Agreement and Plan of Merger - Hain Food Group Inc. and Celestial Seasonings Inc.
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
THE HAIN FOOD GROUP, INC.
AND
CELESTIAL SEASONINGS, INC.
DATED AS OF
MARCH 5, 2000
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TABLE OF CONTENTS
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ARTICLE I
MERGER
1.1 Formation of Hain Subsidiary................................ 1
1.2 The Merger.................................................. 1
1.3 Closing..................................................... 2
1.4 Filing...................................................... 2
1.5 Effective Time of the Merger................................ 2
ARTICLE II
CERTIFICATE OF INCORPORATION; BY-LAWS; DIRECTORS AND OFFICERS
2.1 Certificate of Incorporation................................ 2
2.2 By-Laws..................................................... 2
2.3 Directors and Officers of the Surviving Corporation......... 2
2.4 Board of Directors of Hain.................................. 2
(a) Composition............................................. 2
(b) Company Designees....................................... 2
(c) Chairman and Vice Chairman of the Hain Board............ 3
ARTICLE III
EFFECT OF THE MERGER; CONVERSION OF SHARES
3.1 Effect on Capital Stock..................................... 3
(a) Hain Subsidiary Common Stock............................ 3
(b) Cancellation of Treasury Stock.......................... 3
(c) Conversion of Company Shares............................ 3
3.2 Exchange of Certificates.................................... 3
(a) Exchange Agent.......................................... 3
(b) Exchange Procedures..................................... 4
(c) Exchange of Certificates................................ 4
(d) Distributions with Respect to Unsurrendered
Certificates................................................ 4
(e) No Further Rights in Company Shares..................... 4
(f) No Fractional Shares.................................... 5
(g) Termination of Exchange Fund............................ 5
(h) No Liability............................................ 5
(i) Withholding Rights...................................... 5
(j) Lost Certificates....................................... 5
(k) Anti-Dilution........................................... 5
3.3 Stock Transfer Books........................................ 6
ARTICLE IV
CERTAIN EFFECTS OF THE MERGER
4.1 Effect of the Merger........................................ 6
4.2 Further Assurances.......................................... 6
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
5.1 Organization and Qualification.............................. 6
5.2 Capital Stock of Subsidiaries............................... 7
5.3 Capitalization.............................................. 7
5.4 Authority Relative to This Agreement........................ 7
5.5 No Violations, etc. ........................................ 8
5.6 Commission Filings; Consolidated Financial Statements....... 8
5.7 Absence of Changes or Events................................ 9
5.8 Joint Proxy Statement....................................... 10
5.9 Litigation.................................................. 10
5.10 Property and Leases......................................... 10
5.11 Employment and Labor Contracts.............................. 11
5.12 Labor Matters............................................... 11
5.13 Compliance with Law......................................... 11
5.14 Board Recommendation........................................ 11
5.15 Intellectual Property....................................... 11
5.16 Taxes....................................................... 12
5.17 Employee Benefit Plans; ERISA............................... 13
5.18 Environmental Matters....................................... 14
5.19 Disclosure.................................................. 15
5.20 Absence of Undisclosed Liabilities.......................... 16
5.21 Finders or Brokers.......................................... 16
5.22 Rights Agreement............................................ 16
5.23 Opinion of Financial Advisor................................ 16
5.24 Insurance................................................... 16
5.25 Tax Free Reorganization..................................... 16
5.26 Full Disclosure............................................. 16
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF HAIN
6.1 Organization and Qualification.............................. 17
6.2 Capital Stock of Subsidiaries............................... 17
6.3 Capitalization.............................................. 17
6.4 Authority Relative to This Agreement........................ 17
6.5 No Violations, etc. ........................................ 18
6.6 Commission Filings; Financial Statements.................... 18
6.7 Absence of Changes or Events................................ 19
6.8 Joint Proxy Statement....................................... 20
6.9 Litigation.................................................. 20
6.10 Property and Leases......................................... 20
6.11 Labor Matters............................................... 20
6.12 Compliance with Law......................................... 20
6.13 Board Recommendation........................................ 21
6.14 Intellectual Property....................................... 21
6.15 Taxes....................................................... 21
6.16 Disclosure.................................................. 22
6.17 Absence of Undisclosed Liabilities.......................... 22
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6.18 Finders or Brokers.......................................... 22
6.19 Opinion of Financial Advisor................................ 22
6.20 Environmental Matters....................................... 22
6.21 Employee Benefit Plans; ERISA............................... 23
6.22 Insurance................................................... 23
6.23 Tax Free Reorganization..................................... 23
6.24 Full Disclosure............................................. 23
ARTICLE VII
CONDUCT OF BUSINESS OF
THE COMPANY AND HAIN PENDING THE MERGER
7.1 Conduct of Business of the Company Pending the Merger....... 24
7.2 Conduct of Business of Hain Pending the Merger.............. 25
ARTICLE VIII
COVENANTS AND AGREEMENTS
8.1 Preparation of the Registration Statement; Stockholder
Meeting..................................................... 26
8.2 Letters and Consents of the Company's Accountants........... 27
8.3 Letters and Consents of Hain's Accountants.................. 27
8.4 Additional Agreements; Cooperation.......................... 27
8.5 Publicity................................................... 28
8.6 No Solicitation............................................. 28
8.7 Access to Information....................................... 29
8.8 Notification of Certain Matters............................. 29
8.9 Resignation of Directors.................................... 29
8.10 Indemnification and Insurance............................... 29
8.11 Fees and Expenses........................................... 30
8.12 Affiliates and Pooling Agreements........................... 30
8.13 Nasdaq Listing.............................................. 30
8.14 Stockholder Litigation...................................... 30
8.15 Company Employees........................................... 30
ARTICLE IX
CONDITIONS TO CLOSING
9.1 Conditions to Each Party's Obligation to Effect the
Merger...................................................... 31
(a) Stockholder Approvals................................... 31
(b) HSR Act................................................. 32
(c) No Injunctions or Restraints............................ 32
(d) Pooling of Interests; Consents.......................... 32
(e) Registration Statement.................................. 32
(f) Nasdaq Listing.......................................... 32
(g) Consents and Approvals.................................. 32
9.2 Conditions to Obligations of Hain........................... 32
(a) Representations and Warranties.......................... 32
(b) Performance of Obligations of the Company............... 32
(c) No Material Adverse Change.............................. 32
(d) Affiliate Letters....................................... 32
(e) Tax Opinion............................................. 32
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9.3 Conditions to Obligations of the Company.................... 33
(a) Representations and Warranties.......................... 33
(b) Performance of Obligations of Hain and Hain
Subsidiary.................................................. 33
(c) No Material Adverse Change.............................. 33
(d) Tax Opinion............................................. 33
ARTICLE X
TERMINATION
10.1 Termination................................................. 33
10.2 Effect of Termination....................................... 34
ARTICLE XI
MISCELLANEOUS
11.1 Nonsurvival of Representations and Warranties............... 35
11.2 Waiver...................................................... 35
11.3 Notices..................................................... 35
11.4 Counterparts................................................ 36
11.5 Interpretation.............................................. 36
11.6 Amendment................................................... 37
11.7 No Third Party Beneficiaries................................ 37
11.8 Governing Law............................................... 37
11.9 Enforcement................................................. 37
11.10 Entire Agreement............................................ 37
11.11 No Recourse Against Others.................................. 37
11.12 Validity.................................................... 37
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DISCLOSURE SCHEDULES
COMPANY DISCLOSURE SCHEDULES
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SECTION
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5.1. Organization and Qualification
5.2 Capital Stock of Subsidiaries
5.3. Capitalization
5.5 No Violations, Etc.
5.11. Employment and Labor Contracts
5.17 Employee Benefit Plans; ERISA
5.21. Finders or Brokers
7.1 Conduct of Business of the Company
8.4 Additional Agreements; Cooperation
HAIN DISCLOSURE SCHEDULES
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SECTION
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6.2 Capital Stock of Subsidiaries
6.3 Capitalization
6.5 No Violations, Etc.
6.9 Litigation
6.11 Labor Matters
6.12 Compliance with Law
6.18 Finders or Brokers
EXHIBITS
EXHIBIT A--Amended and Restated Certificate of Incorporation
EXHIBIT B--Form of Company Affiliate Letter
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 5, 2000, by and between The
Hain Food Group, Inc., a Delaware corporation ("HAIN"), and Celestial
Seasonings, Inc., a Delaware corporation (the "COMPANY").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of each of Hain and the Company have
approved the merger (the "MERGER") of a wholly owned subsidiary of Hain, to be
formed for the purpose thereof ("HAIN SUBSIDIARY"), with and into the Company,
upon the terms and subject to the conditions set forth herein and in accordance
with the General Corporation Law of the State of Delaware (the "DGCL");
WHEREAS, in connection with the Merger, the Board of Directors of Hain has
approved and recommended that Hain's stockholders approve a change of its
corporate name to The Hain Celestial Group, Inc.;
WHEREAS, in furtherance thereof it is proposed that each outstanding share
of common stock, par value $.01 per share, of the Company (the "COMPANY COMMON
STOCK," and together with the preferred share purchase rights (the "Rights")
issued pursuant to the Amended and Restated Rights Agreement, dated as of
November 11, 1998, by and between the Company and the Harris Trust and Savings
Bank, as rights agent (the "RIGHTS AGREEMENT"), associated with such shares, the
"COMPANY SHARES") will be converted into the right to receive the Merger
Consideration (as hereinafter defined) upon the terms and conditions set forth
in this Agreement;
WHEREAS, as inducements to the Company and Hain entering into this Agreement
and incurring the obligations set forth herein, and contemporaneously with the
execution and delivery of this Agreement, Irwin D. Simon and Mo Siegel have
agreed to enter into separate Voting Agreements pursuant to which, among other
things, Mr. Simon will vote all of his Hain Common Stock (as hereinafter
defined) in favor of this Agreement and the Merger, and Mr. Siegel will vote all
of his Company Common Stock in favor of this Agreement and the Merger;
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a tax free reorganization within the meaning of Section 368 of
the Internal Revenue Code of 1986, as amended (the "CODE");
WHEREAS, for accounting purposes, it is intended that the Merger shall be
accounted for as a "pooling of interests;" and
NOW, THEREFORE, in consideration of the premises and of the mutual covenants
and agreements herein contained, the parties hereto, intending to be legally
bound, agree as follows:
ARTICLE I
MERGER
1.1 FORMATION OF HAIN SUBSIDIARY. Hain shall form Hain Subsidiary under
the DGCL. Hain Subsidiary will be formed solely to facilitate the Merger and the
transactions contemplated thereby and will conduct no business or activity other
than in connection with the Merger. Hain will cause Hain Subsidiary to execute
and deliver a joinder to this Agreement pursuant to Section 251 of the DGCL and
will execute a written consent as the sole stockholder of Hain Subsidiary,
approving the execution, delivery and performance of this Agreement by Hain
Subsidiary.
1.2 THE MERGER. At the Effective Time (as hereinafter defined), Hain
Subsidiary shall be merged with and into the Company as provided herein.
Thereupon, the corporate existence of the Company, subject to Section 2.1
hereof, with all its purposes, powers and objects, shall continue unaffected and
unimpaired by the Merger, and the corporate identity and existence, with all the
purposes, powers and
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objects, of Hain Subsidiary shall be merged with and into the Company and the
Company as the corporation surviving the Merger (hereinafter sometimes referred
to as the "SURVIVING CORPORATION") shall continue its corporate existence under
the laws of the State of Delaware. The name of the Surviving Corporation shall
be Celestial Seasonings, Inc.
1.3 CLOSING. The closing of the Merger (the "CLOSING") will take place at
10:00 a.m., New York time, on the later of July 1, 2000 or the date that is no
later than the second business day after satisfaction of the conditions set
forth in Article IX, unless another time or date is agreed to in writing by the
parties hereto (the "CLOSING DATE"). The Closing will be held at the offices of
Cahill Gordon & Reindel, 80 Pine Street, New York, New York, unless another
place is agreed to in writing by the parties hereto.
1.4 FILING. Subject to the provisions of this Agreement, on the Closing
Date, the parties hereto will cause to be filed with the office of the Secretary
of State of the State of Delaware, a certificate of merger (the "CERTIFICATE OF
MERGER"), in such form as required by, and executed in accordance with, the
relevant provisions of the DGCL.
1.5 EFFECTIVE TIME OF THE MERGER. The Merger shall be effective at the
time that the filing of the Certificate of Merger, or at such later time
specified in such Certificate of Merger, which time is herein sometimes referred
to as the "EFFECTIVE TIME" and the date thereof is herein sometimes referred to
as the "EFFECTIVE DATE."
ARTICLE II
CERTIFICATE OF INCORPORATION; BY-LAWS; DIRECTORS AND OFFICERS
2.1 CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of the
Company shall be amended and restated, effective at the Effective Time, in the
form set forth in EXHIBIT A hereto. The Certificate of Incorporation of the
Company, as so amended and restated, shall be the Certificate of Incorporation
of the Surviving Corporation.
2.2 BY-LAWS. The By-Laws of Hain Subsidiary shall be the By-Laws of the
Surviving Corporation until the same shall thereafter be altered, amended or
repealed in accordance with the laws of the State of Delaware, the Certificate
of Incorporation of the Surviving Corporation or said By-Laws.
2.3 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The directors and
officers of Hain Subsidiary immediately prior to the Effective Time shall be the
directors and officers of the Surviving Corporation, each to hold office in
accordance with the Certificate of Incorporation and By-laws of the Surviving
Corporation and until their respective successors are duly elected or appointed
and qualified.
2.4 BOARD OF DIRECTORS OF HAIN. (a) COMPOSITION. After the Effective Time,
the Board of Directors of Hain (the "HAIN BOARD") shall be comprised of no less
than eleven directors, including (i) six directors to be designated by Hain
consistent with past practices, (ii) one director to be designated by Earth's
Best, Inc., or its successor ("EB") and one director to be jointly designated by
Hain and EB, each in accordance with a certain Investor's Agreement dated
September 24, 1999 by and among Hain, EB and Irwin D. Simon and (iii) three
directors to be designated as set forth in Section 2.4(b).
(b) COMPANY DESIGNEES. Hain agrees to take all action necessary such that
from and after the Effective Time until the next regularly scheduled meeting of
Hain's stockholders, the Hain Board shall include (i) three directors designated
by the Company (the "COMPANY DESIGNEES") and thereafter to use commercially
reasonable efforts to cause such nominees designated by the Company to be
included in each slate of proposed directors put forth by Hain to its
stockholders and recommended for election in any proxy solicitation materials
disseminated by Hain; PROVIDED, HOWEVER, that the identity of any Company
Designees other than (i) Mo Seigel, (ii) Marina Hahn and (iii) either of Ronald
V. Davis or
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Gregg A. Ostrander shall be reasonably acceptable to Hain. Upon the death,
resignation or removal of any Company Designee, Hain will use its best efforts
to have the vacancy filled by a subsequent designee recommended by the remaining
Company Designees then serving on the Hain Board (subject to the preceding
sentence). Hain shall use commercially reasonable efforts to nominate the
Company Designees for a period of two years from the Effective Time. The Company
Designees shall be fully covered by any directors' and officers' liability
insurance maintained from time to time on the same terms as the other members of
the Hain Board, shall be entitled to the benefit of any indemnification
arrangements applicable to the other members of the Hain Board and shall have
the right to receive all fees paid and options and other awards granted and
expenses reimbursed to non-employee directors generally.
(c) CHAIRMAN AND VICE-CHAIRMAN OF THE HAIN BOARD. Hain agrees to take all
action necessary such that from and after the Effective Time Irwin D. Simon
shall be elected as the Chairman and Mo Seigel shall be elected as the
Vice-Chairman of the Board of Directors of Hain, each to serve in accordance
with Hain's certificate of incorporation and by-laws.
ARTICLE III
EFFECT OF THE MERGER; CONVERSION OF SHARES
3.1 EFFECT ON CAPITAL STOCK. As of the Effective Time, by virtue of the
Merger and without any action on the part of any holders of Company Shares or
any shares of capital stock of Hain Subsidiary:
(a) HAIN SUBSIDIARY COMMON STOCK. Each share of capital stock of Hain
Subsidiary issued and outstanding immediately prior to the Effective Time shall
be converted into one validly issued, fully paid and nonassessable share of
common stock of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK. Each Company Share (including the
associated Rights) that is owned by the Company or by any subsidiary of the
Company shall automatically be canceled and retired and shall cease to exist,
and no shares of common stock, par value $.01 per share, of Hain ("the "HAIN
COMMON STOCK"), cash or other consideration shall be delivered in exchange
therefor.
(c) CONVERSION OF COMPANY SHARES. Subject to Section 3.2(e), each issued and
outstanding Company Share (including the associated Rights) (other than shares
to be canceled in accordance with Section 3.1(b)) (collectively, the "EXCHANGING
COMPANY SHARES") shall be converted into the right to receive 1.265 (the
"EXCHANGE RATIO") shares of Hain Common Stock (the "MERGER CONSIDERATION"). As
of the Effective Time, all such Exchanging Company Shares shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate representing any Exchanging Company
Shares shall cease to have any rights with respect thereto, except the right to
receive the Merger Consideration and any cash in lieu of fractional shares of
Hain Common Stock to be issued or paid in consideration therefor upon surrender
of such certificate in accordance with Section 3.2, without interest.
3.2 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. From and after the Effective Time, Hain shall make
available to Continental Stock Transfer & Trust Company or such other bank or
trust company designated by Hain (the "EXCHANGE AGENT"), for the benefit of the
holders of Company Shares, for exchange in accordance with this Article III
through the Exchange Agent, certificates evidencing a sufficient number of
shares of Hain Common Stock issuable to holders of Company Shares to satisfy the
requirements set forth in Section 3.1 relating to Merger Consideration (such
shares of Hain Common Stock, together with any cash deposited with the Exchange
Agent relating to Additional Payments (as hereinafter defined) being hereinafter
referred to as the "EXCHANGE FUND"). As promptly as practicable after the
Effective Time, Hain shall cause the Exchange Agent to deliver the Merger
Consideration and Additional Payments, if any, contemplated to be issued
pursuant to Section 3.1 out of the Exchange Fund in accordance with
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the procedures specified in this Section 3.2. Except as contemplated by
Section 3.2(g) hereof, the Exchange Fund shall not be used for any other
purpose.
(b) EXCHANGE PROCEDURES. As promptly as practicable after the Effective
Time, Hain shall cause the Exchange Agent to mail to each record holder of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding Company Shares (the "CERTIFICATES") (i) a letter of
transmittal (which shall be in customary form and shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon proper delivery of the Certificates to the Exchange Agent) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for the Merger Consideration.
(c) EXCHANGE OF CERTIFICATES. Upon surrender to the Exchange Agent of a
Certificate for cancellation, together with such letter of transmittal, duly
executed and completed in accordance with the instructions thereto, and such
other documents as may be reasonably required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of whole shares of Hain Common Stock, if
any, constituting Merger Consideration to which such holder is entitled pursuant
to this Article III (including any cash in lieu of any fractional shares of Hain
Common Stock to which such holder is entitled pursuant to Section 3.2(f) and any
dividends or other distributions to which such holder is entitled pursuant to
Section 3.2(d) (together, the "ADDITIONAL PAYMENTS")), and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of ownership
of Company Shares which is not registered in the transfer records of the
Company, the applicable Merger Consideration and Additional Payments, if any,
may be issued to a transferee if the Certificate representing such Company
Shares is presented to the Exchange Agent, accompanied by all documents required
to evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this
Section 3.2, each Certificate shall be deemed at all times after the Effective
Time to represent only the right to receive upon such surrender the applicable
Merger Consideration with respect to the Company Shares formerly represented
thereby and Additional Payments, if any.
(d) DISTRIBUTIONS WITH RESPECT TO UNSURRENDERED CERTIFICATES. No dividends
or other distributions declared or made after the Effective Time with respect to
Hain Common Stock with a record date after the Effective Time shall be paid to
the holder of any unsurrendered Certificate with respect to Hain Common Stock
the holder thereof is entitled to receive upon surrender thereof, and no cash
payment in lieu of any fractional shares shall be paid to any such holder
pursuant to Section 3.2(f), until the holder of such Certificate shall surrender
such Certificate. Subject to the effect of escheat, tax or other applicable
Laws, following surrender of any such Certificate, there shall be paid to the
holder of the certificates representing whole shares of Hain Common Stock issued
in exchange therefor, without interest, (i) promptly, the amount of any cash
payable with respect to fractional Hain Common Stock to which such holder is
entitled pursuant to Section 3.2(f) and the amount of dividends or other
distributions with a record date after the Effective Time and theretofore paid
with respect to such whole shares of Hain Common Stock, and (ii) at the
appropriate payment date, the amount of dividends or other distributions, with a
record date after the Effective Time but prior to surrender and a payment date
occurring after surrender, payable with respect to such whole Hain Common Stock.
After the Effective Time, each outstanding Certificate which theretofore
represented Company Shares shall, until surrendered for exchange in accordance
with this Section 3.2, be deemed for all purposes to evidence ownership of the
number of shares of Hain Common Stock into which the Company Shares (which,
prior to the Effective Time, were represented thereby) shall have been so
converted.
(e) NO FURTHER RIGHTS IN COMPANY SHARES. At the Effective Time all
outstanding Company Shares, by virtue of the Merger and without any action on
the part of the holders thereof, shall no longer be outstanding and shall be
canceled and retired and shall cease to exist, and each holder of a certificate
representing any such Company Shares shall thereafter cease to have any rights
with respect to such Company Shares, except the right to receive the Merger
Consideration for such Company Shares. All Hain Common Stock constituting Merger
Consideration issued upon conversion of the Company
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Shares in accordance with the terms hereof (including any cash paid pursuant to
Section 3.2(d) or (f)) shall be deemed to be validly issued, fully paid and
nonassessable and to have been issued or paid, as the case may be, in full
satisfaction of all rights pertaining to such Company Shares.
(f) NO FRACTIONAL SHARES. No fractional shares of Hain Common Stock shall be
issued in the Merger. In lieu of any such fractional shares, each holder of
Company Shares, who would otherwise have been entitled to a fraction of Hain
Common Stock pursuant to this Article III, will be entitled to receive an amount
of cash rounded to the nearest cent (without interest) determined by multiplying
the fair market value of a share of Company Common Stock (as determined by the
Company's Board of Directors at the Effective Time) by the fractional share
interest to which such holder would otherwise have been entitled. The parties
acknowledge that payment of the cash consideration in lieu of issuing fractional
shares was not separately bargained for consideration but merely represents a
mechanical rounding for purposes of simplifying the corporate and accounting
complexities which would otherwise be caused by the issuance of fractional
shares.
(g) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund which
remains undistributed to the holders of Company Shares for one year after the
Effective Time shall be delivered to Hain (who shall thereafter act as Exchange
Agent), upon demand, and any holders of Company Shares who have not theretofore
complied with this Article III shall thereafter look only to Hain for the
applicable Merger Consideration and any Additional Payments to which they are
entitled. To the extent permitted by applicable law, any portion of the Exchange
Fund remaining unclaimed by holders of Company Shares as of a date which is
immediately prior to such time as such amounts would otherwise escheat to or
become property of any government entity shall, on the third anniversary of the
Effective Date and to the extent permitted by applicable law, become the
property of Hain free and clear of any claims or interest of any person
previously entitled thereto.
(h) NO LIABILITY. None of the Exchange Agent, Hain or the Surviving
Corporation shall be liable to any holder of Certificates for any shares of Hain
Common Stock (or dividends or distributions with respect thereto), or cash
delivered to a public official pursuant to any abandoned property, escheat or
similar law.
(i) WITHHOLDING RIGHTS. Each of the Surviving Corporation and Hain shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Certificates such amounts as it is
required to deduct and withhold with respect to the making of such payment under
the Code, or any provision of state, local or foreign tax law. To the extent
that amounts are so withheld by the Surviving Corporation or Hain, as the case
may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Certificates in respect of
which such deduction and withholding was made by the Surviving Corporation or
Hain, as the case may be.
(j) LOST CERTIFICATES. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation or Hain, the posting by such person of a bond, in such
reasonable amount as the Surviving Corporation or Hain may direct, as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the applicable Merger Consideration and Additional Payments, if any.
(k) ANTI-DILUTION. The Exchange Ratio shall be adjusted to reflect fully the
effect of any stock split, reverse split, stock dividend (including any dividend
or distribution of securities convertible into Company Shares or Hain Common
Stock, as applicable), extraordinary dividend, reorganization, recapitalization
or any other like change with respect to Company Shares or Hain Common Stock
occurring after the date hereof and prior to the Effective Time. References to
the Exchange Ratio elsewhere in this Agreement shall be deemed to refer to the
Exchange Ratio as it may have been adjusted pursuant to this Section 3.2(k).
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3.3 STOCK TRANSFER BOOKS. At the Effective Time, the stock transfer books
of the Company shall be closed and there shall be no further registration of
transfers of Company Shares thereafter on the records of the Company. On or
after the Effective Time, any Certificates presented to the Exchange Agent or
Hain for any reason shall be converted into the applicable Merger Consideration
and Additional Payments, if any.
ARTICLE IV
CERTAIN EFFECTS OF THE MERGER
4.1 EFFECT OF THE MERGER. The effects and consequences of the Merger shall
be as set forth in Section 259 of the DGCL. Without limiting the generality of
the foregoing on and after the Effective Time and pursuant to the DGCL, the
Surviving Corporation shall possess all the rights, privileges, immunities,
powers, and purposes of each of Hain Subsidiary and the Company; all the
property, real and personal, including subscriptions to shares, causes of action
and every other asset (including books and records) of Hain Subsidiary and the
Company shall vest in the Surviving Corporation without further act or deed; and
the Surviving Corporation shall assume and be liable for all the liabilities,
obligations and penalties of Hain Subsidiary and the Company; PROVIDED, HOWEVER,
that this shall in no way impair or affect the indemnification obligations of
any party pursuant to the indemnification provisions of this Agreement. No
liability or obligation due or to become due and no claim or demand for any
cause existing against either Hain Subsidiary or the Company, or any
stockholder, officer or director thereof, shall be released or impaired by the
Merger, and no action or proceeding, whether civil or criminal, then pending by
or against Hain Subsidiary or the Company, or any stockholder, officer or
director thereof, shall abate or be discontinued by the Merger, but may be
enforced, prosecuted, settled or compromised as if the Merger had not occurred,
and the Surviving Corporation may be substituted in any such action or
proceeding in place of Hain Subsidiary or the Company.
4.2 FURTHER ASSURANCES. If at any time after the Effective Time, any
further action is necessary or desirable to carry out the purposes of this
Agreement and to vest the Surviving Corporation with full right, title and
possession to all assets, property, rights, privileges, powers and franchises of
either of Hain Subsidiary or the Company, the officers of such corporation are
fully authorized in the name of their corporation or otherwise to take, and
shall take, all such further action.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Hain as follows:
5.1 ORGANIZATION AND QUALIFICATION. Each of the Company and its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted. Each of the Company and its
subsidiaries 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 or leased or the nature of its activities makes such qualification
necessary, except for failures to be so qualified or in good standing which
would not, individually or in the aggregate, have a material adverse effect on
the general affairs, management, business, operations, condition (financial or
otherwise) or prospects of the Company and its subsidiaries, taken as a whole (a
"COMPANY MATERIAL ADVERSE EFFECT"). SECTION 5.1 of the Disclosure Schedule sets
forth, with respect to the Company and each of its subsidiaries, each of the
jurisdictions in which they are incorporated or qualified or otherwise licensed
as a foreign corporation to do business. Neither the Company nor any of its
subsidiaries is in violation of any of the provisions of its certificate or
articles of incorporation or organization (or other applicable charter document)
or
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by-laws. The Company has delivered to Hain accurate and complete copies of the
certificate or articles of incorporation or organization (or other applicable
charter document) and by-laws, as currently in effect, of each of the Company
and its subsidiaries.
5.2 CAPITAL STOCK OF SUBSIDIARIES. The only direct or indirect
subsidiaries of the Company are those listed in SECTION 5.2 of the Disclosure
Schedule. The Company is directly or indirectly the record and beneficial owner
of all of the outstanding shares of capital stock of each of its subsidiaries,
and all of such shares so owned by the Company are validly issued, fully paid
and nonassessable and are owned by it free and clear of any claim, lien or
encumbrance of any kind with respect thereto.
5.3 CAPITALIZATION. The authorized capital stock of the Company consists
of 15,000,000 shares of Company Common Stock and 1,000,000 shares of preferred
stock, par value $.01 per share. As of March 1, 2000, 8,412,197 shares of
Company Common Stock are issued and outstanding, 17,800 shares are issued and
held as treasury shares and no shares of preferred stock are issued and
outstanding. All of such issued and outstanding shares of Company Common Stock
are validly issued, fully paid and nonassessable and free of preemptive rights.
SECTION 5.3 of the Disclosure Schedule sets forth all outstanding options,
warrants or other rights, whether or not exercisable, to acquire any shares of
Company Common Stock or any other equitable interest in the Company, and, in the
case of outstanding options, identifies the Company stock plan or other Company
benefit plan under which such options were granted. Except as set forth in
SECTION 5.3 of the Disclosure Schedule, and except with respect to plans and
agreements described in Section 8.15(e) of this Agreement, the Company's
obligations under the Rights Agreement and the transactions contemplated by this
Agreement, neither the Company nor any of its subsidiaries is a party to any
agreement or understanding, oral or written, which (a) grants an option, warrant
or other right to acquire shares of Company Common Stock or any other equitable
interest in the Company, (b) grants a right of first refusal or other such
similar right upon the sale of Company Common Stock, or (c) restricts or affects
the voting rights of Company Common Stock. There is no liability for dividends
declared or accumulated but unpaid with respect to any Company Common Stock.
5.4 AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has corporate power
and authority to execute and deliver this Agreement and to consummate the Merger
and other transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the Merger and other transactions contemplated
hereby have been duly and validly authorized by the Board of Directors of the
Company and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the Merger or other
transactions contemplated hereby (other than as contemplated by this Agreement,
including the approval of the Company's stockholders pursuant to the DGCL). This
Agreement has been duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery hereof by Hain,
constitutes a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms, except to the extent that its
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of creditors'
rights generally or by general equitable or fiduciary principles.
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5.5 NO VIOLATIONS, ETC.
(a) Assuming that all filings, permits, authorizations, consents and
approvals or waivers thereof have been duly made or obtained as contemplated by
Section 5.5(b) hereof, except as set forth in SECTION 5.5 of the Disclosure
Schedule, neither the execution and delivery of this Agreement by the Company
nor the consummation of the Merger or other transactions contemplated hereby nor
compliance by the Company with any of the provisions hereof will (i) violate,
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination or suspension of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of the Company or any
of its subsidiaries under, any of the terms, conditions or provisions of
(x) their respective certificate or articles of incorporation or organization or
by-laws, (y) any note, bond, mortgage, indenture or deed of trust, or (z) any
license, lease, agreement or other instrument or obligation to which the Company
or any such subsidiary is a party or to which they or any of their respective
properties or assets may be subject, or (ii) violate any judgment, ruling,
order, writ, injunction, decree, statute, rule or regulation applicable to the
Company or any of its subsidiaries or any of their respective properties or
assets, except, in the case of clauses (i)(z) and (ii) above, for such
violations, conflicts, breaches, defaults, terminations, suspensions,
accelerations, rights of termination or acceleration or creations of liens,
security interests, charges or encumbrances which would not, individually or in
the aggregate, either have a Company Material Adverse Effect or materially
impair the Company's ability to consummate the Merger or other transactions
contemplated hereby.
(b) No filing or registration with, notification to and no permit,
authorization, consent or approval of any governmental entity (including,
without limitation, any federal, state or local regulatory authority or agency)
is required by the Company in connection with the execution and delivery of this
Agreement or the consummation by the Company of the Merger or other transactions
contemplated hereby, except (i) in connection with the applicable requirements
of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR ACT"), (ii) the filing of the Certificate of Merger, (iii) the approval of
the Company's stockholders pursuant to the DGCL, (iv) filings with the
Securities and Exchange Commission (the "SEC") and (v) such other filings,
registrations, notifications, permits, authorizations, consents or approvals the
failure of which to be obtained, made or given would not, individually or in the
aggregate, either have a Company Material Adverse Effect or materially impair
the Company's ability to consummate the Merger or other transactions
contemplated hereby.
(c) As of the date hereof, none of the Company or any of its subsidiaries is
in violation of or default under (x) its respective certificate or articles of
incorporation or organization or by-laws, (y) any note, bond, mortgage,
indenture or deed of trust, or (z) any license, lease, agreement or other
instrument or obligation to which the Company or any such subsidiary is a party
or to which they or any of their respective properties or assets may be subject,
except, in the case of clauses (y) and (z) above, for such violations or
defaults which would not, individually or in the aggregate, either have a
Company Material Adverse Effect or materially impair the Company's ability to
consummate the Merger or other transactions contemplated hereby.
5.6 COMMISSION FILINGS; CONSOLIDATED FINANCIAL STATEMENTS. (a) The Company
has filed all required forms, reports and documents with the SEC since
September 30, 1996, including, in the form filed with the SEC, together with any
amendments thereto, (i) its Annual Report on Form 10-K for the fiscal year ended
September 30, 1999 (the "COMPANY 10-K"), (ii) all proxy statements relating to
the Company's meetings of stockholders (whether annual or special) held since
September 30, 1999 (the "COMPANY CURRENT PROXIES"), (iii) its Quarterly Report
on Form 10-Q for the fiscal quarter ended December 31, 1999 (the "COMPANY
DECEMBER 1999 10-Q" and, together with the Company 10-K and the Company Current
Proxies, the "COMPANY CURRENT SEC REPORTS") and (iv) all other reports or
registration statements filed by the Company with the SEC since September 30,
1996 (collectively, the
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"COMPANY SEC REPORTS") with the SEC, all of which complied when filed in all
material respects with all applicable requirements of the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder (the
"SECURITIES ACT") and the Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the "EXCHANGE ACT"). The audited
consolidated financial statements and unaudited consolidated interim financial
statements of the Company and its subsidiaries included or incorporated by
reference in such Company SEC Reports were prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and present fairly,
in all material respects, the financial position and results of operations and
cash flows of the Company and its subsidiaries on a consolidated basis at the
respective dates and for the respective periods indicated (and in the case of
all such financial statements that are interim financial statements, contain all
adjustments so to present fairly). Except to the extent that information
contained in any Company SEC Report was revised or superseded by a later filed
Company SEC Report, none of the Company SEC Reports contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. The Company has
provided to Hain copies of all other correspondence sent to or received from the
SEC by the Company and its subsidiaries since September 30, 1996 (other than
cover letters).
(b) The Company has provided to Hain true and complete copies of the
unaudited consolidated balance sheet of the Company at February 19, 2000 (the
"FEBRUARY BALANCE SHEET") and the unaudited consolidated statements of income,
stockholders' equity and cash flow of the Company for the period from
December 26, 1999 through February 19, 2000 (collectively, the "FEBRUARY
FINANCIALS"). The February Financials fairly present, in all material respects,
the financial position of the Company at February 19, 2000, and the results of
operations of the Company for the period then ended, and have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis, except that such financial statements will not include any footnote
disclosures that might otherwise be required to be included by generally
accepted accounting principles, and shall also be subject to normal
non-recurring year-end audit adjustments. The February Balance Sheet reflects
all liabilities of the Company, whether absolute, accrued or contingent, as of
the date thereof of the type required to be reflected or disclosed on a balance
sheet prepared in accordance with generally accepted accounting principles
(applied in a manner consistent with the notes of the financial statements
included in the Company 10-K).
5.7 ABSENCE OF CHANGES OR EVENTS. Except as set forth in the Company
Current SEC Reports, since the date of the Company 10-K:
(a) there has been no material adverse change, or any development involving
a prospective material adverse change, in the general affairs, management,
business, operations, condition (financial or otherwise) or prospects of the
Company and its subsidiaries taken as a whole;
(b) there has not been any direct or indirect redemption, purchase or other
acquisition of any shares of capital stock of the Company or any of its
subsidiaries, or any declaration, setting aside or payment of any dividend or
other distribution by the Company or any of its subsidiaries in respect of its
capital stock;
(c) except in the ordinary course of its business and consistent with past
practice, neither the Company nor any of its subsidiaries has incurred any
indebtedness for borrowed money, or assumed, guaranteed, endorsed or otherwise
as an accommodation become responsible for the obligations of any other
individual, firm or corporation, or made any loans or advances to any other
individual, firm or corporation;
(d) there has not been any change in the financial or the accounting
methods, principles or practices of the Company or its subsidiaries;
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(e) except in the ordinary course of business and for amounts which are not
material, there has not been any revaluation by the Company or any of its
subsidiaries of any of their respective assets, including, without limitation,
writing down the value of inventory or writing off notes or accounts
receivables;
(f) there has not been any damage, destruction or loss, whether covered by
insurance or not, except for such as would not, individually or in the
aggregate, have a Company Material Adverse Effect; and
(g) there has not been any agreement by the Company or any of its
subsidiaries to (i) do any of the things described in the preceding clauses
(a) through (f) other than as expressly contemplated or provided for in this
Agreement or (ii) take, whether in writing or otherwise, any action which, if
taken prior to the date of this Agreement, would have made any representation or
warranty in this Article V untrue or incorrect.
5.8 JOINT PROXY STATEMENT. None of the information supplied or to be
supplied by or on behalf of the Company for inclusion or incorporation by
reference in the registration statement to be filed with the SEC by Hain in
connection with the issuance of shares of Hain Common Stock in the Merger (the
"REGISTRATION STATEMENT") will, at the time the Registration Statement becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. None of the information supplied or to be
supplied by or on behalf of the Company for inclusion or incorporation by
reference in the joint proxy statement/ prospectus, in definitive form, relating
to the Company Stockholder Meeting (as hereinafter defined) and the Hain
Stockholder Meeting (as hereinafter defined), or in the related proxy and notice
of meeting, or soliciting material used in connection therewith (referred to
herein collectively as the "JOINT PROXY STATEMENT") will, at the dates mailed to
stockholders and at the time of the Company Stockholder Meeting and the Hain
Stockholder Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. The Company will promptly inform Hain of the happening of
any event prior to the Effective Time which would render such information
regarding the Company incorrect in any material respect or require the amendment
of the Joint Proxy Statement. The Joint Proxy Statement (except for information
relating solely to Hain and Hain Subsidiary) will comply as to form in all
material respects with the provisions of the Securities Act and the Exchange
Act.
5.9 LITIGATION. Except as set forth in the Company Current SEC Reports,
there is no (i) claim, action, suit or proceeding pending or, to the best
knowledge of the Company or any of its subsidiaries, threatened against or
relating to the Company or any of its subsidiaries before any court or
governmental or regulatory authority or body or arbitration tribunal, or
(ii) outstanding judgment, order, writ, injunction or decree, or application,
request or motion therefor, of any court, governmental agency or arbitration
tribunal in a proceeding to which the Company, any subsidiary of the Company or
any of their respective assets was or is a party except, in the case of clauses
(i) and (ii) above, such as would not, individually or in the aggregate, either
have a Company Material Adverse Effect or materially impair the Company's
ability to consummate the Merger or the other transactions contemplated hereby.
5.10 PROPERTY AND LEASES. Except as set forth in the Company Current SEC
Reports, the Company and its subsidiaries have good and marketable title to all
real properties and all other properties and assets owned by them, in each case
free from liens, encumbrances and defects that would materially affect the value
thereof or materially interfere with the use made or to be made thereof by them;
and except as set forth in the Company Current SEC Reports, the Company and its
subsidiaries hold any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere with the
use made or to be made thereof by them.
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5.11 EMPLOYMENT AND LABOR CONTRACTS. Neither the Company nor any of its
subsidiaries is a party to any employment, management services, consultation or
other similar contract with any past or present officer, director or employee
or, to the best knowledge of the Company, any entity affiliated with any past or
present officer, director or employee other than those included as exhibits in
the Company SEC Reports and other than the agreements executed by employees
generally, the forms of which have been delivered to Hain. Notwithstanding the
foregoing, SECTION 5.11 of the Disclosure Schedule identifies any such agreement
containing an agreement with respect to any change of control, severance or
termination benefit or any obligation on the part of the Company that could be
triggered by the Merger.
5.12 LABOR MATTERS. Each of the Company and its subsidiaries is in
compliance in all material respects with all applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, and neither the Company nor any of its subsidiaries is engaged
in any unfair labor practice which would have a Company Material Adverse Effect.
There is no labor strike, material slowdown or material stoppage pending (or, to
the knowledge of the Company, any labor strike or stoppage threatened) against
or affecting the Company or any of its subsidiaries. No petition for
certification has been filed and is pending before the National Labor Relations
Board with respect to any employees of the Company or any of its subsidiaries
who are not currently organized. No employee of the Company or its subsidiaries
is represented by a labor union or similar organization and, to the Company's
knowledge, there exist no ongoing discussions between the employees of the
Company or its subsidiaries and any labor union or similar organization relating
to the representation of such employees by such labor union or similar
organization.
5.13 COMPLIANCE WITH LAW. Neither the Company nor any of its subsidiaries
has violated or failed to comply with any statute, law, ordinance, regulation,
rule or order of any foreign, federal, state or local government or any other
governmental department or agency (including, without limitation, any required
by the Food and Drug Administration or the Nutrition Labeling and Education Act
of 1990), or any judgment, decree or order of any court, applicable to its
business or operations, except where any such violation or failure to comply
would not, individually or in the aggregate, have a Company Material Adverse
Effect or materially impair the Company's ability to consummate the Merger or
the other transactions contemplated hereby; the conduct of the business of each
of the Company and its subsidiaries is in conformity with all foreign, federal,
state and local requirements, and all other foreign, federal, state and local
governmental and regulatory requirements, except where such nonconformities
would not, individually or in the aggregate, have a Company Material Adverse
Effect or materially impair the Company's ability to consummate the Merger or
the other transactions contemplated hereby. The Company and its subsidiaries
have all permits, licenses and franchises from governmental agencies required to
conduct their businesses as now being conducted, except for such permits,
licenses and franchises the absence of which would not, individually or in the
aggregate, have a Company Material Adverse Effect or materially impair the
Company's ability to consummate the Merger or the other transactions
contemplated hereby.
5.14 BOARD RECOMMENDATION. The Board of Directors of the Company has, by
unanimous vote at meetings of such board duly held on March 4, 2000, approved
and adopted this Agreement and the Merger, determined that the Merger is fair to
the stockholders of the Company, recommended that the stockholders of the
Company approve and adopt this Agreement and the Merger and rescinded any stock
repurchase program previously approved by the Board of Directors of the Company.
5.15 INTELLECTUAL PROPERTY. The Company has provided to Hain a complete
and accurate list of all of the trademarks (whether or not registered) and
trademark registrations and applications used by the Company and its
subsidiaries. Except as would not, individually or in the aggregate, have a
Company Material Adverse Effect, (i) each of the Company and its subsidiaries
has or owns, directly or indirectly, all right, title and interest to the
trademarks (whether or not registered) and trademark registrations and
applications, patent and patent applications, copyrights and copyright
applications,
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service marks, service mark registrations and applications, trade dress, trade
and product names (collectively, the "INTELLECTUAL PROPERTY") used by the
Company and its subsidiaries. Except as would not, individually or in the
aggregate, have a Company Material Adverse Effect, (i) each of the Company and
its subsidiaries has or owns, directly or indirectly, all right, title and
interest to such Intellectual Property or has the perpetual right to use such
Intellectual Property without consideration; none of the rights of the Company
and its subsidiaries in or use of such Intellectual Property has been or is
currently being or, to the knowledge of the Company, is threatened to be
infringed or challenged; (ii) all of the patents, trademark registrations,
service mark registrations, trade name registrations and copyright registrations
included in such Intellectual Property have been duly issued and have not been
canceled, abandoned or otherwise terminated; (iii) all of the patent
applications, trademark applications, service mark applications, trade name
applications and copyright applications included in such Intellectual Property
have been duly filed; and (iv) to the knowledge of the Company, the Company and
its subsidiaries own or have adequate licenses or other rights to use all
Intellectual Property, know-how and technical information required for their
operation.
5.16 TAXES. (i) The Company and each of its subsidiaries have prepared and
timely filed or will timely file with the appropriate governmental agencies all
Tax Returns (as hereinafter defined) required to be filed for any period (or
portion thereof) ending on or before the Effective Time, taking into account any
extension of time to file granted to or obtained on behalf of the Company and/or
its subsidiaries, and each such Tax Return is complete and accurate in all
material respects; (ii) the Company and each of its subsidiaries have timely
paid or will timely pay all Taxes (as hereinafter defined) due and payable by
them through the Effective Time and have made or will make adequate accruals for
any Taxes attributable to any taxable period or portion thereof of the Company
and/or its subsidiaries ending on or prior to the Effective Time that are not
yet due and payable; (iii) all asserted deficiencies or assessments resulting
from examinations of any Tax Returns filed by the Company or any of its
subsidiaries have been paid or finally settled and no issue previously raised by
any taxing authority reasonably could be expected to result in a proposed
deficiency or assessment for any prior, parallel or subsequent period (including
periods subsequent to the Effective Date); (iv) no deficiency in respect of
Taxes has been asserted or assessed against the Company or any of its
subsidiaries, and no examination of the Company or any of its subsidiaries is
pending or, to the best knowledge of the Company, threatened by any taxing
authority; (v) no extension of the period for assessment or collection of any
Tax of the Company or its subsidiaries is currently in effect and no extension
of time within which to file any Tax Return has been requested, which Tax Return
has not since been filed; (vi) no liens have been filed with respect to any
Taxes of the Company or any of its subsidiaries other than in respect of
property taxes that have accrued but are not yet due and payable; (vii) neither
the Company nor any of its subsidiaries has made, or is or will be required to
make, any adjustment by reason of a change in their accounting methods for any
period (or portion thereof) ending on or before the Effective Time; (viii) the
Company and its subsidiaries have made timely payments of all Taxes required to
be deducted and withheld from the wages paid to their employees and from all
other amounts paid to third parties; (ix) neither the Company nor any of its
subsidiaries is a party to any tax sharing, tax matters, tax indemnification or
similar agreement; (x) neither the Company nor any of its subsidiaries owns any
interest in any "controlled foreign corporation" (within the meaning of
Section 957 of the Code), "passive foreign investment company" (within the
meaning of Section 1296 of the Code) or other entity the income of which may be
required to be included in the income of the Company or such subsidiary whether
or not distributed; (xi) except as set forth in SECTION 5.17(D) of the
Disclosure Schedule, neither the Company nor any of its subsidiaries has made an
election under Section 341(f) of the Code; (xii) neither the Company nor any of
its subsidiaries is a party to any agreement or arrangement that provides for
the payment of any amount, or the provision of any other benefit, that could
constitute a "parachute payment" within the meaning of Section 280G of the Code;
(xiii) no claim has ever been made by an authority in a jurisdiction where the
Company or any of its subsidiaries does not file Tax Returns that such entity is
or may be subject to taxation by that jurisdiction; (xiv) neither the Company
nor any of its subsidiaries has any liability for the Taxes of any
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person under United States Treasury Regulation ("TREAS. REG.") Section 1.1502-6
(or any similar provision of state, local or foreign law), as a transferee or
successor, by contract or otherwise, except for liability arising under Treas.
Reg. Section 1.1502-6 with respect to current members of the Company's
"affiliated group" (as defined in Section 1504 of the Code); (xv) neither the
Company nor any of its subsidiaries has ever had any "undistributed personal
holding company income" (as defined in Section 545 of the Code); (xvi) none of
the assets of the Company or any of its subsidiaries is "tax-exempt use
property" (as defined in Section 168(h)(1) of the Code) or may be treated as
owned by any other person pursuant to Section 168(f)(8) of the Internal Revenue
Code of 1954 (as in effect immediately prior to the enactment of the Tax Reform
Act of 1986); (xvii) neither the Company nor any of its subsidiaries has ever
been a "United States real property holding corporation," within the meaning of
Section 897 of the Code; (xviii) neither the Company nor any of its subsidiaries
has made any elections under Sections 108, 168, 338, 441, 472, 1017, 1033 or
4977 of the Code; (xix) there are no "excess loss accounts" (as defined in
Treas. Reg. Section 1.1502-19) with respect to any stock of any subsidiary;
(xx) neither the Company nor any of its subsidiaries has any (a) deferred gain
or loss (1) arising from any deferred intercompany transactions (as described in
Treas. Reg. SectionSection 1.1502-13 and 1.1502-13T prior to amendment by
Treasury Decision 8597 (issued July 12, 1995) or (2) with respect to the stock
or obligations of any other member of any affiliated group (as described in
Treas. Reg. SectionSection 1.1502-14 and 1.1502-14T prior to amendment by
Treasury Decision 8597) or (b) any gain subject to Treas. Reg.
Section 1.1502-13, as amended by Treasury Decision 8597; (xxi) neither the
Company nor any of its subsidiaries has requested a ruling from, or entered into
a closing agreement with, the IRS or any other taxing authority; and (xxii) the
Company has previously delivered to Hain true and complete copies of (a) all
federal, state, local and foreign income or franchise Tax Returns filed by the
Company and/or any of its subsidiaries for the last three taxable years ending
prior to the date hereof (except for those Tax Returns that have not yet been
filed) and (b) any audit reports issued within the last three years by the IRS
or any other taxing authority.
For all purposes of this Agreement, "TAX" or "TAXES" means (i) all federal,
state, local or foreign taxes, charges, fees, imposts, levies or other
assessments, including, without limitation, all net income, alternative minimum,
gross receipts, capital, sales, use, ad valorem, value added, transfer,
franchise, profits, inventory, capital stock, license, withholding, payroll,
employment, social security, unemployment, excise, severance, stamp, occupation,
property and estimated taxes, customs duties, fees, assessments and charges of
any kind whatsoever, (ii) all interest, penalties, fines, additions to tax or
other additional amounts imposed by any taxing authority in connection with any
item described in clause (i) and (iii) all transferee, successor, joint and
several or contractual liability (including, without limitation, liability
pursuant to Treas. Reg. Section 1.1502-6 (or any similar state, local or foreign
provision)) in respect of any items described in clause (i) or (ii).
For all purposes of this Agreement, "TAX RETURN" means all returns,
declarations, reports, estimates, information returns and statements required to
be filed in respect of any Taxes.
5.17 EMPLOYEE BENEFIT PLANS; ERISA.
(a) The Company has provided to Hain copies of, and related relevant
materials to, all "employee benefit plans" as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, a amended ("ERISA"), stock
option and other stock-based plans, and deferred compensation and other employee
benefit plans, which are maintained by the Company or as to which the Company
has any direct or indirect, actual or contingent liability ("Benefit Plans").
(b) No Benefit Plans are subject to Title IV of ERISA or Section 412 of the
Code. Neither the Company nor any subsidiary of the Company nor any member of
the Company's controlled group under Section 414 of the Code ("COMPANY ERISA
AFFILIATE") has incurred, or is reasonably likely to incur, any material
liability under Title IV of ERISA.
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(c) Except where the failure to comply would not, individually or in the
aggregate, have a Company Material Adverse Effect, or except as set forth in
SECTION 5.17(C) of the Disclosure Schedule: (i) the Company and all Benefit
Plans are in compliance with the applicable provisions of ERISA and the Code;
(ii) with respect to any Benefit Plan subject to Section 412 of the Code, all
contributions required to be made under Section 412 of the Code have been timely
made, and no such plan has incurred an accumulated funding deficiency, whether
or not waived; (iii) each Benefit Plan intended to qualify under Section 401 of
the Code, is so qualified; (iv) with respect to all Benefit Plans, there are no
investigations or claims pending (other than routine claims for benefits);
(v) there have been no prohibited transactions under the Code or ERISA with
respect to any Benefit Plans; (vi) with respect to all Benefit Plans that are
welfare plans (as defined in ERISA Section 3(1)), no such plan provides for
retiree welfare benefits other than COBRA coverage, and all such plans have
complied with the COBRA continuation coverage requirements of Code
Section 4980B; and (vii) the Company has no liability with respect to any plans
providing benefits on a voluntary basis with respect to employees employed
outside the U.S.
(d) Except as set forth in SECTION 5.17(D) of the Disclosure Schedule, the
consummation of the transactions contemplated by this Agreement will not:
(i) entitle any individual to severance pay, (ii) increase or accelerate
compensation due to any individual, or (iii) result in or satisfy a condition to
the payment of compensation that would, in combination with any other payment,
result in an "excess parachute payment" within the meaning of Section 280G(b) of
the Code.
5.18 ENVIRONMENTAL MATTERS. Except as would not, individually or in the
aggregate, have a Company Material Adverse Effect:
(a) Each of the Company and its subsidiaries has obtained (or is capable of
obtaining without incurring any material incremental expense) all Environmental
Permits required in connection with its business and operations and has no
reason to believe any of them will be revoked prior to their expiration,
modified or will not be renewed, and have made all registrations and given all
notifications that are required under Environmental Laws.
(b) There is no Environmental Claim pending, or, to the knowledge of the
Company, threatened against the Company or any of its subsidiaries under
Environmental Laws.
(c) The Company and its subsidiaries are in compliance with and have no
liability under, Environmental Laws, including, without limitation, all of their
Environmental Permits.
(d) Neither the Company nor any of its subsidiaries has assumed, by contract
or otherwise, any liabilities or obligations arising under Environmental Laws.
(e) There are no past or present actions, activities, conditions,
occurrences or events, including, without limitation, the Release or threatened
Release of Hazardous Materials, which could reasonably be expected to prevent
compliance by the Company or any of its subsidiaries with Environmental Laws, or
to result in any liability of the Company or any of its subsidiaries under
Environmental Laws.
(f) No lien has been recorded under Environmental Laws with respect to any
property, facility or asset currently owned by the Company or any of its
subsidiaries.
(g) Neither the Company nor any of its subsidiaries has received any
notification that Hazardous Materials that any of them or any of their
respective predecessors in interest has used, generated, stored, treated,
handled, transported or disposed of has been found at any site at which any
person is conducting or plans to conduct any investigation, remediation,
removal, response or other action pursuant to Environmental Laws.
(h) There is no friable asbestos or asbestos containing material in, on or
at any property, facility or equipment owned, operated or leased by the Company
or any of its subsidiaries.
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(i) No property now or previously owned, operated or leased by the Company
or any of its subsidiaries, or any of their respective predecessors in interest,
is (i) listed or proposed for listing on the National Priorities List
promulgated pursuant to the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended ("CERCLA") or (ii) listed on the
Comprehensive Environmental Response, Compensation, and Liability Information
System List promulgated pursuant to CERCLA, or on any comparable list relating
to the Release of Hazardous Materials established under Environmental Laws.
(j) No underground or above ground storage tank or related piping, or any
surface impoundment, lagoon, landfill or other disposal site containing
Hazardous Materials is located at, under or on any property owned, operated or
leased by the Company or any of its subsidiaries or, to the knowledge of the
Company, any of their respective predecessors in interest, nor has any of them
been removed from or decommissioned or abandoned at any such property.
(k) The Company has delivered or otherwise made available for inspection to
Hain copies of any investigations, studies, reports, assessments, evaluations
and audits in its possession, custody or control of Hazardous Materials at, in,
beneath, emanating from or adjacent to any properties or facilities now or
formerly owned, leased, operated or used by it or any of its subsidiaries or any
of their respective predecessors in interest, or of compliance by any of them
with, or liability of any of them under, Environmental Laws.
For purposes of this Agreement:
(i) "ENVIRONMENT" means any surface water, ground water, drinking water
supply, land surface or subsurface strata, ambient air, indoor air and any
indoor location and all natural resources such as flora, fauna and wetlands;
(ii) "ENVIRONMENTAL CLAIM" means any notice, claim, demand, complaint,
suit or other communication by any person alleging potential liability
(including, without limitation, potential liability for investigation,
remediation, removal, response or corrective action or damages to any
person, property or natural resources, and any fines or penalties) arising
out of or relating to (1) the Release or threatened Release of Hazardous
Materials or (2) any violation, or alleged violation, of Environmental Laws;
(iii) "ENVIRONMENTAL LAWS" means all federal, state, and local laws,
statutes, codes, rules, ordinances, regulations, judgments, orders, decrees
and the common law as now or previously in effect relating to pollution or
protection of human health or the Environment, or occupational health or
safety including, without limitation, those relating to the Release or
threatened Release of Hazardous Materials;
(iv) "HAZARDOUS MATERIALS" means pollutants, contaminants, hazardous or
toxic substances, constituents, materials or wastes, and any other waste,
substance, material, chemical or constituent subject to regulation under
Environmental Laws including, without limitation, petroleum and petroleum
products and wastes, and all constituents thereof;
(v) "RELEASE" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing
in or into the Environment; and
(vi) "ENVIRONMENTAL PERMIT" means a permit, identification number,
license, approval, consent or other written authorization issued pursuant to
Environmental Laws.
5.19 DISCLOSURE. All of the facts and circumstances not required to be
disclosed as exceptions under or to any of the foregoing representations and
warranties made by the Company, in this Article V by reason of any minimum
disclosure requirement in any such representation and warranty would not, in the
aggregate, have a Company Material Adverse Effect or materially impair the
Company's ability to consummate the Merger or the other transactions
contemplated hereby.
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5.20 ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed in the
Company Current SEC Reports, neither the Company nor any of its subsidiaries has
any liabilities or obligations of any nature, whether absolute, accrued,
unmatured, contingent or otherwise, or any unsatisfied judgments or any leases
of personalty or realty or unusual or extraordinary commitments, except the
liabilities recorded on the Company's balance sheet included in the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 1999 and
any notes thereto, and except for liabilities or obligations incurred in the
ordinary course of business and consistent with past practice since
December 31, 1999 that would not individually or in the aggregate have a Company
Material Adverse Effect or materially impair the Company's ability to consummate
the Merger or the other transactions contemplated hereby.
5.21 FINDERS OR BROKERS. Except as set forth in SECTION 5.21 of the
Disclosure Schedule, none of the Company, the subsidiaries of the Company, the
Board of Directors of the Company or any member of the Board of Directors of the
Company has employed any investment banker, broker, finder or intermediary in
connection with the transactions contemplated hereby who might be entitled to a
fee or any commission in connection with the Merger, and SECTION 5.21 of the
Disclosure Schedule sets forth the maximum consideration (present and future)
agreed to be paid to each such party.
5.22 RIGHTS AGREEMENT. The Company has taken all action which may be
necessary under the Rights Agreement, so that the execution of this Agreement
and any amendments thereto by the parties hereto and the consummation of the
transactions contemplated hereby and thereby shall not cause (i) Hain and/or
Hain Subsidiary or their respective affiliates or associates to become an
Acquiring Person (as such term is defined in the Rights Agreement) unless this
Agreement has been terminated in accordance with its terms or (ii) a
Distribution Date, a Stock Acquisition Date (as such terms are defined in the
Rights Agreement) or certain other events (as described in the Rights Agreement)
to occur, irrespective of the number of Company Shares acquired pursuant to the
Merger or other transactions contemplated by this Agreement.
5.23 OPINION OF FINANCIAL ADVISOR. The Company has received the opinion
(the "COMPANY FAIRNESS OPINION") of Goldman, Sachs & Co., dated the date of this
Agreement, to the effect that, as of such date, the Merger Consideration is fair
from a financial point of view to the holders of Company Shares.
5.24 INSURANCE. The Company carries insurance in such amounts and covering
such risks as is reasonable and customary for businesses of the type conducted
by the Company.
5.25 TAX FREE REORGANIZATION. Neither the Company nor, to the Company's
knowledge, any of its affiliates has taken, agreed to take, or will take any
action that would prevent the Merger from constituting a reorganization within
the meaning of Section 368(a) of the Code. Neither the Company nor, to the
Company's knowledge, any of its affiliates is aware of any agreement, plan or
other circumstance that would prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
5.26 FULL DISCLOSURE. As of the date hereof and as of the Closing Date, as
the case may be, all statements contained in any schedule, exhibit, certificate
or other instrument delivered by or on behalf of the Company pursuant to this
Agreement are, or, in respect of any such instrument to be delivered on or prior
to the Closing Date, as of its date and as of the Closing Date will be, accurate
and complete in all material respects, authentic and incorporated herein by
reference and constitute or will constitute the representations and warranties
of the Company. No representation or warranty of the Company contained in this
Agreement contains any untrue statement or omits to state a fact necessary in
order to make the statements herein or therein, in light of the circumstances
under which they were made, not misleading in any material respect.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF HAIN
Hain represents and warrants to the Company that:
6.1 ORGANIZATION AND QUALIFICATION. Each of Hain and its subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Each of Hain and its subsidiaries 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 or leased or the
nature of its activities makes such qualification necessary, except for failures
to be so qualified or in good standing which would not, individually or in the
aggregate, have a material adverse effect on the general affairs, management,
business, operations, condition (financial or otherwise) or prospects of Hain
and its subsidiaries taken as a whole (a "HAIN MATERIAL ADVERSE EFFECT").
Neither Hain nor any of Hain's subsidiaries is in violation of any of the
provisions of its certificate or articles of incorporation or organization or
by-laws. Hain has delivered to the Company accurate and complete copies of the
certificate or articles of incorporation or organization (or other applicable
charter document) and by-laws, as currently in effect, of each of Hain and its
subsidiaries.
6.2 CAPITAL STOCK OF SUBSIDIARIES. The only direct or indirect
subsidiaries of Hain are those listed in SECTION 6.2 of the Disclosure Schedule.
Hain is directly or indirectly the record and beneficial owner of all of the
outstanding shares of capital stock of each of its subsidiaries and, except as
set forth on Section 6.2 of the Disclosure Schedule, all of such shares owned by
Hain are validly issued, fully paid and nonassessable and are owned by it free
and clear of any claim, lien or encumbrance of any kind with respect thereto.
6.3 CAPITALIZATION. The authorized capital stock of Hain consists of
40,000,000 shares of Hain Common Stock and 5,000,000 shares of preferred stock,
par value $.01 per share. As of March 1, 2000, 18,272,703 shares of Common Stock
are issued and outstanding, 100,000 shares are issued and held as treasury
shares and no shares of preferred stock were issued and outstanding. Except as
set forth in SECTION 6.3 of the Disclosure Schedule, all of such issued and
outstanding shares are, and any shares of Hain Common Stock to be issued in
connection with this Agreement, the Merger and the transactions contemplated
hereby will be, validly issued, fully paid and nonassessable and free of
preemptive rights. Except as set forth in SECTION 6.3 of the Disclosure
Schedule, other than the transactions contemplated by this Agreement, neither
Hain nor any of its subsidiaries is a party to any agreement or understanding,
oral or written, which (a) grants a right of first refusal or other such similar
right upon the sale of Hain Common Stock, or (b) restricts or affects the voting
rights of Hain Common Stock. There is no liability for dividends declared or
accumulated but unpaid with respect to any Hain Common Stock.
6.4 AUTHORITY RELATIVE TO THIS AGREEMENT. Hain has corporate power and
authority to execute and deliver this Agreement and to consummate the Merger and
other transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the Merger and other transactions contemplated
hereby have been duly and validly authorized by the Board of Directors of Hain
and no other corporate proceedings on the part of Hain are necessary to
authorize this Agreement or to consummate the Merger or other transactions
contemplated hereby (other than as contemplated by this Agreement, including
with respect to the issuance of shares of Hain Common Stock in the Merger and
the change of Hain's corporate name, the approval of the Hain's stockholders
pursuant to the DGCL). This Agreement has been duly and validly executed and
delivered by Hain and, assuming the due authorization, execution and delivery
hereof by the Company, constitutes a valid
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and binding agreement of Hain, enforceable against Hain in accordance with its
terms, except to the extent that its enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting the
enforcement of creditors' rights generally or by general equitable or fiduciary
principles.
6.5 NO VIOLATIONS, ETC.
(a) Assuming that all filings, permits, authorizations, consents and
approvals or waivers thereof have been duly made or obtained as contemplated by
Section 6.5(b) hereof, except as set forth in SECTION 6.5 of the Disclosure
Schedule, neither the execution and delivery of this Agreement by Hain nor the
consummation of the Merger or other transactions contemplated hereby nor
compliance by Hain with any of the provisions hereof will (i) violate, conflict
with, or result in a breach of any provision of, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a default)
under, or result in the termination or suspension of, or accelerate the
performance required by, or result in a right of termination or acceleration
under, or result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of Hain or any of its
subsidiaries under, any of the terms, conditions or provisions of (x) their
respective certificate or articles of incorporation or organization or by-laws,
(y) any note, bond, mortgage, indenture or deed of trust, or (z) any license,
lease, agreement or other instrument or obligation, to which Hain or any such
subsidiary is a party or to which they or any of their respective properties or
assets may be subject, or (ii) violate any judgment, ruling, order, writ,
injunction, decree, statute, rule or regulation applicable to Hain or any of its
subsidiaries or any of their respective properties or assets, except, in the
case of clauses (i)(z) and (ii) above, for such violations, conflicts, breaches,
defaults, terminations, suspensions, accelerations, rights of termination or
acceleration or creations of liens, security interests, charges or encumbrances
which would not, individually or in the aggregate, either have a Hain Material
Adverse Effect or materially impair the consummation of the Merger or other
transactions contemplated hereby.
(b) No filing or registration with, notification to and no permit,
authorization, consent or approval of any governmental entity (including,
without limitation, any federal, state or local regulatory authority or agency)
is required by Hain, Hain Subsidiary or any of Hain's other subsidiaries in
connection with the execution and delivery of this Agreement or the consummation
by Hain of the Merger or other transactions contemplated hereby, except (i) in
connection with the applicable requirements of the HSR Act, (ii) the filing of
the Certificate of Merger, (iii) the approval of Hain's stockholders pursuant to
the DGCL, (iv) filings with The Nasdaq Stock Market, Inc., (v) filings with the
SEC and state securities administrators, and (vi) such other filings,
registrations, notifications, permits, authorizations, consents or approvals the
failure of which to be obtained, made or given would not, individually or in the
aggregate, either have a Hain Material Adverse Effect or materially impair
Hain's ability to consummate the Merger or other transactions contemplated
hereby.
(c) As of the date hereof, Hain and its subsidiaries are not in violation of
or default under (x) their respective certificates or articles of incorporation
or organization or by-laws, (y) any note, bond, mortgage, indenture or deed of
trust, or (z) any license, lease, agreement or other instrument or obligation to
which Hain or any such subsidiary is a party or to which they or any of their
respective properties or assets may be subject, except, in the case of clauses
(y) and (z) above, for such violations or defaults which would not, individually
or in the aggregate, either have a Hain Material Adverse Effect or materially
impair Hain's ability to consummate the Merger or other transactions
contemplated hereby.
6.6 COMMISSION FILINGS; FINANCIAL STATEMENTS. Hain has filed all required
forms, reports and documents with the SEC since June 30, 1996, including, in the
form filed with the SEC together with any amendments thereto, (i) its Annual
Report on Form 10-K for the fiscal year ended June 30, 1999 (the "HAIN 10-K"),
(ii) all proxy statements relating to Hain's meetings of stockholders (whether
annual
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or special) held since June 30, 1999 (the "HAIN CURRENT PROXIES"), (iii) its
Current Report on Form 8-K dated September 27, 1999 (the "HAIN CURRENT 8-K"),
(iv) its Quarterly Reports on Form 10-Q for the fiscal quarters ended
September 30, 1999 and December 31, 1999 (the "HAIN CURRENT 10-QS") and,
together with the Hain 10-K, the Hain Current Proxies and the Hain Current 8-K,
the "HAIN CURRENT SEC REPORTS") and (iv) all other reports or registration
statements filed by Hain with the SEC since June 30, 1996 (collectively, the
"HAIN SEC REPORTS"), all of which complied when filed in all material respects
with all applicable requirements of the Securities Act and the Exchange Act. The
audited consolidated financial statements and unaudited consolidated interim
financial statements of Hain and its subsidiaries included or incorporated by
reference in such Hain SEC Reports were prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and present fairly,
in all material respects, the financial position and results of operations and
cash flows of Hain and its subsidiaries on a consolidated basis at the
respective dates and for the respective periods indicated (and in the case of
all such financial statements that are interim financial statements, contain all
adjustments so to present fairly). Except to the extent that information
contained in any Hain SEC Report was revised or superseded by a later filed Hain
SEC Report, none of the Hain SEC Reports contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Hain has provided to
the Company or has otherwise disclosed to the Company all other correspondence
sent to or received from the SEC by Hain and its subsidiaries since June 30,
1996 (other than routine cover letters).
6.7 ABSENCE OF CHANGES OR EVENTS. Except as set forth in the Hain Current
SEC Reports, since the date of the Hain 10-K:
(a) there has been no material adverse change, or any development involving
a prospective material adverse change, in the general affairs, management,
business, operations, condition (financial or otherwise) or prospects of Hain
and its subsidiaries taken as a whole;
(b) there has not been any direct or indirect redemption, purchase or other
acquisition of any shares of capital stock of Hain or any of its subsidiaries,
or any declaration, setting aside or payment of any dividend or other
distribution by Hain or any of its subsidiaries in respect of their capital
stock;
(c) except in the ordinary course of its business and consistent with past
practice neither Hain nor any of its subsidiaries has incurred any indebtedness
for borrowed money, or assumed, guaranteed, endorsed or otherwise as an
accommodation become responsible for the obligations of any other individual,
firm or corporation, or made any loans or advances to any other individual, firm
or corporation;
(d) there has not been any change in accounting methods, principles or
practices of Hain or its subsidiaries;
(e) except in the ordinary course of business and for amounts which are not
material, there has not been any revaluation by Hain or any of its subsidiaries
of any of their respective assets, including, without limitation, writing down
the value of inventory or writing off notes or accounts receivables;
(f) there has not been any damage, destruction or loss, whether covered by
insurance or not, except for such as would not, individually or in the
aggregate, have a Hain Material Adverse Effect; and
(g) there has not been any agreement by Hain or any of its subsidiaries to
(i) do any of the things described in the preceding clauses (a) through
(f) other than as expressly contemplated or provided for in this Agreement or
(ii) take, whether in writing or otherwise, any action which, if taken prior to
the date of this Agreement, would have made any representation or warranty in
this Article VI untrue or incorrect.
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6.8 JOINT PROXY STATEMENT. None of the information supplied or to be
supplied by or on behalf of Hain and Hain Subsidiary for inclusion or
incorporation by reference in the Registration Statement will, at the time the
Registration Statement becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. None of the
information supplied or to be supplied by or on behalf of Hain and Hain
Subsidiary for inclusion or incorporation by reference in the Joint Proxy
Statement will, at the dates mailed to stockholders and at the time of the
Company Stockholder Meeting and the Hain Stockholder Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. Hain will promptly
inform the Company of the happening of any event prior to the Effective Time
which would render such information regarding Hain incorrect in any material
respect or require the amendment of the Joint Proxy Statement. The Registration
Statement and the Joint Proxy Statement (except for information relating solely
to the Company) will comply as to form in all material respects with the
provisions of the Securities Act and the Exchange Act.
6.9 LITIGATION. Except as set forth in SECTION 6.9 of the Disclosure
Schedule or the Hain Current SEC Reports, there is no (i) claim, action, suit or
proceeding pending or, to the best knowledge of Hain or any of its subsidiaries,
threatened against or relating to the Company or any of its subsidiaries before
any court or governmental or regulatory authority or body or arbitration
tribunal, or (ii) outstanding judgment, order, writ, injunction or decree, or
application, request or motion therefor, of any court, governmental agency or
arbitration tribunal in a proceeding to which the Company, any subsidiary of the
Company or any of their respective assets was or is a party except, in the case
of clauses (i) and (ii) above, such as would not, individually or in the
aggregate, either have a Hain Material Adverse Effect or materially impair
Hain's ability to consummate the Merger or the other transactions contemplated
hereby.
6.10 PROPERTY AND LEASES. Except as set forth in the Hain Current SEC
Reports, Hain and its subsidiaries have good and marketable title to all real
properties and all other properties and assets owned by them, in each case free
from liens, encumbrances and defects that would materially affect the value
thereof or materially interfere with the use made or to be made thereof by them;
and except as set forth in the Hain Current SEC Reports, Hain and its
subsidiaries hold any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere with the
use made or to be made thereof by them.
6.11 LABOR MATTERS. Each of Hain and its subsidiaries is in compliance in
all material respects with all applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and hours,
and neither Hain nor any of its subsidiaries is engaged in any unfair labor
practice which would have a Hain Material Adverse Effect. There is no labor
strike, material slowdown or material stoppage pending (or, to the knowledge of
Hain, any labor strike or stoppage threatened) against or affecting Hain or any
of its subsidiaries. No petition for certification has been filed and is pending
before the National Labor Relations Board with respect to any employees of Hain
or any of its subsidiaries who are not currently organized. Except as set forth
in Section 6.11 of the Disclosure Schedule or the Hain Current SEC Reports, no
employee of Hain or its subsidiaries is represented by a labor union or similar
organization and, to Hain's knowledge, there exist no ongoing discussions
between the employees of Hain or its subsidiaries and any labor union or similar
organization relating to the representation of such employees by such labor
union or similar organization.
6.12 COMPLIANCE WITH LAW. Except as set forth in SCHEDULE 6.12 of the
Disclosure Schedule, neither Hain nor any of its subsidiaries has violated or
failed to comply with any statute, law, ordinance, regulation, rule or order of
any foreign, federal, state or local government or any other
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governmental department or agency (including, without limitation, any required
by the Food and Drug Administration or the Nutrition Labeling and Education Act
of 1990), or any judgment, decree or order of any court, applicable to its
business or operations, except where any such violation or failure to comply
would not, individually or in the aggregate, have a Hain Material Adverse Effect
or materially impair Hain's ability to consummate the Merger or the other
transactions contemplated hereby; the conduct of the business of each of Hain
and its subsidiaries is in conformity with all foreign, federal, state and local
requirements, and all other foreign, federal, state and local governmental and
regulatory requirements, except where such nonconformities would not,
individually or in the aggregate, have a Hain Material Adverse Effect or
materially impair Hain's ability to consummate the Merger or the other
transactions contemplated hereby. Hain and its subsidiaries have all permits,
licenses and franchises from governmental agencies required to conduct their
businesses as now being conducted, except for such permits, licenses and
franchises the absence of which would not, individually or in the aggregate,
have a Hain Material Adverse Effect or materially impair Hain's ability to
consummate the Merger or the other transactions contemplated hereby.
6.13 BOARD RECOMMENDATION. The Board of Directors of Hain has, by
unanimous vote at a meeting of such board duly held on March 2, 2000, approved
and adopted this Agreement, the Merger and the other transactions contemplated
hereby (including, without limitation, the issuance of Hain Common Stock as a
result of the Merger and the change of Hain's corporate name to The Hain
Celestial Group, Inc.), determined that the Merger is fair to the holders of
shares of Hain Common Stock, recommended that the stockholders of Hain approve
the issuance of shares of Hain Common Stock in the Merger, the change of Hain's
corporate name and rescinded any stock repurchase program previously approved by
the Hain Board.
6.14 INTELLECTUAL PROPERTY. Except as would not, individually or in the
aggregate, have a Hain Material Adverse Effect, (i) each of Hain and its
subsidiaries has or owns, directly or indirectly, all right, title and interest
to such Intellectual Property or has the perpetual right to use such
Intellectual Property without consideration; none of the rights of Hain and its
subsidiaries in or use of such Intellectual Property has been or is currently
being or, to the knowledge of Hain, is threatened to be infringed or challenged;
(ii) all of the patents, trademark registrations, service mark registrations,
trade name registrations and copyright registrations included in such
Intellectual Property have been duly issued and have not been canceled,
abandoned or otherwise terminated; (iii) all of the patent applications,
trademark applications, service mark applications, trade name applications and
copyright applications included in such Intellectual Property have been duly
filed; and (iv) to the knowledge of Hain, Hain and its subsidiaries own or have
adequate licenses or other rights to use all Intellectual Property, know-how and
technical information required for their operation.
6.15 TAXES. Except as would not, individually or in the aggregate, have a
Hain Material Adverse Effect, (i) Hain and each of its subsidiaries have
prepared and timely filed or will timely file with the appropriate governmental
agencies all Tax Returns (as hereinafter defined) required to be filed for any
period (or portion thereof ending on or before the Effective Time), taking into
account any extension of time to file granted to or obtained on behalf of Hain
and/or its subsidiaries, and each such Tax Return is complete and accurate in
all material respects; (ii) Hain and each of its subsidiaries have timely paid
or will timely pay all Taxes (as hereinafter defined) due and payable by them
through the Effective Time and have made or will make adequate accruals for any
Taxes attributable to any taxable period or portion thereof of Hain and/or its
subsidiaries ending on or prior to the Effective Time that are not yet due and
payable; (iii) all asserted deficiencies or assessments resulting from
examinations of any Tax Returns filed by Hain or any of its subsidiaries have
been paid or finally settled and no issue previously raised by any taxing
authority reasonably could be expected to result in a proposed deficiency or
assessment for any prior, parallel or subsequent period (including periods
subsequent to the Effective Date); (iv) no deficiency in respect of Taxes has
been asserted or assessed against Hain or any of its subsidiaries, and no
examination of Hain or any of its subsidiaries is pending or, to the best
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knowledge of Hain, threatened by any taxing authority; (v) no extension of the
period for assessment or collection of any Tax of Hain or its subsidiaries is
currently in effect and no extension of time within which to file any Tax Return
has been requested, which Tax Return has not since been filed; (vi) no liens
have been filed with respect to any Taxes of Hain or any of its subsidiaries
other than in respect of property taxes that have accrued but are not yet due
and payable; (vii) neither Hain nor any of its subsidiaries has made, or is or
will be required to make, any adjustment by reason of a change in their
accounting methods for any period (or portion thereof) ending on or before the
Effective Time; (viii) Hain and its subsidiaries have made timely payments of
all Taxes required to be deducted and withheld from the wages paid to their
employees and from all other amounts paid to third parties; and (ix) Hain has
previously made available to the Company true and complete copies of (a) all
federal, state, local and foreign income or franchise Tax Returns filed by Hain
and/or any of its subsidiaries for the last three taxable years ending prior to
the date hereof (except for those Tax Returns that have not yet been filed) and
(b) any audit reports issued within the last three years by the IRS or any other
taxing authority.
6.16 DISCLOSURE. All of the facts and circumstances not required to be
disclosed as exceptions under or to any of the foregoing representations and
warranties made by Hain by reason of any minimum disclosure requirement in any
such representation and warranty would not, in the aggregate, have a Hain
Material Adverse Effect or materially impair Hain's ability to consummate the
Merger or the transactions contemplated hereby.
6.17 ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed in the Hain
Current SEC Reports, neither Hain nor any of its subsidiaries has any
liabilities or obligations of any nature, whether absolute, accrued, unmatured,
contingent or otherwise, or any unsatisfied judgments or any leases of
personalty or realty or unusual or extraordinary commitments, except the
liabilities recorded on Hain's balance sheet included in Hain's Quarterly Report
on Form 10-Q for the fiscal quarter ended December 31, 1999 and any notes
thereto, and except for liabilities or obligations incurred in the ordinary
course of business and consistent with past practice since December 31, 1999
that would not individually or in the aggregate have a Hain Material Adverse
Effect or materially impair Hain's ability to consummate the Merger or the
transactions contemplated hereby.
6.18 FINDERS OR BROKERS. Except as set forth in SECTION 6.18 of the
Disclosure Schedule, none of Hain, the subsidiaries of Hain, the Board of
Directors of Hain or any member of the Board of Directors of Hain has employed
any investment banker, broker, finder or intermediary in connection with the
transactions contemplated hereby who might be entitled to a fee or any
commission in connection with of the Merger, and SECTION 6.18 of the Disclosure
Schedule sets forth the maximum consideration (present and future) agreed to be
paid to each such party.
6.19 OPINION OF FINANCIAL ADVISOR. Hain has received the opinion (the
"HAIN FAIRNESS OPINION") of Bear, Stearns & Co. Inc., dated the date of this
Agreement, to the effect that as of such date, the Exchange Ratio is fair from a
financial point of view to Hain.
6.20 ENVIRONMENTAL MATTERS. Except as would not, individually or in the
aggregate, have a Hain Material Adverse Effect:
(a) Each of Hain and its subsidiaries has obtained (or is capable of
obtaining without incurring any material incremental expense) all Environmental
Permits required in connection with its business and operations and has no
reason to believe any of them will be revoked prior to their expiration,
modified or will not be renewed, and have made all registrations and given all
notifications that are required under Environmental Laws.
(b) There is no Environmental Claim pending, or, to the knowledge of Hain,
threatened against Hain or any of its subsidiaries under Environmental Laws.
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(c) Hain and its subsidiaries are in compliance with and have no liability
under, Environmental Laws, including, without limitation, all of their
Environmental Permits.
(d) Neither Hain nor any of its subsidiaries has assumed, by contract or
otherwise, any liabilities or obligations arising under Environmental Laws.
(e) There are no past or present actions, activities, conditions,
occurrences or events, including, without limitation, the Release or threatened
Release of Hazardous Materials, which could reasonably be expected to prevent
compliance by Hain or any of its subsidiaries with Environmental Laws, or to
result in any liability of Hain or any of its subsidiaries under Environmental
Laws.
(f) No lien has been recorded under Environmental Laws with respect to any
property, facility or asset currently owned by Hain or any of its subsidiaries.
(g) Neither Hain nor any of its subsidiaries has received any notification
that Hazardous Materials that any of them or any of their respective
predecessors in interest has used, generated, stored, treated, handled,
transported or disposed of has been found at any site at which any person is
conducting or plans to conduct any investigation, remediation, removal, response
or other action pursuant to Environmental Laws.
(h) No property now or previously owned, operated or leased by Hain or any
of its subsidiaries, or any of their respective predecessors in interest, is
(i) listed or proposed for listing on the National Priorities List promulgated
pursuant to CERCLA or (ii) listed on the Comprehensive Environmental Response,
Compensation, and Liability Information System List promulgated pursuant to
CERCLA, or on any comparable list relating to the Release of Hazardous Materials
established under Environmental Laws.
(i) Hain has delivered or otherwise made available for inspection to the
Company copies of any investigations, studies, reports, assessments, evaluations
and audits in its possession, custody or control of Hazardous Materials at, in,
beneath, emanating from or adjacent to any properties or facilities now or
formerly owned, leased, operated or used by it or any of its subsidiaries or any
of their respective predecessors in interest, or of compliance by any of them
with, or liability of any of them under, Environmental Laws.
6.21 EMPLOYEE BENEFIT PLANS; ERISA. Neither Hain nor any subsidiary of
Hain nor any member of Hain's controlled group under Section 414 of the Code
("HAIN ERISA AFFILIATE") has incurred, or is reasonably likely to incur any
material liability under Title IV of ERISA. Neither Hain nor any subsidiary of
Hain nor any Hain ERISA Affiliate has incurred any material accumulated funding
deficiency, whether or not waived, within the meaning of Section 302 of ERISA or
Section 412 of the Code.
6.22 INSURANCE. Hain carries insurance in such amounts and covering such
risks as is reasonable and customary for businesses of the type conducted by
Hain.
6.23 TAX FREE REORGANIZATION. None of Hain, Hain Subsidiary or any
affiliate of Hain has taken, agreed to take, or will take any action that would
prevent the Merger from constituting a reorganization within the meaning of
Section 368(a) of the Code. None of Hain, Hain Subsidiary or any affiliate of
Hain is aware of any agreement, plan or other circumstance that would prevent
the Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
6.24 FULL DISCLOSURE. As of the date hereof and as of the Closing Date, as
the case may be, all statements contained in any schedule, exhibit, certificate
or other instrument delivered by or on behalf of Hain pursuant to this Agreement
are, or, in respect of any such instrument to be delivered on or prior to the
Closing Date, as of its date and as of the Closing Date will be, accurate and
complete in all material respects, authentic and incorporated herein by
reference and constitute or will constitute the representations and warranties
of Hain. No representation or warranty of Hain contained in this Agreement
contains any untrue statement or omits to state a fact necessary in order to
make the statements herein or therein, in light of the circumstances under which
they were made, not misleading in any material respect.
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ARTICLE VII
CONDUCT OF BUSINESS OF
THE COMPANY AND HAIN PENDING THE MERGER
7.1 CONDUCT OF BUSINESS OF THE COMPANY PENDING THE MERGER. Except as
contemplated by this Agreement or as expressly agreed to in writing by Hain,
during the period from the date of this Agreement to the Effective Time, each of
the Company and its subsidiaries will conduct their respective operations
according to its ordinary course of business consistent with past practice, and
will use all commercially reasonable efforts to keep intact its business
organization, to keep available the services of its officers and employees and
to maintain satisfactory relationships with suppliers, distributors, customers
and others having business relationships with it and will take no action which
would materially impair the ability of the parties to consummate the Merger or
the other transactions contemplated by this Agreement. Without limiting the
generality of the foregoing, and except as otherwise expressly provided in this
Agreement, prior to the Effective Time, the Company will not nor will it permit
any of its subsidiaries to, without the prior written consent of Hain, which
consent shall not be unreasonably withheld or delayed:
(a) amend its certificate or articles of incorporation or organization or
by-laws;
(b) authorize for issuance, issue, sell, deliver, grant any options for, or
otherwise agree or commit to issue, sell or deliver any shares of any class of
its capital stock or any securities convertible into shares of any class of its
capital stock (except for the exercise of currently outstanding stock options
and except pursuant to the 1994 Non-Employee Director Compensation Plan pursuant
to elections currently in effect);
(c) split, combine or reclassify any shares of its capital stock, declare,
set aside or pay any dividend or other distribution (whether in cash, stock or
property or any combination thereof) in respect of its capital stock or
purchase, redeem or otherwise acquire any shares of its own capital stock or of
any of its subsidiaries, except as otherwise expressly provided in this
Agreement;
(d) (i) create, incur, assume, maintain or permit to exist any debt for
borrowed money other than under existing lines of credit in the ordinary course
of business consistent with past practice; (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person except for its wholly owned
subsidiaries in the ordinary course of business and consistent with past
practices and subclause (i) above; (iii) make any loans, advances or capital
contributions to, or investments in, any other person, except loans, advances,
capital contributions or investments not to exceed $50,000 in the aggregate; or
(iv) pledge or otherwise encumber shares of capital stock of the Company or its
subsidiaries;
(e) (i) increase in any manner the compensation of (x) any employee except
in the ordinary course of business consistent with past practice or (y) except
under the terms of any agreement in existence on the date hereof, any of its
directors or officers; (ii) pay or agree to pay any pension, retirement
allowance or other employee benefit not required, or enter into or agree to
enter into any agreement or arrangement with such director or officer or
employee, whether past or present, relating to any such pension, retirement
allowance or other employee benefit, except as required under currently existing
agreements, plans or arrangements or to extend employee benefits upon
termination in the ordinary course of business consistent with past practice;
(iii) grant any severance or termination pay to, or enter into any employment or
severance agreement with, (x) any employee except in the ordinary course of
business consistent with past practice or (y) except under the terms of any
agreement or policy in existence on the date hereof, any of its directors or
officers; or (iv) except as may be required to comply with applicable law,
become obligated (other than pursuant to any new or renewed collective
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bargaining agreement) under any new pension plan, welfare plan, multiemployer
plan, employee benefit plan, benefit arrangement, or similar plan or
arrangement, which was not in existence on the date hereof, including any bonus,
incentive, deferred compensation, stock purchase, stock option, stock
appreciation right, group insurance, severance pay, retirement or other benefit
plan, agreement or arrangement, or employment or consulting agreement with or
for the benefit of any person, or amend any of such plans or any of such
agreements in existence on the date hereof; PROVIDED, HOWEVER, that the Company
may enter into agreements with its employees in order to provide incentives to
such employees to continue to remain as employees of the Company at least
through the Effective Time, so long as the aggregate cost to the Company of such
agreements shall not exceed $500,000 in the aggregate and PROVIDED, FURTHER,
that the Company consults with Hain prior to entering into any such agreements;
(f) except as otherwise expressly contemplated by this Agreement, enter into
any other agreements, commitments or contracts in excess of $50,000 in the
aggregate, except agreements, commitments or contracts in the ordinary course of
business consistent with past practice;
(g) authorize, recommend, propose or announce an intention to authorize,
recommend or propose, or enter into any agreement in principle or an agreement
with respect to, any plan of liquidation or dissolution, any acquisition of a
material amount of assets (other than in the ordinary course of business) or
securities, any sale, transfer, lease, license, pledge, mortgage, or other
disposition or encumbrance of a material amount of assets (other than in the
ordinary course of business) or securities or any material change in its
capitalization, or any entry into a material contract or any amendment or
modification of any material contract or any release or relinquishment of any
material contract rights;
(h) authorize any new capital expenditure or expenditures in excess of
$50,000 in the aggregate, other than expenditures that were included in the
Company's capital expenditure budget for the current fiscal year, which is
attached in Section 7.1 of the Disclosure Schedule;
(i) make any change in the accounting methods or accounting practices
followed by the Company;
(j) settle or compromise any material federal, state, local or foreign Tax
liability, make any new material Tax election, revoke or modify any existing Tax
election, or request or consent to a change in any method of Tax accounting;
(k) take, cause or permit to be taken any action, whether before or after
the Effective Date, that could reasonably be expected to prevent the Merger from
constituting a "reorganization" within the meaning of Section 368(a) of the
Code;
(l) waive, amend or otherwise alter the Rights Agreement or redeem the
Rights, except as contemplated by this Agreement;
(m) knowingly do any act or omit to do any act that would result in a breach
of any representation by the Company set forth in this Agreement; or
(n) agree to do any of the foregoing.
7.2 CONDUCT OF BUSINESS OF HAIN PENDING THE MERGER. Except as contemplated
by this Agreement or as expressly agreed to in writing by the Company, during
the period from the date of this Agreement to the Effective Time, each of Hain
and its subsidiaries will use all commercially reasonable efforts to keep
substantially intact its business, properties and business relationships and
will take no action which would materially adversely affect the ability of the
parties to consummate the transactions contemplated by this Agreement. Without
limiting the generality of the foregoing, and except as otherwise expressly
provided in this Agreement, prior to the Effective Time, Hain will not nor will
it
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permit any of its subsidiaries to, without the prior written consent of the
Company, which consent shall not be unreasonably withheld or delayed:
(a) amend its certificate of incorporation or by-laws except as set forth in
this Agreement;
(b) split, combine or reclassify any shares of its capital stock, declare,
set aside or pay any dividend or other distribution (whether in cash, stock or
property or any combination thereof) in respect of its capital stock or
purchase, redeem or otherwise acquire any shares of its own capital stock or of
any of its subsidiaries, except as otherwise expressly provided in this
Agreement;
(c) authorize, recommend, propose or announce an intention to authorize,
recommend or propose, or enter into any agreement in principle or an agreement
with respect to, any plan of liquidation or dissolution or any sale or
disposition of a material amount of its assets (other than in the ordinary
course of business; or
(d) take, cause or permit to be taken any action, whether before or after
the Effective Date, that could reasonably be expected to prevent the Merger from
constituting a "reorganization" within the meaning of Section 368(a) of the
Code:
(e) knowingly do any act or omit to do any act that would result in a breach
of any representation by Hain set forth in this Agreement; or
(f) agree to do any of the foregoing.
ARTICLE VIII
COVENANTS AND AGREEMENTS
8.1 PREPARATION OF THE REGISTRATION STATEMENT; STOCKHOLDER MEETING.
(a) As soon as practicable following the date of this Agreement, the Company
and Hain shall prepare and file with the SEC the Registration Statement, in
which the Joint Proxy Statement shall be included. Each of the Company and Hain
shall use commercially reasonable efforts to have the Registration Statement
declared effective under the Securities Act as promptly as practicable after
such filing. The Joint Proxy Statement shall include the recommendation of the
Board of Directors of the Company in favor of approval and adoption of this
Agreement and the Merger, except to the extent the Board of Directors of the
Company shall have withdrawn or modified its approval or recommendation of this
Agreement or the Merger as permitted by Section 8.6, and the recommendation of
the Board of Directors of Hain in favor of approval of the issuance of Hain
Common Stock in the Merger. In addition, the Joint Proxy Statement will include
an amendment to Hain's Certificate of Incorporation changing the name of Hain to
The Hain Celestial Group, Inc. The Company shall use commercially reasonable
efforts to cause the Joint Proxy Statement to be mailed to its stockholders, and
Hain shall use commercially reasonable efforts to cause the Joint Proxy
Statement to be mailed to its stockholders, in each case as promptly as
practicable after the Registration Statement becomes effective.
(b) The Company and Hain shall make all necessary filings with respect to
the Merger and the transactions contemplated thereby under the Securities Act
and the Exchange Act and applicable state blue sky laws and the rules and
regulations thereunder. Hain shall also take any action required to be taken
under any applicable state securities laws in connection with the issuance of
Hain Common Stock in the Merger. No filing of, or amendment or supplement to,
the Registration Statement will be made by Hain without providing the Company
and its counsel the opportunity to review and comment thereon. Hain will advise
the Company, promptly after it receives notice thereof, of the time when the
Registration Statement has become effective or any supplement or amendment has
been filed, the issuance of any stop order, the suspension of the qualification
of the Hain Common Stock issuable in
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connection with the Merger for offering or sale in any jurisdiction, or any
request by the SEC for amendment of the Registration Statement or comments
thereon and responses thereto or requests by the SEC for additional information.
If at any time prior to the Effective Time any information relating to the
Company or Hain, or any of their respective affiliates, officers or directors,
should be discovered by the Company or Hain which should be set forth in an
amendment or supplement to any of the Registration Statement, so that any of
such documents would not include any misstatement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, the party which
discovers such information shall promptly notify the other parties hereto and an
appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by law, disseminated to
the stockholders of the Company and Hain.
(c) The Company shall, as soon as practicable following the effectiveness of
the Registration Statement, duly call, give notice of, convene and hold a
meeting of its stockholders (the "COMPANY STOCKHOLDER MEETING") for the purpose
of obtaining the approval and adoption (the "COMPANY STOCKHOLDER APPROVAL") of
the stockholders of the Company of this Agreement and the Merger and shall,
through its Board of Directors, recommend to its stockholders the approval and
adoption of this Agreement and the Merger, and shall use all commercially
reasonable efforts to solicit from its stockholders proxies in favor of approval
and adoption of this Agreement and the Merger; PROVIDED, HOWEVER, that such
recommendation is subject to Section 8.6 hereof.
(d) Hain shall, as soon as practicable following the effectiveness of the
Registration Statement, duly call, give notice of, convene and hold a meeting of
its stockholders (the "HAIN STOCKHOLDER MEETING") for the purpose of obtaining
the approval (the "HAIN STOCKHOLDER APPROVAL") of the stockholders of Hain of
the issuance of shares of Hain Common Stock in the Merger and shall, through its
Board of Directors, recommend to its stockholders the issuance of shares of Hain
Common Stock in the Merger, and shall use all commercially reasonable efforts to
solicit from its stockholders proxies in favor of the issuance of shares of Hain
Common Stock in the Merger.
8.2 LETTERS AND CONSENTS OF THE COMPANY'S ACCOUNTANTS. The Company shall
use all commercially reasonable efforts to cause to be delivered to Hain all
consents required from the Company's independent accountants necessary to effect
the registration of the Hain Common Stock and make any required filing with the
SEC in connection with the Merger and the transactions contemplated thereby.
8.3 LETTERS AND CONSENTS OF HAIN'S ACCOUNTANTS. Hain shall use all
commercially reasonable efforts to cause to be delivered to Hain all consents
required from its independent accountants necessary to effect the registration
of the Hain Common Stock and make any required filing with the SEC in connection
with the Merger and the transactions contemplated thereby.
8.4 ADDITIONAL AGREEMENTS; COOPERATION.
(a) Subject to the terms and conditions herein provided, each of the parties
hereto agrees to use commercially reasonable efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things necessary, proper
or advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement, and to cooperate with each other in
connection with the foregoing, including using commercially reasonable efforts
(i) to obtain all necessary waivers, consents and approvals from other parties
to loan agreements, material leases and other material contracts that are
specified in SECTION 8.4 to the Disclosure Schedule, (ii) to obtain all
necessary consents, approvals and authorizations as are required to be obtained
under any federal, state or foreign law or regulations, (iii) to defend all
lawsuits or other legal proceedings challenging this Agreement or the
consummation of the transactions contemplated hereby, (iv) to lift or rescind
any injunction or restraining order or other order adversely affecting the
ability of the parties to consummate the transactions contemplated hereby,
(v) to effect all necessary registrations and filings, including, but not
limited to, filings under the HSR Act and submissions of information requested
by
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governmental authorities, (vi) provide all necessary information for the
Registration Statement and (vii) to fulfill all conditions to this Agreement.
(b) Each of the Company and Hain will supply each other with copies of all
correspondence, filings or communications (or memoranda setting forth the
substance thereof) between it or its representatives, on the one hand, and the
Federal Trade Commission and the Antitrust Division of the United States
Department of Justice, on the other hand, with respect to this Agreement, the
Merger and the other transactions contemplated hereby. Each of the parties
hereto agrees to furnish to the other party hereto such necessary information
and reasonable assistance as such other party may request in connection with its
preparation of necessary filings or submissions to any regulatory or
governmental agency or authority, including, without limitation, any filing
necessary under the provisions of the HSR Act or any other applicable Federal or
state statute.
8.5 PUBLICITY. The Company and Hain agree to consult with each other in
issuing any press release and with respect to the general content of other
public statements with respect to the transactions contemplated hereby, and
shall not issue any such press release prior to such consultation, except as may
be required by law.
8.6 NO SOLICITATION.
(a) The Company agrees that it shall not, nor shall it permit any of its
subsidiaries to, nor shall it authorize any officer, director or employee or any
investment banker, attorney, accountant, agent or other advisor or
representative of the Company or any of its subsidiaries to, (i) solicit,
initiate or knowingly encourage the submission of any Takeover Proposal (as
hereinafter defined), (ii) enter into any agreement with respect to a Takeover
Proposal or (iii) participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to, any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Takeover Proposal; PROVIDED, HOWEVER, that to the extent required by the
fiduciary obligations of the Board of Directors of the Company, as determined in
good faith by a majority of the members thereof (after consultation with outside
legal counsel), the Company may, in response to unsolicited requests therefor,
participate in discussions or negotiations with, or furnish information pursuant
to a confidentiality agreement no less favorable to such party in all material
respects than the confidentiality agreement between the Company and Hain dated
December 21, 1999 (the "CONFIDENTIALITY AGREEMENT") to, any person who indicates
a willingness to make a Superior Proposal (as hereinafter defined). For all
purposes of this Agreement, "TAKEOVER PROPOSAL" means any proposal for a merger,
consolidation, share exchange, business combination or other similar transaction
involving the Company or any of its Significant Subsidiaries (as hereinafter
defined) or any proposal or offer to acquire, directly or indirectly, 25% or
more of any class of equity securities in, 25% or more of any voting securities
of, or 25% or more of the assets of, the Company or any of its Significant
Subsidiaries. The Company shall cease and cause to be terminated all existing
discussions or negotiations with any persons conducted heretofore with respect
to, or that could reasonably be expected to lead to, any Takeover Proposal. As
used herein, a "SIGNIFICANT SUBSIDIARY" means any subsidiary of the Company that
would constitute a "SIGNIFICANT SUBSIDIARY" within the meaning of Rule 1-02 of
Regulation S-X of the SEC.
(b) Except to the extent permitted below, neither the Board of Directors of
the Company nor any committee thereof shall (i) withdraw or modify, in a manner
adverse to Hain, the approval or recommendation by the Board of Directors of the
Company or any such committee of this Agreement or the Merger or (ii) approve or
recommend, or propose to approve or recommend, any Takeover Proposal.
Notwithstanding the foregoing, (i) the Board of Directors of the Company, to the
extent required by its fiduciary obligations and subject to Section 10.2(b)
hereof, as determined in good faith by a majority of the members thereof (after
consultation with outside legal counsel), may approve or recommend a Superior
Proposal (and, in connection therewith, withdraw or modify its approval or
recommendation of this Agreement or the Merger) and (ii) nothing contained in
this Agreement shall
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prevent the Board of Directors of the Company from complying with Rule 14d-9 and
Rule 14e-2 promulgated under the Exchange Act with regard to a Takeover
Proposal. For all purposes of this Agreement, "SUPERIOR PROPOSAL" means a bona
fide written proposal made by a third party to acquire the Company pursuant to a
tender or exchange offer, a merger, a share exchange, a sale of all or
substantially all its assets or otherwise on terms which a majority of the
members of the Board of Directors of the Company determines in good faith
(taking into account the advice of any independent financial advisors) to be
more favorable to the Company and its stockholders than the Merger (and any
revised proposal made by Hain) and for which financing, to the extent required,
is then fully committed or reasonably determined to be likely to be available by
the Board of Directors of the Company.
(c) The Company shall notify Hain promptly (but in no event later than the
next business day) after receipt by the Company (or its advisors) of any
Takeover Proposal or any request for nonpublic information in connection with a
Takeover Proposal or for access to the properties, books or records of the
Company by any person or entity that informs the Company or its advisors that it
is considering making, or has made, a Takeover Proposal. Such notice to shall
indicate the identity of the person making the Takeover Proposal, inquiry or
contact, and the material terms and conditions of the Takeover Proposal, inquiry
or contact.
8.7 ACCESS TO INFORMATION.
(a) From the date of this Agreement until the Effective Time, each of the
Company and Hain, after reasonable notice, will give the other party and its
authorized representatives (including counsel, environmental and other
consultants, accountants and auditors) reasonable access during normal business
hours to all facilities, personnel and operations and to all books and records
of it and its subsidiaries, will permit the other party to make such inspections
as it may reasonably require and will cause its officers and those of its
subsidiaries, after reasonable notice, to furnish the other party with such
financial and operating data and other information with respect to its business
and properties as such party may from time to time reasonably request.
Notwithstanding the foregoing, nothing in this Section 8.7 shall require either
the Company or Hain to provide access or information if withholding such
disclosure is reasonably determined by the disclosing party's Board of Directors
to be required by fiduciary duties.
(b) All documents and information furnished pursuant to this agreement shall
be subject to the terms and conditions set forth in the Confidentiality
Agreement. This provision shall survive any termination of this Agreement.
8.8 NOTIFICATION OF CERTAIN MATTERS. Prior to the Effective Time, the
Company or Hain, as the case may be, shall promptly notify the other of (i) its
obtaining of actual knowledge as to the matters set forth in clauses (x) and
(y) below, or (ii) the occurrence, or failure to occur, of any event, which
occurrence or failure to occur would be likely to cause (x) any representation
or warranty contained in this Agreement to be untrue or inaccurate in any
material respect at any time from the date hereof to the Effective Time, or
(y) any material failure of the Company or Hain, as the case may be, or of any
officer, director, employee or agent thereof, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement; PROVIDED, HOWEVER, that no such notification shall affect the
representations or warranties of the parties or the conditions to the
obligations of the parties hereunder.
8.9 RESIGNATION OF DIRECTORS. At or prior to the Effective Time, the
Company shall deliver to Hain the resignations of such directors of the
Company's subsidiaries as Hain shall specify, effective at the Effective Time.
8.10 INDEMNIFICATION AND INSURANCE. For a period of ten (10) years after
the Effective Time, (a) Hain and the Surviving Corporation shall maintain in
effect the current provisions regarding indemnification of officers and
directors contained in the certificate of incorporation and by-laws of the
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Company and each of its subsidiaries and any directors, officers or employees
indemnification agreements of the Company and its subsidiaries, (b) for a period
of six (6) years after the Effective Time, Hain and the Surviving Corporation
shall maintain in effect the current policies of directors' and officers'
liability insurance and fiduciary liability insurance maintained by the Company
(provided that Hain may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions which are, in the
aggregate, no less advantageous to the insured in any material respect) with
respect to claims arising from facts or events which occurred on or before the
Effective Time, and (c) for a period of ten (10) years after the Effective Time,
Hain and the Surviving Corporation shall indemnify the directors and officers of
the Company to the fullest extent to which Hain or the Surviving Corporation is
permitted to indemnify such officers and directors under its certificate of
incorporation and by-laws and the DGCL.
8.11 FEES AND EXPENSES. Subject to Section 10.2, whether or not the Merger
is consummated, the Company and Hain shall bear their respective expenses
incurred in connection with the Merger, including, without limitation, the
preparation, execution and performance of this Agreement and the transactions
contemplated hereby, and all fees and expenses of investment bankers, finders,
brokers, agents, representatives, counsel and accountants, except that Hain
shall bear and pay 66.6% and the Company shall bear and pay 33.3% of the costs
and expenses incurred in connection with the filing, printing and mailing of the
Joint Proxy Statement (including SEC filing fees).
8.12 AFFILIATES AND POOLING AGREEMENTS. The Company shall use commercially
reasonable efforts to cause each person who is, at the time this Agreement is
submitted for adoption by the stockholders of the Company, an "affiliate" of the
Company for purposes of Rule 145 under the Securities Act, to deliver to Hain as
of the Closing Date, a written agreement substantially in the form attached as
EXHIBIT B hereto. Hain agrees that, after the Effective Time, it will not take
any action, and will not permit the Surviving Corporation to take any action,
that would prohibit Hain from accounting for the Merger as a "pooling of
interests."
8.13 NASDAQ LISTING. Hain shall cause the Hain Common Stock to be issued
in connection with the Merger to be approved for listing on the National Market
System of The Nasdaq Stock Market, Inc., subject to official notice of issuance,
prior to the Closing Date.
8.14 STOCKHOLDER LITIGATION. Each of the Company and Hain shall give the
other the reasonable opportunity to participate in the defense of any
stockholder litigation against or in the name of the Company or Hain, as
applicable, and/or their respective directors relating to the transactions
contemplated by this Agreement.
8.15 COMPANY EMPLOYEES.
(a) From and after the Effective Time, Hain and the Surviving Corporation
will honor and assume, in accordance with their terms, all existing written
employment agreements between the Company and any officer, director, or employee
of the Company. Hain shall treat employment by the Company prior to the
Effective Time the same as employment with Hain for purposes of vesting and
eligibility under any employment benefit plan of Hain and its subsidiaries,
including the Surviving Corporation.
(b) Hain confirms that it is Hain's intention that, until the first
anniversary of the Effective Time, subject to applicable law, Hain and the
Surviving Corporation will provide salary and benefits to employees of the
Company who continue to be employed by the Company after the Effective Time
("CONTINUING EMPLOYEES") which will, in the aggregate, be substantially
equivalent, in the aggregate, to those currently provided by the Company to its
employees. Notwithstanding the foregoing, nothing in this Agreement shall
otherwise limit the Surviving Corporation's right to amend, modify or terminate
any employee benefit plan or arrangement. Hain agrees that any person employed
by the Company at the Effective Time whose employment is terminated by the
Surviving Corporation on or prior to the
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first anniversary of the Effective Time shall be provided severance benefits
substantially equivalent, in the aggregate, to those currently provided under
the Company's severance policies.
(c) Prior to the Effective Time, unless such action will effect the "pooling
of interest" accounting treatment of the Merger, the Company will terminate the
Employee Stock Ownership Plan of the Company ("ESOP") and will vest all
participants in accordance with the terms of the ESOP. To the extent that shares
of Company Common Stock held by the ESOP have not been distributed to
participants prior to the Closing Date, such shares shall be converted into Hain
Company Stock on the Closing Date in accordance with the provisions of
Article III without further action by any participant. The Company will submit
the ESOP to the Internal Revenue Service for a determination of qualification on
termination prior to the Closing Date.
(d) From and after the Effective Time, Hain or the Surviving Corporation
will honor and assume, in accordance with its terms, the Company's Employee
Stock Purchase Plan ("EMPLOYEE STOCK PURCHASE PLAN"), provided however that Hain
and the Surviving Corporation reserve the right in accordance with the terms of
the Employee Stock Purchase Plan and to the extent permitted by law, to
terminate the Employee Stock Purchase Plan at any time following the Effective
Date. Participants in the Employee Stock Purchase Plan who already have Company
Common Stock in their share accounts shall be entitled to receive Hain Common
Stock in accordance with the provisions of Article III without further action by
any participant.
(e) As of the Effective Time, by virtue of the Merger and without any action
on the part of the holders thereof, Hain or the Surviving Corporation shall
assume all of the obligations of the Company under the Company's Incentive and
Non-Qualified Stock Option Plan, the Company's 1993 Long-Term Incentive Plan,
the Company's 1994 Non-Employee Director Compensation Plan and any other option
agreement pursuant to which the Company has issued stock options (collectively,
the "STOCK OPTION PLANS"),with the effect that each option to purchase shares of
Company Common Stock that is outstanding under the Stock Option Plans
immediately prior to the Effective Time shall be assumed by Hain or the
Surviving Corporation in such a manner that each such option shall be
exercisable on the same terms and conditions as under the applicable Stock
Option Plan and shall vest in accordance with the vesting schedule applicable to
such option prior to such assumption(taking into account any vesting which may
occur as a result of the Merger), except that (i) each such option shall be
exercisable for the number of Hain Common Stock (rounded down to the nearest
whole share) equal to the number of shares of Company Common Stock subject to
such option multiplied by the Exchange Ratio, and (ii) the option price per
share of Hain Common Stock shall be an amount equal to the option price per
share of Company Common Stock subject to such option in effect immediately prior
to the Closing Date divided by the Exchange Ratio (rounded up to the nearest
whole cent). Notwithstanding in the foregoing, after the Effective Time, Hain
may, at its option, adopt or amend substitute option plans to provide
substantially similar benefits for any of the aforementioned plans.
(f) From and after the Effective Time, Hain or the Surviving Corporation
will honor and assume, in accordance with its terms, the Thrift Plan of the
Company ("THRIFT PLAN"), provided however that Hain and the Surviving
Corporation reserve the right in accordance with the terms of the Thrift Plan
and to the extent permitted by law, to terminate the Thrift Plan, merge the
Thrift Plan or transfer assets and liabilities from the thrift Plan to a 401(k)
plan sponsored by Hain or an affiliate.
ARTICLE IX
CONDITIONS TO CLOSING
9.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) STOCKHOLDER APPROVALS. Company Stockholder Approval and Hain Stockholder
Approval shall have been obtained.
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(b) HSR ACT. The waiting period (and any extension thereof) applicable to
the Merger under the HSR Act shall have been terminated or shall have expired.
(c) NO INJUNCTIONS OR RESTRAINTS. No judgment, order, decree, statute, law,
ordinance, rule or regulation entered, enacted, promulgated, enforced or issued
by any court or other governmental entity of competent jurisdiction or other
legal restraint or prohibition (collectively, "Restraints") shall be in effect
preventing the consummation of the Merger.
(d) POOLING OF INTERESTS; CONSENTS. The Merger shall qualify for "pooling of
interests" accounting treatment, and the Company and Hain shall each have
received letters to that effect from each of Ernst & Young LLP, independent
auditors for Hain, and Deloitte & Touche LLP, independent auditors for the
Company, dated the Closing Date. Hain shall have received all consents required
from the independent accountants in connection with the filing of the
Registration Statement necessary to effect the registration of the Hain Common
Stock.
(e) REGISTRATION STATEMENT. The Registration Statement shall have become
effective under the Securities Act and shall not be the subject of any stop
order or proceedings seeking a stop order and no stop order or similar
restraining order shall be threatened or entered by the SEC or any state
securities administration preventing the Merger.
(f) NASDAQ LISTING. The shares of Hain Common Stock issuable to the
Company's stockholders as contemplated by this Agreement shall have been
approved for listing on the National Market System of The Nasdaq Stock
Market, Inc., subject to official notice of issuance.
(g) CONSENTS AND APPROVALS. All necessary consents and approvals of any
United States or any other governmental authority or any other third party
required for the consummation of the transactions contemplated by this Agreement
shall have been obtained; except for such consents and approvals the failure to
obtain which individually or in the aggregate would not have a material adverse
effect on Hain.
9.2 CONDITIONS TO OBLIGATIONS OF HAIN. The obligation of Hain to effect
the Merger is further subject to satisfaction or waiver of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Company set forth herein, to the extent qualified with respect to
materiality, shall be true and correct in all respects, and to the extent not so
qualified shall be true and correct in all material respects, in each case as of
the date of this Agreement and at and as of the Effective Time as if made at and
as of such time (except to the extent expressly made as of earlier date, in
which case as of such date). The Company shall have delivered to Hain an
officer's certificate, in form and substance satisfactory to Hain and its
counsel, to the effect of the matters stated in this Section 9.2(a),
Section 9.2(b) and Section 9.2(c).
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date.
(c) NO MATERIAL ADVERSE CHANGE. Except as disclosed in the Company Current
SEC Reports, at any time after September 30, 1999, there shall not have occurred
any material adverse change in the general affairs, management, business,
operations, assets, condition (financial or otherwise) or prospects of the
Company and its subsidiaries, taken as a whole.
(d) AFFILIATE LETTERS. Hain shall have received from each affiliate of the
Company a written agreement substantially in the form attached as EXHIBIT B
hereto as set forth in Section 8.12.
(e) TAX OPINION. Hain shall have received an opinion of Cahill Gordon &
Reindel, counsel to Hain, dated on or about the Closing Date, based upon such
representations and assumptions as counsel may reasonably deem relevant, to the
effect that the Merger will be treated for federal income tax purposes as a
reorganization qualifying under the provisions of Section 368(a) of the Code;
that each of Hain, Hain Subsidiary and the Company will be a party to the
reorganization within the meaning of
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Section 368(b) of the Code; that no gain or loss will be recognized by a
stockholder of the Company on the exchange of Company shares for the Merger
Consideration pursuant to the Merger (except with respect to any cash received
in lieu of a fractional share).
9.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligation of the
Company to effect the Merger is further subject to satisfaction or waiver of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Hain set forth herein, to the extent qualified with respect to materiality,
shall be true and correct in all respects, and to the extent not so qualified
shall be true and correct in all material respects, in each case as of the date
of this Agreement and at and as of the Effective Time as if made at and as of
such time (except to the extent expressly made as of an earlier date, in which
case as of such date). Hain shall have delivered to the Company an officer's
certificate, in form and substance satisfactory to the Company and its counsel,
to the effect of matters stated in this Section 9.3(a), Section 9.3(b) and
Section 9.3(c).
(b) PERFORMANCE OF OBLIGATIONS OF HAIN AND HAIN SUBSIDIARY. Hain and Hain
Subsidiary shall have performed in all material respects all obligations
required to be performed by them under this Agreement at or prior to the Closing
Date.
(c) NO MATERIAL ADVERSE CHANGE. Except as disclosed in the Hain Current SEC
Reports, at any time after June 30, 1999, there shall not have occurred any
material adverse change in the general affairs, management, business,
operations, assets, condition (financial or otherwise) or prospects of Hain and
its subsidiaries, taken as a whole.
(d) TAX OPINION. The Company shall have received an opinion of Bartlit Beck
Herman Palenchar & Scott, dated on or about the Closing Date, based upon such
representations and assumptions as counsel may reasonably deem relevant, to the
effect that the Merger will be treated for federal income tax purposes as a
reorganization qualifying under the provisions of Section 368(a) of the Code;
that each of Hain, Hain Subsidiary and the Company will be a party to the
reorganization within the meaning of Section 368(b) of the Code; that no gain or
loss will be recognized by a stockholder of the Company on the exchange of
Company Shares for the Merger Consideration pursuant to the Merger (except with
respect to any cash received in lieu of a fractional share).
ARTICLE X
TERMINATION
10.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of this Agreement by the
Company's stockholders:
(a) by mutual written consent of the Company and Hain;
(b) by either the Company or Hain:
(i) if the Merger shall not have been consummated by December 31, 2000;
PROVIDED, HOWEVER, that the right to terminate this Agreement pursuant to
this Section 10.1(b)(i) shall not be available to any party whose failure to
perform any of its obligations under this Agreement results in the failure
of the Merger to be consummated by such time;
(ii) if the Company Stockholder Approval or Hain Stockholder Approval
shall not have been obtained at a Company Stockholder Meeting or Hain
Stockholder Meeting, as the case may be, duly convened therefor or at any
adjournment or postponement thereof; or
(iii) if any Restraint having any of the effects set forth in
Section 9.1(c) shall be in effect and shall have become final and
nonappealable;
(c) by Hain, (i) if the Board of Directors of the Company shall withdraw,
modify, condition, qualify or otherwise change its recommendation of approval
and adoption of this Agreement or the Merger in a manner adverse to Hain or
(ii) if prior to the Company Stockholder Meeting, the Board of
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Directors of the Company approves an agreement to effect a Superior Proposal in
accordance with Section 8.6(b);
(d) by Hain, if the Company shall have breached or failed to perform in any
material respect any of its representations, warranties, covenants or other
agreements contained in this Agreement (which breach is not cured within 15
business days after receipt by the Company of a written notice of such breach
from Hain specifying the breach and requesting that it be cured);
(e) by the Company (i) if the Board of Directors of Hain shall withdraw,
modify, condition, qualify or otherwise change its recommendation of approval
and adoption of this Agreement and the Merger in a manner adverse to the Company
or (ii) if, prior to the Company Stockholder Meeting, the Board of Directors of
the Company approves an agreement to effect a Superior Proposal in accordance
with Section 8.6(b); and
(f) by the Company, if Hain shall have breached or failed to perform in any
material respect any of its representations, warranties, covenants or other
agreements contained in this Agreement (which breach is not cured within 15
business days after receipt by Hain of a written notice of such breach from the
Company specifying the breach and requesting that it be cured).
10.2 EFFECT OF TERMINATION.
(a) The termination of this Agreement shall become effective upon delivery
to the other party of written notice thereof. In the event of the termination of
this Agreement pursuant to the foregoing provisions of this Article X, this
Agreement shall become void and have no effect, with no liability on the part of
any party (except as provided in paragraphs (b), (c), (d) or (e) below) or its
stockholders or directors or officers in respect thereof except for agreements
which survive the termination of this Agreement and except for liability that
Hain or the Company might have arising from a breach of this Agreement.
(b) In the event of a termination of this Agreement (i) by Hain pursuant to
Section 10.1(c) or Section 10.1(d)(if the breach or failure to perform is due to
the Company's intentional or bad faith acts) or (ii) by the Company pursuant to
Section 10.1(e)(ii), then the Company shall pay Hain by wire transfer of
immediately available funds to an account specified by Hain (i) within two
business days of receiving the documentation described below up to $3,000,000 to
reimburse Hain for its documented fees and expenses (including the fees and
expenses of counsel, accountants, consultants and advisors) incurred in
connection with this Agreement and the transactions contemplated hereby and
(ii) within two business days of such termination, a fee of $8,000,000 as
liquidated damages.
(c) In the event of a termination of this Agreement by Hain pursuant to
Sections 10.1(b)(ii) (in the event Company Stockholder Approval is not obtained)
or 10.1(d)(if the breach or failure to perform is due to circumstances other
than those set forth in Section 10.2(b)), then the Company shall pay Hain by
wire transfer of immediately available funds to an account specified by Hain
within two business days of receiving the documentation described below up to
$3,000,000 to reimburse Hain for its documented fees and expenses (including the
fees and expenses of counsel, accountants, consultants and advisors) incurred in
connection with this Agreement and the transactions contemplated hereby;
provided in the event that at any time within the twelve months following
termination of this Agreement under the circumstances set forth in this
Section 10.2(c), the Company executes a definitive agreement which is
consummated within eighteen months with any third party other than Hain relating
to a Superior Proposal, than the Company shall within two business days of the
date of the execution of such definitive agreement pay Hain by wire transfer of
immediately available funds to an account specified by Hain a fee of $8,000,000
as liquidated damages.
(d) In the event of a termination of this Agreement by the Company pursuant
to Section 10.1(e)(i) or Section 10.1(f) (if the breach or failure to perform is
due to Hain's intentional or bad faith acts), then Hain shall pay the Company by
wire transfer of immediately available funds to an account specified by the
Company (i) within two business days of receiving the documentation
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described below up to $3,000,000 to reimburse the Company for its documented
fees and expenses (including the fees and expenses of counsel, accountants,
consultants and advisors) incurred in connection with this Agreement and the
transactions contemplated hereby and (ii) within two business days of such
termination, a fee of $8,000,000 as liquidated damages.
(e) In the event of a termination of this Agreement by the Company pursuant
to Sections 10.1(b)(ii) (in the event Hain Stockholder Approval is not obtained)
or 10.1(f) (if the breach or failure to perform is due to circumstances other
than those set forth in Section 10.2(d)), then Hain shall within two business
days of receiving the documentation described below pay the Company by wire
transfer of immediately available funds to an account specified by the Company
up to $3,000,000 to reimburse the Company for its documented fees and expenses
(including the fees and expenses of counsel, accountants, consultants and
advisors) incurred in connection with this Agreement and the transactions
contemplated hereby.
(f) By agreeing to liquidated damages in Sections 10.2(b), (c) and (d), the
parties acknowledge that (i) such liquidated damages are an integral part of the
transactions contemplated by this Agreement and constitute liquidated damages
and not a penalty, and (ii) such liquidated damages are necessary because actual
damages arising from the loss of opportunity would not be determinable with any
degree of certainty. If a party fails to promptly pay the liquidated damages due
under Sections 10.2(b), (c) and (d), the defaulting Party shall pay the costs
and expenses (including legal fees and expenses) in connection with any action,
including the filing of any lawsuit or other legal action, taken to collect
payment, together with interest on the amount of any unpaid fee at the publicly
announced prime rate of Citibank, N.A. from the date such damages were required
to be paid.
ARTICLE XI
MISCELLANEOUS
11.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 11.1
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
11.2 WAIVER. At any time prior to the Effective Date, any party hereto may
(i) extend the time for the performance of any of the obligations or other acts
of any other party hereto, (ii) waive any inaccuracies in the representations
and warranties of the other party contained herein or in any document delivered
pursuant hereto, and (iii) waive compliance with any of the agreements of any
other party or with any conditions to its own obligations contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing duly authorized by and
signed on behalf of such party.
11.3 NOTICES.
(a) Any notice or communication to any party hereto shall be duly given if
in writing and delivered in person or mailed by first class mail (registered or
certified, return receipt requested), facsimile or overnight air courier
guaranteeing next day delivery, to such other party's address.
If to Hain or Hain Subsidiary:
The Hain Food Group, Inc.
50 Charles Lindbergh Boulevard
Uniondale, New York 11553
Facsimile No.: (516) 237-6240
Attention: President
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with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Facsimile No.: (212) 269-5420
Attention: Roger Meltzer, Esq.
If to the Company:
Celestial Seasonings, Inc.
4600 Sleepytime Drive
Boulder, Colorado 80301-3292
Facsimile No.: (303) 939-8444
Attention: Chairman and President
with a copy to:
Bartlit Beck Herman Palenchar & Scott
The Kittredge Building
511 Sixteenth Street
Denver, Colorado 80202
Facsimile No.: (303) 592-3140
Attention: Thomas R. Stephens, Esq.
(b) All notices and communications will be deemed to have been duly given:
at the time delivered by hand, if personally delivered; five business days after
being deposited in the mail, if mailed; when sent, if sent by facsimile; and the
next business day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
11.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.5 INTERPRETATION. The headings of articles and sections herein are for
convenience of reference, do not constitute a part of this Agreement, and shall
not be deemed to limit or affect any of the provisions hereof. As used in this
Agreement, "person" means any individual, corporation, limited or general
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof; "subsidiary" of any person means (i) a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by such
person or by one or more other subsidiaries of such person or by such person and
one or more subsidiaries thereof or (ii) any other person (other than a
corporation) in which such person, or one or more other subsidiaries of such
person or such person and one or more other subsidiaries thereof, directly or
indirectly, have at least a majority ownership and voting power relating to the
policies, management and affairs thereof; and "voting stock" of any person means
capital stock of such person which ordinarily has voting power for the election
of directors (or persons performing similar functions) of such person, whether
at all times or only so long as no senior class of securities has such voting
power by reason of any contingency. In determining whether a material adverse
effect has occurred in connection with the business or prospects of the Company,
month to month fluctuations in sales either (i) consistent with historical
performance or (ii) resulting from requests relating to the conduct of the
Company's business received from Hain after the date hereof but prior to the
Effective Time, shall not be deemed to constitute a material adverse effect.
11.6 AMENDMENT. This Agreement may be amended by the parties at any time
before or after any required approval of matters presented in connection with
the Merger by the stockholders of each of Hain and the Company; provided,
however, that after any such approval, there shall not be made any amendment
that by law requires further approval by such stockholders without the further
approval of such stockholders; and provided further, that this Agreement shall
not be amended after the
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Effective Time. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.
11.7 NO THIRD PARTY BENEFICIARIES. Except for the rights set forth under
Section 8.10, nothing in this Agreement shall confer any rights upon any person
or entity which is not a party or permitted assignee of a party to this
Agreement.
11.8 GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York without regard to principles
of conflicts of laws.
11.9 ENFORCEMENT. The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. The parties
accordingly agree that the parties will be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement, this being in addition to any other
remedy to which they are entitled at law or in equity.
11.10 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
among the parties with respect to the subject matter hereof and supersedes all
other prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof.
11.11 NO RECOURSE AGAINST OTHERS. No director, officer or employee, as
such, of Hain, Hain Subsidiary or the Company or any of their respective
subsidiaries shall have any liability for any obligations of Hain, Hain
Subsidiary or the Company, respectively, under this Agreement for any claim
based on, in respect of or by reasons of such obligations or their creation.
11.12 VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Merger Agreement to
be executed by their duly authorized officers all as of the day and year first
above written.
THE HAIN FOOD GROUP, INC.
By: /s/ IRWIN D. SIMON
-----------------------------------------
Name: Irwin D. Simon
Title: Chairman of the Board, President
and Chief Executive Officer
CELESTIAL SEASONINGS, INC.
By: /s/ MO SIEGEL
-----------------------------------------
Name: Mo Siegel
Title: Chairman of the Board
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EXHIBIT A
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
CELESTIAL SEASONINGS, INC.
1. NAME. The name of the corporation is Celestial Seasonings, Inc. (the
"Company").
2. REGISTERED OFFICE. The address of the Company's registered office in
the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the
City of Wilmington, County of New Castle. The name of its registered agent at
such address is The Corporation Trust Company.
3. PURPOSES. The purpose for which the Company is organized is to engage
in any and all lawful acts and activities for which corporations may be
organized under the General Corporation Law of the State of Delaware.
4. CAPITAL STOCK. The Company is authorized to issue one class of stock
which is designated Common Stock. The total number of shares of Common Stock
which the Company shall have authority to issue is: 100 shares of Common Stock,
par value of $.01 per share.
5. EXISTENCE. The Company is to have perpetual existence.
6. BY-LAWS. In furtherance and not in limitation of the powers conferred
by statute, the Board of Directors of the Company is expressly authorized to
make, alter or repeal the by-laws of the Company.
7. ELECTION OF DIRECTORS. Elections of directors need not be by written
ballot unless the by-laws of the Company shall so provide.
8. MEETINGS; CORPORATE BOOKS. Meetings of stockholders may be held within
or without the State of Delaware, as the by-laws may provide. The books of the
Company may be kept (subject to any provision of law) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the by-laws of the Company.
9. AMENDMENT AND/OR REPEAL OF CERTIFICATE. The Company reserves the right
to amend, alter, change or repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
10. DIRECTOR'S LIABILITY. No director of the Company shall be personally
liable to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a director; provided that this provision shall not eliminate
or limit the liability of a director (i) for any breach of such director's duty
of loyalty to the corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the Delaware General Corporation Law, or
(iv) for any transaction from which such director derived an improper personal
benefit.
<PAGE>
EXHIBIT B
[FORM OF COMPANY AFFILIATE LETTER]
Ladies and Gentlemen:
I have been advised that I may be considered to be an "affiliate" of
Celestial Seasonings, Inc. (the "Company") for purposes of Rule 145 under the
Securities Act of 1933, as amended (the "Securities Act"), and for purposes of
generally accepted accounting principles as such term relates to pooling of
interests accounting treatment for certain business combinations or the
Securities and Exchange Commission's Staff Accounting Bulletin No. 65.
The Hain Food Group, Inc. ("Hain") and the Company have entered into an
Agreement and Plan of Merger dated as of March 5, 2000 (the "Merger Agreement").
Upon consummation of the transactions contemplated by the Merger Agreement (the
"Merger"), I will receive shares of capital stock of Hain for all of the shares
of capital stock of the Company owned by me or as to which I may be deemed a
beneficial owner. I own shares of common stock of the Company. Such shares
(including the rights attached thereto) will be converted in the Merger into
shares of common stock of Hain as described in the Merger Agreement. The shares
of Company capital stock and Hain capital stock owned by me or as to which I may
deem to be a beneficial owner prior to the Merger are hereinafter collectively
referred to as the "Pre-Merger Stock" and the shares of Hain capital stock
received by me in the Merger are hereinafter collectively referred to as the
"Exchange Stock." This agreement is hereinafter referred to as the "Letter
Agreement."
I represent and warrant to, and agree with, the Company and Hain that:
A. I have read this Letter Agreement and the Merger Agreement and have
discussed their requirements and other applicable limitations upon my
ability to sell, transfer or otherwise dispose of the Pre-Merger Stock and
Exchange Stock, to the extent I felt necessary, with my counsel or counsel
for the Company.
B. The shares of common stock of Hain that I shall receive in exchange
for my shares of common stock of the Company are not being acquired by me
with a view to their distribution except to the extent and in the manner
provided for in paragraph (d) of Rule 145 under the Securities Act.
C. I agree with you not to dispose of any such shares of common stock of
Hain in any manner that would violate Rule 145.
I further agree with you that the certificate or certificates
representing such shares of common stock of Hain may bear a legend referring
to the restrictions on disposition thereof in accordance with the provisions
of the foregoing paragraph and that stop transfer instructions may be filed
with respect to such shares with the transfer agent for such shares.
D. I understand that stop transfer instructions will be given to the
Company, Hain and their respective transfer agents, as the case may be, with
respect to the shares of Pre-Merger Stock and the Exchange Stock in
connection with the restrictions set forth herein.
E. Notwithstanding the foregoing and any other agreements on my part in
connection with the Pre-Merger Stock and the Exchange Stock, I hereby agree
(i) that I will not sell or otherwise reduce my risk relative to any shares
of Pre-Merger Stock during the period of thirty days prior to the effective
date of Merger and (ii) that I will not sell or otherwise reduce my risk
relative to any shares of Exchange Stock until financial results covering at
least thirty days of combined operations have been published following the
effective date of the Merger so as to ensure that the Merger qualified as a
pooling of interests for accounting purposes.
It is understood and agreed that this Letter Agreement shall terminate and
be of no further force and effect if the Merger Agreement is terminated pursuant
to the terms thereof.
<PAGE>
The agreements made by me in the foregoing paragraphs are on the
understanding and condition that you agree, in the event that any shares may be
disposed of in accordance with the provisions of paragraph E above, to deliver
in exchange for the certificate or certificates representing such shares a new
certificate or certificates representing such shares not bearing the legend and
not subject to the stop transfer instruction referred to in paragraph D above,
and so long as I hold shares of stock subject to the provisions of this
agreement (but not for a period in excess of two years from the date of
consummation of the Merger) to file with the Securities and Exchange Commission
or otherwise make publicly available all information about Hain, to the extent
available to you without unreasonable effort or expense, necessary to enable me
to resell shares under the provisions of paragraph (d) of Rule 145.
This Letter Agreement shall be binding on my heirs, legal representatives
and successors.
Very truly yours,
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[Name of Stockholder]
By:
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Name:
Title:
* To be completed if the stockholder is an entity other than an individual
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