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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
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SUMMIT FAMILY RESTAURANTS INC.
(NAME OF ISSUER)
COMMON STOCK
(TITLE OF CLASS OF SECURITIES)
866056 10 4
(CUSIP NUMBER)
ROBERT A. WILSON
VICE PRESIDENT AND GENERAL COUNSEL
CKE RESTAURANTS, INC.
1200 NORTH HARBOR BOULEVARD
ANAHEIM, CA 92801
TELEPHONE: (714) 774-5796
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS)
------------------------
COPIES TO:
C. CRAIG CARLSON, ESQ.
STRADLING, YOCCA, CARLSON & RAUTH
660 NEWPORT CENTER DRIVE, SUITE, 1600
NEWPORT BEACH, CA 92660
TELEPHONE: (714) 725-4000
APRIL 4, 1996
(DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT)
------------------------
If the filing person has previously filed on Schedule 13G to report the
acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box. / /
Check the following box if a fee is being paid with this statement /X/.
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Page 1 of 42 Pages
Exhibit Index Appears on Page 8
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SCHEDULE 13D
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<S> <C> <C>
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CUSIP No. 866056 10 4 Page 2 of 42 Pages
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NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
CKE Restaurants, Inc.
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
2 (b) / /
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SEC USE ONLY
3
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SOURCE OF FUNDS
4
WC
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
5 PURSUANT TO ITEMS 2(d) or 2(e) / /
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CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
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SOLE VOTING POWER
7
946,714
NUMBER OF ---------------------------------------------------------------
SHARES SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY -0-
EACH ---------------------------------------------------------------
REPORTING SOLE DISPOSITIVE POWER
PERSON 9
WITH 946,714
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SHARED DISPOSITIVE POWER
10
-0-
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
11 PERSON
946,714
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES / /
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
13
approximately 16.5%
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TYPE OF REPORTING PERSON
14
CO
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</TABLE>
Page 2 of 42 Pages
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ITEM 1. SECURITY AND ISSUER
The class of equity securities to which this Statement on Schedule 13D (the
"Statement") relates is the common stock, par value $.10 per share (the "Common
Stock"), of Summit Family Restaurants Inc., a Delaware corporation (the
"Company"). The principal executive offices of the Company are located at 440
Lawndale Drive, Salt Lake City, Utah 84115.
ITEM 2. IDENTITY AND BACKGROUND
This Statement is being filed by CKE Restaurants, Inc., a Delaware
corporation ("CKE"). The principal executive offices of CKE are located at 1200
North Harbor Boulevard, Anaheim,California 92801. CKE is engaged in the food
service industry, with its restaurant operations conducted through its
subsidiaries Carl Karcher Enterprises, Inc., which operates, franchises and
licenses the Carls Jr.(R) quick-service restaurant concept, and Boston Pacific,
Inc., which holds a minority interest in Boston West, L.L.C., an operator of
Boston Market restaurants in Southern California.
Information regarding the directors and executive officers of CKE is set
forth on Schedule I attached hereto, which is hereby incorporated by reference.
All of the directors and executive officers of CKE are citizens of the United
States.
During the last five years, neither CKE nor, to the best knowledge of CKE,
any person named in Schedule I attached hereto has been (a) convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
(b) a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
On April 4, 1996, CKE purchased 946,714 shares of Series A Convertible
Preferred Stock of Summit (the "Summit Preferred Stock") with general working
capital funds for an aggregate purchase price of $4,989,182.78.
ITEM 4. PURPOSE OF TRANSACTION
CKE and the Company are parties to an Agreement and Plan of Merger and
Reorganization, dated as of November 30, 1995 and amended as of January 24, 1996
and April 2, 1996 (as amended, the "Merger Agreement"), a copy of which is filed
as Exhibit 1 to this Statement, pursuant to which CKE has agreed to acquire the
Company, and the Company has agreed to be acquired by CKE, in a merger
transaction. CKE and Summit expect to consummate the Merger in late May, 1996.
On April 2, 1996, CKE and the Company agreed to amend the Merger Agreement
to, among other things, reduce the merger consideration payable to the Company's
stockholders to $5.27 per share ($2.63 in cash and shares of CKE Common Stock
having a value of $2.64) from $5.55 per share. In connection with such
amendment, CKE agreed to acquire all of the issued and outstanding shares of
Summit Preferred Stock from ABS MB (JB) Limited Partnership ("ABS") for a cash
purchase price of $5.27 per share. In connection with the purchase and sale of
the Summit Preferred Stock, William L. Paternotte and Frederick L. Bryant
resigned from the Board of Directors of the Company. As the holder of the Summit
Preferred Stock, CKE is entitled to elect two persons to the Company's Board of
Directors; however, at the present time, CKE does not intend to seek
representation on the Company's Board until consummation of the Merger.
The purpose of the purchase by CKE of the Summit Preferred Stock is to
acquire a significant equity position in the Company and to facilitate
consummation of the transactions contemplated by the Merger Agreement.
CKE currently proposes to sell all 16 HomeTown Buffet restaurants operated
by the Company as a franchisee concurrently with or promptly following the
Merger; however, there can be no assurance that CKE
Page 3 of 42 Pages
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will be able to reach a definitive agreement with respect to such disposition,
on the terms and in the timing presently desired by CKE, and CKE may determine
not to complete such sale. Pending the Merger, CKE intends to play an
increasingly active role in the operation of the Company.
As a result of the Merger, the Company will become a wholly-owned
subsidiary of CKE. Upon or promptly following the effective date of the Merger,
CKE plans to cause the Common Stock to cease to be quoted on the Nasdaq National
Market and to terminate the registration of the Common Stock under Section
12(g)(4) of the Securities and Exchange Act of 1934, as amended.
Subject to applicable legal requirements and the factors referred to below,
CKE does not presently intend to purchase any shares of Common Stock, but it may
determine to purchase shares of Common Stock, in the open market, in privately
negotiated transactions, in a tender offer or exchange offer, or otherwise. Any
such purchases of shares of Common Stock could be at a price or prices greater
or less than the consideration to be paid in the Merger. CKE also may determine
to dispose of any portion or all of such shares at any time, or from time to
time. Such transactions may be effected on terms and at prices then determined
by CKE, which prices may vary from the consideration to be paid in the Merger.
In determining whether to purchase shares of Common Stock or to dispose of its
shares, and in formulating any plan or proposal with respect to any transactions
involving the Company, whether prior to or following the Merger, CKE intends to
consider and review various factors on a continuous basis, including the
Company's financial condition, results of operations, business and prospects,
other developments concerning the Company, the status and timing of the
transactions contemplated by the Merger Agreement, the price and availability of
shares of Common Stock, other investment and business opportunities available to
CKE, developments with respect to CKE's business, and general economic, monetary
and stock market conditions.
In connection with its consideration of the Merger, CKE has reviewed, and
will continue to review, on the basis of available information, various possible
business strategies that it may consider involving the Company. CKE intends to
continue to conduct a detailed review of the Company and its assets, businesses,
operations, properties, policies, corporate structure, capitalization and
management, and consider what, if any, changes CKE deems desirable in light of
the circumstances which then exist. Except as otherwise described in this
Statement, CKE has no definitive plans or proposals which relate to or would
result in any of the following:
(a) The acquisition by any person of additional securities of the
issuer, or the disposition of securities of the issuer;
(b) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the issuer or any of its
subsidiaries;
(c) A sale or transfer of a material amount of assets of the issuer or
any of its subsidiaries;
(d) Any change in the present board of directors or management of
issuer, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board;
(e) Any material change in the present capitalization or dividend
policy of the issuer;
(f) Any other material change in the issuer's business or corporate
structure including but not limited to, if the issuer is a registered
closed-end investment company, any plans or proposals to make any changes
in its investment policy for which a vote is required by section 13 of the
Investment Company Act of 1940;
(g) Changes in the issuer's charter, bylaws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the issuer by any person;
(h) Causing a class of securities of the issuer to be delisted from a
national securities exchange or to cease to be authorized to be quoted in
an inter-dealer quotation system of a registered national securities
association;
(i) A class of equity securities of the issuer becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Act; or
(j) Any action similar to any of those enumerated above.
Page 4 of 42 Pages
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ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) As of April 4, 1996, CKE was the beneficial owner of 946,714 shares of
Common Stock (which are issuable upon conversion of the Summit Preferred Stock),
which represent in the aggregate 16.5% of the outstanding shares of Common Stock
(based on 4,805,902 shares of Common Stock outstanding as of January 23, 1996,
as disclosed in the Company's Quarterly Report on Form 10-Q for the quarterly
period ended December 18, 1995).
Except as disclosed in the preceding paragraph, neither CKE nor, to the
best knowledge of CKE, any of the persons referred to in Schedule I attached
hereto beneficially owns any shares of Common Stock.
(b) CKE has the power to vote, direct the voting of, dispose of and direct
the disposition of the Summit Preferred Stock owned by it.
(c) Other than the purchase of the Summit Preferred Stock described in Item
3 above, neither CKE nor, to the best knowledge of CKE, any of the persons
referred to in Schedule I attached hereto has made any transactions in the
Common Stock during the past 60 days.
(d) CKE has the sole right to receive or the power to direct the receipt of
dividends from, or the proceeds from the sale of, the Summit Preferred Stock
owned by it.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER
Except as otherwise described in this Statement, neither CKE nor any other
person referred to in Schedule I attached hereto has any contracts,
arrangements, understandings or relationships (legal or otherwise) with any
person with respect to any securities of the Company, including but not limited
to transfer or voting of any of the securities, finder's fees, joint ventures,
loan or option arrangements, put or calls, guarantees of profits, division of
profits or loss, or the giving or withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
The following documents are filed as Exhibits to this Statement:
Exhibit 2 Agreement and Plan of Merger and Reorganization, dated as
of November 30, 1995 and amended as of January 24, 1996
and April 2, 1996, by and among the Company, CKE and
Summit Merger, Inc.
Page 5 of 42 Pages
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
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Date: April 10, 1996 CKE RESTAURANTS, INC.
By: /s/ JOSEPH N. STEIN
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Joseph N. Stein,
Chief Financial Officer
</TABLE>
Page 6 of 42 Pages
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF THE REPORTING PERSON
The names, present principal occupations and business addresses of the
directors and executive officers of CKE Restaurants, Inc., a Delaware
corporation (the "Reporting Person") are set forth below. If no address is
given, the director's or executive officer's business address is that of the
Reporting Person, 1200 North Harbor Boulevard, Anaheim, California 92803. Unless
otherwise indicated, each occupation set forth opposite an individual's name
refers to the Reporting Person. Each of the named individuals is a citizen of
the United States.
DIRECTORS OF CKE
William P. Foley, II, Chairman of the Board and Chief Executive Officer
Frank P. Willey, President of Fidelity National Financial, Inc., 17911 Von
Karman Avenue, Irvine, CA 92714
Daniel D. (Ron) Lane, Chairman and Chief Executive Officer, Lane/Kuhn Pacific,
Inc., 14 Corporate Plaza, Newport Beach, CA 92660
Peter Churm, Chairman Emeritus, Furon Corporation, 29982 Ivy Glenn Drive, Laguna
Niguel, CA 92677.
Carl L. Karcher, President, CLK, Inc., 72-875 Fred Waring Drive, Suite C, Palm
Desert, CA 92260.
Carl N. Karcher, Chairman of the Board Emeritus
W. Howard Lester, Chairman of the Board and Chief Executive Officer,
Williams -- Sonoma, Inc.,
3250 Van Ness, San Francisco, CA 94109.
EXECUTIVE OFFICERS OF CKE
William P. Foley, II, Chairman of the Board and Chief Executive Officer
C. Thomas Thompson, President and Chief Operating Officer
Joseph N. Stein, Chief Financial Officer
Robert E. Wheaton, Executive Vice President
Rory J. Murphy, Senior Vice President, Restaurant Operations
Loren C. Pannier, Senior Vice President, Purchasing/Distribution
Robert W. Wisely, Senior Vice President, Marketing
Richard C. Celio, Senior Vice President, Development
Robert A. Wilson, Vice President and General Counsel and Secretary
Page 7 of 42 Pages
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EXHIBIT INDEX
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EXHIBIT DESCRIPTION PAGE
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Exhibit 2 Agreement and Plan of Merger and Reorganization, dated as of November 30,
1995 and amended as of January 24, 1996 and April 2, 1996, by and among the
Company, CKE and Summit Merger, Inc.
</TABLE>
Page 8 of 42 Pages
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EXHIBIT 2
FIRST AND SECOND AMENDMENTS TO
AGREEMENT AND PLAN OF MERGER
AND REORGANIZATION
BY AND AMONG
SUMMIT FAMILY RESTAURANTS INC.
CKE RESTAURANTS, INC.
AND
SUMMIT MERGER, INC.
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FOLLOWED BY
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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
1
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SECOND AMENDMENT TO
AGREEMENT AND PLAN OF MERGER
AND REORGANIZATION
BY AND AMONG
SUMMIT FAMILY RESTAURANTS INC.
AND
CKE RESTAURANTS, INC.
DATED: APRIL 2, 1996
2
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[CONFORMED COPY]
SECOND AMENDMENT TO
AGREEMENT AND PLAN OF MERGER
AND REORGANIZATION
This Second Amendment, dated as of April 2, 1996 (this "Second Amendment"),
to the Agreement and Plan of Merger and Reorganization, dated as of November 30,
1995 (the "Original Agreement"), as amended pursuant to the First Amendment to
Agreement and Plan of Reorganization, dated as of January 24, 1996 (the "First
Amendment") is by and among Summit Family Restaurants Inc., a Delaware
corporation ("Summit"), and CKE Restaurants, Inc., a Delaware corporation
("CKE"). Capitalized terms not defined herein have the meanings set forth in the
Original Agreement and the First Amendment. Except as specifically amended
below, all provisions of the Original Agreement and First Amendment remain in
full force and effect.
RECITAL
The respective Boards of Directors of Summit and CKE have determined to
amend the Original Agreement and the First Amendment as set forth in this Second
Amendment.
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:
1. PURCHASE OF SUMMIT PREFERRED STOCK. On or prior to April 4, 1996, CKE
shall purchase all of the shares of Summit Preferred Stock from the holder
thereof at a purchase price of $5.27 per share in cash. CKE hereby agrees to
vote all of such shares of Summit Preferred Stock in favor of the transactions
set forth in the Original Agreement, as amended by the First Amendment and the
Second Amendment.
2. CONVERSION OF SECURITIES (SECTION 2.1). The first paragraph of Section
2.1 of the Original Agreement and the first paragraph of the definition of
"Merger Consideration" in Section 2.1 of the Original Agreement, as amended by
the First Amendment, are amended to read in full as follows:
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 for which appraisal rights
have been exercised pursuant to Section 262 of the DGCL, and other than
shares owned by CKE or its subsidiaries (which will be cancelled), will be
converted into the right to receive the Merger Consideration.
"Merger Consideration" means, for each share of Summit Common Stock
and Summit Preferred Stock (other than shares owned by CKE or its
subsidiaries, which will be cancelled): (a) $2.63 in cash (without
interest) and (b) a number of shares of CKE Common Stock equal to $2.64
divided by the Adjusted CKE Price.
3. FAIRNESS OPINION (SECTION 6.9): Section 6.9 of the Original Agreement,
as amended by the First Amendment, is hereby modified to read in full as
follows:
Summit shall have received letters from Piper Jaffray Inc. confirming the
opinions rendered to Summit's Board of Directors on or prior to the date of
the Original Agreement, on or prior to the date of the First Amendment and
on or prior to the date of the Second Amendment to the effect that the
terms of the Merger are fair to the holders of Summit Common Stock from a
financial point of view, copies of which will be delivered to CKE at the
Closing.
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4. REPRESENTATIONS, WARRANTIES AND COVENANTS. Sections 3.19(i) and 4.12(i)
of the Original Agreement are hereby deleted in their entirety. CKE acknowledges
receipt of the information provided to it regarding the separation compensation
plan and procedures and other matters pursuant to the letter, dated February 29,
1996, from Summit. CKE and Summit agree that such information does not
constitute a violation of the Original Agreement, as amended, including Sections
(3.19(vii) and 5.2(a) thereof.
5. TERMINATION (SECTION 9.1). Section 9.1(c)(i)(A) and 9.1(d)(i)(A) are
hereby deleted in their entirety. The date May 30, 1996 in every instance it
appears in Section 9.1 in the Original Agreement, as amended by the First
Amendment, is hereby changed to June 30, 1996.
6. ADOPTION OF ORIGINAL AGREEMENT BY MERGER SUB. Summit Merger, Inc., a
Delaware corporation ("Summit Merger"), was recently organized by CKE for
purposes of completing the Merger. Summit Merger, by its execution and delivery
hereof, agrees to be bound by the terms and provisions of the Original
Agreement, as amended, and is hereby made a party to the Original Agreement. For
all purposes of the Original Agreement, all references to "Merger Sub" shall be
deemed to refer to Summit Merger.
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have executed this Amendment, or
have caused this Amendment 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
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Don M. McComas
President and Chief Executive Officer
By: /s/ CHARLOTTE L. MILLER
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Charlotte L. Miller
Senior Vice President &
General Counsel
CKE RESTAURANTS, INC.
By: /s/ ROBERT E. WHEATON
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Robert E. Wheaton
Executive Vice President
By: /s/ ROBERT A. WILSON
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Robert A. Wilson
Vice President, General Counsel
SUMMIT MERGER, INC.
By: /s/ ROBERT E. WHEATON
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Robert E. Wheaton
Executive Vice President
By: /s/ ROBERT A. WILSON
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Robert A. Wilson
Vice President, General Counsel
5
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FIRST AMENDMENT TO
AGREEMENT AND PLAN OF MERGER
AND REORGANIZATION
BY AND AMONG
SUMMIT FAMILY RESTAURANTS INC.
AND
CKE RESTAURANTS, INC.
DATED: JANUARY 24, 1996
6
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[CONFORMED COPY]
FIRST AMENDMENT TO
AGREEMENT AND PLAN OF MERGER
AND REORGANIZATION
This First Amendment, dated as of January 24, 1996 (this "Amendment"), to
the Agreement and Plan of Merger and Reorganization, dated as of November 30,
1995 (the "Original Agreement"), is by and among Summit Family Restaurants Inc.,
a Delaware corporation ("Summit"), and CKE Restaurants, Inc., a Delaware
corporation ("CKE"). Capitalized terms not defined herein have the meanings set
forth in the Original Agreement. Except as specifically amended below, all
provisions of the Original Agreement remain in full force and effect.
RECITAL
The respective Boards of Directors of Summit and CKE have determined to
amend the Original Agreement in as set forth in this Agreement.
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:
1. MERGER AND CLOSING. Recital A is hereby amended to provide that Summit
will survive the Merger. Recital B is hereby deleted in its entirety. In
addition, Sections 1.2, 1.4 and 1.5 are hereby amended to read in full as
follows:
1.2 The Merger. At the Effective Time, in accordance with this
Agreement and the applicable provisions of the Delaware General Corporation
Law ("DGCL"), the Merger Sub shall in the Merger merge with and into
Summit, with Summit surviving the Merger, the separate existence of Merger
Sub shall cease, and Summit shall continue as the surviving corporation as
set forth in the Certificate of Merger. Summit is sometimes referred to
herein as the "Surviving Corporation."
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
Merger Sub shall cease and Summit shall be the Surviving Corporation and
shall have all of the rights, privileges, immunities and powers 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 Summit shall be amended and restated to conform to the
Certificate of Incorporation of Merger Sub in effect at the Effective Time.
The Bylaws of Summit shall be amended and restated to conform to the Bylaws
of Merger Sub in effect at the Effective Time until amended in accordance
with applicable law.
2. MERGER CONSIDERATION (SECTION 2.1). The definitions of "Merger
Consideration" and "Adjusted CKE Price" in Section 2.1 of the Original Agreement
are hereby amended to read in full as follows:
"Merger Consideration" means, for each share of Summit Common Stock
and each share of Summit Preferred Stock: (a) $2.77 in cash (without
interest) and (b) a number of shares of CKE Common Stock equal to $2.78
divided by the Adjusted CKE Price.
The Merger Consideration shall be increased by one-half of the amount,
if any, by which the consideration to be received from the purchasers under
the draft Asset Purchase Agreements with and dated
January 24, 1996 (which CKE has provided to Summit) increases in an
immediately quantifiable dollar amount from the amounts currently provided
for in such drafts (either through an increase in the consideration paid or
an increase in the liabilities the proposed buyer assumes) pursuant to
fully executed definitive Asset Purchase Agreements in effect as of the
Closing. The amount of any increase shall be determined at Closing and
shall not be further affected by any other transactions involving Summit
assets or properties subsequent to Closing. The increase, if any, shall be
allocated one-
7
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half to the cash portion of the Merger Consideration and one-half to the
CKE Common Stock portion of the Merger Consideration.
"Adjusted CKE Price" means (a) if the Average CKE Price is equal to or
greater than $17.00, $16.00 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 greater than $15.00, $16.00, (c) if the Average CKE Price is less
than $15.00 and equal to or greater than $13.25, $16.00 less the amount by
which $15.00 exceeds the Average CKE Price, (d) if the Average CKE Price is
less than $13.25 and CKE has not exercised the Fill-Up Election, $14.25 and
(e) if the Average CKE Price is less than $13.25 and CKE has exercised the
Fill-Up Election, $16.00 less the amount by which $15.00 exceeds the
Average CKE Price.
3. FRACTIONAL SHARES (SECTION 2.3). Section 2.3 of the Original Agreement
is hereby amended to read as follows:
No fractional shares of CKE Common Stock shall be issued in the
Merger. In lieu thereof, cash shall be paid for any fractional shares
calculated by multiplying the Adjusted CKE Price by the fraction of a share
of CKE Common Stock to which the holder would otherwise have been entitled.
4. FAIRNESS OPINION (SECTION 6.9). Section 6.9 of the Original Agreement
is hereby modified to read in full as follows:
Summit shall have received a letter from Piper Jaffray Inc. on or
prior to the date of the Amendment 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 prior to the
Closing.
5. FAIRNESS OPINION (SECTION 7.10). Section 7.10 of the Original
Agreement, providing for a fairness opinion from NatWest Markets, is hereby
deleted in its entirety.
6. TAX OPINIONS (SECTION 6.6 AND 7.6). Sections 6.6 and 7.6 of the
Original Agreement, providing for legal opinions regarding certain tax matters,
are hereby deleted in their entirety.
7. TREATMENT OF STOCK OPTIONS (SECTIONS 5.14(A) AND 5.14(B)). Sections
5.14(a) and 5.14(b) of the Original Agreement are hereby amended to read in full
as follows:
(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 $375,000, adjusted for any per share increase in the Merger
Consideration as provided in paragraph 2 of this Amendment.
(b) At the Effective Time, all options to purchase shares of Summit
Common Stock (a "Summit Stock Option") under a Summit Stock Option Plan
shall become fully exercisable in accordance with the terms of the Stock
Option Plan. Each holder of Summit Stock Options may elect to have such
Summit Stock Options cancelled in consideration of the payment of an amount
equal to the product of (x) the excess, if any, of the aggregate dollar
amount of the Merger Consideration over the 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 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 the aggregate dollar
amount of the Merger Consideration and the number of shares of Summit
Common Stock purchasable upon exercise of the Summit Stock Option prior to
the Effective 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.
8. TERMINATION (SECTION 9.1). The date April 15, 1996 in every instance it
appears in Section 9.1 in the Original Agreement is hereby changed to May 30,
1996. The reference to $12.25 in Section 9.1(d) and Section 9.1(e) is hereby
changed to $13.25.
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have executed this Amendment, or
have caused this Amendment to be duly executed on their respective behalf by
their respective officers thereunto duly authorized, as of the date 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
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<PAGE> 10
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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[CONFORMED COPY]
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."
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.
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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
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 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
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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.
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 4,798,811
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
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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 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 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
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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 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 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
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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 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.
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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 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:
(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;
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(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 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 18,676,587 shares were
issued and outstanding as of October 31, 1995; 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 newly promoted employees in the ordinary course of business.
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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 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
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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 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;
(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
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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.
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 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
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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 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
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.
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(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 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 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;
(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.
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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 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.
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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.
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.
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.
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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.
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 obligations hereunder, or any other
events or circumstances shall have occurred, such that, in
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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.
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
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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 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 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
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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.
"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.
"Proxy Statement" has the meaning set forth in Section 3.7.
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"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, 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.
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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:
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.
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 entitled to
specific performance of the terms hereof, in addition to actions for damages and
any other remedy at law or equity.
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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 Agreement 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
confidentiality 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
--------------------------------------------------------
Name: Joseph N. Stein
Title: Senior Vice President,
Chief Financial Officer
By: /s/ RICHARD C. CELIO
--------------------------------------------------------
Name: Richard C. Celio
Title: Senior Vice President,
General Counsel
34
