EXHIBIT 10.1
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SECURITIES PURCHASE AGREEMENT
by and between
THE HAIN FOOD GROUP, INC.
and
EARTH'S BEST, INC.
September 24, 1999
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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
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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
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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:
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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.
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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)).
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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)
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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.
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(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
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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
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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.
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(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
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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.
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(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
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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
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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
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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.
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(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
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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.
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(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.
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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.
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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
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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
-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.
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(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.
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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