Concurrently with the execution and delivery of the Merger Agreement, and as a condition and inducement to Ultimate Parent and Parent’s willingness to enter into the Merger Agreement, Parent and Purchaser entered into separate Support Agreements (the “Support Agreements”) dated as of the date of the Merger Agreement with Weider Health and Fitness, a beneficial owner of 7,486,574 Class B Shares (“Weider”), TPG STAR SNI, L.P., a beneficial owner of 7,486,574 Class A Shares (“TPG”), and certain directors and officers of the Issuer, beneficial owners of an aggregate of 8,902,371 Class A Shares, including 1,415,797 Class A Shares not otherwise beneficially owned by Weider or TPG (the “Directors and Officers” and, together with Weider and TPG, the “Stockholders”). None of the Stockholders was paid any additional consideration in connection with entering into the Support Agreements. |
As described in Item 3 above, this Schedule 13D relates to the Offer, the Merger, and the Support Agreements, the purpose of which is to assist Ultimate Parent, Parent and Purchaser in acquiring control of, and ultimately if the Merger is consummated, acquire the entire equity interest in, the Issuer, while allowing the Issuer’s stockholders an opportunity to receive the Offer Price promptly (and in any event within three business days after our acceptance of such Shares) by tendering their Shares into the Offer. Pursuant to the Support Agreements, each of the Stockholders, among other things, agreed (i) not to sell or otherwise dispose of the Shares subject to the Support Agreements and (ii) not to enter into any voting arrangement, whether by proxy, consent, voting agreement, voting trust, or otherwise, with respect to the Shares subject to the Support Agreements, (iii) not to solicit any inquiry, expression of interest, proposal or offer that constitutes or would reasonably be expected to lead to an alternative proposal to acquire the Issuer, (iv) not to enter into, participate in, maintain or continue any discussions or negotiations relating to any such acquisition proposal, and (v) not to furnish any non-public information that would reasonably be expected to be used in formulating any such acquisition proposal. In the event that the Merger Agreement is terminated, the Support Agreements will terminate automatically. If the Offer is consummated, it is expected that the Merger will occur as promptly as practicable after the acceptance of the Shares tendered in the Offer, as provided in the Merger Agreement. Upon the consummation of the Merger, (x) the Issuer will continue as the Surviving Corporation and as a wholly-owned subsidiary of Parent, and (y) each Share issued and outstanding immediately prior to the effective time of the Merger (other than Shares held in the treasury of the Issuer or owned by Parent or Purchaser, or any of their respective wholly-owned subsidiaries, or held by stockholders who properly demand and perfect dissenters’ rights under Delaware law) will be cancelled and converted into the right to receive of $42.00 per share, payable to the holder in cash, without interest. Promptly upon the acceptance of the Shares tendered in the Offer and all times thereafter, Purchaser will be entitled to designate a number of directors to the board of directors of the Issuer to the extent permitted by applicable law and the rules and regulations of the NYSE Listed Company Manual, rounded up to the next whole number, that is equal to the product of (a) the total number of directors on the board of directors of the Issuer (after giving effect to the directors designated by Purchaser) multiplied by (b) the percentage that the aggregate voting power of Shares beneficially owned by Parent, Purchaser and any of their affiliates bears to the total voting power of Shares then outstanding, and the Issuer will, upon Purchaser’s request, take all actions necessary to (i) appoint the individuals designated by Purchaser and permitted to be so designated as described above, and (ii) cause Purchaser’s designees to be so appointed at such time. In the event that directors designated by Purchaser are designated, then until the effective time of the Merger, the Issuer will cause the board of directors of the Issuer to maintain three directors who are members of the board of directors of the Issuer on November 21, 2012 and who are not officers, directors or employees of Parent, Purchaser, or any of their affiliates, each of whom will be an “independent director” under Section 303A.00 of the NYSE Listed Company Manual and eligible to serve on the Company’s audit committee under the Exchange Act and NYSE Listed Company Manual. The directors of Purchaser immediately prior to the effective time of the Merger will be the directors of the Surviving Corporation until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be. The officers of the Issuer immediately prior to the effective time of the Merger will be the officers of the Surviving Corporation, each to hold office until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be. In addition, at the effective time of the Merger, the certificate of incorporation and bylaws of the Issuer will be amended to read as set forth in the relevant exhibits to the Merger Agreement. Following the Merger, the Shares will no longer be traded on the NYSE, there will be no public market for the Shares and registration of the Shares under the Exchange Act will be terminated. Furthermore, if all of the conditions to the Offer are satisfied or waived and all tendered Shares are purchased prior to the Merger becoming effective, there may then be so few remaining stockholders and publicly held Class A Shares that such Class A Shares will no longer be eligible to be traded on the NYSE or any other securities exchange and there may not be a public trading market for such Class A Shares, and Schiff may cease making filings with the SEC or otherwise cease being required to comply with the SEC rules relating to publicly held companies. |