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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of
earliest event reported): August 14, 1998
THE FRESH JUICE COMPANY, INC.
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(Exact name of registrant as specified in charter)
Delaware 0-15320 11-2771046
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(State or other (Commission file (IRS employer
jurisdiction of number) identification no.)
incorporation)
280 Wilson Avenue, Newark, New Jersey 07105
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (973) 465-7100
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Item 5. Other Events.
The Fresh Juice Company, Inc. (the "Registrant") has entered
into an Agreement and Plan of Merger dated as of August 14, 1998 (the "Merger
Agreement") with Saratoga Beverage Group, Inc. ("Saratoga") and a wholly-owned
subsidiary of Saratoga, Rowale Corp. ("Rowale") pursuant to which Rowale will be
merged into the Registrant (the "Merger"). Subsequent to the Merger, the
Registrant will be operated as a wholly-owned subsidiary of Saratoga. Pursuant
to the terms of the Merger Agreement, Saratoga will purchase the shares of the
Registrant's common stock, par value $.01 per share, for $3.35 per share in
cash.
Pursuant to the terms of the Merger Agreement, Steven Bogen, Chief
Executive Officer of the Registrant, will be added to the Board of Directors of
Saratoga. Mr. Bogen will also become a consultant to Saratoga following the
Merger. Jeffrey Heavirland, in addition to his current responsibilities of Chief
Executive Officer of the Fresh Juice of California, Inc. d/b/a Hansen's Juice
Company, a subsidiary of the Registrant, will become an officer of Saratoga.
Saratoga and the Registrant have also entered into a Voting, Standstill
and Proxy Agreement dated as of August 14, 1998 (the "Voting Agreement") whereby
certain stockholders who are directors or officers of the Registrant, and
collectively own approximately 53% of the common stock of the Registrant, have
agreed to vote in favor of the Merger. The Voting Agreement expires if the
Merger Agreement is terminated. Saratoga has disclosed that Saratoga or its
affiliates may acquire shares of the Registrant on the open market prior to the
Merger.
In connection with the Merger, Saratoga has received a commitment
letter from NationsBank, N.A. to provide Saratoga with senior debt financing
(the "Financing"). The consummation of the transactions contemplated by the
Merger Agreement is subject to several
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material conditions, including, among others, the consummation of the Financing
and the approval of the Merger by the stockholders of the Registrant.
Although there can be no assurance that the Merger will be completed,
the parties expect, subject to the satisfaction of all conditions, to consummate
the Merger during the fourth quarter of this year. Under certain conditions, if
the Merger Agreement is terminated or the Merger is not consummated, either
Saratoga or the Registrant, depending on the circumstances, may be entitled to a
fee as liquidated damages.
This Current Report contains forward-looking statements which are based
on Saratoga's and the Registrant's expectations and are subject to a number of
risks and uncertainties, certain of which are beyond Saratoga's and the
Registrant's control. Actual results could vary materially from expected results
due to a variety of factors, including, but not limited to, the general
performance of the economy, specifically as it affects the retail beverage
industry; factors applicable to Saratoga and its business referred to in the
Securities and Exchange Commission filings of Saratoga, particularly Saratoga's
Annual Reports on Form 10-K for the year ended December 31, 1997 and its
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998 and June
30, 1998; and factors applicable to the Registrant, particularly the
Registrant's Annual Report on Form 10-KSB for the year ended November 30, 1997
and its Quarterly Reports on Form 10-QSB for the quarters ended February 28,
1998 and May 31, 1998.
The Registrant's news release, issued in connection with this
event on August 17, 1998, the Merger Agreement and exhibits thereto, and the
Voting Agreement each appear as an Exhibit to this current report and are
incorporated herein by reference. The foregoing summary is qualified in its
entirety by reference to such documents.
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Item 7. Financial Statements and Exhibits.
EXHIBIT NO. DESCRIPTION
2 Agreement and Plan of Merger dated as of August
14, 1998 among Saratoga Beverage Group, Inc.,
Rowale Corp. and The Fresh Juice Company, Inc.
and exhibits thereto.
10 Form of Voting, Standstill and Proxy Agreement dated
as of August 14, 1998, among The Fresh Juice Company,
Inc., certain stockholders of The Fresh Juice
Company, Inc. and Saratoga Beverage Group, Inc.
99 News Release dated August 17, 1998
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SIGNATURE
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF
1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY
THE UNDERSIGNED THEREUNTO DULY AUTHORIZED.
THE FRESH JUICE COMPANY, INC.
By: /s/ Steven M. Bogen
Steven M. Bogen,
Chief Executive Officer
Dated: August 17, 1998
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INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
2 Agreement and Plan of Merger dated as of August
14, 1998 among Saratoga Beverage Group, Inc.,
Rowale Corp. and The Fresh Juice Company, Inc
and exhibits thereto.
10 Form of Voting, Standstill and Proxy Agreement dated
as of August 14, 1998, among The Fresh Juice
Company, Inc., certain stockholders of The Fresh
Juice Company, Inc. and Saratoga Beverage Group,
Inc.
99 News Release dated August 17, 1998
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AGREEMENT AND PLAN OF MERGER
By and Among
SARATOGA BEVERAGE GROUP, INC.
ROWALE CORP.
and
THE FRESH JUICE COMPANY, INC.
Dated as of August 14, 1998
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of August 14, 1998, by
and among Saratoga Beverage Group, Inc., a Delaware corporation ("Parent"),
Rowale Corp., a Delaware corporation and wholly owned subsidiary of Parent
("Sub"), and The Fresh Juice Company, Inc., a Delaware corporation (the
"Company").
WHEREAS, the Boards of Directors of Parent and the Company
have determined that it is in the best interests of their respective companies
and their stockholders to consummate the business combination transaction
provided for herein in which Sub will, subject to the terms and conditions set
forth herein, merge with and into the Company (the "Merger"); and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties and covenants in connection with the Merger;
NOW, THEREFORE, in consideration of the mutual covenants;
representations, warranties and agreements contained herein, and intending to be
legally bound hereby, the parties agree as follows:
ARTICLE I.
THE MERGER
1.01 THE MERGER. Subject to the terms and conditions of this Agreement,
in accordance with the Delaware General Corporation Law ("DGCL"), at the
Effective Time (as hereinafter defined), Sub shall merge with and into the
Company. The Company shall become the surviving corporation (hereinafter
sometimes called the "Surviving Corporation") in the Merger, and shall continue
its corporate existence under the laws of the State of Delaware. The name of the
Surviving Corporation shall be The Fresh Juice Company, Inc. Upon consummation
of the Merger, the separate corporate existence of Sub shall terminate.
1.02 PLAN OF MERGER. This Agreement shall constitute an agreement of
merger for purposes of the DGCL.
1.03 EFFECTIVE TIME. As promptly as practicable after all of the
conditions set forth in Article VII shall have been satisfied or, if
permissible, waived by the party entitled to the benefit of the same, the
Company and Sub shall duly execute and file a certificate of merger (the
"Certificate of Merger") with the Secretary of State of the State of Delaware
(the "Delaware Secretary") in accordance with Section 251 of the DGCL. The
Merger shall become effective on the date (the "Effective Date") and at such
time (the "Effective Time") as the Certificate of Merger is filed with the
Delaware Secretary or at such later date and time as is specified in the
Certificate of Merger.
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1.04 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided herein and as set forth in Section 259 of the DGCL.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, (i) all the property, rights, privileges, powers and franchises
of Sub shall vest in the Surviving Corporation, (ii) all debts, liabilities,
obligations, restrictions, disabilities and duties of Sub and the Company shall
become the debts, liabilities, obligations, restrictions, disabilities and
duties of the Surviving Corporation and (iii) the Surviving Corporation shall
become a wholly owned subsidiary of Parent.
1.05 CONVERSION OF COMPANY COMMON STOCK.
(a) At the Effective Time, each share of the common stock, par
value $.01 per share, of the Company (the "Company Common Stock")
issued and outstanding immediately prior to the Effective Time (other
than (i) shares of Company Common Stock held in the Company's treasury
or directly or indirectly by Parent, Sub or the Company, and (ii)
Dissenting Shares (as such term is defined in Section 1.06 hereof))
shall, by virtue of this Agreement and without any action on the part
of the holder thereof, be converted into the right to receive and be
exchangeable for $3.35 per share in cash (the "Per Share Price"). By
way of example, a holder of 1,000 shares of Company Common Stock will
receive $3,350.00 in cash.
(b) Each share of Company Common Stock converted into the Per
Share Price pursuant to this Article I shall no longer be outstanding
and shall automatically be canceled and shall cease to exist, and each
certificate (each a "Certificate," and collectively, the
"Certificates") previously representing any such shares of Company
Common Stock shall thereafter represent the right to receive cash equal
to the Per Share Price multiplied by the number of shares of Company
Common Stock represented by such Certificate (in the aggregate, the
"Merger Consideration") or the right to perfect their right to receive
payment for their shares pursuant to the DGCL and Section 1.06 hereof.
Certificates previously representing shares of Company Common Stock
shall be exchanged for the Merger Consideration upon the surrender of
such Certificates in accordance with Section 2.02 hereof, without any
interest thereon, subject to applicable law and the provisions of this
Agreement relating to Dissenting Shares (as hereinafter defined).
(c) The Company (i) will grant no additional options or
restricted stock or similar rights under its 1996 Incentive Stock
Option Plan (the "Option Plan") or otherwise on or after the date of
this Agreement and (ii) has suspended, pending the termination of this
Agreement without the Merger being consummated, the Option Plan without
prejudice to the rights of the holder of options awarded pursuant
thereto. The Company will use reasonable diligence and timely efforts
to obtain the consent of each holder of an option or restricted stock
right (whether or not then exercisable or vested) to the cancellation
or conversion into shares of Company Common Stock of his, her or its
options or warrants in exchange for, at the Effective Time, an amount
in cash equal to the excess, if any, of the Per Share Price over the
exercise price thereof, multiplied by the number of shares of Company
Common Stock subject thereto.
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(d) Each share of Company Common Stock held in the treasury of
the Company, and each share of Company Common Stock owned directly or
indirectly by Parent, Sub or the Company, shall be canceled and retired
without payment of any consideration therefor. Each share of common
stock, par value $.01 per share, of Sub issued and outstanding
immediately prior to the Effective Time shall be converted into one
validly issued, fully paid and nonassessable share of common stock, par
value $.01 per share, of the Surviving Corporation.
1.06 RIGHTS WITH RESPECT TO DISSENTING SHARES.
(a) Notwithstanding anything in this Agreement to the contrary
and unless otherwise provided by applicable law, shares of Company
Common Stock that are issued and outstanding immediately prior to the
Effective Time and that are owned by stockholders who have properly
exercised and perfected their rights of appraisal within the meaning of
Section 262 of the DGCL (the "Dissenting Shares"), shall not be
converted into the right to receive the Per Share Price, unless and
until such stockholders shall have failed to perfect or shall have
effectively withdrawn or lost their right of appraisal and payment
under applicable law. If any such stockholder shall have failed to
perfect or shall have effectively withdrawn or lost such right of
appraisal, each share of Company Common Stock held by such stockholder
shall thereupon be deemed to have been converted into the right to
receive and become exchangeable for the Per Share Price, at the
Effective Time, pursuant to Section 1.05(a) hereof.
(b) The Company shall give Parent (i) prompt notice of any
demands for appraisal received by the Company, withdrawals of such
demands, and any other instruments served in connection with such
demands pursuant to the DGCL and received by the Company and (ii) the
opportunity to direct all negotiations and proceedings with respect to
demands for appraisal under the DGCL consistent with the obligations of
the Company thereunder. The Company shall not, except with the prior
written consent of Parent, (x) make any payment with respect to any
demands for appraisal, (y) offer to settle or settle any such demands
or (z) waive any failure to timely deliver a written demand for
appraisal in accordance with the DGCL.
1.07 CERTIFICATE OF INCORPORATION. Unless otherwise agreed to by the
parties prior to the Effective Time, at and after the Effective Time, the
Certificate of Incorporation of Sub shall be the Certificate of Incorporation of
the Surviving Corporation, until thereafter amended as provided by law and the
Certificate of Incorporation.
1.08 BYLAWS. Unless otherwise agreed to by the parties prior to the
Effective Time, at and after the Effective Time, the Bylaws of Sub shall be the
Bylaws of the Surviving Corporation, until thereafter amended as provided by
law, the Certificate of Incorporation of the Surviving Corporation and such
Bylaws.
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1.09 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. As of the
Effective Time, the board of directors of the Surviving Corporation shall
consist of one (1) member whom shall be designated by Parent in writing prior to
the Effective Time. The director so designated shall hold office in accordance
with the Certificate of Incorporation and Bylaws of the Surviving Corporation
until his or her respective successors are duly elected or appointed and
qualified. The board of directors of the Surviving Corporation shall elect the
officers of the Surviving Corporation.
1.10 BOARD OF DIRECTORS OF PARENT. As of the Effective Time, the board
of directors of Parent shall be the Board of Directors in office prior to the
Effective Time, plus one (1) designee of the Company. The directors in office
shall hold office in accordance with the Certificate of Incorporation and Bylaws
of the Parent until his or her respective successor(s) is (are) duly elected or
appointed and qualified. The designee of the Company to the Board of Directors
of Parent shall not serve after the 1999 Annual Meeting of Stockholders of
Parent unless such designee is nominated by the Nominating Committee of the
Board of Directors of Parent. The board of directors of the Parent shall elect
the officers of the Parent.
1.11 ADDITIONAL ACTIONS. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any further assignments
or assurances in law or any other acts are necessary or desirable (a) to vest,
perfect or confirm, of record or otherwise, in the Surviving Corporation, title
to and possession of any property or right of the Company acquired or to be
acquired by reason of, or as a result of, the Merger, or (b) otherwise to carry
out the purposes of this Agreement, the Company and its proper officers and
directors shall be deemed to have granted to the Surviving Corporation an
irrevocable power of attorney to execute and deliver all such proper deeds,
assignments and assurances in law and to do all acts necessary or proper to
vest, perfect or confirm title to and possession of such property or rights in
the Surviving Corporation and otherwise to carry out the purposes of this
Agreement; and the proper officers and directors of the Surviving Corporation
are fully authorized in the name of the Company or otherwise to take any and all
such action.
1.12 COMPANY ACTION. The Company represents and warrants that (i) the
Board of Directors of the Company has duly approved the execution of this
Agreement, and the Merger, and has resolved to recommend approval of the Merger
by the Company's stockholders, (ii) the persons or entities listed on Exhibit A
attached hereto own an aggregate of 3,443,290 issued and outstanding shares of
Company Common Stock and (iii) each such person or entity listed on Exhibit A
has executed and delivered a Voting, Standstill and Proxy Agreement, in
substantially the form annexed hereto as Exhibit B (the "Voting Agreement").
1.13 BOGEN AGREEMENT AND SMITH AGREEMENT. Steven Bogen, Parent and the
Company shall have entered into an Employment Termination, Non-Competition and
Consulting Agreement, in substantially the form annexed hereto as Exhibit C (the
"Bogen Agreement"). Steven Smith, Parent and the Company shall have entered into
an Employment Termination and Non-Competition Agreement, in substantially the
form annexed hereto as Exhibit D (the "Smith Agreement").
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1.14 FINANCING; EQUITY FINANCING. Parent has delivered to the Company a
commitment letter or letters (the "Commitment Letter(s)"), in form and on terms
reasonably satisfactory to the Company, from a responsible financing source or
sources, indicating its or their willingness, subject to the conditions set
forth therein, to lend (the "Financing") Parent an amount sufficient, together
with Parent's cash and cash equivalents, to fund the Per Share Price plus
expenses related to the transactions contemplated hereby. In addition, Parent
intends to issue such number of shares of its common stock to investors, which
may include one or more non-officer directors or other affiliates of the
Company, as is necessary to consummate the Financing.
ARTICLE II.
PAYMENT OF MERGER CONSIDERATION
2.01 PARENT TO MAKE CASH AVAILABLE. On or prior to the Effective Time,
Parent shall deposit, or shall cause to be deposited, with American Stock
Transfer & Trust Company or such other bank or trust company selected by Parent
and reasonably acceptable to the Company (the "Exchange Agent"), in trust for
the benefit of the holders of Certificates, for exchange in accordance with this
Article II, sufficient cash to pay in full the cash payments (such cash being
hereinafter referred to as the "Exchange Fund") to be issued pursuant to Section
1.05 and paid pursuant to Section 2.02(a) in exchange for outstanding shares of
Company Common Stock.
2.02 EXCHANGE OF SHARES.
(a) As soon as practicable after the Effective Time, and in no
event later than three (3) business days thereafter, the Exchange Agent
shall (and Parent shall cause the Exchange Agent to so) mail to each
holder of record of a Certificate or Certificates a form letter of
transmittal and instructions for use in effecting the surrender of the
Certificates in exchange for cash equal to the Per Share Price
multiplied by the number of shares of Company Common Stock represented
by such Certificate or Certificates. Such letter of transmittal and
instructions shall be in the form agreed to by Parent and the Company
prior to the Closing. Upon surrender of a Certificate for exchange and
cancellation to the Exchange Agent, together with such letter of
transmittal, duly executed, the holder of such Certificates shall be
entitled to receive in exchange therefor a check representing the
amount of cash which such holder has the right to receive in respect of
the Certificate so surrendered pursuant to the provisions of this
Article II, and the Certificate so surrendered shall forthwith be
canceled. No interest will be paid or accrued on the cash paid for the
Company Common Stock, unpaid dividends and distributions, if any,
payable to holders of Certificates.
(b) After the Effective Time, there shall be no transfers on
the stock transfer books of the Company of the shares of Company Common
Stock which were issued and outstanding immediately prior to the
Effective Time.
(c) Any portion of the Exchange Fund that remains unclaimed by
the
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stockholders of the Company for six (6) months after the Effective Time
shall be transferred to the Surviving Corporation. Any stockholders of
the Company who have not theretofore complied with this Article II
shall thereafter look only to Parent and the Surviving Corporation for
payment of their Merger Consideration, without any interest thereon.
Notwithstanding the foregoing, none of the Surviving Corporation, the
Company, Parent, Sub, the Exchange Agent or any other person shall be
liable to any former holder of shares of Company Common Stock for any
amount properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(d) In the event 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 Parent, the posting by such person of a bond in such
amount as Parent 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 Merger Consideration deliverable in respect thereof pursuant to
this Agreement.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Sub as
follows, subject only to the exceptions specifically disclosed under appropriate
section headings in the Company's schedules:
3.01 CORPORATE ORGANIZATION.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
The Company has the corporate power and authority to own or lease all
of its properties and assets and to carry on its business as it is now
being conducted, and is duly licensed or qualified to do business in
each jurisdiction in which the nature of the business conducted by it
or the character or location of the properties and assets owned or
leased by it makes such licensing or qualification necessary, except
where the failure to be so licensed or qualified would not have a
Material Adverse Effect (as defined below) on the Company. As used in
this Agreement, the term "Material Adverse Effect" means, with respect
to Parent, the Company or the Surviving Corporation, as the case may
be, any change or effect that is or is reasonably expected to be
materially adverse to the business, properties, assets, liabilities,
financial condition or results of operations of such party and its
Subsidiaries, taken as a whole. As used in this Agreement, the word
"Subsidiary" means any corporation, partnership or other organization,
whether incorporated or unincorporated, which is or was consolidated
with such party or with which such party is or was consolidated for
financial reporting purposes. The Certificate of Incorporation and
Bylaws of the Company, copies of which have previously been delivered
to Parent, are true and complete copies of such documents as in effect
as of the date of this Agreement.
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(b) Except as set forth on Schedule 3.01, the Company has no
direct or indirect Subsidiaries. Except as set forth on Schedule 3.01,
the Company does not own, control or hold with the power to vote,
directly or indirectly of record, beneficially or otherwise, any
capital stock or any equity or ownership interest in any corporation,
partnership, associate, joint venture or other entity, except for less
than five percent (5%) of any equity security registered under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
(c) The minute books of each of the Company and its
Subsidiaries contains true, accurate and complete records of all
meetings and other corporate actions held or taken by its stockholders
and board of directors (including committees thereof).
3.02 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
30,000,000 shares of Company Common Stock and 7,000,000 shares of
preferred stock, par value $.01 per share ("Company Preferred Stock").
As of the date of this Agreement, there are (x) 6,467,731 shares of
Company Common Stock issued and outstanding and (y) such shares of
Company Common Stock issuable upon exercise of outstanding options or
warrants as set forth in Schedule 3.02 annexed hereto. No Company
Preferred Stock has ever been issued. Except as set forth on Schedule
3.02, all of the issued and outstanding shares of Company Common Stock
have been duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights with no personal liability
attaching to the ownership thereof. The authorized and issued and
outstanding capital stock of each Subsidiary of the Company is set
forth on Schedule 3.02. All of the issued and outstanding shares of
capital stock of each Subsidiary of the Company are owned by the
Company, have been duly authorized and validly issued and are fully
paid, non-assessable and free of preemptive rights with no personal
liability attaching to the ownership thereof. Except as set forth in
Schedule 3.02 hereto, the Company does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any
shares of Company Common Stock or any other equity security of the
Company or any of its Subsidiaries or any securities representing the
right to purchase or otherwise receive any shares of Company Common
Stock or any other equity security of the Company or any of its
Subsidiaries other than as provided for in this Agreement. There are no
bonds, debentures, notes or other indebtedness of the Company having
the right to vote (or convertible into, or exchangeable for securities
having the right to vote) on any matters on which stockholders of the
Company may vote.
(b) Except as contemplated herein or disclosed on Schedule
3.02 hereto, there are no agreements or understandings, with respect to
the voting of any shares of Company Common Stock or capital stock of
any Subsidiary of the Company or which restrict the transfer of such
shares, to which the Company or any of its Subsidiaries is a party and,
to the knowledge of the Company, there are no such agreements or
understandings to which the Company or any of its Subsidiaries is not a
party with respect to the voting of any such shares or which restrict
the transfer of such shares, other than applicable federal and state
securities
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laws.
(c) All dividends on Company Common Stock which have been
declared prior to the date of this Agreement have been paid in full.
3.03 AUTHORITY; NO VIOLATION.
(a) The Company has full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and
the consummation by the Company of the transactions contemplated by
this Agreement have been duly and validly approved by the Board of
Directors of the Company. Subject to the requirements of applicable
law, the Board of Directors of the Company has directed that this
Agreement and the transactions contemplated hereby be submitted to the
Company's stockholders for approval at a meeting of such stockholders
(the "Company Stockholder Meeting") and has voted to recommend to its
stockholders that its stockholders approve and adopt this Agreement and
the transactions contemplated thereby and, except for the adoption of
this Agreement by the requisite vote of the Company's stockholders and
the filing of the Certificate of Merger, no other corporate proceedings
on the part of the Company are necessary to approve this Agreement and
to consummate the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by the Company and
(assuming the due authorization, execution and delivery by Parent and
Sub) constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
(b) Except as set forth in Schedule 3.03 hereto, neither the
execution and delivery of this Agreement by the Company, nor the
consummation by the Company of the transactions contemplated hereby,
nor compliance by the Company with any of the terms or provisions
hereof, will (i) violate, conflict with or result in a breach of any
provision of the Certificate of Incorporation or Bylaws of the Company,
(ii) assuming that the consents and approvals referred to in Section
3.04 hereof are duly obtained, (x) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to the Company or any of its Subsidiaries, or any
of their respective properties or assets, or (y) violate, conflict
with, result in a breach of any provisions of or the loss of any
benefit under, constitute a default (or any event, which, with notice
or lapse of time, or both would constitute a default) under, result in
the termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation of
any lien, pledge, security interest, charge or other 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 any
note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which the Company or any
of its Subsidiaries is a party, or by which the Company or any of its
Subsidiaries or any of their respective properties or assets may be
bound or affected, except (in the case of clause (y) above) for such
violations, conflicts, beaches or defaults which, either individually
or in the aggregate, will not have a Material Adverse Effect on the
Company.
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3.04 CONSENTS AND APPROVALS. Except for (a) the approval of this
Agreement by the requisite vote of the stockholders of the Company, (b) the
filing of the Certificate of Merger with the Delaware Secretary pursuant to the
DGCL to effect the Merger and (c) such filings, authorizations, consents or
approvals as may be set forth in Schedule 3.04 hereto, no consents or approvals
of, or filings or registrations with, any court, administrative agency or
commission or other governmental authority or instrumentality (each a
"Governmental Entity") or with any third party are necessary in connection with
the execution and delivery by the Company of this Agreement and the consummation
by the Company of the Merger and the other transactions contemplated hereby.
3.05 FINANCIAL STATEMENTS.
(a) The Company has previously delivered to Parent copies of
the audited consolidated balance sheets of the Company as of November
30, 1995, November 30, 1996 and November 30, 1997, and the related
consolidated statements of income, changes in stockholders' equity and
cash flows for the fiscal years 1996 through 1997, inclusive, included
in the Company's Annual Report on Form 10-KSB for the fiscal year ended
November 30, 1997 filed with the SEC under the Exchange Act. The
Company has also previously delivered to Parent copies of the unaudited
consolidated balance sheets of the Company as of May 31, 1998, and the
related unaudited consolidated statements of income and cash flows for
the six months ended May 31, 1998, included in the Company's Quarterly
Report on Form 10-QSB for the quarter ended May 31, 1998 filed with the
SEC under 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 the Company SEC Reports (as hereinafter defined) filed on or after
November 30, 1995 have been prepared in accordance with generally
accepted accounting principles ("GAAP") consistently applied during the
periods involved (except as may be indicated in the notes thereto or,
in the case of the unaudited statements, as permitted by Form 10-QSB),
complied as of their respective dates in all material respects with
applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, and fairly present the
consolidated financial position of the Company and its Subsidiaries as
of the dates thereof and the consolidated income and retained earnings
and sources and applications of funds for the periods then ended
(subject, in the case of any unaudited interim financial statements, to
the absence of footnotes required by GAAP and normal year-end
adjustments).
(b) Except as set forth on Schedule 3.05(b) hereto for
liabilities incurred since May 31, 1998 in the ordinary course of
business consistent with past practice and as otherwise set forth on
Schedule 3.05(b) hereto, the Company does not have any liabilities or
obligations of any nature whatsoever (whether absolute, accrued,
contingent or otherwise) which are not adequately reserved or reflected
on the balance sheet of the Company included in its Quarterly Report on
Form 10-QSB for the quarter ended May 31, 1998, except for liabilities
or obligations which in the aggregate do not exceed $100,000, and there
do not exist any circumstances that could reasonably be expected to
result in such liabilities or obligations.
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3.06 FAIRNESS OPINION. The Company has received the opinion of
Ladenburg Thalmann & Company to the effect that, as of the date of such opinion,
the Per Share Price is fair to the Company's stockholders from a financial point
of view, and such opinion has not been amended or rescinded as of the date of
this Agreement.
3.07 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
Schedule 3.07 hereto, since May 31, 1998, there has not been any Material
Adverse Effect on the Company (including without limitation any loss of
employees or customers that has had a Material Adverse Effect, or that is
reasonably likely to have a Material Adverse Effect, on the Company) and, to the
best knowledge of the Company, no fact or condition exists which will cause such
a Material Adverse Effect on the Company in the future.
3.08 LEGAL PROCEEDINGS. Except as set forth in Schedule 3.08
hereto, neither the Company nor any of its Subsidiaries is a party to any, and
there are no pending or, to the best knowledge of the Company, threatened,
legal, administrative, arbitral or other proceedings, claims, actions or
governmental or regulatory investigations of any nature against or affecting the
Company or any of its Subsidiaries or any property or asset of the Company or
any of its Subsidiaries, before any court, arbitrator or administrative,
Governmental Entity, domestic or foreign, which would, either individually or in
the aggregate, have a Material Adverse Effect on the Company, and no facts or
circumstances have come to the Company's attention which have caused it to
believe that such a claim, action, proceeding or investigation against or
affecting the Company or any of its Subsidiaries could reasonably be expected to
occur. Neither the Company nor any of its Subsidiaries nor any property or asset
of the Company or any of its Subsidiaries is subject to any order, writ,
judgment, injunction, decree, determination or award which restricts its ability
to conduct business in any area in which it presently does business or has or
could reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect on the Company.
3.09 TAXES AND TAX RETURNS.
(a) For purposes of this Agreement, the terms "Tax" and
"Taxes" shall mean any and all taxes, charges, fees, levies or other
assessments, including, without limitation, all net income, gross
income, gross receipts, premium, sales, use, ad valorem, value added,
transfer, franchise, profits, license, withholding, payroll,
employment, excise, estimated, severance, stamp, occupation, property
or other taxes, fees, assessments or charges of any kind whatsoever,
together with any interest and any penalties (including penalties for
failure to file in accordance with applicable information reporting
requirements), and additions to tax by any authority, whether federal,
state, or local or domestic or foreign. The term "Tax Return" shall
mean any report, return, form, declaration or other document or
information required to be supplied to any authority in connection with
Taxes. The term "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(b) Each of the Company and its Subsidiaries (the "Taxpayers")
has filed all Tax Returns that were required to be filed. All such Tax
Returns were when filed, and continue to be, correct and complete in
all material respects. All Taxes owed by the Taxpayers
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(whether or not shown on any Tax Return) have been timely paid. Except
as set forth on Schedule 3.09(b) annexed hereto, none of the Taxpayers
currently is the beneficiary of any extension of time within which to
file any Tax Return. No claim has ever been made by an authority in a
jurisdiction where any of the Taxpayers does not file Tax Returns that
it is or may be subject to taxation by that jurisdiction. There are no
liens with respect to Taxes on any of the assets or property of any of
the Taxpayers, except for liens with respect to Taxes not yet payable.
(c) Each of the Taxpayers has withheld or collected and paid
all Taxes required to have been withheld or collected and paid in
connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, an other third party, or otherwise.
(d) There is no dispute or claim concerning any Tax Liability
of any of the Taxpayers either (A) claimed or raised by any authority
in writing or (B) as to which any of the Taxpayers or the directors and
officers (and employees responsible for Tax matters) of any of the
Taxpayers has knowledge. There are no proceedings with respect to Taxes
pending, except as set forth on Schedule 3.09(d) annexed hereto.
(e) Schedule 3.09(e) annexed hereto sets forth an accurate,
correct and complete list of all federal, state, local, and foreign Tax
Returns filed with respect to the Taxpayers for taxable periods ended
on or after November 30, 1991, indicates those Tax Returns that have
been audited and indicates those Tax Returns that currently are the
subject of audit. The Company has delivered to the Parent correct and
complete copies of all federal income Tax Returns, examination reports,
and statements of deficiencies assessed against or agreed to by or on
behalf of any of the Taxpayers since December 1, 1991. To the knowledge
of the Taxpayers and their directors and officers (and employees
responsible for Tax matters), no other audit or investigation with
respect to Taxes is pending or has been threatened.
(f) None of the Taxpayers have waived any statute of
limitations in respect of Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency.
(g) None of the assets of any of the Taxpayers are assets that
Sub or the Parent is or shall be required to treat as being owned by
another person pursuant to the provisions of Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended and in effect immediately
before the enactment of the Tax Reform Act of 1986, or is "tax-exempt
use property" within the meaning of Section 168(h)(1) of the Code.
(h) None of the Taxpayers has agreed to make, nor is it
required to make, any adjustments under Section 481(a) of the Code by
reason of a change in accounting method or otherwise.
(i) None of the Taxpayers is a party to any contract,
arrangement or plan that has resulted or would result, separately or in
the aggregate, in the payment of any "excess parachute payments" within
the meaning of Section 280G of the Code, or the payment of any
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consideration which would not be deductible by reason of Section 162(m)
of the Code.
(j) None of the Taxpayers has been a United States real
property holding corporation within the meaning of Code Section
897(c)(2) during the applicable period specified in Code Section
897(c)(1)(A)(ii).
(k) None of the Taxpayers is a party to any agreement, whether
written or unwritten, providing for the payment of Tax liabilities,
payment for Tax losses, entitlements to refunds or similar Tax matters.
(l) No ruling with respect to Taxes relating to any of the
Taxpayers has been requested by or on behalf of the Taxpayers.
(m) None of the Taxpayers (A) has never been a member of an
affiliated group (within the meaning of Section 1504 of the Code, or
any similar group as defined for state, local or foreign tax purposes)
filing a consolidated federal (or combined or unitary state, local or
foreign) income Tax Return or (B) has any liability for the taxes of
any Person (other than the Taxpayers) under Reg. Section 1.1502-6 (or
any similar provision of state, local or foreign Law), as a transferee
or successor, by contract, or otherwise.
(n) The unpaid Taxes of the Taxpayers (A) did not, as of the
most recent fiscal quarter end, exceed the reserves for Tax liability
(rather than any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) on their respective
books at such time and (B) do not exceed that reserve as adjusted for
the passage of time through the Effective Date in accordance with the
past custom and practice of the Taxpayers in filing their Tax Returns.
(o) Schedule 3.09 sets forth the following information with
respect to each of the Company and its Subsidiaries as of the most
recent practicable date (as well as on an estimated pro forma basis as
of the Effective Date giving effect to the consummation of the
transactions contemplated hereby): (A) the basis of each of the Company
and its Subsidiaries in its assets; and (B) the amount of any net
operating loss, net capital loss, unused investment or other credit,
unused foreign tax, or excess charitable contribution allocable to each
of the Company and its Subsidiaries.
(p) None of the Company or its Subsidiaries has filed an
election, consent or agreement under Section 341(f) of the Code.
(q) For purposes of this Section 3.09, references to the
Taxpayers shall also refer to any predecessor companies.
3.10 EMPLOYEE BENEFIT PLANS.
(a) Schedule 3.10 hereto sets forth a true and complete list
of all Plans maintained
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or contributed to by the Company or any of its Subsidiaries during the
five (5) years preceding this Agreement. The term "Plans" for purposes
of this Article III means all employee benefit plans, arrangements or
agreements that are maintained or contributed to, or that were
maintained or contributed to at any time during the five (5) years
preceding the date of this Agreement, by the Company or any of its
Subsidiaries, or by any trade or business, whether or not incorporated
(an "ERISA Affiliate"), all of which together with the Company would be
deemed a "single employer" within the meaning of Section 4001 of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
(b) The Company has heretofore delivered to Parent true and
complete copies of each of the Plans and all related documents,
including but not limited to (i) all required Forms 5500 and all
related schedules for such Plans (if applicable) for each of the last
two (2) years, (ii) the actuarial report for such Plan (if applicable)
for each of the last two (2) years, and (iii) the most recent
determination letter from the IRS (if applicable) for such plan.
(c) (i) Except as may be provided in Schedule 3.10 hereto,
each of the Plans has been operated and administered in all material
respects in accordance with applicable laws, including but not limited
to ERISA and the Code, (ii) each of the Plans intended to be
"qualified" within meaning of Section 401(a) of the Code has been
maintained so as to qualify from the effective date of such Plan to the
Effective Time, (iii) with respect to each Plan which is subject to
Title IV of ERISA, the present value of "benefit liabilities" (within
the meaning of Section 4001(a)(16) of ERISA) under such Plan, based
upon the actuarial assumptions currently used by the Plan for IRS
funding purposes did not, as of its latest valuation date, exceed the
then current value of the assets of such Plan allocable to such accrued
benefits, and there has been no "accumulated funding deficiency"
(whether or not waived), (iv) no Plan provides benefits, including
without limitation death, medical or other benefits (whether or not
insured), with respect to current or former employees of the Company,
any of its Subsidiaries or any ERISA Affiliate beyond their retirement
or other termination of service, other than (u) coverage mandated by
applicable law, (v) life insurance death benefits payable in the event
of the death of a covered employee, (w) disability benefits payable to
disabled former employees, (x) death benefits or retirement benefits
under any "employee pension plan," as that term is defined in Section
3(2) of ERISA, (y) deferred compensation benefits accrued as
liabilities on the books of the Company, any of its Subsidiaries or any
ERISA Affiliate or (z) benefits the full cost of which is borne by the
current or former employee (or his beneficiary), (v) with respect to
each Plan subject to Title IV of ERISA no liability under Title IV of
ERISA has been incurred by the Company, any of its Subsidiaries or any
ERISA Affiliate that has not been satisfied in full, no condition
exists that presents a material risk to the Company, any of its
Subsidiaries or any ERISA Affiliate of incurring a material liability
to or on account of such Plan, and there has been no "reportable event"
(within the meaning of Section 1013 of ERISA and the regulations
thereunder), (vi) none of the Company, any of its Subsidiaries or any
ERISA Affiliate has ever maintained or contributed to a "multiemployer
pension plan," as such term is defined in Section 3(37) of ERISA, (vii)
all contributions or other amounts payable by the Company or any of its
Subsidiaries as of the Effective Time with respect to each Plan in
respect of
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current or prior plan years have been paid or accrued in accordance
with GAAP and Section 412 of the Code, (viii) none of the Company, any
of its Subsidiaries or any ERISA Affiliate has engaged in a transaction
in connection with which the Company, any of its Subsidiaries or any
ERISA Affiliate has any material liability for either a civil penalty
assessed pursuant to Section 409 or 502(i) of ERISA or a tax imposed
pursuant to Section 4975 or 4976 of the Code, (ix) consummation of the
transactions contemplated hereby will not cause any amounts payable
under any of the Plans to fail to be deductible for federal income tax
purposes under Sections 280G or 162(m) of the Code, and (x) there are
no pending or, to the best knowledge of the Company, threatened or
anticipated claims (other than routine claims for benefits) by, on
behalf of or against any of the Plans or any trusts related thereto.
(d) With respect to any Plan that is a welfare plan (within
the meaning of Section 3(1) of ERISA (i) no such Plan is funded through
a "welfare benefit fund," as such term is defined in Section 419(a) of
the Code, and (ii) each such Plan complies in all material respects
with the applicable requirements of Section 4980B(f) of the Code, Part
6 of Subtitle B of Title I of ERISA and any applicable state
continuation coverage requirements ("COBRA").
(e) Except as prohibited by law (including Section 411(d)(6)
of the Code), each Plan may be amended, terminated, modified or
otherwise revised by the Company, any of its Subsidiaries or its ERISA
Affiliates as of the Effective Time to eliminate, without material
effect, any and all future benefit accruals under any Plan (except
claims incurred under any welfare plan).
(f) Except as set forth on Schedule 3.10, since May 31, 1998,
neither the Company nor any of its Subsidiaries has entered into,
adopted or amended in any respect any collective bargaining agreement
or adopted or amended any bonus, profit sharing, compensation, stock
option, pension, retirement, deferred compensation, insurance or other
similar plan, agreement, trust, fund or arrangement for the benefit of
employees (whether or not legally binding).
3.11 SEC REPORTS. The Company has previously delivered to Parent an
accurate and complete copy of each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement of the Company filed since
January 1, 1993 with the Securities and Exchange Commission (the "SEC") pursuant
to the Exchange Act or the Securities Act of 1933, as amended (the "Securities
Act") (collectively, the "Company SEC Reports"), and (b) communication mailed by
or on behalf of the Company to its stockholders since January 1, 1993. The
Company has timely filed (either by the required filing date or pursuant to Rule
12b-25 promulgated under the Exchange Act) all Company SEC Reports and other
documents required to be filed by it under the Securities Act and the Exchange
Act and, as of their respective dates, all Company SEC Reports complied with all
of the rules and regulations of the SEC with respect thereto. As of their
respective dates, no such Company SEC Reports or communications 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 in which they were made, not misleading.
The
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Company has made available to Parent true and complete copies of all amendments
and modifications to all agreements, documents and other instruments which
previously had been filed with the SEC by the Company and which are currently in
effect.
3.12 COMPANY INFORMATION. The information supplied by the Company
relating to the Company and its Subsidiaries contained in the proxy statement
and related materials to be sent to the stockholders of the Company in
connection with the Company Stockholder Meeting (the "Proxy Statement"), or in
any other document filed with any other regulatory agency in connection
herewith, will not contain, on the date of mailing of the Proxy Statement and on
the date of the Company Stockholder Meeting, any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances in which
they are made, not false or misleading or necessary to correct any statement in
any earlier communication with respect to the solicitation of proxies for the
Company Stockholder Meeting which shall have become false or misleading. The
Proxy Statement will comply in all material respects with the provisions of the
Securities Act and the Exchange Act and the rules and regulations thereunder and
the rules and regulations of the SEC with respect thereto. Nothing in this
Section 3.12 relates to any information concerning Parent or Sub or their
businesses, contracts, litigation, stockholders, directors or officers.
3.13 COMPLIANCE WITH APPLICABLE LAW; CERTAIN AGREEMENTS. Except as
set forth in Schedule 3.13 hereto, each of the Company and its Subsidiaries
holds all material licenses, franchises, permits and authorizations necessary
for the lawful conduct of its business under and pursuant to all, and has
complied with and is not in conflict with, or in default or violation of any (a)
statute, code, ordinance, law, rule, regulation, order, writ, judgment,
injunction or decree, published policies and guidelines of any Governmental
Entity, applicable to the Company or Subsidiary or by which any property or
asset of the Company or Subsidiary is bound or affected or (b) any note, bond,
mortgage, indenture, deed of trust, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or Subsidiary
is a party or by which the Company or Subsidiary or any property or asset of the
Company or Subsidiary is bound or affected, except for any such non-compliance,
conflicts, defaults or violations that would not, individually or in the
aggregate, have a Material Adverse Effect; and the Company neither knows of, nor
has received notice of, any material violations of any the above. In addition to
the foregoing, the Company has in place, and is in compliance with, plans
regarding Hazard Analysis Critical Control Points for each facility of the
Company.
3.14 CERTAIN CONTRACTS.
(a) Except as set forth in Schedule 3.14 hereto, neither the
Company nor any of its Subsidiaries is a party to or bound by any
contract, arrangement, commitment or understanding (whether written or
oral): (i) with respect to the employment of any director, officer or
employee, or with respect to the employment of any consultant which
cannot be terminated with a payment of less than $25,000, (ii) which,
upon the consummation of the transactions contemplated by this
Agreement, will result in any payment (whether of severance pay or
otherwise) becoming due from the Company or any of its Subsidiaries to
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any officer or employee thereof, (iii) which is a material contract (as
defined in Item 601(b)(10) of Regulation S-B of the SEC) to be
performed after the date of this Agreement that has not been filed or
incorporated by reference in the Company SEC Reports, (iv) which is a
consulting or other agreement (including agreements entered into in the
ordinary course and data processing, software programming and licensing
contracts) not terminable on ninety (90) days or less notice and
involves the payment of more than $25,000 per annum, (v) which
restricts the conduct of any line of business by the Company or any of
its Subsidiaries, (vi) with or to a labor union or guild (including any
collective bargaining agreement), or (vii) (including any stock option
plan, stock appreciation rights plan, restricted stock plan or stock
purchase plan) any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence
of any of the transactions contemplated by this Agreement, or the value
of any of the benefits of which will be calculated on the basis of any
of the transactions contemplated by this Agreement. The Company has
previously delivered to Parent true and complete copies of all
employment, consulting and deferred compensation agreements which are
in writing and to which the Company is a party. Each contract,
arrangement, commitment or understanding of the type described in this
section is referred to herein as a "Company Contract".
(b) Except as set forth in Schedule 3.14(b) hereto, (i) each
Company Contract is legal, valid and binding upon the Company or a
Subsidiary of the Company, as the case may be, assuming due
authorization of the other party or parties thereto, and in full force
and effect, (ii) the Company or Subsidiary, as the case may be, has in
all material respects performed all obligations required to be
performed by it to date under each such Company Contract, and (iii) no
event or condition exists which constitutes or, after notice or lapse
of time or both, would constitute, a default on the part of the Company
or Subsidiary, as the case may be, under any such Company Contract.
(c) Neither the Company nor its Subsidiaries has made any
express warranty to any person or entity with respect to any product it
manufactures or sells or has manufactured or sold or has made or agreed
to make any indemnification payment, or replacement with respect to any
product warranty claim, except for (i) the warranties and/or
agreement(s) to indemnify or replace product of which true and correct
copies have been delivered to Parent, (ii) the warranties applicable
under the Uniform Commercial Code as in effect from time to time in the
jurisdictions in which its products are sold and (iii) any other
warranties under other state or federal laws.
3.15 AGREEMENTS WITH REGULATORY AGENCIES. Neither the Company nor any
of its Subsidiaries is subject to any cease-and-desist or other order issued by,
or is a party to any written agreement, consent agreement or memorandum of
understanding, commitment letter or similar undertaking (each a "Regulatory
Agreement") with any Regulatory Agency or other Governmental Entity that
restricts the conduct of its business in any material respect, nor has the
Company or any of its Subsidiaries been notified by any Regulatory Agency or
other Governmental Entity that it is considering issuing or requesting any
Regulatory Agreement.
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3.16 ENVIRONMENTAL MATTERS.
(a) The Company and its Subsidiaries are, and have been, in
material compliance with all applicable environmental laws and with all
rules, regulations, standards and requirements of the United States
Environmental Protection Agency (the "EPA") and of state and local
agencies with jurisdiction over pollution or protection of the
environment.
(b) There is no suit, claim, action or proceeding pending or,
to the best knowledge of the Company, threatened, before any
Governmental Entity or other forum in which the Company or any of its
Subsidiaries have been or, with respect to threatened proceedings, may
be named as a defendant, responsible party or potentially responsible
party (i) for alleged noncompliance (including by any predecessor),
with any environmental law, rule, regulation, standard or requirement
or (ii) relating to the release into or presence in the Environment (as
hereinafter defined) of any Hazardous Materials (as hereinafter
defined) or Oil (as hereinafter defined) whether or not occurring at or
on a site owned, leased or operated by the Company or any of its
Subsidiaries.
(c) Neither the Company nor any of its Subsidiaries has
received any notice regarding a matter on which a suit, claim, action
or proceeding as described in subsection (b) of this Section 3.16 could
reasonably be based. No facts or circumstances have come to the
Company's attention which have caused either to believe that a material
suit, claim, action or proceeding as described in subsection (b) of
this Section 3.16 could reasonably be expected to occur.
(d) Except as set forth in the Environmental Site Assessment
Reports described in Schedule 3.16(d) hereto, during the period of the
ownership or operation by the Company or any of its Subsidiaries of any
of their respective current properties, there has been no release or
presence in the Environment of Hazardous Material or Oil in, on, under
or affecting such property. To the best knowledge of the Company, prior
to the period of the ownership or operation by the Company or any of
its Subsidiaries of any of their respective current properties or any
previously owned or operated properties, there was no release or
presence in the Environment of Hazardous Material or Oil in, on, under
or affecting any such property.
(e) The following definitions apply for purposes of this
Agreement: (i) "Hazardous Material" means any pollutant, contaminant,
or hazardous substance or hazardous material as defined in or pursuant
to the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. Section 9601 et seq., or any other federal, state or
local environmental law, regulation or requirement; (ii) "Oil" means
oil or petroleum of any kind or origin or in any form, as defined in or
pursuant to the Federal Clean Water Act, 33 U.S.C. Section 1251 et
seq., or any other federal, state or local environmental law,
regulation or requirement; and (iii) "Environment" means any soil,
surface waters, groundwaters, stream sediments, surface or subsurface
strata, and ambient air and any other environmental medium.
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3.17 PROPERTIES.
(a) Schedule 3.17 hereto contains a true, complete and correct
list and a brief description (including carrying value) of all real
properties owned by the Company or any of its Subsidiaries. Except as
set forth in Schedule 3.17 hereto, the Company or its Subsidiaries has
good and marketable title to all the real property and other property
owned by it and included in the balance sheet of the Company for the
period ended May 31, 1998, and owns such property subject to no
encumbrances, liens, mortgages, security interests, pledges or title
imperfections except for (i) those items that secure liabilities that
are reflected in such balance sheet or the notes thereto, (ii)
statutory liens for amounts not yet delinquent or which are being
contested in good faith, (iii) with respect to owned real property,
title imperfections noted in title reports, and (iv) those items that
do not, individually or in the aggregate, have a Material Adverse
Effect on the Company or which do not and will not interfere with the
use of the property as currently used or contemplated to be used by the
Company or its Subsidiaries, or the conduct of the business of the
Company or its Subsidiaries.
(b) Neither the Company nor any of its Subsidiaries has
received any notice of a material violation of any applicable zoning or
environmental regulation, ordinance or other law, order, regulation or
requirement relating to its operations or its properties and, to the
knowledge of the Company, there is no such violation. Except as set
forth in Schedule 3.17 hereto, all buildings and structures owned and
used by the Company or any of its Subsidiaries conform in all material
respects with all applicable ordinances, codes or regulations, except
to the extent such noncompliance does not or will not have a Material
Adverse Effect on the Company and which does not or will not interfere
with the use of any property as currently used or contemplated to be
used by the Company or its Subsidiaries, or the conduct of the business
of the Company or its Subsidiaries. Except as set forth in Schedule
3.17 hereto, to the knowledge of the Company, all buildings and
structures leased and used by the Company or any of its Subsidiaries
conform in all material respects with all applicable ordinances, codes
or regulations, except to the extent such noncompliance does not or
will not have a Material Adverse Effect on the Company and which does
not or will not interfere with the use of any property as currently
used or contemplated to be used by the Company or its Subsidiaries, or
the conduct of the business of the Company or its Subsidiaries.
(c) Schedule 3.17 contains a true, complete and correct list
of all leases pursuant to which the Company or any of its Subsidiaries
leases any real or personal property, either as lessee or as lessor
(the "Company Leases"). Assuming due authorization of the other party
or parties thereto, each of the Company Leases is valid and binding on
the Company or Subsidiary, as the case may be, and, to the best of the
Company's knowledge, valid and binding on and enforceable against all
other respective parties to such leases, in accordance with their
respective terms. Except to the extent such breaches, defaults or
events of default do not or will not have a Material Adverse Effect on
the Company and which do not or will not interfere with the use of any
property as currently used or contemplated to be used by the
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Company or its Subsidiaries, or the conduct of the business of the
Company or its Subsidiaries, there are not under such Company Leases
any existing breaches, defaults or events of default by the Company or
any of its Subsidiaries, nor has the Company or any of its Subsidiaries
received notice of, or made a claim with respect to, any breach or
default by any other party to such Company Leases. Each of the Company
and its Subsidiaries enjoys quiet and peaceful possession of all such
leased properties occupied by it as lessee.
(d) All of the real properties, leasehold improvements and
items of equipment and other material personal property owned, leased,
or licensed by the Company or any of its Subsidiaries, or in which any
of those parties hold an interest, are in good maintenance, repair and
operating condition, ordinary wear and tear excepted, are adequate for
the purpose for which they are now being or are anticipated to be used,
and, to the best of the Company's knowledge, are free from any material
defects.
3.18 INSURANCE. The Company has made available to Parent true and
complete copies of all material policies of insurance of the Company or any of
its Subsidiaries currently in effect. All of the policies relating to insurance
maintained by the Company or any of its Subsidiaries with the respect to its
material properties and the conduct of its business in any material respect (or
any comparable policies entered into as a replacement thereof) are in full force
and effect and neither the Company nor any of its Subsidiaries has received any
notice of cancellation with respect thereto. All life insurance policies on the
lives of any of the current and former officers of the Company or any of its
Subsidiaries which are maintained by the Company or any of its Subsidiaries or
which are otherwise included as assets on the books of the Company (i) are, or
will at the Effective Time be, owned by the Company or any of its Subsidiaries,
free and clear of any claims thereon by the officers or members of their
families, except with respect to the death benefits thereunder, as to which the
Company agrees that there will not be an amendment prior to the Effective Time
without the consent of Parent, and (ii) are accounted for properly on the books
of the Company in accordance with GAAP. The Company does not have any material
liability for unpaid premium or premium adjustments not properly reflected on
the Company's May 31, 1998 balance sheet. The Company and its Subsidiaries have
been and are adequately insured with respect to their respective property and
the conduct of their respective business in such amounts and against such risks
as are substantially similar in kind and amount to that customarily carried by
parties similarly situated who own properties and engage in businesses
substantially similar to that of the Company (including without limitation
liability insurance and blanket bond insurance). All claims under any policy or
bond have been duly and timely filed.
3.19 TRANSACTIONS WITH CERTAIN PERSONS. Except as disclosed in the
Company SEC Reports or otherwise set forth on Schedule 3.19 hereto, since April
1, 1996, neither the Company nor any of its Subsidiaries has entered into any
transaction or series of transactions, in which the amount involved exceeded
$10,000, with any executive officer, director or greater-than-5% stockholder of
the Company or any "associate" (as defined in Rule 14a-1 under the Exchange Act)
of any such officer or director or "affiliates" (as defined in Rule 144(a)(1) of
the Securities Act) of any such officer, director or stockholder.
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3.20 LABOR MATTERS. Neither the Company nor any of its Subsidiaries is
a party to any collective bargaining or other labor union or guild contract nor
has the Company or any of its Subsidiaries been approached since November 30,
1997 by any collective bargaining or other labor union or guild seeking to enter
into a contract with the Company or any of its Subsidiaries. There is no pending
or, to the best knowledge of the Company, threatened, labor dispute, strike or
work stoppage against the Company or any of its Subsidiaries which may interfere
with the business activities of the Company or any of its Subsidiaries. None of
the Company, any of its Subsidiaries or their respective representatives or
employees has committed any unfair labor practices in connection with the
operation of the business of the Company or any of its Subsidiaries, and there
is no pending or, to the best knowledge of the Company, threatened charge or
complaint against the Company or any of its Subsidiaries by the National Labor
Relations Board or any comparable state agency. Except as set forth on Schedule
3.20 hereto, to its knowledge, neither the Company nor its Subsidiaries has
hired any illegal aliens as employees. To its knowledge, neither the Company nor
its Subsidiaries has discriminated on the basis of race, age, sex or otherwise
in its employment conditions or practices with respect to its employees. There
are no race, age, sex or other discrimination complaints pending, or, to the
knowledge of the Company, threatened against the Company or any of its
Subsidiaries by any employee, former or current, before any domestic (federal,
state or local) or foreign board, department, commission or agency nor, to the
knowledge of the Company, does any basis therefor exist. There are no pending
or, to the knowledge of the Company, threatened representation questions
respecting any employees.
3.21 INTELLECTUAL PROPERTY. The Company and its Subsidiaries own or
possess valid and binding licenses and other rights to use without payment of
any material amount all material patents, copyrights, trade secrets, trade
names, service marks, trademarks, software and other intellectual property used
in its business, which are set forth in Schedule 3.21 hereto; neither the
Company nor any of its Subsidiaries has received any notice of conflict with
respect thereto that asserts the right of others. The Company and its
Subsidiaries have performed in all material respects all the obligations
required to be performed by it with respect to the items of intellectual
property set forth in Schedule 3.21 hereto and are not in default under any
contract, agreement, arrangement or commitment relating to any of the foregoing.
3.22 SUBSTANTIAL SUPPLIERS AND CUSTOMERS. Except as set forth on
Schedule 3.22 hereto, since November 30, 1997, none of the top ten (10)
suppliers (by dollar volume) or the top ten (10) customers (by dollar volume) of
the Company and its Subsidiaries, taken as a whole, has substantially reduced
the use or supply of the products or goods made available for purchase by the
Company or its Subsidiaries in their business or has ceased, or threatened to
cease, to use or to supply such products or goods, and the Company does not have
any reason to believe that any such supplier or customer will do so.
3.23 BROKER'S FEES. Neither the Company nor any of its officers or
directors, has employed any broker or finder or incurred any liability for any
broker's fees, commissions or finder's fees in connection with any of the
transactions contemplated by this Agreement, except pursuant to an agreement
dated June 5, 1998 between the Company and Ladenburg Thalmann & Company.
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3.24 DISCLOSURE. No representation or warranty contained in this
Agreement or any schedule to this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements herein or therein, in light of the circumstances in which they are
made, not misleading.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub hereby represent and warrant to the Company as follows:
4.01 CORPORATE ORGANIZATION.
(a) Each of Parent and Sub is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware. Each of Parent and Sub has the corporate power and authority
to own or lease all of its properties and assets and to carry on its
business as it is now being conducted, and is duly licensed or
qualified to do business in each jurisdiction in which the nature of
the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or
qualified would not have a Material Adverse Effect on Parent. The
Certificate of Incorporation and Bylaws of each of Parent and Sub,
copies of which have previously been delivered to the Company, are true
and complete copies of such documents as in effect as of the date of
this Agreement.
(b) Parent has no direct or indirect Subsidiaries other than
Sub and is the sole stockholder of Sub. Sub has no direct or indirect
Subsidiaries. Neither Parent nor Sub owns, controls or holds with the
power to vote, directly or indirectly of record, beneficially or
otherwise, any capital stock or any equity or ownership interest in any
corporation, partnership, association, joint venture or other entity,
except for (i) Parent's ownership of Sub, (ii) Parent's ownership of
Company Common Stock and (iii) less than five percent (5%) of any
equity security registered under the Exchange Act.
(c) The minute books of each of Parent and Sub contain true,
complete and accurate records of all meetings and other corporate
actions held or taken by their respective stockholders and boards of
directors (including committees of their respective boards of
directors).
4.02 AUTHORITY; NO VIOLATION.
(a) Each of Parent and Sub have full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by Parent and Sub and the consummation by Parent and Sub of
the transactions contemplated hereby have been duly and validly
approved by the
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Board of Directors of Parent and Sub, respectively. Except for the
filing of the Certificate of Merger, no other corporate proceedings on
the part of Parent or Sub are necessary to approve this Agreement and
to consummate the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by Parent and Sub and
(assuming the due authorization, execution and delivery by the Company)
constitutes a valid and binding obligation of Parent and Sub,
enforceable against Parent and Sub in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by
each of Parent and Sub, nor the consummation by either Parent or Sub,
as the case may be, of the transactions contemplated hereby, nor
compliance by either Parent or Sub with any of the terms or provisions
hereof, will (i) violate, conflict with or result in a breach of any
provision of the Certificate of Incorporation or Bylaws of Parent, or
Sub, as the case may be, or (ii)(x) violate any statute, code,
ordinance, rule, regulations, judgment, order, writ, decree or
injunction applicable to the Parent or Sub or any of their respective
properties or assets, or (y) violate, conflict with, result in a breach
of any provisions of or the loss of any benefit under, constitute a
default (or any event which, with notice or lapse of time, or both,
would constitute a default) under, result in the termination of or a
right of termination or cancellation under, accelerate the performance
required by, or result in the creation of any lien, pledge, security
interest, charge or other encumbrance upon any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which
Parent or Sub is a party, or by which they or any of their respective
properties or assets may be bound or affected, except (in the case of
clause (y) above) for such violations, conflicts, breaches or defaults
which, either individually or in the aggregate, will not have a
Material Adverse Effect on Parent.
4.03 CONSENTS AND APPROVALS. Except for the filing of the Certificate
of Merger with the Delaware Secretary pursuant to the DGCL to effect the Merger,
no consents or approvals of or filings or registrations with any Governmental
Entity or with any third party are necessary in connection with the execution
and delivery by Parent and Sub of this Agreement and the consummation by Parent
and Sub of the Merger and the other transactions contemplated hereby.
4.04 SEC REPORTS. Parent has previously delivered to the Company an
accurate and complete copy of each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement of Parent filed since Parent's
initial public offering in June 1993 with the SEC pursuant to the Exchange Act
or the Securities Act (collectively, the "Parent SEC Reports"), and (b)
communication mailed by or on behalf of the Parent to its stockholders since
June 1, 1993. Parent has timely filed (either by the required filing date or
pursuant to Rule 12b-25 promulgated under the Exchange Act) all Parent SEC
Reports and other documents required to be filed by it under the Securities Act
and the Exchange Act and, as of their respective dates, all Parent SEC Reports
complied with all of the rules and regulations of the SEC with respect thereto.
As of their respective dates, no such Parent SEC Reports or communications
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 in which they were made, not
misleading. Parent
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has made available to the Company true and complete copies of all amendments and
modifications to all agreements, documents and other instruments which
previously had been filed with the SEC by Parent and which are currently in
effect. Since March 31, 1998, there has not been any Material Adverse Effect on
Parent and, to the best knowledge of Parent, no fact or condition exists which
will, or is reasonably likely to, cause such a Material Adverse Effect on Parent
in the future.
4.05 FINANCIAL ABILITY TO PERFORM. Parent has delivered to the Company
prior to the date of this Agreement a letter from a financing source acceptable
to the Company regarding its commitment to fund an amount sufficient to pay the
Merger Consideration. As of the date of this Agreement, Parent knows of no
reason that the financing source will not be able to consummate the Financing.
4.06 DISCLOSURE. No representation or warranty contained in this
Agreement contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements herein, in light of the
circumstances in which they are made, not misleading. No information material to
the Merger and which is necessary to make Parent's and Sub's representations and
warranties hereto contained not misleading, has been withheld from, or has not
been delivered in writing to the Company.
ARTICLE V.
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.01 COVENANTS OF THE COMPANY. During the period from the date of this
Agreement and continuing until the Effective Time, except as expressly
contemplated or permitted by this Agreement or with the prior written consent of
Parent, the Company shall (and shall cause its Subsidiaries to) carry on its
business in the ordinary course consistent with past practice. The Company will
(and shall cause its Subsidiaries to) use all reasonable efforts to (x) preserve
its business organization, (y) keep available the present services of its
employees and (z) preserve for itself and Parent the goodwill of the customers
of the Company and its Subsidiaries and others with whom business relationships
exist. Without limiting the generality of the foregoing, and except as otherwise
contemplated by this Agreement or consented to in writing by Parent, the Company
shall not (and shall cause its Subsidiaries not to):
(a) declare or pay any dividends on, or make other
distributions in respect of, any of its capital stock;
(b) (i) split, combine or reclassify any shares of its capital
stock; or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of
its capital stock except upon the exercise or fulfillment of rights or
options issued or existing pursuant to employee benefit plans, programs
or arrangements, all to the extent outstanding and in existence on the
date of this Agreement, or (ii) repurchase, redeem or otherwise
acquire, any shares of the capital stock of the Company, or any
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securities convertible into or exercisable for any shares of the
capital stock of the Company;
(c) except in connection with the exercise of any of the
options or warrants of the Company outstanding as of the date of this
Agreement, issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or any
securities convertible into or exercisable for, or any rights, warrants
or options to acquire, any such shares, or enter into any agreement
with respect to any of the foregoing;
(d) amend its Certificate of Incorporation or Bylaws;
(e) except as set forth on Schedule 5.01(e), make any capital
expenditures in excess of $50,000 individually, or $150,000 in the
aggregate;
(f) enter into any new line of business;
(g) (i) acquire or agree to acquire, by merging or
consolidating with, or by purchasing a substantial equity interest in
or a substantial portion of the assets of or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof or (ii) otherwise acquire any assets,
other than in the ordinary course of business, which would be material
to the Company and its Subsidiaries, taken as a whole;
(h) take any action that is intended or would result in any of
its representations and warranties set forth in this Agreement being or
becoming untrue, or in any of the conditions to the Merger set forth in
Article VII not being satisfied, or in breach of any provision of this
Agreement except, in every case, as may be required by applicable law;
(i) change its methods of accounting in effect at November 30,
1997, except as required by changes in GAAP or regulatory accounting
principles as concurred to by the Company's independent auditors;
(j) except as set forth on Schedule 5.01(j), (i) except as
required by applicable law or to maintain qualification pursuant to the
Code, (x) enter into, adopt, amend, renew or terminate any Plan or any
agreement, arrangement, plan or policy between the Company or any of
its Subsidiaries and one or more of its current or former directors,
officers or employees or (y) increase in any manner compensation or
fringe benefits of any director, officer or employee or pay any benefit
not required by any plan or agreement as in effect as of the date
hereof (including, without limitation, the granting of stock options,
stock appreciation rights, restricted stock, restricted stock units or
performance units or shares); provided, however, that the Company or
its Subsidiaries may increase the compensation of non-officer employees
in the ordinary course of business consistent with past practice; or
(ii) except for the Bogen Agreement or the Smith Agreement, enter into,
modify or renew any employment, severance or other agreement with any
director, officer or employee of the Company or any of its Subsidiaries
or establish, adopt, enter into, or amend any collective
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bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust,
fund, policy or arrangement providing for any benefit to any director,
officer or employee (whether or not legally binding);
(k) other than (i) as set forth on Schedule 5.01(k), (ii) in
the ordinary course of business consistent with past practice or (iii)
to refinance existing debt with indebtedness under the Company's
revolving credit facility, incur any indebtedness for borrowed money,
assume, guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any other individual, corporation or
other entity;
(l) other than (i) as set forth on Schedule 5.01(l) or (ii) in
the ordinary course of business consistent with past practice, sell,
lease, encumber, assign or otherwise dispose of, or agree to sell,
lease, encumber, assign or otherwise dispose of, any of its material
assets, properties or other rights or agreements;
(m) make any Tax election or settle or compromise any material
federal, state, local or foreign Tax liability;
(n) pay, discharge or satisfy any claim, liability or
obligation, other than the payment, discharge or satisfaction in the
ordinary course of business and consistent with past practice or as
incurred in connection with the Merger and the transactions expressly
contemplated hereby, subject to the limitation on fees set forth in
Section 8.03(a) hereof, of liabilities reflected or reserved against in
the balance sheet for the fiscal year ended November 30, 1997, or
subsequently incurred in the ordinary course of business and consistent
with past practice;
(o) except as set forth on Schedule 5.01(o), enter into or
renew amend or terminate, or give notice of a proposed renewal
amendment or termination, or make any commitment with respect to,
regardless of whether consistent with past practices, any lease,
contract, agreement or commitment (i) involving an aggregate payment by
or to the Company of more than $100,000, (ii) having a term of one year
or more from the time of execution or (iii) outside of the ordinary
course of business consistent with past practices;
(p) waive any material right, whether in equity or at law; or
(q) agree to do any of the foregoing.
5.02 COVENANTS OF PARENT AND SUB. During the period from the date of
this Agreement and continuing until the Effective Time, except (i) as expressly
contemplated or permitted by this Agreement or the Commitment Letter(s) or (ii)
with the prior written consent of the Company, Parent shall not (and shall cause
Sub not to) take any action that is intended or would result in any of its
representations and warranties set forth in this Agreement being or becoming
untrue, or in any of the conditions to the Merger set forth in Article VII
(including, without limitation, Section 7.01(d)
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hereof relating to the Financing) not being satisfied, or in breach of any
provision of this Agreement except, in every case, as may be required by
applicable law.
5.03 NO SOLICITATION; NON-DISCLOSURE.
(a) None of the Company, any of its Subsidiaries or any of
their respective directors, officers, employees, representatives,
agents and advisors or other persons controlled by the Company shall
solicit or hold discussions or negotiations with, or assist or provide
any information to, any person, entity or group (other than Parent, Sub
and their affiliates and representatives) concerning any merger,
business combination, disposition of a significant portion of its
assets, or acquisition of a significant portion of its capital stock or
similar transactions involving the Company; provided, however, that the
Board of Directors of the Company may furnish or cause to be furnished
such information to, and may participate in such discussions or
negotiations with, persons or entities who have made a bona fide
proposal if the Board of Directors of the Company believes, in good
faith, after consultation with its financial and legal advisors, that
such bona fide proposal represents a transaction which is more
favorable to the Company's stockholders from a financial point of view
and is subject only to reasonable conditions of closing which shall
include financing terms reasonably satisfactory to the Company and, in
the opinion of counsel to the Board of Directors of the Company, the
fiduciary duty of the Board of Directors under applicable law requires
it to furnish or cause to be furnished such information and/or
participate in such discussions or negotiations (a "Superior Offer").
The Company will promptly communicate to Parent, Sub and their
affiliates and representatives the terms of any proposal, discussion,
negotiation or inquiry relating to a merger or disposition of a
significant portion of its capital stock or assets or similar
transaction involving the Company and the identity of the party making
such proposal or inquiry, which it may receive with respect to any such
transaction. In the event that the Board of Directors of the Company
receives what it determines, based on the opinion of counsel to the
Board of Directors of the Company, to be a Superior Offer, the Board of
Directors may vote to recommend such Superior Offer rather than
pursuing the consummation of the transactions contemplated hereunder or
withdraw, modify or amend its recommendation of this Agreement and the
Merger, thus terminating this Agreement in accordance with Section
8.01(h) hereof, but any such termination may occur only (i) within
twenty-one (21) days after such Superior Offer is received and (ii)
upon two (2) full business days prior notice to Parent.
(b) No party (or its representatives, agents, counsel,
accountants or investment bankers) hereto shall disclose to any third
party, other than either party's representatives, agents, counsel,
accountants or investment bankers or the potential lenders previously
disclosed to the Company and Parent in writing, any confidential or
proprietary information about the business, assets or operations of the
other parties to this Agreement or the transactions contemplated
hereby, except as may be required by applicable law. Disclosure of such
information by the Company or Parent with respect to obtaining
financing shall be made only if the recipient executes a reasonable and
appropriate agreement to hold such information confidential. The
parties hereto agree that the remedy at law for any breach of
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the requirements of this subsection will be inadequate and that any breach
would cause such immediate and permanent damage as would be impossible to
ascertain, and, therefore, the parties hereto agree and consent that in
the event of any breach of this subsection, in addition to any and all
other legal and equitable remedies available for such breach, including a
recovery of damages, the non-breaching parties shall be entitled to obtain
preliminary or permanent injunctive relief without the necessity of
proving actual damage by reason of such breach and, to the extent
permissible under applicable law, a temporary restraining order may be
granted immediately on commencement of such action.
ARTICLE VI.
ADDITIONAL AGREEMENTS
6.01 REGULATORY MATTERS.
(a) The parties hereto shall cooperate with each other and use all
reasonable efforts promptly to prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings,
and to obtain as promptly as practicable all permits, consents, approvals
and authorizations of all third parties and Governmental Entities which
are necessary or advisable to consummate the transactions contemplated by
this Agreement (including without limitation the Merger). The Company and
Parent shall have the right to review in advance, and to the extent
practicable each will consult with the other on, in each case subject to
applicable laws relating to the exchange of information, all the
information relating to the Company, Parent or Sub, as the case may be,
which appear in any filing made with or written materials submitted to,
any third party or any Governmental Entity in connection with the
transactions contemplated by this Agreement. In exercising the foregoing
right, each of the parties hereto shall act reasonably and as promptly as
practicable. The parties hereto agree that they will consult with each
other with respect to the obtaining of all permits, consents, approvals
and authorizations of all third parties and Governmental Entities
necessary or advisable to consummate the transactions contemplated by this
Agreement and each party will keep the other apprised of the status of
matters relating to completion of the transactions contemplated herein.
(b) Parent (or Sub as the case may be) shall, upon request, furnish
the Company with all information concerning themselves, their respective
directors, officers and stockholders and such other matters as may be
reasonably necessary or advisable in connection with the Proxy Statement
made by or on behalf of the Company in connection with the Merger and the
other transactions contemplated hereby.
(c) Parent (or Sub as the case may be) and the Company shall
promptly furnish each other with copies of written communications received
by Parent, Sub or the Company, as the case may be, from, or delivered by
any of the foregoing to, any Governmental Entity in respect of the
transactions contemplated hereby.
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6.02 SECURITIES LAWS MATTERS.
(a) As soon as reasonably practicable after the date hereof, the
Company shall file the Proxy Statement with the SEC under the Exchange
Act. The Company shall use all reasonable efforts to have the Proxy
Statement cleared by the SEC as promptly as practicable after such filing.
(b) Parent, Sub and the Company shall cooperate with each other in
the preparation of the Proxy Statement, and the Company shall notify
Parent and Sub of the receipt of any comments of the SEC with respect to
the Proxy Statement and of any requests by the SEC for any amendment or
supplement thereto or for additional information and shall provide to the
other parties promptly copies of all correspondence between the party or
any representative or agent of the party and SEC. Each party shall review
the Proxy Statement prior to its being filed with the SEC and shall review
all amendments and supplements to the Proxy Statement and all responses to
requests for additional information and replies to comments prior to their
being filed with, or sent to, the SEC. The Company agrees to use all
reasonable efforts, after consultation with Parent, to respond promptly to
all such comments of and requests by the SEC.
(c) The Company further agrees to cause the Proxy Statement and all
required supplements thereto to be mailed to its stockholders entitled to
vote at the Company Stockholder Meeting at the earliest practicable time.
6.03 COMPANY STOCKHOLDER MEETING. In order to consummate the Merger, the
Company shall take all steps necessary to duly call, give notice of, convene and
hold the Company Stockholder Meeting as soon as reasonably practicable for the
purpose of voting upon the approval of this Agreement and the transactions
contemplated hereby and shall use all reasonable efforts to obtain such approval
and adoption. Subject to Sections 5.03 or 6.11 hereof, the Company shall,
through its Board of Directors, recommend to its stockholders approval of this
Agreement and the transactions contemplated hereby.
6.04 ACCESS TO INFORMATION.
(a) Upon reasonable notice to the Chief Executive Officers of the
parties and subject to applicable laws relating to the exchange of
information, the parties shall afford each other's officers, employees,
counsel, accountants, agents, advisors and other authorized
representatives, access, during normal business hours of the person(s) to
whom access is required, during the period prior to the Effective Time, to
all its properties, books, contracts, commitments and records and, during
such period, make available to the other party (i) when applicable, a copy
of each report, schedule, registration statement and other document filed
or received by it during such period pursuant to the requirements of
federal securities laws (other than reports or documents which are not
permitted to be disclosed under applicable law), (ii) copies of all
periodic reports regularly received by senior management, and (iii) all
other information concerning its business, properties, assets and
personnel as either party
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may reasonably request.
(b) In addition to any other confidentiality covenants and
obligations imposed under this Agreement, the parties agree to comply with
the confidentiality agreement dated as of March 30, 1998 between Parent
and the Company, as amended by that certain letter agreement dated April
24, 1998 between Parent and the Company (the "Confidentiality Agreement"),
which is incorporated herein by reference.
6.05 LEGAL CONDITIONS TO MERGER. Each of Parent, Sub and the Company shall
use all reasonable efforts (a) to take, or cause to be taken, all actions
necessary, proper or advisable to comply promptly with all legal requirements
which may be imposed on such party with respect to the Merger and, subject to
the conditions set forth in Article VII hereof, to consummate the transactions
contemplated by this Agreement and (b) to obtain (and to cooperate with the
other party to obtain) any consent, authorization, order or approval of or any
exemption by, any Governmental Entity and any other third party which is
required to be obtained by Parent, Sub or the Company in connection with the
Merger and the other transactions contemplated by this Agreement.
6.06 ADDITIONAL AGREEMENTS. If at any time after the Effective Time any
further action is necessary or desirable to carry out the purpose of this
Agreement or to vest the Surviving Corporation with full title to all
properties, assets, rights, approvals, immunities and franchises of any of the
parties to the Merger, the proper officers and directors of each party to this
Agreement shall take all such necessary action as may be reasonably requested by
the Company or Parent (without additional cost to them).
6.07 DISCLOSURE SUPPLEMENTS. Prior to the Effective Time, each party will
supplement or amend the Schedules hereto delivered in connection with the
execution of this Agreement to reflect any matter which, if existing, occurring
or known at the date of this Agreement, would have been required to be set forth
or described in such Schedules or which is necessary to correct any information
in such Schedules which has been rendered inaccurate thereby. No supplement or
amendment to such Schedules shall have any effect for the purposes of
determining satisfaction of the conditions set forth in Sections 7.02(a) hereof
or the compliance by the Company with the covenants set forth in Section 5.01
hereof or for the purposes of determining satisfaction of the conditions set
forth in Sections 7.03(a) hereof or the compliance by Parent or Sub with the
covenants set forth in Section 5.02 hereof.
6.08 CURRENT INFORMATION.
(a) During the period from the date of this Agreement to the
Effective Time, each of the Company and Parent will cause its Chief
Executive Officer or one or more of his or her designated representatives
to be available to confer from time to time with representatives of the
other and to report the general status of their ongoing operations. Each
such party will promptly notify the other party of any material change in
the normal course of its business and of any governmental complaints,
investigations or hearings or the institution of significant litigation
involving them or their subsidiaries or properties and will
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keep the other party reasonably informed of such events.
(b) To the extent not covered by paragraph (a) above, the Company
shall give prompt notice to Parent, and Parent shall give prompt notice to
the Company, of (i) the occurrence or non-occurrence of any event which
would be reasonably likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate and (ii) any
failure of Parent, Sub or the Company, as the case may be, to comply with
or satisfy any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement; provided, however, that the delivery
of any notice pursuant to this paragraph (b) shall not limit or otherwise
affect the remedies available hereunder to the party receiving such
notice.
6.09 NO INCONSISTENT ACTIONS. Prior to the Effective Time, except as
otherwise permitted by this Agreement, no party will enter into any transaction
or make any agreement or commitment and will use reasonable efforts not to
permit any event to occur, which could reasonably be anticipated to result in
(x) a denial of the regulatory approvals referred to in Section 7.01(b) or (y)
the imposition of any condition or requirement that would materially adversely
affect the economic or business benefits to the Surviving Corporation of the
transactions contemplated by this Agreement.
6.10 INDEMNIFICATION OF DIRECTORS.
(a) From and after the Effective Time, Parent and Surviving
Corporation shall each defend, indemnify and advance costs and expenses
(including reasonable attorneys' fees, disbursements and expenses) and
hold harmless each present and former director and officer of the Company
or its Subsidiaries determined as of the Effective Time (the "Indemnified
Parties"), against any costs or expenses (including reasonable attorneys'
fees), judgments, fines, losses, claims, damages, settlements or
liabilities (collectively, "Costs") incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising after the Effective Time and out
of or pertaining to matters existing or occurring at or prior to the
Effective Time, including without limitation, the authorization of this
Agreement and the transactions contemplated hereby, whether asserted or
claimed prior to, at or after the Effective Time, to the fullest extent
that the Company would have been permitted under Delaware law and its
certificate of incorporation or by-laws in effect on the date hereof to
indemnify such person (and also advance expenses as incurred to the
fullest extent permitted under applicable law provided the person to whom
expenses are advanced provides an undertaking to repay such advances if it
is ultimately determined that such person is not entitled to
indemnification); provided that any determination required by law to be
made with respect to whether an officer's or director's conduct complies
with the standards set forth under Delaware law and the Company's
certificate of incorporation and by-laws as of the date hereof shall be
made by independent counsel selected jointly by Parent and the Indemnified
Party.
(b) In the event of any claim, action, suit, proceeding or
investigation in which
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indemnification pursuant to Section 6.10(a) is sought (whether arising
before or after the Effective Time), (i) Parent shall have the right to
assume the defense thereof and Parent shall not be liable to any
Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection
with the defense thereof, except that if Parent elects not to assume such
defense or counsel for the Indemnified Parties advises that there are
issues which raise conflicts of interest between Parent and the
Indemnified Parties, the Indemnified Parties may retain counsel
satisfactory to them and reasonably satisfactory to Parent, and Parent
shall pay the reasonable fees and expenses of such counsel for the
Indemnified Parties promptly as statements therefor are received;
provided, however, that Parent shall be obligated pursuant to this
paragraph (b) to pay for only one firm of counsel for all Indemnified
Parties in any jurisdiction unless the use of one counsel for such
Indemnified Parties would present such counsel with a conflict of
interest, (ii) the Indemnified Parties will cooperate in the defense of
any such matter unless counsel for the Indemnified Parties advises that
there are issues which raise conflicts of interest making such cooperation
inadvisable and (iii) Parent shall not be liable for any settlement
effected without its prior written consent (which shall not be
unreasonably withheld); and provided further that Parent shall not have
any obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine, and such determination
shall have become final and nonappealable, that the indemnification of
such Indemnified Party in the manner contemplated hereby is prohibited by
applicable law. If a court of competent jurisdiction determines that the
indemnification of such Indemnified Party in the manner contemplated
hereby is prohibited by applicable law, then Parent shall provide
indemnification to the maximum extent and in such manner as is permissible
under applicable law. If such indemnity is completely unavailable with
respect to any Indemnified Party, Parent and the Indemnified Party shall
contribute to the amount payable in such proportion as is appropriate to
reflect relative faults and benefits.
(c) For a period of six (6) years following the Effective Time,
Parent will provide to the persons who served as directors or officers of
Company or any of the Company's Subsidiaries on or before the Effective
Time, insurance against liabilities and claims (and related expenses) made
against them resulting from their service as such prior to the Effective
Time. Such coverage may be provided by means of an extended reporting
period endorsement to the policy presently issued to the Company by the
present carrier for the Company, or by such other means which shall
provide substantially equivalent coverage to the persons.
6.11 FIDUCIARY OBLIGATIONS. Notwithstanding anything in this Agreement to
the contrary, the Company shall not be required to take, or cause to be taken,
or fail to take any actions or to do, or cause to be done or fail to do any
things which may be contrary to the fiduciary obligations of persons who are
directors of the Company, or are acting pursuant to the exercise of the
directors' fiduciary obligations, as determined in good faith by a majority of
the directors of the Company, based as to legal matters on the advice of its
legal counsel.
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6.12 FINANCING.
(a) Parent shall use all reasonable good faith efforts to consummate
the Financing and Parent will keep the Purchaser apprised of the status of
matters relating to completion of the Financing. Parent shall raise the
amount in cash equity required by the terms of the Commitment Letter(s).
(b) In the event that the Financing is not consummated and a claim,
action, suit or proceeding is sought by Parent against the financing
source or sources for failure to consummate the Financing (i) Parent shall
offer the Company the right to join in such claim, action, suit or
proceeding, (ii) Parent and the Company shall cooperate in any such claim,
action, suit or proceeding, and (iii) Parent and the Company shall share
equally in all costs and in all recoveries in any such claim, action, suit
or proceeding. Nothing contained herein shall obligate (A) Parent to
pursue any such claim, action, suit or proceeding or (B) the Company to
participate in any such claim, action, suit or proceeding.
ARTICLE VII.
CONDITIONS PRECEDENT
7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction at or prior to the Closing of the following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement and the transactions
contemplated hereby shall have been approved and adopted by the
affirmative vote of the stockholders of the Company to the extent required
by Delaware law and the Company's Certificate of Incorporation.
(b) REGULATORY APPROVALS. All necessary approvals, authorizations
and consents of all Governmental Entities required to consummate the
transactions contemplated hereby shall have been obtained and shall remain
in full force and effect and all statutory waiting periods in respect
thereof shall have expired or been terminated (all such approvals and the
expiration of all such waiting periods being referred to herein as the
"Requisite Regulatory Approvals").
(c) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No order, injunction
or decree issued by any court or agency of competent jurisdiction or other
legal restraint or prohibition (an "Injunction") preventing the
consummation of the Merger or any of the other transactions contemplated
by this Agreement shall be in effect and no proceeding initiated by any
Governmental Entity seeking an injunction shall be pending. No statute,
rule, regulation, order, injunction or decree shall have been enacted,
entered, promulgated or enforced by any
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Governmental Entity which prohibits, restricts or makes illegal
consummation of the Merger, or any of the other transactions contemplated
by this Agreement.
(d) FINANCING. The Financing shall have been consummated in
accordance with the proposal set forth in the Commitment Letter(s).
7.02 CONDITIONS TO OBLIGATIONS OF PARENT AND SUB. The obligation of Parent
and Sub to effect the Merger is also subject to the satisfaction or waiver by
Parent and Sub, at or prior to the Effective Time, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company set forth in this Agreement shall be true and
correct as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date. Parent shall
have received a certificate signed on behalf of the Company by its Chief
Executive Officer and Chief Financial Officer to the foregoing effect.
(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, and
Parent shall have received a certificate signed on behalf of the Company
by its Chief Executive Officer and Chief Financial Officer to such effect.
(c) CONSENTS UNDER AGREEMENTS. The consent, approval, waiver or
amendment (with financial covenants) of each person (other than the
Governmental Entities referred to in Section 7.01(b)) whose consent or
approval shall be required in order to permit the succession by the
Surviving Corporation pursuant to the Merger to any obligation, right or
interest of the Company under any material loan or credit agreement, note,
mortgage, indenture, lease, license or other agreement or instrument shall
have been obtained and shall be reasonably satisfactory to Parent.
(d) LEGAL OPINION. Parent shall have received the legal opinion of
Bourne, Noll & Kenyon, counsel to the Company, dated the Closing Date,
covering such matters as Parent and Sub shall reasonably request.
(e) FIRPTA. The Company shall have delivered to the Parent and Sub
an affidavit, dated as of the Effective Date, pursuant to Sections 897 and
1445 of the Code in substantially the form set forth in Exhibit E hereto,
and shall have complied with the notice requirements set forth in Treasury
Regulation Section 1.897-2(h)(2).
(f) BOGEN AGREEMENT AND SMITH AGREEMENT. The Bogen Agreement and the
Smith Agreement shall be in full force and effect as of the Effective
Time, and the employment agreements of Steven Bogen and Steven Smith with
the Company shall have
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been terminated in all respects, except as expressly contemplated by the
Bogen Agreement and the Smith Agreement, respectively.
(g) DISSENTING SHARES. Dissenting Shares shall constitute not more
than five percent (5%) of the issued and outstanding shares of Company
Common Stock as of the record date for the Company Stockholder Meeting.
(h) FIVE LOG REDUCTION. The Company shall be in compliance with the
five (5) log reduction requirements pursuant to the Food Labeling: Warning
and Notice Statement; Labeling of Juice Products; Final Rule promulgated
by the Food and Drug Administration.
7.03 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations of the
Company to effect the Merger is also subject to the satisfaction, or waiver by
the Company, at or prior to the Closing of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Parent and Sub set forth in this Agreement shall be true and
correct of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date. The Company
shall have received a certificate signed on behalf of Parent and Sub by
their respective Chief Executive Officers and Chief Financial Officers to
the foregoing effect.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT AND SUB. Parent and Sub
shall have each performed in all material respects all obligations
required to be performed by them; under this Agreement at or prior to the
Closing Date, and the Company shall have received a certificate signed on
behalf of Parent and Sub by their respective Chief Executive Officers and
Chief Financial Officers to such effect.
(c) CONSENTS UNDER AGREEMENTS. The consent, approval, waiver or
amendment (with financial covenants) of each person (other than the
Governmental Entities referred to in Section 7.01(b)) whose consent or
approval shall be required in order to permit the succession by the
Surviving Corporation pursuant to the Merger to any obligation, right or
interest of Parent or Sub under any material loan or credit agreement,
note, mortgage, indenture, lease, license or other agreement or
instrument, shall have been obtained and shall be reasonably satisfactory
to the Company.
(d) FAIRNESS OPINION. The Company shall have received the written
opinion of Ladenburg Thalmann & Company to the effect that, as of the date
of such opinion, the Per Share Price is fair to the Company's stockholders
from a financial point of view, and such opinion shall not have been
amended or rescinded as of the Effective Time.
(e) LEGAL OPINION. The Company shall have received the legal opinion
of Swidler Berlin Shereff Friedman, LLP, counsel to Parent and Sub, dated
the Closing Date,
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covering such matters as the Company shall reasonably request.
(f) INSURANCE. The Company shall have received evidence, reasonably
satisfactory to it, that Parent shall have obtained the insurance referred
to in Section 6.10(c) hereof or, after giving ten (10) days' prior written
notice to Parent, shall have obtained the insurance referred to in Section
6.10(c) hereof.
(g) PROVISION OF THE EXCHANGE FUND. Parent shall have made available
to the Exchange Agent the Exchange Fund described in Section 2.01 hereof.
ARTICLE VIII.
TERMINATION AND AMENDMENT
8.01 TERMINATION. This Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time, whether before or after
approval of the matters presented in connection with the Merger by the
stockholders of the Company and Parent:
(a) by mutual consent of Parent and the Company in a written
instrument, if the Board of Directors of each so determines by a vote of a
majority of the members of its entire Board;
(b) by either Parent or the Company upon written notice to the other
party (i) at least thirty (30) days after the date on which any request or
application for a regulatory approval required to consummate the Merger
shall have been denied or withdrawn at the request or recommendation of
the Governmental Entity which must grant such requisite regulatory
approval, unless within the thirty (30) day period following such denial
or withdrawal a petition for rehearing or an amended application has been
filed with the applicable Governmental Entity; provided, however, that no
party shall have the right to terminate this Agreement pursuant to this
Section 8.01(b)(i) if such denial or request or recommendation for
withdrawal shall be due to the failure of the party seeking to terminate
this Agreement to perform or observe the covenants and agreements of such
party set forth herein, or (ii) if any Governmental Entity of competent
jurisdiction shall have issued a final nonappealable order enjoining or
otherwise prohibiting the consummation of any of the transactions
contemplated by this Agreement;
(c) by either Parent or the Company if the Merger shall not have
been consummated on or before the earlier of (i) the thirtieth (30th) day
after the Company has mailed the Proxy Statement to its stockholders or,
if later, five (5) days after the Company Stockholder Meeting and (ii)
December 31, 1998, unless the failure of the Closing to occur by such date
shall be due to the failure of the party seeking to terminate this
Agreement to perform or observe in any material respect the covenants and
agreements of such party set forth herein;
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(d) by the Company (provided that the Company shall not be in
material breach of any of its obligations under Section 6.03) if any
approval of the stockholders of the Company required for the consummation
of and Merger shall not have been obtained by reason of the failure to
obtain the required vote at a duly held meeting of stockholders or at any
adjournment or postponement thereof;
(e) by either Parent or the Company (provided that the terminating
party is not then in material breach of any representation, warranty,
covenant or other agreement contained herein) if there shall have been a
material breach of any of the representations or warranties set forth in
this Agreement on the part of the other party, (i) which breach (if
susceptible to cure) is not cured within twenty (20) business days
following written notice to the party committing such breach, or (ii)
which breach, by its nature, cannot be cured;
(f) by either Parent or the Company (provided that the terminating
party is not then in material breach of any representation, warranty,
covenant or other agreement contained herein) if there shall have been a
material breach of any of the covenants or agreements set forth in this
Agreement on the part of the other party, (i) which breach (if susceptible
to cure) shall not have been cured within twenty (20) business days
following receipt by the breaching party of written notice of such breach
from the other party hereto, or (ii) which breach, by its nature, cannot
be cured;
(g) by Parent, if the Board of Directors of the Company does not
publicly recommend, as required by Section 6.03 hereof, in the Proxy
Statement that the Company's stockholders approve and adopt this Agreement
or, if after recommending in the Proxy Statement that stockholders approve
and adopt this Agreement, the Board of Directors of the Company shall have
withdrawn, modified or amended such recommendation in any respect
materially adverse to Parent;
(h) by the Company, if the Board of Directors of the Company votes
to recommend a Superior Offer rather than pursuing the consummation of the
transactions contemplated hereunder or, if after recommending in the Proxy
Statement that stockholders approve and adopt this Agreement and the
Merger, the Board of Directors of the Company shall have withdrawn,
modified or amended such recommendation in order to recommend a Superior
Offer; provided, however, that the Company shall notify Parent at least
two (2) full business days prior to the exercise of its termination rights
under this Section 8.01(h); or
(i) by either Parent or the Company (provided that the terminating
party is not then in material breach of any representation, warranty,
covenant or other agreement contained herein) after a reasonable and
objective determination that any of the conditions in Section 7.01 or
7.02, in the case of a termination by Parent, or that any of the
conditions in Section 7.01 or 7.03, in the case of a termination by the
Company, have not been satisfied or cured within the time frames required
by such sections or are incapable of being satisfied or cured, as the case
may be, by the earlier of (i) the thirtieth (30th) day after the Company
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has mailed the Proxy Statement to its stockholders or, if later, five (5)
days after the Company Stockholder Meeting and (ii) December 31, 1998.
8.02 EFFECT OF TERMINATION. In the event of termination of this Agreement
by either Parent or the Company as provided in Section 8.01, this Agreement
shall forthwith become void and have no effect except Sections 6.04(b), 6.12(b)
and 8.03 shall survive any termination of this Agreement, and there shall be no
further obligation on the part of Parent, Sub, the Company, or their respective
officers or directors except for the obligations under such provisions.
Notwithstanding anything to the contrary contained in this Agreement, no party
shall be relieved or released from any liabilities or damages arising out of its
intentional breach of any provision of this Agreement; provided, however, that
no claim for intentional breach shall survive the Closing.
8.03 EXPENSES; TERMINATION FEE.
(a) If the Merger is not consummated, all costs and expenses
incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expense,
provided that nothing contained herein shall limit Parent's rights under
Section 8.03(b) hereof. If the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be borne by Parent; provided, however, that
Parent shall not be required to pay more than an aggregate of $450,000 for
the out-of-pocket expenses of the Company and its advisors, including
without limitation legal counsel, investment advisors and accountants (but
excluding the out-of pocket expenses of the financial printer with respect
to the Proxy Statement).
(b) In order to induce Parent to enter into this Agreement and to
reimburse Parent for incurring the costs and expenses related to entering
into this Agreement and consummating the transactions contemplated by this
Agreement, in the event that (i) the transactions contemplated by this
Agreement are not consummated as a result of any failure to satisfy the
conditions set forth in Sections 7.01(a), 7.02(b) or 7.02(f) of this
Agreement or (ii) the Company terminates this Agreement and, at the time
of termination, the Board of Directors of the Company has received a
Superior Offer and such Superior Offer is accepted by the Company within
twelve (12) months after the termination of this Agreement), the Company
shall pay Parent an amount equal to $1,500,000 (inclusive of out-of-pocket
expenses) in connection with the transactions contemplated by this
Agreement.
(c) In order to induce the Company to enter into this Agreement and
to reimburse the Company for incurring the costs and expenses related to
entering into this Agreement and consummating the transactions
contemplated by this Agreement, in the event that (i) the transactions
contemplated by this Agreement are not consummated as a result of any
failure to satisfy the conditions set forth in Section 7.03(b) of this
Agreement or (ii) Parent terminates this Agreement and, at the time of
termination, the Board of Directors of Parent has received an offer to be
acquired by a third party and Parent accepts such offer within twelve (12)
months after the termination of this Agreement), Parent shall pay the
Company
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an amount equal to $750,000 (inclusive of out-of-pocket expenses) in
connection with the transactions contemplated by this Agreement.
(d) In order to induce the Company to enter into this Agreement, in
the event that the transactions contemplated by this Agreement are not
consummated for reasons other than as a result of any failure to satisfy
the conditions set forth in Sections 7.01(a), 7.02(a), 7.02(b), 7.02(c),
7.02(e), 7.02(f), 7.02(g) or 7.02(h) of this Agreement, Parent hereby
covenants and agrees that it will not directly or indirectly acquire an
entity which manufactures fresh juices within twelve (12) months after the
termination or failure to consummate of this Agreement.
8.04 AMENDMENT. Subject to compliance with applicable law, this Agreement
may be amended by the parties hereto, by action taken or authorized by their
respective Boards of Directors, at any time before or after approval of the
matters presented in connection with the Merger by the stockholders of the
Company; provided, however, that, after approval by the stockholders of the
Company, no amendment shall be made which reduces or changes the amount or form
of the consideration to be delivered to the stockholders of the Company without
the approval of a majority of the stockholders of the Company. This Agreement
may not be amended except by an instrument in writing signed on behalf of each
of the parties hereto.
8.05 EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions 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 a written instrument signed on behalf of such party, but such
extension or waiver shall nor operate as a waiver of, or estoppel with respect
to, any subsequent or other failure.
ARTICLE IX.
GENERAL PROVISIONS
9.01 CLOSING. Subject to the terms and conditions of this Agreement, the
closing of the Merger (the "Closing") will take place at such date, time and
place as is mutually agreed upon by the Company and Parent, which shall be not
more than three (3) business days after the satisfaction of the conditions set
forth in Article VII hereof. The date on which such Closing takes place is
referred to herein as the "Closing Date."
9.02 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any term or provision of this Agreement to the contrary and
regardless of any investigation made by any party, none of the representations,
warranties, covenants and agreements in this Agreement or otherwise made or
delivered pursuant to, or in connection with, this Agreement, the Merger or any
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related transactions shall survive the Closing Date, except for those covenants
and agreements contained or referenced in the Bogen Agreement or the Smith
Agreement and in the Confidentiality Agreement.
9.03 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given when delivered personally or telecopied (with
confirmation from recipient), three (3) days after mailed by registered or
certified mail (return receipt requested) or on the day delivered by an express
courier (with confirmation from recipient) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to Parent or Sub, to:
Saratoga Beverage Group, Inc.
11 Geyser Road
Saratoga Springs, New York 12866
Attention: Chief Executive Officer
Facsimile No.: (518) 584-0380
with a copy to:
Swidler Berlin Shereff Friedman, LLP
919 Third Avenue
New York, New York 10022-9998
Attention: Charles I. Weissman, Esq.
Facsimile No.: (212) 758-9526
(b) if to the Company, to:
The Fresh Juice Company, Inc.
280 Wilson Avenue
Newark, New Jersey 07105
Attention: Chief Executive Officer
Facsimile No.: (973) 465-7170
with a copy to:
Bourne, Noll & Kenyon
382 Springfield Avenue
P.O. Box 690
Summit, New Jersey 07902-0690
Attention: Craig M. Lessner, Esq.
Facsimile No.: (908) 277-6808
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9.04 INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." The phrases "the date of this Agreement," "the date hereof" and
terms of similar import, unless the context otherwise requires, shall be deemed
to be August 14, 1998.
9.05 COUNTERPARTS. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.
9.06 ENTIRE AGREEMENT. This Agreement (including the documents and the
instruments referred to herein), the Voting Agreement, the Bogen Agreement, the
Smith Agreement, the Confidentiality Agreement and the Option Agreement by and
between Parent and Steven Smith constitute the entire agreement and supersede
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof.
9.07 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without regard to any
applicable to conflicts of law.
9.08 ENFORCEMENT OF AGREEMENT. The parties hereto agree that irreparable
damage would occur in the event that the provisions contained in Sections 5.03,
6.04(b), or 8.03 of this Agreement were not performed in accordance with its
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
Sections 5.03, 6.04(b) or 8.03 of this Agreement and to enforce specifically the
terms and provisions thereof in any court of the United States or any court
located in the State of New York (if such injunction or enforcement action is
instituted by the Company) or the State of New Jersey (if such injunction or
enforcement action is instituted by Parent), this being in addition to any other
remedy to which they are entitled at law or in equity. In the event Parent
institutes an action to enforce the provisions of 8.03(b) of this Agreement, the
prevailing party in such action shall be entitled to all documented, out of
pocket costs and expenses, without limitation.
9.09 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is deemed to be so broad as to be unenforceable, the provision shall
be interpreted to be only so broad as is enforceable.
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9.10 PUBLICITY. Except as otherwise required by law or the rules of the
National Association of Securities Dealers, so long as this Agreement is in
effect, none of Parent, Sub or the Company shall, or shall permit any of their
Subsidiaries to, issue or cause the publication of any press release or other
public announcement with respect to, or otherwise make any public statement
concerning, the transactions contemplated by this Agreement without the consent
of the other party, which consent shall nor be unreasonably withheld.
9.11 ASSIGNMENT. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns. Except as otherwise expressly provided herein, this
Agreement (including the documents and instruments referred to herein) is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder.
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement
to be executed by their respective officers thereunto duly authorized as of the
date first above written.
SARATOGA BEVERAGE GROUP, INC.
By /s/ ROBIN PREVER
------------------------------
Title: President and
Chief Executive Officer
ROWALE CORP.
By /s/ ROBIN PREVER
-----------------
Title: President
THE FRESH JUICE COMPANY, INC.
By /s/ STEVEN BOGEN
------------------------------
Title: Chief Executive Officer
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EXHIBIT A
COMPANY STOCKHOLDERS
Steven Bogen
Steven Smith
Jeffrey Smith
Jeffrey Heavirland
Brian Duffy
Daniel Petry
43
<PAGE> 45
EXHIBIT E
STATEMENT THAT STOCK OF THE FRESH JUICE COMPANY, INC. IS NOT A
U.S. REAL PROPERTY INTEREST
To: Saratoga Beverage Group, Inc.
Please be advised that pursuant to your request, we advise you that as of
[EFFECTIVE DATE], ownership interests in The Fresh Juice Company, Inc. were not
U.S. real property interests for purposes of Treasury Regulations Section
1.897-2(g)(1)(ii) and (h)(1)(i).
The undersigned responsible officer of The Fresh Juice Company, Inc.,
hereby certifies under penalties of perjury that this Statement is correct to
his knowledge and belief, and that he has authority to sign this Statement on
behalf of the Corporation.
The Fresh Juice Company, Inc.
By: ______________________________
Name:
Title:
Date:_____________________________
Based on: Reg. Section 1.897-2(g)(1)(ii), (h)(1)(i).
NOTE: THIS EXHIBIT WAS CHANGED SINCE THE AGREEMENT WAS SIGNED.
44
<PAGE> 46
THE FRESH JUICE COMPANY, INC.
35 WALNUT AVENUE, SUITE 4
CLARK, NEW JERSEY 07066
August 14, 1998
Steven Smith
5 Lawson Lane
Great Neck, NY 11021
Re: Amendment of Employment Agreement
Dear Steve:
Pursuant to the proposed transaction (the "Transaction") between The
Fresh Juice Company, Inc. ("Fresh Juice") and Saratoga Beverage Group, Inc.
("Saratoga"), wherein a newly formed, wholly owned subsidiary of Saratoga will
merge (the "Merger") with and into Fresh Juice, it will be a condition to the
consummation of the Transaction that you and Fresh Juice amend, and you hereby
agree to amend, the Employment Agreement between Fresh Juice and you, dated as
of March 31, 1996 (the "Employment Agreement"), as follows:
1. Effective as of and subject to the date of the consummation of
the Merger (the "Closing Date") you hereby agree to resign from all positions
held by you as an officer, director and employee of Fresh Juice and each of its
subsidiaries.
2. Effective as of and subject to the Closing Date, you hereby waive
all amounts (including payments and benefits) due to you under Sections 6, 14,
15 and 16 of the Employment Agreement, except for (i) the payment of the sum of
$250,000 in cash referenced in paragraph 3 below on the Closing Date, (ii) the
provision at no cost to you of the Cadillac automobile currently utilized by you
for a period of one year (with insurance and maintenance) following the Closing
Date, and (iii) the provision at no cost to you of health or other group
insurance pursuant to plans which are in effect or which are instituted after
the date hereof for executive officers or employees generally of Fresh Juice for
a period of one year following the Closing Date.
3. Effective as of and subject to the Closing Date, in consideration
of the payment of the sum of $250,000 in cash, you hereby agree to extend the
term of Section 24.2 (Agreement Not to Compete) from one year to three years.
4. Upon your receipt of the sum of $250,000 in cash referenced in
paragraph 3 above and payment of your compensation, expenses and benefits on
account of services provided through the Closing Date, you hereby agree to
terminate the Employment Agreement in all respects other than Section 24 of the
Employment Agreement, which Section, as amended by this letter agreement, shall
survive the termination of the Employment Agreement.
45
<PAGE> 47
Steven Smith
August 14, 1998
Page 2
5. You hereby agree to amend Section 1(c)(ii)(C) of the Option
Agreement, dated as of March 16, 1998, by and between you and Saratoga to read
in its entirety "the earlier of (i) the thirtieth (30th) day after the Company
has mailed the proxy statement to its stockholders or, if later, five (5) days
after the Fresh Juice's stockholder meeting and (ii) December 31, 1998."
6. You hereby acknowledge and agree that those certain options
granted by Fresh Juice to you in the amount of (i) 100,000 shares on October 27,
1988 under Fresh Juice's Incentive Stock Option Plan and (ii) 60,000 shares, are
all ineffective, null and void.
Kindly indicate your acceptance of the foregoing by signing in the
space provided below.
Very truly yours,
THE FRESH JUICE COMPANY, INC.
By:__________________________
Jeffrey Heavirland
Vice President
Accepted and agreed to as of
August 14, 1998
____________________________
Steven Smith
SARATOGA BEVERAGE GROUP, INC.
By:_________________________
Robin Prever
President and Chief Executive Officer
46
<PAGE> 48
August 12, 1998
Mr. Steven M. Bogen
18 Dahlia Street
Staten Island, New York 10312
RE: AMENDMENT OF EMPLOYMENT AGREEMENT
Dear Steve:
Pursuant to the proposed transaction (the "Transaction") between The Fresh
Juice Company, Inc. ("Fresh Juice") and Saratoga Beverage Group, Inc.
("Saratoga"), wherein a newly formed, wholly owned subsidiary of Saratoga will
merge (the "Merger") with and into Fresh Juice, it will be a condition to the
consummation of the Transaction that you and Fresh Juice amend, and you hereby
agree to amend, the Employment Agreement between Fresh Juice and you, dated as
of March 31, 1996 (the "Employment Agreement"), as follows:
1. Effective as of and subject to the date of consummation of the Merger
(the "Closing Date") you hereby agree to resign from all positions held by you
as an officer, director and employee of Fresh Juice and each of its
subsidiaries.
2. Effective as of and subject to the Closing Date, you hereby waive all
amounts (including payments and benefits) due to you under Sections 6, 14, 15
and 16 of the Employment Agreement, except for (i) the payment of the sum of
$250,000 in cash on the Closing Date, (ii) the provision at no cost to you of
the automobile currently utilized by you for a period of two years (with
insurance and maintenance) following the Closing Date, and (iii) the provision
at no cost to you of health or other group insurance pursuant to plans which are
in effect or which are instituted after the date hereof for executive officers
or employees generally of Fresh Juice for a period of two years following the
Closing Date.
3. Effective as of and subject to the Closing Date, you hereby agree to
extend the term of Section 24.2 of the Employment Agreement from one year to two
years following the Closing Date.
4. Upon your receipt of the sum of $250,000 in cash referenced in
paragraph 2 above, you hereby agree to terminate the Employment Agreement in all
respects other than Section 24 of the Employment Agreement which section, as
amended by this letter agreement, shall survive the termination of the
Employment Agreement. In consideration therefor, you shall have the
unconditional right to receive the sum of $750,000 plus reasonable interest (as
defined
47
<PAGE> 49
Steven M. Bogen
August 12, 1998
Page 2
by the best rate of interest available for an escrow account established at a
mutually agreeable bank), payable on the first anniversary of the Closing Date
and evidenced by a promissory note from Saratoga. A sum equal to $750,000 will
be placed into an interest-bearing escrow account at a bank mutually agreeable
to you and Saratoga to secure the unconditional payment obligations referenced
in this paragraph 4. Such bank will be instructed to release the proceeds of the
account to you, without any further action on the part of you or Saratoga, on
the first anniversary of the Closing Date in full payment of all obligations
under the promissory note. Upon receipt of payment, the promissory note will be
null and void and you shall return the promissory note to Saratoga for
cancellation.
5. Effective as of and subject to the Closing Date, you hereby agree to
become a full-time consultant to Saratoga and Fresh Juice during the one year
period following the Closing Date in exchange for the sum of $300,000, payable
monthly in arrears over said one year period. Full time is defined for purposes
of this letter as not more than 1,000 hours in total. You shall perform such
consulting services, if any, as shall be reasonably requested by the
President/Chief Executive Officer of Saratoga or the Board of Directors of
Saratoga. The above consulting fees shall be due and payable on an unconditional
basis, regardless whether Saratoga determines to make use of the full 1,000
hours of time available, except that this consulting relationship may be
terminated for cause (defined as (i) conviction of a felony or crime involving
moral turpitude, or (ii) willful malfeasance or willful refusal to perform
consulting services reasonably requested, or (iii) death or disability, which
would prevent you from being a full-time consultant). In the event of a
termination of the consulting relationship by Saratoga other than for cause,
Saratoga shall remain obligated to pay the full balance due and owing on the
$300,000 consulting fee at the time of termination. You shall not be required to
perform consulting services outside of the Newark facility or at your home on
Staten Island, except that you agree that reasonable out-of-state travel may be
required (consistent with your past two years' employment). Any business travel
shall include reimbursement for travel and lodging (consistent with your past
years' employment). This consulting relationship and the mutual agreement of the
parties with respect thereto constitutes a distinct and separate agreement,
separate and apart from the other provisions of this letter or the agreements
embodied therein. For example, the payments due and owing under the separate
provisions of paragraphs 2, 4 and 6 shall not be affected by any failure to
perform under this consulting agreement (as embodied in this paragraph 5).
6. Effective as of an subject to the Closing Date, Fresh Juice hereby
agrees to pay $15,000 toward your legal fees and expenses to Gibbons, Del Deo,
Dolan, Griffinger & Vecchione, attention Brian J. McMahon.
7. Effective as of and subject to the Closing Date, you will be appointed
as a member of the Board of Directors of Saratoga (with all associated
compensation payable to non-
48
<PAGE> 50
Steven M. Bogen
August 12, 1998
Page 3
employee directors) until the 1999 Annual Meeting of Stockholders of Saratoga.
Kindly indicate your acceptance of the foregoing by signing in the space
provided below.
Very truly yours,
THE FRESH JUICE COMPANY, INC.
By:_________________________________
Jeffrey Heavirland, Vice President
Accepted and agreed to as of
____________________, 1998
_________________________________
Steven M. Bogen
SARATOGA BEVERAGE GROUP, INC.
By:_________________________________
Robin Prever
President and Chief Executive Officer
49
<PAGE> 1
VOTING, STANDSTILL AND PROXY AGREEMENT
This Voting, Standstill and Proxy Agreement (the "Agreement") is
made and entered into as of August 14, 1998 by and among THE FRESH JUICE
COMPANY, INC., a Delaware corporation (the "Company"), the stockholders of the
Company whose names and addresses are set forth on the signature pages hereto
(the "Company Stockholders"), and SARATOGA BEVERAGE GROUP, INC., a Delaware
corporation ("Saratoga").
WHEREAS, the Company, Saratoga and Rowale Corp., a wholly-owned
subsidiary of Saratoga ("Sub"), entered into, as of the date hereof, an
Agreement and Plan of Merger (the "Merger Agreement"; terms used herein and not
otherwise defined are used herein as defined in the Merger Agreement), pursuant
to which Sub will merge with and into the Company (the "Merger") and each share
of common stock, $.01 par value per share, of the Company ("Company Common
Stock") would be converted into the right to receive $3.35 in cash; and
WHEREAS, each of the Company Stockholders owns the number of shares
of Company Common Stock set forth opposite his, her or its name on Schedule A
annexed hereto (collectively, the "Company Securities" and, with respect to the
Company Securities owned by a specific Company Stockholder, the "Company
Stockholder's Securities"); and
WHEREAS, execution and delivery of this Agreement by the Company
Stockholders is a condition to the execution and delivery of the Merger
Agreement by Saratoga and Sub, and by the Company, respectively.
NOW, THEREFORE, in order to induce Saratoga, Sub and the Company to
enter into the Merger Agreement and in consideration of the mutual covenants and
agreements set forth herein, the parties hereto agree as follows:
1. Term. This Agreement shall expire on the earlier of (i) the
Effective Date (as defined in the Merger Agreement) or (ii) the termination of
the Merger Agreement by any party thereto pursuant to the terms thereof.
2. Covenants of the Company Stockholders.
(a) Each Company Stockholder agrees to vote all of his, her or
its currently owned shares of Company Common Stock for the approval of the
Merger, the Merger Agreement (in the form executed as of the date hereof,
with such changes thereto as the parties to the Merger Agreement may agree
prior to such changes), and the transactions contemplated therein.
(b) Each Company Stockholder, in his, her or its capacity as
such, further agrees to convert, at the Closing, all in-the-money options
and warrants to
50
<PAGE> 2
purchase shares of Company Common Stock into cash in accordance with
Section 1.05(c) of the Merger Agreement.
(c) Except in accordance with the provisions of this Agreement
or as expressly set forth in the Merger Agreement, each Company
Stockholder agrees, until the termination of this Agreement, not to:
(i) sell, transfer, pledge, assign or otherwise dispose
of, or enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, pledge, assignment
or other disposition of, any Company Securities; or
(ii) deposit any Company Securities into a voting trust,
enter into a voting agreement or otherwise grant any voting rights
to any other person or entity with respect to any Company
Securities.
(d) Until such time as this Agreement is terminated, each
Company Stockholder agrees to take any actions as reasonably requested by
the Company or Saratoga, within his, her or its power as are necessary or
appropriate to enable the Company to satisfy the conditions precedent set
forth in the Merger Agreement to Saratoga's obligations to consummate the
Merger, and to use his, her or its best efforts to cause the Company to
satisfy such conditions precedent; provided, however, that such Company
Stockholder shall not be required to pay any moneys or incur any liability
in connection with the foregoing.
(e) The provisions of this Section 2 are subject to the terms
of that certain Option Agreement dated March 16, 1998 by and between
Steven Smith and Saratoga.
3. Representations and Warranties of Saratoga. Saratoga represents
and warrants to the Company that the execution and delivery of this Agreement by
Saratoga and the performance by it of its obligations hereunder have been duly
authorized by all necessary corporate action, do not violate the terms of its
Certificate of Incorporation, its By-Laws, any law, rule or regulation or any
outstanding agreement or instrument to which it is a party or is bound or
subject to, and this Agreement constitutes a legal, valid and binding agreement
on its part.
4. Representations and Warranties of the Company Stockholders. Each
Company Stockholder represents and warrants to Saratoga as follows:
(a) such Company Stockholder owns such Company Stockholder's
Securities of record or beneficially free and clear of any lien, security
interest, encumbrance or other adverse claim;
(b) such Company Stockholder's Securities set forth on
Schedule A
51
<PAGE> 3
hereto are the only securities of the Company owned of record or
beneficially by such Company Stockholder or in which such Company
Stockholder has any interest, and, except as set forth on Schedule A, such
Company Stockholder has no right to acquire any other securities of the
Company; and
(c) such Company Stockholder has the right, power and
authority to execute and deliver this Agreement and to perform its
obligations hereunder; such execution, delivery and performance will not
violate any applicable law, rule or regulation or any outstanding
agreement or instrument to which such Company Stockholder is a party; and
this Agreement constitutes a legal, valid and binding agreement on the
part of such Company Stockholder enforceable against such Company
Stockholder in accordance with its terms.
5. Representations and Warranties of the Company. The Company
represents and warrants to Saratoga that the execution and delivery of this
Agreement by the Company and the performance by it of its obligations hereunder
have been duly authorized by all necessary corporate action, do not violate the
terms of its Articles of Incorporation, its By-Laws, any law, rule or regulation
or any outstanding agreement or instrument to which it is a party or is bound or
subject to, and this Agreement constitutes a legal, valid and binding agreement
on its part.
6. Proxy.
(a) Each Company Stockholder hereby irrevocably makes,
constitutes and appoints Saratoga to act as such Company Stockholder's
true and lawful proxy and attorney-in-fact in the name and on behalf of
such Company Stockholder to vote all of his, her or its shares of Company
Common Stock for the approval of the Merger, the Merger Agreement and the
transactions contemplated therein as set forth in Section 2(a) hereof
(subject to Section 15 hereof). By giving this proxy, each such holder of
Company Common Stock hereby revokes any other proxy granted by such
Company Stockholder to vote any of such Company Stockholder's Securities
with respect to such matters. This proxy, and the power of attorney and
all authority contained herein, shall become effective as to any Company
Stockholder only upon the failure of such Company Stockholder to vote or
consent with respect to his, her or its shares in accordance with Section
2(a) hereof, following notice to such Company Stockholder to that effect.
(b) All power and authority hereby conferred is coupled with
an interest and is irrevocable, shall not be terminated by any act of such
Company Stockholder or by operation of law, by lack of appropriate power
or authority, or by the occurrence of any other event or events and shall
be binding upon all beneficiaries, heirs at law, legatees, distributees,
successors, assigns and legal representatives of such Company Stockholder.
If after the execution of this Agreement any Company Stockholder shall
cease to have appropriate power or authority, or if any other such event
or events shall occur, Saratoga is nevertheless authorized and directed to
vote the Company Securities in accordance with the terms of this Agreement
as if such lack of
52
<PAGE> 4
appropriate power or authority or other event or events had not occurred
and regardless of notice thereof.
(c) Each Company Stockholder agrees to use all good faith
efforts to cause any record owner of Company Securities of which such
Company Stockholder is the beneficial owner to grant to Saratoga a proxy
of the same effect as that contained herein. Subject to the proviso set
forth in Section 2(d) hereof, each Company Stockholder shall perform such
further acts and execute such further documents as may be required to vest
in Saratoga the power to vote the Company Stockholder's Securities during
the term of the proxy granted herein.
(d) The provisions of this Section 6 are subject to the terms
of that certain Option Agreement dated March 16, 1998 by and between
Steven Smith and Saratoga.
7. Further Assurances. Subject to the proviso set forth in Sections
2(d) hereof, each party hereto shall perform such further acts and execute such
further documents as may reasonably be required to carry out the provisions of
this Agreement.
8. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any party hereto
(whether by operation of law or otherwise) without the prior written consent of
the other parties hereto.
9. Specific Performance. 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. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof, this being in addition to any other remedy to
which they are entitled at law or in equity.
10. Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed duly given when
delivered in person or by telecopier, cable, telex or telegram or three (3) days
after mailed by certified mail, postage prepaid, addressed as follows:
To the Company Stockholders, in each case to:
The address set forth on the signature pages hereto.
53
<PAGE> 5
To the Company:
The Fresh Juice Company, Inc.
280 Wilson Avenue
Newark, New Jersey 07105
Attention: Chief Executive Officer
Facsimile No.: (973) 465-7170
with a copy to:
Bourne, Noll & Kenyon
382 Springfield Avenue
P.O. Box 690
Summit, New Jersey 07902-0690
Attention: John F. Kuntz, Esq.
Facsimile No.: (908) 277-6808
To Saratoga:
Saratoga Beverage Group, Inc.
11 Geyser Road
Saratoga Springs, New York 12866
Attention: Chief Executive Officer
Facsimile No.: (518) 584-0380
with a copy to:
Swidler Berlin Shereff Friedman, LLP
919 Third Avenue
New York, New York 10022-9998
Attention: Charles I. Weissman, Esq.
Facsimile No.: (212) 758-9526
11. Effect of Invalidity. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, such
provision shall be interpreted to be only so broad as is enforceable.
12. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
54
<PAGE> 6
13. Governing Law; Jurisdiction. This Agreement shall be governed by
and construed in accordance with the laws of the Delaware without giving effect
to the conflicts of laws principles thereof.
14. Binding Effect: Benefits. This Agreement shall inure to the
benefit of and shall be binding upon the parties hereto and their respective
heirs, legal representatives, successors and assigns. Nothing in this Agreement,
expressed or implied, is intended to or shall confer on any person other than
the parties hereto and their respective heirs, legal representatives and
successors and permitted assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
15. Merger Agreement Amendments. No amendment to the Merger
Agreement after the date hereof shall alter or affect the rights granted to the
Company and Saratoga hereunder.
[SIGNATURES BEGIN ON NEXT PAGE]
55
<PAGE> 7
IN WITNESS WHEREOF, the Company, the Company Stockholders and
Saratoga have executed this Agreement or caused this Agreement to be executed by
their respective officers thereunto duly authorized, as the case may be, as of
the date first above written.
THE FRESH JUICE COMPANY, INC.
______________________________________
Name:
Title:
______________________________________
[Name]
c/o The Fresh Juice Company, Inc.
280 Wilson Avenue
Newark, New Jersey 07105
Telephone: (973)
Fax: (973) 465-7170
SARATOGA BEVERAGE GROUP, INC.
______________________________________
Name:
Title:
56
<PAGE> 8
SCHEDULE A
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
NAME COMPANY CAPITAL STOCK
---- -----------------------
<S> <C>
Steven Smith 1,361,248*
Steven Bogen 1,232,708
Daniel Petry 442,248
Brian Duffy 307,500
Jeffrey Heavirland 77,667**
Jeffrey Smith 21,919***
---------
3,443,290 shares
6,467,731 total shares
53.23799%
</TABLE>
All above based on 10KSB for 11-30-97 and review of subsequent Form 4s and 5s.
* includes shares subject to option held by Saratoga
** 237,857 options and warrants backed out of 10-KSB 11-30-97 numbers
*** 50,000 options out of 10-KSB 11/30/97 numbers subject to comfirmation-may
be between 17,000 and 22,000 shares
57
<PAGE> 1
[THE FRESH JUICE COMPANY LETTERHEAD]
FOR IMMEDIATE RELEASE
Contact: Gayle Henderson
Saratoga Beverage Group, Inc.
(518) 584-6363 ext. 118
Contact: Steven Bogen or Jeff Heavirland
The Fresh Juice Company, Inc.
(973) 465-7100 or (626) 812-6022
SARATOGA BEVERAGE GROUP AND THE FRESH JUICE COMPANY
ANNOUNCE EXECUTION OF AGREEMENT AND PLAN OF MERGER
- --------------------------------------------------------------------------------
Saratoga Springs, NY and Newark, NJ, August 17, 1998 -- Saratoga Beverage Group,
Inc. (Nasdaq: TOGA) and The Fresh Juice Company, Inc. (Nasdaq: FRSH) jointly
announced that they have signed an Agreement and Plan of Merger (the "Merger
Agreement"). Subsequent to the merger, Fresh Juice will be operated as a wholly
owned subsidiary of Saratoga Beverage Group. Pursuant to the terms of the Merger
Agreement, Saratoga Beverage Group will purchase the shares of Fresh Juice
common stock for $3.35 per share in cash ($21.8 million in the aggregate).
Pursuant to the terms of the Merger Agreement, Steven Bogen, Chief Executive
Officer of Fresh Juice, will be added to the Board of Directors of Saratoga. Mr.
Bogen will also become a consultant to Saratoga following the merger. Jeff
Heavirland, in addition to his current responsibilities as Chief Executive
Officer of The Fresh Juice of California d/b/a Hansen's Juice Company, a
subsidiary of Fresh Juice, will become an officer of Saratoga.
Saratoga and Fresh Juice have also entered into a voting agreement whereby
certain stockholders who are directors or officers of Fresh Juice, and
collectively own approximately 53% of the equity of Fresh Juice, have agreed to
vote in favor of the merger. The voting agreement expires if the Merger
Agreement is terminated. Saratoga or its affiliates may acquire shares of Fresh
Juice on the open market prior to the merger.
In connection with the merger, Saratoga has received a commitment letter from
NationsBank to provide Saratoga with senior debt financing. The consummation of
the transactions contemplated by the Merger Agreement is subject to several
material conditions, including, among others, the consummation of the
above-described financing and the approval of the merger by the stockholders of
Fresh Juice.
***MORE***
<PAGE> 2
SARATOGA BEVERAGE GROUP AND THE FRESH JUICE COMPANY
ANNOUNCE EXECUTION OF AGREEMENT AND PLAN OF MERGER
PAGE 2
Although there can be no assurance that the merger will be completed, the
parties expect, subject to the satisfaction of all conditions, to consummate the
merger during the fourth quarter of this year. Under certain conditions, if the
Merger Agreement is terminated or the merger is not consummated, either Saratoga
or Fresh Juice, depending on the circumstances, may be entitled to a fee as
liquidated damages.
Robin Prever, President and Chief Executive Officer of Saratoga, stated that
"This is a terrific opportunity for the shareholders of Saratoga Beverage Group.
It gives our Company critical mass and furthers the Company's strategy of
rolling up specialty beverage companies with similar distribution channels."
Steven Bogen, Chief Executive Officer of Fresh Juice, stated that "We believe
that this merger is in the best interest for shareholders at this time. It also
offers our customers and employees the opportunity to be part of a larger, more
diverse enterprise."
This news release contains forward-looking statements which are based on
Saratoga's and Fresh Juice's expectations and are subject to a number of risks
and uncertainties, certain of which are beyond Saratoga's and Fresh Juice's
control. Actual results could vary materially from expected results due to a
variety of factors, including but not limited to, the general performance of the
economy, specifically as it affects the retail beverage industry; factors
applicable to Saratoga and its business referred to in the Securities and
Exchange Commission filings of Saratoga, particularly Saratoga's Annual Reports
on Form 10-K for the year ended December 31, 1997 and its Quarterly Reports on
Form 10-Q for the quarters ended March 31, 1998 and June 30, 1998; and factors
applicable to Fresh Juice and its business referred to in the Securities and
Exchange Commission filings of Fresh Juice, particularly Fresh Juice's Annual
Report on Form 10-KSB for the year ended November 30, 1997, as amended, and its
Quarterly Reports on Form 10-QSB for the quarters ended February 28, 1998 and
May 31, 1998.
Saratoga Beverage Group, Inc., formerly the Saratoga Spring Water Company, was
founded in 1872. The Company produces sparkling and non-carbonated spring water
products, and Saratoga Splash. The Company is traded on the Nasdaq SmallCap
Market under the symbol TOGA.
The Fresh Juice Company, Inc. manufactures, markets and distributes fresh
squeezed and frozen fresh squeezed citrus juices, fresh fruit smoothies (blends
of juices and purees) and other non-carbonated beverages to both food service
and retail customers. Fresh Juice has production and distribution facilities on
both the East Coast and West Coast. Marketed under the labels "Fresh Pik't,"
"The Fresh Juice Company," "Hansen's," "Ultimate" and "Just Pik't," Fresh
Juice's products are premium, minimally processed fresh fruit juice products.
*** END IT ***
