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AGREEMENT AND PLAN OF MERGER
AND REORGANIZATION
BY AND AMONG
SUMMIT FAMILY RESTAURANTS INC.
AND
CKE RESTAURANTS, INC.
DATED: NOVEMBER 30, 1995
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TABLE OF CONTENTS
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ARTICLE 1
MERGER AND CLOSING
1.1 Formation of Merger Sub. . . . . . . . . . . . . . . . . . . . 1
1.2 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Effects of the Merger . . . . . . . . . . . . . . . . . . . . 2
1.5 Certificate of Incorporation and Bylaws . . . . . . . . . . . 2
ARTICLE 2
CONVERSION OF SECURITIES; DISSENTING SHARES
2.1 Conversion of Securities . . . . . . . . . . . . . . . . . . . 2
2.2 Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . 3
2.3 Fractional Shares . . . . . . . . . . . . . . . . . . . . . . 3
2.4 Exchange of Certificates . . . . . . . . . . . . . . . . . . . 3
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SUMMIT
3.1 Organization, Good Standing and Authority . . . . . . . . . . 5
3.2 Binding Agreement . . . . . . . . . . . . . . . . . . . . . . 5
3.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . 5
3.4 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.5 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.6 Exchange Act Reports and Financial Statements . . . . . . . . 6
3.7 Information in Registration Statement and Proxy Statement . . 7
3.8 Consents and Approvals . . . . . . . . . . . . . . . . . . . . 7
3.9 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.10 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.11 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . 8
3.12 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.14 Title to Properties . . . . . . . . . . . . . . . . . . . . . 9
3.15 Environmental Matters . . . . . . . . . . . . . . . . . . . . 10
3.16 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.17 Contracts and Commitments . . . . . . . . . . . . . . . . . . 11
3.18 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . 11
3.19 Absence of Certain Developments . . . . . . . . . . . . . . . 11
(i)
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF CKE
4.1 Organization, Good Standing and Authority . . . . . . . . . . 13
4.2 Binding Agreement . . . . . . . . . . . . . . . . . . . . . . 13
4.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . 13
4.4 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.5 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.6 Exchange Act Reports and Financial Statements . . . . . . . . 14
4.7 Information in Registration Statement and Proxy Statement . . 15
4.8 Consents and Approvals . . . . . . . . . . . . . . . . . . . . 15
4.9 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.10 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.11 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . 16
4.12 Absence of Certain Developments . . . . . . . . . . . . . . . 16
ARTICLE 5
ACTIONS BY SUMMIT AND CKE
PENDING THE MERGER
5.1 Maintenance of Business . . . . . . . . . . . . . . . . . . . 17
5.2 Certain Prohibited Transactions . . . . . . . . . . . . . . . 18
5.3 Registration Statement/Proxy Statement . . . . . . . . . . . . 19
5.4 Investigation by CKE . . . . . . . . . . . . . . . . . . . . . 19
5.5 Title Reports . . . . . . . . . . . . . . . . . . . . . . . . 20
5.6 Consents and Best Efforts . . . . . . . . . . . . . . . . . . 20
5.7 Notification of Certain Matters . . . . . . . . . . . . . . . 20
5.8 Reasonable Best Efforts . . . . . . . . . . . . . . . . . . . 21
5.9 Letter of Summit's Accountants . . . . . . . . . . . . . . . . 21
5.10 Letter of CKE's Accountants . . . . . . . . . . . . . . . . . 21
5.11 Stockholders Meeting . . . . . . . . . . . . . . . . . . . . . 21
5.12 New York Stock Exchange Listing . . . . . . . . . . . . . . . 22
5.13 Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . 22
5.14 Stock Option Plans . . . . . . . . . . . . . . . . . . . . . . 22
5.15 Change of Control Letters . . . . . . . . . . . . . . . . . . 23
5.16 Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . . 23
(ii)
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ARTICLE 6
CONDITIONS TO SUMMIT'S OBLIGATIONS
6.1 Completion of Other Transactions . . . . . . . . . . . . . . 24
6.2 Representations, Warranties and Covenants . . . . . . . . . 24
6.3 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.4 No Governmental Proceeding or Litigation . . . . . . . . . . 25
6.5 Certificates . . . . . . . . . . . . . . . . . . . . . . . . 25
6.6 Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . . 25
6.7 Corporate Documents . . . . . . . . . . . . . . . . . . . . 25
6.8 HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.9 Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 7
CONDITIONS TO CKE'S OBLIGATIONS
7.1 Completion of Other Transactions . . . . . . . . . . . . . . 26
7.2 Representations, Warranties and Covenants . . . . . . . . . 26
7.3 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.4 No Governmental Proceeding or Litigation . . . . . . . . . . 27
7.5 Certificates and Opinions . . . . . . . . . . . . . . . . . 27
7.6 Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . . 27
7.7 Corporate Documents . . . . . . . . . . . . . . . . . . . . 27
7.8 HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.9 Dissenting Shares . . . . . . . . . . . . . . . . . . . . . 27
7.10 Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 8
ACTIONS BY SUMMIT
AND CKE AFTER THE CLOSING
8.1 Further Assurances . . . . . . . . . . . . . . . . . . . . . 28
8.2 Directors' and Officers' Insurance . . . . . . . . . . . . . 28
ARTICLE 9
TERMINATION AND AMENDMENT
9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . 28
9.2 Effect of Termination . . . . . . . . . . . . . . . . . . . 29
9.3 Certain Fees . . . . . . . . . . . . . . . . . . . . . . . . 29
(iii)
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ARTICLE 10
DEFINITIONS
10.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 11
MISCELLANEOUS
11.1 Survival of Representations, Etc. . . . . . . . . . . . . . 35
11.2 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.4 Choice of Law . . . . . . . . . . . . . . . . . . . . . . . 36
11.5 Entire Agreement; Amendments and Waivers . . . . . . . . . . 36
11.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 36
11.7 Invalidity . . . . . . . . . . . . . . . . . . . . . . . . . 37
11.8 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 37
11.9 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 37
11.10 Specific Performance . . . . . . . . . . . . . . . . . . . . 37
11.11 Attorneys Fees . . . . . . . . . . . . . . . . . . . . . . . 37
11.12 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . 37
11.13 Confidential Information . . . . . . . . . . . . . . . . . . 37
SUMMIT DISCLOSURE SCHEDULE
CKE DISCLOSURE SCHEDULE
(iv)
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AGREEMENT AND PLAN OF MERGER
AND REORGANIZATION
This Agreement and Plan of Merger and Reorganization, dated as
of November 30, 1995 (this "Agreement"), is by and among Summit Family
Restaurants Inc., a Delaware corporation ("Summit"), and CKE Restaurants, Inc.,
a Delaware corporation ("CKE"). Capitalized terms not otherwise defined have
the meanings set forth in Article 10.
RECITALS
A. The respective Boards of Directors of Summit and CKE
have determined that the merger (the "Merger") of Summit with and into a
newly-formed wholly-owned subsidiary ("Merger Sub") of CKE, with Merger Sub
surviving the Merger, would be advantageous and beneficial to their respective
corporations and stockholders.
B. For United States federal income tax purposes, the
parties intend that the Merger qualify as a reorganization under Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code").
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and promises contained herein and for other good
and valuable consideration the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
MERGER AND CLOSING
1.1 FORMATION OF MERGER SUB. Prior to the Effective
Time, CKE shall organize Merger Sub as a wholly-owned subsidiary of CKE
incorporated under the laws of the State of Delaware.
1.2 THE MERGER. At the Effective Time, in accordance
with this Agreement and the applicable provisions of the Delaware General
Corporation Law ("DGCL"), Summit shall in the Merger merge with and into Merger
Sub, with Merger Sub surviving the Merger, the separate existence of Summit
shall cease, and Merger Sub shall continue as the surviving corporation as set
forth in the Certificate of Merger. Merger Sub is sometimes referred to herein
as the "Surviving Corporation."
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1.3 CLOSING. The closing of the Merger and the other
transactions contemplated herein (the "Closing") shall be held at 10:00 a.m.,
Utah time on February 28, 1996 or such later date to which Summit and CKE shall
agree (the "Closing Date") at the offices of Summit, unless the parties hereto
otherwise agree. After satisfaction or waiver of all conditions to the
Closing, the parties hereto will cause the Merger to be consummated on the
Closing Date by filing with the Secretary of State of the State of Delaware a
certificate of merger as is required by, and executed in accordance with, the
relevant provisions of DGCL (the time of such filing being the "Effective
Time").
1.4 EFFECTS OF THE MERGER. The Merger shall have the
effects set forth in the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, the separate corporate
existence of Summit shall cease and Merger Sub shall be the Surviving
Corporation and shall have all of the rights, privileges, immunities and power
and shall be subject to all duties and liabilities of a corporation organized
under the DGCL.
1.5 CERTIFICATE OF INCORPORATION AND BYLAWS. The
Certificate of Incorporation of Merger Sub in effect at the Effective Time
shall be the Certificate of the Surviving Corporation. The Bylaws of Merger
Sub in effect at the Effective Time shall be the Bylaws of the Surviving
Corporation until amended in accordance with applicable law.
ARTICLE 2
CONVERSION OF SECURITIES; DISSENTING SHARES
2.1 CONVERSION OF SECURITIES. At the Effective Time, by
virtue of the Merger and without any action on the part of the parties hereto
each share of Summit Common Stock and Summit Preferred Stock issued and
outstanding immediately prior to the Effective Time, other than shares of
Summit Common Stock and Summit Preferred Stock for which appraisal rights have
been exercised pursuant to Section 262 of the DGCL, will be converted into the
right to receive the Merger Consideration.
"Merger Consideration" means, for each share of Summit Common
Stock and each share of Summit Preferred Stock: (a) $3.00 in cash (without
interest) and (b) a number of shares of CKE Common Stock equal to $3.00 divided
by the Adjusted CKE Price.
"Adjusted CKE Price" means (a) if the Average CKE Price is
equal to or greater than $17.00, $14.625 plus the amount by which the Average
CKE Price exceeds $17.00, (b) if the Average CKE Price is less than $17.00 and
equal to or
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greater than $12.25, $14.625, (c) if the Average CKE Price is less than $12.25
and CKE has not exercised the Fill-Up Election, $14.625 and (d) if the Average
CKE Price is less than $12.25 and CKE has exercised the Fill-Up Election,
$14.625 less the amount by which $12.25 exceeds the Average CKE Price.
"Average CKE Price" means the average of the per share closing
sales prices of CKE Common Stock on the New York Stock Exchange for the 20
consecutive trading days ending two days prior to the Closing Date.
2.2 DISSENTING SHARES. Notwithstanding Section 2.1,
shares of Summit Common Stock and Summit Preferred Stock outstanding
immediately prior to the Effective Time and held by holders who have not voted
in favor of the Merger or consented thereto in writing and who have demanded
appraisal for such shares in accordance with Section 262 of the DGCL shall not
be converted into rights to receive the Merger Consideration, and holders of
such shares of Summit Common Stock and Summit Preferred Stock shall be entitled
to receive payment from Summit of the appraised value of such shares of Summit
Common Stock and Summit Preferred Stock in accordance with the provisions of
such Section 262 unless and until such holders fail to perfect or shall have
effectively withdrawn or lost their rights to appraisal and payment under the
DGCL. If after the Effective Time any such holder fails to perfect or
withdraws or otherwise loses his right to appraisal or payment, such shares
shall be treated as if they had been converted as of the Effective Time into a
right to receive the Merger Consideration.
2.3 FRACTIONAL SHARES. No fractional shares of CKE
Common Stock shall be issued in the Merger. All fractional shares of CKE
Common Stock that a holder of CKE Common Stock would otherwise be entitled to
receive as a result of the Merger shall be aggregated, and if a fractional
share results from such aggregation, such holder shall be entitled to receive
from Summit, in lieu thereof, an amount in cash (without interest) derived
through the aggregation by Summit of all such fractional shares otherwise
issuable, the sale of such shares of CKE Common Stock in the market and the
distribution of the proceeds thereof calculated by multiplying the average per
share sales price by the fraction of a share of CKE Common Stock to which such
holder would otherwise have been entitled. Under no circumstances will the
aggregate cash consideration paid by CKE in the Merger constitute more than 50%
of the total aggregate consideration paid by CKE in the Merger, with the CKE
Common Stock issued in the Merger being valued at the Adjusted CKE Price.
2.4 EXCHANGE OF CERTIFICATES. From and after the
Effective Time, each holder of an outstanding certificate which immediately
prior to the Effective Time represented outstanding shares of Summit Common
Stock and Summit Preferred Stock shall be entitled to receive in exchange
therefor, upon surrender thereof to an exchange
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agent to be selected by CKE, a certificate or certificates representing the
number of whole shares of CKE Common Stock into which such holder's shares were
converted and a check representing (i) any cash payable in lieu of any
fractional share of CKE Common Stock computed set forth above and (ii) the cash
portion of the Merger Consideration into which such holder's shares were
converted. No holder of a certificate or certificates which immediately prior
to the Effective Time represented shares of Summit Common Stock or Summit
Preferred Stock shall be entitled to receive any dividend or other distribution
from CKE until surrender of such holder's certificate for a certificate or
certificates representing shares of Summit Common Stock or Summit Preferred
Stock. Upon such surrender, there shall be paid to the holder the amount of
any dividends or other distributions (without interest) which became payable on
or after the Effective Time, but which were not paid by reason of the
foregoing, with respect to the number of whole shares of CKE Common Stock
represented by the certificates issued upon such surrender. After the
Effective Time, there shall be no further registration of transfers of Summit
Common Stock and Summit Preferred Stock and holders of certificates
representing Summit Common Stock or Summit Preferred Stock shall not enjoy the
rights and privileges of holders of such stock or CKE Common Stock other than
to exchange the certificates for the Merger Consideration. If, after the
Effective Time, certificates representing Summit Common Stock or Summit
Preferred Stock are presented to the Surviving Corporation, they shall be
cancelled and exchanged for the Merger Consideration. From and after the
Effective Time, CKE shall, however, be entitled to treat certificates for
shares of Summit Common Stock and Summit Preferred Stock which have not yet
been surrendered for exchange and for which appraisal rights have not been
perfected pursuant to the DGCL as evidencing solely the right to receive the
Merger Consideration represented by such certificates, notwithstanding any
failure to surrender such certificates in exchange therefor. If any
certificate for shares of CKE Common Stock is to be issued in a name other than
that in which the certificate for shares of Summit Common Stock or Summit
Preferred Stock surrendered in exchange therefor is registered, it shall be a
condition of such issuance that the person requesting such issuance shall pay
any transfer or other tax required by reason of the issuance of certificates
for such shares of CKE Common Stock in a name other than that of the registered
holder of the certificate surrendered, or shall establish to the satisfaction
of CKE or its agent that such tax has been paid or is not applicable.
Notwithstanding the foregoing, CKE shall not be liable to any holder of shares
of Summit Common Stock or Summit Preferred Stock for any shares of CKE Common
Stock (or dividends or distributions with respect thereto) or cash in lieu of
fractional shares delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SUMMIT
Except as otherwise set forth in the Summit Disclosure
Schedule, Summit hereby represents and warrants to CKE as follows:
3.1 ORGANIZATION, GOOD STANDING AND AUTHORITY. Each of
Summit and its Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the state of its incorporation. Each of
Summit and its Subsidiaries has full corporate power to carry on its business,
as it is now being conducted, and to own, lease or operate the properties and
assets it now owns, leases or operates. Each of Summit and its Subsidiaries is
qualified to do business, is in good standing and has all required business
licenses in each jurisdiction in which its failure to obtain or maintain such
qualification, good standing or license could have a Material Adverse Effect on
Summit.
3.2 BINDING AGREEMENT. Summit has all requisite
corporate power and corporate authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all requisite corporate action, subject to
approval of Summit's stockholders. This Agreement is a legal, valid and
binding obligation of Summit, enforceable against it in accordance with its
terms, except as enforcement thereof may be limited by general principles of
equity (regardless of whether such enforceability is considered in a proceeding
at law or in equity) and the effect of applicable bankruptcy, insolvency,
moratorium and other similar laws of general application relating to or
affecting creditors' rights generally, including, without limitation, the
effect of statutory or other law regarding fraudulent conveyances and
preferential transfers.
3.3 CAPITALIZATION. The authorized capitalization of
Summit consists solely of (a) 10,000,000 shares of Summit Common Stock, of
which 4,798,102 shares were issued and outstanding as of November 30, 1995; (b)
500,000 shares of $.01 par value junior common stock, none of which are
outstanding on the date hereof; and (c) 1,000,000 shares of Summit Preferred
Stock, of which 946,714 shares were issued and outstanding as of the date
hereof. On the Closing Date there will not be outstanding: (i) any options,
warrants or other rights to purchase from Summit any capital stock of Summit,
except for (x) the options, warrants and other rights to purchase capital stock
of Summit outstanding as of the date of this Agreement as set forth on the
Summit Disclosure Schedule, (y) options, warrants or other rights to purchase
capital stock of Summit granted to employees and officers of Summit as set
forth on the Summit Disclosure Schedule and (z) options, warrants and other
rights to purchase in the aggregate not more than 50,000 shares of Summit
Common Stock granted to new or
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newly promoted employees in the ordinary course of business; (ii) any
securities convertible into or exchangeable for shares of such stock; or (iii)
any other commitments of any kind for the issuance of additional shares of
capital stock or options, warrants or other securities of Summit.
3.4 SUBSIDIARIES. There is set forth in the Summit
Disclosure Schedule (i) the name and percentage ownership by Summit of each of
its Subsidiaries; (ii) the jurisdiction of incorporation, capitalization and
ownership of each Subsidiary; and (iii) the names of the officers and directors
of each Subsidiary.
3.5 NO VIOLATION
(a) Except as set forth in the Summit Disclosure
Schedule, none of Summit or any of its Subsidiaries is (i) in violation of its
respective Charter Documents, or (ii) to Summit's best knowledge, in default in
the performance of any obligation, agreement or condition contained in any
Applicable Agreement, which violation or default could, singly or in the
aggregate, have a Material Adverse Effect on Summit.
(b) Except as set forth in the Summit Disclosure
Schedule, neither the execution or delivery by Summit of this Agreement or the
performance by Summit of its obligations under this Agreement will (i)
constitute a breach or violation under the Charter Documents of Summit or any
of its Subsidiaries; or (ii) conflict with, violate, constitute a material
breach or material violation of or a material default (with the passage of time
or otherwise) under, require the consent of any Person under, give to others
any rights of termination, amendment, acceleration or cancellation of or result
in the imposition of a material Lien on any of the properties or assets of
Summit or any of its Subsidiaries or an acceleration of material indebtedness
pursuant to, any Applicable Agreement.
3.6 EXCHANGE ACT REPORTS AND FINANCIAL STATEMENTS.
Summit has furnished or will upon request furnish CKE with copies of its Annual
Report on Form 10-K for the fiscal years ended September 28, 1992, September
27, 1993, September 26, 1994 and September 25, 1995 (when available), in each
case with exhibits, and all other reports filed or required to be filed with
the Securities and Exchange Commission (the "SEC") under applicable laws, rules
and regulations since September 26, 1994 (all such reports being herein
collectively called the "Summit SEC Reports"), each as filed with the SEC.
Each such Summit SEC Report when it became effective or was filed with the SEC,
or as amended, as the case may be, complied in all material respects with the
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as applicable, and the rules and regulations of the SEC thereunder, and
did not on the date of filing or amendment, if any, contain any untrue
statement of material fact or omit to state a material fact necessary to make
the statements therein, in light of the
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circumstances under which they were made, not misleading. The financial
statements contained in said Summit SEC Reports: (i) were prepared in
accordance with the books and records of Summit and its Subsidiaries; (ii) were
prepared in accordance with GAAP and with Regulation S-X promulgated under the
Exchange Act; (iii) fairly present Summit's consolidated financial condition
and the consolidated results of its operations, cash flows and shareholders
equity as at the relevant dates thereof and for the periods covered thereby;
(iv) contain and reflect all necessary adjustments and accruals for a fair
presentation of its consolidated financial condition and the consolidated
results of its operations, cash flows and shareholders equity for the periods
covered by said financial statements; (v) contain and reflect adequate
provisions for all reasonably anticipated liabilities for all taxes, federal,
state, local or foreign, with respect to the periods then ended and all prior
periods; and (vi) with respect to contracts and commitments for the sale of
goods or the provision of services by Summit or any Subsidiary, contain and
reflect adequate reserves for all reasonably anticipated material losses, costs
and expenses in excess of expected receipts.
3.7 INFORMATION IN REGISTRATION STATEMENT AND PROXY
STATEMENT. None of the information supplied or to be supplied by Summit for
inclusion or incorporation by reference in (i) the registration statement on
Form S-4 to be filed with the SEC by CKE in connection with the issuance of
shares of CKE Common Stock in the Merger (the "Registration Statement"), will,
at the time it becomes effective under the Securities Act and at the Effective
Time, 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, in light of the circumstances under which they were made, not
misleading and (ii) the proxy statement relating to the meeting of Summit's
stockholders to be held in connection with the Merger (the "Proxy Statement")
will, at the date mailed to Summit's stockholders, at the time of the meeting
of stockholders to be held in connection with the Merger and at the Effective
Time, 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, when filed with the SEC by Summit,
comply as to form in all material respects with the provisions of the Exchange
Act and the rules and regulations thereunder, except that no representation is
made by Summit with respect to statements made therein about CKE and based on
information supplied by CKE in writing specifically for inclusion in the Proxy
Statement.
3.8 CONSENTS AND APPROVALS. No consent, approval or
authorization of, or declaration, filing or registration with, any United
States federal or state governmental or regulatory authority is required to be
made or obtained by Summit in connection with the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, other than any filings required
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under the HSR Act, the Exchange Act and the Securities Act and filings with
NASDAQ.
3.9 NO BROKERS. Except as set forth in the Summit
Disclosure Schedule, neither Summit nor any affiliate thereof has entered into
or will enter into any agreement, arrangement or understanding with any person
or firm which will result in any obligation of Summit to pay any finder's fee,
brokerage commission or similar payment in connection with the transactions
contemplated hereby.
3.10 INSURANCE. Summit and its Subsidiaries maintain, with
reputable insurers, insurance in such amounts, including deductible
arrangements, and of such a character as is usually maintained by reasonably
prudent managers of companies engaged in the same or similar business.
3.11 LABOR MATTERS. Except as set forth in the Summit
Disclosure Schedule, (i) there is no labor strike, dispute, slowdown, work
stoppage or lockout pending or, to the best knowledge of Summit, threatened
against or affecting Summit or any Subsidiary and, during the past five years,
there has not been any such action; (ii) there are no union claims to represent
the employees of Summit or any Subsidiary; (iii) neither Summit nor any
Subsidiary is a party to or bound by any collective bargaining or similar
agreement with any labor organization, or work rules or practices agreed to
with any labor organization or employee association applicable to employees of
Summit or any Subsidiary; (iv) none of the employees of Summit or any
Subsidiary are represented by any labor organization and none of Summit or any
Subsidiary have any knowledge of any current union organizing activities among
the employees of Summit or any Subsidiary, nor to their best knowledge does any
question concerning representation exist concerning such employees; (v) Summit
and its Subsidiaries are, and have at all times been, in material compliance
with all Applicable Employment Laws and are not engaged in any ULP; (vi) there
is no ULP charge or complaint against Summit or any Subsidiary pending or, to
the best knowledge of Summit, threatened before the NLRB; and (vi) there is no
grievance or arbitration proceeding arising out of any collective bargaining
agreement or other grievance procedure relating to Summit or any Subsidiary.
3.12 ERISA
(a) Summit and its Subsidiaries are in compliance with
the provisions of ERISA and the Code, and (ii) have not incurred any material
liability with respect to any Benefit Plan or Multiemployer Plan to the Pension
Benefit Guaranty Corporation (the "PBGC"), the Internal Revenue Service (the
"IRS"), any Benefit Plan or Multiemployer Plan or any other party (other than
to make premium payments to the PBGC or benefit payments to participants in the
ordinary course of business). Each of
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the Benefit Plans of Summit is in material compliance with all Applicable Laws.
The IRS has determined that each such Benefit Plan that is intended to be a
qualified plan under section 401(a) of the Code is so qualified and Summit is
aware of no event or circumstance that would adversely affect such
determination. The liabilities incurred under each such Benefit Plan are
accurately reflected on the financial statement included in the Summit SEC
Reports. No condition exists or event or transaction has occurred that could
result in Summit or any Subsidiary incurring any liability, fine or penalty
with respect to any Benefit Plan or Multiemployer Plan that could, singly or in
the aggregate, have a Material Adverse Effect on Summit.
(b) Summit has previously furnished the Buyer with (i) a
true and complete copy of each Benefit Plan, (ii) a copy of each trust or other
funding arrangement applicable to each Benefit Plan, (iii) the most recent
summary plan description and any applicable summary of material modifications
of each Benefit Plan, and (iv) the most recently prepared actuarial report and
financial statement, if applicable. Except as contemplated herein, Summit and
its Subsidiaries have no commitment or obligation to (x) create or incur any
material liability with respect to, or cause to exist any other, employee
benefit plan, program or arrangement, (y) enter into any material contract or
agreement to provide compensation or benefits to any individual or (z) modify
or terminate any Benefit Plan, other than with respect to a modification or
termination required by ERISA or the Code.
3.13 TAXES. Except as set forth on the Summit Disclosure
Schedule, all Tax Returns and reports required to be filed by Summit or any of
its Subsidiaries have been filed or will be timely filed (taking into account
extensions), all such Tax Returns are true, correct and complete in all
material respects, and all Taxes, due or claimed to be due from Summit or any
of its Subsidiaries have been paid, other than those currently payable without
penalty or interest and for which an adequate reserve or accrual has been
established. There are no: (a) tax audits pending with respect Tax Returns
filed by Summit or of any of its Subsidiaries, (b) no waivers of the statute of
limitations with respect to any Tax Return filed by Summit of any of the
Subsidiaries or (c) to Summit's best knowledge, no actual or proposed
additional Tax assessments for any fiscal period ending on or prior to the
Closing Date against Summit or any of its Subsidiaries for which an adequate
reserve or accrual has not been established.
3.14 TITLE TO PROPERTIES
Each of Summit and each Subsidiary (a) has legal and valid
title to all the real properties and other assets (tangible, intangible or
mixed) it reflects in the financial statements included in the Summit SEC
Reports as owned, free and clear of all Liens (other than Permitted Liens) and
free and clear of restrictions on the manner in which such property is
presently being used, and (b) enjoys peaceful and undisturbed
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possession under all leases to which it is a party as lessee. All of the
leases to which Summit or any Subsidiary is a party are legal, valid and
binding and in full force and effect, and no payment default by Summit, any
Subsidiary or, to the best knowledge of Summit, any other party thereto has
occurred or is continuing thereunder. Except as set forth in the financial
statements included in the Summit SEC Reports or on the Summit Disclosure
Schedule, no property or asset, the value of which is reflected in the balance
sheets included in the financial statements included in the Summit SEC Reports,
is held under any lease or under any conditional sale or other title retention
agreement. Except for such assets and facilities as are immaterial in the
aggregate to the business of Summit and its Subsidiaries taken as a whole, all
tangible assets and facilities of each of Summit and its Subsidiaries are in
good condition and repair and are adequate for the uses to which they are being
put.
3.15 ENVIRONMENTAL MATTERS
(a) Each of Summit and its Subsidiaries is in compliance
with the provisions of all Environmental Laws, which compliance includes, but
is not limited to, the possession by Summit or its Subsidiaries, as
appropriate, of all licenses, permits and other governmental authorizations
required under applicable Environmental Laws, and compliance with the terms and
conditions thereof where the failure to comply could, singly or in the
aggregate, have a Material Adverse Effect on Summit. None of Summit or any of
its Subsidiaries has received any communication (written or oral), whether from
a Governmental Authority, employee or otherwise, that alleges that Summit or
any of its Subsidiaries is not in such compliance where the failure to comply
could, singly or in the aggregate, have a Material Adverse Effect on Summit,
and there are no currently existing circumstances known to Summit that, if not
corrected, could prevent such compliance in the future.
(b) There is no Environmental Claim pending or, to the
best knowledge of Summit, threatened against Summit or any of its Subsidiaries
or against any Person whose liability for any Environmental Claim Summit or any
of its Subsidiaries has retained or assumed either contractually or by
operation of law. To the best knowledge of Summit, there is no basis for any
such claim.
3.16 LITIGATION. All Proceedings against Summit or any of
its Subsidiaries or any of their properties or assets, and a brief description
thereof are listed in the Summit Disclosure Schedule. There is no Proceeding
or series of related Proceedings against or affecting Summit or any of its
Subsidiaries or any of their properties or assets, that could, singly or in the
aggregate, have a Material Adverse Effect on Summit. Neither Summit nor any of
its Subsidiaries is subject to any judgment, injunction, decree, writ,
interpretation or order of any Governmental
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Authority that could, singly or in the aggregate, have a Material Adverse
Effect on Summit.
3.17 CONTRACTS AND COMMITMENTS
(a) Except as set forth in the Summit Disclosure
Schedule, neither Summit nor any of its Subsidiaries will have any (i)
agreement for the employment of any individual or agreements that contain any
severance pay liabilities or obligations; or (ii) contract or commitment not
terminable without penalty or cost on notice of thirty (30) days or less and
which contains an obligation to pay and/or accrue more than $100,000 per year,
other than real estate and equipment leases and franchise agreements.
(b) Except as set forth in the Summit Disclosure
Schedule: (i) to the best knowledge of Summit, neither Summit nor any of its
Subsidiaries has breached, nor has received notice in writing or otherwise of
any claim that it has breached, any of the terms of conditions of any
agreement, contract or commitment set forth or required to be set forth in the
Summit Disclosure Schedule, any agreement with HomeTown Buffet, Inc. or any
franchise agreement with respect to a JB's restaurant, which breach or breaches
singly or in the aggregate are reasonably likely to have a Material Adverse
Effect on Summit, and (ii) to the best knowledge of Summit, there are no facts
or conditions which have occurred or are anticipated to occur which, through
the passage of time or the giving of notice, or both, would constitute a breach
under any such contract which breach is reasonably likely to have a Material
Adverse Effect on Summit.
3.18 COMPLIANCE WITH LAWS. Except as set forth on the
Summit Disclosure Schedule, to the best knowledge of Summit, Summit and its
Subsidiaries have complied with all applicable laws, regulations (including,
without limitation, applicable occupational health and safety laws and
regulations, applicable immigration laws and regulations and applicable laws
governing the sale of franchises) and zoning ordinances of foreign, federal,
state and local governments and all agencies thereof which affect the business,
business practices or any owned or leased properties of Summit and its
Subsidiaries and to which Summit and its Subsidiaries may be subject, except
where such failure to comply would not singly or in the aggregate have a
Material Adverse Effect on Summit.
3.19 ABSENCE OF CERTAIN DEVELOPMENTS. Except as set forth
on the Summit Disclosure Schedule and except as expressly contemplated by this
Agreement, since September 25, 1995, neither Summit nor any of its Subsidiaries
has:
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(i) suffered a Material Adverse Effect in its business,
financial condition, operating results, earnings, assets, customer,
supplier, employee and sales representative relations, business
prospects, business condition or financing arrangements or material
casualty loss or damage to its assets (whether or not covered by
insurance);
(ii) issued, sold or transferred any notes, bonds or other
debt securities or any equity securities, securities convertible,
exchangeable or exercisable into equity securities, or warrants,
options or other rights to acquire equity securities, in each case of
Summit or any Subsidiary thereof;
(iii) redeemed or repurchased, directly or indirectly, any
shares of capital stock or declared, set aside or paid any dividends
or made any other distributions with respect to any shares of its
capital stock;
(iv) borrowed any amount or incurred or become subject to
any liabilities, except liabilities incurred in the ordinary course of
business;
(v) entered into, amended or terminated any lease,
contract, agreement or commitment, or taken any other action or
entered into any other transaction other than in the ordinary course
of business and in accordance with past custom and practice or as
contemplated by this Agreement, or entered into any transaction with
any insider except as contemplated by this Agreement;
(vi) entered into any other material transaction, whether
or not in the ordinary course of business, or materially changed any
business practice;
(vii) made or granted any bonus or any wage, salary or
compensation increase in excess of $50,000 per year to any director,
officer, employee or sales representative, group of employees or
consultant or made or granted any increase in any employee benefit
plan or arrangement, or amended or terminated any existing employee
benefit plan or arrangement or adopted any new employee benefit plan
or arrangement;
(viii) conducted its cash management customs and practices
(including the collection of receivables, inventory control and
payment of payables) other than in the usual and ordinary course of
business in accordance with past custom and practice;
(ix) changed or authorized any change in its Charter
Documents; or
(x) committed to any of the foregoing.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF CKE
Except as otherwise set forth in the CKE Disclosure Schedule,
CKE hereby represents and warrants to Summit as follows:
4.1 ORGANIZATION, GOOD STANDING AND AUTHORITY. Each of
CKE and its Subsidiaries is a corporation duly organized, validly existing and
in good standing under the laws of the state of its incorporation. Each of CKE
and its Subsidiaries has full corporate power to carry on its business, as it
is now being conducted, and to own, lease or operate the properties and assets
it now owns, leases or operates. Each of CKE and its Subsidiaries is qualified
to do business, is in good standing and has all required business licenses in
each jurisdiction in which its failure to obtain or maintain such
qualification, good standing or license could have a Material Adverse Effect on
CKE.
4.2 BINDING AGREEMENT. CKE has all requisite corporate
power and corporate authority to enter into this Agreement and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all requisite corporate action. This Agreement is a
legal, valid and binding obligation of CKE, enforceable against it in
accordance with its terms, except as enforcement thereof may be limited by
general principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity) and the effect of applicable
bankruptcy, insolvency, moratorium and other similar laws of general
application relating to or affecting creditors' rights generally, including,
without limitation, the effect of statutory or other law regarding fraudulent
conveyances and preferential transfers.
4.3 CAPITALIZATION. The authorized capitalization of CKE
consists solely of (a) 50,000,000 shares of CKE Common Stock, of which
19,140,450 shares were issued and outstanding as of the date hereof; and (b)
5,000,000 shares of Preferred Stock, $.01 per share, of which no shares were
issued or outstanding as of the date hereof. On the Closing Date there will
not be outstanding: (i) any options, warrants or other rights to purchase from
CKE any capital stock of CKE, except for (x) the options, warrants and other
rights to purchase capital stock of CKE outstanding as of the date of this
Agreement as set forth on the CKE Disclosure Schedule, or (y) options, warrants
or other rights to purchase capital stock of CKE granted to employees and
officers of CKE as set forth on the CKE Disclosure Schedule; (ii) any
securities convertible into or exchangeable for shares of such stock; or (iii)
any other commitments of any kind for the issuance of additional shares of
capital stock or options, warrants or other securities of CKE other than rights
to purchase not more than 400,000 shares of CKE Common Stock granted to
existing officers, directors and employees and to new or
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newly promoted employees in the ordinary course of business and other than up
to an additional 200,000 shares of CKE Common Stock that may be issued in an
acquisition.
4.4 SUBSIDIARIES. There is set forth in the CKE
Disclosure Schedule (i) the name and percentage ownership by CKE of each of its
Subsidiaries; (ii) the jurisdiction of incorporation, capitalization and
ownership of each Subsidiary; and (iii) the names of the officers and directors
of each Subsidiary.
4.5 NO VIOLATION
(a) Except as set forth in the CKE Disclosure Schedule,
none of CKE or any of its Subsidiaries is (i) in violation of its respective
Charter Documents, or (ii) to CKE's best knowledge, in default in the
performance of any obligation, agreement or condition contained in any
Applicable Agreement, which violation or default could, singly or in the
aggregate, have a Material Adverse Effect on CKE.
(b) Except a set for in the CKE Disclosure Schedule,
neither the execution or delivery by CKE of this Agreement or the performance
by CKE of its obligations under this Agreement will (i) constitute a material
breach or material violation under the Charter Documents of CKE or any of its
Subsidiaries; or (ii) conflict with, violate, constitute a material breach or
material violation of or a material default (with the passage of time or
otherwise) under, require the consent of any Person under, give to others any
rights of termination, amendment, acceleration or cancellation of or result in
the imposition of a material Lien on any of the properties or assets of CKE or
any of its Subsidiaries or an acceleration of material indebtedness pursuant
to, any Applicable Agreement.
4.6 EXCHANGE ACT REPORTS AND FINANCIAL STATEMENTS. CKE
has furnished or will upon request furnish CKE with copies of its Annual Report
on Form 10-K for the fiscal years ended January 31, 1993, 1994 and 1995 and its
Quarterly Reports on Form 10-Q for the quarters ended May 22, 1995 and August
14, 1995, in each case with exhibits, and all other reports filed or required
to be filed with the Securities and Exchange Commission (the "SEC") under
applicable laws, rules and regulations since January 31, 1995 (all such reports
being herein collectively called the "CKE SEC Reports"), each as filed with the
SEC. Each such CKE SEC Report when it became effective or was filed with the
SEC, or as amended, as the case may be, complied in all material respects with
the requirements of the Exchange Act, as applicable, and the rules and
regulations of the SEC thereunder and did not on the date of filing or
amendment, if any, contain any untrue statement of material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements contained in said CKE SEC Reports: (i) were prepared in accordance
with the books
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and records of CKE and its Subsidiaries; (ii) were prepared in accordance with
GAAP and with Regulation S-X promulgated under the Exchange Act; (iii) fairly
present CKE's consolidated financial condition and the consolidated results of
its operations, cash flows and shareholders equity as at the relevant dates
thereof and for the periods covered thereby; (iv) contain and reflect all
necessary adjustments and accruals for a fair presentation of its consolidated
financial condition and the consolidated results of its operations, cash flows
and shareholders equity for the periods covered by said financial statements;
(v) contain and reflect adequate provisions for all reasonably anticipated
liabilities for all taxes, federal, state, local or foreign, with respect to
the periods then ended and all prior periods; and (vi) with respect to
contracts and commitments for the sale of goods or the provision of services by
CKE or any Subsidiary, contain and reflect adequate reserves for all reasonably
anticipated material losses, costs and expenses in excess of expected receipts.
4.7 INFORMATION IN REGISTRATION STATEMENT AND PROXY
STATEMENT. None of the information supplied or to be supplied by CKE for
inclusion or incorporation by reference in (i) the Registration Statement will,
at the time it becomes effective under the Securities Act and at the Effective
Time, 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, in light of the circumstances under which they were made, not
misleading and (ii) the Proxy Statement will, at the date mailed to Summit's
stockholders, at the time of the meeting of stockholders to be held in
connection with the Merger and at the Effective Time, 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
Registration Statement will, when filed with the SEC by CKE, comply as to form
in all material respects with the provisions of the Securities Act and the
rules and regulations thereunder, except that no representation is made by CKE
with respect to statements made therein based on information supplied by Summit
for inclusion in the Registration Statement.
4.8 CONSENTS AND APPROVALS. No consent, approval or
authorization of, or declaration, filing or registration with, any United
States federal or state governmental or regulatory authority is required to be
made or obtained by CKE in connection with the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, other than any filings required under the HSR Act, the
Exchange Act, the Securities Act and filings with the New York Stock Exchange.
4.9 NO BROKERS. Except as set forth in the CKE
Disclosure Schedule, neither CKE nor any affiliate thereof has entered into or
will enter into any agreement, arrangement or understanding with any person or
firm which will result in
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any obligation of CKE to pay any finder's fee, brokerage commission or similar
payment in connection with the transactions contemplated hereby.
4.10 LITIGATION. All material proceedings against CKE or
any of its Subsidiaries or any of their properties or assets, and a brief
description thereof are listed in the Disclosure Schedule. There is no
Proceeding or series of related Proceedings against or affecting CKE or any of
the Subsidiaries or any of their properties or assets, that could, singly or
in the aggregate, have a Material Adverse Effect on CKE. Neither CKE nor any
of its Subsidiaries is subject to any judgment, injunction, decree, writ,
interpretation or order of any Governmental Authority that could, singly or in
the aggregate, have a Material Adverse Effect on CKE.
4.11 COMPLIANCE WITH LAWS. Except as set forth on the CKE
Disclosure Schedule, to the best knowledge of CKE, CKE and its Subsidiaries
have complied with all applicable laws, regulations (including, without
limitation, applicable occupational health and safety laws and regulations and
applicable immigration laws and regulations) and zoning ordinances of foreign,
federal, state and local governments and all agencies thereof which affect the
business, business practices or any owned or leased properties of CKE and its
Subsidiaries and to which CKE and its Subsidiaries may be subject, except where
such failure to comply would not singly or in the aggregate have a Material
Adverse Effect on CKE.
4.12 ABSENCE OF CERTAIN DEVELOPMENTS. Except as set forth
on the CKE Disclosure Schedule and except as expressly contemplated by this
Agreement, since August 14, 1995, neither CKE nor any of its Subsidiaries has:
(i) suffered a Material Adverse Effect in its business,
financial condition, operating results, earnings, assets, customer,
supplier, employee and sales representative relations, business
prospects, business condition or financing arrangements or material
casualty loss or damage to its assets (whether or not covered by
insurance);
(ii) issued, sold or transferred any notes, bonds or other
debt securities or any equity securities, securities convertible,
exchangeable or exercisable into equity securities, or warrants,
options or other rights to acquire equity securities, in each case of
CKE or any Subsidiary thereof;
(iii) redeemed or repurchased, directly or indirectly, any
shares of capital stock or declared, set aside or paid any dividends
or made any other distributions with respect to any shares of its
capital stock;
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(iv) borrowed any amount or incurred or become subject to
any liabilities, except liabilities incurred in the ordinary course of
business;
(v) entered into, amended or terminated any lease,
contract, agreement or commitment, or taken any other action or
entered into any other transaction other than in the ordinary course
of business and in accordance with past custom and practice or as
contemplated by this Agreement, or entered into any transaction with
any insider except as contemplated by this Agreement;
(vi) entered into any other material transaction, whether
or not in the ordinary course of business, or materially changed any
business practice;
(vii) made or granted any bonus or any wage, salary or
compensation increase in excess of $50,000 per year to any director,
officer, employee or sales representative, group of employees or
consultant or made or granted any increase in any employee benefit
plan or arrangement, or amended or terminated any existing employee
benefit plan or arrangement or adopted any new employee benefit plan
or arrangement;
(viii) conducted its cash management customs and practices
(including the collection of receivables, inventory control and
payment of payables) other than in the usual and ordinary course of
business in accordance with past custom and practice;
(ix) changed or authorized any change in its Charter
Documents; or
(x) committed to any of the foregoing.
ARTICLE 5
ACTIONS BY SUMMIT AND CKE
PENDING THE MERGER
Summit and CKE covenant as follows for the period from the
date hereof through the Closing Date:
5.1 MAINTENANCE OF BUSINESS. Summit shall, and shall
cause each Subsidiary to, diligently carry on its business in the ordinary
course consistent with past practice, including, without limitation, meeting
its obligations as they become due and fulfilling its commitments to suppliers.
Summit shall cause its existing insurance policies to be maintained in effect
through the Closing Date.
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5.2 CERTAIN PROHIBITED TRANSACTIONS. Without the prior
written approval of CKE or except as otherwise contemplated under this
Agreement, prior to the Effective Time Summit shall not, and shall cause each
of its Subsidiaries not to:
(a) incur any indebtedness for borrowed money, assume,
guarantee, endorse or otherwise become responsible for obligations of any other
individual, partnership, firm or corporation, or make any loans or advances to
any individual, partnership, firm or corporation, except in the ordinary course
of business and consistent with past practice and, with respect to
indebtedness, pursuant to existing agreements;
(b) issue any shares of its capital stock or any other
securities or any securities convertible into shares of its capital stock or
any other securities, other than shares issued upon exercise of issued and
outstanding options, warrants and other rights to purchase capital stock of
Summit, which rights are outstanding as of the date hereof and are reflected in
Schedule 3.3 of the Summit Disclosure Schedule;
(c) pay or incur any obligation to pay any dividend on
its capital stock or make or incur any obligation to make any distribution or
redemption with respect to capital stock;
(d) make any change to its Certificate of Incorporation
or bylaws other than the filing of the Certificate of Merger;
(e) mortgage, pledge or otherwise encumber any of its
properties or assets or sell, transfer or otherwise dispose of any of its
properties or assets (other than (i) shares of HomeTown Buffet, Inc. common
stock held by Summit and (ii) restaurants in the process of being disposed of
or transferred as set forth in the Summit Disclosure Schedule) or cancel,
release, compromise or assign any indebtedness owed to it or any claims held by
it, except in the ordinary course of business and consistent with past
practice;
(f) make any investment of a capital nature either by
purchase of stock or securities, contributions to capital, property transfer or
otherwise, or by the purchase of any property or assets of any other
individual, partnership, firm or corporation, except in the ordinary course of
business and consistent with past practice;
(g) make any material tax election or make any material change
in Summit's accounting principles or practices;
(h) enter into any material contracts that would involve
the payment or accrual of payments of more than $100,000 in any fiscal year or
enter into any additional franchise agreements; or
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(i) do any other act which would cause any representation
or warranty of Summit in this Agreement to be or become untrue.
5.3 REGISTRATION STATEMENT/PROXY STATEMENT
Subject to the terms and conditions of this Agreement, Summit
and CKE each agree to use their respective reasonable best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable by such party with respect to (i) the prompt
preparation and filing of the Registration Statement by CKE with the SEC under
the Securities Act relating to the offer and sale of the CKE Common Stock in
the Merger and (ii) the prompt preparation and filing by Summit of the Proxy
Statement pertaining to solicitation of approval of Summit's stockholders, the
form of which shall be included as part of the Registration Statement, (iii)
such actions as may be required to have the Registration Statement declared
effective under the Securities Act and to have the Proxy Statement cleared by
the SEC, in each case as promptly as practicable, including by consulting with
the other parties hereto as to, and responding promptly to, any SEC comments
with respect thereto, and (iv) such actions as may be required to be taken
under applicable state securities or blue sky laws in connection with the
issuance of the CKE Common Stock contemplated hereby. Each party hereto shall
promptly consult with the other party with respect to, provide any necessary
information with respect to and provide the other party (and its counsel)
copies of, all filings made with respect to the Registration Statement and the
Proxy Statement. The information supplied by each party for inclusion in the
Registration Statement and the Proxy Statement shall not, at (i) the time the
Registration Statement (or any amendment or supplement thereto) is declared
effective, (ii) the time the Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to the stockholders of Summit and (iii) the
time of the Summit stockholders' meeting, respectively, 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 not
misleading and shall comply as to form in all material respects with the
requirements of the Securities Act. In addition, if at any time prior to the
Effective Time any event or circumstance relating to either Summit or CKE or
any of their respective subsidiaries, or any of their respective officers or
directors, should be discovered by Summit or CKE, as the case may be, and which
are required to be set forth in an amendment or supplement to the Registration
Statement or the Proxy Statement, the discovering party shall promptly inform
the other party of such event or circumstance.
5.4 INVESTIGATION BY CKE. Summit shall, and shall cause
the Subsidiaries to, allow CKE during regular business hours through their
employees, agents, advisors and representatives, to make such investigation of
the business, properties, books and records of Summit and its Subsidiaries, and
to conduct such
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examination of the condition of Summit and its Subsidiaries, as CKE deems
necessary or advisable to familiarize itself and its lenders with such
business, properties, books, records, condition and other matters, and to
investigate the accuracy and completeness of the representations and warranties
of Summit hereunder; provided however, that any information so obtained is
subject to the confidentiality agreement previously entered into. Such access
shall include authorizing Summit's legal, accounting, tax, insurance and
environmental consultants and advisors to cooperate with CKE, its lenders and
their advisors. In particular, Summit and its consultants and advisors shall
cooperate with CKE to allow CKE (a) to conduct full environmental reviews or
studies of Summit's properties and facilities and (b) to arrange for meetings
between CKE and the franchisees under the Summit's franchise agreements;
provided, that representatives from Summit may attend all such meetings.
5.5 TITLE REPORTS
As promptly as possible after the date hereof, Summit shall
order preliminary title reports from a title insurance company or companies
reasonably satisfactory to CKE for all real properties that are owned by
Summit. Summit shall use its best efforts to cause such reports to be delivered
to CKE on or prior to [30] days following the date hereof.
5.6 CONSENTS AND BEST EFFORTS. As promptly as possible
after the date hereof, CKE and Summit shall make all filings required under the
HSR Act. Summit and CKE will, as soon as possible, commence to take all action
required to obtain all consents, approvals and agreements of, and to give all
notices and make all other filings with, any third parties, including
governmental authorities, necessary to authorize, approve or permit the Merger
and the other transactions contemplated by this Agreement. In addition,
subject to the terms and conditions herein provided, each of the parties hereto
covenants and agrees to use its reasonable best efforts to take, or cause to be
taken, all action or do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated hereby and to cause the fulfillment of
the parties' obligations hereunder.
5.7 NOTIFICATION OF CERTAIN MATTERS. Summit shall give
prompt notice to CKE, and CKE shall give prompt notice to Summit, of (i) the
occurrence, or failure to occur, of any event which occurrence or failure would
be likely to cause any representation or warranty contained in this Agreement
to be untrue or inaccurate any time from the date hereof to the Closing Date
and (ii) any material failure of Summit or CKE, as the case may be, to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder, and each party shall use all reasonable efforts to
remedy same. Summit and the CKE acknowledge that they are
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presently unaware of any facts that cause any representation or warranty
contained in this Agreement to be untrue or inaccurate.
5.8 REASONABLE BEST EFFORTS. Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees to use its
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement. Each party shall promptly consult with the
other with respect to, provide any necessary information with respect to and
provide the other (or its counsel) copies of, all filings made by such party
with any Governmental Entity in connection with this Agreement and the
transactions contemplated hereby. In addition, if at any time prior to the
Effective Time any event or circumstance relating to either Summit or CKE or
any of their respective Subsidiaries, or any of their respective officers or
directors, should be discovered by Summit or CKE, as the case may be, and which
should be set forth in an amendment or supplement to the Registration Statement
or the Proxy Statement, the discovering party shall promptly inform the other
party of such event or circumstance.
5.9 LETTER OF SUMMIT'S ACCOUNTANTS. Following receipt by
KMPG Peat Marwick LLP, Summit's independent auditors, of an appropriate request
from CKE pursuant to Statement on Auditing Standards ("SAS") No. 72, Summit
shall use its reasonable best efforts to cause to be delivered to CKE a letter
of KMPG Peat Marwick LLP , dated a date within two business days before the
date on which the Registration Statement shall become effective and addressed
to CKE, in form and substance reasonably satisfactory to CKE and customary in
scope and substance for letters delivered by independent public accountants in
connection with registration statements similar to the Registration Statement,
which letter shall be brought down to the Effective Time.
5.10 LETTER OF CKE'S ACCOUNTANTS. Following receipt by
KMPG Peat Marwick LLP, CKE's independent auditors, of an appropriate request
from CKE pursuant to SAS No. 72, CKE shall use its reasonable best efforts to
cause to be delivered a letter of KMPG Peat Marwick LLP , dated a date within
two business days before the date on which the Registration Statement shall
become effective and addressed to CKE, in form and substance reasonably
satisfactory to CKE and customary in scope and substance for letters delivered
by independent public accountants in connection with registration statements
similar to the Registration Statement, which letter shall be brought down to
the Effective Time.
5.11 STOCKHOLDERS MEETING. Summit shall call a meeting of
its stockholders for the purpose of voting upon this Agreement, the Merger and
related matters. Summit will, through its Board of Directors, recommend to
its stockholders
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approval of such matters and will coordinate and cooperate with respect to the
timing of this meetings and shall use its reasonable best efforts to hold such
meeting as soon as practicable after the date hereof.
5.12 NEW YORK STOCK EXCHANGE LISTING. CKE shall use its
reasonable best efforts to cause the CKE Common Stock to be issued in the
Merger to be approved for listing on the New York Stock Exchange, subject to
official notice of issuance, prior to the Closing Date.
5.13 BENEFIT PLANS
(a) It is CKE's present intent to provide continuing
employees of Summit and its Subsidiaries with employee benefits comparable to
those provided to CKE employees.
(b) CKE will, and will cause the Surviving Corporation
to, honor without modification all employee severance plans (or policies) and
employment and severance agreements of Summit or any of its Subsidiaries hereto
identified in the Summit Disclosure Schedule as such agreements (or policies)
are in effect on the date of this Agreement.
5.14 STOCK OPTION PLANS
(a) On or prior to the Effective Time, Summit and its
Board of Directors (or a committee thereof) shall take all action necessary to
implement the provisions contained herein; provided, that such provisions do
not create an aggregate cash liability at the Effective Time in excess of
$606,000.
(b) At the election of each holder of an option to
purchase shares of Summit Common Stock (a "Summit Stock Option") which is
currently vested under a Summit Stock Option Plan, at the Effective Time, (i)
all Summit Stock Options held by such holder shall become fully exercisable,
(ii) such Summit Stock Options shall be cancelled and (iii) in consideration of
such cancellation, Summit shall pay to such holders of such Summit Stock
Options an amount in respect thereof equal to the product of (x) the excess, if
any, of $6.00 over the respective exercise price thereof and (y) the number of
shares of Summit Common Stock subject thereto, respectively (such payment to be
net of any required withholding taxes). From and after the Effective Time,
each outstanding Summit Stock Option, whether vested or unvested, that is
not so cancelled shall constitute an option to acquire, on the same terms and
conditions as were applicable under such Summit Stock Option, a number of
shares of CKE Common Stock equal to (w) the product of $6.00 and the number of
shares of Summit Common Stock purchasable upon exercise of the Summit Stock
Option prior to the Effective
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Time divided by (x) the Average CKE Price, at an exercise price per share equal
to (y) the aggregate exercise price for the shares of Summit Common Stock
purchasable upon exercise of the Summit Stock Option prior to the Effective Date
divided by (z) the aggregate number of shares of CKE Common Stock purchasable
upon exercise of such Summit Stock Option following the Effective Date.
(c) Except as provided herein or as otherwise agreed to
by the parties, and to the extent permitted by the Summit Stock Option Plan,
the Summit Stock Option Plan shall terminate as of the Effective Time and the
provisions in any other plan, program or arrangement, providing for the
issuance or grant of any other interest in respect of the capital stock of
Summit or any of its Subsidiaries shall be deleted as of the Effective Time.
5.15 CHANGE OF CONTROL LETTERS
Summit shall cause the seven employees who have signed the
Change of Control letters dated August 17, 1995 identified in Schedule
3.17(a)(i)(c) and Mr. McComas under the employment agreement dated November 24,
1993 to sign modifications extending to 90 days following the Closing the date
after which such employees may voluntarily resign and obtain the severance
benefits set forth therein.
5.16 EXCLUSIVITY
(a) Until the termination of this Agreement pursuant to
Section 9.1, Summit will not, nor will it permit its officers, directors,
affiliates, representatives or agents, directly or indirectly, to do any of the
following:
(i) discuss, negotiate, undertake, authorize,
recommend, propose or enter into, either as the proposed surviving, merged,
acquiring or acquired corporation, any transaction (other than the Merger)
involving any disposition or other change of ownership of of Summit's stock or
assets, other than acquisitions and dispositions of equipment and other
property in the ordinary course of Summit's business and dispositions of
HomeTown Buffet, Inc. common stock owned by Summit (an "Acquisition
Transaction");
(ii) facilitate, encourage, solicit or initiate or in
any way engage in any discussion, negotiation or submission of a proposal or
offer in respect of an Acquisition Transaction;
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(iii) furnish or cause to be furnished to any Person
any information concerning the business, operations, properties or assets of
Summit in connection with an Acquisition Transaction; or
(iv) 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.
Summit will inform CKE by telephone within 24 hours of its receipt of
any proposal or bid (including the terms thereof and the Person making such
proposal or bid) in respect of any Acquisition Transaction.
ARTICLE 6
CONDITIONS TO SUMMIT'S OBLIGATIONS
The obligations of Summit under this Agreement are subject to
the satisfaction, on or prior to the Closing Date, of each of the following
conditions:
6.1 COMPLETION OF OTHER TRANSACTIONS. Simultaneously
with Summit's effectuation of the transactions to be effected by it at the
Closing:
(a) The Registration Statement shall have become
effective under the Securities Act, the Proxy Statement shall have been cleared
by the staff of the SEC and no stop order or proceeding seeking stop orders
shall have been issued with respect to the Registration Statement or the Proxy
Statement.
(b) The Merger shall have been completed and the
Certificate of Merger shall have been filed with the Secretary of State of the
State of Delaware.
(c) This Agreement and the Merger shall have been
approved and adopted by the holders of the Summit Common Stock and the Summit
Preferred Stock pursuant to and in accordance with the Charter Documents of
Summit.
(d) The CKE Common Stock shall have been approved
for listing on the New York Stock Exchange, subject to official notice of
issuance.
6.2 REPRESENTATIONS, WARRANTIES AND COVENANTS. All
representations and warranties of CKE contained in this Agreement shall be true
and correct at and as of the Closing Date as if such representations and
warranties were made at and as of the Closing Date, and CKE shall have
performed in all material respects all
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agreements and covenants required hereby to be performed by it prior to or at
the Closing Date. There shall be delivered to Summit a certificate (signed by
the President or a Vice President of CKE on behalf of the CKE) to the foregoing
effect.
6.3 CONSENTS. All consents, approvals and waivers from
governmental authorities, and other parties necessary to permit Summit to
consummate the transactions as contemplated hereby, shall have been obtained,
unless the failure to obtain any such consent, approval or waiver would not
have a Material Adverse Effect upon Summit.
6.4 NO GOVERNMENTAL PROCEEDING OR LITIGATION. No suit,
action, investigation, inquiry or other Proceeding by any Governmental
Authority shall have been instituted or threatened which questions the validity
or legality of the transactions contemplated hereby. No suit, action,
investigation, inquiry or other Proceeding by any Governmental Authority or
other Person shall have been instituted or threatened which questions the
validity or legality of the transactions contemplated hereby and which could
reasonably be expected to have a Material Adverse Effect on Summit or its
Subsidiaries.
6.5 CERTIFICATES. CKE will furnish Summit with such
certificates of its officers, directors and others to evidence compliance with
the conditions set forth in this Article 6 as may be reasonably requested by
Summit and Summit shall have received an opinion of counsel to CKE reasonably
acceptable to Summit.
6.6 TAX OPINION. Summit shall have received an opinion
of counsel (a copy of which will be delivered to CKE) to the effect that the
Merger shall constitute a tax-free reorganization within the meaning of Section
368(a) of the Code.
6.7 CORPORATE DOCUMENTS. Summit shall have received from
CKE resolutions adopted by the board of directors of CKE approving this
Agreement and the transactions contemplated hereby, certified by CKE's
corporate secretary.
6.8 HSR ACT. The applicable waiting period, including
any extension thereof, under the HSR Act shall have expired.
6.9 FAIRNESS OPINION. Summit shall have received a
letter from Piper Jaffray Inc. confirming the opinion rendered to Summit's
Board of Directors on or prior to the date hereof to the effect that the terms
of the Merger are fair to the holders of Summit Common Stock from a financial
point of view, a copy of which will be delivered to CKE at the Closing.
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ARTICLE 7
CONDITIONS TO CKE'S OBLIGATIONS
The obligations of CKE under this Agreement, including the
obligation to pay the Merger Consideration as provided hereby, are subject, in
the discretion of CKE, to the satisfaction, on or prior to the Closing Date, of
each of the following conditions:
7.1 COMPLETION OF OTHER TRANSACTIONS. Simultaneously
with or prior to CKE's effectuation of the transactions to be effected by it at
the Closing:
(a) The Registration Statement shall have become
effective under the Securities Act, the Proxy Statement shall have been cleared
by the staff of the SEC and no stop order or proceeding seeking stop orders
shall have been issued with respect to the Registration Statement or the Proxy
Statement.
(b) The Merger shall have been completed and the
Certificate of Merger shall have been filed with the Secretary of State of the
State of Delaware.
(c) This Agreement and the Merger shall have been
approved and adopted by the holders of the Summit Common Stock and the Summit
Preferred Stock pursuant in accordance with the Charter Documents of Summit.
(d) The CKE Common Stock shall have been approved
for listing on the New York Stock Exchange, subject to official notice of
issuance.
7.2 REPRESENTATIONS, WARRANTIES AND COVENANTS. All
representations and warranties of Summit contained in this Agreement shall be
true and correct at and as of the Closing Date as if such representations and
warranties were made at and as of the Closing Date, and Summit and each
Subsidiary shall have performed in all material respects all agreements and
covenants required hereby to be performed by any of them prior to or at the
Closing Date. There shall be delivered to CKE a certificate (signed by the
President or a Vice President of Summit on behalf of Summit) to the foregoing
effect.
7.3 CONSENTS. All consents, approvals and waivers from
governmental authorities, and other parties necessary to permit Summit or CKE
to consummate the transactions as contemplated hereby, shall have been
obtained, unless the failure to obtain any such consent, approval or waiver
would not have a Material Adverse Effect upon Summit.
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7.4 NO GOVERNMENTAL PROCEEDING OR LITIGATION. No suit,
action, investigation, inquiry or other Proceeding by any Governmental
Authority shall have been instituted or threatened which questions the validity
or legality of the transactions contemplated hereby. No suit, action,
investigation, inquiry or other Proceeding by any Governmental Authority or
other Person shall have been instituted or threatened which questions the
validity or legality of the transactions contemplated hereby and which could
reasonably be expected to have a Material Adverse Effect on Summit or its
Subsidiaries.
7.5 CERTIFICATES AND OPINIONS. Summit shall furnish CKE
with such certificates of the respective officers of Summit and others to
evidence compliance with the conditions set forth in this Article 7 as may be
reasonably requested by CKE and CKE shall have received an opinion of counsel
to Summit reasonably acceptable to CKE.
7.6 TAX OPINION. CKE shall have received an opinion of
counsel to CKE (a copy of which will be delivered to Summit) to the effect that
the Merger shall constitute a tax-free reorganization within the meaning of
Section 368(a) of the Code.
7.7 CORPORATE DOCUMENTS. CKE shall have received from
Summit resolutions adopted by the respective boards of directors of Summit
approving this Agreement and the transactions contemplated hereby, certified by
the corporate secretary of Summit. CKE shall have also received the corporate
minute books, Certificates of Incorporation, bylaws and stock transfer books of
Summit and each of the Subsidiaries.
7.8 HSR ACT. The applicable waiting period, including
any extension thereof, under the HSR Act shall have expired.
7.9 DISSENTING SHARES. To the extent that holders of
Summit Common Stock and Summit Preferred Stock are entitled to dissent from the
Merger, the holders of not more than 10% of the shares of Summit Common Stock
or Summit Preferred Stock shall have asserted dissenters' rights in accordance
with the DGCL.
7.10 FAIRNESS OPINION. CKE shall have received a letter
from NatWest Markets confirming the opinion rendered to CKE's Board of
Directors on or prior to the date 10 days following to the date hereof to the
effect that the terms of the Merger are fair to the holders of CKE Common Stock
from a financial point of view, a copy of which will be delivered to Summit at
the Closing.
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ARTICLE 8
ACTIONS BY SUMMIT
AND CKE AFTER THE CLOSING
8.1 FURTHER ASSURANCES. On and after the Closing Date,
Summit and CKE will take all appropriate action and execute all documents,
instruments or conveyances of any kind which may be reasonably necessary or
advisable to carry out any of the provisions hereof, including without
limitation, putting CKE in possession and operating control of the business of
Summit.
8.2 DIRECTORS' AND OFFICERS' INSURANCE. CKE shall
either: (i) cause Summit to provide directors' and officers' and fiduciary
liability insurance having substantially similar terms and conditions and
providing substantially similar coverage as the directors' and officers' and
fiduciary liability insurance maintained by Summit at the Effective Time for a
period of one year following the Effective Time for all present directors and
officers of Summit and its Subsidiaries, provided that CKE may substitute
therefor policies of at least the same coverage and amounts containing terms
and conditions which are no less advantageous, or (ii) cause Summit to purchase
runoff extensions under its existing directors' and officers' and fiduciary
liability insurance policies, extending the period for making claims under such
policies for at least one year following the Effective Time; provided, however,
that the total expense for such extensions shall not exceed $40,000.
ARTICLE 9
TERMINATION AND AMENDMENT
9.1 TERMINATION. This Agreement may be terminated at any
time prior to the Effective Time:
(a) by mutual consent of CKE and Summit;
(b) by either CKE or Summit if the Merger shall not have
been consummated before April 15, 1996 despite the good faith effort of such
party to effect such consummation (unless the failure to so consummate the
Merger by such date shall be due to the action or failure to act of the party
seeking to terminate this Agreement, which action or failure to act constitutes
a breach of this Agreement);
(c) by CKE if (i) (A) there are inaccuracies in the
representations and warranties of Summit that would have a Material Adverse
Effect on Summit, or (B) there has been a material breach on the part of Summit
in the covenants of Summit set forth herein, or any failure on the part of
Summit to comply with its material obliga-
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tions hereunder, or any other events or circumstances shall have occurred, such
that, in any such case, Summit could not satisfy on or prior to April 15, 1996,
any of the conditions to the Closing set forth herein, or (ii) Summit's
stockholders do not approve the Merger at the Summit stockholders' meeting;
(d) by Summit if (i) (A) there are inaccuracies in the
representations and warranties of CKE having a Material Adverse Effect on CKE
or (B) there has been a material breach on the part of CKE in the covenants of
CKE set forth herein, or any failure on the part of CKE to comply with its
material obligations hereunder, or any other events or circumstances shall have
occurred, such that, in any such case, CKE could not satisfy on or prior to
April 15, 1996, any of the conditions to the Closing set forth in this
Agreement, (ii) Summit's stockholders do not approve the Merger at the Summit
stockholders' meeting, (iii) prior to the approval of the Merger by Summit's
stockholders, Summit receives a firm offer with respect to an Acquisition
Transaction that is reasonably capable of being financed and, in the good faith
determination of its Board of Directors after consultation with its financial
advisors, is financially superior to the Merger and the Board of Directors of
Summit, after consulting with its outside counsel, determines that to proceed
with the Merger would violate its fiduciary duties under applicable law, or
(iv) if the Average CKE Price is less than $12.25, unless CKE notifies Summit
in writing that it elects to proceed with the Closing by issuing additional
shares of CKE Common Stock to compensate for the reduction in the Average CKE
Price below $12.25 (the "Fill-Up Election"); or
(e) by holders of the Summit Preferred Stock through written
notice to Summit and CKE if the Average CKE Price is less than $12.25, unless
CKE makes the Fill-Up Election.
9.2 EFFECT OF TERMINATION. In the event of a termination
of this Agreement by either Summit or CKE as provided in Section 9.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of CKE or Summit or their respective officers or
directors (other than as provided in Section 9.3 below for termination by
Summit pursuant to Section 9.1(d)(iii)) except for breach of the
confidentiality provisions of Section 11.13, and except to the extent that such
termination results from the willful breach by a party hereto of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
9.3 CERTAIN FEES. In the event that Summit terminates
the Agreement pursuant to Section 9.1(d)(iii), Summit shall promptly pay CKE a
cash fee of $800,000. In the event that all conditions to CKE's obligations as
set forth in Article 7 are satisfied and CKE nevertheless fails to proceed with
the Merger, CKE shall forthwith pay Summit a fee of $800,000, in addition to
all other damages that Summit may suffer as a result of such breach.
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ARTICLE 10
DEFINITIONS
10.1 DEFINED TERMS. As used herein, the terms below shall
have the following meanings:
"Adjusted CKE Price" has the meaning set forth in Section 2.1.
"Average CKE Price" has the meaning set forth in Section 2.1.
"Acquisition Transaction" has the meaning set forth in Section
5.14.
"Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agreement" has the meaning set forth in the Preamble hereof.
"Applicable Agreement" means, with respect to any Person, any
bond, debenture, note or any other evidence of indebtedness, indenture,
mortgage, deed of trust, lease, contract, agreement, license or instrument to
which such Person or any of the Subsidiaries is a party or by which any of
their respective properties or assets is bound.
"Applicable Employment Law" means any Applicable Law governing
or respecting employment or the termination thereof, employment practices,
terms and conditions of employment, wages, hours of work, occupational safety
and health, or discriminatory, wrongful or tortious conduct in connection with
the employment relationship.
"Applicable Law" means any law, statute, ordinance, judgment,
injunction, decree, writ, regulation, interpretation, rule or order of any
court or Governmental Authority, and any other governmental restrictions or
requirements, including (without limitation) pursuant to any permit or license
in effect on or prior to the Closing Date.
"Benefit Plan" means, with respect to any Person, an employee
benefit plan (as defined in Section 3(3) of ERISA) whether or not covered by
ERISA, bonus
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or other incentive plan, deferred compensation, severance arrangement,
executive compensation or any material fringe benefit plan or program
maintained or contributed to by such Person or any of its Subsidiaries or with
respect to which such Person or any of its Subsidiaries has an obligation,
actual or potential.
"Charter Documents" means, with respect to any Person, the
articles or certificate of incorporation and by-laws, partnership agreement or
other organizational documents of such Person.
"CKE" has the meaning set forth in the Preamble.
"CKE Common Stock" means the Common Stock, par value $.01 per
share, of CKE.
"CKE Disclosure Schedule" means a schedule delivered by CKE to
Summit as of the date hereof (and which may be amended or modified on or prior
to the Closing Date) which sets forth exceptions to the representations and
warranties contained in Article 4 hereof and certain other information called
for by Article 4 hereof and other provisions of this Agreement.
"Closing" has the meaning set forth in Section 1.2.
"Closing Date" has the meaning set forth in Section 1.2.
"Code" has the meaning set forth in Recital B.
"DGCL" has the meaning set forth in Section 1.1.
"Effective Time" has the meaning set forth in Section 1.2.
"Environmental Claim" means any claim, action, cause of
action, investigation or notice (written or oral) by any Person alleging
potential liability (including, without limitation, potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries, or penalties) arising
out of or resulting from (a) the presence, or release into the environment, of
any Materials of Environmental Concern at any location, whether or not owned or
operated by Summit or any of the Subsidiaries, or (b) any noncompliance with
any Environmental Law.
"Environmental Law" means any and all Applicable Laws relating
to pollution or the protection of human health or the environment or to
emissions, discharges, releases or threatened releases of any Materials of
Environmental Concern
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into the environment (including without limitation ambient air, surface water,
ground water, or land), or otherwise relating to the manufacture, processing,
distribution, generation, treatment, storage, disposal, transport or handling
of any Materials of Environmental Concern.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" has the meaning set forth in Section 3.6.
"Fill-Up Election" has the meaning set forth in Section
9.1(d)(iv).
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect on the date of this
Agreement.
"Governmental Authority" means any Federal, state, local or
foreign court or governmental, administrative or regulatory authority or
agency.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"IRS" has the meaning set forth in Section 3.12.
"Lien" means any mortgage, pledge, lien, encumbrance, charge
or adverse claim, or a security interest of any kind (including, without
limitation, any conditional sale or other title retention agreement, any lease
in the nature thereof and any option or other agreement to sell).
"Material Adverse Effect" means, with respect to any Person, a
material adverse effect on (i) the condition (financial or otherwise), results
of operations, assets, liabilities, business or business prospects of such
Person, (ii) the ability of such Person or any of its Affiliates to perform its
obligations hereunder or (iii) the validity or enforceability of this
Agreement.
"Merger" shall have the meaning set forth in Recital A.
"Merger Consideration" has the meaning set forth in Section
2.1.
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"Materials of Environmental Concern" means pesticides,
chemicals, pollutants, contaminants, wastes, toxic substances and hazardous
substances.
"Multiemployer Plan" means, with respect to any Person, on any
date, a multiemployer plan defined as such in Section 3(37) of ERISA to which
contributions have been made at any time during the six-year period ending on
or prior to such date, by such Person and that is covered by Title IV of ERISA.
"NLRB" means the National Labor Relations Board.
"PBGC" has the meaning set forth in Section 3.12.
"Permitted Liens" means (i) Liens securing indebtedness under
the Summit's credit facility with Zions National Bank; (ii) Liens in favor of
Summit or any Subsidiary; (iii) Liens to secure the performance of statutory
obligations, surety or appeal bonds, performance bonds or other obligations of
a like nature incurred in the ordinary course of business; (iv) Liens for
taxes, assessments or governmental charges or claims that are not yet
delinquent or that are being contested in good faith by appropriate proceedings
promptly instituted and diligently concluded, provided that any reserve or
other appropriate provision as shall be required in conformity with GAAP shall
have been made therefor; (v) carriers', warehousemen's, mechanics',
materialmen's, repairmen's, or other similar Liens arising in the ordinary
course of business which are not overdue for a period of more than 60 days or
which are being contested in good faith by appropriate proceedings diligently
conducted, (vi) Liens of landlords or of mortgagees of landlords arising by
operation of law, provided that the rental payments secured thereby are not yet
due and payable, (vii) Liens incurred or deposits made in the ordinary course
of business in connection with workers' compensation, unemployment insurance
and other types of social security; (viii) easements, rights-of-way,
restrictions, minor defects or irregularities in title and other similar
charges or encumbrances not interfering in any material respect with the
business of Summit or any of its Subsidiaries, (ix) Purchase Money Liens
(including extensions and renewals thereof); (x) any interest or title of a
lessor in property subject to any capital lease obligation or operating lease;
and (xi) Liens arising from filing Uniform Commercial Code financing statements
regarding leases.
"Person" means any individual, partnership, corporation, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or agency or political subdivision thereof, or other entity.
"Proceeding" means an action, claim, suit or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
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"Proxy Statement" has the meaning set forth in Section 3.7.
"Purchase Money Lien" means a Lien granted on an asset or
property to secure incurred incurred solely to finance the purchase, or the
cost of construction or improvement, of such asset or property.
"Registration Statement" has the meaning set forth in Section
3.7.
"SAS" has the meaning set forth in Section 5.8.
"SEC" has the meaning set forth in Section 3.6.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiaries" means any corporation with respect to which a
specified Person (or a Subsidiary thereof) owns a majority of the common stock
or has the power to vote or direct the voting of sufficient securities to elect
a majority of directors.
"Summit" has the meaning set forth in the Preamble.
"Summit Common Stock" means the Common Stock, par value $.10
per share, of Summit.
"Summit Disclosure Schedule" means a schedule delivered by
Summit to CKE as of the date hereof (and which may be amended or modified on or
prior to the Closing Date) which sets forth exceptions to the representations
and warranties contained in Article 3 hereof and certain other information
called for by Article 3 hereof and other provisions of this Agreement.
"Summit Preferred Stock" means the Series A Convertible
Preferred Stock, par value $1.00 per share, of Summit.
"Summit Stock Option" has the meaning set forth in Section
5.13.
"Summit Stock Option Plans" means the 1987 Nonqualified Stock
Option Plan, the 1987 Incentive Stock Option Plan, the 1984 Incentive Stock
Option Plan, as amended on February 13, 1987, and the 1992 Stock Option Plan,
as amended on April 8, 1994 and November 18, 1994, in each case of Summit.
"Tax or Taxes" means any federal, state, local, foreign or
other income, gross receipts, ad valorem, franchise, profits, sales or use,
transfer, registration, excise, utility, environmental, communications, real or
personal property, capital stock, license,
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payroll, wage or other withholding, employment, social security, severance,
transfer, stamp, occupation, alternative or add-on minimum, estimated or other
taxes of any kind whatsoever (including, without limitation, deficiencies,
penalties, additions to tax, and interest attributable thereto) whether
disputed or not.
"Tax Returns" means any United States Federal, state, local
and foreign returns, declarations, elections, statements, reports, schedules
and information returns pertaining to any Tax or the refiling or amendment of
any such Tax Returns previously filed.
"ULP" means an unfair labor practice as defined in the
National Labor Relations Act.
ARTICLE 11
MISCELLANEOUS
11.1 SURVIVAL OF REPRESENTATIONS, ETC. All statements
contained in the Disclosure Schedule or in any certificate or instrument of
conveyance delivered by or on behalf of the parties pursuant to this Agreement
or in connection with the transactions contemplated hereby shall be deemed to
be representations and warranties by the parties hereunder. The
representations and warranties of Summit and CKE contained herein shall not
survive the Closing Date.
11.2 ASSIGNMENT. Neither this Agreement nor any of the
rights or obligations hereunder may be assigned by Summit without the prior
written consent of CKE, or by CKE without the prior written consent of Summit.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, and no other person shall
have any right, benefit or obligation hereunder.
11.3 NOTICES. Unless otherwise provided herein, any
notice, request, instruction or other document to be given hereunder by any
party to the others shall be in writing and delivered in person or by courier,
telegraphed, telexed or by facsimile transmission (with confirmation given) or
mailed by certified mail, postage prepaid, return receipt requested (such
mailed notice to be effective on the date of such receipt is acknowledged), as
follows:
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If to
Summit: Charlotte L. Miller
Senior Vice President &
General Counsel
Summit Family Restaurants Inc.
440 Lawndale Drive
Salt Lake City, Utah 84115-2917
(801) 463-5500 Phone
(801) 463-5585 Facsimile
If to CKE: Richard C. Celio
Senior Vice President &
General Counsel
CKE Restaurants, Inc.
1200 North Harbor Boulevard
Anaheim, California 92801
(714) 774-5796 Phone
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
11.4 CHOICE OF LAW. This Agreement shall be construed,
interpreted and the rights of the parties determined in accordance with the
laws of the State of Delaware except with respect to matters of law concerning
the internal corporate affairs of any corporate entity which is a party to or
the subject of this Agreement, and as to those matters the law of the
jurisdiction under which the respective entity derives its powers shall govern.
11.5 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This
Agreement, together with all exhibits and schedules hereto, constitutes the
entire agreement among the parties pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties. No supplement, modification or waiver
of this Agreement shall be binding unless executed in writing by the party to
be bound thereby. No waiver of any of the provisions of this Agreement shall
be deemed or shall constitute a waiver of any other provision hereof (whether
or not similar), nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided.
11.6 COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
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11.7 INVALIDITY. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not
affect any other provision of this Agreement or any other such instrument.
11.8 HEADINGS. The headings of the Articles and Sections
herein are inserted for convenience of reference only and are not intended to
be a part of or to affect the meaning or interpretation of this Agreement.
11.9 EXPENSES. Summit and CKE will each be liable for its
own, costs and expenses incurred in connection with the negotiation,
preparation, execution or performance of this Agreement.
11.10 SPECIFIC PERFORMANCE. The parties hereto agree that
if any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached, irreparable damage would
occur, no adequate remedy at law would exist, and that the parties shall be be
entitled to specific performance of the terms hereof, in addition to actions
for damages and any other remedy at law or equity.
11.11 ATTORNEYS FEES. The parties hereby agree that if any
party hereto pursues a Proceeding to enforce the terms of this Agreement, the
prevailing party in any such Proceeding shall be entitled to recover its
attorneys fees and other costs and expenses incurred in such Proceeding from
the other party.
11.12 PUBLICITY. Neither party shall issue or make or
permit any Affiliate or advisor to issue or make any press release or other
public statement regarding the transactions contemplated hereby, without the
prior approval of the other party, except as required by law in the opinion of
counsel to each party. The parties shall issue a mutually acceptable press
release as soon as possible after execution of this Agreemen and as soon as
practicable after the Closing Date.
11.13 CONFIDENTIAL INFORMATION. The parties acknowledge
that the transaction described herein is of a confidential nature and shall not
be disclosed except to consultants, lenders, advisors and affiliates, or as
required by law, until such time as the parties make a public announcement
regarding the transaction. Neither Summit nor CKE shall make any public
disclosure of the specific terms of this Agreement, except as required by law.
In connection with the negotiation of this Agreement and the preparation for
the consummation of the transactions contemplated hereby, each party
acknowledges that it will have access to confidential information relating to
the other party. Each party shall treat such information as confidential,
preserve the confidentiali-
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ty thereof and not duplicate or use such information, except to advisors,
consultants, lenders and affiliates in connection with the transactions
contemplated hereby. Summit, at a time and in a manner which it reasonably
determines and after prior notice to and consultation with CKE, may notify
employees, unions and bargaining agents of the fact of the subject transaction.
In the event of the termination of this Agreement for any reason whatsoever,
each party shall return to the other all documents, work papers and other
material (including all copies thereof) obtained in connection with the
transactions contemplated hereby and will use all reasonable efforts, including
instructing its employees and others who have had access to such information,
to keep confidential and not to use any such information, unless such
information is now, or is hereafter disclosed, through no act or omission of
such party, in any manner making it available to the general public.
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement, or have caused this Agreement to be duly executed on their
respective behalf by their respective officers thereunto duly authorized, as of
the day and year first above written.
SUMMIT FAMILY RESTAURANTS INC.
By /s/ Don M. McComas
------------------------------
Don M. McComas
President and Chief Executive Officer
By /s/ Charlotte L. Miller
------------------------------
Charlotte L. Miller
Senior Vice President &
General Counsel
CKE RESTAURANTS, INC.
By /s/ Joseph N. Stein
------------------------------
Joseph N. Stein
Senior Vice President,
Chief Financial Officer
By /s/ Richard C. Celio
------------------------------
Richard C. Celio
Senior Vice President,
General Counsel