<\/p>\n (c) Tax Opinion………………………………………. 31
\n (d) Consents, etc…………………………………….. 32
\n (e) Affiliate Letters…………………………………. 32
\n (f) Continuity of Interest Agreement……………………. 32
\n (g) Opinion of Counsel to the Company…………………… 32
\n 6.3 Conditions to Obligation of the Company………………….. 33
\n (a) Representations and Warranties……………………… 33
\n (b) Performance of Obligations of Parent and Sub…………. 33
\n (c) Tax Opinion………………………………………. 33
\n (d) Opinion of Counsel to Parent……………………….. 33<\/p>\n
ARTICLE 7 TERMINATION, AMENDMENT AND WAIVER……………………….. 34
\n 7.1 Termination…………………………………………… 34
\n 7.2 Effect of Termination………………………………….. 35
\n 7.3 Amendment…………………………………………….. 35
\n 7.4 Extension; Waiver……………………………………… 35<\/p>\n
ARTICLE 8 GENERAL PROVISIONS…………………………………….. 35
\n 8.1 Nonsurvival of Representations and Warranties…………….. 35
\n 8.2 Notices………………………………………………. 35
\n 8.3 Definitions…………………………………………… 36
\n 8.4 Interpretation………………………………………… 37
\n 8.5 Counterparts………………………………………….. 37
\n 8.6 Entire Agreement; No Third-party Beneficiaries……………. 37
\n 8.7 Governing Law…………………………………………. 37
\n 8.8 Assignment……………………………………………. 37
\n 8.9 Enforcement…………………………………………… 37
\n 8.10 Severability………………………………………….. 38
\n<\/c><\/s><\/table>\n
iii<\/p>\n
AGREEMENT AND PLAN OF MERGER<\/p>\n
THIS AGREEMENT AND PLAN OF MERGER (the “Agreement”) is entered into as
\nof October 21, 1997, by and among Berkshire Hathaway Inc., a Delaware
\ncorporation (“Parent”), QDI, Inc., a Delaware corporation and a direct wholly
\nowned subsidiary of Parent (“Sub”), and International Dairy Queen, Inc., a
\nDelaware corporation (the “Company”).<\/p>\n
RECITALS<\/p>\n
WHEREAS, the Boards of Directors of Parent and the Company have
\napproved, and deem it advisable and in the best interests of their respective
\ncompanies and stockholders to consummate, a merger of the Company with and into
\nSub (the “Merger”), with Sub as the surviving corporation in the Merger, upon
\nthe terms and subject to the conditions set forth in this Agreement, pursuant to
\nwhich each share of Class A Common Stock, par value $.01 per share, of the
\nCompany (“Company Class A Stock”) and each share of Class B Common Stock, par
\nvalue $.01 per share, of the Company (“Company Class B Stock” and together with
\nthe Company Class A Stock, “Company Common Stock”) issued and outstanding
\nimmediately prior to the Effective Time (as defined in Section 1.3), other than
\nshares of Company Common Stock owned, directly or indirectly, by the Company or
\nany subsidiary (as defined in Section 8.3) of the Company or by Parent, Sub or
\nany other subsidiary of Parent, will be converted into the right to receive, at
\nthe elections of the holders of Company Common Stock, subject to the terms
\nhereof, a portion of a share of Class A Common Stock, $5.00 par value per share,
\nof Parent (“Parent Class A Stock”), or a portion of a share of Class B Common
\nStock, $.1667 par value per share, of Parent (“Parent Class B Stock,” and
\ntogether with the Parent Class A Stock, “Parent Stock”), or cash;<\/p>\n
WHEREAS, the Merger and this Agreement require the vote of a majority
\nof the outstanding shares of Company Class B Common Stock entitled to vote
\nthereon for the approval thereof (the “Company Stockholder Approval”);<\/p>\n
WHEREAS, in order to induce Parent to enter into this Agreement,
\nconcurrently with the execution hereof, various shareholders of the Company have
\nentered into a Shareholders’ Agreement (the “Shareholders’ Agreement”) with
\nParent with respect to the Company Common Stock held by such shareholders; and<\/p>\n
WHEREAS, for United States Federal income tax purposes, it is intended
\nthat the Merger shall qualify as a reorganization under the provisions of
\nSection 368 of the Internal Revenue Code of 1986, as amended (the “Code”) and
\nthis Agreement is intended to be and is adopted as a plan of reorganization
\nwithin the meaning of Section 368 of the Code.<\/p>\n
NOW, THEREFORE, in consideration of the representations, warranties,
\ncovenants and agreements contained in this Agreement, the parties agree as
\nfollows:<\/p>\n
ARTICLE 1<\/p>\n
THE MERGER<\/p>\n
1.1 The Merger. Upon the terms and subject to the conditions set forth in
\n ———-
\nthis Agreement, and in accordance with the Delaware General Corporation Law (the
\n“DGCL”), the Company shall be merged with and into Sub at the Effective Time.
\nUpon the Effective Time, the separate existence of the Company shall cease, and
\nSub shall continue as the surviving corporation (the “Surviving Corporation”)
\nhaving the name International Dairy Queen, Inc.<\/p>\n
1.2 Closing. Unless this Agreement shall have been terminated and the
\n ——-
\ntransactions herein contemplated shall have been abandoned pursuant to Section
\n7.1, and subject to the satisfaction or waiver of the conditions set forth in
\nArticle 6, the closing of the Merger (the “Closing”) will take place at 10:00
\na.m. Eastern time on the second business day after satisfaction of the
\nconditions set forth in Section 6.1 (or, if not satisfied or waived at that
\ntime, as soon as practicable thereafter following satisfaction or waiver of the
\nconditions set forth in Sections 6.2 and 6.3) (the “Closing Date”), at the
\noffices of Gray, Plant, Mooty, Mooty, & Bennet, P.A., 3400 City Center, 33 South
\nSixth Street, Minneapolis, Minnesota, unless another date, time or place is
\nagreed to in writing by the parties hereto.<\/p>\n
1.3 Effective Time of the Merger. On the Closing Date, the parties shall
\n —————————-
\nfile a certificate of merger or other appropriate documents (in any such case,
\nthe “Certificate of Merger”) executed in accordance with the relevant provisions
\nof the DGCL and shall make all other filings or recordings required under the
\nDGCL. The Merger shall become effective at such time as the Certificate of
\nMerger is duly filed with the Secretary of State of the State of Delaware, or at
\nsuch other time as is permissible in accordance with the DGCL and as Parent and
\nthe Company shall agree should be specified in the Certificate of Merger (the
\ntime the Merger becomes effective being the “Effective Time”).<\/p>\n
1.4 Effects of the Merger. The Merger shall have the effects set forth
\n ———————
\nin the DGCL.<\/p>\n
1.5 Certificate of Incorporation; Bylaws.
\n ———————————— <\/p>\n
(a) The Certificate of Incorporation of the Company as in effect
\nimmediately prior to the Effective Time shall be the Certificate of
\nIncorporation of the Surviving Corporation until thereafter changed or amended
\nas provided therein or by applicable law.<\/p>\n
(b) The Bylaws of the Company as in effect at the Effective Time
\nshall be the Bylaws of the Surviving Corporation until thereafter changed or
\namended as provided therein or by applicable law.<\/p>\n
-2-<\/p>\n
1.6 Directors. The directors of Sub at the Effective Time shall be the
\n ———
\ndirectors of the Surviving Corporation, until the earlier of their resignation
\nor removal or until their respective successors are duly elected and qualified,
\nas the case may be.<\/p>\n
1.7 Officers. The officers of the Company at the Effective Time shall be
\n ——–
\nthe officers of the Surviving Corporation, until the earlier of their
\nresignation or removal or until their respective successors are duly appointed
\nand qualified, as the case may be.<\/p>\n
ARTICLE 2<\/p>\n
EFFECT OF THE MERGER ON THE CAPITAL STOCK
\n OF THE CONSTITUENT CORPORATIONS<\/p>\n
2.1 Effect on Capital Stock. As of the Effective Time, by virtue of the
\n ———————–
\nMerger and without any action on the part of the holder of any shares of Company
\nCommon Stock or any shares of capital stock of Sub:<\/p>\n
(a) Common Stock of Sub. Each share of common stock of Sub issued
\n ——————-
\nand outstanding immediately prior to the Effective Time shall be converted into
\none share of Class B Common Stock of the Surviving Corporation and shall be the
\nissued and outstanding capital stock of the Surviving Corporation.<\/p>\n
(b) Cancellation of Treasury Stock and Parent-Owned Company Common
\n —————————————————————
\nStock. Each share of the Company Common Stock that is owned by the Company or
\n—–
\nby any subsidiary of the Company, and each share of Company Common Stock that is
\nowned by Parent, Sub or any other subsidiary of Parent shall automatically be
\ncancelled and retired and shall cease to exist, and no cash, Parent Stock or
\nother consideration shall be delivered or deliverable in exchange therefor.<\/p>\n
(c) Conversion of Company Common Stock. Except as otherwise provided
\n ———————————-
\nherein and subject to Sections 2.3 and 2.5, each issued and outstanding share of
\nCompany Common Stock shall be converted into the following (the consideration
\ndescribed in (i), (ii), and (iii) below being the “Merger Consideration” and the
\nconsideration described in (ii) and (iii) below being the “Stock
\nConsideration”):<\/p>\n
(i) for each such share of Company Common Stock with respect
\n to which an election to receive cash has been effectively made and not
\n revoked pursuant to Sections 2.2(c), (d) and (e) (“Cash Electing Shares”),
\n the right to receive $27.00 in cash from Parent (the “Cash Election
\n Price”); or<\/p>\n
(ii) for each share of Company Common Stock with respect to
\n which an election to receive Parent Class A Stock has been effectively made
\n and not revoked pursuant to Sections 2.2(c), (d) and (e) (“Parent Class A
\n Electing Shares”), the right to receive from Parent the portion of a fully
\n paid and nonassessable share of Parent Class A Stock determined by dividing
\n $26.00 by the Average Parent Class A<\/p>\n
-3-<\/p>\n
Stock Price (as defined below) and rounding to nine decimal places
\n (the “Parent Class A Exchange Ratio”); or<\/p>\n
(iii) for each such share of Company Common Stock with respect
\n to which an election to receive Parent Class B Stock has been effectively
\n made and not revoked pursuant to Sections 2.2(c), (d) and (e) or with
\n respect to which none of the elections permitted by this Section 2.1 has
\n been effectively made and not revoked (“Parent Class B Electing Shares”),
\n the right to receive from Parent the portion of a fully paid and
\n nonassessable share of Parent Class B Stock determined by multiplying the
\n Parent Class A Exchange Ratio by 30 and rounding to nine decimal places
\n (the “Parent Class B Exchange Ratio”).<\/p>\n
The “Average Parent Class A Stock Price” means the average of the high and low
\ntrading prices of the Parent Class A Stock on the New York Stock Exchange
\n(“NYSE”) Composite Tape for each of the five consecutive trading days ending on
\nthe trading day which is the last business day prior to the Stockholders Meeting
\n(as defined in Section 5.1(b)).<\/p>\n
(d) Cancellation and Retirement of Company Common Stock. As of the
\n —————————————————
\nEffective Time, all shares of Company Common Stock (other than shares referred
\nto in Section 2.1(b)) issued and outstanding immediately prior to the Effective
\nTime, shall no longer be outstanding and shall automatically be cancelled and
\nretired and shall cease to exist, and each holder of a certificate representing
\nany such shares of Company Common Stock shall cease to have any rights with
\nrespect thereto, except the right to receive the applicable Merger Consideration
\nin accordance with Section 2.1(c) and any cash in lieu of fractional shares of
\nParent Stock to be issued or paid in consideration therefor upon surrender of
\nsuch certificate in accordance with Section 2.5.<\/p>\n
2.2 Company Common Stock Elections.
\n —————————— <\/p>\n
(a) Subject to Sections 2.3 and 2.5(e), each person who, on or prior
\nto the Election Date referred to in (c) below, is a record holder of shares of
\nCompany Common Stock (and remains a record holder of such stock until the
\nEffective Time) will be entitled, with respect to all or any portion of his
\nshares, to make an unconditional election (a “Cash Election,” a “Parent Class A
\nElection,” or a “Parent Class B Election” as the case may be) on or prior to
\nsuch Election Date to receive the Cash Election Price, the Parent Class A
\nExchange Ratio, or the Parent Class B Exchange Ratio, respectively, on the basis
\nhereinafter set forth.<\/p>\n
(b) Prior to the mailing of the Proxy Statement (as defined in
\nSection 3.1(d)), Parent shall appoint a bank or trust company designated by
\nParent and reasonably satisfactory to the Company to act as exchange agent (the
\n“Exchange Agent”) for the payment of the Merger Consideration.<\/p>\n
(c) Parent shall prepare and mail a form of election (the “Form of
\nElection”) with the Proxy Statement to the record holders of Company Common
\nStock as of the record date for the Stockholders Meeting. The Form of Election
\nshall be used by each record holder of shares of Company Common Stock who wishes
\nto elect to receive the Cash<\/p>\n
-4-<\/p>\n
Election Price, the Parent Class A Exchange Ratio, or the Parent Class B
\nExchange Ratio for any or all shares of Company Common Stock held by such
\nholder. On such Form of Election, such a holder may indicate his election. The
\nCompany will use its best efforts to make the Form of Election and the Proxy
\nStatement available to all persons who become holders of Company Common Stock
\nduring the period between such record date and the Election Date referred to
\nbelow. Any such holder’s election to receive the Cash Election Price, the
\nParent Class A Exchange Ratio, or the Parent Class B Exchange Ratio shall have
\nbeen properly made only if the Exchange Agent shall have received at its
\ndesignated office, by 5:00 p.m., New York City time on the last business day
\n(the “Election Date”) prior to the date of the Stockholders Meeting, a Form of
\nElection properly completed and signed and accompanied by certificates for the
\nshares of Company Common Stock to which such Form of Election relates, duly
\nendorsed in blank or otherwise in form acceptable for transfer on the books of
\nthe Company (or by an appropriate guarantee of delivery of such certificates as
\nset forth in such Form of Election from a firm which is a member of a registered
\nnational securities exchange or of the National Association of Securities
\nDealers, Inc. or a commercial bank or trust company having an office or
\ncorrespondent in the United States, provided such certificates are in fact
\ndelivered to the Exchange Agent within five NYSE trading days after the date of
\nexecution of such guarantee of delivery).<\/p>\n
(d) Any Form of Election may be revoked only by duly executed written
\nnotice received by the Exchange Agent prior to 5:00 p.m., New York City time on
\nthe Election Date. In addition, all Forms of Election shall automatically be
\nrevoked if the Exchange Agent is notified in writing by Parent and the Company
\nthat the Merger has been abandoned. If a Form of Election is revoked, the
\nshares of Company Common Stock to which such Form of Election relates shall be
\ntreated as Parent Class B Electing Shares.<\/p>\n
(e) The determination of the Exchange Agent shall be binding as to
\nwhether or not elections to receive the Cash Election Price, the Parent Class A
\nExchange Ratio, or the Parent Class B Exchange Ratio have been properly made or
\nrevoked pursuant to this Section 2.2 with respect to shares of Company Common
\nStock, and as to the time when elections and revocations were received by it.
\nIf the Exchange Agent determines that any election to receive the Cash Election
\nPrice, the Parent Class A Exchange Ratio, or the Parent Class B Exchange Ratio
\nwas not properly made with respect to shares of Company Common Stock, such
\nshares shall be treated by the Exchange Agent as Parent Class B Electing Shares,
\nand such shares shall be exchanged in the Merger for shares of Parent Class B
\nStock pursuant to Section 2.1(c)(iii). The Exchange Agent shall also make all
\ncomputations contemplated by Section 2.3, and any such computation shall be
\nconclusive and binding on the holders of shares of Company Common Stock. Parent
\nand the Company shall make such rules as are consistent with this Section 2.2
\nand Section 2.3 for the implementation of the elections and computations
\nprovided for herein and therein as shall be necessary or desirable fully to
\neffect such elections and computations.<\/p>\n
-5-<\/p>\n
2.3 Issuance of Stock Consideration and Payment of Cash Election Price.
\n ——————————————————————
\nThe manner in which each share of Company Common Stock (other than shares of
\nCompany Common Stock to be cancelled as set forth in Section 2.1(b)) shall be
\nconverted as of the Effective Time into the right to receive the Stock
\nConsideration or the Cash Election Price shall be as set forth in this Section
\n2.3. All references to “outstanding shares of Company Common Stock” in this
\nSection 2.3 shall mean all shares of Company Common Stock outstanding
\nimmediately prior to the Effective Time.<\/p>\n
(a) In the event that, between the date of this Agreement and the
\nEffective Time, the issued and outstanding shares of Parent Class A Stock or
\nParent Class B Stock, as the case may be, shall have been changed into a
\ndifferent number or class of shares as a result of a stock split, reverse stock
\nsplit, stock dividend, spin-off, extraordinary dividend, recapitalization,
\nreclassification or other similar transaction with a record date within such
\nperiod, the Merger Consideration shall be appropriately adjusted.<\/p>\n
(b) As is more fully set forth below, the Total Cash Consideration
\n(as defined below) in the Merger pursuant to this Agreement shall not be more
\nthan 55 percent of the sum of (i) the Total Cash Consideration, and (ii) the
\nTotal Parent Class A Merger Consideration, and (iii) the Total Parent Class B
\nMerger Consideration; such amount is referred to herein as the “Cash
\nLimitation”. “Total Parent Class A Merger Consideration” means the product of
\n(i) the Parent Class A Exchange Ratio and (ii) the number of shares of Company
\nCommon Stock converted into Parent Class A Stock, after the application, if and
\nto the extent necessary, of Section 2.5(e), and (iii) the average of the high
\nand low trading prices of the Parent Class A Stock on the NYSE Composite Tape on
\nthe date on which the Effective Time occurs. “Total Parent Class B Merger
\nConsideration” means the product of (i) the Parent Class B Exchange Ratio and
\n(ii) the number of shares of Company Common Stock converted into Parent Class B
\nStock, after the application, if and to the extent necessary, of Sections 2.3(e)
\nand 2.5(e), and (iii) the average of the high and low trading prices of the
\nParent Class B Stock on the NYSE Composite Tape on the date on which the
\nEffective Time occurs. “Total Cash Consideration” means the sum (after the
\napplication, if and to the extent necessary, of Sections 2.3(e) and 2.5(e)) of
\n(i) cash paid in connection with Cash Elections and (ii) cash paid in lieu of
\nfractional shares.<\/p>\n
(c) Each share of Company Common Stock that is a Parent Class A
\nElecting Share shall be converted into the right to receive Parent Class A Stock
\npursuant to Section 2.1(c)(ii) and each share of Company Common Stock that is a
\nParent Class B Electing Share shall be converted into the right to receive
\nParent Class B Stock pursuant to Section 2.1(c)(iii).<\/p>\n
(d) If the Total Cash Consideration is equal to or less than the Cash
\nLimitation, each share of Company Common Stock that is a Cash Electing Share
\nshall be converted into the right to receive the Cash Election Price pursuant to
\nSection 2.1(c)(i).<\/p>\n
(e) If the Total Cash Consideration is more than the Cash Limitation,
\nthe number of Cash Electing Shares shall be reduced, and the following
\nshareholders of the Company who have made a Cash Election (a “Cash Electing
\nShareholder”) shall instead<\/p>\n
-6-<\/p>\n
receive one or more shares of Parent Class B Stock to the extent and in the
\norder described below until the Total Cash Consideration is equal to or less
\nthan the Cash Limitation:<\/p>\n
(i) Each Cash Electing Shareholder who holds a sufficient
\n number of shares of Company Common Stock covered by a Cash Election to
\n receive as part of the Merger Consideration at least one whole share of
\n Parent Class B Stock pursuant to Section 2.1(c)(iii) if such shares are
\n treated as Parent Class B Electing Shares, shall receive such one whole
\n share of Parent Class B Stock for such shares of Company Common Stock, at
\n the Parent Class B Exchange Ratio pursuant to Section 2.1(c)(iii), in lieu
\n of receiving the Cash Election Price for such shares pursuant to Section
\n 2.1(c)(i), provided, however, that if the application of this procedure to
\n —————–
\n fewer than all of such Cash Electing Shareholders is sufficient to reduce
\n the Total Cash Consideration to an amount equal to or less than the Cash
\n Limitation, the Exchange Agent will select by lot the Cash Electing
\n Shareholders whose Cash Elections will be subject to the foregoing
\n procedure;<\/p>\n
(ii) If the application of Section 2.3(e)(i) is not sufficient
\n to reduce the Total Cash Consideration to an amount equal to or less than
\n the Cash Limitation, then, in addition to the application of Section
\n 2.3(e)(i), each Cash Electing Shareholder who holds a sufficient number of
\n shares of Company Common Stock covered by a Cash Election to receive as
\n part of the Merger Consideration at least a second whole share of Parent
\n Class B Stock pursuant to Section 2.1(c)(iii) if such shares are treated as
\n Parent Class B Electing Shares, shall receive such second whole share of
\n Parent Class B Stock for such shares of Company Common Stock, at the Parent
\n Class B Exchange Ratio pursuant to Section 2.1(c)(iii), in lieu of
\n receiving the Cash Election Price for such shares pursuant to Section
\n 2.1(c)(i), provided, however, that if the application of this procedure to
\n —————–
\n fewer than all of such Cash Electing Shareholders is sufficient to reduce
\n the Total Cash Consideration to an amount equal to or less than the Cash
\n Limitation, the Exchange Agent will select by lot the Cash Electing
\n Shareholders whose Cash Elections will be subject to the foregoing
\n procedure; and<\/p>\n
(iii) If the application of Section 2.3(e)(ii) is not sufficient
\n to reduce the Total Cash Consideration to an amount equal to or less than
\n the Cash Limitation, under the principles of Section 2.3(e)(i) and (ii),
\n the Cash Electing Shares shall continue to be reduced, and each Cash
\n Electing Shareholder who holds a sufficient number of shares of Company
\n Common Stock covered by a Cash Election to receive as part of the Merger
\n Consideration at least a third whole share and, to the extent necessary,
\n greater than three whole shares, of Parent Class B Stock pursuant to
\n Section 2.1(c)(iii) if such shares are treated as Parent Class B Electing
\n Shares, shall receive such third or more whole shares of Parent Class B
\n Stock for such shares of Company Common Stock, at the Parent Class B
\n Exchange Ratio pursuant to Section 2.1(c)(iii), in lieu of receiving the
\n Cash Election Price for such shares pursuant to Section 2.1(c)(i), until
\n the Total Cash Consideration is equal to or less than the Cash Limitation.<\/p>\n
-7-<\/p>\n
(f) If the Exchange Agent shall determine that any Cash Election was
\nnot effectively made or was revoked, the shares of Company Common Stock covered
\nby such Cash Election shall, for purposes hereof, be deemed to be Parent Class B
\nElecting Shares.<\/p>\n
(g) If, due to the amount of cash paid in cancellation of Company
\nStock Options (as defined in Section 2.4(a)), or any other uncertainty in the
\ncalculation of the Cash Limitation, it reasonably appears to Parent or Company
\nthat the Merger may potentially fail to satisfy continuity of interest
\nrequirements under applicable principles relating to reorganizations under
\nSection 368(a) of the Code, the number of Cash Electing Shares shall be reduced,
\nand Cash Electing Shareholders shall instead receive one or more shares of
\nParent Class B Stock in the order described in Section 2.3(e), to the extent
\nnecessary to enable the Merger to satisfy such requirements.<\/p>\n
2.4 Stock Plans. Prior to the mailing of the Proxy Statement, the Board
\n ———–
\nof Directors of the Company (or, if appropriate, any committee administering the
\nStock Plans (as defined below)) shall adopt such resolutions or take such other
\nactions as may be required to effect the following:<\/p>\n
(a) Adjust the terms of all outstanding employee stock options to
\npurchase shares of Company Common Stock (“Company Stock Options”) granted under
\neither the Company’s Restated 1982 Incentive Stock Option Plan or the Company’s
\nStock Option Plan of 1993 (collectively, the “Option Plans”) to provide that, at
\nthe Effective Time, each Company Stock Option outstanding immediately prior to
\nthe Effective Time, whether or not then exercisable, shall be cancelled and
\nthereafter the former holder thereof shall be entitled by having held such
\nCompany Stock Option only to a payment from the Surviving Corporation (subject
\nto any applicable withholding taxes) equal to the product of (i) the total
\nnumber of shares of Company Common Stock subject to such Company Stock Option
\nand (ii) the excess of $27.00 over the exercise price per share of Company
\nCommon Stock subject to such Company Stock Option, payable in cash immediately
\nfollowing the Effective Time; provided, however, that, at the request of any
\n ——– ——-
\nperson subject to Section 16(a) of the Securities Exchange Act of 1934, as
\namended (“Exchange Act”), any such amount to be paid shall be paid as soon as
\npracticable after the first date payment can be made without liability for such
\nperson under Section 16(b) of the Exchange Act.<\/p>\n
(b) Except as provided herein or as otherwise agreed to in writing by
\nParent, the Option Plans, the Company’s Employee Stock Purchase Plan, as amended
\n(the “Stock Purchase Plan”), and any other plan, program or arrangement
\nproviding for the issuance or grant of any interest in respect of the capital
\nstock of the Company or any subsidiary (collectively, the “Stock Plans”) shall
\nterminate as of the Effective Time, and the Company shall ensure that following
\nthe Effective Time no holder of a Company Stock Option nor any participant in
\nany of the Stock Plans shall have any right thereunder to acquire any equity
\nsecurities of the Company or the Surviving Corporation.<\/p>\n
-8-<\/p>\n
2.5 Exchange of Certificates.
\n ———————— <\/p>\n
(a) Exchange Agent. As soon as reasonably practicable as of or
\n ————–
\nafter the Effective Time, Parent shall deposit with the Exchange Agent, for the
\nbenefit of the holders of shares of Company Common Stock, for exchange in
\naccordance with this Article 2, the Merger Consideration.<\/p>\n
(b) Exchange Procedures. As soon as practicable after the Effective
\n ——————-
\nTime of the Merger, the Exchange Agent shall mail to each holder of an
\noutstanding certificate or certificates which prior thereto represented shares
\nof Company Common Stock that did not submit such certificate or certificates to
\nthe Exchange Agent with such holder’s Form of Election (i) a letter of
\ntransmittal (which shall specify, as shall the Form of Election, that delivery
\nshall be effected, and risk of loss and title to such certificate shall pass,
\nonly upon delivery of such certificates to such Exchange Agent), and (ii)
\ninstructions for use in effecting the surrender of the certificates for the
\nMerger Consideration. Upon proper surrender to the Exchange Agent of such
\ncertificates for cancellation, the holder of such certificates shall after the
\nEffective Time be entitled only to a certificate or certificates representing
\nthe number of full shares of Parent Stock, if any, and\/or the amount of cash, if
\nany, into which the aggregate number of shares of Company Common Stock
\npreviously represented by such certificate or certificates surrendered shall
\nhave been converted pursuant to this Agreement. The Exchange Agent shall accept
\nsuch certificates upon compliance with such reasonable terms and conditions as
\nthe Exchange Agent may impose to effect an orderly exchange thereof in
\naccordance with normal exchange practices. After the Effective Time, there
\nshall be no further transfer on the records of the Company or its transfer agent
\nof certificates representing shares of Company Common Stock and if such
\ncertificates are presented to the Company for transfer, they shall be cancelled
\nagainst delivery of certificates for Parent Stock and\/or cash as hereinabove
\nprovided. If any certificate for such Parent Stock is to be issued in, or if
\ncash is to be remitted to, a name other than that in which the certificate for
\nCompany Common Stock surrendered for exchange is registered, it shall be a
\ncondition of such exchange that the certificate so surrendered shall be properly
\nendorsed, with signature guaranteed, or otherwise in proper form for transfer
\nand that the person requesting such exchange shall pay to Parent or its transfer
\nagent any transfer or other taxes required by reason of the issuance of
\ncertificates for such Parent Stock in a name other than that of the registered
\nholder of the certificate surrendered, or establish to the satisfaction of
\nParent or its transfer agent that such tax has been paid or is not applicable.
\nUntil surrendered as contemplated by this Section 2.5(b), each certificate for
\nshares of Company Common Stock shall be deemed at any time after the Effective
\nTime of the Merger to represent only the right to receive upon such surrender
\nthe Merger Consideration. No interest will be paid or will accrue on any cash
\npayable as Merger Consideration or in lieu of any fractional shares of Parent
\nStock.<\/p>\n
(c) Distributions with Respect to Unexchanged Shares. No dividends
\n ————————————————
\nor other distributions with respect to Parent Stock with a record date after the
\nEffective Time shall be paid to the holder of any unsurrendered certificate for
\nshares of Company Common Stock with respect to the shares of Parent Stock
\nrepresented thereby and no cash payment in lieu of fractional shares shall be
\npaid to any such holder pursuant to Section 2.5(e) until the surrender of such
\ncertificate in accordance with this Article 2. Subject to the effect of<\/p>\n
-9-<\/p>\n
applicable laws, following surrender of any such certificate, there shall be
\npaid to the holder of the certificate representing whole shares of Parent Stock
\nissued in exchange therefor, without interest, (i) at the time of such surrender
\nthe amount of any cash payable in lieu of a fractional share of Parent Stock to
\nwhich such holder is entitled pursuant to Section 2.5(e) and the amount of
\ndividends or other distributions with a record date after the Effective Time
\ntheretofore paid with respect to such whole shares of Parent Stock, and (ii) at
\nthe appropriate payment date, the amount of dividends or other distributions
\nwith a record date after the Effective Time but prior to such surrender and a
\npayment date subsequent to such surrender payable with respect to such whole
\nshares of Parent Stock.<\/p>\n
(d) No Further Ownership Rights in Company Common Stock. All shares
\n —————————————————
\nof Parent Stock issued and cash paid upon the surrender for exchange of
\ncertificates representing shares of Company Common Stock in accordance with the
\nterms of this Article 2 (including any cash paid pursuant to Section 2.5(e))
\nshall be deemed to have been issued (and paid) in full satisfaction of all
\nrights pertaining to the shares of Company Common Stock theretofore represented
\nby such certificates.<\/p>\n
(e) No Fractional Shares.
\n ——————– <\/p>\n
(i) No certificates or scrip representing fractional shares of
\n Parent Stock shall be issued upon the surrender for exchange of
\n certificates representing shares of Company Common Stock, and such
\n fractional share interests will not entitle the owner thereof to vote or to
\n any rights of a stockholder of Parent; and<\/p>\n
(ii) Notwithstanding any other provision of this Agreement, (A)
\n each holder of shares of Company Common Stock exchanged pursuant to the
\n Merger who would have otherwise been entitled to receive a fraction of a
\n share of Parent Class A Stock (after taking into account all Parent Class A
\n Electing Shares delivered by such holder or, as to a holder of record who
\n holds shares of Company Common Stock as nominee or in a similar
\n representative capacity, after taking into account all Parent Class A
\n Electing Shares delivered by such a representative holder on behalf of a
\n particular beneficial owner) shall receive, in lieu thereof, the number of
\n shares of Parent Class B Stock determined by dividing (x) the product of
\n such fraction and the Average Parent Class A Stock Price by (y) the
\n quotient of the Average Parent Class A Stock Price divided by 30, and (B)
\n after application of Section 2.5(e)(ii)(A), each holder of shares of
\n Company Common Stock exchanged pursuant to the Merger who would have
\n otherwise been entitled to receive a fraction of a share of Parent Class B
\n Stock (after taking into account all shares of Company Common Stock
\n delivered by such holder, or by such a representative holder on behalf of a
\n particular beneficial owner, other than Parent Class A Electing Shares and
\n Cash Electing Shares) shall receive, in lieu thereof, a cash payment
\n (without interest) equal to the product of (x) such fraction and (y) the
\n quotient of the Average Parent Class A Stock Price divided by 30.<\/p>\n
(f) Termination of Exchange Fund. Any portion of the Merger
\n —————————-
\nConsideration deposited with the Exchange Agent pursuant to this Section 2.5
\n(the “Exchange<\/p>\n
-10-<\/p>\n
Fund”) which remains undistributed to the holders of the certificates
\nrepresenting shares of Company Common Stock for nine months after the Effective
\nTime shall be delivered to Parent, upon demand, and any holders of shares of
\nCompany Common Stock who have not theretofore complied with this Article 2 shall
\nthereafter look only to Parent and only as general creditors thereof for payment
\nof their claim for cash, Parent Stock, any cash in lieu of fractional shares of
\nParent Stock and any dividends or distributions with respect to Parent Stock to
\nwhich such holders may be entitled.<\/p>\n
(g) No Liability. None of Parent, Sub, the Company or the Exchange
\n ————
\nAgent shall be liable to any person in respect of any shares of Parent Stock (or
\ndividends or distributions with respect thereto) or cash from the Exchange Fund
\ndelivered to a public official pursuant to any applicable abandoned property,
\nescheat or similar law. If any certificates representing shares of Company
\nCommon Stock shall not have been surrendered prior to five years after the
\nEffective Time (or immediately prior to such earlier date on which any cash,
\nshares of Parent Stock, any cash in lieu of fractional shares of Parent Stock or
\nany dividends or distributions with respect to Parent Stock in respect of such
\ncertificate would otherwise escheat to or become the property of any
\nGovernmental Entity (as defined in Section 3.1(d)), any such shares, cash
\ndividends or distributions in respect of such certificate shall, to the extent
\npermitted by applicable law, become the property of the Surviving Corporation,
\nfree and clear of all claims or interest of any person previously entitled
\nthereto.<\/p>\n
(h) Investment of Exchange Fund. The Exchange Agent shall invest
\n —————————
\nany cash included in the Exchange Fund, as directed by Parent, on a daily basis.
\nAny interest and other income resulting from such investments shall be paid to
\nParent.<\/p>\n
ARTICLE 3<\/p>\n
REPRESENTATIONS AND WARRANTIES<\/p>\n
3.1 Representations and Warranties of the Company. The Company
\n ———————————————
\nrepresents and warrants to Parent and Sub as follows:<\/p>\n
(a) Organization, Standing and Corporate Power. Each of the Company
\n ——————————————
\nand each of its Subsidiaries (as defined in Section 3.1(b)) is duly organized,
\nvalidly existing and in good standing under the laws of the jurisdiction in
\nwhich it is incorporated and has the requisite corporate power and authority to
\ncarry on its business as now being conducted. Each of the Company and each of
\nits Subsidiaries is duly qualified or licensed to do business and is in good
\nstanding in each jurisdiction in which the nature of its business or the
\nownership or leasing of its properties makes such qualification or licensing
\nnecessary, other than in such jurisdictions where the failure to be so qualified
\nor licensed (individually or in the aggregate) would not have a material adverse
\neffect (as defined in Section 8.3) with respect to the Company. Attached as
\nSection 3.1(a) of the disclosure schedule (“Disclosure Schedule”) delivered to
\nParent by the Company at the time of execution of this Agreement are complete
\nand correct copies of the Certificate of Incorporation and Bylaws of the
\nCompany.<\/p>\n
-11-<\/p>\n
(b) Subsidiaries. The only direct or indirect subsidiaries of the
\n ————
\nCompany (the “Subsidiaries”) and other ownership interests held by the Company
\nin any other person are those listed in Section 3.1(b) of the Disclosure
\nSchedule. Except as set forth in Section 3.1(b) of the Disclosure Schedule, all
\nthe outstanding shares of capital stock of each such Subsidiary which is a
\ncorporation have been validly issued and are fully paid and nonassessable and
\nare owned (of record and beneficially) by the Company, by another Subsidiary
\n(wholly owned) of the Company or by the Company and another such Subsidiary
\n(wholly owned), free and clear of all pledges, claims, liens, charges,
\nencumbrances and security interests of any kind or nature whatsoever
\n(collectively, “Liens”). Except as set forth in Section 3.1(b) of the Disclosure
\nSchedule, the Company does not own, directly or indirectly, any capital stock or
\nother ownership interest in any corporation, partnership, business association,
\njoint venture or other entity.<\/p>\n
(c) Capital Structure. The authorized capital stock of the Company
\n —————–
\nconsists of 32,000,000 shares of Company Class A Stock and 10,000,000 shares of
\nCompany Class B Common Stock. Subject to any Permitted Changes (as defined in
\nSection 4.1(b)) following the date of this Agreement, there are (i) 14,005,042
\nshares of Company Class A Stock issued and outstanding, (ii) 8,025,025 shares of
\nCompany Class B Stock issued and outstanding, (iii) 259,328 shares of Company
\nClass A Stock and 97,644 shares of Company Class B Stock held in the treasury of
\nthe Company or held by any subsidiary of the Company; (iii) 147,431 shares of
\nCompany Class A Stock reserved for issuance upon exercise of authorized but
\nunissued Company Stock Options pursuant to the Option Plans; and (iv) 1,121,855
\nshares of Company Class A Stock issuable upon exercise of outstanding Company
\nStock Options. As of August 31, 1997, there was approximately $2,500 withheld
\nfrom the Company’s employees’ salaries to purchase shares of Company Common
\nStock pursuant to and issuable under the Stock Purchase Plan. Except as set
\nforth above, no shares of capital stock or other equity securities of the
\nCompany are issued, reserved for issuance or outstanding. All outstanding
\nshares of capital stock of the Company are, and all shares which may be issued
\npursuant to the Stock Plans will be when issued, duly authorized, validly
\nissued, fully paid and nonassessable and not subject to preemptive rights.
\nThere are no outstanding bonds, debentures, notes or other indebtedness or other
\nsecurities of the Company having the right to vote (or convertible into, or
\nexchangeable for, securities having the right to vote) on any matters on which
\nstockholders of the Company may vote. Except as set forth above, there are no
\noutstanding securities, options, warrants, calls, rights, commitments,
\nagreements, arrangements or undertakings of any kind to which the Company or any
\nof its subsidiaries is a party or by which any of them is bound obligating the
\nCompany or any of its subsidiaries to issue, deliver or sell, or cause to be
\nissued, delivered or sold, additional shares of capital stock or other equity or
\nvoting securities of the Company or of any of its subsidiaries or obligating the
\nCompany or any of its subsidiaries to issue, grant, extend or enter into any
\nsuch security, option, warrant, call, right, commitment, agreement, arrangement
\nor undertaking. Other than the Company Stock Options, (i) there are no
\noutstanding contractual obligations, commitments, understandings or arrangements
\nof the Company or any of its subsidiaries to repurchase, redeem or otherwise
\nacquire or make any payment in respect of or measured or determined based on the
\nvalue or market price of any shares of capital stock of the Company or any of
\nits subsidiaries and (ii) to the knowledge of the Company, other than as
\nprovided in the Shareholders’ Agreement, there are no irrevocable<\/p>\n
-12-<\/p>\n
proxies with respect to shares of capital stock of the Company or any subsidiary
\nof the Company. There are no agreements or arrangements pursuant to which the
\nCompany is or could be required to register shares of Company Common Stock or
\nother securities under the Securities Act of 1933, as amended (the “Securities
\nAct”).<\/p>\n
(d) Authority; Noncontravention. The Company has the requisite
\n —————————
\ncorporate power and authority to enter into this Agreement and, subject to the
\nCompany Stockholder Approval with respect to the consummation of the Merger, to
\nconsummate the transactions contemplated hereby. The execution and delivery of
\nthis Agreement by the Company and the consummation by the Company of the
\ntransactions contemplated hereby have been duly authorized by all necessary
\ncorporate action on the part of the Company, subject, in the case of the Merger,
\nto the Company Stockholder Approval. This Agreement has been duly executed and
\ndelivered by the Company and constitutes a valid and binding obligation of the
\nCompany, enforceable against the Company in accordance with its terms. Except
\nas disclosed in Section 3.1(d) of the Disclosure Schedule, the execution and
\ndelivery of this Agreement does not, and the consummation of the transactions
\ncontemplated hereby and compliance with the provisions hereof will not, conflict
\nwith, or result in any breach or violation of, or default (with or without
\nnotice or lapse of time, or both) under, or give rise to a right of termination,
\ncancellation or acceleration of or “put” right with respect to any obligation or
\nto loss of a material benefit under, or result in the creation of any Lien upon
\nany of the properties or assets of the Company or any of its subsidiaries under,
\n(i) the Certificate of Incorporation or Bylaws of the Company or the comparable
\ncharter or organizational documents of any of its subsidiaries, (ii) any
\nfranchise or other agreement with any franchisee of the Company or any of its
\nsubsidiaries, (iii) any loan or credit agreement, note, bond, mortgage,
\nindenture, lease or other agreement, instrument, permit, concession, franchise
\nor license applicable to the Company or any of its subsidiaries or their
\nrespective properties or assets or (iv) subject to the governmental filings and
\nother matters referred to in the following sentence, any judgment, order,
\ndecree, statute, law, ordinance, rule, regulation or arbitration award
\napplicable to the Company or any of its subsidiaries or their respective
\nproperties or assets, other than (A) in the case of clause (ii), any such
\nconflicts, breaches, violations, defaults, rights, losses or Liens that could
\nnot affect franchise or other agreements relating, individually or in the
\naggregate, to 150 or more store locations, and (B) in the case of clauses (ii),
\n(iii) and (iv), any such conflicts, breaches, violations, defaults, rights,
\nlosses or Liens that individually or in the aggregate could not have a material
\nadverse effect with respect to the Company or could not prevent, hinder or
\nmaterially delay the ability of the Company to consummate the transactions
\ncontemplated by this Agreement. No consent, approval, order or authorization
\nof, or registration, declaration or filing with, or notice to, any Federal,
\nstate or local government or any court, administrative agency or commission or
\nother governmental authority or agency, domestic or foreign (a “Governmental
\nEntity”), is required by or with respect to the Company or any of its
\nsubsidiaries in connection with the execution and delivery of this Agreement by
\nthe Company or the consummation by the Company of the transactions contemplated
\nhereby, except for (i) the filing of a premerger notification and report form by
\nthe Company under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
\namended (the “HSR Act”), (ii) the filing with the SEC of (y) a proxy statement
\nrelating to the Company Stockholder Approval (such proxy statement as amended or
\nsupplemented from time to time, the “Proxy Statement”), and (z) such reports
\nunder the Exchange Act as may be required in<\/p>\n
-13-<\/p>\n
connection with this Agreement and the transactions contemplated by this
\nAgreement, (iii) the filing of the Certificate of Merger with the Secretary of
\nState of the State of Delaware, and appropriate documents with the relevant
\nauthorities of other states in which the Company is qualified to do business and
\n(iv) such other consents, approvals, orders, authorizations, registrations,
\ndeclarations, filings or notices as are set forth in Section 3.1(d) of the
\nDisclosure Schedule.<\/p>\n
(e) SEC Documents; Undisclosed Liabilities. The Company has filed
\n ————————————–
\nall required reports, schedules, forms, statements and other documents with the
\nSEC since January 1, 1994, (collectively, and in each case including all
\nexhibits and schedules thereto and documents incorporated by reference therein,
\nthe “SEC Documents”). As of their respective dates, the SEC Documents complied
\nin all material respects with the requirements of the Securities Act or the
\nExchange Act, as the case may be, and the rules and regulations of the SEC
\npromulgated thereunder applicable to such SEC Documents, and none of the SEC
\nDocuments (including any and all financial statements included therein) as of
\nsuch dates contained any untrue statement of a material fact or omitted to state
\na material fact required to be stated therein or necessary in order to make the
\nstatements therein, in light of the circumstances under which they were made,
\nnot misleading. The consolidated financial statements of the Company included
\nin the SEC Documents (the “SEC Financial Statements”) comply as to form in all
\nmaterial respects with applicable accounting requirements and the published
\nrules and regulations of the SEC with respect thereto, have been prepared in
\naccordance with generally accepted accounting principles (except, in the case of
\nunaudited consolidated quarterly statements, as permitted by Form 10-Q of the
\nSEC) applied on a consistent basis during the periods involved (except as may be
\nindicated in the notes thereto) and fairly present the consolidated financial
\nposition of the Company and its consolidated subsidiaries as of the dates
\nthereof and the consolidated results of their operations and cash flows for the
\nperiods then ended (subject, in the case of unaudited quarterly statements, to
\nnormal year-end audit adjustments). Since November 30, 1996, neither the
\nCompany nor any of its subsidiaries, has incurred any liabilities or obligations
\nof any nature (whether accrued, absolute, contingent or otherwise) except (i) as
\nand to the extent set forth on the audited balance sheet of the Company and its
\nsubsidiaries as of November 30, 1996 (including the notes thereto), (ii) as
\nincurred in connection with the transactions contemplated by this Agreement,
\n(iii) as incurred after November 30, 1996 in the ordinary course of business and
\nconsistent with past practice, (iv) as described in the SEC Documents filed
\nsince November 30, 1996 (the “Recent SEC Documents”), or (v) as would not,
\nindividually or in the aggregate, have a material adverse effect with respect to
\nthe Company.<\/p>\n
(f) Information Supplied. None of the information supplied or to be
\n ——————–
\nsupplied by the Company for inclusion or incorporation by reference in (i) the
\nregistration statement on Form S-4 to be filed with the SEC by Parent in
\nconnection with the issuance of Parent Stock in the Merger (the “Form S-4”)
\nwill, at the time the Form S-4 is filed with the SEC, and at any time it is
\namended or supplemented or at the time it becomes effective under the Securities
\nAct, contain any untrue statement of a material fact or<\/p>\n
-14-<\/p>\n
omit to state any material fact required to be stated therein or necessary to
\nmake the statements therein not misleading, and (ii) the Proxy Statement will,
\nat the date it is first mailed to the Company’s stockholders or at the time of
\nthe Stockholders Meeting, contain any untrue statement of a material fact or
\nomit to state any material fact required to be stated therein or necessary in
\norder to make the statements therein, in light of the circumstances under which
\nthey are made, not misleading. The Proxy Statement will comply as to form in
\nall material respects with the requirements of the Exchange Act and the rules
\nand regulations promulgated thereunder, except that no representation is made by
\nthe Company with respect to statements made or incorporated by reference therein
\nbased on information supplied by Parent for inclusion or incorporation by
\nreference therein.<\/p>\n
(g) Absence of Certain Changes or Events. Except as disclosed in the
\n ————————————
\nRecent SEC Documents or in Section 3.1(g) of the Disclosure Schedule, since
\nNovember 30, 1996, the Company has conducted its business only in the ordinary
\ncourse consistent with past practice, and there is not and has not been: (i)
\nany material adverse change with respect to the Company; (ii) any condition,
\nevent or occurrence which, individually or in the aggregate, could reasonably be
\nexpected to have a material adverse effect or give rise to a material adverse
\nchange with respect to the Company; (iii) any event which, if it had taken place
\nfollowing the execution of this Agreement, would not have been permitted by
\nSection 4.1 without the prior consent of Parent; or (iv) any condition, event or
\noccurrence which would prevent, hinder or materially delay the ability of the
\nCompany to consummate the transactions contemplated by this Agreement.<\/p>\n
(h) Litigation; Labor Matters; Compliance with Laws.
\n ———————————————– <\/p>\n
(i) Except as disclosed in the Recent SEC Documents, there is
\n no suit, action or proceeding or investigation pending or, to the knowledge
\n of the Company, threatened against or affecting the Company or any of its
\n subsidiaries or any basis for any such suit, action, proceeding or
\n investigation that, individually or in the aggregate, could reasonably be
\n expected to have a material adverse effect with respect to the Company or
\n prevent, hinder or materially delay the ability of the Company to
\n consummate the transactions contemplated by this Agreement, nor is there
\n any judgment, decree, injunction, rule or order of any Governmental Entity
\n or arbitrator outstanding against the Company or any of its subsidiaries
\n having, or which, insofar as reasonably could be foreseen by the Company,
\n in the future could have, any such effect.<\/p>\n
(ii) Neither the Company nor any of its subsidiaries is a party
\n to, or bound by, any collective bargaining agreement, contract or other
\n agreement or understanding with a labor union or labor organization, nor is
\n it or any of its subsidiaries the subject of any proceeding asserting that
\n it or any subsidiary has committed an unfair labor practice or seeking to
\n compel it to bargain with any labor organization as to wages or conditions
\n of employment nor is there any strike, work stoppage or other labor dispute
\n involving it or any of its subsidiaries pending or, to its knowledge,
\n threatened, any of which could have a material adverse effect with respect
\n to the Company.<\/p>\n
(iii) The conduct of the business of each of the Company and
\n each of its subsidiaries complies with all statutes, laws, regulations,
\n ordinances, rules, <\/p>\n
-15-<\/p>\n
judgments, orders, decrees or arbitration awards applicable thereto, except
\n for violations or failures so to comply, if any, that, individually or in
\n the aggregate, could not reasonably be expected to have a material adverse
\n effect with respect to the Company.<\/p>\n
(i) Employee Matters. The Company has delivered to Parent full and
\n —————-
\ncomplete copies or descriptions of each material employment, severance, bonus,
\nprofit sharing, compensation, termination, stock option, stock appreciation
\nright, restricted stock, phantom stock, performance unit, pension, retirement,
\ndeferred compensation, welfare or other employee benefit agreement, trust fund
\nor other arrangement and any union, guild or collective bargaining agreement
\nmaintained or contributed to or required to be contributed to by the Company or
\nany of its ERISA Affiliates, for the benefit or welfare of any director,
\nofficer, employee or former employee of the Company or any of its ERISA
\nAffiliates (such plans and arrangements being collectively the “Company Benefit
\nPlans”). Each of the Company Benefit Plans is in material compliance with all
\napplicable laws including ERISA and the Code. The Internal Revenue Service has
\ndetermined that each Company Benefit Plan that is intended to be a qualified
\nplan under Section 401(a) of the Code is so qualified and the Company is aware
\nof no event occurring after the date of such determination that would adversely
\naffect such determination. The liabilities accrued under each such plan are
\nreflected on the latest balance sheet of the Company included in the Recent SEC
\nReports in accordance with generally accepted accounting principles applied on a
\nconsistent basis. No condition exists that is reasonably likely to subject the
\nCompany or any of its subsidiaries to any direct or indirect liability under
\nTitle IV of ERISA or to a civil penalty under Section 502(j) of ERISA or
\nliability under Section 4069 of ERISA or 4975, 4976, or 4980B of the Code or the
\nloss of a federal tax deduction under Section 280G of the Code or other
\nliability with respect to the Company Benefit Plans that would have a material
\nadverse effect on the Company and that is not reflected on such balance sheet.
\nNo Company Benefit Plan (other than any Company Benefit Plan that is a
\n“multiemployer plan” as such term is defined in Section 4001(a)(3) of ERISA) is
\nsubject to Title IV of ERISA. There are no pending, threatened, or anticipated
\nclaims (other than routine claims for benefits or immaterial claims) by, on
\nbehalf of or against any of the Company Benefit Plans or any trusts related
\nthereto. “ERISA Affiliate” means, with respect to any person, any trade or
\nbusiness, whether or not incorporated, that together with such person would be
\ndeemed a “single employer” within the meaning of Section 4001(a)(15) of the
\nEmployee Retirement Income Security Act of 1974, as amended (“ERISA”).<\/p>\n
(j) Tax Returns and Tax Payments. The Company and each of its
\n —————————-
\nsubsidiaries has timely filed (or, as to subsidiaries, the Company has filed on
\nits behalf) all Tax Returns (as defined below) required to be filed by it, has
\npaid (or, as to subsidiaries, the Company has paid on its behalf) all Taxes (as
\ndefined below) shown thereon to be due and has provided (or, as to subsidiaries,
\nthe Company has made provision on its behalf of) adequate reserves in its
\nfinancial statements for any Taxes that have not been paid, whether or not shown
\nas being due on any Tax Returns. Except as set forth in Section 3.1(j) of the
\nDisclosure Schedule: (i) no material claim for unpaid Taxes has been asserted by
\na Tax authority or has become a lien (except for liens not yet due and payable)
\nagainst the property of the Company or any of its subsidiaries or is being
\nasserted against the Company or any of<\/p>\n
-16-<\/p>\n
its subsidiaries, (ii) no audit of any Tax Return of the Company or any of its
\nsubsidiaries is being conducted by a Tax authority, and (iii) no extension of
\nthe statute of limitations on the assessment of any Taxes has been granted by
\nthe Company or any of its subsidiaries and is currently in effect. Neither the
\nCompany nor any of its Subsidiaries is or has been a member of any consolidated,
\ncombined, unitary or aggregate group for Tax purposes except such a group
\nconsisting only of the Company and its subsidiaries. As used herein, “Taxes”
\nshall mean all taxes of any kind, including, without limitation, those on or
\nmeasured by or referred to as income, gross receipts, sales, use, ad valorem,
\nfranchise, profits, license, withholding, payroll, employment, excise,
\nseverance, stamp, occupation, premium, value added, property or windfall profits
\ntaxes, customs, duties or similar fees, assessments or charges of any kind
\nwhatsoever, together with any interest and any penalties, additions to tax or
\nadditional amounts imposed by any governmental authority, domestic or foreign.
\nAs used herein, “Tax Return” shall mean any return, report or statement required
\nto be filed with any governmental authority with respect to Taxes.<\/p>\n
(k) State Antitakeover Laws Not Applicable. The Board of Directors
\n ————————————–
\nof the Company has approved this Agreement and the Shareholders’ Agreement and
\nthe transactions contemplated hereby and thereby and such approval constitutes
\napproval of the Merger and the Shareholders’ Agreement and the other
\ntransactions contemplated hereby and thereby by the Board of Directors of the
\nCompany under the provisions of Section 203 of the DGCL such that Section 203 of
\nthe DGCL does not apply to this Agreement or the Shareholders’ Agreement or the
\ntransactions contemplated hereby or thereby. No other state takeover statute or
\nsimilar statute or regulation of the State of Delaware (or, to the knowledge of
\nthe Company after due inquiry, of any other state or jurisdiction) applies or
\npurports to apply to this Agreement or the Shareholders’ Agreement or the
\ntransactions contemplated hereby or thereby and no provision of the Certificate
\nof Incorporation, Bylaws or other governing instruments of the Company or any of
\nits subsidiaries or the terms of any rights plan or agreement of the Company
\nwould, directly or indirectly, restrict or impair the ability of Parent to vote,
\nor otherwise to exercise the rights of a stockholder with respect to, securities
\nof the Company and its subsidiaries that may be acquired or controlled by Parent
\nby virtue of this Agreement or the Shareholders’ Agreement or the transactions
\ncontemplated hereby or thereby or permit any stockholder to acquire securities
\nof the Company or of Parent or any of its subsidiaries on a basis not available
\nto Parent in the event that Parent were to acquire securities of the Company.<\/p>\n
(l) Environmental Matters. There are no legal, administrative,
\n ———————
\narbitral or other proceedings, claims, actions, causes of action, private
\nenvironmental investigations or remediation activities or governmental
\ninvestigations of any nature seeking to impose, or that reasonably could be
\nexpected to result in the imposition, on the Company or any of its subsidiaries
\nof any liability or obligations arising under common law standards relating to
\nenvironmental protection, human health or safety, or under any local, state,
\nfederal, national or supernational environmental statute, regulation or
\nordinance, including the Comprehensive Environmental Response, Compensation and
\nLiability Act of 1980, as amended (collectively, “Environmental Laws”), pending
\nor, to the knowledge of the Company, threatened, against the Company or any of
\nits subsidiaries, which liability or obligation would have or would reasonably
\nbe expected to have a material adverse effect on the Company or any of its<\/p>\n
-17-<\/p>\n
subsidiaries. To the knowledge of the Company or any of its subsidiaries, there
\nis no reasonable basis for any such proceeding, claim, action or governmental
\ninvestigation that would impose any liability or obligation that would have or
\nwould reasonably be expected to have a material adverse effect on the Company or
\nany of its subsidiaries. To the knowledge of the Company, during or prior to
\nthe period of (i) its or any of its subsidiaries’ ownership or operation of any
\nof their respective current properties, (ii) its or any of its subsidiaries’
\nparticipation in the management of any property, or (iii) its or any of its
\nsubsidiaries’ holding of a security interest or other interest in any property,
\nthere was no release or threatened release of hazardous, toxic, radioactive or
\ndangerous materials or other materials regulated under Environmental Laws in,
\non, under or affecting any such property which would reasonably be expected to
\nhave a material adverse effect on the Company or any of its subsidiaries.
\nNeither the Company nor any of its subsidiaries is subject to any agreement,
\norder, judgment, decree, letter or memorandum by or with any court, governmental
\nauthority, regulatory agency or third party imposing any material liability or
\nobligations pursuant to or under any Environmental Law that would have or would
\nreasonably be expected to have a material adverse effect on the Company or any
\nof its subsidiaries.<\/p>\n
(m) Properties. Except as disclosed in the Recent SEC Documents,
\n ———-
\neach of the Company and its subsidiaries (i) has good, clear and marketable
\ntitle to all the properties and assets reflected in the latest audited balance
\nsheet included in such Recent SEC Documents as being owned by the Company or one
\nof its subsidiaries or acquired after the date thereof which are, individually
\nor in the aggregate, material to the Company’s business on a consolidated basis
\n(except properties sold or otherwise disposed of since the date thereof in the
\nordinary course of business), free and clear of (A) all Liens except (1)
\nstatutory liens securing payments not yet due and (2) such imperfections or
\nirregularities of title or other Liens (other than real property mortgages or
\ndeeds of trust) as do not materially affect the use of the properties or assets
\nsubject thereto or affected thereby or otherwise materially impair business
\noperations at such properties, and (B) all real property mortgages and deeds of
\ntrust and (ii) is the lessee of all leasehold estates reflected in the latest
\naudited financial statements included in such Recent SEC Documents or acquired
\nafter the date thereof which are material to its business on a consolidated
\nbasis and is in possession of the properties purported to be leased thereunder,
\nand each such lease is valid without default thereunder by the lessee or, to the
\nCompany’s knowledge, the lessor.<\/p>\n
(n) Brokers. No broker, investment banker, financial advisor or
\n ——-
\nother person, other than William Blair & Company, LLC, the fees and expenses of
\nwhich will be paid by the Company (pursuant to fee agreements, copies of which
\nhave been provided to Parent), is entitled to any broker’s, finder’s, financial
\nadvisor’s or other similar fee or commission in connection with the transactions
\ncontemplated by this Agreement based upon arrangements made by or on behalf of
\nthe Company.<\/p>\n
(o) Opinion of Financial Advisor. The Company has received the
\n —————————-
\nopinion of William Blair & Company, LLC, dated the date of this Agreement (which
\nopinion shall be updated within five (5) days prior to the mailing of the Proxy
\nStatement), to the effect that the Merger Consideration to be received in the
\nMerger by the Company’s stockholders is fair to <\/p>\n
-18-<\/p>\n
the holders of the Company Common Stock from a financial point of view, a signed
\ncopy of which opinion has been delivered to Parent.<\/p>\n
(p) Board Recommendation. The Board of Directors of the Company, at
\n ——————–
\na meeting duly called and held, has by unanimous vote of those directors present
\n(who constituted 100% of the directors then in office) (i) determined that this
\nAgreement and the transactions contemplated hereby, including the Merger, are
\nfair to and in the best interests of the stockholders of the Company, and (ii)
\nresolved to recommend that the holders of the shares of Company Common Stock
\napprove this Agreement and the transactions contemplated herein, including the
\nMerger.<\/p>\n
(q) Required Company Vote. The Company Stockholder Approval, being
\n ———————
\nthe affirmative vote of a majority of the outstanding shares of the Company
\nClass B Stock, voting separately as a class, is the only vote of the holders of
\nany class or series of the Company’s securities necessary to approve this
\nAgreement, the Merger and the other transactions contemplated hereby.<\/p>\n
3.2 Representations and Warranties of Parent. Parent represents and
\n —————————————-
\nwarrants to the Company as follows:<\/p>\n
(a) Organization, Standing and Corporate Power. Each of Parent, Sub
\n ——————————————
\nand the other Parent Subsidiaries (as defined in Section 3.2(b)) is duly
\norganized, validly existing and in good standing under the laws of the
\njurisdiction in which it is incorporated and has the requisite corporate power
\nand authority to carry on its business as now being conducted. Each of Parent,
\nSub and the other Parent Subsidiaries is duly qualified or licensed to do
\nbusiness and is in good standing in each jurisdiction in which the nature of its
\nbusiness or the ownership or leasing of its properties makes such qualification
\nor licensing necessary, other than in such jurisdictions where the failure to be
\nso qualified or licensed (individually or in the aggregate) would not have a
\nmaterial adverse effect with respect to Parent.<\/p>\n
(b) Subsidiaries. The only direct or indirect subsidiaries of Parent
\n ————
\n(other than such subsidiaries that would not constitute in the aggregate a
\nSignificant Subsidiary) are listed in Section 3.2(b) of the disclosure schedule
\n(the “Parent Disclosure Schedule”) delivered to the Company by Parent at the
\ntime of execution of this Agreement (together with Sub, the “Parent
\nSubsidiaries”). All the outstanding shares of capital stock of each such Parent
\nSubsidiary which is a corporation have been validly issued and are fully paid
\nand nonassessable and, except as set forth in Section 3.2(b) of the Parent
\nDisclosure Schedule, are owned (of record and beneficially) by Parent, by
\nanother Parent Subsidiary (wholly owned) or by Parent and another such Parent
\nSubsidiary (wholly owned), free and clear of all Liens.<\/p>\n
(c) Capital Structure. The authorized capital stock of Parent
\n —————–
\nconsists of 1,500,000 shares of Parent Class A Stock, 50,000,000 shares of
\nParent Class B Stock, and 1,000,000 shares of preferred stock, no par value per
\nshare (“Parent Preferred Stock”). Subject to such changes as may occur after
\nSeptember 30, 1997, and subject in the case of clauses (i) and (iii) to
\nadjustment as a result of conversions of Parent Class A Stock into Parent Class
\nB Stock, there were, as of September 30, 1997: (i) 1,198,835 shares of Parent
\nClass A <\/p>\n
-19-<\/p>\n
Stock, 1,058,650 shares of Parent Class B Stock, and no shares of Parent
\nPreferred Stock issued and outstanding; (ii) 168,203 shares of Parent Class A
\nStock held by Parent in its treasury; (iii) 35,965,050 shares of Parent Class B
\nStock reserved for issuance upon conversion of Parent Class A Stock; (iv) 406
\nshares of Parent Class B Stock reserved for issuance upon exercise of authorized
\nbut unissued options under Parent’s 1996 Stock Option Plan; and (v) 16,902
\nshares of Parent Class B Common Stock issuable upon exercise of outstanding
\noptions under Parent’s 1996 Stock Option Plan. Except as set forth above, no
\nshares of capital stock or other equity securities of Parent are issued,
\nreserved for issuance or outstanding. All outstanding shares of capital stock
\nof Parent are, and all shares of Parent Stock which may be issued pursuant to
\nthis Agreement will be, when issued, duly authorized, validly issued, fully paid
\nand nonassessable and not subject to preemptive rights. All shares of Parent
\nStock issued pursuant to this Agreement will, when so issued, be registered
\nunder the Securities Act for such issuance and registered under the Exchange
\nAct, be registered or exempt from registration under any applicable state
\nsecurities laws, and be listed on the NYSE, subject to official notice of
\nissuance. There are no outstanding bonds, debentures, notes or other
\nindebtedness or other securities of Parent having the right to vote (or
\nconvertible into, or exchangeable for, securities having the right to vote) on
\nany matters on which stockholders of Parent may vote. Except as set forth
\nabove, there are no outstanding securities, options, warrants, calls, or rights
\nobligating Parent or any of its subsidiaries to issue, deliver or sell, or cause
\nto be issued, delivered or sold, additional shares of capital stock or other
\nequity securities of Parent or any of its subsidiaries or obligating Parent or
\nany of its subsidiaries to issue, grant, extend or enter into any such security,
\noption, warrant, call, or right. The authorized capital stock of Sub consists of
\n1,000 shares of common stock, $.01 par value per share, all of which have been
\nvalidly issued, are fully paid and nonassessable and are owned directly by
\nParent, free and clear of any Lien.<\/p>\n
(d) Authority; Noncontravention. Parent and Sub have all requisite
\n —————————
\ncorporate power and authority to enter into this Agreement and to consummate the
\ntransactions contemplated by this Agreement. The execution and delivery of this
\nAgreement by Parent and Sub and the consummation by Parent and Sub of the
\ntransactions contemplated by this Agreement have been duly authorized by all
\nnecessary corporate action on the part of Parent and Sub. No vote or consent of
\nthe stockholders of Parent or Sub, which has not been obtained, is required
\nunder applicable law or rule of the NYSE to approve the Merger, this Agreement
\nor the transactions contemplated hereby. This Agreement has been duly executed
\nand delivered by and constitutes a valid and binding obligation of each of
\nParent and Sub, enforceable against such party in accordance with its terms.
\nThe execution and delivery of this Agreement do not, and the consummation of the
\ntransactions contemplated by this Agreement and compliance with the provisions
\nof this Agreement will not, conflict with, or result in any breach or violation
\nof, or default (with or without notice or lapse of time, or both) under, or give
\nrise to a right of termination, cancellation or acceleration of or “put” right
\nwith respect to any obligation or to loss of a material benefit under, or result
\nin the creation of any Lien upon any of the properties or assets of Parent or
\nany of its subsidiaries under, (i) the certificate of incorporation or by-laws
\nof Parent or Sub or the comparable charter or organizational documents of any
\nother subsidiary of Parent, (ii) any loan or credit agreement, note, bond,
\nmortgage, indenture, lease or other agreement, instrument, permit, concession,
\nfranchise or license applicable to Parent, Sub or any other subsidiary of Parent
\nor<\/p>\n
-20-<\/p>\n
their respective properties or assets or (iii) subject to the governmental
\nfilings and other matters referred to in the following sentence, any judgment,
\norder, decree, statute, law, ordinance, rule, regulation or arbitration award
\napplicable to Parent, Sub or any other subsidiary of Parent or their respective
\nproperties or assets, other than, in the case of clauses (ii) and (iii), any
\nsuch conflicts, breaches, violations, defaults, rights, losses or Liens that
\nindividually or in the aggregate could not have a material adverse effect with
\nrespect to Parent or could not prevent, hinder or materially delay the ability
\nof Parent to consummate the transactions contemplated by this Agreement. No
\nconsent, approval, order or authorization of, or registration, declaration or
\nfiling with, or notice to, any Governmental Entity is required by or with
\nrespect to Parent, Sub or any other subsidiary of Parent in connection with the
\nexecution and delivery of this Agreement by Parent or Sub or the consummation by
\nParent or Sub, as the case may be, of any of the transactions contemplated by
\nthis Agreement, except for (i) the filing of a premerger notification and report
\nform under the HSR Act, (ii) the filing with the SEC of (y) the Form S-4 and (z)
\nsuch reports under the Exchange Act as may be required in connection with this
\nAgreement and the transactions contemplated hereby, (iii) the filing of the
\nCertificate of Merger with the Secretary of State of the State of Delaware and
\nappropriate documents with the relevant authorities of other states in which the
\nCompany is qualified to do business, and (iv) such other consents, approvals,
\norders, authorizations, registrations, declarations, filings or notices as may
\nbe required under the “takeover” or “blue sky” laws of various states.<\/p>\n
(e) SEC Documents; Undisclosed Liabilities. Parent has filed all
\n ————————————–
\nrequired reports, schedules, forms, statements and other documents with the SEC
\nsince January 1, 1994 (collectively, and in each case, including all exhibits
\nand schedules thereto and documents incorporated by reference therein, the
\n“Parent SEC Documents”). As of their respective dates, the Parent SEC Documents
\ncomplied in all material respects with the requirements of the Securities Act or
\nthe Exchange Act, as the case may be, and the rules and regulations of the SEC
\npromulgated thereunder applicable to such Parent SEC Documents, and none of the
\nParent SEC Documents (including any and all financial statements included
\ntherein) as of such date contained any untrue statement of a material fact or
\nomitted to state a material fact required to be stated therein or necessary in
\norder to make the statements therein, in light of the circumstances under which
\nthey were made, not misleading. The consolidated financial statements of Parent
\nincluded in the Parent SEC Documents comply as to form in all material respects
\nwith applicable accounting requirements and the published rules and regulations
\nof the SEC with respect thereto, have been prepared in accordance with generally
\naccepted accounting principles (except, in the case of unaudited consolidated
\nquarterly statements, as permitted by Form 10-Q of the SEC) applied on a
\nconsistent basis during the periods involved (except as may be indicated in the
\nnotes thereto) and fairly present the consolidated financial position of Parent
\nand its consolidated subsidiaries as of the dates thereof and the consolidated
\nresults of operations and changes in cash flows for the periods then ended
\n(subject, in the case of unaudited quarterly statements, to normal year-end
\naudit adjustments). Since December 31, 1996, neither Parent nor any of its
\nsubsidiaries has incurred any liabilities or obligations of any nature (whether
\naccrued, absolute, contingent or otherwise) except (i) as and to the extent set
\nforth on the audited balance sheet of Parent and its subsidiaries as of December
\n31, 1996 (including the notes thereto), (ii) as incurred in connection with the
\ntransactions contemplated by this Agreement, (iii) as incurred after December
\n31, 1996 in the ordinary course of<\/p>\n
-21-<\/p>\n
business and consistent with past practice, (iv) as described in the SEC
\nDocuments filed since December 31, 1996 (the “Recent Parent SEC Documents”), or
\n(v) as would not, individually or in the aggregate, have a material adverse
\neffect with respect to Parent.<\/p>\n
(f) Information Supplied. None of the information supplied or to be
\n ——————–
\nsupplied by Parent or Sub for inclusion or incorporation by reference in (i) the
\nForm S-4 will, at the time the Form S-4 is filed with the SEC, and at any time
\nit is amended or supplemented or at the time it becomes effective under the
\nSecurities Act, contain any untrue statement of a material fact or omit to state
\nany material fact required to be stated therein or necessary to make the
\nstatements therein not misleading, and (ii) the Proxy Statement will, at the
\ndate the Proxy Statement is first mailed to the Company’s stockholders or at the
\ntime of the Stockholders Meeting, contain any untrue statement of a material
\nfact or omit to state any material fact required to be stated therein or
\nnecessary in order to make the statements therein, in light of the circumstances
\nunder which they are made, not misleading. The Form S-4 will comply as to form
\nin all material respects with the requirements of the Securities Act and the
\nrules and regulations promulgated thereunder, except that no representation or
\nwarranty is made by Parent or Sub with respect to statements made or
\nincorporated by reference therein based on information supplied by the Company
\nfor inclusion or incorporation by reference in the Form S-4.<\/p>\n
(g) Absence of Certain Changes or Events. Except as disclosed in the
\n ————————————
\nRecent Parent SEC Documents, since the date of the most recent financial
\nstatements included in the Recent Parent SEC Documents, Parent has conducted its
\nbusiness only in the ordinary course consistent with past practice, and there is
\nnot and has not been (i) any material adverse change with respect to Parent;
\n(ii) any condition, event or occurrence which, individually or in the aggregate,
\ncould reasonably be expected to have a material adverse effect or give rise to a
\nmaterial adverse change with respect to Parent; or (iii) any condition, event or
\noccurrence which could reasonably be expected to prevent, hinder or materially
\ndelay the ability of Parent to consummate the transactions contemplated by this
\nAgreement.<\/p>\n
(h) Interim Operations of Sub. Sub was formed on October 10, 1997
\n ————————-
\nsolely for the purposes of engaging in the transactions contemplated hereby, has
\nengaged in no other business activities and has conducted its operations only as
\ncontemplated hereby.<\/p>\n
(i) Brokers. No broker, investment banker, financial advisor or
\n ——-
\nother person is entitled to or may be paid any broker’s, finder’s, financial
\nadvisor’s or other similar fee or commission in connection with the transactions
\ncontemplated by this Agreement based upon arrangements made by or on behalf of
\nParent.<\/p>\n
ARTICLE 4<\/p>\n
COVENANTS RELATING TO CONDUCT OF
\n BUSINESS PRIOR TO MERGER<\/p>\n
4.1 Conduct of Business of the Company. From the date of this Agreement
\n ———————————-
\nto the Effective Time (except as otherwise specifically required by the terms of
\nthis Agreement), the <\/p>\n
-22-<\/p>\n
Company shall, and shall cause its subsidiaries to, act and carry on their
\nrespective businesses in the usual, regular and ordinary course of business
\nconsistent with past practice and, to the extent consistent therewith, use its
\nbest efforts to preserve intact their current business organizations, keep
\navailable the services of their current officers and employees and preserve
\ntheir relationships with customers, suppliers, franchisees, licensors,
\nlicensees, advertisers, distributors and others having business dealings with
\nthem to the end that their goodwill and ongoing businesses shall not be impaired
\nin any material respect at the Effective Time. Without limiting the generality
\nof the foregoing, from the date of this Agreement to the Effective Time, the
\nCompany shall not, and shall not permit any of its subsidiaries to, without the
\nprior written consent of Parent:<\/p>\n
(a) (i) declare, set aside or pay any dividends on, or make any other
\n distributions in respect of, any of its capital stock, other than dividends
\n and distributions by a direct or indirect wholly owned subsidiary of the
\n Company to its parent, (ii) split, combine or reclassify any of its capital
\n stock or issue or authorize the issuance of any other securities in respect
\n of, in lieu of or in substitution for shares of its capital stock, or (iii)
\n purchase, redeem or otherwise acquire any shares of capital stock of the
\n Company or any of its subsidiaries or any other securities thereof or any
\n rights, warrants or options to acquire any such shares or other securities,
\n except, in the case of clause (iii), for the acquisition of shares of
\n Company Common Stock from holders of Company Stock Options in full or
\n partial payment of the exercise price payable by such holder or tax
\n liability arising in connection therewith, upon exercise of Company Stock
\n Options outstanding on the date of this Agreement in accordance with their
\n present terms;<\/p>\n
(b) authorize for issuance, issue, deliver, sell, pledge or otherwise
\n encumber any shares of its capital stock or the capital stock of any of its
\n subsidiaries, any other voting securities or any securities convertible
\n into, or any rights, warrants or options to acquire, any such shares,
\n voting securities or convertible securities or any other securities or
\n equity equivalents (including without limitation stock appreciation
\n rights), or contractual obligation valued or measured by the value or
\n market price of Company Common Stock (other than the issuance of Company
\n Common Stock upon the exercise of Company Stock Options outstanding on the
\n date of this Agreement and in accordance with their present terms, such
\n issuance, together with the acquisitions of shares of Company Common Stock
\n permitted under clause (a) above, being referred to herein as “Permitted
\n Changes”);<\/p>\n
(c) amend its certificate of incorporation, by-laws or other
\n comparable charter or organizational documents;<\/p>\n
(d) acquire or agree to acquire by merging or consolidating with, or
\n by purchasing a substantial portion of the stock or assets of, or by any
\n other manner, any business or any corporation, partnership, joint venture,
\n association, or other business organization or division thereof;<\/p>\n
-23-<\/p>\n
(e) sell, lease, license, mortgage or otherwise encumber or subject
\n to any Lien or otherwise dispose of any of its properties or assets that
\n are material, individually or in the aggregate, to the Company and its
\n subsidiaries taken as a whole, except in the ordinary course of business
\n consistent with past practice;<\/p>\n
(f) (i) incur any indebtedness for borrowed money or guarantee any
\n such indebtedness of another person, issue or sell any debt securities or
\n warrants or other rights to acquire any debt securities of the Company or
\n any of its subsidiaries, guarantee any debt securities of another person,
\n enter into any “keep well” or other agreement to maintain any financial
\n statement condition of another person or enter into any arrangement having
\n the economic effect of any of the foregoing, except for short-term
\n borrowings incurred in the ordinary course of business consistent with past
\n practice, or (ii) make any loans, advances or capital contributions to, or
\n investments in, any other person, other than to the Company or any direct
\n or indirect wholly owned subsidiary of the Company;<\/p>\n
(g) acquire or agree to acquire any assets that are material,
\n individually or in the aggregate, to the Company and its subsidiaries taken
\n as a whole, or make or agree to make any capital expenditures except in the
\n ordinary course of business consistent with past practice;<\/p>\n
(h) pay, discharge or satisfy any claims (including claims of
\n stockholders), liabilities or obligations (absolute, accrued, asserted or
\n unasserted, contingent or otherwise), except for the payment, discharge or
\n satisfaction, of (i) liabilities or obligations in the ordinary course of
\n business consistent with past practice or in accordance with their terms as
\n in effect on the date hereof, (ii) liabilities reflected or reserved
\n against in, or contemplated by, the most recent consolidated audited
\n financial statements (or the notes thereof) of the Company included in the
\n Recent SEC Documents, or waive, release, grant, or transfer any rights of
\n material value or modify or change in any material respect any existing
\n license, lease, contract or other document, other than in the ordinary
\n course of business consistent with past practice;<\/p>\n
(i) adopt or amend in any material respect (except as may be required
\n by law or by this Agreement) any bonus, profit sharing, compensation, stock
\n option, pension, retirement, deferred compensation, employment or other
\n employee benefit plan, agreement, trust, fund or other arrangement
\n (including any Company Benefit Plan) for the benefit or welfare of any
\n employee, director or former director or employee or, other than increases
\n for individuals (other than officers and directors) in the ordinary course
\n of business consistent with past practice, increase the compensation or
\n fringe benefits of any director, employee or former director or employee;
\n pay any benefit not required by any existing plan, arrangement or
\n agreement, grant any new or modified severance or termination arrangement
\n or increase or accelerate any benefits payable under its severance or
\n termination pay policies in effect on the date hereof, other than any such
\n increase or acceleration provided for under such policies as in effect on
\n the date of this Agreement;<\/p>\n
-24-<\/p>\n
(j) change any material accounting principle used by it, except for
\n such changes as may be required to be implemented following the date of
\n this Agreement pursuant to generally accepted accounting principles or
\n rules and regulations of the SEC promulgated following the date hereof;<\/p>\n
(k) take any action that would, or is reasonably likely to, result in
\n any of its representations and warranties in this Agreement becoming
\n untrue, or in any of the conditions to the Merger set forth in Article 6
\n not being satisfied;<\/p>\n
(l) except in the ordinary course of business and consistent with
\n past practice, make any tax election or settle or compromise any federal,
\n state, local or foreign income tax liability; and<\/p>\n
(m) authorize any of, or commit or agree to take any of, the
\n foregoing actions.<\/p>\n
ARTICLE 5<\/p>\n
ADDITIONAL AGREEMENTS<\/p>\n
5.1 Preparation of Form S-4 and the Proxy Statement; Stockholder
\n ————————————————————
\nMeetings.
\n——–<\/p>\n
(a) Promptly following the date of this Agreement, the Company shall
\nprepare and file with the SEC the Proxy Statement, and Parent shall prepare and
\nfile with the SEC the Form S-4, in which the Proxy Statement will be included as
\na prospectus. Each of the Company and Parent shall use its reasonable best
\nefforts as promptly as practicable to have the Form S-4 declared effective under
\nthe Securities Act as promptly as practicable after such filing. The Company
\nwill use its reasonable best efforts to cause the Proxy Statement to be mailed
\nto the Company’s stockholders as promptly as practicable after the Form S-4 is
\ndeclared effective under the Securities Act. Parent shall also take any action
\n(other than qualifying to do business in any jurisdiction in which it is not now
\nso qualified) required to be taken under any applicable state securities laws in
\nconnection with the issuance of Parent Stock in the Merger, and the Company
\nshall furnish all information concerning the Company and the holders of the
\nCompany Common Stock and rights to acquire Company Common Stock pursuant to the
\nStock Plans as may be reasonably requested in connection with any such action.<\/p>\n
(b) The Company will, as promptly as practicable following the date
\nof this Agreement, duly call, give notice of, convene and hold a meeting of its
\nstockholders (the “Stockholders Meeting”) for the purpose of approving this
\nAgreement and the transactions contemplated by this Agreement. The Company
\nwill, through its Board of Directors, recommend to its stockholders approval of
\nthe foregoing matters, as set forth in Section 3.1(p). Such recommendation,
\ntogether with a copy of the opinion referred to in Section 3.1(o), shall be
\nincluded in the Proxy Statement. The Company will use reasonable efforts to
\nhold such meeting as soon as practicable after the date hereof.<\/p>\n
-25-<\/p>\n
(c) The Company will cause its transfer agent to make stock transfer
\nrecords relating to the Company available to the extent reasonably necessary to
\neffectuate the intent of this Agreement.<\/p>\n
5.2 Letter of the Company’s Accountants. The Company shall use its best
\n ———————————–
\nefforts to cause to be delivered to Parent a letter of Ernst & Young LLP, the
\nCompany’s independent public accountants, dated a date within two business days
\nbefore the date on which the Form S-4 shall become effective and addressed to
\nParent, in form and substance reasonably satisfactory to Parent and customary in
\nscope and substance for letters delivered by independent public accountants in
\nconnection with registration statements similar to the Form S-4.<\/p>\n
5.3 Parent Access to Information.
\n —————————- <\/p>\n
(a) The Company shall, and shall cause its subsidiaries, officers,
\nemployees, counsel, financial advisors and other representatives to, afford to
\nParent and its representatives reasonable access during normal business hours
\nduring the period prior to the Effective Time to its properties, books,
\ncontracts, commitments, personnel and records and, during such period, shall,
\nand shall cause its subsidiaries, officers, employees and representatives to,
\nfurnish promptly to Parent (i) a copy of each report, schedule, registration
\nstatement and other document filed by it during such period pursuant to the
\nrequirements of Federal or state securities laws and (ii) all other information
\nconcerning its business, properties, financial condition, operations and
\npersonnel as Parent may from time to time reasonably request. No investigation
\npursuant to this Section 5.3 shall affect any representations or warranties of
\nthe Company herein or the conditions to the obligations of the parties hereto.<\/p>\n
(b) The Company shall report on operational matters and promptly
\nadvise Parent orally and in writing of any change or event having, or which,
\ninsofar as can reasonably be foreseen, could have, a material adverse effect on
\nthe Company and its Subsidiaries taken as a whole.<\/p>\n
5.4 Best Efforts. Each of the parties agrees to use its best efforts to
\n ————
\ntake, or cause to be taken, all actions, and to do, or cause to be done, and to
\nassist and cooperate with the other parties in doing, all things necessary,
\nproper or advisable to consummate and make effective, in the most expeditious
\nmanner practicable, the Merger and the other transactions contemplated by this
\nAgreement. Parent, Sub and the Company will use their best efforts and
\ncooperate with one another (i) in promptly determining whether any filings are
\nrequired to be made or consents, approvals, waivers, permits or authorizations
\nare required to be obtained under any applicable law or regulation or from any
\ngovernmental authorities or third parties in connection with the transactions
\ncontemplated by this Agreement and (ii) in promptly making any such filings, in
\nfurnishing information required in connection therewith and in timely seeking to
\nobtain any such consents, approvals, waivers, permits or authorizations.<\/p>\n
5.5 Indemnification.
\n ————— <\/p>\n
-26-<\/p>\n
(a) The Company shall, and from and after the Effective Time Parent
\nand the Surviving Corporation shall, indemnify, defend and hold harmless each
\nperson who is now, or has been at any time prior to the date of this Agreement
\nor who becomes such prior to the Effective Time, an officer, director or
\nemployee of the Company or any of its subsidiaries (the “Indemnified Parties”)
\nagainst (i) all losses, claims, damages, costs, expenses, liabilities or
\njudgments or amounts that are paid in settlement with the approval of the
\nindemnifying party (which approval shall not be unreasonably withheld) of or in
\nconnection with any claim, action, suit, proceeding or investigation based in
\nwhole or in part on or arising in whole or in part out of the fact that such
\nperson is or was a director, officer or employee of the Company or any of its
\nsubsidiaries whether pertaining to any matter existing or occurring at or prior
\nto the Effective Time and whether asserted or claimed prior to, or at or after,
\nthe Effective Time (“Indemnified Liabilities”), and (ii) all Indemnified
\nLiabilities based in whole or in part on, or arising in whole or in part out of,
\nor pertaining to this Agreement or the transactions contemplated hereby;
\nprovided, however, that, in the case of the Company and the Surviving
\n——– ——-
\nCorporation such indemnification shall only be to the fullest extent a
\ncorporation is permitted under the DGCL to indemnify its own directors, officers
\nand employees, and in the case of Parent, such indemnification shall not be
\nlimited by the DGCL but such indemnification shall not be applicable to any
\nclaims made against the Indemnified Parties if a judgment or other final
\nadjudication established that (A) their acts or omissions were committed in bad
\nfaith or were the result of active and deliberate dishonesty and were material
\nto the cause of action so deliberated or (B) arising out of, based upon or
\nattributable to the gaining in fact of any financial profit or other advantage
\nto which they were not legally entitled. The Company, Parent and the Surviving
\nCorporation, as the case may be, will pay all expenses of each Indemnified Party
\nin advance of the final disposition of any such action or proceeding, in the
\ncase of the Company and the Surviving Corporation only to the fullest extent
\npermitted by law upon receipt of any undertaking contemplated by Section 145(e)
\nof the DGCL. Without limiting the foregoing, in the event any such claim,
\naction, suit, proceeding or investigation is brought against any Indemnified
\nParty (whether arising before or after the Effective Time), (i) the Indemnified
\nParties may retain counsel satisfactory to them and the Company (or them and
\nParent and the Surviving Corporation after the Effective Time), (ii) the Company
\n(or after the Effective Time, the Surviving Corporation) shall pay all
\nreasonable fees and expenses of such counsel for the Indemnified Parties
\npromptly as statements therefor are received, and (iii) the Company (or after
\nthe Effective Time, Parent and the Surviving Corporation) will use all
\nreasonable efforts to assist in the vigorous defense of any such matter,
\nprovided that none of the Company, Parent or the Surviving Corporation shall be
\nliable for any settlement of any claim effected without its written consent,
\nwhich consent, however, shall not be unreasonably withheld. Any Indemnified
\nParty wishing to claim indemnification under this Section 5.5, upon learning of
\nany such claim, action, suit, proceeding or investigation, shall notify the
\nCompany, Parent or the Surviving Corporation (but the failure so to notify an
\nindemnifying party shall not relieve it from any liability which it may have
\nunder this Section 5.5 except to the extent such failure prejudices such party),
\nand shall deliver to the Company (or after the Effective Time, the Surviving
\nCorporation (but not Parent)) the undertaking contemplated by Section 145(e) of
\nthe DGCL. The Indemnified Parties as a group may retain only one law firm to
\nrepresent them with respect to each such matter unless there is, under
\napplicable standards of professional conduct, a conflict on any significant
\nissue between the positions of any two or more Indemnified Parties.<\/p>\n
-27-<\/p>\n
(b) The provisions of this Section 5.5 are intended to be for the
\nbenefit of, and shall be enforceable by, each Indemnified Party, his or her
\nheirs and representatives.<\/p>\n
5.6 Expenses. Whether or not the Merger is consummated, all costs and
\n ——–
\nexpenses incurred in connection with this Agreement and the transactions
\ncontemplated hereby shall be paid by the party incurring such expenses, except
\nthat the expenses in connection with printing and mailing the Proxy Statement
\nand the Form S-4, as well as all SEC filing fees relating to the transactions
\ncontemplated herein, shall be shared equally between Parent and the Company.<\/p>\n
5.7 Public Announcements. Parent and Sub, on the one hand, and the
\n ——————–
\nCompany, on the other hand, will consult with each other before issuing, and
\nprovide each other the opportunity to review and comment upon, any press release
\nor other public statements with respect to the transactions contemplated by this
\nAgreement, including the Merger, and shall not issue any such press release or
\nmake any such public statement prior to such consultation, except as may be
\nrequired by applicable law, court process or by obligations pursuant to any
\nlisting agreement with any national securities exchange. The parties agree that
\nthe initial press release or releases to be issued with respect to the
\ntransactions contemplated by this Agreement shall be mutually agreed upon prior
\nto the issuance thereof.<\/p>\n
5.8 Affiliates. Prior to the Closing Date, the Company shall deliver to
\n ———-
\nParent a letter identifying all persons who are, at the time this Agreement is
\nsubmitted for approval to the stockholders of the Company, “affiliates” of the
\nCompany for purposes of Rule 145 under the Securities Act. The Company shall
\nuse its best efforts to cause each such person to deliver to Parent on or prior
\nto the Closing Date a written agreement substantially in the form attached as
\nExhibit A hereto.<\/p>\n
5.9 Stock Exchange Listing. Parent shall use its best efforts to cause
\n ———————-
\nthe shares of Parent Stock to be issued in the Merger to be approved for listing
\non the NYSE, subject to notice of issuance, prior to the Closing Date.<\/p>\n
5.10 Takeover Statutes. If any “fair price,” “moratorium,” “control share
\n —————–
\nacquisition” or other form of antitakeover statute or regulation shall become
\napplicable to the transactions contemplated hereby, the Company and the members
\nof the Board of Directors of the Company shall grant such approvals and take
\nsuch actions as are reasonably necessary so that the transactions contemplated
\nhereby may be consummated as promptly as practicable on the terms contemplated
\nhereby and otherwise act to eliminate or minimize the effects of such statute or
\nregulation on the transactions contemplated hereby.<\/p>\n
5.11 No Solicitation. Neither the Company nor any of its subsidiaries
\n —————
\nshall, nor shall the Company or any of its subsidiaries authorize or permit any
\nof its or their officers, directors, agents, representatives, advisors or
\nsubsidiaries to, (a) solicit, initiate or encourage (including by way of
\nfurnishing information), or take any other action to facilitate the submission
\nof inquiries, proposals or offers from any person relating to any acquisition or
\npurchase of a substantial amount of assets of the Company or any of its
\nsubsidiaries (other than in the ordinary course of business) or of over 20% of
\nany class of equity securities of the <\/p>\n
-28-<\/p>\n
Company or any of its subsidiaries or any tender offer (including a self tender
\noffer) or exchange offer that if consummated would result in any person
\nbeneficially owning 20% or more of any class of equity securities of the Company
\nor any of its subsidiaries, or any merger, consolidation, business combination,
\nsale of substantially all assets, recapitalization, liquidation, dissolution or
\nsimilar transaction involving the Company or any of its subsidiaries, other than
\nthe transactions contemplated by this Agreement, or any other transaction the
\nconsummation of which would or could reasonably be expected to impede, interfere
\nwith, prevent or materially delay the Merger or which would or could reasonably
\nbe expected to materially dilute the benefits to Parent of the transactions
\ncontemplated hereby (collectively, “Transaction Proposals”) or agree to or
\nendorse any Transaction Proposal, or (b) enter into or participate in any
\ndiscussions or negotiations regarding any of the foregoing, or furnish to any
\nother person any information with respect to its business, properties or assets
\nor any of the foregoing, or otherwise cooperate in any way with, or assist or
\nparticipate in, facilitate or encourage, any effort or attempt by any other
\nperson to do or seek any of the foregoing; provided, however, that the foregoing
\n ——– ——-
\nshall not prohibit the Company from (i) furnishing information concerning the
\nCompany and its businesses, properties or assets pursuant to an appropriate and
\ncustomary confidentiality agreement to a third party who has made an unsolicited
\nTransaction Proposal, (ii) engaging in discussions or negotiations with a third
\nparty who has made an unsolicited Transaction Proposal, (iii) following receipt
\nof an unsolicited Transaction Proposal, taking and disclosing to its
\nstockholders a position contemplated by Rule 14e-2(a) under the Exchange Act or
\notherwise making disclosure to its stockholders, and\/or (iv) following receipt
\nof an unsolicited Transaction Proposal, failing to make or withdrawing or
\nmodifying its recommendation referred to in Section 3.1(p), but in each case
\nreferred to in the foregoing clauses (i) through (iv) only if and to the extent
\nthat the Board of Directors of the Company shall have concluded in good faith,
\nafter consulting with and considering the advice of outside counsel, that such
\naction is required by the Board of Directors of the Company in the exercise of
\nits fiduciary duties to the stockholders of the Company; provided, further, that
\n ——– ——-
\nthe Board of Directors of the Company shall not take any of the foregoing
\nactions referred to in clauses (i) through (iv) until after giving at least one
\nbusiness day’s advance written notice to Parent with respect to the actions
\nspecified in the foregoing clauses (i) through (iv) that it shall take. In
\naddition, if the Board of Directors of the Company receives a Transaction
\nProposal, then the Company shall promptly inform Parent in writing of the
\nmaterial terms of such proposal and the identity of the person (or group) making
\nit. The Company will immediately cease and cause to be terminated any existing
\nactivities, discussions or negotiations with any parties conducted heretofore
\nwith respect to any of the foregoing. Without limiting the foregoing, it is
\nunderstood that any violation of the restrictions set forth in this Section by
\nany director or executive officer of the Company or any of its subsidiaries or
\nby any investment banker, financial adviser, attorney, accountant, or other
\nrepresentative of the Company or any of its subsidiaries shall be deemed to be a
\nbreach of this Section by the Company.<\/p>\n
5.12 Certain Agreements. Neither the Company nor any subsidiary of the
\n ——————
\nCompany will waive or fail to enforce any provision of any confidentiality or
\nstandstill or similar agreement to which it is a party without the prior written
\nconsent of Parent.<\/p>\n
-29-<\/p>\n
5.13 Employee Benefits.
\n —————– <\/p>\n
(a) Parent and the Company agree that the Company Benefit Plans
\nshall, to the extent practicable and except as otherwise provided in Section 2.4
\nhereof, remain in effect without material amendment until the Effective Time and
\nthat thereafter the Surviving Corporation will maintain, subject to such changes
\nand modifications as may be necessary or desirable to facilitate compliance by
\nParent and its subsidiaries (including the Surviving Corporation) with
\napplicable statutory and regulatory requirements, substantially similar plans
\n(other than the Stock Plans) for a period of at least three years after the
\nEffective Time.<\/p>\n
(b) Parent will cause the Surviving Corporation to honor without
\nmaterial modification for a period of at least three years after the Effective
\nTime all employee severance plans (or policies) and employment and severance
\nagreements of the Company or any of its subsidiaries in existence on the date
\nhereof.<\/p>\n
(c) Parent and Company will use their reasonable best efforts to
\nagree on compensation plans for the officers and employees of the Company after
\nthe Effective Time to provide them incentive compensation during the three-year
\nperiod following the Effective Time that in the aggregate is reasonably
\ncomparable (without giving effect to any payments to them resulting from the
\nMerger) to that historically provided by the Stock Plans, except that neither
\nParent nor the Surviving Corporation shall be required to issue any shares of
\nits equity securities in connection with such compensation plans.<\/p>\n
ARTICLE 6<\/p>\n
CONDITIONS PRECEDENT<\/p>\n
6.1 Conditions to Each Party’s Obligation To Effect the Merger. The
\n ———————————————————-
\nrespective obligation of each party to effect the Merger is subject to the
\nsatisfaction or waiver on or prior to the Closing Date of the following
\nconditions:<\/p>\n
(a) Company Stockholder Approval. The Company Stockholder Approval
\n —————————-
\nshall have been obtained.<\/p>\n
(b) NYSE Listing. The shares of Parent Stock issuable to the
\n ————
\nCompany’s stockholders pursuant to this Agreement shall have been approved for
\nlisting on the NYSE, subject to notice of issuance.<\/p>\n
(c) HSR Act. The waiting period (and any extension thereof)
\n ——-
\napplicable to the Merger under the HSR Act shall have been terminated or shall
\nhave expired.<\/p>\n
(d) No Injunctions or Restraints. No temporary restraining order,
\n —————————-
\npreliminary or permanent injunction or other order issued by any court of
\ncompetent jurisdiction or other legal restraint or prohibition preventing the
\nconsummation of the Merger <\/p>\n
-30-<\/p>\n
shall be in effect; provided, however, that the parties hereto shall use their
\n ——– ——-
\nbest efforts to have any such injunction, order, restraint or prohibition
\nvacated.<\/p>\n
(e) Form S-4. The Form S-4 shall have become effective under the
\n ——–
\nSecurities Act and shall not be the subject of any stop order or proceedings
\nseeking a stop order, and any material “blue sky” and other state securities
\nlaws applicable to the issuance of the Parent Stock shall have been complied
\nwith.<\/p>\n
6.2 Conditions to Obligation of Parent and Sub. The obligations of Parent
\n ——————————————
\nand Sub to effect the Merger are further subject to the following conditions:<\/p>\n
(a) Representations and Warranties. The representations and
\n ——————————
\nwarranties of the Company set forth in this Agreement shall be true and correct
\nin all material respects, in each case as of the date of this Agreement and as
\nof the Closing Date as though made on and as of the Closing Date. Parent shall
\nhave received a certificate signed on behalf of the Company by the chief
\nexecutive officer and the chief financial officer of the Company to such effect.<\/p>\n
(b) Performance of Obligations of the Company. The Company shall
\n —————————————–
\nhave performed the obligations required to be performed by it under this
\nAgreement at or prior to the Closing Date (except for such failures to perform
\nas have not had or could not reasonably be expected, either individually or in
\nthe aggregate, to have a material adverse effect with respect to the Company or
\nadversely affect the ability of the Company to consummate the transactions
\nherein contemplated or perform its obligations hereunder), and Parent shall have
\nreceived a certificate signed on behalf of the Company by the chief executive
\nofficer and the chief financial officer of the Company to such effect.<\/p>\n
(c) Tax Opinion. Parent shall have received the opinion of Munger,
\n ———–
\nTolles & Olson LLP, counsel to Parent, dated the Closing Date, based on
\nappropriate representations of the Company, its affiliates, and Parent, and such
\nother facts, representations, assumptions, and agreements as counsel may
\nreasonably deem relevant, to the effect that for United States Federal income
\ntax purposes the Merger will qualify as a reorganization within the meaning of
\nSection 368 of the Code and that each of Parent, Sub and the Company will be a
\nparty to the reorganization within the meaning of Section 368(b) of the Code.<\/p>\n
(d) Consents, etc. Parent shall have received evidence, in form and
\n ————–
\nsubstance reasonably satisfactory to it, that such licenses, permits, consents,
\napprovals, authorizations, qualifications and orders of governmental authorities
\nand other third parties as are necessary in connection with the transactions
\ncontemplated hereby have been obtained, except such licenses, permits, consents,
\napprovals, authorizations, qualifications and orders which are not, individually
\nor in the aggregate, material to Parent or the Company or the failure of which
\nto have been received would not (as compared to the situation in which such
\nlicense, permit, consent, approval, authorization, qualification or order had
\nbeen obtained) materially dilute the aggregate benefits to Parent of the Merger.<\/p>\n
-31-<\/p>\n
(e) Affiliate Letters. Parent shall have received the agreements
\n —————–
\nreferred to in Section 5.8.<\/p>\n
(f) Continuity of Interest Agreement. Mr. John W. Mooty shall have
\n ——————————–
\nexecuted and delivered, and shall have used his best efforts to cause the other
\nmembers of his family and such other shareholders of the Company as may be
\nnecessary or desirable to facilitate issuance of the tax opinions referenced in
\nSections 6.2(c) and 6.3(c) to have executed and delivered, a Continuity of
\nInterest Agreement in substantially the form attached as Exhibit B hereto.<\/p>\n
(g) Opinion of Counsel to the Company. Parent shall have received,
\n ———————————
\non and as of the Closing Date, an opinion of Gray, Plant, Mooty, Mooty & Bennet,
\nP.A., counsel to the Company, in usual and customary form reasonably acceptable
\nto Parent, to the effect that (i) the Company is a corporation duly
\nincorporated, validly existing and in good standing under the laws of the State
\nof Delaware, (ii) the execution and delivery of this Agreement by the Company
\nand the consummation by the Company of the transactions contemplated hereby have
\nbeen duly authorized by all necessary corporate and shareholder action, (iii)
\nthis Agreement has been duly executed and delivered by the Company and
\nconstitutes a valid and binding obligation of the Company, enforceable in
\naccordance with its terms (subject to customary exceptions), and (iv) the
\nexecution and delivery of this Agreement does not, and the consummation by the
\nCompany of the transactions contemplated hereby will not, (A) violate the
\nCertificate of Incorporation or Bylaws of the Company, or (B) to the best
\nknowledge of such counsel based upon due inquiry of the Company, conflict with,
\nor result in any breach or violation of, or default (with or without notice or
\nlapse of time, or both) under, or give rise to a right of termination,
\ncancellation or acceleration of or “put” right with respect to any obligation or
\nto loss of a material benefit under, or result in the creation of any Lien upon
\nany of the properties or assets of the Company or any of its subsidiaries under
\nthe terms of, any franchise or other agreement with any franchisee of the
\nCompany or any of its subsidiaries, other than any such conflicts, breaches,
\nviolations, defaults, rights, losses or Liens that could not (x) affect
\nfranchise or other agreements relating, individually or in the aggregate, to 150
\nor more store locations, (y) individually or in the aggregate have a material
\nadverse effect with respect to the Company or the Surviving Corporation, or (z)
\nprevent, hinder or materially delay the ability of the Company to consummate the
\ntransactions contemplated by this Agreement.<\/p>\n
6.3 Conditions to Obligation of the Company. The obligation of the
\n —————————————
\nCompany to effect the Merger is further subjected to the following conditions:<\/p>\n
(a) Representations and Warranties. The representations and
\n ——————————
\nwarranties of Parent and Sub set forth in this Agreement shall be true and
\ncorrect in all material respects, in each case as of the date of this Agreement
\nand as of the Closing Date as though made on and as of the Closing Date. The
\nCompany shall have received a certificate signed on behalf of Parent by the
\nchief executive officer and the chief financial officer of Parent to such
\neffect.<\/p>\n
(b) Performance of Obligations of Parent and Sub. Parent and Sub
\n ——————————————–
\nshall have performed the obligations required to be performed by them under this
\nAgreement at or <\/p>\n
-32-<\/p>\n
prior to the Closing Date (except for such failures to perform as have not had
\nor could not reasonably be expected, either individually or in the aggregate, to
\nhave a material adverse effect with respect to Parent or adversely affect the
\nability of Parent to consummate the transactions herein contemplated or perform
\nits obligations hereunder), and the Company shall have received a certificate
\nsigned on behalf of Parent by the chief executive officer and the chief
\nfinancial officer of Parent to such effect.<\/p>\n
(c) Tax Opinion. The Company shall have received the opinion of
\n ———–
\nFaegre & Benson, tax counsel to the Company, or the opinion of other tax counsel
\nof a prominent law firm designated by Parent and reasonably acceptable to the
\nCompany, dated the Closing Date, based on appropriate representations of the
\nCompany, its affiliates, and Parent and such other facts, representations,
\nassumptions, and agreements as counsel may reasonably deem relevant, to the
\neffect that for United States Federal income tax purposes the Merger will
\nqualify as a reorganization within the meaning of Section 368 of the Code and
\nthat each of Parent, Sub and the Company will be a party to the reorganization
\nwithin the meaning of Section 368(b) of the Code.<\/p>\n
(d) Opinion of Counsel to Parent. The Company shall have received,
\n —————————-
\non and as of the Closing Date, an opinion of Munger, Tolles & Olson LLP, counsel
\nto Parent, in usual and customary form reasonably acceptable to the Company, to
\nthe effect that (i) Parent and Sub are corporations duly incorporated, validly
\nexisting and in good standing under the laws of the State of Delaware, (ii) the
\nexecution and delivery of this Agreement by Parent and Sub and the consummation
\nby Parent and Sub of the transactions contemplated hereby have been duly
\nauthorized by all necessary corporate action, (iii) this Agreement has been duly
\nexecuted and delivered by Parent and Sub and constitutes a valid and binding
\nobligation of each of Parent and Sub, enforceable in accordance with its terms
\n(subject to customary exceptions), and (iv) the execution and delivery of this
\nAgreement does not, and the consummation by Parent and Sub of the transactions
\ncontemplated hereby will not violate the Certificate of Incorporation or Bylaws
\nof Parent or Sub.<\/p>\n
ARTICLE 7<\/p>\n
TERMINATION, AMENDMENT AND WAIVER<\/p>\n
7.1 Termination. This Agreement may be terminated and abandoned at any
\n ———–
\ntime prior to the Effective Time of the Merger, whether before or after approval
\nof the Merger by the stockholders of the Company:<\/p>\n
(a) by mutual written consent of Parent and the Company; or<\/p>\n
(b) by either Parent or the Company if any Governmental Entity shall
\nhave issued an order, decree or ruling or taken any other action permanently
\nenjoining, restraining or otherwise prohibiting the Merger and such order,
\ndecree, ruling or other action shall have become final and nonappealable; or<\/p>\n
-33-<\/p>\n
(c) by either Parent or the Company if the Merger shall not have been
\nconsummated on or before March 31, 1998 (other than due to the failure of the
\nparty seeking to terminate this Agreement to perform its obligations under this
\nAgreement required to be performed at or prior to the Effective Time of the
\nMerger); or<\/p>\n
(d) by Parent, if any required approval of the stockholders of the
\nCompany shall not have been obtained by reason of the failure to obtain the
\nrequired vote upon a vote held at a duly held meeting of stockholders or at any
\nadjournment thereof; or<\/p>\n
(e) by Parent, (1) if the Company shall have (i) withdrawn, modified
\nor amended in any respect adverse to Parent or Sub its approval or
\nrecommendation of this Agreement or the Merger, (ii) failed as soon as
\npracticable to mail the Proxy Statement to its stockholders or failed to include
\nin such statement such recommendation, (iii) recommended any Transaction
\nProposal from a person other than Parent or (iv) resolved to do any of the
\nforegoing, or (2) if (i) the Company shall have exercised a right specified in
\nthe first proviso to Section 5.11 with respect to any Transaction Proposal and
\nshall, directly or through agents or representatives, continue discussions with
\nany third party concerning such Transaction Proposal for more than 10 business
\ndays after the date of receipt of such Transaction Proposal; or (ii) (A) a
\nTransaction Proposal that is publicly disclosed shall have been commenced,
\npublicly proposed or communicated to the Company which contains a proposal as to
\nprice (without regard to whether such proposal specifies a specific price or a
\nrange of potential prices) and (B) the Company shall not have rejected such
\nproposal within 10 business days of its receipt or, if sooner, the date its
\nexistence first becomes publicly disclosed; or<\/p>\n
(f) by the Company, if the Company exercises, pursuant to Section
\n5.11, the right specified in clause (iv) of the first proviso to Section 5.11;
\nor<\/p>\n
(g) by Parent, if the Company fails to perform any of its material
\nobligations under this Agreement; or<\/p>\n
(h) by the Company, if Parent or Sub fails to perform any of their
\nrespective material obligations under this Agreement.<\/p>\n
7.2 Effect of Termination. In the event of termination of this Agreement
\n ———————
\nby either the Company or Parent as provided in Section 7.1, this Agreement shall
\nforthwith become void and have no effect, without any liability or obligation on
\nthe part of Parent, Sub or the Company, other than pursuant to the provisions of
\nSection 5.6 and this Section 7.2. Nothing contained in this Section shall,
\nhowever, relieve any party for any breach of the representations, warranties,
\ncovenants or agreements set forth in this Agreement prior to any such
\ntermination.<\/p>\n
7.3 Amendment. This Agreement may be amended by the parties at any time
\n ———
\nbefore or after required approval of the Merger by the stockholders of the
\nCompany; provided, however, that after such approval, there shall be made no
\n ——– ——-
\namendment that by law requires further approval by such stockholders without the
\nfurther approval of such <\/p>\n
-34-<\/p>\n
stockholders. This Agreement may not be amended except by an instrument in
\nwriting signed on behalf of each of the parties.<\/p>\n
7.4 Extension; Waiver. At any time prior to the Effective Time, the
\n —————–
\nparties may (a) extend the time for the performance of any of the obligations or
\nother acts of the other parties, (b) waive any inaccuracies in the
\nrepresentations and warranties contained in this Agreement or in any document
\ndelivered pursuant to this Agreement or (c) subject to the proviso of Section
\n7.3, waive compliance with any of the agreements or conditions contained in this
\nAgreement. Any agreement on the part of a party to any such extension or waiver
\nshall be valid only if set forth in an instrument in writing signed on behalf of
\nsuch party. The failure of any party to this Agreement to assert any of its
\nrights under this Agreement or otherwise shall not constitute a waiver of such
\nrights.<\/p>\n
ARTICLE 8<\/p>\n
GENERAL PROVISIONS<\/p>\n
8.1 Nonsurvival of Representations and Warranties. None of the
\n ———————————————
\nrepresentations and warranties in this Agreement or in any instrument delivered
\npursuant to this Agreement shall survive the Effective Time. This Section 8.1
\nshall not limit any covenant or agreement of the parties which by its terms
\ncontemplates performance after the Effective Time.<\/p>\n
8.2 Notices. All notices, requests, claims, demands and other
\n ——-
\ncommunications under this Agreement shall be in writing and shall be deemed
\ngiven if delivered personally or sent by overnight courier (providing proof of
\ndelivery) to the parties at the following addresses (or at such other address
\nfor a party as shall be specified by like notice):<\/p>\n
(a) if to Parent or Sub, to:<\/p>\n
Berkshire Hathaway Inc.
\n 1440 Kiewit Plaza
\n Omaha, Nebraska 68131
\n Attention: Chairman of the Board<\/p>\n
with a copy to:<\/p>\n
Munger, Tolles & Olson LLP
\n 355 South Grand Avenue, 35th Floor
\n Los Angeles, California 90071-1560
\n Attention: John B. Frank<\/p>\n
-35-<\/p>\n
(b) if to the Company, to:<\/p>\n
International Dairy Queen, Inc.
\n 7505 Metro Boulevard
\n Minneapolis, Minnesota 55439
\n Attention: Chairman of the Board<\/p>\n
with a copy to:<\/p>\n
Gray, Plant, Mooty, Mooty & Bennett, P.A.
\n 3400 City Center
\n 33 South Sixth Street
\n Minneapolis, MN 55402
\n Attention: John W. Mooty<\/p>\n
8.3 Definitions. For purposes of this Agreement:
\n ———– <\/p>\n
(a) an “affiliate” of any person means another person that directly
\nor indirectly, through one or more intermediaries, controls, is controlled by,
\nor is under common control with, such first person;<\/p>\n
(b) “material adverse change” or “material adverse effect” means,
\nwhen used in connection with the Company or Parent, any change or effect that
\neither individually or in the aggregate with all other such changes or effects
\nis materially adverse to the business, assets, properties, condition (financial
\nor otherwise) or results of operations of such party and its subsidiaries taken
\nas a whole; provided, however, that, (i) a decline in general economic
\n ——– ——-
\nconditions affecting the Company or Parent shall not be deemed to be a “material
\nadverse change” or to have a “material adverse effect” with respect to either
\nsuch party or its subsidiaries; and (ii) for purposes of Sections 3.2(g) and
\n6.3(a), in no event shall changes in the market prices of portfolio securities
\nowned by Parent or its subsidiaries be deemed to be a “material adverse change”
\nor to have a “material adverse effect” with respect to Parent or its
\nsubsidiaries;<\/p>\n
(c) “person” means an individual, corporation, partnership, joint
\nventure, association, trust, unincorporated organization or other entity; and<\/p>\n
(d) a “subsidiary” of any person means another person, an amount of
\nthe voting securities, other voting ownership or voting partnership interests of
\nwhich is sufficient to elect at least a majority of its board of directors or
\nother governing body (or, if there are no such voting interests, 50% or more of
\nthe equity interest of which) is owned directly or indirectly by such first
\nperson.<\/p>\n
8.4 Interpretation. A reference made in this Agreement to a Section,
\n ————–
\nExhibit or Schedule, shall be to a Section of, or an Exhibit or Schedule to,
\nthis Agreement unless otherwise indicated. The table of contents and headings
\ncontained in this Agreement are for reference purposes only and shall not affect
\nthe meaning or interpretation of this Agreement. <\/p>\n
-36-<\/p>\n
Whenever the words “include,” “includes” or “including” are used in this
\nAgreement, they shall be deemed to be followed by the words “without
\nlimitation.”<\/p>\n
8.5 Counterparts. This Agreement may be executed in one or more
\n ————
\ncounterparts, all of which shall be considered one and the same agreement and
\nshall become effective when one or more counterparts have been signed by each of
\nthe parties and delivered to the other parties.<\/p>\n
8.6 Entire Agreement; No Third-party Beneficiaries. This Agreement
\n ———————————————-
\nconstitutes the entire agreement, and supersedes all prior agreements and
\nunderstandings, both written and oral, among the parties with respect to the
\nsubject matter of this Agreement. Except as provided in Section 5.5, this
\nAgreement is not intended to confer upon any person other than the parties any
\nrights or remedies.<\/p>\n
8.7 Governing Law. This Agreement shall be governed by, and construed in
\n ————-
\naccordance with, the laws of the State of Delaware regardless of the laws that
\nmight otherwise govern under applicable principles of conflicts of laws thereof.<\/p>\n
8.8 Assignment. Neither this Agreement nor any of the rights, interests
\n ———-
\nor obligations under this Agreement shall be assigned, in whole or in part, by
\noperation of law or otherwise, by any of the parties without the prior written
\nconsent of the other parties. Subject to the preceding sentence, this Agreement
\nwill be binding upon, inure to the benefit of, and be enforceable by, the
\nparties and their respective successors and assigns.<\/p>\n
8.9 Enforcement. The parties agree that irreparable damage would occur in
\n ———–
\nthe event that any of the provisions of this Agreement were not performed in
\naccordance with their specific terms or were otherwise breached. It is
\naccordingly agreed that the parties shall be entitled to an injunction or
\ninjunctions to prevent breaches of this Agreement and to enforce specifically
\nthe terms and provisions of this Agreement in any court of the State of Delaware
\nor of the United States located in the State of Delaware in the event any
\ndispute arises out of this Agreement or any of the transactions contemplated by
\nthis Agreement, and each party agrees (a) it will not attempt to deny or defeat
\npersonal jurisdiction or venue in any such court by motion or other request for
\nleave from any such court and (b) it will not bring any action relating to this
\nAgreement or any of the transactions contemplated by this Agreement in any court
\nother than any such court.<\/p>\n
8.10 Severability. Whenever possible, each provision or portion of any
\n ————
\nprovision of this Agreement will be interpreted in such manner as to be
\neffective and valid under applicable law but if any provision or portion of any
\nprovision of this Agreement is held to be invalid, illegal or unenforceable in
\nany respect under any applicable law or rule in any jurisdiction, such
\ninvalidity, illegality or unenforceability will not affect any other provision
\nor portion of any provision in such jurisdiction, and this Agreement will be
\nreformed, construed and enforced in such jurisdiction as if such invalid,
\nillegal or unenforceable provision or <\/p>\n
-37-<\/p>\n
portion of any provision had never been contained herein, so long as the
\neconomic and legal substance of the transactions contemplated hereby are not
\naffected in a manner materially adverse to any party hereto.<\/p>\n
-38-<\/p>\n
IN WITNESS WHEREOF, Parent, Sub, and the Company have caused this
\nAgreement to be signed by their respective officers thereunto duly authorized,
\nall as of the date first written above.<\/p>\n
BERKSHIRE HATHAWAY INC.<\/p>\n
By: \/s\/ Warren E. Buffett
\n ——————————
\n Warren E. Buffett<\/p>\n
Its: Chairman
\n —————————<\/p>\n
QDI, INC. <\/p>\n
By: \/s\/ Warren E. Buffett
\n ——————————
\n Warren E. Buffett <\/p>\n
Its: Chairman
\n —————————-<\/p>\n
INTERNATIONAL DAIRY QUEEN, INC.<\/p>\n
By: \/s\/ John W. Mooty
\n ——————————
\n John W. Mooty <\/p>\n
Its: Chairman of the Board
\n —————————–<\/p>\n
-39-<\/p>\n
EXHIBIT A<\/p>\n
FORM OF COMPANY AFFILIATE LETTER<\/p>\n
Gentlemen:<\/p>\n
The undersigned, a holder of shares of [Class A or Class B] Common Stock,
\npar value $.01 per share (“Company Stock”), of International Dairy Queen, Inc.,
\na Delaware corporation (the “Company”), is entitled to receive in connection
\nwith the merger (the “Merger”) of the Company with QDI, Inc., a Delaware
\ncorporation (“Sub”), securities (the “Parent Securities”) of Berkshire Hathaway
\nInc., a Delaware corporation (“Parent”). The undersigned acknowledges that the
\nundersigned may be deemed an “affiliate” of the Company within the meaning of
\nRule 145 (“Rule 145”) promulgated under the Securities Act of 1933, as amended
\n(the “Act”), although nothing contained herein should be construed as an
\nadmission of such fact.<\/p>\n
If the undersigned were an affiliate under the Act, the undersigned’s
\nability to sell, assign or transfer the Parent Securities received by the
\nundersigned in exchange for any shares of Company Stock pursuant to the Merger
\nmay be restricted unless such transaction is registered under the Act or an
\nexemption from such registration is available. The undersigned understands that
\nsuch exemptions are limited and the undersigned has obtained advice of counsel
\nas to the nature and conditions of such exemptions, including information with
\nrespect to the applicability to the sale of such securities of Rules 144 and
\n145(d) promulgated under the Act.<\/p>\n
The undersigned hereby represents to and covenants with the Company, Sub,
\nand Parent that the undersigned will not sell, assign or transfer any of the
\nParent Securities received by the undersigned in exchange for shares of Company
\nStock pursuant to the Merger except (i) pursuant to an effective registration
\nstatement under the Act, (ii) in conformity with the volume and other
\nlimitations of Rule 145 or (iii) in a transaction which, in the opinion of
\nindependent counsel reasonably satisfactory to Parent, is not required to be
\nregistered under the Act.<\/p>\n
In the event of a sale or other disposition by the undersigned of Parent
\nSecurities pursuant to Rule 145, the undersigned will supply Parent with
\nevidence of compliance with such Rule. The undersigned understands that Parent
\nmay instruct its transfer agent to withhold the transfer of any Parent
\nSecurities disposed of by the undersigned pending receipt of such evidence of
\ncompliance.<\/p>\n
The undersigned acknowledges and agrees that appropriate legends will be
\nplaced on certificates representing Parent Securities received by the
\nundersigned in the Merger or held by a transferee thereof, which legends will be
\nremoved by delivery of substitute certificates upon receipt of an opinion in
\nform and substance reasonably satisfactory to Parent from independent counsel
\nreasonably satisfactory to Parent to the effect that such legends are no longer
\nrequired for purposes of the Act.<\/p>\n
A-1<\/p>\n
The undersigned acknowledges that (i) the undersigned has carefully read
\nthis letter and understands the requirements hereof and the limitations imposed
\nupon the distribution, sale, transfer or other disposition of Parent Securities
\nand (ii) the receipt by Parent of this letter is an inducement and a condition
\nto Parent’s obligations to consummate the Merger.<\/p>\n
Very truly yours,<\/p>\n
Dated:<\/p>\n
A-2<\/p>\n
EXHIBIT B<\/p>\n
CONTINUITY OF INTEREST AGREEMENT<\/p>\n
Berkshire Hathaway Inc., a Delaware corporation (“Parent”), QDI, Inc.,
\na Delaware corporation and a direct wholly-owned subsidiary of Parent (“Sub”)
\nand each of the undersigned shareholders (each, a “Shareholder” and
\ncollectively, the “Shareholders”) of International Dairy Queen, Inc., a Delaware
\ncorporation (the “Company”), hereby enter into this Agreement on [DATE] for the
\npurposes hereinafter set forth (collectively, Parent, Sub and the Shareholders
\nare referred to as the “Parties”).<\/p>\n
WHEREAS, Parent, Sub and the Company entered into an Agreement and
\nPlan of Merger dated as of October 21, 1997 (the “Merger Agreement”);<\/p>\n
WHEREAS, pursuant to the Merger Agreement, Company will merge (the
\n“Merger”) with and into Sub with Sub as the surviving corporation in the Merger
\nand pursuant to such Merger, it is intended that each Shareholder will surrender
\nall of such Shareholder’s shares of Company Class A Common Stock and\/or Company
\nClass B Common Stock (collectively, “Company Common Stock”), in exchange for
\nshares of Class A Stock of Parent and\/or Class B Stock of Parent (collectively,
\n“Parent Shares”);<\/p>\n
WHEREAS, the Parties wish to take certain steps to qualify the Merger
\nas a tax-free reorganization within the meaning of Section 368(a) of the
\nInternal Revenue Code of 1986, as amended (the “Code”);<\/p>\n
NOW, THEREFORE, the Parties agree as follows:<\/p>\n
(a) Each Shareholder has all necessary power and authority to enter
\ninto and perform all of such Shareholder’s obligations hereunder. The
\nexecution, delivery and performance of this Agreement by such Shareholder will
\nnot violate any other agreement to which such Shareholder is a party, including
\nany voting agreement, shareholders’ agreement, trust agreement or voting trust.
\nThis Agreement has been duly and validly executed and delivered by such
\nShareholder and constitutes a valid and binding agreement of such Shareholder,
\nenforceable against such Shareholder in accordance with its terms.<\/p>\n
(b) Each Shareholder is the beneficial owner or record holder of the
\nnumber of shares set forth on Schedule 1 attached hereto and, as of the date
\nhereof, the shares listed on Schedule 1, with respect to each Shareholder,
\nconstitute all the shares of Company Common Stock owned of record or
\nbeneficially by such Shareholder. Each Shareholder represents that such
\nShareholder has not purchased, sold, exchanged, transferred by gift or otherwise
\ndisposed of shares of Company Common Stock prior to the date hereof either in
\ncontemplation of or as part of the Merger.<\/p>\n
B-1<\/p>\n
(c) Each Shareholder represents that such Shareholder does not have
\nany plan or intention to sell, exchange, transfer by gift or otherwise dispose
\nof (including by transactions which would have the ultimate economic effect of a
\ndisposition including, but not limited to, puts, short-sales and equity swap
\ntype of arrangements) (collectively, “dispose” or “disposition”) any Parent
\nShares to be received by such Shareholder pursuant to the Merger.<\/p>\n
(d) Each Shareholder further agrees that for a period of two (2)
\nyears after the Merger (the “Post-Merger Continuity Period”), such Shareholder
\nwill not sell, exchange, transfer by gift or otherwise dispose of (including by
\ntransactions which would have the ultimate economic effect of a disposition
\nincluding, but not limited to, puts, short-sales and equity swap type of
\narrangements) any of the Parent Shares that such Shareholder receives in
\nexchange for shares of Company Common Stock pursuant to the Merger; provided,
\n ——–
\nhowever, each Shareholder (or the estate of such Shareholder) is expressly
\n——-
\npermitted to transfer Parent Shares to beneficiaries, heirs or legatees upon
\nsuch Shareholder’s death, or to a “grantor” trust created for such Shareholder’s
\nbenefit in which such Shareholder is treated as the owner pursuant to Sections
\n671 through 678 of the Code. Notwithstanding this paragraph 3, each Shareholder
\nmay, prior to the end of the Post-Merger Continuity Period, sell, exchange,
\ntransfer by gift or otherwise dispose of Parent Shares that such Shareholder
\nreceives pursuant to the Merger, if, prior to the date of such disposition, the
\nShareholder obtains the written opinion of Faegre & Benson (which opinion will
\nspecifically set forth the facts and analysis forming the basis of such
\nopinion), which opinion is reasonably satisfactory to Munger, Tolles & Olson LLP
\n(“Munger Tolles”), that such disposition will not prevent such Parent Shares
\nfrom qualifying as stock that satisfied the “continuity of interest” requirement
\nunder Section 368 of the Code, generally on the ground that the Shareholder had
\nno intent to dispose of such Parent Shares at the time of the Merger and that
\nthe Shareholder’s decision to dispose of such Parent Shares was the result of an
\nunanticipated change in circumstances subsequent to the Merger, or otherwise.<\/p>\n
(e) Each Shareholder agrees that, during the Post-Merger Continuity
\nPeriod, such Shareholder will give notice to Parent, Faegre & Benson and Munger
\nTolles at least 30 days prior to any proposed disposition of Parent Shares
\nreceived pursuant to the Merger, which notice shall describe (i) the number of
\nParent Shares that will be subject to the proposed disposition, and (ii) the
\nmanner of such disposition.<\/p>\n
(f) This Agreement shall be binding upon and inure solely to the
\nbenefit of each party hereto and their respective successors, assigns, heirs,
\nexecutors, administrators and other legal representatives. Nothing in this
\nAgreement, express or implied, is intended to confer upon any other person any
\nrights or remedies of any nature whatsoever under or by reason of this
\nAgreement.<\/p>\n
(g) This Agreement shall not be modified, amended, altered or
\nsupplemented except by a written agreement executed by all of the Parties
\nhereto. A Shareholder requesting the written opinion of Faegre & Benson to
\ndispose of Parent Shares, agrees to bear and pay all fees and expenses of Faegre
\n& Benson and Munger Tolles.<\/p>\n
B-2<\/p>\n
(h) Each Shareholder is entering this Agreement to enable Faegre & Benson and Munger Tolles to opine that the Merger constitutes a reorganization
\nwithin the meaning of Section 368(a) of the Code, and each Shareholder agrees
\nthat both Faegre & Benson and Munger Tolles may rely upon this Agreement in
\nrendering their opinions.<\/p>\n
(i) All notices to Parent shall be sent to:<\/p>\n
Berkshire Hathaway Inc.
\n 1440 Kiewit Plaza
\n Omaha, Nebraska 68131
\n Attention: Chairman of the Board<\/p>\n
(j) All notices to Faegre & Benson should be sent to:<\/p>\n
Faegre & Benson
\n 2200 Norwest Center
\n 90 South Seventh Street
\n Minneapolis, Minnesota 55402<\/p>\n
(k) All notices to Munger Tolles should be sent to:<\/p>\n
Stephen Rose, Esq.
\n Munger, Tolles & Olson LLP
\n 355 South Grand Avenue
\n Los Angeles, California 90071<\/p>\n
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to
\nbe duly executed on the date first set forth above.<\/p>\n
______________________________________
\n John W. Mooty<\/p>\n
BERKSHIRE HATHAWAY INC.<\/p>\n
By: ________________________________<\/p>\n
Its: ________________________________<\/p>\n
B-3<\/p>\n
QDI, INC. <\/p>\n
By: ___________________________________<\/p>\n
Its: ___________________________________<\/p>\n
[Additional shareholder signatures] <\/p>\n
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