<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(d)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
---------------------
GENERAL NUTRITION COMPANIES, INC.
(NAME OF SUBJECT COMPANY)
NUMICO INVESTMENT CORP.
KONINKLIJKE NUMICO N.V.
(ROYAL NUMICO)
(BIDDERS)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
37047F103
(CUSIP NUMBER OF CLASS OF SECURITIES)
JULITTE VAN DER VEN
NUMICO INVESTMENT CORP.
C/O GUY SNYDER, ESQ.
VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 NORTH LASALLE STREET
CHICAGO, ILLINOIS 60601
TELEPHONE: (312) 609-7500
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
COPIES TO:
<TABLE>
<CAPTION>
<S> <C>
GUY E. SNYDER, ESQ. JOHN L. MACCARTHY, ESQ.
VEDDER, PRICE, KAUFMAN & KAMMHOLZ WINSTON & STRAWN
222 NORTH LASALLE STREET 35 WEST WACKER DRIVE
CHICAGO, ILLINOIS 60601 CHICAGO, ILLINOIS 60601
(312) 609-7500 (312) 558-5600
</TABLE>
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE**
<S> <C>
$1,880,551,925 $376,111
</TABLE>
* For purposes of calculating the filing fee only. This calculation assumes
the purchase of 75,222,077 Shares (as defined herein) (equal to the sum of
(i) 67,997,138 Shares issued and outstanding as of June 30, 1999, according
to General Nutrition Companies, Inc. (the "Company") plus (ii) 7,224,939
Shares subject to issuance upon exercise of options, warrants or other
rights for Shares, according to the Company), at $25.00 per Share.
** 1/50 of one percent of Transaction Valuation.
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
<TABLE>
<S> <C> <C> <C>
Amount Previously Paid: N/A Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 14D-1
CUSIP NO. 37047F103
- --------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
KONINKLIJKE NUMICO N.V.
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / /
(b) / /
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS
BK
- --------------------------------------------------------------------------------
5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(E)
OR 2(F)
/ /
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
THE NETHERLANDS
- --------------------------------------------------------------------------------
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
- --------------------------------------------------------------------------------
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
/ /
- --------------------------------------------------------------------------------
9. PERCENT OF CLASS REPRESENTED TO AMOUNT IN ROW (7)
0%
- --------------------------------------------------------------------------------
10. TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
1
<PAGE>
SCHEDULE 14D-1
CUSIP NO. 37047F103
- --------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
NUMICO INVESTMENT CORP.
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / /
(b) / /
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS
AF
- --------------------------------------------------------------------------------
5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(E)
OR 2(F)
/ /
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- --------------------------------------------------------------------------------
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
- --------------------------------------------------------------------------------
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES
/ /
- --------------------------------------------------------------------------------
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
0%
- --------------------------------------------------------------------------------
10. TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
2
<PAGE>
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is General Nutrition Companies, Inc., a
Delaware corporation (the "Company"), and the address of its principal executive
offices is 300 Sixth Avenue, Pittsburgh, Pennsylvania 15222.
(b) The class of securities to which this statement relates is the Common
Stock, par value $.01 per share (the "Shares"), of the Company. The information
set forth in the Introduction Section and Section 1 of the Offer to Purchase
(the "Offer to Purchase") annexed hereto as Exhibit (a)(1) is incorporated
herein by reference.
(c) The information set forth in the Introduction Section and Section 6 of
the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d); (g) This statement is being filed by Koninklijke Numico N.V., a
company incorporated under the laws of The Netherlands ("Numico"), and Numico
Investment Corp., a Delaware corporation (the "Purchaser") and an indirect
wholly-owned subsidiary of Numico. The information set forth in Section 9 of the
Offer to Purchase is incorporated herein by reference. The name, business
address, present principal occupation or employment, the material occupations,
positions, offices or employments for the past five years and citizenship of
each director and executive officer of Numico, the Purchaser and an affiliated
entity, and the name, principal business and address of any corporation or other
organization in which such occupations, positions, offices and employments are
or were carried on are set forth in Schedule A to the Offer to Purchase and are
incorporated herein by reference.
(e); (f) During the last five years, none of Numico, the Purchaser or such
affiliated entity, or to the best of their respective knowledge, any of the
directors or executive officers of Numico, the Purchaser or such affiliated
entity has been convicted in a criminal proceeding (excluding traffic violations
or similar misdemeanors) or was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which any such
person was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, federal or state securities
laws or finding any violation of such law.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Introduction Section and Sections
9, 10 and 11 of the Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(c) The information set forth in Section 13 of the Offer to Purchase is
incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDERS.
(a)-(g) The information set forth in the Introduction Section and Sections
7, 10 and 11 of the Offer to Purchase is incorporated herein by reference.
Except as set forth in such sections of the Offer to Purchase, neither of the
Purchaser nor Numico currently has any plans or proposals which relate to or
would result in: (a) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation involving the Company or any of its subsidiaries;
(b) a sale or transfer of a material amount of assets of the Company or any of
its subsidiaries; (c) any change in the present board of directors or management
of the Company including, but not limited to, any plans or proposals to change
the number or the term of directors or to fill any existing vacancies on the
board of directors of the Company; (d) any material change in the present
capitalization or dividend policy of the Company; (e) any other material change
in the
3
<PAGE>
Company's corporate structure or business; (f) causing a class of securities of
the Company to be delisted from a national securities exchange or to cease to be
authorized to be quoted in an inter-dealer quotation system of a registered
national securities association; or (g) a class of equity securities of the
Company becoming eligible for termination of registration pursuant to Section
12(g)(4) of the Securities Exchange Act of 1934, as amended.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in Sections 9 and 10 of the Offer to
Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction Section and Sections 9, 10 and
11 of the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in Section 16 of the Offer to Purchase is
incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 9 of the Offer to Purchase is
incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
<TABLE>
<S> <C>
(a) The information set forth in Section 9 of the Offer to Purchase is incorporated
herein by reference.
(b)-(c) The information set forth in Section 15 of the Offer to Purchase is incorporated
herein by reference.
(d) The information set forth in Section 7 of the Offer to Purchase is incorporated
herein by reference.
(e) Not applicable.
(f) The information set forth in the Offer to Purchase and the Letter of Transmittal
is incorporated herein by reference in its entirety.
</TABLE>
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C>
(a)(1) Offer to Purchase, dated July 9, 1999.
(a)(2) Form of Letter of Transmittal with respect to the Shares.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Form of letter, dated July 9, 1999, to brokers, dealers, commercial banks,
trust companies and other nominees.
(a)(5) Form of letter to clients to be used by brokers, dealers, commercial banks,
trust companies and other nominees.
(a)(6) Press release, dated July 5, 1999.
(a)(7) Form of newspaper advertisement, dated July 9, 1999.
(a)(8) IRS Guidelines to Substitute Form W-9.
(a)(9) Press release, dated July 9, 1999.
(b)(1) Commitment Letter, dated July 3, 1999, by and among ABN AMRO Bank N.V., J.P.
Morgan Securities Ltd. and Numico.
(c)(1) Agreement and Plan of Merger, dated as of July 5, 1999, by and among the
Company, Numico and the Purchaser.
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
(c)(2) Tender Agreement, dated as of July 5, 1999, by and among the Purchaser,
Numico and certain stockholders of the Company.
(c)(3)(i) Employment Agreement, dated July 5, 1999, by and among Numico, the Company
and William E. Watts.
(c)(3)(ii) Employment Agreement, dated July 5, 1999, by and among Numico, the Company
and Gregory T. Horn.
(c)(3)(iii) Employment Agreement, dated July 5, 1999, by and among Numico, the Company
and Mike K. Meyers.
(c)(3)(iv) Employment Agreement, dated July 5, 1999, by and among Numico, the Company
and Donald G. Smith.
(c)(3)(v) Employment Agreement, dated July 5, 1999, by and among Numico, the Company
and David R. Heilman.
(c)(3)(vi) Employment Agreement, dated July 5, 1999, by and among Numico, the Purchaser
and Michael Locke.
(c)(3)(vii) Employment Agreement, dated July 5, 1999, by and among Numico, the Purchaser
and Reginald N. Steele.
(c)(3)(viii) Employment Agreement, dated July 5, 1999, by and among Numico, the Company
and John A. DiCecco.
(c)(3)(ix) Employment Agreement, dated July 5, 1999, by and among Numico, the Company
and Edwin J. Kozlowski.
(c)(3)(x) Employment Agreement, dated July 5, 1999, by and among Numico, the Company
and Russell L. Cooper.
(c)(4) Non-Competition and Non-Solicitation Agreement, dated July 5, 1999, by and
among Numico, the Company and Gregory T. Horn.
(c)(5)(i) Confidentiality Agreement, dated May 26, 1999, by and between Numico and the
Company.
(c)(5)(ii) Confidentiality Agreement, dated May 26, 1999, by and between the Company and
Numico.
(c)(6) Benefits Letter, dated July 5, 1999, by and between Numico and the Company.
(d) None.
(e) Not Applicable.
(f) None.
</TABLE>
5
<PAGE>
SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Dated: July 9, 1999
<TABLE>
<S> <C> <C>
KONINKLIJKE NUMICO N.V.
By: /s/ JOHANNES C.T. VAN DER WIELEN
------------------------------------------
Name: Johannes C.T. van der Wielen
Title: President and Chief Executive
Officer
NUMICO INVESTMENT CORP.
By: /s/ JULITTE VAN DER VEN
------------------------------------------
Name: Julitte van der Ven
Title: President
</TABLE>
6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------------ -----------------------------------------------------------------------------------------------------
<S> <C>
(a)(1) Offer to Purchase, dated July 9, 1999.
(a)(2) Form of Letter of Transmittal with respect to the Shares.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Form of letter, dated July 9, 1999, to brokers, dealers, commercial banks, trust companies and other
nominees.
(a)(5) Form of letter to clients to be used by brokers, dealers, commercial banks, trust companies and other
nominees.
(a)(6) Press release, dated July 5, 1999.
(a)(7) Form of newspaper advertisement, dated July 9, 1999.
(a)(8) IRS Guidelines to Substitute Form W-9.
(a)(9) Press release, dated July 9, 1999.
(b)(1) Commitment Letter, dated July 3, 1999, by and among ABN AMRO Bank N.V., J.P. Morgan Securities Ltd.
and Numico.
(c)(1) Agreement and Plan of Merger, dated as of July 5, 1999, by and among the Company, Numico and the
Purchaser.
(c)(2) Tender Agreement, dated as of July 5, 1999, by and among the Purchaser, Numico and certain
stockholders of the Company.
(c)(3)(i) Employment Agreement, dated July 5, 1999, by and among Numico, the Company and William E. Watts.
(c)(3)(ii) Employment Agreement, dated July 5, 1999, by and among Numico, the Company and Gregory T. Horn.
(c)(3)(iii) Employment Agreement, dated July 5, 1999, by and among Numico, the Company and Mike K. Meyers.
(c)(3)(iv) Employment Agreement, dated July 5, 1999, by and among Numico, the Company and Donald G. Smith.
(c)(3)(v) Employment Agreement, dated July 5, 1999, by and among Numico, the Company and David R. Heilman.
(c)(3)(vi) Employment Agreement, dated July 5, 1999, by and among Numico, the Purchaser and Michael Locke.
(c)(3)(vii) Employment Agreement, dated July 5, 1999, by and among Numico, the Purchaser and Reginald N. Steele.
(c)(3)(viii) Employment Agreement, dated July 5, 1999, by and among Numico, the Company and John A. DiCecco.
(c)(3)(ix) Employment Agreement, dated July 5, 1999, by and among Numico, the Company and Edwin J. Kozlowski.
(c)(3)(x) Employment Agreement, dated July 5, 1999, by and among Numico, the Company and Russell L. Cooper.
(c)(4) Non-Competition and Non-Solicitation Agreement, dated July 5, 1999, by and among Numico, the Company
and Gregory T. Horn.
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
(c)(5)(i) Confidentiality Agreement, dated May 26, 1999, by and between Numico and the Company.
(c)(5)(ii) Confidentiality Agreement, dated May 26, 1999, by and between the Company and Numico.
(c)(6) Benefits Letter, dated July 5, 1999, by and between the Company and Numico.
(d) None.
(e) Not Applicable.
(f) None.
</TABLE>
8
<PAGE>
EXHIBIT (a)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
GENERAL NUTRITION COMPANIES, INC.
AT
$25.00 NET PER SHARE
BY
NUMICO INVESTMENT CORP.
AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF
KONINKLIJKE NUMICO N.V.
(ROYAL NUMICO)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, AUGUST 5, 1999, UNLESS THE OFFER IS EXTENDED.
THE BOARD OF DIRECTORS OF GENERAL NUTRITION COMPANIES, INC. (THE "COMPANY")
HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT, THE OFFER AND THE MERGER (EACH AS
DEFINED HEREIN), DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN
THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY AND RECOMMENDS THAT
STOCKHOLDERS TENDER THEIR SHARES (AS DEFINED HEREIN) PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE (THE "SHARES"), OF THE COMPANY
EQUIVALENT TO A MAJORITY OF THE TOTAL ISSUED AND OUTSTANDING SHARES ON A FULLY
DILUTED BASIS AS OF THE DATE SUCH SHARES ARE PURCHASED PURSUANT TO THE OFFER
(THE "MINIMUM CONDITION"). THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS
DESCRIBED IN SECTION 12 OF THIS OFFER TO PURCHASE.
------------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should: (1) complete and sign the Letter of Transmittal (or a facsimile
thereof) in accordance with the instructions in the Letter of Transmittal,
including any required signature guarantees, and (A) mail or deliver the Letter
of Transmittal (or such facsimile) with such stockholder's certificate(s) for
the tendered Shares and any other required documents to the Depositary (as
defined herein), or (B) follow the procedure for book-entry transfer of Shares
set forth in Section 3 of this Offer to Purchase or (2) request such
stockholder's broker, dealer, commercial bank, trust company or other nominee to
effect the transaction for such stockholder. Stockholders having Shares
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee must contact such broker, dealer, commercial bank, trust company
or other nominee if they desire to tender Shares so registered.
A stockholder who desires to tender Shares and whose certificates for such
Shares are not immediately available, or who cannot comply with the procedure
for book-entry transfer on a timely basis, may tender such Shares by following
the procedures for guaranteed delivery set forth in Section 3 of this Offer to
Purchase.
Questions and requests for assistance may be directed to J.P. Morgan
Securities Inc., which is acting as the Dealer Manager, or MacKenzie Partners,
Inc., which is acting as the Information Agent, at their respective addresses
and telephone numbers set forth on the back cover of this Offer to Purchase.
Requests for additional copies of this Offer to Purchase and the Letter of
Transmittal may be directed to the Information Agent, the Dealer Manager or to
brokers, dealers, commercial banks or trust companies.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE FAIRNESS OR MERITS OF THIS TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF
THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY
IS UNLAWFUL.
------------------------
THE DEALER MANAGER FOR THE OFFER IS:
[LOGO]
July 9, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
- ---------------------------------------------------------------------------------------------------------------- -----
<C> <S> <C>
Introduction......................................................................................... 1
1. Terms of the Offer................................................................................... 3
2. Acceptance for Payment and Payment for Shares........................................................ 4
3. Procedure for Tendering Shares....................................................................... 5
4. Rights of Withdrawal................................................................................. 8
5. Certain Federal Income Tax Consequences.............................................................. 9
6. Price Range of the Shares; Dividends................................................................. 10
7. Effect of the Offer on the Market for the Shares; Stock Quotation; Exchange Act Registration; Margin
Regulations........................................................................................ 10
8. Certain Information Concerning the Company........................................................... 11
9. Certain Information Concerning the Purchaser and Numico.............................................. 14
10. Background of the Offer; Contacts with the Company................................................... 15
11. Purpose of the Offer; Plans for the Company; the Merger Agreement; Other Agreements.................. 17
12. Certain Conditions to the Offer...................................................................... 30
13. Source and Amount of Funds........................................................................... 31
14. Dividends and Distributions.......................................................................... 32
15. Certain Legal Matters................................................................................ 33
16. Fees and Expenses.................................................................................... 34
17. Miscellaneous........................................................................................ 35
SCHEDULE A--Directors and Executive Officers of Numico, the Purchaser and Numico LP............................. A-1
</TABLE>
<PAGE>
TO THE HOLDERS OF SHARES OF
GENERAL NUTRITION COMPANIES, INC.:
INTRODUCTION
Numico Investment Corp., a Delaware corporation (the "Purchaser") and an
indirect wholly-owned subsidiary of Koninklijke Numico N.V., a company organized
under the laws of The Netherlands ("Numico"), hereby offers to purchase all
outstanding shares of common stock, par value $0.01 per share (the "Shares"), of
General Nutrition Companies, Inc., a Delaware corporation (the "Company"), at
$25.00 per Share, net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in this Offer to Purchase and in
the related Letter of Transmittal (which, together with any amendments or
supplements hereto or thereto, collectively constitute the "Offer").
Tendering stockholders who have Shares registered in their name and who
tender directly to the Depositary will not be charged brokerage fees or
commissions or, subject to Instruction 6 of the Letter of Transmittal, transfer
taxes on the purchase of Shares by the Purchaser pursuant to the Offer.
Stockholders who hold their Shares through their broker, dealer, commercial bank
or trust company should consult with such institution as to whether there are
any fees applicable to a tender of Shares. The Purchaser will pay all charges
and expenses of IBJ Whitehall Bank & Trust Company, as the depositary (the
"Depositary"), J.P. Morgan Securities Inc., as the dealer manager (the "Dealer
Manager"), and MacKenzie Partners, Inc., as the information agent (the
"Information Agent"), incurred in connection with the Offer. See Section 16.
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER (THE
"MERGER AGREEMENT") DATED AS OF JULY 5, 1999, BY AND AMONG THE COMPANY, NUMICO
AND THE PURCHASER. PURSUANT TO THE MERGER AGREEMENT, AFTER COMPLETION OF THE
OFFER AND SUBJECT TO THE SATISFACTION OR WAIVER OF ALL CONDITIONS TO THE MERGER,
THE PURCHASER WILL BE MERGED WITH AND INTO THE COMPANY (THE "MERGER"). THE BOARD
OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT, THE OFFER AND THE MERGER, DETERMINED THAT THE OFFER AND THE MERGER
ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY AND
RECOMMENDS THAT STOCKHOLDERS TENDER THEIR SHARES PURSUANT TO THE OFFER.
For a discussion of the Board's recommendation, see "Item 4. The
Solicitation or Recommendation" set forth in the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"),
which is being mailed to stockholders with this Offer to Purchase.
Morgan Stanley & Co. Incorporated ("Morgan Stanley") has delivered to the
Board its written opinion that, as of July 3, 1999, and based upon and subject
to the matters set forth therein, the consideration to be paid in the Offer and
the Merger to the stockholders of the Company in the Offer and the Merger is
fair to such stockholders from a financial point of view. A copy of the opinion
of Morgan Stanley is contained in the Schedule 14D-9.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES EQUIVALENT TO A MAJORITY OF THE TOTAL ISSUED AND OUTSTANDING SHARES ON A
FULLY DILUTED BASIS AS OF THE DATE SUCH SHARES ARE PURCHASED PURSUANT TO THE
OFFER (THE "MINIMUM CONDITION"). THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER
CONDITIONS DESCRIBED IN SECTION 12.
Pursuant to the Merger Agreement, each issued and outstanding Share (other
than Shares owned by the Company, Numico or the Purchaser or Shares that are
held by stockholders exercising dissenters' rights under Delaware law
("Dissenting Stockholders")) shall, 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 an amount in cash, without interest, equal to the price paid
for each Share pursuant to the Offer (the "Merger Consideration"). The Merger
Agreement is more fully described in Section 11.
The consummation of the Merger is subject to the satisfaction or waiver of a
number of conditions, including the approval of the Merger by the requisite vote
of the stockholders of the Company. Under Delaware law, the stockholder vote
necessary to approve the Merger will be the affirmative vote of at least a
majority of the outstanding Shares, including Shares held by the Purchaser and
its affiliates. Accordingly, if the Purchaser acquires a majority of the
outstanding Shares, the Purchaser will have the voting power required to approve
the Merger without the affirmative vote of any other stockholders of the
Company. In the event the Purchaser obtains 90% or more of the outstanding
Shares pursuant to the Offer or otherwise, the Purchaser will effect the Merger
pursuant to the short-form merger provisions of the Delaware
<PAGE>
General Corporation Law ("DGCL"), without notice to, or any action by, any other
stockholder of the Company.
Certain stockholders of the Company owning in the aggregate 742,799 Shares,
or approximately 1.0% of the Shares issued and outstanding on June 30, 1999, on
a fully diluted basis, have entered into a Tender Agreement dated July 5, 1999,
with Numico and the Purchaser (the "Tender Agreement") whereby such stockholders
have agreed to tender all of their Shares pursuant to the Offer. This agreement
is more fully described in Section 11.
Based on the representations and warranties of the Company contained in the
Merger Agreement, as of June 30, 1999: (i) 67,997,138 Shares were issued and
outstanding and (ii) 7,224,939 Shares were reserved for issuance upon exercise
of outstanding stock options, warrants or other rights to acquire Shares. Based
on the foregoing, the Minimum Condition will be satisfied if 37,611,040 Shares
are validly tendered and not withdrawn prior to the Expiration Date (as defined
herein). The number of Shares required to be validly tendered and not withdrawn
in order to satisfy the Minimum Condition will increase to the extent additional
Shares are deemed to be outstanding on a fully diluted basis under the Merger
Agreement.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
2
<PAGE>
THE TENDER OFFER
1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions set forth in the Offer
(including the terms and conditions set forth in Section 12 (the "Offer
Conditions"), and if the Offer is extended or amended, the terms and conditions
of such extension or amendment), the Purchaser will accept for payment, and pay
for, all Shares validly tendered on or prior to the Expiration Date and not
otherwise withdrawn as permitted by Section 4. The term "Expiration Date" shall
mean 12:00 Midnight, New York City time, on Thursday, August 5, 1999, or any
later time and date at which the Offer, as so extended by the Purchaser, shall
expire.
The Offer is conditioned upon, among other things, satisfaction of the
Minimum Condition and the obtaining of any Required Regulatory Approvals (as
defined in the Merger Agreement), including the expiration or termination of any
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the regulations thereunder (the "HSR Act"). The Offer is also
conditioned upon the satisfaction of each of the other conditions described in
Section 12. If any of these conditions is not satisfied prior to the Expiration
Date (as extended by the Purchaser pursuant to the Merger Agreement), the
Purchaser may terminate the Offer and return all tendered Shares to tendering
stockholders. The Purchaser reserves the right (but shall not be obligated),
subject to the provisions of the Merger Agreement, to waive any or all of such
conditions, except the Minimum Condition.
Subject to the applicable rules and regulations of the Securities and
Exchange Commission (the "SEC") and the terms of the Merger Agreement (see
Section 11), the Purchaser expressly reserves the right, in its sole discretion,
at any time or from time to time, to extend the period of time during which the
Offer is open by giving oral or written notice of such extension to the
Depositary. Any such extension will be followed as promptly as possible by a
public announcement thereof. During any such extension, all Shares previously
tendered and not withdrawn will remain subject to the Offer, subject to the
right of a tendering stockholder to withdraw such stockholder's Shares. See
Section 4. Subject to the terms of the Merger Agreement and the applicable rules
and regulations of the SEC, the Purchaser also expressly reserves the right, in
its sole discretion, at any time or from time to time, (i) to delay acceptance
for payment of or (regardless of whether such Shares were already accepted for
payment) payment for, any tendered Shares, or to terminate or amend the Offer as
to any Shares not then paid for, upon the occurrence of any of the conditions
specified in Section 12 and (ii) to waive any condition and to set forth or
change any other term and condition of the Offer, by giving oral or written
notice of such delay, termination or amendment to the Depositary and by making a
public announcement thereof; provided that pursuant to the Merger Agreement, the
Purchaser will not, without the prior written consent of the Company (such
consent to be authorized by the Board), (i) waive the Minimum Condition, (ii)
decrease the amount or change the form of consideration payable in the Offer,
(iii) decrease the number of Shares sought in the Offer, (iv) impose additional
conditions to the Offer, (v) change any of the Offer Conditions or amend any
other term of the Offer if any such change or amendment would be adverse in any
respect to the holders of Shares (other than Numico or the Purchaser) or (vi)
except as provided below, extend the Offer if all the Offer Conditions have been
satisfied.
Notwithstanding the foregoing, pursuant to the Merger Agreement, the
Purchaser may, without the consent of the Company, (a) extend the Offer, if at
the scheduled Expiration Date, any of the Offer Conditions have not been
satisfied or waived, on one or more occasions for an additional period(s) of up
to ten business days at a time until such conditions are satisfied or waived,
(b) extend the Offer for such period as may be required by any rule, regulation,
interpretation of position of the SEC or the staff thereof applicable to the
Offer or (c) extend the Offer for one or more periods (each such period to be
for not more than three business days, and such extensions to be for an
aggregate period of not more than ten business days beyond the latest Expiration
Date that would otherwise be permitted under clause (a) or (b) of this sentence)
if on the date of such extensions the Offer Conditions have been satisfied or
waived but more than 90% of the outstanding Shares have not been tendered.
Pursuant to the Merger Agreement, if all of the Offer Conditions are not
satisfied on any Expiration Date of the Offer, the Purchaser will, upon the
Company's request, extend the Offer for one or more periods of not more than ten
business days each;
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provided, that the Purchaser will not be required to extend the Offer beyond (i)
October 5, 1999 (the "Outside Date") (or November 5, 1999, if all Required
Regulatory Approvals are not obtained by such date) or (ii), if earlier, the
termination of the Merger Agreement in accordance with its terms.
If the Purchaser accepts any Shares for payment pursuant to the terms of the
Offer, it will accept for payment all Shares validly tendered and not withdrawn
prior to the Expiration Date, and, subject to the terms and conditions of the
Offer, including but not limited to the Offer Conditions, it will accept for
payment and promptly pay for all Shares so accepted for payment. The Purchaser
confirms that its reservation of the right to delay payment for Shares that it
has accepted for payment is limited by Rule 14e-1(c) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), which requires that a
tender offeror pay the consideration offered or return the tendered securities
promptly after the termination or withdrawal of a tender offer.
Any extension, delay, termination or amendment of the Offer will be followed
as promptly as practicable by public announcement thereof, such announcement in
the case of an extension to be issued no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date.
Subject to applicable law (including Rules 14d-4(c), 14d-6(d) and 14e-1 under
the Exchange Act, which require that any material change in the information
published, sent or given to stockholders in connection with the Offer be
promptly disseminated to stockholders in a manner reasonably designed to inform
stockholders of such change) and without limiting the manner in which the
Purchaser may choose to make any public announcement, the Purchaser shall have
no obligation to publish, advertise or otherwise communicate any such public
announcement other than by issuing a press release or other announcement.
The Purchaser confirms that if it makes a material change in the terms of
the Offer or the information concerning the Offer, or if it waives a material
condition of the Offer, the Purchaser will extend the Offer to the extent
required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act.
If, prior to the Expiration Date, the Purchaser (with the previous approval
of the Company in writing) shall decrease the percentage of Shares being sought
or the consideration offered to holders of Shares, such decrease shall be
applicable to all holders whose Shares are accepted for payment pursuant to the
Offer and, if at the time notice of any increase or decrease is first published,
sent or given to holders of Shares, the Offer is scheduled to expire at any time
earlier than the tenth business day from and including the date that such notice
is first so published, sent or given, the Offer will be extended until the
expiration of such ten business day period. For purposes of the Offer, a
"business day" means any day other than a Saturday, Sunday or federal holiday
and consists of the time period from 12:01 a.m. through 12:00 Midnight, New York
City time.
The Company provided the Purchaser with a list of the record holders of the
Shares and their addresses, as well as mailing labels for such record holders,
any non-objecting beneficial owner lists and security position listings for the
purpose of disseminating the Offer to holders of Shares. This Offer to Purchase,
the Letter of Transmittal and other relevant materials will be mailed to record
holders of Shares whose names appear on the Company's stockholder list and will
be furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the Company's
stockholder list or who are listed as participants in a clearing agency's
security position listing for subsequent transmittal to beneficial owners of
Shares by the Purchaser.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the Offer (including the
Offer Conditions and, if the Offer is extended or amended, the terms and
conditions of any such extension or amendment), the Purchaser will accept for
payment, and will pay for, all Shares validly tendered and not withdrawn as
promptly as practicable after the Expiration Date, if the Offer Conditions have
been satisfied or waived.
In addition, subject to applicable rules of the SEC, the Purchaser expressly
reserves the right to delay acceptance for payment of or payment for Shares in
order to comply, in whole or in part, with any applicable law. See Section 12.
Notwithstanding the foregoing, the Purchaser reserves the right, in its sole
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discretion, to extend the Offer notwithstanding the prior satisfaction of the
Offer Conditions if more than 90% of the outstanding Shares have not been
tendered in the Offer (in which case the Purchaser may extend the expiration
date on one or more occasions for up to ten business days in the aggregate
beyond the time it would otherwise be required to accept validly tendered Shares
for payment). See Sections 1, 12 and 15.
Numico filed a Notification and Report Form under the HSR Act on July 6,
1999, and, accordingly, unless earlier terminated or extended by a request for
additional information, the waiting period under the HSR Act is scheduled to
expire at 11:59 p.m., New York City time, on July 21, 1999. See Section 15.
Payment for Shares tendered and accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of certificates for
such Shares (or a confirmation of a book-entry transfer of such Shares (a
"Book-Entry Confirmation") into the Depositary's account at The Depository Trust
Company (the "Book-Entry Transfer Facility")), a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) and any other required
documents.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment Shares validly tendered and not withdrawn as, if and when the Purchaser
gives oral or written notice to the Depositary of its acceptance for payment of
such Shares pursuant to the Offer. Payment for Shares accepted for payment
pursuant to the Offer will be made by deposit of the purchase price therefor
with the Depositary, which will act as agent for the tendering stockholders for
the purpose of receiving payments from the Purchaser and transmitting such
payments to the tendering stockholders. UNDER NO CIRCUMSTANCES WILL INTEREST ON
THE PURCHASE PRICE FOR SHARES BE PAID, REGARDLESS OF ANY EXTENSION OF THE OFFER
OR ANY DELAY IN MAKING SUCH PAYMENT.
If any tendered Shares are not accepted for payment pursuant to the terms
and conditions of the Offer for any reason, or if certificates are submitted for
more Shares than are tendered, certificates for such unpurchased Shares will be
returned, without expense to the tendering stockholder (or, in the case of
Shares tendered by book-entry transfer of such Shares into the Depositary's
account at the Book-Entry Transfer Facility pursuant to the procedures set forth
in Section 3, such Shares will be credited to an account maintained with the
Book-Entry Transfer Facility), as soon as practicable following expiration or
termination of the Offer.
If the Purchaser increases the consideration to be paid for Shares pursuant
to the Offer, the Purchaser will pay such increased consideration for all Shares
purchased pursuant to the Offer.
The Purchaser reserves the right to transfer or assign, in whole or in part,
to one or more direct or indirect subsidiaries of Numico the right to purchase
all or any portion of the Shares tendered pursuant to the Offer, but any such
transfer or assignment will not relieve the Purchaser of its obligations under
the Offer and will in no way prejudice the rights of tendering stockholders to
receive payment for Shares validly tendered and accepted for payment pursuant to
the Offer.
3. PROCEDURE FOR TENDERING SHARES.
VALID TENDER. To tender Shares pursuant to the Offer, (a) a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof) in
accordance with the instructions of the Letter of Transmittal, with any required
signature guarantees, certificates for Shares to be tendered and any other
documents required by the Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase prior to the Expiration Date, (b) such Shares must be delivered
pursuant to the procedures for book-entry transfer described below (and a Book-
Entry Confirmation of such delivery, including an Agent's Message (as defined
below), must be received by the Depositary if the tendering stockholder has not
delivered a Letter of Transmittal) prior to the Expiration Date or (c) the
tendering stockholder must comply with the guaranteed delivery procedures set
forth below. The term "Agent's Message" means a message transmitted by the
Book-Entry Transfer Facility to, and received by, the Depositary and forming a
part of a Book-Entry Confirmation, which states that the Book-Entry Transfer
Facility has received an express acknowledgment from the participant in the
Book-Entry Transfer Facility tendering the Shares that are subject to the
Book-Entry Confirmation, that such
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participant has received and agrees to be bound by the terms of the Letter of
Transmittal and that the Purchaser may enforce such agreement against the
participant.
BOOK-ENTRY DELIVERY. The Depositary will establish accounts with respect to
the Shares at the Book-Entry Transfer Facility for purposes of the Offer within
two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the Book-Entry Transfer Facility's systems
may make book-entry delivery of Shares by causing the Book-Entry Transfer
Facility to transfer such Shares into the Depositary's account in accordance
with the Book-Entry Transfer Facility's procedures for such transfer. However,
although delivery of Shares may be effected through book-entry transfer, either
the Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or an Agent's Message in lieu
of a Letter of Transmittal, and any other required documents, must, in any case,
be transmitted to, and received by, the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date,
or the tendering stockholder must comply with the guaranteed delivery procedures
described below. The confirmation of a book-entry transfer of Shares into the
Depositary's account at the Book-Entry Transfer Facility as described above is
referred to herein as a "Book-Entry Confirmation." DELIVERY OF DOCUMENTS TO THE
BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER
FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
SIGNATURE GUARANTEES. Except as otherwise provided below, all signatures on
a Letter of Transmittal must be guaranteed by a financial institution (including
most commercial banks, savings and loan associations and brokerage houses) that
is a participant in the Securities Transfer Agents Medallion Program, the New
York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program (each, an "Eligible Institution"). No signature guarantee is
required on the Letter of Transmittal (a) if the Letter of Transmittal is signed
by the registered holder(s) (which term, for purposes of this Section 3,
includes any participant in any of the Book-Entry Transfer Facility's systems
whose name appears on a security position listing as the owner of the Shares) of
Shares tendered therewith and such registered holder has not completed either
the box entitled "Special Delivery Instructions" or the box entitled "Special
Payment Instructions" on the Letter of Transmittal or (b) if such Shares are
tendered for the account of an Eligible Institution. See Instructions 1 and 5 to
the Letter of Transmittal. If the certificates for Shares are registered in the
name of a person other than the signer of the Letter of Transmittal, or if
payment is to be made or certificates for Shares not tendered or not accepted
for payment are to be returned to a person other than the registered holder of
the certificates surrendered, the tendered certificates for such Shares must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or names of the registered holders or owners appear on the
certificates, with the signatures on the certificates or stock powers guaranteed
in the manner described above. See Instructions 1 and 5 to the Letter of
Transmittal.
GUARANTEED DELIVERY. A stockholder desiring to tender Shares pursuant to
the Offer and whose certificates for Shares are not immediately available or who
cannot comply with the procedures for book-entry transfer on a timely basis or
who cannot deliver all required documents to the Depositary prior to the
Expiration Date, may tender such Shares by following all of the procedures set
forth below:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, is received
by the Depositary, as provided below, prior to the Expiration Date; and
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(iii) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation with respect to all such Shares),
together with a properly completed and duly executed Letter of Transmittal
(or a facsimile thereof), with any required signature guarantees (or, in the
case of a book-entry transfer, an Agent's Message in lieu of a Letter of
Transmittal), and any other required documents are received by the
Depositary within three trading days after the date of execution of such
Notice of Guaranteed Delivery. A "trading day" is any day on which the
Nasdaq National Market operated by the National Association of Securities
Dealers, Inc. (the "NASD") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand or overnight
courier to the Depositary or transmitted by telegram, telex or facsimile or mail
to the Depositary and must include a guarantee by an Eligible Institution in the
form set forth in such Notice of Guaranteed Delivery.
OTHER REQUIREMENTS. Notwithstanding any other provision hereof, payment for
Shares accepted for payment pursuant to the Offer will in all cases be made only
after timely receipt by the Depositary of (a) certificates for (or a timely
Book-Entry Confirmation with respect to) such Shares, (b) a Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed, with
any required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message in lieu of a Letter of Transmittal) and (c) any other documents
required by the Letter of Transmittal. Accordingly, tendering stockholders may
be paid at different times depending upon when certificates for Shares or
Book-Entry Confirmations with respect to such Shares are actually received by
the Depositary. UNDER NO CIRCUMSTANCES WILL ANY INTEREST BE PAID ON THE PURCHASE
PRICE OF THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN
MAKING SUCH PAYMENT.
TENDER CONSTITUTES AN AGREEMENT. The valid tender of Shares pursuant to one
of the procedures described above will constitute a binding agreement between
the tendering stockholder and the Purchaser upon the terms and subject to the
conditions of the Offer.
APPOINTMENT. By executing a Letter of Transmittal as set forth above
(including through delivery of an Agent's Message), the tendering stockholder
irrevocably appoints designees of the Purchaser as such stockholder's
attorneys-in-fact and proxies in the manner set forth in the Letter of
Transmittal, each with full power of substitution, to the full extent of such
stockholder's rights with respect to the Shares tendered by such stockholder and
accepted for payment by the Purchaser and with respect to any and all other
Shares or other securities or rights issued or issuable in respect of such
Shares on or after July 5, 1999. All such proxies will be considered coupled
with an interest in the tendered Shares. Such appointment will be effective
when, and only to the extent that, the Purchaser accepts for payment and pays
for the Shares tendered by such stockholder as provided herein. Upon such
appointment, all prior powers of attorney, proxies and consents given by such
stockholder with respect to such Shares or other securities or rights will,
without further action, be revoked and no subsequent powers of attorney,
proxies, consents or revocations may be given (and, if given, will be deemed not
effective). The designees of the Purchaser will thereby be empowered to exercise
all voting and other rights with respect to such Shares and other securities or
rights in respect of any annual, special or adjourned meeting of the Company's
stockholders, actions by written consent in lieu of any such meeting or
otherwise, as they in their sole discretion deem proper. The Purchaser reserves
the right to require that, in order for Shares to be deemed validly tendered,
immediately upon the Purchaser's acceptance for payment of and payment for such
Shares, the Purchaser must be able to exercise full voting and other rights with
respect to such Shares, including voting at any meeting of stockholders then
scheduled.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by the Purchaser in its sole discretion, which determination
will be final and binding. The Purchaser reserves the absolute right to reject
any or all tenders determined by it not to be in proper form or the acceptance
for payment of or payment for which may, in the opinion of the Purchaser's
counsel, be unlawful. The Purchaser also reserves the absolute right to waive
any defect or irregularity in the tender of any Shares of any particular
stockholder whether or not similar defects or irregularities are waived in the
case of other stockholders. No tender of Shares will be deemed to have been
validly made until all defects or irregularities relating thereto have been
cured or
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waived. None of the Purchaser, Numico, the Depositary, the Information Agent,
the Dealer Manager or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification. The Purchaser's interpretation of the
terms and conditions of the Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding.
BACKUP WITHHOLDING. In order to avoid "backup withholding" of U.S. Federal
income tax on payments of cash pursuant to the Offer, a U.S. Holder (as defined
herein) surrendering Shares in the Offer must, unless an exemption applies,
provide the Depositary with such U.S. Holder's correct taxpayer identification
number ("TIN") on a Substitute Form W-9 and certify under penalties of perjury
that such TIN is correct and that such U.S. Holder is not subject to backup
withholding. If a U.S. Holder does not provide a correct TIN or fails to provide
the certifications described above, the Internal Revenue Service (the "IRS") may
impose a penalty on such U.S. Holder and payment of cash to such stockholder
pursuant to the Offer may be subject to backup withholding of 31%. All U.S.
Holders surrendering Shares pursuant to the Offer should complete and sign the
Substitute Form W-9 included as part of the Letter of Transmittal to provide the
information and certification necessary to avoid backup withholding (unless an
applicable exemption exists and is proved in a manner satisfactory to the
Purchaser and the Depositary). Certain stockholders (including, among others,
certain domestic corporations and certain foreign individuals and entities) are
not subject to backup withholding. Noncorporate foreign stockholders should
complete and sign a Form W-8, Certificate of Foreign Status, a copy of which may
be obtained from the Depositary, in order to avoid backup withholding. See
Instruction 9 to the Letter of Transmittal.
4. RIGHTS OF WITHDRAWAL.
Tenders of Shares made pursuant to the Offer are irrevocable except that
Shares tendered pursuant to the Offer may be withdrawn pursuant to the
procedures set forth below at any time prior to the Expiration Date and, unless
theretofore accepted for payment and paid for by the Purchaser pursuant to the
Offer, may also be withdrawn at any time after September 6, 1999.
For a withdrawal to be effective, a written, telegraphic, telex or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase and
must specify the name of the person having tendered the Shares to be withdrawn,
the number of Shares to be withdrawn and the name of the registered holder of
the Shares to be withdrawn, if different from the name of the person who
tendered the Shares. If certificates for Shares have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such
certificates, the serial numbers shown on such certificates must be submitted to
the Depositary and, unless such Shares have been tendered by an Eligible
Institution, the signatures on the notice of withdrawal must be guaranteed by an
Eligible Institution. If Shares have been delivered pursuant to the procedure
for book-entry transfer as set forth in Section 3, any notice of withdrawal must
also specify the name and number of the account at the Book-Entry Transfer
Facility to be credited with the withdrawn Shares and otherwise comply with the
Book-Entry Transfer Facility's procedures.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser in its sole
discretion, which determination will be final and binding. None of the
Purchaser, Numico, the Depositary, the Information Agent, the Dealer Manager or
any other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification.
Withdrawals of tenders of Shares may not be rescinded, and any Shares
properly withdrawn will thereafter be deemed not validly tendered for purposes
of the Offer. However, withdrawn Shares may be retendered by again following one
of the procedures described in Section 3 at any time prior to the Expiration
Date.
If the Purchaser extends the Offer, is delayed in its acceptance for payment
of Shares, or is unable to accept for payment Shares pursuant to the Offer, for
any reason, then, without prejudice to the Purchaser's rights under the Offer,
the Depositary may, nevertheless, on behalf of the Purchaser, retain tendered
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Shares, and such Shares may not be withdrawn except to the extent that tendering
stockholders are entitled to withdrawal rights as set forth in this Section 4.
5. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES.
The following is a general discussion of certain U.S. Federal income tax
consequences of the receipt of cash by a holder of Shares pursuant to the Offer
or the Merger. Except as specifically noted, this discussion applies only to a
U.S. Holder.
A "U.S. Holder" means a holder of Shares that is (i) a citizen or resident
of the United States, (ii) a corporation or other entity taxable as a
corporation created or organized in or under the laws of the United States or
any political subdivision thereof or therein, (iii) an estate the income of
which is subject to United States Federal income taxation regardless of its
source, or (iv) a trust if (x) a court within the United States is able to
exercise primary supervision over the administration of the trust and (y) one or
more United States persons have the authority to control all substantial
decisions of the trust. In the case of a partnership that holds Shares, any
partner described in any of (i) through (iv), above, generally is also a U.S.
Holder. A "Non-U.S. Holder" is a holder of Shares, generally including any
partner in a partnership that holds Shares, that is not a U.S. Holder.
The transfer of Shares pursuant to the Offer or the Merger will be a taxable
transaction for U.S. Federal income tax purposes under the Internal Revenue Code
of 1986, as amended (the "Code"), and may also be a taxable transaction under
applicable state, local or foreign income or other tax laws. Generally, for U.S.
Federal income tax purposes, a U.S. Holder will recognize gain or loss equal to
the difference between the amount of cash received by the U.S. Holder pursuant
to the Offer or the Merger and the aggregate tax basis in the Shares transferred
by such U.S. Holder pursuant to the Offer (or canceled pursuant to the Merger).
Gain or loss will be calculated separately for each block of Shares tendered and
purchased pursuant to the Offer (or canceled pursuant to the Merger).
Gain (or loss) will be capital gain (or loss), assuming that such Shares are
held as a capital asset. Capital gains of individuals, estates and trusts
generally are subject to preferential U.S. Federal income tax rates if, at the
time the Company accepts the Shares for payment, the stockholder held the Shares
for more than one year. Capital gains of corporations generally are taxed at the
same Federal income tax rates applicable to corporate ordinary income. In
addition, under present law, the ability to use capital losses to offset
ordinary income is limited.
A U.S. Holder that tenders Shares pursuant to the Offer or surrenders Shares
pursuant to the Merger may be subject to 31% backup withholding unless the U.S.
Holder provides its taxpayer identification number ("TIN") and certifies that
such number is correct or properly certifies that it is awaiting a TIN, or
unless an exemption applies. A stockholder that does not furnish its TIN may be
subject to a penalty imposed by the IRS. See "--Backup Withholding" under
Section 3 herein.
If backup withholding applies to a stockholder, the Depositary is required
to withhold 31% from payments to such stockholder. Backup withholding is not an
additional tax. Rather, the amount of the backup withholding can be credited
against the U.S. Federal income tax liability of the person subject to the
backup withholding, provided that the required information is given to the IRS.
If backup withholding results in an overpayment of tax, a refund can be obtained
by the stockholder upon filing a U.S. Federal income tax return.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO SHARES
RECEIVED PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS
COMPENSATION OR WITH RESPECT TO HOLDERS OF SHARES WHO ARE SUBJECT TO SPECIAL TAX
TREATMENT UNDER THE CODE, SUCH AS NON-U.S. HOLDERS, LIFE INSURANCE COMPANIES,
TAX-EXEMPT ORGANIZATIONS, FINANCIAL INSTITUTIONS, DEALERS IN SECURITIES OR
CURRENCIES, PERSONS WHO HOLD SHARES AS A POSITION IN A "STRADDLE" OR AS PART OF
A "HEDGING" OR "CONVERSION" TRANSACTION AND PERSONS THAT HAVE A FUNCTIONAL
CURRENCY OTHER THAN THE U.S. DOLLAR. THE DISCUSSION MAY NOT APPLY TO A HOLDER OF
SHARES IN LIGHT OF SUCH HOLDER'S INDIVIDUAL CIRCUMSTANCES AND MAY NOT DISCUSS
EVERY ASPECT OF U.S. FEDERAL TAX LAW THAT MAY BE RELEVANT TO HOLDERS (INCLUDING
THE APPLICABILITY OF ANY ESTATE OR GIFT TAX LAWS). STOCKHOLDERS ARE URGED TO
CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO
THEM (INCLUDING THE APPLICATION AND EFFECT OF ANY STATE, LOCAL OR FOREIGN INCOME
AND OTHER TAX LAWS) OF THE OFFER AND THE MERGER.
9
<PAGE>
6. PRICE RANGE OF THE SHARES; DIVIDENDS.
The Shares are included for trading on the Nasdaq National Market under the
symbol "GNCI". The following table sets forth, for each of the fiscal quarters
of the Company indicated, the high and low bid quotations for the Shares on the
Nasdaq National Market based upon published financial sources.
<TABLE>
<CAPTION>
BID QUOTATIONS
------------------------
FISCAL YEAR HIGH LOW
- ------------------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
1997
First quarter................................................................ $ 231/2 $ 173/8
Second quarter............................................................... 285/8 201/8
Third quarter................................................................ 301/2 251/4
Fourth quarter............................................................... 365/8 277/8
1998
First quarter................................................................ 411/4 333/8
Second quarter............................................................... 371/4 277/8
Third quarter................................................................ 321/2 9
Fourth quarter............................................................... 21 95/8
1999
First quarter................................................................ 169/16 11
Second quarter (through July 8, 1999)........................................ 245/8 165/16
</TABLE>
On July 2, 1999, the last full trading day before the first public
announcement of the execution of the Merger Agreement, the last reported bid
price of the Shares on the Nasdaq National Market was $22 7/8 per Share. On July
8, 1999, the last full trading day before the commencement of the Offer, the
last reported bid price of the Shares on the Nasdaq National Market was $24 9/16
per Share. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE
SHARES.
The Purchaser has been advised by the Company that the Company has never
paid any cash dividends on the Shares. The Merger Agreement prohibits the
Company from declaring or paying any dividends until the effectiveness of the
Merger.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK QUOTATION; EXCHANGE
ACT REGISTRATION; MARGIN REGULATIONS.
MARKET FOR THE SHARES. The purchase of Shares by the Purchaser pursuant to
the Offer will reduce the number of Shares that might otherwise trade publicly
and may reduce the number of holders of Shares, which could adversely affect the
liquidity and market value of the remaining Shares held by the public.
STOCK QUOTATION. Depending upon the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the requirements of the National
Association of Securities Dealers, Inc. ("NASD") for continued inclusion in the
Nasdaq National Market, which among other things require that an issuer have
either (i) at least 750,000 publicly held shares, held by at least 400
stockholders of round lots, with an aggregate market value of at least
$5,000,000 and net tangible assets of at least $4,000,000 and at least two
registered and active market makers for the shares or (ii) at least 1,100,000
publicly held shares, held by at least 400 stockholders of round lots, with an
aggregate market value of at least $15,000,000, and either (x) a market
capitalization of at least $50,000,000 or (y) total assets and total revenue of
at least $50,000,000 each for the most recently completed fiscal year or two of
the last three most recently completed fiscal years and at least four registered
and active market markers. Shares held directly or indirectly by directors,
officers or beneficial owners of more than 10% of the Shares are not considered
as being publicly held for this purpose. According to information provided by
the Company, as of July 7, 1999, there were 1,281 stockholders of record.
If the Shares were to cease to be quoted on the Nasdaq National Market, the
market for the Shares could be adversely affected. It is possible that the
Shares would be traded or quoted on other securities
10
<PAGE>
exchanges or in the over-the-counter market and the price quotations would be
reported by such exchange or through Nasdaq or other sources. The extent of the
public market for the Shares and the availability of such quotations would,
however, depend upon the number of stockholders and/or the aggregate market
value of the Shares remaining at such time, the interest in maintaining a market
in the Shares on the part of securities firms, the possible termination of
registration of the Shares under the Exchange Act and other factors.
EXCHANGE ACT REGISTRATION. The Shares are currently registered under the
Exchange Act. Such registration may be terminated by the Company upon
application to the SEC if the outstanding Shares are not listed on a national
securities exchange and there are fewer than 300 holders of record of the
Shares. Termination of registration of the Shares under the Exchange Act would
substantially reduce the information required to be furnished by the Company to
its stockholders and to the SEC and would make certain provisions of the
Exchange Act no longer applicable to the Company, such as the short-swing profit
recovery provisions of Section 16(b), the requirement of furnishing a proxy
statement pursuant to Section 14(a) in connection with stockholders' meetings
and the related requirement of furnishing an annual report to stockholders.
Furthermore, the ability of "affiliates" of the Company and persons holding
"restricted securities" of the Company to dispose of such securities pursuant to
Rule 144 under the Securities Act of 1933, as amended (the "Securities Act"),
may be impaired or eliminated. If registration of the Shares under the Exchange
Act was terminated, the Shares would no longer be eligible for Nasdaq National
Market reporting or for continued inclusion on the list of "margin securities"
of the Board of Governors of the Federal Reserve System (the "Federal Reserve
Board"). The Purchaser intends to seek to cause the Company to apply for
termination of registration of the Shares under the Exchange Act as soon as
possible after the completion of the Offer if the requirements for such
termination are met.
MARGIN REGULATIONS. The Shares are currently "margin securities" under the
regulations of the Federal Reserve Board, which has the effect, among other
things, of allowing brokers to extend credit on the collateral of the Shares.
Depending upon factors similar to those described above regarding listing and
market quotations, it is possible that, following the Offer, the Shares would no
longer constitute "margin securities" for the purposes of the margin regulations
of the Federal Reserve Board and therefore could no longer be used as collateral
for loans made by brokers. In any event, the Shares will cease to be "margin
securities" if registration of the Shares under the Exchange Act is terminated.
INCREASED INTEREST IN NET BOOK VALUE AND NET EARNINGS OF THE COMPANY. If
the Offer is consummated, the direct and indirect interest of Numico in the
Company's net book value and net earnings will increase in proportion to the
number of Shares acquired in the Offer. Following consummation of the Merger,
Numico's direct and indirect interest in such items will increase to 100%, and
the Company will be a wholly-owned indirect subsidiary of Numico. Accordingly,
Numico and its subsidiaries will be entitled to all benefits resulting from that
interest, including all income generated by the Company's operations, any future
increase in the Company's value and the right to elect all members of the Board.
Similarly, Numico will also bear the risk of losses generated by the Company's
operations and any decrease in the value of the Company after the Merger.
Furthermore, after the Merger, pre-Merger shareholders will not have the
opportunity to participate directly in the earnings and growth of the Company
and will not face the risk of losses generated by the Company's operations or
decline in the value of the Company.
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
The Company is a Delaware corporation with its principal executive office at
300 Sixth Avenue, Pittsburgh, Pennsylvania 15222. The Company is a nationwide
specialty retailer of vitamin and mineral supplements, sports nutrition products
and herbs, and is also a leading provider of personal care and other
health-related products.
SELECTED FINANCIAL INFORMATION. The selected financial information of the
Company and its consolidated subsidiaries set forth below has been excerpted and
derived from the Company's Annual Report on Form 10-K for the fiscal year ended
February 6, 1999 (the "Form 10-K") and its Quarterly Report on Form 10-Q for the
twelve weeks ended May 1, 1999, and its Quarterly Report on Form 10-Q for the
twelve weeks ended April 25, 1998. More comprehensive financial and other
information is included in such reports
11
<PAGE>
(including management's discussion and analysis of results of operations and
financial position) and in other reports and documents filed by the Company with
the SEC. The financial information set forth below is qualified in its entirety
by reference to such reports and documents filed with the SEC and all of the
financial statements and related notes contained therein. These reports and
other documents may be examined and copies thereof may be obtained from the SEC
in the manner set forth below under "--Available Information."
GENERAL NUTRITION COMPANIES, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS)
<TABLE>
<CAPTION>
TWELVE WEEKS ENDED FISCAL YEAR ENDED
--------------------------- --------------------------------
APRIL 25, FEBRUARY 6, JANUARY 31,
MAY 1, 1999 1998 1999 1998
------------ ------------- --------------- ---------------
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net revenue...................................... $ 336,357 $ 327,617 $ 1,417,746 $ 1,193,485
Cost of sales.................................... 222,088 195,852 896,539 726,016
Selling, general and administrative.............. 75,844 77,572 337,594 272,215
Compensation expense--non-cash................... -- -- 276 4,083
Operating earnings............................... 38,425 54,193 183,337 191,171
Interest expense................................. 11,802 5,259 36,608 22,926
Income taxes..................................... 9,851 18,696 55,752 64,880
Net earnings..................................... 16,772 30,238 90,977 103,365
BALANCE SHEET DATA:
Working capital.................................. 197,353 161,652 211,142 141,361
Total assets..................................... 1,116,952 1,012,011 1,127,986 933,938
Total outstanding indebtedness................... 994,363 689,609 1,023,070 583,226
Stockholders' equity............................. 122,589 322,402 104,916 350,712
</TABLE>
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or based upon
publicly available documents on file with the SEC and other publicly available
information. Although the Purchaser, Numico, the Information Agent and the
Dealer Manager do not have any knowledge that any such information is untrue,
none of the Purchaser, Numico, the Information Agent and the Dealer Manager
takes any responsibility for the accuracy or completeness of such information or
for any failure by the Company to disclose events that may have occurred and may
affect the significance or accuracy of any such information.
CERTAIN FINANCIAL PROJECTIONS. The Company does not, as a matter of course,
make public forecasts or projections as to its future financial performance.
However, in connection with the negotiations between Numico and the Company, the
Company made available to representatives of Numico certain non-public
information (the "Projections") regarding the Company's projected operating
performance. The Projections indicated that for the fiscal years ended February
5, 2000, February 3, 2001 and February 2, 2002, the
12
<PAGE>
Company's net revenue, earnings before interest and income taxes ("EBIT"),
earnings before interest, income taxes, depreciation and amortization ("EBITDA")
and net earnings are as follows:
GENERAL NUTRITION COMPANIES, INC.
CERTAIN PROJECTIONS OF FUTURE OPERATING RESULTS
(IN MILLIONS)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-------------------------------------------------
FEBRUARY 5, FEBRUARY 3, FEBRUARY 2,
2000 2001 2002
--------------- --------------- ---------------
<S> <C> <C> <C>
Net revenue.................................................. $ 1,529.1 $ 1,724.8 $ 1,976.9
EBIT......................................................... 192.1 222.0 266.5
EBITDA....................................................... 256.7 295.5 343.6
Net earnings................................................. 90.6 112.3 143.9
</TABLE>
The Projections reflect the Company's forecast of its consolidated net
revenue, EBIT, EBITDA and net earnings on a stand-alone basis and without
reflecting any potential synergies from the consummation of the Offer and the
Merger.
THE PROJECTIONS WERE PREPARED SOLELY FOR INTERNAL USE AND NOT WITH A VIEW TO
PUBLIC DISCLOSURE OR COMPLIANCE WITH THE PUBLISHED GUIDELINES OF THE SEC OR THE
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING PROJECTIONS AND
WERE NOT PREPARED WITH THE ASSISTANCE OF, OR REVIEWED BY, INDEPENDENT
ACCOUNTANTS. THE PROJECTIONS ARE INCLUDED IN THIS OFFER TO PURCHASE SOLELY
BECAUSE SUCH INFORMATION WAS FURNISHED TO NUMICO AND THE PURCHASER BY THE
COMPANY. NONE OF NUMICO, THE PURCHASER, THE COMPANY, THE DEALER MANAGER OR ANY
OTHER PERSON PROVIDES ANY ASSURANCE AS TO THE VALIDITY OR ACCURACY OF THE
PROJECTED OUTCOMES OR COMPLETENESS OF THE PROJECTIONS, AND THE INCLUSION OF SUCH
PROJECTED INFORMATION IN THIS OFFER TO PURCHASE SHOULD NOT BE REGARDED AS AN
INDICATION THAT ANY SUCH PERSONS CONSIDER SUCH PROJECTED OUTCOMES TO BE ACCURATE
OR RELIABLE. THE PROJECTIONS WERE NOT PREPARED IN ACCORDANCE WITH GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES AND WERE NOT AUDITED OR REVIEWED BY ANY
INDEPENDENT ACCOUNTING FIRM, NOR DID ANY SUCH FIRM PERFORM ANY OTHER SERVICES
WITH RESPECT THERETO. THE PROJECTIONS ARE BASED ON A VARIETY OF ASSUMPTIONS
RELATING TO THE BUSINESSES OF THE COMPANY, INDUSTRY PERFORMANCE, GENERAL
BUSINESS AND ECONOMIC CONDITIONS AND OTHER MATTERS, WHICH ARE INHERENTLY SUBJECT
TO SIGNIFICANT UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE BEYOND THE
COMPANY'S CONTROL. THESE ASSUMPTIONS INVOLVE JUDGMENTS WITH RESPECT TO, AMONG
OTHER THINGS, FUTURE ECONOMIC AND COMPETITIVE CONDITIONS, INFLATION RATES AND
FUTURE BUSINESS CONDITIONS. THEREFORE, THE PROJECTIONS ARE INHERENTLY IMPRECISE
AND THERE CAN BE NO ASSURANCE THAT THEY WILL PROVE TO BE RELIABLE. ALSO, ACTUAL
FUTURE RESULTS MAY VARY MATERIALLY FROM THOSE SHOWN IN THE PROJECTIONS. NONE OF
NUMICO, THE PURCHASER, THE COMPANY OR THE DEALER MANAGER IS UNDER ANY OBLIGATION
TO OR HAS ANY INTENTION TO UPDATE THE PROJECTIONS AT ANY FUTURE TIME.
AVAILABLE INFORMATION. The Company is subject to the informational
requirements of the Exchange Act and, in accordance therewith, is required to
file reports relating to its business, financial condition and other matters.
Information as of particular dates concerning the Company's directors and
officers, their remuneration, stock options and other matters, the principal
holders of the Company's securities and any material interest of such persons in
transactions with the Company is required to be disclosed in proxy statements
distributed to the Company's stockholders and filed with the SEC. Such reports,
proxy statements and other information should be available for inspection at the
public reference facilities of the SEC at 450 Fifth Street, N.W., Washington,
D.C. 20549, at the regional offices of the SEC located at Seven World Trade
Center, 13th Floor, New York, NY 10048 and at Citicorp Center, 500 West Madison
Street (Suite 1400), Chicago, IL 60661. Copies of such information should be
obtainable, by mail, upon payment of the SEC's customary charges, by writing to
the SEC's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549.
The SEC maintains a web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the SEC. Such reports, proxy and information statements and other
information may be found on the SEC's web site address, http://www.sec.gov.
Although neither Numico nor the Purchaser has any knowledge that any such
information is untrue, Numico and the Purchaser take no responsibility for the
accuracy or completeness of
13
<PAGE>
information contained in this Offer to Purchase with respect to the Company or
for any failure by the Company to disclose events which may have occurred or may
affect the significance or accuracy of any such information.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND NUMICO.
The Purchaser is a Delaware corporation and, to date, has engaged in no
activities other than those incident to its formation and the commencement of
the Offer. The Purchaser is an indirect wholly-owned subsidiary of Numico. The
principal executive office of the Purchaser is located at 1209 Orange Street,
Wilmington, Delaware 19801. All outstanding shares of common stock of Purchaser
are owned by Numico US, LP, a Delaware limited partnership ("Numico LP").
Numico LP is a holding company established solely to hold the common stock
of the Purchaser and has not engaged in any activities other than those incident
to its formation and the formation of the Puchaser. Numico LP is an indirect
wholly-owned subsidiary of Numico. The principal executive office of Numico LP
is located at 1209 Orange Street, Wilmington, Delaware 19801.
Numico is a company incorporated under the laws of The Netherlands. The
principal executive office of Numico is located at Rokkeveenseweg 49, 2712 PJ
Zoetermeer, P.O. Box 1, 2700 MA Zoetermeer, The Netherlands. Numico is a
multinational company concentrating on the development, manufacture and sales of
specialized nutrition products based upon medical scientific concepts with a
high added value.
Numico is not subject to the informational reporting requirements of the
Exchange Act and as such is not required to file reports, proxy statements or
other information with the SEC.
Set forth below is certain summary consolidated financial information of
Numico.
NUMICO
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1996 1997 1998 1998(1)
NLG NLG NLG US$
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
OPERATING DATA:
(Dutch GAAP)
Sales............................................. 2,911 3,202 3,476 1,839
Gross margin...................................... 1,782 2,018 2,187 1,157
Profit before income taxes........................ 306 391 463 245
Net profit........................................ 232 288 339 179
Earnings per share................................ 1.92 2.29 2.63 1.39
Number of shares outstanding...................... 120,930,354 125,650,142 128,828,626 128,828,626
Earnings per share (fully diluted)................ 1.82 2.20 2.55 1.35
Number of shares outstanding (fully diluted)...... 133,269,665 134,389,871 135,621,780 135,621,780
FINANCIAL POSITION:
(Dutch GAAP)
Total assets...................................... 1,772 1,906 1,924 1,018
Total current liabilities......................... 589 729 777 411
Provisions and long-term debt..................... 783 667 629 333
Equalization fund investment grants and minority
interests....................................... 23 27 29 15
Stockholders' equity.............................. 377 483 489 259
</TABLE>
- ------------------------
(1) Dutch Guilders (NLG) are translated into U.S. Dollars ($) at a rate of 1.89
NLG = $1.00, the Noon Mid-Rate of the ABN AMRO Bank in Amsterdam on December
31, 1998. The presentation of the U.S. Dollar amounts should not be
construed as a representation that the Dutch Guilder amounts could be so
converted into U.S. Dollars at the rate indicated or at any other rate.
14
<PAGE>
Numico's financial statements are prepared in accordance with generally
accepted accounting principles in The Netherlands ("Dutch GAAP"), which differ
in certain significant respects from generally accepted accounting principles in
the U.S. ("US GAAP"). Numico, however, believes that the differences between
Dutch GAAP and US GAAP are not material to a decision by holders of Shares
whether to sell, tender or hold the Shares.
Statements which Numico and the Purchaser may publish, including those in
this Offer to Purchase, that are not strictly historical are "forward-looking"
statements. Although Numico and Purchaser believe the expectations reflected in
such forward-looking statements are based on reasonable assumptions, they can
give no assurance that their expectations will be realized. Forward-looking
statements involve known and unknown risks which may cause the actual results
and corporate developments of Numico and the Purchaser to differ materially from
those expected. There are a number of factors that could cause actual results
and developments to differ materially from those expressed or implied by these
forward-looking statements. These factors include, but are not limited to,
levels of consumer and business spending in major economies, changes in consumer
tastes and preferences, the levels of marketing and promotional expenditures by
Numico and its competitors, raw materials and employee costs, changes in future
exchange and interest rates, changes in tax rates and future business
combinations, acquisitions or dispositions, and the rate of technical changes.
The name, citizenship, business address, present principal occupation or
employment and five-year employment history of each of the directors and
executive officers of Numico, the Purchaser and Numico LP are set forth in
Schedule A hereto.
Except as described in Section 10 herein, none of Numico, the Purchaser or
Numico LP, or, to the best of their knowledge, any of the persons listed in
Schedule A, nor any associate or majority-owned subsidiary of any of the
foregoing, beneficially owns or has any right to acquire, directly or
indirectly, any equity security of the Company. Except as set forth in Section
10 herein, none of Numico, the Purchaser or Numico LP, or, to the best of their
knowledge, any of the other persons referred to above, nor any of their
respective directors, executive officers or subsidiaries has effected any
transaction in any equity security of the Company during the past 60 days.
Except as set forth in Sections 10 and 11 herein, none of Numico, the
Purchaser or Numico LP, or, to the best of their knowledge, any of the persons
listed in Schedule A hereto, has any contract, arrangement, understanding or
relationship with any other person with respect to any securities of the
Company, including, but not limited to, any contract, arrangement, understanding
or relationship concerning the transfer or the voting of any such securities,
joint ventures, loan or option arrangements, puts or calls, guaranties of loans,
guaranties against loss or the giving or withholding of proxies.
Except as set forth in Sections 10 and 11 herein, there have been no
contacts, negotiations or transactions since February 6, 1999 between Numico,
the Purchaser or Numico LP, or, to the best of their knowledge, any of the
persons listed in Schedule A hereto, on the one hand, and the Company or its
affiliates, on the other hand, concerning a merger, consolidation or
acquisition, a tender offer or other acquisition of securities, an election of
directors, or a sale or other transfer of a material amount of assets. Except as
described in Sections 10 and 11 herein, none of Numico, the Purchaser or Numico
LP, or, to the best of their knowledge, any of the persons listed in Schedule A
hereto, has since February 6, 1999, had any business relationship or transaction
with the Company or any of its executive officers, directors or affiliates that
would require disclosure under the rules and regulations of the SEC applicable
to the Offer.
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY.
In early April 1999, a consulting firm contacted a representative of Numico
and inquired as to Numico's possible interest in acquiring the Company or
discussing other strategic arrangements between Numico and the Company.
Thereafter, a series of calls took place among representatives of Numico and the
Company to determine whether a meeting of senior executives of the companies
could be arranged.
On April 28, 1999, a representative of Numico and William E. Watts,
President and Chief Executive Officer of the Company, met in Pittsburgh,
Pennsylvania, to discuss the businesses of Numico and the Company, to exchange
information on the market for nutrition products and began preliminary
discussions
15
<PAGE>
regarding the possibility of a strategic transaction between Numico and the
Company. It was determined at the meeting that the companies should continue
discussions. Discussions regarding Numico's interest in
consummating an acquisition transaction with the Company continued thereafter
from time to time between various representatives of Numico and the Company.
As of May 26, 1999, confidentiality agreements were signed providing for the
confidential exchange of information.
A meeting between Mr. Watts and Johannes C. T. van der Wielen, Chief
Executive Officer of Numico, was held on May 27, 1999, at Numico's headquarters
in The Netherlands. Several senior members of Numico's management also attended
the meeting. On May 28, 1999, Mr. Watts was given a tour of Numico's research
laboratories and other facilities in The Netherlands. That evening, Mr. Watts,
Mr. van der Wielen and others from Numico met for additional discussions.
During the first week of June 1999, Mr. van der Wielen and Mr. Watts held
several telephone conversations concerning a potential transaction and discussed
the principal terms of the transaction and how to pursue such a transaction.
Numico representatives traveled to New York for a presentation by the
Company and its advisors on June 9, 1999. Representatives from J.P. Morgan and
its affiliate, J.P. Morgan Securities Ltd., Numico's financial advisor, and
Vedder, Price, Kaufman & Kammholz, Numico's legal counsel in the United States,
also were present. Mr. Watts and other senior management members from the
Company attended. Morgan Stanley, the Company's financial advisor, was also
represented. At the meeting, the Company's management made presentations to
Numico regarding the Company's business and operations.
The following morning, on June 10, 1999, Numico representatives visited the
Company's stores in New York. Later in the day, Numico and the Company and their
advisors met once again to review financial information on the Company. Numico
also made presentations to the Company on its research and development
capabilities and nutrition products in Europe.
Beginning on June 10, 1999, Numico, its financial advisors and legal counsel
conducted business, legal and financial due diligence at the Company's legal
counsel's offices in New York. Over the succeeding weeks, Numico's outside
advisors continued their reviews of the Company and its operations.
On June 14, 1999, Mr. van der Wielen and Mr. Watts met in the United States
to discuss further details of the transaction between the companies and to visit
the Company's facilities. On June 15, 1999 Mr. van der Wielen traveled with Mr.
Watts to Greenville, South Carolina to view the Company's manufacturing
facilities. On June 16 and 17, 1999, Company management visited Numico's
research and development laboratories and headquarters in The Netherlands.
On June 23, 1999, Mr. Watts and Gregory T. Horn arrived in The Netherlands
for meetings with Mr. van der Wielen and Erlend Jan van der Hagen, Chairman of
the Supervisory Board of Numico. On June 24, 1999, Messrs. Watts and Horn made a
presentation to the Supervisory Board of Numico. After the presentation, the
Supervisory Board approved a cash tender offer for all of the outstanding shares
of the Company at $25.00 per share and the subsequent merger of a subsidiary of
Numico with and into the Company, subject to definitive documentation.
Also on June 23, 1999, Numico's legal counsel distributed to the Company and
the Company's legal counsel, a draft merger agreement setting forth the proposed
terms of the tender offer and second step merger. Over the course of the next
several days, Numico, the Company and their respective legal counsel met on a
number of occasions to negotiate the definitive Merger Agreement and the terms
of the Tender Agreement, Employment Agreements (as defined herein) and a side
letter to the Merger Agreement outlining terms of certain benefits to be
provided by Numico to the Company's employees.
At a meeting held on the afternoon of June 30, 1999, in New York City, the
Board of Directors of the Company met to consider the terms of the proposed
acquisition. At such meeting, the Board of Directors of the Company reviewed and
discussed the latest terms of the proposed acquisition and the applicable
agreements and heard presentations from and asked questions of its management
and its legal and financial advisors. The Board of Directors of the Company met
again in the morning of July 3, 1999 at
16
<PAGE>
which time the Company's financial and legal advisors described the final terms
of the proposed acquisition and the applicable agreements and Morgan Stanley
delivered its opinion, dated July 3, 1999, that, as of such date, the
consideration to be received by the Company's stockholders in the Offer and the
Merger was fair, from a financial point of view to such stockholders. At such
meeting, the Board of Directors of the Company unanimously approved the Merger
Agreement, the Offer and the Merger, determined that the Offer and the Merger
are fair to, and in the best interests of, the stockholders of the Company and
voted to recommend to holders of Shares that they tender their Shares pursuant
to the Offer and adopt the Merger Agreement.
On July 5, 1999, the Merger Agreement, the Tender Agreement and the
Employment Agreements were executed by Numico, the Purchaser and the Company.
11. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY; THE MERGER AGREEMENT; OTHER
AGREEMENTS.
PURPOSE.
The purpose of the Offer is to acquire for cash as many outstanding Shares
as possible as a first step in acquiring the entire equity interest in the
Company.
If the Purchaser acquires a majority of the total issued and outstanding
Shares pursuant to the Offer, it will have the votes necessary under the DGCL to
approve the Merger of the Purchaser with and into the Company. Therefore, based
on information provided by the Company, if at least approximately 37,611,040
Shares are acquired pursuant to the Offer or otherwise, the Purchaser will be
able to and intends to effect the Merger without the vote of any person other
than the Purchaser. In addition, under the DGCL, Numico may cause the Purchaser
to merge with and into the Company without a vote of the Company's stockholders
if the Purchaser owns at least 90% of the outstanding Shares. If over 90% of the
outstanding Shares are tendered in the Offer, Numico intends to effect the
merger of the Purchaser into the Company.
PLANS FOR THE COMPANY.
Numico intends to conduct a detailed review of the Company and its assets,
corporate structure, dividend policy, capitalization, operations, properties,
policies, management and personnel and to consider, subject to the terms of the
Merger Agreement, what, if any, changes would be desirable in light of the
circumstances then existing following the acquisition of Shares pursuant to the
Offer and reserves the right to take such actions or effect such changes as it
deems desirable.
Except as otherwise described in this Offer to Purchase, neither Numico nor
the Purchaser have any current plans or proposals that would relate to, or
result in, any extraordinary corporate transaction involving the Company or any
of its subsidiaries, such as a merger, reorganization or liquidation involving
the Company, a sale or transfer of a material amount of assets of the Company or
any of its subsidiaries, any change in the Company's capitalization or dividend
policy or any other material change in the Company's business, corporate
structure or personnel.
THE MERGER AGREEMENT.
The following is a summary of the material terms of the Merger Agreement.
This summary is not a complete description of the terms and conditions thereof
and is qualified in its entirety by reference to the full text thereof, which is
incorporated herein by reference and a copy of which has been filed with the SEC
as an exhibit to Schedule 14D-1. The Merger Agreement may be examined, and
copies thereof may be obtained, as set forth in Section 8 above.
THE OFFER. The Merger Agreement provides for the commencement of the Offer
as described in Section 1 hereof.
THE MERGER. The Merger Agreement provides that upon the closing of the
Merger, the Company and the Purchaser will file a Certificate of Merger with the
Secretary of State of the State of Delaware. The Merger will become effective at
such time as the Certificate of Merger is duly filed with the Delaware Secretary
of State or at such later time as is specified in the Certificate of Merger (the
time the Merger
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becomes effective being the "Effective Time"). The Merger Agreement provides
that, upon the terms and subject to the conditions set forth in the Merger
Agreement, and in accordance with the DGCL, at the Effective Time, the Purchaser
will be merged with and into the Company. Following the Merger, the separate
corporate existence of the Purchaser shall cease, the Company will be the
surviving corporation in the Merger (hereinafter sometimes called the "Surviving
Corporation") and, in accordance with the DGCL, continue to be governed by the
laws of the State of Delaware.
Pursuant to the Merger Agreement, as of the Effective Time, by virtue of the
Merger and without any action on the part of Numico, the Purchaser, the Company
or the holder of any Shares or any shares of capital stock of the Purchaser: (i)
each Share issued and outstanding at the Effective Time (other than any Shares
owned by the Company, Numico or the Purchaser or Shares which are held by
Dissenting Stockholders) will be converted into the right to receive $25.00 in
cash, or such greater amount paid pursuant to the Offer, without interest (the
"Merger Consideration") and (ii) each share of capital stock of the Purchaser
issued and outstanding at the Effective Time will be converted into and become
one fully paid and nonassessable share of common stock, par value $0.01 per
share, of the Surviving Corporation.
COMPANY ACTIONS. The Company's Board of Directors unanimously (x) approved
the Merger Agreement, the Offer and the Merger, (y) determined that the Offer
and the Merger are fair to, and in the best interests of, the stockholders of
the Company and (z) recommends that the stockholders of the Company accept the
Offer, tender their Shares and adopt the Merger Agreement. Morgan Stanley, the
Company's financial advisor, has rendered to the Board its opinion that, as of
July 3, 1999, the consideration to be paid in the Offer and the Merger is fair
to holders of the Shares from a financial point of view.
Concurrently with the filing of this Offer to Purchase, the Company is
filing with the SEC and causing to be disseminated to stockholders of the
Company, a Schedule 14D-9 with respect to the Offer (together with any
amendments or supplements thereto, the "Schedule 14D-9") which includes the
recommendation described in the preceding paragraph. Subject to the provisions
of the Merger Agreement described under "Termination" below, such recommendation
may be withdrawn, modified or amended to the extent that the Board deems it
necessary to do so in the exercise of its fiduciary duty.
STOCKHOLDER APPROVAL. Pursuant to the Merger Agreement, the Company shall,
if required, as soon as practicable following the acquisition by the Purchaser
of the Shares pursuant to the Offer, duly call, give notice of, convene and hold
a meeting of its stockholders (the "Company Stockholders Meeting") for the
purpose of obtaining the requisite number of votes to adopt the Merger
Agreement. In addition, the Company shall, through the Board, recommend to its
stockholders that they vote in favor of the adoption of the Merger Agreement;
provided, however, that the Board may withdraw, modify or change such
recommendation to the extent that the Board determines to do so in exercise of
its fiduciary duties or in accordance with the provisions of the Merger
Agreement described under "--Acquisition Proposals" below. The Merger Agreement
provides that Numico shall vote or cause to be voted all Shares owned of record
by Numico, the Purchaser or any of its other subsidiaries in favor of the
adoption of the Merger Agreement.
Notwithstanding the preceding paragraph or any other provision of the Merger
Agreement, the Merger Agreement provides that in the event that Numico, the
Purchaser, or any other subsidiary of Numico shall beneficially own in the
aggregate at least 90% of the outstanding Shares, the Company shall not be
required to call the Company Stockholders Meeting or to file or mail a proxy
statement, and the parties to the Merger Agreement shall, subject to the
provisions of Section 12 herein, at the request of Numico, take all necessary
and appropriate action to cause the Merger to become effective as soon as
practicable after the acceptance for payment of and payment for Shares by the
Purchaser pursuant to the Offer without a meeting of stockholders of the
Company.
The Merger Agreement provides that, if required by applicable law, as soon
as practicable following Numico's request, the Company and Numico shall prepare
and file with the SEC the proxy statement relating to the Company Stockholders
Meeting (the "Proxy Statement"). Each of the Company and Numico shall use its
reasonable best efforts to cause the Proxy Statement to be mailed to the
Company's stockholders, as promptly as practicable.
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CONDUCT OF BUSINESS. In the Merger Agreement, the Company has covenanted
and agreed as to itself and its subsidiaries that, among other things and
subject to certain exceptions, during the period from the date of the Merger
Agreement to the Effective Time:
(a) the Company and its subsidiaries shall carry on their respective
businesses in the usual, regular and ordinary course in all respects, consistent
with past practice and shall use their respective reasonable best efforts to
preserve intact their present business organizations and preserve their existing
relationships with customers, suppliers, employees, Governmental Entities (as
defined in the Merger Agreement) and others having business dealings with them,
and shall not enter into any material joint venture or other similar
arrangement;
(b) the Company shall not, and shall not propose to, (i) declare or pay any
dividends on or make other distributions in respect of any of its capital stock,
(ii) split, combine or reclassify any of its capital stock or issue or authorize
or propose the issuance of any other securities in respect of, in lieu of or in
substitution for, shares of its capital stock, (iii) repurchase, redeem or
otherwise acquire any shares of its capital stock or any securities convertible
into or exercisable for any shares of its capital stock except as otherwise
permitted with respect to the payment of the option exercise price or tax
withholding under certain option agreements in effect on the date of the Merger
Agreement under the Company Equity Plans (as defined in the Merger Agreement),
or (iv) effect any reorganization or recapitalization;
(c) the Company shall not and shall cause its subsidiaries not to issue,
pledge, dispose of or encumber, deliver or sell, or authorize or propose the
issuance, disposition, encumbrance, pledge, delivery or sale of, any shares of
its capital stock of any class, any Company Voting Debt (as defined in the
Merger Agreement) or any securities convertible into or exercisable for, or any
rights, warrants or options to acquire, any such shares or Company Voting Debt,
or enter into any agreement with respect to any of the foregoing, other than the
issuance of Shares upon the exercise of stock options or rights to purchase
Shares outstanding on the date of the Merger Agreement in accordance with the
terms of the Company Equity Plans as in effect on the date of the Merger
Agreement and other than upon the exercise of the Warrants (as defined in the
Merger Agreement);
(d) except to the extent required to comply with their respective
obligations under the Merger Agreement or required by law, the Company and its
subsidiaries will not amend or propose to amend their respective Certificate of
Incorporation, Bylaws or other similar governing documents;
(e) the Company shall not (i) incur any indebtedness for borrowed money or
guarantee any such indebtedness or issue or sell any debt securities or warrants
or rights to acquire any debt securities of the Company or guarantee any debt
securities of other persons other than indebtedness (including short term
borrowings) of the Company or its subsidiaries to the Company or its
subsidiaries and other than in the ordinary course of business, (ii) make any
loans, advances or capital contributions to, or investments in, any other
person, other than by the Company or its subsidiaries to or in the Company or
its subsidiaries or (iii) pay, discharge, modify or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than in the case of clauses (ii) and (iii),
loans, advances, capital contributions, investments, payments, discharges or
satisfactions incurred or committed to in the ordinary course of business
consistent with past practice;
(f) the Company shall not, and shall not permit its subsidiaries to (i)
increase the compensation payable or to become payable to any of its executive
officers or employees or (ii) take an action with respect to the grant of any
severance or termination pay, or stay, bonus or other incentive arrangement
(other than as required by applicable law or the terms of any collective
bargaining agreement or as required pursuant to benefit plans and policies in
effect on the date of the Merger Agreement), except any such increases or grants
made in the ordinary course of business consistent with past practice, pursuant
to agreements, plans or policies existing on the date of the Merger Agreement or
as otherwise provided under the Merger Agreement; provided, however that in no
event shall the Company grant, or permit to be granted, any options or other
awards under any Company Equity Plan after the date of the Merger Agreement;
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(g) the Company shall not, and shall not permit its subsidiaries to, make
any tax election or change any method of accounting for tax purposes in a manner
that is reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect (as defined below) on the Company;
(h) the Company shall not, and shall not permit its subsidiaries to, release
or otherwise terminate the employment of any employee or hire any new employees,
except in the ordinary course of business;
(i) the Company shall not, and shall not permit is subsidiaries to,
establish, adopt or enter into any new employee benefit plans or agreements
(including pension, profit sharing, bonus, incentive compensation, director and
officer compensation, severance, medical, disability, life or other insurance
plans, and employment agreements) or amend or modify any existing Company
Benefit Plans (as defined in the Merger Agreement), or extend coverage of the
Company Benefit Plans, except as required by applicable law, or the terms of any
collective bargaining agreement;
(j) subject to certain exceptions, no officer or employee shall be entitled
to purchase any additional Shares under any Company Equity Plan (other than
pursuant to currently outstanding stock options and stock purchase periods) and
no stock options or other awards shall be granted under any Company Equity Plan
after the date of the Merger Agreement;
(k) the Company shall not, and shall not permit its subsidiaries to, take
any action that is reasonably likely to result in any of the Offer Conditions
not being satisfied; and
(l) the Company shall not, and shall not permit its subsidiaries to, (i)
transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of or
encumber any assets except in the ordinary course of business consistent with
past practice; (ii) authorize capital expenditures in any manner not reflected
in the capital budget of the Company as currently in effect or make any
acquisition of, or investment in, any business or stock of any other person or
entity except in the ordinary course of business consistent with past practice;
(iii) settle or compromise any material claims or litigation or, except in the
ordinary course of business consistent with past practice, modify, amend or
terminate any of the Company Material Contracts (as defined in the Merger
Agreement) or waive, release or assign any material rights or claims except, in
each case, as is not reasonably likely, individually or in the aggregate, to
have a Material Adverse Effect on the Company; (iv) permit any material
insurance policy naming it as a beneficiary or a loss payable payee to be
canceled or terminated without the prior written approval of Numico, except in
the ordinary course of business consistent with past practice; or (v) terminate
the employment of any employee who is covered by a change in control,
employment, termination or similar agreement, except for Cause (as defined in
such agreements) or permit circumstances to exist that would allow such employee
to terminate employment and be entitled to severance or other payments
thereunder.
Pursuant to the Merger Agreement and subject to certain terms therein, from
the date of the Merger Agreement until the earlier of the termination of the
Merger Agreement or the Effective Time, the Company has agreed to, upon
reasonable notice, afford Numico's officers, employees, counsel, accountants,
financial advisors and other representatives reasonable access to all of its and
its subsidiaries' properties, books, contracts, commitments and records and its
officers, management, employees and representatives and, during such period,
will promptly furnish all information concerning its business, properties and
personnel as may be reasonably requested.
Under the Merger Agreement, before issuing any press release or otherwise
making any public statements with respect to the Merger and other transactions
contemplated by the Merger Agreement, Numico and the Company will use reasonable
best efforts to consult with each other.
DIRECTOR AND OFFICER LIABILITY. Under the Merger Agreement, subject to
certain terms therein, Numico shall (i) cause to be maintained in effect the
current provisions regarding indemnification of current or former officers and
directors contained in the Organizational Documents (as defined in the Merger
Agreement) of the Company and its subsidiaries and any indemnification
agreements between the Company and its current or former officers and directors
that may be in effect; and (ii) maintain, for a period of six years, the
Company's existing directors' and officers' liability insurance policy and
fiduciary liability insurance (provided that Numico or the Surviving Corporation
may substitute therefor policies of substantially similar coverage and amounts
containing terms which are no less advantageous); provided,
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however, that Numico is not obligated to make annual premium payments for such
insurance to the extent such premiums exceed 150% of the premiums paid as of the
date of the Merger Agreement by the Company for such insurance.
REASONABLE BEST EFFORTS. The Merger Agreement further provides that each of
Numico, the Purchaser and the Company shall cooperate with the other and shall
use its respective reasonable best efforts to consummate and make effective the
Offer, the Merger and the other transactions contemplated by the Merger
Agreement, including, among other things, obtaining all Required Regulatory
Approvals (as defined below).
ACQUISITION PROPOSALS. Pursuant to the Merger Agreement, none of the
Company, its subsidiaries, or any of the respective officers and directors of
the Company or its subsidiaries, shall, and the Company shall direct and use its
best efforts to cause its employees, agents and representatives (including any
investment banker, attorney or accountant retained by the Company or any of its
subsidiaries) not to, take or cause, directly or indirectly, any of the
following actions with any party other than Numico, the Purchaser or their
respective designees: (i) directly or indirectly solicit, encourage, initiate,
participate in or otherwise facilitate (including by way of furnishing
information) any negotiations, inquiries or discussions with respect to any
offer, indication or proposal to acquire all or more than 15% of the Company's
business, assets or capital shares whether by merger, consolidation, other
business combination, purchase of assets, reorganization, tender or exchange
offer or otherwise (each of the foregoing, an "Acquisition Proposal") or (ii)
disclose, in connection with an Acquisition Proposal, any information or provide
access to its properties, books or records. The Company also agreed that it will
immediately cease and cause to be terminated any previously existing activities,
discussions or negotiations with any parties with respect to any of the
foregoing. The Company agreed that it will take the necessary steps to promptly
inform the individuals or entities referred to in the first sentence of this
paragraph of such obligations that it has undertaken. The Company also agreed to
promptly request any person which may have executed a confidentiality agreement
in connection with its consideration of acquiring the Company and/or any of its
subsidiaries to return or destroy all confidential information furnished to such
person by or on behalf of the Company.
Notwithstanding anything to the contrary referred to in the previous
paragraph, the Merger Agreement provides that prior to the consummation of the
Offer the Company may participate in discussions or negotiations with, and
furnish non-public information and afford access to the properties, books,
records, officers, employees and representatives of the Company to, any person,
entity or group if such person, entity or group has delivered to the Company,
prior to the consummation of the Offer, and in writing, an Acquisition Proposal
which is not subject to any financing contingency and which the Board in its
good faith judgment (after consultation with its independent financial advisor)
determines if consummated would be more favorable, from a financial point of
view, to the Company's stockholders than the transactions contemplated by the
Merger Agreement and with respect to which the Board receives advice of its
outside legal counsel that the Board would breach its fiduciary duties if it did
not accept the Acquisition Proposal (a "Superior Proposal"). Pursuant to the
Merger Agreement, in the event the Company receives a Superior Proposal the
Board could execute and enter into an agreement relating to such Superior
Proposal and recommend such Superior Proposal to its stockholders, if the Board
determines (after consultation with its independent financial advisor and
outside legal counsel) that its fiduciary duties require it to do so; in such
case, the Board may withdraw, modify or refrain from making its recommendation
of the Offer and the Merger; provided, however, that the Company (i) shall have
promptly notified Numico, and in any event within 24 hours, of receipt of any
Acquisition Proposal, request for any such information, or initiation or
recommencement of any such negotiations or discussions with, the Company or any
of its subsidiaries, indicating, in connection with such notice, the name of
such person making the Acquisition Proposal or taking such action and, in
reasonable detail, the significant terms of any such Acquisition Proposal and
including with such notice any documentation relating to such Acquisition
Proposal, (ii) shall provide Numico at least 48 hours prior written notice of
the Company's intention to execute or enter into an agreement relating to such
Superior Proposal and (iii) may only terminate the Merger Agreement by written
notice to Numico provided no sooner than 48 hours after
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Numico's receipt of a copy of such Superior Proposal (or a detailed description
of the significant terms and conditions thereof).
COMPANY STOCK OPTIONS AND STOCK PURCHASE LOANS. Under the terms of the
Merger Agreement, the Company's Compensation Committee acted pursuant to each
Company Option Plan (as defined in the Merger Agreement) to provide that each
option outstanding thereunder at the Effective Time will be canceled in exchange
for the right to receive a cash payment equal to the product of (x) the excess,
if any, of the Merger Consideration per share over the exercise price per share
subject to the option, multiplied by (y) the number of Shares covered by such
option. The amounts payable will be subject to any required withholding of taxes
and will be paid without interest.
In accordance with the provisions of the Company's 1996 Management and
Director Stock Purchase Plan, officers, key employees and directors of the
Company have received matching stock purchase loans with which such individuals
have periodically purchased Shares. Pursuant to the plan, the loans are subject
to forgiveness based upon market price appreciation of the Shares and are
forgiven in full upon a change in control of the Company. As of the date of the
Merger Agreement, loans aggregating approximately $4,500,000 were owed by 54
individuals, including approximately $200,000 by Jerry D. Horn, Chairman of the
Board, $700,000 by Mr. Watts, President and Chief Executive Officer, and
balances ranging from $22,000 to $27,500 by each of Directors Beimfohr,
Wellford, Rossetti, Shepherd and Lucas. The transactions contemplated by the
Merger Agreement will constitute a change in control under the plan and,
accordingly, all of the loans will be forgiven at the time the Offer is
consummated.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains certain
representations and warranties by the Company, including, among other things,
representations and warranties concerning: (i) the organization, good standing
and qualification of the Company and its subsidiaries; (ii) the capital
structure of the Company; (iii) the authority of the Company relative to the
execution and delivery of and consummation of the transactions contemplated by
the Merger Agreement; (iv) the absence of any Violations (as defined in the
Merger Agreement) of the corporate documents and certain instruments of the
Company or its subsidiaries or of any statute, rule, regulation, order or
decree, subject to certain exceptions; (v) the accuracy and timeliness of
filings of reports and documents filed with the SEC; (vi) the absence since
February 6, 1999 of any undisclosed liabilities or obligations; (vii) compliance
with all applicable laws; (viii) the absence of any litigation, investigation or
proceeding; (ix) certain tax matters; (x) absence of certain changes or events
since February 6, 1999; (xi) validity and enforceability of the Company's
contracts; (xii) certain employee benefit and labor matters; (xiii) absence of
brokers or finders entitled to a fee in connection with the Offer and the
Merger, except Morgan Stanley; (xiv) absence of product liability claims against
the Company; (xv) its properties; (xvi) year 2000 compliance; (xvii) certain
environmental matters; (xviii) status of business relationships with customers
and suppliers; and (xix) the validity and enforceability of the Company's
franchise agreements and related franchise matters. A substantial number of the
representations and warranties of the Company contained in the Merger Agreement
will only be deemed to be inaccurate if such inaccuracy is reasonably likely to
have a Material Adverse Effect on the Company.
The Merger Agreement also contains certain representations and warranties by
Numico and the Purchaser, including (i) the standing and power of Numico and the
Purchaser to carry on their respective businesses and to consummate the
transactions contemplated by the Merger Agreement; (ii) the absence of any
Violations of corporate documents and instruments; (iii) the absence of brokers
or finders entitled to a fee in connection with the Offer and the Merger, except
J.P. Morgan; (iv) the lack of ownership of common stock of the Company by Numico
or its subsidiaries; (v) the absence of litigation that is reasonably likely to
have a Material Adverse Effect on Numico; and (vi) that Numico has available,
and will make available to the Purchaser, sufficient funds to consummate the
Offer and the Merger and the transactions contemplated thereby.
The Merger Agreement defines the term "Material Adverse Effect" to mean,
with respect to any person, any adverse change, circumstance, event or effect
that, individually or in the aggregate with all other adverse changes,
circumstances, events and effects, is or is reasonably likely to be materially
adverse to the business, operations, financial condition or results of
operations of such entity and its subsidiaries
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taken as a whole, other than any change or effect to the extent attributable to
(i) the economy in general and (ii) the announcement or other proper disclosure
of the Merger Agreement or the transactions contemplated thereby.
CONDITIONS TO THE MERGER. The conditions to the Offer are set forth in
Section 12 hereto. The Company's, Numico's and the Purchaser's obligations to
effectuate the Merger are subject to the satisfaction or waiver on or prior to
the Effective Time of the following conditions:
(a) STOCKHOLDER APPROVAL. The Company shall have obtained all
approvals of holders of Shares necessary to approve the Merger Agreement and
all the transactions contemplated thereby (including the Merger) to the
extent required by law.
(b) NO INJUNCTION OR RESTRAINTS; ILLEGALITY. No temporary restraining
order, preliminary or permanent injunction or other order issued by a court
or other Governmental Entity of competent jurisdiction shall be in effect
and have the effect of making the Merger illegal or otherwise prohibiting
the consummation of the Merger.
(c) REQUIRED REGULATORY APPROVALS. All Required Regulatory Approvals
shall have been obtained and shall be in full force and effect.
(d) COMPLETION OF THE OFFER. The Purchaser shall have (i) commenced
the Offer pursuant to the Merger Agreement and (ii) purchased, pursuant to
the terms and conditions of such Offer, all Shares duly tendered and not
withdrawn; provided, however, that neither Numico nor the Purchaser shall be
entitled to rely on the condition in clause (ii) above if either of them
shall have failed to purchase Shares pursuant to the Offer in breach of
their obligations under the Merger Agreement.
TERMINATION. The Merger Agreement may be terminated at any time prior to
the Effective Time, by action taken or authorized by the Board of Directors of
the terminating party or parties, whether before or after approval of the Merger
Agreement and the matters contemplated therein, including the Merger, by the
stockholders of the Company:
(a) By mutual written consent of Numico and the Company, by action of
their respective Boards of Directors;
(b) By either the Company or Numico if the Offer shall not have been
consummated by the Outside Date; provided that the right to terminate the
Merger Agreement under this clause (b) shall not be available to any party
whose failure to fulfill any obligation or condition under the Merger
Agreement has been the cause of, or resulted in, the failure of the Offer to
be consummated on or before such date; notwithstanding the foregoing, if the
sole reason the Offer shall not have been consummated by the Outside Date is
the failure to have obtained all Required Regulatory Approvals prior to the
date which is three months from the date of the Merger Agreement, the
Outside Date shall be extended for a period of 30 days;
(c) By Numico if any person other than Numico, the Purchaser or any of
their affiliates or any group of which any of them is a member, shall have
entered into a definitive agreement or an agreement in principle with the
Company or any of its subsidiaries with respect to an Acquisition Proposal
or the Board (or any committee thereof) shall have adopted a resolution
approving any of the foregoing;
(d) By either the Company or Numico if any court or other Governmental
Entity shall have issued an order, decree or ruling or taken any other
action (which order, decree, ruling or other action the parties shall have
used their reasonable best efforts to resist, resolve or lift, as
applicable, subject to the provisions of the Merger Agreement) permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated by the Merger Agreement, and such order, decree, ruling or
other action shall have become final and nonappealable;
(e) By Numico if (i) the Board (or any committee thereof) shall have
withdrawn or adversely modified (including by amendment of the Schedule
14D-9) its approval or recommendation of the Offer, the Merger or the Merger
Agreement or the Board, upon request by Numico following receipt
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by the Company of an Acquisition Proposal, shall fail to reaffirm such
approval or recommendation within ten business days after such request, or
shall have resolved to do any of the foregoing; (ii) the Board shall have
recommended to the stockholders of the Company that they approve an
Acquisition Proposal other than transactions contemplated by the Merger
Agreement; or (iii) a tender offer or exchange offer is commenced that, if
successful, would result in any person becoming a "beneficial owner" (as
such term is defined under Regulation 13D under the Exchange Act) of 15% or
more of the outstanding Shares (other than by Numico or an affiliate of
Numico) and the Board recommends that the stockholders of the Company tender
their Shares in such tender or exchange offer;
(f) By the Company, prior to the purchase by the Purchaser of Shares
pursuant to the Offer, if the Board determines to accept a Superior
Proposal, provided that the Company shall not be entitled to terminate the
Merger Agreement pursuant to this clause (f) unless the Company concurrently
enters into an agreement with respect to a Superior Proposal and pays the
Termination Fee (as defined below);
(g) By Numico, prior to the purchase by the Purchaser of Shares pursuant
to the Offer, upon a material breach of any material covenant or agreement
on the part of the Company set forth in the Merger Agreement, or if the
Offer Condition contained in paragraph(c)(i) or (ii) of Section 12 below is
not capable of being satisfied or cured by the earlier of (x) the Outside
Date or (y) within 30 days after an executive officer of the Company becomes
aware of the breach of any representation or warranty resulting in the
failure to satisfy such Offer Condition;
(h) By the Company, upon a material breach of any material covenant or
agreement on the part of Numico or the Purchaser set forth in the Merger
Agreement, or upon the failure of any representation or warranty of Numico
or the Purchaser set forth in the Merger Agreement (i) to the extent such
representation or warranty is qualified by Material Adverse Effect, to be
true and correct and (ii) to the extent such representation or warranty is
not qualified by Material Adverse Effect, to be true and correct, except
that, in the case of this clause (ii), no failure shall be deemed to have
occurred so long as such failure, taken together with all other such
failures, does not have a Material Adverse Effect on Numico in the case of
each of clause (i) and (ii) as of the date of the Merger Agreement and
(except to the extent such representation or warranty speaks as of an
earlier date) as of the consummation of the Offer as though made on and as
of such date, and except that, in the case of each of clause (i) and (ii),
no failure shall be deemed to have occurred so long as such failure is
capable of being satisfied or cured by the earlier of (x) the Outside Date
or (y) within 30 days after any executive officer of Numico becomes aware of
the breach of any representation or warranty resulting in such failure; or
(i) By the Company, if the Purchaser fails to (i) commence the Offer or
keep the Offer open as provided in the Merger Agreement or (ii) purchase
validly tendered Shares in violation of the terms of the Offer or the Merger
Agreement.
In the event that (x) the Merger Agreement is terminated as described in
paragraphs (c), (e) or (f) above or (y)(i) the Offer shall have remained open
for a minimum of at least 20 business days from the date it is commenced and for
such longer period as is required, (ii) after the date of the Merger Agreement
any person other than Numico or the Purchaser or any of their respective
subsidiaries or affiliates shall have become the beneficial owner of 15% or more
of the outstanding Shares or made any Acquisition Proposal, (iii) the Minimum
Condition shall not have been satisfied and the Purchaser shall not have
accepted for payment any Shares pursuant to the Offer, (iv) the Merger Agreement
shall not have been terminated as described in paragraph (h) above, and (v)
within twelve months of the termination, expiration or withdrawal of the Offer,
the Company enters into an agreement providing for the consummation of an
Acquisition Proposal (except that the reference in such definition to 15% shall
be deemed a reference to 40% for purposes of this clause (v) only) or any other
person (other than Numico or any of its affiliates) becomes the beneficial owner
of 40% or more of the outstanding Shares, then the Company shall pay Numico in
cash (A) U.S. $60 million plus (B) up to U.S. $9 million of Numico's documented
Expenses (as defined in the Merger Agreement) incurred in connection with the
Offer and Merger ((A) and (B) together, the "Termination Fee"). The Termination
Fee shall be payable by wire transfer of
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immediately available funds upon such termination, in the case of clause (x), or
upon the earlier of the Company entering into an agreement for an Acquisition
Proposal or a person becoming the beneficial owner of 40% or more of the
outstanding Shares in the case of clause (y).
AMENDMENT. Subject to applicable law and the terms of the Merger Agreement,
the Merger Agreement may be amended by the parties thereto, by action taken or
authorized by their respective Boards of Directors, at any time before or after
approval of the matters presented in connection with the Merger by the
stockholders of the Company.
BOARD OF DIRECTORS. Pursuant to the Merger Agreement, promptly upon the
acceptance for payment of and payment for any Shares by the Purchaser in
accordance with the Offer for not less than a majority of the outstanding Shares
(on a fully diluted basis), the Purchaser will be entitled to designate members
of the Board such that the Purchaser will have a number of representatives on
the Board, rounded up to the next whole number, equal to the product of (x) the
total number of directors on the Board (giving effect to the directors elected
pursuant to this sentence) multiplied by (y) the percentage of such number of
Shares owned in the aggregate by Numico or the Purchaser bears to the number
that Shares outstanding; provided, however, that until the Effective Time, there
shall be at least two directors (the "Independent Directors") who are neither
officers of Numico nor designees, shareholders or affiliates of Numico or
Numico's affiliates. The Company will, upon request by the Purchaser, on the
date of such request, (i) either increase the size of the Board or use its
reasonable efforts to secure the resignations of such number of its incumbent
directors as is necessary to enable Numico's designees to be elected to the
Board and (ii) cause Numico's designees to be so elected, including mailing to
its stockholders an information statement containing the information required by
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, which
information statement is attached as Annex A to the Schedule 14D-9.
Following the election or appointment of the Purchaser's designees and prior
to the Effective Time, except for certain actions which are legally required to
have full Board approval, any action to be taken by the Board with respect to
the Merger Agreement which adversely affects the interests of the Company's
stockholders will require approval by a majority of the Independent Directors.
CHARTER AND BYLAWS. The Merger Agreement provides that, at the Effective
Time and without any further action on the part of the Company and the
Purchaser, the Certificate of Incorporation of the Company shall be amended to
read in its entirety as the Certificate of Incorporation of the Purchaser reads
as in effect immediately prior to the Effective Time until thereafter amended,
provided that such certificate of incorporation shall be amended to reflect
"General Nutrition Companies, Inc." as the name of the Surviving Corporation.
Under the Merger Agreement, the Bylaws of the Purchaser at the Effective
Time shall be the Bylaws of the Company until thereafter changed or amended.
Under the Merger Agreement, subject to applicable law, the directors of the
Purchaser at the Effective Time will be the initial directors of the Surviving
Corporation and will hold office until their respective successors are duly
elected or qualified or until their earlier resignation or removal. Pursuant to
the Merger Agreement, the officers of the Company at the Effective Time will be
the initial officers of the Surviving Corporation and will hold office until
their respective successors are duly elected or qualified or until their earlier
resignation or removal.
OTHER MATTERS.
APPRAISAL RIGHTS. Holders of Shares do not have dissenters' rights as a
result of the Offer. However, if the Merger is consummated, holders of Shares
will have certain rights pursuant to the provisions of Section 262 of the DGCL
to dissent and demand appraisal of, and to receive payment in cash of the fair
value of, their Shares. If the statutory procedures were complied with, such
rights could lead to a judicial determination of the fair value required to be
paid in cash to such dissenting holders for their Shares. Any such judicial
determination of the fair value of Shares could be based upon considerations
other than or in addition to the Offer price or the market value of the Shares,
including asset values and the investment value of the Shares. The fair value so
determined could be more or less than the Offer price or the Merger
Consideration.
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If any holder of Shares who demands appraisal under Section 262 of the DGCL
fails to perfect, or effectively withdraws or loses his right to appraisal, as
provided in the DGCL, the Shares of such holder will be converted into the
Merger Consideration in accordance with the Merger Agreement.
The foregoing discussion is not a complete statement of law pertaining to
appraisal rights under the DGCL and is qualified in its entirety by the full
text of Section 262 of the DGCL.
FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 262 OF THE DGCL FOR
PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS.
GOING PRIVATE TRANSACTIONS. The Merger would have to comply with any
applicable Federal law operative at the time of its consummation. Rule 13e-3
under the Exchange Act is applicable to certain "going private" transactions.
The Purchaser does not believe that Rule 13e-3 will be applicable to the Merger
unless the Merger is consummated more than one year after the termination of the
Offer. If applicable, Rule 13e-3 would require, among other things, that certain
financial information concerning the Company and certain information relating to
the fairness of the Merger and the consideration offered to minority
shareholders be filed with the SEC and disclosed to minority shareholders prior
to consummation of the Merger.
EMPLOYMENT AGREEMENTS.
Prior to execution of the Merger Agreement, the Company had entered into an
employment agreement with Mr. Watts and established a change in control
retention bonus program for the benefit of its officers and those of the
Company's subsidiaries. Concurrent with the signing of the Merger Agreement,
Numico and the Company entered into a replacement employment agreement (the
"Watts Employment Agreement") with Mr. Watts and new employment agreements (the
"Employment Agreements") with nine other senior officers (the "Senior
Officers"), in each case with such agreements becoming effective as of the
Effective Time. These agreements replace the existing employment agreement with
Mr. Watts, the retention bonus program with the other Senior Officers, provide
certain assurances with respect to the employment of the Senior Officers,
including severance benefits, and obtain for Numico and the Company
non-competition covenants from the Senior Officers. Copies of the Watts
Employment Agreement and the Employment Agreements with the Senior Officers have
been filed as exhibits to Schedule 14D-1 and are incorporated herein by
reference and the following summary is qualified in its entirety by reference to
such agreements. The Watts Employment Agreement and the Employment Agreements
may be examined, and copies thereof may be obtained, as set forth in Section 8
above.
EMPLOYMENT AGREEMENT WITH MR. WATTS. Under his current employment agreement
with the Company, Mr. Watts serves as President and Chief Executive Officer at
an annual salary of $954,965 (subject to adjustment for future increases in the
cost of living). As part of his compensation, Mr. Watts is entitled to personal
use of the Company's airplane for up to 100 hours per year, certain other
benefits, reimbursement of expenses and participation in the Company's stock
option plans. Mr. Watts' current agreement provides for employment through
February 1, 2002, severance benefits equal to such compensation through that
date in the event of termination of employment other than for cause or his
resignation due to a material reduction in his duties, and reimbursement of
golden parachute excise taxes. Mr. Watts is obligated to maintain the
confidentiality of Company information for a period of two years following
termination of employment. In addition, Mr. Watts is entitled under his
employment agreement to a change in control retention payment of $2,864,895
(three times his annual salary), 50% payable upon the occurrence of a change in
control and 50% payable one year thereafter if he remains employed with the
Company, or if his employment terminates prior thereto due to death, disability
or an event entitling him to severance benefits.
In order to assure itself of the continued services of Mr. Watts for an
extended period following the Effective Time, Numico and the Company have
entered into the Watts Employment Agreement with Mr. Watts which will replace
his existing employment agreement upon the Effective Time. In general, the Watts
Employment Agreement continues the terms and provisions of Mr. Watts' current
employment agreement, including the change in control retention payment (two
times annual salary in lieu of three times) and severance benefits provided
thereunder, and extends the term to December 31, 2002. Mr. Watts will
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continue to serve as President and Chief Executive Officer of the Company. The
Watts Employment Agreement also provides that Mr. Watts will be elected to the
Board of Managing Directors of Numico, where he will serve along with Mr. van
der Wielen at the most senior level of the management of Numico. Mr. Watts will
not be eligible for an annual bonus or incentive compensation, however, he will
receive at least 15% of all stock options to acquire Numico's stock which are
issued to employees of the Company and its subsidiaries in any year during Mr.
Watt's employment term (excluding the initial grant immediately following the
effective time of up to 500,000 options in which he will not be eligible to
participate). The Watts Employment Agreement bars Mr. Watts from using or
disclosing confidential information or trade secrets and from engaging in a
competing business (as defined in the Watts Employment Agreement) prior to
December 31, 2002.
EMPLOYMENT AGREEMENTS WITH SENIOR OFFICERS. In order to assure itself of
the continued service of the Senior Officers and to obtain confidentiality and
non-competition covenants, Numico and the Company have entered into Employment
Agreements with the nine Senior Officers: Gregory T. Horn--Executive Vice
President of Marketing and Business Development and Chief Operating Officer;
Edwin J. Kozlowski--Executive Vice President and Chief Financial Officer; John
A. DiCecco--Senior Vice President, Logistics/Manufacturing; Mike A.
Meyers--Executive Vice President and General Manager; Russell L. Cooper--Senior
Vice President and General Manager; David R. Heilman--Vice President, Strategic
Planning and Corporate Development; Michael Locke--Senior Vice President and
General Manager; Donald G. Smith--Senior Vice President, Sales; and Reginald N.
Steele--Vice President, International Franchising. The Employment Agreements
will become effective upon the Effective Time and provide for an initial
employment term ending on December 31, 2002, in the case of Messrs. Horn,
Kozlowski, DiCecco and Meyers, and December 31, 2001 for the others. Unless
earlier terminated by the Company or the Senior Officer, the Employment
Agreements will renew for additional one-year periods effective each January 1
commencing in 2002 and 2001, respectively.
In general, the Employment Agreements provide for continuation of the Senior
Officer's employment in the same position and at the same base salary, annual
bonus opportunity, and other benefits as in effect as of the date of the Merger
Agreement, and the entitlement to participate in any long-term incentive plans
which may be implemented for the Company's Senior Officers. The Employment
Agreements incorporate the change in control retention bonus program previously
adopted by the Company which will provide each Senior Officer with a payment
equal to one times base salary, 50% payable within 30 days after the Merger and
the remainder on the first anniversary of the Merger if the Senior Officer
remains in the employ of the Company. The Employment Agreements also provide
severance benefits in the event a Senior Officer is terminated without cause or
resigns due to a significant reduction in duties or responsibilities (other than
solely by reason of the Company ceasing to be a public company) or other uncured
breach of the Employment Agreements by the Company, and to reimbursement of any
golden parachute excise taxes. In addition, the Employment Agreements provide a
retention bonus in the event of a future change of control which is identical to
the retention bonus provided under the Watts Employment Agreement. The
Employment Agreements bar the Senior Officers from using or disclosing
confidential information or trade secrets and from engaging in a competing
business (as defined in the Employment Agreement) prior to the scheduled
termination date of their Employment Agreement.
In recognition of the additional duties Gregory T. Horn is expected to
undertake following the Merger, his Employment Agreement provides for a $100,000
increase in base salary to $400,000, with scheduled increases of $50,000 on
January 1, 2001 and January 1, 2002, and an increase in maximum annual bonus
opportunity from $150,000 to $250,000. In addition to his present position, Mr.
Horn will also be named a Group Director of Numico and as such will serve as a
senior executive of Numico. Mr. Horn's Employment Agreement provides for a
change in control retention bonus payment of $180,000 in connection with the
transactions contemplated by the Merger Agreement and for a separate non-
competition agreement with a more expansive definition of "competing business"
than that set forth in the Employment Agreements for which Mr. Horn will receive
a separate payment of $120,000 following the Merger.
EFFECT ON EMPLOYMENT AGREEMENT WITH JERRY D. HORN. Pursuant to the Benefits
Letter, Numico has acknowledged that the employment of Jerry D. Horn, the
Company's Chairman of the Board, will
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terminate for reasons other than cause upon the closing of the Merger. Under the
Company's employment agreement with Mr. Horn as in effect on the date of the
Merger Agreement, Mr. Horn will receive a change in control bonus of $1,000,000
payable within 30 days after the Effective Time. Mr. Horn will also be entitled
to continue to receive severance benefits in the form of salary continuation
payments at the annual rate of $200,000 through January 2000 and $150,000
through January 2002, subject to his right under his employment agreement to
receive such payments in a discounted lump sum.
NUMICO EQUITY INCENTIVE PROGRAMS.
In addition to the provisions of the Watts Employment Agreements and the
Employment Agreements described above, the Benefits Letter (as defined below)
also contemplates that Numico will establish certain programs intended to
provide Mr. Watts, the Senior Officers and other key managers and employees of
the Company with a long term incentive program based on shares of Numico.
NUMICO MANAGEMENT STOCK PURCHASE PLAN. Numico plans to establish a Numico
Management Stock Purchase Plan for the benefit of Mr. Watts, the Senior Officers
and other officers and key employees of the Company and its subsidiaries. The
provisions of the plan are similar to those under the Company's existing 1996
Management and Directors Stock Purchase Plan. Pursuant to the proposed plan,
each eligible individual will be entitled to purchase (the "initial purchase")
directly from Numico shares with an aggregate purchase price of up to two times
annual salary in the case of Mr. Watts and the Senior Officers and one and
one-half or one times salary in the case of the other participants. In addition,
each participant who purchases shares will be permitted to borrow (the "loan")
from the Company to purchase additional shares from Numico in an amount up to
two dollars for each dollar of his or her initial purchase. The loan will be
secured by a pledge of the shares purchased with the loan proceeds, as well as
those purchased in the initial purchase, and will be subject to repayment in
full, with interest at 6% per year, on the third anniversary of the Merger, or
earlier in the event of termination of employment. The loan balance and
interest, however, will be subject to forgiveness if the individual remains in
the continuous employ of the Company through the maturity date. In such case,
50% of the loan balance and interest due will be forgiven and the remaining 50%
will be forgiven if the Company has achieved its operating EBIT goals for the
three year period. A portion of the loan will be forgiven in the event of early
termination of employment due to death, disability or termination by the Company
without cause. Shares purchased under the plan will be held in an account and
may not be sold by the participant until the loan maturity date, or earlier in
the event of termination of employment.
NUMICO STOCK OPTION PROGRAM. Numico has agreed to make available options to
purchase up to 500,000 shares for grant to key employees of the Company and its
subsidiaries following the Merger. In addition, Numico has agreed to make
available options with respect to not less than 250,000 shares annually
following the first, second and third anniversaries of the Merger. The options
with respect to the 500,000 shares will be granted to those key employees
identified by Mr. Watts, which for this purpose will exclude Mr. Watts and the
other Senior Officers, and excludes any other individual eligible to participate
in the Numico Management Stock Purchase Plan unless such individual participates
at the maximum level permitted thereunder. In general, the options will not be
exercisable unless the option holder remains in the continuous employ of the
Company through the third anniversary of the Merger. Partial vesting will occur
in the event of early termination of employment due to death or disability or
termination without cause.
OTHER PROVISIONS. The purchase price to be paid for the shares under the
Numico Management Stock Purchase Plan and for the initial 500,000 options will
be determined by reference to the 15-day average closing price for the Numico
shares on the Amsterdam Stock Exchange immediately prior to the date of the
Merger Agreement. For this purpose and for purposes of these programs "Numico
shares" means the depositary receipts representing ordinary shares of Numico
which are directly traded on the Amsterdam Stock Exchange. Implementation of
these programs is subject to compliance with applicable laws. In the event such
compliance is unduly burdensome, Numico has agreed to establish cash-based
programs which will provide substantially equivalent benefits.
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EMPLOYEE BENEFITS.
Concurrent with the signing of the Merger Agreement, Numico and the Company
entered into a letter agreement (the "Benefits Letter") relating to certain
employee benefit matters. The Benefits Letter has
been filed as an exhibit to the Schedule 14D-1 and is incorporated herein by
reference and the following summary is qualified in its entirety by reference to
the Benefits Letter. The Benefits Letter may be examined, and copies thereof may
be obtained, as set forth in Section 8 above.
In addition to certain commitments relating to employment agreements and
Numico equity incentive plan matters described above (see "--Company Stock
Options and Stock Purchase Loans" and "--Employment Agreements"), the Benefits
Letter contains certain covenants and agreements from Numico relating to certain
actions to be taken in connection with or following the Merger. Numico has
agreed to cause the Company to continue to honor the Company's employee benefit
plans and agreements in effect as of the date of the Merger, except as
contemplated by the Merger Agreement or the Benefits Letter.
Numico has agreed that, through a period ending no earlier than December 31,
2000, the Company will maintain its employee retirement and welfare benefit
programs at a level which, when taken as a whole, is no less favorable to the
Company employees as those benefits provided immediately prior to the Merger,
except alterations made with the written consent of Mr. Watts. In addition,
Numico has agreed to permit the Company to maintain, through December 31, 2000,
its existing severance policy for any employees terminated due to job
elimination, and to continue its severance policy for officers who are not
parties to employment agreements.
As of the date of the Merger Agreement, the Company had in place annual
incentive bonus arrangements and a performance-based matching contribution
provision under certain employee savings and incentive plans with benefits tied
to earnings-per-share targets for the fiscal year ending in February 2000.
Concurrent with the approval of the Merger Agreement, the Board also approved a
pro rata payout of the annual bonus amounts and the matching contribution based
on attainment of the highest performance level. Pursuant to the Benefits Letter,
Numico has agreed to such action and to cause the Company to make such payments
and contribution.
As of the date of the Merger Agreement, the Company had in place for the
benefit of the vice presidents of the Company and its subsidiaries a change in
control retention bonus program which entitled such officers to a bonus equal to
one times current annual salary, payable 50% upon a change in control and the
other 50% one year later if the officer was still employed by the Company. In
connection with the approval of the Merger Agreement, the Board modified the
program to provide that the first half of the bonus will be paid after the
Merger and the remainder on the first anniversary of the Merger, subject to
continuous employment. The second payment will also be made in the event of
employment termination due to death or disability, termination of employment
without cause or resignation due to a significant reduction in post-Merger
duties or a reduction in base salary. Pursuant to the Benefits Letter, Numico
has agreed to such action and to cause the Company to make such payments.
TENDER AGREEMENT.
The following is a summary of the material terms of the Tender Agreement
dated as of July 5, 1999. This summary is not a complete description of the
terms and conditions thereof and is qualified in its entirety by reference to
the full text thereof, which is incorporated herein by reference and a copy of
which has been filed with the SEC as an exhibit to Schedule 14D-1. The Tender
Agreement may be examined, and copies thereof may be obtained, as set forth in
Section 8 above.
Pursuant to the Tender Agreement, five stockholders who are executive
officers of the Company have agreed to validly tender and sell pursuant to the
Offer all of the Shares beneficially owned by such stockholders, as such Shares
may be adjusted by conversion, dividend, stock split, recapitalization,
exchange, merger or similar transaction of or by the Company, together with
Shares that may be acquired after July 5, 1999 by such stockholder, including
Shares issuable upon the exercise of options, warrants or
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rights, the conversion or exchange of convertible or exchangeable securities, or
by means of purchase, dividend, distribution, or otherwise.
Each such stockholder severally has agreed, subject to certain exceptions,
that: (a) each stockholder will not (i) sell, transfer, pledge, assign or
otherwise dispose of, or enter into any contract, option, or other arrangement
(including any profit sharing arrangement) with respect to the sale, transfer,
pledge, assignment, or other disposition of, any of the Shares to any person
other than the Purchaser or the Purchaser's designee, (ii) enter into, or commit
to enter into, any voting arrangement with respect to any Shares, or (iii)
solicit, facilitate, initiate, encourage, or take any other action to, and will
direct and use its best efforts to cause any investment banker, attorney or
other advisor or representative of such stockholder not to, facilitate
(including by way of furnishing information) any Acquisition Proposal, other
than the Offer and the Merger unless, in the case of each of clauses (i), (ii)
and (iii) such action is otherwise permitted in connection with a Superior
Proposal under the Merger Agreement; (b) each stockholder will notify the
Purchaser if approached or solicited, directly or indirectly, by any person with
respect to an Acquisition Proposal; (c) at any meeting of stockholders of the
Company called to vote upon the Merger and the Merger Agreement or at any
adjournment thereof or in any other circumstances upon which a vote, consent or
other approval (including by written consent) with respect to the Merger and the
Merger Agreement is sought, such stockholder will (i) vote (or cause to be
voted) such stockholder's shares in favor of the adoption by the Company of the
Merger Agreement and (ii) vote (or cause to be voted) such stockholder's Shares
against any action or agreement which could result in a breach of any
representation, warranty or covenant of the Company in the Merger Agreement or
which could otherwise impede, delay, prevent, interfere with or discourage the
Offer or the Merger, including, without limitation, any Acquisition Proposal.
CONFIDENTIALITY AGREEMENTS.
The following is a summary of the material terms of the Confidentiality
Agreements (as defined below), which are incorporated herein by reference and a
copy of which has been filed with the SEC as an exhibit to Schedule 14D-1.
Pursuant to letter agreements, dated May 26, 1999, between Numico and the
Company (the "Confidentiality Agreements"), the Company and Numico agreed to
keep confidential certain information exchanged between such parties. The
Confidentiality Agreements also contain customary non-solicitation and
standstill provisions. The Merger Agreement provides that the provisions of the
Confidentiality Agreements shall remain binding and in full force and effect
after the termination or Effective Time of the Merger Agreement.
The capitalized terms used but not otherwise defined in this Section 11
shall have the meanings set forth in the Merger Agreement.
12. CERTAIN CONDITIONS TO THE OFFER.
Notwithstanding any other provision of the Offer, and subject to the terms
and conditions of the Merger Agreement, the Purchaser shall not be obligated to
accept for payment any Shares until all authorizations, consents, orders and
approvals of, and declarations and filings with, and all expirations of waiting
periods imposed by, any Governmental Entity which, if not obtained in connection
with the consummation of the transactions contemplated by the Merger Agreement,
is reasonably likely to have a Material Adverse Effect on the Company or
prevents the Company, Numico or Purchaser from consummating the transactions
contemplated by the Merger Agreement (collectively, "Required Regulatory
Approvals") shall have been obtained, made or satisfied, including the
expiration or earlier termination of any waiting periods applicable under the
HSR Act, and the Purchaser shall not be required to accept for payment or,
subject to any applicable rules and regulations of the SEC (including Rule
14e-1(c) under the Exchange Act) pay for, and may delay the acceptance for
payment of or payment for, any Shares tendered in the Offer and (subject to the
terms and conditions of the Merger Agreement, including Section 1.1(b) thereof),
may amend, extend or terminate the Offer if, (i) immediately prior to the
expiration of the Offer (as extended in accordance with the Merger Agreement)
the Minimum Condition shall not have been
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satisfied or (ii) prior to the time of acceptance of any Shares pursuant to the
Offer, any of the following shall occur:
(a) there shall be threatened or pending any action, litigation or
proceeding (hereinafter, an "Action") by any Governmental Entity: (i)
challenging the acquisition by Numico or the Purchaser of Shares or seeking
to restrain or prohibit the consummation of the Offer or the Merger, (ii)
seeking to prohibit or impose any material limitation (including any hold
separate obligation) on Numico's, the Purchaser's or any of their respective
affiliates' ownership or operation of all or any material portion of the
business or assets of the Company and its subsidiaries taken as a whole or
Numico and its subsidiaries taken as a whole that, in each case referred to
in this clause (ii), individually or in the aggregate, is reasonably likely
to have Material Adverse Effect on the Company or Numico, or (iii) seeking
to impose material limitations on the ability of Numico or the Purchaser
effectively to acquire or hold, or to exercise full rights of ownership of,
the Shares including the right to vote the Shares purchased by them on an
equal basis with all other Shares on all matters properly presented to the
stockholders of the Company; or
(b) any statute, rule, regulation, order or injunction shall be enacted,
promulgated, entered, enforced or deemed to or become applicable to the
Offer or the Merger, or any other action shall have been taken by any court
or other Governmental Entity, that is reasonably likely to result in any of
the effects of, or have any of the consequences sought to be obtained or
achieved in, any Action referred to in clauses (i) through (iii) of
paragraph (a) above; or
(c) (i) the representations and warranties of the Company as set forth
in Section 3.1(b) of the Merger Agreement shall not be true and correct in
all material respects as of the date of the Merger Agreement and (except to
the extent such representations and warranties speak as of an earlier date)
as of the consummation of the Offer as though made on and as of such date;
(ii) the representations and warranties of the Company set forth in the
Merger Agreement (other than those set forth in Section 3.1(b) of the Merger
Agreement), (x) to the extent qualified by Material Adverse Effect shall not
be true and correct and (y) to the extent not qualified by Material Adverse
Effect shall not be true and correct, except that this clause (y) shall be
deemed satisfied so long as any failures of such representations and
warranties to be true and correct, taken together, do not have a Material
Adverse Effect on the Company, in the case of each of clauses (x) and (y) as
of the date of the Merger Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
consummation of the Offer as though made on and as of such date; (iii) the
Company shall have breached or failed to comply in any material respect with
any of its material obligations, covenants or agreements under the Merger
Agreement; or (iv) any change or event shall have occurred that has, or is
reasonably likely to have, a Material Adverse Effect on the Company; or
(d) the Merger Agreement shall have been terminated in accordance with
its terms.
The conditions set forth in clauses (a) through (d) are for the sole benefit
of Numico and the Purchaser and may be asserted by Numico and the Purchaser
regardless of the circumstances giving rise to such condition and may be waived
by Numico and the Purchaser in whole or in part at any time and from time to
time, by express and specific action to that effect in their sole discretion.
The failure by Numico or the Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right, the waiver of
any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances, and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
The capitalized terms used in this Section 12 shall have the meanings set
forth in the Merger Agreement.
13. SOURCE AND AMOUNT OF FUNDS.
The Offer is not conditioned upon obtaining any financing arrangements. The
Purchaser estimates that the total amount of funds required to purchase all of
the outstanding Shares on a fully diluted basis pursuant to the Offer and the
Merger and to pay related fees and expenses of Numico and the Purchaser
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will be approximately $1,920,000,000 (approximately Euro 1,878,000,000 based on
exchange rate of one Euro=1.0223 U.S. Dollars as of July 6, 1999, as reported by
the WALL STREET JOURNAL). The Purchaser will obtain these funds from Numico,
either directly or indirectly via other subsidiaries of Numico, through loans,
advances or capital contributions. Numico has received a commitment letter,
dated July 3, 1999, for a bridge loan, in an amount sufficient to complete the
Offer and the Merger, from ABN AMRO Bank N.V. ("ABN AMRO") and J.P. Morgan
Securities Ltd. ("JPMS").
The commitment letter for the bridge loan has been filed with the SEC as an
exhibit to the Schedule 14D-1 and is incorporated herein by reference and the
following summary is qualified in its entirety by reference to such commitment
letter. The commitment letter provides for an acquisition credit facility in the
amount of Euro 2,600,000,000. Any borrowings will be unsecured and any
outstanding balance on the loan will be payable at the termination of the
facility. Borrowings can be made in Euros or U.S. Dollars and will bear interest
at a rate equal to LIBOR or EURIBOR plus 1.0% per annum until December 31, 1999,
and thereafter at LIBOR or EURIBOR plus 1.5% per annum except as noted below. It
is expected that the bridge loan will be repaid in part with proceeds of an
offering of Euro 1,050,000,000 of ordinary shares and subordinated convertible
bonds of Numico (with a minimum of Euro 450,000,000 of ordinary shares), with
the balance refinanced at the termination of the loan. If Numico refinances Euro
1,050,000,000 of the outstanding loan balance through the sale of ordinary
shares and subordinated convertible bonds prior to January 1, 2000, the interest
rate payable on borrowings will remain at LIBOR or EURIBOR plus 1.0% per annum.
The commitment is subject to certain conditions, including (i) execution of
definitive financing documentation; (ii) the absence, in the opinion of ABN AMRO
and JPMS, of any change in the business condition (financial or otherwise),
operations, performance or prospects of Numico and its subsidiaries taken as a
whole since December 31, 1998, which would have a material adverse effect on the
ability of Numico to perform its financial obligations; (iii) the absence, in
the opinion of ABN AMRO and JPMS, of a material adverse change in the business
condition (financial or otherwise), operations, performance or prospects of the
Company and its subsidiaries taken as a whole since December 31, 1998, where
such change gives Numico or the Purchaser the right to terminate the Merger
Agreement; and (iv) all government approvals and regulatory and/or tax rulings
having been obtained for the Offer.
The commitment terminates on the earlier of (i) the termination of the
Merger Agreement, and (ii) three months from the signing of the Merger Agreement
or, if all Regional Regulatory Approvals have not been obtained, three months
plus a further 30 days from the signing of the Merger Agreement.
The commitment provides that the revolving credit facility will terminate
364 days from the date definitive documents for the facility are executed and
delivered. Final documentation for the facility is expected to include customary
conditions, covenants and events of defaults. Numico has agreed to pay ABN AMRO
and JPMS certain fees in connection with the commitment letter and the bridge
loan that Numico believes to be customary.
14. DIVIDENDS AND DISTRIBUTIONS.
Pursuant to the Merger Agreement, the Company shall not, and shall not
propose to, without the consent of Numico: (i) declare or pay any dividends on
or make other distributions in respect of any of its capital stock, (ii) split,
combine or reclassify any of its capital stock or issue or authorize or propose
the issuance of any other securities in respect of, in lieu of or in
substitution for, shares of its capital stock, (iii) repurchase, redeem or
otherwise acquire any shares of its capital stock or any securities convertible
into or exercisable for any shares of its capital stock except as otherwise
permitted with respect to the payment of the option exercise price or tax
withholding under certain option agreements in effect on the date of the Merger
Agreement under the Company Equity Plans or (iv) effect any reorganization or
recapitalization.
Furthermore, until the Effective Time, the Company shall not, and shall
cause its subsidiaries not to, issue, pledge, dispose of or encumber, deliver or
sell, or authorize or propose the issuance, disposition, encumbrance, pledge,
delivery or sale of, any shares of its capital stock of any class, any Company
Voting Debt or any securities convertible into or exercisable for, or any
rights, warrants or options to acquire, any
32
<PAGE>
such shares or Company Voting Debt, or enter into any agreement with respect to
any of the foregoing, other than the issuance of Shares upon the exercise of
stock options or rights to purchase Shares outstanding on the date of the Merger
Agreement in accordance with the terms of the Company Equity Plans as in effect
on the date of the Merger Agreement and other than upon the exercise of the
Warrants.
15. CERTAIN LEGAL MATTERS.
GENERAL. Except as otherwise described herein, based on a review of
publicly available filings made by the Company with the SEC and other publicly
available information concerning the Company, neither Numico nor the Purchaser
is aware of any license or regulatory permit that appears to be material to the
business of the Company and its subsidiaries, taken as a whole, that might be
adversely affected by the Purchaser's acquisition of Shares pursuant to the
Offer or of any approval or other action by any governmental administrative or
regulatory agency or authority that would be required for the acquisition or
ownership of Shares by the Purchaser pursuant to the Offer. Should any such
approval or other action be required, the Purchaser and Numico currently
contemplate that such approval or other action will be sought or taken. There
can be no assurance that any such approval or other action, if needed, would be
obtained or would be obtained without substantial conditions or that failure to
obtain any such approval or other action might not result in consequences
adverse to the Company's or Numico's business or that certain parts of the
Company's or Numico's business might not have to be disposed of in the event
such approvals were not obtained or such other actions were not taken, any of
which could cause the Purchaser to elect to terminate the Offer without the
purchase of Shares thereunder. The Purchaser's obligation under the Offer to
accept for payment and pay for Shares is subject to certain conditions. See
Section 12.
STATE TAKEOVER LAWS. A number of states throughout the United States have
enacted takeover statutes applicable to attempts to acquire securities of
corporations that are incorporated or have assets, stockholders, executive
offices or places of business in such states. Section 203 of the DGCL limits the
ability of a Delaware corporation to engage in business combinations with
"interested stockholders" (defined generally as any beneficial owner of 15% or
more of the outstanding voting stock of the corporation) for a period of three
years from the time such interested stockholders became the holders of 15% or
more of such Shares unless, among other things, the corporation's board of
directors has given its prior approval to either the business combination or the
transaction which resulted in the stockholder becoming an "interested
stockholder." Section 203 of the DGCL is inapplicable to the Merger because the
Company previously adopted a provision in its Certificate of Incorporation which
opts-out of Section 203.
Except as described herein, the Purchaser has not attempted to comply with
any state takeover statutes in connection with the Offer. The Purchaser reserves
the right to challenge the validity or applicability of any state law allegedly
applicable to the Offer and nothing in this Offer to Purchase nor any action
taken in connection with the Offer or the Merger is intended as a waiver of that
right. In the event that any state takeover statute is found applicable to the
Offer or the Merger, the Purchaser might be unable to accept for payment or pay
for Shares tendered pursuant to the Offer or be delayed in continuing or
consummating the Offer or the Merger. In such case, the Purchaser might not be
obligated to accept for payment or pay for any Shares tendered. See Section 12.
ANTITRUST COMPLIANCE. Under the HSR Act and the rules that have been
promulgated thereunder by the Federal Trade Commission ("FTC"), certain
acquisition transactions may not be consummated unless certain information has
been furnished to the Antitrust Division of the Department of Justice (the
"Antitrust Division") and the FTC and certain waiting period requirements have
been satisfied. The acquisition of the Shares by the Purchaser is subject to
these requirements.
Pursuant to the HSR Act, Numico filed a Notification and Report Form with
respect to the acquisition of Shares pursuant to the Offer and the Merger with
the Antitrust Division and the FTC on July 6, 1999. Under the provisions of the
HSR Act applicable to the purchase of Shares pursuant to the Offer, such
purchases may not be made until the expiration of a 15-calendar day waiting
period following on the filing made by Numico. Accordingly, the waiting period
under the HSR Act will expire at 11:59 p.m., New York City time, on July 21,
1999, unless early termination of the waiting period is granted, or Numico
and/or the Company receives a request for additional information or documentary
material
33
<PAGE>
prior thereto. If either the FTC or the Antitrust Division were to make such a
request(s) for additional information or documentary material, the waiting
period would expire at 11:59 p.m., New York City time, on the tenth calendar day
after the date of substantial compliance with such request(s), unless the
waiting period is sooner terminated by the FTC or the Antitrust Division.
Thereafter, the waiting period could be extended only by agreement or by court
order. Only one extension of such waiting period pursuant to a request for
additional information is authorized by the rules promulgated under the HSR Act,
except by agreement or by court order. Any such extension of the waiting period
will not give rise to any withdrawal rights not otherwise provided for by
applicable law. See Section 4.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's proposed acquisition
of the Company. At any time before or after the Purchaser's acquisition of
Shares pursuant to the Offer, the Antitrust Division or the FTC could take such
action under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or the consummation of the Merger, or seeking the divestiture of Shares
acquired by the Purchaser, or the divestiture of substantial assets of the
Company or its subsidiaries, or of Numico or its subsidiaries. Private parties
also may bring legal action under the antitrust laws under certain
circumstances. There can be no assurance that a challenge to the Offer or the
Merger on antitrust grounds will not be made or, if such a challenge is made, of
the result thereof.
FOREIGN APPROVALS. The Company and Numico each own property or conduct
business in various foreign countries and jurisdictions. In connection with the
acquisition of the Shares pursuant to the Offer or the Merger, the laws of
certain of those foreign countries and jurisdictions may require the filing of
information with, or obtaining the approval of, governmental authorities in such
countries and jurisdictions. The governments in such countries and jurisdictions
might attempt to impose additional conditions on the Company's operations
conducted in such countries and jurisdictions as a result of the acquisition of
the Shares pursuant to the Offer. There can be no assurance that Numico will be
able to cause the Company or its subsidiaries to satisfy or comply with such
laws, or that compliance or noncompliance with such laws will not have a
material adverse effect on the financial condition, properties, business,
results of operations or prospects of the Company and its subsidiaries taken as
a whole, or will not impair the Company, or any of their respective affiliates,
following consummation of the Offer or the Merger, to conduct any material
business or operations in any jurisdiction where they now are being conducted.
See Section 12 of this Offer to Purchase for certain conditions to the Offer
that could become applicable in the event that any such foreign approvals give
rise to the above-described effects.
16. FEES AND EXPENSES.
J.P. Morgan is acting as Dealer Manager in connection with the Offer and
has, together with its affiliate, J.P. Morgan Securities Ltd., provided certain
financial advisory services to the Purchaser and Numico in connection therewith.
Numico has agreed to pay JPMS fees, the aggregate amount of which shall not be
determinable until completion of the Merger, but which in no circumstance shall
exceed $9 million (excluding amounts paid to JPMS in connection with the bridge
loan). Numico has agreed to reimburse JPMS for its expenses, including the fees
and expenses of its counsel, in connection with the Offer, and has agreed to
indemnify J.P. Morgan and JPMS against certain liabilities and expenses in
connection with the Offer and the Merger, including liabilities under the
federal securities laws.
The Purchaser has also retained MacKenzie Partners, Inc. to act as the
Information Agent in connection with the Offer. The Information Agent may
contact holders of Shares by mail, telephone, telex, facsimile, telegraph and
personal interviews and may request brokers, dealers and other nominee
stockholders to forward materials relating to the Offer to beneficial owners of
Shares. The Information Agent will receive reasonable and customary compensation
for such services, plus reimbursement of out-of-pocket expenses. The Purchaser
will also indemnify the Information Agent against certain liabilities and
expenses in connection with the Offer, including liabilities under the federal
securities laws.
The Purchaser will pay the Depositary reasonable and customary compensation
for its services in connection with the Offer, plus reimbursement for
out-of-pocket expenses, and will indemnify the Depositary against certain
liabilities and expenses in connection therewith, including liabilities under
the
34
<PAGE>
federal securities laws. Brokers, dealers, commercial banks and trust companies
will be reimbursed by the Purchaser for customary mailing and handling expenses
incurred by them in forwarding material to their customers.
17. MISCELLANEOUS.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. However, the Purchaser may, in its sole discretion, take such
action as it may deem necessary to make the Offer in any such jurisdiction and
extend the Offer to holders of Shares in such jurisdiction.
Neither the Purchaser nor Numico is aware of any jurisdiction in which the
making of the Offer or the acceptance of Shares in connection therewith would
not be in compliance with the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR NUMICO NOT CONTAINED IN THIS OFFER
TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
The Purchaser and Numico have filed with the SEC a Tender Offer Statement on
Schedule 14D-1 pursuant to Rule 14d-3 under the Exchange Act, together with
exhibits, furnishing certain additional information with respect to the Offer,
and may file amendments thereto. Such Statement and any amendments thereto,
including exhibits, may be examined and copies may be obtained from the
principal office of the SEC in Washington, D.C. in the manner set forth in
Section 8.
NUMICO INVESTMENT CORP.
July 9, 1999
35
<PAGE>
SCHEDULE A
DIRECTORS AND EXECUTIVE OFFICERS OF
NUMICO, NUMICO LP AND THE PURCHASER
KONINKLIJKE NUMICO N.V. ("Numico")
The following table sets forth the name, business address, present principal
occupation or employment and five-year employment history of each of the
directors and executive officers of Koninklijke Numico N.V. Each person has a
business address at Rokkeveenseweg 49, 2712 PJ Zoetermeer, P.O. Box 1, 2700 MA
Zoetermeer, The Netherlands, and is a citizen of The Netherlands, unless a
different business address and/or citizenship is indicated under his or her
name. Directors are indicated by an asterisk.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND FIVE-YEAR EMPLOYMENT HISTORY
- --------------------------------------- -------------------------------------------------------------------------
<S> <C>
Erlend Jan van der Hagen*.............. Chairman of the Supervisory Board since January 1992. Mr. van der Hagen
is also Chairman of the Supervisory Board of Hagemeijer N.V.
Nelly Greta Barendregt*................ Member of the Supervisory Board since July 1981. Mrs. Barendregt is also
a member of the Supervisory Board of Rothmans International.
Petrus Adrianus Wilhelmus Roef*........ Member of the Supervisory Board since May 1987. Mr. Roef is also a member
of the Supervisory Board of Hagemeijer N.V., VNU N.V., Gamma Holding
N.V., Parcon N.V. and Robeco N.V.
Ellis Joost Ruitenberg*................ Member of the Supervisory Board since May 1996. Mr. Ruitenberg has also
served as the General and Scientific Manager of Central Blood
Transfusion Laboratories of the Red Cross in Amsterdam for the past
five years.
Johan Veldman*......................... Member of the Supervisory Board since May 1989. Mr. Veldman is also
Chairman of the Supervisory Board of Hypotheekbank and the Board of
Stichting Administratiekantoor ING Group, a member of the Supervisory
Board of OWM Zorgverzekeraar VGZ ua and Honorary Counsel of Mexico.
Robert Zwartendijk*.................... Member of the Supervisory Board since May 1994. Mr. Zwartendijk served as
a member of the Board of Managing Directors of Koninklijke Ahold N.V.
from 1981 until his retirement in May 1999.
Cornelius Johannes Brakel*............. Member of the Supervisory Board since May 1999. Mr. Brakel was Chairman
and Chief Executive Officer of Wolters Kluwer from 1991 to May 1999.
Mr. Brakel also holds the following positions: Chairman of the
Executive Board of Wolters Kluwer N.V.; Chairman of the Supervisory
Board of Kappa Packaging Nederland B.V., Bols Royal Distilleries and
Unique International N.V.; member of the Supervisory Board of Maxeres
N.V. and Kempen & Co. N.V.
Johannes C. T. van der Wielen.......... President, Chief Executive Officer of Numico since January 1992 and
member of the Board of Managing Directors since January 1989. Mr. van
der Wielen is also a member of the Supervisory Boards of Maxeres
Holding N.V., Gouda Vuurvast Holding N.V. and Benckiser N.V.. In
addition, he is a member of "Raad van Bestuur" Telindus B.V., a member
of the Advisory Board of ABN AMRO and Chairman of "Stichting
Continuiteit Wolters Kluwer."
</TABLE>
A-1
<PAGE>
NUMICO INVESTMENT CORP. ("Purchaser") and
NUMICO US, LP ("Numico LP")
The following table sets forth the name, business address, present
occupation or employment and five-year employment history of the sole director
and executive officer of Numico Investment Corp. Such information is also
provided for the sole director and executive officer of Numico, Inc., a Delaware
corporation and general partner of Numico LP. Numico LP is a Delaware limited
partnership and the parent of the Purchaser. The person listed below has a
business address at Rokkeveenseweg 49, 2712 PJ Zoetermeer, P.O. Box 1, 2700 MA
Zoetermeer, The Netherlands and is a citizen of The Netherlands.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND FIVE-YEAR EMPLOYMENT HISTORY
- --------------------------------------- -------------------------------------------------------------------------
<S> <C>
Julitte van der Ven ................... President and director of Numico Investment Corp. since its inception on
July 2, 1999. Mrs. van der Ven is also General Counsel for Numico, a
position she has held since July 1989. In addition, she is the sole
director and executive officer of Numico, Inc.
</TABLE>
A-2
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal, properly
completed and duly signed, will be accepted. The Letter of Transmittal,
certificates for the Shares and any other required documents should be sent or
delivered by each stockholder of the Company or such stockholder's broker,
dealer, commercial bank, trust company or other nominee to the Depositary as
follows:
THE DEPOSITARY FOR THE OFFER IS:
IBJ WHITEHALL BANK & TRUST COMPANY
<TABLE>
<S> <C> <C>
BY MAIL: FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT COURIER:
Reorganization Operations Department (FOR ELIGIBLE INSTITUTIONS Securities Processing Window
P.O. Box 84 ONLY) Subcellar One, (SC-1)
Bowling Green Station (212) 858-2611 One State Street
New York, New York 10274-0084 For Confirmation Telephone: New York, New York 10004
(212) 858-2103
</TABLE>
Any questions and requests for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Information Agent or the Dealer Manager at their respective
telephone numbers and locations listed below. You may also contact your broker,
dealer, commercial bank or trust company or other nominee for assistance
concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
OR
CALL TOLL-FREE (800) 322-2885
THE DEALER MANAGER FOR THE OFFER IS:
[LOGO]
60 Wall Street
New York, New York 10260
Call (212) 648-6926
<PAGE>
EXHIBIT (a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
GENERAL NUTRITION COMPANIES, INC.
PURSUANT TO THE OFFER TO PURCHASE DATED JULY 9, 1999
BY
NUMICO INVESTMENT CORP.
AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF
KONINKLIJKE NUMICO N.V.
(ROYAL NUMICO)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, AUGUST 5, 1999, UNLESS THE OFFER IS EXTENDED.
This Letter of Transmittal, the certificates for Shares (as defined below)
and any other required documents should be sent or delivered by each stockholder
of the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary (as defined below) at one of its addresses set forth
below.
THE DEPOSITARY FOR THE OFFER IS:
IBJ WHITEHALL BANK & TRUST COMPANY
<TABLE>
<S> <C> <C>
BY MAIL: FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT COURIER:
Reorganization Operations (FOR ELIGIBLE INSTITUTIONS Securities Processing Window
Department ONLY) Subcellar One, (SC-1)
P.O. Box 84 (212) 858-2611 One State Street
Bowling Green Station FOR CONFIRMATION TELEPHONE: New York, New York 10004
New York, New York 10274-0084 (212) 858-2103
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY. YOU MUST SIGN THIS
LETTER OF TRANSMITTAL WHERE INDICATED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9
PROVIDED BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used either if certificates are to be
forwarded herewith or, unless an Agent's Message (as defined in Section 3 of the
Offer to Purchase (as defined below)) is utilized, if delivery is to be made by
book-entry transfer to the Depositary's account at The Depository Trust Company
(the "Book-Entry Transfer Facility"), pursuant to the procedures set forth in
Section 3 of the Offer to Purchase. Stockholders who deliver Shares by
book-entry transfer are referred to herein as "Book-Entry Stockholders" and
other stockholders are referred to herein as "Certificate Stockholders."
Stockholders whose certificates for Shares are not immediately available or who
cannot comply with the procedure for book-entry transfer on a timely basis, or
who cannot deliver all required documents to the Depositary prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase), may tender
their Shares in accordance with the guaranteed delivery procedure set forth in
Section 3 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO
THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) SHARE CERTIFICATES AND SHARES TENDERED
APPEAR(S) ON CERTIFICATE(S) (ATTACH ADDITIONAL LIST IF NECESSARY)
- ------------------------------------------------------------------------------------------------------
TOTAL NUMBER OF
SHARES NUMBER OF
CERTIFICATE REPRESENTED BY SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
Total shares
- ------------------------------------------------------------------------------------------------------
</TABLE>
(1) Need not be completed by Book-Entry Stockholders.
(2) Unless otherwise indicated, it will be assumed that all Shares described
above are being tendered. See Instruction 4.
/ / CHECK HERE IF CERTIFICATE HAS BEEN LOST OR DESTROYED. SEE INSTRUCTION 11.
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING (ONLY FINANCIAL INSTITUTIONS
THAT ARE PARTICIPANTS IN THE SYSTEM OF THE BOOK-ENTRY TRANSFER FACILITY MAY
DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution: _____________________________________________
Account Number: ____________________________________________________________
Transaction Code Number: ___________________________________________________
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY, ENCLOSE A PHOTOCOPY
OF SUCH NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s): ____________________________________________
Date of Execution of Notice of Guaranteed Delivery: ________________________
Name of Institution which Guaranteed Delivery: _____________________________
If delivered by book-entry transfer, check box: / /
Name of Tendering Institution: _____________________________________________
Account Number: ____________________________________________________________
Transaction Code Number: ___________________________________________________
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to Numico Investment Corp., a Delaware
corporation (the "Purchaser") and an indirect wholly-owned subsidiary of
Koninklijke Numico N.V., a company incorporated under the laws of The
Netherlands ("Numico"), the above-described shares of common stock, par value
$0.01 per share (the "Shares"), of General Nutrition Companies, Inc., a Delaware
corporation (the "Company"), pursuant to the Offer to Purchase dated July 9,
1999 (as amended or supplemented from time to time, the "Offer to Purchase"),
all outstanding Shares at $25.00 per Share, net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth in the
Offer to Purchase, receipt of which is hereby acknowledged, and in this Letter
of Transmittal (which, together with any amendments or supplements hereto or
thereto, collectively constitute the "Offer"). The undersigned understands that
the Purchaser reserves the right to transfer or assign, from time to time, in
whole or in part, to one or more of its affiliates, the right to purchase the
Shares tendered herewith.
On the terms and subject to the conditions of the Offer (including the
conditions set forth in Section 12 of the Offer to Purchase and together with,
if the Offer is extended or amended, the terms and conditions of such extension
or amendment), subject to, and effective upon, acceptance for payment of, and
payment for, the Shares tendered herewith in accordance with the terms of the
Offer, the undersigned hereby sells, assigns and transfers to, or upon the order
of, the Purchaser, all right, title and interest in and to all of the Shares
being tendered hereby and any and all cash dividends, distributions, rights,
other Shares or other securities issued or issuable in respect of such Shares on
or after July 5, 1999 (collectively, "Distributions"), and irrevocably appoints
IBJ Whitehall Bank & Trust Company (the "Depositary") the true and lawful agent
and attorney-in-fact of the undersigned with respect to such Shares (and any
Distributions), with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to the fullest
extent of such stockholder's rights with respect to such Shares (and any
Distributions) (a) to deliver such Share Certificates (as defined herein) (and
any Distributions) or transfer ownership of such Shares (and any Distributions)
on the account books maintained by the Book-Entry Transfer Facility, together in
either such case with all accompanying evidences of transfer and authenticity,
to or upon the order of the Purchaser, (b) to present such Shares (and any
Distributions) for transfer on the books of the Company and (c) to receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Shares (and any Distributions), all in accordance with the terms and the
conditions of the Offer.
The undersigned hereby irrevocably appoints the designees of the Purchaser,
and each of them, the attorneys-in-fact and proxies of the undersigned, each
with full power of substitution, to the full extent of such stockholder's rights
with respect to the Shares tendered hereby which have been accepted for payment
by the Purchaser and with respect to any Distributions. The designees of the
Purchaser will, with respect to the Shares (and any associated Distributions)
for which the appointment is effective, be empowered to exercise all voting and
any other rights of such stockholder, as they, in their sole discretion, may
deem proper at any annual, special or adjourned meeting of the Company's
stockholders, by written consent in lieu of any such meeting or otherwise. This
proxy and power of attorney shall be irrevocable and coupled with an interest in
the tendered Shares. Such appointment is effective when, and only to the extent
that, the Purchaser accepts such Shares for payment pursuant to the Offer. Upon
the effectiveness of such appointment, without further action, all prior powers
of attorney, proxies and consents given by the undersigned with respect to such
Shares (and any associated Distributions) will be revoked, and no subsequent
powers of attorney, proxies, consents or revocations may be given (and, if
given, will not be deemed effective). The Purchaser reserves the right to
require that, in order for Shares to be deemed validly tendered, immediately
upon the Purchaser's acceptance for payment for such Shares, the Purchaser must
be able to exercise full voting rights with respect to such Shares (and any
associated Distributions), including voting at any meeting of stockholders.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares (and any
Distributions) tendered hereby and, when the same are accepted for payment by
the Purchaser, the Purchaser will acquire good, marketable and unencumbered
title thereto, free and clear of all liens, restrictions, charges and
encumbrances, and the same will not be subject to any adverse claim. The
undersigned will, upon request, execute and deliver any additional documents
deemed by the Depositary or the Purchaser to be necessary or desirable to
complete the sale, assignment and transfer of the Shares (and any Distributions)
tendered hereby. In addition, the undersigned shall promptly remit and transfer
to the Depositary for the account of the Purchaser any and all Distributions in
respect of the Shares tendered hereby, accompanied by appropriate documentation
of transfer, and, pending such remittance or appropriate assurance thereof, the
Purchaser shall be entitled to all rights and privileges as owner of any such
Distributions and may withhold the entire purchase price or deduct from the
purchase price the amount or value thereof, as determined by the Purchaser in
its sole discretion.
All authority conferred or agreed to be conferred pursuant to this Letter of
Transmittal shall not be affected by, and shall survive, the death or incapacity
of the undersigned and any obligation of the undersigned hereunder shall be
binding upon the heirs, personal representatives, successors and assigns of the
undersigned. Except as stated in the Offer to Purchase, this tender is
irrevocable.
The undersigned understands that the valid tender of Shares pursuant to one
of the procedures described in Section 3 of the Offer to Purchase and the
Instructions hereto will constitute a binding agreement between the undersigned
and the Purchaser upon the terms and subject to the conditions of the Offer,
including, without limitation, the undersigned's representation and warranty
that the undersigned owns the Shares being tendered hereby. The undersigned
recognizes that under certain circumstances set forth in the Offer to Purchase,
the Purchaser may not be required to accept for payment any of the Shares
tendered hereby.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any certificates for
Shares not tendered or not accepted for payment in the name(s) of the registered
owner(s) appearing under "Description of Shares Tendered." Similarly, unless
otherwise indicated under
<PAGE>
"Special Delivery Instructions," please mail the check for the purchase price
and/or return any certificates for Shares not tendered or not accepted for
payment (and accompanying documents, as appropriate) to the address(es) of the
registered holder(s) appearing under "Description of Shares Tendered." In the
event that both the Special Delivery Instructions and the Special Payment
Instructions are completed, please issue the check for the purchase price and/or
issue any certificates for Shares not tendered or not accepted for payment (and
any accompanying documents, as appropriate) in the name of, and deliver such
check and/or return such certificates (and any accompanying documents, as
appropriate) to, the person or persons so indicated. Unless otherwise indicated
herein in the box entitled "Special Payment Instructions," please credit any
Shares tendered hereby and delivered by book-entry transfer, but which are not
purchased by crediting the account at the Book-Entry Transfer Facility. The
undersigned recognizes that the Purchaser has no obligation pursuant to the
Special Payment Instructions to transfer any Shares from the name of the
registered holder thereof if the Purchaser does not accept for payment any of
the Shares so tendered.
<TABLE>
<S> <C>
- ------------------------------------------------ ------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 5 AND 7)
To be completed ONLY if certificate(s) for To be completed ONLY if certificate(s) for
Shares not tendered or not accepted for payment Shares not tendered or not accepted for payment
and/or the check for the purchase price of and/or the check for the purchase price of
Shares accepted for payment (less the amount of Shares accepted for payment (less the amount of
any federal income tax required to be withheld) any federal income tax required to be withheld)
are to be issued in the name of someone other are to be sent to someone other than the
than the undersigned. undersigned, or to the undersigned at an address
Issue: / / Check / / Certificate(s) to: other than that shown above.
Name: Deliver: / / Check / / Certificate(s) to:
(Please Name:
Print) (Please Print)
Address: Address:
(Include Zip Code) (Include Zip Code)
(Tax Identification (See Substitute Form
W-9)
or Social Security
No.)
- ------------------------------------------------ ------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
IMPORTANT
SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
X
- --------------------------------------------------------------------------------
X
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF HOLDER(S))
Dated: ___________________, 1999
(Must be signed by registered holder(s) exactly as name(s) appear(s) on stock
certificate(s) or on a security position listing or by person(s) authorized to
become registered holder(s) by certificates and documents transmitted herewith.
If signature is by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, please set forth full title and see Instruction 5.)
Name(s): _______________________________________________________________________
(PLEASE TYPE OR PRINT)
Capacity (Full Title): _________________________________________________________
Address: _______________________________________________________________________
_______________________________________________________________________________
(INCLUDING ZIP CODE)
Area Code and Telephone No.: ___________________________________________________
Tax Identification or Social Security No.: _____________________________________
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature: __________________________________________________________
Name: __________________________________________________________________________
(PLEASE TYPE OR PRINT)
Address: _______________________________________________________________________
_______________________________________________________________________________
(INCLUDE ZIP CODE)
Full Title and Name of Firm: ___________________________________________________
Dated: ___________________, 1999
- --------------------------------------------------------------------------------
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a financial
institution (including most commercial banks, savings and loan associations and
brokerage houses) which is a participant in the Securities Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Signature Guarantee
Program or the Stock Exchange Medallion Program (each, an "Eligible
Institution"). Signatures on this Letter of Transmittal need not be guaranteed
(a) if this Letter of Transmittal is signed by the registered holders (which
term, for purposes of this document, includes any participant in the Book-Entry
Transfer Facility's system whose name appears on a security position listing as
the owner of the Shares) of Shares tendered herewith and such registered owner
has not completed the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" on this Letter of Transmittal or (b) if
such Shares are tendered for the account of an Eligible Institution. See
Instruction 5 of this Letter of Transmittal.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES OR BOOK-ENTRY
CONFIRMATIONS. This Letter of Transmittal is to be used either if certificates
are to be forwarded herewith or if tenders are to be made pursuant to the
procedures for tender by book-entry transfer set forth in Section 3 of the Offer
to Purchase. Certificates for all physically tendered Shares ("Share
Certificates"), or confirmation of any book-entry transfer ("Book-Entry
Confirmation") into the Depositary's account at the Book-Entry Transfer Facility
of Shares tendered by book-entry transfer, as well as this Letter of Transmittal
(or a facsimile hereof), properly completed and duly executed with any required
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message), and any other documents required by this Letter of Transmittal, must
be received by the Depositary at one of its addresses set forth herein on or
prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase).
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver all other required documents to the Depositary on or prior to
the Expiration Date or who cannot comply with the procedures for book-entry
transfer on a timely basis may nevertheless tender their Shares by properly
completing and duly executing a Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase.
Pursuant to such procedure: (i) such tender must be made by or through an
Eligible Institution; (ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form provided by the Purchaser, must
be received by the Depositary prior to the Expiration Date; and (iii) Share
Certificates, in proper form for transfer (or a Book-Entry Confirmation with
respect to all Shares), together with a properly completed and duly executed
Letter of Transmittal (or a facsimile thereof), with any required signature
guarantees (or, in the case of a book-entry transfer, an Agent's Message), and
all other documents required by this Letter of Transmittal, must be received by
the Depositary within three Nasdaq National Market trading days after the date
of execution of such Notice of Guaranteed Delivery all as provided in Section 3
of the Offer to Purchase.
If Share Certificates are forwarded separately to the Depositary, a properly
completed and duly executed Letter of Transmittal must accompany each such
delivery.
The method of delivery of Share Certificates and all other required
documents, including delivery through the Book-Entry Transfer Facility, is at
the election and risk of the tendering stockholder. The delivery will be deemed
made only when actually received by the Depositary (including, in the case of a
book-entry transfer, by Book-Entry Confirmation). If such delivery is by mail,
it is recommended that such certificates and documents be sent by registered
mail, properly insured, with return receipt requested. In all cases, sufficient
time should be allowed to assure timely delivery.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal (or facsimile thereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
signed schedule attached hereto.
4. PARTIAL TENDERS (APPLICABLE TO CERTIFICATE STOCKHOLDERS ONLY). If fewer
than all the Shares evidenced by any certificate submitted are to be tendered,
fill in the number of Shares which are to be tendered in the box entitled
"Number of Shares Tendered." In such cases, new certificate(s) for the remainder
of the Shares that were evidenced by the old certificate(s) will be sent to the
registered holder, unless otherwise provided in the appropriate box on this
Letter of Transmittal, as soon as practicable after the Expiration Date. All
Shares represented by certificates delivered to the Depositary will be deemed to
have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the certificate(s) without alteration, enlargement or any other
change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to, or
certificates for Shares not tendered or not accepted for payment are to be
issued in the name of, a person other than the registered holder(s), in which
case the certificate(s) evidencing the Shares tendered hereby must be endorsed
or accompanied by appropriate stock powers, in each case signed exactly as the
name(s) of the registered holder(s) appear(s) on such certificate(s). Signatures
on such certificates or stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the certificates(s) listed, the certificate(s) must be
endorsed or accompanied by the appropriate stock powers, in either case signed
exactly as
<PAGE>
the name or names of the registered holder or holders appear(s) on the
certificate(s). Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal or any Share Certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact, agent,
officer of a corporation or any person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to the Purchaser of such person's authority so to act must be
submitted.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, the
Purchaser will pay any stock transfer taxes with respect to the transfer and
sale of Shares to it or its order pursuant to the Offer. If, however, payment of
the purchase price is to be made to, or (in the circumstances permitted hereby)
if certificates for Shares not tendered or accepted for payment are to be
registered in the name of, any person other than the registered holder, or if
tendered certificates are registered in the name of any person other than the
person(s) signing this Letter of Transmittal, the amount of any stock transfer
taxes (whether imposed on the registered holder or such person) payable on
account of the transfer to such person will be deducted from the purchase price
if satisfactory evidence of the payment of such taxes, or exemption therefrom,
is not submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued
in the name of, and/or certificates for Shares not tendered or not accepted for
payment are to be issued or returned to, a person other than the signer of this
Letter of Transmittal or if a check and/or such certificates are to be mailed to
a person other than the signer of this Letter of Transmittal or to an address
other than that shown above, the appropriate boxes on this Letter of Transmittal
should be completed. Stockholders tendering Shares by book-entry transfer may
request that Shares not purchased be credited to such account at the Book-Entry
Transfer Facility as such stockholder may designate under "Special Payment
Instructions." If no such instructions are given, any such Shares not purchased
will be returned by crediting the account designated above at the Book-Entry
Transfer Facility.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Any questions and
requests for assistance or additional copies of the Offer to Purchase, this
Letter of Transmittal and the Notice of Guaranteed Delivery may be directed to
the Dealer Manager or the Information Agent at their respective telephone
numbers and locations set forth below. You may also contact your broker, dealer,
commercial bank, trust company or other nominee for assistance concerning the
Offer.
9. BACKUP FEDERAL INCOME TAX WITHHOLDING AND SUBSTITUTE FORM W-9. Under
the "backup withholding" provisions of U.S. Federal tax law, the Depositary may
be required to withhold 31% of the purchase price of Shares purchased pursuant
to the Offer. To prevent backup withholding, each tendering stockholder should
complete and sign the Substitute Form W-9 included in this Letter of Transmittal
and either: (a) provide the stockholder's correct taxpayer identification number
("TIN") and certify, under penalties of perjury, that the TIN provided is
correct (or that such stockholder is awaiting a TIN), and that (i) the
stockholder has not been notified by the Internal Revenue Service ("IRS") that
the stockholder is subject to backup withholding as a result of failure to
report all interest or dividends, or (ii) the IRS has notified the stockholder
that the stockholder is no longer subject to backup withholding; or (b) provide
an adequate basis for exemption. If "Applied for" is written in Part I of the
substitute Form W-9, the Depositary will retain 31% of any payment of the
purchase price for tendered Shares during the 60-day period following the date
of the Substitute Form W-9. If the stockholder furnishes the Depositary with his
or her TIN within 60 days of the date of the Substitute W-9, the Depositary will
remit such amount retained during the 60-day period to the stockholder and no
further amounts will be retained or withheld from any payment made to the
stockholder thereafter. If, however, the stockholder has not provided the
Depositary with his or her TIN within such 60-day period, the Depositary will
remit such previously retained amounts to the IRS as backup withholding and
shall withhold 31% of any payment of the purchase price for the tendered Shares
made to the stockholder thereafter unless the stockholder furnishes a TIN to the
Depositary prior to such payment. In general, an individual's TIN is the
individual's Social Security Number. If a certificate for tendered Shares is
registered in more than one name or is not in the name of the actual owner,
consult the Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 for additional guidance on which number to report. If the
Depositary is not provided with the correct TIN or an adequate basis for
exemption, the stockholder may be subject to a $50 penalty imposed by the IRS
and backup withholding at a rate of 31%. Certain holders (including, among
others, certain corporations and certain foreign individuals) are not subject to
these backup withholding and reporting requirements. Exempt holders should
indicate their exempt status on the Substitute Form W-9. Additionally, in order
to satisfy the Depositary that a foreign individual qualifies as an exempt
recipient, such foreign individual must submit a statement (generally, IRS Form
W-8), signed under penalties of perjury, attesting to that individual's exempt
status. A form for such statements can be obtained from the Depositary.
If payment for tendered Shares is to be made, pursuant to Special Payment
Instructions, to a person other than the tendering shareholder, backup
withholding will apply unless such other person, rather than the tendering
shareholder, complies with the procedures described above to avoid backup
withholding.
For further information concerning backup withholding and instructions for
completing the Substitute Form W-9 (including how an individual who does not
have a TIN can obtain one and how to complete the Substitute Form W-9 if Shares
are held in more than one name), consult the Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 attached to this Letter of
Transmittal.
Failure to complete the Substitute Form W-9 will not, by itself, cause
Shares to be deemed invalidly tendered, but may require the Depositary to
withhold 31% of the amount of any payments for such Shares. Backup withholding
is not an additional federal income tax. Rather, the federal income tax
liability of a person subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained, provided the appropriate returns are filed with the IRS.
<PAGE>
10. WAIVER OF CONDITIONS. The conditions of the Offer may be waived by the
Purchaser (subject to certain limitations), in whole or in part, at any time or
from time to time, in the Purchaser's sole discretion in accordance with Section
12 of the Offer to Purchase.
11. LOST OR DESTROYED CERTIFICATES. If any Certificate(s) representing
Shares has (have) been lost or destroyed, the holders should promptly notify the
Company's Transfer Agent, The Bank of New York, at (800) 524-4458. The holders
will then be instructed as to the procedure to be followed in order to replace
the Certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost or destroyed Certificates have
been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE THEREOF
(TOGETHER WITH SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL
OTHER REQUIRED DOCUMENTS) OR THE NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED
BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE.
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------
SUBSTITUTE Name: Individual / /
FORM W-9 Address: Partnership / /
Corporation / /
Other (specify) / /
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
REQUEST FOR TAXPAYER
IDENTIFICATION
NUMBER (TIN) AND CERTIFICATION
- ------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
PART I. PLEASE PROVIDE YOUR TAXPAYER IDENTIFICATION NUMBER IN THE SSN:
SPACE AT RIGHT AND CERTIFY BY SIGNING AND DATING BELOW. IF OR
AWAITING TIN, WRITE "APPLIED FOR." EIN:
- -------------------------------------------------------------------------------------------------------
PART II. FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING. SEE THE ENCLOSED "GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9."
- -------------------------------------------------------------------------------------------------------
</TABLE>
CERTIFICATION--UNDER PENALTIES OF PERJURY, I CERTIFY THAT:
(1) THE NUMBER SHOWN ON THIS FORM IS MY CORRECT TAXPAYER IDENTIFICATION NUMBER
(OR I AM WAITING FOR A NUMBER TO BE ISSUED TO ME); AND
(2) I AM NOT SUBJECT TO BACKUP WITHHOLDING EITHER BECAUSE: (A) I AM EXEMPT FROM
BACKUP WITHHOLDING, OR (B) I HAVE NOT BEEN NOTIFIED BY THE IRS THAT I AM
SUBJECT TO BACKUP WITHHOLDING AS A RESULT OF A FAILURE TO REPORT ALL
INTEREST OR DIVIDENDS, OR (C) THE IRS HAS NOTIFIED ME THAT I AM NO LONGER
SUBJECT TO BACKUP WITHHOLDING; AND
(3) ANY OTHER INFORMATION PROVIDED ON THIS FORM IS TRUE, CORRECT AND COMPLETE.
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after being
notified by the IRS that you were subject to backup withholding you received
another notification from the IRS that you are not longer subject to backup
withholding, do not cross out item (2).
Signature ______________________________________________________________________
Date: ____________________, 1999
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN IRS PENALTIES AND
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
-------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (i) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or
(ii) I intend to mail or deliver an application in the near future. I understand
that if I do not provide a taxpayer identification number by the time of
payment, 31% of all reportable payments made to me will be withheld until I
provide a taxpayer identification number to the Depositary.
<TABLE>
<S> <C>
Date: ------------------------, 1999 -------------------------------------------------
Signature
-------------------------------------------------
Name (Please Print)
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
Manually signed facsimile copies of this Letter of Transmittal, properly
completed and duly signed, will be accepted. This Letter of Transmittal,
certificates for Shares and any other required documents should be sent or
delivered by each stockholder of the Company or such stockholder's broker,
dealer, commercial bank, trust company or other nominee to the Depositary at one
of its addresses set forth below.
THE DEPOSITARY FOR THE OFFER IS:
IBJ WHITEHALL BANK & TRUST COMPANY
<TABLE>
<S> <C> <C>
BY MAIL: FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT COURIER:
Reorganization Operations Department (FOR ELIGIBLE INSTITUTIONS Securities Processing Window
P.O. Box 84 ONLY) Subcellar One, (SC-1)
Bowling Green Station (212) 858-2611 One State Street
New York, New York 10274-0084 FOR CONFIRMATION TELEPHONE: New York, New York 10004
(212) 858-2103
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TO A NUMBER OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
Any questions and requests for assistance or additional copies of the Offer
to Purchase, this Letter of Transmittal and the Notice of Guaranteed Delivery
may be directed to the Information Agent or the Dealer Manager at their
respective telephone numbers and locations listed below. You may also contact
your broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
OR
CALL TOLL-FREE (800) 322-2885
THE DEALER MANAGER FOR THE OFFER IS:
[LOGO]
60 Wall Street
New York, New York 10260
Call (212) 648-6926
<PAGE>
EXHIBIT (a)(3)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
GENERAL NUTRITION COMPANIES, INC.
PURSUANT TO THE OFFER TO PURCHASE DATED JULY 9, 1999
OF
NUMICO INVESTMENT CORP.
AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF
KONINKLIJKE NUMICO N.V.
(ROYAL NUMICO)
As set forth in Section 3 of the Offer to Purchase (as defined below), this
form or one substantially equivalent may be used to accept the Offer (as defined
below) if certificates for shares of common stock, par value $0.01 per share
(the "Shares"), of General Nutrition Companies, Inc., a Delaware corporation
(the "Company"), are not immediately available, or if the procedure for
book-entry transfer cannot be complied with on a timely basis, or all required
documents cannot be delivered to the Depositary prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase). This form may be delivered by
hand or overnight courier to the Depositary or transmitted by telegram, telex,
facsimile or mail to the Depositary and must include a guarantee by an Eligible
Institution (as defined in Section 3 of the Offer to Purchase). See Section 3 of
the Offer to Purchase.
THE DEPOSITARY FOR THE OFFER IS:
IBJ WHITEHALL BANK & TRUST COMPANY
<TABLE>
<S> <C> <C>
BY MAIL: FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT COURIER:
Reorganization Operations (FOR ELIGIBLE INSTITUTIONS Securities Processing Window
Department ONLY) Subcellar One, (SC-1)
P.O. Box 84 (212) 858-2611 One State Street
Bowling Green Station FOR CONFIRMATION TELEPHONE: New York, New York 10004
New York, New York 10274-0084 (212) 858-2103
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET
FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Numico Investment Corp., a Delaware
corporation and an indirect wholly-owned subsidiary of Koninklijke Numico N.V.,
a company incorporated under the laws of The Netherlands, on the terms and
subject to the conditions set forth in the Offer to Purchase dated July 9, 1999
(as amended or supplemented from time to time, the "Offer to Purchase") and the
Letter of Transmittal (the "Letter of Transmittal" which, together with any
amendments or supplements thereto, collectively constitute the "Offer"), receipt
of which is hereby acknowledged, the number of shares of common stock, par value
$0.01 per share (the "Shares"), of General Nutrition Companies, Inc., a Delaware
corporation, set forth below, all pursuant to the guaranteed delivery procedures
set forth in Section 3 of the Offer to Purchase.
Number of Shares:
----------------------------------------------------------------------------
Certificate Nos. (if available):
----------------------------------------------------------------------------
----------------------------------------------------------------------------
CHECK BOX IF SHARES WILL BE TENDERED BY BOOK-ENTRY TRANSFER / /
Account Number:
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Name(s) of Record Holder(s):
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Please Print
Address(es):
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Zip Code
Daytime Area Code and Tel. No.:
----------------------------------------------------------------------------
Signature(s):
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Dated: _____________________________________, 1999
2
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
The undersigned, a participant in the Securities Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program, hereby guarantees (a) that the above-named
person(s) "own(s)" the Shares tendered hereby within the meaning of Rule 14e-4
under the Securities Exchange Act of 1934, as amended, (b) that such tender of
Shares complies with Rule 14e-4 and (c) to deliver to the Depositary either the
certificates representing the Shares tendered hereby, in proper form for
transfer, or a Book-Entry Confirmation (as defined in the Offer to Purchase)
with respect to such Shares, in any such case together with a properly completed
and duly executed Letter of Transmittal, with any required signature guarantees,
or an Agent's Message (as defined in the Offer to Purchase), and any other
required documents, within THREE Nasdaq National Market trading days after the
date hereof.
The Eligible Institution that completes this form must communicate this
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
<TABLE>
<S> <C>
Name of Firm:
- -------------------------------------------- --------------------------------------------
Authorized Signature
Address: Name:
- -------------------------------------------- --------------------------------------------
- -------------------------------------------- Please Print
Zip Code Title:
--------------------------------------------
Area Code and Tel No.: Dated: , 1999
- --------------------------------------------
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE.
CERTIFICATES FOR SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE>
EXHIBIT (a)(4)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
GENERAL NUTRITION COMPANIES, INC.
AT
$25.00 NET PER SHARE
BY
NUMICO INVESTMENT CORP.
AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF
KONINKLIJKE NUMICO N.V.
(ROYAL NUMICO)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, AUGUST 5, 1999, UNLESS THE OFFER IS EXTENDED.
July 9, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been engaged by Numico Investment Corp., a Delaware corporation (the
"Purchaser") and an indirect wholly-owned subsidiary of Koninklijke Numico N.V.,
a company incorporated under the laws of The Netherlands ("Numico"), to act as
Dealer Manager in connection with the Purchaser's Offer to Purchase all
outstanding shares of common stock, par value $0.01 per share (the "Shares"), of
General Nutrition Companies, Inc., a Delaware corporation (the "Company"), at
$25.00 per Share, net to the seller in cash, without interest thereon, on the
terms and subject to the conditions set forth in the Offer to Purchase dated
July 9, 1999 (as amended or supplemented from time to time, the "Offer to
Purchase") and the related Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively constitute the "Offer").
Also enclosed is the letter to stockholders from the President and Chief
Executive Officer of the Company accompanied by the Company's
Solicitation/Recommendation Statement on Schedule 14D-9.
Please furnish copies of the enclosed materials to those of your clients for
whom you hold Shares registered in your name or in the name of your nominee.
Enclosed herewith are the following documents:
1. The Offer to Purchase dated July 9, 1999;
2. The Company's Solicitation/Recommendation Statement on Schedule
14D-9;
3. The Letter of Transmittal to be used by stockholders of the Company
in accepting the Offer;
4. A printed form of letter that may be sent to your clients for whose
account you hold Shares in your name or in the name of your nominee, with
space provided for obtaining such clients' instructions with regard to the
Offer;
5. The Notice of Guaranteed Delivery;
6. The Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9; and
<PAGE>
7. A return envelope addressed to IBJ Whitehall Bank & Trust Company,
the Depositary.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES EQUIVALENT TO A MAJORITY OF THE TOTAL ISSUED AND OUTSTANDING SHARES ON A
FULLY DILUTED BASIS AS OF THE DATE SUCH SHARES ARE PURCHASED PURSUANT TO THE
OFFER (THE "MINIMUM CONDITION"). THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER
CONDITIONS DESCRIBED IN SECTION 12 OF THE OFFER TO PURCHASE.
We urge you to contact your clients promptly. Please note that the Offer and
withdrawal rights will expire at 12:00 Midnight, New York City time, on
Thursday, August 5, 1999, unless the Offer is extended.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates for
such Shares or timely confirmation of the book-entry transfer of such Shares
into the Depositary's account at the Book-Entry Transfer Facility (as defined in
the Offer to Purchase) pursuant to the procedures set forth in Section 3 of the
Offer to Purchase, (ii) the Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed, with any required
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message (as defined in the Offer to Purchase)) and (iii) any other documents
required by such Letter of Transmittal. UNDER NO CIRCUMSTANCES WILL INTEREST BE
PAID ON THE PURCHASE PRICE FOR SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER
OR ANY DELAY IN MAKING SUCH PAYMENT PURSUANT TO THE OFFER.
Neither Numico nor the Purchaser will pay any fees or commissions to any
broker or dealer or other person (other than the Depositary, the Information
Agent and the Dealer Manager, as disclosed in the Offer to Purchase) in
connection with the solicitation of tenders of Shares pursuant to the Offer. You
will be reimbursed upon request for customary mailing and handling expenses
incurred by you in forwarding the enclosed offering materials to your clients.
The Purchaser will pay all stock transfer taxes applicable to its purchase of
Shares pursuant to the Offer, subject to Instruction 6 of the Letter of
Transmittal.
Questions and requests for assistance may be directed to the Dealer Manager
or the Information Agent at their respective addresses and telephone numbers set
forth on the back cover of the enclosed Offer to Purchase. Requests for
additional copies of the enclosed materials may be directed to the Information
Agent or the Dealer Manager or to brokers, dealers, commercial banks or trust
companies.
Very truly yours,
J.P. MORGAN SECURITIES INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON AS AN AGENT OF NUMICO, THE PURCHASER, THE DEALER MANAGER, THE
DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THEM, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO GIVE ANY INFORMATION OR USE ANY DOCUMENT OR
MAKE ANY REPRESENTATION ON BEHALF OF ANY OF THEM WITH RESPECT TO THE OFFER NOT
CONTAINED IN THE OFFER TO PURCHASE OR THE LETTER OF TRANSMITTAL.
2
<PAGE>
EXHIBIT (a)(5)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
GENERAL NUTRITION COMPANIES, INC.
AT
$25.00 NET PER SHARE
BY
NUMICO INVESTMENT CORP.
AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF
KONINKLIJKE NUMICO N.V.
(ROYAL NUMICO)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, AUGUST 5, 1999, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated July 9, 1999
(the "Offer to Purchase"), and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer") relating to the Offer by Numico Investment Corp., a Delaware
corporation (the "Purchaser") and an indirect wholly-owned subsidiary of
Koninklijke Numico N.V., a corporation incorporated under the laws of The
Netherlands ("Numico"), to purchase all outstanding shares of common stock, par
value $0.01 per share (the "Shares"), of General Nutrition Companies, Inc., a
Delaware corporation (the "Company"), at $25.00 per Share, net to the seller in
cash, without interest thereon, on the terms and subject to the conditions set
forth in the Offer.
Also enclosed is the letter to the stockholders from the President and Chief
Executive Officer of the Company accompanied by the Company's
Solicitation/Recommendation Statement on Schedule 14D-9.
THIS MATERIAL IS BEING SENT TO YOU AS THE BENEFICIAL OWNER OF SHARES HELD BY
US FOR YOUR ACCOUNT BUT NOT REGISTERED IN YOUR NAME. WE ARE (OR OUR NOMINEE IS)
THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER OF SUCH
SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR
INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION
ONLY AND CANNOT BE USED TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish us to tender on your behalf
any or all the Shares held by us for your account, pursuant to the terms and
conditions set forth in the Offer.
Your attention is directed to the following:
1. The Offer price is $25.00 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions of
the Offer.
2. The Offer is being made for all outstanding Shares.
3. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the expiration of the Offer, a
number of Shares equivalent to a majority of the total issued and
outstanding Shares on a fully diluted basis as of the date such Shares are
purchased
<PAGE>
pursuant to the Offer (the "Minimum Condition"). The Offer is also subject
to certain other conditions described in Section 12 of the Offer to
Purchase.
4. The Offer is being made pursuant to an Agreement and Plan of Merger
(the "Merger Agreement"), dated as of July 5, 1999, by and among the
Company, Numico and the Purchaser. The Merger Agreement provides that, among
other things, following the consummation of the Offer and the satisfaction
or waiver of the other conditions set forth in the Merger Agreement, the
Purchaser will be merged with and into the Company (the "Merger"). Pursuant
to the Merger Agreement, each issued and outstanding Share (other than
Shares owned by the Company, Numico or the Purchaser or Shares that are held
by stockholders exercising dissenters' rights under Delaware law) shall, 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 an amount in
cash, without interest thereon, equal to the price paid for each Share
pursuant to the Offer.
5. The Board of Directors of the Company has unanimously determined
that each of the Offer and the Merger are fair to, and in the best interests
of, the stockholders of the Company, has approved the Merger Agreement and
the transactions contemplated therein, including the Offer and the Merger,
has declared that the Merger Agreement is advisable and recommends that
stockholders tender their shares pursuant to the Offer.
6. Any stock transfer taxes applicable to a sale of Shares to the
Purchaser will be borne by the Purchaser, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
7. Tendering stockholders will not be charged brokerage fees or
commissions by the Dealer Manager, the Depositary, or the Information Agent
or, except as set forth in Instruction 6 of the Letter of Transmittal,
transfer taxes on the purchase of Shares by Purchaser pursuant to the Offer.
However, federal income tax backup withholding at a rate of 31% may be
required, unless an exemption in provided or unless the required taxpayer
identification information is provided. See Instruction 9 of the Letter of
Transmittal.
Your instructions to us should be forwarded promptly to permit us to submit
a tender on your behalf prior to the Expiration Date.
If you wish to have us tender on your behalf any or all of the Shares held
by us for your account, please so instruct us by completing, executing,
detaching and returning to us the instruction form contained in this letter. An
envelope in which to return your instructions to us is enclosed. If you
authorize tender of your Shares, all such Shares will be tendered unless
otherwise indicated in such instruction form. Your instructions should be
forwarded to us in ample time to permit us to submit a tender on your behalf
prior to the Expiration Date.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by IBJ Whitehall Bank & Trust Company
(the "Depositary"), of (a) certificates for (or a timely Book-Entry Confirmation
(as defined in the Offer to Purchase) with respect to) such Shares, (b) a Letter
of Transmittal, properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer effected pursuant
to the procedure set forth in Section 3 of the Offer to Purchase, an Agent's
Message, and (c) any other documents required by the Letter of Transmittal.
Accordingly, tendering stockholders may be paid at different times depending
upon when certificates for Shares or Book-Entry Confirmations with respect to
Shares are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE FOR SHARES, REGARDLESS OF ANY EXTENSION
OF THE OFFER OR ANY DELAY IN MAKING PAYMENT PURSUANT TO THE OFFER.
The Offer is not being made to, nor will tenders be accepted from, or on
behalf of, holders of Shares in any jurisdiction in which the making or
acceptance of the Offer would not be in compliance with the laws of such
jurisdiction. In any jurisdiction where the securities or blue sky laws require
the Offer to be
2
<PAGE>
made by a licensed broker or dealer, the Offer will be deemed made on behalf of
the Purchaser by J.P. Morgan Securities Inc., the Dealer Manager for the Offer,
or one or more registered brokers or dealers that are licensed under the laws of
such jurisdiction.
3
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
GENERAL NUTRITION COMPANIES, INC.
The undersigned acknowledge(s) receipt of your letter, the Offer to Purchase
dated July 9, 1999 (as amended or supplemented from time to time, the "Offer to
Purchase"), and the related Letter of Transmittal relating to the offer by
Numico Investment Corp., a Delaware corporation and an indirect wholly-owned
subsidiary of Koninklijke Numico N.V., a company incorporated under the laws of
The Netherlands, to purchase for $25.00 per Share, net to the seller in cash,
without interest thereon, all outstanding shares of common stock, par value
$0.01 per share (the "Shares"), of General Nutrition Companies, Inc., a Delaware
corporation.
This will instruct you to tender to the Purchaser the number of Shares
indicated below held by you for the account of the undersigned, on the terms and
subject to the conditions set forth in the Offer to Purchase and the related
Letter of Transmittal.
<TABLE>
<S> <C>
Number of Shares to be Tendered:* SIGN HERE:
- ----------------------------- Shares -------------------------------------------
Account Number: -------------------------------------------
- ------------------------------------------- Signature(s)
Daytime Area Code and Tel. No.
- -------------------------------------------
Taxpayer Identification No. or Social
Security No. -------------------------------------------
- ------------------------------------------- -------------------------------------------
Dated: -------------------------------, 1999 (Please print name(s) and address(es))
</TABLE>
- ------------------------
* Unless otherwise indicated, it will be assumed that all your Shares held by us
for your account are to be tendered.
<PAGE>
Contacts: Royal Numico N.V.
Klaas de Jong
31-79-353-9028
[email protected]
-----------------------
Media: BSMG Worldwide
Edward Nebb, 212-445-8213
Bo Park, 212-445-8152
[email protected]
--------------
Lavine Surtani, 212-445-8262
[email protected]
-----------------
FOR IMMEDIATE RELEASE
General Nutrition Companies
Media: Miller DeMartine Group
Gregory Miller, 917-653-7335
[email protected]
-----------------
Barbara Eng, 212-626-6694
Investors:
Edwin J. Kozlowski, EVP/CFO
412-288-4661
[email protected]
-----------------------
GENERAL NUTRITION IN MERGER AGREEMENT WITH ROYAL NUMICO
$2.5 BILLION TRANSACTION TO CREATE A GLOBAL LEADER IN HUMAN NUTRITION
DUTCH COMPANY ACCESSES HIGH-GROWTH U.S. SUPPLEMENTS MARKET;
GNC GAINS ACCESS TO MAJOR NUTRITION RESEARCH CAPABILITIES
ZOETERMEER, THE NETHERLANDS AND PITTSBURGH, PA. -- JULY 5, 1999 -- Royal
Numico N.V. (Amsterdam Stock Exchange: NUTV), a leading European manufacturer
and marketer of specialized nutrition products, and General Nutrition
Companies, Inc. (Nasdaq: GNCI), a leading manufacturer and retailer of
nutritional supplements in the U.S., today announced they have signed a
definitive merger agreement that will create a global leader in human
nutrition. Under the terms of the agreement, Numico will make a $25 per
share cash tender offer for all of GNC's approximately 75 million outstanding
shares and options and will assume $760 million in debt, valuing the
transaction at approximately $2.5 billion.
The combined company would have pro forma sales of approximately US$3.0
billion, based on the fiscal 1998 financial statements of Numico and GNC, and
will have nearly 27,000 employees worldwide. Numico expects the merger to
result in significant incremental revenue from new product development and,
based on currently available information, believes the transaction will be
immediately accretive to earnings.
-more-
<PAGE>
-2-
In a joint statement, J.C.T. van der Wielen, President and CEO of
Numico, and William E. Watts, President and CEO of GNC, said, "This merger
creates the largest company in the world exclusively devoted to human
nutrition. It enhances GNC's current leading position in the U.S.
nutritional supplements segment and positions Numico to be a leader in the
worldwide supplements market -- a market where proprietary research coupled
with marketing and branding expertise will determine category leadership."
The two executives cited several other complementary strengths of the
combined companies:
- - Numico's leadership in clinical research on human nutrition reinforces
GNC's focus on science-based consumer products as a key market differentiator.
- - GNC's proven ability to develop and market branded product in the U.S.
offers crossover potential for Numico's existing lines of supplements in
Europe.
- - Numico's global view of the nutrition business will accelerate GNC's
evolution into an international marketer of nutrition products.
- - GNC's leading role in nutrition marketing in the U.S. complements Numico's
strong market presence and distribution in Europe and Asia.
Mr. van der Wielen said, "The U.S. has long represented a significant
opportunity for Numico, but we wanted to enter this market with a partner who
could give us critical mass in marketing, manufacturing and branding. GNC is
the solution to our needs. They have the largest manufacturing facility for
supplements in the U.S. The GNC brand has broad awareness, credibility and
acceptance with a wide range of American consumers. And, they are a leader
in the specialty retail channel in the U.S. for vitamins and other
nutritional supplements. We are very pleased with this transaction.
"Moving forward," he added, "Numico is committed to maintaining and
expanding GNC's existing business, including its successful use of
franchising. Also, we look to fully utilize GNC's expanded manufacturing
capabilities in South Carolina."
Mr. Watts said, "We strongly believe the merger is in the best interests
of GNC shareholders. It also reflects an exciting new phase in the evolution
of our company. GNC already has a leading market share in the U.S.
supplement segment. Building on our leadership in the specialty retailing
channel, we have created a major strategic alliance with Rite Aid to access
the mass market channel and we have just announced an alliance with
drugstore.com, the leading e-retailing source for health and nutrition
products, to access the fast-growing electronic channel. What this deal does
for GNC is to further enhance our strong position in supplements through
access to world class nutrition research that will result in new proprietary
products.
-more-
<PAGE>
-3-
"This is a strategy-driven merger that allows both parties to take
advantage of the growing global demand for health products," Mr. Watts
continued. "GNC's current management team, which was the engine behind our
21% compounded annual growth rate in sales between 1993 and 1998, is
committed to working with our new parent to expand GNC's penetration of
nutrition retailing, both in the U.S. and in key international markets."
GNC President and CEO William E. Watts and the senior managers of the
company have entered into employment agreements to remain with Numico
following the merger. Additionally, Mr. Watts is expected to be named to the
Board of Managing Directors of Numico.
The Board of Directors of GNC has unanimously approved the tender offer
and the merger and has recommended that GNC shareholders tender their shares.
Numico will commence a tender offer for GNC shares not later than July 12,
1999. The tender offer will be conditioned upon the valid tender of a
majority of the GNC shares, on a fully diluted basis, as well as review under
the Hart-Scott-Rodino Act and other customary conditions. Any shares not
acquired in the tender offer will be acquired in a second step merger at the
same price per share. J.P. Morgan & Co. Incorporated will be the
dealer-manager and MacKenzie Partners will be the information agent for the
tender offer. The financial advisor to Numico was J.P. Morgan & Co.
Incorporated, and Morgan Stanley Dean Witter was the advisor to GNC.
The acquisition will be financed through a bridge facility which Numico
intends to refinance, in part, through an equity offering and a subordinated
convertible bond issue aggregating approximately Euro1,050,000,000.
Royal Numico N.V. (www.numico.com), headquartered in Zoetermeer, The
Netherlands, is a holding company of a group of leaders in specialized
nutrition, such as Nutricia, Milupa and Cow & Gate. Numico concentrates on
the development, manufacture and sales of specialized nutrition products,
based upon medical scientific concepts with a high added value. The company
operates in more than 40 countries, including major market centers in Europe,
including Russia; Turkey; and the Pacific Rim, ranging from China to New
Zealand. Numico had net sales of US$1.6 billion, and operating income of
US$238 million for the year ended December 31, 1998.
General Nutrition Companies, Inc. (www.gnc.com), based in Pittsburgh,
PA, is the only nationwide specialty retailer of vitamin and mineral
supplements, sports nutrition and herbal products and is also a leading
provider of personal care, fitness and other health related products. The
company's products are sold through a network of 4,203 retail stores
operating under the General Nutrition Centers, Health & Diet Center and GNC
Live Well names, of which 2,726 are company-owned and 1,477 are franchised.
The Company's stores are located in all 50 States, Puerto Rico and 25 foreign
markets. For the fiscal year ended February 6, 1999, GNC had net revenue of
$1.42 billion, and net earnings of approximately $91.0 million.
-more-
<PAGE>
-4-
This release contains certain "forward-looking" statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities and Exchange Act of 1934, as amended, which are
intended to be covered by the safe harbors created thereby. Such statements
should be considered as subject to risks and uncertainties that exist in
General Nutrition Corporation's operations and business environment and could
render actual outcomes and results materially different than predicted. For
a description of some of the factors or uncertainties that could cause actual
results to differ, reference is made to the section entitled "Risks and
Uncertainties in the Future" in General Nutrition Corporation's Annual
Report, Form 10-K for the year ended February 6, 1999.
# # #
<PAGE>
THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION OF AN
OFFER TO SELL SHARES (AS DEFINED BELOW). THE OFFER (AS DEFINED BELOW) IS MADE
SOLELY BY THE OFFER TO PURCHASE DATED JULY 9, 1999 AND THE RELATED LETTER OF
TRANSMITTAL AND ANY AMENDMENTS OR SUPPLEMENTS THERETO. THE OFFER IS NOT BEING
MADE TO (NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS OF SHARES
IN ANY JURISDICTION IN WHICH THE MAKING OF THE OFFER OR THE ACCEPTANCE
THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. IN ANY
JURISDICTION WHERE THE SECURITIES, BLUE SKY OR OTHER LAWS REQUIRE THE OFFER
TO BE MADE BY A LICENSED BROKER OR DEALER, THE OFFER SHALL BE DEEMED TO BE
MADE ON BEHALF OF THE PURCHASER (AS DEFINED BELOW) BY J.P. MORGAN SECURITIES
INC. OR ONE OR MORE REGISTERED BROKERS OR DEALERS LICENSED UNDER THE LAWS OF
SUCH JURISDICTION.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
General Nutrition Companies, Inc.
at
$25.00 Net Per Share
by
Numico Investment Corp.
an indirect wholly-owned subsidiary of
Koninklijke Numico N.V.
(Royal Numico)
Numico Investment Corp., a Delaware corporation (the "Purchaser") and an
indirect wholly-owned subsidiary of Koninklijke Numico N.V., a company
incorporated under the laws of The Netherlands ("Numico"), is offering to
purchase all outstanding shares of common stock, par value $0.01 per share
(the "Shares"), of General Nutrition Companies, Inc., a Delaware corporation
(the "Company"), at $25.00 per Share, net to the seller in cash, without
interest, upon the terms and subject to the conditions set forth in the Offer
to Purchase dated July 9, 1999 (the "Offer to Purchase"), and in the related
Letter of Transmittal (which, together with any amendments or supplements
thereto, collectively constitute the "Offer"). Tendering stockholders who
have Shares registered in their name and who tender directly will not be
charged brokerage fees or commissions or, subject to Instruction 6 of the
Letter of Transmittal, transfer taxes on the purchase of Shares pursuant to
the Offer.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, AUGUST 5, 1999, UNLESS THE OFFER IS EXTENDED.
The Offer is being made pursuant to an Agreement and Plan of Merger (the
"Merger Agreement") dated as of July 5, 1999 by and among the Company, Numico
and the Purchaser. Pursuant to the Merger Agreement, after completion of the
Offer, and subject to the satisfaction or waiver of all conditions to the
Merger, the Purchaser will be merged with and into the Company (the "Merger")
and each issued and outstanding Share (other than Shares which are held by
the Company, Numico or the Purchaser or by stockholders exercising
dissenters' rights under Delaware law) shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into the
right to receive $25.00 per Share in cash, or any higher price per Share paid
pursuant to the Offer, without interest thereon. The Merger Agreement is more
fully described in the Offer to Purchase.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT, THE OFFER AND THE MERGER, DETERMINED THAT THE OFFER AND THE MERGER
ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE HOLDERS OF SHARES AND
RECOMMENDS THAT HOLDERS OF SHARES TENDER THEIR SHARES PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES EQUIVALENT TO A MAJORITY OF THE TOTAL ISSUED AND OUTSTANDING SHARES ON
A FULLY DILUTED BASIS AS OF THE DATE SUCH SHARES ARE PURCHASED PURSUANT TO
THE OFFER. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS DESCRIBED IN
SECTION 12 OF THE OFFER TO PURCHASE.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment Shares validly tendered and not withdrawn as, if and when the
Purchaser gives oral or written notice to IBJ Whitehall Bank & Trust Company
(the "Depositary") of its acceptance for payment of such Shares pursuant to
the Offer.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (a) certificates
for (or a timely Book-Entry Confirmation (as defined in the Offer to
Purchase) with respect to) such Shares, (b) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message (as defined in the Offer to Purchase) in lieu of the Letter of
Transmittal) and (c) any other documents required by the Letter of
Transmittal. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR
SHARES BE PAID, REGARDLESS OF ANY DELAY IN MAKING SUCH PAYMENT.
The purpose of the Offer is to acquire control of, and the entire equity
interest in, the Company. The Offer is subject to certain conditions set
forth in the Offer to Purchase. If any such condition is not satisfied, the
Purchaser may, except as provided in the Merger Agreement, (i) terminate the
Offer and return all tendered Shares to tendering stockholders, (ii) extend
the Offer and, subject to withdrawal rights as set forth below, retain all
such Shares until the expiration of the Offer as so extended, (iii) waive
such condition and purchase all Shares validly tendered and not withdrawn
prior to the expiration of the Offer or (iv) delay acceptance for payment or
payment for Shares, subject to applicable laws, until satisfaction or waiver
of the conditions to the Offer.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Thursday, August 5, 1999, unless and until the Purchaser, in its sole
discretion (but subject to the terms of the Merger Agreement), shall have
extended the period of time during which the Offer is open, in which event
the term "Expiration Date" shall mean the latest time and date on which the
Offer, as so extended by the Purchaser, shall expire. Subject to the
applicable rules and regulations of the Securities and Exchange Commission
and the terms of the Merger Agreement, the Purchaser expressly reserves the
right, in its sole discretion, at any time or from time to time, to extend
the period of time during which the Offer is open by giving oral or written
notice of such extension to the Depositary. Any such extension will be
followed as promptly as possible by a public announcement thereof. During any
such extension, all Shares previously tendered and not withdrawn will remain
subject to the Offer, subject to the right of a tendering stockholder to
withdraw such stockholder's Shares.
Tenders of Shares made pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date. Thereafter, such tenders are irrevocable,
except that they may also be withdrawn at any time after September 6, 1999,
unless theretofore accepted for payment as provided in the Offer to Purchase.
For a withdrawal to be effective, a written, telegraphic, telex or facsimile
transmission notice of withdrawal must be timely received by the Depositary
at one of its addresses set forth on the back cover of the Offer to Purchase.
Any such notice of withdrawal must specify the name of the person having
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the names in which the certificate(s) evidencing the Shares to be withdrawn
are registered, if different from that of the person who tendered such
Shares. The signatures(s) on the notice of withdrawal must be guaranteed by
an Eligible Institution (as defined in the Offer to Purchase), unless such
Shares have been tendered for the account of any Eligible Institution. If
Shares have been tendered pursuant to the procedures for book-entry tender as
set forth in Section 3 of the Offer to Purchase, any notice of withdrawal
must specify the name and number of the account at the Book-Entry Transfer
Facility to be credited with the withdrawn Shares. If certificates for Shares
to be withdrawn have been delivered or otherwise identified to the
Depositary, the name of the registered holder and the serial numbers of the
particular certificates evidencing the Shares to be withdrawn must also be
furnished to the Depositary as aforesaid prior to the physical release of
such certificates. All questions as to the form and validity (including time
of receipt) of any notice of withdrawal will be determined by the Purchaser,
in its sole discretion, which determination shall be final and binding. None
of the Purchaser, Numico, the Dealer Manager (listed below), the Depositary,
the Information Agent (listed below) or any other person will be under any
duty to give notification of any defects or irregularities in any notice of
withdrawal or incur any liability for failure to give such notification.
Withdrawals of tenders for Shares may not be rescinded, and any Shares
properly withdrawn will be deemed not to have been validly tendered for
purposes of the Offer. However, withdrawn Shares may be retendered by
following one of the procedures described in Section 3 of the Offer to
Purchase at any time prior to the Expiration Date.
The information required to be disclosed by paragraph (e)(1)(vii) of Rule
14d-6 of the General Rules and Regulations under the Securities Exchange Act
of 1934, as amended, is contained in the Offer to Purchase and is
incorporated herein by reference.
The Company has provided Purchaser with the Company's stockholder list and
security position listings for the purpose of disseminating the Offer to
stockholders. The Offer to Purchase and the related Letter of Transmittal
will be mailed to record holders of Shares and will be furnished to brokers,
banks and similar persons whose names, or the names of whose nominees, appear
on the stockholder list or, if applicable, who are listed as participants in
a clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
Questions and requests for assistance may be directed to the Information
Agent or to the Dealer Manager at their respective addresses and telephone
numbers set forth below. Requests for additional copies of the Offer to
Purchase, the related Letter of Transmittal and other tender offer materials
may be directed to the Information Agent or Dealer Manager. Such additional
copies will be furnished at the Purchaser's expense.
THE INFORMATION AGENT FOR THE OFFER IS:
MACKENZIE
PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
CALL TOLL-FREE (800) 322-2885
THE DEALER MANAGER FOR THE OFFER IS:
J.P. MORGAN & CO.
60 Wall Street
New York, New York 10260
(212) 648-6926
July 9, 1999
<PAGE>
EXHIBIT (a)(8)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER--Social Security numbers have nine digits separated by two hyphens: e.g.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: e.g., 00-0000000. The table below will help determine the name and
number to give the payer.
<TABLE>
<CAPTION>
GIVE THE NAME AND
FOR THIS TYPE OF ACCOUNT TAXPAYER IDENTIFICATION NUMBER OF--
- ---------------------------------------------------------------- -----------------------------------------------------
<C> <S> <C>
1. An individual's account The individual
2. Two or more individuals (joint account) The actual owner of the account or, if combined
funds, any one of the individuals(1)
3. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
4. a. The usual revocable savings trust account (grantor The grantor-trustee(1)
is also trustee)
b. So-called trust account that is not a legal or The actual owner(1)
valid trust under state law
5. Sole proprietorship The owner(3)
6. A valid trust, estate, or pension trust The legal entity(4)
7. Corporate account The corporation
8. Association, club, religious, charitable, The organization
educational, or other tax-exempt organization account
9. Partnership account The partnership
10. A broker or registered nominee The broker or nominee
11. Account with the Department of Agriculture in the The public entity
name of a public entity (such as a state or local
government, school district, or prison) that receives
agricultural program payments
</TABLE>
- --------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your Social Security Number or
Employer Identification Number.
(4) List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the identifying number of the personal representative or
trustee unless the legal entity itself is not designated in the account
title.)
NOTE: If no name is circled when more than one name is listed, the number will
be considered to be that of the first name listed.
OBTAINING A TAXPAYER IDENTIFICATION NUMBER
Persons without a taxpayer identification number should apply for one and
write "Applied for" in Part I of Substitute Form W-9. Individuals should file
Form SS-5, Application for a Social Security Card (or, in the case of resident
aliens who do not have and are not eligible for Social Security numbers, Form
W-7, Application for IRS Individual Taxpayer Identification Number),
corporations, partnerships or other entities should file Form SS-4, Application
for Employer Identification Number. Form SS-5 may be obtained from local Social
Security Administration offices. Forms W-7 and SS-4 may be obtained from the IRS
by calling 1-800-TAX-FORM (1-800-829-3676).
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
NOTE: Writing "Applied for" in Part I means that you have already applied for a
TIN or that you intend to apply for one soon.
The following persons are exempt from backup withholding on payments from
the sale of Shares pursuant to the Offer:
1. An organization exempt from tax under section 501(a) of the Internal Revenue
Code ("IRC"), any IRA, or a custodial account under section 403(b)(7) of the
IRC if the account satisfies the requirements of section 401(f)(2) of the
IRC.
2. The United States or any of its agencies or instrumentalities.
3. A state, the District of Columbia, a possession of the United States.
4. A foreign government or any of its political subdivisions, agencies, or
instrumentalities.
5. An international organization or any of its agencies or instrumentalities.
The following persons may be exempt from backup withholding on payments from
the sale of Shares pursuant to the Offer:
6. A corporation.
7. A foreign central bank of issue.
8. A dealer in securities or commodities required to register in the United
States, the District of Columbia, or a possession of the United States.
9. A futures commission merchant registered with the Commodity Futures Trading
Commission.
10. A real estate investment trust.
11. An entity registered at all times during the tax year under the Investment
Company Act of 1940.
12. A common trust fund operated by a bank under Section 584(a) of the IRC.
13. A financial institution.
14. A middleman known in the investment community as a nominee or who is listed
in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
15. A trust exempt from tax under section 664 of the IRC or described in section
4947 of the IRC.
Such persons should nevertheless complete Substitute Form W-9 to avoid
possible erroneous withholding. An exempt person should enter the correct TIN in
Part I, write "Exempt" in Part II, and sign and date the form.
Payments that are not subject to information reporting are also not subject
to backup withholding. For details, see sections 6041, 6041A, 6042, 6044, 6045,
6049, 6050A, and 6050N of the IRC, and their regulations.
CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING--If you make a
false statement with no reasonable basis that results in no backup withholding,
you are subject to a $500 penalty.
CRIMINAL PENALTY FOR FALSIFYING INFORMATION--Willfully falsifying certifications
or affirmations may subject you to criminal penalties including fines and/or
imprisonment.
PRIVACY ACT NOTICE--Section 6109 of the IRC requires most recipients of
dividend, interest, or other payments to give taxpayer identification numbers to
payers who must report the payments to IRS. The IRS uses the numbers for
identification purposes and to help verify the accuracy of individuals' tax
returns. The IRS may also provide this information to the Department of Justice
for civil and criminal litigation and to states, cities and the District of
Columbia to help carry out their tax laws.
Payers must be given the numbers whether or not recipients are required to file
tax returns. Payers must generally withhold 31% of taxable interest, dividend,
and certain other payments to a payee who does not furnish a taxpayer
identification number to a payer. Certain penalties may also apply.
<PAGE>
Exhibit (a)(9)
FOR IMMEDIATE RELEASE CONTACTS: Royal Numico N.V.
JULY 9, 1999 Klaas de Jong
31-79-353-9028
[email protected]
Media: BSMG Worldwide
Edward Nebb, 212-445-8213
Bo Park, 212-445-8152
[email protected]
Lavine Surtani, 212-445-8262
[email protected]
ROYAL NUMICO N.V. COMMENCES TENDER OFFER
TO PURCHASE ALL OUTSTANDING SHARES OF GNC COMMON STOCK
AT $25.00 PER SHARE
Zoetermeer, The Netherlands, July 9, 1999-Royal Numico N.V. ("Numico")
(Amsterdam Stock Exchange: NUTV NA) announced today that a wholly-owned
subsidiary has commenced a cash tender offer to purchase all outstanding
shares of common stock, par value $0.01 per share (the "Common Stock"), of
General Nutrition Companies, Inc. ("GNC") (Nasdaq: GNCI) at a price of $25.00
per share, net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase and
related Letter of Transmittal both dated today.
The offer is being made pursuant to the previously announced Merger Agreement
between Numico and GNC and is conditioned upon the tender of that number of
shares of Common Stock of GNC equivalent to a majority of the total issued
and outstanding shares of such Common Stock on a fully diluted basis and
certain other customary conditions. GNC's Board of Directors unanimously
approved the tender offer and Merger Agreement and recommends GNC
stockholders tender their shares of Common Stock pursuant to the offer. The
offer and withdrawal rights are scheduled to expire at 12:00 Midnight, New
York City time on Thursday, August 5, 1999, unless the offer is otherwise
extended in accordance with the terms of the Merger Agreement.
The necessary filings with the Securities and Exchange Commission in
connection with the tender offer are being made today, and the offer
documents will be mailed to GNC stockholders promptly. J.P. Morgan
Securities Inc. is acting as the Dealer Manager and MacKenzie Partners, Inc.
is acting as the Information Agent in connection with the tender offer.
Royal Numico N.V. (www.numico.com), headquartered in Zoetermeer, The
Netherlands, is a holding company of a group of leaders in specialized
nutrition, such as Nutricia, Milupa and Cow & Gate. Numico concentrates on
the development, manufacture and sale of specialized nutrition products,
based upon medical scientific concepts with a high added value. The company
operates in more than 40 countries, including major market centers in Europe,
including Russia; Turkey; and the Pacific Rim, ranging from China to New
Zealand. Numico had net sales of US $1.84 billion and operating income of US
$245 million for the year ended December 31, 1998.
-more-
<PAGE>
GNC/Royal Numico
Page 2
General Nutrition Companies, Inc. (www.gnc.com), based in Pittsburgh, PA, is
the only nationwide specialty retailer of vitamin and mineral supplements,
sports nutrition and herbal products and is also a leading provider of
personal care, fitness and other health related products. The company's
products are sold through a network of 4,203 retail stores operating under
the General Nutrition Centers, Health & Diet Center and GNC Live Well names,
of which 2,726 are company-owned and 1,477 are franchised. GNC's stores are
located in all 50 states, Puerto Rico and 25 foreign markets. For the fiscal
year ended February 6, 1999, GNC had net revenue of US $1.42 billion and net
earnings of approximately $91.0 million.
This press release is neither an offer to purchase nor a solicitation of an
offer to sell securities. The tender offer is made solely through the Offer
to Purchase and the related Letter of Transmittal which will be mailed to
stockholders. The offer is not being made to (nor will tenders be accepted
from or on behalf of) holders of Common Stock in any jurisdiction in which
the making of the offer or the acceptance thereof would not be in compliance
with the laws of such jurisdiction. In any jurisdiction where the
securities, blue sky or other laws require the offer to be made by a licensed
broker or dealer, the offer shall be deemed to be made on behalf of Numico by
J.P. Morgan Securities Inc. or one or more registered brokers or dealers
licensed under the laws of such jurisdiction. Additional copies of such
documents can be obtained by contacting J.P. Morgan Securities Inc., the
Dealer Manager, at (212) 648-6926 or MacKenzie Partners, Inc., the
Information Agent, at (800) 322-2885.
# # #
<PAGE>
Exhibit (b)(1)
COMMITMENT LETTER
3rd July 1999
Koninklijke Numico N.V.,
Attention: Messrs J.C.T. van der Wielen and P.T. van Randwijk,
Rokkeveenseweg 49,
2712 PJ ZOETERMEER
Dear Sirs,
EURO 2,600,000,000 ACQUISITION FACILITY ("FACILITY") - COMMITMENT LETTER
1. COMMITMENT TERMS
You have advised us that you, Koninklijke Numico N.V., ("NEPTUNE"), wish to
establish the Facility, the proceeds of which would be used by you or one of
your subsidiaries (the "BUYER") to finance the acquisition of General Nutrition
Companies Inc. (the "TARGET") by way of tender offer (the "TENDER") followed by
a merger (the "MERGER"), to refinance existing indebtedness of the Target and
its subsidiaries and for general corporate purposes. ABN AMRO Bank N.V. and JP
Morgan Securities Ltd. (together the "ARRANGERS" and each an "ARRANGER") are
pleased to inform you of our commitment to provide the entire amount of the
Facility, on a several basis, as follows:
ABN AMRO Bank N V - Euro 1,300,000,000
JP Morgan Securities Ltd. - Euro 1,300,000,000
subject to the terms and conditions described in this letter (the "LETTER") and
the attached Terms and Conditions (the "TERM SHEET"). This Letter should be read
in conjunction with the fee letter of even date herewith (the "FEE LETTER").
This Letter, the Term Sheet and the Fee Letter are referred to collectively as
the "DOCUMENTS".
2. CONDITIONS PRECEDENT AND REFINANCING
The Arrangers' commitment is subject to:
(a) the preparation, execution and delivery of mutually
acceptable financing documentation, incorporating, INTER ALIA, the terms and
conditions outlined in the Term Sheet;
(b) the conditions precedent outlined in the Term Sheet
(except paragraphs g and h of such conditions precedent);
<PAGE>
Koninklijke Numico N.V.
3rd July 1999
Page 2
(c) the absence, in the opinion of the Arrangers, of a change
in the business condition (financial or otherwise), operations, performance or
prospects of you and your subsidiaries taken as a whole since 3lst December,
1998 that would have a material adverse effect on the ability of Neptune to
perform its financial obligations;
(d) the absence, in the opinion of the Arrangers, of a
material adverse change in the business condition (financial or otherwise),
operations, performance or prospects of Goldfish and its subsidiaries taken as a
whole since 3lst December, 1998 where this gives Neptune or the Merger Sub the
right to terminate the Merger Agreement (as defined in the Term Sheet);
(e) the accuracy and completeness of all representations and
warranties that you or the Buyer make to the Arrangers or Lenders (as defined
below) and all information that you or the Buyer furnish to the Arrangers or
Lenders (as defined below) and your compliance with the terms of the Documents;
(f) the delivery to the Arrangers of satisfactory evidence of
any required "positive advice" prior to execution of this Letter by Neptune's
Work Council of the Tender, the Merger, the Facility and the execution and
performance by Neptune and all other Obligors (as the latter term is defined in
the Term Sheet) of the Documents and any required consultation in accordance
with Chapter 2 of the Dutch Merger Code ("SER-besluit Fusiegedragsregels"); and
(g) the delivery to the Arrangers of an equity and convertible
bond mandate letter duly executed by or on behalf of Neptune (on such terms and
conditions as shall have been approved by the Arrangers in their absolute
discretion) appointing each of the Arrangers or such of its respective
affiliates as the relevant Arranger may nominate as the sole joint arrangers on
any refinancing of the Facility by way of the issue of equity and subordinated
convertible bonds.
3. SYNDICATION
3.1 You hereby agree that the Arrangers (or their affiliates) shall act
as sole arrangers for the Facility.
3.2 The Arrangers reserve the right at any time to syndicate (PRO RATA
in proportion to the commitment of each) part of their several commitments to
one or more other financial institutions (such institutions being collectively
referred to as the "LENDERS") and, in the event they exercise such right, the
Arrangers intend to commence such syndication promptly prior to signing the
financing documentation following announcement of the Tender. The choice of
Lenders shall be at the sole discretion of the Arrangers but (subject thereto)
the Arrangers shall consult with Neptune as to such choice and shall take
account of its comments.
<PAGE>
Koninklijke Numico N.V.
3rd July 1999
Page 3
3.3 The Arrangers will manage all aspects of the syndication in
consultation with you, including the timing of all offers to potential Lenders,
the acceptance of commitments, and the determination of the amounts offered and
the compensation provided. You agree to take all action and provide all
information as either Arranger may reasonably request to assist it in forming a
syndicate (including making your senior management and representatives available
at meetings with potential Lenders) and to use all reasonable efforts to ensure
that the syndication efforts benefit from your banking relationships.
3.4 To ensure an orderly and effective syndication of the Facility, you
agree that until the termination of the syndication (as determined by the
Arrangers), you (and your affiliates) will not announce, syndicate or issue any
syndicated bank loan facility (including, without limitation, the establishment
of a series of bilateral arrangements) or debt securities in the international
banking or capital markets, without the prior written consent of the Arrangers.
3.5 Without prejudice to the conditions precedent noted in paragraph 2
of this Letter, the Arrangers are entitled, after consultation with you, to
change the structure, terms and pricing of the Facilities (but not the amount)
if, in the sole opinion of the Arrangers, the syndication has not been completed
and the Arrangers determine that the changes are advisable in order to ensure a
successful syndication of the Facility. The Arrangers' commitment to lend under
this letter and the financing documentation is subject to your agreement to any
such change made under this paragraph.
3.6 The Arrangers will determine when syndication has terminated in
their sole discretion.
4. COMMITMENT TERMINATION
Each Arranger's commitment set forth in this Letter will terminate on
the earlier of (a) the termination of the Merger Agreement and (b) three months
from the signing of the Merger Agreement or (if the proviso to Section 7.1(b) of
the Merger Agreement applies) three months plus a further 30 days from the
signing of the Merger Agreement unless the financing documentation for the
Facility is signed on or before such date. The provisions of the Fee Letter and
Paragraphs 5, 6 and 7 shall survive the expiration or termination of this
Letter.
5. INDEMNIFICATION
5.1 Whether or not the Facility is consummated (and regardless of the
reason therefor) you hereby indemnify and agree to hold harmless each Arranger,
each Lender and in each case each of their respective affiliates and each of
their respective officers, directors, employees, agents, advisers and
representatives (each, an "INDEMNIFIED PARTY") from and against any and all
claims, damages, losses, liabilities, costs and expenses (including, without
limitation, properly incurred fees and disbursements of counsel), joint or
several, that may be incurred by or asserted or
<PAGE>
Koninklijke Numico N.V.
3rd July 1999
Page 4
awarded against any Indemnified Party, in each case arising out of or in
connection with or relating to any investigation, litigation or proceeding or
the preparation of any defence with respect thereto, arising out of or in
connection with or relating to the Documents or the financing documentation or
the transactions contemplated hereby or thereby or any use made or proposed to
be made with the proceeds of the Facility, whether or not such investigation,
litigation or proceeding is brought by you, the Buyer, the Target, any of your,
the Buyer's or the Target's affiliates, shareholders or creditors, an
Indemnified Party or any other person, or an Indemnified Party is otherwise a
party thereto, except to the extent such claim, damage, loss, liability, cost or
expense is found in a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party's gross negligence or
wilful misconduct. The gross negligence or wilful misconduct of one Arranger
will not affect the indemnity given to the other Arranger in the absence of
gross negligence or wilful misconduct of that other Arranger.
5.2 You agree that no Indemnified Party shall have any liability
whatsoever to you or the Buyer for or in connection with the transactions
referred to above, except to the extent such liability results from such
Indemnified Party's gross negligence or wilful misconduct or (in your case only
and only where the Indemnified Party is an Arranger) breach of our express
obligations under this Letter but save that in those circumstances where
liability arises no Indemnified Party shall have any liability to you for loss
(whether direct or indirect) of profits, business or anticipated savings or for
any indirect or consequential loss whatsoever.
6. CONFIDENTIALITY/INFORMATION
6.1 You agree that the Documents (and any Lenders' commitments) are for
your confidential use and benefit only and may not be relied on by any other
person and their existence and terms may only be disclosed by you to your
officers, employees and advisers, and then only on a "need to know" basis in
connection with the transactions contemplated thereby and on a confidential
basis or (subject as follows) as required by law. Following the appointment of
the Arrangers you may (a) freely disclose each Arranger's identity as an
arranging bank, (b) (subject to our agreement as to the form and content of such
description) describe this Letter and the commitments contained in this Letter
in the Tender Documents and (c) (subject as follows) make such other disclosures
as are required by law but you agree that no other announcements regarding the
Document or the Facility will be made without our prior written consent. Where
disclosure is required by law, you shall consult with the Arrangers before
making such disclosure and take account of their comments where this is
permissible and reasonably practicable but you shall in any event notify us of
such disclosure after it is made.
6.2 You represent and warrant that (to the best of your knowledge
(having made due and careful enquiry) in the case of information relating to
Goldfish and its Subsidiaries) (i) all information that has been or will
hereafter be made available to the Arrangers, any Lender or any potential Lender
by you or any of your subsidiaries or any of your or your subsidiaries'
<PAGE>
Koninklijke Numico N.V.
3rd July 1999
Page 5
representatives in connection with the transactions contemplated hereby is and
will be true in all material respects and does not and will not omit to state
any material fact necessary to make such information, in the light of the
circumstances under which such information is provided, not misleading and
(ii) all financial projections provided by you to the Arrangers, any Lender or
any potential Lender will be prepared in good faith and based on reasonable
assumptions, although we recognise they can be subject to uncertainties as to
their realisation and that you make no representation or warranty as to their
realisation. You further agree that prior to the execution of definitive
documentation (and subject thereto) you will ensure that all such information is
updated when required so that it remains correct in all material respects and up
to date. The Arrangers will not verify, and will rely on, the accuracy of all
information that you provide.
6.3 The Arrangers will treat Information provided to them by you as
confidential subject to the following terms. "Information" refers to any and all
non-public financial, technical, commercial or other information concerning the
business and affairs of Neptune or the Target (whether prepared by Neptune, your
advisers or otherwise) that is provided to the Arrangers, by or on behalf of
Neptune, on or after the date hereof, but does not include (a) Information which
was already in either of the Arranger's possession on a non-confidential basis
prior to the date hereof; (b) Information which is or hereafter becomes
generally available to the public other than as a result of a disclosure by the
Arrangers in violation of this Letter; or (c) Information obtained by the
Arrangers from a third party which the Arrangers are unaware has been obtained
by such third party in violation of any obligation to Neptune or any of its
affiliates with respect to such Information, which may be owed by that party.
Notwithstanding anything to the contrary contained herein, it is
understood that the Arrangers may disclose the Information or portions thereof
(a) at the request of any regulatory, supervisory or governmental authority,
institution or department; or (b) under court process or pursuant to statutory
requirement; or (c) to an Arranger's auditors, external counsel or accountants,
or (d) to affiliates or subsidiaries of an Arranger, subject to such affiliates
or subsidiaries agreeing to be bound by a confidentiality agreement on
substantially the same terms as those set forth in this paragraph 6.3.
The confidentiality obligation owed to you shall expire after a period
of 12 months from the date when the Information is provided to the Arrangers, or
where superseded by a similar obligation within definitive financing
documentation.
7. GOVERNING LAW/JURISDICTION/ENTIRE AGREEMENT
The Documents shall be governed by, and construed in accordance with
English law. The parties hereto submit to the non-exclusive jurisdiction of the
English courts and waive any defence of inconvenient forum which may be
available. You have confirmed your irrevocable appointment of Nutricia Holdings
Limited as your agent for service of process and copies of acceptance letters
should be attached to this Letter when returned to us. The Documents set forth
the entire agreement between the parties with respect to the matters addressed
<PAGE>
Koninklijke Numico N.V.
3rd July 1999
Page 6
therein and supersede all prior communications, written or oral, with respect
thereto and may only be modified in writing.
Please indicate your acceptance of the provisions hereof by signing the
enclosed copy of this Letter AND the Fee Letter and returning them, together
with the fees then payable under the Fee Letter, to ABN AMRO Bank N.V., (fax:
+31-20-628 7365, Attention: Matthijs Mondria) and JP Morgan Securities Ltd.
(fax: +44-171 325 8253, Attention: Cyril Tramon) at or before 5 p.m. (Dutch
time) on 6th July, 1999, the time at which the commitment offer of the Arrangers
set forth above (if not so accepted prior thereto) will expire.
If you elect to deliver the above documents by facsimile (which shall
be effective upon receipt), please arrange for the executed originals to follow
by next-day courier.
Yours faithfully,
ABN AMRO BANK N.V.
By: /s/
----------------------------------
Title:
--------------------------------
JP MORGAN SECURITIES LTD.
By: /s/
----------------------------------
Title:
--------------------------------
ACCEPTED AND AGREED
this 3rd day of July, 1999
Koninklijke Numico N.V.
By: /s/ Johannes C.T. van der Wielen
----------------------------------------------
Title: President and Chief Executive Officer
--------------------------------------------
<PAGE>
PROJECT SEA
EURO 2,600,000,000 FACILITY
INDICATIVE TERMS & CONDITIONS
<TABLE>
<CAPTION>
<S> <C>
Borrowers: Neptune and the Merger Sub as defined in
the Merger Agreement.
Guarantors: Neptune and its Material Subsidiaries
and (subject to and immediately on
completion of the Merger) Goldfish and
its Material Subsidiaries. The
Guarantors will guarantee on a joint and
several basis.
Facility Amount: Euro 2,600,000,000 by way of 364-day
bullet revolving credit facility.
Facility Description: Euro denominated term and revolving
credit facilities available for drawing
in US$ and EURO or any freely available
Eurocurrency.
Facility Purpose: To finance the acquisition of Goldfish
for general corporate purposes and to
refinance existing borrowings of
Goldfish and/or Neptune Euro
1,050,000,000 of the Facility is a
bridge to an issue of Euro 1,050,000,000
of ordinary shares and subordinated
convertible bonds (with a minimum of
Euro 450,000,000 of ordinary shares),
together the "Equity Package".
Final Maturity Date: 364 days from signing of the Facility
Agreement.
Availability: Upon satisfaction of conditions
precedent and subject to no actual or
potential Event of Default and upon a
minimum of three business days' notice
(or such shorter period as may be
acceptable to the Banks) in the case of
a drawing denominated in Euro or in US$:
available for drawing on a revolving
basis at any time during the life of the
Facility.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
However, the Facility will not be
available unless the Tender is made and
successfully completed. Drawings will be
in minimum amounts of Euro 10,000,000
and in integral multiples of Euro
5,000,000 with the maximum number of
outstanding drawings at any time to be
agreed.
Interest Periods: 1, 3 or 6 months, at the Borrower's
option, or such periods as the Banks may
agree. Up to seven day periods will be
selected before completion of
syndication.
Interest Rate: The Borrower will pay interest at the
London Interbank Offered Rate ("LIBOR")
or EURIBOR, plus the Applicable Margin
and any applicable ECB costs. LIBOR will
be set by reference to Telerate page
3750, or if not available, by Reference
Banks.
Arrangers: ABN-Amro and J.P. Morgan Securities Ltd.
Applicable Margin: 100 bppa until 31 December, 1999.
To the extent that the Equity Package
has not been completed by 31 December,
1999, the Margin will be LIBOR plus 150
bppa.
Default margin will be 1% above the
Interest Rate set out above.
Interest Payment: Interest will be payable at the end of
each Interest Period and will be
calculated on the basis of the actual
number of days elapsed in a year of 360
days. If the Interest Period is longer
than six months, then accrued interest
will be paid on the last day of each
successive period of six months.
Commitment Fee: 50% of the Applicable Margin payable
quarterly in arrears.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Voluntary Prepayment: Upon 5 business days' written notice, a
Borrower may prepay penalty all or part
of the Facility at any time. Prepayments
will be made in a minimum amount of Euro
50,000,000 and integral multiples of
Euro 5,000,000. If the prepayment takes
place otherwise than at the end of an
Interest Period, the Borrower will be
responsible for breakage costs, if any.
Mandatory Prepayment: Mandatory prepayment of the full net
(i.e. after expenses) proceeds will be
required from:
(a) The raising of any funds in the
international debt and/or equity capital
markets (including under the Equity
Package);
(b) The raising of any funds in the loan
market (subject to any agreed
exceptions); and/or
(c) Until such time as Total Debt/EBITDA
is below 2.5 the sale of any assets in
aggregate exceeding Euro 50,000,000,
in each case including Neptune's
Subsidiaries which shall include
Goldfish or any of its subsidiaries or
(if appropriate) subsidiary undertakings
but only after the Merger is completed.
Cancellation: Upon 3 business days' written notice,
the Borrowers may cancel without penalty
all or part of the undrawn Facility. No
amount cancelled may be redrawn
Conditions Precedent: Customary for facilities of this type,
including, but not limited to:
(a) A certified copy of the
constitutional documents of the
Obligors;
(b) Copies of relevant board resolutions
of the Obligors;
(c) Copies of relevant consents and
authorisations;
(d) Satisfactory legal opinions;
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
(e) There shall have been validly
tendered to Neptune sufficient common
stock of Goldfish to complete successfully
the Tender (being a majority of the
outstanding shares of Goldfish on a
fully diluted basis), all conditions to
the purchase set forth in the Tender
Documents shall have been satisfied
without waiver or amendment (except with
the prior written consent of the Arrangers
where any such waiver relates to a
material provision or such amendment
is material), there was no right of
Neptune or the Merger Sub to
terminate the Merger Agreement (or
the Arrangers have given their prior
written consent to such right not
being exercised) and Neptune shall
have accepted for purchase all such
tendered common stock;
(f) If required, approval of the
Tender at a general meeting of
shareholders of Neptune together with
approval of the increase in Neptune's
share capital and the increase in
Neptune's limit on borrowings
contained in its Articles of
Association, in all cases only to the
extent necessary to implement the
Tender;
(g) The absence, in the opinion of
the Arrangers, of a change in the
business condition (financial or
otherwise), operations, performance
or prospects of Neptune and its
Subsidiaries taken as a whole since
31 December, 1998 which would have a
material adverse affect on the
ability of Neptune to perform its
financial obligations;
(h) The absence, in the opinion of
the Arrangers, of a material adverse
change in the business condition
(financial or otherwise), operations,
performance or prospects of Goldfish
and its Subsidiaries taken as a whole
since 31 December, 1998 where this
gives Neptune or the Merger Sub the
right to terminate the Merger
Agreement;
(i) Board approval for the Equity
Package (and the announcement of the
intention to issue the Equity Package
in the Press Release);
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
(j) If required, evidence that all
governmental approvals and regulatory
and/or tax rulings have been obtained
for the Tender;
(k) A copy of all Tender Documents
and confirmation that there have been
no amendments or waivers requiring
the approval of the Arrangers in
relation thereto;
(l) A certificate from the finance
director of each Obligor that full
utilisation of the Facility will not
breach any of that Obligor's
borrowing limits;
(m) Accuracy of representations and
warranties;
(n) Compliance with applicable legal
requirements including the Dutch
Works Council Act ("Wet op de
ondernemingsraden"), the Dutch
Competition Act ("Wet economische
mededinging") and US Regulations U
and X and compliance with the Dutch
Merger Code ("SER-besluit
Fusiegedragsregels"); and
(o) The delivery of duly executed
guarantees in favour of the Banks by
each of Neptune and its Material
Subsidiaries.
Representations and Warranties: Customary for facilities of this type,
at signing, and to be repeated where
appropriate on drawdown and on the first
day of each interest period, including,
but not limited to:
(a) The Obligors are duly constituted
and validly existing, and have the
power to enter into and comply with
the Finance and Tender Documents;
(b) All relevant authorisations and
consents have been obtained;
(c) Execution and performance of the
Finance Documents and the Tender
Documents will not conflict with
laws, other agreements, contracts and
constitutional documents of any of
the Obligors;
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
(d) All necessary consents,
authorisations and approvals etc.
that are required for the performance
of the Obligors' obligations under
the Finance Documents and the Tender
Documents, the Tender and the
transaction generally and for the
business, have been or will be
obtained and are in full force where
their absence would have a Material
Adverse Effect;
(e) The Obligors shall use all
reasonable endeavours to cause the
Merger to be completed at the
earliest practicable time once a
majority of the outstanding shares in
Goldfish on a fully diluted basis has
been acquired pursuant to the offer;
(f) The full utilisation of the
Facility and the grant of the
guarantees will not contravene any
borrowing limitation on any of the
Obligors, nor any law or agreement;
(g) Obligations of the Obligors in
relation to the Facility are legally
valid, binding and enforceable;
(h) No breach by the Obligors of any
applicable laws and regulations or
any agreements, which could have a
Material Adverse Effect;
(i) No actual or potential Event of
Default;
(j) Neptune's audited 1998/1999
financial statements ("Neptune's
Original Financial Statements") were
prepared in accordance with Dutch
GAAP and present a true and fair view
of the Group's financial condition at
the date to which they were drawn up;
(k) No change in the business
condition (financial or otherwise),
operations, performance or prospects
of Neptune and its Subsidiaries
(which shall include Goldfish and its
Subsidiaries after completion of the
Tender) taken as a whole since 31
December 1998 which would have a
Material Adverse Effect;
(l) No litigation or other
proceedings current, pending or
threatened which will restrain
performance of obligations under the
Facility or would or is reasonably
likely to have a Material Adverse
Effect;
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
(m) No proceedings current, pending
or threatened for the winding-up of
Neptune or any Material Subsidiary;
(n) The Obligors' respective
obligations under the Finance
Documents will rank at least pari
passu with all their other unsecured
and unsubordinated obligations;
(o) No encumbrances exist over any
assets of any Obligor except for
those disclosed at signing or
permitted as set out below;
(p) No stamp, registration or similar
tax, or registration requirement;
(q) To the best of your knowledge
(having made due and careful enquiry)
in the case of information relating
to Goldfish and its Subsidiaries, the
projections for the combined
businesses supplied to the Banks have
been prepared after taking all due
care and are based on reasonable
assumptions and all information
contained in the Information
Memorandum is and will be true in all
material respects and does not and
will not omit to state any material
fact necessary to make such
information, in the light of the
circumstances under which such
information is provided, not
misleading and all forecasts and
projections have been prepared after
taking due care and are based on
reasonable assumptions but with no
representation or warranty as to
their realisation;
(r) Year 2000 compliance;
(s) Compliance with laws and
regulation, including ERISA and
environmental matters; and
(t) Neither Neptune nor the Merger Sub
has:
- Varied or waived any term of
the Tender (except where the
variation is not material or
the waiver is not of a material
term);
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
- Treated any condition of the
Tender as having been waived or
failed to exercise any right to
terminate the Merger Agreement;
- Increased the cash portion of
consideration offered to Goldfish
stockholders above the figure
agreed between Neptune and the
Banks; or
- Changed the way in which the
consideration is funded.
This is subject to any agreed exceptions
applying for a period of 60 days
after completion of the Tender to
these representations and warranties
as they relate to Goldfish and its
Subsidiaries.
Undertakings: Customary for facilities of this type,
with respect to the Borrower(s) and its
subsidiaries, including but not
limited to:
UNDERTAKINGS AS TO INFORMATION
(i) Delivery of audited annual
accounts (for Neptune and Group) as
soon as available, and in any event
within 120 days after the end of each
financial year;
(ii) Delivery of six-monthly
financial information (the Group and
(if produced) for Neptune) as soon as
available, and in any event within 90
days;
(iii) Prompt notification of any actual or
potential Event of Default;
(iv) Prompt notification of material
litigation;
(v) Delivery of such other
information as the Banks may
reasonably request;
(vi) Certificates as to compliance
with financial covenants; and
(vii) Delivery of agreed form
adjusted financials for the purposes
of the financial covenants and
further reconciliation statements for
the purposes of the financial
covenants if Dutch GAAP changes.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
GENERAL UNDERTAKINGS (TO BE GIVEN BY EACH
OBLIGOR)
(i) The Obligors' payment obligations
under this Facility will rank equally
and rateably with all other unsecured
and unsubordinated indebtedness;
(ii) Negative Pledge: Neither any
Obligor nor any Material Subsidiary
shall create or have outstanding any
security or other encumbrance on or
over any of its assets to secure any
of its present or future borrowings
except as may be agreed;
(iii) No guarantees to third parties
(subject to any agreed exceptions);
(iv) No disposal by sale, transfer,
lease or otherwise of all or any part
of its assets, except in the ordinary
course of trading or at arm's length
and on normal commercial terms or as
agreed by the Majority Banks;
(v) Except as agreed by the Majority
Banks (such consent not to be
unreasonably withheld or delayed), no
acquisitions of companies or shares
in companies or businesses or parts
of businesses (subject to an
exception of Euro 150,000,000 in
aggregate for all such acquisitions
(prior to completion of the Equity
Package) and Euro 250,000,000 in
aggregate for all such acquisitions
(thereafter whether such acquisitions
are made before, on or after the
Completion of the Equity Package));
(vi) No material change in the nature
of any Obligors' or any Material
Subsidiary's business;
(vii) Maintaining compliance with all
relevant laws and regulations in all
material respects;
(viii) Neptune will provide a copy of
the Tender Documents to the Arrangers
in sufficient time for the Arrangers
to comment on them before they are
dispatched to Neptune shareholders or
Goldfish stockholders or filed or
otherwise made available;
9
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
(ix) Neptune will keep the Agent
informed of all material developments
in relation to the Tender or the
Equity Package;
(x) Neptune will co-operate fully
with the Arrangers in the syndication
process to ensure a successful
outcome;
(xi) Maintenance of proper insurance;
(xii) No additional Financial
Indebtedness ( in excess of an amount
equal to the aggregate of (a) Euro
100,000,000 (or its equivalent in any
other currency) in aggregate and (b)
the amount of any subordinated
convertible bonds forming part of the
Equity Package) shall be incurred (or
agreed to be incurred) by any Obligor
or any other member of the Group
until the Equity Package is completed
and at any time whilst Total
Debt/EBITDA is below 3.
Financial covenants: EBITDA/net interest expense shall at all
times be at least 4x.
Covenants to be tested every six
months with reference to the most
recent published accounts on a
twelve-month rolling basis.
Events of Default: Events of Default shall include, but not
be limited to, the following:
(a) Non-payment of principal or interest
on its due date;
(b) Breach of representation or warranty
when made or deemed repeated;
(c) Breach of undertaking, which, where
capable of remedy, is not remedied
within 10 Business Days. Undertakings
relating to the conduct of the Tender will
carry no grace period;
10
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
(d) Any Financial Indebtedness of
Neptune or its Subsidiaries exceeding
(in aggregate) Euro 10,000,000 (or
its equivalent in any other currency)
becomes due and payable or capable of
being declared due and payable before
its normal maturity, or is not paid
when due or within any applicable
grace period;
(e) Insolvency, winding up or
enforcement proceedings of or against
Neptune or any of its Material
Subsidiaries, provided that such
proceedings are not frivolous or
vexatious;
(f) It is or becomes unlawful for any
Obligor to comply with its
obligations under the Facility;
(g) Litigation is current, pending or
threatened against Neptune or any of
its Subsidiaries which will restrain
performance of obligations under the
Facility or would have or is
reasonably likely to have a Material
Adverse Effect;
(h) Neptune or any of its Material
Subsidiaries is unable to pay its
debts as and when they fall due;
(i) Any change in the business
condition (financial or otherwise),
operations, performance or prospects
of Neptune and its Subsidiaries
(which shall include Goldfish and its
Subsidiaries after completion of the
Tender) taken as a whole since 31
December 1998 having a Material
Adverse Effect;
(j) Any change in control of Neptune
before or after the Tender;
(k) Any of the Finance Documents
ceases to be valid obligations of any
Obligor; and/or
(l) Any approvals or authorisations
cease to be in full force and effect.
Goldfish and its Subsidiaries to be
excluded from the effect of Events of
Default (b), (c), (d), (g) and (l)
for a period of 60 days after the
completion of the Tender.
11
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Documentation: The documentation will be market
standard for transactions of this
type and will include provisions for,
inter alia, the following:
(a) Changes in circumstances,
including illegality and increased
costs; and
(b) The ability of a Bank freely to
transfer its rights and obligations
without the consent of the
Borrower(s).
Taxation: All payments of principal, interest
and fees will be made free and clear
of any deductions or withholdings,
levied either presently or in the
future. If a deduction or withholding
is required the Borrowers will gross
up the payment.
Amendments and Waivers: Amendments to the Facility Agreement
will require the approval of the
Majority Banks except for the
following items, which will require
the consent of all of the Banks:
(a) Extension of the Final Maturity Date;
(b) Any change in the Interest Rate,
Applicable Margin or Commitment Fee;
(c) Alteration of the date of payment
of any sum;
(d) Any increase in the Facility Amount;
(e) Any change in the definition of
Majority Banks; and
(f) Any change to the amendment clause.
Syndication Strategy and the Role of
Neptune: Neptune will provide the Arrangers
with the necessary assistance during
syndication. Neptune's assistance
will include Neptune providing all
requested information for the
Information Memorandum, making
management presentations and (if
necessary) hosting site visits in
addition to assisting with answering
banks' questions. Neptune will
co-operate fully with the Arrangers
to ensure the participation of banks
in syndication.
The Arrangers reserve the right to
launch syndication at any time
following the announcement of the
Tender.
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Market Conditions: The Arrangers will use all reasonable
efforts to complete the syndication
on the terms and conditions contained
herein. Subject to the Facility
Amount remaining unchanged, the
Arrangers shall be entitled to change
the pricing, terms or structure of
the Facility if the Arrangers
determine that such changes are
advisable in order to ensure a
successful syndication of the
Facility.
The provisions in this paragraph
shall not be superseded by the terms
of the Facility Agreement (but shall
be documented in a separate side
letter) and shall remain in full
force and effect until syndication
has been completed in a manner
satisfactory to the Arrangers.
Clear Market: During the period between the award
of the mandate and close of
syndication of the Facility, neither
Neptune nor its subsidiaries will
launch into the market or syndicate
any bank or bond financing, or enter
into discussions with other debt
providers, without the prior consent
of the Arrangers. All existing
mandates shall be cancelled.
Facility Agent: ABN-Amro.
Indemnification: The Borrowers will indemnify the
Banks against all losses,
liabilities, claims, damages, or
expenses relating to their loans, the
Borrowers' use of loan proceeds or
the commitments, including but not
limited to reasonable lawyers' fees
and settlement costs (except such as
a result from the indemnitee's gross
negligence or wilful misconduct).
Expenses: All costs and expenses, including
legal fees of counsel acting on
behalf of the Arrangers (in all
cases) and (after an actual Event of
Default) the Banks, reasonably
incurred in connection with the
arrangement and syndication of the
Facility or in protecting their
rights, will be for the account of
the Borrowers.
Counsel to Lenders: Slaughter and May, Nauta Dutilh and
Simpson Thacher & Bartlett.
Governing Law: English law.
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Jurisdiction: The Obligors will submit to the
non-exclusive jurisdiction of the
courts of England.
Definitions: "Acquisition" shall mean the proposed
acquisition by Neptune of all the
common stock in Goldfish by means of
the Tender and the Merger.
"Finance Documents" shall mean the
Facility Agreement and the fee
letters.
"Financial Indebtedness" shall mean:
(a) any indebtedness for monies
borrowed and debit balances at banks;
(b) any indebtedness (actual or
contingent) under guarantee, bond,
security, indemnity or other
commitment designed to assure any
creditor against loss in respect of
any Financial Indebtedness of any
third party (including, without
limitation, the subordinated
convertible bonds forming part of the
Equity Package);
(c) any indebtedness under any acceptance
credit;
(d) any indebtedness under any
debenture, note, bill of exchange or
commercial paper;
(e) any indebtedness for money owing
in respect of any interest rate swap
or cross-currency swap or forward
sale or purchase contract or other
form of interest or currency hedging
transaction;
(f) any payment obligations under finance
leases; or
(g) any other liability (actual or
contingent) in connection with
amounts raised under any other
transaction having the commercial
effect of a borrowing or raising of
money.
"Group" shall mean Neptune and all
its subsidiaries and (where
appropriate) subsidiary undertakings
(including Goldfish and its
subsidiaries and subsidiary
undertakings after the Tender).
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
"Information Memorandum" shall mean
the information memorandum prepared
for the purpose of syndication of the
Facility.
"Majority Banks" shall mean at least
66.66% of the Banks by reference to
total commitments at the relevant
time.
"Material Adverse Effect" shall mean
a material adverse effect on the
ability of any Obligor to perform its
obligations under the Finance
Documents.
"Material Subsidiary" shall mean any
Subsidiary of Neptune whose
consolidated turnover or gross assets
represent 5% or more of the
consolidated turnover or gross assets
of the Group or which is a principal
brand-owning subsidiary except that
in the case of the subsidiaries of
Neptune required to provide a
guarantee as a condition precedent to
the first drawdown under the Facility
only Material Subsidiary shall mean
each of the principal holding
companies and each of the principal
brand-owning companies of Neptune's
Subsidiaries.
"Merger Agreement" shall mean the
merger agreement between Neptune, the
Merger Sub and Goldfish and relating
to the Tender and the Merger executed
no later than 6th July, 1999 in or
substantially in the last form
provided to the Arrangers and dated
6/30/99 (a copy of which has been
initialled by or on behalf of the
Banks for identification) or in any
other form provided to the Arrangers
to which they have given their
written consent.
"Obligors" shall mean the Guarantors
and the Borrowers.
"Press Release" shall mean the first
public announcement by Neptune in
connection with the Tender.
"Subsidiary" shall have the meaning
given to it in the Merger Agreement.
"Tender" shall mean the tender by
Neptune for all the common stock in
Goldfish at a price per share not
exceeding US$ 25 (unless the prior
written consent of the Banks has been
obtained).
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
"Tender Documents" shall mean the
Press Release and any subsequent
press release by Neptune relating to
the Tender, the Merger Agreement and
the offer document addressed to
Goldfish stockholders.
</TABLE>
16
<PAGE>
This offer is open for acceptance and will expire an 6th July, 1999, unless
extended by mutual consent.
/s/ /s/
- ----------------------------------- --------------------------------
for and on behalf of for and on behalf of
J.P. MORGAN SECURITIES LTD. ABN-AMRO BANK N.V.
Agreed and accepted by
/s/
- -----------------------------------
For and on behalf of
Neptune
July, 1999
17
<PAGE>
AGREEMENT AND PLAN OF MERGER
DATED AS OF JULY 5, 1999
AMONG
KONINKLIJKE NUMICO N.V.,
a company incorporated under the laws of The Netherlands,
NUMICO INVESTMENT CORP.,
a Delaware corporation,
AND
GENERAL NUTRITION COMPANIES, INC.,
a Delaware corporation
<PAGE>
TABLE OF CONTENTS
ARTICLE I.
THE TENDER OFFER
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1.1 THE OFFER........................................................................2
1.2 SEC FILINGS......................................................................3
1.3 COMPANY ACTION...................................................................4
1.4 COMPOSITION OF THE COMPANY BOARD.................................................4
ARTICLE II.
THE MERGER
2.1 THE MERGER.......................................................................6
2.2 CLOSING..........................................................................6
2.3 EFFECTIVE TIME...................................................................6
2.4 EFFECT OF THE MERGER.............................................................6
2.5 CERTIFICATE OF INCORPORATION.....................................................6
2.6 BYLAWS...........................................................................6
2.7 OFFICERS AND DIRECTORS OF SURVIVING CORPORATION..................................7
2.8 EFFECT ON CAPITAL STOCK..........................................................7
2.9 SURRENDER AND PAYMENT............................................................7
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................................10
3.2 REPRESENTATIONS AND WARRANTIES OF PARENT........................................23
3.3 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.........................26
ARTICLE IV.
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 COVENANTS OF THE COMPANY........................................................28
4.2 COVENANTS OF PARENT AND MERGER SUB..............................................30
4.3 ADVICE OF CHANGES; GOVERNMENT FILINGS...........................................31
i
<PAGE>
ARTICLE V.
ADDITIONAL AGREEMENTS
5.1 APPROVAL BY THE COMPANY'S STOCKHOLDERS..........................................32
5.2 ACCESS TO INFORMATION...........................................................32
5.3 APPROVALS AND CONSENTS; COOPERATION.............................................33
5.4 ACQUISITION PROPOSALS...........................................................33
5.5 EMPLOYEE BENEFITS...............................................................35
5.6 FEES AND EXPENSES...............................................................35
5.7 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.............................35
5.8 PUBLIC ANNOUNCEMENTS............................................................36
5.9 TAKEOVER STATUTES...............................................................36
5.10 THIRD PARTY STANDSTILL AGREEMENTS; TORTIOUS INTERFERENCE........................36
5.11 COMPANY OPTION PLANS............................................................36
ARTICLE VI.
CONDITIONS PRECEDENT
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER......................37
ARTICLE VII.
TERMINATION AND AMENDMENT
7.1 TERMINATION.....................................................................38
7.2 EFFECT OF TERMINATION...........................................................40
7.3 AMENDMENT.......................................................................40
7.4 EXTENSION; WAIVER...............................................................41
ARTICLE VIII.
GENERAL PROVISIONS
8.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS; NO OTHER
REPRESENTATIONS AND WARRANTIES..................................................41
8.2 NOTICES.........................................................................41
8.3 INTERPRETATION..................................................................43
8.4 COUNTERPARTS....................................................................43
8.5 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES..................................43
8.6 GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL...............................44
8.7 SEVERABILITY....................................................................45
8.8 ASSIGNMENT......................................................................45
8.9 ENFORCEMENT.....................................................................45
ii
<PAGE>
8.10 DEFINITIONS.....................................................................45
8.11 PERFORMANCE BY MERGER SUB.......................................................47
8.12 DISCLOSURE SCHEDULES............................................................47
</TABLE>
iii
<PAGE>
GLOSSARY OF DEFINED TERMS
<TABLE>
<CAPTION>
LOCATION OF
DEFINITION DEFINED TERM
- ---------- -------------
<S> <C>
Acquisition Proposal....................................................................Section 5.4(a)
Action.........................................................................................Annex A
Affiliate..............................................................................Section 8.10(a)
Agreement.....................................................................................Preamble
Board of Directors.....................................................................Section 8.10(b)
Business Day...........................................................................Section 8.10(c)
Certificate of Merger......................................................................Section 2.3
Certificates............................................................................Section 2.9(b)
Closing....................................................................................Section 2.2
Closing Date...............................................................................Section 2.2
Code...................................................................................Section 8.10(d)
Company.......................................................................................Preamble
Company Assets..........................................................................Section 3.1(t)
Company Benefit Plans................................................................Section 3.1(1)(i)
Company Board.................................................................................Recitals
Company Common Stock....................................................................Section 1.1(a)
Company Disclosure Schedule................................................................Section 3.1
Company Equity Plans...................................................................Section 8.10(e)
Company Material Contracts..............................................................Section 3.1(k)
Company Permits.........................................................................Section 3.1(f)
Company Products........................................................................Section 3.1(p)
Company SEC Reports..................................................................Section 3.1(d)(i)
Company Stock Option......................................................................Section 5.11
Company Stockholders Meeting............................................................Section 5.1(a)
Company Voting Debt................................................................Section 3.1(b)(iii)
Confidentiality Agreement..................................................................Section 5.2
DGCL..........................................................................................Recitals
Dissenting Shares.......................................................................Section 2.9(h)
Effective Time.............................................................................Section 2.3
ERISA................................................................................Section 3.1(1)(i)
ERISA Affiliate.....................................................................Section 3.1(l)(iv)
Environmental Law.......................................................................Section 3.1(s)
Exchange Act............................................................................Section 1.1(b)
Exchange Agent..........................................................................Section 2.9(a)
Expenses...................................................................................Section 5.6
Franchise Agreement..................................................................Section 3.1(v)(i)
Fund...............................................................................Section 3.1(v)(iii)
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GAAP.................................................................................Section 3.1(d)(i)
Governmental Entity................................................................Section 3.1(c)(iii)
Hazardous Substance.....................................................................Section 3.1(s)
HSR Act........................................................................................Annex A
Indemnified Party..........................................................................Section 5.7
Independent Directors...................................................................Section 1.4(c)
Intellectual Property..................................................................Section 8.10(f)
Liens...............................................................................Section 3.1(b)(ii)
Material Adverse Effect................................................................Section 8.10(g)
Maximum Premium............................................................................Section 5.7
Merger........................................................................................Recitals
Merger Consideration....................................................................Section 2.8(c)
Merger Fees.............................................................................Section 3.1(n)
Merger Sub....................................................................................Preamble
Minimum Condition.......................................................................Section 1.1(b)
Multiemployer Plan...................................................................Section 3.1(l)(i)
Nasdaq.............................................................................Section 3.1(c)(iii)
Offer..................................................................................Section 1.1.(a)
Offer Conditions........................................................................Section 1.1(a)
Offer Documents.........................................................................Section 1.2(a)
Organizational Documents...............................................................Section 8.10(h)
Outside Date............................................................................Section 7.1(b)
Parent........................................................................................Preamble
Parent Disclosure Schedule.................................................................Section 3.2
Parent Representatives.....................................................................Section 5.2
Payment Fund............................................................................Section 2.9(a)
Person.................................................................................Section 8.10(i)
Price Per Share.........................................................................Section 1.1(a)
Proxy Statement......................................................................Section 3.1(e)(i)
Required Company Votes..................................................................Section 3.1(j)
Required Regulatory Approvals...........................................................Section 6.1(c)
Schedule 14D-1..........................................................................Section 1.2(a)
Schedule 14D-9..........................................................................Section 1.2(b)
SEC.....................................................................................Section 1.1(b)
Securities Act.......................................................................Section 3.1(d)(i)
Significant Subsidiary.................................................................Section 8.10(j)
Subsidiary.............................................................................Section 8.10(k)
Superior Proposal.......................................................................Section 5.4(b)
Surviving Corporation......................................................................Section 2.1
Takeover Statute........................................................................Section 3.1(r)
Tax....................................................................................Section 8.10(l)
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Tax Return.............................................................................Section 8.10(l)
Taxable................................................................................Section 8.10(l)
Taxes..................................................................................Section 8.10(l)
Termination Fee.........................................................................Section 7.2(b)
the other party........................................................................Section 8.10(m)
UFOC................................................................................Section 3.1(v)(ii)
Violation...........................................................................Section 3.1(c)(ii)
Warrants.............................................................................Section 3.1(b)(i)
Year 2000 Compliant.....................................................................Section 3.1(q)
</TABLE>
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This AGREEMENT AND PLAN OF MERGER, dated as of July 5, 1999 (this
"Agreement"), by and among KONINKLIJKE NUMICO N.V., a company incorporated under
the laws of The Netherlands ("Parent"), NUMICO INVESTMENT CORP., a Delaware
corporation and an indirect wholly owned Subsidiary of Parent ("Merger Sub"),
and GENERAL NUTRITION COMPANIES, INC., a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and
the Company have each approved the Offer (as defined herein) and the Merger (as
defined herein) and have determined that it is in the best interests of their
respective companies and stockholders for Parent to acquire the Company upon the
terms and subject to the conditions set forth herein;
WHEREAS, in order to complete such acquisition, the respective Boards
of Directors of Parent, Merger Sub and the Company have approved the merger of
Merger Sub with and into the Company (the "Merger"), upon the terms and subject
to the conditions of this Agreement and in accordance with the Delaware General
Corporation Law (the "DGCL"), whereby each issued and outstanding share of
Company Common Stock (as defined herein) not owned directly or indirectly by
Parent or the Company will be converted into the right to receive the price per
share in cash actually paid in the Offer;
WHEREAS, the Board of Directors of the Company (the "Company Board")
has unanimously approved this Agreement, the Offer and the Merger, has
determined that the Offer and the Merger are fair to and in the best interests
of the Company's stockholders and is recommending that the Company's
stockholders accept the Offer, tender their shares of Company Common Stock
thereunder and adopt this Agreement;
WHEREAS, simultaneously with the execution and delivery of this
Agreement, Parent, Merger Sub and the stockholders named therein are entering
into a Tender Agreement;
WHEREAS, simultaneously with execution and delivery of this Agreement
certain executive officers of the Company are entering into employment
agreements with the Company and Parent, which will become effective upon the
Merger;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
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ARTICLE I.
THE TENDER OFFER
1.1 THE OFFER.
(a) Provided that this Agreement shall not have been
terminated in accordance with Article VII hereof and none of the events set
forth in Annex A hereto (the "Offer Conditions") shall have occurred or be
existing, within five Business Days of the date hereof, Merger Sub will commence
a tender offer (the "Offer") for all of the outstanding shares of common stock,
par value $0.01 per share, of the Company (the "Company Common Stock") at a
price per share of the Company Common Stock of U.S. $25.00 net to the Seller in
cash (such price, or any higher price paid in the Offer, the "Price Per Share")
upon the terms and conditions set forth in this Agreement, including Annex A
hereto.
(b) The obligation of Merger Sub to accept for payment,
purchase and pay for any Company Common Stock tendered pursuant to the Offer
shall be subject only to the satisfaction or waiver of the Offer Conditions,
including the Offer Condition that at least that number of shares of Company
Common Stock equivalent to a majority of the total issued and outstanding shares
of Company Common Stock on a fully diluted basis on the date such shares are
purchased pursuant to the Offer shall have been validly tendered and not
withdrawn prior to the expiration of the Offer (the "Minimum Condition"). Merger
Sub will not, without the prior written consent of the Company (such consent to
be authorized by the Company Board): (i) waive the Minimum Condition, (ii)
decrease the amount or change the form of consideration payable in the Offer,
(iii) decrease the number of shares of Company Common Stock sought in the Offer,
(iv) impose additional conditions to the Offer, (v) change any Offer Condition
or amend any other term of the Offer if any such change or amendment would be
adverse in any respect to the holders of the Company Common Stock (other than
Parent or Merger Sub) or (vi) except as provided below, extend the Offer if all
of the Offer Conditions have been satisfied. Subject to the terms and conditions
hereof, the Offer shall remain open until midnight, New York City time, on the
date that is twenty (20) Business Days after the Offer is commenced (within the
meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")); provided, however, that without the consent of the Company
Board, Merger Sub may (x) extend the Offer, if at the scheduled expiration date
of the Offer any of the Offer Conditions shall not have been satisfied or waived
for one (1) or more periods (none of which shall exceed ten (10) Business Days)
until such time as such conditions are satisfied or waived, (y) extend the Offer
for such period as may be required by any rule, regulation, interpretation or
position of the Securities and Exchange Commission ("SEC") or the staff thereof
applicable to the Offer or (z) extend the Offer for one (1) or more periods
(each such period to be for not more than three (3) Business Days and such
extensions to be for an aggregate period of not more than ten (10) Business Days
beyond the latest expiration date that would otherwise be permitted under clause
(x) or (y) of this sentence) if on such expiration date the Offer Conditions
shall have been satisfied or waived but there shall not have been tendered that
number of shares of
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Company Common Stock which would equal more than ninety percent (90%) of the
issued and outstanding shares of Company Common Stock. Merger Sub agrees that if
all of the Offer Conditions are not satisfied on any expiration date of the
Offer, then, Merger Sub shall extend the Offer for one or more periods of not
more than ten (10) Business Days each if requested to do so by the Company;
provided that Merger Sub shall not be required to extend the Offer beyond the
Outside Date or, if earlier, the date of termination of this Agreement in
accordance with the terms hereof. On the terms of the Offer and subject to the
Offer Conditions and this Agreement, Merger Sub shall pay for all shares of
Company Common Stock, validly tendered and not withdrawn pursuant to the Offer
that Merger Sub becomes obligated to purchase pursuant to the Offer as soon as
practicable after the expiration of the Offer.
1.2 SEC FILINGS.
(a) As soon as reasonably practicable on the date of
commencement of the Offer, Parent and Merger Sub shall file with the SEC a
Tender Offer Statement on Schedule 14D-1 with respect to the Offer (as
supplemented or amended from time to time, the "Schedule 14D-1") to provide for
the purchase of the issued and outstanding shares of Company Common Stock in
accordance with the terms hereof. Parent and Merger Sub agree, as to this
Schedule 14D-1, the Offer to Purchase and related Letter of Transmittal (which
documents, as supplemented or amended from time to time, together constitute the
"Offer Documents") will comply as to form and content in all material respects
with the applicable provisions of the federal securities laws. The Company and
its counsel shall be given an opportunity to review and comment upon the Offer
Documents and any amendment or supplement thereto prior to the filing thereof
with the SEC, and Parent and Merger Sub shall consider such comments in good
faith. Parent and Merger Sub agree to provide to the Company and its counsel any
comments which Parent, Merger Sub or their counsel may receive from the Staff of
the SEC promptly after receipt thereof, and any proposed responses thereto, with
respect to the Offer Documents and any amendment or supplement thereto. Parent,
Merger Sub and the Company agree to correct promptly any information provided by
any of them for use in the Offer Documents which shall have become false or
misleading in any material respect, and Parent and Merger Sub further agree to
take all steps necessary to cause the Schedule 14D-1 as so corrected to be filed
with the SEC and to disseminate any revised Offer Documents to the Company's
stockholders, in each case as and to the extent required by the applicable
provisions of the federal securities laws.
(b) The Company Board shall recommend acceptance of the Offer
to its Stockholders in a Solicitation/Recommendation on Schedule 14D-9 (as
supplemented or amended from time to time, the "Schedule 14D-9"), provided,
however, that the Company Board may thereafter amend or withdraw its
recommendation in accordance with Section 5.4(b). The Company shall file the
Schedule 14D-9 with the SEC upon commencement of the Offer which will comply as
to form and content in all material respects with the applicable provisions of
the federal securities laws. The Company will cooperate with Parent and Merger
Sub in mailing or otherwise
3
<PAGE>
disseminating the Schedule 14D-9 with the appropriate Offer Documents to the
stockholders of the Company. Parent and its counsel shall be given an
opportunity to review and comment upon the Schedule 14D-9 and any amendment or
supplement thereto prior to the filing thereof with the SEC, and the Company
shall consider any such comments in good faith. The Company agrees to provide to
Parent and Merger Sub and their counsel any comments which the Company or its
counsel may receive from the Staff of the SEC promptly after receipt thereof,
and any proposed responses thereto, with respect to the Schedule 14D-9 and any
amendment or supplement thereto. The Company, Parent and Merger Sub agree to
correct promptly any information provided by any of them for use in the Schedule
14D-9 which shall have become false or misleading in any material respect, and
the Company further agrees to take all steps necessary to cause such Schedule
14D-9 as so corrected to be filed with the SEC and disseminated to the Company's
stockholders, in each case as and to the extent required by the applicable
provisions of the federal securities laws. Parent, Merger Sub and the Company
each hereby agree to provide promptly such information necessary to the
preparation of the exhibits and schedules to the Schedule 14D-9 and the Offer
Documents which the respective party responsible therefor shall reasonably
request. The Company represents that Morgan Stanley & Co. Incorporated has
delivered to the Company Board a written opinion, as of the date hereof, that
the consideration to be paid in the Offer and the Merger is fair to the holders
of the Company Common Stock from a financial point of view. The Company hereby
consents to the inclusion in the Offer Documents of the recommendations and
approvals referred to in this Section 1.2.
1.3 COMPANY ACTION.
(a) In connection with the Offer, the Company shall promptly
furnish Merger Sub with such information (including a list of the record holders
of the Company Common Stock and their addresses, as well as mailing labels
containing the names and addresses of all record holders of Company Common
Stock, any non-objecting beneficial owner lists and lists of security positions
of Company Common Stock held in stock depositories in the Company's possession
or control, in each case as of a recent date), and shall thereafter render such
assistance as Parent, Merger Sub or their agents may reasonably request in
communicating the Offer to the record and beneficial holders of Company Common
Stock. Subject to the requirements of applicable law and except for such steps
as are necessary to disseminate the Offer Documents and any other documents
necessary to consummate the Offer and the Merger, Parent and Merger Sub shall
(a) hold in confidence the information contained in any of such labels and
lists, (b) use such information only in connection with the Offer and the Merger
and (c) if this Agreement is terminated, shall, upon request, deliver to the
Company or destroy all copies of such information then in their possession.
1.4 COMPOSITION OF THE COMPANY BOARD.
(a) Promptly upon the acceptance for payment of, and payment
by Merger Sub in accordance with the Offer for, not less than a majority of the
outstanding shares of Company Common Stock on a fully diluted basis pursuant to
the Offer, Merger Sub shall be entitled to
4
<PAGE>
designate such number of members of the Company Board, rounded up to the next
whole number, equal to that number of directors which equals the product of the
total number of directors on the Company Board (giving effect to the directors
elected pursuant to this sentence) multiplied by the percentage that such number
of shares of Company Common Stock owned in the aggregate by Merger Sub or
Parent, upon such acceptance for payment, bears to the number of shares of
Company Common Stock outstanding. Upon the written request of Merger Sub, the
Company shall, on the date of such request, (i) either increase the size of the
Company Board or use its reasonable efforts to secure the resignations of such
number of its incumbent directors as is necessary to enable Parent's designees
to be so elected to the Company Board and (ii) cause Parent's designees to be so
elected, in each case as may be necessary to comply with the foregoing
provisions of this Section 1.4(a).
(b) The Company's obligation to cause designees of Merger Sub
to be elected or appointed to the Company Board shall be subject to Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. The Company
shall promptly take all actions required pursuant to Section 14(f) and Rule
14f-1 in order to fulfill its obligations under this Section 1.4, and shall
include in the Schedule 14D-9 such information with respect to Merger Sub and
its designees as is required under Section 14(f) and Rule 14f-1. Parent and
Merger Sub will supply to the Company in writing and be solely responsible for
any information with respect to any of them and their designees, officers,
directors and affiliates required by Section 14(f) and Rule 14f-1 and applicable
rules and regulations.
(c) After the time that Merger Sub's designees constitute at
least a majority of the Company Board and until the Effective Time, the Company
Board shall always have at least two members (the "Independent Directors") who
are neither officers of Parent nor designees, shareholders or affiliates of
Parent or Parent's affiliates. During such period, any (i) amendment or
termination of this Agreement, (ii) extension of time for the performance or
waiver of the obligations or other acts of Parent or Merger Sub or waiver of the
Company's rights hereunder or (iii) action by the Company with respect to this
Agreement and the transactions contemplated hereby which adversely affects the
interests of the stockholders of the Company, shall require the approval of a
majority of the Independent Directors in addition to any required approval
thereof by the full Company Board. If the number of Independent Directors shall
be reduced below two for any reason whatsoever, any remaining Independent
Director shall be entitled to designate a person to fill the vacancy, which
designee shall not be a current or former officer or affiliate of Parent or any
of Parent's affiliates, or, if no Independent Directors then remain, the other
directors shall designate two persons to fill such vacancies who shall not be
current or former officers or affiliates of Parent or any of Parent's
affiliates, and such persons shall be deemed to be Independent Directors for
purposes of this Agreement. The Company Board shall not delegate any matter set
forth in this Section 1.4(c) to any committee of the Company Board.
5
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ARTICLE II.
THE MERGER
2.1 THE MERGER. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the DGCL, Merger Sub shall be merged
with and into the Company at the Effective Time. Following the Merger, the
separate corporate existence of Merger Sub shall cease, and the Company shall
continue as the surviving corporation (the "Surviving Corporation") in
accordance with the DGCL.
2.2 CLOSING. The closing of the Merger (the "Closing") will take place
on the third Business Day after satisfaction or waiver (as permitted by this
Agreement and applicable law) of the conditions (excluding conditions that, by
their terms, cannot be satisfied until the Closing Date) set forth in Article VI
hereof (the "Closing Date"), unless another time or date is agreed to in writing
by the parties hereto. The Closing shall be held at the offices of Vedder,
Price, Kaufman & Kammholz, 222 North LaSalle Street, Suite 2600, Chicago,
Illinois 60601, unless another place is agreed to in writing by the parties
hereto.
2.3 EFFECTIVE TIME. Upon the Closing, the parties shall file with the
Secretary of State of the State of Delaware either (i) a certificate of merger,
in form and substance satisfactory to the Company and Parent, or (ii) in the
event Merger Sub shall have acquired 90% or more of the outstanding shares of
Company Common Stock, a certificate of ownership and merger (in either such
case, the "Certificate of Merger") executed in accordance with the relevant
provisions of the DGCL and shall make all other filings, recordings or
publications required under the DGCL in connection with the Merger. The Merger
shall become effective at such time as the Certificate of Merger is duly filed
with the Delaware Secretary of State, or at such other time as the parties may
agree and specify in the Certificate of Merger (the time the Merger becomes
effective being the "Effective Time").
2.4 EFFECT OF THE MERGER. At and after the Effective Time, the Merger
will have the effects set forth in Section 259 of the DGCL.
2.5 CERTIFICATE OF INCORPORATION. At the Effective Time and without any
further action on the part of the Company and Merger Sub, the certificate of
incorporation of the Company shall be amended to read in its entirety as the
certificate of incorporation of Merger Sub reads as in effect immediately prior
to the Effective Time until thereafter changed or amended as provided therein or
by applicable law, provided that such certificate of incorporation shall be
amended to reflect General Nutrition Companies, Inc. as the name of the
Surviving Corporation.
2.6 BYLAWS. The bylaws of Merger Sub as in effect at the Effective Time
shall be the bylaws of the Company until thereafter changed or amended as
provided therein or by applicable law.
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2.7 OFFICERS AND DIRECTORS OF SURVIVING CORPORATION. The directors of
Merger Sub and/or any individuals designated by Merger Sub immediately prior to
the Effective Time shall be the initial directors of the Surviving Corporation,
until the earlier of their resignation or removal or otherwise ceasing to be a
director or until their respective successors are duly elected and qualified, as
the case may be. The officers of the Company immediately prior to the Effective
Time shall be the initial officers of the Surviving Corporation, until the
earlier of their resignation or removal or otherwise ceasing to be an officer or
until their respective successors are duly elected and qualified, as the case
may be.
2.8 EFFECT ON CAPITAL STOCK. As of the Effective Time, by virtue of the
Merger and without any action on the part of Parent, Merger Sub, the Company or
the holder of any shares of Company Common Stock or any shares of capital stock
of Merger Sub:
(a) CAPITAL STOCK OF MERGER SUB. Each issued and outstanding
share of capital stock of Merger Sub shall be converted into and become one
fully paid and nonassessable share of common stock, par value $0.01 per share,
of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND PARENT-OWNED STOCK.
Each share of Company Common Stock that is owned by the Company and each share
of Company Common Stock that is owned by Parent or Merger Sub shall
automatically be canceled and shall cease to exist, and no Merger Consideration
shall be delivered in exchange therefor.
(c) CONVERSION OF COMPANY COMMON STOCK. Subject to Section
2.9(h), at the Effective Time each issued and outstanding share of Company
Common Stock (other than shares to be canceled in accordance with Section
2.8(b)) shall be converted into the right to receive the Price Per Share in
cash, without interest (the "Merger Consideration"). As of the Effective Time,
all such shares of Company Common Stock shall no longer be outstanding and shall
automatically be canceled and shall cease to exist, and each holder of a
certificate representing any such shares of Company Common Stock shall cease to
have any rights with respect thereto, except the right to receive the Merger
Consideration upon surrender of such certificate in accordance with Section 2.9
or, if asserted properly, the right to appraisal under the DGCL (as described in
Section 2.9(h)).
2.9 SURRENDER AND PAYMENT.
(a) EXCHANGE AGENT. Prior to the Effective Time, Parent shall
designate a bank or trust company reasonably acceptable to the Company to act as
agent for the holders of shares of Company Common Stock in connection with the
Merger (the "Exchange Agent") to receive the Merger Consideration to which
holders of shares of Company Common Stock shall become entitled pursuant to
Section 2.8. Prior to the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware, Parent or Merger Sub shall deposit with the
Exchange Agent cash in an aggregate amount equal to the product of (i) the
number of shares of Company Common Stock
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outstanding (and not to be canceled pursuant to Section 2.8(b)) immediately
prior to the Effective Time, multiplied by (ii) the Merger Consideration. The
deposit made by Parent or Merger Sub pursuant to the preceding sentence is
hereinafter referred to as (the "Payment Fund"). The Exchange Agent shall cause
the Payment Fund to be (i) held for the benefit of the holders of Company Common
Stock and (ii) promptly applied to making the payments provided for in Section
2.8(c). The Payment Fund shall not be used for any purpose that is not provided
for herein.
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable
after the Effective Time, Parent shall cause the Exchange Agent to mail to each
holder of record of a certificate or certificates (the "Certificates") which
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock, other than shares to be canceled in accordance with
Section 2.8(b), (i) a Letter of Transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the Merger Consideration. Upon surrender of a Certificate for cancellation
to the Exchange Agent, together with such Letter of Transmittal, duly executed,
and such other documents as may reasonably be required by the Exchange Agent,
the Exchange Agent shall pay the holder of such Certificate the Merger
Consideration in respect of such Certificate, less any required withholding
taxes, and the Certificate so surrendered shall forthwith be canceled. If any
portion of the Merger Consideration is to be paid to a Person other than the
registered holder of the shares represented by the Certificate or Certificates
surrendered in exchange therefor, it shall be a condition to such payment that
the Certificate or Certificates so surrendered shall be properly endorsed or
otherwise be in proper form for transfer and that the Person requesting such
payment shall pay to the Exchange Agent any transfer or other taxes required as
a result of such payment to a Person other than the registered holder of such
shares or establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not payable. Until surrendered as contemplated by this Section
2.9, each Certificate (other than Certificates representing Dissenting Shares
(as defined below) or shares of Company Common Stock to be canceled pursuant to
Section 2.8(b)) shall be deemed at any time after the Effective Time to
represent only the right to receive the Merger Consideration upon such
surrender.
(c) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All
Merger Consideration paid upon the surrender for exchange of Certificates in
accordance with the terms of this Article II shall be deemed to have been paid
in full satisfaction of all rights pertaining to the shares of Company Common
Stock theretofore represented by such Certificates. There shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Company Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation or the Exchange Agent
for any reason, they shall be canceled and exchanged as provided in this Article
II, except as otherwise provided by law.
8
<PAGE>
(d) UNCLAIMED FUNDS. Any portion of the Payment Fund made
available to the Exchange Agent pursuant to Section 2.9(a) that remains
unclaimed by holders of the Certificates for six months after the Effective Time
shall be delivered to the Surviving Corporation or a United States parent
thereof, upon demand, and any holders of Certificates who have not theretofore
complied with this Article II shall thereafter look only to Parent for payment
of their claim for Merger Consideration.
(e) NO LIABILITY. None of Parent, Merger Sub, the Company or
the Exchange Agent shall be liable to any Person in respect of any Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificate has not been
surrendered prior to five years after the Effective Time (or immediately prior
to such earlier date on which Merger Consideration in respect of such
Certificate would otherwise escheat to or become the property of any public
official), any such shares, cash, dividends or distributions in respect of such
Certificate shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any person previously entitled thereto.
(f) INVESTMENT OF FUNDS. The Payment Fund shall be invested by
the Exchange Agent in obligations of, or guaranteed by, the United States of
America, in commercial paper obligations rated A-1 or P-l or better by Moody's
Investor Services or Standard & Poor's Corporation, respectively, in each case
with maturities not exceeding seven days. All earnings thereon shall inure to
the benefit of Parent or Merger Sub.
(g) LOST CERTIFICATES. In the event that any Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the Person claiming such Certificate to be lost, stolen or destroyed
and, if required by Parent, the granting of an indemnity reasonably satisfactory
to Parent against any claim that may be made against it, the Surviving
Corporation or the Exchange Agent, with respect to such Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration with respect to such Certificate, to which
such Person is entitled pursuant hereto.
(h) DISSENTING SHARES. Notwithstanding anything in this
Agreement to the contrary, shares of Company Common Stock, outstanding
immediately prior to the Effective Time and held by a holder who has not voted
in favor of the Merger or consented thereto in writing and who has demanded
appraisal for such shares in accordance with the DGCL (the "Dissenting Shares"),
shall not be converted into a right to receive the Merger Consideration, unless
such holder fails to perfect or withdraws or otherwise loses its right to
appraisal. If after the Effective Time such holder fails to perfect or withdraws
or loses its right to appraisal, such shares shall be treated as if they had
been converted as of the Effective Time into a right to receive the Merger
Consideration. The Company shall give Parent prompt notice of any demands
received by the Company for appraisal of shares of Company Common Stock, and
Parent shall have the right to participate in all
9
<PAGE>
negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Parent, make any payment with
respect to, or settle or offer to settle, any such demands.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as disclosed
in any of the Company SEC Reports (as defined below) filed with the SEC and
publicly available prior to the date hereof or as specifically set forth in the
Company Disclosure Schedule delivered by the Company to Parent on the date
hereof, subject to Section 8.12 (the "Company Disclosure Schedule"), the Company
represents and warrants to Parent and Merger Sub as follows:
(a) ORGANIZATION, STANDING AND POWER. Each of the Company and
its Subsidiaries has been duly organized and is validly existing and in good
standing under the laws of its jurisdiction of incorporation. Each of the
Company and its Subsidiaries is duly qualified and in good standing or otherwise
authorized or licensed to do business in each jurisdiction in which the nature
of its business or the ownership or leasing of its properties makes such
qualification necessary, except for any such failure to be so qualified,
authorized or licensed or in good standing is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the Company or
prevent the Company from consummating the transactions contemplated hereby. The
copies of the Organizational Documents of the Company and of each Significant
Subsidiary which were previously furnished or made available to Parent are, in
each case, true, complete and correct copies of such documents as in effect on
the date of this Agreement. Each of the Company and its Subsidiaries has the
requisite corporate power and corporate authority in all material respects to
own, lease and operate its properties and to carry on its respective businesses
as they are now being conducted. Neither the Company nor any of its Subsidiaries
is in violation of any provisions of its Organizational Documents in any
material respect. The list of Subsidiaries of the Company filed by the Company
with its most recent Annual Report on Form 10-K is a true and accurate list of
all the Significant Subsidiaries of the Company. Except for its interests in its
Subsidiaries, the Company does not own, directly or indirectly, any capital
stock, membership interest, partnership interest, joint venture interest or
other equity interest in any Person.
(b) CAPITAL STRUCTURE.
(i) As of the date of this Agreement, the authorized
capital stock of the Company consists of 200,000,000 shares of Company
Common Stock, of which, as of June 30, 1999, 67,997,138 shares have
been issued and are outstanding and 7,220,476 shares have been reserved
for issuance upon exercise of outstanding options, warrants or other
rights to acquire capital stock from the Company. Except as provided in
this Section 3.1(b), there are no shares of capital stock or other
equity securities of the Company issued, reserved for
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issuance or outstanding. No shares of preferred stock have been
authorized or are outstanding. All issued and outstanding shares of the
capital stock of the Company are duly authorized, validly issued, fully
paid and nonassessable, and no class of capital stock is entitled to
preemptive rights. As of the date of this Agreement, there are no
outstanding options, warrants, convertible or exchangeable securities
or other rights to acquire capital stock from the Company other than
options representing in the aggregate the right to purchase not more
than 7,170,476 shares of Company Common Stock under the Company Equity
Plans and other than warrants representing in the aggregate the right
to purchase 50,000 shares of Company Common Stock (the "Warrants")
which in accordance with the terms of the Warrants shall upon
consummation of the Merger convert into the right to receive the Merger
Consideration.
(ii) All of the issued and outstanding shares of
capital stock of the Company's Subsidiaries are duly authorized,
validly issued, fully paid and nonassessable and are owned by the
Company, free and clear of any liens, pledges, security interests,
claims, encumbrances, restrictions (including any restriction on the
right to vote or sell such shares, except as may be imposed as a matter
of law), preemptive rights or any other claims of any third party
("Liens").
(iii) As of the date of this Agreement, no bonds,
debentures, notes or other indebtedness of the Company having the right
to vote on any matters on which stockholders may vote ("Company Voting
Debt") are issued or outstanding.
(iv) Except as otherwise set forth in this Section
3.1(b), as of the date of this Agreement, there are no securities,
options, warrants, calls, rights, commitments, agreements, arrangements
or undertakings of any kind to which the Company or its Subsidiaries is
a party or by which any of them is bound obligating (and no contract,
agreement, understanding, arrangement or obligation, whether or not
contingent, providing for) the Company or any of its Subsidiary to
issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other voting securities of the
Company or such Subsidiary or obligating the Company or such Subsidiary
to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or
undertaking. As of the date of this Agreement, there are no outstanding
obligations, arrangements, agreements or commitments of the Company or
any of its Subsidiaries to repurchase, redeem or otherwise acquire any
shares of capital stock of the Company or such Subsidiary. Upon the
consummation of the Merger, no shares of Company Common Stock or other
securities of the Company will be issuable and, immediately after the
Effective Time, the Surviving Corporation will have no obligation to
issue, transfer or sell any shares of common stock of the Surviving
Corporation pursuant to any compensation and benefit plan of the
Company or any of its Subsidiaries.
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(c) AUTHORITY; NO CONFLICTS.
(i) The Company has all requisite corporate power and
corporate authority to enter into this Agreement and, subject to the
adoption of this Agreement by the requisite vote of the holders of
Company Common Stock, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of the
Company, subject in the case of the consummation of the Merger to the
adoption of this Agreement by the requisite vote of the stockholders of
the Company, and no other corporate proceedings are necessary to
authorize this Agreement or to consummate the transactions contemplated
hereby. This Agreement has been duly executed and delivered by the
Company and, assuming the due execution and delivery of this Agreement
by Parent and Merger Sub, constitutes a valid and binding agreement of
the Company, enforceable against it in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws relating to or affecting
creditors generally and by general equity principles (regardless of
whether such enforceability is considered in a proceeding in equity or
at law). The Company Board has, at a meeting duly called and held, (A)
unanimously approved this Agreement, the Offer and the Merger and the
transactions contemplated hereby in accordance with the DGCL, (B)
determined that the Offer and the Merger are fair to and in the best
interests of the Company's stockholders, and (C) recommended that the
stockholders of the Company tender their shares of Company Common Stock
into the Offer and adopt this Agreement.
(ii) The execution, delivery and performance of this
Agreement do not or will not, as the case may be, and the consummation
of the transactions contemplated hereby will not, conflict with, or
result in any violation of, or constitute a default (with or without
notice or lapse of time, or both) under, or give rise to a right of
consent, termination, amendment, cancellation or acceleration of any
obligation or the loss of a material benefit under, or the creation of
a Lien on any assets (any such conflict, violation, default, right of
consent, termination, amendment, cancellation or acceleration of any
obligations or creation, a "Violation"), pursuant to: (A) any provision
of the Organizational Documents of the Company or any of its
Subsidiaries or (B) except as is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the
Company or prevent or materially delay the consummation of the
transactions contemplated hereby and, subject to obtaining or making
the consents, approvals, orders, authorizations, registrations,
declarations and filings referred to in paragraph (iii) below, the
terms, provisions or conditions of any loan or credit agreement, note,
mortgage, bond, indenture, lease (other than the Company's retail store
leases), compensation or benefit plan (or any grant or award made
pursuant thereto) or other agreement, obligation, instrument, contract,
permit, concession,
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franchise, license, judgment, order, writ, injunction, award, decree,
statute, law, ordinance, rule or regulation applicable to the Company,
the Company's Subsidiaries or any of their respective properties or
assets.
(iii) No consent, registration, permit, approval,
order or authorization of, or registration, declaration, notice,
report, or other filing with, any supranational, national, state,
municipal or local government, any instrumentality, subdivision, court,
administrative agency or commission or other authority thereof, or any
quasi-governmental or private body exercising any regulatory, taxing,
importing or other governmental or quasi-governmental authority (a
"Governmental Entity"), is required by or with respect to the Company
or any of its Subsidiaries in connection with the execution and
delivery of this Agreement by the Company or the consummation by the
Company of the transactions contemplated hereby, except for (x) those
required under or in relation to (A) the Exchange Act, (B) the DGCL
with respect to the filing and recordation of the Certificate of Merger
and any other appropriate merger or other documents, (C) the rules and
regulations of The Nasdaq National Market ("Nasdaq"), and (D) antitrust
or other competition laws of any applicable jurisdictions and (y) such
consents, registrations, permits, approvals, orders, authorizations,
registrations, declarations, notices, reports and other filings the
failure of which to make or obtain is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the
Company or prevent the consummation of the transactions contemplated
hereby.
(d) REPORTS AND FINANCIAL STATEMENTS.
(i) Since January 31, 1998, the Company has timely
filed all required reports, schedules, forms, statements and other
documents required to be filed by it with the SEC (collectively,
including all exhibits thereto, the "Company SEC Reports"). The Company
SEC Reports, as of their respective dates (and, if amended or
superseded by a filing prior to the date of this Agreement or the
Closing Date, then on the date of such filing), did not, and any
Company SEC Reports filed with the SEC subsequent to the date hereof
and prior to the purchase of shares pursuant to the Offer will not,
contain any untrue statement of a material fact or omit to state a
material fact required to be stated (or incorporated by reference)
therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading. Each of
the financial statements (including the related notes) included or to
be included in, or incorporated by reference into, the Company SEC
Reports presents or will present fairly, in all material respects, the
consolidated financial position and consolidated results of operations
and cash flows of the Company and its Subsidiaries as of the respective
dates or for the respective periods set forth therein, all in
conformity with U.S. generally accepted accounting principles ("GAAP")
consistently applied during the periods involved except as otherwise
noted therein, and subject, in the case of the unaudited interim
financial statements, to normal year-
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end audit adjustments that have not been and will not be material
in amount. All of such Company SEC Reports, as of their respective
dates (and as of the date of any amendment to the respective
Company SEC Report filed prior to the date hereof), complied as to
form in all material respects with the applicable requirements of
the Securities Act of 1933, as amended (the "Securities Act"), the
Exchange Act and the rules and regulations promulgated under such
acts (as in effect on the dates on which such SEC Reports were
filed).
(ii) Except for liabilities and obligations incurred
in the ordinary course of business since February 6, 1999 (none of
which has had or is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on the Company), the Company does
not have any undisclosed liabilities or obligations of any nature
required by GAAP to be set forth on a consolidated balance sheet of the
Company or which have had or are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the
Company.
(iii) The Company has delivered to Parent a complete
and correct copy of any material amendments or modifications, which
have not yet been filed with the SEC, to all agreements, documents or
other instruments which previously had been filed by the Company with
the SEC pursuant to the Exchange Act.
(e) INFORMATION SUPPLIED.
(i) None of the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in
(A) the proxy statement relating to the Company Stockholders Meeting
(as defined herein) (the "Proxy Statement"), if applicable, (B) the
Schedule 14D-9, (C) the Offer Documents and (D) any other document
filed or to be filed with the SEC or any other Government Entity in
connection with the Offer will, at the respective times such documents
or any amendments or supplements thereto are filed, and, with respect
to the Offer Documents and the Proxy Statement, if any, when first
published, sent or given to the stockholders of the Company, contain an
untrue statement of material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are
made, not false or misleading or, in the case of the Proxy Statement,
if any, or any amendment thereof or supplement thereto, at the time of
the Company Stockholders Meeting, if any, and at the Effective Time,
contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements made therein, in the light of the circumstances
under which they are made, not false or misleading or necessary to
correct any statement in any earlier communication with respect to the
Offer or the solicitation of proxies for the Company Stockholders
Meeting, if any, which shall have become false or misleading. The Proxy
Statement, if any, and Schedule 14D-9 will comply
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as to form with the requirements of the Exchange Act and the Securities
Act and the rules and regulations of the SEC thereunder.
(ii) Notwithstanding the foregoing provisions of this
Section 3.1(e), no representation or warranty is made by the Company
with respect to statements made or incorporated by reference in the
Proxy Statement, if any, or the Offer Documents based on information
supplied by Parent or Merger Sub for inclusion or incorporation by
reference therein.
(f) COMPLIANCE WITH APPLICABLE LAWS; REGULATORY MATTERS. The
Company and each of its Subsidiaries hold all permits, licenses, certificates,
franchises, registrations, variances, exemptions, orders and approvals of all
Governmental Entities other than those the failure to so hold individually or in
the aggregate is not reasonably likely to have a Material Adverse Effect on the
Company (the "Company Permits"). The Company and each of its Subsidiaries have
performed its respective obligations under and are in compliance with the terms
of the Company Permits, except where the failure so to comply or perform,
individually or in the aggregate, is not reasonably likely to have a Material
Adverse Effect on the Company. No event has occurred or condition or state of
facts exists which constitutes or, after notice or lapse of time or both, would
constitute a breach or default under the Company Permits or, after notice or
lapse of time or both, would permit revocation or termination of the Company
Permits, except where such event, condition or state of facts, individually or
in the aggregate, is not reasonably likely to have a Material Adverse Effect on
the Company. The businesses of the Company and its Subsidiaries are not being
and have not been conducted in violation of any law, ordinance, regulation,
judgment, decree, injunction, rule or order of any Governmental Entity, except
for violations which are not reasonably likely to have a Material Adverse Effect
on the Company. As of the date of this Agreement, no lawsuit, claim, suit,
proceeding or investigation by any Governmental Entity with respect to the
Company or any of its Subsidiaries is pending or, to the best knowledge of the
Company, threatened, other than lawsuits, claims, suits, proceedings or
investigations which, individually or in the aggregate, are not reasonably
likely to have a Material Adverse Effect on the Company. This provision shall
not apply to environmental matters, which are the subject of Section 3.1(s).
(g) LITIGATION. As of the date of this Agreement, there is no
litigation, arbitration, claim, suit, action, investigation or proceeding
pending or, to the knowledge of the Company, threatened against or affecting the
Company or any of its Subsidiaries or any of their respective properties or
assets, which is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on the Company or is reasonably likely to prevent the
consummation of the transactions contemplated by this Agreement, nor is there
any judgment, award, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against the Company or any of its Subsidiaries
is reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on the Company. This provision shall not apply to environmental
matters, which are the subject of Section 3.1(s).
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(h) TAXES. (i) The Company and its Subsidiaries have duly and
timely filed (taking into account any extension of time within which to file)
all Tax Returns required to be filed by any of them other than those the failure
of which to file is not reasonably likely to have individually or in the
aggregate a Material Adverse Effect on the Company and all such filed Tax
Returns are complete and accurate in all material respects; (ii) the Company and
its Subsidiaries have paid all Taxes due and payable by them (whether or not
shown on any Tax Return), other than those the failure of which to pay is not
reasonably likely to have individually or in the aggregate a Material Adverse
Effect on the Company; (iii) as of the date of this Agreement, there are no
pending or, to the knowledge of the Company, threatened in writing audits,
examinations, investigations or other proceedings in respect of Taxes or Tax
matters relating to the Company or any of its Subsidiaries which, if determined
adversely to the Company or such Subsidiary, are reasonably likely to have a
Material Adverse Effect on the Company; (iv) there are no deficiencies or claims
for any Taxes that have been proposed, asserted or assessed, or material issues
that have been raised in connection with the examination of Tax Returns and that
are reasonably likely to give rise to such deficiencies or claims, against the
Company or any of its Subsidiaries which, if such deficiencies or claims were
finally resolved against the Company or such Subsidiary, are reasonably likely
to have a Material Adverse Effect on the Company; (v) there are no material
Liens for Taxes upon the assets of the Company or any of its Subsidiaries, other
than Liens for current Taxes not yet due and payable and Liens for Taxes that
are being contested in good faith by appropriate proceedings and that are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on the Company if any such contest is unsuccessful; (vi) the Company is
not, was not, and will not be at any time during the five-year period ending on
the date on which the Effective Time occurs, a "United States real property
holding corporation" within the meaning of Section 897(c) of the Code; (vii)
neither the Company nor any of its Subsidiaries has made an election under
Section 341(f) of the Code; and (viii) neither the Company nor any of its
Subsidiaries has filed or been required to file any reports under Section 999 of
the Code; (ix) other than the consolidated group of which the Company is now the
common parent, neither the Company nor any of its Subsidiaries has ever been (A)
a member of an affiliated group filing a consolidated federal income Tax Return
or (B) responsible for any liability for the Taxes of any Person as a transferee
or successor, by contract, by operation of law, or otherwise; and (x) except
where the failure to do so is not reasonably likely to have individually or in
the aggregate a Material Adverse Effect on the Company, the Company and each of
its Subsidiaries has (A) withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
creditor, stockholder, or other third party and (B) collected any and all
amounts required from customers or other third parties in the form of sales,
use, or similar Taxes and paid, when due, such Taxes to the appropriate
governmental authority.
(i) ABSENCE OF CERTAIN CHANGES OR EVENTS. Since February 6,
1999, (A) each of the Company and the Company's Subsidiaries has conducted its
business in the ordinary course; (B) there has not been any change in the
business, financial condition or results of operations of the
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Company or its Subsidiaries that has had, or is reasonably likely to have, a
Material Adverse Effect on the Company; (C) there has not been any entry by the
Company or its Subsidiaries into any employment agreement, severance agreement
or termination agreement with any employee of the Company other than in the
ordinary course of business except in connection with the transactions
contemplated hereby; (D) there has not been any declaration, setting aside or
payment of any dividend or other distribution with respect to the capital stock
of the Company nor has there been any repurchase, redemption or other
acquisition by the Company or any of its Subsidiaries of any outstanding shares
of capital stock or other securities of, or other ownership interests in, the
Company or such Subsidiary; (E) there has not been any change by the Company in
accounting principles, practices or methods; (F) except as provided for herein,
there has not been any material increase in the compensation payable or which
could become payable by the Company and its Subsidiaries to their officers or
key employees, or any material amendment of any compensation and benefit plans;
(G) there has not been any amendment of any material term of any outstanding
security of the Company or any of its Subsidiaries; (H) there has not been any
acquisition, sale or transfer of any material assets of the Company or any of
its Subsidiaries; and (I) there has not been any entry by the Company or its
Subsidiaries into any material joint venture or other similar arrangement with
any Person.
(j) VOTE REQUIRED. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock adopting this
Agreement (the "Required Company Votes") is the only vote of the holders of any
class or series of the Company capital stock necessary to approve this Agreement
and the transactions contemplated hereby and is only necessary in the event that
the number of shares of Company Common Stock tendered pursuant to the Offer
represents less than 90% of the issued and outstanding shares of Company Common
Stock.
(k) CERTAIN AGREEMENTS. (i) All contracts listed as an exhibit
to the Company's Annual Report on Form 10-K under the rules and regulations of
the SEC relating to the business of the Company and its Subsidiaries and (ii)
any other agreement within the meaning set forth in item 601(b)(10) of
Regulation S-K of Title 17, Part 229 of the Code of Federal Regulations (the
"Company Material Contracts") are valid and in full force and effect, except to
the extent they have previously expired in accordance with their terms, except
as contemplated by the letter agreement referred to in Section 5.5 hereof, and
other than as is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on the Company. Neither the Company nor its
Subsidiaries has violated any provision of, or committed or failed to perform
any act which, with or without notice, lapse of time, or both, is reasonably
likely to constitute a default under the provisions of, any such Company
Material Contract, and neither the Company nor any of its Subsidiaries has
received notice that any party to any Company Material Contract intends to
cancel, terminate or otherwise modify the terms of any applicable Company
Material Contract, except in each case, as is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the Company. To
the knowledge of the Company, no counterparty to any such Company Material
Contract has violated any provision of, or committed or failed to perform any
act which,
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with or without notice, lapse of time, or both, is reasonably likely to
constitute a default or other breach under the provisions of, such Company
Material Contract, except for defaults or breaches which are not reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect on
the Company.
(l) EMPLOYEE BENEFIT PLANS: LABOR MATTERS.
(i) With respect to each employee benefit plan as
defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), and with respect to each other material
employee and/or director benefit plan, program, arrangement and
contract (including any bonus, deferred compensation, stock bonus,
stock purchase, restricted stock, stock option, fringe benefit, sick
pay, vacation, employment, termination, change in control and severance
plan, program, arrangement and contract), to which the Company or any
of its Subsidiaries is a party, which is maintained or contributed to
by the Company or any of its Subsidiaries, or with respect to which the
Company or any of its Subsidiaries could incur material liability under
Section 4069, 4201 or 4212(c) of ERISA other than any "multiemployer
plan" within the meaning of Section 3(37) of ERISA (a "Multiemployer
Plan") (collectively, together with any and all amendments thereto, and
any related trust agreement, insurance contract or other funding
instrument, the "Company Benefit Plans"), the Company has listed such
Company Benefit Plan on Schedule 3.1(l)(i) of the Company Disclosure
Schedule and has made available to Parent a true and complete copy of
such Company Benefit Plan (or, to the extent no such copy exists, an
accurate description thereof). A true and complete copy of the most
recent annual report, actuarial reports, summary plan description or
other employee communication material (including any summary of
material modification) and Internal Revenue Service determination
letter with respect to each Company Benefit Plan (to the extent
applicable thereto) has been made available to Parent.
(ii) Each of the Company Benefit Plans that is an
"employee pension benefit plan" within the meaning of Section 3(2) of
ERISA and that is intended to be qualified under Section 401(a) of the
Code has received a favorable determination letter from the United
States Internal Revenue Service, and the Company is not aware of any
circumstances likely to result in the revocation of any such favorable
determination letter.
(iii) With respect to the Company Benefit Plans and
any Multiemployer Plan, no event has occurred and, to the knowledge of
the Company, there exists no condition or set of circumstances,
including but not limited to any non-exempt "prohibited transactions"
(as described in ERISA or the Code) with respect to any Company Benefit
Plan, in connection with which the Company or any of its Subsidiaries
could be subject to any liability under the terms of such Company
Benefit Plans, Multiemployer Plan, ERISA,
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the Code or any other applicable law which could reasonably be expected
to have a Material Adverse Effect on the Company.
(iv) All Company Benefit Plans, to the extent subject
to ERISA have been and are in substantial compliance with ERISA. There
is no material pending or, to the knowledge of the Company threatened,
litigation relating to the Company Benefit Plans. No Company Benefit
Plan is subject to Title IV of ERISA and no liability under Title IV of
ERISA has been or is expected to be incurred by the Company or any of
its Subsidiaries with respect to any ongoing, frozen or terminated
"single-employer plan", within the meaning of Section 4001(a)(15) of
ERISA, of any entity which is considered one employer with the Company
under Section 4001 of ERISA or Section 414 of the Code (an "ERISA
Affiliate").
(v) Neither the Company nor any of its Subsidiaries
has any material obligations for retiree health and life benefits under
any Company Benefit Plan except to the extent required by applicable
law.
(vi) All Company Benefit Plans maintained outside of
the United States have been and are in substantial compliance with
applicable local law except where such failure to comply is not
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on the Company.
(vii) Neither the Company nor any of its Subsidiaries
is a party to any material collective bargaining or other labor union
contracts and no collective bargaining agreement is being negotiated by
the Company or any of its Subsidiaries. There is no pending labor
dispute, strike or work stoppage against the Company or any of its
Subsidiaries which may interfere with the respective business
activities of the Company or any of its Subsidiaries, except where such
dispute, strike or work stoppage is not reasonably likely to have
individually or in the aggregate a Material Adverse Effect on the
Company. There is no pending charge or complaint against the Company or
any of its Subsidiaries by the National Labor Relations Board or any
comparable state agency, except where such unfair labor practice,
charge or complaint is not reasonably likely to have a Material Adverse
Effect on the Company.
(viii) No amount that will be received (whether in
cash or property or the vesting of property) or the forgiveness of
indebtedness as a result of the Offer, Merger or any other transaction
contemplated by this Agreement or otherwise by any employee, officer or
director of the Company or any of its affiliates under any Company
Benefit Plan currently in effect will be an "excess parachute payment"
(as defined in Section 280G(b)(1) of the Code). Schedule 3.1(l)(viii)
of the Company Disclosure Schedule sets forth (A) the estimated maximum
amount that could be paid to or received by each "disqualified
individual" (as defined in proposed regulations under Section 280G of
the Code) (whether
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in cash or property or the vesting of property or the forgiveness of
indebtedness) as a result of the Offer, Merger or the other
transactions contemplated by this Agreement under all Company Benefit
Plans or otherwise (B) the "base amount" (as defined in Section
280G(b)(3) of the Code) for each disqualified individual calculated as
of the date of this Agreement, and (c) a list of each employee of the
Company or any of its Subsidiaries who is entitled to receive a
retention bonus, severance and/or other payment as a result of the
Offer, Merger or any other transaction contemplated hereby, the amount
of each such bonus, severance and/or other payment and the date and
other terms relating to the payment thereof.
(ix) Other than as set forth on Schedule 3.1(l)(viii)
of the Company Disclosure Schedule, or as set forth in the Company
Equity Plans, no employee of the Company or any of its Subsidiaries
will be entitled to any additional benefits or any acceleration of the
time of payment or vesting of any benefits under any Company Benefit
Plan or otherwise as a result of the transactions contemplated by this
Agreement.
(m) INTELLECTUAL PROPERTY. Except as is not reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on the
Company, all patents, trademarks, trade names, service marks and copyrights and
registrations and applications relating thereto held by the Company and its
Subsidiaries are valid and enforceable and, (A) neither the Company nor any of
its Subsidiaries is, nor will the Company or any of its Subsidiaries be as a
result of the execution and delivery of this Agreement or the performance of the
Company's obligations hereunder, in violation of, and no claims are pending or,
to the knowledge of the Company, threatened that the Company or any of its
Subsidiaries is infringing on or otherwise violating the rights of any person
with regard to any Intellectual Property and (B) no person is infringing on or
otherwise violating any right of the Company or any of its Subsidiaries with
respect to any Intellectual Property owned by and/or licensed to the Company or
any of its Subsidiaries.
(n) BROKERS OR FINDERS. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any broker's
or finder's fee or any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement, except Morgan Stanley & Co.
Incorporated, the arrangements with which have been disclosed in writing to
Parent prior to the date hereof. Schedule 3.1(n) sets forth the estimated Merger
Fees (as defined herein) owed or which will be owing by the Company and its
Subsidiaries in connection with the Offer, the Merger and the other transactions
contemplated by this Agreement. The term "Merger Fees" means all fees and
expenses paid since May 1, 1999 or payable by or on behalf of the Company or any
of its Subsidiaries to all attorneys, accountants, investment bankers, financial
advisors and other experts and advisers incident to the negotiation,
preparation, execution and consummation of this Agreement and the transactions
contemplated hereby.
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(o) OPINION OF FINANCIAL ADVISOR. The Company has received a
written opinion of Morgan Stanley & Co. Incorporated dated the date of this
Agreement, to the effect that, as of such date, the consideration to be paid in
the Offer and the Merger is fair, from a financial point of view, to the holders
of Company Common Stock. A copy of this opinion will promptly be provided to
Parent.
(p) PRODUCT CLAIMS. Except as is not reasonably likely to have
a Material Adverse Effect on the Company, as of the date hereof, there are no
pending or, to the knowledge of the Company, threatened product liability claims
with respect to any products that the Company or any of its Subsidiaries
manufactures or sells ("Company Products").
(q) YEAR 2000. The Company has a Year 2000 program in place
which is adequate to cause all computer software and data processing devices
designed by the Company (i) used in or for the manufacturing of Company Products
by the Company and/or any of its Subsidiaries, or (ii) utilized in or by any
Company Products, including any Company Products sold and/or installed prior to
the date hereof, to become "Year 2000 Compliant" during 1999 and all costs
associated with such program are included in the Company's 1999 budget and in
its 2000 strategic plan, in each case except as had not had or would not
reasonably be likely to have, individually or in the aggregate, a Material
Adverse Effect on the Company. "Year 2000 Compliant" means that the product or
software accurately processes and stores date/time data (including, but not
limited to calculating, comparing, displaying, recording and sequencing
operations involving date/time data) during, from and into and between the
twentieth and twenty-first centuries, and the years 1999 and 2000, including
correct processing of leap year data.
(r) TAKEOVER STATUTES; RIGHTS PLANS. The Company has opted out
of Section 203 of the DGCL in accordance with the terms of Section 203 of the
DGCL. No "fair price", "moratorium", "control share acquisition", "interested
shareholder", "business combination" or other similar anti-takeover statute or
regulation (including the business combination provisions of Section 203 of the
DGCL) (each a "Takeover Statute") is, or prior to or at the Effective Time will
be, applicable to the Company, the Company Common Stock, the Offer or the Merger
or the transactions contemplated hereby. The Company does not have any
stockholder rights plan or similar anti-takeover device in effect.
(s) ENVIRONMENTAL MATTERS. Except as is not reasonably likely
to have a Material Adverse Effect on the Company: (i) the Company and each
Subsidiary is in compliance and to the knowledge of the Company has been in
compliance with all Environmental Laws; (ii) no property that is currently owned
or operated or, to the knowledge of the Company, has been owned or operated by
the Company or any current or former Subsidiary contains any Hazardous Substance
or other condition which is reasonably likely to require investigation or
remediation or lead to any liability of the Company or its Subsidiaries under
any Environmental Law; (iii) to the knowledge
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of the Company, neither the Company nor any of its Subsidiaries is subject to
liability for any off-site disposal or release of any Hazardous Substance under
any Environmental Law; (iv) there are no pending, or to the knowledge of the
Company, threatened claims against the Company or any of its Subsidiaries
alleging a violation of Environmental Law; and (v) neither the Company nor any
of its Subsidiaries has received written notice alleging that the Company or any
of its Subsidiaries is in violation of any Environmental Law or is potentially
liable for the costs of investigating or remediating contaminated property
pursuant to any Environmental Law. As used herein, "Environmental Law" means any
law, regulation, rule, order, decree, or common law relating to the protection
of the environment. "Hazardous Substance" means any substance that is listed,
classified or regulated in any concentration under any Environmental Law
including petroleum products, asbestos and polychlorinated biphenyls.
Notwithstanding anything to the contrary in this Agreement, this Section 3.1(s)
sets forth the sole and exclusive representations and warranties of the Company
or any of its Subsidiaries with regard to any environmental matters.
(t) PROPERTIES. Section 3.1(t) of the Company Disclosure
Schedule contains a true and complete list, as of June 17, 1999, of all real
properties owned by the Company or any of its Subsidiaries. The Company has
delivered a list, which is true and complete in all material respects, of all
real properties leased by the Company or any of its Subsidiaries in the United
States, Canada and the United Kingdom as of June 17, 1999. Each of the Company
and its Subsidiaries has good and marketable title to all properties, assets and
rights of any kind whatsoever whether real, personal or mixed, and whether
tangible or intangible owned by it (collectively, the "Company Assets"), in each
case free and clear of all liens and other encumbrances except those which,
individually or in the aggregate, are not reasonably likely to have a Material
Adverse Effect on the Company. There are no pending or, to the knowledge of the
Company, threatened condemnation proceedings against or affecting any Company
Asset, and none of the Company Assets is subject to any commitment or other
arrangement for its sale to a third party outside the ordinary course of
business, which either individually or in the aggregate are not reasonably
likely to have a Material Adverse Effect on the Company.
(u) CUSTOMERS AND SUPPLIERS. Since February 6, 1999 through
the date hereof, there has been no termination, cancellation or curtailment of
the business relationship of the Company with (i) any customer (other than
retail consumers) or supplier or group of affiliated customers or suppliers or
(ii) any joint venture or alliance partners, in each case which is reasonably
likely to result in a Material Adverse Effect on the Company, and the Company
has not received written notice of any such termination, cancellation or
curtailment.
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(v) FRANCHISE.
(i) To the Company's knowledge, each agreement,
instrument or document executed by the Company or any of its
Subsidiaries in connection with the granting or operation of a
franchise ("Franchise Agreement") represents the legal, valid and
binding obligation of the franchisee thereunder, subject to any
franchisee's rights in bankruptcy, and is enforceable against such
franchisee in accordance with its terms except as is not reasonably
likely, individually or in the aggregate, to have a Material Adverse
Effect on the Company. The Company is not in violation of any Franchise
Agreement to which it is a party except for violations which are not
reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect on the Company.
(ii) The Company has delivered to Parent a true and
correct copy of Company's Uniform Franchise Offering Circular ("UFOC")
which is currently being used in connection with the offer to sell and
sale of its franchises in the United States. The UFOC, and all UFOCs
previously used by Company and/or its Subsidiaries since it commenced
franchising do not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except as is
not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on the Company.
(iii) The Company has maintained, operated and
administered its and/or its Subsidiaries' national advertising fund
("Fund") in compliance with Company's legal responsibilities
established by its Franchise Agreements and in any other agreements or
understandings with respect to the Fund entered into the franchisees,
suppliers, vendors and others except where failure to comply,
individually or in the aggregate, is not reasonably likely to have a
Material Adverse Effect on the Company.
3.2 REPRESENTATIONS AND WARRANTIES OF PARENT. Except as specifically
set forth in the Parent Disclosure Schedule delivered by Parent to the Company
dated as of the date of this Agreement (the "Parent Disclosure Schedule") or as
disclosed in the Parent's Annual Report for the year ended December 31, 1998
publicly available prior to the date hereof, Parent represents and warrants to
the Company as follows:
(a) ORGANIZATION, STANDING AND POWER. Parent has been duly
organized and is validly existing under the laws of its jurisdiction of
organization. Parent is duly qualified or otherwise authorized to do business in
each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification necessary, except where the
failure so to qualify or be so authorized is not reasonably likely to have a
Material Adverse Effect on Parent.
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Parent has the requisite corporate power and corporate authority, in all
material respects, to own, lease and operate its properties and to carry on its
businesses as they are now being conducted. Parent is not in violation of any
provisions of its Organizational Documents in any material respect.
(b) AUTHORITY; NO CONFLICTS.
(i) Parent has all requisite corporate power and
corporate authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action
on the part of Parent and no other corporate proceedings are necessary
to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by Parent and, assuming due execution by the Company,
constitutes a valid and binding agreement of Parent, enforceable
against it in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium
and other similar laws relating to or affecting creditors generally, or
by general equity principles (regardless of whether such enforceability
is considered in a proceeding in equity or at law). The Supervisory
Board of Parent has, at a meeting duly called and held, unanimously
approved the transactions contemplated by this Agreement.
(ii) The execution and delivery of this Agreement do
not or will not, as the case may be, and the consummation of the
transactions contemplated hereby will not, result in any Violation
pursuant to: (A) any provision of the Organizational Documents of
Parent or (B) except as is not reasonably likely to have a Material
Adverse Effect on Parent or prevent or materially delay the
consummation of the transactions contemplated hereby and subject to
obtaining or making the consents, approvals, orders, authorizations,
registrations, declarations and filings referred to in paragraph (iii)
below, the terms, provisions or conditions of any loan or credit
agreement, note, mortgage, bond, indenture, lease, compensation or
benefit plan or grant or award made pursuant thereto, or other
agreement, obligation, instrument, contract, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to Parent, or its properties or assets.
(iii) No consent, registration, permit, approval,
order or authorization of, or registration, declaration or filing with,
any Governmental Entity or foreign securities exchange is required by
or with respect to Parent in connection with the execution and delivery
of this Agreement by Parent or the consummation by Parent of the
transactions contemplated hereby, except for (A) the consents,
approvals, orders, authorizations, registrations, declarations and
filings required under or in relation to clause (x) of Section
3.1(c)(iii) as applicable, (B) any filings required to be made or
consents that have to be obtained or arrangements that have to be made
in order to ensure that the United States
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government or any agency thereof will not challenge the consummation of
the transactions contemplated hereby on national security grounds and
(C) such consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to make or obtain is not
reasonably likely to have a Material Adverse Effect on Parent or
prevent the consummation of the transactions contemplated hereby.
(c) INFORMATION SUPPLIED.
(i) None of the information supplied or to be
supplied by Parent or Merger Sub for inclusion or incorporation by
reference in (A) the Offer Documents or (B) the information supplied or
to be supplied by Parent or Merger Sub for inclusion or incorporation
by reference in the Proxy Statement, if any, the Schedule 14D-9 and any
other documents to be filed with the SEC or any other Governmental
Entity or foreign securities exchange in connection with the
transactions contemplated hereby, including any amendment or supplement
to such documents, will, at the respective times such documents are
filed, and, with respect to the Proxy Statement, if any, and the Offer
Documents, when first published, sent or given to stockholders of the
Company, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the
circumstances under which they are made, not false or misleading or, in
the case of the Proxy Statement, if any, or any amendment thereof or
supplement thereto, at the time of the Company Stockholders Meeting, if
any, and at the Effective Time, contain any untrue statement of a
material fact, or omit to state any material fact required to be stated
therein or necessary in order to make the statements made therein, in
the light of the circumstances under which they are made, not false or
misleading or necessary to correct any statement in any earlier
communication with respect to the Offer or the solicitation of proxies
for the Company Stockholders Meeting, if any, which shall have become
false or misleading. The Offer Documents will comply as to form in all
material respects with the requirements of the Exchange Act and
Securities Act and the rules and regulations of the SEC thereunder.
(ii) Notwithstanding the foregoing provisions of this
Section 3.2(c), no representation or warranty is made by Parent or
Merger Sub with respect to statements made or incorporated by reference
in the Proxy Statement, if any, or the Offer Documents based on
information supplied by the Company for inclusion or incorporation by
reference therein.
(d) VOTE REQUIRED. No vote of the holders of any capital stock
of Parent is necessary to approve this Agreement and the transactions
contemplated hereby.
(e) BROKERS OR FINDERS. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any broker's
or finder's fee or any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement based
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upon arrangements made by or on behalf of Parent on Merger Sub, except J. P.
Morgan & Co. Incorporated and its affiliates.
(f) OWNERSHIP OF COMPANY CAPITAL STOCK. As of the date of this
Agreement, neither Parent nor any of its Subsidiaries (i) beneficially owns,
directly or indirectly or (ii) is party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of, in
case of either clause (i) or (ii), shares of capital stock of the Company.
(g) LITIGATION. As of the date of this Agreement, there is no
litigation, arbitration, claim, suit, action, investigation or proceeding
pending or, to the knowledge of Parent, threatened against or affecting Parent
or any of its Subsidiaries or any of their respective properties or assets,
which is reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Parent or is reasonably likely to prevent the consummation of
the transactions contemplated by this Agreement, nor is there any judgment,
award, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against Parent or any of its Subsidiaries which is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Parent.
(h) FINANCING. Parent will have the funds necessary to
consummate the Offer and the Merger on the terms contemplated by this Agreement
and will provide such funds to Merger Sub at or prior to the consummation of the
Offer and the Merger, as applicable.
3.3 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.
Parent and Merger Sub represent and warrant to the Company as follows:
(a) ORGANIZATION AND CORPORATE POWER. Merger Sub is an
indirect wholly owned Subsidiary of Parent and a corporation duly incorporated,
validly existing and in good standing under the laws of Delaware.
(b) CORPORATE AUTHORIZATION. Merger Sub has all requisite
corporate power and corporate authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance by Merger Sub of this Agreement and the consummation by Merger Sub
of the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action on the part of Merger Sub and no other corporate
proceedings are necessary to authorize this Agreement or to consummate the
transactions as contemplated hereby. This Agreement has been duly executed and
delivered by Merger Sub and, assuming due execution by the Company, constitutes
a valid and binding agreement of Merger Sub, enforceable against it in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to or affecting creditors generally, or by general equity principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law). The Board of Directors of Merger Sub has unanimously approved
the transactions contemplated by this Agreement.
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(c) NON-CONTRAVENTION.
(i) The execution and delivery of this Agreement do
not or will not, as the case may be, and the consummation of the
transactions contemplated hereby will not, result in any Violation
pursuant to: (A) any provisions of the Organizational Documents of
Merger Sub or (B) except as is not reasonably likely to have a Material
Adverse Effect on Parent or prevent the consummation of the
transactions contemplated hereby and subject to obtaining or making the
consents, approvals, orders, authorizations, registrations,
declarations and filings referred to in paragraph (ii) below, the
terms, provisions or conditions of any loan or credit agreement, note,
mortgage, bond, indenture, lease, compensation or benefit plan or any
grant or award made pursuant thereto or other agreement, obligation,
instrument, contract, permit, concession, franchise, license, judgment,
order, writ, injunction, award, decree, statute, law, ordinance, rule
or regulation applicable to Merger Sub or any of its properties or
assets.
(ii) No consent, registration, permit, approval,
order or authorization of, or registration, declaration, notice, report
or filing with, any Governmental Entity or foreign securities exchange
is required by or with respect to Merger Sub in connection with the
execution and delivery of this Agreement by Merger Sub or the
consummation by Merger Sub of the transactions contemplated hereby,
except for (A) the consents, approvals, orders, authorizations,
registrations, declarations and filings required under or in relation
to clause (x) of Section 3.1(c)(iii) as applicable, (B) any filings
required to be made or consents that have to be obtained or
arrangements that have to be made in order to ensure that the United
States government or any agency thereof will not challenge the
consummation of the transactions contemplated hereby on national
security grounds and (C) such consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of
which to make or obtain is not reasonably likely to have a Material
Adverse Effect on Parent or to prevent the consummation of the
transactions contemplated hereby.
(d) NO BUSINESS ACTIVITIES. Merger Sub is not and has never
been a party to any material agreements and has not conducted any activities
other than in connection with the organization of Merger Sub, the commencement
of the Offer, the negotiation and execution of this Agreement and the
consummation of the transactions contemplated hereby. Merger Sub has no
Subsidiaries.
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ARTICLE IV.
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 COVENANTS OF THE COMPANY. During the period from the date of this
Agreement and continuing until the Effective Time (except as expressly
contemplated or permitted by this Agreement, set forth in the Company Disclosure
Schedule (subject to Section 8.12) or to the extent that Parent shall otherwise
consent in writing):
(a) ORDINARY COURSE. The Company and its Subsidiaries shall
carry on their respective businesses in the usual, regular and ordinary course
in all respects, consistent with past practice and shall use their respective
reasonable best efforts to preserve intact their present business organizations
and preserve their existing relationships with customers, suppliers, employees,
Governmental Entities and others having business dealings with them, and shall
not enter into any material joint venture or other similar arrangement;
provided, however, that no action by the Company or its Subsidiaries with
respect to matters specifically addressed by any other provision of this Section
4.1 shall be deemed a breach of this Section 4.1(a) unless such action would
constitute a breach of one or more of such other provisions.
(b) DIVIDENDS; CHANGES IN SHARE CAPITAL. The Company shall
not, and shall not propose to, (i) declare or pay any dividends on or make other
distributions in respect of any of its capital stock, (ii) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for, shares of its capital stock, (iii) repurchase, redeem or otherwise acquire
any shares of its capital stock or any securities convertible into or
exercisable for any shares of its capital stock except as otherwise permitted
with respect to the payment of the option exercise price or tax withholding
under certain option agreements in effect on the date of this Agreement under
the Company Equity Plans, or (iv) effect any reorganization or recapitalization.
(c) ISSUANCE OF SECURITIES. The Company shall not and shall
cause its Subsidiaries not to issue, pledge, dispose of or encumber, deliver or
sell, or authorize or propose the issuance, disposition, encumbrance, pledge,
delivery or sale of, any shares of its capital stock of any class, any Company
Voting Debt or any securities convertible into or exercisable for, or any
rights, warrants or options to acquire, any such shares or Company Voting Debt,
or enter into any agreement with respect to any of the foregoing, other than the
issuance of Company Common Stock upon the exercise of stock options or rights to
purchase Company Common Stock outstanding on the date of this Agreement in
accordance with the terms of the Company Equity Plans as in effect on the date
of this Agreement and other than upon the exercise of the Warrants.
(d) ORGANIZATIONAL DOCUMENTS. Except to the extent required to
comply with their respective obligations hereunder or required by law, the
Company and its Subsidiaries shall not amend or propose to amend their
respective Organizational Documents.
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(e) INDEBTEDNESS. The Company shall not (i) incur any
indebtedness for borrowed money or guarantee any such indebtedness or issue or
sell any debt securities or warrants or rights to acquire any debt securities of
the Company or guarantee any debt securities of other Persons other than
indebtedness (including short term borrowings) of the Company or its
Subsidiaries to the Company or its Subsidiaries and other than in the ordinary
course of business, (ii) make any loans, advances or capital contributions to,
or investments in, any other Person, other than by the Company or its
Subsidiaries to or in the Company or its Subsidiaries or (iii) pay, discharge,
modify or satisfy any claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than in the case of
clauses (ii) and (iii), loans, advances, capital contributions, investments,
payments, discharges or satisfactions incurred or committed to in the ordinary
course of business consistent with past practice.
(f) COMPENSATION. The Company shall not, and shall not permit
its Subsidiaries to (i) increase the compensation payable or to become payable
to any of its executive officers or employees or (ii) take an action with
respect to the grant of any severance or termination pay, or stay, bonus or
other incentive arrangement (other than as required by applicable law or the
terms of any collective bargaining agreement or as required pursuant to benefit
plans and policies in effect on the date of this Agreement), except any such
increases or grants made in the ordinary course of business consistent with past
practice, pursuant to agreements, plans or policies existing on the date hereof
or as otherwise provided under this Agreement; provided, however that in no
event shall the Company grant, or permit to be granted, any options or other
awards under any Company Equity Plan after the date of this Agreement.
(g) TAX ELECTIONS. The Company shall not, and shall not permit
its Subsidiaries to, make any Tax election or change any method of accounting
for Tax purposes in a manner that is reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on the Company.
(h) EMPLOYMENT. The Company shall not, and shall not permit
its Subsidiaries to, release or otherwise terminate the employment of any
employee or hire any new employees, except in the ordinary course of business.
(i) BENEFIT PLANS AND AGREEMENTS.
(i) The Company shall not, and shall not permit its
Subsidiaries to, establish, adopt or enter into any new employee
benefit plans or agreements (including pension, profit sharing, bonus,
incentive compensation, director and officer compensation, severance,
medical, disability, life or other insurance plans, and employment
agreements) or amend or modify any existing Company Benefit Plans, or
extend coverage of the Company
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Benefit Plans, except as required by applicable law, the terms of any
collective bargaining agreement.
(ii) Subject to Section 5.11, simultaneous with the
execution of this Agreement, the Company shall freeze all Company
Equity Plans as of the date of this Agreement, such that, as a result
thereof, no officer or employee shall be entitled to purchase any
additional Company Common Stock under any Company Equity Plan (other
than pursuant to currently outstanding stock options and stock purchase
periods) and no stock options or other awards shall be granted under
any Company Equity Plan after the date of this Agreement.
(j) OTHER ACTIONS.
(i) The Company shall not, and shall not permit its
Subsidiaries to, take any action that is reasonably likely to result in
any of the Offer Conditions not being satisfied.
(ii) The Company shall not, and shall not permit its
Subsidiaries to, (A) transfer, lease, license, guarantee, sell,
mortgage, pledge, dispose of or encumber any assets except in the
ordinary course of business consistent with past practice; (B)
authorize capital expenditures in any manner not reflected in the
capital budget of the Company as currently in effect or make any
acquisition of, or investment in, any business or stock of any other
person or entity except in the ordinary course of business consistent
with past practice; (C) settle or compromise any material claims or
litigation or, except in the ordinary course of business consistent
with past practice, modify, amend or terminate any of the Company
Material Contracts or waive, release or assign any material rights or
claims except, in each case, as is not reasonably likely, individually
or in the aggregate, to have a Material Adverse Effect on the Company;
or (D) permit any material insurance policy naming it as a beneficiary
or a loss payable payee to be canceled or terminated without the prior
written approval of Parent, except in the ordinary course of business
consistent with past practice; or (E) terminate the employment of any
employee who is covered by a change in control, employment, termination
or similar agreement, except for Cause (as defined in such agreements)
or permit circumstances to exist that would allow such employee to
terminate employment and be entitled to severance or other payments
thereunder.
4.2 COVENANTS OF PARENT AND MERGER SUB. During the period from the date
of this Agreement and continuing until the Effective Time (except as expressly
contemplated or permitted by this Agreement or to the extent that the Company
shall otherwise consent in writing) Parent shall not, and shall not permit any
of its Subsidiaries to, take any action that is reasonably likely to result in
(i) any of the representations and warranties of Parent and Merger Sub set forth
in this Agreement (x) to the extent qualified by Material Adverse Effect
becoming untrue or inaccurate and (y) to the
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extent not qualified by Material Adverse Effect becoming untrue or inaccurate,
except that this clause (y) shall be deemed satisfied so long as such
representations and warranties being untrue or inaccurate, taken together, do
not have a Material Adverse Effect on Parent, or (ii) any of the Offer
Conditions not being satisfied.
4.3 ADVICE OF CHANGES; GOVERNMENT FILINGS.
(a) Each party shall (i) confer on a regular and frequent
basis with the other, (ii) report (to the extent permitted by law, regulation
and any applicable confidentiality agreement) to the other on operational
matters and (iii) promptly advise the other orally and in writing of (A) any
representation or warranty made by it in this Agreement (x) to the extent
qualified by Material Adverse Effect becoming untrue or inaccurate and (y) to
the extent not qualified by Material Adverse Effect becoming untrue or
inaccurate, except that this clause (y) shall be deemed satisfied so long as
such representations or warranties being untrue or inaccurate, taken together,
do not have a Material Adverse Effect on the Company or Parent, as the case may
be, or (B) the failure by it to comply with or satisfy in any material respect
any covenant, condition or agreement required to be complied with or satisfied
by it under this Agreement; provided, however, that no such notification shall
affect the representations, warranties, covenants or agreements of the parties
or the conditions to the obligations of the parties under this Agreement. The
Company shall file all reports required to be filed by it with the SEC (and all
other Governmental Entities) between the date of this Agreement and the
Effective Time and shall (to the extent permitted by law or regulation or any
applicable confidentiality agreement) deliver to Parent copies of all such
reports promptly after the same are filed. Subject to applicable laws relating
to the exchange of information, each of the Company and Parent shall have the
right to review in advance, and to the extent practicable each will consult with
the other, with respect to all the information relating to the other party and
each of their respective Subsidiaries, which appears in any filings,
announcements or publications made with, or written materials submitted to, any
third party or any Governmental Entity in connection with the transactions
contemplated by this Agreement. In exercising the foregoing right, each of the
parties hereto agrees to act reasonably and as promptly as practicable. Each
party agrees that, to the extent practicable, it will consult with the other
party with respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Entities necessary or
advisable to consummate the transactions contemplated by this Agreement and each
party will keep the other party apprised of the status of matters relating to
completion of the transactions contemplated hereby.
(b) Each party shall cooperate with each other and shall use
its respective reasonable best efforts to reach a mutually satisfactory
arrangement with the United States government or an appropriate agency thereof
so that Parent's acquisition of the Company Common Stock would not adversely
affect the Company's current business operations with the United States
government (including, the continued operation of Company affiliated or
franchise stores at United States military bases and facilities).
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ARTICLE V.
ADDITIONAL AGREEMENTS
5.1 APPROVAL BY THE COMPANY'S STOCKHOLDERS.
(a) If required by the DGCL or the Company's Organizational
Documents in order to consummate the Merger, the Company shall, as soon as
practicable following the acquisition by Merger Sub of the shares of the Company
Common Stock pursuant to the Offer, duly call, give notice of, convene and hold
a meeting of its stockholders (the "Company Stockholders Meeting") for the
purpose of obtaining the Required Company Votes, and, the Company shall, through
the Company Board, recommend to its stockholders that they vote in favor of the
adoption of this Agreement; provided, however, that the Company Board may
withdraw, modify or change such recommendation to the extent that the Company
Board determines to do so in exercise of its fiduciary duties or as permitted
under Section 5.4. Parent shall vote or cause to be voted all the shares of
Company Common Stock owned of record by Parent, Merger Sub or any of its other
Subsidiaries in favor of the approval of the Merger and adoption of this
Agreement.
(b) Notwithstanding the preceding paragraph or any other
provision of this Agreement, in the event Parent, Merger Sub or any other
Subsidiary of Parent shall beneficially own, in the aggregate, at least 90% of
the outstanding shares of the Company Common Stock, the Company shall not be
required to call the Company Stockholders Meeting or to file or mail the Proxy
Statement, and the parties hereto shall, at the request of Parent and subject to
Article VI, take all necessary and appropriate action to cause the Merger to
become effective as soon as practicable after the acceptance for payment of and
payment for shares of the Company Common Stock by Merger Sub pursuant to the
Offer without a meeting of stockholders of the Company in accordance with
Section 253 of the DGCL.
(c) If required by applicable law, as soon as practicable
following Parent's request, the Company and Parent shall prepare and file with
the SEC the Proxy Statement. Each of the Company and Parent shall use reasonable
best efforts to cause the Proxy Statement to be mailed to the Company's
stockholders, as promptly as practicable.
5.2 ACCESS TO INFORMATION. From the date hereof until the earlier of
the Effective Time or the termination of this Agreement, upon reasonable notice,
the Company shall afford to the officers, employees, accountants, counsel,
financial advisors and other representatives of Parent ("Parent
Representatives") reasonable access to all of its and its Subsidiaries
properties, books, contracts, commitments and records (including security
position listings or other information concerning beneficial and record owners
of the Company's securities) and its officers, management employees and
representatives and, during such period, the Company shall furnish promptly to
Parent, consistent with its legal obligations, all information concerning its
business, properties and personnel as the other party may reasonably request.
Such information shall be held in confidence
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to the extent required by, and in accordance with, the provisions of the letter
(the "Confidentiality Agreement") dated May 26, 1999, between the Company and
Parent, which Confidentiality Agreement shall remain in full force and effect.
5.3 APPROVALS AND CONSENTS; COOPERATION. Each of the Company and Parent
shall cooperate with each other and use (and shall cause their respective
Subsidiaries to use) its reasonable best efforts to take or cause to be taken
all actions, and do or cause to be done all things, necessary, proper or
advisable on their part under this Agreement and applicable laws to consummate
and make effective the Offer and the Merger and the other transactions
contemplated by this Agreement as soon as practicable, including (i) preparing
and filing as promptly as practicable all documentation to effect all necessary
applications, notices, petitions, filings and other documents and to obtain as
promptly as practicable all consents, waivers, licenses, orders, registrations,
approvals, permits and authorizations necessary or advisable to be obtained from
any third party and any Governmental Entity in order to consummate the Offer,
the Merger and the other transactions contemplated by this Agreement and (ii)
taking all reasonable steps as may be necessary to obtain all such consents,
waivers, licenses, registrations, permits, authorizations, orders and approvals.
Without limiting the generality of the foregoing, each of the Company and Parent
agrees to make all necessary filings in connection with the Required Regulatory
Approvals as promptly as practicable after the date of this Agreement, and in
any event no later than 9 Business Days after the date hereof, and to use its
reasonable best efforts to furnish or cause to be furnished, as promptly as
practicable, all information and documents requested with respect to such
Required Regulatory Approvals and shall otherwise cooperate with the applicable
Governmental Entity in order to obtain any Required Regulatory Approvals in as
expeditious a manner as possible. Each of the Company and Parent shall use its
reasonable best efforts to resolve such objections, if any, as any Governmental
Entity may assert with respect to this Agreement and the transactions
contemplated hereby in connection with the Required Regulatory Approvals. In the
event that a suit is instituted by a Person or Governmental Entity challenging
this Agreement and the transactions contemplated hereby as violative of
applicable antitrust or competition laws, each of the Company and Parent shall
use its reasonable best efforts to resist or resolve such suit. The Company and
Parent each shall, upon request by the other, furnish the other with all
information concerning itself, its Subsidiaries, directors, officers and
stockholders and such other matters as may reasonably be necessary or advisable
in connection with the Offer Documents, Schedule 14D-9, Proxy Statement or any
other statement, filing, notice or application made by or on behalf of the
Company, Parent or any of their respective Subsidiaries to any third party and
any Governmental Entity in connection with the Offer, the Merger or the other
transactions contemplated by this Agreement.
5.4 ACQUISITION PROPOSALS.
(a) The Company agrees that neither the Company, its
Subsidiaries, nor any of the respective officers and directors of the Company or
its Subsidiaries, shall and the Company shall direct and use its best efforts to
cause its employees, agents and representatives (including any
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investment banker, attorney or accountant retained by the Company or any of its
Subsidiaries) not to, take or cause, directly or indirectly, any of the
following actions with any party other than Parent, Merger Sub or their
respective designees: (i) directly or indirectly solicit, encourage, initiate,
participate in or otherwise facilitate (including by way of furnishing
information) any negotiations, inquiries or discussions with respect to any
offer, indication or proposal to acquire all or more than 15% of the Company's
business, assets or capital shares whether by merger, consolidation, other
business combination, purchase of assets, reorganization, tender or exchange
offer or otherwise (each of the foregoing, an "Acquisition Proposal") or (ii)
disclose, in connection with an Acquisition Proposal, any information or provide
access to its properties, books or records. The Company will immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any of the foregoing. The
Company will take the necessary steps to promptly inform the individuals or
entities referred to in the first sentence of Section 5.4(a) hereof of the
obligations undertaken in this Section 5.4. The Company also will promptly
request any Person which may have heretofore executed a confidentiality
agreement in connection with its consideration of acquiring the Company and/or
any of its Subsidiaries to return or destroy all confidential information
heretofore furnished to such person by or on behalf of the Company.
(b) Notwithstanding anything to the contrary contained in
Section 5.4(a) or elsewhere in this Agreement, prior to the consummation of the
Offer, the Company may participate in discussions or negotiations with, and
furnish non-public information, and afford access to the properties, books,
records, officers, employees and representatives of the Company to any Person,
entity or group if such Person, entity or group has delivered to the Company,
prior to the consummation of the Offer, and in writing, an Acquisition Proposal
which is not subject to any financing contingency and which the Company Board in
its good faith judgment (after consultation with its independent financial
advisor) determines if consummated would be more favorable, from a financial
point of view, to the Company's stockholders than the transactions contemplated
by this Agreement and with respect to which the Company Board receives advice of
its outside legal counsel that the Company Board would breach its fiduciary
duties if it did not accept the Acquisition Proposal (a "Superior Proposal"). In
the event the Company receives a Superior Proposal, nothing contained in this
Agreement (but subject to the terms of this paragraph (b)) will prevent the
Company Board from executing or entering into an agreement relating to such
Superior Proposal and recommending such Superior Proposal to its stockholders,
if the Company Board determines (after consultation with its independent
financial advisor and outside legal counsel) that its fiduciary duties require
it to do so; in such case, the Company Board may withdraw, modify or refrain
from making its recommendation of the Offer and the Merger; provided, however
that the Company (i) shall have promptly notified Parent, and in any event
within 24 hours, of any Acquisition Proposal received by, any such information
requested from, or any such negotiations or discussions sought to be initiated
or recommenced with, the Company or any of its Subsidiaries, indicating, in
connection with such notice, the name of the Person making the Acquisition
Proposal or taking such action and, in reasonable detail, the significant terms
of any such Acquisition Proposal and including with such
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notice any documentation relating to such Acquisition Proposal, (ii) shall
provide Parent at least 48 hours prior written notice of the Company's intention
to execute or enter into an agreement relating to such Superior Proposal and
(iii) may only terminate this Agreement by written notice to Parent provided no
sooner than 48 hours after Parent's receipt of a copy of such Superior Proposal
(or a detailed description of the significant terms and conditions thereof).
5.5 EMPLOYEE BENEFITS. Parent shall or shall cause the Surviving
Corporation to comply with the provisions of the letter of even date herewith
from Parent to the Company relating to employee benefit matters.
5.6 FEES AND EXPENSES. Whether or not the transactions contemplated
hereby are consummated, all Expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such Expenses, except (a) if the Merger is consummated, the Surviving
Corporation shall pay, or cause to be paid, any and all property or transfer
taxes imposed on the Company or its Subsidiaries, (b) the Expenses incurred in
connection with the printing, filing and mailing to stockholders of the Proxy
Statement, if any, and the solicitation of stockholder approvals shall be shared
equally by the Company and Parent, and (c) as provided in Section 7.2. As used
in this Agreement, "Expenses" includes all out-of-pocket expenses (including,
without limitation, (i) all fees and expenses of counsel, accountants,
investment bankers, experts and consultants to a party hereto and its affiliates
and (ii) the fees, costs and expenses relating to obtaining financing for the
transactions contemplated hereby, including commitment fees and the like)
incurred by a party or on its behalf in connection with or related to the
authorization, preparation, negotiation, execution and performance of this
Agreement and the transactions contemplated hereby, including the preparation,
printing, filing and mailing of the Offer Documents and the Proxy Statement, if
any, and the solicitation of stockholder approvals and all other matters related
to the transactions contemplated hereby.
5.7 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. Parent shall
cause to be maintained in effect (i) the current provisions regarding
indemnification of current or former officers and directors (each an
"Indemnified Party") contained in the Organizational Documents of the Company or
its Subsidiaries and in any agreements between an Indemnified Party and the
Company or its Subsidiaries, and (ii) for a period of six years, the current
policies of directors' and officers' liability insurance and fiduciary liability
insurance maintained by the Company (provided that Parent or the Surviving
Corporation may substitute therefor policies of at least the same coverage and
amounts containing terms and conditions which are, in the aggregate, no less
advantageous to the insured and provided that such substitution shall not result
in any gaps or lapses in coverage with respect to matters occurring prior to the
Effective Time) with respect to claims arising from facts or events that
occurred on or before the Effective Time. Parent shall not be obligated to pay
annual premiums to the extent such premiums exceed 150% of the annual premiums
paid as of the date hereof by the Company for such insurance (such 150% amount,
the "Maximum Premium"). If such insurance coverage cannot be obtained at all, or
can only be obtained at an annual premium in excess
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of the Maximum Premium, Parent shall maintain the most advantageous policies of
directors' and officers' insurance obtainable for an annual premium equal to the
Maximum Premium. The Company represents that the Maximum Premium is U.S.
$437,250. This covenant is intended to be for the benefit of, and shall be
enforceable by, each of the Indemnified Parties and their respective heirs and
legal representatives.
5.8 PUBLIC ANNOUNCEMENTS. So long as this Agreement is in effect, the
Company and Parent shall use all reasonable best efforts to develop a joint
communications plan and each party shall use all reasonable best efforts (i) to
ensure that all press releases and other public statements with respect to the
transactions contemplated hereby shall be consistent with such joint
communications plan and (ii) unless otherwise required by applicable law or by
obligations pursuant to any listing agreement with or rules of any securities
exchange, to consult with each other before issuing any press release or
otherwise making any public statement with respect to this Agreement or the
transactions contemplated hereby.
5.9 TAKEOVER STATUTES. If any Takeover Statute shall become applicable
to the transactions contemplated hereby, the Company and the members of the
Company Board, subject to its fiduciary duties, shall grant such approvals and
take such actions as are reasonably necessary so that the transactions
contemplated hereby may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise act to eliminate or minimize the effects of
such Takeover Statute on the transactions contemplated hereby.
5.10 THIRD PARTY STANDSTILL AGREEMENTS; TORTIOUS INTERFERENCE. During
the period from the date of this Agreement through the Effective Time, the
Company shall not terminate, amend, modify or waive any provision of any
confidentiality or standstill or similar agreement to which the Company or any
of its Subsidiaries is a party (other than involving Parent). Subject to the
foregoing, during such period, the Company agrees to enforce, to the fullest
extent permitted under applicable law, the provisions of any such agreements,
including obtaining injunctions to prevent any breaches of such agreements and
to enforce specifically the terms and provisions thereof and any court having
jurisdiction.
5.11 COMPANY OPTION PLANS. Each outstanding option (a "Company Stock
Option") to purchase Company Common Stock, whether or not fully exercisable,
shall be canceled in exchange for the right to receive a cash payment at the
Effective Time in an amount equal to the product of (x) the excess, if any, of
the Merger Consideration per share over the exercise price per share of the
Company Common Stock subject to such Company Stock Options and (y) the number of
shares of Company Common Stock subject to such Company Stock Options. All
amounts payable pursuant to this Section 5.11 shall be subject to any required
withholding of taxes and shall be paid without interest. The Company shall use
its reasonable best efforts to take such actions as may be necessary to
implement the provisions of this Section 5.11.
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ARTICLE VI.
CONDITIONS PRECEDENT
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
obligations of the Company, Parent and Merger Sub to effect the Merger are
subject to the satisfaction or waiver (subject to Section 1.4(c)) on or prior to
the Effective Time of the following conditions:
(a) STOCKHOLDER APPROVAL. The Company shall have obtained all
approvals of holders of shares of capital stock of the Company necessary to
approve this Agreement and all the transactions contemplated hereby (including
the Merger) to the extent required by law.
(b) NO INJUNCTION OR RESTRAINTS; ILLEGALITY. No temporary
restraining order, preliminary or permanent injunction or other order issued by
a court or other Governmental Entity of competent jurisdiction shall be in
effect and have the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger.
(c) REQUIRED REGULATORY APPROVALS. All authorizations,
consents, orders and approvals of, and declarations and filings with, and all
expirations of waiting periods imposed by, any Governmental Entity which, if not
obtained in connection with the consummation of the transactions contemplated
hereby, is reasonably likely to have a Material Adverse Effect on the Company or
prevents the Company, Parent or Merger Sub from consummating the transactions
contemplated hereby (collectively, "Required Regulatory Approvals"), shall have
been obtained, have been declared or filed or have occurred, as the case may be,
and all such Required Regulatory Approvals shall be in full force and effect.
(d) COMPLETION OF THE OFFER. Merger Sub shall have (i)
commenced the Offer pursuant to Section 1.1 hereof and (ii) purchased, pursuant
to the terms and conditions of such Offer, all shares of Company Common Stock
duly tendered and not withdrawn; provided, however, that neither Parent nor
Merger Sub shall be entitled to rely on the condition in clause (ii) above if
either of them shall have failed to purchase shares of Company Common Stock
pursuant to the Offer in breach of their obligations under this Agreement.
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ARTICLE VII.
TERMINATION AND AMENDMENT
7.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, by action taken or authorized by the Board of Directors of
the terminating party or parties, whether before or after approval of this
Agreement and the matters contemplated herein, including the Merger, by the
stockholders of the Company:
(a) By mutual written consent of Parent and the Company,
by action of their respective Boards of Directors;
(b) By either the Company or Parent if the Offer shall
not have been consummated by the date which is three months from the date of
this Agreement (the "Outside Date"); provided that the right to terminate this
Agreement under this Section 7.1(b) shall not be available to any party whose
failure to fulfill any obligation or condition under this Agreement has been the
cause of, or resulted in, the failure of the Offer to be consummated on or
before such date; notwithstanding the foregoing, if the sole reason the Offer
shall not have been consummated by the Outside Date is the failure to have
obtained all Required Regulatory Approvals prior to the date which is three
months from the date of this Agreement, the Outside Date shall be extended for a
period of 30 days;
(c) By Parent if any Person other than Parent, Merger
Sub, or any of their affiliates or any group of which any of them is a member,
shall have entered into a definitive agreement or an agreement in principle with
the Company or any of its Subsidiaries with respect to an Acquisition Proposal
or the Company Board (or any committee thereof) shall have adopted a resolution
approving any of the foregoing;
(d) By either the Company or Parent if any court or other
Governmental Entity shall have issued an order, decree or ruling or taken any
other action (which order, decree, ruling or other action the parties shall have
used their reasonable best efforts to resist, resolve or lift, as applicable,
subject to the provisions of Section 5.3) permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement, and such
order, decree, ruling or other action shall have become final and nonappealable;
(e) By Parent if (i) the Company Board (or any committee
thereof) shall have withdrawn or adversely modified (including by amendment of
the Schedule 14D-9) its approval or recommendation of the Offer, the Merger or
this Agreement or the Company Board, upon request by Parent following receipt by
the Company of an Acquisition Proposal, shall fail to reaffirm such approval or
recommendation within ten Business Days after such request or shall have
resolved to do any of the foregoing; (ii) the Company Board shall have
recommended to the stockholders of the Company that they approve an Acquisition
Proposal other than transactions contemplated by this
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Agreement; or (iii) a tender offer or exchange offer is commenced that, if
successful, would result in any Person becoming a "beneficial owner" (as such
term is defined under Regulation 13D under the Exchange Act) of 15% or more of
the outstanding shares of Company Common Stock (other than by Parent or an
affiliate of Parent) and the Company Board recommends that the stockholders of
the Company tender their shares in such tender or exchange offer;
(f) By the Company, prior to the purchase by Merger Sub of
shares of Company Common Stock pursuant to the Offer, if the Company Board
determines to accept a Superior Proposal pursuant to Section 5.4(b), provided
that the Company shall not be entitled to terminate this Agreement pursuant to
this Section 7.1(f) unless the Company concurrently enters into an agreement
with respect to a Superior Proposal pursuant to Section 5.4(b) and pays the
Termination Fee pursuant to Section 7.2(b);
(g) By Parent, prior to the purchase by Merger Sub of
shares of Company Common Stock pursuant to the Offer, upon a material breach of
any material covenant or agreement on the part of the Company set forth in this
Agreement, or if the Offer Condition contained in paragraph (c)(i) or (ii) of
Annex A is not capable of being satisfied or cured by the earlier of (x) the
Outside Date or (y) within 30 days after any executive officer of the Company
becomes aware of the breach of any representation or warranty resulting in the
failure to satisfy such Offer Condition;
(h) By the Company, upon a material breach of any material
covenant or agreement on the part of Parent or Merger Sub set forth in this
Agreement, or upon the failure of any representation or warranty of Parent or
Merger Sub set forth in this Agreement (i) to the extent such representation or
warranty is qualified by Material Adverse Effect, to be true and correct and
(ii) to the extent such representation or warranty is not qualified by Material
Adverse Effect, to be true and correct, except that, in the case of this clause
(ii), no failure shall be deemed to have occurred so long as such failure, taken
together with all other such failures, does not have a Material Adverse Effect
on Parent in the case of each of clause (i) and (ii) as of the date of this
Agreement and (except to the extent such representation or warranty speaks as of
an earlier date) as of the consummation of the Offer as though made on and as of
such date, and except that, in the case of each of clause (i) and (ii), no
failure shall be deemed to have occurred so long as such failure is capable of
being satisfied or cured by the earlier of (x) the Outside Date or (y) within 30
days after any executive officer of Parent becomes aware of the breach of any
representation or warranty resulting in such failure; or
(i) By the Company, if Merger Sub fails to (i) commence
the Offer or keep the Offer open as provided in Section 1.1 hereof or (ii)
purchase validly tendered shares of the Company Common Stock in violation of the
terms of the Offer or this Agreement.
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7.2 EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement by
either the Company or Parent as provided in Section 7.1, this Agreement shall
forthwith become void and there shall be no liability or obligation on the part
of Parent or the Company or their respective officers or directors except (i)
with respect to Section 5.6, this Section 7.2 and Section 8.5(a) and (ii) with
respect to any liabilities or damages incurred or suffered by a party as a
result of the willful and material breach by the other party of any of its
covenants or other agreements set forth in this Agreement.
(b) In the event that (x) this Agreement is terminated
pursuant to Section 7.1(c), Section 7.1(e) or Section 7.1(f), or (y) (i) the
Offer shall have remained open for a minimum of at least 20 Business Days from
the date that it is commenced and for such longer period as is required by
Section 1.1, (ii) after the date hereof any Person other than Parent or Merger
Sub or any of their respective Subsidiaries or affiliates shall have become the
beneficial owner of 15% or more of the outstanding shares of Company Common
Stock or made any Acquisition Proposal, (iii) the Minimum Condition shall not
have been satisfied and Merger Sub shall not have accepted for payment any
shares of Company Common Stock pursuant to the Offer, (iv) this Agreement shall
not have been terminated pursuant to Section 7.1(h) hereof, and (v) within
twelve months of the termination, expiration or withdrawal of the Offer, the
Company enters into an agreement providing for the consummation of an
Acquisition Proposal (as such term is defined in Section 5.4(a), except that the
reference in such definition to 15% shall be deemed a reference to 40% for
purposes of this clause (v) only) or any other Person (other than Parent or any
of its affiliates) becomes the beneficial owner of 40% or more of the
outstanding shares of Company Common Stock, then the Company shall pay the
Parent in cash (A) U.S. $60 million plus (B) up to U.S. $9 million of Parent's
documented Expenses incurred in connection with the Offer and Merger ((A) and
(B) together, the "Termination Fee"). The Termination Fee shall be payable by
wire transfer of immediately available funds upon such termination, in the case
of clause (x), or upon the earlier of the Company entering into an agreement for
an Acquisition Proposal or a Person becoming the beneficial owner of 40% or more
of the Company's outstanding shares of Company Common Stock, in the case of
clause (y). The Company acknowledges that the agreements contained in this
Section 7.2(b) are an integral part of the transactions contemplated in this
Agreement, and that, without these agreements, the Parent and Merger Sub would
not enter into this Agreement; accordingly, if the Company fails to promptly pay
the amount due pursuant to this Section 7.2(b), and, in order to obtain such
payment, Parent or Merger Sub commences a suit which results in a judgment
against the Company for the fee set forth in this paragraph (b), the Company
shall pay to Parent or Merger Sub its costs and Expenses (including attorneys'
fees) in connection with such suit, together with interest on the amount of the
fee at the prime rate of Citibank N.A. plus 2% per annum on the date such
payment was required to be made.
7.3 AMENDMENT. Subject to Section 1.4(c), this Agreement may be amended
by the parties hereto, by action taken or authorized by their respective Boards
of Directors, at any time
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before or after approval of the matters presented in connection with the Merger
by the stockholders of the Company, but, after any such approval, no amendment
shall be made which by law or in accordance with the rules of Nasdaq requires
further approval by such stockholders without such further approval. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
7.4 EXTENSION; WAIVER. Subject to Section 1.4(c), at any time prior to
the Effective Time, the parties hereto, by action taken or authorized by their
respective Boards of Directors, may, to the extent legally allowed, (i) extend
the time for the performance of any of the obligations or other acts of the
other parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed on behalf
of such party. No delay on the part of any party hereto in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, nor shall any
waiver on the part of any party hereto of any right, power or privilege
hereunder operate as a waiver of any other right, power or privilege hereunder,
nor shall any single or partial exercise of any right, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder. Unless otherwise provided, the rights
and remedies herein provided are cumulative and are not exclusive of any rights
or remedies which the parties hereto may otherwise have at law or in equity. The
failure of any party to this Agreement to assert any of its rights under this
Agreement or otherwise shall not constitute a waiver of those rights.
ARTICLE VIII.
GENERAL PROVISIONS
8.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS; NO
OTHER REPRESENTATIONS AND WARRANTIES. None of the representations and warranties
in this Agreement or in any instrument delivered pursuant to this Agreement
shall survive the Effective Time. This Section 8.1 shall not limit any covenant
or agreement of the parties which by its terms contemplates performance after
the Effective Time.
8.2 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed duly given (a) on the date of delivery if delivered
personally, (b) on the first Business Day following the date of dispatch if
delivered by a nationally recognized next-day courier service, (c) on the tenth
Business Day following the date of mailing if delivered by registered or
certified mail, return receipt requested, postage prepaid or (d) if sent by
facsimile transmission, with a copy mailed on the same day in the manner
provided in (a) or (b) above, when transmitted and receipt is confirmed by
telephone. All notices hereunder shall be delivered as set forth below, or
pursuant to such other instructions as may be designated in writing by the party
to receive such notice:
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(a) if to Parent or Merger Sub, to:
Koninklijke Numico N.V.
Rokkeveenseweg 49, 2712 PJ Zoetermeer
The Netherlands
Facsimile: 011-31-79-353-9671
Attention: Julitte van der Ven, General Counsel
with copies to:
Vedder Price Kaufmann & Kammholz
222 North LaSalle Street, Suite 2400
Chicago, IL 60601
Facsimile: (312) 609-5005
Attention: Guy E. Snyder
William J. Bettman
and
Winston & Strawn
35 West Wacker Drive
Chicago, IL 60601
Facsimile: (312) 558-5700
Attention: John L. MacCarthy
(b) if to the Company, to,
General Nutrition Companies, Inc.
300 Sixth Avenue
Pittsburgh, PA 15222
Facsimile: (412) 338-8900
Attention: James M. Sander, Chief Legal Officer
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with a copy to
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Facsimile: (212) 474-3700
Attention: Robert A. Kindler
Robert I. Townsend III
8.3 INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents, glossary of defined terms and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden or proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the content requires otherwise.
8.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that both
parties need not sign the same counterpart.
8.5 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES.
(a) This Agreement (including the Schedules) constitutes
the entire agreement and supersedes all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof, other than the Confidentiality Agreement, and the reciprocal
confidentiality agreement by and between the Company and Parent dated as of May
26, 1999, which such confidentiality agreements shall survive the execution and
delivery of this Agreement or any termination hereof.
(b) This Agreement shall be binding upon and inure solely
to the benefit of each party hereto, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any right, benefit
or remedy of any nature whatsoever under or by reason of this Agreement, other
than Section 5.7 (which is intended to be for the benefit of each Indemnified
Party
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covered thereby and may be enforced by each such Indemnified Party) and Section
5.11 (which is intended to be solely for the benefit of each holder of a Company
Stock Option).
8.6 GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL.
(a) This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without regard to the laws
that might be applicable under conflicts of laws principles.
(b) Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the exclusive
jurisdiction of any Delaware State court, or Federal court of the United States
of America, sitting in Delaware, and any appellate court from any thereof, in
any action or proceeding arising out of or relating to this Agreement or the
agreements delivered in connection herewith or the transactions contemplated
hereby or thereby or for recognition or enforcement of any judgment relating
thereto, and each of the parties hereby irrevocably and unconditionally (i)
agrees not to commence any such action or proceeding except in such courts, (ii)
agrees that any claim in respect of any such action or proceeding may be heard
and determined in such Delaware State court or, to the extent permitted by law,
in such Federal court, (iii) waives, to the fullest extent it may legally and
effectively do so, any objection which it may now or hereafter have to the
laying of venue of any such action or proceeding in any such Delaware State or
Federal court, and (iv) waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such Delaware State or Federal court. Each of the parties hereto agrees
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 8.2. Nothing in
this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (ii) IT
MAKES SUCH WAIVERS VOLUNTARILY, AND (iii) IT HAS BEEN INDUCED TO ENTER INTO
THIS
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AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 8.6(c).
8.7 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible. Any provision of this Agreement held invalid or
unenforceable only in part, degree or certain jurisdictions will remain in full
force and effect to the extent not held invalid or unenforceable. To the extent
permitted by applicable law, each party waives any provision of law which
renders any provision of this Agreement invalid, illegal or unenforceable in any
respect.
8.8 ASSIGNMENT. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto, in
whole or in part (whether by operation of law or otherwise), without the prior
written consent of the other parties, and any attempt to make any such
assignment without such consent shall be null and void. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective permitted successors and
assigns.
8.9 ENFORCEMENT. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms. It is accordingly agreed that the parties
shall be entitled to specific performance of the terms hereof, this being in
addition to any other remedy to which they are entitled at law or in equity.
8.10 DEFINITIONS. As used in this Agreement:
(a) "affiliate" means any person directly or indirectly
controlling, controlled by or under common control with such other person at the
time at which the determination of affiliation is being made. The term "control"
(including, with correlative meanings, the term "controlled by" or "under common
control with"), as applied to any person, means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of such person, whether through the ownership of voting securities or
other ownership interest, by contract or otherwise.
(b) "Board of Directors" means the Board of Directors of
any specified Person and any properly serving and acting committees thereof.
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(c) "Business Day" means any day on which banks are not
required or authorized to close in The City of New York.
(d) "Code" means the Internal Revenue Code of 1986, as
amended or replaced and as in effect from time to time.
(e) "Company Equity Plans" means the Company's 1989, 1991,
1992, 1993 and 1995 Stock Option Plans, 1994 Stock Option Plan for Non-Employee
Directors, and 1998 Management and Director Stock Option Plan (the "Company
Options Plans") and the 1993 Employee Stock Purchase Plan and 1996 Management
and Director Stock Purchase Plan (the "Company Stock Purchase Plan").
(f) "Intellectual Property" shall mean patents,
copyrights, trademarks (registered and unregistered), service marks, brand
names, trade names, and registrations in any jurisdiction of, and applications
in any jurisdiction to register the foregoing, technology, know-how, software,
and tangible or intangible proprietary information or materials that are used in
the business of the Company and its Subsidiaries as currently conducted and any
other trade secrets related thereto.
(g) "Material Adverse Effect" means, with respect to any
Person, any adverse change, circumstance, event or effect that, individually or
in the aggregate with all other adverse changes, circumstances, events and
effects, is or is reasonably likely to be materially adverse to the business,
operations, financial condition or results of operations of such entity and its
Subsidiaries taken as a whole, other than any change or effect to the extent
attributable to (i) the economy in general and (ii) the announcement or other
proper disclosure of this Agreement or the transactions contemplated hereby.
(h) "Organizational Documents" means, with respect to any
entity, the certificate of incorporation, bylaws or other similar governing
documents of such entity.
(i) "Person" means an individual, corporation,
partnership, limited liability company association, trust, unincorporated
organization, entity or group (as defined in Section 13(d)(3) the Exchange Act).
(j) "Significant Subsidiary" means a Subsidiary that would
constitute a "significant subsidiary" within the meaning of Rule 1-02 Regulation
S-X of the Securities Act;
(k) "Subsidiary" when used with respect to any Person
means any corporation or other organization, whether incorporated or
unincorporated, (i) of which such Person or any other Subsidiary of such Person
is a general partner (excluding partnerships, the general partnership interests
of which held by such Person or any of its Subsidiaries of such Person do not
have a majority of the voting and economic interests in such partnership) or
(ii) at least a majority of the
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securities or other interests of which having by their terms ordinary voting
power to elect a majority of the Board of Directors or others performing similar
functions with respect to such corporation or other organization is directly or
indirectly owned or controlled by such Person or by any one or more of its
Subsidiaries, or by such Person and one or more of its Subsidiaries.
(l) (i) "Tax" (including, with correlative meaning, the
terms "Taxes" and "Taxable") means all federal, state, local and foreign income,
profits, franchise, gross receipts, environmental, customs duty, capital stock,
severance, stamp, payroll, sales, employment, unemployment disability, use,
property, withholding, excise, production, value added, occupancy and other
taxes, duties or assessments of any nature whatsoever, together with all
interest, penalties, fines and additions to tax imposed with respect to such
amounts and any interest in respect of such penalties and additions to tax, and
(ii) "Tax Return" means all returns and reports (including elections, claims,
declarations, disclosures, schedules, estimates, computations and information
returns) required to be supplied to a Tax authority in any jurisdiction relating
to Taxes.
(m) "the other party" means, with respect to the Company,
Parent and means, with respect to Parent, the Company.
8.11 PERFORMANCE BY MERGER SUB. Parent hereby agrees to cause Merger
Sub to comply with its obligations hereunder and under the Offer and to cause
Merger Sub to consummate the Merger as contemplated herein and whenever this
Agreement requires Merger Sub to take any action, such requirement shall be
deemed to include an undertaking of Parent to cause Merger Sub to take such
action.
8.12 DISCLOSURE SCHEDULES. Any matter disclosed in any subsection of
the parties' respective Disclosure Schedules shall be deemed disclosed for each
subsection of this Agreement to which such matter is reasonably related.
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IN WITNESS WHEREOF, Parent, the Company and Merger Sub have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of July 5, 1999.
KONINKLIJKE NUMICO N.V.
By: /s/ Hans van der Wielen
----------------------------
Name: Hans van der Wielen
Title: President and CEO
NUMICO INVESTMENT CORP.
By: /s/ Julitte van der Ven
----------------------------
Name: Julitte van der Ven
Title: President
GENERAL NUTRITION COMPANIES, INC.
By: /s/ William E. Watts
-------------------------------
Name: William E. Watts
Title: President and
Chief Executive Officer
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ANNEX A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, and subject to the
terms and conditions of the Agreement, Merger Sub shall not be obligated to
accept for payment any shares of Company Common Stock until all Required
Regulatory Approvals shall have been obtained, made or satisfied including until
the expiration of any waiting periods applicable under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act") and Merger Sub
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC (including Rule 14e-1(c) under the Exchange Act) pay
for, and may delay the acceptance for payment of or payment for, any shares of
Company Common Stock tendered in the Offer and (subject to the terms and
conditions of the Agreement, including Section 1.1(b)) may amend, extend or
terminate the Offer if, (i) immediately prior to the expiration of the Offer (as
extended in accordance with the Agreement) the Minimum Condition shall not have
been satisfied or (ii) prior to the time of acceptance of any shares of Company
Common Stock pursuant to the Offer any of the following shall occur:
(a) there shall be threatened or pending any action,
litigation or proceeding (hereinafter, an "Action") by any Governmental Entity:
(i) challenging the acquisition by Parent or Merger Sub of shares of Company
Common Stock or seeking to restrain or prohibit the consummation of the Offer or
the Merger; (ii) seeking to prohibit or impose any material limitation
(including any hold separate obligation) on Parent's, Merger Sub's or any of
their respective affiliates' ownership or operation of all or any material
portion of the business or assets of the Company and its Subsidiaries taken as a
whole or Parent and its Subsidiaries taken as a whole that, in each case
referred to in this clause (ii) individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect on the Company or Parent; or (iii)
seeking to impose material limitations on the ability of Parent or Merger Sub
effectively to acquire or hold, or to exercise full rights of ownership of, the
shares of Company Common Stock including the right to vote the shares of Company
Common Stock purchased by them on an equal basis with all other shares of
Company Common Stock on all matters properly presented to the shareholders of
the Company; or
(b) any statute, rule, regulation, order or injunction
shall be enacted, promulgated, entered, enforced or deemed to or become
applicable to the Offer or the Merger, or any other action shall have been
taken, by any court or other Governmental Entity, that is reasonably likely to
result in any of the effects of, or have any of the consequences sought to be
obtained or achieved in, any Action referred to in clauses (i) through (iii) of
paragraph (a) above; or
(c) (i) the representations and warranties of the Company
contained in Section 3.1(b) of the Agreement shall not be true and correct in
all material respects as of the date of the Agreement and (except to the extent
such representations and warranties speak as of an earlier date) as of the
consummation of the Offer as though made on and as of such date; (ii) the
representations
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and warranties of the Company set forth in the Agreement (other than those set
forth in Section 3.1(b) of the Agreement), (x) to the extent qualified by
Material Adverse Effect shall not be true and correct and (y) to the extent not
qualified by Material Adverse Effect shall not be true and correct, except that
this clause (y) shall be deemed satisfied so long as any failures of such
representations and warranties to be true and correct, taken together, do not
have a Material Adverse Effect on the Company, in the case of each of clause (x)
and (y) as of the date of the Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
consummation of the Offer as though made on and as of such date; (iii) the
Company shall have breached or failed to comply in any material respect with any
of its material obligations, covenants or agreements under the Agreement; or
(iv) any change or event shall have occurred that has, or is reasonably likely
to have, a Material Adverse Effect on the Company; or
(d) the Agreement shall have been terminated in accordance
with its terms.
The conditions set forth in clauses (a) through (d) are for the sole
benefit of Parent and Merger Sub and may be asserted by Parent and Merger Sub
regardless of the circumstances giving rise to such condition and may be waived
by Parent and Merger Sub in whole or in part at any time and from time to time,
by express and specific action to that effect, in their sole discretion. The
failure by Parent or Merger Sub at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right, the waiver of any such
right with respect to particular facts and other circumstances shall not be
deemed a waiver with respect to any other facts and circumstances, and each such
right shall be deemed an ongoing right that may be asserted at any time and from
time to time.
The capitalized terms used in this Annex A shall have the meanings set
forth in the Agreement to which it is annexed.
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Exhibit (c)(2)
TENDER AGREEMENT
TENDER AGREEMENT ("Agreement") dated as of July 5, 1999 among Royal
Numico N.V. ("Parent"), Numico Investment Corp., a Delaware corporation (the
"Purchaser"), and the persons listed on the signature pages hereto (each a
"Stockholder," and, collectively, the "Stockholders"). Capitalized terms not
defined herein shall have the meaning assigned to them in the Merger
Agreement (as defined below).
WHEREAS, Parent, the Purchaser and General Nutrition Companies, Inc., a
Delaware corporation (the "Company"), are entering into an Agreement and Plan
of Merger of even date herewith (the "Merger Agreement") providing for the
making of a cash tender offer (the "Offer") by the Purchaser for all issued
and outstanding shares of Common Stock, par value $0.01 per share, of the
Company (the "Company Common Stock"), and the merger of the Purchaser with
and into the Company (the "Merger");
WHEREAS, the Stockholders own shares of Company Common Stock; and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and the Purchaser have requested that the Stockholders agree
to tender the shares, as set forth herein;
NOW, THEREFORE, to induce Parent and the Purchaser to enter into, and in
consideration of their entering into, the Merger Agreement, and in
consideration of the premises and the representations, warranties and
agreements herein contained, the parties agree as follows:
1. TENDER OF SHARES. (a) Each Stockholder hereby agrees to validly
tender and sell, pursuant to and in accordance with the terms of the Offer,
(i) not later than the fourteenth day after the commencement of the Offer
pursuant to Section 1.1(a) of the Merger Agreement, all of the shares of
Company Common Stock beneficially owned by such Stockholder as of the date
hereof (as such shares may be adjusted by conversion, dividend, stock split,
recapitalization, exchange, merger or similar transaction, the "Existing
Shares"), and (ii) any shares of Company Common Stock acquired by such
Stockholder after the date hereof and prior to the termination of this
Agreement whether upon the exercise of options, warrants or rights, the
conversion or exchange of convertible or exchangeable securities, or by means
of purchase, dividend, distribution or otherwise (the "Acquired Shares," and,
together with the Existing Shares, the "Shares"), provided that the price per
Share paid to such Stockholder pursuant to the Offer shall be no less than
the Price Per Share. Each Stockholder hereby acknowledges and agrees that
Parent's and the Purchaser's obligation to accept for payment and pay for
shares of Company Common Stock in the Offer, including the Shares owned by
such Stockholder, is subject to the terms and conditions of the Offer.
(b) Each Stockholder hereby agrees to permit Parent, the Purchaser
and the Company to publish and disclose in the documents relating to the Offer
and the Merger (including all documents, schedules and proxy statements filed
with the Securities and Exchange Commission),
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its, his or her identity and ownership of Shares and the nature of its, his
or her commitments, arrangements and understandings under this Agreement.
2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. Each of the
Stockholders, with respect to itself only, hereby severally represents and
warrants to Parent and the Purchaser as follows:
(a) AUTHORITY; NO CONFLICTS. Each such Stockholder has all
requisite power and authority to enter into this Agreement and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement by such Stockholder and the consummation by such Stockholder of the
transactions contemplated hereby have been duly authorized by all necessary
action on the part of such Stockholder. This Agreement has been duly
executed and delivered by such Stockholder and, assuming due execution by
Parent and the Purchaser, constitutes a valid and binding obligation of such
Stockholder, enforceable against such Stockholder in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency, and
other similar laws affecting the enforcement of creditors' right generally
and except that the availability of equitable remedies, including specific
performance, is subject to the discretion of the court before which any
proceeding therefor may be brought. The execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated
hereby and compliance with the terms hereof will not, conflict with, or
result in any violation of, or default (with or without notice or lapse of
time or both) under any provision of any voting agreement, trust agreement,
loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise, license, judgment,
order or decree applicable to such Stockholder or to such Stockholder's
property or assets, except as is not reasonably likely to prevent the
consummation of the transactions contemplated hereby. To the knowledge of
such Stockholder, no consent, approval, order or authorization of, or
registration, declaration or filing with any Governmental Entity is required
by or with respect to such Stockholder in connection with the execution and
delivery of this Agreement or the consummation by such Stockholder of the
transactions contemplated hereby. No trust of which such Stockholder is a
trustee requires the consent of any beneficiary to the execution and delivery
of this Agreement or to the consummation of the transactions contemplated
hereby.
(b) THE SHARES. Such Stockholder has, and the transfer by such
Stockholder of its, his or her Shares hereunder will pass to the Purchaser,
good and marketable title to the Existing Shares held by such Stockholder,
free and clear of any claims, liens, encumbrances and security interests
whatsoever. Except pursuant to this Agreement, the Existing Shares are not
subject to any voting trust agreement or other contract, agreement,
arrangement, commitment or understanding restricting or otherwise relating to
the voting, dividend rights or disposition of the Existing Shares except as
is not reasonably likely to prevent the consummation of the transactions
contemplated hereby. Such Stockholder has sole power with respect to the
matters set forth in this Agreement with respect to all of such Stockholder's
Existing Shares with no limitations, qualifications or restrictions on such
rights, subject to applicable securities laws and the terms of this Agreement
except as is not reasonably likely to prevent the consummation of the
transactions contemplated hereby.
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3. REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER. Parent
and the Purchaser hereby represent and warrant to each Stockholder as follows:
AUTHORITY; NO CONFLICTS. Each of Parent and the Purchaser has all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and the Purchaser and the consummation by Parent and
the Purchaser of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Parent and the Purchaser. This
Agreement has been duly executed and delivered by Parent and the Purchaser and,
assuming due execution by each Stockholder, constitutes a valid and binding
obligation of Parent and the Purchaser enforceable against Parent and the
Purchaser in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights generally and except that the availability of equitable
remedies, including specific performance, is subject to the discretion of the
court before which any proceeding therefor may be brought. The execution and
delivery of this Agreement do not, and the consummation of the transactions
contemplated hereby and compliance with the terms hereof will not, conflict
with, or result in any violation of or default (with or without notice or lapse
of time or both) under (a) any provision of the Organizational Documents of
Parent, the Purchaser or any of their Subsidiaries or (b) any provision of any
trust agreement, loan or credit agreement, note, bond, mortgage, indenture,
lease or other agreement, instrument, permit, concession, franchise, license,
judgment, order or decree applicable to the Parent or Purchaser or to the
property or assets of the Parent or Purchaser, except in the case of each clause
(a) and (b), as is not reasonably likely to prevent the consummation of the
transactions contemplated hereby. No consent, approval, order or authorization
of, or registration, declaration or filing with any Governmental Entity or
foreign securities exchange is required by or with respect to the Parent or
Purchaser in connection with the execution and delivery of this Agreement or,
except as set forth in the Merger Agreement, the consummation by the Parent or
Purchaser of the transactions contemplated hereby. The Supervisory Board of
Parent and the Board of Directors of the Purchaser has, at a meeting duly held
unanimously approved the transactions contemplated hereby.
4. COVENANTS OF THE STOCKHOLDERS.
(a) Each Stockholder severally agrees not to:
(i) sell, transfer, pledge, assign or otherwise dispose of, or
enter into any contract, option or other arrangement (including any profit
sharing arrangement) with respect to the sale, transfer, pledge, assignment
or other disposition of, any of the Shares to any person other than the
Purchaser or the Purchaser's designee;
(ii) deposit any Shares into a voting trust or grant a proxy or
enter into a voting agreement with respect to any Shares except as provided
in this Agreement or commit or agree to take any of the foregoing actions;
or
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(iii) solicit, facilitate, initiate, encourage or take any other
action to, and shall direct and to use its best efforts to cause any
investment banker, attorney or other advisor or representative of such
Stockholder not to, facilitate (including by way of furnishing information)
any Acquisition Proposal, other than the Offer and the Merger except in the
case of each of clauses (i), (ii) and (iii) in connection with or resulting
from any actions permitted under Section 5.4(b) of the Merger Agreement.
(b) Each Stockholder agrees to notify the Purchaser promptly and to
provide all details requested by the Purchaser if such Stockholder shall be
approached or solicited, directly or indirectly, by any person with respect to
an Acquisition Proposal.
(c) Each Stockholder agrees that at any annual or special meeting of
the stockholders of the Company and in any action by written consent of the
stockholders of the Company, such Stockholder will (i) vote the Shares in favor
of adoption of the Merger Agreement and (ii) vote the Shares against any action
or agreement which could result in a breach of any representation, warranty or
covenant of the Company in the Merger Agreement or which could otherwise impede,
delay, prevent, interfere with or discourage the Offer or the Merger including,
without limitation, any Acquisition Proposal.
5. NO BROKERS. Except as disclosed in the Merger Agreement, each of the
Stockholders, Parent and the Purchaser represents, as to itself and its
affiliates, that no agent, broker, investment banker or other firm or person is
or will be entitled to any broker's or finder's fees or any other commission or
similar fee in connection with any of the transactions contemplated by this
Agreement and respectively agrees to indemnify and hold the others harmless from
and against any and all claims, liabilities or obligations with respect to any
such fees, commissions or expenses asserted by any person on the basis of any
act or statement alleged to have occurred or been made by such party or its
affiliates.
6. SURVIVAL OF REPRESENTATIONS. Except for the representations and
warranties contained in Section 2(b), which shall survive without limitation to
time, all representations, warranties and agreements made by the parties to this
Agreement shall expire on the Closing Date.
7. FURTHER ASSURANCES. If the Purchaser purchases Shares pursuant to the
Offer, each Stockholder will execute and deliver, or cause to be executed and
delivered, such additional or further transfers, assignments, endorsements,
consents and other instruments as the Purchaser may reasonably request for the
purpose of effectively carrying out the transactions contemplated by this
Agreement, including the transfer of the Shares to the Purchaser and the release
of any and all claims, liens, encumbrances and security interests with respect
thereto.
8. ASSIGNMENT. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties without the
prior written consent of the other parties, except that the Purchaser may
assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to Parent or to any direct or indirect wholly-owned
subsidiary of Parent.
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9. GENERAL PROVISIONS.
(a) SPECIFIC PERFORMANCE. The parties hereto acknowledge that
damages would be an inadequate remedy for any breach of the provisions of this
Agreement and agree that the obligations of the parties hereunder shall be
specifically enforceable.
(b) EXPENSES. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expense.
(c) AMENDMENTS. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto to which such
amendment applies.
(d) NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or by reputable
overnight courier or mailed by registered or certified mail (return receipt
requested) or sent by confirmed telecopy to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(i) if to Parent or the Purchaser, to
Royal Numico N.V.
P. O. Box 1, 2700 MA Zoetemeer
The Netherlands
Telecopy: 31 79 316 9959
Attention: General Counsel
with a copy to:
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street
Chicago, Illinois 60601
Telecopy: (312) 609-5005
Attention: William J. Bettman, Esq.
(ii) if to the Stockholders, to them in care of the Company at
the address set forth in Section 8.2 of the Merger Agreement.
(e) INTERPRETATION. When a reference is made in this Agreement to
Sections or Exhibits, such reference shall be to a Section or Exhibit to this
Agreement unless otherwise indicated. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Wherever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation".
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(f) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more of the counterparts have been signed by
each of the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.
(g) ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This Agreement
(including the documents and instruments referred to herein) (i) constitutes the
entire agreement and supersedes prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
and (ii) is not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder.
(h) GOVERNING LAW; JURISDICTION.
(i) This Agreement shall be governed and construed in accordance
with the laws of the State of Delaware, without regard to the laws that
might be applicable under conflicts of laws principles.
(ii) Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the exclusive
jurisdiction of any Delaware State court, or Federal court of the United
States of America, sitting in Delaware, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement or the agreements delivered in connection herewith or the
transactions contemplated hereby or thereby or for recognition or
enforcement of any judgment relating thereto, and each of the parties
hereby irrevocably and unconditionally (A) agrees not to commence any such
action or proceeding except in such courts, (B) agrees that any claim in
respect of any such action or proceeding may be heard and determined in
such Delaware State court or, to the extent permitted by law, in such
Federal court, (C) waives, to the fullest extent it may legally and
effectively do so, any objection which it may now or hereafter have to the
laying of venue of any such action or proceeding in any such Delaware State
or Federal court, and (D) waives, to the fullest extent permitted by law,
the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such Delaware State or Federal court. Each of the
parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions
by suit on the judgment or in any other manner provided by law. Each party
to this Agreement irrevocably consents to service of process in the manner
provided for notices in Section 9(d). Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any
other manner permitted by law.
(i) TERMINATION. The obligations of the parties hereunder shall
terminate upon the termination of the Merger Agreement in accordance with its
terms.
(j) WAIVER OF APPRAISAL RIGHTS. To the extent applicable, each
Stockholder hereby waives any rights of appraisal or rights to dissent from the
Merger that such Stockholder may have on the terms set forth in the Merger
Agreement.
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IN WITNESS WHEREOF, each party has duly executed this Agreement, all as of
the date first written above.
ROYAL NUMICO N.V.
By:/s/ Hans van der Wielen
--------------------------------------------
Name: Hans van der Wielen
--------------------------------------
Title: President and Chief Executive Officer
NUMICO INVESTMENT CORP.
By:/s/ Julitte van der Ven
---------------------------------------------
Julitte van der Ven, President
[SIGNATURE PAGE TO TENDER AGREEMENT]
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/s/ Jerry D. Horn
-----------------------------------------
Jerry D. Horn
/s/ William E. Watts
-----------------------------------------
William E. Watts
/s/ Gregory T. Horn
-----------------------------------------
Gregory T. Horn
/s/ Edwin J. Kozlowski
-----------------------------------------
Edwin J. Kozlowski
/s/ John A. DiCecco
-----------------------------------------
John A. DiCecco
<PAGE>
Exhibit (c)(3)(i)
EMPLOYMENT AGREEMENT
AGREEMENT dated as of July 5, 1999 among General Nutrition Companies,
Inc., a Delaware corporation ("Company"), Royal Numico N.V., a company
organized under the laws of The Netherlands ("Parent") and William E. Watts
("Executive").
WHEREAS, Executive is employed by General Nutrition, Incorporated, a
Pennsylvania corporation and subsidiary of Company ("Subsidiary") as
President and Chief Executive Officer under the terms of an employment
agreement dated June 16, 1997 and amendments thereto (the "Prior Agreement");
and
WHEREAS, in connection with an Agreement and Plan of Merger dated as of
July 5, 1999, a subsidiary of Parent will merge with and into Company (the
"Merger");
WHEREAS, Parent and Company wish to assure itself of the services of
Executive for the period provided in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereto hereby agree as follows:
1. EMPLOYMENT. Company and Parent agree to employ Executive, and
Executive agrees to serve, as (a) President and Chief Executive Officer of
Company and (b) a member of the Board of Managing Directors of Parent (the
"Management Board"), for the period commencing at the effective time of the
Merger (the "Effective Time") and ending December 31, 2002 (the "Employment
Period"), unless Executive's employment with Company and Parent is earlier
terminated by either party (or parties) as specified in Paragraph 6 hereof.
The Supervisory Board of Parent ("Supervisory Board") or the Management
Board, as applicable, shall propose Executive for election or appointment to
the positions specified above throughout the period of Executive's employment
under this Agreement.
2. DUTIES. Executive is engaged to perform such duties as are
assigned to him by the Supervisory Board or Management Board, as applicable,
in his position as specified in Section 1 hereof. Executive shall devote his
full time and attention to the performance of such duties, which shall remain
similar to the duties he is performing as of the date of this Agreement. At
no time during the Employment Period shall Executive take on additional
employment without permission in writing from Company.
3. COMPENSATION.
(a) BASE SALARY. For all services rendered by Executive during
the Employment Period, Company shall pay Executive a base salary of not less
than $954,965. Salary payments shall be subject to withholding of applicable
taxes. Executive's base salary shall be adjusted as of each January 1 during
the Employment Period to reflect changes from the prior January 1 in the
Consumer Price Index For all Urban Consumers prepared by the United States
Department of Labor. Executive shall not be eligible to participate in any
annual bonus or annual incentive compensation plan, program or arrangement
(but he shall be eligible to participate in the plans described in the first
sentence of Section 3(b) hereof).
(b) LONG-TERM INCENTIVE COMPENSATION. Executive shall be eligible to
participate during the Employment Period in any stock option plans, stock
purchase plans and any other long-
<PAGE>
term compensation plans, programs or arrangements generally available to
members of the senior management of Company. With regard to any stock option
plan maintained or adopted for the benefit of any employees of Company or its
subsidiaries, Executive shall be granted for each calendar year commencing
after December 31, 1999 during the Employment Period, an option to purchase a
number of shares of Parent (which, for purposes hereof, shall mean the
depository shares with respect to the ordinary shares which are directly
traded on the Amsterdam Stock Exchange) ("Parent Shares") not less than 15%
of the aggregate number of Parent Shares for which options were granted to
all employees of Company and its subsidiaries in any such year. The terms
and conditions of such stock options shall be set forth in the option
agreement and stock option plan sponsored by Parent in accordance with the
terms of the letter agreement of even date herewith between the Company and
Parent relating to certain employee benefit matters (the "Benefits Letter");
PROVIDED, HOWEVER; in no event shall any such options granted hereunder be
forfeited for any termination of Executive's employment on or after the
scheduled expiration date of the Employment Period.
(c) DISABILITY. During the Employment Period, Company shall continue
in effect a program comparable to its long-term disability insurance program as
in effect immediately prior to the date of this Agreement so as to provide
insurance payments to Executive upon complete disability of $120,000 per year
for a period and under terms reasonably comparable to those provided under such
long-term disability insurance program.
(d) COMPANY AIRCRAFT. Executive shall be entitled to personal use of
the Company's private airplane for up to 100 hours per year plus up to $35,000
per year in airplane related expenses, (pilots lodging, meals and other
incidental expenses related to operation of the airplane) as part of his
compensation, and such compensation shall include additional amounts to
approximate the federal and any state income taxes applicable to such additional
compensation. If Company does not have available a Company-owned or leased
private airplane, then Executive may in the alternative, charter on the same
compensation terms herein discussed, a private airplane substantially similar to
the type of plane primarily used by the Company for up to the aggregate number
of hours of private use per year when combined with actual use of Company-owned
or leased airplane during such year, equivalent to the costs of 100 hours of
such personal use at the preferential use rate offered to the Company by a
private airplane transportation provider for the corporate lease of such
airplanes. If personal use of a Company-owned or leased private airplane by
Executive exceeds 100 hours per year or when combined with Executive's use of a
chartered airplane, aggregate use exceeds the cost of 100 hours of such use per
year at the Company's preferential use rate, then Executive shall reimburse the
Company for the incremental cost of such excess use.
(e) OTHER COMPENSATION. Executive shall be eligible during the
Employment Period to participate in all employee benefit plans to which the
Company's executives are generally entitled to participate.
(f) PRIOR EMPLOYMENT AGREEMENT. In exchange for the cancelation of
his change-in-control benefit under the Prior Agreement, Company shall pay to
Executive a bonus equal to three times Executive's base salary. This bonus
shall be in addition to Executive's regular salary and other forms of
compensation. Such bonus shall be paid as follows:
(i) 50% within 30 days after the Effective Time (subject to
deferral by the Company in accordance with Section 8 hereof); and
(ii) 50% within 30 days of the first anniversary of the
Effective Time, if Executive is still in the Company's employ as of
that date.
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Should Executive's employment be involuntarily terminated without Cause
(as defined in Section 6(b)), or if Executive resigns with Good Reason (as
defined in Section 6(b)), or his employment terminates as a result of his
death or disability prior to such first anniversary, Executive (or
Executive's estate in the event of death) shall be entitled to the "first
anniversary payment" within 30 days of such termination.
4. REIMBURSEMENT OF EXPENSES. During the Employment Period, Company
shall provide Executive an automobile allowance and associated operating
expenses in accordance with the Company's policy in effect on the date hereof
and with membership dues to a luncheon club and a golf club. Executive shall
furnish Company with periodic, itemized expense reports if directed by
Company.
5. EMPLOYMENT COVENANTS. (a) During the Employment Period (as set
forth in Section 1 hereof and determined without regard to the termination of
Executive's employment), Executive shall not
(i) engage in any way, directly or indirectly, in any Competing
Business (as defined below) in the Geographic Area (as defined below);
PROVIDED, HOWEVER, in no event shall this provision be construed to
prohibit Executive's employment with any business in which less than 5% of
its consolidated gross revenues for its most recent fiscal year relates to
a Competing Business if Executive's responsibilities at such business do
not directly relate to a Competing Business. "Competing Business" shall
mean any activity relating to the development, manufacture, or the retail
or wholesale sale or distribution (including but not limited to sale or
distribution through retail, specialty retail, Internet, e-commerce, mail
order, multi-level marketing, mass market, or any other channel of
distribution) of specialized nutrition products (including, but not limited
to, infant milk formula, foods and drinks, clinical nutrition products, and
nutriceuticals), vitamin and mineral supplements, sports nutrition
products, herbs, personal care or other health-related products.
"Geographic Area" shall mean the United States and any other country in
which the Parent, Company or any affiliate thereof maintains owned or
franchised facilities or hosts web sites; or
(ii) directly or indirectly solicit, encourage, assist, entice,
or induce any employee of Parent or Company or any of its subsidiaries or
approach any such employee for any of the foregoing purposes, to be
employed by, or render any services to, any person, firm, corporation or
other entity engaged in a Competing Business.
(b) During the Employment Period and thereafter, Executive shall
not, without the Parent's and Company's prior written permission or in
connection with his duties under this Agreement, use or disclose all or any
part of the following valuable, special and unique assets of Parent's or
Company's business to any person, corporation, association or other entity
(but excluding information that had become public knowledge without any
action by, or involvement of, Executive) for any reason whatsoever: the
confidential information and trade secrets of Parent, the Company or any
affiliate thereof, including, but not limited to, the financial and sales
information, manufacturing formulas and processes, business plans and
projections, and personnel information and records.
(c) Executive acknowledges that the restrictions contained in this
Section 5 in view of the nature of the business in which Parent or Company is
engaged, are reasonable and necessary in order to protect the legitimate
interests of the Parent or Company and that any violation of such restrictions
would result in irreparable harm to the Parent or Company. In the event of
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<PAGE>
Executive's violation of any of these restrictions, the Parent or Company
shall be entitled to seek from any court of competent jurisdiction
preliminary and permanent injunctive relief without proving actual damage or
immediate or irreparable harm and without posting any bond. Nothing herein
shall prohibit the Parent or Company from pursuing any other remedies legally
available to the Parent or Company for such breach or threatened breach,
including the recovery of damages from Executive.
(d) If any of the provisions of this Section 5 should ever be
adjudicated to exceed the time, geographic, product or service, or other
limitations permitted by applicable law in any jurisdiction, then the
affected provisions shall be deemed reformed in such jurisdiction to the
maximum time, geographic, product or service, or other limitations permitted
by applicable law.
6. TERMINATION ARRANGEMENTS.
(a) DEATH OR DISABILITY. In the event Executive's employment
hereunder is terminated by reason either of his death during the Employment
Period or by reason of his medically determined physical or mental disability
during the Employment Period, the Company shall continue to provide Executive
(or Executive's estate in the event of Executive's death) the compensation,
including adjustments, set forth in Section 3(a) hereof for the remainder of
the Employment Period; or, at Executive's (or Executive's estate's) option
and in lieu thereof, the Company shall pay Executive (or Executive's estate)
a lump sum equal to the total aggregate base salary, excluding adjustments,
payable for such period discounted at the rate of 6% per annum, simple
interest. Any such lump sum payment shall be made within 30 days after
termination.
(b) TERMINATION WITHOUT CAUSE; RESIGNATION WITH GOOD REASON. In
the event Executive's employment is involuntarily terminated by Company
without Cause or Executive resigns with Good Reason during the Employment
Period, Company shall continue to provide Executive (or Executive's estate in
the event of Executive's death) the compensation, including adjustments, set
forth in Section 3 hereof for the remainder of the Employment Period; or, at
Executive's (or Executive's estate's) option and in lieu thereof, Company
shall pay Executive (or Executive's estate) a lump sum equal to the total
aggregate base salary, excluding adjustments, payable for such period,
discounted at the rate of 6% per annum, simple interest. In addition, in the
event of such involuntary termination without Cause or resignation with Good
Reason, the value of the Company aircraft benefit set forth in Section 3(e)
hereof shall be fixed at $200,000 per year and Executive shall be provided
with a lump sum payment equal to the total aggregate value of the aircraft
benefit for such period, discounted at the rate of 9% per annum, simple
interest. Any such lump sum payment shall be made within 30 days of
termination.
"GOOD REASON" shall mean (i) the failure to elect or re-elect or
appoint or re-appoint Executive to the positions specified in Section 1
hereof, (ii) a significant reduction in Executive's duties and
responsibilities hereunder (other than solely by reason of the Company
ceasing to be a public corporation as of the date of this Agreement), or
(iii) a material breach of this Agreement by Company or Parent, which in each
case continued after notice and a reasonable opportunity to cure such action
shall have been provided to Company and Parent.
"CAUSE" shall mean (i) Executive's continued gross negligence,
willful misconduct or gross neglect of duty, after notice and a reasonable
opportunity to cure such action shall have been provided to Executive; or
(ii) any criminal act constituting bad faith by Executive in dealing with or
on behalf of the Company.
(c) RESIGNATION WITHOUT GOOD REASON. In the event Executive's
employment is terminated during the Employment Period by reason of
Executive's resignation without Good
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Reason, no additional payments, beyond those earned or vested prior to the
date of such resignation, shall be payable hereunder.
(d) TERMINATION FOR CAUSE. In the event Executive's employment is
involuntarily terminated for Cause during the Employment Period, no
additional payments, beyond those earned or vested prior to the date of such
termination, shall be payable hereunder.
7. CHANGE OF CONTROL.
(a) CASH BONUS. In the event of a Change of Control of the
Company, as defined in subparagraph (d) below, while Executive is employed
under this Agreement, and in consideration for his remaining in the
employment of the Company for one year following the date of the Change of
Control (or, if earlier, until December 31, 2002), Company shall pay to
Executive a bonus equal to two (2) times Executives' then current base
salary. This bonus shall be in addition to Executive's regular salary and
other forms of compensation. Such bonus shall be paid as follows:
(i) 50% within 30 days after the date of Change of Control; and
(ii) 50% within 30 days of the earlier of the first anniversary
of such Change of Control or December 31, 2002, if Executive is still in
the Company's employ as of such applicable date.
Should Executive's employment be involuntarily terminated without
Cause or if Executive resigns with Good Reason or as a result of his death or
disability prior to such first anniversary, Executive (or Executive's estate
in the event of death) shall be entitled to the "first anniversary payment"
described in clause (ii) of this Section 7(a) within 30 days of such
termination.
Should Executive resign without Good Reason or his employment be
involuntarily terminated with Cause prior to the first anniversary date, he
shall not be eligible to receive any further amount on the first anniversary
date.
Payments under this Section 7 are separate and distinct from and in
addition to any other payments contemplated under this Agreement.
(b) GROSS-UP PAYMENTS. In the event Executive is subject to an
excise tax under Code Section 4999, in respect of payments or other compensation
made under this Agreement, as determined by the Company's independent auditors,
Company agrees to pay Executive an additional amount which, after the payment by
Executive of all federal, state and local income, employment and excise taxes on
such additional amount, is equal to the amount of the excise tax payable without
regard to the additional amount. Should Executive fail to pay such excise tax
or be determined, pursuant to any administrative or judicial proceeding, not to
be subject to such excise tax, Company's obligation to make an additional
payment hereunder shall cease as to the amount not paid or so determined and
Executive shall promptly refund to Company any such additional payment
previously paid to Executive.
(c) EXPENSES OF ENFORCEMENT. In the event Executive's employment
is involuntarily terminated by Company other than for Cause or if Executive
resigns with Good Reason during the Employment Period or following a Change
of Control, then, notwithstanding any provisions to this Agreement to the
contrary, Company shall pay all reasonable legal fees and expenses incurred
by Executive in the successful enforcement of Executive's rights under this
Agreement.
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(d) DEFINITION. For purposes of this Agreement, a Change of
Control shall occur if, after the Merger
(i) Parent and its "affiliates" (as such term is defined in
Rule 12b-2 of the General Rules and Regulations promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), cease to beneficially own, directly
or indirectly, securities representing at least 50% of the combined voting
power of outstanding securities of Subsidiary or any successor entity
(including by merger, sale of assets or otherwise); or
(ii) (A) any person (as such term is used under Sections 13(d)
and 14(d) of the Exchange Act), other than the Parent, the Company or any
affiliate thereof, or any employee benefit plan maintained by Parent, the
Company or any affiliate thereof, or becomes a beneficial owner, directly
or indirectly, of more than 50% of the outstanding equity securities of the
Parent; or (B) the sale or other disposition of all or substantially all of
the assets of Parent, or approval of a plan of liquidation or dissolution
of Parent.
8. DEFERRED PAYMENT. In accordance with Section VI of the Benefits
Letter, Parent and Company acknowledge and agree that any amount deferred
pursuant thereto shall be paid to Executive with interest accruing thereon
from the Effective Time to the date of payment at a rate of 6%, simple
interest, and Parent hereby guarantees that such payment shall be made by
Company.
9. NOTICES. Any notice to be given under this Agreement shall be
deemed received five (5) business days thereafter if sent in writing,
properly addressed, by certified mail, and one (1) business day thereafter if
sent in writing, properly addressed, by overnight express courier or by hand.
Notices to Executive shall be sent to Executive's residence. Notices to
Parent and Company shall be sent to Company's home office.
10. WAIVER OF BREACH. The failure by a party to enforce its rights
against the other party following a breach of any provision of the Agreement
shall not operate or be construed as a waiver of any other provision hereof
or any subsequent breach by such other party.
11. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Pennsylvania.
12. ENTIRE AGREEMENT. Effective as of and conditioned upon the
effective time of the Merger, this Agreement supersedes and replaces any and
all prior employment agreements (including the Prior Agreement), both written
and oral, between the parties. It contains the entire understanding between
parties and can only be amended or supplemented by a written agreement signed
by the parties. Notwithstanding the foregoing, this Agreement does not
supersede any excise tax reimbursement to which Executive is entitled under
his Prior Agreement or as otherwise provided by action of the Compensation
Committee of the Board at its meeting held on June 30, 1999. In the event
the Merger shall not have become effective, this Agreement shall be of no
force or effect.
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13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, which shall together constitute a valid and binding agreement.
PARENT COMPANY
By: /s/ Johannes C.T. van der Wielen By: /s/ James M. Sander
-------------------------------- ---------------------------
Title: Vice President
Title: President and Chief Executive
Officer
William E. Watts
-------------------------------
EXECUTIVE
/s/ William E. Watts
-------------------------------
EXECUTIVE'S SIGNATURE
119 Witherow Road
-------------------------------
ADDRESS
Sewickley, PA 15143
-------------------------------
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Exhibit (c)(3)(ii)
EMPLOYMENT AGREEMENT
AGREEMENT dated as of July 5, 1999 among General Nutrition Companies,
Inc., a Delaware corporation ("Company"), Royal Numico N.V., a company
organized under the laws of The Netherlands ("Parent") and Gregory T. Horn
("Executive").
WHEREAS, Executive is employed by General Nutrition, Incorporated, a
Pennsylvania corporation and subsidiary of Company ("Subsidiary"), as
Executive Vice President of Marketing and Business Development and Chief
Operating Officer;
WHEREAS, in connection with an Agreement and Plan of Merger dated as of
July 5, 1999, a subsidiary of Parent will merge with and into Company (the
"Merger"); and
WHEREAS, Parent and Company wish to assure itself of the services of
Executive for the period provided in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereto hereby agree as follows:
1. EMPLOYMENT. Company and Parent agree to employ Executive, and
Executive agrees to serve, as (a) Executive Vice President of Marketing and
Business Development and Chief Operating Officer of Company and (b) as a
Group Director of Parent, for the period commencing at the effective time of
the Merger (the "Effective Time") and ending December 31, 2002 (the
"Employment Period"); PROVIDED, HOWEVER, that on January 1, 2002 and each
January 1 thereafter, the Employment Period shall automatically be extended
for one additional year, unless not later than 90 days prior to the date of
such automatic extension, the Company or Executive shall have given notice to
discontinue such extensions. The Board of Managing Directors of Parent (the
"Management Board") shall propose Executive for election or appointment to
the positions specified above throughout the period of Executive's employment
under this Agreement.
2. DUTIES. Executive is engaged to perform such duties as are
assigned to him by the chief executive officer of Company (the "CEO").
Executive shall report directly and exclusively to the CEO and the scope of
Executive's duties shall be consistent with such reporting relationship.
Executive shall devote his full time and attention to the performance of such
duties, which shall remain similar to the duties he is performing as of the
date of this Agreement. At no time during the Employment Period shall
Executive take on additional employment without permission in writing from
Company.
3. COMPENSATION.
(a) BASE SALARY. For all services rendered by Executive during
the Employment Period, Company shall pay Executive a base salary at the
annual rate set forth below. Salary payments shall be subject to withholding
of applicable taxes.
Effective Time until 12/31/00 $400,000
1/1/01 until 12/31/01 $450,000
1/1/02 until 12/31/02 $500,000
Executive's base salary hereunder after December 31, 2002 shall be subject to
increase (but not decrease) based on annual performance reviews conducted by
the Chief Executive Officer of the Company.
<PAGE>
(b) INCENTIVE COMPENSATION. Executive shall be eligible to
participate during the Employment Period in any annual bonus or incentive
plans, stock option plans, stock purchase plans and any other long-term
compensation plans, programs or arrangements generally available to members
of the senior management of Company. Executive's maximum annual bonus or
incentive plan opportunity shall not be less than $250,000.
(c) OTHER COMPENSATION. Executive shall be eligible during the
Employment Period to participate in all employee benefit plans to which the
Company's executives are generally entitled to participate.
(d) PRIOR CHANGE-OF-CONTROL BENEFIT. In exchange for the
cancellation of his change-of-control retention bonus in effect immediately
prior to the Effective Time, Company shall pay to Executive a bonus equal to
$180,000. This bonus shall be in addition to Executive's regular salary and
other forms of compensation. Such bonus shall be paid as follows:
(i) $90,000 within 30 days after the Effective Time; and
(ii) $90,000 within 30 days of the first anniversary of the
Effective Time, if Executive is still in the Company's employ as of that
date.
Should Executive's employment be involuntarily terminated without
Cause (as defined herein) or if Executive resigns with Good Reason (as
defined herein) or as a result of his death or disability prior to such first
anniversary, Executive (or Executive's estate in the event of death) shall be
entitled to the "first anniversary payment" within 30 days of such
termination.
Should Executive resign without Good Reason or his employment be
involuntarily terminated with Cause prior to the first anniversary date, he
shall not be eligible to receive any further amount on the first anniversary
date.
Payments under this Section 3(d) are separate and distinct from and
in addition to any other payments contemplated under this Agreement.
(e) (i) GROSS-UP PAYMENTS. In the event Executive is subject to an
excise tax under Code Section 4999, in respect of payments or other
compensation made under this Agreement, as determined by the Company's
independent auditors, Company agrees to pay Executive an additional amount
which, after the payment by Executive of federal, state and local income,
employment and excise taxes on such additional amount, is equal to the
amount of the excise tax payable without regard to the additional amount.
Should Executive fail to pay such excise tax or be determined, pursuant to
any administrative or judicial proceeding, not to be subject to such excise
tax, Company's obligation to make an additional payment hereunder shall
cease as to the amount not paid or so determined and Executive shall
promptly refund to Company any such additional payment previously paid to
Executive.
(ii) EXPENSES OF ENFORCEMENT. In the event Executive's
employment is involuntarily terminated by Company other than for Cause or
if Executive resigns with Good Reason during the Employment Period or
following a Change of Control (as defined herein), then, notwithstanding
any provisions to this Agreement to the contrary, Company shall pay all
reasonable legal fees and expenses incurred by Executive in the successful
enforcement of Executive's rights under this Agreement.
4. REIMBURSEMENT OF EXPENSES. During the Employment Period, Company
shall continue to provide Executive with the perquisites to which he is
entitled immediately prior to
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the Effective Time. Executive shall furnish Company with periodic, itemized
expense reports if directed by Company. Notwithstanding any travel policy of
Company to the contrary, Executive shall be entitled to fly business class on
all international business-related travel.
5. EMPLOYMENT COVENANTS. (a) During the Employment Period and
thereafter, Executive shall not, without the Parent's and Company's prior
written permission or in connection with his duties under this Agreement, use
or disclose all or any part of the following valuable, special and unique
assets of Parent's or Company's business to any person, corporation,
association or other entity (but excluding information that has become public
knowledge without any action by, or involvement of, Executive) for any reason
whatsoever: the confidential information and trade secrets of Parent, the
Company and its affiliates, including but not limited to, financial and sales
information, manufacturing formulas and processes, business plans and
projections, and personnel information and records.
(b) Executive acknowledges that the restrictions contained in this
Section 5 in view of the nature of the business in which Parent or Company is
engaged, are reasonable and necessary in order to protect the legitimate
interests of Parent and Company and that any violation of such restrictions
would result in irreparable harm to the Parent or Company. In the event of
Executive's violation of any of these restrictions, Parent or Company shall
be entitled to seek from any court of competent jurisdiction preliminary and
permanent injunctive relief without proving actual damage or immediate or
irreparable harm and without posting any bond. Nothing herein shall prohibit
Parent or Company from pursuing any other remedies legally available to
Parent or Company for such breach or threatened breach, including the
recovery of damages from Executive.
6. TERMINATION ARRANGEMENTS.
(a) DEATH OR DISABILITY. In the event Executive's employment
hereunder is terminated by reason either of his death during the Employment
Period or by reason of his medically determined physical or mental disability
during the Employment Period, the Company shall continue to provide Executive
(or Executive's estate in the event of Executive's death) the compensation,
including adjustments, set forth in Section 3(a) hereof for the remainder of
the Employment Period; or, at Executive's (or Executive's estate's) option
and in lieu thereof, the Company shall pay Executive (or Executive's estate)
a lump sum equal to the total aggregate base salary, excluding adjustments,
payable for such period discounted at the rate of 6% per annum, simple
interest. Any such lump sum payment shall be made within 30 days after
termination.
(b) TERMINATION WITHOUT CAUSE; RESIGNATION WITH GOOD REASON. In
the event Executive's employment is involuntarily terminated by Company
without Cause or Executive resigns with Good Reason during the Employment
Period, Company shall continue to provide Executive (or Executive's estate in
the event of Executive's death) the compensation, including adjustments, set
forth in Section 3 hereof for the remainder of the Employment Period; or, at
Executive's (or Executive's estate's) option and in lieu thereof, Company
shall pay Executive (or Executive's estate) a lump sum equal to the total
aggregate base salary, excluding adjustments, payable for such period,
discounted at the rate of 6% per annum, simple interest. Any such lump sum
payment shall be made within 30 days of termination.
"Good Reason" shall mean (i) the failure to elect or re-elect or
appoint or re-appoint Executive to the positions specified in Section 1
hereof, (ii) a significant reduction in Executive's duties and
responsibilities hereunder (other than solely by reason of the Company
ceasing to be a public corporation as of the date of this Agreement), or
(iii) a material breach of this Agreement by Company or Parent, which, in
each case continues after notice and a reasonable opportunity to cure such
action shall have been provided to Company and Parent.
3
<PAGE>
"Cause" shall mean (i) Executive's continued gross negligence,
willful misconduct or gross neglect of duty, after notice and a reasonable
opportunity to cure such action shall have been provided to Executive; or
(ii) any criminal act constituting bad faith by Executive in dealing with or
on behalf of the Company.
(c) RESIGNATION WITHOUT GOOD REASON. In the event Executive's
employment is terminated during the Employment Period by reason of
Executive's resignation without Good Reason, no additional payments, beyond
those earned or vested prior to the date of such resignation, shall be
payable hereunder.
(d) TERMINATION FOR CAUSE. In the event Executive's employment is
involuntarily terminated for Cause during the Employment Period, no additional
payments, beyond those earned or vested prior to the date of such termination,
shall be payable hereunder.
7. CHANGE OF CONTROL.
(a) CASH BONUS. In the event of a Change of Control of the Company,
as defined in subparagraph (d) below, while Executive is employed under this
Agreement, and in consideration for his remaining in the employment of the
Company for one year following the date of the Change of Control, Company shall
pay to Executive a bonus equal to two (2) times Executives' then current base
salary. This bonus shall be in addition to Executive's regular salary and other
forms of compensation. Such bonus shall be paid as follows:
(i) 50% within 30 days after the date of Change of Control; and
(ii) 50% within 30 days of the first anniversary of such Change
of Control, if Executive is still in the Company's employ as of that date.
Should Executive's employment be involuntarily terminated without
Cause or if Executive resigns with Good Reason or as a result of his death or
disability prior to such first anniversary, Executive (or Executive's estate
in the event of death) shall be entitled to the "first anniversary payment"
within 30 days of such termination.
Should Executive resign without Good Reason or his employment be
involuntarily terminated with Cause prior to the first anniversary date, he
shall not be eligible to receive any further amount on the first anniversary
date.
Payments under this Section 7 are separate and distinct from and in
addition to any other payments contemplated under this Agreement.
(b) DEFINITION. For purposes of this Agreement, a Change of Control
shall occur if, after the Merger:
(i) Parent and its "affiliates" (as such term is defined in
Rule 12b-2 of the General Rules and Regulations promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) cease to beneficially own, directly
or indirectly, securities representing at least 50% of the combined voting
power of outstanding securities of Subsidiary or any successor entity
(including by merger, sale of assets or otherwise); or
(ii) (A) any "person" (as such term is used under Section 13(d)
and 14(d) of the Exchange Act), other than Parent, Company or any affiliate
thereof, or any employee benefit plan maintained by Parent, Company or any
affiliate thereof, becomes a beneficial
4
<PAGE>
owner, directly or indirectly, of more than 50% of the outstanding equity
securities of Parent; or (B) the sale or disposition of all or
substantially all of the assets of Parent, or (C) approval of a plan of
liquidation or dissolution of Parent.
8. NOTICES. Any notice to be given under this Agreement shall be
deemed received five (5) business days thereafter if sent in writing,
properly addressed, by certified mail, and one (1) business day thereafter if
sent in writing, properly addressed, by overnight express courier or by hand.
Notices to Executive shall be sent to Executive's residence. Notices to
Parent and Company shall be sent to Company's home office.
9. WAIVER OF BREACH. The failure by a party to enforce its rights
against the other party following a breach of any provision of the Agreement
shall not operate or be construed as a waiver of any other provision hereof
or any subsequent breach by such other party.
10. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Pennsylvania.
11. ENTIRE AGREEMENT. Effective as of and conditioned upon the
effective time of the Merger, this Agreement supersedes and replaces any and
all prior employment agreements, both written and oral, between the parties.
It contains the entire understanding between parties and can be amended or
supplemented only by a written agreement signed by the parties.
Notwithstanding the foregoing, this Agreement does not supersede any excise
tax reimbursement to which Executive is entitled as provided by action of the
Compensation Committee of the Board at its meeting held on June 30, 1999. In
the event the Merger shall not have become effective, this Agreement shall be
of no force or effect.
12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, which shall together constitute a valid and binding agreement.
PARENT COMPANY
By: /s/ Johannes C.T. van der Wielen By: /s/ William E. Watts
-------------------------------- ---------------------
Title: President and Chief Executive Title: President and Chief
Officer Executive Officer
Gregory T. Horn
---------------
EXECUTIVE
/s/ Gregory T. Horn
--------------------
EXECUTIVE'S SIGNATURE
112 Creek Drive
--------------------
ADDRESS
Edgeworth, PA 15143
--------------------
5
<PAGE>
Exhibit (c)(3)(iii)
EMPLOYMENT AGREEMENT
AGREEMENT dated as of July 5, 1999 among General Nutrition Companies,
Inc., a Delaware corporation ("Company"), Royal Numico N.V., a company
organized under the laws of The Netherlands ("Parent") and Mike K. Meyers
("Executive").
WHEREAS, Executive is employed by General Nutrition Corporation, a
subsidiary of Company, as Executive Vice President & General Manager;
WHEREAS, in connection with an Agreement and Plan of Merger dated as of
July 5, 1999 (the "Merger Agreement"), a subsidiary of Parent will merge with
and into Company (the "Merger"); and
WHEREAS, Parent and Company wish to assure itself of the services of
Executive for the period provided in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereto hereby agree as follows:
1. EMPLOYMENT. Company and Parent agree to employ Executive, and
Executive agrees to serve in the position set forth above for the period
commencing at the effective time of the Merger (the "Effective Time") and
ending December 31, 2002 (the "Employment Period"); PROVIDED, HOWEVER, that
on January 1, 2002 and each January 1 thereafter, the Employment Period shall
automatically be extended for one additional year, unless not later than 90
days prior to the date of such automatic extension, the Company or Executive
shall have given notice to discontinue such extensions.
2. DUTIES. Executive is engaged to perform such duties as are
assigned to him by the Company. Executive shall devote his full time and
attention to the performance of such duties, which shall remain similar to
the duties he is performing as of the date of this Agreement. At no time
during the Employment Period shall Executive take on additional employment
without permission in writing from Company.
3. COMPENSATION.
(a) BASE SALARY. For all services rendered by Executive during
the Employment Period, Company shall initially pay Executive the base salary
in effect immediately prior to the Effective Time, subject to increase (but
not decrease) based on annual performance reviews conducted by the Chief
Executive Officer of the Company.
(b) INCENTIVE COMPENSATION. Executive shall be eligible to
participate during the Employment Period in any annual bonus or incentive
plans, stock option plans, stock purchase plans and any other long-term
compensation plans, programs or arrangements generally available to members
of the senior management of Company. Executive's maximum annual bonus or
incentive plan opportunity shall not be less than such opportunity as in
effect immediately prior to the date of signing of the Merger Agreement.
(c) OTHER COMPENSATION. Executive shall be eligible during the
Employment Period to participate in all employee benefit plans to which the
Company's executives are generally entitled to participate.
<PAGE>
(d) PRIOR CHANGE-OF-CONTROL BENEFIT. In exchange for the
cancelation of his change-of-control retention bonus in effect immediately
prior to the Effective Time, Company shall pay to Executive a bonus equal to
one (1) times base salary. This bonus shall be in addition to Executive's
regular salary and other forms of compensation. Such bonus shall be paid as
follows:
(i) 50% within 30 days after the Effective Time; and
(ii) 50% within 30 days of the first anniversary of the Effective
Time, if Executive is still in the Company's employ as of that date.
Should Executive's employment be involuntarily terminated without
Cause (as defined herein) or if Executive resigns with Good Reason (as
defined herein) or as a result of his death or disability prior to such first
anniversary, Executive (or Executive's estate in the event of death) shall be
entitled to the "first anniversary payment" within 30 days of such
termination.
Should Executive resign without Good Reason or his employment be
involuntarily terminated with Cause prior to the first anniversary date, he
shall not be eligible to receive any further amount on the first anniversary
date.
Payments under this Section 3(d) are separate and distinct from and
in addition to any other payments contemplated under this Agreement.
(e) (i) GROSS-UP PAYMENTS. In the event Executive is subject to an
excise tax under Code Section 4999, in respect of payments or other
compensation made under this Agreement, as determined by the Company's
independent auditors, Company agrees to pay Executive an additional amount
which, after the payment by Executive of federal, state and local income,
employment and excise taxes on such additional amount, is equal to the
amount of the excise tax payable without regard to the additional amount.
Should Executive fail to pay such excise tax or be determined, pursuant to
any administrative or judicial proceeding, not to be subject to such excise
tax, Company's obligation to make an additional payment hereunder shall
cease as to the amount not paid or so determined and Executive shall
promptly refund to Company any such additional payment previously paid to
Executive.
(ii) EXPENSES OF ENFORCEMENT. In the event Executive's
employment is involuntarily terminated by Company other than for Cause or
if Executive resigns with Good Reason during the Employment Period or
following a Change of Control (as defined herein), then, notwithstanding
any provisions to this Agreement to the contrary, Company shall pay all
reasonable legal fees and expenses incurred by Executive in the successful
enforcement of Executive's rights under this Agreement.
4. REIMBURSEMENT OF EXPENSES. During the Employment Period, Company
shall continue to provide Executive with the perquisites to which he is
entitled immediately prior to the Effective Time. Executive shall furnish
Company with periodic, itemized expense reports if directed by Company.
2
<PAGE>
5. EMPLOYMENT COVENANTS. (a) During the Employment Period (as set
forth in Section 1 hereof and determined without regard to the termination of
Executive's employment), Executive shall not
(i) engage in any way, directly or indirectly, in any Competing
Business (as defined below) in the Geographic Area (as defined below);
PROVIDED, HOWEVER, in no event shall this provision be construed to
prohibit Executive's employment with any business in which less than 5% of
its consolidated gross revenues for its most recent fiscal year relates to
a Competing Business if Executive's responsibilities at such business do
not directly relate to a Competing Business. "Competing Business" shall
mean any activity relating to the development, manufacture, or the retail
or wholesale sale or distribution (including but not limited to sale or
distribution through retail, specialty retail, Internet, e-commerce, mail
order, multi-level marketing, mass market, or any other channel of
distribution) of vitamin and mineral supplements, sports nutrition
products, herbs, personal care or other health-related products.
"Geographic Area" shall mean the United States and any other country in
which the Parent, Company or any affiliate thereof maintains owned or
franchised facilities or hosts web sites; or
(ii) directly or indirectly solicit, encourage, assist, entice,
or induce any employee of Parent or Company or any of its subsidiaries or
approach any such employee for any of the foregoing purposes, to be
employed by, or render any services to, any person, firm, corporation or
other entity engaged in a Competing Business.
(b) During the Employment Period and thereafter, Executive shall
not, without the Parent's and Company's prior written permission or in
connection with his duties under this Agreement, use or disclose all or any
part of the following valuable, special and unique assets of Parent's or
Company's business to any person, corporation, association or other entity
(but excluding information that had become public knowledge without any
action by, or involvement of, Executive) for any reason whatsoever: the
confidential information and trade secrets of Parent, the Company or any
affiliate thereof, including, but not limited to, the financial and sales
information, manufacturing formulas and processes, business plans and
projections, and personnel information and records.
(c) Executive acknowledges that the restrictions contained in this
Section 5 in view of the nature of the business in which Parent or Company is
engaged, are reasonable and necessary in order to protect the legitimate
interests of the Parent or Company and that any violation of such
restrictions would result in irreparable harm to the Parent or Company. In
the event of Executive's violation of any of these restrictions, the Parent
or Company shall be entitled to seek from any court of competent jurisdiction
preliminary and permanent injunctive relief without proving actual damage or
immediate or irreparable harm and without posting any bond. Nothing herein
shall prohibit the Parent or Company from pursuing any other remedies legally
available to the Parent or Company for such breach or threatened breach,
including the recovery of damages from Executive.
(d) If any of the provisions of this Section 5 should ever be
adjudicated to exceed the time, geographic, product or service, or other
limitations permitted by applicable law in any jurisdiction, then the
affected provisions shall be deemed reformed in such jurisdiction to the
maximum time, geographic, product or service, or other limitations permitted
by applicable law.
6. TERMINATION ARRANGEMENTS.
3
<PAGE>
(a) DEATH OR DISABILITY. In the event Executive's employment
hereunder is terminated by reason either of his death during the Employment
Period or by reason of his medically determined physical or mental disability
during the Employment Period, the Company shall continue to provide Executive
(or Executive's estate in the event of Executive's death) the compensation,
including adjustments, set forth in Section 3(a) hereof for the remainder of
the Employment Period; or, at Executive's (or Executive's estate's) option
and in lieu thereof, the Company shall pay Executive (or Executive's estate)
a lump sum equal to the total aggregate base salary, excluding adjustments,
payable for such period discounted at the rate of 6% per annum, simple
interest. Any such lump sum payment shall be made within 30 days after
termination.
(b) TERMINATION WITHOUT CAUSE; RESIGNATION WITH GOOD REASON. In
the event Executive's employment is involuntarily terminated by Company
without Cause or Executive resigns with Good Reason during the Employment
Period, Company shall continue to provide Executive (or Executive's estate in
the event of Executive's death) the compensation, including adjustments, set
forth in Section 3 hereof for the remainder of the Employment Period; or, at
Executive's (or Executive's estate's) option and in lieu thereof, Company
shall pay Executive (or Executive's estate) a lump sum equal to the total
aggregate base salary, excluding adjustments, payable for such period,
discounted at the rate of 6% per annum, simple interest. Any such lump sum
payment shall be made within 30 days of termination.
"Good Reason" shall mean (i) the failure to elect or re-elect or
appoint or re-appoint Executive to the positions specified in Section 1
hereof, (ii) a significant reduction in Executive's duties and
responsibilities hereunder (other than solely by reason of the Company
ceasing to be a public corporation as of the date of this Agreement), or
(iii) a material breach of this Agreement by Company or Parent, which, in
each case continues after notice and a reasonable opportunity to cure such
action shall have been provided to Company and Parent.
"Cause" shall mean (i) Executive's continued gross negligence,
willful misconduct or gross neglect of duty, after notice and a reasonable
opportunity to cure such action shall have been provided to Executive; or
(ii) any criminal act constituting bad faith by Executive in dealing with or
on behalf of the Company.
(c) RESIGNATION WITHOUT GOOD REASON. In the event Executive's
employment is terminated during the Employment Period by reason of
Executive's resignation without Good Reason, no additional payments, beyond
those earned or vested prior to the date of such resignation, shall be
payable hereunder.
(d) TERMINATION FOR CAUSE. In the event Executive's employment is
involuntarily terminated for Cause during the Employment Period, no
additional payments, beyond those earned or vested prior to the date of such
termination, shall be payable hereunder.
7. CHANGE OF CONTROL.
(a) CASH BONUS. In the event of a Change of Control of the
Company, as defined in subparagraph (d) below, while Executive is employed
under this Agreement, and in consideration for his remaining in the
employment of the Company for one year following the date of the Change of
Control, Company shall pay to Executive a bonus equal to two (2) times
Executives' then current base salary. This bonus shall be in addition to
Executive's regular salary and other forms of compensation. Such bonus shall
be paid as follows:
(i) 50% within 30 days after the date of Change of Control; and
4
<PAGE>
(ii) 50% within 30 days of the first anniversary of such Change
of Control, if Executive is still in the Company's employ as of that date.
Should Executive's employment be involuntarily terminated without
Cause or if Executive resigns with Good Reason or as a result of his death or
disability prior to such first anniversary, Executive (or Executive's estate
in the event of death) shall be entitled to the "first anniversary payment"
within 30 days of such termination.
Should Executive resign without Good Reason or his employment be
involuntarily terminated with Cause prior to the first anniversary date, he
shall not be eligible to receive any further amount on the first anniversary
date.
Payments under this Section 7 are separate and distinct from and in
addition to any other payments contemplated under this Agreement.
(b) DEFINITION. For purposes of this Agreement, a Change of Control
shall occur if, after the Merger:
(i) Parent and its "affiliates" (as such term is defined in
Rule 12b-2 of the General Rules and Regulations promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended ("Exchange Act")) cease to beneficially own, directly or
indirectly, securities representing at least 50% of the combined voting
power of the outstanding securities of General Nutrition, Incorporated, a
Pennsylvania corporation, or any successor entity (including by merger,
sale of assets or otherwise); or
(ii) (A) any "person" (as such term is used under Sections 13(d)
and 14(d) of the Exchange Act), other than Parent, Company or any affiliate
thereof, or any employee benefit plan maintained by Parent, Company or any
affiliate thereof, becomes a beneficial owner, directly or indirectly, of
more than 50% of the outstanding equity securities of Parent; or (B) the
sale or disposition of all or substantially all of the assets of Parent, or
(C) approval of a plan of liquidation or dissolution of Parent.
8. NOTICES. Any notice to be given under this Agreement shall be
deemed received five (5) business days thereafter if sent in writing,
properly addressed, by certified mail, and one (1) business day thereafter if
sent in writing, properly addressed, by overnight express courier or by hand.
Notices to Executive shall be sent to Executive's residence. Notices to
Parent and Company shall be sent to Company's home office.
9. WAIVER OF BREACH. The failure by a party to enforce its rights
against the other party following a breach of any provision of the Agreement
shall not operate or be construed as a waiver of any other provision hereof
or any subsequent breach by such other party.
10. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Pennsylvania.
11. ENTIRE AGREEMENT. Effective as of and conditioned upon the
effective time of the Merger, this Agreement supersedes and replaces any and
all prior employment agreements, both written and oral, between the parties.
It contains the entire understanding between parties and can only be amended
or supplemented by a written agreement signed by the parties.
Notwithstanding the foregoing, this Agreement does not supersede any excise
tax reimbursement to which Executive is entitled as provided by action of the
Compensation Committee of the Board at its meeting held
5
<PAGE>
on June 30, 1999. In the event the Merger shall not have become effective,
this Agreement shall be of no force or effect.
12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, which shall together constitute a valid and binding agreement.
PARENT COMPANY
By: /s/ Johannes C.T. van der Wielen By: /s/ William E. Watts
-------------------------------- ---------------------
Title: President and Chief Executive Title: President and Chief
Officer Executive Officer
Michael K. Meyers
--------------------------
EXECUTIVE
/s/ Michael K. Meyers
--------------------------
EXECUTIVE'S SIGNATURE
421 Tyburn Drive
--------------------------
ADDRESS
Wexford, PA 15090
--------------------------
6
<PAGE>
Exhibit (c)(3)(iv)
EMPLOYMENT AGREEMENT
AGREEMENT dated as of July 5, 1999 among General Nutrition Companies,
Inc., a Delaware corporation ("Company"), Royal Numico N.V., a company
organized under the laws of The Netherlands ("Parent") and Donald G. Smith
("Executive").
WHEREAS, Executive is employed by General Nutrition Corporation, a
subsidiary of Company, as Senior Vice President, Sales;
WHEREAS, in connection with an Agreement and Plan of Merger dated as of
July 5, 1999 (the "Merger Agreement"), a subsidiary of Parent will merge with
and into Company (the "Merger"); and
WHEREAS, Parent and Company wish to assure itself of the services of
Executive for the period provided in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereto hereby agree as follows:
1. EMPLOYMENT. Company and Parent agree to employ Executive, and
Executive agrees to serve in the position set forth above for the period
commencing at the effective time of the Merger (the "Effective Time") and
ending December 31, 2001 (the "Employment Period"); PROVIDED, HOWEVER, that
on January 1, 2001 and each January 1 thereafter, the Employment Period shall
automatically be extended for one additional year, unless not later than 90
days prior to the date of such automatic extension, the Company or Executive
shall have given notice to discontinue such extensions.
2. DUTIES. Executive is engaged to perform such duties as are
assigned to him by the Company. Executive shall devote his full time and
attention to the performance of such duties, which shall remain similar to
the duties he is performing as of the date of this Agreement. At no time
during the Employment Period shall Executive take on additional employment
without permission in writing from Company.
3. COMPENSATION.
(a) BASE SALARY. For all services rendered by Executive during the
Employment Period, Company shall initially pay Executive the base salary in
effect immediately prior to the Effective Time, subject to increase (but not
decrease) based on annual performance reviews conducted by the Chief Executive
Officer of the Company.
(b) INCENTIVE COMPENSATION. Executive shall be eligible to
participate during the Employment Period in any annual bonus or incentive
plans, stock option plans, stock purchase plans and any other long-term
compensation plans, programs or arrangements generally available to members
of the senior management of Company. Executive's maximum annual bonus or
incentive plan opportunity shall not be less than such opportunity as in
effect immediately prior to the date of signing of the Merger Agreement.
(c) OTHER COMPENSATION. Executive shall be eligible during the
Employment Period to participate in all employee benefit plans to which the
Company's executives are generally entitled to participate.
<PAGE>
(d) PRIOR CHANGE-OF-CONTROL BENEFIT. In exchange for the
cancellation of his change-of-control retention bonus in effect immediately
prior to the Effective Time, Company shall pay to Executive a bonus equal to
one (1) times base salary. This bonus shall be in addition to Executive's
regular salary and other forms of compensation. Such bonus shall be paid as
follows:
(i) 50% within 30 days after the Effective Time; and
(ii) 50% within 30 days of the first anniversary of the Effective
Time, if Executive is still in the Company's employ as of that date.
Should Executive's employment be involuntarily terminated without
Cause (as defined herein) or if Executive resigns with Good Reason (as
defined herein) or as a result of his death or disability prior to such first
anniversary, Executive (or Executive's estate in the event of death) shall be
entitled to the "first anniversary payment" within 30 days of such
termination.
Should Executive resign without Good Reason or his employment be
involuntarily terminated with Cause prior to the first anniversary date, he
shall not be eligible to receive any further amount on the first anniversary
date.
Payments under this Section 3(d) are separate and distinct from and
in addition to any other payments contemplated under this Agreement.
(e) (i) GROSS-UP PAYMENTS. In the event Executive is subject to an
excise tax under Code Section 4999, in respect of payments or other
compensation made under this Agreement, as determined by the Company's
independent auditors, Company agrees to pay Executive an additional amount
which, after the payment by Executive of federal, state and local income,
employment and excise taxes on such additional amount, is equal to the
amount of the excise tax payable without regard to the additional amount.
Should Executive fail to pay such excise tax or be determined, pursuant to
any administrative or judicial proceeding, not to be subject to such excise
tax, Company's obligation to make an additional payment hereunder shall
cease as to the amount not paid or so determined and Executive shall
promptly refund to Company any such additional payment previously paid to
Executive.
(ii) EXPENSES OF ENFORCEMENT. In the event Executive's
employment is involuntarily terminated by Company other than for Cause or
if Executive resigns with Good Reason during the Employment Period or
following a Change of Control (as defined herein), then, notwithstanding
any provisions to this Agreement to the contrary, Company shall pay all
reasonable legal fees and expenses incurred by Executive in the successful
enforcement of Executive's rights under this Agreement.
4. REIMBURSEMENT OF EXPENSES. During the Employment Period, Company
shall continue to provide Executive with the perquisites to which he is
entitled immediately prior to the Effective Time. Executive shall furnish
Company with periodic, itemized expense reports if directed by Company.
2
<PAGE>
5. EMPLOYMENT COVENANTS. (a) During the Employment Period (as set
forth in Section 1 hereof and determined without regard to the termination of
Executive's employment), Executive shall not
(i) engage in any way, directly or indirectly, in any Competing
Business (as defined below) in the Geographic Area (as defined below);
PROVIDED, HOWEVER, in no event shall this provision be construed to
prohibit Executive's employment with any business in which less than 5% of
its consolidated gross revenues for its most recent fiscal year relates to
a Competing Business if Executive's responsibilities at such business do
not directly relate to a Competing Business. "Competing Business" shall
mean any activity relating to the development, manufacture, or the retail
or wholesale sale or distribution (including but not limited to sale or
distribution through retail, specialty retail, Internet, e-commerce, mail
order, multi-level marketing, mass market, or any other channel of
distribution) of vitamin and mineral supplements, sports nutrition
products, herbs, personal care or other health-related products.
"Geographic Area" shall mean the United States and any other country in
which the Parent, Company or any affiliate thereof maintains owned or
franchised facilities or hosts web sites; or
(ii) directly or indirectly solicit, encourage, assist, entice,
or induce any employee of Parent or Company or any of its subsidiaries or
approach any such employee for any of the foregoing purposes, to be
employed by, or render any services to, any person, firm, corporation or
other entity engaged in a Competing Business.
(b) During the Employment Period and thereafter, Executive shall
not, without the Parent's and Company's prior written permission or in
connection with his duties under this Agreement, use or disclose all or any
part of the following valuable, special and unique assets of Parent's or
Company's business to any person, corporation, association or other entity
(but excluding information that had become public knowledge without any
action by, or involvement of, Executive) for any reason whatsoever: the
confidential information and trade secrets of Parent, the Company or any
affiliate thereof, including, but not limited to, the financial and sales
information, manufacturing formulas and processes, business plans and
projections, and personnel information and records.
(c) Executive acknowledges that the restrictions contained in this
Section 5 in view of the nature of the business in which Parent or Company is
engaged, are reasonable and necessary in order to protect the legitimate
interests of the Parent or Company and that any violation of such
restrictions would result in irreparable harm to the Parent or Company. In
the event of Executive's violation of any of these restrictions, the Parent
or Company shall be entitled to seek from any court of competent jurisdiction
preliminary and permanent injunctive relief without proving actual damage or
immediate or irreparable harm and without posting any bond. Nothing herein
shall prohibit the Parent or Company from pursuing any other remedies legally
available to the Parent or Company for such breach or threatened breach,
including the recovery of damages from Executive.
(d) If any of the provisions of this Section 5 should ever be
adjudicated to exceed the time, geographic, product or service, or other
limitations permitted by applicable law in any jurisdiction, then the
affected provisions shall be deemed reformed in such jurisdiction to the
maximum time, geographic, product or service, or other limitations permitted
by applicable law.
6. TERMINATION ARRANGEMENTS.
3
<PAGE>
(a) DEATH OR DISABILITY. In the event Executive's employment
hereunder is terminated by reason either of his death during the Employment
Period or by reason of his medically determined physical or mental disability
during the Employment Period, the Company shall continue to provide Executive
(or Executive's estate in the event of Executive's death) the compensation,
including adjustments, set forth in Section 3(a) hereof for the remainder of
the Employment Period; or, at Executive's (or Executive's estate's) option
and in lieu thereof, the Company shall pay Executive (or Executive's estate)
a lump sum equal to the total aggregate base salary, excluding adjustments,
payable for such period discounted at the rate of 6% per annum, simple
interest. Any such lump sum payment shall be made within 30 days after
termination.
(b) TERMINATION WITHOUT CAUSE; RESIGNATION WITH GOOD REASON. In
the event Executive's employment is involuntarily terminated by Company
without Cause or Executive resigns with Good Reason during the Employment
Period, Company shall continue to provide Executive (or Executive's estate in
the event of Executive's death) the compensation, including adjustments, set
forth in Section 3 hereof for the remainder of the Employment Period; or, at
Executive's (or Executive's estate's) option and in lieu thereof, Company
shall pay Executive (or Executive's estate) a lump sum equal to the total
aggregate base salary, excluding adjustments, payable for such period,
discounted at the rate of 6% per annum, simple interest. Any such lump sum
payment shall be made within 30 days of termination.
"Good Reason" shall mean (i) the failure to elect or re-elect or
appoint or re-appoint Executive to the positions specified in Section 1
hereof, (ii) a significant reduction in Executive's duties and
responsibilities hereunder (other than solely by reason of the Company
ceasing to be a public corporation as of the date of this Agreement), or
(iii) a material breach of this Agreement by Company or Parent, which, in
each case continues after notice and a reasonable opportunity to cure such
action shall have been provided to Company and Parent.
"Cause" shall mean (i) Executive's continued gross negligence,
willful misconduct or gross neglect of duty, after notice and a reasonable
opportunity to cure such action shall have been provided to Executive; or
(ii) any criminal act constituting bad faith by Executive in dealing with or
on behalf of the Company.
(c) RESIGNATION WITHOUT GOOD REASON. In the event Executive's
employment is terminated during the Employment Period by reason of
Executive's resignation without Good Reason, no additional payments, beyond
those earned or vested prior to the date of such resignation, shall be
payable hereunder.
(d) TERMINATION FOR CAUSE. In the event Executive's employment is
involuntarily terminated for Cause during the Employment Period, no
additional payments, beyond those earned or vested prior to the date of such
termination, shall be payable hereunder.
7. CHANGE OF CONTROL.
(a) CASH BONUS. In the event of a Change of Control of the
Company, as defined in subparagraph (d) below, while Executive is employed
under this Agreement, and in consideration for his remaining in the
employment of the Company for one year following the date of the Change of
Control, Company shall pay to Executive a bonus equal to two (2) times
Executives' then current base salary. This bonus shall be in addition to
Executive's regular salary and other forms of compensation. Such bonus shall
be paid as follows:
(i) 50% within 30 days after the date of Change of Control; and
4
<PAGE>
(ii) 50% within 30 days of the first anniversary of such Change
of Control, if Executive is still in the Company's employ as of that date.
Should Executive's employment be involuntarily terminated without
Cause or if Executive resigns with Good Reason or as a result of his death or
disability prior to such first anniversary, Executive (or Executive's estate
in the event of death) shall be entitled to the "first anniversary payment"
within 30 days of such termination.
Should Executive resign without Good Reason or his employment be
involuntarily terminated with Cause prior to the first anniversary date, he
shall not be eligible to receive any further amount on the first anniversary
date.
Payments under this Section 7 are separate and distinct from and in
addition to any other payments contemplated under this Agreement.
(b) DEFINITION. For purposes of this Agreement, a Change of Control
shall occur if, after the Merger:
(i) Parent and its "affiliates" (as such term is defined in
Rule 12b-2 of the General Rules and Regulations promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended ("Exchange Act")) cease to beneficially own, directly or
indirectly, securities representing at least 50% of the combined voting
power of the outstanding securities of General Nutrition, Incorporated, a
Pennsylvania corporation, or any successor entity (including by merger,
sale of assets or otherwise); or
(ii) (A) any "person" (as such term is used under Sections 13(d)
and 14(d) of the Exchange Act), other than Parent, Company or any affiliate
thereof, or any employee benefit plan maintained by Parent, Company or any
affiliate thereof, becomes a beneficial owner, directly or indirectly, of
more than 50% of the outstanding equity securities of Parent; or (B) the
sale or disposition of all or substantially all of the assets of Parent, or
(C) approval of a plan of liquidation or dissolution of Parent.
8. NOTICES. Any notice to be given under this Agreement shall be
deemed received five (5) business days thereafter if sent in writing,
properly addressed, by certified mail, and one (1) business day thereafter if
sent in writing, properly addressed, by overnight express courier or by hand.
Notices to Executive shall be sent to Executive's residence. Notices to
Parent and Company shall be sent to Company's home office.
9. WAIVER OF BREACH. The failure by a party to enforce its rights
against the other party following a breach of any provision of the Agreement
shall not operate or be construed as a waiver of any other provision hereof
or any subsequent breach by such other party.
10. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Pennsylvania.
11. ENTIRE AGREEMENT. Effective as of and conditioned upon the
effective time of the Merger, this Agreement supersedes and replaces any and
all prior employment agreements, both written and oral, between the parties.
It contains the entire understanding between parties and can only be amended
or supplemented by a written agreement signed by the parties.
Notwithstanding the foregoing, this Agreement does not supersede any excise
tax reimbursement to which Executive is entitled as provided by action of the
Compensation Committee of the Board at its meeting held
5
<PAGE>
on June 30, 1999. In the event the Merger shall not have become effective,
this Agreement shall be of no force or effect.
12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, which shall together constitute a valid and binding agreement.
PARENT COMPANY
By: /s/ Johannes C.T. van der Wielen By: /s/ William E. Watts
-------------------------------- ---------------------------
Title: President and Chief Title: President and Chief
Executive Officer Executive Officer
Donald G. Smith
--------------------------------
EXECUTIVE
/s/ Donald G. Smith
--------------------------------
EXECUTIVE'S SIGNATURE
215 Oak Leaf Drive
--------------------------------
ADDRESS
Mars, PA 16046
--------------------------------
6
<PAGE>
Exhibit (c)(3)(v)
EMPLOYMENT AGREEMENT
AGREEMENT dated as of July 5, 1999 among General Nutrition Companies,
Inc., a Delaware corporation ("Company"), Royal Numico N.V., a company
organized under the laws of The Netherlands ("Parent") and David R. Heilman
("Executive").
WHEREAS, Executive is employed by General Nutrition, Incorporated, a
subsidiary of Company, as Vice President, Strategic Planning & Corporate
Development;
WHEREAS, in connection with an Agreement and Plan of Merger dated as of
July 5, 1999 (the "Merger Agreement"), a subsidiary of Parent will merge with
and into Company (the "Merger"); and
WHEREAS, Parent and Company wish to assure itself of the services of
Executive for the period provided in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereto
hereby agree as follows:
1. EMPLOYMENT. Company and Parent agree to employ Executive, and
Executive agrees to serve in the position set forth above for the period
commencing at the effective time of the Merger (the "Effective Time") and ending
December 31, 2001 (the "Employment Period"); PROVIDED, HOWEVER, that on
January 1, 2001 and each January 1 thereafter, the Employment Period shall
automatically be extended for one additional year, unless not later than 90 days
prior to the date of such automatic extension, the Company or Executive shall
have given notice to discontinue such extensions.
2. DUTIES. Executive is engaged to perform such duties as are assigned
to him by the Company. Executive shall devote his full time and attention to
the performance of such duties, which shall remain similar to the duties he is
performing as of the date of this Agreement. At no time during the Employment
Period shall Executive take on additional employment without permission in
writing from Company.
3. COMPENSATION.
(a) BASE SALARY. For all services rendered by Executive during the
Employment Period, Company shall initially pay Executive the base salary in
effect immediately prior to the Effective Time, subject to increase (but not
decrease) based on annual performance reviews conducted by the Chief Executive
Officer of the Company.
(b) INCENTIVE COMPENSATION. Executive shall be eligible to
participate during the Employment Period in any annual bonus or incentive plans,
stock option plans, stock purchase plans and any other long-term compensation
plans, programs or arrangements generally available to members of the senior
management of Company. Executive's maximum annual bonus or incentive plan
opportunity shall not be less than such opportunity as in effect immediately
prior to the date of signing of the Merger Agreement.
(c) OTHER COMPENSATION. Executive shall be eligible during the
Employment Period to participate in all employee benefit plans to which the
Company's executives are generally entitled to participate.
<PAGE>
(d) PRIOR CHANGE-OF-CONTROL BENEFIT. In exchange for the
cancelation of his change-of-control retention bonus in effect immediately
prior to the Effective Time, Company shall pay to Executive a bonus equal to
one (1) times base salary. This bonus shall be in addition to Executive's
regular salary and other forms of compensation. Such bonus shall be paid as
follows:
(i) 50% within 30 days after the Effective Time; and
(ii) 50% within 30 days of the first anniversary of the Effective
Time, if Executive is still in the Company's employ as of that date.
Should Executive's employment be involuntarily terminated without
Cause (as defined herein) or if Executive resigns with Good Reason (as
defined herein) or as a result of his death or disability prior to such first
anniversary, Executive (or Executive's estate in the event of death) shall be
entitled to the "first anniversary payment" within 30 days of such
termination.
Should Executive resign without Good Reason or his employment be
involuntarily terminated with Cause prior to the first anniversary date, he
shall not be eligible to receive any further amount on the first anniversary
date.
Payments under this Section 3(d) are separate and distinct from and in
addition to any other payments contemplated under this Agreement.
(e) (i) GROSS-UP PAYMENTS. In the event Executive is subject to an
excise tax under Code Section 4999, in respect of payments or other
compensation made under this Agreement, as determined by the Company's
independent auditors, Company agrees to pay Executive an additional amount
which, after the payment by Executive of federal, state and local income,
employment and excise taxes on such additional amount, is equal to the
amount of the excise tax payable without regard to the additional amount.
Should Executive fail to pay such excise tax or be determined, pursuant to
any administrative or judicial proceeding, not to be subject to such excise
tax, Company's obligation to make an additional payment hereunder shall
cease as to the amount not paid or so determined and Executive shall
promptly refund to Company any such additional payment previously paid to
Executive.
(ii) EXPENSES OF ENFORCEMENT. In the event Executive's
employment is involuntarily terminated by Company other than for Cause or
if Executive resigns with Good Reason during the Employment Period or
following a Change of Control (as defined herein), then, notwithstanding
any provisions to this Agreement to the contrary, Company shall pay all
reasonable legal fees and expenses incurred by Executive in the successful
enforcement of Executive's rights under this Agreement.
4. REIMBURSEMENT OF EXPENSES. During the Employment Period, Company
shall continue to provide Executive with the perquisites to which he is entitled
immediately prior to the Effective Time. Executive shall furnish Company with
periodic, itemized expense reports if directed by Company.
5. EMPLOYMENT COVENANTS. (a) During the Employment Period (as set
forth in Section 1 hereof and determined without regard to the termination of
Executive's employment), Executive shall not
2
<PAGE>
(i) engage in any way, directly or indirectly, in any Competing
Business (as defined below) in the Geographic Area (as defined below);
PROVIDED, HOWEVER, in no event shall this provision be construed to
prohibit Executive's employment with any business in which less than 5% of
its consolidated gross revenues for its most recent fiscal year relates to
a Competing Business if Executive's responsibilities at such business do
not directly relate to a Competing Business. "Competing Business" shall
mean any activity relating to the development, manufacture, or the retail
or wholesale sale or distribution (including but not limited to sale or
distribution through retail, specialty retail, Internet, e-commerce, mail
order, multi-level marketing, mass market, or any other channel of
distribution) of vitamin and mineral supplements, sports nutrition
products, herbs, personal care or other health-related products.
"Geographic Area" shall mean the United States and any other country in
which the Parent, Company or any affiliate thereof maintains owned or
franchised facilities or hosts web sites; or
(ii) directly or indirectly solicit, encourage, assist, entice,
or induce any employee of Parent or Company or any of its subsidiaries or
approach any such employee for any of the foregoing purposes, to be
employed by, or render any services to, any person, firm, corporation or
other entity engaged in a Competing Business.
(b) During the Employment Period and thereafter, Executive shall
not, without the Parent's and Company's prior written permission or in
connection with his duties under this Agreement, use or disclose all or any
part of the following valuable, special and unique assets of Parent's or
Company's business to any person, corporation, association or other entity
(but excluding information that had become public knowledge without any
action by, or involvement of, Executive) for any reason whatsoever: the
confidential information and trade secrets of Parent, the Company or any
affiliate thereof, including, but not limited to, the financial and sales
information, manufacturing formulas and processes, business plans and
projections, and personnel information and records.
(c) Executive acknowledges that the restrictions contained in this
Section 5 in view of the nature of the business in which Parent or Company is
engaged, are reasonable and necessary in order to protect the legitimate
interests of the Parent or Company and that any violation of such
restrictions would result in irreparable harm to the Parent or Company. In
the event of Executive's violation of any of these restrictions, the Parent
or Company shall be entitled to seek from any court of competent jurisdiction
preliminary and permanent injunctive relief without proving actual damage or
immediate or irreparable harm and without posting any bond. Nothing herein
shall prohibit the Parent or Company from pursuing any other remedies legally
available to the Parent or Company for such breach or threatened breach,
including the recovery of damages from Executive.
(d) If any of the provisions of this Section 5 should ever be
adjudicated to exceed the time, geographic, product or service, or other
limitations permitted by applicable law in any jurisdiction, then the
affected provisions shall be deemed reformed in such jurisdiction to the
maximum time, geographic, product or service, or other limitations permitted
by applicable law.
6. TERMINATION ARRANGEMENTS.
(a) DEATH OR DISABILITY. In the event Executive's employment
hereunder is terminated by reason either of his death during the Employment
Period or by reason of his medically determined physical or mental disability
during the Employment Period, the Company shall continue to provide Executive
(or Executive's estate in the event of Executive's death) the compensation,
3
<PAGE>
including adjustments, set forth in Section 3(a) hereof for the remainder of
the Employment Period; or, at Executive's (or Executive's estate's) option
and in lieu thereof, the Company shall pay Executive (or Executive's estate)
a lump sum equal to the total aggregate base salary, excluding adjustments,
payable for such period discounted at the rate of 6% per annum, simple
interest. Any such lump sum payment shall be made within 30 days after
termination.
(b) TERMINATION WITHOUT CAUSE; RESIGNATION WITH GOOD REASON. In the
event Executive's employment is involuntarily terminated by Company without
Cause or Executive resigns with Good Reason during the Employment Period,
Company shall continue to provide Executive (or Executive's estate in the event
of Executive's death) the compensation, including adjustments, set forth in
Section 3 hereof for the remainder of the Employment Period; or, at Executive's
(or Executive's estate's) option and in lieu thereof, Company shall pay
Executive (or Executive's estate) a lump sum equal to the total aggregate base
salary, excluding adjustments, payable for such period, discounted at the rate
of 6% per annum, simple interest. Any such lump sum payment shall be made
within 30 days of termination.
"Good Reason" shall mean (i) the failure to elect or re-elect or
appoint or re-appoint Executive to the positions specified in Section 1 hereof,
(ii) a significant reduction in Executive's duties and responsibilities
hereunder (other than solely by reason of the Company ceasing to be a public
corporation as of the date of this Agreement), or (iii) a material breach of
this Agreement by Company or Parent, which, in each case continues after notice
and a reasonable opportunity to cure such action shall have been provided to
Company and Parent.
"Cause" shall mean (i) Executive's continued gross negligence, willful
misconduct or gross neglect of duty, after notice and a reasonable opportunity
to cure such action shall have been provided to Executive; or (ii) any criminal
act constituting bad faith by Executive in dealing with or on behalf of the
Company.
(c) RESIGNATION WITHOUT GOOD REASON. In the event Executive's
employment is terminated during the Employment Period by reason of Executive's
resignation without Good Reason, no additional payments, beyond those earned or
vested prior to the date of such resignation, shall be payable hereunder.
(d) TERMINATION FOR CAUSE. In the event Executive's employment is
involuntarily terminated for Cause during the Employment Period, no additional
payments, beyond those earned or vested prior to the date of such termination,
shall be payable hereunder.
7. CHANGE OF CONTROL.
(a) CASH BONUS. In the event of a Change of Control of the Company,
as defined in subparagraph (d) below, while Executive is employed under this
Agreement, and in consideration for his remaining in the employment of the
Company for one year following the date of the Change of Control, Company shall
pay to Executive a bonus equal to two (2) times Executives' then current base
salary. This bonus shall be in addition to Executive's regular salary and other
forms of compensation. Such bonus shall be paid as follows:
(i) 50% within 30 days after the date of Change of Control; and
(ii) 50% within 30 days of the first anniversary of such Change
of Control, if Executive is still in the Company's employ as of that date.
4
<PAGE>
Should Executive's employment be involuntarily terminated without
Cause or if Executive resigns with Good Reason or as a result of his death or
disability prior to such first anniversary, Executive (or Executive's estate
in the event of death) shall be entitled to the "first anniversary payment"
within 30 days of such termination.
Should Executive resign without Good Reason or his employment be
involuntarily terminated with Cause prior to the first anniversary date, he
shall not be eligible to receive any further amount on the first anniversary
date.
Payments under this Section 7 are separate and distinct from and in
addition to any other payments contemplated under this Agreement.
(b) DEFINITION. For purposes of this Agreement, a Change of Control
shall occur if, after the Merger:
(i) Parent and its "affiliates" (as such term is defined in
Rule 12b-2 of the General Rules and Regulations promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended ("Exchange Act")) cease to beneficially own, directly or
indirectly, securities representing at least 50% of the combined voting
power of the outstanding securities of General Nutrition, Incorporated, a
Pennsylvania corporation, or any successor entity (including by merger,
sale of assets or otherwise); or
(ii) (A) any "person" (as such term is used under Sections 13(d)
and 14(d) of the Exchange Act), other than Parent, Company or any affiliate
thereof, or any employee benefit plan maintained by Parent, Company or any
affiliate thereof, becomes a beneficial owner, directly or indirectly, of
more than 50% of the outstanding equity securities of Parent; or (B) the
sale or disposition of all or substantially all of the assets of Parent, or
(C) approval of a plan of liquidation or dissolution of Parent.
8. NOTICES. Any notice to be given under this Agreement shall be deemed
received five (5) business days thereafter if sent in writing, properly
addressed, by certified mail, and one (1) business day thereafter if sent in
writing, properly addressed, by overnight express courier or by hand. Notices
to Executive shall be sent to Executive's residence. Notices to Parent and
Company shall be sent to Company's home office.
9. WAIVER OF BREACH. The failure by a party to enforce its rights
against the other party following a breach of any provision of the Agreement
shall not operate or be construed as a waiver of any other provision hereof or
any subsequent breach by such other party.
10. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
11. ENTIRE AGREEMENT. Effective as of and conditioned upon the effective
time of the Merger, this Agreement supersedes and replaces any and all prior
employment agreements, both written and oral, between the parties. It contains
the entire understanding between parties and can only be amended or supplemented
by a written agreement signed by the parties. Notwithstanding the foregoing,
this Agreement does not supersede any excise tax reimbursement to which
Executive is entitled as provided by action of the Compensation Committee of the
Board at its meeting held on June 30, 1999. In the event the Merger shall not
have become effective, this Agreement shall be of no force or effect.
5
<PAGE>
12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, which shall together constitute a valid and binding agreement.
PARENT COMPANY
By: /s/ Johannes C.T. van der Wielen By: /s/ William E. Watts
-------------------------------- ----------------------
Title: President and Chief Title: President and Chief
Executive Officer Executive Officer
David R. Heilman
----------------------------
EXECUTIVE
/s/ David R. Heilman
----------------------------
EXECUTIVE'S SIGNATURE
429 Oaklawn Dr.
----------------------------
ADDRESS
Pittsburgh, PA 15241
----------------------------
6
<PAGE>
Exhibit (c)(3)(vi)
EMPLOYMENT AGREEMENT
AGREEMENT dated as of July 5, 1999 among General Nutrition Companies, Inc.,
a Delaware corporation ("Company"), Royal Numico N.V., a company organized under
the laws of The Netherlands ("Parent") and Michael Locke ("Executive").
WHEREAS, Executive is employed by General Nutrition Products, Inc., a
subsidiary of Company, as Senior Vice President & General Manager;
WHEREAS, in connection with an Agreement and Plan of Merger dated as of
July 5, 1999 (the "Merger Agreement"), a subsidiary of Parent will merge with
and into Company (the "Merger"); and
WHEREAS, Parent and Company wish to assure itself of the services of
Executive for the period provided in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereto
hereby agree as follows:
1. EMPLOYMENT. Company and Parent agree to employ Executive, and
Executive agrees to serve in the position set forth above for the period
commencing at the effective time of the Merger (the "Effective Time") and ending
December 31, 2001 (the "Employment Period"); PROVIDED, HOWEVER, that on
January 1, 2001 and each January 1 thereafter, the Employment Period shall
automatically be extended for one additional year, unless not later than 90 days
prior to the date of such automatic extension, the Company or Executive shall
have given notice to discontinue such extensions.
2. DUTIES. Executive is engaged to perform such duties as are assigned
to him by the Company. Executive shall devote his full time and attention to
the performance of such duties, which shall remain similar to the duties he is
performing as of the date of this Agreement. At no time during the Employment
Period shall Executive take on additional employment without permission in
writing from Company.
3. COMPENSATION.
(1) BASE SALARY. For all services rendered by Executive during the
Employment Period, Company shall initially pay Executive the base salary in
effect immediately prior to the Effective Time, subject to increase (but not
decrease) based on annual performance reviews conducted by the Chief Executive
Officer of the Company.
(2) INCENTIVE COMPENSATION. Executive shall be eligible to
participate during the Employment Period in any annual bonus or incentive plans,
stock option plans, stock purchase plans and any other long-term compensation
plans, programs or arrangements generally available to members of the senior
management of Company. Executive's maximum annual bonus or incentive plan
opportunity shall not be less than such opportunity as in effect immediately
prior to the date of signing of the Merger Agreement.
(3) OTHER COMPENSATION. Executive shall be eligible during the
Employment Period to participate in all employee benefit plans to which the
Company's executives are generally entitled to participate.
<PAGE>
(d) (4) PRIOR CHANGE-OF-CONTROL BENEFIT. In exchange for the
cancelation of his change-of-control retention bonus in effect immediately
prior to the Effective Time, Company shall pay to Executive a bonus equal to one
(1) times base salary. This bonus shall be in addition to Executive's regular
salary and other forms of compensation. Such bonus shall be paid as follows:
(i) 50% within 30 days after the Effective Time; and
(ii) 50% within 30 days of the first anniversary of the Effective
Time, if Executive is still in the Company's employ as of that date.
Should Executive's employment be involuntarily terminated without
Cause (as defined herein) or if Executive resigns with Good Reason (as
defined herein) or as a result of his death or disability prior to such first
anniversary, Executive (or Executive's estate in the event of death) shall be
entitled to the "first anniversary payment" within 30 days of such
termination.
Should Executive resign without Good Reason or his employment be
involuntarily terminated with Cause prior to the first anniversary date, he
shall not be eligible to receive any further amount on the first anniversary
date.
Payments under this Section 3(d) are separate and distinct from and in
addition to any other payments contemplated under this Agreement.
(e) (i) GROSS-UP PAYMENTS. In the event Executive is subject to an
excise tax under Code Section 4999, in respect of payments or other
compensation made under this Agreement, as determined by the Company's
independent auditors, Company agrees to pay Executive an additional amount
which, after the payment by Executive of federal, state and local income,
employment and excise taxes on such additional amount, is equal to the
amount of the excise tax payable without regard to the additional amount.
Should Executive fail to pay such excise tax or be determined, pursuant to
any administrative or judicial proceeding, not to be subject to such excise
tax, Company's obligation to make an additional payment hereunder shall
cease as to the amount not paid or so determined and Executive shall
promptly refund to Company any such additional payment previously paid to
Executive.
(ii) EXPENSES OF ENFORCEMENT. In the event Executive's
employment is involuntarily terminated by Company other than for Cause or
if Executive resigns with Good Reason during the Employment Period or
following a Change of Control (as defined herein), then, notwithstanding
any provisions to this Agreement to the contrary, Company shall pay all
reasonable legal fees and expenses incurred by Executive in the successful
enforcement of Executive's rights under this Agreement.
4. REIMBURSEMENT OF EXPENSES. During the Employment Period, Company
shall continue to provide Executive with the perquisites to which he is entitled
immediately prior to the Effective Time. Executive shall furnish Company with
periodic, itemized expense reports if directed by Company.
2
<PAGE>
5. EMPLOYMENT COVENANTS. (a) During the Employment Period (as set
forth in Section 1 hereof and determined without regard to the termination of
Executive's employment), Executive shall not
(i) engage in any way, directly or indirectly, in any Competing
Business (as defined below) in the Geographic Area (as defined below);
PROVIDED, HOWEVER, in no event shall this provision be construed to
prohibit Executive's employment with any business in which less than 5% of
its consolidated gross revenues for its most recent fiscal year relates to
a Competing Business if Executive's responsibilities at such business do
not directly relate to a Competing Business. "Competing Business" shall
mean any activity relating to the development, manufacture, or the retail
or wholesale sale or distribution (including but not limited to sale or
distribution through retail, specialty retail, Internet, e-commerce, mail
order, multi-level marketing, mass market, or any other channel of
distribution) of vitamin and mineral supplements, sports nutrition
products, herbs, personal care or other health-related products.
"Geographic Area" shall mean the United States and any other country in
which the Parent, Company or any affiliate thereof maintains owned or
franchised facilities or hosts web sites; or
(ii) directly or indirectly solicit, encourage, assist, entice,
or induce any employee of Parent or Company or any of its subsidiaries or
approach any such employee for any of the foregoing purposes, to be
employed by, or render any services to, any person, firm, corporation or
other entity engaged in a Competing Business.
(b) During the Employment Period and thereafter, Executive shall not,
without the Parent's and Company's prior written permission or in connection
with his duties under this Agreement, use or disclose all or any part of the
following valuable, special and unique assets of Parent's or Company's business
to any person, corporation, association or other entity (but excluding
information that had become public knowledge without any action by, or
involvement of, Executive) for any reason whatsoever: the confidential
information and trade secrets of Parent, the Company or any affiliate thereof,
including, but not limited to, the financial and sales information,
manufacturing formulas and processes, business plans and projections, and
personnel information and records.
(c) Executive acknowledges that the restrictions contained in this
Section 5 in view of the nature of the business in which Parent or Company is
engaged, are reasonable and necessary in order to protect the legitimate
interests of the Parent or Company and that any violation of such restrictions
would result in irreparable harm to the Parent or Company. In the event of
Executive's violation of any of these restrictions, the Parent or Company shall
be entitled to seek from any court of competent jurisdiction preliminary and
permanent injunctive relief without proving actual damage or immediate or
irreparable harm and without posting any bond. Nothing herein shall prohibit
the Parent or Company from pursuing any other remedies legally available to the
Parent or Company for such breach or threatened breach, including the recovery
of damages from Executive.
(d) If any of the provisions of this Section 5 should ever be
adjudicated to exceed the time, geographic, product or service, or other
limitations permitted by applicable law in any jurisdiction, then the affected
provisions shall be deemed reformed in such jurisdiction to the maximum time,
geographic, product or service, or other limitations permitted by applicable
law.
3
<PAGE>
6. TERMINATION ARRANGEMENTS.
(a) DEATH OR DISABILITY. In the event Executive's employment
hereunder is terminated by reason either of his death during the Employment
Period or by reason of his medically determined physical or mental disability
during the Employment Period, the Company shall continue to provide Executive
(or Executive's estate in the event of Executive's death) the compensation,
including adjustments, set forth in Section 3(a) hereof for the remainder of the
Employment Period; or, at Executive's (or Executive's estate's) option and in
lieu thereof, the Company shall pay Executive (or Executive's estate) a lump sum
equal to the total aggregate base salary, excluding adjustments, payable for
such period discounted at the rate of 6% per annum, simple interest. Any such
lump sum payment shall be made within 30 days after termination.
(b) TERMINATION WITHOUT CAUSE; RESIGNATION WITH GOOD REASON. In the
event Executive's employment is involuntarily terminated by Company without
Cause or Executive resigns with Good Reason during the Employment Period,
Company shall continue to provide Executive (or Executive's estate in the event
of Executive's death) the compensation, including adjustments, set forth in
Section 3 hereof for the remainder of the Employment Period; or, at Executive's
(or Executive's estate's) option and in lieu thereof, Company shall pay
Executive (or Executive's estate) a lump sum equal to the total aggregate base
salary, excluding adjustments, payable for such period, discounted at the rate
of 6% per annum, simple interest. Any such lump sum payment shall be made
within 30 days of termination.
"Good Reason" shall mean (i) the failure to elect or re-elect or
appoint or re-appoint Executive to the positions specified in Section 1 hereof,
(ii) a significant reduction in Executive's duties and responsibilities
hereunder (other than solely by reason of the Company ceasing to be a public
corporation as of the date of this Agreement), or (iii) a material breach of
this Agreement by Company or Parent, which, in each case continues after notice
and a reasonable opportunity to cure such action shall have been provided to
Company and Parent.
"Cause" shall mean (i) Executive's continued gross negligence, willful
misconduct or gross neglect of duty, after notice and a reasonable opportunity
to cure such action shall have been provided to Executive; or (ii) any criminal
act constituting bad faith by Executive in dealing with or on behalf of the
Company.
(c) RESIGNATION WITHOUT GOOD REASON. In the event Executive's
employment is terminated during the Employment Period by reason of Executive's
resignation without Good Reason, no additional payments, beyond those earned or
vested prior to the date of such resignation, shall be payable hereunder.
(d) TERMINATION FOR CAUSE. In the event Executive's employment is
involuntarily terminated for Cause during the Employment Period, no additional
payments, beyond those earned or vested prior to the date of such termination,
shall be payable hereunder.
7. CHANGE OF CONTROL.
(a) CASH BONUS. In the event of a Change of Control of the Company,
as defined in subparagraph (d) below, while Executive is employed under this
Agreement, and in consideration for his remaining in the employment of the
Company for one year following the date of the Change of Control, Company shall
pay to Executive a bonus equal to two (2) times Executives' then current base
salary. This bonus shall be in addition to Executive's regular salary and other
forms of compensation. Such bonus shall be paid as follows:
4
<PAGE>
(i) 50% within 30 days after the date of Change of Control; and
(ii) 50% within 30 days of the first anniversary of such Change
of Control, if Executive is still in the Company's employ as of that date.
Should Executive's employment be involuntarily terminated without
Cause or if Executive resigns with Good Reason or as a result of his death or
disability prior to such first anniversary, Executive (or Executive's estate in
the event of death) shall be entitled to the "first anniversary payment" within
30 days of such termination.
Should Executive resign without Good Reason or his employment be
involuntarily terminated with Cause prior to the first anniversary date, he
shall not be eligible to receive any further amount on the first anniversary
date.
Payments under this Section 7 are separate and distinct from and in
addition to any other payments contemplated under this Agreement.
(b) DEFINITION. For purposes of this Agreement, a Change of Control
shall occur if, after the Merger:
(i) Parent and its "affiliates" (as such term is defined in
Rule 12b-2 of the General Rules and Regulations promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended ("Exchange Act")) cease to beneficially own, directly or
indirectly, securities representing at least 50% of the combined voting
power of the outstanding securities of General Nutrition, Incorporated, a
Pennsylvania corporation, or any successor entity (including by merger,
sale of assets or otherwise); or
(ii) (A) any "person" (as such term is used under Sections 13(d)
and 14(d) of the Exchange Act), other than Parent, Company or any affiliate
thereof, or any employee benefit plan maintained by Parent, Company or any
affiliate thereof, becomes a beneficial owner, directly or indirectly, of
more than 50% of the outstanding equity securities of Parent; or (B) the
sale or disposition of all or substantially all of the assets of Parent, or
(C) approval of a plan of liquidation or dissolution of Parent.
8. NOTICES. Any notice to be given under this Agreement shall be deemed
received five (5) business days thereafter if sent in writing, properly
addressed, by certified mail, and one (1) business day thereafter if sent in
writing, properly addressed, by overnight express courier or by hand. Notices
to Executive shall be sent to Executive's residence. Notices to Parent and
Company shall be sent to Company's home office.
9. WAIVER OF BREACH. The failure by a party to enforce its rights
against the other party following a breach of any provision of the Agreement
shall not operate or be construed as a waiver of any other provision hereof or
any subsequent breach by such other party.
10. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
11. ENTIRE AGREEMENT. Effective as of and conditioned upon the effective
time of the Merger, this Agreement supersedes and replaces any and all prior
employment agreements, both written and oral, between the parties. It contains
the entire understanding between parties and can only be amended or supplemented
by a written agreement signed by the parties. Notwithstanding the foregoing,
this Agreement does not supersede any excise tax reimbursement to which
Executive
5
<PAGE>
is entitled as provided by action of the Compensation Committee of the Board
at its meeting held on June 30, 1999. In the event the Merger shall not have
become effective, this Agreement shall be of no force or effect.
12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, which shall together constitute a valid and binding agreement.
PARENT COMPANY
By: /s/ Johannes C.T. van der Wielen By: /s/ William E. Watts
--------------------------------- --------------------------
Title: President and Chief Title: President and Chief
Executive Officer Executive Officer
Michael Locke
-----------------------------
EXECUTIVE
/s/ Michael Locke
-----------------------------
EXECUTIVE'S SIGNATURE
2300 Salem Drive
-----------------------------
ADDRESS
Pittsburgh, PA 15237
-----------------------------
6
<PAGE>
Exhibit (c)(3)(vii)
EMPLOYMENT AGREEMENT
AGREEMENT dated as of July 5, 1999 among General Nutrition Companies, Inc.,
a Delaware corporation ("Company"), Royal Numico N.V., a company organized under
the laws of The Netherlands ("Parent") and Reginald N. Steele ("Executive").
WHEREAS, Executive is employed by General Nutrition International, Inc., a
subsidiary of Company, as Vice President, International Franchising;
WHEREAS, in connection with an Agreement and Plan of Merger dated as of
July 5, 1999 (the "Merger Agreement"), a subsidiary of Parent will merge with
and into Company (the "Merger"); and
WHEREAS, Parent and Company wish to assure itself of the services of
Executive for the period provided in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereto
hereby agree as follows:
1. EMPLOYMENT. Company and Parent agree to employ Executive, and
Executive agrees to serve in the position set forth above for the period
commencing at the effective time of the Merger (the "Effective Time") and ending
December 31, 2001 (the "Employment Period"); PROVIDED, HOWEVER, that on
January 1, 2001 and each January 1 thereafter, the Employment Period shall
automatically be extended for one additional year, unless not later than 90 days
prior to the date of such automatic extension, the Company or Executive shall
have given notice to discontinue such extensions.
2. DUTIES. Executive is engaged to perform such duties as are assigned
to him by the Company. Executive shall devote his full time and attention to
the performance of such duties, which shall remain similar to the duties he is
performing as of the date of this Agreement. At no time during the Employment
Period shall Executive take on additional employment without permission in
writing from Company.
3. COMPENSATION.
(a) BASE SALARY. For all services rendered by Executive during the
Employment Period, Company shall initially pay Executive the base salary in
effect immediately prior to the Effective Time, subject to increase (but not
decrease) based on annual performance reviews conducted by the Chief Executive
Officer of the Company.
(b) INCENTIVE COMPENSATION. Executive shall be eligible to
participate during the Employment Period in any annual bonus or incentive plans,
stock option plans, stock purchase plans and any other long-term compensation
plans, programs or arrangements generally available to members of the senior
management of Company. Executive's maximum annual bonus or incentive plan
opportunity shall not be less than such opportunity as in effect immediately
prior to the date of signing of the Merger Agreement.
(c) OTHER COMPENSATION. Executive shall be eligible during the
Employment Period to participate in all employee benefit plans to which the
Company's executives are generally entitled to participate.
<PAGE>
(d) PRIOR CHANGE-OF-CONTROL BENEFIT. In exchange for the
cancelation of his change-of-control retention bonus in effect immediately
prior to the Effective Time, Company shall pay to Executive a bonus equal to one
(1) times base salary. This bonus shall be in addition to Executive's regular
salary and other forms of compensation. Such bonus shall be paid as follows:
(i) 50% within 30 days after the Effective Time; and
(ii) 50% within 30 days of the first anniversary of the
Effective Time, if Executive is still in the Company's employ as of
that date.
Should Executive's employment be involuntarily terminated without Cause (as
defined herein) or if Executive resigns with Good Reason (as defined herein) or
as a result of his death or disability prior to such first anniversary,
Executive (or Executive's estate in the event of death) shall be entitled to the
"first anniversary payment" within 30 days of such termination.
Should Executive resign without Good Reason or his employment be
involuntarily terminated with Cause prior to the first anniversary date, he
shall not be eligible to receive any further amount on the first anniversary
date.
Payments under this Section 3(d) are separate and distinct from and in
addition to any other payments contemplated under this Agreement.
(e) (i) GROSS-UP PAYMENTS. In the event Executive is subject to an
excise tax under Code Section 4999, in respect of payments or other
compensation made under this Agreement, as determined by the Company's
independent auditors, Company agrees to pay Executive an additional amount
which, after the payment by Executive of federal, state and local income,
employment and excise taxes on such additional amount, is equal to the
amount of the excise tax payable without regard to the additional amount.
Should Executive fail to pay such excise tax or be determined, pursuant to
any administrative or judicial proceeding, not to be subject to such excise
tax, Company's obligation to make an additional payment hereunder shall
cease as to the amount not paid or so determined and Executive shall
promptly refund to Company any such additional payment previously paid to
Executive.
(ii) EXPENSES OF ENFORCEMENT. In the event Executive's
employment is involuntarily terminated by Company other than for Cause or
if Executive resigns with Good Reason during the Employment Period or
following a Change of Control (as defined herein), then, notwithstanding
any provisions to this Agreement to the contrary, Company shall pay all
reasonable legal fees and expenses incurred by Executive in the successful
enforcement of Executive's rights under this Agreement.
4. REIMBURSEMENT OF EXPENSES. During the Employment Period, Company
shall continue to provide Executive with the perquisites to which he is entitled
immediately prior to the Effective Time. Executive shall furnish Company with
periodic, itemized expense reports if directed by Company.
2
<PAGE>
5. EMPLOYMENT COVENANTS. (a) During the Employment Period (as set
forth in Section 1 hereof and determined without regard to the termination of
Executive's employment), Executive shall not
(i) engage in any way, directly or indirectly, in any Competing
Business (as defined below) in the Geographic Area (as defined below);
PROVIDED, HOWEVER, in no event shall this provision be construed to
prohibit Executive's employment with any business in which less than 5% of
its consolidated gross revenues for its most recent fiscal year relates to
a Competing Business if Executive's responsibilities at such business do
not directly relate to a Competing Business. "Competing Business" shall
mean any activity relating to the development, manufacture, or the retail
or wholesale sale or distribution (including but not limited to sale or
distribution through retail, specialty retail, Internet, e-commerce, mail
order, multi-level marketing, mass market, or any other channel of
distribution) of vitamin and mineral supplements, sports nutrition
products, herbs, personal care or other health-related products.
"Geographic Area" shall mean the United States and any other country in
which the Parent, Company or any affiliate thereof maintains owned or
franchised facilities or hosts web sites; or
(ii) directly or indirectly solicit, encourage, assist, entice,
or induce any employee of Parent or Company or any of its subsidiaries or
approach any such employee for any of the foregoing purposes, to be
employed by, or render any services to, any person, firm, corporation or
other entity engaged in a Competing Business.
(b) During the Employment Period and thereafter, Executive shall not,
without the Parent's and Company's prior written permission or in connection
with his duties under this Agreement, use or disclose all or any part of the
following valuable, special and unique assets of Parent's or Company's business
to any person, corporation, association or other entity (but excluding
information that had become public knowledge without any action by, or
involvement of, Executive) for any reason whatsoever: the confidential
information and trade secrets of Parent, the Company or any affiliate thereof,
including, but not limited to, the financial and sales information,
manufacturing formulas and processes, business plans and projections, and
personnel information and records.
(c) Executive acknowledges that the restrictions contained in this
Section 5 in view of the nature of the business in which Parent or Company is
engaged, are reasonable and necessary in order to protect the legitimate
interests of the Parent or Company and that any violation of such restrictions
would result in irreparable harm to the Parent or Company. In the event of
Executive's violation of any of these restrictions, the Parent or Company shall
be entitled to seek from any court of competent jurisdiction preliminary and
permanent injunctive relief without proving actual damage or immediate or
irreparable harm and without posting any bond. Nothing herein shall prohibit
the Parent or Company from pursuing any other remedies legally available to the
Parent or Company for such breach or threatened breach, including the recovery
of damages from Executive.
(d) If any of the provisions of this Section 5 should ever be
adjudicated to exceed the time, geographic, product or service, or other
limitations permitted by applicable law in any jurisdiction, then the affected
provisions shall be deemed reformed in such jurisdiction to the maximum time,
geographic, product or service, or other limitations permitted by applicable
law.
3
<PAGE>
6. TERMINATION ARRANGEMENTS.
(a) DEATH OR DISABILITY. In the event Executive's employment
hereunder is terminated by reason either of his death during the Employment
Period or by reason of his medically determined physical or mental disability
during the Employment Period, the Company shall continue to provide Executive
(or Executive's estate in the event of Executive's death) the compensation,
including adjustments, set forth in Section 3(a) hereof for the remainder of the
Employment Period; or, at Executive's (or Executive's estate's) option and in
lieu thereof, the Company shall pay Executive (or Executive's estate) a lump sum
equal to the total aggregate base salary, excluding adjustments, payable for
such period discounted at the rate of 6% per annum, simple interest. Any such
lump sum payment shall be made within 30 days after termination.
(b) TERMINATION WITHOUT CAUSE; RESIGNATION WITH GOOD REASON. In the
event Executive's employment is involuntarily terminated by Company without
Cause or Executive resigns with Good Reason during the Employment Period,
Company shall continue to provide Executive (or Executive's estate in the event
of Executive's death) the compensation, including adjustments, set forth in
Section 3 hereof for the remainder of the Employment Period; or, at Executive's
(or Executive's estate's) option and in lieu thereof, Company shall pay
Executive (or Executive's estate) a lump sum equal to the total aggregate base
salary, excluding adjustments, payable for such period, discounted at the rate
of 6% per annum, simple interest. Any such lump sum payment shall be made
within 30 days of termination.
"Good Reason" shall mean (i) the failure to elect or re-elect or
appoint or re-appoint Executive to the positions specified in Section 1 hereof,
(ii) a significant reduction in Executive's duties and responsibilities
hereunder (other than solely by reason of the Company ceasing to be a public
corporation as of the date of this Agreement), or (iii) a material breach of
this Agreement by Company or Parent, which, in each case continues after notice
and a reasonable opportunity to cure such action shall have been provided to
Company and Parent.
"Cause" shall mean (i) Executive's continued gross negligence, willful
misconduct or gross neglect of duty, after notice and a reasonable opportunity
to cure such action shall have been provided to Executive; or (ii) any criminal
act constituting bad faith by Executive in dealing with or on behalf of the
Company.
(c) RESIGNATION WITHOUT GOOD REASON. In the event Executive's
employment is terminated during the Employment Period by reason of Executive's
resignation without Good Reason, no additional payments, beyond those earned or
vested prior to the date of such resignation, shall be payable hereunder.
(d) TERMINATION FOR CAUSE. In the event Executive's employment is
involuntarily terminated for Cause during the Employment Period, no additional
payments, beyond those earned or vested prior to the date of such termination,
shall be payable hereunder.
7. CHANGE OF CONTROL.
(a) CASH BONUS. In the event of a Change of Control of the Company,
as defined in subparagraph (d) below, while Executive is employed under this
Agreement, and in consideration for his remaining in the employment of the
Company for one year following the date of the Change of Control, Company shall
pay to Executive a bonus equal to two (2) times Executives' then current base
salary. This bonus shall be in addition to Executive's regular salary and other
forms of compensation. Such bonus shall be paid as follows:
4
<PAGE>
(i) 50% within 30 days after the date of Change of Control; and
(ii) 50% within 30 days of the first anniversary of such Change
of Control, if Executive is still in the Company's employ as of that date.
Should Executive's employment be involuntarily terminated without
Cause or if Executive resigns with Good Reason or as a result of his death or
disability prior to such first anniversary, Executive (or Executive's estate in
the event of death) shall be entitled to the "first anniversary payment" within
30 days of such termination.
Should Executive resign without Good Reason or his employment be
involuntarily terminated with Cause prior to the first anniversary date, he
shall not be eligible to receive any further amount on the first anniversary
date.
Payments under this Section 7 are separate and distinct from and in
addition to any other payments contemplated under this Agreement.
(b) DEFINITION. For purposes of this Agreement, a Change of Control
shall occur if, after the Merger:
(i) Parent and its "affiliates" (as such term is defined in
Rule 12b-2 of the General Rules and Regulations promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended ("Exchange Act")) cease to beneficially own, directly or
indirectly, securities representing at least 50% of the combined voting
power of the outstanding securities of General Nutrition, Incorporated, a
Pennsylvania corporation, or any successor entity (including by merger,
sale of assets or otherwise); or
(ii) (A) any "person" (as such term is used under Section 13(d)
and 14(d) of the Exchange Act), other than Parent, Company or any affiliate
thereof, or any employee benefit plan maintained by Parent, Company or any
affiliate thereof, becomes a beneficial owner, directly or indirectly, of
more than 50% of the outstanding equity securities of Parent; or (B) the
sale or disposition of all or substantially all of the assets of Parent, or
(C) approval of a plan of liquidation or dissolution of Parent.
8. NOTICES. Any notice to be given under this Agreement shall be deemed
received five (5) business days thereafter if sent in writing, properly
addressed, by certified mail, and one (1) business day thereafter if sent in
writing, properly addressed, by overnight express courier or by hand. Notices
to Executive shall be sent to Executive's residence. Notices to Parent and
Company shall be sent to Company's home office.
9. WAIVER OF BREACH. The failure by a party to enforce its rights
against the other party following a breach of any provision of the Agreement
shall not operate or be construed as a waiver of any other provision hereof or
any subsequent breach by such other party.
10. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
11. ENTIRE AGREEMENT. Effective as of and conditioned upon the effective
time of the Merger, this Agreement supersedes and replaces any and all prior
employment agreements, both written and oral, between the parties. It contains
the entire understanding between parties and can only be amended or supplemented
by a written agreement signed by the parties. Notwithstanding the foregoing,
this Agreement does not supersede any excise tax reimbursement to which
Executive
5
<PAGE>
is entitled as provided by action of the Compensation Committee of the Board
at its meeting held on June 30, 1999. In the event the Merger shall not have
become effective, this Agreement shall be of no force or effect.
12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, which shall together constitute a valid and binding agreement.
PARENT COMPANY
By: /s/ Johannes C.T. van der Wielen By: /s/ James M. Sander
--------------------------------- --------------------------
Title: President and Chief Executive Title: Vice President
Officer
Reginald N. Steele, Sr.
-----------------------------
EXECUTIVE
/s/ Reginald N. Steele, Sr.
-----------------------------
EXECUTIVE'S SIGNATURE
10255 Buckland Bluff
-----------------------------
ADDRESS
Collierville, TN 38017
-----------------------------
6
<PAGE>
Exhibit (c)(3)(viii)
EMPLOYMENT AGREEMENT
AGREEMENT dated as of July 5, 1999 among General Nutrition Companies,
Inc., a Delaware corporation ("Company"), Royal Numico N.V., a company
organized under the laws of The Netherlands ("Parent") and John A. DiCecco
("Executive").
WHEREAS, Executive is employed by General Nutrition, Incorporated, a
subsidiary of Company, as Senior Vice President, Logistics/Manufacturing;
WHEREAS, in connection with an Agreement and Plan of Merger dated as of
July 5, 1999 (the "Merger Agreement"), a subsidiary of Parent will merge with
and into Company (the "Merger"); and
WHEREAS, Parent and Company wish to assure itself of the services of
Executive for the period provided in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereto hereby agree as follows:
1. EMPLOYMENT. Company and Parent agree to employ Executive, and
Executive agrees to serve in the position set forth above for the period
commencing at the effective time of the Merger (the "Effective Time") and
ending December 31, 2002 (the "Employment Period"); PROVIDED, HOWEVER, that
on January 1, 2002 and each January 1 thereafter, the Employment Period shall
automatically be extended for one additional year, unless not later than 90
days prior to the date of such automatic extension, the Company or Executive
shall have given notice to discontinue such extensions.
2. DUTIES. Executive is engaged to perform such duties as are
assigned to him by the Company. Executive shall devote his full time and
attention to the performance of such duties, which shall remain similar to
the duties he is performing as of the date of this Agreement. At no time
during the Employment Period shall Executive take on additional employment
without permission in writing from Company.
3. COMPENSATION.
(a) BASE SALARY. For all services rendered by Executive during the
Employment Period, Company shall initially pay Executive the base salary in
effect immediately prior to the Effective Time, subject to increase (but not
decrease) based on annual performance reviews conducted by the Chief Executive
Officer of the Company.
(b) INCENTIVE COMPENSATION. Executive shall be eligible to
participate during the Employment Period in any annual bonus or incentive
plans, stock option plans, stock purchase plans and any other long-term
compensation plans, programs or arrangements generally available to members
of the senior management of Company. Executive's maximum annual bonus or
incentive plan opportunity shall not be less than such opportunity as in
effect immediately prior to the date of signing of the Merger Agreement.
(c) OTHER COMPENSATION. Executive shall be eligible during the
Employment Period to participate in all employee benefit plans to which the
Company's executives are generally entitled to participate.
<PAGE>
(d) PRIOR CHANGE-OF-CONTROL BENEFIT. In exchange for the
cancelation of his change-of-control retention bonus in effect immediately
prior to the Effective Time, Company shall pay to Executive a bonus equal to one
(1) times base salary. This bonus shall be in addition to Executive's regular
salary and other forms of compensation. Such bonus shall be paid as follows:
(i) 50% within 30 days after the Effective Time; and
(ii) 50% within 30 days of the first anniversary of the Effective
Time, if Executive is still in the Company's employ as of that date.
Should Executive's employment be involuntarily terminated without
Cause (as defined herein) or if Executive resigns with Good Reason (as
defined herein) or as a result of his death or disability prior to such first
anniversary, Executive (or Executive's estate in the event of death) shall be
entitled to the "first anniversary payment" within 30 days of such
termination.
Should Executive resign without Good Reason or his employment be
involuntarily terminated with Cause prior to the first anniversary date, he
shall not be eligible to receive any further amount on the first anniversary
date.
Payments under this Section 3(d) are separate and distinct from and
in addition to any other payments contemplated under this Agreement.
(e) (i) GROSS-UP PAYMENTS. In the event Executive is subject to an
excise tax under Code Section 4999, in respect of payments or other
compensation made under this Agreement, as determined by the Company's
independent auditors, Company agrees to pay Executive an additional amount
which, after the payment by Executive of federal, state and local income,
employment and excise taxes on such additional amount, is equal to the
amount of the excise tax payable without regard to the additional amount.
Should Executive fail to pay such excise tax or be determined, pursuant to
any administrative or judicial proceeding, not to be subject to such excise
tax, Company's obligation to make an additional payment hereunder shall
cease as to the amount not paid or so determined and Executive shall
promptly refund to Company any such additional payment previously paid to
Executive.
(ii) EXPENSES OF ENFORCEMENT. In the event Executive's
employment is involuntarily terminated by Company other than for Cause or
if Executive resigns with Good Reason during the Employment Period or
following a Change of Control (as defined herein), then, notwithstanding
any provisions to this Agreement to the contrary, Company shall pay all
reasonable legal fees and expenses incurred by Executive in the successful
enforcement of Executive's rights under this Agreement.
4. REIMBURSEMENT OF EXPENSES. During the Employment Period, Company
shall continue to provide Executive with the perquisites to which he is
entitled immediately prior to the Effective Time. Executive shall furnish
Company with periodic, itemized expense reports if directed by Company.
2
<PAGE>
5. EMPLOYMENT COVENANTS. (a) During the Employment Period (as set
forth in Section 1 hereof and determined without regard to the termination of
Executive's employment), Executive shall not
(i) engage in any way, directly or indirectly, in any Competing
Business (as defined below) in the Geographic Area (as defined below);
PROVIDED, HOWEVER, in no event shall this provision be construed to
prohibit Executive's employment with any business in which less than 5% of
its consolidated gross revenues for its most recent fiscal year relates to
a Competing Business if Executive's responsibilities at such business do
not directly relate to a Competing Business. "Competing Business" shall
mean any activity relating to the development, manufacture, or the retail
or wholesale sale or distribution (including but not limited to sale or
distribution through retail, specialty retail, Internet, e-commerce, mail
order, multi-level marketing, mass market, or any other channel of
distribution) of vitamin and mineral supplements, sports nutrition
products, herbs, personal care or other health-related products.
"Geographic Area" shall mean the United States and any other country in
which the Parent, Company or any affiliate thereof maintains owned or
franchised facilities or hosts web sites; or
(ii) directly or indirectly solicit, encourage, assist, entice,
or induce any employee of Parent or Company or any of its subsidiaries or
approach any such employee for any of the foregoing purposes, to be
employed by, or render any services to, any person, firm, corporation or
other entity engaged in a Competing Business.
(b) During the Employment Period and thereafter, Executive shall not,
without the Parent's and Company's prior written permission or in connection
with his duties under this Agreement, use or disclose all or any part of the
following valuable, special and unique assets of Parent's or Company's business
to any person, corporation, association or other entity (but excluding
information that had become public knowledge without any action by, or
involvement of, Executive) for any reason whatsoever: the confidential
information and trade secrets of Parent, the Company or any affiliate thereof,
including, but not limited to, the financial and sales information,
manufacturing formulas and processes, business plans and projections, and
personnel information and records.
(c) Executive acknowledges that the restrictions contained in this
Section 5 in view of the nature of the business in which Parent or Company is
engaged, are reasonable and necessary in order to protect the legitimate
interests of the Parent or Company and that any violation of such restrictions
would result in irreparable harm to the Parent or Company. In the event of
Executive's violation of any of these restrictions, the Parent or Company shall
be entitled to seek from any court of competent jurisdiction preliminary and
permanent injunctive relief without proving actual damage or immediate or
irreparable harm and without posting any bond. Nothing herein shall prohibit
the Parent or Company from pursuing any other remedies legally available to the
Parent or Company for such breach or threatened breach, including the recovery
of damages from Executive.
(d) If any of the provisions of this Section 5 should ever be
adjudicated to exceed the time, geographic, product or service, or other
limitations permitted by applicable law in any jurisdiction, then the affected
provisions shall be deemed reformed in such jurisdiction to the maximum time,
geographic, product or service, or other limitations permitted by applicable
law.
3
<PAGE>
6. TERMINATION ARRANGEMENTS.
(a) DEATH OR DISABILITY. In the event Executive's employment
hereunder is terminated by reason either of his death during the Employment
Period or by reason of his medically determined physical or mental disability
during the Employment Period, the Company shall continue to provide Executive
(or Executive's estate in the event of Executive's death) the compensation,
including adjustments, set forth in Section 3(a) hereof for the remainder of
the Employment Period; or, at Executive's (or Executive's estate's) option
and in lieu thereof, the Company shall pay Executive (or Executive's estate)
a lump sum equal to the total aggregate base salary, excluding adjustments,
payable for such period discounted at the rate of 6% per annum, simple
interest. Any such lump sum payment shall be made within 30 days after
termination.
(b) TERMINATION WITHOUT CAUSE; RESIGNATION WITH GOOD REASON. In
the event Executive's employment is involuntarily terminated by Company
without Cause or Executive resigns with Good Reason during the Employment
Period, Company shall continue to provide Executive (or Executive's estate in
the event of Executive's death) the compensation, including adjustments, set
forth in Section 3 hereof for the remainder of the Employment Period; or, at
Executive's (or Executive's estate's) option and in lieu thereof, Company
shall pay Executive (or Executive's estate) a lump sum equal to the total
aggregate base salary, excluding adjustments, payable for such period,
discounted at the rate of 6% per annum, simple interest. Any such lump sum
payment shall be made within 30 days of termination.
"Good Reason" shall mean (i) the failure to elect or re-elect or
appoint or re-appoint Executive to the positions specified in Section 1
hereof, (ii) a significant reduction in Executive's duties and
responsibilities hereunder (other than solely by reason of the Company
ceasing to be a public corporation as of the date of this Agreement), or
(iii) a material breach of this Agreement by Company or Parent, which, in
each case continues after notice and a reasonable opportunity to cure such
action shall have been provided to Company and Parent.
"Cause" shall mean (i) Executive's continued gross negligence, willful
misconduct or gross neglect of duty, after notice and a reasonable opportunity
to cure such action shall have been provided to Executive; or (ii) any criminal
act constituting bad faith by Executive in dealing with or on behalf of the
Company.
(c) RESIGNATION WITHOUT GOOD REASON. In the event Executive's
employment is terminated during the Employment Period by reason of
Executive's resignation without Good Reason, no additional payments, beyond
those earned or vested prior to the date of such resignation, shall be
payable hereunder.
(d) TERMINATION FOR CAUSE. In the event Executive's employment is
involuntarily terminated for Cause during the Employment Period, no
additional payments, beyond those earned or vested prior to the date of such
termination, shall be payable hereunder.
7. CHANGE OF CONTROL.
(a) Cash Bonus. In the event of a Change of Control of the
Company, as defined in subparagraph (d) below, while Executive is employed
under this Agreement, and in consideration for his remaining in the
employment of the Company for one year following the date of the Change of
Control, Company shall pay to Executive a bonus equal to two (2) times
Executives' then current base salary. This bonus shall be in addition to
Executive's regular salary and other forms of compensation. Such bonus shall
be paid as follows:
4
<PAGE>
(i) 50% within 30 days after the date of Change of Control; and
(ii) 50% within 30 days of the first anniversary of such Change
of Control, if Executive is still in the Company's employ as of that date.
Should Executive's employment be involuntarily terminated without
Cause or if Executive resigns with Good Reason or as a result of his death or
disability prior to such first anniversary, Executive (or Executive's estate
in the event of death) shall be entitled to the "first anniversary payment"
within 30 days of such termination.
Should Executive resign without Good Reason or his employment be
involuntarily terminated with Cause prior to the first anniversary date, he
shall not be eligible to receive any further amount on the first anniversary
date.
Payments under this Section 7 are separate and distinct from and in
addition to any other payments contemplated under this Agreement.
(b) DEFINITION. For purposes of this Agreement, a Change of Control
shall occur if, after the Merger:
(i) Parent and its "affiliates" (as such term is defined in
Rule 12b-2 of the General Rules and Regulations promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended ("Exchange Act")) cease to beneficially own, directly or
indirectly, securities representing at least 50% of the combined voting
power of the outstanding securities of General Nutrition, Incorporated, a
Pennsylvania corporation, or any successor entity (including by merger,
sale of assets or otherwise); or
(ii) (A) any "person" (as such term is used under Sections 13(d)
and 14(d) of the Exchange Act), other than Parent, Company or any affiliate
thereof, or any employee benefit plan maintained by Parent, Company or any
affiliate thereof, becomes a beneficial owner, directly or indirectly, of
more than 50% of the outstanding equity securities of Parent; or (B) the
sale or disposition of all or substantially all of the assets of Parent, or
(C) approval of a plan of liquidation or dissolution of Parent.
8. NOTICES. Any notice to be given under this Agreement shall be
deemed received five (5) business days thereafter if sent in writing,
properly addressed, by certified mail, and one (1) business day thereafter if
sent in writing, properly addressed, by overnight express courier or by hand.
Notices to Executive shall be sent to Executive's residence. Notices to
Parent and Company shall be sent to Company's home office.
9. WAIVER OF BREACH. The failure by a party to enforce its rights
against the other party following a breach of any provision of the Agreement
shall not operate or be construed as a waiver of any other provision hereof
or any subsequent breach by such other party.
10. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Pennsylvania.
11. ENTIRE AGREEMENT. Effective as of and conditioned upon the
effective time of the Merger, this Agreement supersedes and replaces any and
all prior employment agreements, both written and oral, between the parties.
It contains the entire understanding between parties and can only be amended
or supplemented by a written agreement signed by the parties.
Notwithstanding the foregoing, this Agreement does not supersede any excise
tax reimbursement to which Executive
5
<PAGE>
is entitled as provided by action of the Compensation Committee of the Board
at its meeting held on June 30, 1999. In the event the Merger shall not have
become effective, this Agreement shall be of no force or effect.
12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, which shall together constitute a valid and binding agreement.
PARENT COMPANY
By: /s/ Johannes C.T. van der Wielen By: /s/ William E. Watts
-------------------------------- ---------------------------
Title: President and Chief Executive Title: President and Chief
Officer Executive Officer
John A. DiCecco
-------------------------------
EXECUTIVE
/s/ John A. DiCecco
-------------------------------
EXECUTIVE'S SIGNATURE
119 Florida Ave.
-------------------------------
ADDRESS
Apollo, PA 15613
-------------------------------
6
<PAGE>
Exhibit (c)(3)(ix)
EMPLOYMENT AGREEMENT
AGREEMENT dated as of July 5, 1999 among General Nutrition Companies,
Inc., a Delaware corporation ("Company"), Royal Numico N.V., a company
organized under the laws of The Netherlands ("Parent") and Edwin J. Kozlowski
("Executive").
WHEREAS, Executive is employed by General Nutrition, Incorporated, a
subsidiary of Company, as Executive Vice President & Chief Financial Officer;
WHEREAS, in connection with an Agreement and Plan of Merger dated as of
July 5, 1999 (the "Merger Agreement"), a subsidiary of Parent will merge with
and into Company (the "Merger"); and
WHEREAS, Parent and Company wish to assure itself of the services of
Executive for the period provided in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereto hereby agree as follows:
1. EMPLOYMENT. Company and Parent agree to employ Executive, and
Executive agrees to serve in the position set forth above for the period
commencing at the effective time of the Merger (the "Effective Time") and
ending December 31, 2002 (the "Employment Period"); PROVIDED, HOWEVER, that
on January 1, 2002 and each January 1 thereafter, the Employment Period shall
automatically be extended for one additional year, unless not later than 90
days prior to the date of such automatic extension, the Company or Executive
shall have given notice to discontinue such extensions.
2. DUTIES. Executive is engaged to perform such duties as are
assigned to him by the Company. Executive shall devote his full time and
attention to the performance of such duties, which shall remain similar to
the duties he is performing as of the date of this Agreement. At no time
during the Employment Period shall Executive take on additional employment
without permission in writing from Company.
3. COMPENSATION.
(a) BASE SALARY. For all services rendered by Executive during
the Employment Period, Company shall initially pay Executive the base salary
in effect immediately prior to the Effective Time, subject to increase (but
not decrease) based on annual performance reviews conducted by the Chief
Executive Officer of the Company.
(b) INCENTIVE COMPENSATION. Executive shall be eligible to
participate during the Employment Period in any annual bonus or incentive
plans, stock option plans, stock purchase plans and any other long-term
compensation plans, programs or arrangements generally available to members
of the senior management of Company. Executive's maximum annual bonus or
incentive plan opportunity shall not be less than such opportunity as in
effect immediately prior to the date of signing of the Merger Agreement.
(c) OTHER COMPENSATION. Executive shall be eligible during the
Employment Period to participate in all employee benefit plans to which the
Company's executives are generally entitled to participate.
<PAGE>
(d) PRIOR CHANGE-OF-CONTROL BENEFIT. In exchange for the
cancelation of his change-of-control retention bonus in effect immediately
prior to the Effective Time, Company shall pay to Executive a bonus equal to one
(1) times base salary. This bonus shall be in addition to Executive's regular
salary and other forms of compensation. Such bonus shall be paid as follows:
(i) 50% within 30 days after the Effective Time; and
(ii) 50% within 30 days of the first anniversary of the Effective
Time, if Executive is still in the Company's employ as of that date.
Should Executive's employment be involuntarily terminated without Cause
(as defined herein) or if Executive resigns with Good Reason (as defined
herein) or as a result of his death or disability prior to such first
anniversary, Executive (or Executive's estate in the event of death) shall be
entitled to the "first anniversary payment" within 30 days of such
termination.
Should Executive resign without Good Reason or his employment be
involuntarily terminated with Cause prior to the first anniversary date, he
shall not be eligible to receive any further amount on the first anniversary
date.
Payments under this Section 3(d) are separate and distinct from and in
addition to any other payments contemplated under this Agreement.
(e) (i) GROSS-UP PAYMENTS. In the event Executive is subject to an
excise tax under Code Section 4999, in respect of payments or other
compensation made under this Agreement, as determined by the Company's
independent auditors, Company agrees to pay Executive an additional amount
which, after the payment by Executive of federal, state and local income,
employment and excise taxes on such additional amount, is equal to the
amount of the excise tax payable without regard to the additional amount.
Should Executive fail to pay such excise tax or be determined, pursuant to
any administrative or judicial proceeding, not to be subject to such excise
tax, Company's obligation to make an additional payment hereunder shall
cease as to the amount not paid or so determined and Executive shall
promptly refund to Company any such additional payment previously paid to
Executive.
(ii) EXPENSES OF ENFORCEMENT. In the event Executive's
employment is involuntarily terminated by Company other than for Cause or
if Executive resigns with Good Reason during the Employment Period or
following a Change of Control (as defined herein), then, notwithstanding
any provisions to this Agreement to the contrary, Company shall pay all
reasonable legal fees and expenses incurred by Executive in the successful
enforcement of Executive's rights under this Agreement.
4. REIMBURSEMENT OF EXPENSES. During the Employment Period, Company
shall continue to provide Executive with the perquisites to which he is
entitled immediately prior to the Effective Time. Executive shall furnish
Company with periodic, itemized expense reports if directed by Company.
2
<PAGE>
5. EMPLOYMENT COVENANTS. (a) During the Employment Period (as set
forth in Section 1 hereof and determined without regard to the termination of
Executive's employment), Executive shall not
(i) engage in any way, directly or indirectly, in any Competing
Business (as defined below) in the Geographic Area (as defined below);
PROVIDED, HOWEVER, in no event shall this provision be construed to
prohibit Executive's employment with any business in which less than 5% of
its consolidated gross revenues for its most recent fiscal year relates to
a Competing Business if Executive's responsibilities at such business do
not directly relate to a Competing Business. "Competing Business" shall
mean any activity relating to the development, manufacture, or the retail
or wholesale sale or distribution (including but not limited to sale or
distribution through retail, specialty retail, Internet, e-commerce, mail
order, multi-level marketing, mass market, or any other channel of
distribution) of vitamin and mineral supplements, sports nutrition
products, herbs, personal care or other health-related products.
"Geographic Area" shall mean the United States and any other country in
which the Parent, Company or any affiliate thereof maintains owned or
franchised facilities or hosts web sites; or
(ii) directly or indirectly solicit, encourage, assist, entice,
or induce any employee of Parent or Company or any of its subsidiaries or
approach any such employee for any of the foregoing purposes, to be
employed by, or render any services to, any person, firm, corporation or
other entity engaged in a Competing Business.
(b) During the Employment Period and thereafter, Executive shall
not, without the Parent's and Company's prior written permission or in
connection with his duties under this Agreement, use or disclose all or any
part of the following valuable, special and unique assets of Parent's or
Company's business to any person, corporation, association or other entity
(but excluding information that had become public knowledge without any
action by, or involvement of, Executive) for any reason whatsoever: the
confidential information and trade secrets of Parent, the Company or any
affiliate thereof, including, but not limited to, the financial and sales
information, manufacturing formulas and processes, business plans and
projections, and personnel information and records.
(c) Executive acknowledges that the restrictions contained in this
Section 5 in view of the nature of the business in which Parent or Company is
engaged, are reasonable and necessary in order to protect the legitimate
interests of the Parent or Company and that any violation of such
restrictions would result in irreparable harm to the Parent or Company. In
the event of Executive's violation of any of these restrictions, the Parent
or Company shall be entitled to seek from any court of competent jurisdiction
preliminary and permanent injunctive relief without proving actual damage or
immediate or irreparable harm and without posting any bond. Nothing herein
shall prohibit the Parent or Company from pursuing any other remedies legally
available to the Parent or Company for such breach or threatened breach,
including the recovery of damages from Executive.
(d) If any of the provisions of this Section 5 should ever be
adjudicated to exceed the time, geographic, product or service, or other
limitations permitted by applicable law in any jurisdiction, then the
affected provisions shall be deemed reformed in such jurisdiction to the
maximum time, geographic, product or service, or other limitations permitted
by applicable law.
3
<PAGE>
6. TERMINATION ARRANGEMENTS.
(a) DEATH OR DISABILITY. In the event Executive's employment
hereunder is terminated by reason either of his death during the Employment
Period or by reason of his medically determined physical or mental disability
during the Employment Period, the Company shall continue to provide Executive
(or Executive's estate in the event of Executive's death) the compensation,
including adjustments, set forth in Section 3(a) hereof for the remainder of
the Employment Period; or, at Executive's (or Executive's estate's) option
and in lieu thereof, the Company shall pay Executive (or Executive's estate)
a lump sum equal to the total aggregate base salary, excluding adjustments,
payable for such period discounted at the rate of 6% per annum, simple
interest. Any such lump sum payment shall be made within 30 days after
termination.
(b) TERMINATION WITHOUT CAUSE; RESIGNATION WITH GOOD REASON. In
the event Executive's employment is involuntarily terminated by Company
without Cause or Executive resigns with Good Reason during the Employment
Period, Company shall continue to provide Executive (or Executive's estate in
the event of Executive's death) the compensation, including adjustments, set
forth in Section 3 hereof for the remainder of the Employment Period; or, at
Executive's (or Executive's estate's) option and in lieu thereof, Company
shall pay Executive (or Executive's estate) a lump sum equal to the total
aggregate base salary, excluding adjustments, payable for such period,
discounted at the rate of 6% per annum, simple interest. Any such lump sum
payment shall be made within 30 days of termination.
"Good Reason" shall mean (i) the failure to elect or re-elect or
appoint or re-appoint Executive to the positions specified in Section 1
hereof, (ii) a significant reduction in Executive's duties and
responsibilities hereunder (other than solely by reason of the Company
ceasing to be a public corporation as of the date of this Agreement), or
(iii) a material breach of this Agreement by Company or Parent, which, in
each case continues after notice and a reasonable opportunity to cure such
action shall have been provided to Company and Parent.
"Cause" shall mean (i) Executive's continued gross negligence,
willful misconduct or gross neglect of duty, after notice and a reasonable
opportunity to cure such action shall have been provided to Executive; or
(ii) any criminal act constituting bad faith by Executive in dealing with or
on behalf of the Company.
(c) RESIGNATION WITHOUT GOOD REASON. In the event Executive's
employment is terminated during the Employment Period by reason of
Executive's resignation without Good Reason, no additional payments, beyond
those earned or vested prior to the date of such resignation, shall be
payable hereunder.
(d) TERMINATION FOR CAUSE. In the event Executive's employment is
involuntarily terminated for Cause during the Employment Period, no
additional payments, beyond those earned or vested prior to the date of such
termination, shall be payable hereunder.
7. CHANGE OF CONTROL.
(a) CASH BONUS. In the event of a Change of Control of the
Company, as defined in subparagraph (d) below, while Executive is employed
under this Agreement, and in consideration for his remaining in the
employment of the Company for one year following the date of the Change of
Control, Company shall pay to Executive a bonus equal to two (2) times
Executives' then current base salary. This bonus shall be in addition to
Executive's regular salary and other forms of compensation. Such bonus shall
be paid as follows:
4
<PAGE>
(i) 50% within 30 days after the date of Change of Control; and
(ii) 50% within 30 days of the first anniversary of such Change
of Control, if Executive is still in the Company's employ as of that date.
Should Executive's employment be involuntarily terminated without
Cause or if Executive resigns with Good Reason or as a result of his death or
disability prior to such first anniversary, Executive (or Executive's estate
in the event of death) shall be entitled to the "first anniversary payment"
within 30 days of such termination.
Should Executive resign without Good Reason or his employment be
involuntarily terminated with Cause prior to the first anniversary date, he
shall not be eligible to receive any further amount on the first anniversary
date.
Payments under this Section 7 are separate and distinct from and in
addition to any other payments contemplated under this Agreement.
(b) DEFINITION. For purposes of this Agreement, a Change of Control
shall occur if, after the Merger:
(i) Parent and its "affiliates" (as such term is defined in
Rule 12b-2 of the General Rules and Regulations promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended ("Exchange Act")) cease to beneficially own, directly or
indirectly, securities representing at least 50% of the combined voting
power of the outstanding securities of General Nutrition, Incorporated, a
Pennsylvania corporation, or any successor entity (including by merger,
sale of assets or otherwise); or
(ii) (A) any "person" (as such term is used under Sections 13(d)
and 14(d) of the Exchange Act), other than Parent, Company or any affiliate
thereof, or any employee benefit plan maintained by Parent, Company or any
affiliate thereof, becomes a beneficial owner, directly or indirectly, of
more than 50% of the outstanding equity securities of Parent; or (B) the
sale or disposition of all or substantially all of the assets of Parent, or
(C) approval of a plan of liquidation or dissolution of Parent.
8. NOTICES. Any notice to be given under this Agreement shall be
deemed received five (5) business days thereafter if sent in writing,
properly addressed, by certified mail, and one (1) business day thereafter if
sent in writing, properly addressed, by overnight express courier or by hand.
Notices to Executive shall be sent to Executive's residence. Notices to
Parent and Company shall be sent to Company's home office.
9. WAIVER OF BREACH. The failure by a party to enforce its rights
against the other party following a breach of any provision of the Agreement
shall not operate or be construed as a waiver of any other provision hereof
or any subsequent breach by such other party.
10. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Pennsylvania.
11. ENTIRE AGREEMENT. Effective as of and conditioned upon the
effective time of the Merger, this Agreement supersedes and replaces any and
all prior employment agreements, both written and oral, between the parties.
It contains the entire understanding between parties and can only be amended
or supplemented by a written agreement signed by the parties.
Notwithstanding the foregoing, this Agreement does not supersede any excise
tax reimbursement to which Executive
5
<PAGE>
is entitled as provided by action of the Compensation Committee of the Board
at its meeting held on June 30, 1999. In the event the Merger shall not have
become effective, this Agreement shall be of no force or effect.
12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, which shall together constitute a valid and binding agreement.
PARENT COMPANY
By:/s/ Johannes C.T. van der Wielen By:/s/ William E. Watts
--------------------------------- ------------------------
Title: President and Chief Executive Title: President and Chief
Officer Executive Officer
Edwin J. Kozlowski
--------------------------
EXECUTIVE
/s/ Edwin J. Kozlowski
--------------------------
EXECUTIVE'S SIGNATURE
4191 Muirfield Circle
--------------------------
ADDRESS
Presto, PA 15142
--------------------------
6
<PAGE>
Exhibit (c)(3)(x)
EMPLOYMENT AGREEMENT
AGREEMENT dated as of July 5, 1999 among General Nutrition Companies,
Inc., a Delaware corporation ("Company"), Royal Numico N.V., a company
organized under the laws of The Netherlands ("Parent") and Russell L. Cooper
("Executive").
WHEREAS, Executive is employed by GNC Franchising, Inc., a subsidiary of
Company, as Senior Vice President and General Manager;
WHEREAS, in connection with an Agreement and Plan of Merger dated as of
July 5, 1999 (the "Merger Agreement"), a subsidiary of Parent will merge with
and into Company (the "Merger"); and
WHEREAS, Parent and Company wish to assure itself of the services of
Executive for the period provided in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereto hereby agree as follows:
1. EMPLOYMENT. Company and Parent agree to employ Executive, and
Executive agrees to serve in the position set forth above for the period
commencing at the effective time of the Merger (the "Effective Time") and
ending December 31, 2001 (the "Employment Period"); PROVIDED, HOWEVER, that
on January 1, 2001 and each January 1 thereafter, the Employment Period shall
automatically be extended for one additional year, unless not later than 90
days prior to the date of such automatic extension, the Company or Executive
shall have given notice to discontinue such extensions.
2. DUTIES. Executive is engaged to perform such duties as are
assigned to him by the Company. Executive shall devote his full time and
attention to the performance of such duties, which shall remain similar to
the duties he is performing as of the date of this Agreement. At no time
during the Employment Period shall Executive take on additional employment
without permission in writing from Company.
3. COMPENSATION.
(a) BASE SALARY. For all services rendered by Executive during
the Employment Period, Company shall initially pay Executive the base salary
in effect immediately prior to the Effective Time, subject to increase (but
not decrease) based on annual performance reviews conducted by the Chief
Executive Officer of the Company.
(b) INCENTIVE COMPENSATION. Executive shall be eligible to
participate during the Employment Period in any annual bonus or incentive
plans, stock option plans, stock purchase plans and any other long-term
compensation plans, programs or arrangements generally available to members
of the senior management of Company. Executive's maximum annual bonus or
incentive plan opportunity shall not be less than such opportunity as in
effect immediately prior to the date of signing of the Merger Agreement.
(c) OTHER COMPENSATION. Executive shall be eligible during the
Employment Period to participate in all employee benefit plans to which the
Company's executives are generally entitled to participate.
<PAGE>
(d) PRIOR CHANGE-OF-CONTROL BENEFIT. In exchange for the
cancelation of his change-of-control retention bonus in effect immediately
prior to the Effective Time, Company shall pay to Executive a bonus equal to
one (1) times base salary. This bonus shall be in addition to Executive's
regular salary and other forms of compensation. Such bonus shall be paid as
follows:
(i) 50% within 30 days after the Effective Time; and
(ii) 50% within 30 days of the first anniversary of the Effective
Time, if Executive is still in the Company's employ as of that date.
Should Executive's employment be involuntarily terminated without Cause
(as defined herein) or if Executive resigns with Good Reason (as defined
herein) or as a result of his death or disability prior to such first
anniversary, Executive (or Executive's estate in the event of death) shall be
entitled to the "first anniversary payment" within 30 days of such
termination.
Should Executive resign without Good Reason or his employment be
involuntarily terminated with Cause prior to the first anniversary date, he
shall not be eligible to receive any further amount on the first anniversary
date.
Payments under this Section 3(d) are separate and distinct from and in
addition to any other payments contemplated under this Agreement.
(e) (i) GROSS-UP PAYMENTS. In the event Executive is subject to an
excise tax under Code Section 4999, in respect of payments or other
compensation made under this Agreement, as determined by the Company's
independent auditors, Company agrees to pay Executive an additional amount
which, after the payment by Executive of federal, state and local income,
employment and excise taxes on such additional amount, is equal to the
amount of the excise tax payable without regard to the additional amount.
Should Executive fail to pay such excise tax or be determined, pursuant to
any administrative or judicial proceeding, not to be subject to such excise
tax, Company's obligation to make an additional payment hereunder shall
cease as to the amount not paid or so determined and Executive shall
promptly refund to Company any such additional payment previously paid to
Executive.
(ii) EXPENSES OF ENFORCEMENT. In the event Executive's
employment is involuntarily terminated by Company other than for Cause or
if Executive resigns with Good Reason during the Employment Period or
following a Change of Control (as defined herein), then, notwithstanding
any provisions to this Agreement to the contrary, Company shall pay all
reasonable legal fees and expenses incurred by Executive in the successful
enforcement of Executive's rights under this Agreement.
4. REIMBURSEMENT OF EXPENSES. During the Employment Period, Company
shall continue to provide Executive with the perquisites to which he is
entitled immediately prior to the Effective Time. Executive shall furnish
Company with periodic, itemized expense reports if directed by Company.
2
<PAGE>
5. EMPLOYMENT COVENANTS. (a) During the Employment Period (as set
forth in Section 1 hereof and determined without regard to the termination of
Executive's employment), Executive shall not
(i) engage in any way, directly or indirectly, in any Competing
Business (as defined below) in the Geographic Area (as defined below);
PROVIDED, HOWEVER, in no event shall this provision be construed to
prohibit Executive's employment with any business in which less than 5% of
its consolidated gross revenues for its most recent fiscal year relates to
a Competing Business if Executive's responsibilities at such business do
not directly relate to a Competing Business. "Competing Business" shall
mean any activity relating to the development, manufacture, or the retail
or wholesale sale or distribution (including but not limited to sale or
distribution through retail, specialty retail, Internet, e-commerce, mail
order, multi-level marketing, mass market, or any other channel of
distribution) of vitamin and mineral supplements, sports nutrition
products, herbs, personal care or other health-related products.
"Geographic Area" shall mean the United States and any other country in
which the Parent, Company or any affiliate thereof maintains owned or
franchised facilities or hosts web sites; or
(ii) directly or indirectly solicit, encourage, assist, entice,
or induce any employee of Parent or Company or any of its subsidiaries or
approach any such employee for any of the foregoing purposes, to be
employed by, or render any services to, any person, firm, corporation or
other entity engaged in a Competing Business.
(b) During the Employment Period and thereafter, Executive shall
not, without the Parent's and Company's prior written permission or in
connection with his duties under this Agreement, use or disclose all or any
part of the following valuable, special and unique assets of Parent's or
Company's business to any person, corporation, association or other entity
(but excluding information that had become public knowledge without any
action by, or involvement of, Executive) for any reason whatsoever: the
confidential information and trade secrets of Parent, the Company or any
affiliate thereof, including, but not limited to, the financial and sales
information, manufacturing formulas and processes, business plans and
projections, and personnel information and records.
(c) Executive acknowledges that the restrictions contained in this
Section 5 in view of the nature of the business in which Parent or Company is
engaged, are reasonable and necessary in order to protect the legitimate
interests of the Parent or Company and that any violation of such
restrictions would result in irreparable harm to the Parent or Company. In
the event of Executive's violation of any of these restrictions, the Parent
or Company shall be entitled to seek from any court of competent jurisdiction
preliminary and permanent injunctive relief without proving actual damage or
immediate or irreparable harm and without posting any bond. Nothing herein
shall prohibit the Parent or Company from pursuing any other remedies legally
available to the Parent or Company for such breach or threatened breach,
including the recovery of damages from Executive.
(d) If any of the provisions of this Section 5 should ever be
adjudicated to exceed the time, geographic, product or service, or other
limitations permitted by applicable law in any jurisdiction, then the
affected provisions shall be deemed reformed in such jurisdiction to the
maximum time, geographic, product or service, or other limitations permitted
by applicable law.
3
<PAGE>
6. TERMINATION ARRANGEMENTS.
(a) DEATH OR DISABILITY. In the event Executive's employment
hereunder is terminated by reason either of his death during the Employment
Period or by reason of his medically determined physical or mental disability
during the Employment Period, the Company shall continue to provide Executive
(or Executive's estate in the event of Executive's death) the compensation,
including adjustments, set forth in Section 3(a) hereof for the remainder of
the Employment Period; or, at Executive's (or Executive's estate's) option
and in lieu thereof, the Company shall pay Executive (or Executive's estate)
a lump sum equal to the total aggregate base salary, excluding adjustments,
payable for such period discounted at the rate of 6% per annum, simple
interest. Any such lump sum payment shall be made within 30 days after
termination.
(b) TERMINATION WITHOUT CAUSE; RESIGNATION WITH GOOD REASON. In
the event Executive's employment is involuntarily terminated by Company
without Cause or Executive resigns with Good Reason during the Employment
Period, Company shall continue to provide Executive (or Executive's estate in
the event of Executive's death) the compensation, including adjustments, set
forth in Section 3 hereof for the remainder of the Employment Period; or, at
Executive's (or Executive's estate's) option and in lieu thereof, Company
shall pay Executive (or Executive's estate) a lump sum equal to the total
aggregate base salary, excluding adjustments, payable for such period,
discounted at the rate of 6% per annum, simple interest. Any such lump sum
payment shall be made within 30 days of termination.
"Good Reason" shall mean (i) the failure to elect or re-elect or appoint
or re-appoint Executive to the positions specified in Section 1 hereof, (ii)
a significant reduction in Executive's duties and responsibilities hereunder
(other than solely by reason of the Company ceasing to be a public
corporation as of the date of this Agreement), or (iii) a material breach of
this Agreement by Company or Parent, which, in each case continues after
notice and a reasonable opportunity to cure such action shall have been
provided to Company and Parent.
"Cause" shall mean (i) Executive's continued gross negligence, willful
misconduct or gross neglect of duty, after notice and a reasonable
opportunity to cure such action shall have been provided to Executive; or
(ii) any criminal act constituting bad faith by Executive in dealing with or
on behalf of the Company.
(c) RESIGNATION WITHOUT GOOD REASON. In the event Executive's
employment is terminated during the Employment Period by reason of
Executive's resignation without Good Reason, no additional payments, beyond
those earned or vested prior to the date of such resignation, shall be
payable hereunder.
(d) TERMINATION FOR CAUSE. In the event Executive's employment is
involuntarily terminated for Cause during the Employment Period, no
additional payments, beyond those earned or vested prior to the date of such
termination, shall be payable hereunder.
7. CHANGE OF CONTROL.
(a) CASH BONUS. In the event of a Change of Control of the
Company, as defined in subparagraph (d) below, while Executive is employed
under this Agreement, and in consideration for his remaining in the
employment of the Company for one year following the date of the Change of
Control, Company shall pay to Executive a bonus equal to two (2) times
Executives' then current base salary. This bonus shall be in addition to
Executive's regular salary and other forms of compensation. Such bonus shall
be paid as follows:
4
<PAGE>
(i) 50% within 30 days after the date of Change of Control; and
(ii) 50% within 30 days of the first anniversary of such Change
of Control, if Executive is still in the Company's employ as of that date.
Should Executive's employment be involuntarily terminated without Cause
or if Executive resigns with Good Reason or as a result of his death or
disability prior to such first anniversary, Executive (or Executive's estate
in the event of death) shall be entitled to the "first anniversary payment"
within 30 days of such termination.
Should Executive resign without Good Reason or his employment be
involuntarily terminated with Cause prior to the first anniversary date, he
shall not be eligible to receive any further amount on the first anniversary
date.
Payments under this Section 7 are separate and distinct from and in
addition to any other payments contemplated under this Agreement.
(b) DEFINITION. For purposes of this Agreement, a Change of
Control shall occur if, after the Merger:
(i) Parent and its "affiliates" (as such term is defined in
Rule 12b-2 of the General Rules and Regulations promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended ("Exchange Act")) cease to beneficially own, directly or
indirectly, securities representing at least 50% of the combined voting
power of the outstanding securities of General Nutrition, Incorporated, a
Pennsylvania corporation, or any successor entity (including by merger,
sale of assets or otherwise); or
(ii) (A) any "person" (as such term is used under Sections 13(d)
and 14(d) of the Exchange Act), other than Parent, Company or any affiliate
thereof, or any employee benefit plan maintained by Parent, Company or any
affiliate thereof, becomes a beneficial owner, directly or indirectly, of
more than 50% of the outstanding equity securities of Parent; or (B) the
sale or disposition of all or substantially all of the assets of Parent, or
(C) approval of a plan of liquidation or dissolution of Parent.
8. NOTICES. Any notice to be given under this Agreement shall be
deemed received five (5) business days thereafter if sent in writing,
properly addressed, by certified mail, and one (1) business day thereafter if
sent in writing, properly addressed, by overnight express courier or by hand.
Notices to Executive shall be sent to Executive's residence. Notices to
Parent and Company shall be sent to Company's home office.
9. WAIVER OF BREACH. The failure by a party to enforce its rights
against the other party following a breach of any provision of the Agreement
shall not operate or be construed as a waiver of any other provision hereof
or any subsequent breach by such other party.
10. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Pennsylvania.
11. ENTIRE AGREEMENT. Effective as of and conditioned upon the
effective time of the Merger, this Agreement supersedes and replaces any and
all prior employment agreements, both written and oral, between the parties.
It contains the entire understanding between parties and can only be amended
or supplemented by a written agreement signed by the parties.
Notwithstanding the foregoing, this Agreement does not supersede any excise
tax reimbursement to which Executive
5
<PAGE>
is entitled as provided by action of the Compensation Committee of the Board
at its meeting held on June 30, 1999. In the event the Merger shall not have
become effective, this Agreement shall be of no force or effect.
12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, which shall together constitute a valid and binding agreement.
PARENT COMPANY
By: /s/ Johannes C.T. van der Wielen By: /s/ William E. Watts
-------------------------------- ------------------------------
Title: President and Chief Executive Title: President and Chief
Officer Executive Officer
Russell L. Cooper
----------------------------------
EXECUTIVE
/s/ Russell L. Cooper
----------------------------------
EXECUTIVE'S SIGNATURE
1920 Lake Marshall
----------------------------------
ADDRESS
Gibsonia, PA 15044
----------------------------------
6
<PAGE>
Exhibit (c)(4)
NON-COMPETITION AND NON-SOLICITATION AGREEMENT
AGREEMENT dated as of July 5, 1999 among General Nutrition Companies,
Inc., a Delaware corporation ("Company"), Royal Numico N.V., a company
organized under the laws of The Netherlands ("Parent"), and Gregory T. Horn
("Executive").
WHEREAS, Executive is employed by General Nutrition, Incorporated, a
Pennsylvania corporation and subsidiary of Company, as Executive Vice
President of Marketing and Business Development and Chief Operating Officer;
WHEREAS, in order for Parent and Company to assure itself of the
services of Executive after the effective time of the Merger, Parent and
Company have entered into an employment agreement as of the even date
herewith (the "Employment Agreement"); and
WHEREAS, in connection with an Agreement and Plan of Merger dated as of
July 5, 1999, a subsidiary of Parent will merge with and into Company (the
"Merger");
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereto hereby agree as follows:
1. NON-COMPETITION. During the Restricted Period (as set forth in
Section 3 below and determined without regard to the termination of
Executive's employment), Executive shall not engage in any way, directly or
indirectly, in any Competing Business (as defined below) in the Geographic
Area (as defined below); PROVIDED, HOWEVER; in no event shall this provision
be construed to prohibit Executive's employment with any business in which
less than 5% of its consolidated gross revenues for its most recent fiscal
year relates to a Competing Business if Executive's responsibilities at such
business do not directly relate to a Competing Business. "Competing
Business" shall mean any activity relating to the development, manufacture,
or the retail or wholesale sale or distribution (including but not limited to
sale or distribution through retail, specialty retail, Internet, e-commerce,
mail order, multi-level marketing, mass market, or any other channel of
distribution) of specialized nutrition products (including, but not limited
to, infant milk formula, foods and drinks, clinical nutrition products, and
nutriceuticals), vitamin and mineral supplements, sports nutrition products,
herbs, personal care or other health-related products. "Geographic Area"
shall mean the United States and any other country in which the Parent,
Company or any affiliate thereof maintains owned or franchised facilities or
hosts web sites.
2. NON-SOLICITATION. During the Restricted Period (as set forth in
Section 3 below and determined without regard to the termination of
Executive's employment), Executive shall not directly or indirectly solicit,
encourage, assist, entice, or induce any employee of Parent or Company or any
of its subsidiaries or approach any such employee for any of the foregoing
purposes, to be employed by, or render any services to, any person, firm,
corporation or other entity engaged in any Competing Business.
<PAGE>
b. During the Employment Period and thereafter, Executive shall
not, without the Parent's and Company's prior written permission or in
connection with his duties under this Agreement, use or disclose all or any
part of the following valuable, special and unique assets of Parent's or
Company's business to any person, corporation, association or other entity
(but excluding information that has become public knowledge without any
action by, or involvement of, Executive) for any reason whatsoever: the
confidential information and trade secrets of Parent, the Company and or any
affiliate, including but not limited to, financial and sales information,
manufacturing formulas and processes, business plans and projections, and
personnel information and records.
c. Executive acknowledges that the restrictions contained in this
Section 2 in view of the nature of the business in which Parent or Company is
engaged, are reasonable and necessary in order to protect the legitimate
interests of Parent and Company and that any violation of such restrictions
would result in irreparable harm to the Parent or Company. In the event of
Executive's violation of any of these restrictions, Parent or Company shall
be entitled to seek from any court of competent jurisdiction preliminary and
permanent injunctive relief without proving actual damage or immediate or
irreparable harm and without posting any bond. Nothing herein shall prohibit
Parent or Company from pursuing any other remedies legally available to
Parent or Company for such breach or threatened breach, including the
recovery of damages from Executive.
d. If any of the provisions of this Section 2 should ever be
adjudicated to exceed the time, geographic, product or service, or other
limitations permitted by applicable law in any jurisdiction, then the
affected provisions shall be deemed reformed in such jurisdiction to the
maximum time, geographic, product or service, or other limitations permitted
by applicable law.
3. RESTRICTED PERIOD. For purposes of this Agreement "Restricted
Period" shall mean the period commencing at the effective time of the Merger
(the "Effective Time") and ending on the later of the date of termination of
Executive's employment with Company or the expiration of the Employment
Period as defined in the Employment Agreement.
4. CONSIDERATION. In consideration for the foregoing covenants as set
forth above, Company shall pay Executive $120,000 in a single sum (net of
applicable withholding taxes) within 30 days following the Effective Time.
5. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Pennsylvania.
6. ENTIRE AGREEMENT. Effective as of and conditioned upon the
Effective Time, this Agreement supersedes and replaces any and all prior
employment agreements, both written and oral, between the parties. It
contains the entire understanding between parties and can only be amended or
supplemented by a written agreement signed by the parties. In the event the
Merger shall not have become effective, this Agreement shall be of no force
or effect.
<PAGE>
7. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, which shall together constitute a valid and binding agreement.
PARENT COMPANY
By:/s/ Johannes C.T. van der Wielen By:/s/ William E. Watts
-------------------------------- -------------------------------
Title: President and Chief Executive Title: President and Chief
Officer Executive Officer
Gregory T. Horn
----------------------------------
EXECUTIVE
/s/ Gregory T. Horn
----------------------------------
EXECUTIVE'S SIGNATURE
112 Creek Drive
----------------------------------
ADDRESS
Edgeworth, PA 15143
----------------------------------
<PAGE>
Exhibit (c)(5)(i)
ROYAL NUMICO, N.V.
P.O. Box 1
2700 M A Zoetermeer
The Netherlands
May 26, 1999
Mr. James M. Sander
Vice President-Law
Chief Legal Officer & Secretary
General Nutrition Companies, Inc.
300 Sixth Avenue
Pittsburgh, PA 15222
Dear Mr. Sander:
You have requested information with respect to Royal Numico, N.V., (the
"Company") in connection with your consideration of a possible transaction
with the Company (a "Transaction"). As a condition to our furnishing such
information to you, we are requiring that you agree, and by entering into
this letter agreement (this "Agreement") you hereby do agree, (i) to treat
confidentially, and to not disclose to any person (other than disclosures
expressly permitted by the terms hereof or to which the Company shall have
consented in writing), such information and any other non-public information
that is furnished by or on behalf of the Company, its agents or its
representatives (including attorneys and financial advisors) to you or your
directors, officers, employees, members, agents, advisors, affiliates or
representatives (including inter alia, financing sources) or those of your
agents or advisors (all the foregoing collectively referred to as
"Representatives"), whether furnished before or after the date of this
Agreement, and all notes, analyses, compilations, studies or other documents
or material, whether prepared by you or others, which contain or otherwise
reflect such information (collectively, the "Evaluation Material"), and (ii)
to not use any of the Evaluation Material for any purpose other than
evaluating a possible Transaction.
The term "Evaluation Material" does not include information that (a)
becomes generally available to the public other than as a result of a
disclosure by you or your Representatives, (b) was available to you or your
representatives on a non-confidential basis prior to its disclosure to you by
the Company its Representatives or its agents, or (c) becomes known by you or
your Representatives on a non-confidential basis from a source other than the
Company, its representatives or its agents, provided that such source is not,
to your knowledge after reasonable inquiry, bound by a confidentiality
agreement with the Company, its representatives or its agents and is not, to
your knowledge after reasonable inquiry, otherwise prohibited from
transmitting the information to you or your Representatives by a contractual,
legal or fiduciary obligation.
<PAGE>
Mr. James M. Sanders
May 26, 1999
Page 2
It is understood that you may disclose any of the Evaluation Material to
those of your Representatives who require such material for the purpose of
evaluating a possible Transaction (provided that such Representatives shall
be informed by you of the confidential nature of the Evaluation Material).
You agree that the Evaluation Material will be kept confidential by your
Representatives and that your Representatives will not disclose to any person
(other than disclosures expressly permitted by the terms hereof or to which
the Company shall have consented in writing) any of the Evaluation Material.
You further agree that your Representatives will not use any of the
Evaluation Material for any purpose other than evaluating a possible
Transaction on your behalf.
Without the prior written consent of the Company, you will not, and you
will cause your Representatives to not disclose (other than disclosures
expressly permitted by the terms hereof or to which the Company shall have
consented in writing) to any person (a) the fact that the Evaluation Material
has been made available to you or any of your Representatives or that you or
any of your Representatives have inspected any portion of the Evaluation
Material, (b) the fact that any discussions or negotiations are taking place
concerning a possible Transaction, or (c) any of the terms, conditions or
other facts with respect to any possible Transaction, including the status
thereof. The term "person" as used in this Agreement shall be broadly
interpreted to include without limitation any corporation, company,
partnership, bank, organization, or individual.
In the event that you or any of your Representatives are requested or
required by a governmental authority or in connection with a legal proceeding
or pursuant to legal process to disclose any of the Evaluation Material or
any other matter referred to in the immediately preceding paragraph, it is
agreed that you or such Representative, as the case may be, will provide the
Company with prompt notice of each such request or requirement so that the
Company may seek promptly an appropriate protective order or other
appropriate remedy and/or waive your or such Representative's compliance with
the provisions of this Agreement. In the event that such protective order or
other remedy is not obtained promptly, you or such Representative may furnish
that portion (and only that portion) of the Evaluation Material or other
information with respect to such matter which, in the opinion of your
counsel, you are legally compelled to disclose and will exercise your best
efforts to obtain reliable assurance that confidential treatment will be
accorded any Evaluation Material or other information so furnished.
In addition, you hereby acknowledge that you are aware (and that your
Representatives who are apprised of this matter have been or will be advised)
that the United States securities laws restrict persons with material
non-public information about a company obtained directly or indirectly from
that company from purchasing or selling securities of such company and from
communicating such information to any other person under circumstances in
which it is reasonably foreseeable that such person is likely to purchase or
sell such securities.
In consideration of the Evaluation Material being furnished to you, you
hereby further agree that, without the prior written consent of the
Supervisory Board of the Company, for a period of
<PAGE>
Mr. James M. Sanders
May 26, 1999
Page 3
eighteen months from the date hereof, neither you nor any of your affiliates
(as such term is defined in Rule 12b-2 of the Securities Exchange Act of
1934, as amended) acting alone or as part of a group, will acquire or offer
or agree to acquire, directly or indirectly, by purchase or otherwise any
voting securities (or direct or indirect rights or options to acquire any
voting securities) of the Company, or otherwise seek to influence or control,
in any manner whatsoever, the management or policies of the Company.
You agree that, prior to the first anniversary of the date of this
Agreement, neither you nor any of your affiliates will solicit for employment
any of the officers or employees (other than non-supervisory employees) of
the Company or any of its subsidiaries, with whom you have had contact during
the course of your consideration of a Transaction, without first obtaining
the written consent of the Company.
You will promptly upon the written request of the Company deliver to the
Company all documents or other matter furnished to you or your
Representatives by or on behalf of the Company, its agents or its
representatives constituting or containing Evaluation Material, together with
all copies thereof in the possession of you or your Representatives. In the
event of such request, you will promptly destroy all other documents or other
matter constituting or containing Evaluation Material in the possession of
you or your Representatives, with any such destruction promptly confirmed by
you in writing to the Company.
Although you understand that the Company has endeavored to include in
the Evaluation Material information known to it which it believes to be
relevant for the purpose of your investigation, you further understand that
neither the Company nor its agents or representatives make any representation
or warranty, express or implied, as to the accuracy or completeness of the
Evaluation Material. You agree that neither the Company nor its officers,
directors, agents or representatives shall have any liability to you or any
of your Representatives resulting from the use of the Evaluation Material by
you or such Representatives. Only those representations and warranties that
may be made to you or your affiliates in a definitive written agreement
regarding a Transaction, when, as and if executed and subject to such
limitations and restrictions as may be specified therein, shall have any
legal effect, and you agree that if you determine to engage in a Transaction
such determination will be based solely on the terms of such written
agreement and on your own investigation, analysis and assessment of the
common stock to be acquired. Moreover, unless and until such a definitive
written agreement is entered into, neither the Company nor you will be under
any legal obligation of any kind whatsoever with respect to such a
Transaction except for the matters specifically agreed to in this Agreement.
The terms of this Agreement may be amended, modified or waived only by a
separate writing signed by the Company and you expressly so amending,
modifying or waiving such terms. It is understood and agreed that no failure
or delay by the Company in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise
thereof
<PAGE>
Mr. James M. Sanders
May 26, 1999
Page 4
preclude any other or further exercise thereof or the exercise of any right,
power or privilege hereunder. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability
of any provision of this Agreement, which shall remain in full force and
effect. You agree and consent to personal jurisdiction and service and venue
in any federal or state court within the State of Delaware having subject
matter jurisdiction, for the purpose of any action, suit or proceeding
arising out of or relating to this Agreement. This Agreement shall be
governed and construed in accordance with the laws of Delaware applicable to
contracts made and to be fully performed in such State.
If you are in agreement with the foregoing, please sign and return one
copy of this letter, which thereupon will constitute our agreement with
respect to the subject matter hereof.
Very truly yours,
ROYAL NUMICO, N.V.
By:/s/ Julitte van der Ven
------------------------------------
Name: Julitte van der Ven
Title: General Counsel
Confirmed and agreed to as of
the date first above written:
GENERAL NUTRITION COMPANIES, INC.
By:/s/ James M. Sander
-----------------------------------
Name: James M. Sander
----------------------------
Title: Vice President
----------------------------
<PAGE>
Exhibit (c)(5)(ii)
[GNC Letterhead]
James M. Sander
Vice President -- Law
Chief Legal Officer and
Secretary
May 26, 1999
Julitte van der Ven
General Counsel
Royal Numico, N.V.
P.O. Box 1
2700 M A Zoetermeer
The Netherlands
Dear Ms. van der Ven:
You have requested information with respect to General Nutrition
Companies, Inc. (the "Company") in connection with your consideration of a
possible transaction with the Company (a "Transaction"). As a condition to
our furnishing such information to you, we are requiring that you agree, and
by entering into this letter agreement (this "Agreement") you hereby do
agree, (i) to treat confidentially, and to not disclose to any person (other
than disclosures expressly permitted by the terms hereof or to which the
Company shall have consented in writing), such information and any other
non-public information that is furnished by or on behalf of the Company, its
agents or its representatives (including attorneys and financial advisors) to
you or your directors, officers, employees, members, agents, advisors,
affiliates or representatives (including inter alia, financing sources) or
those of your agents or advisors (all the foregoing collectively referred to
as "Representatives"), whether furnished before or after the date of this
Agreement, and all notes, analyses, compilations, studies or other documents
or material, whether prepared by you or others, which contain or otherwise
reflect such information (collectively, the "Evaluation Material"), and (ii)
to not use any of the Evaluation Material for any purpose other than
evaluating a possible Transaction.
The term "Evaluation Material" does not include information that (a)
becomes generally available to the public other than as a result of a
disclosure by you or your Representatives, (b) was available to you or your
Representatives on a non-confidential basis prior to its disclosure to you by
the Company, its Representatives or its agents, or (c) becomes known by you
or your Representatives on a non-confidential basis from a source other than
the Company, its Representatives or its agents, provided that such source is
not, to your knowledge after reasonable inquiry, bound by a confidentiality
agreement with the Company, its representatives or its agents and is not, to
your knowledge after reasonable inquiry, otherwise prohibited from
transmitting the information to you or your Representatives by a contractual,
legal or fiduciary obligation.
It is understood that you may disclose any of the Evaluation Material to
those of your Representatives who require such material for the purpose of
evaluating a possible Transaction
<PAGE>
Julitte van der Ven
May 26, 1999
Page 2
(provided that such Representatives shall be informed by you of the
confidential nature of the Evaluation Material). You agree that the
Evaluation Material will be kept confidential by your Representatives and
that your Representatives will not disclose to any person (other than
disclosures expressly permitted by the terms hereof or to which the Company
shall have consented in writing) any of the Evaluation Material. You further
agree that your Representatives will not use any of the Evaluation Material
for any purpose other than evaluating a possible Transaction on your behalf.
Without the prior written consent of the Company, you will not, and you
will cause your Representatives to not disclose (other than disclosures
expressly permitted by the terms hereof or to which the Company shall have
consented in writing) to any person (a) the fact that the Evaluation Material
has been made available to you or any of your Representatives or that you or
any of your Representatives have inspected any portion of the Evaluation
Material, (b) the fact that any discussions or negotiations are taking place
concerning a possible Transaction, or (c) any of the terms, conditions or
other facts with respect to any possible Transaction, including the status
thereof. The term "person" as used in this Agreement shall be broadly
interpreted to include without limitation any corporation, company,
partnership, bank, organization, or individual.
In the event that you or any of your Representatives are requested or
required by a governmental authority or in connection with a legal proceeding
or pursuant to legal process to disclose any of the Evaluation Material or
any other matter referred to in the immediately preceding paragraph, it is
agreed that you or such Representative, as the case may be, will provide the
Company with prompt notice of each such request or requirement so that the
Company may seek promptly an appropriate protective order or other
appropriate remedy and/or waive your or such Representative's compliance with
the provisions of this Agreement. In the event that such protective order or
other remedy is not obtained promptly, you or such Representative may furnish
that portion (and only that portion) of the Evaluation Material or other
information with respect to such manner which, in the opinion of your
counsel, you are legally compelled to disclose and will exercise your best
efforts to obtain reliable assurance that confidential treatment will be
accorded any Evaluation Material or other information so furnished.
In addition, you hereby acknowledge that you are aware (and that your
Representatives who are apprised of this matter have been or will be advised)
that the United States securities laws restrict persons with material
non-public information about a company obtained directly or indirectly from
that company from purchasing or selling securities of such company and from
communicating such information to any other person under circumstances in
which it is reasonably foreseeable that such person is likely to purchase or
sell such securities.
In consideration of the Evaluation Material being furnished to you, you
hereby further agree that, without the prior written consent of the Board of
Directors of the Company, for a period of eighteen months from the date
hereof, neither you nor any of your affiliates (as such term is defined
<PAGE>
Julitte van der Ven
May 26, 1999
Page 3
in Rule 12b-2 of the Securities Exchange Act of 1934, as amended) acting
alone or as part of a group, will acquire or offer or agree to acquire,
directly or indirectly, by purchase or otherwise any voting securities (or
direct or indirect rights or options to acquire any voting securities) of the
Company, or otherwise seek to influence or control, in any manner whatsoever,
the management or policies of the Company.
You agree that, prior to the first anniversary of the date of this
Agreement, neither you nor any of your affiliates will solicit for employment
any of the officers or employees (other than non-supervisory employees) of
the Company or any of its subsidiaries, with whom you have had contact during
the course of your consideration of a Transaction, without first obtaining
the written consent of the Company.
You will promptly upon the written request of the Company deliver to the
Company all documents or other matter furnished to you or your
Representatives by or on behalf of the Company, its agents or its
Representatives constituting or containing Evaluation Material, together with
all copies thereof in the possession of you or your Representatives. In the
event of such request, you will promptly destroy all other documents or other
matter constituting or containing Evaluation Material in the possession of
you or your Representatives, with any such destruction promptly confirmed by
you in writing to the Company.
Although you understand that the Company has endeavored to include in
the Evaluation Material information known to it which it believes to be
relevant for the purpose of your investigation, you further understand that
neither the Company nor its agents or representatives make any representation
or warranty, express or implied, as to the accuracy or completeness of the
Evaluation Material. You agree that neither the Company nor its officers,
directors, agents or representatives shall have any liability to you or any
of your Representatives resulting from the use of the Evaluation Material by
you or such Representatives. Only those representations and warranties that
may be made by you or your affiliates in a definitive written agreement
regarding a Transaction, when, as and if executed and subject to such
limitations and restrictions as may be specified therein, shall have any
legal effect, and you agree that if you determine to engage in a Transaction
such determination will be based solely on the terms of such written
agreement and on your own investigation, analysis and assessment of the
common stock to be acquired. Moreover, unless and until such a definitive
written agreement is entered into, neither the Company nor you will be under
any legal obligation of any kind whatsoever with respect to such a
Transaction except for the matters specifically agreed to in this Agreement.
The terms of this Agreement may be amended, modified or waived only by a
separate writing signed by the Company and you expressly so amending,
modifying or waiving such terms. It is understood and agreed that no failure
or delay by the Company in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise
thereof
<PAGE>
Julitte van der Ven
May 26, 1999
Page 4
preclude any other or further exercise thereof or the exercise of any right,
power or privilege hereunder. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability
of any provision of this Agreement, which shall remain in full force and
effect. You agree and consent to personal jurisdiction and service and venue
in any federal or state court within the State of Delaware having subject
matter jurisdiction, for the purpose of any action, suit or proceeding
arising out of or relating to this Agreement. This Agreement shall be
governed and construed in accordance with the laws of Delaware applicable to
contracts made and to be fully performed in such State.
If you are in agreement with the foregoing, please sign and return one
copy of this letter, which thereupon will constitute our agreement with
respect to the subject matter hereof.
Very truly yours,
GENERAL NUTRITION COMPANIES, INC.
By: /s/ James M. Sander
-------------------
Name: James M. Sander
Title: Vice President - Law
Chief Legal Officer
Confirmed and agreed to as of
the date first above written:
ROYAL NUMICO, N.V.
By: /s/ Julitte H.C. van der Ven
----------------------------
Name: Julitte H.C. van der Ven
----------------------------
Title: General Counsel
----------------------------
<PAGE>
Exhibit (c)(6)
July 5, 1999
Mr. William E. Watts
President and Chief Executive Officer
General Nutrition Companies, Inc.
300 Sixth Avenue
Pittsburgh, PA 15222
Dear Bill:
This will confirm our agreement as to certain matters affecting the
executive officers and employees of General Nutrition Companies, Inc. and its
subsidiaries (collectively, "Company" and, after the Merger, the "Surviving
Corporation") on or after the Merger contemplated by the Agreement and Plan
of Merger, dated as of the date hereof, by and among Royal Numico N.V.
("Parent"), Numico Investment Corp. and General Nutrition Companies, Inc.
(the "Merger Agreement"). Capitalized terms not defined herein shall have the
meaning ascribed to them in the Merger Agreement. This letter (the "Benefits
Letter") is the letter described in Section 5.5 of the Merger Agreement.
I. COMPANY BENEFIT PLANS
A. Parent shall cause the Surviving Corporation to assume and honor
in accordance with their terms all Company Benefit Plans listed on Schedule
3.1(l)(i) of the Company Disclosure Schedule, subject to any modifications or
amendments contemplated by the Merger Agreement or this letter. Notwithstanding
the foregoing, except as expressly provided in the Agreement or this letter,
no provision hereunder shall be construed to in any way limit or restrict the
ability of Parent or the Surviving Corporation following the Effective Time
to modify, amend or terminate any Company Benefit Plan in accordance with the
terms of such Company Benefit Plan. No provision hereunder shall be construed
to limit or restrict the ability of Parent or the Surviving Corporation to
terminate the employment of any officer or employee of Company.
B. For the period commencing on the Effective Date and ending no
earlier than December 31, 2000, Parent shall, and shall cause the Surviving
Corporation to, provide employee pension benefit plan and welfare benefit
plan benefits to employees of the Surviving Corporation and its subsidiaries
that, when taken as a whole, are no less favorable in the aggregate than such
benefits provided to such employees immediately prior to the Effective Time;
provided, however, that nothing in this paragraph shall restrict or limit the
ability of Parent or the Surviving Corporation to alter such benefits where
such alteration has been made with the prior written consent of William E.
Watts.
<PAGE>
C. For the period commencing on the Effective Date and ending no
earlier than December 31, 2000, Parent shall, and shall cause the Surviving
Corporation and its subsidiaries to, provide severance benefits described in
Company Human Resources Manual Policy Number 720, as revised March 25, 1999,
to eligible employees whose employment is terminated on or prior to December
31, 2000 due to job elimination; PROVIDED; HOWEVER; such severance benefit
shall be the minimum benefit provided to officers of the Company or its
subsidiaries without employment agreements whose employment is terminated on
or prior to December 31, 2000 to the extent consistent with past practices of
the Company prior to the Effective Time. In no event shall such severance
benefit for officers of the Company or its subsidiaries exceed 100% of such
officer's then current annual base salary.
II. PAYMENTS UNDER COMPANY ANNUAL INCENTIVE PLAN, COMPANY EQUITY PLANS AND
DEFERRED COMPENSATION PLAN
A. Parent confirms that in accordance with the action taken by the
Compensation Committee of Company on June 30, 1999, a pro rata bonus equal to
7/13th of the maximum potential bonus (the "Current Bonus") for each
participant under any Company annual incentive plan, program or arrangement
(the "Existing Bonus Plans") in effect immediately prior to the Effective
Time (including, for this purpose, performance-based employer contributions
under the Company's 401(k) Savings and Incentive Plan, Canadian Savings Plan
(RRSP) and the Executive Retirement Arrangement) which are tied to the
achievement of annual earnings per share objectives of Company, shall be paid
or, as applicable, contributed immediately prior to the Effective Time.
Parent shall cause the Surviving Corporation to adopt an incentive plan with
respect to the remainder of the Surviving Corporation's fiscal year ending in
2000 which shall provide to each participant of the Existing Bonus Plans a
maximum potential bonus equal to 6/13th of such participant's Current Bonus
based upon performance standards established by William E. Watts.
B. Parent shall cause the Surviving Corporation to make the payments
to holders of Company Stock Options contemplated by Section 5.11 of the
Merger Agreement. Each purchase loan outstanding under the Company's 1996
Management and Director Stock Purchase Plan shall be forgiven upon the change
in control of the Company caused by the transactions contemplated by the
Merger Agreement, in accordance with the terms of such Plan and the purchase
loans.
C. The Company shall pay to each participant under the Company's
1993 and 1999 Deferred Compensation Plans an amount equal to the balance of
such participant's deferral account thereunder as of the Effective Time in
accordance with the terms of such Plans.
III. RETENTION BONUS POLICY
Parent shall cause the Surviving Corporation to pay to each of those
employees (Vice Presidents of the Company and above) listed on Appendix A
hereto the retention bonus set opposite such officer's name in accordance
with the policy adopted by the Company on March 22, 1997, and modified on
June 30, 1999, which policy provides:
<PAGE>
A. 50% of the retention bonus shall be paid as of the Effective Time.
B. The remaining 50% of the retention bonus shall be paid on the
first anniversary of the Effective Time, provided the employee has remained
in the continuous employment of the Surviving Corporation during the one-year
period ending on that date.
C. Notwithstanding the above, the remaining 50% shall be paid to the
employee's beneficiary in the event of death or disability during such
continuous employment, or in the event such continuous employment terminates
by reason of an involuntary termination for Cause or a resignation with Good
Reason. "Cause" shall mean (i) the employee's continued gross negligence,
willful misconduct or gross neglect of duty, after notice and a reasonable
opportunity to cure such action shall have been provided to the employee; or
(ii) any criminal act constituting bad faith by the employee in dealing with
or on behalf of the Company. "Good Reason" shall mean (i) a significant
reduction in the employee's duties and responsibilities from those in effect
immediately after the Effective Time, or (ii) a reduction in base salary of
the employee, which in each case continued after notice and a reasonable
opportunity to cure such action shall have been provided to Company and
Parent.
The amount of such retention bonuses has been provided to Parent on
the compensation report from the Company, dated as of July 2, 1999.
IV. EXECUTIVE EMPLOYMENT AGREEMENTS AND RELATED MATTERS
Parent confirms that it will comply and/or will cause the Surviving
Corporation to comply with the Employment Agreements of even date herewith
entered into by Parent (where applicable), the Company and the senior
officers of Company listed on Appendix B hereof.
Parent confirms that it will cause the Surviving Corporation to pay
to William E. Watts the change in control payment provided for in the
above-described Employment Agreement.
Parent confirms that the termination of the service of the Chairman
of the Board of Company immediately following the Effective Time shall
constitute a termination without cause under his employment agreement with
Company. As a result, Parent confirms that it will cause the Surviving
Corporation to pay to the Chairman the full amount of the change in control
payment provided for in the employment agreement following the Effective Time
and shall continue to pay to the Chairman the base salary set forth in the
employment agreement through February 1, 2002, subject to any election by the
Chairman to receive such amount in a lump sum payment in accordance with the
terms thereunder.
V. PARENT EQUITY INCENTIVE PROGRAMS
Parent agrees to establish or cause the Surviving Corporation to
establish the Parent Management Stock Purchase Plan and Parent Stock Option
Program as described on Appendices C and D, respectively.
<PAGE>
VI. TAX MATTERS
Parent confirms that it will cause the Surviving Corporation to pay
to affected individuals an excise tax reimbursement payment in accordance
with the action of the Compensation Committee of Company on June 30, 1999.
The amount of the tax reimbursement payment shall be determined and payable
in the manner described in the Employment Agreements referred to above.
With regard to payments to the Chief Executive Officer of the
Company otherwise to be made as of the Effective Date relating to (1) the
Company's 1993 and 1999 Deferred Compensation Plans, and (2) the
change-in-control retention bonus under his employment agreement with the
Company in effect immediately prior to the Effective Time, the Company shall
automatically defer any such payment otherwise payable at the Effective Time
to the extent necessary to avoid the disallowance of the deduction thereof
for tax purposes due to Code Section 162(m). Parent shall cause the Surviving
Corporation to pay interest on any amounts so deferred at the rate of 6% per
annum, simple interest, and Parent shall provide a guaranty of the payment
thereof. Payment of such deferred amounts shall be made not later than (i) in
case of the amounts payable under clause (1) of the preceding sentence
hereof, one day after the Effective Time and (ii) in the case of the amounts
payable under clause (2) of the preceding sentence hereof, one day after the
end of the 2 and 1/2 month period following the Effective Time.
VII. COUNTERPARTS
This Benefits Letter may be executed in one or more counterparts,
which shall together constitute a valid and binding agreement.
<PAGE>
Please confirm your agreement with the foregoing by signing and
returning to me the enclosed copy of this letter.
Very truly yours,
ROYAL NUMICO N.V.
/s/ Johannes C.T. van der Wielen
--------------------------------
ACCEPTED AND AGREED TO this
5th day of July, 1999.
GENERAL NUTRITION COMPANIES, INC.
/s/ William E. Watts
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<PAGE>
APPENDIX C
Summary of Principal Terms
NUMICO MANAGEMENT STOCK PURCHASE PLAN
The opportunity to purchase shares of Numico under the new
management stock purchase plan would be subject to the terms and conditions
described below. The new management stock purchase plan is not intended to
qualify as an "employee stock purchase plan" under Section 423 of the U.S.
Internal Revenue Code.
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<CAPTION>
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ELIGIBLE EMPLOYEES Officers and key employees of the Company (and
its subsidiaries) specified on the attached
schedule.
PURCHASE PRICE The purchase price per share will be equal
to the average closing share price for the 15
trading days preceding the date of the Merger
Agreement. Such purchase price will be expressed
in U.S. dollars based on the U.S. dollars-to-Euro
exchange rate as of the last day of such
15-trading day period.
EMPLOYEE PURCHASE The opportunity to purchase shares will be
OF SHARES extended to the eligible employees as promptly as
practicable after the Closing Date. Those
electing to participate will be required to pay
for such shares no earlier than the date on which
option holders are cashed out pursuant to the
Merger Agreement. The maximum value of shares
purchased will be as follows:
PARTICIPANT MAXIMUM VALUE
Category A 200% of base salary
Category B 150% of base salary
Category C 100% of base salary
MATCHING LOAN For each share purchased, the Company will make a
loan in U.S. dollars to finance the participant's
purchase of up to 2 additional shares. The Company
would retain a security interest in the initial
purchased shares and any additional purchased
shares. The loan will be due 36 full months after
the Closing Date (the "Maturity Date"). The interest
on the loan will be at the rate of 6% per annum,
payable at the Maturity Date.
TIME-VESTING 50% of the loan (including interest thereon)
will be forgiven upon completion of continuous
employment with the Company (or its subsidiaries)
from the Closing Date until the Maturity Date.
If the participant incurs an Involuntary
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
Termination Without Cause prior to the loan
forgiveness date, 1/3 of the loan will be forgiven
for each full year of employment with the Company
(or its subsidiaries) following the Closing Date.
An "Involuntary Termination Without Cause" means
a termination of employment by the Company and its
subsidiaries (including a termination by reason of
death or disability) for reasons other than
continuing misconduct, a continuing failure to
substantially perform assigned duties, or other
material violation of Company policy as applied
in a manner consistent with past practices of the
Company prior to the Effective Time, in each case
after notice and a reasonable opportunity to cure
such action shall have been provided to the
employee.
PERFORMANCE-VESTING 50% of the loan (including interest thereon) will
be forgiven as of the Maturity Date if the
Company has attained its cumulative "Operating
EBIT" goal for such period, as prepared by the
CEO of the Company in accordance with the long-
term model presented to Numico prior to the date
of the Merger Agreement. If a participant
is involuntarily terminated without Cause prior
to the Maturity Date, 1/3 of the loan (including
interest thereon) will be forgiven for each annual
Operating EBIT goal attained during such period.
SHARE ACCOUNTS All shares purchased under this plan will be held
in an account by Numico or Company until the
Maturity Date or, if earlier, the date of
termination of employment. Participants will
have voting (if any), dividend and any other
shareholder rights with respect to such shares
during such period. Immediately after the Maturity
Date, shares held in such account will be delivered
to participants (or their nominees) and may be
freely sold or transferred.
SECURITIES LAW If the purchase of shares of Numico under this
plan by eligible employees of the Company (or its
subsidiaries) is not permissible by reason of the
application of U.S. securities laws or compliance
with such laws or other applicable laws would be
unduly burdensome, such employees will be granted
substitute awards substantially equivalent to the
economic benefit under this plan.
MISCELLANEOUS In addition to any limitations on transfer or sale
described above or upon the lifting of such
limitations, the sale of shares of Numico acquired
under this plan will be subject to applicable
law and the policies of Numico generally
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
applicable to holders of shares of Numico. For
purposes of this plan, "shares" shall mean the
depositary receipts exchangeable into ordinary
shares on a restricted scale which are directly
traded on the Amsterdam Stock Exchange.
</TABLE>
3
<PAGE>
APPENDIX D
Summary of Principal Terms
NUMICO STOCK OPTION PROGRAM
1. NUMBER OF OPTIONS
Options to purchase 500,000 shares of Numico would be available for
grant to key employees of the Company (and its subsidiaries) immediately
following the Closing Date. Additional options to purchase at least 250,000
shares of Numico would be available for grant annually following the first,
second and third anniversaries of the Closing Date.
2. TERMS OF OPTION
The options granted under the new stock option plan would be on the
terms and conditions provided below.
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ELIGIBLE EMPLOYEES Employees of the Company (including its
subsidiaries).
GRANTS Option grants as determined by CEO of the Company
and approved by the Supervisory Board of
Numico. With regard to the initial grants of
options to purchase 500,000 ordinary shares of
Numico as soon as practicable following Closing,
it is anticipated that such options will not be
granted to participants in the Numico Management
Stock Purchase Plan; PROVIDED; HOWEVER; any
participant without an employment agreement with
the Company who participates at the maximum level
permissible under the Numico Management Stock
Purchase Plan will be eligible for such initial
grants.
TYPE OF OPTIONS Nonqualified options to purchase ordinary
shares of Numico.
EXERCISE PRICE Initial grants of options to purchase 500,000
ordinary shares of Numico as soon as practicable
following Closing Date have an exercise price
equal to the average closing share price for the
15 trading days preceding the date of the Merger
Agreement. Subsequent grants of options shall
have an exercise price equal to the fair market
value of an ordinary share of Numico on the date
of grant. The exercise price will be expressed
in Euros. Initial grants fully vest upon
completion of 3 years of employment with the
Company (or its subsidiaries) following the
Closing Date. Subsequent grants fully vest upon
completion of 3 years of employment following the
date of grant. If option holder incurs an
Involuntary Termination Without Cause prior
to the vesting date, 1/3 of such option will be
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
exercisable on the date of such termination for
each full year of employment with the Company
(or its subsidiaries) following the date of
grant. An "Involuntary Termination Without
Cause" means a termination of employment by the
Company and its subsidiaries (including a
termination by reason of death or disability)
for reasons other than continuing misconduct,
continuing failure to substantially perform
assigned duties, or other material violation of
Company policy as applied in a manner consistent
with past practices of the Company prior to the
Effective Time, in each case after notice and a
reasonable opportunity to cure such action shall
have been provided to the employee.
OPTION TERM Options expire after 5 years.
SECURITIES LAW If option grants to purchase ordinary shares of
Numico to eligible employees of the Company (or
its subsidiaries) are not permissible by reason
of the application of U.S. securities laws or
compliance with such laws or other applicable laws
would be unduly burdensome, such employees will
be granted substitute cash awards substantially
equivalent to such option grants.
MISCELLANEOUS Exercise of options and the sale of shares of
Numico acquired upon exercise of options will
be subject to applicable law and the policies of
Numico generally applicable to its world-wide
option holders to purchase shares of Numico.
For purposes of this program, "shares" shall
mean the depositary receipts exchangeable into
ordinary shares on a restricted scale which are
directly traded on the Amsterdam Stock Exchange.
</TABLE>
