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