<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 15, 1997
REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
WHOLE FOODS MARKET, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 5411 74-1989366
(STATE OF INCORPORATION) (PRIMARY STANDARD (I.R.S. EMPLOYER
INDUSTRIAL IDENTIFICATION NUMBER)
CLASSIFICATION CODE)
601 NORTH LAMAR BLVD., SUITE 300
AUSTIN, TEXAS 78703
512-477-4455
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
GLENDA FLANAGAN
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
WHOLE FOODS MARKET, INC.
601 NORTH LAMAR BLVD., SUITE 300
AUSTIN, TEXAS 78703
512-477-4455
(NAME, ADDRESS INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF AGENT FOR SERVICE)
----------------
COPY TO:
BRUCE H. HALLETT, ESQ.
CROUCH & HALLETT, L.L.P.
717 N. HARWOOD ST., SUITE 1400
DALLAS, TEXAS 75201
214-953-0053
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: Upon the
consummation of the merger referred to herein.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF EACH MAXIMUM MAXIMUM
CLASS OF SECURITIES AMOUNT BEING OFFERING PRICE AGGREGATE AMOUNT OF
BEING REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE REGISTRATION FEE
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no par
value.................. 4,676,872 shares $32.62 $152,559,565 $46,231
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Estimated solely for purposes of calculating the amount of the
registration fee pursuant to the provisions of Rule 457(c) under the
Securities Act of 1933, as amended, based on the average of the high and
low prices of the registrant's common stock as reported on the Nasdaq
National Market System on July 11, 1997.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
WHOLE FOODS MARKET, INC.
CROSS-REFERENCE SHEET FOR REGISTRATION STATEMENT ON FORM S-4
<TABLE>
<CAPTION>
ITEM OF FORM S-4 PROSPECTUS CAPTION OR LOCATION
---------------- ------------------------------
<C> <S> <C>
A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration
Statement and Outside Front
Cover Page of Prospectus....... Facing Page of Registration Statement;
Outside Front Cover Page of Joint Proxy
Statement/Prospectus
2. Inside Front and Outside Back
Cover Pages of Prospectus...... Inside Front Cover Page of Joint Proxy
Statement/Prospectus; Available
Information; Table of Contents
3. Risk Factors, Ratio of Earnings
to Fixed Charged and Other
Information.................... Inside Front Cover Page of Proxy
Statement/Prospectus; Summary
4. Terms of the Transaction........ Summary; The Merger
5. Pro Forma Financial
Information.................... Pro Forma Financial Information
6. Material Contacts with the
Company Being Acquired......... Summary; The Merger
7. Additional Information Required
for Reoffering by Persons and
Parties Deemed to be
Underwriters................... Not Applicable
8. Interests of Named Experts and
Counsel........................ Not Applicable
9. Disclosure of Commission
Position on Indemnification for
Securities Act Liabilities..... Not Applicable
B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3
Registrants.................... Summary; The Merger
11. Incorporation of Certain
Information by Reference....... Documents Incorporated by Reference
12. Information with Respect to S-2
or S-3 Registrants............. Not Applicable
13. Incorporation of Certain
Information by Reference....... Not Applicable
14. Information with Respect to
Registrants Other than S-2 or
S-3 Registrants................ Not Applicable
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information with Respect to S-3 Summary; Documents Incorporated by
Companies...................... Reference; The Merger
16. Information with Respect to S-2
or S-3 Companies............... Not Applicable
17. Information with Respect to
Companies Other than S-2 or S-3
Companies...................... Not Applicable
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents
or Authorizations are to be
Solicited...................... Summary; The Meetings; The Merger
19. Information if Proxies, Consents
or Authorizations are not to be
Solicited or in an Exchange
Offer.......................... Not Applicable
</TABLE>
<PAGE>
[WFM LOGO]
August , 1997
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders of
Whole Foods Market, Inc. ("WFM") at 10:00 a.m., local time, on September ,
1997, at [location].
At the Special Meeting, you will be asked to consider and vote upon the
issuance of approximately 4,680,000 shares of Common Stock, no par value, of
WFM in the proposed merger (the "Merger Proposal") of a wholly owned
subsidiary of WFM into Amrion, Inc. ("Amrion"). In the proposed Merger, Amrion
will become a wholly owned subsidiary of WFM, and holders of each share of
Amrion Common Stock will be entitled to receive .87 shares of WFM Common
Stock.
At the meeting, you will also be asked to approve two amendments to WFM's
stock option plan for team members. One amendment would increase the number of
shares of WFM Common Stock issuable upon exercise of stock options thereunder,
and the second amendment would limit the number of options granted in any year
to a team member in order to preserve WFM's ability to deduct as a business
expense certain compensation attributable to the exercise of stock options
granted under the WFM Stock Option Plan.
The enclosed Joint Proxy Statement/Prospectus provides a detailed
description of the matters to be considered at the Special Meeting and
extensive information concerning Amrion and WFM. Please carefully review and
consider all of this information.
AFTER CAREFUL CONSIDERATION, THE BOARD OF DIRECTORS OF WFM HAS UNANIMOUSLY
APPROVED THE MERGER PROPOSAL AND RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
APPROVAL AND ADOPTION OF THE MERGER PROPOSAL AND THE INCENTIVE OPTION PLAN
AMENDMENTS AT THE SPECIAL MEETING.
It is important that your shares be present at the Special Meeting,
regardless of the number of shares you hold. Therefore, please sign, date and
return your proxy card as soon as possible, whether or not you plan to attend.
This will not prevent you from voting your shares in person if you
subsequently choose to attend.
Very truly yours,
John Mackey
Chairman and Chief Executive Officer
<PAGE>
WHOLE FOODS MARKET, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON
SEPTEMBER , 1997
To The Shareholders of
Whole Foods Market, Inc.:
Notice is hereby given that a Special Meeting of Shareholders of Whole Foods
Market, Inc., a Texas corporation ("WFM"), will be held on September , 1997,
beginning at 10:00 a.m., local time, at [location], for the following
purposes:
1. To consider and vote upon a proposal to issue approximately 4,680,000
shares of Common Stock, no par value of WFM, upon the consummation of the
transactions contemplated by that certain Agreement and Plan of Merger,
dated June 9, 1997 ("Merger Agreement"), by and among Amrion, Inc.
("Amrion"), WFM and a subsidiary of WFM, pursuant to which Amrion would
become a wholly owned subsidiary of WFM, and each issued share of Common
Stock of Amrion would be converted into the right to receive .87 shares of
Common Stock of WFM;
2. To consider and act upon a proposed amendment to the 1992 Stock Option
Plan for Team Members (the "Option Plan") to increase the number of shares
of Common Stock of WFM issuable upon exercise of stock options under the
Option Plan from 3 million to 4 million shares of Common Stock;
3. To consider and act upon a proposed amendment to the Option Plan to
limit the number of shares of Common Stock of WFM underlying options
granted under the Option Plan which may be granted to any team member
during any fiscal year to not more than 100,000 shares; and
4. To transact any other business as may properly come before the meeting
or any adjournment thereof.
Shareholders of record at the close of business on July 24, 1997 are
entitled to notice of and to vote at the meeting or any adjournment thereof.
WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE MARK, SIGN, DATE AND
RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE
PAID ENVELOPE. YOU MAY REVOKE SUCH PROXY AT ANY TIME PRIOR TO ITS EXERCISE IN
THE MANNER PROVIDED IN THE ACCOMPANYING JOINT PROXY STATEMENT/PROSPECTUS.
By Order of the Board of Directors
Glenda Flanagan
Secretary
Austin, Texas
August , 1997
<PAGE>
[AMRION LOGO]
August , 1997
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders of
Amrion, Inc. ("Amrion") at 10:00 a.m., local time, on September , 1997, at
[location].
At the Special Meeting, you will be asked to consider and vote upon a
proposed merger (the "Merger") of a wholly owned subsidiary of Whole Foods
Market, Inc. ("WFM") into Amrion. In the proposed Merger, Amrion will become a
wholly owned subsidiary of WFM, and holders of each share of Amrion Common
Stock will be entitled to receive .87 shares of WFM Common Stock.
The enclosed Joint Proxy Statement/Prospectus provides a detailed
description of the matters to be considered at the Special Meeting and
extensive information concerning Amrion and WFM. Please carefully review and
consider all of this information.
AFTER CAREFUL CONSIDERATION, THE BOARD OF DIRECTORS OF AMRION HAS
UNANIMOUSLY APPROVED THE MERGER AND RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
APPROVAL AND ADOPTION OF THE PROPOSED MERGER AT THE SPECIAL MEETING.
It is important that your shares be present at the Special Meeting,
regardless of the number of shares you hold. Therefore, please sign, date and
return your proxy card as soon as possible, whether or not you plan to attend.
This will not prevent you from voting your shares in person if you
subsequently choose to attend.
Very truly yours,
Mark S. Crossen
President and Chief Executive
Officer
<PAGE>
AMRION, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON
SEPTEMBER , 1997
To The Shareholders of
Amrion, Inc.:
Notice is hereby given that a Special Meeting of Shareholders of Amrion,
Inc., a Colorado corporation ("Amrion"), will be held on September , 1997,
beginning at 10:00 a.m. local time, at [location] for the following purposes:
1. To consider and vote upon a proposal to approve that certain Agreement
and Plan of Merger, dated June 9, 1997 ("Merger Agreement"), by and among
Amrion, Whole Foods Market, Inc. ("WFM") and a subsidiary of WFM, pursuant
to which Amrion would become a wholly owned subsidiary of WFM, and each
issued share of Common Stock of Amrion would be converted into the right to
receive .87 shares of Common Stock of WFM; and
2. To transact any other business as may properly come before the meeting
or any adjournment thereof.
Shareholders of record at the close of business on August 7, 1997 are
entitled to notice of and to vote at the meeting or any adjournment thereof.
WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE MARK, SIGN, DATE AND
RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE
PAID ENVELOPE. YOU MAY REVOKE SUCH PROXY AT ANY TIME PRIOR TO ITS EXERCISE IN
THE MANNER PROVIDED IN THE ACCOMPANYING JOINT PROXY STATEMENT/PROSPECTUS.
By Order of the Board of Directors
Jeffrey S. Williams
Secretary
Boulder, Colorado
August , 1997
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION DATED JULY 15, 1997
JOINT PROXY STATEMENT/PROSPECTUS
JOINT PROXY STATEMENT
WHOLE FOODS MARKET, INC.
AMRION, INC.
SPECIAL MEETINGS OF SHAREHOLDERS TO BE
HELD ON SEPTEMBER , 1997
-----------
PROSPECTUS
WHOLE FOODS MARKET, INC.
COMMON STOCK
-----------
This Joint Proxy Statement/Prospectus is being furnished in connection with
the solicitation of proxies by the Boards of Directors of Whole Foods Market,
Inc., a Texas corporation ("WFM"), and Amrion, Inc., a Colorado corporation
("Amrion"), for use at a Special Meeting of Shareholders of WFM (the "WFM
Meeting") and a Special Meeting of Shareholders of Amrion (the "Amrion
Meeting"), respectively, each of which is to be held at 10:00 a.m., local time,
on September , 1997. At the Amrion Meeting, the shareholders of Amrion will
consider and vote upon a proposal to approve and adopt an Agreement and Plan of
Merger, dated as of June 9, 1997 (the "Merger Agreement"), among WFM, Nutrient
Acquisition Corp., a Colorado corporation and a wholly owned subsidiary of WFM
("WFM Merger Subsidiary"), and Amrion, pursuant to which the WFM Merger
Subsidiary would be merged with and into Amrion (the "Merger"). As a result of
the Merger, each of the then outstanding shares of Common Stock, $.0011 par
value, of Amrion (the "Amrion Common Stock") will be converted into the right
to receive .87 shares of Common Stock, no par value, of WFM (the "WFM Common
Stock"). At the WFM Meeting, the shareholders of WFM will be asked to consider
and vote upon (i) a proposal (the "Merger Proposal") to approve the issuance of
approximately 4,680,000 shares of WFM Common Stock in connection with the
Merger; (ii) an amendment to the 1992 Stock Option Plan for Team Members (the
"WFM Option Plan") to increase the number of shares of WFM Common Stock
issuable upon the exercise of stock options under the WFM Option Plan from 3
million to 4 million; and (iii) an amendment to the WFM Option Plan to limit
the number of shares of WFM Common Stock underlying options granted under such
plan which may be granted to any team member during any fiscal year to not more
than 100,000 shares.
This document also constitutes a Prospectus of WFM under the Securities Act
of 1933, as amended, with respect to the shares of WFM Common Stock to be
issued to the shareholders of Amrion.
SHAREHOLDERS SHOULD REVIEW CAREFULLY "RISK FACTORS" ON PAGES 18 TO 21 FOR A
DISCUSSION OF CERTAIN CONSIDERATIONS IN EVALUATING THE MERGER.
The shareholders of WFM and Amrion also will consider and vote upon such
other business as may properly come before the meetings or any adjournment or
postponement thereof.
A copy of the Merger Agreement is attached to this Joint Proxy
Statement/Prospectus as Appendix A and is incorporated herein by reference.
This Joint Proxy Statement/Prospectus and the enclosed proxy card are first
being mailed to shareholders of WFM and Amrion on or about August , 1997.
THE SHARES OF WFM COMMON STOCK TO BE OFFERED IN CONNECTION WITH THE MERGER
HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS JOINT PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
-----------
THE DATE OF THIS JOINT PROXY STATEMENT/PROSPECTUS IS AUGUST , 1997.
<PAGE>
AVAILABLE INFORMATION
WFM has filed a Registration Statement on Form S-4 (the "Registration
Statement") with the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the shares of WFM Common Stock that may be issued in the Merger.
This Joint Proxy Statement/Prospectus does not contain all of the information
set forth in the Registration Statement and exhibits thereto which WFM has
filed with the Commission under the Securities Act. As permitted by the rules
and regulations of the Commission, this Joint Proxy Statement/Prospectus omits
certain information, exhibits and undertakings contained in the Registration
Statement. Reference is made to the Registration Statement and to the exhibits
thereto for further information, which may be inspected without charge at the
office of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and copies of which may be obtained from the Commission at prescribed rates.
Statements contained in this Joint Proxy Statement/Prospectus relating to the
contents of any contract or other document referred to herein or therein are
not necessarily complete and, in each instance, reference is made to the copy
of such document filed as an exhibit to the Registration Statement. Each such
statement is qualified in its entirety by such reference.
In addition, both WFM and Amrion are subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith file reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information filed with the Commission can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549 or at the Regional Offices of the
Commission which are located as follows: Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World Trade
Center, 13th Floor, New York, New York 10048. Copies of such material can also
be obtained from the Commission at prescribed rates. Written requests for such
material should be addressed to the Public Reference Section, Securities and
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. The
Commission maintains a Web site that contains reports, proxy statements and
other information filed electronically by WFM and Amrion with the Commission
which can be accessed over the internet at http://www.sec.gov.
DOCUMENTS INCORPORATED BY REFERENCE
THIS JOINT PROXY STATEMENT/PROSPECTUS INCORPORATES BY REFERENCE DOCUMENTS
RELATING TO WFM AND AMRION WHICH ARE NOT PRESENTED HEREIN OR DELIVERED
HEREUNDER. DOCUMENTS RELATING TO WFM (OTHER THAN EXHIBITS TO SUCH DOCUMENT
UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE) ARE AVAILABLE
TO ANY PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS JOINT PROXY
STATEMENT/PROSPECTUS IS DELIVERED, ON WRITTEN OR ORAL REQUEST, WITHOUT CHARGE,
FROM WHOLE FOODS MARKET, INC., 601 N. LAMAR BLVD., SUITE 300, AUSTIN, TEXAS
78703, ATTENTION: CHIEF FINANCIAL OFFICER, TELEPHONE (512) 477-4455. DOCUMENTS
RELATING TO AMRION (OTHER THAN EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS
ARE SPECIFICALLY INCORPORATED BY REFERENCE) ARE AVAILABLE TO ANY PERSON,
INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS JOINT PROXY STATEMENT/PROSPECTUS
IS DELIVERED, ON WRITTEN OR ORAL REQUEST, WITHOUT CHARGE, FROM AMRION, INC.,
6565 ODELL PLACE, BOULDER, COLORADO 80301, ATTENTION: CHIEF FINANCIAL OFFICER,
TELEPHONE: (303) 530-2525. IN ORDER TO ENSURE TIMELY DELIVERY OF THE
DOCUMENTS, ANY SUCH REQUEST SHOULD BE MADE BY SEPTEMBER , 1997. COPIES OF
DOCUMENTS SO REQUESTED WILL BE SENT BY FIRST CLASS MAIL, POSTAGE PAID WITHIN
ONE BUSINESS DAY OF THE RECEIPT OF SUCH REQUEST.
The following WFM documents are incorporated by reference herein:
1. Annual Report on Form 10-K as amended by the Form 10-K/A for the year
ended September 29, 1996;
2. Quarterly Report on Form 10-Q for the quarter ended January 4, 1997;
3. Quarterly Report on Form 10-Q for the quarter ended April 13, 1997;
and
4. The description of WFM Common Stock contained in its Registration
Statement on Form 8-A filed with the Commission on January 14, 1992.
2
<PAGE>
The following Amrion documents are incorporated by reference herein:
1. Annual Report on Form 10-K for the year ended December 31, 1996; and
2. Quarterly Report on Form 10-Q for the quarter ending March 31, 1997.
All documents filed by WFM or Amrion with the Commission pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date hereof
and prior to the date of the WFM Meeting and the Amrion Meeting shall be
deemed to be incorporated by reference herein and shall be a part hereof from
the date of filing of such documents. Any statements contained in a document
incorporated by reference herein or contained in this Joint Proxy
Statement/Prospectus shall be deemed to be modified or superseded for purposes
hereof to the extent that a statement contained herein (or in any other
subsequently filed document which also is incorporated by reference herein)
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed to constitute a part hereof except as so modified or
superseded.
----------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS JOINT PROXY STATEMENT/PROSPECTUS IN
CONNECTION WITH THE OFFERS MADE HEREBY, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY WFM OR AMRION. THIS JOINT PROXY STATEMENT/PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH PERSON'S
JURISDICTION. NEITHER THE DELIVERY OF THIS JOINT PROXY STATEMENT/PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT, SINCE THE DATE OF THIS JOINT PROXY STATEMENT/PROSPECTUS,
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF WFM OR AMRION.
3
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information...................................................... 2
Documents Incorporated by Reference........................................ 2
Summary of Joint Proxy Statement/Prospectus................................ 5
Risk Factors............................................................... 18
The Meetings............................................................... 22
The Merger................................................................. 24
Pro Forma Financial Information............................................ 46
Comparison of Shareholders' Rights......................................... 50
Amendments to the 1992 Stock Option Plan for Team Members.................. 55
Legal Matters.............................................................. 56
Experts.................................................................... 57
Shareholders Proposals for 1998 Annual Meetings............................ 57
Appendix A--Agreement and Plan of Merger................................... A-1
Appendix B--Opinion of Piper Jaffray Inc................................... B-1
Appendix C--Opinion of Robertson, Stephens & Company....................... C-1
Appendix D--Opinion of Adams, Harkness & Hill, Inc......................... D-1
</TABLE>
4
<PAGE>
SUMMARY OF JOINT PROXY STATEMENT/PROSPECTUS
The following is a summary of certain information contained elsewhere in this
Joint Proxy Statement/Prospectus. The summary is necessarily incomplete and
selective and is qualified in its entirety by the more detailed information
contained in this Joint Proxy Statement/Prospectus, including the appendices
hereto and the documents incorporated by reference herein. The terms "Amrion"
and "WFM" refer respectively to Amrion, Inc. and its subsidiaries and Whole
Foods Market, Inc. and its subsidiaries, unless the context otherwise requires.
The information contained in this Joint Proxy Statement/Prospectus with respect
to WFM and its affiliates has been supplied by WFM, and the information with
respect to Amrion and its affiliates has been supplied by Amrion.
Certain statements in the summary and elsewhere in this Joint Proxy
Statement/Prospectus constitute "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. These forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of WFM or
Amrion to be materially different from any future results, performance or
achievements expressed or implied by these forward-looking statements. The
material factors known to Amrion and WFM are general economic and business
conditions, competition with other companies, government actions and
initiatives and the other changes and factors set forth in "Risk Factors."
WFM. WFM owns and operates the country's largest chain of natural foods
supermarkets, featuring food made from natural ingredients free of unnecessary
additives. WFM opened its first store in Austin, Texas in 1980 and currently
operates 74 stores in 17 states and the District of Columbia. WFM's stores
average approximately 23,000 square feet and offer a broad selection of foods
at competitive prices with an emphasis on customer service. WFM has designed
its stores to attract quality-oriented consumers who are interested in health,
nutrition, food safety and preserving the environment. Product offerings
include organically grown and high-grade commercial produce; grocery products
and environmentally safe household items; meat, poultry and seafood free of
growth hormones and antibiotics; bulk foods, such as nuts, candies, dried fruit
and whole unprocessed grains and cereals; specialty gourmet foods such as beer,
wine, coffee and cheese; prepared foods, such as fresh bakery goods, soups,
salads, hot entrees and sandwiches; nutriceuticals and nutritional supplements,
body care products and cosmetics; and miscellaneous items including books and
magazines emphasizing health and nutrition.
WFM's principal executive offices are located at 601 N. Lamar Blvd., Suite
300, Austin, Texas 78703, and its telephone number at such address is (512)
477-4455.
Amrion. Amrion is engaged in developing, producing and marketing
nutriceuticals and nutritional supplements. Amrion's products include
nutriceuticals, herbs, herbal formulas, vitamins, minerals and homeopathic
medicinals. Amrion currently markets and sells approximately 670 items under
Amrion-owned trademarks through four principal divisions, utilizing five
distribution channels which include direct marketing, specialty retail and mass
merchandising, health care professionals and international sales. Amrion
operates in one segment with four separate marketing divisions. Each division
employs a combination of marketing strategies which may include catalog and
direct mailings, print advertising, free standing inserts, package insert
programs, retail merchandising, radio, television, coupons, point of sale
materials and customer service calls.
Amrion's principal executive offices are located at 6565 Odell Place,
Boulder, Colorado 80301, and its telephone number at such address is (303) 530-
2525.
Special Meetings of Shareholders. This Joint Proxy Statement/Prospectus
relates to a Special Meeting of Shareholders of Amrion (the "Amrion Meeting")
and a Special Meeting of Shareholders of WFM (the "WFM Meeting," and
collectively with the Amrion Meeting, the "Meetings"). At the Amrion Meeting,
the shareholders of Amrion will consider and vote upon a proposal to approve
and adopt an Agreement and Plan of Merger, dated as of June 9, 1997 (the
"Merger Agreement"), among WFM, Nutrient Acquisition Corp. (the
5
<PAGE>
"Merger Subsidiary") and Amrion pursuant to which the Merger Subsidiary would
be merged with and into Amrion (the "Merger"), and, as a result, Amrion will
become a wholly owned subsidiary of WFM. At the WFM Meeting, the shareholders
of WFM will be asked to consider and vote upon (i) a proposal (the "Merger
Proposal") to approve the issuance of approximately 4,680,000 shares of WFM
Common Stock in connection with the Merger, (ii) an amendment to the 1992 Stock
Option Plan for Team Members (the "WFM Option Plan") to increase the number of
shares of WFM Common Stock issuable upon the exercise of stock options under
the WFM Option Plan from 3 million to 4 million, and (iii) an amendment to the
WFM Option Plan to limit the number of shares of WFM Common Stock underlying
options granted under such plan which may be granted to any team member during
fiscal year to not more than 100,000 shares.
The WFM Meeting will be held on September , 1997, at 10:00 a.m., local time
at the , Austin, Texas. The record date for shareholders of WFM entitled to
notice of and to vote at the WFM Meeting is as of the close of business on July
24, 1997. Voting rights for WFM are vested in the holders of the WFM Common
Stock, with each share of WFM Common Stock entitled to one vote on each matter
coming before the stockholders. As of June 30, 1997, there were 19,643,273
shares of WFM Common Stock outstanding, held by 1,086 holders of record. See
"The Meetings--WFM Meeting."
The Amrion meeting will be held on September , 1997, at 10:00 a.m., local
time, at , Boulder, Colorado. The record date for shareholders of Amrion
entitled to notice of and to vote at the Amrion Meeting is as of the close of
business on August 7, 1997. Voting rights for Amrion are vested in the holders
of the Common Stock, $.0011 par value, of Amrion ("Amrion Common Stock"), with
each share of Amrion Common Stock entitled to one vote on each matter coming
before the stockholders. As of June 30, 1997, there were 5,255,514 shares of
Amrion Common Stock outstanding, held by 767 holders of record. See "The
Meetings--Amrion Meeting."
VOTES REQUIRED
WFM. The favorable vote of the holders of a majority of the shares of WFM
Common Stock represented at the WFM Meeting will be required for the approval
of the Merger Proposal and the amendment to the WFM Option Plan to increase the
number of shares subject to such plan to 4 million. The favorable vote of the
holders of a majority of the outstanding shares of WFM Common Stock is required
for the amendment to the WFM Option Plan to limit the number of shares which
may be granted to a team member in any fiscal year. As of June 30, 1997,
directors and executive officers and their respective affiliates of WFM were
beneficial owners of approximately 17% of the outstanding shares of WFM Common
Stock (excluding 479,654 shares which may be acquired upon exercise of options
or other rights which are exercisable within 60 days of June 30, 1997). The
holders of such shares have advised WFM that they intend to vote for the Merger
Proposal. See "The Meetings--WFM Meeting."
Amrion. The favorable vote of the holders of a majority of the outstanding
shares of Amrion Common Stock is required for the approval and adoption of the
Merger Agreement. Two shareholders of Amrion who at the record date for the
Amrion Meeting owned approximately 20.5% of the outstanding Amrion Common Stock
have granted WFM an irrevocable proxy to vote all of their Amrion Common Stock
in favor of the proposed Merger. In addition, as of June 30, 1997, those
directors, executive officers and affiliates of Amrion who have not granted
proxies to Amrion were the record owners of approximately 0.8% of the
outstanding shares of Amrion Common Stock (excluding 22,000 shares which may be
acquired upon exercise of options which are exercisable within 60 days of June
30, 1997). See "The Meetings--Amrion Meeting."
THE MERGER
Conversion of Securities. Upon consummation of the transactions contemplated
by the Merger Agreement, (a) the Merger Subsidiary will be merged with and into
Amrion and (b) each issued and outstanding share of
6
<PAGE>
Amrion Common Stock will be converted into the right to receive .87 shares of
WFM Common Stock (the "Exchange Ratio"). Fractional shares of WFM Common Stock
will not be issued in connection with the Merger. A holder otherwise entitled
to a fractional share will be paid cash in lieu of such fractional share in an
amount equal to the product of the Average Price (as defined) of a share of the
WFM Common Stock multiplied by the fraction of a share to which such holder
would otherwise be entitled. The Average Price is the average per share closing
price of WFM Common Stock as reported on the Nasdaq National Market System
("Nasdaq NMS") over the 20 trading days immediately preceding the fifth trading
day prior to the effective date of the Merger.
Based upon the number of shares of Amrion Common Stock and WFM Common Stock
outstanding at June 30, 1997, the former Amrion shareholders will hold,
immediately after the Merger, approximately 19.2% of the aggregate number of
outstanding shares of WFM Common Stock.
Amrion's Reasons for the Merger and Recommendation of Amrion Board of
Directors. In reaching its determination to recommend the Merger, the Amrion
Board consulted with Amrion's management and its financial and legal advisors.
See "The Merger--Amrion's Reasons for the Merger" regarding the factors that
the Amrion Board considered in reaching its decision. The Amrion Board has
determined that the terms of the Merger Agreement, which were established
through arms' length bargaining with WFM, are fair to, and in the best
interests of, Amrion and its shareholders. ACCORDINGLY, THE AMRION BOARD HAS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT THE
AMRION SHAREHOLDERS VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
WFM's Reasons for the Merger and Recommendation of the WFM Boards of
Directors. Upon consultation with its financial and legal advisors and
following the consideration of a number of business issues and factors, the
Board of Directors of WFM has determined that the terms of the Merger are fair
to, and in the best interests of, WFM and its shareholders. ACCORDINGLY, THE
BOARD OF DIRECTORS OF WFM HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND
UNANIMOUSLY RECOMMENDS THAT THE WFM SHAREHOLDERS VOTE FOR APPROVAL AND ADOPTION
OF THE MERGER PROPOSAL.
For a discussion of the factors considered by the respective Boards of
Directors in reaching their decisions, see "The Merger--Amrion's Reasons for
the Merger," "--WFM's Reasons for the Merger," "--Recommendation of the Amrion
Board of Directors" and "--Recommendation of the WFM Board of Directors."
Opinions of Financial Advisors. On June 9, 1997, Piper Jaffray Inc. ("Piper
Jaffray") delivered its written opinion to Amrion's Board of Directors to the
effect that, as of the date of the opinion, based on various considerations and
assumptions, the Exchange Ratio was fair from a financial point of view to the
holders of Amrion Common Stock.
On June 4, 1997, each of Robertson, Stephens & Company ("RS & Co.") and
Adams, Harkness & Hill, Inc. ("AH&H") delivered its opinion to WFM's Board of
Directors to the effect that, based upon and subject to the matters presented
to WFM's Board of Directors, the proposed consideration to be paid by WFM
pursuant to the Merger was fair to WFM from a financial point of view.
Copies of the full text of the written opinions of Piper Jaffray, RS & Co.
and AH&H, which set forth the assumptions made, procedures followed, matters
considered and limits of their respective reviews, are attached to this Joint
Proxy Statement/Prospectus as Appendices B, C and D, respectively, and should
be read carefully in their entirety. See "The Merger--Opinions of Financial
Advisors."
7
<PAGE>
Interests of Certain Persons in the Merger. In considering the recommendation
of the Board of Directors of Amrion with respect to the Merger Agreement and
the transactions contemplated thereby, shareholders of Amrion should be aware
that certain members of the management of Amrion has certain interests in the
Merger that are in addition to the interests of shareholders of Amrion
generally. See "The Merger--Interests of Certain Persons in the Merger" "--
Treatment of Outstanding Amrion Options" and "--Indemnification and Directors'
and Officers' Insurance for Amrion."
Governance and Management Following the Merger. Following the consummation of
the Merger, Amrion will be a wholly owned subsidiary of WFM. At the next WFM
Board of Directors meeting following the Merger, at the request of Mark
Crossen, currently Amrion's Chief Executive Officer, the Board of Directors of
WFM will be increased to 10 members, comprised of the nine current members of
the WFM Board of Directors plus Mr. Crossen. See "The Merger--WFM Board
Following the Merger."
Conditions of the Merger. In addition to approval by the shareholders of WFM
and Amrion, consummation of the Merger is subject to the satisfaction or waiver
of a number of conditions and to certain regulatory matters including the
expiration of the relevant period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended. Other than approval of the Merger by the
WFM and Amrion shareholders and the expiration of certain waiting periods under
the HSR Act, substantially all of the conditions to the Merger may be waived,
in whole or in part, by the parties for whose benefit they have been created,
without the approval of their respective shareholders. However, after approval
by the shareholders of WFM and Amrion, no amendment or modification may be made
which by law requires further approval by such shareholders unless such
approval is obtained. In addition, the Merger may be abandoned under certain
circumstances, and such abandonment will not require shareholder approval. See
"The Merger--Conditions to the Merger."
Effective Time of the Merger. It is contemplated that the Merger will be
consummated as soon as practicable after the Special Meetings. The Merger will
be effective upon the filing of Articles of Merger with the Secretary of State
of Colorado (the "Effective Time").
Exchange of Amrion Stock Certificates. As soon as practicable after the
Effective Time, instructions and a letter of transmittal will be furnished to
all Amrion shareholders for use in exchanging their stock certificates for
certificates evidencing the shares of WFM Common Stock they will be entitled to
receive as a result of the Merger. SHAREHOLDERS OF AMRION SHOULD NOT SUBMIT
THEIR STOCK CERTIFICATES FOR EXCHANGE UNTIL SUCH INSTRUCTIONS AND LETTER OF
TRANSMITTAL ARE RECEIVED. See "The Merger--Exchange of Certificates
Representing Amrion Shares."
No Solicitation. The Merger Agreement provides that Amrion will not directly
or indirectly (i) solicit or initiate discussions with or (ii) enter into any
negotiations or agreements with, or furnish any information that is not
publicly available to, any third party concerning any proposal for a merger,
sale of substantial assets, sale of shares of stock or securities or other
takeover or business combination transaction ("Acquisition Proposal"), subject
to the fiduciary duties of the Amrion Board. See "The Merger--Certain
Covenants."
Appraisal Rights of Dissenting Shareholders. The shareholders of WFM and
Amrion do not have appraisal rights or dissenters' rights with respect to the
Merger. See "Comparison of Shareholders' Rights--Approval of, and Special
Rights with Respect to Mergers or Consolidations and Certain Other
Transactions; Appraisal Rights."
Federal Income Tax Consequences. For federal income tax consequences, the
Merger is intended to be a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"), so that no gain
or loss will be recognized by Amrion or the Amrion shareholders in exchange of
their Amrion Common Stock for the WFM Common Stock (except with respect to cash
received in lieu of a fractional
8
<PAGE>
interest in WFM Common Stock). Neither Amrion nor WFM has requested nor will
they receive an advance ruling from the Internal Revenue Service as to the tax
consequences of the Merger. All shareholders should read carefully the
discussion in "The Merger--Certain Federal Income Tax Consequences" and other
sections of this Joint Proxy Statement/Prospectus. They are urged to consult
their own tax advisors as to the specific consequences to them of the Merger
under federal, state, local and any other applicable tax laws. See "The
Merger--Federal Income Tax Consequences."
Accounting Treatment. The parties intend that the Merger qualify as a
pooling-of-interests for accounting and financial reporting purposes. A
condition to WFM's obligation to consummate the Merger is the receipt of a
letter from each of the accountants for WFM and Amrion regarding the accounting
treatment of the Merger as a pooling. See "The Merger--Accounting Treatment."
Termination. The Merger Agreement may be terminated and the Merger abandoned,
at any time prior to the Effective Time, whether before or after the approval
by the Amrion and WFM shareholders, (i) by the mutual consent of WFM and
Amrion; (ii) by either WFM or Amrion if all conditions to that party's
obligation to consummate the Merger have not been satisfied or waived by
October 31, 1997, unless such failure of consummation is due to the failure of
the terminating party to perform or observe the covenants, agreements, and
conditions hereof to be performed or observed by it; (iii) by either WFM or
Amrion if the consummation of the Merger would violate any nonappealable final
order, decree or judgment of any court or governmental body or agency having
competent jurisdiction; (iv) by WFM if the Amrion Board of Directors withdraws
or materially modifies or changes its recommendation to the shareholders of
Amrion to approve the Merger Agreement and the Merger if there exists at such
time an Acquisition Proposal; or (v) by either WFM or Amrion if the Average
Price is below $23.00 per share. See "The Merger--Termination."
Termination Fee. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with the Merger Agreement and the transactions
contemplated thereby will be paid by the party incurring such costs or
expenses. Notwithstanding the foregoing, if (a) the Merger Agreement is
terminated by WFM because the Amrion Board of Directors withdraws or materially
modifies or changes its recommendation to the shareholders of Amrion to approve
the Merger Agreement and the Merger if there exists at such time an Acquisition
Proposal or (b) on or before October 31, 1997 and while the Merger Agreement
remains in effect, Amrion enters into a definitive agreement with respect to an
Acquisition Proposal with any corporation, partnership, person or other entity
or group (other than WFM or any affiliate of WFM), and such transaction
(including any revised transaction based upon the Acquisition Proposal) is
thereafter consummated (whether before or after October 31, 1997), then Amrion
shall pay to WFM a fee equal to the sum of (A) the documented fees, costs and
expenses, including legal and accounting fees and fees payable to WFM's
financial advisors, incurred by WFM in connection with the transactions
contemplated by the Merger Agreement and (B) $4.5 million. This fee is not
payable if the Merger Agreement is terminated because the Average Price is
below $23. See "The Merger--Fees and Expenses."
Comparison of Rights of WFM Shareholders and Amrion Shareholders. WFM is
incorporated under the laws of the State of Texas and Amrion is incorporated
under the laws of the State of Colorado. Shareholders of Amrion will, upon
consummation of the Merger and to the extent they receive shares of WFM Common
Stock, become shareholders of WFM and their rights as such will be governed by
Texas law and WFM's Articles of Incorporation and Bylaws. See "Comparison of
Shareholders' Rights."
WFM Option Proposals. The Board of Directors of WFM has approved, adopted and
recommended to the shareholders of WFM the amendment to the WFM Option Plan
(the "First Plan Amendment") to increase the number of shares of WFM Common
Stock subject to the plan from 3 million to 4 million shares and the amendment
(the "Second Plan Amendment") to limit the number of shares of WFM Common Stock
underlying options granted under the WFM Option Plan which may be granted to
any team member during any fiscal year to not more than 100,000 shares. The
First Plan Amendment is needed because the consummation of the Merger
9
<PAGE>
will result in a significant increase in Team Members. The affirmative vote of
the holders of a majority of the shares of WFM Common Stock represented at the
WFM Meeting will be required for the approval of the First Plan Amendment. The
Second Plan Amendment is intended to preserve WFM's ability to deduct as a
business expense certain compensation attributable to the exercise of stock
options to be granted in the future under the WFM Option Plan to the extent
such options are not entitled to incentive stock option treatment. The Second
Plan Amendment requires the approval of a majority of the outstanding shares of
WFM Common Stock. See "Amendments to the 1992 Stock Option Plan for Team
Members."
10
<PAGE>
COMBINED SUMMARY UNAUDITED PRO FORMA AND HISTORICAL FINANCIAL INFORMATION
The following tables set forth certain unaudited pro forma combined condensed
and historical financial data for WFM and Amrion. The following data give
effect to the Merger under the pooling-of-interests method of accounting as if
those events had occurred on September 30, 1991 with respect to the statement
of operations data and operating data, and on September 27, 1992 with respect
to the balance sheet data. For further information on the manner in which the
summary pro forma financial information was derived, see "Pro Forma Financial
Information." The following data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements and notes thereto of WFM,
which have been incorporated by reference, and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the consolidated
financial statements and notes thereto of Amrion, which have been incorporated
by reference, and with the pro forma combined condensed financial statements
regarding the Merger appearing elsewhere in this Proxy Statement/Prospectus.
The unaudited pro forma combined condensed financial information is presented
for illustrative purposes only and in the opinion of WFM's management is not
necessarily indicative of the operating results or financial position that
could have occurred if the Merger had been consummated on such dates. Nor is
the pro forma financial information necessarily indicative of future operating
results or financial position. See "The Merger--WFM's Reasons for the Merger."
11
<PAGE>
WHOLE FOODS MARKET, INC.
SUMMARY HISTORICAL FINANCIAL DATA
(In thousands, except per share and operating data)
<TABLE>
<CAPTION>
AS OF OR AS OF OR
FOR THE 28 FOR THE 28 AS OF OR FOR THE FISCAL YEAR ENDED
WEEKS ENDED WEEKS ENDED -----------------------------------------------------
APRIL 13, APRIL 7, (1)
1997 1996 SEPT. 29, SEPT. 24, SEPT. 25, SEPT. 26, SEPT. 27,
(UNAUDITED) (UNAUDITED) 1996 1995 1994 1993 1992
----------- ----------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Sales................... $539,089 $448,898 $892,098 $709,935 $572,050 $439,254 $245,684
Cost of goods sold and
occupancy costs........ 367,723 306,864 613,056 480,781 387,682 297,647 167,845
-------- -------- -------- -------- -------- -------- --------
Gross profit............ 171,366 142,034 279,042 229,154 184,368 141,607 77,839
Direct store expenses... 131,280 111,582 217,048 183,655 144,383 113,690 61,207
General and
administrative
expenses............... 17,985 18,070 33,559 30,777 25,151 21,644 14,055
Pre-opening costs....... 2,733 3,710 3,964 4,029 3,387 4,985 1,087
Store relocation costs.. -- -- 1,939 2,332 5,758 2,457 564
Restructuring expenses.. -- 1,984 -- -- -- -- --
Non-recurring expenses.. -- -- 38,516 -- 282 -- --
Merger transaction
costs.................. -- -- -- -- -- 3,094 --
-------- -------- -------- -------- -------- -------- --------
Income (loss) from
operations............ 19,368 6,688 (15,984) 8,361 5,407 (4,263) 926
-------- -------- -------- -------- -------- -------- --------
OTHER INCOME (EXPENSE):
Interest expense........ (3,266) (1,726) (4,671) (2,368) (109) (478) --
Interest and other
income................. -- -- 10 427 373 1,014 546
-------- -------- -------- -------- -------- -------- --------
Income (loss) before
income taxes........... 16,102 4,962 (20,645) 6,420 5,671 (3,727) 1,472
Provision (credit) for
income taxes........... 5,797 3,404 (3,411) 5,347 6,035 4,727 2,422
-------- -------- -------- -------- -------- -------- --------
Net income (loss)....... $ 10,305 $ 1,558 $(17,234) $ 1,073 $ (364) $ (8,454) $ (950)
======== ======== ======== ======== ======== ======== ========
Net income (loss) per
share.................. $ 0.52 $ 0.08 $ (0.90) $ 0.06 $ (0.02) $ (0.50) $ (0.08)
======== ======== ======== ======== ======== ======== ========
Shares/weighted average
shares outstanding..... 19,930 19,280 19,179 18,924 18,356 17,018 12,418
======== ======== ======== ======== ======== ======== ========
OPERATING DATA:
Number of stores at the
end of the period...... 72 66 68 61 49 42 25
Annualized store sales
per square foot........ $ 635 $ 636 $ 636 $ 625 $ 639 $ 597 $ 599
Average weekly sales per
store.................. $271,480 $252,108 $253,555 $238,776 $243,520 $217,116 $202,629
BALANCE SHEET DATA:
Working capital
(deficit).............. $ 11,346 $ 2,405 $ 4,887 $ (4,400) $ 17,611 $ 10,875 $ 36,488
Total assets............ 346,991 290,199 310,604 266,814 202,477 161,398 97,445
Long-term debt
(including current
maturities)............ 102,838 70,922 85,291 53,721 8,389 5,607 3,149
Shareholders' equity.... 157,708 160,076 146,447 152,633 151,105 122,600 74,796
</TABLE>
- --------
(1) Net loss for the year ended September 29, 1996 is attributable to non-
recurring expenses. These expenses consist primarily of transaction and
other costs associated with the acquisition of Fresh Fields Market, Inc.
and with the reorganization of the Southern California region, including
severance costs and expenses related to changing the names of the stores
from Mrs. Gooch's Natural Food Markets, Inc. to WFM.
12
<PAGE>
AMRION, INC.
SUMMARY HISTORICAL FINANCIAL DATA
(In thousands, except per share data)
<TABLE>
<CAPTION>
AS OF OR AS OF OR
FOR THE THREE FOR THE THREE
MONTHS ENDED MONTHS ENDED AS OF OR FOR THE FISCAL YEAR ENDED
MARCH 31, MARCH 31, ----------------------------------------------------------------
1997 1996 DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
(UNAUDITED) (UNAUDITED) 1996 1995 1994 1993 1992
------------- ------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Sales................... $18,356 $13,382 $54,255 $38,756 $25,244 $16,418 $10,606
Cost of goods sold and
occupancy costs........ 11,124 8,823 32,869 23,430 14,789 9,671 6,375
------- ------- ------- ------- ------- ------- -------
Gross profit............ 7,232 4,559 21,386 15,326 10,455 6,747 4,231
General and
administrative
expenses............... 4,870 3,384 15,499 11,323 8,034 4,752 3,099
------- ------- ------- ------- ------- ------- -------
Income from
operations............ 2,362 1,175 5,887 4,003 2,421 1,995 1,132
------- ------- ------- ------- ------- ------- -------
Other income (expense):
Interest expense........ -- -- -- -- (18) (9) --
Interest and other
income................. 92 159 616 595 704 241 137
------- ------- ------- ------- ------- ------- -------
Income before income
taxes.................. 2,454 1,334 6,503 4,598 3,107 2,227 1,269
Minority interest in
loss of subsidiary..... -- -- 24 65 89 -- --
Provision for income
taxes.................. 820 411 2,007 1,552 1,060 802 474
------- ------- ------- ------- ------- ------- -------
Net income.............. $ 1,634 $ 923 $ 4,520 $ 3,111 $ 2,136 $ 1,425 $ 795
======= ======= ======= ======= ======= ======= =======
Net income per common
share.................. $ 0.30 $ 0.18 $ 0.86 $ 0.60 $ 0.42 $ 0.41 $ 0.26
======= ======= ======= ======= ======= ======= =======
Weighted average shares
outstanding............ 5,392 5,204 5,268 5,147 5,032 3,437 3,098
======= ======= ======= ======= ======= ======= =======
BALANCE SHEET DATA:
Working capital......... $ 9,317 $ 6,178 $10,760 $ 5,271 $ 4,265 $ 6,694 $ 1,324
Total assets............ 33,479 26,122 30,215 23,600 19,033 15,523 2,631
Long-term debt
(including current
maturities)............ -- -- -- -- -- -- --
Shareholders' equity.... 25,265 20,632 25,576 19,719 16,127 14,425 1,995
</TABLE>
13
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED WHOLE FOODS MARKET, INC.
(In thousands, except per share data)
<TABLE>
<CAPTION>
AS OF OR AS OF OR
FOR THE 28 FOR THE 28 AS OF OR FOR THE FISCAL YEAR ENDED
WEEKS ENDED WEEKS ENDED -----------------------------------------------------
APRIL 13, APRIL 7, SEPT. 29, SEPT. 24, SEPT. 25, SEPT. 26, SEPT. 27,
1997 1996 1996 1995 1994 1993 1992
----------- ----------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Sales................... $575,213 $474,151 $946,353 $748,691 $597,294 $455,672 $256,290
Cost of goods sold and
occupancy costs........ 389,294 322,438 645,925 504,211 402,471 307,318 174,220
-------- -------- -------- -------- -------- -------- --------
Gross profit............ 185,919 151,713 300,428 244,480 194,823 148,354 82,070
Direct store expenses... 131,280 111,582 217,048 183,655 144,383 113,690 61,207
General and
administrative
expenses............... 28,102 25,187 49,058 42,100 33,185 26,396 17,154
Pre-opening costs....... 2,733 3,710 3,964 4,029 3,387 4,985 1,087
Store relocation costs.. -- -- 1,939 2,332 5,758 2,457 564
Restructuring expenses.. -- 1,984 -- -- -- -- --
Non-recurring expenses.. -- -- 38,516 -- 282 -- --
Merger transaction
costs.................. -- -- -- -- -- 3,094 --
-------- -------- -------- -------- -------- -------- --------
Income (loss) from
operations............ 23,804 9,250 (10,097) 12,364 7,828 (2,268) 2,058
Other income (expense):
Interest expense........ (3,266) (1,726) (4,671) (2,368) (127) (487) --
Interest and other
income................. 253 326 626 1,022 1,077 1,255 683
-------- -------- -------- -------- -------- -------- --------
Income (loss) before
income taxes........... 20,791 7,850 (14,142) 11,018 8,778 (1,500) 2,741
Minority interest in
loss of subsidiary..... 24 -- 24 65 89 -- --
Provision (credit) for
income taxes........... 7,327 4,194 (1,404) 6,899 7,095 5,529 2,896
-------- -------- -------- -------- -------- -------- --------
Net income (loss)....... 13,488 3,656 (12,714) 4,184 1,772 7,029 (155)
======== ======== ======== ======== ======== ======== ========
Net income (loss) per
share.................. $ 0.55 $ 0.15 $ (0.54) $ 0.18 $ 0.08 $ (0.35) $ (0.01)
======== ======== ======== ======== ======== ======== ========
Shares/weighted average
shares outstanding..... 24,621 23,808 23,762 23,402 22,734 20,008 15,114
======== ======== ======== ======== ======== ======== ========
BALANCE SHEET DATA:
Working capital......... $ 20,663 $ 8,583 $ 15,647 $ 871 $ 21,876 $ 17,569 $ 37,812
Total assets............ 380,470 316,321 340,819 290,414 221,510 176,921 100,076
Long-term debt
(including current
maturities)............ 102,838 70,922 85,291 53,721 8,389 5,607 3,149
Shareholders' equity.... 182,973 180,708 172,023 172,352 167,232 137,025 76,791
</TABLE>
14
<PAGE>
COMPARATIVE PER SHARE DATA
The following tables set forth unaudited data concerning the net income
(loss), earnings per share and book value per common share for WFM and Amrion
(i) on a combined pro forma basis after giving effect to the Merger, (ii) on a
historical basis for WFM, (iii) on a historical basis for Amrion per equivalent
share of WFM Common Stock to be issued in the Merger (as though such shares had
been issued at the beginning of the period), and (iv) on a historical basis for
Amrion. The following comparative per share data should be read in conjunction
with the historical consolidated financial statements of WFM, which have been
incorporated by reference into this Joint Proxy Statement/Prospectus, and the
historical financial statements of Amrion, which have been incorporated by
reference in this Joint Proxy Statement/Prospectus, and information contained
under the caption "Pro Forma Financial Information," appearing elsewhere in
this Joint Proxy Statement/Prospectus.
PRO FORMA COMBINED WFM AND AMRION(1)
<TABLE>
<CAPTION>
FOR FISCAL YEAR
ENDED
SEPTEMBER 29,
1996
---------------
<S> <C>
Net loss per share.............................................. $ (0.54)
Book value per common share at end of period.................... $ 7.24
Weighted average common shares outstanding...................... 23,762,282
</TABLE>
WFM HISTORICAL
<TABLE>
<CAPTION>
FOR THE
TWENTY-
EIGHT FOR FISCAL YEAR
WEEKS ENDED ENDED
APRIL 13, SEPTEMBER 29,
1997 1996(4)
----------- ---------------
<S> <C> <C>
Net income (loss) per share........................ $ 0.52 $ (0.90)
Book value per common share at end of period....... $ 7.91 $ 7.64
Common shares outstanding(3)....................... 19,930,000 19,179,000
</TABLE>
AMRION HISTORICAL PER EQUIVALENT SHARE
<TABLE>
<CAPTION>
FOR FISCAL YEAR
ENDED
DECEMBER 31,
1996
---------------
<S> <C>
Net income per equivalent share............................... $ 0.99
Book value per equivalent share at end of period.............. $ 5.58
Equivalent shares of WFM Common Stock to be issued in exchange
for Amrion Common Stock(2)................................... 4,583,282
</TABLE>
15
<PAGE>
AMRION HISTORICAL
<TABLE>
<CAPTION>
FOR FISCAL YEAR
ENDED
DECEMBER 31,
1996
---------------
<S> <C>
Net income per share............................................ $ 0.86
Book value per common share at end of period.................... $ 4.85
Weighted average common shares outstanding...................... 5,268,140
</TABLE>
- --------
(1) Shares used in computing the pro forma combined per share data include the
common shares outstanding for WFM for the year ended September 29, 1996,
plus the assumed issuance of 4,583,282 shares to Amrion shareholders as of
the beginning of the year.
(2) Equivalent shares is calculated by multiplying the conversion ratio of .87
by the Amrion weighted average common shares outstanding at December 31,
1996 of 5,268,140.
(3) Weighted average shares presented for the twenty-eight weeks ended April
13, 1997.
(4) Net loss for the year ended September 29, 1996 is attributable to non-
recurring expenses. These expenses consist primarily of transaction and
other costs associated with the acquisition of Fresh Fields Market, Inc.
and with the reorganization of the Southern California region, including
severance costs and expenses related to changing the names of the stores
from Mrs. Gooch's Natural Food Markets, Inc. to WFM.
16
<PAGE>
COMPARATIVE MARKET PRICE DATA
The WFM Common Stock and the Amrion Common Stock are quoted on Nasdaq NMS.
The table below sets forth, for the calendar quarters indicated, the reported
high and low sale prices of the WFM Common Stock and of the Amrion Common Stock
as reported on Nasdaq NMS. Each of WFM and Amrion currently intends to retain
any future earnings to finance the growth and development of its business, and
therefore, does not anticipate paying any cash dividends in the foreseeable
future. In addition, the credit facilities maintained by WFM prohibits the
declaration or payment of cash dividends without the prior written consent of
its lenders.
<TABLE>
<CAPTION>
WFM AMRION
COMMON STOCK COMMON STOCK
--------------- ---------------
CALENDAR YEAR HIGH LOW HIGH LOW
- ------------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
1995
First Quarter.................................. $14.125 $10.500 $ 9.875 $ 6.500
Second Quarter................................. 16.125 11.125 10.500 8.750
Third Quarter.................................. 15.375 11.875 12.625 9.500
Fourth Quarter................................. 14.625 10.938 12.500 10.000
1996
First Quarter.................................. 18.438 13.750 15.375 10.500
Second Quarter................................. 28.500 17.750 18.625 14.625
Third Quarter.................................. 36.750 24.000 22.250 15.000
Fourth Quarter................................. 27.250 21.500 26.125 19.250
1997
First Quarter.................................. 24.250 17.500 23.125 16.375
Second Quarter................................. 33.500 19.500 28.000 16.000
Third Quarter (through July 11, 1997).......... 33.120 32.500 28.125 27.250
</TABLE>
On June 9, 1997, the last full trading day prior to the public announcement
of the execution and delivery of the Merger Agreement, the last reported sale
price of the WFM Common Stock on Nasdaq NMS was $31.75 per share and the last
reported sale price of the Amrion Common Stock on Nasdaq NMS was $25.375 per
share.
On July 11, 1997, the most recent practicable date prior to the date of this
Joint Proxy Statement/Prospectus, the last reported sale price of the WFM
Common Stock on Nasdaq NMS was $32.75 per share and the last reported sale
price of the Amrion Common Stock on Nasdaq NMS was $27.50 per share.
Because the market price of WFM Common Stock may fluctuate, the market value
of the shares of WFM Common Stock that holders of Amrion Common Stock will
receive in the Merger cannot be determined until the Merger is consummated.
Amrion stockholders are urged to obtain current market quotations for the WFM
Common Stock and the Amrion Common Stock. See "The Merger--General."
17
<PAGE>
RISK FACTORS
The shareholders of Amrion and WFM should carefully evaluate all of the
information contained and incorporated by reference in this Joint Proxy
Statement/Prospectus, and in particular, the following factors:
WFM
Expansion Strategy Subject to Uncertainties. WFM's strategy is to expand
through a combination of new store openings and acquisitions of existing
stores as well as the possible acquisition or development of businesses with
complimentary product lines and related lines of business. Successful
implementation of this strategy is contingent on numerous conditions, some of
which are described below, and there can be no assurance that WFM's expansion
strategy can be successfully executed.
Continued growth of WFM will depend to a significant degree upon its ability
to open or acquire new stores in existing and new markets and to operate these
stores on a successful basis. Further, WFM's expansion strategy is dependent
on finding suitable locations, and WFM faces intense competition with other
retailers for such sites. There can be no assurance that WFM will be able to
open or acquire new stores in a timely manner and to operate them on a
successful basis. In addition, there can be no assurance that WFM can
successfully hire and train new employees and integrate them into the programs
and policies of WFM or adapt its distribution, management information and
other operating systems to the extent necessary to operate new or acquired
stores in a successful and profitable manner and adequately supply natural
foods products to these stores at competitive prices.
There can be no assurance that WFM will continue to grow through
acquisitions. To the extent WFM further expands by acquiring existing
businesses, there can be no assurance that WFM can successfully integrate the
acquired businesses into its operations and support systems, and that the
operations of acquired businesses will not be adversely affected as WFM's
decentralized approach to store operations is introduced.
Capital Needed for Expansion. The acquisition of existing stores and the
opening of new stores requires significant amounts of capital. In the past,
WFM's growth has been funded primarily through proceeds from public offerings,
bank debt, private placements of debt, and internally generated cash flow.
These and other sources of capital may not be available to WFM in the future.
Quarterly Fluctuations. WFM's quarterly results of operations may fluctuate
significantly as the result of the timing of new store openings and the range
of operating results which may be generated from newly opened stores. WFM
expenses the pre-opening costs associated with a new store opening during the
quarter in which the store is opened. Accordingly, quarter to quarter
comparisons of results of operations have been and will be materially impacted
by the timing of new store openings. In addition, WFM's quarterly operating
results could be adversely affected by losses from new stores, variations in
the mix of product sales, price changes in response to competitive factors,
increases in merchandise costs and possible supply shortages.
Competition. WFM's competitors include other natural foods stores, large and
small traditional and specialty supermarkets and grocery stores. These stores
compete with WFM in one or more product categories. In addition, traditional
and specialty supermarkets are expanding more aggressively in marketing a
broad range of natural foods and thereby competing directly with WFM for
products, customers and locations. Some of these potential competitors have
been in business longer or have greater financial or marketing resources than
WFM and may be able to devote greater resources to the sourcing, promotion and
sale of their products. Increased competition may have an adverse effect on
profitability as the result of lower sales, lower gross profits, and/or
greater operating costs such as marketing.
Personnel Matters. WFM is dependent upon a number of key management and
other personnel. The loss of the services of a significant number of key
personnel within a short period of time could have a material adverse effect
upon WFM. WFM's continued success is also dependent upon its ability to
attract and retain qualified employees to meet WFM's future needs. WFM faces
intense competition for qualified personnel, many
18
<PAGE>
of whom are subject to offers from competing employers, and there can be no
assurance that WFM will be able to attract and retain such personnel. WFM does
not maintain key person insurance on any employee.
Integration of Amrion's Operations. WFM's acquisition of Amrion
significantly expands WFM's current operations to include the manufacturing of
nutriceuticals and nutritional supplements and the direct marketing of these
products. There can be no assurance that the operations of Amrion will not be
adversely affected by the Merger or that the retail stores which are currently
customers of Amrion will continue to do business with Amrion after it becomes
a subsidiary of WFM. There can be no assurance that WFM can realize the
expected benefits from the acquisition of Amrion. The integration of Amrion
into WFM will require the dedication of management resources which may
temporarily detract from attention to the day-to-day business of WFM.
Negative Impact of Litigation Possible. From time to time WFM is the subject
of various lawsuits arising in the ordinary course of business. Although not
currently anticipated by management, WFM results could be materially impacted
by legal and settlement expenses related to such lawsuits.
Non-Subscriber to Worker's Compensation Insurance. WFM is a non-subscriber
to Worker's Compensation Insurance in the State of Texas. There is some
potential for WFM's results to be materially impacted by medical, lost time
and other costs associated with on-the-job injuries.
Self-Insurance and Adequacy of Related Reserves. WFM provides partially
self-insured, voluntary employee benefits plans for health care and other
benefits to participating employees. The plans are designed to provide
specified levels of coverage, with excess insurance coverage provided by a
commercial insurer. There is some potential for WFM's results to be materially
impacted by claims made in excess of reserves therefore.
Potential Change in Relative Stock Prices. In considering whether to approve
the Merger, shareholders of Amrion should consider the risks associated with
(a) a potential change in the relative stock prices of WFM and Amrion prior to
the Effective Time, and (b) a possible reduction in the market price of WFM
Common Stock following the Merger, due to future sales of shares of WFM Common
Stock or the availability of these shares for future sales, government
regulatory action, tax laws, interest rates and market conditions in general.
Informational Picketing. Certain of WFM's stores have been subjected to
informational picketing and negative publicity campaigns by members of various
local trade unions. These informational pickets and campaigns may have the
effect of lowering the sales volumes of new or existing stores.
AMRION
Dependence on Key Personnel. Amrion believes that its continued success
depends to a significant extent on the management and other skills of its
Chairman and Chief Executive Officer, Mark S. Crossen and its Chief Financial
Officer, Jeffrey S. Williams, as well as its ability to retain other key
employees and to attract skilled personnel in the future to manage the growth
of Amrion. The loss or unavailability of the services of either Messrs.
Crossen or Williams could have a material adverse effect on Amrion. As a
condition to the Merger, WFM will enter into employments agreements with each
of Messrs. Crossen and Williams and Mr. Crossen will have the opportunity, if
he chooses, to become a member of the WFM Board of Directors. See "The
Merger--Interest of Certain Persons in the Merger--Employment Agreements."
Product Liability. Amrion, like other retailers, distributors and
manufacturers of nutritional supplements and nutriceuticals, faces an inherent
risk of exposure to product liability claims in the event that the use of its
products results in injury. Amrion currently has $10 million of product
liability insurance and is an additional insured on all of the policies of its
manufacturers. However, there can be no assurance that such insurance will
continue to be available at a reasonable cost or if available will be adequate
to cover liabilities.
19
<PAGE>
Government Regulation. The manufacturing, processing, formulating,
packaging, labeling and advertising of the Amrion's products are subject to
regulation by one or more federal agencies, including the United States Food
and Drug Administration (the "FDA"), the Federal Trade Commission ("FTC"), the
Consumer Product Safety Commission (the "CPSC"), the United States Department
of Agriculture (the "USDA") and the Environmental Protection Agency (the
"EPA"). Amrion's activities are also regulated by various agencies of the
states, localities and foreign countries to which the Amrion's products are
distributed and in which the Amrion's products are sold.
The composition and labeling of nutritional supplements and nutricueticals,
which comprise a significant majority of Amrion's products, is most actively
regulated by the FDA under the provisions of the Federal Food, Drug, and
Cosmetic Act ("FFDC Act"). The FFDC Act has been revised in recent years by
the Nutrition Labeling and Education Act of 1990 ("NLEA") and by the Dietary
Supplement Health and Education Act of 1994 ("DSHEA"). While in the judgment
of Amrion these regulatory changes are generally favorable to the nutritional
supplements industry, there can be no assurance that Amrion will not in the
future be subject to additional laws or regulations administered by various
regulatory authorities. In addition, there can be no assurance that existing
laws and regulations will not be repealed or be subject to more stringent or
unfavorable interpretation by applicable regulatory authorities.
The labeling requirements for dietary supplements, including Amrion's
nutritional supplements and nutriceuticals, have not been clearly established.
In December 1995, the FDA issued proposed regulations to govern the labeling
of dietary supplements. The timeline for issuance of final regulations is
uncertain. These regulations may require Amrion to revise all of its dietary
supplement labels. In the spring of 1997, the FDA published proposed
regulations to govern the Good Manufacturing Practices ("GMP's") for dietary
supplements. It is expected that the final regulations mandating revised GMP's
will issue in late 1998. Amrion is in the process of designing a new
manufacturing facility and believes that its new facility will readily meet
the final GMP's.
Amrion cannot predict the nature of future laws, regulations,
interpretations or applications, nor can it determine what effect either
additional governmental regulations or administrative orders, when and if
promulgated, or disparate federal, state and local regulatory schemes would
have on its business in the future. They could, however, require the
reformulation of certain products to meet new standards, the recall or
discontinuance of certain products not able to be reformulated, additional
recordkeeping, expanded documentation of the properties of certain products,
expanded or different labeling and/or scientific substantiation. Any or all of
such requirements could have a material adverse effect on the Amrion's results
of operations and financial condition.
Governmental regulations in foreign countries where the Amrion plans to
expand sales may prevent or delay entry into the market or prevent or delay
the introduction, or require the reformulation, of certain of the Amrion's
products.
Competition. The sales of nutritional supplements, nutricueticals and other
fitness and health-related products are highly competitive, and Amrion expects
competitive pressures to continue in the future. Amrion's nutritional
supplement products, which are its largest source of revenue, compete on a
national and regional basis directly with other specialty health retailers,
nutritional supplement manufacturers and mass merchandisers such as drug
stores and supermarkets. Many of these competitors are substantially larger
and have greater resources than Amrion.
Sales Concentrations of Major Products. Three product groups collectively
comprise a majority of Amrion's net sales. These product groups are known as
Coenzyme Q10, Ginkgo Biloba and Bilberry. Although historically sales of these
products have increased annually, there can be no assurance this trend will
continue or that current revenues attributed to the products will be
maintained. To the extent customer demand for these product groups declines,
Amrion's sales would be adversely affected. To reduce the potential adverse
effect of a decreased demand for any of these products, Amrion continually
adds new products to its existing line.
20
<PAGE>
Absence of Clinical Studies and Scientific Review; Effect of Publicity
concerning Amrion's Products. While Amrion conducts extensive quality control
testing on its products, it generally does not conduct or sponsor clinical
studies on its products. Amrion's products consist of vitamins, minerals,
herbs and other ingredients that Amrion regards as safe when taken as
suggested by Amrion. However, because Amrion is highly dependent upon
consumers' perception of the safety and quality of its products as well as
similar products distributed by other companies (which may not adhere to the
same quality standards as Amrion), Amrion could be adversely affected in the
event any of its products or any similar products distributed by other
companies should prove or be asserted to be harmful to consumers. In addition,
because of the Amrion's dependence upon consumer perceptions, adverse
publicity associated with illness or other adverse effects resulting from
consumers' failure to consume the Amrion's products as suggested by Amrion or
other misuse or abuse of Amrion's products or any similar products distributed
by other companies could have a material adverse effect on the Amrion's
results of operations and financial condition.
Amrion believes the recent growth experienced by the nutritional supplement
industry is based in part on national media attention regarding recent
scientific research suggesting potential health benefits from regular
consumption of certain vitamins and other nutritional products. Such research
has been described in major medical journals, magazines, newspapers and
television programs. The scientific research to date is preliminary, and there
can be no assurance of future favorable scientific results and media attention
or of the absence of unfavorable or inconsistent findings.
Availability of Raw Materials. Certain of Amrion's nutritional supplements
and nutricueticals contain ingredients that are harvested by and obtained from
third-party suppliers, some of which are harvested internationally. An
unexpected interruption of supply, such as a harvest failure, could cause the
Amrion's results of operations derived from such products to be adversely
affected. Although Amrion has generally been able to raise its prices in
response to significant increases in the cost of such ingredients, Amrion has
not always in the past been, and may not in the future always be, able to
raise prices quickly enough to offset the effects of such increased raw
material costs.
Intellectual Property Protection. Amrion's trademarks are valuable assets
which are very important to the marketing of its products. Amrion pursues
registrations for all of the trademarks associated with its key products.
Amrion has approximately 100 trademark registrations with the United States
Patent and Trademark Office and relies on common law trademark rights to
protect its unregistered trademarks. Common law trademark rights do not
provide Amrion with the same level of protection as would U.S. federal
registered trademarks. In addition, common law trademark rights extend only to
the geographic area in which the trademark is actually used, while U.S.
federal registration prohibits the use of the trademark by any third party
anywhere in the United States.
Self-Insurance and Adequacy of Related Reserves. Amrion provides partially
self-insured, voluntary employee benefits plans for health care and other
benefits to participating employees. The plans are designed to provide
specified levels of coverage, with excess insurance coverage provided by a
commercial insurer. There is some potential for Amrion's results to be
materially impacted by claims made in excess of reserves therefore.
21
<PAGE>
THE MEETINGS
WFM MEETING
This Joint Proxy Statement/Prospectus is furnished to shareholders of WFM in
connection with the solicitation of proxies on behalf of the WFM Board of
Directors for use at the WFM Meeting to be held on September , 1997. Proxies
in the form enclosed will be voted at the WFM Meeting, if properly executed,
returned to WFM prior to the meeting and not revoked. A proxy may be revoked
at any time before it is voted by giving written notice to the secretary of
WFM. The approximate date on which this Joint Proxy Statement/Prospectus and
the enclosed proxy card will be first sent to WFM shareholders is August ,
1997.
Outstanding Shares and Record Date. The record date for shareholders of WFM
entitled to vote at the WFM Meeting is July 24, 1997. Only holders of record
on the record date are entitled to receive notice of and vote at the WFM
Meeting. At the close of business on that day, there were shares of WFM
Common Stock outstanding and entitled to vote at the WFM Meeting.
Quorum and Voting. The presence, in person or by proxy, of the holders of a
majority of the outstanding shares of WFM Common Stock is necessary to
constitute a quorum at the meeting. In deciding all questions, a holder of WFM
Common Stock is entitled to one vote, in person or by proxy, for each share
held in his or her name on the record date. Abstentions broker non-votes will
be treated as WFM Common Stock present and entitled to vote for purposes of
determining the presence of a quorum. The affirmative vote of the holders of a
majority of the shares of WFM Common Stock voting at the WFM Meeting is
required to approve the Merger Proposal and the First Plan Amendment.
Abstentions and broker non-votes, if any, will not be included in vote totals
and, as such, will have no effect on the Merger Proposal and First Plan
Amendment. The Second Plan Amendment requires the affirmative vote of a
majority of the outstanding shares of WFM. Abstentions and broker non-votes,
if any, will be included in vote totals and, as such, will have the same
effect on such proposal as a negative vote. The affirmative vote of the
holders of a majority of the shares represented at the WFM Meeting will be
required for approval of any other proposals submitted for a vote at the WFM
Meeting. As of June 30, 1997, WFM's executive officers and directors and their
respective affiliates had the right to vote an aggregate of 3,250,706 shares
of WFM Common Stock, representing approximately 17% of the shares of WFM
Common Stock then outstanding. The holders of such shares have advised WFM
that they intend to vote for the Merger Proposal.
Action to be taken at the WFM Meeting. At the WFM Meeting the shareholders
of WFM will be asked to consider and vote upon (i) the proposal to approve the
issuance of the shares of WFM Common Stock in connection with the Merger; (ii)
the First Plan Amendment to increase the number of shares of WFM Common Stock
issuable upon exercise of stock options under the WFM Option Plan from 3
million to 4 million; and (iii) the Second Plan Amendment to limit the number
of shares underlying options granted under such plan to a team member in any
fiscal year to 100,000 shares. The accompanying proxy, unless the shareholder
otherwise specifies in the proxy, will be voted for the Merger Proposal, for
the First Plan Amendment, for the Second Plan Amendment and at the discretion
of the proxy holder on any other matter that may properly come before the
meeting or any adjournment thereof. Where shareholders have appropriately
specified how the proxies are to be voted, they will be voted accordingly. If
any other matter of business is brought before the meeting, the proxy holders
may vote the proxies at their discretion. The directors of WFM do not know of
any such other matter of business.
AMRION MEETING
This Joint Proxy Statement/Prospectus is furnished to shareholders of Amrion
in connection with the solicitation of proxies on behalf of the Amrion Board
of Directors for use at the Amrion Meeting to be held on September , 1997.
Proxies in the form enclosed will be voted at the Amrion Meeting, if properly
executed, returned to Amrion prior to the meeting and not revoked. A proxy may
be revoked at any time before it is voted by giving written notice to the
secretary of Amrion. The approximate date on which this Joint Proxy
Statement/Prospectus and the enclosed proxy card will be first sent to Amrion
shareholders is August , 1997.
22
<PAGE>
Outstanding Shares and Record Date. The record date for shareholders of
Amrion entitled to vote at the Amrion Meeting is August 7, 1997. Only holders
of record on the record date are entitled to receive notice of and vote at the
Amrion Meeting. At the close of business on that day, there were shares of
Amrion Common Stock outstanding and entitled to vote at the Amrion Meeting.
Quorum and Voting. The presence, in person or by proxy, of the holders of
one-third of the outstanding shares of Amrion Common Stock is necessary to
constitute a quorum at the Amrion Meeting. In deciding all questions, a holder
of Amrion Common Stock is entitled to one vote, in person or by proxy, for
each share held in his or her name on the record date. Approval of the Merger
Agreement requires the affirmative vote of holders of a majority of the issued
and outstanding Amrion Common Stock. Abstentions and broker non-votes will be
included in vote totals and, as such, will have the same effect on such
proposal as a negative vote. Two shareholders of Amrion who at the record date
collectively owned approximately 20.5% of the outstanding Amrion Common Stock
have granted WFM an irrevocable proxy to vote all of their shares of Amrion
Common Stock in favor of the proposed Merger. The affirmative vote of the
holders of a majority of the shares represented at the Amrion Meeting will be
required for the approval of any other proposals submitted for a vote at the
Amrion Meeting.
Action to be taken at the Amrion Meeting. The accompanying proxy, unless the
shareholder otherwise specifies in the proxy, will be voted at the Amrion
Meeting (i) for approval of the Merger Agreement and (ii) at the discretion of
the proxy holders on any other matter that may properly come before the
meeting or any adjournment thereof. Where shareholders have appropriately
specified how the proxies are to be voted, they will be voted accordingly. If
any other matter of business is brought before the meeting, the proxy holders
may vote the proxies at their discretion. The directors of Amrion do not know
of any such other matter of business.
SOLICITATION OF PROXIES
WFM and Amrion will each bear the cost of solicitation of proxies from their
respective shareholders. In addition to soliciting proxies by mail, directors,
officers and employees of WFM and Amrion, without receiving additional
compensation therefor, may solicit proxies by personal interview, telephone
and telegram. Arrangements have also been made with brokerage houses, banks
and other custodians, nominees and fiduciaries for the forwarding of
soliciting material to the beneficial owners of the shares of WFM Common Stock
and Amrion Common Stock held of record by such persons, and WFM and Amrion
will respectively reimburse them for reasonable out-of-pocket expenses
incurred by them in connection therewith.
23
<PAGE>
THE MERGER
GENERAL
The terms and conditions of the Merger are set forth in the Merger
Agreement, the text of which is attached to this Joint Proxy
Statement/Prospectus as Appendix A. The summary of the Merger Agreement
contained in this Joint Proxy Statement/Prospectus does not purport to be
complete and is qualified in its entirety by reference to the complete text of
such document.
At the time the Merger becomes effective, the Merger Subsidiary will be
merged with and into Amrion in accordance with Colorado law. As a result of
the Merger, the separate corporate existence of the Merger Subsidiary (which
was formed solely for the purposes of the Merger and has not engaged in any
operations or businesses) will cease, and Amrion will continue its existence
as a separate subsidiary of WFM.
Upon the consummation of the Merger, the outstanding shares of Amrion Common
Stock outstanding immediately prior to the time the Merger becomes effective
(the "Amrion Shares") will be converted into the right to receive .87 shares
of WFM Common Stock (the "Exchange Ratio"). Any fractional shares resulting
from such conversion will entitle the holder to receive cash. See "The
Merger--No Fractional Shares." The shares of capital stock of WFM outstanding
immediately prior to the Merger will not be affected as a result of the
Merger.
WFM will treat the Merger as a pooling-of-interests for financial reporting
purposes. See "The Merger--Accounting Treatment." The Merger is intended to be
a tax-free reorganization under the federal income tax laws, and, as such, no
gain or loss will be recognized by the shareholders of Amrion upon their
receipt of the shares of WFM Common Stock (the "WFM Shares") in exchange for
their Amrion Shares. Gain or loss will be recognized, however, by holders of
Amrion Shares to the extent of any cash received by the Amrion shareholders
for any fractional share. See "The Merger--Federal Income Tax Consequences."
BACKGROUND OF THE MERGER
In December 1995, Amrion engaged an investment banker to assist Amrion in
evaluating and pursuing various strategic alternatives, including mergers,
acquisitions and other possible business combinations. During the course of
this engagement, Amrion's investment banker contacted over 200 companies
concerning a possible transaction with Amrion and engaged in preliminary
transaction discussions with several of these companies. This engagement
expired in accordance with its terms effective April 1, 1997, without a
transaction being consummated.
WFM has sought adequate sources for the products sold in its stores and has
developed in-house resources in order to secure certain products, including
private label products and baked goods. WFM became interested in providing a
secure source for its vitamin and nutritional supplement business which has
historically been one of WFM's most profitable product categories. In April
1997, John Mackey, the Chief Executive Officer of WFM, discussed with WFM's
financial advisors research on companies in the vitamin and nutritional
supplement business. Mr. Mackey expressed interest in Amrion due to Amrion's
strong financial performance and its expertise in non-retail distribution
channels. In April 1997, a representative of AH&H contacted Mr. Crossen, the
President of Amrion, to inquire as to whether he was interested in discussing
a strategic transaction with WFM.
On April 8, 1997, WFM engaged RS&Co and AH&H to serve as WFM's financial
advisors in connection with the proposed acquisition of Amrion and, in that
capacity, to assist WFM in developing an appropriate value range for such
acquisition, to negotiate with Amrion and its representatives and to provide
an opinion as to the fairness from a financial point of view of the Merger to
WFM's shareholders. From April 15 to May 7, 1997, representatives of WFM and
Amrion met to discuss potential transactions and to discuss operational and
financial issues. On May 16, 1997, WFM sent to Amrion a written offer and a
draft of a definitive agreement. On that date, WFM and Amrion also executed a
confidentiality agreement. During the week of May 18, 1997,
24
<PAGE>
representatives of WFM's financial advisors met with representatives of Amrion
to discuss valuation issues and the terms of the proposed offer.
On May 23, 1997, the Amrion Board of Directors met to discuss the
contemplated transaction and the proposed offer received from WFM.
Subsequently, on May 29, 1997, Amrion engaged Piper Jaffray to serve as
Amrion's financial advisor in connection with the proposed transaction with
WFM.
During the weeks of May 25th and June 1st, representatives of WFM and Amrion
(including their respective legal counsel) negotiated the terms of the
proposed offer, subject to the approval of the Boards of Directors of WFM and
Amrion, and conducted due diligence. Amrion determined that an all stock
transaction in which Amrion shareholders would receive a fixed exchange ratio
would be in the best interests of the Amrion shareholders so long as Amrion
would have the right to terminate the transaction if the Average Price for the
WFM Common Stock was less than $23 per share.
The Board of Directors of WFM, together with its financial advisors, met on
Wednesday, June 4, 1997, to consider the proposed Merger and Merger Agreement,
at which time the Board of WFM authorized the execution and delivery of the
Merger Agreement. The Amrion Board of Directors and Piper Jaffray met on
Friday, June 6, 1997 to consider the proposed Merger and Merger Agreement and
other matters in connection with the proposed Merger. This meeting was
continued by the Amrion Board of Directors on June 8, 1997 and June 9, 1997 at
which time the Amrion Board authorized the execution and delivery of the
Merger Agreement. After the close of the market on June 9, 1997, the Merger
Agreement was executed by WFM and Amrion, and a public announcement of the
Merger Agreement and the proposed Merger was made.
AMRION'S REASONS FOR THE MERGER
For the following reasons, the Amrion Board unanimously approved the Merger
Agreement and believes the Merger to be fair to, and is in the best interests
of, the Amrion shareholders. In addition to the following reasons, at its June
6, 1997 meeting, the Amrion Board received a presentation from Piper Jaffray
and discussed the terms of the proposed Merger and the Merger Agreement with
representatives of Piper Jaffray. At that meeting, Piper Jaffray orally
delivered to the Amrion Board its opinion that, as of the date of the opinion,
the Merger was fair to the Amrion Shareholders from a financial point of view.
Piper Jaffray subsequently delivered to the Amrion Board a written opinion
dated June 9, 1997.
In reaching its conclusion to enter into the Merger Agreement and to
recommend adoption of the Merger Agreement and the Merger by the Amrion
shareholders, the Amrion Board considered the following factors:
(i) The terms and conditions for the Merger Agreement and related
matters, including the Exchange Ratio, closing conditions, termination
rights, termination fees, the treatment of Amrion Stock Options; employment
and severance arrangements for existing Amrion employees designed to ensure
a smooth transition in connection with the Merger.
(ii) After the Merger, Amrion will be operated as an autonomous
subsidiary of WFM pursuant to its historical business plan and management
philosophy. Amrion's current management team will be retained and Mark
Crossen, Amrion's Chairman and Chief Executive Officer will have the
opportunity to join WFM's Board of Directors. Furthermore, Mr. Crossen and
Amrion's Chief Financial Officer, Jeffrey S. Williams, will execute
employment agreements with WFM.
(iii) Because WFM is a leading chain of natural foods supermarkets with
annual sales of approximately $1 billion and currently has 74 stores in 17
states, the Merger represents an opportunity to expand and leverage
Amrion's infrastructure, research and development efforts and marketing
over a greater geographic territory and potentially millions of new
households through WFM's established retail network. The combined entity
resulting from the Merger will possess the financial resources to compete
more effectively in the fragmented marketplace for natural products and
enhance its market presence, while maintaining its quality and product
standards.
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(iv) Both companies have a clientele that is well educated and quality
driven and interested in health, nutrition, food safety and preserving the
environment.
(v) The Merger may result in increased sales and profits through
expansion of the combined company's customer base and revenue stream, by,
for example, manufacturing and distributing Amrion branded products as well
as WFM private label products through WFM's established retail channel and
the creation of a WFM mail order catalog to "direct market" a broad
selection of branded WFM products on a national basis. The Merger will also
allow for the creation of cross-sharing of retail/catalog data between
Amrion and WFM for better utilization of advertising and promotional
spending.
(vi) Amrion's shareholders will have the opportunity to invest in a
larger company with greater financial resources and improved potential for
long-term appreciation and reducing the combined company's exposure to
regional economic risk, business sector risk and operational risk. The
Merger will also provide Amrion with financing opportunities which might
not be available to smaller companies.
(vii) The belief that the Merger will attract additional financial
analyst and industry coverage to WFM which will support WFM's future
capital market transactions, if any.
(viii) The financial condition, results of operations, cash flows, market
prices and trading information of Amrion and WFM, both on a historical and
a prospective basis and the likelihood that the Merger would receive
requisite regulatory approvals on terms acceptable to Amrion.
(ix) The belief that the terms of the Merger Agreement are fair to Amrion
because the terms were reached through extensive arms-length negotiations.
In this regard, the Amrion Board noted that the Exchange Ratio on an
earnings basis fairly reflected the relative contributions of both
companies to the combined entity.
(x) The two companies businesses are complementary in that WFM sells
nutriceuticals and nutritional supplements, and there is no channel
conflict, because Amrion previously marketed through direct marketing and
WFM marketed through retail stores.
(xi) The opinion, analyses and presentations of Piper Jaffray which
supported the conclusions reached by the Amrion Board after its own
deliberations and analyses.
(xii) The terms and conditions of the Merger which provide for the
continuity of Amrion's outstanding stock options are designed to ensure a
smooth transition in connection with the Merger and are consistent with
Amrion being operated as an autonomous subsidiary after the Merger.
(xiii) The transaction is structured as a tax-free stock-for-stock
exchange for federal income tax purposes to be accounted for as a pooling-
of-interests for financial accounting purposes, which will provide an
opportunity for Amrion's shareholders to participate in any future
appreciation of WFM.
The foregoing discussion includes the material information and factors
considered by the Amrion Board. In reaching its determination to approve the
Merger Agreement and the proposed Merger, the Amrion Board did not assign any
relative or specific weights to the various factors it considered nor did it
specifically characterize any factor as a negative or positive indicator
concerning the proposed Merger. Individual directors may, however, have given
different weights to different factors and may have viewed certain factors
more positively or negatively than others.
OPINION OF AMRION'S FINANCIAL ADVISOR
Piper Jaffray was retained by Amrion on May 29, 1997 to assist Amrion in its
review and analysis of the forms of the proposed Merger and related
documentation and, at the request of the Amrion Board of Directors, render an
opinion to the Amrion Board of Directors concerning the fairness, from a
financial point of view, of the consideration to be paid to the shareholders
of Amrion in the proposed Merger.
Piper Jaffray delivered to Amrion's Board on June 6, 1997, its oral opinion,
subsequently confirmed in writing, as of June 9, 1997, to the effect that, as
of the date of the written opinion, based on and subject to the
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assumptions, factors and limitations set forth in the opinion and as described
below, the consideration proposed to be paid to the shareholders of Amrion in
the Merger was fair, from a financial point of view, to such shareholders. A
copy of the opinion letter dated June 9, 1997 from Piper Jaffray (the "Piper
Jaffray Opinion"), is attached as Appendix B to this Joint Proxy
Statement/Prospectus and is incorporated herein by reference. Shareholders are
urged to read the Piper Jaffray Opinion in its entirety.
Piper Jaffray was not requested and did not make any recommendation to the
Amrion Board as to the form or amount of the consideration to be received by
the shareholders of Amrion in the Merger, which was determined through
negotiations between the parties to the Merger. The Piper Jaffray Opinion was
rendered to the Amrion Board and does not constitute a recommendation to any
shareholder of Amrion as to how such shareholder should vote at the Meeting.
The Piper Jaffray Opinion does not address Amrion's underlying business
decision to proceed with or effect the Merger.
In arriving at the Piper Jaffray Opinion, Piper Jaffray reviewed (i) the
draft of the Merger Agreement dated June 9, 1997, (ii) certain information
relative to the business, financial condition and operations of Amrion, (iii)
certain internal financial planning information of Amrion furnished by
management of Amrion, (iv) certain financial and securities data of Amrion and
companies deemed similar to Amrion or representative of the business sector in
which Amrion operates, (v) to the extent publicly available, the financial
terms of certain acquisition transactions, (vi) certain publicly available
information relative to the business, financial condition and operations of
WFM and (vii) certain publicly available financial and securities data of WFM
and companies deemed similar to WFM or representative of the business sector
in which WFM operates. In addition, Piper Jaffray engaged in discussions with
members of management of WFM and Amrion concerning the respective financial
conditions, current operating results and business outlook of WFM and Amrion
and the plans and business outlook for WFM following the Merger.
In delivering the Piper Jaffray Opinion to Amrion's Board, Piper Jaffray
prepared and delivered to Amrion's Board certain written materials containing
various analyses and other information material to the Piper Jaffray Opinion.
The following is a summary of these materials.
Market Analysis. Piper Jaffray reviewed general background information
concerning WFM and selected market trading data for each of Amrion and WFM.
Implied Purchase Price. Based on the closing price of WFM on June 6, 1997
of $31.69 and the proposed exchange ratio, Piper Jaffray calculated an
implied purchase price per share of Amrion Common Stock of $27.57. The
implied price per share yielded an aggregate equity value of $146.8 million
and an aggregate company value (aggregate equity plus debt less cash) of
$140.0 million for Amrion.
Dilution/Accretion Analysis. Piper Jaffray examined the hypothetical pro
forma effect of the Merger on WFM's earnings per share for the fiscal years
1997 and 1998, without synergies anticipated by Amrion or WFM management.
This analysis indicated that the transaction would be accretive in fiscal
1997 and 1998. Estimated earnings for WFM were based on published analyst
reports and reviewed and confirmed by WFM management. Estimated earnings
for Amrion were based on internal financial planning data furnished to
Piper Jaffray by management of Amrion.
Contribution Analysis. Piper Jaffray also analyzed the expected
contributions of each of WFM and Amrion to revenue, operating income and
net income of WFM for the latest twelve months ending March 31, 1997 of
each of Amrion and WFM and for the years 1997 and 1998 based on Amrion's
financial planning data and publicly available analysts' reports for WFM.
The analysis indicated that during these periods Amrion would contribute to
WFM revenues ranging from 5.7% to 8.2%, earnings before interest and taxes
ranging from 9.8% to 20.7% and net income ranging from 22.1% to 25.1%.
Amrion will account for approximately 18.6% of the ownership of WFM.
Multiples Paid Analysis. Piper Jaffray reviewed completed merger and
acquisition transactions announced since January 1, 1993 for which
information was publicly available involving transaction values greater
than $15.0 million. The review produced 16 transactions deemed comparable
to the Merger: three transactions involved companies in the mail-order or
direct marketing business (the "Distribution
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Comparables") and 13 involved companies in the medicinal chemicals,
pharmaceutical preparations or perfume, cosmetics and toilet preparations
business (the "Product Comparables"). An analysis of the transactions
produced multiples of selected valuation data as follows: company value to
last twelve months ("LTM") net sales for the Distribution Comparables
ranging from 0.7x to 1.6x, with a mean and median of 1.2x, for the Product
Comparables ranging from 0.7x to 4.3x, with a mean and a median of 2.1x and
1.9x, respectively, and for the Merger of 2.4x; company value to LTM
earnings before income tax for the Distribution Comparables ranging from
16.1x to 22.1x, with a mean and a median of 19.1x, for the Product
Comparables ranging from 6.4x to 33.4x, with a mean and a median of 19.0x
and 17.0x, respectively, and for the Merger of 19.8x; equity value to LTM
net income for the Distribution Comparables ranging from 23.8x to 39.5x,
with a mean and a median of 31.6x, for the Product Comparables ranging from
12.8x to 40.4x, with a mean and a median of 28.2x and 29.7x, respectively,
and for the Merger of 28.1x.
Premiums Paid Analysis. Piper Jaffray reviewed completed mergers and
acquisitions with a transaction size of more than $75 million involving the
sale of public companies, other than financial institutions and REITs,
announced after January 1, 1996 that were accounted for as a pooling of
interests. The review produced 62 transactions that satisfied the criteria.
Piper Jaffray then compared the premiums represented by the transaction
values to the market prices for the target companies at one day, one week
and four weeks before the announcement of the acquisition or merger. The
analysis indicated premiums (discounts) as follows: one day before
announcement ranging from (16.1%) to 113.5%, with a mean and a median of
30.9% and 33.0%, respectively, and for the Merger of 8.1%; one week before
announcement ranging from (9.5%) to 115.1%, with a mean and a median of
35.7% and 34.0%, respectively, and for the Merger of 18.6%; and four weeks
before the announcement ranging from (1.1%) to 146.7%, with a mean and a
median of 44.6% and 39.2%, respectively, and for the Merger of 51.1%.
Estimated premiums paid for the comparable transactions were based on
information obtained from public filings, public company disclosures, press
releases, industry and popular press reports, databases and other sources.
Discounted Cash Flow Analysis. Piper Jaffray estimated the present value
of the projected future cash flows of Amrion on a stand-alone basis using
internal financial planning data prepared by Company management for the
years ending December 31, 1997 through 1999 and financial forecasts
prepared by Piper Jaffray based on assumptions provided by Company
management for the years 2000 and 2001. Piper Jaffray applied a range of
terminal value multiples of forecasted 2001 earnings before interest and
taxes of 7.0x to 9.0x and a range of discount rates of 19% to 21%. This
analysis yielded a range of estimated present values of aggregate Company
equity of approximately $139.33 million to $181.08 million or $26.16 per
share to $34.00 per share, respectively.
Comparable Public Company Analysis. Piper Jaffray compared certain
financial information and valuation ratios relating to Amrion and WFM to
corresponding data and ratios from a group of selected publicly traded
companies deemed comparable to Amrion and to WFM.
The comparable companies selected for comparison to Amrion (the "Amrion
Comparables") included eight publicly traded companies in the medicinal
chemicals, pharmaceutical preparations or perfume, cosmetics and toilet
preparations business with revenues between $44.1 and $256.8 million. This
analysis produced multiples of selected valuation data as follows: market
price to LTM earnings for Amrion Comparables ranging from 12.3x to 35.2x,
with a mean and median of 22.9x and 20.3x, respectively, and for Amrion of
28.1x; market price to 1997 calendar earnings estimate for Amrion
Comparables ranging from 9.0x to 28.3x, with a mean and median of 18.9x and
18.6x, respectively, and for Amrion of 20.7x; market price to 1998 calendar
earnings estimate for Amrion Comparables ranging from 15.0x to 15.7x, with
a mean and median of 15.4x, and for Amrion of 13.7x; company value (market
capitalization plus debt less cash) to LTM revenue for Amrion Comparables
ranging from 0.8x to 4.2x, with a mean and median of 2.0x and 1.8x,
respectively, and for Amrion of 2.4x; company value to LTM operating income
for Amrion Comparables ranging from 7.0x to 22.7x, with a mean and median
of 13.9x and 13.3x, respectively, and for Amrion of 19.8x. Earnings
estimates for Amrion Comparables were based on publicly available analysts'
reports. Company value for Amrion was based on the implied purchase price
per share, times the number of shares, less cash.
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The comparable companies selected for comparison to WFM (the "WFM
Comparables") included three publicly traded companies in the natural
food/nutritional supplement/grocery business with revenues between $230.2
and $990.8 million. This analysis produced multiples of selected valuation
data as follows: market price to LTM earnings for the WFM Comparables of
24.1x, and for WFM of 37.3x (excluding restructuring expenses of $36.6
million); market price to 1997 calendar earnings estimate for WFM
Comparables ranging from 19.4x to 25.0x, with a mean and median of 21.9x
and 21.4x, respectively, and for WFM of 26.5x; market price to 1998
calendar earnings estimate for WFM Comparables ranging from 17.3x to 18.8x,
with a mean and median of 18.0x and 17.8x, respectively, and with the
multiple unavailable for WFM; company value (market capitalization plus
debt less cash) to LTM revenue for WFM Comparables ranging from 0.6x to
2.4x, with a mean and median of 1.2x and 0.7x, respectively, and for WFM of
0.7x; company value to LTM operating income for WFM Comparables ranging
from 16.1x to 36.8x, with a mean and median of 26.4x, and for WFM of 10.8x.
Earnings estimates for the WFM Comparables and WFM were based on publicly
available analysts' reports.
In reaching its conclusion as to the fairness of the consideration to be
received in the Merger and in its presentation to Amrion's Board, Piper
Jaffray did not rely on any single analysis or factor described above, assign
relative weights to the analyses or factors considered by it, or make any
conclusions as to how the results of any given analysis, taken alone,
supported the Piper Jaffray Opinion. The preparation of a fairness opinion is
a complete process and not necessarily susceptible to partial analyses or
summary description. Piper Jaffray believes that its analyses must be
considered as a whole and that selecting portions of its analyses and of the
factors considered by it, without considering all factors and analyses, would
create a misleading view of the processes underlying the Piper Jaffray
Opinion. The analyses of Piper Jaffray are not necessarily indicative of
actual values or future results, which may be significantly more or less
favorable than suggested by such analyses. Analyses relating to the value of
companies do not purport to be appraisals or valuations or necessarily reflect
the price at which companies may actually be sold. No company or transaction
used in any comparable analysis as a comparison is identical to WFM, Amrion or
the Merger. Accordingly, an analysis of the results is not mathematical;
rather, it involves complex considerations and judgments concerning
differences in the various characteristics of the comparable companies and
other factors that could affect the public trading value of the comparable
companies to which WFM and Amrion were compared.
For purposes of the Piper Jaffray Opinion, Piper Jaffray relied upon and
assumed the accuracy, completeness and fairness of the financial and other
information made available to it and did not assume responsibility
independently to verify such information. Piper Jaffray relied upon the
assurances of the respective managements of WFM and Amrion that the
information provided by WFM and Amrion had a reasonable basis and, with
respect to financial planning data of Amrion, products and technologies under
development and other business outlook information, reflected the best
available estimates, and that they were not aware of any information or fact
that would make the information provided to Piper Jaffray incomplete or
misleading. Financial planning data of Amrion was prepared based on numerous
variables and assumptions that are inherently uncertain, including, without
limitation, factors related to general economic and competitive conditions,
and actual results could vary significantly from those set forth in such
financial planning data. Piper Jaffray has assumed no liability for such
financial planning data. Upon the advice of WFM and Amrion and their legal and
accounting advisors, Piper Jaffray assumed (i) the Merger would be treated as
a "pooling-of-interests" for accounting purposes and (ii) the Merger would
qualify as a reorganization within the meaning of Section 368(a) of the Code.
In arriving at the Piper Jaffray Opinion, Piper Jaffray did not perform and
was not provided any appraisal or valuation of specific assets or liabilities
(contingent or otherwise) of WFM or Amrion and expressed no opinion regarding
the liquidation value of any entity. Piper Jaffray did not make any physical
inspection of the properties or assets of Amrion or WFM. No other limitations
were imposed by Amrion on the scope of Piper Jaffray's investigation or the
procedures to be followed in rendering its Opinion. Piper Jaffray expressed no
opinion as to the price at which shares of WFM Common Stock may trade at any
future time. The Piper Jaffray Opinion is based upon information available to
Piper Jaffray and the facts and circumstances as they existed and were subject
to evaluation on the date of the Piper Jaffray Opinion. Events occurring after
such date could materially affect the assumptions used in preparing the Piper
Jaffray Opinion.
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Piper Jaffray, as a customary part of its investment banking business, is
engaged in the evaluation of businesses and their securities in connection
with mergers and acquisitions, underwritings and other distributions of
securities, private placements and evaluations for estate, corporate and other
purposes. Amrion's Board selected Piper Jaffray because of its expertise,
reputation and familiarity with the nutriceuticals and nutritional supplement
industry in general and Amrion in particular. Piper Jaffray makes a market in
Amrion's Common Stock. In the ordinary course of its market making activities,
Piper Jaffray and its affiliates may, from time to time, have a long or short
position in and buy and sell Amrion securities, which positions, on occasion,
may be material in size relative to the volume of trading activity. In the
ordinary course of its business, Piper Jaffray and its affiliates may also
actively trade securities of WFM for its own account or the accounts of its
customers and, accordingly, may at any time hold a long or short position in
the securities.
For rendering its services to Amrion's Board in connection with the Merger,
Amrion paid Piper Jaffray a $50,000 non-refundable cash retainer and $50,000
for rendering the Piper Jaffray Opinion upon rendering the Piper Jaffray
Opinion and will pay an additional $50,000 upon consummation of the Merger.
The contingent nature of a portion of these fees may have created a potential
conflict of interest in that Amrion would be unlikely to consummate the Merger
unless it had received the Piper Jaffray Opinion. Whether or not the Merger is
consummated, Amrion has agreed to pay the reasonable out-of-pocket expenses of
Piper Jaffray and to indemnify Piper Jaffray against certain liabilities
incurred (including liabilities under the federal securities laws) in
connection with the engagement of Piper Jaffray by Amrion.
WFM'S REASONS FOR THE MERGER
At a meeting held on June 4, 1997, the WFM Board unanimously determined that
the Merger was advisable and in the best interests of Amrion shareholders and
approved the Merger Proposal. At the June 4, 1997 meeting, the WFM Board
received a presentation from each of RS&Co. and AH&H and reviewed the terms of
the Merger Agreement, including the representations, warranties, covenants and
closing conditions contained therein. At such time, the WFM Board also
received the opinion from each of RS&Co. and AH&H that, as of the date of such
opinion, the consideration to be paid by WFM in the Merger was fair to the
shareholders of WFM from a financial point of view.
In reaching its conclusion to enter into the Merger Agreement and to
recommend adoption of the Merger Proposal by the WFM shareholders, the WFM
Board considered the following factors:
(i) The belief that the consummation of the Merger will provide a unique
opportunity for WFM to expand its vitamin and nutritional supplement
business, which has historically been WFM's most profitable product
category, into the manufacturing and direct marketing of nutriceuticals and
nutritional supplements, thereby securing an in-house manufacturing and
supply source for this WFM product category. Because few of Amrion's
branded products are carried in WFM stores, the acquisition of Amrion is
less likely to cause conflicts with WFM's current suppliers of vitamins and
nutritional supplements and creates an opportunity to expand Amrion's
retail customer base. In addition, Amrion's expertise in direct marketing
and catalogue sales would allow WFM to market its private label and other
products in new distribution channels.
(ii) The belief that the Merger will result in a strong combined entity
with complementary businesses, corporate goals and management philosophies;
(iii) Information relating to the financial performance, prospects and
business operations of Amrion (which information included the historical
financial information contained in the periodic public reports of Amrion
and the descriptions of its lines of business contained in such reports);
(iv) The terms and conditions of the Merger Agreement; and
(v) The presentation of WFM's financial advisors, RS&Co. and AH&H, and
each of their written opinions to the effect that, as of June 4, 1997, and
based upon the assumptions made, matters considered and limits of review as
set forth in such opinion, the consideration to be paid by WFM is fair to
the holders of WFM Common Stock (for a summary of the opinions of RS&Co and
AH&H, including the assumptions made, matters considered and limits of
review, see "The Merger--Opinions of Financial Advisors").
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The WFM Board of Directors believes that each of these factors supports its
recommendation that the WFM shareholders approve the Merger Proposal.
The WFM Board believes that WFM and the WFM shareholders will receive
reasonable protection from a change in circumstances relating to Amrion
between the date of the Joint Proxy Statement/Prospectus and the Effective
Time through the inclusion in the Merger Agreement of a condition of WFM's to
consummation of the Merger that since March 31, 1997, no event shall have
occurred which would have a material adverse effect on the business,
operations, assets or financial condition of Amrion or its subsidiaries, taken
as a whole.
In view of the wide variety of factors considered in connection with its
evaluation of the Merger, the WFM Board of Directors did not find it
practicable to, and did not, quantify or otherwise attempt to assign relative
weights to the specific factors considered in reaching its determination that
the Merger Proposal is fair to, and in the best interests of, WFM and its
shareholders.
THE WFM BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT WFM SHAREHOLDERS VOTE
TO APPROVE AND ADOPT THE MERGER PROPOSAL.
OPINIONS OF WFM'S FINANCIAL ADVISORS
OPINION OF RS&CO. WFM retained RS&Co. to act as its financial advisor in
connection with the Merger. RS&Co. was retained based on RS&Co.'s experience
as a financial advisor in connection with mergers and acquisitions as well as
RS&Co.'s industry knowledge and familiarity with WFM.
At the June 4, 1997 meeting of the WFM Board, RS&Co. delivered its opinion
that, as of such date and based on the matters described therein, the Exchange
Ratio was fair to the shareholders of WFM from a financial point of view.
RS&Co. did not recommend to WFM that any specific transaction value was
appropriate for the Merger. RS&Co.'s opinion to the WFM Board addresses only
the fairness to the shareholders of WFM from a financial point of view of the
Exchange Ratio, and does not constitute a recommendation to any shareholder as
to how such shareholder should vote at the WFM Special Meeting.
THE COMPLETE TEXT OF THE OPINION DATED JUNE 4, 1997 IS ATTACHED HERETO AS
APPENDIX C AND THE SUMMARY OF THE OPINION SET FORTH BELOW IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH OPINION. SHAREHOLDERS OF WFM
ARE URGED TO READ SUCH OPINION CAREFULLY AND IN ITS ENTIRETY FOR A DESCRIPTION
OF THE PROCEDURES FOLLOWED, THE FACTORS CONSIDERED, THE ASSUMPTIONS MADE AND
SCOPE OF THE REVIEW UNDERTAKEN BY, AS WELL AS LIMITATIONS ON THE REVIEW
UNDERTAKEN BY, RS&CO. IN RENDERING ITS OPINION.
RS&Co. expressed no opinion as to the tax consequences of the Merger, and
RS&Co.'s opinion as to the fairness from a financial point of view of the
Exchange Ratio does not take into account the particular tax status or
position of any holder of WFM Common Stock. In rendering its opinion, RS&Co.
was not engaged as an agent or fiduciary of WFM shareholders or any other
third party, and no limitations were imposed by WFM on the scope of RS&Co.'s
opinion or the procedures to be followed by RS&Co. in rendering its opinion.
In connection with the preparation of its opinion dated June 4, 1997, RS&Co.
among other things: (i) reviewed financial information on WFM and Amrion
furnished to it by both companies, including certain financial analyses and
forecasts prepared by the managements of each company; (ii) reviewed publicly
available information concerning WFM and Amrion; (iii) held discussions with
the managements of WFM and Amrion concerning the businesses, past and current
business operations, financial condition and results of operations and the
future prospects of both companies, independently and combined; (iv) reviewed
the Merger Agreement; (v) reviewed the stock price and trading history of
Amrion Common Stock; (vi) reviewed the contribution by each company to pro
forma combined earnings before income and taxes ("EBIT") and net income; (vii)
reviewed the valuations of publicly traded companies which RS&Co. deemed
comparable to Amrion; (viii) compared the financial terms of the Merger with
other transactions which RS&Co. deemed relevant; (ix) analyzed the pro
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forma earnings per share of the combined company; and (x) made such other
studies and inquiries, and reviewed such other data and information, as RS&Co.
deemed relevant.
Based on past activities, RS&Co. has a substantial degree of familiarity
with WFM. In addition, in the course of its engagement, RS&Co. completed
further investigation of both WFM and Amrion. In arriving at its opinion,
however, RS&Co. did not independently verify any of the foregoing information
and has relied on all such information being complete and accurate in all
material aspects. Furthermore, RS&Co. did not obtain any independent appraisal
of the properties or assets and liabilities of WFM and Amrion. With respect to
the financial and operating forecasts (and the assumptions and bases
therefore) of WFM and Amrion which RS&Co. has reviewed, RS&Co. has assumed
that such forecasts have been reasonably prepared in good faith on the basis
of reasonable assumptions, reflect the best available estimates and judgments
of such respective managements and that such projections and forecasts will be
realized in the amounts and in the time periods currently estimated by the
managements of WFM and Amrion. RS&Co. also assumed that the Merger will be
accounted for as a pooling of interests under generally accepted accounting
principles ("GAAP"). While RS&Co. believes that its review, as described
within, is an adequate basis for the opinion that RS&Co. expressed, this
opinion was necessarily based upon market, economic, and other conditions that
existed and could be evaluated as of the date of the opinion, and on
information available to RS&Co. as of such date.
The following paragraphs summarize the material quantitative and qualitative
analyses performed by RS&Co. in arriving at its opinion and reviewed by the
WFM Board and does not purport to be a complete description of the analyses
performed by RS&Co. The information presented below is based on the financial
condition of WFM and Amrion as of a date or dates shortly before the Merger
Agreement was executed on June 9, 1997 and stock price information through the
close of trading on May 30, 1997.
Stock Price and Trading History. RS&Co. reviewed the trading activity
including price and volume of Amrion for the three years ending on May 30,
1997. RS&Co. also reviewed the trading activity including price and volume of
Amrion for the one-year period since May 30, 1996. RS&Co. noted that, since
May 30, 1996, the daily closing prices of the Amrion Common Stock ranged from
a high of $26.125 on October 8, 1996 to a low of $15.000 on July 15, 1996. In
addition, RS&Co. compared the indexed performance of Amrion Common Stock with
that of an index of comparable companies' performance, including General
Nutrition Co., NBTY, Inc., Rexall Sundown, Nature's Sunshine Products, Reliv
International and Usana, over the period from May 30, 1996 to May 30, 1997.
RS&Co. also compared the indexed performance of Amrion Common Stock with that
of an index of comparable companies' performance, including General Nutrition
Co., NBTY, Inc., Rexall Sundown, Nature's Sunshine Products and Herbalife,
over the period from May 31, 1994 to May 30, 1997.
Discounted Cash Flow Analysis. RS&Co. also performed a discounted cash flow
analysis of Amrion and presented a range of implied equity values per Amrion
share of $26.89 to $31.53. In performing this analysis, RS&Co. aggregated the
present value of cash flows projected by Amrion management and selected the
following parameters: terminal valuations between 8.5 times and 10.5 times
operating income at the end of fiscal year ending September 2002 and a
discount rate of 15%.
Comparable Company Analysis. RS&Co. applied certain projected Amrion
financial data to multiples of such parameters accorded to comparable
companies. Comparable companies included in the analysis were General
Nutrition Co., NBTY, Inc., Rexall Sundown, Twinlab Corporation, Weider
Nutrition International, Nature's Sunshine Products, Herbalife, Reliv
International and Usana (the "Comparable Companies"). Multiples compared
included enterprise value to projected operating income and equity value to
projected net income for calendar years 1997 and 1998.
For Amrion, based on enterprise value to operating income multiples of 10.5x
to 15.6x for projected calendar 1997 for the Comparable Companies, implied
equity value per share ranged from $18.26 to $26.52. Based on enterprise value
to operating income multiples of 8.4x to 10.5x for projected calendar 1998 for
the Comparable Companies, implied equity value per share ranged from $19.78 to
$24.41. Based on price per share to earnings per share multiples of 16.4x to
23.8x for projected calendar 1997 for the Comparable Companies,
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implied equity value per share ranged from $19.09 to $27.70. Based on price
per share to earnings per share multiples of 12.1x to 19.0x for projected
calendar 1998 for the Comparable Companies, implied equity value per share
ranged from $19.12 to $30.02.
Comparable Transaction Analysis. RS&Co. also analyzed publicly available
information for selected pending or completed acquisitions and mergers within
the nutritional products and mail order and catalog industries. RS&Co.
examined General Nutrition Co.'s acquisition of Nature Food Centres (1994), a
company operating in this industry with limited direct marketing distribution.
In examining this transaction, RS&Co. applied the multiple of equity
consideration for the target's last twelve months ("LTM") earnings to Amrion's
LTM net income. Based on a LTM net income multiple of 27.0x, Amrion's implied
equity value per share was $26.19. However, RS&Co. noted that this transaction
was not entirely meaningful due to the relatively small portion of revenues
derived from direct marketing as a percentage of overall sales for Nature Food
Centres. RS&Co. concluded that, due to the lack of comparable transactions
involving direct marketers of vitamins and nutritional supplements this
analysis, including the Nature Food Centres/GNC transaction, did not generate
relevant data points useful in analyzing the Amrion/WFM transaction.
No company or transaction used in the Comparable Companies analysis or
comparable transaction analysis is identical to WFM, Amrion or the Merger.
Accordingly, an analysis of the results of the foregoing is not entirely
mathematical; rather, it involves complex considerations and judgments
concerning the differences in the financial and operating characteristics of
the comparable companies or transactions and other factors that could affect
the acquisition or public trading values of the comparable companies or
transactions.
Relative Contribution Analysis. RS&Co. reviewed the relative contribution of
WFM and Amrion to a pro forma combined entity. On an EBIT basis, RS&Co. noted
that for projected calendar years 1998 and 1997, WFM contributed 83% and 84%,
respectively and Amrion, 17% and 16%, respectively to a pro forma combined
entity. On an EBIT basis, RS&Co. noted that for calendar year 1996, WFM
contributed 82% and Amrion, 18% to a pro forma combined entity. On a net
income basis, RS&Co. noted that for projected calendar years 1998 and 1997,
WFM contributed 79% and 80%, respectively and Amrion, 21% and 20%,
respectively to a pro forma combined entity. On a net income basis, RS&Co.
noted that for calendar year 1996, WFM contributed 75% and Amrion 25% to a pro
forma combined entity.
Exchange Ratio Analysis. RS&Co. reviewed the exchange ratio implied by
dividing the daily closing price of Amrion Common Stock by the daily closing
price for WFM Common Stock since May 30, 1996. RS&Co. noted that the average
implied exchange ratio since May 30, 1996 was 0.805 with a high of 1.259 and a
low of 0.453.
The preparation of fairness opinions involves various determinations as to
the most appropriate and relevant quantitative and qualitative methods of
financial analyses and the application of those methods to the particular
circumstances and, therefore, such opinions are not readily susceptible to
summary description. Accordingly, RS&Co. believes its analyses must be
considered as a whole and that considering any portion of such analyses and
the factors, without considering all such analyses and current factors, could
create a misleading or incomplete view of the process underlying such
opinions. In its analyses, RS&Co. made numerous assumptions with respect to
industry performance, general business and other conditions and matters, many
of which are beyond the control of WFM and Amrion. Any estimates contained in
these analyses are not necessarily indicative of actual values or predictive
of future results or values, which may be significantly more or less favorable
than as set forth therein. In addition, analyses relating to the value of a
business do not purport to be appraisals or to reflect the prices at which
businesses actually may be sold.
RS&Co. was retained based on RS&Co.'s experience as financial advisor in
connection with mergers and acquisitions as well as RS&Co.'s investment
banking relationship and familiarity with WFM. RS&Co. has provided certain
investment banking services to WFM from time to time, including acting as
managing underwriter for the initial public offering and two follow-on
offerings of WFM Common Stock and acting as financial advisor to WFM in its
acquisitions of Mrs. Gooch's Natural Food Markets, Inc. and Fresh Fields
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Market, Inc. RS&Co. maintains a market in shares of WFM Common Stock. In the
ordinary course of business, RS&Co. may trade WFM securities for its own
account and the account of its customers and, accordingly, may at any time
hold a long or short position in WFM securities. RS&Co. Investment Management
currently owns, and from time to time has owned, Amrion securities for its own
investment account. In addition, RS&Co. has acted as financial advisor to WFM
in connection with the Merger for which its fee is due and payable contingent
upon closing of the Merger.
WFM formally engaged RS&Co. on April 8, 1997 by means of an engagement
letter to provide financial advisory services in connection with potential
merger or acquisition transactions. Pursuant to the terms of the engagement
letter, RS&Co. is to be paid, contingent upon the closing of the Merger, a fee
equal to one-half of one percent (0.5%) of the aggregate transaction value,
due and payable upon consummation of the merger. WFM has also agreed to
indemnify RS&Co. for certain liabilities relating to or arising out of
services provided by RS&Co. as financial advisor to WFM.
RS&Co. is a nationally recognized investment banking firm. As part of its
investment banking business, RS&Co. is frequently engaged in the valuation of
businesses and their securities in connection with mergers and acquisitions,
negotiated underwritings, secondary distributions of securities, private
placements and other purposes.
ADAMS, HARKNESS & HILL, INC. In connection with the Merger, WFM retained
AH&H together with RS&Co. (collectively, the "Advisors") to act as its
financial advisor and to render an opinion as to the fairness to WFM, from a
financial point of view, of the consideration to be paid by WFM to the holders
of Amrion Common Stock. AH&H assisted in WFM' discussions and negotiations
with Amrion leading up to the execution of the Merger Agreement and in the
consideration by the WFM Board of the Merger. On June 4, 1997, AH&H delivered
an oral opinion to the WFM Board that the consideration to be paid by WFM to
the holders of Amrion Common stock was fair to WFM from a financial point of
view, and on June 4, 1997 AH&H delivered its written opinion (the "AH&H
Opinion") to such effect. Although AH&H assisted WFM in determining the amount
of the consideration to be exchanged for shares of Amrion Common Stock, AH&H
was not required, and did not make any recommendation to the WFM Board that
any specific consideration constituted the appropriate consideration to be
paid in the Merger. The amount of consideration set forth in the Merger
Agreement was determined through negotiations between WFM and Amrion.
A copy of the AH&H Opinion is attached hereto as Appendix D. Shareholders
are urged to read the opinion in its entirety for a summary of assumptions
made, procedures followed, other matters considered and limits of the review
by AH&H. The summary of the AH&H Opinion set forth in this Joint Proxy
Statement/Prospectus is qualified in its entirety by reference to the full
text of such opinion. The AH&H Opinion was prepared for the WFM Board, is
directed only to the fairness to WFM as of June 4, 1997, from a financial
point of view, of the consideration to be received by holders of Amrion Common
Stock pursuant to the Merger Agreement, and does not constitute a
recommendation to any stockholder as to how to vote at the WFM Annual Meeting.
In rendering its opinion, AH&H did not make or seek to obtain appraisals of
Amrion's assets in connection with its analyses of the valuation of Amrion or
the shares of Amrion Common Stock. AH&H relied without independent
verification upon the accuracy and completeness of all of the financial
information reviewed by it for the purposes of its opinion. No limitations
were imposed by the WFM Board upon AH&H with respect to the investigation made
or the procedures followed by AH&H in rendering its opinion.
In rendering its opinion, AH&H, among other things: (i) analyzed certain
publicly available financial statements and other information concerning
Amrion; (ii) analyzed certain internal financial statements and other
financial and operating data concerning Amrion prepared by the management of
Amrion; (iii) discussed the past and current operations, financial condition
and prospects of Amrion with the management of Amrion; (v) reviewed the
reported prices and trading activity for the Amrion Common Stock (vi) compared
the financial performance of Amrion and the prices and trading activity of the
Amrion Common Stock with that of certain other comparable publicly traded
companies and their securities; (vii) reviewed the financial terms, to the
extent
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publicly available, of certain comparable acquisition transactions; (viii)
prepared a discounted cash flow analysis of Amrion; (xi) analyzed certain
publicly available financial statements and other financial and operating data
concerning WFM; (x) analyzed certain internal financial statements and other
financial and operating data concerning WFM prepared by the management of WFM;
(xi) discussed the past and current operations, financial condition and
prospects of WFM with the management of WFM, and analyzed the pro forma impact
of the merger on WFM' earnings per share; (xii) reviewed the reported prices
and trading activity for the WFM Common Stock; (xiii) reviewed and discussed
with the senior management of WFM the strategic rationale for the Merger and
the benefits of the Merger to WFM; (xiv) participated in discussions and
negotiations among representatives of WFM and Amrion and their financial and
legal advisors; (xv) reviewed the Merger Agreement; and (xvi) performed such
other studies, analyses and inquiries and considered such other information as
AH&H deemed relevant.
In rendering its opinion to the WFM Board, AH&H performed and presented
certain financial information and comparative analyses, with such other
factors as its deemed relevant, including, among other things:
Historical Stock Trading and Financial Statement Analysis: As part of its
analysis, AH&H reviewed and analyzed selected historical trading prices and
volumes for WFM' Common Stock and Amrion's Common Stock. In addition, AH&H
reviewed and analyzed selected annual and quarterly income statements and
selected annual balance sheets for each of WFM and Amrion.
Peer Group Comparison: AH&H compared certain financial information of Amrion
with a group of several publicly traded companies in the dietary supplement
industry including, General Nutrition Companies, Inc., NBTY, Inc., Rexall
Sundown, Inc., Twinlab Corporation, Weider Nutrition International, Inc., (the
"Retail Distribution Companies") and Herbalife International, Inc. Nature's
Sunshine Products, Inc., Nutrition for Life, Inc., Reliv International, Inc.
and USANA, Inc. (the "Network Marketing Companies" collectively "The Control
Group"). Such financial information included, among other things, market
valuation, market value as a multiple of earnings, and market value as a
multiple of revenues. In particular, such analysis showed that on average, as
of May 29, 1997, based on the closing prices for the respective common stocks,
the Retail Distribution Companies group of common stocks traded at 25.5 times
calendar 1996 earnings per share, 19.5 times calendar 1997 forecasted earnings
per share, 15.1 times calendar 1998 forecasted earnings per share and 2.3
times the last 12 months reported revenue (based on research and analysts'
estimates as reported by AH&H, First Call (a financial information resource
company), and other sources). The Network Marketing Companies group of common
stocks traded at 26.0 times calendar 1996 earnings per share, 15.9 times
calendar 1997 forecasted earnings per share, 12.2 times calendar 1998
forecasted earnings per share and 1.2 times the last 12 months reported
revenue (estimates based on research and analysts' estimates as reported by
AH&H, First Call, and company sources).
Multiple Analysis: Using the Exchange Ratio, AH&H prepared an analysis that
reviewed the consideration to be paid to the holders of Amrion Common Stock
pursuant to the Merger Agreement using the closing price of WFM Common Stock
on May 29, 1997 as a multiple of Amrion's last 12 months revenue, EBIT and net
income, 1997 projected earnings per share and 1998 projected earnings per
share. The consideration was 2.4 times Amrion's last 12 months revenue, 20.1
times last 12 months EBIT, 31.6 times last 12 months net income, 23.0 times
1997 projected earnings per share and 17.7 times 1998 projected earnings per
share.
Analysis of Operating Statistics. AH&H compared Amrion to the Retail
Distribution Companies and the Network Marketing Companies with respect to
gross margin, operating margin, net profit margin, return on equity and return
on assets over the last 12 months reported results ("Performance Data"). With
respect to the Performance Data, Amrion ranked in the middle of the range of
companies in the Control Group.
Analysis of Selected Precedent Transactions. AH&H examined all disclosed,
completed domestic mergers for the period of January 1, 1995 to May 28, 1997
(the "Broad Group") and selected precedent transactions involving consumer-
related companies for the period of January 1, 1995 to May 28, 1997 (the
"Select Group"). The Select Group analysis compared recent public mergers with
respect to (i) synopses of the transactions; (ii) premiums realized in various
transactions; that is, the offering price per share divided by the closing
price
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per share one day, one week and four weeks prior to the announcement of the
transaction; and (iii) multiples of the transaction price compared to: (a) net
income for the 12 months prior to the transaction, (b) EBIT, (c) revenue for
the 12 months prior to the transaction and (d) book value at the time of the
transaction:
(i) Synopses of the Transactions. The information obtained from
Securities Data Company ("SDC") regarding the Broad Group and selected
precedent transactions was reviewed for comparison with the Merger.
(ii) Transactions Premium Comparisons. AH&H prepared an analysis of
average premiums realized in various transactions one day, one week and
four weeks prior to the announcement of the transaction. Based on data
provided by SDC, AH&H included in its analysis certain disclosed, completed
domestic merger transactions from January 1, 1995 through May 28, 1997 each
of which involved public companies. Such analysis indicated the following
for the Broad Group: the median value for the premiums one day prior to the
announcement was 28.6% (the "Transaction Premium"); the median value for
the premiums one week prior to the announcement was 33.5%; and the median
value for the premiums four weeks prior to the announcement was 40.7%. For
the Select Group, the median value for the premiums one day prior to the
announcement was 31.9%; the median value for the premiums one week prior to
the announcement was 31.6%; and the median value for the premiums four
weeks prior to the announcement was 52.9%.
(iii) Transaction Multiple Analysis. AH&H analyzed transaction multiples
for the Select Group based on the price compared to net income, earnings
before interest and taxes ("EBIT) and revenue for the 12 months prior to
the transaction, and book value at the time of the transaction. This
analysis resulted in a mean transaction valuation, after excluding both the
maximum and minimum values for each valuation metric, of 43.4 times 12
months' net income prior to the transaction, 20.7 times 12 months EBIT
prior to the transaction, 1.2 times 12 months revenue prior to the
transaction and 2.8 times book value at the time of the transaction. AH&H
also analyzed premiums from similar transactions to determine the fairness
to WFM' stockholders of the consideration to be paid to Amrion's
shareholders. AH&H noted that in many of the transactions analyzed, the
acquired companies did not have historical growth rate characteristics as
high as Amrion's, had substantially different financial characteristics
than Amrion and did not participate in the growing dietary supplements
industry. Consequently, these transactions were deemed less meaningful by
AH&H for purposes of arriving at its opinion.
Discounted Cash Flow Analysis. AH&H performed a discounted cash flow
analysis of Amrion based upon a series of financial projections of Amrion
prepared by the Amrion and AH&H (the "Amrion Projections") for projected
fiscal years including the fiscal year ended December 31, 1997 through the
fiscal year ended December 31, 2001. AH&H discounted the projected free cash
flows (EBIT less taxes, plus depreciation, amortization and capital
expenditures and net working capital changes) plus the terminal value based on
a multiple of EBIT in the year ending December 31, 2001 to arrive at a present
value ("Present Value") for Amrion. From this Present Value for Amrion, AH&H
subtracted the short-term portion of long-term debt and all long-term debt
(all debt obligations with terms greater than one year) appearing on Amrion's
balance sheet and added the excess cash balance appearing on Amrion's balance
sheet to obtain Amrion's equity value ("Equity Value"). AH&H performed
sensitivity analyses to understand the effect on Amrion's Equity Value of
different multiples applied to projected EBIT in calendar year 2001. Such
analyses were performed using multiple assumptions ranging from 11 times to 15
times EBIT in the year ending December 31, 2001. This range of multiples to
EBIT to determine terminal value was based upon the ratio of the market
capitalization to calendar year 1997 EBIT multiples of comparable companies.
Based upon assumptions regarding such factors as inflation rates, interest
rates and inherent business risk of Amrion, as well as the dietary supplement
industry as a whole, AH&H observed, after taking into account the number of
shares of WFM Common Stock to be issued in the Merger and the average three-
month closing price for the WFM Common Stock, that the imputed purchase price
for Amrion was within the range of implied Equity Value for Amrion yielded by
such analyses.
Contribution Analysis. AH&H analyzed the pro forma contribution of both WFM
and Amrion in the last 12 months to the combined company if the Merger had
been consummated on March 31, 1996. Such analysis was based on financial data
provided by the managements of WFM and Amrion. Such analysis showed that, for
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the last 12 months ending March 31, 1997, Amrion would contribute
approximately 6% of the projected revenues, 18% of the projected operating
income, and approximately 23% of the projected net income of the combined
company, respectively. Further analysis showed that using the transaction
value as determined by the product of 4.69 million shares, Amrion would
consist of approximately 19% of the combined entity formed by the merger of
WFM and Amrion.
Pro Forma Analysis of the Merger. AH&H analyzed and reviewed certain pro
forma financial information for the combined entity based on 1997 and 1998
management budgets for each of WFM and Amrion, respectively. Such analysis
indicated accretion in the fiscal quarter ending September 30, 1997, or the
first quarter following the merger of the two companies and also indicated
projected accretion for fiscal 1998.
The summary of the AH&H analyses set forth above does not purport to be a
complete description of the presentation by AH&H to the WFM Board. In
performing its analyses, AH&H made numerous assumptions with respect to
industry performance, general business and economic conditions and other
matters, many of which are beyond the control of WFM or Amrion. The analyses
performed by AH&H are not necessarily indicative of actual values or actual
future results, which may be significantly more or less favorable than
suggested by such analyses. In addition, analyses relating to value of
businesses do not purport to be appraisals or to reflect the prices at which
businesses actually may be sold. The analyses and the summary set forth above
should be considered as a whole as any consideration of only selected portions
of the AH&H analyses, or of the above summary, could create an incomplete view
of the process underlying the analyses performed by AH&H in connection with
the preparation of its opinion letter.
WFM formally engaged AH&H on April 8, 1997 by means of an engagement letter
to provide financial advisory services in connection with potential merger or
acquisition transactions. Pursuant to the terms of the engagement letter, AH&H
is to be paid, contingent upon the closing of the Merger, a fee equal to one-
half of one percent (0.5%) of the aggregate transaction value, due and payable
upon consummation of the merger. WFM has also agreed to indemnify AH&H for
certain liabilities relating to or arising out of services provided by AH&H as
financial advisor to WFM.
AH&H provides research coverage on, and makes a market in, WFM Common Stock
and may continue to provide investment banking services to WFM in the future.
In the course of its market-making activities, AH&H may, from time to time,
have a long or short position in, buy or sell securities of WFM. AH&H had not
provided financial advisory services to WFM prior to March 1997. AH&H provides
research coverage on, and makes a market in, Amrion Common Stock. In the
course of its market-making activities, AH&H may, from time to time, have a
long or short position in, buy or sell securities of Amrion. AH&H, as part of
its investment banking activities, is engaged in the valuation of businesses
and their securities in connection with mergers and acquisitions, negotiated
underwritings, secondary distributions of listed and unlisted securities,
private placements and valuations for estate, corporate and other purposes.
INTEREST OF CERTAIN PERSONS IN THE MERGER
Amrion Stock Options. Each of Mark S. Crossen, Amrion's Chief Executive
Officer, and Jeffrey S. Williams, Amrion's Chief Financial Officer, is a party
to option agreements with Amrion pursuant to which he has options to acquire
168,000 and 40,000, respectively, shares of Amrion Common Stock. If the Merger
is consummated, WFM will assume all outstanding options granted by Amrion
(including those described above) and such optionees will then have options to
purchase WFM Common Stock. See "The Merger--Treatment of Options."
Employment Agreements. Each of Messrs. Crossen and Mr. Williams will enter
into employment agreements at the Effective Time. Mr. Crossen's employment
agreement provides that Mr. Crossen will continue to serve as Amrion's Chief
Executive Officer of Amrion and will receive a base salary of $170,000 per
year subject to increases determined by the WFM Board of Directors, and, in
any event, not less than the base salary of WFM's Chief Executive Officer. In
addition, Mr. Crossen will receive bonuses, stock option grants and other
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benefits in the same manner and amount comparable to the senior executive
officers of WFM. The term of Mr. Crossen's employment agreement begins at the
Effective Time and will be terminated upon the earliest of (a) the date WFM
terminates such employment for "just cause" (generally, the performance of Mr.
Crossen's duties in a manner which constitutes gross negligence or willful
misconduct or the commission of any act which materially and adversely affects
WFM's business reputation), (b) the death or disability of Mr. Crossen or (c)
the third anniversary date of the Effective Time. In addition, Mr. Crossen
agreed not to disclose certain confidential information of Amrion after the
termination of his employment or for three years solicit or in manner
influence or induce an employee to leave the employment of WFM or its
affiliates. Further, Mr. Crossen agreed that he will not invest (other than
certain nominal investments in public companies) or engage in any "Restricted
Business" (as defined) or accept employment with or render services to a
competitor of Amrion as a director, officer, agent, employee or consultant for
a period equal to the greater of three years after Mr. Crossen's employment
with WFM terminates or six years from the Effective Time. As used in the
employment agreement, the "Restricted Business" shall mean the development,
production or marketing of high quality nutriceuticals, nutritional
supplements, herbs, herbal formulas, vitamins, minerals and homeopathic
medicines. In consideration for these non-competition provisions, WFM agreed
to pay Mr. Crossen the sum of $300,000 on each of the first, second and third
anniversaries of the Effective Time, $350,000 on each of the fourth and fifth
anniversary of the Effective Time and $400,000 on the sixth anniversary of the
Effective Time (provided Mr. Crossen is not in default under certain non-
disclosure and non-competition provisions of the employment agreement).
Mr. Williams' employment agreement provides that he will continue to serve
as Amrion's Chief Financial Officer and will receive a base salary of $120,000
per year during the term of his employment agreement. In addition, Mr.
Williams will receive such bonuses, stock option grants and other benefits in
the same manner and amount as is comparable to other similarly situated WFM
team members. The term of Mr. Williams' employment agreement begins at the
Effective Time and will be terminated upon the earliest of (a) the date WFM
terminates such employment for "just cause" (generally, the performance of Mr.
Williams' duties in a manner which constitutes gross negligence or willful
misconduct or the commission of any act which materially and adversely affects
WFM's business reputation), (b) the death or disability of Mr. Williams or (c)
the third anniversary date of the Effective Time. In addition, Mr. Williams
agreed not to disclose certain confidential information of Amrion or for three
years after his employment terminates to solicit or in manner influence or
induce an employee to leave the employment of WFM or its affiliates. Further,
Mr. Williams agreed that he will not invest (other than certain nominal
investments in public companies) or engage in any "Restricted Business" or
accept employment with or render services to a competitor of Amrion as a
director, officer, agent, employee or consultant for a period equal to the
greater of three years after his employment with WFM terminates or four years
from the Effective Time. In consideration for these non-competition
provisions, WFM agreed to pay Mr. Williams the sum of $50,000 on each of the
first, second and third anniversaries of the Effective Time (provided he is
not in default under certain non-disclosure and non-competition provisions of
the employment agreement).
Registration Rights Agreement. It is a condition of Amrion's obligation to
consummate the Merger that WFM enter into a Registration Rights Agreement with
Mr. Crossen and Mr. Williams. Under the Registration Rights Agreement, at any
time after the publication of 30 days combined results of Amrion and WFM,
holders of at least 650,000 shares of WFM Common Stock will have the right to
require WFM, at its expense (other than underwriting discounts and selling
commissions), to file a registration statement with the Commission under the
Securities Act covering all or part of their shares of WFM Common Stock in
order to permit such persons to resell their respective shares. If requested
by the holders and if the requested registration is for at least 650,000
shares of WFM Common Stock, then the offering may be pursuant to a firm
commitment underwriting with underwriters selected by WFM. WFM's obligation
under the Registration Rights Agreement is limited to one demand registration
and an unlimited number of "piggy back" registration rights.
Indemnification. The Merger Agreement provides that (i) WFM will indemnify
the present and former officers and directors of Amrion in certain
circumstances, (ii) all rights of indemnification existing in favor of the
officers and directors of Amrion in the Articles of Incorporation of, and
Bylaws of, or agreement with,
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Amrion will survive the Merger, (iii) WFM will provide officers' and
directors' liability insurance for the benefit of Amrion officers and
directors for a period of 24 months after the Effective Time similar in
coverage and content as provided to WFM's directors and officers, and (iv) WFM
will not amend or repeal any provisions of the Articles of Incorporation or
Bylaws of Amrion in any manner which would adversely affect the
indemnification or exculpatory provisions contained therein.
EFFECTIVE TIME AND CONSEQUENCES OF THE MERGER
If approved by the requisite vote of the shareholders of Amrion and if all
other conditions to the consummation of the Merger are satisfied or waived,
the Merger will become effective, unless the Merger Agreement is terminated as
provided therein, upon the making of certain filings with the Secretary of
State of the State of Colorado pursuant to the Colorado Business Corporation
Act (the "CBCA"). At the Effective Time, the Merger Subsidiary will be merged
with and into Amrion, which will be the surviving corporation in the Merger,
and the separate corporate existence and identity of the Merger Subsidiary
will cease. The corporate existence and identity of Amrion will continue
unaffected by the Merger, although it will become a subsidiary of WFM.
It is contemplated that the Effective Time of the Merger will occur as
promptly as practicable after the approval of the Merger by the shareholders
at the Special Meetings of WFM and Amrion, subject to the conditions described
under "Conditions to Merger."
Upon completion of the Merger, each Amrion Share will be converted into the
right to receive .87 WFM Shares.
The directors of the WFM Merger Subsidiary will be the directors of the
surviving corporation after the Effective Date. The officers of Amrion will be
the officers of the Surviving Corporation.
In the event that the Amrion shareholders fail to approve the Merger
Proposal, Amrion will continue to pursue its business strategy, possibly
including seeking suitable acquisition candidates to provide Amrion with
access to new markets and customers.
EXCHANGE OF CERTIFICATES REPRESENTING AMRION SHARES
Instructions with regard to the surrender of Amrion stock certificates,
together with a letter of transmittal to be used for this purpose, will be
mailed to Amrion shareholders as promptly as practicable after the Effective
Time. In order to receive certificates evidencing the WFM Shares, the
shareholders of Amrion will be required to surrender their stock certificates
after the Effective Time, together with a duly completed and executed letter
of transmittal, to Securities Transfer Corp., which will act as Exchange Agent
(the "Exchange Agent") in connection with the Merger. Promptly after the
Effective Time, WFM will deposit in trust with the Exchange Agent certificates
representing the number of whole WFM Shares to which the holders of Amrion
Shares are entitled to receive in the Merger together with cash sufficient to
pay for fractional shares. Upon receipt of such stock certificates and letter
of transmittal, the Exchange Agent will issue a stock certificate evidencing
the WFM Shares to the registered holder or his transferee for the number of
WFM Shares that person is entitled to receive as a result of the Merger,
together with cash in lieu of any fractional share. No interest will be paid
or accrued on the amounts payable upon the surrender of Amrion stock
certificates.
SHAREHOLDERS OF AMRION SHOULD NOT SUBMIT THEIR STOCK CERTIFICATES FOR
EXCHANGE UNTIL THE INSTRUCTIONS AND LETTER OF TRANSMITTAL ARE RECEIVED.
If any certificate for the WFM Shares is to be issued or any cash payment
for a fractional share is to be made to a person other than the person in
whose name the certificate for the Amrion Shares surrendered in exchange
therefor is registered, it will be a condition of such issuance or payment
that the stock certificate so surrendered be properly endorsed and otherwise
in proper form for transfer, and that the person requesting such issuance or
payment (i) pay in advance any transfer or other taxes required by reason of
the issuance of
39
<PAGE>
certificates for the WFM Shares or a check representing cash for a fractional
share to a person other than the registered holder of the Amrion stock
certificate surrendered or (ii) establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not applicable.
After the Effective Time, there will be no further transfers on the stock
transfer books of Amrion of the Amrion Shares that were outstanding
immediately prior to the Effective Time. If a certificate representing such
shares is presented for transfer, subject to compliance with the requisite
transmittal procedures, it will be canceled and exchanged for the applicable
number of WFM Shares and cash for any fractional share amount.
Each certificate representing Amrion Shares immediately prior to the
Effective Time will, at the Effective Time, be deemed for all purposes to
represent only the right to receive the number of whole shares of the WFM
Shares (and the right to receive cash in lieu of any fraction of a WFM Share)
into which the Amrion Shares represented by such certificate were converted in
the Merger.
Until a certificate which formerly represented Amrion Shares is actually
surrendered for exchange and received by the Exchange Agent, the holder
thereof will not be entitled to vote or receive any dividends or other
distributions with respect to WFM Common Stock payable to holders of record
after the Effective Time. Subject to applicable law, upon such surrender of
Amrion stock certificates such dividends or other distributions will be
remitted (without interest) to the record holder of certificates for the WFM
Shares issued in exchange therefor.
Any certificates for the WFM Shares and cash sufficient to pay for
fractional shares delivered or made available to the Exchange Agent and not
exchanged for Amrion stock certificates within six months after the Effective
Time will be returned by the Exchange Agent to WFM, which will thereafter act
as Exchange Agent. None of WFM, Amrion or the Exchange Agent will be liable to
a holder of Amrion Shares for any of the WFM Shares, dividends or other
distributions thereon or cash in lieu of fractional shares delivered to a
public official pursuant to applicable abandoned property, escheat or similar
laws.
NO FRACTIONAL SHARES
No fractional shares of WFM Common Stock will be issued in connection with
the Merger. All fractional shares of WFM Common Stock to which a holder of
Amrion Shares immediately prior to the Effective Time would otherwise be
entitled at the Effective Time will be aggregated. If a fractional share
results from such aggregation, the Amrion shareholder will be entitled to
received from WFM an amount in cash equal to the Average Price multiplied by
the fraction of a share of WFM Common Stock which the Amrion shareholder would
otherwise have received. Except for such payment, no Amrion shareholder will
be entitled to any dividends or other distributions or other rights of
shareholders with respect to any fractional interest.
TREATMENT OF OUTSTANDING AMRION OPTIONS
At June 30, 1997, a total of 393,700 shares of Amrion Common Stock were
reserved for issuance upon the exercise of options outstanding under the 1994
Non-Qualified Stock Option Plan and 1994 Non-Employee Director Stock Option
Plan of Amrion (the "Amrion Plans"). WFM has agreed to assume all of Amrion's
obligations under the Amrion Plans in accordance with their terms and
conditions as in effect at the Effective Time, except that (i) all actions to
be taken thereunder by the Board of Directors of Amrion or a committee thereof
shall be taken by the Board of Directors of WFM or a committee thereof, (ii)
each option shall thereafter evidence the right to purchase only the number of
whole shares of WFM Common Stock (rounded to the nearest whole share) which
would have been issued if the Amrion Shares represented by the option had been
outstanding at the Effective Time at an exercise price per share of WFM Common
Stock (rounded to the nearest cent) equal to the exercise price per share of
Amrion Common Stock applicable to such option divided by .87, and (iii) each
reference in the Amrion Plans to Amrion and Amrion Common Stock will be deemed
to be references to WFM and WFM Common Stock.
40
<PAGE>
CONDITIONS TO THE MERGER
In addition to customary conditions, the obligations of WFM, Amrion and the
Merger Subsidiary to consummate the Merger are subject to the satisfaction or,
where permitted, waiver of certain other conditions, including (a) the absence
of any action, suit or proceeding to restrain, modify, enjoin or prohibit the
carrying out of the transactions contemplated by the Merger Agreement; (b) the
receipt of officer certificates; (c) the absence of any stop order suspending
the effectiveness of the Registration Statement or preventing the use thereof
or any related prospectus; and (d) the receipt of material comments and
approvals.
In addition, WFM's obligation to consummate the Merger is subject to various
additional conditions, including (a) Amrion shall have performed all of its
covenants under the Merger Agreement in all material respects; (b) all of
Amrion's representations and warranties in the Merger Agreement shall be true
and correct in all material respects as if made on the Closing Date; provided,
that this condition will be satisfied even if such representations and
warranties are not true and correct unless the failure of any of the
representations to be so true and correct would have or would likely to have a
material adverse effect on Amrion; (c) the absence of any material adverse
change with respect to Amrion; (d) approval and adoption of the Merger
Agreement by a majority of the shares of WFM Common Stock voting on such
proposal at the WFM Meeting; (e) receipt of satisfactory letters from Amrion's
independent certified public accountants with respect to certain financial
information of Amrion and that Amrion qualifies as an entity such that the
Merger will qualify as a "pooling of interests" transaction under generally
accepted accounting principals; (f) the receipt of a letter from the
independent certified public accountants for WFM dated the Effective Time
stating that such firm concurs that the Merger will qualify as a pooling-of-
interests transaction, subject to certain assumptions; (g) the execution and
delivery of employment agreements with Messrs. Crossen and Williams; and (h)
the Voting Agreements between WFM and Amrion's executive officers will be in
full force and effect and no default shall have occurred thereunder.
Amrion's obligation to consummate the Merger is subject to various
additional conditions, including (a) WFM shall have performed all of its
covenants under the Merger Agreement in all material respects; (b) all of
WFM's representations and warranties in the Merger Agreement shall be true and
correct in all material respects as if made on the Closing Date; provided,
that this condition will be satisfied even if such representations and
warranties are not true and correct unless the failure of any of the
representations to be so true and correct would have or would likely to have a
material adverse effect on WFM; (c) approval and adoption of the Merger
Agreement by the affirmative vote of a majority of the Amrion Shares; (d) the
authorization for listing on Nasdaq NMS of the WFM Shares to be issued in the
Merger and upon the exercise of the Options; (e) the execution and delivery of
the Employment Agreements and the Registration Rights Agreements; (f) the
receipt of certain governmental approvals; and (g) the absence of any material
adverse change with respect to WFM.
MANAGEMENT AND OPERATIONS AFTER THE MERGER
Subject to the ultimate authority and responsibility of the WFM Board, and
to the interests of the shareholders of WFM, WFM currently intends to operate
Amrion as an autonomous subsidiary. Although no concrete program has been
written, it is planned that the respective skills and expertise of WFM and its
subsidiaries and of Amrion will be interchanged so that each company will
benefit from the experience and knowledge of the other, enriching the
development of the overall company. Amrion is expected to continue to operate
under the Amrion name.
As of the Effective Time, WFM or its subsidiaries shall employ all of the
employees of Amrion and, to the extent one or more of the Amrion benefit plans
is terminated, will make available to the former Amrion employees the
corresponding employee benefit plans maintained by WFM for its Team Members in
accordance with their terms. To the extent permitted by the terms of the WFM
plans, WFM agreed to (i) waive all deductibles, waiting periods and
limitations with respect to pre-existing conditions and other conditions
applicable to employees of Amrion and its subsidiaries under the WFM plans and
(ii) grant full past service credit (including credit for eligibility, benefit
accrual and for vesting) to the former Amrion employees for service
41
<PAGE>
with Amrion and its affiliates and predecessors under any and all of the WFM
plans, including bonus, severance, and similar employment policies.
WFM BOARD FOLLOWING MERGER
At the next WFM Board of Directors meeting following the Merger, the Board
of Directors of WFM will increase its size to consist of 10 members, to be
comprised of the nine current members of the WFM Board of Directors plus Mark
Crossen, currently the Chief Executive Officer and President of Amrion. WFM
agreed in the Merger Agreement to nominate Mr. Crossen for re-election at the
annual meetings of WFM shareholders so long as he owns at least one-third of
the shares of WFM Common Stock acquired in the Merger, including shares
underlying options exercisable for WFM Common Stock assumed by WFM pursuant to
the Merger. See "--Interests of Certain Persons in the Merger" for a
description of certain employment agreements with Messrs. Crossen and
Williams.
AMENDMENT OF THE MERGER AGREEMENT; WAIVER OF CONDITIONS
The respective Boards of Directors of WFM, the Merger Subsidiary and Amrion,
by written agreement, may at any time before or after the approval of the
Merger Agreement by the Amrion shareholders amend the Merger Agreement,
provided that after such shareholder approval no amendment or modification may
be made that would materially adversely affect the rights of Amrion
shareholders without the further approval of such shareholders. A vote in
favor of the Merger by an Amrion shareholder will be deemed to be
authorization of Amrion's executive officers and directors to terminate the
Merger Agreement if the Average Price is less than $23.00 per share. Each
party may, to the extent legally permitted, extend the time for the
performance of any of the obligations of any other party to the Merger
Agreement, waive any inaccuracies in the representations or warranties of any
other party contained in the Merger Agreement, waive compliance or performance
by any other party with any covenants, agreements or obligations contained in
the Merger Agreement or waive the satisfaction of any condition that is
precedent to its performance under the Merger Agreement.
TERMINATION OF MERGER AGREEMENT
The Merger Agreement may be terminated and the Merger abandoned, at any time
prior to the Effective Time, whether before or after the approval by the
Amrion shareholders, (i) by the mutual consent of WFM and Amrion; (ii) by
either WFM or Amrion if the transactions contemplated by the Merger Agreement
has not been consummated by October 31, 1997, unless such failure of
consummation is due to the failure of the terminating party to perform or
observe the covenants, agreements, and conditions hereof to be performed or
observed by it; (iii) by either WFM or Amrion if the consummation of the
Merger would violate any nonappealable final order, decree or judgment of any
court or governmental body or agency having competent jurisdiction; (iv) by
WFM if the Amrion Board of Directors withdraws or materially modifies or
changes its recommendation to the shareholders of Amrion to approve the Merger
Agreement and the Merger if there exists at such time an Acquisition Proposal;
or (v) by WFM or Amrion if the Average Price is below $23.00 per share.
FEES AND EXPENSES
Whether or not the Merger is consummated, all costs and expenses incurred in
connection with the Merger Agreement and the transactions contemplated thereby
will be paid by the party incurring such costs or expenses. Notwithstanding
the foregoing, if (a) the Merger Agreement is terminated by WFM because the
Amrion Board of Directors withdraws or materially modifies or changes its
recommendation to the shareholders of Amrion to approve the Merger Agreement
and the Merger if there exists at such time an Acquisition Proposal; or (b) on
or before October 31, 1997 and while the Merger Agreement remains in effect,
Amrion enters into a definitive agreement with respect to an Acquisition
Proposal with any corporation, partnership, person or other entity or group
(other than WFM or any affiliate of WFM), and such transaction (including any
revised transaction based upon the Acquisition Proposal) is thereafter
consummated (whether before or after October 31, 1997), then Amrion shall pay
to WFM a fee equal to the sum of (1) the documented fees, costs and expenses,
including
42
<PAGE>
legal and accounting fees and fees payable to WFM's financial advisors
incurred by WFM in connection with the transactions contemplated by the Merger
Agreement and (2) $4.5 million. This fee is payable only upon completion of
the transaction implementing the Acquisition Proposal and no fee is payable if
the Merger Agreement is terminated by Amrion because the Average Price is less
than $23.
CERTAIN COVENANTS
The Merger Agreement provides that Amrion will not directly or indirectly
(i) solicit or initiate discussions with or (ii) enter into any negotiations
or agreements with, or furnish any information that is not publicly available
to, any third party concerning any proposal for a merger, sale of substantial
assets, sale of shares of stock or securities or other takeover or business
combination transaction involving Amrion; provided, however, that Amrion may
take the actions prohibited by (ii) above if such action is taken by, or upon
the authority of, the Amrion Board in the exercise of its good faith judgment
as to its fiduciary duties to the Amrion shareholders, which judgment is based
upon the advice of independent, outside legal counsel that a failure of the
Amrion Board to take such action would be likely to constitute a breach of its
fiduciary duties to such shareholders. Amrion has agreed to notify WFM
promptly in writing if Amrion receives any inquiries or proposals with respect
to an Acquisition Proposal.
Under the Merger Agreement, Amrion is generally obligated prior to the
Effective Time to conduct its operations in the ordinary and usual course of
business consistent with past and current practices, to notify WFM of changes
in the normal course of its business and to refrain from taking certain
actions without the consent of WFM, including, among other matters, issuing
stock (subject to certain exceptions), declaring dividends, or entering into
transactions outside the ordinary course of business.
INDEMNIFICATION AND DIRECTORS' AND OFFICERS' INSURANCE FOR AMRION
Amrion and WFM agreed in the Merger Agreement to indemnify after the
Effective Time Amrion's current and former officers and directors for claims
made against such persons because they were a shareholder, director, officer,
employee or agent of Amrion or its subsidiaries or serving at the request of
Amrion or any subsidiary as a director, officer, employee or agent of another
entity; provided, however, Amrion and WFM will have no obligation to indemnify
such a person (a) if the indemnification is prohibited by law or (b) if Amrion
had breached a representation or warranty in the Merger Agreement with respect
to the same matters for which indemnification is being sought, except if such
person proves that he or she had no actual knowledge of such breach at the
Effective Time. All rights of indemnification existing in favor of Amrion's
officers and directors in Amrion's Articles of Incorporation or Bylaws and in
any agreement between Amrion and any such officer or director will continue
after the Effective Time. WFM agreed to provide officers' and directors'
liability insurance for the benefit of Amrion's officers and directors for the
two-year period commencing on the Effective Time on terms consistent in scope
and amount of coverage with such insurance currently maintained by WFM. WFM
agrees not to amend its Articles of Incorporation or Bylaws in a manner which
would adversely affect the indemnification or exculpatory provisions contained
therein.
CERTAIN REGULATORY MATTERS
Consummation of the Merger is conditioned upon receipt by WFM and Amrion of
such regulatory and other approvals as are required under applicable law,
including certain approvals from the Commission. Other than these approvals
and the matters described below, WFM and Amrion know of no such regulatory or
other approvals required by law.
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR
Act"), certain acquisition transactions, including the proposed Merger, may
not be consummated unless certain information has been furnished to the FTC
and the Antitrust Division of the Justice Department (the "Antitrust
Division") and certain waiting period requirements have expired or been
terminated. In accordance with the HSR Act, WFM and Amrion each filed
Notification and Report Forms and certain supplementary materials with the
Antitrust Division and the FTC for review in connection with the proposed
Merger. The FTC granted early termination of the waiting period under the HSR
Act on August , 1997.
43
<PAGE>
At any time before or after the Effective Time, notwithstanding such early
termination of the waiting period under the HSR Act, the FTC, the Antitrust
Division or any state could take such action under the antitrust laws of the
United States or such state, as the case may be, as it deems necessary or
desirable in the public interest, including seeking to enjoin the consummation
of the Merger or seeking divesture of substantial assets of WFM or Amrion.
State governmental authorities or private persons may also seek to take legal
action under the antitrust laws under certain circumstances.
POTENTIAL RESALES OF WFM SHARES RECEIVED IN THE MERGER
The WFM Shares to be issued to Amrion shareholders in connection with the
Merger will be freely transferable under the Securities Act, except for shares
issued to any person who, at the time of the Special Meeting, may be deemed to
be an "affiliate" of Amrion within the meaning of Rule 145 under the
Securities Act. In general, affiliates of Amrion include any person or entity
who controls, is controlled by or is under common control with Amrion. Rule
145, among other things, imposes certain restrictions upon the resale of
securities received by affiliates in connection with certain
reclassifications, mergers, consolidations or asset transfers. The WFM Shares
received by affiliates of Amrion in the Merger will be subject to the
applicable resale limitations of Rule 145. For a description of certain
registration rights to be granted to Mr. Crossen and Mr. Williams, see "--
Interests of Certain Persons in the Merger--Registration Rights Agreements."
NASDAQ NMS LISTING OF THE WFM SHARES
WFM has applied for listing on Nasdaq NMS of the WFM Shares to be issued in
connection with the Merger and upon the exercise of Amrion stock options. Such
shares have been approved for listing on Nasdaq NMS, subject to notice of
issuance. See "The Merger--Conditions to Merger."
ACCOUNTING TREATMENT
WFM will account for the business combination of WFM and Amrion in its
financial statements by the pooling-of-interests method of accounting. Receipt
by WFM of a letter from the independent certified public accountants for WFM,
confirming the appropriateness of this accounting treatment, and a letter from
the independent certified public accountants of Amrion to the effect that
Amrion qualifies as an entity such that the Merger will qualify as a pooling
of interests transaction under generally accepted accounting principles are
conditions precedent to the Merger. See "The Merger--Conditions to Merger."
FEDERAL INCOME TAX CONSEQUENCES
The Merger is intended to be a tax-free reorganization for federal income
tax purposes so that no gain or loss will be recognized by the Amrion
shareholders, except for cash received in lieu of fractional shares or as a
result of appraisal rights.
The federal income tax consequences of the Merger to the Amrion shareholders
will be as follows:
(i) The Merger will constitute a reorganization within the meaning of
Section 368(a)(2)(E) of the Code;
(ii) No gain or loss will be recognized to the shareholders of Amrion
upon their receipt of the WFM Shares in exchange for their Amrion Shares;
(iii) The basis of the WFM Shares to be received by the shareholders of
Amrion in the Merger will be the same as the basis of such shareholders in
the Amrion Shares exchanged for such WFM Shares (reduced by any amount
allocable to fractional share interests for which cash is received);
(iv) The holding period of the WFM Shares to be received by the
shareholders of Amrion will include the period during which they held their
Amrion shares exchanged for the WFM Shares; and
(v) Neither WFM nor Amrion will recognize gain or loss as a result of the
Merger.
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<PAGE>
Cash received in the Merger by an Amrion shareholder in lieu of a fractional
WFM Share will be treated under Section 302 of the Code as having been
received by the Amrion shareholder in exchange for such fractional share, and
the Amrion shareholder generally will recognize capital gain or loss in such
exchange equal to the difference between the cash received and such
shareholder's basis allocable to the fractional share.
THE FOREGOING SUMMARY OF MATERIAL FEDERAL INCOME TAX CONSEQUENCES IS NOT
INTENDED TO CONSTITUTE ADVICE REGARDING THE FEDERAL INCOME TAX CONSEQUENCES OF
THE MERGER TO ANY HOLDER OF AMRION SHARES. FURTHER, NEITHER WFM OR AMRION HAS
REQUESTED OR WILL REQUEST ANY RULING FROM THE INTERNAL REVENUE SERVICE AS TO
THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER. THIS SUMMARY
DOES NOT DISCUSS TAX CONSEQUENCES UNDER THE LAWS OF STATES OR LOCAL
GOVERNMENTS OR OF ANY OTHER JURISDICTION OR TAX CONSEQUENCES TO CATEGORIES OF
SHAREHOLDERS THAT MAY BE SUBJECT TO SPECIAL RULES, SUCH AS FOREIGN PERSONS,
TAX-EXEMPT ENTITIES, INSURANCE COMPANIES, FINANCIAL INSTITUTIONS AND DEALERS
IN STOCKS AND SECURITIES. EACH HOLDER OF AMRION SHARES IS URGED TO OBTAIN, AND
SHOULD RELY UPON, HIS OWN TAX ADVICE.
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<PAGE>
PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma combined condensed financial statements
assume a business combination between WFM and Amrion accounted for on a
pooling-of-interests basis. The pro forma combined condensed financial
statements are based on the respective historical financial statements and the
notes thereto, which are incorporated by reference or included elsewhere
herein. The pro forma combined condensed balance sheet combines WFM's April
13, 1997 unaudited condensed consolidated balance sheet with Amrion's March
31, 1997 unaudited condensed balance sheet. The pro forma combined condensed
statements of operations combine WFM's historical condensed consolidated
statements of operations for the fiscal years ended September 29, 1996,
September 24, 1995 and September 25, 1994 and the unaudited twenty-eight week
periods ended April 13, 1997 and April 7, 1996 with the corresponding Amrion
historical condensed statements of operations for the three fiscal years ended
December 31, 1996, 1995 and 1994 and the unaudited estimated twenty-eight week
period ended April 13, 1997 and the unaudited six-month period ended June 30,
1996, respectively. The amounts included as Amrion historical amounts have
been reclassified to conform to classifications used by WFM.
The pro forma information is presented for illustrative purposes only and is
not, in the opinion of WFM's management, necessarily indicative of the
operating results or financial position that would have occurred if the
business combination had been consummated at the beginning of the periods
presented. Nor is the pro forma financial information necessarily indicative
of future operating results or financial position.
These pro forma combined condensed financial statements and the related
notes should be read in conjunction with the consolidated historical financial
statements and the related notes thereto of WFM, which have been incorporated
by reference, and the historical financial statements and the related notes
thereto of Amrion, which have been incorporated by reference herein.
46
<PAGE>
WHOLE FOODS MARKET, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
APRIL 13, 1997
(in thousands, except share data)
ASSETS
<TABLE>
<S> <C>
CURRENT ASSETS:
Cash and cash equivalents.......................................... $ 5,848
Trade accounts receivable.......................................... 28,181
Merchandise inventories............................................ 55,137
Prepaid expenses and other current assets.......................... 3,475
--------
Total current assets............................................. 92,641
Net property and equipment......................................... 219,653
Excess of costs over net assets acquired, net of accumulated amor-
tization.......................................................... 36,111
Marketable securities available for sale........................... 6,346
Mailing lists, net of accumulated amortization..................... 2,849
Other assets, net of accumulated amortization...................... 22,870
--------
Total assets..................................................... $380,470
========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current installments of long-term debt and capital lease obliga-
tions............................................................. $ 838
Trade accounts payable............................................. 29,734
Accrued payroll, bonus and employee benefits....................... 40,596
Other accrued items................................................ 810
--------
Total current liabilities........................................ 71,978
Long-term debt and capital lease obligations....................... 102,000
Other long-term liabilities........................................ 23,205
Deferred income taxes.............................................. 280
--------
Total liabilities................................................ 197,463
Minority interest................................................ 34
SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par value; 5,000,000 shares authorized; none
outstanding....................................................... --
Common stock, no par value; 50,000,000 shares authorized;
23,747,817 shares issued and outstanding.......................... 171,084
Retained earnings.................................................. 12,083
Marketable securities valuation allowance.......................... (194)
--------
Total shareholders' equity....................................... 182,973
--------
$380,470
========
</TABLE>
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<PAGE>
WHOLE FOODS MARKET, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS
TWENTY-EIGHT WEEKS ENDED APRIL 13, 1997 AND APRIL 7, 1996 AND
FISCAL YEARS ENDED SEPTEMBER 29, 1996, SEPTEMBER 24, 1995 AND SEPTEMBER 25,
1994
(in thousands except for per share data)
<TABLE>
<CAPTION>
FOR THE 28 FOR THE 28
WEEKS ENDED WEEKS ENDED
APRIL 13, APRIL 7, SEPT. 29, SEPT. 24, SEPT. 25,
1997 1996 1996 1995 1994
----------- ----------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Sales................... $575,213 $474,151 $946,353 $748,691 $597,294
Cost of goods sold and
occupancy costs........ 389,294 322,438 645,925 504,211 402,471
-------- -------- -------- -------- --------
Gross profit.......... 185,919 151,713 300,428 244,480 194,823
Direct store expenses... 131,280 111,582 217,048 183,655 144,383
General and administra-
tive expenses.......... 28,102 25,187 49,058 42,100 33,185
Pre-opening costs....... 2,733 3,710 3,964 4,029 3,387
Store relocation costs.. -- -- 1,939 2,332 5,758
Restructuring expenses.. -- 1,984 -- -- --
Non-recurring expenses.. -- -- 38,516 -- 282
-------- -------- -------- -------- --------
Income (loss) from op-
erations............. 23,804 9,250 (10,097) 12,364 7,828
Other income (expense):
Interest expense........ (3,266) (1,726) (4,671) (2,368) (127)
Interest and other in-
come................... 253 326 626 1,022 1,077
-------- -------- -------- -------- --------
Income (loss) before in-
come taxes............. 20,791 7,850 (14,142) 11,018 8,778
Minority interest in
loss of subsidiary..... 24 -- 24 65 89
Provision (credit) for
income taxes........... 7,327 4,194 (1,404) 6,899 7,095
-------- -------- -------- -------- --------
Net income (loss)....... $ 13,488 $ 3,656 $(12,714) $ 4,184 $ 1,772
======== ======== ======== ======== ========
Income (loss) per common
and common equivalent
share:................. $ 0.55 $ 0.15 $ (0.54) $ 0.18 $ 0.08
======== ======== ======== ======== ========
Shares/weighted average
shares outstanding..... 24,621 23,808 23,762 23,402 22,734
======== ======== ======== ======== ========
</TABLE>
48
<PAGE>
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The unaudited pro forma combined condensed financial statements give effect
to the business combination between WFM and Amrion accounted for on a pooling-
of-interests basis. The pro forma combined condensed financial statements are
based on the respective historical financial statements and the notes thereto.
The pro forma combined condensed balance sheet combines WFM's April 13, 1997
unaudited condensed balance sheet with Amrion's March 31, 1997 unaudited
condensed balance sheet. The pro forma combined condensed statements of
operations combine WFM's historical condensed consolidated statements of
operations for the three fiscal years ended September 29, 1996, September 24,
1995 and September 25, 1994 and the unaudited twenty-eight week periods ended
April 13, 1997 and April 7, 1996 with Amrion's corresponding historical
condensed statements of operations for the three years ended December 31,
1996, 1995 and 1994 and the unaudited estimated twenty-eight week period ended
April 13, 1997 and the unaudited six month period ended June 30, 1996,
respectively. The amounts included as Amrion's historical amounts have been
reclassified to conform to classifications used by WFM.
The pro forma information is presented for illustrative purposes only and is
not necessarily indicative of the operating results or financial position that
would have occurred if the business combination had been consummated at the
beginning of the periods presented nor is it necessarily indicative of future
operating results or financial position.
These pro forma combined condensed financial statements should be read in
conjunction with the historical financial statements and the related notes
thereto of WFM and Amrion included or incorporated elsewhere herein.
Adjustments to the pro forma combined condensed balance sheet and statements
of operation assume the merger of WFM and Amrion was consummated on September
27, 1993. The transaction has been accounted for using the pooling-of-
interests method of accounting. The following adjustments have been provided
in connection with the merger in accordance with Accounting Principles Board
Opinion No. 16:
(1) Reclassifying additional paid-in capital of Amrion to common stock of
WFM.
(2) Reflecting the estimated number of shares of WFM Common Stock to be
issued in exchange for all common stock of Amrion on the conversion ratio
of .87 new shares of WFM for every existing share of Amrion Common Stock,
or 4,568,817 shares of WFM Common Stock for 5,251,514 shares of Amrion
common equivalent shares assumed to be outstanding at the date of the
Merger.
(3) Prior to the combination, Amrion's fiscal year ended on December 31.
In recording the pooling-of-interests combination, Amrion's December 31,
1996, 1995 and 1994 financial statements were combined with WFM's September
29, 1996, September 24, 1995 and September 25, 1994 financial statements,
respectively.
(4) The estimated merger transaction expenses of approximately $3 to $5
million have not been recorded in the accompanying proforma combined
condensed financial statements. Such expenses will be deferred when
incurred and charged to expense upon consummation of the transaction.
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COMPARISON OF SHAREHOLDERS' RIGHTS
WFM is incorporated under the laws of the State of Texas and Amrion is
incorporated under the laws of the State of Colorado. The Amrion shareholders,
whose rights as shareholders are currently governed by Colorado law and
Amrion's Articles of Incorporation and Bylaws, will become upon consummation
of the Merger shareholders of WFM, and their rights will be governed by Texas
law and WFM's Restated Articles of Incorporation and Bylaws. Certain
differences between the rights of holders of WFM Common Stock and the Amrion
Common Stock are summarized below.
The following summary does not purport to be a complete statement of the
rights of WFM shareholders under applicable Texas law and WFM's Restated
Articles of Incorporation and Bylaws, or the rights of shareholders of Amrion
under applicable Colorado law and Amrion's Articles of Incorporation and
Bylaws. The summary is qualified in its entirety by reference to the Texas
Business Corporation Act ("TBCA") and the CBCA and the WFM Restated Articles
of Incorporation and Bylaws and Amrion's Amended and Restated Certificate of
Incorporation and Bylaws.
AUTHORIZED CAPITAL STOCK
WFM is authorized to issue 50,000,000 shares of Common Stock, no par value,
of which 19,643,273 shares were outstanding as of June 30, 1997, and 5,000,000
shares of Preferred Stock, $.01 par value ("WFM Preferred Stock"), none of
which are outstanding.
WFM may issue Preferred Stock in one or more series and the WFM Board of
Directors may designate the dividend rate, voting rights and other rights,
preferences and restrictions of each series. It is not possible to state the
actual effect of the issuance of any shares of Preferred Stock upon the rights
of holders of the WFM Common Stock until the Board of Directors of WFM
determines the specific rights of holders of such WFM Preferred Stock.
However, such effects might include, among other things, restricting dividends
on the WFM Common Stock, diluting the voting power of the WFM Common Stock,
impairing the liquidation rights of the WFM Common Stock and delaying or
preventing a change in control of WFM without further action by the WFM
shareholders.
Amrion is authorized to issue 10,000,000 shares of Amrion Common Stock,
$.0011 par value per share, and as of June 30, 1997, 5,255,514 shares of
Amrion Common Stock were outstanding. Amrion's Articles of Incorporation do
not authorize any shares of Preferred Stock.
VOTING RIGHTS
The holders of Amrion Common Stock are entitled to one vote per share on all
matters on which shareholders of Amrion are entitled to vote or consent.
Cumulative voting is prohibited in the election of directors.
Under the CBCA, Amrion's shareholders are entitled to vote in groups in
circumstances. A voting group consists of all the shares of a class or series
that, under the Articles or the CBCA, are entitled to vote and be counted
together collectively on a matter at a meeting of shareholders. If multiple
voting groups are entitled to vote on a matter, favorable action on the matter
is taken only when it is approved by each such voting group. Although the
Amrion Common Stock is the only voting stock of Amrion and the Articles do not
provide for voting by voting groups, if any other class or series of capital
stock is issued by Amrion in the future such class or series will be entitled
to vote separately as a voting group under the CBCA in connection with certain
amendments to the Amrion Articles of Incorporation and certain plans of merger
and share exchanges.
Although the CBCA provides that a quorum at a meeting of shareholders will
be a majority of the outstanding shares, the Amrion Articles of Incorporation
provide that one-third of the outstanding Amrion shares will constitute a
quorum at a shareholders' meeting.
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The TBCA has no equivalent provisions for voting groups. Holders of WFM
Common Stock are entitled to one vote per share on any matter submitted to the
vote or consent of shareholders, and cumulative voting is prohibited in the
election of directors. Under the WFM Articles of Incorporation, until such
time as the WFM Board of Directors may designate a series of Preferred Stock
that has the right to vote, WFM Common Stock will be the only class of voting
stock of WFM.
DIVIDEND AND RELATED ISSUES
Under the CBCA, a dividend may be paid on the Amrion Common Stock unless,
after payment of the dividend, (i) Amrion would not be able to pay its debt as
they become due in the usual course of business or (ii) Amrion's total assets
would be less than the sum of its total liabilities plus the amount that would
be needed, if Amrion were dissolved, to satisfy the preferential rights of
shareholders whose preferential rights are superior to those holders receiving
the dividend. Amrion does not have any shareholders who have preferential
rights to the holders of Amrion Common Stock.
Subject to preferences that may be applicable to any outstanding WFM
Preferred Stock, the holders of WFM Common Stock are entitled to receive
ratably such dividends, if any, as may be declared from time to time by the
Board of Directors out of funds legally available therefor. The WFM Common
Stock is non-assessable, not redeemable, does not have any conversion rights
and is not subject to call. Holders of shares of WFM Common Stock have no
preemptive rights to maintain their respective percentage of ownership in
future offerings or sales of stock by WFM.
AMENDMENTS TO CHARTER AND BYLAWS
Under the CBCA, all of the holders of Amrion Common Stock, and each holder
of shares of an affected class or series of stock, voting in separate voting
groups, are entitled to vote on any amendment of the Articles that would (i)
increase or decrease the aggregate number of authorized shares of the class or
series; (ii) effect an exchange or reclassification of all or part of the
shares of the class or series into shares of another class or series; (iii)
effect an exchange or reclassification, or create the right of exchange, of
all or part of the shares of another class or series into shares of the class
or series; (iv) change the designation, preferences, limitations or relative
rights of all or part of the shares of the class or series; (v) change the
shares of all or part of the class or series into a different number of shares
of the same class; (vi) create a new class of shares having rights or
preferences with respect to distributions or dissolution that are prior,
superior or substantially equal to the shares of the class or series; (vii)
increase the rights, preferences, or number of authorized shares of any class
or series that, after giving effect to the amendment, have rights or
preferences with respect to distributions or to dissolutions that are prior,
superior, or substantially equal to the shares of the class or series; (viii)
limit or deny an existing preemptive right of all or part of the shares of the
class or series; or (ix) cancel or otherwise affect rights to distributions or
dividends that have accumulated but have not yet been declared on all or part
of the shares of the class or series.
The Amrion Articles of Incorporation provide that any action to be taken by
the shareholders of Amrion that requires the vote of two-thirds of the
outstanding shares of capital stock under the CBCA may be taken by the vote or
concurrence of a majority of the outstanding Amrion shares.
The TBCA permits a corporation to amend its articles of incorporation so
long as the amended articles of incorporation contain only provisions
permissible in original articles of incorporation filed at the time when the
amendment is filed. The TBCA provides that any amendment to the articles of
incorporation requires the approval of at least two-thirds of the shareholders
entitled to vote, unless the articles of incorporation permits a lesser
amount. The Restated Articles of Incorporation of WFM do not permit approval
of amendments by a lesser number of shareholders.
Under the TBCA, the power to adopt, amend or repeal bylaws rests with the
board of directors unless (i) the articles of incorporation reserves the power
exclusively to the shareholders in whole or in part or (ii) the
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shareholders expressly reserve the power to amend or repeal a particular
bylaw. Under the TBCA, unless the articles of incorporation or a bylaw adopted
by the shareholders provides otherwise, the shareholders' power to amend,
repeal or adopt bylaws is concurrent with that of the directors. The WFM
Bylaws expressly authorize the Board of Directors of WFM to adopt, alter,
amend or repeal the WFM Bylaws by a majority vote at and meeting at which a
quorum is present.
APPROVAL OF, AND SPECIAL RIGHTS WITH RESPECT TO, MERGERS OR CONSOLIDATIONS AND
CERTAIN OTHER TRANSACTIONS; APPRAISAL RIGHTS
Under the CBCA, a plan of merger or share exchange or a transaction
involving the sale, lease, exchange or other disposition of all or
substantially all of Amrion's property, other than in the usual and regular
course of business, must be adopted by the Amrion Board of Directors and then
approved by each voting group entitled to vote separately on such plan, share
exchange or transaction by the holders of a majority of all the votes entitled
to be cast on such plan, share exchange or transaction by that voting group.
The CBCA requires separate voting by voting groups (i) on a plan of merger if
the plan contains a provision that, if contained in an amendment to the Amrion
Articles of Incorporation, would require action by separate voting groups, and
(ii) on a plan of share exchange by each class or series of shares included in
the share exchange, with each class or series constituting a separate voting
group.
Under the CBCA, a shareholder who complies with prescribed statutory
procedures, whether or not entitled to vote, is entitled to dissent and obtain
payment of the fair value of his or her shares in the event of (i)
consummation of a plan of merger to which Amrion is a party, if approval by
Amrion's shareholders is required for the merger or if Amrion were a
subsidiary that was merged with its parent corporation, (ii) consummation of a
plan of share exchange to which Amrion is a party as the corporation whose
shares will be acquired, (iii) consummation of a sale, lease, exchange, or
other disposition of all, or substantially all, of Amrion's property if a
shareholder vote is required for such disposition, and (iv) consummation of a
sale, lease, exchange, or other disposition of all, or substantially all, of
the property of an entity controlled by Amrion if Amrion's shareholders are
entitled to vote on whether Amrion will consent to the disposition, unless the
shareholder's shares are listed on a national securities exchange or on Nasdaq
NMS or are held of record by more than 2,000 shareholders, provided, however,
that this limitation shall not apply if the shareholder will receive for the
shareholder's shares, pursuant to the corporation action, anything except (a)
shares of the corporation surviving the consummation of the plan of merger or
share exchange, (b) shares of any other corporation which at the effective
date of the plan of merger or share exchange either will be listed on a
national securities exchange or on Nasdaq NMS or will be held of record by
more than 2,000 shareholders, (c) cash in lieu of fractional shares, or (d)
any combination of the shares described in (a) and (b) or cash in lieu of
fractional shares.
Except as indicated below, under the TBCA, a merger or consolidation
generally must be approved by the holders of at least two-thirds of all of the
outstanding shares of each constituent corporation entitled to vote. The
merger or consolidation of a wholly owned subsidiary into or with a
corporation does not require shareholder approval. The sale of all or
substantially all of the assets of a corporation must be approved by the
holders of at least two-thirds of the outstanding stock entitled to vote. The
TBCA does not require a shareholder vote of the surviving corporation in a
merger, unless required by the surviving corporation's articles of
incorporation, if (i) the merger agreement does not amend the existing
articles of incorporation, (ii) each shareholder of the surviving corporation
whose shares were outstanding immediately before the effective date of the
merger will hold the same number of shares, with identical designations,
preferences, limitations, and relative rights, immediately after the merger,
(iii) the voting power of the number of voting shares of stock issued and
issuable as a result of the merger does not exceed by more than 20% the voting
power of the shares of stock outstanding immediately prior to the effective
date of the merger, (iv) the number of participating shares outstanding
immediately after the merger plus those issuable as a result of the merger
does not exceed by more than 20% the outstanding pre-merger total, and (v) the
board of directors recommends the plan.
Under the TBCA, any shareholder of a domestic corporation has the right to
dissent from (i) any plan of merger on which he was entitled under the TBCA to
vote, (ii) any sale, lease, exchange, or other disposition of
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all, or substantially all, of the property and assets of the corporation which
required shareholder approval, and (iii) any plan of exchange pursuant to
Article 5.02 of the TBCA in which the shares of the shareholder are to be
acquired. This right is not available with regard to a plan of merger in which
there is a single surviving corporation, or from a plan of exchange, if (i)
the affected shares are listed on a national securities exchange or held by
more than 2,000 shareholders and (ii) the shareholder is not required to
accept anything other than shares of the surviving corporation or another
publicly held corporation (except for payments in lieu of fractional shares).
SPECIAL MEETINGS; ACTION WITHOUT MEETINGS
Under the CBCA and the Amrion Bylaws, a special meeting of the shareholders
of Amrion may be called for any purpose by the President or by the Board, and
must be called by the President at the request of the holders of not less than
10% of all votes entitled to be cast on any issue proposed to be considered at
such meeting. Under the CBCA, unless the articles of incorporation require
that action be taken at a shareholders' meeting, any action required or
permitted to be taken at a shareholders' meeting may be taken without a
meeting if all of the shareholders entitled to vote thereon consent to such
action in writing. The Amrion Articles of Incorporation do not contain
provisions regarding shareholder actions by written consent.
Under the TBCA, special meetings of shareholders may be called by (i) the
president, (ii) the board of directors, (iii) those persons authorized by the
corporation's articles of incorporation or bylaws, and (iv) the holders of at
least 10% of the shares entitled to vote, unless the charter specifics a
greater (but not more than 50%) or lesser number. The WFM Bylaws also
authorizes the chief executive officer to call a special meeting of
shareholders at any time.
Any action required or permitted to be taken by shareholder vote may, under
the TBCA, be taken without a meeting by written consent describing the action
taken and signed by the holders of all of the shares entitled to vote on the
action. The TBCA permits the articles of incorporation to permit action by
written consent of the minimum number of votes that would be necessary to
authorize or take the action at a meeting. The WFM Restated Articles of
Incorporation does not permit shareholder action without a meeting by less
than unanimous consent.
LIMITATIONS OF LIABILITY AND INDEMNIFICATION MATTERS
The TBCA allows corporations to indemnify a director, officer, agent, or
employee against civil or criminal liability if such person acted in good
faith and in a manner he reasonably believed to be in, or not opposed to, the
best interests of the corporation, and, with respect to any criminal action,
if he had no reasonable cause to believe his conduct was unlawful. A director
may not be indemnified in respect of a proceeding if he is held liable to the
corporation or received an improper personal benefit, except to the extent of
reasonable expenses actually incurred, and no indemnification shall be made in
respect of any proceeding in which the person was guilty of willful or
intentional misconduct. In any action in which the director, officer, agent,
or employee has been successful, on the merits or otherwise, the corporation
must indemnify him against reasonable expenses. The indemnification provisions
of the TBCA provide that they are not exclusive of additional rights to
indemnification. The WFM Articles of Incorporation and Bylaws provide that
directors, officers, employees, agents, and persons serving in similar
capacities at the request of the corporation are indemnified to the fullest
extent permitted by the TBCA.
Texas law also allows a corporation's articles of incorporation to eliminate
or limit a director's personal liability to the corporation or its
shareholders for monetary damages for the director's breach of his fiduciary
duty as a director. However, the corporation may not eliminate or limit a
director's liability for (i) any breach of the director's duty of loyalty to
the corporation or its shareholders, (ii) acts or omissions not in good faith
or involving intentional misconduct or a knowing violation of law, (iii) any
transaction from which the director derived an improper personal benefit, or
(iv) an act or omission for which the liability of a director is expressly
provided by an applicable statute. The WFM Restated Articles of Incorporation
limit the liability of WFM
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directors to the full extent permitted by Texas law now or in the future, and
state that any repeal or modification of the TBCA provision will not adversely
affect any right or protection of any WFM director that exists immediately
prior to such repeal or modification.
The CBCA permits indemnification of a director in connection with conduct in
an official capacity only if the director conducted himself or herself in good
faith and in a manner he reasonably believed to be in, or not opposed to, the
best interests of the corporation, and, with respect to any criminal action,
if he had no reasonable cause to believe his conduct was unlawful. The CBCA
generally precludes indemnification if there is an adjudication of liability
that the director obtained an improper personal benefit. The CBCA does not
permit a corporation to indemnify directors against judgments in actions
brought by or in the right of the corporation in which such director was
adjudged liable to the corporation, and the CBCA extends such limitation to
indemnification of officers. However, the CBCA permits indemnification for
reasonable expenses in such situations if the indemnification is ordered by a
court. The CBCA permits the corporation to advance expenses upon an
undertaking for their repayment if the person receiving the advance is not
ultimately entitled to indemnification. The CBCA prohibits provisions in
articles of incorporation, bylaws, or contracts that are inconsistent with the
statutory provisions.
The Amrion Articles of Incorporation provide that its directors will be
indemnified by Amrion to the maximum extent permitted by law. In addition, the
Amrion Articles of Incorporation state that no conflicting interest
transaction (as that term is defined in (S)7-108-501 of the CBCA and generally
includes a loan to a director, a guaranty of a director's obligation or any
other transaction between a corporation and a director of such corporation in
which the director has a financial interest) is void or voidable or be
enjoined, set aside, or give rise to a award of damages or other sanctions in
a proceeding by a shareholder or by or in the right of Amrion solely because
the conflicting interest transaction involves a director of Amrion or an
entity in which a director of Amrion is a director or officer or has a
financial interest or solely because the director is present at or
participates in the meeting of Amrion's Board of Directors or of the committee
of the Board of Directors which authorizes, approves, or ratifies the
conflicting interest transaction or solely because the director's vote is
counted for such purpose if the requirements of the CBCA are met.
The Amrion Articles of Incorporation further provide that a director of
Amrion will not be liable to Amrion or its shareholders for monetary damages
for breach of fiduciary duty as a director except for liability (i) for any
breach of the director's duty of loyalty to Amrion or to its shareholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of the law, (iii) for unlawful distribution
as provided by the CBCA, or (iv) any transaction from which the director
directly or indirectly received an improper personal benefit.
REMOVAL OF DIRECTORS
Under the CBCA and the Amrion Bylaws, a member of the Amrion Board of
Directors may be removed, with or without cause, by the holders of a majority
of the shares of stock entitled to vote on the election of directors. In
addition, a director may be removed by the district court of the county in
Colorado in which Amrion's principal or registered office is located, in a
proceeding commenced either by Amrion or by shareholders holding at least 10%
of the outstanding shares of any class, if the court finds that the director
engaged in fraudulent or dishonest conduct or gross abuse of authority or
discretion with respect to Amrion and that removal is in Amrion's best
interests.
As permitted by the TBCA, the WFM Bylaws provide that directors of WFM may
be removed, with or without cause, by the holders of a majority of the voting
power of the outstanding shares of stock entitled to vote thereon.
NEWLY CREATED DIRECTORSHIPS AND VACANCIES
Under the CBCA and the Amrion Bylaws, vacancies in the Amrion Board of
Directors may be filled by the affirmative vote of a majority of the directors
then in office, even if less than a quorum, and newly created
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directorships resulting from an increase in the number of directors, including
an increase effected by the Amrion Board of Directors, may be filled by the
affirmative vote of a majority of the directors then in office or by an
election at an annual meeting or special meeting of shareholders called for
that purpose.
Under the TBCA and the WFM Bylaws, vacancies and newly created directorships
resulting from any increase in the number of directors may be filled by the
shareholders or by the affirmative vote of a majority of the directors then in
office; provided, however, the WFM Board of Directors may not fill more than
two directorships created by an increase in the number of directors during the
period between any two successive annual meetings of shareholders.
AMENDMENTS TO THE 1992 STOCK OPTION PLAN FOR TEAM MEMBERS
The First Plan Amendment to the WFM Option Plan would increase the number of
shares of WFM Common Stock subject to the plan from 3 million shares to 4
million shares. The WFM Board of Directors has approved the First Plan
Amendment due to the expected significant increase in Team Members resulting
from the Merger. In order to continue to obtain the beneficial effects of the
WFM Option Plan, it will be necessary to increase the number of shares
available under the plan to provide for future options that may be granted to
the Team Members who were formerly employees of Amrion. Approval of this
amendment requires the affirmative vote of the holders of a majority of the
shares of WFM Common Stock represented at the Special Meeting. THE WFM BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE FIRST PLAN AMENDMENT TO THE
WFM OPTION PLAN.
The Board of Directors has approved the Second Plan Amendment to provide
that the aggregate amount of shares which are subject to options which may be
granted to any individual Team Member under the WFM Option Plan during any
fiscal year may not exceed 100,000 shares. The Second Plan Amendment is
intended to preserve WFM's ability to deduct as a business expense certain
compensation attributable to the exercise of stock options to be granted in
the future under the WFM Option Plan in accordance with the requirements of
Section 162(m) of the Code to the extent such options are not entitled to
incentive stock option treatment. THE WFM BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR APPROVAL OF THE SECOND PLAN AMENDMENT TO THE WFM OPTION PLAN.
Under Section 162(m), the allowable deduction for compensation paid or
accrued with respect to the chief executive officer and each of the four most
highly compensated employees of a publicly held corporation is limited to no
more than $1,000,000. In order for compensation to be exempted from this
deduction limitation, the compensation must satisfy the following
requirements: (i) the payments must be subject to the attainment of objective
performance goal or goals; (ii) the plan under which the compensation is
awarded must be administered by outside directors; and (iii) shareholder
approval of the compensation plan must be obtained.
WFM's tax deduction with respect to stock options granted under the WFM
Option Plan is determined when the option is exercised by the optionee. If the
option is a non-qualified option or if the option is otherwise not entitled to
incentive stock option treatment, then WFM is entitled to a deduction in an
amount equal to the difference between WFM's stock price on the date of
exercise and the options' exercise price multiplied by the total number of
shares exercised under the option. Compensation received upon the exercise of
a stock option satisfying the three requirements described above is not
subject to the $1,000,000 per team member per year deduction limitation.
WFM's stock options will meet the first requirement because options which
have exercise prices not less than the fair market value of the stock on the
date of grant are treated as "performance type and base" compensation. The WFM
Option Plan's administration by the Compensation Committee meets the second
requirement. The provisions of the WFM Option Plan meet the third requirement
except that the WFM Option Plan must specify the maximum number of shares
subject to options that can be awarded under the WFM Option Plan to any single
employee. The amendment adopted by the WFM Board and recommended for
shareholder approval specifies that options for no more than 100,000 shares
may be granted to any single team member during any fiscal year. This
amendment is intended to qualify the stock options granted after the date of
the Special Meeting so as to preserve WFM's tax deduction, if and when the
stock options are exercised and to the extent the options are not entitled to
incentive stock option treatment.
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The purpose of the WFM Option Plan is to encourage an ownership attitude
among Team Members at WFM. All Team Members are eligible to participate in the
WFM Option Plan, subject to length of service criteria which are generally
five years or 10,000 hours of employment with WFM. The intention of WFM in
administering the WFM Option Plan is to provide Team Members with an ongoing
incentive to increase earnings and productivity, to acknowledge superior
service contributions by Team Members to WFM and to recognize promotions of
Team Members.
As of June 30, 1997, options to purchase an aggregate of 2,476,560 shares of
WFM Common Stock (net of options canceled) had been granted pursuant to the
WFM Option Plan, options to purchase 378,630 shares had been exercised,
options to purchase 2,097,930 shares remained outstanding, and only 523,440
shares remained available for future grant. As of June 30, 1997, the market
value of all shares of WFM Common Stock subject to outstanding options was
approximately $69,494,000 (based upon the closing sale price of the WFM Common
Stock as reported on the Nasdaq NMS on June 30, 1997). During the 1996 fiscal
year, options covering 657,357 shares of WFM Common Stock were granted to
employees of WFM.
As of June 30, 1997, the following current executive officers named in its
proxy statement for its 1997 annual meeting of shareholders have been granted
options under the WFM Option Plan in the amount indicated: John Mackey, Chief
Executive Officer, 125,000 shares; Peter Roy, President, 135,000 shares,
Glenda Flanagan, Chief Financial Officer, 71,000 shares; Rich Cundiff,
Regional President, 70,500 shares; and Chris Hitt, Regional President, 175,300
shares. Since adoption of the WFM Option Plan, all current executive officers,
as a group, have been granted options covering 1,026,830 shares of WFM Common
Stock which represents approximately 41% of the total number of options
granted pursuant to the WFM Option Plan. The foregoing amounts do not include
options granted under the 1987 Option and Incentive Plan which was terminated
in 1992, except as to options previously granted.
Stock options currently issued under the WFM Option Plan are currently
entitled to "incentive stock option" treatment for federal income tax purposes
provided by Section 422A of the Internal Revenue Code. An optionee, upon
exercise of an option under the WFM Option Plan, will not realize taxable
income (but may generate a tax preference item which may result in tax
liability under alternative minimum tax provisions), nor will WFM then be
entitled to a deduction. The gain realized upon the subsequent disposition of
the stock acquired upon exercise of the options will be entitled to capital
gain treatment, provided that no such disposition is made within two years
after the option was granted and one year after the option was exercised. If
such holding period requirements are not satisfied, the optionee will realize
ordinary income equal to the lesser of (i) the fair market value of the stock
on the date of exercise minus the exercise price or (ii) the amount realized
on disposition minus the exercise price, and will receive a credit against
income tax to the extent alternative minimum tax liability was incurred upon
exercise. If the optionee must recognize ordinary income, WFM will be entitled
to a corresponding deduction. The foregoing statements are based upon current
federal income tax laws and regulations and are subject to change if the tax
laws and regulations, or interpretations thereof, change.
In addition, the WFM Option Plan may establish for officers and directors of
WFM an exemption from the provisions of Section 16(b) of the Exchange Act for
the grants of options. Section 16(b) provides for recovery by WFM of profits
made by officers and directors on short-term trading in shares of Common
Stock. Grants of options to purchase common stock under the WFM Option Plan by
officers and employee-directors of WFM may be entitled to an exemption from
the operation of Section 16(b), provided certain conditions are met under the
rules and regulations of the Commission.
LEGAL MATTERS
The validity of the shares of WFM Common Stock to be issued in connection
with the Merger is being passed upon for WFM by Crouch & Hallett, L.L.P.
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EXPERTS
The consolidated financial statements and schedules of Amrion as of December
31, 1996 and 1995, and for each of the years in the three-year period ended
December 31, 1996 have been incorporated by reference herein in reliance upon
the report of BDO Seidman, LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of such firm as
experts in accounting and auditing.
The consolidated financial statements of WFM as of September 29, 1996 and
September 24, 1995 and for each of the fiscal years in the three-year period
ended September 29, 1996, have been incorporated by reference herein and in
the Registration Statement in reliance upon the report of KPMG Peat Marwick
LLP, independent certified public accountants, incorporated by reference
herein and in the Registration Statement, and upon the authority of such firm
as experts in accounting and auditing.
SHAREHOLDERS PROPOSALS FOR 1998 ANNUAL MEETINGS
Any proposals that stockholders of WFM desire to have presented at the 1998
Annual Meeting of Shareholders must be received by WFM at its principal
executive offices no later than October 17, 1997 for inclusion in WFM's 1998
proxy materials.
In order for proposals of shareholders to be considered for inclusion in the
proxy statement for the 1998 Annual Meeting of Shareholders of Amrion (if the
Merger is not consummated), such proposals must be received by the Secretary
of Amrion by January 19, 1998.
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APPENDIX A
AGREEMENT AND PLAN OF MERGER
AMONG
WHOLE FOODS MARKET, INC.
(A TEXAS CORPORATION)
NUTRIENT ACQUISITION CORP.
(A COLORADO CORPORATION)
AND
AMRION, INC.
(A COLORADO CORPORATION)
DATED: AS OF JUNE 9, 1997
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This Agreement and Plan of Merger (the "Agreement") is made as of the 9th
day of June, 1997, among Whole Foods Market, Inc., a Texas corporation
("WFM"); Nutrient Acquisition Corp., a Colorado corporation (the "Merger
Subsidiary"), which is wholly owned by WFM; and Amrion, Inc., a Colorado
corporation ("Amrion").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of WFM, the Merger Subsidiary
and Amrion each have determined that it is in the best interests of their
respective stockholders for WFM to acquire Amrion through the merger of the
Merger Subsidiary with and into Amrion upon the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and certain other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
covenant and agree as follows:
ARTICLE 1.
The Merger
1.1. Merger. In accordance with the provisions of the business corporation
laws of the State of Colorado at the Effective Date (as hereinafter defined),
the Merger Subsidiary shall be merged (the "Merger") into Amrion, as soon as
practicable following the satisfaction or waiver, if permissible, of the
conditions set forth in Articles 6 and 7. Following the Merger, Amrion shall
continue as the surviving corporation (the "Surviving Corporation") and shall
continue to be governed by the laws of the State of Colorado.
1.2. Continuing of Corporate Existence. Except as may otherwise be set forth
herein, the corporate existence and identity of Amrion, with all its purposes,
powers, franchises, privileges, rights and immunities, shall continue
unaffected and unimpaired by the Merger, and the corporate existence and
identity of the Merger Subsidiary, with all its purposes, powers, franchises,
privileges, rights and immunities, at the Effective Date shall be merged with
and into that of Amrion, and the Surviving Corporation shall be vested fully
therewith and the separate corporate existence and identity of Merger
Subsidiary shall thereafter cease except to the extent continued by statute.
1.3. Effective Date. The Merger shall become effective upon the filing of
the Articles of Merger with the Secretary of State of the State of Colorado
pursuant to the provisions of the Colorado Business Corporation Act (the
"CBCA"). The date and time when the Merger shall become effective is
hereinafter referred to as the "Effective Date".
1.4. Corporate Government of the Surviving Corporation.
(a) The Articles of Incorporation of Amrion, as in effect on the Effective
Date, shall continue in full force and effect and shall be the Articles of
Incorporation of the Surviving Corporation.
(b) The Bylaws of Amrion, as in effect as of the Effective Date, shall
continue in full force and effect and shall be the Bylaws of the Surviving
Corporation.
(c) The members of the Board of Directors of the Surviving Corporation shall
be the persons holding such office in the Merger Subsidiary as of the
Effective Date.
(d) The officers of the Surviving Corporation shall be the persons holding
such offices in Amrion as of the Effective Date.
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1.5. Rights and Liabilities of the Surviving Corporation. The Surviving
Corporation shall have the following rights and obligations:
(a) The Surviving Corporation shall have all the rights, privileges,
immunities and powers and shall be subject to all the duties and
liabilities of a corporation organized under the laws of the State of
Colorado.
(b) The title to all real estate and other property owned by each of
Amrion and the Merger Subsidiary shall be, at the Effective Date,
transferred to and vested in the Surviving Corporation without reversion or
impairment; and such transfer to and vesting in the Surviving Corporation
shall be deemed to occur by operation of law, and no consent or approval of
any other person shall be required in connection with any such transfer or
vesting unless such consent or approval is specifically required in the
event of merger by law or by express provision in any contract, agreement,
decree, order, or other instrument to which Amrion or the Merger Subsidiary
is a party or by which it is bound.
(c) At the Effective Date, the Surviving Corporation shall thenceforth
have all liabilities of Amrion and the Merger Subsidiary, and any
proceeding pending against Amrion or the Merger Subsidiary may be continued
as if the Merger did not occur or the Surviving Corporation may be
substituted in the proceeding for the Merger Subsidiary.
1.6. Closing. Consummation of the transactions contemplated by this
Agreement (the "Closing") shall take place at the executive offices of WFM in
Austin, Texas, commencing at 10:00 a.m., local time, as soon as practicable
after the last to be fulfilled or waived of the conditions set forth in
Articles 6 and 7 or at such other place, time and date as shall be fixed by
mutual agreement between WFM and Amrion. The day on which the Closing shall
occur is referred to herein as the "Closing Date." Each party will cause to be
prepared, executed and delivered the Articles of Merger to be filed with the
Secretary of State of Colorado and all other appropriate and customary
documents as any party or its counsel may reasonably request for the purpose
of consummating the transactions contemplated by this Agreement. All actions
taken at the Closing shall be deemed to have been taken simultaneously at the
time the last of any such actions is taken or completed.
1.7. Tax Consequences. It is intended that the Merger shall constitute a
reorganization within the meaning of Section 368(a)(2)(E) of the Internal
Revenue Code of 1986, as amended (the "Code"), and that this Agreement shall
constitute a "plan of reorganization" for the purposes of Section 368 of the
Code.
1.8. Pooling of Interests. It is the intention of the parties hereto that
the Merger will be treated for financial reporting purposes as a pooling of
interests.
ARTICLE 2.
Conversion of Shares; Treatment of Options
2.1. Conversion of Shares. At the Effective Date, by virtue of the Merger
and without any action on the part of the holder thereof:
(a) Each share of common stock, $.0011 par value per share, of Amrion
("Amrion Common Stock"), which shall be outstanding immediately prior to
the Effective Date (other than Dissenting Shares, as defined in Section 2.3
below) (the "Converted Shares") shall at the Effective Date, by virtue of
the Merger and without any action on the part of the holder thereof, be
converted into and represent the right to receive .87 shares of Common
Stock, $.01 par value, of WFM (the "WFM Common Stock") (the foregoing
amount of shares of WFM Common Stock being referred to herein as the
"Merger Consideration").
(b) Each share of Common Stock, $.01 par value, of the Merger Subsidiary
which shall be outstanding immediately prior to the Effective Date shall at
the Effective Date, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into one share of newly issued
Amrion Common Stock.
2.2. Fractional Shares. No scrip or fractional shares of WFM Common Stock
shall be issued in the Merger. All fractional shares of WFM Common Stock to
which a holder of Amrion Common Stock immediately
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prior to the Effective Date would otherwise be entitled at the Effective Date
shall be aggregated. If a fractional share results from such aggregation, such
stockholder shall be entitled, after the later of (a) the Effective Date or
(b) the surrender of such stockholder's "Certificate" (as defined in Section
2.5) or Certificates that represent such shares of Amrion Common Stock, to
receive from WFM an amount in cash in lieu of such fractional share. The
amount of such cash payment shall be equal to such fractional proportion of
the "Average Closing Price" of the WFM Common Stock. WFM will make available
to the "Exchange Agent" (as defined in Section 2.5) the cash necessary for the
purpose of paying cash for fractional shares. For purposes of this Agreement,
"Average Closing Price" shall mean the average per share closing price of WFM
Common Stock as reported on the Nasdaq National Market System ("NMS") over the
twenty trading days immediately preceding the fifth trading day prior to the
Effective Date.
2.3. Dissenting Shares. Shares of Amrion Common Stock that are issued and
outstanding immediately prior to the Effective Date and that have not been
voted for adoption of the Merger and with respect of which dissenter's rights
have been properly demanded in accordance with the applicable provisions of
the CBCA ("Dissenting Shares") shall not be converted into the right to
receive the consideration provided for in Sections 2.1 and 2.2 at or after the
Effective Date unless and until the holder of such shares withdraws his demand
for such appraisal (in accordance with the applicable provisions of the CBCA)
or becomes ineligible for such appraisal. If a holder of Dissenting Shares
withdraws his demand for such appraisal (in accordance with the applicable
provisions of the CBCA) or becomes ineligible for such appraisal, then, as of
the Effective Date or the occurrence of such event, whichever later occurs,
such holder's Dissenting Shares shall cease to be Dissenting Shares and shall
be converted into and represent the right to receive the consideration
provided for in Sections 2.1 and 2.2. If any holder of Amrion Common Stock
shall assert the right to be paid the fair value of such Amrion Common Stock
as described above, Amrion shall give WFM notice thereof and WFM shall have
the right to participate in all negotiations and proceedings with respect to
any such demands. Amrion shall not, except with the prior written consent of
WFM, voluntarily make any payment with respect to, or settle or offer to
settle, any such demand for payment. After the Effective Date, WFM will cause
the Surviving Corporation to pay its statutory obligations, if applicable, to
holders of Dissenting Shares.
2.4. Stock Options and Warrants.
(a) At the Effective Date, all options and warrants (collectively the
"Options") then outstanding under Amrion's Non-Qualified Stock Option Plan and
Non-Employee Director Stock Option Plan (collectively the "Option Plans") or
pursuant to the underwriters' warrant granted to John G. Kinnard & Co., and
affiliates or transferees thereof, shall remain outstanding following the
Effective Date and such Options shall, by virtue of the Merger and without any
further action on the part of Amrion or the holder of any such Option, be
assumed by WFM in accordance with their terms and conditions as in effect at
the Effective Date (and the terms and conditions of the Option Plans and the
option agreements associated with such Option Plans), except that (A) each
such Option shall be exercisable in accordance with its terms for that whole
number of shares of WFM Common Stock (rounded to the nearest whole share) into
which the number of shares of Amrion Common Stock subject to such Option
immediately prior to the Effective Date would be converted under Section 2.1
at an exercise price per share of WFM Common Stock (rounded to the nearest
cent) equal to the exercise price per share of Amrion Common Stock applicable
to such Option divided by .87; (B) all actions to be taken thereunder by the
Board of Directors of Amrion or a committee thereof shall be taken by the
Board of Directors of WFM or a committee thereof; and (C) no payment shall be
made for fractional interests. From and after the date of this Agreement,
except as provided in Section 5.1, no additional options shall be granted by
Amrion under the Option Plans.
(b) It is intended that the assumed Options, as set forth herein, shall not
give to any holder thereof any benefits in addition to those which such holder
had prior to the assumption of the Option. WFM shall take all necessary
corporate action necessary to reserve for issuance a sufficient number of
shares of WFM Common Stock for delivery upon exercise of the Options. As soon
as practicable after the Effective Date, WFM shall file a registration
statement, or an amendment to an existing registration statement, under the
Securities Act of 1933, as amended (the "Securities Act"), on Form S-8 (or
other successor form) with respect to the shares of WFM
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<PAGE>
Common Stock subject to the Option Plans (the "Option Shares") and shall use
its best efforts to maintain the effectiveness of such registration statement
for so long as such Options remain outstanding. If any optionee is unable to
sell all of his or her Option Shares pursuant to Rule 144 promulgated under
the Securities Act due to the volume restrictions of Rule 144, then such
registration statement will include a resale prospectus with respect to such
optionee. In addition, WFM will cause such all shares of WFM Common Stock
issuable upon exercise of the Options to be quoted on the NMS.
2.5. Exchange Agent.
(a) WFM shall authorize Securities Transfer Corporation to serve as exchange
agent hereunder (the "Exchange Agent"). Promptly after the Effective Date, WFM
shall deposit or shall cause to be deposited in trust with the Exchange Agent
the aggregate of the following: (i) the Merger Consideration with respect to
each Converted Share; (ii) certificates representing the number of whole
shares of WFM Common Stock to which the holders of Amrion Common Stock (other
than holders of Dissenting Shares) are entitled pursuant to Section 2.1(a);
and (iii) cash sufficient to pay for fractional shares then known to WFM, if
applicable (such cash amounts and certificates being hereinafter referred to
as the "Exchange Fund"). The Exchange Agent shall, pursuant to irrevocable
instructions received from WFM, pay the Merger Consideration with respect to
such Converted Share as provided for in this Article 2 out of the Exchange
Fund. Any cash needed from time to time by the Exchange Agent to make payments
for fractional shares shall be provided by WFM and shall become part of the
Exchange Fund. The Exchange Fund shall not be used for any other purpose,
except as provided in this Agreement, or as otherwise agreed to by WFM, Merger
Subsidiary and Amrion prior to the Effective Date.
(b) As soon as practicable after the Effective Date, the Exchange Agent
shall mail and otherwise make available to each record holder (other than
holders of Dissenting Shares) who, as of the Effective Date, was a holder of
an outstanding certificate or certificates which immediately prior to the
Effective Date represented shares of the Converted Shares (the "Certificates")
a form of letter of transmittal and instructions for use in effecting the
surrender of the Certificates for payment therefor and conversion thereof,
which letter of transmittal shall comply with all applicable rules of the NMS.
(c) Delivery of Certificates shall be effected, and risk of loss and title
to the Certificates shall pass, only upon proper delivery of the Certificates
to the Exchange Agent and the form of letter of transmittal shall so reflect.
Upon surrender to the Exchange Agent of a Certificate, together with such
letter of transmittal duly executed, the holder of such Certificate shall be
entitled to receive in exchange therefor one or more certificates as requested
by the holder (properly issued, executed and countersigned, as appropriate)
representing that number of whole shares of WFM Common Stock to which such
holder of Amrion Common Stock shall have become entitled pursuant to the
provisions of this Article 2, and the Certificate so surrendered shall
forthwith be canceled.
(d) WFM shall pay any transfer or other taxes required by reason of the
issuance of a certificate representing shares of WFM Common Stock; provided,
however, that such certificate is issued in the name of the person in whose
name the Certificate surrendered in exchange therefor is registered. If any
portion of the consideration to be received pursuant to this Article 2 upon
exchange of a Certificate is to be issued or paid to a person other than the
person in whose name the Certificate surrendered in exchange therefor is
registered, it shall be a condition of such issuance and payment that the
Certificate so surrendered shall be properly endorsed or otherwise in proper
form for transfer and that the person requesting such exchange shall pay in
advance any transfer or other taxes required by reason of the issuance of a
certificate representing shares of WFM Common Stock to such other person, or
establish to the satisfaction of the Exchange Agent that such tax has been
paid or that no such tax is applicable. From the Effective Date until
surrender in accordance with the provisions of this Section 2.5, each
Certificate (other than Certificates representing treasury shares of Amrion
and Certificates representing Dissenting Shares) shall represent for all
purposes only the right to receive the consideration provided in Sections 2.1
and 2.2. No dividends that are otherwise payable on WFM Common Stock will be
paid to persons entitled to receive WFM Common Stock until such persons
surrender their Certificates. After such surrender, there shall be paid to the
person in whose name WFM Common Stock shall be issued any dividends on such
WFM Common Stock that shall have a record date on or after the Effective Date
and prior to such
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surrender. In no event shall the persons entitled to receive such dividends be
entitled to receive interest on such dividends. All payments in respect of
shares of Amrion Common Stock that are made in accordance with the terms
hereof shall be deemed to have been made in full satisfaction of all rights
pertaining to such securities.
(e) In the case of any lost, mislaid, stolen or destroyed Certificates, the
holder thereof may be required, as a condition precedent to the delivery to
such holder of the consideration described in this Article 2, to deliver to
WFM a bond, in such reasonable sum as WFM may direct, or other form of
indemnity satisfactory to WFM, as indemnity against any claim that may be made
against the Exchange Agent, WFM or the Surviving Corporation with respect to
the Certificate alleged to have been lost, mislaid, stolen or destroyed.
(f) After the Effective Date, there shall be no transfers on the stock
transfer books of the Surviving Corporation of the shares of Amrion Common
Stock that were outstanding immediately prior to the Effective Date. If, after
the Effective Date, Certificates are presented to the Surviving Corporation
for transfer, they shall be canceled and exchanged for the consideration
described in this Article 2.
(g) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of Amrion for six months after the Effective Date shall be
returned to WFM, upon demand, and any holder of Amrion Common Stock who has
not theretofore complied with Section 2.5(c) shall thereafter look only to WFM
for issuance of the number of shares of WFM Common Stock and other
consideration to which such holder has become entitled pursuant to this
Article 2; provided, however, that neither the Exchange Agent nor any party
hereto shall be liable to a holder of shares of Amrion Common Stock for any
amount required to be paid to a public official pursuant to any applicable
abandoned property, escheat or similar law.
2.6. Adjustment. If, between the date of this Agreement and the Closing Date
or the Effective Date, as the case may be, the outstanding shares of Amrion
Common Stock or WFM Common Stock shall have been changed into a different
number of shares or a different class by reason of any classification,
recapitalization, split-up, combination, exchange of shares, or readjustment
or a stock dividend thereon shall be declared with a record date within such
period, then the consideration to be received pursuant to Section 2.1(a)
hereof by the holders of shares of Amrion Common Stock shall be adjusted to
accurately reflect such change.
ARTICLE 3.
Representations and Warranties of Amrion
Amrion represents and warrants to WFM and the Merger Subsidiary that the
statements contained in Article 3 are true and correct in all material
respects, except as set forth in the schedules attached hereto. As used in
this Article 3 and elsewhere in this Agreement, the phrases "to Amrion's
knowledge" or "to Amrion's actual knowledge" shall mean to the knowledge of
Mark S. Crossen, Chief Executive Officer of Amrion, or Jeffrey S. Williams,
Chief Financial Officer of Amrion.
3.1. Organization and Good Standing of Amrion. Amrion is a corporation duly
organized, validly existing and in good standing under the laws of Colorado.
Natrix, LLC ("Natrix") is a limited liability company duly organized, validly
existing and in good standing under the laws of Colorado.
3.2. Capital Stock of Natrix and Other Ownership Interests. The membership
interests of Natrix have been duly authorized and are validly issued, fully
paid and nonassessable. The number of authorized and outstanding membership
interests or other equity interests of Natrix, and the record and beneficial
owners of the same, are set forth on Schedule 3.2 and, except as set forth on
Schedule 3.2, are owned by Amrion, either directly or indirectly, free and
clear of all liens, encumbrances, equities or claims.
3.3. Foreign Qualification. Amrion and Natrix are duly qualified or licensed
to do business and are in good standing as a foreign corporation or limited
liability company in every jurisdiction where the failure so to
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qualify would have a material adverse effect (a "Amrion Material Adverse
Effect") on (a) the business, operations, assets or financial condition of
Amrion and Natrix taken as a whole or (b) the validity or enforceability of,
or the ability of Amrion to perform its obligations under, this Agreement.
3.4. Company Power and Authority. Each of Amrion and Natrix has the
corporate or company power and authority to own, lease and operate its
properties and assets and to carry on its business as currently being
conducted. Amrion has the corporate power and authority to execute and deliver
this Agreement and, subject to the approval of this Agreement and the Merger
by its stockholders, to perform its obligations under this Agreement and to
consummate the Merger. The execution, delivery and performance by Amrion of
this Agreement has been duly authorized by all necessary corporate action
(other than the approval of this Agreement and the Merger by its
stockholders).
3.5. Binding Effect. This Agreement has been duly executed and delivered by
Amrion and is the legal, valid and binding obligation of Amrion enforceable in
accordance with its terms except that:
(a) enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights;
(b) the availability of equitable remedies may be limited by equitable
principles of general applicability; and
(c) rights to indemnification may be limited by considerations of public
policy.
3.6. Absence of Restrictions and Conflicts. Subject only to the approval of
the adoption of this Agreement and the Merger by Amrion's stockholders and
except as set forth on Schedule 3.6, the execution, delivery and performance
of this Agreement and the consummation of the Merger and the fulfillment of
and compliance with the terms and conditions of this Agreement do not and will
not, with the passing of time or the giving of notice or both, violate or
conflict with, constitute a breach of or default under, result in the loss of
any material benefit under, or permit the acceleration of any obligation
under, (i) any term or provision of the articles of Incorporation or bylaws of
Amrion or the articles of organization or operating agreement of the Natrix,
(ii) any "Material Contract" (as defined in Section 3.13), (iii) any judgment,
decree or order of any court or governmental authority or agency to which
Amrion or Natrix is a party or by which Amrion, Natrix or any of their
respective properties is bound, or (iv) any statute, law, regulation or rule
applicable to Amrion or Natrix other than such violations, conflicts, breaches
or defaults which would not have an Amrion Material Adverse Effect. Except for
the filing of the Articles of Merger with the Secretary of State of the State
of Colorado, compliance with the applicable requirements of the Hart-Scott-
Rodino Antitrust Improvements Act of 1976 (the "HSR Act"), the Securities Act,
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
applicable state securities laws, no consent, approval, order or authorization
of, or registration, declaration or filing with, any governmental agency or
public or regulatory unit, agency, body or authority with respect to Amrion or
Natrix is required in connection with the execution, delivery or performance
of this Agreement by Amrion or the consummation of the transactions
contemplated hereby.
3.7. Capitalization of Amrion.
(a) The authorized capital stock of Amrion consists of 10,000,000 shares of
common stock, $.0011 par value. As of the date hereof, there were
approximately 5,252,514 shares of Amrion Common Stock issued and outstanding
and 393,700 shares of Amrion Common Stock reserved for issuance upon the
exercise of outstanding options granted under the Option Plans.
(b) All of the issued and outstanding shares of Amrion Common Stock have
been duly authorized and validly issued and are fully paid, nonassessable and
free of preemptive rights.
(c) To Amrion's knowledge, there are no voting trusts, stockholder
agreements or other voting arrangements by the stockholders of Amrion.
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(d) Except as set forth on Schedule 3.7, there is no outstanding
subscription, contract, convertible or exchangeable security, option, warrant,
call or other right obligating Amrion or Natrix to issue, sell, exchange, or
otherwise dispose of, or to purchase, redeem or otherwise acquire, shares of,
or securities convertible into or exchangeable for, capital stock of Amrion or
membership interests of Natrix.
3.8. Amrion SEC Reports. Amrion has made available to WFM and the Merger
Subsidiary (i) Amrion's Annual Report on Form 10-K, including all exhibits
filed thereto and items incorporated therein by reference, (ii) Amrion's
Quarterly Reports on Form 10-Q, including all exhibits thereto and items
incorporated therein by reference, (iii) proxy statements relating to Amrion's
meetings of stockholders and (iv) all other reports or registration statements
(as amended or supplemented prior to the date hereof), filed by Amrion with
the Securities and Exchange Commission (the "SEC") since January 1, 1995,
including all exhibits thereto and items incorporated therein by reference
(items (i) through (iv) being referred to as the "Amrion SEC Reports"). As of
their respective dates, the Amrion SEC Reports did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Since January 1,
1995, Amrion has filed all material forms (with necessary amendments), reports
and documents with the SEC required to be filed by it pursuant to the federal
securities laws and the SEC rules and regulations thereunder, each of which
complied as to form, at the time such form, report or document was filed, in
all material respects with the applicable requirements of the Securities Act
and the Exchange Act and the applicable rules and regulations thereunder.
3.9. Financial Statements and Records of Amrion. Amrion has made available
to WFM and the Merger Subsidiary true, correct and complete copies of the
following financial statements (the "Amrion Financial Statements"):
(a) the consolidated financial statements of Amrion and its subsidiaries
as of December 31, 1995 and 1996 and for the years then ended, including
the notes thereto, in each case examined by and accompanied by the report
of BDO Seidman, LLP (collectively, the "Amrion Year-End Statements"); and
(b) the unaudited consolidated balance sheet of Amrion and its
subsidiaries as of March 31, 1997 (the "Amrion Balance Sheet"), with any
notes thereto, and the related unaudited consolidated statement of income
for the three months then ended (collectively, the "Amrion Quarterly
Statements").
The Amrion Year-End Statements and Amrion Quarterly Statements have been
prepared from, and are in accordance with, the books and records of Amrion and
its subsidiaries and present fairly, in all material respects, the
consolidated financial position of Amrion and Natrix as of the dates thereof
and the results of operations and cash flows thereof for the periods then
ended, in each case in conformity with generally accepted accounting
principles, consistently applied, except as noted therein. Adequate reserves
are set forth on the Amrion Year-End Statements and Amrion Quarterly
Statements, and the amount of such reserves are reasonable. Since December 31,
1996, there has been no change in accounting principles applicable to, or
methods of accounting utilized by, Amrion and Natrix, except as noted in the
Amrion Financial Statements. The books and records of Amrion have been and are
being maintained in accordance with good business practice, reflect only valid
transactions, are complete and correct in all material respects and present
fairly in all material respects the basis for the financial position and
results of operations of Amrion and Natrix as set forth on the Amrion Year
Statements and Amrion Quarterly Statements.
3.10. Absence of Certain Changes. Since March 31, 1997, Amrion and Natrix
have not, except as otherwise set forth in the Amrion SEC Reports or on
Schedule 3.10:
(a) suffered any adverse change in the business, operations, assets, or
financial condition, except as reflected on the Amrion Quarterly Statements
and except for such changes that would not result in an Amrion Material
Adverse Effect;
(b) suffered any material damage or destruction to or loss of the assets
of Amrion or Natrix, whether or not covered by insurance, which property or
assets are material to the operations or business of Amrion and Natrix
taken as a whole;
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(c) settled, forgiven, compromised, canceled, released, waived or
permitted to lapse any material rights or claims other than in the ordinary
course of business;
(d) entered into or terminated any material agreement, commitment or
transaction, or agreed or made any changes in material leases or
agreements, other than renewals or extensions thereof and leases,
agreements, transactions and commitments entered into or terminated in the
ordinary course of business;
(e) written up, written down or written off the book value of any
material amount of assets other than in the ordinary course of business;
(f) declared, paid or set aside for payment any dividend or distribution
with respect to Amrion's capital stock;
(g) redeemed, purchased or otherwise acquired, or sold, granted or
otherwise disposed of, directly or indirectly, any of Amrion's capital
stock or securities (other than shares issued upon exercise of the Options)
or any rights to acquire such capital stock or securities, or agreed to
changes in the terms and conditions of any such rights outstanding as of
the date of this Agreement;
(h) increased the compensation of or paid any bonuses to any employees or
contributed to any employee benefit plan, other than in accordance with
established policies, practices or requirements and as provided in Section
5.1 hereof;
(i) entered into any employment, consulting or compensation agreement
with any person or group, except for agreements which would not have an
Amrion Material Adverse Effect;
(j) entered into any collective bargaining agreement with any person or
group;
(k) entered into, adopted or amended any employee benefit plan; or
(l) entered into any agreement to do any of the foregoing.
3.11. No Material Undisclosed Liabilities. There are no liabilities or
obligations of Amrion or Natrix of any nature, whether absolute, accrued,
contingent, or otherwise, other than:
(a) the liabilities and obligations that are reflected, accrued or
reserved against on the Amrion Balance Sheet, or referred to in the
footnotes to the Amrion Balance Sheet, or incurred in the ordinary course
of business and consistent with past practices since March 31, 1997; or
(b) liabilities and obligations which in the aggregate would not result
in an Amrion Material Adverse Effect.
3.12. Tax Returns; Taxes. Each of Amrion and Natrix have duly filed all U.S.
federal and material state, county, local and foreign tax returns and reports
required to be filed by it, including those with respect to income, payroll,
property, withholding, social security, unemployment, franchise, excise and
sales taxes and all such returns and reports are correct in all material
respects; have either paid in full all taxes that have become due as reflected
on any return or report and any interest and penalties with respect thereto or
have fully accrued on its books or have established adequate reserves for all
taxes payable but not yet due; and have made cash deposits with appropriate
governmental authorities representing estimated payments of taxes, including
income taxes and employee withholding tax obligations. No extension or waiver
of any statute of limitations or time within which to file any return has been
granted to or requested by Amrion or Natrix with respect to any tax. No
unsatisfied deficiency, delinquency or default for any tax, assessment or
governmental charge has been claimed, proposed or assessed against Amrion or
Natrix, nor has Amrion or Natrix received notice of any such deficiency,
delinquency or default. Amrion and Natrix have no material tax liabilities
other than those reflected on the Amrion Balance Sheet and those arising in
the ordinary course of business since the date thereof. Amrion will make
available to WFM true, complete and correct copies of Amrion's consolidated
U.S. federal tax returns for the last five years and make available such other
tax returns requested by WFM. There is no dispute or claim concerning any tax
liability of Amrion or any of its subsidiaries either: (a) raised by any
taxing authority in writing; (b) as to which Amrion or any of its subsidiaries
has received notice concerning a potential audit of any return filed by
Amrion; and (c) there is no outstanding audit or pending audit of any tax
return filed by Amrion.
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3.13. Material Contracts. Amrion has furnished or made available to WFM
accurate and complete copies of the Material Contracts (as defined herein)
applicable to Amrion or Natrix. Except as set forth on Schedule 3.13, there is
not under any of the Material Contracts any existing breach, default or event
of default by Amrion or Natrix nor event that with notice or lapse of time or
both would constitute a breach, default or event of default by Amrion or
Natrix other than breaches, defaults or events of default which would not have
an Amrion Material Adverse Effect nor does Amrion know of, and Amrion has not
received notice of, or made a claim with respect to, any breach or default by
any other party thereto which would, severally or in the aggregate, have an
Amrion Material Adverse Effect. As used herein, the term "Material Contracts"
shall mean all contracts and agreements filed, or required to be filed, as
exhibits to Amrion's Annual Report on Form 10-K for the year ended December
31, 1996 and any contracts and agreements entered into since December 31, 1996
which would be required to be filed as an exhibit to Amrion's Annual Report on
Form 10-K for the year ending December 31, 1997.
3.14. Litigation and Government Claims. Except as disclosed in the Amrion
SEC Reports, there is no pending suit, claim, action or litigation, or
administrative, arbitration or other proceeding or governmental investigation
or inquiry against Amrion or Natrix to which their businesses or assets are
subject which would, severally or in the aggregate, reasonably be expected to
result in an Amrion Material Adverse Effect. To the knowledge of Amrion, and
except as disclosed in the Amrion SEC Reports, there are no such proceedings
threatened or contemplated which would, severally or in the aggregate, have an
Amrion Material Adverse Effect. Neither Amrion nor Natrix is subject to any
judgment, decree, injunction, rule or order of any court, or, to the knowledge
of Amrion, any governmental restriction applicable to Amrion or Natrix which
is reasonably likely (i) to have an Amrion Material Adverse Effect or (ii) to
cause a material limitation on WFM's ability to operate the business of Amrion
(as it is currently operated) after the Closing.
3.15. Compliance With Laws. Amrion and Natrix each have all material
authorizations, approvals, licenses and orders to carry on their respective
businesses as they are now being conducted, to own or hold under lease the
properties and assets they own or hold under lease and to perform all of their
obligations under the agreements to which they are a party, except for
instances which would not have a Amrion Material Adverse Effect. Amrion and
Natrix have been and are, to the knowledge of Amrion, in compliance with all
applicable laws (including those referenced in the Amrion SEC Reports),
regulations and administrative orders of any country, state or municipality or
of any subdivision of any thereof to which their respective businesses and
their employment of labor or their use or occupancy of properties or any part
hereof are subject, the violation of which would have a Amrion Material
Adverse Effect.
3.16. Employee Benefit Plans. Each employee benefit plan, as such term is
defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), of Amrion or Natrix (collectively the "Employee
Plans") complies in all material respects with all applicable requirements of
ERISA and the Internal Revenue Code of 1986, as amended (the "Code"), and
other applicable laws. None of the Employee Plans is an employee pension
benefit plan or a multiemployer plan, as such terms are defined in ERISA.
Neither Amrion nor Natrix, nor any of their respective directors, officers,
employees or agents has, with respect to any Employee Plan, engaged in any
"prohibited transaction," as such term is defined in the Code or ERISA, nor
has any Employee Plan engaged in such prohibited transaction which could
result in any taxes or penalties or other prohibited transactions, which in
the aggregate could have a Amrion Material Adverse Effect.
3.17. Employment Agreements; Labor Relations.
(a) Schedule 3.17 sets forth a complete and accurate list of all material
employee benefit or compensation plans, agreements and arrangements to which
Amrion or Natrix is a party and which is not disclosed in the Amrion SEC
Reports, including without limitation (i) all severance, employment,
consulting or similar contracts, (ii) all material agreements and contracts
with "change of control" provisions or similar provisions and (iii) all
indemnification agreements or arrangements with directors or officers.
(b) Each of Amrion and Natrix is in compliance in all material respects with
all laws (including Federal and state laws) respecting employment and
employment practices, terms and conditions of employment, wages
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and hours, and is not engaged in any unfair labor or unlawful employment
practice. There is no unlawful employment practice discrimination charge
pending before the EEOC or EEOC recognized state "referral agency." Except as
would not have an Amrion Material Adverse Effect, there is no unfair labor
practice charge or complaint against Amrion or Natrix pending before the
National Labor Review Board. There is no labor strike, dispute, slowdown or
stoppage actually pending or, to the knowledge of Amrion, threatened against
or involving or affecting Amrion or Natrix and no National Labor Review Board
representation question exists respecting their respective employees. Except
as would not have an Amrion Material Adverse Effect, no grievances or
arbitration proceeding is pending and no written claim therefor exists. There
is no collective bargaining agreement that is binding on Amrion or Natrix.
3.18. Intellectual Property. Amrion and Natrix own or have valid, binding
and enforceable rights to use all material patents, trademarks, trade names,
service marks, service names, copyrights, applications therefor and licenses
or other rights in respect thereof ("Intellectual Property") used or held for
use in connection with the business of Amrion or Natrix, without any known
conflict with the rights of others, except for such conflicts as do not have
an Amrion Material Adverse Effect. Neither Amrion nor Natrix has received any
notice from any other person pertaining to or challenging the right of Amrion
or Natrix to use any Intellectual Property or any trade secrets, proprietary
information, inventions, know-how, processes and procedures owned or used or
licensed to Amrion or Natrix, except with respect to rights the loss of which,
individually or in the aggregate, would not have an Amrion Material Adverse
Effect.
3.19. Title to Properties and Related Matters.
(a) Amrion and Natrix have good and marketable title to or valid leasehold
interests in their respective properties (the "Real Estate") reflected on the
Amrion Balance Sheet or acquired after the date thereof (other than personal
properties sold or otherwise disposed of in the ordinary course of business),
and all of such properties and all assets purchased by Amrion since the date
of the Amrion Balance Sheet are free and clear of any lien, claim or
encumbrance, except as reflected in the Amrion Balance Sheet or notes thereto
and except for:
(i) liens for taxes, assessments or other governmental charges not yet
due and payable or the validity of which are being contested in good faith
by appropriate proceedings;
(ii) statutory liens incurred in the ordinary course of business that are
not yet due and payable or the validity of which are being contested in
good faith by appropriate proceedings;
(iii) landlord liens contained in leases entered in the ordinary course
of business; and
(iv) other liens, claims or encumbrances that, in the aggregate, do not
materially subtract from the value of, or materially interfere with, the
present use of, the Real Estate.
Except for those assets acquired since the date of the Amrion Balance Sheet,
all properties and assets material to the present operations of Amrion are
owned or leased by Amrion and are reflected on the Amrion Balance Sheet and
notes thereto in the manner and to the extent required by generally accepted
accounting principles.
(b) (i) Applicable zoning ordinances permit the operation of Amrion's
business at the Real Estate; (ii) Amrion has all easements and rights,
including easements for all utilities, services, roadways and other means of
ingress and egress, necessary to operate Amrion's business at the Real Estate;
(iii) the Real Estate is not located within a flood or lakeshore erosion
hazard area; and (iv) neither the whole nor any portion of the Real Estate has
been condemned, requisitioned or otherwise taken by any public authority, and
no notice of any such condemnation, requisition or taking has been received;
except in each case where the failure of such provisions to be true and
correct would not have an Amrion Material Adverse Effect. No such
condemnation, requisition or taking is threatened or contemplated to Amrion's
knowledge, and there are no pending public improvements which may result in
special assessments against or which may otherwise materially and adversely
affect the Real Estate. To the knowledge of Amrion, the Real Estate has not
been used for deposit or disposal of hazardous wastes or substances in
violation of any past or current law in any material respect and there is no
material liability under past or current law with respect to any hazardous
wastes or substances which have been deposited or disposed of on or in the
Real Estate.
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(c) Amrion has received no notice of, and has no actual knowledge of, any
material violation of any zoning, building, health, fire, water use or similar
statute, ordinance, law, regulation or code in connection with the Real
Estate.
(d) To Amrion's actual knowledge, no hazardous or toxic material (as
hereinafter defined) exists in any structure located on, or exists on or under
the surface of, the Real Estate which is, in any case, in material violation
of applicable environmental law. For purposes of this Agreement, "hazardous or
toxic material" shall mean waste, substance, materials, smoke, gas or
particulate matter designated as hazardous, toxic or dangerous under any
environmental law. For purposes of this Agreement, "environmental law" shall
include the Comprehensive Environmental Response Compensation and Liability
Act, the Clean Air Act, the Clean Water Act and any other applicable federal,
state or local environmental, health or safety law, rule or regulation
relating to or imposing liability or standards concerning or in connection
with hazardous, toxic or dangerous waste, substance, materials, smoke, gas or
particulate matter.
3.20. Brokers and Finders. None of Amrion, Natrix or, to Amrion's knowledge,
any of their respective officers, directors and employees has employed any
broker, finder or investment bank or incurred any liability for any investment
banking fees, financial advisory fees, brokerage fees or finders' fees in
connection with the transactions contemplated hereby, except that Amrion has
engaged Piper Jaffray, Inc. as its financial advisor. Other than the foregoing
arrangements, Amrion is not aware of any claim for payment of any finder's
fees, brokerage or agent's commissions or other like payments in connection
with the negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby. Amrion has delivered to WFM a copy of the
engagement letter between Amrion and Piper Jaffray, Inc.
3.21. Opinion of Financial Advisor. Amrion has received the opinion of its
financial advisor to the effect that, as of the date hereof, the consideration
to be received by the holders of Amrion Common Stock pursuant to the Merger is
fair from a financial point of view to the holders of Amrion Common Stock.
3.22. Expenses of Amrion. Amrion has received the agreement of its
attorneys, accountants and financial advisors as to the maximum fees and
expenses of such firms in connection with the Merger such that the aggregate
of the foregoing fees and expenses will not exceed $350,000.
ARTICLE 4.
Representations and Warranties of WFM
and the Merger Subsidiary
WFM and the Merger Subsidiary represent and warrant to Amrion that the
statements contained in Article 4 are true and correct in all material
respects. As used in this Article 4 and elsewhere in this Agreement, the
phrase "to WFM's or the Merger Subsidiary's knowledge" or "to WFM's or the
Merger Subsidiary's actual knowledge" shall mean to the knowledge of the
officer of WFM or the Merger Subsidiary who has the principal responsibility
for the matter being stated.
4.1. Organization and Good Standing. Each of WFM, the Merger Subsidiary and
all corporations, partnerships and other entities in which WFM owns any equity
interest (the "WFM Subsidiaries" which includes the Merger Subsidiary) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization. All shares of capital stock
or other equity interests of each of the material WFM Subsidiaries are owned
by WFM, either directly or indirectly, free and clear of all material liens,
encumbrances, equities or claims.
4.2. Foreign Qualification. WFM and each of the WFM Subsidiaries are duly
qualified or licensed to do business and are in good standing as a foreign
corporation in every jurisdiction where the failure so to qualify would have a
material adverse effect (a "WFM Material Adverse Effect") on (a) the business,
operations, assets
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or financial condition of WFM and the WFM Subsidiaries taken as a whole or (b)
the validity or enforceability of, or the ability of WFM to perform its
obligations under, this Agreement.
4.3. Corporate Power and Authority. WFM and the WFM Subsidiaries have the
corporate power and authority and all material licenses and permits to own,
lease and operate their respective properties and assets and to carry on their
respective businesses as currently being conducted. Each of WFM and the Merger
Subsidiary has the corporate power and authority to execute and deliver this
Agreement and to perform its obligations under this Agreement and to
consummate the Merger. The execution, delivery and performance by WFM and the
Merger Subsidiary of this Agreement has been duly authorized by all necessary
corporate action.
4.4. Binding Effect. This Agreement has been duly executed and delivered by
WFM and the Merger Subsidiary and is the legal, valid and binding obligations
of WFM and the Merger Subsidiary, enforceable in accordance with its terms
except that:
(a) enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights;
(b) the availability of equitable remedies may be limited by equitable
principles of general applicability; and
(c) rights to indemnification may be limited by considerations of public
policy.
4.5. Absence of Restrictions and Conflicts. The execution, delivery and
performance of this Agreement and the consummation of the Merger and the
fulfillment of and compliance with the terms and conditions of this Agreement
do not and will not, with the passing of time or the giving of notice or both,
violate or conflict with, constitute a breach of or default under, result in
the loss of any material benefit under, or permit the acceleration of any
obligation under, (i) any term or provision of the Articles of Incorporation
or Bylaws of WFM or the Merger Subsidiary, (ii) any "WFM Material Contract"
(as defined in Section 4.12), including, but not limited to, the credit
facility agreement dated as of December 27, 1994 by and among WFM, certain of
the WFM Subsidiaries and Texas Commerce Bank National Association, as agent,
and the note purchase agreement dated May 16, 1996 by and among WFM and the
purchasers named therein, (iii) any judgment, decree or order of any court or
governmental authority or agency to which WFM or any of the WFM Subsidiaries
is a party or by which WFM or any of the WFM Subsidiaries or any of their
respective properties is bound, or (iv) any statute, law, regulation or rule
applicable to WFM or any of the WFM Subsidiaries other than such violations,
conflicts, breaches or defaults as would not have a WFM Material Adverse
Effect. Except for the filing of the Articles of Merger with the Secretary of
State of Colorado, compliance with the applicable requirements of the HSR Act,
the Securities Act, the Exchange Act and applicable state securities laws, no
consent, approval, order or authorization of, or registration, declaration or
filing with, any governmental agency or public or regulatory unit, agency,
body or authority with respect to WFM or the WFM Subsidiaries is required in
connection with the execution, delivery or performance of this Agreement by
WFM or the consummation of the transactions contemplated hereby.
4.6. Capitalization of WFM.
(a) The authorized capital stock of WFM consists of 50,000,000 shares of WFM
Common Stock, no par value, and 5,000,000 shares of preferred stock, $0.01 par
value. As of the date hereof, there are (i) approximately 19,612,000 shares of
WFM Common Stock outstanding, (ii) no shares of the Preferred Stock
outstanding and (iii) 2,119,185 shares reserved for issuance upon the exercise
of outstanding options under WFM's Team Member Stock Option Plan (the "WFM
Options" and "WFM Option Plans," respectively). All of the issued and
outstanding shares of WFM Common Stock have been duly authorized and validly
issued and are fully paid and nonassessable.
(b) All of the issued and outstanding shares of WFM Common Stock have been
duly authorized and validly issued and are fully paid, nonassessable and free
of preemptive rights.
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(c) The shares of WFM Common Stock to be issued in the Merger will be duly
authorized and validly issued and will be fully paid, nonassessable shares of
WFM Common Stock free of preemptive rights.
(d) To WFM's knowledge, there are no voting trusts, stockholder agreements
or other voting arrangements by the stockholders of WFM.
(e) Except as set forth in subsection (a) above, there is no outstanding
subscription, contract, convertible or exchangeable security, option, warrant,
call or other right obligating WFM or its subsidiaries to issue, sell,
exchange, or otherwise dispose of, or to purchase, redeem or otherwise
acquire, shares of, or securities convertible into or exchangeable for,
capital stock of WFM.
4.7. WFM SEC Reports. WFM has made available to Amrion (i) WFM's Annual
Reports on Form 10-K, including all exhibits filed thereto and items
incorporated therein by reference, (ii) WFM's Quarterly Reports on Form 10-Q,
including all exhibits thereto and items incorporated therein by reference,
(iii) proxy statements relating to WFM's meetings of stockholders and (iv) all
other reports or registration statements (as amended or supplemented prior to
the date hereof), filed by WFM with the SEC since January 1, 1995, including
all exhibits thereto and items incorporated therein by reference (items (i)
through (iv) being referred to as the "WFM SEC Reports"). As of their
respective dates, WFM SEC Reports did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. Since January 1, 1995, WFM has
filed all material forms (and necessary amendments), reports and documents
with the SEC required to be filed by it pursuant to the federal securities
laws and the SEC rules and regulations thereunder, each of which complied as
to form, at the time such form, report or document was filed, in all material
respects with the applicable requirements of the Securities Act and the
Exchange Act and the applicable rules and regulations thereunder.
4.8. Financial Statements and Records of WFM. WFM has made available to
Amrion true, correct and complete copies of the following financial statements
(the "WFM Financial Statements"):
(a) the consolidated balance sheets of WFM and its consolidated
subsidiaries as of September 24, 1995 and September 29, 1996, and the
consolidated statements of income, stockholders' equity and cash flows for
the fiscal years then ended, including the notes thereto, in each case
examined by and accompanied by the report of KPMG Peat Marwick LLP; and
(b) the unaudited balance sheet of WFM as of January 19, 1997 (the "WFM
Balance Sheet"), with any notes thereto, and the related unaudited
statement of income for the fiscal quarter then ended (collectively, the
"WFM Quarterly Statements").
The WFM Financial Statements present fairly, in all material respects, the
financial position of WFM as of the dates thereof and the results of
operations and changes in financial position thereof for the periods then
ended, in each case in conformity with generally accepted accounting
principles, consistently applied, except as noted therein. Since January 19,
1997, there has been no change in accounting principles applicable to, or
methods of accounting utilized by, WFM, except as noted in the WFM Financial
Statements. The books and records of WFM have been and are being maintained in
accordance with good business practice, reflect only valid transactions, are
complete and correct in all material respects, and present fairly in all
material respects the basis for the financial position and results of
operations of WFM set forth in the WFM Financial Statements.
4.9. Absence of Certain Changes. Since January 19, 1997, WFM has not, except
as otherwise set forth in the WFM SEC Reports or on Schedule 4.9:
(a) suffered any adverse change in the business, operations, assets, or
financial condition except for such changes that would not have a WFM
Material Adverse Effect;
(b) suffered any material damage or destruction to or loss of the assets
of WFM or any of the WFM Subsidiaries, whether or not covered by insurance,
which property or assets are material to the operations or business of WFM
and its subsidiaries taken as a whole;
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(c) settled, forgiven, compromised, canceled, released, waived or
permitted to lapse any material rights or claims other than in the ordinary
course of business;
(d) entered into or terminated any material agreement, commitment or
transaction, or agreed or made any changes in material leases or
agreements, other than renewals or extensions thereof and leases,
agreements, transactions and commitments entered into or terminated in the
ordinary course of business;
(e) written up, written down or written off the book value of any
material amount of assets other than in the ordinary course of business;
(f) declared, paid or set aside for payment any dividend or distribution
with respect to WFM's capital stock;
(g) redeemed, purchased or otherwise acquired, or sold, granted or
otherwise disposed of, directly or indirectly, any of WFM's capital stock
or securities (other than shares issued upon exercise of the WFM Options)
or any rights to acquire such capital stock or securities, or agreed to
changes in the terms and conditions of any such rights outstanding as of
the date of this Agreement;
(h) increased the compensation of or paid any bonuses to any employees or
contributed to any employee benefit plan, other than in accordance with
established policies, practices or requirements and as provided in Section
5.2 hereof;
(i) entered into any employment, consulting or compensation agreement
with any person or group, except for agreements which would not have a WFM
Material Adverse Effect;
(j) entered into any collective bargaining agreement with any person or
group;
(k) entered into, adopted or amended any employee benefit plan; or
(l) entered into any agreement to do any of the foregoing.
4.10. No Material Undisclosed Liabilities. There are no liabilities or
obligations of WFM and its consolidated subsidiaries of any nature, whether
absolute, accrued, contingent, or otherwise, other than:
(a) liabilities and obligations that are reflected, accrued or reserved
against on the WFM Balance Sheet or referred to in the footnotes to the WFM
Balance Sheet, or incurred in the ordinary course of business and
consistent with past practices since January 19, 1997; or
(b) liabilities and obligations which in the aggregate would not result
in a WFM Material Effect.
4.11. Tax Returns; Taxes. Each of WFM and the WFM Subsidiaries have duly
filed all U.S. federal and material state, county, local and foreign tax
returns and reports required to be filed by it, including those with respect
to income, payroll, property, withholding, social security, unemployment,
franchise, excise and sales taxes and all such returns and reports are correct
in all material respects; have either paid in full all taxes that have become
due as reflected on any return or report and any interest and penalties with
respect thereto or have fully accrued on its books or have established
adequate reserves for all taxes payable but not yet due; and have made cash
deposits with appropriate governmental authorities representing estimated
payments of taxes, including income taxes and employee withholding tax
obligations. No extension or waiver of any statute of limitations or time
within which to file any return has been granted to or requested by WFM or the
WFM Subsidiaries with respect to any tax. No unsatisfied deficiency,
delinquency or default for any tax, assessment or governmental charge has been
claimed, proposed or assessed against WFM or the WFM Subsidiaries, nor has WFM
or the WFM Subsidiaries received notice of any such deficiency, delinquency or
default. WFM and the WFM Subsidiaries have no material tax liabilities other
than those reflected on the WFM Balance Sheet and those arising in the
ordinary course of business since the date thereof. WFM will make available to
Amrion true, complete and correct copies of WFM's consolidated U.S. federal
tax returns for the last five years and make available such other tax returns
requested by Amrion. There is no dispute or claim concerning any material tax
liability of WFM or any of its subsidiaries either: (a) raised by any taxing
authority in writing; (b) as to which WFM or any of its subsidiaries has
received notice concerning a potential audit of any return filed by WFM; and
(c) there is no outstanding audit or pending audit of any tax return filed by
WFM.
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4.12. Material Contracts. WFM has furnished or made available to Amrion
accurate and complete copies of the WFM Material Contracts (as defined herein)
applicable to WFM or any of the WFM Subsidiaries. There is not under any of
the WFM Material Contracts any existing breach, default or event of default by
WFM or any of the WFM Subsidiaries nor event that with notice or lapse of time
or both would constitute a breach, default or event of default by WFM or any
of the WFM Subsidiaries other than breaches, defaults or events of default
which would not have a WFM Material Adverse Effect nor does WFM know of, and
WFM has not received notice of, or made a claim with respect to, any breach or
default by any other party thereto which would, severally or in the aggregate,
have a WFM Material Adverse Effect. As used herein, the term "WFM Material
Contracts" shall mean all contracts and agreements filed, or required to be
filed, as exhibits to WFM's Annual Report on Form 10-K for the year ended
September 29, 1996 and any contracts and agreements entered into since
September 29, 1996 which would be required to be filed or incorporated by
reference therein as an exhibit to WFM's Annual Report on Form 10-K for the
year ending September 28, 1997.
4.13. Litigation and Government Claims. Except as disclosed in the WFM SEC
Reports, there is no pending suit, claim, action or litigation, or
administrative, arbitration or other proceeding or governmental investigation
or inquiry against WFM or the WFM Subsidiaries to which their businesses or
assets are subject which would, severally or in the aggregate, reasonably be
expected to result in a WFM Material Adverse Effect. To the knowledge of WFM,
there are no such proceedings threatened or contemplated which would,
severally or in the aggregate, have a WFM Material Adverse Effect. Neither WFM
nor any WFM Subsidiary is subject to any judgment, decree, injunction, rule or
order of any court, or, to the knowledge of WFM, any governmental restriction
applicable to WFM or any WFM Subsidiary which is reasonably likely to have a
WFM Material Adverse Effect.
4.14. Compliance with Laws. WFM and the WFM Subsidiaries each have all
material authorizations, approvals, licenses and orders to carry on their
respective businesses as they are now being conducted, to own or hold under
lease the properties or assets they own or hold under lease and to perform all
of their obligations under the agreements to which they are a party, except
for instances which would not have a WFM Material Adverse Effect. WFM and the
WFM Subsidiaries have been and are, to the knowledge of WFM, in compliance
with all applicable laws (including those referenced in the WFM SEC Reports),
regulations and administrative orders of any country, state or municipality or
any subdivision of any thereof to which their respective businesses and their
employment of labor or their use or occupancy of properties or any part hereof
are subject, the violation of which would have a WFM Material Adverse Effect.
4.15. Employment Agreements; Labor Relations. Each of WFM and the WFM
Subsidiaries is in compliance in all material respects with all laws
(including Federal and state laws) respecting employment and employment
practices, terms and conditions of employment, wages and hours, and is not
engaged in any unfair labor or unlawful employment practice. There is no
unlawful employment practice discrimination charge pending before the EEOC or
EEOC recognized state "referral agency." Except as would not have a WFM
Material Adverse Effect, there is no unfair labor practice charge or complaint
against WFM or any of the WFM Subsidiaries pending before the National Labor
Review Board. There is no labor strike, dispute, slowdown or stoppage actually
pending or, to the knowledge of WFM, threatened against or involving or
affecting WFM or any of the WFM Subsidiaries and no National Labor Review
Board representation question exists respecting their respective employees.
Except as would not have a WFM Material Adverse Effect, no grievances or
arbitration proceeding is pending and no written claim therefor exists. There
is no collective bargaining agreement that is binding on WFM or any of the WFM
Subsidiaries.
4.16. WFM Employee Benefit Plans. Each employee benefit plan, as such term
is defined in Section 3(3) of ERISA, of WFM and the WFM Subsidiaries
(collectively the "WFM Employee Plans") complies in all material respects with
all applicable requirements of ERISA, the Code and other applicable laws. None
of the WFM Employee Plans is an employee pension benefit plan or a
multiemployer plan, as such terms are defined in ERISA. Neither WFM nor any of
the WFM Subsidiaries nor any of their respective directors, officers,
employees or agents has, with respect to any WFM Employee Plan, engaged in any
"prohibited transaction," as such term is defined in the Code or ERISA, nor
has any WFM Employee Plan engaged in such prohibited transaction which
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could result in any taxes or penalties or other prohibited transactions, which
in the aggregate could have a WFM Material Adverse Effect.
4.17. Intellectual Property. WFM and the WFM Subsidiaries own or have valid,
binding and enforceable rights to use all material patents, trademarks, trade
names, service marks, service names, copyrights, applications therefor and
licenses or other rights in respect thereof ("WFM Intellectual Property") used
or held for use in connection with the business of WFM or the WFM
Subsidiaries, without any known conflict with the rights of others, except for
such conflicts as do not have a WFM Material Adverse Effect. Neither WFM nor
any of the WFM Subsidiaries has received any notice from any other person
pertaining to or challenging the right of WFM or any of the WFM Subsidiaries
to use any WFM Intellectual Property or any trade secrets, proprietary
information, inventions, know-how, processes and procedures owned or used or
licensed to WFM or the WFM Subsidiaries, except with respect to rights the
loss of which, individually or in the aggregate, would not have a WFM Material
Adverse Effect.
4.18. Use and Condition of Stores.
(a) (i) Applicable zoning ordinances permit the operation of WFM's business
as currently conducted at its store locations or the operation of WFM's
business at its stores is a prior non-conforming use; (ii) WFM and the WFM
Subsidiaries have all easements and rights, including easements for all
utilities, services, roadways and other means of ingress or egress, material
to the operation of their business as currently conducted; and (iii) neither
the whole nor any portion of the real property on which such stores are
located has been condemned, requisitioned or otherwise taken by any public
authority, and no notice of any such condemnation, requisition or taking has
been received by WFM or the WFM Subsidiaries. No such condemnation,
requisition or taking is threatened or contemplated to WFM's actual knowledge,
and there are no pending public improvements which may result in special
assessments against or which may otherwise materially and adversely affect
WFM's stores. To the actual knowledge of WFM, none of such store locations has
been used for deposit or disposal of hazardous wastes or substances in
violation of any past or current law in any material respect and there is no
material liability under past or current law with respect to any hazardous
wastes or substances which have been deposited or disposed of on or in such
store locations.
(b) WFM has received no notice of, and has no actual knowledge of, any
material violation of any zoning, building, health, fire, water use or similar
statute, ordinance, law, regulation or code in connection with any store
location of WFM or the WFM Subsidiaries.
(c) To WFM's actual knowledge, WFM and the WFM Subsidiaries are in
compliance with all applicable federal, state and local laws relating to
emissions, discharges and releases of hazardous or toxic materials into the
environment, except as would not cause a WFM Material Adverse Effect. To WFM's
actual knowledge, no hazardous or toxic material (as hereinafter defined)
exists in any structure located on, or exists on or under the surface of, any
real property owned or operated by WFM or the WFM Subsidiaries which is, in
any case, in material violation of applicable environmental law. For purposes
of this Section, "hazardous or toxic material" shall mean waste, substance,
materials, smoke, gas or particulate matter designated as hazardous, toxic or
dangerous under any applicable environmental law. For purposes of this
section, "environmental law" shall include the Comprehensive Environmental
Response Compensation and Liability Act, the Clear Air Act, the Clean Water
Act and any other applicable federal, state or local environmental, health or
safety law, rule or regulation relating to or imposing liability or standards
concerning or in connection with hazardous, toxic or dangerous waste,
substance, materials, smoke, gas or particulate matter.
4.19. Nasdaq Fees. WFM has paid all fees due and owing to Nasdaq with
respect to WFM common stock on the NMS and WFM will pay all such fees arising
out of the issuance of any shares of WFM common stock in connection with
transactions contemplated hereby.
4.20. Opinions of Financial Advisors. WFM has received the opinions of
Robertson, Stephens & Company and Adams, Harkness & Hill, Inc. to the effect
that, as of the date hereof, the consideration to be paid by WFM to the
holders of Amrion Common Stock pursuant to the Merger is fair to WFM from a
financial point of view.
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ARTICLE 5.
Certain Covenants and Agreements
5.1. Conduct of Business by Amrion. From the date hereof to the Effective
Date, Amrion will, and will cause Natrix to, except as required in connection
with the Merger and the other transactions contemplated by this Agreement and
except as otherwise disclosed on the schedules hereto or consented to in
writing by WFM:
(a) carry on its business in the ordinary and regular course in
substantially the same manner as heretofore conducted and not engage in any
new line of business or enter into any material agreement, transaction or
activity or make any material commitment except those in the ordinary and
regular course of business and not otherwise prohibited under this Section
5.1;
(b) neither change nor amend its Articles of Incorporation or Bylaws (in
the case of Amrion) or Articles of Organization or Operating Agreement (in
the case of Natrix);
(c) except as set forth on Schedule 5.1(c), not issue or sell shares of
capital stock of Amrion (other than upon the exercise of Options) or issue,
sell or grant options, warrants or rights to purchase or subscribe to, or
enter into any arrangement or contract with respect to the issuance or sale
of any of the capital stock of Amrion or membership interests of Natrix or
rights or obligations convertible into or exchangeable for any shares of
the capital stock of Amrion or membership interests of Natrix and not alter
the terms of any presently outstanding options or the Option Plans or make
any changes (by split-up, combination, reorganization or otherwise) in the
capital structure of Amrion or Natrix;
(d) not declare, pay or set aside for payment any dividend or other
distribution in respect of the capital stock or other equity securities of
Amrion and not redeem, purchase or otherwise acquire any shares of the
capital stock or other securities of Amrion or Natrix or rights or
obligations convertible into or exchangeable for any shares of the capital
stock or other securities of Amrion or Natrix or obligations convertible
into such, or any options, warrants or other rights to purchase or
subscribe to any of the foregoing;
(e) not acquire or enter into any agreement to acquire, by merger,
consolidation or purchase of stock or assets, any business or entity;
(f) use its reasonable efforts to preserve intact the corporate
existence, goodwill and business organization of Amrion and Natrix, to keep
the officers and employees of Amrion and Natrix available to Amrion and to
preserve the relationships of Amrion and Natrix with suppliers, customers
and others having business relations with any of them, except for such
instances which would not have an Amrion Material Adverse Effect;
(g) not (i) create, incur or assume any debt or create, incur or assume
any short-term debt for borrowed money, (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person other than Natrix except
in the ordinary course of business, (iii) make any loans or advances to any
other person other than Natrix, except in the ordinary course of business
and consistent with past practice, or (iv) make any capital contributions
to, or investments in, any person other than Natrix except in the ordinary
course of business; provided, however, that the aggregate amount of all of
the liabilities, obligations, loans, contributions, investments and other
actions described in (i) through (iv) above that would otherwise be
permitted hereunder shall not in the aggregate exceed $1,000,000 at the
time of the Closing;
(h) except as set forth on Schedule 5.1(h), not (i) enter into, modify or
extend in any manner the terms of any employment, severance or similar
agreements with officers and directors, (ii) grant any increase in the
compensation of officers or directors, whether now or hereafter payable or
(iii) grant any increase in the compensation of any other employees except
for compensation increases in the ordinary course of business and
consistent with past practice (it being understood by the parties hereto
that for the purposes of (ii) and (iii) above increases in compensation
shall include any increase pursuant to any option, bonus, stock purchase,
pension, profit-sharing, deferred compensation, retirement or other plan,
arrangement, contract or commitment), except that Amrion may pay "welcome
bonuses" not exceeding $100,000 in the aggregate
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to key employees as determined by the chief executive officer of Amrion to
ensure the continued employment of such persons through the Effective Date;
(i) except as set forth on Schedule 5.1(i), not make or incur (other than
in the ordinary course of business) any individual capital expenditure in
excess of $200,000 or capital expenditures in the aggregate in excess of
$1,000,000 without the prior approval of WFM (as used herein, "capital
expenditure" shall mean all payments in respect of the cost of any fixed
asset or improvement or replacement, substitution or addition thereto which
has a useful life of more than one year, including those costs arising in
connection with the acquisition of such assets by way of increased product
or service charges or offset items or in connection with capital leases);
(j) except in instances which would not have an Amrion Material Adverse
Effect, perform all of its obligations under all Material Contracts (except
those being contested in good faith) and not enter into, assume or amend
any contract or commitment that would be a Material Contract other than
contracts to provide services entered into in the ordinary course of
business; and
(k) except in instances which would not have an Amrion Material Adverse
Effect, prepare and file all federal, state, local and foreign returns for
taxes and other tax reports, filings and amendments thereto required to be
filed by it, and allow WFM, at its request, to review all such returns,
reports, filings and amendments at Amrion's offices prior to the filing
thereof, which review shall not interfere with the timely filing of such
returns.
In connection with the continued operation of the business of Amrion and
Natrix between the date of this Agreement and the Effective Date, Amrion shall
confer in good faith and on a regular and frequent basis with one or more
representatives of WFM designated in writing to report operational matters of
materiality and the general status of ongoing operations. In addition, Amrion
will allow WFM employees and agents to be present at Amrion's business
locations to observe the business and operations of Amrion and Natrix. Amrion
acknowledges that WFM does not and will not waive any rights it may have under
this Agreement as a result of such consultations nor shall WFM be responsible
for any decisions made by Amrion's officers and directors with respect to
matters which are the subject of such consultation.
5.2. Conduct of Business by WFM. From the date hereof to the Effective Date,
WFM will, and will cause the Merger Subsidiary and each of the WFM
Subsidiaries to, except as required in connection with the Merger and the
other transactions contemplated by this Agreement and except as otherwise
disclosed in the schedules hereto or consented to in writing by Amrion:
(a) Carry on its businesses in the ordinary and regular course in
substantially the same manner as heretofore conducted and not engage in any
new line of business or enter into any agreement, transaction or activity
or make any commitment except in the ordinary and regular course of
business and not otherwise prohibited under this Section 5.2;
(b) Neither change nor amend its Articles of Incorporation or Bylaws;
(c) Not make any adverse changes (by split-up, combination,
reorganization or otherwise) in the capital structure of WFM, Merger
Subsidiary or any of the WFM Subsidiaries;
(d) Not declare, pay or set aside for payment any dividend or other
distribution in respect of the capital stock or other equity securities of
WFM and not redeem, purchase or otherwise acquire any shares of the capital
stock or other securities of WFM or any of the WFM Subsidiaries, or rights
or obligations convertible into or exchangeable for any shares of the
capital stock or other securities of WFM, Merger Subsidiary or any of the
WFM Subsidiaries or obligations convertible into such, or any options,
warrants or other rights to purchase or subscribe to any of the foregoing;
(e) Not acquire or enter into any agreement to acquire, by merger,
consolidation or purchase of stock or assets, any business or entity which
would have a WFM Material Adverse Effect; and
(f) Use its reasonable efforts to preserve intact the corporate
existence, goodwill and business organization of WFM and the WFM
Subsidiaries, to keep the officers and employees of WFM and the WFM
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Subsidiaries available to WFM and to preserve the relationships of WFM and
the WFM Subsidiaries with suppliers, customers and others having business
relations with any of them, except for such instances which would not have
a WFM Material Adverse Effect;
5.3. Notice of any Material Change. Each of Amrion and WFM shall, promptly
after the first notice or occurrence thereof but not later than the Closing
Date, advise the other in writing of any event or the existence of any state
of facts that (i) would make any of its representations and warranties in this
Agreement untrue in any material respect, or (ii) would otherwise constitute
either an Amrion Material Adverse Effect or a WFM Material Adverse Effect.
5.4. Inspection and Access to Information.
(a) Between the date of this Agreement and the Effective Date, Amrion will,
and will cause Natrix to, provide to the Merger Subsidiary and WFM and their
accountants, counsel and other authorized representatives reasonable access,
during normal business hours to its premises, properties, contracts,
commitments, books, records and other information (including tax returns filed
and those in preparation) and will cause its officers to furnish to WFM and
the Merger Subsidiary and their authorized representatives such financial,
technical and operating data and other information pertaining to its business,
as the Merger Subsidiary and WFM shall from time to time reasonably request.
(b) Between the date of this Agreement and the Effective Date, WFM will, and
will cause each of the WFM Subsidiaries to, provide to Amrion and its
accountants, counsel and other authorized representatives reasonable access,
during normal business hours to its premises, properties, contracts,
commitments, books, records and other information (including tax returns filed
and those in preparation) and will cause its officers to furnish to Amrion and
its authorized representatives such financial, technical and operating data
and other information pertaining to its business, as Amrion shall from time to
time reasonably request.
(c) Each of the parties hereto and their respective representatives shall
maintain the confidentiality of all information (other than information which
is generally available to the public) concerning the other parties hereto
acquired pursuant to the transactions contemplated hereby in the event that
the Merger is not consummated. Each of the parties hereto and their
representatives shall not use such information so obtained to the detriment or
competitive disadvantage of the other party hereto. All files, records,
documents, information, data and similar items relating to the confidential
information of Amrion, whether prepared by WFM or otherwise coming into WFM's
possession, shall remain the exclusive property of Amrion and shall be
promptly delivered to Amrion upon termination of this Agreement. All files,
records, documents, information, data and similar items relating to the
confidential information of WFM, whether prepared by Amrion or otherwise
coming into Amrion's possession, shall remain the exclusive property of WFM
and shall be promptly delivered to WFM upon termination of this Agreement.
5.5. Antitrust Laws. As soon as practicable but in no event later than 15
days from the date hereof, each of WFM and Amrion shall make any and all
filings which are required under the HSR Act. Each of WFM and Amrion will
assist the other as may be reasonably requested in connection with the
preparation of such filings. WFM will pay the applicable filing fees required
to be paid under the HSR Act.
5.6. Registration Statement and Proxy Statement.
(a) WFM and Amrion shall promptly prepare and WFM shall file a registration
statement on Form S-4 (which registration statement, in the form it is
declared effective by the SEC, together with any and all amendments and
supplements thereto and all information incorporated by reference therein, is
referred to herein as the "Registration Statement") under and pursuant to the
provisions of the Securities Act for the purpose of registering WFM Common
Stock to be issued in the Merger, a portion of which Registration Statement
shall also serve as the joint proxy statement with respect to the meetings of
the stockholders of WFM and Amrion in connection with the Merger (the "Proxy
Statement"). WFM will use its best efforts to receive and respond to the
comments of the SEC and to have the Registration Statement declared effective
as promptly as practicable,
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and each of WFM and Amrion shall promptly mail to its stockholders the Proxy
Statement in its definitive form contained in the Registration Statement. Such
Proxy Statement shall also serve as the prospectus to be included in the
Registration Statement.
(b) Each of WFM and Amrion agrees to provide as promptly as practicable to
the other such information concerning its business and financial statements
and affairs as, in the reasonable judgment of the other party, may be required
or appropriate for inclusion in the Registration Statement and the Proxy
Statement or in any amendments or supplements thereto, and to cause its
counsel and auditors to cooperate with the other's counsel and auditors in the
preparation of the Registration Statement and the Proxy Statement.
(c) At the time the Registration Statement becomes effective and at the
Effective Date, as such Registration Statement is then amended or
supplemented, at the time the Proxy Statement is mailed to each of WFM's and
Amrion's stockholders, such Registration Statement and Proxy Statement will
(i) not contain any untrue statement of a material fact, or omit to state any
material fact required to be stated therein as necessary, in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading or necessary and (ii) comply in all material respects with the
provisions of the Securities Act and Exchange Act, as applicable, and the
rules and regulations thereunder; provided, however, no representation is made
by WFM or Amrion with respect to statements made in the Registration Statement
and Proxy Statement based on information supplied by the other party expressly
for inclusion or incorporation by reference in the Proxy Statement or
Registration Statement or information omitted with respect to the other party.
5.7. Stockholders' Meeting. Each of WFM and Amrion will take all action
necessary in accordance with applicable law and its Articles of Incorporation
and Bylaws to convene a meeting of its stockholders as promptly as practicable
to consider and vote upon the approval of this Agreement and the transactions
contemplated hereby. The Board of Directors of each of WFM and Amrion shall
recommend such approval and WFM and Amrion shall each take all lawful action
to solicit such approval, including, without limitation, timely mailing the
Proxy Statement /Prospectus. WFM and Amrion shall coordinate and cooperate
with respect to the timing of such meetings and shall use their best efforts
to hold such meetings on the same day.
5.8. Listing Application. WFM will file a listing application with the NMS
to approve for listing, subject to official notice of issuance, the shares of
WFM Common Stock to be issued in the Merger. WFM shall use its reasonable
efforts to cause the shares of WFM Common Stock to be issued in the Merger to
be approved for listing on the NMS, subject to official notice of issuance,
prior to the Effective Date.
5.9. Reasonable Efforts; Further Assurances; Cooperation. Subject to the
other provisions of this Agreement, the parties hereby shall each use their
reasonable efforts to perform their obligations herein and to take, or cause
to be taken or do, or cause to be done, all things reasonably necessary,
proper or advisable under applicable law to obtain all regulatory approvals
and satisfy all conditions to the obligations of the parties under this
Agreement and to cause the Merger and the other transactions contemplated
herein to be carried out promptly in accordance with the terms hereof. The
parties agree to use their reasonable best efforts to consummate the
transactions contemplated hereby by September 15, 1997. The parties shall
cooperate fully with each other and their respective officers, directors,
employees, agents, counsel, accountants and other designees in connection with
any steps required to be taken as a part of their respective obligations under
this Agreement, including without limitation:
(a) Amrion and WFM shall promptly make their respective filings and
submissions and shall take, or cause to be taken, all actions and do, or
cause to be done, all things reasonably necessary, proper or advisable
under applicable laws and regulations to (i) comply with the provisions of
the HSR Act, and (ii) obtain any other required approval of any other
federal, state or local governmental agency or regulatory body with
jurisdiction over the transactions contemplated by this Agreement.
(b) In the event any claim, action, suit, investigation or other
proceeding by any governmental body or other person is commenced which
questions the validity or legality of the Merger or any of the other
transactions contemplated hereby or seeks damages in connection therewith,
the parties agree to cooperate
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and use all reasonable efforts to defend against such claim, action, suit,
investigation or other proceeding and, if an injunction or other order is
issued in any such action, suit or other proceeding, to use all reasonable
efforts to have such injunction or other order lifted, and to cooperate
reasonably regarding any other impediment to the consummation of the
transactions contemplated by this Agreement.
(c) Each party shall give prompt written notice to the other of (i) the
occurrence, or failure to occur, of any event which occurrence or failure
would be likely to cause any representation or warranty of Amrion or WFM,
as the case may be, contained in this Agreement to be untrue or inaccurate
in any material respect at any time from the date hereof to the Effective
Date or that will or may result in the failure to satisfy the conditions
specified in Article 6 or 7 and (ii) any failure of Amrion or WFM, as the
case may be, to comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by it hereunder.
5.10. Public Announcements. The timing and content of all announcements
regarding any aspect of this Agreement or the Merger to the financial
community, government agencies, employees or the general public shall be
mutually agreed upon in advance (unless WFM or Amrion is advised by counsel
that any such announcement or other disclosure not mutually agreed upon in
advance is required to be made by law or applicable NMS rule and then only
after making a reasonable attempt to comply with the provisions of this
Section).
5.11. No Solicitations. From the date hereof until the Effective Date or
until this Agreement is terminated or abandoned as provided in this Agreement,
neither Amrion nor Natrix shall directly or indirectly (i) solicit or initiate
discussion with or (ii) enter into negotiations or agreements with, or furnish
any information to, any corporation, partnership, person or other entity or
group (other than WFM, an affiliate of WFM or their authorized representatives
pursuant to this Agreement) concerning any proposal for a merger, sale of
substantial assets, sale of shares of stock or securities or other takeover or
business combination transaction (the "Acquisition Proposal") involving Amrion
or Natrix, and Amrion will instruct its officers, directors, advisors and its
financial and legal representatives and consultants not to take any action
contrary to the foregoing provisions of this sentence; provided, however, that
Amrion, Natrix, their officers, directors, advisors and their financial and
legal representatives and consultants will not be prohibited from taking any
action described in (ii) above to the extent such action is taken by, or upon
the authority of, the Board of Directors of Amrion in the exercise of good
faith judgment as to its fiduciary duties to the shareholders of Amrion, which
judgment is based upon the advice of independent, outside legal counsel that a
failure of the Board of Directors of Amrion to take such action would be
likely to constitute a breach of its fiduciary duties to such shareholders.
Amrion will notify WFM promptly if Amrion becomes aware that any inquiries or
proposals are received by, any information is requested from or any
negotiations or discussions are sought to be initiated with, Amrion with
respect to an Acquisition Proposal, and Amrion shall promptly deliver to WFM
any written inquiries or proposals received by Amrion relating to an
Acquisition Proposal.
5.12. WFM Board of Directors. WFM's Board of Directors shall to the extent
requested by Mark S. Crossen ("Crossen") at the first scheduled meeting of the
WFM Board of Directors following the Effective Date take all action necessary
to cause the Board of Directors of WFM to be increased by one director and
shall take all such action necessary to cause Crossen to be elected as a
director of WFM for a term expiring at the first annual meeting of
stockholders of WFM following the Effective Date and to nominate such person
for re-election at each subsequent annual meeting so long as he continues to
beneficially own at least one-third of the shares of the WFM Common Stock
received by him pursuant to the Merger, including shares underlying any
options exercisable for WFM Common Stock assumed by WFM pursuant to the
Merger.
5.13. Pooling. From and after the date hereof and until the Effective Date,
neither WFM nor Amrion nor any of their respective subsidiaries or other
affiliates shall (i) knowingly take any action, or knowingly fail to take any
action, that would jeopardize the treatment of the Merger as a "pooling of
interest" for accounting purposes or (ii) knowingly take any action, or
knowingly fail to take any action, that would jeopardize qualification of the
Merger as a reorganization within the meaning of Section 368(a)(2)(E) of the
Code.
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5.14. Employee Benefits. As of the Effective Date, WFM or its subsidiaries
shall employ all of the employees of Amrion as of the Effective Date (the
"Transferred Employees") and, to the extent one or more of the Amrion benefit
plans is terminated, shall make available to the Transferred Employees the
corresponding employee benefit plan(s) maintained by WFM for its Team Members
(the "WFM Plans") in accordance with their terms. To the extent permitted by
the terms of the WFM Plans, WFM will (i) waive all deductibles, waiting
periods and limitations with respect to pre-existing conditions and other
conditions applicable to employees of Amrion and its subsidiaries under the
WFM Plans, and (ii) grant full past service credit (including credit for
eligibility, benefit accrual and for vesting) to the Transferred Employees for
service with Amrion and its affiliates and predecessors under any and all of
the WFM Plans, including but not limited to bonus, severance, and similar
employment policies. WFM will also grant the Transferred Employees a right to
a 20% discount at WFM's planned Boulder, Colorado store. Neither this
Agreement nor the consummation of the transactions contemplated by this
Agreement will entitle any employee, including but not limited to, Transferred
Employees, to any other severance benefits nor will it accelerate compensation
due any such Transferred Employee as of the Effective Date. Subject to the
foregoing, WFM shall have the right in the good faith exercise of operations
and managerial discretion to make changes or cause changes to be made after
the Effective Date in compensation, benefits and other terms of employment and
to terminate any such employee.
ARTICLE 6.
Conditions Precedent to Obligations of Amrion
Except as may be waived by Amrion, the obligations of Amrion to consummate
the transactions contemplated by this Agreement shall be subject to the
satisfaction on or before the Closing Date of each of the following
conditions:
6.1. Compliance. WFM shall have, or shall have caused to be, satisfied or
complied with and performed in all material respects all terms, covenants and
conditions of this Agreement to be complied with or performed by WFM on or
before the Closing Date.
6.2. Representations and Warranties. All of the representations and
warranties made by WFM in this Agreement shall be true and correct in all
material respects at and as of the Closing Date with the same force and effect
as if such representations and warranties had been made at and as of the
Closing Date, except for changes permitted or contemplated by this Agreement
and except that if information which would constitute a breach of the
representations and warranties of WFM made in this Agreement is disclosed in
the Proxy Statement and if Amrion has consented to such disclosure, then
Amrion shall be deemed to have waived this condition to the performance of its
obligations hereunder solely with respect to the matter disclosed; provided,
however, that notwithstanding anything herein to the contrary, this Section
6.2 shall be deemed to have been satisfied even if such representations or
warranties are not true and correct, unless the failure of any of the
representations or warranties to be so true and correct would have or would be
reasonably likely to have a WFM Material Adverse Effect.
6.3. Material Adverse Changes. Subsequent to March 31, 1997, there shall
have occurred no WFM Material Adverse Effect other than any such change that
affects both WFM and Amrion in a substantially similar manner; provided,
however, if such WFM Material Adverse Change is disclosed in the Proxy
Statement (to the extent Amrion consented to such disclosure) on the date such
Proxy Statement is mailed to Amrion's stockholders, then Amrion shall be
deemed to have waived this condition to the performance of its obligations
hereunder solely with respect to the matter disclosed.
6.4. NMS Listing. WFM Common Stock issuable pursuant to the Merger and
pursuant to the exercise of the Options after the Effective Date shall have
been authorized for listing on the NMS.
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6.5. Certificates. Amrion shall have received a certificate or certificates,
executed on behalf of WFM by an executive officer of WFM, to the effect that
the conditions contained in Sections 6.1, 6.2 and 6.3 hereof have been
satisfied.
6.6. Stockholder Approval. This Agreement shall have been approved and
adopted by the affirmative vote of the holders of a majority of all of the
outstanding shares (as of the "record date" set forth in the Proxy Statement)
of Amrion Common Stock.
6.7. Effectiveness of Registration Statement. The Registration Statement
shall have become effective and no stop order shall been issued by the SEC or
any other governmental authority suspending the effectiveness of the
Registration Statement or preventing or suspending the use thereof or any
related prospectus.
6.8. Consents; Litigation. Other than the filing of Articles of Merger as
described in Article 1, all authorizations, consents, orders or approvals of,
or declarations or filings with, or expirations or terminations of waiting
periods (including the waiting period under the HSR Act) imposed by any
governmental entity, and all required third-party consents, the failure to
obtain which would have a WFM Material Adverse Effect, shall have been
obtained, including written confirmation reasonably acceptable to Amrion from
WFM's senior lender and the purchasers of certain notes pursuant to the note
purchase agreement dated May 16, 1996 that the consummation of the Merger does
not require the consent of such lenders and note purchasers. In addition, no
preliminary or permanent injunction or other order shall have been issued by
any court or by any governmental or regulatory agency, body or authority which
prohibits the consummation of the Merger and the transactions contemplated by
this Agreement and which is in effect at the Effective Date.
6.9. Employment and Non-Competition Agreements. The Employment and Non-
Competition Agreements, in the forms of Exhibits B1 and B2 hereto, between WFM
and each of Crossen and Jeffrey S. Williams ("Williams"), shall be executed
and delivered by the parties thereto.
6.10. Registration Rights Agreement. The Registration Rights Agreement, in
the form of Exhibit C hereto, by and among Crossen, Williams and WFM, will be
in full force and effect as of the Closing Date.
ARTICLE 7.
Conditions Precedent to obligations of WFM and the Merger Subsidiary
Except as may be waived by WFM and the Merger Subsidiary, the obligations of
WFM and the Merger Subsidiary to consummate the transactions contemplated by
this Agreement shall be subject to the satisfaction, on or before the Closing
Date, of each of the following conditions:
7.1. Compliance. Amrion shall have, or shall have caused to be, satisfied or
complied with and performed in all material respects all terms, covenants, and
conditions of this Agreement to be complied with or performed by it on or
before the Closing Date.
7.2. Representations and Warranties. All of the representations and
warranties made by Amrion in this Agreement shall be true and correct in all
material respects at and as of the Closing Date with the same force and effect
as if such representations and warranties had been made at and as of the
Closing Date, except for changes permitted or contemplated by this Agreement
and except that if information which would constitute a breach of the
representations and warranties of Amrion made in this Agreement is disclosed
in the Proxy Statement and if WFM has consented to such disclosure, then WFM
shall be deemed to have waived this condition to the performance of its
obligations hereunder solely with respect to the matter disclosed; provided,
however, that notwithstanding anything herein to the contrary, this Section
7.2 shall be deemed to have been satisfied even if such representations or
warranties are not true and correct, unless the failure of any of the
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representations or warranties to be so true and correct would have or would be
reasonably likely to have an Amrion Material Adverse Effect.
7.3. Material Adverse Changes. Since March 31, 1997, except as set forth in
this Agreement or on the schedules hereto, there shall have occurred no Amrion
Material Adverse Effect other than any such change that affects both WFM and
Amrion in a substantially similar manner; provided, however, if such change is
disclosed in the Proxy Statement (to the extent WFM consented to such
disclosure) on the date such Proxy Statement is mailed to WFM's stockholders,
then WFM shall be deemed to have waived this condition to the performance of
its obligations hereunder solely with respect to the matter disclosed.
7.4. Certificates. WFM shall have received a certificate or certificates,
executed on behalf of Amrion by an executive officer of Amrion, to the effect
that the conditions in Sections 7.1, 7.2 and 7.3 hereof have been satisfied.
7.5. Stockholder Approval. This Agreement shall have been approved and
adopted by the affirmative vote of the holders of a majority of the shares of
WFM Common Stock represented at the Special Meeting of WFM shareholders at
which a quorum is obtained.
7.6. Effectiveness of Registration Statement. The Registration Statement
shall have become effective and no stop order shall been issued by the SEC or
any other governmental authority suspending the effectiveness of the
Registration Statement or preventing or suspending the use thereof or any
related prospectus.
7.7. Consents; Litigation. Other than the filing of the Articles of Merger
as described in Article 1, all authorizations, consents, orders or approvals
of, or declarations or filings with, or expirations or terminations of waiting
periods (including the waiting period under the HSR Act) imposed by, any
governmental entity, and all required third-party consents, the failure to
obtain which would have an Amrion Material Adverse Effect or a WFM Material
Effect, shall have been obtained. In addition, no preliminary or permanent
injunction or other order shall have been issued by any court or by any
governmental or regulatory agency, body or authority which prohibits the
consummation of the Merger and the transactions contemplated by this Agreement
and which is in effect at the Effective Date.
7.8. Voting Agreement. The Voting Agreement between WFM and Amrion's
directors and executive officers in the form of Exhibit A, will be in full
force and effect as of the Closing Date, and no default shall have occurred
thereunder.
7.9. Employment and Non-Competition Agreements. The Employment and Non-
Competition Agreements, in the form of Exhibit B hereto, between WFM and each
of Crossen and Williams, shall be executed and delivered by the parties
thereto.
7.10. Receipt of Pooling Letter. WFM shall have received a letter from KPMG
Peat Marwick LLP, dated the Effective Date and addressed to WFM, stating
substantially to the effect that, based on such firm's review of this
Agreement and the other procedures set forth in such letter, such firm concurs
that the Merger will qualify as a pooling of interests transaction under
Opinion 16 of the Accounting Principles Board.
7.11. Comfort Letters. WFM shall have received from BDO Seidman, LLP,
independent auditors for Amrion, a letter to the effect that Amrion qualifies
as an entity such that the Merger will qualify as a "pooling of interests"
transaction under generally accepted accounting principles.
ARTICLE 8.
Indemnification; Directors' and Officers' Insurance
8.1. Indemnification. In the event of any threatened or actual claim,
action, suit, proceeding or investigation (including any claims regarding
securities law matters), whether civil, criminal or administrative,
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including, without limitation, any such claim, action, suit, proceeding or
investigation in which any of the present or former officers or directors (the
"Managers") of Amrion or Natrix is, or is threatened to be, made a party by
reason of the fact that he or she is or was a stockholder, director, officer,
employee or agent of Amrion or Natrix, or is or was serving at the request of
Amrion or Natrix as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, whether
before or after the Effective Date, Amrion shall indemnify and hold harmless,
and from and after the Effective Date each of the Surviving Corporation and
WFM shall indemnify and hold harmless, as and to the full extent permitted by
applicable law (including by advancing expenses promptly as statements
therefor are received), each such Manager against any losses, claims, damages,
liabilities, costs, expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement in connection with any such claim, action, suit,
proceeding or investigation, and in the event of any such claim, action, suit
proceeding or investigation (whether arising before or after the Effective
Date), (i) if Amrion (prior to the Effective Date) or WFM or the Surviving
Corporation (after the Effective Date) have not promptly assumed the defense
of such matter, the Managers may retain counsel satisfactory to them, and
Amrion, or the Surviving Corporation and WFM after the Effective Date, shall
pay all fees and expenses of such counsel for the Managers promptly, as
statements therefor are received, and (ii) Amrion, or the Surviving
Corporation and WFM after the Effective Date, will use their respective best
efforts to assist in the vigorous defense of any such matter; provided that
neither Amrion nor the Surviving Corporation or WFM shall be liable for any
settlement effected without its prior written consent (which consent shall not
be unreasonably withheld); and provided further that the Surviving Corporation
and WFM shall have no obligation under the foregoing provisions of this
Section 8.1 to any Manager if (x) the indemnification of such Manager in the
manner contemplated hereby is prohibited by applicable law, and (y) Amrion has
breached a representation or warranty hereunder with respect to the same
matters for which indemnification is being sought by such Manager and such
Manager fails to prove that such Manager had no actual knowledge of such
breach at the Effective Date. Upon the determination that the Surviving
Corporation or WFM is not liable for any such indemnification claims, the
Manager will reimburse WFM and the Surviving Corporation for any fees,
expenses and costs incurred by WFM or the Surviving Corporation in connection
with the defense of such claims. Any Manager wishing to claim indemnification
under this Section 8.1, upon learning of any such claim, action, suit,
proceeding or investigation, shall notify Amrion and, after the Effective
Date, the Surviving Corporation and WFM, thereof (provided that the failure to
give such notice shall not affect any obligations hereunder, except to the
extent that the indemnifying party is actually and materially prejudiced
thereby). WFM and Amrion agree that all rights to indemnification existing in
favor of the Managers as provided in Amrion's Articles of Incorporation or
Bylaws as in effect as of the date hereof, and in any agreement between Amrion
and any Manager with respect to matters occurring prior to the Effective Date,
shall survive the Merger. WFM further covenants not to amend or repeal any
provisions of the Articles of Incorporation or Bylaws of Amrion in any manner
which would adversely affect the indemnification or exculpatory provisions
contained therein. The provisions of this Section 8.1 are intended to be for
the benefit of, and shall be enforceable by, each indemnified party and his or
her heirs and representatives.
8.2. Directors' and Officers' Insurance. WFM will provide each individual
who served as a director or officer of Amrion at any time prior to the Closing
with liability insurance for a period of 24 months after the Closing similar
in coverage and amount as that provided to WFM's directors and officers.
ARTICLE 9.
Miscellaneous
9.1. Termination. In addition to the provisions regarding termination set
forth elsewhere herein, this Agreement and the transactions contemplated
hereby may be terminated at any time on or before the Closing Date:
(a) by mutual consent of Amrion and WFM;
(b) by either WFM or Amrion if the transactions contemplated by this
Agreement have not been consummated by October 31, 1997, unless such
failure of consummation is due to the failure of the
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terminating party to perform or observe the covenants, agreements, and
conditions hereof to be performed or observed by it at or before the
Closing Date;
(c) by either Amrion or WFM if the transactions contemplated hereby
violate any nonappealable final order, decree, or judgment of any court or
governmental body or agency having competent jurisdiction;
(d) by WFM if the Amrion Board of Directors withdraws or materially
modifies or changes its recommendation to the stockholders of Amrion to
approve this Agreement and the Merger if there exists at such time an
Acquisition Proposal; or
(e) by either Amrion or WFM if the Average Closing Price is less than
$23.
9.2. Expenses.
(a) Except as provided in (b) below, if the transactions contemplated by
this Agreement are not consummated, each party hereto shall pay its own
expenses incurred in connection with this Agreement and the transactions
contemplated hereby.
(b) If, (i) this Agreement is terminated by WFM pursuant to Section 9.1(d)
hereof or (ii) on or before October 31, 1997 and while this Agreement remains
in effect, Amrion enters into a definitive agreement with respect to an
Acquisition Proposal with any corporation, partnership, person or other entity
or group (other than WFM or any affiliate of WFM), and such transaction
(including any revised transaction based upon the Acquisition Proposal) is
thereafter consummated (whether before or after October 31, 1997), then Amrion
shall pay to WFM a fee equal to the sum of (A) the documented fees, costs and
expenses, including legal and accounting fees and fees payable to WFM's
financial advisors, incurred by WFM in connection with the transactions
contemplated by this Agreement and (B) $4.5 million, which such amounts shall
be payable in same day funds to an account specified by WFM. No such fee shall
be payable if this Agreement is terminated by Amrion pursuant to Section
9.1(e) hereof.
9.3. Entire Agreement. This Agreement and the exhibits hereto contain the
complete agreement among the parties with respect to the transactions
contemplated hereby and supersede all prior agreements and understandings
among the parties with respect to such transactions. Section and other
headings are for reference purposes only and shall not affect the
interpretation or construction of this Agreement. The parties hereto have not
made any representation or warranty except as expressly set forth in this
Agreement or in any certificate or schedule delivered pursuant hereto. The
obligations of any party under any agreement executed pursuant to this
Agreement shall not be affected by this section.
9.4. Survival of Representations and Warranties. The representations and
warranties of each party contained herein or in any exhibit, certificate,
document or instrument delivered pursuant to this Agreement shall not survive
the Closing.
9.5. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and such counterparts together shall constitute only one original.
9.6. Notices. All notices, demands, requests, or other communications that
may be or are required to be given, served, or sent by any party to any other
party pursuant to this Agreement shall be in writing and shall be sent by
facsimile transmission, next-day courier or mailed by first-class, registered
or certified mail, return receipt requested, postage prepaid, or transmitted
by hand delivery, addressed as follows:
(i) If to Amrion:
6565 Odell Place
Boulder, Colorado 80301
Attention: Mark S. Crossen, CEO
Fax: (303) 530-7958
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with a copy (which shall not constitute notice) to:
Friedlob Sanderson Raskin Paulson & Tourtillott, LLC
1400 Glenarm Place
Third Floor
Denver, Colorado 80202
Attention: Gerald Raskin
Fax: (303) 571-1400
(ii) If to WFM or Merger Subsidiary:
601 N. Lamar Blvd., Suite 300
Austin, Texas 78703
Fax: (512) 477-1069
with a copy (which shall not constitute notice) to:
Crouch & Hallett, L.L.P.
717 North Harwood Street
Suite 1400
Dallas, Texas 75201
Attention: Bruce H. Hallett
Fax: (214) 953-0576
Each party may designate by notice in writing a new address to which any
notice, demand, request, or communication may thereafter be so given, served,
or sent. Each notice, demand, request, or communication that is mailed,
delivered, or transmitted in the manner described above shall be deemed
sufficiently given, served, sent, and received for all purposes at such time
as it is delivered to the addressee (with the return receipt, the delivery
receipt or the affidavit of messenger being deemed conclusive evidence of such
delivery) or at such time as delivery is refused by the addressee upon
presentation.
9.7. Successors; Assignments. This Agreement and the rights, interests, and
obligations hereunder shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned, by operation of law or otherwise, by any of the parties hereto
without the prior written consent of the other.
9.8. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Colorado (except the choice of law
rules thereof).
9.9. Waiver and Other Action. This Agreement may be amended, modified, or
supplemented only by a written instrument executed by the parties against
which enforcement of the amendment, modification or supplement is sought.
9.10. Severability. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable, such provision shall be fully severable,
and this Agreement shall be construed and enforced as if such illegal,
invalid, or unenforceable provision were never a part hereof; the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid, or unenforceable provision or by its
severance; and in lieu of such illegal, invalid, or unenforceable provision,
there shall be added automatically as part of this Agreement, a provision as
similar in its terms to such illegal, invalid, or unenforceable provision as
may be possible and be legal, valid, and enforceable.
9.11. No Third Party Beneficiaries. Article 8 is intended for the benefit of
each "Manager" (as defined in Article 8) and may be enforced by such persons,
their heirs and representatives. Other than as expressly set forth in this
Section 9.11, nothing expressed or implied in this Agreement is intended, or
shall be construed, to confer upon or give any person, firm or corporation
other than the parties hereto and their stockholders, any
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rights, remedies, obligations or liabilities under or by reason of this
Agreement or result in such person, firm or corporation being deemed a third
party beneficiary of this Agreement.
9.12. Mutual Contribution. The parties to this Agreement and their counsel
have mutually contributed to its drafting. Consequently, no provision of this
Agreement shall be construed against any party on the ground that such party
drafted the provision or caused it to be drafted or the provision contains a
covenant of such party.
9.13. Arbitration. Any controversy or dispute among the parties arising in
connection with this Agreement shall be submitted to a panel of three
arbitrators and finally settled by arbitration in accordance with the
commercial arbitration rules of the American Arbitration Association. Each of
the disputing parties shall appoint one arbitrator, and these two arbitrators
shall independently select a third arbitrator. Arbitration shall take place in
Boulder, Colorado. The prevailing party in such arbitration shall be entitled
to the award of all costs and attorneys' fees in connection with such action.
Any award for monetary damages resulting from nonpayment of sums due hereunder
shall bear interest from the date on which such sums were originally due and
payable. Judgment upon the award rendered may be entered in any court having
jurisdiction or application may be made to such court for judicial acceptance
of the award and an order of enforcement, as the case may be.
[Signatures on Following Page]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
Whole Foods Market, Inc.
/s/ John Mackey
By:__________________________________
John Mackey Chief Executive
Officer
Nutrient Acquisition Corp.
/s/ Glenda Flanagan
By:__________________________________
Glenda Flanagan President
Amrion, Inc.
/s/ Mark S. Crossen
By:__________________________________
Mark S. Crossen President
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APPENDIX B
June 9, 1997
Board of Directors Amrion, Inc. 6565 Odell Place Boulder, CO 80301
Members of the Board:
We understand that Amrion, Inc. ("Amrion" or the "Company"), Nutrient
Acquisition Corp. ("Merger Subsidiary") and Whole Foods Market, Inc. ("Whole
Foods" or "Acquiror") propose to enter into an Agreement and Plan of Merger to
be dated June 9, 1997 (the "Merger Agreement"), pursuant to which Amrion will
be acquired through the merger of Merger Subsidiary with and into Amrion (the
"Transaction"). Pursuant to the Merger Agreement, and subject to certain
exceptions, at the effective time of the Transaction, each share of common
stock of Amrion will be converted into 0.87 shares of Whole Foods common
stock. You have requested our opinion as to whether the consideration to be
received in the Transaction by the shareholders of Amrion, pursuant to the
Merger Agreement is fair, from a financial point of view, as of the date
hereof, to the shareholders of Amrion.
Piper Jaffray Inc. ("Piper Jaffray"), as a customary part of its investment
banking business, is engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, underwritings and
secondary distributions of securities, private placements, and valuations for
estate, corporate and other purposes. For our services in rendering this
opinion, Amrion will pay us a fee and indemnify us against certain
liabilities. Piper Jaffray is also entitled to additional fees which are
contingent on consummation of the Transaction. In the ordinary course of its
business, we and our affiliates may actively trade securities of Amrion and
Whole Foods for our own account or the accounts of our customers and,
accordingly, may at any time hold a long or short position in such securities.
In arriving at our opinion, we have undertaken such reviews, analyses and
inquiries as we deemed necessary and appropriate under the circumstances.
Among other things, we have:
. Reviewed the draft dated June 9, 1997 of the Merger Agreement.
. Reviewed the Reports on Form 10-K for Amrion for the three fiscal years
ended December 31, 1996.
. Reviewed the Report on Form 10-Q for Amrion for the quarter ended March
31, 1997.
. Reviewed the Reports on Form 10-K for Whole Foods for the three fiscal
years ended September 30, 1996.
. Reviewed the Reports on Form 10-Q for Whole Foods for the quarters ended
January 19, 1997 and April 13, 1997.
. Reviewed financial forecasts for Amrion prepared by Company management
for the years ending December 31, 1997 through 1999 and forecasts for the
years ending December 31, 2000 and 2001 prepared by Piper Jaffray and
reviewed by Company management ("Five-Year Financial Forecasts").
. Visited the headquarters of Amrion and conducted discussions with members
of senior management of Amrion, including the Chief Executive Officer and
Chief Financial Officer. Topics discussed included, but were not limited
to, the background and rationale of the proposed Transaction, the
financial condition, operating performance and the balance sheet
characteristics of Amrion and the prospects for the Company and Whole
Foods on a combined basis.
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<PAGE>
. Conducted discussions with members of senior management of Whole Foods,
including the Chief Executive Officer and Chief Financial Officer. Topics
discussed included, but were not limited to, the background and rationale
of the proposed Transaction, the financial condition, operating
performance and the balance sheet characteristics of Whole Foods and the
prospects for the Company.
. Reviewed the historical prices and trading activity for Amrion and Whole
Foods common stock.
. Reviewed the financial terms, to the extent publicly available, of
certain comparable merger and acquisition transactions which we deemed
relevant.
. Performed discounted cash flow analysis on the Five-Year Financial
Forecasts.
. Analyzed the premiums paid in recent public company acquisitions
involving the sale of public companies accounted for under pooling of
interests.
. Compared certain financial data of Amrion and Whole Foods with certain
financial and securities data of companies deemed similar to Amrion and
Whole Foods or representative of the business sector in which both
companies operate.
. Reviewed such other financial data, performed such other analyses and
considered such other information as we deemed necessary and appropriate
under the circumstances.
We have relied upon and assumed the accuracy and completeness of the
financial statements and other information provided by Amrion and Whole Foods
or otherwise made available to us and have not assumed responsibility
independently to verify such information. We have further relied upon the
assurances of Amrion's and Whole Foods' managements that the information
provided has been prepared on a reasonable basis in accordance with industry
practice and, with respect to financial planning data, reflects the best
currently available estimates and judgment of Amrion's and Whole Foods'
managements as to the expected future financial performance of Amrion and
Whole Foods, and that it is not aware of any information or facts that would
make the information provided to us incomplete or misleading. Without limiting
the generality of the foregoing, for the purpose of this opinion, we have
assumed that Amrion and Whole Foods are not a party to any pending
transaction, including external financing, recapitalizations, acquisitions or
merger discussions, other than the Transaction or in the ordinary course of
business.
In arriving at our opinion, we have not performed any appraisals or
valuations of specific assets or liabilities of Amrion or Whole Foods and have
not been furnished with any such appraisals or valuations, have made no
physical inspection of the properties or assets of the Company and express no
opinion regarding the liquidation value of Amrion and Whole Foods. Without
limiting the generality of the foregoing, we have undertaken no independent
analysis of any pending or threatened litigation, possible unasserted claims
or other contingent liabilities, to which either Amrion or Whole Foods or its
affiliates is a party or may be subject and at Amrion's direction and with its
consent, our opinion makes no assumption concerning and therefore does not
consider, the possible assertion of claims, outcomes or damages arising out of
any such matters.
Our opinion is necessarily based upon information available to us, facts and
circumstances and economic, market and other conditions as they exist and are
subject to evaluation on the date hereof; events occurring after the date
hereof could materially affect the assumptions used in preparing this opinion.
We are not expressing any opinion herein as to the prices at which shares of
Amrion's or Whole Foods' common stock have traded or at which such shares may
trade at any future time.
We have not been authorized by the Board of Directors to solicit other
purchasers for the Company or alternative transactions to the Transaction. We
were not requested to opine as to, and this opinion does not in any manner
address, Amrion's underlying decision to proceed with or effect the
Transaction or structure thereof.
This opinion is for the benefit of the Board of Directors of Amrion in
evaluating the Transaction and shall not be published or otherwise used by any
other persons for any other purposes nor shall any public references to Piper
Jaffray be made without our prior written consent. However, notwithstanding
the foregoing, we consent
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to inclusion of this opinion in the Proxy Statement (as defined in the Merger
Agreement) to be issued in connection with the Transaction and in any filings
or disclosures required by law. This opinion is not intended to be and does
not constitute a recommendation to any shareholder as to how such shareholder
should vote in the Transaction.
Based upon and subject to the foregoing and based upon such other factors as
we consider relevant, it is our opinion that, as of the date hereof, the
consideration to be received by the shareholders of Amrion in the Transaction
pursuant to the Merger Agreement is fair, from a financial point of view, to
the shareholders.
Sincerely,
/s/ Piper Jaffray Inc.
PIPER JAFFRAY INC.
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APPENDIX C
June 9, 1997
PERSONAL AND CONFIDENTIAL
Board of Directors
Whole Foods Market, Inc.
601 N. Lamar Blvd.
Suite 300
Austin, TX 78703
Members of the Board:
You have asked for our opinion with respect to the fairness to Whole Foods
Market, Inc. ("Whole Foods"), from a financial point of view and as of the
date hereof, of the Exchange Ratio (as defined below). Under the terms of the
Agreement and Plan of Merger (the "Agreement") dated June 9, 1997, by and
among Whole Foods, Nutrient Acquisition Corp. ("Merger Sub") and Amrion, Inc.
("Amrion"), Merger Sub will merge with and into Amrion (the "Merger") and,
upon consummation of the Merger, Amrion will become a wholly-owned subsidiary
of Whole Foods and the holders of Amrion capital stock will become holders of
Whole Foods Common Stock. In the Merger, each issued and outstanding share of
Amrion Common Stock will be converted into 0.87 shares (the "Exchange Ratio"),
representing approximately 4.7 million shares, of Whole Foods Common Stock and
outstanding options to acquire Amrion Common Stock will be assumed and
converted in accordance with the Exchange Ratio into options to acquire Whole
Foods Common Stock pursuant to the terms of the Agreement. The Merger is
intended to qualify as a tax-free reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended, and to be accounted
for as a "pooling of interests". The terms and conditions of the Merger are
set out more fully in the Agreement.
For purposes of this opinion we have (i) reviewed financial information on
Whole Foods and Amrion furnished to us by both companies, including certain
financial analyses and forecasts prepared by the management of each company;
(ii) reviewed publicly available information concerning Whole Foods and
Amrion; (iii) held discussions with the management of Whole Foods and Amrion
concerning the businesses, past and current business operations, financial
condition and results of operations and the future prospects of both
companies, independently and combined; (iv) reviewed the Agreement; (v)
reviewed the stock price and trading history of Amrion Common Stock; (vi)
reviewed the contribution by each company to pro forma combined earnings
before income and taxes (EBIT), and net income; (vii) reviewed the valuations
of publicly traded companies which we deemed comparable to Amrion; (viii)
compared the financial terms of the Merger with other transactions which we
deemed relevant; (ix) analyzed the pro forma earnings per share of the
combined company; and (x) made such other studies and inquiries, and reviewed
such other data and information, as we deemed relevant.
In connection with our opinion, we have not, however, independently verified
any of the foregoing information and have relied on all such information being
complete and accurate in all material respects. Furthermore, we did not obtain
any independent appraisal of the properties or assets and liabilities of Whole
Foods or Amrion. With respect to the financial and operating forecasts (and
the assumptions and bases therefor) of Whole Foods and Amrion which we have
reviewed, we have assumed that such forecasts have been reasonably prepared in
good faith on the basis of reasonable assumptions, reflect the best available
estimates and judgments of such respective managements and that such
projections and forecasts will be realized in the amounts and in the time
periods currently estimated by the managements of Whole Foods and Amrion. This
opinion is necessarily based upon market, economic, and other conditions that
exist and can be evaluated as of the date of this letter, and on information
available to us as of the date hereof.
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Robertson, Stephens & Company ("RS&Co.") has provided certain investment
banking services to Whole Foods from time to time, including acting as
managing underwriter for the initial public offering and two follow-on
offerings of Whole Foods Common Stock and acting as financial advisor to Whole
Foods in its acquisitions of Mrs. Gooch's Natural Food Markets, Inc. and Fresh
Fields Market, Inc. RS&Co. maintains a market in shares of Whole Foods Common
Stock. In the ordinary course of business, RS&Co. may trade Whole Foods
securities for our own account and the account of our customers and,
accordingly, may at any time hold a long or short position in Whole Foods
securities. Robertson Stephens Investment Management currently owns, and from
time to time has owned, Amrion securities for its' own investment account. In
addition, RS&Co. has acted as financial advisor to Whole Foods in connection
with the Merger for which a portion of our fee is due and payable contingent
upon closing of the Merger.
Based upon and subject to the foregoing considerations, it is our opinion
that, as of the date hereof, the Exchange Ratio is fair to Whole Foods from a
financial point of view.
This opinion is for the Board of Directors of Whole Foods only and, except
as required by law, may not otherwise be used, quoted or referred to except
with the express prior written consent of RS&Co.
Very truly yours,
ROBERTSON, STEPHENS & COMPANY LLC
By: /s/ Robertson, Stephens & Company Group, L.L.C.
-----------------------------------------------
C-2
<PAGE>
APPENDIX D
June 4, 1997
BOARD OF DIRECTORS
Whole Foods Market, Inc.
601 N. Lamar #300
Austin, TX 78703
Attention: John Mackey, Chairman and Chief Executive Officer
Ladies and Gentlemen:
We understand that Whole Foods Market, Inc. ("WFM") and Nutrient Acquisition
Corp. ("Nutrient"), which is wholly owned by WFM, propose to enter into an
Agreement and Plan of Merger to be dated as of June 9, 1997 with Amrion, Inc.
("Amrion") in the form presented to us, pursuant to which Nutrient shall be
merged into Amrion which will be the surviving entity (the "Merger"). Pursuant
to the Merger, we understand that each share of Amrion's Common Stock, $.0011
par value per share, will be exchanged for the right to recieve .87 shares of
Common Stock $.01 per share, of WFM. The terms and conditions of the Merger
are set forth in more detail in the Agreement and Plan of Merger.
You have asked Adams, Harkness & Hill, Inc. ("AH&H") for its opinion as to
the fairness to the current stockholders of WFM from a financial point of view
of the consideration to be paid by WFM in the Merger (the "Opinion"). AH&H, as
part of its investment banking business, is continually engaged in the
valuation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, secondary distributions of listed and
unlisted securities, private placements and valuations for estate, corporate
and other purposes.
In rendering its opinion, AH&H, among other things: (i) analyzed certain
publicly available financial statements and other information concerning WFM
and Amrion; (ii) analyzed certain internal financial statements and forecasts
and other financial and operating data concerning WFM and Amrion prepared by
the management of WFM and Amrion; (iii) analyzed certain forecasts and related
assumptions pertaining to WFM and Amrion obtained from third party research
analysis; (iv) discussed the past and current operations and financial
condition and the prospects of WFM and Amrion with the managements of WFM and
Amrion, respectively, and analyzed the pro forma impact of the Merger on WFM's
earnings per share; (v) reviewed the reported prices and trading activity of
WFM's Common Stock over the past three years; (vi) compared the financial
performance of Amrion and the prices and trading activity of Amrion's Common
Stock with that of certain other comparable publicly traded companies and
their securities; (vii) reviewed the financial terms, to the extent publicly
available, of certain comparable acquisition transactions; (viii) reviewed and
discussed with the senior management of WFM the strategic rationale for the
Merger and the benefits of the Merger to WFM; (ix) reviewed the Agreement and
Plan of Merger; and (x) performed such other studies, analyses and inquiries
and considered such other information as AH&H deemed relevant.
In connection with our review, we have not independently verified any of the
foregoing information provided to us and have relied, with your consent, on
its being complete and accurate in all material respects. With respect to any
financial forecasts reviewed relating to the prospects of WFM or Amrion, we
have assumed that they have been reasonably prepared on bases reflecting the
best currently available estimates and judgments of WFM's and Amrion's
management as to the future financial performance of WFM and Amrion. Our
Opinion is rendered on the basis of securities market conditions prevailing as
of the date hereof and on the conditions and prospects, financial and
otherwise, of WFM and Amrion as known to us on the date hereof. We have not
D-1
<PAGE>
conducted, nor have we received copies of, any independent evaluation or
appraisal of any of the assets of WFM or Amrion.
The opinion rendered by us pursuant hereto may be reproduced in full in
WFM's proxy statement or other materials distributed to WFM's and/or Amrion's
stockholders in connection with the Merger and may be referred to in the
minutes of the meetings of your Board of Directors.
You acknowledge that our opinion and any oral advice given by us to you in
connection with our engagement are intended solely for your use in connection
with the Merger, and your evaluation of the consideration to be paid in the
Merger, but does not constitute a recommendation to any stockholder or
shareholder to approve the Merger, and you agree that, except as provided in
the preceding paragraph, no such opinion or advice shall be reproduced,
disseminated, quoted or referred to at any time, in any manner, or for any
purpose, without our prior written consent (except to the extent otherwise
required by law).
We agree that any confidential or non-public information furnished to us by
you or at your direction in connection with our rendering services hereunder
will be used solely for the purpose of performing our services hereunder and
that such information will be kept confidential by us (except to the extent
otherwise required by law).
Based on the above factors considered by AH&H and subject to the foregoing,
it is our opinion that as of the date hereof, the consideration to be paid in
the Merger by WFM is fair to the stockholders of WFM from a financial point of
view.
Very truly yours,
ADAMS, HARKNESS & HILL, INC.
/s/ Russell W. Landon
By: _________________________________
RUSSELL W. LANDON SENIOR VICE
PRESIDENT
RWL:pgl
D-2
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article 2.02-1 of the Texas Business Corporation Act ("TBCA") provides for
indemnification of directors and officers in certain circumstances. Reference
is made to Article IX of the Bylaws of the registrant filed as an exhibit
hereto.
The Company's Restated Articles of Incorporation provide that no director
shall be liable to the registrant or its shareholders for an act or omission
in such capacity as a director, except for liability as a result of (i) a
breach of the director's duty of loyalty to the registrant or its
shareholders, (ii) an act or omission not in good faith or which involve
intentional misconduct or knowing violation of law, (iii) a transaction from
which such director derived an improper personal benefit, (iv) an act or
omission for which the liability of a director is expressly provided by law or
(v) an act related to an unlawful stock repurchase of payment of a dividend.
An insurance policy obtained by the registrant provides for indemnification
of officers and directors of the registrant and certain other persons against
liabilities and expenses incurred by any of them in certain stated proceedings
and under certain stated conditions.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<C> <S>
2.1 Agreement and Plan of Merger, dated June 9, 1997, by and among the
Registrant, Nutrient Acquisition Corp and Amrion, Inc. (included as
Appendix A to the Prospectus)
3.1 Restated Articles of Incorporation of the Registrant, as amended(1)
3.2 By-laws of the Registrant adopted May 23, 1995(3)
5.1 Opinion of Crouch & Hallett, L.L.P. as to certain corporate matters(6)
8.1 Opinion of Crouch & Hallett, L.L.P. as to certain tax matters(6)
10.1 1987 Stock Option and Incentive Plan for Employees(2)
10.2 1987 Stock Option Plan for Outside Directors(2)
10.3 Form of Retention Agreement between the executive officers of the
Registrant and the Registrant(2)
10.4 Form of amendment to Retention Agreement(1)
10.5 Amended and Restated Loan Agreement, dated December 27, 1994, by and
among the Registrant, the subsidiaries of the Registrant and Texas
Commerce Bank National Association(3)
10.6 First Amendment dated May 16, 1996 to Amended and Restated Loan
Agreement, dated December 27, 1994, by and among Registrant, the
subsidiaries of the Registrant and Texas Commerce Bank National
Association(4)
10.7 1992 Stock Option Plan for Team Members, as amended(1)
10.8 1992 Stock Option Plan for Outside Directors(1)
10.9 1993 Team Member Stock Purchase Plan(1)
10.10 Second Amended and Restated 1991 Stock Incentive Plan of Fresh Fields
Markets, Inc. with amendments thereto(5)
10.11 1994 Director Stock Option Plan of Fresh Fields Markets, Inc. with
amendments thereto(5)
10.12 Note Purchase Agreement, dated May 16, 1996, by and among the
registrant and the purchasers of $40 million of 7.29% Senior Notes due
May 16, 2006(4)
10.13 Form of Employment Agreement with Mark S. Crossen(6)
10.14 Form of Employment Agreement with Jeffrey S. Williams(6)
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <S>
10.15 Registration Rights Agreement among the registrant, Mark C. Crossen
and Jeffrey S. Williams(6)
23.1 Consent of KPMG Peat Marwick LLP(6)
23.2 Consent of Robertson, Stephens & Company(6)
23.3 Consent of Adams, Harkness & Hill, Inc.(6)
23.4 Consent of Piper Jaffray Inc.(6)
23.5 Consent of BDO Seidman, LLP(6)
23.6 Consent of Crouch & Hallett, L.L.P. (included in Exhibits 5.1 and 8.1)
24.1 Power of Attorney (included on page II-3)(6)
99.1 Form of proxy card for Amrion, Inc.(6)
99.2 Form of proxy card for the registrant(6)
</TABLE>
- --------
(1) Filed as an exhibit to Registration Statement on Form S-4 (No. 33-63824)
and incorporated herein by reference.
(2) Filed as an exhibit to Registration Statement on Form S-1 (No. 33-44214)
and incorporated herein by reference.
(3) Filed as an exhibit to registrant's Form 10-K for year ended September 24,
1995 and incorporated herein by reference.
(4) Filed as an exhibit to registrant's Form 10-K for the year ended September
29, 1996.
(5) Filed as an exhibit to Registration Statement on Form S-8 (No. 333-11273)
and incorporated herein by reference.
(6) Filed herewith.
ITEM 22. UNDERTAKINGS.
(a) The registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to section 13(a) or section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the Registration
Statement shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
(c) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 in this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
(d) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-2
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF AUSTIN AND STATE OF
TEXAS ON THE 14TH DAY OF JULY, 1997.
Whole Foods Market, Inc.
By /s/ Glenda Flanagan
-----------------------------------
GLENDA FLANAGAN,
VICE PRESIDENT AND CHIEF
FINANCIAL OFFICER
POWER OF ATTORNEY
Each of the undersigned hereby appoints John Mackey and Glenda Flanagan, and
each of them (with full power to act alone), as attorneys and agents for the
undersigned, with full power of substitution, for and in the name, place and
stead of the undersigned, to sign and file with the Securities and Exchange
Commission under the Securities Act of 1933 any and all amendments and
exhibits to this Registration Statement and any and all applications,
instruments and other documents to be filed with the Securities and Exchange
Commission pertaining to the registration of the securities covered hereby,
with full power and authority to do and perform any and all acts and things
whatsoever requisite or desirable.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON JULY 14TH, 1997.
SIGNATURE TITLE
/s/ John Mackey Chairman of the Board
- ------------------------------------- (Chief Executive
JOHN MACKEY Officer) and Director
/s/ Glenda Flanagan Vice President (Chief
- ------------------------------------- Financial and
GLENDA FLANAGAN Accounting Officer)
/s/ Dr. Cristina G. Banks Director
- -------------------------------------
DR. CRISTINA G. BANKS
/s/ Linda A. Mason Director
- -------------------------------------
LINDA A. MASON
/s/ David W. Dupree Director
- -------------------------------------
DAVID W. DUPREE
/s/ Dr. Ralph Z. Sorenson Director
- -------------------------------------
DR. RALPH Z. SORENSON
/s/ Dr. John Elstrott Director
- -------------------------------------
DR. JOHN ELSTROTT
/s/ Elizabeth Cogan Fascitelli Director
- -------------------------------------
ELIZABETH COGAN FASCITELLI
/s/ Avram J. Goldberg Director
- -------------------------------------
AVRAM J. GOLDBERG
/s/ Fred Lager Director
- -------------------------------------
FRED "CHICO" LAGER
II-3
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF CROUCH & HALLETT APPEARS HERE]
(214) 953-0053
July 14, 1997
Whole Foods Market, Inc.
601 N. Lamar Blvd., #300
Austin, Texas 78703
Gentlemen:
We have served as counsel for Whole Foods Market, Inc., a Texas corporation
(the "Company"), in connection with the Registration Statement on Form S-4
covering the issuance of shares (the "Shares") of Common Stock, no par value, of
the Company in connection with the merger of a wholly owned subsidiary of the
Company with and into Amrion, Inc. ("Amrion"). As a result of such merger, each
of the outstanding shares of common stock of Amrion will be converted into the
right to receive .87 shares of the Company's common stock, as more fully
described in the Agreement and Plan of Merger, dated as of June 9, 1997 (the
"Merger Agreement"), to which the Company and Amrion are parties.
We have examined such documents and questions of law as we have deemed
necessary to render the opinion expressed below. Based upon the foregoing, we
are of the opinion that the Shares, when issued and delivered in connection with
the terms of the Merger Agreement, will be duly and validly issued, fully paid
and non-assessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ Crouch & Hallett, L.L.P.
<PAGE>
EXHIBIT 8.1
[LETTERHEAD OF CROUCH & HALLETT APPEARS HERE]
(214) 953-0053
July 14, 1997
Whole Foods Market, Inc.
601 N. Lamar Blvd., Suite #300
Austin, Texas 78703
Gentlemen:
This will confirm that we have advised Whole Foods Market, Inc. and
Nutrient Acquisition Corp. (the "Subsidiary") with respect to certain federal
income tax aspects of the proposed merger of the Subsidiary into Amrion, Inc.
("Amrion"). Such advice formed the basis for the descriptions of the selected
federal income tax consequences of the proposed merger appearing under the
captions "Summary of Joint Proxy Statement/Prospectus--Federal Income Tax
Consequences" and "The Merger--Federal Income Tax Consequences" in the Joint
Proxy Statement/Prospectus included in the Registration Statement on Form S-4
(the "Registration Statement"), filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended. Such description does
not purport to discuss all possible federal income tax ramifications of the
proposed merger. With respect to the tax consequences which are discussed under
the captions "Summary of Proxy Statement/Prospectus--Federal Income Tax
Consequences" and "The Merger--Federal Income Tax Consequences" in the Joint
Proxy Statement/Prospectus, we are of the opinion that the discussion correctly
states the material federal income tax consequences of the proposed merger to
the shareholders of Amrion and the applicable principles of existing law.
We consent to the use of this letter as an exhibit to the Registration
Statement. By giving such consent, we do not thereby admit that we are experts
with respect to this letter, as that term is used in the Securities Act of 1933,
as amended, or the rules and regulations of the Securities and Exchange
Commission thereunder.
Very truly yours,
/s/Crouch & Hallett, L.L.P.
<PAGE>
EXHIBIT 10.13
EMPLOYMENT AND NON-COMPETITION AGREEMENT
THIS EMPLOYMENT AND NON-COMPETITION AGREEMENT, dated as of September ___,
1997, is by and between Whole Foods Market, Inc., a Texas corporation ("WFM"),
and Mark S. Crossen ("Team Member").
W I T N E S S E T H:
WHEREAS, Team Member has served as the chief executive officer of Amrion,
Inc., a Colorado corporation ("Amrion"); and
WHEREAS, WFM and Amrion are parties to an Agreement and Plan of Merger,
dated as of June 9, 1997 (the "Merger Agreement"), pursuant to which Amrion will
become a wholly-owned subsidiary of WFM; and
WHEREAS, the execution and delivery of this Agreement is a condition
precedent to the closing of the transactions contemplated by the Merger
Agreement; and
WHEREAS, Team Member and WFM desire to set forth the terms upon which Team
Member will join the employ of WFM;
NOW, THEREFORE, in consideration of the foregoing recital and of the mutual
covenants set forth below, the parties hereto agree as follows:
1. Employment. Team Member agrees to enter into the employment of WFM,
----------
and WFM agrees to employ Team Member, on the terms and conditions set forth
below. Team Member agrees during the term of his employment to devote his
business time (at least 40 hours per week) and his best efforts, skills and
abilities exclusively to the performance of his duties as stated in this
Agreement and to the furtherance of WFM's business. Team Member's duties shall
be to serve as chief executive officer of Amrion and to carry out the duties
customarily associated with such office, as may be described by the Board of
Directors of WFM. WFM shall provide Team Member with an office and such support
staff consistent with WFM's senior executives. Team Member shall use his best
efforts to preserve the business of WFM, its subsidiaries and affiliates, and
the goodwill of all employees, customers, suppliers and other persons having
business relations with WFM, its subsidiaries and affiliates.
It is contemplated that Team Member shall remain located in the
metropolitan area in which he resides on the date hereof; provided, however,
Team Member may from time to time be required to do such travelling as the Board
of Directors of WFM may reasonably request. If WFM should require Team Member
to relocate more than 30 miles from the Boulder, Colorado metropolitan area,
Team Member may terminate
<PAGE>
his employment and such termination shall be deemed to be a termination by WFM
without "just cause," as defined in Section 4 hereof.
2. Compensation and Benefits. WFM shall pay to Team Member as a base
-------------------------
salary the sum of $170,000 per year during the term of this Agreement, payable
in accordance with WFM's normal payroll procedures, subject to all appropriate
withholdings. Increases to such base salary shall be determined on an annual
basis by the WFM Compensation Comittee in accordance with the WFM executive
compensation policy and, in any event, shall not be less than the base salary
granted to WFM's Chief Executive Officer. Team Member shall also be entitled to
receive a bonus comparable to that paid to similarly situated senior executives
of WFM and its subsidiaries, subject to the allowed "salary cap" amount under
the WFM executive compensation plan. Team Member shall be entitled to
participate in employee benefit programs of WFM in the same manner as similarly
situated senior executives of WFM and its subsidiaries. Nothwithstanding the
foregoing, Team Member shall be entitled to 12 weeks of paid vacation time
during the first year of the term of his employment and eight weeks during each
of the succeeding two years of the term of his employment hereunder.
3. Stock Options. At the time of each WFM annual stakeholders' meeting
-------------
during the term of this Agreement (commencing with the 1998 stakeholders'
meeting tentatively scheduled for March 1998), Team Member shall receive a stock
option grant of such number of shares of WFM common stock as is comparable to
that granted to the executive officers of WFM.
4. Employment Term; Severance. The term of Team Member's employment under
--------------------------
this Agreement shall begin on the date of this Agreement and shall continue
until the earliest of (a) the date WFM terminates such employment for "just
cause" upon three days' written notice to Team Member, (b) the death or
disability of Team Member, or (c) the third anniversary date of this Agreement.
For purposes of this Agreement, "just cause" for termination shall mean (i) the
performance of duties in a manner which constitutes gross negligence or willful
misconduct by the Team Member or (ii) the commission by Team Member of any act
which materially and adversely affects WFM's business reputation.
5. Nondisclosure Agreement. Team Member, during the term of employment
-----------------------
under this Agreement, shall have continuing access to various trade secrets and
proprietary and confidential information consisting of, but not limited to, non-
public financial information, processes, computer programs, compilations of non-
public business information, records, sales procedures, customer requirements,
pricing techniques, customer lists, methods of doing business and other
confidential information (collectively referred to as the "Trade Secrets"),
which are owned by Amrion. Team Member acknowledges and agrees that the Trade
Secrets are valuable,
2
<PAGE>
special and unique assets of Amrion, the disclosure of which could cause
substantial injury and loss of profits and goodwill to WFM. Team Member shall
not use in any way or disclose any of the Trade Secrets, directly or indirectly,
either during the term of this Agreement or at any time thereafter, except as
required in the course of his employment under this Agreement. All files,
records, documents, information, data and similar items relating to the business
of Amrion, whether prepared by Team Member or otherwise coming into his
possession, shall remain the exclusive property of Amrion and shall not be
removed from the premises of Amrion under any circumstances without the prior
written consent of the Board of Directors of WFM (except in the ordinary course
of business during Team Member's period of active employment under this
Agreement), and in any event shall be promptly delivered to Amrion upon
termination of this Agreement.
6. Noncompetition Agreement. Team Member acknowledges and agrees that the
------------------------
experience he will gain while employed and the information he will acquire
regarding the Trade Secrets will enable him to injure Amrion if he should
compete with Amrion in a business that is competitive with the business
conducted or to be conducted by Amrion. For these reasons, Team Member hereby
agrees that, except as required hereunder or permitted by WFM, Team Member shall
not, during the "Restricted Period" (as defined herein), directly or indirectly,
either as an individual, a partner or a joint venturer, or in any other
capacity, (i) invest (other than investments in publicly-owned companies which
constitute not more than 1% of the voting securities of any such company) or
engage in any "Restricted Business" (as defined herein) or (ii) accept
employment with or render services to a competitor of Amrion as a director,
officer, agent, employee or consultant. As used herein, the "Restricted Period"
shall mean the greater of (i) the period of Team Member's employment with WFM
and continuing three years after such employment terminates or (ii) six years
from the date hereof; and the "Restricted Business" shall mean the development,
production or marketing of high quality nutriceuticals, nutritional supplements,
herbs, herbal formulas, vitamins, minerals and homeopathic medicines. As
separate and independent consideration for Team Member's agreement to the
provisions of this Section 6, WFM shall pay (provided that Team Member is not in
default in the compliance with Sections 5, 6 and 7 of this Agreement) to Team
Member the sum of $300,000 on the first anniversary date of this Agreement and
the sum of $300,000 on each of the second and third anniversary dates of this
Agreement, the sum of $350,000 on each of the fourth and fifth succeeding
anniversary dates of this Agreement and the sum of $400,000 on the sixth
anniversary date of this Agreement.
7. Nonemployment Agreement. For a period of three years after the
-----------------------
termination or cessation of his employment with WFM for any reason whatsoever,
Team Member shall not, on his own behalf or on behalf of any other person,
partnership, association, corporation or other entity, hire or solicit or in any
manner attempt to influence or induce any employee of WFM or its affiliates to
leave the
3
<PAGE>
employment of WFM or its affiliates, nor shall he use or disclose to any person,
partnership, association, corporation or other entity any information obtained
while an employee of WFM concerning the names and addresses of WFM's employees.
8. Severability. The parties hereto intend all provisions of Sections 5,
------------
6 and 7 hereof to be enforced to the fullest extent permitted by law.
Accordingly, should a court of competent jurisdiction determine that the scope
of any provision of Sections 5, 6 or 7 hereof is too broad to be enforced as
written, the parties intend that the court reform the provision to such narrower
scope as it determines to be reasonable and enforceable. In addition, however,
Team Member agrees that the noncompetition agreements, nondisclosure agreements
and nonemployment agreements set forth above each constitute separate agreements
independently supported by good and adequate consideration and shall be
severable from the other provisions of, and shall survive, this Agreement. The
existence of any claim or cause of action of Team Member against WFM or Amrion,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by WFM of the covenants and agreements of Team Member
contained in the noncompetition, nondisclosure or nonemployment agreements. If
any provision of this Agreement is held to be illegal, invalid or unenforceable
under present or future laws effective during the term hereof, such provision
shall be fully severable and this Agreement shall be construed and enforced as
if such illegal, invalid or unenforceable provision never comprised a part of
this Agreement; and the remaining provisions of this Agreement shall remain in
full force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom. Furthermore, in lieu of
such illegal, invalid or unenforceable provision, there shall be added
automatically as part of this Agreement, a provision as similar in its terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
9. Notices. Any notices, consents, demands, requests, approvals and other
-------
communications to be given under this Agreement by either party to the other
shall be deemed to have been duly given if given in writing and personally
delivered or sent by mail (registered or certified) or by a recognized "next-day
delivery service" to (i) in the case of WFM, the address set forth in the Merger
Agreement, and (ii) in the case of Team Member, the address set forth in the
employment records of WFM. Notices delivered personally shall be deemed
communicated as of actual receipt; mailed notices shall be deemed communicated
as of three days after mailing.
10. Entire Agreement. This Agreement supersedes any and all other
----------------
agreements, either oral or written, between the parties hereto with respect to
the subject matter hereof and contains all of the covenants and agreements
between the parties with respect thereto.
4
<PAGE>
11. Modification. No change or modification of this Agreement shall be
------------
valid or binding upon the parties hereto, nor shall any waiver of any term or
condition in the future be so binding, unless such change or modification or
waiver shall be in writing and signed by the parties hereto.
12. Governing Law; Arbitration. This Agreement shall be governed by, and
--------------------------
construed in accordance with, the laws of the State of Texas. Any controversy or
dispute among the parties arising in connection with this Agreement shall be
submitted to a panel of three neutral arbitrators and finally settled by
arbitration in accordance with the commercial arbitration rules and procedures
of the American Arbitration Association. Each of the disputing parties shall
appoint one arbitrator, and these two arbitrators shall independently select a
third arbitrator. Arbitration shall take place in Austin, Texas or such other
location as the arbitrators may select. The prevailing party in such arbitration
shall be entitled to the award of all costs and attorneys' fees in connection
with such action. Any award for monetary damages resulting from nonpayment of
sums due hereunder shall bear interest from the date on which such sums were
originally due and payable. Judgment upon the award rendered may be entered in
any court having jurisdiction or application may be made to such court for
judicial acceptance of the award and an order of enforcement, as the case may
be.
13. Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall constitute an original, but all of which shall constitute one
document.
14. Costs. If any action at law or in equity is necessary to enforce or
-----
interpret the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorneys' fees, costs and necessary disbursements in addition to any
other relief to which he or it may be entitled.
15. Assignment. WFM shall have the right to assign this Agreement to its
----------
successors or assigns. The terms "successors" and "assigns" shall include any
person, corporation, partnership or other entity that buys all or substantially
all of WFM's assets or all of its stock, or with which WFM merges or
consolidates. The rights, duties and benefits to Team Member hereunder are
personal to him, and no such right or benefit may be assigned by him; provided,
however, that if Team Member dies prior to the expiration of the term of
employment, any monies that may be due him from WFM under this Agreement as of
the date of his death shall be paid to his estate.
16. Binding Effect. This Agreement shall be binding upon the parties
--------------
hereto, together with their respective executors, administrators, successors,
personal representatives, heirs and assigns.
5
<PAGE>
[signatures on following page]
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
------------------------------------
Mark S. Crossen
WHOLE FOODS MARKET, INC.
By:
---------------------------------
7
<PAGE>
EXHIBIT 10.14
EMPLOYMENT AND NON-COMPETITION AGREEMENT
THIS EMPLOYMENT AND NON-COMPETITION AGREEMENT, dated as of September ___,
1997, is by and between Whole Foods Market, Inc., a Texas corporation ("WFM"),
and Jeffrey S. Williams ("Team Member").
W I T N E S S E T H:
WHEREAS, Team Member has served as the chief financial officer of Amrion,
Inc., a Colorado corporation ("Amrion"); and
WHEREAS, WFM and Amrion are parties to an Agreement and Plan of Merger,
dated as of June 9, 1997 (the "Merger Agreement"), pursuant to which Amrion will
become a wholly-owned subsidiary of WFM; and
WHEREAS, the execution and delivery of this Agreement is a condition
precedent to the closing of the transactions contemplated by the Merger
Agreement; and
WHEREAS, Team Member and WFM desire to set forth the terms upon which Team
Member will join the employ of WFM;
NOW, THEREFORE, in consideration of the foregoing recital and of the mutual
covenants set forth below, the parties hereto agree as follows:
1. Employment. Team Member agrees to enter into the employment of WFM,
----------
and WFM agrees to employ Team Member, on the terms and conditions set forth
below. Team Member agrees during the term of his employment to devote his
business time (at least 40 hours per week) and his best efforts, skills and
abilities exclusively to the performance of his duties as stated in this
Agreement and to the furtherance of WFM's business. Team Member's duties shall
be to serve as chief financial officer of Amrion and to carry out the duties
customarily associated with such office, as may be described by the Board of
Directors of WFM. Team Member shall use his best efforts to preserve the
business of WFM, its subsidiaries and affiliates, and the goodwill of all
employees, customers, suppliers and other persons having business relations with
WFM, its subsidiaries and affiliates.
2. Compensation and Benefits. WFM shall pay to Team Member as a base
-------------------------
salary the sum of $120,000 per year during the term of this Agreement, payable
in accordance with WFM's normal payroll procedures, subject to all appropriate
withholdings. Increases to such base salary shall be determined on an annual
basis. Team Member shall also be entitled to receive a bonus determined in
accordance with Amrion's historically applied calculations and parameters,
subject to the allowed "salary cap" amount under the WFM compensation plan.
Team Member shall be
<PAGE>
entitled to participate in employee benefit programs of WFM in the same manner
as similarly situated executives of WFM and its subsidiaries. At the discretion
of Amrion's Chief Executive Officer, additional paid time off may be granted to
Team Members in the first year following the date of this Agreement.
3. Stock Options. At the time of each WFM annual stakeholders' meeting
-------------
during the term of this Agreement (commencing with the 1998 stakeholders'
meeting tentatively scheduled for March 1998), Team Member shall receive a stock
option grant of such number of shares of WFM common stock as is comparable to
that granted to similarly situated team members of other subsidiaries of WFM.
4. Employment Term; Severance. The term of Team Member's employment under
--------------------------
this Agreement shall begin on the date of this Agreement and shall continue
until the earliest of (a) the date WFM terminates such employment for "just
cause" upon three days' written notice to Team Member, (b) the death or
disability of Team Member, or (c) the third anniversary date of this Agreement.
For purposes of this Agreement, "just cause" for termination shall mean (i) the
performance of duties in a manner which constitutes gross negligence or willful
misconduct by the Team Member or (ii) the commission by Team Member of any act
which materially and adversely affects WFM's business reputation.
It is contemplated that Team Member shall remain located in the
metropolitan area in which he resides on the date hereof; provided, however,
Team Member may from time to time be required to do such travelling as the Board
of Directors of WFM may reasonably request. If WFM should require Team Member
to relocate more than 30 miles from the Boulder, Colorado metropolitan area,
Team Member may terminate his employment and such termination shall be deemed to
be a termination by WFM without "just cause," as defined in this Section 4.
5. Nondisclosure Agreement. Team Member, during the term of employment
-----------------------
under this Agreement, shall have continuing access to various trade secrets and
proprietary and confidential information consisting of, but not limited to, non-
public financial information, processes, computer programs, compilations of non-
public business information, records, sales procedures, customer requirements,
pricing techniques, customer lists, methods of doing business and other
confidential information (collectively referred to as the "Trade Secrets"),
which are owned by Amrion. Team Member acknowledges and agrees that the Trade
Secrets are valuable, special and unique assets of Amrion, the disclosure of
which could cause substantial injury and loss of profits and goodwill to WFM.
Team Member shall not use in any way or disclose any of the Trade Secrets,
directly or indirectly, either during the term of this Agreement or at any time
thereafter, except as required in the course of his employment under this
Agreement. All files, records, documents, information, data
2
<PAGE>
and similar items relating to the business of Amrion, whether prepared by Team
Member or otherwise coming into his possession, shall remain the exclusive
property of Amrion and shall not be removed from the premises of Amrion under
any circumstances without the prior written consent of the Board of Directors of
WFM (except in the ordinary course of business during Team Member's period of
active employment under this Agreement), and in any event shall be promptly
delivered to Amrion upon termination of this Agreement.
6. Noncompetition Agreement. Team Member acknowledges and agrees that the
------------------------
experience he will gain while employed and the information he will acquire
regarding the Trade Secrets will enable him to injure Amrion if he should
compete with Amrion in a business that is competitive with the business
conducted or to be conducted by Amrion. For these reasons, Team Member hereby
agrees that, except as required hereunder or permitted by WFM, Team Member shall
not, during the "Restricted Period" (as defined herein), directly or indirectly,
either as an individual, a partner or a joint venturer, or in any other
capacity, (i) invest (other than investments in publicly-owned companies which
constitute not more than 1% of the voting securities of any such company) or
engage in any "Restricted Business" (as defined herein) or (ii) accept
employment with or render services to a competitor of Amrion as a director,
officer, agent, employee or consultant. As used herein, the "Restricted Period"
shall mean the greater of (i) the period of Team Member's employment with WFM
and continuing three years after such employment terminates or (ii) four years
from the date hereof; and the "Restricted Business" shall mean the development,
production or marketing of high quality nutriceuticals, nutritional supplements,
herbs, herbal formulas, vitamins, minerals and homeopathic medicines. As
separate and independent consideration for Team Member's agreement to the
provisions of this Section 6, WFM shall pay (provided that Team Member is not in
default in the compliance with Sections 5, 6 and 7 of this Agreement) to Team
Member the sum of $50,000 on the first anniversary date of this Agreement and
the sum of $50,000 on each of the second and third anniversary dates of this
Agreement.
7. Nonemployment Agreement. For a period of three years after the
-----------------------
termination or cessation of his employment with WFM for any reason whatsoever,
Team Member shall not, on his own behalf or on behalf of any other person,
partnership, association, corporation or other entity, hire or solicit or in any
manner attempt to influence or induce any employee of WFM or its affiliates to
leave the employment of WFM or its affiliates, nor shall he use or disclose to
any person, partnership, association, corporation or other entity any
information obtained while an employee of WFM concerning the names and addresses
of WFM's employees.
8. Severability. The parties hereto intend all provisions of Sections 5,
------------
6 and 7 hereof to be enforced to the fullest extent permitted by law.
Accordingly, should
3
<PAGE>
a court of competent jurisdiction determine that the scope of any provision of
Sections 5, 6 or 7 hereof is too broad to be enforced as written, the parties
intend that the court reform the provision to such narrower scope as it
determines to be reasonable and enforceable. In addition, however, Team Member
agrees that the noncompetition agreements, nondisclosure agreements and
nonemployment agreements set forth above each constitute separate agreements
independently supported by good and adequate consideration and shall be
severable from the other provisions of, and shall survive, this Agreement. The
existence of any claim or cause of action of Team Member against WFM or Amrion,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by WFM of the covenants and agreements of Team Member
contained in the noncompetition, nondisclosure or nonemployment agreements. If
any provision of this Agreement is held to be illegal, invalid or unenforceable
under present or future laws effective during the term hereof, such provision
shall be fully severable and this Agreement shall be construed and enforced as
if such illegal, invalid or unenforceable provision never comprised a part of
this Agreement; and the remaining provisions of this Agreement shall remain in
full force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance here from. Furthermore, in lieu of
such illegal, invalid or unenforceable provision, there shall be added
automatically as part of this Agreement, a provision as similar in its terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
9. Notices. Any notices, consents, demands, requests, approvals and other
-------
communications to be given under this Agreement by either party to the other
shall be deemed to have been duly given if given in writing and personally
delivered or sent by mail (registered or certified) or by a recognized "next-day
delivery service" to (i) in the case of WFM, the address set forth in the Merger
Agreement, and (ii) in the case of Team Member, the address set forth in the
employment records of WFM. Notices delivered personally shall be deemed
communicated as of actual receipt; mailed notices shall be deemed communicated
as of three days after mailing.
10. Entire Agreement. This Agreement supersedes any and all other
----------------
agreements, either oral or written, between the parties hereto with respect to
the subject matter hereof and contains all of the covenants and agreements
between the parties with respect thereto.
11. Modification. No change or modification of this Agreement shall be
------------
valid or binding upon the parties hereto, nor shall any waiver of any term or
condition in the future be so binding, unless such change or modification or
waiver shall be in writing and signed by the parties hereto.
4
<PAGE>
12. Governing Law; Arbitration. This Agreement shall be governed by, and
--------------------------
construed in accordance with, the laws of the State of Texas. Any controversy
or dispute among the parties arising in connection with this Agreement shall be
submitted to a panel of three arbitrators and finally settled by arbitration in
accordance with the commercial arbitration rules of the American Arbitration
Association. Each of the disputing parties shall appoint one arbitrator, and
these two arbitrators shall independently select a third arbitrator.
Arbitration shall take place in Austin, Texas or such other location as the
arbitrators may select. The prevailing party in such arbitration shall be
entitled to the award of all costs and attorneys' fees in connection with such
action. Any award for monetary damages resulting from nonpayment of sums due
hereunder shall bear interest from the date on which such sums were originally
due and payable. Judgment upon the award rendered may be entered in any court
having jurisdiction or application may be made to such court for judicial
acceptance of the award and an order of enforcement, as the case may be.
13. Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall constitute an original, but all of which shall constitute one
document.
14. Costs. If any action at law or in equity is necessary to enforce or
-----
interpret the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorneys' fees, costs and necessary disbursements in addition to any
other relief to which he or it may be entitled.
15. Assignment. WFM shall have the right to assign this Agreement to its
----------
successors or assigns. The terms "successors" and "assigns" shall include any
person, corporation, partnership or other entity that buys all or substantially
all of WFM's assets or all of its stock, or with which WFM merges or
consolidates. The rights, duties and benefits to Team Member hereunder are
personal to him, and no such right or benefit may be assigned by him; provided,
however, that if Team Member dies prior to the expiration of the term of
employment, any monies that may be due him from WFM under this Agreement as of
the date of his death shall be paid to his estate.
16. Binding Effect. This Agreement shall be binding upon the parties
--------------
hereto, together with their respective executors, administrators, successors,
personal representatives, heirs and assigns.
[signatures on following page]
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
------------------------------------
Jeffrey S. Williams
WHOLE FOODS MARKET, INC.
By:
---------------------------------
6
<PAGE>
EXHIBIT 10.15
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("Agreement") is made and entered into
as of June 9, 1997, by and among Mark S. Crossen, Jeffrey S. Williams (each a
"Holder" and collectively the "Holders"), and Whole Foods Market, Inc., a Texas
corporation ("Company").
WHEREAS, pursuant to the Agreement and Plan of Merger, of even date
herewith (the "Merger Agreement"), Company has agreed to provide the
registration rights set forth in this Agreement.
The parties hereby agree as follows:
1. Definitions. As used in this Agreement, the following capitalized
-----------
terms shall have the following meanings:
Board: The Board of Directors of Company.
-----
Common Stock: The Common Stock of Company.
------------
Majority in Interest of the Holders: Holders owning at least 51% of the
-----------------------------------
Registrable Securities then outstanding and owned by all Holders.
Misstatement: An untrue statement of a material fact or an omission to
------------
state a material fact required to be stated in a Registration Statement or
Prospectus or necessary to make the statements in a Registration Statement,
Prospectus or preliminary prospectus not misleading.
Person: A natural person, partnership, corporation, business trust,
------
association, joint venture or other entity or a government or agency or
political subdivision thereof.
Prospectus: The prospectus included in any Registration Statement, as
----------
supplemented by any and all prospectus supplements and as amended by any and all
post-effective amendments and including all material incorporated by reference
in such prospectus.
Publication Date: The date on which Company publishes results of operations
----------------
covering at least 30 days of combined post-merger operations of Amrion, Inc. and
Company, as contemplated by the Merger Agreement.
Registration: The shelf registration described in Section 2(a) hereof or a
------------
piggyback registration described in Section 2(b) hereof.
<PAGE>
Registration Expenses: The out-of-pocket expenses of a Registration,
---------------------
including:
(1) all registration and filing fees;
(2) fees and expenses of compliance with securities or blue sky laws
(including fees and disbursements of counsel for the underwriters in connection
with blue sky qualifications of the Registrable Securities);
(3) printing, messenger, telephone and delivery expenses;
(4) fees and disbursements of counsel for Company; and
(5) fees and disbursements of all independent certified public accountants
of Company incurred specifically in connection with such Registration.
Registrable Securities: (a) The shares of Common Stock received by the
----------------------
Holders pursuant to the transactions contemplated by the Merger Agreement and
(b) any securities issued or issuable with respect to such shares by way of a
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or reorganization or similar
transaction; provided that any such share or security shall be deemed to be
--------
Registrable Securities only if and so long as it is a Transfer Restricted
Security.
Registration Statement: Any registration statement which covers
----------------------
Registrable Securities pursuant to the provisions of this Agreement, including
the Prospectus included in such registration statement, amendments (including
post-effective amendments) and supplements to such registration statement, and
all exhibits to and all material incorporated by reference in such registration
statement.
Securities Act: The Securities Act of 1933, as from time to time amended.
--------------
SEC: The Securities and Exchange Commission.
---
Transfer Restricted Security: A security that has not been sold to or
----------------------------
through a broker, dealer or underwriter in a public distribution or other public
securities transaction or sold in a transaction exempt from the registration and
prospectus delivery requirements of the Securities Act under Rule 144(k)
promulgated thereunder (or any successor rule other than Rule 144A). The
foregoing notwithstanding, a security shall remain a Transfer Restricted
Security until (i) all stop transfer instructions or notations and restrictive
legends with respect to such security are eligible to be removed and (ii) the
Holder of such security has received an opinion of counsel to Company, to the
effect that such shares in such Holder's hands are freely transferable
2
<PAGE>
in any public or private transaction without registration under the Securities
Act (or such Holder has waived receipt of such opinion).
Underwritten Registration or Underwritten Offering: A registration in
------------------------- ---------------------
which securities of Company are sold to an underwriter for distribution to the
public.
2. Registrations.
-------------
(a) Shelf Registration. Upon the request of a Majority in Interest of the
------------------
Holders at any time (but only on one occasion) after the Publication Date,
Company will use its best efforts to promptly file and cause to become effective
an appropriate Registration Statement under the Securities Act covering such
number of Registrable Securities as the Holders shall request, which
Registration Statement will, if requested by Holders, provide for delayed or
continuous offering of Registrable Securities pursuant to Rule 415 under the
Securities Act (or any similar rule then in effect). If requested by Holders,
and provided such registration is with respect to at least 650,000 shares of
Common Stock, the public offering or distribution of Registrable Securities
shall be pursuant to a firm commitment underwriting with underwriters, who shall
then be selected by Company. In such case, Company shall enter into an
underwriting agreement containing warranties and agreements not substantially
different from those customarily made by an issuer in underwriting agreements
with respect to secondary distributions.
(b) Piggyback Registrations. Each time Company decides to file a
-----------------------
Registration Statement under the Securities Act (other than on Forms S-4 or S-8
or any successor form for the registration of securities issued or to be issued
in connection with a merger or acquisition or employee benefit plan, unless
Company otherwise registers Common Stock for sale from time to time pursuant to
registration rights granted to other holders of Common Stock) covering the offer
and sale by it or other holders of Company's securities who may demand
registration of such securities of any of its securities for money, Company
shall give written notice thereof to all Holders of Registrable Securities.
Company shall include in such Registration Statement such shares of Registrable
Securities for which it has received written requests to register such shares
within 30 days after such written notice has been given. If the Registration
Statement is to cover an Underwritten Offering, such Registrable Securities
shall be included in the underwriting on the same terms and conditions as the
securities otherwise being sold through the underwriters.
Company may decline to file a Registration Statement pursuant to this
Section 2(b) after giving notice to any Holder, or withdraw a Registration
Statement after filing pursuant to this Section 2(b) and after such notice, but
prior to the effectiveness
3
<PAGE>
thereof, provided, that Company shall promptly notify each Holder in writing of
--------
any such action.
3. Registration Procedures. If and whenever Company is required to
-----------------------
register Registrable Securities, Company will use its best efforts to effect
such registration to permit the sale of such Registrable Securities in
accordance with the intended plan of distribution thereof, and pursuant thereto
Company will as expeditiously as possible:
(a) prepare and file with the SEC within 20 days after a request for
registration a Registration Statement on such form as shall be available for
sale of the Registrable Securities in accordance with the intended method or
methods of distribution thereof with respect to such Registrable Securities and
use its best efforts to cause such Registration Statement to become effective
and remain effective until the Registrable Securities covered by such
Registration Statement have been sold;
(b) prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement, and such supplements to the
Prospectus, as may be requested by any Holder of Registrable Securities or any
underwriter of Registrable Securities or as may be required by the rules,
regulations or instructions applicable to the registration form used by Company
or by the Securities Act or rules and regulations thereunder to keep the
Registration Statement effective until all Registrable Securities covered by
such Registration Statement are sold in accordance with the intended plan of
distribution set forth in such Registration Statement or supplement to the
Prospectus;
(c) deliver to each selling Holder of Registrable Securities and the
underwriters, if any, without charge, as many copies of each Prospectus (and
each preliminary prospectus) as such Persons may reasonably request (Company
hereby consenting to the use of each such Prospectus (or preliminary prospectus)
by each of the selling Holders of Registrable Securities and the underwriters,
if any, in connection with the offering and sale of the Registrable Securities
covered by such Prospectus (or preliminary prospectus);
(d) provide to Holders copies of all documents (including without
limitation, any registration statement, prospectus, supplement, amendment,
exhibit to a registration statement or document incorporated by reference to any
of the foregoing) to be filed with the SEC at least five business days prior to
such filing;
(e) take all actions, enter into such agreements and provide such
information reasonably necessary to effect the registration and sale of the
Registered Securities contemplated hereby; and
4
<PAGE>
(f) prior to any public offering of Registrable Securities, register or
qualify or cooperate with the selling Holders of Registrable Securities, the
underwriters, if any, and their respective counsel in connection with the
registration or qualification of such Registrable Securities for offer and sale
under the securities or blue sky laws of such jurisdictions as such selling
Holders or underwriters may designate in writing and do anything else necessary
or advisable to enable the disposition in such jurisdictions of the Registrable
Securities covered by the Registration Statement; provided that Company shall
--------
not be required to qualify generally to do business in any jurisdiction where it
is not then so qualified or to take any action which would subject it to general
service of process in any such jurisdiction where it is not then so subject.
4. Registration Expenses. The Registration Expenses of all Registrations
---------------------
shall be borne by Company, except that the fees and disbursements of any counsel
to the selling security holders shall be paid by such holders if such security
holders are unwilling to be represented by counsel to Company.
5. Requirements for Participation in Underwritten Offerings. No Person
--------------------------------------------------------
may participate in any Underwritten Offering pursuant to a Registration
initiated by Company hereunder unless such Person (a) agrees to sell such
Person's securities on the basis provided in any underwriting arrangements
approved by Company and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements; provided, that the terms of
--------
such underwriting arrangement in connection with the sale of Registrable
Securities shall be no less favorable than the terms afforded to any other
holder of securities participating in the Underwritten Offering.
6. Suspension of Sales. Upon receipt of written notice from Company that
-------------------
a Registration Statement or Prospectus contains a Misstatement, each Holder of
Registrable Securities shall forthwith discontinue disposition of Registrable
Securities until such Holder has received copies of a supplemented or amended
Prospectus, or until such Holder is advised in writing by Company that the use
of the Prospectus may be resumed, and, if so directed by Company, such Holder
shall deliver to Company (at Company's expense) all copies, other than permanent
file copies then in such Holder's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such notice.
7. Indemnification; Contribution.
-----------------------------
(a) Indemnification by Company. Company agrees to indemnify, to the full
--------------------------
extent permitted by law, each holder of Registrable Securities, its officers,
directors, employees and agents and each Person who controls such holder (within
the meaning
5
<PAGE>
of the Securities Act), and any investment advisor thereof or agent therefor
against all losses, claims, damages, liabilities and expenses (including
reasonable costs of investigation and legal expenses) arising out of or based
upon any untrue or alleged untrue statement of a material fact contained in any
registration statement, prospectus or preliminary prospectus, or any amendment
or supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein (in the case of a prospectus or preliminary prospectus, in light of the
circumstances under which they are made) not misleading, except insofar as the
same are arising out of or based upon or contained in any information with
respect to such holder furnished in writing to Company by such holder expressly
for use therein. Company also agrees to reimburse, to the full extent permitted
by law, each such holder and each such officer, director, and controlling person
for any legal or other expenses reasonably incurred by such holder or such
officer, director or controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action to the extent that
the same are not incurred in connection with the proviso of the preceding
sentence. This indemnity will be in addition to any liability which Company may
otherwise have.
(b) Indemnification by Holders of Registrable Securities. In connection
----------------------------------------------------
with any registration statement in which a holder of Registrable Securities is
participating, each such holder will furnish to Company, in writing, such
information and affidavits with respect to such holder as Company reasonably
requests for use in connection with any such registration statement or
prospectus and agrees to indemnify, to the extent permitted by law, Company, its
directors, officers, employees and agents and each Person who controls Company
(within the meaning of the Securities Act), and any investment advisor thereof
or agent therefor against any losses, claims, damages, liabilities and expenses
resulting from any untrue statement of a material fact or any omission of a
material fact required to be stated in the registration statement or prospectus
or any amendment thereof or supplement thereto or necessary to make the
statements therein (in the case of a prospectus, in light of the circumstances
under which they were made) not misleading, to the extent, but only to the
extent, that such untrue statement or omission is contained in or failed to be
contained in any information or affidavit with respect to such holder so
furnished in writing by such holder specifically for inclusion therein or
resulting from the violation of applicable securities laws of such holder or its
agents in connection with the sale of the Registrable Securities. In no event
shall the liability of any participating holder hereunder be greater in amount
than the dollar amount of the proceeds received by such holder upon the sale of
the Registrable Securities giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
--------------------------------------
indemnification hereunder agrees to give prompt written notice to the
indemnifying
6
<PAGE>
party after the receipt by such Person of any written notice of the commencement
of any action, suit or proceeding against such Person or investigation thereof
made in writing for which such Person will claim indemnification or contribution
pursuant to this Agreement and, permit the indemnifying party to assume the
defense of such claim with counsel reasonably satisfactory to such indemnified
party. If the indemnifying party is not entitled to, or does not, assume the
defense of a claim, it will not be obligated to pay the fees and expenses of
more than one counsel with respect to such claim. No indemnified party will be
required to consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from any liability in respect
of such claim or litigation. The indemnifying party will not be subject to any
liability for any settlement made without its consent, which shall not be
unreasonably withheld.
(d) Contribution. If the indemnification provided for in this Section 7
------------
from the indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to
therein by reason other than that set forth in the exception in the first
sentence of 7(a) above, then the indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and indemnified parties in connection with the actions or
inactions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
fault of such indemnifying party and indemnified parties shall be determined by
reference to, among other things, whether any act or question, including any
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact, has been made by, or relates to information
supplied by, such indemnifying party or indemnified parties, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such action. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in 7(c), any legal or
other fees or expenses reasonably incurred by such party in connection with any
investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 7(d) were determined by pro rata
--- ----
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 7(d), an indemnifying holder
shall not be required to contribute any amounts in excess of the amount by which
the total price at which the Registrable Securities were sold by such
indemnifying holder and distributed to the public exceeds
7
<PAGE>
the amount of any damages which such indemnifying holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
If indemnification is available under this Section 7, the indemnifying
parties shall indemnify each indemnified party to the full extent provided in
Sections 7(a) and (b) without regard to the relative fault of said indemnifying
party or indemnified party or any other equitable consideration provided for in
this Section 7(d).
8. Rule 144. Company covenants that it will file all reports required to
--------
be filed by it under the Securities Act and the Securities Exchange Act and the
rules and regulations adopted by the SEC thereunder (or, if it is not required
to file such reports, it will make publicly available such information as will
enable the holders of Registrable Securities to sell any Registrable Securities
held by them without registration under the Securities Act); and it will take
such further action as any holder of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such holder to
sell Registrable Securities without registration under the Securities Act within
the limitation of the exemptions provided by (a) Rule 144 under the Securities
Act, as such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the SEC. Upon the reasonable request of any
holder of Registrable Securities, Company will deliver to such holder a written
statement as to filings made by Company with the SEC.
9. Miscellaneous.
-------------
(a) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, telex, telecopier or air courier guaranteeing overnight delivery:
(i) if to a Holder of Registrable Securities, at the most current address set
forth in Company's stock transfer books; and (ii) if to Company, at its address
referenced in the Merger Agreement. All such notices and communications shall
be deemed to have been duly given: at the time delivered by hand (including by
telecopy), if personally delivered; five business days after being deposited in
the mail, postage prepaid, if mailed; when answered back, if telexed; when
receipt acknowledged, if to an air courier guaranteeing overnight delivery.
Company shall promptly provide a list of the most current addresses of the
Holders of Registrable Securities given to it in accordance with the provisions
hereof to any such Holder for the purpose of enabling such Holder to communicate
with other Holders in connection with this Agreement.
8
<PAGE>
(b) Successors and Assigns. This Agreement shall inure to the benefit of
----------------------
and be binding upon the successors and assigns of the parties hereto.
(c) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(d) Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Texas.
(e) Severability. In the event that any one or more of the provisions
------------
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(f) No Inconsistent Agreements. Company will not hereafter enter into any
--------------------------
agreement granting registration rights with respect to its securities unless the
registration rights are not otherwise in conflict or inconsistent with or more
favorable than the rights of holders of Registrable Securities in this
Agreement.
(Signature Page to Follow)
9
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
WHOLE FOODS MARKET, INC.
By: /s/ John Mackey
------------------------------------------
John Mackey
Chief Executive Officer
/s/ Mark S. Crossen
---------------------------------------------
Mark S. Crossen
/s/ Jeffrey Williams
---------------------------------------------
Jeffrey S. Williams
10
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
- --------------------------------------------------------------------------------
The Board of Directors
Whole Foods Market, Inc.:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Austin, Texas
July 14, 1997
<PAGE>
EXHIBIT 23.2
We hereby consent to the use of our opinion dated June 9, 1997 as an exhibit to
the Registration Statement on Form S-4 relating to the merger of Nutrient
Acquisition Corp. ("Merger Sub") with and into Amrion, Inc. ("Amrion") and,
upon consummation of the Merger, Amrion to become a wholly-owned subsidiary of
Whole Foods, and as an Annex to the Joint Proxy Statement/Prospectus contained
in such Registration Statement, and to the references to our firm name under
the caption "Summary", "The Merger - Background of the Merger", "WFM's Reasons
for the Merger", and "Opinions of WFM's Financial Advisors" in such Proxy
Statement/Prospectus.
In giving such consent, we do not thereby admit and we hereby disclaim that we
come within the category of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, and the rules and regulations of the
Securities and Exchange Commission thereunder, nor do we thereby admit that we
are experts with respect to any part of such Registration Statement within the
meaning of the term "experts" as used in the Securities Act of 1933, as amended,
or the rules and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
ROBERTSON, STEPHENS & COMPANY LLC
/s/ Robertson, Stephens & Company
By: Robertson, Stephens & Company Group, L.L.C.
<PAGE>
EXHIBIT 23.3
CONSENT OF FINANCIAL ADVISOR
----------------------------
Adams, Harkness & Hill, Inc. hereby consents to the use of its name in the
Joint Proxy Statement/Prospectus constituting part of the Registration Statement
on Form S-4 of Whole Foods Market, Inc. and to the filing of the form of its
opinion attached as Appendix C to such Joint Proxy Statement/Prospectus and
relating to the fairness of the consideration to be paid in connection with the
Merger described therein from a financial point of view. In giving such consent,
we do not thereby admit and we hereby disclaim that we come within the category
of persons whose consent is required under Section 7 of the Securities Act of
1933, as amended, and the rules and regulations of the Securities and Exchange
Commission thereunder, nor do we thereby admit that we are experts with respect
to any part of such Registration Statement within the meaning of the term
"experts" as used in the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission thereunder.
Dated: July 14, 1997 ADAMS, HARKNESS & HILL, INC.
By: /s/ Russell W. Landon
--------------------------
Russell W. Landon
Senior Vice President
<PAGE>
EXHIBIT 23.4
CONSENT OF PIPER JAFFRAY INC.
We hereby consent to the references to our firm and the inclusion of our
fairness opinion dated June 9, 1997 as Appendix B to the Proxy
Statement/Prospectus included in this registration statement on Form S-4 of
Whole Foods Market, Inc. filed under the Securities Act of 1933.
In giving the foregoing consent, we do not admit that we are within the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended, or the rules and regulations of the Securities and
Exchange Commission thereunder.
/s/ PIPER JAFFRAY INC.
PIPER JAFFRAY INC.
Minneapolis, Minnesota
July 14, 1997
<PAGE>
EXHIBIT 23.5
CONSENT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
----------------------------------------
Amrion, Inc.
Boulder, Colorado
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement of our report dated March 14,
1997 relating to the consolidated financial statements of Amrion, Inc. and
subsidiary appearing in Amrion, Inc.'s Annual Report on Form 10-K for the year
ended December 31, 1996.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
/s/ BDO Seidman, LLP
BDO SEIDMAN, LLP
Denver, Colorado
July 14, 1997
<PAGE>
EXHIBIT 99.1
PROXY
AMRION, INC.
The undersigned hereby (a) acknowledges receipt of the Notice of the
Special Meeting of Shareholders of Amrion, Inc. (the "Company") to be held on
September __, 1997, at 10:00 a.m., local time, and the Joint Proxy
Statement/Prospectus in connection therewith, and (b) appoints Mark Crossen and
Jeffrey S. Williams, and each of them, his proxies with full power of
substitution and revocation, for and in the name, place and stead of the
undersigned, to vote upon and act with respect to all of the shares of Common
Stock of the Company standing in the name of the undersigned or with respect to
which the undersigned is entitled to vote and act at said meeting or at any
adjournment thereof, and the undersigned directs that his proxy be voted as
follows:
PROPOSAL TO APPROVE THE AGREEMENT AND PLAN OF MERGER, DATED JUNE 9, 1997, BY
AND AMONG THE COMPANY, WHOLE FOODS MARKET, INC. AND A SUBSIDIARY OF WHOLE
FOODS MARKET, INC.
FOR AGAINST ABSTAIN
--- --- ---
<PAGE>
If more than one of the proxies listed on the reverse side shall be present
in person or by substitute at the meeting or any adjournment thereof, the
majority of said proxies so present and voting, either in person or by
substitute, shall exercise all of the powers hereby given.
THIS PROXY WILL BE VOTED AS SPECIFIED ON THE REVERSE SIDE. IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR THE NAMED PROPOSAL.
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING IN ACCORDANCE
WITH THE SHAREHOLDERS SPECIFICATIONS ABOVE. THIS PROXY CONFERS DISCRETIONARY
AUTHORITY IN RESPECT TO MATTERS NOT KNOWN OR DETERMINED AT THE TIME OF THE
MAILING OF THE NOTICE OF THE SPECIAL MEETING TO THE UNDERSIGNED.
The undersigned hereby revokes any proxy or proxies heretofore given to
vote upon or act with respect to such stock and hereby ratifies and confirms all
that said proxies, their substitutes, or any of them, may lawfully do by virtue
hereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
Dated:
-----------------------------
-----------------------------------
Signature
-----------------------------------
(Signature if held jointly)
Please date the proxy and sign your name
exactly as it appears hereon. Where there
is more than one owner, each should sign.
When signing as an attorney, administrator,
executor, guardian or trustee, please add
your title as such. If executed by a
corporation, the proxy should be signed by
a duly authorized officer. Please sign the
proxy and return it promptly whether or not
you expect to attend the meeting. You may
nevertheless vote in person if you do
attend.
<PAGE>
EXHIBIT 99.2
PROXY
WHOLE FOODS MARKET, INC.
The undersigned hereby (a) acknowledges receipt of the Notice of the
Special Meeting of Shareholders of Whole Foods Market, Inc. (the "Company") to
be held on September __, 1997, at 10:00 a.m., local time, and the Joint Proxy
Statement/Prospectus in connection therewith, and (b) appoints John Mackey and
Glenda Flanagan, and each of them, his proxies with full power of substitution
and revocation, for and in the name, place and stead of the undersigned, to vote
upon and act with respect to all of the shares of Common Stock of the Company
standing in the name of the undersigned or with respect to which the undersigned
is entitled to vote and act at said meeting or at any adjournment thereof, and
the undersigned directs that his proxy be voted as follows:
PROPOSAL TO APPROVE THE ISSUANCE OF SHARES OF THE COMPANY'S COMMON STOCK
PURSUANT TO THE MERGER OF A WHOLLY OWNED SUBSIDIARY OF THE COMPANY INTO AMRION,
INC.
FOR AGAINST ABSTAIN
--- --- ---
PROPOSAL TO APPROVE THE AMENDMENT TO THE 1992 STOCK OPTION PLAN FOR TEAM MEMBERS
TO INCREASE THE NUMBER OF SHARES ISSUABLE UPON THE EXERCISE OF STOCK OPTIONS
UNDER THE PLAN TO 4 MILLION SHARES OF COMMON STOCK.
FOR AGAINST ABSTAIN
--- --- ---
PROPOSAL TO APPROVE THE AMENDMENT TO THE 1992 STOCK OPTION PLAN FOR TEAM MEMBERS
TO LIMIT THE NUMBER OF SHARES OF THE COMPANY'S COMMON STOCK UNDERLYING OPTIONS
GRANTED UNDER THE PLAN WHICH MAY BE GRANTED TO ANY TEAM MEMBER DURING ANY FISCAL
YEAR TO NOT MORE THAN 100,000 SHARES.
FOR AGAINST ABSTAIN
--- --- ---
<PAGE>
If more than one of the proxies listed on the reverse side shall be present
in person or by substitute at the meeting or any adjournment thereof, the
majority of said proxies so present and voting, either in person or by
substitute, shall exercise all of the powers hereby given.
THIS PROXY WILL BE VOTED AS SPECIFIED ON THE REVERSE SIDE. IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR THE NAMED PROPOSALS.
The undersigned hereby revokes any proxy or proxies heretofore given to
vote upon or act with respect to such stock and hereby ratifies and confirms all
that said proxies, their substitutes, or any of them, may lawfully do by virtue
hereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
Dated:
-----------------------------
-----------------------------------
Signature
-----------------------------------
(Signature if held jointly)
Please date the proxy and sign your name
exactly as it appears hereon. Where
there is more than one owner, each
should sign. When signing as an
attorney, administrator, executor,
guardian or trustee, please add your
title as such. If executed by a
corporation, the proxy should be signed
by a duly authorized officer. Please
sign the proxy and return it promptly
whether or not you expect to attend the
meeting. You may nevertheless vote in
person if you do attend.
