EXHIBIT 2.1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
D&B HOLDINGS I, INC.,
D&B ACQUISITION SUB, INC.
AND
DAVE & BUSTER'S, INC.
MAY 30, 2002
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TABLE OF CONTENTS
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Page
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ARTICLE I THE OFFER...............................................................................................2
1.1 The Offer..............................................................................................2
1.2 Company Actions........................................................................................3
1.3 Single Step Merger.....................................................................................4
ARTICLE II THE MERGER.............................................................................................4
2.1 The Merger.............................................................................................4
2.2 Closing................................................................................................5
2.3 Effective Time.........................................................................................5
2.4 Effects of the Merger..................................................................................5
2.5 Articles of Incorporation and Bylaws...................................................................5
2.6 Directors..............................................................................................5
2.7 Officers...............................................................................................5
2.8 Conversion of Common Stock and Options.................................................................5
2.9 Exchange of Certificates...............................................................................7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................................................8
3.1 Corporate Organization.................................................................................9
3.2 Subsidiaries...........................................................................................9
3.3 Capitalization........................................................................................10
3.4 Corporate Authority; Noncontravention.................................................................10
3.5 Consents and Approvals................................................................................11
3.6 SEC Reports...........................................................................................11
3.7 Absence of Certain Changes or Events..................................................................12
3.8 Litigation............................................................................................13
3.9 Employee Benefit Plans................................................................................13
3.10 Information Supplied..................................................................................14
3.11 Conduct of Business; Permits..........................................................................15
3.12 Taxes.................................................................................................15
3.13 Environmental.........................................................................................17
3.14 Title to Assets; Liens................................................................................18
3.15 Real Property.........................................................................................19
3.16 Intellectual Property.................................................................................22
3.17 Material Contracts....................................................................................22
3.18 Brokers...............................................................................................23
3.19 Board and Special Committee Action....................................................................23
3.20 Opinion of Financial Advisor..........................................................................24
3.21 Control Share Acquisition.............................................................................24
3.22 Rights Agreement......................................................................................24
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<Table>
3.23 Vote Required.........................................................................................24
3.24 Insurance.............................................................................................24
3.25 Suppliers.............................................................................................25
3.26 Labor.................................................................................................25
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER...............................................25
4.1 Organization..........................................................................................25
4.2 Authority and Related Matters.........................................................................25
4.3 No Conflicts; Consents................................................................................25
4.4 Information Supplied..................................................................................26
4.5 Financing.............................................................................................26
4.6 Brokers...............................................................................................26
4.7 No Prior Activities...................................................................................26
ARTICLE V COVENANTS RELATED TO CONDUCT OF BUSINESS...............................................................27
5.1 Conduct of Business...................................................................................27
5.2 No Solicitation.......................................................................................30
ARTICLE VI ADDITIONAL COVENANTS..................................................................................31
6.1 Preparation of Proxy Statement; Stockholders Meeting..................................................31
6.2 Access to Information; Confidentiality................................................................31
6.3 Reasonable Efforts; Notification......................................................................32
6.4 Benefit Plans.........................................................................................33
6.5 Indemnification.......................................................................................33
6.6 Fees and Expenses.....................................................................................34
6.7 Public Announcements..................................................................................34
6.8 Directors.............................................................................................35
6.9 Cooperation of Financing Efforts......................................................................35
6.10 Consents..............................................................................................36
6.11 Takeover Statutes.....................................................................................36
ARTICLE VII CONDITIONS PRECEDENT.................................................................................36
7.1 Conditions to Each Party's Obligation to Effect the Merger............................................36
ARTICLE VIII TERMINATION.........................................................................................37
8.1 Termination...........................................................................................37
8.2 Effect of Termination.................................................................................38
ARTICLE IX GENERAL PROVISIONS....................................................................................38
9.1 Non-survival of Representations and Warranties........................................................38
9.2 Notices...............................................................................................39
9.3 Partial Invalidity....................................................................................39
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9.4 Execution in Counterparts; Facsimile Signatures.......................................................40
9.5 Governing Law, Etc....................................................................................40
9.6 Assignment; Successors and Assigns; No Third Party Beneficiaries......................................40
9.7 Titles and Headings...................................................................................40
9.8 Schedules and Exhibits................................................................................40
9.9 Knowledge.............................................................................................40
9.10 Entire Agreement; Amendments..........................................................................41
9.11 Waivers...............................................................................................41
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SCHEDULES
Schedule 3.2 Subsidiaries
Schedule 3.3 Capitalization
Schedule 3.4 Conflicts
Schedule 3.5 Consents and Approvals
Schedule 3.6 Financial Matters
Schedule 3.7 Certain Changes
Schedule 3.8 Litigation
Schedule 3.9 Employee Benefits
Schedule 3.11 Conduct of Business
Schedule 3.12 Taxes
Schedule 3.13 Environmental Matters
Schedule 3.14 Title to Assets; Liens
Schedule 3.15 Real Property
Schedule 3.16 Intellectual Property
Schedule 3.17 Material Contracts
Schedule 3.24 Insurance
Schedule 3.25 Suppliers
Schedule 5.1 Operations Prior to the Closing Date
Schedule 6.4 Employment Arrangements
Schedule 6.5 Maximum Insurance Premium
Schedule 6.10 Cooperation
Schedule 9.9 Persons Having Knowledge
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of May 30, 2002
(this "Agreement"), is by and among Dave & Buster's, Inc., a Missouri
corporation (the "Company"), D&B Holdings I, Inc., a Delaware corporation
("Parent"), and D&B Acquisition Sub, Inc., a Missouri corporation and a
wholly-owned subsidiary of Parent ("Purchaser").
BACKGROUND
A. The respective Boards of Directors of Parent, Purchaser and
the Company, and a Special Committee (the "Special Committee") of the Board of
Directors of the Company (composed entirely of directors who have no direct or
indirect interest in the transactions contemplated hereby), each have determined
that it would be advisable and in the best interests of their respective
stockholders for Parent to acquire the Company by means of a merger of Purchaser
with and into the Company (the "Merger") on the terms and subject to the
conditions set forth in this Agreement.
B. In furtherance of the Merger, Parent proposes to cause
Purchaser to make a tender offer (as it may be amended from time to time as
permitted under this Agreement, the "Offer") for the purchase of all the issued
and outstanding shares of common stock of the Company, par value $0.01 per share
(the "Common Stock"), including the associated stock purchase rights (the
"Rights") issued pursuant to the Amended and Restated Rights Agreement, dated as
of September 22, 1999, between the Company and ChaseMellon Shareholder Services,
L.L.C., as Rights Agent (the "Rights Agreement"), at a price per share of
$12.00, net cash to each seller of Common Stock, upon the terms and subject to
the conditions set forth in this Agreement.
C. The Board of Directors of the Company, upon the
recommendation of the Special Committee, has approved the Offer and recommends
(subject to the limitations contained herein) that the Company's stockholders
accept the Offer and tender their shares of Common Stock pursuant thereto.
D. Concurrently with the execution and delivery of this
Agreement, Parent is entering into an agreement with certain stockholders of the
Company (the "Support and Exchange Agreement") pursuant to which, among other
things, such stockholders shall agree to take certain actions to support the
transactions contemplated by this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties and agreements set forth herein, the parties agree
as follows:
ARTICLE I
THE OFFER
1.1 THE OFFER.
(a) Subject to the conditions of this Agreement, as promptly
as practicable, but in no event later than five business days after the date of
the execution and delivery of this Agreement, Purchaser shall, and Parent shall
cause Purchaser to, commence the Offer within the meaning of Rule 14d-2 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
obligation of Purchaser to, and of Parent to cause Purchaser to, commence the
Offer and accept for payment, and pay for, any shares of Common Stock tendered
pursuant to the Offer shall be subject only to the conditions set forth in
Exhibit A (any of which may be waived by Purchaser in its sole discretion,
provided that, without the consent of the Company, Purchaser may not waive the
Minimum Tender Condition (as defined in Exhibit A)). The initial expiration date
of the Offer shall be the 20th business day following the commencement of the
Offer. Purchaser expressly reserves the right to modify the terms of the Offer,
except that, without the consent of the Company, Purchaser shall not, except as
provided in the next sentence: (i) reduce the number of shares of Common Stock
subject to the Offer; (ii) reduce the price per share of Common Stock to be paid
pursuant to the Offer; (iii) modify or add to the conditions set forth in
Exhibit A in any manner adverse to the holders of Common Stock; (iv) extend the
Offer; (v) change the form of consideration payable in the Offer; or (vi)
otherwise amend the Offer in any manner adverse to the holders of Common Stock.
Notwithstanding the foregoing, Purchaser may, without the consent of the
Company, (x) extend the Offer for up to a maximum of 10 additional business
days, if at the initial expiration date of the Offer any of the conditions to
Purchaser's obligation to purchase shares of Common Stock set forth herein or in
Exhibit A are not satisfied; (y) extend the Offer for any period required by
applicable law, including any rule, regulation, interpretation or position of
the SEC applicable to the Offer; and (z) extend the Offer for any reason for a
period of not more than 10 business days beyond the latest expiration date that
would otherwise be permitted under this Section 1.1(a). If the Minimum Tender
Condition has been satisfied and all other conditions to the Offer have been
satisfied or waived but less than 90% of the Fully Diluted Shares (as defined
below) have been validly tendered and not withdrawn on the scheduled expiration
date, Purchaser may accept and purchase all of the Common Stock tendered in the
initial offer period and may notify holders of Common Stock of Purchaser's
intent to provide a "subsequent offer period" for tender of at least 90% of the
Fully Diluted Shares pursuant to Rule 14d-11 of the Exchange Act, which
subsequent offer period shall not exceed 15 business days. "Fully Diluted
Shares" means all outstanding securities entitled generally to vote in the
election of directors of the Company on a fully diluted basis, after giving
effect to the exercise or conversion of all options, rights and securities
exercisable or convertible into such voting securities. It is agreed that the
conditions to the Offer are for the benefit of Parent and Purchaser and may be
asserted by Parent or Purchaser regardless of the circumstances giving rise to
any such condition (including any action or inaction by Parent or Purchaser not
inconsistent with the terms hereof). On the terms and subject to the conditions
of the Offer and this Agreement, Purchaser shall, and Parent shall cause
Purchaser to, pay for all shares of Common Stock validly tendered and not
withdrawn pursuant to the Offer that Purchaser becomes obligated to purchase
pursuant to the Offer as soon as practicable after the expiration of the Offer.
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(b) On the date of commencement of the Offer, Parent and
Purchaser shall file with the SEC a Tender Offer Statement on Schedule TO with
respect to the Offer (together with all amendments and supplements thereto and
including the exhibits thereto, the "Schedule TO") and a Statement on Schedule
13E-3 (together with all amendments and supplements thereto and including the
exhibits thereto, the "Schedule 13E-3"). The Schedule TO shall contain, among
other things, an offer to purchase and a related letter of transmittal and other
ancillary documents (such Schedule TO, including the Schedule 13E-3 and the
documents included therein pursuant to which the Offer will be made, together
with any supplements or amendments thereto, the "Offer Documents"). Each of
Parent and Purchaser on the one hand, and the Company on the other hand, shall
promptly correct any information provided by it for use in the Offer Documents
if and to the extent that such information is false or misleading in any
material respect, and each of Parent and Purchaser shall take all steps
necessary to amend or supplement the Offer Documents and to cause the Offer
Documents as so amended or supplemented to be filed with the SEC and to be
disseminated to the Company's stockholders, in each case as and to the extent
required by applicable Federal or state securities laws. Parent and Purchaser
shall promptly notify the Company and its counsel regarding any comments that
Parent, Purchaser or their counsel receive from the SEC or its staff with
respect to the Offer Documents and shall promptly provide to the Company and its
counsel copies of such written comments, if any. The Company shall cooperate
with Parent and Purchaser in responding to any comments received from the SEC
with respect to the Offer Documents.
(c) Subject to the terms and conditions of this Agreement,
Parent shall provide or cause to be provided to Purchaser on a timely basis the
funds necessary to purchase any shares of Common Stock that Purchaser becomes
obligated to purchase pursuant to the Offer.
1.2 COMPANY ACTIONS.
(a) The Company hereby approves of and consents to the Offer,
the Merger and the other transactions contemplated by this Agreement, subject to
the approval of the Merger by the Company's stockholders in accordance with the
Missouri BCL (as defined in Section 2.1), if required.
(b) In accordance with Rule 14d-9(e) of the Exchange Act, and
prior to the Company Stockholder Approval (as defined in Section 3.23), if any,
the Company shall file with the SEC a Solicitation/ Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended from
time to time and including the exhibits thereto, the "Schedule 14D-9")
containing the recommendations described in Section 3.19 hereof and shall mail
the Schedule 14D-9 to the stockholders of the Company. Each of the Company,
Parent and Purchaser shall promptly correct any information provided by it for
use in the Schedule 14D-9 if and to the extent that such information is false or
misleading in any material respect, and the Company shall take all steps
necessary to amend or supplement the Schedule 14D-9 and to cause the Schedule
14D-9 as so amended or supplemented to be filed with the SEC and disseminated to
the Company's stockholders, in each case as and to the extent required by
applicable Federal securities laws. The Company shall promptly notify Parent and
its counsel regarding any comments the Company or its counsel may receive from
the SEC or its staff with respect to the
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Schedule 14D-9 and shall promptly provide to the Parent and its counsel copies
of such written comments, if any.
(c) In connection with the Offer, the Company shall cause its
transfer agent to furnish Purchaser promptly with mailing labels containing the
names and addresses of the record holders of Common Stock as of the latest
practicable date, together with copies of all lists of stockholders, security
position listings and computer files and all other information in the Company's
possession or control regarding the beneficial owners of Common Stock, and shall
furnish to Purchaser such information and assistance (including updated lists of
stockholders, security position listings and computer files) as Parent may
reasonably request in communicating the Offer to the stockholders of the
Company. Subject to the requirements of applicable law, and except for such
steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate this Agreement, Parent and Purchaser shall
hold in confidence the information contained in any such labels, listings and
files, shall use such information only in connection with the Offer and the
Merger and, if this Agreement is terminated, shall, upon request, use reasonable
efforts to deliver to the Company or destroy all copies of such information then
in their possession, followed promptly by written confirmation of copies
destroyed, if any.
1.3 SINGLE STEP MERGER. In the event that, upon expiration of
the Offer, at least 66 2/3% of the Fully Diluted Shares have been validly
tendered and not withdrawn but the Minimum Tender Condition has not been
satisfied and no shares of Common Stock are accepted by Purchaser for purchase
and payment pursuant to the Offer, Parent, Purchaser and the Company shall
proceed with the Merger as expeditiously as reasonably possible subject to all
applicable terms and conditions contained in this Agreement, provided that the
obligations of Parent and Purchaser to consummate the Merger shall also be
conditioned on (i) satisfaction of each of the conditions set forth in Exhibit A
(disregarding references to the Offer contained therein) other than the Minimum
Tender Condition and (ii) notwithstanding anything to the contrary in Section
4.5 hereof or elsewhere in this Agreement, the funding from third party lenders
of at least $155 million of new debt financing and availability of an additional
$30 million line of credit from third party lenders, in each case on
commercially reasonable terms as determined in the good faith judgment of
Parent. If this Section 1.3 applies, (x) the "Merger Consideration" referred to
in Section 2.8(a) and elsewhere in this Agreement shall be the per share price
of the Offer in effect immediately prior to expiration of the Offer and (y)
Section 7.1(d) shall not apply.
ARTICLE II
THE MERGER
2.1 THE MERGER. On the terms and subject to the conditions
set forth in this Agreement, and in accordance with the General and Business
Corporation Law of the State of Missouri (the "Missouri BCL"), Purchaser shall
be merged with and into the Company at the Effective Time (as defined in Section
2.3) whereupon the separate corporate existence of Purchaser shall cease and the
Company shall continue as the surviving corporation (the "Surviving
Corporation").
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2.2 CLOSING. The closing of the Merger (the "Closing") shall
take place at the offices of Gibson, Dunn & Crutcher, 200 Park Avenue, New York,
New York 10166 as soon as practicable after all the conditions set forth in
Section 7.1 have been satisfied (or, to the extent permitted by law, waived by
the parties entitled to the benefits thereof), or at such other place, time and
date as shall be agreed in writing between Parent and the Company. The date on
which the Closing occurs is referred to in this Agreement as the "Closing Date".
2.3 EFFECTIVE TIME. Prior to the Closing, Parent shall
prepare, and on the Closing Date or as soon as practicable thereafter Parent
shall file with the Secretary of State for the State of Missouri, Articles of
Merger (the "Articles of Merger") executed in accordance with the relevant
provisions of the Missouri BCL and shall make all other filings or recordings
required under the Missouri BCL to give effect to the Merger. The Merger shall
become effective at such time as the Articles of Merger are duly filed with such
Secretary of State for the State of Missouri (the time the Merger becomes
effective being the ("Effective Time").
2.4 EFFECTS OF THE MERGER. The Merger shall have the effects
set forth in the applicable provisions of the Missouri BCL. Without limiting the
generality of the foregoing and subject thereto, at the Effective Time all the
properties, rights, privileges, powers and franchises of the Company and
Purchaser shall vest in the Surviving Corporation, and all debts, liabilities
and duties of the Company and Purchaser shall become the debts, liabilities and
duties of the Surviving Corporation.
2.5 ARTICLES OF INCORPORATION AND BYLAWS. The Articles of
Incorporation of Purchaser in effect at the Effective Time shall be the Articles
of Incorporation of the Surviving Corporation until amended in accordance with
applicable law. The Bylaws of Purchaser in effect at the Effective Time shall be
the Bylaws of the Surviving Corporation until amended in accordance with
applicable law.
2.6 DIRECTORS. The directors of Purchaser at the Effective
Time shall be the initial directors of the Surviving Corporation, each to hold
office in accordance with the Articles of Incorporation and Bylaws of the
Surviving Corporation until such director's successor is duly elected or
appointed and qualified.
2.7 OFFICERS. The officers of the Company at the Effective
Time shall be the initial officers of the Surviving Corporation, each to hold
office in accordance with the Articles of Incorporation and Bylaws of the
Surviving Corporation until such officer's successor is duly elected or
appointed and qualified.
2.8 CONVERSION OF COMMON STOCK AND OPTIONS. At the Effective
Time, by virtue of the Merger and without any action on the part of any holder
of Common Stock or any shares of capital stock of Purchaser:
(a) Common Stock. Each issued and outstanding share of Common
Stock (other than shares of Common Stock to be canceled and retired in
accordance with Section 2.8(c) and any Dissenting Shares (as defined in Section
2.8(d)) shall be converted into the right to receive in cash from the Company an
amount equal to the price per share of Common Stock paid pursuant to the Offer
(the "Merger Consideration"). As of the Effective Time, all such shares of
5
Common Stock shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each holder of a certificate
representing any such shares of Common Stock shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration upon
surrender of such certificate in accordance with Section 2.9, without interest.
(b) Purchaser Capital Stock. Each issued and outstanding share
of capital stock of Purchaser shall be converted into and become one fully paid
and nonassessable share of common stock, par value $0.01 per share, of the
Surviving Corporation.
(c) Cancellation of Treasury Stock and Purchaser-Owned Common
Stock. Each share of Common Stock that is owned by the Company, Parent or
Purchaser, or any wholly-owned subsidiary of the Company or Parent, shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist, and no consideration shall be delivered or deliverable in
exchange therefor.
(d) Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, shares of Common Stock that are issued and
outstanding immediately prior to the Effective Time and that are held by Persons
who are entitled to demand, and properly demand, payment of the fair value of
such shares pursuant to, and who comply in all respects with, Section 351.455 of
the Missouri BCL ("Dissenting Shares") shall not be converted into the right to
receive the Merger Consideration, but rather shall be entitled to payment of the
fair value of such Dissenting Shares in accordance with the Missouri BCL;
provided, however, that if any holder of Dissenting Shares fails to perfect or
otherwise waives, withdraws or loses the right to payment of the fair value of
such shares under the Missouri BCL, then the right of such holder to be paid the
fair value of such holder's Dissenting Shares shall cease and such Dissenting
Shares shall be treated as if they had been converted as of the Effective Time
into the right to receive the Merger Consideration as provided in Section
2.8(a). The Company shall give prompt notice to Parent of any demands received
by the Company for payment of the fair value of any shares of Common Stock, and
Parent 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 Parent, make any payment with respect to, or settle or
offer to settle, any such demands.
(e) Stock Options. Immediately prior to the Effective Time,
each outstanding Company Stock Option (as defined in Section 3.3) which is then
exercisable or becomes exercisable as a result of the consummation of the
transactions contemplated by this Agreement, shall be canceled by the Company,
and at the Effective Time the holder thereof shall be entitled to receive from
the Surviving Corporation as soon as practicable after the Effective Time in
consideration for such cancellation an amount in cash equal to the product of a)
the number of shares of Common Stock previously subject to such Company Stock
Option and b) the excess, if any, of the Merger Consideration over the exercise
price per share for such Company Stock Option, reduced by the amount of
withholding or other taxes required by law to be withheld. Except as provided
herein or as otherwise agreed by the parties, the Company Stock Plans and any
other plan, program or arrangement providing for the issuance or grant of any
interest in respect of the capital stock of the Company shall terminate as of
the Effective Time. Prior to the Effective Time, the Board of Directors of the
Company and the Compensation Committee of the
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Board of Directors shall adopt such resolutions and the Company shall take such
other actions as are necessary to carry out the terms of this Section 2.8(e).
2.9 EXCHANGE OF CERTIFICATES.
(a) Prior to the Effective Time, Parent shall select a bank or
trust company to act as paying agent (the "Paying Agent") for the payment of the
Merger Consideration upon surrender of certificates (the "Certificates")
representing Common Stock. Parent shall take all steps necessary to enable and
cause the Surviving Corporation to provide to the Paying Agent immediately
following the Effective Time all the cash necessary to pay for the shares of
Common Stock converted into the right to receive the Merger Consideration
pursuant to Section 2.8(a) (such cash being hereinafter referred to as the
"Exchange Fund").
(b) Promptly after the Effective Time, the Paying Agent shall
mail to each holder of record of a Certificate or Certificates that immediately
prior to the Effective Time represented Common Stock whose shares were converted
into the right to receive the Merger Consideration pursuant to Section 2.8(a)
(i) 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 Paying Agent and shall be in a form and have such other
provisions as Parent may reasonably specify and (ii) 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 Paying
Agent or to such other agent or agents as may be appointed by the Parent,
together with such letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Paying Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor the amount of cash
into which the shares of Common Stock theretofore represented by such
Certificate shall have been converted pursuant to Section 2.8(a), and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Common Stock which is not registered in the transfer
records of the Company, payment may be made to a Person (as defined below) 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 2.9, each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive upon such
surrender the amount of cash, without interest, into which the shares of Common
Stock theretofore represented by such Certificate shall have been converted
pursuant to Section 2.8(a). No interest shall be paid or shall accrue on the
cash payable upon the surrender of any Certificate. For purposes of this
Agreement, "Person" means an individual, corporation, partnership, limited
liability company, association, trust or any unincorporated organization or
other entity.
(c) The Merger Consideration paid in accordance with the terms
of this Article II, upon conversion of any shares of Common Stock, shall be
deemed to have been paid in full satisfaction of all rights pertaining to such
shares, and there shall be no further registration of transfers on the stock
transfer books of the Surviving Corporation of shares of Common Stock that were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, any
7
Certificates formerly representing shares of Common Stock are presented to the
Surviving Corporation or the Paying Agent for any reason, they shall be canceled
and exchanged as provided in this Article II.
(d) Any portion of the Exchange Fund (plus any interest and
other income received by the Paying Agent in respect of such funds) that remains
undistributed to the holders of Certificates representing Common Stock as
provided in this Section 2.9 for six months after the Effective Time shall be
delivered to the Surviving Corporation, upon demand, and any holder of Common
Stock who has not theretofore complied with this Article II shall thereafter
look only to the Surviving Corporation for payment of its claim for the Merger
Consideration.
(e) None of Parent, Purchaser, the Company or the Paying Agent
shall be liable to any Person in respect of any cash from the Exchange Fund
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law. If any Certificate has not been surrendered prior to
five years after the Effective Time (or immediately prior to such earlier date
on which the Merger Consideration in respect of such Certificate would otherwise
escheat to or become the property of any Governmental Entity (as defined in
Section 3.5), any such shares, cash, dividends or distributions in respect of
such Certificate shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any Person previously entitled thereto.
(f) The Paying Agent shall invest any cash included in the
Exchange Fund as directed by the Surviving Corporation. Any interest and other
income resulting from such investments shall be paid to the Surviving
Corporation.
(g) Parent and the Surviving Corporation shall be entitled to
deduct and withhold from the consideration otherwise payable to any holder of
Common Stock pursuant to this Agreement such amounts as may be required to be
deducted and withheld with respect to the making of such payment under any
provision of Federal, state, local or foreign tax law. To the extent that
amounts are so deducted and withheld, such deducted and withheld amounts shall
be treated for all purposes of this Agreement as having been paid to such
holders in respect of which such deduction and withholding was made.
(h) 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 Parent, the
posting by such Person of a bond in such amount as Parent may direct as
indemnity against any claim which may be made against it with respect to such
Certificate and/or delivery of a suitable indemnity, the Paying Agent will
issue, in each case, in exchange for such lost, stolen or destroyed Certificate,
the Merger Consideration payable in respect thereof pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each of Parent and
Purchaser as follows:
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3.1 CORPORATE ORGANIZATION. Each of the Company and its
Subsidiaries (as defined below) is duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is organized and has the
requisite 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. Each of the Company and its Subsidiaries is duly qualified to
do business, and is in good standing, in each jurisdiction where the character
of its properties owned, operated or leased, or the nature of its activities,
makes such qualification necessary, except for such failures which, individually
or in the aggregate, have not had and would not reasonably be expected to have a
Material Adverse Effect (as defined below). For purposes of this Agreement,
"Material Adverse Effect" means any event, change, effect or development that
(i) is or is reasonably expected to be materially adverse to the business,
operations, properties (including intangible properties), condition (financial
or otherwise), prospects, assets or liabilities of the Company and all of its
Subsidiaries, taken as a whole, or (ii) impairs or would reasonably be expected
to impair, in any material respect, the ability of the Company to perform its
obligations under this Agreement.
3.2 SUBSIDIARIES. Each Subsidiary of the Company is
identified on Schedule 3.2. All the outstanding equity interests of each
Subsidiary of the Company are validly issued, fully paid and nonassessable and
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, security interests, pledges, agreements, claims, charges or
encumbrances of any nature whatsoever ("Liens"), except as set forth on Schedule
3.2. There are no proxies with respect to any shares of capital stock of any
such Subsidiary. There are no outstanding obligations of the Company or any of
its Subsidiaries to repurchase, redeem or otherwise acquire any outstanding
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. There are no options,
warrants or other rights, agreements, arrangements or commitments of any
character obligating any Subsidiary of the Company to issue or sell any shares
of its capital stock or other equity interests or any securities convertible
into or exchangeable for any capital stock or other equity interests. The
Company does not directly or indirectly own a greater than 5% equity interest in
any Person that is not a Subsidiary of the Company. 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 40% 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 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 40% 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 40% 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, 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 40%
9
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.
3.3 CAPITALIZATION. The authorized capital stock of the
Company consists solely of (i) 50,000,000 shares of Common Stock and (ii)
10,000,000 shares of preferred stock, par value $.01 per share ("Preferred
Stock"). As of the date of this Agreement: (A) 13,269,611 shares of Common Stock
were issued and outstanding, all of which were validly issued, fully paid and
nonassessable and were not subject to or issued in violation of any purchase
option, call option, right of first refusal, preemptive right or any similar
right; (B) no shares of Preferred Stock were issued or outstanding; (C)
2,526,799 shares of Common Stock were reserved for issuance upon exercise of
outstanding Company Stock Options; (D) 500,000 shares of Series A Junior
Participating Preferred Stock were reserved for issuance upon the exercise of
the Rights and (E) 285,500 shares of Company Restricted Stock were issued and
outstanding under the Company Stock Plans. Except as disclosed in this Section
3.3 or in Schedule 3.3, there are (i) no other options, warrants or other
rights, agreements, arrangements or commitments of any character obligating the
Company to issue, sell, transfer, redeem or otherwise acquire 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 Voting Debt (as defined below), (ii) no bonds, debentures, notes or other
indebtedness having the right to vote on any matters on which stockholders of
the Company may vote ("Voting Debt") and (iii) no agreements or commitments that
restrict the transfer of any shares of capital stock of the Company or relate to
the voting of any shares of capital stock of the Company or require the Company
to register any shares of capital stock of the Company. As used herein, "Company
Stock Option" means any option to purchase Common Stock and "Company Stock
Plans" means the plans providing for the grant of Company Stock Options or any
other issuance of capital stock of the Company and listed in Schedule 3.3(b).
3.4 CORPORATE AUTHORITY; NONCONTRAVENTION.
(a) The Company has the necessary corporate power and
authority to enter into this Agreement and, subject to obtaining any necessary
stockholder 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 Special Committee and by the
unanimous vote of the Company's Board of Directors, (ii) determined to be fair
from a financial point of view to, advisable and in the best interests of, the
stockholders of the Company by the Special Committee and the Company's 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
stockholders in accordance with the Missouri BCL. This Agreement has been duly
executed and delivered by the Company and, subject to the approval of the Merger
by the Company's stockholders in accordance with the Missouri BCL, constitutes a
legal, valid and binding obligation of the Company, enforceable against it in
accordance with its terms.
(b) Except as set forth in Schedule 3.4(b), 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 (exclusive of any financing to be
10
consummated by Parent or Purchaser) will not, (i) conflict with or violate any
law, regulation, court order, judgment or decree 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 of the Company currently on file with the Secretary of State of
the State of Missouri (the "Restated Articles of Incorporation") or Bylaws of
the Company or the comparable charter documents or Bylaws of any of its
Subsidiaries, each as amended, or (iii) conflict with, modify, 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, accelerate 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 contract, agreement, indenture, lease, permit,
license, certificate, franchise or other instrument of any kind 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 for
conflicts, violations, breaches or defaults, terminations, accelerations,
cancellations or rights of termination, acceleration or cancellation which,
individually or in the aggregate, and assuming the exercise of any rights of
termination, acceleration or cancellation, have not had and would not reasonably
be expected to have a Material Adverse Effect.
3.5 CONSENTS AND APPROVALS. Except for applicable requirements
of the Exchange Act, the pre-merger notification requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and filing and recordation of appropriate Articles of Merger or other
documents as required by the Missouri BCL, and except as set forth in Schedule
3.5, the Company is not required to submit any application, notice, report or
other filing with any Federal, state, local or foreign government or any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign (a "Governmental Entity") or any other
Person in connection with the execution, delivery or performance of this
Agreement, except where the failure to submit such application, notice, report
or other filing, individually or in the aggregate, has not had and would not
reasonably be expected to have a Material Adverse Effect. Except as disclosed on
Schedule 3.5, no waiver, consent, approval or authorization of any Governmental
Entity or any other Person is required to be obtained or made by the Company in
connection with its execution, delivery or performance of this Agreement, except
where the failure to obtain such waivers, consents, approvals or authorizations,
individually or in the aggregate, has not had and would not reasonably be
expected to have a Material Adverse Effect.
3.6 SEC REPORTS.
(a) The Company has filed all forms, reports and documents
required to be filed by the Company with the SEC since January 1, 1998
(collectively, the "SEC Reports"). The SEC Reports (i) complied in all material
respects 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 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 the light of the circumstances under which they
were made, not misleading.
11
(b) The financial statements contained in the SEC Reports
comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto as in effect at the time of filing, have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes
thereto) and fairly present the consolidated financial position of the Company
and its Subsidiaries as at the respective dates thereof and the consolidated
statements of operations and cash flows of the Company for the periods
indicated, except that the unaudited interim financial statements were or are
subject to normal and recurring non-material year-end adjustments. The Company
is not a party to any material off-balance sheet transactions or agreements,
other than as set forth in Schedule 3.6(b).
(c) Except as reflected or reserved against in the financial
statements contained in the SEC Reports filed prior to the date of this
Agreement or as otherwise disclosed in such filed SEC Reports or in Schedule
3.6(c), the Company has no liabilities of any nature (whether accrued, absolute,
contingent or otherwise) which, individually or in the aggregate, have had or
would reasonably be expected to have Material Adverse Effect.
3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since February 3,
2002, except as contemplated by this Agreement or as set forth in Schedule 3.7
or in the SEC Reports filed prior to the date of this Agreement, there has not
been:
(a) any Material Adverse Effect (other than such as may relate
to economic conditions generally in the United States);
(b) any strike, picketing, work slowdown or other labor
disturbance that has had or would reasonably be expected to have a Material
Adverse Effect;
(c) any damage, destruction or loss (whether or not covered by
insurance) with respect to any of the assets of the Company or any of its
Subsidiaries that has had or would reasonably be expected to have a Material
Adverse Effect;
(d) any (i) grant of any severance or termination pay to (A)
any director or executive officer of the Company or any of its Subsidiaries or
(B) any other officer or employee of the Company, except in the case of clause
(B) which do not cost $100,000 individually or $500,000 in the aggregate, (ii)
employment, deferred compensation or other similar agreement (or any amendment
to any such existing agreement) entered into with any director, officer or
employee of the Company or any of its Subsidiaries, (iii) increase in benefits
payable under any existing severance or termination pay policies or employment
agreements or (iv) increase in compensation, bonus or other benefits payable to
directors, officers or employees of the Company or any of its Subsidiaries other
than, in the case of employees (other than directors and officers), in the
ordinary course of business consistent with past practice;
(e) any redemption or other acquisition of Common Stock or
other capital stock of the Company or options or rights to acquire shares of
Common Stock or other capital stock of the Company by the Company or any
declaration or payment of any dividend or other
12
distribution in cash, stock or property with respect to Common Stock, except for
purchases heretofore made pursuant to the terms of the Company's employee
benefit plans;
(f) any issuance by the Company, or agreement or commitment of
the Company to issue, any shares of Common Stock or securities convertible into
or exchangeable for shares of Common Stock, except for the issuance of shares of
Common Stock in accordance with the terms of outstanding Options; or
(g) any change by the Company in accounting principles except
insofar as may have been required by a change in generally accepted accounting
principles and disclosed in the SEC Reports filed prior to the date of this
Agreement.
Since February 3, 2002, the Company has conducted its business
in the ordinary course, consistent with past practice, except as disclosed in
the SEC Reports filed prior to the date of this Agreement or in Schedule 3.7 or
as contemplated by this Agreement.
3.8 LITIGATION. Except as disclosed in the SEC Reports filed
prior to the date of this Agreement or in Schedule 3.8, 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 or arbitral authority,
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 been reported to the
Company or any of its Subsidiaries, which, individually or in the aggregate,
have had or would reasonably be expected to have a Material Adverse Effect.
Neither the Company or any of its Subsidiaries nor any of their respective
properties is subject to any order, judgment, injunction or decree, which,
individually or in the aggregate, has had or would reasonably be expected to
have a Material Adverse Effect.
3.9 EMPLOYEE BENEFIT PLANS. Schedule 3.9 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, 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 of its
Subsidiaries for the benefit of, or relating to, any employee of, or independent
contractor or consultant to, the Company or any of its Subsidiaries (together,
the "Employee Plans"). The Company has delivered or made available to Purchaser
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 most recent annual actuarial valuation report,
if any, (iv) the last filed Form 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 most recent
annual and periodic accounting of related plan assets. Neither the Company or
any of its Subsidiaries
13
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. 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 or accrued by the Effective Time. No Employee
Plan subject to Section 412 of the Code has incurred any "accumulated funding
deficiency" (as defined in ERISA), whether or not waived. The Company has not
incurred nor reasonably expects to incur any liability under Title IV of Section
302 of ERISA or Section 412 of the Code other than liability to the Pension
Benefit Guaranty Corporation with respect to insurance premiums (which premiums
have been paid when due). Neither the Company nor any of its Subsidiaries
contributes nor within the six-year period ending on the date hereof has any of
them contributed or been obligated to contribute, to any pension or retirement
plan which is a "multiemployer plan" (as defined in Section 3 (37) 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 may otherwise be limited or prohibited by applicable
law. Except as set forth on Schedule 3.9, no amounts payable under any Employee
Plan will fail to be deductible for federal income tax purposes by virtue of
Section 162(m) or 280G of the Code. Except as set forth on Schedule 3.9, the
consummation of the transactions contemplated by this Agreement will not, either
alone or in combination with a related event, (i) entitle any current or former
employee or officer of the Company or any of its Subsidiaries to severance pay
or any other payment or (ii) accelerate the time of payment or vesting, or
increase the amount of compensation due any such employee or officer.
3.10 INFORMATION SUPPLIED. None of the information supplied
or to be supplied by the Company for inclusion or incorporation by reference in:
(i) the Offer Documents or the Schedule 14D-9 will, at the time such document is
filed with the SEC, at any time it is amended or supplemented or at the time it
is first published, sent or given to the stockholders of the Company, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading; or
14
(ii) the proxy statement contemplated by Section 6.1 (together with any
amendments and supplements thereto, (the "Proxy Statement"), if required, will,
at the date it is first mailed to the Company's stockholders or at the time of
the Company Stockholders Meeting (as defined in Section 6.1(b)) or at the time
of any action by written consent in lieu of a meeting pursuant to Section
351.273 of the Missouri BCL with respect to this Agreement and the Merger, as
applicable, 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. The Schedule 14D-9, the Information Statement (as defined in Section
6.8) and the Proxy Statement, if required, will comply as to form in all
material respects with the requirements of the Exchange Act and the rules and
regulations thereunder, except that no representation is made by the Company
with respect to statements made or incorporated by reference therein based
solely on information supplied by Parent or Purchaser for inclusion or
incorporation by reference therein.
3.11 CONDUCT OF BUSINESS; PERMITS. Except as disclosed in the
SEC Reports filed prior to the date of this Agreement or in Schedule 3.11, the
business of the Company and each of its Subsidiaries is not being (and since
February 2, 1998 has not been) conducted in default or violation of any term,
condition or provision of (i) the Restated Articles of Incorporation or Bylaws
of the Company or the comparable charter documents or Bylaws 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, except, with respect to the foregoing clauses (ii) and (iii),
defaults or violations that, individually or in the aggregate, have not had and
would not reasonably be expected to have a Material Adverse Effect. The permits,
licenses, approvals, certifications and authorizations from any Governmental
Entity (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. 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, individually or in the aggregate, has not had and would not
reasonably be expected to have a Material Adverse Effect.
3.12 TAXES.
(a) Except as set forth in Schedule 3.12, and except for such
failures as, individually or in the aggregate, have not had and would not
reasonably be expected to have a Material Adverse Effect, (i) the Company and
each of its Subsidiaries has timely filed with the appropriate governmental
authorities all Tax Returns (as defined below) required to be filed by or with
respect to the Company or any of its Subsidiaries or their respective operations
or assets, and such Tax Returns are true, correct and complete, (ii) all Taxes
(as defined below) due with respect to taxable years for which the Tax Returns
for the Company and each of its Subsidiaries
15
were filed, all Taxes required to be paid on an estimated or installment basis,
and all Taxes required to be withheld with respect to the Company and each of
its Subsidiaries or their respective employees, operations or assets have been
timely and properly paid or, if applicable, withheld and paid to the appropriate
taxing authority in the manner provided by law, (iii) the reserve for Taxes set
forth on the balance sheet of the Company as of February 3, 2002 is adequate for
the payment of all Taxes through the date thereof and no Taxes have been
incurred after February 3, 2002 which were not incurred in the ordinary course
of business, (iv) there are no Liens for Taxes upon the assets of the Company or
any of its Subsidiaries, (v) no Federal, state, local or foreign audits,
administrative proceedings or court proceedings are pending with regard to any
Taxes or Tax Returns of the Company or any of its Subsidiaries and there are no
outstanding deficiencies or assessments asserted or, to the Company's knowledge,
proposed; any such proceedings, deficiencies or assessments shown in Schedule
3.12 are being contested in good faith through appropriate proceedings and the
Company has made available to Purchaser copies of all revenue agent reports (or
similar reports) and related schedules relating to pending Tax audits of the
Company or any of its Subsidiaries, (vi) there are no outstanding agreements,
consents or waivers extending the statutory period of limitations applicable to
the assessment of any Taxes or deficiencies against the Company or any of its
Subsidiaries, or with respect to their respective operations or assets, no power
of attorney granted by the Company or any of its Subsidiaries with respect to
any matter relating to Taxes is currently in force, and neither the Company nor
any of its Subsidiaries is a party to any agreement providing for the allocation
or sharing of Taxes, and (vii) 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 income Tax law), entered into
on or prior to the Closing Date, or (C) any ruling received from the IRS.
(b) Neither the Company nor any of its Subsidiaries has filed
a consent to the application of Section 341(f) of the Code.
(c) Except as set forth in Schedule 3.12, neither the Company
nor any of its Subsidiaries is a party to any agreement, contract or arrangement
that could result, separately or in the aggregate, in the payment of any "excess
parachute payments" within the meaning of Section 280G of the Code.
(d) No claim has been made in writing to the Company by any
taxing authority in a jurisdiction where the Company and its Subsidiaries do not
file Tax Returns that the Company or any Subsidiary is or may be subject to Tax
in that jurisdiction.
(e) For purposes of this Agreement, "Taxes" means 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, value added, withholding, social
security, national insurance (or other similar contributions or payments)
franchise, estimated, severance, stamp, and other taxes (including any interest,
fines, penalties or additions attributable to or imposed on or with respect to
any such taxes, charges, fees, levies or other assessments).
16
(f) For purposes of this Agreement, "Tax Return" means 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.
3.13 ENVIRONMENTAL.
(a) Except as set forth in Schedule 3.13(a), the Company and
each of its Subsidiaries is in compliance with all applicable Environmental Laws
(as defined below) (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 such failures to be in
compliance, individually or in the aggregate, as have not had and would not
reasonably be expected to have 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 compliance with Environmental Laws,
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.
(b) Except as set forth in Schedule 3.13(b), there is no
Environmental Claim (as defined below) 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 has had or would reasonably be expected to have a Material Adverse Effect.
(c) Except as set forth in Schedule 3.13(c), there are no past
or present actions, activities, circumstances, conditions, events or incidents,
including, without limitation, the Release or presence of any Hazardous Material
(as defined below) which could reasonably be expected to 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 has had or would
reasonably be expected to have a Material Adverse Effect.
(d) The Company has delivered or otherwise made available for
inspection to Purchaser 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, 1997 pertaining to
Hazardous Materials in, on, beneath or adjacent to any property currently or
formerly owned, operated 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.
(e) For purposes of this Agreement, "Cleanup" means all
actions required to: (i) cleanup, 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;
17
(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.
(f) For purposes of this Agreement, "Environmental Claim"
means 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 (as defined below), 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.
(g) For purposes of this Agreement, "Environmental Laws" means
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.
(h) For purposes of this Agreement, "Hazardous Materials"
means all substances defined as Hazardous Substances, Oils, Pollutants or
Contaminants in the National Oil and Hazardous Substances Pollution Contingency
Plan, 40 C.F.R. Section 300.5, or defined as such by, or regulated as such
under, any Environmental Law.
(i) For purposes of this Agreement, "Release" means 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.
3.14 TITLE TO ASSETS; LIENS.
(a) Set forth in Schedule 3.14(a) is a true, correct and
complete list of all real property leased by the Company or any of its
Subsidiaries. Except as set forth in Schedule 3.14(a), each of the leases
relating to Leased Real Property (as defined below) is a valid and subsisting
leasehold interest of the Company or any of its Subsidiaries of the Company free
of subtenancies and other occupancy rights and Liens (other than Permitted Liens
and as set forth on Schedule 3.14(a)), is a binding obligation of the parties
thereto, enforceable against the parties thereto in accordance with its terms,
and is in full force and effect.
(b) Set forth in Schedule 3.14(b) is a true, correct and
complete list of each parcel of real property and interest in real property
owned in full by the Company or any of its Subsidiaries (the "Owned Real
Property"). Except as set forth in Schedule 3.14(b), the Company
18
or a Subsidiary of the Company has good, valid and marketable fee simple title
to the Owned Real Property, free and clear of any Lien, except Permitted Liens.
(c) For purposes of this Agreement, "Leased Real Property"
shall mean each of the leasehold interests 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; (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; (iii) with respect to the Real
Property, minor title defects or irregularities that do not, individually or in
the aggregate, impair the value or present use of such property; and (iv) as to
any Real Property Lease, any Lien affecting solely the interest of the landlord
thereunder and not the interest of the tenant thereunder, which do not
materially impair the value or present use of such Real Property Lease.
(e) For purposes of this Agreement, "Real Property" shall mean
the Leased Real Property and the Owned Real Property.
(f) For purposes of this Agreement, "Real Property Leases"
shall mean the real property leases (and/or guarantees thereof) to which the
Company or any of its Subsidiaries is a party.
3.15 REAL PROPERTY.
(a) To the best knowledge of the Company, there are no
defects, shortages or restrictions in or affecting the stores, buildings,
improvements and structures, fixtures or equipment located on or at the Real
Property which, individually or in the aggregate, has had or would reasonably be
expected to have a Material Adverse Effect.
(b) Except as set forth in Schedule 3.15(b), neither the
Company nor any of its Subsidiaries has 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. Except as set forth on Schedule 3.15(b),
neither the Company's nor any of its Subsidiaries' interests with respect to the
Real Property Leases has been assigned or pledged and are not subject to any
Liens other than Permitted Liens. 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) 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.
(d) Except as set forth in Schedule 3.15(d), there is no
contract or agreement to which the Company or any of its Subsidiaries is a
party, affecting any of the Real Property, except those which (i) are terminable
on not more than sixty days' notice without premium or penalty or (ii) require
payment of less than $5,000 per month per location but will expire or be
terminated within one year of the Effective Date.
19
(e) Neither the Company nor any of its Subsidiaries has
received any written notice of any pending, threatened or contemplated
condemnation proceeding affecting any of the Real Property or any part thereof
or of any sale or other disposition of any of the Real Property or any part
thereof in lieu of condemnation.
(f) Neither the Company nor any of its Subsidiaries has
received any written notices from any Governmental Entity or any entity
responsible for the enforcement of applicable restrictive covenants stating or
alleging that any improvements located on the Real Property have not been
constructed in compliance with applicable laws or covenants or are being
operated in violation of applicable law, except for such as, individually or in
the aggregate, have not had and would not reasonably be expected to have a
Material Adverse Effect.
(g) Neither the Company nor any of its Subsidiaries has
received any written notices from any Governmental Entity requiring or advising
as to the need for any material repair, alteration, restoration or improvement
in connection with the Real Property.
(h) To the best knowledge of the Company, the Real Property is
in all material respects in good condition and repair (ordinary wear and tear
excepted) and adequate in all material respects for the continued conduct of the
business to which it relates.
(i) With respect to the Leased Real Property, except as set
forth on Schedule 3.15(i):
(i) the Real Property Leases are in full force and
effect; neither the Company nor any of its Subsidiaries has received
any written notice or, to the best knowledge of the Company, oral
notice, that any material default, or condition which with the passage
of time would constitute a default, exists under the Real Property
Leases, except such notices as to which the alleged defaults have been
cured or otherwise resolved;
(ii) true, correct and complete copies of the Real
Property Leases have been delivered to Purchaser prior to the date
hereof and such Real Property Leases have not been amended, modified or
supplemented since that date;
(iii) no consent by the landlord under the Real
Property Leases is required in connection with the consummation of the
transaction contemplated herein;
(iv) the Company or a Subsidiary of the Company has
non-disturbance agreements with the landlord's lender with respect to
each Real Property Lease;
(v) none of the Leased Real Property has been pledged
by the Company or any of its Subsidiaries or is subject to any Liens
(other than pursuant to this Agreement or Permitted Liens);
(vi) neither the Company nor any of its Subsidiaries
has given any notice to any landlord under any of the Real Property
Leases indicating that it will not be exercising any extension or
renewal options under the Real Property Leases. All security
20
deposits required under the Real Property Leases have been paid to and,
to the best knowledge of the Company, are being held by the applicable
landlord under the Real Property Leases;
(vii) Schedule 3.15(i) 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 Seller
or any of its Subsidiaries; and
(viii) except as set forth on Schedule 3.15(i), the
Company or its Subsidiaries has taken possession of each of the Leased
Real Properties.
(j) The current use of the Real Property does not violate any
instrument of record or agreement affecting such Real Property, except for any
such violations as, individually or in the aggregate, have not had and would not
reasonably be expected to have a Material Adverse Effect. There are no
violations of any covenants, conditions, restrictions, easements, agreements or
orders of any Governmental Entity having jurisdiction over any of the Real
Property that affect such Real Property or the use or occupancy thereof other
than those (i) arising in the ordinary course of business or (ii) which,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Material Adverse Effect. No damage or destruction has
occurred with respect to any of the Real Property that, individually or in the
aggregate, has had or would reasonably be expected to have a Material Adverse
Effect.
(k) There are currently in effect such insurance policies for
the Real Property as are customarily maintained with respect to similar
properties. All premiums due on such insurance policies have been paid by the
Company and the Company will maintain such insurance policies from the date
hereof through the Effective Time or earlier termination of this Agreement. The
Company has not received and has no knowledge of any notice or request from any
insurance company requesting the performance of any work or alteration with
respect to the Real Property or any portion thereof. The Company has received no
notice from any insurance company concerning, nor is the Company aware of, any
defects or inadequacies in the Real Property, which, if not corrected, would
result in the termination of insurance coverage or increase its cost.
(l) Set forth in Schedule 3.15(l) is a true, correct and
complete list of all construction and material alteration projects currently
ongoing with respect to any Real Property (the "Improvements"). The Improvements
are, in all material respects, in good condition and repair and adequate to
operate such facilities as currently used, and, to the Company's knowledge,
there are no facts or conditions affecting any of the Improvements which would,
individually or in the aggregate, interfere in any significant respect with the
current use, occupancy or operation thereof which interference, individually or
in the aggregate, has had or would reasonably be expected to have a Material
Adverse Effect. No Improvement or portion thereof is dependent for its access,
operation or utility on any land, building or other improvement not included in
the Real Property.
(m) To the knowledge of the Company, each parcel of Real
Property is currently being used in a manner that is consistent with and in
compliance with the property classification assigned to it for real estate tax
assessment purposes. To the knowledge of the
21
Company, there are no special taxes or assessments, or any planned public
improvements that may result in a special tax or assessment, with respect to any
Real Property. There is no special or other proceeding pending or, to the
Company's knowledge, threatened in which any taxing authority having
jurisdiction over any of the Real Property is seeking to review or increase the
assessed value thereof, except for any regular periodic assessment or
reassessment in accordance with applicable law.
3.16 INTELLECTUAL PROPERTY. Except as set forth in Schedule
3.16, the Company owns, or is licensed or otherwise possesses rights to use all
patents, trademarks and service marks (registered or unregistered), trade names,
domain names, computer software and copyrights and applications and
registrations therefor, in each case, which are material to the conduct of the
business of the Company, (collectively, the "Intellectual Property Rights").
Except as set forth in Schedule 3.16, there are neither any outstanding nor, to
the Company's knowledge, threatened material disputes or disagreements with
respect to any of the Intellectual Property Rights nor to the Company's
knowledge is there any basis therefor, which disputes, individually or in the
aggregate, have had or would reasonably be expected to have a Material Adverse
Effect.
3.17 MATERIAL CONTRACTS.
(a) Except as set forth in the SEC Reports filed prior to the
date of this Agreement or Schedule 3.17, 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);
(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 individually
involves future aggregate annual payments by the Company or any of its
Subsidiaries of $500,000 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 individually
involves future aggregate annual payments to the Company or any of its
Subsidiaries of $500,000 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 $250,000 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;
22
(vi) any voting or other agreement governing how any
shares of Common Stock shall be voted; 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) Except as set forth on Schedule 3.17(b), each Company
Material Contract is valid and binding on the Company or any of its Subsidiaries
of the Company and is in full force and effect, and the Company or any of its
Subsidiaries of the Company, as applicable, has performed all obligations
required to be performed by it to date under each Company Material Contract,
except where such noncompliance or nonperformance, individually or in the
aggregate, has not had and would not reasonably be expected to have a Material
Adverse Effect. The Company does not know, nor has given or received notice of,
any violation or default 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 or default under) any Company Material
Contract, except where such violations or defaults, individually or in the
aggregate, have not had and would not reasonably be expected to have a Material
Adverse Effect.
3.18 BROKERS. No broker, finder or investment banker (other
than Houlihan, Lokey, Howard & Zukin) 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 the Company. The
Company has heretofore furnished to Purchaser true and complete information
concerning the financial arrangements between the Company and Houlihan, Lokey,
Howard & Zukin pursuant to which such firm would be entitled to any payment as a
result of the transactions contemplated hereby.
3.19 BOARD AND SPECIAL COMMITTEE ACTION.
(a) The Board of Directors of the Company, at a meeting duly
called and held, duly and unanimously adopted resolutions: (i) approving this
Agreement, the Support and Exchange Agreement, the Offer and the Merger; (ii)
determining that the terms of the Offer and the Merger are fair from a financial
point of view to and in the best interests of the Company and its stockholders;
(iii) recommending that the holders of Common Stock accept and tender their
shares of Common Stock pursuant to the Offer; and (iv) recommending that the
Company's stockholders adopt this Agreement.
(b) The Special Committee, at a meeting duly called and held,
at which all the Special Committee members were present duly and unanimously
adopted resolutions: (i) approving this Agreement, the Support and Exchange
Agreement, the Offer and the Merger; (ii) determining that the terms of the
Offer and the Merger are fair from a financial point of view to and in the best
interests of the Company and its stockholders; (iii) recommending that the
holders of Common Stock accept and tender their shares of Common Stock pursuant
to the Offer; (iv) recommending that the Company's stockholders adopt this
Agreement; (v) approving
23
this Agreement, the Support and Exchange Agreement, the Offer and the Merger for
purposes of the provisions of Section 351.459 of the Missouri BCL; and (vi)
approving such amendments to the Bylaws of the Company or other actions as shall
be necessary to opt out of the provisions of Section 351.407 of the Missouri
BCL.
3.20 OPINION OF FINANCIAL ADVISOR. The Special Committee and
the Company have received the opinion of Houlihan, Lokey, Howard & Zukin, the
Special Committee's financial advisor, to the effect that, as of the date
hereof, the Merger Consideration to be received by the Company's stockholders as
provided herein is fair to such stockholders from a financial point of view. The
written confirmation of such opinion has been provided to Purchaser.
3.21 CONTROL SHARE ACQUISITION. Following the actions of the
Board of Directors of the Company and the Special Committee as described in
Section 3.19, there is no "fair price," "moratorium," "control share" or other
similar state takeover statute or regulation (each, a "Takeover Statute") or
comparable takeover provision of the Restated Articles of Incorporation or
Bylaws of the Company that applies or purports to apply to the Company, the
Offer, the Merger or the transactions contemplated by this Agreement.
3.22 RIGHTS AGREEMENT. The Company has taken all necessary
action so that none of the execution of this Agreement and the Support and
Exchange Agreement, the making of the Offer, the acquisition of shares of Common
Stock pursuant to the Offer or the consummation of the Merger will (i) cause the
Rights to become exercisable, (ii) cause Purchaser or any of its affiliates to
become an Acquiring Person (as such term is defined in the Rights Agreement) or
(iii) give rise to a Distribution Date (as such term is defined in the Rights
Agreement). The Company has furnished Purchaser with true and complete copies of
evidence of all actions taken and all other documents that fulfill the
requirements of this Section 3.22.
3.23 VOTE REQUIRED. The affirmative vote of the holders of
two-thirds of the outstanding shares of Common Stock is the only vote necessary
(under applicable law or otherwise) to approve the Merger (the "Company
Stockholder Approval").
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 as of the date hereof have been paid in full. Except as set
forth on Schedule 3.24, 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.
24
3.25 SUPPLIERS. Set forth in Schedule 3.25 is a list of the
ten largest suppliers of the Company on a consolidated basis based on the dollar
value of materials or products purchased by the Company or any of its
Subsidiaries for the fiscal year ended February 3, 2002. Since such date, there
has not been, nor as a result of the Offer or the Merger does the Company have a
reason to anticipate there to be, any change in relations with any of the major
suppliers of the Company or its Subsidiaries that, individually or in the
aggregate, has had or would reasonably be expected to have a Material Adverse
Effect. The existing suppliers of the Company and its Subsidiaries are adequate
in all material respects for the operation of the Company's business as operated
on the date hereof.
3.26 LABOR. Since the enactment of Worker Adjustment and
Retraining Notification Act of 1988 (the "WARN Act"), neither the Company nor
any of its Subsidiaries has effectuated a "plant closing" or a "mass layoff" (as
such terms are defined in the WARN Act); nor has the Company or any of its
Subsidiaries been affected by any transaction or engaged in layoffs or
employment terminations sufficient in number to trigger application of any
similar state, local or foreign law. None of the employees of the Company and
any of its Subsidiaries has suffered an "employment loss" (as defined in the
WARN Act).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER
Parent and Purchaser represent and warrant to the Company as
follows:
4.1 ORGANIZATION . Each of Parent and Purchaser is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has full corporate power
and authority to own its properties and to conduct its businesses as presently
conducted.
4.2 AUTHORITY AND RELATED MATTERS. Each of Parent and
Purchaser has all requisite corporate power and authority to execute and deliver
this Agreement and to perform its obligations hereunder. The execution and
delivery by each of Parent and Purchaser of this Agreement and the performance
by it of its obligations have been duly authorized by all necessary corporate
action on the part of Parent and Purchaser. Parent, as sole stockholder of
Purchaser, has approved and adopted this Agreement. Each of Parent and Purchaser
has duly executed and delivered this Agreement, and this Agreement constitutes
its legal, valid and binding obligation, enforceable against it in accordance
with its terms and conditions.
4.3 NO CONFLICTS; CONSENTS. The execution and delivery of this
Agreement by each of Parent and Purchaser, do not, and the consummation of the
Offer and the Merger and compliance with the terms hereof and thereof will not,
(i) conflict with any of the provisions of the charter or organizational
documents of Parent or Purchaser; (ii) conflict with, result in a breach of or
default under (with or without notice or lapse of time, or both) any contract,
agreement, indenture, mortgage, deed of trust, lease or other instrument to
which Parent or Purchaser is a party or by which any of their respective
properties or assets is bound or subject; or (iii) subject to the filings and
other matters referred to in the following sentence, contravene
25
any domestic or foreign law, rule or regulation, or any order, writ, judgment,
injunction, decree, determination or award currently in effect, other than, in
the case of clauses (ii) and (iii) above, any such items that, individually or
in the aggregate, have not had and could not reasonably be expected to have a
material adverse effect on the ability of Parent and Purchaser to consummate the
Offer and the Merger. No consent, approval or authorization of, or registration,
declaration or filing with, or notice to, any Governmental Entity which has not
been received or made, is required to be obtained or made by or with respect to
Parent or Purchaser in connection with the execution, delivery and performance
of this Agreement or its obligations hereunder, other than: (i) compliance with
and filings under the HSR Act, if applicable; (ii) the filing with the SEC of
(A) the Offer Documents and (B) such reports under Sections 13 and 16 of the
Exchange Act, as may be required in connection with this Agreement, the Offer
and the Merger; (iii) the filing of the Articles of Merger with the Secretary of
State of the State of Missouri; and (iv) any other consents, approvals,
authorizations, filings or notices which, if not made or obtained, individually
or in the aggregate, have not had and could not reasonably be expected to have a
material adverse effect on the ability of Parent and Purchaser to consummate the
Offer and the Merger.
4.4 INFORMATION SUPPLIED. None of the information supplied or
to be supplied by Parent or Purchaser for inclusion or incorporation by
reference in the Offer Documents or the Schedule 14D-9 will, at the time such
document is filed with the SEC, at any time it is amended or supplemented or at
the time it is first published, sent or given to the Company's stockholders,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading. The Offer Documents will comply as to form in all material
respects with the requirements of the Securities Act and the rules and
regulations thereunder, except that no representation is made by Parent or
Purchaser with respect to statements made or incorporated by reference therein
based on information supplied by the Company for inclusion or incorporation by
reference therein.
4.5 FINANCING. Parent and Purchaser have provided the Company
with true and correct copies of signed written financing commitments with
respect to the Offer and the Merger obtained as of the date of this Agreement.
Parent has accepted the financing commitments and paid all fees due thereunder
as of the date of this Agreement. Purchaser will use its commercially reasonable
efforts to obtain financing sufficient to consummate the Offer and the Merger.
Notwithstanding the foregoing or delivery of the financing commitments, Parent,
Purchaser and the Company acknowledge and agree that the obligations of Parent
and Purchaser to consummate the Offer and the Merger and to perform the other
obligations hereunder are not conditioned upon Parent's or Purchaser's ability
to obtain financing pursuant to the financing commitments or otherwise.
4.6 BROKERS. Except for UBS Warburg and DB Securities, no
broker, investment banker, financial advisor or other Person is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with this Agreement, the Offer and the Merger based upon arrangements
made by or on behalf of Parent or Purchaser.
4.7 NO PRIOR ACTIVITIES. Except for obligations or liabilities
incurred in connection with its incorporation or organization or the negotiation
and consummation of this
26
Agreement and the transactions contemplated hereby (including any financing
arrangements), neither Parent nor Purchaser has incurred any obligations or
liabilities, and has not engaged in any business or activities of any type or
kind whatsoever.
ARTICLE V
COVENANTS RELATED TO CONDUCT OF BUSINESS
5.1 CONDUCT OF BUSINESS.
(a) Except for matters set forth in Schedule 5.1 or
otherwise contemplated by this Agreement, from the date of this Agreement to the
Effective Time, the Company shall, and shall cause each of its Subsidiaries to,
conduct its business in the usual, regular and ordinary course in substantially
the same manner as previously conducted (subject to the express restrictions set
forth below) and, to the extent consistent therewith, use its reasonable efforts
to preserve intact its current business organization, keep available the
services of its current officers and key employees and keep its relationships
with customers, suppliers, licensors, licensees, distributors and others having
business dealings with them so that its goodwill and ongoing business shall not
be materially impaired at the Effective Time. In addition, and without limiting
the generality of the foregoing, except for matters set forth in Schedule 5.1 or
otherwise contemplated by this Agreement, from the date of this Agreement to the
Effective Time, the Company shall not, and shall not permit any of its
Subsidiaries to, do any of the following without the prior written consent of
Parent:
(i) (A) declare, set aside or pay any dividends on,
or make any other distributions in respect of, any of its capital
stock, other than dividends and distributions by a direct or indirect
wholly-owned subsidiary of the Company to its parent, (B) split,
combine, subdivide or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, or (C) purchase,
redeem or otherwise acquire, directly or indirectly, any shares of
capital stock of the Company or any Subsidiary or any other securities
thereof or any rights, warrants or options to acquire any such shares
or other securities;
(ii) authorize for issuance, issue, deliver, sell,
pledge or grant (A) any shares of its capital stock, (B) any Voting
Debt or other voting securities, (C) any securities convertible into or
exchangeable for, or any options, warrants or rights to acquire, any
such shares, voting securities or convertible or exchangeable
securities, or (D) any "phantom" stock, "phantom" stock rights, stock
appreciation rights or stock-based performance units, other than the
issuance of Common Stock upon the exercise of Company Stock Options
outstanding on the date of this Agreement and in accordance with their
present terms;
(iii) amend its certificate of incorporation, bylaws
or other comparable charter or organizational documents;
(iv) (A) enter into, or propose or negotiate to enter
into, any material contract (other than as contemplated in clause (xv)
below or otherwise required by this
27
Agreement), (B) amend, or propose or negotiate to amend, the terms of
any existing Company Material Contracts, (C) acquire, or propose or
negotiate to acquire, any interest in a corporation, partnership or
joint venture arrangement, or (D) sell, transfer, assign, relinquish,
terminate or make any other material change (taken on an individual
basis) in, or propose or negotiate to take any such action with respect
to, the Company's material interests (as of the date of this Agreement)
in the equity or debt securities of any corporation, partnership or
joint venture arrangement which holds such an interest, including,
without limitation, the imposition of any Lien on any of the foregoing;
(v) acquire or agree to acquire (A) by merging or
consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any corporation,
partnership, joint venture, association or other business organization
or division thereof, or (B) any assets that are material, individually
or in the aggregate, to the Company and the Subsidiaries taken as a
whole;
(vi) (A) grant to any officer or director of the
Company or any Subsidiary any increase in compensation, except to the
extent required under employment agreements in effect as of the date of
the most recent audited financial statements included in the Company
SEC Documents and except for fees payable to the members of the Special
Committee, (B) grant to any officer or director of the Company or any
Subsidiary any increase in severance or termination pay, except to the
extent required under any agreement in effect as of the date of the
most recent audited financial statements, (C) enter into or amend any
employment, consulting, indemnification, severance or termination
agreement with any such officer or director, (D) establish, adopt,
enter into or amend in any material respect any collective bargaining
agreement or Employee Plan, except as required by applicable law, or
(E) take any action to accelerate any rights or benefits (including
vesting under the Company's 401(K) Plan), or make any material
determinations not in the ordinary course of business consistent with
prior practice, under any collective bargaining agreement or Employee
Plan;
(vii) make any change in accounting methods,
principles or practices materially affecting the reported consolidated
assets, liabilities or results of operations of the Company, except
insofar as may have been required by a change in GAAP;
(viii) sell, lease, license or otherwise dispose of
or subject to any Lien any properties or assets, except in the ordinary
course of business consistent with past practice;
(ix) (A) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another Person, issue or sell any
debt securities or warrants or other rights to acquire any debt
securities of the Company or any Subsidiary, guarantee any debt
securities of another Person, enter into any "keep well" or other
agreement to maintain any financial statement condition of another
Person or enter into any arrangement having the economic effect of any
of the foregoing, except for short-term borrowings incurred in the
ordinary course of business consistent with past practice, or (B) make
any loans, advances or capital contributions to, or investments in, any
other
28
Person, other than to or in the Company or any direct or indirect
wholly-owned subsidiary of the Company;
(x) make or agree to make any new capital expenditure
or expenditures other than capital expenditures which do not exceed the
amount budgeted therefor in the Company's annual capital expenditures
budget for fiscal year 2002 previously provided to Parent.
(xi) make any material Tax election or settle or
compromise any material Tax liability or refund or consent to any
extension or waiver of the statute of limitations period applicable to
any Tax claim or action;
(xii) (A) pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or
satisfaction, in the ordinary course of business consistent with past
practice or in accordance with their terms, of liabilities reflected or
reserved against in, or contemplated by, the most recent consolidated
financial statements (or the notes thereto) of the Company or incurred
in the ordinary course of business consistent with past practice, (B)
cancel any material indebtedness (individually or in the aggregate) or
waive any claims or rights of substantial value, or (C) waive the
benefits of, or agree to modify in any manner, any confidentiality,
standstill or similar agreement to which the Company or any Subsidiary
is a party;
(xiii) make any material change (including failing to
renew) in the amount or nature of the insurance policies covering the
Company and the Subsidiaries;
(xiv) waive any material claims or rights relating to
the Company's or any of the Subsidiaries' business;
(xv) (i) redeem the rights outstanding under the
Rights Agreement, or amend or modify or terminate the Rights Agreement
or render it inapplicable to (or otherwise exempt from the application
of the Rights Agreement) any Person or action, other than to delay the
Distribution Date (as defined therein) or to render the Rights
inapplicable to the execution, delivery and performance of this
Agreement, the Offer and the Merger or (ii) permit the Rights to become
non-redeemable at the redemption price currently in effect
(notwithstanding the foregoing, immediately prior to the Effective
Time, the Company shall, if so requested by Purchaser, redeem the
Rights); or
(xvi) authorize any of, or commit or agree to take
any of, the foregoing actions.
(b) The Company and Parent shall not, and shall not permit any
of their respective subsidiaries to, take any action that would, or that could
reasonably be expected to, result in: (i) any of the representations and
warranties of such party set forth in this Agreement that is qualified as to
materiality becoming untrue; (ii) any of such representations and warranties
that is not so qualified becoming untrue in any material respect; or (iii) any
condition to the Offer set forth in Exhibit A, or any condition to the Merger
set forth in Article VII, not being satisfied.
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5.2 NO SOLICITATION.
(a) The Company shall not, nor shall it permit any of its
Subsidiaries to, nor shall it authorize or permit any officer, director or
employee of, or any investment banker, attorney or other advisor, agent or
representative of the Company or any Subsidiary (collectively, "Company
Representatives") to: (i) solicit, initiate or knowingly encourage the
submission of, any Company Takeover Proposal (as defined below); (ii) enter into
any agreement with respect to any Company Takeover Proposal; or (iii)
participate in any discussions or negotiations regarding, or furnish to any
Person any information with respect to, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any Company Takeover Proposal; provided, however, that,
at any time prior to the consummation of the Offer, the Company's Board of
Directors may, in response to a Superior Proposal (as defined below) that was
not solicited by the Company or any Company Representative on or after the date
hereof and that did not otherwise result from a breach of this Section 5.2(a),
and subject to providing prior written notice of its decision to take such
action to Parent and compliance with Section 5.2(b), participate in discussions
and negotiations regarding such Superior Proposal and furnish information
concerning the Company to the Person making such Superior Proposal. For purposes
of this Agreement, "Takeover Proposal" means any inquiry, proposal or offer from
any Person relating to any direct or indirect acquisition or purchase of a
business that constitutes 25% or more of the net revenues, net income or the
assets of the Company and the Subsidiaries taken as a whole, or 25% or more of
any class of equity securities of the Company or any Subsidiary, any tender
offer or exchange offer that if consummated would result in any Person
beneficially owning 25% or more of any class of equity securities of the Company
or any Subsidiary, or any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any Subsidiary, other than the transactions contemplated by this
Agreement. For purposes of this Agreement, a "Superior Proposal" means any bona
fide proposal made by a third party to acquire, directly or indirectly,
including pursuant to a tender offer, exchange offer, merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction, for consideration consisting of cash and/or securities, 100% of the
outstanding shares of Common Stock or all or substantially all the assets of the
Company and otherwise on terms which the Board of Directors determines in its
good faith judgment (based on the written advice of its financial advisors) (x)
is reasonably capable of being completed, taking into account all legal,
financial, regulatory and other aspects of the proposal and the third party
making such proposal, and (y) provides greater present value to the Company's
stockholders than the cash consideration to be received by such stockholders
pursuant to the Offer and the Merger, as the Offer and the Merger may be amended
from time to time.
(b) The Company's Board of Directors shall promptly advise
Parent orally and in writing of the existence of any Takeover Proposal or
Superior Proposal.
(c) Nothing contained in this Section 5.2 shall prohibit the
Board of Directors from taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from
changing its recommendation with respect to the Offer and this Agreement, or
making any disclosure to the Company's stockholders, if, in the good faith
judgment of the Company, after consultation with outside counsel, failure to
take any such action would result in a breach of its fiduciary duties to
stockholders under applicable law.
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ARTICLE VI
ADDITIONAL COVENANTS
6.1 PREPARATION OF PROXY STATEMENT; STOCKHOLDERS MEETING.
(a) If the approval and adoption of this Agreement by the
Company's stockholders is required by law, the Company shall, at Parent's
request, as soon as practicable following the expiration of the Offer, prepare
and file with the SEC the Proxy Statement in preliminary form, and the Company
shall use its best efforts to respond as promptly as practicable to any comments
of the SEC with respect thereto. The Company shall notify Parent promptly of the
receipt of any comments from the SEC or its staff and of any request by the SEC
or its staff for amendments or supplements to the Proxy Statement or for
additional information and shall supply Parent with copies of all correspondence
between the Company or any of its representatives, on the one hand, and the SEC
or its staff, on the other hand, with respect to the Proxy Statement. If at any
time prior to receipt of the Company Stockholder Approval there shall occur any
event that should be set forth in an amendment or supplement to the Proxy
Statement, the Company shall promptly prepare and mail to its stockholders such
an amendment or supplement. The Company shall not mail any Proxy Statement, or
any amendment or supplement thereto, to which Parent reasonably objects. The
Company shall use its best efforts to cause the Proxy Statement to be mailed to
the Company's stockholders as promptly as practicable after filing with the SEC.
(b) To the extent that this Agreement requires Company
Stockholder Approval, the Company shall, if requested by Parent and as soon as
practicable following the expiration of the Offer, duly call, give notice of,
convene and hold a meeting of its stockholders (the "Company Stockholders
Meeting") for the purpose of seeking the Company Stockholder Approval (including
establishing the record date, if requested by Parent, to be the date immediately
after the date Purchaser first purchases any shares of Common Stock pursuant to
the Offer). The Board of Directors, subject to Section 5.2(c), shall recommend
to its stockholders that they give the Company Stockholder Approval. If
Purchaser or any other subsidiary of Parent shall acquire at least 90% of the
Fully Diluted Shares, the parties shall, at the request of Parent, take all
necessary and appropriate action to cause the Merger to become effective as soon
as practicable after the expiration of the Offer without a stockholders meeting
in accordance with Section 351.447 of the Missouri BCL.
(c) Parent agrees to cause all shares of Common Stock
purchased pursuant to the Offer and all other shares of Common Stock owned by
Purchaser or any other subsidiary of Parent to vote to adopt and approve this
Agreement and the Merger at the Company Stockholders Meeting or, at the election
of Parent, to be subject to action by written consent in favor of the Company
Stockholder Approval pursuant to Section 351.273 of the Missouri BCL.
6.2 ACCESS TO INFORMATION; CONFIDENTIALITY. The Company shall,
and shall cause each of its Subsidiaries to, afford to Parent, and to Parent's
directors, officers, employees, accountants, counsel, financial advisers,
financing sources and other representatives, reasonable access during normal
business hours during the period prior to the Effective Time to all their
respective properties, books, contracts, commitments, personnel and records and,
during such period, the Company shall, and shall cause each of its Subsidiaries
to, furnish promptly to Parent:
31
(i) a copy of each report, schedule, registration statement and other document
filed by it during such period pursuant to the requirements of Federal or state
securities laws; and (ii) all other information concerning its business,
properties and personnel as Parent may reasonably request. All nonpublic
information exchanged pursuant to this Section 6.2 shall be subject to the
confidentiality agreement dated as of March 26, 2002, as amended and/or
supplemented from time to time thereafter, between the Company and Investcorp
International Inc. (the "Confidentiality Agreement").
6.3 REASONABLE EFFORTS; NOTIFICATION.
(a) Upon the terms and subject to the conditions set
forth in this Agreement, each of the parties shall use all reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Offer, the Merger and the other obligations of such
party hereunder, including: (i) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from Governmental Entities and the
making of all necessary registrations and filings (including filings with
Governmental Entities, if any) and the taking of all reasonable steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity; (ii) the obtaining of all necessary
consents, approvals or waivers from third parties; (iii) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of this Agreement, including
seeking to have any stay or temporary restraining order entered by any court or
other Governmental Entity vacated or reversed; and (iv) the execution and
delivery of any additional instruments necessary to consummate this Agreement
and to fully carry out the purposes of this Agreement. In connection with and
without limiting the foregoing, the Company shall: (x) take all action necessary
to ensure that no state takeover statute or similar statute or regulation is or
becomes applicable to this Agreement; and (y) if any state takeover statute or
similar statute or regulation becomes applicable to this Agreement, take all
action necessary to ensure that the Offer and the Merger may be consummated as
promptly as practicable on the terms contemplated by this Agreement and
otherwise to minimize the effect of such statute or regulation on the Offer and
the Merger. Nothing in this Agreement shall be deemed to require any party to
waive any substantial rights or agree to any substantial limitation on its
operations.
(b) The Company shall give prompt notice to Parent, and
Parent or Purchaser shall give prompt notice to the Company, of: (i) any
representation or warranty made by it contained in this Agreement that is
qualified as to materiality becoming untrue or inaccurate in any respect or any
such representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect; or (ii) the failure by it to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement; provided, however, that
no such notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
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6.4 BENEFIT PLANS.
(a) For one year after the Effective Time, Parent shall
either (i) cause the Surviving Corporation to continue to sponsor and maintain
the Employee Plans (except for any Company Stock Plan), or (ii) provide benefits
to the employees of the Company who continue to be employed by the Surviving
Corporation (the "Company Employees") under employee benefit plans, programs,
policies or arrangements that in the aggregate are substantially similar to
those benefits provided to the Company Employees by the Company immediately
prior to the Closing Date (excluding any stock option or other equity
compensation plan or program). With respect any employee benefit plan, program,
policy or arrangement (other than stock options or stock based compensation)
sponsored or maintained by Parent and offered to the Company Employees in
addition to or as a substitute for the Employee Plans, Parent shall give the
Company Employees service credit for their employment with the Company for
eligibility and vesting purposes as if such service had been performed with
Parent. If Parent offers health benefits to the Company Employees under a group
health plan that is not a Employee Plan, Parent shall waive any pre-existing
condition exclusions under such group health plan to the extent coverage exists
for such condition under the Employee Plan and shall credit each Company
Employee with all deductible payments and co-payments paid by such Company
Employee under the Company's health plan prior to the Closing Date during the
current plan year for purposes of determining the extent to which any such
Company Employee has satisfied his or her deductible and whether he or she has
reached the out-of-pocket maximum under any health plan for such plan year.
(b) Following the Effective Time, Parent shall cause the
Surviving Corporation and the Subsidiaries to honor (subject to this Section 6.4
and Section 6.5) all obligations under all of the employment, severance,
consulting and similar agreements of the Company and its Subsidiaries existing
on the date hereof that are set forth on Schedule 6.4(b).
(c) Nothing herein shall be construed as giving any employee
of the Company or any Subsidiary, except as set forth in Schedule 6.4(c), any
right to continued employment following the Effective Time.
6.5 INDEMNIFICATION.
(a) After the earlier of (1) the Effective Time or (2)
the consummation of the Offer, Parent shall cause the Surviving Corporation (or
any successor to the Surviving Corporation) to indemnify, defend and hold
harmless the present and former officers and directors of the Company and its
Subsidiaries (each an "Indemnified Party"), against all losses, claims, damages,
liabilities, fees and expenses (including reasonable fees and disbursements of
counsel and judgments, fines, losses, claims, liabilities and amounts paid in
settlement (provided that any such settlement is effected with the written
consent of the Parent or the Surviving Corporation)) incurred by reason of the
fact that such Person is or was an officer or director of the Company or any of
its Subsidiaries and arising out of actions or omissions occurring at or prior
to the Effective Time to the full extent permitted by law, such right to include
advancement of expenses incurred in the defense of any action or suit to the
extent permitted by the Missouri BCL; provided, however, that any determination
required to be made with respect to whether such Indemnified Party is entitled
to indemnity hereunder (including without limitation whether,
33
with respect to the indemnification of such Indemnified Party by the Surviving
Corporation, an Indemnified Party's conduct complies with the standards set
forth under the Missouri BCL), shall be made at Parent's expense by independent
counsel mutually acceptable to Parent and the Indemnified Party; provided
further, that nothing herein shall impair any rights or obligations of any
present or former directors or officers of the Company.
(b) Parent shall, to the fullest extent permitted by law,
cause the Surviving Corporation to honor all the Company's obligations to
indemnify (including any obligations to advance funds for expenses) the members
of the Special Committee and current or former directors or officers of the
Company and the Subsidiaries for acts or omissions by such directors and
officers occurring prior to the Effective Time to the extent that such
obligations of the Company exist on the date of this Agreement, whether pursuant
to the Company's Restated Articles of Incorporation, Bylaws, individual
indemnity agreements or otherwise, and such obligations shall survive the Merger
and shall continue in full force and effect in accordance with the terms of the
Company's Restated Articles of Incorporation, Bylaws and such individual
indemnity agreements from the Effective Time until the expiration of the
applicable statute of limitations with respect to any claims against such
directors or officers arising out of such acts or omissions.
(c) For a period of six years after the Effective Time,
Parent shall cause to be maintained in effect the current policies of directors'
and officers' liability insurance maintained by the Company (provided that
Parent may substitute therefor policies with reputable and financially sound
carriers of at least the same coverage and amounts containing terms and
conditions which are no less advantageous) with respect to claims arising from
or related to facts or events which occurred at or before the Effective Time;
provided, however, that Parent shall not be obligated to make annual premium
payments for such insurance to the extent such premiums exceed 150% of the
annual premiums paid as of the date hereof by the Company for such insurance
(such 150% amount, the "Maximum Premium"). If such insurance coverage cannot be
obtained at all, or can only be obtained at an annual premium in excess of the
Maximum Premium, Parent shall maintain the most advantageous policies of
directors' and officers' insurance obtainable for an annual premium equal to the
Maximum Premium. The Company represents to Parent that the Maximum Premium is as
set forth on Schedule 6.5.
6.6 FEES AND EXPENSES. All fees and expenses incurred in
connection with the Merger shall be paid by the party incurring such fees or
expenses, whether or not the Merger is consummated, except as provided in
Section 8.2.
6.7 PUBLIC ANNOUNCEMENTS.
(a) Through the Effective Time, Parent and Purchaser, on
the one hand, and the Company, on the other hand, shall consult with each other
before issuing, and provide each other the opportunity to review and comment
upon, any press release or other public statements with respect to the Offer,
the Merger and the other obligations under this Agreement and shall not issue
any such press release or make any such public statement relating thereto prior
to such consultation, except as may be required by applicable law, court process
or by obligations pursuant to any listing agreement with any national securities
exchange.
34
(b) The Company shall give at least 24 hours' prior
written notice to Parent Sub of any proposed press release or other public
statement not relating to the Offer, the Merger or any of the obligations under
this Agreement, which notice shall include the text of such press release or
public statement.
6.8 DIRECTORS. Promptly upon the acceptance for payment of,
and payment by Purchaser for, any shares of Common Stock pursuant to the Offer,
Purchaser shall be entitled to designate such number of directors on the
Company's Board of Directors as will give Purchaser, subject to compliance with
Section 14(f) of the Exchange Act, representation on the Board of Directors
equal to at least that number of directors, rounded up to the next whole number,
which is the product of (a) the total number of directors on the Board of
Directors (giving effect to the directors elected pursuant to this sentence)
multiplied by (b) the percentage that (i) such number of shares of Common Stock
so accepted for payment and paid for by Purchaser plus the number of shares of
Common Stock otherwise owned by Purchaser or any other subsidiary of Parent
bears to (ii) the number of such shares outstanding, and the Company shall, at
such time, cause Purchaser's designees to be so elected; provided, however, that
in the event that Purchaser's designees are appointed or elected to the Board of
Directors, until the Effective Time the Board of Directors shall have at least
two directors who are directors on the date of this Agreement and who are not
officers of the Company (the "Independent Directors"); and provided further
that, in such event, if the number of Independent Directors shall be reduced
below two for any reason whatsoever, the remaining Independent Director shall be
entitled to designate a Person to fill such vacancy who shall be deemed to be an
Independent Director for purposes of this Agreement or, if no Independent
Directors then remain, the other directors shall designate two Persons to fill
such vacancies who shall not be officers, stockholders or affiliates of the
Company, Parent or Purchaser, and such Persons shall be deemed to be Independent
Directors for purposes of this Agreement. Subject to applicable law, the Company
shall take all action requested by Parent necessary to effect any such election,
including mailing to its stockholders the Information Statement containing the
information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder (the "Information Statement"), and the Company shall make
such mailing with the mailing of the Schedule 14D-9 (provided that Purchaser
shall have provided to the Company on a timely basis all information required to
be included in the Information Statement with respect to Purchaser's designees).
In connection with the foregoing, the Company shall promptly, at the option of
Purchaser, either increase the size of the Board of Directors or obtain the
resignation of such number of its current directors as is necessary to enable
Purchaser's designees to be elected or appointed to the Board of Directors as
provided above.
6.9 COOPERATION WITH FINANCING EFFORTS. The Company agrees to
provide, and will cause each of the Subsidiaries and its and their respective
officers, employees and advisors to provide, reasonable cooperation in
connection with the arrangement of any financing in respect of the transactions
contemplated by this Agreement, including without limitation, 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 customary certificate
of the chief financial officer of the Company with
35
respect to solvency matters, comfort letters of accountants, legal opinions and
real estate title documentation as may be reasonably requested by Purchaser.
6.10 CONSENTS. From and after the date of this Agreement and
until the Closing, the Company shall use its commercially reasonable efforts to
obtain the consents listed in Schedule 6.10.
6.11 TAKEOVER STATUTES. If any Takeover Statute shall become
applicable to the transactions contemplated hereby, the Company and the Board of
Directors of the Company shall grant such approvals and take such actions as are
necessary so that the transactions contemplated hereby may be consummated as
promptly as practicable on the terms contemplated hereby and otherwise act to
eliminate or minimize the effects of such statute or resolution on the
transactions contemplated hereby.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) If required by law, the Company shall have obtained the
Company Stockholder Approval.
(b) The waiting period (and any extension thereof) applicable
to the Merger under the HSR Act, if any, shall have been terminated or shall
have expired. Any consents, approvals and filings under any foreign antitrust
law, the absence of which would prohibit the consummation of Merger, shall have
been obtained or made.
(c) No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other
legal restraint or prohibition preventing the consummation of the Merger shall
be in effect.
(d) Purchaser shall have previously accepted for payment and
paid for the shares of Common Stock tendered and not withdrawn pursuant to the
Offer.
(e) In the event that Section 1.3 applies, the representations
and warranties by the Company contained in this Agreement (which for purposes of
this Section 7.1(e) shall be read as though none of them contained any Material
Adverse Effect or other materiality qualifications) shall be true and correct in
all respects as of the date of this Agreement and at the Effective Time, except
where the failure of such representations and warranties in the aggregate to be
true and correct in all respects, individually or in the aggregate, have not had
and would not reasonably be expected to have a Material Adverse Effect;
provided, however, that the representations in Section 3.3 (Capital Structure)
as to the number of issued and outstanding shares of capital stock of the
Company and Company Stock Options shall be true and correct in all respects.
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ARTICLE VIII
TERMINATION
8.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after the Company Stockholder
Approval:
(a) By mutual written consent of Parent, Purchaser and the
Company;
(b) By either Parent or the Company if:
(i) the Merger is not consummated on or before
October 31, 2002 (the "Outside Date"), unless the failure to consummate
the Merger is the result of a willful or material breach this Agreement
by the party seeking to terminate this Agreement; provided, however,
that the passage of such period shall be tolled for any part thereof
during which any party shall be subject to a nonfinal order, decree,
ruling or action restraining, enjoining or otherwise prohibiting the
consummation of the Merger;
(ii) any Governmental Entity issues an order, decree
or ruling or takes any other action permanently enjoining, restraining
or otherwise prohibiting the Merger and such order, decree, ruling or
other action shall have become final and nonappealable;
(iii) subject to Section 1.3, as the result of the
failure of any of the conditions set forth in Exhibit A to this
Agreement, the Offer shall have terminated or expired in accordance
with its terms without Purchaser having purchased any shares of Common
Stock pursuant to the Offer; or
(iv) upon a vote at a duly held stockholders meeting
to obtain the Company Stockholder Approval, the Company Stockholder
Approval is not obtained; provided, however, that this Agreement may
not be terminated by Parent pursuant to this clause (iv) if Parent or
Purchaser shall have failed to vote the shares of Common Stock held by
it in favor of the Merger;
(c) by Parent, if the Company breaches or fails to perform in
any material respect any of its covenants contained in this Agreement, which
breach or failure to perform would give rise to the failure of a condition set
forth in Exhibit A;
(d) subject to Section 1.3, by Parent, if any of the
conditions set forth in Exhibit A shall become incapable of fulfillment prior to
the Outside Date and shall not have been waived by all applicable parties, and
the Offer shall have terminated or expired by its terms without Purchaser having
purchased any shares of Common Stock pursuant to the Offer;
(e) by Parent, if the Board of Directors fails to make, or
withdraws, modifies or changes, in any manner adverse to Parent and Purchaser,
its approval or recommendation of the Offer, the Merger or this Agreement; or
(f) by the Company, (i) if Parent or Purchaser breaches or
fails to perform in any material respect any of their respective covenants
contained in this Agreement or (ii) if prior
37
to consummation of the Offer, the Board of Directors of the Company shall have
provided written notice to Parent that the Company is prepared, upon termination
of this Agreement, to enter into a binding written definitive agreement for a
Superior Proposal; provided that in the case of this clause (ii): (A) the
Company shall have complied with Section 5.2 in all respects; (B) the Board of
Directors of the Company shall have reasonably concluded in good faith in
consultation with its financial advisor and outside counsel that such proposal
is a Superior Proposal; (C) Parent does not make, within five business days
after receipt of the Company's written notice referred to above in this clause
(ii), an offer that the Board of Directors of the Company shall have reasonably
concluded in good faith in consultation with its financial advisor and outside
counsel is at least as favorable to the stockholders of the Company as the
Superior Proposal; and (D) the Company shall have paid Parent the amounts set
forth in Section 8.2(b) concurrently with such termination.
8.2 EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement by either
the Company or Parent as provided in Section 8.1, this Agreement shall forthwith
become void and have no effect, without any liability or obligation on the part
of Parent, Purchaser or the Company, other than Section 6.2, Section 6.6, this
Section 8.2 and Article IX; provided, however, that nothing contained in this
Section 8.2 shall relieve any party from liability for any breach of this
Agreement.
(b) If this Agreement is terminated pursuant to Section 8.1(e)
or 8.1(f)(ii), the Company shall pay to Parent the sum of $5.0 million in cash.
In addition, the Company shall reimburse Parent, Purchaser and their affiliates
for all out-of-pocket fees and expenses incurred by any of them in connection
with the negotiation of this Agreement and preparation of the Offer and the
Merger and any related financings (including, without limitation, fees and costs
of attorneys and accountants and other advisors and fees payable to banks,
financial institutions and their respective agents and fees of financial
printers engaged by Parent, Purchaser or their affiliates). This Section 8.2
will survive any termination of this Agreement. The Company acknowledges that
the agreements contained in this Section 8.2 are an integral part of the
transactions contemplated by this Agreement, and that, without these agreements,
Parent would not enter into this Agreement; accordingly, if the Company fails to
promptly pay the amounts due pursuant to this Section 8.2, the Company shall pay
to Parent all costs and expenses (including attorney's fees) in connection with
collecting such amounts, together with interest on the amount of the unpaid
transaction expenses and termination fee at the prime rate of Citibank, N.A. in
effect on the date such payment was required to be made.
ARTICLE IX
GENERAL PROVISIONS
9.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of
the representations and warranties set forth in Article III or IV of this
Agreement shall survive beyond the Effective Time.
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9.2 NOTICES. All notices and other communications given or
made pursuant to this Agreement shall be in writing and shall be deemed to have
been duly given or made (a) three business days after being sent by registered
or certified mail, return receipt requested, (b) upon delivery, if hand
delivered, (c) one business day after being sent by prepaid overnight carrier
with guaranteed delivery, with a record of receipt, or (d) upon transmission
with confirmed delivery if sent by facsimile, to the parties at the following
addresses (or at such other addresses as shall be specified by the parties by
like notice):
(a) if to Parent or Purchaser:
D&B Holdings I, Inc.
D&B Acquisition Sub, Inc.
c/o Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, New York 10166
Attention: E. Michael Greaney
Fax: (212) 351-4035
with a copy to:
Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, New York 10166
Attention: E. Michael Greaney, Esq.
Fax: (212) 351-4035
(b) if to the Company:
Dave & Buster's, Inc.
2481 Manana Drive
Dallas, Texas 75220
Attention: General Counsel
Fax: (214) 357-1536
with a copy to:
Hallett & Perrin, P.C.
2001 Bryan Street, Suite 3900
Dallas, Texas 75201
Attention: Bruce H. Hallett, Esq.
Fax: (214) 922-4170
9.3 PARTIAL INVALIDITY. 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
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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.
9.4 EXECUTION IN COUNTERPARTS; FACSIMILE SIGNATURES. This
Agreement may be executed in two or more counterparts, each of which shall be
considered an original instrument, but all of which shall be considered one and
the same agreement.
9.5 GOVERNING LAW, ETC. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, without
regard to principles of conflicts of laws. The parties hereby irrevocably submit
to the jurisdiction of the courts of the State of New York and the Federal
courts of the United States of America located in the Borough of Manhattan, the
City of New York solely in respect of the interpretation and enforcement of the
provisions of this Agreement and the transactions contemplated hereby and hereby
waive, and agree not to assert, as a defense in any action, suit or proceeding
for the interpretation or enforcement hereof, that it is not subject thereto or
that such action, suit or proceeding may not be brought or is not maintainable
in said courts or that the venue thereof may not be appropriate or that this
Agreement may not be enforced in or by such courts, and the parties hereto
irrevocably agree that all claims with respect to such action or proceeding
shall be heard and determined in such courts. The parties consent to and grant
any such court jurisdiction over the person of such parties and over the subject
matter of such dispute and agree that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in Section
9.2 or in such other manner as may be permitted by law shall be valid and
sufficient service thereof.
9.6 ASSIGNMENT; SUCCESSORS AND ASSIGNS; NO THIRD PARTY
BENEFICIARIES. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned or delegated by any of the parties
hereto without the prior written consent of the other parties. Subject to the
foregoing, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors or assigns, heirs, legatees,
distributees, executors, administrators and guardians. Nothing in this
Agreement, expressed or implied, is intended or shall be construed to confer a
benefit upon any Person other than the parties hereto (and their successors and
assigns permitted by this Section 9.6) and the Indemnified Parties and their
respective heirs, legatees and personal representatives to the extent provided
in Section 6.5.
9.7 TITLES AND HEADINGS. Titles and headings to sections
herein are inserted for convenience of reference only and are not intended to be
a part of or to affect the meaning or interpretation of this Agreement.
9.8 SCHEDULES AND EXHIBITS. The schedules and exhibits
referred to in this Agreement shall be construed with and as an integral part of
this Agreement to the same extent as if the same had been set forth verbatim
herein.
9.9 KNOWLEDGE. In each provision of this Agreement in which a
representation or warranty is qualified to the "knowledge" of a Person or to the
"best of the
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knowledge" of a Person, unless otherwise stated in such provision, each such
phrase means that the Person does not have actual knowledge after reasonable
investigation of any state of facts which is different from the facts described
in the warranty or representation. With respect to the Company, such knowledge
shall refer solely to the "knowledge" of one or more of those individuals
identified in Schedule 9.9.
9.10 ENTIRE AGREEMENT; AMENDMENTS. This Agreement, including
the schedules and exhibits, contains the entire understanding of the parties
hereto with regard to the subject matter contained herein. The parties hereto,
by mutual agreement in writing, may amend, modify and supplement this Agreement.
Any purported amendment that does not comply with the foregoing shall be null
and void.
9.11 WAIVERS. Any term or provision of this Agreement may be
waived, or the time for its performance may be extended, by the party or parties
entitled to the benefit thereof. The failure of any party hereto to enforce at
any time any provision of this Agreement shall not be construed to be a waiver
of such provision, nor shall it in any way to affect the validity of this
Agreement or any part hereof or the right of any party thereafter to enforce
each and every such provision. No waiver of any breach of this Agreement shall
be held to constitute a waiver of any other or subsequent breach.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above written.
<Table>
<Caption>
D&B HOLDINGS I, INC. DAVE & BUSTER'S, INC.
By: /s/ Simon Moore By: /s/ David O. Corriveau
---------------------------- ----------------------------
Name: Simon Moore Name: David O. Corriveau
Title: President Title: Co-CEO & President
D&B ACQUISITION SUB, INC.
By: /s/ Simon Moore
----------------------------
Name: Simon Moore
Title: President
</Table>
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EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or this Agreement,
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act (relating to Purchaser's obligation to pay for or return tendered
shares of Common Stock promptly after the termination or withdrawal of the
Offer), to pay for any shares of Common Stock tendered pursuant to the Offer,
and, subject to the terms of the Agreement, may terminate the Offer, if there
shall not have been validly tendered and not withdrawn prior to the expiration
of the Offer that number of shares of Common Stock which would represent at
least 80% of the Outstanding Shares (the "Minimum Tender Condition"). The term
"Outstanding Shares" means all outstanding securities entitled generally to vote
in the election of directors of the Company, determined as of the scheduled
expiration date, as such date may be extended pursuant to Section 1.1(a) of this
Agreement. Furthermore, notwithstanding any other term of the Offer or this
Agreement, Purchaser shall not be required to commence the Offer, accept for
payment or, subject as aforesaid, to pay for any shares of Common Stock not
theretofore accepted for payment or paid for, and may terminate or amend the
Offer, (1) with the consent of the Company or (2) if, at any time on or after
the date of this Agreement and before the acceptance of such shares for payment
or the payment therefor, any of the following conditions exists:
(a) there shall be pending any suit, action or proceeding by
any Governmental Entity: (i) seeking to restrain or prohibit the acquisition by
Parent or Purchaser of any Common Stock or the making or consummation of the
Offer or the Merger or any other material transaction contemplated by this
Agreement, or resulting in a material delay in or material restriction on the
ability of Purchaser to consummate the Offer or the Merger or seeking to obtain
from the Company, Parent or Purchaser any damages that would reasonably be
expected to have a Material Adverse Effect; (ii) seeking to prohibit or limit
the ownership or operation by the Company, Parent or any of their respective
subsidiaries of any material portion of the business or assets of the Company,
Parent or any of their respective subsidiaries, or to compel the Company, Parent
or any of their respective subsidiaries to dispose of or hold separate any
material portion of their respective businesses or assets, as a result of the
Offer, the Merger or any other transaction; (iii) seeking to impose limitations
on the ability of Parent or Purchaser to acquire or hold, or exercise full
rights of ownership of, any shares of Common Stock, including the right to vote
the Common Stock purchased by it on all matters properly presented to the
stockholders of the Company; (iv) seeking to prohibit Parent or any of its
subsidiaries from effectively controlling in any material respect the business
or operations of the Company and the Subsidiaries; or (v) which otherwise is
reasonably likely to have a Material Adverse Effect;
(b) any statute, rule, regulation, legislation, judgment,
order or injunction shall be enacted, entered, enforced, promulgated, amended or
issued with respect to, or deemed applicable to, or any consent or approval
withheld with respect to: (i) Parent, the Company or any of their respective
subsidiaries; or (ii) the Offer, the Merger or any other Transaction, by any
Governmental Entity that is reasonably likely to result, directly or indirectly,
in any of the consequences referred to in subparagraph (a) above;
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(c) there shall have occurred any event, change, effect or
development that, individually or in the aggregate, has had or would reasonably
be expected to have a Material Adverse Effect (except for such as may relate to
or arise from (i) economic conditions generally in the United States, or (ii)
the transactions contemplated by this Agreement as specifically relating to
Parent or Purchaser as the acquiror of the Company);
(d) there shall have occurred: (i) any general suspension of
trading of securities on any national securities exchange or in the
over-the-counter market in the United States (excluding any coordinated trading
halt triggered solely as a result of a specified decrease in a market index);
(ii) a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States; (iii) a commencement of a war or armed
hostilities or other national or international calamity directly or indirectly
involving the United States; or (iiv) in the case of any of the foregoing
existing on the date of this Agreement, a material acceleration or worsening
thereof;
(e) the representations and warranties by the Company
contained in this Agreement (which for purposes of this paragraph (e) of Exhibit
A shall be read as though none of them contained any Material Adverse Effect or
other materiality qualifications) shall not be true and correct in all respects
as of the date of this Agreement and at the scheduled or extended expiration of
the Offer, except where the failure of such representations and warranties in
the aggregate to be true and correct in all respects, individually or in the
aggregate, have not had and would not reasonably be expected to have a Material
Adverse Effect; provided, however, that the representations in Section 3.3
(Capital Structure) as to the number of issued and outstanding shares of capital
stock of the Company and Company Stock Options shall be true and correct in all
respects;
(f) the Company shall have failed to perform in any material
respect any obligation or to comply in any material respect with any agreement
or covenant of the Company to be performed or complied with by the Company under
this Agreement;
(g) this Agreement shall have been terminated in accordance
with its terms;
(h) the Company's Board of Directors fails to make, or
withdraws, modifies or changes, in any manner adverse to Parent and Purchaser,
its approval or recommendation of the Offer, the Merger or this Agreement; or
(i) the Company shall have failed to obtain (i) any third
party or governmental consents or approvals required in connection with this
Agreement or the transactions contemplated hereby, the failure of which to
obtain, individually or in the aggregate, have had or would reasonably be
expected to have a Material Adverse Effect or (ii) any of the following consents
and approvals:
(A) landlord consents required pursuant to the leases
governing the following Leased Real Properties: 4821 Mills Circle,
Ontario, California; 4661 Palisades Ctr. Drive, West Nyack, New York;
and 20 City Boulevard West, Building G, Suite 1, Orange, California;
and
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(B) consents, approvals or authorizations required by
all state, city or local liquor licensing boards, agencies or other
similar entities for the Company's operations in the following states:
Michigan, Missouri, Rhode Island and Texas.
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