AGREEMENT AND PLAN OF MERGER
DATED AS OF JULY 5, 1999
AMONG
KONINKLIJKE NUMICO N.V.,
a company incorporated under the laws of The Netherlands,
NUMICO INVESTMENT CORP.,
a Delaware corporation,
AND
GENERAL NUTRITION COMPANIES, INC.,
a Delaware corporation
TABLE OF CONTENTS
ARTICLE I.
THE TENDER OFFER
Page
----
1.1 THE OFFER........................................................................2
1.2 SEC FILINGS......................................................................3
1.3 COMPANY ACTION...................................................................4
1.4 COMPOSITION OF THE COMPANY BOARD.................................................4
ARTICLE II.
THE MERGER
2.1 THE MERGER.......................................................................6
2.2 CLOSING..........................................................................6
2.3 EFFECTIVE TIME...................................................................6
2.4 EFFECT OF THE MERGER.............................................................6
2.5 CERTIFICATE OF INCORPORATION.....................................................6
2.6 BYLAWS...........................................................................6
2.7 OFFICERS AND DIRECTORS OF SURVIVING CORPORATION..................................7
2.8 EFFECT ON CAPITAL STOCK..........................................................7
2.9 SURRENDER AND PAYMENT............................................................7
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................................10
3.2 REPRESENTATIONS AND WARRANTIES OF PARENT........................................23
3.3 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.........................26
ARTICLE IV.
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 COVENANTS OF THE COMPANY........................................................28
4.2 COVENANTS OF PARENT AND MERGER SUB..............................................30
4.3 ADVICE OF CHANGES; GOVERNMENT FILINGS...........................................31
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ARTICLE V.
ADDITIONAL AGREEMENTS
5.1 APPROVAL BY THE COMPANY'S STOCKHOLDERS..........................................32
5.2 ACCESS TO INFORMATION...........................................................32
5.3 APPROVALS AND CONSENTS; COOPERATION.............................................33
5.4 ACQUISITION PROPOSALS...........................................................33
5.5 EMPLOYEE BENEFITS...............................................................35
5.6 FEES AND EXPENSES...............................................................35
5.7 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.............................35
5.8 PUBLIC ANNOUNCEMENTS............................................................36
5.9 TAKEOVER STATUTES...............................................................36
5.10 THIRD PARTY STANDSTILL AGREEMENTS; TORTIOUS INTERFERENCE........................36
5.11 COMPANY OPTION PLANS............................................................36
ARTICLE VI.
CONDITIONS PRECEDENT
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER......................37
ARTICLE VII.
TERMINATION AND AMENDMENT
7.1 TERMINATION.....................................................................38
7.2 EFFECT OF TERMINATION...........................................................40
7.3 AMENDMENT.......................................................................40
7.4 EXTENSION; WAIVER...............................................................41
ARTICLE VIII.
GENERAL PROVISIONS
8.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS; NO OTHER
REPRESENTATIONS AND WARRANTIES..................................................41
8.2 NOTICES.........................................................................41
8.3 INTERPRETATION..................................................................43
8.4 COUNTERPARTS....................................................................43
8.5 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES..................................43
8.6 GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL...............................44
8.7 SEVERABILITY....................................................................45
8.8 ASSIGNMENT......................................................................45
8.9 ENFORCEMENT.....................................................................45
ii
8.10 DEFINITIONS.....................................................................45
8.11 PERFORMANCE BY MERGER SUB.......................................................47
8.12 DISCLOSURE SCHEDULES............................................................47
iii
GLOSSARY OF DEFINED TERMS
LOCATION OF
DEFINITION DEFINED TERM
---------- -------------
Acquisition Proposal....................................................................Section 5.4(a)
Action.........................................................................................Annex A
Affiliate..............................................................................Section 8.10(a)
Agreement.....................................................................................Preamble
Board of Directors.....................................................................Section 8.10(b)
Business Day...........................................................................Section 8.10(c)
Certificate of Merger......................................................................Section 2.3
Certificates............................................................................Section 2.9(b)
Closing....................................................................................Section 2.2
Closing Date...............................................................................Section 2.2
Code...................................................................................Section 8.10(d)
Company.......................................................................................Preamble
Company Assets..........................................................................Section 3.1(t)
Company Benefit Plans................................................................Section 3.1(1)(i)
Company Board.................................................................................Recitals
Company Common Stock....................................................................Section 1.1(a)
Company Disclosure Schedule................................................................Section 3.1
Company Equity Plans...................................................................Section 8.10(e)
Company Material Contracts..............................................................Section 3.1(k)
Company Permits.........................................................................Section 3.1(f)
Company Products........................................................................Section 3.1(p)
Company SEC Reports..................................................................Section 3.1(d)(i)
Company Stock Option......................................................................Section 5.11
Company Stockholders Meeting............................................................Section 5.1(a)
Company Voting Debt................................................................Section 3.1(b)(iii)
Confidentiality Agreement..................................................................Section 5.2
DGCL..........................................................................................Recitals
Dissenting Shares.......................................................................Section 2.9(h)
Effective Time.............................................................................Section 2.3
ERISA................................................................................Section 3.1(1)(i)
ERISA Affiliate.....................................................................Section 3.1(l)(iv)
Environmental Law.......................................................................Section 3.1(s)
Exchange Act............................................................................Section 1.1(b)
Exchange Agent..........................................................................Section 2.9(a)
Expenses...................................................................................Section 5.6
Franchise Agreement..................................................................Section 3.1(v)(i)
Fund...............................................................................Section 3.1(v)(iii)
iv
GAAP.................................................................................Section 3.1(d)(i)
Governmental Entity................................................................Section 3.1(c)(iii)
Hazardous Substance.....................................................................Section 3.1(s)
HSR Act........................................................................................Annex A
Indemnified Party..........................................................................Section 5.7
Independent Directors...................................................................Section 1.4(c)
Intellectual Property..................................................................Section 8.10(f)
Liens...............................................................................Section 3.1(b)(ii)
Material Adverse Effect................................................................Section 8.10(g)
Maximum Premium............................................................................Section 5.7
Merger........................................................................................Recitals
Merger Consideration....................................................................Section 2.8(c)
Merger Fees.............................................................................Section 3.1(n)
Merger Sub....................................................................................Preamble
Minimum Condition.......................................................................Section 1.1(b)
Multiemployer Plan...................................................................Section 3.1(l)(i)
Nasdaq.............................................................................Section 3.1(c)(iii)
Offer..................................................................................Section 1.1.(a)
Offer Conditions........................................................................Section 1.1(a)
Offer Documents.........................................................................Section 1.2(a)
Organizational Documents...............................................................Section 8.10(h)
Outside Date............................................................................Section 7.1(b)
Parent........................................................................................Preamble
Parent Disclosure Schedule.................................................................Section 3.2
Parent Representatives.....................................................................Section 5.2
Payment Fund............................................................................Section 2.9(a)
Person.................................................................................Section 8.10(i)
Price Per Share.........................................................................Section 1.1(a)
Proxy Statement......................................................................Section 3.1(e)(i)
Required Company Votes..................................................................Section 3.1(j)
Required Regulatory Approvals...........................................................Section 6.1(c)
Schedule 14D-1..........................................................................Section 1.2(a)
Schedule 14D-9..........................................................................Section 1.2(b)
SEC.....................................................................................Section 1.1(b)
Securities Act.......................................................................Section 3.1(d)(i)
Significant Subsidiary.................................................................Section 8.10(j)
Subsidiary.............................................................................Section 8.10(k)
Superior Proposal.......................................................................Section 5.4(b)
Surviving Corporation......................................................................Section 2.1
Takeover Statute........................................................................Section 3.1(r)
Tax....................................................................................Section 8.10(l)
v
Tax Return.............................................................................Section 8.10(l)
Taxable................................................................................Section 8.10(l)
Taxes..................................................................................Section 8.10(l)
Termination Fee.........................................................................Section 7.2(b)
the other party........................................................................Section 8.10(m)
UFOC................................................................................Section 3.1(v)(ii)
Violation...........................................................................Section 3.1(c)(ii)
Warrants.............................................................................Section 3.1(b)(i)
Year 2000 Compliant.....................................................................Section 3.1(q)
vi
This AGREEMENT AND PLAN OF MERGER, dated as of July 5, 1999 (this
"Agreement"), by and among KONINKLIJKE NUMICO N.V., a company incorporated under
the laws of The Netherlands ("Parent"), NUMICO INVESTMENT CORP., a Delaware
corporation and an indirect wholly owned Subsidiary of Parent ("Merger Sub"),
and GENERAL NUTRITION COMPANIES, INC., a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and
the Company have each approved the Offer (as defined herein) and the Merger (as
defined herein) and have determined that it is in the best interests of their
respective companies and stockholders for Parent to acquire the Company upon the
terms and subject to the conditions set forth herein;
WHEREAS, in order to complete such acquisition, the respective Boards
of Directors of Parent, Merger Sub and the Company have approved the merger of
Merger Sub with and into the Company (the "Merger"), upon the terms and subject
to the conditions of this Agreement and in accordance with the Delaware General
Corporation Law (the "DGCL"), whereby each issued and outstanding share of
Company Common Stock (as defined herein) not owned directly or indirectly by
Parent or the Company will be converted into the right to receive the price per
share in cash actually paid in the Offer;
WHEREAS, the Board of Directors of the Company (the "Company Board")
has unanimously approved this Agreement, the Offer and the Merger, has
determined that the Offer and the Merger are fair to and in the best interests
of the Company's stockholders and is recommending that the Company's
stockholders accept the Offer, tender their shares of Company Common Stock
thereunder and adopt this Agreement;
WHEREAS, simultaneously with the execution and delivery of this
Agreement, Parent, Merger Sub and the stockholders named therein are entering
into a Tender Agreement;
WHEREAS, simultaneously with execution and delivery of this Agreement
certain executive officers of the Company are entering into employment
agreements with the Company and Parent, which will become effective upon the
Merger;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
1
ARTICLE I.
THE TENDER OFFER
1.1 THE OFFER.
(a) Provided that this Agreement shall not have been
terminated in accordance with Article VII hereof and none of the events set
forth in Annex A hereto (the "Offer Conditions") shall have occurred or be
existing, within five Business Days of the date hereof, Merger Sub will commence
a tender offer (the "Offer") for all of the outstanding shares of common stock,
par value $0.01 per share, of the Company (the "Company Common Stock") at a
price per share of the Company Common Stock of U.S. $25.00 net to the Seller in
cash (such price, or any higher price paid in the Offer, the "Price Per Share")
upon the terms and conditions set forth in this Agreement, including Annex A
hereto.
(b) The obligation of Merger Sub to accept for payment,
purchase and pay for any Company Common Stock tendered pursuant to the Offer
shall be subject only to the satisfaction or waiver of the Offer Conditions,
including the Offer Condition that at least that number of shares of Company
Common Stock equivalent to a majority of the total issued and outstanding shares
of Company Common Stock on a fully diluted basis on the date such shares are
purchased pursuant to the Offer shall have been validly tendered and not
withdrawn prior to the expiration of the Offer (the "Minimum Condition"). Merger
Sub will not, without the prior written consent of the Company (such consent to
be authorized by the Company Board): (i) waive the Minimum Condition, (ii)
decrease the amount or change the form of consideration payable in the Offer,
(iii) decrease the number of shares of Company Common Stock sought in the Offer,
(iv) impose additional conditions to the Offer, (v) change any Offer Condition
or amend any other term of the Offer if any such change or amendment would be
adverse in any respect to the holders of the Company Common Stock (other than
Parent or Merger Sub) or (vi) except as provided below, extend the Offer if all
of the Offer Conditions have been satisfied. Subject to the terms and conditions
hereof, the Offer shall remain open until midnight, New York City time, on the
date that is twenty (20) Business Days after the Offer is commenced (within the
meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")); provided, however, that without the consent of the Company
Board, Merger Sub may (x) extend the Offer, if at the scheduled expiration date
of the Offer any of the Offer Conditions shall not have been satisfied or waived
for one (1) or more periods (none of which shall exceed ten (10) Business Days)
until such time as such conditions are satisfied or waived, (y) extend the Offer
for such period as may be required by any rule, regulation, interpretation or
position of the Securities and Exchange Commission ("SEC") or the staff thereof
applicable to the Offer or (z) extend the Offer for one (1) or more periods
(each such period to be for not more than three (3) Business Days and such
extensions to be for an aggregate period of not more than ten (10) Business Days
beyond the latest expiration date that would otherwise be permitted under clause
(x) or (y) of this sentence) if on such expiration date the Offer Conditions
shall have been satisfied or waived but there shall not have been tendered that
number of shares of
2
Company Common Stock which would equal more than ninety percent (90%) of the
issued and outstanding shares of Company Common Stock. Merger Sub agrees that if
all of the Offer Conditions are not satisfied on any expiration date of the
Offer, then, Merger Sub shall extend the Offer for one or more periods of not
more than ten (10) Business Days each if requested to do so by the Company;
provided that Merger Sub shall not be required to extend the Offer beyond the
Outside Date or, if earlier, the date of termination of this Agreement in
accordance with the terms hereof. On the terms of the Offer and subject to the
Offer Conditions and this Agreement, Merger Sub shall pay for all shares of
Company Common Stock, validly tendered and not withdrawn pursuant to the Offer
that Merger Sub becomes obligated to purchase pursuant to the Offer as soon as
practicable after the expiration of the Offer.
1.2 SEC FILINGS.
(a) As soon as reasonably practicable on the date of
commencement of the Offer, Parent and Merger Sub shall file with the SEC a
Tender Offer Statement on Schedule 14D-1 with respect to the Offer (as
supplemented or amended from time to time, the "Schedule 14D-1") to provide for
the purchase of the issued and outstanding shares of Company Common Stock in
accordance with the terms hereof. Parent and Merger Sub agree, as to this
Schedule 14D-1, the Offer to Purchase and related Letter of Transmittal (which
documents, as supplemented or amended from time to time, together constitute the
"Offer Documents") will comply as to form and content in all material respects
with the applicable provisions of the federal securities laws. The Company and
its counsel shall be given an opportunity to review and comment upon the Offer
Documents and any amendment or supplement thereto prior to the filing thereof
with the SEC, and Parent and Merger Sub shall consider such comments in good
faith. Parent and Merger Sub agree to provide to the Company and its counsel any
comments which Parent, Merger Sub or their counsel may receive from the Staff of
the SEC promptly after receipt thereof, and any proposed responses thereto, with
respect to the Offer Documents and any amendment or supplement thereto. Parent,
Merger Sub and the Company agree to correct promptly any information provided by
any of them for use in the Offer Documents which shall have become false or
misleading in any material respect, and Parent and Merger Sub further agree to
take all steps necessary to cause the Schedule 14D-1 as so corrected to be filed
with the SEC and to disseminate any revised Offer Documents to the Company's
stockholders, in each case as and to the extent required by the applicable
provisions of the federal securities laws.
(b) The Company Board shall recommend acceptance of the Offer
to its Stockholders in a Solicitation/Recommendation on Schedule 14D-9 (as
supplemented or amended from time to time, the "Schedule 14D-9"), provided,
however, that the Company Board may thereafter amend or withdraw its
recommendation in accordance with Section 5.4(b). The Company shall file the
Schedule 14D-9 with the SEC upon commencement of the Offer which will comply as
to form and content in all material respects with the applicable provisions of
the federal securities laws. The Company will cooperate with Parent and Merger
Sub in mailing or otherwise
3
disseminating the Schedule 14D-9 with the appropriate Offer Documents to the
stockholders of the Company. Parent and its counsel shall be given an
opportunity to review and comment upon the Schedule 14D-9 and any amendment or
supplement thereto prior to the filing thereof with the SEC, and the Company
shall consider any such comments in good faith. The Company agrees to provide to
Parent and Merger Sub and their counsel any comments which the Company or its
counsel may receive from the Staff of the SEC promptly after receipt thereof,
and any proposed responses thereto, with respect to the Schedule 14D-9 and any
amendment or supplement thereto. The Company, Parent and Merger Sub agree to
correct promptly any information provided by any of them 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 such Schedule
14D-9 as so corrected to be filed with the SEC and disseminated to the Company's
stockholders, in each case as and to the extent required by the applicable
provisions of the federal securities laws. Parent, Merger Sub and the Company
each hereby agree to provide promptly such information necessary to the
preparation of the exhibits and schedules to the Schedule 14D-9 and the Offer
Documents which the respective party responsible therefor shall reasonably
request. The Company represents that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated has
delivered to the Company Board a written opinion, as of the date hereof, that
the consideration to be paid in the Offer and the Merger is fair to the holders
of the Company Common Stock from a financial point of view. The Company hereby
consents to the inclusion in the Offer Documents of the recommendations and
approvals referred to in this Section 1.2.
1.3 COMPANY ACTION.
(a) In connection with the Offer, the Company shall promptly
furnish Merger Sub with such information (including a list of the record holders
of the Company Common Stock and their addresses, as well as mailing labels
containing the names and addresses of all record holders of Company Common
Stock, any non-objecting beneficial owner lists and lists of security positions
of Company Common Stock held in stock depositories in the Company's possession
or control, in each case as of a recent date), and shall thereafter render such
assistance as Parent, Merger Sub or their agents may reasonably request in
communicating the Offer to the record and beneficial holders of Company Common
Stock. 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 and the Merger, Parent and Merger Sub shall
(a) hold in confidence the information contained in any of such labels and
lists, (b) use such information only in connection with the Offer and the Merger
and (c) if this Agreement is terminated, shall, upon request, deliver to the
Company or destroy all copies of such information then in their possession.
1.4 COMPOSITION OF THE COMPANY BOARD.
(a) Promptly upon the acceptance for payment of, and payment
by Merger Sub in accordance with the Offer for, not less than a majority of the
outstanding shares of Company Common Stock on a fully diluted basis pursuant to
the Offer, Merger Sub shall be entitled to
4
designate such number of members of the Company Board, rounded up to the next
whole number, equal to that number of directors which equals 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 such number
of shares of Company Common Stock owned in the aggregate by Merger Sub or
Parent, upon such acceptance for payment, bears to the number of shares of
Company Common Stock outstanding. Upon the written request of Merger Sub, the
Company shall, on the date of such request, (i) either increase the size of the
Company Board or use its reasonable efforts to secure the resignations of such
number of its incumbent directors as is necessary to enable Parent's designees
to be so elected to the Company Board and (ii) cause Parent's designees to be so
elected, in each case as may be necessary to comply with the foregoing
provisions of this Section 1.4(a).
(b) The Company's obligation to cause designees of Merger Sub
to be elected or appointed to the Company Board shall be subject to Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. The Company
shall promptly take all actions required pursuant to Section 14(f) and Rule
14f-1 in order to fulfill its obligations under this Section 1.4, and shall
include in the Schedule 14D-9 such information with respect to Merger Sub and
its designees as is required under Section 14(f) and Rule 14f-1. Parent and
Merger Sub will supply to the Company in writing and be solely responsible for
any information with respect to any of them and their designees, officers,
directors and affiliates required by Section 14(f) and Rule 14f-1 and applicable
rules and regulations.
(c) After the time that Merger Sub's designees constitute at
least a majority of the Company Board and until the Effective Time, the Company
Board shall always have at least two members (the "Independent Directors") who
are neither officers of Parent nor designees, shareholders or affiliates of
Parent or Parent's affiliates. During such period, any (i) amendment or
termination of this Agreement, (ii) extension of time for the performance or
waiver of the obligations or other acts of Parent or Merger Sub or waiver of the
Company's rights hereunder or (iii) action by the Company with respect to this
Agreement and the transactions contemplated hereby which adversely affects the
interests of the stockholders of the Company, shall require the approval of a
majority of the Independent Directors in addition to any required approval
thereof by the full Company Board. If the number of Independent Directors shall
be reduced below two for any reason whatsoever, any remaining Independent
Director shall be entitled to designate a person to fill the vacancy, which
designee shall not be a current or former officer or affiliate of Parent or any
of Parent's affiliates, or, if no Independent Directors then remain, the other
directors shall designate two persons to fill such vacancies who shall not be
current or former officers or affiliates of Parent or any of Parent's
affiliates, and such persons shall be deemed to be Independent Directors for
purposes of this Agreement. The Company Board shall not delegate any matter set
forth in this Section 1.4(c) to any committee of the Company Board.
5
ARTICLE II.
THE MERGER
2.1 THE MERGER. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the DGCL, Merger Sub shall be merged
with and into the Company at the Effective Time. Following the Merger, the
separate corporate existence of Merger Sub shall cease, and the Company shall
continue as the surviving corporation (the "Surviving Corporation") in
accordance with the DGCL.
2.2 CLOSING. The closing of the Merger (the "Closing") will take place
on the third 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 VI
hereof (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 Vedder,
Price, ▇▇▇▇▇▇▇ & Kammholz, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, unless another place is agreed to in writing by the parties
hereto.
2.3 EFFECTIVE TIME. Upon the Closing, the parties shall file with the
Secretary of State of the State of Delaware either (i) a certificate of merger,
in form and substance satisfactory to the Company and Parent, or (ii) in the
event Merger Sub shall have acquired 90% or more of the outstanding shares of
Company Common Stock, a certificate of ownership and merger (in either such
case, the "Certificate of Merger") executed in accordance with the relevant
provisions of the DGCL and shall make all other filings, recordings or
publications required under the DGCL in connection with the Merger. The Merger
shall become effective at such time as the Certificate of Merger is duly filed
with the Delaware Secretary of State, or at such other time as the parties may
agree and specify in the Certificate of Merger (the time the Merger becomes
effective being the "Effective Time").
2.4 EFFECT OF THE MERGER. At and after the Effective Time, the Merger
will have the effects set forth in Section 259 of the DGCL.
2.5 CERTIFICATE OF INCORPORATION. At the Effective Time and without any
further action on the part of the Company and Merger Sub, the certificate of
incorporation of the Company shall be amended to read in its entirety as the
certificate of incorporation of Merger Sub reads as in effect immediately prior
to the Effective Time until thereafter changed or amended as provided therein or
by applicable law, provided that such certificate of incorporation shall be
amended to reflect General Nutrition Companies, Inc. as the name of the
Surviving Corporation.
2.6 BYLAWS. The bylaws of Merger Sub as in effect at the Effective Time
shall be the bylaws of the Company until thereafter changed or amended as
provided therein or by applicable law.
6
2.7 OFFICERS AND DIRECTORS OF SURVIVING CORPORATION. The directors of
Merger Sub and/or any individuals designated by Merger Sub immediately prior to
the Effective Time shall be the initial directors of the Surviving Corporation,
until the earlier of their resignation or removal or otherwise ceasing to be a
director or until their respective successors are duly elected and qualified, as
the case may be. The officers of the Company immediately prior to the Effective
Time shall be the initial officers of the Surviving Corporation, until the
earlier of their resignation or removal or otherwise ceasing to be an officer or
until their respective successors are duly elected and qualified, as the case
may be.
2.8 EFFECT ON CAPITAL STOCK. As of the Effective Time, by virtue of the
Merger and without any action on the part of Parent, Merger Sub, the Company or
the holder of any shares of Company Common Stock or any shares of capital stock
of Merger Sub:
(a) CAPITAL STOCK OF MERGER SUB. Each issued and outstanding
share of capital stock of Merger Sub shall be converted into and become one
fully paid and nonassessable share of common stock, par value $0.01 per share,
of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND PARENT-OWNED STOCK.
Each share of Company Common Stock that is owned by the Company and each share
of Company Common Stock that is owned by Parent or Merger Sub shall
automatically be canceled and shall cease to exist, and no Merger Consideration
shall be delivered in exchange therefor.
(c) CONVERSION OF COMPANY COMMON STOCK. Subject to Section
2.9(h), at the Effective Time each issued and outstanding share of Company
Common Stock (other than shares to be canceled in accordance with Section
2.8(b)) shall be converted into the right to receive the Price Per Share in
cash, without interest (the "Merger Consideration"). As of the Effective Time,
all such shares of Company Common Stock shall no longer be outstanding and shall
automatically be canceled and shall cease to exist, and each holder of a
certificate representing any such shares of Company Common Stock shall cease to
have any rights with respect thereto, except the right to receive the Merger
Consideration upon surrender of such certificate in accordance with Section 2.9
or, if asserted properly, the right to appraisal under the DGCL (as described in
Section 2.9(h)).
2.9 SURRENDER AND PAYMENT.
(a) EXCHANGE AGENT. Prior to the Effective Time, Parent shall
designate a bank or trust company reasonably acceptable to the Company to act as
agent for the holders of shares of Company Common Stock in connection with the
Merger (the "Exchange Agent") to receive the Merger Consideration to which
holders of shares of Company Common Stock shall become entitled pursuant to
Section 2.8. Prior to the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware, Parent or Merger Sub shall deposit with the
Exchange Agent cash in an aggregate amount equal to the product of (i) the
number of shares of Company Common Stock
7
outstanding (and not to be canceled pursuant to Section 2.8(b)) immediately
prior to the Effective Time, multiplied by (ii) the Merger Consideration. The
deposit made by Parent or Merger Sub pursuant to the preceding sentence is
hereinafter referred to as (the "Payment Fund"). The Exchange Agent shall cause
the Payment Fund to be (i) held for the benefit of the holders of Company Common
Stock and (ii) promptly applied to making the payments provided for in Section
2.8(c). The Payment Fund shall not be used for any purpose that is not provided
for herein.
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable
after the Effective Time, Parent shall cause the Exchange Agent to mail to each
holder of record of a certificate or certificates (the "Certificates") which
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock, other than shares to be canceled in accordance with
Section 2.8(b), (i) a Letter of Transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the Merger Consideration. Upon surrender of a Certificate for cancellation
to the Exchange Agent, together with such Letter of Transmittal, duly executed,
and such other documents as may reasonably be required by the Exchange Agent,
the Exchange Agent shall pay the holder of such Certificate the Merger
Consideration in respect of such Certificate, less any required withholding
taxes, and the Certificate so surrendered shall forthwith be canceled. If any
portion of the Merger Consideration is to be paid to a Person other than the
registered holder of the shares represented by the Certificate or Certificates
surrendered in exchange therefor, it shall be a condition to such payment that
the Certificate or Certificates so surrendered shall be properly endorsed or
otherwise be in proper form for transfer and that the Person requesting such
payment shall pay to the Exchange Agent any transfer or other taxes required as
a result of such payment to a Person other than the registered holder of such
shares or establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not payable. Until surrendered as contemplated by this Section
2.9, each Certificate (other than Certificates representing Dissenting Shares
(as defined below) or shares of Company Common Stock to be canceled pursuant to
Section 2.8(b)) shall be deemed at any time after the Effective Time to
represent only the right to receive the Merger Consideration upon such
surrender.
(c) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. 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 of Company Common
Stock theretofore represented by such Certificates. There shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Company Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation or the Exchange Agent
for any reason, they shall be canceled and exchanged as provided in this Article
II, except as otherwise provided by law.
8
(d) UNCLAIMED FUNDS. Any portion of the Payment Fund made
available to the Exchange Agent pursuant to Section 2.9(a) that remains
unclaimed by holders of the Certificates for six months after the Effective Time
shall be delivered to the Surviving Corporation or a United States parent
thereof, upon demand, and any holders of Certificates who have not theretofore
complied with this Article II shall thereafter look only to Parent for payment
of their claim for Merger Consideration.
(e) NO LIABILITY. None of Parent, Merger Sub, the Company or
the Exchange Agent shall be liable to any Person in respect of any Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificate has not been
surrendered prior to five years after the Effective Time (or immediately prior
to such earlier date on which Merger Consideration in respect of such
Certificate would otherwise escheat to or become the property of any public
official), any such shares, cash, dividends or distributions in respect of such
Certificate shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any person previously entitled thereto.
(f) INVESTMENT OF FUNDS. The Payment Fund shall be invested by
the Exchange Agent in obligations of, or guaranteed by, the United States of
America, in commercial paper obligations rated A-1 or P-l or better by ▇▇▇▇▇'▇
Investor Services or Standard & Poor's Corporation, respectively, in each case
with maturities not exceeding seven days. All earnings thereon shall inure to
the benefit of Parent or Merger Sub.
(g) LOST CERTIFICATES. In the event that any Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the Person claiming such Certificate to be lost, stolen or destroyed
and, if required by Parent, the granting of an indemnity reasonably satisfactory
to Parent against any claim that may be made against it, the Surviving
Corporation or the Exchange Agent, with respect to such Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration with respect to such Certificate, to which
such Person is entitled pursuant hereto.
(h) DISSENTING SHARES. Notwithstanding anything in this
Agreement to the contrary, shares of Company Common Stock, outstanding
immediately prior to the Effective Time and held by a holder who has not voted
in favor of the Merger or consented thereto in writing and who has demanded
appraisal for such shares in accordance with the DGCL (the "Dissenting Shares"),
shall not be converted into a right to receive the Merger Consideration, unless
such holder fails to perfect or withdraws or otherwise loses its right to
appraisal. If after the Effective Time such holder fails to perfect or withdraws
or loses its right to appraisal, such shares shall be treated as if they had
been converted as of the Effective Time into a right to receive the Merger
Consideration. The Company shall give Parent prompt notice of any demands
received by the Company for appraisal of shares of Company Common Stock, and
Parent shall have the right to participate in all
9
negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Parent, make any payment with
respect to, or settle or offer to settle, any such demands.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as disclosed
in any of the Company SEC Reports (as defined below) filed with the SEC and
publicly available prior to the date hereof or as specifically set forth in the
Company Disclosure Schedule delivered by the Company to Parent on the date
hereof, subject to Section 8.12 (the "Company Disclosure Schedule"), the Company
represents and warrants to Parent and Merger Sub as follows:
(a) ORGANIZATION, STANDING AND POWER. Each of the Company and
its Subsidiaries has been duly organized and is validly existing and in good
standing under the laws of its jurisdiction of incorporation. Each of the
Company and its Subsidiaries is duly qualified and in good standing or otherwise
authorized or licensed to do business in each jurisdiction in which the nature
of its business or the ownership or leasing of its properties makes such
qualification necessary, except for any such failure to be so qualified,
authorized or licensed or in good standing is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the Company or
prevent the Company from consummating the transactions contemplated hereby. The
copies of the Organizational Documents of the Company and of each Significant
Subsidiary which were previously furnished or made available to Parent are, in
each case, true, complete and correct copies of such documents as in effect on
the date of this Agreement. 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. Neither the Company nor any of its Subsidiaries
is in violation of any provisions of its Organizational Documents in any
material respect. The list of Subsidiaries of the Company filed by the Company
with its most recent Annual Report on Form 10-K is a true and accurate list of
all the Significant Subsidiaries of the Company. Except for its interests in its
Subsidiaries, the Company does not own, directly or indirectly, any capital
stock, membership interest, partnership interest, joint venture interest or
other equity interest in any Person.
(b) CAPITAL STRUCTURE.
(i) As of the date of this Agreement, the authorized
capital stock of the Company consists of 200,000,000 shares of Company
Common Stock, of which, as of June 30, 1999, 67,997,138 shares have
been issued and are outstanding and 7,220,476 shares have been reserved
for issuance upon exercise of outstanding options, warrants or other
rights to acquire capital stock from the Company. Except as provided in
this Section 3.1(b), there are no shares of capital stock or other
equity securities of the Company issued, reserved for
10
issuance or outstanding. No shares of preferred stock have been
authorized or are outstanding. All issued and outstanding shares of the
capital stock of the Company are duly authorized, validly issued, fully
paid and nonassessable, and no class of capital stock is entitled to
preemptive rights. As of the date of this Agreement, there are no
outstanding options, warrants, convertible or exchangeable securities
or other rights to acquire capital stock from the Company other than
options representing in the aggregate the right to purchase not more
than 7,170,476 shares of Company Common Stock under the Company Equity
Plans and other than warrants representing in the aggregate the right
to purchase 50,000 shares of Company Common Stock (the "Warrants")
which in accordance with the terms of the Warrants shall upon
consummation of the Merger convert into the right to receive the Merger
Consideration.
(ii) All of the issued and outstanding shares of
capital stock of the Company's Subsidiaries are duly authorized,
validly issued, fully paid and nonassessable and are owned by the
Company, free and clear of any liens, pledges, security interests,
claims, encumbrances, restrictions (including any restriction on the
right to vote or sell such shares, except as may be imposed as a matter
of law), preemptive rights or any other claims of any third party
("Liens").
(iii) As of the date of this Agreement, no bonds,
debentures, notes or other indebtedness of the Company having the right
to vote on any matters on which stockholders may vote ("Company Voting
Debt") are issued or outstanding.
(iv) Except as otherwise set forth in this Section
3.1(b), as of the date of this Agreement, there are no securities,
options, warrants, calls, rights, commitments, agreements, arrangements
or undertakings of any kind to which the Company or its Subsidiaries is
a party or by which any of them is bound obligating (and no contract,
agreement, understanding, arrangement or obligation, whether or not
contingent, providing for) the Company or any of its Subsidiary to
issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other voting securities of the
Company or such Subsidiary or obligating the Company or such Subsidiary
to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or
undertaking. As of the date of this Agreement, there are no outstanding
obligations, arrangements, agreements or commitments of the Company or
any of its Subsidiaries to repurchase, redeem or otherwise acquire any
shares of capital stock of the Company or such Subsidiary. Upon the
consummation of the Merger, no shares of Company Common Stock or other
securities of the Company will be issuable and, immediately after the
Effective Time, the Surviving Corporation will have no obligation to
issue, transfer or sell any shares of common stock of the Surviving
Corporation pursuant to any compensation and benefit plan of the
Company or any of its Subsidiaries.
11
(c) AUTHORITY; NO CONFLICTS.
(i) The Company has all requisite corporate power and
corporate authority to enter into this Agreement and, subject to the
adoption of this Agreement by the requisite vote of the holders of
Company Common Stock, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of the
Company, subject in the case of the consummation of the Merger to the
adoption of this Agreement by the requisite vote of the stockholders of
the Company, and no other corporate proceedings are necessary to
authorize this Agreement or to consummate the transactions contemplated
hereby. This Agreement has been duly executed and delivered by the
Company and, assuming the due execution and delivery of this Agreement
by Parent and Merger Sub, constitutes a valid and binding agreement of
the Company, enforceable against it in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws relating to or affecting
creditors generally and by general equity principles (regardless of
whether such enforceability is considered in a proceeding in equity or
at law). The Company Board has, at a meeting duly called and held, (A)
unanimously approved this Agreement, the Offer and the Merger and the
transactions contemplated hereby in accordance with the DGCL, (B)
determined that the Offer and the Merger are fair to and in the best
interests of the Company's stockholders, and (C) recommended that the
stockholders of the Company tender their shares of Company Common Stock
into the Offer and adopt this Agreement.
(ii) The execution, delivery and performance of this
Agreement do not or will not, as the case may be, and the consummation
of the transactions contemplated hereby will not, conflict with, or
result in any violation of, or constitute a default (with or without
notice or lapse of time, or both) under, or give rise to a right of
consent, termination, amendment, cancellation or acceleration of any
obligation or the loss of a material benefit under, or the creation of
a Lien on any assets (any such conflict, violation, default, right of
consent, termination, amendment, cancellation or acceleration of any
obligations or creation, a "Violation"), pursuant to: (A) any provision
of the Organizational Documents of the Company or any of its
Subsidiaries or (B) except as is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the
Company or prevent or materially delay the consummation of the
transactions contemplated hereby and, subject to obtaining or making
the consents, approvals, orders, authorizations, registrations,
declarations and filings referred to in paragraph (iii) below, the
terms, provisions or conditions of any loan or credit agreement, note,
mortgage, bond, indenture, lease (other than the Company's retail store
leases), compensation or benefit plan (or any grant or award made
pursuant thereto) or other agreement, obligation, instrument, contract,
permit, concession,
12
franchise, license, judgment, order, writ, injunction, award, decree,
statute, law, ordinance, rule or regulation applicable to the Company,
the Company's Subsidiaries or any of their respective properties or
assets.
(iii) No consent, registration, permit, approval,
order or authorization of, or registration, declaration, notice,
report, or other filing with, any supranational, national, state,
municipal or local government, any instrumentality, subdivision, court,
administrative agency or commission or other authority thereof, or any
quasi-governmental or private body exercising any regulatory, taxing,
importing or other governmental or quasi-governmental authority (a
"Governmental Entity"), is required by or with respect to the Company
or any of its Subsidiaries in connection with the execution and
delivery of this Agreement by the Company or the consummation by the
Company of the transactions contemplated hereby, except for (x) those
required under or in relation to (A) the Exchange Act, (B) the DGCL
with respect to the filing and recordation of the Certificate of Merger
and any other appropriate merger or other documents, (C) the rules and
regulations of The Nasdaq National Market ("Nasdaq"), and (D) antitrust
or other competition laws of any applicable jurisdictions and (y) such
consents, registrations, permits, approvals, orders, authorizations,
registrations, declarations, notices, reports and other filings the
failure of which to make or obtain is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the
Company or prevent the consummation of the transactions contemplated
hereby.
(d) REPORTS AND FINANCIAL STATEMENTS.
(i) Since January 31, 1998, the Company has timely
filed all required reports, schedules, forms, statements and other
documents required to be filed by it with the SEC (collectively,
including all exhibits thereto, the "Company SEC Reports"). The Company
SEC Reports, as of their respective dates (and, if amended or
superseded by a filing prior to the date of this Agreement or the
Closing Date, then on the date of such filing), 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 (or incorporated by reference)
therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading. Each of
the financial statements (including the related notes) included or to
be included in, or incorporated by reference into, the Company SEC
Reports presents or will present fairly, in all material respects, the
consolidated financial position and consolidated results of operations
and cash flows of the Company and its Subsidiaries as of the respective
dates or for the respective periods set forth therein, all in
conformity with U.S. generally accepted accounting principles ("GAAP")
consistently applied during the periods involved except as otherwise
noted therein, and subject, in the case of the unaudited interim
financial statements, to normal year-
13
end audit adjustments that have not been and will not be material
in amount. All of such Company SEC Reports, as of their respective
dates (and as of the date of any amendment to the respective
Company SEC Report filed prior to the date hereof), complied as to
form in all material respects with the applicable requirements of
the Securities Act of 1933, as amended (the "Securities Act"), the
Exchange Act and the rules and regulations promulgated under such
acts (as in effect on the dates on which such SEC Reports were
filed).
(ii) Except for liabilities and obligations incurred
in the ordinary course of business since February 6, 1999 (none of
which has had or is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on the Company), the Company does
not have any undisclosed liabilities or obligations of any nature
required by GAAP to be set forth on a consolidated balance sheet of the
Company or which have had or are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the
Company.
(iii) The Company has delivered to Parent a complete
and correct copy of any material amendments or modifications, which
have not yet been filed with the SEC, to all agreements, documents or
other instruments which previously had been filed by the Company with
the SEC pursuant to the Exchange Act.
(e) INFORMATION SUPPLIED.
(i) None of the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in
(A) the proxy statement relating to the Company Stockholders Meeting
(as defined herein) (the "Proxy Statement"), if applicable, (B) the
Schedule 14D-9, (C) the Offer Documents and (D) any other document
filed or to be filed with the SEC or any other Government Entity in
connection with the Offer will, at the respective times such documents
or any amendments or supplements thereto are filed, and, with respect
to the Offer Documents and the Proxy Statement, if any, when first
published, sent or given to the stockholders of the Company, 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 or, in the case of the Proxy Statement,
if any, or any amendment thereof or supplement thereto, at the time of
the Company Stockholders Meeting, if any, and at the Effective Time,
contain an 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 are made, not false or misleading or necessary to
correct any statement in any earlier communication with respect to the
Offer or the solicitation of proxies for the Company Stockholders
Meeting, if any, which shall have become false or misleading. The Proxy
Statement, if any, and Schedule 14D-9 will comply
14
as to form with the requirements of the Exchange Act and the Securities
Act and the rules and regulations of the SEC thereunder.
(ii) Notwithstanding the foregoing provisions of this
Section 3.1(e), no representation or warranty is made by the Company
with respect to statements made or incorporated by reference in the
Proxy Statement, if any, or the Offer Documents based on information
supplied by Parent or Merger Sub for inclusion or incorporation by
reference therein.
(f) COMPLIANCE WITH APPLICABLE LAWS; REGULATORY MATTERS. The
Company and each of its Subsidiaries hold all permits, licenses, certificates,
franchises, registrations, variances, exemptions, orders and approvals of all
Governmental Entities other than those the failure to so hold individually or in
the aggregate is not reasonably likely to have a Material Adverse Effect on the
Company (the "Company Permits"). The Company and each of its Subsidiaries have
performed its respective obligations under and are in compliance with the terms
of the Company Permits, except where the failure so to comply or perform,
individually or in the aggregate, is not reasonably likely to have a Material
Adverse Effect on the Company. No event has occurred or condition or state of
facts exists which constitutes or, after notice or lapse of time or both, would
constitute a breach or default under the Company Permits or, after notice or
lapse of time or both, would permit revocation or termination of the Company
Permits, except where such event, condition or state of facts, individually or
in the aggregate, is not reasonably likely to have a Material Adverse Effect on
the Company. The businesses of the Company and its Subsidiaries are not being
and have not been conducted in violation of any law, ordinance, regulation,
judgment, decree, injunction, rule or order of any Governmental Entity, except
for violations which are not reasonably likely to have a Material Adverse Effect
on the Company. As of the date of this Agreement, no lawsuit, claim, suit,
proceeding or investigation by any Governmental Entity with respect to the
Company or any of its Subsidiaries is pending or, to the best knowledge of the
Company, threatened, other than lawsuits, claims, suits, proceedings or
investigations which, individually or in the aggregate, are not reasonably
likely to have a Material Adverse Effect on the Company. This provision shall
not apply to environmental matters, which are the subject of Section 3.1(s).
(g) LITIGATION. As of the date of this Agreement, there is no
litigation, arbitration, claim, suit, action, investigation or proceeding
pending or, to the knowledge of the Company, threatened against or affecting the
Company or any of its Subsidiaries or any of their respective properties or
assets, which is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on the Company or is reasonably likely to prevent the
consummation of the transactions contemplated by this Agreement, nor is there
any judgment, award, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against the Company or any of its Subsidiaries
is reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on the Company. This provision shall not apply to environmental
matters, which are the subject of Section 3.1(s).
15
(h) TAXES. (i) The Company and its Subsidiaries have duly and
timely filed (taking into account any extension of time within which to file)
all Tax Returns required to be filed by any of them other than those the failure
of which to file is not reasonably likely to have individually or in the
aggregate a Material Adverse Effect on the Company and all such filed Tax
Returns are complete and accurate in all material respects; (ii) the Company and
its Subsidiaries have paid all Taxes due and payable by them (whether or not
shown on any Tax Return), other than those the failure of which to pay is not
reasonably likely to have individually or in the aggregate a Material Adverse
Effect on the Company; (iii) as of the date of this Agreement, there are no
pending or, to the knowledge of the Company, threatened in writing audits,
examinations, investigations or other proceedings in respect of Taxes or Tax
matters relating to the Company or any of its Subsidiaries which, if determined
adversely to the Company or such Subsidiary, are reasonably likely to have a
Material Adverse Effect on the Company; (iv) there are no deficiencies or claims
for any Taxes that have been proposed, asserted or assessed, or material issues
that have been raised in connection with the examination of Tax Returns and that
are reasonably likely to give rise to such deficiencies or claims, against the
Company or any of its Subsidiaries which, if such deficiencies or claims were
finally resolved against the Company or such Subsidiary, are reasonably likely
to have a Material Adverse Effect on the Company; (v) there are no material
Liens for Taxes upon the assets of the Company or any of its Subsidiaries, other
than Liens for current Taxes not yet due and payable and Liens for Taxes that
are being contested in good faith by appropriate proceedings and that are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on the Company if any such contest is unsuccessful; (vi) the Company is
not, was not, and will not be at any time during the five-year period ending on
the date on which the Effective Time occurs, a "United States real property
holding corporation" within the meaning of Section 897(c) of the Code; (vii)
neither the Company nor any of its Subsidiaries has made an election under
Section 341(f) of the Code; and (viii) neither the Company nor any of its
Subsidiaries has filed or been required to file any reports under Section 999 of
the Code; (ix) other than the consolidated group of which the Company is now the
common parent, neither the Company nor any of its Subsidiaries has ever been (A)
a member of an affiliated group filing a consolidated federal income Tax Return
or (B) responsible for any liability for the Taxes of any Person as a transferee
or successor, by contract, by operation of law, or otherwise; and (x) except
where the failure to do so is not reasonably likely to have individually or in
the aggregate a Material Adverse Effect on the Company, the Company and each of
its Subsidiaries has (A) withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
creditor, stockholder, or other third party and (B) collected any and all
amounts required from customers or other third parties in the form of sales,
use, or similar Taxes and paid, when due, such Taxes to the appropriate
governmental authority.
(i) ABSENCE OF CERTAIN CHANGES OR EVENTS. Since February 6,
1999, (A) each of the Company and the Company's Subsidiaries has conducted its
business in the ordinary course; (B) there has not been any change in the
business, financial condition or results of operations of the
16
Company or its Subsidiaries that has had, or is reasonably likely to have, a
Material Adverse Effect on the Company; (C) there has not been any entry by the
Company or its Subsidiaries into any employment agreement, severance agreement
or termination agreement with any employee of the Company other than in the
ordinary course of business except in connection with the transactions
contemplated hereby; (D) there has not been any declaration, setting aside or
payment of any dividend or other distribution with respect to the capital stock
of the Company nor has there been any repurchase, redemption or other
acquisition by the Company or any of its Subsidiaries of any outstanding shares
of capital stock or other securities of, or other ownership interests in, the
Company or such Subsidiary; (E) there has not been any change by the Company in
accounting principles, practices or methods; (F) except as provided for herein,
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 material amendment of any compensation and benefit plans;
(G) there has not been any amendment of any material term of any outstanding
security of the Company or any of its Subsidiaries; (H) there has not been any
acquisition, sale or transfer of any material assets of the Company or any of
its Subsidiaries; and (I) there has not been any entry by the Company or its
Subsidiaries into any material joint venture or other similar arrangement with
any Person.
(j) VOTE REQUIRED. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock adopting this
Agreement (the "Required Company Votes") is the only vote of the holders of any
class or series of the Company capital stock necessary to approve this Agreement
and the transactions contemplated hereby and is only necessary in the event that
the number of shares of Company Common Stock tendered pursuant to the Offer
represents less than 90% of the issued and outstanding shares of Company Common
Stock.
(k) CERTAIN AGREEMENTS. (i) All contracts listed as an exhibit
to the Company's Annual Report on Form 10-K under the rules and regulations of
the SEC relating to the business of the Company and its Subsidiaries and (ii)
any other agreement within the meaning set forth in item 601(b)(10) of
Regulation S-K of Title 17, Part 229 of the Code of Federal Regulations (the
"Company Material Contracts") are valid and in full force and effect, except to
the extent they have previously expired in accordance with their terms, except
as contemplated by the letter agreement referred to in Section 5.5 hereof, and
other than as is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on the Company. Neither the Company nor its
Subsidiaries has violated any provision of, or committed or failed to perform
any act which, with or without notice, lapse of time, or both, is reasonably
likely to constitute a default under the provisions of, any such Company
Material Contract, and neither the Company nor any of its Subsidiaries has
received notice that any party to any Company Material Contract intends to
cancel, terminate or otherwise modify the terms of any applicable Company
Material Contract, except in each case, as is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the Company. To
the knowledge of the Company, no counterparty to any such Company Material
Contract has violated any provision of, or committed or failed to perform any
act which,
17
with or without notice, lapse of time, or both, is reasonably likely to
constitute a default or other breach under the provisions of, such Company
Material Contract, except for defaults or breaches which are not reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect on
the Company.
(l) EMPLOYEE BENEFIT PLANS: LABOR MATTERS.
(i) With respect to each employee benefit plan as
defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), and with respect to each other material
employee and/or director benefit plan, program, arrangement and
contract (including any bonus, deferred compensation, stock bonus,
stock purchase, restricted stock, stock option, fringe benefit, sick
pay, vacation, employment, termination, change in control and severance
plan, program, arrangement and contract), to which the Company or any
of its Subsidiaries is a party, which is maintained or contributed to
by the Company or any of its Subsidiaries, or with respect to which the
Company or any of its Subsidiaries could incur material liability under
Section 4069, 4201 or 4212(c) of ERISA other than any "multiemployer
plan" within the meaning of Section 3(37) of ERISA (a "Multiemployer
Plan") (collectively, together with any and all amendments thereto, and
any related trust agreement, insurance contract or other funding
instrument, the "Company Benefit Plans"), the Company has listed such
Company Benefit Plan on Schedule 3.1(l)(i) of the Company Disclosure
Schedule and has made available to Parent a true and complete copy of
such Company Benefit Plan (or, to the extent no such copy exists, an
accurate description thereof). A true and complete copy of the most
recent annual report, actuarial reports, summary plan description or
other employee communication material (including any summary of
material modification) and Internal Revenue Service determination
letter with respect to each Company Benefit Plan (to the extent
applicable thereto) has been made available to Parent.
(ii) Each of the Company Benefit Plans that is an
"employee pension benefit plan" within the meaning of Section 3(2) of
ERISA and that is intended to be qualified under Section 401(a) of the
Code has received a favorable determination letter from the United
States Internal Revenue Service, and the Company is not aware of any
circumstances likely to result in the revocation of any such favorable
determination letter.
(iii) With respect to the Company Benefit Plans and
any Multiemployer Plan, no event has occurred and, to the knowledge of
the Company, there exists no condition or set of circumstances,
including but not limited to any non-exempt "prohibited transactions"
(as described in ERISA or the Code) with respect to any Company Benefit
Plan, in connection with which the Company or any of its Subsidiaries
could be subject to any liability under the terms of such Company
Benefit Plans, Multiemployer Plan, ERISA,
18
the Code or any other applicable law which could reasonably be expected
to have a Material Adverse Effect on the Company.
(iv) All Company Benefit Plans, to the extent subject
to ERISA have been and are in substantial compliance with ERISA. There
is no material pending or, to the knowledge of the Company threatened,
litigation relating to the Company Benefit Plans. No Company Benefit
Plan is subject to Title IV of ERISA and no liability under Title IV of
ERISA has been or is expected to be incurred by the Company or any of
its Subsidiaries with respect to any ongoing, frozen or terminated
"single-employer plan", within the meaning of Section 4001(a)(15) of
ERISA, of any entity which is considered one employer with the Company
under Section 4001 of ERISA or Section 414 of the Code (an "ERISA
Affiliate").
(v) Neither the Company nor any of its Subsidiaries
has any material obligations for retiree health and life benefits under
any Company Benefit Plan except to the extent required by applicable
law.
(vi) All Company Benefit Plans maintained outside of
the United States have been and are in substantial compliance with
applicable local law except where such failure to comply is not
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on the Company.
(vii) Neither the Company nor any of its Subsidiaries
is a party to any material collective bargaining or other labor union
contracts and no collective bargaining agreement is being negotiated by
the Company or any of its Subsidiaries. There is no pending labor
dispute, strike or work stoppage against the Company or any of its
Subsidiaries which may interfere with the respective business
activities of the Company or any of its Subsidiaries, except where such
dispute, strike or work stoppage is not reasonably likely to have
individually or in the aggregate a Material Adverse Effect on the
Company. There is no pending charge or complaint against the Company or
any of its Subsidiaries by the National Labor Relations Board or any
comparable state agency, except where such unfair labor practice,
charge or complaint is not reasonably likely to have a Material Adverse
Effect on the Company.
(viii) No amount that will be received (whether in
cash or property or the vesting of property) or the forgiveness of
indebtedness as a result of the Offer, Merger or any other transaction
contemplated by this Agreement or otherwise by any employee, officer or
director of the Company or any of its affiliates under any Company
Benefit Plan currently in effect will be an "excess parachute payment"
(as defined in Section 280G(b)(1) of the Code). Schedule 3.1(l)(viii)
of the Company Disclosure Schedule sets forth (A) the estimated maximum
amount that could be paid to or received by each "disqualified
individual" (as defined in proposed regulations under Section 280G of
the Code) (whether
19
in cash or property or the vesting of property or the forgiveness of
indebtedness) as a result of the Offer, Merger or the other
transactions contemplated by this Agreement under all Company Benefit
Plans or otherwise (B) the "base amount" (as defined in Section
280G(b)(3) of the Code) for each disqualified individual calculated as
of the date of this Agreement, and (c) a list of each employee of the
Company or any of its Subsidiaries who is entitled to receive a
retention bonus, severance and/or other payment as a result of the
Offer, Merger or any other transaction contemplated hereby, the amount
of each such bonus, severance and/or other payment and the date and
other terms relating to the payment thereof.
(ix) Other than as set forth on Schedule 3.1(l)(viii)
of the Company Disclosure Schedule, or as set forth in the Company
Equity Plans, no employee of the Company or any of its Subsidiaries
will be entitled to any additional benefits or any acceleration of the
time of payment or vesting of any benefits under any Company Benefit
Plan or otherwise as a result of the transactions contemplated by this
Agreement.
(m) INTELLECTUAL PROPERTY. Except as is not reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on the
Company, all patents, trademarks, trade names, service marks and copyrights and
registrations and applications relating thereto held by the Company and its
Subsidiaries are valid and enforceable and, (A) neither the Company nor any of
its Subsidiaries is, nor will the Company or any of its Subsidiaries be as a
result of the execution and delivery of this Agreement or the performance of the
Company's obligations hereunder, in violation of, and no claims are pending or,
to the knowledge of the Company, threatened that the Company or any of its
Subsidiaries is infringing on or otherwise violating the rights of any person
with regard to any Intellectual Property and (B) no person is infringing on or
otherwise violating any right of the Company or any of its Subsidiaries with
respect to any Intellectual Property owned by and/or licensed to the Company or
any of its Subsidiaries.
(n) BROKERS OR FINDERS. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any broker's
or finder's fee or any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement, except ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated, the arrangements with which have been disclosed in writing to
Parent prior to the date hereof. Schedule 3.1(n) sets forth the estimated Merger
Fees (as defined herein) owed or which will be owing by the Company and its
Subsidiaries in connection with the Offer, the Merger and the other transactions
contemplated by this Agreement. The term "Merger Fees" means all fees and
expenses paid since May 1, 1999 or payable by or on behalf of the Company or any
of its Subsidiaries to all attorneys, accountants, investment bankers, financial
advisors and other experts and advisers incident to the negotiation,
preparation, execution and consummation of this Agreement and the transactions
contemplated hereby.
20
(o) OPINION OF FINANCIAL ADVISOR. The Company has received a
written opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated dated the date of this
Agreement, to the effect that, as of such date, the consideration to be paid in
the Offer and the Merger is fair, from a financial point of view, to the holders
of Company Common Stock. A copy of this opinion will promptly be provided to
Parent.
(p) PRODUCT CLAIMS. Except as is not reasonably likely to have
a Material Adverse Effect on the Company, as of the date hereof, there are no
pending or, to the knowledge of the Company, threatened product liability claims
with respect to any products that the Company or any of its Subsidiaries
manufactures or sells ("Company Products").
(q) YEAR 2000. The Company has a Year 2000 program in place
which is adequate to cause all computer software and data processing devices
designed by the Company (i) used in or for the manufacturing of Company Products
by the Company and/or any of its Subsidiaries, or (ii) utilized in or by any
Company Products, including any Company Products sold and/or installed prior to
the date hereof, to become "Year 2000 Compliant" during 1999 and all costs
associated with such program are included in the Company's 1999 budget and in
its 2000 strategic plan, in each case except as had not had or would not
reasonably be likely to have, individually or in the aggregate, a Material
Adverse Effect on the Company. "Year 2000 Compliant" means that the product or
software accurately processes and stores date/time data (including, but not
limited to calculating, comparing, displaying, recording and sequencing
operations involving date/time data) during, from and into and between the
twentieth and twenty-first centuries, and the years 1999 and 2000, including
correct processing of leap year data.
(r) TAKEOVER STATUTES; RIGHTS PLANS. The Company has opted out
of Section 203 of the DGCL in accordance with the terms of Section 203 of the
DGCL. No "fair price", "moratorium", "control share acquisition", "interested
shareholder", "business combination" or other similar anti-takeover statute or
regulation (including the business combination provisions of Section 203 of the
DGCL) (each a "Takeover Statute") is, or prior to or at the Effective Time will
be, applicable to the Company, the Company Common Stock, the Offer or the Merger
or the transactions contemplated hereby. The Company does not have any
stockholder rights plan or similar anti-takeover device in effect.
(s) ENVIRONMENTAL MATTERS. Except as is not reasonably likely
to have a Material Adverse Effect on the Company: (i) the Company and each
Subsidiary is in compliance and to the knowledge of the Company has been in
compliance with all Environmental Laws; (ii) no property that is currently owned
or operated or, to the knowledge of the Company, has been owned or operated by
the Company or any current or former Subsidiary contains any Hazardous Substance
or other condition which is reasonably likely to require investigation or
remediation or lead to any liability of the Company or its Subsidiaries under
any Environmental Law; (iii) to the knowledge
21
of the Company, neither the Company nor any of its Subsidiaries is subject to
liability for any off-site disposal or release of any Hazardous Substance under
any Environmental Law; (iv) there are no pending, or to the knowledge of the
Company, threatened claims against the Company or any of its Subsidiaries
alleging a violation of Environmental Law; and (v) neither the Company nor any
of its Subsidiaries has received written notice alleging that the Company or any
of its Subsidiaries is in violation of any Environmental Law or is potentially
liable for the costs of investigating or remediating contaminated property
pursuant to any Environmental Law. As used herein, "Environmental Law" means any
law, regulation, rule, order, decree, or common law relating to the protection
of the environment. "Hazardous Substance" means any substance that is listed,
classified or regulated in any concentration under any Environmental Law
including petroleum products, asbestos and polychlorinated biphenyls.
Notwithstanding anything to the contrary in this Agreement, this Section 3.1(s)
sets forth the sole and exclusive representations and warranties of the Company
or any of its Subsidiaries with regard to any environmental matters.
(t) PROPERTIES. Section 3.1(t) of the Company Disclosure
Schedule contains a true and complete list, as of June 17, 1999, of all real
properties owned by the Company or any of its Subsidiaries. The Company has
delivered a list, which is true and complete in all material respects, of all
real properties leased by the Company or any of its Subsidiaries in the United
States, Canada and the United Kingdom as of June 17, 1999. Each of the Company
and its Subsidiaries has good and marketable title to all properties, assets and
rights of any kind whatsoever whether real, personal or mixed, and whether
tangible or intangible owned by it (collectively, the "Company Assets"), in each
case free and clear of all liens and other encumbrances except those which,
individually or in the aggregate, are not reasonably likely to have a Material
Adverse Effect on the Company. There are no pending or, to the knowledge of the
Company, threatened condemnation proceedings against or affecting any Company
Asset, and none of the Company Assets is subject to any commitment or other
arrangement for its sale to a third party outside the ordinary course of
business, which either individually or in the aggregate are not reasonably
likely to have a Material Adverse Effect on the Company.
(u) CUSTOMERS AND SUPPLIERS. Since February 6, 1999 through
the date hereof, there has been no termination, cancellation or curtailment of
the business relationship of the Company with (i) any customer (other than
retail consumers) or supplier or group of affiliated customers or suppliers or
(ii) any joint venture or alliance partners, in each case which is reasonably
likely to result in a Material Adverse Effect on the Company, and the Company
has not received written notice of any such termination, cancellation or
curtailment.
22
(v) FRANCHISE.
(i) To the Company's knowledge, each agreement,
instrument or document executed by the Company or any of its
Subsidiaries in connection with the granting or operation of a
franchise ("Franchise Agreement") represents the legal, valid and
binding obligation of the franchisee thereunder, subject to any
franchisee's rights in bankruptcy, and is enforceable against such
franchisee in accordance with its terms except as is not reasonably
likely, individually or in the aggregate, to have a Material Adverse
Effect on the Company. The Company is not in violation of any Franchise
Agreement to which it is a party except for violations which are not
reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect on the Company.
(ii) The Company has delivered to Parent a true and
correct copy of Company's Uniform Franchise Offering Circular ("UFOC")
which is currently being used in connection with the offer to sell and
sale of its franchises in the United States. The UFOC, and all UFOCs
previously used by Company and/or its Subsidiaries since it commenced
franchising do not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except as is
not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on the Company.
(iii) The Company has maintained, operated and
administered its and/or its Subsidiaries' national advertising fund
("Fund") in compliance with Company's legal responsibilities
established by its Franchise Agreements and in any other agreements or
understandings with respect to the Fund entered into the franchisees,
suppliers, vendors and others except where failure to comply,
individually or in the aggregate, is not reasonably likely to have a
Material Adverse Effect on the Company.
3.2 REPRESENTATIONS AND WARRANTIES OF PARENT. Except as specifically
set forth in the Parent Disclosure Schedule delivered by Parent to the Company
dated as of the date of this Agreement (the "Parent Disclosure Schedule") or as
disclosed in the Parent's Annual Report for the year ended December 31, 1998
publicly available prior to the date hereof, Parent represents and warrants to
the Company as follows:
(a) ORGANIZATION, STANDING AND POWER. Parent has been duly
organized and is validly existing under the laws of its jurisdiction of
organization. Parent is duly qualified or otherwise authorized to do business in
each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification necessary, except where the
failure so to qualify or be so authorized is not reasonably likely to have a
Material Adverse Effect on Parent.
23
Parent has the requisite corporate power and corporate authority, in all
material respects, to own, lease and operate its properties and to carry on its
businesses as they are now being conducted. Parent is not in violation of any
provisions of its Organizational Documents in any material respect.
(b) AUTHORITY; NO CONFLICTS.
(i) Parent has all requisite corporate power and
corporate authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action
on the part of Parent and no other corporate proceedings are necessary
to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by Parent and, assuming due execution by the Company,
constitutes a valid and binding agreement of Parent, enforceable
against it in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium
and other similar laws relating to or affecting creditors generally, or
by general equity principles (regardless of whether such enforceability
is considered in a proceeding in equity or at law). The Supervisory
Board of Parent has, at a meeting duly called and held, unanimously
approved the transactions contemplated by this Agreement.
(ii) The execution and delivery of this Agreement do
not or will not, as the case may be, and the consummation of the
transactions contemplated hereby will not, result in any Violation
pursuant to: (A) any provision of the Organizational Documents of
Parent or (B) except as is not reasonably likely to have a Material
Adverse Effect on Parent or prevent or materially delay the
consummation of the transactions contemplated hereby and subject to
obtaining or making the consents, approvals, orders, authorizations,
registrations, declarations and filings referred to in paragraph (iii)
below, the terms, provisions or conditions of any loan or credit
agreement, note, mortgage, bond, indenture, lease, compensation or
benefit plan or grant or award made pursuant thereto, or other
agreement, obligation, instrument, contract, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to Parent, or its properties or assets.
(iii) No consent, registration, permit, approval,
order or authorization of, or registration, declaration or filing with,
any Governmental Entity or foreign securities exchange is required by
or with respect to Parent in connection with the execution and delivery
of this Agreement by Parent or the consummation by Parent of the
transactions contemplated hereby, except for (A) the consents,
approvals, orders, authorizations, registrations, declarations and
filings required under or in relation to clause (x) of Section
3.1(c)(iii) as applicable, (B) any filings required to be made or
consents that have to be obtained or arrangements that have to be made
in order to ensure that the United States
24
government or any agency thereof will not challenge the consummation of
the transactions contemplated hereby on national security grounds and
(C) such consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to make or obtain is not
reasonably likely to have a Material Adverse Effect on Parent or
prevent the consummation of the transactions contemplated hereby.
(c) INFORMATION SUPPLIED.
(i) None of the information supplied or to be
supplied by Parent or Merger Sub for inclusion or incorporation by
reference in (A) the Offer Documents or (B) the information supplied or
to be supplied by Parent or Merger Sub for inclusion or incorporation
by reference in the Proxy Statement, if any, the Schedule 14D-9 and any
other documents to be filed with the SEC or any other Governmental
Entity or foreign securities exchange in connection with the
transactions contemplated hereby, including any amendment or supplement
to such documents, will, at the respective times such documents are
filed, and, with respect to the Proxy Statement, if any, and the Offer
Documents, when first published, sent or given to stockholders of the
Company, 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 are made, not false or misleading or, in
the case of the Proxy Statement, if any, or any amendment thereof or
supplement thereto, at the time of the Company Stockholders Meeting, if
any, and 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 made therein, in
the light of the circumstances under which they are made, not false or
misleading or necessary to correct any statement in any earlier
communication with respect to the Offer or the solicitation of proxies
for the Company Stockholders Meeting, if any, which shall have become
false or misleading. The Offer Documents will comply as to form in all
material respects with the requirements of the Exchange Act and
Securities Act and the rules and regulations of the SEC thereunder.
(ii) Notwithstanding the foregoing provisions of this
Section 3.2(c), no representation or warranty is made by Parent or
Merger Sub with respect to statements made or incorporated by reference
in the Proxy Statement, if any, or the Offer Documents based on
information supplied by the Company for inclusion or incorporation by
reference therein.
(d) VOTE REQUIRED. No vote of the holders of any capital stock
of Parent is necessary to approve this Agreement and the transactions
contemplated hereby.
(e) BROKERS OR FINDERS. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any broker's
or finder's fee or any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement based
25
upon arrangements made by or on behalf of Parent on Merger Sub, except ▇. ▇.
▇▇▇▇▇▇ & Co. Incorporated and its affiliates.
(f) OWNERSHIP OF COMPANY CAPITAL STOCK. As of the date of this
Agreement, neither Parent nor any of its Subsidiaries (i) beneficially owns,
directly or indirectly or (ii) is party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of, in
case of either clause (i) or (ii), shares of capital stock of the Company.
(g) LITIGATION. As of the date of this Agreement, there is no
litigation, arbitration, claim, suit, action, investigation or proceeding
pending or, to the knowledge of Parent, threatened against or affecting Parent
or any of its Subsidiaries or any of their respective properties or assets,
which is reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Parent or is reasonably likely to prevent the consummation of
the transactions contemplated by this Agreement, nor is there any judgment,
award, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against Parent or any of its Subsidiaries which is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Parent.
(h) FINANCING. Parent will have the funds necessary to
consummate the Offer and the Merger on the terms contemplated by this Agreement
and will provide such funds to Merger Sub at or prior to the consummation of the
Offer and the Merger, as applicable.
3.3 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.
Parent and Merger Sub represent and warrant to the Company as follows:
(a) ORGANIZATION AND CORPORATE POWER. Merger Sub is an
indirect wholly owned Subsidiary of Parent and a corporation duly incorporated,
validly existing and in good standing under the laws of Delaware.
(b) CORPORATE AUTHORIZATION. Merger Sub has all requisite
corporate power and corporate authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance by Merger Sub of this Agreement and the consummation by Merger Sub
of the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action on the part of Merger Sub and no other corporate
proceedings are necessary to authorize this Agreement or to consummate the
transactions as contemplated hereby. This Agreement has been duly executed and
delivered by Merger Sub and, assuming due execution by the Company, constitutes
a valid and binding agreement of Merger Sub, enforceable against it in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to or affecting creditors generally, or by general equity principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law). The Board of Directors of Merger Sub has unanimously approved
the transactions contemplated by this Agreement.
26
(c) NON-CONTRAVENTION.
(i) The execution and delivery of this Agreement do
not or will not, as the case may be, and the consummation of the
transactions contemplated hereby will not, result in any Violation
pursuant to: (A) any provisions of the Organizational Documents of
Merger Sub or (B) except as is not reasonably likely to have a Material
Adverse Effect on Parent or prevent the consummation of the
transactions contemplated hereby and subject to obtaining or making the
consents, approvals, orders, authorizations, registrations,
declarations and filings referred to in paragraph (ii) below, the
terms, provisions or conditions of any loan or credit agreement, note,
mortgage, bond, indenture, lease, compensation or benefit plan or any
grant or award made pursuant thereto or other agreement, obligation,
instrument, contract, permit, concession, franchise, license, judgment,
order, writ, injunction, award, decree, statute, law, ordinance, rule
or regulation applicable to Merger Sub or any of its properties or
assets.
(ii) No consent, registration, permit, approval,
order or authorization of, or registration, declaration, notice, report
or filing with, any Governmental Entity or foreign securities exchange
is required by or with respect to Merger Sub in connection with the
execution and delivery of this Agreement by Merger Sub or the
consummation by Merger Sub of the transactions contemplated hereby,
except for (A) the consents, approvals, orders, authorizations,
registrations, declarations and filings required under or in relation
to clause (x) of Section 3.1(c)(iii) as applicable, (B) any filings
required to be made or consents that have to be obtained or
arrangements that have to be made in order to ensure that the United
States government or any agency thereof will not challenge the
consummation of the transactions contemplated hereby on national
security grounds and (C) such consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of
which to make or obtain is not reasonably likely to have a Material
Adverse Effect on Parent or to prevent the consummation of the
transactions contemplated hereby.
(d) NO BUSINESS ACTIVITIES. Merger Sub is not and has never
been a party to any material agreements and has not conducted any activities
other than in connection with the organization of Merger Sub, the commencement
of the Offer, the negotiation and execution of this Agreement and the
consummation of the transactions contemplated hereby. Merger Sub has no
Subsidiaries.
27
ARTICLE IV.
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 COVENANTS OF THE COMPANY. During the period from the date of this
Agreement and continuing until the Effective Time (except as expressly
contemplated or permitted by this Agreement, set forth in the Company Disclosure
Schedule (subject to Section 8.12) or to the extent that Parent shall otherwise
consent in writing):
(a) ORDINARY COURSE. The Company and its Subsidiaries shall
carry on their respective businesses in the usual, regular and ordinary course
in all respects, consistent with past practice and shall use their respective
reasonable best efforts to preserve intact their present business organizations
and preserve their existing relationships with customers, suppliers, employees,
Governmental Entities and others having business dealings with them, and shall
not enter into any material joint venture or other similar arrangement;
provided, however, that no action by the Company or its Subsidiaries with
respect to matters specifically addressed by any other provision of this Section
4.1 shall be deemed a breach of this Section 4.1(a) unless such action would
constitute a breach of one or more of such other provisions.
(b) DIVIDENDS; CHANGES IN SHARE CAPITAL. The Company shall
not, and shall not propose to, (i) declare or pay any dividends on or make other
distributions in respect of any of its capital stock, (ii) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for, shares of its capital stock, (iii) repurchase, redeem or otherwise acquire
any shares of its capital stock or any securities convertible into or
exercisable for any shares of its capital stock except as otherwise permitted
with respect to the payment of the option exercise price or tax withholding
under certain option agreements in effect on the date of this Agreement under
the Company Equity Plans, or (iv) effect any reorganization or recapitalization.
(c) ISSUANCE OF SECURITIES. The Company shall not and shall
cause its Subsidiaries not to issue, pledge, dispose of or encumber, deliver or
sell, or authorize or propose the issuance, disposition, encumbrance, pledge,
delivery or sale of, any shares of its capital stock of any class, any Company
Voting Debt or any securities convertible into or exercisable for, or any
rights, warrants or options to acquire, any such shares or Company Voting Debt,
or enter into any agreement with respect to any of the foregoing, other than the
issuance of Company Common Stock upon the exercise of stock options or rights to
purchase Company Common Stock outstanding on the date of this Agreement in
accordance with the terms of the Company Equity Plans as in effect on the date
of this Agreement and other than upon the exercise of the Warrants.
(d) ORGANIZATIONAL DOCUMENTS. Except to the extent required to
comply with their respective obligations hereunder or required by law, the
Company and its Subsidiaries shall not amend or propose to amend their
respective Organizational Documents.
28
(e) INDEBTEDNESS. The Company shall not (i) incur any
indebtedness for borrowed money or guarantee any such indebtedness or issue or
sell any debt securities or warrants or rights to acquire any debt securities of
the Company or guarantee any debt securities of other Persons other than
indebtedness (including short term borrowings) of the Company or its
Subsidiaries to the Company or its Subsidiaries and other than in the ordinary
course of business, (ii) make any loans, advances or capital contributions to,
or investments in, any other Person, other than by the Company or its
Subsidiaries to or in the Company or its Subsidiaries or (iii) pay, discharge,
modify or satisfy any claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than in the case of
clauses (ii) and (iii), loans, advances, capital contributions, investments,
payments, discharges or satisfactions incurred or committed to in the ordinary
course of business consistent with past practice.
(f) COMPENSATION. The Company shall not, and shall not permit
its Subsidiaries to (i) increase the compensation payable or to become payable
to any of its executive officers or employees or (ii) take an action with
respect to the grant of any severance or termination pay, or stay, bonus or
other incentive arrangement (other than as required by applicable law or the
terms of any collective bargaining agreement or as required pursuant to benefit
plans and policies in effect on the date of this Agreement), except any such
increases or grants made in the ordinary course of business consistent with past
practice, pursuant to agreements, plans or policies existing on the date hereof
or as otherwise provided under this Agreement; provided, however that in no
event shall the Company grant, or permit to be granted, any options or other
awards under any Company Equity Plan after the date of this Agreement.
(g) TAX ELECTIONS. The Company shall not, and shall not permit
its Subsidiaries to, make any Tax election or change any method of accounting
for Tax purposes in a manner that is reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on the Company.
(h) EMPLOYMENT. The Company shall not, and shall not permit
its Subsidiaries to, release or otherwise terminate the employment of any
employee or hire any new employees, except in the ordinary course of business.
(i) BENEFIT PLANS AND AGREEMENTS.
(i) The Company shall not, and shall not permit its
Subsidiaries to, establish, adopt or enter into any new employee
benefit plans or agreements (including pension, profit sharing, bonus,
incentive compensation, director and officer compensation, severance,
medical, disability, life or other insurance plans, and employment
agreements) or amend or modify any existing Company Benefit Plans, or
extend coverage of the Company
29
Benefit Plans, except as required by applicable law, the terms of any
collective bargaining agreement.
(ii) Subject to Section 5.11, simultaneous with the
execution of this Agreement, the Company shall freeze all Company
Equity Plans as of the date of this Agreement, such that, as a result
thereof, no officer or employee shall be entitled to purchase any
additional Company Common Stock under any Company Equity Plan (other
than pursuant to currently outstanding stock options and stock purchase
periods) and no stock options or other awards shall be granted under
any Company Equity Plan after the date of this Agreement.
(j) OTHER ACTIONS.
(i) The Company shall not, and shall not permit its
Subsidiaries to, take any action that is reasonably likely to result in
any of the Offer Conditions not being satisfied.
(ii) The Company shall not, and shall not permit its
Subsidiaries to, (A) transfer, lease, license, guarantee, sell,
mortgage, pledge, dispose of or encumber any assets except in the
ordinary course of business consistent with past practice; (B)
authorize capital expenditures in any manner not reflected in the
capital budget of the Company as currently in effect or make any
acquisition of, or investment in, any business or stock of any other
person or entity except in the ordinary course of business consistent
with past practice; (C) settle or compromise any material claims or
litigation or, except in the ordinary course of business consistent
with past practice, modify, amend or terminate any of the Company
Material Contracts or waive, release or assign any material rights or
claims except, in each case, as is not reasonably likely, individually
or in the aggregate, to have a Material Adverse Effect on the Company;
or (D) permit any material insurance policy naming it as a beneficiary
or a loss payable payee to be canceled or terminated without the prior
written approval of Parent, except in the ordinary course of business
consistent with past practice; or (E) terminate the employment of any
employee who is covered by a change in control, employment, termination
or similar agreement, except for Cause (as defined in such agreements)
or permit circumstances to exist that would allow such employee to
terminate employment and be entitled to severance or other payments
thereunder.
4.2 COVENANTS OF PARENT AND MERGER SUB. During the period from the date
of this Agreement and continuing until the Effective Time (except as expressly
contemplated or permitted by this Agreement or to the extent that the Company
shall otherwise consent in writing) Parent shall not, and shall not permit any
of its Subsidiaries to, take any action that is reasonably likely to result in
(i) any of the representations and warranties of Parent and Merger Sub set forth
in this Agreement (x) to the extent qualified by Material Adverse Effect
becoming untrue or inaccurate and (y) to the
30
extent not qualified by Material Adverse Effect becoming untrue or inaccurate,
except that this clause (y) shall be deemed satisfied so long as such
representations and warranties being untrue or inaccurate, taken together, do
not have a Material Adverse Effect on Parent, or (ii) any of the Offer
Conditions not being satisfied.
4.3 ADVICE OF CHANGES; GOVERNMENT FILINGS.
(a) Each party shall (i) confer on a regular and frequent
basis with the other, (ii) report (to the extent permitted by law, regulation
and any applicable confidentiality agreement) to the other on operational
matters and (iii) promptly advise the other orally and in writing of (A) any
representation or warranty made by it in this Agreement (x) to the extent
qualified by Material Adverse Effect becoming untrue or inaccurate and (y) to
the extent not qualified by Material Adverse Effect becoming untrue or
inaccurate, except that this clause (y) 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; provided, however, that 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 Entities) between the date of this Agreement and the
Effective Time and shall (to the extent permitted by law or regulation 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 Entity 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 Entities 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.
(b) Each party shall cooperate with each other and shall use
its respective reasonable best efforts to reach a mutually satisfactory
arrangement with the United States government or an appropriate agency thereof
so that Parent's acquisition of the Company Common Stock would not adversely
affect the Company's current business operations with the United States
government (including, the continued operation of Company affiliated or
franchise stores at United States military bases and facilities).
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ARTICLE V.
ADDITIONAL AGREEMENTS
5.1 APPROVAL BY THE COMPANY'S STOCKHOLDERS.
(a) If required by the DGCL or the Company's Organizational
Documents in order to consummate the Merger, the Company shall, as soon as
practicable following the acquisition by Merger Sub of the shares of the Company
Common Stock pursuant to the Offer, duly call, give notice of, convene and hold
a meeting of its stockholders (the "Company Stockholders Meeting") for the
purpose of obtaining the Required Company Votes, and, the Company shall, through
the Company Board, recommend to its stockholders that they vote in favor of the
adoption of this Agreement; provided, however, that the Company Board may
withdraw, modify or change such recommendation to the extent that the Company
Board determines to do so in exercise of its fiduciary duties or as permitted
under Section 5.4. Parent shall vote or cause to be voted all the shares of
Company Common Stock owned of record by Parent, Merger Sub or any of its other
Subsidiaries in favor of the approval of the Merger and adoption of this
Agreement.
(b) Notwithstanding the preceding paragraph or any other
provision of this Agreement, in the event Parent, Merger Sub or any other
Subsidiary of Parent shall beneficially own, in the aggregate, at least 90% of
the outstanding shares of the Company Common Stock, the Company shall not be
required to call the Company Stockholders Meeting or to file or mail the Proxy
Statement, and the parties hereto shall, at the request of Parent and subject to
Article VI, take all necessary and appropriate action to cause the Merger to
become effective as soon as practicable after the acceptance for payment of and
payment for shares of the Company Common Stock by Merger Sub pursuant to the
Offer without a meeting of stockholders of the Company in accordance with
Section 253 of the DGCL.
(c) If required by applicable law, as soon as practicable
following Parent's request, the Company and Parent shall prepare and file with
the SEC the Proxy Statement. Each of the Company and Parent shall use reasonable
best efforts to cause the Proxy Statement to be mailed to the Company's
stockholders, as promptly as practicable.
5.2 ACCESS TO INFORMATION. From the date hereof until the earlier of
the Effective Time or the termination of this Agreement, upon reasonable notice,
the Company shall afford to the officers, employees, accountants, counsel,
financial advisors and other representatives of Parent ("Parent
Representatives") reasonable access to all of its and its Subsidiaries
properties, books, contracts, commitments and records (including security
position listings or other information concerning beneficial and record owners
of the Company's securities) and its officers, management employees and
representatives and, during such period, the Company shall furnish promptly to
Parent, consistent with its legal obligations, all information concerning its
business, properties and personnel as the other party may reasonably request.
Such information shall be held in confidence
32
to the extent required by, and in accordance with, the provisions of the letter
(the "Confidentiality Agreement") dated May 26, 1999, between the Company and
Parent, which Confidentiality Agreement shall remain in full force and effect.
5.3 APPROVALS AND CONSENTS; COOPERATION. Each of the Company and Parent
shall cooperate with each other and use (and shall cause their respective
Subsidiaries to use) its reasonable best efforts to take or cause to be taken
all actions, and do or cause to be done all things, necessary, proper or
advisable on their part under this Agreement and applicable laws to consummate
and make effective the Offer and the Merger and the other transactions
contemplated by this Agreement as soon as practicable, including (i) preparing
and filing as promptly as practicable all documentation to effect all necessary
applications, notices, petitions, filings and other documents and to obtain as
promptly as practicable all consents, waivers, licenses, orders, registrations,
approvals, permits and authorizations necessary or advisable to be obtained from
any third party and any Governmental Entity in order to consummate the Offer,
the Merger and the other transactions contemplated by this Agreement and (ii)
taking all reasonable steps as may be necessary to obtain all such consents,
waivers, licenses, registrations, permits, authorizations, orders and approvals.
Without limiting the generality of the foregoing, each of the Company and Parent
agrees to make all necessary filings in connection with the Required Regulatory
Approvals as promptly as practicable after the date of this Agreement, and in
any event no later than 9 Business Days after the date hereof, and to use its
reasonable best efforts to furnish or cause to be furnished, as promptly as
practicable, all information and documents requested with respect to such
Required Regulatory Approvals and shall otherwise cooperate with the applicable
Governmental Entity in order to obtain any Required Regulatory Approvals in as
expeditious a manner as possible. Each of the Company and Parent shall use its
reasonable best efforts to resolve such objections, if any, as any Governmental
Entity may assert with respect to this Agreement and the transactions
contemplated hereby in connection with the Required Regulatory Approvals. In the
event that a suit is instituted by a Person or Governmental Entity challenging
this Agreement and the transactions contemplated hereby as violative of
applicable antitrust or competition laws, each of the Company and Parent shall
use its reasonable best efforts to resist or resolve such suit. The Company and
Parent each shall, upon request by the other, furnish the other with all
information concerning itself, its Subsidiaries, directors, officers and
stockholders and such other matters as may reasonably be necessary or advisable
in connection with the Offer Documents, Schedule 14D-9, Proxy Statement or any
other statement, filing, notice or application made by or on behalf of the
Company, Parent or any of their respective Subsidiaries to any third party and
any Governmental Entity in connection with the Offer, the Merger or the other
transactions contemplated by this Agreement.
5.4 ACQUISITION PROPOSALS.
(a) The Company agrees that neither the Company, its
Subsidiaries, nor any of the respective officers and directors of the Company or
its Subsidiaries, shall and the Company shall direct and use its best efforts to
cause its employees, agents and representatives (including any
33
investment banker, attorney or accountant retained by the Company or any of its
Subsidiaries) not to, take or cause, directly or indirectly, any of the
following actions with any party other than Parent, Merger Sub or their
respective designees: (i) directly or indirectly solicit, encourage, initiate,
participate in or otherwise facilitate (including by way of furnishing
information) any negotiations, inquiries or discussions with respect to any
offer, indication or proposal to acquire all or more than 15% of the Company's
business, assets or capital shares whether by merger, consolidation, other
business combination, purchase of assets, reorganization, tender or exchange
offer or otherwise (each of the foregoing, an "Acquisition Proposal") or (ii)
disclose, in connection with an Acquisition Proposal, any information or provide
access to its properties, books or records. The Company will immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any of the foregoing. The
Company will take the necessary steps to promptly inform the individuals or
entities referred to in the first sentence of Section 5.4(a) hereof of the
obligations undertaken in this Section 5.4. The Company also will promptly
request any Person which may have heretofore executed a confidentiality
agreement in connection with its consideration of acquiring the Company and/or
any of its Subsidiaries to return or destroy all confidential information
heretofore furnished to such person by or on behalf of the Company.
(b) Notwithstanding anything to the contrary contained in
Section 5.4(a) or elsewhere in this Agreement, prior to the consummation of the
Offer, the Company may participate in discussions or negotiations with, and
furnish non-public information, and afford access to the properties, books,
records, officers, employees and representatives of the Company to any Person,
entity or group if such Person, entity or group has delivered to the Company,
prior to the consummation of the Offer, and in writing, an Acquisition Proposal
which is not subject to any financing contingency and which the Company Board in
its good faith judgment (after consultation with its independent financial
advisor) determines if consummated would be more favorable, from a financial
point of view, to the Company's stockholders than the transactions contemplated
by this Agreement and with respect to which the Company Board receives advice of
its outside legal counsel that the Company Board would breach its fiduciary
duties if it did not accept the Acquisition Proposal (a "Superior Proposal"). In
the event the Company receives a Superior Proposal, nothing contained in this
Agreement (but subject to the terms of this paragraph (b)) will prevent the
Company Board from executing or entering into an agreement relating to such
Superior Proposal and recommending such Superior Proposal to its stockholders,
if the Company Board determines (after consultation with its independent
financial advisor and outside legal counsel) that its fiduciary duties require
it to do so; in such case, the Company Board may withdraw, modify or refrain
from making its recommendation of the Offer and the Merger; provided, however
that the Company (i) shall have promptly notified Parent, and in any event
within 24 hours, of any Acquisition Proposal received by, any such information
requested from, or any such negotiations or discussions sought to be initiated
or recommenced with, the Company or any of its Subsidiaries, indicating, in
connection with such notice, the name of the Person making the Acquisition
Proposal or taking such action and, in reasonable detail, the significant terms
of any such Acquisition Proposal and including with such
34
notice any documentation relating to such Acquisition Proposal, (ii) shall
provide Parent at least 48 hours prior written notice of the Company's intention
to execute or enter into an agreement relating to such Superior Proposal and
(iii) may only terminate this Agreement by written notice to Parent provided no
sooner than 48 hours after Parent's receipt of a copy of such Superior Proposal
(or a detailed description of the significant terms and conditions thereof).
5.5 EMPLOYEE BENEFITS. Parent shall or shall cause the Surviving
Corporation to comply with the provisions of the letter of even date herewith
from Parent to the Company relating to employee benefit matters.
5.6 FEES AND EXPENSES. Whether or not the transactions contemplated
hereby are consummated, all Expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such Expenses, except (a) if the Merger is consummated, the Surviving
Corporation shall pay, or cause to be paid, any and all property or transfer
taxes imposed on the Company or its Subsidiaries, (b) the Expenses incurred in
connection with the printing, filing and mailing to stockholders of the Proxy
Statement, if any, and the solicitation of stockholder approvals shall be shared
equally by the Company and Parent, and (c) as provided in Section 7.2. As used
in this Agreement, "Expenses" includes all out-of-pocket expenses (including,
without limitation, (i) all fees and expenses of counsel, accountants,
investment bankers, experts and consultants to a party hereto and its affiliates
and (ii) the fees, costs and expenses relating to obtaining financing for the
transactions contemplated hereby, including commitment fees and the like)
incurred by a party or on its behalf in connection with or related to the
authorization, preparation, negotiation, execution and performance of this
Agreement and the transactions contemplated hereby, including the preparation,
printing, filing and mailing of the Offer Documents and the Proxy Statement, if
any, and the solicitation of stockholder approvals and all other matters related
to the transactions contemplated hereby.
5.7 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. Parent shall
cause to be maintained in effect (i) the current provisions regarding
indemnification of current or former officers and directors (each an
"Indemnified Party") contained in the Organizational Documents of the Company or
its Subsidiaries and in any agreements between an Indemnified Party and the
Company or its Subsidiaries, and (ii) for a period of six years, the current
policies of directors' and officers' liability insurance and fiduciary liability
insurance maintained by the Company (provided that Parent or the Surviving
Corporation may substitute therefor policies of at least the same coverage and
amounts containing terms and conditions which are, in the aggregate, no less
advantageous to the insured and provided that such substitution shall not result
in any gaps or lapses in coverage with respect to matters occurring prior to the
Effective Time) with respect to claims arising from facts or events that
occurred on or before the Effective Time. Parent shall not be obligated to pay
annual premiums to the extent such premiums exceed 150% of the annual premiums
paid as of the date hereof by the Company for such insurance (such 150% amount,
the "Maximum Premium"). If such insurance coverage cannot be obtained at all, or
can only be obtained at an annual premium in excess
35
of the Maximum Premium, Parent shall maintain the most advantageous policies of
directors' and officers' insurance obtainable for an annual premium equal to the
Maximum Premium. The Company represents that the Maximum Premium is U.S.
$437,250. This covenant is intended to be for the benefit of, and shall be
enforceable by, each of the Indemnified Parties and their respective heirs and
legal representatives.
5.8 PUBLIC ANNOUNCEMENTS. So long as this Agreement is in effect, the
Company and Parent shall use all reasonable best efforts to develop a joint
communications plan and each party shall use all reasonable best efforts (i) to
ensure that all press releases and other public statements with respect to the
transactions contemplated hereby shall be consistent with such joint
communications plan and (ii) unless otherwise required by applicable law or by
obligations pursuant to any listing agreement with or rules of any securities
exchange, to consult with each other before issuing any press release or
otherwise making any public statement with respect to this Agreement or the
transactions contemplated hereby.
5.9 TAKEOVER STATUTES. If any Takeover Statute shall become applicable
to the transactions contemplated hereby, the Company and the members of the
Company Board, subject to its fiduciary duties, shall grant such approvals and
take such actions as are reasonably necessary 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.
5.10 THIRD PARTY STANDSTILL AGREEMENTS; TORTIOUS INTERFERENCE. During
the period from the date of this Agreement through the Effective Time, the
Company shall not terminate, amend, modify or waive any provision of any
confidentiality or standstill or similar agreement to which the Company or any
of its Subsidiaries is a party (other than involving Parent). Subject to the
foregoing, during such period, the Company agrees to enforce, to the fullest
extent permitted under applicable law, the provisions of any such agreements,
including obtaining injunctions to prevent any breaches of such agreements and
to enforce specifically the terms and provisions thereof and any court having
jurisdiction.
5.11 COMPANY OPTION PLANS. Each outstanding option (a "Company Stock
Option") to purchase Company Common Stock, whether or not fully exercisable,
shall be canceled in exchange for the right to receive a cash payment at the
Effective Time in an amount equal to the product of (x) the excess, if any, of
the Merger Consideration per share over the exercise price per share of the
Company Common Stock subject to such Company Stock Options and (y) the number of
shares of Company Common Stock subject to such Company Stock Options. All
amounts payable pursuant to this Section 5.11 shall be subject to any required
withholding of taxes and shall be paid without interest. The Company shall use
its reasonable best efforts to take such actions as may be necessary to
implement the provisions of this Section 5.11.
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ARTICLE VI.
CONDITIONS PRECEDENT
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
obligations of the Company, Parent and Merger Sub to effect the Merger are
subject to the satisfaction or waiver (subject to Section 1.4(c)) on or prior to
the Effective Time of the following conditions:
(a) STOCKHOLDER APPROVAL. The Company shall have obtained all
approvals of holders of shares of capital stock of the Company necessary to
approve this Agreement and all the transactions contemplated hereby (including
the Merger) to the extent required by law.
(b) NO INJUNCTION OR RESTRAINTS; ILLEGALITY. No temporary
restraining order, preliminary or permanent injunction or other order issued by
a court or other Governmental Entity of competent jurisdiction shall be in
effect and have the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger.
(c) REQUIRED REGULATORY APPROVALS. All authorizations,
consents, orders and approvals of, and declarations and filings with, and all
expirations of waiting periods imposed by, any Governmental Entity which, if not
obtained in connection with the consummation of the transactions contemplated
hereby, is reasonably likely to have a Material Adverse Effect on the Company or
prevents the Company, Parent or Merger Sub from consummating the transactions
contemplated hereby (collectively, "Required Regulatory Approvals"), shall have
been obtained, have been declared or filed or have occurred, as the case may be,
and all such Required Regulatory Approvals shall be in full force and effect.
(d) COMPLETION OF THE OFFER. Merger Sub shall have (i)
commenced the Offer pursuant to Section 1.1 hereof and (ii) purchased, pursuant
to the terms and conditions of such Offer, all shares of Company Common Stock
duly tendered and not withdrawn; provided, however, that neither Parent nor
Merger Sub shall be entitled to rely on the condition in clause (ii) above if
either of them shall have failed to purchase shares of Company Common Stock
pursuant to the Offer in breach of their obligations under this Agreement.
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ARTICLE VII.
TERMINATION AND AMENDMENT
7.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, by action taken or authorized by the Board of Directors of
the terminating party or parties, whether before or after approval of this
Agreement and the matters contemplated herein, including the Merger, by the
stockholders of the Company:
(a) By mutual written consent of Parent and the Company,
by action of their respective Boards of Directors;
(b) By either the Company or Parent if the Offer shall
not have been consummated by the date which is three months from the date of
this Agreement (the "Outside Date"); provided that the right to terminate this
Agreement under this Section 7.1(b) shall not be available to any party whose
failure to fulfill any obligation or condition under this Agreement has been the
cause of, or resulted in, the failure of the Offer to be consummated on or
before such date; notwithstanding the foregoing, if the sole reason the Offer
shall not have been consummated by the Outside Date is the failure to have
obtained all Required Regulatory Approvals prior to the date which is three
months from the date of this Agreement, the Outside Date shall be extended for a
period of 30 days;
(c) By Parent if any Person other than Parent, Merger
Sub, or any of their affiliates or any group of which any of them is a member,
shall have entered into a definitive agreement or an agreement in principle with
the Company or any of its Subsidiaries with respect to an Acquisition Proposal
or the Company Board (or any committee thereof) shall have adopted a resolution
approving any of the foregoing;
(d) By either the Company or Parent if any court or other
Governmental Entity shall have issued an order, decree or ruling or taken any
other action (which order, decree, ruling or other action the parties shall have
used their reasonable best efforts to resist, resolve or lift, as applicable,
subject to the provisions of Section 5.3) permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement, and such
order, decree, ruling or other action shall have become final and nonappealable;
(e) By Parent if (i) the Company Board (or any committee
thereof) shall have withdrawn or adversely modified (including by amendment of
the Schedule 14D-9) its approval or recommendation of the Offer, the Merger or
this Agreement or the Company Board, upon request by Parent following receipt by
the Company of an Acquisition Proposal, shall fail to reaffirm such approval or
recommendation within ten Business Days after such request or shall have
resolved to do any of the foregoing; (ii) the Company Board shall have
recommended to the stockholders of the Company that they approve an Acquisition
Proposal other than transactions contemplated by this
38
Agreement; or (iii) a tender offer or exchange offer is commenced that, if
successful, would result in any Person becoming a "beneficial owner" (as such
term is defined under Regulation 13D under the Exchange Act) of 15% or more of
the outstanding shares of Company Common Stock (other than by Parent or an
affiliate of Parent) and the Company Board recommends that the stockholders of
the Company tender their shares in such tender or exchange offer;
(f) By the Company, prior to the purchase by Merger Sub of
shares of Company Common Stock pursuant to the Offer, if the Company Board
determines to accept a Superior Proposal pursuant to Section 5.4(b), provided
that the Company shall not be entitled to terminate this Agreement pursuant to
this Section 7.1(f) unless the Company concurrently enters into an agreement
with respect to a Superior Proposal pursuant to Section 5.4(b) and pays the
Termination Fee pursuant to Section 7.2(b);
(g) By Parent, prior to the purchase by Merger Sub of
shares of Company Common Stock pursuant to the Offer, upon a material breach of
any material covenant or agreement on the part of the Company set forth in this
Agreement, or if the Offer Condition contained in paragraph (c)(i) or (ii) of
Annex A is not capable of being satisfied or cured by the earlier of (x) the
Outside Date or (y) within 30 days after any executive officer of the Company
becomes aware of the breach of any representation or warranty resulting in the
failure to satisfy such Offer Condition;
(h) By the Company, upon a material breach of any material
covenant or agreement on the part of Parent or Merger Sub set forth in this
Agreement, or upon the failure of any representation or warranty of Parent or
Merger Sub set forth in this Agreement (i) to the extent such representation or
warranty is qualified by Material Adverse Effect, to be true and correct and
(ii) to the extent such representation or warranty is not qualified by Material
Adverse Effect, to be true and correct, except that, in the case of this clause
(ii), no failure shall be deemed to have occurred so long as such failure, taken
together with all other such failures, does not have a Material Adverse Effect
on Parent in the case of each of clause (i) and (ii) as of the date of this
Agreement and (except to the extent such representation or warranty speaks as of
an earlier date) as of the consummation of the Offer as though made on and as of
such date, and except that, in the case of each of clause (i) and (ii), no
failure shall be deemed to have occurred so long as such failure is capable of
being satisfied or cured by the earlier of (x) the Outside Date or (y) within 30
days after any executive officer of Parent becomes aware of the breach of any
representation or warranty resulting in such failure; or
(i) By the Company, if Merger Sub fails to (i) commence
the Offer or keep the Offer open as provided in Section 1.1 hereof or (ii)
purchase validly tendered shares of the Company Common Stock in violation of the
terms of the Offer or this Agreement.
39
7.2 EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement by
either the Company or Parent as provided in Section 7.1, this Agreement shall
forthwith become void and there shall be no liability or obligation on the part
of Parent or the Company or their respective officers or directors except (i)
with respect to Section 5.6, this Section 7.2 and Section 8.5(a) and (ii) with
respect to any liabilities or damages incurred or suffered by a party as a
result of the willful and material breach by the other party of any of its
covenants or other agreements set forth in this Agreement.
(b) In the event that (x) this Agreement is terminated
pursuant to Section 7.1(c), Section 7.1(e) or Section 7.1(f), or (y) (i) the
Offer shall have remained open for a minimum of at least 20 Business Days from
the date that it is commenced and for such longer period as is required by
Section 1.1, (ii) after the date hereof any Person other than Parent or Merger
Sub or any of their respective Subsidiaries or affiliates shall have become the
beneficial owner of 15% or more of the outstanding shares of Company Common
Stock or made any Acquisition Proposal, (iii) the Minimum Condition shall not
have been satisfied and Merger Sub shall not have accepted for payment any
shares of Company Common Stock pursuant to the Offer, (iv) this Agreement shall
not have been terminated pursuant to Section 7.1(h) hereof, and (v) within
twelve months of the termination, expiration or withdrawal of the Offer, the
Company enters into an agreement providing for the consummation of an
Acquisition Proposal (as such term is defined in Section 5.4(a), except that the
reference in such definition to 15% shall be deemed a reference to 40% for
purposes of this clause (v) only) or any other Person (other than Parent or any
of its affiliates) becomes the beneficial owner of 40% or more of the
outstanding shares of Company Common Stock, then the Company shall pay the
Parent in cash (A) U.S. $60 million plus (B) up to U.S. $9 million of Parent's
documented Expenses incurred in connection with the Offer and Merger ((A) and
(B) together, the "Termination Fee"). The Termination Fee shall be payable by
wire transfer of immediately available funds upon such termination, in the case
of clause (x), or upon the earlier of the Company entering into an agreement for
an Acquisition Proposal or a Person becoming the beneficial owner of 40% or more
of the Company's outstanding shares of Company Common Stock, in the case of
clause (y). The Company acknowledges that the agreements contained in this
Section 7.2(b) are an integral part of the transactions contemplated in this
Agreement, and that, without these agreements, the Parent and Merger Sub would
not enter into this Agreement; accordingly, if the Company fails to promptly pay
the amount due pursuant to this Section 7.2(b), and, in order to obtain such
payment, Parent or Merger Sub commences a suit which results in a judgment
against the Company for the fee set forth in this paragraph (b), the Company
shall pay to Parent or Merger Sub its costs and Expenses (including attorneys'
fees) in connection with such suit, together with interest on the amount of the
fee at the prime rate of Citibank N.A. plus 2% per annum on the date such
payment was required to be made.
7.3 AMENDMENT. Subject to Section 1.4(c), this Agreement may be amended
by the parties hereto, by action taken or authorized by their respective Boards
of Directors, at any time
40
before or after approval of the matters presented in connection with the Merger
by the stockholders of the Company, but, after any such approval, no amendment
shall be made which by law or in accordance with the rules of Nasdaq requires
further approval by such stockholders without such further approval. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
7.4 EXTENSION; WAIVER. Subject to Section 1.4(c), at any time prior to
the Effective Time, the parties hereto, by action taken or authorized by their
respective Boards of Directors, may, to the extent legally allowed, (i) extend
the time for the performance of any of the obligations or other acts of the
other parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed on behalf
of such party. No delay on the part of any party hereto in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, nor shall any
waiver on the part of any party hereto of any right, power or privilege
hereunder operate as a waiver of any other right, power or privilege hereunder,
nor shall any single or partial exercise of any right, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder. Unless otherwise provided, the rights
and remedies herein provided are cumulative and are not exclusive of any rights
or remedies which the parties hereto may otherwise have at law or in equity. The
failure of any party to this Agreement to assert any of its rights under this
Agreement or otherwise shall not constitute a waiver of those rights.
ARTICLE VIII.
GENERAL PROVISIONS
8.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS; NO
OTHER REPRESENTATIONS AND WARRANTIES. None of the representations and warranties
in this Agreement or in any instrument delivered pursuant to this Agreement
shall survive the Effective Time. This Section 8.1 shall not limit any covenant
or agreement of the parties which by its terms contemplates performance after
the Effective Time.
8.2 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed duly given (a) on the date of delivery if delivered
personally, (b) on the first Business Day following the date of dispatch if
delivered by a nationally recognized next-day courier service, (c) on the tenth
Business Day following the date of mailing if delivered by registered or
certified mail, return receipt requested, postage prepaid or (d) if sent by
facsimile transmission, with a copy mailed on the same day in the manner
provided in (a) or (b) above, when transmitted and receipt is confirmed by
telephone. All notices hereunder shall be delivered as set forth below, or
pursuant to such other instructions as may be designated in writing by the party
to receive such notice:
41
(a) if to Parent or Merger Sub, to:
Koninklijke Numico N.V.
▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Facsimile: 011-31-79-353-9671
Attention: Julitte van der Ven, General Counsel
with copies to:
▇▇▇▇▇▇ Price ▇▇▇▇▇▇▇▇ & Kammholz
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
and
Winston & ▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
(b) if to the Company, to,
General Nutrition Companies, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Legal Officer
42
with a copy to
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ III
8.3 INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents, glossary of defined terms and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden or proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the content requires otherwise.
8.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that both
parties need not sign the same counterpart.
8.5 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES.
(a) This Agreement (including the Schedules) constitutes
the entire agreement and supersedes all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof, other than the Confidentiality Agreement, and the reciprocal
confidentiality agreement by and between the Company and Parent dated as of May
26, 1999, which such confidentiality agreements shall survive the execution and
delivery of this Agreement or any termination hereof.
(b) 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 5.7 (which is intended to be for the benefit of each Indemnified
Party
43
covered thereby and may be enforced by each such Indemnified Party) and Section
5.11 (which is intended to be solely for the benefit of each holder of a Company
Stock Option).
8.6 GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL.
(a) This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without regard to the laws
that might be applicable under conflicts of laws principles.
(b) Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the exclusive
jurisdiction of any Delaware State court, or Federal court of the United States
of America, sitting in Delaware, and any appellate court from any thereof, in
any action or proceeding arising out of or relating to this Agreement or the
agreements delivered in connection herewith or the transactions contemplated
hereby or thereby or for recognition or enforcement of any judgment relating
thereto, and each of the parties hereby irrevocably and unconditionally (i)
agrees not to commence any such action or proceeding except in such courts, (ii)
agrees that any claim in respect of any such action or proceeding may be heard
and determined in such Delaware State court or, to the extent permitted by law,
in such Federal court, (iii) waives, to the fullest extent it may legally and
effectively do so, any objection which it may now or hereafter have to the
laying of venue of any such action or proceeding in any such Delaware State or
Federal court, and (iv) waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such Delaware State or Federal court. Each of the parties hereto agrees
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 8.2. Nothing in
this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (ii) IT
MAKES SUCH WAIVERS VOLUNTARILY, AND (iii) IT HAS BEEN INDUCED TO ENTER INTO
THIS
44
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 8.6(c).
8.7 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby 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 an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible. Any provision of this Agreement held invalid or
unenforceable only in part, degree or certain jurisdictions will remain in full
force and effect to the extent not held invalid or unenforceable. To the extent
permitted by applicable law, each party waives any provision of law which
renders any provision of this Agreement invalid, illegal or unenforceable in any
respect.
8.8 ASSIGNMENT. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto, in
whole or in part (whether by operation of law or otherwise), without the prior
written consent of the other parties, and any attempt to make any such
assignment without such consent shall be null and void. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective permitted successors and
assigns.
8.9 ENFORCEMENT. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms. It is accordingly agreed that the parties
shall be entitled to specific performance of the terms hereof, this being in
addition to any other remedy to which they are entitled at law or in equity.
8.10 DEFINITIONS. As used in this Agreement:
(a) "affiliate" means any person directly or indirectly
controlling, controlled by or under common control with such other person at the
time at which the determination of affiliation is being made. The term "control"
(including, with correlative meanings, the term "controlled by" or "under common
control with"), as applied to any person, means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of such person, whether through the ownership of voting securities or
other ownership interest, by contract or otherwise.
(b) "Board of Directors" means the Board of Directors of
any specified Person and any properly serving and acting committees thereof.
45
(c) "Business Day" means any day on which banks are not
required or authorized to close in The City of New York.
(d) "Code" means the Internal Revenue Code of 1986, as
amended or replaced and as in effect from time to time.
(e) "Company Equity Plans" means the Company's 1989, 1991,
1992, 1993 and 1995 Stock Option Plans, 1994 Stock Option Plan for Non-Employee
Directors, and 1998 Management and Director Stock Option Plan (the "Company
Options Plans") and the 1993 Employee Stock Purchase Plan and 1996 Management
and Director Stock Purchase Plan (the "Company Stock Purchase Plan").
(f) "Intellectual Property" shall mean patents,
copyrights, trademarks (registered and unregistered), service marks, brand
names, trade names, and registrations in any jurisdiction of, and applications
in any jurisdiction to register the foregoing, technology, know-how, software,
and tangible or intangible proprietary information or materials that are used in
the business of the Company and its Subsidiaries as currently conducted and any
other trade secrets related thereto.
(g) "Material Adverse Effect" means, with respect to any
Person, any adverse change, circumstance, event or effect that, individually or
in the aggregate with all other adverse changes, circumstances, events and
effects, is or is reasonably likely to be materially adverse to the business,
operations, financial condition or results of operations of such entity and its
Subsidiaries taken as a whole, other than any change or effect to the extent
attributable to (i) the economy in general and (ii) the announcement or other
proper disclosure of this Agreement or the transactions contemplated hereby.
(h) "Organizational Documents" means, with respect to any
entity, the certificate of incorporation, bylaws or other similar governing
documents of such entity.
(i) "Person" means an individual, corporation,
partnership, limited liability company association, trust, unincorporated
organization, entity or group (as defined in Section 13(d)(3) the Exchange Act).
(j) "Significant Subsidiary" means a Subsidiary that would
constitute a "significant subsidiary" within the meaning of Rule 1-02 Regulation
S-X of the Securities Act;
(k) "Subsidiary" when used with respect to any Person
means any corporation or other organization, whether incorporated or
unincorporated, (i) of which such Person or any other Subsidiary of such Person
is a general partner (excluding partnerships, the general partnership interests
of which held by such Person or any of its Subsidiaries of such Person do not
have a majority of the voting and economic interests in such partnership) or
(ii) at least a majority of the
46
securities or other interests of which having by their terms ordinary voting
power to elect a majority of the Board of Directors or others performing similar
functions with respect to such corporation or other organization is directly or
indirectly owned or controlled by such Person or by any one or more of its
Subsidiaries, or by such Person and one or more of its Subsidiaries.
(l) (i) "Tax" (including, with correlative meaning, the
terms "Taxes" and "Taxable") means all federal, state, local and foreign income,
profits, franchise, gross receipts, environmental, customs duty, capital stock,
severance, stamp, payroll, sales, employment, unemployment disability, use,
property, withholding, excise, production, value added, occupancy and other
taxes, duties or assessments of any nature whatsoever, together with all
interest, penalties, fines and additions to tax imposed with respect to such
amounts and any interest in respect of such penalties and additions to tax, and
(ii) "Tax Return" means all returns and reports (including elections, claims,
declarations, disclosures, schedules, estimates, computations and information
returns) required to be supplied to a Tax authority in any jurisdiction relating
to Taxes.
(m) "the other party" means, with respect to the Company,
Parent and means, with respect to Parent, the Company.
8.11 PERFORMANCE BY MERGER SUB. Parent hereby agrees to cause Merger
Sub to comply with its obligations hereunder and under the Offer and to cause
Merger Sub to consummate the Merger as contemplated herein and whenever this
Agreement requires Merger Sub to take any action, such requirement shall be
deemed to include an undertaking of Parent to cause Merger Sub to take such
action.
8.12 DISCLOSURE SCHEDULES. Any matter disclosed in any subsection of
the parties' respective Disclosure Schedules shall be deemed disclosed for each
subsection of this Agreement to which such matter is reasonably related.
47
IN WITNESS WHEREOF, Parent, the Company and Merger Sub have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of July 5, 1999.
KONINKLIJKE NUMICO N.V.
By: /s/ Hans van der Wielen
----------------------------
Name: Hans van der Wielen
Title: President and CEO
NUMICO INVESTMENT CORP.
By: /s/ Julitte van der Ven
----------------------------
Name: Julitte van der Ven
Title: President
GENERAL NUTRITION COMPANIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and
Chief Executive Officer
48
ANNEX A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, and subject to the
terms and conditions of the Agreement, Merger Sub shall not be obligated to
accept for payment any shares of Company Common Stock until all Required
Regulatory Approvals shall have been obtained, made or satisfied including until
the expiration of any waiting periods applicable under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended (the "HSR Act") and Merger Sub
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 of
Company Common Stock tendered in the Offer and (subject to the terms and
conditions of the Agreement, including Section 1.1(b)) may amend, extend or
terminate the Offer 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) prior to the time of acceptance of any shares of Company
Common Stock pursuant to the Offer any of the following shall occur:
(a) there shall be threatened or pending any action,
litigation or proceeding (hereinafter, an "Action") by any Governmental Entity:
(i) challenging the acquisition by Parent or Merger Sub of shares of Company
Common Stock or seeking to restrain or prohibit the consummation of the Offer or
the Merger; (ii) seeking to prohibit or impose any material limitation
(including any hold separate obligation) on Parent's, Merger Sub's or any of
their respective affiliates' ownership or operation of all or any material
portion of the business or assets of the Company and its Subsidiaries taken as a
whole or Parent and its Subsidiaries taken as a whole that, in each case
referred to in this clause (ii) individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect on the Company or Parent; or (iii)
seeking to impose material limitations on the ability of Parent or Merger Sub
effectively to acquire or hold, or to exercise full rights of ownership of, the
shares of Company Common Stock including the right to vote the shares of Company
Common Stock purchased by them on an equal basis with all other shares of
Company Common Stock on all matters properly presented to the shareholders of
the Company; or
(b) any statute, rule, regulation, order or injunction
shall be enacted, promulgated, entered, enforced or deemed to or become
applicable to the Offer or the Merger, or any other action shall have been
taken, by any court or other Governmental Entity, that is reasonably likely to
result in any of the effects of, or have any of the consequences sought to be
obtained or achieved in, any Action referred to in clauses (i) through (iii) of
paragraph (a) above; or
(c) (i) the representations and warranties of the Company
contained in Section 3.1(b) of the Agreement shall not be true and correct in
all material respects as of the date of the Agreement and (except to the extent
such representations and warranties speak as of an earlier date) as of the
consummation of the Offer as though made on and as of such date; (ii) the
representations
49
and warranties of the Company set forth in the Agreement (other than those set
forth in Section 3.1(b) of the Agreement), (x) to the extent qualified by
Material Adverse Effect shall not be true and correct and (y) to the extent not
qualified by Material Adverse Effect shall not be true and correct, except that
this clause (y) shall be deemed satisfied so long as any failures of such
representations and warranties to be true and correct, taken together, do not
have a Material Adverse Effect on the Company, in the case of each of clause (x)
and (y) as of the date of the Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
consummation of the Offer as though made on and as of such date; (iii) the
Company shall have breached or failed to comply in any material respect with any
of its material obligations, covenants or agreements under the Agreement; or
(iv) any change or event shall have occurred that has, or is reasonably likely
to have, a Material Adverse Effect on the Company; or
(d) the Agreement shall have been terminated in accordance
with its terms.
The conditions set forth in clauses (a) through (d) are for the sole
benefit of Parent and Merger Sub and may be asserted by Parent and Merger Sub
regardless of the circumstances giving rise to such condition and may be waived
by Parent and Merger Sub in whole or in part at any time and from time to time,
by express and specific action to that effect, in their sole discretion. The
failure by Parent or Merger Sub at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right, the waiver of any such
right with respect to particular facts and other circumstances shall not be
deemed a waiver with respect to any other facts and circumstances, and each such
right shall be deemed an ongoing right that may be asserted at any time and from
time to time.
The capitalized terms used in this Annex A shall have the meanings set
forth in the Agreement to which it is annexed.
50