AGREEMENT AND PLAN OF MERGER BY AND AMONG DAVE & BUSTER’S, INC., WS MIDWAY ACQUISITION SUB, INC. AND WS MIDWAY HOLDINGS, INC. DATED AS OF DECEMBER 8, 2005
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
XXXX & BUSTER’S, INC.,
WS MIDWAY ACQUISITION SUB, INC.
AND
WS MIDWAY HOLDINGS, INC.
DATED AS OF DECEMBER 8, 2005
TABLE OF CONTENTS
Page | ||||||
ARTICLE I |
||||||
THE MERGER |
||||||
SECTION 1.1.
|
The Merger | 2 | ||||
SECTION 1.2.
|
Effective Time | 2 | ||||
SECTION 1.3.
|
Effect of the Merger | 2 | ||||
SECTION 1.4.
|
Subsequent Actions | 2 | ||||
SECTION 1.5.
|
Articles of Incorporation; By-Laws; Directors and Officers | 2 | ||||
SECTION 1.6.
|
Conversion of Securities | 3 | ||||
SECTION 1.7.
|
Exchange of Certificates and Warrants | 5 | ||||
SECTION 1.8.
|
Stock Plans | 8 | ||||
SECTION 1.9.
|
Time and Place of Closing | 8 | ||||
ARTICLE II |
||||||
REPRESENTATIONS AND WARRANTIES OF MERGER SUB AND HOLDINGS |
||||||
SECTION 2.1.
|
Organization | 9 | ||||
SECTION 2.2.
|
Capitalization | 9 | ||||
SECTION 2.3.
|
Authority | 9 | ||||
SECTION 2.4.
|
No Conflict; Required Filings and Consents | 10 | ||||
SECTION 2.5.
|
Financing Arrangements | 11 | ||||
SECTION 2.6.
|
No Prior Activities | 11 | ||||
SECTION 2.7.
|
Brokers | 11 | ||||
SECTION 2.8.
|
Information Supplied | 11 | ||||
ARTICLE III |
||||||
REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
||||||
SECTION 3.1.
|
Organization and Qualification | 12 | ||||
SECTION 3.2.
|
Subsidiaries and Joint Ventures | 13 | ||||
SECTION 3.3.
|
Capitalization | 14 | ||||
SECTION 3.4.
|
Authority | 15 | ||||
SECTION 3.5.
|
No Conflict; Required Filings and Consents | 16 | ||||
SECTION 3.6.
|
SEC Filings; Financial Statements | 16 | ||||
SECTION 3.7.
|
Absence of Certain Changes or Events | 18 | ||||
SECTION 3.8.
|
Litigation | 18 | ||||
SECTION 3.9.
|
Employee Benefit Plans | 19 | ||||
SECTION 3.10.
|
Information Supplied | 20 | ||||
SECTION 3.11.
|
Conduct of Business; Permits | 21 |
i
SECTION 3.12.
|
Taxes | 22 | ||||
SECTION 3.13.
|
Environmental Matters | 24 | ||||
SECTION 3.14.
|
Title to Assets; Liens | 25 | ||||
SECTION 3.15.
|
Real Property | 26 | ||||
SECTION 3.16.
|
Intellectual Property | 28 | ||||
SECTION 3.17.
|
Material Contracts | 29 | ||||
SECTION 3.18.
|
Brokers | 31 | ||||
SECTION 3.19.
|
Board Action | 31 | ||||
SECTION 3.20.
|
Opinion of Financial Advisor | 31 | ||||
SECTION 3.21.
|
Control Share Acquisition | 31 | ||||
SECTION 3.22.
|
Rights Agreement | 31 | ||||
SECTION 3.23.
|
Vote Required | 31 | ||||
SECTION 3.24.
|
Insurance | 32 | ||||
SECTION 3.25.
|
Suppliers | 32 | ||||
SECTION 3.26.
|
Collective Bargaining; Labor Disputes; Compliance | 32 | ||||
SECTION 3.27.
|
Investment Company | 33 | ||||
SECTION 3.28.
|
Transactions with Affiliates | 33 | ||||
SECTION 3.29.
|
Absence of Restrictions on Business Activities | 33 | ||||
SECTION 3.30.
|
Letters of Credit, Surety Bonds, Guarantees | 34 | ||||
SECTION 3.31.
|
Certain Business Practices | 34 | ||||
ARTICLE IV |
||||||
CONDUCT OF BUSINESS PENDING THE MERGER |
||||||
SECTION 4.1.
|
Conduct of Business by the Company Pending the Merger | 34 | ||||
SECTION 4.2.
|
No Solicitations | 38 | ||||
SECTION 4.3.
|
Fiduciary Duties | 40 | ||||
ARTICLE V |
||||||
ADDITIONAL AGREEMENTS |
||||||
SECTION 5.1.
|
Proxy Statement | 41 | ||||
SECTION 5.2.
|
Meeting of Shareholders of the Company | 41 | ||||
SECTION 5.3.
|
Additional Agreements | 41 | ||||
SECTION 5.4.
|
Notification of Certain Matters | 41 | ||||
SECTION 5.5.
|
Access to Information | 41 | ||||
SECTION 5.6.
|
Public Announcements | 42 | ||||
SECTION 5.7.
|
Approval and Consents; Cooperation | 42 | ||||
SECTION 5.8.
|
Further Assurances | 43 | ||||
SECTION 5.9.
|
Agreement to Defend and Indemnify | 43 | ||||
SECTION 5.10.
|
Continuation of Employee Benefits | 44 | ||||
SECTION 5.11.
|
Financing | 45 | ||||
SECTION 5.12.
|
Takeover Statutes | 46 | ||||
SECTION 5.13.
|
Disposition of Litigation | 46 | ||||
SECTION 5.14.
|
Delisting | 46 |
ii
ARTICLE VI |
||||||
CONDITIONS OF MERGER |
||||||
SECTION 6.1.
|
Conditions to Each Party’s Obligation to Effect the Merger | 46 | ||||
SECTION 6.2.
|
Additional Conditions to Obligation of the Company to Effect the Merger | 47 | ||||
SECTION 6.3.
|
Additional Conditions to Obligations of Merger Sub to Effect the Merger | 47 | ||||
ARTICLE VII |
||||||
TERMINATION, AMENDMENT AND WAIVER |
||||||
SECTION 7.1.
|
Termination | 49 | ||||
SECTION 7.2.
|
Effect of Termination | 51 | ||||
ARTICLE VIII |
||||||
GENERAL PROVISIONS |
||||||
SECTION 8.1.
|
Non-Survival of Representations, Warranties and Agreements | 52 | ||||
SECTION 8.2.
|
Notices | 52 | ||||
SECTION 8.3.
|
Expenses | 54 | ||||
SECTION 8.4.
|
Definitions | 54 | ||||
SECTION 8.5.
|
Headings | 61 | ||||
SECTION 8.6.
|
Severability | 61 | ||||
SECTION 8.7.
|
Entire Agreement; No Third-Party Beneficiaries | 61 | ||||
SECTION 8.8.
|
Assignment | 61 | ||||
SECTION 8.9.
|
Governing Law | 61 | ||||
SECTION 8.10.
|
Amendment | 61 | ||||
SECTION 8.11.
|
Waiver | 62 | ||||
SECTION 8.12.
|
Counterparts | 62 | ||||
SECTION 8.13.
|
Waiver of Jury Trial | 62 | ||||
SECTION 8.14.
|
Interpretation | 62 | ||||
SECTION 8.15.
|
Disclosure Generally | 63 |
iii
INDEX OF DEFINED TERMS
Page | ||||
Acquisition Proposal
|
40 | |||
affiliate
|
7 | |||
Affiliate Transaction
|
34 | |||
Agreement
|
1 | |||
Approvals
|
49 | |||
Board of Directors
|
1 | |||
Certificates
|
5 | |||
Closing
|
9 | |||
Closing Date
|
9 | |||
Code
|
8 | |||
Commitment Letters
|
11 | |||
Company
|
1 | |||
Company 2004 Form 10-K
|
18 | |||
Company Common Stock
|
3 | |||
Company Disclosure Schedule
|
12 | |||
Company Material Contracts
|
31 | |||
Company Preferred Stock
|
15 | |||
Company Shareholder Approval
|
32 | |||
Company Shareholders’ Meeting
|
12 | |||
Construction Projects
|
28 | |||
control
|
7 | |||
Copyrights
|
30 | |||
Credit Agreement
|
26 | |||
Debt Financing
|
11 | |||
Dissenting Shares
|
4 | |||
Draft 10-Q
|
18 | |||
Effective Time
|
2 | |||
Employee Plans
|
19 | |||
Equity Financing
|
11 | |||
ERISA
|
19 | |||
ERISA Affiliate
|
19 | |||
Exchange Act
|
10 | |||
Exchange Agent
|
5 | |||
Exchange Fund
|
5 | |||
Fee
|
52 | |||
Fee Account
|
52 | |||
Financing
|
11 | |||
Financing Sources
|
42 | |||
Governmental Entity
|
12 | |||
Holdings
|
1 | |||
Holdings Schedule
|
9 |
iv
HSR Act
|
11 | |||
Indemnified Parties
|
44 | |||
Indenture
|
46 | |||
Insurance Policies
|
32 | |||
Intellectual Property Rights
|
30 | |||
Joint Venture
|
14 | |||
Leased Real Property
|
25 | |||
Liens
|
9 | |||
Material Adverse Effect
|
13 | |||
Merger
|
1 | |||
Merger Consideration
|
3 | |||
Merger Sub
|
1 | |||
Merger Sub Common Stock
|
3 | |||
Merger Sub Representatives
|
43 | |||
Missouri BCL
|
1 | |||
New Warrant
|
4 | |||
Notes
|
15 | |||
Option Plans
|
8 | |||
Options
|
8 | |||
Owned Real Property
|
25 | |||
Patents
|
30 | |||
Permits
|
22 | |||
Permitted Liens
|
26 | |||
Proxy Statement
|
12 | |||
Real Property
|
26 | |||
Real Property Leases
|
26 | |||
Redemption
|
46 | |||
Regulatory Laws
|
11 | |||
Required Approvals
|
43 | |||
Restricted Stock
|
15 | |||
Xxxxxxxx-Xxxxx
|
18 | |||
SEC Reports
|
17 | |||
Securities Act
|
10 | |||
Significant Subsidiary
|
40 | |||
Software
|
30 | |||
Structures
|
26 | |||
Subsidiary
|
13 | |||
Sugarloaf
|
14 | |||
Sugarloaf Interest
|
14 | |||
Superior Proposal
|
40 | |||
Surviving Corporation
|
2 | |||
Takeover Statute
|
32 | |||
Tango
|
14 | |||
Termination Date
|
50 | |||
Trademarks
|
30 | |||
Transaction Expenses
|
52 |
v
Voting Agreement
|
1 | |||
Voting Group
|
1 | |||
WARN Act
|
33 | |||
Warrant Consideration
|
4 | |||
Warrants
|
4 | |||
Wellspring
|
11 |
vi
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of December 8, 2005 (the “Agreement”), by and among
XXXX & BUSTER’S, INC., a Missouri corporation (the “Company”), WS MIDWAY ACQUISITION SUB, INC., a
Missouri corporation (“Merger Sub”), and WS MIDWAY HOLDINGS, INC., a Delaware corporation
(“Holdings”).
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company (the “Board of Directors”) and the board of
directors of Merger Sub have each determined that it is in the best interests of their respective
shareholders for Merger Sub to merge with and into the Company (the “Merger”) in accordance with
the General and Business Corporation Law of the State of Missouri (the “Missouri BCL”) and upon the
terms and subject to the conditions set forth herein;
WHEREAS, the Board of Directors and the board of directors of Merger Sub have approved the
Merger;
WHEREAS, Merger Sub is a wholly-owned subsidiary of Holdings;
WHEREAS, as a condition for Holdings and Merger Sub to enter into this Agreement, those
shareholders of the Company listed on the signature pages to the Voting Agreement (as defined
below) (the “Voting Group”) have entered into the Voting Agreement, dated as of the date hereof,
with Holdings and the other parties thereto (the “Voting Agreement”), which agreement provides,
among other things, that, subject to the terms and conditions thereof, each member of the Group
will vote its shares of Company Common Stock (as defined below) in favor of the Merger and the
approval and adoption of this Agreement;
WHEREAS, Merger Sub, Holdings and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to prescribe various
conditions to the Merger; and
WHEREAS, terms used but not defined herein shall have the meanings set forth in Section
8.4, unless otherwise noted.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and
agreements herein contained, and intending to be legally bound hereby, the parties hereby agree as
follows:
ARTICLE I
THE MERGER
SECTION 1.1. The Merger. At the Effective Time and subject to and upon the terms and
conditions of this Agreement and the Missouri BCL, Merger Sub shall be merged with and into the
Company, the separate corporate existence of Merger Sub shall cease, and the Company shall continue
as the surviving corporation. The Company as the surviving corporation after the Merger
hereinafter sometimes is referred to as the “Surviving Corporation.”
SECTION 1.2. Effective Time. As promptly as practicable, and in any event within one
business day after the satisfaction or waiver of the conditions set forth in Article VI, the
parties hereto shall cause the Merger to be consummated by filing Articles of Merger with the
Secretary of State of the State of Missouri, in such form as required by, and executed in
accordance with the relevant provisions of, the Missouri BCL (the time of such filing being the
“Effective Time”).
SECTION 1.3. Effect of the Merger. At the Effective Time, the effect of the Merger shall
be as provided in the applicable provisions of the Missouri BCL. Without limiting the generality
of the foregoing, and subject thereto, at the Effective Time all the property, rights, privileges,
powers and franchises of the Company and Merger Sub shall vest in the Surviving Corporation, and
all debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities
and duties of the Surviving Corporation.
SECTION 1.4. Subsequent Actions. If, at any time after the Effective Time, the Surviving
Corporation shall consider or be advised that any deeds, bills of sale, assignments, assurances or
any other actions or things are necessary or desirable to vest, perfect or confirm of record or
otherwise in the Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of either of the Company or Merger Sub acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger or otherwise to carry
out this Agreement, the officers and directors of the Surviving Corporation shall be authorized to
execute and deliver, in the name and on behalf of either the Company or Merger Sub, all such deeds,
bills of sale, assignments and assurances and to take and do, in the name and on behalf of each of
such corporations or otherwise, all such other actions and things as may be necessary or desirable
to vest, perfect or confirm any and all right, title and interest in, to and under such rights, properties or assets in
the Surviving Corporation or otherwise to carry out this Agreement.
SECTION 1.5. Articles of Incorporation; By-Laws; Directors and Officers.
(a) At the Effective Time the Articles of Incorporation of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the Articles of Incorporation of the
Surviving Corporation until thereafter amended in accordance with the provisions thereof and
the Missouri BCL, except that such Articles of Incorporation shall be amended to provide
that the name of the Surviving Corporation shall be “Xxxx & Buster’s, Inc”.
2
(b) The By-Laws of Merger Sub, as in effect immediately before the Effective Time,
shall be the By-Laws of the Surviving Corporation until thereafter altered, amended or
repealed as provided therein or in the Articles of Incorporation of the Surviving
Corporation and the Missouri BCL, except that such By-Laws shall be amended to change the
name of the Surviving Corporation to “Xxxx & Buster’s, Inc.”.
(c) The directors of Merger Sub immediately before the Effective Time will be the
initial directors of the Surviving Corporation, and the officers of the Company immediately
before the Effective Time will be the initial officers of the Surviving Corporation, in each
case until their successors are duly elected or appointed and qualified in the manner
provided in the Surviving Corporation’s Articles of Incorporation and By-Laws, or as
otherwise provided by applicable law.
SECTION 1.6. Conversion of Securities. At the Effective Time, by virtue of the Merger and
without any action on the part of Merger Sub, the Company or the holder of any shares of common
stock, par value $0.01 per share, of the Company (the “Company Common Stock”), or any shares of
common stock, par value $0.01 per share, of Merger Sub (the “Merger Sub Common Stock”):
(a) (i) Company Common Stock. Each share of Company Common Stock that
is issued and outstanding immediately prior to the Effective Time (other than shares
to be cancelled in accordance with Section 1.6(c) and Dissenting Shares)
shall be converted into, and become exchangeable for, the right to receive from the
Surviving Corporation an amount in cash equal to $18.05 per share of Company Common
Stock, without interest (the “Merger Consideration”). As of the Effective Time, all
shares of Company Common Stock upon which the Merger Consideration is payable
pursuant to this Section 1.6(a)(i) shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each holder of
a certificate representing any such shares of Company Common Stock shall cease
to have any rights with respect thereto, except the right to receive the Merger
Consideration.
(ii) Warrants. Each warrant to purchase Company Common Stock
(“Warrants”) that is issued and outstanding immediately prior to the
Effective Time shall be converted into, and become exchangeable for, the
right to receive from the Surviving Corporation a warrant (a “New Warrant”)
entitling the holder thereof to receive, upon exercise thereof and payment
of the exercise price, an amount (the “Warrant Consideration”) in cash equal
to the product of (A) the Merger Consideration and (B) the number of shares
of Company Common Stock into which such Warrant was exercisable immediately
prior to the Effective Time, without interest. As of the Effective Time,
all Warrants converted into New Warrants pursuant to this Section
1.6(a)(ii) shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist, and each holder of a
certificate representing a Warrant shall cease to have any rights with
respect thereto, except the right to receive a New Warrant.
3
(b) Merger Sub Common Stock. Each share of Merger Sub Common Stock that is
issued and outstanding immediately prior to the Effective Time shall be converted into and
become one fully paid and nonassessable share of common stock, $0.01 par value per share, of
the Surviving Corporation, and the Surviving Corporation shall be a wholly-owned subsidiary
of Holdings.
(c) Cancellation of Treasury Stock and Holdings and Merger Sub-Owned Company Common
Stock. All shares of Company Common Stock that are owned by the Company or any direct
or indirect Subsidiary of the Company and any shares of Company Common Stock owned by
Holdings, Merger Sub or any subsidiary of Holdings or Merger Sub or held in the treasury of
the Company shall, by virtue of the Merger and without any action on the part of the holder
thereof, be cancelled and retired and shall cease to exist, and no cash, Company Common
Stock or other consideration shall be delivered or deliverable in exchange therefor.
(d) Dissenting Shares. Notwithstanding anything in this Agreement to the
contrary, shares of Company Common Stock that are issued and outstanding immediately prior
to the Effective Time and that are held by a holder who has validly demanded payment of the
fair value for such holder’s shares as determined in accordance with Section 351.455 of the
Missouri BCL (“Dissenting Shares”) shall not be converted into or be exchangeable for the
right to receive the Merger Consideration (but instead shall be converted into the right to
receive payment from the Surviving Corporation with respect to such Dissenting Shares in
accordance with the Missouri BCL), unless and until such holder shall have failed to perfect
or shall have effectively withdrawn or lost such holder’s right under the Missouri BCL. If any such
holder of Company Common Stock shall have failed to perfect or shall have effectively
withdrawn or lost such right, each share of such holder shall be treated, at the Company’s
sole discretion, as a share of Company Common Stock that had been converted as of the
Effective Time into the right to receive the Merger Consideration in accordance with
Section 1.6(a)(i). Any payments made in respect of Dissenting Shares shall be made
by the Surviving Corporation. The Company shall give prompt notice to Holdings and Merger
Sub of any demands received by the Company for appraisal of shares of Company Common Stock
and of attempted withdrawals of such notice and any other instruments provided pursuant to
applicable law, and Holdings and Merger Sub shall have the right to participate in and
direct all negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Holdings and Merger Sub, make any payment with
respect to, or settle or offer to settle, any such demands or approve any withdrawal of any
such demands.
4
SECTION 1.7. Exchange of Certificates and Warrants.
(a) Exchange Agent. From time to time after the Effective Time, the Surviving
Corporation shall, when and as required, deposit with a bank or trust company designated by
Holdings (the “Exchange Agent”), for the benefit of the holders of shares of Company Common
Stock and Warrants, for exchange in accordance with this Article I through the Exchange
Agent, an amount equal to the aggregate Merger Consideration and the aggregate Warrant
Consideration (such consideration being hereinafter referred to as the “Exchange Fund”).
The Exchange Agent shall, pursuant to irrevocable instructions of the Surviving Corporation,
make payments of the Merger Consideration and the Warrant Consideration out of the Exchange
Fund. The Exchange Fund shall not be used for any other purpose.
(b) Exchange Procedure for Certificates. As soon as reasonably practicable
after the Effective Time, the Surviving Corporation shall cause the Exchange Agent to mail
to each holder of record of a certificate or certificates which immediately prior to the
Effective Time represented outstanding shares of Company Common Stock (the “Certificates”)
whose shares of Company Common Stock were converted into the right to receive the Merger
Consideration pursuant to Section 1.6(a)(i): (x) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange Agent and
shall be in such form and have such other customary provisions as the Surviving Corporation
may reasonably specify); and (y) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Exchange Agent or to such other agent or agents as may be appointed by
the Surviving Corporation, together with such letter of transmittal, duly executed, and such
other documents as may reasonably be required by the Exchange Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor the Merger Consideration into
which the shares of Company Common Stock theretofore represented by such Certificate shall
have been converted pursuant to Section 1.6(a)(i), and the Certificate so surrendered shall
forthwith be cancelled. The Exchange Agent shall accept such Certificates upon compliance
with such reasonable terms and conditions as the Exchange Agent may impose to effect an
orderly exchange thereof in accordance with normal exchange practices. In the event of a
transfer of ownership of such Company Common Stock which is not registered in the transfer
records of the Company, payment may be made to a Person other than the Person in whose name
the Certificate so surrendered is registered, if such Certificate shall be properly endorsed
or otherwise be in proper form for transfer and the Person requesting such payment shall pay
any transfer or other Taxes required by reason of the payment to a Person other than the
registered holder of such Certificate or establish to the satisfaction of the Surviving
Corporation that such Tax has been paid or is not applicable. Until surrendered as
contemplated by this Section 1.7(b), each Certificate (other than a Certificate
representing shares of Company Common Stock cancelled in accordance with Section
1.6(c) and other than Dissenting Shares) shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender the Merger Consideration,
without interest, into which the shares of Company Common Stock theretofore represented by
such Certificate shall have been converted pursuant to Section 1.6(a)(i). No
interest will be paid or will accrue on the consideration payable upon the surrender of any
Certificate.
5
(c) Exchange Procedure for Warrants. As soon as reasonably practicable after
the Effective Time, the Surviving Corporation shall cause the Exchange Agent to mail to each
holder of record of a Warrant whose Warrant is converted into the right to receive a New
Warrant pursuant to Section 1.6(a)(ii): (x) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the Warrants shall
pass, only upon delivery of the Warrants to the Exchange Agent and shall be in such form and
have such other customary provisions as the Surviving Corporation may reasonably specify);
and (y) instructions for use in effecting the surrender of the Warrants in exchange for the
New Warrants. Upon surrender of a Warrant for cancellation to the Exchange Agent or to
such other agent or agents as may be appointed by the Surviving Corporation, together with
such letter of transmittal, duly executed, and such other documents as may reasonably be
required by the Exchange Agent, the holder of such Warrant shall be entitled to receive in
exchange therefor the New Warrant into which such Warrant shall have been converted pursuant
to Section 1.6(a)(ii), and the Warrant so surrendered shall forthwith be cancelled.
The Exchange Agent shall accept such Warrants upon compliance with such reasonable terms and
conditions as the Exchange Agent may impose to effect an orderly exchange thereof in
accordance with normal exchange practices. In the event of a transfer of ownership of such
Warrant which is not registered in the transfer records of the Company, issuance of a New
Warrant may be made to a Person other than the Person in whose name the Warrant so
surrendered is registered, if such Warrant shall be properly endorsed or otherwise be in
proper form for transfer and the Person requesting such New Warrant shall pay any transfer
or other Taxes required by reason of the issuance of a New Warrant to a Person other than
the registered holder of such Warrant or establish to the satisfaction of the Surviving
Corporation that such Tax has been paid or is not applicable. Until surrendered as
contemplated by this Section 1.7(c), each Warrant shall be deemed at any time after
the Effective Time to represent only the right to receive upon such surrender the New
Warrant into which the Warrant shall have been converted pursuant to Section
1.6(a)(ii).
(d) No Further Ownership Rights in Company Common Stock or Warrants. All
consideration paid upon the surrender of Certificates in accordance with the terms of this
Article I shall be deemed to have been paid in full satisfaction of all rights pertaining to
the shares of Company Common Stock theretofore represented by such Certificates, subject,
however, to any obligation of the Surviving Corporation to pay any dividends or make any
other distributions with a record date prior to the Effective Time which may have been
authorized or made with respect to shares of Company Common Stock which remain unpaid or
unsatisfied at the Effective Time, and there shall be no further registration of transfers
on the stock transfer books of the Surviving Corporation of the shares of Company Common
Stock which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, the Certificates or Warrants are presented to the Surviving Corporation or
the Exchange Agent for any reason, they shall be cancelled and exchanged as provided in this
Article I, except as otherwise provided by applicable law.
6
(e) Termination of the Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the holders of the Certificates for six months after the Effective
Time shall be delivered to the Surviving Corporation and any holders of the Certificates who
have not theretofore complied with this Article I shall thereafter look only to the
Surviving Corporation and only as general creditors thereof for payment of their claim for
the Merger Consideration and, if applicable, any unpaid dividends or other distributions
which such holder may be due on Company Common Stock, under applicable law.
(f) No Liability. None of the Company, Merger Sub, Holdings, the Surviving
Corporation or the Exchange Agent, or any employee, officer, director, shareholders, agent or
affiliate thereof, shall be liable to any Person in respect of any cash delivered to a
public official pursuant to any applicable abandoned property, escheat or similar law.
(i) For purposes of this Agreement, “affiliate” of a Person means a
Person that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, the first
mentioned Person.
(ii) For purposes of this Agreement, “control” (including the terms
“controlled by” and “under common control with”) means the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of a Person,
whether through the ownership of stock, as trustee or executor, by
contract, credit arrangement or otherwise.
(g) Investment of the Exchange Fund. The Exchange Agent shall invest any cash
included in the Exchange Fund, as directed by the Surviving Corporation, on a daily basis.
Any interest and other income resulting from such investments shall be paid to the Surviving
Corporation. To the extent that there are losses with respect to such investments, or the
Exchange Fund diminishes for other reasons below the level required to make prompt payments
of the Merger Consideration as contemplated hereby, the Surviving Corporation shall promptly
replace or restore the portion of the Exchange Fund lost through investments or other events
so as to ensure that the Exchange Fund is, at all times, maintained at a level sufficient to
make such payments.
(h) Withholding Rights. The Surviving Corporation shall be entitled to deduct
and withhold from the consideration otherwise payable pursuant to this Agreement to any
holder of shares of Company Common Stock such amounts as the Surviving Corporation is
required to deduct and withhold with respect to the making of such payment under the
Internal Revenue Code of 1986, as amended (the “Code”), or any provision of state, local or
foreign tax law. To the extent that amounts are so deducted
7
and withheld by the Surviving
Corporation, such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the shares of Company Common Stock in respect of which
such deduction and withholding was made by the Surviving Corporation.
(i) Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming such
Certificate to be lost, stolen or destroyed and, if required by the Surviving Corporation,
the posting by such Person of a bond in such reasonable amount as the Surviving Corporation
may require as indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration payable in respect thereof pursuant to this Agreement.
SECTION 1.8. Stock Plans.
(a) Not later than the Effective Time, the Company shall take all actions necessary to
provide that, at the Effective Time, each then outstanding option to purchase shares of
Company Common Stock (the “Options”) granted under any of the Company’s stock option plans
listed in Section 3.3 of the Company Disclosure Schedule, each as amended
(collectively, the “Option Plans”) or granted otherwise, whether or not then exercisable or
vested, shall be cancelled in exchange for the right to receive from Merger Sub or the
Surviving Corporation an amount in cash in respect thereof equal to the product of (i) the
excess, if any, of the Merger Consideration over the exercise price thereof and (ii) the number of shares of
Company Common Stock subject thereto (such payment to be net of applicable withholding
Taxes).
(b) Except as provided herein or as otherwise agreed to by the parties and to the
extent permitted by the Option Plans, (i) the Company shall cause the Option Plans to
terminate as of the Effective Time and cause the provisions in any other plan, program or
arrangement providing for the issuance or grant by the Company of any interest in respect of
the capital stock of the Company or any of its Subsidiaries to terminate and have no further
force or effect as of the Effective Time and (ii) the Company shall ensure that following
the Effective Time no holder of Options or any participant in the Option Plans or anyone
other than Holdings shall hold or have any right to acquire any equity securities of the
Company, the Surviving Corporation or any Subsidiary thereof.
SECTION 1.9. Time and Place of Closing. Unless otherwise mutually agreed upon in writing
by Holdings and the Company, the closing of the Merger (the “Closing”) will be held at 10:00 a.m.,
New York City time, on the first business day following the date that all of the conditions
precedent specified in Article VI (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the fulfillment or waiver of those conditions)
8
have been satisfied or waived by the party or parties permitted to do so (such date being referred to
hereinafter as the “Closing Date”). The place of Closing shall be at the offices of Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP, 0 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000-0000, or at such other place
as may be agreed between Holdings and the Company.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF MERGER SUB AND HOLDINGS
OF MERGER SUB AND HOLDINGS
Except as set forth in the Disclosure Schedule delivered by Holdings and Merger Sub to the
Company at or prior to the execution and delivery of this Agreement, after giving effect to
Section 8.15 (the “Holdings Schedule”), each of Merger Sub and Holdings hereby represents
and warrants to the Company as follows:
SECTION 2.1. Organization. Each of Merger Sub and Holdings is a corporation duly
organized, validly existing and in good standing under the laws of the jurisdiction in which it is
organized and has the requisite corporate power and authority to own, operate or lease the
properties that it purports to own, operate or lease and to carry on its business as it is now
being conducted.
SECTION 2.2. Capitalization. The authorized capital stock of Merger Sub consists of 1,000
shares of Merger Sub Common Stock. As of the date hereof, 100 of such shares are issued and
outstanding, duly authorized, validly issued, fully paid and nonassessable and owned beneficially
and of record by Holdings free and clear of any liens, security interests, pledges, agreements,
claims, charges or encumbrances of any nature whatsoever (“Liens”). There are no options, warrants
or other rights, agreements, arrangements or commitments of any character obligating Merger Sub to
issue or sell any shares of capital stock of or other equity interests in Merger Sub.
SECTION 2.3. Authority. Each of Merger Sub and Holdings has the necessary corporate power
and authority to enter into this Agreement and carry out their respective obligations hereunder.
The execution and delivery of this Agreement by each of Merger Sub and Holdings and the
consummation by each of Merger Sub and Holdings of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of each of Merger Sub and Holdings
and no other corporate proceeding is necessary for the execution and delivery of this Agreement by
either Merger Sub or Holdings, the performance by each of Merger Sub and Holdings of their
respective obligations hereunder and the consummation by each of Merger Sub and Holdings of the
transactions contemplated hereby. This Agreement has been duly executed and delivered by each of
Merger Sub and Holdings and constitutes a legal, valid and binding obligation of each of Merger Sub
and Holdings, enforceable against each of Merger Sub and Holdings in accordance with its terms,
except that (i) such enforcement may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws, now or hereafter in effect, relating to
creditors’ rights generally and (ii) equitable remedies of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought.
9
SECTION 2.4. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by each of Merger Sub and Holdings
does not, and the performance of this Agreement by each of Merger Sub and Holdings and the
consummation of the transactions contemplated hereby will not, (i) subject to the
requirements, filings, consents and approvals referred to in Section 2.4(b),
conflict with or violate any law, regulation, court order, judgment or decree applicable to
Merger Sub or Holdings or by which their respective property is bound or subject, (ii)
violate or conflict with the Articles of Incorporation or By-Laws of Merger Sub or the
Certificate of Incorporation or By-Laws of Holdings or (iii) subject to the requirements,
filings, consents and approvals referred to in Section 2.4(b), result in any breach
of or constitute a default (or an event which with notice or lapse of time or both would
become a default) under, or give to others any rights of termination or cancellation of, or
result in the creation of a Lien on any of the property or assets of Merger Sub or Holdings
pursuant to, any contract, agreement, indenture, lease or other instrument of any kind,
permit, license or franchise to which Merger Sub or Holdings is a party or by which either
Merger Sub or Holdings or any of their respective property is bound or subject except, in
the case of clause (iii), for such breaches, defaults, rights, or Liens which
would not materially impair the ability of Holdings or Merger Sub to consummate the
transactions contemplated hereby.
(b) Except for applicable requirements, if any, of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), the Securities Act of 1933, as amended (the “Securities
Act”), the pre-merger notification requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the “HSR Act”), and the filing and recordation of
appropriate Articles of Merger as required by the Missouri BCL, and except as set forth in
Section 2.4(b) of the Holdings Schedule, neither Holdings nor Merger Sub is required
to submit any notice, report or other filing with any Governmental Entity in connection with
the execution, delivery or performance of this Agreement or the consummation of the
transactions contemplated hereby, except for such of the foregoing, including under
Regulatory Laws, as are required by reason of the legal or regulatory status or the
activities of the Company or its Subsidiaries or by reason of facts specifically pertaining
to any of them. No waiver, consent, approval or authorization of any Governmental Entity is
required to be obtained or made by Holdings or Merger Sub in connection with their
execution, delivery or performance of this Agreement, except for such of the foregoing as
are required by reason of the legal or regulatory status or the activities of the Company or
its Subsidiaries or by reason of facts specifically pertaining to any of them. For purposes
of this Agreement, “Regulatory Laws” means any Federal, state, county, municipal, local or
foreign statute, ordinance, rule, regulation, permit, consent, waiver, notice, approval,
registration, finding of suitability, license, judgment, order, decree, injunction or other
authorization applicable to, governing or relating to the legal or regulatory status or the
activities of the Company or its Subsidiaries, including, without limitation, with respect
to alcoholic beverage control, amusement, health and safety and fire safety.
10
SECTION 2.5. Financing Arrangements. Merger Sub has delivered to the Company financing
letters with respect to debt financing (the “Debt Financing”) of $275 million and an equity
commitment letter from Wellspring Capital Management LLC (“Wellspring”) addressed to the Company
with respect to equity financing of $108 million (the “Equity Financing” and, together with the
Debt Financing, the “Financing”) in an aggregate amount sufficient (a) to pay (or provide the funds
for the Surviving Corporation to pay) the aggregate Merger Consideration and aggregate Warrant
Consideration, (b) to pay (or provide the funds for the Surviving Corporation to pay) all amounts
contemplated by Section 1.8 when due, (c) to refinance any indebtedness or other obligation
of the Company which may become due as a result of this Agreement or any of the transactions
contemplated hereby, and (d) to pay all related fees and expenses, arising solely out of the Merger
when due. As of the date of this Agreement, the Debt Financing (as set forth in the financing
letters) consists of (i) $100 million in term loans provided by banks and (ii) $175 million of
senior unsecured debt securities. The foregoing financing letters, as in effect on the date of
this Agreement and without giving effect to any amendments or supplements thereto after the date
hereof, are hereinafter referred to as the “Commitment Letters.”
SECTION 2.6. No Prior Activities. Except for obligations or liabilities incurred in
connection with its incorporation or organization or the negotiation and consummation of this
Agreement and the transactions contemplated hereby (including the Financing), neither Holdings nor
Merger Sub has incurred any obligations or liabilities, other than in connection with their
formation, and has not engaged in any business or activities of any type or kind whatsoever.
SECTION 2.7. Brokers. Except for the Persons set forth on Section 2.7 of the
Holdings Schedule, and the parties providing the Financing, and except for arrangements
post-Closing, no broker, finder or investment banker is entitled to any brokerage, finder’s or
other fee or commission in connection with the transactions contemplated by this Agreement based
upon arrangements made by and on behalf of Merger Sub or Holdings.
SECTION 2.8. Information Supplied. None of the information to be supplied in writing by
Merger Sub or Holdings specifically for inclusion in the proxy statement contemplated by
Section 5.1 (together with any amendments and supplements thereto, the “Proxy Statement”)
will, on the date it is filed and on the date it is first published, sent or given to the holders
of Company Common Stock and at the time of the meeting of the Company’s shareholders to consider
the Merger Agreement (the “Company Shareholders’ Meeting”), contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which they are made, not
misleading. If, at any time prior to the Company Shareholders’ Meeting, any event with respect to
either Merger Sub or Holdings, or with respect to information supplied in writing by either Merger
Sub or Holdings specifically for inclusion in the Proxy Statement, shall occur which is required to
be described in an amendment of, or supplement to, such Proxy Statement, such event shall be so
described by either Merger Sub or Holdings, as applicable, and provided to the Company. All
documents that Merger Sub or Holdings is
11
responsible for filing with the SEC in connection with the
transactions contemplated herein will comply as to form, in all material respects, with the
provisions of the Exchange Act and the rules and regulations thereunder, and each such document
required to be filed with any federal, state, provincial, local and foreign government,
governmental, quasi-governmental, supranational, regulatory or administrative authority, agency,
commission or any court, tribunal, or judicial or arbitral body (each, a “Governmental Entity”)
will comply in all material respects with the provisions of applicable law as to the information
required to be contained therein. Notwithstanding the foregoing, neither Merger Sub nor Holdings
makes any representation or warranty with respect to the information supplied or to be supplied by
or on behalf of the Company for inclusion or incorporation by reference in the Proxy Statement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Disclosure Schedule delivered by the Company to Holdings and Merger
Sub at or prior to the execution and delivery of this Agreement, after giving effect to Section
8.15 (the “Company Disclosure Schedule”), the Company hereby represents and warrants on behalf
of itself and its Subsidiaries to Merger Sub and Holdings as follows:
SECTION 3.1. Organization and Qualification. Each of the Company and its Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has the requisite corporate power and authority necessary
to own, possess, license, operate or lease the properties that it purports to own, possess,
license, operate or lease and to carry on its business as it is now being conducted. Each of the
Company and its Subsidiaries is duly qualified or licensed as a foreign corporation to do business,
and is in good standing, in each jurisdiction where its business or the character of its properties
owned, possessed, licensed, operated or leased, or the nature of its activities, makes such
qualification necessary, except for such failure which, when taken together with all other such
failures, would not reasonably be expected to result in a Material Adverse Effect. For purposes of
this Agreement, “Material Adverse Effect” means any effect, change, fact, event, occurrence,
development or circumstance that, individually or together with any other effect, change, fact,
event, occurrence, development or circumstance, (A) is or could reasonably be expected to result in
a material adverse effect on or change in the condition (financial or otherwise), properties,
business, prospects, operations, results of operations, assets or liabilities of the Company and
all of its Subsidiaries, taken as a whole, or (B) could reasonably be expected to prohibit,
restrict or materially impede or curtail the consummation of the transactions contemplated by this
Agreement, including the Merger; provided, however, that to the extent any effect,
change, fact, event, occurrence, development or circumstance is caused by or results from any of
the following, it shall not be taken into account in determining whether there has been a “Material
Adverse Effect”: (i) changes in U.S. economic conditions, or (ii) general changes or developments
in the restaurant industry in which the Company and its Subsidiaries operate unless, in the case of
the foregoing clauses (i) and (ii), such changes or developments referred to therein would
reasonably be expected to have a materially disproportionate impact on the condition (financial or
otherwise), properties, business, operations, results of operations, prospects, assets or
liabilities
12
of the Company and its Subsidiaries taken as a whole relative to other industry
participants. The Company has delivered to Holdings and Merger Sub complete and correct copies of
its Restated Articles of Incorporation and Amended and Restated By-Laws and comparable charter and
organizational documents for each of its Subsidiaries.
SECTION 3.2. Subsidiaries and Joint Ventures.
(a) Each Subsidiary of the Company is identified on Section 3.2(a) of the
Company Disclosure Schedule. All the outstanding equity interests of each Subsidiary of the
Company are owned by the Company, by another wholly-owned Subsidiary of the Company or by
the Company and another wholly-owned Subsidiary of the Company, free and clear of all Liens,
except as set forth on Section 3.2(a) of the Company Disclosure Schedule. All of
the capital stock or other equity interests of each Subsidiary of the Company has been duly
authorized and is validly issued, fully paid and nonassessable and free and clear from any
Liens and preemptive or other similar rights. There are no proxies or voting agreements
with respect to any shares of capital stock of any such Subsidiary. There are no options,
puts, calls, warrants or other rights, agreements, arrangements, restrictions or commitments
of any character obligating the Company or any of its Subsidiaries to issue, sell, redeem,
repurchase or exchange any shares of capital stock of or other equity interests in any of
the Company’s Subsidiaries or any securities convertible into or exchangeable for any
capital stock or other equity interests, or any debt securities of any of the Company’s
Subsidiaries or to provide funds to or make any investment (in the form of a loan, capital
contribution or otherwise) in the Company or any of its Subsidiaries or any other Person.
The Company does not directly or indirectly own a greater than 1.0% equity interest in any
Person that is not a Subsidiary of the Company, other than Tango of Sugarloaf, Inc., a
Delaware corporation (“Tango”), organized solely for the purpose of purchasing a 50.1%
general partner interest (the “Sugarloaf Interest”) in Sugarloaf Gwinnett Entertainment
Company, L.P., a Delaware limited partnership (“Sugarloaf”). Except as set forth in
Section 3.2(a) of the Company Disclosure Schedule, Tango has no assets or
liabilities other than the Sugarloaf Interest and has no debts, obligations or liabilities,
under the limited partnership agreement of Sugarloaf or otherwise, to fund any capital calls
or make any other investments in, or loans or other payments to or on behalf of, Sugarloaf.
For purposes of this Agreement, “Subsidiary” means, with respect to any Person, (a) any
corporation with respect to which such Person, directly or indirectly, through one or more
Subsidiaries, (i) owns more than 50% of the outstanding shares of capital stock having
generally the right to vote in the election of directors or (ii) has the power, under
ordinary circumstances, to elect, or to direct the election of, a majority of the board of
directors of such corporation, (b) any partnership, other than Sugarloaf, with respect to
which (i) such Person or a Subsidiary of such Person is a general partner, (ii) such Person
and its Subsidiaries together own more than 50% of the interests therein or (iii) such
Person and its Subsidiaries have the right to appoint or elect or direct the appointment or
election of a majority of the directors or other Person or body responsible for the
governance or management thereof, (c) any limited liability company with respect to which
(i) such Person or a Subsidiary of such Person is the manager or managing member, (ii) such
Person and its Subsidiaries together own more than 50% of the interests therein or (iii)
such Person and its Subsidiaries have the right to appoint or elect or direct the
appointment or election of a majority of the
13
directors or other Person or body responsible
for the governance or management thereof or (d) any other entity in which such Person has,
and/or one or more of its Subsidiaries have, directly or indirectly, (i) at least a 50%
ownership interest or (ii) the power to appoint or elect or direct the appointment or
election of a majority of the directors or other Person or body responsible for the
governance or management thereof.
(b) Neither the Company nor any Subsidiary of the Company is a party to or member of,
or otherwise holds, any Joint Venture. With respect to the joint ventures of the Company
and the Subsidiaries of the Company that are not Joint Ventures (i) except as set forth on
Section 3.2(b) of the Company Disclosure Schedule, neither the Company nor any
Subsidiary of the Company is liable for any material obligations or material liabilities of
any such joint ventures, (ii) except as set forth on Section 3.2(b) of the Company
Disclosure Schedule, neither the Company nor any Subsidiary of the Company is obligated to
make any loans or capital contributions to, or to undertake any guarantees or obligations
with respect to, such joint ventures, (iii) none of such joint ventures own or hold any
assets that are material to the continued conduct of the business of the Company and the
Subsidiaries of the Company, taken as a whole, substantially as it is presently conducted,
(iv) except as set forth on Section 3.2(b) of the Company Disclosure Schedule,
neither the Company nor any Subsidiary of the Company is subject to any material limitation
on its right to compete or any material limitation on its right to otherwise conduct
business by reason of any agreement relating to such joint venture and (v) to the knowledge
of the Company, each joint venture is in material compliance with all applicable laws. As
used herein, “Joint Venture” shall mean those direct or indirect joint ventures of the
Company or any Subsidiary of the Company (i) that are not otherwise a direct or indirect
Subsidiary of the Company and (ii) in which the Company or any Subsidiary of the Company as
of the date of this Agreement have invested, or made commitments to invest, $10 million or
more, but “Joint Venture” and “joint venture” shall not include any entities whose
securities are held solely for passive investment purposes by the Company or any Subsidiary
of the Company. Section 3.2(b) of the Company Disclosure Schedule contains, as of
the date of this Agreement, a correct and complete list of each joint venture of the Company
or any Subsidiary of the Company that is not a Joint Venture.
SECTION 3.3. Capitalization. The authorized capital stock of the Company consists of (i)
50,000,000 shares of Company Common Stock and (ii) 10,000,000 shares of preferred stock, par value
$0.01 per share (“Company Preferred Stock”). As of the date of this Agreement: (A) 13,700,250
shares of Company Common Stock were issued and outstanding, all of which shares are duly
authorized, validly issued, fully paid, and nonassessable and free and clear from any preemptive
or other similar rights; (B) no shares of Company Preferred Stock were issued or outstanding; (C)
2,257,916 shares of Company Common Stock were reserved for issuance upon exercise of outstanding
Options under the Option Plans at a weighted average exercise price of $13.3728 per share; (D)
574,691 shares of Company Common Stock were reserved for issuance upon exercise of outstanding
Warrants; (E) 2,321,981 shares of Company Common Stock were reserved for issuance upon conversion
of outstanding 5.0% Convertible Subordinated Notes Due 2008 (the “Notes”); (F) 592,250 restricted
shares of Company Common Stock (“Restricted Stock”) were issued and outstanding under the Option
Plans; and (G) all
14
Options and Restricted Stock were granted under the Option Plans and not under
any other plan, program or agreement (other than any individual award agreements made pursuant to
the Option Plans and forms of which have been made available to Holdings). The shares of Company
Common Stock issuable pursuant to the Option
Plans, upon exercise of the Warrants and upon conversion of the Notes have been duly reserved for
issuance by the Company, and upon any issuance of such shares in accordance with the terms of the
Option Plans, Warrants or Notes, as the case may be, such shares will be duly authorized, validly
issued, fully paid and nonassessable and free and clear from any preemptive or other similar
rights. All outstanding shares of Company Common Stock are, and all shares which may be issued
prior to the Effective Time will be when issued, duly authorized, validly issued, fully paid and
nonassessable and free and clear from any preemptive or other similar rights. Except as disclosed
in Section 3.3 of the Company Disclosure Schedule, there are (i) no other options, puts,
calls, warrants or other rights, agreements, arrangements, restrictions, or commitments of any
character obligating the Company or any of its Subsidiaries to issue, sell, redeem, repurchase or
exchange any shares of capital stock of or other equity interests in the Company or any securities
convertible into or exchangeable for any capital stock or other equity interests, or any debt
securities of the Company and (ii) no bonds, debentures, notes or other indebtedness having the
right to vote on any matters on which shareholders of the Company may vote (whether or not
dependent on conversion or other trigger event). Except as disclosed in this Section 3.3
or in Section 3.3 of the Company Disclosure Schedule, there are no existing registration
covenants with respect to Company Common Stock or any other securities of the Company and its
Subsidiaries. The Company has provided to Holdings and Merger Sub a correct and complete list of
each Option, including the holder, date of grant, exercise price and number of shares of Company
Common Stock subject thereto. To the knowledge of the Company, after due inquiry, no shareholder
is a party to or holds shares of Company Common Stock bound by or subject to any voting agreement,
voting trust, proxy or similar arrangement, except for the Voting Agreement.
SECTION 3.4. Authority.
The Company has the necessary corporate power and authority to enter into this Agreement and,
subject to obtaining any necessary shareholder approval of the Merger, to carry out its obligations
hereunder. The execution and delivery of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby have been (i) duly authorized and adopted by the
unanimous vote of the Board of Directors, (ii) determined to be fair to, advisable and in the best
interests of the shareholders of the Company by the Board of Directors and (iii) duly authorized by
all necessary corporate action on the part of the Company, subject to the approval of the Merger by
the Company’s shareholders in accordance with the Missouri BCL. This Agreement has been duly
executed and delivered by the Company and constitutes a legal, valid and binding obligation of the
Company, enforceable against it in accordance with its terms, except that (i) such enforcement may
be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws,
now or hereafter in effect, relating to creditors’ rights generally and (ii) equitable remedies of
specific performance and injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor may be brought.
15
SECTION 3.5. No Conflict; Required Filings and Consents.
(a) Except as set forth in Section 3.5(a) of the Company Disclosure Schedule,
the execution and delivery of this Agreement by the Company do not, and the performance of
this Agreement by the Company and the consummation of the transactions contemplated hereby
(including completion of the Financing on the terms set forth in the Commitment Letters)
will not, (i) conflict with or violate any law, regulation, court order, judgment or decree
or Regulatory Laws applicable to the Company or any of its Subsidiaries or by which each of
their respective properties are bound or subject, (ii) violate or conflict with the Restated
Articles of Incorporation or Amended and Restated By-Laws of the Company or the comparable
charter documents or organizational documents of any of its Subsidiaries, (iii) result in
any breach of or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or terminate or cancel or give to others any rights of
termination, acceleration or cancellation of (with or without notice or lapse of time or
both), or result in the creation of a Lien on any of the properties or assets of the Company
or any of its Subsidiaries pursuant to, any of the terms, conditions or provisions of any
contract, agreement, indenture, note, bond, mortgage, deed of trust, agreement, Employee
Plan, lease or other instrument or obligation of any kind, permit, license, certificate or
franchise to which the Company or any of its Subsidiaries is a party, of which the Company
or any of its Subsidiaries is the beneficiary or by which the Company or any of its
Subsidiaries or any of their respective property is bound or subject, except, with respect
to clause (iii), for breaches, defaults, terminations, cancellations or rights of
termination, acceleration or cancellation which, in the aggregate, and assuming the exercise
of any rights of termination, acceleration or cancellation, would not reasonably be expected
to result in a Material Adverse Effect or (iv) violate any valid and enforceable judgment,
ruling, order, writ, injunction, decree, or any statute, rule or regulation applicable to
the Company or any of its Subsidiaries or by which any of their respective property is bound
or subject.
(b) Except for applicable requirements of the Exchange Act, the pre-merger notification
requirements of the HSR Act and the expiration or termination of any applicable waiting
period thereunder, and filing and recordation of appropriate Articles of Merger or other
documents as required by the Missouri BCL, and except as set forth in Section 3.5(b)
of the Company Disclosure Schedule, the Company and its Subsidiaries are not required to
prepare or submit any application, notice, report or other filing with, or obtain any
consent, authorization, approval, registration or confirmation from, any Governmental Entity
or third party in connection with the execution, delivery or performance of this Agreement
by the Company and the consummation of the transactions contemplated hereby.
SECTION 3.6. SEC Filings; Financial Statements.
(a) The Company has timely filed all forms, reports, documents, proxy statements and
exhibits required to be filed with the SEC since January 31, 2002
16
(collectively, the “SEC Reports”). Except as set forth in Section 3.6 of the
Company Disclosure Schedule, the SEC Reports (i) were prepared in accordance with the
requirements of the Securities Act or the Exchange Act, as the case may be, as in effect at
the time they were filed and (ii) did not at the time they were filed and do not, as amended
and supplemented, if applicable, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made, not
misleading. The Company has delivered to Merger Sub copies of all SEC Reports, other than
those available on the Electronic Data Gathering, Analysis, and Retrieval (XXXXX) system of
the SEC. None of the Company’s Subsidiaries is required to file any form, report, proxy
statement or other document with the SEC.
(b) Except as set forth in Section 3.6 of the Company Disclosure Schedule, the
consolidated financial statements contained in the SEC Reports complied, as of their
respective dates of filing with the SEC, and the SEC Reports filed with the SEC after the
date of this Agreement will comply as of their respective dates of filing with the SEC, in
all material respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been, and the SEC Reports filed after the
date of this Agreement will be, prepared in accordance with GAAP (except, in the case of
unaudited consolidated quarterly statements, as permitted by Form 10-Q under the Exchange
Act and except as may be indicated in the notes thereto) and fairly present, and the
financial statements contained in the SEC Reports filed after the date of this Agreement
will fairly present, the consolidated financial position of the Company and its Subsidiaries
as of the respective dates thereof and the consolidated statements of operations and cash
flows of the Company for the periods indicated, except in the case of unaudited quarterly
financial statements that were or are subject to normal and recurring non-material year-end
adjustments. There is no investigation or inquiry pending, or to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries by any Governmental
Entity in connection with revenue recognition practices, restructuring charges,
amortization, writeoffs or any other accounting matter, whether or not a restatement of
financial statements is required.
(c) Except for those liabilities and obligations that are reflected or reserved against
on the balance sheet contained in the Company’s Annual Report on Form 10-K for the year
ended January 30, 2005 (the “Company 2004 Form 10-K”) or in the footnotes to such balance
sheet, neither the Company nor any of its Subsidiaries has any material liabilities or
obligations of any nature whatsoever (whether accrued, absolute, contingent, known, unknown
or otherwise), except for liabilities or obligations incurred since January 30, 2005 in the
ordinary course of business consistent with past practice.
(d) The Company is in compliance with, and has complied, in all material respects with
the applicable provisions of the Xxxxxxxx-Xxxxx Act of 2002 and the related rules and
regulations promulgated under such act or the Exchange Act (collectively, “Xxxxxxxx-Xxxxx”).
The Company has previously made available to Holdings and Merger Sub copies of all certificates delivered by
officers and employees of
17
the Company, including the Company’s chief executive officer and
chief financial officer, to the Board of Directors or any committee thereof pursuant to the
certification requirements relating to the Company 2004 Form 10-K. The management of the
Company has (i) implemented disclosure controls and procedures (as defined in Rule 13a-15(e)
of the Exchange Act) to ensure that material information relating to the Company and its
Subsidiaries is made known to the management of the Company by others within those entities
and (ii) disclosed, based on its most recent evaluation, to the Company’s outside auditors
and the audit committee of the Board of Directors of the Company (A) all significant
deficiencies and material weaknesses in the design or operation of internal controls (as
defined in Rule 13a-15(f) of the Exchange Act) that are reasonably likely to materially
affect the Company’s ability to record, process summarize and report financial data and (B)
any fraud, whether or not material, that involves management or other employees who, in each
case, have a significant role in the Company’s internal controls.
(e) The Company has provided to Holdings and Merger Sub a draft of the Form 10-Q with respect to
the quarterly period ended October 30, 2005 (the “Draft 10-Q”) which the Company expects to file
with the SEC on or about December 8, 2005. The Draft 10-Q (i) was prepared in accordance with the
requirements of the Exchange Act, as in effect at the time it was delivered to Holdings and Merger
Sub, (ii) did not contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading and (iii) fairly presents, the
consolidated financial position of the Company and its Subsidiaries as of the date delivered and
the consolidated statements of operations and cash flows of the Company for the period indicated,
subject to normal and recurring non-material year-end adjustments.
SECTION 3.7. Absence of
Certain Changes or Events. Since January 30, 2005, except as contemplated by this Agreement or
as set forth in Section 3.7 of the Company Disclosure Schedule or in the SEC Reports filed
prior to the date of this Agreement, there has not been:
(a) any event or state of fact that, individually or in the aggregate, has had or is
reasonably likely to result in a Material Adverse Effect; or
(b) any event, action or occurrence, that, if taken after the date hereof without the
consent of Holdings and Merger Sub, would violate Section 4.1 hereof.
SECTION 3.8. Litigation. Except as disclosed in the SEC Reports filed prior to the date of this Agreement or in
Section 3.8 of the Company Disclosure Schedule, there are no claims, actions, suits,
arbitrations, grievances, proceedings or investigations pending or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries or any of their respective
properties or rights of the Company or any of its Subsidiaries or any of their respective officers
or directors in their capacity as such, before any Governmental Entity, nor any internal
investigations (other than investigations in the ordinary course of the Company’s or any of its
Subsidiaries’ compliance programs) being conducted by the Company or any of its Subsidiaries nor
have any acts of alleged misconduct by the Company or any of its Subsidiaries
18
been reported to the
Company or any of its Subsidiaries, which would reasonably be expected to result in a Material
Adverse Effect. Neither the Company nor any of its Subsidiaries nor any of their respective
properties is subject to any order, judgment, injunction or decree material to the conduct of the
businesses of the Company or its Subsidiaries.
SECTION 3.9. Employee Benefit Plans. Section 3.9 of the Company Disclosure
Schedule sets forth a list of all employee welfare benefit plans (as defined in Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”)), employee pension benefit
plans (as defined in Section 3(2) of ERISA) and all other bonus, stock option, restricted stock
grant, stock purchase, benefit, profit sharing, savings, retirement, disability, insurance,
incentive, deferred compensation and other similar fringe or employee benefit plans, programs or
arrangements sponsored, maintained, contributed to or required to be contributed to by the Company
or any other entity, whether or not incorporated, that together with the Company would be deemed a
“single employer” for purposes of Section 414 of the Code or Section 4001 of ERISA (an “ERISA
Affiliate”) for the benefit of, or relating to, any current or former employee, director or other
independent contractor of, or consultant to, the Company or any of its Subsidiaries (together, the
“Employee Plans”). The Company has delivered to Holdings and Merger Sub true and complete copies
of (i) all Employee Plans, together with all amendments thereto, (ii) the latest Internal Revenue
Service determination letters obtained with respect to any Employee Plan intended to be qualified
under Section 401(a) or 501(a) of the Code, (iii) the two most recent annual actuarial valuation
reports, if any, (iv) the two most recently filed Forms 5500 together with Schedule A and/or B
thereto, if any, (v) the “summary plan description” (as defined in ERISA), if any, and all
modifications thereto communicated to employees, and (vi) the two most recent annual and periodic
accountings of related plan assets. The Company has delivered to Holdings and Merger Sub a correct
and complete list of each Option, including the holder, date of grant, exercise price and number of
shares of Company Common Stock subject thereto. Neither the Company or any of its Subsidiaries
nor, to the knowledge of the Company, any of their respective directors, officers, employees or
agents has, with respect to any Employee Plan, engaged in or been a party to any “prohibited
transaction” (as defined in Section 4975 of the Code or Section 406 of ERISA), which could result
in the imposition of either a penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed
by Section 4975 of the Code, in each case applicable to the Company or any of its Subsidiaries or
any Employee Plan. Except as set forth in Section 3.9 of the Company Disclosure Schedule,
all Employee Plans have been approved and administered in accordance with their terms and are in
compliance in all material respects with the currently applicable requirements prescribed by all
statutes, orders, or governmental rules or regulations currently in
effect with respect to such Employee Plans, including, but not limited to, ERISA and the Code and
there are no pending or, to the knowledge of the Company, threatened claims, lawsuits or
arbitrations (other than routine claims for benefits), relating to any of the Employee Plans, or
the assets of any trust for any Employee Plan. Each Employee Plan intended to qualify under
Section 401(a) of the Code, and the trusts created thereunder intended to be exempt from tax under
the provisions of Section 501(a) of the Code, either (i) has received a favorable determination
letter from the Internal Revenue Service to such effect or (ii) is still within the “remedial
amendment period,” as described in Section 401(b) of the Code and the regulations thereunder. All
contributions or payments required to be made or accrued before
the Effective Time under the terms
of any Employee Plan will have been made by the Effective Time. Neither the Company nor any of its
ERISA Affiliates contributes, nor within the six-year period ending
19
on the date hereof has any of them contributed or been obligated to contribute, to any plan, program or agreement which is a
“multiemployer plan” (as defined in Section 3(37) of ERISA) or which is subject to Section 412 of
the Code or Section 302 or Title IV of ERISA. No Employee Plan provides medical, surgical,
hospitalization, death or similar benefits (whether or not insured) for employees or former
employees of the Company or any of its Subsidiaries for periods extending beyond their retirement
or other termination of service, other than coverage mandated by applicable law. No condition
exists that would prevent the Company or any of its Subsidiaries from amending or terminating any
Employee Plan providing health or medical benefits in respect of any active employee of the Company
or any of its Subsidiaries. Except as set forth in Section 3.9 of the Company Disclosure
Schedule, no amounts payable under any Employee Plan or otherwise will fail to be deductible to the
Company, the Surviving Corporation or their Subsidiaries for federal income tax purposes by virtue
of Section 162(m) or 280G of the Code. Except as set forth in Section 3.9 of the Company
Disclosure Schedule, the consummation of the transactions contemplated by this Agreement will not,
either alone or in combination with any other event, (i) entitle any current or former employee,
director or officer of the Company or any of its Subsidiaries to severance pay or any other
payment, (ii) accelerate the time of payment or vesting, or increase the amount of compensation due
any such employee, director or officer or (iii) require the Company to place in trust or otherwise
set aside any amounts in respect of severance pay or otherwise. The assets of the Company’s
Benefit Reserve Trust established in respect of the Company’s Select Executive Retirement Plan have
a fair market value not less than the benefit liabilities under the Company’s Select Executive
Retirement Plan and may be liquidated within three business days at such fair market value (less
normal transaction costs). The maximum amount of cash compensation and benefits that could be
payable by the Company or any Subsidiary under all Employee Plans and any other compensatory plan,
program or agreement to which the Company or any Subsidiary is a party, as a result (in whole or in
part) of the transactions contemplated by this Agreement does not exceed $17.5 million (based upon
the assumptions set forth in Section 3.9 of the Company Disclosure Schedule). No “leased
employees,” as that term is defined in Section 414(n) of the Code, perform services for the Company
or any Subsidiary. Neither the Company nor any Subsidiary has used the services of workers
provided by third party contract labor suppliers, temporary employees, such “leased employees,” or
individuals who have provided services as independent contractors to an extent that would
reasonably be expected to result in the disqualification of any Employee Plan or the imposition of
penalties or excise taxes with respect to any Employee Plan by the Internal Revenue Service, the
Department of Labor, or any other Governmental Entity. Except for determination letters issued by
the Internal Revenue Service with respect to plans intended to qualify under Section 401(a) of the
Code, neither the Company, any Subsidiary nor
any ERISA Affiliate is a party to any agreement or understanding, whether written or unwritten,
with the Internal Revenue Service, the Department of Labor or the Pension Benefit Guaranty
Corporation in regard to any Employee Plan. No representations or communications, oral or written,
with respect to the participation, eligibility for benefits, vesting, benefit accrual or coverage
under any Employee Plan have been made to current or former employees or directors (or any of their
representative
s or beneficiaries) of the Company or any Subsidiary that are not in accordance with
the terms and conditions of the Employee Plans.
SECTION 3.10. Information Supplied. None of the information to be supplied by the Company,
specifically for inclusion or incorporation by reference in the Proxy Statement will, on the date
it is first mailed to the holders of the Company Common Stock and on the date
20
of the Company
Shareholders’ Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they are made, not misleading. If, at any time prior to
the date of the Company Shareholders’ Meeting, any event with respect to the Company or any of its
Subsidiaries, or with respect to information supplied by or on behalf of the Company specifically
for inclusion in the Proxy Statement, shall occur which is required to be described in an amendment
of, or supplement to, the Proxy Statement, such event shall be so described by the Company, and
provided in writing to Merger Sub. All documents that the Company is responsible for filing with
the SEC in connection with the transactions contemplated herein, to the extent relating to the
Company or its Subsidiaries or other information supplied by the Company for inclusion therein,
will comply as to form, in all material respects, with the provisions of the Exchange Act and the
respective rules and regulations thereunder, and each such document required to be filed with any
Governmental Entity will comply in all material respects with the provisions of applicable law as
to the information required to be contained therein. Notwithstanding the foregoing, the Company
makes no representation or warranty with respect to the information supplied or to be supplied by
either Merger Sub or Holdings for inclusion in the Proxy Statement.
SECTION 3.11. Conduct of Business; Permits. Except as disclosed in the SEC Reports filed
prior to the date of this Agreement or in Section 3.11 of the Company Disclosure Schedule,
the business of the Company and each of its Subsidiaries is not being (and since January 1, 2002
has not been) conducted in default or violation of any term, condition or provision of (i) the
Restated Articles of Incorporation or Amended and Restated By-Laws of the Company or the comparable
charter documents or by-laws of any of its Subsidiaries, (ii) any note, bond, mortgage, indenture,
contract, agreement, lease or other instrument or agreement of any kind to which the Company or any
of its Subsidiaries is now a party or by which the Company or any of its Subsidiaries or any of
their respective properties or assets may be bound, or (iii) any federal, state, county, regional,
municipal, local or foreign statute, law, ordinance, rule, regulation, judgment, decree, order,
concession, grant, franchise, permit or license or other governmental authorization or approval
applicable to the Company or any of its Subsidiaries or their respective businesses, including,
without limitation, Regulatory Laws, except, with respect to the foregoing clauses (ii) and (iii),
defaults or violations that would not, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Effect. The material permits, licenses, approvals, certifications and
authorizations from any Governmental Entity, including, without limitation, those obtained
under Regulatory Laws (collectively, “Permits”) held by the Company and each of its Subsidiaries
are valid and sufficient in all material respects for all business presently conducted by the
Company and its Subsidiaries. Except as set forth on Section 3.11 of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries has received any written claim
or notice nor has any knowledge indicating that the Company or any of its Subsidiaries is not in
compliance with the terms of any such Permits and with all requirements, standards and procedures
of the Governmental Entity which issued them, or any limitation or proposed limitation on any
Permit, except where the failure to be in compliance would not reasonably be expected to result in
a Material Adverse Effect. Except as set forth on Section 3.11 of the Company Disclosure
Schedule, none of the Permits will lapse, terminate or otherwise cease to be valid as a result of
the consummation of the transactions contemplated hereby.
21
SECTION 3.12. Taxes.
(a) Except as set forth in Section 3.12 of the Company Disclosure Schedule:
(i) each of the Company and its Subsidiaries has duly and timely filed
all Tax Returns required to be filed by it, and all such Tax Returns are
true, correct and complete except as would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect;
(ii) each of the Company and its Subsidiaries has timely paid all Taxes
required to be paid by it (whether or not shown due on any Tax Return),
except as would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect;
(iii) each of the Company and its Subsidiaries has made adequate
provision in the financial statements of the Company (in accordance with
GAAP) for all Taxes of the Company and its Subsidiaries not yet due, except
as would not, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Effect;
(iv) each of the Company and its Subsidiaries has complied with all
applicable Laws relating to the payment and withholding of Taxes and has,
within the time and manner prescribed by Law, withheld and paid over to the
proper tax authorities all amounts required to be withheld and paid over by
it, except as would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect;
(v) no pending or threatened audit, proceeding, examination or
litigation or similar claim has been commenced or is presently pending with
respect to the Company or any of its Subsidiaries, except as would not,
individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect; and
(vi) no written claim has been made by any tax authority in a
jurisdiction where the Company and its Subsidiaries does not file a Tax
Return that any of the Company or any of its Subsidiaries is or may be
subject to taxation in that jurisdiction which would, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect.
22
(b) Neither the Company nor any of its Subsidiaries has engaged in any transaction that
gives rise to (A) a registration obligation under Section 6111 of the Code or the Treasury
Regulations thereunder, (B) a list maintenance obligation under Section 6112 of the Code or
the Treasury Regulations thereunder, or (C) a disclosure obligation as a “reportable
transaction” under Section 6011 of the Code and the Treasury Regulations thereunder.
(c) There are no Liens for Taxes upon the assets or properties of any of the Company or
its Subsidiaries, except for Liens which arise by operation of Law with respect to current
Taxes not yet due and payable.
(d) Except as would not, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Effect, neither the Company nor any of its Subsidiaries will be
required to include any item of income in, or exclude any item of deduction from, taxable
income for any taxable period (or portion thereof) ending after the Closing Date as a result
of any (A) change in method of accounting for a taxable period ending on or prior to the
Closing Date, or (B) “closing agreement,” as described in Section 7121 of the Code (or any
corresponding provision of state, local or foreign Law), entered into on or prior to the
Closing Date, or (C) any ruling received from the Internal Revenue Service.
(e) The Company has previously delivered or made available to Holdings or Merger Sub
complete and accurate copies of each of (i) all audit reports, letter rulings, technical
advice memoranda, and similar documents issued by any tax authority relating to the United
States Federal, state, local or foreign Taxes due from or with respect to the Company and
its Subsidiaries and (ii) any closing agreements entered into by any of the Company and its
Subsidiaries with any tax authority in each case existing on the date hereof.
(f) Neither the Company nor any of its Subsidiaries is or has been a United States real
property holding corporation (as defined in Section 897(c)(2) of the Code) during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(g) Neither the Company nor any of its Subsidiaries has constituted a “distributing
corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of
the Code) in a distribution of stock to which Section 355 of the Code (or so much of Section
356 of the Code as relates to Section 355 of the Code) applies and which occurred within two
years of the date of this Agreement.
23
SECTION 3.13. Environmental Matters.
(a) Except as set forth in Section 3.13(a) of the Company Disclosure Schedule,
the Company and each of its Subsidiaries is in compliance with all applicable Environmental
Laws (which compliance includes, but is not limited to, the possession by the Company and
each of its Subsidiaries of all permits and other governmental authorizations required under
applicable Environmental Laws, and compliance with the terms and conditions thereof), except
where failure to be in compliance would not reasonably be expected to result in a Material
Adverse Effect. Neither the Company nor any of its Subsidiaries has received any written
communication, whether from a Governmental Entity, citizens group, employee or otherwise,
alleging that the Company or any of its Subsidiaries is not in such compliance, and there
are no past or present actions, activities, circumstances, conditions, events or incidents
that are reasonably likely to prevent or interfere with such compliance in the future, in
each case which would reasonably be expected to result in a Material Adverse Effect.
(b) Except as set forth in Section 3.13(b) of the Company Disclosure Schedule,
there is no Environmental Claim pending or, to the best knowledge of the Company,
threatened, against the Company or any of its Subsidiaries or, to the best knowledge of the
Company, against any Person whose liability for any Environmental Claim the Company or any
of its Subsidiaries has or may have retained or assumed either contractually or by operation
of law, in each case which would reasonably be expected to result in a Material Adverse
Effect.
(c) Except as set forth in Section 3.13(c) of the Company Disclosure Schedule,
there are no past or present actions, activities, circumstances, conditions, events or
incidents, including, without limitation, the Release or presence of any Hazardous Material
which could form the basis of any Environmental Claim against the Company or any of its
Subsidiaries, or to the best knowledge of the Company, against any Person whose liability
for any Environmental Claim the Company has or may have retained or assumed either
contractually or by operation of law, in each case which would reasonably be expected to
result in a Material Adverse Effect.
(d) Except as set forth in Section 3.13(d) of the Company Disclosure Schedule,
the Company has delivered to Holdings and Merger Sub true, complete and correct copies and
results of any reports, studies, analyses, tests or monitoring possessed by the Company or
any of its Subsidiaries which have been prepared since January 1, 2002 pertaining to
Hazardous Materials in, on, beneath or adjacent to any property currently or formerly owned,
operated, occupied or leased by the Company or any of its Subsidiaries, or regarding the
Company’s or any of its Subsidiaries’ compliance with applicable Environmental Laws.
24
SECTION 3.14. Title to Assets; Liens.
(a) Leased Real Property. Set forth in Section 3.14(a) of the Company
Disclosure Schedule is a list of all real property leased by the Company or any of its
Subsidiaries. Each of the leases relating to Leased Real Property is a valid and subsisting
leasehold interest of the Company or any of its Subsidiaries. Except as disclosed on
Section 3.14(a) of the Company Disclosure Schedule, each Leased Real Property is
free of subtenancies and other occupancy rights and Liens (other than Permitted Liens), and
is a valid and binding obligation of the Company or any of its Subsidiaries, enforceable
against the Company or any of its Subsidiaries in accordance with its terms.
(b) Owned Real Property. Set forth in Section 3.14(b) of the Company
Disclosure Schedule is a complete list of all real property and interests in real property
owned in fee simple by the Company or any of its Subsidiaries (the “Owned Real Property”).
The Company or a Subsidiary of the Company has good, valid and marketable fee simple title
to the Owned Real Property. Except as disclosed on Section 3.14(b) of the Company
Disclosure Schedule, each Owned Real Property is free and clear of any Lien, except
Permitted Liens.
(c) For purposes of this Agreement, “Leased Real Property” shall mean the leasehold or
subleasehold interests and any other rights to use or occupy any land, buildings,
structures, improvements, fixtures or other interests in real property held by the Company
or any of its Subsidiaries under the Real Property Leases.
(d) For purposes of this Agreement, “Permitted Liens” shall mean: (i) liens for current
Taxes that are not yet due or delinquent or are being contested in good faith by appropriate
proceedings and for which adequate reserves have been taken on the financial statements
contained in the SEC Reports; (ii) statutory liens or landlords’, carriers’, warehousemen’s,
mechanics’, suppliers’, materialmen’s, repairmen’s liens or other like Liens arising in the
ordinary course of business with respect to amounts not yet overdue or are being contested
in good faith by appropriate proceedings and for which adequate reserves have been taken on
the financial statements contained in the SEC Reports; (iii) with respect to the Real
Property, minor title defects or irregularities that do not, individually or in the aggregate, materially impair the
value or use of such property, the consummation of this Agreement or the operations of the
Company and its Subsidiaries; (iv) as to any Leased Real Property, any Lien affecting solely
the interest of the landlord thereunder and not the interest of the tenant thereunder, which
does not materially impair the value or use of such Leased Real Property; and (v) Liens
securing indebtedness of the Company under the Credit Agreement, which will be retired in
connection with the transactions contemplated hereby.
(e) For purposes of this Agreement, “Real Property” shall mean the Leased Real Property
and the Owned Real Property.
25
(f) For purposes of this Agreement, “Real Property Leases” shall mean the real property
leases, subleases, licenses or other agreements, including all amendments, extensions,
renewals, guaranties or other agreements with respect thereto, pursuant to which the Company
or any of its Subsidiaries is a party.
(g) Each of the Company and its Subsidiaries has good and marketable fee title to, or,
in the case of leased assets, has good and valid leasehold interests in, all of its tangible
and intangible assets, real, personal and mixed, used or held for use in, or which are
necessary to conduct, the respective business of the Company and its Subsidiaries as
currently conducted, free and clear of any Liens, except Permitted Liens.
SECTION 3.15. Real Property.
(a) Except as set forth in Section 3.15(a) of the Company Disclosure Schedule,
all buildings, structures, fixtures, building systems and equipment included in the Real
Property (the “Structures”) are in reasonably good condition and repair in all material
respects and sufficient for the operation of the business of the Company, subject to
reasonable wear and tear and subject to replacements and upgrades of fixed assets consistent
with the Company’s capital expenditures budget and in the ordinary course of business.
There are no facts or conditions affecting any of the Structures which would interfere in
any material respect with the use or occupancy of the Structures or any portion thereof in
the operation of the business of the Company.
(b) Except as set forth in Section 3.15(b)(i) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries has leased or otherwise granted to
any Person (other than pursuant to this Agreement) any right to occupy or possess or
otherwise encumber any portion of the Real Property other than in the ordinary course of
business. Except as set forth in Section 3.15(b)(ii) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries has vacated or abandoned any
portion of the Real Property or given notice to any third party of their intent to do the same.
(c) Except as set forth on Section 3.15 of the Company Disclosure Schedule,
neither the Company nor any of its Subsidiaries is a party to or obligated under any option,
right of first refusal or other contractual right to sell, dispose of or lease any of the
Real Property or any portion thereof or interest therein to any Person (other than pursuant
to this Agreement). Neither the Company nor any of its Subsidiaries is a party to any
agreement or option to purchase any real property or interest therein.
(d) Except as set forth on Section 3.15 of the Company Disclosure Schedule,
neither the Company nor any applicable Subsidiary has received notice of or has knowledge of
an expropriation or condemnation proceeding pending, threatened or proposed against the Real
Property.
26
(e) The present use of the land and Structures on the Real Property are in conformity
in all material respects with all applicable laws, rules, regulations and ordinances,
including, without limitation, all applicable zoning laws, ordinances and regulations and
with all registered deeds, restrictions of record or other agreements affecting such Real
Property, and the Company has no knowledge of any proposed change therein that would so
affect any of the Real Property or its use and the Company has no knowledge of any violation
thereof. To the Company’s or any applicable Subsidiary’s knowledge, there exists no
conflict or dispute with any regulatory authority or other Person relating to any Real
Property or the activities thereon which would be reasonably likely to result in a Material
Adverse Effect. No damage or destruction has occurred with respect to any of the Real
Property that would reasonably be expected to result in a Material Adverse Effect.
(f) With respect to the Leased Real Property:
(i) except as disclosed on Section 3.15(f)(i) of the Company
Disclosure Schedule, true, correct and complete copies of the Real Property
Leases have been delivered to Holdings and Merger Sub prior to the date
hereof and such Real Property Leases have not been amended or modified since
that date;
(ii) (A) there are no material disputes with respect to each Real
Property Lease; and (B) except as disclosed on Section 3.15(f)(ii)
of the Company Disclosure Schedule, neither the Company, nor, to the
knowledge of the Company, any other party to each Real Property Lease is in
breach or default under such Real Property, and no event has occurred or
failed to occur or circumstance exists which, with the delivery of notice,
the passage of time or both, would constitute such a breach or
default, or permit the termination, modification or acceleration of
rent under such Real Property Lease;
(iii) except as disclosed on Section 3.15(f)(iii) of the
Company Disclosure Schedule, no consent by the landlord under the Real
Property Leases is required in connection with the consummation of the
transaction contemplated herein;
(iv) except as disclosed on Section 3.15(f)(iv) of the Company
Disclosure Schedule the Company or a Subsidiary of the Company has
non-disturbance agreements with the landlord’s lender with respect to each
Real Property Lease;
27
(v) none of the Leased Real Property has been pledged or assigned by
the Company or any of its Subsidiaries or is subject to any Liens (other
than pursuant to this Agreement or Permitted Liens);
(vi) Section 3.15(f)(vi) of the Company Disclosure Schedule
sets forth a summary of all construction allowances payable under the Real
Property Leases and the amounts thereof which, as of the date hereof, have
been drawn by the Company or any of its Subsidiaries; and
(vii) the Company does not owe, nor will it owe in the future, any
brokerage commissions or finder’s fees with respect to any Real Property
Lease which have not been accrued or reserved for in the Company’s financial
statements.
(g) Set forth in Section 3.15(g) of the Company Disclosure Schedule is a list
of all construction and material alteration projects currently ongoing with respect to any
Real Property (the “Construction Projects”). The Construction Projects are proceeding in a
workmanlike fashion in compliance in all material respects with all applicable laws, rules,
regulations and ordinances, and, to the Company’s knowledge, there are no facts or
conditions affecting any of the Construction Projects which would interfere in any
significant respect with the completion of the Construction Projects, or the use, occupancy
or operation thereof, which interference would reasonably be expected to result in a
Material Adverse Effect. No Construction Project or portion thereof is dependent for its
access, operation or utility on any land, building or other improvement not included in the
Real Property.
SECTION 3.16. Intellectual Property.
(a) Section 3.16 of the Company Disclosure Schedule sets forth a true, correct
and complete list of all material U.S. and foreign (i) issued Patents and Patent
applications, (ii) Trademark registrations and applications, (iii) Copyright registrations
and applications and (iv) Software, in each case, which is owned by the Company or its
Subsidiaries. The Company or one of its Subsidiaries is the sole and exclusive beneficial
and record owner of all of the material Intellectual Property Rights set forth in
Section 3.16 of the Company Disclosure Schedule, and all such Intellectual Property
Rights are subsisting, valid, and enforceable.
(b) The Company and its Subsidiaries own or have a valid right to use, free and clear
of all Liens, all Intellectual Property Rights necessary, or used or held for use in
connection with the business of the Company and its Subsidiaries, taken as a whole, except
where the failure to so own or have a valid right to use such Intellectual Property Rights,
individually or in the aggregate, would not reasonably be expected to result in a Material
Adverse Effect.
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(c) Neither the Company nor any of its Subsidiaries has infringed, misappropriated or
violated in any material respect any Intellectual Property Rights of any third party, and
there has been no such claim asserted or, to the knowledge of the Company, threatened since
January 1, 2002, against the Company or any of its Subsidiaries, except where such
infringements, misappropriations or violations, individually or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect.
(d) Except as set forth in Section 3.16(d), of the Company Disclosure Schedule,
to the Company’s knowledge, no third Person has infringed, misappropriated or violated any
Intellectual Property Rights owned or exclusively licensed by or to the Company or any of
its Subsidiaries, and neither the Company nor any of its Subsidiaries has asserted or
threatened such a claim against any Person since January 1, 2002, except where such
infringements, misappropriations or violations, individually or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect.
(e) As used herein, “Intellectual Property Rights” means all U.S. and foreign (i)
patents, patent applications, patent disclosures, and all related continuations,
continuations-in-part, divisionals, reissues, re-examinations, substitutions, and extensions
thereof (“Patents”), (ii) trademarks, service marks, trade names, domain names, logos,
slogans, trade dress, and other similar designations of source or origin, together with the
goodwill symbolized by any of the foregoing (“Trademarks”), (iii) copyrights and
copyrightable subject matter (“Copyrights”), (iv) rights of publicity, (v) computer programs
(whether in source code, object code, or other form), databases,
compilations and data, technology supporting the foregoing, and all documentation,
including user manuals and training materials, related to any of the foregoing (“Software”),
(vi) trade secrets and all confidential information, know-how, inventions, proprietary
processes, formulae, models, and methodologies, (vii) all rights in the foregoing and in
other similar intangible assets, (viii) all applications and registrations for the foregoing
and (ix) all rights and remedies against infringement, misappropriation, or other violation
thereof.
SECTION 3.17. Material Contracts.
(a) Except as set forth in the SEC Reports filed prior to the date of this Agreement or
in Section 3.17 of the Company Disclosure Schedule, neither the Company nor any of
its Subsidiaries is a party to or bound by:
(i) any “material contract” (as defined in Item 601(b) (10) of
Regulation S-K of the SEC);
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(ii) any contract or agreement for the purchase of materials or
personal property from any supplier or for the furnishing of services to the
Company or any of its Subsidiaries that involves future aggregate annual
payments by the Company or any of its Subsidiaries of $250,000 or more;
(iii) any contract or agreement for the sale, license or lease (as
lessor) by the Company or any of its Subsidiaries of services, materials,
products, supplies or other assets, owned or leased by the Company or any of
its Subsidiaries, that involves future aggregate annual payments to the
Company or any of its Subsidiaries of $250,000 or more;
(iv) any contract, agreement or instrument relating to or evidencing
indebtedness for borrowed money of the Company or any of its Subsidiaries in
the amount of $50,000 or more;
(v) any non-competition agreement or any other agreement or
obligation which purports to limit in any material respect the manner in
which, or the localities in which, the business of the Company or any of its
Subsidiaries may be conducted;
(vi) any voting or other agreement governing how any shares of Company
Common Stock shall be voted other than the Voting Agreement; or
(vii) any contract, agreement or arrangement to allocate, share or
otherwise indemnify for Taxes.
The foregoing contracts and agreements to which the Company or any of its Subsidiaries is a
party or are bound are collectively referred to herein as “Company Material Contracts.”
(b) Each Company Material Contract is valid and binding on the Company or one of its
Subsidiaries and is in full force and effect, and the Company or one of its Subsidiaries as
applicable, has performed all obligations required to be performed by it to date under each
Company Material Contract, except where such noncompliance would not reasonably be expected
to result in a Material Adverse Effect. The Company has not violated, defaulted under or
terminated, nor has the Company given or received notice of, any violation, default or
termination under (nor, to the knowledge of the Company, does there exist any condition
which with the passage of time or the giving of notice or both would result in such a
violation, default or termination under) any Company Material Contract, except where such
violations, defaults or terminations would not reasonably be expected to result in a
Material Adverse Effect.
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SECTION 3.18. Brokers. Except for the Persons set forth on Section 3.18 of the
Company Disclosure Schedule, no broker, finder or investment banker is entitled to any brokerage,
finder’s or other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company. The Company has delivered
to Holdings and Merger Sub true and complete information concerning the financial and other
arrangements between the Company and its Subsidiaries and the persons set forth on Section
3.18 of the Company Disclosure Schedule pursuant to which such firm(s) would be entitled to any
payment as a result of the transactions contemplated hereby.
SECTION 3.19. Board Action. The Board of Directors, at a meeting duly called and held, at
which all of the directors were present, duly and unanimously: (i) approved and adopted this
Agreement and the transactions contemplated hereby, including the Merger; (ii) resolved to
recommend that this Agreement and the transactions contemplated hereby, including the Merger, be
submitted for consideration by the Company’s shareholders at the Company Shareholders’ Meeting;
(iii) resolved to recommend that the shareholders of the Company approve this Agreement and the
transactions contemplated hereby, including the Merger; and (iv) determined that this Agreement and
the transactions contemplated hereby, including the Merger, are fair to, advisable and in the best
interests of the shareholders of the Company.
SECTION
3.20. Opinion of Financial Advisor. The Company has received the written opinion of Xxxxx Xxxxxxx & Co., the Company’s sole
financial advisor, dated December 8, 2005, to the effect that, as of the date hereof, the Merger
Consideration to be received by the Company’s shareholders as provided herein is fair to such
shareholders from a financial point of view. The Company has delivered a copy of the written
opinion to Holdings and Merger Sub.
SECTION 3.21. Control Share Acquisition. The Company has taken all actions necessary and
within its authority such that no restrictive provision of any “fair price,” “moratorium,” “control
share acquisition,” “business combination,” “shareholders protection,” “interested shareholder” or
other similar anti-takeover statute or regulation (including, without limitation, Sections 351.407
and 351.459 of the Missouri BCL) (each, a “Takeover Statute”) or restrictive provision of any
applicable provision in the Restated Articles of Incorporation or Amended and Restated By-Laws of
the Company or comparable charter documents and By-laws of any of its Subsidiaries is, or at the
Effective Time will be, applicable to the Company, its Subsidiaries, Holdings, Merger Sub, Company
Common Stock, the Merger or any other transaction contemplated by this Agreement or the Voting
Agreement.
SECTION 3.22. Rights Agreement. The rights to purchase shares of Series A Junior
Participating Preferred Stock of the Company, issued pursuant to a Rights Agreement, dated June 16,
1995, as amended, by and between the Company and Boatmen’s Trust Company, expired in accordance
with their terms on June 15, 2005.
SECTION 3.23. Vote Required. The affirmative vote of the holders of two-thirds of the
outstanding shares of Company Common Stock is the only vote of the Company’s
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shareholders necessary (under applicable law or otherwise), to approve this Agreement, and the transactions contemplated
by this Agreement, including the Merger (the “Company Shareholder Approval”).
SECTION 3.24. Insurance. Each of the Company and its Subsidiaries maintains insurance
policies (the “Insurance Policies”) against all risks of a character and in such amounts as are
usually insured against by similarly situated companies in the same or similar businesses. Each
Insurance Policy is in full force and effect and is valid, outstanding and enforceable, and all
premiums due thereon have been paid in full. None of the Insurance Policies will terminate or
lapse (or be affected in any other materially adverse manner) by reason of the transactions
contemplated by this Agreement. Each of the Company and its Subsidiaries has complied in all
material respects with the provisions of each Insurance Policy under which it is the insured party.
No insurer under any Insurance Policy has cancelled or generally disclaimed liability under any
such policy or, to the Company’s knowledge, indicated any intent to do so or not to renew any such
policy. All material claims under the Insurance Policies have been filed in a timely fashion.
Since the Company’s formation, there have been no historical gaps in insurance coverage of the
Company or any of its Subsidiaries.
SECTION 3.25. Suppliers. Set forth in Section 3.25 of the Company Disclosure
Schedule is a list of the ten largest suppliers of the Company on a consolidated basis based on the
dollar value of materials, products or services purchased by the Company or any of its Subsidiaries
for the fiscal year ended January 30, 2005. Since such date, there has not been, nor as a result
of the Merger is there anticipated to be, any change in relations with any of the major suppliers
of the Company or its Subsidiaries that, individually or in the aggregate, would reasonably be
expected to result in a Material Adverse Effect. The existing suppliers of the Company and its
Subsidiaries are adequate for the operation of the Company’s business as operated on the date
hereof.
SECTION 3.26. Collective Bargaining; Labor Disputes; Compliance. There are no collective
bargaining agreements to which the Company or any of its Subsidiaries is a party or under which it
is bound. The employees of the Company and its Subsidiaries are not represented by any unions.
Neither the Company nor any of its Subsidiaries is currently, nor has been during the past three
years, the subject of any union organizing campaign or drive. Neither the Company nor any of its
Subsidiaries is currently, nor has been during the past five years, the subject of any strike,
dispute, walk-out, work stoppage, slow down or lockout involving the Company or any of its
Subsidiaries nor, to the knowledge of the Company after due inquiry, is any such activity
threatened. Except as set forth on Section 3.26 of the Company Disclosure Schedule, there
are no employment agreements, severance agreements or severance plans or other documents,
arrangements or understandings (whether written or oral) requiring the payment (or setting aside)
of any amounts or the providing of any benefits (or acceleration, continuation or modification
thereof) to any of the Company’s or its Subsidiaries directors, officers or employees in the event
of a termination of employment (with or without cause) or as a result of entering into this
Agreement or the consummation of the transactions contemplated hereby. Except as would not
reasonably be expected to result in a Material Adverse Effect, (i) each of the Company and each of
its Subsidiaries has complied with all laws relating to the employment and safety of labor,
including the National Labor Relations Act and other provisions relating to wages, hours, benefits,
collective bargaining and all applicable occupational safety
32
and health acts and laws, (ii) neither the Company nor any of its Subsidiaries has engaged in any unfair labor practice or discriminated
on the basis of race, age, sex, disability or any other protected category in its employment
conditions or practices with respect to its employees, customers or suppliers, and (iii) no action,
suit, complaint, charge, grievance, arbitration, employee proceeding or investigation by or before
any Governmental Entity brought by or on behalf of any employee, prospective employee, former
employee, retired employee, labor organization or other representative of the Company’s and its
Subsidiaries’ employees is pending or, to the knowledge of the Company after due inquiry,
threatened against the Company or any of its Subsidiaries, except as disclosed in Section
3.26 of the Company Disclosure Schedule. Neither the Company nor any of its Subsidiaries is a
party to or otherwise bound by any consent decree with or citation by any Governmental Entity
relating to the Company’s or its Subsidiaries’ employees or employment practices relating to the
Company’s or its Subsidiaries’ employees. The Company and its Subsidiaries are and have been in
compliance with all notice and other requirements under the Worker Adjustment and Retraining
Notification Act of 1988 (the “WARN Act”) and any similar foreign, state or local law relating to plant closings and layoffs.
Except as set forth on Section 3.26 of the Company Disclosure Schedule, none of the
employees of the Company and any of its Subsidiaries has suffered an “employment loss” (as defined
in the WARN Act) within the three month period prior to the date of this Agreement.
SECTION 3.27. Investment Company. Neither the Company nor any Subsidiary of the Company is
an “investment company” as defined under the Investment Company Act of 1940, as amended.
SECTION 3.28. Transactions with Affiliates.
(a) All transactions, agreements, arrangements or understandings between the Company or
any of its Subsidiaries, on the one hand, and the Company’s affiliates (other than
wholly-owned subsidiaries of the Company) or other Persons, on the other hand (an “Affiliate
Transaction”), that are required to be disclosed in the SEC Reports in accordance with Item
404 of Schedule S-K under the Securities Act have been so disclosed. There have been no
Affiliate Transactions that are required to be disclosed under the Exchange Act pursuant to
Item 404 of Schedule S-K under the Securities Act which have not already been disclosed in
the SEC Reports.
(b) Any Affiliate Transaction at the time it was entered into and as of the time of any
amendment or renewal thereof contained such terms, provisions and conditions as were at
least as favorable to the Company or any of its Subsidiaries as would have been obtainable
by the Company or any of its Subsidiaries in a similar transaction with an unaffiliated
third party.
SECTION 3.29. Absence of Restrictions on Business Activities. Except as set forth in
Section 3.29 of the Company Disclosure Schedule, there is no agreement, judgment,
injunction, ruling, decree or order of any Governmental Entity binding upon the Company or any of
its Subsidiaries or any of their assets or properties which has had or could reasonably be expected
to have the effect of prohibiting or impairing any business practice of the Company or
33
any of its Subsidiaries or the conduct of business by the Company or any of its Subsidiaries as currently
conducted or as proposed to be conducted by the Company or any of its Subsidiaries, except for
impairments or impositions that are not material to the conduct of the business of the Company or
any of its Subsidiaries. Except as set forth in Section 3.29 of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries is subject to any non-competition,
non-solicitation or similar restriction on their respective businesses.
SECTION 3.30. Letters of Credit, Surety Bonds, Guarantees. Section 3.30 of the
Company Disclosure Schedule sets forth, as of the date hereof, all standby letters of credit,
performance or payment bonds, guarantee arrangements and surety bonds of any nature involving
amounts in excess of $100,000 relating to the Company or any of its
Subsidiaries and the aggregate amount of all such instruments as of the date is set forth on
Section 3.30 of the Company Disclosure Schedule.
SECTION 3.31. Certain Business Practices. As of the date hereof, neither the Company nor
any of its Subsidiaries nor any director, officer, employee or agent of the Company or any of its
Subsidiaries has (a) used any funds for unlawful contributions, gifts, entertainment or other
unlawful payments relating to political activity, (b) made any unlawful payment to any foreign or
domestic government official or employee or to any foreign or domestic political party or campaign
or violated any provision of the Foreign Corrupt Practices Act of 1977, as amended, (c) consummated
any transaction, made any payment, entered into any agreement or arrangement or taken any other
action in violation of Section 1128B (b) of the Social Security Act, as amended, or (d) made any
other unlawful payment.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 4.1. Conduct of Business by the Company Pending the Merger. The Company covenants
and agrees on behalf of itself and its Subsidiaries that, between the date of this Agreement and
the Effective Time, unless Holdings and Merger Sub shall otherwise consent in writing, the
businesses of the Company and its Subsidiaries shall be conducted only in, and the Company shall
not, and the Company shall not permit any of its Subsidiaries to, take any action except (i) in the
ordinary course of business and in a manner consistent with past practice and (ii) as set forth in
Section 4.1 of the Company Disclosure Schedule; and the Company will use its reasonable
best efforts to preserve substantially intact the business organization of the Company and its
Subsidiaries, to keep available the services of the present officers, employees and consultants of
the Company and its Subsidiaries and to preserve the present relationships of the Company and its
Subsidiaries with customers, suppliers and other Persons with which the Company and its
Subsidiaries have significant business relations and to maintain the Real Property and other
material assets of the Company in good repair, order and condition (subject to normal wear and
tear) consistent with current needs, replace the Company’s inoperable, worn out or obsolete assets
with assets of good quality consistent with past practices and current needs and, in the event of a
casualty, loss or damage to any of such assets or properties prior to the Closing Date, whether or
not the Company is insured, either repair or replace such damaged property to the condition it was
in immediately prior to such casualty, loss or damage, and pay all applicable Taxes when due and
payable. The Company covenants and agrees on behalf of itself and its
34
Subsidiaries that the
outstanding indebtedness under the revolving portion of the Company’s Credit Agreement shall not
exceed $10,000,000 immediately prior to the Effective Time. Without limiting the generality of the
foregoing, except as (x) expressly contemplated by this Agreement or (y) set forth in Section
4.1 of the Company Disclosure Schedule, the Company shall not, and shall not permit any of its
Subsidiaries, without the prior written consent of Holdings and Merger Sub, to:
(a) amend (i) its Restated Articles of Incorporation or Amended and Restated By-Laws or
comparable charter and organizational documents or (ii) any
material term of any outstanding security issued by the Company or any of its
Subsidiaries;
(b) (i) declare, set aside or pay any dividend or other distribution payable in cash,
stock or property with respect to its capital stock (other than dividends paid by
wholly-owned Subsidiaries of the Company to the Company or another wholly-owned Subsidiary
of the Company), (ii) redeem, purchase or otherwise acquire, directly or indirectly, any of
its capital stock or other securities, (iii) issue, sell, pledge, dispose of or encumber any
(A) shares of its capital stock, (B) securities convertible into or exchangeable for, or
options, warrants, calls, commitments or rights of any kind to acquire, any shares of its
capital stock or (C) other securities of the Company or any of its Subsidiaries, other than
(1) shares of Company Common Stock issued upon (x) the exercise of Options outstanding on
the date hereof in accordance with the Option Plans as in effect on the date hereof, (y) the
exercise of Warrants outstanding on the date hereof in accordance with the Warrant Agreement
or (z) the conversion of Notes outstanding on the date hereof in accordance with the terms
thereof and (2) newly issued securities of Subsidiaries may be pledged to the lenders under
the Credit Agreement in accordance with the terms thereof or (iv) split, combine or
reclassify any of its outstanding capital stock or issue or authorize or propose the
issuance of any of other securities in respect of, in lieu of or in substitution for, shares
of its capital stock;
(c) acquire or agree to acquire (i) by merging or consolidating with, or by purchasing
a substantial portion of the equity interests of, or by any other manner, any business or
any corporation, partnership, joint venture, association or other business organization or
division thereof or (ii) any assets, including real estate, except, with respect to clause
(ii) above, purchases of inventory, equipment and supplies in the ordinary course of
business consistent with past practice;
(d) except in the ordinary course of business consistent with past practice, amend,
enter into or terminate any Company Material Contract, or waive, release or assign any
material rights or claims thereunder;
(e) transfer, lease, license, sell, mortgage, pledge, dispose of, encumber or subject
to any Lien any property or assets or cease to operate any assets, other than
35
sales of excess or obsolete assets and sales of inventory and changes in amusement games in the
ordinary course of business consistent with past practice;
(f) (i) enter into, amend or terminate any employment or severance agreement with or,
except in accordance with the existing obligations of the Company or any of its
Subsidiaries, grant any severance or termination pay to, any officer or director of the
Company or any of its Subsidiaries or (ii) hire or agree to hire any new or additional
officers at the Senior Vice President level or above;
(g) except as required to comply with applicable law, (i) adopt, enter into, terminate,
amend or increase the amount or accelerate the payment or vesting of any benefit or award or
amount payable under any Employee Plan or other arrangement for the current or future
benefit or welfare of any director, officer or employee, other than in the case of employees
who are not officers or directors in the ordinary course of business consistent with past
practice, (ii) increase in any manner the compensation or fringe benefits of, or pay any
bonus to, any director or, other than in the ordinary course of business consistent with
past practice, officer or other employee, (iii) other than benefits accrued through the date
hereof and other than in the ordinary course of business for employees other than officers
or directors of the Company, pay any benefit not provided for under any Employee Plan, (iv)
other than bonuses earned through the date hereof and other than in the ordinary course of
business consistent with past practice for employees other than officers and directors,
grant any awards under any bonus, incentive, performance or other compensation plan or
arrangement or Employee Plan; provided that there shall be no grant or award
to any director, officer or employee of stock options, restricted stock, stock appreciation
rights, stock based or stock related awards, performance units, units of phantom stock or
restricted stock, or any removal of existing restrictions in any Employee Plan or agreements
or awards made thereunder or (v) take any action to fund or in any other way secure the
payment of compensation or benefits under any employee plan, agreement, contract or
arrangement or Employee Plan;
(h) (i) incur or assume any indebtedness, subject to the provisions of the second
sentence of Section 4.1 above, (ii) incur or modify any material indebtedness or other
liability, (iii) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any other Person,
except in the ordinary course of business and consistent with past practice or (iv) except
for advances or prepayments in the ordinary course of business in amounts consistent with
past practice, make any loans, advances or capital contributions to, or investments in, any
other Person (other than customary loans or advances to employees in accordance with past
practice);
(i) change any accounting policies or procedures (including procedures with respect to
reserves, revenue recognition, payments of accounts payable and collection of accounts
receivable) used by it unless required by a change in applicable law or GAAP;
36
(j) make any change to any of its tax accounting principles or practices with respect
to Taxes of the Company or any of its Subsidiaries;
(k) make any Tax election or change in any Tax election, amend any Tax Returns or enter
into any settlement or compromise of any Tax liability of the Company or its Subsidiaries;
(l) pay, discharge, satisfy, settle or compromise any claim, litigation, liability,
obligation (absolute, asserted or unasserted, contingent or otherwise) or any legal
proceeding, except for any settlement or compromise involving less than $100,000, but
subject to an aggregate maximum of $500,000, including all fees, costs and expenses
associated therewith but excluding from such amounts any contribution from any insurance
company or other parties to the litigation;
(m) enter into any negotiation with respect to, or adopt or amend in any respect, any
collective bargaining agreement;
(n) enter into any material agreement or arrangement with any of its officers,
directors, employees or any “affiliate” or “associate” of any of its officers or directors
(as such terms are defined in Rule 405 under the Securities Act);
(o) enter into any agreement, arrangement or contract to allocate, share or otherwise
indemnify for Taxes;
(p) enter into or consummate any sale/leaseback agreement or arrangement;
(q) except in the ordinary course of business consistent with past practice and except
as prohibited in subsection (e) above, lease or otherwise dispose of or transfer any
of its assets (including the capital stock of any Subsidiary of the Company);
(r) make, authorize or agree to make any capital expenditures, or enter into any
agreement or agreements providing for payments, which, individually are in excess of
$100,000, or in the aggregate are in excess of $500,000;
(s) enter into an agreement containing any provision or covenant limiting in any
respect the ability of the Company or any of its Subsidiaries with respect to (i) selling
any products or services of or to any other Person, (ii) engaging in any line of business,
(iii) competing with or obtaining the products or services of any Person or limiting the
ability of any Person to provide products or services to the Company or any
37
of its
Subsidiaries or (iv) selecting, opening or operating any store in any geographical area or
location;
(t) terminate or fail to renew any Permit that is material to the conduct of the
businesses of the Company or any of its Subsidiaries;
(u) revalue in any material respect any of its assets, including writing-down the value
of inventory or writing-off notes or accounts receivable, other than in the ordinary course
of business consistent with past practice;
(v) fail to pay any Taxes or other material debts when due (without giving effect to
any grace periods);
(w) fail to maintain in full force and effect all self-insurance and insurance, as the
case may be, currently in effect;
(x) fail to make in a timely manner any and all filings with the SEC required to be
made under the Securities Act or the Exchange Act or the rules and regulations promulgated
thereunder or any filing required under applicable law;
(y) amend, extend, renew, otherwise modify or terminate any of the Real Property Leases
or enter into any new Real Property Lease requiring rental and other payments in excess of
$100,000 annually;
(z) enter into an agreement, contract, commitment or arrangement to do any of the
foregoing, or to authorize, recommend, propose or announce an intention to do any of the
foregoing (a)-(y) of this Section 4.1; and
(aa) take any action or omit to take any action that would, or is reasonably likely to
result in any of its representations and warranties contained in this Agreement becoming
untrue, or in any of the conditions to the Merger set forth in Article VI of this
Agreement not being satisfied.
SECTION 4.2. No Solicitations. The Company shall not and shall cause its Subsidiaries not
to, directly or indirectly, through any officer, director, affiliate, employee, agent, financial
advisor, representative or otherwise, (a) solicit or initiate any inquiries with respect to the
submission of any Acquisition Proposal (as defined below), (b) participate in any discussions or
negotiations regarding, or furnish to any Person any information with respect to, or otherwise
cooperate in any way with, or knowingly assist or participate in, facilitate or encourage, any
effort or attempt by any Person to make an inquiry in respect of or make any proposal or offer
38
that constitutes, or may be reasonably be expected to lead to, any Acquisition Proposal or (c) enter
into any agreement or agreement in principle providing for or relating to an Acquisition Proposal;
provided, however, that (i) nothing contained in this Section 4.2 or any
other provision of this Agreement shall prohibit the Company or the Board of Directors from taking
and disclosing to the Company shareholders pursuant to Rule 14d-9 or Rule 14e-2 promulgated under
the Exchange Act, a position with respect to a tender or exchange offer by a third party and (ii)
the Company may, prior to the approval by the Company shareholders of the Merger, in response to an unsolicited bona fide written
proposal received on or after the date of this Agreement (and not withdrawn), with respect to an
Acquisition Proposal from a third party, which did not result from a breach of this Section
4.2, furnish information to, and negotiate, explore or otherwise engage in substantive
discussions with such third party only if, and only to the extent that (A) the Board of Directors,
after consultation with and taking into account the advice of its financial advisors and outside
legal counsel, determines in good faith that the Board of Directors would breach its fiduciary
duties to shareholders under applicable law without taking such action, (B) prior to taking such
action, the Company receives from such Person an executed confidentiality agreement having terms no
more favorable than the Confidentiality Agreement, (C) the Board of Directors, after consultation
with and taking into account the advice of its financial advisors and legal counsel, determines in
good faith that such proposal would, if accepted, be reasonably likely to be consummated, taking
into account all legal, financial and regulatory aspects of the proposal and the Person making the
proposal, and (D) the proposal would, if consummated, result in a transaction that provides a
higher per share price to its shareholders, from a financial point of view, than the transactions
contemplated by this Agreement and for which financing, to the extent required, is then represented
by bona fide commitment letters (such more favorable Acquisition Proposal hereinafter referred to
as a “Superior Proposal”; provided, that, for purposes of the definition of
Superior Proposal, the term Acquisition Proposal shall have the meaning assigned below, except that
references to “15% or more” shall be deemed to be references to “50% or more”). The Company shall
and shall cause its Subsidiaries and their respective officers, directors, affiliates, employees,
agents, financial advisors and representatives to immediately cease and cause to be terminated any
and all existing activities, discussions or negotiations with any Person conducted heretofore with
respect to any of the foregoing. The Company shall and shall cause its Subsidiaries to immediately
notify Holdings and Merger Sub if any proposals are received by, any information is requested from,
or any negotiations or discussions are sought to be initiated or continued with the Company or any
of its Subsidiaries, in each case in connection with any Acquisition Proposal. Each notice shall
contain the name of any Person making any such proposal, requesting such information or seeking
such negotiations or discussions and a summary of the material terms and conditions of any
proposals or offers and thereafter the Company shall keep Holdings and Merger Sub informed, on a
current basis, of the status and terms of any such proposals or offers and the status of any such
discussions or negotiations. The Company agrees that it will take the necessary steps to promptly
inform the Persons referred to in the first sentence of this Section 4.2 of the obligations
undertaken in this Section 4.2 and in the Confidentiality Agreement. The Co
mpany will
promptly provide to Holdings and Merger Sub any information concerning the Company and its
Subsidiaries provided to any other Person in connection with an Acquisition Proposal which was not
previously delivered to Holdings and Merger Sub. The Company shall and shall cause its
Subsidiaries to promptly request each Person that has heretofore executed a confidentiality
agreement in connection with its consideration of acquiring the Company or any of its Subsidiaries
to promptly return or destroy all written confidential information heretofore
39
furnished to such Person (whether then in the possession of such Person or its advisors or representatives) by or on
behalf of the Company or any of its Subsidiaries. The Company agrees not to release any third
party from or waive any provisions of confidentiality in any confidentiality agreement to which the
Company is a party or by which it is bound. Without limiting the foregoing, it is understood that
any violation of the restrictions set forth in this Section 4.2 by any officer, director,
affiliate, employee, agent, financial advisor or representative of the Company or any of its Subsidiaries shall be deemed to be a breach of this Section
4.2. For purposes of this Agreement, “Acquisition Proposal” means any inquiry, proposal, offer
or indication of interest from any Person (other than by or on behalf of Merger Sub or Holdings)
relating to any direct or indirect acquisition or purchase (including any single or multiple-step
transaction) of a business or assets of the Company or its Subsidiaries that generates 15% or more
of the net revenues or net income, or constitutes 15% or more of the assets (as determined with
respect to the financial statements contained in the most recent SEC Report and filed prior to such
determination) of the Company or any of its significant Subsidiaries (as defined in Rule 1-02(w) of
Regulation S-X promulgated under the Exchange Act) (a “Significant Subsidiary”), or 15% or more
beneficial ownership (as determined pursuant to Rule 13d-3 under the Exchange Act) of any class of
equity securities of the Company or any of its Significant Subsidiaries, any tender offer or
exchange offer that if consummated would result in any Person beneficially owning (as determined
pursuant to Rule 13d-3 under the Exchange Act) 15% or more of any class of equity securities of the
Company or any of its Significant Subsidiaries or any merger, consolidation, business combination,
recapitalization, reorganization, liquidation, dissolution or similar transaction involving the
Company or any of its Significant Subsidiaries.
SECTION 4.3. Fiduciary Duties. The Board of Directors shall not (a) withdraw or modify or
change in a manner adverse to Holdings and Merger Sub, the approval or recommendation by the Board
of Directors of this Agreement and the Merger, (b) approve, recommend or cause the Company to enter
into any written agreement with respect to any Acquisition Proposal or (c) propose to do any of the
foregoing. Notwithstanding the foregoing, if the Board of Directors determines in good faith
(after consultation with and taking into account the advice of its financial advisors and legal
counsel) that an Acquisition Proposal is a Superior Proposal in accordance with the terms of this
Agreement, the Board of Directors may withdraw its approval or recommendation of this Agreement and
the Merger solely in order to concurrently enter into a definitive agreement prior to the time the
Company shareholders shall have approved the Merger, providing for the consummation of a
transaction with respect to such Superior Proposal and terminate this Agreement in accordance with
Section 7.1(f)(ii) and Section 7.2(b), but only if the Board of Directors
determines in good faith (after consultation with and taking into account the advice of its
financial advisor and legal counsel) that the Board of Directors would breach its fiduciary duties
to shareholders under applicable law without taking such action; provided, however,
that (x) prior to taking such action, the Board of Directors shall have (1) given Holdings and
Merger Sub at least five business days’ prior written notice that the Company intends to take such
action and provided Holdings and Merger Sub with a reasonable opportunity to respond to any such
Superior Proposal (which response could include a proposal to revise the terms of the transactions
contemplated hereby) and (2) fully considered any such response by Holdings and Merger Sub and
concluded that, notwithstanding such response, such Acquisition Proposal continues to be a Superior
Proposal in relation to the transactions contemplated hereby, as the terms hereof may be proposed
to be revised by such response.
40
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1. Proxy Statement. As promptly as practicable after the date of this Agreement,
the Company shall prepare and file with the SEC the Proxy Statement in connection with the Merger.
Holdings and Merger Sub will cooperate with the Company in connection with the preparation of the
Proxy Statement including, but not limited to, furnishing to the Company any and all information
regarding Holdings, Merger Sub and their respective affiliates as may be required to be disclosed
therein. The Proxy Statement shall contain the recommendation of the Board of Directors that the
Company’s shareholders approve this Agreement and the transactions contemplated hereby. As
promptly as possible after clearance by the SEC of the Proxy Statement, the Company will cause the
Proxy Statement to be mailed to its shareholders.
SECTION 5.2. Meeting of Shareholders of the Company. The Company shall promptly take all
action necessary in accordance with applicable law, the Restated Articles of Incorporation and the
Amended and Restated By-Laws of the Company to convene the Company Shareholders’ Meeting. The
shareholders vote or consent required for approval of the Merger will be no greater than that set
forth in the Missouri BCL. The Company shall use reasonable best efforts to solicit from
shareholders of the Company proxies in favor of the Merger and shall take all other action
necessary or, in the reasonable opinion of Merger Sub, advisable to secure any vote or consent of
shareholders required by the Missouri BCL to effect the Merger.
SECTION 5.3. Additional Agreements. The Company, Merger Sub and Holdings will each comply
in all material respects with all applicable laws and with all applicable rules and regulations of
any Governmental Entity in connection with its execution, delivery and performance of this
Agreement and the transactions contemplated hereby.
SECTION 5.4. Notification of Certain Matters. The Company shall give prompt notice to
Holdings and Merger Sub and Holdings and Merger Sub shall give prompt notice to the Company, of (a)
the occurrence or non-occurrence of any fact, event or circumstance whose occurrence or
nonoccurrence would be likely to cause any representation or warranty contained in this Agreement
to be untrue or inaccurate in any material respect at any time from the date hereof to the
Effective Time, (b) any material failure of the Company or Merger Sub, as the case may be, or any
officer, director, employee or agent thereof, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder and (c) the occurrence or non-occurrence
of any fact, event or circumstance which has or is reasonably expected to result in a Material
Adverse Effect; provided, however, that the delivery of any notice pursuant to this
Section 5.4 shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
SECTION 5.5. Access to Information.
(a) From the date hereof to the Effective Time, the Company shall and shall cause its
Subsidiaries and their respective directors, officers, directors, employees,
41
auditors and
agents to, afford the directors, officers, employees, environmental and other consultants,
attorneys, accountants financial advisors, representatives and agents of Holdings and Merger
Sub and the anticipated sources of the Financing (the “Financing Sources”), reasonable
access at all reasonable times to its directors, officers, employees, representatives,
agents, properties, offices and other facilities and to all information systems, contracts,
books and records (including Tax Returns, audit work papers and insurance policies), and
shall furnish Holdings and Merger Sub and the Financing Sources with all financial,
operating and other data and information Holdings and Merger Sub and the Financing Sources
through their directors, officers, employees, consultants or agents, may reasonably request.
No information received pursuant to this Section 5.5 shall affect or be deemed to
modify or update any representation and warranties of the Company and its Subsidiaries
contained in this Agreement.
(b) Each of Holdings and Merger Sub agrees that it shall, and shall direct its
affiliates and each of their respective officers, directors, employees, financial advisors,
consultants and agents (the “Merger Sub Representatives”), to hold in strict confidence all
data and information obtained by them from the Company in accordance with the
Confidentiality Agreement which shall survive the execution an delivery of this Agreement,
and any termination hereof pursuant to Section 7.1 hereof.
SECTION 5.6. Public Announcements. Holdings, Merger Sub and the Company shall consult with
each other before issuing any press release or otherwise making any public statements or
announcements with respect to the Merger and shall not issue any such press release or make any
such public statement before such consultation, except as may be required by applicable law or
stock exchange rules, in which case, the party desiring to make a public statement or disclosure
shall consult with the other parties and permit them opportunity to review and comment on the
proposed disclosure to the extent practicable under the circumstances.
SECTION 5.7. Approval and Consents; Cooperation. Each of the Company, Holdings and Merger
Sub shall cooperate with each other and use (and shall cause their respective Subsidiaries to use)
its reasonable best efforts to take or cause to be taken all actions, and do or cause to be done
all things, necessary, proper or advisable on their part under this Agreement and applicable laws
to consummate and make effective the Merger and the other transactions contemplated by this
Agreement as soon as practicable, including (a) preparing and filing as promptly as practicable all
documentation to effect all necessary applications, notices, petitions, filings, Tax ruling
requests and other documents and to obtain as
promptly as practicable all consents, waivers, licenses, orders, registrations, approvals, Permits,
Tax rulings and authorizations necessary or advisable to be obtained from any third party and/or
any Governmental Entity in order to consummate the Merger or any of the other transactions
contemplated by this Agreement (including, but not limited to, those approvals, consents, orders,
registrations, declarations and filings required under Section 3.5 (collectively, the
“Required Approvals”), (b) taking all reasonable steps as may be necessary to obtain all such
Required Approvals and (c) obtaining estoppel certificates with respect to each Leased Real
Property. Without limiting the generality of the foregoing, each of the Company and Holdings and
Merger Sub agree to make all necessary filings in connection with the Required Approvals as
promptly
42
as practicable after the date of this Agreement, and to use its reasonable best efforts to
furnish or cause to be furnished, as promptly as practicable, all information and documents
requested with respect to such Required Approvals, and shall otherwise cooperate with any
applicable Governmental Entity or third party in order to obtain any Required Approvals in as
expeditious a manner as possible. Each of the Company, Holdings and Merger Sub shall use its
reasonable best efforts to resolve such objections, if any, as any Governmental Entity may threaten
or assert with respect to this Agreement and the transactions contemplated hereby in connection
with the Required Approvals. In the event that a suit is instituted by a Person or Governmental
Entity challenging this Agreement and the transactions contemplated hereby in any respect,
including a claim that this Agreement of the transactions contemplated hereby are violative of
applicable antitrust or competition laws, each of the Company, Holdings and Merger Sub shall use
its reasonable best efforts to resist or resolve such suit. The Company, Holdings and Merger Sub
each shall, upon request by the other, furnish the other with all information concerning itself,
its Subsidiaries, affiliates, directors, officers and shareholders and such other matters as may
reasonably be necessary or advisable in connection with the Proxy Statement or any other statement,
filing, Tax ruling request, notice or application made by or on behalf of the Company, Holdings or
any of their respective Subsidiaries to any third party and/or Governmental Entity in connection
with the Merger or the other transactions contemplated by this Agreement.
SECTION 5.8. Further Assurances. In case at any time after the Effective Time any further
action is reasonably necessary to carry out the purposes of this Agreement or the transactions
contemplated by this Agreement, the proper officers of the Company, Holdings and the Surviving
Corporation shall take any such reasonably necessary action.
SECTION 5.9. Agreement to Defend and Indemnify.
(a) If any action, suit, proceeding or investigation relating hereto or to the
transactions contemplated hereby is commenced, whether before or after the Effective Time,
the parties hereto agree to cooperate and use their best efforts to defend against and
respond thereto. It is understood and agreed that, subject to the limitations on
indemnification contained in the Missouri BCL and the Restated Articles of Incorporation of
the Company, the Company shall, regardless of whether the Merger becomes effective,
indemnify and hold harmless, and after the Effective Time, the Surviving Corporation shall
indemnify and hold harmless, each director and officer of the Company including, without
limitation, officers and directors serving as such on the date
hereof (collectively, the “Indemnified Parties”) against any costs or expenses
(including reasonable attorneys’ fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim, action, suit,
proceeding or investigation arising out of or pertaining to any of the transactions
contemplated hereby, including without limitation, to the extent permitted by law,
liabilities arising under the Securities Act or the Exchange Act in connection with the
Merger or the Financing, and in the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) the Company or the
Surviving Corporation shall pay the reasonable fees and expenses of counsel selected by the
Indemnified Parties, which counsel shall be reasonably satisfactory to the Company or the
Surviving Corporation, promptly as statements therefor are received and (ii) the Company and
the Surviving Corporation will cooperate in the defense of any such matter;
provided,
43
however, that neither the Company nor the Surviving Corporation
shall be liable for any settlement effected without its written consent (which consent shall
not be unreasonably withheld); and further, provided, that neither the
Company nor the Surviving Corporation shall be obliged pursuant to this Section 5.9
to pay the fees and disbursements of more than one counsel for all Indemnified Parties in
any single action except to the extent that, in the opinion of counsel for the Indemnified
Parties, two or more of such Indemnified Parties have an actual conflict of interest in the
outcome of such action. For six years after the Effective Time, the Surviving Corporation
shall be required to maintain or obtain officers’ and directors’ liability insurance
covering the Indemnified Parties who are currently covered by the Company’s officers and
directors liability insurance policy on terms not less favorable than those in effect on the
date hereof in terms of coverage and amounts; provided, however, that in no
event shall the Surviving Corporation be required to expend more than an amount per year
equal to 150% of current annual premiums paid by the Company for such insurance to maintain
or procure insurance coverage pursuant hereto, in which case the Surviving Corporation shall
provide the maximum coverage that is then available for 150% of such annual premiums. The
Surviving Corporation shall continue in effect the indemnification provisions currently
provided by the Restated Articles of Incorporation of the Company for a period of not less
than six years following the Effective Time. This Section 5.9 shall survive the
consummation of the Merger. Notwithstanding Section 8.7, this Section 5.9
is intended to be for the benefit of and to grant third-party rights to Indemnified Parties
whether or not parties to this Agreement, and each of the Indemnified Parties shall be
entitled to enforce the covenants contained herein.
(b) If the Surviving Corporation or any of its successors or assigns (i) consolidates
with or merges into any other Person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or (ii) transfers all or substantially
all of its properties and assets to any Person, then and in each such case, proper provision
shall be made so that the successors and assigns of the Surviving Corporation assume the
obligations set forth in this Section 5.9.
SECTION 5.10. Continuation of Employee Benefits.
(a) From and after the Effective Time, Holdings shall cause the Surviving Corporation
and its Subsidiaries to honor in accordance with their terms all existing employment,
severance, consulting and salary continuation agreements between the Company and any current
or former officer, director, employee or consultant of the Company or group of such
officers, directors, employees or consultants described on Section 5.10 of the
Company Disclosure Schedule.
(b) To the extent permitted under any applicable law, each employee of the Company and
its Subsidiaries shall be given credit for all service with the Company (or service credited
by the Company) under all employee benefit plans, programs policies and arrangements
maintained by the Surviving Corporation in which they participate or
44
in which they become
participants for purposes of eligibility, vesting and benefit accrual, including for
purposes of determining (i) short-term and long-term disability benefits, (ii) severance
benefits, (iii) vacation benefits and (iv) benefits under any retirement plan;
provided that credit need not be given for service to the extent such credit
would result in duplication of benefits.
SECTION 5.11. Financing.
(a) Merger Sub shall use its reasonable best efforts to obtain the Financing consistent
with the terms specified and described in the Commitment Letters delivered to the Company by
Merger Sub and otherwise on and subject to terms reasonably acceptable to Merger Sub.
(b) The Company agrees to provide, and will cause its Subsidiaries and its and their
respective directors, officers, employees and advisors to provide, all cooperation
reasonably necessary in connection with the arrangement of Financing to be consummated
contemporaneously with or at or after the expiration of the Effective Time in respect of the
transactions contemplated by this Agreement, including participation in meetings, due
diligence sessions, road shows, the preparation of offering memoranda, private placement
memoranda, prospectuses and similar documents, the execution and delivery of any commitment
letters, underwriting or placement agreements, pledge and security documents, other
definitive financing documents, or other requested certificates or documents, including a
certificate of the chief financial officer of the Company with respect to solvency matters,
audited and unaudited financial statements, comfort letters of accountants and legal
opinions as may be reasonably requested by Holdings or Merger Sub and taking such other
actions as are reasonably required to be taken by the Company in the Commitment Letters. In
addition, in conjunction with the obtaining of Financing, the parties hereto agree to
cooperate and use all reasonable best efforts to take such actions as may be necessary to
prepay, redeem and/or renegotiate the Notes, as reasonably requested by Holdings and Merger
Sub including, without limitation, pursuant
to the Indenture, to fix August 7, 2006 as the redemption date for the redemption of
all Notes issued and outstanding under the Indenture (the “Redemption”) as of the Effective
Time and to cause to be delivered at the Effective Time to the Trustee (as defined in the
Indenture) a notice of redemption dated May 9, 2006 for delivery to each of the holders of
the Notes in connection with the Redemption pursuant to Section 3.2 of the Indenture. In
connection with the Redemption, the Company shall, pursuant to Section 13.1 of the
Indenture, deposit with the Trustee at the Effective Time funds in an amount sufficient to
pay the redemption price under the Indenture with respect to all of the issued and
outstanding Notes including principal and premium, if any, and interest, due or to become
due to such date of Redemption, and shall use its reasonable best efforts to take all other
actions necessary to cause the Indenture to cease to be of further effect pursuant to
Section 13.1 of the Indenture. Notwithstanding the foregoing, no call for redemption or
prepayment of the Notes shall be irrevocably made until contemporaneously with or after the
Effective Time.
45
SECTION 5.12. Takeover Statutes. If any Takeover Statute enacted under state or federal
law shall become applicable to the Merger or any of the other transactions contemplated hereby,
each of the Company, Holdings and Merger Sub and the Board of Directors of each of the Company,
Holdings and Merger Sub shall grant such approvals and take such actions as are necessary so that
the Merger and the other transactions contemplated hereby may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise use reasonable best efforts to eliminate
or minimize the effects of such statute or regulation on the Merger and the other transactions
contemplated hereby.
SECTION 5.13. Disposition of Litigation. In connection with any litigation which may be
brought against the Company or its directors relating to the transactions contemplated hereby, the
Company shall keep Holdings and Merger Sub, and any counsel which Holdings and Merger Sub may
retain at their own expense, informed of the status of such litigation and will provide Holdings’
and Merger Sub’s counsel the right to participate in the defense of such litigation to the extent
Holdings and Merger Sub are not otherwise a party thereto, and the Company shall not enter into any
settlement or compromise of any such shareholders litigation without Holdings’ and Merger Sub’s
prior written consent, which consent shall not be unreasonably withheld or delayed.
SECTION 5.14. Delisting. Each of the parties agrees to cooperate with each other in
taking, or causing to be taken, all actions necessary to delist the Company Common Stock from the
NYSE and to terminate registration under the Exchange Act; provided that such
delisting and termination shall not be effective until after the Effective Time of the Merger.
ARTICLE VI
CONDITIONS OF MERGER
SECTION 6.1. Conditions to Each Party’s Obligation to Effect the Merger. The respective
obligations of each party to effect the Merger shall be subject to the following conditions:
(a) Shareholder Approval. The Merger and this Agreement shall have been
approved and adopted by the affirmative vote of the shareholders holding at least two-thirds
of the outstanding shares of Company Common Stock.
(b) HSR Act. The waiting period applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated.
(c) No Challenge. No statute, rule, regulation, judgment, writ, decree, order
or injunction shall have been promulgated, enacted, entered or enforced, and no other action
shall have been taken, by any Governmental Entity that in any of the foregoing cases has the
effect of making illegal or directly or indirectly restraining, prohibiting or restricting
the consummation of the Merger.
46
SECTION 6.2. Additional Conditions to Obligation of the Company to Effect the Merger. The
obligation of the Company to effect the Merger shall be subject to the fulfillment at or prior to
the Effective Time of the additional following conditions, unless waived by the Company:
(a) Performance of Obligations of Merger Sub. Holdings and Merger Sub shall
have performed in all material respects their agreements contained in this Agreement
required to be performed on or prior to the Effective Time and the Company shall have
received a certificate of an executive officer of Merger Sub and Holdings to that effect.
(b) Representations and Warranties of Merger Sub. The representations and
warranties of Holdings and Merger Sub contained in this Agreement shall be true and correct
(without giving effect to any “materiality” qualifiers set forth therein) as of the date of
this Agreement and at and as of the Effective Time with the same force and effect as if made
at and as of the Effective Time (other than those representations and warranties that
address matters only as of a particular date or only with respect to a specific period of
time, which need only be true and correct as of such date or with respect to such period),
except where the failure of such representations and warranties to be true and correct
(without giving effect to any “materiality” qualifiers set forth therein) would not, individually or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of Holdings and Merger Sub to consummate the transactions
contemplated hereby.
(c) Consents. All consents, authorizations, orders and approvals of (or
filings, reports, registrations with or notifications to) any Governmental Entity required
in connection with the execution, delivery and performance of this Agreement, the failure to
obtain which would prevent the consummation of the Merger, shall have been obtained and
shall be in full force and effect.
SECTION 6.3. Additional Conditions to Obligations of Merger Sub to Effect the Merger. The
obligations of Holdings and Merger Sub to effect the Merger shall be subject to the fulfillment at
or prior to the Effective Time of the additional following conditions, unless waived by Holdings
and Merger Sub:
(a) Performance of Obligations of the Company and its Subsidiaries. The
Company and its Subsidiaries shall have performed in all material respects its agreements
contained in this Agreement required to be performed on or prior to the Effective Time, and
Holdings and Merger Sub shall have received a certificate of the President or Chief
Executive Officer of the Company to that effect.
(b) Representations and Warranties of the Company and its Subsidiaries. The
representations and warranties of the Company contained in Section 3.1
(Organization), Section 3.3 (Capitalization), Section 3.4 (Authority),
Section 3.7
47
(Absence of Certain Changes or Events), Section 3.18 (Brokers),
Section 3.21 (Control Share Acquisition), Section 3.22 (Rights Agreement),
and Section 3.23 (Vote Required) shall be true and correct in all respects, in each
case, as of the date of this Agreement and at and as of the Effective Time with the same
force and effect as if made at and as of the Effective Time (other than those
representations and warranties that address matters only as of a particular date or only
with respect to a specific period of time, which need only be true and correct as of such
date or with respect to such period). The representations and warranties of the Company
contained in this Agreement (other than those listed in the preceding sentence) shall be
true and correct (without giving effect to any “materiality” or “Material Adverse Effect”
qualifiers set forth therein) as of the date of this Agreement and at and as of the
Effective Time with the same force and effect as if made at and as of the Effective Time
(other than those representations and warranties that address matters only as of a
particular date or only with respect to a specific period of time, which need only be true
and correct as of such date or with respect to such period), except where the failure of
such representations and warranties to be true and correct (without giving effect to any
“materiality” or “Material Adverse Effect” qualifiers set forth therein) would not,
individually or in the aggregate, reasonably be expected to result in a Material Adverse
Effect. Holdings and Merger Sub shall have received a certificate of the President or Chief
Executive Officer of the Company as to the satisfaction of this Section 6.3(b).
(c) Consents. The Company shall have obtained and provided to Holdings and
Merger Sub copies of evidence with respect to the consents of third parties listed on
Section 3.5(b) of the Company Disclosure Schedule, the terms of which consents shall
be reasonably satisfactory to Holdings and Merger Sub.
(d) Suits, Actions and Proceedings. No suit, action, proceeding, claim,
inquiry or investigation by any Governmental Entity or any third party shall be pending
seeking to prohibit or restrain, or seeking damages in connection with the Merger or the
transactions contemplated by this Agreement.
(e) Options. From and after the Effective Time, after giving effect to the
Merger, there shall be no options or other rights outstanding to acquire shares of Company
Common Stock or any equity securities of the Company under the Option Plans or otherwise.
(f) Approvals. All notices, applications, approvals, consents, orders,
exemptions and waivers (“Approvals”) required to be furnished to or obtained from any
Governmental Entity, including any Approvals in respect of Permits, necessary in order for
the Company and its Subsidiaries to conduct their business following the consummation of the
transactions contemplated by this Agreement in substantially the manner presently conducted
shall have been obtained or furnished and any applicable waiting period or periods shall
have expired or terminated (or, if there be no time limit for waiver or objection, a notice
of no objection or equivalent with respect thereto shall have been received by the Company)
except where the failure to obtain any such
48
Approvals will not (i) reasonably be expected to
result in a Material Adverse Effect, (ii) materially and adversely impact the economic or
business benefits to Holdings and Merger Sub of the transactions contemplated hereby or
(iii) result in Holdings and the Surviving Corporation and its Subsidiaries being prohibited
from conducting, or materially limiting their ability to conduct, business in any
jurisdiction in substantially the manner presently conducted; and no such Approval shall
impose any condition or conditions relating to, or requiring changes or restrictions in, the
operations of any asset or business of Holdings and the Surviving Corporation and its
Subsidiaries, which is reasonably likely to result in a Material Adverse Effect or to
materially and adversely impact the economic or business benefits to Holdings and the
Surviving Corporation and its Subsidiaries of the transactions contemplated by this
Agreement.
(g) Dissenting Shares. The aggregate number of Dissenting Shares shall be less
than 5% of the total number of outstanding shares of Company Common Stock at the Effective
Time.
(h) Resignations. The Company shall deliver the executed resignation of each
director of the Subsidiaries to be effective as of the Effective Time.
(i) Leased Real Property. With respect to the Leased Real Property, the
Company shall have delivered to Holdings and Merger Sub a written consent for each of the
Real Property Leases, in each case whose consent is required under such Real Property Lease
in connection with the transactions contemplated in this Agreement, in form and substance
reasonably satisfactory to Holdings and Merger Sub.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1. Termination. This Agreement may be terminated at any time before the
Effective Time by:
(a) mutual written consent of the Boards of Directors of Holdings, Merger Sub and the
Company; or
(b) either Holdings, Merger Sub or the Company, if a Governmental Entity shall have
issued an order, decree or ruling or taken any other action (which order, decree or ruling
the parties hereto shall use their reasonable best efforts to lift), in each case
permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by
this Agreement, and such order, decree, ruling or other action shall have become final and
non-appealable; or
49
(c) either Holdings, Merger Sub or the Company, if the Company Shareholder Approval
shall not have been obtained at the Company Shareholders’ Meeting or at any adjournment or
postponement thereof; or
(d) Holdings or Merger Sub, if the Merger shall not have been consummated on or before
June 30, 2006 (the “Termination Date”); provided, however, that the
Termination Date shall be automatically extended for a period of 30 days if (i) the
condition set forth in Section 6.3(f) has not been satisfied on or prior to the Termination
Date and (ii) all other conditions to the consummation of the Merger are satisfied on or
prior to the Termination Date or capable of then being satisfied at the Closing (other than
the condition in Section 6.3(f)), provided that the right to terminate this Agreement
pursuant to this Section 7.1(d) shall not be available to Holdings or Merger Sub if
any action of Holdings or Merger Sub or the failure of Holdings or Merger Sub to perform any
of its obligations under this Agreement or required to be performed at or prior to the
Effective Time has been the cause of, or resulted in, the failure of the Effective Time to
occur on or before the Termination Date and such action or failure to perform constitutes a
material breach of this Agreement; or
(e) the Company, if the Merger shall not have been consummated on or before the
Termination Date, provided that the right to terminate this Agreement pursuant to this
Section 7.1(e) shall not be available to the Company if any action of the Company or
the failure of the Company to perform any of its obligations under this Agreement or
required to be performed at or prior to the Effective Time has been the cause of, or
resulted in, the failure of the Effective Time to occur on or before the Termination Date
and such action or failure to perform constitutes a material breach of this Agreement; or
(f) the Company (i) if there shall be a material breach of any of Merger Sub’s or
Holdings’ representations, warranties or covenants hereunder, such that the conditions
contained in Section 6.2(b) or Section 6.2(a) would not be satisfied and
such breach is not curable or, if curable, is not cured within 15 days of written notice
delivered to Holdings or Merger Sub, provided that the Company shall not have the right to
terminate this Agreement pursuant to this Section 7.1(f) if the Company is then in
material breach of any of its covenants or agreements contained in this Agreement; or (ii)
prior to the approval of the Merger by the Company shareholders, for the purpose of entering
into a binding written definitive agreement with respect to an unsolicited written proposal
or offer for a Superior Proposal, provided that (A) the Company is not in material breach of
any of the terms of this Agreement, (B) the Company shall have complied with the provisions
of Sections 4.2 and 4.3, (C) such binding agreement is entered into
concurrently with the exercise of this termination right and (D) the Company shall have paid
to Holdings and Merger Sub prior to such termination the Fee and Transaction Expenses
described in Section 7.2(b) hereto. The Company agrees (x) that it will not enter
into a binding agreement referred to in clause (ii) above until at least the sixth business
day after it has provided written notice to Holdings and Merger Sub required by Section
4.3 and (y) to notify Holdings and Merger Sub if its intention to enter
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into a written
agreement referred to in its notification shall change at any time after giving such
notification; or
(g) Holdings or Merger Sub, if there shall be a material breach of any of the Company’s
representations, warranties or covenants hereunder after the date of this Agreement, such
that Section 6.3(b) or Section 6.3(a) would not be satisfied and such breach
is not curable or, if curable, is not cured within 15 days of written notice thereof is
delivered to the Company, provided that Holdings or Merger Sub shall not have the right to
terminate this Agreement pursuant to this Section 7.1(g) if Holdings or Merger Sub
is then in material breach of any of its covenants or agreements contained in this
Agreement; or
(h) Holdings or Merger Sub, if (i) the Board of Directors shall (A) withdraw or modify
or change in a manner adverse to Merger Sub its recommendation or approval in respect of
this Agreement and the Merger; provided that such time period shall be
stayed during the period from when the Company first gives written notice pursuant to
Section 4.3 until two business days after the earlier of Holdings’ and Merger Sub’s
response to such written notice and the fifth business day after Holdings and Merger Sub’s
receipt of such written notice, or (B) shall have resolved to do any of the
foregoing; (ii) the Board of Directors shall have approved or recommended any proposal
other than by Holdings and Merger Sub in respect of an Acquisition Proposal or failed to
reject and, if applicable, recommend against any such proposal, or shall have resolved to do
any of the foregoing, or (iii) the Company shall have entered into an agreement with respect
to an Acquisition Proposal.
SECTION 7.2. Effect of Termination.
(a) In the event of termination of this Agreement as provided in Section 7.1,
this Agreement shall forthwith become void and there shall be no liability on the part of
Holdings, Merger Sub or the Company, except (i) as set forth in Sections 5.5(b),
7.2(b) and 8.3 and (ii) nothing herein shall relieve any party from
liability for any breach of this Agreement.
(b) (i) If (A) Holdings or Merger Sub shall have terminated this Agreement pursuant to
Section 7.1(h)(i), (ii) or (iii); or (B) the Company shall have
terminated this Agreement pursuant to Section 7.1(f)(ii); or (C) both (1) this
Agreement is terminated pursuant to Section 7.1(c) or Section 7.1(g) and (2)
at any time after the date of this Agreement and at or before the date of such termination a
proposal or offer with respect to an Acquisition Proposal shall have been publicly announced
or disclosed (whether or not conditional), or disclosed to the Board of Directors or any
committee thereof, then, in any such case, the Company shall pay Holdings (x) a termination
fee of $10,175,000 (the “Fee”) plus (y) an amount, not in excess of $3,000,000, equal to the
actual and reasonably documented out-of-pocket expenses of Holdings, Merger Sub and
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Wellspring incurred in connection with the preparation, negotiation, execution and
performance of this Agreement and the consummation of the transactions contemplated hereby
and the Financing thereof, including, without limitation, all fees and expenses of financing
sources, counsel, accountants, investment bankers, experts, and consultants to Holdings,
Merger Sub, Wellspring and their affiliates (“Transaction Expenses”), which Fee and
Transaction Expenses shall be paid, in the event of any such termination by the Company,
prior to or concurrently with such termination, and, in the event of any such termination by
Holdings or Merger Sub, within one business day following such termination, in immediately
available funds by wire transfer to such account or accounts as Holdings may designate in
writing to the Company (the “Fee Account”).
(ii) If (A) this Agreement is terminated pursuant to Section
7.1(d) or Section 7.1(e) (whether or not the condition in
Section 6.1(a) shall have been satisfied at the time of such
termination), (B) at any time after the date of this Agreement and at or
before the date of such termination a proposal with respect to an
Acquisition Proposal shall have been publicly announced or disclosed
(whether or not conditional), or disclosed to the Board of Directors or any
committee thereof and (C) within twelve months after the date of such
termination the Company shall
have entered into an agreement with respect to an Acquisition Proposal
that provides a higher price to the Company’s shareholders, from a financial
point of view, than the transactions contemplated by this Agreement, then in
any such case the Company shall promptly, but in no event later than one
business day after the execution of such agreement with respect to such
Acquisition Proposal, pay Holdings the Fee plus the Transaction Expenses,
which amounts shall be payable by wire transfer to the Fee Account.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1. Non-Survival of Representations, Warranties and Agreements. The
representations, warranties and agreements in this Agreement shall terminate at the Effective Time
or the termination of this Agreement pursuant to Section 7.1, as the case may be, except
that the agreements set forth in Article I and Section 5.8 and Section 5.9
shall survive the Effective Time indefinitely and those set forth in Sections 5.5(b),
7.2(b) and 8.3 shall survive termination indefinitely.
SECTION 8.2. Notices. All notices and other communications given or made pursuant hereto
shall be in writing and shall be deemed to have been duly given or made (i) as of the date
delivered or sent by facsimile if delivered personally or by facsimile and (ii) on the third
business day after deposit in the U.S. mail, if mailed by registered or certified mail (postage
prepaid, return receipt requested), in each case to the parties at the following addresses (or at
52
such other address for a party as shall be specified by like notice, except that notices of changes
of address shall be effective upon receipt):
(a) if to Holdings or Merger Sub, to:
c/o Wellspring Capital Management LLC
Lever House
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx X. Xxxxxxx, Managing Partner
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Lever House
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx X. Xxxxxxx, Managing Partner
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With copies, which shall not serve as a notice, to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
0 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
0 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxx Xxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx Land Amorison, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Xxx Xxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx Land Amorison, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) if to the Company, to:
Xxxx & Buster’s, Inc.
0000 Xxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
0000 Xxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy, which shall not serve as a notice, to:
Xxxxxxx & Xxxxxx
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxx and Xxxxx X. Xxxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxx and Xxxxx X. Xxxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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SECTION 8.3. Expenses. Except as expressly set forth in Section 7.2(b), all fees,
costs and expenses incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such fees, costs and expenses.
SECTION 8.4. Definitions. For purposes of this Agreement, the term:
“Acquisition Proposal” shall have the meaning set forth in Section 4.2.
“affiliate” shall have the meaning set forth in Section 1.7(f)(i).
“Affiliate Transaction” shall have the meaning set forth in Section 3.28(a).
“Agreement” shall have the meaning set forth in the Preamble.
“Approvals” shall have the meaning set forth in Section 6.3(f).
“Board of Directors” shall have the meaning set forth in the Recitals.
“Certificates” shall have the meaning set forth in Section 1.7(b).
“Cleanup” shall mean all actions required to: (i) clean up, remove, treat or remediate
Hazardous Materials in the indoor or outdoor environment; (ii) prevent the Release of Hazardous
Materials so that they do not migrate, endanger or threaten to endanger public health or welfare or
the indoor or outdoor environment; (iii) perform pre-remedial studies and investigations and
post-remedial monitoring and care; or (iv) respond to any government requests for information or
documents in any way relating to cleanup, removal, treatment or remediation or potential cleanup,
removal, treatment or remediation of Hazardous Materials in the indoor or outdoor environment.
“Closing” shall have the meaning set forth in Section 1.9.
“Closing Date” shall have the meaning set forth in Section 1.9.
“Code” shall have the meaning set forth in Section 1.7(h).
“Commitment Letters” shall have the meaning set forth in Section 2.5.
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“Company” shall have the meaning set forth in the Preamble.
“Company 2004 Form 10-K” shall have the meaning set forth in Section 3.6(c).
“Company Common Stock” shall have the meaning set forth in Section 1.6.
“Company Disclosure Schedule” shall have the meaning set forth in Article III.
“Company Material Contracts” shall have the meaning set forth in Section 3.17(a).
“Company Preferred Stock” shall have the meaning set forth in Section 3.3.
“Company Shareholder Approval” shall have the meaning set forth in Section 3.23.
“Company Shareholders’ Meeting” shall have the meaning set forth in Section 2.8.
“Confidentiality Agreement” shall mean the Confidentiality Agreement, dated November 17, 2005,
by and between the Company and Wellspring.
“Construction Projects” shall have the meaning set forth in Section 3.15(g).
“control”, “controlled by” or “under common control with” shall have the meaning set forth in
Section 1.7(f)(ii).
“Copyrights” shall have the meaning set forth in Section 3.16(e).
“Credit Agreement” shall mean the Amended and Restated Revolving Credit and Term Loan
Agreement dated November 1, 2004, by and among the Company and its subsidiaries, Bank of America NA
and the financial institutions named therein.
“Debt Financing” shall have the meaning set forth in Section 2.5.
“Dissenting Shares” shall have the meaning set forth in Section 1.6(d).
“Draft 10-Q” shall have the meaning set forth in Section 3.6(e).
55
“Effective Time” shall have the meaning set forth in Section 1.2.
“Employee Plans” shall have the meaning set forth in Section 3.9.
“Environmental Claim” shall mean any claim, action, cause of action, investigation or notice
(written or oral) by any Person alleging potential liability (including, without limitation,
potential liability for investigatory costs, Cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries, or penalties)
arising out of, based on or resulting from (i) the presence, or Release, of any Hazardous
Materials at any location, whether or not owned or operated by the Company or any of its
Subsidiaries, or (ii) circumstances forming the basis of any violation, or alleged violation, of
any Environmental Law.
“Environmental Laws” shall mean all federal, state, local and foreign laws and regulations
relating to pollution or protection of the environment, including without limitation, laws relating
to Releases or threatened Releases of Hazardous Materials or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, Release, disposal, transport or handling of
Hazardous Materials and all laws and regulations with regard to record keeping, notification,
disclosure and reporting requirements respecting Hazardous Materials.
“Equity Financing” shall have the meaning set forth in Section 2.5.
“ERISA” shall have the meaning set forth in Section 3.9.
“ERISA Affiliate” shall have the meaning set forth in Section 3.9.
“Exchange Act” shall have the meaning set forth in Section 2.4(b).
“Exchange Agent” shall have the meaning set forth in Section 1.7(a).
“Exchange Fund” shall have the meaning set forth in Section 1.7(a).
“Fee” shall have the meaning set forth in Section 7.2(b)(i).
“Fee Account” shall have the meaning set forth in Section 7.2(b)(i).
“Financing” shall have the meaning set forth in Section 2.5.
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“Financing Sources” shall have the meaning set forth in Section 5.5(a).
“GAAP” shall mean United States generally accepted principles and practices as in effect from
time to time and applied consistently throughout the periods involved.
“Governmental Entity” shall have the meaning set forth in Section 2.8.
“Hazardous Materials” shall mean all substances defined as Hazardous Substances, Oils,
Pollutants or Contaminants in the National Oil and Hazardous Substances Pollution Contingency Plan,
40 C.F.R. § 300.5, or defined as such by, or regulated as such under, any Environmental Law.
“Holdings” shall have the meaning set forth in the Preamble.
“Holdings Schedule” shall have the meaning set forth in Article II.
“HSR Act” shall have the meaning set forth in Section 2.4(b).
“Indemnified Parties” shall have the meaning set forth in Section 5.9(a).
“Indenture” shall mean the Indenture dated as of August 7, 2003 between Xxxx & Buster’s, Inc.
and The Bank of New York, as Trustee, providing for the 5.0% Convertible Subordinated Notes due
2008.
“Insurance Policies” shall have the meaning set forth in Section 3.24.
“Intellectual Property Rights” shall have the meaning set forth in Section 3.16(e).
“Joint Venture” shall have the meaning set forth in Section 3.2(b).
“Leased Real Property” shall have the meaning set forth in Section 3.14(c).
“Liens” shall have the meaning set forth in Section 2.2.
“Material Adverse Effect” shall have the meaning set forth in Section 3.1.
57
“Merger” shall have the meaning set forth in the Recitals.
“Merger Consideration” shall have the meaning set forth in Section 1.6(a)(i).
“Merger Sub” shall have the meaning set forth in the Preamble.
“Merger Sub Common Stock” shall have the meaning set forth in Section 1.6.
“Merger Sub Representatives” shall have the meaning set forth in Section 5.5(b).
“Missouri BCL” shall have the meaning set forth in the Recitals.
“New Warrants” shall have the meaning set forth in Section 1.6(a)(ii).
“Notes” shall have the meaning set forth in Section 3.3.
“Option Plans” shall have the meaning set forth in Section 1.8(a).
“Options” shall have the meaning set forth in Section 1.8(a).
“Owned Real Property” shall have the meaning set forth in Section 3.14(b).
“Patents” shall have the meaning set forth in Section 3.16(e).
“Permits” shall have the meaning set forth in Section 3.11.
“Permitted Liens” shall have the meaning set forth in Section 3.14(d).
“Person” shall mean any individual, partnership, association, joint venture, corporation,
business, trust, joint stock company, limited liability company, special purpose vehicle, any
unincorporated organization, any other entity, a “group” of such persons, as that term is defined
in Rule 13d-5(b) under the Exchange Act, or a Governmental Entity.
“Proxy Statement” shall have the meaning set forth in Section 2.8.
58
“Real Property” shall have the meaning set forth in Section 3.14(e).
“Real Property Leases” shall have the meaning set forth in Section 3.14(f).
“Redemption” shall have the meaning set forth in Section 5.11(b).
“Regulatory Laws” shall have the meaning set forth in Section 2.4(b).
“Release” shall mean any release, spill, emission, discharge, leaking, pumping, injection,
deposit, disposal, dispersal, leaching or migration into the indoor or outdoor environment
(including, without limitation, ambient air, surface water, groundwater and surface or subsurface
strata) or into or out of any property, including the movement of Hazardous Materials through or in
the air, soil, surface water, groundwater or property.
“Required Approvals” shall have the meaning set forth in Section 5.7.
“Restricted Stock” shall have the meaning set forth in Section 3.3.
“Xxxxxxxx-Xxxxx” shall have the meaning set forth in Section 3.6(d).
“SEC” shall mean the United States Securities and Exchange Commission or any other
Governmental Entity administering the Securities Act and the Exchange Act.
“SEC Reports” shall have the meaning set forth in Section 3.6(a).
“Securities Act” shall have the meaning set forth in Section 2.4(b).
“Significant Subsidiary” shall have the meaning set forth in Section 4.2.
“Software” shall have the meaning set forth in Section 3.16(e).
“Structure” shall have the meaning set forth in Section 3.15(a).
“Subsidiary” shall have the meaning set forth in Section 3.2(a).
“Sugarloaf” shall have the meaning set forth in Section 3.2(a).
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“Sugarloaf Interest” shall have the meaning set forth in Section 3.2(a).
“Superior Proposal” shall have the meaning set forth in Section 4.2.
“Surviving Corporation” shall have the meaning set forth in Section 1.1.
“Takeover Statute” shall have the meaning set forth in Section 3.21.
“Tango” shall have the meaning set forth in Section 3.2(a).
“Tax Return” shall mean any return, report, information return or other document (including
any related or supporting information and, where applicable, profit and loss accounts and balance
sheets) with respect to Taxes.
“Taxes” shall mean (i) all taxes, charges, fees, levies or other assessments imposed by any
United States Federal, state, or local taxing authority or by any non-U.S. taxing authority,
including but not limited to, income, gross receipts, excise, property, sales, use, transfer,
payroll, license, ad valorem, liquor, value added, withholding, social security, national insurance
(or other similar contributions or payments) franchise, estimated, severance, stamp, and other
taxes; (ii) all interest, fines, penalties or additions attributable to or in respect of any items
described in clause (i); and (iii) any transferee liability in respect of any items described in
clauses (i) or (ii) payable by reason of contract, assumption, transferee liability, operation of
Law, Treasury Regulation 1.1502-6(a) (or any predecessor or successor thereof or any analogous or
similar provision under Law) or otherwise.
“Termination Date” shall have the meaning set forth in Section 7.1(d).
“Trademarks” shall have the meaning set forth in Section 3.16(e).
“Transaction Expenses” shall have the meaning set forth in Section 7.2(b)(i).
“Treasury Regulations” means the regulations, including temporary regulations, promulgated
under the Code, as the same may be amended hereafter from time to time (including corresponding
provisions of succeeding regulations).
“Voting Agreement” shall have the meaning set forth in the Recitals.
“Voting Group” shall have the meaning set forth in the Recitals.
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“WARN Act” shall have the meaning set forth in Section 3.26.
“Warrant Consideration” shall have the meaning set forth in Section 1.6(a)(ii).
“Warrants” shall have the meaning set forth in Section 1.6(a)(ii).
“Wellspring” shall have the meaning set forth in Section 2.5.
SECTION 8.5. Headings. The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this Agreement.
SECTION 8.6. Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law, or public policy, all other conditions
and provisions of this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision is invalid, illegal
or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are fulfilled to the maximum
extent possible.
SECTION 8.7. Entire Agreement; No Third-Party Beneficiaries. This Agreement, the
Disclosure Schedules and the Confidentiality Agreement constitute the entire agreement and
supersede any and all other prior agreements and undertakings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof and, except as otherwise
expressly provided herein (including Section 5.9 but expressly excluding Section
5.10), this Agreement is not intended to confer upon any other Person any rights or remedies
hereunder, except that Wellspring shall be a beneficiary of Section 7.2(b) (solely with
respect to the right to receive the Transaction Expenses) and shall be entitled to enforce such
provisions.
SECTION 8.8. Assignment. This Agreement shall not be assigned by operation of law or
otherwise, except that Merger Sub may assign all or any of its rights hereunder to any affiliate of
Merger Sub provided that no such assignment shall relieve the assigning party of its obligations
hereunder.
SECTION 8.9. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Missouri applicable to contracts executed in and to be
performed entirely within that State.
SECTION 8.10. Amendment. This Agreement may be amended by the parties hereto by action
taken by Merger Sub, Holdings, and by action taken by or on behalf of the Board of Directors at any
time before the Effective Time; provided, however, that, after approval of the
Merger by the shareholders of the Company, no amendment may be made which would reduce the amount
or change the type of consideration into which each share of Company
61
Common Stock will be converted
upon consummation of the Merger. This Agreement may not be amended except by an instrument in
writing signed by the parties hereto.
SECTION 8.11. Waiver. At any time before the Effective Time, any party hereto may (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or conditions contained herein.
Any agreement on the part of a party hereto to any such extension or waiver shall be valid only as
against such party and only if set forth in an instrument in writing signed by such party. No
delay on the part of any party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any waiver on the part of any party of any right, power or
privilege, nor any single or partial exercise of any such right, power or privilege, preclude any
further exercise thereof or the exercise of any other such right, power or privilege. The rights
and remedies herein provided are cumulative and are not exclusive of any rights or remedies that
any party may otherwise have at law or in equity.
SECTION 8.12. Counterparts. This Agreement may be executed in one or more counterparts,
and by the different parties hereto in separate counterparts, each of which when executed shall be
deemed to be an original but all of which shall constitute one and the same agreement.
SECTION 8.13. Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH
PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF THIS WAIVER, (C) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) EACH SUCH
PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 8.13.
SECTION 8.14. Interpretation.
(a) The parties acknowledge and agree that they may pursue judicial remedies at law or
equity in the event of a dispute with respect to the interpretation or construction of this
Agreement. In the event that an alternative dispute resolution procedure is provided for in
any other agreement contemplated hereby, and there is a dispute with respect to the
construction or interpretation of such agreement, the dispute resolution procedure provided
for in such agreement shall be the procedure that shall apply with respect to the resolution
of such dispute.
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(b) The table of contents is for convenience of reference only, does not constitute
part of this Agreement and shall not be deemed to limit or otherwise affect any of the
provisions hereof. Where a reference in this Agreement is made to an Article, Section,
Exhibit or Schedule, such reference shall be to an Article, Section of or Exhibit or
Schedule to this Agreement unless otherwise indicated. For purposes of this Agreement, the
words “hereof,” “herein,” “hereby” and other words of similar import refer to this Agreement
as a whole unless otherwise indicated. Whenever the words “include,” “includes” or
“including” are used in this Agreement, they shall be deemed to be followed by the words
“without limitation.” Whenever the singular is used herein, the same shall include the
plural, and whenever the plural is used herein, the same shall include the singular, where
appropriate.
(c) No provision of this Agreement will be interpreted in favor of, or against, either
party hereto by reason of the extent to which any such party or its counsel participated in
the drafting thereof or by reason of the extent to which any such provision is inconsistent
with any prior draft hereof or thereof.
SECTION 8.15. Disclosure Generally. All of the Company Disclosure Schedule and Holdings
Schedule are incorporated herein and expressly made a part of this Agreement as though completely
set forth herein. All references to this Agreement herein or in any section of the Company
Disclosure Schedule or Holdings Schedule shall be deemed to refer to this entire Agreement,
including all sections of the Company Disclosure Schedule and Holdings Schedule; provided,
however, that information furnished in any particular section of the Company Disclosure
Schedule or Holdings Schedule shall be deemed to be included in another section of the Company
Disclosure Schedule or Holdings Schedule, respectively, only to the extent a matter in such section
of the Company Disclosure Schedule or Holdings Schedule is disclosed in such a way as to make its
relevance to the information called for by such other section of this Agreement reasonably apparent
on its face.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, each of the Company, Merger Sub and Holdings has caused this Agreement to
be duly executed and delivered by its respective duly authorized officer, all as of the date first
above written.
XXXX & BUSTER’S, INC. |
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By: | ||||
Name: | ||||
Title: | ||||
WS MIDWAY ACQUISITION SUB, INC. |
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By: | ||||
Name: | ||||
Title: | ||||
WS MIDWAY HOLDINGS, INC. |
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By: | ||||
Name: | ||||
Title: | ||||
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