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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (date of earliest event reported): December 16, 1996
WESTERN COUNTRY CLUBS, INC.
(Exact name of registrant as specified in its charter)
COLORADO
(State or other jurisdiction of incorporation or organization)
000-24058 84-1131343
(Commission File Number) (I.R.S. Employer Identification No.)
5218 CLASSEN BOULEVARD
OKLAHOMA CITY, OKLAHOMA 73118
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 405-848-0996
1601 WEST EVANS STREET, DENVER, COLORADO 80223
(Former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Through a subsidiary merger effective December 16, 1996, Western Country
Clubs, Inc. (the "Company") acquired Entertainment Wichita, Inc. ("EWI"), a
Kansas corporation, for 400,000 shares of the Company's Common Stock. EWI was
closely-held and is the general partner and 80% owner of In Cahoots Limited
Partnership, a Kansas limited partnership that owns InCahoots, a
country-western theme nightclub located in Wichita, Kansas.
Prior to the merger, EWI was owned 62.625% by Shane Investments, L.C., a
corporation owned by Joe Robert Love, Jr., the adult son of Joe R. Love, a
director of the Company; 18.75% by Entertainment Oklahoma City II, Inc., a
corporation owned by James E. Blacketer, a director of the Company; and 4.0% by
each of James E. Blacketer, Jr. and Jeb Blacketer, adult sons of Mr. Blacketer.
The Agreement and Plan of Merger is filed with this report as Exhibit 2.0
and is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired
The financial statements required by this Item will be filed by
amendment or amendments of this Report as soon as practicably
available and no later than 60 days after the date of this Report.
(b) Pro Forma Financial Information
The pro forma financial information required by this Item will be
filed by amendment or amendments of this Report as soon as
practicably available and no later than 60 days after the date of
this Report.
(c) The following exhibits are filed with this report:
2.0 Agreement and Plan of Merger dated December 16, 1996, between
Western Country Clubs, Inc., Entertainment Wichita, Inc. and
WCCI Acquisition Corp. (the "Merger Agreement").
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto authorized.
Western Country Clubs, Inc.
/s/ Ted W. Strickland
------------------------------------------
Ted W. Strickland, Chief Financial Officer
Date: January 8, 1997
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EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXH. NO. EXHIBIT NAME PAGE
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<S> <C> <C>
2.0 Agreement and Plan of Merger dated December 16, 1996, 5
between Western Country Clubs, Inc., Entertainment
Wichita, Inc. and WCCI Acquisition Corp. (the "Merger
Agreement").
</TABLE>
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EXHIBIT 2.0
AGREEMENT AND PLAN OF MERGER
BETWEEN
ENTERTAINMENT WICHITA, INC.
WESTERN COUNTRY CLUBS, INC.
AND
WCCI ACQUISITION CORPORATION
DATED DECEMBER 10, 1996
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated December 10, 1996, (the
"Agreement"), is between Entertainment Wichita, Inc., a Kansas corporation
("Entertainment"), Western Country Clubs, Inc., a Colorado corporation
("WCCI"), and WCCI Acquisition Corporation, an Oklahoma corporation and a
wholly-owned subsidiary of WCCI ("Merger Sub"). Entertainment and Merger Sub
are collectively referred to as "Constituent Corporations".
RECITALS
A. Entertainment and Merger Sub desire to merge with one another upon the
terms and conditions of this Agreement.
B. Entertainment, WCCI and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with the
merger.
C. Entertainment has 40,000 issued and outstanding shares of Common Stock,
par value $1.00 per share ("Common Stock"). The merger of Entertainment and
Merger Sub will require the approval of this Agreement by the affirmative vote
of the holders of a majority of the outstanding shares of Common Stock.
D. Merger Sub has 100 issued and outstanding shares of Common Stock, par
value $.01 per share ("Merger Sub Common Stock"). The merger of Entertainment
and Merger Sub will require the approval of this Agreement by the affirmative
vote of the holder of a majority of the outstanding shares of Merger Sub Common
Stock.
E. The Boards of Directors of Entertainment and Merger Sub have approved
the merger of Merger Sub with and into Entertainment (the "Merger") upon the
terms and subject to the conditions set forth in this Agreement.
ACCORDINGLY, the parties agree as follows.
TERMS AND CONDITIONS
ARTICLE I. THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.2 hereof),
and subject to and upon the terms and conditions of this Agreement, Merger Sub
shall be merged with and into Entertainment, the separate existence of Merger
Sub shall cease, and Entertainment shall be the surviving corporation in the
Merger (sometimes called the "Surviving Corporation"), and the separate
corporate existence of Entertainment shall continues as provided under the
Kansas General Corporation Code (the "Code"), subject to the provisions of
Section 3.1. The name of the Surviving Corporation shall continue to be
"Entertainment Wichita, Inc."
1.2 Effective Time. The Merger shall be effected by the filing of a
Certificate of Merger, in the form required by the Code and otherwise
conforming to the requirements of the Code, with the Secretary of State of the
State of Kansas. The Merger shall become effective at the time of the filing,
which shall be made contemporaneously
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with the Closing (as defined in Section 9.1). The time and date when the Merger
shall become effective is called the "Effective Time".
1.3 Effect of the Merger. At the Effective Time, Entertainment -- as the
surviving corporation in the Merger -- shall possess all of the rights,
privileges, immunities, powers and franchises of each of Merger Sub and
Entertainment; all of the property, real, personal and mixed, including
subscription of shares, choses in action and every other asset of each of
Merger Sub and Entertainment shall vest in the Surviving Corporation without
further act or deed; the Surviving Corporation shall assume and be liable for
all the liabilities and obligations of each of Merger Sub and Entertainment;
and all other effects presumed in a merger shall result from the Merger.
ARTICLE II. CONVERSION AND EXCHANGE OF SHARES
2.1 Conversion of Shares. At the Effective Time, by virtue of the Merger
and without any action on the part of Merger Sub, Entertainment, or the holders
of any of the following securities:
2.1.1 Each share of Common Stock issued and outstanding immediately prior
to the Effective Time (other than shares of Common Stock to be cancelled
pursuant to Section 2.1.2 below and other than the Dissenting Shares, as
defined in Section 2.2 below) shall be converted into the right to receive ten
shares of the common stock of WCCI, par value $.01 per share ("WCCI Common
Stock"), upon surrender of the certificate representing such share.
2.1.2 Each share of Common Stock held in Entertainment's treasury, by any
subsidiary of Entertainment, or by WCCI or Merger Sub immediately prior to the
Effective Time shall be cancelled and extinguished without any conversion, and
no payment shall be made in respect thereof.
2.1.3 Each share of Merger Sub Common Stock issued and outstanding
immediately prior to the Effective Time shall be converted into and exchanged
for one validly issued, fully paid and nonassessable share of common stock, par
value $1.00 per share, of the Surviving Corporation ("Surviving Corporation
Common Stock"). From and after the Effective Time, each outstanding certificate
which had represented shares of Merger Sub Common Stock shall evidence
ownership of and represent the number of shares of Surviving Corporation Common
Stock into which such shares of Merger Sub Common Stock shall have been
converted.
2.2 Dissenting Shares. To the extent required by the Code, shares of
Common Stock that are issued and outstanding immediately prior to the Effective
Time and are held by holders of Common Stock who comply with all the provisions
of the Code concerning the right of holders of Common Stock to dissent from the
Merger and demand payment of the appraised value of their shares of Common
Stock ("Dissenting Shareholders") shall not be converted into the right to
receive the WCCI Common Stock but shall instead be converted into the right to
receive such consideration as may be determined to be due such Dissenting
Shareholders pursuant to the law of the State of Kansas (such shares being the
"Dissenting Shares"); provided, however if any Dissenting
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Shareholder fails to establish and perfect his or her dissenter's rights as
provided by applicable law, then such Dissenting Shareholder shall forfeit the
right to obtain payment of the appraised value of the shares held by him or
her, and such Dissenting Shareholder shall be entitled to receive, as of the
Effective Time, only the WCCI Common Stock (without interest) for each share of
Common Stock held by him or her, upon surrender of the certificate representing
such share. The Surviving Corporation shall comply with all of the obligations
pursuant to the Code of a surviving corporation after the effectiveness of a
merger with respect to dissenting shareholders and the Surviving Corporation
shall direct all negotiations and proceedings with respect to demands for
payment of an appraised value under Kansas law.
2.3 Procedures for Shares; Stock Transfer Books.
2.3.1 Promptly after the Effective Time, the Surviving Corporation shall
cause to be mailed to each person who was, at the Effective Time, a holder of
record of issued and outstanding Shares a form of letter of transmittal and
instructions for use in effecting the surrender of the certificates which, at
the Effective Time, represented any of such Shares to be exchanged pursuant to
the Merger. Upon surrender to the exchange agent appointed by WCCI (the
"Exchange Agent") of such certificates, together with such letter of
transmittal, duly executed and completed in accordance with the instructions,
and such other documents as may be requested, the Surviving Corporation shall
promptly cause to be delivered to the persons entitled thereto the WCCI Common
Stock (and any additional cash to which such person may be entitled on account
of fractional shares as provided in subsection 2.3.4). No interest will be paid
or will accrue on any amount payable in cash upon the surrender of any such
certificates. Until so surrendered, each certificates which represented issued
and outstanding Shares immediately prior to the Effective Time shall be deemed
for all purposes to evidence the right to receive the WCCI Common Stock into
which such Shares shall have been converted pursuant to the Merger. The
Exchange Agent may issue the WCCI Common Stock attributable to a certificate
which has been lost or destroyed upon receipt of satisfactory evidence of
ownership of the Shares and of appropriate indemnification. Unless and until
any such outstanding certificates for Shares shall be so surrendered, no
dividend or other distribution, if any, payable to holders of record of WCCI
Common Stock as of any date on or subsequent to the Effective Time shall be
paid to the holder of such outstanding certificate, but upon surrender of such
outstanding certificate, there shall be paid to the record holder of the
certificate for shares of WCCI Common Stock issued in exchange therefor the
amount, without interest thereon, of dividends and other distributions, if any,
which before or after the Effective Time have been declared and become payable
with respect to the number of whole shares of WCCI Common Stock represented
thereby. If any cash in lieu of fractional shares or shares of WCCI Common
Stock is to be paid or registered in the name of a person other than a person
in whose name the certificates for Shares surrendered for exchange are
registered, it shall be a condition of the exchange that the person requesting
such exchange shall pay to the Exchange Agent any transfer or other taxes
required by reason of the payment of any cash to, or the registration of any
shares of WCCI Common Stock in the name of, a person other than the registered
owner of the certificates surrendered, or shall establish to the satisfaction
of the Exchange Agent that such tax has been paid or is
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not applicable. Notwithstanding the foregoing, neither the Exchange Agent nor
any party hereto shall be liable to any holder of certificates formerly
representing Shares for any amount paid to a public official pursuant to any
applicable abandoned property, escheat or similar law. The Surviving
Corporation shall pay all charges an expenses, including those of the Exchange
Agent, in connection with the exchange of cash and/or the certificates for
Shares.
2.3.2 After the Effective Time, there shall be no transfers on the stock
transfer books of the Surviving Corporation of the Shares which were
outstanding immediately prior to the Effective Time. Certificates presented to
the Surviving Corporation after the Effective Time shall be cancelled.
2.3.4 Fractional Shares. No fractional shares of WCCI Common Stock shall
be issued but, in lieu thereof, the Exchange Agent shall pay such holders an
amount in cash equal to the fractional interest in a share of WCCI Common Stock
multiplied by $2.375.
ARTICLE III. ARTICLES OF INCORPORATION;
BYLAWS; DIRECTORS AND OFFICERS
3.1 Certificate of Incorporation; Bylaws. From and after the Effective
Time, the Certificate of Incorporation and the Bylaws of Entertainment, as in
effect immediately prior to the Effective Time, shall be the Certificate of
Incorporation and the Bylaws of the Surviving Corporation.
3.2 Directors and Officers of the Surviving Corporation. From and after
the Effective Time, the directors of Entertainment immediately prior to the
Effective Time shall be the initial directors of the Surviving Corporation,
each of such directors to hold Office, subject to the applicable provisions of
the Certificate of Incorporation and Bylaws of the Surviving Corporation, until
their respective successors shall be duly elected or appointed and qualified.
From and after the Effective Time, the officers of Entertainment immediately
prior to the Effective Time shall, subject to the applicable provisions of the
Certificate of Incorporation and Bylaws of the Surviving Corporation, be the
officers of the Surviving Corporation until their respective successors shall
be duly elected or appointed and qualified.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of Entertainment. Entertainment
represents and warrants to WCCI and Merger Sub as follows:
(a) Corporate Organization; Etc. Entertainment is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Kansas and is in good standing in each jurisdiction where the properties owned,
leased or operated, or the business conducted, by it require such qualification
and where failure to so qualify or be in good standing is reasonably likely to
have a material adverse effect on the financial condition, properties,
businesses or results of operation of Entertainment. Entertainment has
previously delivered to WCCI complete and correct copies of its
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Certificate of Incorporation and Bylaws, each as amended to date. Such
Certificate of Incorporation and Bylaws are in full force and effect.
(b) Capitalization. As of the date of this Agreement, the authorized
capital stock of Entertainment consists of 50,000 shares of Common Stock, par
value $1.00 per share, of which 40,000 shares of Common Stock are issued and
outstanding. All the issued and outstanding shares of capital stock of
Entertainment are validly issued, fully paid and nonassessable. As of the
Effective Time, the capitalization of Entertainment and the ownership of the
issued and outstanding shares of Entertainment's capital stock will be in all
material respects as described in the Form 8-K filed in connection with the
Merger.
(c) Authorization; Etc. Entertainment has the requisite corporate power
and authority to enter into this Agreement and to carry out the transactions
contemplated hereby. The Board of Directors of Entertainment has duly
authorized the execution and delivery of this Agreement, the performance by
Entertainment of its obligations under this Agreement and the consummation of
the transactions contemplated by this Agreement, and, upon approval of the
Merger by the shareholders of Entertainment, no further corporate proceedings
by Entertainment will be necessary to authorize this Agreement. This Agreement
has been validly executed and delivered by Entertainment and is a legal, valid
and binding agreement of Entertainment.
(d) No Violation. Neither the execution and delivery of this Agreement,
the performance by Entertainment of its obligations under this Agreement, nor
the consummation of the transactions contemplated by this Agreement will (i)
violate any provision of the Certificate of Incorporation or Bylaws of
Entertainment; (ii) violate or be in conflict with, or constitute a default
under, or permit the termination of, or cause the acceleration of the maturity
of any debt or other obligation pursuant to, or require the consent of any
other party to, or result in the creation or imposition of any lien upon any
property or assets of Entertainment under, any agreement or commitment to which
Entertainment is a party or by which Entertainment is bound; or (iii) violate
any statute or law or any judgment, decree, order, regulation or rule of any
court or governmental authority to which Entertainment or its properties is
bound, or affected, except where any one or more such violation, conflict or
default described in clause (ii) or (iii) above would not materially adversely
effect the financial condition, results of operations, business or properties
of Entertainment taken as a whole or prevent consummation of the transactions
contemplated by this Agreement.
(e) Consents and Approvals of Governmental Authorities. Except for the
filing of appropriate documents to effect the Merger as required by the laws of
the State of Kansas, no consent, approval or authorization of, or declaration,
filing or registration with, any governmental or regulatory authority is
required to be obtained or made by Entertainment in connection with the
transactions contemplated by this Agreement or the execution, delivery and
performance of this Agreement by Entertainment.
(f) Financial Statements; Liabilities and Litigation. Entertainment has
delivered to WCCI financial information for the years ended December 31, 1994
and
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1995, and for the nine months ended September 30, 1996. As of their respective
dates, except as otherwise previously disclosed to WCCI, each of balance sheets
of Entertainment fairly presents its financial position as of its date and each
statement of operations, cash flows and shareholders' equity fairly present its
results of operations, retained earnings and changes in financial position, as
the case may be, for the periods set forth therein, in each case in accordance
with generally accepted accounting principles (except for the absence of
required footnote disclosure) consistently applied during the periods involved.
Except as disclosed in writing to WCCI, there are no (i) actions, suits or
proceedings pending or, to the knowledge of the management of Entertainment,
threatened against Entertainment, or (ii) obligations, or liabilities, whether
accrued, contingent or otherwise, or any facts or circumstances of which the
management of Entertainment is aware, including those relating to employment,
wage and hour, occupational safety and health matters, that alone or in the
aggregate could result in a claim against, obligation of or liability to
Entertainment that is reasonably likely to have a material adverse effect on
the financial condition, properties, business or results of operations of
Entertainment.
(f) Information for Form 8-K and Registration Statement. The information
to be furnished by Entertainment for inclusion in the Form 8-K filed in
connection with the Merger and for the Registration Statement to be filed by
WCCI on Form SB-2 (or any amendment or supplement thereto) with respect to
Entertainment and its associates and affiliates will not, on the date the Form
8-K or Registration Statement is first filed or on the Closing Date, contain
any statement which is false or misleading with respect to any 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 were made, not misleading.
(g) Certain Fees. Neither Entertainment nor any of its officers, directors
or employees in their capacities as such, has incurred any claims for any
brokerage fees, commissions or finders' fees in connection with the
transactions contemplated by this Agreement.
4.2 Representations of WCCI and Merger Sub. WCCI and Merger Sub represent
and warrant to Entertainment as follows:
(a) Corporate Organization; Etc. Each of WCCI and Merger Sub is a
corporation duly organized, validly existing and in good standing under the
laws of the state of its incorporation. WCCI has previously delivered to
Entertainment complete and correct copies of its Certificate of Incorporation
and Bylaws, each as amended to date. Such Certificate of Incorporation and
Bylaws are in full force and effect. Merger Sub has previously delivered to
Entertainment complete and correct copies of its Certificate of Incorporation
and Bylaws, each as amended to date. Such Certificate of Incorporation and
Bylaws are in full force and effect.
(b) Authorization; Etc. WCCI and Merger Sub each has the requisite
corporate power and authority to enter into this Agreement and to carry out the
transactions contemplated hereby. The Board of Directors of Merger Sub and
WCCI, the
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sole shareholder of Merger Sub, have duly authorized the execution and delivery
of this Agreement, the performance by Merger Sub of its obligations under this
Agreement and the consummation of the transactions contemplated by this
Agreement, and no further corporate proceedings by Merger Sub are necessary to
authorize this Agreement. This Agreement has been validly executed and
delivered by WCCI and Merger Sub and is a legal, valid and binding agreement.
(c) No Violation. Neither the execution and delivery of this Agreement,
the performance by WCCI or Merger Sub of its obligations under this Agreement,
nor the consummation of the transactions contemplated by this Agreement will
(i) violate any provision of the certificate of Incorporation or Bylaws of WCCI
or Merger Sub; (ii) violate or be in conflict with, or constitute a default
under, or permit the termination of, or cause the acceleration of the maturity
of any debt or other obligation pursuant to, or require the consent of any
other party to, or result in the creation or imposition of any lien upon any
property or assets of WCCI or Merger Sub under, any agreement or commitment to
which WCCI or Merger Sub is a party or by which WCCI or Merger Sub is bound; or
(iii) violate any statute or law or any judgment, decree, order, regulation or
rule of any court or governmental authority to which WCCI or Merger Sub or
their respective properties are bound or affected, except where any one or more
such violation, conflict or default described in clause (ii) or (iii) above
would not materially adversely effect the financial condition, results of
operations, business or properties of WCCI or Merger Sub taken as a whole or
prevent consummation of the transactions contemplated by this Agreement.
(d) Consents and Approvals of Governmental Authorities. Except for
requirements of the Exchange Act and the filing of appropriate documents to
effect the Merger as required by the laws of the State of Kansas, no consent,
approval or authorization of, or declaration, filing or registration with, any
governmental or regulatory authority is required to be obtained or made by WCCI
or Merger Sub in connection with the transactions contemplated by this
Agreement or the execution, delivery and performance of this Agreement by WCCI
or Merger Sub.
(e) WCCI Reports; Financial Statements. WCCI has delivered to
Entertainment (i) each registration statement, report on Form 8-K, proxy
statement prepared since December 31, 1995; (ii) WCCI's Annual Report on Form
10-K for the year ended December 31, 1995; and (iii) WCCI's quarterly reports
on Form 10-Q for the periods ended March 31, 1996, and June 30, 1996, each in
the form (including exhibits) as filed with the Securities and Exchange
Commission (collectively, the "WCCI Reports"). As of their respective dates,
except as otherwise disclosed to Entertainment in writing, the WCCI Reports did
not contain any untrue statements of a material fact or omit to state a
mate5ial fact required to be stated or necessary to make the statements made
therein, in light of the circumstances in which the statement was made, not
misleading. Each of the balance sheets of WCCI included in or incorporated by
reference into the WCCI Reports fairly presents its financial position as of
its date and each statement of operations, cash flows and shareholders' equity
fairly present its results of operations, retained earnings and changes in
financial position, as the case may be, for the
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periods set forth therein, in each case in accordance with generally accepted
accounting principles consistently applied during the periods involved.
(f) Liabilities and Litigation. Except as disclosed in writing to
Entertainment, there are no (i) actions, suits or proceedings pending or, to
the knowledge of the management of WCCI, threatened against WCCI, or (ii)
obligations, or liabilities, whether accrued, contingent or otherwise, or any
facts or circumstances of which the management of WCCI is aware, including
those relating to employment, wage and hour, occupational safety and health
matters, that alone or in the aggregate could result in a claim against,
obligation of or liability to WCCI that is reasonably likely to have a material
adverse effect on the financial condition, properties, business or results of
operations of WCCI.
(g) Information for Form 8-K. The information to be furnished by WCCI for
inclusion in the Form 8-K filed in connection with the Merger (or any amendment
or supplement thereto) with respect to WCCI and its associates and affiliates
will not, on the date the Form 8-K is first filed or on the Closing Date,
contain any statement which is false or misleading with respect to any 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 were made, not misleading.
(h) No Prior Activities of Merger Sub. Merger Sub has not incurred any
liabilities except those incurred in connection with its organization or with
the negotiation and performance of this Agreement and the consummation of the
transactions contemplated by this Agreement. Merger Sub has not engaged in any
business or activities of any type or kind whatsoever, or entered into any
agreements or arrangements with any person or entity, or is subject to or bound
by any obligation or undertaking other than in connection with the transactions
contemplated by this Agreement.
(i) Certain Fees. Neither Merger Sub nor any of its officers, directors or
employees in their capacities as such, has incurred any claims for any
brokerage fees, commissions or finders' fees in connection with the
transactions contemplated by this Agreement.
ARTICLE V. CONDUCT OF ENTERTAINMENT'S BUSINESS
PENDING THE CLOSING DATE
Pending the Closing Date (as defined in Section 9.1), and except as
otherwise consented to or approved by WCCI in writing or as otherwise
contemplated by this Agreement:
5.1 Conduct of Business. Entertainment will operate its business
diligently and in good faith, consistent with past practice, and shall use its
best efforts to preserve its business organization intact and maintain its
existing relations with customers, suppliers, employees and business
associates.
5.2 Acquisition or Disposition of Assets. Entertainment shall not acquire
or dispose of any substantial assets, other than in the ordinary course of
business or in transactions where the aggregate consideration does not exceed
$25,000.
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5.3 Employment Agreements; Compensation and Benefits. Entertainment shall
not enter into any new employment agreement, amend any existing employment
agreement or grant any increases in compensation or benefits payable to their
officers or employees other than increases in the ordinary course of business
and consistent with past practice payable to non-officer employees.
5.4 Amendments. No change or amendment shall be made to the Certificate of
Incorporation or other charter documents or Bylaws of Entertainment.
5.5 Capital Changes. Entertainment shall not issue or sell or issue any
securities convertible into, or options, warrants to purchase, rights to
subscribe to or enter into any arrangement or contract with respect to the
issuance of, any shares of its capital stock or any of its other securities, or
make any other changes in its capital structure.
5.6 Dividends; Redemptions. Entertainment shall not declare, pay or set
aside for payment any dividend or other distribution in respect of its capital
stock, nor shall Entertainment, directly or indirectly, redeem, purchase or
otherwise acquire any of its capital stock.
5.7 Capital Expenditures. Entertainment shall not make any capital
expenditures or appropriations or commitments with respect thereto, except
capital expenditures, appropriations or commitments not exceeding $25,000 in
the aggregate as Entertainment may, in its discretion, deem appropriate.
5.8 Borrowing. Entertainment shall not incur or assume any indebtedness
except for short-term indebtedness (as defined below) in the ordinary course of
business, or indebtedness in an amount or amounts less than an aggregate of
$25,000. Except to the extent of any guarantees outstanding on the date of this
Agreement, Entertainment shall not guarantee any indebtedness. As used in this
Section 5.8, "short-term indebtedness" means any such indebtedness for money
borrowed maturing one year or less after the date of the incurrence or
assumption thereof.
5.9 Limitations On Agreements. Entertainment shall not agree or otherwise
commit to do any of the foregoing in this Article V. Entertainment shall not
modify, amend or terminate any of its material contracts (including contracts
of insurance) or waive, release or assign any material rights or claims, except
in the ordinary course of business.
ARTICLE VI.
CERTAIN OBLIGATIONS OF THE PARTIES
Entertainment covenants and agrees with WCCI and Merger Sub, and WCCI and
Merger Sub covenant and agree with Entertainment that between the date of this
Agreement and the Closing Date:
6.1 Full Access. Entertainment shall, upon reasonable request, afford to
WCCI and its affiliates, and its counsel, accountants and other authorized
representatives full access during normal business hours to the facilities,
properties, books and records of Entertainment in order that WCCI may have the
opportunity to make such reasonable
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investigations as it shall desire to make of the affairs of Entertainment, and
Entertainment will cause its officers and employees to furnish such additional
financial and operating data and other information as WCCI shall from time to
time reasonably request. WCCI shall, upon reasonable request, provide
Entertainment or its counsel, accountants and other authorized representatives
with such information concerning WCCI as may be reasonably necessary for
Entertainment to ascertain the accuracy and completeness of the information
supplied by WCCI for inclusion in the Form 8-K filed in connection with the
Merger (or any amendment or supplement to such documents).
6.2 Confidentiality. Entertainment and its affiliates will, and will use
its best efforts to cause its counsel, accountants and other authorized
representatives to, hold in strict confidence and not disclose to others for
any reasons whatsoever, without the prior written consent of WCCI, any
information received by them from WCCI in connection with the transactions
contemplated by this Agreement. In the event this Agreement is terminated,
Entertainment and WCCI each agrees to return promptly, if so requested by the
other party, every document furnished to any of them by the other party or any
subsidiaries, division, associate or affiliate of such other party, in
connection with the transactions contemplated by this Agreement and any copies
of documents which may have been made and to cause their representatives and
others to whom such documents were furnished promptly to return such documents
and any copies, other than documents filed with the SEC or otherwise publicly
available.
6.3 Shareholders' Meeting. Entertainment shall, in accordance with the
provisions of the Code and its Certificate of Incorporation and Bylaws, cause a
special meeting of its shareholders (the "Shareholders' Meeting") to be duly
called and held as soon as reasonably practicable after the date of this
Agreement for the purpose of approving and adopting this Agreement and all
actions contemplated by this Agreement which require the approval and adoption
by Entertainment's shareholders.
6.4 Form 8-K. WCCI will prepare and file, and Entertainment will cooperate
with WCCI in the preparation and filing of, the Form 8-K with the SEC with
respect to the transactions contemplated by this Agreement. In connection with
the Shareholders' Meeting contemplated by this Agreement, Entertainment will
fix a record date, issue proper notice and deliver the information to its
shareholders required by the laws of the State of Kansas. If at any time prior
to the Shareholders' Meeting, any event should occur relating to Entertainment
which should be set forth in an amendment of, or a supplement to, the Form 8-K
filed in connection with the Merger, Entertainment will promptly inform WCCI.
Whenever any event occurs which should be set forth in an amendment of, or a
supplement to, the Form 8-K filed in connection with the Merger, WCCI, with the
cooperation of Entertainment, will, upon learning of such event, promptly
prepare and file such amendment or supplement.
6.5 Waivers, Consents and Approvals. Entertainment will use its best
efforts to obtain any waivers, consents or approvals under the terms of any
agreement or commitment to which Entertainment is a party that are necessary
for the consummation of the Merger. In obtaining such waivers, consents and
approvals, Entertainment shall not, without consent of WCCI, agree to any
amendment to any such instrument.
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6.6 Publicity. Entertainment and WCCI agree to consult with each other in
issuing any press release and with respect to the general content of other
public statements about the transactions contemplated by this Agreement, and
shall not issue any such press lease prior to such consultation, except as may
be required by law or by obligations owed to the National Association of
Securities Dealers.
6.7 Cooperation With Respect To Filings. WCCI shall use its best efforts
to make at the appropriate time all filings required by the SEC or any other
governmental and other regulatory agencies and other third parties in
connection with the transactions contemplated by this Agreement. Entertainment
will, and will cause its associates and affiliates to, provide such information
and cooperate fully with WCCI in making such filings and other submissions
which may be required in connection with the transactions contemplated by this
Agreement. In the event of any action, suit, proceeding or investigation of a
nature referred to in Section 7.5 is commenced, the parties agree to cooperate
and use their best efforts to defend against such actions.
6.8 Negotiations. Between the date of this Agreement and the Effective
Time (or earlier termination of this Agreement pursuant to Section 10.1)
Entertainment shall not, and shall not permit any of its officers, employees,
representatives or agents, directly or indirectly, to encourage, solicit or
initiate discussions or negotiations with, or provide any non-public
information to or negotiate or enter into any agreement with, any corporation,
partnership, person or other entity or group concerning any possible proposals
regarding a merger or other business combination involving Entertainment or for
the acquisition of a material equity interest in, or a material portion of the
assets of Entertainment (an "Acquisition Proposal"), other than the
transactions contemplated by this Agreement. Entertainment shall promptly
notify WCCI if any such discussions or negotiations are sought to be initiated
with, any such information is requested from, or any Acquisition Proposal is
received by Entertainment.
ARTICLE VII.
CONDITIONS TO THE OBLIGATIONS OF WCCI
The obligations of WCCI and Merger Sub under this Agreement to be
performed on or before the Closing Date shall be subject to the satisfaction on
or before the Closing Date, of each of the following conditions:
7.1 Performance. Entertainment shall have performed and complied in all
material respects with all agreements, obligations and conditions required by
this Agreement to be performed or complied with by it on or prior to the
Closing Date.
7.2 Adoption by Entertainment Shareholders. The holders of a majority of
the shares of Common Stock that are eligible to vote at the Shareholders'
Meeting contemplated by this Agreement shall have voted (whether in person or
by proxy) for approval and adoption of this Agreement.
7.3 Consents. All approvals, consents, authorizations and waivers from
governmental and other regulatory agencies and other third parties required to
consummate the transactions contemplated by this Agreement shall have been
obtained.
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7.4 No Injunction. On the Closing Date there shall be no effective
injunction, writ, preliminary restraining order or any order of any nature
issued by a court of competent jurisdiction or other governmental authority
directing that the transactions provided for in this Agreement or any of them
not be consummated as so provided or imposing by conditions on the consummation
of the transactions contemplated by this Agreement that WCCI deems unacceptable
in its sole discretion.
7.5 No Proceeding or Litigation. No suit, action, or other proceeding
seeking to restrain, prevent or change the transactions contemplated by this
Agreement or otherwise questioning the validity or legality of such
transactions shall have been instituted and be pending.
7.6 Dissenters. The holders of not more than 10% of the total number of
shares of Common Stock outstanding immediately prior to the vote by the
shareholders to adopt this Agreement shall have filed with Entertainment a
written notice of intention to demand an appraised value for their shares.
ARTICLE VIII.
CONDITIONS TO ENTERTAINMENT'S OBLIGATIONS
The obligations of Entertainment under this Agreement to be performed on
or before the Closing Date shall be subject to the satisfaction on or before
the Closing Date, of each of the following conditions:
8.1 Representations and Warranties True. The representations and
warranties of WCCI and Merger Sub contained in this Agreement shall be true and
correct in all material respects on the date of this Agreement and at and on
the Closing Date as though such representations and warranties were made at and
on such date, except for changes permitted or contemplated by this Agreement.
8.2 Performance. WCCI and Merger Sub shall have performed and complied
with all agreements, obligations and conditions required by this Agreement to
be performed or complied with by it on or prior to the Closing Date.
8.3 Adoption by Entertainment Shareholders. The conditions set forth in
Section 7.2 shall have been satisfied.
8.4 Consents. All approvals, consents, authorizations and waivers from
governmental and other regulatory agencies required to consummate the
transactions contemplated by this Agreement shall have been obtained.
8.5 No Injunction. On the Closing Date there shall be no effective
injunction, writ, preliminary restraining order or any order of any nature
issued by a court of competent jurisdiction or other governmental agency
directing that the transactions provided for in this Agreement or any of them
not be consummated as so provided.
ARTICLE IX. CLOSING
9.1 Closing. The Closing of the Merger (the "Closing") shall take place at
the offices of Derrick & Briggs, counsel to WCCI, at 10:00 a.m., local time, on
December 10,
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1996, and that all conditions contained in Articles VII and VIII of this
Agreement have been satisfied. If all such conditions have not been satisfied
by such date, the Closing shall take place at a later date, agreed upon by the
parties at least two business days prior to the date selected (the date of the
Closing is in this Agreement called the "Closing Date").
ARTICLE X. TERMINATION AND ABANDONMENT
10.1 Methods of Terminations. Notwithstanding approval by the shareholders
of Entertainment, this Agreement may be terminated and the Merger may be
abandoned at any time before the Effective Time:
(a) by mutual consent of the respective Boards of Directors of Merger Sub
and Entertainment;
(b) by either Entertainment or Merger Sub if the Merger has not been
consummated on or prior to December 31, 1996, if the failure to consummate the
Merger is not attributable to the failure of the terminating party to fulfill
its obligations under this Agreement;
(c) by either Entertainment or Merger Sub if at the Shareholders' Meeting,
or any adjournment, the shareholders of Entertainment fail to adopt and approve
this Agreement as required by Kansas law;
(d) by Merger Sub if since the date of this Agreement, there has been any
changes (or any condition, event or development involving a prospective change)
in the business, properties, assets, liabilities, conditions (financial or
otherwise), results of operations or prospects of Entertainment which is or may
be materially adverse to Entertainment when taken as a whole;
(e) by either Entertainment or WCCI if a court of competent jurisdiction
or governmental, regulatory or administrative agency or commission shall have
issued an order, decree or ruling or taken any other action (which order,
decree or ruling the parties hereto shall use their best efforts to lift), in
each case permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement, and such other decree, ruling or
other action shall have become final and nonappealable; and
(f) by Merger Sub if the condition set forth in Section 7.6 is not
satisfied on the date of the Shareholders' Meeting.
10.2 Procedure Upon Termination. In the event of termination and
abandonment by the Board of Directors of Merger Sub or by the Board of
Directors of Entertainment pursuant to Section 10.1(b), (c), (d), (e) or (f) of
this Agreement, written notice shall terminate and the transactions
contemplated by this Agreement shall be abandoned without further action by
Merger Sub or Entertainment. If this Agreement is terminated as provided in
this Agreement:
(a) All information received by any party with respect to the business of
any other party (other than information which is a matter of public knowledge
or which has been or is published in any publication for public distribution or
filed as public
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information with any governmental authority) shall not at any time be used for
the advantage of, or disclosed to third parties by, such party for any reason;
and
(b) Neither party shall have any liability or further obligation to the
other party, except as stated in this Section 10.2, except that this Section
10.2 and Section 11.7 of this Agreement shall survive any termination of this
Agreement and nothing herein will relieve any party from liability for any
breach of this Agreement.
ARTICLE XI. MISCELLANEOUS PROVISIONS
11.1 Amendment and Modification. Subject to applicable law, this Agreement
may be amended, modified or supplemented before or after the vote of
shareholders of Entertainment by written agreement of the respective Boards of
Directors of WCCI, Merger Sub and Entertainment or their respective officers
authorized by such Board of Directors at any time prior to the Closing Date
with respect to any of the terms contained in this Agreement.
11.2 Extension; Waiver. At any time prior to the Effective Time, the
parties may by board action (i) extend the time for the performance of any of
the obligations or other acts of the other parties, (ii) waive any inaccuracies
in the representations and warranties contained in this Agreement, or (iii)
waive compliance with any of the agreements or conditions contained in this
Agreement. Any such waiver or failure to insist upon strict compliance not
operate as a waiver of, estoppel with respect to, any subsequent or other
failure. Any agreement on the part of any party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf
of such party.
11.3 Fees and Expenses. Except as otherwise provided in this Agreement,
each of the parties will pay its own expenses incurred in connection with the
preparation, negotiation, execution, delivery and consummation of this
Agreement and the transactions contemplated by this Agreement.
11.4 Expiration of Representations and Warranties. The representations and
warranties in this Agreement shall expire with, and be terminated and
extinguished by, the Closing, and neither any party nor any officer, director,
shareholder or agent of a party shall subsequently be under any liability with
respect to any such representation or warranty.
11.5 Notices. All notices, requests, demands and other communications
required or permitted under this Agreement shall be in writing and shall be
deemed to have been duly given if delivered by hand, mailed by certified or
registered mail with postage prepaid or by overnight mail (next day guaranteed
delivery), or if sent by cable, telegram, telex or telecopy as follows:
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(a) If to Entertainment, to:
Mr. Joe R. Love
1601 N.W. Expressway, Suite 1910
Oklahoma City, Oklahoma 73118
405-848-1581
or to such other person or address as Entertainment shall furnish to WCCI
and Merger Sub in writing.
(b) If to WCCI or Merger Sub, to:
Mr. James E. Blacketer
5218 Classen Boulevard
Oklahoma City, Oklahoma 73118
405-848-0996
or to such other person or address as WCCI and Merger Sub shall furnish
Entertainment in writing.
11.6 Assignment. This Agreement and all of the provisions of this
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns, but neither this Agreement
nor any of the rights, interests or obligations shall be assigned by either of
the parties without the prior written consent of the other party; provided,
however, that this Section 11.6 is not intended to limit or restrict the class
of persons entitled to the benefits of Section 11.7 of this Agreement or to
limit or restrict any such person's standing or capacity to enforce the
provisions of Section 11.7.
11.7 Agreement To Indemnify. The WCCI and Surviving Corporation, jointly
and severally, shall indemnify and hold harmless each present and former
director, officer, employee and agent of Entertainment, WCCI or Merger Sub (the
"Indemnified Parties) against any losses, claims, damages, liabilities, costs,
expenses, judgments and amounts paid in settlement in connection with any
claim, action, suit, proceeding or investigation arising out of or pertaining
to any action or omission occurring prior to the Effective Time (including
without limitation, any which arise out of or relate to the transactions
contemplated by this Agreement) to the full extent permitted under Kansas or
Colorado law or WCCI's or the Surviving Corporation's bylaws as presently in
effect; WCCI and the Surviving Corporation each agree that for three years
after the Effective Time the provisions of WCCI's or the Surviving
Corporation's Certificate of Incorporation or Bylaws as in effect on the
Effective Date of the Merger with respect to indemnification of officers,
directors and employees shall not be modified, changed or amended, except as
required by law; and WCCI and/or the Surviving Corporation will advance
expenses to each such person to the full extent so permitted; provided that any
determination required to be made with respect to whether an Indemnified
Party's conduct complied with applicable state law standards for
indemnification or WCCI's or the Surviving Corporation's Certificate of
Incorporation or bylaws shall be made by independent counsel selected by such
Indemnified Party and reasonably satisfactory to WCCI and/or the Surviving
Corporation (which shall pay such counsel's fees and
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expenses); and in the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (a) the
Indemnified Parties may retain counsel satisfactory to them, and WCCI and/or
the Surviving Corporation shall pay all fees and expenses of such counsel for
the Indemnified Parties, promptly as statements therefor are received, and (b)
WCCI and the Surviving Corporation will use their best efforts to assist in the
vigorous defense of any such matter; provided, that neither WCCI nor the
Surviving Corporation shall be liable for any settlement effected without its
written consent, which consent, however, shall not be unreasonably withheld;
and provided further, that WCCI and the Surviving Corporation shall not have
any obligation to any Indemnified Party when and if a court of competent
jurisdiction shall ultimately determine, after exhaustion of all avenues of
appeal, that he or she did not act in accordance with applicable state law
standards or WCCI's or the Surviving Corporation's Certificate of Incorporation
or bylaws (it being agreed, however, that WCCI and the Surviving Corporation
shall not challenge a determination by the independent counsel referred to
above or by any court that it is liable to an Indemnified Party). Any
Indemnified Party wishing to claim indemnification under this Section 11.7,
upon learning of any such claim, action, suit, proceeding or investigation,
shall notify WCCI and the Surviving Corporation and shall deliver to WCCI and
the Surviving Corporation an undertaking to repay any amounts advanced when and
if a court of competent jurisdiction shall ultimately determine, after
exhausting of all avenues of appeal, that he or she did not act in accordance
with applicable state law standards or WCCI's and/or the Surviving
Corporation's Certificate of Incorporation or bylaws. The Indemnified Parties
as a unit may retain only one law firm to represent them with respect to such
matter unless there is, under applicable standards of professional conduct, a
conflict of any significant issue between the positions of any two or more
Indemnified Parties. This Section 11.7 shall survive the Merger and is intended
to benefit each of the Indemnified Parties, each of whom shall be entitled to
enforce this Section 11.7 against WCCI and/or the Surviving Corporation.
11.8 Governing Law. This Agreement and the legal relations among the
parties shall be governed by and construed in accordance with the laws of the
State of Colorado, except to the extent that compliance with the laws of the
State of Kansas is necessary to effect the Merger.
11.9 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
11.10 Headings. The headings in this Agreement are inserted for
convenience only and shall not constitute a part of this Agreement.
11.11 Entire Agreement. This Agreement, including the schedules, lists and
other documents referred to in this Agreement which form a part of this
Agreement, embody the entire agreement and understanding of the parties in
respect of the subject matter contained in this Agreement. There are no
restrictions, promises, warranties, covenants or undertakings, other than those
set forth or referred to in this Agreement.
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This Agreement supersedes all prior agreements and understandings between the
parties with respect to each subject matter.
IN WITNESS WHEREOF, the parties have signed this Agreement on the
dates first above written.
WCCI: WESTERN COUNTRY CLUBS, INC.
By: /s/ James E. Blacketer
--------------------------------
President
Merger Sub: WCCI ACQUISITION CORPORATION
By: /s/ Ted W. Strickland
--------------------------------
President
Entertainment: ENTERTAINMENT WICHITA, INC.
By: /s/ James E. Blacketer
--------------------------------
President
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