EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
DATED AS OF OCTOBER 21, 1997
AMONG
BERKSHIRE HATHAWAY INC.
QDI, INC.
AND
INTERNATIONAL DAIRY QUEEN, INC.
TABLE OF CONTENTS
ARTICLE 1: THE MERGER.............................................................................................1
1.1 The Merger.................................................................................................1
1.2 Closing....................................................................................................2
1.3 Effective Time of the Merger...............................................................................2
1.4 Effects of the Merger......................................................................................2
1.5 Certificate of Incorporation; Bylaws.......................................................................2
1.6 Directors..................................................................................................2
1.7 Officers...................................................................................................2
ARTICLE 2: EFFECT OF THE MERGER ON THE CAPITAL STOCK..............................................................3
2.1 Effect on Capital Stock....................................................................................3
2.2 Company Common Stock Elections.............................................................................4
2.3 Issuance of Stock Consideration and Payment of Cash Election Price.........................................6
2.4 Stock Plans................................................................................................8
2.5 Exchange of Certificates...................................................................................9
ARTICLE 3: REPRESENTATIONS AND WARRANTIES........................................................................12
3.1 Representations and Warranties of the Company.............................................................12
3.2 Representations and Warranties of Parent..................................................................21
ARTICLE 4: COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO MERGER.............................................25
4.1 Conduct of Business of the Company........................................................................25
ARTICLE 5: ADDITIONAL AGREEMENTS.................................................................................27
5.1 Preparation of Form S-4 and the Proxy Statement; Stockholder Meetings.....................................27
5.2 Letter of the Company's Accountants.......................................................................28
5.3 Parent Access to Information..............................................................................28
5.4 Best Efforts..............................................................................................28
5.5 Indemnification...........................................................................................29
5.6 Expenses..................................................................................................30
5.7 Public Announcements......................................................................................30
5.8 Affiliates................................................................................................30
5.9 Stock Exchange Listing....................................................................................30
5.10 Takeover Statutes........................................................................................31
5.11 No Solicitation..........................................................................................31
5.12 Certain Agreements.......................................................................................32
5.13 Employee Benefits........................................................................................32
ARTICLE 6: CONDITIONS PRECEDENT..................................................................................32
6.1 Conditions to Each Party's Obligation To Effect the Merger................................................32
6.2 Conditions to Obligation of Parent and Sub................................................................33
6.3 Conditions to Obligation of the Company...................................................................35
ARTICLE 7: TERMINATION, AMENDMENT AND WAIVER.....................................................................36
7.1 Termination...............................................................................................36
7.2 Effect of Termination.....................................................................................37
7.3 Amendment.................................................................................................37
7.4 Extension; Waiver.........................................................................................37
ARTICLE 8: GENERAL PROVISIONS....................................................................................37
8.1 Nonsurvival of Representations and Warranties.............................................................37
8.2 Notices...................................................................................................37
8.3 Definitions...............................................................................................38
8.4 Interpretation............................................................................................39
8.5 Counterparts..............................................................................................39
8.6 Entire Agreement; No Third-party Beneficiaries............................................................39
8.7 Governing Law.............................................................................................39
8.8 Assignment................................................................................................39
8.9 Enforcement...............................................................................................39
8.10 Severability.............................................................................................40
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is entered into as
of October 21, 1997, by and among Berkshire Hathaway Inc., a Delaware
corporation ("Parent"), QDI, Inc., a Delaware corporation and a direct wholly
owned subsidiary of Parent ("Sub"), and International Dairy Queen, Inc., a
Delaware corporation (the "Company").
RECITALS
WHEREAS, the Boards of Directors of Parent and the Company have
approved, and deem it advisable and in the best interests of their respective
companies and stockholders to consummate, a merger of the Company with and into
Sub (the "Merger"), with Sub as the surviving corporation in the Merger, upon
the terms and subject to the conditions set forth in this Agreement, pursuant to
which each share of Class A Common Stock, par value $.01 per share, of the
Company ("Company Class A Stock") and each share of Class B Common Stock, par
value $.01 per share, of the Company ("Company Class B Stock" and together with
the Company Class A Stock, "Company Common Stock") issued and outstanding
immediately prior to the Effective Time (as defined in Section 1.3), other than
shares of Company Common Stock owned, directly or indirectly, by the Company or
any subsidiary (as defined in Section 8.3) of the Company or by Parent, Sub or
any other subsidiary of Parent, will be converted into the right to receive, at
the elections of the holders of Company Common Stock, subject to the terms
hereof, a portion of a share of Class A Common Stock, $5.00 par value per share,
of Parent ("Parent Class A Stock"), or a portion of a share of Class B Common
Stock, $. 1667 par value per share, of Parent ("Parent Class B Stock," and
together with the Parent Class A Stock, "Parent Stock"), or cash;
WHEREAS, the Merger and this Agreement require the vote of a majority
of the outstanding shares of Company Class B Common Stock entitled to vote
thereon for the approval thereof (the "Company Stockholder Approval");
WHEREAS, in order to induce Parent to enter into this Agreement,
concurrently with the execution hereof, various shareholders of the Company have
entered into a Shareholders' Agreement (the "Shareholders' Agreement") with
Parent with respect to the Company Common Stock held by such shareholders; and
WHEREAS, for United States Federal income tax purposes, it is intended
that the Merger shall qualify as a reorganization under the provisions of
Section 368 of the Internal Revenue Code of 1986, as amended (the "Code") and
this Agreement is intended to be and is adopted as a plan of reorganization
within the meaning of Section 368 of the Code.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE 1: THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the Delaware General Corporation Law
(the "DGCL"), the Company shall be merged with and into Sub at the Effective
Time. Upon the Effective Time, the
separate existence of the Company shall cease, and Sub shall continue as the
surviving corporation (the "Surviving Corporation") having the name
International Dairy Queen, Inc.
1.2 Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
7.1, and subject to the satisfaction or waiver of the conditions set forth in
Article 6, the closing of the Merger (the "Closing") will take place at 10:00
a.m. Eastern time on the second business day after satisfaction of the
conditions set forth in Section 6.1 (or, if not satisfied or waived at that
time, as soon as practicable thereafter following satisfaction or waiver of the
conditions set forth in Sections 6.2 and 6.3) (the "Closing Date"), at the
offices of Xxxx, Plant, Mooty, Mooty, & Xxxxxxx, P.A., 3400 City Center, 00
Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx, unless another date, time or place
is agreed to in writing by the parties hereto.
1.3 Effective Time of the Merger. On the Closing Date, the parties
shall file a certificate of merger or other appropriate documents (in any such
case, the "Certificate of Merger") executed in accordance with the relevant
provisions of the DGCL and shall make all other filings or recordings required
under the DGCL. 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 other time as is permissible in accordance with the DGCL
and as Parent and the Company shall agree should be specified in the Certificate
of Merger (the time the Merger becomes effective being the "Effective Time").
1.4 Effects of the Merger. The Merger shall have the effects set forth
in the DGCL.
1.5 Certificate of Incorporation; Bylaws.
(a) 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 until thereafter changed
or amended as provided therein or by applicable law.
(b) The Bylaws of the Company as in effect at the Effective
Time shall be the Bylaws of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law.
1.6 Directors. The directors of Sub at the Effective Time shall 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.
1.7 Officers. The officers of the Company at the Effective Time shall
be the officers of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly appointed
and qualified, as the case may be.
ARTICLE 2: EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS
2.1 Effect on Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of Company
Common Stock or any shares of capital stock of Sub:
(a) Common Stock of Sub. Each share of common stock of Sub
issued and outstanding immediately prior to the Effective Time shall be
converted into one share of Class B Common Stock of the Surviving
Corporation and shall be the issued and outstanding capital stock of
the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Company
Common Stock. Each share of the Company Common Stock that is owned by
the Company or by any subsidiary of the Company, and each share of
Company Common Stock that is owned by Parent, Sub or any other
subsidiary of Parent shall automatically be cancelled and retired and
shall cease to exist, and no cash, Parent Stock or other consideration
shall be delivered or deliverable in exchange therefor.
(c) Conversion of Company Common Stock. Except as otherwise
provided herein and subject to Sections 2.3 and 2.5, each issued and
outstanding share of Company Common Stock shall be converted into the
following (the consideration described in (i), (ii), and (iii) below
being the "Merger Consideration" and the consideration described in
(ii) and (iii) below being the "Stock Consideration"):
(i) for each such share of Company Common Stock with
respect to which an election to receive cash has been
effectively made and not revoked pursuant to Sections 2.2(c),
(d) and (e) ("Cash Electing Shares"), the right to receive
$27.00 in cash from Parent (the "Cash Election Price"); or
(ii) for each share of Company Common Stock with
respect to which an election to receive Parent Class A Stock
has been effectively made and not revoked pursuant to Sections
2.2(c), (d) and (e) ("Parent Class A Electing Shares"), the
right to receive from Parent the portion of a fully paid and
nonassessable share of Parent Class A Stock determined by
dividing $26.00 by the Average Parent Class A Stock Price (as
defined below) and rounding to nine decimal places (the
"Parent Class A Exchange Ratio"); or
(iii) for each such share of Company Common Stock
with respect to which an election to receive Parent Class B
Stock has been effectively made and not revoked pursuant to
Sections
2.2(c), (d) and (e) or with respect to which none of
the elections permitted by this Section 2.1 has been
effectively made and not revoked ("Parent Class B Electing
Shares"), the right to receive from Parent the portion of a
fully paid and nonassessable share of Parent Class B Stock
determined by multiplying the Parent Class A Exchange Ratio by
30 and rounding to nine decimal places (the "Parent Class B
Exchange Ratio").
The "Average Parent Class A Stock Price" means the average of
the high and low trading prices of the Parent Class A Stock on the New
York Stock Exchange ("NYSE") Composite Tape for each of the five
consecutive trading days ending on the trading day which is the last
business day prior to the Stockholders Meeting (as defined in Section
5.1(b)).
(d) Cancellation and Retirement of Company Common Stock. As of
the Effective Time, all shares of Company Common Stock (other than
shares referred to in Section 2.1(b) issued and outstanding immediately
prior to the Effective Time, shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and
each holder of a certificate representing any such shares of Company
Common Stock shall cease to have any rights with respect thereto,
except the right to receive the applicable Merger Consideration in
accordance with Section 2.1(c) and any cash in lieu of fractional
shares of Parent Stock to be issued or paid in consideration therefor
upon surrender of such certificate in accordance with Section 2.5.
2.2 Company Common Stock Elections.
(a) Subject to Sections 2.3 and 2.5(e), each person who, on or
prior to the Election Date referred to in (c) below, is a record holder
of shares of Company Common Stock (and remains a record holder of such
stock until the Effective Time) will be entitled, with respect to all
or any portion of his shares, to make an unconditional election (a
"Cash Election," a "Parent Class A Election," or a "Parent Class B
Election" as the case may be) on or prior to such Election Date to
receive the Cash Election Price, the Parent Class A Exchange Ratio, or
the Parent Class B Exchange Ratio, respectively, on the basis
hereinafter set forth.
(b) Prior to the mailing of the Proxy Statement (as defined in
Section 3.1(d)), Parent shall appoint a bank or trust company
designated by Parent and reasonably satisfactory to the Company to act
as exchange agent (the "Exchange Agent") for the payment of the Merger
Consideration.
(c) Parent shall prepare and mail a form of election (the
"Form of Election") with the Proxy Statement to the record holders of
Company Common Stock as of the record date for the Stockholders
Meeting. The Form of Election shall be used by each record holder of
shares of Company Common Stock who wishes to elect to receive the Cash
Election Price, the Parent Class A Exchange
Ratio, or the Parent Class B Exchange Ratio for any or all shares of
Company Common Stock held by such holder. On such Form of Election,
such a holder may indicate his election. The Company will use its best
efforts to make the Form of Election and the Proxy Statement available
to all persons who become holders of Company Common Stock during the
period between such record date and the Election Date referred to
below. Any such holder's election to receive the Cash Election Price,
the Parent Class A Exchange Ratio, or the Parent Class B Exchange Ratio
shall have been properly made only if the Exchange Agent shall have
received at its designated office, by 5:00 p.m., New York City time on
the last business day (the "Election Date") prior to the date of the
Stockholders Meeting, a Form of Election properly completed and signed
and accompanied by certificates for the shares of Company Common Stock
to which such Form of Election relates, duly endorsed in blank or
otherwise in form acceptable for transfer on the books of the Company
(or by an appropriate guarantee of delivery of such certificates as set
forth in such Form of Election from a firm which is a member of a
registered national securities exchange or of the National Association
of Securities Dealers, Inc. or a commercial bank or trust company
having an office or correspondent in the United States, provided such
certificates are in fact delivered to the Exchange Agent within five
NYSE trading days after the date of execution of such guarantee of
delivery).
(d) Any Form of Election may be revoked only by duly executed
written notice received by the Exchange Agent prior to 5:00 p.m., New
York City time on the Election Date. In addition, all Forms of Election
shall automatically be revoked if the Exchange Agent is notified in
writing by Parent and the Company that the Merger has been abandoned.
If a Form of Election is revoked, the shares of Company Common Stock to
which such Form of Election relates shall be treated as Parent Class B
Electing Shares.
(e) The determination of the Exchange Agent shall be binding
as to whether or not elections to receive the Cash Election Price, the
Parent Class A Exchange Ratio, or the Parent Class B Exchange Ratio
have been properly made or revoked pursuant to this Section 2.2 with
respect to shares of Company Common Stock, and as to the time when'
elections and revocations were received by it. If the Exchange Agent
determines that any election to receive the Cash Election Price, the
Parent Class A Exchange Ratio, or the Parent Class B Exchange Ratio was
not properly made with respect to shares of Company Common Stock, such
shares shall be treated by the Exchange Agent as Parent Class B
Electing Shares, and such shares shall be exchanged in the Merger for
shares of Parent Class B Stock pursuant to Section 2.1(c)(iii). The
Exchange Agent shall also make all computations contemplated by Section
2.3, and any such computation shall be conclusive and binding on the
holders of shares of Company Common Stock. Parent and the Company shall
make such rules as are consistent with this Section 2.2 and Section 2.3
for the implementation of the elections and computations provided for
herein and therein as shall be necessary or' desirable fully to effect
such elections and computations.
2.3 Issuance of Stock Consideration and Payment of Cash Election Price.
The manner in which each share of Company Common Stock (other than shares of
Company Common Stock to be cancelled as set forth in Section 2.1(b) shall be
converted as of the Effective Time into the right to receive the Stock
Consideration or the Cash Election Price shall be as set forth in this Section
2.3. All references to "outstanding shares of Company Common Stock" in this
Section 2.3 shall mean all shares of Company Common Stock outstanding
immediately prior to the Effective Time.
(a) In the event that, between the date of this Agreement and
the Effective Time, the issued and outstanding shares of Parent Class A
Stock or Parent Class B Stock, as the case may be, shall have been
changed into a different number or class of shares as a result of a
stock split, reverse stock split, stock dividend, spin-off,
extraordinary dividend, recapitalization, reclassification or other
similar transaction with a record date within such period, the Merger
Consideration shall be appropriately adjusted.
(b) As is more fully set forth below, the Total Cash
Consideration (as defined below) in the Merger pursuant to this
Agreement shall not be more than [55] percent of the sum of (i) the
Total Cash Consideration, and (ii) the Total Parent Class A Merger
Consideration, and (iii) the Total Parent Class B Merger Consideration;
such amount is referred to herein as the "Cash Limitation". "Total
Parent Class A Merger Consideration" means the product of (i) the
Parent Class A Exchange Ratio and (ii) the number of shares of Company
Common Stock converted into Parent Class A Stock, after the
application, if and to the extent necessary, of Section 2.5(e), and
(iii) the average of the high and low trading prices of the Parent
Class A Stock on the NYSE Composite Tape on the date on which the
Effective Time occurs. "Total Parent Class B Merger Consideration"
means the product of (i) the Parent Class B Exchange Ratio and (ii) the
number of shares of Company Common Stock converted into Parent Class B
Stock, after the application, if and to the extent necessary, of
Sections 2.3(e) and 2.5(e), and (iii) the average of the high and low
trading prices of the Parent Class B Stock on the NYSE Composite Tape
on the date on which the Effective Time occurs. "Total Cash
Consideration" means the sum (after the application, if and to the
extent necessary, of Sections 2.3(e) and 2.5(e)) of (i) cash paid in
connection with Cash Elections and (ii) cash paid in lieu of fractional
shares.
(c) Each share of Company Common Stock that is a Parent Class
A Electing Share shall be converted into the right to receive Parent
Class A Stock pursuant to Section 2.1(c)(ii) and each share of Company
Common Stock that is a Parent Class B Electing Share shall be converted
into the right to receive Parent Class B Stock pursuant to Section
2.1(c)(iii).
(d) If the Total Cash Consideration is equal to or less than
the Cash Limitation, each share of Company Common Stock that is a Cash
Electing Share shall be converted into the right to receive the Cash
Election Price pursuant to Section 2.1(c)(i).
(e) If the Total Cash Consideration is more than the Cash
Limitation, the number of Cash Electing Shares shall be reduced, and
the following shareholders of the Company who have made a Cash Election
(a "Cash Electing Shareholder") shall instead receive one or more
shares of Parent Class B Stock to the extent and in the order described
below until the Total Cash Consideration is equal to or less than the
Cash Limitation:
(i) Each Cash Electing Shareholder who holds a
sufficient number of shares of Company Common Stock covered by
a Cash Election to receive as part of the Merger Consideration
at least one whole share of Parent Class B Stock pursuant to
Section 2.1 (c)(iii) if such shares are treated as Parent
Class B Electing Shares, shall receive such one whole share of
Parent Class B Stock for such shares of Company Common Stock,
at the Parent Class B Exchange Ratio pursuant to Section
2.1(c)(iii), in lieu of receiving the Cash Election Price for
such shares pursuant to Section 2.1(c)(i), provided, however,
that if the application of this procedure to fewer than all of
such Cash Electing Shareholders is sufficient to reduce the
Total Cash Consideration to an amount equal to or less than
the Cash Limitation, the Exchange Agent will select by lot the
Cash Electing Shareholders whose Cash Elections will be
subject to the foregoing procedure;
(ii) If the application of Section 2.3(e)(i) is not
sufficient to reduce the Total Cash Consideration to an amount
equal to or less than the Cash Limitation, then, in addition
to the application of Section 2.3(e)(i), each Cash Electing
Shareholder who holds a sufficient number of shares of Company
Common Stock covered by a Cash Election to receive as part of
the Merger Consideration at least a second whole share of
Parent Class B Stock pursuant to Section 2.1(c)(iii) if such
shares are treated as Parent Class B Electing Shares, shall
receive such second whole share of Parent Class B Stock for
such shares of Company Common Stock, at the Parent Class B
Exchange Ratio pursuant to Section 2.1(c)(iii), in lieu of
receiving the Cash Election Price for such shares pursuant to
Section 2.1(c)(i), provided, however, that if the application
of this procedure to fewer than all of such Cash Electing
Shareholders is sufficient to reduce the Total Cash
Consideration to an amount equal to or less than the Cash
Limitation, the Exchange Agent will select by lot the Cash
Electing Shareholders whose Cash Elections will be subject to
the foregoing procedure; and
(iii) If the application of Section 2.3(e)(ii) is not
sufficient to reduce the Total Cash Consideration to an amount
equal to or less than the Cash Limitation, under the
principles of
Section 2.3(e)(i) and (ii), the Cash Electing Shares shall
continue to be reduced, and each Cash Electing Shareholder who
holds a sufficient number of shares of Company Common Stock
covered by a Cash Election to receive as part of the Merger
Consideration at least a third whole share and, to the extent
necessary, greater than three whole shares, of Parent Class B
Stock pursuant to Section 2.1(c)(iii) if such shares are
treated as Parent Class B Electing Shares, shall receive such
third or more whole shares of Parent Class B Stock for such
shares of Company Common Stock, at the Parent Class B Exchange
Ratio pursuant to Section 2.1(c)(iii), in lieu of receiving
the Cash Election Price for such shares pursuant to Section
2.1(c)(i), until the Total Cash Consideration is equal to or
less than the Cash Limitation.
(f) If the Exchange Agent shall determine that any Cash
Election was not effectively made or was revoked, the shares of Company
Common Stock covered by such Cash Election shall, for purposes hereof,
be deemed to be Parent Class B Electing Shares.
(g) If, due to the amount of cash paid in cancellation of
Company Stock Options (as defined in Section 2.4(a)), or any other
uncertainty in the calculation of the Cash Limitation, it reasonably
appears to Parent or Company that the Merger may potentially fail to
satisfy continuity of interest requirements under applicable principles
relating to reorganizations under Section 368(a) of the Code, the
number of Cash Electing Shares shall be reduced, and Cash Electing
Shareholders shall instead receive one or more shares of Parent Class B
Stock in the order described in Section 2.3(e), to the extent necessary
to enable the Merger to satisfy such requirements.
2.4 Stock Plans. Prior to the mailing of the Proxy Statement, the Board
of Directors of the Company (or, if appropriate, any committee administering the
Stock Plans (as defined below)) shall adopt such resolutions or take such other
actions as may be required to effect the following:
(a) Adjust the terms of all outstanding employee stock options
to purchase shares of Company Common Stock ("Company Stock Options")
granted under either the Company's Restated 1982 Incentive Stock Option
Plan or the Company's Stock Option Plan of 1993 (collectively, the
"Option Plans") to provide that, at the Effective Time, each Company
Stock Option outstanding immediately prior to the Effective Time,
whether or not then exercisable, shall be cancelled and thereafter the
former holder thereof shall be entitled by having held such Company
Stock Option only to a payment from the Surviving Corporation (subject
to any applicable withholding taxes) equal to the product of (i) the
total number of shares of Company Common Stock subject to such Company
Stock Option and (ii) the excess of $27.00 over the exercise price per
share of Company Common Stock subject to such Company Stock Option,
payable in cash
immediately following the Effective Time; provided, however, that, at
the request of any person subject to Section 16(a) of the Securities
Exchange Act of 1934, as amended ("Exchange Act"), any such amount to
be paid shall be paid as soon as practicable after the first date
payment can be made without liability for such person under Section
16(b) of the Exchange Act.
(b) Except as provided herein or as otherwise agreed to in
writing by Parent, the Option Plans, the Company's Employee Stock
Purchase Plan, as amended (the "Stock Purchase Plan"), and any other
plan, program or arrangement providing for the issuance or grant of any
interest in respect of the capital stock of the Company or any
subsidiary (collectively, the "Stock Plans") shall terminate as of the
Effective Time, and the Company shall ensure that following the
Effective Time no holder of a Company Stock Option nor any participant
in any of the Stock Plans shall have any right thereunder to acquire
any equity securities of the Company or the Surviving Corporation.
2.5 Exchange of Certificates.
(a) Exchange Agent. As soon as reasonably practicable as of or
after the Effective Time, Parent shall deposit with the Exchange Agent,
for the benefit of the holders of shares of Company Common Stock, for
exchange in accordance with this Article 2, the Merger Consideration.
(b) Exchange Procedures. As soon as practicable after the
Effective Time of the Merger, the Exchange Agent shall mail to each
holder of an outstanding certificate or certificates which prior
thereto represented shares of Company Common Stock that did not submit
such certificate or certificates to the Exchange Agent with such
holder's Form of Election (i) a letter of transmittal (which shall
specify, as shall the Form of Election, that delivery shall be
effected, and risk of loss and title to such certificate shall pass,
only upon delivery of such certificates to such Exchange Agent), and
(ii) instructions for use in effecting the surrender of the
certificates for the Merger Consideration. Upon proper surrender to the
Exchange Agent of such certificates for cancellation, the holder of
such certificates shall after the Effective Time be entitled only to a
certificate or certificates representing the number of full shares of
Parent Stock, if any, and/or the amount of cash, if any, into which the
aggregate number of shares of Company Common Stock previously
represented by such certificate or certificates surrendered shall have
been converted pursuant to this Agreement. The Exchange Agent shall
accept such certificates upon compliance with such reasonable terms and
conditions as the Exchange Agent may impose to effect an orderly
exchange thereof in accordance with normal exchange practices. After
the Effective Time, there shall be no further transfer on the records
of the Company or its transfer agent of certificates representing
shares of Company Common Stock and if such certificates are presented
to the Company for transfer, they shall be cancelled against delivery
of certificates for Parent Stock and/or cash as hereinabove provided.
If any certificate for such Parent Stock is to be issued in, or if cash
is to
be remitted to, a name other than that in which the certificate for
Company Common Stock surrendered for exchange is registered, it shall
be a condition of such exchange that the certificate so surrendered
shall be properly endorsed, with signature guaranteed, or otherwise in
proper form for transfer and that the person requesting such exchange
shall pay to Parent or its transfer agent any transfer or other taxes
required by reason of the issuance of certificates for such Parent
Stock in a name other than that of the registered holder of the
certificate surrendered, or establish to the satisfaction of Parent or
its transfer agent that such tax has been paid or is not applicable;
Until surrendered as contemplated by this Section 2.5(b)), each
certificate for shares of Company Common Stock shall be deemed at any
time after the Effective Time of the Merger to represent only the right
to receive upon such surrender the Merger Consideration. No interest
will be paid or will accrue on any cash payable as Merger Consideration
or in lieu of any fractional shares of Parent Stock.
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions with respect to Parent Stock with a
record date after the Effective Time shall be paid to the holder of any
unsurrendered certificate for shares of Company Common Stock with
respect to the shares of Parent Stock represented thereby and no cash
payment in lieu of fractional shares shall be paid to any such holder
pursuant to Section 2.5(e) until the surrender of such certificate in
accordance with this Article 2. Subject to the effect of applicable
laws, following surrender of any such certificate, there shall be paid
to the holder of the certificate representing whole shares of Parent
Stock issued in exchange therefor, without interest, (i) at the time of
such surrender the amount of any cash payable in lieu of a fractional
share of Parent Stock to which such holder is entitled pursuant to
Section 2.5(e) and the amount of dividends or other distributions with
a record date after the Effective Time theretofore paid with respect to
such whole shares of Parent Stock, and (ii) at the appropriate payment
date, the amount of dividends or other distributions with a record date
after the Effective Time but prior to such surrender and a payment date
subsequent to such surrender payable with respect to such whole shares
of Parent Stock.
(d) No Further Ownership Rights in Company Common Stock. All
shares of Parent Stock issued and cash paid upon the surrender for
exchange of certificates representing shares of Company Common
Stock in accordance with the terms of this Article 2 (including any
cash paid pursuant to Section 2.5(e)) shall be deemed to have been
issued (and paid) in full satisfaction of all rights pertaining to the
shares of Company Common Stock theretofore represented by such
certificates.
(e) No Fractional Shares.
(i) No certificates or scrip representing fractional
shares of Parent Stock shall be issued upon the surrender for
exchange of certificates representing shares of Company Common
Stock, and such fractional share interests will not entitle
the owner thereof to vote or to any rights of a stockholder of
Parent; and
(ii) Notwithstanding any other provision of this
Agreement, (A) each holder of shares of Company Common Stock
exchanged pursuant to the Merger who would have otherwise been
entitled to receive a fraction of a share of Parent Class A
Stock (after taking into account all Parent Class A Electing
Shares delivered by such holder or, as to a holder of record
who holds shares of Company Common Stock as nominee or in a
similar representative capacity, after taking into account all
Parent Class A Electing Shares delivered by such a
representative holder on behalf of a particular beneficial
owner) shall receive, in lieu thereof, the number of shares of
Parent Class B Stock determined by dividing (x) the product of
such fraction and the Average Parent Class A Stock Price by
(y) the quotient of the Average Parent Class A Stock Price
divided by 30, and (B) after application of Section
2.5(e)(ii)(A), each holder of shares of Company Common Stock
exchanged pursuant to the Merger who would have otherwise been
entitled to receive a fraction of a share of Parent Class B
Stock (after taking into account all shares of Company Common
Stock delivered by such holder, or by such a representative
holder on behalf of a particular beneficial owner, other than
Parent Class A Electing Shares and Cash Electing Shares) shall
receive, in lieu thereof, a cash payment (without interest)
equal to the product of (x) such fraction and (y) the quotient
of the Average Parent Class A Stock Price divided by 30.
(f) Termination of Exchange Fund. Any portion of the Merger
Consideration deposited with the Exchange Agent pursuant to this
Section 2.5 (the "Exchange Fund") which remains undistributed to the
holders of the certificates representing shares of Company Common Stock
for nine months after the Effective Time shall be delivered to Parent,
upon demand, and any holders of shares of Company Common Stock who have
not theretofore complied with this Article 2 shall thereafter look only
to Parent and only as general creditors thereof for payment of their
claim for cash, Parent Stock, any cash in lieu of fractional shares of
Parent Stock and any dividends or distributions with respect to Parent
Stock to which such holders may be entitled.
(g) No Liability. None of Parent, Sub, the Company or the
Exchange Agent shall be liable to any person in respect of any shares
of Parent Stock (or dividends or distributions with respect thereto) or
cash from the Exchange Fund delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law. If any
certificates representing shares of Company Common Stock shall not have
been surrendered. prior to five years after the Effective Time (or
immediately prior to such earlier date on which any cash,
shares of Parent Stock, any cash in lieu of fractional shares of Parent
Stock or any dividends or distributions with respect to Parent Stock in
respect of such certificate would otherwise escheat to or become the
property of any Governmental Entity (as defined in Section 3.1(d)), any
such shares, cash dividends or distributions in respect of such
certificate shall, to the extent permitted by applicable law, become
the property of the Surviving Corporation, free and clear of all claims
or interest of any person previously entitled thereto.
(h) Investment of Exchange Fund. The Exchange Agent shall
invest any cash included in the Exchange Fund, as directed by Parent,
on a daily basis. Any interest and other income resulting from such
investments shall be paid to Parent.
ARTICLE 3: REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company
represents and warrants to Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. Each of the
Company and each of its Subsidiaries (as defined in Section 3.1(b)) is
duly organized, validly existing and in good standing under the laws of
the jurisdiction in which it is incorporated and has the requisite
corporate power and authority to carry on its business as now being
conducted. Each of the Company and each of its Subsidiaries is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so
qualified or licensed (individually or in the aggregate) would not have
a material adverse effect (as defined in Section 8.3) with respect to
the Company. Attached as Section 3.1(a) of the disclosure schedule
("Disclosure Schedule") delivered to Parent by the Company at the time
of execution of this Agreement are complete and correct copies of the
Certificate of Incorporation and Bylaws of the Company.
(b) Subsidiaries. The only direct or indirect subsidiaries of
the Company (the "Subsidiaries") and other ownership interests held by
the Company in any other person are those listed in Section 3.1(b) of
the Disclosure Schedule. Except as set forth in Section 3.1(b) of the
Disclosure Schedule, all the outstanding shares of capital stock of
each such Subsidiary which is a corporation have been validly issued
and are fully paid and nonassessable and are owned (of record and
beneficially) by the Company, by another Subsidiary (wholly owned) of
the Company or by the Company and another such Subsidiary (wholly
owned), free and clear of all pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens"). Except as set forth in Section 3.1(b) of the
Disclosure Schedule, the Company does not own, directly or indirectly,
any capital stock or other ownership interest in any corporation,
partnership, business association, joint venture or other entity.
(c) Capital Structure. The authorized capital stock of the
Company consists of 32,000,000 shares of Company Class A Stock and
10,000,000 shares of Company Class B Common Stock. Subject to any
Permitted Changes (as defined in Section 4.1(b)) following the date of
this Agreement, there are (i) 14,005,042 shares of Company Class A
Stock issued and outstanding, (ii) 8,025,025 shares of Company Class B
Stock issued and outstanding, (iii) 259,328 shares of Company Class A
Stock and 97,644 shares of Company Class B Stock held in the treasury
of the Company or held by any subsidiary of the Company; (iii) 147,431
shares of Company Class A Stock reserved for issuance upon exercise of
authorized but unissued Company Stock Options pursuant to the Option
Plans; and (iv) 1,121,855 shares of Company Class A Stock issuable upon
exercise of outstanding Company Stock Options. As of August 31, 1997,
there was approximately $2,500 withheld from the Company's employees'
salaries to purchase shares of Company Common Stock pursuant to and
issuable under the Stock Purchase Plan. Except as set forth above, no
shares of capital stock or other equity securities of the Company are
issued, reserved for issuance or outstanding. All outstanding shares of
capital stock of the Company are, and all shares which may be issued
pursuant to the Stock Plans will be when issued, duly authorized,
validly issued, fully paid and nonassessable and not subject to
preemptive rights. There are no outstanding bonds, debentures, notes or
other indebtedness or other securities of the Company having the right
to vote (or convertible into, or exchangeable for, securities having
the right to vote) on any matters on which stockholders of the Company
may vote. Except as set forth above, there are no outstanding
securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which the Company or any of
its subsidiaries is a party or by which any of them is bound obligating
the Company or any of its subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital
stock or other equity or voting securities of the Company or of any of
its subsidiaries or obligating the Company or any of its subsidiaries
to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or
undertaking. Other than the Company Stock Options, (i) there are no
outstanding contractual obligations, commitments, understandings or
arrangements of the Company or any of its subsidiaries to repurchase,
redeem or otherwise acquire or make any payment in respect of or
measured or determined based on the value or market price of any shares
of capital stock of the Company or any of its subsidiaries and (ii) to
the knowledge of the Company, other than as provided in the
Shareholders' Agreement, there are no irrevocable proxies with respect
to shares of capital stock of the Company or any subsidiary of the
Company. There are no agreements or arrangements pursuant to which the
Company is or could be required to register shares of Company Common
Stock or other securities under the Securities Act of 1933, as amended
(the "Securities Act").
(d) Authority; Noncontravention. The Company has the requisite
corporate power and authority to enter into this Agreement and, subject
to the
Company Stockholder Approval with respect to the consummation of the
Merger, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part
of the Company, subject, in the case of the Merger, to the Company
Stockholder Approval. This Agreement has been duly executed and
delivered by the Company and constitutes a valid and binding obligation
of the Company, enforceable against the Company in accordance with its
terms. Except as disclosed in Section 3.1(d) of the Disclosure
Schedule, the execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated hereby and compliance
with the provisions hereof will not, conflict with, or result in any
breach or violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination,
cancellation or acceleration of or "put" right with respect to any
obligation or to loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or assets of the
Company or any of its subsidiaries under, (i) the Certificate of
Incorporation or Bylaws of the Company or the comparable charter or
organizational documents of any of its subsidiaries, (ii) any franchise
or other agreement with any franchisee of the Company or any of its
subsidiaries, (iii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession,
franchise or license applicable to the Company or any of its
subsidiaries or their respective properties or assets or (iv) subject
to the governmental filings and other matters referred to in the
following sentence, any judgment, order, decree, statute, law,
ordinance, rule, regulation or arbitration award applicable to the
Company or any of its subsidiaries or their respective properties or
assets, other than (A) in the case of clause (ii), any such conflicts,
breaches, violations, defaults, rights, losses or Liens that could not
affect franchise or other agreements relating, individually or in the
aggregate, to 150 or more store locations, and (B) in the case of
clauses (ii), (iii) and (iv), any such conflicts, breaches, violations,
defaults, rights, losses or Liens that individually or in the aggregate
could not have a material adverse effect with respect to the Company or
could not prevent, hinder or materially delay the ability of the
Company to consummate the transactions contemplated by this Agreement.
No consent, approval, order or authorization of, or registration,
declaration or filing with, or notice to, any Federal, state or local
government or any court, administrative agency or commission or other
governmental authority or agency, domestic or foreign (a "Governmental
Entity"), is required by or with respect to the Company or any of its
subsidiaries in connection with the execution and delivery of this
Agreement by the Company or the consummation by the Company of the
transactions contemplated hereby, except for (i) the filing of a
premerger notification and report form by the Company under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), (ii) the filing with the SEC of (y) a proxy statement
relating to the Company Stockholder Approval (such proxy statement as
amended or supplemented from time to time, the "Proxy Statement"), and
(z) such reports under the Exchange Act as may be
required in connection with this Agreement and the transactions
contemplated by this Agreement, (iii) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware, and
appropriate documents with the relevant authorities of other states in
which the Company is qualified to do business and (iv) such other
consents, approvals, orders, authorizations, registrations,
declarations, filings or notices as are set forth in Section 3.1(d) of
the Disclosure Schedule.
(e) SEC Documents; Undisclosed Liabilities. The Company has
filed all required reports, schedules, forms, statements and other
documents with the SEC since January 1, 1994, (collectively, and in
each case including all exhibits and schedules thereto and documents
incorporated by reference therein, the "SEC Documents"). As of their
respective dates, the SEC Documents complied in all material respects
with the requirements of the Securities Act or the Exchange Act, as the
case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such SEC Documents, and none of the SEC
Documents (including any and all financial statements included therein)
as of such dates contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The
consolidated financial statements of the Company included in the SEC
Documents (the "SEC Financial Statements") comply as to form in all
material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with generally accepted accounting
principles (except, in the case of unaudited consolidated quarterly
statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present the consolidated
financial position of the Company and its consolidated subsidiaries as
of the dates thereof and the consolidated results of their operations
and cash flows for the periods then ended (subject, in the case of
unaudited quarterly statements, to normal year-end audit adjustments).
Since November 30, 1996, neither the Company nor any of its
subsidiaries, has incurred any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) except (i) as and
to the extent set forth on the audited balance sheet of the Company and
its subsidiaries as of November 30, 1996 (including the notes thereto),
(ii) as incurred in connection with the transactions contemplated by
this Agreement, (iii) as incurred after November 30, 1996 in the
ordinary course of business and consistent with past practice, (iv) as
described in the SEC Documents filed since November 30, 1996 (the
"Recent SEC Documents"), or (v) as would not, individually or in the
aggregate, have a material adverse effect with respect to the Company.
(f) Information Supplied. None of the information supplied or
to be supplied by the Company for inclusion or incorporation by
reference in (i) the registration statement on Form S-4 to be filed
with the SEC by Parent in connection with the issuance of Parent Stock
in the Merger (the "Form S-4") will,
at the time the Form S-4 is filed with the SEC, and at any time it is
amended or supplemented or at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary
to make the statements therein not misleading, and (ii) the Proxy
Statement will, at the date it is first mailed to the Company's
stockholders or at the time of the Stockholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are
made, not misleading. The Proxy Statement will comply as to form in all
material respects with the requirements of the Exchange Act and the
rules and regulations promulgated thereunder, except that no
representation is made by the Company with respect to statements made
or incorporated by reference therein based on information supplied by
Parent for inclusion or incorporation by reference therein.
(g) Absence of Certain Changes or Events. Except as disclosed
in the Recent SEC Documents or in Section 3.1(g) of the Disclosure
Schedule, since November 30, 1996, the Company has conducted its
business only in the ordinary course consistent with past practice, and
there is not and has not been: (i) any material adverse change with
respect to the Company; (ii) any condition, event or occurrence which,
individually or in the aggregate, could reasonably be expected to have
a material adverse effect or give rise to a material adverse change
with respect to the Company; (iii) any event which, if it had taken
place following the execution of this Agreement, would not have been
permitted by Section 4.1 without the prior consent of Parent; or (iv)
any condition, event or occurrence which would prevent, hinder or
materially delay the ability of the Company to consummate the
transactions contemplated by this Agreement.
(h) Litigation; Labor Matters; Compliance with Laws.
(i) Except as disclosed in the Recent SEC Documents,
there is no suit, action or proceeding or investigation
pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its subsidiaries or
any basis for any such suit, action, proceeding or
investigation that, individually or in the aggregate, could
reasonably be expected to have a material adverse effect with
respect to the Company or prevent, hinder or materially delay
the ability of the Company to consummate the transactions
contemplated by this Agreement, nor is there any judgment,
decree, injunction, rule or order of any Governmental Entity
or arbitrator outstanding against the Company or any of its
subsidiaries having, or which, insofar as reasonably could be
foreseen by the Company, in the future could have, any such
effect.
(ii) Neither the Company nor any of its subsidiaries
is a party to, or bound by, any collective bargaining
agreement, contract
or other agreement or understanding with a labor union or
labor organization, nor is it or any of its subsidiaries the
subject of any proceeding asserting that it or any subsidiary
has committed an unfair labor practice or seeking to compel it
to bargain with any labor organization as to wages or
conditions of employment nor is there any strike, work
stoppage or other labor dispute involving it or any of its
subsidiaries pending or, to its knowledge, threatened, any of
which could have a material adverse effect with respect to the
Company.
(iii) The conduct of the business of each of the
Company and each of its subsidiaries complies with all
statutes, laws, regulations, ordinances, rules, judgments,
orders, decrees or arbitration awards applicable thereto,
except for violations or failures so to comply, if any, that,
individually or in the aggregate, could not reasonably be
expected to have a material adverse effect with respect to the
Company.
(i) Employee Matters. The Company has delivered to Parent full
and complete copies or descriptions of each material employment,
severance, bonus, profit sharing, compensation, termination, stock
option, stock appreciation right, restricted stock, phantom stock,
performance unit, pension, retirement, deferred compensation, welfare
or other employee benefit agreement, trust fund or other arrangement
and any union, guild or collective bargaining agreement maintained or
contributed to or required to be contributed to by the Company or any
of its ERISA Affiliates, for the benefit or welfare of any director,
officer, employee or former employee of the Company or any of its ERISA
Affiliates (such plans and arrangements being collectively the "Company
Benefit Plans"). Each of the Company Benefit Plans is in material
compliance with all applicable laws including ERISA and the Code. The
Internal Revenue Service has determined that each Company Benefit Plan
that is intended to be a qualified plan under Section 401(a) of the
Code is so qualified and the Company is aware of no event occurring
after the date of such determination that would adversely affect such
determination. The liabilities accrued under each such plan are
reflected on the latest balance sheet of the Company included in the
Recent SEC Reports in accordance with generally accepted accounting
principles applied on a consistent basis. No condition exists that is
reasonably likely to subject the Company or any of its subsidiaries to
any direct or indirect liability under Title IV of ERISA or to a civil
penalty under Section 5029J) of ERISA or liability under Section 4069
of ERISA or 4975, 4976, or 4980B of the Code or the loss of a federal
tax deduction under Section 280G of the Code or other liability with
respect to the Company Benefit Plans that would have a material adverse
effect on the Company and that is not reflected on such balance sheet.
No Company Benefit Plan (other than any Company Benefit Plan that is a
"multiemployer plan" as such term is defined in Section 4001(a)(3) of
ERISA) is subject to Title W of ERISA. There are no pending,
threatened, or anticipated claims (other than routine claims for
benefits
or immaterial claims) by, on behalf of or against any of the Company
Benefit Plans or any trusts related thereto. "ERISA Affiliate" means,
with respect to any person, any trade or business, whether or not
incorporated, that together with such person would be deemed a "single
employer" within the meaning of Section 4001(a)(15) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
(j) Tax Returns and Tax Payments. The Company and each of its
subsidiaries has timely filed (or, as to subsidiaries, the Company has
filed on its behalf) all Tax Returns (as defined below) required to be
filed by it, has paid (or, as to subsidiaries, the Company has paid on
its behalf) all Taxes (as defined below) shown thereon to be due and
has provided (or, as to subsidiaries, the Company has made provision on
its behalf of) adequate reserves in its financial statements for any
Taxes that have not been paid, whether or not shown as being due on any
Tax Returns. Except as set forth in Section 3.1(j) of the Disclosure
Schedule: (i) no material claim for unpaid Taxes has been asserted by a
Tax authority or has become a lien (except for liens not yet due and
payable) against the property of the Company or any of its subsidiaries
or is being asserted against the Company or any of its subsidiaries,
(ii) no audit of any Tax Return of the Company or any of its
subsidiaries is being conducted by a Tax authority, and (iii) no
extension of the statute of limitations on the assessment of any Taxes
has been granted by the Company or any of its subsidiaries and is
currently in effect. Neither the Company nor any of its Subsidiaries is
or has been a member of any consolidated, combined, unitary or
aggregate group for Tax purposes except such a group consisting only of
the Company and its subsidiaries. As used herein, "Taxes" shall mean
all taxes of any kind, including, without limitation, those on or
measured by or referred to as income, gross receipts, sales, use, ad
valorem, franchise, profits, license, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, value added, property or
windfall profits taxes, customs, duties or similar fees, assessments or
charges of any kind whatsoever, together with any interest and any
penalties, additions to tax or additional amounts imposed by any
governmental authority, domestic or foreign. As used herein, "Tax
Return" shall mean any return, report or statement required to be filed
with any governmental authority with respect to Taxes.
(k) State Antitakeover Laws Not Applicable. The Board of
Directors of the Company has approved this Agreement and the
Shareholders' Agreement and the transactions contemplated hereby and
thereby and such approval constitutes approval of the Merger and the
Shareholders' Agreement and the other transactions contemplated hereby
and thereby by the Board of Directors of the Company under the
provisions of Section 203 of the DGCL such that Section 203 of the DGCL
does not apply to this Agreement or the Shareholders' Agreement or the
transactions contemplated hereby or thereby. No other state takeover
statute or similar statute or regulation of the State of Delaware (or,
to the knowledge of the Company after due inquiry, of any other state
or jurisdiction) applies or purports to apply to this Agreement or the
Shareholders' Agreement or the transactions contemplated hereby or
thereby and no provision of the Certificate of Incorporation, Bylaws or
other governing instruments of the Company or any of its subsidiaries
or the terms of any rights plan or agreement of the Company would,
directly or indirectly, restrict or impair the ability of Parent to
vote, or otherwise to exercise the rights of a stockholder with respect
to, securities of the Company and its subsidiaries that may be acquired
or controlled by Parent by virtue of this Agreement or the
Shareholders' Agreement or the transactions contemplated hereby or
thereby or permit any stockholder to acquire securities of the Company
or of Parent or any of its subsidiaries on a basis not available to
Parent in the event that Parent were to acquire securities of the
Company.
(l) Environmental Matters. There are no legal, administrative,
arbitral or other proceedings, claims, actions, causes of action,
private environmental investigations or remediation activities or
governmental investigations of any nature seeking to impose, or that
reasonably could be expected to result in the imposition, on the
Company or any of its subsidiaries of any liability or obligations
arising under common law standards relating to environmental
protection, human health or safety, or under any local, state, federal,
national or supernational environmental statute, regulation or
ordinance, including the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (collectively,
"Environmental Laws"), pending or, to the knowledge of the Company,
threatened, against the Company or any of its subsidiaries, which
liability or obligation would have or would reasonably be expected to
have a material adverse effect on the Company or any of its
subsidiaries. To the knowledge of the Company or any of its
subsidiaries, there is no reasonable basis for any such proceeding,
claim, action or governmental investigation that would impose any
liability or obligation that would have or would reasonably be expected
to have a material adverse effect on the Company or any of its
subsidiaries. To the knowledge of the Company, during or prior to the
period of (i) its or any of its subsidiaries' ownership or operation of
any of their respective current properties, (ii) its or any of its
subsidiaries' participation in the management of any property, or (iii)
its or any of its subsidiaries' holding of a security interest or other
interest in any property, there was no release or threatened release of
hazardous, toxic, radioactive or dangerous materials or other materials
regulated under Environmental Laws in, on, under or affecting any such
property which would reasonably be expected to have a material adverse
effect on the Company or any of its subsidiaries. Neither the Company
nor any of its subsidiaries is subject to any agreement, order,
judgment, decree, letter or memorandum by or with any court,
governmental authority, regulatory agency or third party imposing any
material liability or obligations pursuant to or under any
Environmental Law that would have or would reasonably be expected to
have a material adverse effect on the Company or any of its
subsidiaries.
(m) Properties. Except as disclosed in the Recent SEC
Documents, each of the Company and its subsidiaries (i) has good, clear
and marketable title to all the properties and assets reflected in the
latest audited balance sheet included
in such Recent SEC Documents as being owned by the Company or one of
its subsidiaries or acquired after the date thereof which are,
individually or in the aggregate, material to the Company's business on
a consolidated basis (except properties sold or otherwise disposed of
since the date thereof in the ordinary course of business), free and
clear of (A) all Liens except (1) statutory liens securing payments not
yet due and (2) such imperfections or irregularities of title or other
Liens (other than real property mortgages or deeds of trust) as do not
materially affect the use of the properties or assets subject thereto
or affected thereby or otherwise materially impair business operations
at such properties, and (3) all real property mortgages and deeds of
trust and (ii) is the lessee of all leasehold estates reflected in the
latest audited financial statements included in such Recent SEC
Documents or acquired after the date thereof which are material to its
business on a consolidated basis and is in possession of the properties
purported to be leased thereunder, and each such lease is valid without
default thereunder by the lessee or, to the Company's knowledge, the
lessor.
(n) Brokers. No broker, investment banker, financial advisor
or other person, other than Xxxxxxx Xxxxx & Company, LLC, the fees and
expenses of which will be paid by the Company (pursuant to fee
agreements, copies of which have been provided to Parent), is entitled
to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company.
(o) Opinion of Financial Advisor. The Company has received the
opinion of Xxxxxxx Xxxxx & Company, LLC, dated the date of this
Agreement (which opinion shall be updated within five (5) days prior to
the mailing of the Proxy Statement), to the effect that the Merger
Consideration to be received in the Merger by the Company's
stockholders is fair to the holders of the Company Common Stock from a
financial point of view, a signed copy of which opinion has been
delivered to Parent.
(p) Board Recommendation. The Board of Directors of the
Company, at a meeting duly called and held, has by unanimous vote of
those directors present (who constituted 100% of the directors then in
office) (i) determined that this Agreement and the transactions
contemplated hereby, including the Merger, are fair to and in the best
interests of the stockholders of the Company, and (ii) resolved to
recommend that the holders of the shares of Company Common Stock
approve this Agreement and the transactions contemplated herein,
including the Merger.
(q) Required Company Vote. The Company Stockholder Approval,
being the affirmative vote of a majority of the outstanding shares of
the Company Class B Stock, voting separately as a class, is the only
vote of the holders of any class or series of the Company's securities
necessary to approve this Agreement, the Merger and the other
transactions contemplated hereby.
3.2 Representations and Warranties of Parent. Parent represents and
warrants to the Company as follows:
(a) Organization, Standing and Corporate Power. Each of
Parent, Sub and the other Parent Subsidiaries (as defined in Section
3.2(b)) is duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is incorporated and has the
requisite corporate power and authority to carry on its business as now
being conducted. Each of Parent, Sub and the other Parent Subsidiaries
is duly qualified or licensed to do business and is in good standing in
each jurisdiction in which the nature of its business or the ownership
or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so
qualified or licensed (individually or in the aggregate) would not have
a material adverse effect with respect to Parent.
(b) Subsidiaries. The only direct or indirect subsidiaries of
Parent (other than such subsidiaries that would not constitute in the
aggregate a Significant Subsidiary) are listed in Section 3.2(1)) of
the disclosure schedule (the "Parent Disclosure Schedule") delivered to
the Company by Parent at the time of execution of this Agreement
(together with Sub, the "Parent Subsidiaries"). All the outstanding
shares of capital stock of each such Parent Subsidiary which is a
corporation have been validly issued and are fully paid and
nonassessable and, except as set forth in Section 3.2(b) of the Parent
Disclosure Schedule, are owned (of record and beneficially) by Parent,
by another Parent Subsidiary (wholly owned) or by Parent and another
such Parent Subsidiary (wholly owned), free and clear of all Liens.
(c) Capital Structure. The authorized capital stock of Parent
consists of 1,500,000 shares of Parent Class A Stock, 50,000,000 shares
of Parent Class B Stock, and 1,000,000 shares of preferred stock, no
par value per share ("Parent Preferred Stock"). Subject to such changes
as may occur after September 30, 1997, and subject in the case of
clauses (i) and (iii) to adjustment as a result of conversions of
Parent Class A Stock into Parent Class B Stock, there were, as of
September 30, 1997: (i) 1,198,835 shares of Parent Class A Stock,
1,058,650 shares of Parent Class B Stock, and no shares of Parent
Preferred Stock issued and outstanding; (ii) 168,203 shares of Parent
Class A Stock held by Parent in its treasury; (iii) 35,965,050 shares
of Parent Class B Stock reserved for issuance upon conversion of Parent
Class A Stock; (iv) 406 shares of Parent Class B Stock reserved for
issuance upon exercise of authorized but unissued options under
Parent's 1996 Stock Option Plan; and (v) 16,902 shares of Parent Class
B Common Stock issuable upon exercise of outstanding options under
Parent's 1996 Stock Option Plan. Except as set forth above, no shares
of capital stock or other equity securities of Parent are issued,
reserved for issuance or outstanding. All outstanding shares of capital
stock of Parent are, and all shares of Parent Stock which may be issued
pursuant to this Agreement
will be, when issued, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. All shares of
Parent Stock issued pursuant to this Agreement will, when so issued, be
registered under the Securities Act for such issuance and registered
under the Exchange Act, be registered or exempt from registration under
any applicable state securities laws, and be listed on the NYSE,
subject to official notice of issuance. There are no outstanding bonds,
debentures, notes or other indebtedness or other securities of Parent
having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which
stockholders of Parent may vote. Except as set forth above, there are
no outstanding securities, options, warrants, calls, or rights
obligating Parent or any of its subsidiaries to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of capital
stock or other equity securities of Parent or any of its subsidiaries
or obligating Parent or any of its subsidiaries to issue, grant, extend
or enter into any such security, option, warrant, call, or right. The
authorized capital stock of Sub consists of 1,000 shares of common
stock, $.01 par value per share, all of which have been validly issued,
are fully paid and nonassessable and are owned directly by Parent, free
and clear of any Lien.
(d) Authority; Noncontravention. Parent and Sub have all
requisite corporate power and authority to enter into this Agreement
and to consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement by Parent and Sub and the
consummation by Parent and Sub of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate. action
on the part of Parent and Sub. No vote or consent of the stockholders
of Parent or Sub, which has not been obtained, is required under
applicable law or rule of the NYSE to approve the Merger, this
Agreement or the transactions contemplated hereby. This Agreement has
been duly executed and delivered by and constitutes a valid and binding
obligation of each of Parent and Sub, enforceable against such party in
accordance with its terms. The execution and delivery of this Agreement
do not, and the consummation of the transactions contemplated by this
Agreement and compliance with the provisions of this Agreement will
not, conflict with, or result in any breach or violation of, or default
(with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of or "put"
right with respect to any obligation or to loss of a material benefit
under, or result in the creation of any Lien upon any of the properties
or assets of Parent or any of its subsidiaries under, (i) the
certificate of incorporation or by-laws of Parent or Sub or the
comparable charter or organizational documents of any other subsidiary
of Parent, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession,
franchise or license applicable to Parent, Sub or any other subsidiary
of Parent or their respective properties or assets or (iii) subject to
the governmental filings and other matters referred to in the following
sentence, any judgment, order, decree, statute, law, ordinance, rule,
regulation or arbitration award applicable to Parent, Sub or any other
subsidiary of Parent or their respective properties or assets, other
than, in the case of clauses (ii) and (iii), any such conflicts,
breaches, violations, defaults, rights, losses or Liens that
individually or in the aggregate could not have a material adverse
effect with
respect to Parent or could not prevent, hinder or materially delay the
ability of Parent to consummate the transactions contemplated by this
Agreement. No consent, approval, order or authorization of, or
registration, declaration or filing with, or notice to, any
Governmental Entity is required by or with respect to Parent, Sub or
any other subsidiary of Parent in connection with the execution and
delivery of this Agreement by Parent or Sub or the consummation by
Parent or Sub, as the case may be, of any of the transactions
contemplated by this Agreement, except for (i) the filing of a
premerger notification and report form under the HSR Act, (ii) the
filing with the SEC of (y) the Form S-4 and (z) such reports under the
Exchange Act as may be required in connection with this Agreement and
the transactions contemplated hereby, (iii) the filing of the
Certificate of Merger with the Secretary of State of the State of
Delaware and appropriate documents with the relevant authorities of
other states in which the Company is qualified to do business, and (iv)
such other consents, approvals, orders, authorizations, registrations,
declarations, filings or notices as may be required under the
"takeover" or "blue sky" laws of various states.
(e) SEC Documents; Undisclosed Liabilities. Parent has filed
all required reports, schedules, forms, statements and other documents
with the SEC since January 1, 1994 (collectively, and in each case,
including all exhibits and schedules thereto and documents incorporated
by reference therein, the "Parent SEC Documents"). As of their
respective dates, the Parent SEC Documents complied in all material
respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such Parent SEC Documents, and
none of the Parent SEC Documents (including any and all financial
statements included therein) as of such date contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading. The consolidated financial statements of Parent
included in the Parent SEC Documents comply as to form in all material
respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles
(except, in the case of unaudited consolidated quarterly statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto)
and fairly present the consolidated financial position of Parent and
its consolidated subsidiaries as of the dates thereof and the
consolidated results of operations and changes in cash flows for the
periods then ended (subject, in the case of unaudited quarterly
statements, to normal year-end audit adjustments). Since December 31,
1996, neither Parent nor any of its subsidiaries has incurred any
liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) except (i) as and to the extent set forth on
the audited balance sheet of Parent and its subsidiaries as of December
31, 1996 (including the notes thereto), (ii) as incurred in connection
with the transactions contemplated by this
Agreement, (iii) as incurred after December 31, 1996 in the ordinary
course of business and consistent with past practice, (iv) as described
in the SEC Documents filed since December 31, 1996 (the "Recent Parent
SEC Documents"), or (v) as would not, individually or in the aggregate,
have a material adverse effect with respect to Parent.
(f) Information Supplied. None of the information supplied or
to be supplied by Parent or Sub for inclusion or incorporation by
reference in (i) the Form S-4 will, at the time the Form S-4 is filed
with the SEC, and at any time it is amended or supplemented or at the
time it becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, and (ii) the Proxy Statement will, at the date
the Proxy Statement is first mailed to the Company's stockholders or at
the time of the Stockholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light
of the circumstances under which they are made, not misleading. The
Form S-4 will comply as to form in all material respects with the
requirements of the Securities Act and the rules and regulations
promulgated thereunder, except that no representation or warranty is
made by Parent or Sub with respect to statements made or incorporated
by reference therein based on information supplied by the Company for
inclusion or incorporation by reference in the Form S-4.
(g) Absence of Certain Changes or Events. Except as disclosed
in the Recent Parent SEC Documents, since the date of the most recent
financial statements included in the Recent Parent SEC Documents,
Parent has conducted its business only in the ordinary course
consistent with past practice, and there is not and has not been (i)
any material adverse change with respect to Parent; (ii) any condition,
event or occurrence which, individually or in the aggregate, could
reasonably be expected to have a material adverse effect or give rise
to a material adverse change with respect to Parent; or (iii) any
condition, event or occurrence which could reasonably be expected to
prevent, hinder or materially delay the ability of Parent to consummate
the transactions contemplated by this Agreement.
(h) Interim Operations of Sub. Sub was formed on October 10,
1997 solely for the purposes of engaging in the transactions
contemplated hereby, has engaged in no other business activities and
has conducted its operations only as contemplated hereby.
(i) Brokers. No broker, investment banker, financial advisor
or other person is entitled to or may be paid any broker's, finder's,
financial advisor's or other similar fee or commission in connection
with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent.
ARTICLE 4: COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO MERGER
4.1 Conduct of Business of the Company. From the date of this Agreement
to the Effective Time (except as otherwise specifically required by the terms of
this Agreement), the Company shall, and shall cause its subsidiaries to, act and
carry on their respective businesses in the usual, regular and ordinary course
of business consistent with past practice and, to the extent consistent
therewith, use its best efforts to preserve intact their current business
organizations, keep available the services of their current officers and
employees and preserve their relationships with customers, suppliers,
franchisees, licensors, licensees, advertisers, distributors and others having
business dealings with them to the end that their goodwill and ongoing
businesses shall not be impaired in any material respect at the Effective Time.
Without limiting the generality of the foregoing, from the date of this
Agreement. to the Effective Time, the Company shall not, and shall not permit
any of its subsidiaries to, without the prior written consent of Parent:
(a) (i) declare, set aside or pay any dividends on, or make
any other distributions in respect of, any of its capital stock, other
than dividends and distributions by a direct or indirect wholly owned
subsidiary of the Company to its parent, (ii) split, combine or
reclassify any of its capital stock or issue or authorize the issuance
of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or (iii) purchase, redeem or otherwise
acquire any shares of capital stock of the Company or any of its
subsidiaries or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities, except, in the
case of clause (iii), for the acquisition of shares of Company Common
Stock from holders of Company Stock Options in full or partial payment
of the exercise price payable by such holder or tax liability arising
in connection therewith, upon exercise of Company Stock Options
outstanding on the date of this Agreement in accordance with their
present terms;
(b) authorize for issuance, issue, deliver, sell, pledge or
otherwise encumber any shares of its capital stock or the capital stock
of any of its subsidiaries, any other voting securities or any
securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities
or any other securities or equity equivalents (including without
limitation stock appreciation rights), or contractual obligation valued
or measured by the value or market price of Company Common Stock (other
than the issuance of Company Common Stock upon the exercise of Company
Stock Options outstanding on the date of this Agreement and in
accordance with their present terms, such issuance, together with the
acquisitions of shares of Company Common Stock permitted under clause
(a) above, being referred to herein as "Permitted Changes");
(c) amend its certificate of incorporation, by-laws or other
comparable charter or organizational documents;
(d) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the stock or assets of,
or by any other manner, any business or any corporation, partnership,
joint venture, association, or other business organization or division
thereof;
(e) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties or
assets that are material, individually or in the aggregate, to the
Company and its subsidiaries taken as a whole, except in the ordinary
course of business consistent with past practice;
(f) (i) incur any indebtedness for borrowed money or guarantee
any such indebtedness of another person, issue or sell any debt
securities or warrants or other rights to acquire any debt securities
of the Company or any of its subsidiaries, guarantee any debt
securities of another person, enter into any "keep well" or other
agreement to maintain any financial statement condition of another
person or enter into any arrangement having the economic effect of any
of the foregoing, except for short-term borrowings incurred in the
ordinary course of business consistent with past practice, or (ii) make
any loans, advances or capital contributions to, or investments in, any
other person, other than to the Company or any direct or indirect
wholly owned subsidiary of the Company;
(g) acquire or agree to acquire any assets that are material,
individually or in the aggregate, to the Company and its subsidiaries
taken as a whole, or make or agree to make any capital expenditures
except in the ordinary course of business consistent with past
practice;
(h) pay, discharge or satisfy any claims (including claims of
stockholders), liabilities or obligations (absolute, accrued, asserted
or unasserted, contingent or otherwise), except for the payment,
discharge or satisfaction, of (i) liabilities or obligations in the
ordinary course of business consistent with past practice or in
accordance with their terms as in effect on the date hereof, (ii)
liabilities reflected or reserved against in, or contemplated by, the
most recent consolidated audited financial statements (or the notes
thereof) of the Company included in the Recent SEC Documents, or waive,
release, grant, or transfer any rights of material value or modify or
change in any material respect any existing license, lease, contract or
other document, other than in the ordinary course of business
consistent with past practice;
(i) adopt or amend in any material respect (except as may be
required by law or by this Agreement) any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation,
employment or other employee benefit plan, agreement, trust, fund or
other arrangement (including any Company Benefit Plan) for the benefit
or welfare of any employee, director or former director or employee or,
other than increases for individuals (other than officers and
directors) in the ordinary course of business consistent with past
practice, increase the compensation or fringe benefits of any director,
employee or
former director or employee; pay any benefit not required by any
existing plan, arrangement or agreement, grant any new or modified
severance or termination arrangement or increase or accelerate any
benefits payable under its severance or termination pay policies in
effect on the date hereof, other than any such increase or acceleration
provided for under such policies as in effect on the date of this
Agreement;
(j) change any material accounting principle used by it,
except for such changes as may be required to be implemented following
the date of this Agreement pursuant to generally accepted accounting
principles or rules and regulations of the SEC promulgated following
the date hereof;
(k) take any action that would, or is reasonably likely to,
result in any of its representations and warranties in this Agreement
becoming untrue, or in any of the conditions to the Merger set forth in
Article 6 not being satisfied;
(1) except in the ordinary course of business and consistent
with past practice, make any tax election or settle or compromise any
federal, state, local or foreign income tax liability; and
(m) authorize any of, or commit or agree to take any of, the
foregoing actions.
ARTICLE 5: ADDITIONAL AGREEMENTS
5.1 Preparation of Form S-4 and the Proxy Statement; Stockholder
Meetings.
(a) Promptly following the date of this Agreement, the Company
shall prepare and file with the SEC the Proxy Statement, and Parent
shall prepare and file with the SEC the Form S-4, in which the Proxy
Statement will be included as a prospectus. Each of the Company and
Parent shall use its reasonable best efforts as promptly as practicable
to have the Form S-4 declared effective under the Securities Act as
promptly as practicable after such filing. The Company will use its
reasonable best efforts to cause the Proxy Statement to be mailed to
the Company's stockholders as promptly as practicable after the Form
S-4 is declared effective under the Securities Act. Parent shall also
take any action (other than qualifying to do business in any
jurisdiction in which it is not now so qualified) required to be taken
under any applicable state securities laws in connection with the
issuance of Parent Stock in the Merger, and the Company shall furnish
all information concerning the Company and the holders of the Company
Common Stock and rights to acquire Company Common Stock pursuant to the
Stock Plans as may be reasonably requested in connection with any such
action.
(b) The Company will, as promptly 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 approving this
Agreement and the transactions contemplated by this Agreement. The
Company will, through its Board of Directors, recommend to its
stockholders approval of the foregoing matters, as set forth in Section
3.1(p). Such recommendation, together with a copy of the opinion
referred to in Section 3.1(o), shall be included in the Proxy
Statement. The Company will use reasonable efforts to hold such meeting
as soon as practicable after the date hereof.
(c) The Company will cause its transfer agent to make stock
transfer records relating to the Company available to the extent
reasonably necessary to effectuate the intent of this Agreement.
5.2 Letter of the Company's Accountants. The Company shall use its best
efforts to cause to be delivered to Parent a letter of Ernst & Young LLP, the
Company's independent public accountants, dated a date within two business days
before the date on which the Form S-4 shall become effective and addressed to
Parent, in form and substance reasonably satisfactory to Parent and customary in
scope and substance for letters delivered by independent public accountants in
connection with registration statements similar to the Form S-4.
5.3 Parent Access to Information.
(a) The Company shall, and shall cause its subsidiaries,
officers, employees, counsel, financial advisors and other
representatives to, afford to Parent and its representatives reasonable
access during normal business hours during the period prior to the
Effective Time to its properties, books, contracts, commitments,
personnel and records and, during such period, shall, and shall cause
its subsidiaries, officers, employees and representatives to, furnish
promptly to Parent (i) a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to
the requirements of Federal or state securities laws and (ii) all other
information concerning its business, properties, financial condition,
operations and personnel as Parent may from time to time reasonably
request. No investigation pursuant to this Section 5.3 shall affect any
representations or warranties of the Company herein or the conditions
to the obligations of the parties hereto.
(b) The Company shall report on operational matters and
promptly advise Parent orally and in writing of any change or event
having, or which, insofar as can reasonably be foreseen, could have, a
material adverse effect on the Company and its Subsidiaries taken as a
whole.
5.4 Best Efforts. Each of the parties 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 parties 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. Parent, Sub and the Company will use their best efforts and cooperate
with one another (i) in promptly determining whether any filings are required to
be made or consents, approvals, waivers, permits or authorizations are required
to be obtained under any applicable
law or regulation or from any governmental authorities or third parties in
connection with the transactions contemplated by this Agreement and (ii) in
promptly making any such filings, in furnishing information required in
connection therewith and in timely seeking to obtain any such consents,
approvals, waivers, permits or authorizations.
5.5 Indemnification.
(a) The Company shall, and from and after the Effective Time
Parent and the Surviving Corporation shall, indemnify, defend and hold
harmless each person who is now, or has been at any time prior to the
date of this Agreement or who becomes such prior to the Effective Time,
an officer, director or employee of the Company or any of its
subsidiaries (the "Indemnified Parties") against (i) all losses,
claims, damages, costs, expenses, liabilities or judgments or amounts
that are paid in settlement with the approval of the indemnifying party
(which approval shall not be unreasonably withheld) of or in connection
with any claim, action, suit, proceeding or investigation based in
whole or in part on or arising in whole or in part out of the fact that
such person is or was a director, officer or employee of the Company or
any of its subsidiaries whether pertaining to any matter existing or
occurring at or prior to the Effective Time and whether asserted or
claimed prior to; or at or after, the Effective Time ("Indemnified
Liabilities"), and (ii) all Indemnified Liabilities based in whole or
in part on, or arising in whole or in part out of, or pertaining to
this Agreement or the transactions contemplated hereby; provided, that
in the case of the Company and the Surviving Corporation such
indemnification shall only be to the fullest extent a corporation is
permitted under the DGCL to indemnify its own directors, officers and
employees, and in the case of Parent, such indemnification shall not be
limited by the DGCL but such indemnification shall not be applicable to
any claims made against the Indemnified Parties if a judgment or other
final adjudication established that (A) their acts or omissions were
committed in bad faith or were the result of active and deliberate
dishonesty and were material to the cause of action so deliberated or
(B) arising out of, based upon or attributable to the gaining in fact
of any financial profit or other advantage to which they were not
legally entitled. The Company, Parent and the Surviving Corporation, as
the case may be, will pay all expenses of each Indemnified Party in
advance of the final disposition of any such action or proceeding, in
the case of the Company and the Surviving Corporation only to the
fullest extent permitted by law upon receipt of any undertaking
contemplated by Section 145(e) of the DGCL. Without limiting the
foregoing, in the event any such claim, action, suit, proceeding or
investigation is brought against any Indemnified Party (whether arising
before or after the Effective Time), (i) the Indemnified Parties may
retain counsel satisfactory to them and the Company (or them and Parent
and the Surviving Corporation after the Effective Time), (ii) the
Company (or after the Effective Time, the Surviving Corporation) shall
pay all reasonable fees and expenses of such counsel for the
Indemnified Parties promptly as statements therefor are received, and
(iii) the Company (or after the Effective Time, Parent and the
Surviving Corporation) will use all reasonable efforts to assist in the
vigorous defense of any such matter, provided
that none of the Company, Parent or the Surviving Corporation shall be
liable for any settlement of any claim effected without its written
consent, which consent, however, shall not be unreasonably withheld.
Any Indemnified Party wishing to claim indemnification under this
Section 5.5, upon learning of any such claim, action, suit, proceeding
or investigation, shall notify the Company, Parent or the Surviving
Corporation (but the failure so to notify an indemnifying party shall
not relieve it from any liability which it may have under this Section
5.5 except to the extent such failure prejudices such party), and shall
deliver to the Company (or after the Effective Time, the Surviving
Corporation (but not Parent)) the undertaking contemplated by Section
145(e) of the DGCL. The Indemnified Parties as a group may retain only
one law firm to represent them with respect to each such matter unless
there is, under applicable standards of professional conduct, a
conflict on any significant issue between the positions of any two or
more Indemnified Parties.
(b) The provisions of this Section 5.5 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party,
his or her heirs and representatives.
5.6 Expenses. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses, except
that the expenses in connection with printing and mailing the Proxy Statement
and the Form S-4, as well as all SEC filing fees relating to the transactions
contemplated herein, shall be shared equally between Parent and the Company.
5.7 Public Announcements. Parent and Sub, on the one hand, and the
Company, on the other hand, will consult with each other before issuing, and
provide each other the opportunity to review and comment upon, any press release
or other public statements with respect to the transactions contemplated by this
Agreement, including the Merger, and shall not issue any such press release or
make any such public statement prior to such consultation, except as may be
required by applicable law, court process or by obligations pursuant to any
listing agreement with any national securities exchange. The parties agree that
the initial press release or releases to be issued with respect to the
transactions contemplated by this Agreement shall be mutually agreed upon prior
to the issuance thereof.
5.8 Affiliates. Prior to the Closing Date, the Company shall deliver to
Parent a letter identifying all persons who are, at the time this Agreement is
submitted for approval to the stockholders of the Company, "affiliates" of the
Company for purposes of Rule 145 under the Securities Act. The Company shall use
its best efforts to cause each such person to deliver to Parent on or prior to
the Closing Date a written agreement substantially in the form attached as
Exhibit A hereto.
5.9 Stock Exchange Listing. Parent shall use its best efforts to cause
the shares of Parent Stock to be issued in the Merger to be approved for listing
on the NYSE, subject to notice of issuance, prior to the Closing Date.
5.10 Takeover Statutes. If any "fair price," "moratorium," "control
share acquisition" or other form of antitakeover statute or regulation shall
become applicable to the transactions contemplated hereby, the Company and the
members of the Board of Directors of the Company shall grant such approvals and
take such actions as are reasonably necessary so that the transactions
contemplated hereby may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise act to eliminate or minimize the effects of
such statute or regulation on the transactions contemplated hereby.
5.11 No Solicitation. Neither the Company nor any of its subsidiaries
shall, nor shall the Company or any of its subsidiaries authorize or permit any
of its or their officers, directors, agents, representatives, advisors or
subsidiaries to, (a) solicit, initiate or encourage (including by way of
furnishing information), or take any other action to facilitate the submission
of inquiries, proposals or offers from any person relating to any acquisition or
purchase of a substantial amount of assets of the Company or any of its
subsidiaries (other than in the ordinary course of business) or of over 20% of
any class of equity securities of the Company or any of its subsidiaries or any
tender offer (including a self tender offer) or exchange offer that if
consummated would result in any person beneficially owning 20% or more of any
class of equity securities of the Company or any of its subsidiaries, or any
merger, consolidation, business combination, sale of substantially all assets,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any of its subsidiaries, other than the transactions contemplated by
this Agreement, or any other transaction the consummation of which would or
could reasonably be expected to impede, interfere with, prevent or materially
delay the Merger or which would or could reasonably be expected to materially
dilute the benefits to Parent of the transactions contemplated hereby
(collectively, "Transaction Proposals") or agree to or endorse any Transaction
Proposal, or (b) enter into or participate in any discussions or negotiations
regarding any of the foregoing, or furnish to any other person any information
with respect to its business, properties or assets or any of the foregoing, or
otherwise cooperate in any way with, or assist or participate in, facilitate or
encourage, any effort or attempt by any other person to do or seek any of the
foregoing; provided, however, that the foregoing shall not prohibit the Company
from (i) furnishing information concerning the Company and its businesses,
properties or assets pursuant to an appropriate and customary confidentiality
agreement to a third party who has made an unsolicited Transaction Proposal,
(ii) engaging in discussions or negotiations with a third party who has made an
unsolicited Transaction Proposal, (iii) following receipt of an unsolicited
Transaction Proposal, taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) under the Exchange Act or otherwise making
disclosure to its stockholders, and/or (iv) following receipt of an unsolicited
Transaction Proposal, failing to make or withdrawing or modifying its
recommendation referred to in Section 3.1(p), but in each case referred to in
the foregoing clauses (i) through (iv) only if and to the extent that the Board
of Directors of the Company shall have concluded in good faith, after consulting
with and considering the advice of outside counsel, that such action is required
by the Board of Directors of the Company in the exercise of its fiduciary duties
to the stockholders of the Company; provided, further, that the Board of
Directors of the Company shall not take any of the foregoing actions referred to
in clauses (i) through (iv) until after giving at least one business day's
advance written notice to Parent with respect to the actions specified in the
foregoing clauses (i) through (iv) that it shall take. In addition, if the Board
of Directors of the Company receives a
Transaction Proposal, then the Company shall promptly inform Parent in writing
of the material terms of such proposal and the identity of the person (or group)
making it. The Company will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing. Without limiting the foregoing,
it is understood that any violation of the restrictions set forth in this
Section by any director or executive officer of the Company or any of its
subsidiaries or by any investment banker, financial adviser, attorney,
accountant, or other representative of the Company or any of its subsidiaries
shall be deemed to be a breach of this Section by the Company.
5.12 Certain Agreements. Neither the Company nor any subsidiary of the
Company will waive or fail to enforce any provision of any confidentiality or
standstill or similar agreement to which it is a party without the prior written
consent of Parent.
5.13 Employee Benefits.
(a) Parent and the Company agree that the Company Benefit
Plans shall, to the extent practicable and except as otherwise provided
in Section 2.4 hereof, remain in effect without material amendment
until the Effective Time and that thereafter the Surviving Corporation
will maintain, subject to such changes and modifications as may be
necessary or desirable to facilitate compliance by Parent and its
subsidiaries (including the Surviving Corporation) with applicable
statutory and regulatory requirements, substantially similar plans
(other than the Stock Plans) for a period of at least three years after
the Effective Time.
(b) Parent will cause the Surviving Corporation to honor
without material modification for a period of at least three years
after the Effective Time all employee severance plans (or policies) and
employment and severance agreements of the Company or any of its
subsidiaries in existence on the date hereof.
(c) Parent and Company will use their reasonable best efforts
to agree on compensation plans for the officers and employees of the
Company after the Effective Time to provide them incentive compensation
during the three-year period following the Effective Time that in the
aggregate is reasonably comparable (without giving effect to any
payments to them resulting from the Merger) to that historically
provided by the Stock Plans, except that neither Parent nor the
Surviving Corporation shall be required to issue any shares of its
equity securities in connection with such compensation plans.
ARTICLE 6: CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation To Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Company Stockholder Approval. The Company Stockholder
Approval shall have been obtained.
(b) NYSE Listing. The shares of Parent Stock issuable to the
Company's stockholders pursuant to this Agreement shall have been
approved for listing on the NYSE, subject to notice of issuance.
(c) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated
or shall have expired.
(d) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any
court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect; provided,
however, that the parties hereto shall use their best efforts to have
any such injunction, order, restraint or prohibition vacated.
(e) Form S-4. The Form S-4 shall have become effective under
the Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order, and any material "blue sky" and other
state securities laws applicable to the issuance of the Parent Stock
shall have been complied with.
6.2 Conditions to Obligation of Parent and Sub. The obligations of
Parent and Sub to effect the Merger are further subject to the following
conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and
correct in all material respects, in each case as of the date of this
Agreement and as of the Closing Date as though made on and as of the
Closing Date. Parent shall have received a certificate signed on behalf
of the Company by the chief executive officer and the chief financial
officer of the Company to such effect.
(b) Performance of Obligations of the Company. The Company
shall have performed the obligations required to be performed by it
under this Agreement at or prior to the Closing Date (except for such
failures to perform as have not had or could not reasonably be
expected, either individually or in the aggregate, to have a material
adverse effect with respect to the Company or adversely affect the
ability of the Company to consummate the transactions herein
contemplated or perform its obligations hereunder), and Parent shall
have received a certificate signed on behalf of the Company by the
chief executive officer and the chief financial officer of the Company
to such effect.
(c) Tax Opinion. Parent shall have received the opinion of
Xxxxxx, Xxxxxx & Xxxxx LLP, counsel to Parent, dated the Closing Date,
based on appropriate representations of the Company, its affiliates,
and Parent, and such
other facts, representations, assumptions, and agreements as counsel
may reasonably deem relevant, to the effect that for United States
Federal income tax purposes the Merger will qualify as a reorganization
within the meaning of Section 368 of the Code and that each of Parent,
Sub and the Company will be a party to the reorganization within the
meaning of Section 368(b) of the Code.
(d) Consents, etc. Parent shall have received evidence, in
form and substance reasonably satisfactory to it, that such licenses,
permits, consents, approvals, authorizations, qualifications and orders
of governmental authorities and other third parties as are necessary in
connection with the transactions contemplated hereby have been
obtained, except such licenses, permits, consents, approvals,
authorizations, qualifications and orders which are not, individually
or in the aggregate, material to Parent or the Company or the failure
of which to have been received would not (as compared to the situation
in which such license, permit, consent, approval, authorization,
qualification or order had been obtained) materially dilute the
aggregate benefits to Parent of the Merger.
(e) Affiliate Letters. Parent shall have received the
agreements referred to in Section 5.8.
(f) Continuity of Interest Agreement. Xx. Xxxx X. Xxxxx shall
have executed and delivered, and shall have used his best efforts to
cause the other members of his family and such other shareholders of
the Company as may be necessary or desirable to facilitate issuance of
the tax opinions referenced in Sections 6.2(c) and 6.3(c) to have
executed and delivered, a Continuity of Interest Agreement in
substantially the form attached as Exhibit B hereto.
(g) Opinion of Counsel to the Company. Parent shall have
received, on and as of the Closing Date, an opinion of Xxxx, Plant,
Xxxxx, Xxxxx & Xxxxxxx, P.A., counsel to the Company, in usual and
customary form reasonably acceptable to Parent, to the effect that (i)
the Company is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, (ii) the
execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby
have been duly authorized by all necessary corporate and shareholder
action, (iii) this Agreement has been duly executed and delivered by
the Company and constitutes a valid and binding obligation of the
Company, enforceable in accordance with its terms (subject to customary
exceptions), and (iv) the execution and delivery of this Agreement does
not, and the consummation by the Company of the transactions
contemplated hereby will not, (A) violate the Certificate of
Incorporation or Bylaws of the Company, or (B) to the best knowledge of
such counsel based upon due inquiry of the Company, conflict with, or
result in any breach or violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of or "put" right with
respect to any obligation or to loss of a material benefit under, or
result in the creation of any Lien upon any of the properties or assets
of the
Company or any of its subsidiaries under the terms of, any franchise or
other agreement with any franchisee of the Company or any of its
subsidiaries, other than any such conflicts, breaches, violations,
defaults, rights, losses or Liens that could not (x) affect franchise
or other agreements relating, individually or in the aggregate, to 150
or more store locations, (y) individually or in the aggregate have a
material adverse effect with respect to the Company or the Surviving
Corporation, or (z) prevent, hinder or materially delay the ability of
the Company to consummate the transactions contemplated by this
Agreement.
6.3 Conditions to Obligation of the Company. The obligation of the
Company to effect the Merger is further subjected to the following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Sub set forth in this Agreement shall be true
and correct in all material respects, in each case as of the date of
this Agreement and as of the Closing Date as though made on and as of
the Closing Date. The Company shall have received a certificate signed
on behalf of Parent by the chief executive officer and the chief
financial officer of Parent to such effect.
(b) Performance of Obligations of Parent and Sub. Parent and
Sub shall have performed the obligations required to be performed by
them under this Agreement at or prior to the Closing Date (except for
such failures to perform as have not had or could not reasonably be
expected, either individually or in the aggregate, to have a material
adverse effect with respect to Parent or adversely affect the ability
of Parent to consummate the transactions herein contemplated or perform
its obligations hereunder), and the Company shall have received a
certificate signed on behalf of Parent by the chief executive officer
and the chief financial officer of Parent to such effect.
(c) Tax Opinion. The Company shall have received the opinion
of Faegre & Xxxxxx, tax counsel to the Company, or the opinion of other
tax counsel of a prominent law firm designated by Parent and reasonably
acceptable to the Company, dated the Closing Date, based on appropriate
representations of the Company, its affiliates, and Parent and such
other facts, representations, assumptions, and agreements as counsel
may reasonably deem relevant, to the effect that for United States
Federal income tax purposes the Merger will qualify as a reorganization
within the meaning of Section 368 of the Code and that each of Parent,
Sub and the Company will be a party to the reorganization within the
meaning of Section 368(b) of the Code.
(d) Opinion of Counsel to Parent. The Company shall have
received, on and as of the Closing Date, an opinion of Xxxxxx, Xxxxxx &
Xxxxx LLP, counsel to Parent, in usual and customary form reasonably
acceptable to the Company, to the effect that (i) Parent and Sub are
corporations duly incorporated, validly existing and in good standing
under the laws of the State of Delaware, (ii) the execution and
delivery of this Agreement by Parent and Sub and the
consummation by Parent and Sub of the transactions contemplated hereby
have been duly authorized by all necessary corporate action, (iii) this
Agreement has been duly executed and delivered by Parent and Sub and
constitutes a valid and binding obligation of each of Parent and Sub,
enforceable in accordance with its terms (subject to customary
exceptions), and (iv) the execution and delivery of this Agreement does
not, and the consummation by Parent and Sub of the transactions
contemplated hereby will not violate the Certificate of Incorporation
or Bylaws of Parent or Sub.
ARTICLE 7: TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated and abandoned at any
time prior to the Effective Time of the Merger, whether before or after approval
of the Merger by the stockholders of the Company:
(a) by mutual written consent of Parent and the Company; or
(b) by either Parent or the Company if any Governmental Entity
shall have issued an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the Merger
and such order, decree, ruling or other action shall have become final
and nonappealable; or
(c) by either Parent or the Company if the Merger shall not
have been consummated on or before March 31, 1998 (other than due to
the failure of the party seeking to terminate this Agreement to perform
its obligations under this Agreement required to be performed at or
prior to the Effective Time of the Merger); or
(d) by Parent, if any required approval of the stockholders of
the Company shall not have been obtained by reason of the failure to
obtain the required vote upon a vote held at a duly held meeting of
stockholders or at any adjournment thereof; or
(e) by Parent, (1) if the Company shall have (i) withdrawn,
modified or amended in any respect adverse to Parent or Sub its
approval or recommendation of this Agreement or the Merger, (ii) failed
as soon as practicable to mail the Proxy Statement to its stockholders
or failed to include in such statement such recommendation, (iii)
recommended any Transaction Proposal, from a person other than Parent
or (iv) resolved to do any of the foregoing, or (2) if (i) the Company
shall have exercised a right specified in the first proviso to Section
5.11 with respect to any Transaction Proposal and shall, directly or
through agents or representatives, continue discussions with any third
party concerning such Transaction Proposal for more than 10 business
days after the date of receipt of such Transaction Proposal; or (ii)
(A) a Transaction Proposal that is publicly disclosed shall have been
commenced, publicly proposed or communicated to the Company which
contains a proposal as to price (without
regard to whether such proposal specifies a specific price or a range
of potential prices) and (B) the Company shall not have rejected such
proposal within 10 business days of its receipt or, if sooner, the date
its existence first becomes publicly disclosed; or
(f) by the Company, if the Company exercises, pursuant to
Section 5.11, the right specified in clause (iv) of the first proviso
to Section 5.11; or
(g) by Parent, if the Company fails to perform any of its
material obligations under this Agreement; or
(h) by the Company, if Parent or Sub fails to perform any of
their respective material obligations under this Agreement.
7.2 Effect of Termination. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 7.1, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Sub or the Company, other than pursuant to
the provisions of Section 5.6 and this Section 7.2. Nothing contained in this
Section shall, however, relieve any party for any breach of the representations,
warranties, covenants or agreements set forth in this Agreement prior to any
such termination.
7.3 Amendment. This Agreement may be amended by the parties at any time
before or after required approval of the Merger by the stockholders of the
Company; provided, however, that after such approval, there shall be made no
amendment that by law requires further approval by such stockholders without the
further approval of such stockholders. This Agreement may not be amended except
by an instrument in writing signed on behalf of each of the parties.
7.4 Extension; Waiver. At any time prior to the Effective Time, the
parties may (a) extend the time for the performance of any of the obligations or
other acts of the other parties, (b) waive any inaccuracies in the
representations and warranties contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) subject to the proviso of Section
7.3, waive compliance with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such party. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of such
rights.
ARTICLE 8: GENERAL PROVISIONS
8.1 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 8.1
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
8.2 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by
overnight courier (providing proof of delivery) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to Parent or Sub, to:
Berkshire Hathaway Inc.
0000 Xxxxxx Xxxxx
Xxxxx, Xxxxxxxx 00000
Attention: Chairman of the Board
with a copy to:
Xxxxxx, Xxxxxx & Xxxxx LLP
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxx
(b) if to the Company, to:
International Dairy Queen, Inc.
0000 Xxxxx Xxxxxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Chairman of the Board
with a copy to:
Xxxx, Plant, Xxxxx, Xxxxx & Xxxxxxx, P.A.
3400 City Center
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxx
8.3 Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries, controls,
is controlled by, or is under common control with, such first person;
(b) "material adverse change" or "material adverse effect"
means, when used in connection with the Company or Parent, any change
or effect that either individually or in the aggregate with all other
such changes or effects is materially adverse to the business, assets,
properties, condition (financial or otherwise) or results of operations
of such party and its subsidiaries taken as a whole; provided, however,
that, (i) a decline in general economic conditions affecting the
Company or Parent shall not be deemed to be a "material adverse change"
or to have a "material adverse effect" with respect to either such
party or
its subsidiaries; and (ii) for purposes of Sections 3.2(g) and 6.3(a),
in no event shall changes in the market prices of portfolio securities
owned by Parent or its subsidiaries be deemed to be a "material adverse
change" or to have a "material adverse effect" with respect to Parent
or its subsidiaries;
(c) person means an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other
entity; and
(d) a "subsidiary" of any person means another person, an
amount of the voting securities, other voting ownership or voting
partnership interests of which is sufficient to elect at least a
majority of its board of directors or other governing body (or, if
there are no such voting interests, 50% or more of the equity interest
of which) is owned directly or indirectly by such first person.
8.4 Interpretation. A reference made in this Agreement to a Section,
Exhibit or Schedule, shall be to a Section of, or an Exhibit or Schedule to,
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
8.5 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
8.6 Entire Agreement; No Third-party Beneficiaries. This Agreement
constitutes the entire agreement, and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement. Except as provided in Section 5.5, this
Agreement is not intended to confer upon any person other than the parties any
rights or remedies.
8.7 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof.
8.8 Assignment. Neither this Agreement nor any of the rights, interests
or obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise, by any of the parties without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
8.9 Enforcement. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the State of Delaware
or of the United
States located in the State of Delaware in the event may dispute arises out of
this Agreement or any of the transactions contemplated by this Agreement, and
each party agrees (a) it will not attempt to deny or defeat personal
jurisdiction or venue in any such court by motion or other request for leave
from any such court and (b) it will not bring any action relating to this
Agreement or any of the transactions contemplated by this Agreement in any court
other than any such court.
8.10 Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein, so long as the economic and legal substance of the
transactions contemplated hereby are not affected in a manner materially adverse
to any party hereto.
IN WITNESS WHEREOF, Parent, Sub, and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
BERKSHIRE HATHAWAY INC.
By: _______________________
Its: ______________________
QDI, INC.
By: _______________________
Its: ______________________
INTERNATIONAL DAIRY QUEEN, INC.
By: _______________________
Its: ______________________
EXHIBIT A
FORM OF COMPANY AFFILIATE LETTER
Gentlemen:
The undersigned, a holder of shares of [Class A or Class B] Common
Stock, par value $.01 per share ("Company Stock"), of International Dairy Queen,
Inc., a Delaware corporation (the "Company"), is entitled to receive in
connection with the merger (the "Merger") of the Company with QDI, Inc., a
Delaware corporation ("Sub"), securities (the "Parent Securities") of Berkshire
Hathaway Inc., a Delaware corporation ("Parent"). The undersigned acknowledges
that the undersigned may be deemed an "affiliate" of the Company within the
meaning of Rule 145 ("Rule 145") promulgated under the Securities Act of 1933,
as amended (the "Act"), although nothing contained herein should be construed as
an admission of such fact.
If the undersigned were an affiliate under the Act, the undersigned's
ability to sell, assign or transfer the Parent Securities received by the
undersigned in exchange for any shares of Company Stock pursuant to the Merger
may be restricted unless such transaction is registered under the Act or an
exemption from such registration is available. The undersigned understands that
such exemptions are limited and the undersigned has obtained advice of counsel
as to the nature and conditions of such exemptions, including information with
respect to the applicability to the sale of such securities of Rules 144 and
145(d) promulgated under the Act.
The undersigned hereby represents to and covenants with the Company,
Sub, and Parent that the undersigned will not sell, assign or transfer any of
the Parent Securities received by the undersigned in exchange for shares of
Company Stock pursuant to the Merger except (i) pursuant to an effective
registration statement under the Act, (ii) in conformity with the volume and
other limitations of Rule 145 or (iii) in a transaction which, in the opinion of
independent counsel reasonably satisfactory to Parent, is not required to be
registered under the Act.
In the event of a sale or other disposition by the undersigned of
Parent Securities pursuant to Rule 145, the undersigned will supply Parent with
evidence of compliance with such Rule. The undersigned understands that Parent
may instruct its transfer agent to withhold the transfer of any Parent
Securities disposed of by the undersigned pending receipt of such evidence of
compliance.
The undersigned acknowledges and agrees that appropriate legends will
be placed on certificates representing Parent Securities received by the
undersigned in the Merger or held by a transferee thereof, which legends will be
removed by delivery of substitute certificates upon receipt of an opinion in
form and substance reasonably satisfactory to Parent from independent counsel
reasonably satisfactory to Parent to the effect that such legends are no longer
required for purposes of the Act.
The undersigned acknowledges that (i) the undersigned has carefully
read this letter and understands the requirements hereof and the limitations
imposed upon the distribution, sale, transfer or other disposition of Parent
Securities and (ii) the receipt by Parent of this letter is an inducement and a
condition to Parent's obligations to consummate the Merger.
Very truly yours,
Dated:
EXHIBIT B
CONTINUITY OF INTEREST AGREEMENT
Berkshire Hathaway Inc., a Delaware corporation ("Parent"), QDI, Inc.,
a Delaware corporation and a direct wholly-owned subsidiary of Parent ("Sub")
and each of the undersigned shareholders (each, a "Shareholder" and
collectively, the "Shareholders") of International Dairy Queen, Inc., a Delaware
corporation (the "Company"), hereby enter into this Agreement on [DATE] for the
purposes hereinafter set forth (collectively, Parent, Sub and the Shareholders
are referred to as the "Parties").
WHEREAS, Parent, Sub and the Company entered into an Agreement and Plan
of Merger dated as of October 21, 1997 (the "Merger Agreement");
WHEREAS, pursuant to the Merger Agreement, Company will merge (the
"Merger") with and into Sub with Sub as the surviving corporation in the Merger
and pursuant to such Merger, it is intended that each Shareholder will surrender
all of such Shareholder's shares of Company Class A Common Stock and/or Company
Class B Common Stock (collectively, "Company Common Stock"), in exchange for
shares of Class A Stock of Parent and/or Class B Stock of Parent (collectively,
"Parent Shares");
WHEREAS, the Parties wish to take certain steps to qualify the Merger
as a tax-free reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, the Parties agree as follows:
(a) Each Shareholder has all necessary power and authority to enter
into and perform all of such Shareholder's obligations hereunder. The execution,
delivery and performance of this Agreement by such Shareholder will not violate
any other agreement to which such Shareholder is a party, including any voting
agreement, shareholders' agreement, trust agreement or voting trust. This
Agreement has been duly and validly executed and delivered by such Shareholder
and constitutes a valid and binding agreement of such Shareholder, enforceable
against such Shareholder in accordance with its terms.
(b) Each Shareholder is the beneficial owner or record holder of the
number of shares set forth on Schedule 1 attached hereto and, as of the date
hereof, the shares listed on Schedule 1, with respect to each Shareholder,
constitute all the shares of Company Common Stock owned of record or
beneficially by such Shareholder. Each Shareholder represents that such
Shareholder has not purchased, sold, exchanged, transferred by gift or otherwise
disposed of shares of Company Common Stock prior to the date hereof either in
contemplation of or as part, of the Merger.
(c) Each Shareholder represents that such Shareholder does not have any
plan or intention to sell, exchange, transfer by gift or otherwise dispose of
(including by transactions which would have the ultimate economic effect of a
disposition including, but not limited to,
puts, short-sales and equity swap type of arrangements) (collectively, "dispose"
or "disposition") any Parent Shares to be received by such Shareholder pursuant
to the Merger.
(d) Each Shareholder further agrees that for a period of two (2) years
after the Merger (the "Post-Merger Continuity Period"), such Shareholder will
not sell, exchange, transfer by gift or otherwise dispose of (including by
transactions which would have the ultimate economic effect of a disposition
including, but not limited to, puts, short-sales and equity swap type of
arrangements) any of the Parent Shares that such Shareholder receives in
exchange for shares of Company Common Stock pursuant to the Merger; provided,
however, each Shareholder (or the estate of such Shareholder) is expressly
permitted to transfer Parent Shares to beneficiaries, heirs or legatees upon
such Shareholder's death, or to a "grantor" trust created for such Shareholder's
benefit in which such Shareholder is treated as the owner pursuant to Sections
671 through 678 of the Code. Notwithstanding this paragraph 3, each Shareholder
may, prior to the end of the Post-Merger Continuity Period, sell, exchange,
transfer by gift or otherwise dispose of Parent Shares that such Shareholder
receives pursuant to the Merger, if, prior to the date of such disposition, the
Shareholder obtains the written opinion of Faegre & Xxxxxx (which opinion will
specifically set forth the facts and analysis forming the basis of such
opinion), which opinion is reasonably satisfactory to Xxxxxx, Xxxxxx & Xxxxx LLP
("Xxxxxx Xxxxxx"), that such disposition will not prevent such Parent Shares
from qualifying as stock that satisfied the "continuity of interest" requirement
under Section 368 of the Code, generally on the ground that the Shareholder had
no intent to dispose of such Parent Shares at the time of the Merger and that
the Shareholder's decision to dispose of such Parent Shares was the result of an
unanticipated change in circumstances subsequent to the Merger, or otherwise.
(e) Each Shareholder agrees that, during the Post-Merger Continuity
Period, such Shareholder will give notice to Parent, Faegre & Xxxxxx and Xxxxxx
Xxxxxx at least 30 days prior to any proposed disposition of Parent Shares
received pursuant to the Merger, which notice shall describe (i) the number of
Parent Shares that will be subject to the proposed disposition, and (ii) the
manner of such disposition.
(f) This Agreement shall be binding upon and inure solely to the
benefit of each party hereto and their respective successors, assigns, heirs,
executors, administrators and other legal representatives. Nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
(g) This Agreement shall not be modified, amended, altered or
supplemented except by a written agreement executed by all of the Parties
hereto. A Shareholder requesting the written opinion of Faegre & Xxxxxx to
dispose of Parent Shares, agrees to bear and pay all fees and expenses of Faegre
& Xxxxxx and Xxxxxx Xxxxxx.
(h) Each Shareholder is entering this Agreement to enable Faegre &
Xxxxxx and Xxxxxx Xxxxxx to opine that the Merger constitutes a reorganization
within the meaning of Section 368(a) of the Code, and each Shareholder agrees
that both Faegre & Xxxxxx and Xxxxxx Xxxxxx may rely upon this Agreement in
rendering their opinions.
(i) All notices to Parent shall be sent to:
Berkshire Hathaway Inc.
0000 Xxxxxx Xxxxx
Xxxxx, Xxxxxxxx 00000
Attention: Chairman of the Board
(j) All notices to Faegre & Xxxxxx should be sent to:
Faegre & Xxxxxx
2200 Norwest Center
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
(k) All notices to Xxxxxx Xxxxxx should be sent to:
Xxxxxxx Xxxx, Esq.
Xxxxxx, Xxxxxx & Xxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
duly executed on the date first set forth above.
___________________________
Xxxx X. Xxxxx
BERKSHIRE HATHAWAY INC.
By: _______________________
Its: ______________________
QDI, INC.
By: _______________________
Its: ______________________
[Additional shareholder signatures]
