As filed with the Securities and Exchange Commission on February 7, 1995
Registration No. 33-_____
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
LA-Z-BOY CHAIR COMPANY
(Exact Name of Registrant as Specified in Its Charter)
MICHIGAN
(State or Other Jurisdiction of Incorporation or Organization)
2512 38-0751137
(Primary Standard Industrial (I.R.S. Employer Identification No.)
Classification Code Number)
1284 NORTH TELEGRAPH ROAD, MONROE, MICHIGAN 48161, (313) 242-1444
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
FREDERICK H. JACKSON Copies to:
VICE PRESIDENT FINANCE DAVID D. JOSWICK, ESQ.
LA-Z-BOY CHAIR COMPANY MILLER, CANFIELD, PADDOCK AND STONE, P.L.C.
1284 NORTH TELEGRAPH ROAD 150 WEST JEFFERSON, SUITE 2500
MONROE, MICHIGAN 48161 DETROIT, MICHIGAN 48226
(313) 242-1444 (313) 963-6420
(Name, Address, Including
Zip Code, and Telephone
Number, Including Area Code,
of Agent for Service)
Approximate date of commencement of proposed sale of securities to public: As
soon as practicable after registration statement becomes effective.
If the securities being registered on this form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. / /
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===============================================================================================================
Title of Each Class of Amount to Be Proposed Maximum Proposed Maximum Amount of
Securities to Be Registered Registered Offering Price Per Aggregate Offering Registration
Security Price Fee
<S> <C> <C> <C> <C>
Common Stock,
$1.00 par value 2,000,000 shares(1) $6.21(2) $12,422,000(2) $4,283.48(3)
8% Unsecured
Promissory Notes
due 1999 $10,000,000 38.1%(4) $3,813,354(4) (3)
Performance Units 297,330 units (5) (5) (3)(5)
===============================================================================================================
<FN>
(1) Maximum number of shares which may be issued in merger. Includes shares to
be issued as part of initial merger consideration and additional shares, if
any, which may be issued in settlement of Performance Units.
(2) Estimated solely for purposes of calculating registration fee; assumes
entire merger consideration is paid in such shares. The proposed maximum
offering price per share was determined by dividing the proposed maximum
aggregate offering price for all securities offered by the maximum amount of
such securities which may be issued. Pursuant to Rule 457(f)(2), the maximum
aggregate offering price is based on the book value of all outstanding
shares of common stock of England/Corsair, Inc. at September 30, 1994.
(3) Fee based on maximum aggregate consideration to be received for all
securities registered, calculated as set forth in note (2).
(4) Estimated solely for purposes of calculating registration fee; assumes
maximum portion of initial merger consideration is paid in such notes. The
proposed maximum offering price per note was determined by dividing the
proposed maximum aggregate offering price for all notes offered by the
maximum principal amount of notes which may be issued. The maximum aggregate
offering price was calculated by multiplying the book value of all
England/Corsair, Inc. shares (see note (2)) by the maximum fraction
(10,000,000/32,575,000) of such shares which may be exchanged for notes.
(5) No additional consideration will be received for the Performance Units.
</TABLE>
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
<TABLE>
<CAPTION>
LA-Z-BOY CHAIR COMPANY
Cross-Reference Sheet Between Items in
Form S-4 and Proxy Statement/Prospectus Pursuant to
Item 501(b) of Regulation S-K
Item No. Form S-4 Caption Heading in Prospectus
- ---------- ----------------------------- --------------------------------------------------------
<S> <C> <C>
A. INFORMATION ABOUT THE
TRANSACTION
Item 1. Forepart of Registration Cover Page of Registration Statement; Cross Reference
Statement and Outside Front Sheet; Outside Front Cover Page of Proxy
Cover Page of Statement/Prospectus
Prospectus
Item 2. Inside Front and Outside Back Table of Contents; Available Information; Incorporation
Cover Pages of Prospectus of Certain Information By Reference
Item 3. Risk Factors, Ratio of Earnings Introduction; Summary; The Merger and Related
to Fixed Charges and Other Transactions; Pro Forma Condensed Combined Financial
Information Information; The Companies; England/Corsair, Inc.
Item 4. Terms of the Transaction Introduction; Summary; The Meeting; The Merger and
Related Transactions; Management of the Surviving
Corporation After the Merger; Description of La-Z-Boy
Capital Stock; Description of the La-Z-Boy Notes;
Description of Indenture; Description of the Performance
Units; Comparison of Shareholder Rights and Charter
Documents; Pro Forma Condensed Combined Financial
Information; England/Corsair, Inc.
Item 5. Pro Forma Financial Summary; Pro Forma Condensed Combined Financial
Information Information
Item 6. Material Contacts with the Summary; The Merger and Related Transactions;
Company Being Acquired England/Corsair, Inc.
Item 7. Additional Information *
Required for Reoffering by
Persons and Parties Deemed to
be Underwriters
Item 8. Interests of Named Experts and England/Corsair, Inc.; Legal Matters
Counsel
Item 9. Disclosure of Commission *
Position on Indemnification for
Securities Act Liabilities
B. INFORMATION ABOUT THE
REGISTRANT
Item 10. Information with Respect to Pro Forma Condensed Combined Financial Information;
S-3 Registrants England/Corsair, Inc. Financial Statements
Item 11. Incorporation of Certain Incorporation of Certain Information by Reference
Information by Reference
Item 12. Information with Respect to *
S-2 or S-3 Registrants
Item 13. Incorporation of Certain *
Information by Reference
Item 14. Information with Respect to *
Registrants Other than S-2 or
S-3 Registrants
C. INFORMATION ABOUT THE
COMPANY BEING ACQUIRED
Item 15. Information with Respect to *
S-3 Companies
Item 16. Information with Respect to *
S-2 or S-3 Companies
Item 17. Information with Respect to England/Corsair, Inc.; Management of the Surviving
Companies Other than S-2 or Corporation After the Merger; Pro Forma Condensed Combined
S-3 Companies Financial Information; England/Corsair, Inc. -- Selected
Financial Data, -- Management's Discussion and
Analysis of Financial Condition and Results of
Operations, -- Business and Properties, -- Management
and Related Matters, -- Principal Shareholders
D. VOTING AND MANAGEMENT
INFORMATION
Item 18. Information If Proxies, Introduction; Summary; England/Corsair, Inc.; The
Consents or Authorizations Are Meeting; The Merger and Related Transactions; Certain
to Be Solicited Relationships and Related Transactions; Management of
the Surviving Corporation After the Merger;
England/Corsair, Inc. -- Principal Shareholders
Item 19. Information if Proxies, *
Consents or Authorizations Are
Not to be Solicited, or in an
Exchange Offer
<FN>
- ------------------------
* Omitted because inapplicable or answer is in the negative.
</TABLE>
<PAGE>
ENGLAND/CORSAIR, INC.
402 OLD KNOXVILLE HIGHWAY
NEW TAZEWELL, TENNESSEE 37825
_________________, 1995
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders
of England/Corsair, Inc., a Tennessee corporation ("E/C"), which will be held
at 402 Old Knoxville Highway, New Tazewell, Tennessee at ______ _.m., local
time, on ______________, __________________, 1995 (the "Meeting"). The Meeting
will be a joint meeting of holders of E/C's Class A Common Stock, without par
value, and its Class B Common Stock, without par value (collectively, the "E/C
Stock").
At the Meeting, E/C shareholders will be asked to consider and vote
upon a proposal (the "Proposal") to approve: (a) the Amended and Restated
Reorganization Agreement dated as of January 13, 1995 (the "Reorganization
Agreement") among E/C, La-Z-Boy Chair Company, a Michigan corporation
("La-Z-Boy"), and LZB Acquisition, Inc., a newly formed Michigan corporation
and a wholly owned subsidiary of La-Z-Boy ("LZB Acquisition"); (b) the Amended
and Restated Plan of Merger dated as of January 13, 1995 among E/C, La-Z-Boy,
and LZB Acquisition (the "Plan of Merger"); and (c) all of the transactions
contemplated by the Reorganization Agreement and the Plan of Merger, including
(without limitation) the merger of E/C with and into LZB Acquisition (the
"Merger"). The Proposal is further described in the accompanying Proxy
Statement/Prospectus.
LZB Acquisition will be the surviving corporation of the Merger. Upon
consummation of the Merger: (i) E/C will cease to exist as a separate
corporation, and all of the assets and liabilities of E/C will become assets
and liabilities of LZB Acquisition, which will continue to be a wholly owned
subsidiary of La-Z-Boy; (ii) holders of E/C Stock of either class will receive,
at their election, either shares of La-Z-Boy's Common Stock, $1.00 par value,
La-Z-Boy's 8% Unsecured Promissory Notes Due 1999, cash, or any combination of
the foregoing, all in the amounts and subject to the terms and limitations
described in the accompanying Proxy Statement/Prospectus; and (iii) holders of
E/C Stock of either class will also receive Performance Units, the terms of
which are described in the accompanying Proxy Statement/Prospectus.
The Board of Directors of E/C (the "E/C Board") has determined that the
Proposal is in the best interests of E/C and its shareholders. ACCORDINGLY, THE
E/C BOARD UNANIMOUSLY APPROVED THE PROPOSAL AND RECOMMENDS THAT YOU VOTE FOR
THE PROPOSAL AT THE MEETING.
Conditions to the consummation of the Merger include, among other
things, the approval of E/C's shareholders. Such approval requires the
affirmative vote of the holders of a majority of the total shares of E/C Stock
of both classes (voting together as a single voting group) outstanding as of
the record date for the Meeting.
The accompanying Proxy Statement/Prospectus sets forth the voting
rights of the E/C Stock with respect to these matters and describes the matters
to be acted upon at the Meeting. It also contains important information
concerning E/C, La-Z-Boy, and their respective subsidiaries, a detailed
description of the Proposal, its terms and conditions, and the transactions
contemplated thereby, certain tax matters that should be considered, management
and operation of E/C following consummation of the Merger, and other matters.
Shareholders are urged to review carefully the accompanying Proxy
Statement/Prospectus. Because of the significance of the proposed transactions
to E/C, your participation in the Meeting, in person or by proxy, is especially
important. In any event, you must complete and submit the enclosed Election
Form prior to the commencement of the Meeting. Baker, Donelson, Bearman &
Caldwell and Dennis C. Valkanoff have been acting as legal counsel on behalf
of E/C and BDO Seidman and Otis S. Sawyer have been providing accounting
services to E/C. Individual shareholders are advised, if they so desire,
to seek the advice of independent accounting and/or legal
counsel.
We hope you will attend the Meeting. Whether or not you are able to
attend the Meeting in person, it is important that your shares be represented.
Accordingly, whether or not you plan to attend the Meeting, please sign, date,
and mail the enclosed proxy promptly in the postage-paid envelope that has been
provided to you for your convenience. If you wish to vote in accordance with
the recommendations of the E/C Board, it is not necessary to specify your
choices; you may merely sign, date, and return the enclosed proxy.
Thank you, and we look forward to seeing you at the Meeting.
<PAGE>
Sincerely,
Rodney D. England
Chairman of the Board, President,
and Chief Executive Officer
England/Corsair, Inc.<PAGE>
ENGLAND/CORSAIR, INC.
402 OLD KNOXVILLE HIGHWAY
NEW TAZEWELL, TENNESSEE 37825
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of
England/Corsair, Inc., a Tennessee corporation ("E/C"), will be held at 402 Old
Knoxville Highway, New Tazewell, Tennessee at ______ _.m., local time, on
______________, __________________, 1995 (the "Meeting"). The Meeting, which
will be a joint meeting of holders of E/C's Class A Common Stock, without par
value, and its Class B Common Stock, without par value (collectively, the "E/C
Stock"), will be held for the following purposes, which are more fully
described in the accompanying Proxy Statement/Prospectus:
1. To consider and vote upon a proposal (the "Proposal") to approve:
(a) the Amended and Restated Reorganization Agreement dated as
of January 13, 1995 (the "Reorganization Agreement") among E/C,
La-Z-Boy Chair Company, a Michigan corporation ("La-Z-Boy"),
and LZB Acquisition, Inc., a newly formed Michigan corporation
and a wholly owned subsidiary of La-Z-Boy ("LZB Acquisition");
(b) the Amended and Restated Plan of Merger dated as of January
13, 1995 among E/C, La- Z-Boy, and LZB Acquisition (the "Plan
of Merger"); and (c) all of the transactions contemplated by the
Reorganization Agreement and the Plan of Merger, including
(without limitation) the merger of E/C with and into LZB
Acquisition (the "Merger").
The transactions contemplated by the Reorganization Agreement,
the Plan of Merger, and certain related instruments and
agreements executed, or to be executed, in connection with the
Reorganization Agreement and the Plan of Merger are intended to
result in the acquisition of E/C by La-Z-Boy through the
Merger. LZB Acquisition will be the surviving corporation of
the Merger. Upon consummation of the Merger: (i) E/C will cease
to exist as a separate corporation, and all of the assets and
liabilities of E/C will become assets and liabilities of LZB
Acquisition, which will continue to be a wholly owned subsidiary
of La-Z-Boy; (ii) holders of E/C Stock of either class will
receive, at their election, either shares of La-Z-Boy's Common
Stock, $1.00 par value, La-Z-Boy's 8% Unsecured Promissory
Notes Due 1999, cash, or any combination of the foregoing, all
in the amounts and subject to the terms and limitations
described in the accompanying Proxy Statement/Prospectus; and
(iii) holders of E/C Stock of either class will also receive
Performance Units, the terms of which are described in the
accompanying Proxy Statement/Prospectus.
2. To transact such other business as may properly come before the
Meeting or any adjournments or postponements thereof.
The Board of Directors of E/C has fixed the close of business on
____________, 1995 as the record date for determination of shareholders
entitled to notice of and to vote at the Meeting and any adjournments or
postponements thereof. Only shareholders of record at the close of business on
such date are entitled to notice of and to vote at the Meeting and any
adjournments or postponements thereof. A list of E/C shareholders entitled to
vote at the Meeting will be subject to inspection at the Meeting.
E/C Stock constitutes the only security of E/C whose holders are
entitled to vote at the Meeting. Approval of the Proposal requires the
affirmative vote of the holders of a majority of the total shares of E/C Stock
of both classes (voting together as a single voting group) outstanding as of
the record date for the Meeting, with each share entitled to one vote.
Pursuant to Chapter 23 of the Tennessee Business Corporation Act, as
amended (the "TBCA"), holders of shares of E/C Common Stock have the right to
dissent and to be paid the fair value of their shares in connection with, or as
a result of, the matters to be acted upon at the Meeting. SUCH DISSENTERS'
RIGHTS WILL BE LOST, HOWEVER, IF THE PROCEDURAL REQUIREMENTS OF THE TBCA ARE
NOT FULLY AND PRECISELY SATISFIED. Such dissenters' rights are more fully
explained in the accompanying Proxy Statement/Prospectus. A copy of Chapter 23
of the TBCA is included in the accompanying Proxy Statement/Prospectus.
Your vote is important regardless of the number of shares you own. Each
shareholder, even though he or she now plans to attend the Meeting, is
requested to sign, date, and return the enclosed proxy without delay in the
enclosed postage-paid envelope. You may revoke your proxy at any time prior to
its exercise. Any shareholder of record present at the Meeting or any
adjournments or postponements thereof may revoke his or her proxy and vote
personally on each matter brought before the Meeting.
<PAGE>
____________________________
Secretary
_______________, 1995
THE BOARD OF DIRECTORS OF E/C RECOMMENDS THAT
YOU VOTE FOR THE ABOVE PROPOSAL.
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND
MAIL IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID RETURN ENVELOPE.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION, OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
Subject to completion, dated February 7, 1995.
LA-Z-BOY CHAIR COMPANY
PROSPECTUS
2,000,000 SHARES OF COMMON STOCK, $1.00 PAR VALUE
$10,000,000 8% UNSECURED PROMISSORY NOTES DUE 1999
297,330 PERFORMANCE UNITS
----------------------------------------
ENGLAND/CORSAIR, INC.
PROXY STATEMENT
----------------------------------------
This Proxy Statement/Prospectus (the "Proxy Statement/Prospectus") is being
furnished to shareholders of England/Corsair, Inc., a Tennessee corporation
("E/C"), in connection with the solicitation of proxies by its Board of
Directors for use at its Special Meeting of Shareholders (including any
adjournments or postponements thereof, the "Meeting") to be held on
_____________, 1995.
This Proxy Statement/Prospectus constitutes a prospectus of La-Z-Boy Chair
Company, a Michigan corporation ("La-Z-Boy"), with respect to the following:
(i) up to 2,000,000 shares of the common stock, $1.00 par value per share, of
La-Z-Boy (the "La-Z-Boy Common Stock") to be issued to shareholders of E/C as
part of the consideration for the "Merger" (as hereinafter defined), including
shares which may be issued in settlement of the Performance Units described
below; (ii) up to $10,000,000 principal amount of La-Z-Boy's 8% Unsecured
Promissory Notes Due 1999 (the "La-Z-Boy Notes") to be issued to shareholders
of E/C as part of the consideration for the Merger; and (iii) 297,330
"Performance Units" to be issued to shareholders of E/C as part of the
consideration for the Merger, each of which constitutes La-Z-Boy's promise to
pay additional consideration in respect of the Merger, in La-Z-Boy Common
Stock as hereinafter described, the amount of which will be contingent
upon the performance of the business now conducted by E/C during the two years
following consummation of the Merger. Upon consummation of the Merger, each
outstanding share of E/C's Class A Common Stock, without par value, and Class B
Common Stock, without par value (collectively, "E/C Stock"), will be converted
into the right to receive, at the holder's election but subject to the terms
and limitations hereinafter set forth, cash, La-Z-Boy Common Stock, or La-Z-Boy
Notes in the amounts herein set forth and, in addition, into one Performance
Unit.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
This Proxy Statement/Prospectus and the accompanying forms of proxy are
first being mailed to shareholders of E/C on or about _________________, 1995.
The date of this Proxy Statement/Prospectus is _________________, 1995.
<PAGE>
TABLE OF CONTENTS
PAGE
AVAILABLE INFORMATION........................................... 2
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE............... 2
INTRODUCTION.................................................... 3
SUMMARY......................................................... 5
The Companies............................................... 5
The Meeting................................................. 6
Vote Required............................................... 6
Record Date, Shares Entitled to Vote........................ 6
The Merger.................................................. 6
Dissenters' Rights.......................................... 9
Management of the Surviving Corporation After the Merger.... 9
Summary Condensed Historical Financial Data of E/C.......... 10
Summary Condensed Consolidated Historical Financial Data
of La-Z-Boy.............................................. 12
Summary Unaudited Pro Forma Condensed Combined Financial
Data of La-Z-Boy After Giving Effect to the Merger....... 13
Capitalization of E/C and La-Z-Boy.......................... 14
Comparative Per Share Data.................................. 16
Comparative Stock Prices.................................... 17
THE COMPANIES................................................... 18
England/Corsair, Inc........................................ 18
La-Z-Boy Chair Company...................................... 18
LZB Acquisition, Inc........................................ 18
THE MEETING..................................................... 18
Matters to Be Considered at the Meeting..................... 18
Vote Required............................................... 18
Voting of Proxies........................................... 19
Revocability of Proxies..................................... 19
Record Date; Shares Entitled to Vote; Quorum................ 19
Dissenters' Rights.......................................... 19
Solicitation of Proxies..................................... 21
THE MERGER AND RELATED TRANSACTIONS............................. 21
The Merger.................................................. 21
Background of the Merger; Recommendation of the Board of
Directors of E/C; and Reasons for the Merger............. 21
Effective Time of the Merger................................ 22
Operations After the Merger................................. 22
Consideration for Shares.................................... 22
Performance Units........................................... 23
Limitations................................................. 23
Election Procedures......................................... 24
Allocation of Cash, Shares and Notes........................ 24
Cash in Lieu of Fractional Shares........................... 25
Payment for Shares.......................................... 25
The Reorganization Agreement................................ 26
Distributions Prior to Closing.............................. 27
Conditions to the Merger.................................... 27
Termination; Liquidated Damages; Termination Fee............ 30
Expenses.................................................... 32
Amendment; Waiver........................................... 32
Certain Federal Income Tax Consequences..................... 32
Tax Lock-up Letters......................................... 35
Resale of La-Z-Boy Common Stock; Restrictions on Transfer... 35
Stock Listing............................................... 36
MANAGEMENT OF THE SURVIVING CORPORATION AFTER THE MERGER........ 36
PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION.............. 36
ENGLAND/CORSAIR, INC............................................ 41
Selected Financial Data..................................... 41
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................ 43
Business and Properties..................................... 47
Market Price of Stock and Dividends......................... 47
Management and Related Matters.............................. 47
Principal Shareholders...................................... 50
Certain Relationships and Related Transactions.............. 51
LA-Z-BOY CHAIR COMPANY.......................................... 51
DESCRIPTION OF LA-Z-BOY CAPITAL STOCK........................... 51
General..................................................... 51
La-Z-Boy Preferred Stock.................................... 52
La-Z-Boy Common Stock....................................... 52
Certain Articles Provisions................................. 53
Certain MBCA Provisions..................................... 53
Certain Potential Anti-Takeover Effects..................... 55
COMPARISON OF SHAREHOLDER RIGHTS AND CHARTER DOCUMENTS.......... 55
Capital Structure........................................... 56
Board of Directors; Removal; Vacancies...................... 56
Dissenters' Rights.......................................... 57
Certain Differences Concerning Shareholder Voting and
Extraordinary Transactions............................... 57
Derivative Proceedings...................................... 58
Director Liability; Indemnification........................ 58
Other Matters............................................... 59
DESCRIPTION OF THE LA-Z-BOY NOTES............................... 60
General..................................................... 60
Interest Rate and Payment................................... 60
Scheduled Principal Payments................................ 60
Optional Prepayment......................................... 60
Ranking..................................................... 60
Limited Transferability..................................... 60
DESCRIPTION OF INDENTURE........................................ 61
General..................................................... 61
Certain Covenants of La-Z-Boy............................... 61
Redemption Provisions....................................... 62
Merger and Consolidation.................................... 62
Events of Default........................................... 62
Defeasance.................................................. 63
Modification of the Indenture............................... 63
The Designated Representative............................... 64
DESCRIPTION OF THE PERFORMANCE UNITS............................ 64
LEGAL MATTERS................................................... 64
EXPERTS......................................................... 64
ENGLAND/CORSAIR, INC. FINANCIAL STATEMENTS......................F-1
INDEX TO FINANCIAL STATEMENTS...................................F-1
ANNEXES
A. Reorganization Agreement
B. Plan of Merger
C. Chapter 23 of TBCA
<PAGE>
NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS
IN CONNECTION WITH THE SOLICITATIONS OF PROXIES OR THE OFFERING OF SECURITIES
MADE HEREBY, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY LA-Z-BOY, LZB ACQUISITION, OR
E/C. THIS PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES, OR THE SOLICITATION OF A
PROXY, IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM IT IS NOT LAWFUL TO
MAKE ANY SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY
OF THIS PROXY STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF LA- Z-BOY, LZB ACQUISITION, OR E/C SINCE THE
DATE HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT
TO SUCH DATE. ALL INFORMATION CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS
RELATING TO LA-Z-BOY AND ITS SUBSIDIARIES HAS BEEN SUPPLIED BY LA-Z-BOY, AND
ALL INFORMATION CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS RELATING TO E/C
HAS BEEN SUPPLIED BY E/C.
AVAILABLE INFORMATION
La-Z-Boy is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements, and other information with the
Securities and Exchange Commission (the "Commission"). The reports, proxy
statements, and other information filed by La-Z-Boy with the Commission can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Commission's Regional Offices at 7 World Trade Center, Suite 1300, New
York, New York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such material also can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. In addition, material filed by La-Z-Boy can be inspected at
the offices of the New York Stock Exchange, Inc. (the "NYSE"), 11 Wall Street,
New York, New York 10005, and of the Pacific Stock Exchange (the "PSE"),
233 South Beaudry Ave., Los Angeles, California 90012.
La-Z-Boy has filed with the Commission a Registration Statement on
Form S-4 (registration no. 33-__________, together with any amendments thereto,
the "Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the following: (i) 2,000,000 shares of the
common stock, $1.00 par value per share, of La-Z-Boy (the "La-Z-Boy Common
Stock"); (ii) $10,000,000 principal amount of La-Z-Boy's 8% Unsecured
Promissory Notes Due 1999 (the "La-Z-Boy Notes"); and (iii) 297,330 performance
units, the terms of which are more fully described herein (the "Performance
Units"). This Proxy Statement/Prospectus does not contain all the information
set forth in the Registration Statement and the exhibits thereto. Such
additional information may be inspected and copied as set forth above.
Statements contained in this Proxy Statement/Prospectus as to the contents of
any contract or other document referred to herein are not necessarily complete,
and in each instance reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement, each such statement
being qualified in all respects by such reference.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents, previously filed by La-Z-Boy with the Commission,
are incorporated into this Proxy Statement/Prospectus by reference:
1. Annual Report on Form 10-K for the fiscal year
ended April 30, 1994;
2. Quarterly Reports on Form 10-Q for the quarters
ended July 30, 1994 and October 29, 1994;
3. Current Reports on Form 8-K dated June 2, 1994,
January 13, 1995, January 27, 1995 and February 6, 1995; and
4. The description of the La-Z-Boy Common Stock
contained in the Registration Statement on Form 8A dated August
5, 1987.
All documents filed by La-Z-Boy with the Commission after the date of this
Proxy Statement/Prospectus and prior to the date of the Meeting pursuant to
Section 13(a), 13(c), 14, or 15(d) of the Exchange Act shall be deemed to be
incorporated by reference into this Proxy Statement/Prospectus and made a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference in this Proxy
Statement/Prospectus shall be deemed to be modified or superseded for purposes
of this Proxy Statement/Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Proxy
Statement/Prospectus.<PAGE>
THIS PROXY STATEMENT/PROSPECTUS REFERENCES DOCUMENTS WHICH ARE NOT
PRESENTED OR DELIVERED HEREWITH. SUCH DOCUMENTS ARE AVAILABLE, WITHOUT CHARGE,
TO ANY PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS PROXY
STATEMENT/PROSPECTUS IS DELIVERED, ON WRITTEN OR ORAL REQUEST TO GENE M. HARDY,
SECRETARY, LA-Z-BOY CHAIR COMPANY, 1284 NORTH TELEGRAPH ROAD, MONROE, MICHIGAN
48161, TELEPHONE (313) 242-1444. IN ORDER TO ENSURE TIMELY DELIVERY OF THE
DOCUMENTS, REQUESTS SHOULD BE RECEIVED BY ___________________,
_____________________, 1995.
INTRODUCTION
This Proxy Statement/Prospectus is being furnished to shareholders of E/C
in connection with the solicitation of proxies by the Board of Directors of E/C
for use at E/C's Special Meeting of Shareholders (including any adjournments or
postponements thereof, the "Meeting") on ____________________, 1995.
At the Meeting, the shareholders of E/C will be asked to approve: (i) the
Amended and Restated Reorganization Agreement dated as of January 13, 1995 (the
"Reorganization Agreement") among E/C, La-Z-Boy Chair Company, a Michigan
corporation ("La-Z-Boy"), and LZB Acquisition, Inc., a newly formed Michigan
corporation and a wholly owned subsidiary of La-Z-Boy ("LZB Acquisition");
(ii) the Amended and Restated Plan of Merger dated as of January 13, 1995 (the
"Plan of Merger") among E/C, La-Z-Boy, and LZB Acquisition; and (iii) all of
the transactions contemplated by the Reorganization Agreement and the Plan of
Merger. The transactions contemplated by the Reorganization Agreement and the
Plan of Merger and certain related instruments and agreements executed, or to
be executed, in connection with the Reorganization Agreement and the Plan of
Merger are intended to result in the acquisition of E/C by La-Z-Boy through the
merger of E/C with and into LZB Acquisition (the "Merger"). LZB Acquisition
will be the surviving corporation of the Merger. LZB Acquisition, in its
capacity as the surviving corporation of the Merger, is sometimes referred to
in this Proxy Statement/Prospectus as the "Surviving Corporation."
Upon consummation of the Reorganization, among other things, the following
will occur:
(i) E/C will cease to exist as a separate corporation, and all
of the assets and liabilities of E/C will become assets and liabilities
of LZB Acquisition, which will continue to be a wholly owned subsidiary
of La-Z-Boy;
(ii) holders of E/C Stock of either class will receive, at their
election, either shares of La-Z-Boy Common Stock, La-Z-Boy Notes, cash,
or any combination of the foregoing ("Initial Merger Consideration"),
all in the amounts and subject to the terms and limitations described
in this Proxy Statement/Prospectus; and
(iii) holders of E/C Stock of either class will also receive
Performance Units, the terms of which are described in this Proxy
Statement/Prospectus.
Copies of the Reorganization Agreement (without exhibits or schedules) and
the Plan of Merger are attached as Annexes A and B, respectively, to this Proxy
Statement/Prospectus.
<PAGE>
SUMMARY
The following is a summary of certain information contained elsewhere in
this Proxy Statement/Prospectus. As this summary is necessarily incomplete,
reference is made to, and this summary is qualified in its entirety by, the
more detailed information contained or incorporated by reference in this Proxy
Statement/Prospectus and the Annexes hereto. Shareholders are urged to read
this Proxy Statement/Prospectus and the Annexes hereto in their entirety.
Certain capitalized terms which are used but not defined in this summary are
defined elsewhere in this Proxy Statement/Prospectus.
THE COMPANIES
England/Corsair, Inc.
E/C was incorporated under the laws of the State of Tennessee in 1964 and
is headquartered in the State of Tennessee. E/C is engaged primarily in the
manufacture of upholstered furniture. E/C's principal office is located at 402
Old Knoxville Highway, New Tazewell, Tennessee 37825, and its telephone number
is (800) 251-9125. For additional information regarding E/C, see
"England/Corsair, Inc."
La-Z-Boy Chair Company
La-Z-Boy was incorporated under the laws of the State of Michigan in 1941
and is headquartered in the State of Michigan. La-Z-Boy is engaged primarily in
the manufacture of furniture. La-Z-Boy's principal office is located at 1284
North Telegraph Road, Monroe, Michigan 48161, and its telephone number is (313)
242-1444. For additional information regarding La-Z-Boy and its operations, see
"La-Z-Boy Chair Company" and the documents described therein.
LZB Acquisition, Inc.
LZB Acquisition was incorporated under the laws of the State of Michigan
in 1995 and is headquartered in the State of Michigan. LZB Acquisition was
formed for the purpose of serving as the Surviving Corporation of the Merger
and does not engage in any business at this time. Its principal office is
located at 1284 North Telegraph Road, Monroe, Michigan 48161, and its telephone
number is (313) 242-1444.
THE MEETING
A Special Meeting of Shareholders of E/C will be held at 402 Old Knoxville
Highway, New Tazewell, Tennessee at ______ _.m., local time, on ______________,
__________________, 1995 (together with any adjournments or postponements
thereof, the "Meeting"). The Meeting will be a joint meeting of holders of
E/C's Class A Common Stock, without par value ("E/C Class A Stock"), and its
Class B Common Stock, without par value ("E/C Class B Stock"). In this Proxy
Statement/Prospectus, the E/C Class A Stock and the E/C Class B Stock are
sometimes referred to collectively as the "E/C Stock." See "The Meeting."
At the Meeting, E/C shareholders will be asked to consider and vote upon a
proposal (the "Proposal") to approve: (a) the Amended and Restated
Reorganization Agreement dated as of January 13, 1995 (the "Reorganization
Agreement") among E/C, La-Z-Boy, and LZB Acquisition; (b) the Amended and
Restated Plan of Merger dated as of January 13, 1995 among E/C, La-Z-Boy, and
LZB Acquisition (the "Plan of Merger"); and (c) all of the transactions
contemplated by the Reorganization Agreement and the Plan of Merger, including
(without limitation) the merger of E/C with and into LZB Acquisition (the
"Merger"). See "The Meeting -- Matters to Be Considered at the Meeting."
VOTE REQUIRED
Approval of the Proposal requires the affirmative votes of the holders of
a majority of all outstanding shares of E/C Stock of both classes (voting
together as a single voting group), with each such share entitled to one vote.
Approval of the Proposal by the requisite vote of E/C shareholders is a
condition to, and is required for, consummation of the Merger. As of
______________, approximately 51.8% of the shares of E/C Stock outstanding and
entitled to vote on the Proposal was held by members of the Board of
Directors, executive officers, and their affiliates. No vote of La-Z-Boy
shareholders is required in connection with the Merger. See "The Meeting --
Vote Required."
RECORD DATE; SHARES ENTITLED TO VOTE
The record date for the Meeting is __________________, 1995. Only E/C
shareholders at the close of business on such date are entitled to notice of,
and to vote at, the Meeting. See "The Meeting -- Record Date; Shares Entitled
to Vote; Quorum."
THE MERGER
In the Merger, E/C will be merged with and into LZB Acquisition, which is
a wholly owned subsidiary of La-Z-Boy and which will be the Surviving
Corporation of the Merger. Upon consummation of the Merger, the Surviving
Corporation will succeed to all the rights and obligations of E/C and will
continue to be a wholly owned subsidiary of La-Z-Boy.
Consideration for Shares
Upon the Merger becoming effective, each share of E/C Stock will be
converted into the right to receive cash, La-Z-Boy Notes, or shares of La-Z-Boy
Common Stock, or a combination thereof, as described below, based on total
merger consideration (excluding the Performance Units) of $32,575,000 and a
value of $30.00 per share of La-Z-Boy Common Stock. Each share of E/C Stock
owned by shareholders who comply with the election procedures set forth in the
Plan of Merger and described herein will be converted into, at their option
(but subject to the limitations set forth in the Plan of Merger and described
under the captions "The Merger and Related Transactions -- Limitations" and
"The Merger and Related Transactions -- Allocation of Cash, Shares and
Notes"), either: $109.558403121 in cash; $109.558403121 principal amount
of La-Z-Boy Notes; or 3.6519467707 shares of La-Z-Boy Common Stock. Each
share of E/C Stock, regardless of, and in addition to, the election made by
the holder thereof, will also be converted into one Performance Unit.
Performance Units will entitle the holders thereof to receive
additional shares of La-Z-Boy Common Stock based on the Pre-Tax Income
(as defined in and determined in accordance with the Plan of Merger) of E/C
during each of the two successive twelve month periods immediately following
the effective time of the Merger. See "The Merger and Related Transactions --
Performance Units" and "Description of Performance Units."
Recommendation of the Board of Directors of E/C; Reasons for the Merger
The Board of Directors of E/C (the "E/C Board") has concluded that the
terms of the Merger are fair to E/C shareholders and that consummation of the
Merger is in the best interests of E/C and its shareholders. In reaching these
conclusions, the E/C Board has considered, among other things, the price being
offered in the Merger in relation to the book value and earnings per share of
E/C Stock. The E/C Board has also considered a number of additional factors
in approving and recommending the terms of the Merger, including, without
limitation, information concerning the financial condition, earnings and
dividend records, and prospects of E/C and La-Z-Boy; the ability of the
combined entity to compete in relevant markets; the compatibility of the
managements of the two organizations; the anticipated tax-free nature of
the Merger to E/C shareholders to the extent they receive La-Z-Boy Common
Stock in exchange for their shares of E/C Stock; and the financial terms of
other recent business combinations in the furniture industry. See "The Merger
and Related Transactions -- Background of the Merger; Recommendation
of the Board of Directors of E/C; Reasons for the Merger."
THE E/C BOARD RECOMMENDS UNANIMOUSLY THAT SHAREHOLDERS VOTE FOR ADOPTION
AND APPROVAL OF THE REORGANIZATION AGREEMENT, PLAN OF MERGER, AND THE MERGER.
Effective Time of the Merger
If the Reorganization Agreement, Plan of Merger, and the Merger are
approved by the E/C shareholders at the Meeting, and assuming that all
other conditions have then been satisfied (see "The Merger and Related
Transactions -- Amendments, Conditions, and Termination"), it is expected that
the Merger will become effective at 5:00 p.m., Detroit, Michigan time, on the
day of the Meeting or as promptly as practicable thereafter. The Merger
will become effective on the date and at the time that appropriate certificate
and articles of merger are filed and have become effective with the Secretary
of State of Tennessee and the Michigan Corporation Bureau, respectively (the
"Effective Time"). See "The Merger and Related Transactions -- Effective Time."
Distributions Prior to Closing
As provided in the Reorganization Agreement, neither La-Z-Boy nor E/C may
either declare or pay any dividends on or make any distributions in respect of
their capital shares prior to the Effective Time, except:
(1) La-Z-Boy may declare and pay dividends on the La-Z-Boy Common Stock in
accordance with its prior practice; and
(2) E/C may (i) pay to its shareholders the cash dividend previously
declared in the amount of 60% of its taxable income for the period of July 1,
1994 to December 31, 1994; (ii) declare and pay to its shareholders dividends
in an amount equal to 40% of its taxable income for the period of January 1,
1995 to the day before the Effective Time; and (iii) declare and pay to its
shareholders dividends in an amount equal to 50% of the net proceeds receivable
by E/C under any policies owned by E/C on the life of Arnold Dwight England.
Conditions to the Merger; Termination
The obligation of La-Z-Boy and E/C to consummate the Merger is subject to
certain conditions, including the requisite approval by the E/C shareholders,
the continuing truth of the parties' representations and warranties in all
material respects, receipt of certain legal opinions of counsel to E/C and
La-Z-Boy (including, in the case of La-Z-Boy's counsel, an opinion in respect
of certain federal income tax consequences of the Merger), and receipt of an
opinion from BDO Seidman, the independent accountants of E/C, as to E/C's
status as an "S corporation" for federal income tax purposes. See "The Merger
and Related Transactions -- Conditions to the Merger."
In certain circumstances, the Reorganization Agreement and the Plan of
Merger, and the transactions contemplated thereby, may be terminated at any
time prior to the Effective Time, whether before or after approval of the
matters presented in connection with the Merger by the shareholders of E/C. In
certain limited circumstances, a termination fee may be payable to one of the
parties by the other party if the Reorganization Agreement is terminated. See
"The Merger and Related Transactions -- Termination; Liquidated Damages;
Termination Fee."
Certain Federal Income Tax Consequences
For a description of the anticipated federal income tax consequences of
the Merger to E/C shareholders, see "The Merger and Related Transactions --
Certain Federal Income Tax Consequences."
Consummation of the Merger is conditioned upon there being delivered an
opinion of La-Z-Boy's counsel to the effect that, (i) the Merger will qualify
as a reorganization within the meaning of Section 368(a)(1)(A) and
368(a)(2)(D) of the Internal Revenue Code of 1986, as amended (the "Code"),
and (ii) no gain or loss will be recognized by an E/C shareholder upon receipt
of La-Z-Boy Common Stock solely in exchange for E/C Stock.
Consummation of the Reorganization is conditioned upon there being
executed and delivered "tax lock-up letters" by all of the holders of
E/C Stock who will receive shares of La-Z-Boy Common Stock in the Merger. These
tax lock-up letters essentially prohibit sales or dispositions of the shares of
La-Z-Boy Common Stock subject thereto prior to the second anniversary of the
consummation of the Merger other than pursuant to "permitted transfers." See
"The Merger and Related Transactions -- Tax Lock-Up Letters."
Resale of La-Z-Boy Common Stock; Restrictions on Transfer
The shares of La-Z-Boy Common Stock to be issued in the Merger will be
registered under the Securities Act and will be transferable under the
Securities Act, except for shares issued to any shareholder who may be deemed
to be an "affiliate" of E/C for purposes of Rule 145 under the Securities Act.
Affiliates may not sell shares of La-Z-Boy Common Stock acquired in connection
with the Merger except pursuant to an effective registration statement under
the Securities Act covering such shares or in compliance with Rule 145 or
another applicable exemption from the registration requirements of the
Securities Act. In addition, all shareholders of E/C receiving La-Z-Boy Common
Stock in the Merger will be required to deliver "tax lock-up letters"
restricting the disposition of such shares. See "The Merger and Related
Transactions -- Tax Lock-up Letters."
Non-Transferability of La-Z-Boy Notes and Performance Units
The La-Z-Boy Notes will not be transferrable except upon the death of the
holder thereof. See "Description of the La-Z-Boy Notes -- Limited
Transferability." Performance Units will not be transferable except to the
extent required by applicable law. See "Description of Performance Units."
Stock Listing
The shares of La-Z-Boy Common Stock to be issued in the Merger will be
approved for listing on the NYSE and the PSE subject to official notice of
issuance and to the approval by the shareholders of E/C of the Merger.
DISSENTERS' RIGHTS
Holders of shares of E/C Stock will have dissenters' rights under Chapter
23 of the Tennessee Business Corporation Act, as amended (the "TBCA"), in
connection with, or as a result of, the matters to be acted upon at the
Meeting. SUCH DISSENTERS' RIGHTS WILL BE LOST, HOWEVER, IF THE PROCEDURAL
REQUIREMENTS OF THE TBCA ARE NOT FULLY AND PRECISELY SATISFIED. See "The Merger
and Related Transactions -- Dissenters' Rights."
A copy of Chapter 23 of the TBCA is attached as Annex C to this Proxy
Statement/Prospectus.
It is a condition to consummation of the Merger that La-Z-Boy's counsel
deliver an opinion as to certain tax matters, and such counsel will not be able
to deliver such opinion if holders of more than 50% of the outstanding shares
of E/C Stock perfect their dissenters' rights. See "The Reorganization
Agreement -- Conditions to the Merger" and "The Merger and Related Transactions
- -- Certain Federal Income Tax Consequences."
MANAGEMENT OF THE SURVIVING CORPORATION AFTER THE MERGER
It is anticipated that, upon consummation of the Merger, the Board of
Directors of the Surviving Corporation will consist of four persons, one of
whom will be Mr. Rodney D. England, the current Chairman of the Board,
President, and Chief Executive Officer of E/C, and the remainder of whom will
be current officers of La-Z-Boy. In addition, following consummation of the
Merger, it is expected that (i) Mr. England will become the President and Chief
Executive Officer of the Surviving Corporation, (ii) Mr. Otis S. Sawyer, the
current Vice President Finance of E/C, will become Vice President Finance of
the Surviving Corporation, (iii) Mr. Dennis C. Valkanoff, the current Vice
President Business Development of E/C, will become a Vice President of the
Surviving Corporation, (iv) Mr. James L. Price, the current Vice President
Manufacturing of E/C, will become Vice President Manufacturing of the Surviving
Corporation, and (v) the remaining officers of the Surviving Corporation will
consist of current officers of La-Z-Boy. See "Management of the Surviving
Corporation After the Merger" and "The Merger and Related Transactions --
Operations After the Merger."
<PAGE>
SUMMARY CONDENSED HISTORICAL FINANCIAL DATA OF E/C
The following table sets forth certain condensed historical financial data
of E/C and is based on the financial statements of E/C, including the notes
thereto, which appear elsewhere in this Proxy Statement/Prospectus and should
be read in conjunction therewith. See "England/Corsair, Inc. Financial
Statements." Interim unaudited data for the three months ended September 30,
1994 and 1993 reflect, in the opinion of management of E/C, all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of such data. Results for the three months ended September 30,
1994 and 1993 are not necessarily indicative of results that may be expected
for any other interim period or for the fiscal year as a whole.
<TABLE>
<CAPTION>
(In thousands except per share data)
(unaudited)
Three Months
Ended September 30, Fiscal Years Ended June 30,
---------------------- -------------------------------------------------------------
Statement of 1994 1993 1994 1993 1992 1991 1990
Operations Data:
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales $ 23,063 $ 24,602 $ 105,781 $ 99,435 $ 86,175 $ 72,729 $ 65,242
Cost of sales 18,924 20,072 87,288 79,905 69,107 60,157 53,947
Gross profit 4,139 4,530 18,493 19,530 17,068 12,572 11,295
Selling, general, and
administrative
expenses(3) 2,979 3,097 14,484 12,632 10,040 8,422 7,707
Operating profit 1,160 1,433 4,009 6,898 7,028 4,150 3,588
Interest expense - net 358 299 1,318 1,073 1,305 1,833 1,421
Miscellaneous income 24 16 10 57 70 187 57
Pre-tax income 826 1,150 2,701 5,882 5,793 2,504 2,224
Income taxes(1) 35 24 122 (499) 2,100 930 820
Net income $ 791 $ 1,126 $ 2,579 $ 6,381 $ 3,693 $ 1,574 $ 1,404
Pro forma income taxes 305 423 994 2,165
Pro forma net income $ 521 $ 727 $ 1,707 $ 3,717
Weighted average shares
used in per share
calculations 297 298 297 298 298 322 339
Net income per share -
historical $ 12.39 $ 4.90 $ 4.14
Pro forma net income per
share $ 1.75 $ 2.44 $ 5.75 $ 12.47
Dividends per share(2) $ .48 $ 2.18 $ 15.88 $ 8.81 $ 2.00 -0- -0-
<CAPTION>
(unaudited)
As of September 30, As of June 30,
----------------------- --------------------------------------------------------------
Balance Sheet Data: 1994 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Total assets $36,600 $ 34,367 $ 28,416 $ 23,335 $ 24,923 $ 24,724
Long-term debt,
including current
portion $14,782 $ 14,094 $ 7,619 $ 7,057 $ 9,225 $ 9,909
Total liabilities $24,178 $ 22,593 $ 14,499 $ 13,080 $ 17,765 $ 17,778
Shareholders' equity $12,422 $ 11,774 $ 13,917 $ 10,255 $ 7,158 $ 6,946
<FN>
- ---------------------------
(1) Beginning July 1, 1992, E/C elected to be treated as an "S
corporation" for federal income tax purposes and accordingly was not
subject to federal or certain state income tax at the corporate level.
The 1994 and 1993 fiscal periods contain an illustration of "pro forma
income taxes" which includes an additional estimated provision for income
taxes based on pre-tax income as if E/C had not been an S corporation.
E/C, for the 1993 fiscal year elected to adopt Financial Accounting
Standards Board Statement No. 109, "Accounting for Income Taxes"
(FAS 109), and the pro forma provisions for income taxes for periods
ending 1994 and 1993 have been reported in accordance with FAS 109.
The adoption of FAS 109 did not have a material effect on E/C's results
of operations.
(2) Dividends for the fiscal year ended June 30, 1994 include a non-recurring
distribution of AAA earnings (previously undistributed taxable earnings
since the S corporation election) in connection with a change in E/C's
debt arrangements and in management structure.
(3) During the fourth quarter of fiscal 1994, E/C recorded a charge of
$600,000 in connection with a one-time bonus paid to its former chief
executive officer.
</TABLE>
<PAGE>
SUMMARY CONDENSED CONSOLIDATED HISTORICAL FINANCIAL DATA OF LA-Z-BOY
The following table sets forth certain condensed consolidated historical
financial data of La-Z-Boy and is based on the financial statements of
La-Z-Boy, including the respective notes thereto, which are incorporated by
reference into this Proxy Statement/Prospectus and should be read in
conjunction therewith. See "Available Information" and "Incorporation of
Certain Documents by Reference." Interim unaudited data for the six months
ended October 29, 1994 and October 23, 1993 reflect, in the opinion of
management of La-Z-Boy, all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of such data. Results
for the six months ended October 29, 1994 and October 23, 1993 are not
necessarily indicative of results that may be expected for any other interim
period or for the fiscal year as a whole.
<TABLE>
<CAPTION>
(In thousands except per share data)
(unaudited)
Six Months Ended Fiscal Years Ended in April,
-------------------- -----------------------------------------------------
Statement of Oct. 29, Oct. 23, 1994 1993 1992 1991 1990
Operations Data: 1994 1993 (53 weeks) (52 weeks) (52 weeks) (52 weeks) (52 weeks)
<S> <C> <C> <C> <C> <C> <C> <C>
Sales $404,973 $371,140 $804,898 $684,122 $619,471 $608,032 $592,273
Cost of sales 300,470 275,207 593,890 506,435 453,055 449,502 430,383
Gross profit 104,503 95,933 211,008 177,687 166,416 158,530 161,890
Selling, general,
and administrative
expenses 76,051 71,453 150,700 130,855 122,888 115,239 111,613
Operating profit 28,452 24,480 60,308 46,832 43,528 43,291 50,277
Interest expense 1,414 1,496 2,822 3,260 5,305 6,374 7,239
Other income 887 868 669 1,727 1,682 1,453 2,497
Pre-tax income 27,925 23,852 58,155 45,299 39,905 38,370 45,535
Income taxes 11,577 9,463 23,438 18,015 14,805 15,009 17,282
Income before
accounting
change 16,348 14,389 34,717 27,284 25,100 23,361 28,253
Accounting change(1) -- 3,352 3,352 -- -- -- --
Net income $ 16,348 $ 17,741 $ 38,069 $ 27,284 $ 25,100 $ 23,361 $ 28,253
Average shares 18,140 18,236 18,268 18,172 18,064 17,941 17,868
Net income per
share before
accounting change $ 0.90 $ 0.79 $ 1.90 $ 1.50 $ 1.39 $ 1.30 $ 1.58
Accounting change(1) -- 0.18 0.18 -- -- -- --
Net income per share $ 0.90 $ 0.97 $ 2.08 $ 1.50 $ 1.39 $ 1.30 $ 1.58
Dividends per share $ 0.34 $ 0.30 $ 0.64 $ 0.60 $ 0.58 $ 0.56 $ 0.54
Ratio of earnings
to fixed
charges 15.4 16.4 11.7 7.4 6.2 6.6
<CAPTION>
(unaudited)
As of October 29, As of Fiscal Year-End in April,
------------------ ------------------------------------------------------
Balance Sheet Data: 1994 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Total assets $442,514 $430,253 $401,064 $376,722 $363,085 $361,856
Long-term debt,
including
current portion $ 58,120 $ 55,370 $ 55,912 $ 60,726 $ 70,867 $ 78,036
Total liabilities $151,445 $139,342 $137,678 $130,363 $133,868 $147,271
Shareholders' equity $291,069 $290,911 $263,386 $246,359 $229,217 $214,585
<FN>
- ----------------
(1) Effective April 25, 1993, La-Z-Boy adopted the provisions of Financial
Accounting Standards Board Statement No. 109.
</TABLE>
<PAGE>
SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA OF LA-Z-BOY
AFTER GIVING EFFECT TO THE MERGER
The following table sets forth certain unaudited pro forma condensed
combined financial data for La-Z-Boy after giving effect to the Merger as if
it had occurred as of the beginning of the fiscal year ended April 30, 1994
for the statement of operations data and as of October 29, 1994 for the
balance sheet data. The Merger will be accounted for as a purchase, and,
accordingly, E/C assets acquired and liabilities assumed will be recorded
at their estimated fair values, based upon net realizable values or other
analysis, with appropriate recognition given to the effect of current interest
rates and income taxes. Because the pro forma fair values used herein are
preliminary and subject to further refinement, the purchase accounting
adjustments shown herein are preliminary and subject to change. This
information should be read in conjunction with the historical financial
statements of E/C and La-Z-Boy, including the respective notes thereto,
which appear or are incorporated by reference in this Proxy
Statement/Prospectus, and in conjunction with the other pro forma financial
information, including the notes thereto, appearing elsewhere in this Proxy
Statement/Prospectus. See "England/Corsair, Inc. Financial Statements" and
"Pro Forma Condensed Combined Financial Information." The pro forma financial
data are not necessarily indicative of the results that actually would have
occurred had the Merger been consummated on the dates indicated or that may
be obtained in the future.
<TABLE>
<CAPTION>
(unaudited)
(In thousands except per share data)
Six Months
Ended Fiscal Year
Oct. 29, Ended
1994 April 30, 1994
(26 Weeks) (53 weeks)
Statement of
Operations Data:
<S> <C> <C>
Sales $454,726 $910,679
Cost of sales 341,349 681,178
Gross profit 113,377 229,501
Selling, general, and
administrative
expenses 83,409 165,184
Operating profit 29,968 64,317
Interest expense 2,478 4,730
Other income 616 50
Pre-tax income 28,106 59,637
Income taxes 11,765 24,229
Income before
accounting change $ 16,341 $ 35,408
Average shares 18,792 18,920
Income before
accounting change
per share $ 0.87 $ 1.87
<CAPTION>
(unaudited)
As of
October 29,
1994
Balance Sheet Data:
<S> <C>
Total assets $493,542
Long-term debt,
including current
portion $ 79,417
Total liabilities $182,928
Shareholders' equity $310,614
/TABLE
<PAGE>
CAPITALIZATION OF E/C AND LA-Z-BOY
The following table sets forth the capitalization (i) of E/C and La-Z-Boy
on an historical basis and (ii) of La-Z-Boy on a pro forma basis as adjusted to
give effect to the Merger. The information set forth below should be read in
conjunction with the historical financial statements of E/C and La-Z-Boy,
including the respective notes thereto, which appear or are incorporated by
reference in this Proxy Statement/Prospectus, and in conjunction with the other
pro forma financial information, including the notes thereto, appearing
elsewhere in this Proxy Statement/Prospectus. See "Available Information,"
"England/Corsair, Inc. Financial Statements" and "Pro Forma Condensed Combined
Financial Information."
<TABLE>
<CAPTION>
(Dollars in thousands)
------------------------------------------------------------
Unaudited Unaudited
La-Z-Boy E/C (unaudited)
Oct. 29, Sept. 30, Adjust- Pro Forma
1994 1994 ments Combined
----------- ------------- ---------- ------------
Long-term debt:
<S> <C> <C> <C> <C>
Credit lines $ 15,000 $ 6,417 $ 21,417
Subordinated debt to
shareholders 1,224 1,224
Capital lease obligations 6,897 6,897
Other long term notes 244 244
Private placement 11,250 11,250
Industrial revenue bonds 31,870 31,870
8% Unsecured Promissory Notes
Due 1999 $ 6,515 (a) 6,515
Total debt 58,120 14,782 6,515 79,417
Less: current portion 1,875 2,290 4,165
Total long term debt 56,245 12,492 6,515 75,252
--------- --------- --------- ---------
Shareholders' equity:
Common stock 17,975 335 317 (a) 18,627
Capital in excess of par value 10,412 0 18,893 (a) 29,305
Retained earnings 263,342 13,530 (13,530)(b) 263,342
Currency translation
adjustments (660) 0 0 (660)
Treasury stock 0 (1,443) 1,443 (b) 0
Total shareholders' equity 291,069 12,422 7,123 310,614
Total capitalization $ 347,314 $ 24,914 $ 13,638 $ 385,866
</TABLE>
The pro forma capitalization has been prepared to reflect the acquisition
of E/C by La-Z-Boy for an estimated aggregate price of $32,575 and a value
of $30 per share of La-Z-Boy Common Stock. The Plan of Merger requires
that at least 50% of the initial consideration be paid in La-Z-Boy Common
Stock with the remainder paid in cash and/or La-Z-Boy Notes. Furthermore,
additional payments in La-Z-Boy Common Stock may be required if the Surviving
Corporation exceeds predetermined Pre-Tax Income as defined and determined in
accordance with the Plan of Merger, for the two successive twelve month periods
following the Merger. These possible additional payments have not been
included in the pro forma capitalization table. For purposes of this
pro forma, it is assumed that 60% of the payment will be made in La-Z-Boy
Common Stock, 20% is cash, and 20% is La-Z-Boy Notes. Pro forma
adjustments reflect:
(a) La-Z-Boy Notes in the amount of $6,515 and 651,500 shares of
La-Z-Boy Common Stock issued and valued at $30 per share.
(b) To eliminate E/C treasury stock and retained earnings.
<PAGE>
COMPARATIVE PER SHARE DATA
The following table sets forth certain selected financial data on an
historical, pro forma combined and pro forma combined equivalent per share
basis giving effect to the Merger as if it had occurred at the beginning of the
earliest period shown. The information presented herein should be read in
conjunction with the other financial information, including the notes thereto,
included and incorporated by reference in this Proxy Statement/Prospectus.
Pro forma and pro forma equivalent share information is unaudited.
<TABLE>
<CAPTION>
(Unaudited)
Six Months Ended Year Ended
October 29 (La-Z-Boy) or April 30 (La-Z-Boy) or
September 30 (E/C), 1994 June 30 (E/C), 1994
Income per share
before accounting change:
<S> <C> <C>
La-Z-Boy $ 0.90 $ 1.90
E/C 1.68 5.75
La-Z-Boy pro forma(1) 0.87 1.87
E/C pro forma 3.18 6.83
equivalent(2)
Dividends per share:
La-Z-Boy $ 0.34 $ 0.64
E/C 10.43 15.88
La-Z-Boy pro forma(1) 0.34 0.64
E/C pro forma 1.24 2.34
equivalent(2)
Book Value per share:
La-Z-Boy $16.19 $15.91
E/C 41.78 39.60
La-Z-Boy pro forma(1) 16.68 16.39
E/C pro forma 60.91 59.86
equivalent(2)
<FN>
(1) La-Z-Boy pro forma per share data has been calculated assuming 60% of
the consideration for the Merger is paid in La-Z-Boy Common Stock,
20% in La-Z-Boy Notes, and 20% in cash. Other assumptions used in
computing the La-Z-Boy pro forma amounts are described in "Pro Forma
Combined Financial Information."
(2) E/C pro forma equivalent per share data has been computed by
multiplying the corresponding pro forma amounts for La-Z-Boy by the
number of shares (3.6519467707) of La-Z-Boy Common Stock into which each
share of E/C Stock will (as to those shares of E/C Stock which the holder
elects to have converted to La-Z-Boy Common Stock) be converted.
</TABLE>
<PAGE>
COMPARATIVE STOCK PRICES
E/C. E/C has been a privately held corporation since its formation, and no
trading market for E/C Stock exists. As of January 31, 1995, there were 22
holders of record of issued and outstanding E/C Stock.
La-Z-Boy. La-Z-Boy Common Stock is traded on the NYSE and the PSE under
the symbol "LZB." The closing price of the La-Z-Boy Common Stock on the NYSE on
January 12, 1995 (the date preceding the day of public announcement of the
proposed Merger) was $31-3/8 and on February __, 1995 was $__________.
<PAGE>
THE COMPANIES
ENGLAND/CORSAIR, INC.
E/C was incorporated under the laws of the State of Tennessee in 1964 and
is headquartered in the State of Tennessee. E/C is engaged primarily in the
manufacture of upholstered furniture. E/C's principal office is located at 402
Old Knoxville Highway, New Tazewell, Tennessee 37825, and its telephone number
is (800) 251-9125.
LA-Z-BOY CHAIR COMPANY
La-Z-Boy was incorporated under the laws of the State of Michigan in 1941
and is headquartered in the State of Michigan. La-Z-Boy is engaged primarily in
the manufacture of furniture. La-Z-Boy's principal office is located at 1284
North Telegraph Road, Monroe, Michigan 48161, and its telephone number is (313)
242-1444.
LZB ACQUISITION, INC.
LZB Acquisition was incorporated under the laws of the State of Michigan
in 1995 and is headquartered in the State of Michigan. LZB Acquisition was
formed for the purpose of serving as the Surviving Corporation of the Merger
and does not engage in any business at this time. Its principal office is
located at 1284 North Telegraph Road, Monroe, Michigan 48161, and its telephone
number is (313) 242-1444.
THE MEETING
MATTERS TO BE CONSIDERED AT THE MEETING
At the Meeting, E/C shareholders will be asked to consider and vote upon
the Proposal, which is to approve: (a) the Reorganization Agreement; (b) the
Plan of Merger; and (c) all of the transactions contemplated by the
Reorganization Agreement and the Plan of Merger, including (without limitation)
the Merger. E/C shareholders will also consider and vote upon such other
matters, if any, as may properly be brought before the Meeting.
THE BOARD OF DIRECTORS OF E/C UNANIMOUSLY APPROVED THE REORGANIZATION
AGREEMENT, THE PLAN OF MERGER AND ALL OF THE TRANSACTIONS CONTEMPLATED THEREBY
AND RECOMMENDS THAT E/C SHAREHOLDERS VOTE FOR THE APPROVAL OF THE PROPOSAL.
VOTE REQUIRED
Approval of the Proposal requires the affirmative votes of the holders of
a majority of all outstanding shares of E/C Stock of both classes (voting
together as a single voting group), with each such share entitled to one vote.
As of ______________, approximately 51.8% of the shares of E/C Stock outstanding
and entitled to vote on the Proposal was held by E/C directors, executive
officers, and their affiliates. Approval of the Proposal by the requisite vote
of E/C shareholders is a condition to, and is required for, consummation of the
Merger. No vote of La-Z-Boy shareholders is required in connection with the
Merger.
VOTING OF PROXIES
Proxies. Shares of E/C Stock represented by properly executed proxies
received at or prior to the Meeting and not thereafter effectively revoked will
be voted at the Meeting in the manner specified by the holders of such shares.
Properly executed proxies which do not contain voting instructions will be
voted FOR the Proposal.
<PAGE>
Broker Nonvotes and Abstentions. As of the record date, none of the E/C
Stock was held in the name of any broker so no proxies are expected to be
withheld due to broker nonvotes. Solely for purposes of determining whether the
Proposal has received the shareholder votes required for approval, each
abstention is functionally equivalent to a vote "against" the Proposal.
Other Matters. If any other matters are properly presented at the Meeting
for consideration, including, among other things, consideration of a motion to
adjourn the Meeting to another time and/or place (including, without
limitation, for the purpose of soliciting additional proxies), the persons
named in the form of proxy enclosed herewith and acting thereunder will have
discretion to vote on such matters in accordance with their best judgment. E/C
directors have no knowledge of any matters to be presented at the Meeting
other than the matters referred to and described in this Proxy
Statement/Prospectus.
REVOCABILITY OF PROXIES
The grant of a proxy on the enclosed form of proxy does not preclude a
shareholder from voting in person or otherwise revoking a proxy. Attendance at
the Meeting will not in and of itself constitute revocation of a proxy. A
shareholder may revoke a proxy at any time prior to its exercise by filing with
the Secretary of E/C a duly executed revocation or a proxy bearing a later date
or by voting in person at the Meeting.
RECORD DATE; SHARES ENTITLED TO VOTE; QUORUM
The record date for the Meeting is __________________, 1995. Only E/C
shareholders at the close of business on such date are entitled to notice of,
and to vote at, the Meeting. At _______________, 1995, there were issued and
outstanding 297,330 shares of E/C Stock. Shares representing a majority of the
aggregate number of outstanding shares of E/C Stock entitled to vote must be
represented in person or by proxy at the Meeting in order for a quorum to be
present at the Meeting. See "-- Voting of Proxies."
DISSENTERS' RIGHTS
Holders of the E/C Class A Stock and holders of the E/C Class B Stock may
have a right pursuant to Section 102(1)(A) of Chapter 23 of the TBCA ("Section
102") to assert dissenters' rights. A copy of Chapter 23 of the TBCA is
attached hereto as Annex C. A dissenting shareholder is entitled to obtain
payment from the Surviving Corporation of the "fair value" (as defined) of his
or her shares. "Fair value" is defined to mean the value of the shares
immediately before the effectuation of the corporate action to which the
dissenter objects, excluding any appreciation or depreciation in anticipation
of the corporate action.
To assert dissenter's rights, a holder of E/C Stock (a) must deliver to
E/C, prior to the shareholder vote on the Proposal, written notice of his or
her intent to demand payment for their shares if the proposed Merger is
effectuated and (b) must not vote their shares in favor of the Proposal.
Holders of E/C Stock who satisfy these requirements are referred to herein as
"dissenting shareholders." The Surviving Corporation will send a dissenter's
notice to all dissenting shareholders no later than 10 days after the proposed
corporate action is authorized by a vote of the shareholders. The dissenter's
notice must state where the payment demand must be sent and where and when
certificates for certificated shares must be deposited. The notice must also
inform holders of uncertificated shares to what extent transfer of the shares
will be restricted after the payment demand is received, and must specify a
date not less than one month, nor more than two months after the date of the
delivery of the dissenter's notice on which the demand for payment must be
received by the Surviving Corporation. The dissenter's notice must be
accompanied by a form for demanding payment that includes the date of the first
announcement to news media or to shareholders of the principal terms of the
proposed corporate action and requires that the dissenting shareholder verify
whether or not he acquired beneficial ownership of the shares before that date.
A shareholder who does not demand payment or deposit his or her share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his or her shares under Chapter 23 of the TBCA.
As soon as the Merger is effectuated, or upon receipt of a payment demand,
which ever is later, the Surviving Corporation must pay each dissenting
shareholder that has satisfied all requirements to assert dissenter's rights,
the amount the corporation estimates to be the fair value of his or her shares,
plus accrued interest. The payment must be accompanied by (a) the Surviving
Corporation's balance sheet as of the end of a fiscal year ending not more than
16 months before the date of payment, an income statement for that year, a
statement of changes in shareholders' equity for that year, and the latest
available interim financial statements, if any; (b) a statement of the
corporation's estimate of the fair value of the shares; (c) an explanation of
how the interest was calculated; (d) a statement of the dissenter's right to
demand payment; and (e) a copy of Chapter 23 of the TBCA, if not previously
provided. A corporation may elect to withhold payment from a dissenter unless
he was the beneficial owner of the shares before the date set forth in the
dissenters' notice as the date of the first announcement to news media or to
shareholders of the principal terms of the proposed corporate action.
If the Surviving Corporation does not effectuate the proposed action that
gave rise to the dissenter's rights within two months after the date set for
demanding payment and delivering stock certificates, the Surviving Corporation
must return the stock certificates and release the transfer restriction imposed
on uncertificated shares.
A dissenter may notify the Surviving Corporation in writing of his or her
own estimate of the fair value of the shares and amount of interest due, and
demand payment of his or her estimate (less any payment made to the dissenting
shareholder for those shares), or reject the Surviving Corporation's offer and
demand payment of the fair value of the shares and interest due if (a) the
dissenting shareholder believes the amount offered or paid by the Surviving
Corporation is less than the fair value of his or her shares or that the
interest due is incorrectly calculated, (b) the proposed action has not been
effectuated within two months after the date set for demanding payment or (c)
the Surviving Corporation, having failed to effectuate the proposed action,
does not return delivered stock certificates or release transfer restrictions
imposed on uncertificated shares within two months after the date set for
demanding payment. A dissenter must notify the Surviving Corporation of his or
her demand in writing within one month after the Surviving Corporation made or
offered payment for his or her shares.
If a demand for payment remains unsettled, the Surviving Corporation must
commence a proceeding within two months after receiving the payment demand and
petition the court to determine the fair value of the shares and accrued
interest. If the Surviving Corporation fails to do so, it must pay each
dissenter whose demand remains unsettled the amount demanded. Each dissenter
made a party to the proceeding is entitled to judgment for the amount, if any,
by which the court finds the fair value of the shares, plus accrued interest,
exceeds the amount paid by the Surviving Corporation or the fair value, plus
accrued interest, of his or her after-acquired shares for which the Surviving
Corporation elected to withhold payment. Court costs and attorneys' fees will
be assessed against the Surviving Corporation, unless the court finds it
equitable to assess some of such fees against the dissenting shareholder.
SOLICITATION OF PROXIES
The Surviving Corporation will bear the cost of the solicitation of
proxies from E/C's shareholders if the Merger is consummated. It is estimated
that the costs of soliciting proxies, including the cost of printing and
mailing this Proxy Statement/Prospectus, will be approximately $5,500. In
addition to solicitation by mail, proxies may be solicited by telephone,
telegram, facsimile transmission, or in person. Proxies will be solicited on
behalf of E/C by directors, officers, and regular employees of E/C (none of
whom will receive any additional compensation for such services, but who may be
reimbursed for reasonable out-of-pocket expenses incurred in connection with
such solicitation).
<PAGE>
THE MERGER AND RELATED TRANSACTIONS
THE MERGER
The following information concerning the Merger, insofar as it relates to
matters contained in the Reorganization Agreement, is qualified in its entirety
by reference to the Reorganization Agreement, a copy of which is attached to
this Proxy Statement/Prospectus as Appendix A. All shareholders are urged to
read the Reorganization Agreement in its entirety.
BACKGROUND OF THE MERGER; RECOMMENDATION OF THE BOARD OF DIRECTORS OF E/C;
AND REASONS FOR THE MERGER
In late 1993 and early 1994, the E/C Board began to look at
various options for the business. In November and December 1993 E/C began
preparations for an initial public offering. For various business and
economic reasons, management of E/C determined not to go forward with an
initial public offering.
Subsequently, E/C underwent a transition of management with the
retirement in June, 1994 of its founder Dwight England.
In the fall of 1994, E/C approached and was approached by several
furniture manufacturers that were interested in purchasing the assets of E/C or
merging with E/C. Some potential suitors toured E/C facilities in the fall of
1994. None of these discussions resulted in either the execution of a letter
of intent or formal agreement.
In early October 1994, E/C President and CEO, Rodney D. England, had
discussions with La-Z-Boy representatives. Subsequently, officers of La-Z-Boy
visited E/C.
In reviewing the merger potential with La-Z-Boy, the E/C Board
considered the advantages and disadvantages of the merger with La-Z-Boy and
with other suitors and determined that a merger with La-Z-Boy was in the best
long term economic interest of E/C's employees and shareholders.
The E/C Board looked at the merger price proposed by La-Z-Boy and the
potential for additional payments with the Performance Units. In addition,
unlike other potential proposals, the La-Z-Boy proposal offered to the E/C
shareholders the potential of a "tax-free reorganization," as provided in
Section 368 of the Code.
The E/C Board has concluded that the terms of the Merger are fair
to E/C shareholders and that consummation of the Merger is in the best
interests of E/C and its shareholders. In reaching these conclusions, the E/C
Board has considered, among other things, the price being offered in the
Merger in relation to the book value and earnings per share of E/C Stock.
The E/C Board has also considered a number of additional factors in approving
and recommending the terms of the Merger, including, without limitation,
information concerning the financial condition, earnings and dividend records,
and prospects of E/C and La-Z-Boy; the ability of the combined entity to
compete in relevant markets; the compatibility of the managements of the two
organizations; the anticipated tax-free nature of the Merger to E/C
shareholders to the extent they receive La-Z-Boy Common Stock in exchange
for their shares of E/C Stock; and the financial terms of other recent
business combinations in the furniture industry.
THE E/C BOARD RECOMMENDS UNANIMOUSLY THAT SHAREHOLDERS VOTE FOR
ADOPTION AND APPROVAL OF THE REORGANIZATION AGREEMENT, PLAN OF MERGER,
AND THE MERGER.
EFFECTIVE TIME OF THE MERGER
If the Reorganization Agreement, Plan of Merger, and the Merger are
approved by the E/C shareholders at the Meeting, and assuming that all
other conditions have then been satisfied (see "Amendments, Conditions, and
Termination"), it is expected that the Merger will become effective at 5:00
p.m., Detroit, Michigan time, on the day of the Meeting or as promptly
as practicable thereafter. The Merger will become effective on the date and at
the time that appropriate certificate and articles of merger are filed and have
become effective with the Secretary of State of Tennessee and the Michigan
Corporation Bureau, respectively (the "Effective Time").
In the event that the Merger has not been consummated by April 15, 1995,
the Reorganization Agreement provides that either La-Z-Boy or E/C may terminate
the Reorganization Agreement and abandon the Merger, notwithstanding the
approval previously given by the shareholders of E/C. See "Amendments,
Conditions, and Termination."
OPERATIONS AFTER THE MERGER
LZB Acquisition will be the Surviving Corporation of the Merger, and, in
connection with consummation of the Merger, LZB Acquisition will change its
name to "England/Corsair, Inc." The Board of Directors and officers of the
Surviving Corporation will be as follows:
Charle T. Knabusch -- Director and Chairman
Rodney D. England -- Director, President, and Chief Executive Officer
Frederick H. Jackson -- Director and Vice President
Gene M. Hardy -- Director, Secretary, and Treasurer
Patrick H. Norton -- Vice President
Otis S. Sawyer -- Vice President Finance
Dennis C. Valkanoff -- Vice President
James L. Price -- Vice President Manufacturing
James P. Klarr -- Assistant Secretary and Tax Counsel
CONSIDERATION FOR SHARES
Upon the Merger becoming effective, each share of E/C Stock will be
converted into the right to receive cash, La-Z-Boy Notes or shares of La-Z-Boy
Common Stock, or a combination thereof, as described below, based on total
merger consideration (excluding the Performance Units) of $32,575,000 and a
value of $30.00 per share of La-Z-Boy Common Stock. Each share of E/C Stock
owned by shareholders who comply with the election procedures set forth in the
Plan of Merger and described below will be converted into, at their option (but
subject to the limitations set forth in the Plan of Merger and described under
the captions "Limitation" and "Allocation of Cash, Shares and Notes"),
either: $109.558403121 in cash; $109.558403121 principal amount of La-Z-Boy
Notes; or 3.6519467707 shares of La-Z-Boy Common Stock. Each share of E/C
Stock, regardless of, and in addition to, the election made by the holder
thereof, will also be converted into one Performance Unit, as described below.
Each share of E/C Stock owned by a shareholder who does not duly and
timely comply with the election procedures will be converted into
$109.558403121 in cash per share, subject to the limitations described below
under the captions "Limitation" and "Allocation of Cash, Shares and Notes,"
plus one Performance Unit.
PERFORMANCE UNITS
Performance Units will entitle the holders thereof to receive
additional shares of La-Z-Boy Common Stock based on the Pre-Tax Income
(as defined in and determined in accordance with the Plan of Merger) of E/C
during each of the two successive twelve month periods immediately following
the Effective Time. The first such twelve month period is referred to herein
and in the Plan of Merger as the "1996 Performance Period" and the amount, if
any, payable with respect to each of the Performance Units for the 1996
Performance Period as the "1996 Performance Unit Amount," and the second such
twelve month period is referred to herein and in the Plan of Merger as the
"1997 Performance Period" and the amount, if any, payable with respect to each
of the Performance Units for the 1997 Performance Period as the "1997
Performance Unit Amount."
The 1996 Performance Unit Amount will be determined by, first, multiplying
the Pre-Tax Income of E/C above $6,000,000 for the 1996 Performance Period by
1.75 and, second, dividing the resulting number by the number of shares of E/C
Stock outstanding as of the Effective Time. The 1997 Performance Unit Amount
will be determined in the same manner but based on the Pre-Tax Income of E/C
for the 1997 Performance Period above $7,000,000. The total value of shares
of La-Z-Boy Common Stock issued pursuant to the Performance Units cannot
exceed $20,000,000.
Performance Units will be settled in additional shares of La-Z-Boy
Common Stock, the number of which will be determined by dividing the aggregate
1996 Performance Unit Amount and the aggregate 1997 Performance Unit Amount by
the closing price of La-Z-Boy Common Stock on the NYSE on the last day of the
1996 Performance Period and the 1997 Performance Period, as the case may be.
LIMITATIONS
The Plan of Merger provides that in the event (i) the aggregate number of
shares of La-Z-Boy Common Stock which would be issuable to those E/C
shareholders who elected to receive shares of La-Z-Boy Common Stock in the
Merger exceeds the Total Share Limitation or the Performance Unit Share
Limitation (both as defined below), or (ii) the aggregate amount of cash
and La-Z-Boy Notes which would otherwise be paid to E/C shareholders who
either elected to receive cash or whose shares were converted into cash
because of the failure to comply with the election procedures specified
in the Plan of Merger, exceeds the Total Non-Share Limitation (as defined
below), or (iii) the aggregate principal amount of La-Z-Boy Notes which would
be issuable to E/C shareholders who have elected to receive La-Z-Boy Notes
exceeds $10,000,000 (the "Note Limitation"), then the elections made by, or
allocations to, one or more of the E/C shareholders will be changed from cash
to shares of La-Z-Boy Common Stock, La-Z-Boy Notes to cash or La-Z-Boy Common
Stock to cash, as the case may be, in accordance with the procedures set forth
in the Plan of Merger and described below under the caption "Allocation of
Cash, Shares and Notes."
As a result of these limitations and the allocation procedures,
shareholders of E/C may not receive the type of consideration they elect. In
addition, as a result of such limitations, shareholders of E/C electing to
receive cash or La-Z-Boy Notes in the Merger may nevertheless receive shares
of La-Z-Boy Common Stock whose market value at the Effective Time may be less
than the $30.00 price of La-Z-Boy Common Stock upon which the exchange
ratio was determined.
The term "Total Non-Share Limitation" means the amount of consideration
other than La-Z-Boy Common Stock which, if paid in connection with the Merger,
would result in such consideration constituting 50% or more of the aggregate
consideration paid by La-Z-Boy to acquire shares of E/C Stock in connection
with the Merger, whether pursuant to the Plan of Merger, by operation of law or
in lieu of fractional shares, based in all cases on the fair market value of
the La-Z-Boy Common Stock at the Effective Time. The term "Total Share
Limitation" means that number of shares of La-Z-Boy Common Stock which, if
issued in connection with the Merger, would result in La-Z-Boy issuing more
than 2,000,000 shares of La-Z-Boy Common Stock, whether issued at time of
consummation of the Merger or in settlement of Performance Units. The term
"Performance Unit Share Limitation" means that number of shares of La-Z-Boy
Common Stock which is equal to the number of shares issued at the time of
consummation of the Merger.
ELECTION PROCEDURES
If the Plan of Merger and the Merger are approved by E/C shareholders at
the Meeting, and assuming that all other conditions have been satisfied
(see "Amendments, Conditions, and Termination"), it is expected that the Merger
will become effective on the date of the Meeting or as promptly as
practicable thereafter. A Letter of Transmittal and Election Form (a "Form of
Election") is being delivered to each E/C shareholder of record on the Record
Date ("Electing Shareholders") together with this Proxy Statement/Prospectus. A
Form of Election can only be filed with respect to all shares of E/C Stock held
by an Electing Shareholder. An election will only be proper if La-Z-Boy shall
have received a Form of Election properly completed and signed prior to the
commencement of the Meeting and the Form of Election is accompanied by the
certificate(s) representing the shares of E/C Stock to which the Form of
Election relates. Any shareholder who fails to file a Form of Election prior
to the commencement of the Meeting will be deemed to have elected to receive
cash in the Merger.
A Form of Election may be revoked by an Electing Shareholder only by
written notice received by La-Z-Boy prior to the commencement of the Meeting.
In the event that the Merger is not consummated for any reason, any
certificate(s) for shares representing E/C Stock which have been deposited
with La-Z-Boy in connection with the election procedures will be promptly
returned.
La-Z-Boy will determine the validity and timeliness of Forms of Election
submitted by E/C shareholders and whether revocations, if any, have been
properly made.
ALLOCATION OF CASH, SHARES AND NOTES
In the event that the elections made by E/C shareholders will result in
the Total Share Limitation, the Total Non-Share Limitation, the Note
Limitation, or the Performance Unit Share Limitation being exceeded, the
Plan of Merger provides that the elections made by one or more of
the E/C shareholders will be changed from cash to shares of La-Z-Boy Common
Stock, from La-Z-Boy Notes to cash or from shares of La-Z-Boy Common Stock to
cash in the order provided, and pursuant to the allocation procedures
described, below. In certain circumstances such limitations could reduce the
total consideration payable in settlement of the Performance Units.
In connection with the initial consideration payable at the time of
consummation of the Merger:
(1) If the total principal amount of La-Z-Boy Notes otherwise
issuable would exceed the Note Limitation, the principal amount of
La-Z-Boy Notes to be issued will be reduced pro rata, and cash
will be allocated instead.
(2) If the sum of the principal amount of La-Z-Boy Notes
issuable and the cash otherwise payable would exceed the Total
Non-Share Limitation, the cash to be paid will be reduced pro rata,
and La-Z-Boy Common Stock will be allocated instead.
In connection with each of the two scheduled payments of consideration
in satisfaction of Performance Units (each a "Performance Unit Payment"):
If the sum of the number of shares of La-Z-Boy Common Stock
previously issued and the number otherwise issuable in connection with
such Performance Unit Payment would exceed the Total Share Limitation,
the Performance Unit Share Limitation, or both, the amount of such
Performance Unit Payment will be reduced pro rata, to the extent
necessary to avoid violating the Total Share Limitation or the
Performance Unit Share Limitation.
La-Z-Boy will determine whether or not elections have been properly made
or revoked. If La-Z-Boy determines that any election was not properly or
timely made or was revoked and not replaced, the shares of E/C Stock subject to
such election will be treated as shares to be converted into cash.
La-Z-Boy may make equitable changes in the election procedures as may be
necessary to fully effect the elections.
As a result of these allocation procedures, shareholders of E/C may not
receive the type of consideration they elect, and shareholders who fail to make
any election may nevertheless not receive cash.
CASH IN LIEU OF FRACTIONAL SHARES
Each holder of a certificate or certificates representing E/C Stock who
would otherwise have been entitled to receive a fraction of a share of La-Z-Boy
Common Stock (after taking into account all E/C Stock represented by such
certificate(s) then delivered by such holder) upon consummation of the Merger
will receive, in lieu thereof, an amount of cash determined by multiplying
such fraction by $30.00. Each holder of Performance Units who would otherwise
have been entitled to receive a fraction of a share of La-Z-Boy Common Stock
(after taking into account all Performance Units held by such holder) in
respect of any 1996 Performance Unit Amount and/or 1997 Performance Unit
Amount will receive, in lieu thereof, cash in an amount determined by
multiplying such fraction by the closing price of La-Z-Boy Common Stock on
the NYSE on the last day of the 1996 Performance Period or the 1997
Performance Period, as the case may be.
PAYMENT FOR SHARES
La-Z-Boy will make available cash, La-Z-Boy Notes and shares of La-Z-Boy
Common Stock sufficient in amounts to make the payments to be made to E/C
shareholders in the Merger promptly following the Effective Time. The Forms of
Election accompanying this Proxy Statement/Prospectus are to be used in
surrendering certificates representing outstanding shares of E/C Stock.
Shareholders are urged to carefully review the instructions which form a part
of the Forms of Election. Promptly after the Effective Time, and upon receipt
by La-Z-Boy of such certificates, together with a duly executed letter of
transmittal, there will be issued to the persons entitled thereto (i) a check
in the amount to which such persons are entitled, after giving effect to any
tax withholdings to the extent required by applicable law; (ii) a certificate
evidencing the number of shares of La-Z-Boy Common Stock to which such persons
are entitled; and/or (iii) a La-Z-Boy Note in the principal amount to which
such persons are entitled. No interest will be paid or will accrue on the cash
amounts payable upon the surrender of any certificate representing E/C Stock.
If payment is to be made to a person other than the registered holder of the
share certificate surrendered, it is a condition of such payment or delivery
that the certificate so surrendered is properly endorsed or otherwise in proper
form for transfer and that the person requesting such payment or delivery shall
pay any transfer or other taxes required by reason of the payment or delivery
to a person other than the registered holder of the certificate surrendered or
establish to the satisfaction of the Surviving Corporation of the Merger or
La-Z-Boy that such tax has been paid or is not applicable. Nine months
following the Effective Time, E/C shareholders who have not submitted their
certificates for exchange will be entitled to look only to La-Z-Boy with
respect to the consideration due upon surrender of their certificates.
Neither La-Z-Boy, LZB Acquisition nor E/C will be liable to any holder of
certificates formerly representing shares of E/C Stock for any amount paid to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
No transfer of shares of E/C Stock will be made on the stock transfer
books of the Surviving Corporation of the Merger at or after the Effective
Time.
THE REORGANIZATION AGREEMENT
The terms of the Reorganization Agreement and Plan of Merger are the
result of the arm's-length negotiations between representatives of E/C and
La-Z-Boy. In the Reorganization Agreement, E/C and La-Z-Boy have made numerous
representations and warranties to one another with respect to, among other
things, their organization and good standing, authorized and issued capital
stock, corporate authority, required filings and financial statements. In
addition, E/C has made certain other representations and warranties to La-Z-Boy
concerning its employee benefit plans and arrangements, labor matters, pending
and threatened litigation, certain tax matters, environmental matters, title to
properties and insurance arrangements, among others.
The representations and warranties and covenants and agreements of E/C
contained in or made pursuant to the Reorganization Agreement will survive the
Merger, but the E/C shareholders will not have any personal liability or
responsibility for any breach or non-performance thereof, whether occurring
prior or subsequent to consummation of the Merger. However, the amount, if any,
the E/C shareholders are to receive in respect of Performance Units will depend
upon the level of Pre-Tax Income achieved by E/C during the two years following
the Merger, and the Computation Standards for Pre-Tax Income attached as
Exhibit A to the Plan of Merger specifically provide that payments, reserves
or accruals resulting from any breach or non-performance of any warranty or
covenant of E/C contained in the Reorganization Agreement, or any liabilities
of E/C existing at the Effective Time and not reflected in the financial
statements or disclosure schedules delivered by E/C to La-Z-Boy as provided
in the Reorganization Agreement, will be treated as deductions in computing
Pre-Tax Income.
ACCORDINGLY, BREACHES OF THE REPRESENTATIONS AND COVENANTS OF E/C
CONTAINED IN THE REORGANIZATION AGREEMENT COULD REDUCE THE AMOUNT OF
LA-Z-BOY COMMON STOCK RECEIVED BY THE E/C SHAREHOLDERS IN RESPECT OF THE
PERFORMANCE UNITS, THEREBY REDUCING THE TOTAL CONSIDERATION TO BE RECEIVED BY
THE E/C SHAREHOLDERS IN RESPECT OF THE MERGER.
E/C has agreed, pending consummation of the Merger, to give La-Z-Boy or
its representatives full access to all its premises, books, records, and
financial and operating data, and that it will continue to operate its business
in the ordinary course, except as otherwise consented to by La-Z-Boy. E/C has
also agreed that neither it nor any of its subsidiaries nor any of their
respective officers or directors will initiate or solicit any other acquisition
proposals for E/C or participate in any negotiations concerning any such
proposals.
DISTRIBUTIONS PRIOR TO CLOSING
As provided in the Reorganization Agreement, neither La-Z-Boy nor E/C may
either declare or pay any dividends on or make any distributions in respect of
their capital shares prior to the Effective Time, except:
(1) La-Z-Boy may declare and pay dividends on the La-Z-Boy Common Stock in
accordance with its prior practice; and
(2) E/C may (i) pay to its shareholders the cash dividend previously
declared in the amount of 60% of its taxable income for the period of July 1,
1994 to December 31, 1994; (ii) declare and pay to its shareholders dividends
in an amount equal to 40% of its taxable income for the period of January 1,
1995 to the day before the Effective Time; and (iii) declare and pay to its
shareholders dividends in an amount equal to 50% of the net proceeds receivable
by E/C under any policies owned by E/C on the life of Arnold Dwight England.
CONDITIONS TO THE MERGER
The obligation of La-Z-Boy and E/C to consummate the Merger is subject to
certain conditions, including (without limitation) the following:
(i) the Reorganization Agreement and Plan of Merger shall have
been approved and adopted by the requisite vote of the E/C shareholders;
(ii) the shares of La-Z-Boy Common Stock issuable in the Merger
shall have been authorized for listing on the NYSE and PSE upon official
notice of issuance;
(iii) other than the filing of the LZB Acquisition Certificate of
Merger with the Corporation and Securities Bureau of the Michigan
Department of Commerce and the filing of the E/C Articles of Merger
with the Secretary of State of the State of Tennessee, all
authorizations, consents, orders or approvals of, or declarations or
filings with, and all expirations of waiting periods imposed by, any
governmental entity (collectively, the "Consents") which are prescribed
by law as necessary for the consummation of the Merger and the other
transactions contemplated by the Reorganization Agreement, other than
immaterial Consents the failure to obtain which would have no material
adverse effect on the consummation of the Merger or the other
transactions contemplated by the Reorganization Agreement, or on the
corporation surviving the Merger, shall have been filed, occurred or been
obtained (all such authorizations, consents, orders, approvals,
declarations or filings and the lapse of all such waiting periods being
referred to as the "Requisite Regulatory Approvals"), as the case
may be and all such Requisite Regulatory Approvals shall be in full force
and effect;
(iv) the Registration Statement, of which this Proxy
Statement/Prospectus forms a part, shall have become effective under the
Securities Act and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened;
(v) the sale of the La-Z-Boy Common Stock shall have been
qualified or registered with the appropriate "Blue Sky" authorities of
all states in which qualification or registration is required and such
qualifications or registrations shall not have been suspended or revoked;
(vi) no order, injunction or decree issued by any court or agency
of competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the Merger or any of the
transactions contemplated by the Reorganization Agreement shall be in
effect, nor shall any proceeding by any governmental entity seeking any
such Injunction be pending, nor shall any lawsuit or governmental
proceeding be pending or threatened against La-Z-Boy, LZB Acquisition
or E/C or any of their respective directors, seeking substantial damages
in connection with the transactions contemplated by the Reorganization
Agreement;
(vii) no statute, rule, regulation, order, injunction or decree
shall have been enacted, entered, promulgated or enforced by any
governmental entity which prohibits, restricts or makes illegal
consummation of the Merger;
(viii) there shall not be any action taken, or any law, rule,
regulation, order, judgment or decree proposed, promulgated, enacted,
entered, enforced or deemed applicable to the Merger or any of the
transactions contemplated by the Reorganization Agreement, by any
governmental entity or by any court or other tribunal, including the
entry of a preliminary injunction, which, (A) in connection with the
grant of a Requisite Regulatory Approval, imposed any condition or
restriction upon La-Z-Boy, LZB Acquisition or E/C which would so
materially adversely impact the economic or business benefits of the
transactions contemplated by the Reorganization Agreement as to render
inadvisable, in the reasonable judgment of the La-Z-Boy Board, the LZB
Acquisition Board or the E/C Board, the consummation of the Merger (a
"Materially Burdensome Condition"); or (B) in the reasonable opinion of
any party, (1) makes the Reorganization Agreement, the Plan of Merger,
the Merger, or any of the other transactions contemplated by the
Reorganization Agreement, illegal, (2) results in a material delay in the
ability of La-Z-Boy, LZB Acquisition or E/C to consummate the Merger or
any of the other transactions contemplated by the Reorganization
Agreement, (3) requires the divestiture by La-Z-Boy, LZB Acquisition or
E/C of a material portion of the business of E/C, taken as a whole, or
La-Z-Boy, taken as a whole, or (4) otherwise prohibits or restricts or
delays in a material respect consummation of the Merger or any of the
other transactions contemplated by the Reorganization Agreement or impairs
in a material respect the contemplated benefits to La-Z-Boy, LZB
Acquisition or E/C of the Reorganization Agreement, the Merger or any of
the other transactions contemplated by the Reorganization Agreement; and
(ix) the E/C shareholders designated in a schedule to the
Reorganization Agreement as affiliates of E/C shall have executed and
delivered to La-Z-Boy an agreement under Rule 145 under the Securities Act
requiring that transfers of La-Z-Boy Common Stock after the Merger comply
with the requirements of Rule 145 and other applicable provisions of the
Securities Act.
The obligation of La-Z-Boy and LZB Acquisition (sometimes referred to
collectively as the "LZB Companies") to effect the Merger is subject to the
satisfaction by E/C or waiver by the LZB Companies of certain additional
conditions, including (without limitation) the following:
(i) the representations and warranties of E/C in the
Reorganization Agreement must be true and correct in all material
respects as of the date of the Reorganization Agreement and (except to the
extent such representations and warranties speak as of an earlier date) as
of the Effective Time as though made on and as of such time, except as
otherwise contemplated by the Reorganization Agreement;
(ii) E/C shall have performed in all material respects all
obligations required to be performed by it under the Reorganization
Agreement at or prior to the Effective Time;
(iii) E/C shall have obtained the consent or approval of each person
(other than those of certain governmental entities) whose consent or
approval shall be required in order to permit the succession by the
corporation surviving the Merger pursuant to the Plan of Merger to any
obligation, right or interest of E/C under any loan or credit agreement,
note, mortgage, indenture, lease, license or other agreement or
instrument;
(iv) the LZB Companies shall have received the opinion of Miller,
Canfield, Paddock and Stone, P.L.C., dated the effective date of the
Registration Statement and the Effective Time, to the effect that the
Merger will be treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code;
(v) the LZB Companies shall have received from Baker, Donelson,
Bearman & Caldwell, counsel to E/C, (A) an appropriate letter regarding
the Registration Statement, this Proxy Statement/Prospectus and certain
related matters, and (B) an opinion as to such matters as are customary
for transactions of the type contemplated by the Reorganization Agreement,
all in form and substance reasonably acceptable to the LZB Companies.
(vi) the total debt of E/C shall not exceed $30,000,000 at the
Effective Time;
(vii) the LZB Companies shall have received the tax lock-up letters
described under "Certain Federal Income Tax Consequences" from all E/C
shareholders who have elected to receive La-Z-Boy Common Stock in the
Merger and from those E/C shareholders designated in a schedule delivered
to the LZB Companies pursuant to the Reorganization Agreement;
(viii) BDO Seidman shall have delivered to the LZB Companies its
opinion with respect to E/C's status as an electing small business
corporation under the Code, in form and content acceptable to the
LZB Companies;
(ix) each of the officers and directors of E/C shall have delivered
to the LZB Companies documents, in form and substance reasonably
satisfactory to the LZB Companies, pursuant to which such officers and
directors forever waive and release any and all claims they might
otherwise have (whether under the charter or bylaws of E/C, the articles
of incorporation or bylaws of either of the LZB Companies, by contract, or
otherwise) for indemnification or for the payment of advancing of expenses
relating in any way to any disputes which may arise between such officer
or director and either the Reorganization Agreement or the transactions
contemplated hereby; and
(x) each holder of E/C Class A Stock shall have executed and
delivered to E/C (with copies to the LZB Companies) documents, in form and
substance satisfactory to La-Z-Boy in its reasonable judgment,
acknowledging that any and all employment contracts between such person
and E/C have been terminated and releasing E/C and LZB Acquisition from
any further liability thereunder, including (but not limited to) any
liability with respect to such termination.
The obligation of E/C to effect the Merger is subject to the satisfaction
by the LZB Companies or the waiver by E/C of certain additional conditions,
including (without limitation) the following:
(i) the representations and warranties of the LZB Companies set
forth in the Reorganization Agreement shall be true and correct in
all material respects as of the date of the Reorganization Agreement and
(except to the extent such representations and warranties speak as of an
earlier date) as of the Effective Time as though made on and as of such
time, except as otherwise contemplated by the Reorganization Agreement;
(ii) the LZB Companies shall have performed in all material
respects all obligations required to be performed by them under the
Reorganization Agreement at or prior to the Effective Time;
(iii) the LZB Companies shall have obtained the consent or approval
of each person (other than those of certain governmental entities) whose
consent or approval shall be required in connection with the transactions
contemplated by the Reorganization Agreement under any loan or credit
agreement, note, mortgage, indenture, lease, license or other agreement or
instrument to which any of the LZB Companies is a party or is otherwise
bound;
(iv) E/C shall have received the opinion of Miller, Canfield,
Paddock and Stone, P.L.C., dated the effective date of the Registration
Statement and the Effective Time, to the effect that the Merger will be
treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code;
(v) E/C shall have received from Miller, Canfield, Paddock and
Stone, P.L.C., (A) an appropriate letter regarding the Registration
Statement, this Proxy Statement/Prospectus and certain related matters,
(B) an opinion, dated the Effective Time, as to such matters as are
customary for transactions of the type contemplated by the Reorganization
Agreement, all in form and substance reasonably acceptable to E/C; and
(vi) E/C shall have received the tax lock-up letters described
under "Certain Federal Income Tax Consequences."
TERMINATION; LIQUIDATED DAMAGES; TERMINATION FEE
The Reorganization Agreement and the Plan of Merger, and the transactions
contemplated thereby, may be terminated at any time prior to the Effective
Time, whether before or after approval of the matters presented in connection
with the Merger by the shareholders of E/C:
(i) by mutual consent of E/C and the LZB Companies if the Board of
Directors of each so determines by a vote or a majority of the members of
the entire Board;
(ii) by E/C or either of the LZB Companies upon written notice to
the others if (A) any Requisite Regulatory Approval shall have been denied
or any Materially Burdensome Condition shall have been imposed, or (B)
any governmental entity of competent jurisdiction shall have issued a
final nonappealable order enjoining or otherwise prohibiting the
consummation of the transactions contemplated by the Reorganization;
(iii) by E/C or either of the LZB Companies upon written notice to
the others if the Merger shall not have been consummated on or before
April 15, 1995, provided that a party may not terminate under this
provision if such party is in breach in any material respect of the
Reorganization Agreement;
(iv) by E/C or either of the LZB Companies upon written notice to
the others if any approval of the shareholders of E/C required for the
consummation of the Merger shall not have been obtained by reason of the
failure to obtain the required vote at the Meeting;
(v) by E/C or the LZB Companies upon written notice to the others
if there shall have been a material breach of any of the representations
or warranties or covenants and agreements set forth in the Reorganization
Agreement on the part of E/C (in the case of the LZB Companies) or either
of the LZB Companies (in the case of E/C);
(vi) by either of the LZB Companies upon written notice to E/C if,
after recommending in this Proxy Statement/Prospectus that shareholders
approve the Reorganization Agreement and the Plan of Merger, the E/C
Board shall withdraw, modify, or amend such recommendation in
any respect materially adverse to the LZB Companies; or
(vii) by either of the LZB Companies upon written notice to E/C if
E/C shall have authorized, recommended, proposed, or announced an
intention to authorize, recommend, or propose, or entered into an
agreement with any person (other than any of the LZB Companies) to effect,
a "Takeover Proposal" (as defined in the Reorganization Agreement) or
shall fail to publicly oppose a tender offer or exchange offer by another
person based on a Takeover Proposal.
In the event of termination of the Reorganization Agreement by E/C or the
LZB Companies, the Reorganization Agreement will become void and have no effect
except (i) with respect to certain specified provisions of the Reorganization
Agreement relating to confidentiality, expenses, the effect of termination,
employees, liquidated damages, termination fees, third party beneficiaries and
governing law, and (ii) subject to the payment of specified liquidated damages,
no party shall be relieved or released from any liabilities or damages arising
out of the breach by such party of any provision of the Reorganization
Agreement or the Plan of Merger.
In the event that (i) at any time prior to termination of the
Reorganization Agreement E/C authorizes, recommends, publicly proposes or
publicly announces an intention to authorize, recommend or propose, or enters
into an agreement with any person (other than any of the LZB Companies) to
effect a Takeover Proposal or shall fail to publicly oppose a tender offer or
exchange offer by another person based on a Takeover Proposal, or (ii) any
approval of the shareholders of E/C required for consummation of the Merger
shall not have been obtained by reason of the failure to obtain the required
vote of shareholders, or (iii) E/C fails to hold the Meeting, or (iv)
the E/C Board shall have withdrawn, modified or amended its recommendation that
E/C shareholders approve and adopt the Reorganization Agreement and the Plan of
Merger in any respect materially adverse to the LZB Companies; or (v) the LZB
Companies, or either of them, shall terminate the Reorganization Agreement due
to a material breach of any of the covenants and agreements set forth therein
on the part of E/C, E/C shall, within 10 days after notice of the occurrence
thereof by La-Z-Boy, pay to La-Z-Boy the sum of $500,000 as liquidated damages.
In the event that E/C shall terminate the Reorganization Agreement due
to the material breach of any of the covenants and agreements set forth therein
on the part of the LZB Companies, or either of them, La-Z-Boy shall, within 10
days after notice of the occurrence thereof by E/C, pay to E/C the sum of
$500,000 as liquidated damages.
EXPENSES
If the Merger is consummated, all costs and expenses incurred in
connection with this Agreement will be paid by the Surviving Corporation, and
if the Merger is not consummated, all such costs and expenses will be paid
by the party incurring the same.
AMENDMENT; WAIVER
The Reorganization Agreement may be amended by the parties thereto, by
action taken or authorized by their respective Boards of Directors, at any time
before or after approval of the matters presented in connection with the Merger
by the shareholders of E/C, provided, that after any such approval, no
amendment shall be made which by law requires further approval by such
shareholders, without such further approval. The Reorganization Agreement may
not be amended except in writing.
At any time prior to the Effective Time, the parties to the Reorganization
Agreement, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties
thereto, (ii) waive any inaccuracies in the representations and warranties
contained therein or in any document delivered pursuant thereto, and (iii)
waive compliance with any of the agreements or conditions contained therein.
Any agreement on the part of a party to the Reorganization Agreement to any
such extension or waiver must be in a written instrument.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary describes the material federal income tax
consequences of the Merger. This summary is taken from the opinion delivered by
Miller, Canfield, Paddock and Stone, P.L.C., which opinion is based on certain
assumptions, matters of reliance and on representations made by La-Z-Boy and
E/C, and is subject to certain exceptions and limitations included in such
opinion. A copy of the opinion has been filed as an Exhibit to the
Registration Statement of which this Proxy Statement/Prospectus is a part. This
summary does not discuss, and the opinion does not cover, the tax consequences
that may be relevant to certain shareholders of E/C entitled to special
treatment under the Internal Revenue Code of 1986, as amended (the "Code").
This summary also does not discuss, and the opinion does not cover, the tax
consequences to E/C shareholders who acquired their shares pursuant to the
exercise of employee stock options, warrants or otherwise as compensation.
In addition, the opinion assumes the E/C shareholders hold their shares as
capital assets and does not address state, local or foreign tax consequences
of the Merger.
In the opinion of Miller, Canfield, Paddock and Stone, P.L.C., the Merger
will be treated as a reorganization within the meaning of Section 368(a)(1)(A)
and 368(a)(2)(D) of the Code, and La-Z-Boy, LZB Acquisition and E/C will each
be treated as a party to the reorganization under Section 368(b) of the Code.
In light of such opinion, E/C believes that:
(i) No gain or loss will be recognized by La-Z-Boy, LZB
Acquisition or E/C as a consequence of the Merger.
(ii) No gain or loss will be recognized by an E/C shareholder upon
the exchange of E/C Stock solely for La-Z-Boy Common Stock.
(iii) Gain or loss will be recognized by an E/C shareholder upon the
receipt of cash in lieu of a fractional interest in a share of La-Z-Boy
Common Stock to which such shareholder is entitled. The payment of cash in
lieu of fractional share interests will be treated as if the fractional
shares were distributed as part of the exchange and then were redeemed by
La-Z-Boy, and will be treated as having been received as distributions in
full payment in exchange for the stock redeemed as provided in Section
302(a) of the Code. Accordingly, any gain or loss recognized by an E/C
shareholder upon the receipt of cash in lieu of a fractional interest in a
share of E/C Stock to which such shareholder is entitled will be taxable
as a capital gain or loss (long-term or short-term, depending on whether
the shareholder had held the share of E/C Stock giving rise to such
fractional interest for more than one year at the Effective Time),
provided such E/C Stock was held as a capital asset at the Effective Time.
(iv) The Federal income tax basis of a share of La-Z-Boy Common
Stock received by an E/C shareholder receiving solely La-Z-Boy Common
Stock in exchange for his E/C Stock and recognizing no income, gain
or loss on the exchange will be approximately 27.382655% of the basis of
each share of E/C Stock exchanged therefor.
(v) The holding period of the La-Z-Boy Common Stock received by
a non-dissenting E/C shareholder will include the period during which the
E/C Stock exchanged therefor was held, provided such E/C Stock was held
as a capital asset at the Effective Time.
(vi) Income, gain or loss may be recognized by an E/C shareholder
who receives a La-Z-Boy Note and/or cash in exchange for the shareholder's
E/C Stock. Any such income or gain recognized by an E/C shareholder
upon receipt of a La-Z-Boy Note and/or cash may be characterized as
capital gain or as ordinary (dividend) income depending upon whether the
receipt of the La-Z-Boy Note and/or cash has the effect of the
distribution of a dividend as interpreted under the Code and law currently
in effect. If gain realized upon the receipt of a La-Z-Boy Note and/or
cash has the "effect of the receipt of a dividend" or is treated as
"substantially equivalent to a dividend" under the Code, then such
shareholder will include such gain in gross income as ordinary (dividend)
income to the extent of his ratable share of the undistributed earnings
and profits of E/C. The remaining gain recognized by said shareholder
will be taxable as a capital gain (long-term or short-term, depending
on whether such E/C Stock had been held for more than one year at the
Effective Time) unless such E/C Stock was not held as a capital asset
at such time. Such income, gain or loss will be recognized as of the
Effective Time, unless the exchange qualifies for deferral as an
installment sale under the Code and the shareholder does not elect to
have the installment method not apply. In determining whether such
distribution will be treated as "substantially equivalent to a
dividend," rules similar to those of Code Section 302 (discussed
in paragraph (vii) below) will generally be applicable.
(vii) An E/C shareholder who dissents to the proposed transaction
and receives only cash in exchange for shares of E/C Stock will be treated
as having received a distribution in redemption of the shareholder's
shares, and will be taxed under the rules of Code Section 302. If such
redemption is treated as a distribution in full payment for the
shareholder's E/C stock pursuant to Code Section 302(a), such gain or
loss will be taxable as a capital gain or loss (long-term or short-term,
depending on whether such E/C Stock had been held for more than one year
at the Effective Time), provided such Common Stock was held as a capital
asset at such time. Alternatively, if the payment of cash to a dissenting
E/C shareholder is not treated as in exchange for such shareholder's E/C
stock under Code Section 302(a), such payment will be treated as a
distribution to which Section 301 of the Code applies. In such event,
such shareholder generally will include such payment in gross
income as a dividend to the extent of his ratable share of the
undistributed earnings and profits, and the remainder of the payment
will generally first be applied to reduce the shareholder's basis in
his E/C Stock and the remainder will generally be taxable as a
capital gain (long-term or short-term, depending on whether such E/C
Stock had been held for more than one year at the Effective Time) unless
such E/C Stock was not held as a capital asset at such time. Such
shareholder will recognize capital gain or loss (measured by the
difference between the amount of cash received and the shareholder's tax
basis in the shares of E/C Stock exchanged) if the shareholder has
completely terminated his actual and constructive ownership interest
(described below) in E/C and in La-Z-Boy within the meaning of Section
302(b)(3). If the shareholder has not completely terminated his interest
in E/C and in La-Z-Boy under Section 302(b)(3), the amount of cash
received may be taxed as ordinary (dividend) income (and proper adjustment
of the basis in the remaining stock must be made) unless the exchange
qualifies for capital gain or loss treatment under one of the other
exceptions from dividend treatment contained in Section 302(b). These
exceptions include an exchange that is "not essentially equivalent to a
dividend" under Section 302(b)(1), or that results in a "substantially
disproportionate" reduction in a shareholder's stock interest under
Section 302(b)(2). For purposes of applying the Section 302(b) tests
described above, a shareholder of E/C will be considered to own all or a
portion of any E/C stock and of any portion of any La-Z-Boy stock owned
directly or indirectly by his or her parents, spouse, children and
grandchildren; a partner's proportionate share of any stock held by a
partnership of which the shareholder is a partner; a portion of the stock
held by a trust of which the shareholder is a beneficiary or is treated as
the owner for tax purposes; a beneficiary's share of any stock held by a
corporation in which the shareholder owns 50% or more value of the stock.
In addition, a shareholder will be considered to own stock that the
shareholder has an option to acquire. Also, a shareholder that is a
partnership, estate, trust, or corporation may be considered to own stock
owned by its partners, grantors, beneficiaries, or shareholders, as the
case may be, but there is no "double" attribution from such partnership,
trust, estate or corporation to another shareholder. Moreover, in certain
cases, an individual shareholder may be able to avoid constructive
ownership of stock owned by family members for purposes of Section
302(b)(3) by meeting the requirements of Section 302(c)(2). Any
shareholder of E/C who does not receive any La-Z-Boy Common Stock in
exchange for his stock in E/C, but whose spouse, parents, children, or
grandchildren own La-Z-Boy Common Stock directly or indirectly, is urged
to consult with his or her tax advisor about the agreement provided for
under Section 302(c)(2) and the other requirements of Code Section 302.
(viii) In addition to receiving Merger consideration received at the
Effective Time, shareholders of E/C will receive one Performance Unit for
each share of E/C Stock surrendered in the Merger. For Federal income tax
purposes, the Performance Units will be treated as "contingent
consideration" received in the Merger. The Internal Revenue Service
("IRS") has issued safeharbor guidelines set forth in Revenue Procedure
84-42, 1984-1 CB 521 applicable to the receipt of shares of capital
stock as contingent consideration in a merger qualifying under Code
Section 368. These guidelines include the requirement that the maximum
amount of contingent consideration that may be issued under the agreement
is stated and the requirement that at least fifty (50%) percent of the
maximum number of shares in the agreement, which may be issued are issued
in the initial distribution (i.e., at the Effective Time).
E/C believes that the IRS requirements regarding the receipt of
"contingent consideration" in a tax-free reorganization will be satisfied,
and that an E/C shareholder's receipt of a Performance Unit at the
Effective Time will generally not give rise to current Federal income tax.
In addition, the receipt of La-Z-Boy Common Stock under the Performance
Units will be taxed under the Code's rules applicable to "fixed period
contingent payment installment sales" set forth in Temporary Treasury
Regulation Section 15A.453-1(c)(3), as outlined below. Under these
rules, the receipt of La-Z-Boy Common Stock will not be taxable to
the E/C shareholders in the year of receipt except for the portion of the
La-Z-Boy Common Stock (the "Imputed Interest Amount") treated as interest
income under the Code. In this regard, the Imputed Interest Amount will
generally equal the excess of (a) the fair market value as of the day of
receipt of the additional La-Z-Boy Common Stock over (b) such fair market
value amount discounted back to the Effective Time using the Code's
prescribed discount rate.
It should be noted that actions taken by E/C shareholders after
consummation of the Merger in connection with the disposition of shares of
La-Z-Boy Common Stock received in the Merger could cause the Merger to fail to
satisfy the "continuity of interest" requirement under the Code and thus cause
the tax consequences described above to be different. The shareholders of
E/C have executed tax lock-up letters designated to prevent such disqualifying
dispositions. See "Tax Lock-up Letters" below.
THE DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY.
THE DISCUSSION DOES NOT ADDRESS THE STATE, LOCAL OR FOREIGN TAX ASPECTS OF THE
MERGER. THE DISCUSSION IS BASED ON CURRENTLY EXISTING PROVISIONS OF THE CODE,
EXISTING AND PROPOSED TREASURY REGULATIONS THEREUNDER AND CURRENT
ADMINISTRATIVE RULINGS AND COURT DECISIONS. IN ADDITION, THE DISCUSSION
REGARDING THE RECEIPT OF CONTINGENT CONSIDERATION BY THE E/C SHAREHOLDERS IS
ONLY A SUMMARY OF THE APPLICABLE RULES AND SHOULD NOT BE RELIED UPON. ALL OF
THE FOREGOING ARE SUBJECT TO CHANGE AND ANY SUCH CHANGES COULD AFFECT THE
CONTINUING VALIDITY OF THIS DISCUSSION. EACH E/C SHAREHOLDER SHOULD CONSULT
SUCH SHAREHOLDER'S OWN TAX ADVISOR WITH RESPECT TO THE SPECIFIC TAX
CONSEQUENCES OF THE MERGER TO SUCH SHAREHOLDER, INCLUDING THE APPLICATION AND
EFFECT OF STATE, LOCAL AND FOREIGN TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES
IN FEDERAL LAWS OR OTHER TAX LAWS.
TAX LOCK-UP LETTERS
Consummation of the Reorganization is conditioned upon there being
executed and delivered certain "tax lock-up letters" by all of the holders of
E/C Stock who will receive shares of La-Z-Boy Common Stock in the Merger. These
tax lock-up letters essentially prohibit sales or dispositions of the shares of
La-Z-Boy Common Stock subject thereto prior to the second anniversary of the
consummation of the Merger other than pursuant to "Permitted Transfers." For
purposes of the foregoing, a "Permitted Transfer" is (i) a disposition by will
or under the laws of descent and distribution; (ii) an offering, sale or other
disposition by any shareholder which is not a natural person to any
corporation in which the direct or indirect parent of such shareholder owns,
directly or indirectly, 100% of the outstanding capital stock of such
corporation; (iii) a transfer by operation of law; or (iv) a disposition to
any person who receives shares of La-Z-Boy Common Stock in the Merger.
RESALE OF LA-Z-BOY COMMON STOCK; RESTRICTIONS ON TRANSFER
The shares of La-Z-Boy Common Stock to be issued in the Merger will be
registered under the Securities Act and will be transferable under the
Securities Act, except for shares issued to any shareholder who may be deemed
to be an "affiliate" of E/C for purposes of Rule 145 under the Securities Act.
Affiliates may not sell shares of La-Z-Boy Common Stock acquired in connection
with the Merger except pursuant to an effective registration statement under
the Securities Act covering such shares or in compliance with Rule 145 or
another applicable exemption from the registration requirements of the
Securities Act.
In addition, shareholders of E/C executing and delivering "tax lock-up
letters" will be subject to the restrictions on disposition set forth therein.
See "Tax Lock-up Letters."
STOCK LISTING
The shares of La-Z-Boy Common Stock to be issued in the Merger will be
approved for listing on the NYSE and the PSE subject to official notice of
issuance and to the approval by the shareholders of E/C of the Merger.
<PAGE>
MANAGEMENT OF THE SURVIVING CORPORATION AFTER THE MERGER
It is anticipated that, upon consummation of the Merger, the Board of
Directors of the Surviving Corporation will consist of four persons, one of
whom will be Mr. Rodney D. England, the current Chairman of the Board,
President, and Chief Executive Officer of E/C, and the remainder of whom will
be current officers of La-Z-Boy. In addition, following consummation of the
Merger, it is expected that (i) Mr. England will become the President and Chief
Executive Officer of the Surviving Corporation, (ii) Mr. Otis S. Sawyer, the
current Vice President Finance of E/C, will become Vice President Finance of
the Surviving Corporation, (iii) Mr. Dennis C. Valkanoff, the current Vice
President Business Development of E/C, will become a Vice President of the
Surviving Corporation, (iv) Mr. James L. Price, the current Vice President
Manufacturing of E/C, will become Vice President Manufacturing of the Surviving
Corporation, and (v) the remaining officers of the Surviving Corporation will
consist of current officers of La-Z-Boy.
PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial statements
are presented to illustrate the financial statement effect of the Merger, as
described previously in this Proxy Statement/Prospectus, and should be read in
conjunction with the historical financial statements of E/C and La-Z-Boy
contained elsewhere herein and incorporated herein by reference. The pro forma
condensed combined financial statements have been prepared assuming that the
Merger will be accounted for as a purchase and, accordingly, the cost of E/C
assets acquired and liabilities assumed will be allocated at their estimated
fair values, based upon appraisals, net realizable values, or other analysis,
with appropriate recognition given to the effect of current interest rates and
income taxes. The excess of the net assets acquired over the purchase price
will be recorded as goodwill. The pro forma fair values used herein are
preliminary and subject to further refinement.
The accompanying unaudited pro forma condensed combined balance sheet
adjusts the historical balance sheets of La-Z-Boy and E/C at October 29, 1994
and September 30, 1994, respectively, as if the Merger had occurred as of that
period end.
The accompanying unaudited pro forma condensed combined statements of
operations adjust the historical statements of operations of La-Z-Boy and E/C
for their respective fiscal years ended April 30, 1994 and June 30, 1994 and
for the six month periods ended October 29, 1994 and September 30, 1994,
respectively, as if the Merger had become effective at the beginning of the
period.
The pro forma condensed combined financial statements may not be
indicative of the combined results of operations or combined financial
position that actually would have been achieved if the Merger had been in
effect as of the date and for the periods indicated or which may be obtained
in the future.
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
REFLECTING LA-Z-BOY AFTER GIVING EFFECT TO THE MERGER
(Dollars in thousands)
Unaudited
Unaudited Unaudited Pro Forma
La-Z-Boy E/C -----------------------
10/29/94 9/30/94 Adjustments(1) Balance
<S> <C> <C> <C> <C>
Current Assets
Cash and equivalents $ 12,299 $ 367 $(6,515)(b) $ 6,151
Receivables 193,004 3,525 196,529
Inventories 75,807 10,081 85,888
Deferred income taxes 15,849 15,849
Other current assets 8,735 398 9,133
Total current assets 305,694 14,371 (6,515) 313,550
Property, plant, and equipment 96,663 21,656 118,319
Goodwill 20,307 20,943 (b) 41,250
Other long-term assets 19,850 573 20,423
Total assets $442,514 $36,600 $14,428 $493,542
Current Liabilities
Current portion of long-term
debt $ 1,875 $ 2,290 $ 4,165
Accounts payable 27,170 7,160 35,168
Other current liabilities 51,106 2,096 52,364
Total current liabilities 80,151 11,546 91,697
Long-term debt 56,245 12,492 $ 6,515 (b) 75,252
Deferred income taxes 6,763 140 790 (a) 7,693
Other long-term liabilities 8,286 0 8,286
Shareholder's equity 291,069 12,422 7,123 (b) 310,614
Total liabilities and
shareholders' equity $442,514 $36,600 $14,428 $493,542
<FN>
- -----------------
(1) The pro forma condensed combined balance sheet has been prepared to
reflect the acquisition of E/C by La-Z-Boy for an estimated aggregate price
of $32,575 and a value of $30 per share of La-Z-Boy Common Stock. The
Plan of Merger requires that at least 50% of the initial consideration be paid
in La-Z-Boy Common Stock with the remainder paid in cash and/or La-Z-Boy notes.
Furthermore, additional payments in La-Z-Boy Common Stock may be required if
the Surviving Corporation exceeds predetermined Pre-Tax Income, as defined and
determined in accordance with the Plan of Merger in the two successive
twelve month periods following the Merger. These possible additional payments
have not been reflected in the pro forma condensed combined balance sheet.
For purposes of these pro forma adjustments, it is assumed that 60% of the
initial consideration will be made in La-Z-Boy Common Stock, 20% in cash,
and 20% in La-Z-Boy notes. Pro forma adjustments are made to reflect:
(a) The estimated deferred income tax liability arising upon termination
of E/C's S-corporation tax status.
(b) Consideration given in the form of cash payment of $6,515, La-Z-Boy
Notes of $6,515 at 8% for four years, and 651,500 shares of La-Z-Boy
Common Stock issued and valued at $30 per share, with the excess of
acquisition cost ($32,575) over the estimated fair market value of
net assets acquired ($11,632) resulting in $20,943 of goodwill.
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT
OF OPERATIONS REFLECTING LA-Z-BOY
AFTER GIVING EFFECT TO THE MERGER
(in thousands, except per share data)
La-Z-Boy (Unaudited)
Year Ended E/C Pro Forma
(53 weeks) Year Ended ------------------------
4/30/94 6/30/94 Adjustments(1) Balance
<S> <C> <C> <C> <C>
Sales $ 804,898 $ 105,781 $ 910,679
Cost of sales 593,890 87,288 681,178
Gross profit 211,008 18,493 229,501
Selling, general, and
administrative expense(3) 150,700 14,484 165,184
Operating profit 60,308 4,009 64,317
Interest expense 2,822 1,387 $ 521 (a) 4,730
Other income 669 79 (698)(b) 50
Pre-tax income 58,155 2,701 (1,219) 59,637
872 (c)
Income taxes 23,438 122 (203)(d) 24,229
Income before accounting change $ 34,717 $ 2,579 $(1,888) $ 35,408
Pro forma taxes 994
Pro forma net income $ 1,707
Average shares and equivalent
shares outstanding 18,268 652(2) 18,920
Income per share before
accounting change $ 1.90 $ 1.87
<FN>
- ----------------
(1) The pro forma condensed combined statement of operations has been
adjusted by the following to reflect the Merger as if it were effective at the
beginning of the period:
(a) Additional annual interest expense of $521 attributed to assumed
issuance of La-Z-Boy Notes of $6,515 at 8%.
(b) Amortization of estimated goodwill on a straight line basis over 30
years.
(c) Reflects additional income taxes on historical earnings of E/C as if
E/C was not an S corporation during the period.
(d) Reduction of income taxes related to additional expenses, excluding
non-deductible amortization, at an effective rate of 38.9%.
(2) Assumes 651,500 shares of La-Z-Boy Common Stock are issued to E/C
shareholders, as described in note 1 to the pro forma condensed combined
balance sheet.
(3) During the fourth quarter of fiscal 1994 E/C recorded a charge of
$600,000 in connection with a one-time bonus paid to its former chief
executive officer.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
REFLECTING LA-Z-BOY AFTER GIVING EFFECT TO THE MERGER
(In thousands, except per share data)
(Unaudited) (Unaudited)
La-Z-Boy E/C (Unaudited)
26 Weeks 6 Months Pro Forma
Ended Ended ------------------------
10/29/94 9/30/94(1) Adjustments(2) Balance
<S> <C> <C> <C> <C>
Sales $ 404,973 $ 49,753 $ 454,726
Cost of sales 300,470 40,879 341,349
Gross profit 104,503 8,874 113,377
Selling, general, and
administrative expenses 76,051 7,358 83,409
Operating profit 28,452 1,516 29,968
Interest expense 1,414 803 $ 261 (a) 2,478
Other income 887 78 (349)(b) 616
Pre-tax income 27,925 791 (610) 28,106
254 (c)
Income taxes 11,577 36 (102)(d) 11,765
Net income $ 16,348 $ 755 $(762) $ 16,341
Pro forma income taxes 290
Pro forma net income $ 501
Average shares and equivalent
shares outstanding 18,140 652 (3) 18,792
Income from continuing operations
per share $ 0.90 $ 0.87
<FN>
- ------------------
(1) E/C's fiscal year ends on June 30; therefore, its operating results
for the six months ended September 30, 1994 include the fourth quarter of its
fiscal year ended June 30, 1994. During the fourth quarter of fiscal 1994, E/C
recorded a charge of $600,000 in connection with a one-time bonus paid to its
former chief executive officer.
(2) The pro forma income statement has been adjusted by the following to
reflect the Merger as if effective at the beginning of the period:
(a) Additional interest expense of $261 attributed to assumed issuance
of La-Z-Boy Notes of $6,515 at 8%.
(b) Amortization of estimated goodwill on a straight line basis over 30
years.
(c) Reflects additional income taxes on historical earnings of E/C as if
E/C was not an S corporation during the period.
(d) Reduction of income taxes related to additional expenses, excluding
non-deductible amortization, at an effective rate of 38.9%.
(3) Assumes 651,500 shares of La-Z-Boy Common Stock are issued to E/C
shareholders, as described in note 1 to the pro forma condensed combined
balance sheet.
</TABLE>
<PAGE>
ENGLAND/CORSAIR, INC.
SELECTED FINANCIAL DATA
The following table sets forth certain condensed historical financial data
of E/C and is based on the financial statements of E/C, including the notes
thereto, which appear elsewhere in this Proxy Statement/Prospectus and should
be read in conjunction therewith. See "England/Corsair, Inc. Financial
Statements." Interim unaudited data for the three months ended September 30,
1994 and 1993 reflect, in the opinion of management of E/C, all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of such data. Results for the three months ended September 30,
1994 and 1993 are not necessarily indicative of results that may be expected
for any other interim period or for the fiscal year as a whole.
<TABLE>
<CAPTION>
(In thousands except per share data)
(unaudited)
Three Months
Ended September 30, Fiscal Years Ended June 30,
---------------------- -------------------------------------------------------------
Statement of 1994 1993 1994 1993 1992 1991 1990
Operations Data:
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales $ 23,063 $ 24,602 $ 105,781 $ 99,435 $ 86,175 $ 72,729 $ 65,242
Cost of sales 18,924 20,072 87,288 79,905 69,107 60,157 53,947
Gross profit 4,139 4,530 18,493 19,530 17,068 12,572 11,295
Selling, general, and
administrative
expenses(3) 2,979 3,097 14,484 12,632 10,040 8,422 7,707
Operating profit 1,160 1,433 4,009 6,898 7,028 4,150 3,588
Interest expense - net 358 299 1,318 1,073 1,305 1,833 1,421
Miscellaneous income 24 16 10 57 70 187 57
Pre-tax income 826 1,150 2,701 5,882 5,793 2,504 2,224
Income taxes(1) 35 24 122 (499) 2,100 930 820
Net income $ 791 $ 1,126 $ 2,579 $ 6,381 $ 3,693 $ 1,574 $ 1,404
Pro forma income taxes(1) 305 423 994 2,165
Pro forma net income $ 521 $ 727 $ 1,707 $ 3,717
Weighted average shares
used in per share
calculations 297 298 297 298 298 322 339
Net income per share -
historical $ 12.39 $ 4.90 $ 4.14
Pro forma net income per
share $ 1.75 $ 2.44 $ 5.75 $ 12.47
Dividends per share(2) $ .48 $ 2.18 $ 15.88 $ 8.81 $ 2.00 -0- -0-
<CAPTION>
(unaudited)
As of September 30, As of June 30,
----------------------- --------------------------------------------------------------
Balance Sheet Data: 1994 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Total assets $36,600 $ 34,367 $ 28,416 $ 23,335 $ 24,923 $ 24,724
Long-term debt,
including current
portion $14,782 $ 14,094 $ 7,619 $ 7,057 $ 9,225 $ 9,909
Total liabilities $24,178 $ 22,593 $ 14,499 $ 13,080 $ 17,765 $ 17,778
Shareholders' equity $12,422 $ 11,774 $ 13,917 $ 10,255 $ 7,158 $ 6,946
<FN>
- ---------------------------
(1) Beginning July 1, 1992, E/C elected to be treated as an "S
corporation" for Federal income tax purposes and accordingly was not
subject to Federal or certain state income tax at the corporate level.
The 1994 and 1993 fiscal periods contain an illustration of "pro forma
income taxes" which includes an additional estimated provision for income
taxes based on pre-tax income as if E/C had not been an S corporation.
E/C, for the 1993 fiscal year elected to adopt Financial Accounting
Standards Board Statement No. 109, "Accounting for Income Taxes"
(FAS 109), and the pro forma provisions for income taxes for periods
ending 1994 and 1993 have been reported in accordance with FAS 109.
The adoption of FAS 109 did not have a material effect on E/C's results
of operations.
(2) Dividends for the fiscal year ended June 30, 1994 include a non-recurring
distribution of AAA earnings (previously undistributed taxable earnings
since the S corporation election) in connection with a change in E/C's
debt arrangements and in management structure.
(3) During the fourth quarter of fiscal 1994, E/C recorded a charge of
$600,000 in connection with a one-time bonus paid to its former chief
executive officer.
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Results Of Operations
Year Ended June 30, 1994 Versus Year Ended June 30, 1993
E/C experienced a compounded growth rate in net sales of 15% from the
period 1990 through 1993. During this same time period gross profits as a
percent of net sales averaged 18.7%, and income before taxes averaged 5.0%.
However, sales for the fiscal year ended June 30, 1994 grew at only 6.4% and
income before taxes was 2.6% of sales, as shown in the table below.
<TABLE>
<CAPTION>
(Dollars in Thousands)
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Net sales $105,781 $ 99,435 $ 86,175 $ 72,729 $ 65,242
Gross profits $ 18,493 $ 19,530 $ 17,068 $ 12,572 $ 11,295
As a % to sales 17.5% 19.6% 19.8% 17.3% 17.3%
Income before
taxes $ 2,701 $ 5,882 $ 5,793 $ 2,504 $ 2,224
As a % to sales 2.6% 5.9% 6.7% 3.4% 3.4%
</TABLE>
Management believes that the decline in the rate of sales growth can be
attributed to a decision to limit the number of new products introduced into
the market in the spring of 1993. Management's decision was based on a desire
to minimize any disruption to a new manufacturing process implemented in the
third quarter of the fiscal year ended June 30, 1993, which was undertaken in
an effort to reduce direct labor and training expenses. Management anticipated
that this manufacturing re-engineering would initially cause a reduction in
productivity and an increase in employee turnover until fully implemented.
During 1994, management noted that productivity has increased and exceeded the
levels being attained prior to the re-engineering. It is management's belief
that the new production system, which is based on group incentive pay, will
provide a higher quality product at a lower overall cost to manufacture.
Cost of goods sold for the fiscal year ended June 30, 1994 was 82.5% of
sales compared to 80.4% for the fiscal year ended June 30, 1993. Management
attributes the majority of the decrease in gross margin to the lack of new
product introduction in 1993. The segment of the market in which E/C operates
is very price sensitive. As a product ages, its profit margins tend to decline
due to material and labor cost increases unless the product is re-engineered or
replaced with a new style. At the 1994 fall furniture market, E/C made
significant introductions of new product, which began shipping in January 1995.
Margins were further depressed in fiscal 1994 by freight concessions
designed to stimulate west coast sales. In February 1994, management began the
process of phasing out these freight concessions, which has not yet been
completed.
Selling and administrative expenses as a percent of net sales were 13.7%
for the fiscal year ended June 30, 1994 compared to 12.7% for the fiscal year
ended June 30, 1993. Over half of the increase in selling and administrative
costs can be attributed to a one time $600,000 bonus paid to the former chief
executive officer.
Also, in anticipation of the former chief executive officer's retirement,
and to prepare E/C for future expansion, additional salaries and relocation
costs were incurred in adding new executive level positions in manufacturing,
marketing, and finance.
Non-recurring legal and accounting fees relating to the preparation for a
public offering (which was abandoned) further increased fiscal 1994
administrative costs. Additional legal fees were incurred in the drafting of a
plan for management succession, which required the re-drafting of corporate
bylaws.
Interest expense for the fiscal year ended June 30, 1994 increased to
1.3% of sales from 1.2%. In anticipation of the chief executive officer's
retirement, E/C borrowed the funds necessary to restructure its existing debt
and distribute substantially all undistributed S corporation earnings to the
shareholders. The increase in interest expense resulted from additional debt
incurred to finance the distributions and the increase in long term leases used
to finance additional transportation equipment purchases.
Quarter Ended September 30, 1994 Versus September 30, 1993
Sales declined $1,539,000 for the quarter ended September 30, 1994 when
compared to the quarter ended September 30, 1993. Management attributes part of
the decline in sales revenue to its decision to limit new product introductions
in the fiscal year ended June 30, 1993. Other conditions depressing sales
include the devaluation of the Canadian dollar, which depressed Canadian
sales, and soft retail conditions experienced during the quarter ended
September 30, 1994.
<TABLE>
<CAPTION>
(Dollars in Thousands)
September 30, 1994 September 30, 1993
<S> <C> <C>
Net sales $23,063 $24,602
Gross profit $ 4,139 $ 4,530
As a % of Sales 17.9% 18.4%
Income before
taxes $ 826 $ 1,150
As a % of Sales 3.6% 4.7%
</TABLE>
Gross profit as a percent of sales declined 0.5% in the quarter ended
September 30, 1994 when compared to the quarter ending September 30, 1993.
Management attributes the decline in gross margins to the lack of new product
introduction in 1993.
Selling, general and administrative expenses were 12.9% of net sales for
the quarter ended September 30, 1994 compared to 12.6% for the quarter ended
September 30, 1993. The slight increase in expenses is primarily attributable
to additional administrative compensation.
Interest expense increased from $299,000 to $358,000 due to additional
capital leases on transportation equipment and additional borrowing levels due
to the management succession plan.
Year Ended June 30, 1993 Versus June 30, 1992
Sales for the fiscal year ended June 30, 1993 grew at 15.4% over the
fiscal year ended June 30, 1992 in line with continued market penetration.
Gross margins remained in line with the prior year. Income before taxes
was 5.9% of sales, down 0.8% from the fiscal year ended June 30, 1992.
Selling, general and administrative expenses increased to 12.7% of sales
for the fiscal year ended June 30, 1993 compared to 11.7% for the fiscal year
ending June 1992. The majority of the increase was due to increases in
advertising expense, professional fees, warranty expenses, and 401(k) plan
expenses.
E/C instituted a 401(k) retirement plan for the first time in the fiscal
year ended June 1993. Professional fees increased due to consulting associated
with E/C's decision to elect S corporation status for Federal tax reporting.
An increase in warranty expense resulted from quality problems experienced
as a result of the manufacturing re-engineering instituted in the third
quarter of 1993. Management believes that quality control procedures have been
more effective since that initial period.
Liquidity And Capital Resources
Year Ended June 30, 1994 Versus June 30, 1993
Cash increased by $109,000 during the year ended June 30, 1994. During
1994, E/C generated $5,419,000 in cash from operations as compared with
$8,124,000 during 1993. Net income of $2,579,000, depreciation and amortization
totaling $2,574,000, and increases in accounts payable and accrued liabilities
of $1,577,000 provided operating cash totaling $6,730,000, which was partially
offset by an increase in accounts receivable of $1,596,000.
For the fiscal year ended June 30, 1993 E/C generated $6,381,000 in
operating cash flow from net income along with $3,172,000 in cash flow
resulting from an increase in accounts payable and depreciation of
$1,908,000. An increase in inventory caused a reduction of operating cash
flow totaling $1,529,000.
For the fiscal year ended June 30, 1994 E/C raised additional capital by
issuing long-term debt in the amount of $3,375,000 net of repayments.
In 1994, a primary use of investing cash flows was $3,272,000 used to
purchase plant and equipment (including a new 120,000 square foot
manufacturing facility) compared to $2,965,000 in 1993. In both 1993 and
1994, transportation equipment additions were financed with long term capital
leases. For the fiscal year ended June 30, 1994 dividends totaling $4,722,000
were paid to shareholders as part of the plan for management succession.
Dividend distributions for 1993 totaled $3,234,000. In 1994, certain
shareholders also loaned approximately $1,288,000 to E/C in the
form of subordinated debt.
To accomplish the 1994 plan of succession and to restructure its existing
debt, E/C negotiated a new loan agreement which provides a credit facility of
$7,500,000, including a $3,750,000 term loan at 6.95% with the remainder as a
revolving credit bearing interest at the prime lending rate less 1/2%. The bank
loan agreement requires no principal payments for a period of three years at
which time the entire facility becomes a term note payable over four years with
a ten year amortization and a balloon payment at the end of the seventh year.
Quarter Ended September 30, 1994 Versus September 30, 1993
Cash increased by $149,000 for the quarter ended September 30, 1994.
During this quarter, E/C generated $1,280,000 in cash from operations as
compared to $1,000,000 for the quarter ending September 30, 1993. In the
quarter ended September 30, 1994 net income of $791,000, depreciation and
amortization totaling $813,000, and an increase in accounts payable of
$897,000 provided cash totaling $2,501,000, which was partially offset by
an increase in accounts receivable of $563,000 and an increase in inventories
of $530,000.
For the quarter ended September 30, 1993 net income of $1,126,000,
depreciation and amortization totaling $592,000, and a decline in accounts
receivable of $185,000 provided cash from operations totaling $1,903,000, which
was partially offset by an increase in inventories of $805,000 and an increase
in prepaid expenses of $126,000.
For the quarter ended September 30, 1994, $544,000 was used to purchase
machinery and equipment compared to $243,000 for the quarter ended September
30, 1993.
Dividends distributed for the quarter ending September 30, 1994 were
$143,000 as compared to $648,000 for September 30, 1993.
As of September 30, 1994 E/C had $6,469,000 outstanding against the
loan agreement. A portion of the $2,478,000 proceeds received during the
three months ended September 30, 1994 were used to retire debt with another
bank and other lenders whose loans had been collateralized by real property
owned by E/C.
Year Ended June 30, 1993 Versus June 30, 1992
Cash increased by $12,000 for the fiscal year ended June 30, 1993. For the
year ended June 30, 1993 E/C generated $8,124,000 in cash from operations
compared to $4,679,000 for the year ended June 30, 1992. In 1993 net income of
$6,381,000, depreciation and amortization of $1,908,000, and increases in
payables and accrued expenses totaling $3,172,000 less the reduction in
deferred income taxes of $784,000 provided cash totaling $10,677,000. The
primary use of operating cash flows in 1993 was to fund an increase in
inventories of $1,529,000 and to reduce income taxes payable by $934,000.
In 1992, net income of $3,693,000, depreciation and amortization of
$1,802,000, and a decrease in inventories totaling $1,093,000 provided cash
totaling $6,588,000. The primary use of operating cash flows in 1992 was to
reduce payables and accrued expenses totaling $2,290,000.
For the year ended June 30, 1993, cash in the amount of $2,965,000 was used
to purchase plant and equipment, compared to capital expenditures totaling
$983,000 in 1992. Transportation equipment was financed with long-term capital
leases in both 1993 and 1992. In 1993, dividends totaling $3,234,000 were paid
to shareholders.
Management believes that cash provided by operating activities, the bank
loan agreement, and the availability of favorable transportation equipment
leases will be sufficient to fund anticipated growth and to meet E/C's
capital requirements through fiscal 1995 and for the foreseeable future.
BUSINESS AND PROPERTIES
E/C is a manufacturer of upholstered furniture which is targeted at
moderate price points and sold under the England/Corsair brand name. E/C's
products include motion and stationary upholstered furniture consisting of
sofas, love seats, sleepers, matching chairs, recliners and accent chairs
and occasional tables. E/C offers imported occasional table products
manufactured from oak, maple and pine veneers which are designed to be
coordinated with the upholstered products.
Based on reported sales, E/C is in the top 40 largest U.S. residential
furniture manufacturers according to Furniture Today. E/C's current product
offerings include 45 separate style collections, each of which is comprised
of pieces available in various combinations of colors, fabrics and styles,
including colonial, traditional, contemporary, country and transitional styles.
E/C's products are sold through independent sales representatives
primarily to independent furniture retailers and specialty retailers, as well
as to certain regional and national chains. E/C maintains approximately 2,000
active accounts located in all 50 states, most of which are independent
furniture retailers.
E/C produces its products to order at its six manufacturing facilities
located in New Tazewell, Tennessee. E/C's present facilities comprise
approximately 685,000 square feet of manufacturing space.
MARKET PRICE OF STOCK AND DIVIDENDS
E/C has been a privately held corporation since its formation, and no
trading market for E/C Stock exists. E/C declared cash dividends of $0.48 per
share in the first quarter of the current fiscal year, $2.18, $3.75, $0.00, and
$9.95, respectively, in the first through fourth quarters of the fiscal year
ended June 30, 1994, and $0.00, $6.25, $0.00, and $2.56, respectively, in the
first through fourth quarters of the fiscal year ended June 30, 1993.
MANAGEMENT AND RELATED MATTERS
Directors and Executive Officers
<TABLE>
<CAPTION>
YRS. OF
DIRECTOR CO.
NAME AGE SINCE SERVICE BUSINESS EXPERIENCE
<S> <C> <C> <C> <C>
Rodney D. England 43 1987 26 He has been employed with
President, CEO and E/C continuously since 1966,
Chairman of the Board except for military service
from 1970-1972.
H. Wayne England 60 1969 25 He has direct responsibility
Executive Vice President, for the outside sales force
Sales and Marketing and assists in merchandising
and marketing.
Richard D. England 37 1989 22 He has held several positions
Vice President from Plant Manager to Vice
Administration President of Manufacturing to
Vice President of
Administration.
James L. Price 50 1994 1 He has been in the
Vice President of furniture industry for 25
Manufacturing years. He served as Vice
President of Manufacturing
for Goode Manufacturing
from 1992 to 1993, General
Manager of Schnadig
Corporation from 1991 to
1992, and Vice President
Manufacturing of T.P.I. from
1989 to 1991, all of which
are engaged in the furniture
business.
Otis S. Sawyer 37 1994 1 He was Controller of
Vice President Finance Council Craftsmen, Inc.
(casegoods) from 1988 to
1993. He holds an MBA
degree and is a certified
public accountant.
Walter Winding 54 1994 1 He has been an independent
consultant since 1994.
He was a Partner and
Director of H.M. Graphics
since 1993. He was
President and CEO of
Schweiger Industries
(furniture) from 1983 to
1993.
</TABLE>
<PAGE>
Executive Compensation
The following table provides information for each of E/C's last three
completed fiscal years concerning the compensation of its Chief Executive
Officer and of each other executive officer who served as such during the
fiscal year ended June 30, 1994 and whose total salary and bonus for such year
exceeded $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
====================================================================================
Annual Compensation
--------------------------------------
(a) (b) (c) (d) (e) (f)
Name and Principal Other Annual All Other
Position Year Salary($) Bonus($) Compensation($) Compensation($)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Rodney D. England 1994 142,196 8,695 1,181 2,498
CEO/President 1993 96,937 16,628 1,665 2,398
1992 77,820 30,431 1,485 925
H. Wayne England 1994 120,406 8,516 5,891 5,921
Vice President 1993 107,640 21,249 5,157 6,717
Marketing 1992 101,430 37,848 3,005 3,690
====================================================================================
</TABLE>
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth information provided by the persons
indicated with respect to the beneficial ownership (as defined under applicable
rules of the Commission) of shares of E/C Stock as of _____________, 1995 by
(i) each person known by E/C to be the owner of more than 5% of the outstanding
shares of E/C Stock, (ii) each director of E/C and executive officer named in
the Summary Compensation Table, and (iii) all directors and executive officers
of E/C as a group:
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME AND ADDRESS(1) NUMBER OF SHARES BENEFICIAL OWNERSHIP(2)
<S> <C> <C>
Rodney D. England(2)(3) 52,284 17.6%
H. Wayne England(2) 41,657 14.0%
Richard D. England(2)(4) 60,125 20.2%
Christopher C. England(2)(5) 55,511 18.7%
James O. England(2) 33,934 11.4%
Linda E. Duff(2)(6) 41,295 13.9%
James L. Price 0 0.0%
Otis S. Sawyer 0 0.0%
Walter Winding 0 0.0%
All directors and executive officers
as a group (seven persons) 154,066 51.8%
<FN>
- ----------------
(1) Unless otherwise noted, E/C believes that all persons named in the above
table have (i) sole voting and investment power with respect to all shares
of E/C Stock owned by them, except to the extent that authority is shared
by spouses under applicable law, and (ii) record and beneficial ownership
of such shares. Each such person has an address at 402 Old Knoxville
Highway, New Tazewell, Tennessee 37825.
(2) Rodney, Richard, Christopher, and James England and Linda Duff are
children of the late Arnold Dwight England, the founder of E/C. H. Wayne
England was Arnold England's brother and is the uncle of the above named
shareholders.
(3) Includes (i) 46,576 shares (15.7% of E/C Stock) held by Mr. Rodney England
individually and (ii) 5,708 shares (1.9%) held as trustee with sole voting
and investment power.
(4) Includes (i) 33,934 shares (11.4% of E/C Stock) held by Mr. Richard
England individually, (ii) 9,228 shares (3.1%) held as trustee with sole
voting and investment power, and (iii) 16,963 shares (5.7%) held as
co-trustee with shared voting and investment power.
(5) Includes (i) 31,795 shares (10.7% of E/C Stock) held by Mr. Christopher
England individually, (ii) 8,562 shares (2.9%) held as trustee with sole
voting and investment power, and (iii) 15,154 shares (5.1%) held as
co-trustee with shared voting and investment power.
(6) Includes (i) 30,924 shares (10.4% of the E/C Stock) held by Ms. Duff
individually, (ii) 8,562 shares (2.9%) held as trustee with sole voting
and investment power, and (iii) 1,809 shares (less than 1%) held as
co-trustee with shared voting and investment power.
</TABLE>
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On June 1, 1994 in connection with the reorganization of E/C, certain
shareholders of E/C loaned E/C approximately $1,288,000. The following persons
individually loaned E/C the amounts set forth opposite their names:
Rodney D. England $ 285,290
Richard D. England 178,106
James O. England 178,106
Christopher C. England 159,973
Linda E. Duff 152,589
The Lisa Epperson Trust 80,392
----------
$1,034,456
==========
In addition, various related trusts, for which the individuals named
above serve as trustees or co-trustees, loaned an aggregate amount of
approximately $253,784. The loans are evidenced by unsecured promissory notes
dated June 1, 1994. These notes bear interest at an annual rate of 7% and
mature in 1999. The proceeds of the notes were used for working capital. At
December 31, 1994 the outstanding balance of these notes was $1,159,415.
LA-Z-BOY CHAIR COMPANY
La-Z-Boy was incorporated under the laws of the State of Michigan in 1941
and is headquartered in the State of Michigan. La-Z-Boy is engaged primarily in
the manufacture of furniture. La-Z-Boy's principal office is located at 1284
North Telegraph Road, Monroe, Michigan 48161, and its telephone number is (313)
242-1444. For additional information regarding La-Z-Boy and its operations, see
"Incorporation of Certain Documents by Reference" and the documents described
therein.
DESCRIPTION OF LA-Z-BOY CAPITAL STOCK
The following description of the capital stock of La-Z-Boy does not
purport to be complete and is subject to and qualified in its entirety by
reference to the full texts of La-Z-Boy's Articles of Incorporation, as amended
(the "La-Z-Boy Articles"), and its By-Laws (the "La-Z-Boy Bylaws" and together
with the La-Z-Boy Articles, the "La-Z-Boy Charter Documents"), which are
exhibits to the Registration Statement of which this Proxy Statement/Prospectus
is a part and are incorporated herein by reference. The summaries provided
herein of certain provisions of the Michigan Business Corporation Act, as
amended (the "MBCA"), also do not purport to be comprehensive and are qualified
in their entirety by reference to the full text of such statutory provisions.
See also "Comparison of Shareholder Rights and Charter Documents" below.
GENERAL
La-Z-Boy's total authorized capital stock consists of: (a) 40,000,000
shares of La-Z-Boy Common Stock, of which approximately 17,969,000 shares were
issued and outstanding as of January 28, 1995 and approximately 3,855,000
shares are reserved for future issuance (including in the Merger), and (b)
5,000,000 shares of Preferred Stock (the "La-Z-Boy Preferred Stock"), none of
which shares have been issued or are currently reserved for future issuance.
Except as otherwise required by the La-Z-Boy Articles or the MBCA, authorized
but unissued shares of either class may be issued at the discretion of the
La-Z-Boy Board without need for any further action by the shareholders of
La-Z-Boy.
LA-Z-BOY PREFERRED STOCK
As permitted by the MBCA, the La-Z-Boy Articles authorize the La-Z-Boy
Board at any time, and from time to time, to divide the La-Z-Boy Preferred
Stock into one or more series, having such voting powers, full, limited, or
none, such designations, preferences, privileges, powers, and relative,
participating, optional, or other special rights, and such qualifications,
limitations, and restrictions thereon as shall be stated and expressed in the
resolutions of the La-Z-Boy Board providing for the issuance thereof. With
respect to any series designated by the La-Z-Boy Board, it also is authorized
to, among other things, specify the number of shares comprising such series,
the dividend rate or rates on the shares of such series and the preference or
relation which such dividends shall bear to any other class or series of
La-Z-Boy stock, and the redemption rights, if any, any purchase, retirement, or
sinking fund, any conversion rights, and any special voting rights relating to
such series.
Shares of any series of La-Z-Boy Preferred Stock hereafter designated and
issued and which subsequently are redeemed or otherwise acquired by La-Z-Boy
would return to the status of authorized and unissued shares of La-Z-Boy
Preferred Stock, without designation as to series, and thereafter may be
reissued by the La-Z-Boy Board.
It is possible for La-Z-Boy Preferred Stock (or additional shares of
La-Z-Boy Common Stock) to be issued for the purpose of making an acquisition by
an unwanted suitor of a controlling interest in La-Z-Boy more difficult,
time-consuming, or costly or to otherwise discourage an attempt to acquire
control of La-Z-Boy. Under such circumstances, the availability of authorized
and unissued shares of La-Z-Boy Preferred Stock and La-Z-Boy Common Stock may
make it more difficult for shareholders to obtain a premium for their shares.
Such authorized and unissued shares could be used to create voting or other
impediments or to frustrate a person seeking to obtain control of La-Z-Boy by
means of a merger, tender offer, proxy contest, or other means. Such shares
could be privately placed with purchasers who might cooperate with the La-Z-Boy
Board in opposing such an attempt by a third party to gain control of La-Z-Boy.
The issuance of new shares of La-Z-Boy Preferred Stock or La-Z-Boy Common Stock
also could be used to dilute ownership of a person or entity seeking to obtain
control of La-Z-Boy. Although La-Z-Boy does not currently contemplate taking
such action, shares of La-Z-Boy Common Stock or one or more series of La-Z-Boy
Preferred Stock could be issued for the purposes and effects described above
and the La-Z-Boy Board reserves its rights (consistent with its fiduciary
responsibilities) to issue such stock for such purposes.
LA-Z-BOY COMMON STOCK
Subject to the rights and preferences, if any, of any then outstanding
shares of La-Z-Boy Preferred Stock, the holders of La-Z-Boy Common Stock are
entitled to receive such dividends as may from time to time be lawfully
declared by the La-Z-Boy Board. With respect to every issue submitted to them
as La-Z-Boy shareholders at a meeting of shareholders or otherwise (including,
without limitation, the election of directors), such holders are entitled to
one vote per share of La-Z-Boy Common Stock. In the event of liquidation they
are entitled, after payment in full of the liquidation preference, if any, on
any then outstanding shares of La-Z-Boy Preferred Stock, to share ratably in
all assets of La-Z-Boy available for distribution to holders of shares of
La-Z-Boy Common Stock. Holders of shares of La-Z-Boy Common Stock do not have
preemptive rights and are not entitled to cumulate votes in the election of
La-Z-Boy directors. All shares of La-Z-Boy Common Stock now issued and
outstanding are, and all such shares to be issued in the Merger will be, fully
paid and nonassessable.
The registrar and transfer agent for the La-Z-Boy Common Stock is American
Stock Transfer & Trust Company.
CERTAIN ARTICLES PROVISIONS
Under Article VIII of the La-Z-Boy Articles, La-Z-Boy may not consummate a
"Business Combination" involving any corporation, person, or other entity that
is a 10%-or-more "beneficial owner" (as therein broadly defined) of shares of
La-Z-Boy stock entitled to vote in the election of La-Z-Boy directors (a
"Related Entity"), without the approval of the Business Combination by the
affirmative vote of the holders of at least 67% of the outstanding shares
entitled to vote in the election of La-Z-Boy directors, unless: (a) certain
"fair price" and related conditions specified in paragraph (2)(a) of Article
VIII are satisfied; (b) a memorandum of understanding concerning the Business
Combination was approved by a majority of the La-Z-Boy directors before the
Related Entity became such; (c) after the Related Entity became such, the
Business Combination has been approved by a majority of "Continuing Directors;"
or (d) the Business Combination relates to or is with a corporation a majority
of the outstanding shares of each class of equity of which is owned by La-Z-Boy
and following consummation of the Business Combination La-Z-Boy shareholders
(other than the Related Entity) will retain their proportionate voting and
equity interests in La-Z-Boy or the resulting combined entity.
For purposes of Article VIII, a "Business Combination" includes any merger
or consolidation of La-Z-Boy with or into a Related Entity; sale, exchange, or
lease of all or any substantial part of the assets of La-Z-Boy to a Related
Entity; or issuance or transfer by La-Z-Boy of voting securities of La-Z-Boy or
rights to acquire such voting securities if issued or exchanged with a Related
Entity for any sort of consideration. As defined in that article, any La-Z-Boy
director who was a member of the La-Z-Boy Board on the date Article VIII was
adopted by the La-Z-Boy shareholders and any other La-Z-Boy director who has
been elected by the La-Z-Boy shareholders prior to the time that the Related
Entity involved in the proposed Business Combination became a Related Entity,
or who, if so elected following the time the Related Entity became such, was
elected upon the recommendation of a majority of the then Continuing Directors
in office to succeed a Continuing Director.
Article X of the La-Z-Boy Articles provides that Article VIII (and Article
X itself) may not be amended or repealed except by the affirmative vote of at
least 67% of all shares of La-Z-Boy stock entitled to vote with respect
thereto, unless such amendment or repeal is approved and recommended to the
La-Z-Boy shareholders by a majority of those members of the La-Z-Boy Board who
would then qualify as Continuing Directors. Article X also requires the
affirmative vote of at least 67% of all La-Z-Boy shares entitled to vote in the
election of directors for any amendment of the La-Z-Boy Bylaws by La-Z-Boy
shareholders.
CERTAIN MBCA PROVISIONS
Chapter 7A of the MBCA provides that a "business combination" (as therein
defined) between a covered Michigan corporation or any of its subsidiaries and
an "interested shareholder" (generally, a 10%-or-more beneficial owner of
voting shares) or any affiliate thereof may not be consummated for at least
five years after the interested shareholder became such (or at any time
thereafter unless certain price and other conditions are also satisfied)
without approval (a) by 90% of the votes of each class of stock entitled to be
cast by the corporation's shareholders, and (b) by 2/3 of the votes of each
class entitled to be cast, excluding shares beneficially owned by the
interested shareholder, its affiliates and associates. Chapter 7A "business
combinations" include, among other transactions, mergers, significant asset
transfers, certain disproportionate issuances of shares to an interested
shareholder, certain reclassifications and recapitalizations disproportionately
favorable to such a shareholder, and the adoption of a plan of liquidation or
dissolution in which such a shareholder would receive anything other than cash,
but do not include purchases of shares from other shareholders in the open
market, a tender offer, or otherwise.
Currently, Chapter 7A does not apply to La-Z-Boy. However, although the
La-Z-Boy Board has no present plans or intentions to take such an action, the
chapter permits the La-Z-Boy Board at any time, by resolution and without a
shareholder vote, to cause La-Z-Boy to become subject, with respect to
specifically identified or unidentified interested shareholders, to the
supermajority vote requirements of the chapter.
Chapter 7B of the MBCA divests of their normal voting rights any shares of
a covered Michigan corporation that are acquired in a "control share
acquisition" (as defined in that chapter) unless, before or after the
acquisition, the shareholders of the corporation approve those rights. Two
votes are required for approval: (a) a majority of votes cast by all holders of
shares entitled to vote (voting by class in certain circumstances), and (b) a
majority of all such votes cast, excluding "interested shares" (i.e., in
general, shares controlled for voting purposes by the person that has made or
proposes to make the control share acquisition, any member of a group with that
person concerning the acquisition, or any officer or employee-director of the
corporation). Subject to certain exceptions (including acquisitions by gift or
inheritance, in satisfaction of a good faith security interest, or pursuant to
a merger agreement to which the corporation is a party), a "control share
acquisition" is an acquisition of outstanding voting shares of the corporation
or the right to direct the vote of such shares which, when added to shares
previously owned or controlled for voting purposes by any person, would entitle
the person, alone or as part of a group, to exercise or direct the exercise of
voting power in the election of the corporation's directors within any of the
following ranges of voting power: over 1/5 but less than 1/3, over 1/3 but less
than a majority, or a majority.
In addition to applying to certain other Michigan corporations, Chapter 7B
applies to any Michigan corporation which, like La-Z-Boy: (a) has its principal
place of business in Michigan, (b) has 100 or more shareholders of record,
excluding certain types of holders specified in the chapter ("excluded
holders"), and (c) without giving effect to any excluded holders, has over 10%
of its shares held of record by, or over 10% of its record shareholders who
are, Michigan residents. Chapter 7B permits a covered corporation to opt out of
coverage by means of an amendment to its articles of incorporation or bylaws
(including by a bylaw amendment adopted by directors), but La-Z-Boy has not
elected to be excluded from coverage. If such an election were made in the
future, it would be effective only with respect to a control share acquisition
occurring after the amendment making such election and before any subsequent
repeal of such amendment.
Under Chapter 7B, unless otherwise provided in the articles of
incorporation or bylaws of a covered corporation before a control share
acquisition has occurred, in the event that the corporation's shareholders
approve full voting rights for the shares acquired in such an acquisition and
the acquiring person has acquired a majority of all voting power of the
corporation, the corporation's shareholders (other than the acquiring person)
would have dissenters' rights to receive the "fair value" of their shares from
the corporation. In addition, if authorized in the covered corporation's
articles of incorporation or bylaws before a control share acquisition has
occurred, shares acquired in a control share acquisition are redeemable for
their fair value at the option of the corporation during certain periods
specified in the chapter. For each of these purposes, "fair value" is defined
in the chapter as a value not less than the highest per share price paid by the
acquiring person in the control share acquisition. Currently, neither of the
La-Z-Boy Charter Documents includes any provisions which would eliminate
dissenters' rights, or would permit redemption of an acquiring person's shares,
under the circumstances described above.
Section 368 of the MBCA prohibits a corporation that has shares registered
on a national securities exchange, such as La-Z-Boy, from privately purchasing
any of such listed shares at a per share price in excess of the average market
price per share for the 30 business days prior to the date of purchase from any
person holding more than 3% of its shares, if such person has owned the listed
shares for less than two years, unless the purchase has been authorized in
advance by the holders of the corporation's shares entitled to vote thereon,
meets the requirements of a provision in the corporation's articles of
incorporation permitting such a purchase, or is otherwise authorized by the
MBCA. The La-Z-Boy Articles do not contain any provision relevant to Section
368. If the redemption provisions of Chapter 7B discussed above were to be made
applicable to La-Z-Boy, as could occur through an amendment of the La-Z-Boy
Bylaws by the La-Z-Boy Board, the shareholder vote requirement of Section 368
would not apply to any redemption pursuant to Chapter 7B. However, the La-Z-Boy
Board has no present plans or intentions to adopt any such bylaw amendment.
CERTAIN POTENTIAL ANTI-TAKEOVER EFFECTS
The supermajority vote requirements of Articles VIII and X of the La-Z-Boy
Articles and the provisions of MBCA Chapter 7A (which, while not currently
applicable to La-Z-Boy, can be made applicable at any time by resolution of the
La-Z-Boy Board) do not prevent the acquisition of a significant or even
controlling voting interest in La-Z-Boy through the purchase of shares in the
open market, a tender offer, or otherwise. However, if the prospective
acquiror's acquisition terms are unacceptable to the La-Z-Boy Board, such
provisions can present substantial impediments to actions, such as a follow-up
merger, that a party obtaining such a voting interest may wish or need to take
in order to accomplish its acquisition goals. In addition, MBCA Chapter 7B
presents substantial direct impediments to the acquisition of a significant or
controlling interest in La-Z-Boy on terms unacceptable to the La-Z-Boy Board.
Such provisions of the La-Z-Boy Articles and the MBCA, therefore, may prevent,
hamper, or discourage persons unwilling or unable to negotiate acceptable
acquisition terms with the La-Z-Boy Board from undertaking or succeeding in an
"unfriendly" takeover attempt. The broad authority of the La-Z-Boy Board
concerning the terms of any series of La-Z-Boy Preferred Stock and its general
authority to issue shares of such series, additional shares of La-Z-Boy Common
Stock, and rights (including so-called "poison pill" rights) to acquire shares
of either class of capital stock, as well as the classified structure of the
La-Z-Boy Board discussed in the next section of this Proxy
Statement/Prospectus, also may have such anti-takeover effects.
COMPARISON OF SHAREHOLDER RIGHTS AND CHARTER DOCUMENTS
In the event the proposed Merger is consummated and E/C merges into LZB
Acquisition, shareholders of E/C whose shares of E/C Stock are converted into
shares of La-Z-Boy Common Stock will become shareholders of La-Z-Boy. Upon the
consummation of the Merger, the rights of La-Z-Boy shareholders will be
governed by the provisions of the La-Z-Boy Charter Documents and the MBCA.
Currently, the rights of E/C shareholders are governed by E/C's Restated
Charter (the "E/C Charter"), its Amended and Restated Bylaws (the "E/C Bylaws"
and, together with the E/C Charter, the "E/C Charter Documents"), the
Tennessee Business Corporation Act ("TBCA"), and, where applicable, certain
other Tennessee statutes.
There are differences between the La-Z-Boy Charter Documents and the E/C
Charter Documents. Moreover, although the MBCA and the TBCA are similar in many
respects, there are differences between the Michigan and Tennessee statutes
which may affect shareholders' rights.
Certain differences between the rights of holders of La-Z-Boy Common Stock
and the rights of holders of E/C Stock are summarized below. The following
discussion is not meant to be relied upon as an exhaustive list or detailed
description of such differences and is not intended to constitute a detailed
comparison or description of the provisions of the La-Z-Boy Charter Documents,
the E/C Charter Documents, the MBCA, the TBCA, or any other Tennessee statutes.
The following discussion is qualified in its entirety by reference to the
La-Z-Boy Charter Documents, the E/C Charter Documents, and the laws of the
State of Michigan and of the State of Tennessee, and holders of E/C Stock are
referred to the complete texts of such documents and laws. Additional
information concerning the La-Z-Boy Common Stock also is provided above under
"Description of La-Z-Boy Capital Stock."
CAPITAL STRUCTURE
Unlike La-Z-Boy, which has only one authorized class of common stock,
there are two classes of E/C Stock: the E/C Class A Stock, and the E/C Class B
Stock. The voting rights of holders of the E/C Class A Stock are comparable to
those of holders of La-Z-Boy Common Stock discussed above. Shares of E/C Class
B Stock have no voting rights with respect to election of E/C directors and
have no other voting rights, except in certain special cases set forth in the
E/C Charter or the TBCA.
Under certain circumstances specified in the E/C Charter, all outstanding
shares of E/C Class B Stock automatically would convert into shares of E/C
Class A Stock, and the E/C Charter also provides for automatic conversion of
shares of one class into shares of the other depending on whether the shares
are held by persons who then hold certain specified positions with E/C. No
comparable conversion provisions apply to shares of La-Z-Boy Common Stock.
As further discussed above, La-Z-Boy also has an authorized class of
Preferred Stock, whereas the only authorized classes of capital stock of E/C
are the E/C Class A Stock and the E/C Class B Stock.
BOARD OF DIRECTORS; REMOVAL; VACANCIES
The La-Z-Boy Bylaws provide for a board of directors divided into two
classes of four directors each and one class of three directors. As
contemplated by the La-Z-Boy Bylaws, La-Z-Boy directors are elected by class
for three-year, staggered terms. The E/C Bylaws provide for nine directors to
constitute the entire board, five of which directors are required to be the
following five officers of E/C: Chief Executive Officer, Executive Vice
President, Vice President Administration, Vice President Manufacturing, Vice
President Finance. Under the TBCA, all directors of a corporation are to be
elected annually, unless the corporation's charter provides for a longer term.
The E/C Charter does not contain any such provisions.
As permitted by the TBCA, the E/C Charter Documents provide that any E/C
director may be removed for cause by vote of a majority of the entire E/C
Board. The MBCA does not authorize the removal of directors by directors. Any
E/C director also may be removed at any time, with or without cause, by the
holders of E/C shares entitled to vote thereon; the same is true with respect
to removal of any La-Z-Boy director by the shareholders of La-Z-Boy.
The La-Z-Boy Bylaws delegate to incumbent directors the power to fill any
vacancies on the La-Z-Boy Board, however occurring, by the affirmative vote of
two-thirds of the remaining directors though less than a quorum. Any person so
appointed to fill a vacancy would hold office for the unexpired portion of the
term of the director whose place was filled. The E/C Bylaws do not permit any
E/C Board action to fill any vacancy on the E/C Board caused by a vote of E/C
shareholders, but any other vacancy may be filled by the E/C Board until the
next annual meeting of E/C shareholders. Where E/C Board action to fill a
vacancy is permitted, the affirmative vote of a simple majority of directors
remaining on the E/C Board is all that is required.
DISSENTERS' RIGHTS
Under the MBCA, shareholders that otherwise would be entitled to exercise
dissenters' rights with respect to an articles or charter amendment, a merger,
disposition of assets, or other extraordinary transaction do not have any
dissenters' rights if (a) the stock affected is either listed on a national
securities exchange or held of record by at least 2,000 shareholders or (b) the
holders of such stock are to receive cash or shares (or any combination
thereof) and such shares, if any, are either listed on a national securities
exchange or held of record by more than 2,000 shareholders. Under the TBCA,
shareholders that otherwise would be entitled to exercise dissenters' rights do
not have such rights if the stock affected is listed on a national securities
exchange or is a national market system security, but the type of consideration
to be received for such stock does not affect the availability of dissenters'
rights. The E/C Stock is neither listed on a national securities exchange nor a
national market system security. Except as noted in the next subsection of this
Proxy Statement/Prospectus or in the discussion of Chapter 7B of the MBCA under
"Description of La-Z-Boy Capital Stock," the matters with respect to which
shareholders of a Michigan corporation such as La-Z-Boy and shareholders of a
Tennessee corporation such as E/C may have dissenters' rights are generally
comparable. The procedural provisions of the MBCA and applicable Tennessee law
relating to dissenters' rights also do not differ significantly.
CERTAIN DIFFERENCES CONCERNING SHAREHOLDER VOTING AND EXTRAORDINARY
TRANSACTIONS
Both under MBCA, and under the TBCA and other Tennessee statutes, the
amendment of a corporation's articles of incorporation or charter, and, in
circumstances in which a shareholder vote is required for approval of a merger,
disposition of assets, or other extraordinary corporate transaction, such a
transaction, requires the affirmative vote of a majority of the outstanding
stock entitled to vote, and a majority of the outstanding stock of any class,
series, or similar category entitled to vote separately, subject, in each case,
to such "supermajority" voting requirements as may be provided for in the
corporation's articles of incorporation or charter and to such special
supermajority or other unusual voting requirements as are imposed by statute.
As more fully discussed under "Description of La-Z-Boy Capital Stock,"
Article VIII of the La-Z-Boy Articles under some circumstances requires a
supermajority shareholder vote for approval of certain Business Combinations
(as therein defined), and, although Chapter 7A of the MBCA does not currently
apply to La-Z-Boy, to the extent (if ever) that the La-Z-Boy Board may at some
time in the future determine to make the chapter applicable, Chapter 7A also
would impose supermajority voting requirements for certain business
combinations (as therein defined). Absent such requirements, some Article VIII
Business Combinations and Chapter 7A business combinations would require
majority shareholder approval and no shareholder approval would be required for
others. As also further discussed above, any amendment of Article VIII of the
La-Z-Boy Articles not recommended by Continuing Directors (as therein defined)
and any shareholder amendment of the La-Z-Boy Bylaws also requires a
supermajority vote.
The E/C Charter does not contain any supermajority shareholder voting
requirements. In addition, although the Tennessee Business Combination Act
contains provisions generally similar to Chapter 7A of the MBCA, that statute
does not apply to a non-public corporation (like E/C) absent an express
election to be covered in the corporation's charter, and the E/C Charter does
not contain such an election.
In addition, as also discussed under "Description of La-Z-Boy Capital
Stock," Chapter 7B would divest voting shares of La-Z-Boy acquired in a control
share acquisition (as therein defined) of their normal voting rights unless and
until approved by the shareholder votes specified in the chapter, and Section
368 of the MBCA in some cases would require shareholder approval for an
above-market purchase by La-Z-Boy of shares of La-Z-Boy Common Stock. The
Tennessee Control Share Acquisition Act contains provisions comparable to those
of Chapter 7B of the MBCA, and the TBCA contains provisions comparable to those
of Section 368 of the MBCA, but such Tennessee statutory provisions do not
apply to a closely-held, non-public corporation like E/C.
The MBCA contains a provision, for which there is no counterpart under
Tennessee law, that affords voting rights (as well as dissenters' rights) to
shareholders of an acquiring corporation concerning a merger with or an
acquisition of shares or assets of another entity where the consideration for
the merger or acquisition is to be shares of the acquiring corporation's common
stock (or convertibles) and the merger or acquisition would have a specified
substantial dilutive effect. Except in that respect and as otherwise indicated
above, the MBCA and the La-Z-Boy Charter Documents, and the applicable
Tennessee statutes and the E/C Charter Documents, respectively, provide similar
shareholder voting rights with respect to mergers, asset dispositions, and
other extraordinary transactions, as well as concerning amendments to the
respective Charter Documents of La-Z-Boy and E/C.
DERIVATIVE PROCEEDINGS
The MBCA provides that a shareholder of a corporation may commence and
maintain a derivative proceeding (i.e., a lawsuit brought in the right of the
corporation to recover damages or other relief for the benefit of the
corporation) only if the shareholder was a shareholder of the corporation at
the time of the act or omission complained of (or is a successor by operation
of law to one who was a shareholder at that time); the shareholder fairly and
adequately represents the interests of the corporation in enforcing the
corporation's right; the shareholder continues to be a shareholder until the
time of judgment, unless the failure to continue to be a shareholder is the
result of corporate action in which he did not acquiesce and the derivative
proceeding was commenced prior to the termination of his status as a
shareholder; and, prior to commencing the proceeding, the shareholder has made
a written demand upon the corporation to take suitable action and certain other
conditions concerning such demand have been satisfied. The TBCA also permits a
corporate shareholder to commence a derivative proceeding if the shareholder
was a shareholder of the corporation when the transaction complained of
occurred (or a successor to one who was), but does not expressly require the
shareholder to continue being a shareholder after that time or expressly impose
any other conditions comparable to those in the MBCA for commencement or
maintenance of such a proceeding.
DIRECTOR LIABILITY; INDEMNIFICATION
The MBCA authorizes a corporation to provide in its articles of
incorporation that a director will not be personally liable to the corporation
or its shareholders for monetary damages for breach of fiduciary duty as a
director, subject to certain exclusions. The TBCA authorizes a corporation to
provide for a similar limitation on directors' liability in its charter. The
La-Z-Boy Articles and the E/C Charter each contain such a liability limiting
provision. Under both the MBCA and the TBCA, such a provision does not
eliminate or limit a director's liability for breach of the duty of loyalty,
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, the unlawful payment of dividends or distributions,
or for any transaction from which the director derived an improper personal
benefit.
Both the MBCA and the TBCA require a corporation to indemnify its
directors, officers, employees, and agents under certain circumstances (in the
case of the TBCA, subject to any charter provisions to the contrary) and permit
broader indemnification of such persons under other circumstances relating to
derivative or other proceedings brought against such a person by virtue of such
person having served in such a capacity with or at the request of the
corporation. Both statutes also permit the advancement of expenses relating to
such proceedings under certain conditions.
Both the La-Z-Boy Charter Documents and the E/C Charter Documents require
indemnification of directors and officers to the fullest extent permitted by
applicable law. The La-Z-Boy Charter Documents also provide for mandatory
advancement of expenses of such an indemnitee under certain circumstances,
whereas advancement of expenses is not mandatory in any case with respect to
E/C indemnitees.
OTHER MATTERS
The La-Z-Boy Bylaws require that La-Z-Boy call a special meeting of
the shareholders whenever requested by shareholders owning, in the
aggregate, at least 75% of the entire capital stock of the corporation
entitled to vote at such special meeting. While the TBCA requires that a
special meeting of shareholders be held upon the demand of the holders of
at least 10% of all the votes entitled to be cast on any issue proposed to
be considered at the meeting (and the E/C Bylaws also so provide), the MBCA
does not have such a requirement. It does provide, however, that upon the
application of at least 10% of all the shares entitled to vote at a meeting
and for good cause shown, a court may order a special meeting of
shareholders to be called and held, for the transaction of such business as
the court may designate.
Any of the La-Z-Boy Bylaws (other than a provision in Article VIII(a)
of the La-Z-Boy Bylaws that corresponds to the provision in the La-Z-Boy
Articles requiring a supermajority vote for shareholder action to amend or
repeal the La-Z-Boy Bylaws) may be amended or repealed, and new bylaws may
be adopted, by the affirmative vote of a majority of the La-Z-Boy Board.
The E/C Bylaws authorize their amendment or alteration, and the adoption of
new bylaws, by majority vote of all of the voting stock of E/C issued and
outstanding. In the absence of any contrary provisions in the E/C Charter
Documents, the TBCA also authorizes the E/C Board to amend the E/C Bylaws,
acting by a majority of a quorum.
Tennessee has a statute, designated as the Tennessee Investor
Protection Act ("TIPA"), regulating certain tender offers (defined therein
as "takeover offers") for equity securities of an "offeree company"
(defined in TIPA to include, any Tennessee corporation involved in a
takeover offer for its equity securities and which has substantial assets
located in Tennessee). Among other exclusions from its definition of
"takeover offer," any offer made on substantially equal terms to the
holders of any class of equity of an offeree company is excluded, if the
number of holders does not exceed 50 at the time of the offer. Also
excluded is an offer made on substantially equal terms to all shareholders
of an offeree company and recommended by that company's board of directors,
if the terms of the offer, including any inducements to officers or
directors not available to all shareholders, have been disclosed to the
shareholders. Where applicable, TIPA requires the filing of a registration
statement by the offeror with the Tennessee Commissioner of Insurance and
Commerce (the "Tennessee Commissioner") and delivery to the Tennessee
Commissioner by both offeror and offeree company of all solicitation
materials used in connection with the takeover offer. It also prohibits
"fraudulent, deceptive, or manipulative acts or practices" by either side
in connection with the offer.
There is no Michigan statute comparable to TIPA and, although TIPA by
its terms purports to govern takeover offers for certain corporations not
organized under the laws of Tennessee, the U.S. Court of Appeals for the
Sixth Circuit has held TIPA to be unconstitutional as so applied. The
Sixth Circuit Court of Appeals also has held provisions of The Tennessee
Control Share Acquisition Act which purports to extend the scope of the
Tennessee counterparts of MBCA Chapters 7A and 7B to certain non-Tennessee
corporations unconstitutional as so applied.
<PAGE>
DESCRIPTION OF THE LA-Z-BOY NOTES
GENERAL
The La-Z-Boy Notes, known as the "La-Z-Boy Chair Company 8% Unsecured
Promissory Notes Due 1999," are unsecured obligations of La-Z-Boy to be issued
under the Indenture. The aggregate principal amount of the Notes outstanding at
any time under the Indenture is limited to $10,000,000. The Notes will be
substantially in the form set forth in the Indenture. See "Description of the
Indenture" for a summary of the provisions of the Indenture.
INTEREST RATE AND PAYMENT
The La-Z-Boy Notes will provide for 8% simple interest per annum on the
unpaid principal balance, payable annually.
SCHEDULED PRINCIPAL PAYMENTS
The principal of the La-Z-Boy Notes will be payable in four equal annual
installments.
OPTIONAL PREPAYMENT
The La-Z-Boy Notes will be subject to prepayment, in whole or in part,
without penalty or premium, at the option of La-Z-Boy, at any time after
issuance. The prepayment price will be an amount equal to the sum of the
outstanding principal balance plus all accrued and unpaid interest thereon.
RANKING
The La-Z-Boy Notes will be unsecured indebtedness of La-Z-Boy. With
respect to any assets of La-Z-Boy deposited, in trust, for the equal and pro
rata benefit of the holders of the La-Z-Boy Notes, such holders will have a
lien of first priority against such assets. With respect to those assets of
La-Z-Boy assigned to other creditors of La-Z-Boy as collateral for credit
extended to La-Z-Boy by such other creditors, the rights of the holders of the
La-Z-Boy Notes will be subordinate to the rights of such creditors. With
respect to the remaining assets of La-Z-Boy, the rights of the holders of the
La-Z-Boy Notes will rank equally with those of other general creditors of
La-Z-Boy.
LIMITED TRANSFERABILITY
There is currently no trading market for the La-Z-Boy Notes and it is
unlikely that any such market will develop. La-Z-Boy does not intend to take
any steps to facilitate the development of a trading market for the La-Z-Boy
Notes. The La-Z-Boy Notes will be transferable only upon the death of the
holder.
DESCRIPTION OF INDENTURE
The following is a summary of certain provisions of the Indenture. The
following summary does not purport to be complete and is subject to, and
qualified in its entirety by, all the provisions of the Indenture. Where
reference is made to particular provisions of the Indenture, such provision,
including definitions of certain terms, are incorporated herein by reference. A
copy of the executed Indenture may be obtained by writing La-Z-Boy at 1284
North Telegraph Road, Monroe, Michigan 48161.
GENERAL
The Indenture provides that the principal of and the interest on the
La-Z-Boy Notes will be payable at an office of La-Z-Boy maintained for such
purpose in the City of Monroe, State of Michigan; provided, however, that at
the option of La-Z-Boy, the principal of and interest on the La-Z-Boy Notes may
be paid by check mailed to the registered holders of the La-Z-Boy Notes
(Section 301). The Notes are to be issued as registered Notes in any
denomination as La-Z-Boy may determine. (Section 302). The La-Z-Boy Notes may
be transferred only upon the death of the Holder pursuant to the applicable
laws of descent, such permitted transfer will be without service charge other
than any tax or other governmental charge imposed in connection therewith,
subject to the limitations provided in the Indenture. (Section 304).
The Indenture limits the aggregate principal amount of the La-Z-Boy Notes
that may be outstanding at any time to $10,000,000 (Section 301). The Indenture
also provides that the La-Z-Boy Notes will mature on the fourth anniversary of
the Effective Time and bear 8% simple interest, and will have such other terms
and provisions, as provided in the Indenture.
The Indenture provides that the La-Z-Boy Notes are solely obligations of
La-Z-Boy and that no personal liability whatever, under any circumstances or
conditions, shall attach to or be incurred by the incorporators, shareholders,
officers or directors of La-Z-Boy because of the incurring of the indebtedness
authorized by the Indenture, or by reason of any of the obligations, covenants
or agreements, express or implied, in the Indenture or in any of the La-Z-Boy
Notes (Article Twelve).
CERTAIN COVENANTS OF LA-Z-BOY
The Indenture requires La-Z-Boy to (i) duly and punctually pay the
principal of and interest on the La-Z-Boy Notes and comply with all other
terms, agreements and conditions contained therein, or made in the Indenture
for the benefit of the La-Z-Boy Notes; (ii) maintain an office where the
La-Z-Boy Notes may be presented, surrendered for payment, transferred or
exchanged and where notices upon La-Z-Boy may be served; (iii) under certain
conditions segregate and hold in trust for the benefit of the persons entitled
thereto a sum sufficient to pay the principal or interest becoming due on the
La-Z-Boy Notes; (iv) deliver to the Designated Representative, within 120 days
after the end of each fiscal year a written statement to the effect that
La-Z-Boy has fulfilled all its obligations under the Indenture throughout such
year; and (v) preserve its corporate existence (Sections 1001, 1002, 1003 and
1005).
La-Z-Boy is required to maintain a list indicating the names and addresses
of the holders of the La-Z-Boy Notes, the aggregate amount of the La-Z-Boy
Notes outstanding and the amount of each La-Z-Boy Note outstanding. If, and so
long as La-Z-Boy acts as its own Paying Agent, the list maintained by La-Z-Boy
must indicate (i) whether there has been any default in the payment of any sums
due and payable under any of the La-Z-Boy Notes outstanding (a "Payment
Default"); (ii) if there has been such a Payment Default, the date of such
Payment Default; (iii) if there has been such a Payment Default, whether such
Payment Default has been cured; and (iv) if such a Payment Default has been
cured, the date of such cure (Section 701).
REDEMPTION PROVISIONS
The La-Z-Boy Notes will be redeemable, at any time, in whole or in part,
at the option of La-Z-Boy, at one hundred percent (100%) of their principal
amount together with accrued interest to the redemption date (Article Eleven).
MERGER AND CONSOLIDATION
The Indenture will permit, without the consent of Holders of the La-Z-Boy
Notes, the consolidation or merger of La-Z-Boy with or into any other
corporation, if (i) La-Z-Boy is the continuing corporation or if the successor
corporation is incorporated under the laws of the United States, any State
thereof or the District of Columbia and expressly assumes the obligations of
La-Z-Boy under the Indenture; and (ii) immediately after giving effect to such
transactions, no Event of Default shall have happened and be continuing
(Section 801).
EVENTS OF DEFAULT
Each of the following events is defined as an Event of Default under the
Indenture with respect to the La-Z-Boy Notes: (i) default in the payment of any
principal and interest on the La-Z-Boy Notes, when due, continued for 30
days (a "Payment Default"); (ii) failure to observe or perform any other
covenant contained in the Indenture for the benefit of the La-Z-Boy Note
Holders continued for 60 days after written notice from the Designated
Representative or the Holders of at least fifty percent (50%) in principal
amount of the outstanding La-Z-Boy Notes; or (iii) certain events of
bankruptcy, insolvency or reorganization (Section 101).
The Indenture provides that if an Event of Default, other than a Payment
Default, shall have occurred and be continuing, the Designated Representative
and the Holders of not less than fifty percent (50%) in principal amount of the
La-Z-Boy Notes outstanding may declare the principal and the interest accrued
thereon, if any, to be due and payable immediately. Upon certain conditions
such declarations may be annulled and past defaults (except for Payment
Defaults or defaults in compliance with certain covenants) may be waived by the
Holders of a majority in principal amount of the La-Z-Boy Notes outstanding
(Sections 501 and 513).
The Indenture provides that if a Payment Default shall have occurred and
be continuing any Holder may notify La-Z-Boy in writing of the occurrence of an
Event of Default with respect to such Holder's La-Z-Boy Note(s) only and may
declare the principal and the interest accrued thereon, if any, to be due and
payable immediately.
Under the Indenture La-Z-Boy must give to the Designated Representative
and the Holders of the La-Z-Boy Notes notice of all uncured defaults, other
than a Payment Default, known to it with respect to the La-Z-Boy Notes
within 90 days after such a default occurs (the term "default" includes the
events specified above without notice of grace periods) (Section 602).
No Holder of any Note may institute any action under the Indenture unless
(i) such Holder gives La-Z-Boy written notice of a continuing Payment Default;
(ii) the Holders of not less than fifty percent (50%) in the aggregate
principal amount of the La-Z-Boy Notes outstanding requests the Designated
Representative to institute proceedings in respect of an Event of Default;
(iii) such Holder or Holders offer the Designated Representative such
reasonable indemnity as the Designated Representative may require; (iv) the
Designated Representative fails to institute an action for 60 days thereafter;
and (v) no inconsistent direction is given to the Designated Representative
during such 60-day period by the Holders of a majority in aggregate principal
amount of the La-Z-Boy Notes outstanding (Section 506).
The Holders of a majority in aggregate principal amount of the La-Z-Boy
Notes outstanding have the right, subject to certain exceptions, to waive an
Event of Default, direct the time, method and place of conducting any
proceeding for any remedy available to the Designated Representative, or
exercising any power conferred on the Designated Representative with respect
to the La-Z-Boy Notes (Section 511).
The Indenture provides that, in case an Event of Default (other than a
Payment Default) shall occur and be continuing, the Designated Representative,
in exercising its rights and powers under the Indenture, will be required to
use the degree of care of a prudent man in the conduct of his own affairs
(Section 601). The Indenture further provides that the Designated
Representative shall not be required to expend or risk his own funds or
otherwise incur any financial liability in the performance of any of his duties
under the Indenture unless it has reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
reasonably assured to it (Section 601).
La-Z-Boy must furnish to the Designated Representative within 120 days
after the end of each fiscal year a statement signed by certain officers of
La-Z-Boy to the effect that a review of the activities of La-Z-Boy during such
year and of its performance under the Indenture and the terms of the La-Z-Boy
Notes has been made, and to the best of the knowledge of the signatories based
on such review, La-Z-Boy is not in default in the performance and observance of
the terms of the Indenture, or, if La-Z-Boy is in default, specifying such
default (Section 1004).
DEFEASANCE
Under the terms of the Indenture, La-Z-Boy, at its option, (i) will be
"Discharged" (defined herein as in the Indenture) from any and all obligations
in respect of the La-Z-Boy Notes (except in each case for certain obligations
to register the transfer of La-Z-Boy Notes, replace stolen, lost or mutilated
La-Z-Boy Notes, or hold moneys for payment in trust) or (ii) need not comply
with certain restrictive covenants of the Indenture (including those described
above under "Certain Covenants of La-Z-Boy"), if La-Z-Boy deposits in trust for
the benefit of the Holders, money or U.S. Government Obligations which passes
through the payment of interest thereon and principal thereof which will
provide for the payment of the principal of and interest on the La-Z-Boy Notes
on the dates such payments are due in accordance with the terms of the La-Z-Boy
Notes.
MODIFICATION OF THE INDENTURE
Under limited circumstances, the Indenture may be modified by La-Z-Boy and
the Designated Representative without the consent of the Holders of any
La-Z-Boy Notes. In addition, with certain exceptions, the Indenture or the
rights of the Holders of the La-Z-Boy Notes may be modified by La-Z-Boy and the
Designated Representative with the consent of the Holders of a majority in
aggregate principal amount of the La-Z-Boy Notes affected by such modification
then outstanding, but no such modification may be made which would (i) change
the maturity of any payment of principal of, or any premium on, or any
installment of interest on, any La-Z-Boy Note, or reduce the principal amount
thereof or the interest thereon, or change the method of computing the amount
of principal thereof or interest thereon on any date or change any place of
payment where, or the coin or currency in which, any La-Z-Boy Note or
interest thereon is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the maturity thereof;
(ii) reduce the percentage in principal amount of the outstanding La-Z-Boy
Notes, the consent of whose Holders is required for any such supplemental
indenture, or the consent of whose Holders is required for any waiver
of compliance with certain provisions of the Indenture or certain
defaults thereunder and their consequences, provided for in the Indenture;
or (iii) modify any of the provisions of certain Sections of the
Indenture including the provisions summarized in this paragraph, except to
increase any such percentage or to provide that certain other provisions of the
Indenture cannot be modified or waived without the consent of the Holder of
each outstanding La-Z-Boy Note affected thereby (Section 902).
THE DESIGNATED REPRESENTATIVE
Mr. Rodney D. England, having offices at 402 Old Knoxville Highway, New
Tazewell, Tennessee 37825, will act as Designated Representative under the
Indenture.
DESCRIPTION OF THE PERFORMANCE UNITS
The Performance Units will constitute general unsecured obligations of
La-Z-Boy to issue additional shares of La-Z-Boy Common Stock to former E/C
shareholders in respect of the Merger. For a description of the terms of the
Performance Units, see "The Merger and Related Transactions -- Performance
Units." The Performance Units will be non-transferable and will not be listed
on any exchange; there is therefore no expectation that any trading market
will be established for the Performance Units.
LEGAL MATTERS
The legality of the La-Z-Boy Common Stock, the La-Z-Boy Notes, and the
Performance Units will be passed upon for La-Z-Boy by its counsel, Miller,
Canfield, Paddock and Stone, P.L.C., 150 West Jefferson, Suite 2500, Detroit,
Michigan 48226. Rocque E. Lipford, the sole shareholder of Rocque E. Lipford,
P.C., which is a principal of Miller, Canfield, Paddock and Stone, P.L.C., is a
director of La-Z-Boy.
Certain legal matters will be passed upon for E/C by its counsel, Baker,
Donelson, Bearman & Caldwell, 2200 Riverview Tower, Knoxville, Tennessee 37902.
EXPERTS
The financial statements of E/C included in this Proxy
Statement/Prospectus and in the Registration Statement have been audited by BDO
Seidman, independent certified public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of that firm as experts in auditing and accounting in giving said
reports.
The financial statements incorporated in this Proxy Statement/Prospectus
by reference to the Annual Report on Form 10-K of La-Z-Boy for the fiscal year
ended April 30, 1994, have been so incorporated in reliance on the report of
Price Waterhouse LLP, independent accountants, given on the authority of said
firm as experts in auditing and accounting.
A representative of BDO Seidman is expected to be present at the Meeting.
This representative will have an opportunity to make statements if he or she so
desires and will be available to respond to appropriate questions.
<PAGE>
F-1
ENGLAND/CORSAIR, INC.
FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
Page
Report of Independent Certified Public Accountants..................... F-2
Balance Sheets as of June 30, 1994 and 1993............................ F-3
Statements of Income for Each of the Three Years in the Period
Ended June 30, 1994................................................... F-5
Statements of Stockholders' Equity for Each of the Three Years in the
Period Ended June 30, 1994............................................ F-6
Statements of Cash Flows for Each of the Three Years in the Period
Ended June 30, 1994................................................... F-7
Summary of Accounting Policies......................................... F-9
Notes to Financial Statements.......................................... F-11
Balance Sheets as of September 30, 1994 and June 30, 1994 (Unaudited).. F-18
Statements of Income for the Three Months Ended September 30, 1994 and
September 30, 1993 (Unaudited)........................................ F-19
Statements of Cash Flows for the Three Months Ended September 30, 1994
and September 30, 1993 (Unaudited).................................... F-20
Notes to Financial Statements (Unaudited).............................. F-21
<PAGE>
F-2
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
England/Corsair, Inc.
Tazewell, Tennessee
We have audited the accompanying balance sheets of England/Corsair, Inc.
as of June 30, 1994 and 1993, and the related statements of income,
stockholders' equity and cash flows for each of the three years in the period
ended June 30, 1994. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of England/Corsair, Inc. at
June 30, 1994 and 1993, and the results of its operations and its cash flows
for each of the three years in the period ended June 30, 1994, in conformity
with generally accepted accounting principles.
High Point, North Carolina BDO SEIDMAN
August 12, 1994
<PAGE>
F-3
ENGLAND/CORSAIR, INC.
BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
June 30, 1994 1993
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current
Cash $ 218 $ 109
Receivables:
Trade, less allowance of $68 for possible losses 833 397
Factors (Note 1) 2,129 986
Inventories (Note 2) 9,551 10,004
Other, including prepaid expenses 326 129
TOTAL CURRENT ASSETS 13,057 11,625
PROPERTY AND EQUIPMENT, less accumulated
depreciation and amortization (Notes 3, 5 and 6) 20,795 16,325
OTHER, including cash surrender value of insurance
(face amount $3,050) on officers' lives, less
loans of $40 515 466
$34,367 $ 28,416
</TABLE>
<PAGE>
F-4
ENGLAND/CORSAIR, INC.
BALANCE SHEETS (CONCLUDED)
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
June 30, 1994 1993
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade $ 6,397 $ 5,294
Accruals:
Compensation 1,577 1,158
Employee benefits (Note 6) 241 202
Income taxes 58 66
Interest 86 70
Current maturities of long-term debt (Note 5) 860 780
Current maturities of capital lease obligations (Note 6) 1,826 1,190
TOTAL CURRENT LIABILITIES 11,045 8,760
LONG-TERM DEBT, less current maturities (Note 5) 6,885 3,590
CAPITAL LEASE OBLIGATIONS, less current maturities (Note 6) 4,523 2,059
DEFERRED INCOME TAXES (Note 7) 140 90
TOTAL LIABILITIES 22,593 14,499
COMMITMENTS (Note 6)
STOCKHOLDERS' EQUITY
Common stock (Notes 6 and 9):
Class A, without par value - shares authorized, 500,000;
issued 262,252 262 --
Class B, without par value - shares authorized, 500,000;
issued 72,678 73 --
Common stock, $1 par - shares authorized, 500,000;
issued 334,930 -- 335
Retained earnings 12,882 15,025
Treasury stock, at cost, 37,600 shares of Class A
Common stock (1,443) (1,443)
TOTAL STOCKHOLDERS' EQUITY 11,774 13,917
$34,367 $ 28,416
<FN>
See accompanying summary of accounting policies and notes to financial
statements.
</TABLE>
<PAGE>
F-5
ENGLAND/CORSAIR, INC.
STATEMENTS OF INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
Year ended June 30, 1994 1993 1992
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET SALES $105,781 $ 99,435 $ 86,175
COST OF SALES 87,288 79,905 69,107
GROSS PROFIT ON SALES 18,493 19,530 17,068
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 14,484 12,632 10,040
OPERATING INCOME 4,009 6,898 7,028
OTHER INCOME (EXPENSE)
Interest expense (1,387) (1,139) (1,359)
Interest income 69 66 54
Miscellaneous - net 10 57 70
TOTAL OTHER INCOME (EXPENSE) (1,308) (1,016) (1,235)
INCOME BEFORE TAXES ON INCOME 2,701 5,882 5,793
TAXES ON INCOME (BENEFIT) (Note 7) 122 (499) 2,100
NET INCOME $ 2,579 $ 6,381 $ 3,693
PRO FORMA AMOUNTS (Note 9)
INCOME BEFORE TAXES $ 2,701 $ 5,882
INCOME TAXES AT 36.8% 994 2,165
NET INCOME $ 1,707 $ 3,717
PRO FORMA INCOME PER SHARE 5.75 12.47
<FN>
See accompanying summary of accounting policies and notes to financial
statements.
</TABLE>
<PAGE>
F-6
ENGLAND/CORSAIR, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
Common Stock Treasury Stock
------------------ ------------------ Retained
Shares Amount Shares Amount earnings
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE, July 1, 1991 307,800 $308 36,500 $ 1,361 $ 8,212
ADD - net income for the year - - - - 3,693
DEDUCT:
S Corporation distributions - - - - (597)
10% stock dividend 27,130 27 - - (27)
BALANCE, June 30, 1992 334,930 335 36,500 1,361 11,281
ADD - net income for the year - - - - 6,381
DEDUCT:
S Corporation distributions - - - - (2,637)
Purchase of treasury stock - - 1,100 82 -
BALANCE, June 30, 1993 334,930 335 37,600 1,443 15,025
ADD - net income for the year - - - - 2,579
DEDUCT - S Corporation distributions - - - - (4,722)
BALANCE, June 30, 1994 334,930 $335 37,600 $ 1,443 $ 12,882
<FN>
See accompanying summary of accounting policies and notes to financial
statements.
</TABLE>
<PAGE>
F-7
ENGLAND/CORSAIR, INC.
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Year ended June 30, 1994 1993 1992
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers $ 104,185 $ 108,455 $ 93,995
Cash paid to suppliers and employees (97,395) (98,137) (86,662)
Interest paid (1,370) (1,098) (1,377)
Interest received 69 66 54
Income taxes paid, net of refunds received (80) (1,219) (1,424)
Other receipts 10 57 93
NET CASH PROVIDED BY OPERATING ACTIVITIES 5,419 8,124 4,679
CASH FLOWS FROM INVESTING ACTIVITIES
Distributions to stockholders (4,722) (3,234) -
Capital expenditures (3,272) (2,965) (983)
Increase in cash surrender value of insurance (19) (11) (25)
Purchase of treasury stock - (82) -
NET CASH USED IN INVESTING ACTIVITIES (8,013) (6,292) (1,008)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 5,170 - (1,500)
Principal payments on long-term debt (1,795) (790) (1,159)
Principal payments under capital lease obligations (672) (1,030) (1,009)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 2,703 (1,820) (3,668)
NET INCREASE IN CASH 109 12 3
CASH, at beginning of year 109 97 94
CASH, at end of year $ 218 $ 109 $ 97
<FN>
See accompanying summary of accounting policies and notes to financial
statements.
</TABLE>
<PAGE>
F-8
ENGLAND/CORSAIR, INC.
STATEMENTS OF CASH FLOWS (CONCLUDED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Year ended June 30, 1994 1993 1992
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY
OPERATING ACTIVITIES
Net income $ 2,579 $6,381 $ 3,693
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,574 1,908 1,802
Deferred income taxes 50 (784) (116)
Provision for losses on accounts receivable 17 64 33
Loss on disposition of assets - - 22
Change in assets and liabilities:
Decrease (increase) in accounts receivable (1,596) 94 (325)
Decrease (increase) in inventories 453 (1,529) 1,093
Decrease (increase) in prepaid expenses and
other assets (227) (248) (25)
Increase (decrease) in payables and accrued
expenses 1,577 3,172 (2,290)
Increase (decrease) in income taxes payable (8) (934) 792
Total adjustments 2,840 1,743 986
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 5,419 $8,124 $ 4,679
<FN>
See accompanying summary of accounting policies and notes to financial
statements.
</TABLE>
<PAGE>
F-9
ENGLAND/CORSAIR, INC.
SUMMARY OF ACCOUNTING POLICIES
ORGANIZATION AND BUSINESS The Company was incorporated in Tennessee
in 1964 and is engaged primarily in the
design, manufacture and sale of upholstered
residential furniture. In addition, the
Company imports and sells occasional tables.
SALES RECOGNITION AND
CREDIT RISK Sales are made to the retail furniture
industry primarily in the United States and
Canada. Sales are recognized when delivered
and accepted by the customer. The Company
uses factoring arrangements to minimize the
risk on accounts receivable. The Company has
no concentrated sales or credit risk with any
individual customer.
INVENTORIES Inventories are valued at the lower of cost
(first-in, first-out) or market. Routine
maintenance, operating and office supplies
are not inventoried.
PROPERTY, EQUIPMENT AND
DEPRECIATION Property and equipment are stated at cost.
Depreciation is computed using straight-line
and accelerated methods for financial
reporting purposes over the following
estimated useful lives:
Years
Buildings and land
improvements 5 - 30
Machinery and equipment 5 - 10
Furniture, fixtures and office
equipment 3 - 10
Transportation equipment 3 - 7
Other vehicles 3 - 7
For income tax reporting purposes,
depreciation is computed under the same
methods used for financial reporting purposes
except for additions after June 30, 1986 for
which the straight-line method is used for
financial reporting purposes and accelerated
methods are used for income tax reporting
purposes.
PRO FORMA DATA Pro forma adjustments are presented to
reflect a provision for income taxes based
upon pro forma income before taxes as if the
Company had not been an S Corporation for
the years ended June 30, 1994 and 1993.
See accompanying notes to financial statements.
<PAGE>
F-10
ENGLAND/CORSAIR, INC.
SUMMARY OF ACCOUNTING POLICIES
(CONCLUDED)
TAXES ON INCOME In July 1992, the Company elected S
Corporation status for federal income tax
purposes (see Note 7).
For the year ended June 30, 1993, the Company
elected early adoption of the method for
accounting for income taxes pursuant to the
Statement of Financial Accounting Standards
No. 109 "Accounting for Income Taxes" (SFAS
109). SFAS 109, effective for fiscal years
beginning after December 15, 1992, requires,
among other things, a liability approach to
calculating deferred income taxes. This
change had no material effect on earnings for
the year ended June 30, 1993.
Deferred income taxes are provided on the
difference in earnings determined for tax and
financial reporting purposes. Since July 1,
1992 deferred taxes are provided for certain
state income taxes only, as these states do
not recognize the S Corporation election.
EMPLOYEE BENEFITS The Company does not provide post-employment
or retirement benefits to its employees.
Accordingly, the provisions of the Financial
Accounting Standards Board's Statements of
Financial Accounting Standards No. 106
"Employers' Accounting for Post-retirement
Benefits other than Pensions" and No. 112
"Employers' Accounting for Postemployment
Benefits" do not have an effect on the
financial condition or results of operations
of the Company.
STATEMENTS OF CASH FLOWS For purposes of the statements of cash flows,
the Company considers investments purchased
with a maturity of three months or less to be
cash equivalents. There were no cash
equivalents at June 30, 1994 or 1993.
FREIGHT REVENUES AND COSTS Freight revenues are classified as an offset
against freight costs which are classified as
a cost of sales.
See accompanying notes to financial statements.
<PAGE>
F-11
ENGLAND/CORSAIR, INC.
NOTES TO FINANCIAL STATEMENTS
(IN THOUSANDS)
1. ACCOUNTS RECEIVABLE
AND FACTORING
AGREEMENT The Company factors most of its customer
accounts receivable with two factors. Of the
receivable invoices factored, most are
factored without recourse. Under the terms of
the agreement, the Company may receive
advances prior to the due dates of the
factored invoices. Such advances, available
from ninety to one hundred percent of the
factored receivables, bear interest at the
prime rate.
2. INVENTORIES Inventories are summarized as follows:
<TABLE>
<CAPTION>
1994 1993
- -----------------------------------------------------------------------------
<S> <C> <C>
Finished products, including tables $ 2,784 $ 3,713
Work-in-process 516 631
Raw materials 6,251 5,660
Total inventories $ 9,551 $10,004
</TABLE>
3. PROPERTY AND
EQUIPMENT Major classes of property and equipment
consist of the following:
<TABLE>
<CAPTION>
1994 1993
- ------------------------------------------------------------------------------
<S> <C> <C>
Land $ 987 $ 987
Buildings and improvements 12,021 10,330
Machinery and equipment (Note 5) 4,558 4,341
Furniture, fixtures and office equipment 2,436 1,746
Transportation equipment (Note 5) 10,268 6,452
Other vehicles 1,465 1,255
Totals 31,735 25,111
Less accumulated depreciation
and amortization (10,940) (8,786)
Net property and equipment $20,795 $ 16,325
</TABLE>
4. NOTES PAYABLE In July 1994, the Company entered into an
agreement with a bank which provides for a
line of credit up to a maximum of $3,750
with interest at the lesser of the prime rate
less .5 percent or the LIBOR rate plus 1.2
percent.
<PAGE>
F-12
ENGLAND/CORSAIR, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS)
4. NOTES PAYABLE
(CONCLUDED) Any amounts outstanding under this line of credit
at September 1, 1997 will convert to a term loan
with monthly payments beginning in September 1997
with the remaining balance to be paid in August
2001. The payments will be based upon an
amortization period of ten years.
In addition to the line of credit, the agreement
also provides for borrowings of an additional
$3,750. Under a bridge loan provided by the
bank, $3,750 was outstanding at June 30, 1994
(see note 5).
5. LONG-TERM DEBT Long-term debt consists of:
<TABLE>
<CAPTION>
1994 1993
- -----------------------------------------------------------------
<S> <C> <C>
Note to bank payable $43 per
month, including interest at
6.95%, beginning September
1997, with the remaining
balance of approximately
$2,600 due August 2001,
collateralized by property
and equipment (see Note 4) $3,750 $ --
Notes to shareholders payable $64
per quarter, plus interest at 7%
beginning August 1994 through
May 1999 (subordinated) 1,288 --
Note to bank payable $47 per
quarter, plus interest at the
prime rate plus 1% through
November 1995 with the remaining
balance due November 1995,
collateralized by property 265 1,443
Note to bank payable $50 per
quarter, plus interest at the
prime rate plus .75%, through
August 1995 with the remaining
balance due November 1995,
collateralized by property 1,145 1,345
</TABLE>
<PAGE>
F-13
ENGLAND/CORSAIR, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS)
5. LONG-TERM DEBT
(CONCLUDED)
<TABLE>
<S> <C> <C>
Industrial revenue bond
payable $13 per quarter,
plus interest at 90% of the
prime rate through
September 2008 with a
final payment due October
2008, collateralized by
property 725 775
Note payable $4 per month,
including interest at 10%
through February 2002,
collateralized by property
and guaranteed by a
stockholder 276 299
Other, collateralized by property
and transportation equipment 296 508
Totals 7,745 4,370
Less current maturities 860 780
Total long-term debt $6,885 $3,590
</TABLE>
At June 30, 1994, the approximate aggregate
amounts of long-term debt maturing in each of the
next five years are as follows: 1995 - $860;
1996 - $1,370; 1997 - $355; 1998 - $570;
and 1999 - $640. Certain of the above
loan agreements contain covenants with
respect to working capital, total indebtedness,
capital expenditures, stockholders' equity,
earnings and dividends. At June 30, 1994, the
Company was in compliance with the provisions
of the agreements.
6. COMMITMENTS Leases
The Company leases showroom facilities, a
manufacturing facility, a research facility,
equipment and delivery equipment under operating
leases that expire over the next five years.
In most cases, management expects that in the
normal course of business, leases will be renewed
or replaced with other leases. Rent expense was
approximately $520, $685 and $490 for
years ended June 30, 1994, 1993 and 1992,
respectively. In addition, the Company leases
equipment (primarily trucks used as
transportation equipment) under capital leases
expiring at various dates through May, 1998.
<PAGE>
F-14
ENGLAND/CORSAIR, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS)
6. COMMITMENTS
(CONTINUED) Following is an analysis of leased property
under capital leases by major classes:
<TABLE>
<CAPTION>
Asset balances at June 30, 1994 1993
- --------------------------------------------------------------
<S> <C> <C>
Transportation equipment $9,590 $6,191
Machinery and equipment 306 306
9,896 6,497
Less accumulated amortization 4,415 3,477
Net leased property under
capital leases $5,481 $3,020
</TABLE>
As of June 30, 1994, future net minimum lease
payments under capital leases and future
minimum rental payments required under
operating leases that have initial or
remaining noncancelable terms in excess of
one year are as follows:
<TABLE>
<CAPTION>
Capital Operating
leases leases
- ----------------------------------------------------------------
<S> <C> <C>
1995 $2,170 $ 150
1996 1,785 20
1997 1,430 20
1998 1,190 10
1999 389 --
Thereafter 176 --
Total minimum lease payments 7,140 $ 200
Less amount representing interest,
calculated at the Company's
incremental borrowing rate (791)
Present value of net minimum
lease payments $6,349
</TABLE>
<PAGE>
F-15
ENGLAND/CORSAIR, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
6. COMMITMENTS
(CONCLUDED) EMPLOYEE BENEFITS
The Company maintains a self-insurance
program for that portion of health care costs
not covered by insurance. The Company is
liable for claims up to $60 per
participant annually, and aggregate claims up
to $2,170 annually. Self-insurance costs
are accrued based upon the aggregate of the
liability for reported claims and an
estimated liability for claims incurred but
not reported.
WORKMEN'S COMPENSATION
In July 1992, the Company began a
self-insurance plan for workmen's
compensation coverage. The Company is liable
for claims up to $250 per employee and
aggregate claims up to $1,100 annually.
Self insurance costs are accrued based upon
the aggregate of the expected liability for
claims filed which have not been paid. The
plan requires the Company to maintain
$1,000 of letters of credit as security
to cover potential claims.
STOCKHOLDERS' AGREEMENTS
The Company has agreements with its
stockholders whereby the Company agrees to
purchase all shares of a stockholder upon
death at an amount established by the Board
of Directors (currently $61 per share). The
amount may be paid in cash or with notes to
be repaid over a period not to exceed 60
months with interest at 5%.
RETIREMENT PLAN
In August 1992, the Company adopted a
tax-qualified employee benefit plan which
meets the criteria of Section 401(k) of the
Internal Revenue Code. Under the Plan,
participants may elect to defer from 1% to
25% of their compensation into the Plan up to
specified limits per year ($9 during
1994). The Company contributes an additional
amount equal to 25% of the employee
contributions, limited to $1 per
employee. Participants become fully vested in
contributions made by the Company on a
graduated scale defined in the Plan document.
Company contributions were approximately
$147 and $149 in the years ended June 30,
1994 and 1993, respectively.
<PAGE>
F-16
ENGLAND/CORSAIR, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS)
7. TAXES ON INCOME (BENEFIT) Provisions for federal and state income
taxes in the statements of income are made
up of the following components:
<TABLE>
<CAPTION>
Year ended June 30, 1994 1993 1992
- ----------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ - $ - $1,925
State 72 285 245
72 285 2,170
Deferred taxes (benefit):
Federal - (764) (60)
State 50 (20) (10)
50 (784) (70)
Total taxes on income
(benefit) $122 $(499) $2,100
</TABLE>
The absence of a provision for federal
income taxes for the years ended June 30,
1994 and 1993 is due to the election by the
Company, and consent by its stockholders to
include their respective shares of taxable
income of the Company in individual federal
tax returns (S Corporation election). As
a result of the election, federal deferred
taxes were eliminated and included in income
for the year ended June 30, 1993.
The following summary reconciles income
taxes at the maximum federal statutory rate
with the effective rate.
<TABLE>
<CAPTION>
1994 1993 1992
% % %
<S> <C> <C> <C>
Provision for Federal income taxes
at the statutory rate - - 34.0
Increase (decrease) due to:
State income taxes 4.5 4.5 2.8
Federal income taxes eliminated
due to S corporation election - (13.0) -
Other - - (.5)
Taxes on income (benefit) 4.5 (8.5) 36.3
</TABLE>
<PAGE>
F-17
ENGLAND/CORSAIR, INC.
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
(IN THOUSANDS)
7. TAXES ON INCOME (BENEFIT)
(CONCLUDED) The components of the deferred income taxes
at June 30, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
1994 1993
- ----------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Inventories $ 3 $ 9
Allowance for doubtful accounts 3 3
Accrued expenses 31 8
Total deferred tax assets 37 20
Deferred tax liability - depreciation 177 110
Total net deferred tax liability $140 $ 90
<FN>
8. SUPPLEMENTAL CASH
FLOW INFORMATION Capital lease obligations of approximately
$3,772 and $2,382 were incurred when
the Company entered into leases for delivery
vehicles and equipment in the years ended
June 30, 1994 and 1993, respectively. The
Company did not enter into capital lease
obligations during the year ended June 30,
1992.
9. COMMON STOCK During the year ended June 30, 1994, the
Company entered into a plan whereby its
existing common stock was exchanged for
newly created Class A common stock and
Class B common stock. The Class A common
stock is voting stock which can only be held
by individuals actively involved in the
management of the Company. The Class B
common stock is non-voting stock. The
relative rights, preferences and limitations
of the shares are otherwise the same.
<PAGE>
F-18
ENGLAND/CORSAIR, INC.
BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARES)
</TABLE>
<TABLE>
<CAPTION>
September 30, June 30,
1994 1994
(UNAUDITED)
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 367 $ 218
Accounts Receivable less allowance for losses
of $68 1,096 833
Accounts Receivable from factors 2,429 2,129
Inventories (Note 3) 10,081 9,551
Prepaid Expense 398 326
Total Current Assets 14,371 13,057
Net Property and Equipment 21,656 20,795
Other Assets 573 515
$ 36,600 $ 20,795
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 7,160 $ 6,397
Current Portion of Long Term Debt 2,290 2,686
Accrued Liabilities 2,096 1,962
Total current liabilities 11,546 11,045
Long Term Debt
Long Term Notes Payable 6,661 6,457
Long Term Notes Payable to Shareholders 1,224 1,288
Obligations under long term capital leases 6,897 6,349
Less Current Portion (2,290) (2,686)
Long Term Debt 12,492 11,408
Deferred Taxes 140 140
Total Long Term Liabilities 12,632 11,548
Total Liabilities 24,178 22,593
Commitments (Note 4)
Stockholders Equity:
Common stock (Notes 6 and 9):
Class A, without par value - shares authorized,
500,000; issued 262,252 262 --
Class B, without par value - shares authorized,
500,000; issued 72,678 73 --
Common stock, $1 par - shares authorized,
500,000; issued 334,930 -- 335
Retained Earnings 13,530 12,882
Less Treasury Stock at cost, 37,600 shares
of Class A common stock (1,443) (1,443)
Total Stockholders Equity 12,422 11,774
$ 36,600 $ 34,367
<FN>
See accompanying notes to unaudited financial statements.
</TABLE>
<PAGE>
F-19
ENGLAND/CORSAIR, INC.
INCOME STATEMENTS (UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended
September 30, September 30,
1994 1993
-------- ---------
<S> <C> <C>
Net Sales $ 23,063 $ 24,602
Cost of Sales 18,924 20,072
Gross Profit 4,139 4,530
Selling, general and administrative
expenses 2,979 3,097
Operating Profit 1,160 1,433
Interest Expense (374) (318)
Interest Income 16 19
Miscellaneous Income 24 16
Income before taxes 826 1,150
Income Taxes 35 24
Net Income $ 791 $ 1,126
Pro forma income taxes $ 305 $ 423
Pro forma net income $ 521 $ 727
Average Shares 297 298
Pro forma net income
Per Share $ 1.75 $ 2.44
Dividends Per Share $ 0.48 $ 2.18
<FN>
See accompanying notes to unaudited financial statements.
</TABLE>
<PAGE>
F-20
ENGLAND/CORSAIR, INC.
STATEMENT OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
September 30, September 30,
1994 1993
<S> <C> <C>
Cash flows from operating activities:
Net income $ 791 $1,126
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization 813 592
Decrease (increase) in accounts receivable (563) 185
Decrease (increase) in inventories (530) (805)
Decrease (increase) in prepaid and other (128) (126)
(Decrease) increase in payables and other 897 28
Total adjustments 489 (126)
Cash provided by operating activities: 1,280 1,000
Cash flows from investing activities:
Distributions to shareholders (143) (648)
Capital expenditures (544) (243)
Increase in cash surrender value (2) (31)
Net cash used in investing activities: (689) (922)
Cash flows from financing activities:
Proceeds from issuance of long term debt 2,478 806
Principal payments on long term debt (2,253) (362)
Principal payments under capital leases (667) (446)
Net cash used in financing activities (442) (2)
Net increase in cash 149 76
Cash, beginning of period 218 109
Cash, ending of period $ 367 $ 185
Supplemental disclosures:
Cash paid during period - income taxes* $ 3 $ 1
Cash paid during period - interest $ 440 $ 302
<FN>
*E/C is an S corporation for tax purposes. All federal taxes are paid by
the shareholders.
See accompanying notes to unaudited financial statements.
</TABLE>
<PAGE>
F-21
ENGLAND/CORSAIR, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Note 1 - In the opinion of management, the accompanying unaudited financial
statements contain all adjustments (consisting of only normal recurring
adjustments) necessary to present fairly the financial position as of
September 30, 1994 and the results of operations and cash flows
for the three months ended September 30, 1994 and September 30, 1993.
Note 2 - The results of operations for the three months ended September 30,
1994 are not necessarily indicative of the results to be expected for the full
year.
Note 3 - Inventories are summarized as follows:
<TABLE>
<CAPTION>
(in Thousands)
September 30, 1994 June 30, 1994
<S> <C> <C>
Finished products, including tables $ 3,229 $2,784
Work-in-process 599 516
Raw materials 6,253 6,251
Total Inventories $10,081 $9,551
</TABLE>
Note 4 - On January 13, 1995, the Company, La-Z-Boy Chair Company ("La-Z-Boy")
and LZB Acquisition, Inc. ("LZB"), a wholly-owned subsidiary of La-Z-Boy,
executed an agreement which provides for the acquisition of the Company by
LZB pursuant to the terms of the Amended and Restated Reorganization
Agreement, on the effective date, holders of the Company's stock will receive,
at their election, either shares of La-Z-Boy's common stock, La-Z-Boy's 8%
Unsecured Promissory Notes due 1999 and/or cash. Holders of the Company's
stock will also receive Performance Units which will provide for additional
considerations in respect of the Merger if certain defined performance goals
are achieved by the Company subsequent to the Merger.
<PAGE>
ANNEX A
AMENDED AND RESTATED
REORGANIZATION AGREEMENT
dated as of January 13, 1995
among
La-Z-Boy Chair Company
LZB Acquisition, Inc.
and
England/Corsair, Inc.
<PAGE>
TABLE OF CONTENTS
Page
PREMISES................................................................... 1
1. DEFINITIONS AND RULES OF CONSTRUCTION................................ 2
1.1. Definitions.................................................. 2
"Acquisition Event".......................................... 2
"Agreement".................................................. 2
"Alpha" .................................................... 2
"CERCLA" .................................................... 2
"Closing".................................................... 2
"Closing Date"............................................... 2
"Code" .................................................... 2
"Debt" .................................................... 2
"E/C" .................................................... 3
"E/C Agreement".............................................. 3
"E/C Balance Sheet Date"..................................... 3
"E/C Benefit Plans".......................................... 3
"E/C Class A Stock".......................................... 4
"E/C Class B Stock".......................................... 4
"E/C Disclosure Schedule".................................... 4
"E/C Financial Statements"................................... 4
"E/C Formerly Owned Property"................................ 4
"E/C Intellectual Property".................................. 4
"E/C Leased Personal Property"............................... 4
"E/C Permits"................................................ 4
"E/C Property"............................................... 5
"E/C Real Estate"............................................ 5
"E/C Real Estate Documents".................................. 5
"E/C Stock".................................................. 5
"E/C Shareholder Meeting".................................... 5
"Effective Time"............................................. 5
"Encumbrance"................................................ 5
"Environmental Laws"......................................... 5
"ERISA" .................................................... 6
"Exchange Act"............................................... 6
"Exchanges".................................................. 6
"GAAP" .................................................... 6
"Governmental Entity"........................................ 6
"Guaranties"................................................. 6
"Hart-Scott-Rodino Act"...................................... 6
"Hart-Scott-Rodino Filings".................................. 6
"Hazardous Substance(s)"..................................... 7
"ICC" .................................................... 7
"Indenture".................................................. 7
"IRS" .................................................... 7
"LZB" .................................................... 7
"LZB Acquisition"............................................ 7
"LZB Common Stock"........................................... 7
"LZB Company"................................................ 7
"LZB Disclosure Schedule".................................... 7
"LZB Notes".................................................. 7
"LZB Preferred Stock"........................................ 7
"LZB SEC Documents".......................................... 7
"Material"................................................... 8
"Material adverse effect".................................... 8
"Materially Burdensome Condition"............................ 8
"MBCA" .................................................... 8
"Merger" .................................................... 8
"Merger Consideration"....................................... 9
"Michigan Certificate of Merger"............................. 9
"Michigan Corporation Bureau"................................ 9
"Merger Securities".......................................... 9
"PBGC" .................................................... 9
"Performance Units".......................................... 9
"Person" .................................................... 9
"Plan of Merger"............................................. 9
"Proxy Statement/Prospectus"................................. 9
"RCRA" .................................................... 9
"Registration Statement"..................................... 9
"Requisite Regulatory Approvals"............................. 10
"Returns".................................................... 10
"SEC" .................................................... 10
"Securities Act"............................................. 10
"Subsidiary"................................................. 10
"Surviving Corporation"...................................... 10
"Takeover Proposal".......................................... 10
"Taxes" .................................................... 10
"TBCA" .................................................... 11
"Tennessee Articles of Merger"............................... 11
"Violation".................................................. 11
"Voting Debt"................................................ 11
1.2. Plurals...................................................... 11
1.3. Gender....................................................... 11
2. THE MERGER AND RELATED TRANSACTIONS.................................. 11
2.1. Plan of Merger............................................... 11
2.2. E/C Shareholder Meeting...................................... 12
2.3. LZB Acquisition Shareholder Action........................... 12
2.4. Articles and Certificate of Merger; Effective
Time......................................................... 12
3. THE CLOSING.......................................................... 12
3.1. Closing Date................................................. 12
3.2. Sales and Transfer Taxes..................................... 13
3.3. Further Assurances........................................... 13
4. REPRESENTATIONS AND WARRANTIES....................................... 13
4.1. Representations and Warranties of E/C........................ 13
4.1.1. Organization, Standing, and Power................... 13
4.1.2. Capital Structure................................... 13
4.1.3. Authority........................................... 14
4.1.4. E/C Financial Statements............................ 15
4.1.5. Registration Statement.............................. 16
4.1.6. Compliance with Applicable Laws..................... 16
4.1.7. Litigation.......................................... 17
4.1.8. Taxes............................................... 17
4.1.9. Certain Agreements.................................. 19
4.1.10. Employee Benefit Plans.............................. 19
4.1.11. Subsidiaries........................................ 21
4.1.12. Absence of Certain Changes or Events................ 22
4.1.13. Antitakeover Provisions............................. 22
4.1.14. Environmental Matters............................... 22
4.1.15. Approvals........................................... 24
4.1.16. Brokers and Finders................................. 24
4.1.17. Labor Matters....................................... 24
4.1.18. Undisclosed Liabilities............................. 25
4.1.19. Illegal Payments.................................... 26
4.1.20. Bank Accounts....................................... 26
4.1.21. Insurance Matters................................... 26
4.1.22. Intellectual Property............................... 27
4.1.23. Conduct of Business................................. 27
4.1.24. Title to Assets..................................... 29
4.1.25. Real Property....................................... 30
4.1.26. Leased Personal Property............................ 31
4.1.27. E/C Tangible Personal Property...................... 32
4.1.28. Accounts Receivable................................. 32
4.1.29. Inventory........................................... 32
4.2. Representations and Warranties of the LZB
Companies.................................................... 32
4.2.1. Organization, Standing, and Power................... 32
4.2.2. Capital Structure................................... 33
4.2.3. Authority........................................... 33
4.2.4. The Merger Securities............................... 35
4.2.4. LZB SEC Documents................................... 35
4.2.5. Registration Statement.............................. 36
4.2.6. Approvals........................................... 36
4.2.7. Brokers and Finders................................. 36
4.2.8. No Material Adverse Change.......................... 36
5. COVENANTS............................................................ 37
5.1. Covenants of E/C............................................. 37
5.1.1. Ordinary Course..................................... 37
5.1.2. Dividends and Distributions......................... 37
5.1.3. Charter and Bylaw Amendments........................ 37
5.1.4. Other Actions....................................... 37
5.1.5. Advice of Changes; Government Filings............... 38
5.1.6. Accounting Methods.................................. 38
5.1.7. S Corporation Status................................ 38
5.1.8. Affiliate Transactions.............................. 38
5.1.9. Other Actions....................................... 38
5.1.10. No Solicitations.................................... 38
5.1.11. Acquisitions........................................ 39
5.1.12. Dispositions........................................ 39
5.1.13. Debt................................................ 39
5.1.14. Benefit Plans....................................... 39
5.1.15. Discharge of Claims; Capital
Expenditures........................................ 40
5.1.16. Access to Information............................... 40
5.2. Covenants of LZB Companies................................... 40
5.2.1. Dividends and Distributions......................... 40
5.2.2. Charter and Bylaw Amendments........................ 40
5.2.3. Other Actions....................................... 40
5.2.4. Advice of Changes; Government Filings............... 41
5.2.5. Other Actions....................................... 41
6. ADDITIONAL AGREEMENTS................................................ 41
6.1. Regulatory Matters........................................... 41
6.1.1. Registration Statement.............................. 41
6.1.2. Hart-Scott-Rodino Filings........................... 41
6.1.3. General............................................. 41
6.2. Opinions of Counsel.......................................... 42
6.3. Legal Conditions to Mergers.................................. 43
6.4. Affiliates................................................... 43
6.5. Expenses..................................................... 43
6.6. Additional Agreements; Best Efforts.......................... 44
6.7. Plan of Merger............................................... 44
6.8. Letter of E/C's Accountants.................................. 44
6.9. Letter of LZB's Accountants.................................. 44
6.10. E/C Disclosure Schedule...................................... 45
7. CONDITIONS PRECEDENT................................................. 45
7.1. Conditions to Each Party's Obligation To Effect
the Merger................................................... 45
7.1.1. Shareholder Approval................................ 45
7.1.2. Listing on Exchanges................................ 45
7.1.3. Requisite Regulatory Approvals...................... 45
7.1.4. Registration Statement.............................. 45
7.1.5. Blue Sky Matters.................................... 45
7.1.6. No Restrictions or Restraints;
Illegality.......................................... 45
7.1.7. No Materially Burdensome Condition.................. 46
7.1.8. Governmental Action................................. 46
7.1.9. Affiliates' Agreements.............................. 46
7.1.10. LZB Notes and Indenture............................. 46
7.2. Conditions to Obligations of the LZB Companies............... 46
7.2.1. Representations and Warranties...................... 46
7.2.2. Performance of Obligations of E/C................... 47
7.2.3. Consents Under Agreements........................... 47
7.2.4. Tax Opinions........................................ 47
7.2.5. Legal Opinions...................................... 47
7.2.6. Debt................................................ 47
7.2.7. Accountants' Letters................................ 47
7.2.8. Tax Lock-Up Letters................................. 47
7.2.9. S Corporation Opinion............................... 48
7.2.10. Waivers of Indemnification Rights................... 48
7.2.11. Termination of Employment Agreements................ 48
7.3. Conditions to Obligations of E/C............................. 48
7.3.1. Representations and Warranties...................... 48
7.3.2. Performance of Obligations of E/C................... 48
7.3.3. Consents Under Agreements........................... 49
7.3.4. Tax Opinions........................................ 49
7.3.5. Legal Opinions...................................... 49
7.3.6. Accountants' Letters................................ 49
7.3.7. Tax Lock-Up Letters................................. 49
8. TERMINATION AND AMENDMENT............................................ 49
8.1. Termination.................................................. 49
8.2. Effect of Termination........................................ 51
8.3. Amendment.................................................... 51
8.4. Extension; Waiver............................................ 51
8.5. Liquidated Damages; Termination Fee.......................... 52
9. GENERAL PROVISIONS................................................... 52
9.1. Survival of Agreements....................................... 52
9.2. Notices...................................................... 52
9.3. Interpretation............................................... 53
9.4. Counterparts................................................. 53
9.5. Entire Agreement; No Third Party Beneficiaries;
Rights of Ownership.......................................... 54
9.6. Governing Law................................................ 54
9.7. Enforcement of Agreement..................................... 54
9.8. Severability................................................. 54
9.9. Publicity.................................................... 54
9.10. Assignment................................................... 54
EXHIBITS
1. Plan of Merger
2. Outline of Terms of LZB Notes
<PAGE>
AMENDED AND RESTATED
REORGANIZATION AGREEMENT
THIS AMENDED AND RESTATED REORGANIZATION AGREEMENT (this
"Agreement") is entered into as of January 13, 1995, by and among
La-Z-Boy Chair Company, a Michigan corporation ("LZB"); LZB
Acquisition, Inc., a Michigan corporation ("LZB Acquisition"); and
England/Corsair, Inc., a Tennessee corporation ("E/C").
PREMISES:
A. The parties have executed and delivered a Reorganization
Agreement dated as of January 13, 1995 (the "Original Agreement")
and a Plan of Merger dated as of January 13, 1995 (the "Original
Plan").
B. The parties desire to amend and restate the Original
Agreement and the Original Plan in their entirety as set forth in
this Agreement and the Amended and Restated Plan of Merger attached
hereto as Exhibit 1 and made a part hereof (the "Plan of Merger").
C. This Agreement, together with the Plan of Merger, sets
forth the terms and conditions of the reorganization of the E/C and
the LZB Companies through the Merger, in which E/C will be merged
with and into LZB Acquisition, LZB Acquisition (the surviving
corporation of the Merger) will continue to be a wholly owned
subsidiary of LZB, holders of E/C Stock will exchange their shares
of E/C Stock for Merger Consideration pursuant to conversion
formulas and procedures set forth in the Plan of Merger.
D. The Plan of Merger is being executed and delivered by the
parties thereto contemporaneously with the execution and delivery
of this Agreement.
E. The respective Boards of Directors of E/C, LZB, and LZB
Acquisition have determined that it is in the best interests of
E/C, LZB, and LZB Acquisition and their respective shareholders for
E/C to be merged with and into LZB Acquisition upon the terms and
subject to the conditions set forth in this Agreement and the Plan
of Merger and in accordance with the TBCA and the MBCA.
F. The respective Boards of Directors of E/C, LZB, and LZB
Acquisition have adopted resolutions approving this Agreement, the
Plan of Merger, and the Merger, and the Board of Directors of E/C
has resolved to recommend approval of this Agreement, the Plan of
Merger, and the Merger to its shareholders.
G. For federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization under the provisions of
Section 368 of the Code.
<PAGE>
H. E/C and the LZB Companies desire to make certain
representations, warranties, and agreements in connection with the
transactions contemplated herein and also to prescribe various
conditions to the consummation of such transactions.
NOW, THEREFORE, in consideration of the premises and the
respective representations, warranties, covenants, and agreements
set forth herein, and intending to be legally bound hereby, the
parties agree as follows:
1. DEFINITIONS AND RULES OF CONSTRUCTION.
1.1. Definitions. As used in this Agreement, the following
terms have the following meanings:
"Acquisition Event" means that E/C shall have
authorized, recommended, proposed, or announced an
intention to authorize, recommend, or propose, or entered
into an agreement with any person (other than either of
the LZB Companies) to effect a Takeover Proposal or shall
have failed to publicly oppose a tender offer or exchange
offer by another person based on a Takeover Proposal.
"Agreement" means this Agreement, as the same may
from time to time be amended or supplemented.
"Alpha" means Alpha Aviation, Inc., a Tennessee
corporation.
"CERCLA" means the Comprehensive Environmental
Response Compensation and Liability Act, 42 U.S.C.
sections 9601 et seq.
"Closing" means the consummation of the transactions
which this Agreement provides are to occur on the Closing
Date.
"Closing Date" is defined in Section 3.1.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Debt" means the following to the extent any item is
not duplicative of another item: (a) all items of
borrowing which in accordance with GAAP would be included
in determining total liabilities as shown on the
liability side of a balance sheet as of the date at which
Debt is to be determined; (b) all Guaranties, letters of
credit, and endorsements (other than of notes, bills, and
checks presented to banks for collection or deposit in
the ordinary course of business); and (c) all items of
-2-
<PAGE>
borrowing secured by any Encumbrance existing on any
property owned by the person whose Debt is to be
determined, whether or not the borrowings secured thereby
shall have been incurred or assumed by such person.
"E/C" means England/Corsair, Inc., a Tennessee
corporation.
"E/C Agreement" means any of the following, whether
oral or written, to which E/C or any Subsidiary is a
party: (a) any consulting agreement not terminable on 60
days or less notice; (b) any union, guild, or collective
bargaining agreement; (c) any agreement with any officer
or other key employee of E/C or any Subsidiary the
benefits of which are contingent, or the terms of which
are materially altered, upon the occurrence of a
transaction involving E/C of the nature contemplated by
this Agreement; (d) any agreement with respect to any
officer of E/C or any Subsidiary providing any term of
employment or compensation guarantee; (e) any agreement
or plan, including any stock option plan, stock
appreciation rights plan, restricted stock plan, or stock
purchase plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will
be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value
of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this
Agreement; (f) any noncompetition or similar agreement
which restricts the conduct of any business by E/C or any
Subsidiary; (g) any loan or line of credit agreement,
note, or other credit facility of E/C or any Subsidiary
or any guarantees by E/C or any Subsidiary of the
indebtedness of any other person; (h) any agreement
providing for the payment or receipt by E/C or any
Subsidiary of $100,000 or more in any twelve-month
period; or (i) any agreement between E/C and any
Subsidiary.
"E/C Balance Sheet Date" means November 25, 1994.
"E/C Benefit Plans" means all plans, contracts,
programs, and arrangements for the benefit of the
employees of E/C or any of its Subsidiaries, including
(but not limited to) employment agreements, collective
bargaining agreements, pensions, profit sharing
arrangements, bonuses, deferred compensation, retirement,
stock option, severance, hospitalization, insurance,
salary continuation, vacation, day care, scholarship, and
other employee benefit plans, programs, or arrangements
now maintained by E/C or any Subsidiary or under which
-3-
<PAGE>
E/C or any Subsidiary has any obligations in respect of
any current or former employee.
"E/C Class A Stock" means the Class A Common Stock,
without par value, of E/C.
"E/C Class B Stock" means the Class B Common Stock,
without par value, of E/C.
"E/C Disclosure Schedule" means the disclosure
schedule to be delivered to the LZB Companies by E/C
pursuant to Section 6.10.
"E/C Financial Statements" means: (a) the balance
sheet as of June 30, 1994, the related statements of
income, retained earnings, and changes in cash flows of
E/C for the year ended June 30, 1994, the notes thereto
and the audit report prepared in connection therewith by
its independent certified public accountants; and (b) the
balance sheet as of November 25, 1994, the related
statements of income, retained earnings, and changes in
cash flows of E/C for the period from July 1, 1994 to
November 25, 1994, and the notes thereto.
"E/C Formerly Owned Property" means all E/C Property
owned or leased by E/C or any Subsidiary at any time in
the past but not owned or leased as of the Effective
Time.
"E/C Intellectual Property" means all intellectual
property of E/C or any Subsidiary including, without
limitation, all copyrights, patents, invention
disclosures, trade secrets, trademarks, trade names, and
service marks, whether registered or common law, and all
applications therefor that are pending or in the process
of preparation in the United States and in foreign
countries, that are directly or indirectly owned,
licensed, used, required for use, or controlled in whole
or in part by E/C or any Subsidiary.
"E/C Leased Personal Property" means all personal
property that is currently being leased by E/C or any
Subsidiary.
"E/C Permits" means all permits, licenses,
variances, exemptions, orders, and approvals of all
Governmental Entities which are necessary for the
operation of the business of E/C or any Subsidiary or the
use, operation, or ownership of any of the E/C Real
Estate.
-4-
<PAGE>
"E/C Property" means any parcel of real estate now
or heretofore owned by E/C or any Subsidiary or in which
E/C or any Subsidiary has or had any interest, including
any lessee's interest or any interest held as security
for an obligation, and all E/C Formerly Owned Property.
"E/C Real Estate" means all real property that is
owned, leased, or subleased by E/C or any of its
Subsidiaries or as to which any of them has any interest
of any kind including, without limitation, all office,
manufacturing, and warehouse facilities and ground
leases.
"E/C Real Estate Documents" means all deeds, leases,
subleases, and other agreements and instruments relating
to any of the E/C Real Estate.
"E/C Stock" means either or both of the E/C Class A
Stock and the E/C Class B Stock.
"E/C Shareholder Meeting" means a meeting of E/C's
shareholders to be held for the purpose of voting upon
the approval of this Agreement, the Plan of Merger, and
the Merger.
"Effective Time" is defined in Section 2.4.
"Encumbrance" means any pledge, lien, security
interest, encumbrance, mortgage, claim, proxy, voting
trust, voting agreement, obligation, option, equity
interest, demand, lease, sublease, tenancy, license,
easement, or rights of occupancy or use by another person
or any other interest whatsoever.
"Environmental Laws" means: (a) the Toxic Substance
Control Act, 15 U.S.C. sections 2601 et seq.; (b) the National
Historic Preservation Act, 16 U.S.C. sections 470 et seq.;
(c) the Coastal Zone Management Zone Act of 1972, 16
U.S.C. sections 1451 et seq.; (d) the Rivers and Harbors Act of
1899, 33 U.S.C. sections 401 et seq.; (e) the Clean Water Act,
33 U.S.C. sections 1251 et seq.; (f) the Flood Disaster
Protection Act, 42 U.S.C. sections 4001 et seq.; (g) the
National Environmental Policy Act, 42 U.S.C. sections 4321 et
seq.; (h) RCRA; (i) the Clean Air Act, 42 U.S.C. sections 7401
et seq.; (j) CERCLA; (k) the Hazardous Materials
Transportation Act, 49 U.S.C. sections 1801 et seq.; (l) the
Safe Drinking Water Act, 42 U.S.C. sections 300f et seq.;
(m) the Emergency Planning and Community Right-to-Know
Act, 42 U.S.C. sections 11001 et seq.; (n) the Federal
Insecticide, Fungicide and Rodenticide Act, 7 U.S.C.
sections 136 et seq.; (o) the Occupational Safety and Hygiene
-5-
<PAGE>
Act, 29 U.S.C. sections 685 et seq.; and (p) all other federal,
state, county, municipal, local, foreign, and other
statutes, laws, regulations, and ordinances which relate
to or deal with protection of human health or the
environment; all as may be from time to time amended.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Exchanges" means the New York Stock Exchange and
the Pacific Stock Exchange.
"GAAP" means generally accepted accounting
principles consistently applied.
"Governmental Entity" means any court, commission,
administrative agency, or other governmental authority or
instrumentality, whether federal, state, or local, and
whether domestic or foreign.
"Guaranties" means all obligations (other than
endorsements in the ordinary course of business of
negotiable instruments for deposit or collection) of a
person guaranteeing any Debt of any other person in any
manner, whether directly or indirectly, including,
without limitation, all obligations incurred through an
agreement, contingent, or otherwise, by such Person:
(a) to purchase such Debt or obligation or any property
or assets constituting security therefor; (b) to advance
or supply funds (i) for the purchase or payment of such
Debt or obligation, (ii) to maintain working capital or
other balance sheet conditions or otherwise to advance or
make available funds for the purchase or payment of such
Debt or obligation; (c) to lease property or to purchase
securities or other property or services primarily for
the purpose of assuring the owner of such Debt or
obligation; or (d) otherwise to assure the owner of the
Debt or obligation against loss in respect thereof.
"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, being Section 7A of
the Clayton Act, as amended.
"Hart-Scott-Rodino Filings" means the filing by E/C
and LZB of appropriate premerger notification forms with
respect to the Merger with the Federal Trade Commission
on the Justice Department pursuant to the Hart-Scott-
Rodino Act.
-6-
<PAGE>
"Hazardous Substance(s)" means: (a) any flammable or
combustible substance, explosive, and/or radioactive
material, hazardous waste, toxic substance, pollutant,
contaminant, and/or any related materials or substance
identified in and/or regulated by any of the
Environmental Laws; and (b) asbestos, polychlorinated
biphenyls, urea formaldehyde, chemicals and/or chemical
wastes, explosives, known carcinogens, petroleum products
and by-products (including fractions thereof), and radon.
"ICC" means the Interstate Commerce Commission.
"Indenture" means the Indenture pursuant to which
the LZB Notes will be issued, which shall be in form and
substance satisfactory to E/C and LZB.
"IRS" means the United States Internal Revenue
Service.
"LZB" means La-Z-Boy Chair Company, a Michigan
corporation.
"LZB Acquisition" means LZB Acquisition, Inc., a
Michigan corporation and a wholly owned subsidiary of
LZB.
"LZB Common Stock" means the Common Stock, $1.00 par
value, of LZB.
"LZB Company" means either LZB or LZB Acquisition.
"LZB Disclosure Schedule" means the disclosure
schedule delivered to E/C by the LZB Companies prior to
the execution of this Agreement.
"LZB Notes" means 8% Unsecured Promissory Notes Due
1999 of LZB issued pursuant to the Indenture, which shall
be in form and substance satisfactory to E/C and LZB and
which shall be consistent with the outline of the terms
thereof set forth in Exhibit 2.
"LZB Preferred Stock" means the Preferred Stock of
LZB.
"LZB SEC Documents" means the following documents
heretofore filed with or furnished to the SEC by LZB
(including, in each case, all documents incorporated by
reference therein): (a) Annual Report on Form 10-K for
the fiscal year ended April 30, 1994; (b) Quarterly
Reports on Form 10-Q for the fiscal quarters ended July
30, 1994 and October 29, 1994; (c) Current Report on Form
-7-
<PAGE>
8-K dated June 2, 1994; (d) Annual Report to Shareholders
for the fiscal year ended April 30, 1994; and (e)
definitive Proxy Statement for the annual meeting of
shareholders held on July 25, 1994.
"Material" (whether or not capitalized), when used
with any reference to any event, change, or effect with
respect to a specified person, means an event, change, or
effect which is material in relation to the condition
(financial or otherwise), assets, liabilities,
businesses, results of operations, or prospects of such
person (and its Subsidiaries, if any) taken as a whole.
In addition to the foregoing, when used with reference to
E/C, an event, change, or effect is "material" if any
resulting cost or loss of profits to E/C or the Surviving
Corporation exceeds or may exceed $25,000 (prior to
giving effect to any Tax consequences thereof).
"Material adverse effect" (whether or not
capitalized), when used with respect to a specified
person, means a material adverse effect on either (a) the
business, assets, liabilities, results of operations,
condition (financial or otherwise), or prospects of such
person (and its Subsidiaries, if any) taken as a whole,
or (b) the ability of any of such person to perform its
obligations hereunder or to consummate the transactions
contemplated hereby. In addition to the foregoing, when
used with reference to E/C, "material adverse effect"
means any cost or loss of profits to E/C or the Surviving
Corporation in an amount exceeding $100,000 (prior to
giving effect to any Tax consequences thereof).
"Materially Burdensome Condition" means any action
taken, or any statute, rule, regulation, or order
enacted, entered, enforced, or deemed applicable to the
Merger or any of the transactions contemplated hereby, by
any Governmental Entity which, in connection with the
grant of a Requisite Regulatory Approval, imposes any
condition or restriction upon E/C, either of the LZB
Companies, or the Surviving Corporation which would so
materially adversely impact the economic or business
benefits of the transactions contemplated by this
Agreement as to render inadvisable, in the reasonable
judgment of the Board of Directors of E/C or either LZB
Company, the consummation of the Merger.
"MBCA" means the Business Corporation Act of the
State of Michigan, as amended.
"Merger" means the merger of E/C with and into LZB
Acquisition pursuant to the Plan of Merger and this
-8-
<PAGE>
Agreement.
"Merger Consideration" means any one or more of the
following: (a) LZB Common Stock; (b) LZB Notes; (c) cash;
and (d) Performance Units.
"Michigan Certificate of Merger" means a certificate
of merger with respect to the Merger, to be filed with
the Michigan Corporation Bureau in accordance with the
MBCA.
"Michigan Corporation Bureau" means the Corporation
and Securities Bureau of the Michigan Department of
Commerce.
"Merger Securities" means: (a) the LZB Common Stock
to be issued as part of the Merger Consideration; (b) LZB
Notes to be issued as part of the Merger Consideration;
(c) the Performance Units; and (d) the LZB Common Stock
to be issued in payment of the Performance Units.
"PBGC" means the Pension Benefit Guaranty
Corporation.
"Performance Units" is defined in the Plan of
Merger.
"Person" (whether or not capitalized) means any
entity, whether a natural person, trustee, corporation,
partnership, limited liability company, joint stock
company, trust, unincorporated organization, business
association or firm, joint venture, government or agency,
instrumentality, or public subdivision thereof, court, or
otherwise.
"Plan of Merger" means the Amended and Restated Plan
of Merger dated as of January 13, 1995 between E/C and
LZB Acquisition, in the form of Exhibit 1.
"Proxy Statement/Prospectus" means the proxy
statement/prospectus constituting part of the
Registration Statement.
"RCRA" means the Resource Conservation and Recovery
Act of 1976, 42 U.S.C. sections 6901 et seq.
"Registration Statement" means a Registration
Statement on Form S-4 to be filed with the SEC pursuant
to the Securities Act by LZB in connection with its
issuance of the Merger Securities.
-9-
<PAGE>
"Requisite Regulatory Approvals" means all
authorizations, consents, orders, or approvals of, all
declarations or filings with, and the expiration or early
termination of all waiting periods by, any Governmental
Entity which are prescribed by law as necessary for the
consummation of the Merger and the other transactions
contemplated hereby (including, but not limited to,
expiration or early termination of the applicable waiting
period under the Hart-Scott-Rodino Act and all required
filings with and actions by the ICC), other than the
filing of the Tennessee Articles of Merger and the
Michigan Certificate of Merger.
"Returns" means all returns, declarations, reports,
statements, and other documents required to be filed in
respect of Taxes.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933,
as amended.
"Subsidiary" means, when used in respect of any
person, any corporation or other organization, whether
incorporated or unincorporated, of which such person
directly or indirectly owns or controls securities or
other interests having by their terms ordinary voting
power to elect 50 percent or more of the board of
directors or others performing similar functions with
respect to such corporation or other organization, or any
organization in which such person is a general partner.
"Surviving Corporation" means LZB Acquisition as the
surviving corporation of the Merger.
"Takeover Proposal" means any tender or exchange
offer, proposal for a merger, consolidation, or other
business combination involving E/C, or any proposal or
offer to acquire in any manner 10 percent or more of any
class of E/C's capital stock or 10 percent or more of
E/C's assets, other than the transactions contemplated by
this Agreement.
"Taxes" means all federal, state, local, foreign,
and other net income, gross income, gross receipts,
sales, use, ad valorem, value added, transfer, franchise,
profits, license, lease, service, service use,
withholding, payroll, employment, unemployment and
payroll related, excise, severance, stamp, occupation,
premium, property, or windfall profits taxes, customs,
duties, or other taxes, fees, assessments, or charges of
-10-
<PAGE>
any kind whatever, together with any interest and any
penalties, additions to tax, or additional amounts with
respect thereto.
"TBCA" means the Tennessee Business Corporation Act,
as amended.
"Tennessee Articles of Merger" means articles of
merger with respect to the Merger, to be filed with the
Tennessee Secretary of State in accordance with the TBCA.
"Violation" means, with respect to any document, any
event or condition which conflicts with, gives rise to or
results in any violation of or default (with or without
notice or lapse of time, or both) under, or gives rise to
a right of termination, cancellation, or acceleration of
any obligation or the loss of a material benefit under,
or the creation of an Encumbrance on assets pursuant to,
any provision of such document.
"Voting Debt" means bonds, debentures, notes, or
other indebtedness the holders of which have the right to
vote (or convertible into or exercisable for securities
having the right to vote) with the shareholders of the
issuer thereof on any matter.
1.2. Plurals. Any defined term used in this Agreement in the
plural form shall be deemed to include all members of the relevant
class.
1.3. Gender. Any masculine, feminine, or neuter word or term
used in this Agreement shall be deemed also to include the other
genders.
2. THE MERGER AND RELATED TRANSACTIONS.
2.1. Plan of Merger. The Plan of Merger sets forth: (a) the
name of each corporation planning to merge, the name of the
Surviving Corporation, and the name of each corporation whose
securities will be issued in connection with the Merger; (b) as to
each of E/C and LZB Acquisition, the designation and number of
outstanding shares of each class, specifying the classes entitled
to vote, and the manner (if any) in which the number of shares is
subject to change before the Effective Time; (c) the terms and
conditions of the Merger; (d) the manner and basis of converting
the outstanding shares of E/C Stock into Merger Consideration;
(e) a statement that no amendment to or restatement of the articles
of incorporation of the Surviving Corporation will be effected by
the Merger; and (f) certain other details and provisions applicable
to the Merger. LZB Acquisition shall be the Surviving Corporation.
-11-
<PAGE>
The Plan of Merger is intended to constitute the "plan of merger"
contemplated by Section 48-21-102 of the TBCA and the "plan of
merger" contemplated by Section 701 of the MBCA.
2.2. E/C Shareholder Meeting. E/C shall take all steps
necessary to duly call, give notice of, convene, and hold the E/C
Shareholder Meeting as soon as is reasonable after the date on
which the Registration Statement becomes effective, and E/C will,
through its Board of Directors, recommend to its shareholders
approval of this Agreement, the Plan of Merger, and the Merger
(unless, in the written opinion of E/C's independent counsel, such
recommendation is not consistent with the fiduciary duties of E/C's
Board of Directors).
2.3. LZB Acquisition Shareholder Action. Prior to the
Effective Time, LZB, as the sole shareholder of LZB Acquisition,
shall take all action proper or convenient for the consummation of
the Merger by LZB Acquisition.
2.4. Articles and Certificate of Merger; Effective Time.
Subject to the provisions of this Agreement, as soon as practicable
on the Closing Date: (a) the Tennessee Articles of Merger shall be
duly prepared, executed, and acknowledged by the Surviving
Corporation and thereafter delivered for filing to the Secretary of
State of the State of Tennessee, as provided in the TBCA; and
(b) the Michigan Certificate of Merger shall be duly prepared,
executed, and acknowledged by the Surviving Corporation and
thereafter delivered for filing to the Michigan Corporation Bureau,
as provided in the MBCA. "Effective Time" means the later of:
(i) the time at which the Merger becomes effective under the laws
of the State of Tennessee; or (ii) the time at which the Merger
becomes effective under the laws of the State of Michigan. It is
contemplated that E/C, LZB, and LZB Acquisition will agree in
writing to provide in the Tennessee Articles of Merger and the
Michigan Certificate of Merger for identical effective times under
the laws of both states.
3. THE CLOSING.
3.1. Closing Date. Subject to the terms and conditions
hereof, the Closing will take place at 10:00 a.m., Detroit,
Michigan time, on the third business day following the satisfaction
(or waiver, subject to applicable law) of the last to be satisfied
(or waived) of the conditions set forth in Sections 7.1, 7.2.3, and
7.3.3 or such other time and date as the parties agree to in
writing (the "Closing Date") at the offices of Miller, Canfield,
Paddock and Stone, P.L.C., Detroit, Michigan. All transactions
occurring and all documents executed and/or delivered at the
Closing shall be deemed to occur simultaneously, and no transaction
shall be deemed to have occurred and no document shall be deemed to
-12-
<PAGE>
have been executed or delivered unless all transactions shall have
occurred and all such documents shall have been executed and
delivered.
3.2. Sales and Transfer Taxes. All applicable sales,
transfer, stamp, documentary, and other similar taxes and
governmental fees, if any, which may be due or payable as a result
of the Merger shall be borne and paid by the Surviving Corporation
if the Merger is consummated and otherwise shall be borne and paid
by the party incurring the same.
3.3. Further Assurances. From time to time subsequent to the
Closing Date, E/C and LZB Acquisition shall at the request of LZB
execute and deliver such additional documents, instruments,
certifications, papers, and other assurances as may be requested by
LZB as necessary, appropriate, convenient, useful, or desirable to
effectively carry out the intent of this Agreement and/or the Plan
of Merger.
4. REPRESENTATIONS AND WARRANTIES.
4.1. Representations and Warranties of E/C. E/C represents
and warrants to the LZB Companies as follows:
4.1.1. Organization, Standing, and Power. E/C is a
corporation duly incorporated, validly existing, and in good
standing under the laws of its jurisdiction of incorporation,
has all requisite power and authority (corporate and other) to
own, lease, and operate its properties and to carry on its
business as now being conducted, and is duly qualified and in
good standing to do business in each jurisdiction in which the
nature of its business or the ownership or leasing of its
properties makes such qualification necessary other than in
such jurisdictions where the failure to so qualify would not
have a material adverse effect on E/C. Section 4.1.1 of the
E/C Disclosure Schedule will correctly set forth the
jurisdictions in which E/C is qualified to do business. True
and complete copies of the charter and bylaws of E/C as
currently in effect have been delivered to LZB.
4.1.2. Capital Structure.
(a) The authorized capital stock of E/C consists solely
of 500,000 shares of E/C Class A Stock and 500,000 shares of
E/C Class B Stock. As of the date of this Agreement, 224,652
shares of E/C Class A Stock are issued and outstanding, and
72,678 shares of E/C Class B Stock are issued and outstanding.
All outstanding shares of E/C Stock have been duly authorized
and validly issued and are fully paid and nonassessable and
not subject to any preemptive rights. 37,600 shares of E/C
-13-
<PAGE>
Class A Stock and no shares of E/C Class B Stock are held by
E/C as treasury shares. No shares of any class of E/C's
capital stock are reserved for issuance for any purpose.
(b) E/C owns 50 percent of the issued and outstanding
shares of capital stock of Alpha. All such shares of capital
stock of Alpha have been duly authorized and validly issued,
are fully paid and nonassessable, and are owned by E/C free
and clear of any Encumbrance except as will be set forth in
Section 4.1.2(b) of the E/C Disclosure Schedule. Section
4.1.2(b) of the E/C Disclosure Schedule will set forth the
name, address, telephone number, and number of shares held
with respect to each other shareholder of Alpha.
(c) E/C has no outstanding Voting Debt.
(d) Except for this Agreement and the Plan of Merger,
E/C has no outstanding options, warrants, calls, rights,
commitments, or agreements of any character to which it is a
party or is bound obligating it to issue, deliver, or sell, or
to cause to be issued, delivered, or sold, additional shares
of capital stock, any Voting Debt, or any other security with
voting rights in E/C or obligating E/C to grant, extend, or
enter into any such option, warrant, call, right, commitment,
or agreement. On and immediately following the Effective
Time, there will be no option, warrant, call, right, or
agreement obligating E/C to issue, deliver, or sell, or to
cause to be issued, delivered, or sold, any shares of capital
stock, any Voting Debt, or any other security with voting
rights in E/C or obligating E/C to grant, extend, or enter
into any such option, warrant, call, right, or agreement.
There are no outstanding contractual obligations of E/C to
repurchase, redeem, or otherwise acquire any shares of its
capital stock. E/C is not required to, and no shareholder of
E/C has any right to require E/C to, redeem, repurchase, or
otherwise acquire or to offer to redeem, repurchase, or
otherwise acquire any shares of its capital stock in
connection with or as a result of the Merger or the other
transactions contemplated in this Agreement.
4.1.3. Authority.
(a) E/C has all requisite corporate power and authority
to enter into this Agreement and the Plan of Merger and,
subject to approval of this Agreement and the Plan of Merger
by the shareholders of E/C, to consummate the transactions
contemplated hereby and thereby. The execution and delivery
of this Agreement and the Plan of Merger and the consummation
of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action on the part
of E/C, subject to the approval of this Agreement and the Plan
-14-
<PAGE>
of Merger by the shareholders of E/C. No approval or adoption
of the shareholders of E/C is required to consummate the
Merger and the other transactions contemplated hereby other
than specifically set forth in Section 7.1.1. This Agreement
and the Plan of Merger have been duly executed and delivered
by E/C and constitute legal, valid, and binding obligations of
E/C, enforceable against E/C in accordance with their terms,
except as enforceability may be limited by general principles
of equity, whether considered at law or in equity, and
bankruptcy, insolvency, and similar laws affecting creditors'
rights and remedies generally.
(b) The execution and delivery of this Agreement and the
Plan of Merger and the consummation of the transactions
contemplated hereby and thereby will not be, give rise to, or
result in any Violation of the charter or bylaws of E/C or
(subject to obtaining or making the consents, approvals,
orders, authorizations, registrations, declarations, and
filings referred to in paragraph (c) below, and except as will
be set forth in Section 4.1.3(b) of the E/C Disclosure
Schedule) be, give rise to, or result in any Violation of, or
require the consent of any other person that is a party to,
any loan or credit agreement, note, mortgage, indenture,
lease, sublease, E/C Benefit Plan, or other agreement,
obligation, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance,
rule, or regulation applicable to E/C or its properties or
assets.
(c) No consent, approval, order, or authorization of, or
registration, declaration, or filing with, any Governmental
Entity is required by or with respect to E/C in connection
with the execution and delivery of this Agreement or the Plan
of Merger by E/C or the consummation by E/C of the
transactions contemplated hereby or thereby, except for:
(i) the filing of the Tennessee Articles of Merger with the
Secretary of State of the State of Tennessee; (ii) the filing
of the Certificate of Merger with the Michigan Corporation
Bureau; (iii) the filing of appropriate documents with the
relevant authorities of other states in which E/C is qualified
to do business; (iv) E/C's Hart-Scott-Rodino Filing and
expiration or early termination of the waiting period under
the Hart-Scott-Rodino Act; (v) the filings with and actions by
the ICC which will be described in Section 4.1.3(c) of the E/C
Disclosure Schedule; and (vi) such other matters, if any, as
will be set forth in Section 4.1.3(c) of the E/C Disclosure
Schedule.
4.1.4. E/C Financial Statements. E/C has delivered to
the LZB Companies true and complete copies of the E/C
Financial Statements. The E/C Financial Statements have been
-15-
<PAGE>
prepared in accordance with GAAP and fairly present the
financial position of E/C as at the dates thereof and the
results of its operations and cash flows or changes in
financial position for the periods then ended.
4.1.5. Registration Statement. None of the
information supplied or to be supplied by E/C for inclusion in
(a) the Registration Statement will, at the time the
Registration Statement becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, or
(b) the Proxy Statement/Prospectus or any amendment or
supplement thereto will, at the date of mailing to
shareholders and at the time of the E/C Shareholder Meeting,
contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
The Proxy Statement/Prospectus (except for such portions
thereof that relate only to the LZB Companies) will comply in
all material respects with the laws of the State of Tennessee
and with any applicable provisions of the Exchange Act and the
rules and regulations thereunder, and the Registration
Statement (except for portions thereof that relate only to the
LZB Companies) will comply in all material respects with the
provisions of the Securities Act and the rules and regulations
thereunder.
4.1.6. Compliance with Applicable Laws. E/C holds all
E/C Permits, except for E/C Permits the lack of which does not
and will not, individually or in the aggregate, have a
material adverse effect on E/C. A list of the material E/C
Permits held by E/C will be set forth in Section 4.1.6 of the
E/C Disclosure Schedule, and each of the E/C Permits so listed
is in full force and effect. E/C is in compliance in all
material respects with the terms of the E/C Permits and all
applicable laws and regulations, except for possible
violations which, individually or in the aggregate, do not and
will not have a material adverse effect on E/C. The
businesses of E/C and its Subsidiaries are not being
conducted, and have not been conducted during the past five
years, in violation of any law, ordinance, regulation, order,
writ, rule, or decree of any Governmental Entity except for
possible violations which, individually or in the aggregate,
do not and will not have a material adverse effect on E/C. No
investigation by any Governmental Entity with respect to E/C
or any Subsidiary is pending or, to the best knowledge of E/C,
threatened. None of the E/C Companies is required, or has
ever been required, to be registered under the Investment
Company Act of 1940, as amended.
-16-
<PAGE>
4.1.7. Litigation. Except as will be set forth in
Section 4.1.7 of the E/C Disclosure Schedule, there is no
claim, suit, action, arbitration, or governmental proceeding
or investigation pending or, to the best knowledge of E/C,
threatened against or affecting E/C or any Subsidiary which,
if adversely determined, would, individually or in the
aggregate, have a material adverse effect on E/C, nor is there
any reasonable basis for any such claim, suit, action,
arbitration, or governmental proceeding or investigation.
Except as will be set forth in Section 4.1.7 of the E/C
Disclosure Schedule, there is no judgment, decree, injunction,
rule, or order of any Governmental Entity or arbitrator
outstanding against E/C or any Subsidiary. Section 4.1.7 of
the E/C Disclosure Schedule will list all consents, orders,
decrees, and other compliance agreements with any Governmental
Entity under which E/C or any Subsidiary is operating or by
which any of their assets are bound and, to the best knowledge
of E/C, all investigations commenced by any Governmental
Entity against E/C or any Subsidiary during the past five
years.
4.1.8. Taxes.
(a) There have been properly completed in all material
respects and filed on a timely basis, and in correct form in
all material respects, all Returns required to be filed by E/C
or any Subsidiary. All taxes owing by E/C or any Subsidiary
for all periods ended on or prior to the date of the latest of
the E/C Financial Statements have either been paid or
adequately accrued in accordance with GAAP in such E/C
Financial Statements.
(b) Except as will be described in Section 4.1.8 of the
E/C Disclosure Schedule, within the last five years: (i) there
has not been any review or audit by any taxing authority of
any Taxes of E/C or any Subsidiary; (ii) neither E/C nor any
Subsidiary has received notice of any pending or threatened
audit by the IRS or any other Governmental Entity related to
any Returns or Tax liability of E/C or any Subsidiary for any
period; and (iii) no claim for assessment or collection of
Taxes has been asserted against E/C or any Subsidiary.
Neither E/C nor any Subsidiary has any unpaid deficiency
assessed by the IRS or any other Governmental Entity with
respect to any of Returns of E/C or any Subsidiary, nor is
there reason to believe that any deficiency will be assessed.
There are no actions, suits, proceedings, investigations, or
claims now pending or, to the best knowledge of E/C,
threatened against E/C or any Subsidiary in respect of Taxes,
nor are there any matters under discussion with any
Governmental Entity relating to Taxes.
-17-
<PAGE>
(c) No agreements have been made or are currently being
negotiated by or on behalf of E/C or any Subsidiary for any
waiver or for the extension of any statute of limitations
governing the time of assessment or collection of any Taxes,
and no closing agreements or compromises are currently pending
or have been entered into by E/C or any Subsidiary.
(d) E/C and each Subsidiary has withheld in connection
with the amount paid to any officer, director, employee,
independent contractor, creditor, shareholder, or other third
party the amount of all Taxes and other amounts required to be
withheld therefrom by applicable law and has paid the same to
the proper Governmental Entities or other receiving officers
within the time required under applicable law.
(e) There are no liens for Taxes (other than for current
Taxes not yet due and payable) on any of the assets of E/C or
any Subsidiary.
(f) None of the assets of E/C or any Subsidiary is
property that is required to be treated as being owned by any
other person pursuant to the so-called "safe harbor lease"
provisions of former Section 168(f)(8) of the Code.
(g) None of the assets of E/C or any Subsidiary directly
or indirectly secures any debt the interest on which is tax-
exempt under Section 103(a) of the Code.
(h) Neither E/C nor any Subsidiary: (i) has filed a
consent under Section 341(f) of the Code; (ii) has made any
payments or is obligated to make any payments, or is a party
to any compensatory agreement with respect to the performance
of services that under certain circumstances could obligate it
to make any payments, that may not be deductible under Section
280G of the Code; (iii) is a new loss corporation within the
meaning of Section 382(k)(3) of the Code; (iv) is or has been
a United States real property holding corporation within the
meaning of Section 897(c)(2) of the Code; (v) (A) has been a
member of an affiliated group of corporations that filed a
consolidated return with respect to the federal corporate
income tax for any taxable year in lieu of separate returns
(other than a group the common parent of which was E/C),
(B) has been a member of an affiliated group of corporations
that was considered by authorities in any jurisdiction to
conduct a unitary business the combined income of which was
subject to Tax in such jurisdiction, or (C) to the best
knowledge of the E/C Companies, has any liability for the
Taxes of any person under Section 1.1502-6 of the Treasury
Regulations (or any similar provision of state, local, or
foreign law) as a transferee or successor, by contract, or
otherwise; (vi) is a party to any safe harbor lease within the
-18-
<PAGE>
meaning of Section 168(f)(8) of the Internal Revenue Code of
1954 (as in effect prior to enactment of the Tax Equity and
Fiscal Responsibility Act of 1982); (vii) owns any asset that
is tax-exempt use property within the meaning of Section
168(h) of the Code; (viii) has agreed, or is required, to make
any adjustment under Section 481(a) of the Code by reason of
a change in accounting method; or (ix) has ever computed its
taxable income for federal income tax purposes using the cash
receipts and disbursements method of accounting.
(i) Section 4.1.8(i) of the E/C Disclosure Schedule will
set forth the following information with respect to E/C and
each Subsidiary as of the most recent practicable date (which
date is specified therein): (i) the tax basis of any stock
owned by such company in any Subsidiary of E/C (or the amount
of such company's excess loss account with respect to such
stock); (ii) the amount of any net operating loss, capital
loss, unused investment or other credit, or excess charitable
contribution; and (iii) the amount of any gain or loss on
deferred intercompany transactions that has been deferred by
such company under Section 1.1502-13 of the Treasury
Regulations and the character and source of such gain or loss.
(j) There is no tax-sharing agreement or similar
agreement with respect to or involving E/C or any Subsidiary.
(k) No new elections with respect to Taxes or any
changes in current elections with respect to Taxes affecting
E/C or any Subsidiary will be made after the date of this
Agreement without the prior written consent of LZB.
4.1.9. Certain Agreements. Except for this Agreement
and the Plan of Merger, all E/C Agreements will be listed in
Section 4.1.9 of the E/C Disclosure Schedule. There are no
defaults or events which with the passage of time or the
giving of notice would constitute defaults under any of the
E/C Agreements on the part of any person that is a party to
any of the E/C Agreements. Section 4.1.9 of the E/C
Disclosure Schedule will contain a true and complete
description of all transactions with management and others,
business relationships, indebtedness of management, and
transactions with promoters that would be required to be
disclosed pursuant to Item 404 of Regulation S-K promulgated
by the SEC for the current and last two fiscal years of E/C.
4.1.10. Employee Benefit Plans.
(a) Section 4.1.10 of the E/C Disclosure Schedule will
contain a true and complete list of all E/C Benefit Plans.
True and complete copies of all current and prior documents,
including all amendments, with respect to each E/C Benefit
-19-
<PAGE>
Plan and related trust or other funding vehicle to be listed
in Section 4.1(j)(i) of the E/C Disclosure Schedule will be
provided to the LZB Companies with the E/C Disclosure
Schedule. With respect to each "employee benefit plan,"
within the meaning of Section 3(3) of the ERISA, all of which
will be listed in Section 4.1.10 of the E/C Disclosure
Schedule, E/C will provide the LZB Companies (at the same time
it provides the E/C Disclosure Schedule) with true and
complete copies of (i) the three most recent annual actuarial
valuation reports, if any, (ii) the five most recently filed
Form 5500s or 5500-Cs and Schedules A and B thereto, (iii) all
IRS rulings, if any, (iv) the most recent IRS determination
letter, if any, and (v) each form 5310 and any related
documents filed with the IRS or with the PBGC with respect to
any E/C Benefit Plan during the most recent six full plan
years.
(b) With respect to any and all of the E/C Benefit
Plans: (i) none of the E/C Benefit Plans is an "employee
pension benefit plan," as defined in Section 3(2) of ERISA;
(ii) E/C and its Subsidiaries have performed all obligations
required to be performed by them under the E/C Benefit Plans
and are not in default under or in violation of, and have no
knowledge of any other person's default under or violation of,
any E/C Benefit Plan; (iii) each such plan is in compliance
with the requirements prescribed by any and all statutes,
orders, or governmental rules or regulations applicable to
such plan, including but not limited to ERISA and the Code;
(iv) neither E/C, any Subsidiary, nor any other "disqualified
Person" or "party in interest," within the meanings of Section
4975 of the Code or Section 3(14) of ERISA, respectively, has
engaged in any "prohibited transaction," as such term is
defined in Section 4975 of the Code or Section 406 of ERISA,
which could, following the Effective Time, subject any plan
(or its related trust), E/C, any Subsidiary of E/C, either of
the LZB Companies, or any officer, director, or employee of
any of such entities, to any tax or penalty imposed under the
Code or ERISA; (v) there are no actions, suits, or claims
pending (other than routine claims for benefits) or threatened
against any E/C Benefit Plan or against the assets of any E/C
Benefit Plan; (vi) no E/C Benefit Plan is subject to Part 3 of
Subtitle B of Title I of ERISA or Section 412 of the Code;
(vii) each "plan official," within the meaning of Section 412
of ERISA, of each Plan is bonded to the extent required by
said Section 412; (viii) no proceeding has been initiated to
terminate any E/C Benefit Plan, and no "reportable event,"
within the meanings of Section 4043(b) or 4063(a) of ERISA,
has occurred with respect to any E/C Benefit Plan (other than
those which may result from the transactions contemplated
hereby); (ix) E/C and its Subsidiaries have complied in all
material respects with the reporting and disclosure
-20-
<PAGE>
requirements of ERISA, and all filings and reports as to each
E/C Benefit Plan required to have been made on or before the
Effective Time to the IRS, the PBGC, or the Department of
Labor have been or will be made on or before the Effective
Time; (x) all insurance premiums incurred or accrued up to and
including the Effective Time to the PBGC have been timely paid
by the E/C Companies; and (xi) there are no leased employees
that must be taken into account under any E/C Benefit Plan
pursuant to Code Section 414(n)(3).
(c) No E/C Benefit Plan is subject to Title IV of ERISA.
(d) With respect to each E/C Benefit Plan that is a
defined contribution plan within the meaning of Section 3(34)
of ERISA, to the extent required by the terms of such E/C
Benefit Plan, E/C and its Subsidiaries have paid all
contributions on behalf of prior plan years and any salary
deferrals and employer contributions, including matching
contributions, that have accrued for the current plan year.
(e) Neither E/C nor any Subsidiary maintains or
participates in, or has ever maintained or participated in, a
plan which is a "multiemployer plan" within the meaning of
Section 3(37) of ERISA.
(f) Except as will be specifically set forth in Section
4.1.10(f) of the E/C Disclosure Schedule, with respect to each
E/C Benefit Plan that is an "employer welfare benefit plan"
within the meaning of Section 3(1) of ERISA: (i) each such E/C
Benefit Plan which is intended to meet the requirements for
tax-favored treatment under Subchapter B of Chapter 1 of the
Code meets such requirements; (ii) there is no disqualified
benefit (as such term is defined in Section 4976(b) of the
Code) which would subject E/C, any of its Subsidiaries, or
either of the LZB Companies to a tax under Section 4976(a) of
the Code; (iii) each such E/C Benefit Plan that is a "group
health plan" as such term is defined in Section 5000(b)(i) of
the Code satisfies and has satisfied the applicable
requirements of Sections 601 through 608 of ERISA, Section
162(k) of the Code (through December 31, 1988), and Section
4980B of Code (commencing on January 1, 1989); and (iv) each
such E/C Benefit Plan that covers former employees of E/C or
any Subsidiary may be amended or terminated by E/C or such
Subsidiary on or at any time after the Effective Time, and all
of the liabilities to such former employees (and future former
employees) under such E/C Benefit Plan have been reflected in
the E/C Financial Statement in a manner satisfying the
requirements of FAS 106.
4.1.11. Subsidiaries. E/C has no Subsidiaries other
than Alpha.
-21-
<PAGE>
4.1.12. Absence of Certain Changes or Events. Except
as will be disclosed in Section 4.1.12 of the E/C Disclosure
Schedule, since the E/C Balance Sheet Date neither E/C nor any
Subsidiary has incurred any material liability except in the
ordinary course of its business consistent with its past
practices, nor has there been any change, or any event
involving a prospective change, in the business, assets,
liabilities, condition (financial or otherwise), results of
operations, or prospects of E/C or any Subsidiary which has
had, or is reasonably likely to have, a material adverse
effect on E/C.
4.1.13. Antitakeover Provisions. None of the
provisions of the Tennessee Investor Protection Act, the
Tennessee Business Combination Act, or the Tennessee Control
Share Acquisition Act apply or will apply to the transactions
contemplated by this Agreement.
4.1.14. Environmental Matters.
(a) A true and correct list of all E/C Property and all
E/C Formerly Owned Property, including the address and the
county in which such property is located, will be set forth in
Section 4.1.14(a) of the E/C Disclosure Schedule.
(b) Except as will be described in Section 4.1.14(b) of
the E/C Disclosure Schedule, E/C and each of its Subsidiaries
is now and has at all times been in compliance with all
Environmental Laws except for any violations which,
individually or in the aggregate, would not have a material
adverse effect on E/C. Except as will be described in Section
4.1.14(b) of the E/C Disclosure Schedule, no Hazardous
Substances have been stored, treated, released, emitted, or
disposed of, or otherwise deposited, on or in the E/C Property
in violation of any Environmental Law except any of the
foregoing as would not, individually or in the aggregate, have
a material adverse effect on E/C. A true and correct list of
all Hazardous Substances now or heretofore used or generated
by E/C or any Subsidiary will be set forth in Section
4.1.14(b) of the E/C Disclosure Schedule. All Hazardous
Substances to be disclosed in Section 4.1.14(b) of the E/C
Disclosure Schedule have been used, generated, stored,
treated, released, emitted, and disposed of, or otherwise
deposited, on or in the E/C Property in compliance with all
Environmental Laws except for any violations which,
individually or in the aggregate, would not have a material
adverse effect on E/C.
(c) Except as will be described in Section 4.1.14(c) of
the E/C Disclosure Schedule, no activity has been undertaken
on any E/C Property that would cause or contribute to:
-22-
<PAGE>
(i) such E/C Property becoming a treatment, storage, or
disposal facility within the meaning of RCRA or any similar
state law or local ordinance; (ii) a release or threatened
release of any Hazardous Substances; or (iii) the discharge of
pollutants or effluents into any water source or system or
into the air, or the dredging or filling of any waters, that
would require a permit under the Federal Water Pollution
Control Act, 33 U.S.C. sections 1251 et seq., the Clean Air Act, as
amended, 42 U.S.C. sections 7401 et seq., or any similar foreign or
state law or local ordinance.
(d) Except as will be described in Section 4.1.14(d) of
the E/C Disclosure Schedule, there are no substances or
conditions in or on any of the E/C Property or any operations
conducted in or on any of the E/C Property that may support a
claim or cause of action or imposition of any liability under
any Environmental Law against E/C or any Subsidiary, except
for any claim, cause of action, or liability which would not,
individually or in the aggregate, have a material adverse
effect on E/C.
(e) Except as will be described in Section 4.1.14(e) of
the E/C Disclosure Schedule, there are not and never have been
any underground storage tanks located in or under any E/C
Property.
(f) E/C and its Subsidiaries have obtained all permits
required by all applicable Environmental Laws, and all such
permits are in full force and effect, except for any such
permits the lack of which would not, individually or in the
aggregate, have a material adverse effect on E/C. Except as
will be described in Section 4.1.14(f) of the E/C Disclosure
Schedule, E/C and its Subsidiaries are and have at all times
been in compliance with all such permits, except for any
violations which, individually or in the aggregate, would not
have a material adverse effect on E/C.
(g) Except as will be described in Section 4.1.14(g) of
the E/C Disclosure Schedule, neither E/C, any of its
Subsidiaries, nor any of their respective directors, officers,
employees, or agents have generated or transported any
Hazardous Substances at any time which have been transported
to or disposed of in any landfill, waste processing facility,
or other facility, which transportation or disposal could
create liability to any unit of government or any third
person, except for any such liability which, individually or
in the aggregate, would not have a material adverse effect on
E/C. Neither E/C nor any Subsidiary has received any request
for response action, administrative or other order (or request
therefor), judgment, complaint, claim, investigation, request
for information, or other request for relief in any form
-23-
<PAGE>
relating to any facility where Hazardous Substances generated
or transported by E/C or any Subsidiary have been disposed of,
placed, or located. No later than the time it delivers the
E/C Disclosure Schedule, E/C will provide the LZB Companies
with true and complete copies of, or access to, all manifests
and records maintained by E/C or any Subsidiary relating to
such transporters, landfills, and other facilities.
(h) Except as will be described in Section 4.1.14(h) of
the E/C Disclosure Schedule, there are no pending or, to the
best knowledge of E/C, threatened claims, investigations,
administrative proceedings, litigation, regulatory hearings,
or requests or demands for remedial or response actions or for
compensation with respect to any E/C Property, alleging
noncompliance with or violation of any Environmental Law, or
seeking relief under any Environmental Law, nor, to the best
knowledge of E/C, is there any reasonable basis therefor.
(i) Except as will be described in Section 4.1.14(i) of
the E/C Disclosure Schedule, none of the E/C Property is or
ever has been listed on the United States Environmental
Protection Agency's National Priorities List of Hazardous
Waste Sites or any other list, schedule, log, inventory, or
record of hazardous waste sites maintained by any federal,
state, or local agency.
(j) E/C has disclosed and delivered to the LZB Companies
all environmental reports and investigations which E/C or any
Subsidiary has obtained or ordered with respect to any E/C
Property during the past ten years.
4.1.15. Approvals. E/C knows of no reason why all
Requisite Regulatory Approvals should not be obtained without
the imposition of any Materially Burdensome Condition.
4.1.16. Brokers and Finders. Neither E/C nor any of
its directors, officers, or employees has employed any broker
or finder or incurred any liability for any financial advisory
fees, brokerage fees, commissions, or similar payments in
connection with the transactions contemplated by this
Agreement.
4.1.17. Labor Matters.
(a) Neither E/C nor any of its Subsidiaries is or ever
has been a party to any collective bargaining agreement or
labor union contract. Except as will be listed in Section
4.1.17(a) of the E/C Disclosure Schedule, no grievance
procedure, arbitration proceeding or other labor controversy
is pending against any E/C or any Subsidiary that would result
in a material liability. E/C and its Subsidiaries have
-24-
<PAGE>
complied in all material respects with all laws relating to
the employment of labor, including, without limitation, any
provisions thereof relating to wages, hours, equal employment,
safety, collective bargaining, and the payment of social
security and similar Taxes, and neither E/C nor any Subsidiary
is liable for any arrears of wages or any Taxes or penalties
for failure to comply with any of the foregoing. Except as
will be disclosed in Section 4.1.17(a) of the E/C Disclosure
Schedule, there is no unfair labor practice or similar
complaint against E/C or any Subsidiary pending before the
National Labor Relations Board or any similar authority or any
strike, dispute, slowdown, work stoppage, or lockout pending
or threatened against E/C or any Subsidiary or any compliant
pending before the Equal Employment Opportunity Commission or
any comparable federal, state, or local fair employment
practices agency and none has existed during the past five
years.
(b) Section 4.1.17(b) of the E/C Disclosure Schedule
will contain a true and complete list of the following with
respect to E/C and each Subsidiary: the names, positions, and
compensation of each director, each officer, and each employee
who received during 1994, or who is expected to receive during
1995, $100,000 or more, together with a statement of the
annual salary payable to such person, summaries of bonus
arrangements, and descriptions of agreements for commissions
or additional compensation and other like benefits, if any,
paid or payable to each such person. Except as will be listed
in Section 4.1.17(b) of the E/C Disclosure Schedule, all
employees of E/C and its Subsidiaries are employees-at-will,
may be terminated at any time for any lawful reason or for no
reason, and have no entitlement to employment by virtue of any
oral or written contract, employer policy, or otherwise.
(c) There are no retired employees of E/C or any
Subsidiary who are receiving or are entitled to receive any
payments or any health or other benefits from E/C or any
Subsidiary.
4.1.18. Undisclosed Liabilities. Neither E/C nor any
Subsidiary has any liabilities or obligations, accrued,
contingent, or otherwise, that are material to E/C that do not
satisfy one of the following: (a) such liabilities or
obligations have been reflected or disclosed in the E/C
Financial Statements; (b) such liabilities or obligations have
been incurred since the E/C Balance Sheet Date in the ordinary
course of business; or (c) such liabilities or obligations
will be disclosed in Section 4.1.18 of the E/C Disclosure
Schedule. E/C knows of no basis for the assertion against it
or against any Subsidiary of any liability, obligation, or
claim (including, without limitation, that of any Governmental
-25-
<PAGE>
Entity) that is likely to result in or have a material adverse
effect on E/C that is not fairly reflected in the E/C
Financial Statements.
4.1.19. Illegal Payments. Neither E/C, any of its
Subsidiaries, nor any of their directors, officers, agents, or
employees, or any other person acting on behalf of any of them
has, directly or indirectly: (a) used any corporate funds of
E/C or any Subsidiary for unlawful contributions, gifts,
entertainment, or other unlawful expenses relating to
political activity; (b) made any unlawful payments on behalf
of E/C or any Subsidiary to foreign or domestic government
officials or employees or to foreign or domestic political
parties or campaigns from corporate funds; (c) violated any
provision of the Foreign Corrupt Practices Act of 1977, as
amended; (d) knowingly made any false or fictitious entry on
the books or records of E/C or any Subsidiary; or (e) made any
bribe, rebate, payoff, influence payment, kickback, or other
unlawful payment on behalf of E/C or any Subsidiary.
4.1.20. Bank Accounts. Section 4.1.20 of the E/C
Disclosure Schedule will contain a true and complete list of
the names and locations of all banks or other financial
institutions which are depositories of funds of any of E/C or
any Subsidiary, the names of all persons authorized to draw or
sign checks or drafts upon such accounts, the numbers of such
accounts, and the names and locations of any institutions in
which E/C or any Subsidiary has safe deposit boxes and the
names of the individuals having access thereto. Neither E/C
nor any Subsidiary has any outstanding powers of attorney.
4.1.21. Insurance Matters. All policies of insurance
covering any of E/C's or any Subsidiary's real and personal
property or providing for business interruption, personal or
product liability coverage, and other insurance will be
described in Section 4.1.21 of the E/C Disclosure Schedule
(specifying the insurer, the policy number, type of insurance,
and any pending claims thereunder). Such insurance is in
amounts deemed by E/C to be sufficient with respect to its and
its Subsidiaries' assets, properties, business, operations,
products, and services as the same are presently owned or
conducted. All such policies are in full force and effect,
and the premiums have been paid when due. Except as will be
described in Section 4.1.21 of the E/C Disclosure Schedule,
other than claims made under the policies in the ordinary
course and which are not material in amount, there are no
claims, actions, suits, or proceedings arising out of or based
upon any of such policies of insurance, and, to the best
knowledge of E/C, no reasonable basis for any such claim,
action, suit, or proceeding exists. Neither E/C nor any
Subsidiary is in default with respect to any provisions
-26-
<PAGE>
contained in any such insurance policies, and none of them has
failed to give any notice or to present any material claim
under any such insurance policy in due and timely fashion.
4.1.22. Intellectual Property. Section 4.1.22 of the
E/C Disclosure Schedule will list all E/C Intellectual
Property and material licenses and other agreements allowing
E/C or any Subsidiary to use the intellectual property of
third parties in the United States or foreign countries.
Except as will be set forth in Section 4.1.22 of the E/C
Disclosure Schedule, E/C or one of its Subsidiaries is the
sole and exclusive owner of each item of E/C Intellectual
Property free and clear of all Encumbrances, and no
governmental registration of any of the E/C Intellectual
Property has lapsed, expired, or been abandoned, opposed,
canceled, or the subject of a re-examination request. There
are no claims or any reasonable basis for challenging the
scope, validity, or enforceability of any of the copyrights,
patents, trademarks, trade names, or service marks which are
a part of the E/C Intellectual Property. None of the E/C
Intellectual Property infringes the intellectual property of
any other person, and no activity of any other person
infringes upon any of the E/C Intellectual Property. E/C and
each of its Subsidiaries has been and is now conducting its
business in a manner which has not been and is not now in
violation of any intellectual property rights of any other
person and so as not to require a license or other proprietary
right to so operate its business other than as will be
described in Section 4.1.22 of the E/C Disclosure Schedule.
The manufacturing and engineering drawings, process sheets,
specifications, bills of material, trade secrets, "know-how,"
and other like data of E/C and its Subsidiaries are in such
form and of such quality that they can, following the
Effective Time, be used in the process of designing,
producing, manufacturing, assembling, and selling the products
and providing the services heretofore provided by them so that
such products and services meet applicable specifications and
conform with the quality standards heretofore met or required
to be met by them.
4.1.23. Conduct of Business. Except as will be
otherwise disclosed in Section 4.1.23 of the E/C Disclosure
Schedule, since the E/C Balance Sheet Date, neither E/C nor
any Subsidiary has:
(a) Issued any capital stock or other securities
convertible into or exchangeable or exercisable for capital
stock or having voting rights or declared or paid any dividend
or made any other payment from capital or surplus or other
distribution of any nature, or directly or indirectly
redeemed, purchased, or otherwise acquired or recapitalized or
-27-
<PAGE>
reclassified any of its capital stock or liquidated in whole
or in part.
(b) Merged or consolidated with any other person.
(c) Altered or amended its charter or bylaws.
(d) Entered into, materially amended, or terminated any
material agreement, license or permit, except in the ordinary
course of business consistent with past practices.
(e) Experienced any labor disturbance.
(f) Incurred or become subject to any obligation or
liability (absolute, accrued, contingent or otherwise),
except: (i) obligations incurred in the ordinary course of
business consistent with past practice, which did not involve
borrowing money, and which have not caused and will not cause
a material adverse effect on E/C; and (ii) obligations in
connection with the performance of this Agreement.
(g) Discharged or satisfied any Encumbrance or paid or
satisfied any obligation or liability (absolute, accrued,
contingent, or otherwise) other than: (i) liabilities shown or
reflected in the E/C Financial Statements; or (ii) liabilities
incurred since the E/C Balance Sheet Date in the ordinary
course of business consistent with past practice which were
not material in amount.
(h) Mortgaged, pledged, or subjected to any Encumbrance
any of its assets, properties, or business.
(i) Sold or transferred or agreed to sell or transfer
any material asset, property, or business, canceled or agreed
to cancel any material debt or claim, or waived any right,
except in any such event in the ordinary course of business
consistent with past practice.
(j) Disposed of or permitted to lapse any E/C
Intellectual Property.
(k) Granted any increase in the rates of pay of
employees or any increases in salary or compensation payable
or to become payable to any officer, employee, consultant, or
agent, or changed or increased the compensation payable to any
officer, director, or employee, or (by means of any bonus or
pension plan, contract, or other commitment) increased the
compensation of any officer, director, employee, consultant,
or agent, or hired any new officer, employee, consultant, or
agent.
-28-
<PAGE>
(l) Since January 1, 1994, made or authorized any
capital expenditures for additions to plant or equipment
accounts in excess of $500,000 in the aggregate.
(m) Experienced any material damage, destruction, or
loss (whether or not covered by insurance) affecting its
properties, assets, or business.
(n) Instituted or settled any litigation, action, or
proceeding before any court or other Governmental Entity
relating to it or its property involving a controversy in
excess of $10,000.
(o) Made any change in any method of accounting or any
accounting practice or suffered any deterioration in
accounting controls.
(p) Varied, canceled, or allowed to expire any insurance
coverage, other than renewals in the ordinary course of
business consistent with past practice.
(q) Entered into any other material transaction other
than in the ordinary course of business consistent with past
practice.
(r) Agreed or committed to do any of the foregoing.
4.1.24. Title to Assets.
(a) E/C and its Subsidiaries are the sole and absolute
owners of all of the assets (real and personal, tangible and
intangible) reflected in the latest E/C Financial Statements
as owned by them, other than assets which are leased under
leases capitalized in accordance with GAAP and assets which
have been disposed of since the date of such financial
statements, and have good and marketable title to all such
assets free and clear of any and all Encumbrances, except for
the Encumbrances, if any, which will be listed in Section
4.1.24(a) of the E/C Disclosure Schedule. E/C and its
Subsidiaries have valid leasehold interests in all assets
(real and personal, tangible and intangible) leased by them.
(b) No person has any written or oral agreement, option,
understanding, or commitment, or any right or privilege
capable of becoming an agreement, for the purchase from E/C or
any Subsidiary of any of the assets owned or leased by any of
them other than pursuant to purchase orders for inventory
accepted in the ordinary course of business consistent with
past practice.
(c) Section 4.1.24(c) of the E/C Disclosure Schedule
-29-
<PAGE>
will list or describe all consigned property and other
property which is owned by or an interest in which is claimed
by any other person (whether a customer, supplier, or other
person) for which E/C or any Subsidiary is responsible (and
true and complete copies of all agreements relating thereto
will be delivered to the LZB Companies with the E/C Disclosure
Schedule). All such property is used or held for use in the
conduct of the business of E/C or a Subsidiary and is in such
condition that upon return to its owner, they will not be
liable to such owner.
4.1.25. Real Property.
(a) Section 4.1.25(a) of the E/C Disclosure Schedule
will contain a true and complete list of: (i) all E/C Real
Estate; and (ii) all E/C Real Estate Documents (true and
complete copies of all of which will delivered to the LZB
Companies with the E/C Disclosure Schedule). All buildings
and other improvements on the E/C Real Estate are located
within the boundaries of each particular parcel of E/C Real
Estate and do not encroach upon such boundaries, except to the
extent such encroachment would not have a material adverse
effect on E/C. No building or other improvement situated on
any adjacent real estate is encroaching upon any of the
boundaries of the E/C Real Estate, except to the extent such
encroachment would not have a material adverse effect on E/C.
(b) Except as will be described in Section 4.1.25(b) of
the E/C Disclosure Schedule, the use of the E/C Real Estate by
E/C and its Subsidiaries and the conduct therein of their
respective businesses have not violated, and are not expected
to violate, any federal, state, or local law, ordinance, rule,
or regulation. The E/C Real Estate has an adequate water
supply and sewage and waste disposal, or facilities therefor,
and adequate utility connections and capacity as are
sufficient for the operation of existing business of E/C and
its Subsidiaries.
(c) The E/C Real Estate, including, without limitation,
the buildings and improvements located thereon, and the
ownership, operations, and maintenance thereof as now owned,
operated, and maintained, do not: (i) violate any ordinances,
statutes, regulations, covenants, or deed restrictions,
including, without limitation, those relating to zoning,
building use, air or water pollution, waste disposal,
sanitation, and noise control; or (ii) violate any provision
of federal, state, or local law. Consummation of the
transactions contemplated herein will not cause the zoning for
any of the E/C Real Estate to become non-complying by virtue
of elimination of a grandfather clause or for any other
reason.
-30-
<PAGE>
(d) The buildings and other improvements on the E/C Real
Estate, including, without limitation, the plumbing, heating,
air-conditioning, electrical, mechanical, water, water
pumping, and sewage systems, are in working order and not in
violation of any applicable governmental rule or regulation or
any other legal requirements, including, without limitation,
health and fire codes and other similar regulations.
(e) There exists no pending or, to the best knowledge of
E/C, threatened condemnation or similar proceeding with
respect to, or which could affect, the E/C Real Estate in any
respect.
(f) Except as will be described in Section 4.1.25(f) of
the E/C Disclosure Schedule, neither E/C nor any Subsidiary
has contracted for the furnishing of labor or materials to the
E/C Real Estate which will not be paid in full prior to the
Effective Time.
(g) Each of the E/C Real Estate Documents is in full
force and effect, and there are no existing defaults or events
of default thereunder, real or claimed, or events which with
notice or lapse of time or both would constitute defaults
thereunder by E/C or any Subsidiary or, to the best knowledge
of E/C, any other person.
(h) The E/C Real Estate has sufficient and adequate
vehicular and pedestrian access rights to and from public
streets and rights-of-way contiguous to the E/C Real Estate,
and adequate parking for each property comprising the E/C Real
Estate is available and in compliance with all applicable
zoning ordinances and laws.
(i) The buildings on the E/C Real Estate are fully
constructed and are free from structural defects.
4.1.26. Leased Personal Property. Section 4.1.26 of
the E/C Disclosure Schedule will describe all E/C Leased
Personal Property. True and complete copies of all leases to
which E/C or any Subsidiary is a party relating to the E/C
Leased Personal Property will be delivered to the LZB
Companies with the E/C Disclosure Schedule. All E/C Leased
Personal Property is in such condition that upon the return of
such E/C Leased Personal Property in its present condition to
its owner, neither E/C nor any Subsidiary will be liable to
such owner. All E/C Leased Personal Property is situated at
the E/C Real Estate and is used by E/C or a Subsidiary in the
operation of its business. Each of the leases relating to the
E/C Leased Personal Property is in full force and effect, and
there are no existing defaults or events of default, real or
claimed, or events which with notice or lapse of time or both
-31-
<PAGE>
would constitute defaults by E/C or any Subsidiary or, to the
best knowledge of E/C, any other person.
4.1.27. E/C Tangible Personal Property. Except as will
be described in Section 4.1.27 of the E/C Disclosure Schedule,
all of the machinery, equipment, vehicles, and other tangible
personal property that is used or useful in or necessary for
the conduct of the businesses E/C and its Subsidiaries, except
items with an aggregate book value of less than $50,000, is in
working condition and repair and is capable of and has the
capacity to produce products in the amount and of the quality
required by any purchase order accepted by E/C or any
Subsidiary and outstanding at the Effective Time.
4.1.28. Accounts Receivable. All accounts and notes
receivable reflected on the latest balance sheet included in
the E/C Financial Statements, or arising since the E/C Balance
Sheet Date (net of related reserves or, if reserves have not
been established, net of an amount which if so established
would be consistent with the established reserve policies of
E/C), have been collected, or are and will be good and
collectible, in each case at the aggregate recorded amounts
thereof without right of recourse, defense, deduction, return
of goods, counterclaim, or set off on the part of the obligor
and, if not collected, can reasonably be anticipated to be
paid within 90 days of the date incurred.
4.1.29. Inventory. Except as will be disclosed in
Section 4.1.29 of the E/C Disclosure Schedule, the inventory
of raw materials and work in process of E/C and its
Subsidiaries is usable in all material respects, and all
inventory of finished goods is good and marketable on a normal
basis in the existing product lines of E/C and its
Subsidiaries. Such inventories do not represent more than a
twelve-month supply measured by the volume of sales or use for
the most recent complete fiscal year covered by the E/C
Financial Statements.
4.2. Representations and Warranties of the LZB Companies. The
LZB Companies, jointly and severally, represent and warrant to E/C
as follows:
4.2.1. Organization, Standing, and Power. Each of the
LZB Companies is a corporation duly incorporated, validly
existing, and in good standing under the laws of its
jurisdiction of incorporation. True and complete copies of
the articles of incorporation and bylaws of each of the LZB
Companies as currently in effect have been delivered to E/C
with the LZB Disclosure Schedule.
-32-
<PAGE>
4.2.2. Capital Structure.
(a) The authorized capital stock of LZB consists solely
of 40,000,000 shares of LZB Common Stock and 5,000,000 shares
of LZB Preferred Stock. As of December 31, 1994, 17,961,476
shares of LZB Common Stock were issued and outstanding, and no
shares of LZB Preferred Stock were issued and outstanding.
All outstanding shares of LZB Common Stock have been duly
authorized and validly issued and are fully paid and
nonassessable and not subject to any preemptive rights. No
shares of any class of LZB's capital stock are held by LZB as
treasury shares.
(b) The authorized capital stock of LZB Acquisition
consists solely of 1,000 shares of common stock. As of the
date of this Agreement, one share of LZB Acquisition's common
stock is issued and outstanding, which is owned by LZB. All
outstanding shares of LZB Acquisition's common stock have been
duly authorized and validly issued and are fully paid and
nonassessable and not subject to any preemptive rights. No
shares of any class of LZB Acquisition's capital stock are
held by LZB Acquisition as treasury shares.
(c) Neither of the LZB Companies has outstanding any
Voting Debt.
(d) Except for this Agreement and the Plan of Merger,
and except as disclosed in the LZB SEC Documents or in Section
4.2.2(d) of the LZB Disclosure Schedule, LZB has no
outstanding options, warrants, calls, rights, commitments, or
agreements of any character to which it is a party or is bound
obligating it to issue, deliver, or sell, or to cause to be
issued, delivered, or sold, additional shares of capital
stock, any Voting Debt, or any other security with voting
rights in LZB or obligating LZB to grant, extend, or enter
into any such option, warrant, call, right, commitment, or
agreement. There are no outstanding contractual obligations
of LZB to repurchase, redeem, or otherwise acquire any shares
of its capital stock. LZB is not required to, and no
shareholder of LZB has any right to require LZB to, redeem,
repurchase, or otherwise acquire or to offer to redeem,
repurchase, or otherwise acquire any shares of its capital
stock in connection with or as a result of the Merger or the
other transactions contemplated in this Agreement.
4.2.3. Authority.
(a) The LZB Companies have all requisite corporate power
and authority to enter into this Agreement and the Plan of
Merger and, subject to approval of this Agreement and the Plan
of Merger by the shareholders of E/C, to consummate the
-33-
<PAGE>
transactions contemplated hereby and thereby. The execution
and delivery of this Agreement and the Plan of Merger and the
consummation of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate
action on the part of the LZB Companies. No approval or
adoption by the shareholders of LZB is required to consummate
the Merger and the other transactions contemplated hereby.
This Agreement and the Plan of Merger have been duly executed
and delivered by the LZB Companies and constitute legal,
valid, and binding obligations of the LZB Companies,
enforceable against the LZB Companies in accordance with their
terms, except as enforceability may be limited by general
principles of equity, whether considered at law or in equity,
and bankruptcy, insolvency, and similar laws affecting
creditors' rights and remedies generally.
(b) The execution and delivery of this Agreement and the
Plan of Merger and the consummation of the transactions
contemplated hereby and thereby will not be, give rise to, or
result in any Violation of the articles of incorporation or
bylaws of either of the LZB Companies or (subject to obtaining
or making the consents, approvals, orders, authorizations,
registrations, declarations, and filings referred to in
paragraph (c) below, and except as set forth in Section
4.2.3(b) of the LZB Disclosure Schedule) be, give rise to, or
result in any Violation of, or require the consent of any
other person that is a party to, any loan or credit agreement,
note, mortgage, indenture, lease, sublease, or other
agreement, obligation, instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law,
ordinance, rule, or regulation applicable to either of the LZB
Companies or its properties or assets.
(c) No consent, approval, order, or authorization of, or
registration, declaration, or filing with, any Governmental
Entity is required by or with respect to either of the LZB
Companies in connection with the execution and delivery of
this Agreement or the Plan of Merger by the LZB Companies or
the consummation by the LZB Companies of the transactions
contemplated hereby or thereby, except for: (i) the filing of
the Tennessee Articles of Merger with the Secretary of State
of the State of Tennessee; (ii) the filing of the Certificate
of Merger with the Michigan Corporation Bureau; (iii) the
filing of appropriate documents with the relevant authorities
of other states in which E/C is qualified to do business;
(iv) LZB's Hart-Scott-Rodino Filing and expiration or early
termination of the waiting period under the Hart-Scott-Rodino
Act; (v) the filing of the Registration Statement and any
appropriate amendments thereto with the SEC and the
effectiveness thereof under the Securities Act; (vi) any
filings or other actions required to register the Merger
-34-
<PAGE>
Securities under the securities laws of any state or to obtain
exemptions from the requirement for such registration; and
(vii) the listing of the LZB Common Stock to be issued as part
of the Merger Consideration upon notice of issuance with the
Exchanges.
4.2.4. The Merger Securities.
(a) The LZB Common Stock to be issued as part of the
Merger Consideration and the additional LZB Common Stock which
may become issuable under the terms of the Performance Units
has been duly authorized and, when issued in accordance with
the Plan of Merger, will be validly issued, fully paid, and
nonassessable.
(b) When the Indenture has been duly authorized,
executed, and delivered by LZB, the Indenture will constitute
the legal, valid, and binding obligation of LZB, enforceable
against LZB in accordance with its terms, except as
enforceability may be limited by general principles of equity,
whether considered at law or in equity, and bankruptcy,
insolvency, and similar laws affecting creditors' rights and
remedies generally.
(c) When the Notes have been duly authorized, executed,
and delivered in accordance with the Plan of Merger and the
Indenture, the Notes will constitute the legal, valid, and
binding obligations of LZB, enforceable against LZB in
accordance with their terms, except as enforceability may be
limited by general principles of equity, whether considered at
law or in equity, and bankruptcy, insolvency, and similar laws
affecting creditors' rights and remedies generally.
4.2.4. LZB SEC Documents. LZB has provided to E/C
with the LZB Disclosure Schedule true and complete copies of
each of the LZB SEC Documents (including those exhibits copies
of which were requested by E/C, but excluding the other
exhibits thereto). As of their respective dates, the LZB SEC
Documents complied in all material respects with the
requirements of the Exchange Act and the rules and regulations
of the SEC thereunder applicable to such LZB SEC Documents,
and none of the E/C SEC Documents contained any untrue
statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of
LZB included in the LZB SEC Documents comply in all material
respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with GAAP, except as
may be indicated in the notes thereto or, in the case of
-35-
<PAGE>
unaudited statements, as permitted by Form 10-Q of the SEC,
and fairly present (subject, in the case of the unaudited
statements, to recurring audit adjustments normal in nature
and amount) the consolidated financial position of LZB as at
the dates thereof and the consolidated results of its
operations and cash flows or changes in financial position for
the periods then ended.
4.2.5. Registration Statement. None of the
information supplied or to be supplied by either of the LZB
Companies for inclusion or incorporation by reference in
(a) the Registration Statement will, at the time the
Registration Statement becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, or
(b) the Proxy Statement/Prospectus or any amendment or
supplement thereto will, at the date of mailing to
shareholders and at the time of the E/C Shareholder Meeting,
contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
The Proxy Statement/Prospectus (except for such portions
thereof that relate only to E/C or its Subsidiaries) will
comply in all material respects with any applicable provisions
of the Exchange Act and the rules and regulations thereunder,
and the Registration Statement (except for portions thereof
that relate only to E/C or its Subsidiaries) will comply in
all material respects with the provisions of the Securities
Act and the rules and regulations thereunder.
4.2.6. Approvals. The LZB Companies know of no reason
why all Requisite Regulatory Approvals should not be obtained
without the imposition of any Materially Burdensome Condition.
4.2.7. Brokers and Finders. Neither of the LZB
Companies nor any of their directors, officers, or employees
has employed any broker or finder or incurred any liability
for any financial advisory fees, brokerage fees, commissions,
or similar payments in connection with the transactions
contemplated by this Agreement.
4.2.8. No Material Adverse Change. Except as
disclosed in Section 4.2.8 of the LZB Disclosure Schedule,
there has been no material adverse change in the condition
(financial or otherwise), business, or prospects of LZB since
the date of the latest balance sheet included in the LZB SEC
Documents.
-36-
<PAGE>
5. COVENANTS.
5.1. Covenants of E/C. During the period from the date of
this Agreement and continuing until the Closing Date, E/C agrees
that, except as expressly contemplated or permitted by this
Agreement or to the extent that LZB shall otherwise consent in
writing:
5.1.1. Ordinary Course. E/C and each Subsidiary shall
carry on its respective business in, and only in, the usual,
regular, and ordinary course in substantially the same manner
as heretofore conducted and use all reasonable efforts to
preserve intact its present business organizations, maintain
its rights and franchises, and preserve its relationships with
customers, suppliers, and others having business dealings with
it to the end that its goodwill and ongoing business shall not
be impaired, and will not enter into any transaction not in
the ordinary course of business.
5.1.2. Dividends and Distributions. Neither E/C nor
any Subsidiary shall, or shall propose to: (a) declare or pay
any dividends on or make other distributions in respect of any
of its capital stock except for (i) payment by E/C to its
shareholders of the dividend previously declared in an amount
equal to 60 percent of its taxable income for the period of
July 1, 1994 to December 31, 1994, (ii) declaration and
payment by E/C of dividends to its shareholders in an amount
equal to 40 percent of its taxable income for the period of
January 1, 1995 to the day before the Effective Time (or, if
earlier, the date on which E/C ceases to be a small business
corporation (as defined in Section 1361(a) of the Code)), as
estimated by it in good faith), and (iii) declaration and
payment by E/C of dividends to its shareholders in an amount
equal to 50 percent of the proceeds (net of any loans and
other deductions or offsets) receivable by E/C under insurance
policies owned by E/C on the life of Arnold Dwight England;
(b) split, combine, or reclassify any of its capital stock or
issue or authorize or propose the issuance of any other
securities in respect of, in lieu of, or in substitution for
shares of its capital stock; or (c) repurchase, redeem, or
otherwise acquire, or permit any Subsidiary to purchase or
otherwise acquire, any shares of its capital stock or any
securities convertible into or exercisable for any shares of
its capital stock.
5.1.3. Charter and Bylaw Amendments. Neither E/C nor
any Subsidiary shall amend its charter or bylaws.
5.1.4. Other Actions. Neither E/C nor any Subsidiary
shall take any action that is intended to result in any of its
representations and warranties set forth in this Agreement
-37-
<PAGE>
being or becoming untrue in any material respect, or in any of
the conditions to the Merger set forth in Section 7 not being
satisfied or in a violation of any provision of this Agreement
or which would adversely affect the ability of E/C to obtain
any of the Requisite Regulatory Approvals without imposition
of a Materially Burdensome Condition except, in every case, as
may be required by applicable law.
5.1.5. Advice of Changes; Government Filings. E/C
shall promptly advise the LZB Companies orally and in writing
of any change or event having, or which, insofar as can
reasonably be foreseen, could have, a material adverse effect
on E/C or which would cause or constitute a material breach of
any of the representations, warranties, or covenants of E/C
contained herein, or which, insofar as can be reasonably
foreseen, would result in a condition set forth in Section 7
not being satisfied as of the Closing Date.
5.1.6. Accounting Methods. E/C shall not change its
methods of accounting in effect at the E/C Balance Sheet Date,
except as required by changes in generally accepted accounting
principles as concurred in by such party's independent
auditors, or change its fiscal year.
5.1.7. S Corporation Status. E/C shall use its best
efforts to maintain its status as an S Corporation for federal
income tax purposes.
5.1.8. Affiliate Transactions. Neither E/C nor any
Subsidiary shall engage in any new transaction with any of its
"affiliates" (as defined in Rule 145 under the Securities
Act).
5.1.9. Other Actions. Neither E/C nor any Subsidiary
will issue, deliver, or sell, or authorize or propose the
issuance, delivery, or sale of, any shares of its capital
stock of any class, any Voting Debt, or any securities
convertible into or exercisable for, or any rights, warrants,
or options to acquire any such shares or Voting Debt, or other
securities with voting rights or enter into any agreement with
respect to any of the foregoing.
5.1.10. No Solicitations. E/C will not, and will not
authorize or permit any of its officers, directors, or
employees or any investment banker, financial advisor,
attorney, accountant, or other representative or agent
retained by it to, solicit or encourage the making of any
Takeover Proposal or (unless, in the written opinion of E/C's
independent counsel, such action is required by the fiduciary
duties of the Board of Directors of E/C) agree to or endorse
any Takeover Proposal, or participate in any negotiations, or
-38-
<PAGE>
provide third parties with any information relating to any
such proposal. E/C will promptly advise LZB orally and in
writing of any such proposals.
5.1.11. Acquisitions. Neither E/C nor any Subsidiary
will acquire or agree to acquire, by merging or consolidating
with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or in any other manner,
any business or any corporation, partnership, association, or
other business organization or division thereof, or otherwise
acquire or agree to acquire any assets which are material,
individually or in the aggregate, to E/C.
5.1.12. Dispositions. Other than sales of inventory in
the ordinary course of business consistent with prior
practice, neither E/C nor any Subsidiary will sell, lease,
encumber, or otherwise dispose of, or agree to sell, lease,
encumber, or otherwise dispose of, any material portion of its
assets.
5.1.13. Debt. Other than in the ordinary course of
business consistent with past practice, neither E/C nor any
Subsidiary will incur any Debt, assume, guarantee, endorse or
otherwise as an accommodation become responsible for the
obligations of any other individual, corporation or other
entity, or make any loan or advance other than in the ordinary
course of business consistent with past practice; provided,
however, that in no event shall E/C incur Debt which would
result in it having total Debt as of the Closing Date in
excess of $24,000,000.
5.1.14. Benefit Plans. Neither E/C nor any Subsidiary
will, without the prior written consent of LZB: (a) enter
into, adopt, amend, or terminate any E/C Benefit Plan or any
other employee benefit plan or any agreement, arrangement,
plan, or policy between such party and one or more of its
directors or officers; (b) increase in any manner the
compensation or fringe benefits of any director, officer, or
employee or pay any benefit not required by any plan or
arrangement as in effect as of the date hereof (including,
without limitation, the granting of stock options, stock
appreciation rights, restricted stock, restricted stock units,
or performance units or shares) or enter into any contract,
agreement, commitment, or arrangement to do any of the
foregoing; or (c) enter into or renew any contract, agreement,
commitment, or arrangement providing for the payment to any
director, officer, or employee of such party of compensation
or benefits contingent, or the terms of which are materially
altered, upon the occurrence of any of the transactions
contemplated by this Agreement.
-39-
<PAGE>
5.1.15. Discharge of Claims; Capital Expenditures.
Neither E/C nor any Subsidiary will: (a) pay, discharge, or
satisfy any claim, liability, or obligation of any nature
other than in the ordinary course of business consistent with
past practice; or (b) make any capital expenditures or
commitments other than those which have been approved by LZB.
5.1.16. Access to Information. Upon reasonable notice
and subject to applicable laws relating to the exchange of
information, E/C shall each afford to the officers, employees,
accountants, counsel, and other representatives of LZB access,
during normal business hours during the period prior to the
Closing Date, to all its properties, books, contracts,
commitments and records and, during such period, E/C shall
make available to LZB all other information concerning its
business, properties, and personnel as LZB may reasonably
request. No investigation by or on behalf of a LZB Company
shall affect the representations and warranties of E/C set
forth herein.
5.2. Covenants of LZB Companies. During the period from the
date of this Agreement and continuing until the Closing Date, the
LZB Companies agree that, except as expressly contemplated or
permitted by this Agreement or to the extent that E/C shall
otherwise consent in writing:
5.2.1. Dividends and Distributions. LZB shall not,
and shall not propose to: (a) declare or pay any dividends on
or make other distributions in respect of the LZB Common Stock
other than cash dividends in amounts determined in accordance
with prior practice; or (b) split, combine, or reclassify the
LZB Common Stock or issue or authorize or propose the issuance
of any other securities in respect of, in lieu of, or in
substitution for shares of the LZB Common Stock.
5.2.2. Charter and Bylaw Amendments. Neither of the
LZB Companies shall amend its articles of incorporation or
bylaws so as to adversely affect the rights of holders of LZB
Common Stock.
5.2.3. Other Actions. Neither of the LZB Companies
shall take any action that is intended to result in any of its
representations and warranties set forth in this Agreement
being or becoming untrue in any material respect, or in any of
the conditions to the Merger set forth in Section 7 not being
satisfied or in a violation of any provision of this Agreement
or which would adversely affect the ability of the LZB
Companies to obtain any of the Requisite Regulatory Approvals
without imposition of a Materially Burdensome Condition
except, in every case, as may be required by applicable law.
-40-
<PAGE>
5.2.4. Advice of Changes; Government Filings. LZB
shall promptly advise E/C orally and in writing of any change
or event having, or which, insofar as can reasonably be
foreseen, could have, a material adverse effect on LZB or
which would cause or constitute a material breach of any of
the representations, warranties, or covenants of the LZB
Companies contained herein, or which, insofar as can be
reasonably foreseen, would result in a condition set forth in
Section 7 not being satisfied as of the Closing Date.
5.2.5. Other Actions. LZB will not issue any shares
of LZB Common Stock for less than fair value except pursuant
to employee stock option plans described in the LZB SEC
Documents or in Section 5.2.5 of the LZB Disclosure Schedule.
6. ADDITIONAL AGREEMENTS.
6.1. Regulatory Matters.
6.1.1. Registration Statement. E/C and LZB shall
promptly prepare and file with the SEC the Registration
Statement, in which the Proxy Statement/Prospectus will be
included. Each of LZB and E/C shall use all reasonable
efforts to have the Registration Statement declared effective
under the Securities Act as promptly as practicable after such
filing and after receipt of the tax lock-up letters referred
to in Section 7.2.8, and E/C shall thereafter mail the Proxy
Statement to its shareholders. E/C and the LZB Companies
shall also use their respective best efforts to obtain all
necessary state securities law or "blue sky" permits and
approvals required to carry out the transactions contemplated
by this Agreement, and E/C and the LZB Companies, as
applicable, shall furnish all information concerning LZB, E/C,
and the holders of E/C Stock as may be reasonably requested in
connection with any such action.
6.1.2. Hart-Scott-Rodino Filings. E/C and LZB shall
each promptly prepare and file their respective Hart-Scott-
Rodino Filings and shall use their best efforts to cause the
applicable waiting period under the Hart-Scott-Rodino Act to
expire or be terminated.
6.1.3. General.
(a) The parties hereto shall cooperate with each other
and use their best efforts to promptly prepare and file all
necessary documentation, to effect all necessary applications,
notices, petitions, filings, and other documents, to obtain as
promptly as practicable all necessary permits, consents,
approvals, and authorizations of all other persons and
-41-
<PAGE>
Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement. E/C and LZB
shall have the right to review in advance, and to the extent
practicable each will consult the other on, in each case
subject to applicable laws relating to the exchange of
information, all the information relating to E/C or the LZB
Companies, which appears in any filing made with, or written
materials submitted to, any third party or any Governmental
Entity in connection with the transactions contemplated by
this Agreement. In exercising the foregoing right, each of
the parties hereto shall act reasonably and as promptly as
practicable. The parties hereto agree that they will consult
with each other with respect to the obtaining of all permits,
consents, approvals, and authorizations of all third parties
and Governmental Entities necessary or advisable to consummate
the transactions contemplated by this Agreement, and each
party will keep the other apprised of the status of matters
relating to completion of the transactions contemplated
herein.
(b) E/C and each of the LZB Companies shall, upon
request, use their best efforts to furnish each other with all
information concerning themselves, their directors, officers,
and shareholders, all financial information or other
information, including accountant comfort letters relating
thereto, certificates, and consents, and such other matters as
may be reasonably necessary or advisable in connection with
the Registration Statement, the Hart-Scott-Rodino Filings, or
any other statement, filing, notice, or application made by or
on behalf of any of E/C or either of the LZB Companies to any
Governmental Entity or any other person in connection with the
Merger and the other transactions contemplated by this
Agreement and the Plan of Merger.
(c) E/C and each of the LZB Companies shall promptly
furnish each other with copies of written communications
received by any of them or any of their respective affiliates
or associates (as such terms are defined in Rule 12b-2 under
the Exchange Act as in effect on the date hereof) from, or
delivered by any of the foregoing to, any Governmental Entity
in respect of the transactions contemplated hereby.
6.2. Opinions of Counsel. Each party shall use its best efforts to cause
to be delivered to the other opinions of its independent counsel, dated the
effective date of the Registration Statement and the date of the E/C
Shareholder Meeting, to the effect that the Registration Statement and the
Proxy Statement/Prospectus and any amendment and supplements thereto (except
for information with respect to the other parties and except for the financial
statements and notes thereto and other financial, statistical, and accounting
data included in, incorporated by
-42-
<PAGE>
reference in, or which should have been included in or incorporated by
reference in the Registration Statement or the Proxy Statement/Prospectus, as
to all of which they need express no opinion) comply as to form in all material
respects with the applicable requirements of the Securities Act and rules and
regulations of the SEC promulgated thereunder. Each party shall also use its
best efforts to cause to be delivered to the other letters of its counsel dated
the same dates as the opinions described above to the effect that nothing has
come to such counsel's attention that has caused such counsel to believe that
the Registration Statement or the Proxy Statement/Prospectus, at the time the
Registration Statement became effective, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were, made not misleading (except for information with respect
to the other parties and except for financial statements and notes thereto and
other financial, statistical, and accounting data included in, incorporated by
reference in, or which should have been included in or incorporated by
reference in the Registration Statement or the Proxy Statement/Prospectus, as
to all of which they need make no statement).
6.3. Legal Conditions to Mergers. Each of E/C and the LZB
Companies shall use their best efforts: (a) to take, or cause to be
taken, all actions necessary to comply promptly with all legal
requirements which may be imposed on such party with respect to the
Merger and, subject to the conditions set forth in Section 7, to
consummate the transactions contemplated by this Agreement and the
Plan of Merger; and (b) to obtain (and to cooperate with the other
party to obtain) any consent, authorization, order, or approval of,
or any exemption by, any Governmental Entity and any other public
or private person which is required to be obtained or made by such
party in connection with the Merger and the transactions
contemplated by this Agreement and the Plan of Merger. Each of the
parties will promptly cooperate with and furnish information to the
other in connection with any such condition or restriction suffered
by, or requirement imposed upon, any of them in connection with the
foregoing.
6.4. Affiliates. E/C shall use its best efforts to cause each
director, officer, and other person who is an "affiliate" (for
purposes of Rule 145 under the Securities Act) of E/C to deliver to
LZB, on or prior to the Closing Date, a written agreement, in form
and substance satisfactory to LZB in its reasonable judgment, to
comply with the applicable provisions of Rule 145 in connection
with any resales of Merger Securities. Section 6.4 of the E/C
Disclosure Schedule will contain a list of the persons considered
by E/C to be an affiliate for such purpose.
6.5. Expenses. If the Merger is consummated, all costs and
-43-
<PAGE>
expenses incurred in connection with this Agreement shall be paid
by the Surviving Corporation, and if the Merger is not consummated,
all such costs and expenses shall be paid by the party incurring
the same. Nothing in this Section 6.5 is intended to limit in any
manner the damages or liabilities that a party may seek to recover
arising out of a breach of this Agreement or the Plan of Merger by
another party.
6.6. Additional Agreements; Best Efforts. Subject to the
terms and conditions of this Agreement, each of the parties hereto
agrees to use its best efforts to take, or cause to be taken, all
action and to do, or cause to be done, all things necessary,
proper, or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this
Agreement, including, without limitation, cooperating fully with
the other parties hereto, providing the other parties hereto with
any appropriate information, and making all necessary filings in
connection with the Requisite Regulatory Approvals. In case at any
time after the Closing Date any further action is necessary or
desirable to carry out the purposes of this Agreement or the Plan
of Merger or to vest the Surviving Corporation with full title to
all properties, assets, rights, approvals, immunities, and
franchises of any of the constituent corporations of the Merger,
the proper officers and directors of each party to this Agreement
shall take all such necessary action.
6.7. Plan of Merger. Immediately after the execution of this
Agreement, the parties thereto shall execute and deliver the Plan
of Merger.
6.8. Letter of E/C's Accountants. E/C shall use its best
efforts to cause to be delivered to E/C and the LZB Companies
letters of BDO Seidman, independent auditors for E/C, dated (a) the
date on which the Registration Statement shall become effective,
and (b) the business day prior to the Effective Time, and addressed
to E/C and the LZB Companies, in form and substance reasonably
satisfactory to E/C the LZB Companies, and customary in scope and
substance for letters delivered by independent public accountants
in connection with registration statements similar to the
Registration Statement.
6.9. Letter of LZB's Accountants. LZB shall use its best
efforts to cause to be delivered to E/C and the LZB Companies
letters of Price Waterhouse, independent auditors for LZB, dated
(a) the date on which the Registration Statement shall become
effective, and (b) the business day prior to the Effective Time,
and addressed to E/C and the LZB Companies, in form and substance
reasonably satisfactory to E/C the LZB Companies, and customary in
scope and substance for letters delivered by independent public
accountants in connection with registration statements similar to
the Registration Statement.
-44-
<PAGE>
6.10. E/C Disclosure Schedule. No later than January 24,
1995, E/C shall deliver the E/C Disclosure Schedule (together with
all documents required to be delivered therewith) to the LZB
Companies.
7. CONDITIONS PRECEDENT.
7.1. Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to effect the
Merger shall be subject to the satisfaction prior to the Effective
Time of the following conditions:
7.1.1. Shareholder Approval. This Agreement, the Plan
of Merger, and the Merger shall have been duly approved by the
requisite vote of each "voting group" (as defined in the TBCA)
entitled to vote thereon.
7.1.2. Listing on Exchanges. The shares of LZB Common
Stock issuable as part of the Merger Consideration shall have
been listed on upon official notice of issuance on the
Exchanges.
7.1.3. Requisite Regulatory Approvals. The waiting
period under the Hart-Scott-Rodino Act shall have expired or
been terminated, and all other Requisite Regulatory Approvals
shall have been accomplished or obtained and shall be in full
force and effect.
7.1.4. Registration Statement. The Registration
Statement shall have become effective under the Securities
Act, no stop order suspending the effectiveness of the
Registration Statement shall have been issued, and no
proceedings for that purpose shall have been initiated or
threatened by the SEC or the securities administrators of any
jurisdiction, nor shall any of such authorities have
instituted or threatened to institute any proceedings with
respect to a stop order.
7.1.5. Blue Sky Matters. The Merger Securities shall
have been qualified or registered with the appropriate "blue
sky" authorities of all states in which qualification or
registration is required, and such qualifications or
registrations shall not have been suspended or revoked.
7.1.6. No Restrictions or Restraints; Illegality. No
order, injunction, or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger or any of the
transactions contemplated hereby shall be in effect, nor shall
any proceeding by any Governmental Entity seeking any of the
foregoing be pending, nor shall any lawsuit or governmental
-45-
<PAGE>
proceeding be pending or threatened against any of E/C, either
of the LZB Companies, or any of their respective directors
seeking substantial damages in connection with the
transactions contemplated in this Agreement. No statute,
rule, regulation, order, injunction, or decree shall have been
enacted, entered, promulgated, or enforced by any Governmental
Entity which prohibits, restricts or makes illegal
consummation of the Merger.
7.1.7. No Materially Burdensome Condition. No
Materially Burdensome Condition shall have been imposed or be
applicable to the transactions contemplated by this Agreement.
7.1.8. Governmental Action. There shall not have been
any action taken, or any law, rule, regulation, order,
judgment, or decree proposed, promulgated, enacted, entered,
enforced, or deemed applicable to the transactions
contemplated by this Agreement by any Governmental Entity or
by any court or other tribunal, including the entry of a
preliminary or permanent injunction, which, in the reasonable
opinion of such party: (a) makes this Agreement, the Plan of
Merger, or the Merger, or any of the other transactions
contemplated by this Agreement, illegal; (b) results in a
material delay in the ability of E/C or the LZB Companies to
consummate the Merger or any of the other transactions
contemplated by this Agreement; (c) requires the divestiture
by E/C or the LZB Companies of a material portion of the
business of E/C, taken as a whole, or the LZB Companies, taken
as a whole; or (d) otherwise prohibits or restricts or delays
in a material respect consummation of the Merger or any of the
other transactions contemplated by this Agreement or impairs
in a material respect the contemplated benefits to E/C or the
LZB Companies of this Agreement, the Merger, or any of the
other transactions contemplated by this Agreement.
7.1.9. Affiliates' Agreements. The affiliates'
agreements described in Section 6.4 shall have been executed
and delivered by the persons described in Section 6.4.
7.1.10. LZB Notes and Indenture. The parties shall
have agreed to the definitive forms of the LZB Notes and the
Indenture, and the Indenture shall have been executed and
delivered by the parties thereto.
7.2. Conditions to Obligations of the LZB Companies. The
obligation of the LZB Companies to effect the Merger is also
subject to the satisfaction or waiver by the LZB Companies prior to
the Effective Time of the following conditions:
7.2.1. Representations and Warranties. The
representations and warranties of E/C set forth in this
-46-
<PAGE>
Agreement shall be true and correct in all material respects
as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier
date) as of the Effective Time as though made on and as of
such time, except as otherwise contemplated by this Agreement,
and the LZB Companies shall have received a certificate signed
on behalf of E/C by its Chief Executive Officer and Chief
Financial Officer to such effect.
7.2.2. Performance of Obligations of E/C. E/C shall
have performed in all material respects all obligations
required to be performed by it under this Agreement at or
prior to the Effective Time, and the LZB Companies shall have
received a certificate signed on behalf of E/C by its Chief
Executive Officer and Chief Financial Officer to such effect.
7.2.3. Consents Under Agreements. E/C shall have
obtained the consent or approval of each person (other than
the Governmental Entities referred to in Section 7.1.3) whose
consent or approval shall be required in order to permit the
succession by the Surviving Corporation pursuant to the Merger
to any obligation, right, or interest of E/C under any loan or
credit agreement, note, mortgage, indenture, lease, license,
or other agreement or instrument.
7.2.4. Tax Opinions. The LZB Companies shall have
received the opinion of Miller, Canfield, Paddock and Stone,
P.L.C., dated the effective date of the Registration Statement
and the Effective Time, to the effect that the Merger will be
treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code.
7.2.5. Legal Opinions. The LZB Companies shall have
received: (a) the opinions and letters referred to in Section
6.2; and (b) the opinion of Baker, Donelson, Bearman &
Caldwell, counsel to E/C, dated the Effective Time, as to such
matters as are customary for transactions of this type and in
form and substance reasonably acceptable to the LZB Companies.
7.2.6. Debt. The total Debt of E/C shall not exceed
$30,000,000 on the Effective Time, and the LZB Companies shall
have received a certificate dated the Effective Time, signed
on behalf of E/C by its respective Chief Financial Officer, to
such effect.
7.2.7. Accountants' Letters. The LZB Companies shall
have received the letters referred to in Sections 6.8 and 6.9.
7.2.8. Tax Lock-Up Letters. The LZB Companies shall
have received tax lock-up letters, in form and substance
satisfactory to LZB in its reasonable judgment: (a) from all
-47-
<PAGE>
E/C shareholders who are to receive LZB Common Stock as Merger
Consideration; and (b) from those E/C shareholders to be
designated in Section 7.2.8 of the E/C Disclosure Schedule.
7.2.9. S Corporation Opinion. BDO Seidman shall have
delivered to the LZB Companies its opinion, dated the
Effective Time, with respect to the status of E/C prior to
such time as an electing small business corporation under the
Code, in form and substance reasonably acceptable to LZB.
7.2.10. Waivers of Indemnification Rights. Each of the
officers and directors of E/C shall have delivered to the LZB
Companies documents, in form and substance reasonably
satisfactory to the LZB Companies, pursuant to which such
officers and directors forever waive and release any and all
claims they might otherwise have (whether under the charter or
bylaws of E/C, the articles of incorporation or bylaws of
either LZB Company, by contract, or otherwise) for
indemnification or for the payment or advancing of expenses
relating in any way to any disputes which may arise between
such officer or director and either LZB Company relating to
this Agreement or the transactions contemplated hereby.
7.2.11. Termination of Employment Agreements. Each
holder of E/C Class A Stock shall have executed and delivered
to E/C (with copies to the LZB Companies) documents, in form
and substance satisfactory to LZB in its reasonable judgment,
acknowledging that any and all employment contracts between
such person and E/C have been terminated and releasing E/C and
the Surviving Corporation from any further liability
thereunder, including (but not limited to) any liability with
respect to such termination.
7.3. Conditions to Obligations of E/C. The obligation of E/C
to effect the Merger is also subject to the satisfaction or waiver
by E/C prior to the Effective Time of the following conditions:
7.3.1. Representations and Warranties. The
representations and warranties of the LZB Companies set forth
in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and (except to the
extent such representations and warranties speak as of an
earlier date) as of the Effective Time as though made on and
as of such time, except as otherwise contemplated by this
Agreement, and E/C shall have received a certificate signed on
behalf of LZB by its Chief Executive Officer and Chief
Financial Officer to such effect.
7.3.2. Performance of Obligations of E/C. The LZB
Companies shall have performed in all material respects all
obligations required to be performed by them under this
-48-
<PAGE>
Agreement at or prior to the Effective Time, and E/C shall
have received a certificate signed on behalf of LZB by its
Chief Executive Officer and Chief Financial Officer to such
effect.
7.3.3. Consents Under Agreements. The LZB Companies
shall have obtained the consent or approval of each person
(other than the Governmental Entities referred to in Section
7.1.3) whose consent or approval shall be required in order to
permit the succession by the Surviving Corporation pursuant to
the Merger to any obligation, right, or interest of LZB
Acquisition under any loan or credit agreement, note,
mortgage, indenture, lease, license, or other agreement or
instrument.
7.3.4. Tax Opinions. E/C shall have received the
opinion of Miller, Canfield, Paddock and Stone, P.L.C., dated
the effective date of the Registration Statement and the
Effective Time, to the effect that the Merger will be treated
for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code.
7.3.5. Legal Opinions. E/C shall have received:
(a) the opinions and letters referred to in Section 6.2; and
(b) the opinion of Miller, Canfield, Paddock and Stone,
P.L.C., counsel to the LZB Companies, dated the Effective
Time, as to such matters as are customary for transactions of
this type and in form and substance reasonably acceptable to
E/C.
7.3.6. Accountants' Letters. E/C shall have received
the letters referred to in Sections 6.8 and 6.9.
7.3.7. Tax Lock-Up Letters. E/C shall have received
the tax lock-up letters referred to in Section 7.2.8.
8. TERMINATION AND AMENDMENT.
8.1. Termination. This Agreement and the Plan of Merger may
be terminated at any time prior to the Effective Time, whether
before or after approval of the matters presented in connection
with the Merger by the shareholders of E/C:
(a) by mutual consent of E/C and the LZB Companies in a
written instrument, if the Board of Directors of each so
determines by a vote of a majority of the members of its
entire Board;
(b) by E/C or either of the LZB Companies upon written
notice to the others if (i) any Requisite Regulatory Approval
-49-
<PAGE>
shall have been denied or any Materially Burdensome Condition
shall have been imposed or (ii) any Governmental Entity of
competent jurisdiction shall have issued a final nonappealable
order enjoining or otherwise prohibiting the consummation of
the transactions contemplated by this Agreement;
(c) by E/C or either of the LZB Companies upon written
notice to the others if the Merger shall not have been
consummated on or before April 15, 1995, provided that a party
may not terminate under this Section 8.1(c) if such party is
in breach in any material respect of this Agreement;
(d) by E/C or either of the LZB Companies upon written
notice to the others if any approval of the shareholders of
E/C required for the consummation of the Merger shall not have
been obtained by reason of the failure to obtain the required
vote at the E/C Shareholder Meeting, provided that any such
notice of termination must be given not later than 45 days
after the conclusion of the E/C Shareholder Meeting or within
such longer period as may be agreed upon by the parties;
(e) by E/C or the LZB Companies upon written notice to
the others if there shall have been a material breach of any
of the representations or warranties set forth in this
Agreement on the part of E/C (in the case of the LZB
Companies) or either of the LZB Companies (in the case of
E/C), as if any such breach were being made as of the date of
determination, and which breach by its nature cannot be cured
prior to the earlier of the then scheduled Closing Date or 60
days following receipt by the breaching party of written
notice of the breach from any other party hereto;
(f) by E/C or the LZB Companies upon written notice to
the others if there shall have been a material breach of any
of the covenants or agreements set forth in this Agreement on
the part of E/C (in the case of the LZB Companies) or either
of the LZB Companies (in the case of E/C), which breach shall
not have been cured prior to the earlier of the then scheduled
Closing Date 15 business days following receipt by the
breaching party of written notice of such breach from any
other party hereto;
(g) by either of the LZB Companies upon written notice
to E/C if the Board of Directors of E/C does not, or shall
indicate to either of the LZB Companies that it is unwilling
or unable to, recommend in the Proxy Statement/Prospectus that
its shareholders approve this Agreement and the Plan of
Merger, or if after recommending in the Proxy Statement/Prospectus
that shareholders approve this Agreement and the Plan
of Merger, the Board of Directors of E/C shall have withdrawn,
modified, or amended such recommendation in any respect
-50-
<PAGE>
materially adverse to the LZB Companies, provided that any
such notice of termination must be given not later than 45
days after the date LZB shall have been advised by E/C in
writing that it is unable or unwilling to so recommend in the
Proxy Statement/Prospectus or that it has withdrawn, modified,
or amended such recommendation, or such later date as may be
agreed upon by E/C and the LZB Companies;
(h) by either of the LZB Companies upon written notice
to E/C if E/C shall have authorized, recommended, proposed, or
announced an intention to authorize, recommend, or propose, or
entered into an agreement with any person (other than any of
the LZB Companies) to effect, a Takeover Proposal or shall
fail to publicly oppose a tender offer or exchange offer by
another person based on a Takeover Proposal;
(i) by either of the LZB Companies upon written notice
to E/C if E/C fails to deliver the E/C Disclosure Schedule
within the time specified in Section 6.10; and
(j) by either of the LZB Companies, in its sole
discretion, upon written notice to E/C given any time within
ten business days after receiving the E/C Disclosure Schedule.
8.2. Effect of Termination. In the event of termination of
this Agreement by E/C or either of the LZB Companies as provided in
Section 8.1, this Agreement shall forthwith become void and have no
effect except (a) with respect to Sections 6.5, 8.2, 8.5, 9.5, and
9.6 and (b) except as otherwise provided in Section 8.5, no party
shall be relieved or released from any liabilities or damages
arising out of the breach by such party of any provision of this
Agreement or the Plan of Merger.
8.3. Amendment. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of
Directors, at any time before or after approval of the matters
presented in connection with the Merger by the shareholders of E/C;
provided, however, that after any such approval, no amendment shall
be made which by law requires further approval by such
shareholders, without such further approval. This Agreement may
not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
8.4. Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their
respective Board of Directors, may, to the extent legally allowed:
(a) extend the time for the performance of any of the obligations
or other acts of the other parties hereto; (b) waive any
inaccuracies in the representations and warranties contained herein
or in any document delivered pursuant hereto; and (c) waive
compliance with any of the agreements or conditions contained
-51-
<PAGE>
herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party.
8.5. Liquidated Damages; Termination Fee.
(a) Notwithstanding anything to the contrary contained herein,
in the event that any of the following events or circumstances
shall occur, E/C shall, within ten days after notice of the
occurrence thereof by LZB, pay to LZB the sum of $500,000, which
the parties agree and stipulate as reasonable and full liquidated
damages and reasonable compensation for the involvement of the LZB
Companies in the transactions contemplated in this Agreement, is
not a penalty or forfeiture, and will not affect the provisions of
Section 8.2(a):
(i) at any time prior to termination of this Agreement
an Acquisition Event shall occur; or
(ii) E/C shall terminate this Agreement pursuant to
Section 8.1(d), LZB or LZB Acquisition shall
terminate this Agreement pursuant to Sections
8.1(d), (f), (g), or (h), or E/C shall fail to
call and hold the E/C Shareholder Meeting as
required by Section 2.2.
(b) Notwithstanding anything to the contrary contained herein,
in the event that E/C shall terminate this Agreement pursuant to
Section 8.1(f), LZB shall, within ten days after notice of the
occurrence thereof by E/C, pay to E/C the sum of $500,000, which
the parties agree and stipulate as reasonable and full liquidated
damages and reasonable compensation for the involvement of E/C in
the transactions contemplated in this Agreement, is not a penalty
or forfeiture, and will not affect the provisions of Section
8.2(a).
(c) Upon the making and receipt of payment under either
subsection (a) or subsection (b) of this Section 8.5, neither E/C
nor either of the LZB Companies shall have any further obligation
of any kind under this Agreement, except in each case under Section
8.2(a).
9. GENERAL PROVISIONS.
9.1. Survival of Agreements. All of the representations,
warranties, covenants, and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the
Effective Time and consummation of the Merger.
9.2. Notices. All notices and other communications hereunder
-52-
<PAGE>
shall be in writing and shall be deemed given if delivered
personally, telecopied (with confirmation), or mailed by registered
or certified mail (return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall
be specified by like notice):
(a) if to E/C, to:
England/Corsair, Inc.
402 Old Knoxville Highway
New Tazewell, Tennessee 37825
Attention: Chief Executive Officer
Fax: (614) 626-5211, Ext. 560
and
(b) if to either of the LZB Companies, to:
La-Z-Boy Chair Company
1284 North Telegraph Road
Monroe, Michigan 48161
Attention: Chief Executive Officer
Fax: (313) 457-2005
with a copy to:
Miller, Canfield, Paddock and Stone, P.L.C.
Suite 2500
150 West Jefferson Avenue
Detroit, Michigan 48226
Attention: David D. Joswick, Esq.
Fax: (313) 496-8451
9.3. Interpretation. When a reference is made in this
Agreement to Sections, Exhibits, or Schedules, such reference shall
be to a Section of or Exhibit or Schedule to this Agreement unless
otherwise indicated. The table of contents and headings contained
in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include," "includes," or "including," are used
in this Agreement, they shall be deemed to be followed by the words
"without limitation." The phrases "the date of this Agreement,"
"the date hereof," and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to the date set forth
in the first paragraph of this Agreement.
9.4. Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been
signed by each of the parties and delivered to the other parties,
it being understood that all parties need not sign the same
-53-
<PAGE>
counterpart. An executed counterpart received by telecopy shall
have the same effect as an originally executed counterpart.
9.5. Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership. This Agreement, the Exhibits hereto, and the Plan of
Merger: (a) constitute the entire agreement and supersede all prior
agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof; and (b) are not
intended to confer upon any person other than the parties hereto
any rights or remedies hereunder or thereunder except, if and only
if the Merger is consummated, for the right of the shareholders of
E/C to receive the Merger Consideration. For the purposes hereof,
"party" shall mean E/C, LZB, and LZB Acquisition and shall not
include any other person whatsoever, whether a shareholder,
employee, officer, director, or otherwise.
9.6. Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Michigan,
without regard to any applicable conflicts of law.
9.7. Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with
its specific terms or was otherwise breached. It is accordingly
agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or
in equity.
9.8. Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of such invalidity
or unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement or affecting the
validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall
be interpreted to be only so broad as is enforceable.
9.9. Publicity. Except as otherwise required by law or the
rules of the Exchanges, so long as this Agreement is in effect,
none of E/C or the LZB Companies shall issue or cause the
publication of any press release or other public announcement with
respect to the transactions contemplated by this Agreement without
the consent of the other party, which consent shall not be
unreasonably withheld, conditioned, or delayed.
9.10. Assignment. Neither this Agreement nor any of the
rights, interests, or obligations hereunder shall be assigned by
-54-
<PAGE>
any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties.
Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of, and be enforceable by the parties
and their respective successors and assigns.
-55-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective officers thereunto duly
authorized as of the date first above written.
ENGLAND/CORSAIR, INC.
By /s/ RODNEY ENGLAND
Rodney England
President
Attest:
/s/ DENNIS C. VALKANOFF
Dennis C. Valkanoff
Vice President
LA-Z-BOY CHAIR COMPANY
By /s/ F. H. JACKSON
F. H. Jackson
Vice President Finance
Attest:
/s/ JAMES P. KLARR
James P. Klarr
Assistant Secretary
and Tax Counsel
LZB ACQUISITION, INC.
By /s/ GENE M. HARDY
Gene M. Hardy
Secretary and Treasurer
Attest:
/s/ JAMES P. KLARR
James P. Klarr
Assistant Secretary
and Tax Counsel
-56-
<PAGE>
Exhibit 2 to Reorganization Agreement
SUMMARY OF TERMS OF LZB NOTES
Title: La-Z-Boy Chair Company 8% Unsecured
Promissory Notes Due 1999
Maximum aggregate principal
amount: $10,000,000
Form: Registered
Denominations: Any
Principal payments: Four equal installments payable on
first through fourth anniversaries
of Effective Time
Final maturity: Fourth anniversary of Effective Time
Interest: 8% simple, payable annually on
anniversaries of Effective Time
Prepayments: Permitted -- no premium
Security: None
<PAGE>
ANNEX B
Exhibit 1 to Amended and Restated Reorganization Agreement
AMENDED AND RESTATED PLAN OF MERGER
THIS AMENDED AND RESTATED PLAN OF MERGER (the "Plan of Merger") is
entered into as of January 13, 1995 by and among La-Z-Boy Chair Company, a
Michigan corporation ("LZB"), LZB Acquisition, Inc., a Michigan corporation and
a wholly owned subsidiary of LZB ("LZB Acquisition"), and England/Corsair,
Inc., a Tennessee corporation ("E/C").
Premises:
A. The parties have executed and delivered a Plan of Merger dated as
of January 13, 1995 (the "Original Plan of Merger") and a Reorganization
Agreement dated as of January 13, 1995 (the "Original Agreement").
B. The parties hereto have amended and restated the Original Agreement
in its entirety by entering into an Amended and Restated Reorganization
Agreement of even date herewith (the "Reorganization Agreement").
C. The parties desire to amend and restate the Original Plan
of Merger in its entirety as set forth in this Plan of Merger.
D. The Reorganization Agreement provides for the merger (the "Merger")
of E/C with and into LZB Acquisition with the result that the separate
existence of E/C will cease, LZB Acquisition will continue to be a wholly owned
subsidiary of LZB, and E/C shareholders will exchange their shares of common
stock of E/C for shares of LZB common stock, LZB notes, or cash (or a
combination of the foregoing) and for Performance Units (as hereinafter
defined).
E. The parties hereto are entering into this Plan of Merger
to set forth the terms and conditions of the Merger.
F. E/C has authorized capital stock consisting solely of: (1) 500,000
shares of Class A Common Stock, without par value ("E/C Class A Stock") of
which 224,652 shares are issued and outstanding as of the date of this Plan of
Merger and entitled to vote; and (2) 500,000 shares of Class B Common Stock,
without par value ("E/C Class B Stock") of which 72,678 shares are issued and
outstanding as of the date of this Plan of Merger and entitled to vote. Holders
of the E/C Class A Stock and the E/C Class B Stock are entitled to vote on the
Merger; the affirmative votes of the holders of a majority of the total number
of shares of E/C Class A Stock and E/C Class B stock issued and outstanding,
voting together as a single voting group, are required to approve the Merger.
The E/C Class A Stock and the E/C Class B Stock are referred to herein
collectively as the "E/C Stock."
<PAGE>
G. The number of shares of E/C Class A Stock and the number
of shares of E/C Class B Stock are not subject to change before the
effective date of the Merger.
H. LZB Acquisition has an authorized capital stock consisting solely
of 1,000 shares of Common Stock ("LZB Acquisition Stock"), of which one share
is issued and outstanding as of the date of this Plan of Merger and entitled to
vote and which is owned by LZB.
I. The number of shares of LZB Acquisition Stock is not subject to
change before the effective date of the Merger.
J. The respective Boards of Directors of LZB, LZB Acquisition, and E/C
have determined that it is in the best interests of LZB, LZB Acquisition, and
E/C and their respective shareholders for E/C to be merged with and into LZB
Acquisition upon the terms and subject to the conditions set forth in this Plan
of Merger and in accordance with the Business Corporation Act of the State of
Michigan (the "MBCA") and the Tennessee Business Corporation Act (the "TBCA").
K. The respective Boards of Directors of LZB, LZB Acquisition, and E/C
have adopted resolutions approving this Plan of Merger and the Merger; LZB, as
the sole shareholder of LZB Acquisition, has approved this Plan of Merger and
the Merger; and the Board of Directors of E/C has resolved to recommend
approval of this Plan of Merger and the Merger to its shareholders.
L. E/C has agreed in the Reorganization Agreement to duly call and
hold a special meeting of its shareholders to vote upon the approval of this
Plan of Merger and the Merger (the "Meeting").
NOW, THEREFORE, in consideration of the premises and the respective
covenants and agreements set forth herein and in the Reorganization Agreement,
and intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 EFFECTIVE TIME OF THE MERGER. Subject to the provisions
of this Plan of Merger and the Reorganization Agreement: (a) a
certificate of merger (the "Michigan Certificate of Merger") shall
be duly prepared and executed by E/C and LZB Acquisition and
thereafter delivered for filing to the Corporation and Securities
-2-
<PAGE>
Bureau of the Michigan Department of Commerce (the "Michigan Corporation
Bureau"), as provided in the MBCA, as soon as practicable on or after the
Closing Date (as defined in the Reorganization Agreement); and (b) articles of
merger (the "Tennessee Articles of Merger") shall be duly prepared and executed
by E/C and LZB Acquisition and thereafter delivered for filing to the Tennessee
Secretary of State, as provided in the TBCA, as soon as practicable on or after
the Closing Date. The Merger shall become effective: (i) under Michigan law,
upon the filing of the Michigan Certificate of Merger with the Michigan
Corporation Bureau or at such time thereafter as LZB, LZB Acquisition, and E/C
may agree in writing to provide in the Michigan Certificate of Merger; and (ii)
under Tennessee law, upon the filing of the Tennessee Articles of Merger with
the Tennessee Secretary of State or at such time thereafter as LZB, LZB
Acquisition, and E/C may agree in writing to provide in the Tennessee Articles
of Merger. As used in this Plan of Merger, "Effective Time" means the later
said times.
1.2 EFFECTS OF THE MERGER.
(a) At the Effective Time,
(i) the separate existence of E/C shall cease, and it shall
be merged with and into LZB Acquisition, which shall be the Surviving
Corporation (as defined in Section 1.2(b) below) of the Merger;
(ii) the Articles of Incorporation of LZB Acquisition, as in
effect immediately prior to the Effective Time, shall be the Articles of
Incorporation of the Surviving Corporation until duly amended in accordance
with the provisions thereof and the MBCA; and
(iii) the Bylaws of LZB Acquisition, as in effect immediately prior
to the Effective Time, shall be the Bylaws of the Surviving Corporation until
amended in accordance with the provisions thereof and the MBCA.
(b) As used in this Plan of Merger, the term "Surviving
Corporation" shall mean LZB Acquisition.
(c) At and after the Effective Time, the Merger will have the
effects set forth in Section 724(1) of the MBCA and Section 48-21-108 of the
TBCA.
-3-
<PAGE>
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
2.1 EFFECT ON CAPITAL STOCK. At the Effective Time, by
virtue of the Merger and without any action on the part of the
holder of any shares of the E/C Stock or the holder of any shares
of the LZB Acquisition Stock:
(a) CANCELLATION OF E/C TREASURY STOCK. All shares of E/C
Stock that are owned by E/C as treasury stock shall be canceled and retired and
shall cease to exist, and no consideration shall be delivered in exchange
therefor.
(b) CONVERSION OF E/C STOCK.
(i) Each issued and outstanding share of E/C Stock (other
than shares to be canceled and retired in accordance with Section 2.1(a) and
shares held by any holder who shall have perfected such holder's dissenter's
rights under the TBCA, if any, which shall be treated in accordance with the
applicable provisions of the TBCA) shall be converted into the right to receive
the consideration described below:
(x) Each share of E/C Stock held by a shareholder who duly
and timely files a form of election in accordance with the procedures
attached hereto and made a part hereof as Exhibit B (the "Procedures")
shall be converted into, and evidence: (1) the right to receive from
LZB Acquisition, at such shareholder's option, but subject to the
Limitations (as hereinafter defined) and the Procedures, either (A)
$109.558403121 in cash, (B) $109.558403121 principal amount of LZB's
8% Unsecured Promissory Notes Due 1999 ("LZB Notes"), or (C)
3.6519467707 shares of the duly authorized, validly issued, fully
paid, and nonassessable Common Stock, $1.00 par value, of LZB ("LZB
Common Stock"); and (2) one Performance Unit (as hereinafter defined).
Any fractional shares of LZB Common Stock resulting from the
computation in clause (C) above shall not be issued and shall be
settled in cash at $30.00 per whole share of LZB Common Stock.
Each share of E/C Stock held by a shareholder who
fails, for whatever reason, to duly and timely file a form of election
in accordance with the Procedures shall be converted into, and
evidence: (1) the right to receive from LZB Acquisition, but subject
to the Limitations and the Procedures, $109.558403121 in cash; and (2)
one Performance Unit.
-4-
<PAGE>
LZB Common Stock, LZB Notes, and cash (including
cash in lieu of fractional shares) issuable pursuant to this Section
2.1(b)(i)(x) are collectively referred to herein as the "Initial
Merger Consideration."
(y) (1) As used in this Plan of Merger, the term "Performance
Unit" means the right to receive from LZB, at the times, in the form,
and on the terms hereinafter set forth, consideration in the 1996
Performance Unit Amount and consideration in the 1997 Performance Unit
Amount (both as hereinafter defined). By executing this Plan of
Merger, LZB hereby agrees to provide such consideration to each holder
of a Performance Unit, at the times, in the form, and on the terms
hereinafter set forth.
(2) As used in this Plan of Merger, the term "Pre-
Tax Income" means the pre-tax income of the Surviving Corporation
determined in accordance with the standards described in Exhibit A
attached hereto and incorporated herein by reference (the "Computation
Standards").
(3) As used in this Plan of Merger, the term "1996
Performance Unit Amount" means the amount derived by performing the
following calculations:
Step 1: Subtract $6,000,000.00 from the Pre-Tax
Income of the Surviving Corporation for the period (the "1996
Performance Period") from (but excluding) the last day of the
accounting month of LZB in which the Effective Time occurs to (and
including) the last day of the corresponding accounting month in 1996.
(If the result is less than zero, the result of this step shall be
deemed to be zero.)
Step 2: Multiply the result of Step 1 by 1.75.
Step 3: Determine the lesser of (A) $20,000,000 or
(B) the result of Step 2 (the "Total 1996 Payment Amount").
Step 4: Divide the Total 1996 Payment Amount by the
number of shares of E/C stock issued and outstanding at the Effective
Time to obtain the 1996 Performance Unit Amount.
(4) As used in this Plan of Merger, the term "1997
Performance Unit Amount" means the amount derived by performing the
following calculations:
Step 1: Subtract $7,000,000.00 from the Pre-Tax
Income of the Surviving Corporation for the period (the "1997
Performance Period") from (but excluding) the last day of the 1996
Performance Period to (and including) the last day of the
corresponding accounting month in 1997. (If the result is
-5-
<PAGE>
less than zero, the result of this step shall be deemed to be
zero.)
Step 2: Multiply the result of Step 1 by 1.75.
Step 3: Determine the lesser of (A) $20,000,000
minus the Total 1996 Payment Amount or (B) the result of Step 2 (the
"Total 1997 Payment Amount").
Step 4: Divide the Total 1997 Payment Amount by the
number of shares of E/C stock issued and outstanding at the Effective
Time to obtain the 1997 Performance Unit Amount.
(5) Subject to the Limitations, each Performance
Unit will be settled by the issuance, to the holder of such
Performance Unit, of shares of LZB Common Stock in accordance with
subparagraphs (A) and (B) below:
(A) On or before the forty-fifth day after the later
of the end of the 1996 Performance Period or the date on which
any disputes concerning the 1996 Performance Unit Amount shall have
been resolved in accordance with the Computation Standards (the "1996
Settlement Date"), the holder of each Performance Unit shall be
entitled to receive a number of shares of LZB Common Stock calculated
as follows:
Step 1: Determine the closing price of LZB Common
Stock on the New York Stock Exchange on the last day of the 1996
Performance Period (or, if LZB Common Stock is not traded on that
date, on the last preceding date on which LZB Common Stock was
traded). Such price is referred to herein as the "1996 LZB Common
Stock Price."
Step 2: Divide the 1996 Performance Unit Amount by
the 1996 LZB Common Stock Price.
The result obtained from Step 2, rounded to the nearest
one one-thousandth of a share, shall be the number of shares of LZB
Common Stock which a holder of one Performance Unit shall be entitled
to receive on or before the 1996 Settlement Date in respect of such
Performance Unit. The number of shares of LZB Common Stock so
issuable to each holder of Performance Units shall be aggregated, and
if such aggregate number includes any fractional share, such
fractional share shall not be issued and shall be settled in cash
at the 1996 LZB Common Stock Price.
(B) On or before the forty-fifth day after the later of
the end of the 1997 Performance Period or the date on which any
disputes concerning the 1997 Performance Unit Amount shall have been
resolved in accordance with the Computation Standards (the "1997
Settlement Date"), the holder of each Performance Unit shall be
entitled to receive a number of shares of LZB Common Stock calculated
as follows:
-6-
<PAGE>
Step 1: Determine the closing price of LZB Common
Stock on the New York Stock Exchange on the last day of the 1997
Performance Period (or, if LZB Common Stock is not traded on that
date, on the last preceding date on which LZB Common Stock was
traded). Such price is referred to herein as the "1997 LZB Common
Stock Price."
Step 2: Divide the 1997 Performance Unit Amount by
the 1997 LZB Common Stock Price.
The result obtained from Step 2, rounded to the nearest
one one-thousandth of a share, shall be the number of shares of LZB
Common Stock which a holder of one Performance Unit shall be entitled
to receive on or before the 1997 Settlement Date in respect of such
Performance Unit. The number of shares of LZB Common Stock so
issuable to each holder of Performance Units shall be aggregated,
and if such aggregate number includes any fractional share, such
fractional share shall not be issued and shall be settled in cash
at the 1997 LZB Common Stock Price.
(6) Performance Units will be settled, by the issuance of
LZB Common Stock as set forth above, without interest.
(7) Neither the Surviving Corporation nor LZB will
maintain any system for recording transfers of Performance Units. To
the fullest extent permitted by law, Performance Units shall be
non-transferrable, and LZB Common Stock will be issued in settlement
of Performance Units only to the persons to whom the Initial Merger
Consideration was issued with respect to the corresponding shares
of E/C Stock.
(z) As used in this Plan of Merger, the term "Limitations"
means the Note Limitation, the Total Share Limitation, the Total
Non-Share Limitation, and the Performance Unit Share Limitation. As
used herein, the term "Note Limitation" means $10,000,000 aggregate
principal amount of LZB Notes. As used herein, the term "Total Share
Limitation" means that number of shares of LZB Common Stock which, if
issued in connection with the Merger, would result in LZB's issuance
of more than 2,000,000 shares of LZB Common Stock (including both
shares issued as part of the Initial Merger Consideration and shares
-7-
<PAGE>
issued in settlement of Performance Units), whether pursuant
to this Plan of Merger or by operation of law. As used herein,
the term "Total Non-Share Limitation" means that amount of
consideration other than shares of LZB Common Stock (including
both cash and LZB Notes) which, if paid in connection with
the Merger, would result in consideration other than LZB Common Stock
constituting 50 percent or more of the aggregate consideration paid by
LZB and LZB Acquisition to acquire E/C Stock in connection with the
Merger, whether pursuant to this Plan of Merger, by operation of law,
from the perfection of appraisal rights by dissenting E/C shareholders
("Dissenting Shareholders"), or in lieu of fractional shares. If the
amount payable to Dissenting Shareholders is not known at the time the
computation of the Non-Share Limitation is made, then LZB shall make a
good faith estimate of the maximum amount which may be payable by the
Surviving Corporation to Dissenting Shareholders, and such estimate
shall be included in the computation of the Non-Share Limitation. All
calculations of the Total Non-Share Limitation shall be based on the
fair market value of the LZB Common Stock at the Effective Time. As
used herein, the term "Performance Unit Share Limitation" means the
number of shares of LZB Common Stock which is equal to the aggregate
number of shares of LZB Common Stock issued as Initial Merger
Consideration.
Notwithstanding the elections to receive cash, LZB Notes, or
LZB Common Stock made by the holders of E/C Stock in accordance with
Section 2.1(b)(i)(x) above: (1) in the event the aggregate principal
amount of LZB Notes which would be issuable to those shareholders
electing to receive LZB Notes exceeds the Note Limitation, then the
elections made by, or allocations to, one or more shareholders shall
be changed from LZB Notes to cash in accordance with the Procedures;
(2) in the event the aggregate amount which would be payable to those
shareholders electing to receive consideration other than LZB Common
Stock exceeds the Total Non-Share Limitation, or the aggregate number
of shares of LZB Common Stock which would be issuable to those
shareholders electing to receive LZB Common Stock shares issuable
in settlement of Performance Units, exceeds the Total Share
Limitation, then the elections made by, or allocations to, one
or more shareholders shall be changed from cash and/or LZB Notes to
LZB Common Stock, or from LZB Common Stock to cash, as the case may
be, in accordance with the Procedures; and (3) in the event that the
aggregate number of shares of LZB Common Stock which would be issuable
in satisfaction of the Performance Units exceeds the Performance Unit
Share Limitation or the Total Share Limitation, then the 1996
-8-
<PAGE>
Performance Unit Amount and/or the 1997 Performance Unit
Amount, as the case may be, will be reduced in accordance with the
Procedures. The Limitations shall be applied in the following
order: (A) first, the Note Limitation; (B) second, the Total
Non-Share Limitation; (C) third, the Total Share Limitation;
and (D) last, the Performance Unit Share Limitation. If, but
only if, it proves impossible to pay the full 1996 Performance
Unit Amount and/or the full 1997 Performance Unit Amount without
exceeding either the Total Share Limitation and/or the Performance
Unit Share Limitation, then the 1996 Performance Unit Amount and/or
the 1997 Performance Unit Amount, as the case may be, shall be
reduced to the largest amount which can be paid without exceeding
any of the Limitations.
(ii) All such shares of E/C Common Stock shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each certificate (each, a "Certificate") previously representing any
such shares shall thereafter represent only the rights described in this
Section 2.1(b). Certificates previously representing shares of E/C Common Stock
shall be exchanged for certificates representing whole shares of LZB Common
Stock, LZB Notes, and/or cash in consideration therefor upon the surrender of
such Certificates in accordance with Section 2.2 without any interest thereon.
(c) NO CONVERSION OF LZB ACQUISITION STOCK. Each of the issued
and outstanding shares of LZB Acquisition Stock shall be and remain as one
issued and outstanding share of the Common Stock of the Surviving Corporation.
2.2 EXCHANGE OF CERTIFICATES. (a) EXCHANGE FUND. As of the Effective
Time, LZB shall have or make available, for exchange in accordance with this
Article II, (i) certificates representing the shares of LZB Common Stock, (ii)
LZB Notes, and (iii) cash (including any cash in lieu of fractional shares)
(such cash, certificates for shares of LZB Common Stock, and LZB Notes,
together with any dividends, interest, or distributions with respect thereto,
being hereinafter referred to as the "Exchange Fund") to be issued as the
Initial Merger Consideration pursuant to Section 2.1(b)(i)(x) and paid pursuant
to Section 2.2 in exchange for outstanding shares of E/C Stock.
(b) EXCHANGE PROCEDURES. Promptly after the Effective Time,
LZB shall mail to each holder of record of a Certificate or Certificates (i) a
letter of transmittal which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of
the Certificates to LZB and shall be in such form and have such other
provisions as LZB and E/C may reasonably specify, and (ii) instructions for use
in effecting the surrender of the Certificates in exchange for the
-9-
<PAGE>
applicable Initial Merger Consideration. Upon surrender of a Certificate for
cancellation to LZB together with such letter of transmittal, duly executed,
the holder of such Certificate shall be entitled to receive in exchange
therefor (x) a certificate representing that number of whole shares of LZB
Common Stock, (y) a Note in the principal amount, and (z) a check representing
the amount of cash (including any cash in lieu of fractional shares) and unpaid
dividends and distributions, if any, which such holder has the right to receive
in respect of the Certificate surrendered pursuant to the provisions of this
Article II, and the Certificate so surrendered shall forthwith be canceled. No
interest will be paid or accrued on the cash or unpaid dividends and
distributions, if any, payable to holders of Certificates. Except as otherwise
provided in the next sentence, no transfer taxes shall be payable by any holder
of a Certificate in respect of the issuance of certificates representing the
LZB Common Stock or LZB Notes pursuant to this Plan of Merger. In the event of
a transfer of ownership of E/C Stock which is not registered in the transfer
records of E/C, certificates representing the proper number of shares of LZB
Common Stock and/or the proper principal amount of LZB Notes, together with a
check for the proper amount of cash, if any, may be issued to such a transferee
if the Certificate representing such E/C Common Stock is presented to LZB,
accompanied by all documents required to evidence and effect such transfer and
to evidence that any applicable stock transfer taxes have been paid.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES; VOTING.
Whenever a dividend or other distribution is declared by LZB on the LZB Common
Stock, the record date for which is at or after the Effective Time, the
declaration shall include dividends or other distributions on all whole shares
of LZB Common Stock issuable pursuant to this Plan of Merger, provided that no
dividends or other distributions declared or made with respect to the LZB
Common Stock with a record date that is six months or more after the Effective
Time shall be paid to the holder of any unsurrendered Certificate with respect
to any shares of LZB Common Stock represented thereby until the holder of such
Certificate shall surrender such Certificate in accordance with this Article
II. Subject to the effect of applicable laws, following surrender of any such
Certificate, there shall be paid to the holder of the certificates representing
whole shares of LZB Common Stock issued in exchange therefor, without interest,
(i) at the time of such surrender, the amount of dividends or other
distributions with a record date after the Effective Time theretofore payable
with respect to such whole shares of LZB Common Stock and not paid, and (ii) at
the appropriate payment date, the amount of dividends or other distributions
with a record date after the Effective Time but prior to surrender and a
payment date subsequent to surrender payable with respect to such whole shares
of LZB Common Stock. Holders of unsurrendered Certificates shall be entitled to
vote
-10-
<PAGE>
after the Effective Time at any meeting of LZB shareholders the number of whole
shares of LZB Common Stock represented by such Certificates, regardless of
whether such holders have exchanged their Certificates. Subject to the effect
of applicable laws, following surrender of any Certificate representing the
right to receive LZB Notes, there shall be paid to the holder of the LZB Notes
issued in exchange therefor, without additional interest, (i) at the time of
such surrender, the amount of each interest payment with a record date after
the Effective Time theretofore payable with respect to such LZB Notes and not
paid, and (ii) at the appropriate payment date, the amount of each interest
payment with a record date after the Effective Time but prior to surrender and
a payment date subsequent to surrender payable with respect to such LZB Notes.
(d) TRANSFERS. After the Effective Time, there shall be no
transfers on the stock transfer books of E/C of the shares of E/C Stock which
were outstanding immediately prior the Effective Time. If after the Effective
Time, certificates are presented to the Surviving Corporation, they shall be
canceled and exchanged for the Initial Merger Consideration deliverable in
respect thereof pursuant to this Plan of Merger in accordance with the
procedures set forth in this Article II. Certificates surrendered for exchange
by any person constituting an "affiliate" of E/C for purposes of Rule 145(c)
under the Securities Act of 1933, as amended (the "Securities Act"), shall not
be exchanged until LZB has received a written agreement from such person as
provided in Section 6.4 of the Reorganization Agreement.
(e) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund (including the proceeds of any investments thereof) that remains unclaimed
by the shareholders of E/C for nine months after the Effective Time shall be
paid to LZB. Any shareholders of E/C who have not theretofore complied with
this Article II shall thereafter look only to LZB for payment of their Initial
Merger Consideration (and unpaid dividends and distributions on the LZB Common
Stock and unpaid interest on the LZB Notes) deliverable in respect of each
share of E/C Stock such shareholder holds as determined pursuant to this Plan
of Merger, in each case, without any interest thereon. Notwithstanding the
foregoing, neither of LZB nor any other person shall be liable to any former
holder of shares of E/C Stock for any amount properly delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws.
(g) LOST CERTIFICATE(S). In the event any Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such Certificate to be lost, stolen or destroyed
and, if required by LZB, the posting by such person of a bond in such amount as
LZB may direct as indemnity against any claim that may be made against it with
-11-
<PAGE>
respect to such Certificate, LZB shall issue in exchange for such lost, stolen
or destroyed Certificate the Initial Merger Consideration deliverable in
respect thereof pursuant to this Plan of Merger.
ARTICLE III
TERMINATION AND ABANDONMENT
3.1 TERMINATION. This Plan of Merger may be terminated and the Merger
abandoned at any time prior to the Effective Time, whether before or after
approval of this Plan of Merger, the Reorganization Agreement and the Merger by
the shareholders of E/C, as provided in Section 8.1 of the Reorganization
Agreement.
3.2 EFFECT OF TERMINATION. In the event of termination of this Plan of
Merger as provided in Section 3.1, this Plan of Merger shall forthwith become
void and have no effect except with respect to this Section 3.2 and Sections
4.2 and 4.3 and (ii) no party shall be relieved or released from any
liabilities or damages arising out of the breach by such party of any provision
of this Plan of Merger.
3.3 AMENDMENT. This Plan of Merger may be amended by the parties
hereto by action taken or authorized by their respective Boards of Directors at
any time before or after approval of this Plan of Merger, the Reorganization
Agreement, and the Merger by the shareholders of E/C; provided, however, that
after such approval, no amendment shall be made which by law requires further
approval by such shareholders, without such further approval. This Plan of
Merger may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
3.4 EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto, and (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall
be valid only if set forth in a written instrument signed on behalf of such
party.
-12-
<PAGE>
ARTICLE IV
MISCELLANEOUS
4.1 COUNTERPARTS. This Plan of Merger may be executed in counterparts,
all of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all parties need not
sign the same counterpart. An executed counterpart received by telecopy shall
have the same effect as an originally executed counterpart.
4.2 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES; RIGHTS OF
OWNERSHIP. This Plan of Merger and the Reorganization Agreement (a) constitute
the entire agreement and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof, and (b) is not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder except, if and only if the
Merger is consummated, for the right of holders of E/C Stock to receive the
Initial Merger Consideration and Performance Units as provided herein. For the
purposes hereof, the parties shall mean LZB, LZB Acquisition, and E/C and shall
not include other person whatsoever, whether a shareholder, employee, officer,
director, or otherwise.
4.3 GOVERNING LAW. This Plan of Merger shall be governed and construed
in accordance with the laws of the State of Michigan, without regard to any
applicable conflicts of law.
4.4 ROUNDING. The dollar amounts of all cash payable and all LZB Notes
issuable hereunder shall be rounded to the nearest whole cent.
4.5 ENFORCEMENT OF PLAN OF MERGER. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Plan of Merger were not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Plan of Merger and
to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.
4.6 SEVERABILITY. Any term or provision of this Plan of Merger which
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Plan of Merger or affecting the validity or enforceability of any of the terms
or provisions of this Plan of Merger in any other
-13-
<PAGE>
jurisdiction. If any provision of this Plan of Merger is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
4.7 ASSIGNMENT. Neither this Plan of Merger nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Plan of
Merger will be binding upon, inure to the benefit of and be enforceable by the
parties and their respective successors and assigns.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
-14-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Plan of Merger
to be signed by their respective officers thereunto duly authorized as of the
date first above written.
LA-Z-BOY CHAIR COMPANY
By /s/ F. H. JACKSON
F. H. Jackson
Vice President Finance
Attest:
/s/ JAMES P. KLARR
James P. Klarr
Assistant Secretary
and Tax Counsel
LZB ACQUISITION, INC.
By /s/ GENE M. HARDY
Gene M. Hardy
Secretary and Treasurer
Attest:
/s/ JAMES P. KLARR
James P. Klarr
Assistant Secretary
and Tax Counsel
ENGLAND/CORSAIR, INC.
By /s/ RODNEY ENGLAND
Rodney England
President
Attest:
/s/ DENNIS C. VALKANOFF
Dennis C. Valkanoff
Vice President
-15-
<PAGE>
Exhibit A to Plan of Merger
COMPUTATION STANDARDS FOR PRE-TAX INCOME
For purposes of this Plan of Merger, the "Pre-Tax Income" of the
Surviving Corporation for a specified period shall be equal to the sum of (a)
the Surviving Corporation's net income for such period and (b) the Surviving
Corporation's federal income tax expense for such period, both as determined in
accordance with generally accepted accounting principles ("GAAP") as
consistently applied, as applied by E/C immediately prior to the Effective
Time; provided, however, that the rules and standards set forth in the
following numbered paragraphs shall be applied to such computation
notwithstanding whether such rules and standards comply or are in accordance
with GAAP as of the Effective Time.
1. Pro forma adjustments will be made so as to make Pre-Tax Income
equal, as nearly as possible, to the net income prior to federal income tax
expense which E/C would have had for the periods in question had the Merger not
occurred, subject, however, to paragraph 5 below. To this end, and subject to
paragraph 5, pro forma adjustments will be made eliminating the benefits and
the costs of the Merger to the Surviving Corporation. By way of example (but
not of limitation), some of the pro forma adjustments which may be made, if
applicable, are as follows:
(a) If the Surviving Corporation employs different
accountants than were employed by E/C and the fees of such accountants
are higher or lower than the fees most recently charged by E/C's
accountants, Pre-Tax Income will be computed using the fees most
recently charged by E/C's accountants.
(b) If, due to insurance maintained by LZB, the Surviving
Corporation has lower insurance expense than it would have had had the
Merger not occurred, Pre-Tax Income will be computed using the
insurance expense E/C would have incurred if the Merger had not
occurred.
2. Pre-Tax Income will be computed for the business conducted by E/C
at the Effective Time considered as a discrete business unit. If any portion of
such business is transferred to a different entity, such portion will be
considered a part of the Surviving Entity for purposes of this computation.
3. Any applicable state tax expense will not be added back under
clause (b) of the introductory paragraph of these Standards.
4. Before the Surviving Corporation undertakes any new line of
business (including any line of business transferred to the
A-1
<PAGE>
Surviving Corporation by LZB or another subsidiary), and before the Surviving
Corporation and LZB or any other subsidiary engage in any inter-company
business, the impact of such business on the computation of Pre-Tax Income
shall be agreed upon pursuant to paragraph 6 below.
5. Any payments, reserves taken, or accruals resulting from or
relating to any breach by E/C of any covenant contained in the Reorganization
Agreement, the inaccuracy of any warranty of E/C contained in the
Reorganization Agreement, or any liabilities of E/C existing at the Effective
Time (including any contingent and/or unliquidated liabilities) and not
reflected in its financial statements or the disclosure schedule delivered by
E/C pursuant to the Reorganization Agreement shall be treated as expenses for
purposes of computing Pre-Tax Income.
6. In the event of any dispute concerning such computations, the chief
executive officer of the Surviving Corporation (if such person was an E/C
shareholder at the Effective Time, and otherwise another former E/C shareholder
designated by the holders of a majority of the E/C shares at the Effective
Time) and the chief financial officer of LZB will endeavor in good faith to
resolve the same. If such persons are unable to resolve such dispute, they will
select a neutral firm of independent certified public accountants and submit
the dispute to such firm, and the decision of such firm will be final and
binding on all parties.
A-2
<PAGE>
Exhibit B to Plan of Merger
ELECTION PROCEDURES
1. When E/C mails the Proxy Statement/Prospectus (as defined in the
Reorganization Agreement) to its shareholders, it shall at the same time mail
to each shareholder an election form in the form attached hereto as Attachment
1 or in such other form as E/C and LZB may agree upon (an "Election Form"). An
Election Form can only be filed with respect to all shares of E/C Stock held by
a shareholder, and any such election shall have been properly made only if LZB
shall have received an Election Form properly completed and signed in
accordance with the instructions prior to the commencement of the Meeting (the
"Election Deadline"), accompanied by certificates for the shares of E/C Stock
to which such Election Form relates. Any holder of E/C Stock who fails to file
an Election Form with LZB in the manner and prior to the Election Deadline
shall be deemed to have elected to receive cash as provided in the Plan of
Merger.
2. Any Election Form may be revoked by an E/C shareholder only by
written notice received by LZB prior to the Election Deadline.
3. Each Election Form shall be conditioned upon acceptance in
accordance with the following provisions:
(a) In connection with the payment of Initial Merger Consideration:
(1) In the event the aggregate principal amount of LZB Notes
which would be issuable as a result of due and proper Election Forms
filed with LZB would exceed the Note Limitation, then LZB shall reduce
the aggregate number of shares of E/C Stock with respect to which the
Initial Merger Consideration is to consist of LZB Notes from the
number previously determined (by specification in the Election Forms)
to the largest number as to which it is possible for the Initial
Merger Consideration to consist of LZB Notes without exceeding the
Note Limitation. Such reduction shall be applied pro rata (as nearly
as possible) among all shares of E/C Stock as to which the holders
thereof elected to receive LZB Notes. With respect to each share of
E/C Stock affected by such reduction, cash shall be allocated as
Initial Merger Consideration (instead of LZB Notes) in the same amount
as if the holder of such share of E/C Stock had elected to receive
cash with respect thereto.
(2) In the event the sum of the aggregate principal amount of
LZB Notes which would be issuable and the aggregate amount of cash
B-1
<PAGE>
which would be payable as a result of due and proper Election
Forms filed with LZB would exceed the Total Non-Share Limitation
(computed without regard to additional consideration which may
become payable under the Performance Units), then LZB shall reduce
the aggregate number of shares of E/C Stock with respect to which the
Initial Merger Consideration is to consist of cash from the number
previously determined (by specification in the Election Forms, by
failures to file due and proper Election Forms, and by any allocations
under Section 3(a)(1) of these election procedures) to the largest
number as to which it is possible for the Initial Merger Consideration
to consist of cash without exceeding the Total Non-Share Limitation.
Such reduction shall be applied pro rata (as nearly as possible) among
all shares of E/C Stock as to which the Initial Merger Consideration
otherwise (by specification in the Election Forms, by failures to file
due and proper Election Forms, and by any allocations under Section
3(a)(1) of these election procedures) would have consisted of cash.
With respect to each share of E/C Stock affected by such reduction,
LZB Common Stock shall be allocated as Initial Merger Consideration
(instead of cash) in the same amount as if the holder of such share of
E/C Stock had elected to receive LZB Common Stock with respect
thereto.
(b) In connection with each of the two scheduled payments of
consideration in satisfaction of Performance Units (each a "Performance Unit
Payment"):
In the event the sum of the aggregate number of shares of
LZB Common Stock which would be issuable in connection with such
Performance Unit Payment, the aggregate number of shares of LZB Common
Stock issued as Initial Merger Consideration, and (in the case of the
second Performance Unit Payment) the aggregate number of shares of LZB
Common Stock issued in connection with the first Performance Unit
Payment would exceed the Total Share Limitation, the Performance Unit
Share Limitation, or both, then the aggregate amount of such
B-2
<PAGE>
Performance Unit Payment shall be reduced (and the 1996
Performance Unit Amount or the 1997 Performance Unit Amount,
as the case may be, shall also be deemed to have been
proportionately reduced) to the largest amount which may be paid
without exceeding the Total Share Limitation and without exceeding
the Performance Unit Share Limitation. Such reduction shall
be applied pro rata (as nearly as possible) among all Performance
Units, and no other consideration shall be allocated to the
Performance Units in respect of any such reduction.
4. LZB shall have discretion to determine whether or not elections
have been properly made or revoked and when elections and revocations were
received by it. If LZB determines that any election was not properly or timely
made or that any election has been revoked and not replaced with another valid
Election Form, the shares subject to such election shall be treated by LZB as
shares for which no election was made. LZB may make such changes in the
procedures set forth herein for the implementation of the elections provided
for as shall be necessary to fully effect such elections.
5. If the Merger is not consummated for any reason, any certificate or
certificates for shares of E/C Stock which have been deposited with LZB in
connection with these election procedures shall be promptly returned to the
person submitting the same to LZB.
B-3
<PAGE>
Attachment 1 to Election Procedures
ELECTION FORM
If the merger (the "Merger") of England/Corsair, Inc. ("E/C"), a
Tennessee corporation, with and into LZB Acquisition, Inc. ("LZB Acquisition"),
a Michigan corporation and a wholly owned subsidiary of La-Z-Boy Chair Company
("LZB"), a Michigan corporation, pursuant to the Amended and Restated
Reorganization Agreement and the Amended and Restated Plan of Merger (the "Plan
of Merger"), both dated as of January 13, 1995, by and among said parties,
becomes effective, then the undersigned shareholder of E/C hereby elects the
form(s) of Initial Merger Consideration set forth below with respect to the
number(s) of shares set forth below, respectively, of E/C's Stock (of
either class) owned by the undersigned shareholder:
No. of Shares of
Form of Initial Merger Consideration E/C Stock
------------------------------------ -----------------
La-Z-Boy Chair Company Common
Stock, $1.00 par value ________ shares
La-Z-Boy Chair Company 8% Unsecured
Promissory Notes Due 1999 ________ shares
(Four annual principal and interest
payments)
Cash ________ shares
===============
Total shares of E/C Stock
(of either class) owned by the
undersigned shareholder ________ shares
Any Election Form previously executed by the undersigned is hereby
revoked. The undersigned understands that the elections set forth herein
cannot be revoked after the commencement of the meeting of E/C shareholders at
which approval of the Merger is to be considered.
Dated: ___________, 1995 ____________________________________
Signature
____________________________________
Signature if held jointly
[Please sign exactly as name appears on stock certificate. When shares are
held by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee, or guardian, please give full title as such.]
(At least 50% of the total E/C Stock must be elected to be converted to
La-Z-Boy Chair Company Common Stock).
<PAGE>
ANNEX C
CHAPTER 23 OF THE
TENNESSEE BUSINESS CORPORATION ACT
48-23-101. DEFINITIONS. (1) "Beneficial shareholder" means the person
who is a beneficial owner of shares held by a nominee as the record
shareholder;
(2) "Corporation" means the issuer of the shares held by a dissenter
before the corporate action, or the surviving or acquiring corporation by
merger or share exchange of that issuer;
(3) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under section 48-23-102 and who exercises that right when and
in the manner required by section 48-23-201- -48-23-209;
(4) "Fair value", with respect to a dissenter's shares, means the value
of the shares immediately before the effectuation of the corporation action to
which the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action;
(5) "Interest" means interest from the effective date of the corporate
action that gave rise to the shareholder's right to dissent until the date of
payment, at the average auction rate paid on United States treasury bills with
a maturity of six (6) months (or the closest maturity thereto) as of the
auction date for such treasury bills closest to such effective date;
(6) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares to
the extent of the rights granted by a nominee certificate on file with a
corporation; and
(7) "Shareholder" means the record shareholder or the beneficial
shareholder. [Acts 1986, ch. 887, section 13.01.]
48-23-102. RIGHT TO DISSENT. (a) A shareholder is entitled to dissent
from, and obtain payment of the fair value of his shares in the event of, any
of the following corporation actions:
(1) Consummation of a plan of merger to which the corporation is a
party:
(A) If shareholder approval is required for the merger by section
48-21-103 or the charter and the shareholder is entitled to vote on the
merger; or
(B) If the corporation is a subsidiary that is merged with its
parent under section 48-21-104;
(2) Consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired, if the shareholder
is entitled to vote on the plan;
(3) Consummation of a sale or exchange of all, or substantially all, of
the property of the corporation other than in the usual and regular course of
business, if the shareholder is entitled to vote on the sale or exchange,
including a sale in dissolution, but not including a sale pursuant to court
order or a sale for cash pursuant to a plan by which all or substantially all
of the net proceeds of the sale will be distributed to the shareholders within
one (1) year after the date of sale;
(4) An amendment of the charter that materially and adversely affects
rights in respect of a dissenter's shares because it:
(A) Alters or abolishes a preferential right of the shares;
(B) Creates, alters, or abolishes a right in respect of redemption,
including a provision respecting a sinking fund for the redemption or
repurchase of the shares;
(C) Alters or abolishes a preemptive right of the holder of the
shares to acquire shares or other securities;
(D) Excludes or limits the right of the shares to vote on any
matter, or to cumulate votes, other than a limitation by dilution
through issuance of shares or other securities with similar voting
rights; or
(E) Reduces the number of shares owned by the shareholder to a
fraction of a share, if the fractional share is to be acquired for cash
under section 48-16-104; or
(5) Any corporate action taken pursuant to a shareholder vote to the
extent the charter, bylaws, or a resolution of the board of directors provides
that voting or nonvoting shareholders are entitled to dissent and obtain
payment for their shares.
(b) A shareholder entitled to dissent and obtain payment for his shares
under this chapter may not challenge the corporation action creating his
entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.
(c) Notwithstanding the provisions of subsection (a), no shareholder
may dissent as to any shares of a security which, as of the date of the
effectuation of the transaction which would otherwise give rise to dissenters'
rights, is listed on an exchange registered under section 6 of the Securities
Exchange Act of 1934, as amended, or is a "national market system security," as
defined in rules promulgated pursuant to the Securities Exchange Act of 1934,
as amended. [Acts 1986, ch. 887, section 13.02.]
48-23-103. DISSENT BY NOMINEES AND BENEFICIAL OWNERS. (a) A record
shareholder may assert dissenters' rights as to fewer than all the shares
registered in his name only if he dissents with respect to all shares
beneficially owned by any one (1) person and notifies the corporation in
writing of the name and address of each person on whose behalf he asserts
dissenters' rights. The rights of a partial dissenter under this subsection are
determined as if the shares as to which he dissents and his other shares were
registered in the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares
of any one (1) or more classes held on his behalf only if:
(1) He submits to the corporation the record shareholder's written
consent to the dissent not later than the time the beneficial shareholder
asserts dissenters' rights; and
(2) He does so with respect to all shares of the same class of which he
is the beneficial shareholder or over which he has power to direct the vote.
[Acts 1986, ch. 887, section 13.03.]
48-23-201. Notice of dissenters' rights. (a) If proposed corporate
action creating dissenters' rights under section 48-23-102 is submitted to a
vote at a shareholders' meeting, the meeting notice must state that
shareholders are or may be entitled to assert dissenters' rights under this
chapter and accompanied by a copy of this chapter.
(b) If corporate action creating dissenters' rights under section
48-23-102 is taken without a vote of shareholders, the corporation shall notify
in writing all shareholders entitled to assert dissenters' rights that the
action was taken and send them the dissenters' notice described in section
48-23-203.
(c) A corporation's failure to give notice pursuant to this section
will not invalidate the corporate action. [Acts 1986, ch. 887, section 13.20.]
48-23-202. NOTICE OF INTENT TO DEMAND PAYMENT. (a) If proposed
corporate action creating dissenters' rights under section 48-23-102 is
submitted to a vote at a shareholders' meeting, a shareholder who wishes to
assert dissenters' rights:
(1) Must deliver to the corporation, before the vote is taken, written
notice of his intent to demand payment for his shares if the proposed action is
effectuated; and
(2) Must not vote his shares in favor of the proposed action. No such
written notice of intent to demand payment is required of any shareholder to
whom the corporation failed to provide the notice required by section
48-23-201.
(b) A shareholder who does not satisfy the requirements of subsection
(a) is not entitled to payment for his shares under this chapter. [Acts 1986,
ch, 887, section 13.21.]
48-23-203. DISSENTERS' NOTICE. (a) If proposed corporate action
creating dissenters' rights under section 48-23-102 is authorized at a
shareholders' meeting, the corporation shall deliver a written dissenters'
notice to all shareholders who satisfied the requirements of section 48-23-202.
(b) The dissenters' notice must be sent no later than ten (10) days
after the corporate action was authorized by the shareholders or effectuated,
whichever is the first to occur, and must;
(1) State where the payment demand must be sent and where and when
certificates for certified shares must be deposited;
(2) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(3) Supply a form for demanding payment that includes the date of the
first announcement to news media or to shareholders of the principal terms of
the proposed corporate action and requires that the person asserting
dissenters' rights certify whether or not he acquired beneficial ownership of
the shares before that date;
(4) Set a date by which the corporation must receive the payment
demand, which date may not be fewer than one (1) nor more than two (2) months
after the date the subsection (a) notice is delivered; and
(5) Be accompanied by a copy of this chapter if the corporation has not
previously sent a copy of this chapter to the shareholder pursuant to section
48-23-201. [Acts 1986, ch. 88887, section 13.22.]
48-23-204. DUTY TO DEMAND PAYMENT. (a) A shareholder sent a dissenters'
notice described in section 48-23-203 must demand payment, certify whether he
acquired beneficial ownership of the shares before the date required to be set
forth in the dissenters' notice pursuant to section 48-23-203(b)(3), and
deposit his certificates in accordance with the terms of the notice.
(b) The shareholder who demands payment and deposits his share
certificates under subsection (a) retains all other rights of a shareholder
until these rights are canceled or modified by the effectuation of the proposed
corporate action.
(c) A shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his shares under this chapter.
(d) A demand for payment filed by a shareholder may not be withdrawn
unless the corporation with which it was filed, or the surviving corporation,
consents thereto. [Acts 1986, ch. 887, section 13.23.]
48-23-205. SHARE RESTRICTIONS. (a) The corporation may restrict the
transfer of uncertificated shares from the date the demand for their payment is
received until the proposed corporate action is effectuated or the restrictions
released under section 48-23-207.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are canceled or modified by the effectuation of the proposed corporate
action. [Acts 1986, ch. 887, section 13.24.]
48.23-206. PAYMENT. (a) Except as provided in section 48-23-208, as
soon as the proposed corporate action is effectuated, or upon receipt of a
payment demand, whichever is later, the corporation shall pay each dissenter
who complied with section 48-23-204 the amount the corporation estimates to be
the fair value of his shares, plus accrued interest.
(b) The payment must be accompanied by:
(1) The corporation's balance sheet as of the end of a fiscal year
ending not more than sixteen (16) months before the date of payment, an income
statement for that year, a statement of changes in shareholders' equity for
that year, and the latest available interim financial statements, if any:
(2) A statement of the corporation's estimate of the fair value of the
shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenter's right to demand payment under
section 48-23-209; and
(5) A copy of this chapter if the corporation has not previously sent a
copy of this chapter to the shareholder pursuant to section 48-23-201 or
section 48-23-203. [Acts 1986, ch. 887, section 13.25]
48.23-207. FAILURE TO TAKE ACTION. (a) If the corporation does not
effectuate the proposed action that gave rise to the dissenters' rights within
two (2) months after the date set for demanding payment and depositing share
certificates, the corporation shall return the deposited certificates and
release the transfer restrictions imposed on uncertificated shares.
(b) If after returning deposited certificates and releasing transfer
restrictions, the corporation effectuates the proposed action, it must send a
new dissenters' notice under section 48-23-203 and repeat the payment demand
procedure. [Acts 1986, ch. 887, section 13.26.]
48-23-208. AFTER-ACQUIRED SHARES. (a) A corporation may elect to
withhold payment required by section 48-23-206 from a dissenter unless he was
the beneficial owner of the shares before the date set forth in the dissenters'
notice as the date of the first announcement to news media or to shareholders
of the principal terms of the proposed corporate action.
(b) To the extent the corporation elects to withhold payment under
subsection (a), after effectuating the proposed corporate action, it shall
estimate the fair value of the shares, plus accrued interest, and shall pay
this amount to each dissenter who agrees to accept it in full satisfaction of
his demand. The corporation shall send with its offer a statement of its
estimate of the fair value of the shares, an explanation of how the interest
was calculated, and a statement of the dissenter's right to demand payment
under section 48-23-209. [Acts 1986, ch. 887, section 13.27.]
48-23-209. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER.
(a) A dissenter may notify the corporation in writing of his own estimate of
the fair market value of his shares and amount of interest due, and demand
payment of his estimate (less any payment under section 48-23-206), or reject
the corporation's offer under section 48-23-208 and demand payment of the fair
value of his shares and interest due, if:
(1) The dissenter believes that the amount paid under section 48-23-206
or offered under section 48-23-208 is less than the fair value of his shares or
that the interest due is incorrectly calculated;
(2) The corporation fails to make payment under section 48-23-206
within two (2) months after the date set for demanding payment; or
(3) The corporation, having failed to effectuate the proposed action,
does not return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within two (2) months after the date set for
demanding payment.
(b) A dissenter waives his right to demand payment under this section
unless he notified the corporation of his demand in writing under subsection
(a) within one (1) month after the corporation made or offered payment for his
shares. [Acts 1986, ch. 887, section 13.28.]
48-23-301. COURT ACTION. (a) If a demand for payment under section
48-23-209 remains unsettled, the corporation shall commence a proceeding within
two (2) months after receiving the payment demand and petition the court to
determine the fair value of the shares and accrued interest. If the corporation
does not commence the proceeding within the two-month period, it shall pay each
dissenter whose demand remains unsettled the amount demanded.
(b) The corporation shall commence the proceeding in a court of record
having equity jurisdiction in the county where the corporation's principal
office or, if none in this state, its registered office) is located. If the
corporation is a foreign corporation without a registered office in this state,
it shall commence the proceeding in the county in this state where the
registered office of the domestic corporation merged with or whose shares were
acquired by the foreign corporation was located.
(c) The corporation shall make all dissenters (whether or not residents
of this state) whose demands remain unsettled, parties to the proceeding as in
an action against their shares and all parties must be served with a copy of
the petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
(d) The jurisdiction of the court in which the proceeding is commenced
under subsection (b) is plenary and exclusive. The court may appoint one (1) or
more persons as appraisers to receive evidence and recommend decision on the
question of fair value. The appraisers have the powers described in the order
appointing them, or in any amendment to it. The dissenters are entitled to the
same discovery rights as parties in other civil proceedings.
(e) Each dissenter made a party to the proceeding is entitled to
judgment:
(1) For the amount, if any, by which the court finds the fair value of
his shares, plus accrued interest, exceeds the amount paid by the corporation;
or
(2) For the fair value, plus accrued interest, of his after-acquired
shares for which the corporation elected to withhold payment under section
48-23-208. [Acts 1986, ch. 887, section 13.30.]
48-23-302. COURT COSTS AND COUNSEL FEES. (a) The court in an appraisal
proceeding commenced under section 48-23-301 shall determine all costs of the
proceeding, including the reasonable compensation and expenses of appraisers
appointed by the court. The court shall assess the costs against the
corporation, except that the court may assess costs against all or some of the
dissenters, in amounts the court finds equitable, to the extent the court finds
the dissenters acted arbitrarily, vexatiously, or not in good faith in
demanding payment under section 48-23-209.
(b) The court may also assess the fees and expenses of counsel and
experts for the respective parties, in amounts the court finds equitable:
(1) Against the corporation and in favor of any or all dissenters if
the court finds the corporation did not substantially comply with the
requirements of section 48-23-201--48-23-209; or
(2) Against either the corporation or a dissenter, in favor of any
other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith
with respect to the rights provided by this chapter.
(c) If the court finds that the services of counsel for any dissenter
were of substantial benefit to other dissenters similarly situated, and that
the fees for those services should not be assessed against the corporation,
the court may award to the counsel reasonable fees to be paid out of the
amounts awarded to the dissenters who were benefitted. [Act 1986,
ch. 887, section 13.31.]<PAGE>
==============================================================================
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Michigan Business Corporation Act, as amended (the "MBCA"), provides
that a Michigan corporation, such as the registrant, may indemnify any person
who was or is a party or is threatened to be made a party to a threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative and whether formal or informal (a
"Proceeding"), other than a Proceeding by or in the right of the corporation,
by reason of the fact that he or she is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, partner, trustee, employee or agent of
another corporation, partnership, joint venture, trust, or other enterprise
(including any employee benefit plan) against expenses (including attorney
fees) and judgments, penalties, fines and amounts paid in settlement actually
and reasonably incurred by him or her in connection with the Proceeding, if the
person acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the corporation or its shareholders,
and with respect to a criminal action or proceeding, if the person had no
reasonable cause to believe his or her conduct was unlawful. The MBCA also
provides that a Michigan corporation may indemnify any person who is or was a
party or is threatened to be made a party to any Proceeding by or in the right
of the corporation by reason of that fact that he or she is or was a director,
officer, employee or agent of the corporation (or, is or was serving at the
request of the corporation, in one of the other capacities described above)
against expenses (including attorney's fees) and amounts paid in settlement
actually and reasonably incurred by the person in connection with the
Proceeding, if the person acted in good faith and in a manner the person
reasonably believed to be in or not opposed to the best interests of the
corporation or its shareholders, except that no indemnification may be made for
a claim, issue, or matter in which the person has been found liable to the
corporation except for any indemnification against expenses that may be ordered
by the court.
Under the MBCA, any indemnification described above, unless ordered by a
court, may be made only as authorized in the specific case upon a determination
(made in one of the ways described in Section 564a(1) of the MBCA) that
indemnification of the pertinent party is proper because he or she has met the
applicable standard of conduct and upon an evaluation of the reasonableness of
expenses and amounts paid in settlement. Section 564b of the MBCA permits a
corporation to pay or reimburse the reasonable expenses incurred by a director,
officer, employee or agent in advance of final disposition of a Proceeding,
only if the person furnishes the corporation with a written affirmation of his
or her good faith belief that he or she has met the applicable standard of
conduct for indemnification and a written undertaking to repay the advance if
it ultimately is determined that he or she did not meet the standard and only
if a determination is made (in one of the ways described in Section 564a(1))
that the facts then known to those making the determination would not preclude
indemnification under the MBCA. Section 565 of the MBCA further provides that
the above-described provisions concerning indemnification and advancement of
expenses are not exclusive of other rights to which a person seeking
indemnification or advancement of expenses may be entitled under a
corporation's articles of incorporation, its bylaws or a contractual
arrangement.
Section 2 of Article IX of the registrant's Articles of Incorporation, as
amended, provides for mandatory indemnification of directors and officers and
permits indemnification of other parties, as follows:
"Section 2. Indemnification. The corporation shall indemnify any of
its directors and officers and may indemnify any of its employees and
agents (in each case including such person's
II-1
<PAGE>
heirs, executors, administrators and legal representatives) who are
made or threatened to be made a party to an action, suit or proceeding
(whether civil, criminal, administrative or investigative) by reason of
the fact that such person is or was a director, officer, employee or
agent of the corporation or serves or served at the request of the
corporation as a director, officer, partner, trustee, employee or agent
of another foreign or domestic corporation, partnership, joint venture,
trust or other enterprise, whether for profit or not, to the fullest
extent authorized or permitted under the [Michigan Business Corporation]
Act or other applicable law, as the same presently exist or may hereafter
be amended, but in the case of any such amendment, only to the extent
that such amendment permits the corporation to provide broader
indemnification rights than authorized or permitted before such
amendment. Without limiting the generality of the foregoing, the
following provisions, except to the extent they limit the indemnity which
may be provided pursuant to the foregoing, shall apply:
2.1 -- Indemnification of Directors and Officers: Claims by
Third Parties. The corporation shall to the fullest extent
authorized or permitted by the Act or other applicable law, as the
same presently exist or may hereafter be amended, but, in the case
of any such amendment, only to the extent such amendment permits
the corporation to provide broader indemnification rights than
before such amendment, indemnify a director or officer (the
"Indemnitee") who was or is a party or is threatened to be made a
party to a threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, or
investigative and whether formal or informal, other than an action
by or in the right of the corporation, by reason of the fact that
he or she is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation
as a director, officer, partner, trustee, employee, or agent of
another foreign or domestic corporation, partnership, joint
venture, trust, or other enterprise, whether for profit or not,
against expenses, including attorneys' fees, judgments, penalties,
fines, and amounts paid in settlement actually and reasonably
incurred by him or her in connection with the action, suit or
proceeding, if the Indemnitee acted in good faith and in a manner
he or she reasonably believed to be in or not opposed to the best
interests of the corporation or its shareholders, and with respect
to a criminal action or proceeding, if the Indemnitee had no
reasonable cause to believe his or her conduct was unlawful. The
termination of an action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, does not, of itself, create a presumption that the
Indemnitee did not act in good faith and in a manner which he or
she reasonably believed to be in or not opposed to the best
interests of the corporation or its shareholders, and, with respect
to a criminal action or proceeding, has reasonable cause to believe
that his or her conduct was unlawful.
2.2 -- Indemnification of Directors and Officers: Claims
Brought By or In the Right of the Corporation. The corporation
shall, to the fullest extent authorized or permitted by the Act or
other applicable law, as the same presently exist or may hereafter
be amended, but, in the case of any such amendment, only to the
extent such amendment permits the corporation to provide broader
indemnification right than before such amendment, indemnify a
director or officer (the "Indemnitee") who was or is a party to or
is threatened to be made a party to a threatened, pending, or
completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he or
she is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation
as a director, officer, partner, trustee, employee, or agent of
another foreign or domestic corporation, partnership, joint
venture, trust, or other enterprise, whether for profit or not,
against expenses, including actual and
II-2
<PAGE>
reasonable attorneys' fees, and amounts paid in settlement
incurred by the Indemnitee in connection with the action or suit,
if the Indemnitee acted in good faith and in a manner the
Indemnitee reasonably believed to be in or not opposed to the best
interests of the corporation or its shareholders. However,
indemnification shall not be made under this subsection 2.2 for a
claim, issue, or matter in which the Indemnitee has been found
liable to the corporation unless and only to the extent that the
court in which the action or suit was brought has determined upon
application that, despite the adjudication of liability but in view
of all circumstances of the case, the Indemnitee is fairly and
reasonably entitled to indemnification for the expenses which the
court considers proper.
2.3 -- Actions Brought by the Indemnitee. Notwithstanding the
provisions of subsections 2.1 and 2.2, the corporation shall not be
required to indemnify an Indemnitee in connection with an action,
suit, proceeding or claim (or part thereof) brought or made by such
Indemnitee, unless such action, suit, proceeding or claim (or part
thereof): (i) was authorized by the Board of Directors of the
corporation; or (ii) was brought or made to enforce this Section 2
and the Indemnitee has been successful in such action, suit,
proceeding or claim (or part thereof).
2.4 -- Approval of Indemnification. An indemnification under
subsections 2.1 or 2.2 hereof, unless ordered by a court, shall be
made by the corporation only as authorized in the specific case
upon a determination that indemnification of the Indemnitee is
proper in the circumstances because such Indemnitee has met the
applicable standard of conduct set forth in subsections 2.1 or 2.2
as the case may be. This determination shall be made in any of the
following ways:
(a) By a majority vote of a quorum of the Board
consisting of directors who were not parties to the action,
suit, or proceeding.
(b) If the quorum described in subdivision (a) is not
obtainable, then by a majority vote of a committee of
directors who are not parties to the action. The committee
shall consist of not less than three (3) disinterested
directors.
(c) By independent legal counsel in a written opinion.
(d) By the shareholders.
2.5 -- Advancement of Expenses. Expenses incurred in
defending a civil or criminal action, suit, or proceeding described
in subsections 2.1 or 2.2 above shall be paid by the corporation in
advance of the final disposition of the action, suit, or proceeding
upon receipt of an undertaking by or on behalf of the Indemnitee to
repay the expenses if it is ultimately determined that the
Indemnitee is not entitled to be indemnified by the corporation.
The undertaking shall be by unlimited general obligation of the
person on whose behalf advances are made but need not be secured.
2.6 -- Partial Indemnification. If an Indemnitee is entitled
to indemnification under subsections 2.1 or 2.2 for a portion of
expenses including attorneys' fees, judgments, penalties, fines,
and amounts paid in settlement, but not for the total amount
thereof, the corporation shall indemnify the Indemnitee for the
portion of the expenses, judgments, penalties, fines, or amounts
paid in settlement for which the Indemnitee is entitled to be
indemnified.
II-3
<PAGE>
2.7 -- Indemnification of Employees and Agents. Any person
who is not covered by the foregoing provisions of this Section 2
and who is or was an employee or agent of the corporation, or is or
was serving at the request of the corporation as a director,
officer, partner, trustee, employee or agent of another foreign or
domestic corporation, partnership, joint venture, trust or other
enterprise, whether for profit or not, may be indemnified to the
fullest extent authorized or permitted by the Act or other
applicable law, as the same exist or may hereafter be amended, but,
in the case of any such amendment, only to the extent such
amendment permits the corporation to provide broader
indemnification rights than before such amendment, but in any event
only to the extent authorized at any time or from time to time by
the Board of Directors.
2.8 -- Other Rights of Indemnification. The indemnification
or advancement of expenses provided under subsections 2.1 through
2.7 is not exclusive of other rights to which a person seeking
indemnification or advancement of expenses may be entitled under
the Articles of Incorporation or Bylaws, or an agreement. However,
the total amount of expenses advanced or indemnified from all
sources combined shall not exceed the amount of actual expenses
incurred by the person seeking indemnification or advancement of
expenses. The indemnification provided for in subsections 2.1
through 2.7 continues as to a person who ceases to be a director,
officer, employee, or agent and shall inure to the benefit of the
heirs, executors, and administrators of the person.
2.9 -- Definitions. "Other enterprise" shall include employee
benefit plans: "fines" shall include any excise taxes assessed on a
person with respect to an employee benefit plan; and "serving at
the request of the corporation" shall include any service as a
director, officer, employee, or agent of the corporation which
imposes duties on, or involves services by, the director, officer,
employee or agent with respect to an employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith
and in a manner he or she reasonably believed to be in the interest
of the participants and beneficiaries of an employee benefit plan
shall be considered to have acted in a manner "not opposed to the
best interests of the corporation or its shareholders" as referred
to in subsections 2.1 and 2.2
2.10 -- Liability Insurance. The corporation shall have the
power to purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee or agent of the
corporation or is or was serving at the request of the corporation
as a director, officer, partner, trustee, employee or agent of
another corporation, partnership, joint venture, trust, or other
enterprise, whether for profit or not, against any liability
asserted against and incurred by such person in any such capacity
or arising out of such person's status as such, regardless of
whether or not the corporation would have the power to indemnify
such person against such liability under the pertinent provisions
of the Act.
2.11 -- Enforcement. If a claim under this Section 2 is not
paid in full by the corporation within thirty days after a written
claim has been received by the corporation, the claimant may at any
time thereafter bring suit against the corporation to recover the
unpaid amount of the claim, and, if successful in whole or in part,
the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has
been tendered to the corporation) that the claimant has not met the
standards of conduct which makes it permissible under the Act for
the
II-4
<PAGE>
corporation to indemnify the claimant for the amount claimed,
but the burden of providing such defense shall be on the
corporation. Neither the failure of the corporation (including the
Board of Directors, a committee thereof, independent legal counsel,
or its shareholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is
proper in the circumstances because such claimant has met the
applicable standard of conduct set forth in the Act nor an actual
determination by the corporation (including its Board of Directors,
a committee thereof, independent legal counsel or its shareholders)
that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
2.12 -- Contract with the Corporation. The right to
indemnification conferred in this Section 2 shall be deemed to be a
contract right between the corporation and each director or officer
who serves in any such capacity at any time while this Section 2 is
in effect and any repeal or modification of this Section 2 shall
not affect any rights or obligations then existing with respect to
any state of facts then or theretofore existing or any action,
suit, proceeding theretofore or thereafter brought or threatened
based in whole or in part upon any such state of facts.
2.13 -- Application to a Resulting or Surviving Corporation
or Constituent Corporation. The definition for "corporation" found
in Section 569 of the Act, as the same exists or may hereafter be
amended is, and shall be, specifically excluded from application to
this Section 2. The indemnification and other obligations set forth
in this Section 2 of the corporation shall be binding upon any
resulting or surviving corporation after any merger or
consolidation with the corporation. Notwithstanding anything to the
contrary contained herein or in Section 569 of the Act, no person
shall be entitled to the indemnification and other rights set forth
in this Section 2 for acting as a director or officer of another
corporation prior to such other corporation entering into a merger
or consolidation with the corporation.
2.14 -- Severability. Each and every paragraph, sentence,
term and provision of this Section 2 shall be considered severable
in that, in the event that a court finds any paragraph, sentence,
term or provision to be invalid or unenforceable, the validity and
enforceability, operation, or effect of the remaining paragraphs,
sentences, terms or provisions shall not be affected, and this
Section 2 shall be construed in all respects as if such invalid or
unenforceable matter had been omitted."
Section 209(c) of the MBCA provides that the articles of incorporation of
a Michigan business corporation may contain a provision providing that a
director of the corporation is not personally liable to the corporation or its
shareholders for monetary damages for a breach of the director's fiduciary
duty, except that such a provision may not eliminate or limit the liability of
a director for (i) any breach of the director's duty of loyalty to the
corporation or its shareholders; (ii) acts or omissions not in good faith or
which involve intentional misconduct or knowing violation of law; (iii) a
violation of Section 551(1) of the MBCA (relating to unauthorized dividends or
distributions to shareholders and unauthorized loans); or (iv) any transaction
from which the director derived an improper personal benefit. At the 1987
Annual Meeting of registrant's shareholders, the shareholders approved an
amendment to registrant's Articles of Incorporation to include such a
provision, as well as the above-quoted provisions of Section 2, Article IX.
The registrant also has entered into indemnification agreements with its
directors and officers under which the Company is required to maintain
directors' and officers' liability insurance for their benefit or a substitute
for such insurance to the extent reasonably available, or to indemnify them to
the
II-5
<PAGE>
full extent of the insurance coverage which otherwise would be provided to
them. These agreements contemplate indemnification broader than that expressly
provided for in the MBCA, in that they contemplate, when certain conditions are
met, indemnification against judgments and fines (as well as settlement costs)
incurred in proceedings brought by or in the right of the Company.
Insurance is maintained on a regular basis (and not specifically in
connection with this offering) against liabilities arising on the part of
directors and officers out of their performance in such capacities or arising
on the part of the registrant out of the foregoing indemnification provisions,
subject to certain exclusions and to the policy limits.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits. The following exhibits are filed as part of the registration
statement on Form S-4:
Item 601
Regulation S-K
Exhibit Reference
Number Exhibit Description
(1) Not applicable
(2) Amended and Restated Reorganization Agreement,
dated as of January 13, 1995, among La-Z-Boy Chair
Company, LZB Acquisition Inc. and England/Corsair,
Inc.
A conformed copy of this agreement (with exhibits) is
included as Annex A to the Proxy Statement/Prospectus
which is part of this Registration Statement.
(3)(i)(a)/(4)(a) Articles of Incorporation of registrant, as amended
through August 4, 1987 (filed as an exhibit to
registrant's Form S-8 Registration Statement
(Commission File No. 33-31502) and incorporated
herein by reference).
(3)(i)(b)/(4)(b) Amendment to Articles of Incorporation of registrant,
effective April 24, 1991 (filed as an exhibit to
registrant's Annual Report on Form 10-K for its
fiscal year ended April 25, 1992 (Commission File No.
0-5091) and incorporated herein by reference).
(3)(ii)/(4)(c) Bylaws of registrant, as currently in effect (filed
as an exhibit to registrant's Annual Report on Form
10-K for its fiscal year ended April 25, 1992
(Commission File No. 0-5091) and incorporated herein
by reference).
(4)(d) Form of certificate for Common Stock $1.00 par
value (filed as an exhibit to registrant's Form S-8
Registration Statement (Commission File No. 33-
50318) and incorporated herein by reference).
II-6
<PAGE>
Item 601
Regulation S-K
Exhibit Reference
Number Exhibit Description
(4)(e) Form of Indenture between La-Z-Boy Chair Company and
Rodney D. England as Designated Representative.
(4)(f) Description of the Performance Units as set forth in
the Amended and Restated Plan of Merger included as
Annex B to the Proxy Statement/Prospectus which
is part of this Registration Statement.
(5) Opinion and consent of Miller, Canfield, Paddock and
Stone, P.L.C.
(6) Not applicable.
(7) Not applicable.
(8) Opinion and consent of Miller, Canfield, Paddock and
Stone, P.L.C.
(9) Not applicable.
(10)(a) La-Z-Boy Chair Company 1993 Performance-Based
Stock plan (filed as Exhibit A to registrant's proxy
statement dated June 25, 1993 (Commission File No.
0-5091) and incorporated herein by reference).
(10)(b) La-Z-Boy Chair Company Restricted Stock Plan for
Non-Employee Directors (filed as Exhibit B to
registrant's proxy statement dated July 6, 1989
(Commission File No. 0-5091) and incorporated herein
by reference).
(10)(c) La-Z-Boy Chair Company Executive Incentive
Compensation Plan Description (filed as
an exhibit to registrant's Current Report on
Form 8-K dated February 6, 1995 (Commission File
No. 0-5091) and incorporated herein by reference).
10(d) La-Z-Boy Chair Company Supplemental Executive
Retirement Plan dated May 1, 1991 (filed as
an exhibit to registrant's Current Report
on Form 8-K dated February 6, 1995 (Commission File
No. 0-5091) and incorporated herein by reference).
(10)(e)(i) La-Z-Boy Chair Company 1986 Restricted Share Plan
(filed as an exhibit to registrant's proxy statement
dated June 26, 1986 (Commission File No. 0-5091) and
incorporated herein by reference).
II-7
<PAGE>
Item 601
Regulation S-K
Exhibit Reference
Number Exhibit Description
(10)(e)(ii) La-Z-Boy Chair Company Amended and Restated
1989 Restricted Share Plan (filed as Exhibit A to
registrant's proxy statement dated July 6, 1989
(Commission File No. 0-5091) and incorporated herein
by reference).
(10)(f) La-Z-Boy Chair Company 1986 Incentive Stock
Option Plan (filed as Exhibit B to registrant's proxy
statement dated June 26, 1986 (Commission File No.
0-5091) and incorporated herein by reference).
(10)(g) Form of Change in Control Agreement, accompanied by
list of employees party thereto (filed as an
exhibit to registrant's Current Report on Form
8-K dated February 6, 1995 (Commission File No.
0-5091) and incorporated herein by reference).
(10)(h) Form of Indemnification Agreement and list of
Registrant's directors who are parties thereto
(filed as an exhibit to Form 8, Amendment
No. 1 dated November 3, 1989 (Commission
File No. 0-5091) and incorporated herein by
reference).
(10)(i) Agreement and Plan of Merger with Kincaid Furniture
Company, Incorporated (filed as Exhibit (c) to
registrant's Schedule 14D-1 dated December 18, 1987
(Commission File No. S-36021) and incorporated herein
by reference).
(10)(j) Revolving Credit and Term Loan Agreement dated as
of April 22, 1988 (filed as an exhibit to
registrant's Form 8, Amendment No. 1 dated November
3, 1989 (Commission File No. 0-5091) and incorporated
herein by reference).
(10)(k) Fixed Rate Term Loan Agreement dated as of April
22, 1988 (filed as an exhibit to registrant's Form 8,
Amendment No. 1 dated November 3, 1989 (Commission
File No. 0-5091) and incorporated herein by
reference).
II-8
<PAGE>
Item 601
Regulation S-K
Exhibit Reference
Number Exhibit Description
(10)(l) La-Z-Boy Chair Company 1979 Key Employee Stock
Option Plan (filed as an exhibit to Form S-8
Registration Statement effective February 15, 1980
(Commission File No. 2-66510) and incorporated herein
by reference).
(11) No statement is required to be filed with respect to
either La-Z-Boy Chair Company or England/Corsair,
Inc. because the computations can be clearly
determined from the materials contained in the
registration statement.
(12) Computation of Ratio of Earnings to Fixed Charges.
(13) Quarterly Reports on Form 10-Q for the quarters
ended July 30, 1994 and October 29, 1994
(Commission File No. 0-5091) and incorporated
herein by reference.
(14) Not applicable.
(15) Not applicable.
(21) List of subsidiaries of La-Z-Boy Chair Company.
(23)(a) Consents of Miller, Canfield, Paddock and Stone,
P.L.C. (included in Exhibits (5) and (8)).
(23)(b) Consent of Price Waterhouse LLP.
(23)(c) Consent of BDO Seidman, independent certified
public accountants.
(24) Powers of Attorney (contained in signature pages of
the initial filing of the registration statement).
(25) Not applicable.
(26) Not applicable.
(27) Not applicable. This registration statement does not
include annual and/or interim financial statements
that have not been previously included in a filing
with the Commission (such Financial Data Schedule
was filed with the registrant's Form 10-Q for the
quarter ended October 29, 1994 (Commission File
No. 0-5091)).
(28) Not applicable.
II-9
<PAGE>
Item 601
Regulation S-K
Exhibit Reference
Number Exhibit Description
(99) None.
===============================================================================
(b) Financial Statement Schedules. The following financial statement
schedules are filed as a part of the registration statement on Form S-4.
Schedule
Number Schedule Description
VIII Valuation and Qualifying Accounts
(c) Information Pursuant to Item 4(b). Not Applicable.
ITEM 22. UNDERTAKINGS.
La-Z-Boy hereby makes the undertakings that follow:
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
II-10
<PAGE>
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions described in Item 20 or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of the registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.
The undersigned registrant undertakes that every prospectus (i) that is
filed pursuant to the paragraph immediately preceding this paragraph, or (ii)
that purports to meet the requirements of Section 10(a)(3) of the Securities
Act of 1933 and is used in connection with an offering of securities subject to
Rule 415, will be filed as a part of an amendment to the registration statement
and will not be used until such amendment is effective, and that, for purposes
of determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
II-11
<PAGE>
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
[THIS SPACE INTENTIONALLY LEFT BLANK]
II-12
<PAGE>
LA-Z-BOY CHAIR COMPANY
FINANCIAL STATEMENT SCHEDULE
LA-Z-BOY CHAIR COMPANY AND SUBSIDIARIES SCHEDULE VIII
VALUATION AND QUALIFYING ACCOUNTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Trade accounts
Additions receivable
Balance at charged to "written off" Balance at
beginning costs and net of end of
Description of period expenses recoveries period
<S> <C> <C> <C> <C>
Year ended April 30, 1994:
Allowance for doubtful
accounts and long-term notes $11,670 $7,578 $ 4,454 $14,794
Accrued warranties $ 6,250 $ 400 $ 6,650
Year ended April 24, 1993:
Allowance for doubtful
accounts and long-term notes $ 7,217 $7,891 $ 3,438 $11,670
Accrued warranties $ 5,950 $ 300 $ 6,250
Year ended April 25, 1992:
Allowance for doubtful
accounts receivable $11,351 $9,271 $13,397 $ 7,217
Accrued warranties $ 5,650 $ 300 $ 5,950
</TABLE>
II-13<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Monroe, State of
Michigan, on the 6th day of February, 1995.
LA-Z-BOY CHAIR COMPANY
a Michigan corporation
By /s/ CHARLES T. KNABUSCH
Name: Charles T. Knabusch
Title: Chairman, President, and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Each of the undersigned, pursuant to the powers of attorney previously
filed with the Securities and Exchange Commission, severally constituted and
appointed [Charles T. Knabusch, Frederick H. Jackson and Gene M. Hardy], and
each or any one of them, his true and lawful attorneys and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments or
post-effective amendments to the registration statement and to file the same,
with all exhibits thereto and all other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys and
agents, and each or any of them, full power and authority to do and perform
each and every act and things requisite or necessary to be done, as fully to
all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that said attorneys and agents, and each of them, or his
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
<TABLE>
<CAPTION>
Signatures Title Date
<S> <C> <C>
/s/ CHARLES T. KNABUSCH Chairman and President February 6, 1995
Charles T. Knabusch and Chief Executive Officer
/s/ FREDERICK H. JACKSON Vice President Finance February 6, 1995
Frederick H. Jackson (principal financial
officer) and Director
/s/ GENE M. HARDY Secretary and February 6, 1995
Gene M. Hardy Treasurer (principal accounting officer)
and Director
/s/ WARREN W. GRUBER Director February 6, 1995
Warren W. Gruber
</TABLE>
II-14
<PAGE>
<TABLE>
<S> <C> <C>
/s/ DAVID K. HEHL Director February 6, 1995
David K. Hehl
_____________________ Director __________, 1995
James W. Johnston
/s/ ROCQUE E. LIPFORD Director February 6, 1995
Rocque E. Lipford
/s/ PATRICK H. NORTON Director February 6, 1995
Patrick H. Norton
____________________ Vice Chairman,
Edwin J. Shoemaker Executive Vice President
of Engineering and Director __________, 1995
/s/ LORNE G. STEVENS Director February 6, 1995
Lorne G. Stevens
/s/ JOHN F. WEAVER Director February 6, 1995
John F. Weaver
</TABLE>
II-14
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ---------- -----------
(4)(e) Form of Indenture between La-Z-Boy Chair Company
and Rodney D. England as Designated Representative.
(5) Opinion and consent of Miller, Canfield, Paddock
and Stone, P.L.C.
(8) Opinion and consent of Miller, Canfield, Paddock
and Stone, P.L.C.
(12) Computation of Ratio of Earnings to Fixed Charges.
(21) List of subsidiaries of La-Z-Boy Chair Company.
II-15
Exhibit (4)(e)
============================================================================
LA-Z-BOY CHAIR COMPANY
and
MR. RODNEY ENGLAND
as Designated Representative
INDENTURE
Dated as of ____________, 1995
=============================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
SECTION 101. Definitions. . . . . . . . . . . . . . . . . . . . 1
SECTION 102. Compliance Certificates. . . . . . . . . . . . . . 6
SECTION 103. Form of Documents Delivered to Designated
Representative . . . . . . . . . . . . . . . . . 6
SECTION 104. Acts of Holders of the Notes . . . . . . . . . . . 7
SECTION 105. Notices to Designated Representative and Company . 8
SECTION 106. Notices to Holders; Waiver . . . . . . . . . . . . 8
SECTION 107. Effect of Headings and Table of Contents . . . . . 9
SECTION 108. Successors and Assigns . . . . . . . . . . . . . . 9
SECTION 109. Separability Clause. . . . . . . . . . . . . . . . 9
SECTION 110. Benefits of Indenture. . . . . . . . . . . . . . . 9
SECTION 111. Governing Law. . . . . . . . . . . . . . . . . . . 9
SECTION 112. Counterparts . . . . . . . . . . . . . . . . . . . 9
ARTICLE TWO
FORM OF THE NOTES
SECTION 201. Forms Generally. . . . . . . . . . . . . . . . . . 10
SECTION 202. Form of Notes. . . . . . . . . . . . . . . . . . . 10
ARTICLE THREE
THE NOTES
SECTION 301. Generally. . . . . . . . . . . . . . . . . . . . . 13
SECTION 302. Denominations. . . . . . . . . . . . . . . . . . . 14
SECTION 303. Execution, Authentication and Delivery and Dating. 14
SECTION 304. Registration and Transfer. . . . . . . . . . . . . 14
SECTION 305. Mutilated, Destroyed, Lost and Stolen Notes. . . . 15
SECTION 306. Payment of Principal and Interest; Principal
and Interest Rights Preserved. . . . . . . . . . 16
SECTION 307. Persons Deemed Owners. . . . . . . . . . . . . . . 16
SECTION 308. Cancellation . . . . . . . . . . . . . . . . . . . 17
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture. . . . . . 17
SECTION 402. Defeasance Upon Deposit of Moneys or U.S.
Government Obligations . . . . . . . . . . . . . 17
SECTION 403. Return of Unclaimed Amounts. . . . . . . . . . . . 18
SECTION 404. Reinstatement. . . . . . . . . . . . . . . . . . . 18
ARTICLE V
REMEDIES
SECTION 501. Acceleration of Maturity; Recission and Anullment. 19
SECTION 502. Collection of Indebtedness and Suits for
Enforcement by Holder. . . . . . . . . . . . . . 19
SECTION 503. Designated Representative May File Proofs
of Claims. . . . . . . . . . . . . . . . . . . . 20
SECTION 504. Designated Representative May Enforce Claims
Without Possession of Notes . . . . . . . . . . 21
SECTION 505. Application of Money Collected . . . . . . . . . . 21
SECTION 506. Limitation on Suits. . . . . . . . . . . . . . . . 21
SECTION 507. Unconditional Right of Holders to Receive
Principal and Interest . . . . . . . . . . . . . 22
SECTION 508. Restoration of Rights and Remedies . . . . . . . . 22
SECTION 509. Rights and Remedies Cumulative . . . . . . . . . . 22
SECTION 510. Delay or Omission Not Waiver . . . . . . . . . . . 23
SECTION 511. Control by Holders . . . . . . . . . . . . . . . . 23
SECTION 512 Waiver of Past Defaults. . . . . . . . . . . . . . 23
SECTION 513. Undertaking for Costs. . . . . . . . . . . . . . . 23
SECTION 514. Waiver of Stay or Extension Laws . . . . . . . . . 24
ARTICLE SIX
THE DESIGNATED REPRESENTATIVE
SECTION 601. Certain Duties and Responsibilities. . . . . . . . 24
SECTION 602. Certain Rights of Designated Representative. . . . 25
SECTION 603. Not Responsible for Recitals or Issuance
of Notes . . . . . . . . . . . . . . . . . . . . 26
SECTION 604. May Hold Notes . . . . . . . . . . . . . . . . . . 26
SECTION 605. Resignation and Removal; Appointment of
Successor. . . . . . . . . . . . . . . . . . . . 27
SECTION 606. Acceptance of Appointment by Successor . . . . . . 28
ARTICLE SEVEN
HOLDERS' LISTS AND OTHER REPORTS BY COMPANY
SECTION 701. Company to Furnish Designated Representative
Names and Addresses of Holders . . . . . . . . . 29
SECTION 702. Notice of Defaults . . . . . . . . . . . . . . . . 29
SECTION 703. Preservation of Information. . . . . . . . . . . . 29
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER
SECTION 801. Company May Consolidate or Merge, or Convey or
Transfer Properties, Only on Certain Terms . . . 30
ECTION 802. Successor Corporation Substituted. . . . . . . . . 30
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures without Consent
of Holders . . . . . . . . . . . . . . . . . . . 31
SECTION 902. Supplemental Indentures with Consent of Holders. . 31
SECTION 903. Execution of Supplemental Indentures . . . . . . . 32
SECTION 904. Effect of Supplemental Indentures. . . . . . . . . 32
SECTION 905. Reference in Notes to Supplemental Indentures. . . 33
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal and Interest. . . . . . . . . 33
SECTION 1002. Maintenance of Office. . . . . . . . . . . . . . . 33
SECTION 1003. Money for Payments to be Held in Trust . . . . . . 33
SECTION 1004. Statement as to Compliance . . . . . . . . . . . . 34
SECTION 1005. Corporate Existence. . . . . . . . . . . . . . . . 34
SECTION 1006. Waiver of Certain Covenants. . . . . . . . . . . . 34
ARTICLE ELEVEN
REDEMPTION OF NOTES
SECTION 1101. Applicability of Article . . . . . . . . . . . . . 34
SECTION 1102. Election to Redeem: Notice to Designated
Representative . . . . . . . . . . . . . . . . . 34
SECTION 1103. Selection by the Company of Notes to
be Redeemed. . . . . . . . . . . . . . . . . . . 35
SECTION 1104. Notice of Redemption . . . . . . . . . . . . . . . 35
SECTION 1105. Deposit of Redemption Price. . . . . . . . . . . . 36
SECTION 1106. Notes Payable on Redemption Date . . . . . . . . . 36
SECTION 1107. Notes Redeemed in Part . . . . . . . . . . . . . . 36
ARTICLE TWELVE
IMMUNITIES OF OFFICERS, DIRECTORS
AND STOCKHOLDERS
SECTION 1201. No Recourse. . . . . . . . . . . . . . . . . . . . 37
<PAGE>
INDENTURE
THIS INDENTURE dated as of the ___ day of __________, 1995, by and
between LA-Z-BOY CHAIR COMPANY, a Michigan corporation having its
principal office at 1284 North Telegraph Road, Monroe, Michigan 48161-3390
(the "Company"), and Rodney England, whose address is 402 Old Knoxville
Highway, New Tazewell, Tennessee 37825, as designated representative
(the "Designated Representative").
W I T N E S S E T H :
WHEREAS, the Company, LZB Acquisition, Inc., a Michigan corporation and
wholly owned subsidiary of the Company ("LZB Acquisition"), and
England/Corsair, Inc., a Tennessee corporation ("E/C") have entered into an
Amended and Restated Reorganization Agreement and an Amended and Restated Plan
of Merger dated January 13, 1995 under which E/C will be merged with and into
LZB Acquisition; and
WHEREAS, the holders of E/C Class A and Class B Common Stock ("E/C Stock")
will exchange their shares of E/C Stock for Merger Consideration; and
WHEREAS, one component of the Merger Consideration is La-Z-Boy Chair
Company 8% Unsecured Promissory Notes Due 1999; and
WHEREAS, the Company has duly authorized and directed the issuance of
notes as consideration in exchange for shares of stock of E/C, limited in
aggregate principal amount, to mature on ___________ 1999 and to bear 8%
simple interest, and to contain such other conditions and provisions as
are hereinafter in this indenture provided or permitted; and
WHEREAS, the Company and the Designated Representative duly authorized and
directed the execution and delivery of this Indenture in order to provide for
the payment of the principal of and interest on the Notes, and to establish and
declare the terms and conditions upon which the Notes are to be issued,
received and held.
NOW, THEREFORE, in consideration of the premises and the exchange and
acceptance of the Notes by the holders thereof, the Company and the Designated
Representative hereby agree as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions. For all purposes of this Indenture and of any
indenture supplemental hereto, except as otherwise expressly provided or unless
the context otherwise requires:
(1) the terms defined in this Article One have the meanings assigned
to them in this Article One and include the plural as well as the
singular;
(2) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as
are generally accepted in the United States of America at the date of such
computation; and
(3) all references in this instrument to designated "Articles,"
"Sections" and other subdivisions are to the designated Articles, Sections
and other subdivisions of this instrument as originally executed. The
words "herein," "hereof" and "hereunder" and other words of similar import
refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision.
Certain terms, used principally ln Article Six, are defined in that
Article.
"Act" when used with respect so any Holder of a Note has the meaning
specified in Section 104.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Board of Directors" means either the Board of Directors of the Company or
any duly authorized committee of that board.
"Board Resolution" means a copy or a resolution certified by the Secretary
of the Company to have been duly adopted by the Board of Directors and to be in
full force and effect on the date of such certification, and delivered to the
Designated Representative.
"Business Day" means earn day which is neither a Saturday, Sunday or other
day on which banking institutions in the Place of Payment are authorized or
required by law or executive order to be closed.
"Company" means the Person named as the "Company" in the first paragraph
of this Indenture until a successor corporation shall have become such pursuant
to Article Eight of this Indenture, and thereafter "Company" shall mean such
successor corporation.
"Company Request," "Company Order" and "Company Consent" mean,
respectively, a written request, order or consent signed in the name of the
Company by its President and its Secretary and delivered to the Designated
Representative.
"Event of Default" means with respect to any Note any one of the following
events (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body), unless such event is either inapplicable
to a particular Note or it is specifically deleted or modified in the
supplemental indenture creating such Note or in the form of such Note:
(1) a Payment Default; or
(2) default in the performance or breach, of any covenant or warranty
of the Company in this Indenture in respect of the Notes (other than a
covenant or warranty in respect of the Notes a default in the performance
of which or the breach of which is specifically dealt with in Article
Five), all of such covenants and warranties in the Indenture which are not
expressly stated to be for the benefit of particular Notes being deemed in
respect of all Notes for this purpose, and continuance of such default or
breach for a period of 60 days after there has been given, by registered
or certified mail, of the Company by the Designated Representative or of
the Company and the Designated Representative by the Holders of at least
50% in principal amount of the Outstanding Notes, a written notice
specifying such default or breach and requiring i.t to be remedied and
stating that such notice is a "Notice of Default" hereunder; or
(3) the entry of an order for relief against the Company under the
Federal Bankruptcy Code by a court having jurisdiction in the premises or
a decree or order by a court having jurisdiction in the premises adjudging
the Company a bankrupt or insolvent under any other applicable Federal or
State law, or the entry of a decree or order approving Federal or State
law, or the entry of a decree or order approving as properly filed a
petition seeking reorganization, arrangement, adjustment or composition of
or in respect of the Company under the Federal Bankruptcy code or any
other applicable Federal or State law, or appointing a receiver,
liquidator, assignee, trustee, sequestrator (or other similar official) of
the Company or of any substantial part of its property, or ordering the
winding up or liquidation of its affairs, and the continuance of any such
decree or order unstated and in effect for a period of 60 consecutive
days; or
(4) the consent by the Company to the institution of bankruptcy or
insolvency proceedings against it, or the filing by it of a petition or
answer or consent seeking reorganization or relief under the Federal
Bankruptcy Code or any other applicable Federal or State law, or the
consent by it to the filing of such petition or to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Company or of any substantial part of its property, or
the making by it of an assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts generally as
they become due, or the taking of corporate action by the Company in
furtherance of any such action; or
(5) any other Event of Default provided in a supplemental indenture
or Board Resolution under which any Notes are issued or in the form of
such Notes.
"Holder" when used with respect to any Note means the Person in whose name
a Note is registered in the Register.
"Indenture" or "this Indenture" means this instrument as originally
executed or as it may from time to time be supplemented or amended by one or
more indentures supplemental hereto and shall include the terms of particular
Notes established as contemplated by Section 301.
"Maturity," when used with respect to any Note, means the date on which
the principal of such Note becomes due and payable as therein or herein
provided, whether at the Stated Maturity, by declaration of acceleration, or
otherwise.
"Note" or "Notes" means any note or notes authenticated and delivered from
time to time under this Indenture.
"Officers' Certificate" means a certificate signed by the President and by
the Secretary of the Company, and delivered to the Designated Representative.
"Outstanding," when used with respect to the Notes, means, as of the date
of determination, all such Notes theretofore authenticated and delivered under
this Indenture, except:
(i) such Notes theretofore cancelled by the Company or delivered to
the Company for cancellation;
(ii) such Notes for whose payment or redemption money in the
necessary amount has been theretofore paid to the Holders of such Notes;
and
(iii) such Notes in exchange for or in lieu of which other Notes have
been authenticated and delivered pursuant to this Indenture.
"Paying Agent" means the Company or other Person appointed by the Company
who is authorized by Section 1003 of this Indenture to pay the principal of or
interest on any Notes.
"Payment Date," when used with respect to any Note means the Stated
Maturity of any installment of principal and interest on that Note.
"Payment Default" means with respect to any Note a default in the payment
of any principal or Interest upon any Note when it becomes due and payable, and
continuance of such default for a period of 30 days.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Place of Payment" means with respect to any Notes issued hereunder the
city or political subdivision so designated with respect to the Notes in
question in accordance with the provisions of Section 301.
"Predecessor Notes" of any particular Note means every previous Note
evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for the purposes of this definition, any Note delivered
under Section 306 in lieu of a lost, destroyed or stolen Note shall be deemed
to evidence the same debt as the lost, destroyed or stolen Note.
"Redemption Date" when used with respect to any Note to be redeemed means
the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price" when used with respect to any Note to be redeemed means
the price at which it is to be redeemed pursuant to this Indenture.
"Register" shall have the meaning specified in Section 304.
"Special Record Date" for the payment of any Defaulted Payment (as defined
in Section 306) means a date fixed by the Company pursuant to Section 306.
"Stated Maturity" when used with respect to any Note or any installment of
principal thereof or interest thereon means the date specified in such Note as
the fixed date on which the principal of such Note or such installment of
principal or interest is due and payable.
"Designated Representative" means the Person named as the Designated
Representative in the first paragraph of this instrument until a successor
Designated Representative shall have become such pursuant to Article Six of
this Indenture, and thereafter "Designated Representative" shall mean and
include each Person who is then a Designated Representative hereunder.
"U.S. Government Obligations" means (1) direct obligations of the United
States of America for the payment of which the full faith and credit of the
United States of America is pledged or (2) depositary receipts issued by a bank
or trust company as custodian of U.S. Government Obligations or (3) obligations
of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America.
SECTION 102. Compliance Certificates. Upon any application or request by
the Company to the Designated Representative to take any action under any
provision of this Indenture, the Company shall furnish to the Designated
Representative an Officers' Certificate stating that all conditions precedent,
if any, provided for in this Indenture relating to the proposed action have
been complied with, except that in the case of any such application or request
as to which the furnishing of such document is specifically required by any
provision of this Indenture relating to such particular application or request,
no additional certificate need be furnished.
Every certificate with respect to compliance with a condition or covenant
provided for in this Indenture shall include:
(1) a statement that each individual signing such certificate has
read such covenant or condition and the definitions herein relating
thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements contained in such certificate
or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Designated Representative. In
any case where several matters are required to be certified by any specified
Person, it is not necessary that all such matters be certified by only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to the other matters, and any such Person may
certify or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate, or representations
by, counsel, unless such officer knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect
to the matters upon which his certificate or opinion is based are erroneous.
Any such certificate may be based, insofar as it relates to factual matters,
upon a certificate, or representations by, an officer or officers of the
Company stating that the information with respect to such factual matters is
in the possession of the Company, unless such Counsel knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one Instrument.
SECTION 104. Acts of Holders of the Notes. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Holders of the Notes may be embodied in
and evidenced by one or more instruments of substantially similar tenor signed
by such Holders of the Notes in person or by an agent duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Designated Representative, and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
of Notes signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for
any purpose of this Indenture and (subject to Section 601) conclusive in favor
of the Designated Representative and the Company, if made in the manner
provided in this Section 104.
(b) The fact and date or the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness to such
execution or by the certificate of any notary public or other officer
authorized by law to take acknowledgements of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the execution
thereof. Where such execution is by an officer of a corporation or a member of
a partnership, on behalf of such corporation or partnership, such certificate
or affidavit shall also constitute sufficient proof of his authority. The fact
and date of the execution of any such instrument or writing, or the authority
of the person executing the same, may also be proved in any other manner which
the Designated Representative deems sufficient.
(c) The ownership or Notes shall be proved by the Register.
(d) If the Company shall solicit from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other action, the Company
may, at its option, by Board Resolution, fix in advance a record date for the
determination of Holders entitled to give such request, demand, authorization,
direction, notice, consent, salver or other action, but the Company shall have
no obligation to do so. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other action may be given
before or after the record date, but only the Holders of record at the close
of business on the record date shall be deemed to be Holders for the purposes
of determining whether Holders of the requisite proportion of Notes Outstanding
have authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other action, and for that purpose the
Notes Outstanding shall be computed as of the record date; provided that no
such authorization, agreement or consent by the Holders on the record date
shall be deemed effective unless it shall become effective pursuant to the
provisions of this Indenture not later than six months after the record date.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Note shall bind the Holder of every
Note issued upon the transfer thereof or in lieu thereof, in respect of
anything done or suffered to be done by the Designated Representative or the
Company in reliance thereon whether or not notation of such action is made
upon such Note.
SECTION 105. Notices to Designated Representative and Company. Any
request, demand, authorization, direction, notice, consent, waiver or Act of a
Holder of the Notes or other document provided or permitted by this Indenture
to be made upon, given or furnished to, or filed with,
(1) the Designated Representative by any Holder of the Notes or by
the Company shall be sufficient for every purpose hereunder if made,
given, furnished, or filed in writing to or with the Designated
Representative at his address specified in the first paragraph of this
instrument or at any other address previously furnished in writing to
such Holder.
(2) the Company by the Designated Representative or by any Holder of
Notes shall be sufficient for every purpose hereunder (except as provided
in the definition of "Event of Default") if in writing and mailed,
first-class postage prepaid, to the Company addressed to it at the
address of its principal office specified in the first paragraph of this
instrument or at any other address previously furnished in writing to the
Designated Representative by the Company.
SECTION 106. Notices to Holders: Waiver. Where this Indenture or any Note
provides for notice to Holders of the Notes of any event, such notice shall be
sufficiently given (unless otherwise herein or in such Note expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder of Notes
affected by such event, at his address as it appears in the Register, not later
than the latest date, and not earlier than the earliest date, prescribed for
the giving of such notice. In any case where notice to Holders of the Notes is
given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder of the Notes shall affect the
sufficiency of such notice with respect to other Holders of the Notes. Where
this Indenture or any Note provides for notice in any manner, such notice may
be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders of the Notes shall be filed with the
Designated Representative and the Company, but such filing shall not be a
condition precedent to the validity of any action taken in reliance upon such
waiver.
In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or otherwise, it shall be impractical to mail notice
of any event to any Holder of the Notes when such notice is required to be
given pursuant to any provision of this Indenture, then any method of
notification as shall be satisfactory to the Company shall be deemed to be a
sufficient giving of such notice.
SECTION 107. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
SECTION 108. Successors and Assigns. All covenants and agreements in this
Indenture by the Company shall bind its successors and assigns, whether so
expressed or not.
SECTION 109. Separability Clause. In case any provision in this Indenture
or in any Notes shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.
SECTION 110. Benefits of Indenture. Nothing in this Indenture or in any
Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, the Paying Agent, and the Holders of the
Notes for such of them as may be affected thereby), any benefit or any legal
or equitable right, remedy or claim under this Indenture.
SECTION 111. Governing Law. This Indenture shall be construed in
accordance with and governed by the laws of the State of Michigan.
SECTION 112. Counterparts. This Instrument may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.
ARTICLE TWO
FORMS OF NOTES
SECTION 201. Forms Generally. The Notes shall have such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon, as may be
determined by the officers executing such Notes, as evidenced by their
execution of the Notes. Any portion of the text of any of the Notes may be set
forth on the reverse thereof, with an appropriate reference thereto on the
face of the Notes.
The Notes shall be printed, lithographed, typewritten, mimeographed,
photocopied or engraved or produced by any combination of these methods ln any
manner as is determined by the officers executing such Notes, as evidenced by
their execution of such Notes.
SECTION 202. Form of Notes.
(a) Each Note will have a four year term and provide for four equal annual
payments of principal and accrued interest and shall be substantially in the
form that follows:
"LA-Z-BOY CHAIR COMPANY 8% Unsecured Promissory Notes Due 1999"
$ Date:
No. At: Monroe, Michigan
LA-Z-BOY CHAIR COMPANY, a corporation organized and existing under the
laws of Michigan and having offices at 1284 North Telegraph Road, Monroe,
Michigan 48161-3390 (herein called the "Company," which term includes any
successor corporation under the Indenture hereinafter referred to) promises to
pay to ______________________________________________________________________
______________________________________________________________ of
__________________________________________ , or registered assigns, the
principal sum of ______________________________________ Dollars, payable in
four annual principal installments, plus accrued interest at 8% simple
interest per annum on the unpaid balance from the date first above written.
The initial payment hereunder shall be due and payable on ________________,
1996 and subsequent annual installments shall be payable on the same date
in 1997, 1998 and 1999 until the principal hereof is paid or made available
for payment. The principal and interest so payable, and punctually paid or
duly provided for, on any Payment Date will, as provided in such
Indenture, be paid to the Person in whose name this Note (or any
Predecessor Note) is registered at the close of business on such
Payment Date.
Payment of the principal and interest on this Note will be made at the
office or agency of the Company maintained for that purpose in the City of
Monroe, State of Michigan, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts, provided that at the option of the Company payment of the
principal of and any interest on this Note may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Register.
This Note is one of a duly authorized issue of notes, or other evidence of
indebtedness of the Company (herein called the "Notes") issued or to be issued
under an indenture, dated as of ______________, 1995 (herein called the
"Indenture"), between the Company and Mr. Rodney England (herein called
the "Designated Representative" which term includes any successor designated
representative under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Designated Representative and the Holders of the Notes and of
the terms upon which the Notes are, and are to be, authenticated and delivered.
Terms used herein which are defined in the Indenture shall have the
respective meanings assigned thereto in the Indenture.
Under the terms of the Indenture, the Company, at its option (a) will be
Discharged from any and all obligations in respect of the Notes (except in
each case for certain obligations to register the transfer of Notes, replace
stolen, lost or mutilated Notes, maintain paying agencies and hold moneys for
payment in trust) or (b) need not comply with certain restrictive covenants of
the Indenture, in each case, if the Company deposits or sets aside, in trust,
money, or U.S. Government Obligations which through the payment of interest
thereon and principal thereof in accordance with their terms will provide
money, in an amount sufficient to pay all the principal of, and interest on,
the Notes on the dates such payments are due in accordance with the terms of
the Notes.
If an Event of Default or a Payment Default with respect to Notes shall
occur and be continuing, the principal amount of the Notes may be declared due
and payable in the manner and subject to the conditions provided in the
Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Notes to be affected under the
Indenture at any time by the Company and the Designated Representative with the
consent of the Holders of a majority in the aggregate in principal amount of
the Notes then Outstanding. The Indenture also contains provisions permitting
the Holders of a majority in principal amount of the Outstanding Notes, on
behalf of the Holders of all Notes, to waive compliance by the Company with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Note shall be conclusive and binding upon such Holder and upon all future
Holders of the Note and of any Note issued upon the registration of transfer
hereof or ln lieu hereof, whether or not notation of such consent or waiver is
made upon this Note.
Under the Indenture, any principal and interest that is not punctually
paid or duly provided for by the Company will forthwith cease to be payable to
the Holder on such Payment Date and will be paid to the Person in whose name
this Note (or any Predecessor Note) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Payment to be fixed by
the Company, notice thereof to be given to Holders of the Notes not less than
10 days prior to such Special Record Date, all as more fully provided in said
Indenture.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this Note
at the times, place and rate, and in the coin or currency, herein prescribed.
The Notes are issuable only in registered form without coupons in any
denomination.
As provided in the Indenture and subject to certain exceptions therein set
forth, this Note is not transferable other than upon the death of a Holder by
will or the applicable laws of descent and distribution.
No service charge shall be made for any such registration of a permitted
transfer, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Company, the Designated Representative and any agent of the Company or
the Designated Representative may treat the Person in whose name this Note is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and neither the Company, the Designated Representative nor any such
agent shall be affected by notice to the contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Note, or for any claim based herein or otherwise in respect
hereof or of said Indenture, against any incorporator, or against any past,
present or future stockholder, director or officer, as such, of the Company or
of any predecessor or successor corporation, either directly or through the
Company or any such predecessor or successor corporation, whether for amounts
unpaid on stock subscriptions or by virtue of any constitution, statute or rule
of law, or Dy the enforcement of any assessment or penalty or otherwise
howsoever; all such liability being, by the acceptance hereof and as part of
the consideration for the issue hereof, expressly waived and released by every
Holder hereof, as more fully provided in said Indenture.
The Notes may be redeemed, at any time and from time to time, in whole or
in part, at the election of the Company, upon payment of the Redemption Price
which shall consist of 100% of the unpaid principal amount of the Notes so
redeemed plus interest accrued on the Notes so redeemed to the date fixed for
redemption of such principal amount of the Note.
The Notes are not secured.
The Notes may be for various principal sums, will mature on the same date,
will bear 8% simple interest payable annually and will otherwise be identical
under the terms of the Indenture.
The Notes have been registered under the Securities Act of 1933, as
amended. The Notes may only be acquired and held by the Holder, or transferred
to other Persons upon the death of the Holder by will or the applicable laws of
descent and distribution. All transfers and exchanges of the Notes may be made
only in accordance with applicable Federal and state laws.
Unless this Note has been executed by the Company by manual or facsimile
signature, this Note shall not be entitled to any benefit under the Indenture
or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be signed
by its duly authorized officers.
Dated: LA-Z-BOY CHAIR COMPANY
By ____________________
Its ________________
Attest:
__________________________ "
ARTICLE THREE
THE NOTES
SECTION 301. Generally. The aggregate principal amount of the Notes that
may be delivered and Outstanding at any time under this Indenture may not
exceed $10,000,000.
All Notes that are authenticated, delivered and Outstanding under this
Indenture shall in all respects be equally and ratably entitled to the rights
and benefits of this Indenture without preference, priority or distinction on
account of the actual time of the delivery or Stated Maturity of any of the
Notes.
Each Note shall be created either by or pursuant to this Indenture, a
Board Resolution or by an indenture supplemental hereto. Each Note may bear
such date(s), be payable at such place(s), have such Stated Maturity, be
issuable at their face value, bear 8% simple interest, from ________, 1995,
payable annually in four equal installments and at such place(s) to the
Holders of the Notes registered as such, and may be redeemable or repayable at
such Redemption Price(s) or Repayment Price(s) as the case may be, whether at
the option of the Holder or otherwise, and upon such terms, all as shall be
provided for in or pursuant to this Indenture or the Board Resolution or
supplemental indenture creating the same.
SECTION 302. Denominations. The Notes shall be issuable in such
denominations and currency as shall be provided in the provisions of this
Indenture or in the Board Resolution creating such Notes.
SECTION 303. Execution Authentication and Delivery and Dating. The Notes
shall be executed on behalf of the Company by its President under its corporate
seal reproduced thereon and attested by its Secretary. The signature of any of
these officers on the Notes may be manual or facsimile.
Notes bearing the manual or facsimile signatures of individuals who were
at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
All Notes shall be dated the date of their execution by the Company.
No Note shall be entitled to any lien, right or benefit under this
Indenture or be valid or obligatory for any purpose unless it has been
executed by the Company by manual or facsimile signature.
SECTION 304. Registration and Transfer. The Company shall keep or cause
to be kept a register or registers (herein sometimes referred to as the
"Register") in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of the Notes, and for
permitted transfers of the Notes. Any such Register shall be in written form
or in any form capable of being converted into written form within a reasonable
time. At all reasonable times the information contained in such register shall
be available for inspection by the Holders or the Designated Representative at
the offices of the Company.
Upon surrender for transfer of any Notes, as permitted, at the office of
the Company, the Company shall execute and deliver, in the name of the
designated transferee(s), one or more new Notes of a like aggregate principal
amount and Stated Maturity.
A Note may only be transferred to another Person or Persons upon the death
of its Holder by will or the applicable laws of descent and distribution. The
Notes may only be transferred in accordance with applicable Federal and state
laws.
All Notes issued upon any transfer shall be the valid obligations of the
Company, evidencing the same debt, and entitled to the same benefits under
this Indenture, as the Notes surrendered upon such transfer.
Every Note presented or surrendered for transfer shall if so required by
the Company be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company duly executed, by the Holder
thereof or his attorney duly authorized in writing.
Unless otherwise provided in the Notes to be transferred, no service
charge shall be made for any transfer of Notes, but the Company may (unless
otherwise provided in such Notes) require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with
any transfer of Notes.
SECTION 305. Mutilated. Destroyed. Lost and Stolen Notes. If (i) any
mutilated Note is surrendered to the Company and the Company receives evidence
to its satisfaction of the destruction, loss or theft of any Note, and (ii)
there is delivered to the Company such security or indemnity as may be required
by it to save it harmless, then, the Company shall execute and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note,
a new Note of like tenor, series, stated maturity and principal amount,
bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become or
is about to become due and payable, the Company in its discretion may, instead
of issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section 305, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses
connected therewith.
Every new Note issued pursuant to this Section 305 in lieu of any
destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled
to all the benefits of this Indenture equally and proportionately with any and
all other Notes duly issued hereunder. The provisions of this Section 305 are
exclusive and shall preclude (to the extent lawful) all other rights and
remedies with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Notes.
SECTION 306. Payment of Principal and Interest: Principal and Interest
Rights Preserved. Principal and interest on any Note which is payable, and is
punctually paid or duly provided for, on any Payment Date shall be paid to the
Person in whose name that Note (or one or more Predecessor Notes) is
registered at the close of business on such Payment Date.
Unless otherwise provided with respect to the Notes, at the option of the
Company payment of principal and interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Register.
Any principal and interest on any Note which is payable, but is not
punctually paid or duly provided for, on any Payment Date (herein called
"Defaulted Payment") shall forthwith cease to be payable to the registered
Holder on the relevant Payment Date by virtue of his having been such Holder;
and, except as hereinafter provided, such Defaulted Payment may be paid by the
Company to the Persons in whose names any such Notes (or their respective
Predecessor Notes) are registered at the close of business on a Special Record
Date for the payment of such Defaulted Payment, which shall be fixed in the
following manner. The Company shall make arrangements satisfactory to each
Holder for the deposit of the amount of such Defaulted Payment prior to the
date of the proposed payment, to be held in trust for the benefit of the
Persons entitled to such Defaulted Payment as herein provided. Thereupon the
Company shall fix a Special Record Date for the payment of such Defaulted
Payment which shall be not more than 15 nor less than 10 days prior to the date
of the proposed payment. The Company shall cause notice of the proposed payment
of such Defaulted Payment and the Special Record Date therefore to be mailed,
first-class postage prepaid, to the Holder of each such Note at his address as
it appears in the Register, not less than 10 days prior to such Special Record
Date. Notice of the proposed payment of such Defaulted Payment and the Special
Record Date therefor having been mailed as aforesaid, such Defaulted Payment
shall be paid to the Persons in whose names such Notes (or their respective
Predecessor Notes) are registered on such Special Record Date.
Subject to the foregoing provisions of this Section 306, each Note
delivered under this Indenture upon transfer of or in exchange for or in lieu
of any other Note shall carry the rights to principal and interest accrued and
unpaid and to accrue, which were carried by such other Note.
SECTION 307. Persons Deemed Owners. The Company, the Designated
Representative and any agent of the Company or the Designated Representative
may treat the Person in whose name any Note is registered as the owner of such
Note for the purpose of receiving payment of principal of, and (subject to
Section 306) interest on, such Note and for all other purposes whatsoever,
whether or not such Note be overdue, and neither the Company, the Designated
Representative nor any agent of the Company or the Designated Representative
shall be affected by notice to the contrary.
SECTION 308. Cancellation. All Notes surrendered for payment, transfer,
or exchange shall, if surrendered to any Person other than the Company, be
delivered to the Company and shall be promptly cancelled by it.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture. This Indenture shall
cease to be of further effect with respect to any Notes (except as to any
surviving rights of conversion or transfer of Notes expressly provided for
herein or in the form of such Notes), and the Designated Representative, on
demand of and at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture as to such series,
when
(1) all Notes theretofore delivered (other than (i) Notes which have
been destroyed, lost or stolen and which have been replaced or paid as
provided in Section 304 and (ii) Notes for which payment money has
theretofore been deposited in trust or segregated and held in trust by the
Company and thereafter repaid to the Company or discharged from such
trust, as provided in Section 1003) have been delivered to the Company for
cancellation;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company with respect to the Notes; and
(3) the Company has delivered to the Designated Representative an
Officers' Certificate stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture
with respect to the Notes have been complied with.
SECTION 402. Defeasance Upon Deposit of Moneys or U.S. Government
Obligations. At the Company's option indicated by notice to the Designated
Representative, either (a) the Company shall be deemed to have been
"Discharged" (as defined below) from its obligations with respect to the Notes
on the ninety-first day after the applicable conditions set forth below have
been satisfied or (b) the Company shall cease to be under any obligation to
comply with any term, provision or condition set forth in Section 801 and
Section 1005 with respect to any Notes at any time after he applicable
conditions set forth below have been satisfied:
(1) the Company shall have deposited or caused to be deposited
irrevocably funds, in trust, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of the Notes (A) money in
an amount, or (B) U.S. Government Obligations which through the payment of
interest and principal in respect thereof in accordance with their terms
will provide, not later than one day before the due date of any payment,
money in an amount, or (C) a combination of (A) and (B), sufficient, in
the opinion of the Company, to pay and discharge each installment of
principal of, and interest on, the Outstanding Notes on the dates such
installments of interest or principal are due; and
(2) no Event of Default or event (including such deposit) which
with notice or lapse of time would become an Event of Default with
respect to the Notes shall have occurred and be continuing on the date
of such deposit.
"Discharged" means, for purposes of this Section 402 that the Company
shall be deemed to have paid and discharged the entire indebtedness represented
by, and obligations under, the Notes and to have satisfied all the obligations
under this Indenture relating to the Notes, the Designated Representative,
shall execute proper instruments acknowledging the same), except (A) the rights
of Holders of Notes to receive, from the trust fund described in clause (1)
above, payments of the principal of and the interest on such Notes when such
payments are due; (B) the Company's obligations with respect to such Notes
under Section 304, Section 305, Section 507; and (C) the rights, powers, duties
and immunities of the Designated Representative hereunder.
SECTION 403. Return of Unclaimed Amounts. Any amounts deposited in trust
for payment of the principal of, or interest, if any, on the Notes and not
applied but remaining unclaimed by the Holders of such Notes for two years
after the date upon which the principal of, or interest, if any, on such
Notes, as the case may be, shall have become due and payable, shall be
repaid to the Company on demand; and the Holder of any of such Notes
shall thereafter look only to the Company for any prepayment which such
holder may be entitled to collect.
SECTION 404. Reinstatement. If any money or U.S. Government Obligations
is unable to be applied in accordance with Section 402 by reason of any
legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company's obligations under this Indenture and the
Notes shall be revived and reinstated as though no deposit had occurred
pursuant to Section 402 until such time as is permitted to apply all
such money or U.S. Government Obligations in accordance with Section 403.
ARTICLE V
REMEDIES
SECTION 501. Acceleration of Maturity; Rescission and Annulment. If an
Event of Default (other than a Payment Default) occurs and is continuing, then
and in each and every such case, unless the principal of all the Notes shall
have already become due and payable, the Holders of not less than 50% in
aggregate principal amount of the Notes then Outstanding hereunder and the
Designated Representative, by notice in writing to the Company may declare the
unpaid principal amount of all the Notes to be due and payable immediately, and
upon any such declaration the same shall become and shall be immediately due
and payable, anything in this Indenture or in the Notes contained to the
contrary notwithstanding.
At any time after such a declaration of acceleration has been made with
respect to the Notes and before a judgment or decree for payment of the money
due has been obtained by the Designated Representative or the Holders as
provided in this Article Five, Holders of a majority in principal amount of the
Notes Outstanding, by written Notice to the Company and the Designated
Representative, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited for the benefit of the Holders
a sum sufficient to pay
(A) all overdue installments of principal and interest on the
Notes;
(B) the principal of any Notes, which have become due otherwise
than by such declaration of acceleration, and interest thereon at the
rate or rates prescribed therefor by the terms of the Notes, to the
extent that payment of such interest is lawful; and
(C) interest upon overdue installments of interest at the
rate(s) prescribed therefor by the terms of the Notes, to the extent
that payment of such interest is lawful; and
(2) all Events of Default with respect to such Notes, other than the
nonpayment of the principal of the Notes which have become due solely by
such acceleration, have been cured or waived as provided in Section 512.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 502. Collection of Indebtedness and Suits for Enforcement by
Holder. The Company covenants that if any Payment Default continues for any
period of grace provided with respect to the Notes, the Company will, upon
demand of any Holder, pay to such Holder, the whole amount then due and payable
on any such Note for principal and interest, with interest, to the extent that
payment of such interest shall be legally enforceable, upon the overdue
principal and upon overdue installments or interest, at such rates(s) as may be
prescribed therefor by the terms of any such Note; and, in addition thereto,
such further amount as shall be sufficient to cover the costs and expenses of
collection.
If the Company fails to pay such amounts forthwith upon such
demand, the Holder may institute a judicial proceeding for the collection of
the sums so due and unpaid, and may prosecute such proceeding to judgment or
final decree, and may enforce the same against the Company or any other obligor
upon the Notes and collect the money adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any other
obligor upon such Notes, wherever situated.
SECTION 503. Designated Representative May File Proofs of Claim. In case
of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company or any other obligor upon the Notes or
the property of the Company or of such other obligor or their creditors, the
Designated Representative (irrespective of whether the principal of
or interest on the Notes shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether
the Designated Representative shall have made any demand on the Company
for the payment or overdue principal or interest) shall be entitled and
empowered, by intervention in such proceedings or otherwise.
(i) to file and prove a claim for the whole amount of principal and
interest owing and unpaid in respect of the Notes and to file such other
papers or documents as may be necessary and advisable in order to have the
claims of the Designated Representative (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Designated Representative, its agents and counsel) and of the Holders of
the Notes allowed in such judicial proceeding, and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any receiver, assignee, trustee, liquidator, sequestrator (or other similar
official) in any such judicial proceeding is hereby authorized by each of
the Holders of the Notes to make such payments directly to the Holders of
the Notes, to pay to the Designated Representative any amount due to it
for he reasonable compensation expenses, disbursements and advances of the
Designated Representative, its agents and counsel.
Nothing herein contained shall be deemed to authorize the Designated
Representative to authorize or consent to or accept or adopt on behalf of any
Holders of the Notes any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof, or to
authorize the Designated Representative to vote in respect of the claim of any
Holders of the Notes in any such proceeding.
SECTION 504. Designated Representative May Enforce Claims Without
Possession of Notes. All rights of action and claims under this Indenture or
the Notes may be prosecuted and enforced by the Designated Representative
without the possession of any of the Notes or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the
Designated Representative shall be brought in its own name as Designated
Representative, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances
of the Designated Representative, its agents and counsel, be for the ratable
benefit of the Holders of the Notes in respect of which such judgment has been
recovered.
SECTION 505. Application of Money Collected. Any money collected by the
Designated Representative with respect to the Notes pursuant to Section 501 or
Section 503 shall be applied in the following order, at the date or dates
fixed by the Designated Representative and, in case of the distribution of such
money on account of principal or interest, upon presentation of the Notes and
the notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
First: To the payment of the amounts then due and unpaid upon the
Notes for principal and interest, in respect of which or for the benefit
of which such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable on such
Notes for principal and interest, respectively.
Second: To the payment of the balance, if any, to the Person or
Persons entitled thereto (including the Designated Representative).
SECTION 506. Limitation on Suits. Except as otherwise expressly provided
in Section 507, no Holder of any Note shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder,
unless
(1) such Holder has previously given written notice to the Company of
a continuing Payment Default with respect to the Notes; or
(2) the Holders of not less than 50% in principal amount of the
Outstanding Notes shall have made written request to the Designated
Representative to institute proceedings in respect of such Event of
Default in its own name as Designated Representative hereunder;
(3) such Holder(s) have offered to the Designated Representative
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Designated Representative for 60 days after its receipt of
such notice, request and offer of indemnity has failed to institute any
such proceeding; and
(5) no discretion inconsistent with such written request has been
given to the Designated Representative during such 60-day period by the
Holders of a majority in principal amount of the Outstanding Notes;
it being understood and intended that no one or more Holders of Notes shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Notes, or to obtain or to seek to obtain priority or
preference over any other such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and
proportionate benefit of all the Holders of all Notes.
SECTION 507. Unconditional Right of Holders to Receive Principal and
Interest. Notwithstanding any other provision in this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of and (subject to Section 307) interest on such Note
on the respective Stated Maturity expressed in such Note and to institute suit
for the enforcement of any such payment, and such right shall not be impaired
without the consent of such Holder.
SECTION 508. Restoration of Rights and Remedies. If the Designated
Representative or a Holder of any Notes has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, then and in every such case the
Company, the Designated Representative and the Holders of the Notes shall,
subject to any determination in such proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Designated Representative and the Holders of the Notes shall
continue as though no such proceeding had been instituted.
SECTION 509. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Designated Representative or to the Holders
of the Notes is intended to be exclusive of any other right or remedy, and
every right and remedy shall to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 510. Delay or Omission Not Waiver. No delay or omission of the
Designated Representative or of any Holder of any Note to exercise any right or
remedy accruing upon any Payment Default or Event of Default shall impair any
such right or remedy or constitute a waiver of any such Payment Default or
Event of Default or an acquiescence therein. Every right and remedy given by
this Article Five or to the Designated Representative or to the Holder of any
Notes may be exercised from time to time, and as often as may be deemed
expedient, by the Designated Representative or by the Holder of any Notes, as
the case may be.
SECTION 511. Control by Holders. The Holders of a majority in principal
amount of the Outstanding Notes shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the
Designated Representative or exercising any trust or power conferred on the
Designated Representative with respect to the Notes provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture and could not involve the Designated Representative in
personal liability and
(2) the Designated Representative may take any other action deemed
proper by the Designated Representative which is not inconsistent with
such direction.
SECTION 512. Waiver of Past Defaults. The Holders of not less than a
majority in principal amount of the Outstanding Notes may on behalf of the
Holders of all the Notes waive any past default hereunder with respect to the
Notes and its consequences, except a Payment Default or a default not
theretofore cured in respect of a covenant or provision hereof which cannot be
modified or amended without the consent of all of the Holders of each of the
Outstanding Notes.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 513. Undertaking for Costs. All parties to this Indenture agree,
and each Holder of any Note by his acceptance thereof shall be deemed to have
agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Designated Representative for any action taken or omitted by it as
Designated Representative, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant.
SECTION 514. Waiver of Stay or Extension Laws. The Company covenants (to
the extent that it may lawfully do so) that it will not at any time insist
upon, or plead, or in any manner whatsoever claim to take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the performance of this
Indenture; and the Company (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that
it will not hinder, delay or impede the execution of any power herein granted
to the Designated Representative, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE SIX
THE DESIGNATED REPRESENTATIVE
SECTION 601. Certain Duties and Responsibilities. (a) Except during the
continuance of an Event of Default with respect to any Notes,
(1) the Designated Representative undertakes to perform such duties
and only such duties as are specifically set forth in this Indenture with
respect to the Notes, and no implied covenants or obligations shall be
read into this Indenture against the Designated Representative; and
(2) in the absence of bad faith on its part, the Designated
Representative may, with respect to the Notes, conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Designated
Representative and conforming to the requirements of this Indenture; but
in the case of any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the Designated
Representative, the Designated Representative shall be under a duty to
examine the same to determine whether or not they conform to the
requirements of this Indenture.
(b) In case an Event of Default with respect to any Notes has
occurred and is continuing, the Designated Representative shall
exercise with respect to the Notes such of the rights and powers
vested in it by this Indenture, and use the same degree of care and
skill in their exercise, as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to relieve
the Designated Representative from liability for its own grossly
negligent action, its own grossly negligent failure to act, or its
own willful misconduct, except that
(1) this Subsection 601(c) shall not be construed to limit the effect
of Subsection (a) of this Section 601;
(2) the Designated Representative shall not be liable for any error
of judgment made in good faith, unless it shall be proved that the
Designated Representative was grossly negligent in ascertaining the
pertinent facts;
(3) the Designated Representative shall not liable with respect to
any action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of a majority in principal amount of the
Outstanding Notes relating to the time, method and place of conducting any
proceeding for any remedy available to the Designated Representative, or
exercising any trust or power conferred upon the Designated
Representative, under this Indenture with respect to the Notes; and
(4) no provision of this Indenture shall require the Designated
Representative to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder, or
in the exercise of any of its rights or powers.
(d) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Designated Representative shall be subject to the provisions
of this Section 601.
SECTION 602. Certain Rights of Designated Representative. Except as
otherwise provided in Section 601:
(a) the Designated Representative may rely and shall be protected in
acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(c) whenever in the administration of this Indenture the Designated
Representative shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action hereunder,
the Designated Representative (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;
(d) the Designated Representative may consult with counsel and the
written advice of such counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(e) the Designated Representative shall be under no obligation to
exercise any of the rights or powers vested in it by this Indenture at the
request or direction of any of the Holders of Notes pursuant to this
Indenture, unless such Holders shall have offered to the Designated
Representative reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with
such request or direction;
(f) the Designated Representative shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture or other paper or document, but
the Designated Representative, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit,
and, if the Designated Representative shall determine to make such further
inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Company, personally or by agent or attorney;
(g) the Designated Representative may execute any of the powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Designated Representative shall not be
responsible for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder.
SECTION 603. Not Responsible for Recitals or Issuance of Notes. The
recitals contained herein and in the Notes, except the certificates of
authentication, shall be taken as the statements of the Company, and the
Designated Representative assumes no responsibility for their correctness. The
Designated Representative makes no representations as to the validity or
sufficiency of this Indenture or of the Notes.
SECTION 604. May Hold Notes. The Designated Representative, or any other
agent of the Company, in his individual or any other capacity, may become the
owner of Notes and may otherwise deal with the Company with the same rights it
would have if it were not Designated Representative or such other agent.
SECTION 605. Resignation and Removal: Appointment of Successor.
(a) No resignation or removal of a Designated Representative, and no
appointment of a successor Designated Representative shall become effective
until the acceptance of appointment by the successor Designated Representative
under Section 606.
(b) The Designated Representative may resign at any time by giving 180
days' prior written notice thereof to the Company. If an instrument of
acceptance by a successor Designated Representative shall not have been
delivered to the Company within 210 days after the giving of such notice of
resignation, the resigning Designated Representative may petition any court of
competent jurisdiction for the appointment of a successor Designated
Representative with respect to the Notes.
(c) The Designated Representative may be removed at any time by Act of the
Holders of a majority in principal amount of the Outstanding Notes, delivered
to the Designated Representative and to the Company.
(d) If any at time:
(1) the Designated Representative shall become incapable of acting
with respect to any of the Notes, or
(2) the Designated Representative shall be adjudged a bankrupt or
insolvent or a receiver of the Designated Representative or of its
property shall be appointed or any public officer shall take charge or
control of the Designated Representative or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may
remove the Designated Representative, or (ii) subject to Section 513, any
person who has been a bone Side Holder of a Note for at least 6 months
may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Designated
Representative and the appointment of a successor Designated
Representative with respect to the Notes.
(e) If the Designated Representative shall resign, be removed or become
incapable of acting with respect to the Notes, or if a vacancy shall occur in
the office of Designated Representative with respect to the Notes for any
cause, the Company, by a Board Resolutions shall promptly appoint a successor
Designated Representative for the Notes. If, within one year after such
resignation, removal or incapacity, or the occurrence of such vacancy, a
successor designated representative with respect to the Notes shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Notes delivered to the Company and the retiring Designated
Representative, the successor Designated Representative so appointed shall,
forthwith upon its acceptance of such appointment, become the successor
Designated Representative and supersede the successor Designated Representative
appointed by the Company. If no successor Designated Representative shall have
been so appointed by the Company or the Holders of the Notes and accepted
appointment in the manner hereinafter provided, any person who has been a bona
fide Holder of a Note for at least 6 months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Designated Representative with respect to the
Notes.
(f) The Company shall give notice of each resignation and each removal of
the Designated Representative with respect to any of the Notes and each
appointment of a successor Designated Representative with respect to any series
by mailing written notice of such event by first-class mail, postage prepaid,
to the Holders of Notes as their names and addresses appear in the Register.
Each notice shall include the name of the successor Designated Representative
and the address of its principal corporate trust office.
SECTION 606. Acceptance of Appointment by Successor. Every successor
Designated Representative appointed hereunder shall execute, acknowledge and
deliver to the Company and to any predecessor Designated Representative an
instrument accepting such appointment, and thereupon the resignation or removal
of the predecessor Designated Representative shall become effective with
respect to the Notes and such successor Designated Representative, without any
further act, deed or conveyance, shall become vested with all the rights,
powers and duties of the predecessor Designated Representative with respect to
the Notes; but on the request of the Company or the successor Designated
Representative, such predecessor Designated Representative shall, upon payment
of its reasonable charges, if any, execute and deliver an instrument
transferring to such successor Designated Representative all the rights and
powers of the predecessor Designated Representative, and shall duly assign,
transfer and deliver to such successor Designated Representative all property
and money, if any, held by such predecessor Designated Representative hereunder
with respect to the Notes. Upon request of any such successor Designated
Representative, the Company shall execute any and all instruments for more
fully and certainly vesting in and confirming to such successor Designated
Representative all such rights and powers.
Designated Representative shall have the power, with the prior written
consent of the Company, to appoint other Persons, in such number as the
Designated Representative and the Company shall agree, to act as co-Designated
Representatives with the Designated Representative in the administration of
this Indenture hereunder. Every co-Designated Representative appointed
hereunder shall execute, acknowledge and deliver to the Company and to the
existing Designated Representative an instrument accepting such appointment,
and thereupon the appointment of such co-Designated Representative shall become
effective with respect to the Notes, without any further act, deed or
conveyance, and such co-Designated Representative shall become vested with all
the rights, powers and duties of a Designated Representative with respect to
the Notes. Upon request of any co-Designated Representative, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such co-Designated Representative all such rights and powers.
No successor Designated Representative or co-Designated Representative
shall accept its appointment unless at the time of such acceptance such
successor Designated Representative or co-Designated Representative shall be
qualified and eligible with respect to the Notes under this Article six.
ARTICLE SEVEN
HOLDERS' LISTS AND OTHER REPORTS BY COMPANY
SECTION 701. Company to Furnish Designated Representative Names and
Addresses of Holders. The Company will furnish or cause to be furnished to the
Designated Representative, on the first day of the fiscal year, a list
indicating the names and addresses of all of the Holders of the Notes as of the
date of the list, the aggregate amount of the Notes Outstanding as of such
date, and the amount of each Note Outstanding as of such date. If, and so long
as, the Company acts as its own Paying Agent, the list to be furnished by the
Company to the Designated Representative pursuant to this Section 701 shall
indicate (i) whether there has been any default in the payment of any sums due
and payable under any of the Notes Outstanding, (ii) if there has been such a
default, the date of such default, (iii) if there has been such a default,
whether such default has been cured, and (iv) if such a default has been
cured, the date of such cure.
SECTION 702. Notice of Defaults. Within 90 days after the occurrence of
any default hereunder with respect to the Notes, the Company shall transmit by
mail to the Designated Representative and to all Holders of the Notes as their
names and addresses appear in the Register, notice of such default hereunder,
unless such default shall have been cured or waived. For the purpose of this
Section 702, the term "default," with respect to the Notes, means any event
which is, or after notice or lapse of time or both would become, an Event of
Default with respect to the Notes.
SECTION 703. Preservation of Information. The Designated Representative
shall preserve, in as current a form as is reasonably practicable, all
information contained in the most recent lists furnished to the Designated
Representative as provided in Section 701. The Designated Representative may
destroy any list furnished to it as provided in Section 701 upon receipt of a
new list so furnished.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER
SECTION 801. Company May Consolidate or Merge, or Convey or Transfer
Properties, Only on Certain Terms. The Company shall not consolidate with or
merge into any other corporation or convey or transfer or lease its properties
and assets substantially as an entirety to any Person, unless:
(1) the corporation formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance or transfer
or lease the properties and assets of the Company substantially as an
entirety shall be a corporation organized and existing under the laws of
the United States of America or any State or the District of Columbia, and
shall expressly assume, by an indenture supplemental hereto, executed and
delivered to the Designated Representative, in the form satisfactory to
the Designated Representative, the due and punctual payment of the
principal of and interest on all the Notes and the performance of every
covenant of this Indenture on the part of the Company to be performed or
observed;
(2) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time, or both, would
become an Event of Default, shall have happened and be continuing; and
(3) the Company has delivered to the Designated Representative an
Officers' Certificate stating that such consolidation, merger, conveyance
or transfer and such supplemental indenture comply with this Article Eight
and that all conditions precedent herein provided for relating to such
transaction have been complied with.
SECTION 802. Successor Corporation Substituted. Upon any consolidation or
merger, or any conveyance or transfer of the properties and assets of the
Company substantially as an entirety in accordance with Section 801, the
successor corporation formed by such consolidation or into which the Company is
merged or to which such conveyance or transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor corporation had been
named as the Company herein. In the event of any such conveyance or transfer,
the Company as the predecessor corporation may be dissolved, wound up or
liquidated at any time thereafter.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders. Without
the consent of the Holders of any Notes, the Company, when authorized by a
Board Resolution, and the Designated Representative, at any time and from time
to time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Designated Representative, for any of the following
purposes:
(1) to evidence the succession of another corporation to the Company,
and the assumption by any such successor of the covenants of the Company
herein and in the Notes contained; or
(2) to add to the covenants of the Company, or to surrender any right
or power herein conferred upon the Company, for the benefit of the Holders
of the Notes; or
(3) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising
under this Indenture; or
(4) to establish any form of Note, as provided in Article Two and to
set forth the terms hereof, and/or to add to the rights of the Holders of
the Notes; or
(5) to evidence and provide for the acceptance of appointment by
another Person or corporation as a successor Designated Representative or
a co-Designated Representative hereunder with respect to the Notes and to
add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of this
Indenture hereunder by more than one Designated Representative, pursuant
to Section 606; or
(6) to add any additional Events of Default in respect of the Notes;
or
(7) to supplement any of the provisions of this Indenture to such
extent as shall be necessary to permit or facilitate the defeasance and
discharge of any Notes pursuant to this Indenture.
No supplemental indenture for the purposes identified in Clauses (2), (3),
(4), (6) or (7) above may be entered into if to do so would adversely affect
the interest of the Holders of Notes.
SECTION 902. Supplemental Indentures with Consent of Holders. With the
consent of the Holders of not less than a majority in principal amount of the
Outstanding Notes affected by such supplemental indenture or indentures, by Act
of said Holders delivered to the Company and the Designated Representative, the
Company, when authorized by a Board Resolution, and the Designated
Representative may enter into an indenture or indentures supplemental hereto
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of modifying in any
manner the rights of the Holders of the Notes under this Indenture; provided,
however, that no such supplemental indenture shall, without the consent of the
Holder of each Outstanding Note affected thereby,
(1) change the Maturity of the principal of or any installment of
interest on, any Note, or reduce the principal amount thereof or the
interest or any premium thereon, or change the method of computing the
amount of principal thereof or interest thereon on any date or change any
Place of Payment where, or the coin or currency in which, any Note or any
interest thereon is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the Maturity thereof; or
(2) reduce the percentage in principal amount of the Outstanding
Notes, the consent of whose Holders is required for any such supplemental
indenture, or the consent of whose Holders is required for any waiver (of
compliance with certain provisions of this Indenture or certain defaults
hereunder and their consequences) provided for in this Indenture; or
(3) modify any of the provisions of this Section or Section 512,
except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Note affected thereby.
It shall not be necessary for any Act of Holders under this Section 902 to
approve the particular form of any proposed supplemental indenture, but is
shall be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures. In executing any
supplemental indenture permitted by this Article Nine or the modifications
thereby created by this Indenture, the Designated Representative shall be
entitled to receive, and (subject to Section 601) shall be fully protected in
relying upon an Officers' Certificate stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. The
Designated Representative may, but shall not be obligated to, enter into any
such supplemental indenture which affects the Designated Representative's own
rights, duties or immunities under this Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures. Upon the execution of any
supplemental indenture under this Article Nine, this Indenture shall be
modified in accordance therewith, and such supplemental indenture shall form a
part of this Indenture for all purposes; and every Holder of Notes theretofore
or thereafter authenticated and delivered hereunder shall be bound thereby to
the extent provided therein.
SECTION 905. Reference in Notes to Supplemental Indentures. Notes
delivered after the execution of any supplemental indenture pursuant to this
Article Nine may, and shall if required by the Designated Representative, bear
a notation in form approved by the Designated Representative as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Notes so modified as to conform, in the opinion of the Designated
Representative and the Board of Directors, to any such supplemental indenture
may be prepared and executed by the Company and authenticated and delivered by
the Designated Representative in exchange for Outstanding Notes.
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal and Interest. With respect to each
Note, the Company will duly and punctually pay the principal of and interest on
such Note in accordance with its terms and this Indenture, and will duly comply
with all the other terms, agreements and conditions contained in, or made in
this Indenture for the benefit of, such Note.
SECTION 1002. Maintenance of Office. The Company will maintain an office
where the Notes may be presented or surrendered for payment, where the Notes
may be surrendered for transfer or exchange and where notices and demands to or
upon the Company in respect of the Notes and this Indenture may be served. The
Company will give prompt written notice to the Designated Representative and
the Holders of the location, and of the change in the location, of such
office.
SECTION 1003. Money for Payments to be Held in Trust. The Company shall
act as its own Paying Agent for the Notes and will, on or before each due date
of the principal of or interest on, any of the Notes, segregate and hold in
trust for the benefit of the persons entitled thereto a sum sufficient to pay
the principal (and premium, if any) or interest so becoming due until such sums
shall be paid to such persons or otherwise disposed of as herein provided, and
will promptly notify the Designated Representative of its action or failure so
to act.
Any money held by the Company in trust for the payment of the principal of
or interest on any Note and remaining unclaimed for two years after such
principal or interest has become due and payable (if then held by the Company)
shall be discharged from such trust; and the Holder of such Note shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, all liability of the Company as trustee thereof, shall
thereupon cease.
SECTION 1004. Statement as to Compliance. The Company will deliver to the
Designated Representative, within 120 days after the end of each fiscal year, a
written statement signed by the President and by the Secretary of the Company,
stating, as to each signer thereof, that
(1) a review of the activities of the Company during such year and of
performance under this Indenture and under the terms of the Notes has been
made under his supervision; and
(2) to the best of his knowledge, based on such review, the Company
has fulfilled all its obligations under this Indenture throughout such
year, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to him and the nature and
status thereof.
SECTION 1005. Corporate Existence. Subject to Article Eight the Company
will do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence.
SECTION 1006. Waiver of Certain Covenants. The Company may omit in respect
of any of the Notes, in any particular instance, to comply with any covenant or
condition set forth in this Indenture, if before or after the time for such
compliance the Holders of at least a majority in principal amount of the Notes
at the time Outstanding shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such covenant or
condition, but no such waiver shall extend to or affect such covenant or
condition except to the extent so expressly waived, and, until such waiver
shall become effective, the obligations of the Company and the duties of the
Designated Representative in respect of any such covenant or condition shall
remain in full force and effect.
ARTICLE ELEVEN
REDEMPTION OF NOTES
SECTION 1101. Applicability of Article. The Company reserves the right to
redeem and pay before Stated Maturity all or any of the Notes Outstanding
either by optional redemption or otherwise, by provision therefor in the form
of Note established and approved pursuant to Article Two and on such terms as
are specified in such form, this Indenture or in any indenture supplemental
hereto with respect to the Notes to be redeemed as provided in Section 301.
Redemption of any Notes shall be made in accordance with the terms of such
Notes and, to the extent that this Article Eleven does not conflict with such
terms, the succeeding Sections of this Article.
SECTION 1102. Election to Redeem: Notice to Designated Representative. The
election of the Company to redeem any Notes redeemable at the election of the
Company shall be evidenced by a Board Resolution. In case of any redemption at
the election of the Company of less than all of the Notes, the Company shall
notify the Designated Representative and the Holders of the Redemption Date
fixed by the Company and of the principal amount of the Notes to be redeemed.
In the case of any redemption of Notes (i) prior to the expiration of any
restriction on such redemption provided in the terms of such Notes or elsewhere
in this Indenture, or (ii) pursuant to an election of the Company which is
subject to a condition specified in the terms of such Notes, the Company shall
furnish the Designated Representative with an Officers' Certificate evidencing
compliance with such restriction or condition.
SECTION 1103. Selection by the Company of Notes to be Redeemed. If less
than all of Notes Outstanding are to be redeemed, the particular Notes to be
redeemed shall be selected not more than 60 days prior to the Redemption Date
by the Company, from the Outstanding Notes not previously called for
redemption, by such method as the Company shall deem fair and appropriate.
Unless otherwise provided in the terms of a particular Note, the portions of
the principal of the Notes so selected for partial redemption shall be equal to
the minimum authorized denomination of the Notes, or an integral multiple
thereof, and the principal amount which remains outstanding shall not be less
than the minimum authorized denomination for the Notes.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Notes shall relate, in the case of
any Note redeemed or to be redeemed on in part, to the portion of the principal
of such Note which has been or is to be redeemed.
SECTION 1104. Notice of Redemption. Notice of redemption shall be given by
first-class mail, postage prepaid, mailed not more than 60 days prior to the
Redemption Date, to each Holder of Notes to be redeemed, at his address
appearing in the Register.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) if less than all Notes Outstanding are to be redeemed, the
identification (and, in the case of partial redemption, the respective
principal amounts) of the Notes to be redeemed, from the Holder to whom
the notice is given; and
(4) that on the Redemption Date the Redemption Price will become due
and payable upon each such Note and that interest, if any, thereon shall
cease to accrue from and after said date.
All notices of redemption shall also either state the place where such
Notes are to be surrendered for payment of the Redemption Price, which shall be
the office or agency of the Company in the Place of Payment, or include payment
of the Redemption Price and instructions regarding the surrender of the Notes
to be redeemed.
Notice of redemption of Notes to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Designated Representative in the name and at the expense of the Company.
SECTION 1105. Deposit of Redemption Price. Prior to any Redemption Date,
the Company shall segregate and hold in trust as provided in Section 1003, an
amount of money sufficient to pay the Redemption Price of all the Notes which
are to be redeemed on that date, together with any interest accrued thereon.
SECTION 1106. Notes Payable on Redemption Date. Notice of Redemption
having been given as aforesaid, the Notes so to be redeemed shall, on the
Redemption Date, become due and payable at the Redemption Price therein
specified and from and after such date (unless the Company shall default in the
payment of the Redemption Price) such Notes shall cease to bear interest. Upon
surrender of such Notes for redemption in accordance with the notice, such
Notes shall be paid by the Company at the Redemption Price. Installments of
interest the Stated Maturity of which is on or prior to the Redemption Date
shall be payable to the Holders of such Notes registered as such on the
relevant Payment Date according to their terms and the provisions of Section
307.
If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal shall, until paid, bear interest from the
Redemption Date at the rate borne by the Note or as otherwise provided in such
Note.
SECTION 1107. Notes Redeemed in Part. Any Note which is to be redeemed
only in part shall be surrendered at the office of the Company with, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company duly executed by, the Holder thereof or his attorney duly authorized in
writing) and the Company shall execute if the Company so requires, and the
Designated Representative shall authenticate and deliver to the Holder of such
Note without service charge, a new Note or Notes with the same Stated Maturity,
of any authorized denomination as requested by such Holder in aggregate
principal amount equal to and in exchange for the unredeemed portion of the
principal of the Note so surrendered.
ARTICLE TWELVE
IMMUNITIES OF OFFICERS, DIRECTORS
AND STOCKHOLDERS
SECTION 1201. No Recourse. No recourse under or upon any obligation,
covenant or agreement contained in this Indenture or any supplemental
indenture, or in any Note hereby secured, or because of the creation of any
indebtedness hereby secured, shall be had against any incorporator, or against
any past, present or future stockholder, officer or director of the Company, or
of any predecessor or successor corporation, either directly or through the
Company or any such predecessor or successor corporation, by the enforcement of
any assessment or penalty, or for the recovery of amounts unpaid on stock
subscriptions, or by any legal or equitable proceeding by virtue of any
constitution, statute or law or otherwise; it being expressly agreed and
understood that this Indenture or any supplemental indentures and the
obligations hereby or thereby secured, are solely corporate obligations and
that no personal liability whatever, under any circumstances or conditions,
shall attach to or be incurred by the incorporators, stockholders, officers or
directors of the Company or of any predecessor or successor corporation, or any
of them, because of the incurring of the indebtedness hereby authorized, or
under or by reason of any of the obligations, covenants or agreements contained
in this Indenture or any supplemental indenture or in any of the Notes hereby
or thereby secured, or implied therefrom; and that any and all personal
liability of every name and nature, and any and all rights and claims against
every such incorporator, stockholder, officer or director, whether arising at
common law or in equity, or created by statute or constitution, are hereby
expressly released and waived by the Designated Representative and by each of
the Holders of the Notes, as a condition of, and as part of the consideration
for, the execution of this Indenture and the issue of the Notes secured
hereby.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
LA-Z-BOY CHAIR COMPANY
By____________________
Attest:
Its
______________________
Secretary
RODNEY D. ENGLAND,
as Designated Representative
_________________________
Attest:
______________________
Title
STATE OF )
: ss
COUNTY OF )
On this___________ day of _________________, 19 _ , before me
personally appeared _____________________, to me personally known,
who being by me duly sworn, did depose and say that he is the
____________________ of LA-Z-BOY Chair Company, the corporation
described in and which executed the foregoing instrument, that the
seal affixed to said instrument is the corporate seal of that
corporation, that it was so affixed by authority of the Board of
Directors of that corporation; and that he signed his name by like
authority, and acknowledged that instrument to be the free act and
deed of the corporation.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed
my seal in the County and State aforesaid, the day and year first
above written.
__________________________________
Name
Notary Public
_______________ County, __________
My commission expires: ___________
Exhibit (5)
[Letterhead of Miller, Canfield, Paddock and Stone, P.L.C.]
February 7, 1995
La-Z-Boy Chair Company
1284 North Telegraph Road
Monroe, Michigan 48161
Gentlemen:
This opinion relates to the registration statement on Form S-4 (the
"Registration Statement") being filed today by La-Z-Boy Chair Company, a
Michigan corporation ("La-Z-Boy"), with the Securities and Exchange
Commission for the purpose of registering under the Securities Act of 1933,
as amended (the "Act"), 2,000,000 shares of common stock, $1.00 par value
("Common Stock"), $10,000,000 principal amount of 8% Unsecured Promissory
Notes due 1999 ("Notes"), and 297,330 Performance Units ("Performance
Units"). The Common Stock, the Notes, and the Performance Units are to be
issued pursuant to an Amended and Restated Plan of Merger dated as of
January 13, 1995 (the "Plan of Merger") among England/Corsair, Inc., a
Tennessee corporation ("E/C"), La-Z-Boy, and LZB Acquisition, Inc., a
Michigan corporation and a wholly owned subsidiary of La-Z-Boy ("LZB
Acquisition"). A portion of the Common Stock (the "Initial Stock"), the
Notes and the Performance Units are to be issued upon the conversion of the
outstanding common stock of E/C (the "E/C Stock") at the time of
consummation of the merger (the "Merger") of E/C with and into LZB
Acquisition. Additional Common Stock (the "Performance Unit Stock") may be
issued in settlement of the Performance Units on the terms and at the times
provided in the Plan of Merger. As your counsel, we have examined such
certificates, instruments, and documents and reviewed such questions of law
as we have considered necessary or appropriate for the purposes of this
opinion, and, on the basis of such examination and review, we advise you
that, in our opinion:
1. The Common Stock, the Notes, and the Performance Units have been
validly authorized.
2. When the Registration Statement has become effective and the
Initial Stock, the Notes, and the Performance Units have been issued upon
conversion of the E/C Stock in connection with the consummation of the
Merger in accordance with the terms of the Plan of Merger:
(a) The Initial Stock will be legally issued, fully paid, and
nonassessable; and
(b) The Notes and the Performance Units will be binding
obligations of La-Z-Boy.
3. When the Registration Statement has become effective, if and when
Performance Unit Stock is issued in settlement of the Performance Units in
accordance with the terms of the Plan of Merger, the Performance Unit Stock
will be legally issued, fully paid, and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the caption "Legal
Matters" and in the Prospectus/Proxy Statement forming a part of the
Registration Statement. In giving this consent, we do not thereby admit
that we are within the category of persons whose consent is required under
Section 7 of the Act or the rules and regulations of the Securities and
Exchange Commission.
Very truly yours,
Miller, Canfield, Paddock and Stone, P.L.C.
Exhibit (8)
[Letterhead of Miller, Canfield, Paddock and Stone, P.L.C.]
[FORM OF MILLER, CANFIELD, PADDOCK AND STONE
TAX OPINION TO BE DELIVERED AT THE CLOSING
ONLY IF CERTAIN CONDITIONS ARE SATISFIED,
CERTAIN REPRESENTATIONS ARE RECEIVED
AND EACH OF THE REQUIREMENTS OF
REV. PROC. 84-42 IS SATISFIED]
______________________ , 1995
La-Z-Boy Chair Company England/Corsair, Inc.
1284 North Telegraph Road 402 Old Knoxville Highway
Monroe, Michigan 48161-3390 New Tazewell, Tennessee 37825
LZB Acquisition, Inc.
1284 North Telegraph Road
Monroe, Michigan 48161-3390
Gentlemen:
We have acted as counsel to La-Z-Boy Chair Company, a Michigan
corporation ("La-Z-Boy"), in connection with the contemplated merger of
England/Corsair, Inc., a Tennessee corporation ("E/C"), with and into LZB
Acquisition, Inc., a newly-formed Michigan corporation and a wholly-owned
subsidiary of La-Z-Boy ("LZB Acquisition"), pursuant to an Amended and
Restated Reorganization Agreement (the "Reorganization Agreement") and a
related Amended and Restated Plan of Merger (the "Plan of Merger" and,
collectively with the Reorganization Agreement, the "Merger Agreement"),
both dated as of January 13, 1995, among La-Z-Boy, LZB Acquisition and E/C.
Our opinion is provided solely with respect to certain of the federal
income tax consequences of the merger (the "Merger") of E/C with and into
LZB Acquisition. This opinion is being delivered pursuant to Sections 7.2.4
and 7.3.4 of the Reorganization Agreement. All capitalized terms used
herein, unless otherwise specified, have the meanings assigned to them in
the Merger Agreement.
FACTUAL ASSUMPTIONS, REPRESENTATIONS AND LIMITATIONS
In rendering our opinion, we have examined and relied upon, and our
opinion is conditioned upon the accuracy and completeness of, the facts,
information, covenants and representations contained in originals or
copies, certified or otherwise identified to our satisfaction, of the
Merger Agreement, the Registration Statement on Form S-4 under the
Securities Act of 1933, as amended, Registration No. 33-_____ [, as
amended] (the "Registration Statement"), filed by La-Z-Boy with respect to
the La-Z-Boy Common Stock to be issued in connection with the Merger and
such other documents as we have deemed necessary or appropriate as a basis
for the opinion set forth below. We also have assumed that the Merger will
be consummated in accordance with the Merger Agreement and that the Merger
will qualify as a merger under applicable state law.
In addition, we have relied upon, and this opinion is expressly
conditioned on the accuracy of, the representations contained in the
attached Representation Certificates from E/C, La-Z-Boy and LZB Acquisition
as being true in all material respects as of the date hereof. These
Representation Certificates are attached hereto as Exhibits ___ and ___,
respectively.
DISCUSSION
In order to qualify as a tax-free reorganization, a transaction must
satisfy certain statutory requirements set forth in the Internal Revenue
Code of 1986, as amended (the "Code"), and several judicially-created
requirements which have been developed through court rulings and Internal
Revenue Service ("IRS") interpretations. Based upon our review of the
representations and the documentation concerning the proposed Merger, we
believe that these statutory and judicial requirements will be satisfied.
It is well established that in order for the Merger to be treated as a
tax-free reorganization under Code Section 368, the "continuity of
shareholder interest" requirement must be satisfied.(1) The purpose of this
requirement is to ensure that the shareholders of the acquired corporation
(E/C) maintain a substantial part of their historic equity investment in
the acquired corporation following the reorganization through holding of
the acquiring corporation's stock. In general, to satisfy the IRS ruling
guidelines applicable to the continuity of shareholder interest
requirement, the E/C shareholders, as a group:
(i) must exchange at least 50% of their E/C Stock solely for
La-Z-Boy Common Stock in the reorganization(2);
(ii) must have the unrestricted right to maintain ownership of
the La-Z-Boy Common Stock for some period following the
reorganization(3); and
(iii) either must (a) in fact retain ownership of the La-Z-Boy
Common Stock for some minimum period following the Merger or (b)
demonstrate any early disposition was not pursuant to a plan or
arrangement in place at the time of the Merger.
In addition to the consideration received at the Effective Time,
shareholders of E/C will be issued a Performance Unit for each share of E/C
Stock surrendered. A Performance Unit entitles an E/C shareholder who
exchanges shares of E/C Stock in the Merger to the opportunity to receive
additional shares of La-Z-Boy Common Stock based on the financial
performance of the Surviving Corporation during the two-year period
following the Effective Time.
Generally the IRS will treat contingent stock consideration as not
adversely affecting the tax-free qualification of a merger if the
requirements set forth in Rev. Proc. 84-42, 1984-1 C.B. 521, are satisfied.
These requirements are as follows:
(1) The contingent stock arrangement will settle within five years
after the date of the merger;
(2) There is a valid business purpose for the contingent
consideration arrangement (e.g., the resolution of a dispute
pertaining to the value of the acquired company at the time of
the merger);
(3) The maximum number of shares which may be issued under the
contingent stock arrangement must be expressly stated in the
merger agreement;
(4) At least 50 percent of the maximum number of shares of stock that
may be issued is issued in the initial distribution;
(5) The event that triggers the right to receive additional stock
under the contingent consideration arrangement cannot be within
the control of the acquired corporation's shareholders and cannot
be based on the determination of a reorganization-related federal
income tax liability;
(6) The formula for calculating the amount of stock to be issued or
delivered is objective and readily ascertainable; and
(7) The right to receive additional stock cannot be assignable
(except by operation of law), and the contingent stock
arrangement can be satisfied only with additional stock.
It has been represented that the proposed provision for contingent
considerations in connection with the Merger will satisfy all of these
guidelines.
OPINION
Based upon the foregoing, we are of the opinion that under current
law:
The Merger will be treated as a reorganization within the meaning
of Sections 368(a)(1)(A) and 368(a)(2)(D) of the Code, and La-Z-Boy,
LZB Acquisition and E/C will each be a party to the reorganization
within the meaning of Section 368(b) of the Code.
Although the Merger is treated as a tax free reorganization, under current
regulations of the IRS, La-Z-Boy Common Stock issued in settlement of the
Performance Units will be subject to tax treatment as a deferred payment
which will include imputed taxable interest.
The parties do not intend to submit a ruling request regarding the
transaction to the National Office of the IRS.
In rendering our opinion, we have considered the applicable provisions
of the Code, Treasury Regulations promulgated thereunder, pertinent
judicial authorities, interpretive rulings of the IRS and such other
authorities as we have considered relevant. It should be noted that
statutes, regulations, judicial decisions and administrative
interpretations are subject to change at any time and, in some
circumstances, with retroactive effect. A material change in the
authorities upon which our opinion is based could affect our conclusions.
However, we assume no obligation to revise or supplement this opinion if
any subsequent change were to occur.
Except as set forth above, we express no opinion as to the tax
consequences, whether federal, state, local or foreign, of the Merger, or
of any transactions related thereto. We are furnishing this opinion to you
in connection with Sections 7.2.4 and 7.3.4 of the Reorganization
Agreement; this opinion is solely for your benefit and is not to be used,
circulated, quoted or otherwise referred to for any purpose without our
express written permission. This opinion may not be relied upon by anyone
other than the addressees.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references made to us under the heading
"The Merger and Related Transactions -- Certain Federal Income Tax
Consequences" in the Proxy Statement/Prospectus of La-Z-Boy which forms a
part of the Registration Statement. In giving such consent we do not hereby
admit that we are within the category of persons whose consent is required
under Section 7 of the Securities Act of 1933, as amended, or the rules or
regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
Miller, Canfield, Paddock and Stone, P.L.C.
- --------------
(1) Pinellas Ice & Cold Storage v. Commissioner, 287 U.S. 462 (1933)
and Treasury Regulation section 1.368-1(b).
(2) Rev. Proc. 77-37, section 3.02, 1972-2 CB 568.
(3) Ordinarily five years will, and two years should, suffice.
Exhibit (12)
LA-Z-BOY CHAIR COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
26 weeks 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Pre-tax income from
continuing operations $27,925 $58,155 $45,299 $39,905 $38,370 $45,535
Interest expense 1,414 2,822 3,260 5,305 6,374 7,239
Rentals 519 961 964 940 1,045 850
------- ------- ------- ------- ------- -------
Total fixed charges 1,933 3,783 4,224 6,245 7,419 8,089
Pre-tax earnings before
interest and fixed
charges $29,858 $61,938 $49,523 $46,150 $45,789 $53,624
Ratio of earnings to
fixed charges 15.4 16.4 11.7 7.4 6.2 6.6
</TABLE>
Earnings to fixed charges have been determined based on continuing operations
and have been computed by dividing earnings before income taxes and fixed
charges by fixed charges. Fixed charges are considered to be interest on
indebtedness and one-third of rentals, which the Company believes is
representative of the interest factor of such rentals.
Exhibit (21)
Subsidiary
Jurisdiction of Incorporation
La-Z-Boy Canada, Ltd.
Ontario, Canada
La-Z-Boy Ad Co.
Michigan
Kincaid Furniture Company, Incorporated
Delaware
La-Z-Boy Export Ltd.
Barbados
LZB Finance, Inc.
Michigan
LZB Acquisition, Inc.
Michigan
Exhibit (23)(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of La-Z-Boy Chair
Company of our report dated June 2, 1994, which appears on page 17 of the 1994
Annual Report to Shareholders of La-Z-Boy Chair Company, which is incorporated
by reference in its Annual Report on Form 10-K for the year ended April 30,
1994. We also consent to the incorporation by reference of our report on the
Financial Statement Schedules, which appears on page S-2 of such Annual Report
on Form 10-K. We also consent to the reference to us under the heading
"Experts" in such Prospectus.
PRICE WATERHOUSE LLP
Toledo, Ohio
February 3, 1995
Exhibit (23)(c)
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
England/Corsair, Inc.
Tazewell, Tennessee
We hereby consent to the use in the Prospectus constituting a part of this
Registration Statement of our report dated August 12, 1994, relating to the
financial statements of England/Corsair, Inc., which is contained in that
Prospectus.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
High Point, North Carolina
February 3, 1995 BDO Seidman