SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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)
September 27, 1999
THE HAIN FOOD GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-22818 22-3240619
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) dentification No.)
50 Charles Lindbergh Boulevard
Uniondale, New York 11553
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (516) 237-6200
<PAGE>
-2-
Item 5. Other Events
On September 27, 1999, The Hain Food Group, Inc. (the "Company") announced
that it had entered into a strategic alliance with H.J. Heinz Company ("Heinz")
related to the production and distribution of natural products domestically and
internationally. In connection with the alliance, the Company issued 2,837,343
shares (the "Investment Shares") of its common stock, par value $.01 per share
(the "Common Stock") to Earth's Best, Inc. ("Earth's Best"), a wholly owned
subsidiary of Heinz, for an aggregate purchase price of $82,383,843 under a
Securities Purchase Agreement dated September 24, 1999 (the "Securities Purchase
Agreement") between the Company and Earth's Best.
In addition, in a separate transaction, the Company announced on September
27, 1999 that it had purchased the trademarks of Earth's Best (the
"Acquisition") under a Purchase and Sale Agreement dated September 24, 1999
among the Company, Earth's Best and Heinz (the "Acquisition Agreement"). In
consideration for the trademarks, the Company paid a combination of $4,620,000
in cash and 670,234 shares of Common Stock, valued at $17,380,000 (the
"Acquisition Shares" and together with the Investment Shares, the "Shares").
Earth's Best has agreed to change its name following the consummation of the
Acquisition.
In connection with the issuance of the Shares, the Company and Earth's Best
have entered into an Investor's Agreement dated September 24, 1999 (the
"Investor's Agreement") that sets forth certain restrictions and obligations of
the Company and Earth's Best and its affiliates relating to the Shares,
including restrictions and obligations relating to (1) the appointment by the
Company of one member to its board of directors nominated by Earth's Best and
one member jointly nominated by Earth's Best and the Company, (2) an 18-month
standstill period during which Earth's Best and its affiliates may not purchase
or sell shares of Common Stock, subject to certain exceptions, (3) a right of
first offer by Heinz and its affiliates to the Company upon the sale of Shares
by Earth's Best and its affiliates following the standstill period, (4)
preemptive rights granted to Earth's Best and its affiliates relating to the
future issuance by the Company of shares of capital stock and (5)
confidentiality. Irwin D. Simon, the President and Chief Executive Officer of
the Company is also a party to the Investor's Agreement for the purpose of
restricting certain sales by Mr. Simon of Common Stock during the standstill
period.
In addition, the Company and Earth's Best have entered into a Registration
Rights Agreement dated September 24, 1999 (the
<PAGE>
-3-
"Registration Rights Agreement") that provides Earth's Best and its affiliates
customary registration rights relating to the Shares, including two demand
registration rights and "piggy-back" registration rights.
The parties have agreed to negotiate the strategic alliance agreements in
good faith and execute the same as soon as reasonably practicable following the
consummation of the issuance of the Investment Shares.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit No. Description
10.1 Securities Purchase Agreement between the Company
and Earth's Best, dated September 24, 1999.
10.2 Investor's Agreement among the Company, Earth's
Best and Irwin D. Simon dated September 24, 1999.
10.3 Registration Rights Agreement between the Company
and Earth's Best, dated September 24, 1999.
10.4 Purchase and Sale Agreement among, the Company,
Earth's Best and H.J. Heinz Company, the parent of
Earth's Best, dated September 24, 1999.
20 Press release dated September 27, 1999.
<PAGE>
SIGNATURES
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 hereunto duly authorized.
THE HAIN FOOD GROUP, INC.
Dated: September 30, 1999 By: /s/ Gary M. Jacobs
-----------------------------------
Gary M. Jacobs
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Number Description
10.1 Securities Purchase Agreement between the Company and
Earth's Best, dated September 24, 1999.
10.2 Investor's Agreement among the Company, Earth's Best
and Irwin D. Simon, the President of the Company,
dated September 24, 1999.
10.3 Registration Rights Agreement between the Company
and Earth's Best, dated September 24, 1999.
10.4 Purchase and Sale Agreement among, the Company,
Earth's Best and H.J. Heinz Company, the parent of
Earth's Best, dated September 24, 1999.
20 Press release dated September 27, 1999.
EXHIBIT 10.1
===============================================================================
SECURITIES PURCHASE AGREEMENT
by and between
THE HAIN FOOD GROUP, INC.
and
EARTH'S BEST, INC.
September 24, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
THE SHARES
SECTION 1.1. Issuance, Sale and Purchase of the Shares........................2
SECTION 1.2. Other Agreements.................................................2
SECTION 1.3. Closing..........................................................2
SECTION 1.4. Legends..........................................................3
SECTION 1.5. Further Action...................................................4
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.1. Representations and Warranties of the Company....................4
SECTION 2.2. Representations and Warranties of the Purchaser.................12
ARTICLE III
CLOSING CONDITIONS
SECTION 3.1. Conditions to Obligation of the Purchaser.......................14
SECTION 3.2. Conditions to the Obligations of the Company....................16
ARTICLE IV
TERMINATION
ARTICLE V
MISCELLANEOUS
-i-
<PAGE>
EXHIBITS
EXHIBIT A - FORM OF INVESTORS AGREEMENT
EXHIBIT B - FORM OF REGISTRATION RIGHTS AGREEMENT
EXHIBIT C - STRATEGIC ALLIANCE AGREEMENT TERM SHEETS
EXHIBIT D - OPINION OF CAHILL GORDON & REINDEL
EXHIBIT E - OPINION OF COUNSEL FOR THE PURCHASER
SCHEDULES
Schedule 2.1(g) Litigation
Schedule 2.1(o) Outstanding Options, Warrants and Convertible Securities
Schedule 2.1(p) Registration Rights
Schedule 2.1(r) Fiscal 1999 Balance Sheet
Schedule 2.1(u) Labor Relations
Schedule 2.1(y) Brokers and Finders
-ii-
<PAGE>
SECURITIES PURCHASE AGREEMENT
Securities Purchase Agreement (the "Agreement"), dated September 24, 1999,
by and between The Hain Food Group, Inc., a Delaware corporation (the
"Company"), and Earth's Best, Inc., an Idaho corporation (the "Purchaser").
W I T N E S S E T H :
WHEREAS, the Company desires to issue and sell to the Purchaser 2,837,343
shares (the "Investment Shares") of its Common Stock, par value $.01 per share
(the "Common Stock"), on the terms and subject to the conditions set forth in
this Agreement, and the Purchaser desires to purchase such Investment Shares on
the terms and subject to the conditions set forth in this Agreement;
WHEREAS, concurrently with the issuance and sale of the Investment Shares,
the Purchaser desires to sell and assign to the Company, and the Company desires
to purchase from the Purchaser (the "Acquisition"), the existing trademarks of
the Purchaser (the "Business") pursuant to the terms and subject to the
conditions contained in a separate Asset Purchase and Sale Agreement (the
"Acquisition Agreement");
WHEREAS, in connection with the Acquisition, the Company has agreed to
issue to the Purchaser an additional 670,234 shares of Common Stock (the
"Acquisition Shares" and, together with the Investment Shares, the "Shares");
and
WHEREAS, in connection with the issuance and sale of the Investment Shares,
H.J. Heinz Company, the indirect owner of EB ("Heinz"), and Company desire to
enter into a Service Agreement for procurement, manufacturing and logistics
(i.e., warehousing, handling and distribution) of food products and a
Sales/Marketing/Distribution Agreement relating to existing and future foreign
operations (together, the "Strategic Alliance Agreements").
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Purchaser
hereby agree as follows:
<PAGE>
-2-
ARTICLE I
THE SHARES
SECTION 1.1. Issuance, Sale and Purchase of the Investment Shares. In
reliance upon the representations and warranties made herein and subject to the
satisfaction or waiver of the conditions set forth herein, the Company agrees to
issue and sell to the Purchaser, and the Purchaser agrees to purchase, the
Investment Shares from the Company on the Closing Date (as defined below), for
an aggregate purchase price of $82,383,843 (the "Purchase Price"), or $29.03556
per share.
SECTION 1.2. Other Agreements. (a) Concurrently with the Closing (as
defined below), the Company will enter into (a) an Investor's Agreement with the
Purchaser in substantially the form attached as Exhibit A hereto (the
"Investor's Agreement") and (b) a Registration Rights Agreement in favor of the
Purchaser and its permitted assignees in substantially the form attached as
Exhibit B hereto (the "Registration Rights Agreement" and, together with the
Investor's Agreement and the Acquisition Agreement, the "Other Documents").
(b) The Company and the Purchaser, on behalf of Heinz, agree to negotiate
the Strategic Alliance Agreements in good faith and execute the same as soon as
reasonably practicable following the Closing (as defined below), substantially
on the terms and conditions set forth in Exhibit C hereto.
SECTION 1.3. Closing. The closing (the "Closing") of the issuance and sale
of the Shares shall take place at the offices of Davis Polk & Wardwell, 450
Lexington Avenue, New York, New York 10017, on such date and time as may be
agreed upon between the Purchaser and the Company following the satisfaction or
waiver of the conditions set forth in Article III below (such date and time
being called the "Closing Date"). At the Closing, the Company shall issue and
deliver to the Purchaser stock certificates in definitive form, registered in
the name of the Purchaser or its designee, representing the Investment Shares
and, in accordance with the Acquisition Agreement, the Acquisition Shares. As
payment in full for the Investment Shares, and against delivery therefor at the
Closing, the Purchaser shall initiate a wire transfer in immediately available
United States funds in the amount of the Purchase Price to an account of the
Company in New York, New York designated by the Company by notice to the
Purchaser not later than two days prior to the Closing Date.
<PAGE>
-3-
SECTION 1.4. Legends. (a) Each certificate representing the Shares shall
bear the following legend in addition to any other legend that may be required
from time to time under applicable law or pursuant to any other contractual
obligation:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED,
SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF (A
"TRANSFER") EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF AN INVESTOR'S
AGREEMENT DATED SEPTEMBER 24, 1999 BY AND BETWEEN THE HAIN FOOD GROUP, INC.
("HAIN") AND EARTH'S BEST, INC. ("EBI"). SUCH SECURITIES ARE ALSO SUBJECT
TO A REGISTRATION RIGHTS AGREEMENT DATED SEPTEMBER 24, 1999 BY AND BETWEEN
HAIN AND EBI. ANY TRANSFEREE OF THESE SECURITIES TAKES SUBJECT TO THE TERMS
OF SUCH AGREEMENTS, A COPY OF EACH OF WHICH IS ON FILE WITH THE COMPANY.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR STATE SECURITIES LAWS AND
NO TRANSFER OF THESE SECURITIES MAY BE MADE EXCEPT (A) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR (B) PURSUANT TO AN
EXEMPTION THEREFROM WITH RESPECT TO WHICH THE COMPANY MAY, UPON REQUEST,
REQUIRE A SATISFACTORY OPINION OF COUNSEL FOR THE HOLDER THAT SUCH TRANSFER
IS EXEMPT FROM THE REQUIREMENTS OF THE ACT.
(b) Upon termination of the Investor's Agreement and/or the Registration
Rights Agreement, the legends set forth in the first paragraph of Section 1.4(a)
referencing each such agreement which has been terminated shall be removed from
the certificates representing the Shares. The legends set forth in the second
paragraph of Section 1.4(a) shall be removed from the certificates representing
the Shares upon delivery of a satisfactory opinion of counsel for the holders
that the removal of such legends would comply with the Securities Act of 1933,
as amended (the "Securities Act"). Notwithstanding anything in this Agreement to
the contrary, the Purchaser shall be permitted to transfer all or any Shares to
any wholly-owned, direct or indirect subsidiary of Heinz without the delivery to
the Company of an opinion of counsel that such transfer is exempt from the
requirements of the Securities Act; provided, the transferred Shares shall bear
the legends set forth in Section 1.4(a) following such transfer (unless
otherwise removed in accordance with this Section 1.4(b)).
<PAGE>
-4-
SECTION 1.5. Further Action. During the period from the date hereof to the
Closing Date, each of the Company and the Purchaser shall use its best efforts
to take all action necessary or appropriate to satisfy the closing conditions
contained in Article III hereof and to cause its respective representations and
warranties contained in Article II to be complete and correct as of the Closing
Date, after giving effect to the transactions contemplated by this Agreement, as
if made on and as of such date.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.1. Representations and Warranties of the Company. The Company
represents and warrants to the Purchaser as follows:
(a) Each of the Company and each of its subsidiaries (collectively, the
"Subsidiaries") has been duly organized and is validly existing as a corporation
in good standing under the laws of the jurisdiction in which it is organized,
and has all requisite power and authority to own or lease and occupy its
properties and conduct its business as currently conducted, and is duly
qualified to do business, and is in good standing, in each jurisdiction which
requires such qualification, except where the failure to so qualify would not,
individually or in the aggregate, have or be reasonably likely to result in a
material adverse effect on the business, results of operations, properties or
condition (financial or otherwise) of the Company and the Subsidiaries, taken as
a whole (a "Material Adverse Effect").
(b) All of the outstanding shares of capital stock of each of the
Subsidiaries have been duly authorized and validly issued and are fully paid and
nonassessable and, are owned by the Company, directly, or indirectly through
another Subsidiary, free and clear of any lien, adverse claim, security
interest, mortgage, pledge, equity or other encumbrance except for the security
interest granted therein under the Credit Agreement among the Company, the
subsidiary guarantors named therein and IBJ Whitehall Bank & Trust Company, as
administrative agent and Fleet Bank, N.A., as syndication agent dated May 18,
1999 (the "Credit Agreement"). None of the outstanding shares of capital stock
of any of the Subsidiaries was issued in violation of the preemptive or similar
rights of any stockholder or other holder of interests of such Subsidiary
arising by operation of law, under its certificate or articles of incorporation
or organization, by-laws or other organizational document or under any agreement
to which the Company or any Subsidiary is a party. There are no outstanding (i)
securities of the Company or any Subsidiary convertible into or exchangeable for
shares of capital stock or voting securities of any Subsidiary or (ii)
<PAGE>
-5-
options or other rights to acquire from the Company or any Subsidiary, or other
obligation of the Company or any Subsidiary to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of any Subsidiary.
(c) The authorized capital stock of the Company consists of 40,000,000
shares of Common Stock and 5,000,000 shares of preferred stock, par value $.01
per share (the "Preferred Stock"). As of the date hereof, 14,480,000 shares of
Common Stock were issued and outstanding and no shares of Preferred Stock were
issued and outstanding. The outstanding shares of Common Stock have been duly
and validly authorized and issued in compliance with all Federal and state
securities laws, and are fully paid and nonassessable; the Shares have been duly
and validly authorized and, when issued and delivered pursuant to this
Agreement, will be fully paid and nonassessable; and the holders of outstanding
shares of capital stock of the Company are not entitled to preemptive or other
rights to subscribe for the Shares.
(d) The Company and each of the Subsidiaries have all requisite power and
authority, and all necessary material authorizations, approvals, orders,
licenses, certificates and permits (collectively, "Governmental Licenses"), of
and from the appropriate Federal, state, local or foreign regulatory or
governmental agencies, officials, bodies and tribunals, necessary to own or
lease their respective properties and to conduct their respective businesses as
now being conducted, except where the failure to possess any such Government
Licenses would not, individually or in the aggregate, have a Material Adverse
Effect; all such Governmental Licenses are in full force and effect, except
where the failure to be in full force and effect, individually or in the
aggregate, would not have a Material Adverse Effect; and the Company and each of
the Subsidiaries are in compliance with all applicable laws (including, without
limitation laws and regulations governing the manufacture, processing, storage,
packaging, distribution and sale of the food products of the Company and the
Subsidiaries) and Governmental Licenses, except where the failure to comply
would not, individually or in the aggregate, have a Material Adverse Effect.
(e) Except as otherwise disclosed in the Company's reports, proxy
statements, registration statements, forms and other documents filed with the
Securities and Exchange Commission (the "SEC") and publicly available during the
Company's fiscal year ended June 30, 1998 and the nine months ended March 31,
1999 (the "Current SEC Documents") or as would not have a Material Adverse
Effect, the Company and the Subsidiaries have good and marketable title in fee
simple to all items of real property and good and marketable title to all
personal property owned by them, in each case free and clear of all liens,
encumbrances and defects, and any real property and buildings held under lease
by the Company and the Subsidiaries are held by them under valid, existing and
enforceable leases.
<PAGE>
-6-
(f) The Company and the Subsidiaries own or possess a valid license to use
the patents, patent rights, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks and trade names
(collectively, "Intellectual Property") presently employed by them in connection
with the business now operated by them. Neither the Company nor any of the
Subsidiaries has received any notice or is otherwise aware of any facts or
circumstances which would render any Intellectual Property invalid,
unenforceable or inadequate to protect the interest of the Company or any of the
Subsidiaries therein, and which invalidity, unenforceability or inadequacy,
either singly or in the aggregate, might reasonably be expected to result in a
Material Adverse Effect. Since the respective dates of the Base Balance Sheets
(as defined below) neither the Company nor any of the Subsidiaries has been a
defendant in any action, suit, investigation or proceeding relating to, or has
otherwise been notified of, any alleged claim of infringement by the Company or
any of the Subsidiaries of the intellectual property rights of any person, and
neither the Company nor any of the Subsidiaries has knowledge of any other such
infringement by the Company or any of the Subsidiaries which action, suit,
investigation, proceeding or claim, either singly or in the aggregate, might
reasonably be expected to have a Material Adverse Effect. Neither the Company
nor any of the Subsidiaries has any outstanding claim or suit for, or has any
knowledge of, any continuing infringement by any other person of any of the
Intellectual Property, and no Intellectual Property is subject to any
outstanding judgment, injunction, order, decree or agreement restricting the use
thereof by the Company or any of the Subsidiaries which, either singly or in the
aggregate, might reasonably be expected to have a Material Adverse Effect.
(g) Except as set forth on Schedule 2.1(g), there is no action, suit,
proceeding, inquiry, audit or investigation before or by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened, against or affecting the Company or any of
the Subsidiaries, which is required to be disclosed in the Current SEC
Documents, or which might reasonably be expected to have a Material Adverse
Effect or materially and adversely affect the consummation of this Agreement or
the performance by the Company of its obligations hereunder; the aggregate of
all such pending legal or governmental proceedings to which the Company or any
Subsidiary is a party or of which any of their respective property or assets is
the subject which are not described in the Current SEC Documents, including
ordinary routine litigation incidental to the business, could not reasonably be
expected to have in a Material Adverse Effect.
(h) The Company has full corporate power and authority to enter into and
perform its obligations under this Agreement, the Acquisition Agreement and the
Investor's Agreement and to issue, sell and deliver the Shares; this Agreement,
the Acquisition
<PAGE>
-7-
Agreement and the Investor's Agreement have been or will be, at or prior to the
Closing, duly authorized, executed and delivered by the Company and, when so
executed (assuming the due authorization, execution and delivery by the
Purchaser), will each constitute a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except to the
extent that enforcement thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of equity
(regardless of whether a proceeding is considered at law or in equity).
(i) The Company has full corporate power and authority to enter into and
perform its obligations under the Registration Rights Agreement; the
Registration Rights Agreement has been or will be, at or prior to the Closing,
duly authorized, executed and delivered by the Company and, when so executed
(assuming the due authorization, execution and delivery by the Purchaser), will
constitute a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except to the extent that enforcement
thereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditors' rights
generally, (ii) general principles of equity (regardless of whether a proceeding
is considered at law or in equity) or (iii) with respect to any rights to
indemnity or contribution thereunder, by applicable securities laws and public
policy considerations.
(j) No filing with or consent, approval, authorization or order of any
court or governmental agency, authority or body is required (and has not been
received) for the execution and delivery by the Company of this Agreement and
the Other Documents, the performance by the Company of its obligations hereunder
and thereunder or the consummation by the Company of the transactions
contemplated herein and therein, except (i) in connection with the applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), (ii) filings with the SEC and state securities
administrators and (iii) such other consents, approvals, authorizations or
orders the failure of which to be obtained, made or given would not,
individually or in the aggregate, have a Material Adverse Effect.
(k) Neither the Company nor any of the Subsidiaries is in violation of, in
conflict with, in breach of or in default under (and none of them knows of an
event which with the giving of notice or the lapse of time or both would be
reasonably likely to constitute a default under) its certificate or articles of
incorporation or organization or by-laws (and none of them knows of an event
which with the giving of notice or the lapse of time or both would be reasonably
likely to constitute a violation), and neither the Company nor any Subsidiary is
in default in the performance of any obligation, agreement or condition
contained in any loan, note or other evidence of indebtedness or in any
indenture, mortgage, deed of trust or any other material agreement by which it
or its properties are bound, except
<PAGE>
-8-
for such defaults as would not, individually or in the aggregate, have a
Material Adverse Effect.
(l) Except as described in the Current SEC Documents or as would not have a
Material Adverse Effect, (A) neither the Company nor any of the Subsidiaries is
in violation of any Federal, state, local or foreign laws or regulations
relating to pollution or protection of human health, the environment (including,
without limitation, ambient air, surface water, groundwater, land surface or
subsurface strata), or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, "Hazardous Materials") or to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials (collectively, "Environmental
Laws"), and (B) there are no events or circumstances that could form the basis
of an order for clean-up or remediation, or an action, suit or proceeding by any
private party or governmental body or agency, against or affecting the Company
or any of the Subsidiaries relating to any Hazardous Materials or the violation
of any Environmental Laws.
(m) All "employee benefit plans", as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
maintained or contributed to by the Company or the Subsidiaries are in
compliance with their terms and all applicable provisions of ERISA, the Internal
Revenue Code of 1986, as amended, and any other applicable laws, and the
Company, the Internal Revenue Code of 1986, as amended, and any other applicable
laws, and the Company and its Subsidiaries do not have liabilities or
obligations with respect to such employee benefit plans (whether in respect of
funding, provision of security or otherwise), except (i) liabilities or
obligations to make benefit or other payments in accordance with the terms of
such plan, and (ii) for instances of non-compliance or liabilities or
obligations that, individually or in the aggregate, will not have a Material
Adverse Effect.
(n) Neither the issuance and sale of the Shares nor the execution and
delivery by the Company of this Agreement and the Other Documents and the
performance by the Company of its obligations hereunder and thereunder will
violate any provision of law, the organizational documents governing the Company
or any Subsidiary or any order of any court or other agency of government, or
conflict with, result in a breach of or constitute (with notice or lapse of time
or both) a default under any indenture, agreement or other instrument by which
the Company or any Subsidiary or any of their respective properties or assets is
bound, or result in the creation or imposition of any lien, charge, restriction,
claim or encumbrance of any nature whatsoever known to the Company upon any of
the properties or assets of the Company or any Subsidiary.
<PAGE>
-9-
(o) Except as set forth on Schedule 2.1(o), there are no (i) outstanding
warrants or options to purchase any shares of capital stock, voting securities
or securities convertible into or exchangeable for capital stock or voting
securities of the Company or (ii) securities of the Company convertible into or
exchangeable for shares of capital stock or voting securities of the Company,
and there are no restrictions upon the voting or transfer of, or the declaration
or payment of any dividend or distribution on, any shares of capital stock of
the Company pursuant to the certificate of incorporation or by-laws of the
Company, any agreement (other than the Credit Agreement) or other instrument to
which the Company is a party or by which the Company is bound, or any order,
law, rule, regulation or determination of any court, governmental agency or body
(including, without limitation, any banking or insurance regulatory agency or
body), or arbitrator having jurisdiction over the Company.
(p) Except as set forth on Schedule 2.1(p) hereto, there are no
registration or other rights entitling any person to registration by the Company
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the issued capital stock of the Company (other than pursuant to the
Registration Rights Agreement), or to purchase or subscribe for capital stock of
the Company (other than pursuant to the Investors Agreement).
(q) The Company files and has filed all required reports, proxy statements,
forms and other documents with the SEC since June 30, 1994 (including all
information incorporated therein by reference, the "SEC Documents"). True and
complete copies of all such SEC Documents have been made available to the
Purchaser. As of their respective dates, (i) the SEC Documents complied in all
material respects with the requirements of the Securities Act or the Securities
Exchange Act of 1934, as amended, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such SEC Documents,
and (ii) except to the extent that information contained in any SEC Document has
been revised or superseded by a later filed SEC Document filed and publicly
available prior to the date of this Agreement, none of the SEC Documents
contains any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC
Documents comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved and fairly
present the consolidated financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). Except
<PAGE>
-10-
for liabilities and obligations incurred in the ordinary course of business,
consistent with past practices, since the date of the most recent consolidated
balance sheet included in our Current Report on Form 8-K filed in connection
with the acquisition of Natural Nutrition Group, Inc. which was consummated on
May 18, 1999 (the "8-K Balance Sheet"), neither the Company nor any of the
Subsidiaries has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) and there is no existing condition, situation
or set of circumstances which could reasonably be expected to result in such a
liability, other than (i) liabilities provided for in the Base Balance Sheets or
disclosed in the notes thereto and (ii) other undisclosed liabilities which,
individually or in the aggregate, would not have a Material Adverse Effect.
(r) Schedule 2.1(r) sets forth a draft copy of the Company's consolidated
balance sheet for the fiscal year ended June 30, 1999 (the "Draft Fiscal 1999
Balance Sheet" and, together with the 8-K Balance Sheet, the "Base Balance
Sheets"). The Draft Fiscal 1999 Balance Sheet fairly presents in all material
respects, in conformity with generally accepted accounting principles applied on
consistent basis, the consolidated financial position of the Company and the
Subsidiaries as of June 30, 1999. Except for liabilities and obligations
incurred in the ordinary course of business, consistent with past practices,
since the date of the Draft Fiscal 1999 Balance Sheet, neither the Company nor
any of the Subsidiaries has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) and there is no existing
condition, situation or set of circumstances which could reasonably be expected
to result in such a liability, other than (i) liabilities provided for in the
Base Balance Sheets or disclosed in the notes thereto and (ii) other undisclosed
liabilities which, individually or in the aggregate, would not have a Material
Adverse Effect.
(s) Except as disclosed in Current SEC Documents, since the respective
dates of the Base Balance Sheets, the Company and the Subsidiaries have
conducted their respective businesses only in the ordinary course of business in
accordance with past practices, and there has not been (i) any event occurrence,
development or state of circumstances or facts which, individually or in the
aggregate, has had or could reasonably be expected to have a Material Adverse
Effect, (ii) any split, combination or reclassification of any of its capital
stock or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for shares of the
capital stock of the Company, (iii) any damage, destruction or loss, whether or
not covered by insurance, that has or reasonably could be expected to have a
Material Adverse Effect, (iv) any change in accounting methods, principles or
practices by the Company, except for the adoption of SOP 98-5 effective July 1,
1999, and (v) any dividend or distribution of any kind declared, paid or made by
the Company on any class of its capital stock.
<PAGE>
-11-
(t) All Tax returns, statements, reports and forms (including estimated tax
or information returns and reports) required to be filed with any Taxing
Authority by or on behalf of the Company or any Subsidiary (collectively, the
"Returns") have, to the extent required to be filed on or before the date
hereof, been filed when due in accordance with all applicable laws; (ii) as of
the time of filings, the Returns were true, correct and complete in all material
respects; (iii) all Taxes shown as due and payable on the Returns that have been
filed have been timely paid, or withheld and remitted to the appropriate Taxing
Authority; (iv) the charges, accruals and reserves for Taxes with respect to the
Company and each of its Subsidiaries reflected on the books of the Company and
its Subsidiaries (excluding any provision for deferred income taxes reflecting
either differences between the treatment of items for accounting and income tax
purposes or carryforwards) are adequate to cover material Tax liabilities
accruing through the end of the last period for which the Company and its
Subsidiaries ordinarily record items on their respective books; and (v) there
are no liens or encumbrances for Taxes upon the assets of the Company or any
Subsidiary except liens for current Taxes not yet due. "Tax" means (i) any tax,
governmental fee or other like assessment or charge of any kind whatsoever
(including, but not limited to, withholding on amounts paid to or by any
Person), together with any interest, penalty, addition to tax or additional
amount imposed by any governmental authority (a "Taxing Authority") responsible
for the imposition of any such tax (domestic or foreign) and (ii) liability of
the Company or any Subsidiary for the payment of any amount of the type
described in clause (i) as a result of being or having been before the Closing
Date a member of an affiliated, consolidated, combined or unitary group, or a
party to any agreement or arrangement, as a result of which liability of the
Company or any Subsidiary to a Taxing Authority is determined or taken into
account with reference to the liability of any other Person.
(u) Except as set forth on Schedule 2.01(u), there exists no strike, labor
dispute, slowdown or work stoppage with the employees of the Company or any
Subsidiary with is pending or, to the knowledge of the Company, threatened.
(v) The Company is not and, after giving effect to the offering and sale of
the Shares, will not be an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940
and the rules and regulations promulgated thereunder.
(w) The Company agrees that neither it nor anyone acting on its behalf will
offer any of the Shares so as to bring the issuance and sale of the Shares
within the provisions of Section 5 of the Securities Act, or offer any similar
securities for issuance or sale to, or solicit any offer to acquire any of the
same from, or otherwise approach or negotiate with respect thereto with, anyone
if the sale of any of the Shares or any such similar
<PAGE>
-12-
securities would be integrated as a single offering for the purposes of the
Securities Act, including, without limitation, Regulation D thereunder.
(x) The Board of Directors of the Company has, by a majority vote at a
meeting of such Board duly held on September 14, 1999, approved and adopted this
Agreement, the offering and sale of the Shares and the other transactions
contemplated hereby and determined that the offering and sale of the Shares is
fair to the stockholders of the Company.
(y) Except as set forth in Schedule 2.1(y) hereof, none of the Company, the
Subsidiaries, the Board of Directors of the Company or any member of the Board
of Directors of the Company has employed any investment banker, broker, finder
or intermediary in connection with the transactions contemplated hereby who
might be entitled to a fee or any commission in connection with the offering and
sale of the Shares.
(z) In connection with the Company's computer software relevant for the
normal operation of its business (i) the Company is aware of the risk associated
with the date change from December 31, 1999 to January 1, 2000, (ii) the Company
is taking, or has taken, appropriate action to remedy any problems relating to
the year 2000 date change that might adversely affect its business, both prior
to and following January 1, 2000, (iii) the Company is taking, or has taken,
steps to assure that its clients, counterparties and suppliers, including
technology, telecommunications, and software providers, are able to meet the
requirements of the year 2000 date change, as applicable and neither the Company
nor any of the Subsidiaries knows of any inability of any of the foregoing to
meet the requirements of the year 2000 date change and (iv) the Company will
complete all year 2000 required modification, validation and implementation by
October 31, 1999.
SECTION 2.2. Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to the Company that:
(a) The Purchaser has been duly organized, and is validly existing and in
good standing as a corporation under the laws of the jurisdiction in which it
was organized, and has all requisite power and authority under such laws to own
or lease and operate its properties and to carry on its business as now
conducted.
(b) The Purchaser has the power and authority to execute, deliver and
perform this Agreement, the Acquisition Agreement and the Investor's Agreement.
All action on the part of the Purchaser necessary for the authorization,
execution and delivery of this Agreement, the Acquisition Agreement and the
Investor's Agreement and the performance of all obligations of the Purchaser
hereunder and thereunder have been taken or will be taken prior to the Closing.
This Agreement, the Acquisition Agreement and the Investor's
<PAGE>
-13-
Agreement have been or will be, at or prior to the Closing, duly authorized,
executed and delivered by the Purchaser and, when so executed (assuming the due
authorization, execution and delivery by the Company), each constitutes a valid
and legally binding obligation of the Purchaser, enforceable in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general principles of equity (whether
enforcement is sought by proceedings in equity or at law).
(c) The Purchaser has full corporate power and authority to enter into and
perform its obligations under the Registration Rights Agreement; the
Registration Rights Agreement has been or will be, at or prior to the Closing,
duly authorized, executed and delivered by the Purchaser and, when so executed
(assuming the due authorization, execution and delivery by the Company), will
constitute a valid and binding obligation of the Purchaser, enforceable against
the Purchaser in accordance with its terms, except to the extent that
enforcement thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereinafter in effect
relating to creditors' rights generally, (ii) general principles of equity
(regardless of whether a proceeding is considered at law or in equity) or (iii)
with respect to any rights to indemnity or contribution thereunder, applicable
securities laws and public policy considerations.
(d) The execution and delivery by the Purchaser of this Agreement and the
Other Documents and the performance by the Purchaser of its obligations
hereunder and thereunder will not violate any provision of law, the
organizational documents governing the Purchaser or any order of any court or
other agency of government, or conflict with, result in a breach of or
constitute (with notice or lapse of time or both) a default under any indenture,
agreement or other instrument by which the Purchaser or any of their respective
properties or assets is bound, or result in the creation or imposition of any
lien, charge, restriction, claim or encumbrance of any nature whatsoever known
to the Purchaser upon any of the properties or assets of the Purchaser.
(e) The Shares will be acquired for investment for the Purchaser's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and the Purchaser has no present intention of
selling, granting any participation in, or otherwise distributing the same. The
Purchaser further represents that it does not presently have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Shares. The Purchaser (i) has such knowledge and experience in financial and
business matters, including investments of the type represented by the Shares,
as to be capable of evaluating the merits of investment in the Company; (ii) has
not been furnished with or relied upon any oral representation, warranty or
information in connection with the offering of the Shares; and (iii) is an
"accredited investor" as such term is defined in Rule
<PAGE>
-14-
501 of the rules and regulations promulgated under the Securities Act. The
Purchaser and its agents, attorneys and advisors have been provided reasonable
access to all of the books, records, financial statements, accounts, places of
business, and any other information reasonably related to the conduct of the
business of the Company, and has been afforded the opportunity to conduct an
independent investigation of all of those matters and has satisfied itself as to
all of the risks of the business of the Company, and has satisfied itself that
it has obtained all of the information and descriptions of reasonable risks
associated with the transaction contemplated hereby that a reasonably prudent
investor would wish to obtain.
(f) The Company will not have any liability or obligation for any brokerage
fees or finder's fees with respect to this Agreement or the transactions
contemplated hereby as a result of any action taken by the Purchaser in
connection herewith and therewith.
(g) No filing with or consent, approval, authorization or order of any
court or governmental agency, authority or body is required (and has not been
received) for the execution and delivery by the Purchaser of this Agreement and
the Other Documents, the performance by the Purchaser or its obligations
hereunder and thereunder or the consummation by the Purchaser of the
transactions contemplated herein and therein, except (i) in connection with the
applicable requirements of the HSR Act and (ii) filings with the SEC and state
securities administrators.
(h) On the Closing Date, the Purchaser and its corporate, limited liability
and limited partnership Affiliates shall not beneficially own (as determined in
accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as
amended) shares of Common Stock other than the Shares.
ARTICLE III
CLOSING CONDITIONS
SECTION 3.1. Conditions to Obligation of the Purchaser. The obligation of
the Purchaser to purchase the Investment Shares shall be subject to satisfaction
or waiver by it of the following conditions on or before the Closing Date:
(a) The representations and warranties of the Company contained in Section
2.1 hereof that are qualified as to materiality shall be true and accurate, and
those not so qualified shall be true and accurate in all material respects at
and as of the Closing Date as if made on the date hereof.
<PAGE>
-15-
(b) The Company shall have performed and complied in all material respects
with all agreements, covenants and conditions contained herein that are required
to be performed or complied with by it on or before the Closing Date.
(c) The Company shall have received all consents, permits, approvals and
other authorizations that may be required from, and made all such filings and
declarations that may be required with, any person pursuant to any law, statute,
regulation or rule (federal, state, local and foreign), or pursuant to any
agreement, order or decree by which the Company or any of its assets is bound,
in connection with the transactions contemplated by this Agreement, except for
(i) notice requirements which may be fulfilled subsequent to the Closing Date
and (ii) consents, permits, approvals, authorizations, filings and declarations
the failure to obtain or to undertake which will not adversely affect the
Company's ability to perform its obligations under this Agreement or any
agreement executed in accordance herewith.
(d) The waiting period (and any extension thereof) applicable to the
offering and sale of the Shares under the HSR Act shall have been terminated or
shall have expired.
(e) The Purchaser shall have received a certificate, dated the Closing Date
and signed by the Chief Executive Officer and the Chief Financial Officer of the
Company, certifying that the conditions in Sections 3.1(a), (b) and (c) are
satisfied on and as of such date.
(f) The Company shall have executed and delivered the Investor's Agreement
and Registration Rights Agreement, and the Purchaser's Designee and the Joint
Designee (each as defined in the Investor's Agreement) shall have been appointed
to the Board of Directors of the Company pursuant to the Investor's Agreement.
(g) The Purchaser and its counsel shall have received copies of the
following documents:
(i) the certificate of incorporation of the Company (the "Certificate
of Incorporation"), certified as of a recent date by the Secretary of State
of the State of Delaware, and a certificate of such authority dated as of a
recent date as to the due incorporation and good standing of the Company
and listing all documents of the Company on file with said authority;
(ii) a certificate of the Secretary of the Company dated the Closing
Date certifying: (A) that attached thereto is a true and complete copy of
the by-laws of the Company (the "By-Laws") as in effect on the date of such
<PAGE>
-16-
certification; (B) that attached thereto is a true and complete copy of all
resolutions adopted by the Board of Directors of the Company authorizing
the execution, delivery and performance of this Agreement and the Other
Documents and the issuance, sale and delivery of the Shares, and that all
such resolutions are in full force and effect and are all the resolutions
adopted in connection with the transactions contemplated by this Agreement;
(C) that the Certificate of Incorporation has not been amended since the
date of the last amendment referred to in the certificate delivered
pursuant to clause (i) above; (D) that the By-Laws have not been amended
since the date of the last amendment referred to in such certificate
pursuant to subclause (ii)(A) above; and (E) that each officer of the
Company executing this Agreement and the Other Documents, the certificates
representing the Shares and any agreement, certificate or instrument
furnished pursuant hereto, was, at the respective times of such execution
and delivery of such documents, duly elected or appointed, qualified and
acting as such officer, and the signatures of such persons appearing on
such documents are their genuine signatures or true facsimiles thereof; and
(iii) such additional supporting documents as the Purchaser may
reasonably request.
(h) The Purchaser shall have received an opinion (satisfactory to the
Purchaser and its counsel), dated the Closing Date, from Cahill Gordon & Reindel
in substantially the form of Exhibit C hereto.
(i) Each of the Investor's Agreement and the Registration Rights Agreement
shall have been duly executed and delivered by the parties thereto and such
agreements shall be in full force and effect upon Closing.
(j) On the Closing Date, the Company shall have made the requisite filings
for listing of the shares on the Nasdaq National Market.
SECTION 3.2. Conditions to the Obligations of the Company. The Company's
obligation to sell the Investment Shares shall be subject to the satisfaction or
waiver by it of the following conditions on or before the Closing:
(a) The representations and warranties of the Purchaser contained in
Section 2.2 of this Agreement that are qualified as to materiality shall be true
and accurate, and those not so qualified shall be true and accurate in all
material respects at and as of the Closing Date as if made on the date hereof.
<PAGE>
-17-
(b) The Purchaser shall have performed and complied in all material
respects with all agreements and conditions contained herein that are required
to be performed or complied with by it on or before the Closing Date, including
without limitation, payment of the Purchase Price.
(c) The Purchaser shall have received all consents, permits, approvals and
other authorizations that may be required from, and made all such filings and
declarations that may be required with, any person pursuant to any law, statute,
regulation or rule (federal, state, local and foreign), or pursuant to any
agreement, order or decree by which the Purchaser or any of its assets is bound,
in connection with the transactions contemplated by this Agreement, except for
(i) notice requirements which may be fulfilled subsequent to the Closing Date
and (ii) consents, permits, approvals, authorizations, filings and declarations
the failure to obtain or to undertake which will not adversely affect the
Purchaser's ability to perform its obligations under this Agreement or any
agreement executed in accordance herewith.
(d) The waiting period (and any extension thereof) applicable to the
offering and sale of the Shares under the HSR Act shall have been terminated or
shall have expired.
(e) The Company shall have received a certificate, dated the Closing Date
and signed by the President of the Purchaser, certifying that the conditions in
Sections 3.2(a), (b) and (c) are satisfied on and as of such date.
(f) The Company shall have received an opinion (reasonably satisfactory to
the Company and its counsel), dated the Closing Date, from the Vice
President-Legal Affairs of the Purchaser in substantially the form of Exhibit D
hereto.
(g) Each of the Investor's Agreement and Registration Rights Agreement
shall have been duly executed and delivered by the parties thereto and such
agreements shall be in full force and effect upon Closing.
(h) On the Closing Date, the Company shall have made the requisite filings
for listing of the shares on the Nasdaq National Market.
<PAGE>
-18-
ARTICLE IV
TERMINATION
SECTION 4.1 (a) This Agreement maybe terminated at any time prior to
Closing:
(i) by the written agreement of the Company and the Purchaser;
(ii) upon notice given by the Company or the Purchaser to the other
party if the Closing has not occurred on or prior to October 15, 1999;
provided that if the Closing has not occurred as of such date due to the
failure of such party to perform or comply with any of the conditions
required to be performed by it prior to the Closing, such party will have
no termination rights under this clause (ii); or
(iii) upon notice given by the Company or the Purchaser to the other
parties, if the consummation of the transactions contemplated hereby would
violate, in whole or in part, any non-appealable final order, decree or
judgment of any court or governmental body having competent jurisdiction.
(b) In the event of the termination of this Agreement pursuant to this
Article IV, this Agreement, except for the provisions of Article V(a), (f) and
(g), shall become void and shall have no effect, without any liability on the
part of any party or its directors, officers or stockholders. Notwithstanding
the foregoing, nothing in this Article IV shall relieve any party to this
Agreement for a breach of any of its covenants or agreements contained in this
Agreement.
(c) The Company and the Purchaser acknowledge that, in the event this
Agreement is terminated in accordance with this Article IV, the Confidentiality
Agreements dated August 23, 1999 and September 1, 1999 between the Company and
the Purchaser shall remain in full force and effect.
<PAGE>
-19-
ARTICLE V
MISCELLANEOUS
(a) The Company shall pay all expenses (including, without limitation,
reasonable counsel fees) in connection with the transactions contemplated
hereby, including all fees incurred in connection with filings under the HSR
Act.
(b) The representations or warranties contained in this Agreement or in any
instrument delivered in connection with this Agreement shall survive for 12
months after the Closing Date.
(c) The Company agrees to make all commercially reasonable efforts to have
the Shares duly admitted for listing on the Nasdaq National Market as soon as
reasonable practicable following the Closing Date.
(d) The Company and the Purchaser acknowledge that the rules of the Nasdaq
Stock Market, Inc. regarding the issuance of securities listed on the Nasdaq
National Market (the "NNM Rules") would require the approval of the Company's
stockholders in the event the Company issues shares constituting in excess of
twenty percent (20%) of the then outstanding Common Stock at a price less than
the greater of the book value and the current market price of the Common Stock
and/or as otherwise provided in the NNM Rules. In the event the Company and the
Purchaser determine that the issuance of the Shares would require approval of
the stockholders of the Company under NNM Rules, the Company and the Purchaser
agree to cooperate to take all action necessary to receive such approval in a
timely fashion.
(e) The Company and the Purchaser, on behalf of Heinz, agree to negotiate
the Strategic Alliance Agreements in good faith and execute the same as soon as
reasonably practicable following the Closing on terms and conditions
substantially as set forth in Exhibit C hereto.
(f) Neither this Agreement nor any term hereof may be amended, waived,
discharged or terminated other than by an instrument in writing, signed by the
party against which enforcement of such amendment, discharge, waiver or
termination is sought.
(g) This Agreement shall not be assignable or otherwise transferable by a
party without the prior consent of the other parties, and any attempt to so
assign or otherwise transfer this Agreement without such consent shall be void
and of no effect; provided
<PAGE>
-20-
that Heinz may, without the consent of the Company, assign its rights hereunder
upon the transfer of the Investment Shares in accordance with Section 1.4(b) to
a wholly-owned direct or indirect subsidiary of Heinz who agrees to be subject
to the terms and conditions of this Agreement, the Investor's Agreement and the
Registration Rights Agreement. This Agreement shall be binding upon the
respective successors and assigns of the parties hereto. Nothing in this
Agreement shall be construed as giving any person, other than the parties hereto
and their successors and permitted assigns, any right, remedy or claim under or
in respect of this Agreement or any provision hereof.
(h) No failure or delay by any party in exercising any right, power or
privilege under this Agreement shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies provided herein shall be cumulative and not exclusive of any rights or
remedies provided by law.
(i) All notices, requests, consents and other communications hereunder
shall be in writing and shall be delivered in person, sent by facsimile or
mailed by certified or registered mail; return receipt requested, addressed as
follows:
If to the Purchaser, to: Earth's Best, Inc.
c/o H.J. Heinz Company
1062 Progress Street
Pittsburgh, PA 15230
Telecopier No.: (412) 237-3523
Attention: Francis W. Daily, Jr.
with a copy to: H.J. Heinz Company
600 Grant Street
Pittsburgh, PA 15219
Telecopier No.: (412) 4566102
Attention: Vice President - Legal Affairs
If to the Company, to: The Hain Food Group, Inc.
50 Charles Lindbergh Boulevard
Uniondale, NY 11553
Telecopier No.: (516) 237-6240
Attention: President
with a copy to: Cahill Gordon & Reindel
80 Pine Street
<PAGE>
-21-
New York, New York 10005
Telecopier No.: (212) 269-5420
Attention: Roger Meltzer, Esq.
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others. All notices, requests,
consents and other communications hereunder shall be deemed to have been duly
given or served on the date on which personally delivered or on the date
actually received, with receipt acknowledged.
(j) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAWS
PROVISIONS THEREOF.
(k) This Agreement, the Other Documents (when executed and delivered by the
parties hereto) and the Acquisition Agreement constitute the sole and entire
agreement of the parties with respect to the subject matter hereof and supersede
any and all prior or contemporaneous agreements, discussions, representations,
except as set forth in Section 4.1(c) hereof, warranties or other
communications. All Schedules and Exhibits hereto are hereby incorporated herein
by reference.
(l) Reference in this Agreement to the Acquisition Agreement, including in
connection with the Shares, are for convenience purposes only and create no
obligation of the parties hereto with respect to the Acquistion.
(m) This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
(n) As used in this Agreement, knowledge shall mean, with respect to any
person, actual knowledge of such person (without imputing any knowledge to such
person), if an individual, or of any executive officer of such person, if not an
individual.
(o) This Agreement may not be amended or modified without the written
consent of the Company and the Purchaser, nor shall any waiver be effective
against any party unless in a writing executed on behalf of such party.
(p) If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from this
Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its terms
to the fullest extent permitted by law.
<PAGE>
-22-
(q) The titles and subtitles used in this Agreement are for convenience
only and are not to be considered in construing or interpreting any term or
provisions of this Agreement.
<PAGE>
-23-
IN WITNESS WHEREOF, the Company and the Purchaser have caused this
Agreement to be executed and delivered by the undersigned duly authorized
officers as of the day and year first above written.
THE HAIN FOOD GROUP, INC.
By: /s/ Irwin D. Simon
---------------------------
Name: Irwin D. Simon
Title: President
EARTH'S BEST, INC.
By: /s/ Robert Yoshida
---------------------------
Name: Robert Yoshida
Title: President
EXHIBIT 10.2
INVESTOR'S AGREEMENT
This Investor's Agreement (the "Agreement"), dated as of September 24,
1999, among The Hain Food Group, Inc., a Delaware corporation (the "Company"),
Earth's Best, Inc., an Idaho corporation (the "Purchaser") and Irwin D. Simon
(solely for purposes of Section 3.05).
W I T N E S S E T H :
WHEREAS, upon the terms and subject to the conditions of a Securities
Purchase Agreement between the parties hereto dated September 24, 1999 (the
"Purchase Agreement"), the Company has agreed to issue and sell to the Purchaser
2,837,343 shares (the "Investment Shares") of Common Stock, par value $0.01 per
share, of the Company ("Common Stock");
WHEREAS, upon the terms and subject to the conditions of an Asset Purchase
and Sale Agreement by and among the parties hereto and H.J. Heinz Company dated
September 24, 1999 (the "Acquisition Agreement"), the Company has agreed to
issue to the Purchaser 670,234 shares of Common Stock (the "Acquisition
Shares"); and
WHEREAS, the Purchaser and the Company each desire to enter into this
Agreement for the purpose of regulating certain aspects of their relationship
with regard to the Company.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Purchaser
hereby agree as follows:
ARTICLE I
DEFINITIONS
(a) As used herein, the following terms shall have the following meanings:
"Affiliate" shall mean, with respect to any Person, (i) any Person or
entity directly or indirectly controlling or controlled by or under direct or
indirect common con-
<PAGE>
-2-
trol with such Person, (ii) any spouse or non-adult child (including by
adoption), (iii) any relative other than a spouse or non-adult child (including
by adoption) who has the same principal residence of any natural person
described in clause (i) above, (iv) any trust in which any such Persons
described in clause (i), (ii) or (iii) above has a beneficial interest and (v)
any corporation, partnership, limited liability company or other organization of
which any such Persons described in clause (i), (ii) or (iii) above collectively
own more than fifty percent (50%) of the equity of such entity.
"Lock-up Period" means the period commencing on the Closing Date (as
defined in the Purchase Agreement) and ending the earlier of (I) eighteen months
thereafter and (II) the occurrence of a Significant Corporate Event.
"New Securities" has the meaning set forth in Section 5.01.
"Person" shall mean an individual, partnership, limited liability company,
joint venture, corporation, trust or unincorporated organization or any other
similar entity.
"Registration Rights Agreement" means the Registration Rights Agreement
between the parties hereto dated the date hereof.
"Related Party" shall mean with respect to any Person: (i) any parent,
controlling shareholder, fifty percent (50%) or greater owned subsidiary, or
spouse or ex-spouse or immediate family member (in the case of an individual) of
such Person; or (ii) a trust, corporation, partnership, limited liability
company or other entity, the beneficiaries, shareholders, partners, owners or
persons holding a fifty percent (50%) or greater controlling interest of which
consist of such Person and/or such other persons or entities referred to in the
immediately preceding clause (i).
A "Significant Corporate Event" means any of the following: (i) the launch
of a bona fide tender offer for the capital stock of the Company by a third
party other than the Purchaser or its Affiliate, (ii) the issuance and sale by
the Company in a private transaction or series of private transactions to a
third party other than the Purchaser or its Affiliate of capital stock of the
Company resulting in a greater ownership interest in the Company by such third
party than the Purchaser's maximum allowable ownership interest at the time of
such transaction(s), (iii) the acquisition by a third party other than the
Purchaser or its Affiliates of shares of Common Stock constituting in the
aggregate 15% (fifteen percent) or greater of the outstanding Common Stock in a
transaction or series of transactions approved prior to consummation thereof by
the Company's Board of Directors, (iv) the acquisition by the Company of a
business such that, following such acquisition, greater than twenty-five percent
(25%) of the Company's sales, on a pro forma basis, are derived from the sale of
products other than food, beverage or natural health and beauty products
<PAGE>
-3-
(excluding dietary supplements) sold through the Company's existing distribution
channels; provided, the Company does not divest that portion of the acquired
business necessary to fall below the twenty-five percent (25%) threshold within
a reasonable period of time following such acquisition, (v) the sale by the
Company of all or substantially all of its assets or (vi) the loss by the
Company of the services of Irwin D. Simon as its President and Chief Executive
Officer.
"Shares" shall mean, without duplication, (i) the Investment Shares, if and
when issued in connection with the Purchase Agreement, (ii) the Acquisition
Shares, if and when issued in accordance with the Acquisition Agreement, (iii)
any New Securities purchased by the Purchaser in accordance with Article V
hereof and (iv) any other shares of Common Stock hereafter acquired by the
Purchaser.
(b) Capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Purchase Agreement.
ARTICLE II
CORPORATE GOVERNANCE
SECTION 2.01. Board of Directors. Upon the execution of this Agreement, and
until such time as the Purchaser and its Affiliates no longer collectively
beneficially own Common Stock representing at least fifty percent (50%) of the
Shares issued to the Purchaser on the Closing Date (as defined in the Purchase
Agreement), the Company agrees as follows:
(a) Purchaser's Designee. The Company agrees to take all action
necessary such that from and after the date hereof until the next regularly
scheduled meeting of the Company's stockholders, the Board of Directors of
the Company (the "Board") shall include one director designated by the
Purchaser (the "Purchaser's Designee") and thereafter to use its best
efforts to cause a nominee designated by the Purchaser to be included in
each slate of proposed directors put forth by the Company to its
stockholders and recommended for election in any proxy solicitation
materials disseminated by the Company; provided, however, that the identity
of any Purchaser's Designee other than Joseph Jimenez shall be reasonably
acceptable to the Company. Upon the death, resignation or removal of a
Purchaser's Designee, the Company will use its best efforts to have the
vacancy filled by a subsequent Purchaser's Designee. The Purchaser's
Designee shall be fully covered by any directors' and officers' liability
insurance maintained from time to time on the same
<PAGE>
-4-
terms as the other members, shall be entitled to the benefit of any
indemnification arrangements applicable to the other members and shall have
the right to receive all fees paid and options and other awards granted and
expenses reimbursed to non-employee directors generally.
(b) Joint Designee. The Company agrees to take all action necessary
such that from and after the date hereof until the next regularly scheduled
meeting of the Company's stockholders, the Board shall include one director
designated jointly by the Purchaser and the Company (the "Joint Designee"),
and thereafter to use its best efforts to cause a nominee jointly
designated by the Purchaser and the Company to be included in each slate of
proposed directors put forth by the Company to its stockholders and
recommended for election in any proxy solicitation materials disseminated
by the Company. The initial Joint Designee shall be A.G. Malcolm Ritchie.
In the event the Company and the Purchaser fail to agree on a successor
Joint Designee, each of the Company and the Purchaser shall submit one name
to a committee comprised of three independent members (other than the
Purchaser's Designee) of the Board, and such committee shall determine,
from the two names submitted, the proposed nominee for Joint Designee,
which determination shall be final. Upon the death, resignation or removal
of a Joint Designee, the Company will use its best efforts to have the
vacancy filled by a subsequent Joint Designee. The Joint Designee shall be
fully covered by any directors' and officers' liability insurance
maintained from time to time on the same terms as the other members, shall
be entitled to the benefit of any indemnification arrangements applicable
to the other members and shall have the right to receive all fees paid and
options and other awards granted and expenses reimbursed to non-employee
directors generally.
ARTICLE III
RESTRiCTIONS ON TRANSFER; RIGHT OF FIRST OFFER
SECTION 3.01. Lock-up Period. Without the prior written consent of the
Board, the Purchaser agrees and covenants that, during the Lock-up Period, it
will not sell, assign, pledge or otherwise transfer any Shares.
SECTION 3.02. Company's Right of First Offer. If, following the Lock-up
Period, the Purchaser has received a bona fide offer (a "Transfer Offer") which
the Purchaser proposes to accept to sell or otherwise transfer any or all of the
Shares (the "Transfer Stock") then owned by the Purchaser to any Person (a "Bona
Fide Purchaser"), then before the Purchaser may sell the Transfer Stock, the
Purchaser shall provide the
<PAGE>
-5-
Company a written notice detailing the terms of such Transfer Offer that the
Purchaser has received with respect to such Transfer Stock (a "Transfer
Notice"). Such Transfer Notice shall identify the number of shares of the
Transfer Stock, the price of the Transfer Stock, the identity of the Bona Fide
Purchaser and all the other material terms and conditions of such Transfer
Offer. The Transfer Notice shall contain an irrevocable offer to sell to the
Company the Shares constituting Transfer Stock at a price equal to the price and
upon substantially the same terms as the terms contained in such Transfer Offer.
If the Company does not notify the Purchaser of its intent to purchase the
Transfer Stock within 20 days of delivery of the Transfer Notice, the Company's
right of first offer with respect to the Transfer Stock shall terminate. If the
Company notifies the Purchaser that it has decided not to purchase the Transfer
Stock, the Purchaser shall have 120 days from the date of such notice to
transfer to the Bona Fide Purchaser any or all of the Transfer Stock at a price
not less than and on terms no more favorable than were contained in the Transfer
Notice. No sale may be made to any third party unless such third party agrees,
in writing, to be bound by the provisions of this Agreement. Promptly after any
sale pursuant to this Section 3.02, the Purchaser shall notify the Company of
the consummation thereof and shall furnish such evidence of the completion
(including time of completion) of such sale and of the terms thereof as the
Company may reasonably request. If, at the termination of the 120-day sale
period specified above, the Purchaser has not completed the sale of all of the
Transfer Stock, the Purchaser shall no longer be permitted to transfer such
Transfer Stock pursuant to this Section 3.02 without again fully complying with
the provisions of this Section 3.02 and all the restrictions on transfer
contained in this Agreement shall again be in effect with respect to all the
Purchaser's Shares.
SECTION 3.03. Restrictions on Transfer to Certain Parties. In addition to
the restrictions on transfer set forth in Sections 3.01 and 3.02, the Purchaser
agrees that the Purchaser will not sell, assign, pledge, or otherwise transfer
any of the Company's Common Stock or other securities exercisable for, or
convertible or exchangeable into Common Stock, including, but not limited to,
the Shares (collectively, "Company Securities"), or any right or interest
therein, whether voluntarily or by operation of law, or otherwise, (i) to an
Adverse Person (as defined below), (ii) to any transferee who holds, prior to
such transfer, ten percent (10%) or greater of the outstanding voting capital
stock of the Company registered in its name or beneficially owned by it or its
Affiliates as of the date thereof or (iii) without the consent of the Company,
that would result in such transferee holding ten percent (10%) or greater of
outstanding voting capital stock of the Company registered in its name or
beneficially owned by it or any of its Affiliates upon the consummation of such
transfer. The term "Adverse Person" as used in this Section 3.03 shall mean any
corporation or entity which at such time is a competitor of the Company or any
Affiliate of such corporation or entity.
<PAGE>
-6-
SECTION 3.04. Public Offering Lock-Up. (a) The Purchaser agrees and
covenants that in connection with an underwritten public offering of Company
Securities by the Company, it will agree if requested by the underwriter(s) not
to offer, sell or otherwise dispose of any Shares for a period not to exceed 90
days after the date of the underwriting agreement, without the prior consent of
the underwriter(s).
(b) The Company agrees and covenants that in connection with an
underwritten public offering of Company Securities in connection with a Demand
Registration (as defined in the Registration Rights Agreement), the Company will
agree if requested by the underwriter(s) not to offer, sell or otherwise dispose
of any Company Securities for a period not to exceed 45 days after the date of
the underwriting agreement, without the prior consent of the underwriter(s).
SECTION 3.05. Restrictions on Transfer by Irwin D. Simon. Without the prior
written approval of the Purchaser, during the Lock-up Period, Irwin D. Simon,
the Company's President and Chief Executive Officer, will not sell in excess of
500,000 (five hundred thousand) shares of Common Stock (including shares of
Common Stock issued or issuable upon the exercise of options). In addition to
the foregoing, in the event Mr. Simon proposes to sell, during the Lock-up
Period, 50,000 or greater shares of Common Stock in any single transaction, Mr.
Simon will use commercially reasonable efforts to sell such shares, subject to
requisite approval of the Board, to Heinz or its Affiliates in a transaction
substantially consistent with Section 3.02 (with respect to notice requirements
and time periods).
ARTICLE IV
STANDSTILL AGREEMENT
SECTION 4.01. Standstill Agreement. The Purchaser agrees and covenants
that, without the prior written consent of the Board, during the Lock-up Period,
the Purchaser will not, and will cause each of its Affiliates not to, singly or
as part of a "partnership, limited partnership, syndicate or other group" (as
those terms are used within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), which meanings shall
apply for all purposes of this Agreement), directly or indirectly, through one
or more intermediaries or otherwise:
(a) acquire, offer or propose to acquire, or agree to acquire,
directly or indirectly, by purchase or otherwise (other than as may be
otherwise permitted in this Section 4.01), any Company Securities, except
(i) in accordance with Article V
<PAGE>
-7-
of this Agreement or (ii) by way of stock dividends, stock splits,
reorganization, recapitalization, merger, consolidation or like
distributions made available to holders of the Common Stock generally;
(b) make, or in any way participate, directly or indirectly, in, any
"solicitation" of "proxies" (as such terms are defined or used in
Regulation 14A of the Exchange Act) by Persons other than the Company with
respect to Company Securities (including by the execution of actions by
written consent), become a "participant" in any "election contest" (as such
terms are defined or used in Rule 14a-11 of the Exchange Act) with respect
to the Company other than in concurrence with actions initiated or
supported by the Board;
(c) initiate, propose or otherwise solicit, or participate in the
solicitation of, stockholders for the approval of one or more stockholder
proposals with respect to the Company as described in Rule 14a-8 under the
Exchange Act or induce any other individual or entity to initiate any
stockholder proposal relating to the Company;
(d) directly or indirectly participate in or encourage the formation
of any group that seeks control of the Company (other than as may be
otherwise permitted in this Section 4.01) or for the purpose of
circumventing any provision of this Agreement;
(e) other than in connection with a competing proposal in respect of
any such action taken by a third party without the direct or indirect
assistance of the Purchaser or its Affiliates, solicit, seek or offer to
effect with any third party, or make any statement or proposal, whether
written or oral, either alone or in concert with others, with respect to
any form of business combination or transaction involving the Company or
any subsidiary thereof, including, without limitation, a merger, exchange
offer or liquidation of the Company's assets, or instigate or encourage any
third party to do any of the foregoing;
(f) deposit any Company Securities into a trust or subject any Company
Securities to any arrangement or agreement with respect to the voting
thereof or take any action by written consent in lieu of a meeting, in any
such case that seeks control of the Company (except as may be otherwise
permitted in this Section 4.01) or for the purpose of circumventing any
provision of this Agreement; or
(g) other than in connection with a competing proposal in respect of
any such action taken by a third party without the direct or indirect
assistance of the Purchaser or its Affiliates, otherwise act, directly or
indirectly, alone or in concert
<PAGE>
-8-
with others (including by providing financing for another party) to seek or
offer to acquire control of the Company.
SECTION 4.02. Additional Standstill Agreement on Transactions with 10% or
Greater Stockholders. Notwithstanding the foregoing, during the term of this
Agreement, the Purchaser shall not enter any arrangement, written or otherwise,
with any holder of ten percent (10%) or greater of the outstanding voting
capital stock of the Company registered in its name or beneficially owned by it
or its Affiliates, for the purpose of effecting any acquisition, offer,
proposal, solicitation or participation specified in clauses (a) through (g) of
Section 4.01.
SECTION 4.03. Voting Rights. The Purchaser agrees that, for the duration of
this Agreement, so long as the Purchaser and its Affiliates own any voting
capital stock of the Company registered in their respective names or
beneficially owned by them, it will use reasonable best efforts to, and to cause
each of its Affiliates to, be present, in person or represented by proxy, at all
stockholder meetings of the Company so that all of the Common Stock beneficially
owned by the Purchaser and its Affiliates may be counted for the purpose of
determining the presence of a quorum at such meetings and to vote in favor of
(i) the slate of directors put forth by the Company to its stockholders at any
such meetings and recommended for election in proxy solicitation materials
disseminated by the Company and (ii) at the Company's annual meeting of
stockholders to be held on or about December 7, 1999, amendments to the
Company's certificate of incorporation and by-laws providing for the
classification of our board of directors into three classes and amendments to
the Company's stock option plans providing for increases in the number of shares
eligible for grant thereunder.
ARTICLE V
PREEMPTIVE RIGHTS; ETC.
SECTION 5.01. Private Transactions. If the Company proposes to issue or
sell any additional Company Securities ("New Securities"), other than (i) in an
underwritten public offering registered under the Securities Act, (ii) pursuant
to any Company stock option plan or in connection with the exercise of currently
outstanding warrants or currently outstanding options or options received
pursuant to any Company stock option plan or the conversion of outstanding
convertible notes or (iii) pursuant to a stock split, dividend or other
recapitalization, then the Company shall deliver written notice thereof (the
"Preemptive Notice") to the Purchaser setting forth the number, terms and
purchase consideration (or if such purchase consideration is not expressed in
cash, the fair market
<PAGE>
-9-
value cash equivalent thereof determined in good faith by the Board) of the New
Securities which the Company proposes to issue. The Purchaser shall thereupon
have the right, unless otherwise agreed in writing by the Purchaser in advance,
to elect to purchase on the same terms and conditions (including consideration
or the cash equivalent thereof) as those offered to any third party that number
of New Securities proposed to be issued as would maintain the Purchaser's
relative proportional equity interest in the Company as of the date of such
Preemptive Notice. The Purchaser may make such election by written notice to the
Company within 20 days of receipt of notice of any proposed issuance of New
Securities. If the Purchaser does not elect to purchase its pro rata portion of
New Securities within 20 days of the date of the Preemptive Notice (the
"Preemptive Notice Period"), this pro rata purchase right shall terminate with
respect to the New Securities described in the written notice delivered to that
party (but not with respect to any future proposed sales of New Securities by
the Company), and the Company may, in its sole discretion, sell to third parties
within 120 days after the Purchaser's receipt of the Preemptive Notice any or
all of the New Securities described in such written notice to the Purchaser.
Subject to the Company's rights under the preceding sentence, any purchases by
the Purchaser of New Securities in accordance with this Section 5.01 shall be
made at the closing and upon terms of the sale of New Securities to the third
party permitted by the preceding sentence. At such closing, the Purchaser shall
deliver a certified check or checks or a wire transfer of immediately available
funds in the appropriate amount to the Company against delivery of certificates
representing the New Securities so purchased.
SECTION 5.02. Underwritten Offerings. If, during the Lock-up Period, the
Company issues and sells any New Securities in an underwritten public offering
pursuant to an effective Registration Statement under the Securities Act (an
"Underwritten Offering"), then the Company shall arrange for the Purchaser to be
allocated securities in the Underwritten Offering on the same terms and
conditions as those offered in such offering such that the number of New
Securities issued to the Purchaser would maintain the Purchaser's relative
proportional equity interest in the Company as of the date of consummation of
such Underwritten Offering; provided, the Company may, in the alternative, and
with the consent of the Purchasers, issue and sell to the Purchaser in a private
offering to be consummated simultaneously with the closing of the Underwritten
Offering that the number of New Securities that would maintain the Purchaser's
relative proportional equity interest in the Company as of the date of
consummation of the Underwritten Offering.
SECTION 5.03. Option and Warrant Exercises. The Purchaser shall have the
right, as of each November 15, February 15, May 15 and August 15 during the
Lock-up Period, to acquire in open market transactions or private transactions
with third parties (other than in violation of Section 4.02) the number of
shares of Common Stock, which shall be deemed to constitute "New Securities" for
purposes of this Agreement, such that
<PAGE>
-10-
the Purchaser can maintain the relative proportional equity interest in the
Company it would have held if the Company had issued no shares of Common Stock
upon the exercise of options or warrants or the conversion of convertible notes
outstanding on the date hereof during the three-month period immediately prior
to such date; provided, the above mentioned period ending November 15, 1999
shall commence as of the date of the Purchase Agreement.
SECTION 5.04. Recapitalizations, etc. Notwithstanding the foregoing, the
provisions of this Agreement (including any calculation of share ownership)
shall apply, except to the extent specifically set forth herein with respect to
the Shares, to any and all shares of capital stock of the Company or any capital
stock or any other security evidencing ownership interests in any successor or
assign of the Company (whether by merger, consolidation, sale of assets or
otherwise) that may be issued in respect of, in exchange for, or in substitution
of the Common Stock by reason of any stock dividend, split, reverse split,
combination, recapitalization, liquidation, reclassification, merger,
consolidation or otherwise.
SECTION 5.05. Stockholders Rights Plan. In the event the Company adopts a
stockholders rights plan, the Company agrees that no provision of such plan
shall have the effect of diluting the economic or voting power of the Shares,
notwithstanding the occurrence of any event or contingency, including without
limitation the ownership or acquisition by the H.J. Heinz Company or any of its
Affiliates of any amount of Common Stock.
ARTICLE VI
CONFIDENTIALITY
SECTION 6.01. Confidentiality. (a) As used herein, "Confidential Material"
means, with respect to either party hereto (the "Providing Party"), all
information, whether oral, written, or otherwise, furnished to the other party
hereto (the "Receiving Party") or such Receiving Party's directors, officers,
partners, Affiliates, employees, agents or representatives (collectively,
"Representatives"), and all reports, analyses, compilations, studies and other
materials prepared by the Receiving Party or its Representatives (in whatever
form maintained, whether documentary, computer storage or otherwise) containing,
reflecting or based upon, in whole or in part, any such information. The term
"Confidential Material" does not include information which (i) is or becomes
generally available to the public other than as a result of a disclosure by the
Receiving Party, its Representatives or anyone to whom the Receiving Party or
any of its
<PAGE>
-11-
Representatives transmits any Confidential Material in violation of this
Agreement, or (ii) is or becomes known or available to the Receiving Party on a
non-confidential basis from a source (other than the Providing Party or one of
its Representatives) who is not, to the knowledge of the Receiving Party after
reasonable inquiries, prohibited from transmitting the information to the
Receiving Party or its Representatives by contractual legal, fiduciary or other
obligations.
(b) Subject to paragraph (c) below or except as required by law, the
Confidential Material will be kept confidential and will not, without prior
written consent of the Providing Party, be disclosed by the Receiving Party or
its Representatives, in whole or in part, and will not be used by the Receiving
Party or its Representatives, directly or indirectly, for any purpose other than
in connection with the Purchase Agreement, this Agreement or with respect to the
matters contemplated therein. Moreover, each Receiving Party agrees to transmit
Confidential Material to its Representatives only if and to the extent that such
Representatives need to know the Confidential Material for purposes of such
transaction and are informed by such Receiving Party of the confidential nature
of the Confidential Material and of the terms of this Section 6.01. In any
event, each Receiving Party will be responsible for any actions by its
Representatives which are not in accordance with the provisions hereof.
(c) In the event that the Receiving Party, its Representatives or anyone to
whom such Receiving Party or its Representatives supply Confidential Material is
requested or required (by oral questionnaires, interrogatories, requests for
information or documents, subpoena, civil investigative demand, any informal or
formal investigation by any government or governmental agency authority or
otherwise in connection with legal processes) to disclose any Confidential
Material, such Receiving Party agrees (i) to immediately notify the Providing
Party of the existence, terms and circumstances surrounding such request, (ii)
to consult with the Providing Party on the advisability of taking legally
available steps to resist or narrow such request and (iii) if disclosure of such
information is required, to furnish only that portion of the Confidential
Material which, in the opinion of such Receiving Party's counsel, such Receiving
Party is legally compelled to disclose and to cooperate with any action by the
Providing Party to obtain an appropriate protective order or other reliable
assurance that confidential treatment will be accorded the Confidential Material
(it being agreed that the Providing Party shall reimburse the Receiving Party
for all reasonable out-of-pocket expenses incurred by the Receiving Party in
connection with such cooperation.)
(d) In the event of the termination of this Agreement in accordance with
its terms, promptly upon request from either Providing Party, the Receiving
Party shall, except to the extent prevented by law, redeliver to the Providing
Party or destroy all tangible Confidential Material and will not retain any
copies, extracts or other reproductions
<PAGE>
-12-
thereof in whole or in part. Any such destruction shall be certified in writing
to the Providing Party by an authorized officer of the Receiving Party
supervising the same. Notwithstanding the foregoing, each Receiving Party and
one Representative designated by each Receiving Party shall be permitted to
retain one permanent file copy of each document constituting Confidential
Material.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Successors, Assigns and Transferees. This Agreement shall not
be assignable or otherwise transferable by a party without the prior consent of
the other parties, and any attempt to so assign or otherwise transfer this
Agreement without such consent shall be void and of no effect. This Agreement
shall be binding upon the respective successors and assigns of the parties
hereto. Nothing in this Agreement shall be construed as giving any Person, other
than the parties hereto and their successors and permitted assigns, any right,
remedy or claim under or in respect of this Agreement or any provision hereof.
SECTION 7.02. Amendment and Waiver. Neither this Agreement nor any term
hereof may be amended, waived, discharged or terminated other than by an
instrument in writing, signed by the party against which enforcement of such
amendment, discharge, waiver or termination is sought.
SECTION 7.03. No Failure or Delay. No failure or delay by any party in
exercising any right, power or privilege under this Agreement shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies provided herein shall be cumulative and not
exclusive of any rights or remedies provided by law.
SECTION 7.04. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be delivered in person,
sent by facsimile or mailed by certified or registered mail; return receipt
requested, addressed as follows:
If to the Purchaser, to: Earth's Best, Inc.
c/o H.J. Heinz Company
1062 Progress Street
Pittsburgh, PA 15230
<PAGE>
-13-
Telecopier No.: (412) 237-3523
Attention: Francis W. Daily
with a copy to: H.J. Heinz Company
600 Grant Street
Pittsburgh, PA 15219
Telecopier No.: (412) 4566102
Attention: Vice President - Legal Affairs
If to the Company or
Irwin D. Simon, to: The Hain Food Group, Inc.
50 Charles Lindbergh Boulevard
Uniondale, NY 11553
Telecopier No.: (516) 237-6240
Attention: President
with a copy to: Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Telecopier No.: (212) 269-5420
Attention: Roger Meltzer, Esq.
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others. All notices, requests,
consents and other communications hereunder shall be deemed to have been duly
given or served on the date on which personally delivered or on the date
actually received, with receipt acknowledged.
SECTION 7.05. Choice of Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CONFLICT OF LAWS PROVISIONS THEREOF.
SECTION 7.06. Entire Agreement. This Agreement, the Purchase Agreement,
Acquisition Agreement and the Registration Rights Agreement constitute the sole
and entire agreement of the parties with respect to the subject matter hereof
and supersede any and all prior or contemporaneous agreements, discussions,
representations, warranties or other communications.
<PAGE>
-14-
SECTION 7.07. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
SECTION 7.08. Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms to the fullest extent permitted by law.
SECTION 7.09. Termination. Unless earlier terminated by an instrument in
writing amending this Agreement pursuant to Section 7.02, this Agreement shall
terminate upon the earlier of (a) the tenth anniversary of the effective date of
this Agreement or (b) the first date on which the Purchaser and its Affiliates
no longer own any Shares.
SECTION 7.10. Headings. The titles and subtitles used in this Agreement are
for convenience only and are not to be considered in construing or interpreting
any term or provisions of this Agreement.
<PAGE>
-15-
IN WITNESS WHEREOF, the parties hereto have caused this Investor's
Agreement to be duly executed as of the date first above written.
THE HAIN FOOD GROUP, INC.
By: /s/ Irwin D. Simon
--------------------------
Name: Irwin D. Simon
Title: President
EARTH'S BEST, INC.
By: /s/ Robert Yoshida
--------------------------
Name: Robert Yoshida
Title: President
IRWIN D. SIMON
(solely for purposes of
Section 3.05)
/s/ Irwin D. Simon
-------------------------------
EXHIBIT 10.3
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of September 24,
1999, by and between The Hain Food Group, Inc., a Delaware corporation (the
"Company"), and Earth's Best, Inc., an Idaho corporation (the "Purchaser").
W I T N E S S E T H :
WHEREAS, upon the terms and subject to the conditions of a Securities
Purchase Agreement between the parties hereto dated September 24, 1999 (the
"Purchase Agreement"), the Company has agreed to issue and sell to the Purchaser
2,837,343 shares (the "Investment Shares") of common stock of the Company, par
value $.01 per share (the "Common Stock");
WHEREAS, upon the terms and subject to the conditions of an Asset Purchase
and Sale Agreement by and among the parties hereto and H.J. Heinz Company dated
September 24, 1999 (the "Acquisition Agreement"), the Company has agreed to
issue to the Purchaser 670,234 additional shares of Common Stock (the
"Acquisition Shares" and, together with the Investment Shares, the "Shares");
and
WHEREAS, to induce the Purchaser to execute and deliver the Purchase
Agreement and the Acquisition Agreement, the Company has agreed to provide
certain registration rights under the Securities Act of 1933, as amended, and
the rules and regulations thereunder, or any similar successor statute and rules
(collectively, the "Securities Act"), and applicable state securities laws.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Purchaser
hereby agree as follows:
ARTICLE I
DEFINITIONS
(a) As used in this Agreement, the following terms shall have the following
meanings:
(i) "Effective Date" means the date of execution of this Agreement and
the Purchase Agreement.
(ii) "Existing Warrantholders" means holders of warrants to purchase
Common Stock outstanding on the Effective Date.
<PAGE>
-2-
(iii) "Investor's Agreement" means the Investor's Agreement between
the parties hereto dated the date hereof.
(iv) "Lock-up Period" means the period commencing on the Closing Date
(as defined in the Purchase Agreement) and ending the earlier of (I)
eighteen months thereafter and (II) the occurrence of a Significant
Corporate Event (as defined in the Investor's Agreement).
(v) "Person" shall mean an individual, partnership, limited liability
company, joint venture, corporation, trust or unincorporated organization
or any other similar entity.
(vi) "Register," "Registered" and "Registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415
under the Securities Act or any successor rule providing for offering
securities on a continuous basis ("Rule 415"), and the declaration or
ordering of effectiveness of such Registration Statement by the United
States Securities and Exchange Commission (the "SEC").
(vii) "Registrable Shares" means (i) the Investment Shares, if and
when issued in accordance with the Purchase Agreement and (ii) the
Acquisition Shares, if and when issued in accordance with the Acquisition
Agreement, and including any New Securities (as defined in the Investor's
Agreement) purchased by the Purchaser in accordance with Article V of the
Investor's Agreement and any other shares of Common Stock hereinafter
acquired by the Purchaser, but excluding (i) any Registrable Shares sold by
a person in a transaction in which such person's registration rights are
not assigned, (ii) any Registrable Shares sold pursuant to an effective
registration statement or pursuant to Rule 144 under the Securities Act and
(iii) any Registrable Shares eligible for resale without volume
restrictions under Rule 144(k) of the Securities Act.
(viii) "Registration Expenses" shall mean any and all expenses
incident to performance of or compliance with this Agreement, including,
without limitation, (i) all SEC and National Association of Securities
Dealers, Inc. registration and filing fees, (ii) all fees and expenses of
complying with securities or blue sky laws (including fees and
disbursements of counsel for the underwriters in connection with blue sky
qualifications of the Registrable Shares), (iii) all printing expenses,
(iv) all fees and expenses incurred in connection with the listing of the
Registrable Shares on the National Market System of The Nasdaq Stock
Market, Inc., (v) the fees and disbursements of counsel for the Company and
of its independent public accountants, including the expenses of any
special audits and/or "cold comfort" letters required by or in-
<PAGE>
-3-
cident to such performance and compliance and the reasonable fees of any special
experts retained in connection with the requested registration, (vi) any fees
and disbursements of underwriters customarily paid by the issuers or sellers of
securities, including liability insurance if the Company so desires or if the
underwriters so require, and the reasonable fees and expenses of any special
expert retained in connection with the requested registration, but excluding
underwriting discounts and commissions and transfer taxes, if any.
(ix) "Registration Statement" means a registration statement of the
Company under the Securities Act.
(x) "SEC" means the Securities and Exchange Commission.
(xi) "Significant Corporate Event" shall have the meaning ascribed
thereto in the Investor's Agreement.
(b) Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Purchase Agreement.
ARTICLE II
REGISTRATION
2.1 (a) Demand Registration. At any time on or after the expiration of the
Lock-up Period, the Purchaser may make a written request for registration under
the Securities Act of all or a part of its Registrable Shares (a "Demand
Registration"). Subject to the conditions set forth in Section 2.3 hereof,
within 45 days of the receipt of such written request for a Demand Registration,
the Company shall file with the SEC and use its best efforts to cause to become
effective under the Securities Act a Registration Statement with respect to such
Registrable Shares. Any such request will specify the number of Registrable
Shares proposed to be sold (the "Included Shares") and will also specify the
intended method of disposition thereof; provided that, if such demand occurs
during the "lock up" or "black out" period (not to exceed 90 days) imposed on
the Company pursuant to any underwriting or purchase agreement relating to an
underwritten Rule 144A or registered public offering of Common Stock or other
securities exerciseable for, or convertible or exchangeable into, Common Stock,
the Company shall file such demand registration statement prior to the end of
such "lock up" or "black out" period, in which event the Company will use its
best efforts to cause such Demand Registration statement to become effective no
later than 45 days after the end of such "lock up" or "black out" period.
Subject to Section 2.1(b) hereof, the Company shall be required to register
Registrable Shares pursuant to this Section 2.1(a) on no more than two occasions
and each such registration shall be separated by at least nine months.
<PAGE>
-4-
Without the written consent of the Purchaser, no other securities of the
Company except securities held by the Purchaser and any Person entitled to
exercise "piggy-back" registration rights (including the Existing
Warrantholders) pursuant to contractual commitments of the Company shall be
included in a Demand Registration.
(b) Effective Registration. A Registration Statement will not be deemed to
have been effected as a Demand Registration unless it has been declared
effective by the SEC and the Company has complied in a timely manner and in all
material respects with all of its obligations under this Agreement with respect
thereto; provided, however, that if, after such Registration Statement has
become effective, the offering of Registrable Shares pursuant to such
Registration Statement is or becomes the subject of any stop order, injunction
or other order or requirement of the SEC or any other governmental or
administrative agency or court that prevents, restrains or otherwise limits the
sale of Registrable Shares pursuant to such Registration Statement for any
reason not attributable to the Purchaser and such Registration Statement has not
become effective within a reasonable time period thereafter (not to exceed 30
days), such Registration Statement will be deemed not to have been effective. If
(i) a registration requested pursuant to this Section 2.1 is deemed not to have
been effective or (ii) a Demand Registration does not remain effective under the
Securities Act until at least the earlier of (A) an aggregate of 180 days after
the effective date thereof or (B) the consummation of the distribution by the
Purchaser of all of its Registrable Shares covered thereby, then such
registration shall not constitute one of the two Demand Registrations provided
for under Section 2.1(a) and the Company shall continue to be obligated to
effect such registration or registrations pursuant to this Section 2.1. For
purposes of calculating the 180-day period referred to in the preceding
sentence, any period of time during which such Registration Statement was not in
effect shall be excluded.
(c) Priority in Demand Registration. If the managing underwriter or
underwriters of an underwritten Demand Registration have informed, in writing,
the Company that in such underwriter's or underwriters' opinion the total number
of securities which the Purchaser and any other Persons desiring to participate
in such registration intend to include in such offering is such as to materially
and adversely affect the success of such offering, including the price at which
such securities can be sold, then the Registration Statement relating to such
offering shall include only such amount of securities which the underwriter or
underwriters have so advised should be included in such registration. In such
event, the amount of Registrable Shares to be offered for the account of the
Company and all Persons other than the Purchaser shall been reduced to zero.
(d) Designation of Managing Underwriter. In connection with any Demand
Registration, the Purchaser may designate the managing underwriter or
underwriters, which shall be reasonably acceptable to the Company.
<PAGE>
-5-
(e) Expenses. The Company shall pay all Registration Expenses in connection
with the first Demand Registration of Registrable Shares pursuant to Section 2.1
(and any registration deemed not to be a Demand Registration in accordance with
Section 2.1(b)) and the Purchaser shall pay all Registration Expenses in
connection with the second Demand Registration of Registrable Shares pursuant to
this Section 2.1.
2.2 (a) Piggy-Back Registration. If at any time following the Lock-up
Period, the Company proposes to file a Registration Statement under the
Securities Act with respect to an offering by the Company for its own account or
for the account of any of its securityholders of any class of its common equity
securities (other than (i) a Registration Statement on Form S-4 or S-8 (or any
substitute form that may be adopted by the SEC), (ii) a Registration Statement
filed in connection with an exchange offer or offering of securities solely to
the Company's existing securityholders or (iii) a Demand Registration), then the
Company shall give written notice of such proposed filing to the Purchaser as
soon as practicable (but in no event less than 30 days before the anticipated
filing date), and such notice shall offer the Purchaser the opportunity to
register such number of shares of Registrable Shares as the Purchaser may
request in writing within 20 days after receipt of such written notice from the
Company (which request shall specify the Registrable Shares intended to be
disposed of by the Purchaser and the intended method of distribution thereof) (a
"Piggy-Back Registration"). The Company shall use its best efforts to keep such
Piggy-Back Registration continuously effective under the Securities Act until
the earlier of (A) an aggregate of 180 days after the effective date thereof or
(B) the consummation of the distribution by the Purchaser of all of the
Registrable Shares covered thereby. If such registration is pursuant to an
underwritten offering, the Company shall use its best efforts to cause the
managing underwriter or underwriters of such proposed offering to permit the
Registrable Shares requested to be included in a Piggy-Back Registration to be
included on the same terms and conditions as any similar securities of the
Company or any other securityholder included therein and to permit the sale or
other disposition of such Registrable Shares in accordance with the intended
method of distribution thereof. The Purchaser shall have the right to withdraw
its request for inclusion of its Registrable Shares in any Registration
Statement pursuant to this Section 2.2 by giving written notice to the Company
of its request to withdraw. The Company may withdraw a Piggy-Back Registration
at any time prior to the time it becomes effective or the Company may elect to
delay the registration; provided, however, that the Company shall give prompt
written notice thereof to the Purchaser.
No registration effected under this Section 2.2, and no failure to effect a
registration under this Section 2.2, shall relieve the Company of its
obligations to effect a registration upon the request of the Purchaser pursuant
to Section 2.1 hereof, and no failure to effect a registration under this
Section 2.2 and to complete the sale of Registrable Shares registered
<PAGE>
-6-
thereunder in connection therewith shall relieve the Company of any other
obligation under this Agreement.
(b) Priority in Piggy-Back Registration. In a registration pursuant to
Section 2.2(a) hereof involving an underwritten offering in which the Purchaser
has requested to participate in accordance with Section 2.2(a), if the managing
underwriter or underwriters of such underwritten offering have informed, in
writing, the Company and the Purchaser that in such underwriter's or
underwriters' opinion the total number of securities which the Company, the
Purchaser and any other Persons desiring to participate in such registration
intend to include in such offering is such as to materially and adversely affect
the success of such offering, including the price at which such securities can
be sold, then the Company will be required to include in such registration only
the amount of securities which it is so advised should be included in such
registration. In such event: (x) in cases initially involving the registration
for sale of securities for the Company's own account, securities shall be
registered in such offering in the following order of priority: (i) first, the
securities which the Company proposes to register, (ii) second, the securities
which have been requested to be included in such registration by the Purchaser
pursuant to this Agreement and by the Existing Warrantholders (pro rata based on
the amount of securities sought to be registered by such Persons) and (iii)
third, provided that no securities sought to be included by the Purchaser and
the Existing Warrantholders have been excluded from such registration, the
securities of other Persons entitled to exercise "piggy-back" registration
rights pursuant to contractual commitments of the Company (pro rata based on the
amount of securities sought to be registered by such Persons); and (y) in cases
not initially involving the registration for sale of securities for the
Company's own account, securities shall be registered in such offering as
follows: (i) first, the securities of any Person whose exercise of a "demand"
registration right pursuant to a contractual commitment of the Company is the
basis for the registration, (ii) second, the securities requested to be included
in such registration by the Purchaser pursuant to this Agreement and by the
Existing Warrantholders (pro rata based on the total amount of securities sought
to be registered by such Persons) and (iii) third, securities of other Persons
entitled to exercise "piggy-back" registration rights pursuant to contractual
commitments (pro rata based on the amount of securities sought to be registered
by such Persons) and (iv) fourth, the securities which the Company proposes to
register.
If, as a result of the provisions of this Section 2.2(b), the Purchaser
shall not be entitled to include all Registrable Shares in a Piggy-Back
Registration that the Purchaser has requested to be included, the Purchaser may
elect to withdraw its request to include Registrable Shares in such registration
(a "Withdrawal Election"); provided, however, that a Withdrawal Election shall
be irrevocable and, after making a Withdrawal Election, the Purchaser shall no
longer have any right to include Registrable Shares in the registration as to
which such Withdrawal Election was made.
<PAGE>
-7-
(c) Expenses. The Company will pay all Registration Expenses in connection
with each registration of Registrable Shares requested pursuant to this Section
2.2.
ARTICLE III
OBLIGATIONS OF THE COMPANY
In connection with the registration of the Registrable Shares, the Company
shall have the following obligations:
(a) Once declared effective, the Company shall use its commercially
reasonable efforts to keep each Registration Statement effective pursuant to
Rule 415 at all times for the applicable period specified in Sections 2.1(b) and
2.2(a) (the "Registration Period").
(b) The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to each Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all Registrable Shares of the Company covered by
such Registration Statement .
(c) The Company shall furnish to the Purchaser such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act and such other documents as the Purchaser may
reasonably request in order to facilitate the disposition of the Registrable
Shares owned by the Purchaser.
(d) The Company shall use commercially reasonable efforts to register and
qualify the Registrable Shares covered by each Registration Statement under such
other securities or "blue sky" laws of such jurisdictions in the United States
as the Purchaser may reasonably request and maintain such registrations and
qualifications in effect at all times during the Registration Period; provided,
however, that the Company shall not be required in connection therewith or as a
condition thereto to (a) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 3(d), (b)
subject itself to general taxation in any such jurisdiction, (c) file a general
consent to service of process in any such jurisdiction, (d) make any change in
its certificate of incorporation or bylaws.
(e) In the event that, in the reasonable judgment of the Company, it is
advisable to suspend use of the prospectus relating to a Registration Statement
for a discrete period of time (a "Deferral Period") due to pending material
corporate developments or similar material events that have not yet been
publicly disclosed and as to which the Company believes public disclosure will
be prejudicial to the Company, the Company shall deliver a notice in writing, to
the Purchaser, to the effect of the foregoing (but in no event shall the Company
be
<PAGE>
-8-
obligated to disclose to the Purchaser the facts and circumstances giving rise
to the foregoing) and, upon receipt of such notice, the Purchaser agrees not to
dispose of any Registrable Shares covered by such Registration Statement (other
than in transactions exempt from the registration requirements under the
Securities Act) until the Purchaser is advised in writing by the Company that
use of the prospectus may be resumed; provided, however, that the aggregate
number of days in any such Deferral Period or Deferral Periods shall be no more
than 90 in any 12-month period.
(f) In a registration involving an underwritten offering, the Company shall
cause senior management of the Company to participate in "road shows" relating
to any offering of Registrable Shares, as reasonably requested by the managing
underwriter or underwriters of such offering; provided, no such road show shall
last more than 10 consecutive business days.
(g) In a registration involving an underwritten offering, the Company will
enter into customary agreements (including an underwriting agreement in
customary form) (in the judgment of its counsel) and take such other actions as
are reasonably required (in the judgment of its counsel) in order to expedite or
facilitate the sale of such Registrable Shares.
(h) In a registration involving an underwritten offering, the Company shall
furnish to each underwriter a signed counterpart, addressed to such underwriter,
of an opinion or opinions of counsel to the Company and a comfort letter or
comfort letters from the Company's independent public accountants, each in
customary form and covering such matters of the type customarily covered by
opinions or comfort letters, as the case may be, as the managing underwriter
reasonably requests.
ARTICLE IV
OBLIGATIONS OF THE PURCHASER
In connection with the registration of the Registrable Shares, the
Purchaser shall have the following obligations:
(a) It shall be a condition precedent to the obligations of the Company to
take any action pursuant to this Agreement that the Purchaser shall furnish to
the Company such information regarding itself, the Registrable Shares held by it
and the intended method of disposition of the Registrable Shares held by it as
shall be required to effect the registration of such Registrable Shares and
shall execute such documents in connection with such registration as the Company
may reasonably request.
<PAGE>
-9-
(b) The Purchaser, by acceptance of the Registrable Shares, agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of the Registration Statement hereunder, unless
such Purchaser has notified the Company in writing of the Purchaser's election
to exclude the Registrable Shares from the Registration Statement.
(c) For any offer or sale of any of the Registrable Shares under a
Registration Statement by the Purchaser in a transaction that is not exempt
under the Securities Act, the Purchaser, in addition to complying with any other
federal securities laws, shall deliver a copy of the final prospectus (together
with any amendment of or supplement to such prospectus) of the Company covering
the Registrable Shares, in the form furnished to the Purchaser by the Company,
to the purchaser of any of the Registrable Shares on or before the settlement
date for the purchase of such Registrable Shares.
(d) The Company shall promptly notify the Purchaser of (1) the existence of
any fact or the happening of any event as a result of which the prospectus
included in a Registration Statement, as such Registration Statement is then in
effect, contains an untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, (2) the issuance
by the SEC of any stop order or injunction suspending or enjoining the use or
the effectiveness of a Registration Statement or the initiation of any
proceedings for that purpose, or the taking of any similar action by the
securities regulators of any state or other jurisdiction, or (3) the request by
the SEC or any other federal or state governmental agency for amendments or
supplements to a Registration Statement or related prospectus or for additional
information related thereto. Upon receipt of any such notice, the Purchaser
shall forthwith discontinue disposition of its Registrable Shares covered by
such Registration Statement or related prospectus (other than in transactions
exempt from the registration requirements under the Securities Act) until
receipt of the supplemented or amended prospectus or until the Purchaser is
advised in writing by the Company that the use of the applicable prospectus may
be resumed, and, if so directed by the Company, the Purchaser shall deliver to
the Company or destroy (and deliver to the Company a certificate of destruction)
all copies in the Purchaser's possession (other than permanent file copies), of
the prospectus covering such Registrable Shares current at the time of receipt
of such notice. In such a case, subject to Section 3(e), the Company shall as
promptly as reasonably practicable (i) prepare an amendment to correct or update
the prospectus, (ii) use its commercially reasonable efforts to remove the
impediments referred to in subclause (2) above, or (iii) comply with the
requests referred to in subclause (3) above. In the event the Company shall give
such notice, the Company shall extend the applicable Registration Period by the
number of days during the period from and including the date of the giving of
such notice to the date when the Company shall make available to Pur-
<PAGE>
-10-
chaser such supplemental or amended prospectus or the Company shall notify the
Purchaser that the use of the applicable prospectus may be resumed.
ARTICLE V
INDEMNIFICATION
In the event any Registrable Shares are included in a Registration
Statement under this Agreement:
(a) Indemnification by the Company. To the extent permitted by law, the
Company will indemnify and hold harmless the Purchaser, its directors, officers,
employees and representatives and each person who controls the Purchaser within
the meaning of the Securities Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), if any (each, an "Indemnified Person"), against
any joint or several losses, claims, damages or liabilities to third parties
(collectively, "Claims") to which any of them may become subject under the
Securities Act, the Exchange Act or other federal or state law, insofar as such
Claims arise out of or are based upon: (i) any untrue statement or alleged
untrue statement of a material fact in a Registration Statement (as amended or
supplemented, if the Company files any amendment thereof or supplement thereto
with the SEC) or the omission or alleged omission to state therein a material
fact required to be stated or necessary to make the statements therein not
misleading; (ii) any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus if used prior to the effective date
of such Registration Statement, or contained in the final prospectus (as amended
or supplemented, if the Company files any amendment thereof or supplement
thereto with the SEC) or the omission or alleged omission to state therein any
material fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading; or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any other law, including, without limitation, any state
securities law, or any rule or regulation thereunder relating to the offer or
sale of the Registrable Shares (the matters in the foregoing clauses (i) through
(iii) being, collectively, "Violations"). Subject to the provisions set forth in
Section 5(c), the Company shall reimburse promptly the Indemnified Person for
any legal fees or other expenses as and when reasonably incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 5(a): (i) shall not apply to a Claim arising out of or
based upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company by any Indemnified Person for
such Indemnified Person expressly for use in connection with the preparation of
the Registration Statement or any such amendment thereof or supplement thereto,
if such prospectus was timely made available by the Company pursuant to Section
3(c) hereof; (ii) shall not apply to amounts paid in settlement of any Claim if
such settlement is effected without the prior writ-
<PAGE>
-11-
ten consent of the Company, which consent shall not be unreasonably withheld;
and (iii) with respect to any preliminary prospectus, shall not inure to the
benefit of any Indemnified Person if the untrue statement or omission of
material fact contained in the preliminary prospectus was corrected on a timely
basis in the prospectus, as then amended or supplemented, such corrected
prospectus was timely made available by the Company pursuant to Section 3(c)
hereof, and the Indemnified Person was promptly advised in writing not to use
the incorrect prospectus prior to the use giving rise to a Violation and such
Indemnified Person, notwithstanding such advice, used it.
(b) Indemnification by the Purchaser. In connection with any Registration
Statement in which the Purchaser is participating, the Purchaser agrees to
indemnify and hold harmless, to the same extent and in the same manner set forth
in Section 5(a), the Company, each of its directors, each of its officers who
signs the Registration Statement, its employees representatives and each person,
if any, who controls the Company within the meaning of the Securities Act or the
Exchange Act (each, an "Indemnified Party"), against any Claim to which any of
them may become subject, under the Securities Act, the Exchange Act or other
federal or state securities law, insofar as such Claim arises out of or is based
upon any Violation by such Purchaser, in each case to the extent (and only to
the extent) that such Violation occurs in reliance upon and in conformity with
written information furnished to the Company by the Purchaser expressly for use
in connection with such Registration Statement; and subject to Section 5(c) the
Purchaser will reimburse any legal or other expenses reasonably incurred by it
in connection with investigating or defending any such Claim; provided, however,
that the indemnity agreement contained in this Section 5(b) shall not apply to
amounts paid in settlement of any Claim if such settlement is effected without
the prior written consent of the Purchaser, which consent shall not be
unreasonably withheld; provided, further, however, that the Purchaser shall be
liable under this Agreement (including this Section 5(b) and Section 6) for only
that amount as does not exceed the gross proceeds to the Purchaser as a result
of the sale of Registrable Shares pursuant to such Registration Statement.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 5(b) with respect to any preliminary
prospectus shall not inure to the benefit of any Indemnified Party if the untrue
statement or omission of material fact contained in the preliminary prospectus
was corrected on a timely basis in the prospectus, as then amended or
supplemented.
(c) Notices of Claims, Etc. Promptly after receipt by an Indemnified Person
or Indemnified Party under this Section 5 of notice of the commencement of any
action (including any governmental action), such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 5, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party upon the
request of the Indemnified Person or Indemnified Party, shall retain counsel
reasonably satisfactory to the Indemnified Person or the Indemnified Party
<PAGE>
-12-
(which consent shall not be unreasonably withheld), as the case may be;
provided, however, that an Indemnified Person or Indemnified Party shall have
the right to retain its own counsel with the reasonable fees and expenses to be
paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of the
Indemnified Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party represented by such
counsel in such proceeding. The indemnifying party shall pay for only one
separate legal counsel (in addition to any local counsel) for the Indemnified
Persons or the Indemnified Parties, as applicable, and such legal counsel shall
be selected by the Purchaser, if the Purchaser is entitled to indemnification
hereunder, or the Company, if the Company is entitled to indemnification
hereunder, as applicable. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if materially prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the Indemnified Person or
Indemnified Party under this Section 5.
(d) Contribution. If the indemnity provided for in the foregoing paragraphs
of this Section 5 is unavailable or insufficient for any reason to hold harmless
an Indemnified Person or Indemnified Party in respect of any Claim referred to
therein, then the indemnifying party, in lieu of indemnifying such Indemnified
Person or Indemnified Party, agrees to contribute to the amount paid or payable
by such Indemnified Person or Indemnified Party as a result of such Claim in
such proportion as is appropriate to reflect the relative benefits received by
the indemnifying party on the one hand and the Indemnified Person or Indemnified
Party, as the case may be, on the other hand from the sale of securities under
such registration statement or, if the foregoing allocation is not permitted by
applicable law, in such proportion as is appropriate to reflect (i) the relative
benefits received by the indemnifying party on the one hand and the Indemnified
Person or Indemnified Party, as the case may be, on the other hand from the sale
of securities under such registration statement, (ii) the relative fault of the
indemnifying party on the one hand and the Indemnified Person or Indemnified
Party on the other hand in connection with the statements, actions or omissions
which resulted in such Claim and (iii) any other relevant equitable
considerations. The relative fault of the indemnifying party on the one hand and
of the Indemnified Person or Indemnified Party on the other hand (i) in the case
of an untrue or alleged untrue statement of a material fact or an omission or
alleged omission to state a material fact, shall be determined by reference to,
among other things, whether such statement or omission relates to information
supplied by the indemnifying party or by the Indemnified Person or Indemnified
Party respectively and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission and
(ii) in the case of any other action or omission, shall be determined by
reference to, among other things, whether such action or omission was taken or
omitted to be taken by the indemnifying party or the Indemnified Person or
Indemnified Party respec-
<PAGE>
-13-
tively and the parties' relative intent, knowledge, access to information and
opportunity to prevent such action or omission. The parties agree that it would
not be just and equitable if contribution pursuant to this Section 5(d) were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in the
immediately preceding sentences. The amount paid or payable by the Indemnified
Person or Indemnified Party as a result of the Claims referred to in such
sentences shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified
Person or Indemnified Party in connection with investigating, preparing to
defend or defending any such Claim.
(e) Non-Exclusivity. The obligations of the parties under this Section 5
shall be in addition to any liability which any party may otherwise have to any
other party.
ARTICLE VI
GENERAL PROVISIONS
(a) Registered Holder. A person or entity is deemed to be a holder of
Registrable Shares whenever such person or entity owns of record such
Registrable Shares. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Shares, the Company shall act upon the basis of instructions, notice
or election received from the registered owner of such Registrable Shares.
(b) Successor, Assigns and Transferees. This Agreement shall not be
assignable or otherwise transferable by a party without the prior consent of the
other parties, and any attempt to so assign or otherwise transfer this Agreement
without such consent shall be void and of no effect. This Agreement shall be
binding upon the respective successors and assigns of the parties hereto.
Nothing in this Agreement shall be construed as giving any Person, other than
the parties hereto and their successors and permitted assigns, any right, remedy
or claim under or in respect of this Agreement or any provision hereof.
(c) Amendment and Waiver. Neither this Agreement nor any term hereof may be
amended, waived, discharged or terminated other than by an instrument in
writing, signed by the party against which enforcement of such amendment,
discharge, waiver or termination is sought.
(d) No Failure or Delay. No failure or delay by any party in exercising any
right, power or privilege under this Agreement shall operate as a waiver thereof
nor shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies provided herein shall be cumulative and not exclusive of any
rights or remedies provided by law.
<PAGE>
-14-
(e) Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be delivered in person, sent by
facsimile or mailed by certified or registered mail; return receipt requested,
addressed as follows:
If to the Purchaser, to: Earth's Best, Inc.
c/o H.J. Heinz Company
1062 Progress Street
Pittsburgh, PA 15230
Telecopier No.: (412) 237-3523
Attention: Francis W. Daily, Jr.
with a copy to: H.J. Heinz Company
600 Grant Street
Pittsburgh, PA 15219
Telecopier No.: (412) 4566102
Attention: Vice President - Legal Affairs
If to the Company, to: The Hain Food Group, Inc.
50 Charles Lindbergh Boulevard
Uniondale, NY 11553
Telecopier No.: (516) 237-6240
Attention: President
with a copy to: Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Telecopier No.: (212) 269-5420
Attention: Roger Meltzer, Esq.
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others. All notices, requests,
consents and other communications hereunder shall be deemed to have been duly
given or served on the date on which personally delivered or on the date
actually received, with receipt acknowledged.
(f) Choice of Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAWS PROVISIONS THEREOF.
(g) Entire Agreement. This Agreement, the Purchase Agreement, the
Acquisition Agreement and the Investor's Agreement constitute the sole and
entire agreement of the
<PAGE>
-15-
parties with respect to the subject matter hereof and supersede any and all
prior or contemporaneous agreements, discussions, representations, warranties or
other communications.
(h) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(i) Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its terms
to the fullest extent permitted by law.
(j) Termination. This Agreement shall terminate and be of no further force
or effect when there shall not be any Registrable Shares, except Sections 5 and
6(f) and (g) shall survive any such termination.
(k) Headings. The titles and subtitles used in this Agreement are for
convenience only and are not to be considered in construing or interpreting any
term or provisions of this Agreement.
<PAGE>
-16-
IN WITNESS WHEREOF, the Company and the Purchaser have caused this
Agreement to be duly executed as of the date first above written.
THE HAIN FOOD GROUP, INC.
By: /s/ Irwin D. Simon
------------------------------
Name: Irwin D. Simon
Title: President and
Chief Executive Officer
EARTH'S BEST, INC.
By: /s/ Robert Yoshida
-----------------------------
Name: Robert Yoshida
Title: President
EXHIBIT 10.4
PURCHASE AND SALE AGREEMENT
This Agreement dated September 24, 1999 by and among The Hain Food Group,
Inc., a Delaware corporation, located at 50 Charles Lindbergh Boulevard,
Uniondale, New York 11553 ("Hain"), Earth's Best, Inc., an Idaho corporation,
located at 877 West Main Street, Suite 510, Boise, Idaho 83702 ("EB") and H. J.
Heinz Company, a Pennsylvania corporation and parent corporation of EB, located
at 600 Grant Street, Pittsburgh, Pennsylvania 15219 ("Heinz").
WITNESSETH:
WHEREAS, Hain and Heinz entered into that certain Licensing and Profit
Sharing Agreement dated April 1, 1999 (the "License Agreement"), wherein Heinz
USA, a division of Heinz, as licensee to EB, granted an exclusive sublicense to
Hain to utilize the United States trademarks owned by EB in connection with the
manufacture, marketing, sale and distribution of Certified Organic food products
through Retail Foods Channels and Natural Foods Channels; Any capitalized terms
not otherwise defined herein shall have the meanings ascribed in the License
Agreement ;
WHEREAS, Hain is now desirous of entering into an agreement wherein Hain
acquires all of the Trademarks (as herein defined) which are owned by EB and
where such agreement shall supersede the License Agreement in its entirety other
than with respect to those terms which expressly survive the termination of that
License Agreement;
WHEREAS, EB and Heinz are desirous of selling the Trademarks to Hain
pursuant to the terms set forth herein (the "Acquisition");
WHEREAS, concurrently with the Acquisition, EB and Hain is entering into
that certain Securities Purchase Agreement dated September 24, 1999, together
with all Exhibits and Schedules thereto (the "Stock Purchase Agreement");
NOW THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein, the parties hereto, intending to be legally
bound, agree as follows:
<PAGE>
-2-
ARTICLE I
Definitions
"Acquisition Shares" shall have the meaning specified in Section 3.1.
"Affiliate" means a person, firm or corporation, which directly or
indirectly, alone or through one or more intermediaries, controls, or is
controlled by, or is under common control with a specified person, firm or
corporation.
"Agreement" shall mean this Agreement between Hain and EB as originally
executed and delivered, as the same may be amended or supplemented in accordance
with the provisions hereof, together with all Exhibits and Schedules made a part
hereof by the references thereto.
"Closing" and "Closing Date" shall have the respective meanings specified
in Section 4.1.
"Trademarks" shall mean all United States and foreign pending trademark
applications and registrations owned by EB (as set forth on Schedule A attached
hereto), together with all goodwill associated therewith as well as all label
and package designs embodying the trademarks and any unregistered trademark
rights or common law trademark rights and all rights of copyright in all labels,
packaging and packaging designs and components thereof which EB may have
throughout the world, including all renewals thereof; and the right to sue and
to recover damages or other appropriate relief for all past infringements of the
foregoing and further provided that any and all intellectual property assets and
rights owned by Heinz and Heinz Affiliates (other than EB) shall be expressly
excluded from this definition of Trademarks.
ARTICLE II
Transfer of Assets
Section 2.1 Transfer of Assets. On the terms and subject to the conditions
set forth in this Agreement, EB shall assign, transfer, deliver and convey to
Hain the Trademarks (as herein defined).
<PAGE>
-3-
ARTICLE III
Consideration
Section 3.1 Consideration. As consideration for the purchase of the
Trademarks, Hain shall pay to Heinz on the Closing Date an amount equal to
Twenty-Two Million Dollars ($22,000,000) consisting of: (i) Four Million Six
Hundred Twenty Thousand Dollars ($4,620,000) in cash by wire transfer of
immediately available United States funds to an account designated in writing by
EB and (ii) 670,234 shares of common stock of Hain, par value $.01 per share
(the "Acquisition Shares");
Section 3.2 Allocation of Consideration. The amount paid to EB pursuant to
Clause 3.1, hereto, Twenty-Two Million Dollars ($22,000,000), represents the
fair market value of the Trademarks. Each of EB and Hain agree that (i) such
amount will be allocated to the Trademarks in accordance with the requirements
of Section 1060 of the U.S. Internal Revenue code, and the regulations
thereunder and (ii) all appropriate tax filings will be made on a basis
consistent with the allocation referenced above.
Section 3.3 Legends. Each certificate representing the Acquisition Shares
shall bear the following legend in addition to any other legend that may be
required from time to time under applicable law or pursuant to any other
contractual obligation:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED,
SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF (A
"TRANSFER") EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF AN INVESTOR'S
AGREEMENT DATED SEPTEMBER 24, 1999 BY AND BETWEEN THE HAIN FOOD GROUP, INC.
("HAIN") AND EARTH'S BEST, INC. ("EBI"). SUCH SECURITIES ARE ALSO SUBJECT
TO A REGISTRATION RIGHTS AGREEMENT DATED SEPTEMBER 24, 1999 BY AND BETWEEN
HAIN AND EBI. ANY TRANSFEREE OF THESE SECURITIES TAKES SUBJECT TO THE TERMS
OF SUCH AGREEMENTS, A COPY OF EACH OF WHICH IS ON FILE WITH HAIN.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR STATE SECURITIES
LAWS AND NO TRANSFER OF THESE SECURITIES MAY BE MADE EXCEPT (A) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR (B) PURSUANT TO AN
EXEMPTION THEREFROM WITH RESPECT TO WHICH HAIN MAY, UPON REQUEST, REQUIRE A
SATISFACTORY OPINION
<PAGE>
-4-
OF COUNSEL FOR THE HOLDER THAT SUCH TRANSFER IS EXEMPT FROM THE
REQUIREMENTS OF THE ACT.
ARTICLE IV
Closing
Section 4.1 Closing Date. The closing of the transaction contemplated
hereby (the "Closing") shall take place at the offices of Davis, Polk &
Wardwell, 450 Lexington Ave., New York, New York 10017, or as soon thereafter as
practicable, but not later than the fifth business day after the satisfaction or
waiver of the conditions set forth herein and in Article III of the Stock
Purchase Agreement, or at such other location, date and time as may be mutually
agreed upon between EB and Hain. The day on which the Closing actually takes
place is referred to herein as the "Closing Date". The Closing shall be deemed
to have occurred on the close of business on the Closing Date.
Section 4.2 EB Closing Deliverables. At the Closing, EB shall deliver to
Hain the following:
(a) a duly executed General Assignment of all Trademarks as set forth
in Schedule 4.2 attached hereto;
(b) duly executed U.S. and foreign trademark assignments for each
specified jurisdiction as set forth in Schedule A attached hereto;
(c) the officer's certificate and documents referred to in Section
7.1(c);
(d) a duly executed assignment for that certain Distribution Agreement
dated May 17, 1997, as amended, by and between EB and Nutrimedic PTE, Ltd.;
(e) all other documents referenced in the Stock Purchase Agreement
which may be required for the issuance of the Acquisition Shares;
(f) a notice of termination of the License Agreement which shall
include mutually agreeable provisions relative to the payments required
under the terms of such Agreement;
(g) a notice of termination of that certain license agreement dated
March 7, 1996 by and between EB and Heinz U.S.A, a division of H.J. Heinz
Company ("the HUSA Agreement).
<PAGE>
-5-
Section 4.3 Hain Closing Deliverables. At the Closing, Hain shall deliver
to EB the following:
(a) the cash consideration set forth in Section 3.1;
(b) stock certificates in definitive form, registered in the name of
EB or its designee, representing the Acquisition Shares;
(c) the officer's certificate and documents referred to in Section 7.2
(c);
(d) a consent agreement evidencing Hain's consent to Heinz Affiliates'
continued distribution and manufacture (as applicable) of EB products in
each of Canada, Australia and New Zealand from the Closing Date for a
period of the earlier of (i) sixty (60) days or (ii) until such time as the
Service Agreement (as defined herein) is finalized and executed by Hain and
Heinz;
(e) all other documents referenced in the Stock Purchase Agreement
which may be required for the issuance of the Acquisition Shares.
ARTICLE V
Representations and Warranties
Section 5.1 Representations and Warranties of EB.
(a) Incorporation. EB is a corporation duly organized, validly existing and
in good standing under the laws of the State of Idaho and, except as provided in
Section 9.5, shall remain in valid existence and in good standing under the laws
of the State of Idaho after the Closing Date, for at least seven (7) years.
(b) Authority. EB has all requisite power and authority to execute and
deliver this Agreement and any other agreements required or contemplated to be
executed and delivered hereby, and to perform its obligations hereunder and
thereunder. The execution, delivery and performance of the terms of this
Agreement has been duly authorized by the Board of Directors of EB, and no other
corporate act or proceeding on the part of EB or Heinz is necessary to approve
the execution, delivery and performance of this Agreement.
(c) Execution and Binding Effect. This Agreement has been, and at Closing
will be, duly executed and delivered by a duly authorized officer of EB and
constitutes, and at Closing will constitute, the legally valid and binding
obligations of EB, enforceable in accordance with their respective terms, except
as such enforceability may be limited by bankruptcy,
<PAGE>
-6-
moratorium, insolvency, reorganization, liquidation or other laws relating to or
affecting creditors' rights or by equitable principles.
(d) Trademarks.
(i) Attached as Schedule A is a listing and description of all United
States and foreign pending trademark applications and issued registrations
which are owned by EB;
(ii) Except as set forth in Schedule 5.1
(A) EB is the owner of all right, title and interest in and to
each of the Trademarks;
(B) EB has not licensed or granted any party the right to use
any of the Trademarks;
(C) All of the United States registered trademarks are valid and
enforceable and are free and clear of all liens, security
interests, charges, encumbrances, equities and other adverse
claims;
(D) The United State trademark application, #75/480,504, is
valid and upon issuance will be enforceable.
(E) The Canadian registered trademark is valid and enforceable
and is free and clear of all liens, security interests,
charges, encumbrances, equities and other adverse claims;
(F) The Canadian trademark application is valid and upon
issuance will be enforceable;
(G) There are no current claims or proceedings pending or, to
the knowledge of EB, threatened which challenge the rights
of EB in any respect in and to any of the United States and
Canadian trademark applications and registrations;
(H) As to Trademarks in jurisdictions other than the United
States and Canada, to the knowledge of EB, EB has received
no written notice of any current claims or proceedings
pending in any respect in and to any of such Trademarks.
(I) To the knowledge of EB, none of the Trademarks are infringed
by any trademark or tradename owned or used by another
party;
<PAGE>
-7-
(J) To the knowledge of EB, there are no orders, decrees,
judgments or stipulations pending against or affecting the
Trademarks.
(e) Litigation. There is no action, suit or proceeding pending or
threatened against or affecting EB, in any of its rights or assets before any
court or arbitrator or any governmental body, agency or official which seeks to
prohibit or could adversely affect the ability of EB to enter into this
Agreement or perform its obligations hereunder.
(f) Contravention. The execution, delivery and performance of this
Agreement by EB and the consummation of the transactions contemplated hereby and
thereby do not, or if to be executed at Closing will not, (i) contravene,
violate or result in a breach of the Certificate of Incorporation or bylaws of
EB or any order, judgment or decree to which EB is subject or bound; (ii)
require the filing with, consent, waiver, approval, license or authorization of
any governmental or public authority, except in connection with the applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, or in connection with filings with the SEC and state securities
administrators; (iii) require the consent or approval not heretofore obtained of
any shareholder, security holder or creditor of EB; or (iv) result in a
contravention, violation or breach of any law or regulation or any agreement,
license, permit, indenture or other instrument to which EB or any of its
property is subject or bound.
(g) Brokers and Finders. Neither EB nor Heinz has employed any broker or
finder or incurred liability for any brokerage fees or commissions or finders
fees in connection with the transactions contemplated by this Agreement.
Section 5.2 Representations and Warranties of Hain. Hain hereby represents
and warrants to EB as follows:
(a) Incorporation. Hain is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(b) Authority. Hain has all requisite power and authority to execute
and deliver this Agreement and any other agreements required or
contemplated to be executed and delivered hereby, and to perform its
obligations hereunder and thereunder. The execution, delivery and
performance of this Agreement has been duly authorized by the Board of
Directors of Hain, and no other corporate act or proceeding on the part of
Hain is necessary to approve the execution, delivery and performance of
this Agreement and any other agreements required or contemplated to be
executed and delivered hereby.
<PAGE>
-8-
(c) Execution and Binding Effect. The Agreement has been, and at
Closing will be, duly executed and delivered by a duly authorized officer
of Hain and constitutes, and at Closing will constitute, the legally valid
and binding obligations of Hain, enforceable in accordance with their
terms, except as such enforceability may be limited by bankruptcy,
moratorium, insolvency, reorganization, liquidation or other laws relating
to or affecting creditors' rights or by equitable principles.
(d) Litigation. There is no action, suit or proceeding pending or
threatened against or affecting Hain or any of its rights or assets before
any court or arbitrator or any governmental body, agency or official which
seeks to prohibit or could adversely affect the ability of Hain to enter
into this Agreement or perform its obligations hereunder or which in any
manner draws into question the validity of this Agreement.
(e) No Contravention. The execution, delivery and performance of this
Agreement by Hain and the consummation of the transactions contemplated
hereby and thereby do not, or if to be executed at Closing will not, (i)
contravene, violate or result in a breach of the Certificate of
Incorporation or bylaws of Hain or any order, judgment or decree to which
Hain is subject or bound; (ii) require the filing with, consent, waiver,
approval, license or authorization of any governmental or public authority,
except in connection with the applicable requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or in
connection with filings with the SEC and state securities administrators;
(iii) require the consent or approval not heretofore obtained of any
shareholder, security holder or creditor of Hain; or (iv) result in a
contravention, violation or breach of any law or regulation or any
agreement, license, permit, indenture or other instrument to which Hain or
any of its property is subject or bound.
(f) Brokers and Finders. Except as set forth in Schedule 5.2(f), Hain
does not have any brokerage fees or commissions or finders fees in
connection with the transactions contemplated by this Agreement.
ARTICLE VI
Covenants
Section 6.1 Covenants of EB. EB hereby covenants and agrees with Hain as
follows:
(a) Access; Confidential Information. From the date hereof until the
Closing Date, EB shall furnish to Hain and its representatives all
information relating to the
<PAGE>
-9-
Trademarks, reasonably requested by Hain; provided however, that nothing
contained herein shall require EB, unless approved for release by counsel,
to furnish to Hain any marketing, cost and/or pricing information. Any
confidential information furnished to Hain prior to or following the
Closing shall be subject to the terms of the Confidentiality Agreement
entered into between Heinz USA, a division of H. J. Heinz Company ("HUSA")
and Hain dated August 23, 1999 and the terms of the Confidentiality
Agreement dated September 1, 1999 entered into between HUSA and Hain,
respectively (such agreements shall be collectively referred to as the
"Confidentiality Agreements"). The provisions of such Confidentiality
Agreements shall survive any termination of this Agreement.
(b) Maintenance and Administration of Trademarks. From the date hereof
until the Closing Date, EB shall maintain and administer the Trademarks in
the ordinary course of business. Thereafter, EB shall reasonably cooperate
with Hain in the confirmation of recordation of the appropriate
chain-of-title documents to enable Hain to properly file and record the
assignments pursuant to Section 6.2(e). Further, EB shall maintain the
trademark applications depicted as Reference # T02096USO and Reference
#T03045USO in Schedule A attached hereto through the Closing Date and shall
abandon such trademark applications as soon as practicable after the
Closing Date and Hain's filing of such trademark applications pursuant to
Section 6.2(f).
(c) Reasonable Best Efforts; Notifications. EB shall use its best
reasonable efforts to fulfill its conditions to Closing and otherwise to
consummate the transactions contemplated by this Agreement. Prior to
Closing, EB shall as promptly as reasonably practicable notify Hain in
writing of the occurrence of any event as to which it obtains knowledge
that is reasonably likely to result in the failure of a condition specified
in Section 7.1.
(d) Preservation of Records. EB shall preserve and, during regular
business hours and upon reasonable notice, make available to Hain and its
representatives for inspection and copying all agreements, records, books
and other documents pertaining to the Trademarks.
(e) Conduct of Business. Except as provided in Section 9.5, EB shall
remain in valid existence and in good standing under the laws of the State
of Idaho after the Closing Date for at least seven (7) years.
(f) Termination of Agreements. EB shall terminate the License
Agreement and the HUSA Agreement as of the Closing Date.
(g) Change of Name. EB shall change its corporate name from Earth's
Best, Inc. to a name which is not confusingly similar to Earth's Best, Inc.
and which, at a
<PAGE>
-10-
minimum does not include the words "Earth's", "Best", or a combination
thereof. In addition, EB shall not hereafter adopt or otherwise use any
trademark, service mark or tradename confusingly similar to "Earth's Best".
Section 6.2 Covenants of Hain. Hain hereby covenants and agrees with EB as
follows:
(a) Reasonable Best Efforts; Notifications. Hain shall use its best
reasonable efforts to fulfill its conditions to Closing and otherwise to
consummate the transactions contemplated by this Agreement. Prior to
Closing, Hain shall as promptly as reasonably practicable, notify EB in
writing of the occurrence of any event as to which it obtains knowledge
that is reasonably likely to result in the failure of a condition specified
in Section 7.2.
(b) Preservation of Records. Hain shall preserve and, during regular
business hours and upon reasonable notice, make available to EB and its
representatives for inspection and copying all agreements, records, books
and other documents pertaining to the transactions contemplated by this
Agreement.
(c) Consent to Distribution of EB Products. Hain shall consent to
Heinz Affiliates' continued distribution and manufacture (if applicable) of
EB products in each of Canada, Australia and New Zealand from the Closing
Date for a period of the earlier of (i) sixty (60) days or (ii) until such
time as the Service Agreement (as defined herein) is finalized and executed
by Hain and Heinz.
(d) Assumption of Third Party Agreement. Hain shall assume EB's
obligations under that certain Distribution Agreement dated May 17, 1997 by
and between Nutrimedic PTE Ltd. and EB.
(e) Recordation of Assignments. Hain shall be responsible for the
filing and recordation of all U.S. and foreign trademark assignments in the
relevant filing offices and shall pay all costs and fees associated
therewith.
(f) Filing of Pending Trademark Applications. On the Closing Date,
Hain shall file trademark applications in the United States Trademark
Office for Reference #T02096USO and #T03045USO for the designated Classes
and Description of Goods for Earth's Best and Earth's Best in Farm Design
as set forth in Schedule A attached hereto.
<PAGE>
-11-
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Hain's Obligations. The obligations of Hain under
this Agreement are subject to the fulfillment, prior to or on the Closing Date,
of each of the following conditions, any of which may be waived in whole or in
part by Hain:
(a) Accuracy of Representations and Warranties. The representations
and warranties of EB contained in this Agreement shall be true and correct
in all material respects on the date hereof and as of the Closing Date with
the same effect as though such representations and warranties had been made
or given again at and as of the Closing Date (except for any representation
or warranty expressly stated to have been made or given as of a specified
date, which, at the Closing Date, shall be true and correct as of the date
expressly stated).
(b) Performance of Agreements. EB shall have performed and complied in
all material respects with all of its agreements, covenants and conditions
required by this Agreement to be performed or complied with by it prior to
or at the Closing Date.
(c) Certificates. EB shall have delivered to Hain (i) a certificate of
its President or any Vice President dated the Closing Date and certifying
the fulfillment of the conditions set forth in this Section 7.1(a) and (b).
EB shall have delivered to Hain (i) an incumbency certificate from the
Secretary or an Assistant Secretary of EB and (ii) a copy of resolution of
the Board of Directors of EB certified by the Secretary or an Assistant
Secretary, authorizing and approving the transaction contemplated herein.
(d) Consents. Any notices to, and declarations, filings and
registrations with, and consents, approvals and waivers from governmental
and regulatory agencies necessary in order to consummate the transactions
contemplated hereby shall have been obtained, including expiration of the
Hart-Scott-Rodino waiting period.
(e) No Injunction. No preliminary or permanent injunction or other
order shall have been issued by any court of competent jurisdiction, or by
any governmental or regulatory body, which prevents the consummation of the
transactions contemplated in this Agreement.
(f) Closing Deliveries. EB shall have delivered to Hain all deliveries
to be made to it pursuant to Section 4.2.
<PAGE>
-12-
Section 7.2 Conditions to EB's Obligation. The obligations of EB under this
Agreement are subject to the fulfillment, prior to or on the Closing Date, of
each of the following conditions, all or any of which may be waived in whole or
in part by EB:
(a) Accuracy of Representations and Warranties. The representations
and warranties of Hain contained in this Agreement shall be true and
correct in all material respects on the date hereof and as of the Closing
Date with the same effect as though such representations and warranties had
been made or given again at and as of the Closing Date (except for any
representation or warranty expressly stated to have been made or given as
of a specified date, which, at the Closing Date, shall be true and correct
in all material respects as of the date expressly stated).
(b) Performance of Agreements. Hain shall have performed and complied
in all material respects with all of its agreements, covenants and
conditions required by this Agreement to be performed or complied with by
it prior to or at the Closing Date.
(c) Certificates. Hain shall have delivered to EB a certificate of its
President or any Vice President dated the Closing Date and certifying the
fulfillment of the conditions set forth in this Section 7.2(a) and (b).
Hain shall have delivered to EB (i) an incumbency certificate from the
Secretary or an Assistant Secretary of Hain and (ii) a copy of the Board of
Directors' resolutions of Hain certified by the Secretary or an Assistant
Secretary, authorizing and approving the transaction contemplated herein.
(d) Consents. Any notices to, and declarations, filings and
registrations with and consents, approvals and waivers from governmental
and regulatory agencies necessary in order to consummate the transactions
contemplated hereby shall have been obtained, including expiration of the
Hart-Scott-Rodino waiting period.
(e) No Injunction. No preliminary or permanent injunction or other
order shall have been issued by any court of competent jurisdiction, or by
any governmental or regulatory body, which prevents the consummation of the
transactions contemplated in this Agreement.
(f) Closing Deliveries. Hain shall have delivered to EB all deliveries
to be made to it pursuant to Section 4.3.
<PAGE>
-13-
ARTICLE VIII
INDEMNIFICATION
Section 8.1 Survival of Representations and Warranties and Obligations. All
representations, warranties, agreements, covenants and obligations made or
undertaken by the parties in this Agreement or in any document or instrument
executed and delivered pursuant hereto (including the exceptions to any
representations or warranties) shall survive the Closing hereunder and shall not
merge in the performance of any obligation by any party hereto, and will remain
in full force and effect unless, in respect of any agreement or covenant, some
specified period is set forth in this Agreement or in any document or instrument
executed and delivered pursuant hereto.
Section 8.2 Indemnification by EB. Hain and its officers, directors,
employees, successors and assigns shall be indemnified and held harmless by EB
from any and all liabilities, losses, damages, claims, costs and expenses,
interest, awards, judgments and penalties (including, without limitation,
reasonable legal costs and expenses), after taking into account any tax benefit
with respect thereto, actually suffered or incurred by it actually arising out
of or resulting from:
(a) the breach of any representation or warranty by EB contained
herein; or
(b) the breach of any covenant or agreement by EB contained herein or
in any document delivered hereunder at the Closing;
collectively ("Hain Losses").
Section 8.3 Indemnification by Hain. EB and its respective officers,
directors, employees, successors and assigns shall be indemnified and held
harmless by Hain from any and all liabilities, losses, damages, claims, costs
and expenses, interest, awards, judgments and penalties (including, without
limitation, reasonable legal costs and expenses), after taking into account any
tax benefit with respect thereto, actually suffered or incurred by it actually
arising out of or resulting from:
(a) the breach of any representation or warranty by Hain contained
herein; or
(b) the breach of any covenant or agreement by Hain contained herein
or in any document delivered hereunder at the Closing;
collectively ("EB Losses").
<PAGE>
-14-
Section 8.4 Indemnification Procedures. (a) For the purposes of this
Section 8.4, the term "Indemnitee" shall refer to the person indemnified, or
entitled, or claiming to be entitled to be indemnified, pursuant to the
provisions of Section 8.2 or 8.3, as the case may be; the term "Indemnitor"
shall refer to the person having the obligation to indemnify pursuant to such
provisions; and "Losses" shall refer to the "Hain Losses" or the "EB Losses", as
the case may be.
(b) An Indemnitee shall give written notice (a "Notice of Claim") to the
Indemnitor within ten (10) business days after the Indemnitee has knowledge of
any claim (including a Third Party Claim, as hereinafter defined) which an
Indemnitee has determined has been given or could give rise to a right of
indemnification under this Agreement. No failure to give such Notice of Claim
within ten (10) business days as aforesaid shall affect the indemnification
obligations of the Indemnitor hereunder, except to the extent Indemnitor can
demonstrate such failure materially prejudiced such Indemnitor's ability to
successfully defend the matter giving rise to the claim. The Notice of Claim
shall state the nature of the claim, the amount of the Loss, if known, and the
method of computation thereof, all with reasonable particularity and containing
a reference to the provisions of this Agreement in respect of which such right
of indemnification is claimed or arises.
(c) The obligations and liabilities of an Indemnitor under this Article
VIII with respect to those losses arising from claims of any third party that
are subject to the indemnification provisions provided for in this Article VIII
("Third Party Claims") shall be governed by and contingent upon the following
additional terms and conditions: The Indemnitee at the time it gives a Notice of
Claim to the Indemnitor of the Third Party Claim shall advise the Indemnitor
that it shall be permitted, at its option, to assume and control the defense of
such Third Party Claim at its expense and through counsel of its choice if it
gives prompt notice of its intention to do so to the Indemnitee and confirms
that the Third Party Claim is one with respect to which the Indemnitor is
obligated to indemnity. In the event the Indemnitor exercises its right to
undertake the defense against any such Third Party Claim as provided above, the
Indemnitee shall cooperate with the Indemnitor in such defense and make
available to the Indemnitor all witnesses, pertinent records, materials and
information in its possession or under its control relating thereto as is
reasonably required by the Indemnitor and the Indemnitee may participate by its
own counsel and at its own expense in defense of such Third Party Claim.
Similarly, in the event the Indemnitee is, directly or indirectly, conducting
the defense against any such Third Party Claim, the Indemnitor shall cooperate
with the Indemnitee in such defense and make available to it all such witnesses,
records, materials and information in its possession or under its control
relating thereto as is reasonably required by the Indemnitee and the Indemnitor
may participate by its own counsel and at its own expense in defense of such
Third Party Action. Except for the settlement of a Third Party Claim which
involves the payment of money only, no Third Party Claim may be settled by the
Indemnitor without the written consent of the Indemnitee, which consent shall
not be unreasonably withheld or de-
<PAGE>
-15-
layed. No Third Party claim may be settled by the Indemnitee without the written
consent of the Indemnitor, which consent shall not be unreasonably withheld or
delayed.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Termination of Agreement. This Agreement may be terminated at
any time prior to the Closing:
(a) by mutual written consent of Hain and EB; or
(b) by either party if the Closing shall not have occurred by December
31, 1999, provided however, that the right to terminate this Agreement
under this Section 9.1(b) shall not be available to any party whose failure
to perform any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Closing to occur on or before such date; or
(c) by either party upon the occurrence of any of the adverse events
described in Section 7.1(e) or Section 7.2(e).
In the event of termination of this Agreement by either or both of the
parties pursuant to this Section 9.1, written notice thereof shall forthwith be
given to the other party specifying the provision hereof pursuant to which such
termination is made, and this Agreement shall forthwith become void and there
shall be no liability on the part of the parties hereto (or their respective
officers, directors or affiliates) except (a) as set forth in Section 9.2 hereof
and (b) nothing herein shall relieve either party from liability for any breach
hereof. The parties acknowledge that, in the event this Agreement is terminated
in accordance with this Section 9.1, the Confidentiality Agreements shall remain
in full force and effect.
Section 9.2 Expenses. All costs and expenses, including, without
limitation, fees and disbursements of counsel, financial advisors and
accountants, incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses, whether or not the Closing shall have occurred. The parties agree that
all costs and expenses including, without limitation, fees and disbursements of
counsel, incurred in connection with the filing and recordation of the U.S. and
foreign trademark assignments referred to in Sections 4.2(b) and 6.2(e) shall be
borne by Hain.
<PAGE>
-16-
Section 9.3 Waiver. The accuracy of any representation or warranty, the
performance of any covenant or agreement or the fulfillment of any condition of
this Agreement by Hain on the one hand or EB on the other, may be expressly
waived in writing by Hain or EB, as appropriate. Any waiver hereunder shall be
effective only in the specific instance and for the purpose for which given. No
failure or delay on the part of Hain or EB in exercising any right, power or
privilege under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege.
Section 9.4 Consents. Whenever this Agreement requires a permit or consent
by or on behalf of either party hereto, such consent shall be given in writing
in a manner consistent with the requirements for a waiver of compliance as set
forth in Section 9.3.
Section 9.5 Assignment; Parties in Interest. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of, and be
enforceable by, the parties hereto and their respective permitted successors and
assigns, but neither this Agreement nor any of the rights, interests or
obligations herein shall be assigned, including by operation of law or
otherwise, by Hain without the prior written consent of EB; except that EB shall
not unreasonably withhold its consent to the assignment of this Agreement. This
Agreement may be assigned by EB by operation of law or otherwise without the
consent of Hain. Nothing contained in this Agreement shall prevent any
consolidation of EB and/or Heinz with, or merger of EB and/or Heinz into, any
other corporation or corporations (whether or not affiliated with EB and/or
Heinz), or shall prevent any sale, transfer or conveyance of the shares of EB
and/or Heinz or the property of EB and/or Heinz as an entirety or substantially
as an entirety to any person, or the assumption by another corporation of any of
the obligations of EB hereunder. EB shall respond to any written request made by
Hain under this Section 9.5 within twenty (20) days following receipt thereof.
Section 9.6 Further Assurances. Each of the parties hereto agrees that,
from and after the Closing, upon the reasonable request of any other party
hereto and without further consideration, such party will execute and deliver to
such other party such documents and further assurances and will take such other
actions (without cost to such party) as such other party may reasonably request
in order to carry out the purpose and intention of this Agreement.
Section 9.7 Entire Agreement. This Agreement and the Stock Purchase
Agreement and the other writings referred to herein or delivered pursuant hereto
which form a part hereof contain the entire understanding of the parties with
respect to the subject matter
<PAGE>
-17-
hereof. This Agreement shall supersede the License Agreement. However, that
certain Co-Pack Agreement by and between Hain and Heinz dated April 1, 1999,
shall not be superseded and shall remain in full force and effect until such
time as the parties have negotiated and entered into that certain service
agreement for procurement, manufacturing and logistics (i.e. warehousing,
handling and distribution) of food products (the "Service Agreement").
Section 9.8 Amendment. This Agreement may be amended or modified in whole
or in part only by a duly authorized written agreement that refers to this
Agreement and is signed by the parties hereto or by their duly appointed
representatives or successors.
Section 9.9 Limitations on Rights of Third Parties. Nothing expressed or
implied in this Agreement is intended or shall be construed to confer upon or
give any person other than the parties hereto any rights or remedies under or by
reason of this Agreement or any transaction contemplated hereby.
Section 9.10 Captions. The captions in this Agreement are inserted for
convenience of reference only and shall not be considered a part of or affect
the construction or interpretation of any provision of this Agreement.
Section 9.11 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. It shall not be necessary in making
proof of this Agreement to produce or account for more than one such
counterpart.
Section 9.12 Notices. All notices, claims, certificates, requests, demands
and other communications hereunder shall be in writing and will be deemed to
have been duly given if personally delivered or telecopied or on the date of
receipt indicated on the return receipt if delivered or mailed (registered or
certified mail, postage prepaid, return receipt requested) as follows:
Earth's Best, Inc.
877 West Main Street
Suite 510
Boise, Idaho 83702
Telecopy Number: (412) 237-3914
Attn: President
With a copy to:
Heinz U.S.A.
1062 Progress Street
<PAGE>
-18-
Pittsburgh, PA 15212
Telecopy Number: 412-237-5377
Attention: President
With a copy to:
H. J. Heinz Company
600 Grant Street
Pittsburgh, Pennsylvania 15219
Telecopy Number: 412-456-6102
Attention: Senior Vice President and General Counsel
If to Hain:
The Hain Food Group, Inc.
50 Charles Lindbergh Boulevard
Uniondale, New York 11553
Telecopy Number: 516-237-6277
Attention: Senior Vice President Finance
With a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Telecopy Number 212-269-5420
Attention: Roger Meltzer, Esq.
or to such other address as the person to whom notice is to be given may have
previously furnished to the other in writing in the manner set forth above.
Section 9.13 Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the Commonwealth of
Pennsylvania without regard to its provisions concerning conflicts or choice of
law.
Section 9.14 Transfer Taxes. All excise, sales, value added, use,
registration, stamp, transfer and similar taxes, levies, charges and fees
incurred in connection with this Agreement and the transactions contemplated
hereby, shall be shared equally by the
<PAGE>
-19-
parties. The parties shall cooperate in providing each other appropriate resale
exemption certificates and other appropriate tax documentation.
Section 9.15 Public Announcements. All public announcements relating to
this Agreement or the transactions contemplated hereby shall be made at such
time and in such manner as the parties hereto shall mutually agree, except that
nothing in this Agreement shall prevent a party hereto from making any
disclosure in connection with the transactions contemplated by this Agreement to
the extent required by law or to the extent required by any securities exchange
on which a party has listed its securities provided that prior notice of such
disclosure is given to the other party.
Section 9.16 Heinz Guaranty. Heinz hereby guarantees the prompt performance
by EB of its covenants and obligations hereunder. In the event of nonperformance
by EB of any such covenants or obligations, Heinz shall promptly perform or
cause EB to promptly perform such covenants and obligations. Heinz shall be
entitled to the benefit of all defenses to and limitations on the guaranteed
covenants and obligations to the same extent EB would have had such benefit,
except that in no event shall the validity of this guarantee or the obligations
of EB be in any way terminated, affected or impaired by its dissolution or the
rejection of such obligations under any bankruptcy, insolvency or similar laws,
now or hereafter enacted.
[The remainder of this page is left intentionally blank.]
<PAGE>
-20-
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of Hain, EB and Heinz as of the date first above
written.
THE HAIN FOOD GROUP, INC.
By: /s/ Irwin D. Simon
------------------------------
Name: Irwin D. Simon
Title: President
EARTH'S BEST, INC.
By: /s/ Robert Yoshida
------------------------------
Name: Robert Yoshida
Title: President
H. J. HEINZ COMPANY
By: /s/ Paul F. Renne
------------------------------
Name: Paul F. Renne
Title: Executive Vice President
and Chief Financial Officer
Exhibit 20
NEWS RELEASE
Heinz to Acquire 19.5% of Hain Food Group;
Global strategic Alliance Part of Heinz and
Hain Growth Strategies; Hain Acquires
Earth's Best Baby Food Brand from Heinz
Pittsburgh, PA and Uniondale, NY -- September 27, 1999 -- H.J. Heinz
Company (NYSE:HNZ) and The Hain Food Group, Inc. (Nasdaq:HAIN) today announced
an agreement to form a strategic alliance for the global production and
marketing of natural and organic foods and soy-based beverages. This nearly $100
million investment by Heinz will give it a minority stake (19.5% or 3.5 million
shares) in Hain and was based on a per-share purchase price in excess of the
$28.4375 closing price of Hain stock on Friday, September 24, 1999. Further,
Heinz will provide procurement, manufacturing and logistic expertise while Hain
will provide marketing, sales and distribution services.
The natural and organic food category represents a $20 billion U.S.
business growing at 15 to 18 percent annually. Hain is projecting more than $300
million for the current year, following revenues of $206 million in the year
ended June 30, up from $104 million the prior year. Hain is the U.S.A.'s leading
natural and organic food company, with more than 3,500 products offered under
such well-known names as Health Valley cereal, bakery and soups; Terra Chip
snacks; and Westsoy, the largest soy beverage marketer.
"This strategic alliance thrusts Heinz into the natural and organic food
segment, which is among the fastest growing in the international food industry.
Heinz is the first major U.S. food company to gain such direct access to natural
food retail stores. We see attractive opportunities for us in our global
markets," explained William R. Johnson, Heinz president and chief executive
officer. "We will marry Heinz's great strength and scale in low-cost
international procurement, manufacturing and logistics with Hain's talent and
success in the marketing, sales and distribution to specialty food outlets. The
resulting sales growth and cost synergies will benefit shareholders of both
Heinz and Hain and will be accretive to the earnings per share of both companies
in the first year."
As part of the strategic alliance, Heinz will be represented on the
expanded Hain board of directors by Joseph Jimenez, president and CEO of Heinz
North America, and Malcolm
<PAGE>
-2-
Ritchie, executive vice president of the H.J. Heinz Company and president Heinz
Europe. Heinz and Hain will exchange some technical and management personnel in
collaborative research and manufacturing programs. Additionally, Hain will
acquire from Heinz the trademark and name for Earth's Best organic baby foods.
"I am happy that Hain has forged this alliance with one of the world's
foremost food companies. Hain has been marketing and distributing Earth's Best
products since 1998; we have increased sales by more than 25% and believe there
is great global potential for the brand beyond infant feeding," noted Irwin
Simon, president and CEO of Hain. "This alliance is a strategic fit with our
expanding product line, and we have some of the strongest names in the natural
and organic food industry with great growth opportunities internationally and
domestically."
The $20 billion U.S. market for natural and organic foods includes $12
billion in sales in specialty stores (natural and organic food shops) and $8
billion through traditional supermarkets. Hain has number-one or number-two
market shares in 11 of the top 15 natural and organic food categories.
"With growing consumer demand for natural and functional foods in North
America, Heinz and Hain will form a powerful global team. This will enable Heinz
to leverage the Hain sales and distribution network to drive functional food
sales in North America," Mr. Jimenez said.
Mr. Simon added: "Traditional supermarkets, drug stores and mass
merchandisers are rapidly expanding their natural and organic product offerings
and, by joining with Heinz, we will grow and, at the same time, reach economies
of scale in production and improve our supply chain. And, with the resources and
global capabilities of Heinz, Hain will be positioned for the first time to
satisfy the growing international demand for healthy foods and snacks."
"We expect to greatly extend our European sales in this segment as a result
of the Hain partnership, which gives us access to the rapidly growing natural
and organic food business, in addition to other items in the cereal, snack,
condiment and baked goods categories," explained Mr. Ritchie.
The alliance with Hain complements Heinz's worldwide portfolio of brands
that meet special nutritional needs. The $100 million Heinz range includes an
array of gluten-free and
<PAGE>
-3-
other special diet products made by Heinz Italy under the brand names Bi-Aglut,
Aproten and Dieterba. Additionally, it offers Complan and Glucon D nutritional
drink mixes, sold in India and parts of Europe and South Africa. "We will expand
sales of these foods in the United States through Hain's outstanding marketing
and distribution network," Mr. Simon explained.
"The goal of our strategic alliance is to heighten consumer awareness of
the benefits of natural and organic food and make Heinz a global leader in this
profitable segment of the industry," Mr. Jimenez said. "Heinz has been known as
the pure food company since its founding. This partnership with Hain positions
Heinz in the forefront of one of the leading consumer trends in the food
industry."
Heinz and Hain have worked together on other products for the past two
years. Hain manufactures, markets and sells certain Weight Watchers brand dry
and refrigerated products under a 1997 licensing agreement with Heinz. The line
includes salad dressings, canned soups, sauces, cookies and mayonnaise, among
other items. Also in 1997, Hain acquired from Heinz the Alba Foods line of
regular and non-fat dry milk products, cocoa mixes and dairy shakes.
This transaction is subject to customary regulatory approval.
###
The above contains certain forward-looking statements which are based on
management's current views and assumptions regarding future events and financial
performance. For Heinz, reference should be made to the section "Forward-Looking
Statements" in Item 1 of H.J. Heinz Company's Annual Report on Form 10-K for the
fiscal year ended April 28, 1999 for a description of the important factors that
could cause actual results to differ materially from those discussed above. For
Hain, certain of the statements in this press release are forward looking in
nature and, accordingly, are subject to risks and uncertainties. The actual
results may differ materially from those described or contemplated.
###
ABOUT HEINZ: With sales over $9 billion, H.J. Heinz Company is one of the
world's leading food processors and purveyors of nu-
<PAGE>
-4-
tritional services. Its 50 affiliates operate in some 200 countries, offering
more than 5,700 varieties. Among the company's famous brands are Heinz,
StarKist, Ore-Ida, 9-Lives, Weight Watchers, Wattie's, Plasmon, Farley's, Smart
Ones, The Budget Gourmet, Rosetto, Bagel Bites, John West, Petit Navire, Skippy,
Kibbles 'n Bits, Pounce, Wagwells, Nature's Recipe, Orlando, Olivine and
Pudliszki. Information on Heinz is available at http://www.heinz.com.
***
ABOUT HAIN: The Hain Food Group, headquartered in Uniondale, NY, is a natural,
specialty and snack food company. The Company is a leader in many of the top 15
natural food categories, with such well-known natural food brands as Hain Pure
Foods(R), Westbrae(R), Natural, Westsoy(R), Arrowhead Mills(R), Health
Valley(R), Breadshop's(R), Casbah(R), Garden of Eatin(R), Terra Chips(R),
DeBoles(R), Earth's Best(R), and Nile Spice. The company's principal specialty
and snack food product lines include Hollywood(R) cooking oils, Estee(R)
sugar-free products, Weight Watchers(R) dry and refrigerated products,
Kineret(R) kosher foods, Boston Better Snacks(R), Harry's Premium Snacks and
Alba Foods(R). Hain's Internet web site is www.thehainfoodgroup.com.
###
