Agreement and Plan of Merger - Krispy Kreme Doughnut Corp., Krisoy Kreme Doughnuts Inc. and KKDC Merger Corp.
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
December 2, 1999, is made and entered into by and between Krispy Kreme Doughnut
Corporation, a North Carolina corporation ("the Company"), Krispy Kreme
Doughnuts, Inc., a North Carolina corporation and a wholly-owned subsidiary of
the Company (the "Holding Company"), and KKDC Merger Corporation, a North
Carolina corporation and a wholly-owned subsidiary of the Holding Company
("Newco").
W I T N E S S E T H:
WHEREAS, the Company is the owner of all of the issued and outstanding
capital stock of the Holding Company, and the Holding Company is the owner of
all of the issued and outstanding capital stock of Newco;
WHEREAS, the Board of Directors of the Company, the Board of Directors
of the Holding Company, and the Board of Directors of Newco have each determined
that it is desirable to merge Newco with and into the Company upon the terms and
conditions hereinafter provided (such merger being hereinafter referred to as
the "Merger") and pursuant to Sections 368(a)(1)(A) and 368(a)(2)(E) of the
Internal Revenue Code of 1986, as amended;
NOW, THEREFORE, in consideration of the premises, the mutual covenants
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
I. - MERGER
A. At the Effective Time (as hereafter defined), Newco shall be merged
with and into the Company, the separate existence of Newco shall cease, and the
Company shall continue as the surviving corporation. The Company as the
surviving corporation after the Merger is hereinafter sometimes referred to as
the "Surviving Corporation."
B. In connection with the Merger, the Holding Company shall change its
corporate name to "Krispy Kreme Doughnuts, Inc."
C. The parties hereto shall cause Articles of Merger to be delivered to
the Secretary of State of the State of North Carolina, in such form as required
by, and executed in accordance with, the relevant provisions of the North
Carolina Business Corporation Act, as amended (the "NCBCA"), for filing thereby.
The Merger will become effective at such time as the Articles of Merger are duly
filed or at such later time as is specified therein (the "Effective Time").
<PAGE> 2
D. At the Effective Time, by virtue of the Merger and without any
action on the part of the holders thereof:
(a) the issued and outstanding shares of capital stock of the
Company, other than shares held by the Holding Company, shall be
converted into the right to receive (i) an equal or greater number of
shares of common stock, no par value, of the Holding Company ("Holding
Company Common Stock"), based upon a share exchange ratio to be
determined by the Board of Directors of the Company prior to the
Effective Time (the "Exchange Ratio") and (ii) a cash payment in an
amount per share to be determined by the Board of Directors of the
Company prior to the Effective Time, which amount shall not be less
than $10.00 per share and shall be payable from the proceeds of an
underwritten public offering of Holding Company Common Stock (the "Cash
Consideration");
(b) the issued and outstanding shares of capital stock of the
Company held by the Holding Company shall not be converted, exchanged,
or altered in any manner and shall remain outstanding as fully paid and
nonassessable shares of capital stock of the Surviving Corporation;
(c) the issued and outstanding shares of capital stock of the
Holding Company held by the Company shall be canceled and no
consideration shall be issued in exchange therefor; and
(d) the issued and outstanding shares of capital stock of
Newco shall be canceled and no consideration shall be issued in
exchange therefor.
The parties acknowledge and agree that the Exchange Ratio reflects the payment
of the Cash Consideration to the shareholders of the Company and that, absent
the payment of the Cash Consideration, each such shareholder would have been
entitled to receive a proportionately greater number of shares of Holding
Company Common Stock. The Cash Consideration shall be deemed to be paid in
consideration of the effective redemption of the additional shares of Holding
Company Common Stock that each shareholder would have received in the event that
the Cash Consideration had not been paid.
E. The Articles of Incorporation and Bylaws, respectively, of the
Company, as in effect immediately prior to the Effective Time, shall be the
Articles of Incorporation and Bylaws of the Surviving Corporation.
F. The officers and directors of the Company immediately prior to the
Effective Time shall be the officers and directors of the Surviving Corporation,
in each case until their respective successors are duly elected and qualified.
G. Each holder of a certificate representing shares to be converted or
exchanged in the merger will surrender such certificate and after the Effective
Time will be entitled to receive in exchange therefor a certificate or
certificates representing the number of shares to which he is
2
<PAGE> 3
entitled under this Plan. Until so surrendered, each outstanding certificate
that prior to the Effective Time represented shares of the Company will be
deemed for all purposes to evidence ownership of the consideration to be issued
for such shares under this Plan.
H. The Merger shall otherwise have the effects set forth in the NCBCA.
II. - CONDITIONS TO CONSUMMATION OF THE MERGER
A. Consummation of the Merger is conditioned on the satisfaction or, to
the extent legally permissible, waiver by the Company of the following
conditions: (a) this Agreement and the Merger shall have been approved by the
shareholders of the Company in accordance with the NCBA; (b) a registration
statement relating to an underwritten public offering of Holding Company Common
Stock shall have been filed with the Securities and Exchange Commission (the
"SEC") and declared effective under the Securities Act of 1933, as amended, and
no stop order suspending the effectiveness of such registration statement shall
be in effect and no proceedings for such purpose shall be pending or threatened
by the SEC; (c) the shares of Holding Company Common Stock to be issued in
connection with such public offering shall have been approved for listing on a
national securities exchange, subject to official notice of issuance and (d) the
Holding Company and underwriters selected by the Board of Directors of the
Company shall have entered into an underwriting agreement, upon terms and
conditions acceptable to the Board of Directors of the Company, relating to the
proposed public offering of Holding Company Common Stock and such agreement
shall remain in full force and effect.
B. Payment of the Cash Consideration shall be further conditioned on
the completion of an underwritten public offering of Holding Company Common
Stock within thirty days of the Effective Date.
III. - AMENDMENT AND TERMINATION OF AGREEMENT
To the extent permitted by North Carolina law, this Agreement may be
amended, modified and supplemented at any time prior to the effectiveness of the
Merger, whether before or after shareholder approval, by written consent of the
Board of Directors of the respective parties and shall be amended by consent of
the Board of Directors of the Company prior to the effectiveness of the Merger
in order to reflect the determination of the Exchange Ratio. This Agreement may
be terminated and the Merger abandoned at any time prior to the Effective Time
by the consent of the Board of Directors of the Company.
IV. - MISCELLANEOUS
If any term or provision of this Agreement is held by a court or other
authority of competent jurisdiction to be invalid, void, or unenforceable, the
remaining provisions of this Agreement shall remain in full force and effect and
shall in no way be affected, impaired, or invalidated. This Agreement shall be
governed in all respects, including validity, interpretation, and effect, by the
laws of the State of North Carolina, without giving effect to the conflict of
laws rules thereof.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers, all as of the date and year first above written.
KRISPY KREME DOUGHNUT CORPORATION
By: /s/ SCOTT A. LIVENGOOD
-------------------------------------
Scott A. Livengood, President
KRISPY KREME DOUGHNUTS, INC.
By: /s/ SCOTT A. LIVENGOOD
-------------------------------------
Scott A. Livengood, President
KKDC MERGER CORPORATION
By: /s/ SCOTT A. LIVENGOOD
-------------------------------------
Scott A. Livengood, President
4