Exhibit 2
AGREEMENT AND PLAN OF MERGER
----------------------------
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), made and
entered into this 10th day of October, 1996, by and among CHROMCRAFT
REVINGTON, INC. ("CRI"), a Delaware corporation, CRI ACQUISITION
CORPORATION ("Newco"), a Delaware corporation, and COCHRANE FURNITURE
COMPANY, INC. ("Cochrane"), a North Carolina corporation,
W I T N E S S E T H:
--------------------
WHEREAS, Cochrane is a corporation organized and existing under
the laws of the State of North Carolina, maintains its principal office
at 000 Xxxxxxxx Xxxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000, and is engaged
in the business of manufacturing dining room, bedroom and upholstered
furniture; and
WHEREAS, Newco is a corporation organized and existing under
the laws of the State of Delaware, is a wholly-owned subsidiary of CRI
and maintains its principal office at 0000 Xxxxx Xxxxxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxx 00000; and
WHEREAS, the respective Boards of Directors of Cochrane and
Newco deem it desirable to merge Newco into Cochrane pursuant to the
terms and conditions provided herein, have unanimously approved this
Agreement and authorized its execution and delivery and have designated
this Agreement a plan of merger;
NOW, THEREFORE, in consideration of the foregoing premises, the
representations, warranties, covenants, agreements and mutual
obligations contained herein, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Cochrane
and Newco hereby agree as follows:
SECTION 1
THE MERGER
----------
1.01. DESCRIPTION OF THE MERGER. Upon the terms and subject
to the conditions of this Agreement, at the Effective Time, Newco shall
be merged with and into Cochrane (the "Merger"). Cochrane shall survive
the Merger (the "Surviving Corporation") and shall continue its
corporate existence under the laws of the State of North Carolina
pursuant to the provisions of the North Carolina Business Corporation
Act, as amended (the "North Carolina Corporation Act"). At the
Effective Time of the Merger, the corporate existence of Newco shall
cease.
1.02. CONSUMMATION OF THE MERGER. The parties hereto shall
cause the Merger to be consummated by filing with the Secretary of State
of Delaware a properly executed Certificate of Merger and with the
Secretary of State of North Carolina properly executed Articles of
Merger.
1.03. EFFECTIVE TIME. The Merger shall be effective as of
the date and time specified in the Articles of Merger filed with the
Secretary of State of North Carolina (such date and time being referred
to herein as the "Effective Time").
1.04. CLOSING. The parties hereto shall use their best
efforts to cause the closing of the Merger (the "Closing") to take place
at 10:00 a.m., local time, on November 13, 1996 (the "Closing Date") at
the offices of Xxxxx XxXxxxx Xxxxxxxxx & Xxxxxxxx, Indianapolis, Indiana
(subject to Newco's right to extend such date pursuant to Section
9.01(a)(i)).
1.05. EFFECTS OF THE MERGER. On and after the Effective
Time, the status, rights, assets and liabilities of, and the effect of
the Merger on, Newco, Cochrane and the Surviving Corporation shall be as
provided in the North Carolina Corporation Act.
1.06. NAME OF SURVIVING CORPORATION. The name of the
Surviving Corporation after the Effective Time shall be "Cochrane
Furniture Company, Inc." until such name may be changed in accordance
with applicable law.
1.07. ARTICLES OF INCORPORATION. The Articles of
Incorporation of Cochrane, as in effect immediately prior to the
Effective Time, shall, from and after the Effective Time, be and
continue to be the Articles of Incorporation of the Surviving
Corporation until amended as provided by applicable law.
1.08. BY-LAWS. The By-Laws of Cochrane, as in effect
immediately prior to the Effective Time, shall, from and after the
Effective Time, be and continue to be the By-Laws of the Surviving
Corporation until amended as provided by applicable law.
1.09. BOARD OF DIRECTORS. From and after the Effective Time,
the Board of Directors of the Surviving Corporation, subject to the term
of office and other provisions regarding directors set forth in the
Surviving Corporation s By-Laws, shall be those persons elected by CRI,
as the sole shareholder of Cochrane, at the Effective Time.
1.10. OFFICERS. From and after the Effective Time, the
officers of the Surviving Corporation, subject to the term of office and
other provisions regarding officers set forth in the Surviving
Corporation's By-Laws, shall be those persons elected by the Board of
Directors of the Surviving Corporation immediately following the
Effective Time.
2
SECTION 2
CONVERSION OF SHARES
--------------------
2.01. BASIS OF CONVERSION.
(a) Upon and by virtue of the Merger becoming effective at
the Effective Time, (and without any action on the part of Cochrane,
Newco or the shareholders of Cochrane), each of the Outstanding Cochrane
Shares (as hereinafter defined), other than the Outstanding Cochrane
Shares that are held by Cochrane shareholders who have properly
exercised and perfected statutory dissenters' rights under the North
Carolina Corporation Act with respect to the Merger, shall be converted
solely into the right to receive Four and 75/100 Dollars ($4.75) per
share, payable in immediately available funds without any interest
thereon from the Effective Time through and until the date of payment.
Such conversion price of $4.75 per share was determined by dividing
$2,213,362.25 by the number of Outstanding Cochrane Shares set forth in
Section 4.03(a) hereof. Such per share conversion price shall be
increased or decreased to the amount determined by dividing
$2,213,362.25 by the total number of shares of Cochrane Common Stock (as
hereinafter defined) certified by Cochrane's stock transfer agent as
being issued and outstanding at the Effective Time if (i) the total
number of shares of Cochrane Common Stock issued and outstanding at the
Effective Time is greater or less than the number of Outstanding
Cochrane Shares, and (ii) the total number of shares of Cochrane Common
Stock issued and outstanding at the Effective Time is not greater than
470,971 or less than 460,971).
(b) Upon and by virtue of the Merger becoming effective at
the Effective Time, each of the outstanding shares of common stock of
Newco shall be automatically converted into one (1) share of Cochrane
Common Stock, which shares of Cochrane Common Stock shall continue to
remain outstanding and owned by CRI following the Effective Time.
2.02. SURRENDER OF CERTIFICATES.
(a) As promptly as feasible following the Effective Time,
each holder of an outstanding certificate or certificates which, prior
to the Effective Time, represented any Outstanding Cochrane Shares
(other than those persons who have properly exercised and perfected
statutory dissenters' rights under the North Carolina Corporation Act
with respect to the Merger) shall surrender such certificate or
certificates to the Disbursing Agent (as hereinafter defined) for
conversion thereof in accordance with Section 2.01 hereof, together with
a properly completed and executed letter of transmittal relative to such
certificates. Until so surrendered, each outstanding certificate which,
prior to the Effective Time, represented any Outstanding Cochrane Shares
shall not be transferrable on the books of the Surviving Corporation but
shall be deemed for all purposes to evidence solely the right to receive
the consideration specified in Section 2.01 hereof. From and after the
Effective Time, the holders of certificates which, prior to the
Effective Time, represented any Outstanding Cochrane Shares shall cease
to have any rights as shareholders of Cochrane, and their sole rights,
except as otherwise provided by law, shall be to surrender such
certificates and to receive the consideration specified in Section 2.01
hereof. No interest shall be paid following the Effective Time to any
3
former shareholder of Cochrane with respect to the consideration
specified in Section 2.01 hereof.
(b) With respect to any certificate for shares of Cochrane
Common Stock which has been lost, stolen or destroyed, the Disbursing
Agent shall be authorized to pay to the registered owner of such
certificate the consideration specified in Section 2.01 hereof upon
receipt by the Disbursing Agent of an affidavit of lost, stolen or
destroyed stock certificate together with an agreement to indemnify the
Surviving Corporation against any liability resulting from such lost,
stolen or destroyed certificate, both in form and substance reasonably
satisfactory to the Surviving Corporation, and upon compliance by such
shareholder with all other reasonable requirements of the Surviving
Corporation in connection with lost, stolen or destroyed stock
certificates (including, without limitation, the requirement that such
registered owner shall provide an appropriate indemnity bond in favor of
CRI).
(c) Promptly following the Effective Time, the Disbursing
Agent shall mail to each former shareholder of Cochrane who is entitled
to receive the consideration specified in Section 2.01 hereof upon
surrender of his or her certificates, which prior to the Effective Time
represented any Outstanding Cochrane Shares, a letter of transmittal
that shall accompany each such certificate which is surrendered to the
Disbursing Agent.
2.03. COCHRANE'S STOCK TRANSFER BOOKS. Cochrane's stock
transfer books shall be closed on the day immediately preceding the
Closing Date. Following the close of Cochrane's stock transfer books,
Cochrane shall not register or permit to be registered any transfers of
Cochrane Common Stock (as hereinafter defined), and the Surviving
Corporation shall not be obligated to recognize any transfers of
Cochrane Common Stock made subsequent to the close of Cochrane's stock
transfer books. The Surviving Corporation and the Disbursing Agent
shall be entitled to rely upon the stock transfer books of Cochrane to
establish the person entitled to receive the consideration specified in
Section 2.01 hereof, which books shall be conclusive with respect to the
ownership of shares of Cochrane Common Stock.
2.04. DISBURSING AGENT. (a) Prior to the Effective Time,
Cochrane shall use its best efforts to cause the First Citizens Bank and
Trust Company, located in Raleigh, North Carolina, to act as the
disbursing agent (the "Disbursing Agent") in connection with the
conversion of the Outstanding Cochrane Shares hereunder pursuant to a
disbursement agreement contemplating the terms of this Agreement which
shall be reasonably acceptable to Newco and Cochrane. In the event that
First Citizens Bank and Trust Company does not agree to serve as the
Disbursing Agent, then Newco and Cochrane shall select another mutually
acceptable financial institution to serve as the Disbursing Agent
hereunder. At the Effective Time, Newco shall cause to be deposited
with the Disbursing Agent the sum of Two Million Two Hundred Thirteen
Thousand Three Hundred Sixty-Two and 25/100 Dollars ($2,213,362.25)
less an amount equal to the product which results from taking $4.75
multiplied by the number of Outstanding Cochrane Shares that have become
subject to perfected dissenters rights with respect to the Merger (the
"Funds"). Upon receipt of the Funds, the Disbursing Agent shall then
pay to the former shareholders of Cochrane (other than those persons who
have properly exercised and perfected statutory dissenters' rights under
4
the North Carolina Corporation Act with respect to the Merger) upon
surrender of their certificates, which prior to the Effective Time
represented any Outstanding Cochrane Shares, together with properly
completed and executed letters of transmittal, the proper amount in
accordance with this Section 2 and the disbursement agreement.
(b) All payments to former shareholders of Cochrane who are
entitled to receive the consideration specified in Section 2.01 hereof
shall be made by the Disbursing Agent by regular bank check and not by
certified, cashier's or other official check.
(c) On the date which is one (1) year following the Closing
Date, the Disbursing Agent shall return to the Surviving Corporation
such portion of the Funds as to which certificates, which prior to the
Effective Time represented any Outstanding Cochrane Shares, have not
been presented to the Disbursing Agent for conversion in accordance with
this Agreement. Thereafter, subject to applicable law, any former
shareholder of Cochrane who has not theretofore surrendered his or her
certificate or certificates, which prior to the Effective Time
represented any Outstanding Cochrane Shares, for conversion as provided
herein, shall be entitled upon surrender of such certificate or
certificates to the Surviving Corporation or its agent to receive the
consideration specified in Section 2.01 hereof without any interest
thereon.
SECTION 3
DISSENTERS' RIGHTS
------------------
Shareholders of Cochrane who properly exercise and perfect
statutory dissenters' rights shall have the rights accorded to
dissenting shareholders under Article 13 of the North Carolina
Corporation Act.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF COCHRANE
------------------------------------------
Cochrane hereby represents and warrants to Newco as follows:
4.01. ORGANIZATION. Cochrane is a corporation duly
organized, validly existing and in good standing under the laws of the
State of North Carolina. Cochrane is duly qualified to do business and
is in good standing in each state and jurisdiction set forth on Schedule
4.01 hereto, which are the only states and jurisdictions in which the
character or location of the properties owned or leased by it or the
nature of the business conducted by it makes such qualification
necessary and where the failure to qualify would have a material adverse
effect on Cochrane. Cochrane has full power and authority (corporate
and otherwise) to own and lease its properties as presently owned and
leased and to conduct its business in the manner and by the means
utilized as of the date hereof. Cochrane has no subsidiaries and owns
no stock, equity securities or any other interest in any corporation,
partnership, joint venture or other entity, except as set forth in
Schedule 4.01 hereto.
5
4.02. AUTHORITY; NO VIOLATIONS. (a) Cochrane has the
requisite corporate power and authority to enter into this Agreement and
to perform its obligations hereunder, subject to the fulfillment of the
conditions precedent set forth in Section 8.02 hereof (including
shareholder approval). This Agreement and its execution and delivery by
Cochrane have been duly authorized and approved by the Board of
Directors of Cochrane. This Agreement constitutes a valid and binding
obligation of Cochrane and is enforceable in accordance with its terms,
except to the extent limited by general principles of equity and public
policy and by bankruptcy, insolvency, reorganization, liquidation,
moratorium, readjustment of debt or other laws of general application
relating to or affecting the enforcement of creditors' rights.
(b) Neither the execution of this Agreement nor the
consummation of the Merger (i) conflicts with or violates Cochrane's
Articles of Incorporation or By-Laws; (ii) conflicts with or violates
any law, statute, ordinance, rule, regulation or governmental
requirement or any court or administrative judgment, order, injunction,
writ or decree; (iii) except as set forth in Schedule 4.02 hereto,
conflicts with, results in a breach of or constitutes a default under
any note, bond, indenture, mortgage, deed of trust, license, lease,
contract, agreement, arrangement, commitment or other instrument to
which Cochrane is a party or by which Cochrane is subject or bound; (iv)
except as set forth in Schedule 4.02 hereto, results in the creation of
or gives any person, corporation or entity the right to create any lien,
charge, claim, encumbrance, mortgage, security interest or option, or
results in the creation of any other rights or claims of any third
party, upon any right, property or asset of Cochrane; or (v) except as
set forth in Schedule 4.02 hereto, terminates or gives any person,
corporation or entity the right to terminate, accelerate, amend, modify
or refuse to perform under any note, bond, indenture, mortgage, deed of
trust, license, lease, contract, agreement, arrangement, commitment or
other instrument to which Cochrane is subject or bound or with respect
to which Cochrane is to perform any duties or obligations or receive any
rights or benefits.
4.03. CAPITAL STOCK. (a) The authorized capital stock of
Cochrane consists of 2,000,000 shares of no par value common stock (the
"Cochrane Common Stock"), of which 465,971 shares are issued and
outstanding (such 465,971 issued and outstanding shares are referred to
in this Agreement as the "Outstanding Cochrane Shares"). The
Outstanding Cochrane Shares have been duly and validly authorized by all
necessary corporate action of Cochrane, are validly issued, fully paid
and nonassessable, and have not been issued in violation of any
pre-emptive rights of any present or former Cochrane shareholder.
Cochrane has no treasury shares and no capital stock authorized or
issued other than as described in this Section 4.03(a).
(b) Except with respect to the outstanding options (the
"Stock Options") to purchase an aggregate of Forty-Five Thousand
(45,000) shares of Cochrane Common Stock pursuant to the 1994 Executive
Stock Option Plan of Cochrane (the "Stock Option Plan"), there are no
options, warrants, commitments, calls, puts, agreements, understandings,
arrangements or subscription rights relating to any shares of Cochrane
Common Stock or any of the Outstanding Cochrane Shares that are binding
upon Cochrane, nor are there any securities convertible into or
representing the right to purchase or otherwise acquire any capital
stock or other debt securities of Cochrane. The shares of Cochrane
Common Stock subject to the Stock Options are not included in the
Outstanding Cochrane Shares.
6
(c) Cochrane is not a party to any agreement and does not
have any contractual or other obligation (i) to repurchase, redeem or
otherwise acquire any Outstanding Cochrane Shares, or (ii) to issue any
shares of Cochrane Common Stock other than the Outstanding Cochrane
Shares and the shares of Cochrane Common Stock subject to the Stock
Options.
(d) Cochrane does not have a class of securities registered
under, and is not subject to any reporting requirements of, the
Securities Exchange Act of 1934, as amended.
4.04. ARTICLES OF INCORPORATION AND BY-LAWS. A true,
accurate and complete copy of the Articles of Incorporation and By-Laws
of Cochrane, including all amendments thereto, in effect as of the date
of this Agreement are set forth in Schedule 4.04 hereto.
4.05. FINANCIAL STATEMENTS. Cochrane has delivered to Newco
copies of the following financial statements:
(a) Cochrane's audited balance sheets as of March 30, 1996,
April 1, 1995 and April 2, 1994 and related statements of income,
stockholders' equity and cash flows for the fiscal years ended March 30,
1996, April 1, 1995 and April 2, 1994 (collectively, the "Cochrane
Audited Financial Statements"); and
(b) Cochrane's unaudited interim balance sheet as of August
31, 1996 and its related unaudited statements of income and cash flow
for the five months then ended (collectively, the "Cochrane Interim
Financial Statements").
The Cochrane Audited Financial Statements and the Cochrane
Interim Financial Statements are collectively referred to herein as the
"Cochrane Financial Statements". The Cochrane Financial Statements
present fairly in all material respects the financial position of
Cochrane as of and at the dates shown and the results of operations for
the periods covered thereby in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis. The
Cochrane Interim Financial Statements contain all adjustments necessary
to present fairly in all material respects the financial position and
results of operation of Cochrane as of and for the interim periods
presented therein. The Cochrane Financial Statements do not include any
assets, liabilities or obligations which should not be included in
accordance with GAAP or omit any assets, liabilities or obligations
(whether absolute, contingent, matured, unmatured or otherwise) which
should be included in accordance with GAAP and which, in either case,
would render any of the Cochrane Financial Statements false, misleading
or inaccurate in any material respect.
4.06. ABSENCE OF UNDISCLOSED LIABILITIES. Except as set
forth in Section 4.06 hereto, to the best knowledge of Cochrane, there
are no liabilities, debts or obligations of, or claims against, Cochrane
of any nature (whether absolute, contingent, accrued, fixed, matured or
unmatured), except (a) as and to the extent reflected on the Cochrane
Financial Statements, (b) for purchase contracts and orders for
inventory in the ordinary course of business consistent with past
practices, or (c) as may have been incurred in the ordinary course of
business.
7
4.07. ACCOUNTS RECEIVABLE. Cochrane's accounts receivable
reflected on the Cochrane Audited Financial Statements for the year
ended March 30, 1996 and all accounts receivable recorded or arising
since March 30, 1996, (i) are valid and genuine, (ii) represent bona
fide obligations resulting from sales or deliveries of goods or products
in the ordinary course of business, (iii) are not subject to valid
defenses, set-offs or counterclaims other than claims relating to
defective goods arising in the ordinary course of business, which claims
are adequately accrued as a liability on the Cochrane Financial
Statements, and (iv) with respect to the accounts receivable existing as
of March 30,1996, are properly reflected on the Cochrane Audited
Financial Statements as of March 30, 1996 in accordance with GAAP and,
with respect to the accounts receivable recorded or arising since March
30, 1996, are properly reflected on the books and records of Cochrane.
The allowance for doubtful accounts and other reserves as reflected on
the Cochrane Financial Statements are in accordance with GAAP.
4.08. INVENTORIES; MACHINERY AND EQUIPMENT. (a) Cochrane s
inventories reflected on the Cochrane Audited Financial Statements for
the year ended March 30, 1996 and, except as set forth in Schedule 4.08
hereto, all inventories acquired since the date thereof, including,
without limitation, raw materials, work- in-process and finished goods,
(i) were acquired for adequate consideration and have been maintained in
the ordinary course of business, (ii) are of good and merchantable
quality and are not damaged or obsolete, (iii) are not subject to any
write-down or write-off and have been valued at the lower of cost or
market in accordance with GAAP, (iv) are currently usable on a
non-discounted basis in the ordinary course of business, and (v) can be
reasonably expected to be sold or used in the ordinary course of
Cochrane's business without discount, other than normal trade discounts
regularly offered by Cochrane in the ordinary course of its business.
The quantities of each type of inventory maintained by Cochrane are in
an amount consistent with Cochrane's past practices. Cochrane has not
consigned any of its inventory to any third party.
(b) The machinery and equipment owned or leased by and used
in Cochrane's business are, in all material respects, in normal
operating condition, have been and are being maintained and repaired in
the ordinary course of business so as to preserve their usefulness and
value and are reflected on the Cochrane Financial Statements in
accordance with GAAP.
4.09. SUPPLIERS AND CUSTOMERS. Except as set forth in
Schedule 4.09 hereto, Cochrane has no knowledge of (a) any supplier
providing products, components, materials or services to Cochrane who
intends to cease selling such products, components, materials or
services to Cochrane or to limit, reduce or materially alter the terms
or conditions of any such sales to Cochrane, or (b) any customer of
Cochrane which individually represented or accounted for at least
$100,000 of Cochrane's total sales for the fiscal year ended March 30,
1996, or any of the other customers of Cochrane that taken together in
the aggregate represent a material portion of Cochrane's business, who
intends or intend to terminate, limit, reduce or change its or their
business relations with Cochrane.
8
4.10. PROPERTIES, CONTRACTS AND OTHER AGREEMENTS. Set forth
in Schedule 4.10 hereto is a true, accurate and complete list or
description of the following (all of which Cochrane has delivered true,
accurate and complete copies to CRI or Newco):
(a) The location of all real property owned by Cochrane and
the principal buildings located thereon, together with copies of the
title insurance policies relating to such real property, which policies
contain a legal description of such real property ;
(b) All loan or credit agreements, lines of credit, letters
of credit, promissory notes, land or conditional sales contracts, other
title retention agreements, security agreements, mortgages, deeds of
trust, indentures, bonds and guaranties of the debts or obligations of a
third party relating to Cochrane or to which Cochrane is a party;
(c) All agreements, contracts, understandings, commitments
or obligations of Cochrane which:
(i) involve payments by Cochrane of more than
$25,000, whether individually or in the
aggregate;
(ii) relate to the purchase of goods, products,
supplies, materials or services in excess of
$25,000, whether individually or in the
aggregate;
(iii) involve payments based on profits of Cochrane;
(iv) were not made in the ordinary course of
business; or
(v) may not be terminated without penalty within
one (1) year from the date of this Agreement;
and
(d) All leases of real, personal and other property to
which Cochrane is a party or is subject or bound.
4.11. NO DEFAULTS. Except as set forth in Schedule 4.11
hereto, Cochrane (i) has not breached or violated and is not in default
under any contract, agreement, lease, license, promissory note,
mortgage, deed of trust, indenture, bond, understanding or commitment to
which it is a party, (ii) has no knowledge of any breach or default
under any of the foregoing by any other party thereto, and (iii) has no
knowledge of any event which, with notice or lapse of time or both,
would constitute a breach or default thereof.
4.12. TITLE TO ASSETS AND LEASEHOLD INTERESTS. (a) Cochrane
has good and marketable title in fee simple absolute to all real
property and good and marketable title to all personal property
reflected in the Cochrane Audited Financial Statements for the fiscal
year ended March 30, 1996, other than personal property disposed of in
the ordinary course of business since March 30, 1996; good and
marketable title to or right to use by valid and enforceable lease or
9
contract all other properties and assets (whether real, personal or
otherwise) which Cochrane purports to own or which Cochrane uses in its
business; and good and marketable title to all property and assets
acquired and not disposed of since March 30, 1996. All of such
properties and assets are owned by Cochrane free and clear of all land
or conditional sales contracts, mortgages, liens, pledges, restrictions,
security interests, charges, claims or encumbrances of any nature except
(i) as set forth in the Schedule 4.12 hereto, (ii) as specifically noted
in reasonable detail in the Cochrane Audited Financial Statements, (iii)
statutory liens for taxes not yet delinquent, and (iv) easements,
encumbrances, restrictions and liens of record and minor imperfections
of title which are not substantial in amounts, do not materially detract
from the value or materially interfere with the present or contemplated
use of any of the properties subject thereto or otherwise materially
impair the use thereof for the purposes for which they are held or used.
(b) All real property owned or leased by Cochrane is in
material compliance with all applicable zoning and land use laws.
(c) Except as set forth in Schedule 4.12 hereto, with
respect to each lease of real or personal property to which Cochrane is
a party, (i) Cochrane has a valid leasehold interest in such real or
personal property (ii) such lease is in full force and effect in
accordance with its terms, (iii) all rents and other monetary amounts
that have become due and payable thereunder have been paid in full, (iv)
no waiver, indulgence or postponement of any obligations thereunder has
been granted by any party thereto, (v) there exists no default or breach
(or an event that, with notice or lapse of time or both, would
constitute a default or breach) under such lease, and (vi) the
transactions contemplated by this Agreement will not constitute a
default or breach, or cause the termination or any modification, of such
lease.
4.13. LITIGATION AND PENDING PROCEEDINGS. (a) Except as set
forth in Schedule 4.13 hereto, there are no claims, actions, suits,
proceedings, arbitrations, mediations or investigations pending or, to
the best knowledge of Cochrane after due inquiry, threatened in any
court or before any government agency or authority, arbitration panel,
mediator or otherwise (nor does Cochrane have any knowledge of a basis
for any claim, action, suit, proceeding, litigation, arbitration,
mediation or investigation) against, by or affecting Cochrane.
(b) Cochrane is not (i) subject to any outstanding
judgment, order, writ, injunction, directive or decree of any court,
arbitration panel or governmental agency or authority, (ii) presently
charged with or under governmental investigation with respect to any
actual or alleged violations of any law, statute, rule, regulation or
ordinance, or (iii) the subject of any pending or, to the best knowledge
of Cochrane after due inquiry, threatened proceeding by any government
regulatory agency or authority, having jurisdiction over its business,
properties or operations.
4.14. TAXES, RETURNS AND REPORTS. (a) Cochrane has (i)
except as set forth in Schedule 4.14 hereto, timely, properly and duly
filed all federal, state, local and foreign Tax returns of every type
and kind required to be filed, and each such return is true, accurate
and complete in all material respects; (ii) paid all taxes, assessments
and other governmental charges due or claimed to be due upon it or any
of its income, properties or assets; and (iii) not requested an
10
extension of time for any such payments (which extension is still in
force) nor has granted any extension of the limitation period applicable
to any claim for taxes. Except for taxes not yet due and payable until
after the Effective Time, the liability for Taxes in the Cochrane
Audited Financial Statements as of March 30, 1996 is adequate to pay all
of Cochrane's Tax liabilities (including, without limitation, income
taxes and franchise fees) that may become payable in future years with
respect to all of its tax years through the tax year ended March 30,
1996. Cochrane has no liability for Taxes of any nature for or with
respect to the operation of its business, or ownership of its assets,
except to the extent set forth in the Cochrane Financial Statements and
other than its Tax Liability for the period beginning September 1, 1996
and ending on or prior to the Effective Time.
(b) Cochrane is not currently under audit by any federal,
state or local taxing authority and has no knowledge of any pending
investigation, examination or proceeding by any taxing authority with
respect to its taxes. No federal, state or local tax returns of
Cochrane have been audited by any taxing authority during the past five
(5) years.
(c) With respect to Cochrane and its business, operations
and affairs, (i) all material elections with respect to any Taxes
affecting Cochrane are set forth in Schedule 4.14 hereto; (ii) all Taxes
that Cochrane is required by law to withhold or collect have been duly
withheld or collected and have been timely paid over to the appropriate
governmental authorities to the extent due and payable and are not
subject to any Tax Liability in connection with amounts paid or owing to
any employee, creditor, independent contractor, or other third party;
(iii) all deficiencies of Taxes which have been claimed, proposed or
asserted against Cochrane have been fully paid or finally settled, and
no issue has been raised in any examination which may be expected to
result in the proposal or assertion of a deficiency of taxes for any
other year not so examined; (iv) no facts or circumstances exist that
would constitute the basis for the proposal or assertion of any
deficiencies of Taxes against Cochrane for any unexamined year or for
the recharacterization of any item of income, expense or deduction set
forth on any income tax return filed by Cochrane resulting in any Taxes
payable by Cochrane; (v) Cochrane has complied in all material respects
with all laws, statutes, rules, regulations and requirements relating to
all foreign, federal, state and local Taxes, and no claim by a
government authority where Cochrane does not file Tax returns that
Cochrane is or may be subject to taxation by that governmental authority
is outstanding; and (vi) Cochrane has not agreed, nor is it required, to
make any adjustment under Section 481(a) of the Code, or any comparable
provision of state or local law, by reason of a change in accounting
method or otherwise.
(d) Cochrane has never been a member of an affiliated group
of corporations, within the meaning of Section 1504 of the Code.
Cochrane has never been a "United States real property holding
corporation" (as defined in Section 897(c) of the Code) during the
applicable period specified in Section 897 (c) (1) (A) (ii) of the Code.
The transactions contemplated by this Agreement are not subject to the
tax withholding provisions of the Code or any other law. Cochrane has
disclosed on its federal, state or local income Tax returns all
positions taken therein that could reasonably give rise to an
accuracy-related penalty under Section 6662 of the Code (or any
corresponding provision of state or local tax law).
11
(e) Cochrane has timely paid all Taxes due and payable by
Cochrane for any Tax period (or portion thereof) ending on or before the
date of this Agreement and shall timely pay all Taxes due and payable by
it for any Tax period (or portion thereof) hereafter. No Tax liens have
been filed against Cochrane and there are no liens for Taxes (other than
for current Taxes not yet due and payable) on Cochrane assets.
(f) All federal, state, local and other taxes resulting
from or imposed by virtue of the conversion of the Outstanding Cochrane
Shares for the consideration specified in Section 2.01 hereof shall be
paid by the shareholders of Cochrane.
(g) For purposes of this Agreement, the term "Tax" (or
"Taxes" where applicable) shall mean any federal, state, local, foreign
or other income, gross receipts, capital stock, franchise, employee
income withholding, foreign withholding, other withholding, social
security, unemployment, disability, environmental (including under
Section 59A of the Internal Revenue Code of 1986, as amended (the
"Code")), real property, personal property, sales, use, transfer, value
added, alternative or add-on minimum or other tax, including any
interest, penalties or additions to tax in respect of the foregoing,
whether disputed or not. The term "Tax Liability" shall mean any
liability (whether known, unknown, absolute, contingent, liquidated or
unliquidated, and whether due or to become due) with respect to any
Taxes, including, without limitation, any liability to indemnify, assume
or succeed to a Tax Liability of a third party.
4.15. TRANSACTIONS WITH RELATED PARTIES. (a) Except as set
forth in Schedule 4.15 hereto, there are no contracts, agreements,
leases, commitments, understandings, transactions or business
relationships involving, or for the benefit of, any shareholder,
director or officer of Cochrane or any of their respective parents,
spouses, siblings, children, affiliates, agents, trusts, corporations or
other entities on the one hand, (collectively, the "Affiliated Parties")
and Cochrane, on the other hand, including, but not limited to, (i) any
debtor or creditor relationship, (ii) any sale, other transfer or lease
of real or personal property, (iii) purchases or sales of products or
services, and (iv) any interest in any assets used in Cochrane's
business.
(b) There are (i) no agreements or claims of any nature
that any of the Affiliated Parties has with or against Cochrane as of
the date of this Agreement or which may arise subsequent to the date of
this Agreement, other than any claim by any shareholder of Cochrane who
may exercise and perfect statutory dissenters' rights under the North
Carolina Corporation Act with respect to the Merger, any claims for
directors' fees, salary or other compensation and employee benefits
payable in the ordinary course of business in accordance with past
practices to the directors and employees of Cochrane and any claim by
any shareholder of Cochrane for the consideration payable under this
Agreement upon the conversion of any Outstanding Cochrane Shares, and
(ii) no agreements or claims of any nature that Cochrane has with or
against any of the Affiliated Parties as of the date of this Agreement
or which may arise subsequent to the date of this Agreement.
4.16. ENVIRONMENTAL MATTERS. Except as set forth in Schedule
4.16 hereto, Cochrane has conducted its business in compliance with all
applicable federal, state, county, municipal and other laws, statutes,
rules, regulations, ordinances, orders, restrictions, requirements and
12
common law duties relating to, without limitation, responsible property
transfer, underground storage tanks, petroleum products, chemicals, air
pollutants, water pollutants or process waste water or otherwise
relating to the environment, air, water or toxic, contaminated or
hazardous substances or materials, or to the manufacturing, recycling,
handling, processing, distribution, use, generation, treatment, storage,
disposal or transport thereof (including, without limitation,
polychlorinated biphenyls, whether contained or uncontained, and
asbestos-containing materials, whether friable or not, paints and
lacquers) (collectively, the "Environmental Laws"). There are no
pending or, to the best knowledge of Cochrane, threatened claims,
actions or proceedings by any federal, state or local governmental
agency or authority against Cochrane with respect to the Environmental
Laws and, to the best knowledge of Cochrane, there is no basis or
grounds for any such claim, action or proceeding, except as set forth in
Schedule 4.16 hereto. Set forth in Schedule 4.16 hereto is a true,
accurate and complete list of all environmental permits or other
governmental authorizations held by Cochrane that are required for the
conduct of Cochrane's business (collectively, the "Environmental Permits").
Other than the Environmental Permits, there are no permits or
governmental authorizations necessary for the conduct of Cochrane's
business. Except as expressly provided by their terms, all of such
Environmental Permits shall remain in full force and effect in
accordance with their terms without any modification or limitations on
or after the Effective Time and will not be terminated, revoked or
withdrawn as a result of the transactions contemplated by this
Agreement. Except as set forth in Schedule 4.16 hereto, Cochrane is not
the owner of any property on which any substances have been used,
stored, deposited, treated, recycled or disposed of, which substances
require clean-up, removal or some other remedial action under any
Environmental Law.
4.17. EMPLOYEE BENEFIT PLANS. (a) With respect to the
employee benefit plans, as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), sponsored,
contributed to or otherwise maintained by Cochrane, including, without
limitation, employee benefit plans for which Cochrane acts as
administrator, trustee or fiduciary or with respect to which Cochrane
has any liability and any such plans which have been terminated, merged
into another plan, frozen or discontinued (collectively, the "Cochrane
Plans"):
(i) all such Cochrane Plans have, on a continuous basis
since their adoption, been maintained in compliance
with the requirements prescribed by all applicable
laws, statutes, rules, regulations, orders and other
governmental requirements, including, without
limitation, ERISA, the Code and the Department of Labor
(the "DOL") and the Treasury Regulations promulgated
thereunder;
(ii) all Cochrane Plans intended to constitute tax-qualified
plans under the Code have complied, in form and in
operation, since their adoption with all applicable
requirements of the Code and the Treasury Regulations
promulgated thereunder, and favorable determination
letters with respect to the Tax Reform Act of 1986 have
been received from the Internal Revenue Service (the
"IRS") with respect to each such Cochrane Plan stating
that each, in its current form (or at the time of its
disposition if it has been terminated, merged, frozen
or discontinued), is qualified under and satisfies all
applicable provisions of the Code and Treasury
Regulations;
13
(iii) no Cochrane Plan (or its related trust) holds any
Cochrane Common Stock or any stock of a related or
affiliated person or entity, except for the Cochrane
Employee Stock Ownership Plan (the "ESOP");
(iv) Cochrane has no liability to the DOL, the IRS or the
Pension Benefit Guaranty Corporation (the "PBGC") with
respect to any Cochrane Plan;
(v) Cochrane has not engaged in any transaction that may
subject Cochrane or any Cochrane Plan to a civil
penalty imposed by Section 502 of ERISA;
(vi) no prohibited transaction (as defined in Section 406 of
ERISA and as defined in Section 4975(c) of the Code)
has occurred with respect to any Cochrane Plan;
(vii) no participant or beneficiary or non-participating
employee has been denied any benefit due or to become
due under any Cochrane Plan or has been misled as to
his or her rights under any Cochrane Plan;
(viii) all obligations required to be performed by Cochrane
under any provision of a Cochrane Plan have been
performed by it, and Cochrane is not in default under
or in violation of any provision of a Cochrane Plan;
(ix) there are no actions, suits, proceedings or claims
pending (other than routine claims for benefits) or
threatened against Cochrane, any Cochrane Plan or the
assets of any Cochrane Plan;
(x) all reports, notices and information required to be
given to any individual or entity or any governmental
agency or authority in connection with a Cochrane Plan
has been given in a complete and timely fashion;
(xi) Cochrane does not maintain, participate in or
contribute to any multiemployer plan, as defined in
Sections 3(37) and 4001(a)(3) of ERISA, and has no
actual or asserted withdrawal liability with respect to
such a plan;
(xii) no Cochrane Plan has incurred an "accumulated funding
deficiency," as determined under Code Section 412 and
ERISA Section 302; and
(xiii) with respect to any Cochrane Plan sponsored,
participated in or contributed to by Cochrane or with
respect to which Cochrane is responsible for complying
with the reporting and disclosure requirements of ERISA
or the Code, there has been no violation of the
reporting and disclosure requirements imposed either
under ERISA or the Code for which a penalty has been or
may be imposed.
(b) With regard to any Cochrane Plan intended to be a
tax-qualified plan under Section 401(a) of the Code, no director,
officer, employee or agent of Cochrane has engaged in any action or
14
failed to act in such a manner that, as a result of such action or
failure to act, the IRS could revoke or deny any Cochrane Plan's
qualification under the Code or the exemption under Section 501(a) of
the Code for any trust or annuity contract related to such Cochrane
Plan.
(c) Set forth in Schedule 4.17 hereto is a true, accurate
and complete list of all of the following with respect to which Cochrane
maintains, contributes, administers or is subject, or which otherwise
relates to Cochrane (all of which Cochrane has delivered true, accurate
and complete copies to CRI or Newco): (i) pension, retirement,
profit-sharing, savings, stock purchase, stock bonus, stock ownership,
stock option (including, without limitation, the Stock Option Plan) and
stock appreciation or depreciation right plans or agreements and all
amendments thereto; (ii) all employment, deferred compensation (whether
funded or unfunded), salary continuation, consulting, bonus, severance
and collective bargaining agreements, arrangements or understandings;
(iii) all executive and other incentive compensation plans and programs;
(iv) all group insurance and health contracts, policies or plans; and
(v) all other incentive, welfare or employee benefit plans,
understandings, arrangements or agreements, maintained or sponsored,
participated in or contributed to by Cochrane for their current or
former directors, officers or employees. Except as otherwise provided
in Schedule 4.17, all of the foregoing have been, since their inception,
drafted, implemented, administered and, where applicable, amended or
terminated, in accordance with their terms and with applicable law.
Cochrane does not maintain, contribute or administer any plans or
programs referenced in this Section 4.17(c) that have not been reduced
to writing.
(d) Set forth in Schedule 4.17 hereto is a true, accurate
and complete list of each contract, agreement, understanding,
commitment, arrangement, policy or plan (written or oral) providing for
compensation, monetary payments, securities or benefits (all of which
Cochrane has provided true, accurate and complete copies to CRI or
Newco) that (i) is not an employee benefit plan, (ii) was entered into,
maintained or contributed to by Cochrane or which Cochrane is bound by
and (iii) covers any current or former employee or director of Cochrane
(collectively, "Benefit Arrangements"). Each of the Benefit
Arrangements has been maintained in compliance with its terms and with
the requirements prescribed by any and all laws, statutes, orders,
rules, regulations and other governmental requirements which are
applicable to such Benefit Arrangements. Except as otherwise provided
in Schedule 4.17 hereto, there are no collective bargaining, employment,
management, consulting, deferred compensation, reimbursement, indemnity,
retirement, early retirement, severance, bonus, salary continuation or
similar plans, agreements, commitments or understandings or any other
plan, agreement, commitment or understanding providing currently or in
the future for any compensation, monetary payment, property or benefit
to any present or former director, officer or employee of Cochrane, and
no such agreement, commitment, understanding or plan is under discussion
or negotiation by management with any employee or group of employees,
any member of management or any other person.
(e) No current or former director, officer or employee of
Cochrane is entitled to any benefit under any employee welfare benefit
plans (as defined in Section 3(1) of ERISA) after termination of
employment with Cochrane, except that such individuals may be entitled
to continue their group health care coverage pursuant to Section 4980B
of the Code if they pay the cost of such coverage pursuant to the
applicable requirements of the Code with respect thereto.
15
(f) With respect to any group health plan (as defined in
Section 607(1) of ERISA) sponsored or maintained by Cochrane, in which
Cochrane participates as a participating employer or to which Cochrane
contributes, no director, officer, employee or agent of Cochrane has
engaged in any action or failed to act in such a manner that, as a
result of such action or failure to act, would cause a tax to be imposed
upon Cochrane under Section 4980B(a) of the Code. With respect to all
such plans, all applicable provisions of Section 4980B of the Code and
Section 601 of ERISA have been complied with in all material respects by
Cochrane.
(g) For purposes of this Section 4.17, references to
Cochrane are deemed to include (i) all predecessors of Cochrane and (ii)
any entity related to or affiliated with Cochrane.
(h) Cochrane does not sponsor, maintain or otherwise
contribute to any employee benefit plan or program which has not been
reduced to writing.
4.18. EMPLOYEE MATTERS. (a) Except for the employees set
forth in Schedule 4.18 hereto, all employees of Cochrane are
employees-at-will.
(b) Cochrane has provided to CRI a true, accurate and
complete list, dated within ten (10) days prior to the date hereof,
containing the name, title, current annual salary, compensation or
wages, as the case may be (including bonuses, commissions and overtime),
(i) of each employee of Cochrane whose total annual compensation
exceeded $35,000 during the year ended December 31, 1995, and (ii) of
each employee of Cochrane whose total compensation exceeded $2,900 in
any month through September 30, 1996. All salaries, wages and other
compensation (including bonuses, commissions and overtime), sick leave,
severance pay and vacation benefits for all employees of Cochrane for
all periods ending on August 31, 1996 have been fully paid or accrued
and will be fully accrued on Cochrane's books and records and have been
paid in the ordinary course of business after August 31, 1996 through
the Closing Date. Cochrane has previously provided to Newco copies of
all confidentiality, non-compete and similar agreements to which it is a
party or to which any of Cochrane's present or former employees is a
party. Cochrane has previously provided to Newco copies of all employee
handbooks or manuals used by Cochrane at any time during the past five
(5) years.
(c) Cochrane has maintained and continues to maintain true,
accurate and complete payroll, personnel and time records for purposes
of compliance with all federal and state minimum wage and overtime laws
and right to work laws, including, without limitation, adequate
documentation of the applicability of exemptions under such laws.
Cochrane is in compliance with all applicable laws, statutes, rules,
regulations, requirements and common law duties with respect to (i)
employment and employment practices, (ii) terms and conditions of
employment, (iii) wages and hours, and (iv) occupational safety and
health.
(d) Cochrane is not and has not engaged in any unfair labor
practice within the meaning of Section 8 of the National Labor Relations
Act, as amended, and there is no proceeding or investigation pending or
threatened against it with respect thereto. Except as set forth in
Schedule 4.18 hereto, there are no, and during the last five (5) years
have not been any, formal, informal or internal charges or complaints
16
of, or any proceedings or lawsuits pending or threatened involving,
discrimination or harassment (including, but not limited to,
discrimination or harassment based upon gender, age, marital status,
race, religion, color, creed, national origin, sexual preference,
handicap or veteran status), nor is there any investigation pending or
threatened before the Equal Employment Opportunity Commission or any
other federal, state or local agency or authority with respect to
alleged or actual discrimination or harassment, by Cochrane or any of
its present or former directors, employees or agents.
(e) Cochrane is in compliance with the Family and Medical
Leave Act and the Americans With Disabilities Act, as amended.
4.19. OBLIGATIONS TO EMPLOYEES. All accrued obligations and
liabilities of and all payments by Cochrane, all Cochrane Plans and all
Benefit Arrangements, whether arising by operation of law, by contract,
by past custom or otherwise, for payments to trusts or other funds, to
any government agency or authority or to any present or former director,
officer, employee or agent of Cochrane (or his heirs, legatees or legal
representatives) have been paid to the extent required by applicable law
or by the plan, trust, agreement, past custom or practice or otherwise.
Adequate actuarial accruals and reserves for such payments, if
applicable, have been and are being made by Cochrane in accordance with
GAAP applied on a consistent basis, applicable law and, if applicable,
actuarial methods with respect to the following: (a) withholding taxes,
unemployment compensation and social security or other government
benefits; (b) all Cochrane Plans and Benefits Arrangements; (c) all
employment, deferred compensation (whether funded or unfunded), salary
continuation, consulting, severance and bonus agreements; (d) all group
insurance and health or hospitalization contracts or policies; and (e)
all other incentive, welfare, retirement or employee benefit plans or
agreements maintained, sponsored, participated in or contributed to by
Cochrane for, and all other compensation paid by Cochrane to, its
current or former directors, officers, employees and agents. All
obligations, liabilities, payments, accruals and reserves referred to in
this Section 4.19 have either been paid in full or are correctly and
adequately reflected and accounted for in all material respects in the
Cochrane Financial Statements with respect to all periods ending on or
prior to respective dates covered thereby and thereafter in the books
and records of Cochrane.
4.20. INSURANCE. Set forth in Schedule 4.20 hereto is a list
and brief description of all policies of insurance (including, without
limitation, product liability insurance, property and casualty
insurance, group health or hospitalization insurance and other insurance
providing benefits for employees) owned or held by Cochrane on the date
hereof or with respect to which Cochrane pays any premiums. Each such
policy is in full force and effect, all premiums due thereon have been
paid when due, and a true, accurate and complete copy thereof has been
previously delivered to Newco.
4.21. INTELLECTUAL PROPERTY. Set forth in Schedule 4.21
hereto is an accurate and complete list of all patents, trademarks,
service marks, trade names and registered copyrights (collectively, "the
Intellectual Property") owned, possessed, licensed or used by Cochrane
and all applications therefor and registrations thereof owned or
controlled by Cochrane and, in the case of any such rights that are so
owned, the jurisdictions in which such rights have been registered,
filed or issued. The Intellectual Property constitutes all of the
intellectual property that Cochrane uses in the operation of its
17
business. Cochrane has filed all affidavits, renewals and other
documents necessary to keep the Intellectual Property in full force and
effect and is the sole and exclusive owner of the Intellectual Property
with the sole and exclusive right to use and license such property. No
claim has been asserted or threatened seeking cancellation or concurrent
use of the Intellectual Property.
4.22. DIVIDENDS. Since December 31, 1995, Cochrane has paid
no dividends or other distributions to its shareholders.
4.23. COMPLIANCE WITH LAW. Except as set forth in Schedule
4.23 hereto, Cochrane has not engaged in any activity nor has it taken
or failed to take any action which has resulted in the violation of any
federal, state, local or other law, statute, rule, regulation,
ordinance, requirement or common law duty or obligation. Cochrane is
not in violation of any judgment, order, injunction, ruling, directive,
writ or decree of any court or government agency or authority.
4.24. LICENSES AND PERMITS. Cochrane possesses and holds all
licenses, franchises, permits, certificates and other authorizations
(including, but not limited to, all Environmental Permits and bedding
licenses) necessary for the continued conduct of its business without
interference or interruption. Such licenses, franchises, permits,
certificates and other authorizations are set forth in Schedule 4.24
hereto and shall remain in full force and effect in accordance with
their respective terms from and after the Effective Time without any
restrictions or limitations thereon or the need to obtain any consents
or approvals of any government agencies or authorities or any other
third parties. No such license, franchise, permit, certificate or
authorization, or any renewal thereof, will be terminated, revoked,
suspended, limited or modified in any respect as a result of the
transactions contemplated by this Agreement.
4.25. NO THIRD PARTY CONSENTS. Except as set forth in
Schedule 4.25 hereto, no consent, approval, authorization, clearance or
waiver of or any filing with or notice to any person, corporation, other
entity or third party or any government agency or authority is required
for the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby by Cochrane, except
for the filing of the Certificate of Merger with the Secretary of State
of Delaware and the Articles of Merger with the Secretary of State of
North Carolina, as provided in Section 1.02 hereof, and any filing under
the Xxxx- Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx "XXX
Xxx")
4.26. NO ADVERSE AGREEMENTS. Except for any contract
disclosed in any Schedule attached hereto, neither Cochrane nor, to its
best knowledge, any of its employees is a party to or bound by (a) any
oral or written agreement, contract, understanding or commitment
containing any covenant or restriction which limits its or his freedom
or ability to engage in any line of business or to compete with any
person, corporation or other entity, or (b) any oral or written
agreement, contract, understanding or commitment that is or may be
materially adverse to Cochrane's financial condition, results of
operations, business or prospects.
4.27. WARRANTIES. Except as listed and described on Schedule
4.27 hereto, Cochrane does not provide any warranties with respect to
any products or goods that it sells. The amount of all reserves for
18
Cochrane's warranty obligations reflected on its books and records are
in accordance with GAAP.
4.28. FINANCIAL RECORDS. The financial records of Cochrane
are in all material respects true, accurate and complete and accurately
reflect the basis for the financial condition and results of operations
of Cochrane set forth in the Cochrane Financial Statements.
4.29. BROKER'S OR FINDER'S FEES. No agent, broker or other
person acting on behalf of Cochrane or under any authority of Cochrane
is or shall be entitled to any commission, broker's or finder's fee or
any other form of similar compensation or payment from any of the
parties hereto relating to this Agreement and the Merger, except for
Xxxxxxxx, Ball & Company which is entitled to receive a total fee of
Thirty Thousand Dollars ($30,000) in connection with certain services
provided to Cochrane.
4.30. ACCURACY OF STATEMENTS MADE AND MATERIALS PROVIDED TO
NEWCO. No representation or warranty made by Cochrane in this Agreement
and no statement or information contained in any Schedule attached
hereto or in any written report, list, materials or other document
furnished or to be furnished by Cochrane to CRI or Newco in connection
with this Agreement or the Merger contains or will contain any untrue or
misleading statement of material fact or omits or will omit to state a
material fact necessary to make the statements contained herein or
therein, in light of the circumstances in which they were or are made,
not false or misleading.
SECTION 5
REPRESENTATIONS AND WARRANTIES OF CRI AND NEWCO
-----------------------------------------------
Each of CRI and Newco represents and warrants to Cochrane as follows:
5.01. ORGANIZATION. Each of CRI and Newco is a corporation
duly organized and validly existing under the laws of the State of
Delaware.
5.02. AUTHORITY. Each of CRI and Newco has the requisite
corporate power and authority to enter into this Agreement and to carry
out its obligations hereunder subject to the fulfillment of the
conditions precedent set forth in Section 8.01 hereof (including
shareholder approval). This Agreement and its execution and delivery by
CRI and Newco have been duly authorized and unanimously approved by the
respective Boards of Directors of CRI and Newco and constitutes a valid
and binding obligation of CRI and Newco, enforceable in accordance with
its terms, except to the extent limited by general principles of equity
and public policy and by bankruptcy, insolvency, reorganization,
liquidation, moratorium, readjustment of debt or other laws of general
application relating to or affecting the enforcement of creditors'
rights.
5.03. NO THIRD PARTY CONSENTS. No consent, approval,
authorization, clearance or waiver of or any filing with or notice to
any person, corporation, other entity or third party or any government
agency or authority is required for the execution, delivery and
19
performance of this Agreement or the consummation of the transactions
contemplated hereby by CRI or Newco, except for the filing of the
Certificate of Merger with the Secretary of State of Delaware and the
Articles of Merger with the Secretary of State of North Carolina, as
provided in Section 1.02 hereof, any filing under the HSR Act, and any
filing under applicable federal securities laws.
SECTION 6
COVENANTS OF COCHRANE
---------------------
Cochrane covenants to and agrees with CRI as follows:
6.01. PROXY STATEMENT; SHAREHOLDER APPROVAL. (a) As soon as
practicable following the date of this Agreement, Cochrane shall mail a
proxy statement relating to this Agreement and the Merger (the "Proxy
Statement") to its shareholders with respect to a meeting of its
shareholders at which meeting such shareholders shall vote upon the
Agreement and the Merger, all in compliance with the Articles of
Incorporation and By-Laws of Cochrane and applicable law and in
accordance with Section 6.01(b) hereof. Cochrane shall have provided CRI
with a copy of the definitive Proxy Statement, in a form that is
substantially ready to be mailed to the shareholders of Cochrane, prior
to the date of this Agreement. The Board of Directors of Cochrane shall
recommend to Cochrane's shareholders that such shareholders should
approve this Agreement and the Merger, shall state such recommendation
in the Proxy Statement and shall solicit proxies voting in favor of this
Agreement from such shareholders; provided, however, that the Board of
Directors of Cochrane shall not be obligated to recommend approval of,
or to state any recommendation with respect to, this Agreement or the
Merger in the Proxy Statement or to attempt to obtain the approval of
this Agreement or the Merger by Cochrane's shareholders if such Board of
Directors, acting upon the advice of legal counsel, determines that such
recommendation may be contrary to the Board of Director's fiduciary
duties to the shareholders of Cochrane.
(b) Subject to the provisions of Section 6.01(a) and (c)
hereof, Cochrane shall take all action necessary under the North
Carolina Corporation Act and its Articles of Incorporation and By-Laws
to call and hold (without any adjournment thereof) a special meeting of
its shareholders for the purpose of approving this Agreement and the
Merger, and to complete the vote of Cochrane's shareholders with respect
to this Agreement and the Merger, as soon as practicable following the
date of this Agreement and, in any event, not later than one (1)
business day prior to the Closing Date.
(c) Neither the Board of Directors of Cochrane nor any
committee thereof shall withdraw or modify, or propose to withdraw or
modify, in a manner adverse to CRI or Newco such Board's approval and
recommendation to Cochrane's shareholders of this Agreement and the
Merger; provided, however, that the Board of Directors of Cochrane and
any committee thereof may withdraw or modify, or propose to withdraw or
modify, in a manner adverse to CRI or Newco such Board's approval and
recommendation to Cochrane's shareholders of this Agreement and the
Merger if the Board of Directors or any committee thereof, acting upon
20
the advice of legal counsel, determines that the failure to so withdraw
or modify the Board's approval and recommendation of this Agreement and
the Merger may be contrary to the Board of Director's fiduciary duties
to the shareholders of Cochrane.
6.02. XXXX-XXXXX-XXXXXX FILING; OTHER APPROVALS. (a)
Cochrane shall take all actions necessary or appropriate to file, and
shall expeditiously and diligently prosecute to a favorable conclusion,
all notices and other documents required to be filed under the HSR Act
with the U.S. Federal Trade Commission (the "FTC") and the U.S.
Department of Justice (the "DOJ"); provided that Cochrane shall not be
required to accept prior to the Effective Time any conditions that may
be imposed by the FTC or the DOJ in connection with such filings which
would have a material adverse effect on Cochrane. Cochrane shall
provide Newco with a copy of all such notices and other documents filed
under the HSR Act prior to the filing thereof and shall promptly provide
Newco with copies of all correspondence and other documents received
from the FTC or DOJ in connection with such filings.
(b) Cochrane shall proceed expeditiously in good faith,
cooperate fully and use its best efforts to (i) obtain all consents,
authorizations and approvals of third parties, on terms and conditions
acceptable to Newco, to the transactions contemplated by this Agreement,
(ii) satisfy all requirements prescribed by law, and all conditions set
forth in this Agreement, for the consummation of the Merger, and (iii)
consummate the Merger in accordance with this Agreement on November 13,
1996.
6.03. EMPLOYEE BENEFIT PLANS. Cochrane acknowledges that CRI
or Newco shall have primary responsibility for the preparation and
filing of all documents relating to the termination, merger or other
disposition of the Cochrane Plans; provided, however, that no such
filing of documents or termination, merger or other disposition of any
Cochrane Plan shall be made or become effective prior to the Effective
Time. Cochrane, and its employees and agents, shall cooperate with CRI
or Newco in the preparation and filing of any such documents relating to
the termination, merger or other disposition of the Cochrane Plans.
6.04. CONDUCT OF BUSINESS PRIOR TO THE EFFECTIVE TIME.
Except as set forth in Schedule 6.04 hereto, on and after the date of
this Agreement and until the Effective Time or until this Agreement
shall be terminated as herein provided, Cochrane shall not, without the
prior written consent of Newco:
(a) make any changes in its capital stock accounts or
declare, authorize, approve or issue any stock split or
stock dividend or any recapitalization or
reclassification of its capital stock;
(b) authorize a class of stock or issue, or authorize the
issuance of, securities or options other than or in
addition to the Outstanding Cochrane Shares or the
Stock Options;
(c) declare, authorize, approve or issue any distribution
or dividend to the shareholders of Cochrane;
21
(d) redeem any of the Outstanding Cochrane Shares;
(e) merge, consolidate, affiliate, effect a share exchange
or otherwise combine with, sell a material portion of
its assets to or sell any of its securities to any
third party; or enter into a new line of business or
change in any material respect any of its operations or
existing lines of business;
(f) acquire or dispose of any property or assets in excess
of $10,000 individually or $25,000 in the aggregate,
except for purchases in the ordinary course of business
of raw materials inventory and sales in the ordinary
course of business of finished goods inventory;
(g) refinance or restructure any of its indebtedness for
borrowed money or other debts or obligations; or amend,
modify or terminate, or change the terms or conditions
of, any agreement with any bank, financial institution
or other lender or any promissory note, bond, indenture
or other evidence of indebtedness;
(h) increase or incur any new or additional indebtedness to
any bank, financial institution or other lender, except
for any advances under its existing revolving credit
facilities provided by Mellon Bank, N.A., or pay any
fee to Mellon Bank, N.A. or any other bank, financial
institution or lender;
(i) fail to timely pay (subject to cash flow limitations)
and accrue its accounts payable, indebtedness to third
parties, Taxes (including, without limitation,
withholdings from employees), interest and other
obligations in the ordinary course of business in
accordance with the respective terms and conditions of
such accounts payable, indebtedness and other
obligations or as otherwise are required to be paid;
(j) incur any accounts payable, indebtedness or other
obligation, or create, record or collect any accounts
receivable, except in the ordinary course of business
and on terms and conditions that are generally
acceptable to parties in similar circumstances;
(k) amend, modify or terminate, or grant any waiver or
concession under, any contract, agreement, lease,
understanding or commitment, except in the ordinary
course of business consistent with past practices of
Cochrane and not material in amount, whether
individually or in the aggregate;
(l) amend, modify or terminate, or forgive or grant any
waiver or concession under, any debt, obligation or
claim owed to Cochrane or any accounts receivable of
Cochrane, except in the ordinary course of business
consistent with past practices of Cochrane and not
material in amount, whether individually or in the
aggregate;
(m) guaranty any indebtedness or other obligation of any
third party, other than the existing guaranty of
Cochrane as set forth in Schedule 4.10 hereto;
22
(n) place or allow to exist on any of its assets or
properties any security interest, pledge, mortgage,
deed of trust, encumbrance, charge, claim or other
lien, except as permitted under Section 4.12 hereof;
(o) amend, modify or restate Cochrane's Articles of
Incorporation or By-Laws;
(p) promote to a new position or increase the rate of
compensation of any director, officer or employee of
Cochrane;
(q) hire or employ any new or additional employees, except
for employees hired to replace presently existing
employees of Cochrane whose employment has been
terminated subsequent to the date hereof;
(r) create, institute, amend, modify or terminate any
employment policy or practice affecting any present or
former directors, officers or employees of Cochrane;
(s) create, institute, amend, modify or terminate any stock
purchase, stock bonus, stock option or stock
appreciation plan or agreement; any savings, profit
sharing, retirement or employee pension benefit plan;
any insurance plan, policy or agreement or other
employee welfare benefit plan; or any employment,
deferred compensation, consulting, bonus, incentive,
severance or collective bargaining agreement; or change
the level of benefits or payments under any of the
foregoing which are in effect or existing as of the
date of this Agreement or under any Cochrane Plan;
(t) fail to maintain its accounting and other books and
records in the ordinary course of business and in the
usual manner on a basis consistent with that heretofore
maintained;
(u) purchase, expand, renovate or materially change any of
its plants, warehouses or other facilities;
(v) enter into any contract, agreement, lease, commitment,
understanding or transaction, or incur any liability or
obligation, other than in the ordinary course of
business;
(w) violate any law, statute, rule, regulation, order,
directive or other governmental requirement in any
material respect; or
(x) enter into any contract, agreement, commitment or
understanding with respect to any of the foregoing
specified in this Section 6.04.
6.05. PRESERVATION OF BUSINESS. On and after the date of
this Agreement and until the Effective Time or until this Agreement is
terminated as herein provided, Cochrane shall:
23
(a) carry on its business substantially in the manner as is
presently being conducted and in the ordinary course of
business;
(b) use its best efforts to preserve its business,
operations and affairs, and its employees, customers
and persons having business dealings with it, in the
same manner as presently exists;
(c) maintain all of its machinery, equipment, real property
and other assets that it owns or leases in accordance
with its current practices;
(d) maintain in full force and effect insurance on its
assets, properties, operations, employees and directors
in the same manner as they are currently insured as of
the date of this Agreement; and
(e) not take any action or fail to take any reasonable
action which will cause a breach of or material default
in any contract, agreement, lease, indenture, bond,
obligation, commitment or understanding to which
Cochrane is a party (subject to cash flow limitations).
6.06. PRESS RELEASES. Cochrane shall not issue any press
releases or make any other public announcements or disclosures to the
press or other media relating to this Agreement or the transactions
contemplated hereby without the prior written consent of Newco. CRI and
Newco shall issue a mutually agreeable press release upon the execution
of this Agreement.
6.07. UPDATE TO SCHEDULES. Cochrane shall promptly (a)
supplement, amend and update any and all of the Schedules attached to
this Agreement provided pursuant to Section 4 hereof and any and all
lists, letters, documents, written information and other writings
provided by Cochrane to CRI or Newco pursuant to this Agreement to
reflect each and every change to each Schedule and each such list,
letter, document, written information and other writing and to reflect
each and every document, action, matter or event occurring or arising
after the date of this Agreement and prior to the Effective Time which
would make any Schedule or any such list, letter, document, written
information or other writing incomplete or inaccurate or which, if in
existence or having occurred as of or prior to the date of this
Agreement, would have been required to be set forth or described in any
Schedule to this Agreement or in any list, letter, document, written
information or other writing provided to CRI or Newco pursuant to this
Agreement (collectively, the "Updated Schedules and Materials"), and (b)
disclose in writing to CRI or Newco each and every document, action,
matter, event or other information which, if existing or known as of the
date hereof, would have made any of the representations or warranties of
Cochrane contained herein inaccurate, untrue or misleading. No Updated
Schedule or Material and no disclosure pursuant to this Section will be
deemed to amend, modify or limit, or to provide any exceptions with
respect to, any representation or warranty or any original Schedule,
list, letter, document, written information or other writing without the
prior written consent of CRI or Newco.
24
6.08. SUBSEQUENT FINANCIAL STATEMENTS. Prior to the
Effective Time and as soon as they are available, Cochrane shall deliver
to CRI (a) its unaudited balance sheet as of September 30, 1996 and its
related statements of income and cash flows for the six-month period
then ended and (b) its unaudited interim balance sheets and related
statements of income and cash flows that are prepared for subsequent
periods. Each of such balance sheets and income and cash flow statements
shall be included within the definition of Cochrane Interim Financial
Statements upon delivery thereof to Newco.
6.09. CERTAIN ACCESS AND DUE DILIGENCE MATTERS. CRI and
Newco, and their respective representatives and agents, shall, at all
times during normal business hours prior to the Effective Time, have
full and continuing access to the properties, facilities, operations,
employees, books and records of Cochrane; provided, however, that such
access shall not interfere unnecessarily with the normal operations of
Cochrane. No investigation by CRI or Newco (whether conducted before or
after the date hereof) shall affect the representations and warranties
made by Cochrane in this Agreement or the information contained in any
Schedule attached hereto or in any list, letter, document, written
information or other writing provided by Cochrane to CRI or Newco, and
CRI and Newco shall be entitled to rely on such representations,
warranties, Schedules, lists, letters, documents, written information
and other writings notwithstanding any such investigation.
6.10. CERTAIN ACTIONS. Cochrane shall not take any action or
fail to take any reasonable action, and shall not permit its directors,
employees or agents to take or fail to take, any action which will
result in (a) a misrepresentation or a breach of any covenant or
warranty of Cochrane in this Agreement, (b) Newco having the right to
terminate this Agreement, or (c) a condition to the obligation of Newco
to consummate the Merger not being fulfilled.
6.11. TERMINATION OF STOCK OPTION PLAN AND OTHER AGREEMENTS.
Cochrane shall cause to be terminated, as of the Effective Time (a) the
Stock Option Plan; (b) all of the Stock Options; (c) "the deferred
compensation" plan for certain executive officers of Cochrane; (d) the
"deferred compensation" agreements between Cochrane and each of Xxxxx X.
Xxxxxxxx, Xxxxx X. Xxxxxxxx and Xxxxxx X. Xxxxxxx; and (e) the
Employment Agreement dated February 28, 1994 between Cochrane and Xxxxxx
X. Xxxxxxx. Xxxxxxxx shall cause to be amended as of the Effective Time
the Employment Agreement dated December 9, 1994 between Cochrane and Xxx
Xxxxxx and the "deferred compensation" agreement between Cochrane and
X.X. Xxxxxxxx, Xx. Xxxxxxxx shall not allow any of the Stock Options to
be exercised and shall not issue any shares of Cochrane Common Stock in
connection with any attempted exercise of the Stock Options. The
agreements contemplated by subsections (b), (d) and (e) hereof and the
amendments to the Employment Agreement of Xxx Xxxxxx and the "deferred
compensation" agreement of X.X. Xxxxxxxx, Xx. referenced above are
collectively referred to herein as the "Ancillary Agreements".
6.12. NO SOLICITATIONS. On and after the date of this
Agreement and until the Effective Time or until this Agreement is
terminated as provided herein, Cochrane shall not, and shall not
authorize or permit any of its shareholders, directors, officers,
employees, attorneys, accountants, investment bankers, representatives
or agents to, directly or indirectly initiate, solicit or encourage
inquiries, discussions or negotiations with, or provide any information
25
to, any person, group, corporation or other entity concerning any
merger, consolidation, combination, affiliation, share exchange, tender
offer, sale of substantial assets or securities or any other similar
transaction relating to Cochrane (collectively, "Acquisition
Transactions"); provided, however, that Cochrane may provide, and may
authorize any of its directors, officers, attorneys or investment
bankers to provide, information relating to Cochrane and/or access to
Cochrane's facilities to any third party in response to a request for
such information and/or access by such third party which has not been
initiated, solicited or encouraged by Cochrane or any of its
shareholders, directors, officers, employees, attorneys, accountants,
investment bankers, representatives or agents if the Board of Directors,
acting upon the advice of legal counsel, determines that failing to
provide such information and/or access may be contrary to the Board of
Director's fiduciary duties to the shareholders of Cochrane. Cochrane
shall promptly notify CRI in writing of (i) the existence and terms of
any proposal or offer which it may receive with respect an Acquisition
Transaction and (ii) any request by or indication of interest on the
part of any third party with respect to the initiation of any
Acquisition Transaction or any discussions with respect thereto. In
addition, prior to the time that Cochrane provides to any third party,
pursuant to this Section, any information relating to Cochrane or access
to any of Cochrane's facilities, books or records or engages in any
discussions with any third party concerning an Acquisition Transaction,
Cochrane shall notify CRI in writing of the name of such party.
6.13. BREAK-UP FEE. (a) Cochrane hereby acknowledges and
agrees that CRI and Newco have committed and will commit substantial
time, effort, resources and expenses, and will forgo other acquisition
opportunities, in pursuing the Merger. Cochrane further agrees that it
shall pay to CRI or Newco a break-up fee (the "Break-up Fee") in the
amount of Seven Hundred Fifty Thousand Dollars ($750,000) in immediately
available funds in the event that:
(i) Cochrane or any of its shareholders,
directors, officers, employees, attorneys,
accountants, investment bankers,
representatives or agents shall have provided
to a party other than CRI or Newco subsequent
to the date of this Agreement (I) any
information relating to Cochrane other than
the Cochrane Audited Financial Statements or a
summary of the Cochrane Interim Financial
Statements or (II) any access to Cochrane's
facilities other than a one-time escorted tour
of such facilities, or
(ii) The Merger is not consummated on or before
November 13, 1996, unless such date is
extended pursuant to Section 9.01(a)(i),
because Cochrane breaches any of the
representations or covenants contained in this
Agreement, or because of fault on the part of
Cochrane, or because Cochrane fails to hold a
shareholders' meeting and to complete the vote
on this Agreement and the Merger, or
(iii) The Board of Directors of Cochrane fails to
recommend to Cochrane's shareholders that such
shareholders should approve this Agreement and
the Merger, or
26
(iv) The Board of Directors of Cochrane withdraws,
modifies or conditions its recommendation to
Cochrane's shareholders to approve this
Agreement and the Merger or is silent with
respect to the approval of this Agreement and
the Merger,
and Cochrane approves, enters into or executes a definitive agreement or
letter of intent relating to an Acquisition Transaction with a party
other than CRI, Newco or an affiliate of CRI, or a tender offer is
initiated for any of the shares of Cochrane Common Stock by a party
other than CRI, Newco or an affiliate of CRI, at any time within twelve
(12) months following the date of this Agreement.
(b) The Break-up Fee shall be immediately paid to CRI or
Newco upon the occurrence of the above specified events. If the
Break-up Fee is not immediately paid as provided, then CRI or Newco
shall be entitled to recover interest at the highest prime rate set
forth in THE WALL STREET JOURNAL (Midwest Edition) under the section
entitled "Money Rates" on the unpaid amount of the Break-up Fee from
such time until paid- in-full, together with all costs of collection
thereof, including reasonable attorneys' fees and expenses.
(c) Cochrane hereby acknowledges and agrees that the
Break-up Fee shall compensate CRI and Newco for (i) the value of the
lost business opportunity which would have inured to CRI or Newco if the
Merger had been consummated, (ii) expenses incurred for attorneys,
accountants, financial advisors and consultants of CRI and Newco in
developing the Merger and drafting this Agreement, (iii) CRI's and Newco's
management time and expense in investigating, analyzing, developing
and pursuing the Merger, (iv) expenses relating to CRI's and Newco's due
diligence efforts, and (v) the value of the acquisition opportunities
lost by CRI and Newco in pursuing the Merger instead of other
acquisitions. Cochrane further acknowledges and agrees that the amount
of the Break-up Fee is fair, reasonable and not a penalty and that its
obligation to pay the Break-up Fee shall survive any termination of this
Agreement by CRI or Newco.
6.14. RESTRUCTURE OF MERGER. Cochrane hereby understands,
acknowledges and agrees that Newco, in its sole discretion, may change
the structure of the transactions contemplated by this Agreement to
provide for a merger of Cochrane into Newco; provided, however, that any
such change in structure shall not change the consideration to be paid
upon the conversion of the Outstanding Cochrane Shares pursuant to
Section 2.01 hereof and shall not adversely affect the shareholders of
Cochrane. Cochrane shall execute and deliver such amendments,
agreements, instruments and other documents and shall take such further
actions as Newco may request in connection with any such restructure of
the transactions contemplated by this Agreement.
6.15 Shareholder Voting Agreement. A shareholder voting
agreement among Newco, each member of the Cochrane family and each
director and officer of Cochrane who owns any Outstanding Cochrane
Shares shall be executed and delivered simultaneously with the execution
of this Agreement.
27
SECTION 7
COVENANTS OF CRI AND NEWCO
--------------------------
7.01. XXXX-XXXXX-XXXXXX FILING; OTHER APPROVALS. (a) CRI and
Newco shall take all actions necessary or appropriate to file, and shall
expeditiously and diligently prosecute to a favorable conclusion, all
notices and other documents required to be filed under the HSR Act with
the FTC and DOJ; provided, however, that neither CRI nor Newco shall be
required to accept any conditions that may be imposed by the FTC or the
DOJ in connection with such filings that would require the divestiture
of any assets or which would otherwise have a material adverse effect on
CRI or Newco. CRI and Newco shall provide Cochrane with a copy of all
such notices and other documents filed under the HSR Act prior to the
filing thereof and shall promptly provide Cochrane with copies of all
correspondence and other documents received from the FTC or DOJ in
connection with such filings.
(b) CRI and Newco shall proceed expeditiously in good
faith, cooperate fully and use their best efforts to (i) obtain all
consents, authorizations and approvals of third parties, if any, to the
transactions contemplated by this Agreement, (ii) satisfy all
requirements prescribed by law, and all conditions set forth in this
Agreement, for the consummation of the Merger, and (iii) effect the
Merger in accordance with the Agreement on November 13, 1996.
7.02. CERTAIN ACTIONS. CRI and Newco shall not take any
action or fail to take any reasonable action, and shall not permit its
directors, employees or agents to take or fail to take, any action which
would result in (a) a misrepresentation or a breach of any covenant or
warranty of CRI or Newco in this Agreement, (b) Cochrane having the
right to terminate this Agreement, or (c) a condition to the obligation
of Cochrane to consummate the Merger not being fulfilled.
7.03. INDEMNIFICATION. CRI shall cause Cochrane to keep the
indemnification provisions in Cochrane's By-Laws in effect on the date
hereof in full force and effect for a period of three (3) years
following the Effective Time and, during such three (3) year period, CRI
agrees to be liable for the obligation to provide such indemnification
to the extent not paid by Cochrane.
SECTION 8
CONDITIONS PRECEDENT TO CLOSING
-------------------------------
8.01. CRI AND NEWCO. The obligation of CRI and Newco to
consummate the Merger is subject to the satisfaction and fulfillment of
each of the following conditions on or prior to the Closing Date, unless
waived in writing by Newco:
(a) REPRESENTATIONS AND WARRANTIES AT EFFECTIVE TIME. Each
of the representations and warranties of Cochrane contained in this
Agreement shall be true, accurate and complete in all material respects
at and as of the Effective Time.
28
(b) NO MATERIAL ADVERSE CHANGE. There shall not have
occurred any material adverse change in the financial condition, results
of operations, business, operations or affairs of Cochrane from the date
of the Cochrane Interim Financial Statements as of and for the five
months ended August 31, 1996 through and until the Effective Time.
(c) CONSENTS AND APPROVALS. All third-party and
governmental consents and approvals, necessary to permit the
consummation of the Merger, or to permit the continued operation of the
business of Cochrane in substantially the same manner after the Closing
Date as before, shall have been received.
(d) CORPORATE ACTION. Cochrane's Board of Directors and
shareholders shall have approved this Agreement and the Merger and shall
have taken all corporate action necessary to effect the Merger, and
Cochrane shall have furnished Newco with certified copies of resolutions
adopted by its directors and shareholders in connection with the
foregoing, in form and content satisfactory to Newco.
(e) NO RESTRAINING ACTIONS. No action, suit or proceeding
before any court or governmental or regulatory authority shall be
pending, and no investigation by any governmental or regulatory
authority shall have been commenced or threatened, against Cochrane,
Newco, CRI or any of the principals, officers or directors of any of
them, seeking to restrain, prevent or change the transactions
contemplated hereby or questioning the legality or validity of any such
transactions or seeking damages in connection with any such
transactions.
(f) COMPLIANCE WITH COVENANTS. Cochrane shall have
complied with all of its covenants and agreements set forth in Section 6
of this Agreement and elsewhere herein.
(g) RESIGNATION OF DIRECTORS AND OFFICERS. All of the
directors and officers of Cochrane in office on the Closing Date shall
have tendered written resignations satisfactory to Newco, as of the
Effective Time.
(h) SHAREHOLDERS EXERCISING DISSENTERS' RIGHTS. The
holders of not more than five percent (5%) of the Outstanding Cochrane
Shares shall have exercised and perfected their dissenters' rights under
the North Carolina Corporation Act.
(i) RETAINED EARNINGS. As of the last day of the month
immediately preceding the Closing Date, the retained earnings of
Cochrane shall be at least Two Million Nine Hundred Thousand Dollars
($2,900,000) as reflected on Cochrane's financial statements as of such
date. Such amount of retained earnings (i) shall be calculated before
any payment of or accrual for any fees of Mellon Bank incurred
subsequent to August 1, 1996 and before any accrual for any prepayment
penalty payable to Mellon Bank and (ii) shall be calculated before any
liability accruals have been made for all legal, accounting, investment
banking, environmental and other professional or advisors' fees of
Cochrane incurred as of and through the date of such financial
statements.
29
(j) PROFESSIONAL FEES. Since June 1, 1996, Cochrane's
legal, accounting, investment banking, environmental consultant and
other professional or advisors' fees relating to this Agreement and the
transactions contemplated hereby (whether accrued or paid) shall not
have exceeded Two Hundred Seventy-Five Thousand Dollars ($275,000) in
the aggregate.
(k) OFFICERS' CERTIFICATE. The receipt by CRI or Newco of
a certificate executed by Cochrane's Chief Executive Officer and its
Vice President - Finance, dated as of the Closing Date, certifying that
the conditions specified in Sections 8.01(a) through (j) hereof have
been fulfilled.
(l) HSR ACT. The waiting periods (and any extensions
thereof) applicable to the Merger under the HSR Act shall have expired
or been terminated, and no conditions shall have been imposed upon
Newco, Cochrane or CRI in connection with any filing under the HSR Act
that would require the divestiture of any assets of Cochrane or CRI or
that otherwise would have a material adverse effect on Cochrane or CRI.
(m) OPINION OF COUNSEL. Newco shall have received from
Xxxxxxxx, Xxxxxxxx and Xxxxxx, P.A., counsel to Cochrane, an opinion,
dated as of the Closing Date, substantially in the form attached hereto
as Exhibit A.
(n) ESOP VALUATION. The administrative committee of the
ESOP shall have received the written valuation of Interstate/Xxxxxxx
Xxxx opining that the purchase price to be paid hereunder for the shares
of Cochrane Common Stock held by the ESOP is fair from a financial point
of view, and a copy of such valuation shall have been delivered to CRI
or Newco.
(o) GOOD STANDING CERTIFICATES. Cochrane shall have
delivered to CRI or Newco, each dated as of a date not earlier than
fifteen (15) days prior to the Closing Date, (a) copies of Cochrane's
Articles of Incorporation, including all amendments thereto, certified
by the Secretary of State of North Carolina or other appropriate
government official, (b) a certificate from the appropriate government
official to the effect that Cochrane is in good standing in North
Carolina, and (c) a certificate from the appropriate government official
from each jurisdiction in which Cochrane is qualified to do business to
the effect that Cochrane is in good standing in such jurisdiction.
(p) ENVIRONMENTAL CERTIFICATE. The receipt by CRI or Newco
of a certificate executed by Cochrane's Chief Executive Officer and Vice
President-Finance, after discussions with appropriate Cochrane employees
(including, without limitation, Xxx Xxxxxxx and Xxxxx Chitkin) and other
appropriate due inquiry certifying that (i) each has read the sections
contained in each report prepared by Xxxxx Environmental Engineering
Services Co., Inc. in connection with the Merger with respect to the
real property owned by Cochrane, as identified in Exhibit B hereto, and
(ii) other than as is set forth in such sections of such reports, none
of them is aware of the existence or removal of any underground storage
tanks on or from such real property; any spills, leaks or contamination;
or any other actions, omissions, events or occurrences, on or affecting
such real property which requires or required any action under any of
the Environmental Laws.
30
(q) ANCILLARY AGREEMENTS. Each of the Ancillary Agreements
shall have been duly executed and delivered by the respective parties
thereto and shall continue to be in full force and effect as of the
Effective Time, and no termination, amendment, modification or
revocation shall have occurred with respect to any of the Ancillary
Agreements, except as may have been approved in writing by CRI.
8.02. COCHRANE. The obligation of Cochrane to consummate the
Merger is subject to the satisfaction and fulfillment of each of the
following conditions on or prior to the Closing Date, unless waived in
writing by Cochrane:
(a) REPRESENTATIONS AND WARRANTIES AT EFFECTIVE TIME. Each
of the representations and warranties of CRI and Newco contained in this
Agreement shall be true, accurate and complete in all material respects
at and as of the Effective Time.
(b) CONSENTS AND APPROVALS. All third-party and
governmental consents and approvals relating to CRI and Newco necessary
to permit the consummation of the Merger shall have been received.
(c) CORPORATE ACTION OF CRI AND NEWCO. CRI's and Newco's
respective Boards of Directors and Newco's sole shareholder shall have
approved this Agreement and the Merger and shall have taken all
corporate action necessary to effect the Merger, and both CRI and Newco
shall have furnished Cochrane with certified copies of resolutions
adopted by its directors and shareholders in connection with the
foregoing, in form and content satisfactory to Cochrane.
(d) COMPLIANCE WITH COVENANTS. CRI and Newco shall have
complied with all of their covenants and agreements set forth in Section
7 of this Agreement and elsewhere herein.
(e) OFFICERS' CERTIFICATE. The receipt by Cochrane of a
certificate executed by CRI's and Newco's President and its Secretary,
dated as of the Closing Date, certifying that the conditions specified
in Sections 8.02(a) through (d) hereof have been fulfilled.
(f) CORPORATE ACTION OF COCHRANE. Cochrane's shareholders
shall have approved this Agreement and the Merger.
(g) OPINION OF COUNSEL. Cochrane shall have received from
Xxxxx XxXxxxx Xxxxxxxxx & Xxxxxxxx, counsel to Newco and CRI, an
opinion, dated as of the Closing Date, substantially in the form
attached hereto as Exhibit C.
(h) HSR ACT. The waiting periods (and any extensions
thereof) applicable to the Merger under the HSR Act shall have expired.
31
SECTION 9
TERMINATION OF MERGER
---------------------
9.01. MANNER OF TERMINATION. This Agreement may be
terminated and the Merger contemplated hereby abandoned at any time
prior to the Effective Time, whether before or after the approval of
this Agreement and the Merger by the shareholders of Cochrane, as
follows:
(a) By CRI or Newco or Cochrane, if:
(i) the Merger contemplated by this Agreement has
not been consummated by November 13, 1996,
provided that such date may be extended by
Newco, in its sole discretion, for up to sixty
(60) days (A) if all approvals, clearances or
waiting periods under the HSR Act relating to
the Merger have not occurred or expired by
such date, or (B) for any other reason
pertaining to the filings made under the HSR
Act relating to the Merger; or
(ii) the respective Boards of Directors of Newco
and Cochrane mutually agree in writing to
terminate this Agreement.
(b) By CRI or Newco, if:
(i) there has been a misrepresentation or a breach
of any warranty by or on the part of Cochrane
in its representations and warranties set
forth in this Agreement or in any document
delivered pursuant hereto which has had or
would be expected to have a material adverse
effect on the financial condition, results of
operations, business, operations or prospects
of Cochrane; provided, however, that in the
event that the number of issued and
outstanding shares of Cochrane Common Stock at
the Effective Time is greater than 470,971 or
less than 460,971, then CRI or Newco shall
have the absolute right to terminate this
Agreement without regard to the materiality of
any inaccuracy in the representations and
warranties contained in Section 4.03(a) hereof
with respect to the number of Outstanding
Cochrane Shares; or
(ii) there has been a breach of or a failure to
comply with any covenant set forth in this
Agreement by or on the part of Cochrane; or
(iii) any condition set forth in Section 8.01 hereof
to either of its obligation to consummate the
Merger has not been satisfied or fulfilled
immediately prior to the Effective Time; or
32
(iv) The commencement or threat of any action,
claim, litigation or proceeding (A) relating
to this Agreement or the Merger or (B) which
is likely to have a material adverse effect on
the financial condition, results of operation,
business, operations or prospects of Cochrane;
or
(v) any document, action, matter, event or other
information set forth in any Updated Schedule
has had or would be expected to have, in the
reasonable discretion of CRI or Newco, a
material adverse effect on the financial
condition, results of operation, business,
operations or prospects of Cochrane; or
(vi) there has been a material adverse change in
the financial condition, results of operation,
business, operations or prospects of Cochrane
at the Effective Time as compared to that in
existence as of and for the five month period
ended August 31, 1996; or
(vii) (A) the Board of Directors of Cochrane
fails to recommend unconditionally to
Cochrane's shareholders that such
shareholders should approve this
Agreement and the Merger, or
(B) the Board of Directors of Cochrane
withdraws, modifies or conditions its
recommendation to Cochrane's
shareholders to approve this Agreement
and the Merger or is silent with
respect to the approval of this
Agreement and the Merger, or
(C) the meeting of shareholders of
Cochrane at which shareholders are to
consider this Agreement and the Merger
is not held, and the shareholder vote
with respect to this Agreement and the
Merger is not completed, by November
13, 1996, or
(D) Cochrane or any of its shareholders,
directors, officers, employees,
attorneys, accountants, investment
bankers, representatives or agents
shall have provided to a party other
than CRI or Newco subsequent to the
date of this Agreement (I) any
information relating to Cochrane other
than the Cochrane Audited Financial
Statements or a summary of the
Cochrane Interim Financial Statements
or (II) any access to Cochrane's
facilities other than a one-time
escorted tour of such facilities, or
(E) Cochrane approves, enters into or
executes a definitive agreement or
letter of intent relating to an
Acquisition Transaction with a party
other than CRI, Newco or an affiliate
of CRI, or a tender offer is initiated
33
or completed for any of the shares of
Cochrane Common Stock by a party other
than CRI, Newco or any affiliate of
CRI.
(c) By Cochrane, if:
(i) there has been a material misrepresentation or
a material breach of any warranty by or on the
part of CRI or Newco in its representations
and warranties set forth in this Agreement; or
(ii) there has been a material breach of or
material failure to comply with any covenant
set forth in this Agreement by or on the part
of CRI or Newco; or
(iii) any condition set forth in Section 8.02 hereof
to its obligation to consummate the Merger has
not been satisfied or fulfilled immediately
prior to the Effective Time.
9.02. EFFECT OF TERMINATION. Upon termination of this
Agreement in accordance with Section 9.01 hereof, this Agreement shall
be of no further force or effect and the Merger shall be deemed to be
abandoned, and there shall be no obligation of or liability to any party
hereto, or their respective shareholders, directors, officers,
employees, representatives or agents, unless such termination was the
result of an intentional breach of any representation, warranty,
covenant or other provision in this Agreement, or an intentional act or
omission which resulted in any representation, warranty, covenant or
other provision in this Agreement to be breached, in which case the
party who breached the representation, warranty, covenant or other
provision shall be liable to the other parties hereto for damages and
all costs and expenses incurred in connection with the preparation,
negotiation and execution of this Agreement, including, but not limited
to, reasonable attorneys' fees and disbursements, reasonable fees and
disbursements of accountants and tax advisors, and reasonable fees and
costs of environmental consultants; provided, however, that in the event
that Cochrane is required to pay the Break-up Fee to CRI or Newco, then
CRI's and Newco's sole damages from Cochrane relating to this Agreement
and the Merger shall be limited solely to the Break-up Fee. The
obligation of Cochrane to pay the Break-up Fee in accordance with
Section 6.13 hereof shall survive any termination of this Agreement.
SECTION 10
MISCELLANEOUS
-------------
10.01. NOTICES. All notices, requests and other
communications hereunder shall be in writing (which shall include
telecopier communication) and shall be deemed to have been duly given if
(a) delivered by hand, (b) sent by certified United States Mail, return
receipt requested, first class postage pre-paid, (c) delivered by
overnight receipted delivery service or (d) telecopied if confirmed
immediately thereafter by also mailing a copy of such notice, request or
other communication by certified United States Mail, return receipt
requested, first class postage pre-paid, as follows:
34
If to CRI, Newco or the Surviving with a copy to (which shall not
Corporation: constitute notice):
CRI Acquisition Corporation Xxxxx XxXxxxx Xxxxxxxxx & Xxxxxxxx
c/o Chromcraft Revington, Inc. Xxx Xxxxxxx Xxxxxx, Xxxxx 0000
0000 Xxxxx Xxxxxxxxxx Street Indianapolis, Indiana 46204-2017
Xxxxxx, Xxxxxxx 00000 ATTN: Xxxxxx Xxxxxxxxxx, Xx., Esq.
ATTN: Xxxxx X. Xxxx, Vice President Telephone: (000) 000-0000
Telephone: (000) 000-0000 Telecopier: (000) 000-0000
Telecopier: (000) 000-0000
If to Cochrane: with a copy to (which shall not
constitute notice):
Cochrane Furniture Company, Inc. Xxxxxxxx, Xxxxxxxx & Xxxxxx, P.A.
000 Xxxxxxxx Xxxx Xxx Xxxxxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
XXXX: Xxxxx X. Xxxxxxxx, Chief Charlotte, North Carolina 28246-1900
Executive Officer ATTN: Xxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Telecopier: (000) 000-0000 Telecopier: (000) 000-0000
or such substituted address or person as any party has given to the
other in writing.
All such notices, requests and other communications shall be
effective (a) if delivered by hand, when delivered, (b) if mailed in the
manner provided herein, three (3) business days after deposit with the
United States Postal Service, (c) if delivered by overnight express
delivery service, on the next business day after deposit with such
service, and (d) if by telecopier, on the next business day if also
confirmed by mail in the manner provided herein.
10.02. BINDING EFFECT; ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that neither party
hereto may assign this Agreement without the prior written consent of
the other party except that Newco may assign this Agreement to any
subsidiary of CRI without the prior consent of Cochrane.
10.03. BENEFITS. Nothing in this Agreement, express or
implied, is intended to confer upon any person other than the parties
hereto and their respective successors and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
10.04. WAIVER; AMENDMENT. (a) Either party hereto may by an
instrument in writing: (i) waive any inaccuracies in the
representations or warranties of the other party contained in this
Agreement or in any document delivered pursuant hereto or thereto; (ii)
waive the performance by the other party of any of the covenants or
agreements to be performed by such other party under this Agreement; or
35
(iii) waive the satisfaction or fulfillment of any condition, the
nonsatisfaction or nonfulfillment of which is a condition to the right
of the party so waiving to consummate the Merger. The waiver by any
party hereto of a breach of or noncompliance with any provision of this
Agreement shall not operate or be construed as a continuing waiver or a
waiver of any other or subsequent breach or noncompliance hereunder.
(b) This Agreement may be amended, modified or supplemented
only by a written agreement executed by the parties hereto.
10.05. HEADINGS. The headings in this Agreement have been
inserted solely for ease of reference and should not be considered in
the interpretation or construction of this Agreement.
10.06. SEVERABILITY. In case any one or more of the
provisions contained herein shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision of
this Agreement, but this Agreement shall be construed as if such
invalid, illegal or unenforceable provision or provisions had never been
contained herein.
10.07. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but such
counterparts shall together constitute one and the same instrument.
10.08. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Indiana, without
reference to the choice of law principles or rules thereof.
10.09. ENTIRE AGREEMENT. This Agreement supersedes all other
prior understandings, commitments, representations, negotiations or
agreements, whether oral or written, between the parties hereto or
between CRI and Cochrane relating to the Merger or the matters
contemplated hereby and constitutes the entire agreement between the
parties hereto and between CRI and Cochrane relating to the subject
matter hereof. Cochrane acknowledges and agrees that the letter of
intent between CRI and Cochrane which Cochrane executed on June 20,
1996, is hereby terminated and of no force or effect.
10.10. EXPENSES. In the event that the transactions
contemplated by this Agreement are not consummated, each party hereto
shall pay its own respective expenses related to this Agreement and the
Merger. In the event that the transactions contemplated by this
Agreement are consummated, then CRI shall pay all merger-related costs
and expenses of Cochrane.
10.11. CERTAIN REFERENCES. Whenever in this Agreement a
singular word is used, it also shall include the plural wherever
required by the context and vice-versa. All references to the
masculine, feminine or neuter genders shall include any other gender, as
the context requires.
36
10.11. CONSTRUCTION. The rule of construction to the effect
that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of this Agreement.
10.13. SCHEDULES. The Schedules attached hereto are intended
to be and hereby are specifically made a part of this Agreement.
* * *
37
IN WITNESS WHEREOF, CRI, Newco and Cochrane have made, entered
into and executed this Agreement as of the day and year first above
written.
CHROMCRAFT REVINGTON, INC.
By: /s/ XXXXXXX X. XXXXXX
-----------------------------------
Xxxxxxx X. Xxxxxx, President
CRI ACQUISITION CORPORATION
By: /s/ XXXXXXX X. XXXXXX
-----------------------------------
Xxxxxxx X. Xxxxxx, President
COCHRANE FURNITURE COMPANY, INC.
By: /s/ XXXXX X. XXXXXXXX
-----------------------------------
Xxxxx X. Xxxxxxxx, Chief Executive
Officer
38
