AGREEMENT AND PLAN OF MERGER
AMONG
WHOLE FOODS MARKET, INC.
(A TEXAS CORPORATION)
NUTRIENT ACQUISITION CORP.
(A COLORADO CORPORATION)
AND
AMRION, INC.
(A COLORADO CORPORATION)
DATED: AS OF JUNE 9, 1997
This Agreement and Plan of Merger (the "Agreement") is made as of the 9th
day of June, 1997, among Whole Foods Market, Inc., a Texas corporation
("WFM"); Nutrient Acquisition Corp., a Colorado corporation (the "Merger
Subsidiary"), which is wholly owned by WFM; and Amrion, Inc., a Colorado
corporation ("Amrion").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of WFM, the Merger Subsidiary
and Amrion each have determined that it is in the best interests of their
respective stockholders for WFM to acquire Amrion through the merger of the
Merger Subsidiary with and into Amrion upon the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and certain other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
covenant and agree as follows:
ARTICLE 1.
The Merger
1.1. Merger. In accordance with the provisions of the business corporation
laws of the State of Colorado at the Effective Date (as hereinafter defined),
the Merger Subsidiary shall be merged (the "Merger") into Amrion, as soon as
practicable following the satisfaction or waiver, if permissible, of the
conditions set forth in Articles 6 and 7. Following the Merger, Amrion shall
continue as the surviving corporation (the "Surviving Corporation") and shall
continue to be governed by the laws of the State of Colorado.
1.2. Continuing of Corporate Existence. Except as may otherwise be set forth
herein, the corporate existence and identity of Amrion, with all its purposes,
powers, franchises, privileges, rights and immunities, shall continue
unaffected and unimpaired by the Merger, and the corporate existence and
identity of the Merger Subsidiary, with all its purposes, powers, franchises,
privileges, rights and immunities, at the Effective Date shall be merged with
and into that of Amrion, and the Surviving Corporation shall be vested fully
therewith and the separate corporate existence and identity of Merger
Subsidiary shall thereafter cease except to the extent continued by statute.
1.3. Effective Date. The Merger shall become effective upon the filing of
the Articles of Merger with the Secretary of State of the State of Colorado
pursuant to the provisions of the Colorado Business Corporation Act (the
"CBCA"). The date and time when the Merger shall become effective is
hereinafter referred to as the "Effective Date".
1.4. Corporate Government of the Surviving Corporation.
(a) The Articles of Incorporation of Amrion, as in effect on the Effective
Date, shall continue in full force and effect and shall be the Articles of
Incorporation of the Surviving Corporation.
(b) The Bylaws of Amrion, as in effect as of the Effective Date, shall
continue in full force and effect and shall be the Bylaws of the Surviving
Corporation.
(c) The members of the Board of Directors of the Surviving Corporation shall
be the persons holding such office in the Merger Subsidiary as of the
Effective Date.
(d) The officers of the Surviving Corporation shall be the persons holding
such offices in Amrion as of the Effective Date.
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1.5. Rights and Liabilities of the Surviving Corporation. The Surviving
Corporation shall have the following rights and obligations:
(a) The Surviving Corporation shall have all the rights, privileges,
immunities and powers and shall be subject to all the duties and
liabilities of a corporation organized under the laws of the State of
Colorado.
(b) The title to all real estate and other property owned by each of
Amrion and the Merger Subsidiary shall be, at the Effective Date,
transferred to and vested in the Surviving Corporation without reversion or
impairment; and such transfer to and vesting in the Surviving Corporation
shall be deemed to occur by operation of law, and no consent or approval of
any other person shall be required in connection with any such transfer or
vesting unless such consent or approval is specifically required in the
event of merger by law or by express provision in any contract, agreement,
decree, order, or other instrument to which Amrion or the Merger Subsidiary
is a party or by which it is bound.
(c) At the Effective Date, the Surviving Corporation shall thenceforth
have all liabilities of Amrion and the Merger Subsidiary, and any
proceeding pending against Amrion or the Merger Subsidiary may be continued
as if the Merger did not occur or the Surviving Corporation may be
substituted in the proceeding for the Merger Subsidiary.
1.6. Closing. Consummation of the transactions contemplated by this
Agreement (the "Closing") shall take place at the executive offices of WFM in
Austin, Texas, commencing at 10:00 a.m., local time, as soon as practicable
after the last to be fulfilled or waived of the conditions set forth in
Articles 6 and 7 or at such other place, time and date as shall be fixed by
mutual agreement between WFM and Amrion. The day on which the Closing shall
occur is referred to herein as the "Closing Date." Each party will cause to be
prepared, executed and delivered the Articles of Merger to be filed with the
Secretary of State of Colorado and all other appropriate and customary
documents as any party or its counsel may reasonably request for the purpose
of consummating the transactions contemplated by this Agreement. All actions
taken at the Closing shall be deemed to have been taken simultaneously at the
time the last of any such actions is taken or completed.
1.7. Tax Consequences. It is intended that the Merger shall constitute a
reorganization within the meaning of Section 368(a)(2)(E) of the Internal
Revenue Code of 1986, as amended (the "Code"), and that this Agreement shall
constitute a "plan of reorganization" for the purposes of Section 368 of the
Code.
1.8. Pooling of Interests. It is the intention of the parties hereto that
the Merger will be treated for financial reporting purposes as a pooling of
interests.
ARTICLE 2.
Conversion of Shares; Treatment of Options
2.1. Conversion of Shares. At the Effective Date, by virtue of the Merger
and without any action on the part of the holder thereof:
(a) Each share of common stock, $.0011 par value per share, of Amrion
("Amrion Common Stock"), which shall be outstanding immediately prior to
the Effective Date (other than Dissenting Shares, as defined in Section 2.3
below) (the "Converted Shares") shall at the Effective Date, by virtue of
the Merger and without any action on the part of the holder thereof, be
converted into and represent the right to receive .87 shares of Common
Stock, $.01 par value, of WFM (the "WFM Common Stock") (the foregoing
amount of shares of WFM Common Stock being referred to herein as the
"Merger Consideration").
(b) Each share of Common Stock, $.01 par value, of the Merger Subsidiary
which shall be outstanding immediately prior to the Effective Date shall at
the Effective Date, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into one share of newly issued
Amrion Common Stock.
2.2. Fractional Shares. No scrip or fractional shares of WFM Common Stock
shall be issued in the Merger. All fractional shares of WFM Common Stock to
which a holder of Amrion Common Stock immediately
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prior to the Effective Date would otherwise be entitled at the Effective Date
shall be aggregated. If a fractional share results from such aggregation, such
stockholder shall be entitled, after the later of (a) the Effective Date or
(b) the surrender of such stockholder's "Certificate" (as defined in Section
2.5) or Certificates that represent such shares of Amrion Common Stock, to
receive from WFM an amount in cash in lieu of such fractional share. The
amount of such cash payment shall be equal to such fractional proportion of
the "Average Closing Price" of the WFM Common Stock. WFM will make available
to the "Exchange Agent" (as defined in Section 2.5) the cash necessary for the
purpose of paying cash for fractional shares. For purposes of this Agreement,
"Average Closing Price" shall mean the average per share closing price of WFM
Common Stock as reported on the Nasdaq National Market System ("NMS") over the
twenty trading days immediately preceding the fifth trading day prior to the
Effective Date.
2.3. Dissenting Shares. Shares of Amrion Common Stock that are issued and
outstanding immediately prior to the Effective Date and that have not been
voted for adoption of the Merger and with respect of which dissenter's rights
have been properly demanded in accordance with the applicable provisions of
the CBCA ("Dissenting Shares") shall not be converted into the right to
receive the consideration provided for in Sections 2.1 and 2.2 at or after the
Effective Date unless and until the holder of such shares withdraws his demand
for such appraisal (in accordance with the applicable provisions of the CBCA)
or becomes ineligible for such appraisal. If a holder of Dissenting Shares
withdraws his demand for such appraisal (in accordance with the applicable
provisions of the CBCA) or becomes ineligible for such appraisal, then, as of
the Effective Date or the occurrence of such event, whichever later occurs,
such holder's Dissenting Shares shall cease to be Dissenting Shares and shall
be converted into and represent the right to receive the consideration
provided for in Sections 2.1 and 2.2. If any holder of Amrion Common Stock
shall assert the right to be paid the fair value of such Amrion Common Stock
as described above, Amrion shall give WFM notice thereof and WFM shall have
the right to participate in all negotiations and proceedings with respect to
any such demands. Amrion shall not, except with the prior written consent of
WFM, voluntarily make any payment with respect to, or settle or offer to
settle, any such demand for payment. After the Effective Date, WFM will cause
the Surviving Corporation to pay its statutory obligations, if applicable, to
holders of Dissenting Shares.
2.4. Stock Options and Warrants.
(a) At the Effective Date, all options and warrants (collectively the
"Options") then outstanding under Amrion's Non-Qualified Stock Option Plan and
Non-Employee Director Stock Option Plan (collectively the "Option Plans") or
pursuant to the underwriters' warrant granted to Xxxx X. Xxxxxxx & Co., and
affiliates or transferees thereof, shall remain outstanding following the
Effective Date and such Options shall, by virtue of the Merger and without any
further action on the part of Amrion or the holder of any such Option, be
assumed by WFM in accordance with their terms and conditions as in effect at
the Effective Date (and the terms and conditions of the Option Plans and the
option agreements associated with such Option Plans), except that (A) each
such Option shall be exercisable in accordance with its terms for that whole
number of shares of WFM Common Stock (rounded to the nearest whole share) into
which the number of shares of Amrion Common Stock subject to such Option
immediately prior to the Effective Date would be converted under Section 2.1
at an exercise price per share of WFM Common Stock (rounded to the nearest
cent) equal to the exercise price per share of Amrion Common Stock applicable
to such Option divided by .87; (B) all actions to be taken thereunder by the
Board of Directors of Amrion or a committee thereof shall be taken by the
Board of Directors of WFM or a committee thereof; and (C) no payment shall be
made for fractional interests. From and after the date of this Agreement,
except as provided in Section 5.1, no additional options shall be granted by
Amrion under the Option Plans.
(b) It is intended that the assumed Options, as set forth herein, shall not
give to any holder thereof any benefits in addition to those which such holder
had prior to the assumption of the Option. WFM shall take all necessary
corporate action necessary to reserve for issuance a sufficient number of
shares of WFM Common Stock for delivery upon exercise of the Options. As soon
as practicable after the Effective Date, WFM shall file a registration
statement, or an amendment to an existing registration statement, under the
Securities Act of 1933, as amended (the "Securities Act"), on Form S-8 (or
other successor form) with respect to the shares of WFM
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Common Stock subject to the Option Plans (the "Option Shares") and shall use
its best efforts to maintain the effectiveness of such registration statement
for so long as such Options remain outstanding. If any optionee is unable to
sell all of his or her Option Shares pursuant to Rule 144 promulgated under
the Securities Act due to the volume restrictions of Rule 144, then such
registration statement will include a resale prospectus with respect to such
optionee. In addition, WFM will cause such all shares of WFM Common Stock
issuable upon exercise of the Options to be quoted on the NMS.
2.5. Exchange Agent.
(a) WFM shall authorize Securities Transfer Corporation to serve as exchange
agent hereunder (the "Exchange Agent"). Promptly after the Effective Date, WFM
shall deposit or shall cause to be deposited in trust with the Exchange Agent
the aggregate of the following: (i) the Merger Consideration with respect to
each Converted Share; (ii) certificates representing the number of whole
shares of WFM Common Stock to which the holders of Amrion Common Stock (other
than holders of Dissenting Shares) are entitled pursuant to Section 2.1(a);
and (iii) cash sufficient to pay for fractional shares then known to WFM, if
applicable (such cash amounts and certificates being hereinafter referred to
as the "Exchange Fund"). The Exchange Agent shall, pursuant to irrevocable
instructions received from WFM, pay the Merger Consideration with respect to
such Converted Share as provided for in this Article 2 out of the Exchange
Fund. Any cash needed from time to time by the Exchange Agent to make payments
for fractional shares shall be provided by WFM and shall become part of the
Exchange Fund. The Exchange Fund shall not be used for any other purpose,
except as provided in this Agreement, or as otherwise agreed to by WFM, Merger
Subsidiary and Amrion prior to the Effective Date.
(b) As soon as practicable after the Effective Date, the Exchange Agent
shall mail and otherwise make available to each record holder (other than
holders of Dissenting Shares) who, as of the Effective Date, was a holder of
an outstanding certificate or certificates which immediately prior to the
Effective Date represented shares of the Converted Shares (the "Certificates")
a form of letter of transmittal and instructions for use in effecting the
surrender of the Certificates for payment therefor and conversion thereof,
which letter of transmittal shall comply with all applicable rules of the NMS.
(c) Delivery of Certificates shall be effected, and risk of loss and title
to the Certificates shall pass, only upon proper delivery of the Certificates
to the Exchange Agent and the form of letter of transmittal shall so reflect.
Upon surrender to the Exchange Agent of a Certificate, together with such
letter of transmittal duly executed, the holder of such Certificate shall be
entitled to receive in exchange therefor one or more certificates as requested
by the holder (properly issued, executed and countersigned, as appropriate)
representing that number of whole shares of WFM Common Stock to which such
holder of Amrion Common Stock shall have become entitled pursuant to the
provisions of this Article 2, and the Certificate so surrendered shall
forthwith be canceled.
(d) WFM shall pay any transfer or other taxes required by reason of the
issuance of a certificate representing shares of WFM Common Stock; provided,
however, that such certificate is issued in the name of the person in whose
name the Certificate surrendered in exchange therefor is registered. If any
portion of the consideration to be received pursuant to this Article 2 upon
exchange of a Certificate is to be issued or paid to a person other than the
person in whose name the Certificate surrendered in exchange therefor is
registered, it shall be a condition of such issuance and payment that the
Certificate so surrendered shall be properly endorsed or otherwise in proper
form for transfer and that the person requesting such exchange shall pay in
advance any transfer or other taxes required by reason of the issuance of a
certificate representing shares of WFM Common Stock to such other person, or
establish to the satisfaction of the Exchange Agent that such tax has been
paid or that no such tax is applicable. From the Effective Date until
surrender in accordance with the provisions of this Section 2.5, each
Certificate (other than Certificates representing treasury shares of Amrion
and Certificates representing Dissenting Shares) shall represent for all
purposes only the right to receive the consideration provided in Sections 2.1
and 2.2. No dividends that are otherwise payable on WFM Common Stock will be
paid to persons entitled to receive WFM Common Stock until such persons
surrender their Certificates. After such surrender, there shall be paid to the
person in whose name WFM Common Stock shall be issued any dividends on such
WFM Common Stock that shall have a record date on or after the Effective Date
and prior to such
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surrender. In no event shall the persons entitled to receive such dividends be
entitled to receive interest on such dividends. All payments in respect of
shares of Amrion Common Stock that are made in accordance with the terms
hereof shall be deemed to have been made in full satisfaction of all rights
pertaining to such securities.
(e) In the case of any lost, mislaid, stolen or destroyed Certificates, the
holder thereof may be required, as a condition precedent to the delivery to
such holder of the consideration described in this Article 2, to deliver to
WFM a bond, in such reasonable sum as WFM may direct, or other form of
indemnity satisfactory to WFM, as indemnity against any claim that may be made
against the Exchange Agent, WFM or the Surviving Corporation with respect to
the Certificate alleged to have been lost, mislaid, stolen or destroyed.
(f) After the Effective Date, there shall be no transfers on the stock
transfer books of the Surviving Corporation of the shares of Amrion Common
Stock that were outstanding immediately prior to the Effective Date. If, after
the Effective Date, Certificates are presented to the Surviving Corporation
for transfer, they shall be canceled and exchanged for the consideration
described in this Article 2.
(g) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of Amrion for six months after the Effective Date shall be
returned to WFM, upon demand, and any holder of Amrion Common Stock who has
not theretofore complied with Section 2.5(c) shall thereafter look only to WFM
for issuance of the number of shares of WFM Common Stock and other
consideration to which such holder has become entitled pursuant to this
Article 2; provided, however, that neither the Exchange Agent nor any party
hereto shall be liable to a holder of shares of Amrion Common Stock for any
amount required to be paid to a public official pursuant to any applicable
abandoned property, escheat or similar law.
2.6. Adjustment. If, between the date of this Agreement and the Closing Date
or the Effective Date, as the case may be, the outstanding shares of Amrion
Common Stock or WFM Common Stock shall have been changed into a different
number of shares or a different class by reason of any classification,
recapitalization, split-up, combination, exchange of shares, or readjustment
or a stock dividend thereon shall be declared with a record date within such
period, then the consideration to be received pursuant to Section 2.1(a)
hereof by the holders of shares of Amrion Common Stock shall be adjusted to
accurately reflect such change.
ARTICLE 3.
Representations and Warranties of Amrion
Amrion represents and warrants to WFM and the Merger Subsidiary that the
statements contained in Article 3 are true and correct in all material
respects, except as set forth in the schedules attached hereto. As used in
this Article 3 and elsewhere in this Agreement, the phrases "to Amrion's
knowledge" or "to Amrion's actual knowledge" shall mean to the knowledge of
Xxxx X. Xxxxxxx, Chief Executive Officer of Amrion, or Xxxxxxx X. Xxxxxxxx,
Chief Financial Officer of Amrion.
3.1. Organization and Good Standing of Amrion. Amrion is a corporation duly
organized, validly existing and in good standing under the laws of Colorado.
Natrix, LLC ("Natrix") is a limited liability company duly organized, validly
existing and in good standing under the laws of Colorado.
3.2. Capital Stock of Natrix and Other Ownership Interests. The membership
interests of Natrix have been duly authorized and are validly issued, fully
paid and nonassessable. The number of authorized and outstanding membership
interests or other equity interests of Natrix, and the record and beneficial
owners of the same, are set forth on Schedule 3.2 and, except as set forth on
Schedule 3.2, are owned by Amrion, either directly or indirectly, free and
clear of all liens, encumbrances, equities or claims.
3.3. Foreign Qualification. Amrion and Natrix are duly qualified or licensed
to do business and are in good standing as a foreign corporation or limited
liability company in every jurisdiction where the failure so to
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qualify would have a material adverse effect (a "Amrion Material Adverse
Effect") on (a) the business, operations, assets or financial condition of
Amrion and Natrix taken as a whole or (b) the validity or enforceability of,
or the ability of Amrion to perform its obligations under, this Agreement.
3.4. Company Power and Authority. Each of Amrion and Natrix has the
corporate or company power and authority to own, lease and operate its
properties and assets and to carry on its business as currently being
conducted. Amrion has the corporate power and authority to execute and deliver
this Agreement and, subject to the approval of this Agreement and the Merger
by its stockholders, to perform its obligations under this Agreement and to
consummate the Merger. The execution, delivery and performance by Amrion of
this Agreement has been duly authorized by all necessary corporate action
(other than the approval of this Agreement and the Merger by its
stockholders).
3.5. Binding Effect. This Agreement has been duly executed and delivered by
Amrion and is the legal, valid and binding obligation of Amrion enforceable in
accordance with its terms except that:
(a) enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights;
(b) the availability of equitable remedies may be limited by equitable
principles of general applicability; and
(c) rights to indemnification may be limited by considerations of public
policy.
3.6. Absence of Restrictions and Conflicts. Subject only to the approval of
the adoption of this Agreement and the Merger by Amrion's stockholders and
except as set forth on Schedule 3.6, the execution, delivery and performance
of this Agreement and the consummation of the Merger and the fulfillment of
and compliance with the terms and conditions of this Agreement do not and will
not, with the passing of time or the giving of notice or both, violate or
conflict with, constitute a breach of or default under, result in the loss of
any material benefit under, or permit the acceleration of any obligation
under, (i) any term or provision of the articles of Incorporation or bylaws of
Amrion or the articles of organization or operating agreement of the Natrix,
(ii) any "Material Contract" (as defined in Section 3.13), (iii) any judgment,
decree or order of any court or governmental authority or agency to which
Amrion or Natrix is a party or by which Amrion, Natrix or any of their
respective properties is bound, or (iv) any statute, law, regulation or rule
applicable to Amrion or Natrix other than such violations, conflicts, breaches
or defaults which would not have an Amrion Material Adverse Effect. Except for
the filing of the Articles of Merger with the Secretary of State of the State
of Colorado, compliance with the applicable requirements of the Xxxx-Xxxxx-
Xxxxxx Antitrust Improvements Act of 0000 (xxx "XXX Xxx"), the Securities Act,
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
applicable state securities laws, no consent, approval, order or authorization
of, or registration, declaration or filing with, any governmental agency or
public or regulatory unit, agency, body or authority with respect to Amrion or
Natrix is required in connection with the execution, delivery or performance
of this Agreement by Amrion or the consummation of the transactions
contemplated hereby.
3.7. Capitalization of Amrion.
(a) The authorized capital stock of Amrion consists of 10,000,000 shares of
common stock, $.0011 par value. As of the date hereof, there were
approximately 5,252,514 shares of Amrion Common Stock issued and outstanding
and 393,700 shares of Amrion Common Stock reserved for issuance upon the
exercise of outstanding options granted under the Option Plans.
(b) All of the issued and outstanding shares of Amrion Common Stock have
been duly authorized and validly issued and are fully paid, nonassessable and
free of preemptive rights.
(c) To Amrion's knowledge, there are no voting trusts, stockholder
agreements or other voting arrangements by the stockholders of Amrion.
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(d) Except as set forth on Schedule 3.7, there is no outstanding
subscription, contract, convertible or exchangeable security, option, warrant,
call or other right obligating Amrion or Natrix to issue, sell, exchange, or
otherwise dispose of, or to purchase, redeem or otherwise acquire, shares of,
or securities convertible into or exchangeable for, capital stock of Amrion or
membership interests of Natrix.
3.8. Amrion SEC Reports. Amrion has made available to WFM and the Merger
Subsidiary (i) Amrion's Annual Report on Form 10-K, including all exhibits
filed thereto and items incorporated therein by reference, (ii) Amrion's
Quarterly Reports on Form 10-Q, including all exhibits thereto and items
incorporated therein by reference, (iii) proxy statements relating to Amrion's
meetings of stockholders and (iv) all other reports or registration statements
(as amended or supplemented prior to the date hereof), filed by Amrion with
the Securities and Exchange Commission (the "SEC") since January 1, 1995,
including all exhibits thereto and items incorporated therein by reference
(items (i) through (iv) being referred to as the "Amrion SEC Reports"). As of
their respective dates, the Amrion SEC Reports did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Since January 1,
1995, Amrion has filed all material forms (with necessary amendments), reports
and documents with the SEC required to be filed by it pursuant to the federal
securities laws and the SEC rules and regulations thereunder, each of which
complied as to form, at the time such form, report or document was filed, in
all material respects with the applicable requirements of the Securities Act
and the Exchange Act and the applicable rules and regulations thereunder.
3.9. Financial Statements and Records of Amrion. Amrion has made available
to WFM and the Merger Subsidiary true, correct and complete copies of the
following financial statements (the "Amrion Financial Statements"):
(a) the consolidated financial statements of Amrion and its subsidiaries
as of December 31, 1995 and 1996 and for the years then ended, including
the notes thereto, in each case examined by and accompanied by the report
of BDO Xxxxxxx, LLP (collectively, the "Amrion Year-End Statements"); and
(b) the unaudited consolidated balance sheet of Amrion and its
subsidiaries as of March 31, 1997 (the "Amrion Balance Sheet"), with any
notes thereto, and the related unaudited consolidated statement of income
for the three months then ended (collectively, the "Amrion Quarterly
Statements").
The Amrion Year-End Statements and Amrion Quarterly Statements have been
prepared from, and are in accordance with, the books and records of Amrion and
its subsidiaries and present fairly, in all material respects, the
consolidated financial position of Amrion and Natrix as of the dates thereof
and the results of operations and cash flows thereof for the periods then
ended, in each case in conformity with generally accepted accounting
principles, consistently applied, except as noted therein. Adequate reserves
are set forth on the Amrion Year-End Statements and Amrion Quarterly
Statements, and the amount of such reserves are reasonable. Since December 31,
1996, there has been no change in accounting principles applicable to, or
methods of accounting utilized by, Amrion and Natrix, except as noted in the
Amrion Financial Statements. The books and records of Amrion have been and are
being maintained in accordance with good business practice, reflect only valid
transactions, are complete and correct in all material respects and present
fairly in all material respects the basis for the financial position and
results of operations of Amrion and Natrix as set forth on the Amrion Year
Statements and Amrion Quarterly Statements.
3.10. Absence of Certain Changes. Since March 31, 1997, Amrion and Natrix
have not, except as otherwise set forth in the Amrion SEC Reports or on
Schedule 3.10:
(a) suffered any adverse change in the business, operations, assets, or
financial condition, except as reflected on the Amrion Quarterly Statements
and except for such changes that would not result in an Amrion Material
Adverse Effect;
(b) suffered any material damage or destruction to or loss of the assets
of Amrion or Natrix, whether or not covered by insurance, which property or
assets are material to the operations or business of Amrion and Natrix
taken as a whole;
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(c) settled, forgiven, compromised, canceled, released, waived or
permitted to lapse any material rights or claims other than in the ordinary
course of business;
(d) entered into or terminated any material agreement, commitment or
transaction, or agreed or made any changes in material leases or
agreements, other than renewals or extensions thereof and leases,
agreements, transactions and commitments entered into or terminated in the
ordinary course of business;
(e) written up, written down or written off the book value of any
material amount of assets other than in the ordinary course of business;
(f) declared, paid or set aside for payment any dividend or distribution
with respect to Amrion's capital stock;
(g) redeemed, purchased or otherwise acquired, or sold, granted or
otherwise disposed of, directly or indirectly, any of Amrion's capital
stock or securities (other than shares issued upon exercise of the Options)
or any rights to acquire such capital stock or securities, or agreed to
changes in the terms and conditions of any such rights outstanding as of
the date of this Agreement;
(h) increased the compensation of or paid any bonuses to any employees or
contributed to any employee benefit plan, other than in accordance with
established policies, practices or requirements and as provided in Section
5.1 hereof;
(i) entered into any employment, consulting or compensation agreement
with any person or group, except for agreements which would not have an
Amrion Material Adverse Effect;
(j) entered into any collective bargaining agreement with any person or
group;
(k) entered into, adopted or amended any employee benefit plan; or
(l) entered into any agreement to do any of the foregoing.
3.11. No Material Undisclosed Liabilities. There are no liabilities or
obligations of Amrion or Natrix of any nature, whether absolute, accrued,
contingent, or otherwise, other than:
(a) the liabilities and obligations that are reflected, accrued or
reserved against on the Amrion Balance Sheet, or referred to in the
footnotes to the Amrion Balance Sheet, or incurred in the ordinary course
of business and consistent with past practices since March 31, 1997; or
(b) liabilities and obligations which in the aggregate would not result
in an Amrion Material Adverse Effect.
3.12. Tax Returns; Taxes. Each of Amrion and Natrix have duly filed all U.S.
federal and material state, county, local and foreign tax returns and reports
required to be filed by it, including those with respect to income, payroll,
property, withholding, social security, unemployment, franchise, excise and
sales taxes and all such returns and reports are correct in all material
respects; have either paid in full all taxes that have become due as reflected
on any return or report and any interest and penalties with respect thereto or
have fully accrued on its books or have established adequate reserves for all
taxes payable but not yet due; and have made cash deposits with appropriate
governmental authorities representing estimated payments of taxes, including
income taxes and employee withholding tax obligations. No extension or waiver
of any statute of limitations or time within which to file any return has been
granted to or requested by Amrion or Natrix with respect to any tax. No
unsatisfied deficiency, delinquency or default for any tax, assessment or
governmental charge has been claimed, proposed or assessed against Amrion or
Natrix, nor has Amrion or Natrix received notice of any such deficiency,
delinquency or default. Amrion and Natrix have no material tax liabilities
other than those reflected on the Amrion Balance Sheet and those arising in
the ordinary course of business since the date thereof. Amrion will make
available to WFM true, complete and correct copies of Amrion's consolidated
U.S. federal tax returns for the last five years and make available such other
tax returns requested by WFM. There is no dispute or claim concerning any tax
liability of Amrion or any of its subsidiaries either: (a) raised by any
taxing authority in writing; (b) as to which Amrion or any of its subsidiaries
has received notice concerning a potential audit of any return filed by
Amrion; and (c) there is no outstanding audit or pending audit of any tax
return filed by Amrion.
8
3.13. Material Contracts. Amrion has furnished or made available to WFM
accurate and complete copies of the Material Contracts (as defined herein)
applicable to Amrion or Natrix. Except as set forth on Schedule 3.13, there is
not under any of the Material Contracts any existing breach, default or event
of default by Amrion or Natrix nor event that with notice or lapse of time or
both would constitute a breach, default or event of default by Amrion or
Natrix other than breaches, defaults or events of default which would not have
an Amrion Material Adverse Effect nor does Amrion know of, and Amrion has not
received notice of, or made a claim with respect to, any breach or default by
any other party thereto which would, severally or in the aggregate, have an
Amrion Material Adverse Effect. As used herein, the term "Material Contracts"
shall mean all contracts and agreements filed, or required to be filed, as
exhibits to Amrion's Annual Report on Form 10-K for the year ended December
31, 1996 and any contracts and agreements entered into since December 31, 1996
which would be required to be filed as an exhibit to Amrion's Annual Report on
Form 10-K for the year ending December 31, 1997.
3.14. Litigation and Government Claims. Except as disclosed in the Amrion
SEC Reports, there is no pending suit, claim, action or litigation, or
administrative, arbitration or other proceeding or governmental investigation
or inquiry against Amrion or Natrix to which their businesses or assets are
subject which would, severally or in the aggregate, reasonably be expected to
result in an Amrion Material Adverse Effect. To the knowledge of Amrion, and
except as disclosed in the Amrion SEC Reports, there are no such proceedings
threatened or contemplated which would, severally or in the aggregate, have an
Amrion Material Adverse Effect. Neither Amrion nor Natrix is subject to any
judgment, decree, injunction, rule or order of any court, or, to the knowledge
of Amrion, any governmental restriction applicable to Amrion or Natrix which
is reasonably likely (i) to have an Amrion Material Adverse Effect or (ii) to
cause a material limitation on WFM's ability to operate the business of Amrion
(as it is currently operated) after the Closing.
3.15. Compliance With Laws. Amrion and Natrix each have all material
authorizations, approvals, licenses and orders to carry on their respective
businesses as they are now being conducted, to own or hold under lease the
properties and assets they own or hold under lease and to perform all of their
obligations under the agreements to which they are a party, except for
instances which would not have a Amrion Material Adverse Effect. Amrion and
Natrix have been and are, to the knowledge of Amrion, in compliance with all
applicable laws (including those referenced in the Amrion SEC Reports),
regulations and administrative orders of any country, state or municipality or
of any subdivision of any thereof to which their respective businesses and
their employment of labor or their use or occupancy of properties or any part
hereof are subject, the violation of which would have a Amrion Material
Adverse Effect.
3.16. Employee Benefit Plans. Each employee benefit plan, as such term is
defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), of Amrion or Natrix (collectively the "Employee
Plans") complies in all material respects with all applicable requirements of
ERISA and the Internal Revenue Code of 1986, as amended (the "Code"), and
other applicable laws. None of the Employee Plans is an employee pension
benefit plan or a multiemployer plan, as such terms are defined in ERISA.
Neither Amrion nor Natrix, nor any of their respective directors, officers,
employees or agents has, with respect to any Employee Plan, engaged in any
"prohibited transaction," as such term is defined in the Code or ERISA, nor
has any Employee Plan engaged in such prohibited transaction which could
result in any taxes or penalties or other prohibited transactions, which in
the aggregate could have a Amrion Material Adverse Effect.
3.17. Employment Agreements; Labor Relations.
(a) Schedule 3.17 sets forth a complete and accurate list of all material
employee benefit or compensation plans, agreements and arrangements to which
Amrion or Natrix is a party and which is not disclosed in the Amrion SEC
Reports, including without limitation (i) all severance, employment,
consulting or similar contracts, (ii) all material agreements and contracts
with "change of control" provisions or similar provisions and (iii) all
indemnification agreements or arrangements with directors or officers.
(b) Each of Amrion and Natrix is in compliance in all material respects with
all laws (including Federal and state laws) respecting employment and
employment practices, terms and conditions of employment, wages
9
and hours, and is not engaged in any unfair labor or unlawful employment
practice. There is no unlawful employment practice discrimination charge
pending before the EEOC or EEOC recognized state "referral agency." Except as
would not have an Amrion Material Adverse Effect, there is no unfair labor
practice charge or complaint against Amrion or Natrix pending before the
National Labor Review Board. There is no labor strike, dispute, slowdown or
stoppage actually pending or, to the knowledge of Amrion, threatened against
or involving or affecting Amrion or Natrix and no National Labor Review Board
representation question exists respecting their respective employees. Except
as would not have an Amrion Material Adverse Effect, no grievances or
arbitration proceeding is pending and no written claim therefor exists. There
is no collective bargaining agreement that is binding on Amrion or Natrix.
3.18. Intellectual Property. Amrion and Natrix own or have valid, binding
and enforceable rights to use all material patents, trademarks, trade names,
service marks, service names, copyrights, applications therefor and licenses
or other rights in respect thereof ("Intellectual Property") used or held for
use in connection with the business of Amrion or Natrix, without any known
conflict with the rights of others, except for such conflicts as do not have
an Amrion Material Adverse Effect. Neither Amrion nor Natrix has received any
notice from any other person pertaining to or challenging the right of Amrion
or Natrix to use any Intellectual Property or any trade secrets, proprietary
information, inventions, know-how, processes and procedures owned or used or
licensed to Amrion or Natrix, except with respect to rights the loss of which,
individually or in the aggregate, would not have an Amrion Material Adverse
Effect.
3.19. Title to Properties and Related Matters.
(a) Amrion and Natrix have good and marketable title to or valid leasehold
interests in their respective properties (the "Real Estate") reflected on the
Amrion Balance Sheet or acquired after the date thereof (other than personal
properties sold or otherwise disposed of in the ordinary course of business),
and all of such properties and all assets purchased by Amrion since the date
of the Amrion Balance Sheet are free and clear of any lien, claim or
encumbrance, except as reflected in the Amrion Balance Sheet or notes thereto
and except for:
(i) liens for taxes, assessments or other governmental charges not yet
due and payable or the validity of which are being contested in good faith
by appropriate proceedings;
(ii) statutory liens incurred in the ordinary course of business that are
not yet due and payable or the validity of which are being contested in
good faith by appropriate proceedings;
(iii) landlord liens contained in leases entered in the ordinary course
of business; and
(iv) other liens, claims or encumbrances that, in the aggregate, do not
materially subtract from the value of, or materially interfere with, the
present use of, the Real Estate.
Except for those assets acquired since the date of the Amrion Balance Sheet,
all properties and assets material to the present operations of Amrion are
owned or leased by Amrion and are reflected on the Amrion Balance Sheet and
notes thereto in the manner and to the extent required by generally accepted
accounting principles.
(b) (i) Applicable zoning ordinances permit the operation of Amrion's
business at the Real Estate; (ii) Amrion has all easements and rights,
including easements for all utilities, services, roadways and other means of
ingress and egress, necessary to operate Amrion's business at the Real Estate;
(iii) the Real Estate is not located within a flood or lakeshore erosion
hazard area; and (iv) neither the whole nor any portion of the Real Estate has
been condemned, requisitioned or otherwise taken by any public authority, and
no notice of any such condemnation, requisition or taking has been received;
except in each case where the failure of such provisions to be true and
correct would not have an Amrion Material Adverse Effect. No such
condemnation, requisition or taking is threatened or contemplated to Amrion's
knowledge, and there are no pending public improvements which may result in
special assessments against or which may otherwise materially and adversely
affect the Real Estate. To the knowledge of Amrion, the Real Estate has not
been used for deposit or disposal of hazardous wastes or substances in
violation of any past or current law in any material respect and there is no
material liability under past or current law with respect to any hazardous
wastes or substances which have been deposited or disposed of on or in the
Real Estate.
10
(c) Amrion has received no notice of, and has no actual knowledge of, any
material violation of any zoning, building, health, fire, water use or similar
statute, ordinance, law, regulation or code in connection with the Real
Estate.
(d) To Amrion's actual knowledge, no hazardous or toxic material (as
hereinafter defined) exists in any structure located on, or exists on or under
the surface of, the Real Estate which is, in any case, in material violation
of applicable environmental law. For purposes of this Agreement, "hazardous or
toxic material" shall mean waste, substance, materials, smoke, gas or
particulate matter designated as hazardous, toxic or dangerous under any
environmental law. For purposes of this Agreement, "environmental law" shall
include the Comprehensive Environmental Response Compensation and Liability
Act, the Clean Air Act, the Clean Water Act and any other applicable federal,
state or local environmental, health or safety law, rule or regulation
relating to or imposing liability or standards concerning or in connection
with hazardous, toxic or dangerous waste, substance, materials, smoke, gas or
particulate matter.
3.20. Brokers and Finders. None of Amrion, Natrix or, to Amrion's knowledge,
any of their respective officers, directors and employees has employed any
broker, finder or investment bank or incurred any liability for any investment
banking fees, financial advisory fees, brokerage fees or finders' fees in
connection with the transactions contemplated hereby, except that Amrion has
engaged Xxxxx Xxxxxxx, Inc. as its financial advisor. Other than the foregoing
arrangements, Amrion is not aware of any claim for payment of any finder's
fees, brokerage or agent's commissions or other like payments in connection
with the negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby. Amrion has delivered to WFM a copy of the
engagement letter between Amrion and Xxxxx Xxxxxxx, Inc.
3.21. Opinion of Financial Advisor. Amrion has received the opinion of its
financial advisor to the effect that, as of the date hereof, the consideration
to be received by the holders of Amrion Common Stock pursuant to the Merger is
fair from a financial point of view to the holders of Amrion Common Stock.
3.22. Expenses of Amrion. Amrion has received the agreement of its
attorneys, accountants and financial advisors as to the maximum fees and
expenses of such firms in connection with the Merger such that the aggregate
of the foregoing fees and expenses will not exceed $350,000.
ARTICLE 4.
Representations and Warranties of WFM
and the Merger Subsidiary
WFM and the Merger Subsidiary represent and warrant to Amrion that the
statements contained in Article 4 are true and correct in all material
respects. As used in this Article 4 and elsewhere in this Agreement, the
phrase "to WFM's or the Merger Subsidiary's knowledge" or "to WFM's or the
Merger Subsidiary's actual knowledge" shall mean to the knowledge of the
officer of WFM or the Merger Subsidiary who has the principal responsibility
for the matter being stated.
4.1. Organization and Good Standing. Each of WFM, the Merger Subsidiary and
all corporations, partnerships and other entities in which WFM owns any equity
interest (the "WFM Subsidiaries" which includes the Merger Subsidiary) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization. All shares of capital stock
or other equity interests of each of the material WFM Subsidiaries are owned
by WFM, either directly or indirectly, free and clear of all material liens,
encumbrances, equities or claims.
4.2. Foreign Qualification. WFM and each of the WFM Subsidiaries are duly
qualified or licensed to do business and are in good standing as a foreign
corporation in every jurisdiction where the failure so to qualify would have a
material adverse effect (a "WFM Material Adverse Effect") on (a) the business,
operations, assets
11
or financial condition of WFM and the WFM Subsidiaries taken as a whole or (b)
the validity or enforceability of, or the ability of WFM to perform its
obligations under, this Agreement.
4.3. Corporate Power and Authority. WFM and the WFM Subsidiaries have the
corporate power and authority and all material licenses and permits to own,
lease and operate their respective properties and assets and to carry on their
respective businesses as currently being conducted. Each of WFM and the Merger
Subsidiary has the corporate power and authority to execute and deliver this
Agreement and to perform its obligations under this Agreement and to
consummate the Merger. The execution, delivery and performance by WFM and the
Merger Subsidiary of this Agreement has been duly authorized by all necessary
corporate action.
4.4. Binding Effect. This Agreement has been duly executed and delivered by
WFM and the Merger Subsidiary and is the legal, valid and binding obligations
of WFM and the Merger Subsidiary, enforceable in accordance with its terms
except that:
(a) enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights;
(b) the availability of equitable remedies may be limited by equitable
principles of general applicability; and
(c) rights to indemnification may be limited by considerations of public
policy.
4.5. Absence of Restrictions and Conflicts. The execution, delivery and
performance of this Agreement and the consummation of the Merger and the
fulfillment of and compliance with the terms and conditions of this Agreement
do not and will not, with the passing of time or the giving of notice or both,
violate or conflict with, constitute a breach of or default under, result in
the loss of any material benefit under, or permit the acceleration of any
obligation under, (i) any term or provision of the Articles of Incorporation
or Bylaws of WFM or the Merger Subsidiary, (ii) any "WFM Material Contract"
(as defined in Section 4.12), including, but not limited to, the credit
facility agreement dated as of December 27, 1994 by and among WFM, certain of
the WFM Subsidiaries and Texas Commerce Bank National Association, as agent,
and the note purchase agreement dated May 16, 1996 by and among WFM and the
purchasers named therein, (iii) any judgment, decree or order of any court or
governmental authority or agency to which WFM or any of the WFM Subsidiaries
is a party or by which WFM or any of the WFM Subsidiaries or any of their
respective properties is bound, or (iv) any statute, law, regulation or rule
applicable to WFM or any of the WFM Subsidiaries other than such violations,
conflicts, breaches or defaults as would not have a WFM Material Adverse
Effect. Except for the filing of the Articles of Merger with the Secretary of
State of Colorado, compliance with the applicable requirements of the HSR Act,
the Securities Act, the Exchange Act and applicable state securities laws, no
consent, approval, order or authorization of, or registration, declaration or
filing with, any governmental agency or public or regulatory unit, agency,
body or authority with respect to WFM or the WFM Subsidiaries is required in
connection with the execution, delivery or performance of this Agreement by
WFM or the consummation of the transactions contemplated hereby.
4.6. Capitalization of WFM.
(a) The authorized capital stock of WFM consists of 50,000,000 shares of WFM
Common Stock, no par value, and 5,000,000 shares of preferred stock, $0.01 par
value. As of the date hereof, there are (i) approximately 19,612,000 shares of
WFM Common Stock outstanding, (ii) no shares of the Preferred Stock
outstanding and (iii) 2,119,185 shares reserved for issuance upon the exercise
of outstanding options under WFM's Team Member Stock Option Plan (the "WFM
Options" and "WFM Option Plans," respectively). All of the issued and
outstanding shares of WFM Common Stock have been duly authorized and validly
issued and are fully paid and nonassessable.
(b) All of the issued and outstanding shares of WFM Common Stock have been
duly authorized and validly issued and are fully paid, nonassessable and free
of preemptive rights.
12
(c) The shares of WFM Common Stock to be issued in the Merger will be duly
authorized and validly issued and will be fully paid, nonassessable shares of
WFM Common Stock free of preemptive rights.
(d) To WFM's knowledge, there are no voting trusts, stockholder agreements
or other voting arrangements by the stockholders of WFM.
(e) Except as set forth in subsection (a) above, there is no outstanding
subscription, contract, convertible or exchangeable security, option, warrant,
call or other right obligating WFM or its subsidiaries to issue, sell,
exchange, or otherwise dispose of, or to purchase, redeem or otherwise
acquire, shares of, or securities convertible into or exchangeable for,
capital stock of WFM.
4.7. WFM SEC Reports. WFM has made available to Amrion (i) WFM's Annual
Reports on Form 10-K, including all exhibits filed thereto and items
incorporated therein by reference, (ii) WFM's Quarterly Reports on Form 10-Q,
including all exhibits thereto and items incorporated therein by reference,
(iii) proxy statements relating to WFM's meetings of stockholders and (iv) all
other reports or registration statements (as amended or supplemented prior to
the date hereof), filed by WFM with the SEC since January 1, 1995, including
all exhibits thereto and items incorporated therein by reference (items (i)
through (iv) being referred to as the "WFM SEC Reports"). As of their
respective dates, WFM SEC Reports did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. Since January 1, 1995, WFM has
filed all material forms (and necessary amendments), reports and documents
with the SEC required to be filed by it pursuant to the federal securities
laws and the SEC rules and regulations thereunder, each of which complied as
to form, at the time such form, report or document was filed, in all material
respects with the applicable requirements of the Securities Act and the
Exchange Act and the applicable rules and regulations thereunder.
4.8. Financial Statements and Records of WFM. WFM has made available to
Amrion true, correct and complete copies of the following financial statements
(the "WFM Financial Statements"):
(a) the consolidated balance sheets of WFM and its consolidated
subsidiaries as of September 24, 1995 and September 29, 1996, and the
consolidated statements of income, stockholders' equity and cash flows for
the fiscal years then ended, including the notes thereto, in each case
examined by and accompanied by the report of KPMG Peat Marwick LLP; and
(b) the unaudited balance sheet of WFM as of January 19, 1997 (the "WFM
Balance Sheet"), with any notes thereto, and the related unaudited
statement of income for the fiscal quarter then ended (collectively, the
"WFM Quarterly Statements").
The WFM Financial Statements present fairly, in all material respects, the
financial position of WFM as of the dates thereof and the results of
operations and changes in financial position thereof for the periods then
ended, in each case in conformity with generally accepted accounting
principles, consistently applied, except as noted therein. Since January 19,
1997, there has been no change in accounting principles applicable to, or
methods of accounting utilized by, WFM, except as noted in the WFM Financial
Statements. The books and records of WFM have been and are being maintained in
accordance with good business practice, reflect only valid transactions, are
complete and correct in all material respects, and present fairly in all
material respects the basis for the financial position and results of
operations of WFM set forth in the WFM Financial Statements.
4.9. Absence of Certain Changes. Since January 19, 1997, WFM has not, except
as otherwise set forth in the WFM SEC Reports or on Schedule 4.9:
(a) suffered any adverse change in the business, operations, assets, or
financial condition except for such changes that would not have a WFM
Material Adverse Effect;
(b) suffered any material damage or destruction to or loss of the assets
of WFM or any of the WFM Subsidiaries, whether or not covered by insurance,
which property or assets are material to the operations or business of WFM
and its subsidiaries taken as a whole;
13
(c) settled, forgiven, compromised, canceled, released, waived or
permitted to lapse any material rights or claims other than in the ordinary
course of business;
(d) entered into or terminated any material agreement, commitment or
transaction, or agreed or made any changes in material leases or
agreements, other than renewals or extensions thereof and leases,
agreements, transactions and commitments entered into or terminated in the
ordinary course of business;
(e) written up, written down or written off the book value of any
material amount of assets other than in the ordinary course of business;
(f) declared, paid or set aside for payment any dividend or distribution
with respect to WFM's capital stock;
(g) redeemed, purchased or otherwise acquired, or sold, granted or
otherwise disposed of, directly or indirectly, any of WFM's capital stock
or securities (other than shares issued upon exercise of the WFM Options)
or any rights to acquire such capital stock or securities, or agreed to
changes in the terms and conditions of any such rights outstanding as of
the date of this Agreement;
(h) increased the compensation of or paid any bonuses to any employees or
contributed to any employee benefit plan, other than in accordance with
established policies, practices or requirements and as provided in Section
5.2 hereof;
(i) entered into any employment, consulting or compensation agreement
with any person or group, except for agreements which would not have a WFM
Material Adverse Effect;
(j) entered into any collective bargaining agreement with any person or
group;
(k) entered into, adopted or amended any employee benefit plan; or
(l) entered into any agreement to do any of the foregoing.
4.10. No Material Undisclosed Liabilities. There are no liabilities or
obligations of WFM and its consolidated subsidiaries of any nature, whether
absolute, accrued, contingent, or otherwise, other than:
(a) liabilities and obligations that are reflected, accrued or reserved
against on the WFM Balance Sheet or referred to in the footnotes to the WFM
Balance Sheet, or incurred in the ordinary course of business and
consistent with past practices since January 19, 1997; or
(b) liabilities and obligations which in the aggregate would not result
in a WFM Material Effect.
4.11. Tax Returns; Taxes. Each of WFM and the WFM Subsidiaries have duly
filed all U.S. federal and material state, county, local and foreign tax
returns and reports required to be filed by it, including those with respect
to income, payroll, property, withholding, social security, unemployment,
franchise, excise and sales taxes and all such returns and reports are correct
in all material respects; have either paid in full all taxes that have become
due as reflected on any return or report and any interest and penalties with
respect thereto or have fully accrued on its books or have established
adequate reserves for all taxes payable but not yet due; and have made cash
deposits with appropriate governmental authorities representing estimated
payments of taxes, including income taxes and employee withholding tax
obligations. No extension or waiver of any statute of limitations or time
within which to file any return has been granted to or requested by WFM or the
WFM Subsidiaries with respect to any tax. No unsatisfied deficiency,
delinquency or default for any tax, assessment or governmental charge has been
claimed, proposed or assessed against WFM or the WFM Subsidiaries, nor has WFM
or the WFM Subsidiaries received notice of any such deficiency, delinquency or
default. WFM and the WFM Subsidiaries have no material tax liabilities other
than those reflected on the WFM Balance Sheet and those arising in the
ordinary course of business since the date thereof. WFM will make available to
Amrion true, complete and correct copies of WFM's consolidated U.S. federal
tax returns for the last five years and make available such other tax returns
requested by Amrion. There is no dispute or claim concerning any material tax
liability of WFM or any of its subsidiaries either: (a) raised by any taxing
authority in writing; (b) as to which WFM or any of its subsidiaries has
received notice concerning a potential audit of any return filed by WFM; and
(c) there is no outstanding audit or pending audit of any tax return filed by
WFM.
14
4.12. Material Contracts. WFM has furnished or made available to Amrion
accurate and complete copies of the WFM Material Contracts (as defined herein)
applicable to WFM or any of the WFM Subsidiaries. There is not under any of
the WFM Material Contracts any existing breach, default or event of default by
WFM or any of the WFM Subsidiaries nor event that with notice or lapse of time
or both would constitute a breach, default or event of default by WFM or any
of the WFM Subsidiaries other than breaches, defaults or events of default
which would not have a WFM Material Adverse Effect nor does WFM know of, and
WFM has not received notice of, or made a claim with respect to, any breach or
default by any other party thereto which would, severally or in the aggregate,
have a WFM Material Adverse Effect. As used herein, the term "WFM Material
Contracts" shall mean all contracts and agreements filed, or required to be
filed, as exhibits to WFM's Annual Report on Form 10-K for the year ended
September 29, 1996 and any contracts and agreements entered into since
September 29, 1996 which would be required to be filed or incorporated by
reference therein as an exhibit to WFM's Annual Report on Form 10-K for the
year ending September 28, 1997.
4.13. Litigation and Government Claims. Except as disclosed in the WFM SEC
Reports, there is no pending suit, claim, action or litigation, or
administrative, arbitration or other proceeding or governmental investigation
or inquiry against WFM or the WFM Subsidiaries to which their businesses or
assets are subject which would, severally or in the aggregate, reasonably be
expected to result in a WFM Material Adverse Effect. To the knowledge of WFM,
there are no such proceedings threatened or contemplated which would,
severally or in the aggregate, have a WFM Material Adverse Effect. Neither WFM
nor any WFM Subsidiary is subject to any judgment, decree, injunction, rule or
order of any court, or, to the knowledge of WFM, any governmental restriction
applicable to WFM or any WFM Subsidiary which is reasonably likely to have a
WFM Material Adverse Effect.
4.14. Compliance with Laws. WFM and the WFM Subsidiaries each have all
material authorizations, approvals, licenses and orders to carry on their
respective businesses as they are now being conducted, to own or hold under
lease the properties or assets they own or hold under lease and to perform all
of their obligations under the agreements to which they are a party, except
for instances which would not have a WFM Material Adverse Effect. WFM and the
WFM Subsidiaries have been and are, to the knowledge of WFM, in compliance
with all applicable laws (including those referenced in the WFM SEC Reports),
regulations and administrative orders of any country, state or municipality or
any subdivision of any thereof to which their respective businesses and their
employment of labor or their use or occupancy of properties or any part hereof
are subject, the violation of which would have a WFM Material Adverse Effect.
4.15. Employment Agreements; Labor Relations. Each of WFM and the WFM
Subsidiaries is in compliance in all material respects with all laws
(including Federal and state laws) respecting employment and employment
practices, terms and conditions of employment, wages and hours, and is not
engaged in any unfair labor or unlawful employment practice. There is no
unlawful employment practice discrimination charge pending before the EEOC or
EEOC recognized state "referral agency." Except as would not have a WFM
Material Adverse Effect, there is no unfair labor practice charge or complaint
against WFM or any of the WFM Subsidiaries pending before the National Labor
Review Board. There is no labor strike, dispute, slowdown or stoppage actually
pending or, to the knowledge of WFM, threatened against or involving or
affecting WFM or any of the WFM Subsidiaries and no National Labor Review
Board representation question exists respecting their respective employees.
Except as would not have a WFM Material Adverse Effect, no grievances or
arbitration proceeding is pending and no written claim therefor exists. There
is no collective bargaining agreement that is binding on WFM or any of the WFM
Subsidiaries.
4.16. WFM Employee Benefit Plans. Each employee benefit plan, as such term
is defined in Section 3(3) of ERISA, of WFM and the WFM Subsidiaries
(collectively the "WFM Employee Plans") complies in all material respects with
all applicable requirements of ERISA, the Code and other applicable laws. None
of the WFM Employee Plans is an employee pension benefit plan or a
multiemployer plan, as such terms are defined in ERISA. Neither WFM nor any of
the WFM Subsidiaries nor any of their respective directors, officers,
employees or agents has, with respect to any WFM Employee Plan, engaged in any
"prohibited transaction," as such term is defined in the Code or ERISA, nor
has any WFM Employee Plan engaged in such prohibited transaction which
15
could result in any taxes or penalties or other prohibited transactions, which
in the aggregate could have a WFM Material Adverse Effect.
4.17. Intellectual Property. WFM and the WFM Subsidiaries own or have valid,
binding and enforceable rights to use all material patents, trademarks, trade
names, service marks, service names, copyrights, applications therefor and
licenses or other rights in respect thereof ("WFM Intellectual Property") used
or held for use in connection with the business of WFM or the WFM
Subsidiaries, without any known conflict with the rights of others, except for
such conflicts as do not have a WFM Material Adverse Effect. Neither WFM nor
any of the WFM Subsidiaries has received any notice from any other person
pertaining to or challenging the right of WFM or any of the WFM Subsidiaries
to use any WFM Intellectual Property or any trade secrets, proprietary
information, inventions, know-how, processes and procedures owned or used or
licensed to WFM or the WFM Subsidiaries, except with respect to rights the
loss of which, individually or in the aggregate, would not have a WFM Material
Adverse Effect.
4.18. Use and Condition of Stores.
(a) (i) Applicable zoning ordinances permit the operation of WFM's business
as currently conducted at its store locations or the operation of WFM's
business at its stores is a prior non-conforming use; (ii) WFM and the WFM
Subsidiaries have all easements and rights, including easements for all
utilities, services, roadways and other means of ingress or egress, material
to the operation of their business as currently conducted; and (iii) neither
the whole nor any portion of the real property on which such stores are
located has been condemned, requisitioned or otherwise taken by any public
authority, and no notice of any such condemnation, requisition or taking has
been received by WFM or the WFM Subsidiaries. No such condemnation,
requisition or taking is threatened or contemplated to WFM's actual knowledge,
and there are no pending public improvements which may result in special
assessments against or which may otherwise materially and adversely affect
WFM's stores. To the actual knowledge of WFM, none of such store locations has
been used for deposit or disposal of hazardous wastes or substances in
violation of any past or current law in any material respect and there is no
material liability under past or current law with respect to any hazardous
wastes or substances which have been deposited or disposed of on or in such
store locations.
(b) WFM has received no notice of, and has no actual knowledge of, any
material violation of any zoning, building, health, fire, water use or similar
statute, ordinance, law, regulation or code in connection with any store
location of WFM or the WFM Subsidiaries.
(c) To WFM's actual knowledge, WFM and the WFM Subsidiaries are in
compliance with all applicable federal, state and local laws relating to
emissions, discharges and releases of hazardous or toxic materials into the
environment, except as would not cause a WFM Material Adverse Effect. To WFM's
actual knowledge, no hazardous or toxic material (as hereinafter defined)
exists in any structure located on, or exists on or under the surface of, any
real property owned or operated by WFM or the WFM Subsidiaries which is, in
any case, in material violation of applicable environmental law. For purposes
of this Section, "hazardous or toxic material" shall mean waste, substance,
materials, smoke, gas or particulate matter designated as hazardous, toxic or
dangerous under any applicable environmental law. For purposes of this
section, "environmental law" shall include the Comprehensive Environmental
Response Compensation and Liability Act, the Clear Air Act, the Clean Water
Act and any other applicable federal, state or local environmental, health or
safety law, rule or regulation relating to or imposing liability or standards
concerning or in connection with hazardous, toxic or dangerous waste,
substance, materials, smoke, gas or particulate matter.
4.19. Nasdaq Fees. WFM has paid all fees due and owing to Nasdaq with
respect to WFM common stock on the NMS and WFM will pay all such fees arising
out of the issuance of any shares of WFM common stock in connection with
transactions contemplated hereby.
4.20. Opinions of Financial Advisors. WFM has received the opinions of
Xxxxxxxxx, Xxxxxxxx & Company and Xxxxx, Xxxxxxxx & Xxxx, Inc. to the effect
that, as of the date hereof, the consideration to be paid by WFM to the
holders of Amrion Common Stock pursuant to the Merger is fair to WFM from a
financial point of view.
16
ARTICLE 5.
Certain Covenants and Agreements
5.1. Conduct of Business by Amrion. From the date hereof to the Effective
Date, Amrion will, and will cause Natrix to, except as required in connection
with the Merger and the other transactions contemplated by this Agreement and
except as otherwise disclosed on the schedules hereto or consented to in
writing by WFM:
(a) carry on its business in the ordinary and regular course in
substantially the same manner as heretofore conducted and not engage in any
new line of business or enter into any material agreement, transaction or
activity or make any material commitment except those in the ordinary and
regular course of business and not otherwise prohibited under this Section
5.1;
(b) neither change nor amend its Articles of Incorporation or Bylaws (in
the case of Amrion) or Articles of Organization or Operating Agreement (in
the case of Natrix);
(c) except as set forth on Schedule 5.1(c), not issue or sell shares of
capital stock of Amrion (other than upon the exercise of Options) or issue,
sell or grant options, warrants or rights to purchase or subscribe to, or
enter into any arrangement or contract with respect to the issuance or sale
of any of the capital stock of Amrion or membership interests of Natrix or
rights or obligations convertible into or exchangeable for any shares of
the capital stock of Amrion or membership interests of Natrix and not alter
the terms of any presently outstanding options or the Option Plans or make
any changes (by split-up, combination, reorganization or otherwise) in the
capital structure of Amrion or Natrix;
(d) not declare, pay or set aside for payment any dividend or other
distribution in respect of the capital stock or other equity securities of
Amrion and not redeem, purchase or otherwise acquire any shares of the
capital stock or other securities of Amrion or Natrix or rights or
obligations convertible into or exchangeable for any shares of the capital
stock or other securities of Amrion or Natrix or obligations convertible
into such, or any options, warrants or other rights to purchase or
subscribe to any of the foregoing;
(e) not acquire or enter into any agreement to acquire, by merger,
consolidation or purchase of stock or assets, any business or entity;
(f) use its reasonable efforts to preserve intact the corporate
existence, goodwill and business organization of Amrion and Natrix, to keep
the officers and employees of Amrion and Natrix available to Amrion and to
preserve the relationships of Amrion and Natrix with suppliers, customers
and others having business relations with any of them, except for such
instances which would not have an Amrion Material Adverse Effect;
(g) not (i) create, incur or assume any debt or create, incur or assume
any short-term debt for borrowed money, (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person other than Natrix except
in the ordinary course of business, (iii) make any loans or advances to any
other person other than Natrix, except in the ordinary course of business
and consistent with past practice, or (iv) make any capital contributions
to, or investments in, any person other than Natrix except in the ordinary
course of business; provided, however, that the aggregate amount of all of
the liabilities, obligations, loans, contributions, investments and other
actions described in (i) through (iv) above that would otherwise be
permitted hereunder shall not in the aggregate exceed $1,000,000 at the
time of the Closing;
(h) except as set forth on Schedule 5.1(h), not (i) enter into, modify or
extend in any manner the terms of any employment, severance or similar
agreements with officers and directors, (ii) grant any increase in the
compensation of officers or directors, whether now or hereafter payable or
(iii) grant any increase in the compensation of any other employees except
for compensation increases in the ordinary course of business and
consistent with past practice (it being understood by the parties hereto
that for the purposes of (ii) and (iii) above increases in compensation
shall include any increase pursuant to any option, bonus, stock purchase,
pension, profit-sharing, deferred compensation, retirement or other plan,
arrangement, contract or commitment), except that Amrion may pay "welcome
bonuses" not exceeding $100,000 in the aggregate
17
to key employees as determined by the chief executive officer of Amrion to
ensure the continued employment of such persons through the Effective Date;
(i) except as set forth on Schedule 5.1(i), not make or incur (other than
in the ordinary course of business) any individual capital expenditure in
excess of $200,000 or capital expenditures in the aggregate in excess of
$1,000,000 without the prior approval of WFM (as used herein, "capital
expenditure" shall mean all payments in respect of the cost of any fixed
asset or improvement or replacement, substitution or addition thereto which
has a useful life of more than one year, including those costs arising in
connection with the acquisition of such assets by way of increased product
or service charges or offset items or in connection with capital leases);
(j) except in instances which would not have an Amrion Material Adverse
Effect, perform all of its obligations under all Material Contracts (except
those being contested in good faith) and not enter into, assume or amend
any contract or commitment that would be a Material Contract other than
contracts to provide services entered into in the ordinary course of
business; and
(k) except in instances which would not have an Amrion Material Adverse
Effect, prepare and file all federal, state, local and foreign returns for
taxes and other tax reports, filings and amendments thereto required to be
filed by it, and allow WFM, at its request, to review all such returns,
reports, filings and amendments at Amrion's offices prior to the filing
thereof, which review shall not interfere with the timely filing of such
returns.
In connection with the continued operation of the business of Amrion and
Natrix between the date of this Agreement and the Effective Date, Amrion shall
confer in good faith and on a regular and frequent basis with one or more
representatives of WFM designated in writing to report operational matters of
materiality and the general status of ongoing operations. In addition, Amrion
will allow WFM employees and agents to be present at Amrion's business
locations to observe the business and operations of Amrion and Natrix. Amrion
acknowledges that WFM does not and will not waive any rights it may have under
this Agreement as a result of such consultations nor shall WFM be responsible
for any decisions made by Amrion's officers and directors with respect to
matters which are the subject of such consultation.
5.2. Conduct of Business by WFM. From the date hereof to the Effective Date,
WFM will, and will cause the Merger Subsidiary and each of the WFM
Subsidiaries to, except as required in connection with the Merger and the
other transactions contemplated by this Agreement and except as otherwise
disclosed in the schedules hereto or consented to in writing by Amrion:
(a) Carry on its businesses in the ordinary and regular course in
substantially the same manner as heretofore conducted and not engage in any
new line of business or enter into any agreement, transaction or activity
or make any commitment except in the ordinary and regular course of
business and not otherwise prohibited under this Section 5.2;
(b) Neither change nor amend its Articles of Incorporation or Bylaws;
(c) Not make any adverse changes (by split-up, combination,
reorganization or otherwise) in the capital structure of WFM, Merger
Subsidiary or any of the WFM Subsidiaries;
(d) Not declare, pay or set aside for payment any dividend or other
distribution in respect of the capital stock or other equity securities of
WFM and not redeem, purchase or otherwise acquire any shares of the capital
stock or other securities of WFM or any of the WFM Subsidiaries, or rights
or obligations convertible into or exchangeable for any shares of the
capital stock or other securities of WFM, Merger Subsidiary or any of the
WFM Subsidiaries or obligations convertible into such, or any options,
warrants or other rights to purchase or subscribe to any of the foregoing;
(e) Not acquire or enter into any agreement to acquire, by merger,
consolidation or purchase of stock or assets, any business or entity which
would have a WFM Material Adverse Effect; and
(f) Use its reasonable efforts to preserve intact the corporate
existence, goodwill and business organization of WFM and the WFM
Subsidiaries, to keep the officers and employees of WFM and the WFM
18
Subsidiaries available to WFM and to preserve the relationships of WFM and
the WFM Subsidiaries with suppliers, customers and others having business
relations with any of them, except for such instances which would not have
a WFM Material Adverse Effect;
5.3. Notice of any Material Change. Each of Amrion and WFM shall, promptly
after the first notice or occurrence thereof but not later than the Closing
Date, advise the other in writing of any event or the existence of any state
of facts that (i) would make any of its representations and warranties in this
Agreement untrue in any material respect, or (ii) would otherwise constitute
either an Amrion Material Adverse Effect or a WFM Material Adverse Effect.
5.4. Inspection and Access to Information.
(a) Between the date of this Agreement and the Effective Date, Amrion will,
and will cause Natrix to, provide to the Merger Subsidiary and WFM and their
accountants, counsel and other authorized representatives reasonable access,
during normal business hours to its premises, properties, contracts,
commitments, books, records and other information (including tax returns filed
and those in preparation) and will cause its officers to furnish to WFM and
the Merger Subsidiary and their authorized representatives such financial,
technical and operating data and other information pertaining to its business,
as the Merger Subsidiary and WFM shall from time to time reasonably request.
(b) Between the date of this Agreement and the Effective Date, WFM will, and
will cause each of the WFM Subsidiaries to, provide to Amrion and its
accountants, counsel and other authorized representatives reasonable access,
during normal business hours to its premises, properties, contracts,
commitments, books, records and other information (including tax returns filed
and those in preparation) and will cause its officers to furnish to Amrion and
its authorized representatives such financial, technical and operating data
and other information pertaining to its business, as Amrion shall from time to
time reasonably request.
(c) Each of the parties hereto and their respective representatives shall
maintain the confidentiality of all information (other than information which
is generally available to the public) concerning the other parties hereto
acquired pursuant to the transactions contemplated hereby in the event that
the Merger is not consummated. Each of the parties hereto and their
representatives shall not use such information so obtained to the detriment or
competitive disadvantage of the other party hereto. All files, records,
documents, information, data and similar items relating to the confidential
information of Amrion, whether prepared by WFM or otherwise coming into WFM's
possession, shall remain the exclusive property of Amrion and shall be
promptly delivered to Amrion upon termination of this Agreement. All files,
records, documents, information, data and similar items relating to the
confidential information of WFM, whether prepared by Amrion or otherwise
coming into Amrion's possession, shall remain the exclusive property of WFM
and shall be promptly delivered to WFM upon termination of this Agreement.
5.5. Antitrust Laws. As soon as practicable but in no event later than 15
days from the date hereof, each of WFM and Amrion shall make any and all
filings which are required under the HSR Act. Each of WFM and Amrion will
assist the other as may be reasonably requested in connection with the
preparation of such filings. WFM will pay the applicable filing fees required
to be paid under the HSR Act.
5.6. Registration Statement and Proxy Statement.
(a) WFM and Amrion shall promptly prepare and WFM shall file a registration
statement on Form S-4 (which registration statement, in the form it is
declared effective by the SEC, together with any and all amendments and
supplements thereto and all information incorporated by reference therein, is
referred to herein as the "Registration Statement") under and pursuant to the
provisions of the Securities Act for the purpose of registering WFM Common
Stock to be issued in the Merger, a portion of which Registration Statement
shall also serve as the joint proxy statement with respect to the meetings of
the stockholders of WFM and Amrion in connection with the Merger (the "Proxy
Statement"). WFM will use its best efforts to receive and respond to the
comments of the SEC and to have the Registration Statement declared effective
as promptly as practicable,
19
and each of WFM and Amrion shall promptly mail to its stockholders the Proxy
Statement in its definitive form contained in the Registration Statement. Such
Proxy Statement shall also serve as the prospectus to be included in the
Registration Statement.
(b) Each of WFM and Amrion agrees to provide as promptly as practicable to
the other such information concerning its business and financial statements
and affairs as, in the reasonable judgment of the other party, may be required
or appropriate for inclusion in the Registration Statement and the Proxy
Statement or in any amendments or supplements thereto, and to cause its
counsel and auditors to cooperate with the other's counsel and auditors in the
preparation of the Registration Statement and the Proxy Statement.
(c) At the time the Registration Statement becomes effective and at the
Effective Date, as such Registration Statement is then amended or
supplemented, at the time the Proxy Statement is mailed to each of WFM's and
Amrion's stockholders, such Registration Statement and Proxy Statement will
(i) not contain any untrue statement of a material fact, or omit to state any
material fact required to be stated therein as necessary, in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading or necessary and (ii) comply in all material respects with the
provisions of the Securities Act and Exchange Act, as applicable, and the
rules and regulations thereunder; provided, however, no representation is made
by WFM or Amrion with respect to statements made in the Registration Statement
and Proxy Statement based on information supplied by the other party expressly
for inclusion or incorporation by reference in the Proxy Statement or
Registration Statement or information omitted with respect to the other party.
5.7. Stockholders' Meeting. Each of WFM and Amrion will take all action
necessary in accordance with applicable law and its Articles of Incorporation
and Bylaws to convene a meeting of its stockholders as promptly as practicable
to consider and vote upon the approval of this Agreement and the transactions
contemplated hereby. The Board of Directors of each of WFM and Amrion shall
recommend such approval and WFM and Amrion shall each take all lawful action
to solicit such approval, including, without limitation, timely mailing the
Proxy Statement /Prospectus. WFM and Amrion shall coordinate and cooperate
with respect to the timing of such meetings and shall use their best efforts
to hold such meetings on the same day.
5.8. Listing Application. WFM will file a listing application with the NMS
to approve for listing, subject to official notice of issuance, the shares of
WFM Common Stock to be issued in the Merger. WFM shall use its reasonable
efforts to cause the shares of WFM Common Stock to be issued in the Merger to
be approved for listing on the NMS, subject to official notice of issuance,
prior to the Effective Date.
5.9. Reasonable Efforts; Further Assurances; Cooperation. Subject to the
other provisions of this Agreement, the parties hereby shall each use their
reasonable efforts to perform their obligations herein and to take, or cause
to be taken or do, or cause to be done, all things reasonably necessary,
proper or advisable under applicable law to obtain all regulatory approvals
and satisfy all conditions to the obligations of the parties under this
Agreement and to cause the Merger and the other transactions contemplated
herein to be carried out promptly in accordance with the terms hereof. The
parties agree to use their reasonable best efforts to consummate the
transactions contemplated hereby by September 15, 1997. The parties shall
cooperate fully with each other and their respective officers, directors,
employees, agents, counsel, accountants and other designees in connection with
any steps required to be taken as a part of their respective obligations under
this Agreement, including without limitation:
(a) Amrion and WFM shall promptly make their respective filings and
submissions and shall take, or cause to be taken, all actions and do, or
cause to be done, all things reasonably necessary, proper or advisable
under applicable laws and regulations to (i) comply with the provisions of
the HSR Act, and (ii) obtain any other required approval of any other
federal, state or local governmental agency or regulatory body with
jurisdiction over the transactions contemplated by this Agreement.
(b) In the event any claim, action, suit, investigation or other
proceeding by any governmental body or other person is commenced which
questions the validity or legality of the Merger or any of the other
transactions contemplated hereby or seeks damages in connection therewith,
the parties agree to cooperate
20
and use all reasonable efforts to defend against such claim, action, suit,
investigation or other proceeding and, if an injunction or other order is
issued in any such action, suit or other proceeding, to use all reasonable
efforts to have such injunction or other order lifted, and to cooperate
reasonably regarding any other impediment to the consummation of the
transactions contemplated by this Agreement.
(c) Each party shall give prompt written notice to the other of (i) the
occurrence, or failure to occur, of any event which occurrence or failure
would be likely to cause any representation or warranty of Amrion or WFM,
as the case may be, contained in this Agreement to be untrue or inaccurate
in any material respect at any time from the date hereof to the Effective
Date or that will or may result in the failure to satisfy the conditions
specified in Article 6 or 7 and (ii) any failure of Amrion or WFM, as the
case may be, to comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by it hereunder.
5.10. Public Announcements. The timing and content of all announcements
regarding any aspect of this Agreement or the Merger to the financial
community, government agencies, employees or the general public shall be
mutually agreed upon in advance (unless WFM or Amrion is advised by counsel
that any such announcement or other disclosure not mutually agreed upon in
advance is required to be made by law or applicable NMS rule and then only
after making a reasonable attempt to comply with the provisions of this
Section).
5.11. No Solicitations. From the date hereof until the Effective Date or
until this Agreement is terminated or abandoned as provided in this Agreement,
neither Amrion nor Natrix shall directly or indirectly (i) solicit or initiate
discussion with or (ii) enter into negotiations or agreements with, or furnish
any information to, any corporation, partnership, person or other entity or
group (other than WFM, an affiliate of WFM or their authorized representatives
pursuant to this Agreement) concerning any proposal for a merger, sale of
substantial assets, sale of shares of stock or securities or other takeover or
business combination transaction (the "Acquisition Proposal") involving Amrion
or Natrix, and Amrion will instruct its officers, directors, advisors and its
financial and legal representatives and consultants not to take any action
contrary to the foregoing provisions of this sentence; provided, however, that
Amrion, Natrix, their officers, directors, advisors and their financial and
legal representatives and consultants will not be prohibited from taking any
action described in (ii) above to the extent such action is taken by, or upon
the authority of, the Board of Directors of Amrion in the exercise of good
faith judgment as to its fiduciary duties to the shareholders of Amrion, which
judgment is based upon the advice of independent, outside legal counsel that a
failure of the Board of Directors of Amrion to take such action would be
likely to constitute a breach of its fiduciary duties to such shareholders.
Amrion will notify WFM promptly if Amrion becomes aware that any inquiries or
proposals are received by, any information is requested from or any
negotiations or discussions are sought to be initiated with, Amrion with
respect to an Acquisition Proposal, and Amrion shall promptly deliver to WFM
any written inquiries or proposals received by Amrion relating to an
Acquisition Proposal.
5.12. WFM Board of Directors. WFM's Board of Directors shall to the extent
requested by Xxxx X. Xxxxxxx ("Xxxxxxx") at the first scheduled meeting of the
WFM Board of Directors following the Effective Date take all action necessary
to cause the Board of Directors of WFM to be increased by one director and
shall take all such action necessary to cause Xxxxxxx to be elected as a
director of WFM for a term expiring at the first annual meeting of
stockholders of WFM following the Effective Date and to nominate such person
for re-election at each subsequent annual meeting so long as he continues to
beneficially own at least one-third of the shares of the WFM Common Stock
received by him pursuant to the Merger, including shares underlying any
options exercisable for WFM Common Stock assumed by WFM pursuant to the
Merger.
5.13. Pooling. From and after the date hereof and until the Effective Date,
neither WFM nor Amrion nor any of their respective subsidiaries or other
affiliates shall (i) knowingly take any action, or knowingly fail to take any
action, that would jeopardize the treatment of the Merger as a "pooling of
interest" for accounting purposes or (ii) knowingly take any action, or
knowingly fail to take any action, that would jeopardize qualification of the
Merger as a reorganization within the meaning of Section 368(a)(2)(E) of the
Code.
21
5.14. Employee Benefits. As of the Effective Date, WFM or its subsidiaries
shall employ all of the employees of Amrion as of the Effective Date (the
"Transferred Employees") and, to the extent one or more of the Amrion benefit
plans is terminated, shall make available to the Transferred Employees the
corresponding employee benefit plan(s) maintained by WFM for its Team Members
(the "WFM Plans") in accordance with their terms. To the extent permitted by
the terms of the WFM Plans, WFM will (i) waive all deductibles, waiting
periods and limitations with respect to pre-existing conditions and other
conditions applicable to employees of Amrion and its subsidiaries under the
WFM Plans, and (ii) grant full past service credit (including credit for
eligibility, benefit accrual and for vesting) to the Transferred Employees for
service with Amrion and its affiliates and predecessors under any and all of
the WFM Plans, including but not limited to bonus, severance, and similar
employment policies. WFM will also grant the Transferred Employees a right to
a 20% discount at WFM's planned Boulder, Colorado store. Neither this
Agreement nor the consummation of the transactions contemplated by this
Agreement will entitle any employee, including but not limited to, Transferred
Employees, to any other severance benefits nor will it accelerate compensation
due any such Transferred Employee as of the Effective Date. Subject to the
foregoing, WFM shall have the right in the good faith exercise of operations
and managerial discretion to make changes or cause changes to be made after
the Effective Date in compensation, benefits and other terms of employment and
to terminate any such employee.
ARTICLE 6.
Conditions Precedent to Obligations of Amrion
Except as may be waived by Amrion, the obligations of Amrion to consummate
the transactions contemplated by this Agreement shall be subject to the
satisfaction on or before the Closing Date of each of the following
conditions:
6.1. Compliance. WFM shall have, or shall have caused to be, satisfied or
complied with and performed in all material respects all terms, covenants and
conditions of this Agreement to be complied with or performed by WFM on or
before the Closing Date.
6.2. Representations and Warranties. All of the representations and
warranties made by WFM in this Agreement shall be true and correct in all
material respects at and as of the Closing Date with the same force and effect
as if such representations and warranties had been made at and as of the
Closing Date, except for changes permitted or contemplated by this Agreement
and except that if information which would constitute a breach of the
representations and warranties of WFM made in this Agreement is disclosed in
the Proxy Statement and if Amrion has consented to such disclosure, then
Amrion shall be deemed to have waived this condition to the performance of its
obligations hereunder solely with respect to the matter disclosed; provided,
however, that notwithstanding anything herein to the contrary, this Section
6.2 shall be deemed to have been satisfied even if such representations or
warranties are not true and correct, unless the failure of any of the
representations or warranties to be so true and correct would have or would be
reasonably likely to have a WFM Material Adverse Effect.
6.3. Material Adverse Changes. Subsequent to March 31, 1997, there shall
have occurred no WFM Material Adverse Effect other than any such change that
affects both WFM and Amrion in a substantially similar manner; provided,
however, if such WFM Material Adverse Change is disclosed in the Proxy
Statement (to the extent Amrion consented to such disclosure) on the date such
Proxy Statement is mailed to Amrion's stockholders, then Amrion shall be
deemed to have waived this condition to the performance of its obligations
hereunder solely with respect to the matter disclosed.
6.4. NMS Listing. WFM Common Stock issuable pursuant to the Merger and
pursuant to the exercise of the Options after the Effective Date shall have
been authorized for listing on the NMS.
22
6.5. Certificates. Amrion shall have received a certificate or certificates,
executed on behalf of WFM by an executive officer of WFM, to the effect that
the conditions contained in Sections 6.1, 6.2 and 6.3 hereof have been
satisfied.
6.6. Stockholder Approval. This Agreement shall have been approved and
adopted by the affirmative vote of the holders of a majority of all of the
outstanding shares (as of the "record date" set forth in the Proxy Statement)
of Amrion Common Stock.
6.7. Effectiveness of Registration Statement. The Registration Statement
shall have become effective and no stop order shall been issued by the SEC or
any other governmental authority suspending the effectiveness of the
Registration Statement or preventing or suspending the use thereof or any
related prospectus.
6.8. Consents; Litigation. Other than the filing of Articles of Merger as
described in Article 1, all authorizations, consents, orders or approvals of,
or declarations or filings with, or expirations or terminations of waiting
periods (including the waiting period under the HSR Act) imposed by any
governmental entity, and all required third-party consents, the failure to
obtain which would have a WFM Material Adverse Effect, shall have been
obtained, including written confirmation reasonably acceptable to Amrion from
WFM's senior lender and the purchasers of certain notes pursuant to the note
purchase agreement dated May 16, 1996 that the consummation of the Merger does
not require the consent of such lenders and note purchasers. In addition, no
preliminary or permanent injunction or other order shall have been issued by
any court or by any governmental or regulatory agency, body or authority which
prohibits the consummation of the Merger and the transactions contemplated by
this Agreement and which is in effect at the Effective Date.
6.9. Employment and Non-Competition Agreements. The Employment and Non-
Competition Agreements, in the forms of Exhibits B1 and B2 hereto, between WFM
and each of Xxxxxxx and Xxxxxxx X. Xxxxxxxx ("Xxxxxxxx"), shall be executed
and delivered by the parties thereto.
6.10. Registration Rights Agreement. The Registration Rights Agreement, in
the form of Exhibit C hereto, by and among Xxxxxxx, Xxxxxxxx and WFM, will be
in full force and effect as of the Closing Date.
ARTICLE 7.
Conditions Precedent to obligations of WFM and the Merger Subsidiary
Except as may be waived by WFM and the Merger Subsidiary, the obligations of
WFM and the Merger Subsidiary to consummate the transactions contemplated by
this Agreement shall be subject to the satisfaction, on or before the Closing
Date, of each of the following conditions:
7.1. Compliance. Amrion shall have, or shall have caused to be, satisfied or
complied with and performed in all material respects all terms, covenants, and
conditions of this Agreement to be complied with or performed by it on or
before the Closing Date.
7.2. Representations and Warranties. All of the representations and
warranties made by Amrion in this Agreement shall be true and correct in all
material respects at and as of the Closing Date with the same force and effect
as if such representations and warranties had been made at and as of the
Closing Date, except for changes permitted or contemplated by this Agreement
and except that if information which would constitute a breach of the
representations and warranties of Amrion made in this Agreement is disclosed
in the Proxy Statement and if WFM has consented to such disclosure, then WFM
shall be deemed to have waived this condition to the performance of its
obligations hereunder solely with respect to the matter disclosed; provided,
however, that notwithstanding anything herein to the contrary, this Section
7.2 shall be deemed to have been satisfied even if such representations or
warranties are not true and correct, unless the failure of any of the
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representations or warranties to be so true and correct would have or would be
reasonably likely to have an Amrion Material Adverse Effect.
7.3. Material Adverse Changes. Since March 31, 1997, except as set forth in
this Agreement or on the schedules hereto, there shall have occurred no Amrion
Material Adverse Effect other than any such change that affects both WFM and
Amrion in a substantially similar manner; provided, however, if such change is
disclosed in the Proxy Statement (to the extent WFM consented to such
disclosure) on the date such Proxy Statement is mailed to WFM's stockholders,
then WFM shall be deemed to have waived this condition to the performance of
its obligations hereunder solely with respect to the matter disclosed.
7.4. Certificates. WFM shall have received a certificate or certificates,
executed on behalf of Amrion by an executive officer of Amrion, to the effect
that the conditions in Sections 7.1, 7.2 and 7.3 hereof have been satisfied.
7.5. Stockholder Approval. This Agreement shall have been approved and
adopted by the affirmative vote of the holders of a majority of the shares of
WFM Common Stock represented at the Special Meeting of WFM shareholders at
which a quorum is obtained.
7.6. Effectiveness of Registration Statement. The Registration Statement
shall have become effective and no stop order shall been issued by the SEC or
any other governmental authority suspending the effectiveness of the
Registration Statement or preventing or suspending the use thereof or any
related prospectus.
7.7. Consents; Litigation. Other than the filing of the Articles of Merger
as described in Article 1, all authorizations, consents, orders or approvals
of, or declarations or filings with, or expirations or terminations of waiting
periods (including the waiting period under the HSR Act) imposed by, any
governmental entity, and all required third-party consents, the failure to
obtain which would have an Amrion Material Adverse Effect or a WFM Material
Effect, shall have been obtained. In addition, no preliminary or permanent
injunction or other order shall have been issued by any court or by any
governmental or regulatory agency, body or authority which prohibits the
consummation of the Merger and the transactions contemplated by this Agreement
and which is in effect at the Effective Date.
7.8. Voting Agreement. The Voting Agreement between WFM and Amrion's
directors and executive officers in the form of Exhibit A, will be in full
force and effect as of the Closing Date, and no default shall have occurred
thereunder.
7.9. Employment and Non-Competition Agreements. The Employment and Non-
Competition Agreements, in the form of Exhibit B hereto, between WFM and each
of Xxxxxxx and Xxxxxxxx, shall be executed and delivered by the parties
thereto.
7.10. Receipt of Pooling Letter. WFM shall have received a letter from KPMG
Peat Marwick LLP, dated the Effective Date and addressed to WFM, stating
substantially to the effect that, based on such firm's review of this
Agreement and the other procedures set forth in such letter, such firm concurs
that the Merger will qualify as a pooling of interests transaction under
Opinion 16 of the Accounting Principles Board.
7.11. Comfort Letters. WFM shall have received from BDO Xxxxxxx, LLP,
independent auditors for Amrion, a letter to the effect that Amrion qualifies
as an entity such that the Merger will qualify as a "pooling of interests"
transaction under generally accepted accounting principles.
ARTICLE 8.
Indemnification; Directors' and Officers' Insurance
8.1. Indemnification. In the event of any threatened or actual claim,
action, suit, proceeding or investigation (including any claims regarding
securities law matters), whether civil, criminal or administrative,
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including, without limitation, any such claim, action, suit, proceeding or
investigation in which any of the present or former officers or directors (the
"Managers") of Amrion or Natrix is, or is threatened to be, made a party by
reason of the fact that he or she is or was a stockholder, director, officer,
employee or agent of Amrion or Natrix, or is or was serving at the request of
Amrion or Natrix as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, whether
before or after the Effective Date, Amrion shall indemnify and hold harmless,
and from and after the Effective Date each of the Surviving Corporation and
WFM shall indemnify and hold harmless, as and to the full extent permitted by
applicable law (including by advancing expenses promptly as statements
therefor are received), each such Manager against any losses, claims, damages,
liabilities, costs, expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement in connection with any such claim, action, suit,
proceeding or investigation, and in the event of any such claim, action, suit
proceeding or investigation (whether arising before or after the Effective
Date), (i) if Amrion (prior to the Effective Date) or WFM or the Surviving
Corporation (after the Effective Date) have not promptly assumed the defense
of such matter, the Managers may retain counsel satisfactory to them, and
Amrion, or the Surviving Corporation and WFM after the Effective Date, shall
pay all fees and expenses of such counsel for the Managers promptly, as
statements therefor are received, and (ii) Amrion, or the Surviving
Corporation and WFM after the Effective Date, will use their respective best
efforts to assist in the vigorous defense of any such matter; provided that
neither Amrion nor the Surviving Corporation or WFM shall be liable for any
settlement effected without its prior written consent (which consent shall not
be unreasonably withheld); and provided further that the Surviving Corporation
and WFM shall have no obligation under the foregoing provisions of this
Section 8.1 to any Manager if (x) the indemnification of such Manager in the
manner contemplated hereby is prohibited by applicable law, and (y) Amrion has
breached a representation or warranty hereunder with respect to the same
matters for which indemnification is being sought by such Manager and such
Manager fails to prove that such Manager had no actual knowledge of such
breach at the Effective Date. Upon the determination that the Surviving
Corporation or WFM is not liable for any such indemnification claims, the
Manager will reimburse WFM and the Surviving Corporation for any fees,
expenses and costs incurred by WFM or the Surviving Corporation in connection
with the defense of such claims. Any Manager wishing to claim indemnification
under this Section 8.1, upon learning of any such claim, action, suit,
proceeding or investigation, shall notify Amrion and, after the Effective
Date, the Surviving Corporation and WFM, thereof (provided that the failure to
give such notice shall not affect any obligations hereunder, except to the
extent that the indemnifying party is actually and materially prejudiced
thereby). WFM and Amrion agree that all rights to indemnification existing in
favor of the Managers as provided in Amrion's Articles of Incorporation or
Bylaws as in effect as of the date hereof, and in any agreement between Amrion
and any Manager with respect to matters occurring prior to the Effective Date,
shall survive the Merger. WFM further covenants not to amend or repeal any
provisions of the Articles of Incorporation or Bylaws of Amrion in any manner
which would adversely affect the indemnification or exculpatory provisions
contained therein. The provisions of this Section 8.1 are intended to be for
the benefit of, and shall be enforceable by, each indemnified party and his or
her heirs and representatives.
8.2. Directors' and Officers' Insurance. WFM will provide each individual
who served as a director or officer of Amrion at any time prior to the Closing
with liability insurance for a period of 24 months after the Closing similar
in coverage and amount as that provided to WFM's directors and officers.
ARTICLE 9.
Miscellaneous
9.1. Termination. In addition to the provisions regarding termination set
forth elsewhere herein, this Agreement and the transactions contemplated
hereby may be terminated at any time on or before the Closing Date:
(a) by mutual consent of Amrion and WFM;
(b) by either WFM or Amrion if the transactions contemplated by this
Agreement have not been consummated by October 31, 1997, unless such
failure of consummation is due to the failure of the
25
terminating party to perform or observe the covenants, agreements, and
conditions hereof to be performed or observed by it at or before the
Closing Date;
(c) by either Amrion or WFM if the transactions contemplated hereby
violate any nonappealable final order, decree, or judgment of any court or
governmental body or agency having competent jurisdiction;
(d) by WFM if the Amrion Board of Directors withdraws or materially
modifies or changes its recommendation to the stockholders of Amrion to
approve this Agreement and the Merger if there exists at such time an
Acquisition Proposal; or
(e) by either Amrion or WFM if the Average Closing Price is less than
$23.
9.2. Expenses.
(a) Except as provided in (b) below, if the transactions contemplated by
this Agreement are not consummated, each party hereto shall pay its own
expenses incurred in connection with this Agreement and the transactions
contemplated hereby.
(b) If, (i) this Agreement is terminated by WFM pursuant to Section 9.1(d)
hereof or (ii) on or before October 31, 1997 and while this Agreement remains
in effect, Amrion enters into a definitive agreement with respect to an
Acquisition Proposal with any corporation, partnership, person or other entity
or group (other than WFM or any affiliate of WFM), and such transaction
(including any revised transaction based upon the Acquisition Proposal) is
thereafter consummated (whether before or after October 31, 1997), then Amrion
shall pay to WFM a fee equal to the sum of (A) the documented fees, costs and
expenses, including legal and accounting fees and fees payable to WFM's
financial advisors, incurred by WFM in connection with the transactions
contemplated by this Agreement and (B) $4.5 million, which such amounts shall
be payable in same day funds to an account specified by WFM. No such fee shall
be payable if this Agreement is terminated by Amrion pursuant to Section
9.1(e) hereof.
9.3. Entire Agreement. This Agreement and the exhibits hereto contain the
complete agreement among the parties with respect to the transactions
contemplated hereby and supersede all prior agreements and understandings
among the parties with respect to such transactions. Section and other
headings are for reference purposes only and shall not affect the
interpretation or construction of this Agreement. The parties hereto have not
made any representation or warranty except as expressly set forth in this
Agreement or in any certificate or schedule delivered pursuant hereto. The
obligations of any party under any agreement executed pursuant to this
Agreement shall not be affected by this section.
9.4. Survival of Representations and Warranties. The representations and
warranties of each party contained herein or in any exhibit, certificate,
document or instrument delivered pursuant to this Agreement shall not survive
the Closing.
9.5. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and such counterparts together shall constitute only one original.
9.6. Notices. All notices, demands, requests, or other communications that
may be or are required to be given, served, or sent by any party to any other
party pursuant to this Agreement shall be in writing and shall be sent by
facsimile transmission, next-day courier or mailed by first-class, registered
or certified mail, return receipt requested, postage prepaid, or transmitted
by hand delivery, addressed as follows:
(i) If to Amrion:
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx, CEO
Fax: (000) 000-0000
26
with a copy (which shall not constitute notice) to:
Friedlob Xxxxxxxxx Xxxxxx Xxxxxxx & Xxxxxxxxxxx, LLC
0000 Xxxxxxx Xxxxx
Xxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxx
Fax: (000) 000-0000
(ii) If to WFM or Merger Subsidiary:
000 X. Xxxxx Xxxx., Xxxxx 000
Xxxxxx, Xxxxx 00000
Fax: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxx & Xxxxxxx, L.L.P.
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Fax: (000) 000-0000
Each party may designate by notice in writing a new address to which any
notice, demand, request, or communication may thereafter be so given, served,
or sent. Each notice, demand, request, or communication that is mailed,
delivered, or transmitted in the manner described above shall be deemed
sufficiently given, served, sent, and received for all purposes at such time
as it is delivered to the addressee (with the return receipt, the delivery
receipt or the affidavit of messenger being deemed conclusive evidence of such
delivery) or at such time as delivery is refused by the addressee upon
presentation.
9.7. Successors; Assignments. This Agreement and the rights, interests, and
obligations hereunder shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned, by operation of law or otherwise, by any of the parties hereto
without the prior written consent of the other.
9.8. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Colorado (except the choice of law
rules thereof).
9.9. Waiver and Other Action. This Agreement may be amended, modified, or
supplemented only by a written instrument executed by the parties against
which enforcement of the amendment, modification or supplement is sought.
9.10. Severability. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable, such provision shall be fully severable,
and this Agreement shall be construed and enforced as if such illegal,
invalid, or unenforceable provision were never a part hereof; the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid, or unenforceable provision or by its
severance; and in lieu of such illegal, invalid, or unenforceable provision,
there shall be added automatically as part of this Agreement, a provision as
similar in its terms to such illegal, invalid, or unenforceable provision as
may be possible and be legal, valid, and enforceable.
9.11. No Third Party Beneficiaries. Article 8 is intended for the benefit of
each "Manager" (as defined in Article 8) and may be enforced by such persons,
their heirs and representatives. Other than as expressly set forth in this
Section 9.11, nothing expressed or implied in this Agreement is intended, or
shall be construed, to confer upon or give any person, firm or corporation
other than the parties hereto and their stockholders, any
27
rights, remedies, obligations or liabilities under or by reason of this
Agreement or result in such person, firm or corporation being deemed a third
party beneficiary of this Agreement.
9.12. Mutual Contribution. The parties to this Agreement and their counsel
have mutually contributed to its drafting. Consequently, no provision of this
Agreement shall be construed against any party on the ground that such party
drafted the provision or caused it to be drafted or the provision contains a
covenant of such party.
9.13. Arbitration. Any controversy or dispute among the parties arising in
connection with this Agreement shall be submitted to a panel of three
arbitrators and finally settled by arbitration in accordance with the
commercial arbitration rules of the American Arbitration Association. Each of
the disputing parties shall appoint one arbitrator, and these two arbitrators
shall independently select a third arbitrator. Arbitration shall take place in
Boulder, Colorado. The prevailing party in such arbitration shall be entitled
to the award of all costs and attorneys' fees in connection with such action.
Any award for monetary damages resulting from nonpayment of sums due hereunder
shall bear interest from the date on which such sums were originally due and
payable. Judgment upon the award rendered may be entered in any court having
jurisdiction or application may be made to such court for judicial acceptance
of the award and an order of enforcement, as the case may be.
[Signatures on Following Page]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
Whole Foods Market, Inc.
/s/ Xxxx Xxxxxx
By:__________________________________
Xxxx Xxxxxx Chief Executive
Officer
Nutrient Acquisition Corp.
/s/ Xxxxxx Xxxxxxxx
By:__________________________________
Xxxxxx Xxxxxxxx President
Amrion, Inc.
/s/ Xxxx X. Xxxxxxx
By:__________________________________
Xxxx X. Xxxxxxx President
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