Slade MICHAEL C. SLADE ABRAHAM FELDMAN TRUST F/B/O RUTH SLADE By: /s/ Ruth Slade ------------------------------------------ Name: Ruth Slade Title: Trustee of the Abraham Feldman Trust F/B/O Ruth Slade U/A 1/21/91 (the "RS Trust"), is signing this document solely in his fiduciary capacity, and recourse against the RS Trust shall be limited solely to the assets of the RS Trust, and no recourse shall be had against the Trustee thereof. ABRAHAM FELDMAN TRUST F/B/O E. STEVEN LENGER By: /s/ E. Steven Lenger ------------------------------------------ Name: E. Steven Lenger Title: Trustee of the Abraham Feldman Trust F/B/O E. Steven Lenger U/A/ 1/21/91 (the "ESL Trust"), is signing this document solely in his fiduciary capacity, and recourse against the ESL Trust shall be limited solely to the assets of the ESL Trust, and no recourse shall be had against the Trustee thereof. NBTY, INC. By: /s/ Scott Rudolph ------------------------------------------ Name: Scott Rudolph Title: President and Chief Executive Officer EX-99.4 5 JOINT FILING AGREEMENT JOINT FILING AGREEMENT Each of the undersigned hereby agree that the Statement on Schedule 13D, dated as of April 20, 1998 (the "Schedule 13D"), with respect to the Common Stock, par value $0.008 per share, of NBTY, Inc., a Delaware corporation, is, and any amendments thereto executed by each of us shall be, filed on behalf of each of us pursuant to and in accordance with the provisions of Rule 13d-1(f)(1) under the Securities and Exchange Act of 1934, as amended, and that this Agreement shall be included as an Exhibit to the Schedule 13D and each such amendment. Each of the undersigned agrees to be responsible for the timely filing of the Schedule 13D and any amendments thereto, and for the completeness and accuracy of the information concerning itself contained therein. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument. IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the 23rd day of April, 1998. /s/ Michael C. Slade ------------------------------------ MICHAEL C. SLADE /s/ Ruth L. Slade ------------------------------------ RUTH L. SLADE ABRAHAM FELDMAN TRUST F/B/O RUTH SLADE U/A 1/21/91 By: /s/ Ruth L. Slade ------------------------------- Ruth L. Slade, Trustee /s/ E. Steven Lenger ------------------------------------ E. STEVEN LENGER ABRAHAM FELDMAN TRUST F/B/O E. STEVEN LENGER U/A 1/21/91 By: /s/ E. Steven Lenger ------------------------------- E. Steven Lenger, Trustee -----END PRIVACY-ENHANCED MESSAGE-----