Free Motion for Summary Judgment - District Court of Colorado - Colorado

Case 1:04-cv-00725-RPM

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DISTRICT COURT, CITYANDCOUNTY OF DBNVB&COLORADO CoultAddiess: 143? Baruock Stre4t Dnver, 80202 CO PhoooNumberi 72OE65-8301
Pealtlotrer!TheQui2no'sCorpor.tio4 a Colorado Corporation v, RlpondeDtr: William S. Fegs&et al. Nrmr
futomeysfor: TheQuiao's CorporAti({l

COURT USEONLY Caso 02-CV-2598 No. Divisior/Crurtoom: I

RichadS.V.nncirc Chcsley Cuh m Kcy

Leolard H. MacPhee Mol,, cilB, O'Kccfe,Vcnneirc& Goncu LLP Addrcssi 1225Srltnte.'ft Sficlt,z9thFloor Dcnver,CO 80202-5529 PhoneNo.: (303)292-2900 (303)2924510 FrxNo:: B-Majli [email protected]; [email protected] ' [email protected] Atty. Reg.# 7739(Vcrmcir.) 18139 (Culp)27753 (MacPhee) Narne: FrEdricA. Cohcrl Addrcss: Pipfr RudniokLLP 203North ksallc SoEet, Ste. I 80C Chicagq lL 60601 PhoncNo.r 312.368.7066 FaxNo.: 312-749-9057 E-Mril [email protected]

TRTALMANAGEMENT ONDER Thc prrtias to this a.tio!, by rnd throughthcir respcctive counsel" pursunnt.to C.R.C.P. 16(0, hcrebyprcsenlthcir Trial Managomort Ordetasfollow!:

STATEMf,NT CL{MS ANI' DEFENSES OF
A. Ptltloder Th Qolzro's Corpor|alor (.QuizDo's"),

this with &e Color.do lDirse err' Quizno'8commenced plocordingin accordalc Righls" Statute, C,RS. $$7-113-l0l,et re4 ('Acf'or,'Dissentos'RighlsStatulc').On Dcrnber 21, 2001,Quizno'smrgcd with FirdrzeCoA. fFi(tEa') andQuiano'sw.6 tbo survivinger ty. This nerger,which wasappmved a majorityofQuizno's shrrchordcrs, by
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tliggtcddissntrs' rights for thorc sha.cbolders prepcrlyobjocted thc mcrggrand who to tandied thofu sh{s pursuant t[ Dislcntors'Righti Statut , Quiano'srcqucst!tlat tlrc Court to detlrminethe "fsir valuc':oftho slnrosholdby Quiaro'r sharholders otiected to the who meigersndwho pcrfcted their dissqlteE' rightsrmder Act. the TheAppraisalActiotr. Quizno'smainbils thatthefair v.lue ofQuizno'r shars th on datoprior to themc.rger $8.50per shore.This i6 thepriooolfredaudpsid to Quizoo'g was shareholders underthe Merg6 Agrometrl, whichQuizno'spaidto thc dbs.ati[g .rd shareholdeB oompliance iD with tle Ac( I|l fhcir rspoctivo aDswrs and/orco$terclaimc, the Rcspondents olaimcdthat fair valuewas$31.00perslde. lte Snr*idctpo!$ aodth. S"rdsloDe Respoudonts providcdan expdt disclosure strling thrt thc fait valuoofQuiano's sh4eswas$36.76 slurE,6!d thc Fagan pr providedano(pert disololur. statinS Rospondents tnat". reasonablc cstimatc"of fair valuewss945pcrsbaro,.Tho issuethe Courlmustdeoide is the fair valueofQuizno's shdesthdaybcforelhe Decmber Z00l mcrger. In additionto 21, lhis cedkalirsuq lherc aJe relatcdissues hro bcforcthe CouI. Thc SturkieCouulerolairn. tlut Thomas Sturkie O. Quizdo'sBraintsins oDcRe3lotrdont, a&/a Thomas Stulkio,MD C'Stu*ie'), did not c.rnply with Oetequirement5 O, oftle Di$nters' RightsStstutewith lrspectto I 5,000of his shares; pursuant C.R.S, the.foro, to lhos6share6 not bc included this action. Sturtic h4 filed & {0 ?-113-204(4), may in coutlerclairnasserting that Qui.aE'sprsventd hirn froo complyitrgwith the Act, d, (s) altemslivclyO) that hc shouldbe deerEed haveeffectivelyconpliod with thc Ac! atd that ro lhese15,000 shares m.y propedybeincludedin this action. TheFasdns'IndividualRetirernNrt Accounts.A second lo i$ue relates a comporon puportEdlyfilcd againrtQuiztro's bchalfofcedain IRA accou s in which two namrd c36e on respondetrb, Willias aIrdIlurr Fagan, hcld a nulnbrofthir Quiano'srhaes. CaseNo. 02CV-5530. Quizno'sDaintainsthst tho6e sharorarcpan ofthc AppBisal Action andcntitle-d a to fair v<re dcterminatio!by lhe Coult bccarlre Quido'5 nand tho fagansasrcspotileat!, (a) and(b) the Fagaru benofici.l ownlrs ofthc shares formorlyhcld in their IRAs. All ar they pttis, otherthanfto FagsnGroup,havcstipulated IRA! ncednot bc named seporata that as partiesto this appraisal litig.tio[ &e 9rg. SriputatiorBtweorQui2r|o'E TbeSturkie and Group,p 2 $l (a), (b). Th6Fag.nr' claim rhatbeasusc Qui.ao,s did rot namcthe IRA accounts a8separate palties,thesh6res vere in thoseaccounts not part ofthis procaeditr& that are srd, thus,Quizno'sis ie4uiled to pay the amounl Fagalsdodatded,$3I per shar. the IRA shares iocludodin rhir actionis a sI! Quizno'sbelicverthal whclherthcFagans' quesuon oflaw. In suppo( of its positionthat thebedeEoirlowletroftho sb.rostlut the Fagars' Pu&ha$d &d k?t ir Oon IRA! s'' tl,c Flgrns - aDd thcrtirerncnt not rc.{unts th.rnrclvosQuizio's incolporates hercinits Motion to DismissaDd Combincd Re?ly in Support ofits Motion to Dismissfron CgsNo. 02-CV-5530. B. RespoDdnts,

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l.

Sandstouc CJrouo

Thc SardstorcGroupconsist!ofsaodriole Vo u$s, LLC .od Charlec sld paricic M. Alb*, Lcigh Bock, Crry sndM,rths Cousino, TGrryRobinsor(Collcctivel, th atrd lj "Sandstonc Gmup").Thc Saadrlonc Goup owned253,?88 shrres ofeuizuo,s co&mo! stooh whichwasspproximltely 10.870 ofQuizno'Eoutshtrding stockat thetjme offtc merypratd is approximately 55%oftho totsl discnting lhares. Apploxirnatcly 60%ofthenon-hsidsn disscdtd_ th! goingprivaremerger.TheSaadstono from Groupclaior tbo frii velucofits sh.rs asof 1u2ll01 plus costs, cxpcGes,interertandattomoys, fc. 2. Stultie/CroornscroUp

TheSnukie/Crooms CroupconBiste ofThorna6 Sbrkie, May K. Stu*ic, C. L'4 O, Crcons, Jo Ann Roberts croomsandLBT EEte.pris,r, Tic Stu*ir'Crood! Groupowled Itc, 91,626sharr8ofQuiano'6 iDmedi.relyprior to thrtrrgfrt issue,Ilto Shlki /CmoD! Croup seks rccove{Oc diffeFnca betwee!the fair valueofthos shsres the sumpaid by ro and QuizrD's,plus intcrert alld litigatiou oxpeDss. Respondrnt Shukiebrelici.lly owftd 15,000 shsres euiano's hldi! I brokcrage of accourt. Altboughhc haddircctedthorrcoadox,ncrofthosshalca dis6cnt to thososhars !o as lnd hc hadtimely noti6cd Quiano'sofhis intotto dirsnt,tle lEoordownr,uoklown to D.. Slu*io or his counrel,senttlle sbare ccftificatcto euizlo's tansfcr agcnt,who catoclodth slta& cedficate in DecEmbr 2001. Dr. Stu*ie's counsel, Crfhy Krcndl, brougbtthe oco1rlrence l,oth attentiol ofQuizno's. Quizio's reftsodto rksue ahe sharo certifiosteso (hatDr. Slulkie codd tonderit wilh his paymgbt demaod. Krendl believcd hadrcaohed agEemnt Ms. ihe an with Qqizno'sun
Responded Psgal GroW oonsistr the ofindividudl respondents WilliaB S. Fagan, Catol . A, ArD$tong, Jamcs Dvorak,Faga!CapitslIno.,Lul8ApplebyFaganald AndrEss A, Iawson. Thc Fagan croup doesnot includ. two cnriia3namcd Willis;S. iogrtr RA Bc.r StcanE Sec Corp.Cusl Spar.to PropcrtyandLaulaApplobyFagan IRA BoarSrcaouSooCorp.Cust SepasteProperD, "FaganIRA'8), Thc FagjmIRA'S arer6lated!o 6omcmernbers (lhc ofthe Fogan Groupatrd,like all ncorbrsoftho Fag.n Group,thoFagan IRA's worc stookholdoro of
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IRA'8 alc not rcspotdnt8 Civii Actior No. m-CV.2598. TheFsgin Quizuit, ThePa,gan in IRA's areplaintilfd in Civil Action No. O2.CV-5530, b. Civil Action No. 02-CV-2598

vliqt euiztro'ecaucda "mqgcd, with anifity _-Or Dccrnbo21,2001Quizno'sefiected namod FircnzCorp.RichardF. Sohadlnandhis sotrRich.rd B. Schrdetr owtrodall Fircnze slock, Richard SchadeD Riolard B. Scnadeo otud . sizr.blc majodtyof euiao's F. atrd dro stock,RichatdE. Schadcn the?rsidc$ ChisfExecutiveOfriccr. rod thc Chaim; oftlp was Bo.rd ofDirectorbofQuiarc's, andthc Schadens effoctivelycontrollod euiatb's. Ac_cordilgly, thematgerwaswfiot is knowtraB "intere,sted an plrty' trstsaation" the Schrdens i.e., rpcag orl beth sideo oftie trrisactio!. I! Novembr, 2001,i[ coDnectio! wilh lha mager, elriano,s offerrd to pay $8.50for each i$ud .nd outetaDdiug sbaro euiao's sook owuodby of sloctloldcrEoth!! thanthe Sohadrns. Al thc tirlc ofthc "mergci' theFagao Grcupqwuod?8,830shqr ofeuizno,s stock,t TheFagao Groupdisscntd fioEl thc Foposcd',mergcr', dispurd .dcquacyoftto $g,50 and tho pricofrcrdby Quizno's. Tbc Faga! Ctoupprcscrvcd righh by conplyitg with th its re+irmentsofthe Colorado DisseritG.s RtghtsAct, CRS. $$Z-l l3-101, 4 re4. (the"Act,,). Therea0er, the Groupon Mdch 13,2OO2.I Fagan Quizno'sfiled this lswsuitagainsl FaSan The Gloup advancec pdaoipalclaimsin Civil Action No. 02-CV-2598. two First lhe Fagan Groupqlsimsthatthc ,'fair vatu,, ofeuizro's stockasofDcccobcr 2O 2001,ifproperly detffEioed wdor thoAo! is materiallyi! axcos6 of$8.j0 a 6haro.TheFagan Gloup seoks reoovcrfair valoc(dinus tle amount to al&adyreooivod), itrtrcot, co0tsandfc6. Se{.n4 the FsganGroupclains tbat Quizdo,s Deccnber,2001 ',morgef'wasthelastoccurrirg steph a sericsofstcpsby Quizoo,s, takenat thebehest ofthe Schados, iltcgafly to disenfirnohisc ofQuizoo'3 publiostockholdE.Conomcdcitrg Fsll, 1998,ifnot eadier,the a i! SohaderN souShr p,rsolallyhkc codbolofthis publiocornp.ny. Duridg 2001md st the to Schados' beheltQuiz[o's Boad appoitrtod ,'indr?cndcntiSplial Cofioitte, ThGSpecial sn CoEditteo retaiaed iindcpfndcnf' ftradoialadvisor an named Tuckq AnthodySuAoCeitrl Markets,Lrd. Ttele wasnothingindcpcndent aboutthese cntitio6. T19 entitios, rcooome|datio4ofthc $8.50stockp.iceusedi! this ,interdtcd part/, tansactionr"r! vcxatiouJ andarbitrary,andsewodthc Schdcns' intcG6t,not theintlrost oleuizno's public stoclloldcrB. thus, theFsganGroup'ssecotrd claim,sectingfcos&adcosts, rrisce ftom lhis factual historyandis specificallysanctioocd C,R.S.g ?-tl3-302 vhial erplrct y establislFs claim by a for_'fees expenso! sad ofcoun6clarldcxprts" who!, a3euizno's did hcrc,e panyhaslotgd "arbitrarily,vcxaliouslyor rct i! good fairb..."

' TheFagao IRA5 owrcd 8nadditioDal 25,32?shar93 euidlob Stock of 2 Quiznobdid rol sucthqFagan lRA,s,whocontond, Civil Aatiot No, O2-CV-5530, in thal by fsiling to do so,Quialo'r &ilod lo complywith theAot
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Civil Aotioo No,-02-CV-553

TheFagrDIRA'g filod fir 8ctiotr, Qui.ao's is tbc solodefendant.lttc p.rtis bevofllod extcnsive briefswith lhc Court. ThoCourtrcceotlyd.rdcd Quizlo'o motionio diemiss. The Cotut al6odcnicdtheFagst|IRA'! motionfo! rumrory j udgmrf, Thc Fagro IM's submit thrt ia light of lhc Coud's dlDial of Quiato's lrotion to diufut lte Coult logicallyvar rcqured to glant theF.grn lM's dotion forlurDlrry judglrrlt TheCoud ha! c4Dlolidated Civil ActionNo, 02-CV-5530 Civil Aotior No. 02-CVed 2598. Thc Courthrs not cxprsrlynlod whethertheoa!!! shouldbc trid aogthrlftho issue in disputein Civil Action No. 02-CV.5530 an issue is oflaw, thenno hial as suchis noessary. II. A. Approbd Actionr SIIPULATED FACTS

1. ODDeomber29, 1998, Richad B. Sohaden Riohld F. Sclnden !!d ("Schadcns") offeredto buy ell of Quizro's outstatrding sharcs ofcommoastooknot owae.d by themfor bctwcetr $7.E4 $8.20pershar. .nd 2. Ott OcloberI, f999, tho Quizno'6Boad ofDirecto$ authorized ro-Durcbrse r of up to 200,000 shares ofQuizoo's comnonstock,pulsuad to v.'hich tho coEpary re-puchased 144,005 q sh&son the op@darkFt until Soptemb 30, 2OOO.' 3. Ou Novembr 2000,Quizao'8commenced tetrdsrofrer for any aadall 13, the slurcs of their confion stockat I cash pricof $8.00per share. Oh Dccedbef12,200q Quia$'s dmouncrdtlDt its teode!offor hsd expired. . 4. purchaced 1,699139sharcs Quizno's ofits common stoch inoludingoptiots sndwalratrt!to purchsse 928,284 shares uponthecouummationofit! tedc! ofrc!. Quizro,ealro clooed loao a for approximatcly miltion principal.moult ard gl.6 millio! id pre-paid $12 intqEst witb kvin Lcichtrnan filrancait't t9nd6 offer. to 5. OnMay 21, 2001,Ricbad E. Sohadcn fuohardF. Schadsa and madeaDoffcr to rheSpecialCommittee ofthe BoardofDirctorsofthe Quizno,sCorpotztion .c{uiro all to outstardingslBresofQuizlo's common stock,otherthatrsbatos o$ted by themrnd crtaiq afliliahs for $8,00pcr shar ordc! to efleotthe66c.trdstErtrsnsaotio!. in 6. As ofoctober 5.2001,thc Sc,hadqE ownedapproxiEatcly62%oftha outstanding Ehsres oftho oommon stockofQuizno,s. ' The following uc stipulated facrsprop@od euiano's, tho San&toneGroupaodOrc by Stukidcrooms Croup. 'For its psn, 6e Faga!cloup dissgiees with Quizro'r inoludioga truncaled abbreviafed and statcrDout ofsripulatodfactssuchss thrt oontsiled in Quizlo's ourrent proposal, [it] Esk that it! disagrccment thc samc &ted- TheFagdt cruup,s ar|d with be ploposed Stipulated Faotsc6! bc fouodat 5 U.D.l rrpra. N:KIQUIzNoSUrpnislUt rd\TMor0noc 5

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7. Themenbcrsoftha Sadstolc Groupovnrd lhc followingtu$bcr ofshrtos of comrnoh slockasof l2llol, $e datoof ihe mcrgcr., Quizno'6
A, b. a, d.

PahiciaA. atldChadcrM. Alber LciShBoctl G.rt atrdManlu Cou6i!o: TerryRobiason: Sandstone Vcnturrs,LLC|

1.000

5,400 8,700 5,000 227,688

8. Thcoodbersof$e SturtiJcrooms Grcup owned following tho Dueber of shar6ofQuizno's comrDon stock: a. b. c,
d-

Thomas Stulkio O. MaryK. Strlrkic C.Ly! Crooms
C, Lyn & Jo Al'! Robo{ts Crooes

48273 400 5,000
37,123

e,

LBT Bnte..

830

9, Quizno'6is r crrporationorganizcd undctthelawsofth St.te ofcolondo .ta'ith . its p.itrcipalplacofbusiressit Dqrver,ColoGdo. IO. ftior to its mergc.rvith Firozg euiao,6lils a publiocohpatrywhosorhar6 wcrereSistered tte SeruriticsandExchango with Conunission tradedjn tho NASDAQ and SmaUCap Ma*et. tl On NovEber5,2001,euizno,spto\ddrdnotioothstit had drterEd fic ilto agreQment mf|rgrwith Fi!lzc andthattheconrideffion plasullt to rho MtgrAgreemci to was$8.50pef rhare. ti&lyg.vc noticcofrhoir intntio di8lent. , 12. Tbofollo{ing Quizso'i sharcholdcrs to the fteBcf a[d to demsnd psymcntandapp.aisal rightspuasusnt thg Colorado to Dissenter6, lugttt Act: a. b, WilliaE S. Fagan; ChsdcsM. Alber; Pqtioia A- Albcr;
d.

CarolA. Armotrong;

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Irigh Book; C. LynCtooms; JoAnnRob.ds Croomli GaryCoudiDo;
i. l. k.

MuthaCoulino; A, Janc6 Dvorik Fagrn lnc.; Capital, Laura Appleby Fsgin;

m.

Atldlar kwson;

LBT Strterpriss, .; In M.ry Koosn Slurki;
p. o.
t

TorlyRobinsoD; V!tue,s,LLC; and Sandston Thomas Sturkiea4daThom|s O. Sbrkic M,D, O.

13. On Dccefiber2t, 2001,Quiztro'srnerged with FirenzgandQuizuo'swasthe eurviviagcompany. 14. A majolity ofQuiaD'r $iarcholdeB votdto spprovelho $erg!r.

15, P rsuantto ahotenff oflhe mcrgcr,Quiano'E paidils lor{iscding gh&holdcrs $E.50p!shre. 16. Followingthemorger, Quiano'ssottroticcto irs dissoting shaeholdere infonni4g th@ that the mcrgc.hadbeenappDvod that dilrenterr coulddcEard payme for lnd tlrcir slDirs uodrtho Disseattr'RightsSlatute. n. Thcreaftcr, named lhe Rcspordeots dd timely todorcd 0Fir 6tockcedtificstcan .lcmsnded patdent.

'Thopa!tie,!disputevhetbcrSturkitndercdthestockcertificaterwithEspctto 15,000 ofhis shars.
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IL Afterreceiving deuunds 6ent Mro forpaymnt, Quiznp's lo theRcspondcrtg vith .s Foperlycomplied tbc$anr&the.tnourt Quiao's cstimatd thefair vslucoftho. disrodos' shuos.Quidro's pr o8timatod fairvaluo $8.50 shue. lhat was 19. Thqeoftr,lhc poyidodtrotico Qgiao's th.t the dissntilg to sharcholdem amoudt by Quiano's 1c5s thircstimatc paid wls tha! dissenting offair vdue. Thoee shaleholdrs deostrded ticy bepaidS3l parshare. thst 20. B. timelycommenced actiotr. this Quizno's

SiurkieCounlsrclalm

a

21. In order a shardlolder pedoot disscltcrs' for righs, thcshareholda musl his !o fle s writtr! demadfor D!}rncDt dcFosit sharcholdr's oeltifoatcs witb and thc oftheshares rEspcct whichthcsharehold.r disscntirg. to is C.R.S. 7.1l3-2MO). @isp*enby $ Slvtlde/Ctootns Granp), 22. Shares whichcrtifrcates notdeposited notbcitrcludod thef.ir in for arc rlsy procecdiag. value C.R.S. 7-113-204(4). (Di$ntted S,u ie./Croont by Grory), $ 23, OnNovembcr 2001, 28, owrcrof48,2?3 Bharos of was Sturkie lhcbcdofioial stock heldindi.dduElly itr various sccounts. 8d lRA Quiao's 24. Snfkjeheld15,000 .ccount withFirstUnion oft[oso sh.Icri! abrokelage (hereinaff "theCounterclaim Secudtie! er Sheres'). 25. Therecord TrustComprny. holder of$osc 15,000 shares thcDgpository was Thenominee }retcrrprettdledbyhiffoate ofthel tr.ord holdrrvasCcdl & Co. Tho6e sllaias No,319. glvenotioe 26. OnNovcrnbof 29,2001, to Stulkie ofhis intq iqtrto dtuse{rt th mergcl with respcot all 4E,273 to pursusrto C,RS.$ 7n 13-202. ofhis Quirtro's sharcs n . 2@1. 28. Bfibit l. $ulkio BxhibitI i! Btruecop, of a letteirlceived Quiuro'so! Novef$er29, by Stukic Exhibiis 3, 4, ard 5 wercprovided Quiztro's enclosurs Sturkie to 2, as to

2.9. Stu*iaBdibit 7 i8I kue oopyof o letterreeiredby QpiDo's onNov@bq 30, 2001,alongwith SturkieBxhibit 6. 30. Or or aboutDecc,raber aad7, 2001,Ccdc& Co. doliveredCcrtificale No. 319 6 io First ClesriogCory.,*hich csnccld it C.iificatc No. 319,roissuod !s C.rtiffcat. No. I160 in thenam. ofFirst CloaridgCorp.,8ndrctumrdit to Cede Co. &

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31. Cede Co.delivcrod & Cortificato I160,along No, withoth.r "sheet" natrle ctrtificstes noodissenting for sharoholdeBQuiano'r trosfr tge'rtwitlrouts writtrdt to Quiztro's dems[dfo! pa)'menL 32, Quizoo's Ellsfet agrutcancaled Cartiicato t 160snddepositd No, $127,500 (rpresertting pershsr!)inb Sturkic's $8.50 acroultorlor about Drccqts! 26.2001. 200t. 33. Stukic Exhibit8 is a [ue copyofa lotter rccaived Quiao'e oDJ.trully 2, by Sturkic Exlibit 9 i$ a uueoopy lcttrr rogived Quizao'r Jsnudy3, by ofa on

34, 2001.

35. Sftrtie Eitibit | 0 is arruecopyofs lettcrse by Quizoo'!to th. attomy for Dr. Sturkie January 2002, o! 4, 36. 2002. 2002. Sturkie ExhibitI I ir a truccopyof. lefte.rcccivcd Quizno's Jarury 7, by on
SlurkieExhibit 12is I tlue copyofa lettrrceivd Quizio's ot! Jatrurfy21, by

38, Stur*ie Exhibir13ir a tuc copyofa lctierie.eived Quiano's or about otr by 15,2002. Janusry 39. OnJanuary 2002 28, Sturkio msdc wdtto dmaod pdymorrtStu*io for a Exhibit14is a lruecopyof a letter lcccived Quiano's J&rurry 2002elo[gwithlhc by o! 28, of original Sturkie Exhibir15. 40. Sturkic dolosilcd certiioates tlle reflecting shsrcs lhc listedotrStutie Exhibitt4 vrithlespe.t allt'utthe Countargbim to CitificatcNo. 60 lt Slare8.Sturkic rct provida did wi0rhiswrittendemand. C. Fagans'IndivldualRtlroment Accounts

4l. TheDisse ers'Rigbts Statutc providcs mcchaoisrtr vhiohdinority a tbrough sbarcholders selltheirshas thoevent may chaDgpc thecorporatiotr. fundamental to ill ofcertain 42. Only'tharoholdors" l,rDrittad er(e{cise rightsuDdcr Acl ard it is th aro to 0leir ody to "sharoholdrs" tllec..poration govjdepayneot thonotios rcquircd that must under and
the Aot. 43. A th{eholdr k dfincdas"eilhr a $co!d 8hi.hoKtor cbeneficid 6h!rcholdcr." C.R.S. 7.113-101. $ 44. A rcordshaleholdr dofincdas"tho Dergon whoseftlrlre shar6 !r! i! ia rogistercd...." Id.

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45, Therecord shrlcholdr! of&c rharcs IRA subjeot theFagans' clainswrs Cdc to & Co. Cede Co.did notexrcise & dissentcr!' rights. 46. A be[afiaial slEcholder the't9ncioial ormerof the.haros i! 8votitrg is held bustor by I noninee ofrhcsh$cholder." .ld.
47. Thetcrm 'bcN&ficielownct'' is not dofircd in thc Act.

48, Thequestion Coui rlust dooid dctcnnining the whethlrthcshstr in lbe itr held Fagaos' IRAS wercincluded tbeAppr&isal ilt Aotiotr whcdQuizlo'snamGd Fagans tlrc a6 Respoddents whoi$ 0lc"bdoficial is: o!/uet''of theshus held IRA formerl.y h thcFaga68' accormls. 49. Fagan BxhibitF-Bis a tsuo by oopy Notic,e to Psyncnt ofd oflotna Dema[d Beneficisl Owlorsignd Wiliae S.Fagan Novembgr 2001. by oo 27, 50. Fagon ExbibitF.c is a tru! copyof. Noticc oflntentto Damrad Psldd by Benetrcial Owrcrsignd laun Apploby by 27, Fagan Novurbr 2001. on 51, Quizro'sExhibit14?is a ttuecopyofschedulo l3D, 6ld withth. Scculities andExchangr Cortrmissiotr Wlliam S.Fagarl Iaua Appleby by Fagau Nov[ber27, o!' and 2001. 52. FagalExhibitF-Eir a trueoopy Demaad Poymmt Dissntcr ofa by for &red JarNary 2002ad theattaohed coltificatos, 28, whioh receive-d J&uary28, stook on Qoizrro's 2002. 53. ExhibitF-Fis a truecopyofa letter Febluqry 2002, 4, dated withwhioh Quizio'6 paidintothcWlliae S.F{gatr $4,510.55 IRA rqrac!$ngFylontv,,ith rrBprqt 527shrIor to holdh thewilliarn S.Fagan and9212,261 &prcssnting paymed IRA x/ithrcsped 24,800 .16 io sha&s in theLouiaAppleby hcld IRA. 54. ExhibitF-Gcontlinre huecopyofa lott.r dated Ma&h4, 2002sig!dby Williah S.Fagan Mr. Patsick Mcyers, to E. Vic! Presideot C.noralCoudelofQuizno's. and 55. Exhibit co rils a truecopyofa letter F-C d.tedMalgh4,2002 oigncd t ura by Appleby Fagao Mr, Patrick Meyers, Presidc$ Gneml to B. Vice ad Counscl ofQuizto'r. D, The FaganGroup'sProposed Stiputated Fact8.

1. PctitiolrQuiztro's ("Quizto's"), Corpo.atioD, aColorado war corpotario{ incorDoEtd 1991. itr
5 Yesterday roon counsclfor at theFagan Ctoupprovidedthe following,l4 propo8cd stipulated factsto Quizdo'scounrel. ThorcmsiDitrg responddts lgr to thc Fagirn Grcup's proposcd stipulations,As ofthe dateofthis fli!& ooutrset Quiztro'shasnot h{d an for oppo |rnity to dotnnine whcolerthcy alsoagroe.
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2.

ofbusinoss in DDv.r, Colo..do. is Q'riuD'sprinciprlplacc

3. ('rh. Sohsd6s") Itl 1991 Richard Sohado! hi66on F, snd RichddB. Schad.n o$!ed aI of Quizno's issud oodoutstaadilg stook.6 4. A6of l99l Quiztro had.pproximarely r.psrstcsto!s4Esburads r 18 in operatioD, 5. ln Febnrary, Quiao'selfected Initid ?ublicOfiringC,IPO") 1994 ofit3 sn conEron stookregistering stock theSourities Exohaoge its ("SEC") . with aul ComEission for lrading theNASDAQ on Saall CapM.rkst. 6, As oftheFcbturry,1.994 Quizto's pprqximctely Sepr$te IPO, 40 hed ltorcdrostdunnts operation, in 'syst@-widc'r wcro 7. Ac otFebosry,1994 aDnuqlized salrs Quizoo's spproxieltelySI 4200,0{D. In itr Fcbluary, 1994 Quizno's IPO valued stock $5. shrle. ita at
9. Followi$gthe conpletionofQuizno'r Fcbnaty, 1994IPq fio Schsd@s o$,Dcd 59.2% ofQuizno,sis8u.dandoutrtandi0g common stock. 10. operafoo. As ofluno, 1998Quizno'6 approximatcly 6par8te sto.ortertaut"snts in had 363

I l. As ofJune l99E Quizno'$ sltlralized system-wide srleswtoapp$ximately $?9,600,000.

12. OnDeccmbr 1998, Schadeu! 28, atd the dlfetd buy.ll ofQqizto'$isnrcd fo outshnding oommon rtoch notowftd bythcSchadeD6 thenslws, &pricebehve! for $7,84 and por $8.20 sharc. 13. As ofDec@br, 1998 438 had Quiuto's apploxinately sparalo ltordrcstsurant! opcration. in 14, As ofDcember, Quizro's 1998 amualized dystsmwido walcgl12,000,000. 6alca

15. Itr Docember, Quiznoh 1998 Boatd ofDireclors fomcd a Spccial Conoitteoto qvaluale Schadcno' tho proposd tg .acolt|mnd theBoard rnd whethc. rot to ac,.,pt to or the Schadens' proposal. 16, ODlune23, 1999 SohsdcDs,thcnasoofsohado th. in Codpany, Acquisition spaiicd thgiro$erto puchalc''a! rt thopriceof $8,00 sh$o. thst e " At timcs horlinsfter "schadens"' th! ovrcFhip ofstockinclud6 owiorship thc of clos afTiliates a! Schadcn Buch fiunilythmbers.
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. 17. opcrano!.

As of Argwt, 1999Quizno bad .pFoximafcly 568storE6lrcstar8fsit 8

18. As ofAugust, 1999Quizuo's annualized syetorn-wido ssleswroeproxinstcly $160,850,000. 19. h August,1999the Special ComtnitofQuizro s BoardofDtlcrots rojectd tbe Schadeno $8,00a shar offcr. 20. I! S6ptember, 1999Quialo'sapplicdfor $14,000,000 furalcilg iom Amicsco in Commercisl Finarcg Ino. (',Ammco'). 21, appliodfor, andobtaind, Amlleco fin ncilg itr pad for the statcd lhe Quizno's purpose funding"goitrgpriv&h rar6actioDs,,. of On OctobrI , 1999Quiz[o'sBoad ofDircotorr tuttDrizcd r rcp[tpbsscofup to 22. 200,000 ofQuiznorr conmonsloclgpusurnt to whichfta compeyrapurrta6cd liM,005 shnts rhateson tboopenmrrket uotil Septeobl30,2000. Io Scptsmber, 23. 2000Qui6o's aDplied 6unoing fto6l'ine l,lic,hhlar in pa$ for fot the 6tat6d purpde ofnfundirg s tcoderofrc. in whichtbeprefencdandcommonstoct ofthe Company lQuiznot.l shdl bc rcpu&hrsed". U. On November 13,2000Quizto'! co.ruucnoed tcddcroffcr for any.d sll its shtrsofits combon stockownedby tbcpublic, e.g,,thenoFsohadso stookholdo{r, a or6h al p.ic of$8.00 pr shslo, 25, On Docembq 12,2000Quizno's auounocdthat its tdderoffor lud gxpirod,In a.codanoewith thelqdsr offcr, 'Quidro'spurcbascd 1,69,439 rharccof ii! c,ommon stock includitrgoptio!8 lnd warants io purohsra 98,284 shares uponth consudlrnalion ofits teldcr ofIcr. 26, OtrDocEber12,2000,upo! the closi[g ofthe teoderofftr, alsooloscd Quizno's I lognwitb LevineIrichtmaa to fimncc thetenderolfer for apptoxim.t ly $12rnillion prilcipsl aEountand$I .8 million in protaid btercst. A! ofNovctnber- Deccmber, 27. 2000Quizno's approximately scparato 972 had slored/rcstaur<s opr&tion, in 28, ABofNovmbor- Decembcr, 2000Quiztro's a$uslizod slEtrdwido rslcr of had $332,000,000. 29, Ia April, 2001,Quiaro'rBoardof Directo6formcd8 SpociolCoomine.The Special Committee chatgcd ws8 with thoduty of "crplonng lQuiarob] option8b corrplctea second stq| to [Quizno'6]tddcr offor',, ''second stp' tradr.otio& lhe .30. O! M8y 21, 2001,dndirl ordcrto elfectIhe Schadens madeanoffq to thc Spcial ConmitteeofQujzno'gBoad ofDireolo.s to acquiieall
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out6tmdingsb,IesofQ'riao's con$nolr stock,othrthanohars owncdby thc SchadD! therFelvesmd ccrtsidaffililk3, for $E.00 sha$. a 31, opefal1on. 32. As ofMay, 2001Quizno'6 apFoxinotlly 1,159storcdrci.uradsin hsd As ofMay, 2001Qutno's hadannualizcd systrmwide salesof$351,000,000.

33. On Juoe21,2001Quizdol SpecislConmitte. rccoEsod.d that Quizno's olfect lhc rblorger"propGdby the Schadens thepricc of$8.50 a 6ha!a. Julrc21, 2001Quizno's ar O! Boad of Dirctors apprcved proposod the trsnsection. 34, As ofoctobor 5, 200t thoSchadns ow!d sppNxiiately 6?%offto oul6teding ofthc commonstockofQuizno's, sharer 35. Or Novcrnbo 5, 2O0tQuizro'sffld wilh the SBCits proxy rtnor.nt to beu!d to solioit Quizno'sstobkboldcrs' bctwcd Fitlnzc md votscatrc-ffning plopo8cd the Ec1gEr Quizno's.t $8.50per sharc. 36. (.'the In accord$ocwith the Colorado Disseutcr!'Rights Aot! C.R.S.$07-l 13-101 Aot"), all ofltc irdividusls strdclrtiti.s mrn.d asrespoidonts thc captionofthis cascproperly in noticcdthcir intedtto dissedt pryrocqfrnd app!ai!4| from ttc prcpoa.dmergor to ddlsnd 6nd ights 'rnde.the Act.' 37. On DeceDrbor 2001themergerbeNeenQuizno's Firnze 21, ad wasclosd, was Quizno'8 thesuNiving complny. 38. At tte Decernbcr 2001votc a Eajority ofQuiznoh rtoclaoldcb votedto 21, apptove mcrg(calling for thopurohrso the ofall of Quiztro's non-Scladen stoct ar$E,50 a sh.sro, rnojotity of qdzno'r D$blir 8to.&holder8, thc non-SchadlrslooldoldDrs, Eot A did i.o., wtc to apprcvethemclger. 39, A! ofDec.rnbff, 2001Quizoo's opffatcdapproxinstely1,400scpsraie stoloYrcslauranta40. As ofDeoombor, 2001Quiznoro systern-widc 6ales wcrc apptoxisutcly $428.000.000. 41. Follovdngthe Dlcqnbe.2l, 2001merger, Quizlo's ssntMtioe to itr dies.ntinS stookholdeF,Quiarc'snoticciDforeedthc dislcutitg stodldold..sthlt thc t!rger hrd beer spproved thai tbo dirBcntlrscouldd.rirl|d paymmtof "fair v6luC'for ll|Girstod(bolilingr atrd undrr thc Act.

' Respoudcnt procceded Dr. Sturtic6trd disputo whethe! Sturkie Dr. in Quizno'6 ac,cordrlco theAct withrespoct I 5,000 with to sh.rcs Qui2do,s of ctock
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A, Thrcaier,thoscdi8ssnting stockJDIdcr6 atelamd aslospqdots i! thi6 who actionprocecded sllcotdance thc Aot'sprooedural io with rcquirmcnts ed de[undodlsym@t for the "fair value'ofthcir Quizno's holdhgs. 43. Aier recciviDg thse andsforpaytdf, Quizno'ssentthc disseffiflg de stooklpldeEwho hadcompli.d with thoAct th sEouit Quizoo's egtimarod the f4ir vsluc of 09 lhe dissentn' sharcs. ostim.tedfair valueas$8.J0s lhrtc, Followingthcir rccoiptof Quizno'6 payoeal, drodiss.utingstoctholdcrs timely notifiodQuizno's dratthc $8.50eou.tt Quizno's

wasls$ tbeirlim8tc thar ofhir value.

44, Quiaot commcrcrdtbigactior agaiNt thodisrdtitrg srookholdrs nrmcd ar rsponderts tijoaely in f.shio!.

III. l.

PRETRIALMOTIONS

Tirneto File I Motion Pufrulnt to Rule56(h)andor i! tizi4e tg Frctudo tcstimonyby Quizro'r Bxpn Wibssos,
2. Witnesse6.

OdMarch 2003, Faga!Group a Motioafor OnoWcckBltrnsioaof 24, thc fild

On Mafoh24, 2003,the Fsg4n of Grcupfiled s Motion for Sequcshatiotr

ry.
V.

TRIAL BRIEIS

Tdalbliefs,if.ny, shall filcdono! beforc be Flidiy, Aplil 18,2003. TTEI{IZATION OFDAMAGES OTHERNELIEF SOUGFT OR

it6 seets coste e4,cnscs thisIrtio4 itohrdirgbutlot liritd to,thefees and of Qui2no's g andexpenles ofcounsel, experb otber cost!putruant C.R.S, 7-l 13-302. atld to ' TheSturkidcroorns ptr Rspondnt9 to rocorq$28,26 sharo, in1orc6t. plus sclk R.spondent in Stulkie, hi5countdchim, roclc !o have rrcovcry .o ldditioDsl fo! 15,000 that sharcs whichQuizro'cbas inoludcd it' pctitior ThoStu*idcloobs Respgnd.nts an not sok in awErd fecs8td xpnrr couDsel cxprrls of pursuad CRSSectioo 13-302. of ard to 7-l TheSaidsto[e Gllup scrls .n awsrd ofthe tait value miuurthemount ofits sharEs akeady by Quiztro'6, intcrcst, paid plus fces, and ofthis aotion attorneyt' and costs expenses TheFsgq!Croup's ltctuization iD of ofDsmages inoludcd its Statrnnt Claimt, is YI. A. W&|rsss. II'ENTIFICATIONOF WITNESSES ANI' EXHIBITS

partyhasattrohcd thisproposed MaDagemot itJtheirOocurenae Each to Trial Odor Wirnocs andExpcrt Lisb qurtificaliong. Witne.ss ooting obj6ctjotrs dcpolt Lists, sny to B. Exhibit!.
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U
partyhssah.chcd this$opoledftisl MaoagEmdt its/thcitList of Each fuar b Exhibits it/theyidodto intsoduoo tiisl rcting snyobjections thEutl&orioity to ofshibits. rt

c.
D.

Jumr Notebool! Not appliaabta' Dposldotr otherprc!rved rld trdmory. If th. prcsrrvod testimony anylvitDess to beFesented, ptoponenl tho the of is of

testimony shall providothe othcrparti.s wilh its de6iSnation lcast25 daysbcforehial, Any at othtr partymay deeignate rspoolivedesignsliotu le3stl0 daysblfor trial. Theprlpotrclt al

m4yprovide tt tial. ryly desiSlations lc.st5 dlysbefor VIL MATTERS TRIAL ETTICIENCIES ANDOITHER

Thepartiec rogrrdhgthcApprairal Action rocornmard theCoudfr6t heor cvid.dcc tiet IRA sndthcnhea!additioral aud videnc& regrr{itrg Stu*ie Coutterclain thFagan Action, tho ifaocessary.' palio! canft!! thaltioy havc The x,sl8itr wldchtheuse of consid.rcd tcbtrology sil'|plifylbecas llake it mor can uddrst tr(kblo. atd

3

8 9

"atrdorces uso ThcFagatr Group the of'juror notcbookc."' ThcFagan Group docs &gr this"statomot rot will! ofpurpofied Trisl E6cicnqica."
15

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.ApR-01-2003 nuilotilln sT rur og:sa fl.

Fm i6s-il0 ilo,

Rcspcctiv.ly.ubmlrcdfti. t MOYE,OILSS, O'KEEFE CORRELL, LLP

I

ofApril,2003. PC BREGA WNTENS &

l
;

RichadS.Vcrmei& Chcrlly Kly Cup IU ltolard H. Mlclhcc 1225l7d Stlgl 29$Floor Dctrvcr, 80202 @ Trbpho&r 303.292.2900

jay John Schnolt f1300 1700 Uncob Sltcc!, Dawet,CO W2034552 tclophorc:303.866.9,[00
lod

I

atrd PIPER RT'DMCK Ftldric A. Coh.rl 203Norlhlrsrtl6 Sscct, SuirE 1800 clticaeo. 60601-1293 lL Tel6phon6: 12.368-4000 3 Attotn ys for ThoQuizno'3 HOROWTTZ WAKE &

LI' SMITT!CAIIBRELLAND RUSSELI+ H. Wlstltnb, Edw.rd P.achtoc Stlct N.8.,SuitcaI 00 1230 Atl. !, GA 30309 5.3500 Tolcahonol|ol'El AtloBcy!for hs Stultic Gloup

t J-"-.

I

Jayllorowitz 37017' SEcct, Sqite 3950 Dcrwd,CO 80202 T.lcphon.: 303.572,5102 Attomoys &! Fagrn&oup for JACOBS FRICK CTIASE KELLEYLLC

Johtr Mrrtin D, 1050l?'r Srrsct, Suit6t5O0 Dqrvcr,CO 80202 Tclcphorc:303.685.4800 A$omcy! ThcSuldrtoN&oqp Fot

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Rerpoqively subditted Eday thir MOYE CILES, O'KEEFB !?RMEIRE& CORRELL. LLP

of AFi! 2003. BRBCA WINTERS PC &

Ricbi[dS.Vermeiro Chesloy CulpUI Koy Leonald MacPhee H.

ffi#*s"L-r/

1225l7\ Steel 29s Ftoor Dcnvcr,CO 80202 Telcphonc:303.292.2900 and PIPERRIJDNICK Frcdlic A. Cohen 203Noni Lssdlo Strt,Suile 1800 Chioago,lL60601-1293 Tclephone:12.368.,1000 3 AttomFysfor The Quizno'sColpoEtion HOROWITZ& WAKE Jly Horowitz 3?Ol?6 St!o.! Suito3950 Dcovo, CO 80202 Tolephore: 303.572.5102 Attomey. for the FeganOloup JACOBSCHASBFRICK KISNKOPF &

Lhcoh Steel #1300 1700 Denv., 80203-46552 CO Tclephotro: 303,866.9400 and

SMITI{,GAMBRBLL ANDRUSSEII. IIP Bdward W.6muth, E. 1230 Pcachtee StEctN.8.,Suite 3100 Atl6nts, 30309 GA Tclephonc: 404.815J500 Auorleysfor thcSturldc Group

Attonels For The Satdstoao Group

Nj\Q\QU nos\r{ppr.lolPlc{d\[email protected]!

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thir e Oder M.nagement is madc dor of thoCourt 5!

ot
Judgp istriat Coort

o
hrt (a!ilu.:?u.-/

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PETITIONER THE QUIZNO'SCORPORATION

trf.r.?6-;