Exhibit 1
AGREEMENT AND PLAN OF MERGER
AMONG
NATUREX, S.A.
NATUREX ACQUISITION CORP.
AND
PURE WORLD, INC.
DATED AS OF JUNE 6, 2005
TABLE OF CONTENTS
PAGE
ARTICLE I THE OFFER............................................................1
SECTION 1.01. The Offer....................................................1
SECTION 1.02. Company Action...............................................4
ARTICLE II THE MERGER..........................................................5
SECTION 2.01. The Merger...................................................5
SECTION 2.02. Closing......................................................5
SECTION 2.03. Effective Time...............................................5
SECTION 2.04. Effect of the Merger.........................................5
SECTION 2.05. Certificate of Incorporation; By-laws........................5
SECTION 2.06. Directors and Officers.......................................6
SECTION 2.07. Conversion of Securities.....................................6
SECTION 2.08. Treatment of Options.........................................6
SECTION 2.09. Dissenting Shares............................................7
SECTION 2.10. Surrender of Shares; Stock Transfer Books....................7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................9
SECTION 3.01. Organization and Qualification; Subsidiaries.................9
SECTION 3.02. Certificate of Incorporation and By-laws....................10
SECTION 3.03. Capitalization..............................................10
SECTION 3.04. Authority Relative to the Transactions......................10
SECTION 3.05. No Conflict; Required Filings and Consents..................11
SECTION 3.06. SEC Filings; Financial Statements...........................12
SECTION 3.07. Absence of Certain Changes or Events........................14
SECTION 3.08. Absence of Litigation.......................................14
SECTION 3.09. Employee Benefit Plans......................................14
SECTION 3.10. Property; Title to Assets...................................16
SECTION 3.11. Taxes.......................................................16
SECTION 3.12. Material Contracts..........................................17
SECTION 3.13. Environmental Matters.......................................18
SECTION 3.14. Labor and Employment Matters................................18
SECTION 3.15. Compliance with Laws; Permits...............................18
SECTION 3.16. Ephedra.....................................................18
SECTION 3.17. Offer Documents; Schedule 14D-9.............................18
SECTION 3.18. Opinion of Financial Advisor................................19
SECTION 3.19. Brokers.....................................................19
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER.............19
SECTION 4.01. Corporate Organization......................................19
SECTION 4.02. Authority Relative to the Transactions......................19
SECTION 4.03. No Conflict; Required Filings and Consents..................20
SECTION 4.04. Financing...................................................20
SECTION 4.05. Offer Documents; Proxy Statement............................20
SECTION 4.06. Brokers.....................................................21
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER..............................21
SECTION 5.01. Conduct of Business by the Company Pending the Merger.......21
SECTION 5.02. Advice of Changes; Government Filings.......................23
ARTICLE VI ADDITIONAL AGREEMENTS..............................................24
SECTION 6.01. Stockholders' Meeting.......................................24
SECTION 6.02. Proxy Statement.............................................25
SECTION 6.03. Company Board Representation; Section 14(f) of the
Exchange Act................................................25
SECTION 6.04. Access to Information; Confidentiality......................26
SECTION 6.05. No Solicitation of Transactions.............................27
SECTION 6.06. Employee Benefits Matters...................................29
SECTION 6.07. Directors' and Officers' Indemnification; Insurance.........31
SECTION 6.08. Notification of Certain Matters.............................31
SECTION 6.09. Further Action; Reasonable Best Efforts.....................32
SECTION 6.10. Subsequent Financial Statements.............................32
SECTION 6.11. Public Announcements........................................32
SECTION 6.12. Takeover Statute............................................33
SECTION 6.13. Bedminster Services.........................................33
ARTICLE VII CONDITIONS TO THE MERGER..........................................33
SECTION 7.01. Conditions to the Merger....................................33
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER................................34
SECTION 8.01. Termination.................................................34
SECTION 8.02. Effect of Termination.......................................35
SECTION 8.03. Fees and Expenses...........................................36
SECTION 8.04. Amendment...................................................36
SECTION 8.05. Waiver......................................................37
ARTICLE IX GENERAL PROVISIONS.................................................37
SECTION 9.01. Non-Survival of Representations. Warranties and Agreements..37
SECTION 9.02. Notices.....................................................37
SECTION 9.03. Certain Definitions.........................................38
SECTION 9.04. Severability................................................42
SECTION 9.05. Entire Agreement; Assignment................................42
SECTION 9.06. Parties in Interest.........................................42
SECTION 9.07. Specific Performance........................................42
SECTION 9.08. Governing Law...............................................42
SECTION 9.09. Waiver of Jury Trial........................................43
SECTION 9.10. Headings....................................................43
SECTION 9.11. Counterparts................................................43
SECTION 9.12. Company Disclosure Schedule.................................43
AGREEMENT AND PLAN OF MERGER, dated as of June 6, 2005 (this "AGREEMENT"),
among NATUREX, S.A., a societe anonyme organized under the laws of the French
Republic ("PARENT"), NATUREX ACQUISITION CORP., a Delaware corporation and
direct wholly owned Subsidiary of Parent ("PURCHASER"), and PURE WORLD, INC., a
Delaware corporation (the "COMPANY").
WHEREAS, the Boards of Directors of Purchaser and the Company have each
determined that it is in the best interests of their respective stockholders for
Parent to acquire the Company upon the terms and subject to the conditions set
forth herein;
WHEREAS, Purchaser shall, and Parent shall cause Purchaser to, make a cash
tender offer (the "OFFER") to acquire all the issued and outstanding shares of
common stock, par value $0.01 per share, of the Company ("Shares"), for $4.30
per Share (such amount, or any greater amount per Share paid pursuant to the
Offer, being the "PER SHARE AMOUNT"), net to the seller in cash;
WHEREAS, the Board of Directors of the Company (the "COMPANY BOARD") has
unanimously approved (except for the abstention of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇) the making
of the Offer and resolved to recommend that holders of Shares tender their
Shares pursuant to the Offer;
WHEREAS, the Boards of Directors of Parent, Purchaser and the Company have
each approved this Agreement and declared its advisability and approved the
merger (the "MERGER") of Purchaser with and into the Company in accordance with
the General Corporation Law of the State of Delaware (the "DGCL"), following the
consummation of the Offer; and
WHEREAS, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (the "STOCKHOLDER") and certain of his Affiliates
have entered into a Stockholder Agreement, dated as of the date hereof (the
"STOCKHOLDER AGREEMENT"), providing that, among other things, the Stockholder
and certain of his Affiliates will (i) tender their Shares into the Offer and
(ii) vote the Shares owned of record and beneficially by them in favor of the
Merger and, if applicable, the other transactions contemplated by this
Agreement.
NOW, THEREFORE, Parent, Purchaser and the Company hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01. THE OFFER.
(a) Provided that this Agreement shall not have been terminated in accordance
with Article VIII and none of the events set forth in Annex A (the "OFFER
CONDITIONS") shall have occurred and be continuing, Purchaser shall, and
Parent shall cause the Purchaser, to:
(i) commence (within the meaning of Rule 14d-2 under the Exchange Act) the
Offer as promptly as reasonably practicable after the date hereof, but
in no event later than ten Business Days after the execution of this
Agreement; and
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(ii) cause the Offer to remain open until the twentieth Business Day after
such commencement of the Offer (the "INITIAL EXPIRATION DATE").
(b) The obligation of the Purchaser to accept for payment, purchase and pay for
any Shares validly tendered pursuant to the Offer on or prior to the
Initial Expiration Date and not withdrawn prior to such Initial Expiration
Date shall be subject only to the satisfaction or waiver of the Offer
Conditions, specifically including the Offer Condition that at least that
number of shares of Company Common Stock, which, together with Shares
beneficially owned by Parent, Purchaser and their direct and indirect
Subsidiaries, shall represent at least a majority of the total issued and
outstanding shares of Company Common Stock on a Fully-Diluted Basis shall
have been validly tendered and not withdrawn prior to 12:00 p.m. (midnight)
New York City time, on the Expiration Date (the "MINIMUM CONDITION").
Purchaser shall, and Parent shall cause Purchaser, to accept for payment
and pay for Shares tendered pursuant to the Offer, subject only to the
satisfaction of each of the conditions set forth in Annex A (the "Offer
Conditions"). At the Company's request, Purchaser will, and Parent shall
cause Purchaser to, extend the Offer after the Initial Expiration Date for
one or more periods not to exceed an aggregate of twenty Business Days if
the Offer Conditions have not been satisfied at the Initial Expiration
Date. Subject to the prior satisfaction of the Offer Conditions, Purchaser
shall, and Parent shall cause Purchaser to, consummate the Offer in
accordance with its terms and accept for payment all Shares tendered and
not withdrawn by 9:00 a.m. Eastern time on the next Business Day after the
expiration of the Offer. Purchaser expressly reserves the right to waive
any Offer Condition, or increase the Per Share Amount payable in the Offer
and to make any other changes in the terms and conditions of the Offer.
However, without the consent of the Company, Purchaser shall not, and
Parent shall not permit Purchaser to:
(i) decrease the Per Share Amount or change the form of consideration
payable in the Offer;
(ii) reduce the number of Shares subject to the Offer;
(iii) impose conditions to the Offer in addition to the Offer
Conditions; or
(iv) change the Offer in a manner adverse to the holders of the
Shares.
Notwithstanding the foregoing, Purchaser may, without the consent of the
Company:
(i) extend the Offer for one or more periods of not more than fifteen
Business Days each beyond the Initial Expiration Date, if, at any
scheduled expiration of the Offer, any of the Offer Conditions
shall not be satisfied or waived; or
(ii) extend the Offer for any period required by any rule, regulation
or interpretation of the Securities and Exchange Commission (the
"SEC"), or the staff thereof, applicable to the Offer (provided
that Purchaser shall keep the Company reasonably informed of
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Purchaser's or Parent's contact with the SEC or the staff thereof
with respect to the Offer).
The Per Share Amount shall be net to the seller in cash, upon the terms and
subject to the conditions of the Offer (the "MERGER CONSIDERATION").
Purchaser shall, and Parent shall cause Purchaser to, pay for all Shares
validly tendered and not withdrawn promptly following the acceptance of
Shares for payment pursuant to the Offer. Notwithstanding the immediately
preceding sentence and subject to the applicable rules of the SEC and the
terms and conditions of the Offer, Purchaser expressly reserves the right
to delay payment for Shares in order to comply in whole or in part with
applicable Laws. Any such delay shall be effected in compliance with Rule
14e-1(c) under the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"). Purchaser may extend the Offer after the acceptance of
Shares thereunder for a further period of time by means of a subsequent
offering period ("SUBSEQUENT OFFERING PERIOD") under Rule 14d-11
promulgated under the Exchange Act of not more than twenty Business Days to
meet the objective that there be validly tendered, in accordance with the
terms of the Offer, prior to the expiration of the Offer (as so extended),
and not withdrawn a number of Shares which, together with Shares then
beneficially owned by Parent and Purchaser and their direct and indirect
Subsidiaries, represents at least 90% of the then outstanding Shares on a
Fully-Diluted Basis.
(c) On the date of commencement of the Offer, Purchaser and Parent shall file
with the SEC a Tender Offer Statement on Schedule TO (together with all
exhibits, amendments and supplements thereto, the "SCHEDULE TO") with
respect to the Offer. The Schedule TO shall comply in all material respects
with the provisions of the Exchange Act, the rules and regulations
promulgated thereunder and all other applicable Laws, and shall contain or
shall incorporate by reference an offer to purchase relating to the Offer
(the "OFFER TO PURCHASE") and forms of the related letter of transmittal
and any related summary advertisement (the Schedule TO, the Offer to
Purchase and such other documents, together with all exhibits, supplements
and amendments thereto, being referred to herein collectively as the "OFFER
DOCUMENTS"). Each of Parent, Purchaser and the Company shall correct
promptly any information provided by it for use in the Offer Documents that
shall have become false or misleading in any material respect, and Parent
and Purchaser further agree to take all steps necessary to cause the
Schedule TO, as so corrected, to be filed with the SEC, and the other Offer
Documents, as so corrected, to be disseminated to holders of Shares, in
each case as and to the extent required by applicable federal securities
laws. Parent and Purchaser shall give the Company and its counsel a
reasonable opportunity to review and comment on the Offer Documents prior
to such documents being filed with the SEC or disseminated to holders of
Shares. Parent and Purchaser shall provide the Company and its counsel with
any comments that Parent, Purchaser or their counsel may receive from the
SEC or its staff with respect to the Offer Documents promptly after the
receipt of such comments and shall provide the Company and its counsel with
a reasonable opportunity to participate in the response of the Parent and
Purchaser to such comments.
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SECTION 1.02. COMPANY ACTION.
(a) Subject to Section 6.05(d), the Company hereby consents to the inclusion in
the Offer Documents of the recommendation of the Company Board described in
Section 3.04. The Company has been advised by its directors and executive
officers that they intend to tender all Shares beneficially owned by them
to Purchaser pursuant to the Offer and, if applicable, the Stockholder
Agreement.
(b) On the date of commencement of the Offer, the Company shall file with the
SEC a Solicitation/Recommendation Statement on Schedule 14D-9 (together
with all amendments and supplements thereto, the "SCHEDULE 14D-9"), which
shall:
(i) comply in all material respects with the provisions of the Exchange
Act, the rules and regulations thereunder and all other applicable
Laws; and
(ii) contain the Fairness Opinion and, except as provided in Section
6.05(d), the recommendation of the Company Board described in Section
3.04.
The Company shall disseminate the Schedule 14D-9 to the extent required by
Rule 14d-9 under the Exchange Act, and any other applicable federal
securities laws. Each of the Company, Parent and Purchaser agrees to
correct promptly any information provided by it for use in the Schedule
14D-9 which shall have become false or misleading in any material respect,
and the Company further agrees to take all steps necessary to cause the
Schedule 14D-9, as so corrected, to be filed with the SEC and disseminated
to holders of Shares, in each case as and to the extent required by
applicable federal securities laws. The Company shall give Parent and its
counsel a reasonable opportunity to review and comment on the Schedule
14D-9 prior to such document being filed with the SEC or disseminated to
holders of Shares. The Company shall provide Parent and its counsel with
any comments that the Company or its counsel may receive from the SEC or
its staff with respect to the Schedule 14D-9 promptly after the receipt of
such comments and shall provide Parent and its counsel with a reasonable
opportunity to participate in the response of the Company to such comments.
(c) The Company shall promptly furnish Parent and Purchaser with mailing labels
containing the names and addresses of all record holders of Shares, with
non-objecting beneficial owner lists and with security position listings in
written and electronic form of Shares held in stock depositories, each as
of a recent date. The Company shall promptly furnish Parent and Purchaser
with such additional information, including, without limitation, updated
listings, mailing labels and security position listings, and such other
assistance in disseminating the Offer Documents to holders of Shares as
Parent or Purchaser may reasonably request. Subject to the requirements of
applicable Law, and except for such steps as are necessary to disseminate
the Offer Documents and any other documents necessary to consummate the
Offer or the Merger, Parent and Purchaser shall hold in confidence the
information contained in such labels, listings and files, shall use such
information only in connection with the Transactions, and, if this
Agreement shall be terminated in accordance with Section 8.01, shall
deliver to the Company or destroy all copies of such information then in
their possession.
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ARTICLE II
THE MERGER
SECTION 2.01. THE MERGER.
Upon the terms and subject to the conditions set forth in Article VII, and in
accordance with the DGCL, at the Effective Time (as defined below), Purchaser
shall be merged with and into the Company. As a result of the Merger, the
separate corporate existence of Purchaser shall cease and the Company shall
continue as the surviving corporation of the Merger (the "SURVIVING
CORPORATION").
SECTION 2.02. CLOSING.
The closing of the Merger (the "CLOSING") will take place on the second Business
Day after satisfaction or waiver (as permitted by this Agreement and applicable
law) of the conditions (excluding conditions that, by their terms, cannot be
satisfied until the Closing Date) set forth in Article VII (the "CLOSING DATE"),
unless another time or date is agreed to in writing by the parties hereto. The
Closing shall be held at the offices of ▇▇▇▇▇▇ ▇▇▇▇ & Priest LLP, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, unless another place is agreed to in writing
by the parties hereto.
SECTION 2.03. EFFECTIVE TIME.
At the Closing, the parties shall cause the Merger to be consummated by filing a
certificate of merger (the "CERTIFICATE OF MERGER") with the Secretary of State
of the State of Delaware, in such form as is required by, and executed in
accordance with, the relevant provisions of the DGCL (the date and time of such
filing of the Certificate of Merger (or such later time as may be agreed by the
parties hereto and specified in the Certificate of Merger) being the "EFFECTIVE
TIME.
SECTION 2.04. EFFECT OF THE MERGER.
At the Effective Time, the effect of the Merger shall be as provided in the
applicable provisions of the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the property, rights,
privileges, powers and franchises of the Company and Purchaser shall vest in the
Surviving Corporation, and all debts, liabilities, obligations, restrictions,
disabilities and duties of each of the Company and Purchaser shall become the
debts, liabilities, obligations, restrictions, disabilities and duties of the
Surviving Corporation.
SECTION 2.05. CERTIFICATE OF INCORPORATION; BY-LAWS.
(a) At the Effective Time, the Certificate of Incorporation of the Surviving
Corporation shall be the Certificate of Incorporation of the Company as in
effect immediately prior to the Effective Time.
(b) At the Effective Time, the By-laws of the Company, as in effect immediately
prior to the Effective Time, shall be the By-laws of the Surviving
Corporation until thereafter duly amended.
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SECTION 2.06. DIRECTORS AND OFFICERS.
The directors of Purchaser immediately prior to the Effective Time and the
President and Chief Operating Officer of the Company shall be the initial
directors of the Surviving Corporation, each to hold office in accordance with
the Certificate of Incorporation and By-laws of the Surviving Corporation, and
the officers of Purchaser immediately prior to the Effective Time and the
President and Chief Operating Officer of the Company shall be the initial
officers of the Surviving Corporation, in each case until their respective
successors are duly elected or appointed and qualified or until their earlier
death, resignation or removal.
SECTION 2.07. CONVERSION OF SECURITIES.
At the Effective Time, by virtue of the Merger and without any action on the
part of Purchaser, the Company or the holders of any of the following
securities:
(a) each Share issued and outstanding immediately prior to the Effective Time
(other than any Shares to be canceled pursuant to Section 2.07(b), and any
Dissenting Shares (as defined below)) shall be canceled and shall be
converted automatically into the right to receive an amount equal to the
Merger Consideration payable, without interest, to the holder of such
Share, upon surrender, in the manner provided in Section 2.10, of the
certificate that formerly evidenced such Share;
(b) each Share held in the treasury of the Company and each Share owned by
Purchaser, Parent or any direct or indirect Subsidiary of Parent or of the
Company immediately prior to the Effective Time shall be canceled without
any conversion thereof and no payment or distribution shall be made with
respect thereto; and
(c) each share of common stock, par value $0.01 per share, of Purchaser issued
and outstanding immediately prior to the Effective Time shall be converted
into and exchanged for one validly issued, fully paid and nonassessable
share of common stock, par value $0.01 per share, of the Surviving
Corporation ("SURVIVING CORPORATION SHARES").
SECTION 2.08. TREATMENT OF OPTIONS.
(a) Between the date of this Agreement and the Effective Time, the Company
shall take all necessary action (which shall be effective as of the
Effective Time) to:
(i) terminate (effective as of the Effective Time) the Company's 1991 and
1997 Stock Option Plans, and use its reasonable efforts to terminate
each stock option agreement granted otherwise than under such plans
which shall themselves constitute separate plans, each as amended
through the date of this Agreement (collectively, the "COMPANY STOCK
OPTION PLANS"); and
(ii) use its reasonable efforts to cancel, as of the Effective Time, each
outstanding option to purchase Shares of Company Common Stock granted
under the Company Stock Option Plans (each, a "COMPANY STOCK OPTION")
that is outstanding and unexercised, whether or not vested or
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exercisable, as of such date (in each case, without the creation of
additional liability to the Company or any Subsidiary).
(b) As of the Effective Time, each holder of a Company Stock Option cancelled
immediately prior to the Effective Time pursuant to Section 2.08(a)(ii)
shall be entitled to receive an amount of cash, without interest, equal to
the product of:
(i) the total number of Shares subject to such Company Stock Option,
multiplied by
(ii) the excess, if any, of the Merger Consideration over the exercise
price per Share of such Company Stock Option (with the aggregate
amount of such payment to the holder to be rounded to the nearest
cent), less applicable withholding taxes. No holder of a Company Stock
Option that has an exercise price per Share that is equal to or
greater than the Merger Consideration shall be entitled to any payment
with respect to such cancelled Company Stock Option before or after
the Effective Time.
SECTION 2.09. DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the contrary and to the
extent available under the DGCL, Shares that are outstanding immediately
prior to the Effective Time and that are held by stockholders who shall
have neither voted in favor of the Merger nor consented thereto in writing
and who shall have demanded properly in writing appraisal for such Shares
in accordance with Section 262 of the DGCL (collectively, the "DISSENTING
SHARES") shall not be converted into, or represent the right to receive,
the Merger Consideration. Such stockholders shall be entitled to receive
payment of the appraised value of such Shares held by them in accordance
with the provisions of such Section 262, except that all Dissenting Shares
held by stockholders who shall have failed to perfect or who effectively
shall have withdrawn or lost their rights to appraisal of such Shares under
such Section 262 shall thereupon be deemed to have been converted into, and
to have become exchangeable for, as of the Effective Time, the right to
receive the Merger Consideration, without any interest thereon, upon
surrender, in the manner provided in Section 2.10, of the certificate or
certificates that formerly evidenced such Shares.
(b) The Company shall give Parent prompt notice of any demands for appraisal
received by the Company, withdrawals of such demands, and any other
instruments served pursuant to the DGCL and received by the Company, and
Parent shall have the right to direct all negotiations and proceedings with
respect to demands for appraisal under the DGCL. The Company shall not,
except with the prior written consent of Parent, make any payment with
respect to any demands for appraisal or offer to settle or settle any such
demands.
SECTION 2.10. SURRENDER OF SHARES; STOCK TRANSFER BOOKS.
(a) Prior to the Effective Time, Purchaser shall designate a bank or trust
company to act as agent (the "PAYING AGENT") for the holders of Shares to
receive the funds to which holders of Shares shall become entitled pursuant
to Section 2.07(a). Such funds shall be invested by the Paying Agent as
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directed by the Surviving Corporation. Any interest and other income
resulting from such investments shall be paid to Purchaser.
(b) Promptly after the Effective Time, the Surviving Corporation shall cause to
be mailed to each Person who was, at the Effective Time, a holder of record
of Shares entitled to receive the Merger Consideration pursuant to Section
2.07(a) a form of letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the certificates
evidencing such Shares (the "CERTIFICATES") shall pass, only upon proper
delivery of the Certificates to the Paying Agent) and instructions for use
in effecting the surrender of the Certificates pursuant to such letter of
transmittal. Upon surrender to the Paying Agent of a Certificate, together
with such letter of transmittal, duly completed and validly executed in
accordance with the instructions thereto, and such other documents as may
be required pursuant to such instructions, the holder of such Certificate
shall be entitled to receive in exchange therefor the Merger Consideration
for each Share formerly evidenced by such Certificate, and such Certificate
shall then be canceled. No interest shall accrue or be paid on the Merger
Consideration payable upon the surrender of any Certificate for the benefit
of the holder of such Certificate. If the payment equal to the Merger
Consideration is to be made to a Person other than the Person in whose name
the surrendered certificate formerly evidencing Shares is registered on the
stock transfer books of the Company, it shall be a condition of payment
that the certificate so surrendered shall be endorsed properly or otherwise
be in proper form for transfer and that the Person requesting such payment
shall have paid all transfer and other taxes required by reason of the
payment of the Merger Consideration to a Person other than the registered
holder of the certificate surrendered, or shall have established to the
satisfaction of Purchaser that such taxes either have been paid or are not
applicable. If any holder of Shares is unable to surrender such holder's
Certificates because such Certificates have been lost, stolen, mutilated or
destroyed, such holder may deliver in lieu thereof an affidavit and
indemnity bond in form and substance and with surety reasonably
satisfactory to the Surviving Corporation.
(c) At any time following the ninth month after the Effective Time, the
Surviving Corporation shall be entitled to require the Paying Agent to
deliver to it any funds which had been made available to the Paying Agent
and not disbursed to holders of Shares (including, without limitation, all
interest and other income received by the Paying Agent in respect of all
funds made available to it), and, thereafter, such holders shall be
entitled to look to the Surviving Corporation (subject to abandoned
property, escheat and other similar laws) only as general creditors thereof
with respect to any Merger Consideration that may be payable upon due
surrender of the Certificates held by them. Notwithstanding the foregoing,
neither the Surviving Corporation nor the Paying Agent shall be liable to
any holder of a Share for any Merger Consideration delivered in respect of
such Share to a public official pursuant to any abandoned property, escheat
or other similar law.
(d) At the close of business on the day of the Effective Time, the stock
transfer books of the Company shall be closed and thereafter there shall be
no further registration of transfers of Shares on the records of the
Company. From and after the Effective Time, the holders of Shares
outstanding immediately prior to the Effective Time shall cease to have any
8
rights with respect to such Shares except as otherwise provided herein or
by applicable Law.
(e) All Merger Consideration paid upon the surrender for exchange of
Certificates in accordance with the terms of this Article II shall be
deemed to have been paid in full satisfaction of all rights pertaining to
the Shares theretofore represented by such Certificates. If, after the
Effective Time, Certificates are presented to the Surviving Corporation or
the Paying Agent for any reason, they shall be canceled and exchanged as
provided in this Article II, except as otherwise provided by Law.
(f) Each of the Surviving Corporation, the Paying Agent, Purchaser and the
Parent shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable hereunder to any Person such amounts as it
is required to deduct and withhold with respect to the making of such
payment under any provision of Federal, state, local or foreign tax law. To
the extent that amounts are so deducted and withheld, such deducted and
withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the Person in respect of which such deduction and
withholding was made.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Purchaser that:
SECTION 3.01. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Each of the Company and each Subsidiary of the Company is a corporation or
limited liability company duly formed, validly existing and in good
standing under the laws of the jurisdiction of its formation and has the
requisite power and authority and all necessary governmental approvals to
own, lease and operate its properties and to carry on its business as it is
now being conducted. Each of the Company and each Subsidiary is duly
qualified or licensed as a foreign corporation or limited liability company
to do business, and is in good standing, in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature
of its business makes such qualification or licensing necessary, except for
such failures to be so qualified or licensed and in good standing that
would not have a Company Material Adverse Effect.
(b) A true and complete list of all the Subsidiaries, together with the
jurisdiction of formation of each Subsidiary, is set forth in Section
3.01(b) of the Company Disclosure Schedule (the "COMPANY DISCLOSURE
SCHEDULE"), which has been prepared by the Company and delivered by the
Company to Parent and Purchaser prior to the execution and delivery of this
Agreement. Except as disclosed in Section 3.01(b) of the Company Disclosure
Schedule, the Company does not directly or indirectly own any equity or
similar interest in, or any interest convertible into or exchangeable or
exercisable for any equity or similar interest in, any corporation,
partnership, joint venture or other business association or entity.
9
(c) Each of the Company and its Subsidiaries has the requisite corporate power
and corporate authority in all material respects to own, lease and operate
its properties and to carry on its respective businesses as they are now
being conducted.
SECTION 3.02. CERTIFICATE OF INCORPORATION AND BY-LAWS.
The Company has heretofore furnished to Parent a complete and correct copy of
the Certificate of Incorporation and the By-laws or equivalent organizational
documents, each as amended to date, of the Company and each Subsidiary. Such
Certificates of Incorporation, By-laws or equivalent organizational documents
are in full force and effect. Neither the Company nor any Subsidiary is in
violation of any of the provisions of its Certificate of Incorporation, By-laws
or equivalent organizational documents.
SECTION 3.03. CAPITALIZATION.
(a) The authorized capital stock of the Company consists of 30,000,000 Shares
("COMPANY COMMON STOCK"). As of the date of this Agreement, 8,077,018
Shares are issued and outstanding, all of which are validly issued, fully
paid and nonassessable. Except as set forth in Section 3.03 of the Company
Disclosure Schedule, which Schedule sets forth the name of the holder of
each option, warrant or other right to purchase capital stock of the
Company, the number of Shares that may be purchased by such holder and the
price per Share at which such Shares may be purchased, there are no
options, warrants, agreements, or other arrangements of any character that
are binding on the Company or any Subsidiary that obligate the Company or
any Subsidiary to issue or sell any shares of capital stock of, or other
equity interests in, the Company or any Subsidiary. The Company Common
Stock is not entitled to preemptive rights.
(b) The Company has made available to Parent accurate and complete copies of
all Company Stock Option Plans pursuant to which the Company has granted
the Company Stock Options that are currently outstanding. All Shares
subject to issuance as aforesaid, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable, will be
duly authorized, validly issued, fully paid and nonassessable.
SECTION 3.04. AUTHORITY RELATIVE TO THE TRANSACTIONS.
The Company has all necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the Transactions. The execution and delivery by the Company of this Agreement
and the consummation by the Company of the Transactions have been duly and
validly authorized by all necessary corporate action, and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or to consummate the Transactions (other than, with respect to the Merger, the
approval and adoption of this Agreement by the holders of a majority of the then
outstanding shares of Company Common Stock (the "COMPANY STOCKHOLDER
APPROVAL")), if and to the extent required by applicable Law, and the filing and
recordation of appropriate merger documents as required by the DGCL). This
Agreement has been duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery by the other parties
thereto, constitutes the legal, valid and binding obligation of the Company,
10
enforceable against the Company in accordance with its terms, subject to the
effect of any applicable bankruptcy, insolvency (including, without limitation,
all Laws relating to fraudulent transfers), reorganization, moratorium or
similar Laws affecting creditors' rights generally and subject to the effect of
general principles of equity (regardless of whether considered in a proceeding
at law or in equity). The Company Board, at a meeting duly called and held, has
unanimously (except for the abstention of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇):
(a) determined that this Agreement and the transactions contemplated hereby,
including each of the Offer and the Merger (collectively, the
"TRANSACTIONS"), are fair to, and in the best interests of, the holders of
Shares;
(b) approved, adopted and declared advisable this Agreement and the
Transactions (such approval and adoption having been made in accordance
with the DGCL, including without limitation Section 203 thereof); and
(c) resolved, subject to Section 6.05(d), to recommend that the holders of
Shares accept the Offer and tender their Shares pursuant to the Offer, and,
if required, approve and adopt this Agreement and the Transactions (the
"COMPANY TENDER RECOMMENDATION").
SECTION 3.05. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
The execution and delivery by the Company of this Agreement do not, and the
performance by the Company of this Agreement and the consummation of the
Transactions by the Company will not:
(a) violate the Certificate of Incorporation or By-laws or any equivalent
organizational documents of the Company or any Subsidiary;
(b) violate any United States or non-United States statute, law, ordinance,
regulation, rule, code, executive order, injunction, judgment, decree or
other order ("LAW") applicable to the Company or any Subsidiary or by which
any property or asset of the Company or any Subsidiary is bound or
affected; or
(c) except as set forth in Section 3.05 of the Company Disclosure Schedule,
result in any breach of or constitute a default (or an event which, with
notice or lapse of time or both, would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation
of, or result in the creation of a lien or other encumbrance on any
property or asset of the Company or any of its Subsidiaries pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or any property or asset of any of them is bound or affected,
except for any such conflicts, violations, breaches, defaults or other
occurrences which would not, individually or in the aggregate, have a
Company Material Adverse Effect.
(d) Neither the Company nor any of its Subsidiaries is required to obtain any
consent, permit, approval, order or authorization of any government, any
instrumentality, subdivision, court, administrative agency or commission or
other authority thereof, or any quasi governmental or private body
11
exercising any regulatory, taxing, importing or other governmental or quasi
governmental authority (a "GOVERNMENTAL AUTHORITY"), in connection with the
execution and delivery of this Agreement by the Company or the consummation
of the Transactions except for (x) those required under or in relation to
(A) the Exchange Act or the Securities Act of 1933, as amended (the
"SECURITIES ACT"), (B) the DGCL with respect to the filing of the
Certificate of Merger, (C) rules and regulations of The Nasdaq Stock Market
and (D) such as may be required under any applicable state securities or
blue sky laws and (y) such consents, permits, approvals, orders or
authorizations the failure of which to obtain is not reasonably likely to
have, individually or in the aggregate, a Company Material Adverse Effect.
(e) The Board of Directors of the Company, or an appropriate committee thereof,
has taken, or prior to the Effective Time will take, all action necessary
so that the Rule 16b-3(e) exemption from Section 16 under the Exchange Act
is applicable to the disposition by all persons who are directors and/or
officers of the Company of the Company Common Stock and Company Stock
Options in or in connection with the Merger.
SECTION 3.06. SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has filed or furnished, as the case may be, all forms, reports
and documents required to be filed or furnished by it with the SEC since
June 30, 2002, and has heretofore made available to Parent:
(i) its Annual Reports on Form 10-KSB, as amended, for the fiscal years
ended December 31, 2002, 2003 and 2004, respectively;
(ii) its Quarterly Report on Form 10-QSB for the period ended March 31,
2005;
(iii) all proxy statements relating to the Company's meetings of
stockholders (whether annual or special) held since June 30, 2002; and
(iv) all other forms, reports and registration statements (other than
Quarterly Reports on Form 10-QSB not referred to in clause (i) above)
filed by the Company with the SEC since June 30, 2002.
(The forms, reports and other documents referred to in clauses (i), (ii),
(iii) and (iv) above being, collectively, the "COMPANY SEC REPORTS".)
The Company SEC Reports were prepared in accordance with the Exchange Act,
and the rules and regulations promulgated thereunder. The Company SEC
Reports, as of their respective dates, did not, and any Company SEC Reports
filed with the SEC subsequent to the date hereof and prior to the purchase
of Shares pursuant to the Offer will not, contain any untrue statement of a
material fact or omit to state a 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. All of such
Company SEC Reports, as of their respective dates, complied as to form in
all material respects with the applicable requirements of the Securities
Act and the Exchange Act and the rules and regulations promulgated
thereunder.
12
(b) Each of the consolidated financial statements (including, in each case, any
notes thereto) contained in the Company SEC Reports on Form 10-KSB was
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto) and each fairly
presents, in all material respects, the consolidated financial position,
results of operations and cash flows of the Company and its consolidated
Subsidiaries as at the respective dates thereof and for the respective
periods indicated therein, except as otherwise noted therein.
(c) Neither the Company nor any Subsidiary has any liability or obligation
(whether known or unknown, accrued, absolute, contingent or otherwise)
which would be required to be reflected, reserved for or disclosed in a
consolidated balance sheet of the Company and its consolidated
Subsidiaries, including the notes thereto, prepared as of the date of this
Agreement in accordance with GAAP and consistent with the consolidated
balance sheet of the Company and the consolidated Subsidiaries as at
December 31, 2004, including the notes thereto (the "2004 BALANCE SHEET"),
except for:
(i) liabilities and obligations to the extent reflected, reserved for or
disclosed in the 2004 Balance Sheet;
(ii) liabilities and obligations that were incurred in the ordinary course
of business consistent with past practice since December 31, 2004
(none of which has had or is reasonably like to have, individually or
in the aggregate, a Company Material Adverse Effect); or
(iii) as set forth in Section 3.06(c) of the Company Disclosure Schedule.
(d) Information Supplied.
(i) The information supplied or to be supplied by the Company for
inclusion or incorporation by reference in Schedule TO or the Offer
Documents and any other document filed or to be filed by Purchaser or
Parent with the SEC or any other Governmental Authority in connection
with the Offer will, at the respective times such documents are filed
and when first published, sent or given to the stockholders of the
Company shall not contain an untrue statement of material fact or omit
to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they are made, not false or misleading. If at any time
before Closing any event relating to the Company is discovered by the
Company that is required to be set forth in an amendment to the
Schedule TO or a supplement to the Offer Documents, the Company shall
promptly inform Parent.
(ii) Notwithstanding the foregoing provisions of this Section 3.06(d), no
representation or warranty is made by the Company with respect to
statements made or incorporated by reference in the Schedule TO or the
Offer Documents based on information supplied by Parent or the
Purchaser for inclusion or incorporation by reference therein.
13
SECTION 3.07. ABSENCE OF CERTAIN CHANGES OR EVENTS.
Since December 31, 2004, except as set forth in the Company SEC Reports filed
prior to the date hereof, Section 3.07 of the Company Disclosure Schedule, or as
expressly contemplated by this Agreement:
(a) the Company and the Subsidiaries have conducted their businesses only in
the ordinary course and in a manner consistent with past practice;
(b) there has not been any Company Material Adverse Effect;
(c) except to the extent required under the Plans or in the ordinary course of
business, there has not been any material increase in the compensation
payable or which could become payable by the Company and its Subsidiaries
to their officers or key employees, or any amendment of any compensation
and benefit plans resulting in a material increase in payments thereunder;
(d) there has not been any issuance or agreement to issue shares of Company
Common Stock, other than under the Company Option Plans; and
(e) none of the Company or any Subsidiary has taken any action that, if taken
after the date of this Agreement, would constitute a material breach of any
of the covenants set forth in Section 5.01.
SECTION 3.08. ABSENCE OF LITIGATION.
Except as set forth in the Company SEC Reports filed prior to the date hereof or
in Section 3.08 of the Company Disclosure Schedule:
(a) there is no litigation, suit, claim, action, proceeding, arbitration or
investigation (an "ACTION") pending or, to the knowledge of the Company,
threatened against or affecting the Company or any Subsidiary, or any
property or asset of the Company or any Subsidiary and
(b) there are no judgments, decrees, injunctions, rules or orders of any
Governmental Authority,
except for any of the foregoing under clauses (a) and (b) above that,
individually or in the aggregate, would not result or reasonably be likely to
result in losses and expenses (including reasonable expenses of counsel) in
excess of $100,000 or otherwise constitute a Company Material Adverse Effect.
SECTION 3.09. EMPLOYEE BENEFIT PLANS.
(a) Section 3.09(a) of the Company Disclosure Schedule lists all employee
benefit plans (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) and all bonus, stock option,
stock purchase, restricted stock, incentive, deferred compensation, excess
benefit, retiree medical or life insurance, supplemental retirement,
14
severance, salary continuation, change in control, termination or other
benefit plans, programs or arrangements, and all material employment,
retention, termination, severance or other contracts or agreements, whether
legally enforceable or not, whether written or unwritten, that cover any of
the current or former employees, officers, or directors of the Company or
any Subsidiary and with respect to which the Company or any Subsidiary has
any liability or obligation or which are maintained, contributed to or
sponsored by the Company or any Subsidiary (collectively, the "Plans");
provided, however, that there shall be no obligation hereunder to list on
Section 3.09(a) of the Company Disclosure Schedule any Plan that is not
material. For each material Plan, the Company has furnished or made
available to Parent a true and complete copy of the following documents, if
applicable: (i) each Plan document and all amendments thereto, and where
such Plan is unwritten, a written description of the material terms
thereof, (ii) all trust agreements, insurance or annuity contracts or other
funding vehicles, (iii) the current summary plan description, (iv) the
three most recent annual reports on Form 5500 filed with the IRS and (v)
the most recent determination letter or opinion letter from the IRS with
respect to any Plan that is intended to be qualified under Section 401(a)
of the Code or the standardized prototype plan on which such Plan is based.
(b) Except as disclosed in Section 3.09(b) of the Company Disclosure Schedule,
each Plan has been maintained, operated and administered in material
compliance with its terms and the requirements of all applicable Laws
including, without limitation, ERISA and the Code. Except as disclosed in
Section 3.09(b) of the Company Disclosure Schedule, the Company and the
Subsidiaries have performed all obligations required to be performed by
them under, are not in any respect in default under or in violation of, and
have no knowledge of any default or violation by any party to, any Plan.
(c) Except as otherwise disclosed on Section 3.09(c) of the Company Disclosure
Schedule, there will be no payment, accrual of additional benefits,
acceleration of payments or vesting of any benefit under any contract,
agreement, plan or other arrangement, whether or not a Plan, and no
employee, officer or director of the Company or any of the Subsidiaries
will become entitled to severance, termination pay or similar payments or
benefits in connection with the transactions contemplated by this Agreement
(either alone or in combination with any other event), other than as
specifically provided for in this Agreement. No payment, accrual of
additional benefits, acceleration of payments or vesting of any benefit
under this Agreement, any Plan or similar agreement or arrangement between
the Company or any of its Affiliates and any "disqualified individual" (as
such term is defined in Section 280G of the Code) could reasonably be
expected to be characterized as an "excess parachute payment" (as such term
is defined in Section 280G of the Code) in connection with the transactions
contemplated by this Agreement (either alone or in combination with any
other event).
(d) All contributions, premiums or payments required to be made with respect to
any Plan have been made on or before their due dates, with such exceptions
as would not be reasonably likely to have a Company Material Adverse
Effect.
15
SECTION 3.10. PROPERTY; TITLE TO ASSETS.
(a) The Company owns no real property. Section 3.10 of the Company Disclosure
Schedule lists each parcel of real property currently leased, subleased or
licensed by the Company or any Subsidiary together, in each case, with the
name of the lessor, the lessee and the date of the lease, sublease,
license, assignment of the lease, any guaranty given or leasing commissions
payable by the Company or any Subsidiary in connection therewith and each
material amendment to any of the foregoing (collectively, the "LEASE
DOCUMENTS").
(b) True, correct and complete copies of all Lease Documents have been
delivered to Parent. All such current leases, subleases and licenses are in
full force and effect, are valid and effective in accordance with their
respective terms, and there is not, under any of such leases, any existing
material default or event of default (or event which, with notice or lapse
of time, or both, would constitute a material default) by the Company or
any Subsidiary or, to the Company's knowledge, by the other party to such
lease, sublease or license.
(c) Except as disclosed in Section 3.10 of the Company Disclosure Schedule, the
Company and the Subsidiaries own or have valid leasehold interests in, all
of their respective properties and assets (other than assets disposed of in
the ordinary course of business since December 31, 2004) free and clear of
all encumbrances except for defects in title, easements, encroachments,
restrictive covenants and similar encumbrances or impediments that are not
reasonably likely to have a Company Material Adverse Effect.
SECTION 3.11. TAXES
(a) Except as set forth in Section 3.11(a) of the Company Disclosure Schedule,
the Company and the Subsidiaries have timely filed (or caused to be timely
filed) all material Tax Returns required to be filed by them and have paid
and discharged all material Taxes required to be paid or discharged
(whether or not shown on such Tax Returns). All such Tax Returns are true,
correct and complete in all material respects. Except as set forth in
Section 3.11(a) of the Company Disclosure Schedule, neither the Company nor
any Subsidiary has granted any waiver of any statute of limitations with
respect to, or any extension of a period for the assessment of, any Tax.
All amounts of material Taxes required to be withheld by or with respect to
the Company or any Subsidiary have been timely withheld and remitted to the
applicable Governmental Authority. The accruals and reserves for Taxes
reflected in the 2004 Balance Sheet are adequate to satisfy all material
Taxes accruable through such date (including interest and penalties, if
any, thereon) in accordance with GAAP. Neither the Company nor any
Subsidiary is a party to any indemnification, allocation or sharing
agreement with respect to Taxes that could give rise to a payment or
indemnification obligation (other than agreements among the Company and its
Subsidiaries and other than customary Tax indemnifications contained in
credit or other commercial agreements the primary purpose of which does not
relate to Taxes).
(b) Except as set forth in Section 3.11(b) of the Company Disclosure Schedule,
there are no pending or, to the Knowledge of the Company, threatened in
16
writing, audits, examinations, investigations or other proceedings in
respect of any Tax matter of the Company or any Subsidiary.
(c) There are no Tax liens upon any property or assets of the Company or any of
the Subsidiaries except liens for current Taxes not yet due and payable.
SECTION 3.12. MATERIAL CONTRACTS.
(a) Subsections (i) through (v) of Section 3.12(a) of the Company Disclosure
Schedule list the following types of contracts and agreements, whether
written or oral, to which the Company or any Subsidiary is a party (such
contracts and agreements as are required to be set forth in Section 3.12(a)
of the Company Disclosure Schedule being the "MATERIAL CONTRACTS"):
(i) each "material contract" (as such term is defined in Item 601 (b)(10)
of Regulation S-B of the SEC) with respect to the Company and its
Subsidiaries;
(ii) all contracts and agreements relating to issuances of securities of
the Company or any Subsidiary (and all letters of intent, term sheets
and draft agreements relating to any such pending transactions);
(iii) all contracts and agreements evidencing indebtedness in an amount in
excess of $25,000;
(iv) all Lease Documents; and
(v) all other contracts and agreements in an amount in excess of $25,000,
whether or not made in the ordinary course of business, which are
material to the Company, any Subsidiary or the conduct of its and
their respective businesses, or the absence of which would,
individually or in the aggregate, have a Company Material Adverse
Effect.
(b) (i) Each Material Contract is a legal, valid and binding agreement of the
Company or the applicable Subsidiary, as the case may be, and, to the
Company's knowledge, of the other party(ies) thereto; and
(ii) except as set forth in Section 3.12(b) of the Company Disclosure
Schedule, (A) neither the execution of this Agreement nor the
consummation of any Transaction shall constitute a default under, give
rise to cancellation rights under, or otherwise adversely affect any
of the rights of the Company or any Subsidiary under any Material
Contract, and (B) neither the Company nor any of its Subsidiaries is
in material breach of, or default under, any Material Contract to
which it is a party..
The Company has furnished or made available to Parent true and complete copies
of all Material Contracts, including any amendments thereto.
17
SECTION 3.13. ENVIRONMENTAL MATTERS
Except as set forth in Section 3.13 of the Company Disclosure Schedule, the
Company has not received any notice, demand, letter, claim or request for
information relating to the Company property alleging violation of or liability
under any Environmental Law and there are no proceedings, actions, orders,
decrees, injunctions of other claims, or to the knowledge of the Company, any
threatened actions or claims, relating to or otherwise alleging liability under
any Environmental Law.
SECTION 3.14. LABOR AND EMPLOYMENT MATTERS
Except as disclosed in Section 3.14 of the Company Disclosure Schedule, (i)
neither the Company nor any of its Subsidiaries has entered into, is a party to
or is bound by any express or implied collective bargaining agreements or other
agreement, contract, commitment, arrangement or understanding with any labor
union or labor organization, and (ii) no union organization campaign is pending,
or to the Knowledge of the Company has been threatened with respect to the
employees of the Company or any of its Subsidiaries.
SECTION 3.15. COMPLIANCE WITH LAWS; PERMITS
The Company and its Subsidiaries are in compliance with the Federal Food, Drug,
and Cosmetic Act as it pertains to the importation, manufacture, processing,
marketing and distribution of ingredients sold as dietary supplement, cosmetic
or drug ingredients and all other applicable laws, rules, regulations, codes,
ordinances, orders, policies and guidelines of all Governmental Authorities
except for any failures to so comply as would not reasonably be expected to have
a Company Material Adverse Effect.
SECTION 3.16. EPHEDRA
Except as disclosed in Section 3.16 of the Company Disclosure Schedule, none of
the Company or any of its Subsidiaries has, since January 1, 2000, produced,
marketed, distributed or sold any product containing any substance derived from
the plant Ephedra including ephedra, ma ▇▇▇▇▇ and ephedrine (the "Ephedra
Products"). Section 3.16 of the Company Disclosure Schedule sets forth the
following information relating to the Ephedra Products since January 1, 2000:
(i) revenues derived by the Company and its Subsidiaries from the Ephedra
Products, and (ii) the names of the customers to whom the Ephedra Products were
sold.
SECTION 3.17. SCHEDULE 14D-9.
The Schedule 14D-9 will not, when it is filed with the SEC or is first
published, sent or given to the stockholders of the Company, as the case may be,
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 the light of the circumstances under which they were made, not misleading.
Notwithstanding the foregoing, the Company makes no representation or warranty
with respect to any information supplied in writing by Parent, Purchaser or any
of Parent's or Purchaser's Representatives for inclusion in the foregoing
documents. The Schedule 14D-9 shall comply in all material respects as to form
with the requirements of the Exchange Act and the rules and regulations
promulgated thereunder.
18
SECTION 3.18. OPINION OF FINANCIAL ADVISOR.
The Company has received the written opinion (the "FAIRNESS OPINION") of ▇▇▇▇▇
▇▇▇▇▇▇▇▇, Inc., dated the date of this Agreement, to the effect that, as of the
date of this Agreement, the Merger Consideration is fair, from a financial point
of view, to the Company's stockholders, a copy of which opinion will be
delivered to Parent concurrent with the execution and delivery of this Agreement
by the Company.
SECTION 3.19. BROKERS.
No broker, finder or investment banker (other than ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Inc.) is
entitled to any brokerage, finder's or other fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of the
Company. The Company has heretofore furnished to Parent a complete and correct
copy of all agreements between the Company and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Inc., pursuant to
which such firm would be entitled to any payment relating to the Transactions.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser hereby, jointly and severally, represent and warrant to the
Company that:
SECTION 4.01. CORPORATE ORGANIZATION.
Parent is a societe anonyme duly organized, validly existing and in good
standing under the laws of the French Republic. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Each of Parent and Purchaser has the requisite corporate power and
authority and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted.
SECTION 4.02. AUTHORITY RELATIVE TO THE TRANSACTIONS.
Each of Parent and Purchaser has all necessary corporate power and authority to
execute and deliver this Agreement, to perform its respective obligations
hereunder and to consummate the Transactions. The execution and delivery by
Parent and Purchaser of this Agreement and the consummation by Parent and
Purchaser of the Transactions have been duly and validly authorized by all
necessary corporate action, and no other corporate proceedings on the part of
Parent or Purchaser are necessary to authorize this Agreement or to consummate
the Transactions (other than, with respect to the Merger, the filing and
recordation of appropriate merger documents as required by the DGCL). This
Agreement has been duly and validly executed and delivered by Parent and
Purchaser and, assuming due authorization, execution and delivery by the
Company, constitutes the legal, valid and binding obligation of each of Parent
and Purchaser, enforceable against each of Parent and Purchaser in accordance
with its terms, subject to the effect of any applicable bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting creditors' rights generally
and subject to the effect of general principles of equity (regardless of whether
considered in a proceeding at law or in equity).
19
SECTION 4.03. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
The execution and delivery by Parent and Purchaser of this Agreement do not, and
the performance by Parent and Purchaser of this Agreement and the consummation
of the Transactions by Parent and Purchaser will not:
(a) violate the Certificate of Incorporation or By-laws of Purchaser or the
organizational documents of Parent;
(b) violate any Law applicable to Parent or Purchaser or by which any property
or asset of either of them is bound or affected; or
(c) result in any breach of, or constitute a default (or an event which, with
notice or lapse of time or both, would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation
of, or result in the creation of a lien or other encumbrance on any
property or asset of Parent or Purchaser pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise
or other instrument or obligation to which Parent or Purchaser is a party
or by which Parent or Purchaser or any property or asset of either of them
is bound or affected, except for any such conflicts, violations, breaches,
defaults or other occurrences which would not, individually or in the
aggregate, have a Parent Material Adverse Effect.
SECTION 4.04. FINANCING.
Parent has, or has commitments for, sufficient funds to permit Parent and
Purchaser to consummate all the Transactions, including, without limitation,
acquiring all the outstanding Shares in the Offer and the Merger.
SECTION 4.05. OFFER DOCUMENTS; PROXY STATEMENT.
The Offer Documents shall not, at the time the Offer Documents are filed with
the SEC or are first published, sent or given to stockholders of the Company, as
the case may be, 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 made therein, in the light of the circumstances under which
they were made, not misleading. The information supplied by Parent for inclusion
in the Proxy Statement or the information statement filed under Section 14(f) of
the Exchange Act and Rule 14f-1 thereunder (the "Information Statement") shall
not, at the date the Proxy Statement or the Information Statement (or any
amendment or supplement thereto) is first mailed to stockholders of the Company,
at the time of the Stockholders' Meeting or at the Effective Time, contain any
untrue statement of a material fact, or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not false or misleading,
or necessary to correct any statement in any earlier communication with respect
to the solicitation of proxies for the Stockholders' Meeting which shall have
become false or misleading. Notwithstanding the foregoing, Parent and Purchaser
make no representation or warranty with respect to any information supplied by
the Company or any of its Representatives for inclusion in any of the foregoing
documents or the Offer Documents. The Offer Documents shall comply in all
20
material respects as to form with the requirements of the Exchange Act and the
rules and regulations promulgated thereunder.
SECTION 4.06. BROKERS.
No broker, finder or investment banker (other than ▇▇▇▇▇▇▇▇ Capital Advisors LLC
and Canec International Ltd.) is entitled to any brokerage, finder's or other
fee or commission in connection with the Transactions based upon arrangements
made by or on behalf of Parent or Purchaser.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER.
The Company agrees that, between the date of this Agreement and the Effective
Time, except as expressly contemplated by any other provision of this Agreement
or as set forth in Section 5.01 of the Company Disclosure Schedule, unless
Parent shall otherwise consent in writing:
(a) the businesses of the Company and its Subsidiaries shall be conducted only
in, and the Company and its Subsidiaries shall not take any action except
in, the ordinary course of business and in a manner consistent with past
practice; and
(b) the Company shall use commercially reasonable efforts to preserve
substantially intact the business organization of the Company and the
Subsidiaries, to keep available the services of the current officers,
employees and consultants of the Company and the Subsidiaries and to
preserve the current relationships of the Company and the Subsidiaries with
customers, suppliers and other Persons with which the Company or any
Subsidiary has significant business relations.
Except as expressly contemplated by any other provision of this Agreement or as
set forth in Section 5.01 of the Company Disclosure Schedule, neither the
Company nor any Subsidiary shall, between the date of this Agreement and the
Effective Time, directly or indirectly, do, or propose to do, any of the
following without the prior written consent of Parent:
(a) amend or otherwise change its Certificate of Incorporation or By-laws or
equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant or encumber, or authorize such
issuance, sale, pledge, disposition, grant, or encumbrance of:
(i) any shares of any class of capital stock of the Company or any
Subsidiary, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of such capital stock, or any
other ownership interest (including, without limitation, any phantom
interest), of the Company or any Subsidiary (except for the issuance
of Shares issuable pursuant to employee stock options outstanding on
the date of this Agreement and granted under Company Stock Option
Plans in effect on the date of this Agreement); or
21
(ii) any assets of the Company or any Subsidiary, except in the ordinary
course of business and in a manner consistent with past practice;
(c) declare, set aside, make or pay any dividend or other distribution, payable
in cash, stock, property or otherwise, with respect to any of its capital
stock;
(d) reclassify, combine, split, subdivide or redeem, or purchase or otherwise
acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire (including, without limitation, by merger, consolidation, or
acquisition of stock or assets or any other business combination) any
corporation, partnership, other business organization or any division
thereof or any significant amount of assets;
(ii) issue any debt securities or assume, guarantee or endorse, or
otherwise become responsible for, the obligations of any Person, or
make any loans or advances; or
(iii) enter into or amend any contract or agreement with respect to any
matter set forth in this Section 5.01(e), other than in the ordinary
course of business and consistent with past practice;
(f) (i) hire any additional employees other than in the ordinary course of
business, except (A) to fill vacancies arising after the date of this
Agreement; (B) to hire non-executive employees for the Company's
Beijing office; or (C) to meet increased production demand.
(ii) make any offers to any employee of an employment position other than
the employment position he or she currently holds, except for offers
of an employment position made in the ordinary course of business and
consistent with past practice in connection with the promotion or
demotion of any employee of the Company or any of its Subsidiaries who
is not a director or officer of the Company;
(iii) increase the compensation payable or to become payable or the
benefits provided to its directors, officers or employees, except for
increases in the ordinary course of business and consistent with past
practice in salaries or wages of employees of the Company or any of
its Subsidiaries who are not directors or officers of the Company;
(iv) except as set forth in Section 5.01 of the Company Disclosure
Schedule, grant any loan, advance, extensions of credit to current or
former employees or forgiveness or deferral of any loans due from any
employee, other than any loan, advance or extension of credit to a
current employee in circumstances and in amounts consistent with past
practice, in any event not to exceed $10,000 for any one employee and
$25,000 in the aggregate;
(v) establish, adopt, enter into, terminate or amend any Plan or
establish, adopt or enter into any plan, agreement, program, policy,
trust, fund or other arrangement that would be a Plan if it were in
22
existence as of the date of this Agreement for the benefit of any
director, officer or employee except as required by this Agreement or
the Transactions contemplated hereby, or as required by ERISA, the
Code or to otherwise comply with applicable Law;
(vi) grant any equity or equity based awards (provided that equity awards
may be transferred in accordance with the applicable plan document or
agreement);
(g) enter into, amend or modify in any material respect, or consent to the
termination of, any Material Contract, or amend, waive or modify in any
material respect, or consent to the termination of, the Company's or any
Subsidiary's rights thereunder other than in the ordinary course of
business consistent with past practice;
(h) fail to make in a timely manner any material filings with the SEC required
under the Securities Act or the Exchange Act or the rules and regulations
promulgated thereunder;
(i) change any Tax election, annual tax accounting period, or method of tax
accounting, file amended Tax Returns or claims for Tax refunds by the
Company or its Subsidiaries, enter into a closing agreement relating to
Taxes or any settlement of any Tax claim, audit or assessment;
(j) make any changes in its accounting methods, principles or practices
currently in effect, except as required by changes in GAAP or by Regulation
S-X under the Exchange Act, in each case as concurred in by its independent
public accountants;
(k) adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of
the Company or any of its Subsidiaries (other than the Transactions);
(l) except as required by applicable Law or GAAP, revalue in any material
respect any of its assets, including writing down the value of inventory in
any material manner, or writing-off notices or accounts receivable in any
material manner; or
(m) authorize, agree or commit to do any of the foregoing.
SECTION 5.02. ADVICE OF CHANGES; GOVERNMENT FILINGS.
Each party shall promptly advise the other orally and in writing of (a) any
representation or warranty made by it in this Agreement (i) to the extent
qualified by Material Adverse Effect becoming untrue or inaccurate and (ii) to
the extent not qualified by Material Adverse Effect becoming untrue or
inaccurate in any material respect except that this clause (ii) shall be deemed
satisfied so long as such representations or warranties being untrue or
inaccurate, taken together, do not have a Material Adverse Effect on the Company
or Parent, as the case may be, or (b) the failure by it to comply with or
satisfy in any material respect any covenant, condition or agreement required to
be complied with or satisfied by it under this Agreement. However, no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement. The Company shall file all reports required to be filed by
it with the SEC (and all other Governmental Authorities) between the date of
23
this Agreement and the Effective Time including, the Schedule 14D-9 and the
Information Statement or Proxy Statement, as the case may be, and shall (to the
extent permitted by Law or any applicable confidentiality agreement) deliver to
Parent copies of all such reports promptly after the same are filed. Subject to
applicable Laws relating to the exchange of information, each of the Company and
Parent shall have the right to review in advance, and to the extent practicable
each will consult with the other, with respect to all the information relating
to the other party and each of their respective Subsidiaries, which appears in
any filings, announcements or publications made with, or written materials
submitted to, any third party or any Governmental Authority in connection with
the transactions contemplated by this Agreement. In exercising the foregoing
right, each of the parties hereto agrees to act reasonably and as promptly as
practicable. Each party agrees that, to the extent practicable, it will consult
with the other party with respect to the obtaining of all permits, consents,
approvals and authorizations of all third parties and Governmental Authorities
necessary or advisable to consummate the transactions contemplated by this
Agreement and each party will keep the other party apprised of the status of
matters relating to completion of the transactions contemplated hereby.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. STOCKHOLDERS' MEETING.
(a) If required by applicable Law in order to consummate the Merger, the
Company, acting through the Company Board, shall:
(i) in accordance with applicable Law and the Company's Certificate of
Incorporation and By-laws, duly call, give notice of, convene and hold
an annual or special meeting of its stockholders as promptly as
practicable following consummation of the Offer for the purpose of
considering and taking action on this Agreement and the Merger (the
"STOCKHOLDERS' MEETING"); and
(ii) (A) include in the Proxy Statement, and not subsequently withdraw or
modify in any manner adverse to Purchaser or Parent, the
unanimous recommendation of the Company Board (except for the
abstention of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and any other Company Board members
designated by Parent and Purchaser in accordance with the terms
hereof) that the stockholders of the Company approve and adopt
this Agreement and the Merger; and
(B) use its best efforts to obtain such approval and adoption. At the
Stockholders' Meeting, Parent and Purchaser shall cause all
Shares then beneficially owned by them and their affiliates to be
voted in favor of the approval and adoption of this Agreement and
the Merger.
(b) Notwithstanding the foregoing, in the event that Purchaser shall acquire at
least 90% of the then outstanding Shares, the parties shall take all
necessary and appropriate action to cause the Merger to become effective,
in accordance with Section 253 of the DGCL, as promptly as reasonably
24
practicable after such acquisition, without a meeting of the stockholders
of the Company.
SECTION 6.02. PROXY STATEMENT.
If approval of the Company's stockholders is required by applicable Law to
consummate the Merger, promptly following consummation of the Offer, the Company
shall file a proxy statement or information statement under Section 14 of the
Exchange Act (the "PROXY STATEMENT") with the SEC, and shall use its best
efforts to have the Proxy Statement cleared by the SEC as promptly as
practicable. Parent, Purchaser and the Company shall cooperate with each other
in the preparation of the Proxy Statement and in responding to any comments of
the SEC with respect to the Proxy Statement or any requests by the SEC for any
amendment or supplement thereto or for additional information. Each of
Purchaser, Parent and the Company and its respective counsel shall have a
reasonable opportunity to review and comment on:
(a) the Proxy Statement, including all amendments and supplements thereto,
prior to such documents being filed with the SEC or disseminated to holders
of Shares; and
(b) all responses to requests for additional information and replies to
comments from the SEC or the staff thereof prior to their being filed with,
or sent to, the SEC. Each of the Company, Parent and Purchaser agrees to
use its reasonable best efforts, after consultation with the other parties
hereto, to respond promptly to all such comments of and requests by the SEC
and to cause the Proxy Statement and all required amendments and
supplements thereto to be mailed to the holders of Shares entitled to vote
at the Stockholders' Meeting at the earliest practicable time.
SECTION 6.03. COMPANY BOARD REPRESENTATION; SECTION 14(F) OF THE EXCHANGE ACT.
(a) Promptly upon the purchase by Purchaser of Shares pursuant to the Offer and
from time to time thereafter. Purchaser shall be entitled to designate up
to such number of directors, rounded up to the next whole number, on the
Company Board as shall give Purchaser representation on the Company Board
equal to the product of the total number of directors on the Company Board
(giving effect to the directors elected pursuant to this sentence)
multiplied by the percentage that the aggregate number of Shares
beneficially owned by Purchaser or any affiliate of Purchaser following
such purchase bears to the total number of Shares then outstanding, and the
Company shall, at such time, promptly take all actions necessary to cause
Purchaser's designees to be elected or appointed as directors of the
Company, including increasing the size of the Company Board or securing the
resignations of incumbent directors, or both.
(b) The Company shall promptly take all actions required pursuant to Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder to fulfill
its obligations under this Section 6.03, and shall include in the Schedule
14D-9 such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-l to fulfill such
obligations. Parent or Purchaser shall supply to the Company, and be solely
responsible for, any information with respect to either of them and their
nominees, officers, directors and affiliates required by such Section 14(f)
and Rule 14f-1.
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(c) Following the election of designees of Purchaser pursuant to this Section
6.03, prior to the Effective Time, any:
(i) amendment of this Agreement or the Certificate of Incorporation or
By-laws of the Company or any Subsidiary;
(ii) termination of this Agreement by the Company;
(iii) extension by the Company of the time for the performance of any of
the obligations or other acts of Parent or Purchaser;
(iv) recommendation to the Company stockholders or any modification or
withdrawal of any such recommendation in connection with this
Agreement or the Transactions; or
(v) waiver of any of the Company's rights hereunder,
in each case, shall require the concurrence of a majority of the directors of
the Company then in office who neither were designated by Purchaser nor are
employees of the Company or any Subsidiary. If the independent directors of the
Company Board deem it advisable in connection with the Transactions to retain
outside legal counsel, such directors shall be entitled to retain such counsel
at the expense of the Company.
SECTION 6.04. ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) Subject to applicable Law and confidentiality agreements, including that
certain confidentiality agreement dated February 15, 2005 between Naturex,
Inc., a Subsidiary of Parent, and the Company (the "CONFIDENTIALITY
AGREEMENT"), from the date of this Agreement until the Effective Time, the
Company shall (and shall cause its Subsidiaries to):
(i) provide to Parent and Parent's Representatives access, during normal
business hours and upon reasonable notice by Parent, to the officers,
employees, agents, properties, offices and other facilities of the
Company and its Subsidiaries and to the books and records thereof;
(ii) furnish to Parent all monthly and quarterly statements of revenue and
expense and earnings as are regularly and customarily provided to
senior management of the Company; and
(iii) furnish to Parent such information concerning the business,
properties, contracts, assets, liabilities, personnel and other
aspects of the Company as Parent or its Representatives may reasonably
request.
(b) Each party shall, and shall cause its affiliates and Representatives to:
(i) comply with the Confidentiality Agreement as if a party thereto; and
26
(ii) hold in strict confidence all nonpublic documents and information
furnished or made available by one party to the other(s) and their
respective affiliates and Representatives.
SECTION 6.05. NO SOLICITATION OF TRANSACTIONS.
(a) The Company shall not, and the Company shall cause its Subsidiaries and its
and their respective Representatives not to, directly or indirectly:
(i) Solicit, knowingly encourage or initiate any inquiries for the making
of any proposal or offer (including any proposal or offer to its
stockholders) that constitutes, or could reasonably be expected to
lead to, any Competing Transaction (as defined below) (each such
proposal or offer an "ACQUISITION PROPOSAL");
(ii) participate in discussions or negotiations with, or disclose or
provide any non-public information relating to the Company or its
Subsidiaries to, or afford access to any of the properties, books or
records of the Company or its Subsidiaries to, any Person with respect
to an Acquisition Proposal;
(iii) agree to, approve, endorse or recommend any Competing Transaction or
enter into any letter of intent or other contract, agreement or
commitment providing for or otherwise relating to any Competing
Transaction;
(iv) grant any waiver or release under any standstill or similar agreement
by any Person who has made an Acquisition Proposal; or
(v) authorize or direct any Representative of the Company or any of its
Subsidiaries to take any such action.
The Company shall, and shall cause its Subsidiaries and instruct its and
their Representatives to, immediately cease and cause to be terminated all
existing discussions or negotiations with any Person conducted heretofore
with respect to any proposal relating to a Competing Transaction.
(b) Notwithstanding anything to the contrary in this Section 6.05, before the
time of acceptance for payment of Shares pursuant to the Offer, the Company
Board may furnish information to, and enter into discussions with, a Person
who has made a bona fide, written Acquisition Proposal, but only if
(i) such Acquisition Proposal was made after the date of this Agreement
(it being understood that such an Acquisition Proposal made after the
date of this Agreement by a Person who made an Acquisition Proposal
regarding a Competing Transaction prior to the date of this Agreement
shall be considered a new Acquisition Proposal made after the date of
this Agreement) and none of the Company, its Subsidiaries and their
Representatives has violated any of the restrictions set forth in this
Section 6.05;
27
(ii) the Company Board has determined in good faith after consultation with
outside legal counsel (who may be the Company's regularly engaged
outside legal counsel) and a financial advisor that such Acquisition
Proposal constitutes or could reasonably be expected to lead to a
Superior Proposal (as defined below) and that, in light of such
proposal, the failure to furnish information or enter into discussions
could reasonably be inconsistent with its fiduciary duties to the
Company's stockholders under applicable law; and
(iii) such person shall have executed a confidentiality agreement on terms
no less favorable to the Company than those contained in the
Confidentiality Agreement, except that such confidentiality agreement
may permit such person to share evaluation material with its financing
sources.
(c) In addition to the obligations of the Company set forth in Sections 6.05(a)
and (b), the Company shall promptly as practicable (i) advise Parent and
Purchaser, telephonically and in writing, of the Company's receipt of any
Acquisition Proposal and (ii) provide Parent and Purchaser, in writing,
with the terms and conditions of any such Acquisition Proposal, or a copy
of such Acquisition Proposal, inquiry or request and the identity of the
Person making the same. The Company shall inform Parent within 48 hours of
any change to the material terms of any such Acquisition Proposal. Within
24 hours upon such determination by the Board of Directors of the Company
that an Acquisition Proposal constitutes a Superior Proposal, the Company
shall deliver to Parent and Purchaser, a written notice (a "NOTICE OF
SUPERIOR PROPOSAL") advising them of such determination, specifying the
terms and conditions of such Superior Proposal and the identity of the
Person making such Superior Proposal, and providing Parent and Purchaser
with a copy of the Superior Proposal.
(d) If the Company Board determines, in its good faith judgment prior to the
time of the acceptance for payment of Shares pursuant to the Offer and
after consulting with outside legal counsel (who may be the Company's
regularly engaged outside legal counsel), that the failure to make a change
in the Company Tender Recommendation by the Company Board or any committee
thereof in a manner adverse to Parent or Purchaser, (a "CHANGE IN THE
COMPANY RECOMMENDATION") could reasonably be inconsistent with its
fiduciary duties to the Company's stockholders under applicable Law, then,
notwithstanding anything in Section 6.05(a) to the contrary, the Company
Board may make a Change in the Company Recommendation and/or recommend a
Superior Proposal, and the Company may enter into any agreement otherwise
prohibited by Section 6.05(a) in connection with the termination of this
Agreement, in accordance with the terms of this Agreement; provided,
however, that no such Change in the Company Recommendation or
recommendation of a Superior Proposal may be made until after the third
Business Day following Parent's receipt of written notice from the Company
(an "ADVERSE RECOMMENDATION NOTICE") (i) advising Parent that the Board of
Directors has received a Superior Proposal, (ii) advising that the Board of
Directors intends to make such Change in the Company Recommendation or
recommendation of a Superior Proposal, and (iii) containing all information
required by Section 6.05(c), together with copies of any written offer or
proposal in respect of such Superior Proposal (it being understood and
agreed that any material amendment to the financial terms or other material
terms of such Superior Proposal shall require a new Adverse Recommendation
28
Notice and a new three Business Day period). Any disclosure that the
Company Board may be compelled to make with respect to an Acquisition
Proposal or otherwise in order to comply with its fiduciary duties under
applicable Law or Rule 14d-9 or 14e-2 under the Exchange Act will not
constitute a violation of this Agreement.
(e) A "COMPETING TRANSACTION" means any of the following (other than the
Transactions):
(i) any merger, consolidation, share exchange for 35% of any class of
equity securities of the Company, business combination,
recapitalization, liquidation, dissolution or other similar
transaction (including any so-called merger-of-equals and whether or
not the Company is the entity surviving any such transaction)
involving the Company or any Subsidiary;
(ii) any sale, lease, exchange, transfer or other disposition of all or
substantially all of the assets of the Company or of any Subsidiary;
(iii) any sale, exchange, transfer or other disposition in which the
Company or any Subsidiary participates and which results in any person
beneficially owning more than 35% of any class of equity securities of
the Company or of any Subsidiary; or
(iv) any transaction or series of transactions, including a tender offer or
exchange offer, that, if consummated, would result in any person
beneficially owning more than 35% of any outstanding class of equity
securities of the Company.
(f) A "SUPERIOR PROPOSAL" means a written offer (in its most recently amended
or modified terms, if amended or modified) made by a third party to enter
into a Competing Transaction, the effect of which would be that the
stockholders of the Company would beneficially own less than 50% of the
capital stock of the combined or ongoing entity and which the Company Board
determines, in its good faith judgment (after consulting with its financial
advisor) and taking into account all relevant legal, financial, regulatory
and other aspects of the offer that it deems relevant, to be more favorable
to Company stockholders than the Offer and Merger.
SECTION 6.06. EMPLOYEE BENEFITS MATTERS.
(a) From and after the Effective Time and until December 31 of the calendar
year in which the Effective Time occurs, employees of the Company and its
Subsidiaries shall be offered participation in employee benefit plans,
programs, policies and arrangements that are no less favorable in the
aggregate to those provided under the applicable employee benefit plans (as
defined in Section 3(3) of ERISA (excluding plans exempt under Section
201(2) of ERISA)), programs, policies and arrangements of the Company and
its Subsidiaries in effect at the Effective Time (collectively, "CURRENT
PLANS"). However, nothing contained in this Section 6.06(a) shall:
29
(i) obligate or commit Parent or its Subsidiaries to continue any
particular Current Plan after the Effective Time or to maintain in
effect any particular Current Plan or any level or type of benefits;
(ii) obligate or commit Parent or its Subsidiaries to provide any employee
of the Company or any Subsidiary with any equity compensation pursuant
to any equity compensation plans, programs or arrangements sponsored
or provided by Parent or any of its Subsidiaries or affiliates for the
benefit of its employees; or
(iii) prohibit Parent or its Subsidiaries from making any changes to any
Current Plan.
(b) Parent will cause the Company and the Subsidiaries to credit each employee
of the Company and the Subsidiaries as of the Effective Time with such
number of unused vacation days and other paid time off accrued by each
employee with the Company and the Subsidiaries prior to the Effective Time
in accordance with the Company's personnel policies applicable to such
employees on the date hereof, copies of which have been made available to
Parent. However, Parent may, in its sole discretion and to the extent
permitted by applicable law, require that such vacation and other paid time
off be taken by the employee prior to June 30, 2006.
(c) Employees of the Company and its Subsidiaries shall receive credit for
purposes of eligibility to participate and vesting (but not for benefit
accruals under any defined benefit pension plan) under any employee benefit
plan, program or arrangement established or maintained by the Surviving
Corporation or any of its U.S. affiliates for service accrued prior to the
Effective Time with the Company or any Subsidiary to the extent such
employee may be eligible to participate on or after the Effective Time to
the same extent recognized by the Company or any Subsidiary under
comparable plans immediately prior to the Effective Time. However, such
crediting of service shall not operate to duplicate any benefit or the
funding of any such benefit.
(d) With respect to the welfare benefit plans, programs and arrangements
maintained, sponsored or contributed to by Parent or its Subsidiaries
("PARENT WELFARE BENEFIT PLANS") in which an employee of the Company or the
Subsidiaries may be eligible to participate on or after the Effective Time,
Parent shall use commercially reasonable efforts to cause its insurance
carrier to waive any limitations on benefits relating to pre-existing
conditions (if any) with respect to participation and coverage requirements
applicable to employees of the Company and its Subsidiaries under Parent
Welfare Benefit Plans to the same extent such limitations are waived under
any comparable U.S. plan of Parent or its Subsidiaries and shall, to the
extent permitted under the applicable plans, recognize for purposes of
annual deductible and out-of-pocket limits under its medical and dental
plans, deductible and out-of-pocket expenses paid by employees of the
Company and its Subsidiaries in the calendar year in which the Effective
Time occurs.
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SECTION 6.07. DIRECTORS' AND OFFICERS' INDEMNIFICATION; INSURANCE.
(a) The By-laws of the Surviving Corporation, which shall be the By-laws of the
Company, shall not be amended, repealed or otherwise modified for a period
of six years from the Effective Time in any manner that would affect
adversely the rights thereunder of individuals who, at or prior to the
Effective Time, were directors, officers, employees, fiduciaries or agents
of the Company (collectively, "INDEMNIFIED DIRECTORS/OFFICERS"), unless
such modification shall be required by law. All rights to indemnification,
advancement of expenses and exculpation from liabilities for acts or
omissions occurring at or prior to the Effective Time existing in favor of
the Indemnified Directors/Officers as provided in any written
indemnification contract or agreement with the Company or any Subsidiary in
effect on the date of this Agreement shall be assumed by the Surviving
Corporation as of the Effective Time and shall continue in full force and
effect in accordance with their terms and shall not be amended, repealed,
terminated or otherwise modified (except as required by Law) for a period
of six years after the Effective Time in any manner that would adversely
affect the rights thereunder of the Indemnified Directors/Officers. Parent
hereby unconditionally guarantees the obligations of the Surviving
Corporation under this Section 6.07(a).
(b) The Company shall purchase and maintain in effect for a period of six (6)
years after the Effective Time an insurance policy covering Company
directors' and officers' liability for actions and omissions arising before
the Effective Time that provides $2 million of coverage on terms reasonably
acceptable to the directors of the Company. However, the cost thereof to
the Company shall not exceed $200,000, and any amount in excess thereof may
be paid by the officers and directors pro rata in their discretion.
(c) If Parent or the Surviving Corporation or any of their respective
successors or assigns:
(i) consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or
merger, or
(ii) transfers all or substantially all of its properties and assets to any
Person, then, and in each such case, proper provision shall be made so
that the successors and assigns of Parent or the Surviving
Corporation, as the case may be, shall assume the obligations set
forth in this Section 6.07.
SECTION 6.08. NOTIFICATION OF CERTAIN MATTERS.
The Company shall give prompt notice to Parent, and Parent shall give prompt
notice to the Company, of:
(a) the occurrence, or non-occurrence, of any event the occurrence, or
non-occurrence, of which could reasonably be expected to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect; and
(b) any failure of the Company, Parent or Purchaser, as the case may be, to
comply in any material respect with or satisfy in any material respect any
covenant or agreement to be complied with or satisfied by it hereunder.
However, the delivery of any notice pursuant to this Section 6.08 shall not
31
limit or otherwise affect the remedies available hereunder to the party
giving or receiving such notice.
SECTION 6.09. FURTHER ACTION; REASONABLE BEST EFFORTS.
Upon the terms and subject to the conditions of this Agreement, each of the
parties hereto shall:
(a) make promptly its respective filings, and thereafter make any other
required submissions, under any applicable foreign, federal or state
antitrust, competition or fair trade Laws with respect to the Transactions;
and
(b) use its reasonable best efforts to take, or cause to be taken, all
appropriate action, and to do, or cause to be done, all things necessary,
proper or advisable under applicable Laws or otherwise to consummate and
make effective the Transactions, including, without limitation, using its
reasonable best efforts to obtain all Permits, consents, approvals,
authorizations, qualifications and orders of Governmental Authorities and
parties to contracts with the Company and the Subsidiaries as are necessary
for the consummation of the Transactions and to fulfill the conditions to
the Offer and the Merger. However, neither Purchaser nor Parent will be
required by this Section 6.09 to take any action, including entering into
any consent decree, hold separate orders or other arrangements, that:
(i) requires the divestiture of any assets of any of Purchaser, Parent,
the Company or any of their respective Subsidiaries;
(ii) limits Parent's freedom of action with respect to, or its ability to
retain, the Company and the Subsidiaries or any portion thereof or any
of Parent's or its Affiliates' other assets or businesses. In case, at
any time after the Effective Time, any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper
officers and directors of each party to this Agreement shall use their
reasonable best efforts to take all such action.
SECTION 6.10. SUBSEQUENT FINANCIAL STATEMENTS.
The Company shall, if practicable, provide Parent:
(a) its financial results for any period ending after the date of this
Agreement prior to making any such financial results publicly available;
and
(b) any report or document (other than reports under Section 16 of the Exchange
Act) to be filed with the SEC after the date of this Agreement prior to any
such filing, it being understood that, in either case, Parent shall have no
liability by reason of being provided with any such documents.
SECTION 6.11. PUBLIC ANNOUNCEMENTS.
The initial press release relating to this Agreement shall be a joint press
release the text of which has been agreed to by each of Parent and the Company.
Thereafter, unless otherwise required by applicable Law or the requirements of
32
The Nasdaq Stock Market, each of Parent and the Company shall use its reasonable
best efforts to consult with each other before issuing any press release or
otherwise making any public statements with respect to this Agreement, the
Offer, the Merger or any of the other Transactions.
SECTION 6.12. TAKEOVER STATUTE
If any "fair price," "moratorium," "control share acquisition," "interested
stockholder," "business combination" or other similar anti-takeover statute or
regulation (including, without limitation, the business combination provisions
of Section 203 of the DGCL) (each a "TAKEOVER STATUTE") shall become applicable
to the transactions contemplated hereby, the Company and the members of the
Board of Directors of the Company, subject to its fiduciary duties, shall grant
such approvals and take such actions as are reasonably necessary to the extent
practicable so that the transactions contemplated hereby may be consummated as
promptly as practicable on the terms contemplated hereby and otherwise act to
eliminate or minimize the effects of such Takeover Statute on the transactions
contemplated hereby.
SECTION 6.13. BEDMINSTER SERVICES
Bedminster Management Corp. shall continue to provide to the Company its
existing services for health and life insurance plan coverage until September 1,
2005.
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. CONDITIONS TO THE MERGER.
The obligations of the Company, Parent and Purchaser to consummate the Merger
shall be subject to the satisfaction or waiver (where permissible), at or prior
to the Effective Time, of the following conditions:
(a) If required, the Company shall have obtained the Company Stockholder
Approval in accordance with, and to the extent required by, the DGCL and
the Company's Certificate of Incorporation.
(b) No Governmental Authority shall have enacted, issued, promulgated, enforced
or entered any law, rule, regulation, judgment, decree, executive order or
award (an "ORDER") which is then in effect and has the effect of making the
Merger illegal or otherwise restricting, preventing or prohibiting
consummation of the Merger.
(c) Purchaser or its permitted assignee shall have purchased all Shares validly
tendered and not withdrawn pursuant to the Offer.
33
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. TERMINATION.
This Agreement may be terminated and the Offer and the Merger may be abandoned
at any time prior to the Effective Time by action duly taken or authorized by
the Board of Directors of the terminating party or parties, notwithstanding any
requisite approval and adoption of this Agreement by the stockholders of the
Company, as follows:
(a) if no Shares have been accepted for payment pursuant to the Offer, by
mutual written consent of Parent and the Company duly authorized by the
Boards of Directors of Parent and the Company;
(b) if no Shares have been accepted for payment pursuant to the Offer, by
Parent if a Company Triggering Event (as defined below) shall have
occurred;
(c) if no Shares have been accepted for payment pursuant to the Offer, by the
Company if the Company Board determines to accept a Superior Proposal;
(d) by Parent if due to a failure to satisfy any Offer Condition, including the
Minimum Condition, Purchaser shall have:
(i) terminated the Offer without having accepted any Shares for payment
thereunder; or
(ii) failed to accept Shares for payment pursuant to the Offer within 60
days following the commencement of the Offer,
unless such action or inaction under (i) or (ii) shall have been caused by
or resulted from the failure of Parent or Purchaser to perform, in any
material respect, any of their covenants or agreements contained in this
Agreement or the material breach by Parent or Purchaser of any of their
representations or warranties contained in this Agreement;
(e) by the Company, if Purchaser shall have:
(i) terminated the Offer without having accepted any Shares for payment
thereunder; or
(ii) failed to accept Shares for payment pursuant to the Offer within 60
days following the commencement of the Offer,
unless such action or inaction under (i) or (ii) shall have been caused by
or resulted from the failure of the Company to perform, in any material
respect, any of its covenants or agreements contained in this Agreement or
the material breach by the Company of any of its representations or
warranties contained in this Agreement; or
34
(f) if no Shares have been accepted for payment pursuant to the Offer, by
either Parent or the Company if the Effective Time shall not have occurred
on or before October 15, 2005; provided, however, that the right to
terminate this Agreement under this Section 8.01(f) shall not be available
to any party whose failure to fulfill any obligation under this Agreement
has been the cause of, or resulted in, the failure of the Effective Time to
occur on or before such date.
For purposes of this Agreement, a "COMPANY TRIGGERING EVENT" shall be deemed to
have occurred if:
(i) a Change in Company Recommendation shall have occurred or the Company
Board shall have resolved to make a Change in Company Recommendation;
(ii) the Company Board shall have recommended to the stockholders of the
Company a Competing Transaction or shall have publicly announced it
intends to do so or shall have entered into any letter of intent or
similar document or any agreement, contract or commitment accepting
any Competing Transaction;
(iii) the Company shall have failed to include in the Schedule 14D-9 the
recommendation of the Company Board in favor of holders of Shares
accepting the Offer and tendering their Shares in the Offer;
(iv) a tender offer or exchange offer for the outstanding shares of capital
stock of the Company is commenced (other than pursuant to the
Transactions), and the Company Board fails to recommend against
acceptance of such tender offer or exchange offer by its stockholders;
or
(v) the Company Board, upon request of Parent following receipt of a
proposal or offer for a Competing Transaction, fails to reaffirm the
approval or recommendation of the Offer, the Merger and this Agreement
within five Business Days after such request.
SECTION 8.02. EFFECT OF TERMINATION.
In the event of the termination of this Agreement pursuant to Section 8.01, this
Agreement shall forthwith become void, and there shall be no liability under
this Agreement on the part of any party hereto, except:
(a) as set forth in Section 8.03; and
(b) nothing herein shall relieve any party from liability for any willful
breach of any of its representations, warranties, covenants or agreements
set forth in this Agreement prior to such termination.
However, the terms of Section 6.04(b) shall survive any termination of this
Agreement.
35
SECTION 8.03. FEES AND EXPENSES.
(a) Except as set forth in this Section 8.03, all Expenses (as defined below)
incurred in connection with this Agreement, the Offer and the Merger shall
be paid by the party incurring such expenses, whether or not the Offer, the
Merger or any other transaction is consummated. "EXPENSES," as used in this
Agreement, shall include all reasonable out-of-pocket expenses (including,
without limitation, all reasonable fees and expenses of counsel,
accountants, auditors, investment bankers, experts and consultants to a
party hereto and its affiliates) incurred by a party or on its behalf in
connection with or related to the authorization, preparation, negotiation,
execution and performance of this Agreement, the preparation, printing,
filing and mailing of the Offer Documents, the Schedule 14D-9, the
Information Statement and the Proxy Statement, the solicitation of
stockholder tenders, the filing of any required notices and all other
matters related to consummation of the Offer, the Merger and the other
transactions contemplated by this Agreement.
(b) The Company agrees that:
(i) (A) if Parent shall terminate this Agreement pursuant to Section
8.01(b); or
(B) if the Company shall terminate this Agreement pursuant to Section
8.01(c); or
(C) Parent shall terminate the Agreement pursuant to Section 8.01(d);
and
(ii) within twelve months after such termination, the Company enters into
an agreement for a Competing Transaction or a Competing Transaction is
consummated;
then upon such termination and under the circumstances described in clause (ii)
of this Section 8.03(b), upon the execution of an agreement for, and the
consummation of, a Competing Transaction the Company shall pay to Parent a fee
of $750,000 (the "FEE"); provided that the Company shall not be liable for any
amount of Parent's Expenses. The Fee shall be payable by wire transfer of
immediately available funds. The Company acknowledges that the agreements
contained in this Section 8.03 are an integral part of the transactions
contemplated by this Agreement and that, without these agreements, Parent and
the Purchaser would not enter into this Agreement. Accordingly, if the Company
fails to promptly pay the amount due pursuant to this Section 8.03, and, in
order to obtain such payment, Parent or the Purchaser commences an action or
proceeding which results in a judgment against the Company for the Fee, the
Company shall pay to Parent and the Purchaser their reasonable costs and
expenses (including reasonable attorney's fees) incurred in connection with such
action or proceeding, together with interest per annum on the amount of the Fee
at the prime rate as announced in the Wall Street Journal from the date such
payment was required to be made to the date of payment.
SECTION 8.04. AMENDMENT.
Subject to Section 6.03(c), this Agreement may be amended by the parties hereto
by action taken by or on behalf of their respective Boards of Directors at any
time prior to the Effective Time. However, after the approval and adoption of
36
this Agreement and the Transactions by the stockholders of the Company, no
amendment may be made that would reduce the amount or change the type of
consideration into which each Share shall be converted upon consummation of the
Merger. This Agreement may not be amended except by an instrument in writing
signed by each of the parties hereto.
SECTION 8.05. WAIVER.
Subject to Section 6.03(c), at any time prior to the Effective Time, any party
hereto may:
(a) extend the time for the performance of any obligation or other act of any
other party hereto;
(b) waive any inaccuracy in the representations and warranties of any other
party contained herein or in any document delivered pursuant hereto; and
(c) waive compliance with any agreement of any other party or any condition to
its own obligations contained herein.
Any such extension or waiver shall be valid if set forth in an instrument in
writing signed by the party or parties to be bound thereby.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. NON-SURVIVAL OF REPRESENTATIONS. WARRANTIES AND AGREEMENTS.
The representations, warranties and agreements in this Agreement and in any
certificate delivered pursuant hereto shall terminate at the Effective Time or
upon the termination of this Agreement pursuant to Section 8.01, as the case may
be, except that the agreements set forth in Articles I and II and Section
6.04(b) and 6.07 and this Article IX shall survive the Effective Time.
SECTION 9.02. NOTICES.
All notices, requests, claims, demands and other communications hereunder shall
be in writing and shall be given (and shall be deemed to have been duly given
upon receipt) by delivery in person, by facsimile transmissions between the
hours of 9:00 A.M. and 5:00 P.M. in the recipient party's time zone, or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with this Section
9.02):
if to Parent or Purchaser:
Naturex, S.A.
Site D'Agroparc Montfavet, B.P. 1218
F-84911 Avignon Cedex
France
37
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Chief Executive Officer
Telephone No.: ▇▇▇ ▇ ▇▇ ▇▇ ▇▇ ▇▇
Facsimile No: ▇▇▇ ▇ ▇▇ ▇▇ ▇▇ ▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇ & Priest LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Company:
Pure World, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: : ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with a copy to:
▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Davies ▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 9.03. CERTAIN DEFINITIONS
(a) For purposes of this Agreement:
"AFFILIATE" of a specified Person means a Person who, directly or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, such specified Person.
"BENEFICIAL OWNER", with respect to any Shares, has the meaning ascribed to
such term in Rule 13d-3(a) under the Exchange Act.
"BUSINESS DAY" means any day on which the principal offices of the SEC in
Washington, D.C. are open to accept filings, or, in the case of determining a
date when any payment is due, any day on which banks are not required or
authorized to close in The City of New York.
38
"CODE" means the United States Internal Revenue Code of 1986, as amended.
"COMPANY MATERIAL ADVERSE EFFECT" means any event, circumstance, change or
effect that, individually or in the aggregate with all other events,
circumstances, changes and effects, is or is reasonably likely to be materially
adverse to (i) the business, financial condition, or results of operations of
the Company and the Subsidiaries taken as a whole or (ii) the ability of the
Company to consummate the transactions contemplated by this Agreement.
"CONTROL" (including the terms "CONTROLLED BY" and "UNDER COMMON CONTROL
WITH") means the possession, directly or indirectly, or as trustee or executor,
of the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities, as trustee or
executor, by contract or credit arrangement or otherwise.
"ENVIRONMENTAL LAW" means any Law relating to: (A) the protection,
investigation, remediation, or restoration of the environment or natural
resources, (B) the handling, use, storage, treatment, disposal, release or
threatened release of any hazardous substance, (C) noise, odor, pollution,
contamination, land use, any injury or threat of injury to persons or property,
or (D) the protection of the health and safety of employees or the public.
"FULLY-DILUTED BASIS" means, for determining a number of outstanding
shares, taking into account all issued and outstanding shares of Company Common
Stock and the number of shares that would be outstanding assuming the exercise,
conversion or exchange of all options, warrants, convertible or exchangeable
securities and similar rights to acquire shares and the issuance of all shares
of Company Common Stock that the Company is obligated to issue thereunder.
"GOVERNMENTAL AUTHORITY" means any national, federal, state, provincial,
county, municipal or local government, foreign or domestic, or the government of
any political subdivision of any of the foregoing.
"KNOWLEDGE OF THE COMPANY" and the "COMPANY'S KNOWLEDGE" and words of
similar import means the actual knowledge of any executive officer of the
Company or any of its Subsidiaries after due inquiry.
"PARENT MATERIAL ADVERSE EFFECT" means any event, circumstance, change or
effect that, individually or in the aggregate with all other events,
circumstances, changes and effects, is or is reasonably likely to be materially
adverse to (i) the business, financial condition or results of operations of
Parent and its Subsidiaries taken as a whole or (ii) the ability of Parent to
consummate the transactions contemplated by this Agreement.
"PERSON" means an individual, corporation, partnership, limited
partnership, limited liability company, syndicate, person (including, without
limitation, a "person" as defined in Section 13(d)(3) of the Exchange Act),
trust, association or entity or government, political subdivision, agency or
instrumentality of a government.
"REPRESENTATIVE" means, with respect to any Person, such Person's officers,
directors, employees, accountants, auditors, attorneys, consultants, legal
counsel, agents, investment bankers, financial advisors and other
representatives.
39
"SUBSIDIARY" or "SUBSIDIARIES" of the Company, the Surviving Corporation,
Parent or any other Person means an affiliate controlled by such Person,
directly or indirectly, through one or more intermediaries.
"TAX RETURNS" means in respect of any Tax, any return, declaration, report,
election, claim for refund or information return or other statement, form or
disclosure filed or required to be filed with any Governmental Authority or
taxing authority, including any schedule or attachment thereto, and including
any amendment thereof.
"TAX " or "TAXES" shall mean (i) any and all taxes, assessments, fees,
levies, duties, tariffs, customs, imposts and other governmental charges of any
kind (together with any and all interest, penalties, additions to tax and
additional amounts imposed with respect thereto) imposed by any Governmental
Authority or taxing authority, including, without limitation: taxes or other
charges on or with respect to income, franchise, windfall or other profits,
gross receipts, property, sales, use, capital stock, payroll, employment, social
security, workers' compensation, unemployment compensation or net worth's-taxes
or other charges in the nature of excise, withholding, ad valorem, stamp,
transfer, value-added or gains taxes; license, registration and documentation
fees; tariffs and similar charges, (ii) any liability for payment of amounts
described in clause (i) whether as a result of transferee liability, of being a
member of an affiliated, consolidated, combined or unitary group for any period,
or otherwise through operation of law, and (iii) any liability for the payment
of amounts described in clause (i) or (ii) as a result of any tax sharing, tax
indemnity or tax allocation agreement or any other express or implied agreement
to indemnify any other person..
(b) The following terms have the meaning set forth in the Sections set forth
below:
Defined Term Location of definition
-------------------------------------------------------- ----------------------
2004 Balance Sheet...................................... Section 3.06(c)
Action.................................................. Section 3.08
Acquisition Proposal.................................... Section 6.05(a)(i)
Adverse Recommendation Notice........................... Section 6.05(d)
Agreement............................................... Preamble
Certificate of Merger................................... Section 2.03
Certificates............................................ Section 2.10(b)
Change in the Company Recommendation.................... Section 6.05(d)
Closing................................................. Section 2.02
Closing Date............................................ Section 2.02
Company................................................. Preamble
Company Board........................................... Recitals
Company Common Stock.................................... Section 3.03(a)
Company Disclosure Schedule............................. Section 3.01(b)
Company SEC Reports..................................... Section 3.06(a)
Company Stock Option.................................... Section 2.08(a)
Company Stock Option Plans.............................. Section 2.08(a)
Company Stockholder Approval............................ Section 3.04
Company Tender Recommendation........................... Section 3.04(c)
Company Triggering Event................................ Section 8.01
40
Defined Term Location of definition
-------------------------------------------------------- ----------------------
Competing Transaction................................... Section 6.05(d)
Confidentiality Agreement............................... Section 6.04(a)
Current Plans........................................... Section 6.06(a)
DGCL.................................................... Recitals
Dissenting Shares....................................... Section 2.09(a)
Effective Time.......................................... Section 2.03
Ephedra Products........................................ Section 3.16
ERISA................................................... Section 3.09(a)
Exchange Act............................................ Section 1.01(b)
Expenses................................................ Section 8.03(a)
Fairness Opinion........................................ Section 3.18
Fee..................................................... Section 8.03(b)
GAAP.................................................... Section 3.06(b)
Indemnified Directors/Officers.......................... Section 6.07(a)
Information Statement................................... Section 4.05
Initial Expiration Date................................. Section 1.01(a)
Law..................................................... Section 3.05(b)
Lease Documents......................................... Section 3.10(a)
Material Contracts...................................... Section 3.12(a)
Merger.................................................. Recitals
Merger Consideration.................................... Section 1.01(b)
Minimum Condition....................................... Section 1.01(b)
Notice of Superior Proposal............................. Section 6.05(c)
Offer................................................... Recitals
Offer Conditions........................................ Section 1.01(a)
Offer Documents......................................... Section 1.01(c)
Offer to Purchase....................................... Section 1.01(c)
Order................................................... Section 7.01(b)
Parent.................................................. Preamble
Parent Welfare Benefit Plans............................ Section 6.06(d)
Paying Agent............................................ Section 2.10(a)
Per Share Amount........................................ Recitals
Plans................................................... Section 3.09(a)
Proxy Statement......................................... Section 6.02
Purchaser............................................... Preamble
Schedule 14D-9.......................................... Section 1.02(b)
Schedule TO............................................. Section 1.01(c)
SEC..................................................... Section 1.01(b)
Securities Act.......................................... Section 3.05(d)
Shares.................................................. Recitals
Stockholder Agreement................................... Recitals
Stockholders............................................ Recitals
Stockholders' Meeting................................... Section 6.01(a)
Subsequent Offering Period.............................. Section 1.01(b)
Superior Proposal....................................... Section 6.05(f)
41
Defined Term Location of definition
-------------------------------------------------------- ----------------------
Surviving Corporation................................... Section 2.01
Surviving Corporation Shares............................ Section 2.07(c)
Takeover Statute........................................ Section 6.12
Transactions............................................ Section 3.04(a)
SECTION 9.04. SEVERABILITY.
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the Transactions
is not affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the Transactions be
consummated as originally contemplated to the fullest extent possible.
SECTION 9.05. ENTIRE AGREEMENT; ASSIGNMENT.
This Agreement and the Confidentiality Agreement constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede all
prior agreements and undertakings, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof. This Agreement shall not
be assigned (whether pursuant to a merger, by operation of law or otherwise),
except that Parent and Purchaser may assign all or any of their rights and
obligations hereunder to any Affiliate of Parent; provided that no such
assignment shall relieve the assigning party of its obligations hereunder if
such assignee does not perform such obligations.
SECTION 9.06. PARTIES IN INTEREST.
This Agreement shall be binding upon and inure solely to the benefit of each
party hereto, and nothing in this Agreement, express or implied, is intended to
or shall confer upon any other Person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement, other than Section 6.07 (which
is intended to be for the benefit of the Persons covered thereby and may be
enforced by such Persons).
SECTION 9.07. SPECIFIC PERFORMANCE.
The parties hereto agree that irreparable damage would occur in the event any
provision of this Agreement were not performed in accordance with the terms
hereof and that the parties shall be entitled to specific performance of the
terms hereof, in addition to any other remedy at law or equity.
SECTION 9.08. GOVERNING LAW.
This Agreement shall be governed by, and construed in accordance with, the laws
of the State of Delaware applicable to contracts executed in and to be performed
in that State. The parties hereto hereby:
42
(a) submit to the exclusive jurisdiction of any such state or federal court
sitting in the State of Delaware for the purpose of any Action arising out
of or relating to this Agreement brought by any party hereto; and
(b) irrevocably waive, and agree not to assert by way of motion, defense, or
otherwise, in any such Action, any claim that it is not subject personally
to the jurisdiction of the above-named courts, that its property is exempt
or immune from attachment or execution, that the Action is brought in an
inconvenient forum, that the venue of the Action is improper, or that this
Agreement or the Transactions may not be enforced in or by any of the
above-named courts.
SECTION 9.09. WAIVER OF JURY TRIAL.
Each party to this Agreement waives, to the fullest extent permitted by
applicable law, any right it may have to a trial by jury in respect of any
action, suit or proceeding arising out of this Agreement.
SECTION 9.10. HEADINGS.
The descriptive headings contained in this Agreement are included for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.11. COUNTERPARTS.
This Agreement may be executed and delivered (including by facsimile
transmission) in one or more counterparts, and by the different parties hereto
in separate counterparts, each of which when executed shall be deemed to be an
original but all of which taken together shall constitute one and the same
agreement.
SECTION 9.12. COMPANY DISCLOSURE SCHEDULE.
Parent and Purchaser shall not be entitled to claim that any fact or combination
of facts constitutes a breach of any of the representations or warranties
contained in this Agreement if and to the extent that such fact or combination
of facts has been disclosed in any Section of the Company Disclosure Schedule or
the Company SEC Reports filed prior to the date of this Agreement in sufficient
detail to put a reasonable person on notice of the relevance of the facts or
circumstances so disclosed. The inclusion of any item in any Section of the
Company Disclosure Schedule:
(a) does not represent a determination by the Company that such item is
"material"; and
(b) does not represent a determination by the Company that such item did not
arise in the ordinary course of business.
43
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
NATUREX, S.A.
By : /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Chief Executive Officer
NATUREX ACQUISTION CORP.
By : /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
President
PURE WORLD, INC.
By : /s/ Qun ▇▇ ▇▇▇▇▇
----------------
Qun ▇▇ ▇▇▇▇▇
President
44
MERGER AGREEMENT
COMPANY DISCLOSURE SCHEDULE
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Section 3.01(b) Subsidiaries
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Section 3.03 Company Stock Options and Other Awards
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Section 3.05 Breaches; Defaults; Consents
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Section 3.06(c) Undisclosed Liabilities
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Section 3.07 Absence of Certain Changes or Events
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Section 3.08 Litigation
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Section 3.09(a) Employee Benefit Plans
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Section 3.09(b) Employee Benefit Plan Compliance Disclosure
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Section 3.09(c) Employee Benefit Plans
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Section 3.10 Leased Real Property
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Section 3.11(a) Taxes
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Section 3.11(b) Pending Tax Proceedings
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Section 3.12(a) Material Contracts
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Section 3.12(b) Breach or Default of Material Contracts Resulting from
Transactions
--------------------------------------------------------------------------------
Section 3.13 Environmental Matters
--------------------------------------------------------------------------------
Section 3.14 Labor and Employment Matters
--------------------------------------------------------------------------------
Section 3.16 Ephedra
--------------------------------------------------------------------------------
Section 5.01 Conduct of Business Pending the Merger
--------------------------------------------------------------------------------
ANNEX A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, and subject to the terms and
conditions of the Agreement, Purchaser shall not be required to accept for
payment or, subject to any applicable rules and regulations of the SEC
(including Rule 14e-1(c) under the Exchange Act) pay for, and may delay the
acceptance for payment of or payment for, any Shares tendered pursuant to the
Offer, and may extend, terminate or amend the Offer, subject to the terms of the
Agreement, if (i) immediately prior to the expiration of the Offer (as extended
in accordance with the Agreement) the Minimum Condition shall not have been
satisfied, or (ii) at any time on or after the date of this Agreement and prior
to the Initial Expiration Date, any of the following conditions shall occur:
(a) there shall be pending against Purchaser or Parent any action, suit or
proceeding (hereinafter, an "ACTION") brought by a Governmental Authority
(i) challenging or seeking to make illegal, materially delay, make
materially more costly or otherwise, directly or indirectly, restrain or
prohibit, the making of the Offer, the acceptance for payment of any Shares
by Parent, Purchaser or any other Affiliate of Parent, or the consummation
of the Transactions or seeking to obtain from the Company, Parent or the
Purchaser any damages that are material in relation to the Company and its
Subsidiaries taken as a whole, or in relation to the amount to be paid by
Parent and Purchaser for all of the Shares on a Fully-Diluted Basis, (ii)
seeking to restrain, enjoin or otherwise prohibit or prevent the
Transactions, (iii) seeking to prohibit or impose any material limitations
on Parent's, the Purchaser's or any of their respective Affiliates'
ownership, operation or effective control of all or any material portion of
the business or assets of the Company and its Subsidiaries taken as a
whole, (iv) requiring divestiture by the Purchaser or any of its Affiliates
of any Shares or current material business or material assets (including,
without limitation, any material business or material assets of the Company
or any of its Subsidiaries) which is reasonably likely, individually or in
the aggregate, to have a Company Material Adverse Effect; or (v) seeking to
impose material limitations on the ability of Parent or the Purchaser
effectively to acquire or hold, or to exercise full rights of ownership of,
the Shares including the right to vote the Shares purchased by them on an
equal basis with all other Shares on all matters properly presented to the
stockholders of the Company;
(b) any Governmental Authority or court of competent jurisdiction shall have
issued an order, decree, injunction or ruling or taken any other action
permanently restraining, enjoining or otherwise prohibiting or preventing
the Transactions and such order, decree, injunction, ruling or other action
shall have become final and non-appealable;
(c) there shall have been any statute, rule, regulation, legislation or
interpretation enacted, promulgated, amended, issued or deemed applicable
by a Governmental Authority to (i) Parent, the Company or any Subsidiary or
affiliate of Parent or the Company or (ii) any Transaction, by any United
States or non-United States legislative body or Governmental Authority with
appropriate jurisdiction, that is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in paragraph (a) above;
A-1
(d) any Company Material Adverse Effect shall have occurred since the date of
this Agreement;
(e) there shall have occurred (i) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, or (ii)
any limitation (whether or not mandatory) by any Governmental Authority on
the extension of credit by banks or other lending institutions which
materially and adversely affects the ability of Parent and Purchaser to
consummate the Transactions;
(f) it shall have been publicly disclosed, or Purchaser shall have otherwise
learned, that beneficial ownership (determined for the purposes of this
paragraph as set forth in Rule 13d-3 promulgated under the Exchange Act) of
50% or more of the then outstanding Shares has been acquired after the date
hereof by any Person, other than Parent or any of its affiliates;
(g) the representations and warranties of the Company in the Agreement shall
not be true and correct as of the date of such determination (except for
representations and warranties that relate to a specific date or time,
which need only be true and correct as of such date or time) except for
such failures of representations or warranties to be true and correct
which, in the aggregate, would not be reasonably likely to have a Company
Material Adverse Effect;
(h) the Board of Directors of the Company (or a special committee thereof) (i)
shall have withdrawn, modified or changed in a manner adverse to the Parent
and the Purchaser (including by amendment of the Schedule 14D-9) its
recommendation of the Offer, this Agreement or the Merger, or approved or
recommended any Competing Transaction or any other acquisition of Shares
other than the Offer and the Merger; or (ii) fails to reconfirm the Company
Tender Recommendation within five (5) Business Days after receipt of a
request by the Parent or the Purchaser; provided that any such request may
be made only one time within five (5) Business Days after notice of any of
the following events (as any of the following events may occur from time to
time): (A) receipt by the Company of a proposal or offer for a Competing
Transaction, (B) any material change to an existing proposal or offer for a
Competing Transaction, (C) a public announcement of any transaction to
acquire a material portion of the Company Common Stock by a Person other
than the Purchaser, the Parent or any of their Subsidiaries or Affiliates
other than an existing Acquisition Proposal, and (D) any extension of the
Offer.
(i) the Company shall have breached or failed to perform in any material
respect any obligation or to comply in any material respect with any
material agreement or material covenant of the Company required to be
performed or complied with by it under the Agreement prior to such
determination;
(j) the Agreement shall have been terminated in accordance with its terms; or
(k) Purchaser and the Company shall have agreed that Purchaser shall terminate
the Offer or postpone the acceptance for payment of Shares thereunder.
A-2
The capitalized terms used in this Annex A shall have the meanings ascribed to
them in the Agreement to which it is annexed.
A-3
COMPANY DISCLOSURE SCHEDULE
---------------------------
Company Disclosure Schedules presented on June 6, 2005 to the foregoing
AGREEMENT AND PLAN OF MERGER
dated as of June 6, 2005 (THE "AGREEMENT")
AMONG
NATUREX, S.A.
NATUREX ACQUISITION CORP.
AND
PURE WORLD, INC.
THE FOLLOWING MATTERS SHOULD BE USED ONLY IN CONJUNCTION WITH THE AGREEMENT, AND
(I) WITH RESPECT TO MATTERS CONCERNING POTENTIAL OR CONTINGENT LIABILITIES OR
RESPONSIBILITIES, SHOULD NOT BE DEEMED ADMISSIONS OF LIABILITY OR RESPONSIBILITY
WITH RESPECT TO ANY OF THE MATTERS LISTED AND (II) ARE MEANT TO SUPPLEMENT THE
REPRESENTATIONS AND WARRANTIES OF THE COMPANY SET FORTH IN THE AGREEMENT.
DISCLOSURE OF A MATTER IN ANY SECTION HERETO SHALL BE DEEMED DISCLOSURE WITH
RESPECT TO ANY OTHER SECTION.
ALL CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN SHALL HAVE THE MEANING
ASCRIBED THERETO IN THE AGREEMENT.
2
SECTION 3.01(b)
---------------
SUBSIDIARIES
------------
Subsidiaries
------------
SUBSIDIARIES JURISDICTION OF FORMATION
American Holdings, Inc. Delaware
Eco-Pure, Inc. Delaware
Pure World Botanicals, Inc. Delaware
Pure World Botanicals Powders, Inc. Delaware
PW Subsidiary, LLC Delaware
Equity Ownership
----------------
The Company owns seven hundred (700) shares of non-voting common stock of
Gaia Herbs, Inc. ("Gaia"), a privately held company, which constitutes 35% of
the issued and outstanding Gaia common stock. The Company has a right of first
refusal to acquire any Gaia common stock sold by Gaia or Gaia's principal
stockholder, and Gaia has a right of first refusal to acquire any Gaia common
stock sold by the Company. In addition, if any third party acquires any voting
shares in Gaia, the Company's non-voting Gaia common stock will convert to
voting common stock.
3
SECTION 3.03
------------
COMPANY STOCK OPTIONS AND OTHER AWARDS
--------------------------------------
INDIVIDUAL GRANT DATE 1991 PLAN 1997 PLAN OUTSIDE PLAN EXERCISE PRICE
-----------------------------------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. 05/29/02 55,000 0.71000
-----------------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 06/09/95 11,000 1.56250
02/01/96 5,500 2.04545
12/09/97 8,250 5.51136
01/12/00 6,000 3.12500
05/29/02 15,000 0.71000
-----------------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 01/12/00 120,000 3.12500
-----------------------------------------------------------------------------------------
Qun ▇▇ ▇▇▇▇▇ 02/01/96 27,500 2.04545
03/24/97 82,500 2.75568
03/08/98 55,000 5.00000
01/12/00 100,000 3.12500
10/29/01 75,000 1.00000
05/29/02 200,000 0.71000
-----------------------------------------------------------------------------------------
▇▇▇ ▇▇▇▇▇▇▇ 02/01/96 5,500 2.04545
04/01/98 8,250 5.0000
05/29/02 15,000 0.71000
07/01/04 30,000 1.98000
-----------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 12/09/96 2,200 1.70455
04/01/98 550 5.00000
11/11/03 10,000 2.05000
-----------------------------------------------------------------------------------------
Kan He 03/24/97 7,700 2.75568
09/02/97 11,000 4.88636
01/12/00 3,300 3.12500
05/29/02 15,000 0.71000
-----------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 07/30/97 5,500 3.06818
-----------------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇ 09/02/97 16,500 4.88636
01/12/00 5,000 3.12500
-----------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇ 04/01/98 2,750 5.00000
01/12/00 10,000 3.12500
-----------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 04/01/98 1,100 5.00000
-----------------------------------------------------------------------------------------
▇▇▇▇▇▇ (▇▇▇) ▇▇▇▇▇▇▇ 04/01/98 550 5.00000
-----------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 04/01/98 1,100 5.00000
-----------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 04/01/98 550 5.00000
-----------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 04/01/98 1,100 5.00000
-----------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇ 04/01/98 550 5.00000
-----------------------------------------------------------------------------------------
Tang Peng 02/21/01 15,000 1.30000
-----------------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 02/16/00 25,000 3.75000
-----------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇'▇▇▇▇▇▇ 07/07/03 10,000 3.41000
-----------------------------------------------------------------------------------------
4
INDIVIDUAL GRANT DATE 1991 PLAN 1997 PLAN OUTSIDE PLAN EXERCISE PRICE
-----------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 11/03/03 25,000 1.65000
-----------------------------------------------------------------------------------------
TOTALS 112,200 394,050 482,700
-----------------------------------------------------------------------------------------
GLOBAL TOTAL 988,950
=========================================================================================
5
SECTION 3.05
------------
BREACHES; DEFAULTS; CONSENTS
----------------------------
None.
6
SECTION 3.06(c)
---------------
UNDISCLOSED LIABILITIES
-----------------------
(a) Oral Retention Agreement between the Company and ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇. The
Agreement originally provided for a bonus of $35,000 if ▇▇. ▇▇▇▇▇▇▇ remained
with the Company through April 30, 2005, and for a payment of $15,000 to ▇▇.
▇▇▇▇▇▇▇ if the Company completed a business combination transaction. The
Agreement was subsequently amended to provide for an additional bonus of $35,000
if ▇▇. ▇▇▇▇▇▇▇ remained with the Company through June 30, 2005.
7
SECTION 3.07
------------
ABSENCE OF CERTAIN CHANGES OR EVENTS
------------------------------------
(a) Between January 1, 2005 and April 30, 2005, the Company made open
market purchases of an aggregate of 82,485 shares of the Company's common stock
for total consideration of $151,928.27.
(b) The Company forgave the $80,000 loan to Qun ▇▇ ▇▇▇▇▇ and the
$53,787.50 loan to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
8
SECTION 3.08
------------
LITIGATION
----------
(a) C&A Systems Inc. v. Pure World Botanicals, Inc., civil action in the
Superior Court of New Jersey, Law Division, Essex County, Docket No.:
ESX-L-012039-02.
(b) Letter to the Company from Soft Gel Technologies, Inc. dated June 1,
2005, alleging that the Company is infringing on U.S. Patents Nos. 6,716,459,
6,485,760 and 6,784,206 owned by Soft Gel Technologies, Inc.
9
SECTION 3.09(a)
---------------
EMPLOYEE BENEFIT PLANS
----------------------
Stock Option Plans
------------------
(a) Computer Memories Incorporated 1991 Non-Qualified Stock Option Plan.
(b) Pure World, Inc. 1997 Non-Qualified Stock Option Plan.
Stock Option Agreements
-----------------------
(a) See Section 3.03.
Employment Agreements
---------------------
(a) Employment Agreement between the Company and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, dated
November 11, 2003.
(b) Consultation and Non-Competition Agreement between the Company and
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, dated June 6, 2005.
(c) Employment Agreement between the Company and Qun ▇▇ ▇▇▇▇▇, dated March
1, 1996, as amended by that certain Amendment dated July 28, 1997.
(d) Employment Letter from the Company to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, dated December
1, 2003.
(e) Oral Retention Agreement between the Company and ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇. The
Agreement originally provided for a bonus of $35,000 if ▇▇. ▇▇▇▇▇▇▇ remained
with the Company through April 30, 2005, and for a payment of $15,000 to ▇▇.
▇▇▇▇▇▇▇ if the Company completed a business transaction. The Agreement was
subsequently amended to provide for an additional bonus of $35,000 if ▇▇.
▇▇▇▇▇▇▇ remained with the Company through June 30, 2005.
(f) Compensation Arrangement between the Company and ▇▇▇▇ ▇▇▇▇▇▇,
effective June 15, 2003.
Employee Benefit Plans
----------------------
(a) Bedminster Management Corp. 401(k) Profit Sharing Plan and Trust.
(b) Plan Recordkeeping Agreement between ▇. ▇▇▇▇ Price Retirement Plan
Services, Inc. and Bedminster Management Corp.
(c) Bedminster Management Corp. Long Term Disability Plan (Unum
Provident).
10
(d) Horizon Blue Cross Blue Shield of New Jersey Health and Prescription
Drug Plan - POS Plan and PPO Plan.
(e) Horizon Blue Cross Blue Shield of New Jersey Dental Plan - Dental
Choice Plan and Dental Option Plan.
(f) Bedminster Management Corp. Life Insurance and Accidental Death &
Dismemberment Insurance Plan (Unum Provident).
(g) Workers Compensation Insurance.
(h) Educational Assistance Policy.
(i) Vacation.
(j) Company car for the following employees: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇ ▇▇
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇.
(k) Car allowance for the following employees: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
(l) Pure World Botanicals, Inc. Employee Handbook.
SECTION 3.09(b)
---------------
EMPLOYEE BENEFIT PLAN COMPLIANCE DISCLOSURE
-------------------------------------------
(a) The Company has not distributed any summary plan descriptions for the
Plans to the participants.
(b) The Bedminster Management Corp. 401(k) Profit Sharing Plan and Trust
failed the nondiscrimination tests in the 2002 and 2003 plan years.
SECTION 3.09(c)
---------------
EMPLOYEE BENEFIT PLANS
----------------------
(a) Section 6.3 C of the Employment Agreement between the Company and ▇▇▇▇
▇. ▇▇▇▇▇▇▇, dated November 11, 2003, provides that upon termination of the
agreement by ▇▇. ▇▇▇▇▇▇▇ after a "Change of Control" (as defined in the
agreement) of the Company, ▇▇. ▇▇▇▇▇▇▇ will be paid an amount equal to the
greater of (i) the base salary and any bonus payable to him through the
termination date and (ii) an amount equal to three times the average annual base
salary and bonus paid to him during the five years preceding the termination
date.
11
(b) The Employment Letter from the Company to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, dated
December 11, 2003, states that if "there is a change in ownership of more than
50% of Pure World Shares," then ▇▇. ▇▇▇▇▇▇▇ will be entitled to "guaranteed one
year employment at [his] then current salary."
(c) The Oral Retention Agreement between the Company and ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
provides that ▇▇. ▇▇▇▇▇▇▇ will be entitled to a payment of $15,000 if the
company completes a business transaction.
(d) Payments to Qun ▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ could reasonably be
expected to be characterized as "excess parachute payments" (as such term is
defined in Section 280G of the Code).
12
SECTION 3.10
PROPERTY; TITLE TO ASSETS
Leased Real Property
--------------------
(a) Lease between AMHOLD MACO Inc. and IVM Corporation, dated January 3,
1995, as amended by that certain Amendment to Lease Agreement dated January 1,
2000, for the premises known as ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇.
(b) Lease between Teterboro '89 Associates and Pure World Botanicals,
Inc., dated December 1989, as amended by that certain Amendment to Lease dated
January 21, 1995, Amendment to Lease dated November 3, 1999 and Lease
Modification and Extension of Lease dated December 2000, for the premises known
as ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇.
(c) Lease Agreement between ProLogis and Pure World Botanicals, Inc.,
dated March 4, 2003, for the premises known as Building #5 at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇.
(d) Oral month-to-month office sublease between the Company and ▇.▇.
▇▇▇▇▇▇▇ & Company, LLC for ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ at $1,800 per
month.
(e) The Company rents space for inventory storage in a public warehouse in
Newark, New Jersey and in Lakewood, New Jersey, for monthly fees and receiving
and shipping fees. The Company also rents space on a month-to-month basis in a
warehouse in Chatsworth, California for document storage.
Encumbrances
------------
(a) Original UCC-1 Financing Statement
File Number: 1912847
File Date: 07/16/1999
Debtor: Pure World Botanicals, Inc.
Secured Party: GE Capital Corporation
Collateral: Equipment lease dated May 7, 1999 between Debtor
and Secured Party, insurance thereof and all
proceeds thereof.
(b) Original UCC-1 Financing Statement
File Number: 1982578
File Date: 07/21/2000
Debtor: Pure World Botanicals, Inc.
Secured Party: GE Capital Corporation
13
Collateral: Equipment lease dated May 26, 2000 between Debtor
and Secured Party, insurance thereof and all
proceeds thereof.
(c) Original UCC-1 Financing Statement
File Number: 1998405
File Date: 09/05/2000
Debtor: Pure World Botanicals, Inc.
Secured Party: Agilent Technologies
Collateral: All of the Debtor's right, title and interest in
the inventory and equipment now or hereafter
leased from Secured Party pursuant to Finance
Agreement Number AR2059.
(d) Original UCC-1 Financing Statement
File Number: 2030475
File Date: 03/19/2001
Debtor: Pure World Botanicals, Inc.
Secured Party: NMHG Financial Services, Inc.
Collateral: All of the equipment now or hereafter leased by
Secured Party to Debtor and all proceeds,
including insurance proceeds, thereof.
(e) Loan and Security Agreement between Pure World Botanicals, Inc. and
Fleet Capital Corporation dated December 22, 2003.
Debtor: Pure World Botanicals, Inc.
Secured Party: Fleet Capital Corporation
Collateral: All of the right title and interest in all of
Debtor's assets whether now owned or existing or
hereafter created, acquired or arising and
wheresoever located.
14
SECTION 3.11(a)
---------------
TAXES
-----
The Company has filed for extensions for filing of its 2004 federal and state
income tax returns.
SECTION 3.11(b)
---------------
PENDING TAX PROCEEDINGS
-----------------------
None.
15
SECTION 3.12 (a)
----------------
MATERIAL CONTRACTS
------------------
(i) (a) See Section 3.09(a).
(b) Oral Agreements
1. Loan to Qun ▇▇ ▇▇▇▇▇ (current balance: $9,823).
2. Loan to Qun ▇▇ ▇▇▇▇▇ (current balance: $13,757.50).
(ii) See Section 3.03.
(iii) (a) Loan and Security Agreement and Subordination Agreement between Pure
World Botanicals, Inc. and Fleet Capital Corporation, dated December 22,
2003, as amended by that certain Agreement of Amendment to the Loan and
Security Agreement and Other Documents between Pure World Botanicals, Inc.
and Fleet Capital Corporation, dated April 18, 2005.
(b) Equipment Loan Note between Pure World Botanicals, Inc. and Fleet
Capital Corporation, dated December 22, 2003.
(c) Secured Promissory Note between Pure World Botanicals, Inc. and Fleet
Capital Corporation, dated December 22, 2003
(d) Revolving Credit Note between Pure World Botanicals, Inc. and Fleet
Capital Corporation.
(e) Notice and Assignment of Equipment Serial Numbers between Pure World
Botanicals, Inc. and Agilent Financial Services, dated October 31, 2002.
(f) Forklift Lease between Pure World Botanicals, Inc. and ▇▇▇▇▇▇▇ Brand
Corporation, dated December 18, 2000.
(g) Five Year Lease Agreement between Pure World Botanicals, Inc. and
bioMerieux, Inc., dated March 7, 2001.
(h) Equipment Lease Agreement between Pure World Botanicals, Inc. and De
▇▇▇▇ ▇▇▇▇▇▇ Financial Services, Inc., dated June 19, 2003.
(i) Ford Truck Lease between Pure World Botanicals, Inc. and Meadowland
Ford Truck Sales, dated March 19, 2004.
(j) Master Lease No. 160029 and Promissory Note between Pure World
Botanicals, Inc. and Valley Commercial Capital, LLC, dated April 28, 2003.
(k) See (i), above, for loans to officers and directors.
16
(l) Outstanding loans to employees and former employees:
NAME LOAN BALANCE
---- ------------
Kan He 25,600.00
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 29,914.40
(iv) See Section 3.10 above.
(v) (a) Employment Letter from the Company to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ dated December 1,
2003.
SECTION 3.12(b)
---------------
BREACH OR DEFAULT OF MATERIAL CONTRACTS
---------------------------------------
None.
17
SECTION 3.13
------------
ENVIRONMENTAL MATTERS
---------------------
None.
18
SECTION 3.14
------------
LABOR AND EMPLOYMENT MATTERS
----------------------------
None.
19
SECTION 3.16
------------
EPHEDRA
-------
-------------------------------------------
CUSTOMER 2004 2003 2002
---------------------------------------------------------------------------------------
Nutraco International S.A./Rexall Sundown $ __ $ 122,429.60 $ 530,310.15
Breakthru Nutrition __ __ 3,990.00
Optimum Nutrition __ __ 237.50
NMS __ __ 440.00
Wisconsin Life Sciences __ __ __
Progressive Labs __ __ __
Weider Nutrition Group __ __ __
-------------------------------------------
$ __ $ 122,429.60 $ 534,977.65
===========================================
20
SECTION 5.01
------------
CONDUCT OF BUSINESS PENDING THE MERGER
--------------------------------------
See Section 3.07.
The following loans to officers, directors, employees and former employees are
being forgiven or are to be forgiven as follows:
NAME CURRENT LOAN BALANCE TERMS
---- -------------------- -----
Qun ▇▇ ▇▇▇▇▇ 9,823.00 $3,000 per year forgiven
▇▇▇▇▇ ▇▇▇▇▇ 8,000.00 $2,000 per year forgiven
Kan He 25,600.00 $6,400 per year forgiven
