-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BAGs48S2vF7bjwOdb/aBWyMwOO7yGe7HmDT4lPMN1cZFpYm24GEmU1FeKXeG7AAw O05eBXZnSxO1m8mN8XuEeA== 0001047469-99-026935.txt : 19990712 0001047469-99-026935.hdr.sgml : 19990712 ACCESSION NUMBER: 0001047469-99-026935 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 27 FILED AS OF DATE: 19990709 GROUP MEMBERS: KONINKLIJKE NUMICO NV GROUP MEMBERS: NUMICO INVESTMENT CORP. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: GENERAL NUTRITION COMPANIES INC CENTRAL INDEX KEY: 0000880120 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-FOOD STORES [5400] IRS NUMBER: 043056351 STATE OF INCORPORATION: DE FISCAL YEAR END: 0206 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: SEC FILE NUMBER: 005-49003 FILM NUMBER: 99662224 BUSINESS ADDRESS: STREET 1: 300 SIXTH AVENUE CITY: PITTSBURGH STATE: PA ZIP: 15222 BUSINESS PHONE: 412-288-46 MAIL ADDRESS: STREET 1: 921 PENN AVENUE CITY: PITTSBURGH STATE: PA ZIP: 15222 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: KONINKLIJKE NUMICO NV CENTRAL INDEX KEY: 0001089936 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: P.O. BOX 1 STREET 2: 2700 MA ZOETERMEER CITY: AMSTERDAM BUSINESS PHONE: 01131793539607 MAIL ADDRESS: STREET 1: P.O. BOX 1 STREET 2: 2700 MA ZOETERMEER CITY: AMSTERDAM SC 14D1 1 SC 14D1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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:
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
CALCULATION OF FILING FEE
TRANSACTION VALUATION* AMOUNT OF FILING FEE** $1,880,551,925 $376,111
* 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. Amount Previously Paid: N/A Filing Party: N/A Form or Registration No.: N/A Date Filed: N/A
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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 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 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 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. (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.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS. (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.
4 (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.
5 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 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
6 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION - ------------ ----------------------------------------------------------------------------------------------------- (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.
7 (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.
8 EX-99.(A)(1) 2 EXHIBIT 99(A)(1) 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 TABLE OF CONTENTS
SECTION PAGE - ---------------------------------------------------------------------------------------------------------------- ----- 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
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 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 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; 3 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 4 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 5 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 6 (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 7 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 8 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 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.
BID QUOTATIONS ------------------------ FISCAL YEAR HIGH LOW - ------------------------------------------------------------------------------- ----------- ----------- 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
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 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 (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)
TWELVE WEEKS ENDED FISCAL YEAR ENDED --------------------------- -------------------------------- APRIL 25, FEBRUARY 6, JANUARY 31, MAY 1, 1999 1998 1999 1998 ------------ ------------- --------------- --------------- 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
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 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)
FISCAL YEAR ENDED ------------------------------------------------- FEBRUARY 5, FEBRUARY 3, FEBRUARY 2, 2000 2001 2002 --------------- --------------- --------------- 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
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 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)
FISCAL YEAR ENDED DECEMBER 31, ---------------------------------------------------------- 1996 1997 1998 1998(1) NLG NLG NLG US$ ------------- ------------- ------------- ------------- 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
- ------------------------ (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 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 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 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 17 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. 18 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; 19 (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, 20 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 21 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 22 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 23 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 24 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. 25 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 26 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 27 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. 28 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 29 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 30 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 31 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 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 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 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 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.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT NAME AND FIVE-YEAR EMPLOYMENT HISTORY - --------------------------------------- ------------------------------------------------------------------------- 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."
A-1 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.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT NAME AND FIVE-YEAR EMPLOYMENT HISTORY - --------------------------------------- ------------------------------------------------------------------------- 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.
A-2 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 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
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 EX-99.(A)(2) 3 EXHIBIT 99(A)(2) 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 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
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.
- ------------------------------------------------------------------------------------------------------ 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) - ------------------------------------------------------------------------------------------------------ ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- ------------------------------------------------- Total shares - ------------------------------------------------------------------------------------------------------
(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: ___________________________________________________ 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 "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. - ------------------------------------------------ ------------------------------------------------ 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.) - ------------------------------------------------ ------------------------------------------------
- -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 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. 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. - ------------------------------------------------------------------------------------------------------ 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 - ------------------------------------------------------------------------------------------------------
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." - -------------------------------------------------------------------------------------------------------
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. Date: ------------------------, 1999 ------------------------------------------------- Signature ------------------------------------------------- Name (Please Print)
- -------------------------------------------------------------------------------- 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 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
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 EX-99.(A)(3) 4 EXHIBIT 99(A)(3) 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 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
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. 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 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. Name of Firm: - -------------------------------------------- -------------------------------------------- Authorized Signature Address: Name: - -------------------------------------------- -------------------------------------------- - -------------------------------------------- Please Print Zip Code Title: -------------------------------------------- Area Code and Tel No.: Dated: , 1999 - --------------------------------------------
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES FOR SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL. 3 EX-99.(A)(4) 5 EXHIBIT 99(A)(4) 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 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 EX-99.(A)(5) 6 EXHIBIT 99(A)(5) 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 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 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 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. 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))
- ------------------------ * Unless otherwise indicated, it will be assumed that all your Shares held by us for your account are to be tendered. EX-99.(A)(6) 7 EXHIBIT 99(A)(6) Contacts: Royal Numico N.V. Klaas de Jong 31-79-353-9028 klaas.dejong@numico.com ----------------------- Media: BSMG Worldwide Edward Nebb, 212-445-8213 Bo Park, 212-445-8152 bpark@bsmg.com -------------- Lavine Surtani, 212-445-8262 lsurtani@bsmg.com ----------------- FOR IMMEDIATE RELEASE General Nutrition Companies Media: Miller DeMartine Group Gregory Miller, 917-653-7335 gmiller@mdgpr.com ----------------- Barbara Eng, 212-626-6694 Investors: Edwin J. Kozlowski, EVP/CFO 412-288-4661 ed-kozlowski@gnc-hq.com ----------------------- 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- -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- -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- -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. # # # EX-99.(A)(7) 8 EXHIBIT 99(A)(7) 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 EX-99.(A)(8) 9 EXHIBIT 99(A)(8) 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.
GIVE THE NAME AND FOR THIS TYPE OF ACCOUNT TAXPAYER IDENTIFICATION NUMBER OF-- - ---------------------------------------------------------------- ----------------------------------------------------- 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
- -------------------------- (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). 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. EX-99.(A)(9) 10 EXHIBIT 99(A)(9) Exhibit (a)(9) FOR IMMEDIATE RELEASE CONTACTS: Royal Numico N.V. JULY 9, 1999 Klaas de Jong 31-79-353-9028 klaas.dejong@numico.com Media: BSMG Worldwide Edward Nebb, 212-445-8213 Bo Park, 212-445-8152 bpark@bsmg.com Lavine Surtani, 212-445-8262 lsurtani@bsmg.com 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- 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. # # # EX-99.(B)(1) 11 EXHIBIT 99(B)(1) 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); 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. 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 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' 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 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 -------------------------------------------- PROJECT SEA EURO 2,600,000,000 FACILITY INDICATIVE TERMS & CONDITIONS
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.
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.
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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;
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(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);
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(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;
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(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;
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(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);
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- 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.
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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
(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
(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
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.
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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.
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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).
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"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).
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"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.
16 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 EX-99.(C)(1) 12 EXHIBIT 99(C)(1) AGREEMENT AND PLAN OF MERGER DATED AS OF JULY 5, 1999 AMONG KONINKLIJKE NUMICO N.V., a company incorporated under the laws of The Netherlands, NUMICO INVESTMENT CORP., a Delaware corporation, AND GENERAL NUTRITION COMPANIES, INC., a Delaware corporation TABLE OF CONTENTS ARTICLE I. THE TENDER OFFER
Page ---- 1.1 THE OFFER........................................................................2 1.2 SEC FILINGS......................................................................3 1.3 COMPANY ACTION...................................................................4 1.4 COMPOSITION OF THE COMPANY BOARD.................................................4 ARTICLE II. THE MERGER 2.1 THE MERGER.......................................................................6 2.2 CLOSING..........................................................................6 2.3 EFFECTIVE TIME...................................................................6 2.4 EFFECT OF THE MERGER.............................................................6 2.5 CERTIFICATE OF INCORPORATION.....................................................6 2.6 BYLAWS...........................................................................6 2.7 OFFICERS AND DIRECTORS OF SURVIVING CORPORATION..................................7 2.8 EFFECT ON CAPITAL STOCK..........................................................7 2.9 SURRENDER AND PAYMENT............................................................7 ARTICLE III. REPRESENTATIONS AND WARRANTIES 3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................................10 3.2 REPRESENTATIONS AND WARRANTIES OF PARENT........................................23 3.3 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.........................26 ARTICLE IV. COVENANTS RELATING TO CONDUCT OF BUSINESS 4.1 COVENANTS OF THE COMPANY........................................................28 4.2 COVENANTS OF PARENT AND MERGER SUB..............................................30 4.3 ADVICE OF CHANGES; GOVERNMENT FILINGS...........................................31 i ARTICLE V. ADDITIONAL AGREEMENTS 5.1 APPROVAL BY THE COMPANY'S STOCKHOLDERS..........................................32 5.2 ACCESS TO INFORMATION...........................................................32 5.3 APPROVALS AND CONSENTS; COOPERATION.............................................33 5.4 ACQUISITION PROPOSALS...........................................................33 5.5 EMPLOYEE BENEFITS...............................................................35 5.6 FEES AND EXPENSES...............................................................35 5.7 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.............................35 5.8 PUBLIC ANNOUNCEMENTS............................................................36 5.9 TAKEOVER STATUTES...............................................................36 5.10 THIRD PARTY STANDSTILL AGREEMENTS; TORTIOUS INTERFERENCE........................36 5.11 COMPANY OPTION PLANS............................................................36 ARTICLE VI. CONDITIONS PRECEDENT 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER......................37 ARTICLE VII. TERMINATION AND AMENDMENT 7.1 TERMINATION.....................................................................38 7.2 EFFECT OF TERMINATION...........................................................40 7.3 AMENDMENT.......................................................................40 7.4 EXTENSION; WAIVER...............................................................41 ARTICLE VIII. GENERAL PROVISIONS 8.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS; NO OTHER REPRESENTATIONS AND WARRANTIES..................................................41 8.2 NOTICES.........................................................................41 8.3 INTERPRETATION..................................................................43 8.4 COUNTERPARTS....................................................................43 8.5 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES..................................43 8.6 GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL...............................44 8.7 SEVERABILITY....................................................................45 8.8 ASSIGNMENT......................................................................45 8.9 ENFORCEMENT.....................................................................45 ii 8.10 DEFINITIONS.....................................................................45 8.11 PERFORMANCE BY MERGER SUB.......................................................47 8.12 DISCLOSURE SCHEDULES............................................................47
iii GLOSSARY OF DEFINED TERMS
LOCATION OF DEFINITION DEFINED TERM - ---------- ------------- Acquisition Proposal....................................................................Section 5.4(a) Action.........................................................................................Annex A Affiliate..............................................................................Section 8.10(a) Agreement.....................................................................................Preamble Board of Directors.....................................................................Section 8.10(b) Business Day...........................................................................Section 8.10(c) Certificate of Merger......................................................................Section 2.3 Certificates............................................................................Section 2.9(b) Closing....................................................................................Section 2.2 Closing Date...............................................................................Section 2.2 Code...................................................................................Section 8.10(d) Company.......................................................................................Preamble Company Assets..........................................................................Section 3.1(t) Company Benefit Plans................................................................Section 3.1(1)(i) Company Board.................................................................................Recitals Company Common Stock....................................................................Section 1.1(a) Company Disclosure Schedule................................................................Section 3.1 Company Equity Plans...................................................................Section 8.10(e) Company Material Contracts..............................................................Section 3.1(k) Company Permits.........................................................................Section 3.1(f) Company Products........................................................................Section 3.1(p) Company SEC Reports..................................................................Section 3.1(d)(i) Company Stock Option......................................................................Section 5.11 Company Stockholders Meeting............................................................Section 5.1(a) Company Voting Debt................................................................Section 3.1(b)(iii) Confidentiality Agreement..................................................................Section 5.2 DGCL..........................................................................................Recitals Dissenting Shares.......................................................................Section 2.9(h) Effective Time.............................................................................Section 2.3 ERISA................................................................................Section 3.1(1)(i) ERISA Affiliate.....................................................................Section 3.1(l)(iv) Environmental Law.......................................................................Section 3.1(s) Exchange Act............................................................................Section 1.1(b) Exchange Agent..........................................................................Section 2.9(a) Expenses...................................................................................Section 5.6 Franchise Agreement..................................................................Section 3.1(v)(i) Fund...............................................................................Section 3.1(v)(iii) iv GAAP.................................................................................Section 3.1(d)(i) Governmental Entity................................................................Section 3.1(c)(iii) Hazardous Substance.....................................................................Section 3.1(s) HSR Act........................................................................................Annex A Indemnified Party..........................................................................Section 5.7 Independent Directors...................................................................Section 1.4(c) Intellectual Property..................................................................Section 8.10(f) Liens...............................................................................Section 3.1(b)(ii) Material Adverse Effect................................................................Section 8.10(g) Maximum Premium............................................................................Section 5.7 Merger........................................................................................Recitals Merger Consideration....................................................................Section 2.8(c) Merger Fees.............................................................................Section 3.1(n) Merger Sub....................................................................................Preamble Minimum Condition.......................................................................Section 1.1(b) Multiemployer Plan...................................................................Section 3.1(l)(i) Nasdaq.............................................................................Section 3.1(c)(iii) Offer..................................................................................Section 1.1.(a) Offer Conditions........................................................................Section 1.1(a) Offer Documents.........................................................................Section 1.2(a) Organizational Documents...............................................................Section 8.10(h) Outside Date............................................................................Section 7.1(b) Parent........................................................................................Preamble Parent Disclosure Schedule.................................................................Section 3.2 Parent Representatives.....................................................................Section 5.2 Payment Fund............................................................................Section 2.9(a) Person.................................................................................Section 8.10(i) Price Per Share.........................................................................Section 1.1(a) Proxy Statement......................................................................Section 3.1(e)(i) Required Company Votes..................................................................Section 3.1(j) Required Regulatory Approvals...........................................................Section 6.1(c) Schedule 14D-1..........................................................................Section 1.2(a) Schedule 14D-9..........................................................................Section 1.2(b) SEC.....................................................................................Section 1.1(b) Securities Act.......................................................................Section 3.1(d)(i) Significant Subsidiary.................................................................Section 8.10(j) Subsidiary.............................................................................Section 8.10(k) Superior Proposal.......................................................................Section 5.4(b) Surviving Corporation......................................................................Section 2.1 Takeover Statute........................................................................Section 3.1(r) Tax....................................................................................Section 8.10(l) v Tax Return.............................................................................Section 8.10(l) Taxable................................................................................Section 8.10(l) Taxes..................................................................................Section 8.10(l) Termination Fee.........................................................................Section 7.2(b) the other party........................................................................Section 8.10(m) UFOC................................................................................Section 3.1(v)(ii) Violation...........................................................................Section 3.1(c)(ii) Warrants.............................................................................Section 3.1(b)(i) Year 2000 Compliant.....................................................................Section 3.1(q)
vi This AGREEMENT AND PLAN OF MERGER, dated as of July 5, 1999 (this "Agreement"), by and among KONINKLIJKE NUMICO N.V., a company incorporated under the laws of The Netherlands ("Parent"), NUMICO INVESTMENT CORP., a Delaware corporation and an indirect wholly owned Subsidiary of Parent ("Merger Sub"), and GENERAL NUTRITION COMPANIES, INC., a Delaware corporation (the "Company"). W I T N E S S E T H: WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the Company have each approved the Offer (as defined herein) and the Merger (as defined herein) and have determined that it is in the best interests of their respective companies and stockholders for Parent to acquire the Company upon the terms and subject to the conditions set forth herein; WHEREAS, in order to complete such acquisition, the respective Boards of Directors of Parent, Merger Sub and the Company have approved the merger of Merger Sub with and into the Company (the "Merger"), upon the terms and subject to the conditions of this Agreement and in accordance with the Delaware General Corporation Law (the "DGCL"), whereby each issued and outstanding share of Company Common Stock (as defined herein) not owned directly or indirectly by Parent or the Company will be converted into the right to receive the price per share in cash actually paid in the Offer; WHEREAS, the Board of Directors of the Company (the "Company Board") has unanimously approved this Agreement, the Offer and the Merger, has determined that the Offer and the Merger are fair to and in the best interests of the Company's stockholders and is recommending that the Company's stockholders accept the Offer, tender their shares of Company Common Stock thereunder and adopt this Agreement; WHEREAS, simultaneously with the execution and delivery of this Agreement, Parent, Merger Sub and the stockholders named therein are entering into a Tender Agreement; WHEREAS, simultaneously with execution and delivery of this Agreement certain executive officers of the Company are entering into employment agreements with the Company and Parent, which will become effective upon the Merger; NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, and intending to be legally bound hereby, the parties hereto agree as follows: 1 ARTICLE I. THE TENDER OFFER 1.1 THE OFFER. (a) Provided that this Agreement shall not have been terminated in accordance with Article VII hereof and none of the events set forth in Annex A hereto (the "Offer Conditions") shall have occurred or be existing, within five Business Days of the date hereof, Merger Sub will commence a tender offer (the "Offer") for all of the outstanding shares of common stock, par value $0.01 per share, of the Company (the "Company Common Stock") at a price per share of the Company Common Stock of U.S. $25.00 net to the Seller in cash (such price, or any higher price paid in the Offer, the "Price Per Share") upon the terms and conditions set forth in this Agreement, including Annex A hereto. (b) The obligation of Merger Sub to accept for payment, purchase and pay for any Company Common Stock tendered pursuant to the Offer shall be subject only to the satisfaction or waiver of the Offer Conditions, including the Offer Condition that at least that number of shares of Company Common Stock equivalent to a majority of the total issued and outstanding shares of Company Common Stock on a fully diluted basis on the date such shares are purchased pursuant to the Offer shall have been validly tendered and not withdrawn prior to the expiration of the Offer (the "Minimum Condition"). Merger Sub will not, without the prior written consent of the Company (such consent to be authorized by the Company Board): (i) waive the Minimum Condition, (ii) decrease the amount or change the form of consideration payable in the Offer, (iii) decrease the number of shares of Company Common Stock sought in the Offer, (iv) impose additional conditions to the Offer, (v) change any Offer Condition or amend any other term of the Offer if any such change or amendment would be adverse in any respect to the holders of the Company Common Stock (other than Parent or Merger Sub) or (vi) except as provided below, extend the Offer if all of the Offer Conditions have been satisfied. Subject to the terms and conditions hereof, the Offer shall remain open until midnight, New York City time, on the date that is twenty (20) Business Days after the Offer is commenced (within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")); provided, however, that without the consent of the Company Board, Merger Sub may (x) extend the Offer, if at the scheduled expiration date of the Offer any of the Offer Conditions shall not have been satisfied or waived for one (1) or more periods (none of which shall exceed ten (10) Business Days) until such time as such conditions are satisfied or waived, (y) extend the Offer for such period as may be required by any rule, regulation, interpretation or position of the Securities and Exchange Commission ("SEC") or the staff thereof applicable to the Offer or (z) extend the Offer for one (1) or more periods (each such period to be for not more than three (3) Business Days and such extensions to be for an aggregate period of not more than ten (10) Business Days beyond the latest expiration date that would otherwise be permitted under clause (x) or (y) of this sentence) if on such expiration date the Offer Conditions shall have been satisfied or waived but there shall not have been tendered that number of shares of 2 Company Common Stock which would equal more than ninety percent (90%) of the issued and outstanding shares of Company Common Stock. Merger Sub agrees that if all of the Offer Conditions are not satisfied on any expiration date of the Offer, then, Merger Sub shall extend the Offer for one or more periods of not more than ten (10) Business Days each if requested to do so by the Company; provided that Merger Sub shall not be required to extend the Offer beyond the Outside Date or, if earlier, the date of termination of this Agreement in accordance with the terms hereof. On the terms of the Offer and subject to the Offer Conditions and this Agreement, Merger Sub shall pay for all shares of Company Common Stock, validly tendered and not withdrawn pursuant to the Offer that Merger Sub becomes obligated to purchase pursuant to the Offer as soon as practicable after the expiration of the Offer. 1.2 SEC FILINGS. (a) As soon as reasonably practicable on the date of commencement of the Offer, Parent and Merger Sub shall file with the SEC a Tender Offer Statement on Schedule 14D-1 with respect to the Offer (as supplemented or amended from time to time, the "Schedule 14D-1") to provide for the purchase of the issued and outstanding shares of Company Common Stock in accordance with the terms hereof. Parent and Merger Sub agree, as to this Schedule 14D-1, the Offer to Purchase and related Letter of Transmittal (which documents, as supplemented or amended from time to time, together constitute the "Offer Documents") will comply as to form and content in all material respects with the applicable provisions of the federal securities laws. The Company and its counsel shall be given an opportunity to review and comment upon the Offer Documents and any amendment or supplement thereto prior to the filing thereof with the SEC, and Parent and Merger Sub shall consider such comments in good faith. Parent and Merger Sub agree to provide to the Company and its counsel any comments which Parent, Merger Sub or their counsel may receive from the Staff of the SEC promptly after receipt thereof, and any proposed responses thereto, with respect to the Offer Documents and any amendment or supplement thereto. Parent, Merger Sub and the Company agree to correct promptly any information provided by any of them for use in the Offer Documents which shall have become false or misleading in any material respect, and Parent and Merger Sub further agree to take all steps necessary to cause the Schedule 14D-1 as so corrected to be filed with the SEC and to disseminate any revised Offer Documents to the Company's stockholders, in each case as and to the extent required by the applicable provisions of the federal securities laws. (b) The Company Board shall recommend acceptance of the Offer to its Stockholders in a Solicitation/Recommendation on Schedule 14D-9 (as supplemented or amended from time to time, the "Schedule 14D-9"), provided, however, that the Company Board may thereafter amend or withdraw its recommendation in accordance with Section 5.4(b). The Company shall file the Schedule 14D-9 with the SEC upon commencement of the Offer which will comply as to form and content in all material respects with the applicable provisions of the federal securities laws. The Company will cooperate with Parent and Merger Sub in mailing or otherwise 3 disseminating the Schedule 14D-9 with the appropriate Offer Documents to the stockholders of the Company. Parent and its counsel shall be given an opportunity to review and comment upon the Schedule 14D-9 and any amendment or supplement thereto prior to the filing thereof with the SEC, and the Company shall consider any such comments in good faith. The Company agrees to provide to Parent and Merger Sub and their counsel any comments which the Company or its counsel may receive from the Staff of the SEC promptly after receipt thereof, and any proposed responses thereto, with respect to the Schedule 14D-9 and any amendment or supplement thereto. The Company, Parent and Merger Sub agree to correct promptly any information provided by any of them for use in the Schedule 14D-9 which shall have become false or misleading in any material respect, and the Company further agrees to take all steps necessary to cause such Schedule 14D-9 as so corrected to be filed with the SEC and disseminated to the Company's stockholders, in each case as and to the extent required by the applicable provisions of the federal securities laws. Parent, Merger Sub and the Company each hereby agree to provide promptly such information necessary to the preparation of the exhibits and schedules to the Schedule 14D-9 and the Offer Documents which the respective party responsible therefor shall reasonably request. The Company represents that 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 designate such number of members of the Company Board, rounded up to the next whole number, equal to that number of directors which equals the product of the total number of directors on the Company Board (giving effect to the directors elected pursuant to this sentence) multiplied by the percentage that such number of shares of Company Common Stock owned in the aggregate by Merger Sub or Parent, upon such acceptance for payment, bears to the number of shares of Company Common Stock outstanding. Upon the written request of Merger Sub, the Company shall, on the date of such request, (i) either increase the size of the Company Board or use its reasonable efforts to secure the resignations of such number of its incumbent directors as is necessary to enable Parent's designees to be so elected to the Company Board and (ii) cause Parent's designees to be so elected, in each case as may be necessary to comply with the foregoing provisions of this Section 1.4(a). (b) The Company's obligation to cause designees of Merger Sub to be elected or appointed to the Company Board shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. The Company shall promptly take all actions required pursuant to Section 14(f) and Rule 14f-1 in order to fulfill its obligations under this Section 1.4, and shall include in the Schedule 14D-9 such information with respect to Merger Sub and its designees as is required under Section 14(f) and Rule 14f-1. Parent and Merger Sub will supply to the Company in writing and be solely responsible for any information with respect to any of them and their designees, officers, directors and affiliates required by Section 14(f) and Rule 14f-1 and applicable rules and regulations. (c) After the time that Merger Sub's designees constitute at least a majority of the Company Board and until the Effective Time, the Company Board shall always have at least two members (the "Independent Directors") who are neither officers of Parent nor designees, shareholders or affiliates of Parent or Parent's affiliates. During such period, any (i) amendment or termination of this Agreement, (ii) extension of time for the performance or waiver of the obligations or other acts of Parent or Merger Sub or waiver of the Company's rights hereunder or (iii) action by the Company with respect to this Agreement and the transactions contemplated hereby which adversely affects the interests of the stockholders of the Company, shall require the approval of a majority of the Independent Directors in addition to any required approval thereof by the full Company Board. If the number of Independent Directors shall be reduced below two for any reason whatsoever, any remaining Independent Director shall be entitled to designate a person to fill the vacancy, which designee shall not be a current or former officer or affiliate of Parent or any of Parent's affiliates, or, if no Independent Directors then remain, the other directors shall designate two persons to fill such vacancies who shall not be current or former officers or affiliates of Parent or any of Parent's affiliates, and such persons shall be deemed to be Independent Directors for purposes of this Agreement. The Company Board shall not delegate any matter set forth in this Section 1.4(c) to any committee of the Company Board. 5 ARTICLE II. THE MERGER 2.1 THE MERGER. Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the DGCL, Merger Sub shall be merged with and into the Company at the Effective Time. Following the Merger, the separate corporate existence of Merger Sub shall cease, and the Company shall continue as the surviving corporation (the "Surviving Corporation") in accordance with the DGCL. 2.2 CLOSING. The closing of the Merger (the "Closing") will take place on the third Business Day after satisfaction or waiver (as permitted by this Agreement and applicable law) of the conditions (excluding conditions that, by their terms, cannot be satisfied until the Closing Date) set forth in Article VI hereof (the "Closing Date"), unless another time or date is agreed to in writing by the parties hereto. The Closing shall be held at the offices of Vedder, Price, 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. 6 2.7 OFFICERS AND DIRECTORS OF SURVIVING CORPORATION. The directors of Merger Sub and/or any individuals designated by Merger Sub immediately prior to the Effective Time shall be the initial directors of the Surviving Corporation, until the earlier of their resignation or removal or otherwise ceasing to be a director or until their respective successors are duly elected and qualified, as the case may be. The officers of the Company immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation, until the earlier of their resignation or removal or otherwise ceasing to be an officer or until their respective successors are duly elected and qualified, as the case may be. 2.8 EFFECT ON CAPITAL STOCK. As of the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company or the holder of any shares of Company Common Stock or any shares of capital stock of Merger Sub: (a) CAPITAL STOCK OF MERGER SUB. Each issued and outstanding share of capital stock of Merger Sub shall be converted into and become one fully paid and nonassessable share of common stock, par value $0.01 per share, of the Surviving Corporation. (b) CANCELLATION OF TREASURY STOCK AND PARENT-OWNED STOCK. Each share of Company Common Stock that is owned by the Company and each share of Company Common Stock that is owned by Parent or Merger Sub shall automatically be canceled and shall cease to exist, and no Merger Consideration shall be delivered in exchange therefor. (c) CONVERSION OF COMPANY COMMON STOCK. Subject to Section 2.9(h), at the Effective Time each issued and outstanding share of Company Common Stock (other than shares to be canceled in accordance with Section 2.8(b)) shall be converted into the right to receive the Price Per Share in cash, without interest (the "Merger Consideration"). As of the Effective Time, all such shares of Company Common Stock shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each holder of a certificate representing any such shares of Company Common Stock shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration upon surrender of such certificate in accordance with Section 2.9 or, if asserted properly, the right to appraisal under the DGCL (as described in Section 2.9(h)). 2.9 SURRENDER AND PAYMENT. (a) EXCHANGE AGENT. Prior to the Effective Time, Parent shall designate a bank or trust company reasonably acceptable to the Company to act as agent for the holders of shares of Company Common Stock in connection with the Merger (the "Exchange Agent") to receive the Merger Consideration to which holders of shares of Company Common Stock shall become entitled pursuant to Section 2.8. Prior to the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, Parent or Merger Sub shall deposit with the Exchange Agent cash in an aggregate amount equal to the product of (i) the number of shares of Company Common Stock 7 outstanding (and not to be canceled pursuant to Section 2.8(b)) immediately prior to the Effective Time, multiplied by (ii) the Merger Consideration. The deposit made by Parent or Merger Sub pursuant to the preceding sentence is hereinafter referred to as (the "Payment Fund"). The Exchange Agent shall cause the Payment Fund to be (i) held for the benefit of the holders of Company Common Stock and (ii) promptly applied to making the payments provided for in Section 2.8(c). The Payment Fund shall not be used for any purpose that is not provided for herein. (b) EXCHANGE PROCEDURES. As soon as reasonably practicable after the Effective Time, Parent shall cause the Exchange Agent to mail to each holder of record of a certificate or certificates (the "Certificates") which immediately prior to the Effective Time represented outstanding shares of Company Common Stock, other than shares to be canceled in accordance with Section 2.8(b), (i) a Letter of Transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Exchange Agent) and (ii) instructions for use in effecting the surrender of the Certificates in exchange for the Merger Consideration. Upon surrender of a Certificate for cancellation to the Exchange Agent, together with such Letter of Transmittal, duly executed, and such other documents as may reasonably be required by the Exchange Agent, the Exchange Agent shall pay the holder of such Certificate the Merger Consideration in respect of such Certificate, less any required withholding taxes, and the Certificate so surrendered shall forthwith be canceled. If any portion of the Merger Consideration is to be paid to a Person other than the registered holder of the shares represented by the Certificate or Certificates surrendered in exchange therefor, it shall be a condition to such payment that the Certificate or Certificates so surrendered shall be properly endorsed or otherwise be in proper form for transfer and that the Person requesting such payment shall pay to the Exchange Agent any transfer or other taxes required as a result of such payment to a Person other than the registered holder of such shares or establish to the satisfaction of the Exchange Agent that such tax has been paid or is not payable. Until surrendered as contemplated by this Section 2.9, each Certificate (other than Certificates representing Dissenting Shares (as defined below) or shares of Company Common Stock to be canceled pursuant to Section 2.8(b)) shall be deemed at any time after the Effective Time to represent only the right to receive the Merger Consideration upon such surrender. (c) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All Merger Consideration paid upon the surrender for exchange of Certificates in accordance with the terms of this Article II shall be deemed to have been paid in full satisfaction of all rights pertaining to the shares of Company Common Stock theretofore represented by such Certificates. There shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the shares of Company Common Stock which were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to the Surviving Corporation or the Exchange Agent for any reason, they shall be canceled and exchanged as provided in this Article II, except as otherwise provided by law. 8 (d) UNCLAIMED FUNDS. Any portion of the Payment Fund made available to the Exchange Agent pursuant to Section 2.9(a) that remains unclaimed by holders of the Certificates for six months after the Effective Time shall be delivered to the Surviving Corporation or a United States parent thereof, upon demand, and any holders of Certificates who have not theretofore complied with this Article II shall thereafter look only to Parent for payment of their claim for Merger Consideration. (e) NO LIABILITY. None of Parent, Merger Sub, the Company or the Exchange Agent shall be liable to any Person in respect of any Merger Consideration delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. If any Certificate has not been surrendered prior to five years after the Effective Time (or immediately prior to such earlier date on which Merger Consideration in respect of such Certificate would otherwise escheat to or become the property of any public official), any such shares, cash, dividends or distributions in respect of such Certificate shall, to the extent permitted by applicable law, become the property of the Surviving Corporation, free and clear of all claims or interest of any person previously entitled thereto. (f) INVESTMENT OF FUNDS. The Payment Fund shall be invested by the Exchange Agent in obligations of, or guaranteed by, the United States of America, in commercial paper obligations rated A-1 or P-l or better by 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 negotiations and proceedings with respect to such demands. The Company shall not, except with the prior written consent of Parent, make any payment with respect to, or settle or offer to settle, any such demands. ARTICLE III. REPRESENTATIONS AND WARRANTIES 3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as disclosed in any of the Company SEC Reports (as defined below) filed with the SEC and publicly available prior to the date hereof or as specifically set forth in the Company Disclosure Schedule delivered by the Company to Parent on the date hereof, subject to Section 8.12 (the "Company Disclosure Schedule"), the Company represents and warrants to Parent and Merger Sub as follows: (a) ORGANIZATION, STANDING AND POWER. Each of the Company and its Subsidiaries has been duly organized and is validly existing and in good standing under the laws of its jurisdiction of incorporation. Each of the Company and its Subsidiaries is duly qualified and in good standing or otherwise authorized or licensed to do business in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification necessary, except for any such failure to be so qualified, authorized or licensed or in good standing is not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on the Company or prevent the Company from consummating the transactions contemplated hereby. The copies of the Organizational Documents of the Company and of each Significant Subsidiary which were previously furnished or made available to Parent are, in each case, true, complete and correct copies of such documents as in effect on the date of this Agreement. Each of the Company and its Subsidiaries has the requisite corporate power and corporate authority in all material respects to own, lease and operate its properties and to carry on its respective businesses as they are now being conducted. Neither the Company nor any of its Subsidiaries is in violation of any provisions of its Organizational Documents in any material respect. The list of Subsidiaries of the Company filed by the Company with its most recent Annual Report on Form 10-K is a true and accurate list of all the Significant Subsidiaries of the Company. Except for its interests in its Subsidiaries, the Company does not own, directly or indirectly, any capital stock, membership interest, partnership interest, joint venture interest or other equity interest in any Person. (b) CAPITAL STRUCTURE. (i) As of the date of this Agreement, the authorized capital stock of the Company consists of 200,000,000 shares of Company Common Stock, of which, as of June 30, 1999, 67,997,138 shares have been issued and are outstanding and 7,220,476 shares have been reserved for issuance upon exercise of outstanding options, warrants or other rights to acquire capital stock from the Company. Except as provided in this Section 3.1(b), there are no shares of capital stock or other equity securities of the Company issued, reserved for 10 issuance or outstanding. No shares of preferred stock have been authorized or are outstanding. All issued and outstanding shares of the capital stock of the Company are duly authorized, validly issued, fully paid and nonassessable, and no class of capital stock is entitled to preemptive rights. As of the date of this Agreement, there are no outstanding options, warrants, convertible or exchangeable securities or other rights to acquire capital stock from the Company other than options representing in the aggregate the right to purchase not more than 7,170,476 shares of Company Common Stock under the Company Equity Plans and other than warrants representing in the aggregate the right to purchase 50,000 shares of Company Common Stock (the "Warrants") which in accordance with the terms of the Warrants shall upon consummation of the Merger convert into the right to receive the Merger Consideration. (ii) All of the issued and outstanding shares of capital stock of the Company's Subsidiaries are duly authorized, validly issued, fully paid and nonassessable and are owned by the Company, free and clear of any liens, pledges, security interests, claims, encumbrances, restrictions (including any restriction on the right to vote or sell such shares, except as may be imposed as a matter of law), preemptive rights or any other claims of any third party ("Liens"). (iii) As of the date of this Agreement, no bonds, debentures, notes or other indebtedness of the Company having the right to vote on any matters on which stockholders may vote ("Company Voting Debt") are issued or outstanding. (iv) Except as otherwise set forth in this Section 3.1(b), as of the date of this Agreement, there are no securities, options, warrants, calls, rights, commitments, agreements, arrangements or undertakings of any kind to which the Company or its Subsidiaries is a party or by which any of them is bound obligating (and no contract, agreement, understanding, arrangement or obligation, whether or not contingent, providing for) the Company or any of its Subsidiary to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other voting securities of the Company or such Subsidiary or obligating the Company or such Subsidiary to issue, grant, extend or enter into any such security, option, warrant, call, right, commitment, agreement, arrangement or undertaking. As of the date of this Agreement, there are no outstanding obligations, arrangements, agreements or commitments of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock of the Company or such Subsidiary. Upon the consummation of the Merger, no shares of Company Common Stock or other securities of the Company will be issuable and, immediately after the Effective Time, the Surviving Corporation will have no obligation to issue, transfer or sell any shares of common stock of the Surviving Corporation pursuant to any compensation and benefit plan of the Company or any of its Subsidiaries. 11 (c) AUTHORITY; NO CONFLICTS. (i) The Company has all requisite corporate power and corporate authority to enter into this Agreement and, subject to the adoption of this Agreement by the requisite vote of the holders of Company Common Stock, to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action on the part of the Company, subject in the case of the consummation of the Merger to the adoption of this Agreement by the requisite vote of the stockholders of the Company, and no other corporate proceedings are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Company and, assuming the due execution and delivery of this Agreement by Parent and Merger Sub, constitutes a valid and binding agreement of the Company, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws relating to or affecting creditors generally and by general equity principles (regardless of whether such enforceability is considered in a proceeding in equity or at law). The Company Board has, at a meeting duly called and held, (A) unanimously approved this Agreement, the Offer and the Merger and the transactions contemplated hereby in accordance with the DGCL, (B) determined that the Offer and the Merger are fair to and in the best interests of the Company's stockholders, and (C) recommended that the stockholders of the Company tender their shares of Company Common Stock into the Offer and adopt this Agreement. (ii) The execution, delivery and performance of this Agreement do not or will not, as the case may be, and the consummation of the transactions contemplated hereby will not, conflict with, or result in any violation of, or constitute a default (with or without notice or lapse of time, or both) under, or give rise to a right of consent, termination, amendment, cancellation or acceleration of any obligation or the loss of a material benefit under, or the creation of a Lien on any assets (any such conflict, violation, default, right of consent, termination, amendment, cancellation or acceleration of any obligations or creation, a "Violation"), pursuant to: (A) any provision of the Organizational Documents of the Company or any of its Subsidiaries or (B) except as is not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on the Company or prevent or materially delay the consummation of the transactions contemplated hereby and, subject to obtaining or making the consents, approvals, orders, authorizations, registrations, declarations and filings referred to in paragraph (iii) below, the terms, provisions or conditions of any loan or credit agreement, note, mortgage, bond, indenture, lease (other than the Company's retail store leases), compensation or benefit plan (or any grant or award made pursuant thereto) or other agreement, obligation, instrument, contract, permit, concession, 12 franchise, license, judgment, order, writ, injunction, award, decree, statute, law, ordinance, rule or regulation applicable to the Company, the Company's Subsidiaries or any of their respective properties or assets. (iii) No consent, registration, permit, approval, order or authorization of, or registration, declaration, notice, report, or other filing with, any supranational, national, state, municipal or local government, any instrumentality, subdivision, court, administrative agency or commission or other authority thereof, or any quasi-governmental or private body exercising any regulatory, taxing, importing or other governmental or quasi-governmental authority (a "Governmental Entity"), is required by or with respect to the Company or any of its Subsidiaries in connection with the execution and delivery of this Agreement by the Company or the consummation by the Company of the transactions contemplated hereby, except for (x) those required under or in relation to (A) the Exchange Act, (B) the DGCL with respect to the filing and recordation of the Certificate of Merger and any other appropriate merger or other documents, (C) the rules and regulations of The Nasdaq National Market ("Nasdaq"), and (D) antitrust or other competition laws of any applicable jurisdictions and (y) such consents, registrations, permits, approvals, orders, authorizations, registrations, declarations, notices, reports and other filings the failure of which to make or obtain is not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on the Company or prevent the consummation of the transactions contemplated hereby. (d) REPORTS AND FINANCIAL STATEMENTS. (i) Since January 31, 1998, the Company has timely filed all required reports, schedules, forms, statements and other documents required to be filed by it with the SEC (collectively, including all exhibits thereto, the "Company SEC Reports"). The Company SEC Reports, as of their respective dates (and, if amended or superseded by a filing prior to the date of this Agreement or the Closing Date, then on the date of such filing), did not, and any Company SEC Reports filed with the SEC subsequent to the date hereof and prior to the purchase of shares pursuant to the Offer will not, contain any untrue statement of a material fact or omit to state a material fact required to be stated (or incorporated by reference) therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. Each of the financial statements (including the related notes) included or to be included in, or incorporated by reference into, the Company SEC Reports presents or will present fairly, in all material respects, the consolidated financial position and consolidated results of operations and cash flows of the Company and its Subsidiaries as of the respective dates or for the respective periods set forth therein, all in conformity with U.S. generally accepted accounting principles ("GAAP") consistently applied during the periods involved except as otherwise noted therein, and subject, in the case of the unaudited interim financial statements, to normal year- 13 end audit adjustments that have not been and will not be material in amount. All of such Company SEC Reports, as of their respective dates (and as of the date of any amendment to the respective Company SEC Report filed prior to the date hereof), complied as to form in all material respects with the applicable requirements of the Securities Act of 1933, as amended (the "Securities Act"), the Exchange Act and the rules and regulations promulgated under such acts (as in effect on the dates on which such SEC Reports were filed). (ii) Except for liabilities and obligations incurred in the ordinary course of business since February 6, 1999 (none of which has had or is reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on the Company), the Company does not have any undisclosed liabilities or obligations of any nature required by GAAP to be set forth on a consolidated balance sheet of the Company or which have had or are reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on the Company. (iii) The Company has delivered to Parent a complete and correct copy of any material amendments or modifications, which have not yet been filed with the SEC, to all agreements, documents or other instruments which previously had been filed by the Company with the SEC pursuant to the Exchange Act. (e) INFORMATION SUPPLIED. (i) None of the information supplied or to be supplied by the Company for inclusion or incorporation by reference in (A) the proxy statement relating to the Company Stockholders Meeting (as defined herein) (the "Proxy Statement"), if applicable, (B) the Schedule 14D-9, (C) the Offer Documents and (D) any other document filed or to be filed with the SEC or any other Government Entity in connection with the Offer will, at the respective times such documents or any amendments or supplements thereto are filed, and, with respect to the Offer Documents and the Proxy Statement, if any, when first published, sent or given to the stockholders of the Company, contain an untrue statement of material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not false or misleading or, in the case of the Proxy Statement, if any, or any amendment thereof or supplement thereto, at the time of the Company Stockholders Meeting, if any, and at the Effective Time, contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they are made, not false or misleading or necessary to correct any statement in any earlier communication with respect to the Offer or the solicitation of proxies for the Company Stockholders Meeting, if any, which shall have become false or misleading. The Proxy Statement, if any, and Schedule 14D-9 will comply 14 as to form with the requirements of the Exchange Act and the Securities Act and the rules and regulations of the SEC thereunder. (ii) Notwithstanding the foregoing provisions of this Section 3.1(e), no representation or warranty is made by the Company with respect to statements made or incorporated by reference in the Proxy Statement, if any, or the Offer Documents based on information supplied by Parent or Merger Sub for inclusion or incorporation by reference therein. (f) COMPLIANCE WITH APPLICABLE LAWS; REGULATORY MATTERS. The Company and each of its Subsidiaries hold all permits, licenses, certificates, franchises, registrations, variances, exemptions, orders and approvals of all Governmental Entities other than those the failure to so hold individually or in the aggregate is not reasonably likely to have a Material Adverse Effect on the Company (the "Company Permits"). The Company and each of its Subsidiaries have performed its respective obligations under and are in compliance with the terms of the Company Permits, except where the failure so to comply or perform, individually or in the aggregate, is not reasonably likely to have a Material Adverse Effect on the Company. No event has occurred or condition or state of facts exists which constitutes or, after notice or lapse of time or both, would constitute a breach or default under the Company Permits or, after notice or lapse of time or both, would permit revocation or termination of the Company Permits, except where such event, condition or state of facts, individually or in the aggregate, is not reasonably likely to have a Material Adverse Effect on the Company. The businesses of the Company and its Subsidiaries are not being and have not been conducted in violation of any law, ordinance, regulation, judgment, decree, injunction, rule or order of any Governmental Entity, except for violations which are not reasonably likely to have a Material Adverse Effect on the Company. As of the date of this Agreement, no lawsuit, claim, suit, proceeding or investigation by any Governmental Entity with respect to the Company or any of its Subsidiaries is pending or, to the best knowledge of the Company, threatened, other than lawsuits, claims, suits, proceedings or investigations which, individually or in the aggregate, are not reasonably likely to have a Material Adverse Effect on the Company. This provision shall not apply to environmental matters, which are the subject of Section 3.1(s). (g) LITIGATION. As of the date of this Agreement, there is no litigation, arbitration, claim, suit, action, investigation or proceeding pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries or any of their respective properties or assets, which is reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on the Company or is reasonably likely to prevent the consummation of the transactions contemplated by this Agreement, nor is there any judgment, award, decree, injunction, rule or order of any Governmental Entity or arbitrator outstanding against the Company or any of its Subsidiaries is reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on the Company. This provision shall not apply to environmental matters, which are the subject of Section 3.1(s). 15 (h) TAXES. (i) The Company and its Subsidiaries have duly and timely filed (taking into account any extension of time within which to file) all Tax Returns required to be filed by any of them other than those the failure of which to file is not reasonably likely to have individually or in the aggregate a Material Adverse Effect on the Company and all such filed Tax Returns are complete and accurate in all material respects; (ii) the Company and its Subsidiaries have paid all Taxes due and payable by them (whether or not shown on any Tax Return), other than those the failure of which to pay is not reasonably likely to have individually or in the aggregate a Material Adverse Effect on the Company; (iii) as of the date of this Agreement, there are no pending or, to the knowledge of the Company, threatened in writing audits, examinations, investigations or other proceedings in respect of Taxes or Tax matters relating to the Company or any of its Subsidiaries which, if determined adversely to the Company or such Subsidiary, are reasonably likely to have a Material Adverse Effect on the Company; (iv) there are no deficiencies or claims for any Taxes that have been proposed, asserted or assessed, or material issues that have been raised in connection with the examination of Tax Returns and that are reasonably likely to give rise to such deficiencies or claims, against the Company or any of its Subsidiaries which, if such deficiencies or claims were finally resolved against the Company or such Subsidiary, are reasonably likely to have a Material Adverse Effect on the Company; (v) there are no material Liens for Taxes upon the assets of the Company or any of its Subsidiaries, other than Liens for current Taxes not yet due and payable and Liens for Taxes that are being contested in good faith by appropriate proceedings and that are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on the Company if any such contest is unsuccessful; (vi) the Company is not, was not, and will not be at any time during the five-year period ending on the date on which the Effective Time occurs, a "United States real property holding corporation" within the meaning of Section 897(c) of the Code; (vii) neither the Company nor any of its Subsidiaries has made an election under Section 341(f) of the Code; and (viii) neither the Company nor any of its Subsidiaries has filed or been required to file any reports under Section 999 of the Code; (ix) other than the consolidated group of which the Company is now the common parent, neither the Company nor any of its Subsidiaries has ever been (A) a member of an affiliated group filing a consolidated federal income Tax Return or (B) responsible for any liability for the Taxes of any Person as a transferee or successor, by contract, by operation of law, or otherwise; and (x) except where the failure to do so is not reasonably likely to have individually or in the aggregate a Material Adverse Effect on the Company, the Company and each of its Subsidiaries has (A) withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, creditor, stockholder, or other third party and (B) collected any and all amounts required from customers or other third parties in the form of sales, use, or similar Taxes and paid, when due, such Taxes to the appropriate governmental authority. (i) ABSENCE OF CERTAIN CHANGES OR EVENTS. Since February 6, 1999, (A) each of the Company and the Company's Subsidiaries has conducted its business in the ordinary course; (B) there has not been any change in the business, financial condition or results of operations of the 16 Company or its Subsidiaries that has had, or is reasonably likely to have, a Material Adverse Effect on the Company; (C) there has not been any entry by the Company or its Subsidiaries into any employment agreement, severance agreement or termination agreement with any employee of the Company other than in the ordinary course of business except in connection with the transactions contemplated hereby; (D) there has not been any declaration, setting aside or payment of any dividend or other distribution with respect to the capital stock of the Company nor has there been any repurchase, redemption or other acquisition by the Company or any of its Subsidiaries of any outstanding shares of capital stock or other securities of, or other ownership interests in, the Company or such Subsidiary; (E) there has not been any change by the Company in accounting principles, practices or methods; (F) except as provided for herein, there has not been any material increase in the compensation payable or which could become payable by the Company and its Subsidiaries to their officers or key employees, or any material amendment of any compensation and benefit plans; (G) there has not been any amendment of any material term of any outstanding security of the Company or any of its Subsidiaries; (H) there has not been any acquisition, sale or transfer of any material assets of the Company or any of its Subsidiaries; and (I) there has not been any entry by the Company or its Subsidiaries into any material joint venture or other similar arrangement with any Person. (j) VOTE REQUIRED. The affirmative vote of the holders of a majority of the outstanding shares of Company Common Stock adopting this Agreement (the "Required Company Votes") is the only vote of the holders of any class or series of the Company capital stock necessary to approve this Agreement and the transactions contemplated hereby and is only necessary in the event that the number of shares of Company Common Stock tendered pursuant to the Offer represents less than 90% of the issued and outstanding shares of Company Common Stock. (k) CERTAIN AGREEMENTS. (i) All contracts listed as an exhibit to the Company's Annual Report on Form 10-K under the rules and regulations of the SEC relating to the business of the Company and its Subsidiaries and (ii) any other agreement within the meaning set forth in item 601(b)(10) of Regulation S-K of Title 17, Part 229 of the Code of Federal Regulations (the "Company Material Contracts") are valid and in full force and effect, except to the extent they have previously expired in accordance with their terms, except as contemplated by the letter agreement referred to in Section 5.5 hereof, and other than as is not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on the Company. Neither the Company nor its Subsidiaries has violated any provision of, or committed or failed to perform any act which, with or without notice, lapse of time, or both, is reasonably likely to constitute a default under the provisions of, any such Company Material Contract, and neither the Company nor any of its Subsidiaries has received notice that any party to any Company Material Contract intends to cancel, terminate or otherwise modify the terms of any applicable Company Material Contract, except in each case, as is not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on the Company. To the knowledge of the Company, no counterparty to any such Company Material Contract has violated any provision of, or committed or failed to perform any act which, 17 with or without notice, lapse of time, or both, is reasonably likely to constitute a default or other breach under the provisions of, such Company Material Contract, except for defaults or breaches which are not reasonably likely, individually or in the aggregate, to have a Material Adverse Effect on the Company. (l) EMPLOYEE BENEFIT PLANS: LABOR MATTERS. (i) With respect to each employee benefit plan as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and with respect to each other material employee and/or director benefit plan, program, arrangement and contract (including any bonus, deferred compensation, stock bonus, stock purchase, restricted stock, stock option, fringe benefit, sick pay, vacation, employment, termination, change in control and severance plan, program, arrangement and contract), to which the Company or any of its Subsidiaries is a party, which is maintained or contributed to by the Company or any of its Subsidiaries, or with respect to which the Company or any of its Subsidiaries could incur material liability under Section 4069, 4201 or 4212(c) of ERISA other than any "multiemployer plan" within the meaning of Section 3(37) of ERISA (a "Multiemployer Plan") (collectively, together with any and all amendments thereto, and any related trust agreement, insurance contract or other funding instrument, the "Company Benefit Plans"), the Company has listed such Company Benefit Plan on Schedule 3.1(l)(i) of the Company Disclosure Schedule and has made available to Parent a true and complete copy of such Company Benefit Plan (or, to the extent no such copy exists, an accurate description thereof). A true and complete copy of the most recent annual report, actuarial reports, summary plan description or other employee communication material (including any summary of material modification) and Internal Revenue Service determination letter with respect to each Company Benefit Plan (to the extent applicable thereto) has been made available to Parent. (ii) Each of the Company Benefit Plans that is an "employee pension benefit plan" within the meaning of Section 3(2) of ERISA and that is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the United States Internal Revenue Service, and the Company is not aware of any circumstances likely to result in the revocation of any such favorable determination letter. (iii) With respect to the Company Benefit Plans and any Multiemployer Plan, no event has occurred and, to the knowledge of the Company, there exists no condition or set of circumstances, including but not limited to any non-exempt "prohibited transactions" (as described in ERISA or the Code) with respect to any Company Benefit Plan, in connection with which the Company or any of its Subsidiaries could be subject to any liability under the terms of such Company Benefit Plans, Multiemployer Plan, ERISA, 18 the Code or any other applicable law which could reasonably be expected to have a Material Adverse Effect on the Company. (iv) All Company Benefit Plans, to the extent subject to ERISA have been and are in substantial compliance with ERISA. There is no material pending or, to the knowledge of the Company threatened, litigation relating to the Company Benefit Plans. No Company Benefit Plan is subject to Title IV of ERISA and no liability under Title IV of ERISA has been or is expected to be incurred by the Company or any of its Subsidiaries with respect to any ongoing, frozen or terminated "single-employer plan", within the meaning of Section 4001(a)(15) of ERISA, of any entity which is considered one employer with the Company under Section 4001 of ERISA or Section 414 of the Code (an "ERISA Affiliate"). (v) Neither the Company nor any of its Subsidiaries has any material obligations for retiree health and life benefits under any Company Benefit Plan except to the extent required by applicable law. (vi) All Company Benefit Plans maintained outside of the United States have been and are in substantial compliance with applicable local law except where such failure to comply is not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on the Company. (vii) Neither the Company nor any of its Subsidiaries is a party to any material collective bargaining or other labor union contracts and no collective bargaining agreement is being negotiated by the Company or any of its Subsidiaries. There is no pending labor dispute, strike or work stoppage against the Company or any of its Subsidiaries which may interfere with the respective business activities of the Company or any of its Subsidiaries, except where such dispute, strike or work stoppage is not reasonably likely to have individually or in the aggregate a Material Adverse Effect on the Company. There is no pending charge or complaint against the Company or any of its Subsidiaries by the National Labor Relations Board or any comparable state agency, except where such unfair labor practice, charge or complaint is not reasonably likely to have a Material Adverse Effect on the Company. (viii) No amount that will be received (whether in cash or property or the vesting of property) or the forgiveness of indebtedness as a result of the Offer, Merger or any other transaction contemplated by this Agreement or otherwise by any employee, officer or director of the Company or any of its affiliates under any Company Benefit Plan currently in effect will be an "excess parachute payment" (as defined in Section 280G(b)(1) of the Code). Schedule 3.1(l)(viii) of the Company Disclosure Schedule sets forth (A) the estimated maximum amount that could be paid to or received by each "disqualified individual" (as defined in proposed regulations under Section 280G of the Code) (whether 19 in cash or property or the vesting of property or the forgiveness of indebtedness) as a result of the Offer, Merger or the other transactions contemplated by this Agreement under all Company Benefit Plans or otherwise (B) the "base amount" (as defined in Section 280G(b)(3) of the Code) for each disqualified individual calculated as of the date of this Agreement, and (c) a list of each employee of the Company or any of its Subsidiaries who is entitled to receive a retention bonus, severance and/or other payment as a result of the Offer, Merger or any other transaction contemplated hereby, the amount of each such bonus, severance and/or other payment and the date and other terms relating to the payment thereof. (ix) Other than as set forth on Schedule 3.1(l)(viii) of the Company Disclosure Schedule, or as set forth in the Company Equity Plans, no employee of the Company or any of its Subsidiaries will be entitled to any additional benefits or any acceleration of the time of payment or vesting of any benefits under any Company Benefit Plan or otherwise as a result of the transactions contemplated by this Agreement. (m) INTELLECTUAL PROPERTY. Except as is not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on the Company, all patents, trademarks, trade names, service marks and copyrights and registrations and applications relating thereto held by the Company and its Subsidiaries are valid and enforceable and, (A) neither the Company nor any of its Subsidiaries is, nor will the Company or any of its Subsidiaries be as a result of the execution and delivery of this Agreement or the performance of the Company's obligations hereunder, in violation of, and no claims are pending or, to the knowledge of the Company, threatened that the Company or any of its Subsidiaries is infringing on or otherwise violating the rights of any person with regard to any Intellectual Property and (B) no person is infringing on or otherwise violating any right of the Company or any of its Subsidiaries with respect to any Intellectual Property owned by and/or licensed to the Company or any of its Subsidiaries. (n) BROKERS OR FINDERS. No agent, broker, investment banker, financial advisor or other firm or Person is or will be entitled to any broker's or finder's fee or any other similar commission or fee in connection with any of the transactions contemplated by this Agreement, except 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. 20 (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 21 of the Company, neither the Company nor any of its Subsidiaries is subject to liability for any off-site disposal or release of any Hazardous Substance under any Environmental Law; (iv) there are no pending, or to the knowledge of the Company, threatened claims against the Company or any of its Subsidiaries alleging a violation of Environmental Law; and (v) neither the Company nor any of its Subsidiaries has received written notice alleging that the Company or any of its Subsidiaries is in violation of any Environmental Law or is potentially liable for the costs of investigating or remediating contaminated property pursuant to any Environmental Law. As used herein, "Environmental Law" means any law, regulation, rule, order, decree, or common law relating to the protection of the environment. "Hazardous Substance" means any substance that is listed, classified or regulated in any concentration under any Environmental Law including petroleum products, asbestos and polychlorinated biphenyls. Notwithstanding anything to the contrary in this Agreement, this Section 3.1(s) sets forth the sole and exclusive representations and warranties of the Company or any of its Subsidiaries with regard to any environmental matters. (t) PROPERTIES. Section 3.1(t) of the Company Disclosure Schedule contains a true and complete list, as of June 17, 1999, of all real properties owned by the Company or any of its Subsidiaries. The Company has delivered a list, which is true and complete in all material respects, of all real properties leased by the Company or any of its Subsidiaries in the United States, Canada and the United Kingdom as of June 17, 1999. Each of the Company and its Subsidiaries has good and marketable title to all properties, assets and rights of any kind whatsoever whether real, personal or mixed, and whether tangible or intangible owned by it (collectively, the "Company Assets"), in each case free and clear of all liens and other encumbrances except those which, individually or in the aggregate, are not reasonably likely to have a Material Adverse Effect on the Company. There are no pending or, to the knowledge of the Company, threatened condemnation proceedings against or affecting any Company Asset, and none of the Company Assets is subject to any commitment or other arrangement for its sale to a third party outside the ordinary course of business, which either individually or in the aggregate are not reasonably likely to have a Material Adverse Effect on the Company. (u) CUSTOMERS AND SUPPLIERS. Since February 6, 1999 through the date hereof, there has been no termination, cancellation or curtailment of the business relationship of the Company with (i) any customer (other than retail consumers) or supplier or group of affiliated customers or suppliers or (ii) any joint venture or alliance partners, in each case which is reasonably likely to result in a Material Adverse Effect on the Company, and the Company has not received written notice of any such termination, cancellation or curtailment. 22 (v) FRANCHISE. (i) To the Company's knowledge, each agreement, instrument or document executed by the Company or any of its Subsidiaries in connection with the granting or operation of a franchise ("Franchise Agreement") represents the legal, valid and binding obligation of the franchisee thereunder, subject to any franchisee's rights in bankruptcy, and is enforceable against such franchisee in accordance with its terms except as is not reasonably likely, individually or in the aggregate, to have a Material Adverse Effect on the Company. The Company is not in violation of any Franchise Agreement to which it is a party except for violations which are not reasonably likely, individually or in the aggregate, to have a Material Adverse Effect on the Company. (ii) The Company has delivered to Parent a true and correct copy of Company's Uniform Franchise Offering Circular ("UFOC") which is currently being used in connection with the offer to sell and sale of its franchises in the United States. The UFOC, and all UFOCs previously used by Company and/or its Subsidiaries since it commenced franchising do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except as is not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on the Company. (iii) The Company has maintained, operated and administered its and/or its Subsidiaries' national advertising fund ("Fund") in compliance with Company's legal responsibilities established by its Franchise Agreements and in any other agreements or understandings with respect to the Fund entered into the franchisees, suppliers, vendors and others except where failure to comply, individually or in the aggregate, is not reasonably likely to have a Material Adverse Effect on the Company. 3.2 REPRESENTATIONS AND WARRANTIES OF PARENT. Except as specifically set forth in the Parent Disclosure Schedule delivered by Parent to the Company dated as of the date of this Agreement (the "Parent Disclosure Schedule") or as disclosed in the Parent's Annual Report for the year ended December 31, 1998 publicly available prior to the date hereof, Parent represents and warrants to the Company as follows: (a) ORGANIZATION, STANDING AND POWER. Parent has been duly organized and is validly existing under the laws of its jurisdiction of organization. Parent is duly qualified or otherwise authorized to do business in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification necessary, except where the failure so to qualify or be so authorized is not reasonably likely to have a Material Adverse Effect on Parent. 23 Parent has the requisite corporate power and corporate authority, in all material respects, to own, lease and operate its properties and to carry on its businesses as they are now being conducted. Parent is not in violation of any provisions of its Organizational Documents in any material respect. (b) AUTHORITY; NO CONFLICTS. (i) Parent has all requisite corporate power and corporate authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action on the part of Parent and no other corporate proceedings are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by Parent and, assuming due execution by the Company, constitutes a valid and binding agreement of Parent, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors generally, or by general equity principles (regardless of whether such enforceability is considered in a proceeding in equity or at law). The Supervisory Board of Parent has, at a meeting duly called and held, unanimously approved the transactions contemplated by this Agreement. (ii) The execution and delivery of this Agreement do not or will not, as the case may be, and the consummation of the transactions contemplated hereby will not, result in any Violation pursuant to: (A) any provision of the Organizational Documents of Parent or (B) except as is not reasonably likely to have a Material Adverse Effect on Parent or prevent or materially delay the consummation of the transactions contemplated hereby and subject to obtaining or making the consents, approvals, orders, authorizations, registrations, declarations and filings referred to in paragraph (iii) below, the terms, provisions or conditions of any loan or credit agreement, note, mortgage, bond, indenture, lease, compensation or benefit plan or grant or award made pursuant thereto, or other agreement, obligation, instrument, contract, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Parent, or its properties or assets. (iii) No consent, registration, permit, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity or foreign securities exchange is required by or with respect to Parent in connection with the execution and delivery of this Agreement by Parent or the consummation by Parent of the transactions contemplated hereby, except for (A) the consents, approvals, orders, authorizations, registrations, declarations and filings required under or in relation to clause (x) of Section 3.1(c)(iii) as applicable, (B) any filings required to be made or consents that have to be obtained or arrangements that have to be made in order to ensure that the United States 24 government or any agency thereof will not challenge the consummation of the transactions contemplated hereby on national security grounds and (C) such consents, approvals, orders, authorizations, registrations, declarations and filings the failure of which to make or obtain is not reasonably likely to have a Material Adverse Effect on Parent or prevent the consummation of the transactions contemplated hereby. (c) INFORMATION SUPPLIED. (i) None of the information supplied or to be supplied by Parent or Merger Sub for inclusion or incorporation by reference in (A) the Offer Documents or (B) the information supplied or to be supplied by Parent or Merger Sub for inclusion or incorporation by reference in the Proxy Statement, if any, the Schedule 14D-9 and any other documents to be filed with the SEC or any other Governmental Entity or foreign securities exchange in connection with the transactions contemplated hereby, including any amendment or supplement to such documents, will, at the respective times such documents are filed, and, with respect to the Proxy Statement, if any, and the Offer Documents, when first published, sent or given to stockholders of the Company, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they are made, not false or misleading or, in the case of the Proxy Statement, if any, or any amendment thereof or supplement thereto, at the time of the Company Stockholders Meeting, if any, and at the Effective Time, contain any untrue statement of a material fact, or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they are made, not false or misleading or necessary to correct any statement in any earlier communication with respect to the Offer or the solicitation of proxies for the Company Stockholders Meeting, if any, which shall have become false or misleading. The Offer Documents will comply as to form in all material respects with the requirements of the Exchange Act and Securities Act and the rules and regulations of the SEC thereunder. (ii) Notwithstanding the foregoing provisions of this Section 3.2(c), no representation or warranty is made by Parent or Merger Sub with respect to statements made or incorporated by reference in the Proxy Statement, if any, or the Offer Documents based on information supplied by the Company for inclusion or incorporation by reference therein. (d) VOTE REQUIRED. No vote of the holders of any capital stock of Parent is necessary to approve this Agreement and the transactions contemplated hereby. (e) BROKERS OR FINDERS. No agent, broker, investment banker, financial advisor or other firm or Person is or will be entitled to any broker's or finder's fee or any other similar commission or fee in connection with any of the transactions contemplated by this Agreement based 25 upon arrangements made by or on behalf of Parent on Merger Sub, except 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. 26 (c) NON-CONTRAVENTION. (i) The execution and delivery of this Agreement do not or will not, as the case may be, and the consummation of the transactions contemplated hereby will not, result in any Violation pursuant to: (A) any provisions of the Organizational Documents of Merger Sub or (B) except as is not reasonably likely to have a Material Adverse Effect on Parent or prevent the consummation of the transactions contemplated hereby and subject to obtaining or making the consents, approvals, orders, authorizations, registrations, declarations and filings referred to in paragraph (ii) below, the terms, provisions or conditions of any loan or credit agreement, note, mortgage, bond, indenture, lease, compensation or benefit plan or any grant or award made pursuant thereto or other agreement, obligation, instrument, contract, permit, concession, franchise, license, judgment, order, writ, injunction, award, decree, statute, law, ordinance, rule or regulation applicable to Merger Sub or any of its properties or assets. (ii) No consent, registration, permit, approval, order or authorization of, or registration, declaration, notice, report or filing with, any Governmental Entity or foreign securities exchange is required by or with respect to Merger Sub in connection with the execution and delivery of this Agreement by Merger Sub or the consummation by Merger Sub of the transactions contemplated hereby, except for (A) the consents, approvals, orders, authorizations, registrations, declarations and filings required under or in relation to clause (x) of Section 3.1(c)(iii) as applicable, (B) any filings required to be made or consents that have to be obtained or arrangements that have to be made in order to ensure that the United States government or any agency thereof will not challenge the consummation of the transactions contemplated hereby on national security grounds and (C) such consents, approvals, orders, authorizations, registrations, declarations and filings the failure of which to make or obtain is not reasonably likely to have a Material Adverse Effect on Parent or to prevent the consummation of the transactions contemplated hereby. (d) NO BUSINESS ACTIVITIES. Merger Sub is not and has never been a party to any material agreements and has not conducted any activities other than in connection with the organization of Merger Sub, the commencement of the Offer, the negotiation and execution of this Agreement and the consummation of the transactions contemplated hereby. Merger Sub has no Subsidiaries. 27 ARTICLE IV. COVENANTS RELATING TO CONDUCT OF BUSINESS 4.1 COVENANTS OF THE COMPANY. During the period from the date of this Agreement and continuing until the Effective Time (except as expressly contemplated or permitted by this Agreement, set forth in the Company Disclosure Schedule (subject to Section 8.12) or to the extent that Parent shall otherwise consent in writing): (a) ORDINARY COURSE. The Company and its Subsidiaries shall carry on their respective businesses in the usual, regular and ordinary course in all respects, consistent with past practice and shall use their respective reasonable best efforts to preserve intact their present business organizations and preserve their existing relationships with customers, suppliers, employees, Governmental Entities and others having business dealings with them, and shall not enter into any material joint venture or other similar arrangement; provided, however, that no action by the Company or its Subsidiaries with respect to matters specifically addressed by any other provision of this Section 4.1 shall be deemed a breach of this Section 4.1(a) unless such action would constitute a breach of one or more of such other provisions. (b) DIVIDENDS; CHANGES IN SHARE CAPITAL. The Company shall not, and shall not propose to, (i) declare or pay any dividends on or make other distributions in respect of any of its capital stock, (ii) split, combine or reclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for, shares of its capital stock, (iii) repurchase, redeem or otherwise acquire any shares of its capital stock or any securities convertible into or exercisable for any shares of its capital stock except as otherwise permitted with respect to the payment of the option exercise price or tax withholding under certain option agreements in effect on the date of this Agreement under the Company Equity Plans, or (iv) effect any reorganization or recapitalization. (c) ISSUANCE OF SECURITIES. The Company shall not and shall cause its Subsidiaries not to issue, pledge, dispose of or encumber, deliver or sell, or authorize or propose the issuance, disposition, encumbrance, pledge, delivery or sale of, any shares of its capital stock of any class, any Company Voting Debt or any securities convertible into or exercisable for, or any rights, warrants or options to acquire, any such shares or Company Voting Debt, or enter into any agreement with respect to any of the foregoing, other than the issuance of Company Common Stock upon the exercise of stock options or rights to purchase Company Common Stock outstanding on the date of this Agreement in accordance with the terms of the Company Equity Plans as in effect on the date of this Agreement and other than upon the exercise of the Warrants. (d) ORGANIZATIONAL DOCUMENTS. Except to the extent required to comply with their respective obligations hereunder or required by law, the Company and its Subsidiaries shall not amend or propose to amend their respective Organizational Documents. 28 (e) INDEBTEDNESS. The Company shall not (i) incur any indebtedness for borrowed money or guarantee any such indebtedness or issue or sell any debt securities or warrants or rights to acquire any debt securities of the Company or guarantee any debt securities of other Persons other than indebtedness (including short term borrowings) of the Company or its Subsidiaries to the Company or its Subsidiaries and other than in the ordinary course of business, (ii) make any loans, advances or capital contributions to, or investments in, any other Person, other than by the Company or its Subsidiaries to or in the Company or its Subsidiaries or (iii) pay, discharge, modify or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than in the case of clauses (ii) and (iii), loans, advances, capital contributions, investments, payments, discharges or satisfactions incurred or committed to in the ordinary course of business consistent with past practice. (f) COMPENSATION. The Company shall not, and shall not permit its Subsidiaries to (i) increase the compensation payable or to become payable to any of its executive officers or employees or (ii) take an action with respect to the grant of any severance or termination pay, or stay, bonus or other incentive arrangement (other than as required by applicable law or the terms of any collective bargaining agreement or as required pursuant to benefit plans and policies in effect on the date of this Agreement), except any such increases or grants made in the ordinary course of business consistent with past practice, pursuant to agreements, plans or policies existing on the date hereof or as otherwise provided under this Agreement; provided, however that in no event shall the Company grant, or permit to be granted, any options or other awards under any Company Equity Plan after the date of this Agreement. (g) TAX ELECTIONS. The Company shall not, and shall not permit its Subsidiaries to, make any Tax election or change any method of accounting for Tax purposes in a manner that is reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on the Company. (h) EMPLOYMENT. The Company shall not, and shall not permit its Subsidiaries to, release or otherwise terminate the employment of any employee or hire any new employees, except in the ordinary course of business. (i) BENEFIT PLANS AND AGREEMENTS. (i) The Company shall not, and shall not permit its Subsidiaries to, establish, adopt or enter into any new employee benefit plans or agreements (including pension, profit sharing, bonus, incentive compensation, director and officer compensation, severance, medical, disability, life or other insurance plans, and employment agreements) or amend or modify any existing Company Benefit Plans, or extend coverage of the Company 29 Benefit Plans, except as required by applicable law, the terms of any collective bargaining agreement. (ii) Subject to Section 5.11, simultaneous with the execution of this Agreement, the Company shall freeze all Company Equity Plans as of the date of this Agreement, such that, as a result thereof, no officer or employee shall be entitled to purchase any additional Company Common Stock under any Company Equity Plan (other than pursuant to currently outstanding stock options and stock purchase periods) and no stock options or other awards shall be granted under any Company Equity Plan after the date of this Agreement. (j) OTHER ACTIONS. (i) The Company shall not, and shall not permit its Subsidiaries to, take any action that is reasonably likely to result in any of the Offer Conditions not being satisfied. (ii) The Company shall not, and shall not permit its Subsidiaries to, (A) transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of or encumber any assets except in the ordinary course of business consistent with past practice; (B) authorize capital expenditures in any manner not reflected in the capital budget of the Company as currently in effect or make any acquisition of, or investment in, any business or stock of any other person or entity except in the ordinary course of business consistent with past practice; (C) settle or compromise any material claims or litigation or, except in the ordinary course of business consistent with past practice, modify, amend or terminate any of the Company Material Contracts or waive, release or assign any material rights or claims except, in each case, as is not reasonably likely, individually or in the aggregate, to have a Material Adverse Effect on the Company; or (D) permit any material insurance policy naming it as a beneficiary or a loss payable payee to be canceled or terminated without the prior written approval of Parent, except in the ordinary course of business consistent with past practice; or (E) terminate the employment of any employee who is covered by a change in control, employment, termination or similar agreement, except for Cause (as defined in such agreements) or permit circumstances to exist that would allow such employee to terminate employment and be entitled to severance or other payments thereunder. 4.2 COVENANTS OF PARENT AND MERGER SUB. During the period from the date of this Agreement and continuing until the Effective Time (except as expressly contemplated or permitted by this Agreement or to the extent that the Company shall otherwise consent in writing) Parent shall not, and shall not permit any of its Subsidiaries to, take any action that is reasonably likely to result in (i) any of the representations and warranties of Parent and Merger Sub set forth in this Agreement (x) to the extent qualified by Material Adverse Effect becoming untrue or inaccurate and (y) to the 30 extent not qualified by Material Adverse Effect becoming untrue or inaccurate, except that this clause (y) shall be deemed satisfied so long as such representations and warranties being untrue or inaccurate, taken together, do not have a Material Adverse Effect on Parent, or (ii) any of the Offer Conditions not being satisfied. 4.3 ADVICE OF CHANGES; GOVERNMENT FILINGS. (a) Each party shall (i) confer on a regular and frequent basis with the other, (ii) report (to the extent permitted by law, regulation and any applicable confidentiality agreement) to the other on operational matters and (iii) promptly advise the other orally and in writing of (A) any representation or warranty made by it in this Agreement (x) to the extent qualified by Material Adverse Effect becoming untrue or inaccurate and (y) to the extent not qualified by Material Adverse Effect becoming untrue or inaccurate, except that this clause (y) shall be deemed satisfied so long as such representations or warranties being untrue or inaccurate, taken together, do not have a Material Adverse Effect on the Company or Parent, as the case may be, or (B) the failure by it to comply with or satisfy in any material respect any covenant, condition or agreement required to be complied with or satisfied by it under this Agreement; provided, however, that no such notification shall affect the representations, warranties, covenants or agreements of the parties or the conditions to the obligations of the parties under this Agreement. The Company shall file all reports required to be filed by it with the SEC (and all other Governmental Entities) between the date of this Agreement and the Effective Time and shall (to the extent permitted by law or regulation or any applicable confidentiality agreement) deliver to Parent copies of all such reports promptly after the same are filed. Subject to applicable laws relating to the exchange of information, each of the Company and Parent shall have the right to review in advance, and to the extent practicable each will consult with the other, with respect to all the information relating to the other party and each of their respective Subsidiaries, which appears in any filings, announcements or publications made with, or written materials submitted to, any third party or any Governmental Entity in connection with the transactions contemplated by this Agreement. In exercising the foregoing right, each of the parties hereto agrees to act reasonably and as promptly as practicable. Each party agrees that, to the extent practicable, it will consult with the other party with respect to the obtaining of all permits, consents, approvals and authorizations of all third parties and Governmental Entities necessary or advisable to consummate the transactions contemplated by this Agreement and each party will keep the other party apprised of the status of matters relating to completion of the transactions contemplated hereby. (b) Each party shall cooperate with each other and shall use its respective reasonable best efforts to reach a mutually satisfactory arrangement with the United States government or an appropriate agency thereof so that Parent's acquisition of the Company Common Stock would not adversely affect the Company's current business operations with the United States government (including, the continued operation of Company affiliated or franchise stores at United States military bases and facilities). 31 ARTICLE V. ADDITIONAL AGREEMENTS 5.1 APPROVAL BY THE COMPANY'S STOCKHOLDERS. (a) If required by the DGCL or the Company's Organizational Documents in order to consummate the Merger, the Company shall, as soon as practicable following the acquisition by Merger Sub of the shares of the Company Common Stock pursuant to the Offer, duly call, give notice of, convene and hold a meeting of its stockholders (the "Company Stockholders Meeting") for the purpose of obtaining the Required Company Votes, and, the Company shall, through the Company Board, recommend to its stockholders that they vote in favor of the adoption of this Agreement; provided, however, that the Company Board may withdraw, modify or change such recommendation to the extent that the Company Board determines to do so in exercise of its fiduciary duties or as permitted under Section 5.4. Parent shall vote or cause to be voted all the shares of Company Common Stock owned of record by Parent, Merger Sub or any of its other Subsidiaries in favor of the approval of the Merger and adoption of this Agreement. (b) Notwithstanding the preceding paragraph or any other provision of this Agreement, in the event Parent, Merger Sub or any other Subsidiary of Parent shall beneficially own, in the aggregate, at least 90% of the outstanding shares of the Company Common Stock, the Company shall not be required to call the Company Stockholders Meeting or to file or mail the Proxy Statement, and the parties hereto shall, at the request of Parent and subject to Article VI, take all necessary and appropriate action to cause the Merger to become effective as soon as practicable after the acceptance for payment of and payment for shares of the Company Common Stock by Merger Sub pursuant to the Offer without a meeting of stockholders of the Company in accordance with Section 253 of the DGCL. (c) If required by applicable law, as soon as practicable following Parent's request, the Company and Parent shall prepare and file with the SEC the Proxy Statement. Each of the Company and Parent shall use reasonable best efforts to cause the Proxy Statement to be mailed to the Company's stockholders, as promptly as practicable. 5.2 ACCESS TO INFORMATION. From the date hereof until the earlier of the Effective Time or the termination of this Agreement, upon reasonable notice, the Company shall afford to the officers, employees, accountants, counsel, financial advisors and other representatives of Parent ("Parent Representatives") reasonable access to all of its and its Subsidiaries properties, books, contracts, commitments and records (including security position listings or other information concerning beneficial and record owners of the Company's securities) and its officers, management employees and representatives and, during such period, the Company shall furnish promptly to Parent, consistent with its legal obligations, all information concerning its business, properties and personnel as the other party may reasonably request. Such information shall be held in confidence 32 to the extent required by, and in accordance with, the provisions of the letter (the "Confidentiality Agreement") dated May 26, 1999, between the Company and Parent, which Confidentiality Agreement shall remain in full force and effect. 5.3 APPROVALS AND CONSENTS; COOPERATION. Each of the Company and Parent shall cooperate with each other and use (and shall cause their respective Subsidiaries to use) its reasonable best efforts to take or cause to be taken all actions, and do or cause to be done all things, necessary, proper or advisable on their part under this Agreement and applicable laws to consummate and make effective the Offer and the Merger and the other transactions contemplated by this Agreement as soon as practicable, including (i) preparing and filing as promptly as practicable all documentation to effect all necessary applications, notices, petitions, filings and other documents and to obtain as promptly as practicable all consents, waivers, licenses, orders, registrations, approvals, permits and authorizations necessary or advisable to be obtained from any third party and any Governmental Entity in order to consummate the Offer, the Merger and the other transactions contemplated by this Agreement and (ii) taking all reasonable steps as may be necessary to obtain all such consents, waivers, licenses, registrations, permits, authorizations, orders and approvals. Without limiting the generality of the foregoing, each of the Company and Parent agrees to make all necessary filings in connection with the Required Regulatory Approvals as promptly as practicable after the date of this Agreement, and in any event no later than 9 Business Days after the date hereof, and to use its reasonable best efforts to furnish or cause to be furnished, as promptly as practicable, all information and documents requested with respect to such Required Regulatory Approvals and shall otherwise cooperate with the applicable Governmental Entity in order to obtain any Required Regulatory Approvals in as expeditious a manner as possible. Each of the Company and Parent shall use its reasonable best efforts to resolve such objections, if any, as any Governmental Entity may assert with respect to this Agreement and the transactions contemplated hereby in connection with the Required Regulatory Approvals. In the event that a suit is instituted by a Person or Governmental Entity challenging this Agreement and the transactions contemplated hereby as violative of applicable antitrust or competition laws, each of the Company and Parent shall use its reasonable best efforts to resist or resolve such suit. The Company and Parent each shall, upon request by the other, furnish the other with all information concerning itself, its Subsidiaries, directors, officers and stockholders and such other matters as may reasonably be necessary or advisable in connection with the Offer Documents, Schedule 14D-9, Proxy Statement or any other statement, filing, notice or application made by or on behalf of the Company, Parent or any of their respective Subsidiaries to any third party and any Governmental Entity in connection with the Offer, the Merger or the other transactions contemplated by this Agreement. 5.4 ACQUISITION PROPOSALS. (a) The Company agrees that neither the Company, its Subsidiaries, nor any of the respective officers and directors of the Company or its Subsidiaries, shall and the Company shall direct and use its best efforts to cause its employees, agents and representatives (including any 33 investment banker, attorney or accountant retained by the Company or any of its Subsidiaries) not to, take or cause, directly or indirectly, any of the following actions with any party other than Parent, Merger Sub or their respective designees: (i) directly or indirectly solicit, encourage, initiate, participate in or otherwise facilitate (including by way of furnishing information) any negotiations, inquiries or discussions with respect to any offer, indication or proposal to acquire all or more than 15% of the Company's business, assets or capital shares whether by merger, consolidation, other business combination, purchase of assets, reorganization, tender or exchange offer or otherwise (each of the foregoing, an "Acquisition Proposal") or (ii) disclose, in connection with an Acquisition Proposal, any information or provide access to its properties, books or records. The Company will immediately cease and cause to be terminated any existing activities, discussions or negotiations with any parties conducted heretofore with respect to any of the foregoing. The Company will take the necessary steps to promptly inform the individuals or entities referred to in the first sentence of Section 5.4(a) hereof of the obligations undertaken in this Section 5.4. The Company also will promptly request any Person which may have heretofore executed a confidentiality agreement in connection with its consideration of acquiring the Company and/or any of its Subsidiaries to return or destroy all confidential information heretofore furnished to such person by or on behalf of the Company. (b) Notwithstanding anything to the contrary contained in Section 5.4(a) or elsewhere in this Agreement, prior to the consummation of the Offer, the Company may participate in discussions or negotiations with, and furnish non-public information, and afford access to the properties, books, records, officers, employees and representatives of the Company to any Person, entity or group if such Person, entity or group has delivered to the Company, prior to the consummation of the Offer, and in writing, an Acquisition Proposal which is not subject to any financing contingency and which the Company Board in its good faith judgment (after consultation with its independent financial advisor) determines if consummated would be more favorable, from a financial point of view, to the Company's stockholders than the transactions contemplated by this Agreement and with respect to which the Company Board receives advice of its outside legal counsel that the Company Board would breach its fiduciary duties if it did not accept the Acquisition Proposal (a "Superior Proposal"). In the event the Company receives a Superior Proposal, nothing contained in this Agreement (but subject to the terms of this paragraph (b)) will prevent the Company Board from executing or entering into an agreement relating to such Superior Proposal and recommending such Superior Proposal to its stockholders, if the Company Board determines (after consultation with its independent financial advisor and outside legal counsel) that its fiduciary duties require it to do so; in such case, the Company Board may withdraw, modify or refrain from making its recommendation of the Offer and the Merger; provided, however that the Company (i) shall have promptly notified Parent, and in any event within 24 hours, of any Acquisition Proposal received by, any such information requested from, or any such negotiations or discussions sought to be initiated or recommenced with, the Company or any of its Subsidiaries, indicating, in connection with such notice, the name of the Person making the Acquisition Proposal or taking such action and, in reasonable detail, the significant terms of any such Acquisition Proposal and including with such 34 notice any documentation relating to such Acquisition Proposal, (ii) shall provide Parent at least 48 hours prior written notice of the Company's intention to execute or enter into an agreement relating to such Superior Proposal and (iii) may only terminate this Agreement by written notice to Parent provided no sooner than 48 hours after Parent's receipt of a copy of such Superior Proposal (or a detailed description of the significant terms and conditions thereof). 5.5 EMPLOYEE BENEFITS. Parent shall or shall cause the Surviving Corporation to comply with the provisions of the letter of even date herewith from Parent to the Company relating to employee benefit matters. 5.6 FEES AND EXPENSES. Whether or not the transactions contemplated hereby are consummated, all Expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such Expenses, except (a) if the Merger is consummated, the Surviving Corporation shall pay, or cause to be paid, any and all property or transfer taxes imposed on the Company or its Subsidiaries, (b) the Expenses incurred in connection with the printing, filing and mailing to stockholders of the Proxy Statement, if any, and the solicitation of stockholder approvals shall be shared equally by the Company and Parent, and (c) as provided in Section 7.2. As used in this Agreement, "Expenses" includes all out-of-pocket expenses (including, without limitation, (i) all fees and expenses of counsel, accountants, investment bankers, experts and consultants to a party hereto and its affiliates and (ii) the fees, costs and expenses relating to obtaining financing for the transactions contemplated hereby, including commitment fees and the like) incurred by a party or on its behalf in connection with or related to the authorization, preparation, negotiation, execution and performance of this Agreement and the transactions contemplated hereby, including the preparation, printing, filing and mailing of the Offer Documents and the Proxy Statement, if any, and the solicitation of stockholder approvals and all other matters related to the transactions contemplated hereby. 5.7 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. Parent shall cause to be maintained in effect (i) the current provisions regarding indemnification of current or former officers and directors (each an "Indemnified Party") contained in the Organizational Documents of the Company or its Subsidiaries and in any agreements between an Indemnified Party and the Company or its Subsidiaries, and (ii) for a period of six years, the current policies of directors' and officers' liability insurance and fiduciary liability insurance maintained by the Company (provided that Parent or the Surviving Corporation may substitute therefor policies of at least the same coverage and amounts containing terms and conditions which are, in the aggregate, no less advantageous to the insured and provided that such substitution shall not result in any gaps or lapses in coverage with respect to matters occurring prior to the Effective Time) with respect to claims arising from facts or events that occurred on or before the Effective Time. Parent shall not be obligated to pay annual premiums to the extent such premiums exceed 150% of the annual premiums paid as of the date hereof by the Company for such insurance (such 150% amount, the "Maximum Premium"). If such insurance coverage cannot be obtained at all, or can only be obtained at an annual premium in excess 35 of the Maximum Premium, Parent shall maintain the most advantageous policies of directors' and officers' insurance obtainable for an annual premium equal to the Maximum Premium. The Company represents that the Maximum Premium is U.S. $437,250. This covenant is intended to be for the benefit of, and shall be enforceable by, each of the Indemnified Parties and their respective heirs and legal representatives. 5.8 PUBLIC ANNOUNCEMENTS. So long as this Agreement is in effect, the Company and Parent shall use all reasonable best efforts to develop a joint communications plan and each party shall use all reasonable best efforts (i) to ensure that all press releases and other public statements with respect to the transactions contemplated hereby shall be consistent with such joint communications plan and (ii) unless otherwise required by applicable law or by obligations pursuant to any listing agreement with or rules of any securities exchange, to consult with each other before issuing any press release or otherwise making any public statement with respect to this Agreement or the transactions contemplated hereby. 5.9 TAKEOVER STATUTES. If any Takeover Statute shall become applicable to the transactions contemplated hereby, the Company and the members of the Company Board, subject to its fiduciary duties, shall grant such approvals and take such actions as are reasonably necessary so that the transactions contemplated hereby may be consummated as promptly as practicable on the terms contemplated hereby and otherwise act to eliminate or minimize the effects of such Takeover Statute on the transactions contemplated hereby. 5.10 THIRD PARTY STANDSTILL AGREEMENTS; TORTIOUS INTERFERENCE. During the period from the date of this Agreement through the Effective Time, the Company shall not terminate, amend, modify or waive any provision of any confidentiality or standstill or similar agreement to which the Company or any of its Subsidiaries is a party (other than involving Parent). Subject to the foregoing, during such period, the Company agrees to enforce, to the fullest extent permitted under applicable law, the provisions of any such agreements, including obtaining injunctions to prevent any breaches of such agreements and to enforce specifically the terms and provisions thereof and any court having jurisdiction. 5.11 COMPANY OPTION PLANS. Each outstanding option (a "Company Stock Option") to purchase Company Common Stock, whether or not fully exercisable, shall be canceled in exchange for the right to receive a cash payment at the Effective Time in an amount equal to the product of (x) the excess, if any, of the Merger Consideration per share over the exercise price per share of the Company Common Stock subject to such Company Stock Options and (y) the number of shares of Company Common Stock subject to such Company Stock Options. All amounts payable pursuant to this Section 5.11 shall be subject to any required withholding of taxes and shall be paid without interest. The Company shall use its reasonable best efforts to take such actions as may be necessary to implement the provisions of this Section 5.11. 36 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. 37 ARTICLE VII. TERMINATION AND AMENDMENT 7.1 TERMINATION. This Agreement may be terminated at any time prior to the Effective Time, by action taken or authorized by the Board of Directors of the terminating party or parties, whether before or after approval of this Agreement and the matters contemplated herein, including the Merger, by the stockholders of the Company: (a) By mutual written consent of Parent and the Company, by action of their respective Boards of Directors; (b) By either the Company or Parent if the Offer shall not have been consummated by the date which is three months from the date of this Agreement (the "Outside Date"); provided that the right to terminate this Agreement under this Section 7.1(b) shall not be available to any party whose failure to fulfill any obligation or condition under this Agreement has been the cause of, or resulted in, the failure of the Offer to be consummated on or before such date; notwithstanding the foregoing, if the sole reason the Offer shall not have been consummated by the Outside Date is the failure to have obtained all Required Regulatory Approvals prior to the date which is three months from the date of this Agreement, the Outside Date shall be extended for a period of 30 days; (c) By Parent if any Person other than Parent, Merger Sub, or any of their affiliates or any group of which any of them is a member, shall have entered into a definitive agreement or an agreement in principle with the Company or any of its Subsidiaries with respect to an Acquisition Proposal or the Company Board (or any committee thereof) shall have adopted a resolution approving any of the foregoing; (d) By either the Company or Parent if any court or other Governmental Entity shall have issued an order, decree or ruling or taken any other action (which order, decree, ruling or other action the parties shall have used their reasonable best efforts to resist, resolve or lift, as applicable, subject to the provisions of Section 5.3) permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement, and such order, decree, ruling or other action shall have become final and nonappealable; (e) By Parent if (i) the Company Board (or any committee thereof) shall have withdrawn or adversely modified (including by amendment of the Schedule 14D-9) its approval or recommendation of the Offer, the Merger or this Agreement or the Company Board, upon request by Parent following receipt by the Company of an Acquisition Proposal, shall fail to reaffirm such approval or recommendation within ten Business Days after such request or shall have resolved to do any of the foregoing; (ii) the Company Board shall have recommended to the stockholders of the Company that they approve an Acquisition Proposal other than transactions contemplated by this 38 Agreement; or (iii) a tender offer or exchange offer is commenced that, if successful, would result in any Person becoming a "beneficial owner" (as such term is defined under Regulation 13D under the Exchange Act) of 15% or more of the outstanding shares of Company Common Stock (other than by Parent or an affiliate of Parent) and the Company Board recommends that the stockholders of the Company tender their shares in such tender or exchange offer; (f) By the Company, prior to the purchase by Merger Sub of shares of Company Common Stock pursuant to the Offer, if the Company Board determines to accept a Superior Proposal pursuant to Section 5.4(b), provided that the Company shall not be entitled to terminate this Agreement pursuant to this Section 7.1(f) unless the Company concurrently enters into an agreement with respect to a Superior Proposal pursuant to Section 5.4(b) and pays the Termination Fee pursuant to Section 7.2(b); (g) By Parent, prior to the purchase by Merger Sub of shares of Company Common Stock pursuant to the Offer, upon a material breach of any material covenant or agreement on the part of the Company set forth in this Agreement, or if the Offer Condition contained in paragraph (c)(i) or (ii) of Annex A is not capable of being satisfied or cured by the earlier of (x) the Outside Date or (y) within 30 days after any executive officer of the Company becomes aware of the breach of any representation or warranty resulting in the failure to satisfy such Offer Condition; (h) By the Company, upon a material breach of any material covenant or agreement on the part of Parent or Merger Sub set forth in this Agreement, or upon the failure of any representation or warranty of Parent or Merger Sub set forth in this Agreement (i) to the extent such representation or warranty is qualified by Material Adverse Effect, to be true and correct and (ii) to the extent such representation or warranty is not qualified by Material Adverse Effect, to be true and correct, except that, in the case of this clause (ii), no failure shall be deemed to have occurred so long as such failure, taken together with all other such failures, does not have a Material Adverse Effect on Parent in the case of each of clause (i) and (ii) as of the date of this Agreement and (except to the extent such representation or warranty speaks as of an earlier date) as of the consummation of the Offer as though made on and as of such date, and except that, in the case of each of clause (i) and (ii), no failure shall be deemed to have occurred so long as such failure is capable of being satisfied or cured by the earlier of (x) the Outside Date or (y) within 30 days after any executive officer of Parent becomes aware of the breach of any representation or warranty resulting in such failure; or (i) By the Company, if Merger Sub fails to (i) commence the Offer or keep the Offer open as provided in Section 1.1 hereof or (ii) purchase validly tendered shares of the Company Common Stock in violation of the terms of the Offer or this Agreement. 39 7.2 EFFECT OF TERMINATION. (a) In the event of termination of this Agreement by either the Company or Parent as provided in Section 7.1, this Agreement shall forthwith become void and there shall be no liability or obligation on the part of Parent or the Company or their respective officers or directors except (i) with respect to Section 5.6, this Section 7.2 and Section 8.5(a) and (ii) with respect to any liabilities or damages incurred or suffered by a party as a result of the willful and material breach by the other party of any of its covenants or other agreements set forth in this Agreement. (b) In the event that (x) this Agreement is terminated pursuant to Section 7.1(c), Section 7.1(e) or Section 7.1(f), or (y) (i) the Offer shall have remained open for a minimum of at least 20 Business Days from the date that it is commenced and for such longer period as is required by Section 1.1, (ii) after the date hereof any Person other than Parent or Merger Sub or any of their respective Subsidiaries or affiliates shall have become the beneficial owner of 15% or more of the outstanding shares of Company Common Stock or made any Acquisition Proposal, (iii) the Minimum Condition shall not have been satisfied and Merger Sub shall not have accepted for payment any shares of Company Common Stock pursuant to the Offer, (iv) this Agreement shall not have been terminated pursuant to Section 7.1(h) hereof, and (v) within twelve months of the termination, expiration or withdrawal of the Offer, the Company enters into an agreement providing for the consummation of an Acquisition Proposal (as such term is defined in Section 5.4(a), except that the reference in such definition to 15% shall be deemed a reference to 40% for purposes of this clause (v) only) or any other Person (other than Parent or any of its affiliates) becomes the beneficial owner of 40% or more of the outstanding shares of Company Common Stock, then the Company shall pay the Parent in cash (A) U.S. $60 million plus (B) up to U.S. $9 million of Parent's documented Expenses incurred in connection with the Offer and Merger ((A) and (B) together, the "Termination Fee"). The Termination Fee shall be payable by wire transfer of immediately available funds upon such termination, in the case of clause (x), or upon the earlier of the Company entering into an agreement for an Acquisition Proposal or a Person becoming the beneficial owner of 40% or more of the Company's outstanding shares of Company Common Stock, in the case of clause (y). The Company acknowledges that the agreements contained in this Section 7.2(b) are an integral part of the transactions contemplated in this Agreement, and that, without these agreements, the Parent and Merger Sub would not enter into this Agreement; accordingly, if the Company fails to promptly pay the amount due pursuant to this Section 7.2(b), and, in order to obtain such payment, Parent or Merger Sub commences a suit which results in a judgment against the Company for the fee set forth in this paragraph (b), the Company shall pay to Parent or Merger Sub its costs and Expenses (including attorneys' fees) in connection with such suit, together with interest on the amount of the fee at the prime rate of Citibank N.A. plus 2% per annum on the date such payment was required to be made. 7.3 AMENDMENT. Subject to Section 1.4(c), this Agreement may be amended by the parties hereto, by action taken or authorized by their respective Boards of Directors, at any time 40 before or after approval of the matters presented in connection with the Merger by the stockholders of the Company, but, after any such approval, no amendment shall be made which by law or in accordance with the rules of Nasdaq requires further approval by such stockholders without such further approval. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto. 7.4 EXTENSION; WAIVER. Subject to Section 1.4(c), at any time prior to the Effective Time, the parties hereto, by action taken or authorized by their respective Boards of Directors, may, to the extent legally allowed, (i) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (ii) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto and (iii) waive compliance with any of the agreements or conditions contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such party. No delay on the part of any party hereto in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party hereto of any right, power or privilege hereunder operate as a waiver of any other right, power or privilege hereunder, nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder. Unless otherwise provided, the rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies which the parties hereto may otherwise have at law or in equity. The failure of any party to this Agreement to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of those rights. ARTICLE VIII. GENERAL PROVISIONS 8.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS; NO OTHER REPRESENTATIONS AND WARRANTIES. None of the representations and warranties in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Effective Time. This Section 8.1 shall not limit any covenant or agreement of the parties which by its terms contemplates performance after the Effective Time. 8.2 NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed duly given (a) on the date of delivery if delivered personally, (b) on the first Business Day following the date of dispatch if delivered by a nationally recognized next-day courier service, (c) on the tenth Business Day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid or (d) if sent by facsimile transmission, with a copy mailed on the same day in the manner provided in (a) or (b) above, when transmitted and receipt is confirmed by telephone. All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice: 41 (a) if to Parent or Merger Sub, to: Koninklijke Numico N.V. 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 42 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 43 covered thereby and may be enforced by each such Indemnified Party) and Section 5.11 (which is intended to be solely for the benefit of each holder of a Company Stock Option). 8.6 GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL. (a) This Agreement shall be governed and construed in accordance with the laws of the State of Delaware, without regard to the laws that might be applicable under conflicts of laws principles. (b) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any Delaware State court, or Federal court of the United States of America, sitting in Delaware, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the agreements delivered in connection herewith or the transactions contemplated hereby or thereby or for recognition or enforcement of any judgment relating thereto, and each of the parties hereby irrevocably and unconditionally (i) agrees not to commence any such action or proceeding except in such courts, (ii) agrees that any claim in respect of any such action or proceeding may be heard and determined in such Delaware State court or, to the extent permitted by law, in such Federal court, (iii) waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any such action or proceeding in any such Delaware State or Federal court, and (iv) waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such Delaware State or Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 8.2. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law. (c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (ii) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (iii) IT HAS BEEN INDUCED TO ENTER INTO THIS 44 AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.6(c). 8.7 SEVERABILITY. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible. Any provision of this Agreement held invalid or unenforceable only in part, degree or certain jurisdictions will remain in full force and effect to the extent not held invalid or unenforceable. To the extent permitted by applicable law, each party waives any provision of law which renders any provision of this Agreement invalid, illegal or unenforceable in any respect. 8.8 ASSIGNMENT. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto, in whole or in part (whether by operation of law or otherwise), without the prior written consent of the other parties, and any attempt to make any such assignment without such consent shall be null and void. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective permitted successors and assigns. 8.9 ENFORCEMENT. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms. It is accordingly agreed that the parties shall be entitled to specific performance of the terms hereof, this being in addition to any other remedy to which they are entitled at law or in equity. 8.10 DEFINITIONS. As used in this Agreement: (a) "affiliate" means any person directly or indirectly controlling, controlled by or under common control with such other person at the time at which the determination of affiliation is being made. The term "control" (including, with correlative meanings, the term "controlled by" or "under common control with"), as applied to any person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such person, whether through the ownership of voting securities or other ownership interest, by contract or otherwise. (b) "Board of Directors" means the Board of Directors of any specified Person and any properly serving and acting committees thereof. 45 (c) "Business Day" means any day on which banks are not required or authorized to close in The City of New York. (d) "Code" means the Internal Revenue Code of 1986, as amended or replaced and as in effect from time to time. (e) "Company Equity Plans" means the Company's 1989, 1991, 1992, 1993 and 1995 Stock Option Plans, 1994 Stock Option Plan for Non-Employee Directors, and 1998 Management and Director Stock Option Plan (the "Company Options Plans") and the 1993 Employee Stock Purchase Plan and 1996 Management and Director Stock Purchase Plan (the "Company Stock Purchase Plan"). (f) "Intellectual Property" shall mean patents, copyrights, trademarks (registered and unregistered), service marks, brand names, trade names, and registrations in any jurisdiction of, and applications in any jurisdiction to register the foregoing, technology, know-how, software, and tangible or intangible proprietary information or materials that are used in the business of the Company and its Subsidiaries as currently conducted and any other trade secrets related thereto. (g) "Material Adverse Effect" means, with respect to any Person, any adverse change, circumstance, event or effect that, individually or in the aggregate with all other adverse changes, circumstances, events and effects, is or is reasonably likely to be materially adverse to the business, operations, financial condition or results of operations of such entity and its Subsidiaries taken as a whole, other than any change or effect to the extent attributable to (i) the economy in general and (ii) the announcement or other proper disclosure of this Agreement or the transactions contemplated hereby. (h) "Organizational Documents" means, with respect to any entity, the certificate of incorporation, bylaws or other similar governing documents of such entity. (i) "Person" means an individual, corporation, partnership, limited liability company association, trust, unincorporated organization, entity or group (as defined in Section 13(d)(3) the Exchange Act). (j) "Significant Subsidiary" means a Subsidiary that would constitute a "significant subsidiary" within the meaning of Rule 1-02 Regulation S-X of the Securities Act; (k) "Subsidiary" when used with respect to any Person means any corporation or other organization, whether incorporated or unincorporated, (i) of which such Person or any other Subsidiary of such Person is a general partner (excluding partnerships, the general partnership interests of which held by such Person or any of its Subsidiaries of such Person do not have a majority of the voting and economic interests in such partnership) or (ii) at least a majority of the 46 securities or other interests of which having by their terms ordinary voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such Person or by any one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries. (l) (i) "Tax" (including, with correlative meaning, the terms "Taxes" and "Taxable") means all federal, state, local and foreign income, profits, franchise, gross receipts, environmental, customs duty, capital stock, severance, stamp, payroll, sales, employment, unemployment disability, use, property, withholding, excise, production, value added, occupancy and other taxes, duties or assessments of any nature whatsoever, together with all interest, penalties, fines and additions to tax imposed with respect to such amounts and any interest in respect of such penalties and additions to tax, and (ii) "Tax Return" means all returns and reports (including elections, claims, declarations, disclosures, schedules, estimates, computations and information returns) required to be supplied to a Tax authority in any jurisdiction relating to Taxes. (m) "the other party" means, with respect to the Company, Parent and means, with respect to Parent, the Company. 8.11 PERFORMANCE BY MERGER SUB. Parent hereby agrees to cause Merger Sub to comply with its obligations hereunder and under the Offer and to cause Merger Sub to consummate the Merger as contemplated herein and whenever this Agreement requires Merger Sub to take any action, such requirement shall be deemed to include an undertaking of Parent to cause Merger Sub to take such action. 8.12 DISCLOSURE SCHEDULES. Any matter disclosed in any subsection of the parties' respective Disclosure Schedules shall be deemed disclosed for each subsection of this Agreement to which such matter is reasonably related. 47 IN WITNESS WHEREOF, Parent, the Company and Merger Sub have caused this Agreement to be signed by their respective officers thereunto duly authorized, all as of July 5, 1999. KONINKLIJKE NUMICO N.V. By: /s/ Hans van der Wielen ---------------------------- Name: Hans van der Wielen Title: President and CEO NUMICO INVESTMENT CORP. By: /s/ Julitte van der Ven ---------------------------- Name: Julitte van der Ven Title: President GENERAL NUTRITION COMPANIES, INC. By: /s/ William E. Watts ------------------------------- Name: William E. Watts Title: President and Chief Executive Officer 48 ANNEX A CONDITIONS TO THE OFFER Notwithstanding any other provision of the Offer, and subject to the terms and conditions of the Agreement, Merger Sub shall not be obligated to accept for payment any shares of Company Common Stock until all Required Regulatory Approvals shall have been obtained, made or satisfied including until the expiration of any waiting periods applicable under the 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 49 and warranties of the Company set forth in the Agreement (other than those set forth in Section 3.1(b) of the Agreement), (x) to the extent qualified by Material Adverse Effect shall not be true and correct and (y) to the extent not qualified by Material Adverse Effect shall not be true and correct, except that this clause (y) shall be deemed satisfied so long as any failures of such representations and warranties to be true and correct, taken together, do not have a Material Adverse Effect on the Company, in the case of each of clause (x) and (y) as of the date of the Agreement and (except to the extent such representations and warranties speak as of an earlier date) as of the consummation of the Offer as though made on and as of such date; (iii) the Company shall have breached or failed to comply in any material respect with any of its material obligations, covenants or agreements under the Agreement; or (iv) any change or event shall have occurred that has, or is reasonably likely to have, a Material Adverse Effect on the Company; or (d) the Agreement shall have been terminated in accordance with its terms. The conditions set forth in clauses (a) through (d) are for the sole benefit of Parent and Merger Sub and may be asserted by Parent and Merger Sub regardless of the circumstances giving rise to such condition and may be waived by Parent and Merger Sub in whole or in part at any time and from time to time, by express and specific action to that effect, in their sole discretion. The failure by Parent or Merger Sub at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right, the waiver of any such right with respect to particular facts and other circumstances shall not be deemed a waiver with respect to any other facts and circumstances, and each such right shall be deemed an ongoing right that may be asserted at any time and from time to time. The capitalized terms used in this Annex A shall have the meanings set forth in the Agreement to which it is annexed. 50 EX-99.(C)(2) 13 EXHIBIT 99(C)(2) 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), 1 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. 2 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 3 (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. 4 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". 5 (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. 6 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] 7 /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 EX-99.(C)(3)(I) 14 EXHIBIT 99(C)(3)(I) 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- 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. 2 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 3 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 4 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. 5 (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. 6 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 ------------------------------- 7 EX-99.(C)(3)(II) 15 EXHIBIT 99(C)(3)(II) 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. (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 2 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 "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 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 EX-99.(C)(3)(III) 16 EXHIBIT 99(C)(3)(III) 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. (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 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 (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 (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 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 EX-99.(C)(3)(IV) 17 EXHIBIT 99(C)(3)(IV) 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. (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 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 (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 (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 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 EX-99.(C)(3)(V) 18 EXHIBIT 99(C)(3)(V) 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. (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 (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 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 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 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 EX-99.(C)(3)(VI) 19 EXHIBIT 99(C)(3)(VI) 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. (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 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 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 (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 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 EX-99.(C)(3)(VII) 20 EXHIBIT 99(C)(3)(VII) 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. (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 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 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 (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 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 EX-99.(C)(3)(VIII) 21 EXHIBIT 99(C)(3)(VIII) 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. (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 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 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 (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 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 EX-99.(C)(3)(IX) 22 EXHIBIT 99(C)(3)(IX) 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. (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 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 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 (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 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 EX-99.(C)(3)(X) 23 EXHIBIT 99(C)(3)(X) 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. (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 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 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 (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 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 EX-99.(C)(4) 24 EXHIBIT 99(C)(4) 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. 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. 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 ---------------------------------- EX-99.(C)(5)(I) 25 EXHIBIT 99(C)(5)(I) 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. 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 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 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 ---------------------------- EX-99.(C)(5)(II) 26 EXHIBIT 99(C)(5)(II) 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 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 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 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 ---------------------------- EX-99.(C)(6) 27 EXHIBIT 99(C)(6) 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. 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: 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. 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. 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 - -------------------------- 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.
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
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
2
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.
3 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.
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
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.
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