www.sec.gov/Archives/edgar/data/899755/0000931763-01-50 -
[Cached Version]
Published on: 9/26/2001
Last Visited: 6/27/2002
In connection with the Asset Purchase Agreement, Harry A. Blazer, the beneficial owner of all outstanding shares of our Class B common stock, entered into a Voting Agreement with Whole Foods Market Group pursuant to which he agreed to vote the Class B shares for approval of the Asset Purchase Agreement and related asset sale.Because of the voting rights of the Class B shares, this ensures approval of the proposal. Directors are elected by a plurality of the votes cast.Votes withheld from any nominee, abstentions and broker non-votes will have no effect on the outcome of the election of directors.
THE ASSET PURCHASE AGREEMENT AND ASSET SALE Purchaser:
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At this time, we have decided to promptly close the Harry's In A Hurry store located in Dunwoody, Georgia, and we are evaluating our alternatives with respect to the remaining Harry's In A Hurry stores.Alternatives being considered include continuing to operate one or more of the stores, closing one or more of the stores or selling one or more of the stores, including possibly selling one or more of the stores to an affiliate of Harry A. Blazer, our president and chief executive officer.In addition, we are retaining other existing liabilities of Harry's Farmers Market under the terms of the Asset Purchase Agreement.
-ii- See "Proposal 1: The Asset Purchase Agreement and Asset Sale--The Asset Purchase Agreement--Assets Not Purchased, and Liabilities Not Assumed, by Whole Foods Market Group" on page 14 and "Proposal 1: The Asset Purchase Agreement and Asset Sale--Ongoing Operations of Harry's Farmers Market" on page 22.
Purchase Price:
Whole Foods Market Group has agreed to purchase our assets for a cash purchase price of $35.0 million.
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These alternatives include possibly continuing to operate some or all of the stores, closing some or all of the stores or selling some or all of the stores, including the possibility that we will sell one or more stores to an affiliate Harry A. Blazer, our president and
-iv- chief executive officer.As of the date of this proxy statement, our board of directors has decided to promptly close the Harry's In A Hurry located in Dunwoody, Georgia.Our decision about the remaining Harry's In A Hurry stores will depend on what course of action our board of directors and special committee believes will best maximize shareholder value.To maintain our ability and flexibility in continuing to operate the Harry's In A Hurry stores, we will enter into a Supply Agreement and a License Agreement with Whole Foods Market Group at the time of the closing of the asset sale.Pursuant to the Supply Agreement, Whole Foods Market Group generally will supply us with the products now sold in the Harry's In A Hurry stores for a period of up to three years.Under the License Agreement, Whole Foods Market Group will license intellectual property to us, including the right to use the "Harry's In A Hurry" name.
See "Proposal 1: The Asset Purchase Agreement and Asset Sale--"Ongoing Operations of Harry's Farmers Market" on page 22. Closing Conditions:
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In connection with the closing of the asset sale, Harry A. Blazer, our president, chief executive officer and chairman of our board of directors, will be required to enter into a Consulting and Noncompetition Agreement.Mr. Blazer will act as a consultant to Whole Foods Market Group for a specified number of hours for five years and has agreed not to compete with Whole Foods Market Group during this period.In exchange for his consulting services and agreement not to compete, Mr. Blazer will receive $250,000 during each of the five years.
See "Proposal 1: The Asset Purchase Agreement and Asset Sale--Interests of Our Directors and Executive Officer in the Asset Sale" on page 12.
Voting Agreement:
As a condition to entering into the Asset Purchase Agreement, Whole Foods Market Group required that Harry A. Blazer, the sole record and beneficial holder of our Class B common stock, enter into a Voting Agreement Pursuant to the Voting Agreement, Mr. Blazer has agreed to vote all of the shares beneficially owned by him and over which he has voting control in favor of the Asset Purchase Agreement and the asset sale, except in limited circumstances.A copy of the Voting Agreement is attached to this proxy statement as Annex C.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO APPROVE THE ASSET PURCHASE AGREEMENT AND RELATED ASSET SALE. -vi- QUESTIONS AND ANSWERS ABOUT THE ASSET SALE Q: Who is soliciting my proxy? A: Our board of directors is soliciting proxies from each of our shareholders. Q: When and where is the annual meeting? A: The annual meeting will be held October 23, 2001 at 10:00 a.m. Eastern time, at the Auditorium of the Roswell Cultural Arts Center located at 950 Forrest Street, Roswell, Georgia.
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These alternatives include continuing to operate some or all of the stores, closing some or all of the stores or selling some or all of the stores, including the possibility that we will sell one or more stores to an affiliate of Harry A. Blazer, our president and chief executive officer.In addition to retaining the assets and liabilities of the Harry's In A Hurry stores, we also are retaining some corporate liabilities that we will have to satisfy.
Q: What will we do if the asset sale is not approved by the shareholders? A: If the asset sale is not approved, our board of directors will evaluate other strategic alternatives available to us in accordance with its fiduciary obligations to our shareholders. Q: When do you expect the asset sale to be completed? A: We expect to complete the asset sale within five business days following the satisfaction of the conditions specified in the Asset Purchase Agreement, including the receipt of shareholder approval at the annual meeting.
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Harry A. Blazer is the beneficial holder of all of the shares of our Class B common stock.Holders of Class B shares are entitled to ten votes per share.If at any time any shares of Class B common stock are beneficially owned by any person other than Mr. Blazer (or entities controlled by him) or upon his death, these shares of Class B common stock automatically convert to an equal number of shares of our Class A common stock. Shares Beneficially Owned ------------------------- Percent Percent of Total
Beneficial Owner Class
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Harry A. Blazer Class A Common Stock Class B Common Stock
2,0 Total 38,000/(1)/ 50,701/(2)/ 100 * .00% 83.33%
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1 Shares owned by Mr. Blazer's wife, with respect to which Mr. Blazer disclaims beneficial ownership. 2 Includes 2,049,400 shares owned by Harry Blazer, Inc., an entity of which Mr. Blazer is the sole director and sole shareholder.Mr. Blazer's address is 1180 Upper Hembree Road, Roswell, Georgia 30076. 3 Includes 19,999 shares subject to presently exercisable stock options or stock options exercisable within 60 days of August 15, 2001. 4 Includes 129,999 shares subject to presently exercisable stock options or stock options exercisable within 60 days of August 15, 2001. 5 Includes 9,999 shares subject to presently exercisable stock options or stock options exercisable within 60 days of August 15, 2001. 6 Represents shares subject to presently exercisable stock options or stock options exercisable within 60 days of August 15, 2001. 7 Includes 463,330 shares subject to presently exercisable stock options or stock options exercisable within 60 days of August 15, 2001.
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Also includes 38,000 shares owned by Mr. Blazer's wife, with respect to which Mr. Blazer disclaims beneficial ownership. Costs of Solicitation of Proxies We will bear the cost of the solicitation of proxies from our shareholders and the cost of printing and mailing this proxy statement.In addition to solicitation by mail, our directors, officers and employees may contact our shareholders to solicit their proxies.Those directors, officers and employees will not be paid any additional compensation for doing so. PROPOSAL 1: THE ASSET PURCHASE AGREEMENT AND ASSET SALE Background of the Asset Sale
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The special committee usually invited Mr. Blazer and representatives of Houlihan Lokey and Mirzaco to participate in the meetings as well as representatives of Alston & Bird, counsel to Harry's Farmers Market. Whole Foods Market, Inc. was one of the entities identified by Houlihan Lokey as possibly being interested in further expanding in the Atlanta market.
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On April 4 and 5, 2001, officers and other management employees of Whole Foods met with Mr. Blazer and other of our officers in Atlanta and visited our stores.The representatives of Whole Foods also performed other due diligence tasks, including the review of our books and records and inspections of our facilities. On April 28, 2001, Whole Foods submitted a non-binding letter of intent to us, offering to purchase our three megastores, distribution center, commissary kitchen, bakery and office facilities as well as our intellectual property.Pursuant to the letter of intent, Whole Foods would assume liabilities related to the purchased assets and would require that Mr. Blazer enter into a noncompetition agreement.In order to take advantage of our net operating losses, or NOLs, Whole Foods Market proposed that it buy all of our issued and outstanding capital stock for $35.0 milli