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:
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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).
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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
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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).
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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,
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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;
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(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.
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(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
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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
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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.
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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.
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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.
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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").
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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-
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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.
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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
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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
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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
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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.]
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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