Exhibit 2
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into as of
the 15th day of January 2003, by and among Conn Appliances, Inc., a Texas
corporation ("Conn Texas"), Conn's, Inc., a Delaware corporation and wholly
owned subsidiary of Conn Appliances, Inc. ("Conn Delaware"), and Conn's Merger
Sub, Inc., a Texas corporation and wholly owned subsidiary of Conn Delaware
("Merger Sub").
RECITALS
WHEREAS, Conn Texas, Conn Delaware and Merger Sub intend to effect a merger
of Merger Sub into Conn Texas in accordance with this Agreement and the Texas
Business Corporation Act (the "Merger"), such that upon consummation of the
Merger, Merger Sub will cease to exist, and Conn Texas will become a wholly
owned subsidiary of Conn Delaware; and
WHEREAS, Conn Delaware and Merger Sub are newly formed corporations, were
organized for the sole purpose of participating in the Merger and have nominal
assets and liabilities, if any; and
WHEREAS, the Merger is intended to qualify as a tax-free reorganization
under the Internal Revenue Code of 1986, as amended (the "Code").
AGREEMENT
NOW, THEREFORE, in consideration of the mutual obligations and covenants
set forth in this Agreement and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Conn Texas, Conn
Delaware and Merger Sub agree as follows:
I.
Terms of Merger
Section 1.1 Statutory Merger. Subject to the terms and conditions contained
herein and in accordance with the provisions of the Texas Business Corporation
Act (the "TBCA"), Merger Sub will, at the Effective Time (as defined herein), be
merged with and into Conn Texas, and Conn Texas will be the surviving
corporation (the "Surviving Corporation"). After the Merger, Conn Texas will
continue to exist under and to be governed by the laws of the State of Texas.
Except as herein specifically set forth, the identity, existence, purposes,
powers, objectives, franchises, privileges, rights and immunities of Conn Texas
will continue unaffected and unimpaired by the Merger, and the corporate
franchises, existence, assets, liabilities and rights of Merger Sub will be
merged into Conn Texas, which, as the Surviving Corporation, will be fully
vested therewith. The separate existence and corporate organization of Merger
Sub, except insofar as they may be continued by statute, will cease at the
Effective Time.
Section 1.2 Effective Time. The Merger will become effective at the time
stated in the Articles of Merger filed with the Secretary of State of the State
of Texas or if no time is stated therein, the Merger shall become effective upon
the acceptance of the Articles of Merger by the Secretary of State of the State
of Texas (the "Effective Time").
Section 1.3 Name of Surviving Corporation. At the Effective Time, the name
of the Surviving Corporation will continue as "Conn Appliances, Inc."
Section 1.4 Articles of Incorporation and Bylaws. The Articles of
Incorporation and Bylaws of Conn Texas as in effect immediately prior to the
Effective Time will be the Articles of Incorporation and Bylaws of the Surviving
Corporation from and after the Effective Time, without change.
Section 1.5 Directors. The directors of Conn Texas in office immediately
prior to the Effective Time will be the directors of the Surviving Corporation,
each to hold office in accordance with the Articles of Incorporation and Bylaws
of the Surviving Corporation, and, unless they sooner die, resign or are
removed, will hold office from the Effective Time until their respective
successors are elected and qualified.
Section 1.6 Officers. The officers of Conn Texas in office immediately
prior to the Effective Time will be the officers of the Surviving Corporation
from and after the Effective Time. Unless the foregoing officers sooner die,
resign or are removed, they will hold their respective offices from the
Effective Time until their respective successors are elected or appointed.
Section 1.7 Conditions to the Completion of the Merger. The completion of
the Merger depends upon the satisfaction of the following conditions: (i) the
approval of the Merger by the holders of two-thirds of the outstanding shares of
Conn Texas Common Stock and Conn Texas Preferred Stock, as defined herein; (ii)
the approval of the Merger by the holders of two-thirds of the outstanding
shares of Merger Sub Common Stock, as defined herein; and (iii) the consummation
of an initial public offering of Conn Delaware Common Stock, as defined herein.
The Merger will take place contemporaneously with the closing of the initial
public offering and will only take place if Conn Delaware completes the initial
public offering.
II.
Conversion of Securities; Effects of the Merger
Section 2.1 Merger Consideration; Conversion and Cancellation of
Securities. At the Effective Time, by virtue of the Merger and without any
action on the part of the holder of any securities of Conn Delaware, Merger Sub
or Conn Texas:
2.1.1 Shares of Conn Texas Common Stock. Each share of the Common
Stock, $.01 par value per share, of Conn Texas ("Conn Texas Common Stock"),
outstanding immediately prior to the Effective Time shall be converted into
one share of the Common Stock, $.01 par value per share, of Conn Delaware
("Conn Delaware Common Stock").
2.1.2 Shares of Conn Texas Preferred Stock. Each share of Senior
Preferred Stock, par value $.01 per share, of Conn Texas ("Conn Texas
Preferred Stock"), outstanding immediately prior to the Effective Time
shall be converted into one share of the Senior Preferred Stock, par value
$.01 per share, of Conn Delaware ("Conn Delaware Preferred Stock").
2
2.1.3 Shares of Merger Sub Common Stock. Each share of the Common
Stock, $.01 par value per share, of Merger Sub ("Merger Sub Common Stock")
outstanding immediately prior to the Effective Time shall be converted into
one share of Conn Texas Common Stock.
2.1.4 Shares of Conn Delaware Common Stock. Each share of Conn
Delaware Common Stock outstanding immediately prior to the Effective Time
shall automatically be cancelled and retired and all rights with respect
thereto shall cease to exist.
2.1.5 Treasury Shares. Each share of Conn Texas Common Stock or Conn
Texas Preferred Stock issued and held as Conn Texas treasury stock shall be
cancelled and retired without payment of any consideration therefor and
shall cease to exist.
Section 2.2 Exchange of Certificates. As soon as reasonably practicable
after the Effective Time, the Surviving Corporation shall mail, or shall cause
to be mailed, to each holder of record of a certificate or certificates which
immediately prior to the Effective Time represented outstanding shares of the
capital stock of Conn Texas (collectively, the "Certificates") whose shares were
converted into the right to receive shares of capital stock of Conn Delaware
pursuant to Section 2.1: (i) a letter of transmittal and (ii) instructions for
use in effecting the surrender of the Certificates in exchange for the capital
stock of Conn Delaware. Upon surrender of a Certificate for cancellation,
together with such letter of transmittal, duly executed, and such other
documents as may reasonably be required by Conn Delaware, the holder of such
Certificate shall be entitled to receive in exchange therefor the capital stock
of Conn Delaware into which the holder's shares of capital stock of Conn Texas
theretofore represented by such Certificate shall have been converted pursuant
to Section 2.1, and the Certificate so surrendered shall forthwith be canceled.
In the event of a transfer of ownership of any shares of capital stock of Conn
Texas that are not registered in the transfer records of Conn Texas, payment may
be made to an individual, corporation, partnership, limited liability company,
joint venture, association, trust, unincorporated organization or other entity
(each 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
either shall pay any transfer or other taxes required by reason of such payment
being made to a Person other than the registered holder of such Certificate or
establish to the satisfaction of Conn Delaware that such tax or taxes have been
paid or are not applicable; provided, however, that Conn Delaware may require
reasonable assurance that the transfer complied with the TBCA or other
applicable laws.
Section 2.3 No Further Ownership Rights in Texas Common Stock or Texas
Preferred Stock. All shares of capital stock of Conn Delaware issued upon the
surrender of Certificates in accordance with the terms of this Article II shall
be deemed to have been paid in full satisfaction of all rights pertaining to the
capital stock of Conn Texas theretofore represented by such Certificates, and
there shall be no further registration of transfers on the stock transfer books
of Conn Texas of the capital stock of Conn Texas which was outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Company for any reason, they shall
be canceled and exchanged as provided in this Article II.
3
Section 2.4 No Escheat Liability. Neither Conn Delaware, Merger Sub nor
Conn Texas shall be liable to any Person in respect of any shares of capital
stock of Conn Delaware issued nor dividends delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
Section 2.5 Assumption of Stock Option Plans. Conn Delaware shall, from and
after the Effective Time, assume and agree to perform all obligations of Conn
Texas pursuant to the Conn Appliances, Inc. 2003 Amended and Restated Incentive
Stock Option Plan, the Conn Appliances, Inc. 2003 Non-Employee Director Stock
Option Plan and the Conn Appliances, Inc. Employee Stock Purchase Plan
(collectively the "Plans").
Section 2.6 Assumption of Obligations to Issue Stock.
2.6.1 At the Effective Time, automatically and without any action on
the part of the holder thereof, each outstanding option to purchase shares
of Conn Texas Common Stock granted pursuant to the Plans shall become an
option to purchase shares of Conn Delaware Common Stock. The terms of each
such option shall be amended automatically to provide that the number of
shares of Conn Delaware Common Stock issuable upon exercise of the option
shall equal the number of shares of Conn Texas Common Stock issuable
pursuant to the option immediately prior to its amendment hereby and that
the exercise price per share of such Conn Delaware Common Stock shall be
equal to the exercise price per share of Conn Texas Common Stock in effect
immediately prior to the amendment effected hereby, subject in each case to
subsequent adjustment as provided by the terms of the Plans and the
applicable option agreement. In the case of any option to which Section 421
of the Code applies by reason of the qualifications under Section 422 or
423 of the Code, the exercise price, the number of shares purchasable
pursuant to such option and the terms and conditions of exercise of such
option shall be determined in a manner that complies with Section 424(a) of
the Code. This Subsection 2.6.1 will only effectuate such changes that are
not effectuated pursuant to Section 12(c) of the Amended and Restated 2003
Incentive Stock Option Plan and Section 17(c) of the 2003 Non-Employee
Director Stock Option Plan.
2.6.2 On or prior to the Effective Time, Conn Texas shall take or
cause to be taken all such actions as may be necessary or desirable in
order to authorize the transactions contemplated by Subsection 2.6.1
hereof.
2.6.3 Conn Delaware shall take all corporate actions necessary to
reserve for issuance a sufficient number of shares of Conn Delaware Common
Stock for delivery upon exercise of such stock options.
Section 2.7 Accumulated and Unpaid Dividends. All accumulated and unpaid
dividends on Conn Texas Preferred Stock (whether or not declared) shall be
assumed by Conn Delaware to the extent set forth in Section 2.1 of the
Certificate of Designations, Preferences and Relative Rights of Senior Preferred
Stock of Conn Delaware.
Section 2.8 Assumption of Obligations to Dissenting Shareholders. Conn
Delaware shall be obligated for the payment of the fair value of any shares held
by any shareholder of
4
Conn Texas that dissented to the merger and complied with the requirements of
Article 5.12 of the TBCA for the recovery of the fair value of his shares.
III.
Filings Relating to the Effective Time
Section 3.1 Full Cooperation. Conn Delaware, Merger Sub and Conn Texas will
proceed expeditiously and cooperate fully in the procurement of any consents and
approvals, the taking of any other action, and the satisfaction of all other
requirements prescribed by law or otherwise necessary for the consummation of
the Merger.
Section 3.2 Filings. The appropriate officers of Conn Delaware, Merger Sub
and Conn Texas will execute and verify, and cause to be filed Articles of Merger
in accordance with the TBCA at such time as the companies may mutually agree.
IV.
Certain Effects of the Merger
Section 4.1 Separate Existence of Merger Sub. At the Effective Time, the
separate existence of Merger Sub will cease. All rights, title, and interests to
all real estate, employee benefit plans, accounts receivable, furniture,
fixtures, equipment, leasehold rights and all other assets and property owned by
Conn Texas and Merger Sub shall be allocated to, acquired by and vested in the
Surviving Corporation without reversion or impairment, without further act or
deed, and without any transfer or assignment having occurred, but subject to any
existing liens thereon. All liabilities and obligations of Conn Texas and Merger
Sub, including obligations under employee benefit plans, leases, bank
indebtedness and accounts payable shall be allocated to and assumed completely
by the Surviving Corporation, and the Surviving Corporation shall be the primary
obligor therefor. All contracts, leases, agreements, promissory notes, employee
benefit plans and other documents or instruments which include Merger Sub within
their text, shall be deemed as of the Effective Time to have substituted the
name of the Surviving Corporation for Merger Sub, wherever it may appear. For
vesting purposes, years of employment, calculation of dividends and other
provisions contained in such documents for which association with Merger Sub is
important, the period of association with the Surviving Corporation will relate
back to the date of original association with Merger Sub.
Section 4.2 Further Actions. At the time, or from time to time, after the
Effective Time, the last acting officers and directors of Merger Sub will, as
and when requested by the Surviving Corporation or its successors or assigns,
execute and deliver all such deeds, assignments and other instruments and take
or cause to be taken all such further or other reasonable action as the
Surviving Corporation deems reasonably necessary or desirable in order to vest,
perfect or confirm in the Surviving Corporation title to and possession of all
of the properties, rights, privileges, powers, franchises, immunities and
interests of Merger Sub and otherwise to carry out the purpose of this
Agreement.
5
V.
Closing Date, Termination and Amendment
Section 5.1 Closing Date. The Merger and the other transactions
contemplated by this Agreement shall be closed at the time and date as may be
mutually agreed upon by Conn Delaware, Merger Sub and Conn Texas.
Section 5.2 Termination. This Agreement may be terminated and the Merger
and the other transactions contemplated by this Agreement abandoned at any time
prior to the Effective Time pursuant to resolutions adopted by the Board of
Directors of each of Conn Delaware, Merger Sub and Conn Texas, without action by
the stockholders of Conn Delaware or the shareholders of Conn Texas and Merger
Sub.
Section 5.3 Amendments. This Agreement may be supplemented, amended or
modified by mutual consent of the parties to this Agreement; provided, however,
that, any amendment effected subsequent to stockholder approval shall be subject
to the restrictions contained in the TBCA. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
all the parties hereto.
VI.
Miscellaneous Provisions
Section 6.1 Governing Law. This Agreement shall be governed by and
construed in accordance with, the laws of the State of Texas, regardless of the
laws that might otherwise govern under applicable conflict of laws principles.
Section 6.2 Counterparts. This Agreement may be executed in multiple
counterparts, each of which will be deemed an original and all of which together
will constitute one agreement.
Section 6.3 Entire Agreement. This Agreement, including the agreements and
documents referenced herein, constitutes the entire agreement and supersedes all
other prior agreements and undertakings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof.
[Remainder of Page Intentionally Left Blank. Signature Page Follows.]
6
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
CONN APPLIANCES, INC.,
a Texas corporation
By: /s/ Xxxxxx X. Xxxxx Xx.
------------------------------
Xxxxxx X. Xxxxx, Xx.
Chairman of the Board and Chief Executive Officer
CONN'S, INC.,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxx Xx.
-------------------------------
Xxxxxx X. Xxxxx, Xx.
Chairman of the Board and Chief Executive Officer
CONN'S MERGER SUB, INC.,
a Texas corporation
By: /s/ Xxxxxx X. Xxxxx, Xx.
-------------------------------
Xxxxxx X. Xxxxx, Xx.
President
7
