SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________
SCHEDULE 14D-1
Tender Offer Statement Pursuant To Section
14(d)(1) of the Securities Exchange Act of 1934
and
SCHEDULE 13D
Under the Securities Exchange Act of 1934
________________
Westbrae Natural, Inc.
(Name of Subject Company)
________________
The Hain Food Group, Inc.
Hain Acquisition Corp.
(Bidders)
________________
Common Stock, par value $.01 per share
(Title of Class of Securities)
________________
957150-10-5
(CUSIP Number of Class of Securities)
________________
Irwin D. Simon
President and Chief Executive Officer
The Hain Food Group, Inc.
50 Charles Lindbergh Boulevard
Uniondale, New York 11553
(516) 237-6200
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Bidders)
________________
Copy to:
Roger Meltzer, Esq.
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
(212) 701-3000
Calculation of Filing Fee
- ---------------------------------------------------------------------
Transaction Valuation* Amount of Filing Fee**
- --------------------------------- ----------------------------------
$23,470,049 $4,694
- ---------------------------------------------------------------------
* For purposes of calculating the filing fee only. This calculation assumes
the purchase of 5,950,588 shares of Common Stock of the Subject Company at
$3.625 net per share in cash and the purchase of all outstanding options
of the Subject Company.
** The amount of the filing fee, calculated in accordance with Rule 0-11(d) of
the Securities Exchange Act of 1934, as amended, equals 1/50th of one
percent of the aggregate value of cash offered by Bidders for such number
of Shares.
[X] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and date of its filing.
Amount Previously Paid: $6,104.82 Filing Party: The Hain Food Group, Inc.
Form or Registration No.: 333-32517 Date Filed: 31-Jul-97
_____________________________________________________
Exhibit Index begins on Page 10
(Page 1 of 11 Pages)
CUSIP No. 957150-10-5
- --------------------------------------------------------------------
1. Names of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
The Hain Food Group, Inc. I.R.S. No. 223240619
- --------------------------------------------------------------------
2. Check the Appropriate Box if a Member of Group
(See Instructions) (a)
(b) [X]
- --------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------
4. Sources of Funds (See Instructions)
BK
- --------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(e) or 2(f) [_]
- --------------------------------------------------------------------
6. Citizenship or Place of Organization
Delaware
- --------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each
Reporting Person
4,618,654*
- --------------------------------------------------------------------
8. Check if the Aggregate Amount in Row (7)
Excludes Certain Shares (See Instructions) [_]
- --------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row (7)
71.4%
- --------------------------------------------------------------------
10. Type of Reporting Person (See Instructions)
CO
Exhibit Index begins on Page 10
(Page 2 of 11 Pages)
CUSIP No. 957150-10-5
- --------------------------------------------------------------------
1. Names of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
Hain Acquisition Corp. I.R.S. No.
(pending)
- --------------------------------------------------------------------
2. Check the Appropriate Box if a Member of Group
(See Instructions) (a) [_]
(b) [X]
- --------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------
4. Sources of Funds (See Instructions)
AF
- --------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(e) or 2(f) [_]
- --------------------------------------------------------------------
6. Citizenship or Place of Organization
Delaware
- --------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each
Reporting Person
4,618,654*
- --------------------------------------------------------------------
8. Check if the Aggregate Amount in Row (7)
Excludes Certain Shares (See Instructions) [_]
- --------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row (7)
71.4%
- --------------------------------------------------------------------
10. Type of Reporting Person (See Instructions)
CO
- -----------------
* On September 11, 1997, Hain Acquisition Corp. (the "Purchaser") and The Hain
Food Group, Inc. ("Parent") entered into a Stockholders Agreement (the
"Stockholders Agreement") with certain Stockholders (the "Selling Stockholders")
of Westbrae Natural, Inc. (the "Company"), pursuant to which, upon the terms set
forth therein, the Selling Stockholders have agreed to tender, in accordance
with the terms of the tender offer described in this statement (the "Offer"),
those shares of common stock, par value $.01 per share (the "Shares") of the
Company, owned (beneficially or of record) by the Selling Stockholders. As of
September 11, 1997, the Selling Stockholders owned 4,098,654 Shares, along with
currently-exercisable options for an additional 520,000 Shares with the total
reflected in Row 7 of each table. On September 11, 1997, the Company had
5,950,588 Shares outstanding. The Stockholders Agreement is described more fully
in Section 12 of the Offer to Purchase dated September 12, 1997.
Exhibit Index begins on Page 10
(Page 3 of 11 Pages)
This Schedule 14D-1 relates to the offer by Hain Acquisition Corp.
(the "Purchaser"), a Delaware corporation and a wholly-owned subsidiary of The
Hain Food Group, Inc., a Delaware corporation ("Parent"), to purchase all of the
outstanding Common Stock, par value $.01 per share (the "Shares"), of Westbrae
Natural, Inc., a Delaware corporation (the "Company"), at a purchase price of
$3.625 per Share, net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase, dated
September 12, 1997 (the "Offer to Purchase"), and the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
collectively constitute the "Offer"), which are annexed to and filed with this
Schedule 14D-1 as Exhibits (a)(1) and (a)(2). The item numbers and responses
thereto below are in accordance with the requirements of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Westbrae Natural, Inc. The
address of its principal executive offices is 1065 East Walnut Street, Carson,
California 90746.
(b) The equity securities to which this Schedule 14D-1 relates are the
Shares. Reference is hereby made to the information set forth in the
"Introduction" and Section 1 ("Terms of the Offer") of the Offer to Purchase,
which is incorporated herein by reference.
(c) Reference is hereby made to the information set forth in Section 6
("Price Range of the Shares; Dividends") of the Offer to Purchase, which is
incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a) - (d) Reference is hereby made to the information set forth in
the "Introduction," Section 9 ("Certain Information Concerning the Purchaser and
Parent") and Schedule I ("Directors and Executive Officers of Parent and the
Purchaser") of the Offer to Purchase, which is incorporated herein by reference.
(e) - (f) During the last five years, neither Parent nor the
Purchaser, nor, to their knowledge, any of their respective executive officers
and directors listed in Schedule I ("Directors and Executive Officers of Parent
and the Purchaser") of the Offer to Purchase has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or was a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which any such person was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject
Exhibit Index begins on Page 10
(Page 4 of 11 Pages)
to, federal or state securities laws or finding any violation of such laws.
(g) Reference is hereby made to the information set forth in Schedule
I ("Directors and Executive Officers of Parent and the Purchaser") of the Offer
to Purchase, which is incorporated herein by reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) - (b) Reference is hereby made to the information set forth in the
"Introduction," Section 9 ("Certain Information Concerning the Purchaser and
Parent"), Section 11 ("Background of the Offer; Contacts with the Company") and
Section 12 of the Offer to Purchase, which is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) - (b) Reference is hereby made to the information set forth in
Section 10 ("Source and Amount of Funds") of the Offer to Purchase, which is
incorporated herein by reference.
(c) [Not applicable].
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSAL OF THE BIDDER.
(a) - (g) Reference is hereby made to the information set forth in the
"Introduction," Section 11 ("Background of the Offer; Contacts with the
Company"), Section 12 ("Purpose of the Offer, Merger, Merger Agreement, and
Stockholders Agreement"), Section 7 ("Effect of the Offer on the Market for the
Shares; NASDAQ Listing and Exchange Act Registration") and Section 13
("Dividends and Distributions") of the Offer to Purchase, which is incorporated
herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) - (b) Reference is hereby made to the information set forth in (i)
the "Introduction," Section 9 ("Certain Information Concerning the Purchaser and
Parent"), Section 11 ("Background of the Offer; Contacts with the Company"),
Section 12 ("Purpose of the Offer, Merger, Merger Agreement, Stockholder
Agreement, and Option Agreement") and Schedule I ("Directors and Executive
Officers of Parent and the Purchaser") of the Offer to Purchase and (ii) the
Merger Agreement, each of which is incorporated herein by reference.
Exhibit Index begins on Page 10
(Page 5 of 11 Pages)
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO THE SUBJECT
COMPANY'S SECURITIES.
Reference is hereby made to the information set forth in (i) the
"Introduction," Section 9 ("Certain Information Concerning the Purchaser and
Parent"), Section 11 ("Background of the Offer; Contacts with the Company") and
Section 12 ("Purpose of the Offer, Merger, Merger Agreement, and Stockholders
Agreement") of the Offer to Purchase, (ii) the Merger Agreement, the Shareholder
Agreement and the Option Agreement each of which is incorporated herein by
reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Reference is hereby made to the information set forth in Section 16
("Fees and Expenses") of the Offer to Purchase, which is incorporated herein by
reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Not Applicable.
ITEM 10. ADDITIONAL INFORMATION.
(a) Reference is hereby made to the information set forth in Section
12 ("Purpose of the Offer, Merger, Merger Agreement, and Stockholders
Agreement") of the Offer to Purchase, which is incorporated herein by reference.
(b) - (c) Reference is hereby made to the information set forth in
Section 15 ("Certain Legal Matters") of the Offer to Purchase, which is
incorporated herein by reference.
(d) Reference is hereby made to the information set forth in Section 7
("Effect of the Offer on the Market for the Shares; NASDAQ Listing and Exchange
Act Registration") of the Offer to Purchase, which is incorporated herein by
reference.
(e) To the best knowledge of Parent and the Purchaser, no such
proceedings are pending or have been instituted.
(f) Reference is hereby made to the entire text of the Offer to
Purchase and the related Letter of Transmittal, which is incorporated herein by
reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) - Offer to Purchase, dated September 12, 1997.
Exhibit Index begins on Page 10
(Page 6 of 11 Pages)
(a)(2) - Letter of Transmittal.
(a)(3) - Notice of Guaranteed Delivery.
(a)(4) - Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(5) - Form of Letter to Clients for Use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(6) - Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
(a)(7) - Text of letter from Information Agent to holders of stock
certificates for Vestro Natural Foods, Inc.
(a)(8) - Form of Summary Advertisement, dated September 12, 1997.
(b)(1) - Financing commitment letter dated September 11, 1997 between IBJ
Schroder Bank & Trust Company and Parent.
(c)(1) - Agreement and Plan of Merger dated as of September 11, 1997,
among Parent, the Purchaser and the Company.
(c)(2) - Shareholders Agreement dated as of September 11, 1997 among
the Company, the shareholders named therein, the Parent and
the Purchaser.
(c)(3) - Confidentiality Agreement dated June 27, 1994 between Parent
and Company.
(c)(4) - Confidentiality Agreement dated August 20, 1997, between Parent
and Company.
(d) - Not applicable.
(e) - Not applicable.
(f) - Not applicable.
Exhibit Index begins on Page 10
(Page 7 of 11 Pages)
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
THE HAIN FOOD GROUP, INC.
/s/ Irwin D. Simon
By:_______________________
Name: Irwin D. Simon
Title: President and Chief Executive
Officer
Dated: September 12, 1997
Exhibit Index begins on Page 10
(Page 8 of 11 Pages)
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
HAIN ACQUISITION CORP.
/s/ Irwin D. Simon
By:___________________________
Name: Irwin D. Simon
Title: President
Dated: September 12, 1997
Exhibit Index begins on Page 10
(Page 9 of 11 Pages)
EXHIBIT SEQUENTIAL
NO. DESCRIPTION PAGE NUMBER
- ------- ----------- -----------
(a)(1) -- Offer to Purchase, dated
September 12, 1997.
(a)(2) -- Letter of Transmittal.
(a)(3) -- Notice of Guaranteed
Delivery.
(a)(4) -- Form of Letter to Brokers,
Dealers, Commercial Banks,
Trust Companies and Other
Nominees.
(a)(5) -- Form of Letter to Clients
for Use by Brokers, Dealers,
Commercial Banks, Trust
Companies and Other Nominees.
(a)(6) -- Guidelines of the Internal
Revenue Service for
Certification of Taxpayer
Identification Number on
Substitute Form W-9.
(a)(7) -- Text of letter from Information
Agent to holders of stock
certificates for Vestro Natural
Foods, Inc.
(a)(8) -- Form of Summary
Advertisement, dated
September 12, 1997.
(b)(1) -- Financing commitment letter dated
September 11, 1997, between
IBJ Schroder Bank & Trust
Company and Parent.
(c)(1) -- Agreement and Plan of Merger
dated as of September 11,
1997 among Parent, the
Purchaser and the Company.
Exhibit Index begins on Page 10
(Page 10 of 11 Pages)
(c) (2) -- Shareholders Agreement dated
as of September 11, 1997
among the Company, the
shareholders named therein,
the Parent and the Purchaser.
(c)(3) -- Confidentiality Agreement dated
June 27, 1994 Between Parent
and Company.
(c)(4) -- Confidentiality Agreement dated
August 20, 1997, Between
Parent and Company.
Exhibit Index begins on Page 10
(Page 11 of 11 Pages)
EXHIBIT (a)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
WESTBRAE NATURAL, INC.
AT
$3.625 NET PER SHARE
BY
HAIN ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
THE HAIN FOOD GROUP, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, OCTOBER 9, 1997, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES (AS DEFINED HEREIN) WHICH CONSTITUTES AT LEAST A MAJORITY OF THE SHARES
OUTSTANDING ON A FULLY DILUTED BASIS AND (II) PARENT (AS DEFINED HEREIN)
OBTAINING, PRIOR TO THE EXPIRATION OF THE OFFER, SUFFICIENT FINANCING, ON
TERMS REASONABLY ACCEPTABLE TO PARENT, TO ENABLE THE CONSUMMATION OF THE OFFER
(AS DEFINED HEREIN) AND THE MERGER (AS DEFINED HEREIN). THE OFFER IS ALSO
SUBJECT TO OTHER TERMS AND CONDITIONS. SEE SECTION 14.
IN CONNECTION WITH THE EXECUTION OF THE MERGER AGREEMENT (AS DEFINED
HEREIN), THE BENEFICIAL OWNERS OF APPROXIMATELY 68.9% OF THE OUTSTANDING
SHARES AGREED TO TENDER SUCH SHARES PURSUANT TO THE OFFER. SEE SECTION 12.
---------------
THE BOARD OF DIRECTORS OF THE COMPANY (AS DEFINED HEREIN) HAS APPROVED THE
OFFER AND THE MERGER, HAS DETERMINED THAT THE TERMS OF THE OFFER AND THE
MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE STOCKHOLDERS OF THE
COMPANY AND RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES PURSUANT TO THE OFFER.
---------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
shares of common stock, par value $.01 per share, of the Company should either
(a) complete and sign the Letter of Transmittal (or a facsimile thereof) in
accordance with the instructions in the Letter of Transmittal and mail or
deliver it together with the certificate(s) evidencing tendered Shares, and
any other required documents, to the Depositary (as defined herein) or tender
such Shares pursuant to the procedures for book-entry transfer set forth in
Section 3 or (b) request such stockholder's broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for such stockholder.
A stockholder whose Shares are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such broker,
dealer, commercial bank, trust company or other nominee if such stockholder
desires to tender such Shares.
Any stockholder who desires to tender Shares and whose certificates
evidencing such Shares are not immediately available or who cannot comply with
the procedures for book-entry transfer described in this Offer to Purchase on
a timely basis may tender such Shares by following the procedures for
guaranteed delivery set forth in Section 3.
Questions and requests for assistance may be directed to the Information
Agent at its address and telephone numbers set forth on the back cover of this
Offer to Purchase. Requests for additional copies of this Offer to Purchase,
the Letter of Transmittal, the Notice of Guaranteed Delivery and other tender
offer materials may also be directed to the Information Agent. A stockholder
may also contact brokers, dealers, commercial banks and trust companies for
assistance concerning this Offer.
---------------
The Depositary for the Offer is:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
The Information Agent for the Offer is:
MACKENZIE
PARTNERS, INC.
September 12, 1997
TABLE OF CONTENTS
PAGE
----
INTRODUCTION............................................................. 1
1. Terms of the Offer.................................................. 2
2. Acceptance for Payment and Payment for Shares....................... 4
3. Procedures for Tendering Shares..................................... 5
4. Withdrawal Rights................................................... 7
5. Certain Federal Income Tax Consequences............................. 8
6. Price Range of Shares; Dividends.................................... 9
7. Effect of the Offer on the Market for the Shares; NASDAQ Listing and
Exchange Act Registration.......................................... 9
8. Certain Information Concerning the Company.......................... 10
9. Certain Information Concerning the Purchaser and Parent............. 13
10. Source and Amount of Funds.......................................... 14
11. Background of the Offer; Contacts with the Company.................. 16
Purpose of the Offer, Merger, Merger Agreement and Stockholders
12. Agreement........................................................... 17
13. Dividends and Distributions......................................... 24
14. Conditions to the Offer............................................. 25
15. Certain Legal Matters............................................... 26
16. Fees and Expenses................................................... 27
17. Miscellaneous....................................................... 27
Schedule I-Directors and Executive Officers of Parent and the Purchaser
TO THE HOLDERS OF COMMON STOCK OF
WESTBRAE NATURAL, INC.
INTRODUCTION
Hain Acquisition Corp., a Delaware corporation (the "Purchaser") and wholly
owned subsidiary of The Hain Food Group, Inc., a Delaware corporation
("Parent"), hereby offers to purchase all outstanding shares (the "Shares") of
common stock, par value $.01 per share (the "Common Stock"), of Westbrae
Natural, Inc., a Delaware corporation (the "Company"), at $3.625 per Share
(the "Offer Price"), net to the seller in cash, without interest, upon the
terms and subject to the conditions set forth in this Offer to Purchase and in
the related Letter of Transmittal (which, as amended or supplemented from time
to time, together constitute the "Offer").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by the Purchaser
pursuant to the Offer. The Purchaser will pay all fees of Continental Stock
Transfer & Trust Company, which is acting as the Depositary (the
"Depositary"), and of MacKenzie Partners, Inc., which is acting as the
Information Agent (the "Information Agent"), incurred in connection with the
Offer. See Section 16.
The Offer is conditioned upon, among other things, (i) there having been
validly tendered and not withdrawn prior to the expiration of the Offer a
number of Shares which would represent at least a majority of the Shares
outstanding on a fully diluted basis (the "Minimum Condition") and (ii) Parent
obtaining, prior to the expiration of the Offer, sufficient financing, on
terms substantially as set forth in the Financing Commitment (as defined
herein), to enable the consummation of the Offer and the Merger (the
"Financing Condition"). See Sections 10 and 14.
The Purchaser is a corporation newly formed by Parent in connection with the
Offer and the transactions contemplated thereby. The Purchaser has no
significant assets or liabilities other than those that will be acquired in
connection with the Offer and the Merger. For additional information
concerning the Purchaser, see Section 9.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of September 11, 1997 (the "Merger Agreement"), by and among the Company,
Parent and the Purchaser. The Merger Agreement provides that, among other
things, following the consummation of the Offer and the satisfaction or waiver
of the other conditions set forth in the Merger Agreement and in accordance
with the relevant provisions of the Delaware General Corporations Law, as
amended (the "DGCL"), the Purchaser will be merged with and into the Company
(the "Merger"). Following consummation of the Merger, the Company will
continue as the surviving corporation (the "Surviving Corporation") and will
be a wholly owned subsidiary of Parent. At the effective time of the Merger
(the "Effective Time"), each outstanding Share (other than Shares owned by the
Company or by any subsidiary of the Company and Shares owned by Parent, the
Purchaser or any other subsidiary of Parent or held by stockholders, if any,
who are entitled to and who properly exercise dissenters' rights under the
DGCL) will be converted into the right to receive an amount in cash equal to
the price per Share paid pursuant to the Offer, without interest. See Section
12.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER, THE MERGER,
THE MERGER AGREEMENT, HAS DETERMINED THAT THE TERMS OF THE OFFER AND THE
MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE STOCKHOLDERS OF THE
COMPANY AND RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES PURSUANT TO THE OFFER.
Once the conditions to the Offer, including the Minimum Condition and the
Financing Condition, are satisfied and the Purchaser accepts the Shares
tendered for payment pursuant to the Offer, the Merger will occur as soon as
practicable thereafter. If following the Offer the Purchaser holds a number of
Shares that satisfies the Minimum Condition but which is less than 90% of all
of the outstanding Shares, then in accordance with Section 251 of the DGCL,
the Merger Agreement will be submitted for approval at a special meeting of
the stockholders of the Company. As a result of the Minimum Condition and the
Purchaser's beneficial ownership of a majority
1
of all of the outstanding Shares, the Purchaser, acting alone, would be able
to approve the Merger Agreement at such meeting. If, following the Offer, the
Purchaser holds 90% or more of the outstanding Shares, the Purchaser intends
to cause the Merger to occur as a short-form merger (without the need for a
stockholders' meeting) in accordance with the terms of Section 253 of the
DGCL.
The Merger Agreement provides that, following the satisfaction or waiver of
the conditions to the Offer, the Purchaser will accept for payment, in
accordance with the terms of the Offer, all Shares validly tendered pursuant
to the Offer as soon as practicable after the Expiration Date (as hereinafter
defined). The Merger Agreement provides that the Purchaser may under certain
circumstances, from time to time, extend the Expiration Date of the Offer
beyond the time it would otherwise be required to accept validly tendered
Shares for payment. The Offer will not remain open following the time Shares
are accepted for payment.
In connection with the execution of the Merger Agreement, Parent and the
Purchaser entered into a Stockholders Agreement, dated as of September 11,
1997 (the "Stockholders Agreement"), with Delaware State Employees' Retirement
Fund, The Declaration of Trust for the Defined Benefit Plan of ICI American
Holdings Inc., the Declaration of Trust for the Defined Benefit Plans of ICI
Zeneca Holdings Inc., Baccharis Capital, Inc., Princeton/Montrose Partners,
Southern California Ventures II, Natural Venture Partners I, Robert J. Cresci,
Allan Dalben, Anthony J. Harnett, B. Allen Lay, Jay J. Miller, Stephen P.
Monticelli, F. Noel Perry, Henry W. Poett, III and Donald R. Stroben and
Stephen Schorr (collectively, the "Stockholders"), the record and/or
beneficial owners of an aggregate of 4,098,654 Shares, or approximately 68.9%
of the Shares outstanding on September 11, 1997 (66.4% of the outstanding
Shares on a fully diluted basis). The Stockholders Agreement is more fully
described in Section 12.
Parent has entered into a commitment letter dated September 11, 1997 with
IBJ Schroder Bank & Trust Company ("IBJ Schroder") pursuant to which, subject
to the terms and conditions thereof, IBJ Schroder has agreed to provide the
financing necessary to finance the Offer and Merger and to pay related fees
and expenses. The Offer is conditioned upon, among other things, Parent having
satisfied the Financing Condition. See Section 10.
According to the Company, as of September 11, 1997 there were 5,950,588
Shares issued and outstanding, 292,066 Shares held by the Company in its
treasury, and 1,089,875 Shares reserved for issuance pursuant to the Company's
outstanding officer, director and employee stock options ("Company Options")
granted pursuant to stock option plans or arrangements of the Company (the
"Option Plans"), of which 1,008,875 Shares are subject to outstanding,
unexercised options. Based upon the foregoing information, the Minimum
Condition would be satisfied if 3,479,732 Shares were validly tendered.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS
MADE WITH RESPECT TO THE OFFER.
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any extension or
amendment), the Purchaser will accept for payment and pay for all Shares which
are validly tendered prior to the Expiration Date and not withdrawn in
accordance with Section 4. The term "Expiration Date" means 12:00 Midnight,
New York City time, on October 9, 1997, unless and until the Purchaser, in its
sole discretion (but subject to the terms of the Merger Agreement), shall have
extended the period of time during which the Offer is open, in which event the
term "Expiration Date" shall mean the latest time and date at which the Offer,
as so extended by the Purchaser, shall expire.
The Offer is conditioned upon, among other things, satisfaction of the
Minimum Condition and the Financing Condition. See Section 14, which sets
forth in full the conditions to the Offer. If the Minimum Condition or the
Financing Condition is not satisfied or any or all of the other events set
forth in Section 14 shall have occurred or shall be determined by the
Purchaser to have occurred prior to the Expiration Date, the Purchaser
reserves the right (but shall not be obligated) to (i) decline to purchase any
of the Shares tendered in the Offer and terminate the Offer and return all
tendered Shares to the tendering stockholders, (ii) waive any or
2
all conditions to the Offer, to the extent permitted by applicable law and the
provisions of the Merger Agreement and, subject to complying with applicable
rules and regulations of the Securities and Exchange Commission (the "SEC"),
purchase all Shares validly tendered, (iii) subject to the terms of the Merger
Agreement, extend the Offer and, subject to the right of stockholders to
withdraw Shares until the Expiration Date, retain the Shares which have been
tendered during the period or periods for which the Offer is extended or (iv)
subject to the terms of the Merger Agreement, amend the Offer. The Merger
Agreement provides that the Purchaser will not, without the consent of the
Company, reduce the number of Shares sought in the Offer, reduce the Offer
Price, modify or add to the conditions of the Offer set forth in "Conditions
to the Offer" below or otherwise amend the Offer in any manner materially
adverse to the Company's stockholders, except as provided in the next two
sentences, extend the Offer or change the form of consideration payable in the
Offer. Notwithstanding the foregoing, the Purchaser may, without the consent
of the Company, (i) extend the Offer for a period of not more than 10 business
days beyond the initial expiration date of the Offer (which initial expiration
date shall be 20 business days following commencement of the Offer), if on the
date of such extension less than 90% of the outstanding Shares have been
validly tendered and not properly withdrawn pursuant to the Offer, (ii) extend
the Offer from time to time if at the initial expiration date or any extension
thereof the Minimum Condition or any of the other conditions to the
Purchaser's obligation to purchase Shares set forth in paragraphs (a), (b) and
(e) under "Conditions to the Offer" below shall not be satisfied or waived,
until such time as such conditions are satisfied or waived, (iii) extend the
Offer for any period required by any rule, regulation, interpretation or
position of the SEC or the staff thereof applicable to the Offer and (iv)
extend the Offer for any reason for a period of not more than 10 business days
beyond the latest expiration date that would otherwise be permitted under
clause (i), (ii) or (iii) of this sentence. In addition, the Purchaser shall
at the request of the Company extend the Offer for five business days if at
any scheduled expiration date of the Offer any of the conditions to the
Purchaser's obligation to purchase Shares shall not be satisfied; provided,
however, that the Purchaser shall not be required to extend the Offer beyond
November 30, 1997.
The Purchaser expressly reserves the right, in its sole discretion, at any
time or from time to time, subject to the terms of the Merger Agreement and
regardless of whether or not any of the events set forth in Section 14 shall
have occurred or shall have been determined by the Purchaser to have occurred,
(i) to extend the period of time during which the Offer is open and thereby
delay acceptance for payment of, and the payment for, any Shares, by giving
oral or written notice of such extension to the Depositary and (ii) to amend
the Offer in any respect by giving oral or written notice of such amendment to
the Depositary. The rights reserved by the Purchaser in this paragraph are in
addition to the Purchaser's rights to terminate the Offer pursuant to
Section 14. Any extension, amendment or termination will be followed as
promptly as practicable by public announcement thereof, the announcement in
the case of an extension to be issued no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date
in accordance with Rules 14d-4(c), 14d-6(d) and 14e-1(d) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Without limiting the
obligation of the Purchaser under such rules or the manner in which the
Purchaser may choose to make any public announcement, the Purchaser currently
intends to make announcements by issuing a release to the Dow Jones News
Service.
If the Purchaser extends the Offer, or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its purchase of or
payment for Shares or is unable to pay for Shares pursuant to the Offer for
any reason, then, without prejudice to the Purchaser's rights under the Offer,
the Depositary may retain tendered Shares on behalf of the Purchaser, and such
Shares may not be withdrawn except to the extent tendering stockholders are
entitled to withdrawal rights as described in Section 4. However, the ability
of the Purchaser to delay the payment for Shares that the Purchaser has
accepted for payment is limited by Rule 14e-1(c) under the Exchange Act, which
requires that a bidder pay the consideration offered or return the securities
deposited by or on behalf of holders of securities promptly after the
termination or withdrawal of the Offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer
(including the Minimum Condition, subject to the Merger Agreement), the
Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent
3
required by Rules 14d-4(c), 14d-6(d) and 14e-1(c) under the Exchange Act. The
minimum period during which the Offer must remain open following material
changes in the terms of the Offer or information concerning the Offer, other
than a change in price or a change in percentage of securities sought, will
depend upon the facts and circumstances, including the relative materiality of
the terms or information.
In a public release, the SEC has stated that in its view an offer must
remain open for a minimum period of time following a material change in the
terms of the Offer and that waiver of a material condition, such as the
Minimum Condition, is a material change in the terms of the Offer. The release
states that an offer should remain open for a minimum of five business days
from the date a material change is first published, sent or given to security
holders and that, if material changes are made with respect to information not
materially less significant than the offer price and the number of shares
being sought, a minimum of ten business days may be required to allow adequate
dissemination and investor response. The requirement to extend the Offer will
not apply to the extent that the number of business days remaining between the
occurrence of the change and the then-scheduled Expiration Date equals or
exceeds the minimum extension period that would be required because of such
amendment. As used in this Offer to Purchase, "business day" has the meaning
set forth in Rule 14d-1 under the Exchange Act.
The Company has provided the Purchaser with its list of stockholders and
security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of
Transmittal and other relevant materials will be mailed to record holders of
Shares and furnished to brokers, dealers, commercial banks, trust companies
and similar persons whose names, or the names of whose nominees, appear on the
stockholder list or, if applicable, who are listed as participants in a
clearing agency's security position listing, for subsequent transmittal to
beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Under the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such
extension or amendment), the Purchaser will accept for payment and will pay,
promptly after the Expiration Date, for all Shares validly tendered prior to
the Expiration Date and not properly withdrawn in accordance with Section 4.
All determinations concerning the satisfaction of such terms and conditions
will be within the Purchaser's reasonable discretion, which determinations
will be final and binding. See Sections 1 and 14. The Purchaser expressly
reserves the right, in its sole discretion, to delay acceptance for payment of
or payment for Shares in order to comply in whole or in part with any
applicable law. Any such delays will be effected in compliance with Rule 14e-
1(c) under the Exchange Act (relating to a bidder's obligation to pay for or
return tendered securities promptly after the termination or withdrawal of
such bidder's offer).
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt of the Depositary of (i) certificates
evidencing such Shares ("Stock Certificates") or timely confirmation of a
book-entry transfer (a "Book-Entry Confirmation") of such Shares into the
Depositary's account at The Depository Trust Company (the "Book-Entry Transfer
Facility") pursuant to the procedures set forth in Section 3, (ii) a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) or,
in the case of a book-entry transfer, an Agent's Message (as defined below)
and (iii) any other documents required by the Letter of Transmittal.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility
has received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, tendered Shares if, as and when the Purchaser
gives oral or written notice to the Depositary of the Purchaser's acceptance
of such Shares for payment. Payment for Shares accepted pursuant to the Offer
will be
4
made by deposit of the purchase price with the Depositary, which will act as
agent for tendering stockholders for the purpose of receiving payments from
the Purchaser and transmitting payments to such tendering stockholders. UNDER
NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE PAID BY THE
PURCHASER, REGARDLESS OF ANY DELAY IN MAKING SUCH PAYMENT.
Upon the deposit of funds with the Depositary for the purpose of making
payments to tendering stockholders, the Purchaser's obligation to make such
payment shall be satisfied and tendering stockholders must thereafter look
solely to the Depositary for payment of amounts owed to them by reason of the
acceptance for payment of Shares pursuant to the Offer.
If any tendered Shares are not accepted pursuant to the Offer for any
reason, or if Stock Certificates are submitted evidencing more Shares than are
tendered, Stock Certificates evidencing Shares not purchased or tendered will
be returned, without expense to the tendering stockholder (or in the case of
Shares tendered by book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility pursuant to the procedures set forth in Section
3, such Shares will be credited to an account maintained at the Book-Entry
Transfer Facility), as promptly as practicable after the expiration,
termination or withdrawal of the Offer.
The Purchaser reserves the right to transfer or assign, in whole at any time
or in part from time to time, to Parent or to one or more of its affiliates,
the right to purchase all or a portion of the Shares tendered pursuant to the
Offer, but any such transfer or assignment will not relieve the Purchaser of
its obligations under the Offer and will in no way prejudice the rights of
tendering stockholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
3. PROCEDURES FOR TENDERING SHARES
Valid Tender. For Shares to be validly tendered pursuant to the Offer, a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees, or an Agent's Message (in
the case of any book-entry transfer), and any other required documents, must
be received by the Depositary at its address set forth on the back cover of
this Offer to Purchase prior to the Expiration Date. In addition, either (i)
the Stock Certificates evidencing Shares must be received by the Depositary
along with the Letter of Transmittal or Shares must be tendered pursuant to
the procedures for book-entry transfer described below and a Book-Entry
Confirmation must be received by the Depositary, in each case prior to the
Expiration Date or (ii) the tendering stockholder must comply with the
guaranteed delivery procedures described below.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase, and any
financial institution that is a participant in any of the Book-Entry Transfer
Facility's systems may make book-entry delivery of Shares by causing the Book-
Entry Transfer Facility to transfer such Shares into the Depositary's account
at the Book-Entry Transfer Facility in accordance with the Book-Entry Transfer
Facility's procedures for transfer. However, although delivery of Shares may
be effected through book-entry transfer at the Book-Entry Transfer Facility,
the Letter of Transmittal (or facsimile thereof), with any required signature
guarantees, or an Agent's Message in connection with a book-entry delivery of
Shares, and any other required documents, must, in any case, be transmitted to
and received by the Depositary at its address set forth on the back cover of
this Offer to Purchase prior to the Expiration Date or the tendering
stockholder must comply with the guaranteed delivery procedures described
below. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE
WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE
DELIVERY TO THE DEPOSITARY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal if (i) the Letter of Transmittal is signed by the registered
holder(s) of the Shares (which term, for purposes of this Section, includes
any participant in the Book-Entry Transfer Facility system whose name appears
on a security position listing as the owner of the Shares) tendered therewith
and such registered holder(s) has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on such Letter of
5
Transmittal or (ii) such Shares are tendered for the account of a bank,
broker, dealer, credit union, savings association or other entity that is a
member in good standing of the Securities Transfer Agents Medallion Program
(an "Eligible Institution"). In all other cases, all signatures on the Letter
of Transmittal must be guaranteed by an Eligible Institution. See Instructions
1 and 5 to the Letter of Transmittal. If the Stock Certificates are registered
in the name of a person other than the signer of the Letter of Transmittal, or
if payment is to be made or Stock Certificates not validly tendered or not
accepted for payment or not purchased are to be issued or returned to a person
other than the registered holder of the Stock Certificates, the tendered Stock
Certificates must be endorsed in blank or accompanied by appropriate stock
powers, signed exactly as the name or names of the registered holder(s) appear
on the Stock Certificates with the signatures on such Stock Certificates or
stock powers guaranteed by an Eligible Institution. See Instructions 1 and 5
to the Letter of Transmittal.
THE METHOD OF DELIVERY OF STOCK CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ANY OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER AND
THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Stock Certificates are not immediately
available or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, or the procedures for book-entry
transfer cannot be completed on a timely basis, such Shares may nevertheless
be tendered if all the following conditions are satisfied:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser herewith, is
received by the Depositary prior to the Expiration Date as provided below;
and
(iii) the Stock Certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation), together with a properly completed
and duly executed Letter of Transmittal (or facsimile thereof), with any
required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message) and any other documents required by the Letter of
Transmittal, are received by the Depositary within four NASDAQ trading days
after the date of execution of the Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, facsimile transmission or mail to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares purchased
pursuant to the Offer will in all cases be made only after timely receipt by
the Depositary of (i) Stock Certificates evidencing such Shares or a Book-
Entry Confirmation of the delivery of such Shares, (ii) a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees (or, in the case of a book-entry transfer,
an Agent's Message) and (iii) any other documents required by the Letter of
Transmittal. Accordingly, tendering stockholders may be paid at different
times depending upon when certificates for Shares or Book-Entry Confirmations
with respect to Shares are actually received by the Depositary. UNDER NO
CIRCUMSTANCES WILL INTEREST BE PAID ON THE OFFER PRICE TO BE PAID BY THE
PURCHASER FOR THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY
DELAY IN MAKING SUCH PAYMENT.
BACKUP FEDERAL INCOME TAX WITHHOLDING. TO PREVENT BACKUP FEDERAL INCOME TAX
WITHHOLDING WITH RESPECT TO PAYMENT OF THE PURCHASE PRICE FOR SHARES PURCHASED
PURSUANT TO THE OFFER, EACH TENDERING STOCKHOLDER MUST PROVIDE THE DEPOSITARY
WITH SUCH STOCKHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER
6
("TIN") AND CERTIFY THAT SUCH STOCKHOLDER IS NOT SUBJECT TO BACKUP
WITHHOLDING. IF A STOCKHOLDER DOES NOT PROVIDE SUCH STOCKHOLDER'S CORRECT TIN
OR FAILS TO PROVIDE THE CERTIFICATIONS DESCRIBED ABOVE, THE INTERNAL REVENUE
SERVICE MAY IMPOSE A PENALTY ON SUCH STOCKHOLDER AND PAYMENTS THAT ARE MADE TO
SUCH STOCKHOLDER WITH RESPECT TO SHARES PURCHASED PURSUANT TO THE OFFER MAY BE
SUBJECT TO BACKUP WITHHOLDING AT A RATE OF 31%. ALL STOCKHOLDERS SURRENDERING
SHARES PURSUANT TO THE OFFER SHOULD COMPLETE AND SIGN THE MAIN SIGNATURE FORM
AND THE SUBSTITUTE FORM W-9 INCLUDED AS PART OF THE LETTER OF TRANSMITTAL TO
PROVIDE THE INFORMATION AND CERTIFICATION NECESSARY TO AVOID BACKUP
WITHHOLDING (UNLESS AN APPLICABLE EXEMPTION EXISTS AND IS PROVED IN A MANNER
SATISFACTORY TO THE PURCHASER AND THE DEPOSITARY). SEE INSTRUCTION 9 AND
"IMPORTANT TAX INFORMATION" IN THE LETTER OF TRANSMITTAL.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tendered Shares pursuant to any of the procedures described above will be
determined by the Purchaser, in its sole discretion, whose determination will
be final and binding on all parties. The Purchaser reserves the absolute right
to reject any or all tenders of any Shares determined by it not to be in
proper form or if the acceptance for payment of, or payment for, such Shares
may, in the opinion of the Purchaser's counsel, be unlawful. The Purchaser
also reserves the absolute right, in its sole discretion, subject to the
Merger Agreement, to waive any of the conditions of the Offer or any defect or
irregularity in any tender with respect to Shares of any particular
stockholder, and the Purchaser's interpretation of the terms and conditions of
the Offer (including the Letter of Transmittal and the Instructions thereto)
will be final and binding. None of the Purchaser, Parent, the Depositary, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or will incur any
liability for failure to give any such notification.
Appointment; Other Requirements. By executing a Letter of Transmittal as set
forth above, a tendering stockholder irrevocably appoints designees of the
Purchaser as the stockholder's attorneys-in-fact and proxies, in the manner
set forth in the Letter of Transmittal, each with full power of substitution,
to the full extent of the stockholder's rights with respect to the Shares
tendered by the stockholder and accepted for payment by the Purchaser (and any
and all other Shares or other securities issued or issuable in respect of such
Shares on or after the date of the Merger Agreement). All such proxies shall
be considered coupled with an interest in the tendered Shares. This
appointment will be effective when, and only to the extent that, the Purchaser
accepts Shares for payment. Upon acceptance for payment, all prior proxies
given by the stockholder with respect to the Shares or other securities will,
without further action, be revoked, and no subsequent proxies may be given nor
any subsequent written consent executed by such stockholder (and if given or
executed, will not be deemed to be effective) with respect thereto. The
designees of the Purchaser will, with respect to the Shares and other
securities, be empowered to exercise all voting and other rights of such
stockholder as they in their sole discretion may deem proper at any annual,
special or adjourned meeting of the Company's stockholders, by written consent
or otherwise. The Purchaser reserves the right to require that, in order for
Shares to be deemed validly tendered, immediately upon the Purchaser's
acceptance for payment of such Shares, the Purchaser must be able to exercise
full voting and other rights of a record and beneficial holder, including
rights in respect of acting by written consent, with respect to such Shares.
A tender of Shares pursuant to any one of the procedures described above
will constitute the tendering stockholder's acceptance of the terms and
conditions of the Offer. The Purchaser's acceptance for payment of Shares
tendered pursuant to the Offer will constitute a binding agreement between the
tendering stockholder and the Purchaser upon the terms and subject to the
conditions of the Offer.
4. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable, provided that Shares tendered pursuant
to the Offer may be withdrawn at any time prior to the Expiration Date and,
unless theretofore accepted for payment by the Purchaser pursuant to the
Offer, may also be withdrawn at any time after November 10, 1997, or at such
later time as may apply if the Offer is extended.
7
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
its address set forth on the back cover of this Offer to Purchase. Any such
notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of
the registered holder, if different from that of the person who tendered such
Shares. If Stock Certificates evidencing Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the
physical release of such Stock Certificates, the serial numbers of the
particular Stock Certificates and a signed notice of withdrawal with signature
guaranteed by an Eligible Institution, except in the case of Shares tendered
for the account of an Eligible Institution, must also be furnished to the
Depositary as described above. If Shares have been tendered pursuant to the
procedures for book-entry transfer set forth in Section 3, any notice of
withdrawal must also specify the name and number of the account at the
appropriate Book-Entry Transfer Facility to be credited with the withdrawn
Shares.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding. None of the
Purchaser, Parent, the Depositary, the Information Agent or any other person
will be under any duty to give notification of any defects or irregularities
in any notice of withdrawal or incur any liability for failure to give any
such notification.
ANY SHARES PROPERLY WITHDRAWN WILL BE DEEMED NOT TO HAVE BEEN VALIDLY
TENDERED FOR PURPOSES OF THE OFFER. However, withdrawn Shares may be re-
tendered by following one of the procedures described in Section 3 at any time
prior to the Expiration Date.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The receipt of cash for Shares pursuant to the Offer (or the Merger) will be
a taxable transaction for U.S. federal income tax law purposes and may also be
a taxable transaction under applicable state, local or foreign tax laws. The
tax consequences of such receipt pursuant to the Offer (or the Merger) may
vary depending upon, among other things, the particular circumstances of the
stockholder. In general, a stockholder who receives cash for Shares pursuant
to the Offer (or the Merger) will recognize gain or loss for federal income
tax purposes equal to the difference between the amount of cash received in
exchange for the Shares sold and such stockholder's adjusted tax basis in such
Shares.
Provided that the Shares constitute capital assets in the hands of the
stockholder, such gain or loss will be capital gain or loss, and will be long
term capital gain or loss if the holder has held the Shares for more than
eighteen months at the time of sale and will be midterm capital gain or loss
if the holder has held the Shares for more than one year but not more than
eighteen months at the time of sale. Under present law, long term capital
gains and midterm capital gains recognized by an individual stockholder
generally will be taxed at a maximum U.S. federal marginal tax rate of 20% and
28%, respectively, and long term capital gains and midterm capital gains
recognized by a corporate stockholder both will be taxed at a maximum U.S.
federal marginal tax rate of 35%. In addition, under present law, the ability
to use capital losses to offset ordinary income is limited.
A stockholder that tenders Shares may be subject to backup withholding at a
rate of 31% unless a TIN is provided by such stockholder and such stockholder
certifies that such number is correct or properly certifies that such
stockholder is awaiting a TIN, or unless an exemption applies. See "Backup
Federal Income Tax Withholding" under Section 3 and Instruction 9 and
"Important Tax Information" in the Letter of Transmittal.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND IS BASED UPON PRESENT LAW. STOCKHOLDERS ARE URGED TO
CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF
THE OFFER (OR THE MERGER) TO THEM, INCLUDING THE APPLICATION AND EFFECT OF THE
ALTERNATIVE MINIMUM TAX, AND STATE, LOCAL AND FOREIGN TAX LAWS. IN ADDITION,
THE DISCUSSION SET FORTH ABOVE MAY NOT APPLY TO PARTICULAR CATEGORIES OF
STOCKHOLDERS, INCLUDING STOCKHOLDERS WHO ACQUIRED SHARES PURSUANT TO THE
EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION, INDIVIDUALS
WHO ARE NOT CITIZENS OR RESIDENTS OF THE UNITED STATES, AND FOREIGN
CORPORATIONS, LIFE INSURANCE COMPANIES, TAX-EXEMPT ORGANIZATIONS, FINANCIAL
INSTITUTIONS OR ENTITIES THAT ARE OTHERWISE SUBJECT TO SPECIAL TAX TREATMENT.
8
6. PRICE RANGE OF SHARES; DIVIDENDS
The Shares are traded on The Nasdaq Stock Market's SmallCap System ("The
Nasdaq SmallCap Market") under the symbol "WNAT." The following table sets
forth, for each of the periods indicated, the high and low reported sale price
per Share as reported by The Nasdaq SmallCap Market.
MARKET
PRICE
-----------
HIGH LOW
---- ---
YEAR ENDED DECEMBER 31, 1995
First Quarter............................................. $2 $1 1/4
Second Quarter............................................ 1 7/8 1 1/2
Third Quarter............................................. 2 1/2 1 5/8
Fourth Quarter............................................ 2 1 3/8
YEAR ENDED DECEMBER 31, 1996
First Quarter............................................. $2 5/8 $1 1/2
Second Quarter............................................ 2 7/8 2 1/4
Third Quarter............................................. 4 1/8 2
Fourth Quarter............................................ 3 3/4 2 7/8
YEAR ENDED DECEMBER 31, 1997
First Quarter............................................. $3 5/8 $2 5/8
Second Quarter............................................ 3 5/8 2 3/8
Third Quarter (through September 5, 1997)................. 4 2 5/8
The Company has not paid any dividends on its Common Stock during the past
two fiscal years or the fiscal year to date.
The closing sale price of the Shares as reported by the Nasdaq SmallCap
Market was $3.625 per share on September 5, 1997, the last full day of trading
prior to the first public announcement relating to the Offer.
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; NASDAQ LISTING AND
EXCHANGE ACT REGISTRATION
The purchase of shares pursuant to the Offer will reduce the number of
Shares that might otherwise trade publicly and may reduce the number of
holders of Shares, which could adversely affect the liquidity and market value
of the remaining Shares held by stockholders other than the Purchaser. The
Purchaser cannot predict whether the reduction in the number of Shares that
might otherwise trade publicly would have an adverse or beneficial effect on
the market price for or marketability of the Shares or whether it would cause
future market prices to be greater or less than the Offer price.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of The Nasdaq Stock Market for
continued listing and may, therefore, be delisted from such stock market. The
Nasdaq Stock Market's published guidelines require that, among other things,
if the number of beneficial holders were to fall below 300, or if the number
of publicly held shares were to fall below 100,000 or there were not at least
two registered and active market makers for the shares, such shares would no
longer be "qualified" for reporting by The Nasdaq SmallCap Market.
9
If, as a result of the purchase of Shares pursuant to the Offer or
otherwise, the Shares no longer meet the requirements of the National
Association of Securities Dealers, Inc. (the "NASD") for continued inclusion
in The Nasdaq SmallCap Market or in any other tier of The Nasdaq Stock Market,
and the shares are no longer included in The Nasdaq SmallCap Market or in any
other tier of The Nasdaq Stock Market, the market for the Shares could be
adversely affected.
If The Nasdaq Stock Market were to delist the Shares, it is possible that
the Shares would trade in the over-the-counter market and that price
quotations for the Shares would be reported through other sources. The extent
of the public market for the shares and availability of such quotations would,
however, depend upon such factors as the number of holders and/or the
aggregate market value of the publicly held Shares at such time, the interest
in maintaining a market in the Shares on the part of the securities firms, the
possible termination of registration of the Shares under the Exchange Act, as
described below, and other factors.
The Shares are currently registered under the Exchange Act. Registration of
the Shares under the Exchange Act may be terminated upon application of the
Company to the SEC if the Shares are not listed on a national securities
exchange or The Nasdaq Stock Market and there are fewer than 300 record
holders of the Shares. Termination of registration of the Shares under the
Exchange Act would reduce substantially the information required to be
furnished by the Company to its stockholders and to the SEC and would make
certain provisions of the Exchange Act, such as the short-swing profit
recovery provisions of Section 16(b), the requirement of furnishing a proxy
statement in connection with stockholders' meetings pursuant to Section 14(a)
and the requirements of Rule 13e-3 under the Exchange Act with respect to
"going private" transactions no longer applicable to the Company. Furthermore,
if the Purchaser acquires a substantial number of Shares or the registration
of the Shares under the Exchange Act were to be terminated, the ability of
"affiliates" of the Company and persons holding "restricted securities" of the
Company to dispose of such securities pursuant to Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"), may be impaired or
eliminated. It is the present intention of the Purchaser to seek to cause the
Company to make an application for termination of registration of the Shares
as soon as possible following the Offer if the requirements for termination of
registration are met.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The information concerning the Company contained in this Offer to Purchase,
including financial information, has been taken from or is based upon publicly
available documents and records on file with the SEC and other public sources.
Neither Parent nor the Purchaser assumes any responsibility for the accuracy
or completeness of the information concerning the Company contained in such
documents and records or for any failure by the Company to disclose events
which may have occurred or may effect the significance or accuracy of any such
information but which were unknown to Parent or the Purchaser.
The Company is a Delaware corporation with its principal executive offices
located at 1065 East Walnut Street, Carson, California 90746. The telephone
number of the Company at such offices is (310) 886-8200.
The Company (formerly Vestro Natural Foods Inc.) is engaged in the marketing
and distribution of natural and organic food products.
The Company was originally incorporated in New York on June 13, 1947 under
the name of Project Fabrication Corporation. In 1987, the Company assumed the
name Vestro Foods Inc., in 1994, adopted the name Vestro Natural Foods Inc.
and, in 1997 adopted its present name. The Company began its program of
acquiring specialty food companies during 1987 as a result of an equity
infusion of $3,420,000 (later increased to $5,000,000) by a group of
institutional investors.
On February 5, 1988, Westbrae Natural Foods, Inc. ("Westbrae Natural"), a
California corporation, merged with and into a wholly owned subsidiary of the
Company. Westbrae Natural marketed soy beverages, condiments, pasta, and
Japanese products. This subsidiary was the first in the Company's natural
foods core.
10
Effective September 29, 1989, the Company acquired 100% of the common stock
of Little Bear Organic Foods, Inc. ("Little Bear") a national marketer of
organic snack foods such as corn chips, salsas, popcorn, taco and tostada
shells and refried beans under the trade names Little Bear and Bearitos, to
the natural foods industry.
Westbrae Natural markets an extensive line of natural food products,
including soy and rice beverages, cookies, potato chips, canned beans, soups,
pasta, condiments, tahini, ramen soups, soy sauce and rice cakes. Westbrae
Natural's products are sold nationally through specialty food distributors,
which in turn sell to retail natural food stores, specialty food stores and
mass market food stores. Westbrae Natural's products are marketed under the
trade names Westbrae Natural, WestSoy and Right from the Field.
Little Bear has been a leader in the natural food industry in the use of
organic products, i.e. those grown without the use of chemical fertilizers or
pesticides. Little Bear's product lines consist of snack foods (blue, yellow
and white corn tortilla chips, popcorn, corn chips, cheddar puffs, and
licorice) and canned products (refried beans, chili, baked beans, bean dip,
salsa). Little Bear's products are marketed under the trade names Little Bear
and Bearitos.
The Company believes there is significant potential in the expansion of
Little Bear's organic product lines as well as new Westbrae Natural products
which are organic. Little Bear and Westbrae Natural operate in the same
marketplace and sell their products through the same distribution channels for
sale nationally by natural food, specialty food and mass market retail stores.
In January, 1992, the Company consolidated the operations of Westbrae
Natural and Little Bear. The product lines continue to be sold under each
label, but the sales, distribution and administration functions are performed
by a unified operating staff.
The Company has historically been a leader in its industry in the
formulation and introduction of new products. These introductions have
provided the impetus to the Company's growth.
In September 1989, Westbrae Natural introduced a line of potato chips made
from 100% organically grown potatoes and oil. The potato chips are now
available in salted, no salt, barbecue, sour cream ranch and ripple varieties.
In March 1990, Westbrae Natural introduced Westsoy Lite, a reduced fat (1%)
soy beverage in three flavors, cocoa, vanilla, and plain. This product line
was unique in the natural food industry and has produced significant sales for
the Company.
In September 1991, Westbrae Natural introduced Westsoy Plus, a fortified
(with vitamins and calcium) soy beverage in three flavors.
In 1992, Westbrae Natural and Little Bear introduced items that fit into the
growing trend to "low fat" food products. Westbrae added a line of five Lite
Malteds to its soy beverage offerings. Little Bear brought out a Lite version
of its Cheddar Puffs.
In 1993, Westbrae Natural and Little Bear continued their high level of
product introductions with an emphasis on "fat free" and "low fat" products.
Most significantly, a new soy drink, which is both lowfat and popularly
priced, and a product line of eight flavors of fat free soups were introduced.
In 1994, Westbrae Natural introduced a rice drink as an addition to its non
dairy beverage line, as well as a nonfat soy beverage. At the end of the year
a line of reduced fat cookies in ten flavors was introduced. These cookies
were very well received in the market place and produced over $2.5 million of
net sales in their first year.
In 1995, the Company introduced corn chips in four varieties, the first in
the natural foods industry. To reinforce its commitment to lowfat and nonfat
products, the Company reformulated its soups, caramel corn and baked chips to
improve their taste while retaining their health characteristics.
11
In 1996, Westbrae Natural became the first company to sell nondairy
beverages in an aseptic half gallon size. Westbrae Natural introduced six
varieties of nondairy beverages in this size. Also introduced during the year
were Sweet Interludes shortbread cookies in four flavors, popcorn bars in two
flavors and three varieties of canned organic vegetables.
Approximately 5% of Westbrae Natural's products are currently imported
through one trading company in Japan. Westbrae Natural is subject to the risks
of currency price fluctuations on these products. During certain times of the
year certain items with long lead delivery times must be purchased in advance
and inventoried to ensure available product at reasonable prices. Some raw
materials used in the Company's products are subject to seasonal availability.
The Company uses copackers to process products to the Company's
specifications. In some product lines, the Company uses only one source. In
the past the Company has been able to change copackers without a significant
disruption of its business. However, the loss of a copacker could disrupt the
Company's supply chain of those products resulting in reduced revenue in that
product line until a replacement is found.
Westbrae Natural and Little Bear compete with a number of producers of
natural and organic food products on a national basis. The principal factors
of competition are believed to be the formulation of natural and organic
products and consumer confidence in the nutritional content of the
ingredients. The Company believes it prices its products competitively and has
a well recognized and trusted name in its marketplace.
Sales to three customers amounted to $9,126,000 (27%), $6,275,000 (18%) and
$4,728,000 (14%), respectively, of consolidated net sales in 1996. Although
sales of several of the Company's products (i.e. soups) may be affected by
seasonal usage, the Company's overall product sales do not exhibit a high
degree of seasonality. The Company does not normally have a material backlog.
The Company owns the right to certain trademarks, tradenames and service
marks used in its business.
The Company maintains ongoing product development programs relating to new
food products which it considers important to the growth of its business.
Operations are supervised by various federal, state and local regulatory
agencies, including the U.S. Department of Agriculture, U.S. Food and Drug
Administration, California Food and Agricultural Department, California Air
Resources and Solid Waste Management Boards, California Industrial Relations
Department, Air Pollution Control Board, Building Inspectors Office and Bureau
of Weights and Measures. The Company believes that it substantially complies
with pertinent environmental regulations and does not contemplate any
significant expenditures for environmental control facilities in the
foreseeable future.
Selected Financial Information. Set forth below is a summary of certain
consolidated financial information with respect to the Company, excerpted or
derived from the information contained in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1996 and the Company's Quarterly
Reports on Form 10-Q for the six month periods ended June 30, 1996 and June
30, 1997. More comprehensive financial information is included in such reports
and other documents filed by the Company with the SEC, and the following
summary is qualified in its entirety by reference to such reports and other
documents and all of the financial information (including any related notes)
contained therein. Such reports and other documents may be inspected and
copies may be obtained from the offices of the SEC in the manner set forth
below.
12
WESTBRAE NATURAL, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
SIX MONTHS
ENDED JUNE 30, FISCAL YEAR ENDED DECEMBER 31,
----------------------- -----------------------------------
1997 1996 1996 1995 1994
----------- ----------- ----------- ----------- -----------
Selected statement of operations
data
Net Sales............... $17,502,000 $17,191,000 $32,583,000 $28,836,000 $24,892,000
Gross Profit............ 6,933,000 6,498,000 12,440,000 10,462,000 8,833,000
Earnings from Continuing
Operations............. 708,000 571,000 1,203,000 602,000 538,000
Earnings (Loss) from
Continuing Operations
per Share of Common
Stock.................. $ 0.11 $ 0.09 $ 0.19 $ 0.10 $ 0.09
Selected Balance Sheet
Data
Current Assets........ $ 7,320,000 $ 7,176,000 $ 6,517,000 $ 6,159,000 $ 6,336,000
Property, Plant and
Equipment, Net....... 156,000 174,000 169,000 156,000 166,000
Other Assets.......... 6,877,000 7,238,000 7,084,000 7,452,000 7,772,000
----------- ----------- ----------- ----------- -----------
Total Assets........ $14,353,000 $14,588,000 $13,775,000 $13,767,000 $14,276,000
Current Liabilities..... $ 3,607,000 $ 4,368,000 $ 3,348,000 $ 3,691,000 $ 4,165,000
Long-term obligations... 1,524,000 2,338,000 1,913,000 2,765,000 3,402,000
Shareholders' Equity.... 9,222,000 7,882,000 8,514,000 7,311,000 6,709,000
----------- ----------- ----------- ----------- -----------
Total Liabilities and
Shareholders' Equity... $14,353,000 $14,558,000 $13,775,000 $13,767,000 $14,276,000
Available Information. The Company is subject to the information filing
requirements of the Exchange Act and is required to file reports and other
information with the SEC relating to its business, financial condition and
other matters. Information, as of particular dates, concerning the Company's
directors and officers, their remuneration, options granted to them, the
principal holders of the Company's securities and any material interest of
such persons in transactions with the Company is required to be described in
proxy statements distributed to the Company's stockholders and filed with the
SEC. These reports, proxy statements and other information should be available
for inspection and copying at the SEC's office at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and also should be available for inspection and
copying at the regional offices of the SEC located at Seven World Trade
Center, New York, New York 10048 and Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of this material
may also be obtained by mail, upon payment of the SEC's customary fees, from
the SEC's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549.
The SEC also maintains an internet web site at http://www.sec.gov that
contains reports, proxy statements and other information.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT
The Purchaser is a newly incorporated Delaware corporation and a wholly
owned subsidiary of Parent. To date the Purchaser has not conducted any
business other than in connection with the Offer and the Merger. The principal
executive offices of the Purchaser are located at 50 Charles Lindbergh
Boulevard, Uniondale, New York 11553. The telephone number at such offices is
(516) 237-6200.
The name, citizenship, business address, present principal occupation or
employment and five-year employment history of each of the directors and
executive officers of the Purchaser and Parent are set forth in Schedule I
hereto.
13
Until immediately prior to the time the Purchaser purchases Shares pursuant
to the Offer, it is not anticipated that the Purchaser will have any
significant assets or liabilities or engage in activities other than those
incident to its formation and capitalization and the transactions contemplated
by the Offer and the Merger. Because the Purchaser is a newly formed
corporation and has minimal assets and capitalization, no meaningful financial
information regarding the Purchaser is available.
Parent is a Delaware corporation with its principal office located at 50
Charles Lindbergh Boulevard, Uniondale, New York 11553. The telephone number
at such offices is (516) 237-6200.
Except as set forth in this Offer to Purchase, none of the Purchaser or
Parent (collectively, the "Purchaser Entities"), or, to the best knowledge of
any of the Purchaser Entities, any of the persons listed on Schedule I, has
any contract, arrangement, understanding or relationship with any other person
with respect to any securities of the Company, including, but not limited to,
any contract, arrangement, understanding or relationship concerning the
transfer or the voting of any securities of the Company, joint ventures, loan
or option arrangement, puts or calls, guarantees of loans, guarantees against
loss or the giving or withholding of any of the Purchaser Entities, any of the
persons listed on Schedule I, has had any business relationships or
transactions with the Company or any of its executive officers, directors or
affiliates that would require reporting under the rules of the SEC. Except as
set forth in this Offer to Purchase, there have been no contacts, negotiations
or transactions between the Purchaser Entities, or their respective
subsidiaries or, to the best knowledge of any of the Purchaser Entities, any
of the persons listed on Schedule I, and the Company or its affiliates,
concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, election of directors or a sale or other transfer
of a material amount of assets. Except as set forth in this Offer to Purchase,
none of the Purchaser Entities or, to the best knowledge of any of the
Purchaser Entities, any of the persons listed on Schedule I, beneficially owns
any Shares or has effected any transactions in the Shares in the past 60 days.
10. SOURCE AND AMOUNT OF FUNDS
The total amount required by the Purchaser to acquire all outstanding Shares
pursuant to the Offer and the Merger, to consummate the transactions
contemplated by the Merger Agreement and to pay fees and expenses related to
the Offer and the Merger is estimated to be approximately $27.6 million. The
Purchaser will obtain all such funds through a capital contribution from
Parent. Parent intends to obtain such funds pursuant to a term loan and a
revolving credit facility (together, the "Facilities") contemplated by a
commitment letter from IBJ Schroder dated September 11, 1997 (the "Financing
Commitment"). The Facilities will also be used by the Parent to provide
working capital and to fund future acquisitions. IBJ Schroder intends to
syndicate the Facilities to other financial institutions ("Lenders").
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE FINANCING CONDITION.
THE OBLIGATIONS OF IBJ SCHRODER TO FUND UNDER THE FINANCING COMMITMENT ARE
SUBJECT TO CERTAIN CONDITIONS THAT ARE SUMMARIZED BELOW. IF ANY SUCH CONDITION
IS NOT SATISFIED OR WAIVED, AND AS A RESULT, THE FINANCING CONTEMPLATED BY THE
FINANCING COMMITMENT IS NOT FUNDED, THEN THE FINANCING CONDITION WILL NOT BE
SATISFIED AND THE PURCHASER WILL NOT BE OBLIGATED TO ACCEPT FOR PAYMENT OR TO
PAY FOR SHARES TENDERED PURSUANT TO THE OFFER.
FINANCING COMMITMENT. The following is a summary of certain provisions of
the Financing Commitment. The summary is qualified in its entirety by
reference to the full text thereof which is incorporated herein by reference
and a copy of which has been filed with the SEC as an exhibit to Parent's and
the Purchaser's Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-
1"). The Financing Commitment may be examined and copies may be obtained at
the places and in the manner set forth in Section 8 of this Offer to Purchase.
The Facilities will consist of two loans totaling $40.0 million (the
"Commitment Amount"), in the form of a $30 million secured term loan
("Facility A") and a $10 million secured borrowing base revolving credit
facility ("Facility B"). The Facilities will be guaranteed by the existing and
future subsidiaries of Parent, including the Purchaser (the "Guarantors").
Consummation of the Facilities is subject to, among other things, the
negotiation and execution of a definitive financing agreement (the "Definitive
Financing Agreement") on terms satisfactory to the parties thereto. There can
be no assurance that the terms set forth below will be contained in such
agreement or that such agreement will not contain additional provisions.
14
Facility A. The Financing Commitment provides that the Parent may borrow up
to $30.0 million at the closing of the Offer and the Merger (the "Closing") to
fund the Offer and the Merger, consummate the transactions contemplated
thereby, refinance certain indebtedness, retire certain stock options and to
pay certain related fees and expenses. Facility A provides for a single
borrowing at the Closing and no subsequent borrowings thereafter. The final
maturity of Facility A will be six years after the date of Closing (the
"Closing Date") and will be paid in quarterly installments beginning December
31, 1997. Outstanding amounts under Facility A will bear interest at a rate
equal to, at Parent's option, either (i) the sum of the Alternate Base Rate
plus 0.75% or (ii) the sum of the Eurodollar Rate plus 2.75%.
Facility B. The Financing Commitment provides that the Parent may borrow up
to $10.0 million from time to time, subject to borrowing base limitations, to
provide for ongoing working capital needs and to fund the purchase price,
subject to certain restrictions, of future acquisitions. Funds may be drawn,
reborrowed and redrawn from the Closing Date through the Facility's maturity
six years from the Closing Date, at which time the facility will be repaid in
full. Outstanding amounts under Facility B will bear interest at a rate equal
to, at Parent's option, either (i) the sum of the Alternate Base Rate plus
0.75% or (ii) the sum of the Eurodollar Rate plus 2.75%.
Security. The Facilities will be secured by a first priority perfected
security interest in all of the Parent's and Guarantors' present and future
accounts receivable, general intangibles, contract rights, all rights to
payment of money, instruments, documents, chattel paper, inventory, equipment,
furniture, fixtures, licenses, trademarks, trade names, patents, copyrights
and other assets (collectively, the "Collateral"). In addition, all the shares
of capital stock of the Guarantors will be pledged to IBJ Schroder. The
proceeds and products of the Collateral will not be subject to claims, liens
or encumbrances except in IBJ Schroder's favor or with IBJ Schroder's written
consent.
Fees. The Parent will also pay IBJ Schroder certain commitment, facility and
other fees, reimburse certain expenses and provide certain indemnities. The
Purchaser and Parent believe that the material terms of such fees and
reimbursement and indemnification obligations are customary for commitments of
this type.
Prepayments. The Definitive Financing Agreement will provide for mandatory
prepayments (i) equal to 75% of excess cash flow determined on a year end
basis, (ii) upon certain asset sales, (iii) with proceeds from any equity
offering in an amount equal to 50% of the net proceeds of such offering and
(iv) with certain insurance proceeds. In addition, the Facilities may be
voluntarily prepaid by Parent.
Conditions to Lending. The Financing Commitment conditions the Facilities
upon, among other things, (i) loan structure and documentation satisfactory to
IBJ Schroder, (ii) satisfactory opinion of counsel to Parent at Closing as to
certain matters, (iii) receipt of promissory notes from the Parent, (iv)
satisfactory completion of due diligence, (v) evidence that the credit parties
are in compliance with pertinent Federal, state and local regulations, (vi)
documentation regarding waiver of jury trial and consequential damages, (vii)
payment of fees and expenses, (viii) no material adverse change in the
financial condition, business, operations, or prospects of Parent and the
Guarantors (the "Credit Parties"), (ix) receipt of current SEC filings from
Parent and the Company, (x) receipt of annual forecasts from the Parent and
the Company, (xi) customary representations and warranties, (xii) receipt of
requested third party consents and the evidence of issuance of certain
insurance policies, (xiii) grant of the right to sell participations and
assign interests in the Facilities, (xiv) approval of the corporate structure
of the Credit Parties, (xv) satisfaction with acquisition documents and
certain material contracts of the Company, (xvi) approval of expenses and
maintenance by Parent and Guarantors of minimum liquidity, (xvii) review of
regulatory issues and (xviii) certain restrictions with respect to Parent's
subordinated debt.
Covenants. The Financing Commitment provides that covenants in the
Definitive Financing Agreement will include but not be limited to the
following: maintenance of corporate existence, payment of indebtedness and
taxes when due, financial reporting requirements (on a consolidated and
consolidating basis for the Credit Parties), delivery of certificates of non-
default, current or quick ratio, incrementing net worth, earnings before
interest and taxes over interest ratio, debt to net worth ratio, fixed charge
coverage, excess cash flow recapture,
15
limitation on dividends and stock repurchases, limitation on capital
expenditures, restriction and quality standards with respect to investments,
limitations on other debt, no additional liens or guarantees other than the
permitted liens, no change in nature of business, limitation on mergers or
acquisitions, limitation on purchase of assets outside of the ordinary course
of business, no change in fiscal year, restrictions on sale of assets, no
affiliate transaction other than in the normal course of business as presently
conducted.
Parent anticipates that indebtedness incurred to fund the Offer and the
Merger will be repaid from a variety of sources, which may include, but may
not be limited to, funds generated internally by Parent and its affiliates,
bank refinancing, and the public or private sale of equity or debt securities.
Decisions concerning the method of repayment will be made based on Parent's
review from time to time of the feasibility of particular actions and on
prevailing interest rates and market conditions.
11. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY
In June 1994, Company approached Parent regarding a possible acquisition.
Upon further discussion, the Company agreed to provide to Parent certain
information regarding the Company. Parent and the Company entered into a
confidentiality agreement dated June 27, 1994 preceding Parent's review of
certain information concerning the Company.
In early 1995, Parent made a non-binding offer to purchase the Company,
which was terminated by mutual consent of the parties.
In March 1997, Parent and the Company renewed discussions relating to the
possible acquisition of the Company by Parent.
Between June and August 1997, representatives of Parent met with
representatives of the Company to discuss the Company's business, valuation
parameters of the Company and to discuss generally the terms and conditions of
a possible transaction.
Parent and Company entered into a second confidentiality agreement dated
August 20, 1997 preceding Parent's review of certain information concerning
the Company.
On September 4, 1997, the Purchaser presented the Company with a non-binding
letter of intent which generally set forth the terms and conditions for the
proposed acquisition of the Company. The Company executed the letter of intent
which provided, among other things, that the Company negotiate exclusively
with Parent regarding Parent's proposed acquisition, subject to the fiduciary
duty of the Company's Board of Directors and that the Stockholders sign a
Stockholders Agreement providing for the sale of Shares owned by them to
Parent, through a tender of such Shares in the Offer or otherwise.
On September 5, 1997, representatives of Parent and representatives of the
Company began negotiating the terms of a definitive Merger Agreement and a
definitive Stockholders Agreement.
16
Parent issued a press release on September 8, 1997 announcing the execution
of the letter of intent and setting forth the terms of the Offer.
Negotiations between Parent and the Company continued through September 10,
1997, culminating in Parent and the Company agreeing upon a form of Merger
Agreement and a form of Stockholders Agreement.
A meeting of the Board of Directors of the Company was held on September 10,
1997, at which the definitive Merger Agreement and Stockholders Agreement were
unanimously approved by the Board of Directors of the Company. Meetings of the
Boards of Directors of Parent and the Purchaser were held on September 11,
1997, at which the Merger Agreement and Stockholders Agreement were approved
by the Boards of Directors of Parent and the Purchaser. Following this
approval, the Merger Agreement and the Stockholders Agreement were executed,
and the Offer was commenced on September 12, 1997.
12. PURPOSE OF THE OFFER, MERGER, MERGER AGREEMENT AND STOCKHOLDERS
AGREEMENT
The purpose of the Offer, the Merger, the Merger Agreement and the
Stockholder Agreement is to enable Parent to acquire control of, and the
entire equity interest in, the Company. Upon consummation of the Merger, the
Company will become a subsidiary of Parent. The Offer and the Stockholder
Agreement are intended to increase the likelihood that the Merger will be
effected.
MERGER AGREEMENT. The following is a summary of certain provisions of the
Merger Agreement. The summary is qualified in its entirety by reference to the
full text thereof which is incorporated herein by reference and a copy of
which has been filed with the SEC as an exhibit to Parent's and the
Purchaser's Schedule 14D-1. The Merger Agreement may be examined and copies
may be obtained at the places and in the manner set forth in Section 8 of this
Offer to Purchase.
The Offer. The Merger Agreement provides that, subject to the provisions of
the Merger Agreement, as promptly as practicable but in no event later than
five business days after the announcement of the execution of the Merger
Agreement, the Purchaser will, and Parent will cause the Purchaser to,
commence the Offer. The Merger Agreement provides that the obligation of the
Purchaser to, and of Parent to cause the Purchaser to, accept for payment, and
pay for, any shares of Common Stock tendered pursuant to the Offer will be
subject to the (i) the Minimum Condition, (ii) the Financing Condition and
(iii) conditions set forth in "Conditions to the Offer" below and to the other
conditions of the Merger Agreement. On the terms and subject to the conditions
of the Offer and the Merger Agreement, the Purchaser will, and Parent will
cause the Purchaser to, pay for all shares of Common Stock validly tendered
and not withdrawn pursuant to the Offer that the Purchaser becomes obligated
to purchase pursuant to the Offer as soon as practicable after the expiration
of the Offer. The Purchaser expressly reserves the right to modify the terms
of the Offer and to waive any condition of the Offer, except that, without the
consent of the Company, the Purchaser will not (i) reduce the number of shares
of Common Stock subject to the Offer, (ii) reduce the price per share of
Common Stock to be paid pursuant to the Offer, (iii) modify or add to the
conditions set forth in "Conditions to the Offer" below or otherwise amend the
Offer in any manner materially adverse to the Company's stockholders, (iv)
except as provided in the next two sentences, extend the Offer, or (v) change
the form of consideration payable in the Offer. Notwithstanding the foregoing,
the Purchaser may, without the consent of the Company, (i) extend the Offer
for a period of not more than 10 business days beyond the initial expiration
date of the Offer (which initial expiration date will be 20 business days
following commencement of the Offer), if on the date of such extension less
than 90% of the outstanding shares of Common Stock have been validly tendered
and not properly withdrawn pursuant to the Offer, (ii) extend the Offer from
time to time if at the initial expiration date or any extension thereof the
Minimum Condition or any of the other conditions to the Purchaser's obligation
to purchase shares of Common Stock set forth in paragraphs (a), (b) and (e) of
"Conditions to the Offer" below will not be satisfied or waived, until such
time as such conditions are satisfied or waived, (iii) extend the Offer for
any period required by any rule, regulation, interpretation or position of the
SEC or the staff thereof applicable to the Offer and (iv) extend the Offer for
any reason for a period of not more than 10 business days beyond the latest
expiration date that would otherwise be permitted under clause (i), (ii) or
(iii) of this sentence. In addition, the Purchaser will at the request of the
Company extend the Offer for five business days if at any scheduled expiration
date of the Offer any of the conditions to the Purchaser's obligation to
purchase shares of Common Stock will not be satisfied; provided, however, that
the Purchaser will not be required to extend the Offer beyond November 30,
1997.
17
The Merger. The Merger Agreement provides that following the satisfaction or
waiver of the conditions described below under "Conditions to the Merger" and
in accordance with the DGCL, the Purchaser will be merged with and into the
Company, and each then outstanding Share (other than Shares owned by the
Company or by any subsidiary of the Company and Shares owned by Parent, the
Purchaser or any other subsidiary of Parent or held by stockholders, if any,
who are entitled to and who properly exercise dissenters' rights under the
DGCL), will be converted into the right to receive an amount in cash equal to
the price per Share paid pursuant to the Offer, without interest.
Approval of Company Stockholders. If required by applicable law in order to
consummate the Merger, the Company will duly call, give notice of, convene and
hold a special meeting (the "Special Meeting") of its stockholders as soon as
practicable following the consummation of the Offer for the purpose of
considering and taking action upon the Merger Agreement and the Merger. In
addition to receiving notice of such Special Meeting, stockholders would
receive a Proxy Statement (the "Proxy Statement"), soliciting the vote of the
stockholders of the Company with respect to the Merger Agreement and the
Merger at the Special Meeting. Section 253 of the DGCL would permit the Merger
to occur without a vote of the Company's stockholders (a "short-form merger")
if the Purchaser were to acquire at least 90% of all of the outstanding Shares
in the Offer. If the Purchaser acquires 90% or more of the outstanding Shares
in the Offer, the Purchaser intends to cause the Merger to occur as a short-
form merger.
Conditions to the Merger. The Merger Agreement provides that the Merger is
subject to the satisfaction or waiver of the following conditions: (1) the
Merger Agreement shall have been approved and adopted by the requisite vote of
the holders of the Shares, if required by applicable law, in order to
consummate the Merger, (2) no statute, rule or regulation shall have been
enacted or promulgated by any governmental authority which prohibits the
consummation of the Merger; and there shall be no order or injunction of a
court of competent jurisdiction in effect precluding consummation of the
Merger and (3) Parent, the Purchaser or their affiliates shall have purchased
Shares pursuant to the Offer, except that this condition shall not apply if
Parent, the Purchaser or their affiliates shall have failed to purchase Shares
pursuant to the Offer in breach of their obligations under the Merger
Agreement.
Termination of the Merger Agreement. The Merger Agreement may be terminated
and the transactions contemplated therein may be abandoned at any time prior
to the Effective Time, whether before or after stockholder approval thereof:
(1) by the mutual written consent of Parent and the Company; (2) by either of
the Company or Parent (a) if the Offer will have expired without any Shares
being purchased therein, other than by a party whose failure to fulfill an
obligation under the Merger Agreement was the cause of the failure of Parent
or the Purchaser to purchase such shares, (b) if any Federal, state or local
government or any court, administrative or regulatory agency or commission or
other governmental authority or agency, domestic or foreign (a "Governmental
Entity") will have issued an order, decree or ruling or taken any other action
(which order, decree, ruling or other action the parties hereto will use their
reasonable efforts to lift), which permanently restrains, enjoins or otherwise
prohibits the acceptance for payment of, or payment for, Shares pursuant to
the Offer or the Merger and such order, decree, ruling or other action will
have become final and non-appealable or (c) if the Offer has not been
consummated prior to November 30, 1997; (3) by the Company if (a) to the
extent described under the second paragraph under "Takeover Proposals," the
Board of Directors of the Company (the "Company Board") approves or recommends
a Superior Proposal (as defined below) and (b) the Company has paid to the
Parent an amount in cash equal to the sum of the Termination Fee (as defined
below); or (4) by Parent (a) if, due to an occurrence, not involving a breach
by Parent or the Purchaser of their obligations hereunder, which makes it
impossible to satisfy any of the conditions set forth in "Conditions to the
Offer" below, (b) if prior to the purchase of Shares pursuant to the Offer,
the Company will have breached any representation, warranty, covenant or other
agreement contained in the Merger Agreement which (I) would give rise to the
failure of a condition set forth in "Conditions to the Offer" below and (II)
cannot be or has not been cured, in all material respects, within 30 days
after the giving of written notice to the Company or (c) if either Parent or
the Purchaser is entitled to terminate the Offer as a result of the occurrence
of any event set forth in paragraphs (d), (f) and (g) of "Conditions to the
Offer" below.
18
Takeover Proposals; No Solicitation. The Company has agreed in the Merger
Agreement that it will not, nor will it permit any officer or director of the
Company or any officer or director of its subsidiaries to, nor will it
authorize or permit, any officer, director or employee of, or any investment
banker, attorney or other advisor or representative of, the Company or any of
its subsidiaries to, (1) solicit, initiate or encourage the submission of, any
Takeover Proposal (as defined below), (2) except as provided in the next
paragraph, enter into any agreement with respect to any Takeover Proposal or
(3) participate in any discussions or negotiations regarding, or furnish to
any person any non-public information with respect to the Company, or take any
other action to facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Takeover Proposal;
provided, however, that prior to the acceptance for payment of shares of
Common Stock pursuant to the Offer, to the extent required by the fiduciary
obligations of the Company Board, as determined in good faith by a majority of
the members thereof based on the written advice of outside counsel, the
Company may, in response to an unsolicited written bona fide Takeover Proposal
that contains no financing condition from a person that the Company Board
reasonably believes has the financial ability to make a Superior Proposal,
furnish non-public information with respect to the Company to such person
pursuant to a customary confidentiality agreement and participate in
discussions or negotiations with such person. For purposes of the Merger
Agreement, "Takeover Proposal" means any written proposal that contains no
financing condition for a merger or other business combination involving the
Company or any of its subsidiaries or any proposal or offer to acquire in any
manner, directly or indirectly, more than 20% of the equity securities of the
Company or more than 20% of the Company's consolidated total assets, other
than the transactions contemplated in the Merger Agreement.
The Merger Agreement provides that neither the Company Board nor any
committee thereof will (1) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Parent or the Purchaser, the approval or
recommendation by the Company Board or any such committee of the Offer, the
Merger Agreement or the Merger or (2) approve or recommend, or propose to
approve or recommend, any Takeover Proposal. Notwithstanding the foregoing,
the Company Board, to the extent required by the fiduciary obligations
thereof, as determined in good faith by a majority of the members thereof
based on the written advice of outside counsel, may approve or recommend (and,
in connection therewith withdraw or modify its approval or recommendation of
the Offer, the Merger Agreement or the Merger) a Superior Proposal. For
purposes of the Merger Agreement, "Superior Proposal" means a bona fide
Takeover Proposal made by a third party on terms which the Company Board
determines in its good faith judgment to be more favorable to the Company's
stockholders than the Offer and the Merger.
The Merger Agreement provides that nothing contained therein shall prohibit
the Company and its Board of Directors from complying with Rule 14e-2 under
the Exchange Act, or issuing a communication meeting the requirements of Rule
14d-9(e) under the Exchange Act, with respect to any tender offer; provided,
however, that the Company may not, except as permitted by the second preceding
paragraph, withdraw or modify its position, with respect to the Offer or the
Merger or approve or recommend, or propose to approve or recommend, a takeover
proposal.
Fees and Expenses. The Merger Agreement provides that the Company will pay
to Parent, upon demand a fee of $1 million (the "Termination Fee"), payable in
same day funds, if (1) after the date of the Merger Agreement, any person or
"group" (within the meaning of Section 13(d)(3) of the Exchange Act) will have
publicly made a Takeover Proposal, (2) the Offer will have remained open until
at least the scheduled expiration date immediately following the date such
Takeover Proposal is made (and in any event for at least ten business days
following the date such Takeover Proposal is made), (3) the Minimum Condition
will not have been satisfied at the expiration of the Offer, (4) the Merger
Agreement will thereafter be terminated pursuant to its terms and (5) the
Company Board, within 10 business days after the public announcement of the
Takeover Proposal, either fails to recommend against acceptance of such
Takeover Proposal by the Company's stockholders or announces that it takes no
position with respect to the acceptance of such Takeover Proposal by the
Company's stockholders. The Merger Agreement further provides that if (1) the
Company will terminate the Merger Agreement for reasons described in clause
(3) under "Termination of the Merger Agreement" above,
19
(2) Parent will terminate the Merger Agreement for reasons described in clause
(4)(c) under "Termination of the Merger Agreement" above, or (3) either the
Company or Parent terminates the Merger Agreement for reasons described in
clause (2)(a) under "Termination of the Merger Agreement" above as a result of
the existence of any condition set forth in paragraph (d) of "Conditions to
the Offer" below; the Company will pay to Parent, an amount (the "Expense
Reimbursement Amount"), equal to $200,000, which will be payable in same day
funds. The estimated Amount will be paid concurrently with any such
termination. Parent shall reimburse the Company to the extent such Expense
Reimbursement Amount exceeds its actual expenses. Notwithstanding the
foregoing, the aggregate payment by the Company for reason described in this
paragraph above will not exceed $1 million. If Parent terminates the Merger
Agreement upon failure by the Parent to satisfy the Financing Condition for
reasons not attributable to the Company, Parent shall pay to the Company an
amount equal to $100,000.
Conduct of Business by the Company. The Merger Agreement provides that
during the period from the date of the Merger Agreement to the earlier of the
Effective Time of the Merger and the appointment or election of the
Purchaser's designees to the Company Board pursuant to the terms of the Merger
Agreement (such earlier time, the "Control Time"), the Company will, and will
cause its subsidiaries to, carry on their respective businesses in the usual,
regular and ordinary course in substantially the same manner as heretofore
conducted and, to the extent consistent therewith, use all reasonable efforts
to preserve intact their current business organizations, keep available the
services of their current officers and employees and preserve their
relationships with customers, suppliers, licensors, licensees, distributors
and others having business dealings with them to the end that their goodwill
and ongoing businesses will be unimpaired at the Effective Time. Without
limiting the generality of the foregoing, except as contemplated by the Merger
Agreement or otherwise approved in writing by Parent, during the period from
the date of the Merger Agreement to the Control Time, the Company will not,
and will not permit any of its subsidiaries to: (1)(a) declare, set aside or
pay any dividends on, or make any other distributions in respect of, any of
its capital stock, other than dividends and distributions by any direct or
indirect wholly owned subsidiary of the Company to its parent, (b) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock or (c) purchase, redeem or otherwise acquire
any shares of capital stock of the Company or any of its subsidiaries or any
other securities thereof or any rights, warrants or options to acquire any
such shares or other securities; (2) issue, deliver, sell, pledge or otherwise
encumber any shares of its capital stock (including shares issued and held in
treasury), any other voting securities or any securities convertible into, or
any rights, warrants or options to acquire, any such shares, voting securities
or convertible securities, other than the issuance of Common Stock upon the
exercise of Company Options outstanding on the date of the Merger Agreement in
accordance with their present terms; (3) amend its certificate of
incorporation, by-laws or other comparable charter or organizational
documents; (4) acquire or agree to acquire (a) by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, joint venture,
association or other business organization or division thereof or (b) any
assets that are material, individually or in the aggregate, to the Company and
its subsidiaries taken as a whole, except purchases of inventory in the
ordinary course of business consistent with past practice; (5) sell, lease,
license, mortgage or otherwise encumber or subject to any Lien or otherwise
dispose of any of its properties or assets, except sales of inventory in the
ordinary course of business consistent with past practice; (6)(a) incur any
indebtedness for borrowed money or guarantee any such indebtedness of another
person, issue or sell any debt securities or warrants or other rights to
acquire any debt securities of the Company or any of its subsidiaries,
guarantee any debt securities of another person, enter into any "keep well" or
other agreement to maintain any financial statement condition of another
person or enter into any arrangement having the economic effect of any of the
foregoing, except for short-term borrowings incurred in the ordinary course of
business consistent with past practice and pursuant to existing agreements not
to exceed in the aggregate $250,000, or (b) make any loans, advances or
capital contributions to, or investments in, any other person, other than to
the Company or any direct or indirect wholly owned subsidiary of the Company
except for travel advances and loans to employees in amounts not to exceed
$10,000 in the aggregate; (7) make or agree to make any new capital
expenditure or expenditures which, individually, is in excess of $50,000 or,
in the aggregate, are in excess of $250,000; (8) (a) grant to any officer of
the Company or any of its subsidiaries any increase in compensation, except as
was required under employment agreements in effect as of December 31, 1996,
(b) grant to any officer of the
20
Company or any of its subsidiaries any increase in severance or termination
pay, except as was required under employment, severance or termination
agreements in effect as of December 31, 1996, (c) enter into any employment,
severance or termination agreement with any officer of the Company or any of
its subsidiaries or (d) amend any benefit plan in any respect; (9) make any
change in accounting methods, principles or practices materially affecting the
Company's assets, liabilities or business, except insofar as may have been
required by a change in generally accepted accounting principles; (10) pay,
discharge, settle or satisfy any material claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge, settlement or satisfaction, in the ordinary
course of business consistent with past practice or in accordance with their
terms; (11) except in the ordinary course of business, modify, amend or
terminate any material contract or waive or release or assign any material
rights or claims; (12) make any material tax election or settle or compromise
any material income tax liability; or (13) authorize any of, or commit or
agree to take any of, the foregoing actions. In addition, the Merger Agreement
provides the Company will not, and will not permit any of its subsidiaries to,
take any action that would, or that could reasonably be expected to, result in
(i) any of the representations and warranties of the Company set forth in the
Merger Agreement that are qualified as to materiality becoming untrue, (ii)
any of such representations and warranties that are not so qualified becoming
untrue in any material respect or (iii) except as otherwise permitted by the
terms of the Merger Agreement, any of the conditions to the Offer set forth
under "Conditions to the Offer" below, or any of the conditions to the Merger
set forth under "Conditions to the Offer" above, not being satisfied.
Pursuant to the Merger Agreement, the Company shall not, and shall not
permit any of its subsidiaries to, take any action that would or that could
reasonably be expected to result in (1) any of its representations and
warranties set forth in the Merger Agreement that are qualified as to
materiality becoming untrue, (2) any of such representations and warranties
that are not so qualified becoming untrue in any material respect or (3)
except as otherwise permitted by the provisions of the Merger Agreement
described above under "Takeover Proposals", any of the conditions to the Offer
or to the Merger not being satisfied.
In addition, the Merger Agreement provides that the Company shall promptly
advise the Purchaser orally and in writing of any change or event having, or
which, insofar as can reasonably be foreseen, would have, a material adverse
effect on the Company and its subsidiaries taken as a whole.
Board of Directors of the Company. The Merger Agreement provides that upon
the purchase and payment by Parent or the Purchaser of Shares representing at
least a majority of the outstanding Shares on a fully diluted basis, Parent
shall be entitled to designate such number of directors on the Board of
Directors of the Company which represents a percentage of the Board of
Directors of the Company equaling the percentage of Shares purchased. If
requested by Parent, the Company shall cause such persons designated by Parent
to constitute at least the same percentage of each committee of the Board of
Directors of the Company and each board of directors of each subsidiary of the
Company.
The Merger Agreement further provides that in the event that Parent's
designees are elected to the Board of Directors of the Company prior to the
Effective Time of the Merger, until the Effective Time of the Merger the Board
of Directors of the Company shall have at least two directors who are
directors as of the date of the Merger Agreement. In such event, the
affirmative vote of a majority of the directors not designated by Parent shall
be required to (i) amend or terminate the Merger Agreement, (ii) exercise or
waive any of the Company's rights, benefits or remedies under the Merger
Agreement, or (iii) take any other action by the Board of Directors of the
Company under or in connection with the Merger Agreement.
Stock Options. Immediately prior to the Effective Time, each outstanding
Company Option granted under the Option Plans or otherwise shall be
surrendered to the Company and shall be forthwith cancelled and the Company
shall pay to each holder of a Company Option, by check, an amount equal to (i)
the product of the number of the Shares which are issuable upon exercise of
such Company Option, multiplied by the Offer Price, less (ii) the aggregate
exercise price of such Company Option. Except as may be otherwise agreed to by
Parent or the Purchaser and the Company, the Company's Option Plans shall
terminate as of the Effective Time and the provisions in any other plan,
program or arrangement providing for the issuance or grant of any other
interest in respect of the capital stock of the Company or any of its
subsidiaries shall be deleted as of the Effective Time and no holder of
Company Options or any participant in the Option Plans or any other plans,
programs or
21
arrangements shall have any rights thereunder to acquire any equity securities
of the Company, the Surviving Corporation or any subsidiary thereof.
Subordinated Debt. Immediately prior to the Effective Time, Parent will
cause the Company to redeem all of the Company's 8% Senior Subordinated Notes
A and 8% Senior Subordinated Notes B in an amount equivalent to the
outstanding principal amount thereof and accrued and unpaid interest thereon
but not in excess of $2.2 million.
Indemnification. The Purchaser and Parent have agreed in the Merger
Agreement that all rights to indemnification for acts or omissions occurring
prior to the Effective Time existing on the date of the Merger Agreement in
favor of the current or former directors or officers of the Company and its
subsidiaries as provided under certain indemnification agreements and in their
respective certificates of incorporation or by-laws shall survive the Merger
and shall continue in full force and effect in accordance with their terms for
a period of not less than six years from the Effective Time.
Reasonable Notification. The Merger Agreement provides that, on the terms
and subject to the conditions of the Merger Agreement, each of the parties
shall use its best efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Offer and the
Merger and the other transactions contemplated by the Operative Agreements.
Procedure for Termination, Amendment, Extension or Waiver. The Merger
Agreement provides that in the event the Purchaser's designees are appointed
or elected to the Board of Directors of the Company as described above under
"Board of Directors," after the acceptance for payment of Shares pursuant to
the Offer and prior to the Effective Time, the affirmative vote of a majority
of the Independent Directors shall be required for the Company to amend or
terminate the Merger Agreement, exercise or waive any of its rights or
remedies under the Merger Agreement or extend the time for performance of the
Purchaser's and Parent's respective obligations under the Operative
Agreements.
Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and the Purchaser with
respect to, among other things, its organization, capitalization, financial
statements, public filings, conduct of business, employee benefit plans, labor
relations and employment matters, compliance with laws, subsidiaries, tax
matters, litigation, vote required to approve the Merger Agreement,
undisclosed liabilities, information supplied, the absence of any material
adverse changes in the Company since December 31, 1996, brokers, fees and
expenses, intellectual property, environmental protection, transactions with
affiliates and contracts.
THE STOCKHOLDERS AGREEMENT. As an inducement and a condition to entering
into the Merger Agreement, Parent required that the Stockholders agree, and
the Stockholders agreed, to enter into the Stockholders Agreement.
The following is a summary of the material terms of the Stockholders
Agreement. This summary is not a complete description of the terms and
conditions thereof and is qualified in its entirety by reference to the full
text thereof which is incorporated herein by reference and a copy of which has
been filed with the Commission as an exhibit to the Schedule 14D-1. The
Stockholders Agreement may be examined, and copies thereof may be obtained, as
set forth in Section 8 above.
Tender of Shares. Pursuant to the Stockholders Agreement, the Stockholders
have agreed to tender all of the Shares beneficially owned by them at the
Offer Price and in accordance with the terms and conditions of the Offer,
representing in the aggregate of 4,098,654 Shares, or approximately 68.9% of
the currently outstanding Shares of the Company. The effect of the
Stockholders agreeing to tender certain Shares pursuant to the Stockholders
Agreement is that the Purchaser would satisfy the Minimum Condition.
Voting. Pursuant to the Stockholders Agreement, the Stockholders have
agreed, for a period ending upon the earlier of the consummation of the Merger
and four-months following the termination of the Merger
22
Agreement in accordance with its terms (the "Term"), at any meeting of the
holders of Shares, however called, or in connection with any written consent
of the holders of Shares, to vote (or cause to be voted) the Shares (if any)
then held of record or beneficially owned by such Stockholder, (i) in favor of
the Merger, the execution and delivery by the Company of the Merger Agreement
and the approval of the terms thereof and each of the other actions
contemplated by the Merger Agreement and the Stockholders Agreement and any
actions required in furtherance thereof, and (ii) against any Takeover
Proposal and against any action or agreement that would impede, frustrate,
prevent or nullify the Merger Agreement, or result in a breach in any respect
of any covenant, representation or warranty or any other obligations or
agreement of the Company under the Merger Agreement or which would result in
any of the conditions set forth in "Conditions to the Offer" below or under
"Conditions to the Merger" above not being fulfilled; provided, however, that
nothing contained in the Stockholders Agreement shall be construed as
requiring any Stockholder who also is a director of the Company to propose,
endorse, approve or recommend the Merger Agreement or any transaction
contemplated thereby in such Stockholder's capacity as a director of the
Company.
Pursuant to the Stockholders Agreement, the Stockholders have further
agreed, during the Term, that the Stockholders shall not (i) tender, or
consent to any tender of, any or all such Stockholder's Shares, pursuant to
any Acquisition Proposal, (ii) transfer, or consent to any transfer of, any or
all of such Stockholder's Shares, Company Options or any interest therein,
(iii) enter into any contract, option or other agreement or understanding with
respect to any transfer of any or all of such Shares, Company Options or any
interest therein, (iv) grant any proxy, power-of-attorney or other
authorization in or with respect to such Shares or Company Options, (v)
deposit such Shares or Company Options into a voting trust or enter into a
voting agreement or arrangement with respect to such Shares or Company
Options, or (vi) take any other action that would in any way restrict, limit
or interfere with the performance of their obligations under the Stockholders
Agreement or the transactions contemplated thereby or by the Merger Agreement.
The Stockholders have further agreed to be bound by the provisions of the
Merger Agreement relating to prohibitions on solicitations of Acquisition
Proposals to the same extent as the Company. For purposes of the Stockholders
Agreement, "Acquisition Proposal" means a Takeover Proposal but excludes any
Superior Proposal which a Stockholder, in his capacity as director, would be
required to approve or recommend in accordance with his fiduciary duties.
Each Stockholder has also granted Parent an irrevocable proxy to vote each
Stockholder's Shares in favor of the Merger Agreement and against any
Acquisition Proposal. Each Stockholder will be indemnified under the
Stockholders Agreement to the extent such Stockholder shall be indemnified in
his capacity as director of the Company under the Merger Agreement.
Termination. The covenants and agreements contained in the Stockholders
Agreement with respect to the Shares shall terminate upon the earlier of the
consummation of the Merger and four months following the termination of the
Merger agreement in accordance with its terms; provided, however, in the event
the Merger Agreement is terminated by the Company upon the receipt of a
Superior Proposal in accordance with the Merger Agreement, the Stockholders
Agreement shall terminate on the date of termination of the Merger Agreement.
Representations, Warranties, Covenants and Other Agreements. Each
Stockholder has made certain customary representations, warranties and
covenants, including with respect to (i) ownership of the Shares, (ii) the
authority to enter into and perform its obligations under the Stockholders
Agreement, (iii) the absence of required consents or contractual conflicts
relating to the Stockholders Agreement, (iv) the absence of encumbrances on
and in respect of its Shares, (v) no finder's fees, (vi) the solicitation of
Acquisition Proposals, (vii) transfers of Shares, (viii) waiver of appraisal
rights and (ix) further assurances.
CONFIDENTIALITY AGREEMENT. Pursuant to the Confidentiality Agreements dated
June 27, 1994 and August 20, 1997 by Parent and the Company (together, the
"Confidentiality Agreement"), the parties agreed to provide, among other
things, for the confidential treatment of their discussions regarding the
Offer and the Merger and the exchange of certain confidential information
concerning the Company. The Confidentiality Agreement is incorporated herein
by reference and a copy of it has been filed with the SEC as an exhibit to the
Schedule 14D-1. The Confidentiality Agreement may be examined and copies may
be obtained at the places and in the manner set forth under the heading
"Available Information" in Section 8 of this Offer to Purchase.
23
OTHER MATTERS. Under the Company's Certificate of Incorporation, the
affirmative vote of holders of a majority of the outstanding Shares entitled
to vote, including any Shares owned by the Purchaser, would be required to
adopt the Merger. If the Purchaser acquires, through the Offer or otherwise,
voting power with respect to at least a majority of the outstanding Shares,
which would be the case if the Minimum Condition were satisfied, it would have
sufficient voting power to effect the Merger without the vote of any other
stockholder of the Company. The DGCL also provides that if a parent company
owns at least 90% of each class of stock of a subsidiary, the parent company
can effect a merger with the subsidiary without the authorization of the other
stockholders of the subsidiary. Accordingly, if, as a result of the Offer, the
Stockholder Agreements or otherwise, the Purchaser acquires at least 90% of
the outstanding Shares, the Purchaser could, and intends to, effect the Merger
without approval of any other stockholder of the Company.
No appraisal rights are available in connection with the Offer. However, if
the Merger is consummated, stockholders of the Company may have certain rights
under the DGCL to dissent and demand appraisal of, and payment in cash for the
fair value of, the Shares. Such rights, if the statutory procedures are
complied with, could lead to a judicial determination of the fair value
(excluding any element of value arising from accomplishment or expectation of
the Merger) required to be paid in cash to such dissenting holders for their
Shares. Any such judicial determination of the fair value of Shares could be
based upon consideration other than or in addition to the price paid in the
Offer and the market value of the Shares, including asset values and the
investment value of the Shares. The value so determined could be more or less
than the purchase price per Share pursuant to the Offer or the consideration
per Share to be paid in the Merger. The foregoing summary of the rights of
dissenting stockholders does not purport to be a complete statement of the
procedures to be followed by stockholders desiring to exercise their
dissenters' rights. The preservation and exercise of dissenters' rights are
conditioned on strict adherence to the applicable provisions of Delaware law.
In addition, the Merger will have to comply with other applicable procedural
and substantive requirements of Delaware law, including any duties to minority
stockholders imposed upon a controlling or, if applicable, majority
stockholder.
The SEC has adopted Rule 13e-3 under the Exchange Act which is applicable to
certain "going private" transactions and which may under certain circumstances
be applicable to the Merger or another business combination following the
purchase of Shares pursuant to the Offer in which the Purchaser seeks to
acquire the remaining Shares not held by it. The Purchaser believes, however,
that Rule 13e-3 will not be applicable to the Merger because it is anticipated
that the Merger will be effected within one year following consummation of the
Offer. Rule 13e-3 requires, among other things, that certain financial
information concerning the Company and certain information relating to the
fairness of the proposed transaction and the consideration offered to minority
stockholders in such transaction be filed with the SEC and disclosed to
stockholders prior to consummation of the transaction.
The Purchaser or an affiliate of the Purchaser may, following the
consummation or termination of the Offer, seek to acquire additional Shares
through open market purchases, privately negotiated transactions, a tender
offer or exchange offer or otherwise, upon such terms and at such prices as it
shall determine, which may be more or less than the price to be paid pursuant
to the Offer. The Purchaser and its affiliates also reserve the right to
dispose of any or all Shares acquired by them.
Except as noted in this Offer to Purchase, neither Parent nor the Purchaser
has any present plans or proposals that would result in an extraordinary
corporate transaction, such as a merger, reorganization, liquidation,
relocation of operations, or sale or transfer of assets, involving the Company
or any of its subsidiaries, or any material changes in the Company's corporate
structure, business or composition of its management or personnel.
13. DIVIDENDS AND DISTRIBUTIONS
As described above, the Merger Agreement provides that, prior to the
Effective Time, the Company will not, except as explicitly permitted by the
Merger Agreement, (i) declare, set aside or pay any dividend or make
24
any other distributions in respect of, any of its capital stock, other than
dividends and distributions by any direct or indirect wholly owned subsidiary
of the Company to its parent, (ii) split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock, or
(iii) purchase, redeem or otherwise acquire any shares of capital stock of the
Company or any of its subsidiaries or any other securities thereof or any
rights, warrants or options to acquire any such shares or other securities.
14. CONDITIONS TO THE OFFER
Notwithstanding any other terms of the Offer or the Merger Agreement, the
Purchaser will not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-l(c) under the
Exchange Act (relating to the Purchaser's obligation to pay for or return
tendered Shares promptly after termination or withdrawal of the Offer), pay
for, and may delay the acceptance for payment of or, subject to the
restriction referred to above, the payment for, any tendered Shares, and may
terminate or amend the Offer as to any Shares not then paid for, if (i) the
Minimum Condition has not been satisfied, (ii) the Financing Condition has not
been satisfied or (iii) at any time on or after the date of the Agreement and
before the time of acceptance for payment for any such Shares, any of the
following events will have occurred:
(a) there will be threatened or pending any suit, action or proceeding by
any Governmental Entity against the Purchaser, Parent, the Company or any
subsidiary of the Company (i) seeking to prohibit or impose any material
limitations on Parent's or the Purchaser's ownership or operation (or that
of any of their respective subsidiaries or affiliates) of all or a material
portion of their or the Company's businesses or assets, or to compel Parent
or the Purchaser or their respective subsidiaries and affiliates to dispose
of or hold separate any material portion of the business or assets of the
Company or Parent and their respective subsidiaries, in each case taken as
a whole, (ii) challenging the acquisition by Parent or the Purchaser of any
Shares under the Offer, seeking to restrain or prohibit the making or
consummation of the Offer or the Merger or the performance of any of the
other transactions contemplated by the Agreement, or seeking to obtain from
the Company, Parent or the Purchaser any damages that are material in
relation to the Company and its subsidiaries taken as a whole, (iii)
seeking to impose material limitations on the ability of the Purchaser, or
render the Purchaser unable, to accept for payment, pay for or purchase
some or all of the Shares pursuant to the Offer and the Merger, (iv)
seeking to impose material limitations on the ability of Purchaser or
Parent effectively to exercise full rights of ownership of the Shares,
including, without limitation, the right to vote the Shares purchased by it
on all matters properly presented to the Company's stockholders, or (v)
which otherwise is reasonably likely to have a material adverse effect on
the operations, business, properties or condition (financial or otherwise)
of the Company or any of its subsidiaries taken as a whole;
(b) there will be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated, or deemed applicable,
pursuant to an authoritative interpretation by or on behalf of a Government
Entity, to the Offer or the Merger, or any other action will be taken by
any Governmental Entity that is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in clauses (i) through
(v) of paragraph (a) above;
(c) there will have occurred any other event, change or effect after the
date of the Agreement which, either individually or in the aggregate, would
have, or be reasonably likely to have, a material adverse effect on the
operations, business, properties or condition (financial or otherwise) of
the Company or any of its subsidiaries taken as a whole;
(d) (i) the Company Board or any committee thereof will have withdrawn or
modified in a manner adverse to Parent or the Purchaser its approval or
recommendation of the Offer, the Merger or the Agreement, or approved or
recommended any Takeover Proposal or (ii) the Company Board or any
committee thereof will have resolved to do any of the foregoing;
25
(e) there will have occurred (i) any general suspension of trading in, or
limitation on prices for, securities on the New York Stock Exchange or on
the London Stock Exchange, for a period in excess of 24 hours (excluding
suspensions or limitations resulting solely from physical damage or
interference with such exchanges not related to market conditions), (ii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States (whether or not mandatory), (iii) a
commencement of war, armed hostilities or other international or national
calamity directly or indirectly involving the United States, (iv) any
limitation (whether or not mandatory) by any United States governmental
authority on the extension of credit generally by banks or other financial
institutions or (v) in the case of any of the foregoing existing at the
time of the commencement of the Offer, a material acceleration or worsening
thereof;
(f) any of the representations and warranties of the Company set forth in
the Merger Agreement that are qualified as to materiality will not be true
and correct in any material respect and any such representations and
warranties that are not so qualified will not be true and correct, in each
case as if such representations and warranties were made as of such time;
(g) the Company will have failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under the
Merger Agreement and such failure would result in a material adverse effect
on the operations, business, properties or condition (financial or
otherwise) of the Company or any of its subsidiaries taken as a whole;
(h) any person acquires beneficial ownership (as defined in Rule 13d-3
promulgated under the Exchange Act), of at least 20% of the outstanding
Common Stock of the Company (other than any person not required to file a
Schedule 13D under the rules promulgated under the Exchange Act); or
(i) the Agreement shall have been terminated in accordance with its
terms.
Subject to the provisions of the Merger Agreement set forth under "The
Offer" in Section 12 above, the foregoing conditions (i) may be asserted by
Parent and the Purchaser regardless of the circumstances giving rise to such
condition and (ii) are for the sole benefit of Parent and the Purchaser and
may be waived by Parent or the Purchaser, in whole or in part at any time and
from time to time in the sole discretion of Parent or the Purchaser. The
failure by Parent or the Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time.
15. CERTAIN LEGAL MATTERS
Except as described in this Section 15, based on a review of publicly
available filings by the Company with the SEC and other publicly available
information concerning the Company, the Purchaser is not aware of any
regulatory license or permit that appears to be material to the business of
the Company and its subsidiaries, taken as a whole, that might be adversely
affected by the acquisition of Shares by the Purchaser pursuant to the Offer
or, except as set forth below, of any approval or other action by any
governmental, administrative or regulatory agency or authority, domestic or
foreign, that would be required prior to the acquisition of Shares by the
Purchaser pursuant to the Offer. Should any such approval or other action be
required, the Purchaser currently contemplates that it will be sought. While
the Purchaser does not currently intend to delay the acceptance for payment of
Shares tendered pursuant to the Offer pending the outcome of any such matter,
there can be no assurance that any such approval or other action, if needed,
would be obtained or would be obtained without substantial conditions or that
adverse consequences might not result to the Company's business or that
certain parts of the Company's business might not have to be disposed of in
the event that such approvals were not obtained or any other actions were not
taken. The Purchaser's obligation under the Offer to accept for payment and
pay for Shares is subject to certain conditions, including conditions relating
to the legal matters discussed in this Section 15. See Section 14.
26
Delaware State Takeover Laws. The Company is incorporated under the laws of
the State of Delaware. Section 203 of the DGCL limits the ability of a
Delaware corporation to engage in business combinations with "interested
stockholders" (defined as any beneficial owner of 15% or more of the
outstanding voting stock of the corporation) unless, among other things, the
corporation's board of directors has given its prior approval to either the
business combination or the transaction which resulted in the stockholder
becoming an "interested stockholder." The Company has represented in the
Merger Agreement that it properly elected that Section 203 of the DGCL be
inapplicable to the Offer, the Merger and the transactions contemplated in the
Merger Agreement and the Stockholders Agreement. At a meeting on September 10,
1997, the Board of Directors of the Company approved the Merger Agreement, the
Stockholders Agreement, the Merger, the Offer and the Purchaser's purchase of
Shares pursuant to the Offer. Accordingly, the provisions of Section 203 of
the DGCL have been satisfied with respect to the Offer and the Merger and such
provisions will not delay the consummation of the Merger.
State Takeover Statutes. A number of other states have adopted "takeover"
statutes that purport to apply to attempts to acquire corporations that are
incorporated in such states, or whose business operations have substantial
economic effects in such states, or which have substantial assets, security
holders, employees, principal executive offices or principal places of
business in such states.
The Company, directly or through subsidiaries, conducts business in a number
of states throughout the United States, some of which have enacted "takeover"
statutes. The Purchaser does not know whether any of these statutes will, by
their terms, apply to the Offer, and has not complied with any such statutes.
To the extent that certain provisions of these statutes purport to apply to
the Offer, the Purchaser believes that there are reasonable bases for
contesting such statutes. See Section 12. If any person should seek to apply
any state takeover statute, the Purchaser would take such action as then
appears desirable, which action may include challenging the validity or
applicability of any such statute in appropriate court proceedings. If it is
asserted that one or more takeover statutes apply to the Offer, and it is not
determined by an appropriate court that such statute or statutes do not apply
or are invalid as applied to the Offer, the Purchaser might be required to
file certain information with, or receive approvals from, the relevant state
authorities, and the Purchaser might be unable to purchase or pay for Shares
tendered pursuant to the Offer, or be delayed in continuing or consummating
the Offer. In such case, the Purchaser may not be obligated to accept for
payment or pay for Shares tendered. See Section 14.
16. FEES AND EXPENSES
The Purchaser has retained MacKenzie Partners, Inc. to act as the
Information Agent and Continental Stock Transfer & Trust Company to act as the
Depositary in connection with the Offer. The Information Agent may contact
holders of Shares by mail, telephone, telex, telegraph and personal interview
and may request brokers, dealers, commercial banks, trust companies and other
nominees to forward the Offer material to beneficial owners. The Information
Agent and the Depositary each will receive reasonable and customary
compensation for their services and will be indemnified against certain
liabilities and expenses in connection therewith, including certain
liabilities under the federal securities laws. The Information Agent and the
Depositary will be reimbursed for certain reasonable out-of-pocket expenses.
Neither of the Information Agent or the Depositary has been retained to make
solicitations or recommendations in connection with the Offer. CIBC Wood Gundy
Securities Corp. has acted as financial adviser to Parent in connection with
the Offer and the Merger and will receive customary fees in consideration for
its services. Neither Parent nor the Purchaser will pay any fees or
commissions to any broker or dealer or other person (other than the
Information Agent) for soliciting tenders of Shares pursuant to the Offer.
Brokers, dealers, commercial banks and trust companies will be reimbursed by
the Purchaser for reasonable expenses incurred by them in forwarding material
to their customers.
17. MISCELLANEOUS
The Purchaser is not aware of any jurisdiction in which the making of the
Offer is not in compliance with applicable law. If the Purchaser becomes aware
of any jurisdiction in which the making of the Offer would not
27
be in compliance with applicable law, the Purchaser will make a good faith
effort to comply with any such law. If, after such good faith effort, the
Purchaser cannot comply with any such law, the Offer will not be made to (nor
will tenders be accepted from or on behalf of) the holders of Shares residing
in such jurisdiction. In those jurisdictions whose securities or blue sky laws
require the Offer to be made by a licensed broker or dealer, the Offer is
being made on behalf of the Purchaser by one or more registered brokers or
dealers which are licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR PARENT NOT CONTAINED IN THIS
OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
The Purchaser has filed with the SEC the Schedule 14D-1 pursuant to Rule
14d-3 under the Exchange Act, furnishing certain additional information with
respect to the Offer, and may file amendments thereto. The Schedule 14D-1 and
any amendments thereto, including exhibits, may be inspected and copies may be
obtained at the same places and in the same manner as set forth under the
heading "Available Information" in Section 8 (except that they will not be
available at the regional offices of the SEC).
Hain Acquisition Corp.
September 12, 1997
28
SCHEDULE I
DIRECTORS AND EXECUTIVE
OFFICERS OF PARENT AND THE PURCHASER
1. Directors and Executive Officers of Parent. The following table sets
forth the name, business address and present principal occupation or
employment, and material occupations, positions, offices or employment for the
past five years of each director and executive officer of Parent. Unless
otherwise indicated, each such person is a citizen of the United States of
America, except for Mr. Simon, who is a citizen of Canada, and the business
address of each such person is c/o The Hain Food Group, 50 Charles Lindbergh
Boulevard, Uniondale, New York 11553. Unless otherwise indicated, each
occupation set forth opposite an individual's name refers to employment with
Parent. Unless otherwise indicated, each executive officer has been an
executive officer of Parent since November 1993.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- --------------------------------- -------------------------------------------------------
DIRECTORS OF PARENT
Irwin D. Simon................... Mr. Simon has been a Director, President and Chief
Executive Officer of the Company since its inception
and is its founder. From December 1990 through
December 1992, Mr. Simon was employed in various
marketing capacities with Slim-Fast Foods Company
("Slim Fast"), a national marketer of meal replacement
and weight loss food supplements. Prior to that, Mr.
Simon held various sales and marketing functions with
Haagan Dazs Inc., a subsidiary of Grand Metropolis
Inc.
Andrew R. Heyer.................. Since August 1995, Mr. Heyer has been a Managing
Director of CIBC Wood Gundy Securities Corp., an
affiliate of the Canadian Imperial Bank of Commerce
and the successor to the Argosy Group, L.P. From
February 1990 until August 1995, Mr. Heyer was a
Managing Director of the Argosy Group, L.P., an
investment banking firm that specialized in merger,
acquisition, divestiture, financing, refinancing and
restructuring transactions. Mr. Heyer has been a
Director since November 1993.
Beth L. Bronner.................. Ms. Bronner joined Citibank, N.A. in September 1996 as
Vice President and Director of Marketing for the
United States and Europe. From July 1994 to August
1996, Ms. Bronner was Vice President--Emerging Markets
of American Telephone & Telegraph Company Consumer
Communication Services business. Ms. Bronner was
President of the Professional Products Division of
Revlon, Inc. from May 1993 until June 1994. From
February 1992 to May 1993 she was Executive Vice
President of the Beauty Care and Professional Products
Division of Revlon, Inc. Ms. Bronner also serves as a
director of Fortis, Inc. and Ulta, Inc. Ms. Bonner has
been a Director since November 1993.
Barry Gordon..................... Since 1980, Mr. Gordon has been President and a
director of American Fund Advisors, Inc., a money
management firm, and was elected Chairman of the Board
thereof in 1987. In addition, Mr. Gordon is President
of The John Hancock Global Technology Fund (a mutual
fund specializing in telecommunications and technology
securities) and a director of Winfield Capital
Corporation, a publicly traded small business
investment company. Mr. Gordon has been a Director
since November 1993.
I-1
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- --------------------------------- -------------------------------------------------------
Steve S. Schwartzreich........... Since 1973, Mr. Schwartzreich has been Vice President
and a director of Nassau Suffolk Frozen Food Co.,
Inc., a distributor of frozen food, ice cream, and
bakery products to retail stores. He is currently the
Chairman and President of the Hunts Point Cooperative
Market located in New York City. Mr. Schwartzreich has
been a Director since November 1993.
William P. Carmichael............ Mr. Carmichael is a certified public accountant and
member of the Illinois State Bar. He was Senior Vice
President & Chief Accounting Officer of Sara Lee
Corporation from 1991 until his retirement in 1993.
Mr. Carmichael is a director of several other
companies, including Health O Meter Products, Inc.,
Cobra Electronics Corporation and The Golden Rule
Insurance Company. Mr. Carmichael has been a director
since 1995.
William J. Fox................... Mr. Fox has been Executive Vice President and Chief
Financial Officer of Revlon, Inc. and Revlon Consumer
Products Corporation since their respective formations
in 1992 and was elected as a Director in November 1995
and September 1994, respectively. He has been
Executive Vice President and Chief Financial Officer
of Revlon Holdings Inc. since November 1991 and a Vice
President since 1987. He has been Senior Vice
President of MacAndrews & Forbes Holdings Inc. since
August 1990. Mr. Fox has been a director since
December 1996.
Jack Futterman................... Mr. Futterman is Chairman and Chief Executive Officer
of the Pathmark Supermarket chain in March 1996. He
joined Pathmark in 1973 as Vice President of its
drugstore and general merchandise divisions and
occupied a number of positions before becoming
Chairman and Chief Executive Officer. Mr. Futterman is
a registered pharmacist and former Chairman of the
National Association of Chain Drugstores. He is a
Director of Del Labs, Inc. as well as several not-for-
profit organizations. Mr. Futterman has been a
director since December 1996.
EXECUTIVE OFFICERS OF PARENT
Irwin D. Simon................... Director, President and Chief Executive Officer. For
further information, see above.
Jack Kaufman..................... Chief Financial Officer, Treasurer and Assistant
Secretary. During 1992 and part of 1993, Mr. Kaufman
was a financial executive for JWP, Inc.
Benjamin Brecher................. Vice President--Operations. Prior to November 1993, Mr.
Brecher was an officer and director of Kineret Kosher
Foods from 1974 until its acquisition by The Hain Food
Group, Inc. in November 1993.
Ellen Deutsch.................... Senior Vice President--Sales and Marketing. Prior to
May 1996, Ms. Deutsch was a principal of F&D
Advertising Agency of Westbury, New York.
I-2
2. Directors and Executive Officers of the Purchaser. The following table
sets forth the name, business address and present principal occupation or
employment, and material occupations, positions, offices or employment for the
past five years of each director and executive officer of the Purchaser. Each
person listed is a director of the Purchaser. Unless otherwise indicated, each
such person is a citizen of the United States of America, except for Mr.
Simon, who is a citizen of Canada, and the business address of each such
person is c/o The Hain Food Group, Inc., 50 Charles Lindbergh Boulevard,
Uniondale, New York 11553.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
--------------------------------- -------------------------------------------------------
President. For further information, see paragraph 1
Irwin D. Simon................... above.
Secretary. For further information, see paragraph 1
Jack Kaufman..................... above.
Bruce Lerit...................... Treasurer. Mr. Lerit is a certified public accountant
and has been corporate controller of The Hain Food
Group, Inc. since March 1995. From January 1994, until
March 1995, he was controller of Rockbottom Stores,
Inc. From April 1991, until January 1994, Mr. Lerit was
controller of Entex, Inc.
I-3
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each
stockholder of the Company or his broker, dealer, commercial bank or other
nominee to the Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
By Mail: By Facsimile: By Hand or Overnight
Carrier:
2 Broadway (19th Floor) (212) 509-5150 2 Broadway (19th Floor)
New York, New York 10004 New York, New York 10004
Attn: Reorganization Attn: Reorganization
Department Department
To confirm fax only:
(212) 509-4000, Ext. 535
Any questions or requests for assistance may be directed to the Information
Agent at its telephone numbers and location listed below. Additional copies of
this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be obtained from the Information Agent at its address and
telephone numbers set forth below. You may also contact your broker, dealer,
commercial bank or trust company or nominee for assistance concerning the
Offer.
The Information Agent for the Offer is:
MACKENZIE
PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
CALL TOLL-FREE (800) 322-2885
Exhibit (a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
WESTBRAE NATURAL, INC.
PURSUANT TO THE OFFER TO PURCHASE DATED SEPTEMBER 12, 1997
BY
HAIN ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY
OF
THE HAIN FOOD GROUP, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, OCTOBER 9, 1997 UNLESS THE OFFER IS EXTENDED
The Depositary for the Offer is:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
By Mail: By Facsimile: By Hand or by Overnight
Courier:
Continental Stock (212) 509-5150
Transfer & Trust Continental Stock
Company Transfer & Trust
2 Broadway (19th Company
Floor) 2 Broadway (19th
New York, New York Floor)
10004 New York, New York
Attn: Reorganization 10004
Department Attn: Reorganization
Department
To Confirm Facsimile
Transmissions call:
(212) 509-4000, Ext. 535
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION TO A NUMBER
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST
SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE THEREFOR PROVIDED
BELOW AND COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
DESCRIPTION OF SHARES TENDERED
- -------------------------------------------------------------------------------
NAME(S) AND
ADDRESS(ES)
OF
REGISTERED SHARE CERTIFICATE(S) AND SHARES TENDERED
HOLDER(S) (ATTACH ADDITIONAL LIST IF NECESSARY)
- -------------------------------------------------------------------
TOTAL NUMBER OF SHARES NUMBER
SHARE CERTIFICATE REPRESENTED BY OF SHARES
NUMBER(S)* SHARE CERTIFICATE(S)* TENDERED**
----------------------------
----------------------------
----------------------------
----------------------------
----------------------------
----------------------------
TOTAL SHARES
- -------------------------------------------------------------------------------
* Certificate numbers are not required if tender is made by book-entry
transfer.
** Unless otherwise indicated, all Share Certificates delivered to the
Depositary are being tendered. See Instruction 4.
This Letter of Transmittal is to be completed by stockholders either if
certificates for Shares (as defined below) are to be forwarded herewith or,
unless an Agent's Message (as defined in Section 2 of the Offer to Purchase
dated September 12, 1997 (the "Offer to Purchase")) is utilized, if tenders of
Shares are to be made by book-entry transfer to an account maintained by
Continental Stock Transfer and Trust Company (the "Depositary") at The
Depository Trust Company ("DTC" or the "Book Entry Transfer Facility"),
pursuant to the procedures set forth in Section 3 of the Offer to Purchase.
Stockholders who tender Shares by book-entry transfer are referred to herein
as "Book-Entry Stockholders."
Any stockholder who desires to tender Shares and whose certificates
representing such Shares (the "Share Certificates") are not immediately
available or who cannot deliver their Share Certificates and all other
required documents to the Depositary prior to the Expiration Date (as defined
in the Offer to Purchase) or who cannot complete the procedures for book-entry
transfer on a timely basis may tender their Shares according to the guaranteed
delivery procedures set forth in Section 3 of the Offer to Purchase. See
Instruction 2 hereof. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER
FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
[_]CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN
ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY TRANSFER FACILITY
AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
Account Number: Transaction Code Number:
[_]CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING.
PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY.
Name(s) of Registered Holder(s):
Window Ticket Number (if any):
Date of Execution of Notice of Guaranteed Delivery:
Name of Institution which Guaranteed Delivery:
[_]CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO AN
ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER FACILITY
AND COMPLETE THE FOLLOWING:
Account Number: Transaction Code Number:
LADIES AND GENTLEMEN:
The undersigned hereby tenders to Hain Acquisition Corp., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of The Hain Food
Group, Inc., a Delaware corporation ("Parent"), the above described shares of
Common Stock, par value $.01 per share (the "Shares"), of Westbrae Natural,
Inc., a Delaware corporation (the "Company"), at a price of $3.625 per Share
net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated September
12, 1997 (the "Offer to Purchase"), receipt of which is hereby acknowledged,
and in this Letter of Transmittal (which together with the Offer to Purchase
constitute the "Offer"). The undersigned understands that the Purchaser
reserves the right to transfer or assign, in whole or from time to time in
part, to one or more of its subsidiaries or affiliates, the right to purchase
all or any portion of the Shares tendered pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms or conditions of any such extension or
amendment), the undersigned hereby sells, assigns, and transfers to, or upon
the order of, the Purchaser all right, title and interest in and to all of the
Shares that are being tendered hereby and any and all dividends on the Shares
or any distribution (including, without limitation, the issuance of additional
Shares pursuant to a stock dividend or stock split, the issuance of other
securities or the issuance of rights for the purchase of any securities) with
respect to the tendered Shares that is declared, paid or issued by the Company
on or after September 11, 1997, and is payable or distributable to
stockholders of record on a date prior to the transfer into the name of the
Purchaser or its nominees or transferees on the Company's stock transfer
records of the Shares purchased pursuant to the Offer (collectively, a
"Distribution"), and constitutes and irrevocably appoints the Depositary the
true and lawful agent, attorney-in-fact and proxy of the undersigned to the
full extent of the undersigned's rights with respect to such Shares (and any
Distributions), with full power of substitution (such power of attorney and
proxy being deemed to be an irrevocable power coupled with an interest), to
(a) deliver Share Certificates (and any Distributions), or transfer ownership
of such Shares (and any Distributions), on the account books maintained by the
Book-Entry Transfer Facility, together in either such case with all
accompanying evidences of transfer and authenticity, to or upon the order of
the Purchaser upon receipt by the Depositary, as the undersigned's agent, of
the purchase price, (b) present such Shares (and any Distributions) for
transfer on the books of the Company and (c) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares (and any
Distributions), all in accordance with the terms and subject to the conditions
set forth in the Offer.
The undersigned hereby irrevocably appoints Irwin D. Simon and Jack Kaufman,
and each of them, or any other designees of the Purchaser, as attorneys-in-
fact and proxies of the undersigned, each with full power of substitution, to
vote in such manner as each such attorney and proxy or his substitute shall,
in his sole discretion, deem proper, and otherwise act (including pursuant to
written consent) with respect to all of the Shares tendered hereby which have
been accepted for payment by the Purchaser prior to the time of such vote or
action (and any Distributions) which the undersigned is entitled to vote at
any meeting of stockholders (whether annual or special and whether or not an
adjourned meeting) of the Company, or by written consent in lieu of such
meeting, or otherwise. This power of attorney and proxy is coupled with an
interest in the Company and in the Shares and is irrevocable and is granted in
consideration of, and is effective upon, the acceptance for payment of such
Shares by the Purchaser in accordance with the terms of the Offer. Such
acceptance for payment shall revoke, without further action, any other power
of attorney or proxy granted by the undersigned at any time with respect to
such Shares (and any Distributions) and no subsequent powers of attorney or
proxies will be given (and if given will be deemed not to be effective) with
respect thereto by the undersigned. The undersigned understands that the
Purchaser reserves the absolute right to require that, in order for Shares to
be deemed validly tendered, immediately upon the Purchaser's acceptance for
payment of such Shares, the Purchaser is able to exercise full voting rights
with respect to such Shares and other securities, including voting at any
meeting of stockholders then scheduled.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby (and any Distributions) and that when such Shares are accepted for
payment and paid for by the Purchaser, the Purchaser will acquire good,
marketable and unencumbered title thereto (and to any Distributions), free and
clear of all liens, restrictions, charges and encumbrances and the same will
not be subject to any adverse claim. The undersigned, upon request, will
execute and deliver any additional documents deemed by the Depositary or the
Purchaser to be necessary or desirable to complete the sale, assignment and
transfer of the Shares tendered hereby (and any Distributions). In addition,
the undersigned shall promptly remit and transfer to the Depositary for the
account of
the Purchaser any and all other Distributions issued to the undersigned on or
after September 11, 1997 in respect of the Shares tendered hereby, accompanied
by appropriate documentation of transfer and, pending such remittance or
appropriate assurance thereof, the Purchaser shall be entitled to all rights
and privileges as owner of any such Distributions, and may withhold the entire
purchase price, or deduct from the purchase price of Shares tendered hereby,
the amount or value thereof, as determined by the Purchaser in its sole
discretion.
All authority herein conferred or herein agreed to be conferred shall not be
affected by, and shall survive, the death or incapacity of the undersigned and
any obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, legal representatives, successors and assigns of
the undersigned. Except as otherwise provided in the Offer to Purchase,
tenders of Shares made pursuant to the Offer are irrevocable.
The Purchaser's acceptance of validly tendered Shares will constitute a
binding agreement between the undersigned and the Purchaser with respect to
such Shares upon the terms and subject to the conditions set forth in the
Offer. The undersigned recognizes that under certain circumstances set forth
in the Offer to Purchase, the Purchaser may not be required to accept for
payment any of the Shares tendered hereby.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price of all Shares purchased and/or
return any Share Certificates evidencing Shares not tendered or not purchased
in the name(s) of the registered holder(s) appearing above under "Description
of Shares Tendered." Similarly, unless otherwise indicated under "Special
Delivery Instructions," please mail the check for the purchase price and/or
return any Share Certificates evidencing Shares not tendered or not purchased
(and accompanying documents, as appropriate) to the address(es) of the
registered holder(s) appearing under "Description of Shares Tendered." In the
event that either of the "Special Delivery Instructions" or the "Special
Payment Instructions" boxes are completed, please issue the check for the
purchase price of all Shares purchased and/or return any Share Certificates
evidencing Shares not tendered or not purchased in the name(s) of, and deliver
said check and/or return certificates to, the person(s) so indicated. Unless
otherwise indicated in this Letter of Transmittal under "Special Payment
Instructions," in the case of a book-entry delivery of Shares, please credit
the account maintained by the undersigned at the Book-Entry Facility indicated
above with respect to any Shares not purchased. The undersigned recognizes
that the Purchaser has no obligation pursuant to the "Special Payment
Instructions" to transfer any Shares from the name(s) of the registered
holder(s) thereof if the Purchaser does not accept for payment any of such
Shares.
[_] CHECK HERE IF ANY OF THE CERTIFICATES EVIDENCING SHARES THAT YOU OWN
HAVE BEEN LOST OR DESTROYED AND SEE INSTRUCTION 11.
Number of Shares represented by the lost or destroyed
certificates: ______________________________________________
SPECIAL PAYMENT SPECIAL DELIVERY
INSTRUCTIONS INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Share
To be completed ONLY if Share Certificates not tendered or not
Certificates not tendered or not purchased and/or the check for
purchased and/or the check for the purchase price of Shares pur-
the purchase price of Shares pur- chased are to be sent to someone
chased are to be issued in the other than the undersigned, or to
name of someone other than the the undersigned, at an address
undersigned, or if Shares deliv- other than that shown under "De-
ered by book-entry transfer that scription of Shares Tendered."
are not purchased are to be re-
turned by credit to an account
maintained at the Book-Entry
Transfer Facility, other than to
the account indicated above.
Mail check and/or Share Certifi-
cates to:
Name: ____________________________
(PLEASE PRINT)
Address: _________________________
__________________________________
Issue check and/or Share Certifi- __________________________________
cates to: (INCLUDE ZIP CODE)
__________________________________
Name: ____________________________ (TAX IDENTIFICATION OR SOCIAL
(PLEASE TYPE OR PRINT) SECURITY NO.)
__________________________________
Address: _________________________
__________________________________
__________________________________
(INCLUDE ZIP CODE)
__________________________________
(TAX IDENTIFICATION OR SOCIAL
SECURITY NO.)
(ALSO COMPLETE SUBSTITUTE FORM W-
9)
Credit unpurchased Shares de-
livered by book-entry transfer to
the Book-Entry Transfer Facility
account set forth below:
__________________________________
(DTC ACCOUNT NUMBER)
IMPORTANT
STOCKHOLDERS: SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9)
...........................................................................
...........................................................................
(SIGNATURE(S) OF HOLDER(S))
Dated: ..................... 1997
(Must be signed by the registered holder(s) exactly as name(s) appear(s)
on the Share Certificate(s) or on a security position listing or by
person(s) authorized to become registered holder(s) by certificates and
documents transmitted herewith. If signature is by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity for the registered
holder(s), please provide the necessary information. See Instruction 5
hereof.)
Name(s):...................................................................
(PLEASE PRINT)
Capacity (full title):.....................................................
Address:...................................................................
....................................................................
....................................................................
(INCLUDE ZIP CODE)
Area Code and Telephone Number:............................................
Tax Identification or
Social Security No.: ......................................................
(COMPLETE SUBSTITUTE FORM W-9)
GUARANTEE OF SIGNATURE(S) (IF REQUIRED--SEE INSTRUCTIONS 1 AND 5 HEREOF)
Authorized Signature:......................................................
Name: .....................................................................
(PLEASE PRINT)
Name of Firm:..............................................................
Address:...................................................................
....................................................................
....................................................................
(INCLUDE ZIP CODE)
Area Code and Telephone Number:............................................
Dated: ..................... 1997
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. All signatures on this Letter of Transmittal
must be guaranteed by a firm which is a bank, broker, dealer, credit union,
savings association or other entity that is a member in good standing of the
Securities Transfer Agents Medallion Program (each, an "Eligible
Institution"), unless (i) this Letter of Transmittal is signed by the
registered holder (which term, for purposes of this document, shall include
any participant in the Book-Entry Transfer Facility whose name appears on a
security position listing as the owner of Shares) of the Shares tendered
hereby, and such registered holder has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on this Letter of Transmittal or (ii) such Shares are tendered
for the account of an Eligible Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be used either if Share Certificates are to be forwarded
herewith or, unless an Agent's Message (as defined in Section 2 of the Offer
to Purchase) is utilized, if tenders are to be made pursuant to the procedures
for tender by book-entry transfer set forth in Section 3 of the Offer to
Purchase. Share Certificates, or timely confirmation (a "Book-Entry
Confirmation") of a book-entry transfer of such Shares into the Depositary's
account at the Book-Entry Transfer Facility, as well as this Letter of
Transmittal (or a manually signed facsimile thereof), properly completed and
duly executed, with any required signature guarantees, or an Agent's Message
in connection with a book-entry transfer, and any other documents required by
this Letter of Transmittal, must be received by the Depositary at one of its
addresses set forth herein prior to the Expiration Date. Any stockholder who
desires to tender Shares and whose Share Certificates are not immediately
available or who cannot deliver their Share Certificates and all other
required documents to the Depositary prior to the Expiration Date or who
cannot complete the procedures for book-entry transfer on a timely basis may
tender their Shares by properly completing and duly executing a Notice of
Guaranteed Delivery pursuant to the guaranteed delivery procedures set forth
in Section 3 of the Offer to Purchase. Pursuant to such procedure: (i) such
tender must be made by or through an Eligible Institution; (ii) a properly
completed and duly executed Notice of Guaranteed Delivery, substantially in
the form provided by the Purchaser, must be received by the Depositary prior
to the Expiration Date; and (iii) the Share Certificates or a Book-Entry
Confirmation representing all tendered Shares, in proper form for transfer
together with a properly completed and duly executed Letter of Transmittal (or
a manually signed facsimile thereof), with any required signature guarantees
(or, in the case of a book-entry transfer of Shares, an Agent's Message) and
any other documents required by this Letter of Transmittal, must be received
by the Depositary within four NASDAQ trading days after the date of execution
of such Notice of Guaranteed Delivery. If Share Certificates are forwarded
separately to the Depositary, a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof) must accompany each such
delivery. A "NASDAQ trading day" is any day on which The Nasdaq Stock Market,
Inc.'s National Market is open for business.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THIS LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND SOLE RISK OF THE TENDERING
STOCKHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED
BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution
of this Letter of Transmittal (or a manually signed facsimile thereof), waive
any right to receive any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares and any other required
information should be listed on a separate schedule attached hereto and
separately signed on each page thereof in the same manner as this Letter of
Transmittal is signed.
4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares evidenced by any certificate submitted
are to be tendered, fill in the number of Shares which are to be tendered in
the
box entitled "Number of Shares Tendered." In such case, new certificate(s) for
the remainder of the Shares that were evidenced by your old certificate(s)
will be sent to you, unless otherwise provided in the appropriate box marked
"Special Payment Instructions" and/or "Special Delivery Instructions" on this
Letter of Transmittal, as soon as practicable after the Expiration Date. All
Shares represented by certificates delivered to the Depositary will be deemed
to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond exactly with the name(s) as
written on the face of the certificate(s) without alteration, enlargement or
any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
persons, all such persons must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
certificates.
When this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made, or a Share
Certificate for Shares not accepted for payment or not tendered is to be
returned, to a person other than the registered holder(s), in which case, the
Share Certificate must be endorsed or accompanied by appropriate stock powers,
in either case signed exactly as the name(s) of the registered holder(s)
appear(s) on such certificates. Signatures on such certificates or stock
powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares listed, the certificates must be endorsed
or accompanied by appropriate stock powers, in either case signed exactly as
the name(s) of the registered holder(s) appear(s) on the certificates, with
the signature on such certificate or stock power guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any certificates or stock powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity for
the registered holder(s), such persons should so indicate when signing, and
proper evidence satisfactory to the Purchaser of their authority so to act
must be submitted.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, the
Purchaser will pay or cause to be paid any stock transfer taxes with respect
to the transfer and sale of purchased Shares to it or its order pursuant to
the Offer. If, however, payment of the purchase price is to be made to, or if
certificates for Shares not tendered or purchased are to be registered in the
name of, any person other than the registered holder(s), or if tendered
certificates are registered in the name of any person other than the person(s)
signing this Letter of Transmittal, the amount of any stock transfer taxes
(whether imposed on the registered holder(s) or such other person or
otherwise) payable on account of the transfer to such other person will be
deducted from the purchase price of such Shares purchased, unless evidence
satisfactory to the Purchaser of the payment of such taxes or exemption
therefrom is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares tendered hereby is to be issued in the name of and/or
certificates for unpurchased Shares are to be returned to a person other than
the signer of this Letter of Transmittal or if a check is to be sent and/or
such certificates are to be returned to someone other than the signer of this
Letter of Transmittal or to the signer of this Letter of Transmittal but at an
address other than that shown under "Description of Shares Tendered," the
appropriate boxes on this Letter of Transmittal should be completed. If no
such instructions are given, such Shares not purchased will be returned by
crediting the account at the Book-Entry Transfer Facility designated above.
See Instruction 1.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance may
be directed to the Information Agent at its address or telephone number set
forth below. Requests for additional copies of the Offer to Purchase, this
Letter of Transmittal, the Notice of Guaranteed Delivery and the Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9 may
be directed to the Information Agent or to brokers, dealers, commercial banks
or trust companies.
9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Each tendering stockholder
is required to provide the Depositary with a correct Taxpayer Identification
Number ("TIN") on the Substitute Form W-9 which is provided under "Important
Tax Information" below, and to certify, under penalties of perjury, that such
number is correct and that such stockholder is not subject to backup
withholding of federal income tax. If a tendering stockholder has been
notified by the Internal Revenue Service that such stockholder is subject to
backup withholding, such stockholder must cross out item (2) of the
Certification box of the Substitute Form W-9, unless such stockholder has
since been notified by the Internal Revenue Service that such stockholder is
no longer subject to backup withholding. Failure to provide the information on
the Substitute Form W-9 may subject the tendering stockholder to 31% federal
income tax withholding on the payment of the purchase price of all Shares
purchased from such stockholder. If the tendering stockholder has not been
issued a TIN and has applied for one or intends to apply for one in the near
future, such stockholder should check the box in Part III of the Substitute
Form W-9 and sign and date both the Substitute Form W-9 and the "Certificate
of Awaiting Taxpayer Identification." If the box in Part III for "Awaiting
TIN" is checked and the Depositary is not provided with a TIN within 60 days,
the Depositary will withhold 31% on all payments of the purchase price to such
stockholder until a TIN is provided to the Depositary.
10. WAIVER OF CONDITIONS. Subject to the terms of the Offer, Purchaser
reserves the right to waive any of the specified conditions of the Offer, in
whole or in part, in the case of any Shares tendered.
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify the Depositary. The stockholder will then be instructed as to
the steps that must be taken in order to replace the certificate(s). This
Letter of Transmittal and related documents cannot be processed until the
procedures for replacing lost or destroyed certificates have been followed. In
certain cases it may not be possible to complete the procedures for replacing
lost or destroyed certificates prior to the Expiration Date.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE COPY HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED, OR AN AGENT'S MESSAGE IN THE CASE OF A BOOK-ENTRY
DELIVERY, TOGETHER WITH CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER
AND ALL OTHER REQUIRED DOCUMENTS, OR A PROPERLY COMPLETED AND DULY EXECUTED
NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE
EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under current federal income tax law, a stockholder whose tendered Shares
are accepted for payment is required to provide the Depositary (as payer) with
such stockholder's correct TIN on Substitute Form W-9 below. If such
stockholder is an individual, the TIN is his social security number. If the
tendering stockholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future, the stockholder should so
indicate on the Substitute Form W-9. See Instruction 9. If the Depositary is
not provided with the correct TIN, the stockholder may be subject to a $50
penalty imposed by the Internal Revenue Service. In addition, payments that
are made to the stockholder with respect to Shares purchased pursuant to the
Offer may be subject to backup federal income tax withholding at a 31% rate.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholdings and
reporting requirements and should indicate their status by writing "exempt"
across the face of, and by signing and dating, the Substitute Form 9-W. In
order for a foreign individual to qualify as an exempt recipient, that
stockholder must submit a statement, signed under penalties of perjury,
attesting to that individual's exempt status. Forms for such statements can be
obtained from the Depositary. See the enclosed Guidelines for Certificates of
Taxpayer Identification Number on Substitute Form W-9 for additional
instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the federal income tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup federal income tax withholding with respect to payment of
the purchase price for Shares purchased pursuant to the Offer, a stockholder
must provide the Depositary with his correct TIN by completing the Substitute
Form W-9 below, certifying that the TIN provided on Substitute Form W-9 is
correct (or that the stockholder is awaiting a TIN) and that (1) the
stockholder has not been notified by the Internal Revenue Service that he is
subject to backup withholding as a result of a failure to report all interest
or dividends or (2) the Internal Revenue Service has notified the stockholder
that he is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the Social Security
Number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are registered in more than one name or are not
in the name of the actual owner, consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidance on which number to report.
TO BE COMPLETED BY ALL TENDERING STOCKHOLDERS
(SEE INSTRUCTION 9)
PAYER'S NAME: CONTINENTAL STOCK TRANSFER & TRUST COMPANY
PART I--PLEASE PROVIDE YOUR PART III--
SUBSTITUTE TIN IN THE BOX AT RIGHT AND
CERTIFY BY SIGNING AND
DATING BELOW.
FORM W-9 ----------------------
Social Security Number
DEPARTMENT OF
THE TREASURY OR
INTERNAL
REVENUE ----------------------
SERVICE Employee ID Number (If
awaiting TIN write
"Applied For")
PART II--FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING,
SEE THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
AND COMPLETE AS INSTRUCTED THEREIN.
PAYER'S REQUEST FOR TAXPAYER IDENTIFICATION NUMBER (TIN)
--------------------------------------------------------
Certifications--Under penalties of perjury, I certify
that:
(1) The number shown on this form is my correct
Taxpayer Identification Number (or I am waiting
for a number to be issued to me); and
(2) I am not subject to backup withholding because:
(a) I am exempt from backup withholding, (b) I
have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup
withholding as a result of a failure to report
all interest or dividends, or (c) the IRS has
notified me that I am no longer subject to backup
withholding.
--------------------------------------------------------
Certification Instructions--You must cross out item
(2) above if you have been notified by the IRS that
you are currently subject to backup withholding be-
cause of underreporting interest or dividends on your
tax return. However, if after being notified by the
IRS that you were subject to backup withholding you
received another notification from the IRS that you
are no longer subject to backup withholding, do not
cross out such item (2). (Also see instructions in
the enclosed Guidelines.)
Signature: _________________________ Date: __________
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE
REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR" IN
THE BOX IN PART III OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification
Number has not been issued to me, and either (1) I have mailed or delivered
an application to receive a Taxpayer Identification Number to the
appropriate Internal Revenue Service Center or Social Security
Administration Office or (2) I intend to mail or deliver an application in
the near future. I understand that if I do not provide a Taxpayer
Identification Number by the time of payment, 31% of all reportable
payments made to me will be withheld, but that such amounts will be
refunded to me if I then provide the Depositary a Taxpayer Identification
Number within sixty (60) days.
Signature: Date:
Questions and requests for assistance may be directed to the Information
Agent at its address and telephone number listed below. Additional copies
of the Offer to Purchase, the Letter of Transmittal and other tender offer
materials may be obtained from the Information Agent as set forth below.
You may also contact your broker, dealer, commercial bank, trust company or
other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
MACKENZIE
PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (call collect)
or
CALL TOLL-FREE (800) 322-2885
Exhibit (a)(3)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
WESTBRAE NATURAL, INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery or one substantially equivalent hereto
must be used to accept the Offer (as defined below) if certificates
representing shares of common stock, par value $.01 per share (the "Shares"),
of Westbrae Natural, Inc., a Delaware corporation (the "Company"), are not
immediately available or if the procedure for book-entry transfer cannot be
completed on a timely basis or time will not permit all required documents to
reach Continental Stock Transfer & Trust Company (the "Depositary") prior to
the Expiration Date (as defined in the Offer to Purchase dated September 12,
1997 (the "Offer to Purchase")), or the procedures for book-entry transfer
cannot be completed on a timely basis. This Notice of Guaranteed Delivery may
be delivered by hand, facsimile transmission or mail to the Depositary. See
Section 3 of the Offer to Purchase.
The Depositary for the Offer Is:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
By Mail: By Facsimile Transmission: By Hand or By Overnight
Courier:
Continental Stock (212) 509-5150
Transfer & Continental Stock
Trust Company Transfer & Trust Company
2 Broadway (19th Floor) 2 Broadway (19th Floor)
New York, New York 10004 New York, New York 10004
Attn: Reorganization Attn: Reorganization
Department Department
To Confirm Facsimile Transmission, call:
(212) 509-4000, Ext. 535
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION
TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY OR ONE SUBSTANTIALLY EQUIVALENT HERETO,
PROPERLY COMPLETED AND DULY EXECUTED, MUST BE RECEIVED BY THE DEPOSITARY PRIOR
TO THE EXPIRATION DATE.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to the Eligible Institution.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED
Ladies and Gentlemen:
The undersigned hereby tenders to Hain Acquisition Corp., a Delaware
corporation (the "Purchaser"), and a wholly owned subsidiary of The Hain Food
Group, Inc., a Delaware corporation (the "Parent"), upon the terms and subject
to the conditions set forth in the Offer to Purchase, dated September 12, 1997
(the "Offer to Purchase"), and in the related Letter of Transmittal (which
together constitute the "Offer"), receipt of each of which is hereby
acknowledged, the number of Shares indicated below pursuant to the guaranteed
delivery procedures set forth in Section 3 of the Offer to Purchase.
Number of Shares: Name(s) of Record Holder(s): _________
Shares _______________________________ ______________________________________
Certificate No(s). (if available): ___ ______________________________________
______________________________________ Address(es): _________________________
______________________________________ ______________________________________
______________________________________
[_Check]here if Share(s) will be Area Code and Telephone Number(s): ___
tendered by book-entry transfer ______________________________________
made to an account maintained by
the Depositary with The Depository Signature(s): ________________________
Trust Company and complete the ______________________________________
following: ______________________________________
Account Number: ______________________
THE GUARANTEE BELOW MUST BE COMPLETED
Date: ________________________________
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a bank, broker, dealer, credit union, savings association
or other entity which is a member in good standing of the Securities Transfer
Agents Medallion Program or a bank, broker, dealer, credit union, savings
association or other entity which is an "eligible guarantor institution," as
such term is defined in Rule 17Ad-15 under the Securities Exchange Act of
1934, as amended, and guarantees the delivery to the Depositary of the Shares
tendered hereby, together with a properly completed and duly executed Letter
of Transmittal (or a manually signed facsimile thereof), and any other
required documents or an Agent's message (as defined in the Offer to Purchase)
in the case of a book-entry delivery of Shares, all within four NASDAQ trading
days after the date hereof.
______________________________________ ______________________________________
Name of Firm (Authorized Signature)
______________________________________ Title: _______________________________
Address
______________________________________ Name: ________________________________
Area Code and Tele. Number: __________ ______________________________________
(Please type or print)
Date: ________________________________
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED
DELIVERY. CERTIFICATES FOR SHARES SHOULD ONLY BE SENT TOGETHER WITH
YOUR LETTER OF TRANSMITTAL.
Exhibit (a)(4)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
WESTBRAE NATURAL, INC.
AT
$3.625 NET PER SHARE
BY
HAIN ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
THE HAIN FOOD GROUP, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON OCTOBER 9, 1997, UNLESS THE OFFER IS EXTENDED.
September 12, 1997
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by Hain Acquisition Corp., a Delaware corporation
(the "Purchaser") and a wholly owned subsidiary of The Hain Food Group, Inc.,
a Delaware corporation ("Parent"), to act as Information Agent in connection
with the Purchaser's offer to purchase all outstanding shares of common stock,
par value $.01 per share (the "Shares"), of Westbrae Natural, Inc., a Delaware
corporation (the "Company"), at a purchase price of $3.625 per Share, net to
the seller in cash, without interest thereon, upon the terms and subject to
the conditions set forth in the Offer to Purchase, dated September 12, 1997
(the "Offer to Purchase"), and in the related Letter of Transmittal (which
together constitute the "Offer") enclosed herewith. The Offer is being made in
connection with the Agreement and Plan of Merger, dated September [11], 1997
among the Parent, Purchaser, and the Company (the "Merger Agreement"). Holders
of Shares whose certificates for such Shares (the "Share Certificates") are
not immediately available, or who cannot deliver their Share Certificates and
all other required documents to the Depositary (as defined below) prior to the
Expiration Date (as defined in the Offer to Purchase) or who cannot complete
the procedures for book-entry transfer on a timely basis, must tender their
Shares according to the guaranteed delivery procedures set forth in Section 3
of the Offer to Purchase.
Please furnish copies of the enclosed materials to those of your clients for
whose accounts you hold Shares registered in your name or in the name of your
nominee.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer a number of
Shares which constitutes at least a majority of the Shares outstanding on a
fully diluted basis. The Offer is also subject to other terms and conditions
which are set forth in the Offer to Purchase.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase.
2. The Letter of Transmittal to tender Shares for your use and for the
information of your clients. Manually signed facsimile copies of the
appropriate Letter of Transmittal may be used to tender Shares.
3. The Notice of Guaranteed Delivery for Shares to be used to accept the
Offer if Share Certificates are not immediately available or time will not
permit all required documents to reach Continental Stock Transfer & Trust
Company (the "Depositary") prior to the Expiration Date, or the procedures
for book-entry transfer cannot be completed on a timely basis.
4. A printed form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer.
5. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
6. A return envelope addressed to the Depositary.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, OCTOBER 9, 1997,
UNLESS THE OFFER IS EXTENDED.
In order to accept the Offer, the Letter of Transmittal (or a manually
signed facsimile thereof), properly completed and duly executed with any
required signature guarantees, or an Agent's Message (as defined in the Offer
to Purchase) in connection with a book-entry transfer of Shares and any other
documents required by the Letter of Transmittal should be sent to the
Depositary and either Share Certificates evidencing the tendered Shares should
be delivered to the Depositary or Shares should be tendered by book-entry
transfer into the Depositary's account maintained at one of the Book Entry
Facilities (as described in the Offer to Purchase), all in accordance with the
instructions set forth in the Letter of Transmittal and the Offer to Purchase.
If holders of Shares wish to tender Shares pursuant to the Offer and such
holders' Share Certificates are not immediately available or time will not
permit all required documents to reach the Depositary prior to the Expiration
Date or the procedures for book-entry transfer cannot be completed on a timely
basis, such Shares may nevertheless be tendered by following the guaranteed
delivery procedures specified in Section 3 of the Offer to Purchase.
Neither the Purchaser, the Parent, nor any officer, director, stockholder,
agent or other representative of the Purchaser will pay any commissions or
fees to any broker, dealer or other person other than the Depositary and the
Information Agent, as described in the Offer to Purchase) for soliciting
tenders of Shares pursuant to the Offer. The Purchaser will, however, upon
request, reimburse you for customary clerical and mailing expenses incurred by
you in forwarding any of the enclosed materials to your clients. The Purchaser
will pay or cause to be paid any stock transfer taxes payable on the transfer
of Shares to it, except as otherwise provided in Instruction 6 of the Letter
of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to,
and additional copies of the enclosed material may be obtained by contacting
the undersigned at (800) 322-2885 (toll-free) or (212) 929-5500 (call
collect).
Very truly yours,
MacKenzie Partners, Inc.
---------------
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF THE PARENT, PURCHASER, THE COMPANY, THE
DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THEM, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE OFFER TO
PURCHASE AND THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
Exhibit (a)(5)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
WESTBRAE NATURAL, INC.
AT
$3.625 NET PER SHARE
BY
HAIN ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
THE HAIN FOOD GROUP, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, OCTOBER 9, 1997, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated September
12, 1997 (the "Offer to Purchase"), and the related Letter of Transmittal
(which together constitute the "Offer") relating to the offer by Hain
Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly owned
subsidiary of The Hain Food Group, Inc., a Delaware corporation ("Parent"), to
purchase all outstanding shares of Common Stock, par value $.01 per share (the
"Shares"), of Westbrae Natural, Inc., a Delaware corporation (the "Company"),
at a purchase price of $3.625 per Share, net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth in
the Offer. The Offer is being made in connection with the Agreement and Plan
of Merger, dated as of September 11, 1997, among the Parent, Purchaser and the
Company (the "Merger Agreement").
WE ARE (OR OUR NOMINEE IS) THE HOLDER OF RECORD OF SHARES HELD BY US FOR
YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS
FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER
SHARES HELD BY US FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
tender any or all Shares held by us for your account, upon the terms and
conditions set forth in the Offer.
Please note the following:
1. The tender price is $3.625 per Share, net to you in cash, without
interest thereon, upon the terms and subject to the conditions set forth in
the Offer.
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of the Company has approved the Offer and the
Merger (as defined in the Offer to Purchase) and has determined that the
terms of the Offer and the Merger are fair to and in the best interests of
the stockholders of the Company, and recommends that stockholders accept
the Offer and tender their Shares pursuant to the Offer.
4. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on October 9, 1997, unless the Offer is extended.
5. The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer a number of
Shares which constitutes at least a majority of the Shares outstanding on a
fully diluted basis.
6. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, subject to Instruction 6 of the Letter of Transmittal,
stock transfer taxes on the purchase of Shares by the Purchaser pursuant to
the Offer. However, backup federal income tax withholding at a rate of 31%
may be required, unless an exemption applies or unless the required
taxpayer identification information is provided. See Instruction 9 of the
Letter of Transmittal.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing, detaching and
returning to us the instruction form contained in this letter. If you
authorize the tender of your Shares, all such Shares will be tendered unless
otherwise specified on the back page of this letter. An envelope to return
your instructions to us is enclosed. YOUR INSTRUCTIONS SHOULD BE FORWARDED TO
US AS SOON AS POSSIBLE TO ALLOW US AMPLE TIME TO PERMIT US TO SUBMIT A TENDER
ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal. The Offer is not being made to (nor will tenders be accepted from
or on behalf of) holders of Shares residing in any jurisdiction in which the
making of the Offer or the acceptance thereof would not be in compliance with
the securities, blue-sky or other laws of such jurisdiction. In any
jurisdiction where securities, blue-sky or other laws require the Offer to be
made by a licensed broker or dealer, the Offer will be deemed to be made on
behalf of the Purchaser by one or more registered brokers or dealers that are
licensed under the laws of such jurisdiction.
INSTRUCTION WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL
OUTSTANDING SHARES OF COMMON STOCK
OF
WESTBRAE NATURAL, INC.
BY
HAIN ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF THE HAIN FOOD GROUP, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated September 12, 1997 (the "Offer to Purchase"), and the
related Letter of Transmittal (which together constitute the "Offer") in
connection with the offer by Hain Acquisition Corp., a Delaware corporation
(the "Purchaser") and a wholly owned subsidiary of The Hain Food Group, Inc.,
a Delaware corporation (the "Parent"), to purchase all outstanding shares of
Common Stock, par value $.01 per share (the "Shares"), of Westbrae Natural,
Inc., a Delaware corporation (the "Company"), at a purchase price of $3.625
per Share, net to the seller in cash, without interest thereon, upon the terms
and subject to the conditions set forth in the Offer.
This will instruct you to tender to the Purchaser the number of Shares
indicated below (or if no number is indicated below, all Shares) which are
held by you for the account of the undersigned, upon the terms and subject to
the conditions set forth in the Offer.
Number of Shares To Be Tendered:* Shares
Dated: , 1997
- -------
* Unless otherwise indicated,
it will be assumed that you
instruct us to tender all
Shares held by us for your
account.
- -------------------------------------------------------------------------------
SIGN HERE
Signature(s)
------------------------------------------------------------------------
Print Name(s)
----------------------------------------------------------------------
Address(es)
------------------------------------------------------------------------
Area Code and Telephone Number(s)
-------------------------------------------------------
Taxpayer Identification or
Social Security Number(s)
--------------------------------------------------------------
Exhibit (a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.-- Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e. 00-0000000. The table below will help determine the
number to give the payer.
- ----------------------------------- -----------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- --------------------------------------------
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, any one
of the
individuals(1)
3. Husband and wife (joint The actual owner
account) of the account
or, if joint
funds, either
person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if
account) the minor is the
only
contributor, the
minor(1)
6. Account in the name of The ward, minor,
guardian or committee or incompetent
for a designated ward, person(3)
minor, or incompetent
person
7.a The usual revocable The grantor-
savings trust account trustee(1)
(grantor is also
trustee)
b So-called trust account The actual
that is not a legal or owner(1)
valid trust under State
law
8. Sole proprietorship The owner(4)
account
- --------------------------------------------
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
---
9. A valid trust, estate, The legal entity
or pension trust (Do not furnish
the identifying
number of the
personal
representative
or trustee
unless the legal
entity itself is
not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, The organization
or educational
organization account
12. Partnership account The partnership
held in the name of the
business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or registered The broker or
nominee nominee
15. Account with the The public
Department of entity
Agriculture in the name
of a public entity
(such as a State or
local government,
school district, or
prison) that receives
agricultural program
payments
---
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate or pension trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number, at the local office
of the Social Security Administration or the Internal Revenue Service and
apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual
retirement plan.
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency, or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a).
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
. An entity registered at all times under the Investment Company Act of
1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT
TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS,
ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1993, payers must generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer.
Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you
fail to furnish your taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
under-payment attributable to that failure unless there is clear and
convincing evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
EXHIBIT (a)(7)
[LETTERHEAD OF MACKENZIE PARTNERS, INC.]
The records of the transfer agent of Westbrae Natural, Inc. ("Westbrae")
indicate that you have not previously exchanged your Vestro Natural Foods,
Inc. ("Vestro") share certificate for shares of Westbrae, either in accordance
with the June 1997 name change, pursuant to which Vestro became Westbrae or,
in some cases, the January 1994 one-for-ten reverse stock split.
Enclosed you will find documents relating to an offer to purchase Westbrae
by Hain Acquisition Corp. and The Hain Food Group, Inc. (together, "Hain").
You may participate in this tender offer using your Vestro share certificate
and completing the letter of transmittal along with any other required
documents.
Please Note: If your Vestro share certificate was issued prior to the
January 1994 one-for-ten reverse stock split, share amounts represented on
such certificates will be converted by the depositary, Continental Stock
Transfer & Trust Company, at the reverse stock split ratio of one-for-ten, to
determine the purchase price. For example, if you hold such a certificate for
100 shares, the depositary will convert that to 10 shares of Westbrae and you
will receive $36.25 based on the $3.625 net per share offer from Hain.
The offer is fully explained in the enclosed materials. However, should you
have any questions, you may call MacKenzie Partners, Inc., who is acting as
information agent for the offer, at (800) 322-2885 (Toll Free) or (212) 929-
5500 (call collect).
Exhibit (a)(8)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares (as defined below). The Offer (as defined below) is made solely
by the Offer to Purchase dated September 12, 1997 and the related Letter of
Transmittal, and is being made to all holders of Shares. The Purchaser (as
defined below) is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If the Purchaser becomes aware of any valid state statute
prohibiting the making of the Offer or the acceptance of Shares pursuant
thereto, the Purchaser will make a good faith effort to comply with
such state statute. If after such good faith effort, the Purchaser
cannot comply with such state statute, the Offer will not be made
to (nor will tenders be accepted from or on behalf of) the holders
of Shares in such state. In any jurisdiction where the securities,
blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer shall be deemed to be made on behalf
of the Purchaser by one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
WESTBRAE NATURAL, INC.
AT
$3.625 NET PER SHARE
BY
HAIN ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
THE HAIN FOOD GROUP, INC.
Hain Acquisition Corp., a Delaware corporation (the "Purchaser"), and a
wholly owned subsidiary of The Hain Food Group Inc., a Delaware corporation
("Parent"), is offering to purchase all outstanding shares of the common stock,
par value $.01 per share (the "Shares"), of Westbrae Natural, Inc., a Delaware
corporation (the "Company"), at $3.625 per Share net to the seller in cash,
without any interest, upon the terms and subject to the conditions set forth in
the Offer to Purchase, dated September 12, 1997 (the "Offer to Purchase") and in
the related Letter of Transmittal (which together constitute the "Offer").
Following the Offer, the Purchaser intends to effect the Merger (as defined
below).
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON THURSDAY, OCTOBER 9, 1997, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
The Offer is conditioned upon, among other things, (i) there being
validly tendered and not withdrawn prior to the Expiration Date (as defined in
the Offer to Purchase) a number of shares of the Company which represents at
least a majority of the total number of shares outstanding on a fully diluted
basis (the "Minimum Condition") and (ii) Parent obtaining, prior to the
expiration of the Offer, sufficient financing, on terms reasonably acceptable to
Parent, to enable the consummation of the Offer and the Merger. The Purchaser
estimates that approximately 3,479,732 shares will need to be validly tendered
(and not validly withdrawn) to satisfy the Minimum Condition.
The Offer is being made pursuant to an Agreement and Plan of Merger
dated as of September 11, 1997 (the "Merger Agreement"), by and among the
Parent, the Purchaser and the Company. The Merger Agreement provides that,
following the satisfaction or waiver of the conditions to the Offer, the
Purchaser will accept for payment, in accordance with the terms of the Offer,
all Shares validly tendered pursuant to the Offer as soon as practicable after
the Expiration Date. After the completion of the Offer, the Purchaser and the
Company will merge (the "Merger") and each Share then outstanding (other than
Shares held by the Parent, the Purchaser, the Company or any direct or indirect
subsidiary of the Parent, the Purchaser or the Company, and Shares with respect
to which dissenter's rights under the Delaware General Corporation Law, as
amended, are properly exercised) will be converted upon effectiveness of the
Merger (the "Effective Time") into the right to receive $3.625 in cash, without
any interest. Following the consummation of the Merger, the Company will
continue as the surviving corporation and will be a wholly owned subsidiary of
the Parent.
The Board of Directors of the Company has unanimously approved the
Offer, the Merger and the Merger Agreement, has determined that the terms of the
Offer, the Merger and the Merger Agreement are fair to and in the best interests
of the stockholders of the Company and recommends that stockholders accept the
Offer and tender their shares pursuant to the Offer.
Simultaneously with entering into the Merger Agreement, the Parent
entered into a Stockholders Agreement (the "Stockholders Agreement") with
certain stockholders of the Company (the "Tendering Stockholders"). Pursuant to
the Stockholders Agreement, each Tendering Stockholder has agreed to tender (and
not withdraw) pursuant to the Offer and before the Expiration Date all of the
Shares owned of record or beneficially by such Tendering Stockholder on the date
of the Stockholders Agreement, together with any Shares acquired by any such
Tendering Stockholder prior to the termination of the Stockholders Agreement. As
of the date hereof, the Tendering Stockholders beneficially own 4,098,654
outstanding shares or approximately 68.9% of all outstanding Shares (71.0% of
the outstanding Shares on a fully diluted basis). Assuming compliance with the
Stockholders Agreement, the Minimum Condition will be satisfied.
The Offer is subject to certain conditions set forth in the Offer to
Purchase. If any such condition is not satisfied prior to the time of payment
for any Shares, the Purchaser may (i) terminate the Offer and return all
tendered Shares to tendering stockholders, (ii) extend the Offer and, subject to
withdrawal rights as set forth below, retain all such Shares until the
expiration of the Offer as so extended, (iii) waive such condition and, subject
to any requirement to extend the period of time during which the Offer is open,
purchase all Shares validly tendered by the Expiration Date and not withdrawn,
or (iv) delay acceptance for payment of or payment for Shares, subject to
applicable law, until satisfaction or waiver of the conditions of the Offer.
For purposes of the Offer, the Purchaser shall be deemed to have
accepted for payment (and thereby purchased) tendered Shares as, if and when the
Purchaser gives oral or written notice to Continental Stock Transfer & Trust
Company (the "Depositary") of the Purchaser's acceptance of such Shares for
payment pursuant to the Offer. Payment for Shares purchased pursuant to the
Offer will be made by deposit of the purchase price with the Depositary, which
will act as agent for tendering stockholders for the purpose of receiving
payment from the Purchaser and transmitting payments to tendering stockholders.
The Purchaser will not, under any circumstances, pay interest on the purchase
price, regardless of any delay in making such payment. In all cases, payment for
Shares purchased pursuant to the Offer will be made only after timely receipt by
the Depositary of (i) the certificates evidencing the Shares or timely
confirmation of a book-entry transfer of such Shares into the Depositary's
account at the Book-Entry Transfer Facility (as defined in the Offer to
Purchase) pursuant to the procedures set forth in the Offer to Purchase, (ii)
the Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or an Agent's Message (as
defined in the Offer to Purchase) and (iii) any other documents required by the
Letter of Transmittal.
The Purchaser expressly reserves the right, in its sole discretion, at
any time and from time to time, to extend the period of time during which the
Offer is open (but subject to the terms and conditions of the Merger Agreement)
by giving oral or written notice of such extension to the Depositary. Any such
extension will be followed, as soon as practicable, by public announcement
thereof, no later than 9:00 a.m. New York City time, on the next business day
after the previously scheduled Expiration Date.
Tenders of Shares made pursuant to the Offer will be irrevocable, except
that Shares tendered may be withdrawn at any time prior to the Expiration Date
and, unless previously accepted for payment, may also be withdrawn after
November 10, 1997. If the Purchaser is delayed in its acceptance or purchase of
or payment for Shares or is unable to purchase or pay for Shares for any reason,
then, without prejudice to the Purchaser's rights, tendered Shares may be
retained by the Depositary on behalf of the Purchaser and may not be withdrawn
except as described in the Offer to Purchase.
For a withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Depositary at one of its
addresses specified on the back cover of the Offer to Purchase. Any such notice
of withdrawal must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and, if certificates
representing such Shares have been delivered or otherwise identified to the
Depositary, the name(s) in which such certificate(s) is (are) registered, if
different from the name of the person tendering such Shares. If certificates
have been delivered or otherwise identified to the Depositary, then prior to the
physical release of such certificates, the tendering stockholder must also
submit the serial numbers shown on the particular certificates evidencing such
Shares and the signature on the notice of withdrawal must be guaranteed by a
member firm of a registered national securities exchange, a member of the
National Association of Securities Dealers, Inc., a commercial bank or trust
company having an office, branch or agency in the United States or any other
institution that is a member of the Medallion Signature Guaranty Program. If
Shares have been tendered pursuant to the procedure for book-entry tender set
forth in the Offer to Purchase, the notice of withdrawal must specify the name
and account number(s) of the account(s) at the Book-Entry Transfer Facility to
be credited with the withdrawn Shares. All questions as to the form and validity
(including time of receipt) of notices of withdrawal will be determined by the
Purchaser, in its sole discretion, whose determination shall be final and
binding.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Company has provided the Purchaser with the Company's stockholder
list and security position listings for the purpose of disseminating the Offer
to holders of Shares. The Offer to Purchase and the related Letter of
Transmittal will be mailed to record holders of Shares and will be furnished to
brokers, dealers, banks and similar persons whose names, or the names of whose
nominees, appear on the stockholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares.
The Offer to Purchase and the related Letter of Transmittal contain
important information which should be read carefully before any decision is made
with respect to the Offer.
Questions and requests for assistance or for additional copies of the
Offer to Purchase and the related Letter of Transmittal and other tender offer
materials may be directed to the Information Agent at its telephone numbers and
location as set forth below, and copies will be furnished promptly at the
Purchaser's expense. The Purchaser will not pay any fees or commissions to any
broker or dealer or any other person for soliciting tenders of Shares pursuant
to the Offer.
The Information Agent for the Offer is:
MacKenzie
Partners, Inc.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
CALL TOLL-FREE (800) 322-2885
September 12, 1997
EXHIBIT (b)(1)
[IBJ LETTERHEAD]
September 11, 1997
The Hain Food Group, Inc.
50 Charles Lindbergh Boulevard
Uniondale, New York 11553
Attention: Mr. Irwin D. Simon
President
Ladies and Gentlemen:
The Hain Food Group, Inc, (the "Borrower") has advised IBJ Schroder Bank & Trust
Company ("IBJS") that it intends to (a) acquire 100% of the outstanding capital
stock of Westbrae Natural, Inc. ("Westbrae"), (b) retire all existing stock
options of Westbrae for up to $2,200,000, (c) refinance all of the Borrower's
existing indebtedness to IBJS, and (d) refinance existing indebtedness of
Westbrae in an amount of up to $2,600,000 (collectively, the "Transaction"). You
have requested IBJS to provide the $40,000,000 senior credit facilities
(collectively, the "Credit Facilities") required to finance the Transaction, to
pay fees and expenses directly related to the Transaction which are acceptable
to IBJS, to finance the continuing working capital requirements of the Borrower
and its subsidiaries from and after the Transaction and to finance in part
future acquisitions to be made by the Borrower and its subsidiaries (subject to
certain terms and restrictions).
IBJS is pleased to confirm its willingness to provide the Credit Facilities.
Although IBJS is committing to provide all of the Credit Facilities on the terms
set forth in the Memorandum of Terms and Conditions and the separate
confidential Fee Letter referred to below, IBJS may act as agent for a syndicate
of financial institutions (together with IBJS, the "Lenders") to provide all or
a portion of the Credit Facilities.
Attached to this letter is a Memorandum of Terms and Conditions (the "Memorandum
of Terms and Conditions") and separately enclosed is a confidential fee letter
(the "Fee Letter") setting forth the principal terms and conditions on and
subject to which IBJS is willing to make the Credit Facilities available.
It is agreed that IBJS will act as the sole agent for, and sole arranger and
syndication manager of, the Credit Facilities and that no additional agents or
co-agents or arrangers will be appointed without the prior written consent of
IBJS.
You agree to assist IBJS in forming any such syndicate and to provide IBJS and
the other Lenders, promptly upon request, with all information deemed necessary
by them to complete successfully the syndication, including, but not limited to,
(a) an information package for delivery to potential syndicate members and
participants and (b) all information and projections prepared by you or your
advisers relating to the transactions described herein. You agree to coordinate
any other financings by the Borrower or any of its affiliates with the Lenders'
syndication effort and to refrain from any such financings during such
syndication process unless otherwise agreed to by IBJS. You further agree to
make appropriate officers and representatives of the Borrower and its
subsidiaries available to participate in information meetings for potential
syndicate members and participants at such times and places as IBJS
The Hain Food Group, Inc. -2-
may reasonably request.
You represent, warrant and covenant that:
(1) all information which has been or is hereafter made available to IBJS
by you or any of your representatives in connection with the transactions
contemplated hereby is and will be complete and correct in all material
respects and does not and will not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements contained therein not materially misleading in light of the
circumstances under which such statements are made; and
(2) all financial projections that have been or are hereafter prepared by
you and are available to IBJS or any other participants in the Credit
Facilities have been or will be prepared in good faith based upon
reasonable assumptions.
You agree to supplement the information and projections referred to in clauses
(1) and (2) above from time to time until completion of the syndication of the
Credit Facilities so that the representations and warranties in the preceding
sentence remain correct. In arranging and syndicating the Credit Facilities,
IBJS will use and rely on such information and projections without independent
verification thereof.
In connection with the syndication of the Credit Facilities, IBJS may, in its
discretion, allocate to other Lenders portions of any fees and other
compensation payable to IBJS in connection with the Credit Facilities. You
agree that no Lender will give any compensation of any kind for its
participation in the Credit Facilities, except as expressly provided for in this
letter.
We have reviewed certain historical and pro forma financial statements of the
Borrower and Westbrae delivered by the Borrower. We and our counsel have not had
the opportunity to complete our review of the assets and liabilities (including
contingent liabilities) of the Borrower, Westbrae and respective subsidiaries,
their business and operations and the proposed organization and capital
structure of the Borrower and its subsidiaries after the Transaction. Our
willingness to provide the financing described in this letter is subject to our
satisfactory completion of such review and our continuing satisfaction herewith.
If our continuing review of materials about the Borrower, Westbrae and their
respective subsidiaries discloses information, or we otherwise discover
information not previously disclosed to us, which we believe has or could have a
material adverse effect on business, operations, property, condition (financial
or otherwise) or prospects of the Borrower and its subsidiaries, token as a
whole, Westbrae and its subsidiaries, taken as a whole, or the Transaction, we,
in our sole discretion, may suggest alternative financing amounts or structures
or decline to participate in the proposed financing.
IBJS's commitment hereunder is subject to the negotiation, execution and
delivery prior to October 31, 1997 of definitive documentation with respect to
the Credit Facilities satisfactory in form and substance to IBJS and its
counsel, and shall be prepared by such counsel. Such documentation shall contain
the terms and conditions set forth in the Memorandum of Terms and Conditions and
such other indemnities, covenants, representations and warranties, events of
default, conditions precedent, security arrangements
The Hain Food Group -3-
and other terms and conditions as shall be satisfactory in all respects to IBJS.
The terms and conditions of IBJS's commitment hereunder and of the Credit
Facilities are not limited to the terms and conditions set forth herein and in
the Memorandum of Terms and Conditions, and matters which are not covered by the
provisions of this letter and the Memorandum of Temps and Conditions are subject
to the approval of IBJS and its counsel.
The costs and expenses (including, without limitation, the fees and expenses of
counsel to IBJS and IBJS's syndication and other out-of-pocket expenses) arising
in connection with the preparation, execution and delivery of this letter and
the definitive financing agreements shall be for your account. You further agree
to indemnify and hold harmless each Lender (including IBJS) and each director,
officer, employee, affiliate and agent thereof (each, an "indemnified person")
----------- ------
against, and to reimburse each indemnified person, upon its demand, for, any
losses, claims, damages, liabilities or other expenses ("Losses") to which such
------
indemnified person may become subject insofar as such Losses arise out of or in
any way relate to or result from the Transaction, this letter or financing
contemplated hereby, including, without limitation, Losses consisting of legal
or other expenses incurred in connection with investigating, defending or
participating in any legal proceeding relating to any of the foregoing (whether
or not such indemnified person is a party thereto); that the foregoing will not
apply to any Losses to the extent they result are found by a final decision of a
court of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of such indemnified person. In addition, should any
indemnified person be involved (whether as party, witness or otherwise) in any
litigation or other proceeding in connection with the transactions contemplated
hereby, you agree to compensate such indemnified party in an amount equal to its
customary per diem charges for each day that such indemnified party is involved
in preparation, discovery proceedings or testimony pertaining to any such
litigation or other proceedings. Your obligations under this paragraph shall
remain effective whether or not definitive financing documentation is executed
and notwithstanding any termination of this letter. Neither IBJS nor any other
indemnified person shall be responsible or liable to any other person for
consequential damages which may be alleged as a result of IBJS's letter or the
financing contemplated hereby.
By executing this letter, you acknowledge that this letter, the Fee Letter and,
with respect to the Deposit referred to in the proposal letter from IBJS to you
dated September 4, 1997 (the "Proposal Letter"), the Proposal Letter, are the
only agreements between you and IBJS with respect to the Credit Facilities and
set forth the entire understanding of the parties with respect thereto. Neither
this letter, the Fee Letter nor the Proposal Letter may be changed except
pursuant to a writing signed by each of the parties hereto. To the extent of any
conflict between this letter and the Proposal Letter (including any attachments
thereto), this letter shall control. This letter and the Fee Letter shall be
governed by, and construed in accordance with, the laws of the State of New
York.
This letter is delivered to you on the understanding that neither this letter,
the Proposal Letter, the Fee Letter nor any of their terms or substance shall be
disclosed, directly or indirectly, to any other person except to your employees,
agents and advisers who are directly involved in the consideration of this
matter or as disclosure may be compelled to be disclosed in a judicial or
administrative proceeding or as otherwise required by law.
The Hain Food Group, Inc. -4-
If you are in agreement with the foregoing, please sign and return to IBJS the
enclosed copies of this letter and the Fee Letter no later than 5 pm, New York
time, on September 12, 1997. This offer shall terminate at such time unless
prior thereto we shall have received signed copies of this letter, the Fee
Letter and payment of the amount due under the Fee Letter.
This letter, the Memorandum of Terms and Conditions and the Fee Letter supersede
in their entirety the letter and Memorandum of Terms and Conditions of IBJS,
dated September 8, 1997.
We look forward to working with you on this transaction.
Very truly yours,
IBJ SCHRODER BANK & TRUST COMPANY
By: /s/ Michael Graham
------------------------------------
Title: Director
Accepted and agreed to as of
the date first above written:
THE HAIN FOOD GROUP, INC.
By: /s/ Irwin D. Simon
------------------------------
Title: President and Chief
Executive Officer
-------------------------
MEMORANDUM OF TERMS & CONDITIONS
--------------------------------
SEPTEMBER 11, 1997
BORROWER: The Hain Food Group, Inc.
- ---------
GUARANTORS: Hain Pure Food Co., Inc.
- -----------
Kineret Foods Corporation
Any other current or future subsidiaries of the Borrower
TOTAL
FACILITY: $ 40,000,000
- ---------
TYPE &
AMOUNT OF
FINANCING: FACILITY A: $30,000,000 Secured Term Loan
- ----------
FACILITY B: $10,000,000 Secured Revolving Credit
AGENT: IBJ SCHRODER BANK & TRUST COMPANY ("IBJS")
- ------
LENDERS: IBJS and other institutions selected by IBJS prior to or after
- --------
the Closing Date
CLOSING
DATE: No later than October 31, 1997
- -----
TERM/
MATURITY: The final maturity of Facility A will be six years from the
- ---------
Closing Date.
The final maturity of Facility B will be six years from the
Closing Date.
PURPOSE: FACILITY A: To (a) acquire 100% of the outstanding capital
- -------- -----------
stock of Westbrae Natural, Inc. ("Westbrae"), (b) retire all
existing stock options of Westbrae for up to $2,200,000, (c)
refinance all existing indebtedness to IBJS, (d) refinance
existing indebtedness of Westbrae of no more than $2,600,000 and
(e) pay up to $1,200,000 of fees and expenses related to the
transaction contemplated herein. To the extent that the facility
is utilized to finance the tender offer for all of the capital
stock of Westbrae, IBJS will be entitled to structure the
facility in a manner appropriate for a margin stock lending.
FACILITY B: To (a) provide for ongoing working capital needs
-----------
and (b) fund a portion of the purchase price of companies to be
acquired subject to certain terms and conditions limited to
$4,000,000 in aggregate revolving indebtedness throughout the
term of the facility. (See Acquisition Restrictions below.) Note
that amounts utilized for acquisitions shall be repaid with
payments calculated on
1
a five year straight line basis payable over the remaining life
of the Facility. The first payment on any such borrowing shall
be due on the last day of the calendar quarter in which the draw
is made and the balance of outstandings remaining at the
maturity of the Facilities shall be due in full. Under no
circumstances shall any amounts outstanding under Facility B be
due and payable any later than the maturity date of the
Facilities.
AVAILABILITY: FACILITY A: A single draw will be permitted at closing. No
- ------------- -----------
subsequent draws of additional funds will be permitted.
Facility B: Amounts may be drawn, reborrowed and redrawn from
----------
closing through the maturity date. At no time will outstandings
under this facility exceed the lesser of (i) the commitment
amount and (ii) availability under the borrowing base. Borrowing
base terms including eligibility criteria and advance rates will
be finalized after the completion of procedures satisfactory to
IBJS regarding Westbrae's assets, liabilities and systems which
will be conducted by CPAs acceptable to IBJS.
Amortization: Facility A: The Borrower shall make quarterly principal payments
- ------------- -----------
commencing on December 31, 1997 as follows:
Year Quarterly Payment Annual Total
---- ----------------- ------------
1 $750,000 $3,000,000
2 $950,000 $3,800,000
3 $1,250,000 $5,000,000
4 $1,437,500 $5,750,000
5 $1,437,500 $5,750,000
6 $1,675,000 $6,700,000
----------
Total $30,000,000
Facility B: The facility will be repaid in full as of the final
-----------
maturity date. Draws used to finance acquisitions shall be
repaid in equal quarterly installments calculated as if each
draw were a five year loan. The first installment shall be due
on the last day of the calendar quarter in which such draw is
made. However, any balance remaining as of the maturity date
shall be repaid in full. Under no circumstances will any amounts
outstanding under this facility be due and payable after the
maturity date
2
of the Facilities.
MANDATORY
PREPAYMENTS: EXCESS CASH FLOW SWEEP: On an annual basis, after IBJS's receipt
- ------------
of the Borrower's year end audited numbers, the Borrower will
use 75% of excess cash flow, as defined in the loan documents,
to make a mandatory prepayment of term debt. If the Borrower
issues shares of common stock to the public which generate net
proceeds of at least $15,000,000 then the percentage of excess
cash flow required to be used to make mandatory repayments shall
be reduced to 50% thereafter. The first excess cash flow sweep
payment will be due immediately following receipt of the June
30, 1998 financial statements.
ASSET SALES: The Borrower shall promptly repay the Facilities
with the 100% of the proceeds of any sales of assets other than
sales of inventory in the ordinary course of business if such
sale generates proceeds of $100,000 or more.
EQUITY PROCEEDS: The Borrower shall promptly repay the
Facilities in an amount equal to 50% of the net proceeds of any
sale of capital stock or exercise of warrants which generates
net proceeds in excess of $100,000.
INSURANCE PROCEEDS: The Borrower shall within 120 days following
receipt thereof repay the Facilities in an amount equal to the
net proceeds of any claims received for losses less any amounts
expended to replace assets or restore operations if such amount
equals or exceeds $100,000.
APPLICATION OF PAYMENTS: All Mandatory Prepayments will be
applied first to Facility A and will be applied in the inverse
order of maturity. Upon repayment in full of Facility A,
payments will be applied to Facility B. Repayments of Facility B
under this provision shall first be used to repay amounts drawn
for acquisitions and then to any other outstandings. Repayments
will not permanently reduce the commitment and may be reborrowed
subject to compliance with the terms and conditions of the
credit agreement. Refer to the Fees detailed below.
VOLUNTARY
PREPAYMENTS: Voluntary prepayments of Facilities A and B may be made from
- ------------
time to time subject to the Fees detailed below. All Voluntary
Prepayments will be applied first to Facility B and then to
Facility A and in each will be applied in the inverse order of
maturity. Prepayments of Facility B under this provision shall
first be used to repay amounts drawn for acquisitions and then
to any other outstandings. Prepayments will not permanently
3
reduce the commitment and may be reborrowed subject to
compliance with the terms and conditions of the credit
agreement.
COLLATERAL
FOR LOANS: Loans will be secured by a first priority perfected security
- ----------
interest in all of the Borrower's and Guarantors' present and
future accounts receivable, general intangibles, contract rights
(including the purchase agreement to be executed in connection
with this transaction), all rights to the payment of money,
instruments, documents, chattel paper, inventory, machinery,
equipment, furniture, fixtures, licenses, trademarks, trade
names, patents, copyrights and other assets. In addition, all of
the shares of stock of the Guarantors shall be pledged to IBJS.
All proceeds and products of the Collateral shall be subject to
no claims, liens or encumbrances except in IBJS's favor or with
IBJS's prior written consent.
Interest
Rate: FACILITY A: Outstandings shall bear interest at a rate equal to
- ---- -----------
the Borrower's option of (i) the sum of the Alternate Base Rate
plus 0.75% or (ii) the sum of the Eurodollar Rate plus 2.75%.
FACILITY B: Outstandings shall bear interest at a rate equal to
-----------
the Borrower's option of (i) the sum of the Alternate Base Rate
plus 0.75% or (ii) the sum of the Eurodollar Rate plus 2.75%.
Note that the above rates will be subject to a pricing grid
under which quarterly measurements of Senior Debt to trailing
twelve month EBITDA (adjusted on a pro forma basis in a manner
to be agreed for the Westbrae and other acquisitions) can
influence the interest rate for the succeeding quarter on each
facility as follows:
Ratio of Senior Debt to LTM EBITDA Pricing Adjustment
---------------------------------- ------------------
>4.50 +0.25%
-
up to 4.50 and >3.50 No adjustment
-
up to 3.50 and >3.00 -0.25%
-
up to 3.00 and >2.50 -0.50%
-
below 2.50 -0.75%
All interest on the Alternate Base Rate loans is due and payable
monthly in arrears, calculated on a 360 day basis. The
Alternative Base Rate shall mean, for any day, a rate per annum
equal to the higher of (i) the Base Rate of IBJS or (ii) the
Federal Funds Rate in effect on such day plus one-half of one
percent (.5%). The Base Rate of IBJS shall mean the rate of
interest publicly announced from time to time by IBJS as its
Base Rate and is not necessarily the lowest rate charged to
borrowers by IBJS.
4
Interest on Eurodollar borrowings shall be payable at the end of
the applicable interest period. Interest periods of one, three
or six months will be available to the Borrowers provided that
interest for borrowings under six month interest periods shall
be payable three months after the inception of such period with
the balance payable at the end of the interest period. Interest
on all Eurodollar borrowings will be calculated on a 360 day
basis.
YIELD PROTECTION: The Borrower shall indemnify IBJS for any
change in, or enactment of any new law or governmental rule,
regulation, policy, guideline or directive or the administration
thereof which shall have the effect of (a) increasing IBJS's
cost of making, renewing or maintaining the Loans, or (b)
decreasing IBJS's rate of return.
DEFAULT
RATE: The default rate for all loans will be the prevailing applicable
- -----
interest rate for each facility (described above) plus an
additional two percent (2%).
FEES: See separate confidential Fee Letter of even date herewith.
- -----
EXPENSES: All reasonable out-of-pocket expenses including legal,
- ---------
accounting, environmental and other due diligence costs and
expenses (including but not limited to filing and searches and
the recording of UCC-1's, perfecting IBJS's security interest in
and liens upon the Collateral, and expenses related to
structuring, documenting, closing, monitoring, or enforcing the
agreements), whether or not the loans are approved or closed,
shall be for the account of the Borrower. The provisions of this
paragraph shall survive the expiration and termination of this
Memorandum of Terms and Conditions.
CONDITIONS
PRECEDENT: 1) Borrower and Guarantors (together the "Credit Parties") will
- ----------
maintain main operating accounts at IBJS. (Payroll accounts
and depository accounts may be maintained at another bank if
a nearby branch is needed.)
2) The loan structure must be satisfactory to IBJS and its
counsel in their sole discretion. This will include evidence
that outstanding debt obligations of the Credit Parties have
been fully extinguished, other than those debts which are
acceptable to IBJS. All loan documentation will be in form
and substance satisfactory to IBJS.
3) At closing, IBJS shall have received the favorable legal
opinions of the Borrower's counsel as to the due execution,
authorization and enforceability of the documents and as to
such other matters, including due perfection of IBJS's
security interests and liens in the Collateral as
5
IBJS may reasonably request, and IBJS shall have received the
favorable opinion of IBJS counsel, if necessary, as to such
matters as IBJS may reasonably require.
4) Promissory notes payable to the order of IBJS in the
principal amount of the Facilities duly executed by Hain
shall have been received by IBJS.
5) Prior to closing, IBJS shall have completed a satisfactory
review of the Borrower's, Westbrae's and any Guarantor's
books and records, including but not limited to all material
sales contracts, vendor supply contracts and satisfactory
trade references. This will include receipt, review and
satisfaction with due diligence reports prepared by a CPA
firm acceptable to IBJS concerning (i) accounts receivable,
inventory of each Credit Party and (ii) the quality of
Westbrae's historical financial reporting and its accounting
procedures and MIS.
6) Prior to closing, IBJS shall receive evidence that the Credit
Parties are in compliance with all pertinent Federal, State
and local regulations.
7) Documentation shall include provisions regarding waiver of
jury trial and consequential damages.
8) All fees and expenses due at closing shall have been paid in
full.
9) There shall not have been any material adverse change in the
financial condition, business, operations or prospects of any
of the Credit Parties. No material adverse deviation from the
forecasts to be furnished to IBJS shall have occurred, and no
representations made or information supplied to IBJS shall
have proven to be inaccurate or misleading in any material
respect.
10) Prior to closing, IBJS shall receive Hain's Form 10-K for the
fiscal year ended 6/30/97 as filed with the Securities and
Exchange Commission, Westbrae's Form 10-Q for the quarter
ended 6/30/97 as filed with the Securities and Exchange
Commission, the most current available monthly internal
financial statements of Hain and Westbrae, the Borrower's
Borrowing Base Certificate for the calendar month immediately
preceding the closing, a pro forma opening balance sheet as
of the Closing Date, pro forma financial statements for Hain
and Westbrae prepared as if the acquisition had occurred on
July 1, 1997 (including underlying assumptions) and any other
financial information requested by IBJS.
6
11) Prior to closing, IBJS shall receive the Borrower's annual
forecasts for the fiscal years ending 6/30/98 through the
scheduled maturity of the Facilities as well as quarterly
forecasts for the fiscal years ending 6/30/98 and 6/30/99.
Such forecasts shall include the operations of Westbrae, be
prepared on a consolidated and consolidating basis and
shall include income statements, statements of cash flow,
balance sheets and the underlying assumptions used in their
preparation. The cash flow projections shall demonstrate
the ability to meet all obligations as they mature. All
such forecasts shall be prepared on a consolidating and
consolidated basis.
12) Intentionally omitted.
13) The Borrower shall make representations and warranties
appropriate in the judgment of IBJS.
14) Prior to closing, IBJS shall receive (a) such consents and
waivers of third parties (including any landlords,
mortgagees and others) that might have claims against the
Collateral, as IBJS and its counsel shall determine are
necessary; (b) evidence of such insurance coverage on all
Collateral in such amounts, with such insurance carriers,
covering such risks and otherwise as may be acceptable to
IBJS and its counsel, and (c) the issuance of insurance
policies evidencing such coverages that contain Lender's
loss payable endorsement naming IBJS, as agent, as its
interest may appear, in form and substance satisfactory to
IBJS and their counsel.
15) IBJS shall have the right to sell participations or assign
interests in the Facilities in such amounts, to such
participants and upon such terms and granting such rights,
all as IBJS shall determine before or after the closing
date.
16) Prior to closing, IBJS shall review and approve the
corporate structure of the Credit Parties and all
intercompany contracts and transactions between the
Borrower and any affiliates.
17) IBJS shall be satisfied in its sole discretion with the
terms and conditions of the purchase of Westbrae and any
documentation in connection with the acquisition of
Westbrae by the Borrower including, but not limited to, all
employment contracts, leases and co-packing contracts. The
total purchase consideration, including refinancing of
Westbrae debt, may not exceed $27,500,000, (not including
expenses).
18) IBJS shall approve all expenses to be paid by Hain which
are incurred
7
directly because of the consummation of this
transaction. In no event shall total expenses paid in
connection with this transaction exceed $1,200,000.
19) The Borrower shall have minimum liquidity (defined as cash
plus availability under Facility B) of no less than
$7,500,000 at closing.
20) Prior to closing, IBJS shall be satisfied with its review
of regulatory issues, restrictions and compliance issues
which affect Hain including, but not limited to,
environmental and pension liabilities.
21) Hain's existing subordinated debt agreements shall require
no more scheduled principal amortization than appears in
the following table. The definitive loan documents will
restrict Hain's ability to make such principal payments if
the Borrower is not in compliance with all terms and
conditions of the Facilities or if such payments would
cause the Borrower to violate any term or condition.
Year Permitted Payment
---- -----------------
2000 $1,943,000
2001 $0
2002 $2,307,000
2003 $2,125,000
2004 $2,125,000
REPRESENTATIONS
AND WARRANTIES: The Credit Parties will make such representations and
- ---------------
warranties to IBJS as are customarily found in IBJS's
documentation for similar financings and such additional
representations and warranties as may be appropriate in
IBJS's judgment in light of the proposed transaction and
the general circumstances of the Credit Parties including,
without limitation, representation and warranties relating
to the existence, good standing, and authority of the
Borrower; due authorization of all loan documentation;
receipt of all necessary government approvals and
authorization; absence of material litigation; payment of
taxes and other material obligations; ownership by the
Credit Parties of its properties and assets pledged as
collateral to IBJS; absence of liens or similar
encumbrances thereon other than the Permitted Liens; no
material adverse change in the Credit Parties' operations
or financial conditions; validity of all requisite
licenses, permits, patents or other franchises of the
Credit Parties; solvency of the Credit Parties; compliance
with all applicable laws and regulations and such other
representations and warranties as may be deemed appropriate
by counsel to IBJS.
8
COVENANTS: Covenants shall include but not be limited to the following:
- ----------
maintenance of corporate existence, payment of indebtedness and
taxes when due, financial reporting requirements (on a
consolidated and consolidating basis for the Credit Parties),
delivery of certificates of non-default, current or quick ratio,
incrementing net worth, earnings before interest and taxes over
interest ratio, debt to net worth ratio, fixed charge coverage,
excess cash flow recapture, limitation on dividends and stock
repurchases, limitation on capital expenditures, restriction and
quality standards with respect to investments, limitations on
other debt, no additional liens or guarantees other than the
Permitted Liens, no change in nature of business, limitation on
mergers or acquisitions (see below), limitation on purchase of
assets outside of the ordinary course of business, no change in
fiscal year, restrictions on sale of assets, no affiliate
transaction other than in the normal course of business as
presently conducted. Financial covenants shall be set generally
at 80% of projected financial performance as forecast in the
financial projections which previously have been provided to
IBJS by Hain's management.
ACQUISITION
RESTRICTIONS: The Borrower shall be permitted to acquire 100% of the capital
- -------------
stock or substantially all of the assets of another company
("Target") subject to the following restrictions:
1) The Borrower shall be in compliance with all terms and
conditions of the credit agreement;
2) The Borrower shall be in compliance with all terms and
conditions of the credit agreement on a pro forma basis
assuming the Target had been acquired one year prior to the
actual date of the proposed acquisition;
3) The Target must be in a line of business which is
substantially the same as the Borrower's;
4) The Target's financial statements shall be satisfactory to
the bank;
5) A field examination shall be conducted on the Target prior
to closing any acquisition, and the results of such
examination shall be satisfactory to the Lenders;
6) The Borrower shall not incur any liabilities in connection
with any acquisition except: (i) notes payable to sellers
which are subordinated to the Facilities on terms and
conditions satisfactory to the Lenders and (ii) trade credit
assumed;
7) The total consideration for any single Target including
cash, stock, notes and assumed debt may not exceed
$10,000,000 and the aggregate consideration for all
acquisitions may not exceed $20,000,000 in any twelve month
period;
9
8) No more than $2,000,000 of consideration for any single
acquisition may be funded by draws under Facility B.
EVENTS OF
DEFAULT: The loan documents shall contain certain Events of Default
- --------
appropriate for a transaction of this nature, including but not
limited to the following:
1) Any non-payment when due of interest and/or principal of any
advance, loan or drawing under the credit facility, or any
fee thereunder;
2) Any breach of any representation or warranty when made;
3) Any violation in any material respect of any affirmative or
negative covenant;
4) Any of the security interests or liens granted by the
Collateral Documents ceases to be a valid, binding and
enforceable first priority security interest;
5) Acceleration due to any default related to other material
indebtedness by any of the Credit Parties;
6) Any bankruptcy insolvency, attachment, receivership or
similar proceeding shall be instituted by or against any of
the Credit Parties;
7) Any final judgment for the payment of money in excess of
$100,000 shall be rendered against the any of the Credit
Parties and remain unpaid for more than 30 days;
8) Any change in employment status of certain key individuals
agreed to by the Credit Parties and the Bank.
GOVERNING LAW: New York.
- --------------
Hain Commit Ltr
10
EXHIBIT (c)(1)
AGREEMENT AND PLAN OF MERGER
by and among
THE HAIN FOOD GROUP, INC.
HAIN ACQUISITION CORP.
and
WESTBRAE NATURAL, INC.
dated as of
September 11, 1997
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
THE OFFER AND MERGER
Section 1.1 The Offer...........................................2
Section 1.2 Company Actions.....................................4
Section 1.3 Directors...........................................5
Section 1.4 The Merger..........................................6
Section 1.5 Effective Time......................................7
Section 1.6 Closing.............................................7
Section 1.7 Directors of the Surviving Corporation..............7
Section 1.8 Officers of the Surviving Corporation...............7
Section 1.9 Stockholders' Meeting...............................8
Section 1.10 Merger Without Meeting of Stockholders..............8
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock..........................9
Section 2.2 Exchange of Certificates.............................9
Section 2.3 Dissenters' Rights..................................11
Section 2.4 Company Plans.......................................11
Section 2.5 Company Subordinated Debt...........................12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Organization.......................................13
Section 3.2 Capitalization.....................................13
Section 3.3 Authorization; Validity of Agreement...............14
Section 3.4 No Conflict........................................15
Section 3.5 SEC Reports and Financial Statements...............15
Section 3.6 Absence of Certain Changes.........................16
Section 3.7 No Undisclosed Liabilities.........................16
-i-
Page
----
Section 3.8 Litigation.........................................17
Section 3.9 Liens; Insurance...................................17
Section 3.10 Contracts; Permits.................................18
Section 3.11 Employee Benefit Plans.............................18
Section 3.12.. Taxes..............................................20
Section 3.13 Intellectual Property..............................21
Section 3.14 Employment Matters.................................22
Section 3.15 Compliance with Laws...............................22
Section 3.16 Vote Required......................................22
Section 3.17 Environmental Matters..............................22
Section 3.18 Accounts Receivable................................24
Section 3.19 Inventory..........................................24
Section 3.20 Product Warranty...................................24
Section 3.21 Information in Proxy Statement.....................25
Section 3.22 Brokers or Finders; Schedule of Fees and Expenses 25
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER
Section 4.1 Organization........................................25
Section 4.2 Authorization; Validity of Agreement................25
Section 4.3 Brokers or Finders..................................26
Section 4.4 Financing...........................................26
ARTICLE V
COVENANTS
Section 5.1 Conduct of Business.................................26
Section 5.2 Access to Information; Confidentiality..............29
Section 5.3 Consents and Approvals..............................29
Section 5.4 No Solicitation.....................................30
Section 5.5 Additional Agreements...............................31
Section 5.6 Publicity...........................................32
Section 5.7 Notification of Certain Matters.....................32
Section 5.8 Directors' and Officers' Indemnification............32
-ii-
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation to Effect
the Merger..........................................33
Section 6.2 Condition to Parent's and the Purchaser's Obligations
to Effect the Merger................................33
ARTICLE VII
TERMINATION
Section 7.1 Termination...........................................33
Section 7.2 Effect of Termination.................................35
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Fees and Expenses..................................35
Section 8.2 Amendment and Modification.........................36
Section 8.3 Nonsurvival of Representations and Warranties......36
Section 8.4 Notices............................................36
Section 8.5 Interpretation.....................................37
Section 8.6 Counterparts.......................................38
Section 8.7 Entire Agreement; No Third Party Beneficiaries.....38
Section 8.8 Severability.......................................38
Section 8.9 Governing Law......................................38
Section 8.10 Assignment.........................................38
Annex A Certain Conditions of the Offer
Exhibit 1 Stockholders Agreement
Schedule 1 Disclosure Schedule
Schedule 1.8 Officers of the Surviving Corporation
-iii-
INDEX OF DEFINED TERMS
DEFINED TERM SECTION NO.
- ------------ -----------
Agreement.............................................. Recitals
Balance Sheet.......................................... 3.12(a)
By-laws................................................ 1.4
Certificate of Incorporation........................... 1.4
Certificate of Merger.................................. 1.5
Certificates........................................... 2.2(b)
Closing................................................ 1.6
Closing Date........................................... 1.6
Code................................................... 3.11(a)
Common Stock........................................... Recitals
Company................................................ Recitals
Company Board.......................................... 1.2(a)
Company Option......................................... 2.4(a)
Company Reimbursement Amount........................... 8.1(d)
Confidentiality Agreement.............................. 5.2(a)
Contracts.............................................. 3.10(a)
Control Time........................................... 5.1(a)
Copyrights............................................. 3.13(c)
DGCL................................................... 1.4
Disclosure Documents................................... 3.0
Disclosure Schedule.................................... 3.0
Dissenting Shares...................................... 2.3
Dissenting Stockholders................................ Recitals
Effective Time......................................... 1.5
Encumbrances........................................... 3.2(d)
Environmental Laws..................................... 3.17(a)
Environmental Permits.................................. 3.17(a)
ERISA.................................................. 3.11(a)
ERISA Affiliate........................................ 3.11(a)
Exchange Act........................................... 1.1(a)
Expense Reimbursement Amount........................... 8.1(c)
Financial Statements................................... 3.5
Financing.............................................. 1.1(a)
Financing Commitment Letter............................ 1.1(a)
Financing Condition.................................... 1.1(a)
-iv-
fully diluted basis.................................... Annex A
GAAP................................................... 3.5(b)
Governmental Entity.................................... 3.8
Hazardous Substance.................................... 3.17(a)
HSR Act................................................ 5.3(b)
Independent Directors.................................. 1.3(c)
Intellectual Property.................................. 3.13(c)
Interim Balance Sheet.................................. 3.5(c)
Interim Financial Statements........................... 3.5(c)
Licenses............................................... 3.13(c)
Lien................................................... 3.4
Material Adverse Effect................................ 3.0
Merger................................................. Recitals
Merger Consideration................................... 2.1(c)
Minimum Condition...................................... Annex A
Notes.................................................. 2.5
Offer.................................................. Recitals
Offer Documents........................................ 1.1(b)
Offer Price............................................ Recitals
Offer to Purchase...................................... 1.1(b)
Option Plans and Awards................................ 2.4(a)
Parent................................................. Recitals
Patents................................................ 3.13(c)
Paying Agent........................................... 2.2(a)
PCB.................................................... 3.17(a)
Permits................................................ 3.10(b)
Plans.................................................. 3.11(a)
Preferred Stock........................................ 3.2(a)
Proxy Statement........................................ 1.9(a)
Purchaser.............................................. Recitals
Purchaser Common Stock................................. 2.1
Schedule 14D-1......................................... 1.1(b)
Schedule 14D-9......................................... 1.2(b)
SEC.................................................... 1.1(a)
SEC Documents.......................................... 3.5
Secretary of State..................................... 1.5
Securities Act......................................... 3.5
Shares................................................. Recitals
Special Meeting........................................ 1.9(a)
-v-
Stockholders Agreement................................. Recitals
Subsidiary............................................. 3.0
Superior Proposal...................................... 5.4(b)
Surviving Corporation.................................. 1.4
Takeover Proposal...................................... 5.4(b)
Tax.................................................... 3.12(c)
Taxes.................................................. 3.12(c)
Tax Return............................................. 3.12(c)
Termination Fee........................................ 8.1(b)
Title IV Plan`......................................... 3.11(a)
Trademarks............................................. 3.13(c)
Transactions........................................... Recitals
Voting Debt............................................ 3.2(b)
-vi-
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of September 11, 1997 (the
"Agreement"), by and among The Hain Food Group, Inc., a Delaware corporation
- ----------
("Parent"), Hain Acquisition Corp., a Delaware corporation and a wholly owned
- --------
subsidiary of Parent (the "Purchaser"), and Westbrae Natural, Inc., a Delaware
---------
corporation (the "Company").
-------
WHEREAS, the Board of Directors of each of Parent, the Purchaser and
the Company has approved, and deems it advisable and in the best interests of
its respective stockholders to consummate, the acquisition of the Company by
Parent upon the terms and subject to the conditions set forth herein;
WHEREAS, in furtherance of such acquisition, Parent proposes to cause
the Purchaser to make a tender offer (as it may be amended from time to time as
permitted under this Agreement, the "Offer") to purchase all the issued and
-----
outstanding shares (the "Shares") of Common Stock, par value $0.01 per share, of
------
the Company (the "Common Stock"), at a price per share of Common Stock of
------------
$3.625, net to the seller in cash (the "Offer Price"), upon the terms and
-----------
subject to the conditions set forth in this Agreement;
WHEREAS, concurrently with the execution and delivery of this
Agreement, Parent, the Purchaser and certain stockholders of the Company are
entering into a stockholders agreement (the "Stockholders Agreement") in the
----------------------
form attached hereto as Exhibit 1 pursuant to which such stockholders shall
agree to take certain actions to support the transactions contemplated by this
Agreement;
WHEREAS, the Board of Directors of the Company has (a) determined that
the Offer and the Merger (as defined below) are fair to and in the best
interests of the stockholders of the Company, (b) approved (i) the acquisition
of the Company by Parent on the terms and subject to the conditions set forth in
this Agreement, (ii) the Offer and the Merger, (iii) this Agreement and the
transactions contemplated hereby and (iv) the transactions contemplated by the
Stockholder Agreement (collectively, the "Transactions") and (c) resolved to
------------
recommend acceptance of the Offer and adoption of this Agreement by such
stockholders;
WHEREAS, the respective Boards of Directors of Parent, the Purchaser
and the Company have approved the merger of the Purchaser into the Company (the
"Merger"), on the terms and subject to the conditions set forth in this
------
Agreement, whereby, each issued and outstanding share of Common Stock not owned
directly or indirectly by Parent or the Company, except shares of Common Stock
held by persons who object to the Merger and comply with all the provisions of
Delaware law concerning the right of holders of Common Stock to
-2-
dissent from the Merger and require appraisal of their shares of Common Stock
("Dissenting Stockholders"), shall be converted into the right to receive the
---------- ------------
per share consideration paid pursuant to the Offer; and
WHEREAS, Parent, the Purchaser and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE I
THE OFFER AND MERGER
Section 1.1 The Offer.
---------
(a) Subject to the provisions of this Agreement, as promptly as
practicable but in no event later than five business days after the announcement
of the execution of this Agreement, the Purchaser shall, and Parent shall cause
the Purchaser to, commence (within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) the Offer.
------------
The obligation of the Purchaser to, and of Parent to cause the Purchaser to,
accept for payment, and pay for, any shares of Common Stock tendered pursuant to
the Offer shall be subject to the (i) the Minimum Condition (as defined in Annex
A), (ii) the condition that the Purchaser shall have received the Financing (as
defined below) contemplated by the commitment letter dated September 11, 1997
(the "Financing Commitment Letter"), pursuant to which, subject to certain terms
---------------------------
and conditions thereof, the lenders named therein have committed to provide all
of the Financing (the "Financing") necessary to consummate the Offering and the
---------
Merger and the transactions contemplated hereby (the "Financing Condition") and
-------------------
(iii) conditions set forth in Annex A attached hereto and to the other
conditions of this Agreement. On the terms and subject to the conditions of the
Offer and this Agreement, the Purchaser shall, and Parent shall cause the
Purchaser to, pay for all shares of Common Stock validly tendered and not
withdrawn pursuant to the Offer that the Purchaser becomes obligated to purchase
pursuant to the Offer as soon as practicable after the expiration of the Offer.
The Purchaser expressly reserves the right to modify the terms of the Offer and
to waive any condition of the Offer, except that, without the consent of the
Company, the Purchaser shall not (i) reduce the number of shares of Common Stock
subject to the Offer, (ii) reduce the price per share of Common Stock to be paid
pursuant to the Offer, (iii) modify or add to the conditions set forth in Annex
A or otherwise amend the Offer in any manner materially adverse to the Company's
stockholders, (iv) except as provided in the next two sentences, extend the
Offer, or (v) change the form of consideration payable in the Offer.
-3-
Notwithstanding the foregoing, the Purchaser may, without the consent of the
Company, (i) extend the Offer for a period of not more than 10 business days
beyond the initial expiration date of the Offer (which initial expiration date
shall be 20 business days following commencement of the Offer), if on the date
of such extension less than 90% of the outstanding shares of Common Stock have
been validly tendered and not properly withdrawn pursuant to the Offer, (ii)
extend the Offer from time to time if at the initial expiration date or any
extension thereof the Minimum Condition or any of the other conditions to the
Purchaser's obligation to purchase shares of Common Stock set forth in
paragraphs (a), (b) and (e) of Annex A shall not be satisfied or waived, until
such time as such conditions are satisfied or waived, (iii) extend the Offer for
any period required by any rule, regulation, interpretation or position of the
Securities and Exchange Commission (the "SEC") or the staff thereof applicable
---
to the Offer and (iv) extend the Offer for any reason for a period of not more
than 10 business days beyond the latest expiration date that would otherwise be
permitted under clause (i), (ii) or (iii) of this sentence. In addition, the
Purchaser shall at the request of the Company extend the Offer for five business
days if at any scheduled expiration date of the Offer any of the conditions to
the Purchaser's obligation to purchase shares of Common Stock shall not be
satisfied; provided, however, that the Purchaser shall not be required to extend
the Offer beyond November 30, 1997.
(b) As soon as practicable on the date the Offer is commenced, Parent
and the Purchaser shall file with the SEC a Tender Offer Statement on Schedule
14D-1 with respect to the Offer (together with all amendments and supplements
thereto and including the exhibits thereto, the "Schedule 14D-l"). The Schedule
--------------
14D-1 will include disclosure sufficient to satisfy the requirements of Rule
13e-3 under the Exchange Act. The Schedule 14D-1 will include, as exhibits, the
offer to purchase pursuant to which the Offer shall be made (the "Offer to
--------
Purchase") and a form of letter of transmittal and summary advertisement
- --------
(collectively, together with any amendments and supplements thereto, the "Offer
-----
Documents"). The Offer Documents will comply in all material respects with the
- ---------
provisions of applicable federal securities laws and, on the date filed with the
SEC and on the date first published, sent or given to the Company's
stockholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except that no representation is made by Parent or
the Purchaser with respect to information furnished by the Company to Parent or
the Purchaser, in writing, expressly for inclusion in the Offer Documents. The
Company shall furnish to Parent and the Purchaser all information concerning the
Company and its affiliates required to be set forth in the Offer Documents. The
information supplied by the Company to Parent or the Purchaser, in writing,
expressly for inclusion in the Offer Documents and by Parent or the Purchaser to
the Company, in writing, expressly for inclusion in the Schedule 14D-9 (as
hereinafter defined) will not, at the time so provided, contain any untrue
statement of a material fact or omit to state any material fact re-
-4-
quired 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.
(c) Each of Parent and the Purchaser will take all steps necessary to
cause the Offer Documents to be filed with the SEC and to be disseminated to
holders of the Shares, in each case as and to the extent required by applicable
federal securities laws. Each of Parent and the Purchaser, on the one hand, and
the Company, on the other hand, will promptly correct any information provided
by it for use in the Offer Documents if and to the extent that it shall have
become false or misleading in any material respect and the Purchaser will take
all steps necessary to cause the Offer Documents as so corrected to be filed
with the SEC and to be disseminated to holders of the Shares, in each case as
and to the extent required by applicable federal securities laws. The Company
and its counsel shall be given the opportunity to review the Schedule 14D-1
(including, without limitation, all documents filed therewith as exhibits)
before it is filed with the SEC. In addition, Parent and the Purchaser will
provide the Company and its counsel in writing with any comments, whether
written or oral, Parent, the Purchaser or their counsel may receive from time to
time from the SEC or its staff with respect to the Offer Documents promptly
after the receipt of such comments.
Section 1.2 Company Actions.
---------------
(a) The Company hereby approves of and consents to the Offer and
represents that the Board of Directors of the Company (the "Company Board"), at
-------------
a meeting duly called and held, have (i) determined that the terms of the Offer
and the Merger and the other Transactions are fair to and in the best interests
of the Stockholders of the Company, (ii) approved (A) the acquisition of the
Company by Parent on the terms and subject to the conditions set forth in this
Agreement and (B) the Offer, the Merger and the other Transactions, (iii)
approved this Agreement, and (iv) resolved to recommend that the stockholders of
the Company accept the Offer, tender their Shares thereunder to the Purchaser
and approve and adopt this Agreement and the Merger; provided, that such
recommendation may be withdrawn, modified or amended if, in the opinion of the
Board of Directors, only after receipt of advice from outside legal counsel,
failure to withdraw, modify or amend such recommendation would reasonably be
expected to result in the Board of Directors violating its fiduciary duties to
the Company's stockholders under applicable law and the Company pays the fees
and expenses required by Section 8.1 hereof. The Company represents that the
Company Board has approved the acquisition of Shares by the Purchaser pursuant
to the Offer, the Merger and the Stockholders Agreement.
(b) Concurrently with the commencement of the Offer, the Company
shall file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-
9 (together with all amendments and supplements thereto and including the
exhibits thereto, the "Schedule 14D-9") which shall, subject to the provisions
--------------
of Section 5.4(b), contain the recommendation re-
-5-
ferred to in clause (iv) of Section 1.2(a) hereof. The Schedule 14D-9 will
comply in all material respects with the provisions of applicable federal
securities laws and, on the date filed with the SEC and on the date first
published, sent or given to the Company's Stockholders, shall not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
that no representation is made by the Company with respect to information
furnished by Parent or the Purchaser for inclusion in the Schedule 14D-9. The
Company further agrees to take all steps necessary to cause the Schedule 14D-9
to be filed with the SEC and to be disseminated to holders of the Shares, in
each case as and to the extent required by applicable federal securities laws.
Each of the Company, on the one hand, and Parent and the Purchaser, on the other
hand, agrees promptly to correct any information provided by it for use in the
Schedule 14D-9 if and to the extent that it shall have become false and
misleading in any material respect and the Company further agrees to take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the
SEC and to be disseminated to holders of the Shares, in each case as and to the
extent required by applicable federal securities laws. Parent and its counsel
shall be given the opportunity to review the Schedule 14D-9 before it is filed
with the SEC. In addition, the Company agrees to provide Parent, the Purchaser
and their counsel with any comments, whether written or oral, that the Company
or its counsel may receive from time to time from the SEC or its staff with
respect to the Schedule 14D-9 promptly after the receipt of such comments or
other communications.
(c) In connection with the Offer, the Company will promptly furnish
or cause to be furnished to the Purchaser mailing labels, security position
listings and any available listing, or computer file containing the names and
addresses of all recordholders of the Shares as of a recent date, and shall
furnish the Purchaser with such additional information (including, but not
limited to, updated lists of holders of the Shares and their addresses, mailing
labels and lists of security positions) and assistance, and cause its
representatives and advisors to provide such assistance, as the Purchaser or its
agents may reasonably request in communicating the Offer to stockholders of the
Company.
Section 1.3 Directors.
---------
(a) Promptly upon the purchase of and payment for any Shares by
Parent or any of its subsidiaries which represents at least a majority of the
outstanding Shares (on a fully diluted basis, as defined in Section 1.1(a)),
Parent shall be entitled to designate such number of directors, rounded up to
the next whole number, on the Company Board as is equal to the product of the
total number of directors on such Company Board (giving effect to the directors
designated by Parent pursuant to this sentence) multiplied by the percentage
that the number of Shares so accepted for payment bears to the total number of
Shares then outstanding. In furtherance thereof, the Company shall, upon
request of the Purchaser, use its best
-6-
reasonable efforts promptly either to increase the size of the Company Board or
secure the resignations of such number of its incumbent directors, or both, as
is necessary to enable Parent's designees to be so elected to the Company Board,
and shall take all actions available to the Company to cause Parent's designees
to be so elected. At such time, the Company shall, if requested by Parent, also
cause persons designated by Parent to constitute at least the same percentage
(rounded up to the next whole number) as is on the Company Board of (i) each
committee of the Company Board, (ii) each board of directors (or similar body)
of each Subsidiary (as defined in Section 3.1) of the Company and (iii) each
committee (or similar body) of each such board.
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-l promulgated thereunder in order
to fulfill its obligations under Section 1.3(a), including mailing to
stockholders together with Schedule 14D-9 the information required by such
Section 14(f) and Rule 14f-1 as is necessary to enable Parent's designees to be
elected to the Company Board. Parent or the Purchaser will supply the Company
and be solely responsible for any information with respect to either of them and
their nominees, officers, directors and affiliates required by such Section
14(f) and Rule 14f-1. The provisions of this Section 1.3 are in addition to and
shall not limit any rights which the Purchaser, Parent or any of their
affiliates may have as a holder or beneficial owner of Shares as a matter of law
with respect to the election of directors or otherwise.
(c) In the event that Parent's designees are elected to the Company
Board, until the Effective Time (as defined below), the Company Board shall have
at least two directors who are directors on the date hereof (the "Independent
-----------
Directors"); provided that, in such event, if the number of Independent
- ---------
Directors shall be reduced below two for any reason whatsoever, any remaining
Independent Directors (or Independent Director, if there be only one remaining)
shall be entitled to designate persons to fill such vacancies who shall be
deemed to be Independent Directors for purposes of this Agreement or, if no
Independent Director then remains, the other directors shall designate two
persons to fill such vacancies who shall not be stockholders, affiliates or
associates of Parent or the Purchaser and such persons shall be deemed to be
Independent Directors for purposes of this Agreement. Notwithstanding anything
in this Agreement to the contrary, in the event that Parent's designees are
elected to the Company Board, after the acceptance for payment of Shares
pursuant to the Offer and prior to the Effective Time, the affirmative vote of a
majority of the Independent Directors shall be required to (a) amend or
terminate this Agreement by the Company, (b) exercise or waive any of the
Company's rights, benefits or remedies hereunder, or (c) take any other action
by the Company Board under or in connection with this Agreement.
Section 1.4 The Merger. Subject to the terms and conditions of this
----------
Agreement, at the Effective Time (as defined in Section 1.5 hereof), the Company
and the Purchaser shall consummate the Merger pursuant to which (a) the
Purchaser shall be merged with and
-7-
into the Company and the separate corporate existence of the Purchaser shall
thereupon cease, (b) the Company shall be the successor or surviving corporation
in the Merger and shall continue to be governed by the laws of the State of
Delaware, and (c) the separate corporate existence of the Company with all its
rights, privileges, immunities, powers and franchises shall continue unaffected
by the Merger. Pursuant to the Merger, (x) the certificate of incorporation of
the Purchaser, as in effect immediately prior to the Effective Time, shall be
the certificate of incorporation (the "Certificate of Incorporation") of the
-----------------------------
Surviving Corporation (as defined below), except that Article FIRST of the
Certificate of Incorporation of the Surviving Corporation shall read in its
entirety as follows: "FIRST: The name of the corporation is Westbrae Natural,
Inc." and (y) the by-laws of the Purchaser (the "By-laws"), as in effect
-------
immediately prior to the Effective Time, shall be the By-laws of the Surviving
Corporation until thereafter amended as provided by law, the Certificate of
Incorporation and such By-laws. The corporation surviving the Merger is
sometimes hereafter referred to as the "Surviving Corporation." The Merger
--------- -----------
shall have the effects set forth in the Delaware General Corporation Law ( the
"DGCL").
Section 1.5 Effective Time. Parent, the Purchaser and the Company
--------------
will cause a Certificate of Merger or, if applicable, Certificate of Ownership
and Merger (the "Certificate of Merger") to be executed and filed on the date of
---------------------
the Closing (as defined in Section 1.6) (or on such other date as Parent and the
Company may agree) with the Secretary of State of the State of Delaware (the
"Secretary of State") as provided in the DGCL. The Merger shall become
- -------------------
effective on the date on which the Certificate of Merger has been duly filed
with the Secretary of State or such time as is agreed upon by the parties and
specified in the Certificate of Merger, and such time is hereinafter referred to
as the "Effective Time."
--------------
Section 1.6 Closing. The closing of the Merger (the "Closing") will
------- -------
take place at 10:00 a.m., New York time, on a date to be specified by the
parties, which shall be no later than the first business day after satisfaction
or waiver of all of the conditions set forth in Article VI hereof (the "Closing
-------
Date") and in any event, no later than December 31, 1997, at the offices of
- ----
Cahill Gordon & Reindel, 80 Pine Street, New York, New York 10005, unless
another date or place is agreed to in writing by the parties hereto.
Section 1.7 Directors of the Surviving Corporation. The directors of
--------------------------------------
the Purchaser at the Effective Time shall, from and after the Effective Time, be
the directors of the Surviving Corporation until their successors shall have
been duly elected or appointed or qualified or until their earlier death,
resignation or removal in accordance with the Certificate of Incorporation and
the By-laws.
Section 1.8 Officers of the Surviving Corporation. Except as set
-------------------------------------
forth on Schedule 1.8 hereto, the officers of the Purchaser immediately prior to
the Effective Time shall, from and after the Effective Time, be the officers of
the Surviving Corporation until
-8-
their successors have been duly elected or appointed or qualified or until their
earlier death, resignation or removal in accordance with the Certificate of
Incorporation or the By-laws.
Section 1.9 Stockholders' Meeting.
---------------------
(a) If required by applicable law in order to consummate the Merger,
the Company, acting through its Board of Directors, shall, in accordance with
applicable law:
(i) duly call, give notice of, convene and hold a special meeting of
its stockholders (the "Special Meeting") as promptly as practicable
---------------
following the acceptance for payment and purchase of Shares by the
Purchaser pursuant to the Offer for the purpose of considering and taking
action upon the approval of the Merger and the adoption of this Agreement;
(ii) prepare and file with the SEC a preliminary proxy or
information statement relating to the Merger and this Agreement and use its
best efforts (x) to obtain and furnish the information required to be
included by the SEC in the Proxy Statement (as hereinafter defined) and,
after consultation with Parent, to respond promptly to any comments made by
the SEC with respect to the preliminary proxy or information statement and
cause a definitive proxy or information statement, including any amendment
or supplement thereto (the "Proxy Statement") to be mailed to its
---------------
stockholders, provided that no amendment or supplement to the Proxy
Statement will be made by the Company without consultation with Parent and
its counsel and (y) to obtain the necessary approvals of the Merger and
this Agreement by its stockholders; and
(iii) include in the Proxy Statement the recommendation of the
Company Board that stockholders of the Company vote in favor of the
approval of the Merger and the adoption of this Agreement.
(b) Parent shall vote, or cause to be voted, all of the Shares then
owned by it, the Purchaser or any of its other subsidiaries and affiliates in
favor of the approval of the Merger and the approval and adoption of this
Agreement.
Section 1.10 Merger Without Meeting of Stockholders. Notwithstanding
--------------------------------------
Section 1.9 hereof, in the event that Parent, the Purchaser and any other
Subsidiaries of Parent shall acquire in the aggregate at least 90% of the
outstanding shares of each class of capital stock of the Company, pursuant to
the Offer or otherwise, the parties hereto shall, at the request of Parent and
subject to Article VI hereof, take all necessary and appropriate action to cause
the Merger to become effective as soon as practicable after such acquisition,
without a meeting of stockholders of the Company, in accordance with Section 253
of the DGCL.
-9-
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock. As of the Effective Time,
---------------------------
by virtue of the Merger and without any action on the part of the holders of any
Shares or holders of common stock, par value $.01 per share, of the Purchaser
(the "Purchaser Common Stock"):
----------------------
(a) The Purchaser Common Stock. Each issued and outstanding share of
--------------------------
the Purchaser Common Stock shall be converted into and become one fully
paid and nonassessable share of common stock of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. All
-----------------------------------------------------
Shares that are owned by the Company as treasury stock and any Shares owned
by Parent, the Purchaser or any other wholly owned Subsidiary of Parent
shall be cancelled and retired and shall cease to exist and no
consideration shall be delivered in exchange therefor.
(c) Conversion of Shares. Each issued and outstanding Share and
---------------------
Shares, if any, subject to outstanding options then outstanding not
theretofore cancelled as provided in Section 2.4 hereof (other than Shares
to be cancelled in accordance with Section 2.1(b) and any Shares which are
held by Dissenting Stockholders shall be converted into the right to
receive the Offer Price, payable to the holder thereof, without interest
(the "Merger Consideration"), upon surrender of the certificate formerly
--------------------
representing such Share in the manner provided in Section 2.2. All such
Shares, when so converted, shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each
holder of a certificate representing any such Shares shall cease to have
any rights with respect thereto, except the right to receive the Merger
Consideration therefor upon the surrender of such certificate in accordance
with Section 2.2, without interest.
Section 2.2 Exchange of Certificates.
------------------------
(a) Paying Agent. Parent shall designate a bank or trust company
------------
reasonably acceptable to the Company to act as agent for the holders of the
Shares in connection with the Merger (the "Paying Agent") to receive in trust
------------
the funds to which holders of the Shares shall become entitled pursuant to
Section 2.1(c). Such funds shall be invested by the Paying Agent as directed by
Parent or the Surviving Corporation.
(b) Exchange Procedures. As soon as reasonably practicable after the
-------------------
Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates,
-10-
which immediately prior to the Effective Time represented outstanding Shares
(the "Certificates"), whose Shares were converted pursuant to Section 2.1 into
------------
the right to receive the Merger Consideration (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent and shall be in such form and have such other provisions as Parent and the
Company may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for payment of the Merger
Consideration. Upon surrender of a Certificate for cancellation to the Paying
Agent or to such other agent or agents as may be appointed by Parent, together
with such letter of transmittal, duly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor the Merger Consideration for
each Share formerly represented by such Certificate and the Certificate so
surrendered shall forthwith be cancelled. If payment of the Merger Consideration
is to be made to a person other than the person in whose name the surrendered
Certificate is registered, it shall be a condition of payment that the
Certificate so surrendered shall be properly endorsed or shall be otherwise in
proper form for transfer and that the person requesting such payment shall have
paid any transfer and other taxes required by reason of the payment of the
Merger Consideration to a person other than the registered holder of the
Certificate surrendered or shall have established to the satisfaction of the
Surviving Corporation that such tax either has been paid or is not applicable.
Until surrendered as contemplated by this Section 2.2, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive the Merger Consideration in cash as contemplated by this Section 2.2.
(c) Transfer Books; No Further Ownership Rights in the Shares. At
---------------------------------------------------------
the Effective Time, the stock transfer books of the Company shall be closed and
thereafter there shall be no further registration of transfers of the Shares on
the records of the Company. From and after the Effective Time, the holders of
Certificates evidencing ownership of the Shares outstanding immediately prior to
the Effective Time shall cease to have any rights with respect to such Shares,
except as otherwise provided for herein or by applicable law. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be cancelled and exchanged as provided in this Article II.
(d) Termination of Fund; No Liability. At any time following six
---------------------------------
months after the Effective Time, the Surviving Corporation shall be entitled to
require the Paying Agent to deliver to it any funds (including any interest
received with respect thereto) which had been made available to the Paying Agent
and which have not been disbursed to holders of Certificates, and thereafter
such holders shall be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) only as general creditors
thereof with respect to the Merger Consideration payable upon due surrender of
their Certificates, without any interest thereon. Notwithstanding the foregoing,
neither the Surviving Corporation nor the Paying Agent shall be liable to any
holder of a Certificate for Merger Considera-
-11-
tion delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(e) Lost, Stolen or Destroyed Certificates. In the event any
--------------------------------------
Certificate for Shares shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the Person claiming such Certificate to
be lost, stolen or destroyed and, if required by Parent, the posting by such
Person of a bond in customary amount as indemnity against any claim that may be
made against it with respect to such Certificate, the Paying Agent will issue in
exchange for such lost, stolen or destroyed Certificate $3.625 per Share
pursuant to Section 2.2(b) upon due surrender of and deliverable in respect of
the Shares represented by such Certificate pursuant to this Agreement.
Section 2.3 Dissenters' Rights. Notwithstanding anything in this
------------------
Agreement to the contrary, Dissenting Stockholders who shall not have voted such
Shares in favor of the Merger and who shall have delivered to the Company a
written objection to the Merger in the manner provided by Section 262 of the
DGCL or, if the Merger is effected pursuant to Section 253 of the DGCL, made a
written demand for payment of the fair value of his or her Shares ("Dissenting
----------
Shares"), shall not be converted into the right to receive the Merger
- ------
Consideration unless and until such holder fails to perfect or effectively
withdraws or loses his right to appraisal. If, after the Effective Time, such
holder fails to perfect or withdraw or loses his right to appraisal, such Shares
shall be deemed to have been converted as of the Effective Time into a right to
receive the Merger Consideration, without interest. The Company shall give the
Parent or the Purchaser prompt notice of any notices of objection to the Merger
received by the Company, and of any demands received by the Company for payment
for any Shares pursuant to Section 262 of the DGCL, and the Parent or the
Purchaser shall have the right to participate in all negotiations and
proceedings with respect to such demands. The Company shall not, except with
the prior written consent of Parent, which consent shall not be unreasonably
withheld or delayed, make any payment with respect to, or offer to settle, any
such demands.
Section 2.4 Company Plans.
-------------
(a) Immediately prior to the Effective Time, each outstanding
employee stock option to purchase Shares (a "Company Option") granted under the
--------------
Company's 1988 Stock Option Plan, the Company's 1996 Incentive Stock Plan and
granted as certain executive and director non-statutory options (collectively,
"Option Plans and Awards"), shall be surrendered to the Company and shall be
- ------------------------
forthwith cancelled and the Purchaser shall provide the Company with funds
sufficient to pay to each holder of a Company Option, by check, an amount equal
to (i) the product of the number of the Shares which are issuable upon exercise
of such Company Option, multiplied by the Offer Price, less (ii) the aggregate
exercise price of such Company Option. Prior to the Closing, the Company shall
use its best efforts to take all actions
-12-
(including, without limitation, soliciting any necessary consents from the
holders of the Company Options) required to effect the matters set forth in this
Section 2.4, including the surrender, cancellation and payment in consideration
for the Company Options described in this Section 2.4(a). The Company shall
withhold all income or other taxes as required under applicable law prior to
distribution of the cash amount received under this Section 2.4(a) to the
holders of Company Options.
(b) Except as may be otherwise agreed to by Parent or the Purchaser
and the Company, the Company's Option Plans and Awards shall terminate as of the
Effective Time and the provisions in any other plan, program or arrangement
providing for the issuance or grant of any other interest in respect of the
capital stock of the Company or any of its Subsidiaries shall be deleted as of
the Effective Time and no holder of Company Options or any participant in the
Option Plans and Awards or any other plans, programs or arrangements shall have
any rights thereunder to acquire any equity securities of the Company, the
Surviving Corporation or any subsidiary thereof.
Section 2.5 Company Subordinated Debt. Immediately prior to the
-------------------------
Effective Time, Parent shall cause the Company to redeem all of the Company's 8%
Senior Subordinated Notes A and 8% Senior Subordinated Notes B (collectively,
the "Notes") in an amount equivalent to the outstanding principal amount thereof
-----
and accrued and unpaid interest thereon but not in excess of $2.2 million.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
To induce the Parent and the Purchaser to enter into and perform their
respective obligations under this Agreement, the Company hereby represents and
warrants to the Parent and the Purchaser that (except as set forth on the
attached disclosure schedule attached hereto as Schedule 1 (the "Disclosure
---------- ----------
Schedule") or as otherwise disclosed in the Company's Annual Report on Form 10-K
- --------
for the fiscal year ended December 31, 1996, its Quarterly Reports on Form 10-Q
for the quarterly periods ended March 30, 1997 and June 30, 1997 and its Notice
of Annual Meeting of Shareholders dated June 17, 1997 and related Information
Statement (collectively with the Disclosure Schedule, the "Disclosure
----------
Documents") as filed by the Company with the SEC under the Exchange Act) each of
the following statements is true and correct. As used in this Agreement, the
term "Material Adverse Effect" means any event or series of events which,
-----------------------
individually or in the aggregate, may reasonably be expected to result in a
material adverse change in, or a material adverse effect upon, (1) the
operations, business, properties or condition (financial or otherwise) of the
Company or any Subsidiary, (2) the ability of the Company to perform its
obligations hereunder, or (3) the legality, validity, binding effect or
enforceability of this Agreement. As used in this Agreement, the term
-13-
"Subsidiary" shall mean all corporations or other entities in which the Company
- -----------
or the Parent, as the case may be, owns, directly or indirectly, a majority of
the issued and outstanding capital stock or similar interests or has the right
to elect a majority of the members of the Board of Directors or similar
governing body.
Section 3.1 Organization. (a) Each of the Company and its
------------
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
and has all requisite corporate power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power, authority, and
governmental approvals would not, individually or in the aggregate, have a
Material Adverse Effect.
(b) The Company and each of its Subsidiaries is duly qualified or
licensed to do business and in good standing in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except where the failure
to be so duly qualified or licensed and in good standing would not individually
or in the aggregate have a Material Adverse Effect. Section 3.1(b) of the
Disclosure Schedule contains a correct and complete list of each of the
Company's Subsidiaries, the jurisdiction where each such Subsidiary is organized
and the percentage of outstanding capital stock of such Subsidiary that is
directly or indirectly owned by the Company. Except as set forth in Section
3.1(b) of the Disclosure Schedule, the Company does not own (i) any equity
interest in any corporation or other entity or (ii) marketable securities where
the Company's equity interest in any entity exceeds five percent of the
outstanding equity of such entity on the date hereof.
Section 3.2 Capitalization.
--------------
(a) The authorized capital stock of the Company consists of
30,000,000 Shares and 500,000 shares of preferred stock, par value $.01 per
share (the "Preferred Stock"). As of the date hereof, (i) 5,950,588 Shares are
---------------
issued and outstanding, (ii) 292,066 Shares are issued and held in the treasury
of the Company, (iii) no shares of Preferred Stock are issued and outstanding,
and (iv) 1,089,875 Shares are reserved for issuance to officers, directors and
employees pursuant to the Option Plans and Awards, of which no Shares have been
issued pursuant to option exercises and 1,008,875 Shares are subject to
outstanding, unexercised options. Section 3.2(a) of the Disclosure Schedule sets
forth a true and complete list of the holders of Company Options, including such
person's name, the number of options (vested, unvested and total) held by such
person and the exercise price for each such option. Since the date hereof, the
Company has not issued or granted additional options under the Options Plans.
All the outstanding shares of the Company's capital stock are, and all Shares
which may be issued pursuant to the exercise of outstanding Company Options will
be, when issued
-14-
in accordance with the respective terms thereof, duly authorized, validly
issued, fully paid and non-assessable.
(b) Except as disclosed in Section 3.2(b) of the Disclosure Schedule,
there are no bonds, debentures, notes or other indebtedness having general
voting rights (or convertible into securities having such rights) ("Voting
------
Debt") of the Company or any of its Subsidiaries issued and outstanding.
(c) Except as set forth above, except as described in Section 3.2(c)
of the Disclosure Schedule and except for the transactions contemplated by this
Agreement, as of the date hereof, (i) there are no shares of capital stock of
the Company authorized, issued or outstanding (ii) there are no existing
options, warrants, calls, pre-emptive rights, subscriptions or other rights,
agreements, arrangements or commitments of any character, relating to the issued
or unissued capital stock of the Company or any of its Subsidiaries, obligating
the Company or any of its Subsidiaries to issue, transfer or sell or cause to be
issued, transferred or sold any shares of capital stock or Voting Debt of, or
other equity interest in, the Company or any of its Subsidiaries or securities
convertible into or exchangeable for such shares or equity interests, or
obligating the Company or any of its Subsidiaries to grant, extend or enter into
any such option, warrant, call, subscription or other right, agreement,
arrangement or commitment and (iii) except as set forth above, except as set
forth in Section 3.2(c) of the Disclosure Schedule, there are no outstanding
contractual obligations of the Company or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any Shares, or the capital stock of the Company, or
any Subsidiary or affiliate of the Company or to provide funds to make any
investment (in the form of a loan, capital contribution or otherwise) in any
Subsidiary or any other entity other than loans to Subsidiaries in the ordinary
course of business.
(d) Except as set forth in Section 3.2(d) of the Disclosure Schedule,
all of the outstanding shares of capital stock of each of the Subsidiaries are
beneficially owned by the Company, directly or indirectly, and all such shares
have been validly issued and are fully paid and nonassessable and are owned by
either the Company or one of its Subsidiaries free and clear of all liens,
charges, claims or encumbrances of whatever nature ("Encumbrances").
------------
(e) There are no voting trusts or other agreements or understandings
to which the Company or any of its Subsidiaries is a party with respect to the
voting of the capital stock of the Company or any of the Subsidiaries.
Section 3.3 Authorization; Validity of Agreement. The Company has
------------------------------------
full corporate power and authority to execute and deliver this Agreement and to
consummate the Transactions. The execution, delivery and performance by the
Company of this Agreement, and the consummation by it of the Transactions, have
been duly authorized by its Board of Directors and, except for obtaining the
approval of its Stockholders as contemplated by Sec-
-15-
tion 1.9 hereof, no other corporate action on the part of the Company is
necessary to authorize the execution and delivery by the Company of this
Agreement and the consummation by it of the Transactions. This Agreement has
been duly executed and delivered by the Company and, assuming due and valid
authorization, execution and delivery hereof by Parent and the Purchaser, is a
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms.
Section 3.4 No Conflict.
-----------
(a) Except as set forth in Section 3.4(a) of the Disclosure Schedule,
none of the execution, delivery and performance of this Agreement by the
Company, the consummation by the Company of the Transactions or the compliance
by the Company with any of the provisions hereof do not, and the performance of
this Agreement will not (i) violate the [Restated and Amended] Certificate of
Incorporation or By-laws of the Company or the certificate or articles of
incorporation or organization or by-laws of any of its Subsidiaries, or (ii)
conflict with or result in a violation or breach of any terms or provisions of,
or constitute (with or without due notice, lapse of time or both) a default or
give rise to a right of acceleration, cancellation or termination under, or
result in the creation or imposition of any lien, security interest, mortgage,
or encumbrance (collectively, "Lien") upon any properties of the Company or any
----
Subsidiary under any Contract (as defined in Section 3.10(a)) or Permit (as
defined in Section 3.10 (b)) or other instrument to which the Company or any
Subsidiary is a party or by which any of their properties are bound or any
existing applicable statute, ordinance, law, rule, regulation, judgment, order
or decree of any court, governmental instrumentality or regulatory body, agency
or authority having jurisdiction over the Company, any Subsidiary or any of
their properties.
(b) Section 3.4(b) of the Disclosure Schedule sets forth a list of
all third party consents and approvals required to be obtained in connection
with this Agreement under the Company Agreements prior to the consummation of
the transactions contemplated by this Agreement, except such third party
consents and approvals the failure of which to obtain would not have a Company
Material Adverse Effect.
Section 3.5 SEC Reports and Financial Statements.
------------------------------------
(a) The Company has timely filed with the SEC, and has heretofore
made available to Parent, true and complete copies of, all forms, reports,
schedules, statements and other documents required to be filed by it since
January 1, 1994 under the Exchange Act or the Securities Act of 1933, as amended
(the "Securities Act") (as such documents have been amended since the time of
--------------
their filing, collectively, the "SEC Documents"). As of their respective dates
-------------
or, if amended, as of the date of the last such amendment, the SEC Documents,
including, without limitation, any financial statements or schedules included
therein (a) did
-16-
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading and (b) complied in all material respects with the applicable
requirements of the Exchange Act and the Securities Act, as the case may be, and
the applicable rules and regulations of the SEC thereunder. None of the
Company's Subsidiaries is required to file any forms, reports or other documents
with the SEC.
(b) The financial statements of the Company included in the SEC
Documents (the "Financial Statements") have been prepared from, and are in
--------------------
accordance with, the books and records of the Company and its consolidated
Subsidiaries, comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis during the
----
period involved and fairly present in all material respects the consolidated
financial position and the consolidated results of operations and cash flows
(and changes in financial position, if any) of the Company and its consolidated
Subsidiaries as of the times and for the periods referred to therein.
(c) The Company has delivered to the Parent an unaudited consolidated
Balance Sheet as of June 30, 1997 (the "Interim Balance Sheet") and related
---------------------
consolidated statements of operations for the period then ended (the "Interim
-------
Financial Statements"). Such Interim Financial Statements were prepared in
- --------------------
accordance with generally accepted accounting principles applied on a consistent
basis (except for footnotes thereto and for the consolidated statement of
shareholders' equity) and fairly present in all material respects the financial
position of the Company and the Subsidiaries as of such date and the results of
operations of the Company and the Subsidiaries for the periods ending on such
dates.
Section 3.6 Absence of Certain Changes. Except as set forth in
--------------------------
Section 3.6 of the Disclosure Schedule or in the SEC Documents filed prior to
the date hereof, since December 31, 1996, the Company and its Subsidiaries have
conducted their respective businesses only in the ordinary and usual course and
there has not occurred any events or changes (including the incurrence of any
liabilities of any nature, whether or not accrued, contingent or otherwise)
having, individually or in the aggregate, a Material Adverse Effect and the
Company has not taken any action which would have been prohibited under Section
5.1 hereof.
Section 3.7 No Undisclosed Liabilities. Except (a) as disclosed in
--------------------------
the Financial Statements and (b) for liabilities and obligations (i) incurred in
the ordinary course of business and consistent with past practice since December
31, 1996, or (ii) as otherwise disclosed in Section 3.7 of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries has any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise, that
have, or would be reasonably likely to have, a Material Adverse Effect or that
-17-
would be required by GAAP to be reflected in, reserved against or otherwise
described in a consolidated balance sheet of the Company (including the notes
thereto).
Section 3.8 Litigation. Except as set forth in Section 3.8 of the
----------
Disclosure Schedule, there are no suits, claims, actions, proceedings,
including, without limitation, arbitration proceedings or alternative dispute
resolution proceedings, or investigations pending or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries before any
court, arbitral tribunal, administrative agency or commission or other
governmental or other regulatory authority or agency (a "Governmental Entity")
-------------------
that, either individually or in the aggregate, would be reasonably likely to
have a Material Adverse Effect.
Section 3.9 Liens; Insurance. Except as set forth in Section 3.9 of
----------------
the Disclosure Schedule, all properties owned or leased by the Company or the
Subsidiaries are free and clear of all liens, charges or other encumbrances
except for (a) mechanics', carriers', workers' and other similar liens imposed
by law and incurred in the ordinary course of business for obligations not yet
due and payable, (b) liens for current taxes not yet due and payable or being
contested in good faith by appropriate means, (c) liens reflected in the
Financial Statements and/or the Interim Financial Statements, and (d) liens
which in the aggregate do not materially detract from the value or impair the
use of the property subject thereto, or impair the operations of the Company or
any Subsidiary. All of the assets which are material to the business of the
Company or any Subsidiary are in good condition in accordance with industry
practice (subject to normal wear and tear). As of December 31, 1996, the
insurance coverage respecting the Company and its Subsidiaries was reasonably
adequate for the respective assets, business and operations of the Company and
its Subsidiaries and was maintained with financially sound and reputable
insurers. The assets, business and operations insured by the Company and its
Subsidiaries are of the kind customarily insured against by corporations of
established reputation engaged in the same or similar businesses and similarly
situated and such insurance is of such types and in such amounts as are
customarily carried under similar circumstances by such other corporations.
Since December 31, 1996, each of the Company and its Subsidiaries has maintained
all existing insurance policies (including without limitation, policies relating
to workers' compensation). Except as set forth on Section 3.9 of the Disclosure
Schedule, neither the Company nor any of the Subsidiaries is in default (other
than a default which does not affect the obligation of the insurer to make
payment on the policy) with respect to any provisions or requirements of any
insurance policy nor have they failed to give any notice or present any material
claim thereunder in due and timely fashion, other than such defaults and
failures, which individually or in the aggregate, would not have a Material
Adverse Effect.
-18-
Section 3.10 Contracts; Permits.
------------------
(a) Contracts. Section 3.10(a) of the Disclosure Schedule sets forth
---------
a complete and accurate list of all material contracts, loan agreements,
mortgages, notes, bonds, security agreements, leases, agreements, instruments
and understandings, whether written or oral (collectively, "Contracts") binding
---------
upon the Company or any Subsidiary. Each Contract is in full force and effect
and constitutes a valid and binding obligation enforceable in accordance with
its terms, and no event has occurred that would constitute a default under or
otherwise give rise to a right of termination, cancellation or acceleration with
respect to any Contract (presently, with the giving of notice or the passage of
time). Except as set forth in Section 3.4(a) of the Disclosure Schedule, no
contract will be terminated or otherwise adversely affected by virtue of the
consummation of any transaction contemplated by this Agreement.
(b) Permits. Section 3.10(b) of the Disclosure Schedule sets forth a
-------
complete and accurate list of all federal, state and local governmental
licenses, permits, authorizations and approvals (collectively, "Permits") held
-------
by the Company or any Subsidiary. Each Permit is in full force and effect
without violation and no actions are pending or threatened to revoke or limit
any Permit. Except as set forth in Section 3.4(a) of the Disclosure Schedule,
No Permit will be terminated or otherwise adversely affected by virtue of the
consummation of any transaction contemplated by this Agreement.
(c) Employees. Except as set forth in the SEC Filings filed with the
---------
SEC prior to the date hereof or in Section 3.10(c) of the Disclosure Schedule,
neither the Company nor any Subsidiary is a party to or bound by any written or
formal contract, agreement or policy for the employment of any director, officer
or employee of the Company or any Subsidiary.
(d) Certain Agreements. Except as set forth on Section 3.10(d) of
------------------
the Disclosure Schedule, neither the Company nor any of its Subsidiaries is a
party to or bound by any contract, agreement or arrangement that contains any
"change in control" provisions.
Section 3.11 Employee Benefit Plans.
----------------------
(a) For purposes of this Agreement, the term "Plans" shall include:
-----
each deferred compensation and each incentive compensation, stock purchase,
stock option and other equity compensation plan, program, agreement or
arrangement; each severance or termination pay, medical, surgical,
hospitalization, life insurance and other 'welfare' plan, fund or program
(within the meaning of section 3(1) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")); each profit-sharing, stock bonus or other
-----
'pension' plan, fund or program (within the meaning of section 3(2) of ERISA);
each employment, termination or severance agreement; and each other employee
benefit plan, fund, program, agreement or arrangement, in each case, that is
sponsored, maintained or contributed to or required to be contrib-
-19-
uted to by the Company or by any trade or business, whether or not incorporated
(an "ERISA Affiliate"), that together with the Company would be deemed a
----- ---------
single employer within the meaning of section 4001(b) of ERISA, or to which the
Company or an ERISA Affiliate is party, whether written or oral, for the benefit
of any employee or former employee of the Company or any Subsidiary (the
"Plans"). Each
-----
of the Plans that is subject to section 302 or Title IV of ERISA or section 412
of the Internal Revenue Code of 1986, as amended (the "Code") is hereinafter
----
referred to in this Section 3.11 as a "Title IV Plan." Neither the Company, any
-------------
Subsidiary nor any ERISA Affiliate has any commitment or formal plan, whether
legally binding or not, to create any additional employee benefit plan or modify
or change any existing Plan that would affect any employee or former employee of
the Company or any Subsidiary.
(b) No liability under Title IV or section 302 of ERISA has been
incurred by the Company or any ERISA Affiliate that has not been satisfied in
full, and no condition exists that presents a material risk to the Company or
any ERISA Affiliate of incurring any such liability. No Plan is a Title IV Plan.
(c) Neither the Company or any Subsidiary, any Plan, any trust
created thereunder, nor any trustee or administrator thereof has engaged in a
transaction in connection with which the Company or any Subsidiary, any Plan,
any such trust, or any trustee or administrator (as defined in Section 3(16)(A)
of ERISA) thereof, or any party in interest (as defined in ERISA Section 3(14))
or fiduciary with respect to any Plan or any such trust could be subject to
either a civil penalty assessed pursuant to section 409 or 502(i) of ERISA or a
tax imposed pursuant to section 4975 or 4976 of the Code, which would be
material in amount.
(d) Each Plan has been operated and administered in all material
respects in accordance with its terms and applicable law, including but not
limited to ERISA and the Code.
(e) Each Plan intended to be "qualified" within the meaning of
section 401(a) of the Code has received a favorable determination letter from
the Internal Revenue Service with respect to the qualified status of such Plan
under the Code, including all amendments to the Code effected by the Tax Reform
Act of 1986, and nothing has occurred since the issuance of such letter which
could reasonably be expected to cause the loss of the tax-qualified status of
such Plan and the related trust maintained.
(f) No Plan provides medical, surgical, hospitalization, death or
similar benefits (whether or not insured) for employees or former employees of
the Company or any Subsidiary for periods extending beyond their retirement or
other termination of service, other than (i) coverage mandated by applicable
law, (ii) death benefits under any "pension plan," or
-20-
(iii) benefits the full cost of which is borne by the current or former employee
(or his beneficiary) or (iv) post-death exercise periods in effect under
outstanding Company Options.
(g) Except as set forth in Section 3.11 of the Disclosure Schedule,
the consummation of the transactions contemplated by this Agreement will not,
either alone or in combination with another event, (i) entitle any current or
former employee or officer of the Company or any ERISA Affiliate to severance
pay, unemployment compensation or any other payment, except as expressly
provided in this Agreement, or (ii) accelerate the time of payment or vesting,
or increase the amount of compensation due any such employee or officer.
(h) There are no pending, or to the knowledge of the Company,
threatened or anticipated claims by or on behalf of any Plan, by any employee or
beneficiary covered under any such Plan, or otherwise involving any such Plan
(other than routine claims for benefits) which would have a material adverse
effect upon the Plans or a Material Adverse Effect.
Section 3.12 Taxes.
-----
(a) Each of the Company and each of its Subsidiaries has filed all
Tax Returns required to be filed by it or duly obtained extensions, except to
the extent that a failure to file, in the individual or in the aggregate, would
not result in a Material Adverse Effect. All such Tax Returns are complete and
correct in all respects, other than any inaccuracy or incompleteness that, in
the individual or in the aggregate, would not result in a Material Adverse
Effect. The Company and each of its Subsidiaries has timely paid (or the
Company has timely paid on its Subsidiaries' behalf) all Taxes shown to be due
on such returns and reports. The Company and each of its Subsidiaries has
timely paid (or the Company has timely paid on its Subsidiaries' behalf) all
Taxes for which no return was required to be filed, except to the extent that a
failure to pay, in the individual or in the aggregate, would not result in a
Material Adverse Effect. All Taxes not previously paid that are attributable to
any period or portion thereof ending on the date hereof do not exceed the
reserve in the Financial Statements for Taxes payable by the Company and its
Subsidiaries for all taxable periods and portions thereof through the date of
such financial statements by an amount that would result in a Material Adverse
Effect. All liabilities for Taxes incurred by the Company or any of its
Subsidiaries since the date of the Company's balance sheet dated December 31,
1996 included in the financial statements (the "Balance Sheet") have been
-------------
incurred in the ordinary course of business consistent with past practice, other
than any liabilities for taxes that, individually or in the aggregate, would not
result in a Material Adverse Effect. No deficiencies for any Taxes have been
proposed, asserted, assessed or threatened against the Company or any of its
Subsidiaries in writing that would have a Material Adverse Effect, and no
requests for waivers of the time to assess or collect any such Taxes are
pending. No Tax Returns of the Company and or any its Subsidiaries consolidated
in such returns have not been examined or audited by the United States Internal
Revenue Service or any other taxing authority since 1986.
-21-
(b) Neither the Company nor any of its Subsidiaries is a party to any
agreement, plan, contract or arrangement that could result, separately or in the
aggregate, in a payment of any "excess parachute payments" within the meaning of
Section 280G of the Code.
(c) As used in this Agreement, the following terms shall have the
following meanings:
(i) "Tax" or "Taxes" shall mean all taxes, charges, fees, duties,
--- -----
levies, penalties or other assessments imposed by any federal, state, local
or foreign governmental authority, including, but not limited to, income,
gross receipts, excise, property, sales, gain, use, license, custom duty,
unemployment, capital stock, transfer, franchise, payroll, withholding,
social security, minimum estimated, and other taxes, and shall include
interest, penalties or additions attributable thereto; and
(ii) "Tax Return" shall mean any return, declaration, report, claim
----------
for refund, or information return or statement relating to Taxes, including
any schedule or attachment thereto, and including any amendment thereof.
Section 3.13 Intellectual Property.
---------------------
(a) Disclosure Schedule 3.13(a) sets forth a complete and accurate
list of all the Intellectual Property (as defined below) owned or licensed by
the Company and its Subsidiaries. To the best knowledge of the Company, the
Company and its Subsidiaries own or have adequate rights to use all items of
Intellectual Property utilized in the conduct of the business of the Company and
its Subsidiaries as currently conducted or as currently proposed to be
conducted, free and clear of all Encumbrances (other than Encumbrances which,
individually or in the aggregate, are not expected to have a Material Adverse
Effect).
(b) To the best knowledge of the Company, the conduct of the
Company's and its Subsidiaries' business and the Intellectual Property owned or
used by the Company and its Subsidiaries, do not infringe any Intellectual
Property rights or any other proprietary right of any person other than
infringements which, individually or in the aggregate, are not expected to have
a Material Adverse Effect. The Company and its Subsidiaries have received no
notice of any allegations or threats that the Company's and its Subsidiaries'
use of any of the Intellectual Property infringes upon or is in conflict with
any Intellectual Property or proprietary rights of any third party other than
infringements or conflicts which individually or in the aggregate are not
expected to have a Material Adverse Effect.
(c) As used in this Agreement, "Intellectual Property" means all of
---------------------
the following: (i) U.S. and foreign registered and unregistered trademarks,
trade dress, service marks, logos, trade names, corporate names and all
registrations and applications to register
-22-
the same (the "Trademarks"); (ii) issued U.S. and foreign patents and pending
----------
patent applications, patent disclosures, and any and all divisions,
continuations, continuations-in-part, reissues, reexaminations, and extension
thereof, any counterparts claiming priority therefrom, utility models, patents
of importation/confirmation, certificates of invention and like statutory rights
(the "Patents"); (iii) U.S. and foreign registered and unregistered copyrights
-------
(including, but not limited to, those in computer software and databases) rights
of publicity and all registrations and applications to register the same (the
"Copyrights"); (iv) all categories of trade secrets as defined in the Uniform
----------
Trade Secrets Act including, but not limited to, business information; (v) all
licenses and agreements pursuant to which the Company has acquired rights in or
to any Trademarks, Patents, rights of publicity or Copyrights, or licenses and
agreements pursuant to which the Company has licensed or transferred the right
to use any of the foregoing (the "Licenses").
--------
Section 3.14 Employment Matters. Neither the Company nor any of its
------------------
Subsidiaries has experienced any strikes, collective labor grievances, other
collective bargaining disputes or claims of unfair labor practices in the last
five years. To the Company's knowledge, there is no organizational effort
currently being made or threatened by or on behalf of any labor union with
respect to employees of the Company and its Subsidiaries.
Section 3.15 Compliance with Laws. To the best knowledge of the
--------------------
Company, the Company and its Subsidiaries are in material compliance with, and
have not violated in any material respect any applicable law, rule or regulation
of any United States federal, state, local, or foreign government or agency
thereof which affects the business, properties or assets of the Company and its
Subsidiaries. No notice, charge, claim, inquiry, investigation action or
assertion has been received by the Company or any of its Subsidiaries or has
been filed, commenced or, to the Company's knowledge, threatened against the
Company or any of its Subsidiaries alleging any such violation. To the knowledge
of the Company, all licenses, permits and approvals required under such laws,
rules and regulations are in full force and effect except where the failure to
be in full force and effect would not have a Material Adverse Effect.
Section 3.16 Vote Required. The affirmative vote of the holders of a
-------------
majority of the outstanding Shares is the only vote of the holders of any class
or series of the Company's capital stock which may be necessary to approve this
Agreement or any of the Transactions.
Section 3.17 Environmental Matters. Except as set forth on Section
---------------------
3.17 of the Disclosure Schedule:
(a) The Company and its Subsidiaries have obtained and currently
maintain all material licenses, permits, certificates and other
authorizations (the "Environmental Permits") which are currently required
---------------------
with respect to their respective operations under
-23-
federal, state, local and foreign laws and regulations now in existence
relating to pollution or protection of public or employee health or the
environment, including, without limitation, laws and regulations relating
to emissions, discharges or releases of any "Hazardous Substance" (as
defined below) into the environment (including, without limitation, ambient
air, indoor air, surface water, groundwater, drinking water supply, land
surface or subsurface strata located both on and off-site) or otherwise
relating to the manufacture, processing, distribution, generation, use,
removal, abatement, remediation, treatment, storage, disposal, transport,
handling, import or export of any Hazardous Substance (the "Environmental
-------------
Laws"). The term "Hazardous Substance" shall mean
---- -------------------
any toxic or hazardous substances, constituents, pollutants, contaminants
or wastes, including, without limitation, asbestos, polychlorinated
biphenyls ("PCB"), petroleum or any petroleum products or wastes regulated
---
under applicable Environmental Laws. The Company has not been notified in
writing by any governmental entity that any of the Environmental Permits
will or may be revoked, rescinded, annulled or otherwise terminated.
(b) To the best knowledge of the Company, each of the Company and its
Subsidiaries is in compliance with the terms and conditions of all
applicable Environmental Permits and Environmental Laws.
(c) There is no civil, criminal or administrative action, suit,
demand, claim, hearing, notice of violation, order, investigation,
proceeding, notice or demand letter received by or pending or, to the best
of the Company's knowledge, threatened against the Company or any
Subsidiary under any Environmental Law or any order, decree, judgment or
injunction entered or approved under such Environmental Law.
(d) To the knowledge of the Company, there has been no release,
storage, treatment or disposal of any Hazardous Substance from, into, at or
on any real property owned or leased by the Company or any Subsidiary which
has resulted in or would reasonably be expected to result in a material
violation by the Company or any Subsidiary under the Environmental Laws.
(e) There are no above- or underground storage tanks or PCB
containing transformers on, about or beneath any real property owned or
leased by the Company or any Subsidiary, nor were there any at any real
property formerly utilized by the Company.
(f) To the knowledge of the Company, there are no conditions on,
about, beneath or arising from any real property currently or formerly
owned or leased by the Company or any Subsidiary which might, under any
Environmental Law, result in any liability or the imposition of a statutory
lien, or which would or may require any
-24-
"response," "removal" or "remedial action" as defined in any Environmental
Law, or any other action, including, without limitation, reporting,
monitoring, clean-up or contribution of funds.
(g) The Company has made available to Parent for review copies of all
environmental reports or studies in its possession prepared since January
1, 1994.
Section 3.18 Accounts Receivable. All accounts receivable reflected
-------------------
on the Balance Sheet are valid receivables arising in the ordinary course of
business, subject to normal reserves for bad debts, returns, allowances and
customer promotional allowances reflected on the Balance Sheet, and, to the
Company's knowledge, are subject to no setoffs or counterclaims except as
reflected on the Balance Sheet. All accounts receivable reflected in the
financial or accounting records of the Company that have arisen since December
31, 1996 are valid receivables, arising in the ordinary course of business,
subject to normal reserves for bad debts, returns and allowances and, to the
Company's knowledge, are subject to no material setoffs or counterclaims except
as set forth on the Interim Balance Sheet.
Section 3.19 Inventory. All inventory of the Company is valued on
---------
the Company's books and records at the lower of cost or market. Obsolete items
and items of below standard quality have been written off or written down to
their net realizable value on the books and records of the Company. Subject to
reserves reflected on the Balance Sheet and the Interim Balance Sheet, all such
inventory consisting of raw materials or packaging is usable in the ordinary
course of business, and all such inventory consisting of finished goods is, and
all such inventory consisting of work in process will upon completion be, of
merchantable quality, meeting all material contractual, and all Food and Drug
Administration and Nutrition Labeling and Education Act of 1990 requirements,
and is, or in the case of work in process, will be, saleable in the ordinary
course of business.
Section 3.20 Product Warranty. Except as set forth on Section 3.20
----------------
of the Disclosure Schedule, (a) the Company has not agreed to become or, to its
knowledge, otherwise is not responsible for consequential damages (exclusive of
responsibilities imposed by law) and has not made any express warranties to
third parties with respect to any products created, manufactured, sold,
distributed or licensed, or any services rendered, by the Company; (b) there are
no warranties (express or implied) outstanding with respect to any such product
or products or services other than any such implied by law pursuant to Sections
2-312, 2-313(b) and 2-314 of the UCC or the Company's customer purchase order or
contract forms, or the Company's order information forms; (c) there are no
material design, manufacturing or other defects, latent or otherwise, with
respect to any such products; and (d) such products are nontoxic. The Company
has not modified or expanded its warranty obligation to any customer beyond that
set forth in the exceptions described above or in Section 3.20 of the Disclosure
Schedule. Except as set forth in Section 3.20 of the Disclosure Schedule, no
products
-25-
have been sold or distributed by the Company under an understanding that such
products would be returnable other than in accordance with the Company's written
standard returns policy.
Section 3.21 Information in Proxy Statement. The Proxy Statement, if
------------------------------
any (or any amendment thereof or supplement thereto), will, at the date mailed
to Company stockholders and at the time of the meeting of Company stockholders
to be held in connection with the Merger, not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading, except that no
representation is made by the Company with respect to statements made therein
based on information supplied by Parent or the Purchaser for inclusion in the
Proxy Statement. The Proxy Statement will comply in all material respects with
the provisions of the Exchange Act and the rules and regulations thereunder.
Section 3.22 Brokers or Finders; Schedule of Fees and Expenses.
-------------------------------------------------
Except as set forth in Section 3.22 of the Disclosure Schedule, no broker,
investment banker, financial advisor or other person is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the Transactions based upon arrangements made by or on behalf of
the Company. The Company's current estimate of fees and expenses incurred and
to be incurred by the Company in connection with this Agreement and the
Transactions (including the fees of the Company's legal counsel) are set forth
in Section 3.22 of the Disclosure Schedule.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
-----------------------------------
To induce the Company to enter into and perform its obligations under
this Agreement, the Parent and the Purchaser each hereby represent and warrant
to the Company as follows:
Section 4.1 Organization. Each of Parent and the Purchaser is a
------------
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation.
Section 4.2 Authorization; Validity of Agreement. Parent and the
------------------------------------
Purchaser have full corporate power and authority to execute and deliver this
Agreement and to consummate the Transactions. The execution, delivery and
performance by Parent and the Purchaser of this Agreement, and the consummation
by it of the Transactions, have been duly
-26-
authorized by their respective Boards of Directors and no other corporate action
on the part of either Parent or the Purchaser is necessary to authorize the
execution and delivery by Parent or the Purchaser of this Agreement and the
consummation by it of the Transactions. This Agreement has been duly executed
and delivered by Parent and the Purchaser and, assuming due and valid
authorization, execution and delivery hereof by the Company, is a valid and
binding obligation of each of Parent and the Purchaser enforceable against it in
accordance with its terms.
Section 4.3 Brokers or Finders. Except for CIBC Wood Gundy
------------------
Securities Corp., which served as financial advisor to Parent in connection with
the Transactions and will receive customary compensation in cash in
consideration for its services in such capacity, no broker, investment banker,
financial advisor or other person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of Parent or the
Purchaser.
Section 4.4 Financing. Parent shall have entered into, furnished to
---------
the Company a copy of the Financing Commitment Letter and paid the related
Commitment Issuance Fee (as defined in the Financing Commitment Letter).
Subject to the terms and conditions specified therein, the Financing Commitment
Letter will provide Purchaser with funds sufficient in amount to consummate the
Offer and Merger and the transactions contemplated hereby. Parent shall take
all actions reasonably required to consummate the transactions contemplated by
the Financing Commitment Letter.
ARTICLE V
COVENANTS
---------
Section 5.1 Conduct of Business.
-------------------
(a) Ordinary Course. During the period from the date of this
---------------
Agreement to the earlier of the Effective Time of the Merger and the appointment
or election of the Purchaser's designees to the Company Board pursuant to
Section 1.3 (such earlier time, the "Control Time"), the Company shall, and
------------
shall cause its Subsidiaries to, carry on their respective businesses in the
usual, regular and ordinary course in substantially the same manner as
heretofore conducted and, to the extent consistent therewith, use all reasonable
efforts to preserve intact their current business organizations, keep available
the services of their current officers and employees and preserve their
relationships with customers, suppliers, licensors, licensees, distributors and
others having business dealings with them to the end that their goodwill and
ongoing businesses shall be unimpaired at the Effective Time. Without limiting
the generality of the foregoing, except as contemplated by this Agreement or
otherwise approved in writing
-27-
by Parent, during the period from the date of this Agreement to the Control
Time, the Company shall not, and shall not permit any of its Subsidiaries to:
(i) (A) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, other than dividends
and distributions by any direct or indirect wholly owned Subsidiary of the
Company to its parent, (B) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock or (C)
purchase, redeem or otherwise acquire any shares of capital stock of the
Company or any of its Subsidiaries or any other securities thereof or any
rights, warrants or options to acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock (including shares issued and held in treasury), any other
voting securities or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, voting securities or
convertible securities, other than the issuance of Common Stock upon the
exercise of Company Options outstanding on the date of this Agreement in
accordance with their present terms;
(iii) amend its certificate of incorporation, by-laws or other
comparable charter or organizational documents;
(iv) acquire or agree to acquire (A) by merging or consolidating with,
or by purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, joint venture,
association or other business organization or division thereof or (B) any
assets that are material, individually or in the aggregate, to the Company
and its Subsidiaries taken as a whole, except purchases of inventory in the
ordinary course of business consistent with past practice;
(v) sell, lease, license, mortgage or otherwise encumber or subject to
any Lien or otherwise dispose of any of its properties or assets, except
sales of inventory in the ordinary course of business consistent with past
practice;
(vi) (A) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or
any of its Subsidiaries, guarantee any debt securities of another person,
enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement having
the economic effect of any of the foregoing, except for short-term
borrowings incurred in the ordinary course of business consistent with past
practice and pursuant to existing agreements not to exceed in the aggregate
$250,000, or (B)
-28-
make any loans, advances or capital contributions to, or investments in,
any other person, other than to the Company or any direct or indirect
wholly owned Subsidiary of the Company except for travel advances and loans
to employees in amounts not to exceed $10,000 in the aggregate;
(vii) make or agree to make any new capital expenditure or
expenditures which, individually, is in excess of $50,000 or, in the
aggregate, are in excess of $250,000;
(viii) (A) grant to any officer of the Company or any of its
Subsidiaries any increase in compensation, except as was required under
employment agreements in effect as of December 31, 1996, (B) grant to any
officer of the Company or any of its Subsidiaries any increase in severance
or termination pay, except as was required under employment, severance or
termination agreements in effect as of December 31, 1996, (C) enter into
any employment, severance or termination agreement with any officer of the
Company or any of its Subsidiaries or (D) amend any benefit plan in any
respect;
(ix) make any change in accounting methods, principles or practices
materially affecting the Company's assets, liabilities or business, except
insofar as may have been required by a change in generally accepted
accounting principles;
(x) pay, discharge, settle or satisfy any material claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge, settlement or satisfaction,
in the ordinary course of business consistent with past practice or in
accordance with their terms;
(xi) except in the ordinary course of business, modify, amend or
terminate any material Contract or waive or release or assign any material
rights or claims;
(xii) make any material tax election or settle or compromise any
material income tax liability; or
(xiii) authorize any of, or commit or agree to take any of, the
foregoing actions.
(b) Other Actions. The Company shall not, and shall not permit any
-------------
of its Subsidiaries to, take any action that would, or that could reasonably be
expected to, result in (i) any of the representations and warranties of the
Company set forth in this Agreement that are qualified as to materiality
becoming untrue, (ii) any of such representations and warranties that are not so
qualified becoming untrue in any material respect or (iii) except as otherwise
permitted by Section 5.1, any of the conditions to the Offer set forth in Annex
A, or any of the conditions to the Merger set forth in Article VI, not being
satisfied.
-29-
(c) Advice of Changes. The Company shall promptly advise Parent
-----------------
orally and in writing of any change or event having, or which, insofar as can
reasonably be foreseen, would have, a Material Adverse Effect.
Section 5.2 Access to Information; Confidentiality.
--------------------------------------
(a) The Company shall, and shall cause each of its Subsidiaries to,
afford to Parent, and to Parent's officers, employees, accountants, counsel,
financial advisors and other representatives, reasonable access during normal
business hours during the period prior to the Effective Time to all their
respective properties, books, contracts, commitments, personnel and records and,
during such period, the Company shall, and shall cause each of its Subsidiaries
to, furnish promptly to Parent (a) a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of federal or state securities laws and (b) all other information
concerning its business, properties and personnel as Parent may reasonably
request. All such information shall be held in accordance with the
confidentiality agreements dated June 27, 1994 and August 20, 1997 (together,
the "Confidentiality Agreement").
-------------------------
(b) Following the execution of this Agreement, Parent and the Company
shall cooperate with each other and make all reasonable efforts to minimize any
disruption to the business which may result from the announcement of the
Transactions.
Section 5.3 Consents and Approvals.
----------------------
(a) Each of the Company, Parent and the Purchaser will take all
reasonable actions necessary to comply promptly with all legal requirements
which may be imposed on it with respect to this Agreement and the Transactions
and will promptly cooperate with and furnish information to each other in
connection with any such requirements imposed upon any of them or any of their
Subsidiaries in connection with this Agreement and the Transactions. Each of the
Company, Parent and the Purchaser will, and will cause its Subsidiaries to, take
all reasonable actions necessary to obtain (and will cooperate with each other
in obtaining) any consent, authorization, order or approval of, or any exemption
by, any Governmental Entity or other public or private third party required to
be obtained or made by Parent, the Purchaser, the Company or any of their
Subsidiaries in connection with the Merger or the taking of any action
contemplated thereby or by this Agreement.
(b) The Company and Parent shall take all reasonable actions
necessary to file as soon as practicable, if applicable, notifications under the
Hart Scott Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
---
Act"), and to respond as
-30-
promptly as practicable to any inquiries received from the Federal Trade
Commission and the Antitrust Division of the Department of Justice for
additional information or documentation and to respond as promptly as
practicable to all inquiries and requests received from any State Attorney
General or other Governmental Entity in connection with antitrust matters.
Section 5.4 No Solicitation.
---------------
(a) The Company shall not, nor shall it permit any officer or
director of the Company or any officer or director of its Subsidiaries to, nor
shall it authorize or permit, any officer, director or employee of, or any
investment banker, attorney or other advisor or representative of, the Company
or any of its Subsidiaries to, (i) solicit, initiate or encourage the submission
of, any Takeover Proposal (as defined below), (ii) except as provided in Section
5.4(b), enter into any agreement with respect to any Takeover Proposal or (iii)
participate in any discussions or negotiations regarding, or furnish to any
person any non-public information with respect to the Company, or take any other
action to facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Takeover Proposal;
provided, however, that prior to the acceptance for payment of shares of Common
Stock pursuant to the Offer, to the extent required by the fiduciary obligations
of the Company Board, as determined in good faith by a majority of the members
thereof based on the written advice of outside counsel, the Company may, in
response to an unsolicited written bona fide Takeover Proposal that contains no
financing condition from a person that the Company Board reasonably believes has
the financial ability to make a Superior Proposal (as defined in Section 5.4(b))
subject to compliance with Section 5.4(c), furnish non-public information with
respect to the Company to such person pursuant to a customary confidentiality
agreement and participate in discussions or negotiations with such person.
Without limiting the foregoing, it is understood that any violation of the
restrictions set forth in the preceding sentence by any executive officer or
director of the Company or any of its Subsidiaries or any investment banker,
attorney or other advisor or representative of the Company or any of its
Subsidiaries shall be deemed to be a breach of this Section 5.4(a) by the
Company. For purposes of this Agreement, "Takeover Proposal" means any written
-----------------
proposal that contains no financing condition for a merger or other business
combination involving the Company or any of its Subsidiaries or any proposal or
offer to acquire in any manner, directly or indirectly, more than 20% of the
equity securities of the Company or more than 20% of the Company's consolidated
total assets, other than the Transactions.
(b) Neither the Company Board nor any committee thereof shall (i)
withdraw or modify, or propose to withdraw or modify, in a manner adverse to
Parent or the Purchaser, the approval or recommendation by the Company Board or
any such committee of the Offer, this Agreement or the Merger or (ii) approve or
recommend, or propose to approve or recommend, any Takeover Proposal.
Notwithstanding the foregoing, the Company Board, to the extent required by the
fiduciary obligations thereof, as determined in good faith by a majority of the
members thereof based on the written advice of outside counsel, may approve or
recommend (and, in connection therewith withdraw or modify its approval or
recommendation of
-31-
the Offer, this Agreement or the Merger) a Superior Proposal. For purposes of
-----------------
this Agreement, "Superior Proposal" means a bona fide Takeover Proposal made by
a third party on terms which the Company Board determines in its good faith
judgment to be more favorable to the Company's stockholders than the Offer and
the Merger.
(c) The Company promptly shall advise Parent orally and in writing of
any Takeover Proposal or any inquiry with respect to or which could lead to any
Takeover Proposal and the identity of the person making any such Takeover
Proposal or inquiry. The Company shall keep Parent fully informed of the status
and details of any such Takeover Proposal or inquiry. Nothing in this Section
5.4(c) shall require the Company or the Company Board to take any action that
the Company Board determines in good faith, based on the written advice of
outside counsel, would be inconsistent with the fiduciary duties of the Company
Board.
(d) Nothing in this Section 5.4 shall prevent the Company and the
Company Board from complying with Rule 14e-2 under the Exchange Act, or issuing
a communication meeting the requirements of Rule 14d-9(e) under the Exchange
Act, with respect to any tender offer; provided, however, that the Company may
not, except as permitted by Section 5.2(b), withdraw or modify its position with
respect to the Offer or the Merger or approve or recommend, or propose to
approve or recommend, a Takeover Proposal.
Section 5.5 Additional Agreements. Subject to the terms and
---------------------
conditions herein provided, each of the parties hereto shall use all reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations, or to remove any injunctions or other impediments or delays, legal
or otherwise, to achieve the satisfaction of the Minimum Condition and all
conditions set forth in Annex A and Article VI, and to consummate and make
effective the Merger and the other transactions contemplated by this Agreement.
Without limiting the foregoing, the Company shall, and shall cause its
representatives and advisors to, without cost to Parent or Purchaser, assist
Parent and Purchaser in connection with their financing of the transactions
contemplated hereby, including, without limitation, (i) making available on a
timely basis any financial information of the Company and its Subsidiaries that
may be requested, (ii) obtaining comfort letters and updates thereof from the
Company's independent certified public accountants and opinion letters from the
Company's attorneys, with such letters to be in customary form and to cover
matters of the type customarily covered by accountants and attorneys in such
financing transactions, if applicable, and (iii) making available
representatives of the Company and its accountants and attorneys in connection
with any such financing, including for purposes of due diligence and marketing
efforts related thereto. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of the Company, Parent and the
Purchaser shall use all reasonable efforts to take, or cause to be taken, all
such neces-
-32-
sary actions. The Company shall use its reasonable best efforts to effect the
retention of the individuals set forth in Section 5.5 of the Disclosure Schedule
as employees of the Company following consummation of the Transactions.
Section 5.6 Publicity. The initial press release with respect to the
---------
execution of this Agreement shall be a joint or separate press release(s)
acceptable to Parent and the Company. Thereafter, so long as this Agreement is
in effect, neither the Company, Parent nor any of their respective affiliates
shall issue or cause the publication of any press release or other announcement
with respect to the Merger, this Agreement or the other Transactions without the
prior consultation of the other party, except as such party believes, after
receiving the advice of outside counsel and notification to the other party, may
be required by law or by any listing agreement with a national securities
exchange or trading market.
Section 5.7 Notification of Certain Matters. The Company shall give
-------------------------------
prompt notice to Parent and Parent shall give prompt notice to the Company, of
(i) the occurrence or non-occurrence of any event the occurrence or non-
occurrence of which would cause any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respect at or prior to the
Effective Time and (ii) any material failure of the Company, Parent or the
Purchaser, as the case may be, to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it hereunder; provided,
however, that the delivery of any notice pursuant to this Section 5.7 shall not
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
Section 5.8 Directors' and Officers' Indemnification. For a period
----------------------------------------
of not less than six years from the Effective Time of the Merger, parent will
not modify the rights of the officer and directors of the Company and its
Subsidiaries set forth on Section 5.8 of the Disclosure Schedule to
indemnification and Parent and the Purchaser agree that all rights to
indemnification for acts or omissions occurring prior to the Effective Time now
existing in favor of the current directors or officers of the Company and its
Subsidiaries as provided in their respective certificates or articles of
incorporation or organization or by-laws shall survive the Merger and shall
continue in full force and effect in accordance with their terms.
Notwithstanding anything to the contrary provided herein, an indemnified party
shall use his best efforts to obtain indemnification from any source other than
Parent or the Purchaser from which he may be entitled thereto before seeking
indemnification from Parent or the Purchaser. In the event any action is
brought against any indemnified party for which such indemnified party seeks
indemnity from Parent or the Purchaser, Parent shall have the right to appoint
counsel for such indemnified party in such action and shall be entitled to
direct the defense thereof.
-33-
ARTICLE VI
CONDITIONS
----------
Section 6.1 Conditions to Each Party's Obligation to Effect the
---------------------------------------------------
Merger. The respective obligation of each party to effect the Merger shall be
- ------
subject to the satisfaction on or prior to the Closing Date of each of the
following conditions, any and all of which may be waived in whole or in part by
the Company, Parent or the Purchaser, as the case may be, to the extent
permitted by applicable law:
(a) Stockholder Approval. This Agreement shall have been approved
--------------------
and adopted by the requisite vote of the holders of the Shares, if required
by applicable law, in order to consummate the Merger.
(b) Statutes; Court Orders. No statute, rule or regulation shall
----------------------
have been enacted or promulgated by any governmental authority which
prohibits the consummation of the Merger; and there shall be no order or
injunction of a court of competent jurisdiction in effect precluding
consummation of the Merger.
(c) Purchase of Shares in Offer. Parent, the Purchaser or their
---------------------------
affiliates shall have purchased Shares pursuant to the Offer, except that
this condition shall not apply if Parent, the Purchaser or their affiliates
shall have failed to purchase Shares pursuant to the Offer in breach of
their obligations under this Agreement.
(d) HSR Act. The waiting period (and any extension thereof)
-------
applicable to the Merger under the HSR Act, if any, shall have been
terminated or shall have expired.
Section 6.2 Condition to Parent's and the Purchaser's Obligations to
--------------------------------------------------------
Effect the Merger. The obligations of Parent and the Purchaser to consummate
- -----------------
the Merger are further subject to the fulfillment of the condition that all
actions contemplated by Section 2.4 hereof shall have been taken, which may be
waived in whole or in part by Parent and the Purchaser.
ARTICLE VII
TERMINATION
-----------
Section 7.1 Termination. This Agreement may be terminated and the
-----------
Transactions contemplated herein may be abandoned at any time prior to the
Effective Time, whether before or after stockholder approval thereof:
(a) By the mutual written consent of Parent and the Company.
-34-
(b) By either of the Company or Parent:
(i) if the Offer shall have expired without any Shares being
purchased therein; provided, however, that the right to terminate this
Agreement under this Section 7.1(b)(i) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has
been the cause of, or resulted in, the failure of Parent or the
Purchaser, as the case may be, to purchase the Shares pursuant to the
Offer on or prior to such date;
(ii) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action (which order, decree,
ruling or other action the parties hereto shall use their reasonable
efforts to lift), which permanently restrains, enjoins or otherwise
prohibits the acceptance for payment of, or payment for, Shares
pursuant to the Offer or the Merger and such order, decree, ruling or
other action shall have become final and non-appealable; or
(iii) if the Offer has not been consummated prior to November
30, 1997; provided, that the right to terminate this Agreement under
this Section 7.1(b)(iii) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of Parent or the Purchaser, as
the case may be, to purchase Shares pursuant to the Offer on or prior
to such date.
(c) By the Company if (x) to the extent permitted by Section 5.4(b),
the Company Board approves or recommends a Superior Proposal and (y) the
Company has paid to the Parent an amount in cash equal to the sum of the
Termination Fee (as defined in Section 8.1(b)); or
(d) By Parent:
(i) if, due to an occurrence, not involving a breach by Parent or
the Purchaser of their obligations hereunder, which makes it
impossible to satisfy any of the conditions set forth in Annex A
hereto, Parent, the Purchaser, or any of their affiliates shall have
failed to commence the Offer, and shall have delivered written notice
to the Company specifying the reason or reasons the Offer has not been
commenced and indicating that Parent is terminating this Agreement
pursuant to this Section 7.1(d)(i), on or prior to five business days
following the date of the initial public announcement of the Offer;
(ii) if prior to the purchase of Shares pursuant to the Offer,
the Company shall have breached any representation, warranty, covenant
or other
-35-
agreement contained in this Agreement which (A) would give rise to the
failure of a condition set forth in Annex A hereto and (B) cannot be
or has not been cured, in all material respects, within 30 days after
the giving of written notice to the Company; or
(iii) if either Parent or the Purchaser is entitled to terminate
the Offer as a result of the occurrence of any event set forth in
paragraphs (d), (f) and (g) of Annex A hereto.
Section 7.2 Effect of Termination. In the event of the termination
---------------------
of this Agreement pursuant to its terms, written notice thereof shall forthwith
be given to the other party or parties specifying the provision hereof pursuant
to which such termination is made, and this Agreement shall forthwith become
null and void, and there shall be no liability on the part of the Parent, the
Purchaser or the Company except (A) for fraud or for willful breach of this
Agreement and (B) as set forth in Section 3.22, the last sentence of Section
5.2(a), this Section 7.2, Section 8.1 and Article VIII.
ARTICLE VIII
MISCELLANEOUS
-------------
Section 8.1 Fees and Expenses.
-----------------
(a) Except as contemplated by this Agreement, all fees and expenses
incurred in connection with the Offer, the Merger, this Agreement and the
Transactions shall be paid by the party incurring such fees or expenses, whether
or not the Offer or the Merger is consummated.
(b) The Company shall pay to Parent, upon demand a fee of $1 million
(the "Termination Fee"), payable in same day funds, if (A) after the date of
---------------
this Agreement, any person or "group" (within the meaning of Section 13(d)(3) of
the Exchange Act) shall have publicly made a Takeover Proposal, (B) the Offer
shall have remained open until at least the scheduled expiration date
immediately following the date such Takeover Proposal is made (and in any event
for at least ten business days following the date such Takeover Proposal is
made), (C) the Minimum Condition shall not have been satisfied at the expiration
of the Offer, (D) this Agreement shall thereafter be terminated pursuant to
Section 7.1(b)(i), and (E) the Company Board, within 10 business days after the
public announcement of the Takeover Proposal, either fails to recommend against
acceptance of such Takeover Proposal by the Company's stockholders or announces
that it takes no position with respect to the acceptance of such Takeover
Proposal by the Company's stockholders.
-36-
(c) If (x) the Company shall terminate this Agreement pursuant to
Section 7.1(c), (y) Parent shall terminate this Agreement pursuant to Section
7.1(d)(iii) hereof, or (z) either the Company or Parent terminates this
Agreement pursuant to Section 7.1(b)(i) as a result of the existence of any
condition set forth in paragraph (d) of Annex A; the Company shall pay to
Parent, an amount (the "Expense Reimbursement Amount") equal to $200,000, which
----------------------------
shall be payable in same day funds. The equal Expense Reimbursement Amount shall
be paid concurrently with any such termination. Parent shall reimburse the
Company to the extent such Expense Reimbursement Amount exceeds its actual
expenses.
(d) If Parent shall terminate this Agreement upon failure by Parent
to satisfy the Financing Condition, Parent shall pay to the Company an amount
equal to $100,000, which shall be payable in same day funds (the "Company
Reimbursement Amount"); provided, however, Parent and Purchaser shall not be
obligated to pay the Company Reimbursement Amount if such failure to satisfy the
Financing Condition is due to the failure by the Company to fulfill its
obligations under this Agreement or satisfy the conditions precedent applicable
to the Company, if any, to the Financing set forth in the Financing Commitment
Letter.
(e) Notwithstanding the foregoing, the aggregate payment by the
Company pursuant to Section 8.1(b) and 8.1(c) shall not exceed $1 million.
Section 8.2 Amendment and Modification. Subject to applicable law,
--------------------------
this Agreement may be amended, modified and supplemented in any and all
respects, whether before or after any vote of the shareholders of the Company
contemplated hereby, by written agreement of the parties hereto, by action taken
by their respective Boards of Directors (which in the case of the Company shall
include approvals as contemplated in Section 1.3(b)), at any time prior to the
Closing Date with respect to any of the terms contained herein; provided,
however, that after the approval of this Agreement by the stockholders of the
Company, no such amendment, modification or supplement shall reduce the amount
or change the form of the Merger Consideration.
Section 8.3 Nonsurvival of Representations and Warranties. None of
---------------------------------------------
the representations and warranties in this Agreement or in any schedule,
instrument or other document delivered pursuant to this Agreement shall survive
the Effective Time.
Section 8.4 Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by an overnight courier service, such as
Federal Express, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
-37-
(a) if to Parent or the Purchaser, to:
The Hain Food Group, Inc.
50 Charles Lindbergh Boulevard
Uniondale, New York 11553
Attention: President
Telephone No.: (516) 237-6200
Telecopy No.: (516) 237-6240
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Attention: Roger Meltzer, Esq.
Telephone No.: (212) 701-3000
Telecopy No.: (212) 269-5420
and
(b) if to the Company, to:
Westbrae Natural, Inc.
1065 East Walnut Street
Carson, California 90746
Attention: President
Telephone No.: (800) 776-1276
Telecopy No.: (310) 886-8219
with a copy to:
Law Offices of Jay J. Miller, Esq
430 East 57th Street, Suite 5D
New York, New York 10022
Attention: Jay Miller, Esq.
Telephone number: (212) 758-5577
Telecopy number: (212) 758-0624
Section 8.5 Interpretation. When a reference is made in this
--------------
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. Whenever the words "include," "includes" or
"including" are used in this Agreement they
-38-
shall be deemed to be followed by the words "without limitation." As used in
this Agreement, the term "affiliates" shall have the meaning set forth in Rule
12b-2 of the Exchange Act.
Section 8.6 Counterparts. This Agreement may be executed in one or
------------
more counterparts, each of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties.
Section 8.7 Entire Agreement; No Third Party Beneficiaries. This
----------------------------------------------
Agreement and the Confidentiality Agreement (including the documents and the
instruments referred to herein and therein) constitute the entire agreement and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof.
Section 8.8 Severability. Any term or provision of this Agreement
------------
that is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction or other authority declares that any term or
provision hereof is invalid, void or unenforceable, the parties agree that the
court asking such determination shall have the power to reduce the scope,
duration, area or applicability of the term or provision, to delete specific
words or phrases, or to replace any invalid, void or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision.
Section 8.9 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of New York without giving
effect to the principles of conflicts of law thereof.
Section 8.10 Assignment. Neither this Agreement nor any of the
----------
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written content of the other parties, except that the Purchaser may assign, in
its sole discretion, any or all of its rights, interests and obligations
hereunder to Parent or to any direct or indirect wholly owned Subsidiary of
Parent. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns.
-39-
IN WITNESS WHEREOF, Parent, the Purchaser and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
THE HAIN FOOD GROUP, INC.
By: /s/ Irwin D. Simon
--------------------------------------
Name: Irwin D. Simon
Title: President and Chief Executive
Officer
HAIN ACQUISITION CORP.
By: /s/ Irwin D. Simon
--------------------------------------
Name: Irwin D. Simon
Title: President
WESTBRAE NATURAL, INC.
By: /s/ B. Allen Lay
--------------------------------------
Name: B. Allen Lay
Title: President
ANNEX A
CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provisions of the Offer, and in addition to
(and not in limitation of) the Purchaser's rights to extend and amend the Offer
at any time in its sole discretion (subject to the provisions of the Agreement),
the Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-l(c) under the
Exchange Act (relating to the Purchaser's obligation to pay for or return
tendered Shares promptly after termination or withdrawal of the Offer), pay for,
and may delay the acceptance for payment of or, subject to the restriction
referred to above, the payment for, any tendered Shares, and may terminate or
amend the Offer as to any Shares not then paid for, if (i) there shall have been
validly tendered and not withdrawn prior to the expiration of the Offer less
than a majority of the issued and outstanding Common Stock on a fully-diluted
basis (the "Minimum Condition") ("fully-diluted basis" means all outstanding
-----------------
shares after giving effect to the exercise or conversion of all options, rights
and securities exercisable or convertible into such Shares) (ii) the Financing
Condition has not been satisfied or (iii) at any time on or after the date of
the Agreement and before the time of acceptance for payment for any such Shares,
any of the following events shall have occurred:
(a) there shall be threatened or pending any suit, action or
proceeding by any Governmental Entity against the Purchaser, Parent, the
Company or any Subsidiary of the Company (i) seeking to prohibit or impose
any material limitations on Parent's or the Purchaser's ownership or
operation (or that of any of their respective Subsidiaries or affiliates)
of all or a material portion of their or the Company's businesses or
assets, or to compel Parent or the Purchaser or their respective
Subsidiaries and affiliates to dispose of or hold separate any material
portion of the business or assets of the Company or Parent and their
respective Subsidiaries, in each case taken as a whole, (ii) challenging
the acquisition by Parent or the Purchaser of any Shares under the Offer,
seeking to restrain or prohibit the making or consummation of the Offer or
the Merger or the performance of any of the other transactions contemplated
by the Agreement, or seeking to obtain from the Company, Parent or the
Purchaser any damages that are material in relation to the Company and its
Subsidiaries taken as a whole, (iii) seeking to impose material limitations
on the ability of the Purchaser, or render the Purchaser unable, to accept
for payment, pay for or purchase some or all of the Shares pursuant to the
Offer and the Merger, (iv) seeking to impose material limitations on the
ability of Purchaser or Parent effectively to exercise full rights of
ownership of the Shares, including, without limitation, the right to vote
the Shares purchased by it on all matters
-2-
properly presented to the Company's stockholders, or (v) which otherwise is
reasonably likely to have a Material Adverse Effect;
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated, or deemed applicable,
pursuant to an authoritative interpretation by or on behalf of a Government
Entity, to the Offer or the Merger, or any other action shall be taken by
any Governmental Entity that is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in clauses (i) through
(v) of paragraph (a) above;
(c) there shall have occurred any other event, change or effect after
the date of the Agreement which, either individually or in the aggregate,
would have, or be reasonably likely to have, a Material Adverse Effect;
(d) (i) the Company Board or any committee thereof shall have
withdrawn or modified in a manner adverse to Parent or the Purchaser its
approval or recommendation of the Offer, the Merger or the Agreement, or
approved or recommended any Takeover Proposal or (ii) the Company Board or
any committee thereof shall have resolved to do any of the foregoing;
(e) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock Exchange
or in the London Stock Exchange, for a period in excess of 24 hours
(excluding suspensions or limitations resulting solely from physical damage
or interference with such exchanges not related to market conditions), (ii)
a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States (whether or not mandatory), (iii) a
commencement of war, armed hostilities or other international or national
calamity directly or indirectly involving the United States, (iv) any
limitation (whether or not mandatory) by any United States governmental
authority on the extension of credit generally by banks or other financial
institutions or (v) in the case of any of the foregoing existing at the
time of the commencement of the Offer, a material acceleration or worsening
thereof;
(f) any of the representations and warranties of the Company set
forth in this Agreement that are qualified as to materiality shall not be
true and correct in any material respect and any such representations and
warranties that are not so qualified shall not be true and correct, in each
case as if such representations and warranties were made as of such time;
(g) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the
-3-
Company to be performed or complied with by it under this Agreement and
such failure would result in a Material Adverse Effect;
(h) any person acquires beneficial ownership (as defined in Rule 13d-
3 promulgated under the Exchange Act), of at least 20% of the outstanding
Common Stock of the Company (other than any person not required to file a
Schedule 13D under the rules promulgated under the Exchange Act); or
(i) the Agreement shall have been terminated in accordance with its
terms.
The foregoing conditions are for the sole benefit of Parent and the
Purchaser, may be asserted by Parent or the Purchaser regardless of the
circumstances giving rise to such condition (including any action or inaction by
Parent or the Purchaser not in violation of the Agreement) and may be waived by
Parent or the Purchaser in whole or in part at any time and from time to time in
the sole discretion of Parent or the Purchaser, subject in each case to the
terms of the Agreement. The failure by Parent or the Purchaser at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
EXHIBIT (c)(2)
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT, dated as of September 11, 1997, among The Hain
Food Group, Inc., a Delaware corporation ("Parent"), Hain Acquisition Corp., a
------
Delaware corporation and a wholly owned subsidiary of Parent (the "Purchaser"),
---------
and the Stockholders of Westbrae Natural, Inc., a Delaware corporation (the
"Company"), set forth on the signature page hereto (collectively referred to
- --------
herein as the "Stockholders" and each, a "Stockholder").
------------ -----------
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this
Agreement, Parent, the Purchaser and the Company have entered into an Agreement
and Plan of Merger (as such Agreement may hereafter be amended from time to
time, the "Merger Agreement"), pursuant to which Purchaser will be merged with
----------------
and into the Company (the "Merger");
------
WHEREAS, in furtherance of the Merger, Parent and the Company desire
that as soon as practicable (and not later than five business days) after the
execution and delivery of the Merger Agreement, the Purchaser shall commence a
cash tender offer (the "Offer") to purchase at a price of $3.625 per share all
-----
outstanding shares of Company Common Stock (as defined in Section 1 hereof); and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Stockholders agree, and the Stockholders
have agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
1. Definitions. For purposes of this Agreement:
-----------
(a) "Acquisition Proposal" shall mean a Takeover Proposal (as defined
--------------------
in the Merger Agreement) but shall exclude, for purposes of determining any
action to be taken or refrained from by any Stockholder in accordance with
this Agreement, any Superior Proposal (as defined in the Merger Agreement)
which such Stockholder, in his capacity as a director, would be required to
approve or recommend in accordance with his fiduciary duties.
-2-
(b) "Beneficially Own" or "Beneficial Ownership" with respect to any
---------------- --------------------
securities shall mean having 'beneficial ownership' of such securities (as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")), including pursuant to any
------------
agreement, arrangement or understanding, whether or not in writing. Without
duplicative counting of the same securities by the same holder, securities
Beneficially Owned by a Person shall include securities Beneficially Owned
by all other Persons with whom such Person would constitute a "group" as
within the meaning of Section 13(d)(3) of the Exchange Act.
(c) "Company Common Stock" shall mean at any time the common stock,
--------------------
$.01 par value, of the Company.
(d) "Person" shall mean an individual, corporation, partnership,
------
joint venture, association, trust, unincorporated organization or other
entity.
(e) Capitalized terms used and not defined herein have the
respective meanings ascribed to them in the Merger Agreement.
2. Tender of Shares.
----------------
(a) In order to induce Parent and the Purchaser to enter into the
Merger Agreement, each of the Stockholders hereby agrees to validly tender (or
cause the record owner of such shares to validly tender), and not to withdraw,
pursuant to and in accordance with the terms of the Offer, not later than the
fifth business day after commencement of the Offer pursuant to Section 1.1 of
the Merger Agreement and Rule 14d-2 under the Exchange Act, the number of shares
of Company Common Stock set forth opposite such Stockholder's name under the
caption ''Tender Shares'' on Schedule I hereto, all of which are Beneficially
Owned by such Stockholder. Each Stockholder hereby acknowledges and agrees that
Parent's and the Purchaser's obligation to accept for payment and pay for the
Shares in the Offer, including the Shares Beneficially Owned by such
Stockholder, is subject to the terms and conditions of the Offer. The total
number of shares of Company Common Stock set forth opposite such Stockholder's
name on Schedule I under the caption ''Total Shares", and together with any
shares acquired by such Stockholder in any capacity after the date hereof and
prior to the termination of this Agreement whether upon the exercise of options
or by means of purchase, dividend, distribution, gift or otherwise, are referred
to herein as the "Shares".
(b) The transfer by the Stockholders of the Shares to Purchaser in
the Offer shall pass to and unconditionally vest in the Purchaser good and valid
title to the Tender Shares, free and clear of all Encumbrances and all
preemptive or other rights whatsoever, except for any Encumbrances or rights
arising hereunder.
-3-
(c) The Stockholders hereby permit Parent and the Purchaser to
publish and disclose in the Offer Documents and, if approval of the Company's
Stockholders is required under applicable law, the Proxy Statement (including
all documents and schedules filed with the SEC) their identity and ownership of
the Company Common Stock and the nature of their commitments, arrangements and
understandings under this Agreement.
3. Additional Agreements.
---------------------
(a) Voting Agreement. During the Term (as defined in Section 8
----------------
herein), each Stockholder shall, at any meeting of the holders of Company Common
Stock, however called, or in connection with any written consent of the holders
of Company Common Stock, vote (or cause to be voted) the Shares (if any) then
held of record or Beneficially Owned by such Stockholder, (i) in favor of the
Merger, the execution and delivery by the Company of the Merger Agreement and
the approval of the terms thereof and each of the other actions contemplated by
the Merger Agreement and this Agreement and any actions required in furtherance
thereof and hereof; and (ii) against any Acquisition Proposal and against any
action or agreement that would impede, frustrate, prevent or nullify this
Agreement, or result in a breach in any respect of any covenant, representation
or warranty or any other obligation or agreement of the Company under the Merger
Agreement or which would result in any of the conditions set forth in Annex A to
the Merger Agreement or set forth in Article VI of the Merger Agreement not
being fulfilled. The parties hereto agree and acknowledge that nothing in this
Section 3 or any other part of this Agreement shall be construed as requiring
any Stockholder who also is a director of the Company to propose, endorse,
approve or recommend the Merger Agreement or any transaction contemplated
thereby in such Stockholder's capacity as a director of the Company in any
manner inconsistent with his fiduciary duties as director.
(b) No Inconsistent Arrangements. Each of the Stockholders hereby
----------------------------
covenants and agrees that, except as contemplated by this Agreement and the
Merger Agreement, during the Term it shall not (i) tender, or consent to any
tender of, any or all of such Stockholder's Shares, pursuant to any Acquisition
Proposal, (ii) transfer (which term shall include, without limitation, any sale,
gift, pledge or other disposition), or consent to any transfer of, any or all of
such Stockholder's Shares, Company Options or any interest therein, (iii) enter
into any contract, option or other agreement or understanding with respect to
any transfer of any or all of such Shares, Company Options or any interest
therein, (iv) grant any proxy, power-of-attorney or other authorization in or
with respect to such Shares or Company Options, (v) deposit such Shares or
Company Options into a voting trust or enter into a voting agreement or
arrangement with respect to such Shares or Company Options, or (vi) take any
other action that would in any way restrict, limit or interfere with the
performance of its obligations hereunder or the transactions contemplated hereby
or by the Merger Agreement. Without limiting the foregoing sentence, each of the
Stockholders hereby covenants and
-4-
agrees to be bound by the provisions of Section 5.4(a) of the Merger Agreement
to the same extent as the Company.
(c) Grant of Irrevocable Proxy; Appointment of Proxy.
------------------------------------------------
(i) Each Stockholder hereby irrevocably grants to, and appoints,
Parent and B. Irwin D. Simon (as President and Chief Executive Officer) and
Jack Kaufman (as Chief Financial Officer), or either of them, in their
respective capacities as officers of Parent, and any individual who shall
hereafter succeed to any such office of Parent, and each of them
individually, such Stockholder's proxy and attorney-in-fact (with full
power of substitution), for and in the name, place and stead of such
Stockholder, to vote such Stockholder's Shares, or grant a consent or
approval in respect of the Shares in favor of the various transactions
contemplated by the Merger Agreement (the "Transactions") and against any
Acquisition Proposal.
(ii) Each Stockholder represents that any proxies heretofore given in
respect of such Stockholder's Shares are not irrevocable, and that any
such proxies are hereby revoked.
(iii) Each Stockholder understands and acknowledges that Parent is
entering into the Merger Agreement in reliance upon such Stockholder's
execution and delivery of this Agreement. Each Stockholder hereby affirms
that the irrevocable proxy set forth in this Section 3(c) is given in
connection with the execution of the Merger Agreement, and that such
irrevocable proxy is given to secure the performance of the duties of such
Stockholder under this Agreement. Each Stockholder hereby further affirms
that the irrevocable proxy is coupled with an interest and may under no
circumstances be revoked. Each Stockholder hereby ratifies and confirms all
that such irrevocable proxy may lawfully do or cause to be done by virtue
hereof.
(d) Company Options. Each of the Stockholders that holds Company
---------------
Options to acquire shares of Company Common Stock, as identified on the
signature pages hereof, shall, if requested by the Company, consent to the
cancellation of such Stockholder's Company Options in accordance with the terms
of the Merger Agreement and shall execute all appropriate documentation in
connection with such cancellation or substitution.
(e) Reasonable Efforts. Subject to the terms and conditions of this
------------------
Agreement, each of the parties hereto agrees to use its best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement
and the Merger Agreement. Each party shall promptly consult with the other and
provide any necessary information and material with respect to all filings made
by such party
-5-
with any Governmental Entity in connection with this Agreement and the Merger
Agreement and the transactions contemplated hereby and thereby.
(f) Waiver of Rights to Dissent. Each Stockholder hereby waives any
---------------------------
rights of appraisal or rights to dissent from the Merger that such Stockholder
may have.
4. Representations and Warranties of the Stockholders. Each
--------------------------------------------------
Stockholder hereby represents and warrants to Parent as follows:
(a) Ownership of Shares. Such Stockholder is the record and
-------------------
Beneficial Owner of the Shares, as set forth on Schedule I. On the date
hereof, the Total Shares set forth next to such Stockholder's name on
Schedule I hereto constitute all of the Shares owned of record or
Beneficially Owned by such Stockholder. Such Stockholder has sole voting
power and sole power to issue instructions with respect to the matters set
forth in Sections 2 and 3 hereof, sole power of disposition, sole power of
conversion, sole power to demand appraisal rights and sole power to agree
to all of the matters set forth in this Agreement, in each case with
respect to all of the Tender Shares set forth next to such Stockholder's
name on Schedule I hereto with no limitations, qualifications or
restrictions on such rights, subject to applicable securities laws and the
terms of this Agreement.
(b) Power; Binding Agreement. Such Stockholder has the legal
------------------------
capacity, power and authority to enter into and perform all of such
Stockholder's obligations under this Agreement. The execution, delivery and
performance of this Agreement by such Stockholder will not violate any
other agreement to which such Stockholder is a party including, without
limitation, any voting agreement, proxy arrangement, pledge agreement,
Stockholders agreement or voting trust. This Agreement has been duly and
validly executed and delivered by such Stockholder and constitutes a valid
and binding agreement of such Stockholder, enforceable against such
Stockholder in accordance with its terms. There is no beneficiary or holder
of a voting trust certificate or other interest of any trust of which such
Stockholder is a trustee whose consent is required for the execution and
delivery of this Agreement or the consummation by such Stockholder of the
transactions contemplated hereby.
(c) No Conflicts. Except for filings under the HSR Act, if
------------
applicable, and the Exchange Act, (i) no filing with, and no permit,
authorization, consent or approval of, any Governmental Entity for the
execution of this Agreement by such Stockholder and the consummation by
such Stockholder of the transactions contemplated hereby and (ii) none of
the execution and delivery of this Agreement by such Stockholder, the
consummation by such Stockholder of the transactions contemplated hereby or
compliance by such Stockholder with any of the provisions hereof shall (A)
conflict with
-6-
or result in any breach of any organizational documents applicable to the
Stockholder, (B) result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any
third party right of termination, cancellation, material modification or
acceleration) under any of the terms, conditions or provisions of any note,
loan agreement, bond, mortgage, indenture, license, contract, commitment,
arrangement, understanding, agreement or other instrument or obligation of
any kind to which such Stockholder is a party or by which such Stockholder
or any of its properties or assets may be bound, or (C) violate any order,
writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to such Stockholder or any of its properties or assets.
(d) No Encumbrances. Except as permitted by this Agreement, the
---------------
Shares and the certificates representing such Shares are now, and at all
times during the term hereof will be, held by such Stockholder, or by a
nominee or custodian for the benefit of such Stockholder, free and clear of
all Encumbrances, proxies, voting trusts or agreements, understandings or
arrangements or any other rights whatsoever, except for any such
Encumbrances or proxies arising hereunder.
(e) No Finder's Fees. Except as set forth in the Merger Agreement,
----------------
no broker, investment banker, financial advisor or other person is entitled
to any broker's, finder's, financial adviser's or other similar fee or
commission in connection with the transactions contemplated hereby based
upon arrangements made by or on behalf of such Stockholder.
(f) Reliance by Parent. Each Stockholder understands and
------------------
acknowledges that Parent is entering into, and causing Purchaser to enter
into, the Merger Agreement in reliance upon such Stockholder's execution
and delivery of this Agreement.
5. Representations and Warranties of Parent and the Purchaser. Each
----------------------------------------------------------
of Parent and the Purchaser hereby represents and warrants to the Stockholders
as follows:
(a) Power; Binding Agreement. Parent and the Purchaser each has the
------------------------
corporate power and authority to enter into and perform all of its
obligations under this Agreement. The execution, delivery and performance
of this Agreement by each of Parent and the Purchaser will not violate any
other agreement to which either of them is a party. This Agreement has been
duly and validly executed and delivered by each of Parent and the Purchaser
and constitutes a valid and binding agreement of each of Parent and the
Purchaser, enforceable against each of Parent and the Purchaser in
accordance with its terms.
-7-
(b) No Conflicts. Except for filings under the HSR Act, if
------------
applicable, and the Exchange Act, (i) no filing with, and no permit,
authorization, consent or approval of, any Governmental Entity is necessary
for the execution of this Agreement by each of Parent and the Purchaser and
the consummation by each of Parent and the Purchaser of the transactions
contemplated hereby and (ii) none of the execution and delivery of this
Agreement by each of Parent and the Purchaser, the consummation by each of
Parent and the Purchaser of the transactions contemplated hereby or
compliance by each of Parent and the Purchaser with any of the provisions
hereof shall (A) conflict with or result in any breach of any
organizational documents applicable to either of Parent or the Purchaser,
(B) result in a violation or breach of, or constitute (with or without
notice or lapse of time or both) a default (or give rise to any third party
right of termination, cancellation, material modification or acceleration)
under any of the terms, conditions or provisions of any note, loan
agreement, bond, mortgage, indenture, license, contract, commitment,
arrangement, understanding, agreement or other instrument or obligation of
any kind to which either of Parent or the Purchaser is a party or by which
either of Parent or the Purchaser or any of their properties or assets may
be bound, or (C) violate any order, writ, injunction, decree, judgment,
order, statute, rule or regulation applicable to either of Parent or the
Purchaser or any of their properties or assets.
6. Further Assurances. From time to time, at the other party's
------------------
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further lawful action as may
be necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.
7. Stop Transfer. The Stockholders shall not request that the
-------------
Company register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of the Shares, unless such transfer is
made in compliance with this Agreement. In the event of a stock dividend or
distribution, or any change in the Company Common Stock by reason of any stock
dividend, split-up, recapitalization, combination, exchange of shares or the
like, the term 'Shares' shall refer to and include the Shares as well as all
such stock dividends and distributions and any shares into which or for which
any or all of the Shares may be changed or exchanged.
8. Termination. The covenants and agreements contained herein with
-----------
respect to the Shares shall terminate upon the earlier of the consummation of
the Merger and four months following the termination of the Merger Agreement in
accordance with its terms (the period during which this Agreement is in effect
being referred to herein as the "Term"); provided, however, in the event the
-------- -------
Merger Agreement is terminated by the Company in accor-
-8-
dance with Section 7.1(c) of the Merger Agreement, this Agreement shall
terminate on the date of termination of the Merger Agreement.
9. Miscellaneous.
-------------
(a) Entire Agreement. This Agreement constitutes the entire
----------------
agreement between the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof.
(b) Binding Agreement. This Agreement and the obligations hereunder
-----------------
shall attach to the Shares and shall be binding upon any person or entity to
which legal or beneficial ownership of such Shares shall pass, whether by
operation of law or otherwise, including, without limitation, a Stockholder's
heirs, guardians, administrators or successors. Notwithstanding any transfer of
Shares, the transferor shall remain liable for the performance of all
obligations of the transferor under this Agreement.
(c) Indemnity. Each Stockholder will be indemnified under this
---------
Agreement to the extent such Stockholder shall be indemnified in his
capacity as a director of the Company under Section 5.8 of the Merger
Agreement; provided, in the event any action is brought against any
indemnified party for which such indemnified party seeks indemnity from
Parent or the Purchaser, Parent shall have the right to appoint counsel for
such indemnified party in such action and shall be entitled to direct the
defense thereof.
(d) Assignment. This Agreement shall not be assigned by operation of
----------
law or otherwise without the prior written consent of the other parties,
provided that Parent may assign, in its sole discretion, its rights and
obligations hereunder to any direct or indirect wholly owned subsidiary of
Parent, but no such assignment shall relieve Parent of its obligations hereunder
if such assignee does not perform such obligations.
(e) Amendments, Waivers, Etc. This Agreement may not be amended,
------------------------
changed, supplemented, waived or otherwise modified or terminated, except upon
the execution and delivery of a written agreement executed by the parties
hereto.
(f) Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if given) by hand delivery or telecopy (with a
confirmation copy sent for next day delivery via courier service, such as
Federal Express), or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
-9-
If to a Stockholder: to such Stockholder's address set forth
on Schedule I hereto
If to Parent or the Purchaser: The Hain Food Group, Inc.
50 Charles Lindbergh Boulevard
Uniondale, New York 11553
Attention: President
Telephone No.: (516) 237-6200
Telecopy No.: (516) 237-6240
copy to: Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Attention: Roger Meltzer, Esq.
Telephone No.: (212) 701-3000
Telecopy No.: (212) 269-5420
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(g) Severability. Whenever possible, each provision or portion of
------------
any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
(h) Specific Performance. Each of the parties hereto recognizes and
--------------------
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore in the event
of any such breach the aggrieved party shall be entitled to the remedy of
specific performance of such covenants and agreements and injunctive and other
equitable relief in addition to any other remedy to which it may be entitled, at
law or in equity.
(i) Remedies Cumulative. All rights, powers and remedies provided
-------------------
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any thereof
by any party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party.
-10-
(j) No Waiver. The failure of any party hereto to exercise any
---------
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
(k) No Third Party Beneficiaries. This Agreement is not intended to
----------------------------
be for the benefit of, and shall not be enforceable by, any person or entity who
or which is not a party hereto.
(l) Governing Law. This Agreement shall be governed and construed in
-------------
accordance with the laws of the State of New York, without giving effect to the
principles of conflicts of law thereof.
(m) Jurisdiction. Each party hereby irrevocably submits to the
------------
exclusive jurisdiction of the Courts of the State of New York and the United
States District Court for the Southern District of New York in any action, suit
or proceeding arising in connection with this Agreement, and agrees that any
such action, suit or proceeding shall be brought only in such court (and waives
any objection based on forum non conveniens or any other objection to venue
therein). Each party hereto hereby waives any right to a trial by jury in
connection with any such action, suit or proceeding.
(n) Descriptive Headings. The descriptive headings used herein are
--------------------
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
(o) Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.
-11-
IN WITNESS WHEREOF, Parent, the Purchaser and the Stockholders have
caused this Agreement to be duly executed as of the day and year first above
written.
PARENT
THE HAIN FOOD GROUP, INC.
By: /s/ Irwin D. Simon
------------------
Name: Irwin D. Simon
Title: President and Chief Executive
Officer
PURCHASER
HAIN ACQUISITION CORP.
By: /s/ Irwin D. Simon
------------------
Name: Irwin D. Simon
Title: President
STOCKHOLDERS
DELAWARE STATE EMPLOYEES' RETIREMENT FUND
By: /s/ Robert J. Cresci
--------------------
Name:
Title:
-12-
THE DECLARATION OF TRUST FOR THE
DEFINED BENEFIT PLANS OF ICI
AMERICAN HOLDINGS INC.
By: /s/ Robert J. Cresci
--------------------
Name:
Title:
THE DECLARATION OF TRUST FOR THE DEFINED BENEFIT
PLANS OF ICI ZENECA HOLDINGS INC.
By: /s/ Robert J. Cresci
--------------------
Name:
Title:
BACCHARIS CAPITAL, INC.
By: /s/ F. Noel Perry
--------------------
Name:
Title:
PRINCETON/MONTROSE PARTNERS
By: /s/ Donald R. Stroben
---------------------
Name:
Title:
SOUTHERN CALIFORNIA VENTURES II
By: /s/ B. Allen Lay
----------------
Name:
Title:
-13-
NATURAL VENTURE PARTNERS I
By: /s/ Anthony J. Harnett
----------------------
Name:
Title:
/s/ Robert J. Cresci
--------------------
Robert J. Cresci
/s/ Allen Dalfen
----------------
Allen Dalfen
/s/ Anthony J. Harnett
----------------------
Anthony J. Harnett
/s/ Allen Lay
-------------
B. Allen Lay
/s/ Jay J. Miller
-----------------
Jay J. Miller
/s/ Stephen P. Monticelli
-------------------------
Stephen P. Monticelli
/s/ F. Noel Perry
-----------------
F. Noel Perry
/s/ Harry W. Poett III
----------------------
Harry W. Poett III
/s/ Donald R. Stroben
---------------------
Donald R. Stroben
/s/ Stephen Schorr
------------------
Stephen Schorr
-14-
Schedule I
Number of Shares and Company Options
Beneficially Owned
---------------------------------------
Total Tender Company
Name of Stockholder Shares Shares Options
- ------------------ --------- --------- -------
Delaware State Employees' 983,940 983,940 -
Retirement Fund
The Declaration of Trust for the 231,929 231,929 -
Defined Benefit Plans of ICI
American Holdings Inc.
The Declaration of Trust for the 189,760 189,760 -
Defined Benefit Plans of ICI
Zeneca Holdings Inc.
Baccharis Capital, Inc. 702,814 702,814 -
Princeton/Montrose Partners 548,016 548,016 -
Southern California Ventures II 365,345 365,345 -
Natural Venture Partners I 351,407 351,407 -
Robert J. Cresci 1,405,629 - 20,000
Allan Dalfen 589,155 589,155 20,000
Anthony Harnett 351,407 - 20,000
B. Allen Lay 388,9126 23,571 300,000
Jay J. Miller 85,144 85,144 20,000
Stephen P. Monticelli 10,000 10,000 20,000
F. Noel Perry 702,814 - 20,000
Henry W. Poett III 8,786 8,786 20,000
Donald R. Stroben 548,016 - 20,000
Stephen Schorr 8,786 8,786 60,000
--------- -------
Total 4,098,654 520,000
========= =======
EXHIBIT (c)(3)
[Vestro Natural Foods, Inc. Letterhead]
June 27, 1994
Kineret Acquisition Corp.
24 Jericho Turnpike
Jericho, NY 11753-1031
Attention: Irwin Simon, President and
Andrew R. Heyer, Chairman of the Board
Gentlemen:
In connection with your consideration of a possible transaction with Vestro
Foods Inc. (collectively with any subsidiaries, the "Company") pursuant to which
you would, among other things, (i) merge with or purchase all of the outstanding
stock or substantially all of the assets of the Company, or (ii) form a joint
venture with the Company; or (iii) pursue a minority investment or partnership
or any similar transaction (the "Transaction"), you have requested financial and
other information concerning the business and affairs of the Company. In
consideration of furnishing you and your directors, officers, employees, agents,
advisors and potential financing sources (collectively, "Representatives") such
financial and other information, you agree to treat, and to cause your
Representatives to treat, such information furnished to you by or on behalf of
the Company or its Representatives and all analyses, complications, studies and
other material containing or reflecting, in whole or in part, any such
information whether prepared by the Company, you and/or your Representatives
(collectively, "Evaluation Material"), as follows:
1. You recognize and acknowledge the competitive value and confidential
nature of the Evaluation Material and the damage that could result
to the Company if any information contained therein is disclosed to
any third party or used by you for any purpose other than to
evaluate a possible Transaction.
2. The term "Evaluation Material" does not include any information
which (a) has been made public other than by acts by you or your
Representatives in violation of this agreement (b) becomes available
to you on a nonconfidential basis from a source that is entitled to
disclose it on a nonconfidential basis.
3. You agree that the Evaluation Material will be used solely for the
purpose of evaluating the Transaction. You agree not to disclose any
of the Evaluation Material to any of your employees, officers,
directors or affiliates or to any third party without the prior
written consent of the Company, except that you may disclose the
Evaluation Material or portions thereof solely to such of your
employees, officers, and directors and to such employees, officers,
directors of your Representatives who need to know such information
(and who agree to use such information solely) for the purpose of
evaluating the Transaction, which individuals shall agree that you
will be responsible for the breach of the Agreement by any of your
Representatives.
4. In the event that you or your Representatives are requested in any
proceeding to disclose any Evaluation Material, unless prohibited by
law, you will give the Company prompt notice of such request so that
the Company may seek an appropriate protective order. If, in the
absence of a protective order, you or your Representatives are
nonetheless legally compelled to disclose such information to the
extent compelled to do so in such proceeding, without liability
hereunder, you will, unless prohibited by law, give the Company
written notices of the information to be disclosed as far in advance
of its disclosure as is practicable.
5. Without the prior written consent of the Company, you and your
Representatives will not disclose to any person either the fact that
discussions or negotiations are taking concerning a possible
transaction involving the company or any of the terms, conditions or
other facts with respect to any such possible transaction including
the status thereof, or the subject matter of this agreement;
provided, that you may make such disclosure if you have received an
opinion of counsel that such disclosure must be made by you in order
that you not commit a violation of law.
6. You understand and agree that the Company shall be free to conduct
the process relating to the Transaction as it in its sole discretion
shall determine (including, without limitation, negotiating with any
prospective party and entering into an agreement to effect a
Transaction without notice to you or any
other person) and, (ii) any procedures relating to any such
Transaction may be changed by the Company at any time without notice
to you or any other person.
7. In the event that a Transaction is not consummated, neither you or
your Representatives shall without the prior written consent of the
Company, use any of the Evaluation Material for any purpose and you
will promptly return to the Company upon written request all copies
of all Evaluation Material furnished to you or your Representatives
and will return or destroy all analyses, compilations, studies and
other material prepared by you or your Representatives based in
whole or in part on the Evaluation Material.
8. You understand that neither the Company nor any of its
Representatives makes any representation or warranty, express or
implied, as to the accuracy or completeness of the Evaluation
Material and you agree that neither the Company nor any of its
Representatives shall have any liability to your or any other party
resulting from any use or reliance on the Evaluation Material. Only
the representations and warranties and other terms and conditions of
a Purchase Agreement, when, as and if it is executed and delivered
(and subject to the restrictions and conditions specified therein)
shall have any legal effect.
9. You agree that for period of one year from the date hereof neither
you nor any of your affiliates or agents will, without the prior
written consent of the Company, solicit the employment of any person
who is at the time an employee of the Company.
10. You agree that money damages would not be a sufficient remedy for
any breach of this agreement by you or your Representatives, and
that, in addition to all other remedies, the Company shall be
entitled to specific performance and injunctive or other equitable
relief as a remedy for any such breach, and you further agree to
waive, and to use your best efforts to cause your Representatives to
waive, any requirement for the securing or posting of any bond in
connection with such remedy. You agree to be responsible for any
breach of this agreement by any of your Representatives.
11. No failure or delay by either party in exercising any right, power
or privilege under this agreement shall operate as a waiver thereof
no shall any single or partial exercise thereof preclude any other
or further exercise of any right, power or privilege hereunder. No
provision of this agreement may be waived or amended nor any consent
given except by writing signed by duly authorized representative of
each party, which specifically refers to this agreement and
provision so amended or for which such waiver or consent is given.
In case any provision of this agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the
remaining provisions of the agreement shall not in any way be
affected or impaired thereby.
12. This agreement shall be governed by and construed in accordance with
the laws of the State of California without giving effect to choice
of law doctrines. Each party hereto consents to personal
jurisdiction in such State and voluntarily submits to the
jurisdiction of the courts of such State in any action or proceeding
with respect to this agreement, including the federal district
courts of such State in any action or proceeding with respect to
this agreement, including the federal district courts located in
such State. You agree that you may be served with process at your
address set forth on the first page hereof.
All inquiries, request for information and other communications with the Company
shall be made through Allan Dalfen or Stephen Schorr. Please acknowledge your
agreement to the foregoing by countersigning this letter in the place provided
below and returning it to us.
Very truly yours,
Stephen Schorr
Vice President, Finance
Executed and Agreed
This 27 day of June, 1994.
Kineret Acquisition Corp.
Irwin D. Simon
By: ________________________
President
Its: ________________________
EXHIBIT (c)(4)
[WESTBRAE NATURAL, INC. LETTERHEAD]
August 20, 1997
The Hain Food Group
50 Charles Lindbergh Blvd.
Uniondale, NY 11533
Attention: Irwin Simon, President and
Andrew R. Heyer, Chairman of the Board
Gentlemen:
In connection with your consideration of a possible transaction with
Westbrae Natural, Inc. (collectively with any subsidiaries, the "Company") or
its shareholders pursuant to which you would, among other things, tender for,
merge with or purchase all of the outstanding stock or all or substantially all
of the assets of the Company, or any similar transaction (the "Transaction"),
you have requested financial and other information concerning the business and
affairs of the Company. In consideration of furnishing you and your directors,
officers, employees, agents, advisors and financing sources (collectively,
"Representatives") such financial and other information, you agree to treat, and
to cause your Representatives to treat, such information furnished to you by or
on behalf of the Company or its Representatives and all analyses, compilations,
studies and other material containing or reflecting, in whole or in part, any
such information whether prepared by the Company, you and/your Representatives
(collectively, "Evaluation Material"), as follows:
1. You recognize and acknowledge the competitive value and
confidential nature of the Evaluation Material and the damage
that could result to the Company if any information contained
therein is disclosed to any third party or used by you for any
purpose other than to evaluate a possible Transaction.
2. The term "Evaluation Material" does not include any information
which (a) has been made public other than by acts by you or your
Representatives in violation of this Agreement or (b) becomes
available to you on a nonconfidential basis from a source that is
entitled to disclose it on a nonconfidential basis.
3. You agree that the Evaluation Material will be used solely for
the purpose of evaluating the Transaction. You agree not to
disclose any of the Evaluation Material to any of your employees,
officers, directors or affiliates or to any third party without
the prior written consent of the Company, except that you may
disclose the Evaluation Material or portions thereof solely to
such of your employees, officers, and directors and to such
employees, officers, directors of your Representatives who need
to know such information (and who agree to use such information
solely) for the purpose of evaluating the Transaction, which
individuals shall agree to be bound by this Agreement and not to
use or disclose any of the Evaluation Material to any other
party. You agree that you will be responsible for any breach of
this Agreement by any of your Representatives.
4. In the event that you or your Representatives are requested in
any proceeding to disclose any Evaluation Material, unless
prohibited by law, you will give the Company prompt notice of
such request so that the Company may seek an appropriate
protective order. If, in the absence of a protective order, you
or your Representatives are nonetheless legally compelled to
disclose such information to the extent compelled to do so in
such proceeding, without liability hereunder, you will, unless
prohibited by law, give the Company written notice of the
information to
be disclosed as far in advance of its disclosure as is
practicable.
5. Without the prior written consent of the Company, you and your
Representatives will not disclose to any person either the fact
that discussions or negotiations are taking place concerning a
possible transaction involving the Company or any of the terms,
conditions or other facts with respect to any such possible
transaction including the status thereof, or the subject matter
of this agreement; provided, that you may make such disclosure if
you have received an opinion of counsel that such disclosure must
be made by you in order that you not commit a violation of law.
6. You understand and agree that the Company shall be free to
conduct the process relating to the Transaction as it in its sole
discretion shall determine (including, without limitation,
negotiating with any prospective party and entering into an
agreement to effect a Transaction without notice to you or any
other person) and, (ii) any procedures relating to any such
Transaction may be changed by the Company at any time without
notice to you or any other person.
7. In the event that a Transaction is not consummated, neither you
nor any of your Representatives without the prior written consent
of the Company, shall use any of the Evaluation Material for any
purposes and you will promptly return to the Company upon written
request all copies of all Evaluation Material furnished to you or
your Representatives and will return or destroy all analyses,
compilations, studies and other material prepared by you or your
Representatives based in whole or in part on the Evaluation
Material.
8. You understand that neither the Company nor any of its
Representatives makes any representation or warranty, express or
implied, as to the accuracy or completeness of the Evaluation
Material and you agree that neither the Company nor any of its
Representatives shall have any liability to you or any other
party resulting from any use or reliance on the Evaluation
Material. Only such representatives and warranties and other
terms and conditions of a definitive Purchase Agreement, when, as
and if it is executed and delivered (and subject to the
restrictions and conditions specified therein) shall have any
legal effect.
9. You agree that for a period of one year from the date hereof
neither you nor any of your affiliates or agents without the
prior written consent of the Company, shall hire or solicit the
employment of any person who is at said date the time an employee
or representative of the Company.
10. You agree that money damages would not be a sufficient remedy for
any breach of this Agreement by you or any of your
Representatives, and that, in addition to all other remedies, the
Company shall be entitled to specific performance and injunctive
or other equitable relief as a remedy for any such breach, and
you further agree to waive, and to use your best efforts to cause
your Representatives to waive, any requirement for the securing
or posting of any bond in connection with such remedy. You shall
be responsible for any breach of this Agreement by any of your
Representatives. If any legal proceeding is commenced by the
Company to enforce this Agreement as a result of the breach or
threatened breach of any provision hereof by you or any of your
Representatives, the Company shall be entitled to reasonable
attorney's fees and expenses in addition to any damages to which
it may be entitled.
11. No failure or delay by either 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 of any right, power or privilege
hereunder. No provision of this Agreement may be waived or
amended not any consent given except by a writing signed by a
duly authorized representative of each party, which specifically
refers to this Agreement and the provision so amended or for
which such waiver or consent is given.
In case any provision of this agreement shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of
the remaining provisions of the agreement shall not in any way be
affected or impaired thereby.
12. This Agreement shall be governed by and construed in accordance
with the laws of the State of California without giving effect to
choice of law doctrines. Each party hereto consents to personal
jurisdiction in such State and voluntarily submits to the
jurisdiction of the courts of such State in any action or
proceeding with respect to this Agreement, including the Federal
District courts of such State. You agree that you may be served
with process at your address set forth on the first page hereof.
All inquiries, requests for information and other communications with the
Company shall be made through B. Allen Lay or Stephen Schorr. Please
acknowledge your agreement to the foregoing by countersigning this letter in the
place provided below and returning it to us.
Very truly yours,
By: /s/ STEPHEN SCHORR
---------------------
Name: Stephen Schorr
Title: Vice President,
Finance
EXECUTED AND AGREED
This 22nd day of August, 1997
THE HAIN FOOD GROUP
BY: /s/ Jack Kaufman
---------------------------
ITS: Chief Financial Officer
---------------------------
