EXHIBIT 2.2
AMENDMENT NO. 1 TO
AGREEMENT AND PLAN OF MERGER
AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER dated as of December 13,
1999 among XXXX FURNITURE, INC., a North Carolina corporation (the "Company"),
LA-Z-BOY INCORPORATED, a Michigan corporation ("Acquiror"), and LZB ACQUISITION
CORP., a newly-formed Michigan corporation and a wholly-owned first-tier
subsidiary of Acquiror ("Merger Subsidiary").
WHEREAS, Acquiror, Merger Subsidiary and the Company are parties to an
Agreement and Plan of Merger dated as of September 28, 1999 (the "Existing
Agreement"); and
WHEREAS, the parties wish to amend the Existing Agreement as provided
below;
NOW, THEREFORE, in consideration of the promises and the respective
representations, warranties, covenants, and agreements set forth herein and in
the Existing Agreement, the parties hereto agree as follows:
1. AMENDMENT OF EXISTING AGREEMENT. Effective as of September 28, 1999,
the Existing Agreement is hereby amended as follows:
1.1 SECTION 1.02(A)(III). Section 1.02(a)(iii) is amended to read in its
entirety as follows:
(iii) each Share outstanding immediately prior to the Effective
Time shall, except as otherwise provided in Section 1.02(a)(i), be
converted into the right to receive 1.18 (the "Exchange Ratio") shares
of fully paid and nonassessable common stock, $1.00 par value, of
Acquiror ("Acquiror Common Stock").
1.2 SECTION 1.02(C). Section 1.02(c) is amended to read in its entirety
as follows:
(c) From and after the Effective Time, all Shares converted in accordance
with Section 1.02(a)(iii) 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 shall cease to have any rights
with respect thereto, except the right to receive the Merger Consideration (as
defined below), as applicable, and any dividends payable pursuant to Section
1.03(f). From and after the Effective Time, all certificates representing the
common stock of Merger Subsidiary shall be deemed for all purposes to represent
the number of shares of common stock of the Surviving Corporation into which
they were converted in accordance with Section 1.02(a)(ii).
1.3 SECTION 1.04. Section 1.04 is amended to read in its entirety as
follows:
SECTION 1.04. STOCK OPTIONS. (a) At the Effective Time, each outstanding
option to purchase Shares (a "Company Stock Option") granted under the
Company's plans identified in Schedule 1.04 (collectively, the "Company Stock
Option Plans"), whether vested or not vested, shall be deemed assumed by
Acquiror and shall thereafter be deemed to constitute an option to acquire, on
the same terms and conditions as were applicable under such Company Stock
Option prior to the Effective Time, the number (rounded up to the nearest whole
number) of shares of Acquiror Common Stock determined by multiplying (x) the
number of Shares subject to such Company Stock Option immediately prior to the
Effective Time by (y) the Exchange Ratio, at a price per share of Acquiror
Common Stock (rounded up to the nearest whole cent) equal to (A) the exercise
price per Share otherwise purchasable pursuant to such Company Stock Option
divided by (B) the Exchange Ratio; provided, however, that in the case of any
Company Stock Option to which Section 422 of the Code applies, the adjustments
provided for in this Section shall be effected in a manner consistent with the
requirements of Section 424(a) of the Code. In addition, prior to the Effective
Time, the Company will make any amendments to the terms of such stock option or
compensation plans or arrangements that are necessary to give effect to the
transactions contemplated by this Section. The Company represents that no
consents are necessary to give effect to the transactions contemplated by this
Section.
1.4 SECTION 1.10. Section 1.10 is deleted in its entirety.
1.5 SECTION 8.02. The introductory paragraph of Section 8.02 is amended
to read in its entirety as follows:
SECTION 8.02. CONDITIONS TO THE OBLIGATIONS OF ACQUIROR AND MERGER
SUBSIDIARY. The obligations of Acquiror and Merger Subsidiary to consummate the
Merger are subject to the satisfaction (or, to the extent legally permissible,
waiver, except that the condition specified in subsection (e) may not be
waived) of the following further conditions:
1.6 SECTION 8.02(E). Section 8.02(e) is amended to read in its entirety
as follows:
(e) Acquiror shall have received an opinion of Miller, Canfield, Paddock
and Stone, p.l.c. as to federal income tax matters that is identical in all
material respects to the opinion of that firm which is described in the proxy
statement/prospectus included in the Form S-4 at the time the Form S-4 becomes
effective. In rendering such opinion, such counsel shall be entitled to rely
upon certain representations of officers of Acquiror and the Company reasonably
requested by counsel, including without limitation those contained in
certificates substantially in the form attached as Exhibits B-1 and B-2;
1.7 SECTION 8.02(G). Section 8.02(g) is amended to read in its entirety
as follows:
(g) the parties shall have received all required approvals and third
party consents under the contracts listed on Schedule 3.04; and
1.8 SECTION 8.03. The introductory paragraph of Section 8.03 is amended
to read in its entirety as follows:
SECTION 8.03. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The
obligation of the Company to consummate the Merger is subject to the
satisfaction (or, to the extent legally permissible, waiver, except that the
condition specified in subsection (b) may not be waived) of the following
further conditions:
1.9 SECTION 8.03(B). Section 8.03(b) is amended to read in its entirety
as follows:
(b) the Company shall have received an opinion of Xxxxxxxxxx Xxxxxxxx llp
as to federal income tax matters that is identical in all material respects to
the opinion of that firm which is described in the proxy statement/prospectus
included in the Form S-4 at the time the Form S-4 becomes effective. In
rendering such opinion, such counsel shall be entitled to rely upon certain
representations of officers of Acquiror and the Company reasonably requested by
counsel, including without limitation those contained in certificates
substantially in the form attached as Exhibits B-1 and B-2; and
1.10 EXHIBIT B-1. Exhibit B-1 is hereby amended to read in its entirety
as set forth in Exhibit B-1 to this Amendment.
1.11 EXHIBIT B-2. Exhibit B-2 is hereby amended to read in its entirety
as set forth in Exhibit B-2 to this Amendment.
2. RATIFICATION OF AGREEMENT. The Existing Agreement, as amended by this
Amendment, is hereby ratified, confirmed, and acknowledged to be and remain in
full force and effect.
3. COUNTERPARTS; EFFECTIVENESS. This Amendment may be signed in any
number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Amendment shall become effective when each party hereto shall have
received counterparts hereof signed by all of the other parties hereto.
2
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective authorized officers as of the day and year
first above written.
XXXX FURNITURE, INC.
By /s/ Xxxx X. Xxxxxxxxxx, Xx.
Its Chairman, President & CEO
LA-Z-BOY INCORPORATED
By /s/ Xxxxxx X. Xxxxx
Its President & Chief Operating
Officer
LZB ACQUISITION CORP.
By /s/ Xxxx X. Xxxxx
Its Treasurer
3
EXHIBIT B-1
LA-Z-BOY INCORPORATED REPRESENTATION LETTER
[Date]
Miller, Canfield, Paddock and Stone, P.L.C.
000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Xxxxxxxxxx Xxxxxxxx LLP
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx-Xxxxx, Xxxxx Xxxxxxxx 00000
Ladies and Gentlemen:
In connection with the opinions to be delivered pursuant to Sections
8.02(e) and 8.03(b) of the Agreement and Plan of Merger, as amended (as so
amended, the "Agreement"),* dated as of September 28, 1999, among XXXX
Furniture, Inc., a North Carolina corporation ("Company"), La-Z-Boy
Incorporated, a Michigan corporation ("Parent"), and LZB Acquisition Corp., a
Michigan corporation and a wholly-owned subsidiary of Parent ("Merger
Subsidiary"), and the opinions which, pursuant to the requirements of Item
601(b)(8) of Regulation S-K under the Securities Act of 1933, as amended, will
be included in the Registration Statement on Form S-4, the undersigned officers
of Parent and Merger Subsidiary hereby certify and represent as to Parent and
Merger Subsidiary that the facts relating to the merger (the "Merger") of
Merger Subsidiary with and into Company pursuant to the Agreement, and as
described in the Proxy Statement/Prospectus of Parent and Company relating to
the Merger (the "Proxy Statement"), are true, correct and complete in all
material respects as of the date hereof and will be true, correct and complete
in all material respects at the Effective Time and that:
1. The Merger Consideration to be received in the Merger by holders of
common stock of Company ("Company Stock") was determined by arm's length
negotiations between the managements of Parent and Company and will be
approximately equal to the fair market value of the Company Stock
surrendered in exchange. In connection with the Merger, no holder of
Company Stock will receive in exchange for such stock, directly or
indirectly, any consideration other than common stock of Parent ("Parent
Stock") and, in lieu of fractional shares of Parent Stock, cash.
2. Other than cash paid in lieu of fractional shares of Parent Stock,
none of
(i) Parent (or any successor corporation),
(ii) a corporation that, immediately before or immediately after
such purchase, exchange, redemption, or other acquisition, is a
member of an Affiliated Group (as defined herein) of which Parent
(or any successor corporation) is a member, or
(iii) a corporation in which Parent (or any successor corporation)
owns, or which owns with respect to Parent (or any successor
corporation), directly or indirectly, immediately before or
immediately after such purchase, exchange, redemption, or other
acquisition, at least 50% of the total combined voting power of all
classes of stock entitled to vote or at
--------
* References contained in this Certificate to the Agreement include, unless
the context otherwise requires, each document attached as an exhibit or
schedule. All defined terms used herein and not otherwise defined have the
meaning ascribed to them in the Agreement.
B-1-1
least 50% of the total value of shares of all classes of stock,
taking into account for purposes of this clause (iii)
. any stock owned by 5% or greater stockholders of Parent (or
any successor) or such corporation,
. a proportionate share of the stock owned by entities in which
Parent (or any successor) or such corporation owns an
interest, and
. any stock which may be acquired pursuant to the exercise of
options
(a "Parent Related Person") has any current plan or intention to
redeem, purchase, exchange or otherwise reacquire any of the Parent
Stock to be issued in the Merger. Parent will implement its stock
repurchase plan consistent with the resolutions adopted by the Board of
Parent on October 26, 1987, February 3, 1993, October 9, 1995 and May
8, 1997. Parent intends that all stock repurchases made pursuant to
this stock repurchase plan, or any other stock repurchase plan adopted
by Parent,
(a) shall be undertaken for a corporate business purpose,
(b) shall be made in the open market for stock of the Parent
which is widely held and publicly traded, except that Parent may
acquire stock directly in block trades (provided that any such
trade made within two years after the Effective Time is not made
with an entity that is known to Parent to have acquired such stock
in the Merger), and any redemptions or repurchases of stock issued
in the Merger that occur shall be incidental to the operation of
such stock repurchase plan, and
(c) shall be limited to, in the aggregate, a small percentage of
each class of stock of Parent outstanding at the time of the
redemption or repurchase.
In addition, Parent will cause all Parent Related Persons and any person
acting as an agent of Parent not to redeem, purchase, exchange or otherwise
acquire (including by derivative transactions such as an equity swap which
would have the economic effect of an acquisition), directly or indirectly
(including through partnerships or through third parties in connection with a
plan to so acquire), a number of shares of Parent Stock to be received by
Company shareholders in connection with the Merger that would reduce the
Company shareholders' ownership of Parent Stock to a number of shares having a
value, as of the Effective Time, of less than 50% of the total value of Company
Stock immediately prior to the Effective Time.
For purposes of this representation, shares of Company Stock exchanged
for cash in lieu of fractional shares of Parent Stock are treated as
outstanding shares of Company Stock at the Effective Time. Moreover, shares of
Company Stock that are redeemed or sold or otherwise transferred to Company,
Parent, or any person related to Company or Parent prior to the Merger and in
contemplation of or as part of the Merger will be taken into account for
purposes of this representation.
For purposes of this Certificate, "Affiliated Group" shall mean one or
more chains of corporations connected through stock ownership with a common
parent corporation, but only if
(x) the common parent owns directly stock that possesses at least
80% of the total voting power, and has a value at least equal to 80%
of the total value, of the stock in at least one of the other
corporations, and
(y) stock possessing at least 80% of the total voting power, and
having a value at least equal to 80% of the total value, of the
stock in each corporation (except the common parent) is owned
directly by one or more of the other corporations.
B-1-2
For purposes of the preceding sentence, "stock" does not include any stock
which
(a) is not entitled to vote,
(b) is limited and preferred as to dividends and does not
participate in corporate growth to any significant extent,
(c) has redemption and liquidation rights which do not exceed the
issue price of such stock (except for a reasonable redemption or
liquidation premium), and
(d) is not convertible into another class of stock.
3. After the Merger, Company will hold at least 90% of the fair market
value of the net assets and at least 70% of the fair market value of the
gross assets held by Merger Subsidiary immediately prior to the Merger,
and at least 90% of the fair market value of the net assets and at least
70% of the fair market value of the gross assets held by Company
immediately prior to the Merger. For purposes of this representation,
assets of Merger Subsidiary or Company held immediately prior to the
Merger include amounts paid or incurred by Merger Subsidiary or Company
in connection with the Merger, including amounts used to pay
reorganization expenses or to make payments to shareholders who receive
cash or other property (including cash in lieu of fractional shares) and
all payments, redemptions and distributions (except for regular, normal
dividends, if any) made in contemplation or as part of the Merger.
4. Prior to and at the Effective Time of the Merger, Parent will be in
Control of Merger Subsidiary. Merger Subsidiary is wholly and directly
owned by Parent and has been newly formed solely in order to consummate
the Merger, and at no time has or will Merger Subsidiary conduct any
business activities or other operations of any kind other than the
issuance of its stock to Parent prior to the Effective Time. For
purposes of this Certificate, "Control" with respect to a corporation
shall mean ownership of at least 80% of the total combined voting power
of all classes of stock entitled to vote and at least 80% of the total
number of shares of each other class of stock of the corporation.
5. Following the Merger, Parent has no plan or intention to cause
Company to issue additional shares of stock, or any plan or intention to
take any action, that could result in Parent losing Control of Company.
6. Parent has no plan or intention to liquidate Company, to merge
Company with or into another corporation, to sell, exchange, transfer or
otherwise dispose of any stock of Company or to cause Company to sell,
exchange, transfer or otherwise dispose of any of its assets or of any
assets acquired from Merger Subsidiary in the Merger, except for (i)
dispositions made in the ordinary course of business, (ii) transfers or
successive transfers if in each case the transferor is in Control of the
transferee, or (iii) arm's length dispositions to unrelated persons
other than dispositions which would result in Parent ceasing to use a
significant portion of the Company's historic business assets in a
business.
7. In the Merger, Merger Subsidiary will have no liabilities assumed
by Company and will not transfer to Company any assets subject to
liabilities.
8. Following the Merger, Parent will cause Company to continue its
historic business or use a significant portion of its historic business
assets in a business. For this purpose, Parent will be treated as
holding all of the businesses and assets of its Qualified Group and
Parent will be treated as owning its proportionate share of the Company
business assets used in a business of any partnership in which members
of Parent's Qualified Group either own a significant interest or have
active and substantial management functions as a partner with respect to
that partnership business. A Qualified Group is one or more chains of
corporations connected through stock ownership with Parent but only if
Parent is in Control of at least one other corporation and each of the
corporations (other than Parent) is Controlled directly by one of the
other corporations.
B-1-3
9. Except as provided below, Parent, Merger Subsidiary, Company and
the Company shareholders each will bear its or their own expenses, if
any, incurred in connection with or as part of the Merger or related
transactions. However, to the extent any expenses related to the Merger
are to be funded directly or indirectly by a party other than the
incurring party, such expenses are solely and directly related to the
Merger, and do not include expenses incurred for investment or estate
planning advice, or expenses incurred by an individual shareholder or
group of shareholders for legal, accounting or investment advice or
counsel relating to the merger. Neither Parent nor Merger Subsidiary has
paid or will pay, directly or indirectly, any expenses (including
transfer taxes) incurred or to be incurred by any holder of Company
Stock in connection with or as part of the Merger or any related
transactions; provided that any stamp duties and stamp duty reserve
taxes in connection with the issuance and creation of Parent Stock in
the Merger will be paid by Parent. Neither Parent nor Merger Subsidiary
has agreed to assume, nor will it directly or indirectly assume, any
other expense or other liability, whether fixed or contingent, of any
holder of Company Stock. To the extent that any transfer tax or other
expense is a liability of a shareholder of Company, such liability will
be paid by Company or such shareholder, but in no event by Parent.
10. There is no intercorporate indebtedness existing between Parent
and Company or between Merger Subsidiary and Company that was issued,
acquired or will be settled at a discount.
11. All shares of Parent Stock into which shares of Company Stock will
be converted pursuant to the Merger will be newly issued shares, and
will be issued by Parent directly to record holders of Company Stock
pursuant to the Merger.
12. In the Merger, shares of Company Stock representing Control of
Company will be exchanged solely for voting stock of Parent and cash in
lieu of fractional shares. Under the Agreement, all shares of Company
Stock will be exchanged in the Merger for voting stock of Parent and
cash in lieu of fractional shares. For purposes of this representation,
if any stock of Company is exchanged for cash or other property
originating with Parent, such stock will be treated as outstanding stock
of Company acquired by Parent at the Effective Time. The payment of cash
in lieu of fractional shares of Parent Stock to holders of Company Stock
is solely for the purpose of avoiding the expense and inconvenience to
Parent of issuing fractional shares and does not represent separately
bargained for consideration. To the best knowledge of the management of
Parent, the total cash consideration that will be paid in the Merger to
holders of Company Stock instead of issuing fractional shares of Parent
Stock will not exceed one percent of the total consideration that will
be issued to the holders of Company Stock in the Merger.
13. In the Merger, no liabilities of shareholders of Company will be
assumed by Parent, and Parent will not assume any liabilities relating
to any Company Stock acquired by Parent in the Merger. Furthermore,
there is no plan or intention for Parent to assume any liabilities of
Company except to the extent that liabilities of Company are guaranteed
by Parent in the Merger Agreement.
14. Neither Parent nor Merger Subsidiary is a regulated investment
company, a real estate investment trust, or a corporation fifty percent
(50%) or more of the value of whose assets are stock and securities and
eighty percent (80%) or more of the value of whose total assets are
assets held for investment (each, an "Investment Company"). For purposes
of this representation, in making the 50% and 80% determinations under
the preceding sentence, (i) stock and securities in any subsidiary
corporation shall be disregarded and the parent corporation shall be
deemed to own its ratable share of the subsidiary's assets, and (ii) a
corporation shall be considered a subsidiary if the parent owns 50% or
more of the combined voting power of all classes of stock entitled to
vote or 50% or more of the total value of shares of all classes of stock
outstanding. In determining total assets there shall be excluded cash
and cash items (including receivables), government securities, and
assets acquired (through incurring indebtedness or otherwise) for
purposes of ceasing to be an Investment Company.
X-0-0
00. Xxxx of the employee compensation received or to be received by
any shareholder-employee of Company is or will be separate consideration
for, or allocable to, any of his shares of Company Stock to be
surrendered in the Merger. None of the shares of Parent Stock to be
received by any shareholder-employee of Company in the Merger is or will
be separate consideration for, or allocable to, any employment,
consulting or similar arrangement. Any compensation paid or to be paid
to any shareholder of Company, who will be an employee of or perform
advisory services for Parent, Company, or any affiliate thereof after
the Merger, will be determined by bargaining at arm's length.
16. At the Effective Time, neither Parent nor any Parent Related
Person will own more than 100 shares of any class of stock of Company or
any securities of Company or any instrument giving the holder the right
to acquire any such stock or securities.
17. The Merger is being effected for bona fide business reasons and
will be carried out strictly in accordance with the Agreement, and as
described in the Proxy Statement, and none of the material terms and
conditions therein have been or will be waived or modified.
18. The Agreement and the documents described in the Agreement, the
Proxy Statement and the Form S-4 represent the entire understanding
between or among (i) Parent and its subsidiaries and (ii) Company and
its subsidiaries and, to the best knowledge of the management of Parent,
between or among such entities and the affiliates and shareholders of
Parent and Company with respect to the Merger and there are no written
or oral agreements regarding the Merger other than those expressly
referred to in the Agreement, the Proxy Statement and the Form S-4.
19. None of Parent, Merger Subsidiary or, after the Merger, Company
will take any position on any Federal, state, or local income or
franchise tax return, or take any other tax reporting position, that is
inconsistent with the treatment of the Merger as a tax-free
reorganization or any of the foregoing representations, unless otherwise
required by a decision by the Tax Court or a judgment, decree, or other
order by any court of competent jurisdiction, which has become final, or
by applicable state or local income or franchise tax law.
We understand that Miller, Canfield, Paddock and Stone, p.l.c. and
Xxxxxxxxxx Xxxxxxxx llp will rely, without further inquiry, on this Certificate
in rendering their opinions as to certain United States Federal income tax
consequences of the Merger, and we will promptly and timely inform them if,
after signing this Certificate, we have reason to believe that any of the facts
described herein or in the Proxy Statement or any of the representations made
in this Certificate are or have become untrue, incorrect or incomplete in any
respect.
Very truly yours,
LA-Z-BOY INCORPORATED
By _______________________________
Title: _______________________
LZB ACQUISITION CORP.
By _______________________________
Title: _______________________
X-0-0
XXXXXXX X-0
XXXX FURNITURE, INC. REPRESENTATION LETTER
[Date]
Miller, Canfield, Paddock and Stone, P.L.C.
000 X. Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Xxxxxxxxxx Xxxxxxxx LLP
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx-Xxxxx, Xxxxx Xxxxxxxx 00000
Ladies and Gentlemen:
In connection with the opinions to be delivered pursuant to Sections
8.02(e) and 8.03(b) of the Agreement and Plan of Merger, as amended (as so
amended, the "Agreement"),* dated as of September 28, 1999, among XXXX
Furniture, Inc., a North Carolina corporation ("Company"), La-Z-Boy
Incorporated, a Michigan corporation ("Parent"), and LZB Acquisition Corp., a
Michigan corporation and a wholly-owned subsidiary of Parent ("Merger
Subsidiary"), and the opinions which, pursuant to the requirements of Item
601(b)(8) of Regulation S-K under the Securities Act of 1933, as amended, will
be included in the Registration Statement on Form S-4, the undersigned officer
of Company hereby certifies and represents as to Company that the facts
relating to the merger (the "Merger") of Merger Subsidiary with and into
Company pursuant to the Agreement and as described in the Proxy
Statement/Prospectus of Parent and Company relating to the Merger (the "Proxy
Statement") are true, correct and complete in all material respects as of the
date hereof and will be true, correct and complete in all material respects at
the Effective Time and that:
1. The Merger Consideration to be received in the Merger by holders of
common stock of the Company ("Company Stock") was determined by arm's
length negotiations between the managements of Parent and Company and
will be approximately equal to the fair market value of the Company
Stock surrendered in exchange. In connection with the Merger, no holder
of Company Stock will receive in exchange for such stock, directly or
indirectly, any consideration other than common stock of Parent ("Parent
Stock") and, in lieu of fractional shares of Parent Stock, cash.
2. To the best knowledge of the management of Company, there is no
plan or intention on the part of holders of Company Stock to sell,
exchange or otherwise transfer ownership (including by derivative
transactions such as an equity swap which would have the economic effect
of a transfer of ownership) to Parent, Company or any Related Person (as
defined herein) with respect to either of them, directly or indirectly
(including through partnerships or through third parties in connection
with a plan to so transfer ownership), of a number of shares of Parent
Stock to be received by Company shareholders in connection with the
Merger that would reduce the Company shareholders' ownership of Parent
Stock to a number of shares having a value, as of the Effective Time, of
less than 50% of the total value of all of the formerly outstanding
stock of Company immediately prior to the Effective Time. For purposes
of this representation, shares of Company Stock exchanged for cash in
lieu of fractional shares of Parent Stock are treated as outstanding
shares of Company Stock at the Effective Time. Moreover, shares of
Company Stock and Parent Stock held by shareholders of Company that are
redeemed or sold or otherwise transferred to Company, Parent, or any
Related Person of either prior or subsequent to the
--------
* References contained in this Certificate to the Agreement include, unless
the context otherwise requires, each document attached as an exhibit or
schedule. All defined terms used herein and not otherwise defined have the
meaning ascribed to them in the Agreement.
B-2-1
Merger and in contemplation of or as part of the Merger will be taken
into account for purposes of this representation.
For purposes of this Certificate, a Related Person with respect to either
Parent or Company shall mean
(i) a corporation that, immediately before or immediately after
such purchase, exchange, redemption, or other acquisition, is a
member of an Affiliated Group (as defined herein) of which Parent or
Company, as the case may be, or any successor corporation of Parent
or Company, as the case may be, is a member, or
(ii) a corporation in which Parent or Company, as the case may be,
or any successor corporation of Parent or Company, as the case may
be, owns, or which owns with respect to Parent or Company (or any
such successor corporation), as the case may be, directly or
indirectly, immediately before or immediately after such purchase,
exchange, redemption, or other acquisition, at least 50% of the
total combined voting power of all classes of stock entitled to vote
or at least 50% of the total value of shares of all classes of
stock, taking into account for purposes of this clause (ii) any
stock owned by 5% or greater stockholders of Parent or Company (or
any such successor), as the case may be, or such corporation, a
proportionate share of the stock owned by entities in which Parent
or Company (or any such successor), as the case may be, or such
corporation owns an interest, and any stock which may be acquired
pursuant to the exercise of options.
For purposes of this Certificate, "Affiliated Group" shall mean one or more
chains of corporations connected through stock ownership with a common parent
corporation, but only if
(x) the common parent owns directly stock that possesses at least
80% of the total voting power, and has a value at least equal to 80%
of the total value, of the stock in at least one of the other
corporations, and
(y) stock possessing at least 80% of the total voting power, and
having a value at least equal to 80% of the total value, of the
stock in each corporation (except the common parent) is owned
directly by one or more of the other corporations.
For purposes of the preceding sentence, "stock" does not include any stock
which (a) is not entitled to vote, (b) is limited and preferred as to dividends
and does not participate in corporate growth to any significant extent, (c) has
redemption and liquidation rights which do not exceed the issue price of such
stock (except for a reasonable redemption or liquidation premium), and (d) is
not convertible into another class of stock.
3. After the Merger, to the knowledge of the management of Company,
Company will hold at least 90% of the fair market value of the net
assets and at least 70% of the fair market value of the gross assets
held by Merger Subsidiary immediately prior to the Merger and at least
90% of the fair market value of the net assets and at least 70% of the
fair market value of the gross assets held by Company immediately prior
to the Merger. For purposes of this representation, assets of Merger
Subsidiary or Company held immediately prior to the Merger include
amounts paid or incurred by Merger Subsidiary or Company in connection
with the Merger, including amounts used to pay Company's reorganization
expenses or to make payments to shareholders who receive cash or other
property (including cash in lieu of fractional shares) and all payments,
redemptions and distributions (except for regular, normal dividends, if
any) made in contemplation or as part of the Merger. Any dispositions in
contemplation or as part of the Merger of assets held by Company prior
to the Merger will be for fair market value, and the proceeds thereof
will be retained by the Company.
4. The Company has no plan or intention to issue additional shares of
its stock that would result in Parent losing Control of the Company. For
purposes of this Certificate, "Control" with respect to a corporation
shall mean ownership of at least 80% of the total combined voting power
of all classes of stock entitled to vote and at least 80% of the total
number of shares of each other class of stock of the corporation.
B-2-2
5. In the Merger, to the knowledge of the management of Company,
Merger Subsidiary will have no liabilities assumed by the Company and
will not transfer to Company any assets subject to liabilities.
6. No assets of Company have been sold, transferred or otherwise
disposed of which would prevent Parent from continuing the historic
business of Company or from using a significant portion of Company's
historic business assets in a business following the Merger, and Company
intends to continue its historic business or use a significant portion
of its historic business assets in a business.
7. Except as specified below, Parent, Merger Subsidiary, Company and
the Company shareholders each will bear its or their own expenses, if
any, incurred in connection with or as part of the Merger or related
transactions. However, to the extent any expenses related to the Merger
are to be funded directly or indirectly by a party other than the
incurring party, such expenses are solely and directly related to the
Merger, and do not include expenses incurred for investment or estate
planning advice, or expenses incurred by an individual shareholder or
group of shareholders for legal, accounting or investment advice or
counsel relating to the merger. Company has not paid or will not pay,
directly or indirectly, any expenses incurred by any shareholder of
Company in connection with or as part of the Merger or any related
transactions; provided that all liability for transfer taxes (except for
stamp duties and stamp duty reserve taxes to be paid by Parent in
connection with the issuance and creation of Parent Stock in the Merger)
incurred by the holders of Company Stock will be paid by Company or the
Company shareholders and in no event by Parent. Company has not agreed
to assume, nor will it directly or indirectly assume, any other expense
or other liability, whether fixed or contingent, of any holder of
Company Stock.
8. There is no intercorporate indebtedness existing between Parent and
Company or between Merger Subsidiary and Company that was issued,
acquired or will be settled at a discount.
9. Company has no authorized stock other than common stock par value
$0.30 per share, and preferred stock, par value $100 per share. At the
date hereof, the only capital stock of Company issued and outstanding is
Company Stock.
10. In the Merger, Company Stock representing Control of Company will
be exchanged solely for voting stock of Parent other than cash in lieu
of fractional shares. For purposes of this representation, stock of
Company exchanged for cash or other property originating with Parent, if
any, will be treated as outstanding stock of Company acquired by Parent
at the Effective Time. The payment of cash in lieu of fractional shares
of Parent stock to holders of Company Stock is solely for the purpose of
avoiding the expense and inconvenience to Parent of issuing fractional
shares and does not represent separately bargained for consideration. To
the best knowledge of the management of Company, the total cash
consideration that will be paid in the Merger to holders of Company
Stock instead of issuing fractional shares of Parent Stock will not
exceed one percent of the total consideration that will be issued to the
holders of Company Stock in the Merger.
11. There exist no options, warrants, convertible securities, equity-
linked securities or other rights to acquire Company Stock (whether
settled in stock or cash) other than as described in the Agreement, and
even if such rights were exercised or converted, it would not affect the
acquisition or retention of Control of Company.
12. To the knowledge of the management of Company, in the Merger, no
liabilities of shareholders of Company will be assumed by Parent, and
Parent will not assume any liabilities relating to any Company Stock
acquired by Parent in the Merger. Furthermore, to the knowledge of the
management of Company, there is no plan or intention for Parent to
assume any liabilities
B-2-3
of Company, except to the extent that liabilities of Company are
guaranteed by Parent in the Merger Agreement.
13. Company is not a regulated investment company, a real estate
investment trust, or a corporation fifty percent (50%) or more of the
value of whose assets are stock and securities and eighty percent (80%)
or more of the value of whose total assets are assets held for
investment (each, an "Investment Company"). For purposes of this
representation, in making the 50% and 80% determinations under the
preceding sentence, (i) stock and securities in any subsidiary
corporation shall be disregarded and the parent corporation shall be
deemed to own its ratable share of the subsidiary's assets, and (ii) a
corporation shall be considered a subsidiary if the parent owns 50% or
more of the combined voting power of all classes of stock entitled to
vote or 50% or more of the total value of shares of all classes of stock
outstanding. In determining total assets there shall be excluded cash
and cash items (including receivables), government securities, and
assets acquired (through incurring indebtedness or otherwise) for
purposes of ceasing to be an Investment Company.
14. None of the employee compensation received or to be received by
any shareholder-employee of Company is or will be separate consideration
for, or allocable to, any of his shares of Company Stock to be
surrendered in the Merger. None of the shares of Parent Stock to be
received by any shareholder-employee of Company in the Merger is or will
be separate consideration for, or allocable to, any employment,
consulting or similar arrangement. Any compensation paid or to be paid
to any shareholder of Company who will be an employee of or perform
advisory services for Parent, Company, or any affiliate thereof after
the Merger, will be determined by bargaining at arm's length.
15. Since the date of the Agreement, except for the issuance of
Company Stock pursuant to the rights described in paragraph 11 hereof,
Company has not issued any additional shares of Company Stock.
16. Prior to and in connection with the Merger no Company Stock has
been (i) redeemed by Company, (ii) acquired by a Related Person with
respect to Company (except that for the purposes of this representation,
clause (i) of the definition of Related Person shall not apply) with
consideration other than stock of Company or Parent or (iii) the subject
of any extraordinary distribution by Company.
17. Company has not redeemed any of its stock, made any distributions
with respect to its stock, or disposed of any of its assets in
contemplation or as part of the Merger, excluding for purposes of this
representation regular, normal dividends and Company Stock acquired in
the ordinary course of business in connection with employee incentive
and benefit programs, or other programs or arrangements in existence on
the date hereof.
18. The Merger is being effected for bona fide business reasons and
will be carried out strictly in accordance with the Agreement, and as
described in the Proxy Statement, and none of the material terms and
conditions therein has been or will be waived or modified.
19. The Agreement and the documents described in the Agreement, the
Proxy Statement and the Form S-4 represent the entire understanding
between or among (i) Parent and its subsidiaries and (ii) Company and
its subsidiaries and, to the best knowledge of the management of
Company, between or among such entities and the affiliates and
shareholders of Parent and Company with respect to the Merger and there
are no other written or oral agreements regarding the Merger other than
those expressly referred to in the Agreement, the Proxy Statement and
the Form S-4.
20. At the Effective Time, the fair market value of the assets of
Company will exceed the sum of its liabilities, plus the amount of
liabilities, if any, to which those assets are subject.
21. Company is not and at the Effective Time will not be under the
jurisdiction of a federal or state court in a Title 11 case or in a
receivership, foreclosure or similar proceeding.
X-0-0
00. Xxxx of Parent, Merger Subsidiary or, after the Merger, Company
will take any position on any Federal, state, or local income or
franchise tax return, or take any other tax reporting position, that is
inconsistent with the treatment of the Merger as a tax-free
reorganization or any of the foregoing representations, unless otherwise
required by a decision by the Tax Court or a judgment, decree, or other
order by any court of competent jurisdiction, which has become final, or
by applicable state or local income or franchise tax law.
The Company understands that Miller, Canfield, Paddock and Stone, P.L.C.
and Xxxxxxxxxx Xxxxxxxx LLP will rely, without further inquiry, on this
Certificate in rendering their opinions as to certain United States Federal
income tax consequences of the Merger and will promptly and timely inform them
if, after this Certificate is signed, the Company has reason to believe that
any of the facts described herein or in the Proxy Statement or any of the
representations made in this Certificate are or have become untrue, incorrect
or incomplete in any respect.
Very truly yours,
XXXX FURNITURE, INC.
By: ______________________________
Name: ____________________________
Title: ________________________
B-2-5
