AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 24, 2000
REGISTRATION NO. 333-33830
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
THE HAIN FOOD GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 2099 22-3240619
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification Number)
incorporation or organization)
50 CHARLES LINDBERGH BOULEVARD
UNIONDALE, NEW YORK 11553
(516) 237-6200
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
--------------------------
IRWIN D. SIMON
CHAIRMAN OF THE BOARD,
PRESIDENT AND CHIEF EXECUTIVE OFFICER
THE HAIN FOOD GROUP, INC.
50 CHARLES LINDBERGH BOULEVARD
UNIONDALE, NEW YORK 11553
(516) 237-6200
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
--------------------------
Copies to:
ROGER MELTZER, ESQ. THOMAS R. STEPHENS, ESQ.
CAHILL GORDON & REINDEL BARTLIT BECK HERMAN
80 PINE STREET PALENCHAR & SCOTT
NEW YORK, NEW YORK 10005 THE KITTREDGE BUILDING
(212) 701-3000 511 SIXTEENTH STREET
DENVER, COLORADO 80202
(303) 592-3100
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON AS
PRACTICABLE AFTER THE DATE HEREOF.
--------------------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / / ______
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / ______
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO
SECTION 8(A), MAY DETERMINE.
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THE HAIN FOOD GROUP, INC.
CROSS REFERENCE SHEET
ITEM NUMBER IN FORM S-4 LOCATION IN JOINT PROXY STATEMENT/PROSPECTUS
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A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus..... Facing Page of the Registration Statement;
Outside Front Cover Page of Joint Proxy
Statement/Prospectus
2. Inside Front and Outside Back Cover Pages
of Prospectus.............................. Where You Can Find More Information; Table
of Contents
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information.............. Outside Front Cover Page of Joint Proxy
Statement Prospectus; Summary; Risk Factors;
Summary--Selected Financial Data; Summary--
Comparative Per Share Data; Unaudited Pro
Forma Combined Condensed Financial
Statements; Where You Can Find More
Information
4. Terms of the Transaction................... Outside Front Cover Page of Prospectus;
Summary; The Merger; Role of Financial
Advisors; Principal Provisions of the Merger
Agreement; Comparison of Stockholder Rights
5. Pro Forma Financial Information............ Unaudited Pro Forma Combined Condensed
Financial Statements
6. Material Contracts with the Company Being
Acquired................................... *
7. Additional Information Required for
Reoffering by Persons and Parties Deemed to
be Underwriters............................ *
8. Interests of Named Experts and Counsel..... *
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities................................ *
B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3
Registrants................................ Where You Can Find More Information
11. Incorporation of Certain Information by
Reference.................................. Where You Can Find More Information
12. Information with Respect to S-2 and S-3
Registrants................................ *
13. Incorporation of Certain Information by
Reference.................................. *
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* Omitted because the Item is inapplicable or the answer thereto is negative.
ITEM NUMBER IN FORM S-4 LOCATION IN JOINT PROXY STATEMENT/PROSPECTUS
- ------------------------------------------------ --------------------------------------------
14. Information with Respect to Registrants
Other Than S-3 or S-2 Registrants.......... *
C. INFORMATION ABOUT THE COMPANY BEING
ACQUIRED
15. Information with Respect to S-3
Companies.................................. Where You Can Find More Information
16. Information with Respect to S-2 or S-3
Companies.................................. *
17. Information with Respect to Companies Other
Than S-2 or S-3 Companies.................. *
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or
Authorizations are to be Solicited......... Outside Front Cover Page of Joint Proxy
Statement/Prospectus; Summary; Interests of
Insiders in the Merger; The Merger;
Principal Provisions of the Merger
Agreement; The Stockholders' Meetings;
Comparison of Stockholder Rights; Where You
Can Find More Information
19. Information if Proxies, Consents or
Authorizations are not to be Solicited or
in an Exchange Offer....................... *
- ------------------------
* Omitted because the Item is inapplicable or the answer thereto is negative.
THE HAIN FOOD GROUP, INC.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
A special meeting of stockholders of The Hain Food Group, Inc. will be held
at The Town Club, located at 9 East 86th Street, New York, New York 10028, at
11:00 a.m., New York time, on Tuesday, May 30, 2000 for the following purposes:
1. To consider and vote upon a proposal to issue shares of Hain common
stock in the merger of Hain Acquisition Corp., a wholly-owned subsidiary
of Hain, with and into Celestial, upon the terms and subject to the
conditions set forth in the merger agreement dated as of March 5, 2000
between Hain and Celestial;
2. To amend the Hain certificate of incorporation to change Hain's
corporate name to The Hain Celestial Group, Inc., effective upon
consummation of the merger;
3. To amend the Hain certificate of incorporation to increase the
authorized number of shares of Hain common stock from 40 million to
100 million;
4. To amend the Hain 1994 Long Term Incentive and Stock Award Plan to
(a) increase the number of shares issuable over the term of the plan by
3 million shares to 6.4 million shares in the aggregate and (b) increase
the upper limit on the number of shares for which options or stock
appreciation rights may be granted to any participant under the plan
during any calendar year to 1 million shares;
5. To adopt the Hain 2000 Directors Stock Option Plan; and
6. To transact such other business as may properly come before the special
meeting.
Only holders of record of Hain common stock at the close of business on
April 21, 2000 are entitled to notice of and to vote at the special meeting, or
any adjournments or postponements thereof. Approval of the proposals to issue
Hain common stock in the merger and to amend the Hain certificate of
incorporation require the favorable vote of the holders of a majority of the
outstanding shares of Hain common stock. Approval of the proposals to amend
Hain's Long Term Incentive and Stock Award Plan and adopt Hain's 2000 Directors
Stock Option Plan require the favorable vote of the holders of a majority of the
Hain common stock present in person or by proxy at the special meeting, assuming
a quorum is present.
/s/ Irwin D. Simon
Irwin D. Simon
Chairman of the Board,
President and Chief Executive Officer
April 28, 2000
PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY PROMPTLY,
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING.
THE BOARD OF DIRECTORS OF HAIN UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE FOR APPROVAL OF THE MATTERS TO BE VOTED UPON AT THE SPECIAL MEETING.
CELESTIAL SEASONINGS, INC.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
A special meeting of stockholders of Celestial Seasonings, Inc. will be held
at The Town Club, located at 9 East 86th Street, New York, New York 10028, at
1:00 p.m., New York time, on Tuesday, May 30, 2000 for the following purposes:
1. To consider and vote upon a proposal to adopt the merger agreement dated
as of March 5, 2000 between Celestial and Hain providing for the merger
of Hain Acquisition Corp., a wholly-owned subsidiary of Hain, with and
into Celestial; and
2. To transact such other business as may properly come before the special
meeting.
Only holders of record of Celestial common stock at the close of business on
April 21, 2000 are entitled to notice of and to vote at the special meeting or
any adjournments or postponements thereof. Approval of the merger proposal at
the special meeting requires the favorable vote of the holders of a majority of
the outstanding shares of Celestial common stock.
/s/ Mo Siegel
Mo Siegel
Chairman of the Board
April 28, 2000
PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY PROMPTLY,
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING.
THE BOARD OF DIRECTORS OF CELESTIAL UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE FOR APPROVAL OF THE MATTERS TO BE VOTED UPON AT THE SPECIAL MEETING.
[LOGO]
[LOGO]
MERGER PROPOSED--YOUR VOTE IS VERY IMPORTANT
The boards of directors of each of Hain and Celestial have approved a merger
and a merger agreement and are seeking your approval of this important
transaction.
If we complete the merger, Celestial's stockholders will receive 1.265
shares of Hain common stock for each share of Celestial common stock that they
own. Hain stockholders will continue to own their existing shares after the
merger. Hain common stock is listed on the Nasdaq National Market under the
symbol "HAIN."
PLEASE SEE PAGES 19-26 FOR A DESCRIPTION OF CERTAIN FACTORS THAT MAY AFFECT
THE VALUE OF THE HAIN COMMON STOCK TO BE ISSUED IN THE MERGER, ALONG WITH
SEVERAL OTHER RISK FACTORS PERTAINING TO THE MERGER THAT YOU SHOULD CONSIDER.
Hain and Celestial have scheduled special meetings to vote on the following
proposals:
- Approval and adoption by the Celestial stockholders of the merger and the
merger agreement, which is necessary for the completion of the merger; and
- Approval by the Hain stockholders of the following proposals:
- the issuance of Hain common stock in the merger, which is necessary
for the completion of the merger;
- an amendment to Hain's certificate of incorporation to change Hain's
corporate name to The Hain Celestial Group, Inc., effective upon
consummation of the merger;
- an amendment to Hain's certificate of incorporation to increase the
authorized number of shares of Hain common stock from 40 million to
100 million shares;
- amendments to Hain's 1994 Long Term Incentive and Stock Award Plan to
(a) increase the number of shares issuable over the term of the plan
by 3 million shares to 6.4 million shares in the aggregate and
(b) increase the upper limit on the number of shares for which options
or stock appreciation rights may be granted to any participant under
the plan during any calendar year to 1 million shares; and
- the adoption of Hain's 2000 Directors Stock Option Plan.
If you are a Celestial stockholder and fail to return the enclosed proxy
card, the effect will be a vote against the merger agreement proposal, unless
you attend your meeting and vote for that proposal. If you are a Hain
stockholder and fail to return the enclosed proxy card, the effect will be a
vote against the issuance of Hain common stock in the merger, the change of
Hain's corporate name, the increase in the authorized number of shares of Hain
common stock and approval of the stock plans, unless you attend your meeting and
vote for that proposal.
THIS JOINT PROXY STATEMENT/PROSPECTUS PROVIDES YOU WITH DETAILED INFORMATION
ABOUT THE MERGER. PLEASE READ THIS DOCUMENT CAREFULLY.
/S/ IRWIN D. SIMON /S/ MO SIEGAL
Irwin D. Simon Mo Siegel
Chairman of the Board, Chairman of the Board
President and Chief Executive Officer Celestial Seasonings, Inc.
The Hain Food Group, Inc.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE HAIN COMMON STOCK TO BE ISSUED UNDER
THIS JOINT PROXY STATEMENT/ PROSPECTUS OR DETERMINED IF THIS DOCUMENT IS
ACCURATE OR ADEQUATE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This joint proxy statement/prospectus is dated April 25, 2000 and is first
being mailed to stockholders on or about April 28, 2000.
PAGE
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Questions And Answers About The
Merger.............................. 1
SUMMARY............................... 4
The Companies....................... 4
Reasons For The Merger.............. 4
Additional Celestial Considerations
For The Merger.................... 5
Our Recommendations To
Stockholders...................... 5
Record Date; Voting Power........... 5
Stockholder Vote Required........... 5
Share Ownership Of Management And
Directors......................... 6
The Merger.......................... 6
What Celestial Stockholders Will
Receive In The Merger............. 6
What Hain Stockholders Will Hold
After The Merger.................. 6
Ownership Of Hain After The Merger.. 7
Material Federal Income Tax
Consequences...................... 7
No Appraisal Or Dissenters'
Rights............................ 7
Comparative Per Share Market Price
Information....................... 7
Listing Or Quotation Of Hain Common
Stock............................. 7
Accounting Treatment................ 7
Regulatory Matters.................. 7
Interests Of Directors And Officers
Of Hain And Celestial In The
Merger............................ 8
Directors And Management Of The
Combined Company After The
Merger............................ 8
Conditions To The Merger............ 8
Termination Of The Merger
Agreement......................... 8
Termination Fees And Expenses....... 9
Voting Agreements................... 10
Opinions Of Financial Advisors...... 10
Selected Financial Data............. 11
Selected Pro Forma Combined
Financial Data.................... 15
Comparative Per Share Data.......... 17
Comparative Per Share Market Price
Information....................... 18
RISK FACTORS.......................... 19
Risk Factors Relating to the
Merger............................ 19
Risk Factors Relating To The
Business, Finances And Operations
Of The Combined Company After The
Merger............................ 20
STATEMENT CONCERNING FORWARD-LOOKING
STATEMENTS.......................... 27
THE MERGER............................ 28
General............................. 28
PAGE
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Hain's Proposals.................... 28
Celestial's Proposal................ 28
Background Of The Merger............ 28
Considerations of Hain's Board of
Directors......................... 30
Recommendation Of Hain's Board Of
Directors......................... 31
Considerations Of Celestial's Board
of Directors...................... 31
Recommendation Of Celestial's Board
Of Directors...................... 33
Accounting Treatment................ 33
Material Federal Income Tax
Consequences Of The Merger........ 33
Regulatory Matters.................. 35
No Appraisal Or Dissenters'
Rights............................ 36
Federal Securities Laws
Consequences; Stock Transfer
Restriction Agreements............ 36
Right To Purchase Shares Of Hain
Common Stock By An Affiliate Of
H.J. Heinz Company................ 36
UNAUDITED PRO FORMA COMBINED CONDENSED
FINANCIAL STATEMENTS................ 37
ROLE OF FINANCIAL ADVISORS............ 49
Opinion of Hain's Financial
Advisor........................... 49
Opinion of Celestial's Financial
Advisor........................... 55
INTERESTS OF INSIDERS IN THE MERGER... 60
Interests Of Celestial Officers And
Directors......................... 60
PRINCIPAL PROVISIONS OF THE MERGER
AGREEMENT........................... 62
General............................. 62
Consideration To Be Received In The
Merger............................ 62
Exchange Of Shares.................. 62
Principal Representations And
Warranties........................ 63
Principal Covenants................. 63
Conditions To The Consummation Of
The Merger........................ 67
Termination......................... 69
Termination Fees Payable By Hain.... 70
Termination Fees Payable By
Celestial......................... 70
Expenses............................ 71
Voting Agreements................... 71
THE STOCKHOLDERS' MEETINGS............ 72
The Hain Special Meeting.............. 72
General............................. 72
Record Date; Quorum................. 72
Vote Required....................... 72
Voting of Proxies................... 73
Revocability of Proxies............. 73
i
PAGE
--------
Solicitation of Proxies............. 73
The Celestial Special Meeting......... 74
General............................. 74
Record Date; Quorum................. 74
Vote Required....................... 74
Voting of Proxies................... 74
Revocability of Proxies............. 75
Solicitation of Proxies............. 75
DESCRIPTION OF THE AMENDED AND
RESTATED 1994 LONG TERM INCENTIVE
AND STOCK AWARD PLAN................ 76
U.S. Federal Income Tax Consequences
Of The 1994 Plan.................. 78
New Plan Benefits................... 80
DESCRIPTION OF 2000 DIRECTORS STOCK
OPTION PLAN......................... 80
U.S. Federal Income Tax Consequences
of The Directors Plan............. 81
COMPARISON OF STOCKHOLDER RIGHTS...... 82
LEGAL MATTERS......................... 87
PAGE
--------
EXPERTS............................... 87
FUTURE STOCKHOLDER PROPOSALS.......... 87
WHERE YOU CAN FIND MORE INFORMATION... 88
LIST OF ANNEXES
Annex A Agreement and Plan of Merger
Annex B Voting Agreement of Irwin D.
Simon
Annex C Voting Agreement of Mo Siegel
Annex D Opinion of Bear, Stearns & Co.
Inc.
Annex E Opinion of Goldman, Sachs & Co.
Annex F Amended and Restated 1994 Long
Term Incentive and Stock Award
Plan
Annex G 2000 Directors Stock Option
Plan
ii
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHEN AND WHERE ARE THE STOCKHOLDERS' MEETINGS?
A: Hain's meeting will be held at The Town Club, located at 9 East 86th
Street, New York, New York 10028 on May 30, 2000, starting at 11:00 a.m.
New York time. Celestial's meeting will also be held at The Town Club,
located at 9 East 86th Street, New York, New York 10028 on Tuesday,
May 30, 2000, starting at 1:00 p.m. New York time.
Q: WHAT AM I BEING ASKED TO VOTE UPON?
A: HAIN STOCKHOLDERS: You are being asked to approve the issuance of Hain
common stock in the merger, a change of Hain's corporate name to The Hain
Celestial Group, Inc., an increase in the number of shares of Hain common
stock authorized to 100 million shares, an amendment to the 1994 Long
Term Incentive and Stock Award Plan and adoption of the 2000 Directors
Stock Option Plan.
CELESTIAL STOCKHOLDERS: You are being asked to approve the merger
agreement and the merger, which provides that Celestial will become a
wholly owned subsidiary of Hain.
Q: WHAT WILL I RECEIVE IN THE MERGER?
A: Celestial stockholders will receive 1.265 shares of Hain common stock for
each share of Celestial common stock they hold. Hain stockholders will
continue to hold their Hain common stock.
The number of shares of Hain common stock to be issued in connection with
the merger is fixed and will not be adjusted based upon changes in the
value of these shares. As a result, the value of the shares Celestial
stockholders receive in the merger will not be known at the time you vote
on the merger and may go up or down as the market price of Hain common
stock goes up or down.
Q: HOW DOES MY BOARD OF DIRECTORS RECOMMEND THAT I VOTE ON THE PROPOSALS?
A: HAIN STOCKHOLDERS: The Hain board of directors unanimously recommends
that you vote FOR the issuance of shares of Hain common stock in the
merger, FOR the change of Hain's corporate name, FOR the increase in the
authorized number of Hain common stock, FOR the amendment to the 1994
Long Term Incentive and Stock Award Plan and FOR adoption of the 2000
Directors Stock Option Plan.
CELESTIAL STOCKHOLDERS: The Celestial board of directors unanimously
recommends that you vote FOR the approval of the merger agreement and the
merger.
Q: WHAT DO I NEED TO DO NOW?
A: Indicate on your proxy card how you want to vote, sign it and mail it in
the enclosed postage-prepaid return envelope as soon as possible, so that
your shares may be represented at your stockholders' meeting. If you sign
and send in your proxy card and do not indicate how you want to vote, we
will count your proxy card as a vote in favor of the proposals submitted
at your stockholders' meeting. You may attend your stockholders' meeting
and vote your shares in person, rather than signing and mailing your
proxy card.
Q: CAN I CHANGE MY VOTE AFTER SUBMITTING MY PROXY CARD?
A: Yes. Any person giving a proxy in connection with this solicitation may
revoke the proxy at any time before it is voted. The proxy may be revoked
in writing or by appearing at your company's stockholders' meeting and
voting in person. You can find further details on how to revoke your
proxy on pages 73 and 75.
1
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE
MY SHARES FOR ME?
A: Your broker will not be able to vote your shares without instructions
from you. You should instruct your broker to vote your shares, following
the directions provided by your broker.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. We will send instructions to Celestial stockholders on how to
exchange their Celestial stock certificates for Hain stock after
completion of the merger. Hain stockholders will continue to hold their
Hain common stock.
Q: WHAT HAPPENS TO MY FUTURE DIVIDENDS?
A: We expect no changes in Hain's or Celestial's dividend policies before or
after the completion of the merger. Neither Hain nor Celestial has paid
cash dividends on its common stock in the past.
Q: WHEN DO YOU EXPECT TO COMPLETE THE MERGER?
A: We are working to complete the merger as soon as possible. We hope to
complete the merger shortly after the special stockholders' meetings, if
we obtain the required stockholder approvals at those stockholders'
meetings.
2
WHO CAN HELP ANSWER YOUR QUESTIONS
If you have more questions about the merger you should contact:
if you are a
HAIN STOCKHOLDER:
The Hain Food Group, Inc.
50 Charles Lindbergh Boulevard
Uniondale, New York 11553
Attention: Gary M. Jacobs, Chief Financial Officer
Phone Number: (516) 237-6200
if you are a
CELESTIAL STOCKHOLDER:
Celestial Seasonings, Inc.
4600 Sleepytime Drive
Boulder, Colorado 80301-3292
Attention: David I. Rosenthal, Senior Director of Finance
Phone Number: (303) 530-5300
If you would like additional copies of this document,
or if you have questions about the merger, you should contact:
if you are a
HAIN STOCKHOLDER:
MacKenzie Partners, Inc.
156 Fifth Avenue
New York, NY 10010
Phone Number: (212) 929-5500 (call collect)
or
(800) 322-2885 (toll-free)
if you are a
CELESTIAL STOCKHOLDER:
D.F. King & Co., Inc.
77 Water Street
New York, NY 10005
Phone Number: (212) 269-5550 (call collect)
or
(800) 549-6746 (toll-free)
3
SUMMARY
THIS SUMMARY CONTAINS SELECTED INFORMATION FROM THIS JOINT PROXY
STATEMENT/PROSPECTUS AND MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS
IMPORTANT TO YOU. TO UNDERSTAND THE MERGER MORE FULLY AND FOR A MORE COMPLETE
DESCRIPTION OF THE LEGAL TERMS OF THE MERGER, YOU SHOULD READ THIS ENTIRE
DOCUMENT CAREFULLY, INCLUDING THE ANNEXES, AND THE DOCUMENTS TO WHICH WE REFER.
A LIST OF DOCUMENTS THAT WE INCORPORATE BY REFERENCE APPEARS BELOW UNDER THE
HEADING "WHERE YOU CAN FIND MORE INFORMATION." UNLESS OTHERWISE INDICATED, THE
INFORMATION CONTAINED IN THIS JOINT PROXY STATEMENT/PROSPECTUS DOES NOT ASSUME
THE EXERCISE OF A RIGHT TO PURCHASE SHARES OF HAIN COMMON STOCK GRANTED BY HAIN
TO AN AFFILIATE OF H.J. HEINZ COMPANY AS DESCRIBED UNDER "THE MERGER--RIGHT TO
PURCHASE SHARES OF HAIN COMMON STOCK BY AN AFFILIATE OF H.J. HEINZ COMPANY." IN
THIS JOINT PROXY STATEMENT/PROSPECTUS "HAIN" REFERS TO THE HAIN FOOD
GROUP, INC., "CELESTIAL" REFERS TO CELESTIAL SEASONINGS, INC. AND THE "COMBINED
COMPANY," "WE," "OUR," OR "US" REFERS TO THE COMBINED COMPANY FOLLOWING THE
MERGER.
THE COMPANIES
THE HAIN FOOD GROUP, INC.
50 Charles Lindbergh Boulevard
Uniondale, New York 11553
Telephone: (516) 237-6200
Hain is a leading marketer, distributor and seller of natural, organic and
specialty food products under brand names which are sold as "better for you
products" in the United States. Hain's product categories encompass natural and
organic foods, medically-directed foods, weight-loss and portion control foods,
snack foods and kosher foods.
CELESTIAL SEASONINGS, INC.
4600 Sleepytime Drive
Boulder, Colorado 80301-3292
Phone Number: (303) 530-5300
Celestial is the largest manufacturer and marketer of specialty teas in the
United States, with an estimated 50% share of the herbal tea category. Celestial
also has a range of other herbal products.
REASONS FOR THE MERGER
We believe that the merger will, among other things:
- Add the market leader in the specialty teas category to Hain's product
portfolio. Celestial has one of the most recognizable food brands, with a
50% market share in herbal teas and a 32% share in the broader specialty
tea category. Moreover, with 1999 sales of over $100 million, Celestial
teas would be Hain's largest product line.
- Expand distribution potential by optimizing Celestial's strong presence in
the grocery and mass retail channels. The merger is expected to enable
both companies to access the other's distribution strengths, allowing for
both increased penetration in natural foods stores through broader product
offerings and greater cross-selling potential through expansion of the
sales forces in both the grocery and food service channels.
- Achieve significant operating synergies, including elimination of certain
duplicative costs, including: sales/ marketing costs, company-wide
operational functions, natural foods and grocery brokerage commissions,
public company fees and trade spending.
- Increase our ability to finance the acquisition of other companies and/or
brands and allow the pursuit of larger companies and/or brand acquisitions
than could be pursued by either Hain or Celestial alone.
- Provide the combined company with a wider stockholder base, float and
greater liquidity.
However, you should note that achieving these objectives is subject to
particular risks which we discuss below in the section "Risk Factors."
4
ADDITIONAL CELESTIAL CONSIDERATIONS FOR THE MERGER
Celestial also believes that the merger offers Celestial's stockholders:
- an attractive premium for their shares;
- the ability to participate in the future growth potential of the combined
company and share in any cost reduction and revenue enhancements expected
to be realized as a result of the merger; and
- the ability to further Celestial's long-term strategic plan of combining
Celestial's tea business with other natural foods brands.
OUR RECOMMENDATIONS TO STOCKHOLDERS
TO HAIN STOCKHOLDERS:
Hain's board of directors believes that the merger is in your best interests
and unanimously recommends that you vote FOR the proposals to:
- approve the issuance of Hain common stock in the merger;
- approve an amendment to Hain's certificate of incorporation to change
Hain's corporate name to The Hain Celestial Group, Inc., to be effective
upon consummation of the merger;
- approve an amendment to Hain's certificate of incorporation to increase
the authorized number of shares of Hain common stock from 40 million to
100 million;
- approve amendments to Hain's 1994 Long Term Incentive and Stock Award Plan
to (a) increase the number of shares issuable over the term of the plan by
3 million shares to 6.4 million shares in the aggregate and (b) increase
the upper limit on the number of shares for which options or stock
appreciation rights may be granted to any participant under the plan
during any calendar year to 1 million shares; and
- approve the adoption of Hain's 2000 Directors Stock Option Plan.
TO CELESTIAL STOCKHOLDERS:
Celestial's board of directors believes that the merger is in your best
interests and unanimously recommends that you vote FOR the proposal to:
- approve and adopt the merger and the merger agreement.
RECORD DATE; VOTING POWER
(SEE PAGES 72 AND 74)
If you are a Hain stockholder, you are entitled to vote at your
stockholders' meeting if you owned shares of common stock as of the record date
for that stockholders' meeting, which was the close of business on April 21,
2000.
If you are a Celestial stockholder, you are entitled to vote at your
stockholders' meeting if you owned shares of common stock as of the record date
for that stockholders' meeting, which was the close of business on April 21,
2000.
On April 21, 2000, there were 18,411,458 shares of Hain common stock
outstanding. For each share of Hain common stock owned on April 21, 2000, Hain
stockholders will have one vote at the Hain stockholders' meeting.
On April 21, 2000, there were 8,428,636 shares of Celestial common stock
outstanding. For each share of Celestial common stock owned on April 21, 2000,
Celestial stockholders will have one vote at the Celestial stockholders'
meeting.
STOCKHOLDER VOTE REQUIRED (SEE PAGE 28)
FOR HAIN STOCKHOLDERS:
- Issuance of Hain common stock in the merger and amendments to Hain's
certificate of incorporation to change Hain's corporate name and approve
the increase in the authorized number of shares of Hain common stock from
40 million to 100 million must be approved by the holders of a majority of
all outstanding shares of Hain common stock entitled to vote at the Hain
stockholders' meeting.
5
- The amendment to Hain's 1994 Long Term Incentive and Stock Award Plan and
adoption of Hain's 2000 Directors Stock Option Plan requires the
affirmative vote of the holders of a majority of Hain common stock present
in person or represented by proxy at the special meeting and entitled to
vote, assuming a quorum is present.
FOR CELESTIAL STOCKHOLDERS:
- The merger and the merger agreement must be approved by the holders of a
majority of all outstanding shares of Celestial common stock entitled to
vote at the Celestial stockholders' meeting.
SHARE OWNERSHIP OF MANAGEMENT AND DIRECTORS
On April 21, 2000, the record date for Hain's stockholders' meeting,
directors and executive officers of Hain and their affiliates owned and were
entitled to vote 4,331,741 shares of Hain common stock, or approximately 23.5%
of Hain common stock outstanding on that date.
On April 21, 2000, the record date for Celestial's stockholders' meeting,
directors and executive officers of Celestial owned and were entitled to vote
415,044 shares of Celestial common stock, or approximately 4.9% of Celestial
common stock outstanding on that date.
Irwin D. Simon and Mo Siegel have entered into voting agreements under which
they have agreed to vote their shares in favor of the merger. Each of the other
directors and executive officers of Hain and Celestial intend to vote their
shares in favor of the merger.
THE MERGER
WE HAVE ATTACHED THE MERGER AGREEMENT AS ANNEX A TO THIS JOINT PROXY
STATEMENT/PROSPECTUS. WE ENCOURAGE YOU TO READ THE MERGER AGREEMENT BECAUSE IT
IS THE LEGAL DOCUMENT THAT GOVERNS THE MERGER.
WHAT CELESTIAL STOCKHOLDERS WILL RECEIVE IN THE MERGER
As a result of the merger, Celestial stockholders will receive 1.265 shares
of Hain common stock for each share of Celestial common stock (including the
associated rights) that they own. Hain will not issue any fractional common
stock in the merger. Instead, Celestial stockholders will receive cash for any
fractional common stock owed to them as calculated pursuant to the terms of the
merger agreement.
EXAMPLE:
- If you own 100 shares of Celestial common stock after the merger, you will
receive 126 shares of Hain common stock and a check for the value of .5
shares of Hain common stock, rounded to the nearest one cent. The value of
the Hain common stock that you receive will fluctuate as the price of Hain
common stock changes.
- On April 20, 2000, the most recent practicable date prior to the filing of
this document, the last reported sales price of Hain common stock on the
Nasdaq National Market was $28.938. Applying the 1.265 exchange ratio to
the Hain closing price on that date, each holder of Celestial common stock
would be entitled to receive Hain common stock with a market value of
approximately $36.606 for each share of Celestial common stock owned by
them. The actual value of the Hain common stock to be issued in the
merger, however, will depend on the market price of Hain common stock at
that time, and may be more or less than the value given in this example.
We urge you to obtain current price quotations for Celestial and Hain
common stock.
WHAT HAIN STOCKHOLDERS WILL HOLD AFTER THE MERGER
Hain stockholders will continue to own their existing Hain common stock
after the merger. Hain stockholders should not send in their stock certificates
in connection with the merger.
6
OWNERSHIP OF HAIN AFTER THE MERGER
Hain will issue approximately 10,662,224 shares of common stock to Celestial
stockholders in the merger. Celestial stockholders will own approximately 36.7%
of the outstanding Hain common stock after the merger. This information is based
on the number of shares of Hain common stock and Celestial common stock
outstanding on April 21, 2000, and does not take into account stock options of
Celestial or Hain or convertible securities of Hain.
Under an agreement that Hain entered with an affiliate of the H.J. Heinz
Company in September 1999, the affiliate of H.J. Heinz has the right to purchase
shares of Hain common stock upon completion of the merger to maintain its
approximately 19.5% interest in Hain. If the H.J. Heinz affiliate exercises this
right in full, Hain will issue approximately 2.6 million additional shares of
Hain common stock to the H.J. Heinz affiliate at the time of the merger and
Celestial stockholders will then own approximately 33.7% of the outstanding Hain
common stock after the merger.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES (SEE PAGES 33-35)
We intend that the merger qualify as a "tax-free reorganization" for federal
income tax purposes. If the merger qualifies as a tax-free reorganization,
holders of Celestial common stock will generally not recognize any gain or loss
for federal income tax purposes on the exchange of their Celestial common stock
for Hain common stock in the merger, except for any gain or loss recognized in
connection with any cash received for a fractional Hain share. The companies
themselves, as well as current holders of Hain common stock, will not recognize
gain or loss as a result of the merger. It is a condition to the obligations of
Celestial and Hain to complete the merger that each receive a legal opinion from
its counsel that the merger will be a tax-free reorganization for federal income
tax purposes.
THE FEDERAL INCOME TAX CONSEQUENCES DESCRIBED ABOVE MAY NOT APPLY TO ALL
HOLDERS OF CELESTIAL COMMON STOCK. YOUR TAX CONSEQUENCES WILL DEPEND ON YOUR OWN
SITUATION. YOU SHOULD CONSULT YOUR TAX ADVISOR SO AS TO FULLY UNDERSTAND THE TAX
CONSEQUENCES OF THE MERGER TO YOU.
NO APPRAISAL OR DISSENTERS' RIGHTS (SEE PAGE 36)
Under Delaware law, the holders of Hain and Celestial common stock have no
dissenters' rights or rights to an appraisal of the value of their shares in
connection with the merger.
COMPARATIVE PER SHARE MARKET PRICE INFORMATION (SEE PAGE 18)
Shares of Hain and Celestial common stock are both listed on the Nasdaq
National Market under the symbols "HAIN" and "CTEA", respectively. On March 3,
2000, the last full trading day before the public announcement of the proposed
merger, the last reported sale price of Hain common stock on the Nasdaq National
Market was $32.375 and the last reported sale price of Celestial common stock on
the Nasdaq National Market was $35.50. On April 20, 2000, the most recent
practicable date prior to the date of this joint proxy statement/prospectus, the
last reported sale price for Hain common stock was $28.938 and the last reported
sale price for Celestial common stock was $36.031.
LISTING OR QUOTATION OF HAIN COMMON STOCK
It is a condition to the closing of the merger that the Hain common stock to
be issued to Celestial stockholders in the merger be approved for listing on the
Nasdaq National Market.
ACCOUNTING TREATMENT (SEE PAGE 33)
We intend that the merger qualify as a "pooling-of-interests," which means
that we will treat our companies as if they had always been combined for
accounting and financial reporting purposes at their current book value.
REGULATORY MATTERS (SEE PAGE 35)
The parties will obtain all material regulatory approvals required to permit
consummation of the merger from the applicable U.S. regulatory authorities. The
Hart-Scott-Rodino statute prohibits completion of a merger
7
until statutory notification requirements and waiting periods have been
satisfied. The waiting period under the statute applicable to the merger was
terminated on April 6, 2000. However, the Department of Justice and the FTC have
the authority to challenge the merger on antitrust grounds before or after we
complete the merger.
INTERESTS OF DIRECTORS AND OFFICERS OF HAIN AND CELESTIAL IN THE MERGER (SEE
PAGES 60-61)
The Hain and Celestial stockholders should note that a number of Celestial
directors and executive officers may have interests in the merger that are
different from, or in addition to, their interests as Celestial stockholders
generally. These interests exist because of the rights that these Celestial
directors and executive officers have under the terms of their Celestial benefit
and compensation plans and also, in the case of the officers, under the terms of
various agreements with Celestial. These agreements may provide some officers
with severance benefits if Hain terminates their employment under specified
circumstances following the merger. Celestial's equity plans provide for the
accelerated vesting of stock options and restricted stock as a result of the
merger.
The members of Celestial's board of directors knew about and considered
these additional interests when they approved the merger and the merger
agreement.
DIRECTORS AND MANAGEMENT OF THE COMBINED COMPANY AFTER THE MERGER
Following the merger, our board of directors will have 11 directors,
including (1) six directors designated by Hain, (2) one director designated by
an affiliate of H.J. Heinz and one director jointly designated by Hain and the
H.J. Heinz affiliate and (3) three directors designated by Celestial. Following
the merger, Irwin D. Simon will remain chairman of our board of directors and Mo
Siegel will be appointed vice chairman.
Following the merger, Hain's executive officers will include members of the
existing management of Hain and/or Celestial.
CONDITIONS TO THE MERGER (SEE PAGES 67-69)
We will complete the merger only if specific conditions are satisfied or, in
some cases, waived, including the following:
- approval by the stockholders of Hain and Celestial;
- absence of any law or final and nonappealable court order prohibiting the
completion of merger;
- receipt by Hain of a letter from Ernst & Young LLP that the merger should
be treated as a "pooling-of-interests" and receipt by Celestial of a
letter from Deloitte & Touche LLP stating that Celestial will qualify as a
party to a "pooling-of-interests" transaction; and
- receipt of opinions of Hain's and Celestial's counsel that the merger will
be a tax-free reorganization for federal income tax purposes.
TERMINATION OF THE MERGER AGREEMENT (SEE PAGES 69-70)
Hain's and Celestial's respective boards of directors can jointly agree to
terminate the merger agreement at any time before completing the merger. In
addition, either Hain or Celestial can terminate the merger agreement if:
- the companies do not complete the merger by December 31, 2000;
- either Hain's or Celestial's stockholders fail to approve their respective
merger proposal(s);
- a law or final and nonappealable court order prohibits the merger; or
- the other party to the merger agreement materially breaches or fails to
perform any of its representations, warranties, covenants or other
agreements under the merger agreement and fails to cure that breach within
15 days of written notice of such breach.
8
In addition, Hain can terminate the merger agreement if:
- Celestial's board of directors modifies, withdraws, conditions or
qualifies its recommendation, approval and adoption of the merger
agreement or the merger to its stockholders in a manner adverse to Hain;
or
- prior to Celestial's stockholders' meeting, Celestial's board decides to
approve or recommend an agreement to effect a superior takeover proposal.
In addition, Celestial can terminate the merger agreement if:
- Hain's board of directors modifies, withdraws, conditions or qualifies its
recommendation, approval and adoption of the merger agreement or the
merger to its stockholders in a manner adverse to Celestial; or
- prior to Celestial's stockholders' meeting, Celestial's board decides to
approve or recommend an agreement to effect a superior takeover proposal.
TERMINATION FEES AND EXPENSES (SEE PAGES 70-71)
If the merger is not consummated, Hain or Celestial may be required to pay,
in specified circumstances, some of the expenses of, or a termination fee to,
the other party.
FEES AND EXPENSES TO BE PAID BY HAIN.
Hain must pay Celestial up to $3 million in cash to cover expenses, plus
liquidated damages of $8 million, in specified circumstances if the merger is
not consummated, including termination of the merger agreement because:
- the Hain board of directors changes its recommendation of approval and
adoption of the merger agreement and the merger; or
- Hain materially breached or failed to perform, and Hain's breach or
failure to perform is due to Hain's intentional or bad faith acts, any of
its representations, warranties, covenants or other agreements contained
in the merger agreement, which breach is not cured within 15 days of
written notice.
Alternatively, Hain must pay Celestial up to $3 million in cash to cover
expenses (but no liquidated damages) if Celestial terminates the merger
agreement because Hain's stockholders fail to approve the merger and the merger
agreement or if Hain materially breaches or fails to perform its obligations for
reasons other than for the reasons described in the immediately preceding
paragraph.
FEES AND EXPENSES TO BE PAID BY CELESTIAL.
Celestial must pay Hain up to $3 million in cash to cover expenses, plus
liquidated damages of $8 million, in specified circumstances if the merger is
not consummated, including termination of the merger agreement because:
- Celestial's board of directors changes its recommendation of approval and
adoption of the merger agreement or the merger;
- Celestial's board of directors approves an agreement to effect a superior
takeover proposal before Celestial's stockholders meeting; or
- Celestial materially breached or failed to perform and Celestial's failure
to perform is due to its intentional or bad faith acts, any of its
representations, warranties or covenants in the merger agreement, which
breach is not cured within 15 days of written notice.
Alternatively, Celestial must pay Hain up to $3 million in cash to cover
expenses (but no liquidated damages) if Celestial's stockholders fail to approve
the merger and the merger agreement or if Celestial materially breaches or fails
to perform its obligations for reasons other than the reasons described in the
immediately preceding paragraph. However, if Celestial terminates the merger
agreement for the reasons described in the immediately preceding sentence, and
within 12 months of the termination of the merger agreement, signs a definitive
agreement relating to a superior proposal which closes
9
within 18 months of the termination, then Celestial must additionally pay Hain
$8 million as liquidated damages.
VOTING AGREEMENTS (SEE PAGE 71)
In connection with the merger agreement, Irwin D. Simon and Mo Siegel
entered into separate voting agreements pursuant to which, among other things,
Mr. Simon will vote all of his Hain common stock in favor of the merger
agreement and the merger, and Mr. Siegel will vote all of his Celestial common
stock in favor of the merger agreement and the merger.
OPINIONS OF FINANCIAL ADVISORS (SEE PAGES 49-59)
In connection with the merger, each of Hain's and Celestial's board of
directors received an opinion from its financial advisor as to the fairness of
the exchange ratio in the merger from a financial point of view. Hain received
an opinion from Bear, Stearns & Co. Inc. and Celestial received an opinion from
Goldman, Sachs & Co. We have attached the full text of these opinions as Annexes
D and E, respectively, to this document. These opinions contain a description of
the assumptions made, matters considered and limitations on the review
undertaken in connection with these opinions. We encourage you to read and
consider the opinions addressed to your respective board of directors. Each
opinion is directed to the respective board of directors to which it is
addressed and does not constitute a recommendation to any stockholder as to how
that stockholder should vote in connection with the merger proposals and did not
constitute a recommendation to the board of directors as to whether they should
approve and/or recommend the merger.
10
SELECTED FINANCIAL DATA
Hain and Celestial have provided the following selected historical financial
data and selected pro forma combined condensed financial data to aid you in
analyzing the financial aspects of the proposed merger. The information is only
a summary and you should read it together with Hain's and Celestial's
consolidated financial statements and other financial information contained in
the most recent annual and quarterly reports filed by Hain and Celestial, which
are incorporated by reference in this joint proxy statement/prospectus. Please
see the section entitled "Where You Can Find More Information."
The selected historical consolidated statements of operations data for the
six-month periods ended December 31, 1998 and 1999, and for each of the fiscal
years in the three-year period ended June 30, 1999 for Hain, and for the
three-month periods ended December 31, 1998 and 1999, and for each of the fiscal
years in the three-year period ended September 30, 1999 for Celestial, have been
derived from the consolidated statements of operations for Hain and Celestial
for such periods incorporated by reference in this joint proxy
statement/prospectus. The consolidated statements of operations data for the
fiscal years ended June 30, 1995 and 1996 for Hain and for the fiscal years
ended September 30, 1995 and 1996 for Celestial have been derived from
consolidated financial statements not included or incorporated by reference in
this joint proxy statement/prospectus.
The historical consolidated balance sheet data for Hain as of June 30, 1998
and 1999, and December 31, 1999 and for Celestial as of September 30, 1998 and
1999 and December 31, 1999, have been derived from consolidated financial
statements for such periods incorporated by reference in this joint proxy
statement/prospectus. The historical consolidated balance sheet data for Hain as
of June 30, 1995, 1996 and 1997, and for Celestial as of September 30, 1995,
1996 and 1997 have been derived from consolidated financial statements not
included or incorporated by reference in this joint proxy statement/prospectus.
The selected unaudited pro forma combined condensed financial data reflects
the merger using the pooling-of-interests method of accounting. Since the fiscal
years for Hain and Celestial differ, Celestial will change its fiscal year to
coincide with Hain's upon the completion of the merger. The unaudited pro forma
combined condensed statements of operations combine Hain's consolidated
statements of operations for the six-month periods ended December 31, 1998 and
1999 and fiscal years ended June 30, 1997, 1998 and 1999 with Celestial's
six-month periods ended December 31, 1998 and 1999 and fiscal years ended
September 30, 1997, 1998 and 1999, respectively. The unaudited selected pro
forma combined condensed balance sheet data combines Hain's consolidated balance
sheet data as of December 31, 1999 with Celestial's consolidated balance sheet
data as of December 31, 1999.
The pro forma financial information does not purport to represent what our
financial position or results of operations would actually have been had the
merger occurred at the beginning of the earliest period presented or to project
our financial position or results of operations for any future date or period.
In addition, it does not incorporate any benefits to us from cost savings or
synergies of operations.
11
SELECTED FINANCIAL DATA
THE HAIN FOOD GROUP, INC.
AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
SIX MONTHS
ENDED
YEARS ENDED JUNE 30, DECEMBER 31,
---------------------------------------------------- -------------------
1995 1996 1997 1998 1999 1998 1999
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
STATEMENTS OF OPERATIONS DATA:
Net sales............................................ $58,076 $68,606 $65,353 $104,253 $205,969 $94,098 $149,086
Cost of sales........................................ 36,220 40,884 40,781 61,797 122,219 57,080 87,904
------- ------- ------- -------- -------- ------- --------
Gross profit......................................... 21,856 27,722 24,572 42,456 83,750 37,018 61,182
------- ------- ------- -------- -------- ------- --------
Selling, general and administrative expenses......... 15,492 21,089 19,829 30,659 55,045 25,097 41,262
Amortization of goodwill and other intangible
assets............................................. 474 651 740 1,311 3,585 1,702 2,710
------- ------- ------- -------- -------- ------- --------
15,966 21,740 20,569 31,970 58,630 26,799 43,972
------- ------- ------- -------- -------- ------- --------
Operating income..................................... 5,890 5,982 4,003 10,486 25,120 10,219 17,210
------- ------- ------- -------- -------- ------- --------
Other income......................................... 753
Interest expense, net................................ (1,351) (1,745) (1,639) (2,128) (5,318) (2,412) (3,675)
Amortization of deferred financing costs and
discounts.......................................... (419) (473) (509) (474) (378) (163) (310)
------- ------- ------- -------- -------- ------- --------
(1,770) (2,218) (2,148) (2,602) (5,696) (2,575) (3,232)
------- ------- ------- -------- -------- ------- --------
Income before income taxes, extraordinary charge and
cumulative change in accounting principle.......... 4,120 3,764 1,855 7,884 19,424 7,644 13,978
Provision for income taxes........................... 1,755 1,630 786 3,250 8,394 3,325 6,290
------- ------- ------- -------- -------- ------- --------
Income before extraordinary charge and cumulative
change in accounting principle..................... 2,365 2,134 1,069 4,634 11,030 4,319 7,688
Extraordinary charge--costs in connection with
prepayment of debentures, net of income tax
benefit............................................ (1,342)
Cumulative change in accounting principle, net of
income tax benefit................................. (3,754)
------- ------- ------- -------- -------- ------- --------
Net income........................................... $ 2,365 $ 2,134 $ 1,069 $ 3,292 $ 11,030 $ 4,319 $ 3,934
======= ======= ======= ======== ======== ======= ========
Basic Earnings Per Common Share:
Income before extraordinary charge and cumulative
change in accounting principle................... $ 0.28 $ 0.24 $ 0.12 $ 0.45 $ 0.81 $ 0.32 $ 0.47
Extraordinary charge............................... (0.13)
Cumulative change in accounting principle.......... (0.23)
------- ------- ------- -------- -------- ------- --------
Net income......................................... $ 0.28 $ 0.24 $ 0.12 $ 0.32 $ 0.81 $ 0.32 $ 0.24
======= ======= ======= ======== ======== ======= ========
Diluted Earnings Per Common Share:
Income before extraordinary charge and cumulative
change in accounting principle................... $ 0.28 $ 0.24 $ 0.12 $ 0.39 $ 0.71 $ 0.28 $ 0.43
Extraordinary charge............................... (0.11)
Cumulative change in accounting principle.......... (0.21)
------- ------- ------- -------- -------- ------- --------
Net income......................................... $ 0.28 $ 0.24 $ 0.12 $ 0.28 $ 0.71 $ 0.28 $ 0.22
======= ======= ======= ======== ======== ======= ========
Weighted average common shares outstanding:
Basic.............................................. 8,597 8,887 8,694 10,269 13,619 13,429 16,184
======= ======= ======= ======== ======== ======= ========
Diluted............................................ 8,597 8,964 8,993 11,893 15,443 15,402 17,835
======= ======= ======= ======== ======== ======= ========
12
SELECTED FINANCIAL DATA
(CONTINUED)
THE HAIN FOOD GROUP, INC.
AMOUNTS IN THOUSANDS
SIX MONTHS ENDED
YEARS ENDED JUNE 30, DECEMBER 31,
---------------------------------------------------- -------------------
1995 1996 1997 1998 1999 1998 1999
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
BALANCE SHEET DATA:
Cash and cash equivalents....................... $ 187 $ 306 $ 219 $ 495 $ 510 $ 471 $ 1,055
Working capital................................. 8,883 6,540 4,482 14,538 18,877 14,704 19,501
Total assets.................................... 34,291 47,442 48,895 88,291 281,822 184,045 304,246
Long-term obligations........................... 7,277 12,105 10,756 16,561 130,683 55,630 37,578
Total stockholders' equity...................... 22,290 24,424 25,059 53,247 110,001 98,256 222,357
13
SELECTED FINANCIAL DATA
(CONTINUED)
CELESTIAL SEASONINGS, INC.
AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
THREE MONTHS
ENDED
YEARS ENDED SEPTEMBER 30, DECEMBER 31,
---------------------------------------------------- -------------------
1995 1996 1997 1998 1999 1998 1999
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
STATEMENTS OF OPERATIONS DATA:
Net sales............................................ $70,104 $72,998 $79,039 $102,197 $114,949 $37,662 $35,653
Non-recurring item--product return program........... (5,098)
------- ------- ------- -------- -------- ------- -------
70,104 72,998 79,039 102,197 109,851 37,662 35,653
------- ------- ------- -------- -------- ------- -------
Cost of goods sold................................... 27,349 28,545 29,606 36,638 42,915 14,003 12,622
Non-recurring item--product return program........... 4,007
------- ------- ------- -------- -------- ------- -------
27,349 28,545 29,606 36,638 46,922 14,003 12,622
------- ------- ------- -------- -------- ------- -------
Gross profit......................................... 42,755 44,453 49,433 65,559 62,929 23,659 23,031
Operating expenses:
Selling and marketing.............................. 27,323 30,071 33,915 46,683 50,579 17,244 15,218
General and administrative......................... 4,429 3,899 4,556 6,127 6,178 1,694 1,716
Non-recurring item--lawsuit settlement............. 1,200
Amortization of intangibles........................ 1,823 1,493 1,296 1,308 1,202 311 294
------- ------- ------- -------- -------- ------- -------
Total operating expenses......................... 33,575 35,463 39,767 54,118 59,159 19,249 17,228
------- ------- ------- -------- -------- ------- -------
Operating income..................................... 9,180 8,990 9,666 11,441 3,770 4,410 5,803
Interest expense..................................... 1,264 874 493 631 746 242 194
------- ------- ------- -------- -------- ------- -------
Income before income taxes........................... 7,916 8,116 9,173 10,810 3,024 4,168 5,609
Provision for income taxes........................... 2,049 3,093 3,509 4,054 537 1,563 2,075
------- ------- ------- -------- -------- ------- -------
Net income........................................... $ 5,867 $ 5,023 $ 5,664 $ 6,756 $ 2,487 $ 2,605 $ 3,534
======= ======= ======= ======== ======== ======= =======
Net income per common share--basic (1)............... $ 0.73 $ 0.62 $ 0.70 $ 0.82 $ 0.30 $ 0.31 $ 0.42
======= ======= ======= ======== ======== ======= =======
Net income per common share--assuming dilution (1)... $ 0.72 $ 0.61 $ 0.68 $ 0.77 $ 0.28 $ 0.30 $ 0.40
======= ======= ======= ======== ======== ======= =======
Weighted average common shares--basic (1)............ 8,053 8,088 8,107 8,250 8,320 8,307 8,358
======= ======= ======= ======== ======== ======= =======
Weighted average common shares--assuming dilution
(1)................................................ 8,172 8,230 8,281 8,732 8,848 8,771 8,810
======= ======= ======= ======== ======== ======= =======
THREE MONTHS
ENDED
YEARS ENDED SEPTEMBER 30, DECEMBER 31,
---------------------------------------------------- -------------------
1995 1996 1997 1998 1999 1998 1999
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
BALANCE SHEET DATA:
Cash and cash equivalents.......................... $ 375 $ 204 $ 2,829 $ 2,533 $ 637 $ 768 $ 1,995
Working capital.................................... 6,239 7,882 10,588 23,131 18,892 27,464 20,922
Total assets....................................... 53,327 54,903 58,371 82,647 80,847 81,189 87,217
Long-term obligations.............................. 12,768 9,057 6,073 10,750 10,455 11,675 9,395
Total stockholders' equity......................... 31,909 37,217 43,051 51,320 54,488 53,996 58,197
- ------------------------------
(1) During September 1998, Celestial declared a two-for-one stock split effected
in the form of a 100% common stock dividend. All per share and weighted
average common share information has been restated to reflect the stock
dividend.
14
SELECTED PRO FORMA COMBINED FINANCIAL DATA
AMOUNT IN THOUSANDS, EXCEPT PER SHARE AMOUNT
(UNAUDITED)
SIX MONTHS ENDED
YEARS ENDED JUNE 30, DECEMBER 31,
------------------------------ -------------------
1997 1998 1999 1998 1999
-------- -------- -------- -------- --------
STATEMENTS OF OPERATIONS DATA(1)(2):
Net sales................................. $144,392 $206,450 $378,818 $192,535 $204,615
Gross profit.............................. 74,005 108,015 170,035 89,250 89,534
Operating income.......................... 13,669 21,927 27,614 15,222 15,952
Income before extraordinary charge and
cumulative change in accounting
principle, net of income tax benefits... 6,733 11,390 8,235 4,721 7,307
Earnings per common share before
extraordinary charge and cumulative
change in accounting principle, net of
income tax benefits (3):
Basic................................... $ 0.36 $ 0.55 $ 0.34 $ 0.20 $ 0.27
Diluted................................. $ 0.35 $ 0.50 $ 0.31 $ 0.18 $ 0.25
Weighted average shares outstanding (3)
Basic................................... 18,949 20,705 24,144 23,935 26,744
Diluted................................. 19,468 22,939 26,636 26,525 28,982
DECEMBER 31,
1999
------------
BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 3,050
Working capital............................................. 25,423
Total assets................................................ 391,463
Long-term obligations....................................... 46,973
Total stockholders' equity.................................. 265,554
- ------------------------
(1) Does not reflect certain estimated non-recurring merger related charges
aggregating approximately $15 million with respect to advisory, legal,
accounting and other expenses associated with the merger.
(2) The selected pro forma combined financial data for the year ended June 30,
1999 and six-month period ended December 31, 1999 include certain
non-recurring charges recorded by Celestial. These non-recurring charges
relate to a product return program ($9.1 million) and shareholder lawsuit
settlement ($1.2 million). In addition, the selected pro forma combined
financial data for the year ended June 30, 1999 and six-month period ended
December 31, 1998 include the results of operations as if the acquisition of
the Natural Nutrition Group, Inc. (NNG) by Hain, or the NNG Acquisition, had
occurred July 1, 1998. Hain management has achieved significant cost
synergies and savings with the NNG Acquisition, however, in accordance with
the rules for presentation of pro forma financial information, no effect to
such cost savings has been included in this joint proxy
statement/prospectus. In addition, the NNG historical results include
certain restructuring charges for the year ended June 30, 1999
($1.2 million) and six-month period ended December 31, 1998 ($.7 million)
that will not continue following the NNG Acquisition. Excluding Celestial's
non-recurring items from the pro forma financial results, pro forma income
before
15
SELECTED PRO FORMA COMBINED FINANCIAL DATA
(UNAUDITED)
(CONTINUED)
extraordinary charge and cumulative change in accounting principle, net of
income tax benefits and related per share data would have been as follows:
YEAR SIX MONTH PERIOD
ENDED ENDED
JUNE 30, 1999 DECEMBER 31, 1999
------------- -----------------
Income before extraordinary charge and cumulative change in
accounting principle, net of income tax benefits.......... $14,145 $13,217
Earnings per common share before extraordinary charge and
cumulative change in accounting principle, net of income
tax benefits
Basic..................................................... $ 0.59 $ 0.49
======= =======
Diluted................................................... $ 0.53 $ 0.46
======= =======
- ------------------------
(3) Pro forma earnings per common share before extraordinary charge and
cumulative change in accounting principle, net of income tax benefits are
based on the average number of common shares of the combined company that
would have been outstanding during each period presented. Shares and
dilutive options of Celestial common stock have been adjusted to the
equivalent shares of Hain common stock using an exchange ratio of 1.265.
16
COMPARATIVE PER SHARE DATA
SIX MONTHS
ENDED
YEARS ENDED JUNE 30, DECEMBER 31,
------------------------------ -------------------
1997 1998 1999 1998 1999
-------- -------- -------- -------- --------
HAIN HISTORICAL PER COMMON SHARE DATA:
Income before extraordinary charge and cumulative change
in accounting principle, net of income tax benefits... $0.12 0.45 $0.81 $0.32 $ 0.47
Income before extraordinary charge and cumulative change
in accounting principle, net of income tax
benefits--assuming dilution........................... 0.12 0.39 0.71 0.28 0.43
Book value.............................................. $7.79 $12.24
CELESTIAL HISTORICAL PER COMMON SHARE DATA(1):
Net income (loss)....................................... $0.70 0.82 $0.30 $0.44 $(0.05)
Net income (loss)--assuming dilution.................... 0.68 0.77 0.28 0.42 (0.05)
Book value.............................................. $6.52 $ 6.95
COMBINED COMPANY PRO FORMA
PER HAIN COMMON SHARE DATA(2)(3):
Income before extraordinary charge and cumulative change
in accounting, net of income tax benefits............. $0.36 $0.55 $0.34 $0.20 $ 0.27
Income before extraordinary charge and cumulative change
in accounting, net of income tax benefits--assuming
dilution.............................................. 0.35 0.50 0.31 0.18 0.25
Book value.............................................. $ 9.24
COMBINED COMPANY PRO FORMA
PER CELESTIAL COMMON SHARE DATA(2)(3):
Income before extraordinary charge and cumulative change
in accounting, net of income tax benefits............. $0.46 $0.70 $0.43 $0.25 $ 0.34
Income before extraordinary charge and cumulative change
in accounting, net of income tax benefits--assuming
dilution.............................................. 0.44 0.63 0.39 0.23 0.32
Book value.............................................. $11.69
- ------------------------
Neither Hain nor Celestial has paid cash dividends on its common stock;
therefore, the table does not include such dividend information.
(1) The historical common share data for the year ended June 30, 1999 and six
months ended December 31, 1999 includes certain nonrecurring charges related
to a product return program ($9.1 million) and stockholder lawsuit
settlement ($1.2 million) of Celestial.
(2) The combined company pro forma per share data for the year ended June 30,
1999 and six-month period ended December 31, 1998 includes the results of
operations of NNG as if the NNG Acquisition had occurred July 1, 1998. Hain
management has achieved significant cost synergies and savings with the NNG
Acquisition, however, in accordance with the rules for presentation of pro
forma financial information, no effect to such cost savings has been
included herein. In addition, the NNG historical results include certain
restructuring charges for the year ended June 30, 1999 ($1.2 million) and
six-month period ended December 31, 1998 ($.7 million) that will not
continue following the NNG Acquisition.
(3) Pro forma income per share amounts are based on the average number of shares
of common stock of the combined company that would have been outstanding
during each period. Shares and dilutive options of Celestial common stock
have been adjusted to the equivalent shares of Hain common stock using an
exchange ratio of 1.265.
17
COMPARATIVE PER SHARE MARKET PRICE INFORMATION
Hain's common stock is traded on the Nasdaq National Market under the symbol
"HAIN." The following table sets forth the range of high and low closing sale
prices for Hain common stock as reported on the Nasdaq National Market during
each of the periods presented.
Celestial's common stock is also traded on the Nasdaq National Market under
the symbol "CTEA." The following table sets forth the range of high and low
closing sale prices of Celestial common stock as reported on the Nasdaq National
Market during each of the periods presented.
HAIN CELESTIAL
COMMON STOCK COMMON STOCK
--------------------------- ---------------------------
MARKET PRICE MARKET PRICE
--------------------------- ---------------------------
HIGH LOW HIGH LOW
------------ ------------ ------------ ------------
HAIN FISCAL YEAR ENDED CELESTIAL FISCAL YEAR ENDED
JUNE 30, 1998 SEPTEMBER 30, 1998
First Quarter.................. $11 15/16 $ 4 27/32 First Quarter.................. $16 1/4 $13 3/16
Second Quarter................. 12 3/4 8 5/8 Second Quarter................. 20 5/8 15 1/4
Third Quarter.................. 19 13/16 9 1/16 Third Quarter.................. 28 13/16 20
Fourth Quarter................. 27 1/4 17 11/16 Fourth Quarter................. 26 3/4 17 3/8
HAIN FISCAL YEAR ENDED CELESTIAL FISCAL YEAR ENDED
JUNE 30, 1999 SEPTEMBER 30, 1999
First Quarter.................. $27 3/4 $14 7/8 First Quarter.................. $26 3/4 $14 1/16
Second Quarter................. 25 12 1/8 Second Quarter................. 31 3/4 20
Third Quarter.................. 23 1/8 15 1/8 Third Quarter.................. 22 5/8 14
Fourth Quarter................. 21 1/2 16 1/16 Fourth Quarter................. 23 3/8 16 1/2
HAIN FISCAL YEAR ENDING JUNE CELESTIAL FISCAL YEAR ENDING
30, 2000 SEPTEMBER 30, 2000
First Quarter.................. $28 7/16 $21 3/16 First Quarter.................. $24 1/4 $16 5/8
Second Quarter................. 26 7/16 22 1/4 Second Quarter................. 35 1/2 20 15/16
Third Quarter.................. 37 1/8 21 1/16 Third Quarter (through
Fourth Quarter (through 31 13/16 28 1/4 April 20, 2000)................ 39 34 3/4
April 20, 2000)..............
On March 3, 2000, the last full trading day prior to the public announcement
of the proposed merger, the closing price per share of Hain common stock quoted
on the Nasdaq National Market was $32.375 and the closing price per share of
Celestial common stock reported on the Nasdaq National Market was $35.50. On
April 20, 2000, the most recent practicable date prior to the date of this
document, the closing price per share of Hain common stock reported on the
Nasdaq National Market was $28.938 and the closing price per share of Celestial
common stock reported on the Nasdaq National Market was $36.031.
WE URGE CELESTIAL STOCKHOLDERS TO OBTAIN CURRENT MARKET QUOTATIONS FOR HAIN
COMMON STOCK PRIOR TO MAKING ANY DECISION WITH RESPECT TO THE MERGER. WE CANNOT
GIVE ANY ASSURANCE TO YOU CONCERNING THE MARKET PRICE FOR HAIN COMMON STOCK
BEFORE OR AFTER THE DATE ON WHICH THE MERGER IS CONSUMMATED. THE MARKET PRICE
FOR HAIN COMMON STOCK WILL FLUCTUATE BETWEEN THE DATE OF THIS JOINT PROXY
STATEMENT/ PROSPECTUS AND THE DATE ON WHICH THE MERGER IS CONSUMMATED AND
THEREAFTER.
18
RISK FACTORS
IN ADDITION TO THE RISKS OF THE BUSINESSES OF HAIN AND CELESTIAL WHICH ARE
DESCRIBED BELOW, YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS
RELATING TO THE MERGER IN DETERMINING WHETHER TO VOTE IN FAVOR OF THE MERGER.
YOU SHOULD ALSO CONSIDER THE RISK FACTORS THAT WILL GENERALLY HAVE AN IMPACT ON
HAIN'S FINANCIAL CONDITION, RESULTS OF OPERATIONS AND BUSINESS AFTER THE MERGER,
INCLUDING THOSE DESCRIBED UNDER "STATEMENT CONCERNING FORWARD-LOOKING
STATEMENTS."
RISK FACTORS RELATING TO THE MERGER
THE HAIN COMMON STOCK TO BE ISSUED IN THE MERGER WILL FLUCTUATE IN VALUE
In the merger, Celestial stockholders will receive 1.265 shares of Hain
common stock for each share of Celestial common stock. The market price of the
Hain common stock to be issued in the merger will fluctuate as a result of
changes in the business, operations or prospects of Hain or Celestial or market
assessments of the impact of the merger. Because the market price of Hain common
stock fluctuates, the value of the Hain common stock that Celestial stockholders
will receive will depend upon the market price of those shares at the time of
the merger. We can give no assurance as to this value.
For historical and current market prices of Hain shares, see "Comparative
Per Share Market Price Information." The actual performance and volatility of
Hain common stock and/or the financial markets in general could vary
significantly more or less than that indicated by historical or current
performance and volatility.
WE MAY EXPERIENCE DIFFICULTIES IN COMBINING THE OPERATIONS OF THE TWO COMPANIES
The merger involves the integration of two companies that have previously
operated independently. Our future success may be dependent upon our ability to
effectively integrate these companies and their brands, including our ability to
realize potentially available marketing opportunities and cost savings, some of
which may involve operational changes. We cannot be certain:
- as to the timing or number of marketing opportunities or amount of cost
savings that may be realized as the result of our integration of these
companies and their brands;
- that this merger will enhance our competitive position and business
prospects; or
- that we will not experience difficulties with customers, personnel or
other parties as a result of this merger.
In addition, we cannot be certain that we will be successful in:
- integrating Celestial's distribution channels with those of Hain;
- coordinating sales force activities of Celestial or in selling the
products of Celestial to our customer base; or
- integrating Celestial into our management information systems or in
integrating Celestial's products into our product mix.
Additionally, integrating Celestial into Hain's existing operations will
require management resources and may divert our management from our day-to-day
operations. If we are not successful in integrating the operations of our two
companies, the value of the Hain common stock received in the merger could fall.
19
OFFICERS AND DIRECTORS HAVE POTENTIAL CONFLICTS OF INTERESTS IN THE MERGER
In considering the recommendations of the Hain and Celestial boards of
directors that the stockholders approve the merger, you should be aware that
some of the directors and officers of Celestial may have interests in the merger
different from or in addition to yours. For example, three of the current
members of the board of directors of Celestial will become members of the board
of directors of Hain. See "Interests of Insiders In The Merger."
RISK FACTORS RELATING TO THE BUSINESS, FINANCES AND OPERATIONS OF THE COMBINED
COMPANY AFTER THE MERGER
HAIN'S ACQUISITION STRATEGY EXPOSES THE INTEGRATED COMPANY TO RISK
We intend to continue to grow our business in part through the acquisition
of new brands and businesses. Our acquisition strategy is based on identifying
and acquiring businesses with products and/or brands that complement our
existing product mix. We cannot be certain that we will be able to:
- successfully identify suitable acquisition candidates;
- negotiate identified acquisitions on terms acceptable to us; or
- obtain the necessary financing to complete such acquisitions.
We may encounter increased competition for acquisitions in the future, which
could result in acquisition prices we do not consider acceptable. In addition,
our credit facility with our lending banks contains restrictions that limit our
ability to make acquisitions. We are unable to predict whether or when any
prospective acquisition candidate will become available or the likelihood that
any acquisition will be completed.
CONSUMER PREFERENCES FOR SPECIALTY FOOD PRODUCTS AND TEAS ARE DIFFICULT TO
PREDICT AND MAY CHANGE
A significant shift in consumer demand away from our products or our failure
to maintain our current market position could reduce our sales or the prestige
of our brands in our markets, which could have a material adverse effect on our
business, results of operations and financial condition. While we continue to
diversify our product offerings, we cannot be certain that demand for our
products will continue at current levels or increase in the future.
Hain's business is limited to natural and specialty food products in markets
geared to consumers of natural foods, non-dairy beverages, cereals, breakfast
bars, canned soups and vegetables, snacks and cooking oils, which, if consumer
demand for such categories were to decrease, could have a material adverse
effect on Hain's business, results of operations and financial condition.
Consumer trends change based on a number of possible factors, including:
- nutritional values, such as a change in preference from fat free to
reduced fat to no reduction in fat; and
- a shift in preference from organic to non-organic and from natural
products to non-natural products.
In addition, Hain has other product categories, such as medically-directed
and weight management food products, kosher foods and other specialty food
items. Hain is subject to evolving consumer preferences for these products
Celestial's business is substantially dependent on the specialty teas
market, which consists of herb tea, green tea, wellness tea and specialty black
teas. If consumer demand for Celestial's specialty teas
20
were to decrease, the business, results of operations and financial condition of
our integrated company could be harmed.
OUR MARKETS ARE HIGHLY COMPETITIVE
Hain operates in highly competitive geographic and product markets, and some
of Hain's markets are dominated by competitors with greater resources. Hain
cannot be certain that it could successfully compete for sales to distributors
or stores that purchase from larger, more established companies that have
greater financial, managerial, sales and technical resources. In addition Hain
competes for limited retailer shelf space for its products. Larger competitors,
such as mainstream food companies including Nabisco, General Mills, Nestle S.A.,
Kraft Foods, Groupe Danone, Kellogg Company, Sara Lee Corporation, B&G
Foods, Inc. and Triarc Beverage Holdings Corporations also may be able to
benefit from economies of scale, pricing advantages or the introduction of new
products that compete with Hain's products. Retailers also market competitive
products under their own private labels.
The beverage market is large and highly competitive. The tea portion of the
beverage market is also highly competitive. Competitive factors in the tea
industry include product quality and taste, brand awareness among consumers,
variety of specialty tea flavors, interesting or unique product names, product
packaging and package design, supermarket and grocery store shelf space,
alternative distribution channels, reputation, price, advertising and promotion.
Celestial currently competes in the specialty tea market segment which consists
of herb tea, green tea, wellness tea and specialty black tea. Celestial's
specialty herb tea products, like other specialty tea products, are priced
higher than most commodity black tea products.
Celestial's principal competitors on a national basis in the specialty teas
market segment are Thomas J. Lipton Company, a division of Unilever PLC, and
R.C. Bigelow, Inc. Unilever has substantially greater financial resources than
Celestial. Additional competitors include a number of regional specialty tea
companies. There may be potential entrants which are not currently in the
specialty tea market who may have substantially greater financial resources than
Celestial. Private label competition in the specialty tea category is currently
minimal.
The market for Celestial's dietary supplement products is highly
competitive. Competition is based principally upon price, quality of products,
customer service and marketing support. Celestial currently competes in the
herbal supplement segment of the dietary supplement category. Sales of herbal
supplements have declined over the past year. The category consists of several
competitors in a broad spectrum of distribution channels. Private label and
Rexall Sundown, Inc. dominate the market on a national basis. Direct mail,
regional and private label competition is significant.
In the future our competitors may introduce other products that compete with
our products and these competitive products may have an adverse effect on our
business, results of operations and financial condition.
HAIN IS DEPENDENT UPON THE SERVICES OF ITS CHIEF EXECUTIVE OFFICER
Hain is highly dependent upon the services of Irwin D. Simon, its chairman
of the board, president and chief executive officer. Hain believes Mr. Simon's
reputation as the founder of Hain and his expertise and knowledge in the natural
and specialty foods market are critical factors in our continuing growth. The
loss of the services of Mr. Simon could have a material adverse effect on our
business, results of operations and financial condition.
HAIN AND CELESTIAL RELY ON INDEPENDENT DISTRIBUTORS AND BROKERS FOR A
SUBSTANTIAL PORTION OF THEIR SALES
We rely upon sales efforts made by or through non-affiliated food brokers
and distributors to distributors and other customers. The loss of, or business
disruption at, one or more of these distributors or brokers may have a material
adverse effect on our business, results of operations and
21
financial condition. If we were required to obtain additional or alternative
distribution and food brokerage agreements or arrangements in the future, we
cannot be certain that we will be able to do so on satisfactory terms or in a
timely manner. Two Hain distributors, Tree of Life and United Natural Foods,
accounted for approximately 19.8% and 18.0%, respectively, for the fiscal year
ended June 30, 1999, 17.4% and 18.4%, respectively, for the six-months ended
December 31, 1999, of our sales on a pro forma basis as if all of our
acquisitions and the merger with Celestial had occurred on or prior to July 1,
1998. Our inability to enter into satisfactory brokerage agreements may inhibit
our ability to implement our business plan or to establish markets necessary to
develop our products successfully. The success of our business depends, in large
part, upon the establishment of a strong distribution network. Food brokers act
as selling agents representing specific brands on a non-exclusive basis under
oral or written agreements generally terminable at any time on 30 days notice
and receive a percentage of net sales as compensation. Distributors purchase
directly for their own account for resale.
MANUFACTURING FACILITIES
Hain manages and operates four manufacturing facilities located throughout
the United States. These facilities are located and produce the following
product lines: Terra Chips-Registered Trademark-, in Brooklyn, New York,
produces vegetable chips; Arrowhead Mills, in Hereford, Texas, produces hot and
cold cereals, baked goods and meal cups; Deboles-Registered Trademark- pasta, in
Shreveport, Louisiana, produces organic pasta; and Health Valley in Irwindale,
California, produces hot and cold cereals, baked goods, granola, granola bars,
dry soups and other products under the Health Valley-Registered Trademark-,
Breadshop-Registered Trademark- and Casbah-Registered Trademark- labels.
The facilities in Brooklyn, New York and Irwindale, California are under
operating leases through 2004. In addition, Celestial owns and operates a
manufacturing facility in Boulder, Colorado which produces its tea product
lines. On a pro forma basis as if the merger had occurred as of July 1, 1999,
approximately 56.7% of our products are manufactured at these locations.
An interruption in or the loss of operations at one or more of these
facilities or failure to maintain our labor force at one or more of these
facilities could delay or postpone production of our products, which could have
a material adverse effect on our business, results of operations and financial
condition until we could secure an alternate source of supply. We cannot assure
you that any such alternate source of supply could be obtained on reasonable
terms, or at all.
WE RELY ON INDEPENDENT CO-PACKERS TO PRODUCE SOME OR MOST OF OUR PRODUCTS
Currently, independent food manufacturers, who are referred to in our
industry as co-packers, manufacture many of Hain's product lines. These product
lines include our Estee-Registered Trademark-, Garden of
Eatin'-Registered Trademark-, Hain Pure Foods-Registered Trademark-,
Kineret-Registered Trademark-, Little Bear Organic Foods-Registered Trademark-,
Terra Chips-Registered Trademark- (Yukon Gold-Registered Trademark- line),
Westbrae-Registered Trademark-, and Westsoy-Registered Trademark- product lines.
During the six months ended December 31, 1999, on a pro forma basis as if the
merger with Celestial had occurred on or prior to July 1, 1999, products
manufactured for us by co-packers represented approximately 44% of our sales.
Hain presently obtains:
- all of our requirements for non-dairy beverages from five co-packers, four
of which are under contract;
- all of our requirements for rice cakes from two co-packers;
- all of our cooking oils from one co-packer, which is under contract;
- principally all of our tortilla chips from two suppliers, one of which is
under contract;
- all of our requirements for Terra's Yukon Gold line from one supplier,
which is under contract; and
- the requirements for our canned soups from one supplier.
22
In addition, H.J. Heinz manufactures the Earth's Best baby food products for
Hain under contract. The loss of one or more co-packers, or our failure to
retain co-packers for newly acquired products or brands, could delay or postpone
production of our products, which could have a material adverse effect on our
business, results of operations and financial condition until such time as an
alternate source could be secured, which may be on less favorable terms.
Celestial's dietary supplement product line is also manufactured by an
independent co-packer located in the United States. Celestial believes that
there are numerous alternative co-packers for this product line available and
that loss of this current co-packer would not have a material adverse effect on
our business, results of operations or financial condition.
CELESTIAL'S INGREDIENTS ARE SUBJECT TO IMPORT RISK
Celestial purchases its ingredients from numerous foreign and domestic
manufacturers, importers and growers, with the majority of those purchases
occurring outside of the United States. Celestial maintains long-term
relationships with most of its suppliers. Purchase arrangements with ingredient
suppliers are generally made annually in U.S. currency. Purchases are made
through purchase orders or contracts, and price, delivery terms and product
specifications vary.
Celestial's botanical purchasers visit major suppliers around the world
annually to procure ingredients and to assure quality by observing production
methods and providing product specifications. Many ingredients are presently
grown in countries where labor-intensive cultivation is possible, and where
Celestial often must educate the growers about product standards. Celestial
performs laboratory analysis on incoming ingredient shipments for the purpose of
assuring that they meet Celestial's quality standards and those of the U.S. Food
and Drug Administration.
Celestial's ability to ensure a continuing supply of ingredients at
competitive prices depends on many factors beyond its control, such as foreign
political situations, embargoes, changes in international and world economic
conditions, currency fluctuations and unfavorable climatic conditions. Celestial
takes steps and will continue to take steps intended to lessen the risk of an
interruption of botanical supplies, including identification of alternative
sources and maintenance of appropriate inventory levels. Celestial has, in the
past, maintained sufficient supplies for its ongoing operations.
Celestial's failure to maintain its relationships with its existing
suppliers or find new suppliers, or continue receiving botanicals meeting
quality standards from foreign sources could have a material adverse effect on
our business, results of operations and financial condition following the
merger.
CELESTIAL RELIES PRIMARILY ON A SINGLE SUPPLIER FOR ITS PACKAGING MATERIALS AND
A SINGLE SUPPLIER FOR ITS WAXED CARTON LINER
Celestial purchases most of its packaging materials domestically. The Fort
James Corporation, a packaging materials supplier, was the largest single
supplier in 1999. The ability of Celestial to continue its current packaging of
waxed carton liner depends upon the continued access to waxed carton liner.
Celestial currently obtains all of its waxed carton liner from a single domestic
supplier. While this supplier has historically been a reliable source of quality
liners, Celestial has recently learned that the supplier is reorganizing in
bankruptcy. Celestial is currently investigating alternative sources of supply.
If this supplier ceases to supply liners to Celestial and if Celestial is unable
to obtain a reliable alternative waxed carton liner source, Celestial could be
forced to reformat its packaging, which could have a material adverse effect on
our business, results of operations and financial condition following the
merger.
INABILITY TO USE OUR TRADEMARKS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR
BUSINESS
Our inability to use our trademarks could have a material adverse effect on
our business, results of operations and financial condition.
23
Hain owns the trademarks for its principal products, including the Arrowhead
Mills-Registered Trademark-, Bearitos-Registered Trademark-,
Breadshop's-Registered Trademark-, Casbah-Registered Trademark-,
DeBoles-Registered Trademark-, Earth's Best-Registered Trademark-,
Estee-Registered Trademark-, Garden of Eatin'-Registered Trademark-, Hain Pure
Foods-Registered Trademark-, Health Valley-Registered Trademark-,
Kineret-Registered Trademark-, Little Bear Organic Foods-Registered Trademark-,
Nile Spice-Registered Trademark-, Terra-Registered Trademark-,
Westbrae-Registered Trademark-, and Westsoy-Registered Trademark- brands.
Celestial has trademarks for most of its best-selling brands, including
Sleepytime-Registered Trademark-, Lemon Zinger-Registered Trademark-, Mandarin
Orange Spice-Registered Trademark-, Red Zinger-Registered Trademark-, Wild Berry
Zinger-Registered Trademark-, Tension Tamer-Registered Trademark-, Country Peach
Passion-Registered Trademark-, and Raspberry Zinger-Registered Trademark-.
Celestial has made various federal and international filings with respect to its
material trademarks, and intends to keep these filings current and seek
protection for new trademarks to the extent consistent with business needs.
Celestial also copyrights certain of its artwork and package designs.
We believe that brand awareness is a significant component in a consumer's
decision to purchase one product over another in the highly competitive food and
beverage industry. Our failure to continue to sell our products under our
established brand names could have a material adverse effect on our business,
results of operations and financial condition.
OUR PRODUCTS MUST COMPLY WITH GOVERNMENT REGULATION
We and our manufacturers, distributors and co-packers are subject to
extensive regulation by federal, state and local authorities that affect our
business. The federal agencies governing our business include the Federal Trade
Commission, The Food and Drug Administration, the United States Department of
Agriculture and the Occupational Safety and Health Administration. These
agencies regulate, among other things, the production, sale, safety,
advertising, labeling of and ingredients used in our products. Under various
statutes these agencies prescribe the requirements and establish the standards
for quality, purity and labeling. Among other requirements, the FDA must approve
our products, including a review of the manufacturing processes and facilities
used to produce these products before these products can be marketed in the
United States. In addition advertising of our business is subject to regulation
by the FTC. Our activities are also regulated by state agencies as well as
county and municipal authorities. We are also subject to the laws of the foreign
jurisdictions in which we sell our products.
The USDA has proposed certain regulations with respect to organic labeling
and certification. These regulations are currently in a comment period through
the middle of the second calendar quarter of 2000. Based upon certification by a
third-party organic certifier Hain believes it meets the requirements of the
USDA as proposed. In addition, new government laws and regulations may be
introduced in the future that could result in additional compliance costs,
seizures, confiscation, recall or monetary fines, any of which could prevent or
inhibit the development, distribution and sale of our products. If we fail to
comply with applicable laws and regulations, we may be subject to civil
remedies, including fines, injunctions, recalls or seizures, as well as
potential criminal sanctions, which could have a material adverse effect on our
business, results of operations and financial condition.
Celestial is also subject to the Dietary Supplement Health and Education Act
of 1994, or DSHEA, which went into effect in March 1999. DSHEA defines dietary
supplements as a new category of food, separate from conventional food. DSHEA
requires specific nutritional labeling requirements for dietary supplements and
permits substantiated, truthful and non-misleading statements of nutritional
support to be made in labeling, such as statements describing general well-being
resulting from consumption of a dietary ingredient, or the role of a nutrient or
dietary ingredient in affecting or maintaining a structure or function of the
body.
PRODUCT RECALLS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS
Manufacturers and distributors of products in the food industry are
sometimes subject to the recall of their products for a variety of reasons,
including for product defects such as ingredient contamination, packaging safety
and inadequate labeling disclosure. If any of our products are recalled
24
due to a product defect or for any other reason, we could be required to incur
the expense of the recall or the expense of any resulting legal proceeding.
Additionally, if one of our significant brands were subject to recall, the image
of that brand could be harmed, which could have a material adverse effect on our
business, results of operations or financial condition.
PRODUCT LIABILITY SUITS, IF BROUGHT, COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR
BUSINESS
If a product liability claim exceeding our insurance coverage were to be
successfully asserted against us, it could have a material adverse effect on our
business, results of operations and financial condition. We cannot assure you
that such coverage will be sufficient to insure against claims which may be
brought against us, or that we will be able to maintain such insurance or obtain
additional insurance covering existing or new products. As a marketer of food
products, we are subject to the risk of claims for product liability. We
maintain product liability insurance and generally require that our co-packers
maintain product liability insurance with us as a co-insured.
WE RELY ON INDEPENDENT CERTIFICATION FOR A NUMBER OF OUR NATURAL AND SPECIALTY
FOOD PRODUCTS
We rely on independent certificates, such as certifications of our products
as "organic" or "kosher," to differentiate our products in natural and specialty
food categories. The loss of any independent certifications could adversely
affect Hain's market position as a natural and specialty food company, which
could have a material adverse effect on our business, results of operations and
financial condition.
We must comply with the requirements of independent organizations or
certification authorities in order to label our product as certified. For
example, we can lose our "organic" certification if a plant becomes contaminated
with non-organic materials, or if not properly cleaned after a production run.
In addition, all raw materials must be certified organic. Similarly, we can lose
our "kosher" certification if a plant and raw materials do not meet the
requirements of the appropriate kosher supervision organization, such as The
Union of Orthodox Jewish Congregations, The Organized Kashruth Laboratories,
"KOF-K" Kosher Supervision, Kosher Overseers Associated of America and Upper
Midwest Kashruth.
CELESTIAL'S BUSINESS IS SEASONAL AND SUBJECT TO QUARTERLY FLUCTUATIONS
Celestial's business consists primarily of manufacturing and marketing hot
tea products and as a result its quarterly results of operations reflect
seasonal trends resulting from increased demand for its hot tea products in the
cooler months of the year. Quarterly fluctuations in Celestial's sales volume
and operating results are due to a number of factors, including the timing of
trade promotions, advertising and consumer promotions. The impact on sales
volume and operating results, due to the timing and extent of these factors, can
significantly impact Celestial's business. Thus, as a result of the merger, our
quarterly results of operations will also reflect seasonal trends.
OUR OFFICERS AND DIRECTORS AND AN UNAFFILIATED STOCKHOLDER MAY BE ABLE TO
CONTROL OUR ACTIONS
Following the merger, our officers, directors and affiliates will own
approximately 16.0% of our outstanding common stock. Of these officers and
directors, two of our directors currently serve as a designee and jointly
appointed designee of an affiliate of H.J. Heinz Company, which owns
approximately 19.5% of Hain's common stock prior to the merger and has the right
to purchase shares of Hain common stock upon completion of the merger to
maintain its approximately 19.5% interest, in which case our officers, directors
and affiliates will own 24.9% of our outstanding common stock. Accordingly, our
officers and directors will be in a position to influence the election of our
directors and otherwise influence stockholder action.
25
OUR ABILITY TO ISSUE PREFERRED STOCK MAY DETER TAKEOVER ATTEMPTS
Our board of directors, upon completion of the merger, is empowered to
issue, without stockholder approval, preferred stock with dividends,
liquidation, conversion, voting or other rights which could decrease the amount
of earnings and assets available for distribution to holders of our common stock
and adversely affect the relative voting power or other rights of the holders of
our common stock. In the event of issuance, the preferred stock could be used as
a method of discouraging, delaying or preventing a change in control. Our
certificate of incorporation authorizes the issuance of up to 5,000,000 shares
of "blank check" preferred stock with such designations, rights and preferences
as may be determined from time to time by our board of directors. Although we
have no present intention to issue any shares of our preferred stock, we may do
so in the future under appropriate circumstances.
WE DO NOT PAY DIVIDENDS
We have not paid any cash dividends on our common stock to date and do not
anticipate declaring or paying any dividends in the foreseeable future.
Celestial paid dividends in the form of a two-for-one stock split in
September 1998. Hain's ability to pay dividends is currently restricted by its
credit facility with its lending banks.
26
STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This joint proxy statement/prospectus contains forward-looking statements
about Hain, Celestial and the combined company which Hain and Celestial believe
are within the meaning of the Private Securities Litigation Reform Act of 1995.
Statements in this document that are not historical facts are hereby identified
as "forward-looking statements" for the purpose of the safe harbor provided by
Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A
of the Securities Act of 1933, as amended. When used in this document, the words
"anticipates," "believes," "expects," "intends" and similar expressions as they
relate to Hain, Celestial or the combined company or the management of either
company are intended to identify such forward-looking statements. In making any
such statements, we believe that our expectations are based on reasonable
assumptions. However, any such statement may be influenced by factors that could
cause actual outcomes and results to be materially different from those
projected. These forward-looking statements are subject to numerous risks and
uncertainties. There are numerous important factors that could cause actual
results to differ materially from those in forward-looking statements, some of
which are beyond the control of Hain, Celestial or the combined company,
including:
- the impact of general economic conditions in the U.S., and industry
conditions, including competition and product and raw material prices;
- capital expenditure requirements;
- legislative or regulatory requirements, particularly concerning
environmental matters;
- interest rates;
- access to capital markets; and
- consumer preferences.
The actual results, performance or achievement by Hain, Celestial or the
combined company could differ materially from those expressed in, or implied by,
these forward-looking statements and, accordingly, we cannot assure you that any
of the events anticipated by the forward-looking statements will transpire or
occur, or if any of them do so, what impact they will have on the results of
operations and financial condition of Hain, Celestial or the combined company.
27
THE MERGER
GENERAL
We are furnishing this joint proxy statement/prospectus to holders of Hain
common stock and holders of Celestial common stock in connection with the
solicitation of proxies by Hain's board of directors at a special meeting of its
stockholders and by Celestial's board of directors at a special meeting of its
stockholders, and at any adjournments or postponements of either stockholders'
meeting.
HAIN'S PROPOSALS
At the Hain special stockholders' meeting, Hain will ask its stockholders to
vote on the following proposals:
- to consider and vote upon the issuance of Hain common stock in connection
with the merger agreement between Hain and Celestial as described in this
joint proxy statement/prospectus;
- to change Hain's corporate name to The Hain Celestial Group, Inc. to be
effective upon consummation of the merger;
- to increase the authorized number of shares of Hain common stock from
40 million to 100 million;
- to amend the Hain 1994 Long Term Incentive and Stock Award Plan to
(a) increase the number of shares issuable over the term of the plan by 3
million shares to 6.4 million shares in the aggregate and (b) increase the
upper limit on the number of shares for which options or stock
appreciation rights may be granted to any participant under the plan
during any calendar year to 1 million shares;
- to adopt the Hain 2000 Directors Stock Option Plan; and
- to transact such other business as may properly come before the special
meeting.
CELESTIAL'S PROPOSALS
At the Celestial special stockholders' meeting, Celestial will ask its
stockholders to vote on the following proposals:
- to approve and adopt the merger agreement and the merger; and
- to transact such other business as shall properly come before the special
meeting.
The merger agreement provides for the merger of Hain Acquisition Corp., a
wholly owned subsidiary of Hain, with and into Celestial, with Celestial
surviving the merger and becoming a wholly owned subsidiary of Hain. Each
stockholder of Celestial will receive 1.265 shares of Hain common stock (and
cash for fractional shares) for each share of Celestial common stock (including
associated rights) they own. The merger will become effective in accordance with
the certificate of merger to be filed with the office of the Secretary of State
of the State of Delaware. We anticipate that the parties will make this filing
as soon as practicable after the last of the conditions precedent to the merger
contained in the merger agreement has been satisfied or waived. We have attached
a copy of the merger agreement as Annex A to this document. We urge all
stockholders of Hain and Celestial to read the merger agreement in its entirety
because it is the legal document governing the merger.
BACKGROUND OF THE MERGER
The respective board of directors and management of Hain and Celestial
regularly consider their strategic alternatives as part of their ongoing efforts
to enhance stockholder value. These alternatives have included making strategic
investments and acquisitions to gain access to greater financial resources and
marketing capabilities.
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Hain, a leading marketer, distributor and seller of natural, organic and
specialty foods, had long viewed Celestial, the leader in specialty teas in the
United States with approximately half of all U.S. herbal tea sales, as a strong
candidate for a strategic combination. On November 16, 1999, Irwin D. Simon,
Hain's president and chief executive officer, and Gary M. Jacobs, Hain's chief
financial officer, met with Mo Siegel, Celestial's founder and chairman of its
board, and James P. Kelley, a Celestial director, to discuss a possible
transaction. On December 3, 1999, Mr. Simon, Mr. Jacobs and a representative of
Bear Stearns met with Mr. Siegel, Mr. Kelley and Mr. Ronald Davis, a Celestial
director, in Denver, Colorado. At this meeting, Hain outlined its initial
proposal for a pooling-of-interests transaction, in which shares of Hain common
stock would be exchanged for shares of Celestial common stock. On December 21,
1999, Hain and Celestial signed a confidentiality agreement.
On January 4, 2000, at the offices of Bear Stearns in New York City, Hain
and Celestial presented each other with overviews of their respective
businesses, and preliminary discussions regarding a potential combination were
held. Management from both sides agreed to pursue initial due diligence. During
the next few weeks, senior management of both companies discussed their
respective operations and the expected benefits of a merger of the two
companies, and both sides made available business, product, financial, and legal
information, among other items. On February 1, 2000, the Hain board held a
telephonic meeting to discuss the progress of due diligence. At this time, Bear
Stearns discussed the structure of the proposed transaction and Celestial's
historical and projected financial performance. The Hain board then authorized
management to pursue more detailed due diligence discussions with Celestial. The
following day, the Celestial board met and similarly authorized its management,
and Goldman Sachs presented its preliminary analysis of the transaction to the
Celestial board.
Over the next few weeks, data rooms were established in both New York and
Boulder, Colorado, and extensive due diligence was performed by the financial,
legal and tax advisors of both Hain and Celestial. Also during this period, the
merger agreement was negotiated among Celestial, Hain and their respective
advisors. Discussions included the exchange ratio, the conditions under which
the termination fees would be paid, the number and identity of prospective board
members of the combined companies and the roles of Mr. Simon and Mr. Siegel in
the combined company. On February 18, 28, and 29, 2000, Celestial's board met to
review the status of the ongoing negotiations and consulted with Celestial's
legal, accounting and investment advisors. On February 24, 2000, Hain's board
held a telephonic meeting with its advisors, at which Hain's management reported
on the status of its ongoing discussions with Celestial and reviewed the
remaining open due diligence and transaction issues.
On March 2, 2000, the Hain board held a telephonic meeting to discuss the
merger; the terms of the merger agreement, including the proposed exchange ratio
of 1.265 shares of Hain common stock for each share of Celestial common stock;
termination fees; the number and identity of the new board members; and the
roles of Mr. Simon and Mr. Siegel in the combined company. Representatives of
Bear Stearns and Hain's legal and accounting advisors attended the meeting. At
the meeting, Bear Stearns delivered its oral opinion, which was subsequently
confirmed by delivery of a written opinion dated March 5, 2000 that, as of the
date of the written opinion and subject to the assumptions, qualifications and
limitations set forth in the written opinion, the exchange ratio was fair, from
a financial point of view, to Hain. The Hain board gave specific consideration
to the proposed name of the combined company, the number of Celestial
representatives who would join the combined company's board, and the role of
Mr. Siegel. It was decided that the combined company's name would be The Hain
Celestial Group, Inc., that Celestial would designate three of eleven board
seats of the combined company, and that Mr. Siegel would be given the title of
vice chairman. The Hain board also voted unanimously to elect Mr. Simon as the
new chairman and then approved the merger agreement, pending the resolution of
certain outstanding points, and authorized final negotiations by Hain and its
advisors.
29
On March 4, 2000, the Celestial board met and approved the merger agreement,
subsequent to receiving reports from Celestial's legal and investment advisors
and subject to resolution of outstanding issues. At the request of the Celestial
board, each of Mr. Simon and Mr. Siegel entered into voting agreements under
which they agreed to vote their shares in favor of the merger. At this meeting,
Goldman Sachs rendered its oral opinion (which was subsequently confirmed in
writing) that, as of the date of the opinion, the exchange ratio was fair from a
financial point of view to the holders of Celestial common stock. In addition,
in recognition of the extensive time and effort required for Celestial's
non-employee directors in connection with the merger discussions, Celestial
authorized a $15,000 cash payment to each non-employee director. The merger
agreement was finalized and signed on March 5, 2000.
CONSIDERATIONS OF HAIN'S BOARD OF DIRECTORS
The Hain board considered a number of factors in recommending and approving
the merger. Hain's management believes that the merger brings together two of
the most important and fastest growing companies in the natural and organic and
beverage sector. Hain is a leading marketer of natural, organic and specialty
foods, and Celestial is the largest producer of specialty teas. Both companies
share a common vision, possess experienced and effective management teams, and
have built effective sales and marketing organizations to promote specialty food
products through different distribution channels. The principal benefits of the
merger for Hain are expected to include:
- ADDS THE MARKET LEADER IN THE SPECIALTY TEAS CATEGORY TO HAIN'S PRODUCT
PORTFOLIO. As one of the most recognizable food brands, Celestial has a
50% market share in herbal teas and a 32% share in the broader specialty
teas category. The transaction will build upon Hain's leading position in
natural foods, in which it currently maintains major shares in 12 of the
top 15 categories, by adding the leader in the third largest natural foods
category to its portfolio. Moreover, with sales in 1999 of over
$100 million, Celestial teas also would be Hain's largest product line.
- EXPANDS DISTRIBUTION POTENTIAL. Hain distributes its products primarily
through natural foods stores, whereas Celestial has a strong presence in
the grocery and mass retail channels. The merger is expected to enable
both companies to access the other's distribution strengths, allowing for
both increased penetration in natural foods stores through broader product
offerings and greater cross-selling potential through expansion of the
sales forces in both the grocery and food service channels.
- LEVERAGES HAIN'S RELATIONSHIP WITH H.J. HEINZ. Hain is expected to utilize
the powerful manufacturing and distribution platform of H.J. Heinz to
increase distribution of Celestial's teas internationally as well as in
the food service channel, where Celestial's products currently are
under-represented. Broader distribution in these channels, combined with
H.J. Heinz's expertise in supply chain management, offers Hain greater
revenue growth opportunities going forward.
- EXPECTED OPERATING SYNERGIES. The proposed merger is expected to result in
significant operating synergies, including elimination of certain
duplicative costs such as: sales/marketing costs, company-wide operational
functions, natural foods and grocery brokerage commissions, public company
fees and trade spending. Furthermore, the above-mentioned expansion of
distribution potential and the opportunity to leverage Hain's relationship
with H.J. Heinz could lead to significant growth at the revenue level.
- GREATER FINANCIAL RESOURCES TO PURSUE FURTHER GROWTH OPPORTUNITIES. As of
December 31, 1999, Hain had $49.8 million in indebtedness, stockholders'
equity of $222.4 million and $1.1 million in cash and investments, while
Celestial had approximately $9.8 million in indebtedness, stockholders'
equity of $58.2 million and $2.0 million in cash and investments. We
believe the combined company will be able to finance the acquisition of
other companies and/or brands and allow the pursuit of larger company
and/or brand acquisitions than neither company could pursue alone.
30
- INCREASED INVESTOR PROFILE AND LIQUIDITY. Hain's management believes that
the combined company will benefit from a wider stockholder base, larger
float and greater liquidity.
- QUALITY MANAGEMENT TEAM. Hain's management recognizes the depth and
breadth of experience in the specialty tea business that the management of
Celestial possesses.
In view of the number and wide variety of factors considered in connection
with its evaluation of the merger, and the complexity of these matters, Hain's
board did not find it practicable to, nor did it attempt to, quantify, rank or
otherwise assign relative weights to the specific factors it considered. In
addition, the Hain board did not undertake to make any specific determination as
to whether any particular factor was favorable or unfavorable to the board of
directors' ultimate determination or assign any particular weight to any factor.
Instead, it conducted an overall analysis of the factors described above,
including thorough discussions with Hain's management and management's analysis
of the proposed merger based on information received from Hain's legal,
financial and accounting advisors. In considering the factors described above,
individual members of the Hain board may have given different weight to
different factors. Hain's board considered all of these factors as a whole, and
considered the factors overall to be favorable to and to support its
determination.
In addition to the above mentioned factors, consideration was also given by
the Hain board to the risk factors associated with the merger. Please refer to
the section entitled "Risk Factors" for a discussion of these risk factors.
RECOMMENDATION OF HAIN'S BOARD OF DIRECTORS
HAIN'S BOARD OF DIRECTORS BELIEVES THAT THE TERMS OF THE MERGER ARE FAIR TO
AND IN THE BEST INTERESTS OF HAIN AND ITS STOCKHOLDERS AND UNANIMOUSLY
RECOMMENDS TO ITS STOCKHOLDERS THAT THEY VOTE "FOR" THE PROPOSALS TO:
- issue Hain common stock in the merger;
- amend Hain's certificate of incorporation to change Hain's corporate name
to The Hain Celestial Group, Inc.;
- amend Hain's certificate of incorporation to increase the authorized
number of shares of Hain common stock from 40 million to 100 million
shares;
- amend the Hain 1994 Long Term Incentive and Stock Award Plan to
(a) increase the number of shares issuable over the term of the plan by
3 million shares to 6.4 million shares, in the aggregate and (b) increase
the upper limit on the number of shares for which options or stock
appreciation rights may be granted to any participant under the plan
during any calendar year to 1 million shares; and
- adopt the Hain 2000 Directors Stock Option Plan.
CONSIDERATIONS OF CELESTIAL'S BOARD OF DIRECTORS
At its meeting on March 4, 2000, Celestial's board voted unanimously to
enter into the merger agreement and to recommend that Celestial stockholders
vote to approve the merger and the merger agreement.
In the course of reaching its decision to adopt the merger agreement,
Celestial's board consulted with Celestial's management, as well as its outside
legal counsel, accounting advisor and financial advisor, and carefully
considered the following material factors:
- information concerning the business, earnings, operations, competitive
position and prospects of Celestial and Hain both individually and on a
combined basis including, but not limited to, the compatibility of the two
companies' products and operations, the potential efficiencies, cost
savings and other combination benefits or collective synergies expected to
be realized as a result
31
of the consolidation of Celestial's and Hain's operations as well as the
Celestial board's own knowledge of Celestial and Hain;
- analyses and other information with respect to Celestial and Hain and
current industry and economic conditions and trends presented to
Celestial's board by management, including, without limitation, a
discussion of the complementary nature of the distribution channels of
Celestial and Hain;
- the presentations of Goldman Sachs at the Celestial board meetings held on
February 2, February 18 and March 4, 2000, and the opinion of Goldman
Sachs dated March 5, 2000 to the effect that, as of the date of Goldman
Sachs' opinion, the exchange ratio for the merger was fair to the
Celestial stockholders from a financial point of view. The full text of
Goldman Sachs' opinion, which sets forth assumptions made, matters
considered and limitations on the review undertaken in connection with
Goldman Sachs' opinion, is attached hereto as Annex E and is incorporated
by reference in this joint proxy statement/prospectus. We urge Celestial
stockholders to read Goldman Sachs' opinion in its entirety;
- the amount and form of the consideration to be received by Celestial
stockholders in the merger and information on the historical trading
ranges of Celestial common stock and Hain common stock;
- that the merger would provide Celestial stockholders with an opportunity
to receive a premium over the market price for their Celestial common
stock;
- that the board believed premium to be received by Celestial's stockholders
was the maximum value Celestial's stockholders could obtain for their
shares and the maximum value Hain was prepared to pay for Celestial;
- that the merger would further Celestial's long-term strategic plan of
combining Celestial's tea business with other natural foods brands and
that, as a result of the merger, Celestial's stockholders would have a
stake in a larger company focused on natural foods products;
- that the transaction will provide Celestial stockholders with an
opportunity to hold a more liquid stock in a significantly larger, more
diversified company. Celestial stockholders will own approximately 36.7%
of the combined entity and the merger will provide them with the
opportunity to share in the combined company's long-term growth and any
synergies realized as a result of the merger. In addition, the board
believed that employees of Celestial could benefit from expanded business
opportunities due to Celestial's premier facilities becoming part of a
combined company that is a leader in the natural foods industry;
- the conditions to the merger agreement that the merger will be accounted
for under the pooling-of-interests method of accounting and will be a
tax-free transaction for U.S. federal income tax purposes, as described
under the sub-headings "--Accounting Treatment" and "--Material Federal
Income Tax Consequences of the Merger";
- the role that Celestial's current management and board is expected to play
in the management of the combined company and the intention of Hain to
maximize the management resources at both companies;
- a detailed review and analysis of potential transactions with third
parties and the belief that no party other than Hain was a likely buyer of
Celestial at a premium that was superior to that offered by Hain; and
- the interests that the executive officers and directors of Celestial may
have in connection with the merger that may be different from, or in
addition to, their interests as stockholders of Celestial generally, see
"Interests of Insiders in the Merger."
32
In view of the number and wide variety of factors considered in connection
with its evaluation of the merger, and the complexity of these matters,
Celestial's board did not find it practicable to, nor did it attempt to,
quantify, rank or otherwise assign relative weights to the specific factors it
considered. In addition, the Celestial board did not undertake to make any
specific determination as to whether any particular factor was favorable or
unfavorable to the board of directors' ultimate determination or assign any
particular weight to any factor, but rather conducted an overall analysis of the
factors described above, including through discussions with and questioning of
Celestial's management and management's analysis of the proposed merger based on
information received from Celestial's legal, financial and accounting advisors.
In considering the factors described above, individual members of the Celestial
board may have given different weight to different factors. Celestial's board
considered all these factors as a whole, and overall considered the factors to
be favorable to and to support its determination.
RECOMMENDATION OF CELESTIAL'S BOARD OF DIRECTORS
CELESTIAL'S BOARD OF DIRECTORS BELIEVES THAT THE TERMS OF THE MERGER ARE
FAIR TO AND IN THE BEST INTERESTS OF CELESTIAL AND ITS STOCKHOLDERS AND
UNANIMOUSLY RECOMMENDS TO ITS STOCKHOLDERS THAT THEY VOTE "FOR" THE PROPOSAL TO
APPROVE AND ADOPT THE MERGER AND THE MERGER AGREEMENT.
ACCOUNTING TREATMENT
The merger will be accounted for under the "pooling-of-interests" accounting
method, whereby the assets and liabilities of Celestial will be carried forward
to Hain at their historical recorded basis. Results of operations of Hain will
include the results of both Hain and Celestial for the entire fiscal year in
which the merger occurs. The reported balance sheet amounts and results of
operations of the separate companies for prior periods will be restated, as
appropriate, to reflect the financial position and results of operations for
Hain combined with Celestial. We present these restated amounts under the
heading "Unaudited Pro Forma Combined Condensed Financial Statements."
The merger is conditioned upon:
- the receipt by Hain of a letter from Ernst & Young LLP, dated as of the
effective time of the merger and addressed to Hain, stating that Ernst &
Young LLP believes that the transaction contemplated by the merger
agreement, should be treated as a "pooling-of-interests" transaction in
conformity with U.S. generally accepted accounting principles as described
in Accounting Principles Board Opinion No. 16 and applicable rules and
regulations of the SEC; and
- such letter not having been withdrawn or modified in any material respect.
Similarly, the merger is also conditioned upon:
- Celestial having received a letter from Deloitte & Touche LLP, dated as of
the effective time of the merger and addressed to Celestial, stating that
Deloitte & Touche LLP believes that in the transaction contemplated by the
merger agreement, Celestial will qualify as a party to a
"pooling-of-interests" transaction in conformity with U.S. generally
accepted accounting principles as described in Accounting Principles Board
Opinion No. 16 and applicable rules and regulations of the SEC; and
- such letter not having been withdrawn or modified in any material respect.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following discussion summarizes the material United States federal
income tax consequences of the merger. This discussion is based on the Internal
Revenue Code of 1986, as amended, applicable Treasury regulations,
administrative interpretations and court decisions as in effect as of the date
of this joint proxy statement/prospectus, all of which may change, possibly with
retroactive effect.
33
This discussion does not address all aspects of United States federal income
taxation that may be important to a Celestial stockholder in light of that
stockholder's particular circumstances or to a Celestial stockholder subject to
special rules, such as:
- a nonresident alien individual, foreign corporation or foreign estate or
trust;
- a stockholder who does not hold its Celestial common stock as a capital
asset;
- a financial institution or insurance company;
- a tax-exempt organization;
- a dealer or broker in securities;
- a partnership or other pass-through entity, or an investor in a
partnership or other pass-through entity;
- a stockholder that holds its Celestial common stock as part of a hedge,
appreciated financial position, straddle or conversion transaction; or
- a stockholder who acquired its Celestial common stock pursuant to the
exercise of options or otherwise as compensation.
TAX OPINIONS. Hain has received an opinion of Cahill Gordon & Reindel, and
Celestial has received an opinion of Bartlit Beck Herman Palenchar & Scott
(together with Cahill Gordon & Reindel, "tax counsel"), each dated as of the
date of this joint proxy statement/prospectus, that, based on the law as of that
date:
- the merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Internal
Revenue Code;
- Hain, its merger subsidiary and Celestial will each be a party to that
reorganization within the meaning of Section 368(b) of the Internal
Revenue Code; and
- as a result of the merger, no gain or loss will be recognized for federal
income tax purposes by any stockholder of Celestial (except with respect
to any cash received for a fractional share of Hain).
It is a condition to the obligation of each of Hain and Celestial to
complete the merger that the relevant tax counsel confirm its opinion as of the
closing date. Neither Hain nor Celestial intends to waive this condition.
The opinions of tax counsel regarding the merger have each relied, and the
confirmation opinions regarding the merger as of the closing date will each
rely, on (1) representations and covenants made by Hain and Celestial, including
those contained in certificates of officers of Hain and Celestial, and
(2) specified assumptions, including an assumption regarding the completion of
the merger in the manner contemplated by the merger agreement. In addition, the
opinions of tax counsel have assumed, and tax counsel's ability to provide the
closing date opinions will depend on, the absence of changes in existing facts
or in law between the date of this joint proxy statement/prospectus and the
closing date. If any of those representations, covenants or assumptions are
inaccurate, tax counsel may not be able to provide one or more of the required
closing date opinions. In addition, the tax consequences of the merger could
differ from those described in the opinions that tax counsel have delivered. Tax
counsel's opinions neither bind the IRS nor preclude the IRS or the courts from
adopting a contrary position. Neither Hain nor Celestial intends to obtain a
ruling from the IRS on the tax consequences of the merger.
The discussion that follows is based on the opinions of tax counsel that are
described above.
FEDERAL INCOME TAX TREATMENT OF THE MERGER. The merger will be treated for
federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code, and Hain, its merger subsidiary and
Celestial will each be a party to that reorganization within the meaning
34
of Section 368(b) of the Internal Revenue Code. None of Hain, its merger
subsidiary or Celestial will recognize any gain or loss for federal income tax
purposes as a result of the merger.
FEDERAL INCOME TAX CONSEQUENCES TO CELESTIAL STOCKHOLDERS. For federal
income tax purposes:
- A holder of Celestial common stock will not recognize any gain or loss
upon exchange in the merger of its shares of Celestial common stock for
shares of Hain common stock;
- When a holder of Celestial common stock receives cash instead of a
fractional share of Hain's common stock, the holder will be required to
recognize gain or loss, measured by the difference between the amount of
cash received instead of that fractional share and the portion of the tax
basis of that holder's shares of Celestial common stock allocable to that
fractional share. This gain or loss will be capital gain or loss, and will
be long-term capital gain or loss if the share of Celestial common stock
exchanged for that fractional share of Hain common stock was held for more
than one year at the effective time of the merger;
- A holder of Celestial common stock will have a tax basis in the Hain
common stock received in the merger equal to (1) the tax basis of the
Celestial common stock surrendered by that holder in the merger, less
(2) any tax basis of the Celestial common stock surrendered that is
allocable to any fractional share of Hain common stock for which cash is
received;
- The holding period for shares of Hain common stock received in exchange
for shares of Celestial common stock in the merger will include the
holding period for the shares of Celestial common stock surrendered in the
merger; and
- Certain noncorporate holders of Celestial common stock may be subject to
backup withholding at a 31% rate on payments made with respect to the
merger if the holder fails to provide an accurate taxpayer identification
number and other information or is otherwise subject to backup
withholding. The amount of any backup withholding from a payment to a
holder will be allowed as a credit against the holder's U.S. federal
income tax liability.
FEDERAL INCOME TAX CONSEQUENCES TO HAIN STOCKHOLDERS. For federal income
tax purposes, holders of Hain common stock will not recognize gain or loss as a
result of the merger.
This discussion of material federal income tax consequences is intended to
provide only a general summary, and is not a complete analysis or description of
all potential federal income tax consequences of the merger. This discussion
does not address tax consequences that may vary with, or are contingent on,
individual circumstances. In addition, it does not address any non-income tax or
any foreign, state or local tax consequences of the merger. ACCORDINGLY, WE
STRONGLY ENCOURAGE EACH CELESTIAL STOCKHOLDER TO CONSULT HIS OR HER OWN TAX
ADVISOR TO DETERMINE THE PARTICULAR UNITED STATES FEDERAL, STATE, LOCAL OR
FOREIGN INCOME OR OTHER TAX CONSEQUENCES TO THE STOCKHOLDER OF THE MERGER.
REGULATORY MATTERS
We will obtain all material regulatory approvals required to permit
completion of the merger from the applicable U.S. regulatory authorities,
including the antitrust authorities in the United States.
The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
the rules and regulations promulgated under that Act, prohibited Hain and
Celestial from consummating the merger until they notified and furnished
information to the FTC and the Antitrust Division of the United States
Department of Justice and specified waiting period requirements were satisfied.
On March 17, 2000, in connection with the merger, Hain and Celestial each filed
with the FTC and the Antitrust Division a Notification and Report Form under the
Hart-Scott-Rodino Act. The applicable waiting period under the Hart-Scott-Rodino
Act relating to the merger was terminated on April 6, 2000.
Notwithstanding the expiration of the waiting period under the
Hart-Scott-Rodino Act relating to the merger, at any time before or after the
completion of the merger, either the Antitrust Division or the FTC could take
any action under the antitrust laws as it deems necessary or desirable in the
public
35
interest, including seeking to enjoin the completion of the merger or seeking
the divestiture of substantial assets of Hain or Celestial. Private parties and
the state attorneys general may also bring actions under the U.S. antitrust laws
depending on the circumstances. Although Hain and Celestial believe that the
merger is legal under the U.S. antitrust laws, there can be no assurance that a
challenge to the merger on antitrust grounds will not be made or if such a
challenge is made, that it would not be successful.
NO APPRAISAL OR DISSENTERS' RIGHTS
Under the applicable provisions of the Delaware General Corporation Law (the
DGCL), neither Hain's nor Celestial's stockholders will be entitled to
dissenters' rights or appraisal in connection with the merger. Section 262 of
the DGCL provides stockholders with appraisal rights for certain mergers and
consolidations. Appraisal rights are not available to holders of (i) shares
listed on a national securities exchange, designated as a national market system
security on an inter-dealer quotation system by the NASD, or held of record by
more than 2,000 stockholders or (ii) shares of the surviving corporation of the
merger, if the merger did not require the approval of the stockholders of such
corporation, unless in either case, the holders of such stock required pursuant
to the merger to accept anything other than (A) shares of stock of the surviving
corporation, (B) shares of stock of another corporation which are also listed on
a national securities exchange, designated as a national market system security
on an inter-dealer quotation system by the NASD, or held by more than 2,000
holders or (C) cash in lieu of fractional shares of such stock. As long as Hain
common stock is listed on the Nasdaq National Market, the provisions of
Section 262 of the DGCL will not apply to holders of shares of Hain or Celestial
common stock.
FEDERAL SECURITIES LAWS CONSEQUENCES; STOCK TRANSFER RESTRICTION AGREEMENTS
This joint proxy statement/prospectus does not cover any resales of the Hain
common stock to be received by Celestial's stockholders upon completion of the
merger, and no person is authorized to make any use of this document in
connection with any such resale.
All Hain common stock that Celestial stockholders receive in the merger will
be freely transferable, with the exception of the Hain common stock received by
persons who are deemed to be "affiliates" of Celestial under the Securities Act,
at the time of the Celestial stockholders' meeting. These "affiliates" may only
sell their Hain common stock in transactions permitted by Rule 145 under the
Securities Act or as otherwise permitted under the Securities Act. Persons who
may be deemed to be affiliates of Celestial for such purposes generally include
individuals or entities that control, are controlled by, or are under common
control with, Celestial and may include some officers, directors and principal
stockholders of Celestial. The merger agreement requires Celestial to use
commercially reasonable efforts to deliver or cause to be delivered to Hain on
or prior to the effective time of the merger from each of those affiliates an
executed letter agreement to the effect that those persons will not offer or
sell or otherwise dispose of any Hain common stock issued to them in the merger
(i) in violation of the Securities Act or (ii) until after such time as results
covering at least 30 days of post-merger combined operations of Hain and
Celestial have been published.
RIGHT TO PURCHASE SHARES OF HAIN COMMON STOCK BY AN AFFILIATE OF H.J. HEINZ
COMPANY
Under an agreement that Hain entered with an affiliate of the H.J. Heinz in
September 1999, the affiliate of H.J. Heinz has the right to purchase shares of
Hain common stock upon completion of the merger to maintain its approximately
19.5% interest in Hain. If the H.J. Heinz affiliate exercises this right in
full, Hain will issue approximately 2.6 million additional shares of Hain common
stock to the H.J. Heinz affiliate at the time of the merger and Celestial
stockholders will own approximately 33.8% of the outstanding Hain common stock
after the merger.
36
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
On March 5, 2000, Hain and Celestial entered into an agreement and plan of
merger. Under the agreement, Hain is to issue 1.265 shares of Hain common stock
for every share of common stock of Celestial. The merger is subject to, among
other things, regulatory approval and the approval by stockholders of both Hain
and Celestial. The transaction, which is intended to be accounted for as a
pooling-of-interests transaction, is expected to be consummated on May 30, 2000.
The following unaudited pro forma combined condensed financial information
gives effect to the merger using the pooling-of-interests method of accounting,
after giving effect to the pro forma adjustments described in the accompanying
notes. The unaudited pro forma combined condensed financial information should
be read in conjunction with the audited historical consolidated financial
statements and related notes thereto of Hain, Celestial and NNG, which was
acquired by Hain on May 18, 1999 under the purchase method of accounting, which
are incorporated by reference into this joint proxy statement/prospectus.
The unaudited pro forma combined condensed balance sheet data as of
December 31, 1999 gives effect to the merger as if it had occurred on
December 31, 1999, and combines Hain's consolidated balance sheet as of
December 31, 1999 with Celestial's consolidated balance sheet as of
December 31, 1999. Since the fiscal years for Hain and Celestial differ, the
unaudited pro forma combined condensed statements of operations combine Hain's
consolidated statements of operations for the six-month periods ended
December 31, 1999 and 1998 and fiscal years ended June 30, 1999, 1998 and 1997
with Celestial's six-month periods ended December 31, 1999 and 1998 and fiscal
years ended September 30, 1999, 1998 and 1997, respectively. It is expected that
upon the completion of the merger, Celestial will change its fiscal year to
coincide with Hain's.
In addition, the unaudited pro forma combined condensed statements of
operations are presented to give effect to the acquisition of NNG on May 18,
1999 by Hain which was accounted for under the purchase method of accounting.
The pro forma combined condensed statements of operations are presented to also
include the historical and pro forma adjusted information of Sahara Natural
Foods, Inc. ("Sahara"), which NNG acquired on January 12, 1999 under the
purchase method of accounting (collectively, Hain's acquisition of NNG and the
NNG acquisition of Sahara are referred to as the "NNG Acquisition"). The
pro-forma combined condensed statements of operations for the six-month period
ended December 31, 1998 and also for the year ended June 30, 1999 assumes that
the NNG Acquisition had been consummated on July 1, 1998.
The selected pro forma combined financial data for the year ended June 30,
1999 and six-month period ended December 31, 1999 include certain non-recurring
charges recorded by Celestial. These nonrecurring charges relate to a product
return program ($9.1 million) and stockholder lawsuit settlement
($1.2 million). In addition, the selected pro forma combined financial data for
the year ended June 30, 1999 and six-month period ended December 31, 1998
include the results of operations as if the NNG Acquisition had occurred
July 1, 1998. Hain management has achieved significant cost synergies and
savings with the NNG Acquisition, however, in accordance with the rules for
presentation of pro forma financial information, no effect to such cost savings
has been included herein. In addition, the NNG historical results include
certain restructuring charges for the year ended June 30, 1999 ($1.2 million)
and six-month period ended December 31, 1998 ($.7 million) that will not
continue following the NNG Acquisition.
The pro forma combined condensed financial statements are not necessarily
indicative of the results of operations or the financial position, which would
have occurred, had the Celestial merger and the NNG Acquisition been consummated
at such times, nor are they necessarily indicative of future results of
operations or financial position. The allocation of the purchase price of NNG is
preliminary and does not reflect the fair value adjustments to the NNG assets
and liabilities, since such amounts
37
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
have not been finalized and have been estimated at this time. We will determine
the fair value of NNG's assets and liabilities through independent appraisals,
which will include appraisals of machinery and equipment, patents, trademarks
and trade names. The unaudited pro forma combined condensed financial statements
should be read in conjunction with the historical consolidated financial
statements of Hain, Celestial and NNG including the notes thereto, incorporated
by reference in this joint proxy statement/prospectus.
38
PRO FORMA COMBINED CONDENSED BALANCE SHEET
DECEMBER 31, 1999
AMOUNTS IN THOUSANDS
(UNAUDITED)
HISTORICAL PRO FORMA
--------------------- ---------------------------
HAIN CELESTIAL ADJUSTMENTS COMBINED
-------- ---------- ----------- --------
ASSETS
Current assets:
Cash and cash equivalents................... $ 1,055 $ 1,995 $ 3,050
Trade accounts receivable, net.............. 24,185 23,150 47,335
Inventories................................. 35,726 9,626 45,352
Deferred income taxes....................... 2,576 2,576
Other current assets........................ 2,846 3,200 6,046
-------- ---------- -------- --------
TOTAL CURRENT ASSETS...................... 63,812 40,547 104,359
Property, plant and equipment, net............ 17,376 24,110 41,486
Goodwill and other intangible assets, net..... 214,243 17,446 231,689
Deferred income taxes......................... 3,431 292 3,723
Other assets.................................. 2,063 4,822 $ (543)(11) 6,342
Unamortized financing costs................... 3,321 543 (11) 3,864
-------- ---------- -------- --------
TOTAL ASSETS.............................. $304,246 $ 87,217 $ 0 $391,463
======== ========== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses....... $ 28,991 $ 8,519 $ 15,000 (12) $ 62,586
9,992 (13)
84 (13)
Accrued liabilities and wages............... 9,992 (9,992)(13) 0
Accrued interest............................ 84 (84)(13) 0
Current portion of long-term debt........... 12,261 392 12,653
Income taxes payable........................ 3,059 638 3,697
-------- ---------- -------- --------
TOTAL CURRENT LIABILITIES................. 44,311 19,625 15,000 78,936
Long-term debt, less current portion.......... 37,578 9,395 46,973
-------- ---------- -------- --------
TOTAL LIABILITIES......................... 81,889 29,020 15,000 125,909
-------- ---------- -------- --------
STOCKHOLDERS' EQUITY:
Common stock................................ 182 84 (84)(14) 288
106 (14)
Additional paid in capital.................. 199,203 35,865 (35,865)(14) 235,046
35,843 (14)
Retained earnings........................... 23,247 22,423 (15,000)(12) 30,670
Treasury stock.............................. (275) (175) (450)
-------- ---------- -------- --------
TOTAL STOCKHOLDERS' EQUITY................ 222,357 58,197 (15,000) 265,554
-------- ---------- -------- --------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY.................................. $304,246 $ 87,217 $ 0 $391,463
======== ========== ======== ========
See notes to unaudited pro forma combined condensed financial statements.
39
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999
AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
(UNAUDITED)
HISTORICAL PRO FORMA
-------------------- ----------------------
HAIN CELESTIAL ADJUSTMENTS COMBINED
-------- --------- ----------- --------
Net sales.......................................... $149,086 $55,529 $204,615
Cost of sales...................................... 87,904 27,177 115,081
-------- ------- ----- --------
Gross profit....................................... 61,182 28,352 89,534
-------- ------- ----- --------
Selling, general and administrative expenses....... 41,262 29,023 70,285
Amortization of goodwill and other intangibles..... 2,710 587 3,297
-------- ------- ----- --------
43,972 29,610 73,582
-------- ------- ----- --------
Operating income (loss)............................ 17,210 (1,258) 15,952
-------- ------- ----- --------
Other income....................................... 753 753
Interest expense................................... (3,675) (275) (3,950)
Amortization of deferred financing costs........... (310) (106) (416)
-------- ------- ----- --------
(3,232) (381) (3,613)
-------- ------- ----- --------
Income (loss) before income taxes and cumulative
change in accounting principle, net of income tax
benefit.......................................... 13,978 (1,639) 12,339
Provision (benefit) for income taxes............... 6,290 (1,258) 5,032
-------- ------- ----- --------
Income (loss) before cumulative change in
accounting principle, net of income tax
benefit.......................................... $ 7,688 $ (381) $ 7,307
======== ======= ===== ========
Earnings (loss) per common share before cumulative
change in accounting principle, net of income tax
benefit:
Basic............................................ $ 0.47 $ (0.05) $ 0.27
======== ======= ===== ========
Diluted.......................................... $ 0.43 $ (0.05) $ 0.25
======== ======= ===== ========
Common equivalent shares weighted:
Basic............................................ 16,184 8,358 2,212(10) 26,744
Diluted.......................................... 17,835 8,810 2,335(10) 28,982
See notes to unaudited pro forma combined condensed financial statements.
40
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1998
AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
(UNAUDITED)
PRO FORMA
HISTORICAL PRO FORMA COMBINED
-------------------- ---------------------- NNG WITH NNG
HAIN CELESTIAL ADJUSTMENTS COMBINED ACQUISITION ACQUISITION
-------- --------- ----------- -------- -------------- -----------
(FROM PAGE 42)
Net sales........................... $94,098 $60,735 $154,833 $37,702 $192,535
Cost of sales....................... 57,080 22,490 79,570 23,715 103,285
------- ------- --------- -------- ------- --------
Gross profit........................ 37,018 38,245 75,263 13,987 89,250
------- ------- --------- -------- ------- --------
Selling, general and administrative
expenses.......................... 25,097 31,416 56,513 13,447 69,960
Amortization of goodwill and other
intangibles....................... 1,702 637 2,339 999 3,338
Restructuring expenses.............. 730 730
------- ------- --------- -------- ------- --------
26,799 32,053 58,852 15,176 74,028
------- ------- --------- -------- ------- --------
Operating income (loss)............. 10,219 6,192 16,411 (1,189) 15,222
------- ------- --------- -------- ------- --------
Interest expense.................... 2,412 385 2,797 3,075 5,872
Amortization of deferred financing
costs............................. 163 102 265 200 465
------- ------- --------- -------- ------- --------
2,575 487 3,062 3,275 6,337
------- ------- --------- -------- ------- --------
Income (loss) before income taxes... 7,644 5,705 13,349 (4,464) 8,885
Provision (benefit) for income
taxes............................. 3,325 2,047 5,372 (1,208) 4,164
------- ------- --------- -------- ------- --------
Net income (loss)................... $ 4,319 $ 3,658 $ 7,977 $(3,256) $ 4,721
======= ======= ========= ======== ======= ========
Earnings per common share
Basic............................. $ 0.32 $ 0.44 $ 0.33 $ 0.20
======= ======= ======== ========
Diluted........................... $ 0.28 $ 0.42 $ 0.30 $ 0.18
======= ======= ======== ========
Common equivalent shares weighted:
Basic............................. 13,429 8,305 2,201 (10) 23,935 23,935
Diluted........................... 15,402 8,793 2,330 (10) 26,525 26,525
See notes to unaudited pro forma combined condensed financial statements.
41
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1998
AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
(UNAUDITED)
PRO FORMA
NNG
SAHARA AS ADJUSTED NNG
NNG SAHARA PRO FORMA FOR SAHARA PRO FORMA NNG
HISTORICAL HISTORICAL ADJUSTMENTS ACQUISITION ADJUSTMENTS ACQUISITION
---------- ---------- ----------- ----------- ----------- ------------
(TO PAGE 41)
Net sales....................... $34,592 $3,110 $37,702 $ 37,702
Cost of sales................... 21,859 1,856 23,715 23,715
------- ------ ----- ------- ------- --------
Gross profit.................... 12,733 1,254 13,987 13,987
------- ------ ----- ------- ------- --------
Selling, general and
administrative expenses....... 12,112 1,335 13,447 13,447
Amortization of goodwill and $ (192)(4)
other intangibles............. 384 $ 77 (1) 461 730 (5) 999
Restructuring expenses.......... 730 730 730
------- ------ ----- ------- ------- --------
13,226 1,335 77 14,638 538 15,176
------- ------ ----- ------- ------- --------
Operating loss.................. (493) (81) (77) (651) (538) (1,189)
------- ------ ----- ------- ------- --------
(3,497)(6)
Interest expense................ 815 147 (2) 962 5,610 (7) 3,075
Amortization of deferred
financing costs............... 24 20 (3) 44 156 (8) 200
------- ------ ----- ------- ------- --------
839 167 1,006 2,269 3,275
------- ------ ----- ------- ------- --------
Loss before income taxes........ (1,332) (81) (244) (1,657) (2,807) (4,464)
Provision (benefit) for income
taxes......................... 4,136 29 4,165 (5,373)(9) (1,208)
------- ------ ----- ------- ------- --------
Net income (loss)............... $(5,468) $ (110) $(244) $(5,822) $ 2,566 $ (3,256)
======= ====== ===== ======= ======= ========
See notes to unaudited pro forma combined condensed financial statements.
42
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1999
AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
(UNAUDITED)
PRO FORMA
COMBINED
HISTORICAL PRO FORMA WITH
-------------------- ---------------------- NNG NNG
HAIN CELESTIAL ADJUSTMENTS COMBINED ACQUISITION ACQUISITION
-------- --------- ----------- -------- -------------- -----------
(FROM PAGE 44)
Net sales.......................... $205,969 $109,851 $315,820 $62,998 $378,818
Cost of sales...................... 122,219 46,922 169,141 39,642 208,783
-------- -------- -------- -------- ------- --------
Gross profit....................... 83,750 62,929 146,679 23,356 170,035
-------- -------- -------- -------- ------- --------
Selling, general and administrative
expenses......................... 55,045 57,957 113,002 21,615 134,617
Amortization of goodwill and other
intangibles...................... 3,585 1,202 4,787 1,845 6,632
Restructuring expenses............. 1,172 1,172
-------- -------- -------- -------- ------- --------
58,630 59,159 117,789 24,632 142,421
-------- -------- -------- -------- ------- --------
Operating income (loss)............ 25,120 3,770 28,890 (1,276) 27,614
-------- -------- -------- -------- ------- --------
Interest expense................... 5,318 535 5,853 5,389 11,242
Amortization of deferred financing
costs............................ 378 211 589 340 929
-------- -------- -------- -------- ------- --------
5,696 746 6,442 5,729 12,171
-------- -------- -------- -------- ------- --------
Income (loss) before income
taxes............................ 19,424 3,024 22,448 (7,005) 15,443
Provision (benefit) for income
taxes............................ 8,394 537 8,931 (1,723) 7,208
-------- -------- -------- -------- ------- --------
Net income (loss).................. $ 11,030 $ 2,487 $ 13,517 $(5,282) $ 8,235
======== ======== ======== ======== ======= ========
Earnings per common share
Basic............................ $ 0.81 $ 0.30 $ 0.56 $ 0.34
======== ======== ======== ========
Diluted.......................... $ 0.71 $ 0.28 $ 0.51 $ 0.31
======== ======== ======== ========
Common equivalent shares weighted:
Basic............................ 13,619 8,320 2,205(10) 24,144 24,144
Diluted.......................... 15,443 8,848 2,345(10) 26,636 26,636
See notes to unaudited pro forma combined condensed financial statements.
43
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1999
AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
(UNAUDITED)
PERIOD ENDED PERIOD ENDED PRO FORMA
MAY 17, JANUARY 12, NNG AS
1999 1999 SAHARA ADJUSTED NNG PRO
NNG SAHARA PRO FORMA FOR SAHARA FORMA NNG
HISTORICAL HISTORICAL ADJUSTMENT ACQUISITION ADJUSTMENTS ACQUISITION
------------ ------------ ---------- ----------- ----------- ------------
(TO PAGE 43)
Net sales................... $59,222 $3,776 $62,998 $62,998
Cost of sales............... 37,399 2,243 39,642 39,642
------- ------ ----- ------- -------- -------
Gross profit................ 21,823 1,533 23,356 23,356
------- ------ ----- ------- -------- -------
Selling, general and
administrative expenses... 20,037 1,578 21,615 21,615
Amortization of goodwill and $ (300)(4)
other intangibles......... 756 26 $ 77(1) 859 1,286 (5) 1,845
Restructuring expenses...... 1,172 1,172 1,172
------- ------ ----- ------- -------- -------
21,965 1,604 77 23,646 986 24,632
------- ------ ----- ------- -------- -------
Operating loss.............. (142) (71) (77) (290) (986) (1,276)
------- ------ ----- ------- -------- -------
(7,427)(6)
Interest expense............ 1,489 147(2) 1,636 11,180 (7) 5,389
Amortization of deferred
financing costs........... 43 20(3) 63 277 (8) 340
------- ------ ----- ------- -------- -------
1,532 167 1,699 4,030 5,729
------- ------ ----- ------- -------- -------
Loss before income taxes.... (1,674) (71) (244) (1,989) (5,016) (7,005)
Provision (benefit) for
income taxes.............. 3,875 32 3,907 (5,630)(9) (1,723)
------- ------ ----- ------- -------- -------
Net income (loss)........... $(5,549) $ (103) $(244) $(5,896) $ 614 $(5,282)
======= ====== ===== ======= ======== =======
See notes to unaudited pro forma combined condensed financial statements.
44
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1998
AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
(UNAUDITED)
HISTORICAL PRO FORMA
--------------------- -------------------------
HAIN CELESTIAL ADJUSTMENTS COMBINED
-------- --------- ----------- --------
Net sales........................................ $104,253 $102,197 $206,450
Cost of sales.................................... 61,797 36,638 98,435
-------- -------- -------- --------
Gross profit..................................... 42,456 65,559 108,015
-------- -------- -------- --------
Selling, general and administrative expenses..... 30,659 52,810 83,469
Amortization of goodwill and other intangibles... 1,311 1,308 2,619
-------- -------- -------- --------
31,970 54,118 86,088
-------- -------- -------- --------
Operating income................................. 10,486 11,441 21,927
-------- -------- -------- --------
Interest expense................................. 2,128 437 2,565
Amortization of deferred financing costs......... 474 194 668
-------- -------- -------- --------
2,602 631 3,233
-------- -------- -------- --------
Income before income taxes and extraordinary
charge, net of income tax benefit.............. 7,884 10,810 18,694
Provision for income taxes....................... 3,250 4,054 7,304
-------- -------- -------- --------
Income before extraordinary charge, net of income
tax benefit.................................... $ 4,634 $ 6,756 $ 11,390
======== ======== ======== ========
Earnings per common share before extraordinary
charge, net of income tax benefit:
Basic.......................................... $ 0.45 $ 0.82 $ 0.55
======== ======== ======== ========
Diluted........................................ $ 0.39 $ 0.77 $ 0.50
======== ======== ======== ========
Common equivalent shares weighted:
Basic.......................................... 10,269 8,250 2,186(10) 20,705
Diluted........................................ 11,893 8,732 2,314(10) 22,939
See notes to unaudited pro forma combined condensed financial statements.
45
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1997
AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
(UNAUDITED)
HISTORICAL PRO FORMA
----------------------- --------------------------
HAIN CELESTIAL ADJUSTMENTS COMBINED
-------- --------- ----------- --------
Net sales..................................... $65,353 $79,039 $144,392
Cost of sales................................. 40,781 29,606 70,387
------- ------- --------- --------
Gross profit.................................. 24,572 49,433 74,005
------- ------- --------- --------
Selling, general and administrative
expenses.................................... 19,829 38,471 58,300
Amortization of goodwill and other intangible
assets...................................... 740 1,296 2,036
------- ------- --------- --------
20,569 39,767 60,336
------- ------- --------- --------
Operating income.............................. 4,003 9,666 13,669
------- ------- --------- --------
Interest expense.............................. 1,639 282 1,921
Amortization of deferred financing costs...... 509 211 720
------- ------- --------- --------
2,148 493 2,641
------- ------- --------- --------
Income before income taxes.................... 1,855 9,173 11,028
Provision for income taxes.................... 786 3,509 4,295
------- ------- --------- --------
Net income.................................... $ 1,069 $ 5,664 $ 6,733
======= ======= ========= ========
Earnings per common share:
Basic....................................... $ 0.12 $ 0.70 $ 0.36
======= ======= ========= ========
Diluted..................................... $ 0.12 $ 0.68 $ 0.35
======= ======= ========= ========
Common equivalent shares:
Basic....................................... 8,694 8,107 2,148(10) 18,949
Diluted..................................... 8,993 8,281 2,194(10) 19,468
See notes to unaudited pro forma combined condensed financial statements.
46
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
PRO FORMA STATEMENTS OF OPERATIONS ADJUSTMENTS:
SAHARA ACQUISITION
On January 12, 1999, NNG completed its acquisition of all of the outstanding
capital stock of Sahara Natural Foods, Inc. for an initial purchase price of
$6.8 million, including $.1 million in transaction costs, consisting of a
combination of cash and a $.4 million convertible and an $.8 million
nonconvertible promissory note. The acquisition was accounted for using the
purchase method. Accordingly, the adjustment to record the excess of the
purchase price over the net assets acquired amounted to $6.1 million. This
goodwill is being amortized on a straight-line basis over 40 years.
(1) Goodwill amortization with respect to goodwill acquired in the
acquisition of Sahara. Goodwill is being amortized over a 40 year life.
(2) Increase in interest cost resulting from the increased proceeds of the
NNG term loan (borrowing rate of 8%) and issuance of the promissory
notes (both promissory notes earn interest at a rate of 7.75%) in
connection with the acquisition of Sahara.
(3) Reflects the adjustment to record the increased amortization associated
with NNG's financing costs on its increased term loan.
NNG ACQUISITION
On May 18, 1999, Hain acquired NNG. NNG is a manufacturer and marketer of
premium natural and organic food products primarily under its Health Valley,
Breadshop's and Sahara brands. The aggregate purchase price, including
acquisition costs, amounted to approximately $82 million. The purchase price was
paid by approximately $72 million in cash and the issuance of $10 million in
convertible promissory notes. To finance the cash portion of the acquisition,
Hain entered into a $160 million senior secured loan which provided for a
$30 million revolving credit facility and $130 million in term loans. The
aggregate purchase price paid in excess of net assets acquired amounted to
$60.5 million. The purchase price allocations have been made on a preliminary
basis, subject to adjustment.
(4) Elimination of NNG pro forma combined historical amortization expense of
goodwill.
(5) Goodwill amortization arising from the NNG acquisition (assuming a
40 year life).
(6) Elimination of historical interest expense of Hain and NNG acquisitions
on a pro forma basis, relating to the retired debt instruments.
(7) Adjustment of historical interest expense to reflect the new revolving
credit facility, long term debt and convertible note issued in
connection with the NNG acquisition. The $75 million term loan A bears
interest in accordance with the term loan agreement (7.8% on May 18,
1999); the $50 million term loan B bears interest in accordance with the
term loan agreement (8% on May 18, 1999); the interest charged on the
revolving credit facility is in accordance with the term loan agreement
(7.8% on May 18, 1999) and the $10 million convertible seller notes bear
interest at 7%.
(8) Reflects the adjustment to record the increased amortization associated
with Hain's financing costs on its new senior secured facility offset by
the elimination of NNG's financing cost amortization.
(9) Adjustment of income taxes to give effect to the pro forma pre-tax
adjustments, the nondeductible portion of goodwill and to adjust for the
expected effective income tax rate following the NNG acquisition and the
Celestial merger.
47
CELESTIAL MERGER
(10) Adjustment to reflect the assumed rate of 1.265 shares of Hain common
stock to be issued for each share of Celestial common stock.
(11) The adjustment to the pro forma combined condensed balance sheet as of
December 31, 1999 reflects the reclassification of unamortized deferred
financing costs of Celestial out of other assets to conform to Hain's
financial statement presentation.
(12) Hain and Celestial will incur certain direct transaction costs
associated with the merger including transaction fees for investment
bankers, attorneys, accountants, financial printing and other related
changes. These costs are estimated to be approximately $15 million.
Actual costs could not be determined since the merger has not been
completed. The pro forma combined condensed balance sheet as of
December 31, 1999 includes the effect of these costs as if the merger
occurred at such date. The pro forma combined condensed statement of
operations excludes the effect of these costs.
(13) The adjustment to the pro forma combined condensed balance sheet as of
December 31, 1999 reflects the reclassification of certain accrued
liabilities, wages and interest of Celestial to accounts payable and
accrued expenses to conform with Hain's financial statement
presentation.
(14) On March 5, 2000 Hain entered into a definitive merger agreement with
Celestial. According to the merger agreement each share of Celestial
common stock will be exchanged for 1.265 shares of Hain common stock.
Based on this exchange ratio, the pro forma adjustment reflects the
issuance of approximately 10.6 million shares of Hain's common stock
with a par value of $0.01, as if the merger occurred as of December 31,
1999. The actual shares of Hain common stock to be issued will be
determined at the effective date of the merger based on the actual
shares of Celestial common stock outstanding at such date.
48
ROLE OF FINANCIAL ADVISORS
OPINION OF HAIN'S FINANCIAL ADVISOR
Under a letter agreement dated as of December 27, 1999, Hain engaged Bear
Stearns as its financial advisor in connection with a possible combination with
Celestial. Hain engaged Bear Stearns as its financial advisor based on Bear
Stearns' experience and expertise in transactions similar to the merger. Bear
Stearns, as part of its investment banking business, is continuously engaged in
the valuation of businesses and securities in connection with mergers and
acquisitions, negotiated underwritings, secondary distributions of listed and
unlisted securities, private placements and valuations for corporate and other
purposes.
At the March 2, 2000 meeting of the Hain board of directors, Bear Stearns
delivered its oral opinion, which was subsequently confirmed by delivery of a
written opinion dated March 5, 2000, that, as of the date of the written opinion
and subject to the assumptions, qualifications and limitations set forth in the
written opinion, the exchange ratio was fair, from a financial point of view, to
Hain.
WE HAVE ATTACHED AS ANNEX D TO THIS DOCUMENT THE FULL TEXT OF BEAR STEARNS'
WRITTEN OPINION AND URGE YOU TO READ THE OPINION IN ITS ENTIRETY. THE OPINION
SETS FORTH THE ASSUMPTIONS MADE, MATTERS CONSIDERED, AND QUALIFICATIONS AND
LIMITATIONS ON THE REVIEW UNDERTAKEN BY BEAR STEARNS AND IS INCORPORATED HEREIN
BY REFERENCE. THE SUMMARY OF BEAR STEARNS' OPINION SET FORTH BELOW IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE OPINION.
In reading the discussion of the fairness opinion set forth below, Hain
stockholders should be aware that Bear Stearns' opinion:
- was provided to the Hain board of directors for its benefit and use;
- relates only to fairness, from a financial point of view, of the exchange
ratio to Hain;
- did not constitute a recommendation to the board of directors of Hain in
connection with the transaction;
- does not constitute a recommendation to any Hain stockholder as to how to
vote in connection with the transaction;
- did not address Hain's underlying business decision to pursue the
transaction; and
- did not express any opinion as to the price or range of prices at which
the shares of common stock of Hain and Celestial would trade subsequent to
the announcement of the transaction or as to the price or range of prices
at which the shares of common stock of Hain may trade subsequent to the
consummation of the transaction.
Although Bear Stearns evaluated the fairness, from a financial point of
view, of the exchange ratio to Hain, the exchange ratio itself was determined by
Hain and Celestial through arm's-length negotiations. Bear Stearns provided
advice to Hain during the course of such negotiations. Hain did not provide
specific instructions to, nor place any limitations on, Bear Stearns with
respect to the procedures to be followed or factors to be considered by it in
performing its analyses or providing its opinion.
In arriving at its opinion, Bear Stearns, among other things:
- reviewed a draft of the merger agreement dated March 5, 2000;
- reviewed Hain's Annual Reports to Stockholders and Annual Reports on
Form 10-K for the fiscal years ended June 30, 1997 through 1999, and its
Quarterly Reports on Form 10-Q for the periods ended September 30 and
December 31, 1999;
49
- reviewed certain operating and financial information, including projected
financial results, provided to or discussed with Bear Stearns by Hain's
management relating to Hain's business and prospects;
- reviewed certain estimates of cost saving and other combination benefits
(collectively, the "Synergies") anticipated to result from the
transaction, prepared by the senior managements of Hain and Celestial and
provided to Bear Stearns by Hain's management;
- met with certain members of Hain's senior managements to discuss Hain's
business, operations, historical and projected financial results and
future prospects;
- reviewed Celestial's Annual Reports to Stockholders and Annual Reports on
Form 10-K for the fiscal years ended September 30, 1997 through 1999, and
its Quarterly Report on Form 10-Q for the period ended December 31, 1999;
- reviewed certain operating and financial information, including projected
financial results, provided to or discussed with Bear Stearns by
Celestial's management relating to Celestial's business and prospects;
- met with certain members of Celestial's senior management to discuss
Celestial's business, operations, historical and projected financial
results and future prospects;
- reviewed the historical prices, trading multiples and trading volumes of
Hain and Celestial common stock;
- reviewed publicly available financial data, stock market performance data
and trading multiples of companies which it deemed generally comparable to
Hain and Celestial or otherwise relevant to its analysis;
- reviewed the terms of recent mergers and acquisitions of companies which
it deemed generally comparable to Celestial and the transaction or
otherwise relevant to its analysis; and
- considered other information and conducted other studies, analyses,
inquiries and investigations as it deemed appropriate.
In preparing its opinion, Bear Stearns relied upon and assumed, without
independent verification, the accuracy and completeness of the financial and
other information, including without limitation the projected financial results
and synergy estimates prepared by Hain and Celestial. With respect to Hain's and
Celestial's projected financial results and the potential Synergies that could
be achieved upon consummation of the transaction, Bear Stearns assumed that they
have been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the senior managements of Hain and Celestial as to
the expected future performance of Hain and Celestial, respectively. Bear
Stearns did not assume any responsibility for the independent verification of
any such information or of the projected financial results and synergy estimates
provided to Bear Stearns, and has further relied upon the assurances of the
senior managements of Hain and Celestial that they are unaware of any facts that
would make the information, projected financial results and synergy estimates
provided to Bear Stearns incomplete or misleading.
In arriving at its opinion, Bear Stearns has not performed or obtained any
independent evaluation or appraisal of the assets or liabilities, contingent or
otherwise, of Hain or Celestial, nor has it been furnished with any such
evaluation or appraisal. Bear Stearns has assumed that the transaction:
(i) will qualify as a tax-free "reorganization" within the meaning of
Section 368(a) of the Internal Revenue Code, and (ii) will be accounted for as a
pooling-of-interests in accordance with U.S. GAAP. Bear Stearns also assumed
that the transaction will be consummated in accordance with the terms described
in the merger agreement, without the waiver of any material condition and with
all necessary material consents and approvals having been obtained without any
limitations, restrictions, conditions,
50
amendments or modifications that collectively would be material to its analysis.
Representatives of Hain had advised Bear Stearns, and therefore it was assumed,
that the final terms of the merger agreement did not vary materially from those
set forth in the draft reviewed by Bear Stearns.
In performing its analyses, Bear Stearns made numerous assumptions with
respect to industry performance, general business, economic, market and
financial conditions and other matters, many of which are beyond the control of
Bear Stearns, Hain and Celestial. Any estimates contained in the analyses
performed by Bear Stearns are not necessarily indicative of actual values or
future results, which may be significantly more or less favorable than suggested
by such analyses. Accordingly, such analyses and estimates are inherently
subject to substantial uncertainty. In addition, Bear Stearns' opinion was among
several factors taken into consideration by the Hain board of directors in
making its determination to approve the transaction and the merger agreement.
The following is a brief summary of the material valuation, financial and
comparative analyses considered by Bear Stearns in connection with the rendering
of its opinion. THE FINANCIAL ANALYSES SUMMARIZED BELOW INCLUDE INFORMATION
PRESENTED IN TABULAR FORMAT. IN ORDER TO FULLY UNDERSTAND BEAR STEARNS'
FINANCIAL ANALYSES THE TABLES MUST BE READ TOGETHER WITH THE TEXT OF EACH
SUMMARY. THE TABLES ALONE DO NOT CONSTITUTE A COMPLETE DESCRIPTION OF THE
FINANCIAL ANALYSES. CONSIDERING THE DATA SET FORTH IN THE TABLES BELOW WITHOUT
CONSIDERING THE FULL NARRATIVE DESCRIPTION OF THE FINANCIAL ANALYSES, INCLUDING
THE METHODOLOGIES AND ASSUMPTIONS UNDERLYING THE ANALYSES, COULD CREATE A
MISLEADING OR INCOMPLETE VIEW OF BEAR STEARNS' FINANCIAL ANALYSES.
RELATIVE CONTRIBUTION ANALYSIS. Bear Stearns calculated the relative
contribution by each of Hain and Celestial to the combined company with respect
to various income statement categories of the pro forma combined company,
including 2000 projected and 2001 projected net income and cash net income,
which is calculated by adding goodwill amortization to net income. Bear Stearns
did so in order to compare Hain's relative contribution to the combined company
on these measurements to Hain's pro forma ownership of the combined company,
taking into account each company's outstanding options and warrants on common
stock treated under the treasury stock method and other securities convertible
into common stock. Bear Stearns observed that Hain's share of the combined
equity value would be 62.9% at the exchange ratio based on the closing price of
Hain's common stock of $36.75 as of February 29, 2000. Bear Stearns assumed
$10.0 million in cost benefits from the combination in both 2000 and 2001 when
performing the analysis presented below. Bear Stearns noted that the pro forma
ownership percentage of 62.9% was above Hain's contribution of net income and
cash and income, as set forth in the table below:
RELATIVE CONTRIBUTION PERCENTAGE
-----------------------------------------------------
CASH NET
NET INCOME INCOME
OWNERSHIP ------------------- -------------------
SPLIT 2000P 2001P 2000P 2001P
--------- -------- -------- -------- --------
Hain................................................... 62.9% 51.3% 56.1% 55.7% 58.9%
Cost benefits.......................................... -- 17.2 12.7 14.6 11.3
Celestial.............................................. 37.1 31.5 31.2 29.7 29.8
SELECTED COMPARABLE COMPANIES ANALYSIS. Bear Stearns compared certain
operating, financial, trading and valuation information for Celestial to certain
publicly available operating, financial, trading and valuation information for
eight selected companies, including Hain, which in Bear Stearns' judgment were
reasonably comparable to Celestial for purposes of this analysis. These
companies were:
- - Ben & Jerry's Homemade, Inc. - Horizon Organic Holding Corporation
- - Glacier Water Services, Inc. - Odwalla, Inc.
- - Hain - Saratoga Beverage Group, Inc.
- - Hansen Natural Corporation - Vermont Pure Holdings, Ltd.
51
Bear Stearns utilized earnings forecasts for all of these companies other
than Hain from publicly available data as well as First Call and selected Wall
Street equity research reports. For Hain, Bear Stearns utilized management
forecasts. Bear Stearns' analysis was based on closing stock prices as of
February 29, 2000. Bear Stearns noted that, based on Hain's February 29, 2000
closing price of $36.75, a purchase price of $46.49 per share was implied. Bear
Stearns observed that the implied purchase price multiples produced a 2000 net
income multiple that was within the range and below the harmonic mean for the
comparable companies, while the 2001 net income multiple and the 2000 EBITDA
multiple were within the range, but above the harmonic mean. A summary of the
purchase price multiples, assuming $10.0 million in cost benefits from the
combination for both 2000 and 2001, and comparison to the comparable companies'
projected multiples on the bases of equity value to net income for fiscal years
2000 and 2001 and enterprise value to EBITDA based on estimates for fiscal year
2000, is set forth below:
ENTERPRISE VALUE/
EQUITY VALUE/NET INCOME EBITDA
--------------------------------------- -----------------
2000P 2001P 2000P
------------------ ------------------ -----------------
Celestial purchase price multiples................... 23.0x 20.1x 13.1x
Range of multiples for comparable companies.......... 18.6x-37.9x 15.3x-27.2x 5.7x-16.9x
Harmonic mean for comparable companies............... 24.1x 19.6x 7.8x
Bear Stearns also noted that none of the comparable companies are identical
to Celestial or the combined company and, accordingly, any analysis of
comparable companies necessarily involved complex consideration and judgments
concerning differences in financial and operating characteristics and other
factors that would necessarily affect the value of Celestial to Hain versus the
trading values of the companies to which Celestial was being compared.
COMPARABLE TRANSACTIONS ANALYSIS. Bear Stearns reviewed certain
publicly-available financial information related to nine merger and acquisition
transactions completed in the natural and organic foods and beverage categories
since January 1, 1997 that it deemed generally comparable to the transaction.
Transactions reviewed by Bear Stearns included:
TARGET ACQUIROR
- ------ --------
Powerbar Nestle S.A.
Balance Bar Company Kraft Foods
McKesson Water Products Groupe Danone
Worthington Foods, Inc. Kellogg Company
Hain (minority interest only) H.J. Heinz Company
Chock Full O' Nuts Corporation Sara Lee Corporation
Pillsbury Company Brands B&G Foods, Inc.
AquaPenn Spring Water Company, Inc. Groupe Danone
Snapple Beverage Corporation Triarc Beverage Holdings Corporation
For each of the comparable transactions, Bear Stearns reviewed certain
publicly-available financial information for the acquired companies including,
to the extent available, revenue, EBITDA, EBIT, net income and certain valuation
statistics, as adjusted for certain extraordinary and non-recurring items. The
ratios of the enterprise values of the acquired companies to their respective
latest twelve months ("LTM") revenues, EBITDA and EBIT and the ratio of the
equity value of the acquired companies to their respective LTM net income are
listed in the table below and are compared to the implied purchase price
multiples for Celestial assuming fiscal year 2000 projections and no cost
benefits from the combination, based on the implied purchase price of $46.49 per
share. Bear Stearns observed that the implied purchase price of $46.49 per share
produced revenue multiples that are above the range of revenue multiples paid in
comparable transactions, net income multiples that are within the range and
52
equal to the harmonic mean and EBITDA and EBIT multiples that are within the
range and below the harmonic mean. Bear Stearns also noted that there was
limited data available for the selected transactions. A summary of the
aforementioned multiples is set forth below:
ENTERPRISE VALUE/
EQUITY VALUE/ ------------------------------------------------------------
NET INCOME REVENUES EBITDA EBIT
------------------ ------------------ ------------------ ------------------
Celestial purchase price multiples......... 34.4x 3.58x 18.5x 22.2x
Range of multiples for comparable
transactions............................. 21.4x-63.9x 0.57x-2.98x 14.5x-30.7x 20.3x-60.0x
Harmonic mean for comparable
transactions............................. 34.4x 1.36x 20.3x 33.7x
Bear Stearns also noted that none of the precedent transactions were
identical to the merger of Hain and Celestial and, accordingly, any analysis of
the precedent transactions necessarily involved complex considerations and
judgments concerning differences in industry dynamics, stock market valuation
parameters, financial and operating characteristics and various other factors
that would necessarily affect the purchase price multiples in the transaction as
compared to the purchase price multiples for the precedent transactions.
PRO FORMA MERGER ANALYSIS. Bear Stearns reviewed and analyzed certain pro
forma financial impacts of the transaction on holders of Hain common stock based
on the following:
- the exchange ratio;
- the management forecasts for Hain and Celestial, respectively;
- an assumption for analytical purposes that the combined company would
realize cost benefits from the combination on a pre-tax basis of either
(i) $4.5 million in both 2000 and 2001 or (ii) $10.0 million in both 2000
and 2001;
- an assumption for analytical purposes that there would be no financial
statement impact of potential restructuring charges or other one-time
items associated with the transaction; and
- pooling-of-interests accounting treatment for the transaction.
Bear Stearns analyzed the potential pro forma effects of the transaction on
Hain's and Celestial's projected earnings per share as derived through Generally
Accepted Accounting Principles ("GAAP EPS") and projected cash earnings per
share ("Cash EPS") which is calculated by adding amortization of goodwill per
share to GAAP EPS. This analysis indicated that when either of the
aforementioned levels of cost benefits from the combination were assumed the
transaction would be accretive to Hain's GAAP EPS and Hain's Cash EPS in 2000
and 2001. The actual results achieved by the combined company may vary from
projected results and any variations may be material.
OTHER ANALYSES. Bear Stearns conducted other analyses as it deemed
necessary, including reviewing historical and projected financial and operating
data for both Hain and Celestial and pro forma balance sheet data for the
combined company, analyzing selected Wall Street equity research reports on, and
earnings and other estimates for, each of Hain and Celestial and various of
their business segments / product lines, reviewing the relative stock price
performance of Hain and Celestial versus various stock market indices, comparing
the coverage universe of the research analysts who monitor each of Hain and
Celestial, reviewing and comparing certain financial data and valuation
parameters for each of Hain and Celestial and various of their business
segments, and reviewing available information regarding the institutional
holdings of Hain common stock and Celestial common stock.
The preparation of a fairness opinion is a complex process and involves
various judgments and determinations as to the most appropriate and relevant
assumptions and financial analyses and the application of these methods to the
particular circumstances involved. Such an opinion is therefore not
53
readily susceptible to partial analysis or summary description, and taking
portions of the analyses set out above, without considering the analysis as a
whole, would, in the view of Bear Stearns, create an incomplete and misleading
picture of the processes underlying the analyses considered in rendering the
Bear Stearns opinion. Bear Stearns did not form an opinion as to whether any
individual analysis or factor, positive or negative, considered in isolation,
supported or failed to support the Bear Stearns opinion. In arriving at its
opinion, Bear Stearns considered the results of its analyses and did not
attribute particular weight to any one analysis or factor. The analyses
performed by Bear Stearns, particularly those based on estimates and forecasts,
are not necessarily indicative of actual values or actual future results, which
may be significantly more or less favorable than suggested by such analyses.
Such analyses were prepared solely as part of Bear Stearns' analyses of the
fairness, from a financial point of view, of the exchange ratio to Hain.
Pursuant to the terms of its engagement letter with Bear Stearns, Hain has
agreed to pay Bear Stearns a fee, part of which became payable upon the delivery
of the Bear Stearns opinion and the balance of which will become payable upon
consummation of the transaction or a similar business combination between Hain
and Celestial. In addition, Hain has agreed to reimburse Bear Stearns for all
reasonable out-of-pocket expenses, subject to a stated maximum, incurred by Bear
Stearns in connection with its engagement and the transaction, including
reasonable fees and disbursements of its legal counsel. Hain has also agreed to
indemnify Bear Stearns against certain liabilities in connection with its
engagement, including certain liabilities under the federal securities laws.
Bear Stearns has been previously engaged by Hain to provide certain
investment banking and financial advisory services for which it received
customary compensation. In the ordinary course of business, Bear Stearns may
actively trade the equity and debt securities of Hain and/or Celestial for its
own account and for the account of its customers and, accordingly, may at any
time hold a long or short position in those securities.
54
OPINION OF CELESTIAL'S FINANCIAL ADVISOR
On March 5, 2000, Goldman Sachs delivered its written opinion to the
Celestial board that, as of such date, the exchange ratio was fair from a
financial point of view to the holders of Celestial common stock.
THE FULL TEXT OF THE WRITTEN OPINION OF GOLDMAN SACHS, DATED MARCH 5, 2000,
WHICH SETS FORTH ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE
REVIEW UNDERTAKEN IN CONNECTION WITH THE OPINION, IS ATTACHED AS ANNEX E AND IS
INCORPORATED BY REFERENCE IN THIS JOINT PROXY STATEMENT/ PROSPECTUS. YOU SHOULD
READ THE OPINION IN ITS ENTIRETY.
In connection with its opinion, Goldman Sachs reviewed, among other things,
- the merger agreement;
- annual reports to stockholders and annual reports on Form 10-K of
Celestial for the five fiscal years ended September 30, 1999;
- annual reports to stockholders and annual reports on Form 10-K of Hain for
the five fiscal years ended June 30, 1999;
- interim reports to stockholders and quarterly reports on Form 10-Q of
Celestial and Hain;
- other communications from Celestial and Hain to their respective
stockholders; and
- internal financial analyses and forecasts for Celestial and Hain prepared
by their respective managements including certain cost savings and
operating synergies projected by the management of Celestial and Hain to
result from the merger (the "Synergies").
Goldman Sachs also held discussions with members of the senior management of
Celestial and Hain regarding their assessment of the strategic rationale for,
and the potential benefits of, the merger and the past and current business
operations, financial condition and future prospects of their respective
companies. In addition, Goldman Sachs:
- reviewed the reported price and trading activity for Celestial common
stock and Hain common stock;
- compared financial and stock market information for Celestial and Hain
with similar information for other companies the securities of which are
publicly traded;
- reviewed the financial terms of recent business combinations in the food
industry specifically and in other industries generally; and
- performed other studies and analyses Goldman Sachs considered appropriate.
Goldman Sachs relied upon the accuracy and completeness of all of the
financial and other information discussed with or reviewed by it and assumed
such accuracy and completeness for purposes of rendering its opinion. In that
regard, Goldman Sachs has assumed, with the consent of Celestial's board, that
the internal financial forecasts prepared by the management of Hain and the
Synergies have been reasonably prepared on a basis reflecting the best currently
available estimates and judgments of Celestial and Hain. Goldman Sachs did not
make an independent evaluation or appraisal of the assets and liabilities of
Celestial or Hain or any of their respective subsidiaries and was not furnished
with any such evaluation or appraisal. Goldman Sachs assumed, with the consent
of Celestial's board, that the merger will be accounted for as a
pooling-of-interests under generally accepted accounting principles. Goldman
Sachs was not requested to solicit, and did not solicit, interest from other
parties with respect to an acquisition of or other business combination with
Celestial. The advisory services and opinion of Goldman Sachs were provided for
the information and assistance of the board of directors of Celestial in
connection with its consideration of the merger, and the opinion
55
does not constitute a recommendation as to how any holder of Celestial common
stock should vote with respect to the merger.
The following is a summary of the material financial analyses used by
Goldman Sachs in connection with providing its opinion to the Celestial board of
directors on March 5, 2000.
THE FOLLOWING SUMMARIES OF FINANCIAL ANALYSES INCLUDE INFORMATION PRESENTED
IN TABULAR FORMAT. YOU SHOULD READ THESE TABLES TOGETHER WITH THE TEXT OF EACH
SUMMARY.
(1) EXCHANGE RATIO HISTORY. Goldman Sachs calculated the ratio of the
average market price of Celestial common stock to the average market price of
Hain common stock over selected periods ending on March 2, 2000.
PERIOD HIGH LOW AVERAGE
- ------ -------- -------- --------
March 2, 2000 Closing Price........................... -- -- 0.85x
1 Month ending March 2, 2000.......................... 0.97x 0.71x 0.88x
3 Months ending March 2, 2000......................... 1.04x 0.71x 0.92x
6 Months ending March 2, 2000......................... 1.04x 0.65x 0.85x
1 Year ending March 2, 2000........................... 1.88x 0.64x 0.94x
3 Years ending March 2, 2000.......................... 2.67x 0.64x 1.29x
5 Years ending March 2, 2000.......................... 3.89x 0.64x 1.87x
(2) HISTORICAL PREMIUM ANALYSIS. Goldman Sachs calculated the implied
premium being paid in the merger based on the exchange ratio of 1.265 shares of
Hain common stock for each share of Celestial common stock relative to historic
implied exchange ratios based on Celestial and Hain common stock prices on the
following dates, or the average prices over the following periods:
IMPLIED
EXCHANGE RATIO PREMIUM
DATE/PERIOD (CELESTIAL TO HAIN) (DISCOUNT)
- ----------- ------------------- ----------
March 2, 2000..................................... 0.85x 48.8%
February 18, 2000................................. 0.92x 37.3%
1 Month ending March 2, 2000 Average.............. 0.88x 43.8%
6 Months ending March 2, 2000 Average............. 0.85x 48.8%
1 Year ending March 2, 2000 Average............... 0.94x 34.6%
3 Years ending March 2, 2000 Average.............. 1.29x (1.9%)
(3) SELECTED COMPANIES ANALYSIS. Goldman Sachs reviewed and compared
selected financial information, ratios and public market multiples for Celestial
and Hain to corresponding financial information, ratios and public market
multiples for the following 15 publicly traded middle capitalization food
companies:
- - American Italian Pasta Company; - Keebler Foods Company;
- - Aurora Foods Inc.; - Lance, Inc.;
- - Dean Foods Company; - McCormick & Company, Incorporated;
- - Del Monte Foods Company; - Riviana Foods Inc.;
- - Flowers Industries Inc.; - Suiza Foods Corporation;
- - International Home Foods, Inc.; - Tootsie Roll Industries, Inc.; and
- - International Multifoods Corp.; - Vlasic Foods International Inc.;
- - The J.M. Smucker Company;
56
and for the following 15 publicly traded large capitalization food companies:
- - Bestfoods; - Kellogg Company;
- - Cadbury Schweppes, plc; - Nabisco, Inc.;
- - Campbell Soup Company; - Nestle S.A.;
- - ConAgra, Inc.; - Quaker Oats Co.;
- - Groupe Danone; - Sara Lee Corp.;
- - General Mills, Inc.; - Wm. Wrigley Jr. Company; and
- - H.J. Heinz Company; - Unilever plc.
- - Hershey Foods Corporation;
The selected companies were chosen because they are publicly traded
companies with operations that for purposes of analysis may be considered
similar to Celestial and/or Hain. Goldman Sachs calculated and compared various
financial multiples and ratios. The multiples and ratios were calculated using
the closing price for the common stock of Celestial and Hain and each of the
selected companies on March 2, 2000 and were based on the most recent publicly
available information. Goldman Sachs' analyses of the selected companies
compared the following to the results for Celestial and Hain:
- closing share price on March 2, 2000 as a percentage of 52-week high share
price;
- enterprise value, which is the market value of common equity PLUS debt
LESS cash, as a multiple of latest 12 months sales;
- enterprise value as a multiple of latest 12 months earnings before
interest, taxes, depreciation and amortization, or EBITDA;
- enterprise value as a multiple of latest 12 months earnings before
interest and taxes, or EBIT;
The results of these analyses are summarized as follows:
SELECTED PUBLICLY TRADED SELECTED PUBLICLY TRADED
MIDDLE CAPITALIZATION LARGE CAPITALIZATION
FOOD COMPANIES FOOD COMPANIES
---------------------------------- -----------------------------------
PERCENTAGE/ MULTIPLE RANGE MEDIAN MEAN RANGE MEDIAN MEAN HAIN CELESTIAL
- -------------------- ------------ -------- -------- ------------ -------- -------- -------- ---------
March 2, 2000 share price as
a percentage of 52-week
high share price........... 20.4%-89.5% 65.9% 61.0% 51.8%-93.3% 66.4% 67.9% 92.3% 95.5%
Enterprise value to latest 12
months sales............... 0.2x-3.3x 0.8x 1.0x 0.6x-3.4x 1.6x 1.7x 2.8x 2.5x
Enterprise value to latest 12
months EBITDA.............. 5.3x-11.3x 6.6x 6.9x 7.4x-14.5x 9.2x 9.6x 19.0x 14.7x
Enterprise value to latest 12
months EBIT................ 6.7x-12.5x 8.9x 9.3x 8.6x-16.6x 11.8x 12.2x 22.7x 17.7x
Goldman Sachs also compared the selected companies' stock prices as a
multiple of their respective estimated calendar years 2000 and 2001 earnings to
similar multiples for Celestial and Hain. The estimates for the selected
companies were provided by Institutional Brokers Estimate System, or IBES. The
results of these analyses are summarized as follows:
SELECTED PUBLICLY TRADED SELECTED PUBLICLY TRADED
MIDDLE CAPITALIZATION LARGE CAPITALIZATION
FOOD COMPANIES FOOD COMPANIES
-------------------------------- --------------------------------
MULTIPLE RANGE MEDIAN MEAN RANGE MEDIAN MEAN HAIN CELESTIAL
- -------- ---------- -------- -------- ---------- -------- -------- -------- ---------
Estimated Price to earnings for
calendar year 2000................. 4.3x-17.5x 10.7x 11.1x 9.0x-21.8x 15.3x 15.8x 30.8x 19.9x
Estimated Price to earnings for
calendar year 2001................. 3.7x-15.5x 9.6x 9.8x 8.2x-20.0x 13.8x 14.3x 22.0x 15.8x
Goldman Sachs also compared the selected companies' estimated 5-year
earnings per share compound annualized growth rates, as estimated by IBES, and
the ratio of the selected companies' stock prices as a multiple of their
respective estimated calendar year 2001 earnings to their respective
57
estimated 5-year growth rates, to the results for Celestial and Hain. The
results of these analyses are summarized as follows:
SELECTED PUBLICLY TRADED SELECTED PUBLICLY TRADED
MIDDLE CAPITALIZATION LARGE CAPITALIZATION
FOOD COMPANIES FOOD COMPANIES
---------------------------------- ---------------------------------
PERCENTAGE/ MULTIPLE RANGE MEDIAN MEAN RANGE MEDIAN MEAN HAIN CELESTIAL
- -------------------- ----------- -------- -------- ----------- -------- -------- -------- ---------
IBES estimated 5-year EPS
compound annualized growth
rate......................... 7.0%-15.0% 13.0% 12.1% 9.0%-11.4% 10.0% 10.3% 28.5% 28.0%
Price to IBES estimated 2001
earnings to 5-year growth
rate......................... 0.2x-1.5x 0.9x 0.8x 0.7x-2.0x 1.4x 1.4x 0.8x 0.6x
(4) SELECTED TRANSACTIONS ANALYSIS. Goldman Sachs compared certain
information for 183 selected transactions in the branded food industry to
similar information for the proposed merger, based on Hain's stock price as of
March 2, 2000, including:
- Leveraged consideration as a multiple of target's latest twelve months
sales;
- Leveraged consideration as a multiple of target's latest twelve months
EBITDA; and
- Leveraged consideration as a multiple of target's latest twelve months
EBIT.
The results of these analyses are summarized as follows:
SELECTED TRANSACTIONS IN THE BRANDED
FOOD INDUSTRY
LATEST TWELVE- --------------------------------------------------
MONTH MULTIPLE RANGE MEAN MEDIAN HAIN/CELESTIAL
- ------------------------------------- ----------- -------- -------- --------------
Sales................................ 0.10x-4.50x 1.23x 1.00x 3.8x
EBITDA............................... 2.2x-28.4x 10.8x 9.5x 22.1x
EBIT................................. 2.8x-41.6x 14.3x 12.4x 26.6x
(5) CONTRIBUTION ANALYSIS. Goldman Sachs analyzed the relative
contribution of Celestial and Hain to the combined company resulting from the
merger based on selected historical and estimated future operating and financial
information for Celestial, Hain and the combined company based on Celestial's
and Hain's managements' forecasts. Historical figures did not reflect
Celestial's non-recurring charges taken in September 1999. The forecasted
figures are based on Hain's fiscal year. The results of these analyses are
summarized as follows:
HAIN CELESTIAL
CONTRIBUTION TO CONTRIBUTION TO
COMBINED COMPANY COMBINED COMPANY
---------------- ----------------
Latest 12 months sales..................... 70.8% 29.2%
Fiscal year 2000 estimated sales........... 72.6% 27.4%
Fiscal year 2001 estimated sales........... 73.3% 26.7%
Latest 12 months EBITDA.................... 67.4% 32.6%
Fiscal year 2000 estimated EBITDA.......... 68.4% 31.6%
Fiscal year 2001 estimated EBITDA.......... 68.5% 31.5%
Latest 12 months EBIT...................... 67.5% 32.5%
Fiscal year 2000 estimated EBIT............ 68.3% 31.7%
Fiscal year 2001 estimated EBIT............ 68.7% 31.3%
Latest 12 months net income................ 59.9% 40.1%
Fiscal year 2000 estimated net income...... 62.0% 38.0%
Fiscal year 2001 estimated net income...... 64.9% 35.1%
(6) PRO FORMA MERGER ANALYSIS. Goldman Sachs prepared pro forma analyses
of the financial impact of the merger using estimates provided by the
managements of Celestial and Hain. For the
58
fiscal years 2000 and 2001, Goldman Sachs compared the estimated earnings per
share of Hain common stock on a standalone basis to the estimated earnings per
share of the common stock of the combined company on a pro forma basis. Goldman
Sachs performed this analysis using three scenarios: without the achievement of
Synergies, assuming the achievement of $5 million in annual pre-tax Synergies
and assuming the achievement of $10 million in annual pre-tax Synergies. Based
on such analyses, the merger would be accretive to the holders of Hain common
stock in both fiscal years 2000 and 2001 if there are Synergies.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or of the summary set forth above, without considering
the analyses as a whole, could create an incomplete view of the processes
underlying Goldman Sachs' opinion. In arriving at its fairness determination,
Goldman Sachs considered the results of all such analyses. No company or
transaction used in the above analyses as a comparison is directly comparable to
Celestial or Hain or the contemplated merger.
The analyses were prepared solely for purposes of providing an opinion to
the Celestial board of directors as to the fairness from a financial point of
view to the holders of Celestial common stock of the exchange ratio. The
analyses do not purport to be appraisals or necessarily reflect the prices at
which businesses or securities actually may be sold. Analyses based upon
forecasts of future results are not necessarily indicative of actual future
results, which may be significantly more or less favorable than suggested by
such analyses. Because such analyses are inherently subject to uncertainty,
being based upon numerous factors or events beyond the control of the parties or
their respective advisors, none of Celestial, Hain, Goldman Sachs or any other
person assumes responsibility if future results are materially different from
those forecast.
As described above, Goldman Sachs' opinion to the Celestial board of
directors was one of many factors taken into consideration by the Celestial
board of directors in making its determination to approve the merger. The
foregoing summary does not purport to be a complete description of the analyses
performed by Goldman Sachs.
Goldman Sachs, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes.
Goldman Sachs provides a full range of financial advisory and securities
services and, in the course of its normal trading activities, may from time to
time effect transactions and hold securities, including derivative securities,
of Celestial or Hain for its own account and for the accounts of customers.
Goldman Sachs may provide investment banking services to Hain and its
subsidiaries in the future.
Pursuant to a letter agreement dated December 3, 1999, Celestial engaged
Goldman Sachs to act as its financial advisor in connection with the possible
sale of, or a business combination involving, all or a portion of the stock or
assets of Celestial. Pursuant to the terms of this letter agreement, Celestial
has agreed to pay Goldman Sachs upon the consummation of the merger a fee of
1.5% of the aggregate consideration paid in the merger. Celestial also has
agreed to reimburse Goldman Sachs for its reasonable out-of-pocket expenses,
including attorneys' fees, and to indemnify Goldman Sachs against certain
liabilities, including certain liabilities under the federal securities laws.
59
INTERESTS OF INSIDERS IN THE MERGER
In considering the recommendations of Hain's board of directors and
Celestial's board of directors with respect to the merger proposals, Hain
stockholders and Celestial stockholders should be aware that some directors and
members of management of Celestial have interests in the merger that are in
addition to their interests as Celestial stockholders generally. The names and
titles of the individuals who are directors and/or executive officers of
Celestial and who are known to have these additional interests are listed on the
table located on page 61 of this document. Celestial's board of directors was
aware of these interests and considered them, among other matters, in approving
the merger.
INTERESTS OF CELESTIAL OFFICERS AND DIRECTORS
HAIN'S BOARD OF DIRECTORS. The merger agreement provides that, as of the
effective time of the merger until the next regularly scheduled meeting of the
Hain stockholders, three Celestial designees will be added to our board of
directors. Mo Siegel, Marina Hahn and Gregg A. Ostrander, who are current
members of Celestial's board of directors, are to become members of our board of
directors pursuant to this provision. Any other directors designated by
Celestial will be reasonably acceptable to Hain's board of directors, in its
sole discretion. Upon the election of the three directors to be designated by
Celestial, Hain's board will consist of 11 directors. The Celestial designees to
our board will be entitled to compensation customarily paid to our board
members.
STOCK OPTIONS AND STOCK AWARDS. Pursuant to the terms of the Celestial
stock option and stock award plans, as a result of the merger, all unvested
Celestial options will become fully vested and exerciseable and the restrictions
on awards of restricted stock will lapse. The number of unvested Celestial
options and the number of shares of Celestial common stock underlying awards of
restricted stock that will become nonforfeitable and transferrable as a result
of the merger that are held by the executive officers of Celestial are set forth
in the table on page 61 of this joint proxy statement/ prospectus.
SEVERANCE. Pursuant to the terms of Celestial's Retention and Severance
Policy For Key Employees certain of Celestial's executive officers are eligible
to receive a performance bonus in the event they remain employed by Celestial
through September 30, 2000 or their position is eliminated prior to that date.
In addition, such key employees may be eligible to receive severance
compensation in the event they experience a significant reduction in
responsibility or are terminated under certain circumstances following the
merger. The table below includes the benefits that may become payable to
Celestial's executive officers pursuant to the Retention and Severance Policy.
INDEMNIFICATION AND INSURANCE. Under the merger agreement, Hain has agreed
to, or cause the surviving corporation in the merger to:
- for a period of ten years after the effective time of the merger, maintain
in effect the current provisions regarding indemnification of officers and
directors contained in the certificate of incorporation and by-laws, prior
to the effective time of the merger, of Celestial and each of its
subsidiaries and any directors, officers or employees indemnification
agreements, prior to the effective time of the merger, of Celestial and
its subsidiaries;
- for a period of six years after the effective time of the merger,
indemnify the directors and officers, prior to the effective time of the
merger, of Celestial to the fullest extent to which Hain or the surviving
corporation is permitted to indemnify such officers and directors under
its certificate of incorporation and by-laws and the DGCL; and
- for a period of ten years after the effective time of the merger, maintain
in effect the current policies of directors' and officers' liability
insurance and fiduciary liability insurance, prior to the effective time
of the merger, maintained by Celestial with respect to claims arising from
facts or
60
events which occurred on or before the effective time of the merger. Hain,
however, may substitute in place of such policies, policies of at least
the same coverage and amounts containing terms and conditions which are,
in the aggregate, no less advantageous to the insured in any material
respect.
See "Principal Provisions of The Merger Agreement--Principal
Covenants--Benefits Continuation" for a description of the benefits provided by
the merger agreement for employees of Celestial generally.
The following table shows the maximum benefits that may become payable to
the executive officers of Celestial (other than Messrs. Siegel and Hughes) as a
consequence of the merger. An executive officer's employment must be terminated
to receive the dollar amounts listed. The accelerated vesting of the stock
options and restricted stock shown will occur regardless of termination of
employment. The amounts shown assume a merger date of May 30, 2000 and that the
executive officer's employment is terminated on that date (other than for
cause).
SEVERANCE OPTIONS
BENEFITS BONUS BENEFITS TOTAL CASH VESTED
---------- -------- -------- ---------- --------
Kerin Franklin................................ $ 101,200 $ 72,864 $ 30,360 $ 204,424 14,293
Vice President Research & Development
Walter Freese................................. $ 165,000 $132,000 $ 49,500 $ 346,500 32,534
General Manager
Marie Gambon.................................. $ 124,701 $ 89,785 $ 37,410 $ 251,896 21,500
Vice President Human Resources
James Leighton................................ $ 150,000 $108,000 $ 45,000 $ 303,000 30,000
Vice President Operations
David Rosenthal............................... $ 125,000 $ 90,000 $ 37,500 $ 252,500 5,000
Senior Director of Finance
In lieu of benefits under Celestial's Retention and Severance Policy,
Mo Siegel, Celestial's chairman, and Steve Hughes, Celestial's Chief Executive
Officer, have agreements with Celestial entitling them to certain severance
benefits if their employment is terminated without cause following the merger
(or if either resign following the merger for good reason, as defined in their
respective agreements). Mr. Siegel would be entitled to two years of salary
($500,000), coverage for Mr. Siegel and his family under Celestial's health
insurance policies for life, life insurance coverage for up to two years,
payments for accrued vacation and payments equal to two years of certain other
benefits received by Celestial officers. Mr. Hughes would be entitled to two
years of salary (approximately $685,000), two times Mr. Hughes' average bonus
for the last two years (approximately $158,000) plus any accrued bonus, health
and life insurance coverage for up to two years, payments for accrued vacation
and payments equal to two years of certain other benefits received by Celestial
officers. In addition, 15,000 shares of restricted stock held by Mr. Hughes and
options to acquire 191,665 shares of Celestial common stock held by Mr. Hughes
will vest as a result of the merger.
61
PRINCIPAL PROVISIONS OF THE MERGER AGREEMENT
THE FOLLOWING IS A SUMMARY OF THE MERGER AGREEMENT, A COPY OF WHICH IS
ATTACHED AS ANNEX A AND IS INCORPORATED INTO THIS JOINT PROXY
STATEMENT/PROSPECTUS BY REFERENCE. STOCKHOLDERS OF HAIN AND CELESTIAL ARE URGED
TO READ THE MERGER AGREEMENT IN ITS ENTIRETY FOR A MORE COMPLETE DESCRIPTION OF
THE TERMS AND CONDITIONS OF THE MERGER.
GENERAL
The merger agreement contemplates the merger of Hain Acquisition Corp., a
wholly owned subsidiary of Hain, with and into Celestial, with Celestial
surviving the merger. The merger will become effective at the date and time that
the certificate of merger is filed with the Secretary of State of the State of
Delaware. We anticipate that we will make this filing as soon as practicable
after the last of the conditions precedent to the merger, as set forth in the
merger agreement, has been satisfied or waived. The merger agreement obligates
Hain to have the Hain common stock to be issued in connection with the merger
approved for listing on the Nasdaq National Market, subject to official notice
of issuance, prior to the effective time of the merger.
CONSIDERATION TO BE RECEIVED IN THE MERGER
At the effective time of the merger, each issued and outstanding share of
Celestial common stock, together with the associated rights, which are described
in detail under the heading "Comparison of Stockholder Rights--Stockholder
Rights Plan," will be converted into the right to receive 1.265 shares of Hain
common stock. However, each share of Celestial common stock, together with the
associated rights, owned by Celestial or any of Celestial's subsidiaries will be
canceled and retired. Cash will be paid in lieu of any fractional Hain common
stock that would otherwise be issuable to each holder of Celestial common stock
together with the associated rights, who would otherwise have been entitled to a
fraction of Hain Common Stock pursuant, will be entitled to receive an amount of
cash rounded to the nearest cent (without interest) determined by multiplying
the fair market value of a share of Celestial common stock (as determined by
Celestial's board of directors at the effective time of the merger) by the
fractional share interest to which that holder would otherwise have been
entitled.
EXCHANGE OF SHARES
Subject to the terms and conditions of the merger agreement, Hain will
deposit with an exchange agent designated by Hain and reasonably acceptable to
Celestial, as needed, certificates representing the Hain common stock issuable
in exchange for the outstanding Celestial common stock and will from time to
time deposit cash in an amount required to be paid for fractional Hain common
stock and other distributions, if any, on the Hain common stock. As promptly as
practicable after the effective time of the merger, Hain will send, or will
cause the exchange agent to send, to each holder of record of Celestial common
stock a letter of transmittal and instructions. Thereafter, holders of Celestial
common stock may surrender their certificates to the exchange agent, together
with a duly executed letter of transmittal. In exchange for such share
certificates, holders will receive Hain common stock certificates representing
such number of shares as described under "--Consideration to be Received in the
Merger." Holders of unexchanged Celestial common stock will not be entitled to
receive any dividends or distributions payable by Hain with respect to those
shares of Hain common stock represented by such unexchanged Celestial
certificates until the applicable Celestial certificate is surrendered. Upon
surrender, however, subject to applicable laws, those holders of whole shares
will receive distributions, without interest, together with cash in lieu of
fractional shares.
Hain will not issue fractional common stock to holders of Celestial common
stock. For each fractional share that would otherwise be issued, the exchange
agent will pay the relevant holder an
62
amount in cash equal to the fractional part of a share of Hain common stock as
determined under the merger agreement.
PRINCIPAL REPRESENTATIONS AND WARRANTIES
The merger agreement contains a number of reciprocal representations and
warranties of Hain and Celestial as to, among other things, due incorporation
and good standing, corporate authority to enter into the contemplated
transactions, required consents and filings with government entities, absence of
conflicts with organizational documents and material agreements, capitalization,
reports filed with the SEC, financial statements, absence of undisclosed
liabilities, litigation, material changes or events, compliance with laws, title
to properties, tax matters, finder's fees, intellectual property, labor matters,
information supplied for use in this document and the required stockholder
approvals. Many of these representations and warranties are qualified by
material adverse effect, which, for purposes of the merger agreement, means,
with respect to Hain or Celestial, as the case may be, a material adverse effect
on the general affairs, management, business, operations or condition (financial
or otherwise) of either party and its subsidiaries, taken as a whole.
PRINCIPAL COVENANTS
CONDUCT OF BUSINESS PENDING THE MERGER. Pursuant to the merger agreement,
Celestial has agreed that from the date of the merger agreement until the
effective time of the merger, except as consented to in writing by Hain, which
consent is not to be unreasonably withheld or delayed, Celestial will, and will
cause each Celestial subsidiary to, conduct its business in the ordinary course
consistent with past practice and will use all commercially reasonable efforts
to:
- keep intact its present business organization;
- maintain the availability of the services of its officers and employees;
- maintain existing satisfactory relationships with its customers,
distributors, suppliers and others having business relationships with it;
and
- take no action which would materially impair the ability of the parties to
consummate the merger or the other transactions contemplated by the merger
agreement.
Without limiting the generality of the foregoing, except as otherwise
expressly provided in the merger agreement, prior to the effective time of the
merger, Celestial will not, nor will it permit any of its subsidiaries to,
without the prior written consent of Hain, which consent is not to be
unreasonably withheld or delayed:
(a) amend its certificate of incorporation or organization or bylaws;
(b) authorize for issuance, issue, sell, deliver, grant any options for,
or otherwise agree or commit to issue, sell or deliver any shares of any
class of its capital stock or any securities convertible into shares of any
class of its capital stock (except for the exercise of currently outstanding
stock options and except pursuant to the 1994 Non-Employee Director
Compensation Plan pursuant to elections currently in effect);
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its
capital stock or purchase, redeem or otherwise acquire any shares of
Celestial's own capital stock or of any of Celestial's subsidiaries, except
as otherwise expressly provided in the merger agreement;
(d) (1) create, incur, assume, maintain or permit to exist any debt for
borrowed money other than under existing lines of credit in the ordinary
course of business consistent with past practice;
63
(2) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any other person except for Celestial's wholly-owned
subsidiaries in the ordinary course of business and consistent with past
practices and subclause (1) above;
(3) make any loans, advances or capital contributions to, or
investments in, any other person except loans, advances, capital
contributions or investments not to exceed $50,000 in the aggregate; or
(4) pledge or otherwise encumber shares of its capital stock or its
subsidiaries;
(e) (1) increase in any manner the compensation of
- any employee except in the ordinary course of business
consistent with past practice; or
- except under the terms of any agreement in existence on the
date of the merger agreement any of its directors or
officers;
(2) pay or agree to pay any pension, retirement allowance or other
employee benefit not required, or enter into or agree to enter into any
agreement or arrangement with such director or officer or employee,
whether past or present, relating to any such pension, retirement
allowance or other employee benefit, except as required under currently
existing agreements, plans or arrangements or to extend employee benefits
upon termination in the ordinary course of business consistent with past
practice;
(3) grant any severance or termination pay to, or enter into any
employment or severance agreement with,
- any employee except in the ordinary course of business
consistent with past practice; or
- except under the terms of any agreement or policy in
existence on the date of the merger agreement any of its
directors or officers; or
(4) except as may be required to comply with applicable law, become
obligated (other than pursuant to any new or renewed collective
bargaining agreement) under any new pension plan, welfare plan,
multiemployer plan, employee benefit plan, benefit arrangement, or
similar plan or arrangement, which was not in existence on the date of
the merger agreement, including any bonus, incentive, deferred
compensation, stock purchase, stock option, stock appreciation right,
group insurance, severance pay, retirement or other benefit plan,
agreement or arrangement, or employment or consulting agreement with or
for the benefit of any person, or amend any of such plans or any of such
agreements in existence on the date of the merger agreement; however,
Celestial may enter into agreements with its employees in order to
provide incentives to such employees to continue to remain as employees
of Celestial at least through the effective time of the merger, so long
as the aggregate cost to Celestial of such agreements shall not exceed
$500,000 in the aggregate and further, that Celestial consults with Hain
prior to entering into any such agreements;
(f) except as otherwise expressly contemplated by the merger agreement,
enter into any other agreements, commitments or contracts in excess of
$50,000 in the aggregate, except agreements, commitments or contracts for
the purchase, sale or lease of goods or services in the ordinary course of
business consistent with past practice;
(g) authorize, recommend, propose or announce an intention to authorize,
recommend or propose, or enter into any agreement in principle or an
agreement with respect to, any plan of liquidation or dissolution, any
acquisition of a material amount of assets (other than in the
64
ordinary course of business) or securities, any sale, transfer, lease,
license, pledge, mortgage, or other disposition or encumbrance of a material
amount of assets (other than in the ordinary course of business) or
securities or any material change in its capitalization, or any entry into a
material contract or any amendment or modification of any material contract
or any release or relinquishment of any material contract rights;
(h) authorize any new capital expenditure or expenditures in excess of
$50,000 in the aggregate, other than expenditures that were included in
Celestial's capital expenditure budget for the current fiscal year;
(i) make any change in the accounting methods or accounting practices
followed by Celestial;
(j) settle or compromise any material federal, state, local or foreign
tax liability, make any new material tax election, revoke or modify any
existing tax election, or request or consent to a change in any method of
tax accounting;
(k) take, cause or permit to be taken any action, whether before or
after the effective date of the merger, that could reasonably be expected to
prevent the merger from constituting a "reorganization" within the meaning
of section 368(a) of the tax code;
(l) waive, amend or otherwise alter the rights agreement or redeem the
rights, except as contemplated by the merger agreement;
(m) knowingly do any act or omit to do any act that would result in a
breach of any representation by Celestial set forth in the merger agreement;
or
(n) agree to do any of the foregoing.
Pursuant to the merger agreement, Hain has agreed that from the date of the
merger agreement until the effective time of the merger, except as consented to
in writing by Celestial, which consent is not to be unreasonably withheld or
delayed, Hain shall, and will cause each of the Hain subsidiaries to, conduct
its business in all material respects in the ordinary course consistent with
past practice and shall use all commercially reasonable efforts to:
- keep substantially intact its present business, properties and business
relationships; and
- take no action which would materially adversely affect the ability of Hain
and Celestial to consummate the transactions contemplated by the merger
agreement.
Without limiting the generality of the foregoing, except as otherwise
expressly provided in the merger agreement, prior to its effectiveness, Hain
will not, nor will it permit any of its subsidiaries to, without the prior
written consent of Celestial, which consent is not to be unreasonably withheld
or delayed:
(a) amend its certificate of incorporation or by-laws except as set
forth in the merger agreement;
(b) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its
capital stock or purchase, redeem or otherwise acquire any shares of its own
capital stock or of any of its subsidiaries, except as otherwise expressly
provided in the merger agreement;
(c) authorize, recommend, propose or announce an intention to authorize,
recommend or propose, or enter into any agreement in principle or an
agreement with respect to, any plan of liquidation or dissolution or any
sale or disposition of a material amount of its assets (other than in the
ordinary course of business);
65
(d) take, cause or permit to be taken any action, whether before or
after the effective date of the merger, that could reasonably be expected to
prevent the merger from constituting a "reorganization" within the meaning
of Section 368(a) of the Code;
(e) knowingly do any act or omit to do any act that would result in a
breach of any representation by Hain set forth in the agreement; or
(f) agree to do any of the foregoing.
NO SOLICITATION OF TRANSACTIONS. Pursuant to the merger agreement:
(a) Celestial has agreed that it will not, nor will it permit any
Celestial subsidiary to, nor will it authorize any officer, director,
employee, investment banker, attorney, accountant, agent or other advisor or
representative of Celestial or any Celestial subsidiary, directly or
indirectly, to:
(1) solicit, initiate or knowingly facilitate or encourage the
submission of any takeover proposal, which is defined in the
merger agreement to mean any proposal for a merger,
consolidation, share exchange, business combination or other
similar transaction involving Celestial or any of its
significant subsidiaries or any proposal or offer to acquire,
directly or indirectly 25% or more of any class of equity
securities in, 25% or more of any voting securities of, or 25%
or more of any class of the assets of, Celestial or any of its
significant subsidiaries;
(2) 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 information with respect to, any
inquiries or the making of any proposal that constitutes, or may
be reasonably expected to lead to, any takeover proposal.
However, Celestial may take any action(s) described in the foregoing
clauses 1, 2 or 3, but only if to the extent required by the fiduciary
obligations of Celestial's board of directors, as determined in good
faith by a majority of its members, after consultation with outside
legal counsel, Celestial may, in response to unsolicited requests of
takeover proposals, participate in discussions or negotiations with, or
furnish information pursuant to a confidentiality agreement no less
favorable to such party in all material respects than the
confidentiality agreement between Celestial and Hain dated December 21,
1999 to, any person who indicates a willingness to make a superior
proposal as defined in the merger agreement.
(b) Unless Celestial's board of directors has previously withdrawn, or
is concurrently withdrawing, its recommendation of the merger in order to
satisfy its fiduciary duties, as determined in good faith by a majority of
its members on the basis of the written advice of its outside legal counsel,
neither Celestial's board of directors nor any board committee may recommend
any third party takeover proposal to Celestial stockholders. Notwithstanding
the foregoing, nothing contained in the merger agreement will prevent
Celestial's board of directors from complying with Rule 14d-9 and
Rule 14e-2 under the Exchange Act with respect to any takeover proposal or
making any disclosure required by applicable law.
(c) Celestial must notify Hain promptly, but no later than the next
business day, after receipt by Celestial, or any Celestial advisors, of any
takeover proposal or any request for nonpublic information in connection
with a takeover proposal or for access to the properties, books or records
of Celestial by any person or entity that informs Celestial that it is
considering making or has made a takeover proposal. Such notice must be made
orally and in writing and must indicate the identity of the person making
the takeover proposal, inquiry or contact, and the material terms and
conditions of such proposal, inquiry or contact.
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INDEMNIFICATION AND INSURANCE. These matters are discussed above under the
heading "Interests of Insiders in the Merger--Interests of Celestial Officers
and Directors--Indemnification and Insurance."
CELESTIAL STOCK OPTIONS. The merger agreement provides that after the
effective time of the merger, Hain or the surviving corporation of the merger
will assume each Celestial option under the same terms of any stock option plan
under which such Celestial options were issued and any stock option agreement by
which it is evidenced. Alternatively, after the effective time of the merger,
Hain may adopt or amend substitute plans to provide substantially similar
benefits for any Celestial option. Each Celestial option assumed or substituted
by Hain will be exerciseable for the number of shares of Hain common stock equal
to the number of shares of Celestial common stock (including the associated
preferred share purchase rights) underlying such option multiplied by the
exchange ratio. The exercise price for each Celestial option assumed by Hain
will equal the Celestial exercise price divided by the exchange ratio and will
vest in accordance with the vesting schedule applicable to such option in effect
prior to such assumption or substitution, taking into account any vesting which
may occur as a result of the merger.
BENEFITS CONTINUATION. For a period of one year following the effective
time of the merger, Hain has agreed in the merger agreement that it will provide
or cause the surviving corporation to provide salary and benefits to employees
of Celestial who continue to be employed by Celestial after the effective time
of the merger which will, in the aggregate, be substantially equivalent, in the
aggregate, to those currently provided by Celestial to its employees.
Notwithstanding the foregoing, nothing in the merger agreement shall otherwise
limit the surviving corporation's right to amend, modify or terminate any
employee benefit plan or arrangement. Hain has agreed that any person employed
by Celestial at the effective time of the merger whose employment is terminated
by the surviving corporation on or prior to the first anniversary of the
effective time of the merger will be provided severance benefits substantially
equivalent in the aggregate, to those currently provided under Celestial's
severance policies. Hain or the surviving corporation in the merger will also
assume in accordance with its terms, the Celestial thrift plan, however, Hain
and the surviving corporation reserve the right in accordance with the thrift
plan to terminate or merge the plan or transfer assets and liabilities from the
plan to a 401(k) plan sponsored by Hain or an affiliate.
EMPLOYEE STOCK OWNERSHIP PLAN. To the extent that shares of Celestial
common stock held by the ESOP have not been distributed to participants prior to
the closing date, such shares shall be converted into shares of Hain common
stock on the closing date in accordance with the provisions described under
"--Exchange of Shares" without further action by any participant.
OTHER COVENANTS. The merger agreement contains additional covenants,
including covenants relating to preparation and distribution of this document,
coordination of stockholders' meetings, access to information, mutual
notification of particular events, public announcements and cooperation
regarding filings with governmental and other agencies and organizations. In
addition, the merger agreement contains a general covenant requiring each of the
parties thereto to use all commercially reasonable efforts to effect the
completion of the merger.
CONDITIONS TO THE CONSUMMATION OF THE MERGER
CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE MERGER. Each party's
obligation to consummate the merger is subject to the satisfaction or waiver of
the following conditions:
(a) STOCKHOLDER APPROVALS.
- Celestial's stockholders having approved and adopted the merger and
the merger agreement; and
- Hain's stockholders having approved the issuance of Hain common
stock in the merger.
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(b) HART-SCOTT-RODINO ACT. The waiting period (and any extension of it)
applicable to the merger under the Hart-Scott-Rodino Act will have been
terminated or will have expired.
(c) NO INJUNCTIONS OR RESTRAINTS. No judgment, order, decree, statute,
law, ordinance, rule or regulation entered, enacted, promulgated, enforced
or issued by any court or other governmental entity of competent
jurisdiction or other legal restraint or prohibition will be in effect
preventing the consummation of the merger.
(d) POOLING-OF-INTERESTS; CONSENTS. The merger will qualify for
"pooling-of-interests" accounting treatment. Hain will have received a
letter to that effect from Ernst & Young LLP, independent auditors for Hain.
Celestial will have received a letter from Deloitte & Touche LLP,
independent auditors for Celestial stating that Celestial will qualify as a
party to a "pooling-of-interests" transaction, each letter dated the closing
date of the merger. In addition, Hain will have received all consents
required from the independent accountants in connection with the filing of
this registration statement necessary to effect the registration of the Hain
common stock.
(e) REGISTRATION STATEMENT. The registration statement of which this
joint proxy statement/ prospectus is a part will have become effective under
the Securities Act and will not be the subject of any stop order or
proceedings seeking a stop order and no stop order or similar restraining
order will be threatened or entered by the SEC or any state securities
administration preventing the merger.
(f) NASDAQ LISTING. The shares of Hain common stock issuable to
Celestial's stockholders as contemplated by the merger agreement will have
been approved for listing on the National Market System of The Nasdaq Stock
Market, Inc., subject to official notice of issuance.
(g) CONSENTS AND APPROVALS. All necessary consents and approvals of any
United States or any other governmental authority or any other third party
required for the consummation of the transactions contemplated by the merger
agreement will have been obtained; except for such consents and approvals
which individually or in the aggregate would not have a material adverse
effect on Hain after the effective time of the merger if they were not
obtained.
ADDITIONAL CONDITION TO OBLIGATIONS OF HAIN. The obligation of Hain to
consummate the merger is further subject to the satisfaction of the following
additional conditions, which may be waived in writing exclusively by Hain:
(a) PERFORMANCE OF OBLIGATIONS; REPRESENTATIONS AND WARRANTIES.
Celestial will have performed in all material respects all of its
obligations under the merger agreement required to be performed by it at or
prior to the closing date of the merger. The representations and warranties
of Celestial included in the merger agreement, to the extent qualified with
respect to materiality, shall be true and correct in all respects, and to
the extent not so qualified will have been true and correct in all material
respects as of the date of the merger agreement and at and as of the
effective time of the merger, as if made at and as of that time except to
the extent expressly made as of an earlier date, in which case on that date.
Celestial will have delivered to Hain an officer's certificate, in form and
substance satisfactory to Hain and its counsel relating to the matters
addressed in this clause (a) and clause (b).
(b) NO MATERIAL ADVERSE CHANGE. Except as disclosed in Celestial's
current SEC reports, at any time after September 30, 1999, there will not
have occurred any material adverse change in the general affairs,
management, business, operations, assets, condition (financial or otherwise)
or prospects of Celestial and its subsidiaries, taken as a whole.
(c) AFFILIATE LETTERS. Hain will have received from each affiliate of
Celestial a written agreement substantially in the form attached as
Exhibit B to the merger agreement.
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(d) TAX OPINION. Hain will have received an opinion of Cahill Gordon &
Reindel, counsel to Hain, dated on or about the closing date, based upon
such representations and assumptions as such counsel may reasonably deem
relevant, to the effect that the merger will be treated for federal income
tax purposes as a reorganization qualifying under the provisions of
Section 368(a) of the federal tax code; that each of Hain, Hain Acquisition
Corp. and Celestial will be a party to the reorganization within the meaning
of section 368(b) of the federal tax code; that no gain or loss will be
recognized by a stockholder of Celestial on the exchange of Celestial shares
for the merger consideration pursuant to the merger, except with respect to
any cash received in lieu of a fractional share.
ADDITIONAL CONDITIONS TO OBLIGATIONS OF CELESTIAL. The obligation of
Celestial to effect the merger is subject to the satisfaction of each of the
following additional conditions, any of which may be waived in writing
exclusively by Celestial:
(a) PERFORMANCE OF OBLIGATIONS; REPRESENTATIONS AND WARRANTIES. Hain and
Hain Acquisition Corp. each will have performed in all material respects all
of its obligations under the merger agreement required to be performed by it
at or prior to the closing date. The representations and warranties of Hain
contained in the merger agreement that are qualified by reference to
materiality will be true and correct in all respects, and to the extent not
so qualified will be true and correct in all material respects, in each case
as of the date of the merger agreement and at and as of the effective time
of the merger as if made at and as of such time, except to the extent
expressly made as of an earlier date, in which case as of such date. Hain
will have delivered to Celestial an officer's certificate, in form and
substance satisfactory to Celestial and its counsel, to the effect of
matters stated in this clause (a) and clause (b).
(b) NO MATERIAL ADVERSE CHANGE. Except as disclosed in the Hain current
SEC reports, at any time after June 30, 1999, there will not have occurred
any material adverse change in the general affairs, management, business,
operations, assets, condition (financial or otherwise) or prospects of Hain
and its subsidiaries, taken as a whole.
(c) TAX OPINION. Celestial will have received an opinion from Bartlit
Beck Herman Palenchar & Scott, counsel to Celestial, on or about the closing
date, to the effect that the merger will be treated for federal income tax
purposes as a reorganization qualifying under section 368(a) of the federal
tax code; that each of Hain, Hain Acquisition Corp. and Celestial will be a
party to the reorganization within the meaning of section 368(b) of the
federal tax code; that no gain or loss will be recognized by a stockholder
of Celestial on the exchange of Celestial shares for the merger
consideration pursuant to the merger except with respect to any cash
received in lieu of a fractional share.
TERMINATION
The merger agreement may be terminated at any time prior to the effective
time of the merger, whether before or after approval of the matters presented in
connection with the merger by the Celestial stockholders:
(a) by mutual written consent of Hain and Celestial;
(b) by either Hain or Celestial, if the merger has not been consummated
by December 31, 2000; but the right to terminate the merger agreement under
this clause (b) will not be available to any party whose breach of any
obligation under the merger agreement resulted in the failure of the merger
to occur on or before that date;
(c) by either Hain or Celestial, if there is any judgment, order,
decree, statute, law, ordinance, rule or regulation entered, enacted,
promulgated, enforced or issued by any court or other
69
governmental entity of competent jurisdiction or other legal restraint or
prohibition in effect preventing the consummation of the merger will have
become final and nonappealable;
(d) by either Hain or Celestial if,
- at the Hain special stockholders' meeting, including any
adjournment or postponement, the requisite vote of Hain's
stockholders is not obtained in favor of the Hain proposals to
issue Hain common stock in the merger, or
- at the Celestial special stockholders' meeting, including any
adjournment or postponement, the requisite vote of the Celestial
stockholders in favor of the merger and the merger agreement is not
obtained;
(e) by Hain,
- if Celestial's board of directors modifies, withdraws, conditions
or qualifies in a manner adverse to Hain its recommendation,
approval and adoption of the merger agreement or the merger in a
manner adverse to Hain, or
- if prior to the Celestial stockholders' meeting, Celestial's board
of directors approves an agreement to effect a superior takeover
proposal;
(f) by Hain, if Celestial will have breached or failed to perform in any
material respect any of its representations, warranties, covenants or other
agreements contained in the merger agreement, which breach is not cured
within 15 business days after receipt by Celestial of a written notice of
such breach from Hain specifying the breach and requesting that it be cured;
(g) by Celestial,
- if the Hain board of directors withdraws, modifies, conditions,
qualifies or otherwise changes its recommendation of approval and
adoption of the merger agreement and the merger in a manner adverse
to Celestial, or
- if prior to the Celestial stockholders' meeting, the Celestial
board of directors approves an agreement to effect a superior
takeover proposal; or
(h) by Celestial, if Hain will have breached or failed to perform in any
material respect any of its representations, warranties, covenants or other
agreements contained in the merger agreement, which breach is not cured
within 15 business days after receipt by Hain of a written notice of such
breach from Celestial specifying the breach and requesting that it be cured.
TERMINATION FEES PAYABLE BY HAIN
If the merger agreement is terminated by Celestial pursuant to
paragraph (g) above only if the Hain board changes its recommendation, or under
paragraph (h) above if Hain's breach or failure to perform is due to Hain's
intentional or bad faith acts, then Hain will pay Celestial up to $3 million to
cover expenses and $8 million in liquidated damages. If the merger agreement is
terminated by Celestial after Hain fails to receive stockholder approval or
pursuant to paragraph (h) above for reasons other than those described in the
previous sentence, then Hain will pay Celestial up to $3 million to cover
expenses (but no liquidated damages).
TERMINATION FEES PAYABLE BY CELESTIAL
If the merger agreement is terminated by Hain pursuant to paragraph (e)
above or under paragraph (f) above if Celestial's breach or failure to perform
is due to Celestial's intentional or bad faith acts, or if the merger agreement
is terminated by Celestial under paragraph (g) above upon approval of a superior
proposal by Celestial, then Celestial will pay Hain up to $3 million to cover
70
expenses and $8 million in liquidated damages. If the merger agreement is
terminated by Hain after Celestial fails to receive stockholder approval or
pursuant to paragraph (f) above for reasons other than those described in the
previous sentence, then Celestial will pay Hain up to $3 million (but no
liquidated damages), but if Celestial terminates the merger agreement as
described in this sentence and then within the next twelve months signs an
agreement relating to a superior proposal which it closes within eighteen months
of termination, then Celestial will pay Hain an additional $8 million as
liquidated damages.
EXPENSES
All fees and expenses incurred in connection with the merger agreement and
the transactions contemplated by the merger agreement, other than termination
fees payable upon termination under "--Termination Fees Payable by Hain" and
"--Termination Fees Payable by Celestial," will be paid by the party incurring
such expenses, whether or not the merger is consummated, including without
limitation, the preparation, execution and performance of the merger agreement
and the transactions contemplated by such agreement and all fees and expenses of
any investment banker, finders, broker, agent, representative, counsel or
accountant, except that Hain will bear and pay 66.6% and Celestial will bear and
pay 33.3% of the costs and expenses incurred in connection with the filing,
printing and mailing of the joint proxy statement/prospectus (including SEC
filing fees).
VOTING AGREEMENTS
On March 5, 2000, Irwin D. Simon, in his capacity as a stockholder of Hain,
entered into a voting agreement with Celestial, pursuant to which he agreed to
vote his Hain shares in favor of the merger agreement and merger at the special
stockholders meeting. Concurrently, Mo Siegel, in his capacity as a stockholder
of Celestial, entered into a voting agreement with Hain, pursuant to which he
agreed to vote his Celestial shares in favor of the merger agreement and merger
at the special stockholders meeting.
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THE STOCKHOLDERS' MEETINGS
THE HAIN SPECIAL MEETING
GENERAL
This joint proxy statement/prospectus is being furnished to the stockholders
of Hain in connection with the solicitation of proxies on behalf of the Hain
board of directors for use at the special meeting to be held on May 30, 2000, at
the time and place specified in the accompanying notice of special meeting of
stockholders, and at any adjournment or postponement thereof. The purpose of the
special meeting is to consider and vote upon proposals to:
- approve the issuance of Hain common stock pursuant to the merger agreement
dated March 5, 2000 by and between Hain and Celestial;
- amend the Hain certificate of incorporation to change Hain's corporate
name to The Hain Celestial Group, Inc. to be effective upon consummation
of the merger;
- amend the Hain certificate of incorporation to increase the authorized
number of shares of Hain common stock from 40 million to 100 million;
- amend the Hain 1994 Long Term Incentive and Stock Award Plan to
(a) increase the number of shares issuable over the term of the plan by 3
million shares to 6.4 million shares in the aggregate and (b) increase the
upper limit on the number of shares for which options or stock
appreciation rights may be granted to any participant under the plan
during any calendar year to 1 million shares;
- adopt the Hain 2000 Directors Stock Option Plan; and
- transact such other business as may properly come before the special
meeting.
Each copy of this joint proxy statement/prospectus mailed to holders of Hain
common stock is accompanied by a form of proxy for use at the special meeting.
This joint proxy statement/prospectus is also furnished to Celestial
stockholders as a prospectus in connection with the issuance to them of shares
of Hain common stock upon completion of the merger.
THE BOARD OF DIRECTORS OF HAIN HAS APPROVED THE ISSUANCE OF SHARES IN THE
MERGER, THE AMENDMENTS TO HAIN'S CERTIFICATE OF INCORPORATION, THE AMENDMENT TO
HAIN'S 1994 LONG TERM INCENTIVE AND STOCK AWARD PLAN AND ADOPTION OF THE 2000
DIRECTORS STOCK OPTION PLAN AND RECOMMENDS A VOTE FOR APPROVAL AND ADOPTION OF
THE FOREGOING ACTIONS.
RECORD DATE; QUORUM
The Hain board of directors has fixed the close of business on April 21,
2000 as the record date for the determination of the holders of Hain common
stock entitled to receive notice of and to vote at the special meeting. The
presence, in person or represented by proxy, of the holders of a majority of
shares of Hain common stock entitled to vote at the special meeting is necessary
to constitute a quorum.
VOTE REQUIRED
As of the record date for the special meeting, there were 18,411,458 shares
of Hain common stock outstanding, each of which is entitled to one vote on the
issuance of shares of Hain common stock in the merger and each other matter
properly submitted at the special meeting. Holders of Hain common stock as of
the record date of the special meeting are entitled to one vote per share of
Hain common stock on each matter to be considered at the special meeting.
Approval of the issuance of shares of Hain common stock in the merger and of the
amendments to Hain's certificate of incorporation require the affirmative vote
of the holders of a majority of the shares of Hain common stock entitled to vote
at the special meeting. Approval of an amendment to Hain's 1994 Long Term
Incentive and Stock Award Plan and adoption of Hain's 2000 Directors Stock
Option Plan require the affirmative
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vote of the holders of a majority of the Hain common stock present in person or
by proxy at the special meeting, assuming a quorum is present.
VOTING OF PROXIES
Shares of Hain common stock represented by a proxy properly signed and
received at or prior to the special meeting, unless subsequently revoked, will
be voted in accordance with the instructions indicated on the proxy.
Stockholders of Hain will not be entitled to present any matter for
consideration at the special meeting, and no business is to be acted upon at the
special meeting other than as set forth in the notice of special meeting of
stockholders accompanying this joint proxy statement/prospectus.
Shares of Hain common stock represented at the special meeting by a properly
executed, dated and returned proxy will be treated as present at the special
meeting for purposes of determining a quorum, without regard to whether the
proxy is marked as casting a vote or abstaining. For voting purposes at the
special meeting, only shares affirmatively voted in favor of approval of the
proposals presented at the special meeting will be counted as favorable votes
for such approval. Any broker non-votes and abstaining votes will not be counted
in favor of approval of the proposals presented at the special meeting. Since
applicable law requires approval of a majority of the shares voting at the
special meeting, abstentions will have the same effect as votes cast against the
proposals.
The persons named as proxies by a stockholder may propose and vote for one
or more adjournments of the special meeting to permit further solicitations of
proxies in favor of approval of the proposals presented at the special meeting;
however, no proxy that is voted against the approval of the proposals will be
voted in favor of any such adjournment. An adjournment proposal requires the
affirmative vote of a majority of the votes cast by holders of Hain common stock
and, therefore, broker non-votes and abstentions will have no effect.
REVOCABILITY OF PROXIES
The grant of a proxy on the enclosed form does not preclude a stockholder
from voting in person. A stockholder may revoke a proxy at any time prior to its
exercise by submitting a signed written revocation to the secretary of Hain, by
submitting a signed proxy bearing a later date or by appearing at the special
meeting and voting in person. Attendance at the special meeting will not, in and
of itself, constitute revocation of a proxy.
SOLICITATION OF PROXIES
Hain will bear the cost of solicitation of proxies from its stockholders,
including the costs of preparing, filing, printing and distributing this joint
proxy statement/prospectus and any other solicitation materials that are used.
Such directors, officers and employees will not be additionally compensated
but may be reimbursed for reasonable out-of-pocket expenses in connection with
such solicitation. Arrangements will also be made with brokerage houses and
other custodians, nominees and fiduciaries for the forwarding of solicitation
material to the beneficial owners of stock held of record by such persons, and
Hain will reimburse such custodians, nominees and fiduciaries for their
reasonable out-of-pocket expenses in connection therewith.
In addition, Hain has retained MacKenzie Partners, Inc. to assist in the
solicitation of proxies by Hain for an estimated fee of $6,500 plus
reimbursement of reasonable out-of-pocket costs and expenses. For bankers and
brokers, call collect at (212) 929-5500. For others call toll-free at
(800) 322-2885.
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THE MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING ARE OF GREAT IMPORTANCE
TO THE HAIN STOCKHOLDERS. ACCORDINGLY, HAIN STOCKHOLDERS ARE URGED TO READ AND
CAREFULLY CONSIDER THE INFORMATION PRESENTED IN THIS JOINT PROXY
STATEMENT/PROSPECTUS, AND TO COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE
ENCLOSED PROXY IN THE ENCLOSED POSTAGE PRE-PAID ENVELOPE.
STOCKHOLDERS SHOULD NOT SEND HAIN COMMON STOCK CERTIFICATES WITH THEIR PROXY
CARDS. IF THE PROPOSALS PRESENTED AT THE STOCKHOLDER MEETING ARE APPROVED BY THE
STOCKHOLDERS AND THE MERGER IS CONSUMMATED, CURRENT STOCKHOLDERS WILL CONTINUE
TO HOLD THEIR EXISTING SHARES OF HAIN COMMON STOCK.
THE CELESTIAL SPECIAL MEETING
GENERAL
This joint proxy statement/prospectus is being furnished to the stockholders
of Celestial in connection with the solicitation of proxies on behalf of the
Celestial board for use at the special meeting to be held on May 30, 2000, at
the time and place specified in the accompanying notice of special meeting of
stockholders, and at any adjournment or postponement thereof. The purpose of the
special meeting is to consider and vote upon proposals to:
- approve and adopt the merger and the merger agreement; and
- transact such other business as may properly come before the special
meeting.
Each copy of this joint proxy statement/prospectus mailed to holders of
Celestial common stock is accompanied by a form of proxy for use at the special
meeting. This joint proxy statement/prospectus is also furnished to Hain
stockholders in connection with the proposed merger.
THE BOARD OF DIRECTORS OF CELESTIAL HAS APPROVED THE MERGER AGREEMENT AND
RECOMMENDS A VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
RECORD DATE; QUORUM
The Celestial board of directors has fixed the close of business on
April 21, 2000 as the record date for the determination of the holders of
Celestial common stock entitled to receive notice of and to vote at the special
meeting. The presence, in person or by proxy, of the holders of a majority of
the outstanding shares of Celestial common stock entitled to vote at the special
meeting is necessary to constitute a quorum.
VOTE REQUIRED
As of the record date for the special meeting, there were 8,428,636 shares
of Celestial common stock outstanding, each of which is entitled to one vote on
the merger agreement and each other matter properly submitted at the special
meeting. Holders of Celestial common stock as of the record date of the special
meeting are entitled to one vote per share of Celestial common stock on each
matter to be considered at the special meeting. Approval of the merger and the
merger agreement requires the affirmative vote of the holders of a majority of
the outstanding shares of Celestial common stock entitled to vote.
VOTING OF PROXIES
Shares of Celestial common stock represented by a proxy properly signed and
received at or prior to the special meeting, unless subsequently revoked, will
be voted in accordance with the instructions indicated on the proxy.
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Shares of Celestial common stock represented at the special meeting by a
properly executed, dated and returned proxy will be treated as present at the
special meeting for purposes of determining a quorum, without regard to whether
the proxy is marked as casting a vote or abstaining. For voting purposes at the
special meeting, only shares affirmatively voted in favor of approval and
adoption of the merger agreement will be counted as favorable votes. Any broker
non-votes and abstaining votes will not be counted in favor of approval and
adoption of the merger agreement or the amendment. Since applicable law requires
the affirmative vote of a majority of the outstanding shares to approve the
merger agreement, broker non-votes and abstentions will have the same effect as
votes cast against the merger. Broker non-votes and abstentions will be counted
for purposes of establishing a quorum.
The persons named as proxies by a stockholder may propose and vote for one
or more adjournments of the special meeting to permit further solicitations of
proxies in favor of approval of the proposals; however, no proxy that is voted
against the approval of the proposals will be voted in favor of any such
adjournment. An adjournment proposal requires the affirmative vote of a majority
of the votes cast by holders of Celestial common stock and, therefore, broker
non-votes and abstentions will have no effect.
REVOCABILITY OF PROXIES
The grant of a proxy on the enclosed form does not preclude a stockholder
from voting in person. A stockholder may revoke a proxy at any time prior to its
exercise by submitting a signed written revocation to the secretary of
Celestial, by submitting a signed proxy bearing a later date or by appearing at
the special meeting and voting in person at the special meeting. No special form
of revocation is required. Attendance at the special meeting will not, in and of
itself, constitute revocation of a proxy.
SOLICITATION OF PROXIES
Celestial will bear the cost of the solicitation of proxies from its
stockholders, including the costs of preparing, filing, printing and
distributing this joint proxy statement/prospectus and any other solicitation
materials that are used.
Directors, officers and employees will not be additionally compensated but
may be reimbursed for reasonable out-of-pocket expenses in connection with any
proxy solicitation. Arrangements will also be made with brokerage houses and
other custodians, nominees and fiduciaries for the forwarding of solicitation
material to the beneficial owners of stock held of record by those persons, and
Celestial will reimburse all custodians, nominees and fiduciaries for their
reasonable out-of-pocket expenses in connection with these actions.
In addition, Celestial has retained D.F. King & Co., Inc. to assist in the
solicitation of proxies by Celestial for a fee of not more than $6,500 plus
reasonable out-of-pocket costs and expenses. For bankers and brokers, call
collect at (212) 269-5550. For all others, call toll free at (800) 549-6749.
THE MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING ARE OF GREAT IMPORTANCE
TO THE CELESTIAL STOCKHOLDERS. ACCORDINGLY, CELESTIAL STOCKHOLDERS ARE URGED TO
READ AND CAREFULLY CONSIDER THE INFORMATION PRESENTED IN THIS JOINT PROXY
STATEMENT/PROSPECTUS, AND TO COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE
ENCLOSED PROXY IN THE ENCLOSED POSTAGE PRE-PAID ENVELOPE.
STOCKHOLDERS SHOULD NOT SEND CELESTIAL COMMON STOCK CERTIFICATES WITH THEIR
PROXY CARDS. IF THE MERGER AGREEMENT IS APPROVED BY THE STOCKHOLDERS AND THE
MERGER IS CONSUMMATED, TRANSMITTAL FORMS AND INSTRUCTIONS WILL BE SENT TO
CELESTIAL STOCKHOLDERS FOR THE EXCHANGE OF SHARES OF CELESTIAL COMMON STOCK FOR
HAIN COMMON STOCK.
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DESCRIPTION OF THE AMENDED AND RESTATED 1994 LONG TERM INCENTIVE AND STOCK AWARD
PLAN
The Hain board of directors recommends a vote FOR the adoption of amendments
to Hain's 1994 Long Term Incentive and Stock Award Plan, (as amended prior to
the merger, the "existing 1994 plan") to (a) increase the number of shares
issuable over the term of the plan by 3 million shares to 6.4 million shares in
the aggregate and (b) increase the upper limit on the number of shares for which
options or stock appreciation rights may be granted to any participant under the
plan during any calendar year to 1 million shares. Upon the adoption of these
amendments, the existing 1994 plan will be amended and restated as The Hain
Celestial Group, Inc. Amended and Restated 1994 Long Term Incentive and Stock
Award Plan (the "amended 1994 plan").
Since the stock authorization under the original 1994 plan is nearly
depleted, and in order to allow for awards to qualify as performance-based
compensation under Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code") and to conform with certain changes made to Rule 16b-3 of
the Securities Exchange Act of 1934 (the "Exchange Act"), the board has adopted
the proposed amendments, subject to stockholder approval.
The stockholders are now requested to approve the adoption of the amended
1994 plan. The following summary of the amended 1994 plan is qualified in its
entirety by express reference to the amended 1994 plan, which is attached as
Annex F to this joint proxy statement/prospectus.
GENERAL. The amended 1994 plan, like its predecessor, is intended to
provide incentives to attract, retain and motivate employees in order to achieve
the combined company's long-term growth and profitability objectives. The
amended 1994 plan will provide for the grant to eligible employees of stock
options, share appreciation rights ("SARs"), restricted shares, restricted share
units, performance shares, performance units, dividend equivalents and other
share-based awards (the "Awards"). An aggregate of 6.4 million shares of Hain
common stock has been reserved for issuance under the amended 1994 plan (of
which during a calendar year the maximum number of shares with respect to which
options and SARs may be granted to any individual eligible employee under the
amended 1994 plan will be 1,000,000 shares), subject to anti-dilution
adjustments in the event of certain changes in Hain's capital structure, as
described below. Shares issued pursuant to the amended 1994 plan will be either
authorized but unissued shares or treasury shares.
ELIGIBILITY AND ADMINISTRATION. Officers and other employees of the
combined company and its subsidiaries and affiliates (including directors who
are employees) who are responsible for or contribute to the management and
profitability of the business of the combined company will be eligible to be
granted awards under the amended 1994 plan. The amended 1994 plan will be
administered by the compensation committee or such other board committee (or the
entire board) as may be designated by the board (the "Committee"). The Committee
will consist of two or more non-employee directors within the meaning of
Rule 16b-3 of the Exchange Act. The Committee will determine which eligible
employees and directors receive awards, the types of awards to be received and
the terms and conditions thereof. The Committee will have authority to waive
conditions relating to an award or accelerate vesting of awards. The actual
number of employees who will receive awards under the amended 1994 plan cannot
be determined because selection for participation in the amended 1994 plan is in
the sole discretion of the Committee.
The Committee will be permitted to delegate to officers or other directors
of the combined company the authority to perform administrative functions for
the amended 1994 plan and, with respect to Awards granted to persons not subject
to Section 16 of the Exchange Act, to perform such other functions as the
Committee may determine to the extent permitted under Rule 16b-3 of the Exchange
Act and applicable law. If an award agreement so provides, the Committee may not
increase the amount of compensation payable if it would disqualify the Award as
qualified performance-based compensation under Section 162(m) of the Internal
Revenue Code.
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AWARDS. Incentive stock options ("ISOs") intended to qualify for special
treatment in accordance with the Internal Revenue Code and nonqualified stock
options not intended to qualify for special tax treatment under the Internal
Revenue Code may be granted for such number of shares of Hain common stock as
the Committee determines. The Committee will be authorized to set the terms
relating to an option, including exercise price and the time and method of
exercise. The terms of ISOs will comply with the provisions of Section 422 of
the Code. ISOs may only be granted to employees. Awards may be granted alone, in
tandem with or in exchange for any other Award.
A SAR will entitle the holder thereof to receive with respect to each share
subject thereto, an amount equal to the excess of the fair market value of one
share of Hain common stock on the date of the exercise (or, if the Committee so
determines, at any time during a specified period before or after the date of
exercise) over the exercise price of the SAR set by the Committee as of the date
of the grant. Payment with respect to SARs may be made in cash or shares of Hain
common stock as determined by the Committee.
Awards of restricted shares will be subject to such restrictions on
transferability and other restrictions, if any, as the Committee may impose.
Such restrictions will lapse under circumstances as the Committee may determine,
including upon the achievement of performance criteria. Except as otherwise
determined by the Committee, eligible employees granted restricted shares will
have all of the rights of a stockholder, including the right to vote restricted
shares and receive dividends thereon, and unvested restricted shares will be
forfeited upon termination of employment during the applicable restriction
period.
A restricted share unit will entitle the holder thereof to receive shares of
Hain common stock or cash at the end of a specified deferral period. Restricted
share units will also be subject to such restrictions as the Committee may
impose. Such restrictions will lapse under circumstances as the Committee may
determine, including upon the achievement of performance criteria. Except as
otherwise determined by the Committee, restricted share units subject to
deferral or restriction will be forfeited upon termination of employment during
any applicable deferral or restriction period.
Performance shares and performance units will provide for future issuance of
shares or payment of cash, respectively, to the recipient upon the attainment of
corporate performance goals established by the Committee over specified
performance periods. Except as otherwise determined by the Committee,
performance shares and performance units will be forfeited upon termination of
employment during any applicable performance period. Performance objectives may
vary from employee to employee and will be based upon such performance criteria
as the Committee may deem appropriate. The Committee may revise performance
objectives if significant events occur during the performance period which the
Committee expects to have a substantial effect on such objectives.
Dividend equivalents granted under the amended 1994 plan will entitle the
holder thereof to receive cash, shares of Hain common stock or other property
equal in value to dividends paid with respect to a specified number of shares of
Hain common stock. Dividend equivalents may be awarded on a free-standing basis
or in connection with another Award, and may be paid currently or on a deferred
basis. The Committee is also authorized, subject to limitations under applicable
law, to grant such other Awards that may be denominated in, valued in, or
otherwise based on, shares of Hain common stock, as deemed by the Committee to
be consistent with the purposes of the amended 1994 plan.
NONTRANSFERABILITY. Unless otherwise set forth by the Committee in an award
agreement, awards (except for vested shares) will generally not be transferable
by the participant other than by will or the laws of descent and distribution
and will be exercisable during the lifetime of the participant only by such
participant or his or her guardian or legal representative.
CAPITAL STRUCTURE CHANGES. If the Committee determines that any dividend,
recapitalization, share split, reorganization, merger, consolidation, spin-off,
repurchase, or other similar corporate transaction
77
or event affects the Hain common stock such that an adjustment is appropriate in
order to prevent dilution or enlargement of the rights of eligible employees
under the amended 1994 plan, then the Committee is authorized to make such
equitable changes or adjustments as it deems appropriate, including adjustments
to (i) the number and kind of shares which may thereafter be issued under the
amended 1994 plan, (ii) the number and kind of shares, other securities or other
consideration issued or issuable in respect to outstanding awards and (iii) the
exercise price, grant price or purchase price relating to the award.
AMENDMENT AND TERMINATION. The amended 1994 plan may be amended, suspended
or terminated by the board of directors at any time, in whole or in part.
However, any amendment for which stockholder approval is required by
Section 422 of the Internal Revenue Code or by the rules of any stock exchange
or automated quotation system on which the shares are listed or quoted, will not
be effective until such approval has been attained. In addition, no amendment,
suspension, or termination of the amended 1994 plan may impair or adversely
affect the rights of a participant under any Award theretofore granted to him or
her without the consent of the affected participant. The Committee may waive any
conditions or rights, amend any terms, or amend, suspend or terminate, any Award
granted, provided that, without participant consent, such amendment, suspension
or termination may not impair or adversely affect the rights of such participant
under any Award previously granted to him or her.
EFFECTIVE DATE AND TERM. The amended 1994 plan was originally effective
October 3, 1994. Unless earlier terminated, the amended 1994 plan will expire in
October 3, 2004, and no further awards may be granted thereunder after such
date.
U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE AMENDED 1994 PLAN
The following is a summary of the principal federal income tax consequences
associated with the granting of awards under the amended 1994 plan. This summary
is based on the provisions of the Internal Revenue Code, the Treasury
regulations promulgated thereunder, and administrative and judicial
interpretations thereof, all as in effect as of the date hereof. It does not
describe all federal income tax consequences under the amended 1994 plan, nor
does it describe foreign, state or local tax consequences.
STOCK OPTIONS. In general, the grant of a stock option will not be a
taxable event to the recipient and it will not result in a deduction to Hain.
The tax consequences associated with the exercise of a stock option and the
subsequent disposition of shares of common stock acquired on the exercise of
such option depend on whether the option is an ISO or a nonqualified stock
option.
Upon the exercise of a nonqualified stock option, the participant will
recognize ordinary taxable income equal to the excess of the fair market value
of the shares of common stock received upon exercise over the exercise price.
Any gain or loss upon a subsequent sale or exchange of the shares of common
stock will be capital gain or loss, long-term or short-term, depending on the
holding period for the shares of common stock.
Generally, a participant will not recognize ordinary taxable income at the
time of exercise of an incentive stock option and no deduction will be available
to Hain, provided the option is exercised while the participant is an employee
or within three months following termination of employment (longer, in the case
of termination of employment by reason of disability or death). If an ISO
granted under the amended 1994 plan is exercised after these periods, the
exercise will be treated for U.S. federal income tax purposes as the exercise of
a nonqualified stock option. In addition, the exercise of an ISO granted under
the amended 1994 plan will be treated for U.S. federal income tax purposes as
the exercise of a nonqualified option to the extent it (together with any other
ISOs granted under other plans of the Hain and its subsidiaries) first becomes
exercisable in any calendar year for shares of common stock having a fair market
value, determined as of the date of grant, in excess of $100,000.
If shares of common stock acquired upon exercise of an ISO are sold or
exchanged more than one year after the date of exercise and more than two years
from the date of grant of the option, any gain
78
or loss will be long-term capital gain or loss. If shares of common stock
acquired upon exercise of an ISO are disposed of prior to the expiration of
these one-year or two-year holding periods, which Hain refers to as a
disqualifying disposition, the participant will recognize ordinary income at the
time of disposition in an amount equal to the excess of the fair market value of
the shares of common stock at the date of exercise over the exercise price, and
Hain will generally be entitled to a corresponding deduction. Any additional
gain will be treated as capital gain, long-term or short-term, depending on how
long the shares of common stock have been held. When shares of common stock are
sold or exchanged in a disqualifying disposition (other than certain related
party transactions) for an amount less than their fair market value at the date
of exercise, any ordinary income recognized in connection with the disqualifying
disposition will be limited to the amount of gain, if any, recognized in the
sale or exchange, and any loss will be a long-term or short-term capital loss,
depending on how long the shares of common stock have been held.
Although the exercise of an ISO as described above would not produce
ordinary taxable income to the participant, it would result in an increase in
the participant's alternative minimum taxable income and may result in an
alternative minimum tax liability.
PAYMENT OF STOCK OPTION PRICE IN SHARES. If a stock option is exercised
through the use of company stock previously owned by the participant, such
exercise generally will not be considered a taxable disposition of the
previously owned shares and, thus, no gain or loss will be recognized with
respect to such previously owned shares upon such exercise. (The amount of any
built-in gain on the previously owned shares generally will not be recognized
until the new shares acquired on the option exercise are disposed of in a sale
or other taxable transaction.) However, if the previously owned shares were
acquired on the exercise of an ISO and the holding period requirement for those
shares was not satisfied at the time they were used to exercise an ISO, such use
would constitute a disqualifying disposition of such previously owned shares
resulting in the recognition of ordinary income (but, under proposed Treasury
Regulations, not any additional capital gain) in the amount described above.
RESTRICTED STOCK. A participant who receives restricted shares of common
stock will generally recognize ordinary income at the time that they "vest",
i.e., either when they are not subject to a substantial risk of forfeiture or
when they are freely transferable. The amount of ordinary income so recognized
will be the fair market value of the shares of common stock at the time the
income is recognized, determined without regard to any restrictions other than
restrictions which by their terms will never lapse, less the amount, if any,
paid for the stock. The amount is generally deductible for federal income tax
purposes by Hain. Dividends paid with respect to shares of common stock while
such shares are nontransferable will be taxable as ordinary compensation income
to the participant and generally will be deductible by Hain. Any gain or loss
upon a subsequent sale or exchange of the shares of common stock, measured by
the difference between the sale price and the fair market value on the date
restrictions lapse, will be capital gain or loss, long-term or short-term,
depending on the holding period for the shares of common stock. The holding
period for this purpose will begin on the date following the date restrictions
lapse.
In lieu of the treatment described above, a participant may elect immediate
recognition of income under Section 83(b) of the Internal Revenue Code. In such
event, the participant will recognize as income the fair market value of the
restricted stock at the time of grant (determined without regard to any
restrictions other than restrictions which by their terms will never lapse), and
Hain will generally be entitled to a corresponding deduction. Dividends paid
with respect to shares of common stock as to which a proper Section 83(b)
election has been made will be taxable as ordinary dividend income to the
participant. If a Section 83(b) election is made and the restricted stock is
subsequently forfeited, the participant will not be entitled to any offsetting
tax deduction.
STOCK APPRECIATION RIGHTS AND OTHER AWARDS. With respect to stock
appreciation rights and other awards under the amended 1994 plan not described
above, generally, when a participant receives payment with respect to an award
granted to him or her under the amended 1994 plan, the amount of
79
cash or other property and the fair market value of shares of common stock
received will be ordinary income to such participant and will be allowed as a
deduction for federal income tax purposes to Hain.
LIMITATION ON DEDUCTIBILITY. Section 162(m) of the Internal Revenue Code
generally limits the deductible amount of annual compensation paid (including,
unless an exception applies, compensation otherwise deductible in connection
with awards granted under the 1994 plan) by a public company to a "covered
employee" (the chief executive officer and Hain's four other most highly
compensated executive officers) to no more than $1.0 million. Hain currently
intends to structure stock options and SARs made under the amended 1994 plan to
comply with an exception to nondeductiblity under Section 162(m) of the Internal
Revenue Code.
PAYMENT OF WITHHOLDING TAXES. Hain may withhold, or require a participant
to remit to Hain, an amount sufficient to satisfy and federal, state or local
withholding tax requirements associated with awards under the amended 1994 plan.
The foregoing is only a summary of the effects of federal income taxation
upon the optionee and Hain with regard to the grant and exercise of options
under the plan. Such summary does not purport to be complete and reference
should be made to the applicable provisions of the Internal Revenue Code.
NEW PLAN BENEFITS
No benefits have been received or allocated to any employee under the
amended plan, and therefore a "New Plan Benefits" table has not been included.
DESCRIPTION OF 2000 DIRECTORS STOCK OPTION PLAN
The board of directors of Hain recommend a vote FOR approval of The Hain
Celestial Group, Inc. 2000 Directors Stock Option Plan.
ADOPTION OF THE 2000 DIRECTORS STOCK OPTION PLAN
The 2000 Directors Stock Option Plan (the directors plan) provides for the
grant to non-employee directors of stock options. Up to an aggregate amount of
750,000 shares of Hain common stock are authorized to be reserved for issuance
under the directors plan. The shares of common stock issuable over the term of
the directors plan may be authorized and unissued common stock and treasury
stock, including shares acquired in the open market or other transactions. A
copy of the directors plan is attached as Annex G to this joint proxy
statment/prospectus.
TERMS OF OPTIONS
Each option granted under the directors plan shall expire ten (10) years
from its date of grant. The exercise price of each option shall be the fair
market value, as determined under the directors plan, of the shares of common
stock underlying such option on its grant date.
Unless otherwise determined by the board, the options shall not be
transferrable other than by will or the laws of descent and distribution.
The directors plan will continue in effect until all options granted
thereunder have expired or terminated or upon earlier termination as provided
for in the directors plan.
GRANTS OF OPTIONS
INITIAL GRANT. On the date an option is initially granted, each eligible
director will automatically be granted an option to purchase 15,000 shares of
Hain common stock. Such option will be immediately exercisable.
80
ANNUAL GRANTS. Each eligible director will, upon re-election, automatically
receive an annual grant of an option to purchase 7,500 shares of Hain common
stock on each annual meeting date after his or her election as a director of the
combined company. Such option will be immediately exercisable.
DISCRETIONARY GRANTS. The board of directors is authorized to, in its
discretion, grant additional options to eligible directors. The date of the
grant, date first exercisable, number of shares of Hain common stock which may
be purchased upon exercise and the exercise price of the options will be
determined by the board, in its discretion.
ADMINISTRATION. The directors plan will be administered by the board, which
has the authority to interpret the plan, make and change rules relating to the
plan, and make all other determinations regarding the plan, with the
determination of the board being final and conclusive.
TERM OF DIRECTORS PLAN AND AMENDMENT AND TERMINATION. This directors plan
is effective upon its adoption of the board. Options may be granted prior to
shareholder approval, but the options cannot be exercised prior to such
approval. The directors plan shall continue until all options granted thereunder
have expired or been exercised, unless sooner terminated.
The board may amend or terminate the directors plan without approval of the
shareholders, except where such approval is required by any law or regulation or
any stock exchange or automated quotation system rule. Generally, an amendment
or termination of the directors plan may not substantially impair any existing
option without the optionee's consent.
ADJUSTMENTS TO THE DIRECTORS PLAN
In the event of any recapitalization, split-up or consolidation of shares,
separation, stock dividend, or other similar change in our capitalization or we
merge or consolidate or sell assets or other similar event, the board of
directors shall make such appropriate adjustments in the exercise prices of
options, in the number and kind of securities or property issued pursuant to
options and in the number of shares with respect to which options may be granted
as the board deems equitable to maintain the proportionate interest of the
directors and the value of the options.
No fractional shares of common stock shall be issued.
U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE DIRECTORS PLAN
The following discussion summarizes the principal U.S. federal income tax
consequences of the directors plan. This discussion is based on current
provisions of the Internal Revenue Code, the Treasury regulations promulgated
thereunder, and administrative and judicial interpretations thereof as in effect
on the date hereof.
Upon exercise of an option granted under the directors plan, the optionee
will recognize ordinary income in an amount equal to the excess of the fair
market value of the shares received over the exercise price of such shares. That
amount increases the optionee's basis in the common stock acquired pursuant to
the exercise of the option. Upon a subsequent sale of the shares of common
stock, the optionee will incur short-term or long-term capital gain or loss
depending upon his holding period for the shares of common stock and upon the
shares of common stock's subsequent appreciation or depreciation in value. We
will be allowed a federal income tax deduction for the amount recognized as
ordinary income by the optionee upon the optionee's exercise of the option.
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COMPARISON OF STOCKHOLDER RIGHTS
A summary comparison of material differences between the rights of a Hain
stockholder under Hain's current certificate of incorporation and bylaws (left
column) and the rights of a Celestial stockholder under Celestial's current
certificate of incorporation and bylaws (right column) is shown below. These
summaries are not complete. We encourage stockholders to refer to the relevant
portions of Hain's current certificate of incorporation and bylaws, Celestial's
current certificate of incorporation and bylaws, incorporated in this joint
proxy statement/prospectus by reference, and the relevant provisions of Delaware
law.
HAIN CELESTIAL
- --------------------------------------------- ---------------------------------------------
GENERAL
Hain is a Delaware corporation subject to the Celestial is a Delaware corporation subject
provisions of the Delaware General to the provisions of the Delaware General
Corporation Law. The rights of Hain Corporation Law. The rights of Celestial
stockholders are governed by Hain's stockholders are governed by Celestial's
certificate of incorporation and bylaws, in certificate of incorporation and bylaws, in
addition to Delaware law. addition to Delaware law. Celestial
stockholders will, upon consummation of the
merger, become Hain stockholders.
AUTHORIZED CAPITAL
The authorized capital stock of Hain consists The authorized capital stock of Celestial
of: 40 million shares of common stock, par consists of: 15 million shares of common
value $.01 per share; and 5 million shares of stock, par value $.01 per share; and 1
preferred stock, par value $.01 per share. million shares of preferred stock, par value
Hain's authorized common stock will increase $.01 per share, of which 10,000 shares are
to 100 million shares following consummation designated as Series A Junior Participating
of the merger if Hain's stockholders approve Preferred Stock in connection with the
the increase. stockholders rights plan described below.
AMENDMENT OF CERTIFICATE OF INCORPORATION
The Hain Certificate of incorporation The Celestial certificate of incorporation
provides that it may be amended in the manner provides that an affirmative vote of 2/3 of
prescribed by statute. Under Delaware law, the outstanding shares of Series A Preferred
amendment of the certificate of incorporation Stock is required for any amendment that
requires: (1) an authorization by the board; would adversely affect the Series A Preferred
followed by (2) a vote of the majority of all Stock. All other amendments to the Celestial
outstanding voting shares. certificate of incorporation require the
authorization of the board followed by a vote
of the majority of all outstanding voting
shares.
DIRECTORS
- - NUMBER
The Hain by-laws provide that the number of The number of directors must be no less than
directors are to be determined by statute. one, with the actual number to be determined
Under Delaware law the number of directors by the board of directors, except as
must be no less than one, with the actual otherwise provided by the certificate of
number to be determined by the board of incorporation in connection with rights to
directors. elect additional directors under specified
circumstances which may be granted to the
holders of any class or series of preferred
stock.
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HAIN CELESTIAL
- --------------------------------------------- ---------------------------------------------
The current number of directors is eight. The current number of directors is eight.
- - CLASSIFICATION
Each member of the Hain board of directors is The Celestial board of directors is divided
elected at the annual meeting of into three classes, each as nearly equal in
stockholders. number as possible, with one class being
elected annually to a three-year term.
- - REMOVAL
Directors may be removed either for cause or Directors may be removed only for cause.
without cause by a majority stockholder vote
and may be removed for cause by a majority
vote of the board of directors.
- - VACANCIES
A vacancy occurring on the Hain board of Except as otherwise provided by the
directors may be filled by the affirmative certificate of incorporation in connection
vote of a majority of the remaining Hain with rights to elect additional directors
directors, even if less than a quorum, or by under specified circumstances which may be
the stockholders at the next annual meeting granted to the holders of any class or series
or at a special meeting. of preferred stock, a vacancy on the
Celestial board may be filled by the
affirmative vote of a majority of the
remaining Celestial directors, even if less
than a quorum, or by a sole remaining
director.
- - LIMITATION ON LIABILITY
The Hain certificate of incorporation The Celestial certificate of incorporation
provides for indemnification of directors for provides for the indemnification of its
breaches of fiduciary duty, except for officers and directors to the fullest extent
liability: for breaches of the duty of permitted by Delaware law. The Celestial
loyalty to Hain or Hain's stockholders; for certificate of incorporation limits liability
acts or omissions not in good faith or which of its directors for breach of fiduciary duty
involve intentional misconduct or a knowing to the fullest extent permitted by Delaware
violation of law; under Section 174 of the law.
DGCL; or for any transaction from which the
director derived an improper personal
benefit.
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HAIN CELESTIAL
- --------------------------------------------- ---------------------------------------------
- -INDEMNIFICATION
The Hain certificate of incorporation and Celestial's by-laws provide that Celestial
bylaws provide that the corporation shall may indemnify a director or officer made, or
indemnify its officers and directors for any threatened to be made, a party to any
liability incurred in their official capacity threatened, pending or completed action other
to the fullest extent permissible under than a derivative action, whether civil or
Delaware law. criminal, against expenses (including
attorneys' fees), judgments, fines, amounts
paid in settlement actually and reasonably
incurred as a result of such action, if such
director or officer acted, in good faith, for
a purpose which he reasonably believed to be
in, or not opposed to, the best interests of
the corporation and, in criminal actions or
proceedings, in addition, has no reasonable
cause to believe that his conduct was
unlawful.
Celestial's by-laws provide that Celestial
will indemnify any person who was or is a
party to or is threatened to any threatened
action or suit by or in the right of
Celestial to obtain a judgment in its favor
because such person was a director, officer,
employee or agent of Celestial, against
expenses (including attorneys fees) actually
and reasonably incurred by such person in
connection with the defense or settlement of
such action, if such person acted, in good
faith, and in a manner such person reasonably
believed to be in, or not opposed to, the
best interests of Celestial, except that no
indemnification will be made in respect of
any claim as to which such director or
officer shall have been adjudged liable to
Celestial, unless and only to the extent that
the court in which such action was brought
determines, upon application, that, despite
the determination of liability, such person
is fairly and reasonably entitled to
indemnity for such expenses.
Celestial's by-laws provide that if a
director, officer, employee or agent has been
successful, whether on the merits or
otherwise, in defending an action, suit or
proceeding referred to above, or in defending
any claim, issue or matter therein, he or she
will be indemnified against expenses
(including attorneys' fees) actually and
reasonable incurred by him or her in
connection with such claim, issue or matter.
Delaware law provides that a corporation may indemnify a director or officer
by a provision contained in the certificate of incorporation or by-laws or by a
duly authorized resolution of its stockholders or directors or by agreement,
provided that no indemnification may be made to or on behalf of any director or
officer if a judgment or other final adjudication adverse to the director or
84
officer establishes that his acts were committed in bad faith or were the result
of active and deliberate dishonesty and material to the cause of action, or that
such director or officer personally gained in fact a financial profit or other
advantage to which he was not legally entitled.
Delaware law provides that a corporation may indemnify a director or officer
made, or threatened to be made, a party to any threatened, pending or completed
action other than a derivative action, whether civil or criminal, against
expenses (including attorneys' fees), judgments, fines, amounts paid in
settlement actually and reasonably incurred as a result of such action, if such
director or officer acted, in good faith, for a purpose which he reasonably
believed to be in, or not opposed to, the best interests of the corporation and,
in criminal actions or proceedings, in addition, has no reasonable cause to
believe that his conduct was unlawful.
Delaware law provides that a corporation may indemnify a director or
officer, made or threatened to be made a party in a derivative action, against
expenses (including attorneys fees) actually and reasonably incurred by such
person in connection with the defense or settlement of such action, if such
director or officer acted, in good faith, and in a manner such person reasonably
believed to be in, or not opposed to, the best interests of the corporation,
except that no indemnification will be made in respect of any claim as to which
such director or officer shall have been adjudged liable to the corporation,
unless and only to the extent that the Court of Chancery or the court in which
the action was brought determines, upon application, that, in view of all the
circumstances of the case, the director or officer is fairly and reasonably
entitled to indemnity for such expenses as the Court of Chancery or such other
court deems proper.
Delaware law provides that indemnification by a corporation is mandatory in
any case in which a present or former director or officer has been successful,
whether on the merits or otherwise, in defending an action. In the event that
the director or officer has not been successful or the action is settled,
indemnification must be authorized by the appropriate corporate action as set
forth in Section 145(d).
HAIN CELESTIAL
- --------------------------------------------- ---------------------------------------------
SPECIAL MEETINGS OF STOCKHOLDERS
The Hain by-laws provide that special Special meetings of the Celestial
meetings may be called at any time and for stockholders for any purpose may be called at
any purpose by: the chairman of the board of any time by: the chairman of Celestial's
directors; the vice-chairman of the board of board of directors; Celestial's president; or
directors; Hain's president; or the board of Celestial's secretary or assistant secretary
directors. at the written request of a majority of the
board of directors.
STOCKHOLDER ACTION WITHOUT MEETING
The Hain by-laws provide that any action The Celestial certificate of incorporation
required or permitted to be voted on may be and bylaws provide that no action required or
consented to in writing without a meeting. permitted to be taken at any annual or
special meeting of stockholders may be taken
without a meeting and stockholders may not
take action by written consent.
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HAIN CELESTIAL
- --------------------------------------------- ---------------------------------------------
STOCKHOLDER RIGHTS PLAN
Hain currently has no stockholders rights Each share of Celestial common stock has one
plan. right attached to it. Generally, each right
entitles the registered holder to purchase
from Celestial one one-thousandth of a share
of Series A Junior Participating Preferred
Stock, at a purchase price of $42.50. The
purchase price is subject to adjustment from
time to time to prevent dilution upon
specified changes in Celestial's
capitalization. The terms and conditions
relating to the rights are set forth in
Celestial rights agreement, dated July 19,
1993, as amended.
The rights will separate from the Celestial
common stock upon the earlier of:
- ten days following a public announcement
that a person or group, known as an
"acquiring person," together with persons
affiliated or associated with it, has
acquired, or obtained the right to acquire,
beneficial ownership of 15% or more of the
outstanding shares of Celestial common
stock. This date is referred to as the
"stock acquisition date"; or
- ten business days, or any later date
determined by the Celestial board, following
the commencement of a tender offer or
exchange offer that would result in a
person or group beneficially owning 15% or
more of the outstanding shares of Celestial
common stock;
Upon consummation of the merger, each share
of Celestial common stock and the associated
right will convert into 1.265 shares of Hain
common stock.
86
LEGAL MATTERS
Cahill Gordon & Reindel, counsel to Hain, will pass on the validity of the
Hain common shares to be issued to Celestial stockholders in the merger. It is a
condition to the consummation of the merger that Hain and Celestial receive
opinions from Cahill Gordon & Reindel and Bartlit Beck Herman Palenchar & Scott,
counsel to Celestial, to the effect that, among other things, the merger will be
a tax-free reorganization for federal income tax purposes. We describe the
conditions for consummation of the merger under the heading "The Merger
Agreement--Conditions To The Merger" and we provide details of the tax opinion
under the heading "The Merger--Material Federal Income Tax Consequences."
EXPERTS
The consolidated financial statements of The Hain Food Group, Inc. and
Subsidiaries appearing in The Hain Food Group Inc. and Subsidiaries Annual
Report (Form 10-K) for the year ended June 30, 1999, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
included therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
report given on the authority of such firm as experts in accounting and
auditing.
The consolidated financial statements of Natural Nutrition Group, Inc. as of
December 31, 1997 and 1998 and for each of the three years in the period ended
December 31, 1998, incorporated in this joint proxy statement/prospectus by
reference from Amendment No. 3 to the Current Report on Form 8-K of The Hain
Food Group, Inc. dated April 27, 1999, have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference, and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
The consolidated financial statements and the related financial statement
schedules of Celestial Seasonings, Inc. incorporated in this joint proxy
statement/prospectus by reference from Celestial Seasonings, Inc.'s Annual
Report on Form 10-K/A for the year ended September 30, 1999 have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their reports, which
are incorporated by reference, and have been so incorporated in reliance upon
the reports of such firm given upon their authority as experts in accounting and
auditing.
With respect to the unaudited interim financial information of Celestial
Seasonings, Inc. for the periods ended December 31, 1999 and 1998 which is
incorporated by reference in this joint proxy statement/prospectus, Deloitte &
Touche LLP have applied limited procedures in accordance with professional
standards for a review of such information. However, as stated in their report
included in Celestial Seasonings, Inc.'s Quarterly Report on Form 10-Q for the
quarter ended December 31, 1999, and incorporated by reference herein, they did
not audit and they do not express an opinion on that interim financial
information. Accordingly, the degree of reliance on their report on such
information should be restricted in light of the liability provisions of
Section 11 of the Securities Act of 1933 for their reports on the unaudited
interim financial information because those reports are not "reports" or a
"part" of the joint proxy statement/prospectus prepared or certified by an
accountant within the meaning of Sections 7 and 11 of the Securities Act.
FUTURE STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 2000 Annual Meeting of
Stockholders of Hain must be received by the Secretary of Hain not later than
July 31, 2000 for inclusion in the proxy materials for that meeting pursuant to
Rule 14a-8(d) of the Securities Exchange Act of 1934.
87
If proxy materials are required to be delivered and completion of the merger
does not occur, stockholder proposals intended to be presented at the 2000
Annual Meeting of Stockholders of Celestial must be received by the Secretary of
Celestial for inclusion in the proxy materials for such meeting on or before
September 14, 2000 pursuant to Rule 14a-8(d) of the Exchange Act of 1934, or
between November 1, 2000 and November 25, 2000 pursuant to the bylaws of
Celestial.
WHERE YOU CAN FIND MORE INFORMATION
Hain and Celestial file annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any
reports, statements or other information we file at the SEC's public reference
rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call
the SEC at 1-800-SEC-0330 for further information on the public reference rooms.
Hain's and Celestial's SEC filings are also available to the public from
commercial document retrieval services and at the web site maintained by the SEC
at www.sec.gov.
Hain filed a Registration Statement on Form S-4 to register with the SEC the
Hain common shares to be issued to Celestial stockholders in the merger. This
document is a part of that Registration Statement and constitutes a prospectus
of Hain in addition to being a proxy statement of Hain and Celestial for each
company's special meeting. As permitted by SEC rules, this document does not
contain all the information that you can find in the Registration Statement or
the exhibits to the Registration Statement.
The SEC allows Hain and Celestial to incorporate by reference information
into this document. This means that Hain and Celestial can disclose important
information to you by referring you to another document filed separately with
the SEC. The information incorporated by reference is deemed to be part of this
document, except for any information superseded by information in this document.
This document incorporates by reference the documents set forth below that Hain
and Celestial have previously filed with the SEC. These documents contain
important information about Hain and Celestial and their financial performance.
HAIN'S SEC FILINGS
(FILE NO. 0-22818) PERIOD
- --------------------------------------------- ---------------------------------------------
Annual Report on Form 10-K Fiscal year ended June 30, 1999
Quarterly Reports on Form 10-Q Quarters ended September 30, 1999 and
December 31, 1999
Current Reports on Form 8-K Filed on April 27, 1999, as amended by
Amendment No. 3 dated June 18, 1999,
September 30, 1999 and March 13, 2000
Hain is also incorporating by reference additional documents that Hain files
with the SEC pursuant to sections 13(a), 13(c), 14 or 15(d) of the Exchange Act,
between the date of this document and the date of the Hain special stockholders'
meeting.
CELESTIAL'S SEC FILINGS
(FILE NO. 0-22018) PERIOD
- --------------------------------------------- ---------------------------------------------
Annual Report on Form 10-K Fiscal year ended September 30, 1999
Amended Annual Report on Form 10-K/A Filed on December 31, 1999
Quarterly Report on Form 10-Q Quarter ended December 31, 1999
Current Report on Form 8-K Filed on March 14, 2000
88
Celestial is also incorporating by reference additional documents that
Celestial files with the SEC pursuant to sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act, between the date of this document and the date of the
Celestial special stockholders' meeting.
Hain has supplied all information contained or incorporated by reference in
this document relating to Hain, and Celestial has supplied all such information
contained or incorporated by reference in this document relating to Celestial.
You may already have been sent some of the documents incorporated by
reference, but you can obtain any of them from Hain or Celestial, as
appropriate, or the SEC. Documents incorporated by reference are available from
Hain or Celestial, as appropriate, without charge, excluding all exhibits unless
an exhibit has been specifically incorporated by reference in this document.
Stockholders may obtain documents incorporated by reference in this document by
Hain by requesting them in writing or by telephone at the following address:
The Hain Food Group, Inc.
50 Charles Lindbergh Boulevard
Uniondale, NY 11553
Tel: (516) 237-6200
Attn: Gary M. Jacobs
Stockholders may obtain documents incorporated by reference in this document by
Celestial by requesting them in writing or by telephone at the following
address:
Celestial Seasonings, Inc.
4600 Sleepytime Drive
Boulder, CO 80301
Tel: (303) 530-5300
Attn: David I. Rosenthal
If you would like to request documents from Hain or Celestial, please do so
by May 22, 2000 to receive them before the stockholders' meetings. Hain or
Celestial will send such documents by first-class mail within one business day
of receiving your request.
You should rely only on the information contained or incorporated by
reference in this document to vote on the Hain certificate amendment proposal
and share issuance proposal and the Celestial merger agreement proposal. We have
not authorized anyone to provide you with information that is different from
what is contained in this document. This document is dated April 25, 2000. You
should not assume that the information contained in this document is accurate as
of any date other than that date, and neither the mailing of this document to
stockholders nor the issuance of Hain common shares in the merger shall create
any implication to the contrary.
89
ANNEX A
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
THE HAIN FOOD GROUP, INC.
AND
CELESTIAL SEASONINGS, INC.
DATED AS OF
MARCH 5, 2000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
--------
ARTICLE I
MERGER
1.1 Formation of Hain Subsidiary................................ 1
1.2 The Merger.................................................. 1
1.3 Closing..................................................... 2
1.4 Filing...................................................... 2
1.5 Effective Time of the Merger................................ 2
ARTICLE II
CERTIFICATE OF INCORPORATION; BY-LAWS; DIRECTORS AND OFFICERS
2.1 Certificate of Incorporation................................ 2
2.2 By-Laws..................................................... 2
2.3 Directors and Officers of the Surviving Corporation......... 2
2.4 Board of Directors of Hain.................................. 2
(a) Composition............................................. 2
(b) Company Designees....................................... 2
(c) Chairman and Vice Chairman of the Hain Board............ 3
ARTICLE III
EFFECT OF THE MERGER; CONVERSION OF SHARES
3.1 Effect on Capital Stock..................................... 3
(a) Hain Subsidiary Common Stock............................ 3
(b) Cancellation of Treasury Stock.......................... 3
(c) Conversion of Company Shares............................ 3
3.2 Exchange of Certificates.................................... 3
(a) Exchange Agent.......................................... 3
(b) Exchange Procedures..................................... 4
(c) Exchange of Certificates................................ 4
(d) Distributions with Respect to Unsurrendered
Certificates................................................ 4
(e) No Further Rights in Company Shares..................... 4
(f) No Fractional Shares.................................... 5
(g) Termination of Exchange Fund............................ 5
(h) No Liability............................................ 5
(i) Withholding Rights...................................... 5
(j) Lost Certificates....................................... 5
(k) Anti-Dilution........................................... 5
3.3 Stock Transfer Books........................................ 6
ARTICLE IV
CERTAIN EFFECTS OF THE MERGER
4.1 Effect of the Merger........................................ 6
4.2 Further Assurances.......................................... 6
i
PAGE
--------
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
5.1 Organization and Qualification.............................. 6
5.2 Capital Stock of Subsidiaries............................... 7
5.3 Capitalization.............................................. 7
5.4 Authority Relative to This Agreement........................ 7
5.5 No Violations, etc. ........................................ 8
5.6 Commission Filings; Consolidated Financial Statements....... 8
5.7 Absence of Changes or Events................................ 9
5.8 Joint Proxy Statement....................................... 10
5.9 Litigation.................................................. 10
5.10 Property and Leases......................................... 10
5.11 Employment and Labor Contracts.............................. 11
5.12 Labor Matters............................................... 11
5.13 Compliance with Law......................................... 11
5.14 Board Recommendation........................................ 11
5.15 Intellectual Property....................................... 11
5.16 Taxes....................................................... 12
5.17 Employee Benefit Plans; ERISA............................... 13
5.18 Environmental Matters....................................... 14
5.19 Disclosure.................................................. 15
5.20 Absence of Undisclosed Liabilities.......................... 16
5.21 Finders or Brokers.......................................... 16
5.22 Rights Agreement............................................ 16
5.23 Opinion of Financial Advisor................................ 16
5.24 Insurance................................................... 16
5.25 Tax Free Reorganization..................................... 16
5.26 Full Disclosure............................................. 16
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF HAIN
6.1 Organization and Qualification.............................. 17
6.2 Capital Stock of Subsidiaries............................... 17
6.3 Capitalization.............................................. 17
6.4 Authority Relative to This Agreement........................ 17
6.5 No Violations, etc. ........................................ 18
6.6 Commission Filings; Financial Statements.................... 18
6.7 Absence of Changes or Events................................ 19
6.8 Joint Proxy Statement....................................... 20
6.9 Litigation.................................................. 20
6.10 Property and Leases......................................... 20
6.11 Labor Matters............................................... 20
6.12 Compliance with Law......................................... 20
6.13 Board Recommendation........................................ 21
6.14 Intellectual Property....................................... 21
6.15 Taxes....................................................... 21
6.16 Disclosure.................................................. 22
6.17 Absence of Undisclosed Liabilities.......................... 22
ii
PAGE
--------
6.18 Finders or Brokers.......................................... 22
6.19 Opinion of Financial Advisor................................ 22
6.20 Environmental Matters....................................... 22
6.21 Employee Benefit Plans; ERISA............................... 23
6.22 Insurance................................................... 23
6.23 Tax Free Reorganization..................................... 23
6.24 Full Disclosure............................................. 23
ARTICLE VII
CONDUCT OF BUSINESS OF
THE COMPANY AND HAIN PENDING THE MERGER
7.1 Conduct of Business of the Company Pending the Merger....... 24
7.2 Conduct of Business of Hain Pending the Merger.............. 25
ARTICLE VIII
COVENANTS AND AGREEMENTS
8.1 Preparation of the Registration Statement; Stockholder
Meeting..................................................... 26
8.2 Letters and Consents of the Company's Accountants........... 27
8.3 Letters and Consents of Hain's Accountants.................. 27
8.4 Additional Agreements; Cooperation.......................... 27
8.5 Publicity................................................... 28
8.6 No Solicitation............................................. 28
8.7 Access to Information....................................... 29
8.8 Notification of Certain Matters............................. 29
8.9 Resignation of Directors.................................... 29
8.10 Indemnification and Insurance............................... 29
8.11 Fees and Expenses........................................... 30
8.12 Affiliates and Pooling Agreements........................... 30
8.13 Nasdaq Listing.............................................. 30
8.14 Stockholder Litigation...................................... 30
8.15 Company Employees........................................... 30
ARTICLE IX
CONDITIONS TO CLOSING
9.1 Conditions to Each Party's Obligation to Effect the
Merger...................................................... 31
(a) Stockholder Approvals................................... 31
(b) HSR Act................................................. 32
(c) No Injunctions or Restraints............................ 32
(d) Pooling of Interests; Consents.......................... 32
(e) Registration Statement.................................. 32
(f) Nasdaq Listing.......................................... 32
(g) Consents and Approvals.................................. 32
9.2 Conditions to Obligations of Hain........................... 32
(a) Representations and Warranties.......................... 32
(b) Performance of Obligations of the Company............... 32
(c) No Material Adverse Change.............................. 32
(d) Affiliate Letters....................................... 32
(e) Tax Opinion............................................. 32
iii
PAGE
--------
9.3 Conditions to Obligations of the Company.................... 33
(a) Representations and Warranties.......................... 33
(b) Performance of Obligations of Hain and Hain
Subsidiary.................................................. 33
(c) No Material Adverse Change.............................. 33
(d) Tax Opinion............................................. 33
ARTICLE X
TERMINATION
10.1 Termination................................................. 33
10.2 Effect of Termination....................................... 34
ARTICLE XI
MISCELLANEOUS
11.1 Nonsurvival of Representations and Warranties............... 35
11.2 Waiver...................................................... 35
11.3 Notices..................................................... 35
11.4 Counterparts................................................ 36
11.5 Interpretation.............................................. 36
11.6 Amendment................................................... 37
11.7 No Third Party Beneficiaries................................ 37
11.8 Governing Law............................................... 37
11.9 Enforcement................................................. 37
11.10 Entire Agreement............................................ 37
11.11 No Recourse Against Others.................................. 37
11.12 Validity.................................................... 37
iv
DISCLOSURE SCHEDULES
COMPANY DISCLOSURE SCHEDULES
SECTION
- ---------------------
5.1. Organization and Qualification
5.2 Capital Stock of Subsidiaries
5.3. Capitalization
5.5 No Violations, Etc.
5.11. Employment and Labor Contracts
5.17 Employee Benefit Plans; ERISA
5.21. Finders or Brokers
7.1 Conduct of Business of the Company
8.4 Additional Agreements; Cooperation
HAIN DISCLOSURE SCHEDULES
SECTION
- ---------------------
6.2 Capital Stock of Subsidiaries
6.3 Capitalization
6.5 No Violations, Etc.
6.9 Litigation
6.11 Labor Matters
6.12 Compliance with Law
6.18 Finders or Brokers
EXHIBITS
EXHIBIT A--Amended and Restated Certificate of Incorporation
EXHIBIT B--Form of Company Affiliate Letter
v
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 5, 2000, by and between The
Hain Food Group, Inc., a Delaware corporation ("HAIN"), and Celestial
Seasonings, Inc., a Delaware corporation (the "COMPANY").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of each of Hain and the Company have
approved the merger (the "MERGER") of a wholly owned subsidiary of Hain, to be
formed for the purpose thereof ("HAIN SUBSIDIARY"), with and into the Company,
upon the terms and subject to the conditions set forth herein and in accordance
with the General Corporation Law of the State of Delaware (the "DGCL");
WHEREAS, in connection with the Merger, the Board of Directors of Hain has
approved and recommended that Hain's stockholders approve a change of its
corporate name to The Hain Celestial Group, Inc.;
WHEREAS, in furtherance thereof it is proposed that each outstanding share
of common stock, par value $.01 per share, of the Company (the "COMPANY COMMON
STOCK," and together with the preferred share purchase rights (the "Rights")
issued pursuant to the Amended and Restated Rights Agreement, dated as of
November 11, 1998, by and between the Company and the Harris Trust and Savings
Bank, as rights agent (the "RIGHTS AGREEMENT"), associated with such shares, the
"COMPANY SHARES") will be converted into the right to receive the Merger
Consideration (as hereinafter defined) upon the terms and conditions set forth
in this Agreement;
WHEREAS, as inducements to the Company and Hain entering into this Agreement
and incurring the obligations set forth herein, and contemporaneously with the
execution and delivery of this Agreement, Irwin D. Simon and Mo Siegel have
agreed to enter into separate Voting Agreements pursuant to which, among other
things, Mr. Simon will vote all of his Hain Common Stock (as hereinafter
defined) in favor of this Agreement and the Merger, and Mr. Siegel will vote all
of his Company Common Stock in favor of this Agreement and the Merger;
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a tax free reorganization within the meaning of Section 368 of
the Internal Revenue Code of 1986, as amended (the "CODE");
WHEREAS, for accounting purposes, it is intended that the Merger shall be
accounted for as a "pooling of interests;" and
NOW, THEREFORE, in consideration of the premises and of the mutual covenants
and agreements herein contained, the parties hereto, intending to be legally
bound, agree as follows:
ARTICLE I
MERGER
1.1 FORMATION OF HAIN SUBSIDIARY. Hain shall form Hain Subsidiary under
the DGCL. Hain Subsidiary will be formed solely to facilitate the Merger and the
transactions contemplated thereby and will conduct no business or activity other
than in connection with the Merger. Hain will cause Hain Subsidiary to execute
and deliver a joinder to this Agreement pursuant to Section 251 of the DGCL and
will execute a written consent as the sole stockholder of Hain Subsidiary,
approving the execution, delivery and performance of this Agreement by Hain
Subsidiary.
1.2 THE MERGER. At the Effective Time (as hereinafter defined), Hain
Subsidiary shall be merged with and into the Company as provided herein.
Thereupon, the corporate existence of the Company, subject to Section 2.1
hereof, with all its purposes, powers and objects, shall continue unaffected and
unimpaired by the Merger, and the corporate identity and existence, with all the
purposes, powers and
A-1
objects, of Hain Subsidiary shall be merged with and into the Company and the
Company as the corporation surviving the Merger (hereinafter sometimes referred
to as the "SURVIVING CORPORATION") shall continue its corporate existence under
the laws of the State of Delaware. The name of the Surviving Corporation shall
be Celestial Seasonings, Inc.
1.3 CLOSING. The closing of the Merger (the "CLOSING") will take place at
10:00 a.m., New York time, on the later of July 1, 2000 or the date that is no
later than the second business day after satisfaction of the conditions set
forth in Article IX, unless another time or date is agreed to in writing by the
parties hereto (the "CLOSING DATE"). The Closing will be held at the offices of
Cahill Gordon & Reindel, 80 Pine Street, New York, New York, unless another
place is agreed to in writing by the parties hereto.
1.4 FILING. Subject to the provisions of this Agreement, on the Closing
Date, the parties hereto will cause to be filed with the office of the Secretary
of State of the State of Delaware, a certificate of merger (the "CERTIFICATE OF
MERGER"), in such form as required by, and executed in accordance with, the
relevant provisions of the DGCL.
1.5 EFFECTIVE TIME OF THE MERGER. The Merger shall be effective at the
time that the filing of the Certificate of Merger, or at such later time
specified in such Certificate of Merger, which time is herein sometimes referred
to as the "EFFECTIVE TIME" and the date thereof is herein sometimes referred to
as the "EFFECTIVE DATE."
ARTICLE II
CERTIFICATE OF INCORPORATION; BY-LAWS; DIRECTORS AND OFFICERS
2.1 CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of the
Company shall be amended and restated, effective at the Effective Time, in the
form set forth in EXHIBIT A hereto. The Certificate of Incorporation of the
Company, as so amended and restated, shall be the Certificate of Incorporation
of the Surviving Corporation.
2.2 BY-LAWS. The By-Laws of Hain Subsidiary shall be the By-Laws of the
Surviving Corporation until the same shall thereafter be altered, amended or
repealed in accordance with the laws of the State of Delaware, the Certificate
of Incorporation of the Surviving Corporation or said By-Laws.
2.3 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The directors and
officers of Hain Subsidiary immediately prior to the Effective Time shall be the
directors and officers of the Surviving Corporation, each to hold office in
accordance with the Certificate of Incorporation and By-laws of the Surviving
Corporation and until their respective successors are duly elected or appointed
and qualified.
2.4 BOARD OF DIRECTORS OF HAIN. (a) COMPOSITION. After the Effective Time,
the Board of Directors of Hain (the "HAIN BOARD") shall be comprised of no less
than eleven directors, including (i) six directors to be designated by Hain
consistent with past practices, (ii) one director to be designated by Earth's
Best, Inc., or its successor ("EB") and one director to be jointly designated by
Hain and EB, each in accordance with a certain Investor's Agreement dated
September 24, 1999 by and among Hain, EB and Irwin D. Simon and (iii) three
directors to be designated as set forth in Section 2.4(b).
(b) COMPANY DESIGNEES. Hain agrees to take all action necessary such that
from and after the Effective Time until the next regularly scheduled meeting of
Hain's stockholders, the Hain Board shall include (i) three directors designated
by the Company (the "COMPANY DESIGNEES") and thereafter to use commercially
reasonable efforts to cause such nominees designated by the Company to be
included in each slate of proposed directors put forth by Hain to its
stockholders and recommended for election in any proxy solicitation materials
disseminated by Hain; PROVIDED, HOWEVER, that the identity of any Company
Designees other than (i) Mo Seigel, (ii) Marina Hahn and (iii) either of Ronald
V. Davis or
A-2
Gregg A. Ostrander shall be reasonably acceptable to Hain. Upon the death,
resignation or removal of any Company Designee, Hain will use its best efforts
to have the vacancy filled by a subsequent designee recommended by the remaining
Company Designees then serving on the Hain Board (subject to the preceding
sentence). Hain shall use commercially reasonable efforts to nominate the
Company Designees for a period of two years from the Effective Time. The Company
Designees shall be fully covered by any directors' and officers' liability
insurance maintained from time to time on the same terms as the other members of
the Hain Board, shall be entitled to the benefit of any indemnification
arrangements applicable to the other members of the Hain Board and shall have
the right to receive all fees paid and options and other awards granted and
expenses reimbursed to non-employee directors generally.
(c) CHAIRMAN AND VICE-CHAIRMAN OF THE HAIN BOARD. Hain agrees to take all
action necessary such that from and after the Effective Time Irwin D. Simon
shall be elected as the Chairman and Mo Seigel shall be elected as the
Vice-Chairman of the Board of Directors of Hain, each to serve in accordance
with Hain's certificate of incorporation and by-laws.
ARTICLE III
EFFECT OF THE MERGER; CONVERSION OF SHARES
3.1 EFFECT ON CAPITAL STOCK. As of the Effective Time, by virtue of the
Merger and without any action on the part of any holders of Company Shares or
any shares of capital stock of Hain Subsidiary:
(a) HAIN SUBSIDIARY COMMON STOCK. Each share of capital stock of Hain
Subsidiary issued and outstanding immediately prior to the Effective Time shall
be converted into one validly issued, fully paid and nonassessable share of
common stock of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK. Each Company Share (including the
associated Rights) that is owned by the Company or by any subsidiary of the
Company shall automatically be canceled and retired and shall cease to exist,
and no shares of common stock, par value $.01 per share, of Hain ("the "HAIN
COMMON STOCK"), cash or other consideration shall be delivered in exchange
therefor.
(c) CONVERSION OF COMPANY SHARES. Subject to Section 3.2(e), each issued and
outstanding Company Share (including the associated Rights) (other than shares
to be canceled in accordance with Section 3.1(b)) (collectively, the "EXCHANGING
COMPANY SHARES") shall be converted into the right to receive 1.265 (the
"EXCHANGE RATIO") shares of Hain Common Stock (the "MERGER CONSIDERATION"). As
of the Effective Time, all such Exchanging Company Shares shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate representing any Exchanging Company
Shares shall cease to have any rights with respect thereto, except the right to
receive the Merger Consideration and any cash in lieu of fractional shares of
Hain Common Stock to be issued or paid in consideration therefor upon surrender
of such certificate in accordance with Section 3.2, without interest.
3.2 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. From and after the Effective Time, Hain shall make
available to Continental Stock Transfer & Trust Company or such other bank or
trust company designated by Hain (the "EXCHANGE AGENT"), for the benefit of the
holders of Company Shares, for exchange in accordance with this Article III
through the Exchange Agent, certificates evidencing a sufficient number of
shares of Hain Common Stock issuable to holders of Company Shares to satisfy the
requirements set forth in Section 3.1 relating to Merger Consideration (such
shares of Hain Common Stock, together with any cash deposited with the Exchange
Agent relating to Additional Payments (as hereinafter defined) being hereinafter
referred to as the "EXCHANGE FUND"). As promptly as practicable after the
Effective Time, Hain shall cause the Exchange Agent to deliver the Merger
Consideration and Additional Payments, if any, contemplated to be issued
pursuant to Section 3.1 out of the Exchange Fund in accordance with
A-3
the procedures specified in this Section 3.2. Except as contemplated by
Section 3.2(g) hereof, the Exchange Fund shall not be used for any other
purpose.
(b) EXCHANGE PROCEDURES. As promptly as practicable after the Effective
Time, Hain shall cause the Exchange Agent to mail to each record holder of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding Company Shares (the "CERTIFICATES") (i) a letter of
transmittal (which shall be in customary form and shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon proper delivery of the Certificates to the Exchange Agent) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for the Merger Consideration.
(c) EXCHANGE OF CERTIFICATES. Upon surrender to the Exchange Agent of a
Certificate for cancellation, together with such letter of transmittal, duly
executed and completed in accordance with the instructions thereto, and such
other documents as may be reasonably required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of whole shares of Hain Common Stock, if
any, constituting Merger Consideration to which such holder is entitled pursuant
to this Article III (including any cash in lieu of any fractional shares of Hain
Common Stock to which such holder is entitled pursuant to Section 3.2(f) and any
dividends or other distributions to which such holder is entitled pursuant to
Section 3.2(d) (together, the "ADDITIONAL PAYMENTS")), and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of ownership
of Company Shares which is not registered in the transfer records of the
Company, the applicable Merger Consideration and Additional Payments, if any,
may be issued to a transferee if the Certificate representing such Company
Shares is presented to the Exchange Agent, accompanied by all documents required
to evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this
Section 3.2, each Certificate shall be deemed at all times after the Effective
Time to represent only the right to receive upon such surrender the applicable
Merger Consideration with respect to the Company Shares formerly represented
thereby and Additional Payments, if any.
(d) DISTRIBUTIONS WITH RESPECT TO UNSURRENDERED CERTIFICATES. No dividends
or other distributions declared or made after the Effective Time with respect to
Hain Common Stock with a record date after the Effective Time shall be paid to
the holder of any unsurrendered Certificate with respect to Hain Common Stock
the holder thereof is entitled to receive upon surrender thereof, and no cash
payment in lieu of any fractional shares shall be paid to any such holder
pursuant to Section 3.2(f), until the holder of such Certificate shall surrender
such Certificate. Subject to the effect of escheat, tax or other applicable
Laws, following surrender of any such Certificate, there shall be paid to the
holder of the certificates representing whole shares of Hain Common Stock issued
in exchange therefor, without interest, (i) promptly, the amount of any cash
payable with respect to fractional Hain Common Stock to which such holder is
entitled pursuant to Section 3.2(f) and the amount of dividends or other
distributions with a record date after the Effective Time and theretofore paid
with respect to such whole shares of Hain Common Stock, and (ii) at the
appropriate payment date, the amount of dividends or other distributions, with a
record date after the Effective Time but prior to surrender and a payment date
occurring after surrender, payable with respect to such whole Hain Common Stock.
After the Effective Time, each outstanding Certificate which theretofore
represented Company Shares shall, until surrendered for exchange in accordance
with this Section 3.2, be deemed for all purposes to evidence ownership of the
number of shares of Hain Common Stock into which the Company Shares (which,
prior to the Effective Time, were represented thereby) shall have been so
converted.
(e) NO FURTHER RIGHTS IN COMPANY SHARES. At the Effective Time all
outstanding Company Shares, by virtue of the Merger and without any action on
the part of the holders thereof, shall no longer be outstanding and shall be
canceled and retired and shall cease to exist, and each holder of a certificate
representing any such Company Shares shall thereafter cease to have any rights
with respect to such Company Shares, except the right to receive the Merger
Consideration for such Company Shares. All Hain Common Stock constituting Merger
Consideration issued upon conversion of the Company
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Shares in accordance with the terms hereof (including any cash paid pursuant to
Section 3.2(d) or (f)) shall be deemed to be validly issued, fully paid and
nonassessable and to have been issued or paid, as the case may be, in full
satisfaction of all rights pertaining to such Company Shares.
(f) NO FRACTIONAL SHARES. No fractional shares of Hain Common Stock shall be
issued in the Merger. In lieu of any such fractional shares, each holder of
Company Shares, who would otherwise have been entitled to a fraction of Hain
Common Stock pursuant to this Article III, will be entitled to receive an amount
of cash rounded to the nearest cent (without interest) determined by multiplying
the fair market value of a share of Company Common Stock (as determined by the
Company's Board of Directors at the Effective Time) by the fractional share
interest to which such holder would otherwise have been entitled. The parties
acknowledge that payment of the cash consideration in lieu of issuing fractional
shares was not separately bargained for consideration but merely represents a
mechanical rounding for purposes of simplifying the corporate and accounting
complexities which would otherwise be caused by the issuance of fractional
shares.
(g) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund which
remains undistributed to the holders of Company Shares for one year after the
Effective Time shall be delivered to Hain (who shall thereafter act as Exchange
Agent), upon demand, and any holders of Company Shares who have not theretofore
complied with this Article III shall thereafter look only to Hain for the
applicable Merger Consideration and any Additional Payments to which they are
entitled. To the extent permitted by applicable law, any portion of the Exchange
Fund remaining unclaimed by holders of Company Shares as of a date which is
immediately prior to such time as such amounts would otherwise escheat to or
become property of any government entity shall, on the third anniversary of the
Effective Date and to the extent permitted by applicable law, become the
property of Hain free and clear of any claims or interest of any person
previously entitled thereto.
(h) NO LIABILITY. None of the Exchange Agent, Hain or the Surviving
Corporation shall be liable to any holder of Certificates for any shares of Hain
Common Stock (or dividends or distributions with respect thereto), or cash
delivered to a public official pursuant to any abandoned property, escheat or
similar law.
(i) WITHHOLDING RIGHTS. Each of the Surviving Corporation and Hain shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Certificates such amounts as it is
required to deduct and withhold with respect to the making of such payment under
the Code, or any provision of state, local or foreign tax law. To the extent
that amounts are so withheld by the Surviving Corporation or Hain, as the case
may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Certificates in respect of
which such deduction and withholding was made by the Surviving Corporation or
Hain, as the case may be.
(j) LOST CERTIFICATES. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation or Hain, the posting by such person of a bond, in such
reasonable amount as the Surviving Corporation or Hain may direct, as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the applicable Merger Consideration and Additional Payments, if any.
(k) ANTI-DILUTION. The Exchange Ratio shall be adjusted to reflect fully the
effect of any stock split, reverse split, stock dividend (including any dividend
or distribution of securities convertible into Company Shares or Hain Common
Stock, as applicable), extraordinary dividend, reorganization, recapitalization
or any other like change with respect to Company Shares or Hain Common Stock
occurring after the date hereof and prior to the Effective Time. References to
the Exchange Ratio elsewhere in this Agreement shall be deemed to refer to the
Exchange Ratio as it may have been adjusted pursuant to this Section 3.2(k).
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3.3 STOCK TRANSFER BOOKS. At the Effective Time, the stock transfer books
of the Company shall be closed and there shall be no further registration of
transfers of Company Shares thereafter on the records of the Company. On or
after the Effective Time, any Certificates presented to the Exchange Agent or
Hain for any reason shall be converted into the applicable Merger Consideration
and Additional Payments, if any.
ARTICLE IV
CERTAIN EFFECTS OF THE MERGER
4.1 EFFECT OF THE MERGER. The effects and consequences of the Merger shall
be as set forth in Section 259 of the DGCL. Without limiting the generality of
the foregoing on and after the Effective Time and pursuant to the DGCL, the
Surviving Corporation shall possess all the rights, privileges, immunities,
powers, and purposes of each of Hain Subsidiary and the Company; all the
property, real and personal, including subscriptions to shares, causes of action
and every other asset (including books and records) of Hain Subsidiary and the
Company shall vest in the Surviving Corporation without further act or deed; and
the Surviving Corporation shall assume and be liable for all the liabilities,
obligations and penalties of Hain Subsidiary and the Company; PROVIDED, HOWEVER,
that this shall in no way impair or affect the indemnification obligations of
any party pursuant to the indemnification provisions of this Agreement. No
liability or obligation due or to become due and no claim or demand for any
cause existing against either Hain Subsidiary or the Company, or any
stockholder, officer or director thereof, shall be released or impaired by the
Merger, and no action or proceeding, whether civil or criminal, then pending by
or against Hain Subsidiary or the Company, or any stockholder, officer or
director thereof, shall abate or be discontinued by the Merger, but may be
enforced, prosecuted, settled or compromised as if the Merger had not occurred,
and the Surviving Corporation may be substituted in any such action or
proceeding in place of Hain Subsidiary or the Company.
4.2 FURTHER ASSURANCES. If at any time after the Effective Time, any
further action is necessary or desirable to carry out the purposes of this
Agreement and to vest the Surviving Corporation with full right, title and
possession to all assets, property, rights, privileges, powers and franchises of
either of Hain Subsidiary or the Company, the officers of such corporation are
fully authorized in the name of their corporation or otherwise to take, and
shall take, all such further action.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Hain as follows:
5.1 ORGANIZATION AND QUALIFICATION. 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 and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted. Each of the Company and its
subsidiaries is duly qualified as a foreign corporation to do business, and is
in good standing, in each jurisdiction where the character of its properties
owned or leased or the nature of its activities makes such qualification
necessary, except for failures to be so qualified or in good standing which
would not, individually or in the aggregate, have a material adverse effect on
the general affairs, management, business, operations, condition (financial or
otherwise) or prospects of the Company and its subsidiaries, taken as a whole (a
"COMPANY MATERIAL ADVERSE EFFECT"). SECTION 5.1 of the Disclosure Schedule sets
forth, with respect to the Company and each of its subsidiaries, each of the
jurisdictions in which they are incorporated or qualified or otherwise licensed
as a foreign corporation to do business. Neither the Company nor any of its
subsidiaries is in violation of any of the provisions of its certificate or
articles of incorporation or organization (or other applicable charter document)
or
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by-laws. The Company has delivered to Hain accurate and complete copies of the
certificate or articles of incorporation or organization (or other applicable
charter document) and by-laws, as currently in effect, of each of the Company
and its subsidiaries.
5.2 CAPITAL STOCK OF SUBSIDIARIES. The only direct or indirect
subsidiaries of the Company are those listed in SECTION 5.2 of the Disclosure
Schedule. The Company is directly or indirectly the record and beneficial owner
of all of the outstanding shares of capital stock of each of its subsidiaries,
and all of such shares so owned by the Company are validly issued, fully paid
and nonassessable and are owned by it free and clear of any claim, lien or
encumbrance of any kind with respect thereto.
5.3 CAPITALIZATION. The authorized capital stock of the Company consists
of 15,000,000 shares of Company Common Stock and 1,000,000 shares of preferred
stock, par value $.01 per share. As of March 1, 2000, 8,412,197 shares of
Company Common Stock are issued and outstanding, 17,800 shares are issued and
held as treasury shares and no shares of preferred stock are issued and
outstanding. All of such issued and outstanding shares of Company Common Stock
are validly issued, fully paid and nonassessable and free of preemptive rights.
SECTION 5.3 of the Disclosure Schedule sets forth all outstanding options,
warrants or other rights, whether or not exercisable, to acquire any shares of
Company Common Stock or any other equitable interest in the Company, and, in the
case of outstanding options, identifies the Company stock plan or other Company
benefit plan under which such options were granted. Except as set forth in
SECTION 5.3 of the Disclosure Schedule, and except with respect to plans and
agreements described in Section 8.15(e) of this Agreement, the Company's
obligations under the Rights Agreement and the transactions contemplated by this
Agreement, neither the Company nor any of its subsidiaries is a party to any
agreement or understanding, oral or written, which (a) grants an option, warrant
or other right to acquire shares of Company Common Stock or any other equitable
interest in the Company, (b) grants a right of first refusal or other such
similar right upon the sale of Company Common Stock, or (c) restricts or affects
the voting rights of Company Common Stock. There is no liability for dividends
declared or accumulated but unpaid with respect to any Company Common Stock.
5.4 AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has corporate power
and authority to execute and deliver this Agreement and to consummate the Merger
and other transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the Merger and other transactions contemplated
hereby have been duly and validly authorized by the Board of Directors of the
Company and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the Merger or other
transactions contemplated hereby (other than as contemplated by this Agreement,
including the approval of the Company's stockholders pursuant to the DGCL). This
Agreement has been duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery hereof by Hain,
constitutes a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms, except to the extent that its
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of creditors'
rights generally or by general equitable or fiduciary principles.
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5.5 NO VIOLATIONS, ETC.
(a) Assuming that all filings, permits, authorizations, consents and
approvals or waivers thereof have been duly made or obtained as contemplated by
Section 5.5(b) hereof, except as set forth in SECTION 5.5 of the Disclosure
Schedule, neither the execution and delivery of this Agreement by the Company
nor the consummation of the Merger or other transactions contemplated hereby nor
compliance by the Company with any of the provisions hereof will (i) violate,
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination or suspension of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of the Company or any
of its subsidiaries under, any of the terms, conditions or provisions of
(x) their respective certificate or articles of incorporation or organization or
by-laws, (y) any note, bond, mortgage, indenture or deed of trust, or (z) any
license, lease, agreement or other instrument or obligation to which the Company
or any such subsidiary is a party or to which they or any of their respective
properties or assets may be subject, or (ii) violate any judgment, ruling,
order, writ, injunction, decree, statute, rule or regulation applicable to the
Company or any of its subsidiaries or any of their respective properties or
assets, except, in the case of clauses (i)(z) and (ii) above, for such
violations, conflicts, breaches, defaults, terminations, suspensions,
accelerations, rights of termination or acceleration or creations of liens,
security interests, charges or encumbrances which would not, individually or in
the aggregate, either have a Company Material Adverse Effect or materially
impair the Company's ability to consummate the Merger or other transactions
contemplated hereby.
(b) No filing or registration with, notification to and no permit,
authorization, consent or approval of any governmental entity (including,
without limitation, any federal, state or local regulatory authority or agency)
is required by the Company in connection with the execution and delivery of this
Agreement or the consummation by the Company of the Merger or other transactions
contemplated hereby, except (i) in connection with the applicable requirements
of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR ACT"), (ii) the filing of the Certificate of Merger, (iii) the approval of
the Company's stockholders pursuant to the DGCL, (iv) filings with the
Securities and Exchange Commission (the "SEC") and (v) such other filings,
registrations, notifications, permits, authorizations, consents or approvals the
failure of which to be obtained, made or given would not, individually or in the
aggregate, either have a Company Material Adverse Effect or materially impair
the Company's ability to consummate the Merger or other transactions
contemplated hereby.
(c) As of the date hereof, none of the Company or any of its subsidiaries is
in violation of or default under (x) its respective certificate or articles of
incorporation or organization or by-laws, (y) any note, bond, mortgage,
indenture or deed of trust, or (z) any license, lease, agreement or other
instrument or obligation to which the Company or any such subsidiary is a party
or to which they or any of their respective properties or assets may be subject,
except, in the case of clauses (y) and (z) above, for such violations or
defaults which would not, individually or in the aggregate, either have a
Company Material Adverse Effect or materially impair the Company's ability to
consummate the Merger or other transactions contemplated hereby.
5.6 COMMISSION FILINGS; CONSOLIDATED FINANCIAL STATEMENTS. (a) The Company
has filed all required forms, reports and documents with the SEC since
September 30, 1996, including, in the form filed with the SEC, together with any
amendments thereto, (i) its Annual Report on Form 10-K for the fiscal year ended
September 30, 1999 (the "COMPANY 10-K"), (ii) all proxy statements relating to
the Company's meetings of stockholders (whether annual or special) held since
September 30, 1999 (the "COMPANY CURRENT PROXIES"), (iii) its Quarterly Report
on Form 10-Q for the fiscal quarter ended December 31, 1999 (the "COMPANY
DECEMBER 1999 10-Q" and, together with the Company 10-K and the Company Current
Proxies, the "COMPANY CURRENT SEC REPORTS") and (iv) all other reports or
registration statements filed by the Company with the SEC since September 30,
1996 (collectively, the
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"COMPANY SEC REPORTS") with the SEC, all of which complied when filed in all
material respects with all applicable requirements of the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder (the
"SECURITIES ACT") and the Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the "EXCHANGE ACT"). The audited
consolidated financial statements and unaudited consolidated interim financial
statements of the Company and its subsidiaries included or incorporated by
reference in such Company SEC Reports were prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and present fairly,
in all material respects, the financial position and results of operations and
cash flows of the Company and its subsidiaries on a consolidated basis at the
respective dates and for the respective periods indicated (and in the case of
all such financial statements that are interim financial statements, contain all
adjustments so to present fairly). Except to the extent that information
contained in any Company SEC Report was revised or superseded by a later filed
Company SEC Report, none of the Company SEC Reports contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. The Company has
provided to Hain copies of all other correspondence sent to or received from the
SEC by the Company and its subsidiaries since September 30, 1996 (other than
cover letters).
(b) The Company has provided to Hain true and complete copies of the
unaudited consolidated balance sheet of the Company at February 19, 2000 (the
"FEBRUARY BALANCE SHEET") and the unaudited consolidated statements of income,
stockholders' equity and cash flow of the Company for the period from
December 26, 1999 through February 19, 2000 (collectively, the "FEBRUARY
FINANCIALS"). The February Financials fairly present, in all material respects,
the financial position of the Company at February 19, 2000, and the results of
operations of the Company for the period then ended, and have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis, except that such financial statements will not include any footnote
disclosures that might otherwise be required to be included by generally
accepted accounting principles, and shall also be subject to normal
non-recurring year-end audit adjustments. The February Balance Sheet reflects
all liabilities of the Company, whether absolute, accrued or contingent, as of
the date thereof of the type required to be reflected or disclosed on a balance
sheet prepared in accordance with generally accepted accounting principles
(applied in a manner consistent with the notes of the financial statements
included in the Company 10-K).
5.7 ABSENCE OF CHANGES OR EVENTS. Except as set forth in the Company
Current SEC Reports, since the date of the Company 10-K:
(a) there has been no material adverse change, or any development involving
a prospective material adverse change, in the general affairs, management,
business, operations, condition (financial or otherwise) or prospects of the
Company and its subsidiaries taken as a whole;
(b) there has not been any direct or indirect redemption, purchase or other
acquisition of any shares of capital stock of the Company or any of its
subsidiaries, or any declaration, setting aside or payment of any dividend or
other distribution by the Company or any of its subsidiaries in respect of its
capital stock;
(c) except in the ordinary course of its business and consistent with past
practice, neither the Company nor any of its subsidiaries has incurred any
indebtedness for borrowed money, or assumed, guaranteed, endorsed or otherwise
as an accommodation become responsible for the obligations of any other
individual, firm or corporation, or made any loans or advances to any other
individual, firm or corporation;
(d) there has not been any change in the financial or the accounting
methods, principles or practices of the Company or its subsidiaries;
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(e) except in the ordinary course of business and for amounts which are not
material, there has not been any revaluation by the Company or any of its
subsidiaries of any of their respective assets, including, without limitation,
writing down the value of inventory or writing off notes or accounts
receivables;
(f) there has not been any damage, destruction or loss, whether covered by
insurance or not, except for such as would not, individually or in the
aggregate, have a Company Material Adverse Effect; and
(g) there has not been any agreement by the Company or any of its
subsidiaries to (i) do any of the things described in the preceding clauses
(a) through (f) other than as expressly contemplated or provided for in this
Agreement or (ii) take, whether in writing or otherwise, any action which, if
taken prior to the date of this Agreement, would have made any representation or
warranty in this Article V untrue or incorrect.
5.8 JOINT PROXY STATEMENT. None of the information supplied or to be
supplied by or on behalf of the Company for inclusion or incorporation by
reference in the registration statement to be filed with the SEC by Hain in
connection with the issuance of shares of Hain Common Stock in the Merger (the
"REGISTRATION STATEMENT") will, at the time the Registration Statement becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. None of the information supplied or to be
supplied by or on behalf of the Company for inclusion or incorporation by
reference in the joint proxy statement/ prospectus, in definitive form, relating
to the Company Stockholder Meeting (as hereinafter defined) and the Hain
Stockholder Meeting (as hereinafter defined), or in the related proxy and notice
of meeting, or soliciting material used in connection therewith (referred to
herein collectively as the "JOINT PROXY STATEMENT") will, at the dates mailed to
stockholders and at the time of the Company Stockholder Meeting and the Hain
Stockholder Meeting, 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. The Company will promptly inform Hain of the happening of
any event prior to the Effective Time which would render such information
regarding the Company incorrect in any material respect or require the amendment
of the Joint Proxy Statement. The Joint Proxy Statement (except for information
relating solely to Hain and Hain Subsidiary) will comply as to form in all
material respects with the provisions of the Securities Act and the Exchange
Act.
5.9 LITIGATION. Except as set forth in the Company Current SEC Reports,
there is no (i) claim, action, suit or proceeding pending or, to the best
knowledge of the Company or any of its subsidiaries, threatened against or
relating to the Company or any of its subsidiaries before any court or
governmental or regulatory authority or body or arbitration tribunal, or
(ii) outstanding judgment, order, writ, injunction or decree, or application,
request or motion therefor, of any court, governmental agency or arbitration
tribunal in a proceeding to which the Company, any subsidiary of the Company or
any of their respective assets was or is a party except, in the case of clauses
(i) and (ii) above, such as would not, individually or in the aggregate, either
have a Company Material Adverse Effect or materially impair the Company's
ability to consummate the Merger or the other transactions contemplated hereby.
5.10 PROPERTY AND LEASES. Except as set forth in the Company Current SEC
Reports, the Company and its subsidiaries have good and marketable title to all
real properties and all other properties and assets owned by them, in each case
free from liens, encumbrances and defects that would materially affect the value
thereof or materially interfere with the use made or to be made thereof by them;
and except as set forth in the Company Current SEC Reports, the Company and its
subsidiaries hold any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere with the
use made or to be made thereof by them.
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5.11 EMPLOYMENT AND LABOR CONTRACTS. Neither the Company nor any of its
subsidiaries is a party to any employment, management services, consultation or
other similar contract with any past or present officer, director or employee
or, to the best knowledge of the Company, any entity affiliated with any past or
present officer, director or employee other than those included as exhibits in
the Company SEC Reports and other than the agreements executed by employees
generally, the forms of which have been delivered to Hain. Notwithstanding the
foregoing, SECTION 5.11 of the Disclosure Schedule identifies any such agreement
containing an agreement with respect to any change of control, severance or
termination benefit or any obligation on the part of the Company that could be
triggered by the Merger.
5.12 LABOR MATTERS. Each of the Company and its subsidiaries is in
compliance in all material respects with all applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, and neither the Company nor any of its subsidiaries is engaged
in any unfair labor practice which would have a Company Material Adverse Effect.
There is no labor strike, material slowdown or material stoppage pending (or, to
the knowledge of the Company, any labor strike or stoppage threatened) against
or affecting the Company or any of its subsidiaries. No petition for
certification has been filed and is pending before the National Labor Relations
Board with respect to any employees of the Company or any of its subsidiaries
who are not currently organized. No employee of the Company or its subsidiaries
is represented by a labor union or similar organization and, to the Company's
knowledge, there exist no ongoing discussions between the employees of the
Company or its subsidiaries and any labor union or similar organization relating
to the representation of such employees by such labor union or similar
organization.
5.13 COMPLIANCE WITH LAW. Neither the Company nor any of its subsidiaries
has violated or failed to comply with any statute, law, ordinance, regulation,
rule or order of any foreign, federal, state or local government or any other
governmental department or agency (including, without limitation, any required
by the Food and Drug Administration or the Nutrition Labeling and Education Act
of 1990), or any judgment, decree or order of any court, applicable to its
business or operations, except where any such violation or failure to comply
would not, individually or in the aggregate, have a Company Material Adverse
Effect or materially impair the Company's ability to consummate the Merger or
the other transactions contemplated hereby; the conduct of the business of each
of the Company and its subsidiaries is in conformity with all foreign, federal,
state and local requirements, and all other foreign, federal, state and local
governmental and regulatory requirements, except where such nonconformities
would not, individually or in the aggregate, have a Company Material Adverse
Effect or materially impair the Company's ability to consummate the Merger or
the other transactions contemplated hereby. The Company and its subsidiaries
have all permits, licenses and franchises from governmental agencies required to
conduct their businesses as now being conducted, except for such permits,
licenses and franchises the absence of which would not, individually or in the
aggregate, have a Company Material Adverse Effect or materially impair the
Company's ability to consummate the Merger or the other transactions
contemplated hereby.
5.14 BOARD RECOMMENDATION. The Board of Directors of the Company has, by
unanimous vote at meetings of such board duly held on March 4, 2000, approved
and adopted this Agreement and the Merger, determined that the Merger is fair to
the stockholders of the Company, recommended that the stockholders of the
Company approve and adopt this Agreement and the Merger and rescinded any stock
repurchase program previously approved by the Board of Directors of the Company.
5.15 INTELLECTUAL PROPERTY. The Company has provided to Hain a complete
and accurate list of all of the trademarks (whether or not registered) and
trademark registrations and applications used by the Company and its
subsidiaries. Except as would not, individually or in the aggregate, have a
Company Material Adverse Effect, (i) each of the Company and its subsidiaries
has or owns, directly or indirectly, all right, title and interest to the
trademarks (whether or not registered) and trademark registrations and
applications, patent and patent applications, copyrights and copyright
applications,
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service marks, service mark registrations and applications, trade dress, trade
and product names (collectively, the "INTELLECTUAL PROPERTY") used by the
Company and its subsidiaries. Except as would not, individually or in the
aggregate, have a Company Material Adverse Effect, (i) each of the Company and
its subsidiaries has or owns, directly or indirectly, all right, title and
interest to such Intellectual Property or has the perpetual right to use such
Intellectual Property without consideration; none of the rights of the Company
and its subsidiaries in or use of such Intellectual Property has been or is
currently being or, to the knowledge of the Company, is threatened to be
infringed or challenged; (ii) all of the patents, trademark registrations,
service mark registrations, trade name registrations and copyright registrations
included in such Intellectual Property have been duly issued and have not been
canceled, abandoned or otherwise terminated; (iii) all of the patent
applications, trademark applications, service mark applications, trade name
applications and copyright applications included in such Intellectual Property
have been duly filed; and (iv) to the knowledge of the Company, the Company and
its subsidiaries own or have adequate licenses or other rights to use all
Intellectual Property, know-how and technical information required for their
operation.
5.16 TAXES. (i) The Company and each of its subsidiaries have prepared and
timely filed or will timely file with the appropriate governmental agencies all
Tax Returns (as hereinafter defined) required to be filed for any period (or
portion thereof) ending on or before the Effective Time, taking into account any
extension of time to file granted to or obtained on behalf of the Company and/or
its subsidiaries, and each such Tax Return is complete and accurate in all
material respects; (ii) the Company and each of its subsidiaries have timely
paid or will timely pay all Taxes (as hereinafter defined) due and payable by
them through the Effective Time and have made or will make adequate accruals for
any Taxes attributable to any taxable period or portion thereof of the Company
and/or its subsidiaries ending on or prior to the Effective Time that are not
yet due and payable; (iii) all asserted deficiencies or assessments resulting
from examinations of any Tax Returns filed by the Company or any of its
subsidiaries have been paid or finally settled and no issue previously raised by
any taxing authority reasonably could be expected to result in a proposed
deficiency or assessment for any prior, parallel or subsequent period (including
periods subsequent to the Effective Date); (iv) no deficiency in respect of
Taxes has been asserted or assessed against the Company or any of its
subsidiaries, and no examination of the Company or any of its subsidiaries is
pending or, to the best knowledge of the Company, threatened by any taxing
authority; (v) no extension of the period for assessment or collection of any
Tax of the Company or its subsidiaries is currently in effect and no extension
of time within which to file any Tax Return has been requested, which Tax Return
has not since been filed; (vi) no liens have been filed with respect to any
Taxes of the Company or any of its subsidiaries other than in respect of
property taxes that have accrued but are not yet due and payable; (vii) neither
the Company nor any of its subsidiaries has made, or is or will be required to
make, any adjustment by reason of a change in their accounting methods for any
period (or portion thereof) ending on or before the Effective Time; (viii) the
Company and its subsidiaries have made timely payments of all Taxes required to
be deducted and withheld from the wages paid to their employees and from all
other amounts paid to third parties; (ix) neither the Company nor any of its
subsidiaries is a party to any tax sharing, tax matters, tax indemnification or
similar agreement; (x) neither the Company nor any of its subsidiaries owns any
interest in any "controlled foreign corporation" (within the meaning of
Section 957 of the Code), "passive foreign investment company" (within the
meaning of Section 1296 of the Code) or other entity the income of which may be
required to be included in the income of the Company or such subsidiary whether
or not distributed; (xi) except as set forth in SECTION 5.17(D) of the
Disclosure Schedule, neither the Company nor any of its subsidiaries has made an
election under Section 341(f) of the Code; (xii) neither the Company nor any of
its subsidiaries is a party to any agreement or arrangement that provides for
the payment of any amount, or the provision of any other benefit, that could
constitute a "parachute payment" within the meaning of Section 280G of the Code;
(xiii) no claim has ever been made by an authority in a jurisdiction where the
Company or any of its subsidiaries does not file Tax Returns that such entity is
or may be subject to taxation by that jurisdiction; (xiv) neither the Company
nor any of its subsidiaries has any liability for the Taxes of any
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person under United States Treasury Regulation ("TREAS. REG.") Section 1.1502-6
(or any similar provision of state, local or foreign law), as a transferee or
successor, by contract or otherwise, except for liability arising under Treas.
Reg. Section 1.1502-6 with respect to current members of the Company's
"affiliated group" (as defined in Section 1504 of the Code); (xv) neither the
Company nor any of its subsidiaries has ever had any "undistributed personal
holding company income" (as defined in Section 545 of the Code); (xvi) none of
the assets of the Company or any of its subsidiaries is "tax-exempt use
property" (as defined in Section 168(h)(1) of the Code) or may be treated as
owned by any other person pursuant to Section 168(f)(8) of the Internal Revenue
Code of 1954 (as in effect immediately prior to the enactment of the Tax Reform
Act of 1986); (xvii) neither the Company nor any of its subsidiaries has ever
been a "United States real property holding corporation," within the meaning of
Section 897 of the Code; (xviii) neither the Company nor any of its subsidiaries
has made any elections under Sections 108, 168, 338, 441, 472, 1017, 1033 or
4977 of the Code; (xix) there are no "excess loss accounts" (as defined in
Treas. Reg. Section 1.1502-19) with respect to any stock of any subsidiary;
(xx) neither the Company nor any of its subsidiaries has any (a) deferred gain
or loss (1) arising from any deferred intercompany transactions (as described in
Treas. Reg. SectionSection 1.1502-13 and 1.1502-13T prior to amendment by
Treasury Decision 8597 (issued July 12, 1995) or (2) with respect to the stock
or obligations of any other member of any affiliated group (as described in
Treas. Reg. SectionSection 1.1502-14 and 1.1502-14T prior to amendment by
Treasury Decision 8597) or (b) any gain subject to Treas. Reg.
Section 1.1502-13, as amended by Treasury Decision 8597; (xxi) neither the
Company nor any of its subsidiaries has requested a ruling from, or entered into
a closing agreement with, the IRS or any other taxing authority; and (xxii) the
Company has previously delivered to Hain true and complete copies of (a) all
federal, state, local and foreign income or franchise Tax Returns filed by the
Company and/or any of its subsidiaries for the last three taxable years ending
prior to the date hereof (except for those Tax Returns that have not yet been
filed) and (b) any audit reports issued within the last three years by the IRS
or any other taxing authority.
For all purposes of this Agreement, "TAX" or "TAXES" means (i) all federal,
state, local or foreign taxes, charges, fees, imposts, levies or other
assessments, including, without limitation, all net income, alternative minimum,
gross receipts, capital, sales, use, ad valorem, value added, transfer,
franchise, profits, inventory, capital stock, license, withholding, payroll,
employment, social security, unemployment, excise, severance, stamp, occupation,
property and estimated taxes, customs duties, fees, assessments and charges of
any kind whatsoever, (ii) all interest, penalties, fines, additions to tax or
other additional amounts imposed by any taxing authority in connection with any
item described in clause (i) and (iii) all transferee, successor, joint and
several or contractual liability (including, without limitation, liability
pursuant to Treas. Reg. Section 1.1502-6 (or any similar state, local or foreign
provision)) in respect of any items described in clause (i) or (ii).
For all purposes of this Agreement, "TAX RETURN" means all returns,
declarations, reports, estimates, information returns and statements required to
be filed in respect of any Taxes.
5.17 EMPLOYEE BENEFIT PLANS; ERISA.
(a) The Company has provided to Hain copies of, and related relevant
materials to, all "employee benefit plans" as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, a amended ("ERISA"), stock
option and other stock-based plans, and deferred compensation and other employee
benefit plans, which are maintained by the Company or as to which the Company
has any direct or indirect, actual or contingent liability ("Benefit Plans").
(b) No Benefit Plans are subject to Title IV of ERISA or Section 412 of the
Code. Neither the Company nor any subsidiary of the Company nor any member of
the Company's controlled group under Section 414 of the Code ("COMPANY ERISA
AFFILIATE") has incurred, or is reasonably likely to incur, any material
liability under Title IV of ERISA.
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(c) Except where the failure to comply would not, individually or in the
aggregate, have a Company Material Adverse Effect, or except as set forth in
SECTION 5.17(C) of the Disclosure Schedule: (i) the Company and all Benefit
Plans are in compliance with the applicable provisions of ERISA and the Code;
(ii) with respect to any Benefit Plan subject to Section 412 of the Code, all
contributions required to be made under Section 412 of the Code have been timely
made, and no such plan has incurred an accumulated funding deficiency, whether
or not waived; (iii) each Benefit Plan intended to qualify under Section 401 of
the Code, is so qualified; (iv) with respect to all Benefit Plans, there are no
investigations or claims pending (other than routine claims for benefits);
(v) there have been no prohibited transactions under the Code or ERISA with
respect to any Benefit Plans; (vi) with respect to all Benefit Plans that are
welfare plans (as defined in ERISA Section 3(1)), no such plan provides for
retiree welfare benefits other than COBRA coverage, and all such plans have
complied with the COBRA continuation coverage requirements of Code
Section 4980B; and (vii) the Company has no liability with respect to any plans
providing benefits on a voluntary basis with respect to employees employed
outside the U.S.
(d) Except as set forth in SECTION 5.17(D) of the Disclosure Schedule, the
consummation of the transactions contemplated by this Agreement will not:
(i) entitle any individual to severance pay, (ii) increase or accelerate
compensation due to any individual, or (iii) result in or satisfy a condition to
the payment of compensation that would, in combination with any other payment,
result in an "excess parachute payment" within the meaning of Section 280G(b) of
the Code.
5.18 ENVIRONMENTAL MATTERS. Except as would not, individually or in the
aggregate, have a Company Material Adverse Effect:
(a) Each of the Company and its subsidiaries has obtained (or is capable of
obtaining without incurring any material incremental expense) all Environmental
Permits required in connection with its business and operations and has no
reason to believe any of them will be revoked prior to their expiration,
modified or will not be renewed, and have made all registrations and given all
notifications that are required under Environmental Laws.
(b) There is no Environmental Claim pending, or, to the knowledge of the
Company, threatened against the Company or any of its subsidiaries under
Environmental Laws.
(c) The Company and its subsidiaries are in compliance with and have no
liability under, Environmental Laws, including, without limitation, all of their
Environmental Permits.
(d) Neither the Company nor any of its subsidiaries has assumed, by contract
or otherwise, any liabilities or obligations arising under Environmental Laws.
(e) There are no past or present actions, activities, conditions,
occurrences or events, including, without limitation, the Release or threatened
Release of Hazardous Materials, which could reasonably be expected to prevent
compliance by the Company or any of its subsidiaries with Environmental Laws, or
to result in any liability of the Company or any of its subsidiaries under
Environmental Laws.
(f) No lien has been recorded under Environmental Laws with respect to any
property, facility or asset currently owned by the Company or any of its
subsidiaries.
(g) Neither the Company nor any of its subsidiaries has received any
notification that Hazardous Materials that any of them or any of their
respective predecessors in interest has used, generated, stored, treated,
handled, transported or disposed of has been found at any site at which any
person is conducting or plans to conduct any investigation, remediation,
removal, response or other action pursuant to Environmental Laws.
(h) There is no friable asbestos or asbestos containing material in, on or
at any property, facility or equipment owned, operated or leased by the Company
or any of its subsidiaries.
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(i) No property now or previously owned, operated or leased by the Company
or any of its subsidiaries, or any of their respective predecessors in interest,
is (i) listed or proposed for listing on the National Priorities List
promulgated pursuant to the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended ("CERCLA") or (ii) listed on the
Comprehensive Environmental Response, Compensation, and Liability Information
System List promulgated pursuant to CERCLA, or on any comparable list relating
to the Release of Hazardous Materials established under Environmental Laws.
(j) No underground or above ground storage tank or related piping, or any
surface impoundment, lagoon, landfill or other disposal site containing
Hazardous Materials is located at, under or on any property owned, operated or
leased by the Company or any of its subsidiaries or, to the knowledge of the
Company, any of their respective predecessors in interest, nor has any of them
been removed from or decommissioned or abandoned at any such property.
(k) The Company has delivered or otherwise made available for inspection to
Hain copies of any investigations, studies, reports, assessments, evaluations
and audits in its possession, custody or control of Hazardous Materials at, in,
beneath, emanating from or adjacent to any properties or facilities now or
formerly owned, leased, operated or used by it or any of its subsidiaries or any
of their respective predecessors in interest, or of compliance by any of them
with, or liability of any of them under, Environmental Laws.
For purposes of this Agreement:
(i) "ENVIRONMENT" means any surface water, ground water, drinking water
supply, land surface or subsurface strata, ambient air, indoor air and any
indoor location and all natural resources such as flora, fauna and wetlands;
(ii) "ENVIRONMENTAL CLAIM" means any notice, claim, demand, complaint,
suit or other communication by any person alleging potential liability
(including, without limitation, potential liability for investigation,
remediation, removal, response or corrective action or damages to any
person, property or natural resources, and any fines or penalties) arising
out of or relating to (1) the Release or threatened Release of Hazardous
Materials or (2) any violation, or alleged violation, of Environmental Laws;
(iii) "ENVIRONMENTAL LAWS" means all federal, state, and local laws,
statutes, codes, rules, ordinances, regulations, judgments, orders, decrees
and the common law as now or previously in effect relating to pollution or
protection of human health or the Environment, or occupational health or
safety including, without limitation, those relating to the Release or
threatened Release of Hazardous Materials;
(iv) "HAZARDOUS MATERIALS" means pollutants, contaminants, hazardous or
toxic substances, constituents, materials or wastes, and any other waste,
substance, material, chemical or constituent subject to regulation under
Environmental Laws including, without limitation, petroleum and petroleum
products and wastes, and all constituents thereof;
(v) "RELEASE" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing
in or into the Environment; and
(vi) "ENVIRONMENTAL PERMIT" means a permit, identification number,
license, approval, consent or other written authorization issued pursuant to
Environmental Laws.
5.19 DISCLOSURE. All of the facts and circumstances not required to be
disclosed as exceptions under or to any of the foregoing representations and
warranties made by the Company, in this Article V by reason of any minimum
disclosure requirement in any such representation and warranty would not, in the
aggregate, have a Company Material Adverse Effect or materially impair the
Company's ability to consummate the Merger or the other transactions
contemplated hereby.
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5.20 ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed in the
Company Current SEC Reports, neither the Company nor any of its subsidiaries has
any liabilities or obligations of any nature, whether absolute, accrued,
unmatured, contingent or otherwise, or any unsatisfied judgments or any leases
of personalty or realty or unusual or extraordinary commitments, except the
liabilities recorded on the Company's balance sheet included in the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 1999 and
any notes thereto, and except for liabilities or obligations incurred in the
ordinary course of business and consistent with past practice since
December 31, 1999 that would not individually or in the aggregate have a Company
Material Adverse Effect or materially impair the Company's ability to consummate
the Merger or the other transactions contemplated hereby.
5.21 FINDERS OR BROKERS. Except as set forth in SECTION 5.21 of the
Disclosure Schedule, none of the Company, the subsidiaries of the Company, the
Board of Directors of the Company or any member of the Board of Directors of the
Company has employed any investment banker, broker, finder or intermediary in
connection with the transactions contemplated hereby who might be entitled to a
fee or any commission in connection with the Merger, and SECTION 5.21 of the
Disclosure Schedule sets forth the maximum consideration (present and future)
agreed to be paid to each such party.
5.22 RIGHTS AGREEMENT. The Company has taken all action which may be
necessary under the Rights Agreement, so that the execution of this Agreement
and any amendments thereto by the parties hereto and the consummation of the
transactions contemplated hereby and thereby shall not cause (i) Hain and/or
Hain Subsidiary or their respective affiliates or associates to become an
Acquiring Person (as such term is defined in the Rights Agreement) unless this
Agreement has been terminated in accordance with its terms or (ii) a
Distribution Date, a Stock Acquisition Date (as such terms are defined in the
Rights Agreement) or certain other events (as described in the Rights Agreement)
to occur, irrespective of the number of Company Shares acquired pursuant to the
Merger or other transactions contemplated by this Agreement.
5.23 OPINION OF FINANCIAL ADVISOR. The Company has received the opinion
(the "COMPANY FAIRNESS OPINION") of Goldman, Sachs & Co., dated the date of this
Agreement, to the effect that, as of such date, the Merger Consideration is fair
from a financial point of view to the holders of Company Shares.
5.24 INSURANCE. The Company carries insurance in such amounts and covering
such risks as is reasonable and customary for businesses of the type conducted
by the Company.
5.25 TAX FREE REORGANIZATION. Neither the Company nor, to the Company's
knowledge, any of its affiliates has taken, agreed to take, or will take any
action that would prevent the Merger from constituting a reorganization within
the meaning of Section 368(a) of the Code. Neither the Company nor, to the
Company's knowledge, any of its affiliates is aware of any agreement, plan or
other circumstance that would prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
5.26 FULL DISCLOSURE. As of the date hereof and as of the Closing Date, as
the case may be, all statements contained in any schedule, exhibit, certificate
or other instrument delivered by or on behalf of the Company pursuant to this
Agreement are, or, in respect of any such instrument to be delivered on or prior
to the Closing Date, as of its date and as of the Closing Date will be, accurate
and complete in all material respects, authentic and incorporated herein by
reference and constitute or will constitute the representations and warranties
of the Company. No representation or warranty of the Company contained in this
Agreement contains any untrue statement or omits to state a fact necessary in
order to make the statements herein or therein, in light of the circumstances
under which they were made, not misleading in any material respect.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF HAIN
Hain represents and warrants to the Company that:
6.1 ORGANIZATION AND QUALIFICATION. Each of Hain and its subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Each of Hain and its subsidiaries is duly
qualified as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned or leased or the
nature of its activities makes such qualification necessary, except for failures
to be so qualified or in good standing which would not, individually or in the
aggregate, have a material adverse effect on the general affairs, management,
business, operations, condition (financial or otherwise) or prospects of Hain
and its subsidiaries taken as a whole (a "HAIN MATERIAL ADVERSE EFFECT").
Neither Hain nor any of Hain's subsidiaries is in violation of any of the
provisions of its certificate or articles of incorporation or organization or
by-laws. Hain has delivered to the Company accurate and complete copies of the
certificate or articles of incorporation or organization (or other applicable
charter document) and by-laws, as currently in effect, of each of Hain and its
subsidiaries.
6.2 CAPITAL STOCK OF SUBSIDIARIES. The only direct or indirect
subsidiaries of Hain are those listed in SECTION 6.2 of the Disclosure Schedule.
Hain is directly or indirectly the record and beneficial owner of all of the
outstanding shares of capital stock of each of its subsidiaries and, except as
set forth on Section 6.2 of the Disclosure Schedule, all of such shares owned by
Hain are validly issued, fully paid and nonassessable and are owned by it free
and clear of any claim, lien or encumbrance of any kind with respect thereto.
6.3 CAPITALIZATION. The authorized capital stock of Hain consists of
40,000,000 shares of Hain Common Stock and 5,000,000 shares of preferred stock,
par value $.01 per share. As of March 1, 2000, 18,272,703 shares of Common Stock
are issued and outstanding, 100,000 shares are issued and held as treasury
shares and no shares of preferred stock were issued and outstanding. Except as
set forth in SECTION 6.3 of the Disclosure Schedule, all of such issued and
outstanding shares are, and any shares of Hain Common Stock to be issued in
connection with this Agreement, the Merger and the transactions contemplated
hereby will be, validly issued, fully paid and nonassessable and free of
preemptive rights. Except as set forth in SECTION 6.3 of the Disclosure
Schedule, other than the transactions contemplated by this Agreement, neither
Hain nor any of its subsidiaries is a party to any agreement or understanding,
oral or written, which (a) grants a right of first refusal or other such similar
right upon the sale of Hain Common Stock, or (b) restricts or affects the voting
rights of Hain Common Stock. There is no liability for dividends declared or
accumulated but unpaid with respect to any Hain Common Stock.
6.4 AUTHORITY RELATIVE TO THIS AGREEMENT. Hain has corporate power and
authority to execute and deliver this Agreement and to consummate the Merger and
other transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the Merger and other transactions contemplated
hereby have been duly and validly authorized by the Board of Directors of Hain
and no other corporate proceedings on the part of Hain are necessary to
authorize this Agreement or to consummate the Merger or other transactions
contemplated hereby (other than as contemplated by this Agreement, including
with respect to the issuance of shares of Hain Common Stock in the Merger and
the change of Hain's corporate name, the approval of the Hain's stockholders
pursuant to the DGCL). This Agreement has been duly and validly executed and
delivered by Hain and, assuming the due authorization, execution and delivery
hereof by the Company, constitutes a valid
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and binding agreement of Hain, enforceable against Hain in accordance with its
terms, except to the extent that its enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting the
enforcement of creditors' rights generally or by general equitable or fiduciary
principles.
6.5 NO VIOLATIONS, ETC.
(a) Assuming that all filings, permits, authorizations, consents and
approvals or waivers thereof have been duly made or obtained as contemplated by
Section 6.5(b) hereof, except as set forth in SECTION 6.5 of the Disclosure
Schedule, neither the execution and delivery of this Agreement by Hain nor the
consummation of the Merger or other transactions contemplated hereby nor
compliance by Hain with any of the provisions hereof will (i) violate, conflict
with, or result in a breach of any provision of, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a default)
under, or result in the termination or suspension of, or accelerate the
performance required by, or result in a right of termination or acceleration
under, or result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of Hain or any of its
subsidiaries under, any of the terms, conditions or provisions of (x) their
respective certificate or articles of incorporation or organization or by-laws,
(y) any note, bond, mortgage, indenture or deed of trust, or (z) any license,
lease, agreement or other instrument or obligation, to which Hain or any such
subsidiary is a party or to which they or any of their respective properties or
assets may be subject, or (ii) violate any judgment, ruling, order, writ,
injunction, decree, statute, rule or regulation applicable to Hain or any of its
subsidiaries or any of their respective properties or assets, except, in the
case of clauses (i)(z) and (ii) above, for such violations, conflicts, breaches,
defaults, terminations, suspensions, accelerations, rights of termination or
acceleration or creations of liens, security interests, charges or encumbrances
which would not, individually or in the aggregate, either have a Hain Material
Adverse Effect or materially impair the consummation of the Merger or other
transactions contemplated hereby.
(b) No filing or registration with, notification to and no permit,
authorization, consent or approval of any governmental entity (including,
without limitation, any federal, state or local regulatory authority or agency)
is required by Hain, Hain Subsidiary or any of Hain's other subsidiaries in
connection with the execution and delivery of this Agreement or the consummation
by Hain of the Merger or other transactions contemplated hereby, except (i) in
connection with the applicable requirements of the HSR Act, (ii) the filing of
the Certificate of Merger, (iii) the approval of Hain's stockholders pursuant to
the DGCL, (iv) filings with The Nasdaq Stock Market, Inc., (v) filings with the
SEC and state securities administrators, and (vi) such other filings,
registrations, notifications, permits, authorizations, consents or approvals the
failure of which to be obtained, made or given would not, individually or in the
aggregate, either have a Hain Material Adverse Effect or materially impair
Hain's ability to consummate the Merger or other transactions contemplated
hereby.
(c) As of the date hereof, Hain and its subsidiaries are not in violation of
or default under (x) their respective certificates or articles of incorporation
or organization or by-laws, (y) any note, bond, mortgage, indenture or deed of
trust, or (z) any license, lease, agreement or other instrument or obligation to
which Hain or any such subsidiary is a party or to which they or any of their
respective properties or assets may be subject, except, in the case of clauses
(y) and (z) above, for such violations or defaults which would not, individually
or in the aggregate, either have a Hain Material Adverse Effect or materially
impair Hain's ability to consummate the Merger or other transactions
contemplated hereby.
6.6 COMMISSION FILINGS; FINANCIAL STATEMENTS. Hain has filed all required
forms, reports and documents with the SEC since June 30, 1996, including, in the
form filed with the SEC together with any amendments thereto, (i) its Annual
Report on Form 10-K for the fiscal year ended June 30, 1999 (the "HAIN 10-K"),
(ii) all proxy statements relating to Hain's meetings of stockholders (whether
annual
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or special) held since June 30, 1999 (the "HAIN CURRENT PROXIES"), (iii) its
Current Report on Form 8-K dated September 27, 1999 (the "HAIN CURRENT 8-K"),
(iv) its Quarterly Reports on Form 10-Q for the fiscal quarters ended
September 30, 1999 and December 31, 1999 (the "HAIN CURRENT 10-QS") and,
together with the Hain 10-K, the Hain Current Proxies and the Hain Current 8-K,
the "HAIN CURRENT SEC REPORTS") and (iv) all other reports or registration
statements filed by Hain with the SEC since June 30, 1996 (collectively, the
"HAIN SEC REPORTS"), all of which complied when filed in all material respects
with all applicable requirements of the Securities Act and the Exchange Act. The
audited consolidated financial statements and unaudited consolidated interim
financial statements of Hain and its subsidiaries included or incorporated by
reference in such Hain SEC Reports were prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and present fairly,
in all material respects, the financial position and results of operations and
cash flows of Hain and its subsidiaries on a consolidated basis at the
respective dates and for the respective periods indicated (and in the case of
all such financial statements that are interim financial statements, contain all
adjustments so to present fairly). Except to the extent that information
contained in any Hain SEC Report was revised or superseded by a later filed Hain
SEC Report, none of the Hain SEC Reports contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Hain has provided to
the Company or has otherwise disclosed to the Company all other correspondence
sent to or received from the SEC by Hain and its subsidiaries since June 30,
1996 (other than routine cover letters).
6.7 ABSENCE OF CHANGES OR EVENTS. Except as set forth in the Hain Current
SEC Reports, since the date of the Hain 10-K:
(a) there has been no material adverse change, or any development involving
a prospective material adverse change, in the general affairs, management,
business, operations, condition (financial or otherwise) or prospects of Hain
and its subsidiaries taken as a whole;
(b) there has not been any direct or indirect redemption, purchase or other
acquisition of any shares of capital stock of Hain or any of its subsidiaries,
or any declaration, setting aside or payment of any dividend or other
distribution by Hain or any of its subsidiaries in respect of their capital
stock;
(c) except in the ordinary course of its business and consistent with past
practice neither Hain nor any of its subsidiaries has incurred any indebtedness
for borrowed money, or assumed, guaranteed, endorsed or otherwise as an
accommodation become responsible for the obligations of any other individual,
firm or corporation, or made any loans or advances to any other individual, firm
or corporation;
(d) there has not been any change in accounting methods, principles or
practices of Hain or its subsidiaries;
(e) except in the ordinary course of business and for amounts which are not
material, there has not been any revaluation by Hain or any of its subsidiaries
of any of their respective assets, including, without limitation, writing down
the value of inventory or writing off notes or accounts receivables;
(f) there has not been any damage, destruction or loss, whether covered by
insurance or not, except for such as would not, individually or in the
aggregate, have a Hain Material Adverse Effect; and
(g) there has not been any agreement by Hain or any of its subsidiaries to
(i) do any of the things described in the preceding clauses (a) through
(f) other than as expressly contemplated or provided for in this Agreement or
(ii) take, whether in writing or otherwise, any action which, if taken prior to
the date of this Agreement, would have made any representation or warranty in
this Article VI untrue or incorrect.
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6.8 JOINT PROXY STATEMENT. None of the information supplied or to be
supplied by or on behalf of Hain and Hain Subsidiary for inclusion or
incorporation by reference in the Registration Statement will, at the time the
Registration Statement becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. None of the
information supplied or to be supplied by or on behalf of Hain and Hain
Subsidiary for inclusion or incorporation by reference in the Joint Proxy
Statement will, at the dates mailed to stockholders and at the time of the
Company Stockholder Meeting and the Hain Stockholder Meeting, 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. Hain will promptly
inform the Company of the happening of any event prior to the Effective Time
which would render such information regarding Hain incorrect in any material
respect or require the amendment of the Joint Proxy Statement. The Registration
Statement and the Joint Proxy Statement (except for information relating solely
to the Company) will comply as to form in all material respects with the
provisions of the Securities Act and the Exchange Act.
6.9 LITIGATION. Except as set forth in SECTION 6.9 of the Disclosure
Schedule or the Hain Current SEC Reports, there is no (i) claim, action, suit or
proceeding pending or, to the best knowledge of Hain or any of its subsidiaries,
threatened against or relating to the Company or any of its subsidiaries before
any court or governmental or regulatory authority or body or arbitration
tribunal, or (ii) outstanding judgment, order, writ, injunction or decree, or
application, request or motion therefor, of any court, governmental agency or
arbitration tribunal in a proceeding to which the Company, any subsidiary of the
Company or any of their respective assets was or is a party except, in the case
of clauses (i) and (ii) above, such as would not, individually or in the
aggregate, either have a Hain Material Adverse Effect or materially impair
Hain's ability to consummate the Merger or the other transactions contemplated
hereby.
6.10 PROPERTY AND LEASES. Except as set forth in the Hain Current SEC
Reports, Hain and its subsidiaries have good and marketable title to all real
properties and all other properties and assets owned by them, in each case free
from liens, encumbrances and defects that would materially affect the value
thereof or materially interfere with the use made or to be made thereof by them;
and except as set forth in the Hain Current SEC Reports, Hain and its
subsidiaries hold any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere with the
use made or to be made thereof by them.
6.11 LABOR MATTERS. Each of Hain and its subsidiaries is in compliance in
all material respects with all applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and hours,
and neither Hain nor any of its subsidiaries is engaged in any unfair labor
practice which would have a Hain Material Adverse Effect. There is no labor
strike, material slowdown or material stoppage pending (or, to the knowledge of
Hain, any labor strike or stoppage threatened) against or affecting Hain or any
of its subsidiaries. No petition for certification has been filed and is pending
before the National Labor Relations Board with respect to any employees of Hain
or any of its subsidiaries who are not currently organized. Except as set forth
in Section 6.11 of the Disclosure Schedule or the Hain Current SEC Reports, no
employee of Hain or its subsidiaries is represented by a labor union or similar
organization and, to Hain's knowledge, there exist no ongoing discussions
between the employees of Hain or its subsidiaries and any labor union or similar
organization relating to the representation of such employees by such labor
union or similar organization.
6.12 COMPLIANCE WITH LAW. Except as set forth in SCHEDULE 6.12 of the
Disclosure Schedule, neither Hain nor any of its subsidiaries has violated or
failed to comply with any statute, law, ordinance, regulation, rule or order of
any foreign, federal, state or local government or any other
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governmental department or agency (including, without limitation, any required
by the Food and Drug Administration or the Nutrition Labeling and Education Act
of 1990), or any judgment, decree or order of any court, applicable to its
business or operations, except where any such violation or failure to comply
would not, individually or in the aggregate, have a Hain Material Adverse Effect
or materially impair Hain's ability to consummate the Merger or the other
transactions contemplated hereby; the conduct of the business of each of Hain
and its subsidiaries is in conformity with all foreign, federal, state and local
requirements, and all other foreign, federal, state and local governmental and
regulatory requirements, except where such nonconformities would not,
individually or in the aggregate, have a Hain Material Adverse Effect or
materially impair Hain's ability to consummate the Merger or the other
transactions contemplated hereby. Hain and its subsidiaries have all permits,
licenses and franchises from governmental agencies required to conduct their
businesses as now being conducted, except for such permits, licenses and
franchises the absence of which would not, individually or in the aggregate,
have a Hain Material Adverse Effect or materially impair Hain's ability to
consummate the Merger or the other transactions contemplated hereby.
6.13 BOARD RECOMMENDATION. The Board of Directors of Hain has, by
unanimous vote at a meeting of such board duly held on March 2, 2000, approved
and adopted this Agreement, the Merger and the other transactions contemplated
hereby (including, without limitation, the issuance of Hain Common Stock as a
result of the Merger and the change of Hain's corporate name to The Hain
Celestial Group, Inc.), determined that the Merger is fair to the holders of
shares of Hain Common Stock, recommended that the stockholders of Hain approve
the issuance of shares of Hain Common Stock in the Merger, the change of Hain's
corporate name and rescinded any stock repurchase program previously approved by
the Hain Board.
6.14 INTELLECTUAL PROPERTY. Except as would not, individually or in the
aggregate, have a Hain Material Adverse Effect, (i) each of Hain and its
subsidiaries has or owns, directly or indirectly, all right, title and interest
to such Intellectual Property or has the perpetual right to use such
Intellectual Property without consideration; none of the rights of Hain and its
subsidiaries in or use of such Intellectual Property has been or is currently
being or, to the knowledge of Hain, is threatened to be infringed or challenged;
(ii) all of the patents, trademark registrations, service mark registrations,
trade name registrations and copyright registrations included in such
Intellectual Property have been duly issued and have not been canceled,
abandoned or otherwise terminated; (iii) all of the patent applications,
trademark applications, service mark applications, trade name applications and
copyright applications included in such Intellectual Property have been duly
filed; and (iv) to the knowledge of Hain, Hain and its subsidiaries own or have
adequate licenses or other rights to use all Intellectual Property, know-how and
technical information required for their operation.
6.15 TAXES. Except as would not, individually or in the aggregate, have a
Hain Material Adverse Effect, (i) Hain and each of its subsidiaries have
prepared and timely filed or will timely file with the appropriate governmental
agencies all Tax Returns (as hereinafter defined) required to be filed for any
period (or portion thereof ending on or before the Effective Time), taking into
account any extension of time to file granted to or obtained on behalf of Hain
and/or its subsidiaries, and each such Tax Return is complete and accurate in
all material respects; (ii) Hain and each of its subsidiaries have timely paid
or will timely pay all Taxes (as hereinafter defined) due and payable by them
through the Effective Time and have made or will make adequate accruals for any
Taxes attributable to any taxable period or portion thereof of Hain and/or its
subsidiaries ending on or prior to the Effective Time that are not yet due and
payable; (iii) all asserted deficiencies or assessments resulting from
examinations of any Tax Returns filed by Hain or any of its subsidiaries have
been paid or finally settled and no issue previously raised by any taxing
authority reasonably could be expected to result in a proposed deficiency or
assessment for any prior, parallel or subsequent period (including periods
subsequent to the Effective Date); (iv) no deficiency in respect of Taxes has
been asserted or assessed against Hain or any of its subsidiaries, and no
examination of Hain or any of its subsidiaries is pending or, to the best
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knowledge of Hain, threatened by any taxing authority; (v) no extension of the
period for assessment or collection of any Tax of Hain or its subsidiaries is
currently in effect and no extension of time within which to file any Tax Return
has been requested, which Tax Return has not since been filed; (vi) no liens
have been filed with respect to any Taxes of Hain or any of its subsidiaries
other than in respect of property taxes that have accrued but are not yet due
and payable; (vii) neither Hain nor any of its subsidiaries has made, or is or
will be required to make, any adjustment by reason of a change in their
accounting methods for any period (or portion thereof) ending on or before the
Effective Time; (viii) Hain and its subsidiaries have made timely payments of
all Taxes required to be deducted and withheld from the wages paid to their
employees and from all other amounts paid to third parties; and (ix) Hain has
previously made available to the Company true and complete copies of (a) all
federal, state, local and foreign income or franchise Tax Returns filed by Hain
and/or any of its subsidiaries for the last three taxable years ending prior to
the date hereof (except for those Tax Returns that have not yet been filed) and
(b) any audit reports issued within the last three years by the IRS or any other
taxing authority.
6.16 DISCLOSURE. All of the facts and circumstances not required to be
disclosed as exceptions under or to any of the foregoing representations and
warranties made by Hain by reason of any minimum disclosure requirement in any
such representation and warranty would not, in the aggregate, have a Hain
Material Adverse Effect or materially impair Hain's ability to consummate the
Merger or the transactions contemplated hereby.
6.17 ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed in the Hain
Current SEC Reports, neither Hain nor any of its subsidiaries has any
liabilities or obligations of any nature, whether absolute, accrued, unmatured,
contingent or otherwise, or any unsatisfied judgments or any leases of
personalty or realty or unusual or extraordinary commitments, except the
liabilities recorded on Hain's balance sheet included in Hain's Quarterly Report
on Form 10-Q for the fiscal quarter ended December 31, 1999 and any notes
thereto, and except for liabilities or obligations incurred in the ordinary
course of business and consistent with past practice since December 31, 1999
that would not individually or in the aggregate have a Hain Material Adverse
Effect or materially impair Hain's ability to consummate the Merger or the
transactions contemplated hereby.
6.18 FINDERS OR BROKERS. Except as set forth in SECTION 6.18 of the
Disclosure Schedule, none of Hain, the subsidiaries of Hain, the Board of
Directors of Hain or any member of the Board of Directors of Hain has employed
any investment banker, broker, finder or intermediary in connection with the
transactions contemplated hereby who might be entitled to a fee or any
commission in connection with of the Merger, and SECTION 6.18 of the Disclosure
Schedule sets forth the maximum consideration (present and future) agreed to be
paid to each such party.
6.19 OPINION OF FINANCIAL ADVISOR. Hain has received the opinion (the
"HAIN FAIRNESS OPINION") of Bear, Stearns & Co. Inc., dated the date of this
Agreement, to the effect that as of such date, the Exchange Ratio is fair from a
financial point of view to Hain.
6.20 ENVIRONMENTAL MATTERS. Except as would not, individually or in the
aggregate, have a Hain Material Adverse Effect:
(a) Each of Hain and its subsidiaries has obtained (or is capable of
obtaining without incurring any material incremental expense) all Environmental
Permits required in connection with its business and operations and has no
reason to believe any of them will be revoked prior to their expiration,
modified or will not be renewed, and have made all registrations and given all
notifications that are required under Environmental Laws.
(b) There is no Environmental Claim pending, or, to the knowledge of Hain,
threatened against Hain or any of its subsidiaries under Environmental Laws.
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(c) Hain and its subsidiaries are in compliance with and have no liability
under, Environmental Laws, including, without limitation, all of their
Environmental Permits.
(d) Neither Hain nor any of its subsidiaries has assumed, by contract or
otherwise, any liabilities or obligations arising under Environmental Laws.
(e) There are no past or present actions, activities, conditions,
occurrences or events, including, without limitation, the Release or threatened
Release of Hazardous Materials, which could reasonably be expected to prevent
compliance by Hain or any of its subsidiaries with Environmental Laws, or to
result in any liability of Hain or any of its subsidiaries under Environmental
Laws.
(f) No lien has been recorded under Environmental Laws with respect to any
property, facility or asset currently owned by Hain or any of its subsidiaries.
(g) Neither Hain nor any of its subsidiaries has received any notification
that Hazardous Materials that any of them or any of their respective
predecessors in interest has used, generated, stored, treated, handled,
transported or disposed of has been found at any site at which any person is
conducting or plans to conduct any investigation, remediation, removal, response
or other action pursuant to Environmental Laws.
(h) No property now or previously owned, operated or leased by Hain or any
of its subsidiaries, or any of their respective predecessors in interest, is
(i) listed or proposed for listing on the National Priorities List promulgated
pursuant to CERCLA or (ii) listed on the Comprehensive Environmental Response,
Compensation, and Liability Information System List promulgated pursuant to
CERCLA, or on any comparable list relating to the Release of Hazardous Materials
established under Environmental Laws.
(i) Hain has delivered or otherwise made available for inspection to the
Company copies of any investigations, studies, reports, assessments, evaluations
and audits in its possession, custody or control of Hazardous Materials at, in,
beneath, emanating from or adjacent to any properties or facilities now or
formerly owned, leased, operated or used by it or any of its subsidiaries or any
of their respective predecessors in interest, or of compliance by any of them
with, or liability of any of them under, Environmental Laws.
6.21 EMPLOYEE BENEFIT PLANS; ERISA. Neither Hain nor any subsidiary of
Hain nor any member of Hain's controlled group under Section 414 of the Code
("HAIN ERISA AFFILIATE") has incurred, or is reasonably likely to incur any
material liability under Title IV of ERISA. Neither Hain nor any subsidiary of
Hain nor any Hain ERISA Affiliate has incurred any material accumulated funding
deficiency, whether or not waived, within the meaning of Section 302 of ERISA or
Section 412 of the Code.
6.22 INSURANCE. Hain carries insurance in such amounts and covering such
risks as is reasonable and customary for businesses of the type conducted by
Hain.
6.23 TAX FREE REORGANIZATION. None of Hain, Hain Subsidiary or any
affiliate of Hain has taken, agreed to take, or will take any action that would
prevent the Merger from constituting a reorganization within the meaning of
Section 368(a) of the Code. None of Hain, Hain Subsidiary or any affiliate of
Hain is aware of any agreement, plan or other circumstance that would prevent
the Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
6.24 FULL DISCLOSURE. As of the date hereof and as of the Closing Date, as
the case may be, all statements contained in any schedule, exhibit, certificate
or other instrument delivered by or on behalf of Hain pursuant to this Agreement
are, or, in respect of any such instrument to be delivered on or prior to the
Closing Date, as of its date and as of the Closing Date will be, accurate and
complete in all material respects, authentic and incorporated herein by
reference and constitute or will constitute the representations and warranties
of Hain. No representation or warranty of Hain contained in this Agreement
contains any untrue statement or omits to state a fact necessary in order to
make the statements herein or therein, in light of the circumstances under which
they were made, not misleading in any material respect.
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ARTICLE VII
CONDUCT OF BUSINESS OF
THE COMPANY AND HAIN PENDING THE MERGER
7.1 CONDUCT OF BUSINESS OF THE COMPANY PENDING THE MERGER. Except as
contemplated by this Agreement or as expressly agreed to in writing by Hain,
during the period from the date of this Agreement to the Effective Time, each of
the Company and its subsidiaries will conduct their respective operations
according to its ordinary course of business consistent with past practice, and
will use all commercially reasonable efforts to keep intact its business
organization, to keep available the services of its officers and employees and
to maintain satisfactory relationships with suppliers, distributors, customers
and others having business relationships with it and will take no action which
would materially impair the ability of the parties to consummate the Merger or
the other transactions contemplated by this Agreement. Without limiting the
generality of the foregoing, and except as otherwise expressly provided in this
Agreement, prior to the Effective Time, the Company will not nor will it permit
any of its subsidiaries to, without the prior written consent of Hain, which
consent shall not be unreasonably withheld or delayed:
(a) amend its certificate or articles of incorporation or organization or
by-laws;
(b) authorize for issuance, issue, sell, deliver, grant any options for, or
otherwise agree or commit to issue, sell or deliver any shares of any class of
its capital stock or any securities convertible into shares of any class of its
capital stock (except for the exercise of currently outstanding stock options
and except pursuant to the 1994 Non-Employee Director Compensation Plan pursuant
to elections currently in effect);
(c) split, combine or reclassify any shares of its capital stock, declare,
set aside or pay any dividend or other distribution (whether in cash, stock or
property or any combination thereof) in respect of its capital stock or
purchase, redeem or otherwise acquire any shares of its own capital stock or of
any of its subsidiaries, except as otherwise expressly provided in this
Agreement;
(d) (i) create, incur, assume, maintain or permit to exist any debt for
borrowed money other than under existing lines of credit in the ordinary course
of business consistent with past practice; (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person except for its wholly owned
subsidiaries in the ordinary course of business and consistent with past
practices and subclause (i) above; (iii) make any loans, advances or capital
contributions to, or investments in, any other person, except loans, advances,
capital contributions or investments not to exceed $50,000 in the aggregate; or
(iv) pledge or otherwise encumber shares of capital stock of the Company or its
subsidiaries;
(e) (i) increase in any manner the compensation of (x) any employee except
in the ordinary course of business consistent with past practice or (y) except
under the terms of any agreement in existence on the date hereof, any of its
directors or officers; (ii) pay or agree to pay any pension, retirement
allowance or other employee benefit not required, or enter into or agree to
enter into any agreement or arrangement with such director or officer or
employee, whether past or present, relating to any such pension, retirement
allowance or other employee benefit, except as required under currently existing
agreements, plans or arrangements or to extend employee benefits upon
termination in the ordinary course of business consistent with past practice;
(iii) grant any severance or termination pay to, or enter into any employment or
severance agreement with, (x) any employee except in the ordinary course of
business consistent with past practice or (y) except under the terms of any
agreement or policy in existence on the date hereof, any of its directors or
officers; or (iv) except as may be required to comply with applicable law,
become obligated (other than pursuant to any new or renewed collective
A-24
bargaining agreement) under any new pension plan, welfare plan, multiemployer
plan, employee benefit plan, benefit arrangement, or similar plan or
arrangement, which was not in existence on the date hereof, including any bonus,
incentive, deferred compensation, stock purchase, stock option, stock
appreciation right, group insurance, severance pay, retirement or other benefit
plan, agreement or arrangement, or employment or consulting agreement with or
for the benefit of any person, or amend any of such plans or any of such
agreements in existence on the date hereof; PROVIDED, HOWEVER, that the Company
may enter into agreements with its employees in order to provide incentives to
such employees to continue to remain as employees of the Company at least
through the Effective Time, so long as the aggregate cost to the Company of such
agreements shall not exceed $500,000 in the aggregate and PROVIDED, FURTHER,
that the Company consults with Hain prior to entering into any such agreements;
(f) except as otherwise expressly contemplated by this Agreement, enter into
any other agreements, commitments or contracts in excess of $50,000 in the
aggregate, except agreements, commitments or contracts in the ordinary course of
business consistent with past practice;
(g) authorize, recommend, propose or announce an intention to authorize,
recommend or propose, or enter into any agreement in principle or an agreement
with respect to, any plan of liquidation or dissolution, any acquisition of a
material amount of assets (other than in the ordinary course of business) or
securities, any sale, transfer, lease, license, pledge, mortgage, or other
disposition or encumbrance of a material amount of assets (other than in the
ordinary course of business) or securities or any material change in its
capitalization, or any entry into a material contract or any amendment or
modification of any material contract or any release or relinquishment of any
material contract rights;
(h) authorize any new capital expenditure or expenditures in excess of
$50,000 in the aggregate, other than expenditures that were included in the
Company's capital expenditure budget for the current fiscal year, which is
attached in Section 7.1 of the Disclosure Schedule;
(i) make any change in the accounting methods or accounting practices
followed by the Company;
(j) settle or compromise any material federal, state, local or foreign Tax
liability, make any new material Tax election, revoke or modify any existing Tax
election, or request or consent to a change in any method of Tax accounting;
(k) take, cause or permit to be taken any action, whether before or after
the Effective Date, that could reasonably be expected to prevent the Merger from
constituting a "reorganization" within the meaning of Section 368(a) of the
Code;
(l) waive, amend or otherwise alter the Rights Agreement or redeem the
Rights, except as contemplated by this Agreement;
(m) knowingly do any act or omit to do any act that would result in a breach
of any representation by the Company set forth in this Agreement; or
(n) agree to do any of the foregoing.
7.2 CONDUCT OF BUSINESS OF HAIN PENDING THE MERGER. Except as contemplated
by this Agreement or as expressly agreed to in writing by the Company, during
the period from the date of this Agreement to the Effective Time, each of Hain
and its subsidiaries will use all commercially reasonable efforts to keep
substantially intact its business, properties and business relationships and
will take no action which would materially adversely affect the ability of the
parties to consummate the transactions contemplated by this Agreement. Without
limiting the generality of the foregoing, and except as otherwise expressly
provided in this Agreement, prior to the Effective Time, Hain will not nor will
it
A-25
permit any of its subsidiaries to, without the prior written consent of the
Company, which consent shall not be unreasonably withheld or delayed:
(a) amend its certificate of incorporation or by-laws except as set forth in
this Agreement;
(b) split, combine or reclassify any shares of its capital stock, declare,
set aside or pay any dividend or other distribution (whether in cash, stock or
property or any combination thereof) in respect of its capital stock or
purchase, redeem or otherwise acquire any shares of its own capital stock or of
any of its subsidiaries, except as otherwise expressly provided in this
Agreement;
(c) authorize, recommend, propose or announce an intention to authorize,
recommend or propose, or enter into any agreement in principle or an agreement
with respect to, any plan of liquidation or dissolution or any sale or
disposition of a material amount of its assets (other than in the ordinary
course of business; or
(d) take, cause or permit to be taken any action, whether before or after
the Effective Date, that could reasonably be expected to prevent the Merger from
constituting a "reorganization" within the meaning of Section 368(a) of the
Code:
(e) knowingly do any act or omit to do any act that would result in a breach
of any representation by Hain set forth in this Agreement; or
(f) agree to do any of the foregoing.
ARTICLE VIII
COVENANTS AND AGREEMENTS
8.1 PREPARATION OF THE REGISTRATION STATEMENT; STOCKHOLDER MEETING.
(a) As soon as practicable following the date of this Agreement, the Company
and Hain shall prepare and file with the SEC the Registration Statement, in
which the Joint Proxy Statement shall be included. Each of the Company and Hain
shall use commercially reasonable efforts to have the Registration Statement
declared effective under the Securities Act as promptly as practicable after
such filing. The Joint Proxy Statement shall include the recommendation of the
Board of Directors of the Company in favor of approval and adoption of this
Agreement and the Merger, except to the extent the Board of Directors of the
Company shall have withdrawn or modified its approval or recommendation of this
Agreement or the Merger as permitted by Section 8.6, and the recommendation of
the Board of Directors of Hain in favor of approval of the issuance of Hain
Common Stock in the Merger. In addition, the Joint Proxy Statement will include
an amendment to Hain's Certificate of Incorporation changing the name of Hain to
The Hain Celestial Group, Inc. The Company shall use commercially reasonable
efforts to cause the Joint Proxy Statement to be mailed to its stockholders, and
Hain shall use commercially reasonable efforts to cause the Joint Proxy
Statement to be mailed to its stockholders, in each case as promptly as
practicable after the Registration Statement becomes effective.
(b) The Company and Hain shall make all necessary filings with respect to
the Merger and the transactions contemplated thereby under the Securities Act
and the Exchange Act and applicable state blue sky laws and the rules and
regulations thereunder. Hain shall also take any action required to be taken
under any applicable state securities laws in connection with the issuance of
Hain Common Stock in the Merger. No filing of, or amendment or supplement to,
the Registration Statement will be made by Hain without providing the Company
and its counsel the opportunity to review and comment thereon. Hain will advise
the Company, promptly after it receives notice thereof, of the time when the
Registration Statement has become effective or any supplement or amendment has
been filed, the issuance of any stop order, the suspension of the qualification
of the Hain Common Stock issuable in
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connection with the Merger for offering or sale in any jurisdiction, or any
request by the SEC for amendment of the Registration Statement or comments
thereon and responses thereto or requests by the SEC for additional information.
If at any time prior to the Effective Time any information relating to the
Company or Hain, or any of their respective affiliates, officers or directors,
should be discovered by the Company or Hain which should be set forth in an
amendment or supplement to any of the Registration Statement, so that any of
such documents would not include any misstatement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, the party which
discovers such information shall promptly notify the other parties hereto and an
appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by law, disseminated to
the stockholders of the Company and Hain.
(c) The Company shall, as soon as practicable following the effectiveness of
the Registration Statement, duly call, give notice of, convene and hold a
meeting of its stockholders (the "COMPANY STOCKHOLDER MEETING") for the purpose
of obtaining the approval and adoption (the "COMPANY STOCKHOLDER APPROVAL") of
the stockholders of the Company of this Agreement and the Merger and shall,
through its Board of Directors, recommend to its stockholders the approval and
adoption of this Agreement and the Merger, and shall use all commercially
reasonable efforts to solicit from its stockholders proxies in favor of approval
and adoption of this Agreement and the Merger; PROVIDED, HOWEVER, that such
recommendation is subject to Section 8.6 hereof.
(d) Hain shall, as soon as practicable following the effectiveness of the
Registration Statement, duly call, give notice of, convene and hold a meeting of
its stockholders (the "HAIN STOCKHOLDER MEETING") for the purpose of obtaining
the approval (the "HAIN STOCKHOLDER APPROVAL") of the stockholders of Hain of
the issuance of shares of Hain Common Stock in the Merger and shall, through its
Board of Directors, recommend to its stockholders the issuance of shares of Hain
Common Stock in the Merger, and shall use all commercially reasonable efforts to
solicit from its stockholders proxies in favor of the issuance of shares of Hain
Common Stock in the Merger.
8.2 LETTERS AND CONSENTS OF THE COMPANY'S ACCOUNTANTS. The Company shall
use all commercially reasonable efforts to cause to be delivered to Hain all
consents required from the Company's independent accountants necessary to effect
the registration of the Hain Common Stock and make any required filing with the
SEC in connection with the Merger and the transactions contemplated thereby.
8.3 LETTERS AND CONSENTS OF HAIN'S ACCOUNTANTS. Hain shall use all
commercially reasonable efforts to cause to be delivered to Hain all consents
required from its independent accountants necessary to effect the registration
of the Hain Common Stock and make any required filing with the SEC in connection
with the Merger and the transactions contemplated thereby.
8.4 ADDITIONAL AGREEMENTS; COOPERATION.
(a) Subject to the terms and conditions herein provided, each of the parties
hereto agrees to use commercially 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 to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement, and to cooperate with each other in
connection with the foregoing, including using commercially reasonable efforts
(i) to obtain all necessary waivers, consents and approvals from other parties
to loan agreements, material leases and other material contracts that are
specified in SECTION 8.4 to the Disclosure Schedule, (ii) to obtain all
necessary consents, approvals and authorizations as are required to be obtained
under any federal, state or foreign law or regulations, (iii) to defend all
lawsuits or other legal proceedings challenging this Agreement or the
consummation of the transactions contemplated hereby, (iv) to lift or rescind
any injunction or restraining order or other order adversely affecting the
ability of the parties to consummate the transactions contemplated hereby,
(v) to effect all necessary registrations and filings, including, but not
limited to, filings under the HSR Act and submissions of information requested
by
A-27
governmental authorities, (vi) provide all necessary information for the
Registration Statement and (vii) to fulfill all conditions to this Agreement.
(b) Each of the Company and Hain will supply each other with copies of all
correspondence, filings or communications (or memoranda setting forth the
substance thereof) between it or its representatives, on the one hand, and the
Federal Trade Commission and the Antitrust Division of the United States
Department of Justice, on the other hand, with respect to this Agreement, the
Merger and the other transactions contemplated hereby. Each of the parties
hereto agrees to furnish to the other party hereto such necessary information
and reasonable assistance as such other party may request in connection with its
preparation of necessary filings or submissions to any regulatory or
governmental agency or authority, including, without limitation, any filing
necessary under the provisions of the HSR Act or any other applicable Federal or
state statute.
8.5 PUBLICITY. The Company and Hain agree to consult with each other in
issuing any press release and with respect to the general content of other
public statements with respect to the transactions contemplated hereby, and
shall not issue any such press release prior to such consultation, except as may
be required by law.
8.6 NO SOLICITATION.
(a) The Company agrees that it shall not, nor shall it permit any of its
subsidiaries to, nor shall it authorize any officer, director or employee or any
investment banker, attorney, accountant, agent or other advisor or
representative of the Company or any of its subsidiaries to, (i) solicit,
initiate or knowingly encourage the submission of any Takeover Proposal (as
hereinafter defined), (ii) enter into any agreement with respect to a Takeover
Proposal or (iii) participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to, any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Takeover Proposal; PROVIDED, HOWEVER, that to the extent required by the
fiduciary obligations of the Board of Directors of the Company, as determined in
good faith by a majority of the members thereof (after consultation with outside
legal counsel), the Company may, in response to unsolicited requests therefor,
participate in discussions or negotiations with, or furnish information pursuant
to a confidentiality agreement no less favorable to such party in all material
respects than the confidentiality agreement between the Company and Hain dated
December 21, 1999 (the "CONFIDENTIALITY AGREEMENT") to, any person who indicates
a willingness to make a Superior Proposal (as hereinafter defined). For all
purposes of this Agreement, "TAKEOVER PROPOSAL" means any proposal for a merger,
consolidation, share exchange, business combination or other similar transaction
involving the Company or any of its Significant Subsidiaries (as hereinafter
defined) or any proposal or offer to acquire, directly or indirectly, 25% or
more of any class of equity securities in, 25% or more of any voting securities
of, or 25% or more of the assets of, the Company or any of its Significant
Subsidiaries. The Company shall cease and cause to be terminated all existing
discussions or negotiations with any persons conducted heretofore with respect
to, or that could reasonably be expected to lead to, any Takeover Proposal. As
used herein, a "SIGNIFICANT SUBSIDIARY" means any subsidiary of the Company that
would constitute a "SIGNIFICANT SUBSIDIARY" within the meaning of Rule 1-02 of
Regulation S-X of the SEC.
(b) Except to the extent permitted below, neither the Board of Directors of
the Company nor any committee thereof shall (i) withdraw or modify, in a manner
adverse to Hain, the approval or recommendation by the Board of Directors of the
Company or any such committee of this Agreement or the Merger or (ii) approve or
recommend, or propose to approve or recommend, any Takeover Proposal.
Notwithstanding the foregoing, (i) the Board of Directors of the Company, to the
extent required by its fiduciary obligations and subject to Section 10.2(b)
hereof, as determined in good faith by a majority of the members thereof (after
consultation with outside legal counsel), may approve or recommend a Superior
Proposal (and, in connection therewith, withdraw or modify its approval or
recommendation of this Agreement or the Merger) and (ii) nothing contained in
this Agreement shall
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prevent the Board of Directors of the Company from complying with Rule 14d-9 and
Rule 14e-2 promulgated under the Exchange Act with regard to a Takeover
Proposal. For all purposes of this Agreement, "SUPERIOR PROPOSAL" means a bona
fide written proposal made by a third party to acquire the Company pursuant to a
tender or exchange offer, a merger, a share exchange, a sale of all or
substantially all its assets or otherwise on terms which a majority of the
members of the Board of Directors of the Company determines in good faith
(taking into account the advice of any independent financial advisors) to be
more favorable to the Company and its stockholders than the Merger (and any
revised proposal made by Hain) and for which financing, to the extent required,
is then fully committed or reasonably determined to be likely to be available by
the Board of Directors of the Company.
(c) The Company shall notify Hain promptly (but in no event later than the
next business day) after receipt by the Company (or its advisors) of any
Takeover Proposal or any request for nonpublic information in connection with a
Takeover Proposal or for access to the properties, books or records of the
Company by any person or entity that informs the Company or its advisors that it
is considering making, or has made, a Takeover Proposal. Such notice to shall
indicate the identity of the person making the Takeover Proposal, inquiry or
contact, and the material terms and conditions of the Takeover Proposal, inquiry
or contact.
8.7 ACCESS TO INFORMATION.
(a) From the date of this Agreement until the Effective Time, each of the
Company and Hain, after reasonable notice, will give the other party and its
authorized representatives (including counsel, environmental and other
consultants, accountants and auditors) reasonable access during normal business
hours to all facilities, personnel and operations and to all books and records
of it and its subsidiaries, will permit the other party to make such inspections
as it may reasonably require and will cause its officers and those of its
subsidiaries, after reasonable notice, to furnish the other party with such
financial and operating data and other information with respect to its business
and properties as such party may from time to time reasonably request.
Notwithstanding the foregoing, nothing in this Section 8.7 shall require either
the Company or Hain to provide access or information if withholding such
disclosure is reasonably determined by the disclosing party's Board of Directors
to be required by fiduciary duties.
(b) All documents and information furnished pursuant to this agreement shall
be subject to the terms and conditions set forth in the Confidentiality
Agreement. This provision shall survive any termination of this Agreement.
8.8 NOTIFICATION OF CERTAIN MATTERS. Prior to the Effective Time, the
Company or Hain, as the case may be, shall promptly notify the other of (i) its
obtaining of actual knowledge as to the matters set forth in clauses (x) and
(y) below, or (ii) the occurrence, or failure to occur, of any event, which
occurrence or failure to occur would be likely to cause (x) any representation
or warranty contained in this Agreement to be untrue or inaccurate in any
material respect at any time from the date hereof to the Effective Time, or
(y) any material failure of the Company or Hain, as the case may be, or of any
officer, director, employee or agent thereof, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement; PROVIDED, HOWEVER, that no such notification shall affect the
representations or warranties of the parties or the conditions to the
obligations of the parties hereunder.
8.9 RESIGNATION OF DIRECTORS. At or prior to the Effective Time, the
Company shall deliver to Hain the resignations of such directors of the
Company's subsidiaries as Hain shall specify, effective at the Effective Time.
8.10 INDEMNIFICATION AND INSURANCE. For a period of ten (10) years after
the Effective Time, (a) Hain and the Surviving Corporation shall maintain in
effect the current provisions regarding indemnification of officers and
directors contained in the certificate of incorporation and by-laws of the
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Company and each of its subsidiaries and any directors, officers or employees
indemnification agreements of the Company and its subsidiaries, (b) for a period
of six (6) years after the Effective Time, Hain and the Surviving Corporation
shall maintain in effect the current policies of directors' and officers'
liability insurance and fiduciary liability insurance maintained by the Company
(provided that Hain may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions which are, in the
aggregate, no less advantageous to the insured in any material respect) with
respect to claims arising from facts or events which occurred on or before the
Effective Time, and (c) for a period of ten (10) years after the Effective Time,
Hain and the Surviving Corporation shall indemnify the directors and officers of
the Company to the fullest extent to which Hain or the Surviving Corporation is
permitted to indemnify such officers and directors under its certificate of
incorporation and by-laws and the DGCL.
8.11 FEES AND EXPENSES. Subject to Section 10.2, whether or not the Merger
is consummated, the Company and Hain shall bear their respective expenses
incurred in connection with the Merger, including, without limitation, the
preparation, execution and performance of this Agreement and the transactions
contemplated hereby, and all fees and expenses of investment bankers, finders,
brokers, agents, representatives, counsel and accountants, except that Hain
shall bear and pay 66.6% and the Company shall bear and pay 33.3% of the costs
and expenses incurred in connection with the filing, printing and mailing of the
Joint Proxy Statement (including SEC filing fees).
8.12 AFFILIATES AND POOLING AGREEMENTS. The Company shall use commercially
reasonable efforts to cause each person who is, at the time this Agreement is
submitted for adoption by the stockholders of the Company, an "affiliate" of the
Company for purposes of Rule 145 under the Securities Act, to deliver to Hain as
of the Closing Date, a written agreement substantially in the form attached as
EXHIBIT B hereto. Hain agrees that, after the Effective Time, it will not take
any action, and will not permit the Surviving Corporation to take any action,
that would prohibit Hain from accounting for the Merger as a "pooling of
interests."
8.13 NASDAQ LISTING. Hain shall cause the Hain Common Stock to be issued
in connection with the Merger to be approved for listing on the National Market
System of The Nasdaq Stock Market, Inc., subject to official notice of issuance,
prior to the Closing Date.
8.14 STOCKHOLDER LITIGATION. Each of the Company and Hain shall give the
other the reasonable opportunity to participate in the defense of any
stockholder litigation against or in the name of the Company or Hain, as
applicable, and/or their respective directors relating to the transactions
contemplated by this Agreement.
8.15 COMPANY EMPLOYEES.
(a) From and after the Effective Time, Hain and the Surviving Corporation
will honor and assume, in accordance with their terms, all existing written
employment agreements between the Company and any officer, director, or employee
of the Company. Hain shall treat employment by the Company prior to the
Effective Time the same as employment with Hain for purposes of vesting and
eligibility under any employment benefit plan of Hain and its subsidiaries,
including the Surviving Corporation.
(b) Hain confirms that it is Hain's intention that, until the first
anniversary of the Effective Time, subject to applicable law, Hain and the
Surviving Corporation will provide salary and benefits to employees of the
Company who continue to be employed by the Company after the Effective Time
("CONTINUING EMPLOYEES") which will, in the aggregate, be substantially
equivalent, in the aggregate, to those currently provided by the Company to its
employees. Notwithstanding the foregoing, nothing in this Agreement shall
otherwise limit the Surviving Corporation's right to amend, modify or terminate
any employee benefit plan or arrangement. Hain agrees that any person employed
by the Company at the Effective Time whose employment is terminated by the
Surviving Corporation on or prior to the
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first anniversary of the Effective Time shall be provided severance benefits
substantially equivalent, in the aggregate, to those currently provided under
the Company's severance policies.
(c) Prior to the Effective Time, unless such action will effect the "pooling
of interest" accounting treatment of the Merger, the Company will terminate the
Employee Stock Ownership Plan of the Company ("ESOP") and will vest all
participants in accordance with the terms of the ESOP. To the extent that shares
of Company Common Stock held by the ESOP have not been distributed to
participants prior to the Closing Date, such shares shall be converted into Hain
Company Stock on the Closing Date in accordance with the provisions of
Article III without further action by any participant. The Company will submit
the ESOP to the Internal Revenue Service for a determination of qualification on
termination prior to the Closing Date.
(d) From and after the Effective Time, Hain or the Surviving Corporation
will honor and assume, in accordance with its terms, the Company's Employee
Stock Purchase Plan ("EMPLOYEE STOCK PURCHASE PLAN"), provided however that Hain
and the Surviving Corporation reserve the right in accordance with the terms of
the Employee Stock Purchase Plan and to the extent permitted by law, to
terminate the Employee Stock Purchase Plan at any time following the Effective
Date. Participants in the Employee Stock Purchase Plan who already have Company
Common Stock in their share accounts shall be entitled to receive Hain Common
Stock in accordance with the provisions of Article III without further action by
any participant.
(e) As of the Effective Time, by virtue of the Merger and without any action
on the part of the holders thereof, Hain or the Surviving Corporation shall
assume all of the obligations of the Company under the Company's Incentive and
Non-Qualified Stock Option Plan, the Company's 1993 Long-Term Incentive Plan,
the Company's 1994 Non-Employee Director Compensation Plan and any other option
agreement pursuant to which the Company has issued stock options (collectively,
the "STOCK OPTION PLANS"),with the effect that each option to purchase shares of
Company Common Stock that is outstanding under the Stock Option Plans
immediately prior to the Effective Time shall be assumed by Hain or the
Surviving Corporation in such a manner that each such option shall be
exercisable on the same terms and conditions as under the applicable Stock
Option Plan and shall vest in accordance with the vesting schedule applicable to
such option prior to such assumption (taking into account any vesting which may
occur as a result of the Merger), except that (i) each such option shall be
exercisable for the number of Hain Common Stock (rounded down to the nearest
whole share) equal to the number of shares of Company Common Stock subject to
such option multiplied by the Exchange Ratio, and (ii) the option price per
share of Hain Common Stock shall be an amount equal to the option price per
share of Company Common Stock subject to such option in effect immediately prior
to the Closing Date divided by the Exchange Ratio (rounded up to the nearest
whole cent). Notwithstanding in the foregoing, after the Effective Time, Hain
may, at its option, adopt or amend substitute option plans to provide
substantially similar benefits for any of the aforementioned plans.
(f) From and after the Effective Time, Hain or the Surviving Corporation
will honor and assume, in accordance with its terms, the Thrift Plan of the
Company ("THRIFT PLAN"), provided however that Hain and the Surviving
Corporation reserve the right in accordance with the terms of the Thrift Plan
and to the extent permitted by law, to terminate the Thrift Plan, merge the
Thrift Plan or transfer assets and liabilities from the thrift Plan to a 401(k)
plan sponsored by Hain or an affiliate.
ARTICLE IX
CONDITIONS TO CLOSING
9.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) STOCKHOLDER APPROVALS. Company Stockholder Approval and Hain Stockholder
Approval shall have been obtained.
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(b) HSR ACT. The waiting period (and any extension thereof) applicable to
the Merger under the HSR Act shall have been terminated or shall have expired.
(c) NO INJUNCTIONS OR RESTRAINTS. No judgment, order, decree, statute, law,
ordinance, rule or regulation entered, enacted, promulgated, enforced or issued
by any court or other governmental entity of competent jurisdiction or other
legal restraint or prohibition (collectively, "Restraints") shall be in effect
preventing the consummation of the Merger.
(d) POOLING OF INTERESTS; CONSENTS. The Merger shall qualify for "pooling of
interests" accounting treatment, and the Company and Hain shall each have
received letters to that effect from each of Ernst & Young LLP, independent
auditors for Hain, and Deloitte & Touche LLP, independent auditors for the
Company, dated the Closing Date. Hain shall have received all consents required
from the independent accountants in connection with the filing of the
Registration Statement necessary to effect the registration of the Hain Common
Stock.
(e) REGISTRATION STATEMENT. The Registration Statement shall have become
effective under the Securities Act and shall not be the subject of any stop
order or proceedings seeking a stop order and no stop order or similar
restraining order shall be threatened or entered by the SEC or any state
securities administration preventing the Merger.
(f) NASDAQ LISTING. The shares of Hain Common Stock issuable to the
Company's stockholders as contemplated by this Agreement shall have been
approved for listing on the National Market System of The Nasdaq Stock
Market, Inc., subject to official notice of issuance.
(g) CONSENTS AND APPROVALS. All necessary consents and approvals of any
United States or any other governmental authority or any other third party
required for the consummation of the transactions contemplated by this Agreement
shall have been obtained; except for such consents and approvals the failure to
obtain which individually or in the aggregate would not have a material adverse
effect on Hain.
9.2 CONDITIONS TO OBLIGATIONS OF HAIN. The obligation of Hain to effect
the Merger is further subject to satisfaction or waiver of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Company set forth herein, to the extent qualified with respect to
materiality, shall be true and correct in all respects, and to the extent not so
qualified shall be true and correct in all material respects, in each case as of
the date of this Agreement and at and as of the Effective Time as if made at and
as of such time (except to the extent expressly made as of earlier date, in
which case as of such date). The Company shall have delivered to Hain an
officer's certificate, in form and substance satisfactory to Hain and its
counsel, to the effect of the matters stated in this Section 9.2(a),
Section 9.2(b) and Section 9.2(c).
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date.
(c) NO MATERIAL ADVERSE CHANGE. Except as disclosed in the Company Current
SEC Reports, at any time after September 30, 1999, there shall not have occurred
any material adverse change in the general affairs, management, business,
operations, assets, condition (financial or otherwise) or prospects of the
Company and its subsidiaries, taken as a whole.
(d) AFFILIATE LETTERS. Hain shall have received from each affiliate of the
Company a written agreement substantially in the form attached as EXHIBIT B
hereto as set forth in Section 8.12.
(e) TAX OPINION. Hain shall have received an opinion of Cahill Gordon &
Reindel, counsel to Hain, dated on or about the Closing Date, based upon such
representations and assumptions as counsel may reasonably deem relevant, to the
effect that the Merger will be treated for federal income tax purposes as a
reorganization qualifying under the provisions of Section 368(a) of the Code;
that each of Hain, Hain Subsidiary and the Company will be a party to the
reorganization within the meaning of
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Section 368(b) of the Code; that no gain or loss will be recognized by a
stockholder of the Company on the exchange of Company shares for the Merger
Consideration pursuant to the Merger (except with respect to any cash received
in lieu of a fractional share).
9.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligation of the
Company to effect the Merger is further subject to satisfaction or waiver of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Hain set forth herein, to the extent qualified with respect to materiality,
shall be true and correct in all respects, and to the extent not so qualified
shall be true and correct in all material respects, in each case as of the date
of this Agreement and at and as of the Effective Time as if made at and as of
such time (except to the extent expressly made as of an earlier date, in which
case as of such date). Hain shall have delivered to the Company an officer's
certificate, in form and substance satisfactory to the Company and its counsel,
to the effect of matters stated in this Section 9.3(a), Section 9.3(b) and
Section 9.3(c).
(b) PERFORMANCE OF OBLIGATIONS OF HAIN AND HAIN SUBSIDIARY. Hain and Hain
Subsidiary shall have performed in all material respects all obligations
required to be performed by them under this Agreement at or prior to the Closing
Date.
(c) NO MATERIAL ADVERSE CHANGE. Except as disclosed in the Hain Current SEC
Reports, at any time after June 30, 1999, there shall not have occurred any
material adverse change in the general affairs, management, business,
operations, assets, condition (financial or otherwise) or prospects of Hain and
its subsidiaries, taken as a whole.
(d) TAX OPINION. The Company shall have received an opinion of Bartlit Beck
Herman Palenchar & Scott, dated on or about the Closing Date, based upon such
representations and assumptions as counsel may reasonably deem relevant, to the
effect that the Merger will be treated for federal income tax purposes as a
reorganization qualifying under the provisions of Section 368(a) of the Code;
that each of Hain, Hain Subsidiary and the Company will be a party to the
reorganization within the meaning of Section 368(b) of the Code; that no gain or
loss will be recognized by a stockholder of the Company on the exchange of
Company Shares for the Merger Consideration pursuant to the Merger (except with
respect to any cash received in lieu of a fractional share).
ARTICLE X
TERMINATION
10.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of this Agreement by the
Company's stockholders:
(a) by mutual written consent of the Company and Hain;
(b) by either the Company or Hain:
(i) if the Merger shall not have been consummated by December 31, 2000;
PROVIDED, HOWEVER, that the right to terminate this Agreement pursuant to
this Section 10.1(b)(i) shall not be available to any party whose failure to
perform any of its obligations under this Agreement results in the failure
of the Merger to be consummated by such time;
(ii) if the Company Stockholder Approval or Hain Stockholder Approval
shall not have been obtained at a Company Stockholder Meeting or Hain
Stockholder Meeting, as the case may be, duly convened therefor or at any
adjournment or postponement thereof; or
(iii) if any Restraint having any of the effects set forth in
Section 9.1(c) shall be in effect and shall have become final and
nonappealable;
(c) by Hain, (i) if the Board of Directors of the Company shall withdraw,
modify, condition, qualify or otherwise change its recommendation of approval
and adoption of this Agreement or the Merger in a manner adverse to Hain or
(ii) if prior to the Company Stockholder Meeting, the Board of
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Directors of the Company approves an agreement to effect a Superior Proposal in
accordance with Section 8.6(b);
(d) by Hain, if the Company shall have breached or failed to perform in any
material respect any of its representations, warranties, covenants or other
agreements contained in this Agreement (which breach is not cured within 15
business days after receipt by the Company of a written notice of such breach
from Hain specifying the breach and requesting that it be cured);
(e) by the Company (i) if the Board of Directors of Hain shall withdraw,
modify, condition, qualify or otherwise change its recommendation of approval
and adoption of this Agreement and the Merger in a manner adverse to the Company
or (ii) if, prior to the Company Stockholder Meeting, the Board of Directors of
the Company approves an agreement to effect a Superior Proposal in accordance
with Section 8.6(b); and
(f) by the Company, if Hain shall have breached or failed to perform in any
material respect any of its representations, warranties, covenants or other
agreements contained in this Agreement (which breach is not cured within 15
business days after receipt by Hain of a written notice of such breach from the
Company specifying the breach and requesting that it be cured).
10.2 EFFECT OF TERMINATION.
(a) The termination of this Agreement shall become effective upon delivery
to the other party of written notice thereof. In the event of the termination of
this Agreement pursuant to the foregoing provisions of this Article X, this
Agreement shall become void and have no effect, with no liability on the part of
any party (except as provided in paragraphs (b), (c), (d) or (e) below) or its
stockholders or directors or officers in respect thereof except for agreements
which survive the termination of this Agreement and except for liability that
Hain or the Company might have arising from a breach of this Agreement.
(b) In the event of a termination of this Agreement (i) by Hain pursuant to
Section 10.1(c) or Section 10.1(d)(if the breach or failure to perform is due to
the Company's intentional or bad faith acts) or (ii) by the Company pursuant to
Section 10.1(e)(ii), then the Company shall pay Hain by wire transfer of
immediately available funds to an account specified by Hain (i) within two
business days of receiving the documentation described below up to $3,000,000 to
reimburse Hain for its documented fees and expenses (including the fees and
expenses of counsel, accountants, consultants and advisors) incurred in
connection with this Agreement and the transactions contemplated hereby and
(ii) within two business days of such termination, a fee of $8,000,000 as
liquidated damages.
(c) In the event of a termination of this Agreement by Hain pursuant to
Sections 10.1(b)(ii) (in the event Company Stockholder Approval is not obtained)
or 10.1(d)(if the breach or failure to perform is due to circumstances other
than those set forth in Section 10.2(b)), then the Company shall pay Hain by
wire transfer of immediately available funds to an account specified by Hain
within two business days of receiving the documentation described below up to
$3,000,000 to reimburse Hain for its documented fees and expenses (including the
fees and expenses of counsel, accountants, consultants and advisors) incurred in
connection with this Agreement and the transactions contemplated hereby;
provided in the event that at any time within the twelve months following
termination of this Agreement under the circumstances set forth in this
Section 10.2(c), the Company executes a definitive agreement which is
consummated within eighteen months with any third party other than Hain relating
to a Superior Proposal, than the Company shall within two business days of the
date of the execution of such definitive agreement pay Hain by wire transfer of
immediately available funds to an account specified by Hain a fee of $8,000,000
as liquidated damages.
(d) In the event of a termination of this Agreement by the Company pursuant
to Section 10.1(e)(i) or Section 10.1(f) (if the breach or failure to perform is
due to Hain's intentional or bad faith acts), then Hain shall pay the Company by
wire transfer of immediately available funds to an account specified by the
Company (i) within two business days of receiving the documentation
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described below up to $3,000,000 to reimburse the Company for its documented
fees and expenses (including the fees and expenses of counsel, accountants,
consultants and advisors) incurred in connection with this Agreement and the
transactions contemplated hereby and (ii) within two business days of such
termination, a fee of $8,000,000 as liquidated damages.
(e) In the event of a termination of this Agreement by the Company pursuant
to Sections 10.1(b)(ii) (in the event Hain Stockholder Approval is not obtained)
or 10.1(f) (if the breach or failure to perform is due to circumstances other
than those set forth in Section 10.2(d)), then Hain shall within two business
days of receiving the documentation described below pay the Company by wire
transfer of immediately available funds to an account specified by the Company
up to $3,000,000 to reimburse the Company for its documented fees and expenses
(including the fees and expenses of counsel, accountants, consultants and
advisors) incurred in connection with this Agreement and the transactions
contemplated hereby.
(f) By agreeing to liquidated damages in Sections 10.2(b), (c) and (d), the
parties acknowledge that (i) such liquidated damages are an integral part of the
transactions contemplated by this Agreement and constitute liquidated damages
and not a penalty, and (ii) such liquidated damages are necessary because actual
damages arising from the loss of opportunity would not be determinable with any
degree of certainty. If a party fails to promptly pay the liquidated damages due
under Sections 10.2(b), (c) and (d), the defaulting Party shall pay the costs
and expenses (including legal fees and expenses) in connection with any action,
including the filing of any lawsuit or other legal action, taken to collect
payment, together with interest on the amount of any unpaid fee at the publicly
announced prime rate of Citibank, N.A. from the date such damages were required
to be paid.
ARTICLE XI
MISCELLANEOUS
11.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 11.1
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
11.2 WAIVER. At any time prior to the Effective Date, any party hereto may
(i) extend the time for the performance of any of the obligations or other acts
of any other party hereto, (ii) waive any inaccuracies in the representations
and warranties of the other party contained herein or in any document delivered
pursuant hereto, and (iii) waive compliance with any of the agreements of any
other party or with any conditions to its own obligations contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing duly authorized by and
signed on behalf of such party.
11.3 NOTICES.
(a) Any notice or communication to any party hereto shall be duly given if
in writing and delivered in person or mailed by first class mail (registered or
certified, return receipt requested), facsimile or overnight air courier
guaranteeing next day delivery, to such other party's address.
If to Hain or Hain Subsidiary:
The Hain Food Group, Inc.
50 Charles Lindbergh Boulevard
Uniondale, New York 11553
Facsimile No.: (516) 237-6240
Attention: President
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with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Facsimile No.: (212) 269-5420
Attention: Roger Meltzer, Esq.
If to the Company:
Celestial Seasonings, Inc.
4600 Sleepytime Drive
Boulder, Colorado 80301-3292
Facsimile No.: (303) 939-8444
Attention: Chairman and President
with a copy to:
Bartlit Beck Herman Palenchar & Scott
The Kittredge Building
511 Sixteenth Street
Denver, Colorado 80202
Facsimile No.: (303) 592-3140
Attention: Thomas R. Stephens, Esq.
(b) All notices and communications will be deemed to have been duly given:
at the time delivered by hand, if personally delivered; five business days after
being deposited in the mail, if mailed; when sent, if sent by facsimile; and the
next business day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
11.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.5 INTERPRETATION. The headings of articles and sections herein are for
convenience of reference, do not constitute a part of this Agreement, and shall
not be deemed to limit or affect any of the provisions hereof. As used in this
Agreement, "person" means any individual, corporation, limited or general
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof; "subsidiary" of any person means (i) a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by such
person or by one or more other subsidiaries of such person or by such person and
one or more subsidiaries thereof or (ii) any other person (other than a
corporation) in which such person, or one or more other subsidiaries of such
person or such person and one or more other subsidiaries thereof, directly or
indirectly, have at least a majority ownership and voting power relating to the
policies, management and affairs thereof; and "voting stock" of any person means
capital stock of such person which ordinarily has voting power for the election
of directors (or persons performing similar functions) of such person, whether
at all times or only so long as no senior class of securities has such voting
power by reason of any contingency. In determining whether a material adverse
effect has occurred in connection with the business or prospects of the Company,
month to month fluctuations in sales either (i) consistent with historical
performance or (ii) resulting from requests relating to the conduct of the
Company's business received from Hain after the date hereof but prior to the
Effective Time, shall not be deemed to constitute a material adverse effect.
11.6 AMENDMENT. This Agreement may be amended by the parties at any time
before or after any required approval of matters presented in connection with
the Merger by the stockholders of each of Hain and the Company; provided,
however, that after any such approval, there shall not be made any amendment
that by law requires further approval by such stockholders without the further
approval of such stockholders; and provided further, that this Agreement shall
not be amended after the
A-36
Effective Time. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.
11.7 NO THIRD PARTY BENEFICIARIES. Except for the rights set forth under
Section 8.10, nothing in this Agreement shall confer any rights upon any person
or entity which is not a party or permitted assignee of a party to this
Agreement.
11.8 GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York without regard to principles
of conflicts of laws.
11.9 ENFORCEMENT. The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. The parties
accordingly agree that the parties will be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement, this being in addition to any other
remedy to which they are entitled at law or in equity.
11.10 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
among 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.
11.11 NO RECOURSE AGAINST OTHERS. No director, officer or employee, as
such, of Hain, Hain Subsidiary or the Company or any of their respective
subsidiaries shall have any liability for any obligations of Hain, Hain
Subsidiary or the Company, respectively, under this Agreement for any claim
based on, in respect of or by reasons of such obligations or their creation.
11.12 VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Merger Agreement to
be executed by their duly authorized officers all as of the day and year first
above written.
THE HAIN FOOD GROUP, INC.
By: /s/ IRWIN D. SIMON
-----------------------------------------
Name: Irwin D. Simon
Title: Chairman of the Board, President
and Chief Executive Officer
CELESTIAL SEASONINGS, INC.
By: /s/ MO SIEGEL
-----------------------------------------
Name: Mo Siegel
Title: Chairman of the Board
A-37
EXHIBIT A
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
CELESTIAL SEASONINGS, INC.
1. NAME. The name of the corporation is Celestial Seasonings, Inc. (the
"Company").
2. REGISTERED OFFICE. The address of the Company's registered office in
the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the
City of Wilmington, County of New Castle. The name of its registered agent at
such address is The Corporation Trust Company.
3. PURPOSES. The purpose for which the Company is organized is to engage
in any and all lawful acts and activities for which corporations may be
organized under the General Corporation Law of the State of Delaware.
4. CAPITAL STOCK. The Company is authorized to issue one class of stock
which is designated Common Stock. The total number of shares of Common Stock
which the Company shall have authority to issue is: 100 shares of Common Stock,
par value of $.01 per share.
5. EXISTENCE. The Company is to have perpetual existence.
6. BY-LAWS. In furtherance and not in limitation of the powers conferred
by statute, the Board of Directors of the Company is expressly authorized to
make, alter or repeal the by-laws of the Company.
7. ELECTION OF DIRECTORS. Elections of directors need not be by written
ballot unless the by-laws of the Company shall so provide.
8. MEETINGS; CORPORATE BOOKS. Meetings of stockholders may be held within
or without the State of Delaware, as the by-laws may provide. The books of the
Company may be kept (subject to any provision of law) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the by-laws of the Company.
9. AMENDMENT AND/OR REPEAL OF CERTIFICATE. The Company reserves the right
to amend, alter, change or repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
10. DIRECTOR'S LIABILITY. No director of the Company shall be personally
liable to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a director; provided that this provision shall not eliminate
or limit the liability of a director (i) for any breach of such director's duty
of loyalty to the corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the Delaware General Corporation Law, or
(iv) for any transaction from which such director derived an improper personal
benefit.
EXHIBIT B
[FORM OF COMPANY AFFILIATE LETTER]
Ladies and Gentlemen:
I have been advised that I may be considered to be an "affiliate" of
Celestial Seasonings, Inc. (the "Company") for purposes of Rule 145 under the
Securities Act of 1933, as amended (the "Securities Act"), and for purposes of
generally accepted accounting principles as such term relates to pooling of
interests accounting treatment for certain business combinations or the
Securities and Exchange Commission's Staff Accounting Bulletin No. 65.
The Hain Food Group, Inc. ("Hain") and the Company have entered into an
Agreement and Plan of Merger dated as of March 5, 2000 (the "Merger Agreement").
Upon consummation of the transactions contemplated by the Merger Agreement (the
"Merger"), I will receive shares of capital stock of Hain for all of the shares
of capital stock of the Company owned by me or as to which I may be deemed a
beneficial owner. I own shares of common stock of the Company. Such shares
(including the rights attached thereto) will be converted in the Merger into
shares of common stock of Hain as described in the Merger Agreement. The shares
of Company capital stock and Hain capital stock owned by me or as to which I may
deem to be a beneficial owner prior to the Merger are hereinafter collectively
referred to as the "Pre-Merger Stock" and the shares of Hain capital stock
received by me in the Merger are hereinafter collectively referred to as the
"Exchange Stock." This agreement is hereinafter referred to as the "Letter
Agreement."
I represent and warrant to, and agree with, the Company and Hain that:
A. I have read this Letter Agreement and the Merger Agreement and have
discussed their requirements and other applicable limitations upon my
ability to sell, transfer or otherwise dispose of the Pre-Merger Stock and
Exchange Stock, to the extent I felt necessary, with my counsel or counsel
for the Company.
B. The shares of common stock of Hain that I shall receive in exchange
for my shares of common stock of the Company are not being acquired by me
with a view to their distribution except to the extent and in the manner
provided for in paragraph (d) of Rule 145 under the Securities Act.
C. I agree with you not to dispose of any such shares of common stock of
Hain in any manner that would violate Rule 145.
I further agree with you that the certificate or certificates
representing such shares of common stock of Hain may bear a legend referring
to the restrictions on disposition thereof in accordance with the provisions
of the foregoing paragraph and that stop transfer instructions may be filed
with respect to such shares with the transfer agent for such shares.
D. I understand that stop transfer instructions will be given to the
Company, Hain and their respective transfer agents, as the case may be, with
respect to the shares of Pre-Merger Stock and the Exchange Stock in
connection with the restrictions set forth herein.
E. Notwithstanding the foregoing and any other agreements on my part in
connection with the Pre-Merger Stock and the Exchange Stock, I hereby agree
(i) that I will not sell or otherwise reduce my risk relative to any shares
of Pre-Merger Stock during the period of thirty days prior to the effective
date of Merger and (ii) that I will not sell or otherwise reduce my risk
relative to any shares of Exchange Stock until financial results covering at
least thirty days of combined operations have been published following the
effective date of the Merger so as to ensure that the Merger qualified as a
pooling of interests for accounting purposes.
It is understood and agreed that this Letter Agreement shall terminate and
be of no further force and effect if the Merger Agreement is terminated pursuant
to the terms thereof.
The agreements made by me in the foregoing paragraphs are on the
understanding and condition that you agree, in the event that any shares may be
disposed of in accordance with the provisions of paragraph E above, to deliver
in exchange for the certificate or certificates representing such shares a new
certificate or certificates representing such shares not bearing the legend and
not subject to the stop transfer instruction referred to in paragraph D above,
and so long as I hold shares of stock subject to the provisions of this
agreement (but not for a period in excess of two years from the date of
consummation of the Merger) to file with the Securities and Exchange Commission
or otherwise make publicly available all information about Hain, to the extent
available to you without unreasonable effort or expense, necessary to enable me
to resell shares under the provisions of paragraph (d) of Rule 145.
This Letter Agreement shall be binding on my heirs, legal representatives
and successors.
Very truly yours,
--------------------------------------
[Name of Stockholder]
By:
------------------------------------------------------------------------------*
Name:
Title:
* To be completed if the stockholder is an entity other than an individual
2
ANNEX B
VOTING AGREEMENT
VOTING AGREEMENT made this 5th day of March, 2000 (the "AGREEMENT"), between
Irwin D. Simon (the "STOCKHOLDER"), in his capacity as a stockholder of The Hain
Food Group, Inc., a Delaware corporation (the "COMPANY"), and Celestial
Seasonings, Inc., a Delaware corporation ("CELESTIAL").
R E C I T A L S
Concurrently with the execution of this Agreement, Celestial and the Company
have entered into a Merger Agreement dated as of the date of this Agreement (the
"MERGER AGREEMENT") pursuant to which a subsidiary of the Company to be formed
will merge with and into Celestial (the "MERGER"). The transactions contemplated
by the Merger Agreement are collectively referred to as the "TRANSACTIONS."
In order to induce Celestial to enter into the Merger Agreement with the
Company, Celestial has requested, and the Stockholder has agreed, that the
Stockholder enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
ARTICLE 1
VOTING AGREEMENT
The Stockholder hereby agrees with Celestial as follows:
SECTION 1.1. VOTING OF SHARES. (a) At any meeting of the stockholders of
the Company, however called, at every adjournment of any such meeting, and in
connection with any written consent of the stockholders of the Company, the
Stockholder will cause all of his Shares to be voted, during the term of this
Agreement, in favor of (i) the Merger and the approval and adoption of the
Merger Agreement, and (ii) all other Transactions as to which stockholders of
the Company are called upon to vote.
For purposes of this Agreement, (i) "PERSON" shall mean an individual,
partnership, limited liability company, corporation, joint stock company, trust,
estate, joint venture, association or unincorporated organization, or any other
entity or organization, including a government or political subdivision or any
agency or instrumentality thereof, and (ii) "SHARES" shall mean any and all
shares of capital stock of the Company which are entitled to vote in any
election of the board of directors of the Company now owned and/or subsequently
acquired by the Stockholder through purchase, gift, stock splits, stock
dividends and the exercise of stock options.
(b) The Stockholder agrees that during the term of this Agreement, the
Stockholder shall attend or otherwise participate in all duly called
stockholder meetings and any adjournments of such meetings and in all
actions by written consent of stockholders in which the Merger or any
Transaction is being considered.
(c) The parties hereto agree and acknowledge that nothing in this Article I
or any other part of this Agreement shall be construed as requiring the
Stockholder to propose, endorse, approve or recommend the Merger
Agreement or the transactions contemplated thereby in the Stockholder's
capacity as a director of the Company in any manner inconsistent with his
fiduciary duties as director.
SECTION 1.2. NO PROXIES OR ENCUMBRANCES. The Stockholder shall not
(i) grant any proxies or enter into any voting trust or other agreement or
arrangement with respect to the voting of any of the
B-1
Shares in a manner which would be inconsistent with the provisions of this
Agreement, (ii) sell, assign, transfer, encumber or otherwise dispose of or
enter into any contract, option or other arrangement or understanding with
respect to, the direct or indirect sale, assignment, transfer, encumbrance or
other disposition of any of his Shares or any interest therein except (A) for
Permitted Transfers to Permitted Transferees (as such terms are defined below)
or (B) any other disposition by the Stockholder of up to 100,000 of his Shares
in the aggregate or (iii) seek or solicit any of the foregoing. For purposes of
this Agreement, (i) "PERMITTED TRANSFEREE" means any Person controlled, directly
or indirectly, by Stockholder, Stockholder's spouse and children, and any trust
for the benefit of Stockholder, Stockholder's spouse or children, and (ii) each
transfer to a Permitted Transferee shall constitute a "PERMITTED TRANSFER" only
if it is a:
(i) transfer to a Permitted Transferee and, in the case of a Permitted
Transferee, transfer to the Stockholder or to other Permitted
Transferees of Stockholder; PROVIDED that, any such Permitted Transferee
shall enter into a supplement to this Agreement, consented to in writing
by Celestial, agreeing to be bound by the terms of this Agreement; or
(ii) pledge to a bank or securities firm of Stockholder's Shares securing a
bona fide loan; PROVIDED that the pledge agreement with the pledgee
shall provide that the Stockholder shall continue at all times to have
the right, from time to time, to vote and to give consents,
ratifications and waivers with respect to such pledged Shares; and
PROVIDED FURTHER that any pledge agreement that Stockholder enters into
shall provide that the pledgee shall give written notice to Celestial
at least 10 days prior to the date such pledgee takes any action to
exercise any remedies with respect to such Shares;
PROVIDED that no such transfer is in violation of applicable federal or
state securities laws.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
The Stockholder represents and warrants to Celestial as follows:
SECTION 2.1. VALID TITLE. The Stockholder is the true and lawful owner of
100% of the Shares set forth next on the signature page to this Agreement, with
full power to vote and dispose of such Shares, and there are no restrictions on
the Stockholder's voting rights or rights of disposition pertaining to such
Shares which would be inconsistent with this Agreement or interfere with
Stockholder's performance of this Agreement.
SECTION 2.2. NON-CONTRAVENTION. The execution, delivery and performance by
the Stockholder of this Agreement and the consummation of the transactions
contemplated hereby, do not and will not contravene or constitute a default
under or give rise to a right of termination, cancellation or acceleration of
any material right or obligation of the Stockholder or to a loss of any material
benefit of the Stockholder under any provision of applicable law or regulation
or of any agreement, judgment, injunction, order, decree or other instrument
binding on the Stockholder.
SECTION 2.3. AUTHORIZATION. The execution, delivery and performance by the
Stockholder of this Agreement are within the Stockholder's powers and have been
duly authorized by all necessary actions.
SECTION 2.4. BINDING EFFECT. This Agreement constitutes a valid and
binding agreement of the Stockholder, enforceable against the Stockholder in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, moratorium or other similar laws relating to creditors' rights
generally.
SECTION 2.5. NO OTHER SHARES. The number of Shares set forth on the
signature page to this Agreement are the only Shares owned by the Stockholder.
B-2
ARTICLE 3
MISCELLANEOUS
SECTION 3.1. NOTICES. All notices, requests and other communications to
any party hereunder shall be deemed to have been duly given when delivered in
person, by telegram, facsimile or by registered or certified mail (postage
prepaid, return receipt requested) to such party at its address set forth on the
signature pages hereto.
SECTION 3.2. AMENDMENTS; NO WAIVERS. (a) Any provision of this Agreement
may be amended or waived if, and only if, such amendment or waiver is in writing
and signed, in the case of an amendment, by each of the parties hereto, or in
the case of a waiver, by the party against whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 3.3. TERMINATION. This Agreement shall automatically terminate
upon termination of the Merger Agreement in accordance with its terms.
SECTION 3.4. SEVERABILITY. If any provision of this Agreement or the
application of such provision to any party or set of circumstances shall, in any
jurisdiction and to any extent, be finally held invalid or unenforceable, such
term or provision shall only be ineffective as to such jurisdiction, and only to
the extent of such invalidity or unenforceability, without invalidating or
rendering unenforceable any other terms or provisions of this Agreement or under
any other circumstances, and the parties shall negotiate in good faith a
substitute provision which comes as close as possible to the invalidated or
unenforceable term or provision, and which puts each party in a position as
nearly comparable as possible to the position it would have been in but for the
finding of invalidity or unenforceability, while remaining valid and
enforceable.
SECTION 3.5. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and undertakings, both written and oral, among
the parties with respect to the subject matter hereof.
SECTION 3.6. SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns (and, in the case of the Stockholder, the
heirs and executors of the Stockholder); provided that, except as permitted by
Section 1.2 or by will or intestacy, no party may assign, delegate or otherwise
transfer all or any of his or its rights or obligations under this Agreement
without the consent of the other party hereto.
SECTION 3.7. COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party shall have received
counterparts (or signature pages) hereof signed by all of the other parties.
SECTION 3.8. GOVERNING LAW; SPECIFIC PERFORMANCE. The terms of this
Agreement shall be construed in accordance with and governed by the law of the
State of Delaware (without regard to principles of conflict of laws). Each of
the parties acknowledges and agrees that the parties' respective remedies at law
for a breach or threatened breach of any of the provisions of this Agreement
would be inadequate and, in recognition of that fact, each agrees that, in the
event of a breach or threatened breach by any party of the provisions of this
Agreement, in addition to any remedies at law, each party, without posting any
bond, shall be entitled to seek equitable relief in the form of specific
performance, a temporary restraining order, a temporary or permanent injunction
or any other equitable remedy which may then be available.
B-3
SECTION 3.9. EXPENSES. All costs and expenses incurred in connection with
this Agreement shall be paid by the party incurring such cost or expense.
SECTION 3.10. CERTAIN EVENTS. The Stockholder agrees that this Agreement
and the obligations hereunder shall attach to its Shares and shall be binding
upon any Person to which legal or beneficial ownership of such shares shall
pass, whether by operation of law or otherwise.
SECTION 3.11. NO REVOCATION. The voting agreements contained herein are
coupled with an interest and may not be revoked prior to termination of this
Agreement in accordance with Section 3.3, except by written consent of
Celestial.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, or
caused this Agreement to be duly executed by their respective authorized
officers or representatives, as of the day and year first above written.
CELESTIAL SEASONINGS, INC.
By: /s/ MO SIEGEL
---------------------------------------
Its: Chairman of the Board
Address: 4600 Sleeptime Drive
Boulder, CO 80301-3292
STOCKHOLDER:
/s/ IRWIN D. SIMON
---------------------------------------
Irwin D. Simon
Number of Shares Owned: 705,378
Address: 50 Charles Lindbergh Boulevard,
Uniondale, New York 11553
B-4
ANNEX C
VOTING AGREEMENT
VOTING AGREEMENT made this 5th day of March, 2000 (the "AGREEMENT"), between
Mo Siegel (the "STOCKHOLDER"), in his capacity as a stockholder of Celestial
Seasonings, Inc., a Delaware corporation (the "COMPANY"), and The Hain Food
Group, Inc., a Delaware corporation ("HAIN").
R E C I T A L S
Concurrently with the execution of this Agreement, Hain and the Company have
entered into a Merger Agreement dated as of the date of this Agreement (the
"MERGER AGREEMENT") pursuant to which a subsidiary of Hain to be formed will
merge with and into the Company (the "MERGER"). The transactions contemplated by
the Merger Agreement are collectively referred to as the "TRANSACTIONS."
In order to induce Hain to enter into the Merger Agreement with the Company,
Hain has requested, and the Stockholder has agreed, that the Stockholder enter
into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
ARTICLE 1
VOTING AGREEMENT
The Stockholder hereby agrees with Hain as follows:
SECTION 1.1. VOTING OF SHARES. (a) At any meeting of the stockholders of
the Company, however called, at every adjournment of any such meeting, and in
connection with any written consent of the stockholders of the Company, the
Stockholder will cause all of his Shares to be voted, during the term of this
Agreement, in favor of (i) the Merger and the approval and adoption of the
Merger Agreement, and (ii) all other Transactions as to which stockholders of
the Company are called upon to vote.
For purposes of this Agreement, (i) "PERSON" shall mean an individual,
partnership, limited liability company, corporation, joint stock company, trust,
estate, joint venture, association or unincorporated organization, or any other
entity or organization, including a government or political subdivision or any
agency or instrumentality thereof, and (ii) "SHARES" shall mean any and all
shares of capital stock of the Company which are entitled to vote in any
election of the board of directors of the Company now owned and/or subsequently
acquired by the Stockholder through purchase, gift, stock splits, stock
dividends and the exercise of stock options.
(b) The Stockholder agrees that during the term of this Agreement, the
Stockholder shall attend or otherwise participate in all duly called stockholder
meetings and any adjournments of such meetings and in all actions by written
consent of stockholders in which the Merger or any Transaction is being
considered.
(c) The parties hereto agree and acknowledge that nothing in this Article I
or any other part of this Agreement shall be construed as requiring the
Stockholder to propose, endorse, approve or recommend the Merger Agreement or
the transactions contemplated thereby in the Stockholder's capacity as a
director of the Company in any manner inconsistent with his fiduciary duties as
director.
SECTION 1.2. NO PROXIES OR ENCUMBRANCES. The Stockholder shall not
(i) grant any proxies or enter into any voting trust or other agreement or
arrangement with respect to the voting of any of the Shares in a manner which
would be inconsistent with the provisions of this Agreement, (ii) sell, assign,
C-1
transfer, encumber or otherwise dispose of or enter into any contract, option or
other arrangement or understanding with respect to, the direct or indirect sale,
assignment, transfer, encumbrance or other disposition of any of his Shares or
any interest therein except for Permitted Transfers to Permitted Transferees (as
such terms are defined below) or (iii) seek or solicit any of the foregoing. For
purposes of this Agreement, (i) "PERMITTED TRANSFEREE" means any Person
controlled, directly or indirectly, by Stockholder, Stockholder's spouse and
children, and any trust for the benefit of Stockholder, Stockholder's spouse or
children, and (ii) each transfer to a Permitted Transferee shall constitute a
"PERMITTED TRANSFER" only if it is a:
(i) transfer to a Permitted Transferee and, in the case of a Permitted
Transferee, transfer to the Stockholder or to other Permitted Transferees of
Stockholder; PROVIDED that, any such Permitted Transferee shall enter into a
supplement to this Agreement, consented to in writing by Hain, agreeing to
be bound by the terms of this Agreement; or
(ii) pledge to a bank or securities firm of Stockholder's Shares
securing a bona fide loan; PROVIDED that the pledge agreement with the
pledgee shall provide that the Stockholder shall continue at all times to
have the right, from time to time, to vote and to give consents,
ratifications and waivers with respect to such pledged Shares; and PROVIDED
FURTHER that any pledge agreement that Stockholder enters into shall provide
that the pledgee shall give written notice to Hain at least 10 days prior to
the date such pledgee takes any action to exercise any remedies with respect
to such Shares;
PROVIDED that no such transfer is in violation of applicable federal or state
securities laws.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
The Stockholder represents and warrants to Hain as follows:
SECTION 2.1. VALID TITLE. The Stockholder is the true and lawful owner of
100% of the Shares set forth next on the signature page to this Agreement, with
full power to vote and dispose of such Shares, and there are no restrictions on
the Stockholder's voting rights or rights of disposition pertaining to such
Shares which would be inconsistent with this Agreement or interfere with
Stockholder's performance of this Agreement.
SECTION 2.2. NON-CONTRAVENTION. The execution, delivery and performance by
the Stockholder of this Agreement and the consummation of the transactions
contemplated hereby, do not and will not contravene or constitute a default
under or give rise to a right of termination, cancellation or acceleration of
any material right or obligation of the Stockholder or to a loss of any material
benefit of the Stockholder under any provision of applicable law or regulation
or of any agreement, judgment, injunction, order, decree or other instrument
binding on the Stockholder.
SECTION 2.3. AUTHORIZATION. The execution, delivery and performance by the
Stockholder of this Agreement are within the Stockholder's powers and have been
duly authorized by all necessary actions.
SECTION 2.4. BINDING EFFECT. This Agreement constitutes a valid and
binding agreement of the Stockholder, enforceable against the Stockholder in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, moratorium or other similar laws relating to creditors' rights
generally.
SECTION 2.5. NO OTHER SHARES. The number of Shares set forth on the
signature page to this Agreement are the only Shares owned by the Stockholder.
C-2
ARTICLE 3
MISCELLANEOUS
SECTION 3.1. NOTICES. All notices, requests and other communications to
any party hereunder shall be deemed to have been duly given when delivered in
person, by telegram, facsimile or by registered or certified mail (postage
prepaid, return receipt requested) to such party at its address set forth on the
signature pages hereto.
SECTION 3.2. AMENDMENTS; NO WAIVERS. (a) Any provision of this Agreement
may be amended or waived if, and only if, such amendment or waiver is in writing
and signed, in the case of an amendment, by each of the parties hereto, or in
the case of a waiver, by the party against whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 3.3. TERMINATION. This Agreement shall automatically terminate
upon termination of the Merger Agreement in accordance with its terms.
SECTION 3.4. SEVERABILITY. If any provision of this Agreement or the
application of such provision to any party or set of circumstances shall, in any
jurisdiction and to any extent, be finally held invalid or unenforceable, such
term or provision shall only be ineffective as to such jurisdiction, and only to
the extent of such invalidity or unenforceability, without invalidating or
rendering unenforceable any other terms or provisions of this Agreement or under
any other circumstances, and the parties shall negotiate in good faith a
substitute provision which comes as close as possible to the invalidated or
unenforceable term or provision, and which puts each party in a position as
nearly comparable as possible to the position it would have been in but for the
finding of invalidity or unenforceability, while remaining valid and
enforceable.
SECTION 3.5. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and undertakings, both written and oral, among
the parties with respect to the subject matter hereof.
SECTION 3.6. SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns (and, in the case of the Stockholder, the
heirs and executors of the Stockholder); provided that, except as permitted by
Section 1.2 or by will or intestacy, no party may assign, delegate or otherwise
transfer all or any of his or its rights or obligations under this Agreement
without the consent of the other party hereto.
SECTION 3.7. COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party shall have received
counterparts (or signature pages) hereof signed by all of the other parties.
SECTION 3.8. GOVERNING LAW; SPECIFIC PERFORMANCE. The terms of this
Agreement shall be construed in accordance with and governed by the law of the
State of Delaware (without regard to principles of conflict of laws). Each of
the parties acknowledges and agrees that the parties' respective remedies at law
for a breach or threatened breach of any of the provisions of this Agreement
would be inadequate and, in recognition of that fact, each agrees that, in the
event of a breach or threatened breach by any party of the provisions of this
Agreement, in addition to any remedies at law, each party, without posting any
bond, shall be entitled to seek equitable relief in the form of specific
performance,
C-3
a temporary restraining order, a temporary or permanent injunction or any other
equitable remedy which may then be available.
SECTION 3.9. EXPENSES. All costs and expenses incurred in connection with
this Agreement shall be paid by the party incurring such cost or expense.
SECTION 3.10. CERTAIN EVENTS. The Stockholder agrees that this Agreement
and the obligations hereunder shall attach to its Shares and shall be binding
upon any Person to which legal or beneficial ownership of such shares shall
pass, whether by operation of law or otherwise.
SECTION 3.11. NO REVOCATION. The voting agreements contained herein are
coupled with an interest and may not be revoked prior to termination of this
Agreement in accordance with Section 3.3, except by written consent of Hain.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, or
caused this Agreement to be duly executed by their respective authorized
officers or representatives, as of the day and year first above written.
THE HAIN FOOD GROUP, INC.
By: /s/ IRWIN D. SIMON
---------------------------------------
Its: Chairman of the Board, President and
Chief Executive Officer
Address: 50 Charles Lindbergh Boulevard,
Uniondale, New York 11553
STOCKHOLDER:
/s/ MO SIEGEL
---------------------------------------
Mo Siegel
Number of Shares Owned: 243,728*
*Includes 733 ESOP shares
Address: 1919 14th Street
Suite 609
Boulder, CO 80302-5325
C-4
ANNEX D
[LETTERHEAD OF BEAR, STEARNS & CO. INC.]
March 5, 2000
The Hain Food Group, Inc.
50 Charles Lindbergh Blvd.
Uniondale, NY 11553
Attention: Board of Directors
Ladies and Gentlemen:
We understand that The Hain Food Group, Inc. ("Hain") and Celestial
Seasonings, Inc. ("Celestial") intend to enter into an Agreement and Plan of
Merger to be dated March 5, 2000 (the "Agreement") pursuant to which a newly
formed, wholly owned subsidiary of Hain would be merged with and into Celestial
(the "Transaction"). Pursuant to the Agreement, each issued and outstanding
share of common stock, par value $0.01 per share, of Celestial (the "Celestial
Common Stock") will be converted into the right to receive 1.265 shares (the
"Exchange Ratio") of common stock, par value $0.01 per share, of Hain (the "Hain
Common Stock" and, together with the Celestial Common Stock, the "Common
Stock"). You have provided us with a draft of the Agreement dated March 5, 2000.
You have asked us to render our opinion as to whether the Exchange Ratio is
fair, from a financial point of view, to Hain.
In the course of performing our review and analyses for rendering this
opinion, we have:
- reviewed a draft of the Agreement dated March 5, 2000;
- reviewed Hain's Annual Reports to Shareholders and Annual Reports on
Form 10-K for the fiscal years ended June 30, 1997 through 1999, and its
Quarterly Reports on Form 10-Q for the periods ended September 30 and
December 31, 1999;
- reviewed certain operating and financial information, including financial
forecasts, provided to or discussed with us by Hain's management relating
to Hain's business and prospects;
- reviewed certain estimates of cost savings and other combination benefits
anticipated to result from the Transaction, prepared by and provided to or
discussed with us by Hain's management;
- met with certain members of Hain's senior management to discuss Hain's
business, operations, historical and projected financial results and
future prospects;
- reviewed Celestial's Annual Reports to Shareholders and Annual Reports on
Form 10-K for the fiscal years ended September 30, 1997 through 1999, and
its Quarterly Report on Form 10-Q for the period ended December 31, 1999;
- reviewed certain operating and financial information, including financial
forecasts, provided to or discussed with us by Celestial's management
relating to Celestial's business and prospects;
- met with certain members of Celestial's senior management to discuss
Celestial's business, operations, historical and projected financial
results and future prospects;
- reviewed the historical prices, trading multiples and trading volumes of
the Common Stock;
- reviewed publicly available financial data, stock market performance data
and trading multiples of companies which we deemed generally comparable to
Hain and Celestial or otherwise relevant to our analysis;
D-1
- reviewed the terms of recent mergers and acquisitions of companies which
we deemed generally comparable to Celestial and the Transaction or
otherwise relevant to our analysis;
- considered such other information and conducted such other studies,
analyses, inquiries and investigations as we deemed appropriate.
In the course of our review, we have relied upon and assumed, without
independent verification, the accuracy and completeness of the financial and
other information, including without limitation the financial forecasts and
synergy estimates, provided to us by Hain and Celestial. With respect to Hain's
and Celestial's projected financial results and the potential synergies that
could be achieved upon consummation of the Transaction, we have assumed that
they have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of the senior managements of Hain and
Celestial as to the expected future performance of Hain and Celestial,
respectively. We have not assumed any responsibility for the independent
verification of any such information or of the financial forecasts and synergy
estimates provided to us, and we have further relied upon the assurances of the
senior managements of Hain and Celestial that they are unaware of any facts that
would make the information, financial forecasts and synergy estimates provided
to us incomplete or misleading.
In arriving at our opinion, we have not performed or obtained any
independent evaluation or appraisal of the assets or liabilities (contingent or
otherwise) of Hain or Celestial, nor have we been furnished with any such
evaluation or appraisal. We have assumed that the Transaction: (i) will qualify
as a tax-free "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code, and (ii) will be accounted for as a pooling-of-interests
in accordance with U.S. GAAP. We also assume that the Transaction will be
consummated in accordance with the terms described in the Agreement, without the
waiver of any material condition and with all necessary material consents and
approvals having been obtained without any limitations, restrictions,
conditions, amendments or modifications that collectively would be material to
our analysis. Representatives of Hain have advised us, and therefore we have
assumed, that the final terms of the Agreement will not vary materially from
those set forth in the draft reviewed by us.
We do not express any opinion as to the price or range of prices at which
the Common Stock may trade subsequent to the announcement of the Transaction or
as to the price or range of prices at which Hain Common Stock may trade
subsequent to the consummation of the Transaction.
We have acted as a financial advisor to Hain in connection with the
Transaction and will receive a customary fee for such services, including the
rendering of this opinion, a substantial portion of which is contingent on
successful consummation of the Transaction. Bear Stearns has been previously
engaged by Hain to provide certain investment banking and financial advisory
services for which we received customary fees. In the ordinary course of
business, Bear Stearns may actively trade the securities of Hain or Celestial
for our own account and for the accounts of our customers and, accordingly, may
at any time hold a long or short position in such securities.
It is understood that this letter is intended for the benefit and use of the
Board of Directors of Hain and does not constitute a recommendation to the Board
of Directors of Hain or any holders of Hain Common Stock as to how to vote in
connection with the Transaction. This opinion does not address Hain's underlying
business decision to pursue the Transaction. This letter is not to be used for
any other purpose, or be reproduced, disseminated, quoted from or referred to at
any time, in whole or in part, without our prior written consent; provided,
however, that this letter may be included in its entirety in any joint proxy
statement/prospectus to be distributed to the holders of Hain Common Stock in
connection with the Transaction.
Our opinion is subject to the assumptions and conditions contained herein
and is necessarily based on economic, market and other conditions, and the
information made available to us, as they exist and
D-2
can be evaluated as of the date hereof. With your consent, we have no
obligation, and do not intend, to update or revise this letter after the date
hereof.
Based on and subject to the foregoing, it is our opinion that, as of the
date hereof, the Exchange Ratio is fair, from a financial point of view, to
Hain.
Very truly yours,
BEAR, STEARNS & CO. INC.
D-3
ANNEX E
GOLDMAN, SACHS & CO.
85 BROAD STREET
NEW YORK, NEW YORK 10004
(212) 902-1000
March 5, 2000
Board of Directors
Celestial Seasonings, Inc.
4600 Sleepytime Drive
Boulder, CO 80301
Ladies and Gentlemen:
You have requested our opinion as to the fairness from a financial point of
view to the holders of the outstanding shares of Common Stock, par value $0.01
per share (the "Company Shares"), of Celestial Seasonings, Inc. (the "Company")
of the exchange ratio of 1.265 shares of Common Stock, par value $0.01 per share
(the "Hain Shares"), of The Hain Food Group, Inc. ("Hain") to be received for
each Company Share (the "Exchange Ratio") pursuant to the Agreement and Plan of
Merger, dated as of March 5, 2000, by and between Hain and the Company (the
"Agreement").
Goldman, Sachs & Co., as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisition, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. We are
familiar with the Company having acted as its financial advisor in connection
with, and having participated in certain of the negotiations leading to, the
Agreement. Goldman, Sachs & Co. provides a full range of financial advisory and
securities services and, in the course of its normal trading activities, may
from time to time effect transactions and hold securities, including derivative
securities, of the Company or Hain for its own account and for the accounts of
customers. Goldman, Sachs & Co. may provide investment banking services to Hain
and its subsidiaries in the future.
In connection with this opinion, we have reviewed, among other things, the
Agreement; Annual Reports to Stockholders and Annual Reports on Form 10-K of the
Company and Hain for the five fiscal years ended September 30, 1999 and
June 30, 1999, respectively; certain interim reports to stockholders and
Quarterly Reports on Form 10-Q of the Company and Hain; certain other
communications from the Company and Hain to their respective stockholders; and
certain internal financial analyses and forecasts for the Company and Hain
prepared by their respective managements, including certain cost savings and
operating synergies projected by the managements of the Company and Hain to
result from the transaction contemplated by the Agreement (the "Synergies"). We
also have held discussions with members of the senior managements of the Company
and Hain regarding their assessment of the strategic rationale for, and the
potential benefits of, the transaction contemplated by the Agreement and the
past and current business operations, financial condition and future prospects
of their respective companies. In addition, we have reviewed the reported price
and trading activity for the Company Shares and the Hain Shares, compared
certain financial and stock market information for the Company and Hain with
similar information for certain other companies the securities of which are
publicly traded, reviewed the financial terms of certain recent business
combinations in the food industry specifically and in other industries generally
and performed such other studies and analyses as we considered appropriate.
E-1
We have relied upon the accuracy and completeness of all of the financial
and other information discussed with or reviewed by us and have assumed such
accuracy and completeness for purposes of rendering this opinion. In that
regard, we have assumed with your consent that the internal financial forecasts
prepared by the management of Hain and the Synergies have been reasonably
prepared on a basis reflecting the best currently available estimates and
judgments of the Company and Hain. In addition, we have not made an independent
evaluation or appraisal of the assets and liabilities of the Company or Hain or
any of their subsidiaries and we have not been furnished with any such
evaluation or appraisal. We also have assumed with your consent that the
transaction contemplated by the Agreement will be accounted for as a
pooling-of-interests under generally accepted accounting principles. We were not
requested to solicit, and did not solicit, interest from other parties with
respect to an acquisition of or other business combination with the Company. Our
advisory services and the opinion expressed herein are provided for the
information and assistance of the Board of Directors of the Company in
connection with its consideration of the transaction contemplated by the
Agreement and such opinion does not constitute a recommendation as to how any
holder of Company Shares should vote with respect to such transaction.
Based upon and subject to the foregoing and based upon such other matters as
we consider relevant, it is our opinion that as of the date hereof the Exchange
Ratio pursuant to the Agreement is fair from a financial point of view to the
holders of Company Shares.
Very truly yours,
Goldman, Sachs & Co.
E-2
ANNEX F
THE HAIN CELESTIAL GROUP, INC.
AMENDED AND RESTATED
1994 LONG TERM INCENTIVE AND STOCK AWARD PLAN
- --------------------------------------------------------------------------------
THE HAIN CELESTIAL GROUP, INC.
AMENDED AND RESTATED
1994 LONG TERM INCENTIVE AND STOCK AWARD PLAN
SECTION PAGE
- ------- ----
1. Purposes......................................................... 1
2. Definitions...................................................... 1
3. Administration................................................... 2
(a) Authority of the Committee.................................. 2
(b) Manner of Exercise of Committee Authority................... 3
(c) Limitation of Liability..................................... 3
4. Shares Subject to the Plan....................................... 4
5. Specific Terms of Awards......................................... 4
(a) General..................................................... 4
(b) Options..................................................... 5
(c) SARs........................................................ 5
(d) Restricted Shares........................................... 5
(e) Restricted Share Units...................................... 6
(f) Performance Shares and Performance Units.................... 6
(g) Dividend Equivalents........................................ 7
(h) Other Share-Based Awards.................................... 7
6. Certain Provisions Applicable to Awards.......................... 8
(a) Stand-Alone, Additional, Tandem and Substitute Awards....... 8
(b) Terms of Awards............................................. 8
(c) Form of Payment Under Awards................................ 8
(d) Nontransferability.......................................... 8
7. General Provisions............................................... 8
(a) Compliance with Legal and Trading Requirements.............. 8
(b) No Right to Continued Employment or Service................. 9
(c) Taxes....................................................... 9
(d) Changes to the Plan and Awards.............................. 9
(e) No Rights to Awards; No Shareholder Rights.................. 9
(f) Unfunded Status of Awards................................... 9
(g) Nonexclusivity of the Plan.................................. 9
(h) Not Compensation for Benefit Plans.......................... 9
(i) No Fractional Shares........................................ 10
(j) Governing Law............................................... 10
(k) Effective Date; Plan Termination............................ 10
(l) Titles and Headings......................................... 10
i
THE HAIN CELESTIAL GROUP, INC.
AMENDED AND RESTATED
1994 LONG TERM INCENTIVE AND STOCK AWARD PLAN
1. PURPOSES. The purposes of the 1994 Long Term Incentive and Stock Award
Plan are to advance the interests of The Hain Celestial Group, Inc. and its
stockholders by providing a means to attract, retain, and motivate employees and
directors of the Company upon whose judgment, initiative and efforts the
continued success, growth and development of the Company is dependent.
2. DEFINITIONS. For purposes of the Plan, the following terms shall be
defined as set forth below:
(a) "Affiliate" means any entity other than the Company and its Subsidiaries
that is designated by the Board or the Committee as a participating employer
under the Plan, provided that the Company directly or indirectly owns at least
20% of the combined voting power of all classes of stock of such entity or at
least 20% of the ownership interests in such entity.
(b) "Award" means any Option, SAR, Restricted Share, Restricted Share Unit,
Performance Share, Performance Unit, Dividend Equivalent, or Other Share-Based
Award granted to an Eligible Employee under the Plan.
(c) "Award Agreement" means any written agreement, contract, or other
instrument or document evidencing an Award.
(d) "Beneficiary" means the person, persons, trust or trusts which have been
designated by an Eligible Employee in his or her most recent written beneficiary
designation filed with the Company to receive the benefits specified under this
Plan upon the death of the Eligible Employee, or, if there is no designated
Beneficiary or surviving designated Beneficiary, then the person, persons, trust
or trusts entitled by will or the laws of descent and distribution to receive
such benefits.
(e) "Board" means the Board of Directors of the Company.
(f) "Code" means the Internal Revenue Code of 1986, as amended from time to
time. References to any provision of the Code shall be deemed to include
successor provisions thereto and regulations thereunder.
(g) "Committee" means the Compensation Committee of the Board, or such other
Board committee as may be designated by the Board to administer the Plan;
PROVIDED, HOWEVER, that the Committee shall consist of two or more directors of
the Company, each of whom is a "non-employee person" within the meaning of
Rule 16b-3 under the Exchange Act, to the extent applicable, and each of whom is
an "outside director" within the meaning of Section 162(m) of the Code, to the
extent applicable.
(h) "Company" means The Hain Celestial Group, Inc., a corporation organized
under the laws of Delaware, or any successor corporation.
(i) "Dividend Equivalent" means a right, granted under Section 5(g), to
receive cash, Shares, or other property equal in value to dividends paid with
respect to a specified number of Shares. Dividend Equivalents may be awarded on
a free-standing basis or in connection with another Award, and may be paid
currently or on a deferred basis.
(j) "Eligible Employee" means an employee of the Company or its Subsidiaries
and Affiliates, including any director who is an employee, who is responsible
for or contributes to the management, growth and/or profitability of the
business of the Company, its Subsidiaries or Affiliates.
F-1
(k) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time. References to any provision of the Exchange Act shall be
deemed to include successor provisions thereto and regulations thereunder.
(l) "Fair Market Value" means, with respect to Shares or other property, the
fair market value of such Shares or other property determined by such methods or
procedures as shall be established from time to time by the Committee. Unless
otherwise determined by the Committee in good faith, the Fair Market Value of
Shares as of any given date prior to the existence of a public market for the
Company's Shares shall mean the Company's book value. Thereafter, unless
otherwise determined by the Committee in good faith, the Fair Market Value of
Shares shall mean the mean between the high and low selling prices per Share on
the immediately preceding date (or, if the Shares were not traded on that day,
the next preceding day that the Shares were traded).
(m) "ISO" means any Option intended to be and designated as an incentive
stock option within the meaning of Section 422 of the Code.
(n) "NQSO" means any Option that is not an ISO.
(o) "Option" means a right, granted under Section 5(b) or Section 7, to
purchase Shares.
(p) "Other Share-Based Award" means a right, granted under Section 5(h),
that relates to or is valued by reference to Shares.
(q) "Participant" means an Eligible Employee who has been granted an Award
under the Plan.
(r) "Performance Share" means a performance share granted under
Section 5(f).
(s) "Performance Unit" means a performance unit granted under Section 5(f).
(t) "Plan" means this 1994 Long Term Incentive and Stock Award Plan.
(u)"Restricted Shares" means an Award of Shares under Section 5(d) that may
be subject to certain restrictions and to a risk of forfeiture.
(v) "Restricted Share Unit" means a right, granted under Section 5(e), to
receive Shares or cash at the end of a specified deferral period.
(w) "Rule 16b-3" means Rule 16b-3, as from time to time in effect and
applicable to the Plan and Participants, promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act.
(x) "SAR" or "Share Appreciation Right" means the right, granted under
Section 5(c), to be paid an amount measured by the difference between the
exercise price of the right and the Fair Market Value of Shares on the date of
exercise of the right, with payment to be made in cash, Shares, or property as
specified in the Award or determined by the Committee.
(y) "Shares" means common stock, $.01 par value per share, of the Company.
(z) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations (other than the last corporation in the unbroken chain) owns shares
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain.
3. ADMINISTRATION.
(a) Authority of the Committee. The Plan shall be administered by the
Committee, and the Committee shall have full and final authority to take the
following actions, in each case subject to and consistent with the provisions of
the Plan:
(i) to select Eligible Employees to whom Awards may be granted;
F-2
(ii) to designate Affiliates;
(iii) to determine the type or types of Awards to be granted to each
Eligible Employee;
(iv) to determine the type and number of Awards to be granted, the
number of Shares to which an Award may relate, the terms and conditions of
any Award granted under the Plan (including, but not limited to, any
exercise price, grant price, or purchase price, and any bases for adjusting
such exercise, grant or purchase price, any restriction or condition, any
schedule for lapse of restrictions or conditions relating to transferability
or forfeiture, exercisability, or settlement of an Award, and waiver or
accelerations thereof, and waivers of performance conditions relating to an
Award, based in each case on such considerations as the Committee shall
determine), and all other matters to be determined in connection with an
Award;
(v) to determine whether, to what extent, and under what circumstances
an Award may be settled, or the exercise price of an Award may be paid, in
cash, Shares, other Awards, or other property, or an Award may be cancelled,
forfeited, exchanged, or surrendered;
(vi) to determine whether, to what extent, and under what circumstances
cash, Shares, other Awards, or other property payable with respect to an
Award will be deferred either automatically, at the election of the
Committee, or at the election of the Eligible Employee;
(vii) to prescribe the form of each Award Agreement, which need not be
identical for each Eligible Employee;
(viii) to adopt, amend, suspend, waive, and rescind such rules and
regulations and appoint such agents as the Committee may deem necessary or
advisable to administer the Plan;
(ix) to correct any defect or supply any omission or reconcile any
inconsistency in the Plan and to construe and interpret the Plan and any
Award, rules and regulations, Award Agreement, or other instrument
hereunder;
(x) to make all other decisions and determinations as may be required
under the terms of the Plan or as the Committee may deem necessary or
advisable for the administration of the Plan.
(b) MANNER OF EXERCISE OF COMMITTEE AUTHORITY. The Committee shall have sole
discretion in exercising its authority under the Plan. Any action of the
Committee with respect to the Plan shall be final, conclusive, and binding on
all persons, including the Company, Subsidiaries, Affiliates, Eligible
Employees, any person claiming any rights under the Plan from or through any
Eligible Employee, and shareholders. The express grant of any specific power to
the Committee, and the taking of any action by the Committee, shall not be
construed as limiting any power or authority of the Committee. The Committee may
delegate to officers or managers of the Company or any Subsidiary or Affiliate
the authority, subject to such terms as the Committee shall determine, to
perform administrative functions and, with respect to Awards granted to persons
not subject to Section 16 of the Exchange Act, to perform such other functions
as the Committee may determine, to the extent permitted under Rule 16b-3 (if
applicable) and applicable law.
(c) LIMITATION OF LIABILITY. Each member of the Committee shall be entitled
to, in good faith, rely or act upon any report or other information furnished to
him or her by any officer or other employee of the Company or any Subsidiary or
Affiliate, the Company's independent certified public accountants, or other
professional retained by the Company to assist in the administration of the
Plan. No member of the Committee, nor any officer or employee of the Company
acting on behalf of the Committee, shall be personally liable for any action,
determination, or interpretation taken or made in good faith with respect to the
Plan, and all members of the Committee and any officer or employee of the
Company acting on their behalf shall, to the extent permitted by law, be fully
indemnified and protected by the Company with respect to any such action,
determination, or interpretation.
F-3
4. SHARES SUBJECT TO THE PLAN.
(a) Subject to adjustment as hereinafter provided, the total number of
Shares reserved for issuance in connection with Awards under the Plan shall be
6,400,000. No Award may be granted if the number of Shares to which such Award
relates, when added to the number of Shares previously issued under the Plan,
exceeds the number of Shares reserved under the preceding sentence. If any
Awards are forfeited, cancelled, exchanged or surrendered or such Award is
settled in cash or otherwise terminates without a distribution of Shares to the
Participant, any Shares counted against the number of Shares reserved and
available under the Plan with respect to such Award shall, to the extent of any
such forfeiture, settlement, termination, cancellation, exchange or surrender,
again be available for Awards under the Plan; PROVIDED, HOWEVER, that in the
case of forfeiture, cancellation, exchange or surrender of Restricted Shares or
Restricted Share Units with respect to which dividends or Dividend Equivalents
have been paid or accrued, such number of Shares shall not be available for
Awards unless, in the case of Shares with respect to which dividends or Dividend
Equivalents were accrued but unpaid, such dividends and Dividend Equivalents are
also forfeited, cancelled, exchanged or surrendered. Upon the exercise of any
Award granted in tandem with any other Awards, such related Awards shall be
cancelled to the extent of the number of Shares as to which the Award is
exercised.
(b) Subject to adjustment as provided in Section 4(d) hereof, the maximum
number of Shares with respect to which Options or SARs may be granted during a
calendar year to any Eligible Employee under this Plan shall be 1,000,000
Shares.
(c) Any Shares distributed pursuant to an Award may consist, in whole or in
part, of authorized and unissued Shares or treasury Shares including Shares
acquired by purchase in the open market or in private transactions.
(d) In the event that the Committee shall determine that any dividend in
Shares, recapitalization, Share split, reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, or share exchange, or other
similar corporate transaction or event, affects the Shares such that an
adjustment is appropriate in order to prevent dilution or enlargement of the
rights of Eligible Employees under the Plan, then the Committee shall make such
equitable changes or adjustments as it deems appropriate and, in such manner as
it may deem equitable, adjust any or all of (i) the number and kind of Shares
which may thereafter be issued under the Plan, (ii) the number and kind of
Shares issued or issuable in respect of outstanding Awards, and (iii) the
exercise price, grant price, or purchase price relating to any Award; PROVIDED,
HOWEVER, in each case that, with respect to ISOs, such adjustment shall be made
in accordance with Section 424(a) of the Code, unless the Committee determines
otherwise. In addition, the Committee is authorized to make adjustments in the
terms and conditions of, and the criteria and performance objectives included
in, Awards in recognition of unusual or non-recurring events (including, without
limitation, events described in the preceding sentence) affecting the Company or
any Subsidiary or Affiliate or the financial statements of the Company or any
Subsidiary or Affiliate, or in response to changes in applicable laws,
regulations, or accounting principles.
5. SPECIFIC TERMS OF AWARDS.
(a) GENERAL. Awards may be granted on the terms and conditions set forth in
this Section 5. In addition, the Committee may impose on any Award or the
exercise thereof, at the date of grant or thereafter (subject to Section 8(d)),
such additional terms and conditions, not inconsistent with the provisions of
the Plan, as the Committee shall determine, including terms regarding forfeiture
of Awards or continued exercisability of Awards in the event of termination of
employment by the Eligible Employee.
F-4
(b) OPTIONS. The Committee is authorized to grant Options, which may be
NQSOs or ISOs, to Eligible Employees on the following terms and conditions:
(i) EXERCISE PRICE. The exercise price per Share purchasable under an
Option shall be determined by the Committee, and the Committee may, without
limitation, set an exercise price that is based upon achievement of
performance criteria if deemed appropriate by the Committee.
(ii) TIME AND METHOD OF EXERCISE. The Committee shall determine at the
date of grant or thereafter the time or times at which an Option may be
exercised in whole or in part (including, without limitation, upon
achievement of performance criteria if deemed appropriate by the Committee),
the methods by which such exercise price may be paid or deemed to be paid
(including, without limitation, broker-assisted exercise arrangements), the
form of such payment (including, without limitation, cash, Shares, notes or
other property), and the methods by which Shares will be delivered or deemed
to be delivered to Eligible Employees.
(iii) ISOS. The terms of any ISO granted under the Plan shall comply in
all respects with the provisions of Section 422 of the Code, including but
not limited to the requirement that no ISO shall be granted more than ten
years after the effective date of the Plan. ISOs may only be granted to
employees of the Company or a Subsidiary.
(c) SARS. The Committee is authorized to grant SARs (Share Appreciation
Rights) to Eligible Employees on the following terms and conditions:
(i) RIGHT TO PAYMENT. An SAR shall confer on the Eligible Employee to
whom it is granted a right to receive with respect to each Share subject
thereto, upon exercise thereof, the excess of (1) the Fair Market Value of
one Share on the date of exercise (or, if the Committee shall so determine
in the case of any such right, including, in the Committee's discretion, one
related to an ISO, the Fair Market Value of one Share at any time during a
specified period before or after the date of exercise) over (2) the exercise
price of the SAR as determined by the Committee as of the date of grant of
the SAR (or, in the case of an SAR granted in tandem with an option, shall
be equal to the exercise price of the underlying option).
(ii) OTHER TERMS. The Committee shall determine, at the time of grant or
thereafter, the time or times at which an SAR may be exercised in whole or
in part, the method of exercise, method of settlement, form of consideration
payable in settlement, method by which Shares will be delivered or deemed to
be delivered to Eligible Employees, whether or not an SAR shall be in tandem
with any other Award, and any other terms and conditions of any SAR. Unless
the Committee determines otherwise, an SAR (1) granted in tandem with an
NQSO may be granted at the time of grant of the related NQSO or at any time
thereafter or (2) granted in tandem with an ISO may only be granted at the
time of grant of the related ISO.
(d) RESTRICTED SHARES. The Committee is authorized to grant Restricted
Shares to Eligible Employees on the following terms and conditions:
(i) ISSUANCE AND RESTRICTIONS. Restricted Shares shall be subject to
such restrictions on transferability and other restrictions, if any, as the
Committee may impose at the date of grant or thereafter, which restrictions
may lapse separately or in combination at such times, under such
circumstances (including, without limitation, upon achievement of
performance criteria if deemed appropriate by the Committee), in such
installments, or otherwise, as the Committee may determine. Except to the
extent restricted under the Award Agreement relating to the Restricted
Shares, an Eligible Employee granted Restricted Shares shall have all of the
rights of a shareholder including, without limitation, the right to vote
Restricted Shares and the right to receive dividends thereon.
F-5
(ii) FORFEITURE. Except as otherwise determined by the Committee, at the
date of grant or thereafter, upon termination of employment during the
applicable restriction period, Restricted Shares and any accrued but unpaid
dividends or Dividend Equivalents that are at that time subject to
restrictions shall be forfeited; PROVIDED, HOWEVER, that the Committee may
provide, by rule or regulation or in any Award Agreement, or may determine
in any individual case, that restrictions or forfeiture conditions relating
to Restricted Shares will be waived in whole or in part in the event of
terminations resulting from specified causes, and the Committee may in other
cases waive in whole or in part the forfeiture of Restricted Shares.
(iii) CERTIFICATES FOR SHARES. Restricted Shares granted under the Plan
may be evidenced in such manner as the Committee shall determine. If
certificates representing Restricted Shares are registered in the name of
the Eligible Employee, such certificates shall bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to such
Restricted Shares, and the Company shall retain physical possession of the
certificate.
(iv) DIVIDENDS. Dividends paid on Restricted Shares shall be either paid
at the dividend payment date, or deferred for payment to such date as
determined by the Committee, in cash or in unrestricted Shares having a Fair
Market Value equal to the amount of such dividends. Shares distributed in
connection with a Share split or dividend in Shares, and other property
distributed as a dividend, shall be subject to restrictions and a risk of
forfeiture to the same extent as the Restricted Shares with respect to which
such Shares or other property has been distributed.
(e) RESTRICTED SHARE UNITS. The Committee is authorized to grant Restricted
Share Units to Eligible Employees, subject to the following terms and
conditions:
(i) AWARD AND RESTRICTIONS. Delivery of Shares or cash, as the case may
be, will occur upon expiration of the deferral period specified for
Restricted Share Units by the Committee (or, if permitted by the Committee,
as elected by the Eligible Employee). In addition, Restricted Share Units
shall be subject to such restrictions as the Committee may impose, if any
(including, without limitation, the achievement of performance criteria if
deemed appropriate by the Committee), at the date of grant or thereafter,
which restrictions may lapse at the expiration of the deferral period or at
earlier or later specified times, separately or in combination, in
installments or otherwise, as the Committee may determine.
(ii) FORFEITURE. Except as otherwise determined by the Committee at date
of grant or thereafter, upon termination of employment (as determined under
criteria established by the Committee) during the applicable deferral period
or portion thereof to which forfeiture conditions apply (as provided in the
Award Agreement evidencing the Restricted Share Units), or upon failure to
satisfy any other conditions precedent to the delivery of Shares or cash to
which such Restricted Share Units relate, all Restricted Share Units that
are at that time subject to deferral or restriction shall be forfeited;
PROVIDED, HOWEVER, that the Committee may provide, by rule or regulation or
in any Award Agreement, or may determine in any individual case, that
restrictions or forfeiture conditions relating to Restricted Share Units
will be waived in whole or in part in the event of termination resulting
from specified causes, and the Committee may in other cases waive in whole
or in part the forfeiture of Restricted Share Units.
(f) PERFORMANCE SHARES AND PERFORMANCE UNITS. The Committee is authorized to
grant Performance Shares or Performance Units or both to Eligible Employees on
the following terms and conditions:
(i) PERFORMANCE PERIOD. The Committee shall determine a performance
period (the "Performance Period") of one or more years and shall determine
the performance objectives for grants of Performance Shares and Performance
Units. Performance objectives may vary from Eligible Employee to Eligible
Employee and shall be based upon such performance criteria as the Committee
may deem appropriate. Performance Periods may overlap and Eligible Employees
may
F-6
participate simultaneously with respect to Performance Shares and
Performance Units for which different Performance Periods are prescribed.
(ii) AWARD VALUE. At the beginning of a Performance Period, the
Committee shall determine for each Eligible Employee or group of Eligible
Employees with respect to that Performance Period the range of number of
Shares, if any, in the case of Performance Shares, and the range of dollar
values, if any, in the case of Performance Units, which may be fixed or may
vary in accordance with such performance or other criteria specified by the
Committee, which shall be paid to an Eligible Employee as an Award if the
relevant measure of Company performance for the Performance Period is met.
(iii) SIGNIFICANT EVENTS. If during the course of a Performance Period
there shall occur significant events as determined by the Committee which
the Committee expects to have a substantial effect on a performance
objective during such period, the Committee may revise such objective;
PROVIDED, HOWEVER, that in no event shall any provision of the Plan be
construed as granting to the Committee any discretion to increase the amount
of compensation payable under any Award to the extent such an increase would
cause the Award to lose its qualification as performance-based compensation
for purposes of Section 162(m)(4)(C) of the Code and the regulations
thereunder, and the Committee shall have no such discretion notwithstanding
any provision of the Plan to the contrary.
(iv) FORFEITURE. Except as otherwise determined by the Committee, at the
date of grant or thereafter, upon termination of employment during the
applicable Performance Period, Performance Shares and Performance Units for
which the Performance Period was prescribed shall be forfeited; PROVIDED,
HOWEVER, that the Committee may provide, by rule or regulation or in any
Award Agreement, or may determine in an individual case, that restrictions
or forfeiture conditions relating to Performance Shares and Performance
Units will be waived in whole or in part in the event of terminations
resulting from specified causes, and the Committee may in other cases waive
in whole or in part the forfeiture of Performance Shares and Performance
Units.
(v) PAYMENT. Each Performance Share or Performance Unit may be paid in
whole Shares, or cash, or a combination of Shares and cash either as a lump
sum payment or in annual installments, all as the Committee shall determine,
at the time of grant of the Performance Share or Performance Unit or
otherwise, commencing as soon as practicable after the end of the relevant
Performance Period.
(g) DIVIDEND EQUIVALENTS. The Committee is authorized to grant Dividend
Equivalents to Eligible Employees. The Committee may provide, at the date of
grant or thereafter, that Dividend Equivalents shall be paid or distributed when
accrued or shall be deemed to have been reinvested in additional Shares, or
other investment vehicles as the Committee may specify, provided that Dividend
Equivalents (other than freestanding Dividend Equivalents) shall be subject to
all conditions and restrictions of the underlying Awards to which they relate.
(h) OTHER SHARE-BASED AWARDS. The Committee is authorized, subject to
limitations under applicable law, to grant to Eligible Employees such other
Awards that may be denominated or payable in, valued in whole or in part by
reference to, or otherwise based on, or related to, Shares, as deemed by the
Committee to be consistent with the purposes of the Plan, including, without
limitation, unrestricted shares awarded purely as a "bonus" and not subject to
any restrictions or conditions, other rights convertible or exchangeable into
Shares, purchase rights for Shares, Awards with value and payment contingent
upon performance of the Company or any other factors designated by the
Committee, and Awards valued by reference to the performance of specified
Subsidiaries or Affiliates. The Committee shall determine the terms and
conditions of such Awards at date of grant or thereafter. Shares delivered
pursuant to an Award in the nature of a purchase right granted under this
Section 5(h) shall be purchased for such consideration, paid for at such times,
by such methods, and in
F-7
such forms, including, without limitation, cash, Shares, notes or other
property, as the Committee shall determine. Cash awards, as an element of or
supplement to any other Award under the Plan, shall also be authorized pursuant
to this Section 5(h).
6. CERTAIN PROVISIONS APPLICABLE TO AWARDS.
(a) STAND-ALONE, ADDITIONAL, TANDEM AND SUBSTITUTE AWARDS. Awards granted
under the Plan may, in the discretion of the Committee, be granted to Eligible
Employees either alone or in addition to, in tandem with, or in exchange or
substitution for, any other Award granted under the Plan or any award granted
under any other plan or agreement of the Company, any Subsidiary or Affiliate,
or any business entity to be acquired by the Company or a Subsidiary or
Affiliate, or any other right of an Eligible Employee to receive payment from
the Company or any Subsidiary or Affiliate. Awards may be granted in addition to
or in tandem with such other Awards or awards, and may be granted either as of
the same time as or a different time from the grant of such other Awards or
awards. The per Share exercise price of any Option, grant price of any SAR, or
purchase price of any other Award conferring a right to purchase Shares which is
granted, in connection with the substitution of awards granted under any other
plan or agreement of the Company or any Subsidiary or Affiliate or any business
entity to be acquired by the Company or any Subsidiary or Affiliate, shall be
determined by the Committee, in its discretion.
(b) TERMS OF AWARDS. The term of each Award granted to an Eligible Employee
shall be for such period as may be determined by the Committee; PROVIDED,
HOWEVER, that in no event shall the term of any ISO or an SAR granted in tandem
therewith exceed a period of ten years from the date of its grant (or such
shorter period as may be applicable under Section 422 of the Code).
(c) FORM OF PAYMENT UNDER AWARDS. Subject to the terms of the Plan and any
applicable Award Agreement, payments to be made by the Company or a Subsidiary
or Affiliate upon the grant, maturation, or exercise of an Award may be made in
such forms as the Committee shall determine at the date of grant or thereafter,
including, without limitation, cash, Shares, or other property, and may be made
in a single payment or transfer, in installments, or on a deferred basis. The
Committee may make rules relating to installment or deferred payments with
respect to Awards, including the rate of interest to be credited with respect to
such payments.
(d) NONTRANSFERABILITY. Unless otherwise set forth by the Committee in an
Award Agreement, Awards (except for vested shares) shall not be transferable by
an Eligible Employee except by will or the laws of descent and distribution
(except pursuant to a Beneficiary designation) and shall be exercisable during
the lifetime of an Eligible Employee only by such Eligible Employee or his
guardian or legal representative. An Eligible Employee's rights under the Plan
may not be pledged, mortgaged, hypothecated, or otherwise encumbered, and shall
not be subject to claims of the Eligible Employees' creditors.
7. GENERAL PROVISIONS.
(a) COMPLIANCE WITH LEGAL AND TRADING REQUIREMENTS. The Plan, the granting
and exercising of Awards thereunder, and the other obligations of the Company
under the Plan and any Award Agreement, shall be subject to all applicable U.S.
federal and state laws, rules and regulations, and to such approvals by any
regulatory or governmental agency as may be required. The Company, in its
discretion, may postpone the issuance or delivery of Shares under any Award
until completion of such stock exchange or market system listing or registration
or qualification of such Shares or other required action under any U.S. state or
federal law, rule or regulation as the Company may consider appropriate, and may
require any Participant to make such representations and furnish such
information as it may consider appropriate in connection with the issuance or
delivery of Shares in compliance with applicable laws, rules and regulations. No
provisions of the Plan shall be interpreted or construed to obligate the Company
to register any Shares under U.S. federal or state law.
F-8
(b) NO RIGHT TO CONTINUED EMPLOYMENT OR SERVICE. Neither the Plan nor any
action taken thereunder shall be construed as giving any employee or director
the right to be retained in the employ or service of the Company or any of its
Subsidiaries or Affiliates, nor shall it interfere in any way with the right of
the Company or any of its Subsidiaries or Affiliates to terminate any employee's
or director's employment or service at any time.
(c) TAXES. The Company or any Subsidiary or Affiliate is authorized to
withhold from any Award granted, any payment relating to an Award under the
Plan, including from a distribution of Shares, or any payroll or other payment
to an Eligible Employee, amounts of withholding and other taxes due in
connection with any transaction involving an Award, and to take such other
action as the Committee may deem advisable to enable the Company and Eligible
Employees to satisfy obligations for the payment of withholding taxes and other
tax obligations relating to any Award. This authority shall include authority to
withhold or receive Shares or other property and to make cash payments in
respect thereof in satisfaction of an Eligible Employee's tax obligations.
(d) CHANGES TO THE PLAN AND AWARDS. The Board may amend, alter, suspend,
discontinue, or terminate the Plan or the Committee's authority to grant Awards
under the Plan without the consent of shareholders of the Company or
Participants, except that any such amendment, alteration, suspension,
discontinuation, or termination shall be subject to the approval of the
Company's shareholders to the extent such shareholder approval is required under
Section 422 of the Code or the rules of any stock exchange or automated
quotation system on which the Shares may then be listed or quoted; PROVIDED,
HOWEVER, that, without the consent of an affected Participant, no amendment,
alteration, suspension, discontinuation, or termination of the Plan may impair
the rights or, in any other manner, adversely affect the rights of such
Participant under any Award theretofore granted to him or her. The Committee may
waive any conditions or rights under, or amend, alter, suspend, discontinue, or
terminate any Award theretofore granted and any Award Agreement relating
thereto; PROVIDED, HOWEVER, that, without the consent of an affected Eligible
Employee, no such amendment, alteration, suspension, discontinuation, or
termination of any Award may impair or adversely affect the rights of such
Eligible Employee under such Award.
(e) NO RIGHTS TO AWARDS; NO SHAREHOLDER RIGHTS. No Eligible Employee or
employee shall have any claim to be granted any Award under the Plan, and there
is no obligation for uniformity of treatment of Eligible Employees and
employees. No Award shall confer on any Eligible Employee any of the rights of a
shareholder of the Company unless and until Shares are duly issued or
transferred to the Eligible Employee in accordance with the terms of the Award.
(f) UNFUNDED STATUS OF AWARDS. The Plan is intended to constitute an
"unfunded" plan for incentive compensation. With respect to any payments not yet
made to a Participant pursuant to an Award, nothing contained in the Plan or any
Award shall give any such Participant any rights that are greater than those of
a general creditor of the Company; PROVIDED, HOWEVER, that the Committee may
authorize the creation of trusts or make other arrangements to meet the
Company's obligations under the Plan to deliver cash, Shares, other Awards, or
other property pursuant to any Award, which trusts or other arrangements shall
be consistent with the "unfunded" status of the Plan unless the Committee
otherwise determines with the consent of each affected Participant.
(g) NONEXCLUSIVITY OF THE PLAN. Neither the adoption of the Plan by the
Board nor its submission to the shareholders of the Company for approval shall
be construed as creating any limitations on the power of the Board to adopt such
other incentive arrangements as it may deem desirable, including, without
limitation, the granting of options and other awards otherwise than under the
Plan, and such arrangements may be either applicable generally or only in
specific cases.
(h) NOT COMPENSATION FOR BENEFIT PLANS. No Award payable under this Plan
shall be deemed salary or compensation for the purpose of computing benefits
under any benefit plan or other arrangement of
F-9
the Company for the benefit of its employees or directors unless the Company
shall determine otherwise.
(i) NO FRACTIONAL SHARES. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award. The Committee shall determine whether cash,
other Awards, or other property shall be issued or paid in lieu of such
fractional Shares or whether such fractional Shares or any rights thereto shall
be forfeited or otherwise eliminated.
(j) GOVERNING LAW. The validity, construction, and effect of the Plan, any
rules and regulations relating to the Plan, and any Award Agreement shall be
determined in accordance with the laws of New York without giving effect to
principles of conflict of laws.
(k) EFFECTIVE DATE; PLAN TERMINATION. The Plan shall become effective as of
October 3, 1994 (the "Effective Date") upon approval by the affirmative votes of
the holders of a majority of voting securities of the Company. The Plan shall
terminate as to future awards on the date which is ten (10) years after the
Effective Date, or, if earlier, at such time as no Shares remain available for
issuance pursuant to Section 4 and the Company has no further obligations with
respect to any Award granted under the Plan.
(l) TITLES AND HEADINGS. The titles and headings of the sections in the Plan
are for convenience of reference only. In the event of any conflict, the text of
the Plan, rather than such titles or headings, shall control.
F-10
ANNEX G
THE HAIN CELESTIAL GROUP, INC.
2000 DIRECTORS STOCK OPTION PLAN
1. PURPOSE. The purpose of this Plan is to advance the interests of The
Hain Celestial Group, Inc., a Delaware corporation, by providing an additional
incentive to attract and retain nonemployee directors through the encouragement
of stock ownership in the Company by such persons.
2. DEFINITIONS. As used herein, the following terms shall have the meaning
indicated:
(a) "Annual Meeting Date" shall mean the date of the annual meeting of the
Company's stockholders at which the Directors are elected.
(b) "Board" shall mean the Company's Board of Directors.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Common Stock" shall mean the Common Stock, par value $.01 per share, of
the Company.
(e) "Company" shall refer to The Hain Celestial Group, Inc., a Delaware
corporation.
(f) "Director" shall mean a member of the Board.
(g) "Eligible Director" means any person who is a member of the Board and
who is not an employee, full time or part time, of the Company or a Subsidiary.
(h) "Fair Market Value" of a share of Common Stock on any day means: (i) if
the principal market for the Common Stock is a national securities exchange or
the Nasdaq National Market System, the closing sales price of the Common Stock
on such day as reported by such exchange or market system, or on a consolidated
tape reflecting transactions on such exchange or market system, or (ii) if the
principal market for the Common Stock is not a national securities exchange or
the Nasdaq National Market System, and the Common Stock is quoted on the
National Association of Securities Dealers Automated Quotations System, the mean
between the closing bid and the closing asked prices for the Common Stock on
such day as quoted on such system, or (iii) if the principal market for the
Common Stock is not a national securities exchange or the Nasdaq National Market
System, and the Common Stock is not quoted on the National Association of
Securities Dealers Automated Quotations System, the mean between the highest bid
and lowest asked prices for the Common Stock on such day as reported by the
National Quotation Bureau, Inc.
(i) "Initial Grant Date" means the date on which a person is first elected
as a member of the Board, or, in the case of persons who were members of the
Board as of the date of the adoption of this Plan.
(j) "Option" shall mean any stock option granted under this Plan.
(k) "Option Agreement" means the agreement between the Company and the
Optionee to evidence the grant of an Option.
(l) "Optionee" shall mean a person to whom a stock option is granted under
this plan or any person who succeeds to the rights of such person under this
Plan by reason of the death of such person.
(m) "Plan" shall mean this Directors Stock Option Plan for the Company.
(n) "Share(s)" shall mean a share or shares of the Common Stock.
G-1
(o) "Subsidiary" means (i) any corporation of which the securities have a
majority of the ordinary voting power in electing the Board (other than as a
result of a default) are owned, at the time as of which any determination is
being made, by the Company either directly or through one or more Subsidiaries,
(ii) a partnership in which the Company or a Subsidiary of the Company is, at
the time as of which any determination is being made, a general partner or
(iii) any other Person (other than a corporation or a partnership) in which the
Company either directly or through one or more Subsidiaries, at the time as of
which any determination is being made, has (x) at least a majority ownership
interest or (y) the power to elect or direct the election of the directors or
other governing body of such Person.
3. SHARES AND OPTIONS. Subject to Section 9 of this Plan, there shall be
reserved for issuance pursuant to the Plan an aggregate of up to 750,000 Shares
from authorized and unissued Shares or treasury Shares including Shares acquired
by purchase in the open market or other transactions. If any Option granted
under the Plan shall terminate, expire, or be canceled or surrendered as to any
Shares, such Shares shall be available for future grants under the Plan.
4. GRANTS OF OPTIONS.
(a) Initial Grant. On the Initial Grant Date, each Eligible Director shall
automatically be granted an Option to purchase 15,000 Shares.
(b) Annual Grant. Each Eligible Director shall upon re-election,
automatically receive an annual grant of an Option to purchase 7,500 Shares on
each Annual Meeting Date subsequent to his election as a director of the
Company.
(c) Discretionary Grants. The Board is authorized, in its discretion, to
grant additional Options to Eligible Directors. The date of grant, date first
exercisable, number of shares of Common Stock which may be purchased on exercise
and the exercise price of the Options shall be determined by the Board, in its
discretion. Grants of Options under this paragraph (c) need not be uniform to
all Eligible Directors.
(d) Option Agreement. Upon the grant of each Option, the Company and the
Eligible Director shall enter into an Option Agreement, which shall specify the
grant date and the exercise price and shall include or incorporate by reference
the substance of this Plan and such other provisions consistent with this Plan
as the Board may determine.
5. EXERCISE PRICE. The exercise price per Share of any Option shall be the
Fair Market Value of the Shares underlying such Option on the date such Option
is granted.
6. EXERCISE OF OPTIONS. An option shall be deemed exercised when (i) the
Company has received written notice of such exercise in accordance with the
terms of the Option, (ii) full payment has been made of the aggregate exercise
price of the Shares as to which the Option is exercised, and (iii) arrangements
for the Optionee's payment to the Company of the amount, if any, that is
necessary for the Company to withhold in accordance with applicable tax
withholding requirements. The exercise price of any Shares purchased shall be
paid in cash, by certified or official bank check or personal check, by money
order, with Shares or by a combination of the above. If the exercise price is
paid in whole or in part with Shares, the value of the Shares surrendered shall
be their Fair Market Value on the date the Option is exercised. No Optionee
shall be deemed to be a holder of any Shares subject to an Option unless or
until a stock certificate or certificates for such Shares are issued to such
person(s) under the terms of the Plan.
7. EXERCISE SCHEDULE FOR OPTIONS. Each Option granted under Sections 4(a)
and 4(b) hereunder shall be immediately exercisable. Options granted under
Section 4(c) shall be exercisable as set forth in the individual Option
Agreements. The expiration date of an Option shall be ten (10) years from the
date of grant of the Option.
G-2
8. TERMINATION OF OPTION PERIOD. The unexercised portion of any Option
shall automatically and without notice terminate and become null and void prior
to the expiration date specified in Section 7 hereof at the time of the earliest
to occur of the following:
(i) three (3) months after the date on which the Optionee ceases to be a
Director for any reason other than by reason of (A) Cause which, for
purposes of this Plan, shall mean the removal of the Optionee as a Director
by reason of any act of (x) fraud or intentional misrepresentation, or
(y) embezzlement, misappropriation, or conversion of assets or opportunities
of the Company or any Subsidiary, or (B) death;
(ii) immediately upon the removal of the Optionee as a Director for
Cause;
(iii) one year after the date the Optionee ceases to be a Director by
reason of death of the Optionee.
9. ADJUSTMENT OF SHARES.
(a) In the event of any recapitalization, reclassification, split-up or
consolidation of Shares of Common Stock, separation (including a spin-off),
dividend on Shares of Common Stock payable in capital stock, or other similar
change in capitalization of the Company or a merger or consolidation of the
Company or sale by the Company of all or a portion of its assets or other
similar event, the Board shall make such appropriate adjustments in the exercise
prices of Options, including Options then outstanding, in the number and kind of
securities, cash or other property which may be issued pursuant to Options under
the Plan, including Options then outstanding, and in the number of Shares of
Common Stock with respect to which Options may be granted (in the aggregate and
to individual participants) as the Board deems equitable with a view toward
maintaining the proportionate interest of the Directors and preserving the value
of the Options.
(b) No fractional Shares of Common Stock shall be issued. In lieu thereof,
the cash value of such fraction shall be paid.
(c) Without limiting the generality of the foregoing, the existence of
outstanding Options granted under the Plan shall not affect in any manner the
right or power of the Company to make, authorize or consummate (i) any or all
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business; (ii) any merger or consolidation of
the Company; (iii) any issue by the Company of debt securities, or preferred or
preference stock that would rank above the Shares subject to outstanding
Options; (iv) the dissolution or liquidation of the Company; (v) the sale,
transfer or assignment of all or any part of the assets or business of the
Company; or (vi) any other corporate act or proceeding, whether of a similar
character or otherwise.
10. TRANSFERABILITY OF OPTIONS. Unless otherwise determined by the Board,
each Option shall provide that such Option shall not be transferable by the
Optionee otherwise than by will or the laws of descent and distribution, and
each Option shall be exercisable during the Optionee's lifetime only by the
Optionee.
11. ISSUANCE OF SHARES. As a condition of any sale or issuance of Shares
upon exercise of any Options, the Board may require such agreement or
undertakings; if any, as the Board may deem necessary or advisable to assure
compliance with any such law or regulation including, but not limited to, the
following:
(a) a representation and warranty by the Optionee to the Company, at the
time any Option is exercised, that he is acquiring the Shares to be issued to
him for investment and not with a view to, or for sale in connection with, the
distribution of any such Shares; and
(b) a representation, warranty and/or agreement to be bound by any legends
that are, in the opinion of the Board, necessary or appropriate to comply with
the provisions of any securities law
G-3
deemed by the Board to be applicable to the issuance of the Shares and are
endorsed upon the Share Certificates.
12. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Board. Subject to the provisions of the Plan, the Board shall be authorized to
interpret the Plan, to establish, amend, and rescind any rules and regulations
relating to the Plan, and to make all other determinations necessary or
advisable for the administration of the Plan. The determination of the Board in
the administration of the Plan, as described herein, shall be final and
conclusive and binding upon all persons including, without limitation, the
Company, its stockholders and persons granted Options under the Plan.
13. INTERPRETATION. If any provision of the Plan should be held invalid or
illegal for any reason, such determination shall not affect the remaining
provisions hereof, but instead the Plan shall be construed and enforced as if
such provision had never been included in the Plan. The determination and the
interpretation and construction of any provision of the Plan by the Board shall
be final and conclusive. This Plan shall be governed by the laws of the State of
Delaware. Headings contained in this Plan are for convenience only and shall in
no manner be construed as part of the Plan. Any reference to the masculine,
feminine, or neuter gender shall be a reference to such other gender as is
appropriate.
14. TERM OF PLAN, AMENDMENT AND TERMINATION OF THE PLAN.
(a) This Plan shall become effective upon its adoption of the Board, and
shall continue in effect until all Options granted hereunder have expired or
been exercised, unless sooner terminated under the provisions relating thereto.
(b) The Plan shall be adopted by the Board and shall be presented to the
Company stockholders for their approval by vote of a majority of such
stockholders present or represented at a meeting duly held. Options may be
granted prior to stockholder approval of the Plan, but such Options shall be
contingent upon such approval being obtained and may not be exercised prior to
such approval.
(c) The Board may from time to time amend the Plan without further approval
of the Company's stockholders, except where such approval is required by any law
or regulation or any stock exchange or automated quotation system rule;
provided, however, that, except to the extent specifically provided otherwise in
Section 8, no amendment of the Plan issued hereunder shall substantially impair
any Option previously granted to any Optionee without the consent of such
Optionee.
(d) The Board, without further approval of the Company's stockholders, may
at any time terminate or suspend this Plan. Any such termination or suspension
of the Plan shall not affect Options already granted and such Options shall
remain in full force and effect as if the Plan had not been terminated or
suspended. No Option may be granted while the Plan is suspended or after it is
terminated. Except to the extent specifically provided otherwise in Section 8,
the rights and obligations under any Option granted to any Optionee while the
Plan is in effect shall not be altered or impaired by the suspension or
termination of the Plan without the consent of such Optionee.
15. RESERVATION OF SHARES. The Company, during the term of the Plan, will
at all times reserve and keep available a number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
G-4
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
1. INDEMNIFICATION. DELAWARE LAW. Section 145 of the Delaware General
Corporation Law, or the DGCL, provides that a corporation may indemnify a
director or officer by a provision contained in the certificate of incorporation
or by-laws or by a duly authorized resolution of its stockholders or directors
or by agreement, provided that no indemnification may be made to or on behalf of
any director or officer if a judgment or other final adjudication adverse to the
director or officer establishes that his acts were committed in bad faith or
were the result of active and deliberate dishonesty and material to the cause of
action, or that such director or officer personally gained in fact a financial
profit or other advantage to which he was not legally entitled.
Section 145(a) of the DGCL provides that a corporation may indemnify a
director or officer made, or threatened to be made, a party to any threatened,
pending or completed action other than a derivative action, whether civil or
criminal, against expenses (including attorneys' fees), judgments, fines,
amounts paid in settlement actually and reasonably incurred as a result of such
action, if such director or officer acted, in good faith, for a purpose which he
reasonably believed to be in, or not opposed to, the best interests of the
corporation and, in criminal actions or proceedings, in addition, has no
reasonable cause to believe that his conduct was unlawful.
Section 145(b) of the DGCL provides that a corporation may indemnify a
director or officer, made or threatened to be made a party in a derivative
action, against expenses (including attorneys fees) actually and reasonably
incurred by such person in connection with the defense or settlement of such
action, if such director or officer acted, in good faith, and in a manner such
person reasonably believed to be in, or not opposed to, the best interests of
the corporation, except that no indemnification will be made in respect of any
claim as to which such director or officer shall have been adjudged liable to
the corporation, unless and only to the extent that the Court of Chancery or the
court in which the action was brought determines, upon application, that, in
view of all the circumstances of the case, the director or officer is fairly and
reasonably entitled to indemnity for such expenses as the Court of Chancery or
such other court deems proper.
Section 145(d) of the DGCL specifies the manner in which payment of
indemnification under Section 145(a) of the DGCL or indemnification permitted
under Section 145(b) of the DGCL may be authorized by the corporation.
Section 145(c) of the DGCL provides that indemnification by a corporation is
mandatory in any case in which a present or former director or officer has been
successful, whether on the merits or otherwise, in defending an action. In the
event that the director or officer has not been successful or the action is
settled, indemnification must be authorized by the appropriate corporate action
as set forth in Section 145(d).
Section 145(g) of the DGCL authorizes the purchase and maintenance of
insurance to indemnify (1) a corporation for any obligation which it incurs as a
result of the indemnification of directors and officers under the above section
or (2) directors and officers in instances in which they may be indemnified by a
corporation under such section.
2. HAIN'S CERTIFICATE OF INCORPORATION AND BYLAWS. Article Tenth of Hain's
Amended and Restated Certificate of Incorporation and Article VI of Hain's
Amended and Restated Bylaws provides for Hain to indemnify its corporate
personnel, directors and officers to the full extent permitted by Section 145 of
the DGCL, as the same may be supplemented or amended from time to time.
3. THE MERGER AGREEMENT. The merger agreement provides that (a) for a
period of ten years after the effective time for the merger, Hain and the
surviving corporation shall maintain in effect the current provisions regarding
indemnification of officers and directors contained in the certificate of
II-1
incorporation and by-laws of Celestial and each of its subsidiaries and any
directors, officers or employees indemnification agreements of Celestial and its
subsidiaries, (b) for a period of six years after the effective time of the
merger, Hain and the surviving corporation shall maintain in effect the current
policies of directors' and officers' liability insurance and fiduciary liability
insurance maintained by Celestial (provided that Hain may substitute therefor
policies of at least the same coverage and amounts containing terms and
conditions which are, in the aggregate, no less advantageous to the insured in
any material respect) with respect to claims arising from facts or events which
occurred on or before the effective time of the merger, and (c), for a period of
ten years after the effective time of the merger, Hain and the surviving
corporation shall indemnify the directors and officers of Celestial to the
fullest extent to which Hain is permitted to indemnify such officers and
directors under its certificate of incorporation and by-laws and the DGCL.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) LIST OF EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- -----------
2 Agreement and Plan of Merger (the "Merger Agreement") dated
as of March 5, 2000 between The Hain Food Group, Inc. and
Celestial Seasonings, Inc. (included as Annex A to the Joint
Proxy Statement/Prospectus contained in this Registration
Statement).
3.1 Form of Amended and Restated Certificate of Incorporation of
Hain.
3.2 Amended and Restated Bylaws of Hain.
3.3 Form of Amended and Restated Certificate of Incorporation of
Celestial (included as Exhibit A to the Merger Agreement).
4.1 Specimen Common Stock Certificate.
4.2 Form of Amended and Restated 1994 Long Term Incentive and
Stock Award Plan of Hain (included as Annex F to the Joint
Proxy Statement/Prospectus contained in this Registration
Statement).
4.3 Form of 2000 Directors Stock Option Plan of Hain (included
as Annex G to the Joint Proxy Statement/Prospectus contained
in this Registration Statement).
5 Opinion of Cahill Gordon & Reindel regarding the validity of
the securities being registered.
8.1 Opinion of Cahill Gordon & Reindel regarding certain federal
income tax consequences relating to the merger.
8.2 Opinion of Bartlit Beck Herman Palenchar & Scott regarding
certain federal income tax consequences relating to the
merger.
10.1 Voting Agreement between Irwin D. Simon and Celestial
Seasonings, Inc. dated March 5, 2000 (included as Annex B to
the Joint Proxy Statement/Prospectus contained in this
Registration Statement).
10.2 Voting Agreement between Mo Siegel and The Hain Food Group,
Inc. dated March 5, 2000 (included as Annex C to the Joint
Proxy Statement/Prospectus contained in this Registration
Statement).
15 Letter of Deloitte & Touche LLP regarding unaudited interim
financial information.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Deloitte & Touche LLP.
23.3 Consent of Deloitte & Touche LLP.
23.4 Consents of Cahill Gordon & Reindel (included in the
opinions filed as Exhibit 5 and Exhibit 8.1, respectively,
to this Registration Statement).
II-2
EXHIBIT
NUMBER DESCRIPTION
------- -----------
23.5 Consent of Bartlit Beck Herman Palenchar & Scott (included
in the opinion filed as Exhibit 8.2 to this Registration
Statement).
24* Powers of Attorney authorizing execution of this
registration statement on form S-4 on behalf of certain
directors of the registrant (included on signature pages to
this registration statement).
99.1** Consent of Goldman, Sachs & Co.
99.2* Consent of Bear, Stearns & Co. Inc.
99.3** Form of Hain Proxy Card.
99.4** Form of Celestial Proxy Card.
99.5 Consent of Mo Siegel to Become a Director of Hain.
99.6 Consent of Marina Hahn to Become a Director of Hain.
99.7 Consent of Gregg A. Ostrander to Become a Director of Hain.
- ------------------------
* Previously filed.
** Superseding exhibit.
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(a) (1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities
Act of 1993;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes:
(1) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this
registration statement, by any person or party who is
II-3
deemed to be an underwriter within the meaning of Rule 145(c), such
reoffering prospectus will contain the information called for by the
applicable registration form with respect to reofferings by persons who
may be deemed underwriters, in addition to the information called for by
the other items of the applicable form.
(2) That every prospectus (i) that is filed pursuant to paragraph (1)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Securities Act of 1933 and is used in connection
with an offering of securities subject to Rule 415, will be filed as a
part of an amendment to the registration statement and will not be used
until such amendment is effective, and that, for purposes of determining
any liability under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
(3) That, for purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(4) To respond to requests for information that is incorporated by reference
into the Joint Proxy Statement/Prospectus pursuant to Item 4, 10(b), 11
or 13 of this form, within one business day of receipt of such request,
and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement
through the date of responding to the request.
(5) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved
therein, that was not the subject of and included in the registration
statement when it became effective.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 1 to the registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Uniondale, State of New York, on this 24th day of April, 2000.
Date: April 24, 2000 THE HAIN FOOD GROUP, INC.
(REGISTRANT)
BY: /S/ IRWIN D. SIMON
-----------------------------------------
Name: Irwin D. Simon
Title: Chairman of the Board of Directors,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the registration statement has been signed below by the following
persons and by Irwin D. Simon as Attorney-in-Fact in the capacities and on the
dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
Chairman of the Board of
/s/ IRWIN D. SIMON Directors, President and
------------------------------------------- Chief Executive Officer April 24, 2000
Irwin D. Simon (Principal Executive Officer)
/s/ ANDREW R. HEYER*
------------------------------------------- Director April 24, 2000
Andrew R. Heyer
Chief Financial Officer,
/s/ GARY M. JACOBS* Treasurer and Secretary
------------------------------------------- (Principal Financial and April 24, 2000
Gary M. Jacobs Accounting Officer)
/s/ BETH L. BRONNER*
------------------------------------------- Director April 24, 2000
Beth L. Bronner
/s/ JACK FUTTERMAN*
------------------------------------------- Director April 24, 2000
Jack Futterman
/s/ JAMES S. GOLD*
------------------------------------------- Director April 24, 2000
James S. Gold
/s/ KENNETH J. DALEY*
------------------------------------------- Director April 24, 2000
Kenneth J. Daley
/s/ JOSEPH JIMENEZ*
------------------------------------------- Director April 24, 2000
Joseph Jimenez
/s/ A.G. MALCOLM RITCHIE*
------------------------------------------- Director April 24, 2000
A.G. Malcolm Ritchie
*By: /s/ IRWIN D. SIMON
Irwin D. Simon
Attorney-in-Fact
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- -----------
2 Agreement and Plan of Merger (the "Merger Agreement") dated
as of March 5, 2000 between The Hain Food Group, Inc. and
Celestial Seasonings, Inc. (included as Annex A to the Joint
Proxy Statement/Prospectus contained in this Registration
Statement).
3.1 Form of Amended and Restated Certificate of Incorporation of
Hain.
3.2 Amended and Restated Bylaws of Hain.
3.3 Form of Amended and Restated Certificate of Incorporation of
Celestial (included as Exhibit A to the Merger Agreement).
4.1 Specimen Common Stock Certificate.
4.2 Form of Amended and Restated 1994 Long Term Incentive and
Stock Award Plan of Hain (included as Annex F to the Joint
Proxy Statement/Prospectus contained in this Registration
Statement).
4.3 Form of 2000 Directors Stock Option Plan of Hain (included
as Annex G to the Joint Proxy Statement/Prospectus contained
in this Registration Statement).
5 Opinion of Cahill Gordon & Reindel regarding the validity of
the securities being registered.
8.1 Opinion of Cahill Gordon & Reindel regarding certain federal
income tax consequences relating to the merger.
8.2 Opinion of Bartlit Beck Herman Palenchar & Scott regarding
certain federal income tax consequences relating to the
merger.
10.1 Voting Agreement between Irwin D. Simon and Celestial
Seasonings, Inc. dated March 5, 2000 (included as Annex B to
the Joint Proxy Statement/Prospectus contained in this
Registration Statement).
10.2 Voting Agreement between Mo Siegel and The Hain Food Group,
Inc. dated March 5, 2000 (included as Annex C to the Joint
Proxy Statement/Prospectus contained in this Registration
Statement).
15 Letter of Deloitte & Touche LLP regarding unaudited interim
financial information.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Deloitte & Touche LLP.
23.3 Consent of Deloitte & Touche LLP.
23.4 Consents of Cahill Gordon & Reindel (included in the
opinions filed as Exhibit 5 and Exhibit 8.1, respectively,
to this Registration Statement).
23.5 Consent of Bartlit Beck Herman Palenchar & Scott (included
in the opinion filed as Exhibit 8.2 to this Registration
Statement).
24* Powers of Attorney authorizing execution of this
registration statement on form S-4 on behalf of certain
directors of the registrant (included on signature pages to
this registration statement).
99.1** Consent of Goldman, Sachs & Co.
99.2* Consent of Bear, Stearns & Co. Inc.
99.3** Form of Hain Proxy Card.
99.4** Form of Celestial Proxy Card.
99.5 Consent of Mo Siegel to Become a Director of Hain.
99.6 Consent of Marina Hahn to Become a Director of Hain.
99.7 Consent of Gregg A. Ostrander to Become a Director of Hain.
- ------------------------
* Previously filed.
** Superseding exhibit
Exhibit 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
THE HAIN CELESTIAL GROUP, INC.
The undersigned, for the purposes of amending and restating
the Certificate of Incorporation of The Hain Celestial Group, Inc., a Delaware
corporation (the "Corporation"), does hereby certify that:
I. On May 19, 1993, the Corporation (under the name "21st
Century Food Corp.") filed its original Certificate of Incorporation with the
Secretary of State of the State of Delaware, thereby causing the Corporation to
become organized and existing under and by virtue of the General Corporation Law
of the State of Delaware, as amended (the "DGCL").
II. On May 28, 1993, the Corporation filed a Certificate of
Amendment with the Secretary of State of the State of Delaware, changing the
name of the Corporation to "21st Century Food Products Corp."
III. On October 1, 1993, the Corporation filed a Certificate
of Amendment with the Secretary of State of the State of Delaware, permitting
the Corporation to issue a class of common stock and a class of preferred stock.
IV. On October 14, 1993, the Corporation filed a Certificate
of Amendment with the Secretary of State of the State of Delaware , changing the
name of the Corporation to "Kineret Acquisition Corp.," increasing the aggregate
number of authorized shares to 20,000,000 (comprised of 15,000,000 shares of
common stock and 5,000,000 shares of preferred stock) and changing its
registered office and agent.
V. On December 7, 1994, the Corporation filed a Certificate of
Amendment with the Secretary of State of the State of Delaware, changing the
name of the Corporation to "The Hain Food Group, Inc." and increasing the
aggregate number of authorized shares to 45,000,000 (comprised of 40,000,000
shares of common stock and 5,000,000 shares of preferred stock).
VI. The Amended and Restated Certificate of Incorporation set
forth below has been duly adopted in accordance with the provisions of Section
242 and Section 245 of the DGCL:
-2-
ARTICLE FIRST: NAME. The name of the Corporation is The Hain
Celestial Group, Inc.
ARTICLE SECOND: REGISTERED OFFICE AND AGENT. The address of
the Corporation's registered office in the State of Delaware is 32 Loockerman
Square, Suite L-100, in the City of Dover, County of Kent, Delaware 19901. The
name of its registered agent at such address is The Prentice-Hall Corporation
System, Inc.
ARTICLE THIRD: PURPOSE. The purpose of the Corporation is to
engage in any lawful act or activity for which corporations may be organized
under the DGCL.
ARTICLE FOURTH: STOCK. The aggregate number of shares which
the Corporation shall have authority to issue is 105,000,000 shares, $.01 par
value per share consisting of:
1. 100,000,000 shares of Common Stock, $.01 par value per
share (the "Common Stock"); and
2. 5,000,000 shares of Preferred Stock, $.01 par value per
share (the "Preferred Stock").
COMMON STOCK:
(a) Each share of Common Stock issued and outstanding shall be
identical in all respects one with the other, and no dividends shall be paid on
any shares of Common Stock unless the same dividend is paid on all shares of
Common Stock outstanding at the time of such payment.
(b) Except for and subject to those rights expressly granted
to the holders of the Preferred Stock, or except as may be provided by the DGCL,
the holders of Common Stock shall have exclusively all other rights of
stockholders including, but not by way of limitation, (i) the right to receive
dividends, when, as and if declared by the Board of Directors out of assets
lawfully available therefor, and (ii) in the event of any distribution of assets
upon liquidation, dissolution or winding up of the Corporation or otherwise, the
right to receive ratably and equally all the assets and funds of the Corporation
remaining after payment to the holders of the Preferred Stock of the Corporation
of the specific amounts which they are entitled to receive upon such
liquidation, dissolution or winding up of the Corporation as herein provided.
(c) In the event that the holder of any share of Common Stock
shall receive any payment of any dividend on, liquidation of, or other amounts
payable with respect to, any
-3-
shares of Common Stock, which he is not then entitled to receive, he will
forthwith deliver the same to the holders of shares of the Preferred Stock in
the form received, and until it is so delivered will hold the same in trust for
such holders.
(d) Each holder of shares of Common Stock shall be entitled to
one vote for each share of such Common Stock held by him, and voting power with
respect to all classes of securities of the Corporation shall be vested solely
in the Common Stock, other than as specifically provided in the Corporation's
Certificate of Incorporation, as it may be amended, with respect to the
Preferred Stock.
PREFERRED STOCK. Authority is hereby vested in the Board of
Directors of the Corporation to provide for the issuance of Preferred Stock and
in connection therewith to fix by resolution providing for the issue of such
series, the number of shares to be included and such of the preferences and
relative participating, optional or other special rights and limitations of such
series, including, without limitation, rights of redemption or conversion into
Common Stock, to the fullest extent now or hereafter permitted by the DGCL.
ARTICLE FIFTH: The board of directors is expressly authorized
to adopt, amend or repeal the by-laws of the Corporation.
ARTICLE SIXTH: ELECTION OF DIRECTORS. Elections of directors
need not be by written ballot unless the by-laws of the Corporation shall
otherwise provide.
ARTICLE SEVENTH: CONTRACTS. Whenever a compromise or
arrangement is proposed between this Corporation and its creditors or any class
of them and/or between this Corporation and its stockholders or any class of
them, any court of equitable jurisdiction within the State of Delaware may, on
the application in a summary way of this Corporation or of any creditor or
stockholder thereof or on the application of any receiver or receivers appointed
for this Corporation under the provisions of Section 291 of the DGCL or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of the DGCL order a
meeting of the creditors or class of creditors, and/or of the stockholders or
class of stockholders of this Corporation, as the case may be, to be summoned in
such manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which said application has been made, be binding on all the
creditors or class of creditors, and/or on all of the stockholders or class of
stockholders of this Corporation, as the case may be, and also on this
Corporation.
-4-
ARTICLE EIGHTH: AMENDMENTS. The Corporation reserves the right
to amend, alter, change or repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
ARTICLE NINTH: LIABILITY OF DIRECTORS. No director of the
Corporation shall be liable to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability (i) for
any breach of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the DGCL, or (iv) for any transaction from which the director derived an
improper personal benefit.
ARTICLE TENTH: INDEMNIFICATION. Except as may otherwise be
specifically provided in this certificate of incorporation, no provision of this
certificate of incorporation is intended by the Corporation to be construed as
limiting, prohibiting, denying or abrogating any of the general or specific
powers or rights conferred under the DGCL upon the Corporation, upon its
stockholders, bondholders and security holders, and upon its directors, officers
and other corporate personnel, including, in particular, the power of the
Corporation to furnish indemnification to directors and officers in the
capacities defined and prescribed by the DGCL and the defined and prescribed
rights of said persons to indemnification as the same are conferred under the
DGCL; provided, however, that the indemnification provisions contained in the
DGCL shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under any by-law, agreement, resolution of
shareholders or disinterested directors, or otherwise, and shall continue as to
a person who has ceased to be a director, officer, employee or agent, both as to
action in his official capacity and as to action in another capacity while
holding such office, and shall inure to the benefit of the heirs, executors and
administrators of such person.
ARTICLE ELEVENTH: DIRECTORS. In the event of any vacancy in
the Corporation's Board of Directors, whether arising from death, resignation,
removal (with or without cause), an increase in the number of directors or any
other cause, the stockholders of the Corporation shall not have the right to
apply to the Delaware Court of Chancery in order to request said Court to
summarily order an election to be held to fill any such vacancy.
The foregoing Amended and Restated Certificate of
Incorporation was duly adopted by a meeting of and by unanimous written consent
of the directors of, and by a meeting of the stockholders of, the Corporation in
accordance with the provisions of Sections 141, 228, 242, 245 of the DGCL.
-5-
IN WITNESS WHEREOF, the undersigned hereby execute their names
and affirm that the statements made herein are true under the penalties of
perjury, this 30th day of May, 2000.
-----------------------------
Irwin D. Simon,
Chairman of the Board,
President and Chief Executive
Officer
Exhibit 3.2
AMENDED AND RESTATED
BY-LAWS OF
THE HAIN CELESTIAL GROUP, INC.
(A Delaware Corporation)
ARTICLE I
OFFICES
SECTION 1. PRINCIPAL OFFICE. The principal office of The Hain Celestial
Group (the "Corporation") shall be located at 50 Charles Lindbergh, Uniondale,
New York or such other location as may be designated by the Board of Directors
from time to time.
SECTION 2. REGISTERED OFFICE AND AGENT. The registered office of the
Corporation in the State of Delaware is 31 Loockerman Square, Suite L-100,
Dover, Delaware 19901. The registered agent shall be The Prentice-Hall
Corporation System, Inc.
SECTION 3. OTHER OFFICES. The Corporation may also have an office or
offices other than said principal office at such place or places, either within
or without the State of Delaware, as the Board of Directors shall from time to
time determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. All meetings of the stockholders for the
election of directors or for any other purpose shall be held at such place as
may be fixed from time to time by the Board of Directors, or at such other
place, either within or without the State of Delaware, as shall be designated
from time to time by the Board of Directors.
SECTION 2. ANNUAL MEETINGS. The annual meeting of the stockholders of
the Corporation for the election of directors and for the transaction of such
other business as may properly come before the meeting, shall be designated from
time to time by the Board of Directors.
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SECTION 3. SPECIAL MEETINGS. Special meetings of the stockholders,
unless otherwise prescribed by statute, may be called at any time by the Board
of Directors or the Chairman of the Board, if one shall have been elected, or
the Vice-Chairman of the Board, if one shall have been elected, or the
President.
SECTION 4. NOTICE OF MEETINGS. Notice of the place, date and hour of
holding of each annual and special meeting of the stockholders and, unless it is
the annual meeting, the purpose or purposes thereof, shall be given personally
or by mail in a postage prepaid envelope, not less than ten nor more than sixty
days before the date of such meeting, to each stockholder entitled to vote at
such meeting, and, if mailed, it shall be directed to such stockholder at his
address as it appears on the record of stockholders, unless he shall have filed
with the Secretary of the Corporation a written request that notices to him be
mailed at some other address, in which case it shall be directed to him at such
other address. Any such notice for any meeting other than the annual meeting
shall indicate that it is being issued at the direction of the Board of
Directors, the Chairman of the Board, the Vice-Chairman of the Board, the
President or the Secretary, whichever shall have called the meeting. Notice of
any meeting of stockholders shall not be required to be given to any stockholder
who shall attend such meeting in person or by proxy and shall not, prior the
conclusion of such meeting, protest the lack of notice thereof, or who shall,
either before or after the meeting, submit a signed waiver of notice, in person
or by proxy. Unless the Board of Directors shall fix a new record date for an
adjourned meeting, notice of such adjourned meeting need not be given if the
time and place to which the meeting shall be adjourned were announced at the
meeting at which the adjournment is taken.
SECTION 5. QUORUM. At all meetings of the stockholders the holders of a
majority of the shares of the Corporation issued and outstanding and entitled to
vote thereat shall be present in person or by proxy to constitute a quorum for
the transaction of business, except as otherwise provided by statute. In the
absence of a quorum, the holders of a majority of the shares present in person
or by proxy and entitled to vote may adjourn the meeting from time to time. At
any such adjourned meeting at which a quorum may be present any business may be
transacted which might have been transacted at the meeting as originally called.
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SECTION 6. ORGANIZATION. At each meeting of the stockholders, the
Chairman of the Board, if one shall have been elected, shall act as chairman of
the meeting. In the absence of the Chairman of the Board or if one shall not
have been elected, the Vice-Chairman of the Board, or in his absence or if one
shall not have been elected, the President shall act as chairman of the meeting.
The Secretary, or in his absence or inability to act, the person whom the
chairman of the meeting shall appoint secretary of the meeting, shall act as
secretary of the meeting and keep the minutes thereof.
SECTION 7. ORDER OF BUSINESS. The order of business at all meetings of
the stockholders shall be determined by the chairman of the meeting.
SECTION 8. VOTING. Except as otherwise provided by statute or the
Certificate of Incorporation, each holder of record of shares of the Corporation
having voting power shall be entitled at each meeting of the stockholders to one
vote for each share standing in his name on the record of stockholders of the
Corporation:
(a) on the date fixed pursuant to the provisions of Section 6
of Article V of these By-Laws as the record date for the determination
of the stockholders who shall be entitled to notice of and to vote at
such meeting; or
(b) if no such record date shall have been so fixed, then at
the close of business on the day next preceding the day on which notice
thereof shall be given.
Each stockholder entitled to vote at any meeting of the stockholders may
authorize another person or persons to act for them by a proxy signed by such
stockholder or his attorney-in-fact. Any such proxy shall be delivered to the
secretary of such meeting at or prior to the time designated in the order of
business for so delivering such proxies. Except as otherwise provided by statute
or the Certificate of Incorporation or these By-Laws, any corporate action to be
taken by vote of the stockholders shall be authorized by a majority of the votes
cast at a meeting of stockholders by the holders of shares present in person or
represented by proxy and entitled to vote on such action. Unless required by
statute, or determined by the chairman of the meeting to be advisable, the vote
on any question need not be by ballot. On a vote by ballot, each ballot shall be
signed by the stockholder acting, or by his proxy, if there be such proxy, and
shall state the number of shares voted.
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SECTION 9. LIST OF STOCKHOLDERS. A list of stockholders as of the
record date, certified by the Secretary of the Corporation or by the transfer
agent for the Corporation, shall be produced at any meeting of the stockholders
upon the request of any stockholder made at or prior to such meeting.
SECTION 10. INSPECTORS. The Board of Directors may, in advance of any
meeting of stockholders, appoint one or more inspectors to act at such meeting
or any adjournment thereof. If any of the inspectors so appointed shall fail to
appear or act or on the request of any stockholder entitled to vote at such
meeting, the chairman of the meeting shall, or if inspectors shall not have been
appointed, the chairman of the meeting may, appoint one or more inspectors. Each
inspector, before entering upon the discharge of his duties, shall take and sign
an oath faithfully to execute the duties of inspector at such meeting with
strict impartiality and according to the best of his ability. The inspectors
shall determine the number of shares outstanding and the voting power of each,
the number of shares represented at the meeting, the existence of a quorum, the
validity and effect of proxies, and shall receive votes, ballots or consents,
hear and determine all challenges and questions arising in connection with the
right to vote, count and tabulate all votes, ballots or consents, determine the
results, and do such acts as are proper to conduct the election or vote with
fairness to all stockholders. On request of the chairman of the meeting or any
stockholder entitled to vote thereat, the inspector shall make a report in
writing of any challenge, request or matter determined by them and shall execute
a certificate of any fact found by him. No director or candidate for the office
of director shall act as an inspector of an election of directors. Inspectors
need not be stockholders.
SECTION 11. ACTION BY CONSENT. Whenever stockholders are required or
permitted to take any action by vote, such action may be taken without a meeting
on written consent, setting forth the action so taken signed by the holders of a
majority of the outstanding shares of the Corporation entitled to vote thereon.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS. The business and affairs of the Corporation
shall be managed under the direction of the Board of Directors. The Board of
Directors may exercise
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all such authority and powers of the Corporation and do all such lawful acts and
things as are not by statute or the Certificate of Incorporation directed or
required to be exercised or done by the stockholders.
SECTION 2. NUMBER, QUALIFICATIONS, ELECTION AND TERM OF OFFICE. The
number of directors constituting the Board of Directors shall be determined by
the Board of Directors from time to time. Any decrease in the number of
directors shall be effective at the time of the next succeeding annual meeting
of the stockholders unless there shall be vacancies in the Board of Directors,
in which case such decrease may become effective at any time prior to the next
succeeding annual meeting to the extent of the number of such vacancies. All the
directors shall be at least eighteen years of age. Directors need not be
stockholders. Except as otherwise provided by statute or these By-Laws, the
directors (other than members of the initial Board of Directors) shall be
elected at the annual meeting of the stockholders. At each meeting of the
stockholders for the election of directors at which a quorum is present the
persons receiving a plurality of the votes cast at such election shall be
elected. Each director shall hold office until the next annual meeting of the
stockholders and until his successor shall have been elected and qualified, or
until his death, or until he shall have resigned, or have been removed, as
hereinafter provided in these By-Laws.
SECTION 3. PLACE OF MEETINGS. Meetings of the Board of Directors shall
be held at the principal office of the Corporation in the State of Delaware or
at such other place, within or without such State, as the Board of Directors may
from time to time determine or as shall be specified in the notice of any such
meeting.
SECTION 4. REGULAR MEETINGS. Regular meetings of the Board of Directors
shall be held at such time and place as the Board of Directors may fix. If any
day fixed for a regular meeting shall be a legal holiday at the place where the
meeting is to be held, then the meeting which would otherwise be held on that
day shall be held at the same hour on the next succeeding business day. Notice
of regular meetings of the Board of Directors need not be given except as
otherwise required by statute or these By-Laws.
SECTION 5. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by the President or by a majority of the directors.
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SECTION 6. NOTICE OF MEETING. Notice of each special meeting of the
Board of Directors (and of each regular meeting for which notice shall be
required) shall be given by the Secretary as hereinafter provided in this
Section 6, in which notice shall be stated the time and place of the meeting.
Except as otherwise required by these By-Laws, such notice need not state the
purposes of such meeting. Notice of each such meeting shall be mailed, postage
prepaid, to each director, addressed to him at his residence or usual place of
business, by first-class mail, at least five days before the day on which such
meeting is to be held, or shall be sent addressed to him at such place by
telegraph, cable, telex, telecopier or other similar means, or be delivered to
him personally or be given to him by telephone, or other similar means, at least
forty-eight hours before the time at which such meeting is to be held. Notice of
any such meeting need not be given to any director who shall, either before or
after the meeting, submit a signed waiver of notice or who shall attend such
meeting without protesting, prior to or at its commencement, the lack of notice
to him.
SECTION 7. QUORUM AND MANNER OF ACTING. A majority of the entire Board
of Directors shall constitute a quorum for the transaction of business at any
meeting of the Board of Directors, and, except as otherwise expressly required
by statute or the Certificate of Incorporation or these By-Laws, the act of a
majority of the directors present at any meeting at which a quorum is present
shall be the act of the Board of Directors. In the absence of a quorum at any
meeting of the Board of Directors, a majority of the directors present thereat
may adjourn such meeting to another time and place. Notice of the time and place
of any such adjourned meeting shall be given to the directors unless such time
and place were announced at the meeting at which the adjournment was taken, to
the other directors. At any adjourned meeting at which a quorum is present, any
business may be transacted which might have been transacted at the meeting as
originally called. The directors shall act only as a Board and the individual
directors shall have no power as such.
SECTION 8. ORGANIZATION. At each meeting of the Board of Directors, the
Chairman of the Board, if one shall have been elected, shall act as the Chairman
of the meeting, or if one shall not have been elected, the Vice-Chairman of the
Board, or in his absence, or if one shall not have been elected, the President
(or, in his absence, another director chosen by a majority of the directors
present) shall act as Chairman of the meeting and preside thereat. The Secretary
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(or, in his absence, any person -- who shall be an Assistant Secretary, if any
of them shall be present at such meeting -- appointed by the chairman) shall act
as secretary of the meeting and keep the minutes thereof.
SECTION 9. RESIGNATIONS. Any director of the Corporation may resign at
any time by giving written notice of his resignation to the Board of Directors
or the Chairman of the Board or the Vice-Chairman of the Board or the President
or the Secretary. Any such resignation shall take effect at the time specified
therein or, if the time when it shall become effective shall not be specified
therein, immediately upon its receipt. Unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
SECTION 10. VACANCIES. Subject to any express provision of the
Certificate of Incorporation, any vacancy in the Board of Directors, whether
arising from death, resignation, removal (with or without cause), an increase in
the number of directors or any other cause, may be filled by the vote of a
majority of the directors then in office, though less than a quorum, or by the
stockholders at the next annual meeting thereof or at a special meeting thereof.
Each director so elected shall hold office until the next meeting of the
stockholders in which the election of directors is in the regular order of
business and until his successor shall have been elected and qualified.
SECTION 11. REMOVAL OF DIRECTORS. Except as otherwise provided by
statute, any director may be removed, either with or without cause, at any time,
by the stockholders at a special meeting thereof. Except as otherwise provided
by statute, any director may be removed for cause by the Board of Directors at a
special meeting thereof.
SECTION 12. COMPENSATION. The Board of Directors shall have authority
to fix the compensation, including fees and reimbursement of expenses, of
directors for services to the Corporation in any capacity.
SECTION 13. COMMITTEES. The Board of Directors may, by resolution
passed by a majority of the entire Board of Directors, designate one or more
committees, including an executive committee, each committee to consist of three
or more of the directors of the Corporation. The Board of Directors may
designate one or more directors as alternate members of any committee, who may
replace any absent member at any meeting of the committee. Except to the extent
restricted by statute or
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the Certificate of Incorporation, each such committee, to the extent provided in
the resolution creating it, shall have and may exercise all the authority of the
Board of Directors. Each such committee shall serve at the pleasure of the Board
of Directors and have such name as may be determined from time to time by
resolution adopted by the Board of Directors. Each committee shall keep regular
minutes of its meetings and report the same to the Board of Directors.
SECTION 14. ACTION BY CONSENT. Unless restricted by the Certificate of
Incorporation, any action required or permitted to be taken by the Board of
Directors or any committee thereof may be taken without a meeting if all members
of the Board of Directors or such committee consent in writing to the adoption
of a resolution authorizing the action. The resolution and the written consents
thereto by the members of the Board of Directors or such committee shall be
filed with the minutes of the proceedings of the Board of Directors or such
committee.
SECTION 15. TELEPHONIC MEETING. Unless restricted by the Certificate of
Incorporation or by statute, any one or more members of the Board of Directors
or any committee thereof may participate in a meeting of the Board of Directors
or such committee by means of a conference telephone or similar communications
equipment allowing all persons participating in the meeting to hear each other
at the same time. Participation by such means shall constitute presence in
person at a meeting.
ARTICLE IV
OFFICERS
SECTION 1. NUMBER AND QUALIFICATIONS. The officers of the Corporation
shall be elected by the Board of Directors and shall include the President, one
or more Vice-Presidents, the Secretary, and the Treasurer. If the Board of
Directors wishes, it may also elect as officers of the Corporation a Chairman of
the Board and a Vice-Chairman of the Board and may elect other officers
(including one or more Assistant Treasurers and one or more Assistant
Secretaries, as may be necessary or desirable for the business of the
Corporation). Any two or more offices may be held by the same person, except the
offices of President and Secretary. Each officer shall hold office until the
first meeting of the Board of Directors following the next annual meeting of the
stockholders, and until his successor shall have been elected and shall have
qualified, or until
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his death, or until he shall have resigned or have been removed, as hereinafter
provided in these By-Laws.
SECTION 2. RESIGNATIONS. Any officer of the Corporation may resign at
any time by giving written notice of his resignation to the Board of Directors
or the Chairman of the Board or the Vice-Chairman of the Board or the President
or the Secretary. Any such resignation shall take effect at the time specified
therein or, if the time when it shall become effective shall not be specified
therein, immediately upon its receipt. Unless otherwise specified therein, the
acceptance of any such resignation shall not be necessary to make it effective.
SECTION 3. REMOVAL. Any officer of the Corporation may be removed,
either with or without cause, at any time, by the Board of Directors at any
meeting thereof.
SECTION 4. CHAIRMAN OF THE BOARD. The Chairman of the Board, if one
shall have been elected, and, if present, shall preside at each meeting of the
Board of Directors or the stockholders. He shall perform all duties incident to
the office of Chairman and shall perform such other duties as may from time to
time be assigned to him by the Board of Directors. The Board may, but need not,
designate the Chairman as the chief executive officer of the Corporation, in
which event he shall exercise all those general supervisory functions described
in Section 6 below, and the President will thereupon act as Chief Operating
Officer of the Corporation, subject to the direction of the Chairman and the
Board.
SECTION 5. VICE-CHAIRMAN OF THE BOARD. The Vice-Chairman of the Board,
if one shall have been elected, shall be a member of the Board, an officer of
the Corporation and, if present, shall preside at each meeting of the Board of
Directors if no Chairman of the Board has been elected or if the Chairman of the
Board is absent, or is unable or refuses to act. He shall advise and counsel the
Chairman of the Board and the President, and, in the President's absence, other
executives of the Corporation, and shall perform such other duties as may from
time to time be assigned to him by the Board of Directors.
SECTION 6. THE PRESIDENT. Unless the Board shall have designated the
Chairman as the chief executive officer of the Corporation, the President shall
be the chief executive officer of the Corporation and shall have general
supervision over the business of the Corporation, subject, however, to the
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control of the Board and the Chairman, if any, and of any duly authorized
committee of directors. The President shall, if present, and in the absence of
the Chairman of the Board and the Vice-Chairman of the Board or if either shall
not have been elected, preside at each meeting of the Board of Directors or the
stockholders. He shall perform all duties incident to the office of President
and chief operating officer and such other duties as may from time to time be
assigned to him by the Board of Directors.
SECTION 7. VICE-PRESIDENT. Each Vice-President shall perform all such
duties as from time to time may be assigned to him by the Board of Directors or
the President. At the request of the President or in his absence or in the event
of his inability or refusal to act, the Vice-President, or if there shall be
more than one, the Vice-Presidents in the order determined by the Board of
Directors (or if there be no such determination, then the Vice-Presidents in the
order of their election), shall perform the duties of the President, and, when
so called, shall have the power of and be subject to the restrictions placed
upon the President in respect of the performance of such duties.
SECTION 8. TREASURER. The treasurer shall
(a) have charge and custody of, and be responsible for, all
the funds and securities of the Corporation;
(b) keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation;
(c) deposit all moneys and other valuables to the credit of
the Corporation in such depositories as may be designated by the Board
of Directors or pursuant to its direction;
(d) receive, and give receipts for, moneys due and payable to
the Corporation from any source whatsoever;
(e) disburse the funds of the Corporation and supervise the
investments of its funds, taking proper vouchers therefor;
(f) render to the Board of Directors, whenever the Board of
Directors may require, an account of the financial condition of the
Corporation; and
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(g) in general, perform all duties incident to the office of
the Treasurer and such other duties as from time to time may be
assigned to him by the Board of Directors.
SECTION 9. SECRETARY. The Secretary shall
(a) keep or cause to be kept in one or more books provided for
the purpose, the minutes of all meetings of the Board of Directors, the
committees of the Board of Directors and the stockholders;
(b) see that all notices are duly given in accordance with the
provisions of these By-Laws and as required by law;
(c) be custodian of the records and the seal of the
Corporation and affix and attest the seal to all certificates for
shares of the Corporation (unless the seal of the Corporation on such
certificates shall be a facsimile, as hereinafter provided) and affix
and attest the seal to all other documents to be executed on behalf of
the Corporation under its seal;
(d) see that the books, reports, statements, certificates and
other documents and records required by law to be kept and filed are
properly kept and filed; and
(e) in general, perform all duties incident to the office of
the Secretary and such other duties as from time to time may be
assigned to him by the Board of Directors.
SECTION 10. THE ASSISTANT TREASURER. The Assistant Treasurer, or if
there shall be more than one, the Assistant Treasurers in the order determined
by the Board of Directors (or if there be no such determination, then in the
order of their election), shall, in the absence of the Treasurer or in the event
of his inability or refusal to act, perform the duties and exercise the powers
of the Treasurer and shall perform such other duties as from time to time may be
assigned by the Board of Directors.
SECTION 11. THE ASSISTANT SECRETARY. The Assistant Secretary, or if
there be more than one, the Assistant Secretaries in the order determined by the
Board of Directors (or if there be no such determination, then in the order of
their election), shall, in the absence of the Secretary or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
Secretary and shall perform such
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other duties as from time to time may be assigned by the Board of Directors.
SECTION 12. OFFICERS' BONDS OR OTHER SECURITY. If required by the Board
of Directors, any officer of the Corporation shall give a bond or other security
for the faithful performance of his duties, in such amount and with such surety
or sureties as the Board of Directors may require.
SECTION 13. COMPENSATION. The compensation of the officers of the
Corporation for their services as such officers shall be fixed from time to time
by the Board of Directors. An officer of the Corporation shall not be prevented
from receiving compensation by reason of the fact that he is also a director of
the Corporation.
ARTICLE V
SHARES, ETC.
SECTION 1. SHARE CERTIFICATES. Each owner of shares of the Corporation
shall be entitled to have a certificate, in such form as shall be approved by
the Board of Directors, certifying the number of shares of the Corporation owned
by him. The certificates representing shares shall be signed in the name of the
Corporation by the Chairman of the Board or the Vice-Chairman of the Board or
the President or a Vice-President and by the Secretary, an Assistant Secretary,
the Treasurer or an Assistant Treasurer, and sealed with the seal of the
Corporation (which seal may be a facsimile, engraved or printed); provided,
however, that where any such certificate is countersigned by a transfer agent,
or is registered by a registrar (other than the Corporation or one of its
employees), the signatures of the Chairman of the Board, Vice-Chairman of the
Board, President, Vice-President, Secretary, Assistant Secretary, Treasurer or
Assistant Treasurer upon such certificates may be facsimiles, engraved or
printed. In case any officer who shall have signed any such certificate shall
have ceased to be such officer before such certificate shall be issued, it may
nevertheless be issued by the Corporation with the same effect as if such
officer were still in office at the date of their issue. When the Corporation is
authorized to issue shares of more than one class, there shall be set forth upon
the face or back of the certificate (or the certificate shall have a statement
that the Corporation will furnish to any stockholder upon request and without
charge) a full statement of the designation, relative rights, preferences, and
limitations of the shares of each separate class, or of the different shares
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within each class, authorized to be issued and, if the Corporation is authorized
to issue any class of preferred shares in series, the designation, relative
rights, preferences and limitations of each such series so far as the same have
been fixed and the authority of the Board of Directors to designate and fix the
relative rights, preferences and limitations of other series.
SECTION 2. BOOKS OF ACCOUNT AND RECORD OF STOCKHOLDERS. There shall be
kept correct and complete books and records of account of all the business and
transactions of the Corporation. There shall also be kept, at the office of the
Corporation, or at the office of its transfer agent, a record containing the
names and addresses of all stockholders of the Corporation, the number of shares
held by each, and the dates when they became the holders of record thereof.
SECTION 3. TRANSFER OF SHARES. Transfers of shares of the Corporation
shall be made on the records of the Corporation only upon authorization by the
registered holder thereof, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary or with a transfer agent,
and on surrender of the certificate or certificates for such shares properly
endorsed or accompanied by a duly executed stock transfer power and the payment
of all taxes thereon. The person in whose name shares shall stand on the record
of stockholders of the Corporation shall be deemed the owner thereof for all
purposes as regards the Corporation. Whenever any transfer of shares shall be
made for collateral security and not absolutely and written notice thereof shall
be given to the Secretary or to a transfer agent, such fact shall be noted on
the records of the Corporation.
SECTION 4. TRANSFER AGENTS AND REGISTRARS. The Board of Directors may
appoint, or authorize any officer or officers to appoint, one or more transfer
agents and one or more registrars and may require all certificates for shares of
stock to bear the signature of any of them.
SECTION 5. REGULATIONS. The Board of Directors may make such additional
rules and regulations, not inconsistent with these By-Laws, as it may deem
expedient concerning the issue, transfer and registration of certificates for
shares of the Corporation.
SECTION 6. FIXING OF RECORD DATE. The Board of Directors may fix, in
advance, a date not more than fifty nor less than ten days before the date when
fixed for the holding
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of any meeting of the stockholders or before the last day on which the consent
or dissent of the stockholders may be effectively expressed for any purpose
without a meeting, as the time as of which the stockholders entitled to notice
of and to vote at such meeting or whose consent or dissent is required or may be
expressed for any purpose, as the case may be, shall be determined, and all
persons who were stockholders of record of voting shares at such time, and no
others, shall be entitled to notice of and to vote at such meeting or to express
their consent or dissent, as the case may be. The Board of Directors may fix, in
advance, a date not more than fifty nor less than ten days preceding the date
fixed for the payment of any dividend or the making of any distribution or the
allotment of rights to subscribe for securities of the Corporation, or for the
delivery of evidences of rights or evidences of interests arising out of any
change, conversion or exchange of shares or other securities, as the record date
for the determination of the stockholders entitled to receive any such dividend,
distribution, allotment, rights or interests, and in such case only the
stockholders of record at the time SO fixed shall be entitled to receive such
dividend, distribution, allotment, rights or interests.
SECTION 7. LOST, DESTROYED OR MUTILATED CERTIFICATES. The holder of any
certificate representing shares of the Corporation shall immediately notify the
Corporation of any loss, destruction or mutilation of such certificate, and the
Corporation may issue a new certificate in the place of any certificate
theretofore issued by it which the owner thereof shall allege to have been lost
or destroyed or which shall have been mutilated. The Board of Directors may, in
its discretion, require such owner or his legal representatives to give to the
Corporation a bond in such sum, limited or unlimited, and in such form and with
such surety or sureties as the Board of Directors in its absolute discretion
shall determine, to indemnify the Corporation against any claim that may be made
against it on account of the alleged loss or destruction of any such
certificate, or the issuance of such new certificate.
ARTICLE VI
INDEMNIFICATION
The Corporation to the extent permitted by law may provide for
indemnification and advancement of expenses of directors in any civil or
criminal action or proceeding, including one in the right of the Corporation to
procure a judgment in its favor, for acts or decisions made by them in good
faith
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while performing services for the Corporation. Such indemnification may be
authorized by resolution of the Board of Directors or resolution of the
stockholders.
ARTICLE VII
GENERAL PROVISIONS
SECTION 1. DIVIDENDS. Subject to statute and the Certificate of
Incorporation, dividends upon the shares of the Corporation may be declared by
the Board of Directors at any regular or special meeting. Dividends may be paid
in cash, in property or in shares of the Corporation, unless otherwise provided
by statute or the Certificate of Incorporation.
SECTION 2. RESERVED. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the Board of Directors may, from time to time, in its absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
Corporation or for such other purpose as the Board of Directors may think
conducive to the interests of the Corporation. The Board of Directors may modify
or abolish any such reserves in the manner in which it was created.
SECTION 3. FISCAL YEAR. The first fiscal year of the Corporation shall
be fixed, and once fixed, may thereafter be changed, by resolution of the Board
of Directors.
SECTION 4. CHECKS, NOTES, DRAFTS, ETC. All checks, notes, drafts or
other orders for the payment of money of the Corporation shall be signed,
endorsed or accepted in the name of the Corporation by such officer, officers,
person or persons as from time to time may be designated by the Board of
Directors to make such designation.
SECTION 5. EXECUTION OF CONTRACTS, DEEDS, ETC. The Board of Directors
may authorize any officer or officers, agent or agents, in the name and on
behalf of the Corporation to enter into or execute and deliver any and all
deeds, bonds, mortgages, contracts and other obligations or instruments, and
such authority may be general or confined to specific instances.
SECTION 6. VOTING OF STOCKS IN OTHER CORPORATIONS. Unless otherwise
provided by resolution of the Board of Directors, the Chairman of the Board, the
Vice-Chairman of the Board, or the President, from time to time, may (or may
appoint
-16-
one or more attorneys or agents to) cast the votes which the Corporation may be
entitled to cast as a stockholder or otherwise in any other corporation, any of
whose shares or securities may be held by the Corporation, at meetings of the
holders of the shares or other securities of such other corporations, or to
consent in writing to any action by any such other corporation. In the event one
or more attorneys or agents are appointed, the Chairman of the Board, the
Vice-Chairman of the Board, or the President may instruct the person or persons
so appointed as to the manner of casting such votes or giving such consent. The
Chairman of the Board, the Vice-Chairman of the Board, or the President may, or
may instruct the attorneys or agents appointed to, execute or cause to be
executed in the name and on behalf of the Corporation and under its seal or
otherwise, such written proxies, consents, waivers or other instruments as may
be necessary or proper in the premises.
ARTICLE VIII
FORCE AND EFFECT OF BY-LAWS
These By-Laws are subject to the provisions of the Delaware General
Corporation Law and the Corporation's certificate of incorporation, as it may be
amended from time to time. If any provision in these By-Laws is inconsistent
with a provision in that Act or the certificate of incorporation, the provision
of that Act or the certificate of incorporation shall govern. Wherever in these
By-Laws references are made to more than one incorporator, director, or
stockholder, they shall, if this is a sole incorporator, director, stockholder
corporation, be construed to mean the solitary person; and all provisions
dealing with the quantum of majorities or quorums shall be deemed to mean the
action by the one person constituting the corporation.
ARTICLE IX
AMENDMENTS
These By-Laws may be amended or repealed or new By-Laws may be adopted
at an annual or special meeting of stockholders at which a quorum is present or
represented, by the vote of the holders of shares entitled to vote in the
election of directors provided that notice of the proposed amendment or repeal
or adoption of new By-Laws is contained in the notice of such meeting. These
By-Laws may also be amended or repealed or new By-Laws may be adopted by the
Board at any regular or special meeting of the Board of Directors. If any By-Law
regulat-
-17-
ing an impending election of directors is adopted, amended or repealed by the
Board of Directors, there shall be set forth in the notice of the next meeting
of the stockholders for the election of directors the By-Law so adopted, amended
or repealed, together with a concise statement of the changes made. By-Laws
adopted by the Board of Directors may be amended or repealed by the
stockholders.
EXHIBIT 4.1
NUMBER SHARES
HC
[HC LOGO]
THE HAIN CELESTIAL GROUP, INC.
COMMON STOCK
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP 405217 10 0
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
This Certifies that
is the owner of
FULLY PAID AND NONASSESSABLE SHARES OF THE PAR VALUE OF $.01 EACH OF THE COMMON
STOCK
THE HAIN CELESTIAL GROUP, INC. (hereinafter called the "Corporation")
transferable on the books of the Corporation by said owner in person or by his
duly authorized attorney, upon the surrender of this certificate properly
endorsed. This certificate is not valid unless countersigned by the Transfer
Agent and Registrar.
Witness the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
Dated:
/s/ GARY M. JACOBS SEAL /s/ IRWIN D. SIMON
- ------------------------ ------------------------
Gary M. Jacobs Irwin D. Simon
Sr. Vice President-Finance, Chairman of the Board,
Treasurer and Secretary President and Chief
Executive Officer
Countersigned and Registered:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
Transfer Agent
and Registrar
By Authorized Officer
THE HAIN CELESTIAL GROUP, INC.
The Corporation will furnish without charge to each stockholder who so
requests a statement of the powers, designations, preferences and relative
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM - as tenants in common UNIF GIFT MIN ACT - ____ Custodian______
TEN ENT - as tenants by the entireties (Cust) (Minor)
under Uniform Gifts to Minors
JT TEN - as joint tenants with right of Act ________________
survivorship and not as tenants (State)
in common
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, __________ HEREBY SELL, ASSIGN AND TRANSFER UNTO
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- -/ / / / / / / / / / / / / / / / / / /-
- -/ / / / / / / / / / / / / / / / / / /-
-----------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF ASSIGNEE)
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------ SHARES
OF THE CAPITAL STOCK REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY
IRREVOCABLY CONSTITUTE AND APPOINT
- ----------------------------------------------------------------------- ATTORNEY
TO TRANSFER THE SAID STOCK OF THE BOOKS OF THE WITHIN-NAMED CORPORATION, WITH
FULL POWER OF SUBSTITUTION IN THE PREMISES.
DATED_________________________
NOTICE:
--------------------------------------------
THE SIGNATURE TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME AS WRITTEN UPON THE
FACT OF THE CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT, OR ANY
CHANGE WHATEVER.
SIGNATURE(S) GUARANTEED: THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN
ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS
AND CREDIT UNIONS WITH MEMBERSHIP IN AN
APPROVED SIGNATURE MEDALLION PROGRAM,
PURSUANT TO SEC. RULE 17Ad-5.
Exhibit 5
CAHILL GORDON & REINDEL
80 Pine Street
New York, New York 10005
April 24, 2000
(212) 701-3000
The Hain Food Group, Inc.
50 Charles Lindbergh Boulevard
Uniondale New York 11553
Re: The Hain Food Group, Inc.
Registration Statement on
Form S-4 (No. 333-33830)
Dear Ladies and Gentlemen:
As counsel for The Hain Food Group, Inc. (the "Company"), we
are representing the Company in connection with the registration statement on
Form S-4 (the "Registration Statement") filed with the Securities and Exchange
Commission on March 31, 2000, as amended, relating to the registration under the
Securities Act of 1933, as amended, (the "Act"), of the number of shares (the
"Shares") of the Company's common stock, par value $.01 per share (the "Common
Stock"), as determined in accordance with the provisions of an agreement and
plan of merger between the Company and Celestial Seasonings, Inc. dated March 5,
2000. It is our understanding that the number of Shares shall not exceed
12,272,914 shares of Common Stock.
We advise you that in our opinion the Shares, when issued in
the manner and for the consideration contemplated by the Registration Statement,
will be validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an
Exhibit to the Registration Statement and to the reference to our firm under
the caption "Legal Matters" in the Registration Statement and related Proxy
Statement/Prospectus. Our consent to such reference does not constitute a
consent under Section 7 of the Act, as in consenting to such reference we have
not certified any part of the Registration Statement and do not otherwise
come within the categories or persons whose consent is required under said
Section 7 or under the rules and regulations of the Securities and Exchange
Commission thereunder.
We are members of the bar of the State of New York, and in
rendering this opinion we express no opinion as to the laws of any jurisdiction
other than the laws of the State of New York, the State of Delaware and the
Federal laws of the United States of America.
Very truly yours,
/s/ Cahill Gordon & Reindel
---------------------------
Cahill Gordon & Reindel
2
EXHIBIT 8.1
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
April 24, 2000
The Hain Food Group, Inc.
50 Charles Lindbergh Boulevard
Uniondale, New York 11553
Ladies and Gentlemen:
You have requested our opinion as to whether, for federal income tax
purposes, the proposed merger (the "Merger") of Hain Acquisition Corp.
("Subco"), a Delaware corporation that is a direct, wholly-owned subsidiary of
The Hain Food Group, Inc., a Delaware corporation ("Parent"), with and into
Celestial Seasonings, Inc., a Delaware corporation (the "Company"), will
constitute a "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"). Any capitalized terms
not defined herein will have the meaning ascribed to them in the Agreement and
Plan of Merger by and between Parent and the Company dated as of March 5, 2000
(such agreement, including all schedules and exhibits thereto, hereinafter
referred to as the "Merger Agreement").
In rendering this opinion, we have relied, with your consent, upon the
following assumptions:
1. The representations of Parent set forth in the certificate attached
hereto as Exhibit A, and the representations of the Company set forth in the
certificate attached hereto as Exhibit B, are true and complete, in each case
without regard to any qualification as to materiality, knowledge or belief;
2. Parent will comply in all respects with the undertakings set forth
in the certificate attached hereto as Exhibit A, and Company will comply in all
respects with the undertakings set forth in the certificate attached hereto as
Exhibit B;
-2-
3. The Merger will be consummated in accordance with the Merger
Agreement; and
4. The factual information contained in the Registration Statement,
Registration No. 333-33830, covering the registration of common stock of Parent
("Parent Common Stock") under the Securities Act of 1933, as amended, as filed
by Parent with the Securities and Exchange Commission on April , 2000, is true
and complete.
This opinion is based upon existing laws, regulations, Internal Revenue
Service positions, and judicial decisions, any of which may be changed at any
time with retroactive effect. We assume no obligation to modify or supplement
our opinion if, after the date hereof, any such laws, regulations, positions, or
decisions change or we become aware of any facts that might change our opinion.
Based on and subject to the foregoing assumptions, we are of the
opinion that, for federal income tax purposes:
(i) the Merger will be treated as a reorganization within the
meaning of Section 368(a) of the Code;
(ii) Parent, Subco and the Company will each be a "party to
the reorganization" within the meaning of Section 368(b) of the Code;
(iii) with respect to a stockholder of Company Common Stock
that, pursuant to the Merger, exchanges Company Common Stock solely for
Parent Common Stock: (A) no gain or loss will be recognized on the
exchange except with respect to gain or loss, if any, realized with
respect to a fractional share of Parent Common Stock, (B) the aggregate
tax basis in the Parent Common Stock received in the exchange
(including any fractional share of Parent Common Stock) will be the
same as the aggregate tax basis in the Company Common Stock
surrendered, and (C) the holding period of the Parent Common Stock
received in the exchange will include the holding period of the Company
Common Stock surrendered; and
(iv) any gain or loss recognized with respect to a fractional
share of Parent Common Stock will equal the difference between the cash
received for the fractional share and the portion of the aggregate tax
basis of the shareholder's Parent Common Stock that is allocable to the
fractional share.
This opinion is intended only for the use of Parent in connection with
the Merger. This opinion may not be relied upon, or quoted in whole or in part,
by any other person or for any other purpose.
We hereby consent to the filing of this opinion as an exhibit to
Parent's Registration Statement relating to the Merger. In giving the foregoing
consent, we do not admit that we come within the category of persons whose
consent is required under Section 7 of the Securities Act of 1933, as
-3-
amended (the "Securities Act"), or the rules and regulations promulgated
thereunder nor do we admit that we are experts with respect to any part of such
Registration Statement within the meaning of the term "experts" as used in the
Securities Act or the rules and regulations promulgated thereunder.
Very truly yours,
/s/ CAHILL GORDON & REINDEL
---------------------------
Cahill Gordon & Reindel
EXHIBIT 8.2
Bartlitt Beck Herman Palenchar & Scott
The Kittredge Building
511 Sixteenth Street
Denver, Colorado 80202
April 24, 2000
Celestial Seasonings, Inc.
4600 Sleepytime Drive
Boulder, Colorado 80301
Ladies and Gentlemen:
You have requested our opinion as to whether, for federal income tax
purposes, the proposed merger (the "Merger") of Hain Acquisition Corp.
("Subco"), a Delaware corporation that is a direct, wholly-owned subsidiary
of The Hain Food Group, Inc., a Delaware corporation ("Parent"), with and
into Celestial Seasonings, Inc., a Delaware corporation (the "Company"), will
constitute a "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"). Any capitalized terms
not defined herein will have the meaning ascribed to them in the Agreement
and Plan of Merger by and between Parent and the Company dated as of March 5,
2000 (such agreement, including all schedules and exhibits thereto,
hereinafter referred to as the "Merger Agreement").
In rendering this opinion, we have relied, with your consent, upon
the following assumptions:
1. The representations of Parent set forth in the certificate
attached hereto as Exhibit A, and the representations of the Company set
forth in the certificate attached hereto as Exhibit B, are true and complete,
in each case without regard to any qualification as to materiality, knowledge
or belief;
2. Parent will comply in all respects with the undertakings set
forth in the certificate attached hereto as Exhibit A, and Company will
comply in all respects with the undertakings set forth in the certificate
attached hereto as Exhibit B;
Celestial Seasonings, Inc.
April 24, 2000
Page -2-
3. The Merger will be consummated in accordance with the Merger
Agreement; and
4. The factual information contained in the Registration Statement,
Registration No. 333-33830, covering the registration of common stock of
Parent ("Parent Common Stock") under the Securities Act of 1933, as amended,
as filed by Parent with the Securities and Exchange Commission on April 21,
2000, is true and complete.
This opinion is based upon existing laws, regulations, Internal
Revenue Service positions, and judicial decisions, any of which may be
changed at any time with retroactive effect. We assume no obligation to
modify or supplement our opinion if, after the date hereof, any such laws,
regulations, positions, or decisions change or we become aware of any facts
that might change our opinion.
Based on and subject to the foregoing assumptions, we are of the
opinion that, for federal income tax purposes:
(i) the Merger will be treated as a reorganization within the
meaning of Section 368(a) of the Code;
(ii) Parent, Subco and the Company will each be a "party to
the reorganization" within the meaning of Section 368(b) of the Code;
(iii) with respect to a stockholder of Company Common Stock
that, pursuant to the Merger, exchanges Company Common Stock solely for
Parent Common Stock: (A) no gain or loss will be recognized on the
exchange except with respect to gain or loss, if any, realized with
respect to a fractional share of Parent Common Stock, (B) the aggregate
tax basis in the Parent Common Stock received in the exchange
(including any fractional share of Parent Common Stock) will be the
same as the aggregate tax basis in the Company Common Stock
surrendered, and (C) the holding period of the Parent Common Stock
received in the exchange will include the holding period of the Company
Common Stock surrendered; and
(iv) any gain or loss recognized with respect to a fractional
share of Parent Common Stock will equal the difference between the cash
received for the fractional share and the portion of the aggregate tax
basis of the shareholder's Parent Common Stock that is allocable to the
fractional share.
This opinion is intended only for your use in connection with the
Merger. This opinion may not be relied upon, or quoted in whole or in part,
by any other person or for any other purpose.
Celestial Seasonings, Inc.
April 24, 2000
Page -3-
We hereby consent to the filing of this opinion as an exhibit to
Parent's Registration Statement relating to the Merger. In giving the
foregoing consent, we do not admit that we come within the category of
persons whose consent is required under Section 7 of the Securities Act of
1933, as amended (the "Securities Act"), or the rules and regulations
promulgated thereunder nor do we admit that we are experts with respect to
any part of such Registration Statement within the meaning of the term
"experts" as used in the Securities Act or the rules and regulations
promulgated thereunder.
Very truly yours,
/s/ BARTLITT BECK HERMAN PALENCHAR & SCOTT
------------------------------------------
Bartlitt Beck Herman Palenchar & Scott
+
EXHIBIT 15
April 21, 2000
Celestial Seasonings, Inc.
4600 Sleepytime Drive
Boulder, CO 80301
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim financial
information of Celestial Seasonings, Inc. and subsidiaries for the periods ended
December 31, 1999 and 1998 as indicated in our report dated January 12, 2000;
because we did not perform an audit, we expressed no opinion on that
information.
We are aware that our report referred to above, which was included in your
Quarterly Report on Form 10-Q for the quarter ended December 31, 1999 is being
used in this Registration Statement of The Hain Food Group, Inc.
We also are aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act of 1933, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
Yours truly,
/s/ Deloitte & Touche LLP
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
Amendment No. 1 to the Registration Statement (Form S-4 No. 333-33830) and
related Prospectus of The Hain Food Group, Inc. and Subsidiaries for the
registration of shares of its common stock and to the incorporation by reference
therein of our report dated September 8, 1999 (except Note 15, as to which the
date is September 27, 1999) with respect to the consolidated financial
statements and schedule of The Hain Food Group, Inc. and Subsidiaries included
in its Annual Report (Form 10-K) for the year ended June 30, 1999, filed with
the Securities and Exchange Commission.
By: /s/ ERNST & YOUNG LLP
----------------------------------
ERNST & YOUNG LLP
Melville, N.Y.
April 20, 2000
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-33830 of The Hain Food Group, Inc. on Form S-4 of
our report dated February 18, 1999 (except for Note 7, as to which the date is
March 30, 1999), on the consolidated financial statements of Natural Nutrition
Group, Inc., appearing in Amendment No. 3 to the Current Report on Form 8-K of
The Hain Food Group, Inc., dated April 27, 1999, and filed with the Securities
and Exchange Commission on June 18, 1999, and to the reference to us under the
heading "Experts" in the joint proxy statement/prospectus, which is part of such
Registration Statement.
By: /s/ DELOITTE & TOUCHE LLP
----------------------------------
DELOITTE & TOUCHE LLP
Costa Mesa, California
April 20, 2000
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-33830 of The Hain Food Group, Inc. of our reports
dated November 3, 1999, appearing in the Annual Report on Form 10-K/A of
Celestial Seasonings, Inc. for the year ended September 30, 1999 and to the
reference to us under the heading "Experts" in the Prospectus, which is part of
this Registration Statement.
/s/ DELOITTE & TOUCHE LLP
Denver, Colorado
April 21, 2000
EXHIBIT 99.1
CONSENT OF GOLDMAN, SACHS & CO.
April 24, 2000
Board of Directors
Celestial Seasonings, Inc.
4600 Sleepytime Drive
Boulder, Colorado 80301
Re: Registration Statement on Form S-4 of The Hain Food Group, Inc.
Ladies and Gentlemen:
Reference is made to our opinion letter dated March 5, 2000 with respect to the
fairness from a financial point of view to the holders of the outstanding shares
of Common Stock, par value $0.01 per share, of Celestial Seasonings, Inc. (the
"Company") of the Exchange Ratio (as defined in our opinion letter) pursuant to
the Agreement and Plan of Merger, dated as of March 5, 2000, between The Hain
Food Group, Inc. and the Company.
The foregoing opinion letter is provided for the information and assistance of
the Board of Directors of the Company in connection with its consideration of
the transaction contemplated therein and is not to be used, circulated, quoted
or otherwise referred to for any other purpose, nor is it to be filed with,
included in or referred to in whole or in part in any registration statement,
proxy statement or any other document, except in accordance with our prior
written consent. We understand that the Company has determined to include our
opinion in the above-referenced Registration Statement.
In that regard, we hereby consent to the reference to the opinion of our Firm
under the captions "Summary--Opinions of Financial Advisors," "The
Merger--Additional Considerations of Celestial's Board of Directors" and "Role
of Financial Advisors--Opinion of Celestial's Financial Advisor" and to the
inclusion of the foregoing opinion in the Joint Proxy Statement-Prospectus
included in the above-mentioned Registration Statement. In giving such consent,
we do not thereby admit that we come within the category of persons whose
consent is required under Section 7 of the Securities Act of 1933 or the rules
and regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ GOLDMAN, SACHS & CO.
- ------------------------------------
GOLDMAN, SACHS & CO.
EXHIBIT 99.3
[FORM OF HAIN'S PROXY CARD]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE HAIN FOOD
GROUP, INC. ("HAIN" OR THE "COMPANY"). The undersigned appoints Andrew R. Heyer,
Irwin D. Simon and Gary M. Jacobs, jointly or individually, proxies, each with
full power of substitution to vote all shares the undersigned is entitled to
vote at the Special Meeting of stockholders of the Company on May 30, 2000, and
any adjournments thereof, upon all matters as may properly come before the
meeting. Without limiting the forgoing general authorization, the proxies are
instructed to vote as indicated herein. IF NO INSTRUCTION IS GIVEN THE SHARES
WILL BE VOTED "FOR" ITEMS 1, 2, 3, 4 AND 5 BELOW, EACH OF SAID ITEMS BEING MORE
FULLY DESCRIBED IN THE NOTICE OF SUCH MEETING AND THE ACCOMPANYING JOINT PROXY
STATEMENT/PROSPECTUS, RECEIPT OF WHICH ARE HEREBY ACKNOWLEDGED.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS YOU VOTE "FOR" EACH OF THE
ITEMS BELOW:
1. Approval of the issuance of shares of common stock, par value $.01 per
share, of Hain to stockholders of Celestial Seasonings, Inc., a Delaware
corporation ("Celestial"), pursuant to the Agreement and Plan of Merger
dated as of March 5, 2000 between Celestial and Hain. The merger agreement
is attached to the accompanying Joint Proxy Statement/Prospectus as Annex A.
FOR / / AGAINST / / ABSTAIN / /
2. Approval of the change of Hain's corporate name to The Hain Celestial Group,
Inc. to be effective upon consummation of the merger.
FOR / / AGAINST / / ABSTAIN / /
3. To amend the Hain certificate of incorporation to increase the authorized
number of shares of Hain common stock from 40 million to 100 million.
FOR / / AGAINST / / ABSTAIN / /
4. To amend the Hain 1994 Long Term Incentive and Stock Award Plan to
(a) increase the number of shares issuable over the term of the plan by
3 million shares to 6.4 million shares in the aggregate and (b) increase the
upper limit on the number of shares for which options or stock appreciation
rights may be granted to any participant under the plan during any calendar
year to 1 million shares.
FOR / / AGAINST / / ABSTAIN / /
5. To adopt the Hain 2000 Directors Stock Option Plan.
FOR / / AGAINST / / ABSTAIN / /
PLEASE COMPLETE ALL INFORMATION
BELOW
Signature: _______________________
Signature: _______________________
Dated: _____________________, 2000
Please sign exactly as
names appear hereon,
indicating official
position or representative
capacity, if any. If shares
are held jointly, both
owners should sign.
EXHIBIT 99.4
[FORM OF CELESTIAL PROXY CARD]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CELESTIAL
SEASONINGS, INC. (THE "COMPANY"). The undersigned appoints Mo Siegel, Stephen B.
Hughes and David I. Rosenthal, or any of them, the proxies and attorneys-in-fact
for the undersigned, with full power of substitution and revocation, to vote on
behalf of the undersigned, at the Special Meeting of stockholders of the Company
on May 30, 2000, and any adjournments thereof, upon all matters as may properly
come before the meeting. Without limiting the foregoing general authorization,
the proxies are instructed to vote as indicated herein. If no instruction is
given the shares will be voted "For" item 1 below, which is more fully described
in the Notice of such meeting and the accompanying Joint Proxy
Statement/Prospectus, receipt of which are hereby acknowledged.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS YOU VOTE "FOR" THE ITEM BELOW:
1. Approval and adoption of the Agreement and Plan of Merger (the "Merger
Agreement") dated as of March 5, 2000 between the Company and The Hain Food
Group, Inc., a Delaware corporation. The Merger Agreement is attached to the
accompanying Joint Proxy Statement/Prospectus as Annex A.
FOR / / AGAINST / / ABSTAIN / /
PLEASE COMPLETE ALL INFORMATION BELOW
Signature: _________________________________________________________________
Signature: _________________________________________________________________
Dated: _______________________________________________________________, 2000
Please sign exactly as names appear hereon, indicating official
position or representative capacity, if any. If shares are held
jointly, both owners should sign.
EXHIBIT 99.5
CONSENT OF MO SIEGEL TO BECOME A DIRECTOR OF
THE HAIN FOOD GROUP, INC.
I hereby consent to the reference to my election as a director
of The Hain Food Group, Inc. in the Prospectus/Proxy Statement constituting part
of Hain's Registration Statement on Form S-4.
/s/ Mo Siegel
------------------
Mo Siegel
March 24, 2000
EXHIBIT 99.6
CONSENT OF MARINA HAHN TO BECOME A DIRECTOR OF
THE HAIN FOOD GROUP, INC.
I hereby consent to the reference to my election as a director
of The Hain Food Group, Inc. in the Prospectus/Proxy Statement constituting part
of Hain's Registration Statement on Form S-4.
/s/ Marina Hahn
-----------------
Marina Hahn
March 24, 2000
EXHIBIT 99.7
CONSENT OF GREGG A. OSTRANDER TO BECOME A DIRECTOR OF
THE HAIN FOOD GROUP, INC.
I hereby consent to the reference to my election as a director
of The Hain Food Group, Inc. in the Prospectus/Proxy Statement constituting part
of Hain's Registration Statement on Form S-4.
/s/ Gregg A. Ostrander
----------------------
Gregg A. Ostrander
March 24, 2000
