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EXECUTION COPY
AGREEMENT AND PLAN OF MERGER dated as of May 14, 1999 (this
"Agreement"), between THE NEIMAN MARCUS GROUP, INC., a Delaware corporation (the
"Company"), HARCOURT GENERAL, INC., a Delaware corporation ("Harcourt General")
and SPRING MERGER CORPORATION, a Delaware corporation and a wholly-owned
subsidiary of Harcourt General ("Merger Sub").
WHEREAS, Harcourt General will own 21,440,960 shares of common
stock, par value $.01 per share, of the Company ("Common Stock") immediately
prior to the Merger (as defined below), and Harcourt General will own through
HGI Investment Trust, a wholly owned subsidiary of Harcourt General ("HGI"),
4,988,542 shares of Common Stock (the "Retained Shares") immediately prior to
the Merger, totaling 26,429,502 shares of Common Stock;
WHEREAS, Harcourt General owns all of the issued and outstanding
shares of common stock, par value $.01 per share, of Merger Sub ("Merger Sub
Common Stock");
WHEREAS, prior to the effectiveness of the Merger, Harcourt General
plans to contribute to Merger Sub 21,440,960 of its 26,429,502 shares of Common
Stock (the "Contributed Shares");
WHEREAS, Harcourt General and the Company desire that Merger Sub
merge with and into the Company (the "Merger") upon the terms and subject to the
conditions set forth in this Agreement in accordance with the General
Corporation Law of the State of Delaware (the "DGCL"), pursuant to which all the
issued and outstanding shares of Merger Sub Common Stock shall be converted into
shares of a new class of common stock designated as Class B Common Stock, par
value $.01 per share, of the Company ("Class B Common Stock") and all the issued
and outstanding shares of Common Stock (other than the Contributed Shares held
by Merger Sub, which shall be canceled with no securities or other consideration
issued in exchange therefor) shall be converted into Class A Common Stock
("Class A Common Stock") and shall remain issued and outstanding;
WHEREAS, Harcourt General has announced its intention, subject to
the satisfaction of certain conditions, to distribute all the shares of Class B
Common Stock, on a pro rata basis, to the holders of the common stock of
Harcourt General following consummation of the Merger (the "Distribution");
WHEREAS, simultaneously with the execution hereof, the Company and
Harcourt General are entering into a Distribution Agreement dated as of the date
hereof (the "Distribution Agreement"), which provides for the Distribution and
certain other matters;
WHEREAS, the Boards of Directors of the Company and Merger Sub by
resolutions duly adopted have approved the terms of this Agreement and of the
Merger, have declared the advisability of this Agreement and of the Merger and
determined them to be fair to and in the best interests of the Company and
Merger Sub and their respective subsidiaries, and have directed the submission
of this Agreement to their respective stockholders for approval; and
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WHEREAS, the Merger is intended to constitute a reorganization
within the meaning of Section 368(a)(1)(E) of the Internal Revenue Code of 1986,
as amended.
NOW, THEREFORE in consideration of the premises and the mutual
agreements and provisions herein contained, the parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1. The Merger. (a) Upon the terms and subject to the
conditions of this Agreement, at the Effective Time (as defined below), Merger
Sub shall be merged with and into the Company in accordance with the DGCL,
whereupon the separate corporate existence of Merger Sub shall cease, and the
Company shall be the surviving corporation (the "Surviving Corporation").
(b) Following satisfaction or waiver of all conditions to the
Merger, the Company and Merger Sub shall file a certificate of merger with the
Secretary of State of the State of Delaware and make all other filings or
recordings required by the DGCL in connection with the Merger. The Merger shall
become effective at such time as the certificate of merger is duly filed with
the Secretary of State of the State of Delaware or at such later time as is
specified in the certificate of merger (the "Effective Time").
(c) At and after the Effective Time, the Merger shall have the
effects set forth in the DGCL. Without limiting the foregoing and subject
thereto, from and after the Effective Time, the Surviving Corporation shall
possess all the rights, privileges, powers and franchises and be subject to all
of the restrictions, disabilities and duties of the Company and Merger Sub, all
as provided under the DGCL.
SECTION 1.2. Effect on Capital Stock. At the Effective Time:
(a) All of the shares of Merger Sub Common Stock outstanding
immediately prior to the Effective Time shall be converted in the aggregate into
and become 21,440,960 fully paid and non-assessable shares of Class B Common
Stock of the Surviving Corporation, and shall have the rights and privileges as
set forth in the Surviving Corporation Certificate of Incorporation (as defined
in Section 2.1);
(b) Each of the Contributed Shares shall automatically be canceled
and shall cease to exist and no stock of the Surviving Corporation or other
consideration shall be delivered in exchange therefor; and
(c) Each share of Common Stock (other than the Contributed Shares to
be canceled in accordance with Section 1.2(b)), including shares held in the
treasury, if any, and shares held by HGI, shall be converted into "Class A
Common Stock".
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SECTION 1.3. Share Certificates. (a) As soon as practicable after
the Effective Time:
(i) the Surviving Corporation shall deliver, or cause to be
delivered, to Harcourt General a number of certificates issued in the
names of such persons, in each case, as Harcourt General shall direct,
representing in the aggregate 21,440,960 shares of Class B Common Stock
which Harcourt General has the right to receive upon conversion of shares
of Merger Sub Common Stock pursuant to the provisions of Section 1.2 (a)
hereof;
(ii) the Surviving Corporation shall cancel the share certificate or
certificates representing the shares of Common Stock owned directly by
Merger Sub; and
(iii) the share certificates representing shares of Class A Common
Stock that remain issued and outstanding under Section 1.2(c) hereof or
that remain treasury shares under Section 1.2(c) hereof shall not be
exchanged and shall continue to represent an equal number of shares of
Class A Common Stock of the Surviving Corporation without physical
substitution of share certificates of the Surviving Corporation for
existing share certificates of the Company.
(b) Any dividend or other distribution declared or made with respect
to any shares of capital stock of the Company, whether the record date for such
dividend or distribution is before or after the Effective Time, shall be paid to
the holder of record of such shares of capital stock on such record date,
regardless of whether such holder has surrendered its certificates representing
Class A Common Stock or received certificates representing Class B Common Stock
pursuant to Section 1.3(a)(i).
ARTICLE II
THE SURVIVING CORPORATION
SECTION 2.1. Certificate of Incorporation. At the Effective Time,
the Certificate of Incorporation of the Company as in effect immediately prior
to the Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation, except that such Certificate of Incorporation shall be amended as
set forth in Exhibit A-1 hereto. The Certificate of Incorporation of the
Surviving Corporation that becomes effective pursuant to this Section 2.1 is
herein referred to as the "Surviving Corporation Certificate of Incorporation."
SECTION 2.2. By-Laws. (a) At the Effective Time, the By-Laws of the
Company as in effect immediately prior to the Effective Time shall be the
By-Laws of the Surviving Corporation. The By-Laws of the Surviving Corporation
are herein referred to as the "Surviving Corporation By-Laws."
SECTION 2.3. Directors and Officers. (a) The Surviving Corporation's
Board of Directors initially shall consist of eight members as identified on
Exhibit B-1 hereto. From and
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after the Effective Time, until the earlier of their removal or resignation or
until their successors are duly elected or appointed and qualified in accordance
with applicable law, the directors of the Surviving Corporation shall consist of
the directors of the Company in office at the Effective Time. At the Effective
Time, the directors of the Surviving Corporation shall be divided into two
classes pursuant to the Surviving Corporation Certificate of Incorporation. One
director of the Surviving Corporation shall be designated a "Class A Director"
and will remain in the class of which such director is currently a member that
designates the expiration of such director's term. Each of the remaining seven
directors of the Surviving Corporation shall be designated a "Class B Director"
and each will remain in the class of which each such director is currently a
member that designates the expiration of such director's term. The director of
the Company that is expected to be designated as the "Class A Director" shall be
identified by the Board of Directors of the Company from the directors of the
Company that are not affiliated with Harcourt General on or prior to the date on
which the Proxy Statement referred to in Section 3.2 is mailed to the Company's
stockholders.
(b) From and after the Effective Time, until the earlier of their
removal or resignation or until their successors are duly appointed and
qualified in accordance with applicable law and the Surviving Corporation
By-Laws, the officers of the Company shall be the officers of the Surviving
Corporation.
ARTICLE III
COVENANTS
SECTION 3.1. Stockholders Meeting. The Company shall, as soon as
practicable following the date of this Agreement, duly call, give notice of,
convene and hold, a meeting of its stockholders (the "Stockholders Meeting") for
the purpose of considering the adoption of this Agreement. The Company hereby
represents and warrants to Merger Sub that a committee of independent directors
of the Company's Board of Directors has approved and declared advisable the
Merger and this Agreement, has determined that the Merger and the transactions
contemplated by the Distribution Agreement are fair to and in the best interests
of the stockholders of the Company, and has recommended that the stockholders of
the Company vote in favor of the adoption of this Agreement. The Company shall,
through a committee of independent directors of its Board of Directors, continue
to recommend to its stockholders approval of the Merger and this Agreement and
shall not withdraw such recommendation.
SECTION 3.2. Filings; Other Actions. (a) Subject to the provisions
of this Agreement and the Distribution Agreement, the Company shall prepare and
file with the Securities and Exchange Commission (the "SEC") as soon as
reasonably possible following the execution hereof a proxy statement for the
solicitation of proxies in favor of the adoption of this Agreement (the "Proxy
Statement"). The Company shall use all reasonable efforts to have the Proxy
Statement cleared by the SEC for mailing in definitive form as promptly as
practicable after such filing. The Company and Harcourt General shall cooperate
with each other in the preparation of the Proxy Statement and any amendment or
supplement thereto, and the Company
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shall notify Harcourt General of the receipt of any comments of the SEC with
respect to the Proxy Statement and of any requests by the SEC for any amendment
or supplement thereto or for additional information, and shall provide to
Harcourt General promptly copies of all correspondence between the SEC and the
Company or any of its advisors with respect to the Proxy Statement. The Company
shall give Harcourt General and its counsel appropriate advance opportunity to
review the Proxy Statement and all responses to requests for additional
information by and replies to comments of the SEC, and shall incorporate therein
any comments Harcourt General may deliver to the Company with respect thereto,
before such Proxy Statement, response or reply is filed with or sent to the SEC.
The Company agrees to use its best efforts, after consultation with Harcourt
General and its advisors, to respond promptly to all such comments of, and
requests by, the SEC and to cause the Proxy Statement to be mailed to the
holders of its common stock entitled to vote at the Stockholders Meetings at
such time as shall be requested by Harcourt General.
(b) The Company agrees promptly to furnish to Harcourt General all
copies of written communications (and summaries of the substance of all oral
communications) received by it, or any of its affiliates or representatives
from, or delivered by any of the foregoing to, any federal, state or local or
international court, commission, governmental body, agency, authority, tribunal,
board or other governmental entity (each a "Governmental Entity") in respect of
the transactions contemplated hereby.
SECTION 3.3. Best Efforts. Except in the case of Harcourt General to
the extent that it shall have exercised its right to terminate the Distribution
Agreement in accordance with the terms thereof, upon the terms and subject to
the conditions set forth in this Agreement, each of the parties hereto agrees to
use its best efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other party in doing, all
things necessary, proper or advisable to consummate and make effective, in the
most expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement and the Distribution Agreement, including, but
not limited to (i) the obtaining of all necessary actions or non-actions,
waivers, consents and approvals from all Governmental Entities and the making of
all necessary registrations and filings (including filings with Governmental
Entities) and the taking of all reasonable steps as may be necessary to obtain
an approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity, (ii) the obtaining of all necessary consents, approvals or
waivers from third parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of the transactions contemplated hereby, including seeking to
have any stay or temporary restraining order entered by any court or other
Governmental Entity with respect to the Merger or this Agreement vacated or
reversed, (iv) the execution and delivery of any additional instruments
necessary to consummate the transactions contemplated by this Agreement and (v)
taking such other actions as are necessary, including agreeing to such other
amendments to or modifications of this Agreement to obtain a favorable tax
ruling from the Internal Revenue Service as to the Federal income tax
consequences of the Merger and Distribution.
SECTION 3.4. Merger Sub Approval. The Board of Directors of Merger
Sub has approved and declared advisable the Merger and this Agreement, has
determined that the
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Merger is fair to and in the best interests of its stockholders and has
recommended that its stockholders adopt this Agreement. As promptly as possible
following the execution of this Agreement, Harcourt General, as sole stockholder
of Merger Sub, shall execute a written consent adopting this Agreement.
SECTION 3.5. Harcourt General Approval. Harcourt General agrees to
vote, or cause to be voted, all of the shares of Common Stock owned by it and
any of its subsidiaries in favor of the adoption of this Agreement.
SECTION 3.6. Stockholders Rights Plan. The Company agrees that prior
to the Distribution, it will adopt a stockholders rights plan substantially in
the form attached hereto as Exhibit D-1.
ARTICLE IV
CONDITIONS TO THE MERGER
SECTION 4.1. Conditions to the Obligations of the Company. The
obligations of the Company to consummate the Merger are subject to the
satisfaction (or waiver by the Company, except that the condition set forth in
Section 4.1(a) may not be waived) of the following conditions:
(a) a proposal to adopt this Agreement has been approved by the
holders of (i) a majority of the shares of Common Stock (other than shares held
directly or indirectly by Harcourt General) present in person or by proxy at
the Stockholders Meeting and voting on such proposal and (ii) two-thirds of the
shares of Common Stock outstanding and entitled to vote thereon;
(b) no court, arbitrator or governmental body, agency or official
shall have issued any order, and there shall not be any statute, rule or
regulation, restraining or prohibiting the consummation of the Merger or the
Distribution and no proceeding challenging this Agreement or the transactions
contemplated hereby or seeking to prohibit, alter, prevent or materially delay
the Merger or the Distribution shall have been instituted by any Governmental
Entity before any court, arbitrator or governmental body, agency or official and
be pending; and
(c) all actions by or in respect of or filings with any Governmental
Entity required to permit the consummation of the Merger shall have been
obtained, except those that would not reasonably be expected to have a material
adverse affect on any party's ability to consummate the transactions
contemplated by this Agreement.
(d) all the conditions to the Distribution set forth in the
Distribution Agreement, other than the consummation of the Merger, shall have
been satisfied.
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SECTION 4.2. Conditions to the Obligations of Harcourt General and
Merger Sub. The obligations of Harcourt General and Merger Sub to consummate the
Merger are subject to the satisfaction (or waiver by Merger Sub, except that the
condition set forth in Section 4.2(a) may not be waived) of the following
conditions:
(a) a proposal to adopt this Agreement has been approved by the
holders of (i) a majority of the shares of Common Stock (other than shares held
directly or indirectly by Harcourt General) present in person or by proxy at
the Stockholders Meeting and voting on such proposal and (ii) two-thirds of the
shares of Common Stock outstanding and entitled to vote thereon;
(b) Harcourt General shall have received a favorable tax ruling from
the Internal Revenue Service as to the Federal income tax consequences of the
Merger and the Distribution;
(c) no court, arbitrator or Governmental Entity shall have issued
any order, and there shall not be any statute, rule or regulation, restraining
or prohibiting the consummation of the Merger or the Distribution and no
proceeding challenging this Agreement or the transactions contemplated hereby or
seeking to prohibit, alter, prevent or materially delay the Merger or the
Distribution shall have been instituted by any Governmental Entity before any
court, arbitrator or governmental body, agency or official and be pending;
(d) the Class B Common Stock shall have been approved for listing on
the New York Stock Exchange, subject to official notice of issuance;
(e) all actions by or in respect of or filings with any governmental
body, agency, official, or authority required to permit the consummation of the
Merger and the Distribution shall have been obtained, except those that would
not reasonably be expected to have a material adverse affect on any party's
ability to consummate the transactions contemplated by this Agreement;
(f) the stockholders of Harcourt General shall have approved the
amendment to Harcourt General's Restated Certificate of Incorporation attached
hereto as Exhibit C-1; and
(g) all the conditions to the Distribution set forth in the
Distribution Agreement, other than the consummation of the Merger, shall have
been satisfied.
ARTICLE V
TERMINATION
SECTION 5.1. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
any approval of this Agreement by the stockholders of the Company):
(a) by mutual written consent of the Company and Harcourt General;
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(b) by either the Company or Harcourt General, if there shall be any
law or regulation that makes consummation of the Merger illegal or
otherwise prohibited or if any judgment, injunction, order or decree
enjoining the Company or Merger Sub from consummating the Merger is
entered and such judgment, injunction, order or decree shall become final
and nonappealable;
(c) by the Company, Merger Sub or Harcourt General, if there shall
be any law or regulation that makes consummation of the Distribution
illegal or otherwise prohibited or if any judgment, injunction, order or
decree enjoining Harcourt General from consummating the Distribution is
entered;
(d) by Harcourt General or the Company in the event the Distribution
Agreement is terminated;
(e) by Harcourt General or the Company if, after a vote on the
matter by the Company's stockholders at the Stockholders Meeting, the
condition set forth in Sections 4.1(a) and 4.2(a) is not satisfied; or
(f) by Harcourt General if, after a vote on the matter by Harcourt
General's stockholders at a meeting called for such purpose, the condition
set forth in Section 4.2(f) is not satisified.
SECTION 5.2. Effect of Termination. If this Agreement is terminated
pursuant to Section 5.1, this Agreement shall become void and of no effect with
no liability on the part of any party hereto.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Notices. All notices and other communications hereunder
shall be in writing and hand delivered or mailed by registered or certified mail
(return receipt requested) or sent by any means of electronic message
transmission with delivery confirmed (by voice or otherwise) to the parties at
the following addresses (or at such other addresses for a party as shall be
specified by like notice) and will be deemed given on the date on which such
notice is received:
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To Harcourt General or Merger Sub:
c/o Harcourt General, Inc.
27 Boylston Street
Chestnut Hill, Massachusetts 02467
Telecopy: (617) 278-5567
Attn: Chief Executive Officer
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Telecopy: (212) 455-2502
Attn: John G. Finley, Esq.
To the Company:
The Neiman Marcus Group, Inc.
27 Boylston Street
Chestnut Hill, Massachusetts 02467
Telecopy: (617) 278-5567
Attn: Chief Executive Officer
and:
The Independent Directors of the Company
c/o The Secretary of the Company
The Neiman Marcus Group, Inc.
27 Boylston Street
Chestnut Hill, Massachusetts 02467
Telecopy: (617) 278-5567
with a copy to:
Choate Hall & Stewart
Exchange Place
53 State Street
Boston, Massachusetts 02109
Telecopy: (617) 248-4000
Attn: Andrew L. Nichols, Esq.
SECTION 6.2. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; provided that no party may assign,
delegate or otherwise transfer any of its rights or
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obligations under this Agreement without the consent of the other party hereto,
except that Merger Sub may at any time prior to the mailing of the Proxy
Statement assign all of its rights and obligations under this Agreement to any
other wholly-owned subsidiary of Harcourt General, and in the case of such
assignment, the parties hereto agree to amend this Agreement to so provide.
SECTION 6.3. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Delaware.
SECTION 6.4. Counterparts; Effectiveness. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by the other party hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
THE NEIMAN MARCUS GROUP, INC.
By /s/ Eric P. Geller
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Name: Eric P. Geller
Title: Senior Vice President, General Counsel
and Secretary
HARCOURT GENERAL, INC.
By /s/ John R. Cook
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Name: John R. Cook
Title: Senior Vice President and Chief
Financial Officer
SPRING MERGER CORPORATION
By /s/ John R. Cook
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Name: John R. Cook
Title: President