SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
Amendment No. 1 to
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
April 24, 1995
(Date of Report (Date of Earliest Event Reported))
LA-Z-BOY CHAIR COMPANY
(Exact Name of Registrant as Specified in Its Charter)
Michigan
(State or Other Jurisdiction of Incorporation)
1-9656
(Commission File Number)
38-0751137
(I.R.S. Employer Identification No.)
1284 N. Telegraph Road
Monroe, Michigan 48161
(Address of Principal Executive Offices, Including Zip Code)
(313) 242-1444
(Registrant's Telephone Number, Including Area Code)
[not applicable]
(Former Name or Former Address If Changed Since Last Report)
NOTE: THE REGISTRANT'S CURRENT REPORT ON FORM 8-K DATED APRIL 24, 1995 IS
SUPERSEDED IN ITS ENTIRETY BY THIS AMENDMENT AND SHOULD NOT BE RELIED UPON FOR
ANY PURPOSE.
Item 2. Acquisition or Disposition of Assets.
On April 24, 1995, La-Z-Boy Chair Company ("La-Z-Boy") and
England/Corsair, Inc., a privately held Tennessee corporation ("E/C"), closed a
transaction pursuant to which La-Z-Boy acquired E/C through a merger (the
"Merger") of E/C into a wholly owned subsidiary of La-Z-Boy formed for that
purpose (the "Surviving Corporation"). The Merger became effective on April
29, 1995 (the "Effective Date").
The aggregate consideration paid by La-Z-Boy to the shareholders of E/C
consisted of: (a) approximately $2.6 million in cash; (b) approximately $10.0
million in notes payable over four years with interest at 8% per annum; (c)
approximately 667,000 shares of La-Z-Boy common stock; and (d) Performance
Units. The Performance Units represent a contingent right of the former E/C
shareholders to receive up to a maximum of approximately 667,000 additional
shares of La-Z-Boy common stock based on E/C's pre-tax income during the two-
year period following the Effective Date. Under the terms of the Performance
Units, the former E/C shareholders will be entitled to receive an aggregate of
$1.75 in La-Z-Boy common stock (valued for such purpose at its market value on
the first and second anniversaries, respectively, of the Effective Date) for
each $1.00 by which such pre-tax income exceeds $6 million in the first year
and $7 million in the second year. The total number of shares issued in
settlement of Performance Units cannot exceed the number issued at the time of
consummation of the Merger. The Merger consideration was determined by
negotiation between officers of La-Z-Boy and officers of E/C. On April 28,
1995, the New York Stock Exchange closing price for La-Z-Boy's common stock was
$27. The cash portion ofthe Merger consideration was paid from La-Z-Boy's
internal funds.
The principal assets acquired by La-Z-Boy in the Merger consist of
manufacturing facilities located in New Tazewell, Tennessee, machinery and
equipment, transportation equipment, receivables, inventory, and other assets
relating to E/C's business. Prior to the Merger E/C was, and La-Z-Boy intends
the Surviving Corporation to continue to be, a manufacturer of upholstered
furniture which is targeted at moderate price points and sold under the
England/Corsair brand name.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of E/C. The financial statements of E/C listed
below were contained in Amendment No. 2 to La-Z-Boy's Registration Statement on
Form S-4 (Reg. No. 33-57623) filed with the Securities and Exchange Commission
on April 17, 1995 (the "Registration Statement") and are hereby incorporated
into this report by reference:
- Report of Independent Certified Public Accountants (BDO Seidman)
- E/C Balance Sheets as of June 30, 1994 and 1993
- E/C Statements of Income for Each of the Three Years in the Period
Ended June 30, 1994
- E/C Statements of Equity Subject to Redemption for Each of the Three
Years in the Period Ended June 30, 1994
- E/C Statements of Cash Flows for Each of the Three Years in the Period
Ended June 30, 1994
- E/C Summary of Accounting Policies
- E/C Notes to Financial Statements
- E/C Balance Sheets as of December 31, 1994 and June 30, 1994
(Unaudited)
- E/C Statements of Income for the Six Months Ended December 31, 1994 and
December 31, 1993 (Unaudited)
- E/C Statements of Cash Flows for the Six Months Ended December 31, 1994
and December 31, 1993 (Unaudited)
- E/C Notes to Financial Statements (Unaudited)
(b) Pro Forma Financial Information. The information set forth in the
Proxy Statement/Prospectus contained in the Registration Statement under the
caption "Pro Forma Condensed Combined Financial Information" is hereby
incorporated into this report by reference.
(c) Exhibits.
Exhibit
No. Description
------- --------------------------------------------------------
(1) [not applicable]
(2)(a) Amended and Restated Reorganization Agreement dated as
of January 13, 1995 among La-Z-Boy, E/C, and the
Surviving Corporation (filed as Annex A to the Proxy
Statement/Prospectus contained in Amendment No. 2 to
La-Z-Boy's Registration Statement on Form S-4 (Reg.
No. 33-57623) and incorporated herein by reference)
(2)(b) Amended and Restated Plan of Merger dated as of January
13, 1995 among La-Z-Boy, E/C, and the Surviving
Corporation (filed as Annex B to the Proxy State-
ment/Prospectus contained in Amendment No. 2 to
La-Z-Boy's Registration Statement on Form S-4 (Reg.
No. 33-57623) and incorporated herein by reference)
(4)(a) Indenture dated as of April 24, 1995 between La-Z-Boy and
Rodney England (including form of La-Z-Boy notes
issuable thereunder)
(4)(b) Terms of Performance Units contained in Amended and
Restated Plan of Merger (Exhibit (2)(b) to this report)
(16) [not applicable]
(17) [not applicable]
(20) [not applicable]
(23) Consent of Independent Certified Public Accountants (BDO
Seidman)
(24) [not applicable]
(27) [not applicable]
(99) Copies of pages of Amendment No. 2 to La-Z-Boy's
Registration Statement on Form S-4 (Reg. No. 33-57623)
containing information incorporated by reference in
Items 7(a) and 7(b) of this report
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LA-Z-BOY CHAIR COMPANY
Date: May 10, 1995 Gene M. Hardy
Secretary and Treasurer
EXHIBIT INDEX
Exhibit
No. Description
------- --------------------------------------------------------
(4)(a) Indenture dated as of April 24, 1995 between La-Z-Boy and
Rodney England (including form of La-Z-Boy notes
issuable thereunder)
(23) Consent of Independent Certified Public Accountants (BDO
Seidman)
(99) Copies of pages of Amendment No. 2 to La-Z-Boy's
Registration Statement on Form S-4 (Reg. No. 33-57623)
containing information incorporated by reference in
Items 7(a) and 7(b) of this report
Exhibit (4)(a)
Conformed Copy
=================================================================
LA-Z-BOY CHAIR COMPANY
and
MR. RODNEY ENGLAND
as Designated Representative
INDENTURE
Dated as of April 24, 1995
=================================================================
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
FORMS OF 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; Rescission
and Annulment. . . . . . . . . . . . . . . . . 19
SECTION 502. Collection of Indebtedness and Suits
for Enforcement by Holder. . . . . . . . . . . 19
SECTION 503. Designated Representative May File
Proofs of Claim. . . . . . . . . . . . . . . . 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
SECTION 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
INDENTURE
THIS INDENTURE dated as of the 24th day of April, 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 April 29, 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 in Article Six, are defined in that
Article.
"Act" when used with respect to 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 of 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 each 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, to the Company by the Designated
Representative or to 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
it 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 unstayed 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 of 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 of 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, waiver 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 (or 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 in 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 in 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 transferrable 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 hereon 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 by 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
Attest: By ________________________________
Its __________________________
_______________________"
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 April 29 ,
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 therefor 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 the 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 of interest, at such rate(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 of
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
the 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 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 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 Resolution, 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' Certifi-
cate 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 crated 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 /s/ C.T. Knabusch
Attest:
Its Chairman of the Board
and President
/s/ Gene M. Hardy
Secretary RODNEY ENGLAND,
as Designated Representative
/s/ Rodney England
Attest:
/s/ Dennis Valkanoff
Title
STATE OF Michigan)
: ss
COUNTY OF Monroe )
On this 19 day of April , 1995 , before me personally appeared
Charles T. Knabusch, to me personally known, who being by me duly sworn, did
depose and say that he is the Chairman and President 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.
/s/ Diane Doncouse
Name
Notary Public
Monroe County, Michigan
My commission expires: 2-11-99
STATE OF Tennessee )
: ss
COUNTY OF Clairborne)
The foregoing instrument was acknowledged before me this 20th day of
April, 1995 by Rodney D. England.
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.
/s/ Carolyn Ann Ferguson
Name
Notary Public
Clairborne County, Tennessee
My commission expires: 5-11-96
Exhibit (23)
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
La-Z-Boy Chair Company
Monroe, Michigan
We hereby consent to the incorporation by reference in La-Z-Boy Chair
Company's Form 8-K/A Amendment No. 1 to its Current Report on Form 8-K for the
event dated April 24, 1995 and in the Registration Statement No. 33-8996 on
Form S-8, Registration Statement No. 33-8997 on Form S-8, Registration
Statement No. 33-31502 on Form S-8, Registration Statement No. 33-50318 on
Form S-8 and Registration Statement No. 33-57443 on Form S-8 of our report
dated August 12, 1994, relating to the financial statements of
England/Corsair, Inc. appearing in Amendment No. 2 to La-Z-Boy Chair Company's
Registration Statement No. 33-57623 on Form S-4.
High Point, North Carolina
May 8, 1995 BDO Seidman
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. 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, however, the final allocation is not expected to
materially differ from the pro forma presentation.
The accompanying unaudited pro forma condensed combined balance
sheet adjusts the historical balance sheets of La-Z-Boy and E/C at
January 28, 1995 and December 31, 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 nine month periods ended
January 28, 1995 and December 31, 1994, respectively, as if the Merger
had become effective at the beginning of each of the respective
periods presented.
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.
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 -----------------------
1/28/95 12/31/94 Adjustments(1) Balance
Current Assets
Cash and equivalents $ 41,552 $ 285 $(6,515)(b) $ 35,322
Receivables 166,506 3,721 170,227
Inventories 75,634 9,031 84,665
Deferred income taxes 17,820 17,820
Other current assets 5,084 335 5,419
Total current assets 306,596 13,372 (6,515) 313,453
Property, plant, and equipment 97,552 21,679 119,231
Goodwill 20,085 20,769 (b) 40,854
Other long-term assets 17,191 568 17,759
Total assets $441,424 $35,619 $14,254 $491,297
Current Liabilities
Current portion of long-term
debt $ 1,875 $ 2,325 $ 4,200
Accounts payable 29,761 4,929 34,690
Other current liabilities 44,528 3,214 47,742
Total current liabilities 76,164 10,468 86,632
Long-term debt 56,245 12,345 $ 6,515 (b) 75,105
Deferred income taxes 6,424 140 860 (a) 7,424
Other long-term liabilities 8,170 0 8,170
Equity subject to redemption 12,666 (12,666) (b) 0
Shareholder's equity 294,421 0 19,545 (b) 313,966
Total liabilities, equity
subject to redemption and
shareholders' equity $441,424 $35,619 $14,254 $491,297
[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 negotiated value of $30 per share of La-Z-Boy Common Stock. The
$30 value per share is the value stated in the Plan of Merger and was used to
determine the ratio of exchange. At April 13, 1995, the closing price for
La-Z-Boy Common Stock was $27.625. The Plan of Merger requires that more than
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.
It should be noted that E/C has not attained these performance levels at any
time in its history. These possible additional payments have not been
reflected in the pro forma condensed combined balance sheet. Should such
additional payments be required, La-Z-Boy will record additional goodwill
which will be amortized over the remaining life of the original goodwill. 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 ($11,806) resulting in $20,769 of goodwill. The
estimated Fair Market Value of net assets acquired is equal to the E/C
equity subject to redemption less the estimated deferred income tax
liability from (a) above.
The pro forma balance sheet reflects dividends totaling approximately $856
declared by E/C but not paid as of December 31, 1994.
In February 1995, E/C received life insurance proceeds totaling $850 on key
man policies covering the former chairman of the board, Dwight England, who died
in January, 1995. On February 23, 1995 E/C distributed 50% of these proceeds or
$1.43 per share to its shareholders in accordance with the provisions of the
Reorganization Agreement. See "The Merger and Related Transactions --
Distributions Prior to Closing." Dividends will be distributed for the period
January 1, 1995, through the Effective Time of the merger based on 60% of the
taxable income earned during this period. Such dividends have not been
reflected in this pro forma table.
If the payment was based on the maximum La-Z-Boy Notes of $10,000 or 31%,
51% La-Z-Boy Stock and 18% cash, Total assets and Total liabilities, equity
subject to redemption and shareholders' equity would be $491,857. If the
payment was based on 92% La-Z-Boy Stock, 8% cash and no La-Z-Boy Notes, Total
assets and Total liabilities, equity subject to redemption and shareholders'
equity would be $495,237.
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
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) 151,756 14,484 $ 720 (b) 166,960
Operating profit 59,252 4,009 (720) 62,541
Interest expense 2,822 1,387 521 (a) 4,730
Other income 1,725 79 (228)(c) 1,576
Pre-tax income 58,155 2,701 (1,469) 59,387
872 (d)
Income taxes 23,438 122 (291)(e) 24,141
Income before accounting change $ 34,717 $ 2,579 $(2,050) $ 35,246
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 $ 1.86
[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) Reduction in interest income of $228 attributed to assumed payment of
$6,515 in cash at 3.5%, the average interest rate for investments
during the period.
(d) Reflects additional income taxes on historical earnings of E/C as if
E/C was not an S corporation during the period. For purposes of this
calculation a combined federal and state rate of 36.8% was used. The
federal tax portion was derived by subtracting the actual state taxes
incurred from the estimated combined taxes.
(e) Reduction of income taxes related to the additional expenses and a
decrease in interest income, excluding non-deductible amortization,
at an effective rate of 38.9%. As a tax free reorganization, the
goodwill and resulting amortization are not recognized or deductible
for tax purposes.
(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
in connection with a one-time bonus paid to its former chief executive officer.
If the payment was based on the maximum La-Z-Boy Notes of $10,000 or 31%,
51% La-Z-Boy Stock and 18% cash, the income per share before accounting
change would be $1.86. If the payment was based on 92% La-Z-Boy Stock,
8% cash and no La-Z-Boy Notes, the income per share before accounting
change would be $1.85.
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)
39 Weeks 9 Months Pro Forma
Ended Ended ------------------------
1/28/95 12/31/94(1) Adjustments(2) Balance
Sales $ 615,787 $ 76,817 $ 692,604
Cost of sales 458,237 63,138 521,375
Gross profit 157,550 13,679 171,229
Selling, general, and
administrative expenses 116,187 10,472 $ 519 (b) 127,178
Operating profit 41,363 3,207 (519) 44,051
Interest expense 2,455 1,361 $ 391(a) 4,207
Other income 1,705 90 (244)(c) 1,551
Pre-tax income 40,613 1,936 (1,154) 41,395
631(d)
Income taxes 17,044 82 (247)(e) 17,510
Net income $ 23,569 $ 1,854 $(1,538) $ 23,885
Pro forma income taxes 713
Pro forma net income $ 1,223
Average shares and equivalent
shares outstanding 18,083 652 (3) 18,735
Income from continuing operations
per share $ 1.30 $ 1.27
- ------------------
(1) E/C's fiscal year ends on June 30; therefore, its operating results
for the nine months ended December 31, 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 to selling, general and administrative expenses 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 $391 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) Reduction in interest income of $244 attributed to assumed payment of $6,515
in cash at 5%, the average interest rate for investments during the period.
(d) Reflects additional income taxes on historical earnings of E/C as if
E/C was not an S corporation during the period. For purposes of this
calculation a combined federal and state tax rate of 36.8% was used.
The federal tax portion was derived by subtracting the actual state
taxes incurred from the estimated combined taxes.
(e) Reduction of income taxes related to the additional expenses and a
decrease in interest income, excluding non-deductible amortization, at
an effective rate of 38.9%. As a tax free reorganization, the goodwill
and resulting amortization are not recognized or deductible for tax
purposes.
(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.
If the payment was based on the maximum La-Z-Boy Notes of $10,000 or 31%,
51% La-Z-Boy Stock and 18% cash, the income per share before accounting
change would be $1.28. If the payment was based on 92% La-Z-Boy Stock,
8% cash and no La-Z-Boy Notes, the income per share before accounting
change would be $1.27.
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, equity
subject to redemption 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
F-3
ENGLAND/CORSAIR, INC.
BALANCE SHEETS
(IN THOUSANDS)
June 30, 1994 1993
- ----------------------------------------------------------------------------------------------
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
F-4
ENGLAND/CORSAIR, INC.
BALANCE SHEETS (CONCLUDED)
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
June 30, 1994 1993
- ----------------------------------------------------------------------------------------------
LIABILITIES AND EQUITY SUBJECT TO REDEMPTION
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
EQUITY SUBJECT TO REDEMPTION (Notes 6 and 9)
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, 0 in 1994 and
500,000 in 1993; issued 334,930 in 1993 -- 335
Retained earnings 12,882 15,025
Treasury stock, at cost, 37,600 shares of Class A
Common stock (1,443) (1,443)
TOTAL EQUITY SUBJECT TO REDEMPTION 11,774 13,917
TOTAL LIABILITIES AND EQUITY SUBJECT TO REDEMPTION 34,367 28,416
Commitments (Note 6)
$34,367 $28,416
See accompanying summary of accounting policies and notes to financial
statements.
F-5
ENGLAND/CORSAIR, INC.
STATEMENTS OF INCOME
(IN THOUSANDS)
Year ended June 30, 1994 1993 1992
- ----------------------------------------------------------------------------------------------
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 (Note 10) 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
NET INCOME PER SHARE -
HISTORICAL $ 12.37
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
See accompanying summary of accounting policies and notes to financial
statements.
F-6
ENGLAND/CORSAIR, INC.
STATEMENTS OF EQUITY SUBJECT TO REDEMPTION
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
Common Stock Treasury Stock
------------------ ------------------ Retained
Shares Amount Shares Amount earnings
- ----------------------------------------------------------------------------------------------
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
See accompanying summary of accounting policies and notes to financial
statements.
F-7
ENGLAND/CORSAIR, INC.
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
Year ended June 30, 1994 1993 1992
- ----------------------------------------------------------------------------------------------
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
See accompanying summary of accounting policies and notes to financial
statements.
F-8
ENGLAND/CORSAIR, INC.
STATEMENTS OF CASH FLOWS (CONCLUDED)
(IN THOUSANDS)
Year ended June 30, 1994 1993 1992
- ----------------------------------------------------------------------------------------------
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
See accompanying summary of accounting policies and notes to financial
statements.
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.
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.
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:
1994 1993
- -----------------------------------------------------------------------------
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
3. PROPERTY AND
EQUIPMENT Major classes of property and equipment
consist of the following:
1994 1993
- ------------------------------------------------------------------------------
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
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.
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:
1994 1993
- -----------------------------------------------------------------
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
F-13
ENGLAND/CORSAIR, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS)
5. LONG-TERM DEBT
(CONCLUDED)
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
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.
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:
Asset balances at June 30, 1994 1993
- --------------------------------------------------------------
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
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:
Capital Operating
leases leases
- ----------------------------------------------------------------
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
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%. As a result of
the potential redemptions, what would
otherwise be classified as stockholders'
equity is presented as equity subject to
redemption in the accompanying balance sheets.
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.
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:
Year ended June 30, 1994 1993 1992
- ----------------------------------------------------------------
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
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.
1994 1993 1992
% % %
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
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:
1994 1993
- ----------------------------------------------------------------
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
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. As a
result, there are no shares of the old common
stock outstanding.
10. Other In the year ended June 30, 1994, the Company
recorded a charge of $600 in connection with a
a one time bonus paid to its former chairman of the
board. Such charge is included in selling
general and administrative expenses in the
accompanying statements of income.
F-18
ENGLAND/CORSAIR, INC.
BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARES)
(UNAUDITED)
December 31, June 30,
1994 1994
ASSETS
Current Assets:
Cash and cash equivalents $ 285 $ 218
Accounts Receivable less allowance for losses
of $68 1,535 833
Accounts Receivable from factors 2,186 2,129
Inventories (Note 3) 9,031 9,551
Prepaid Expense 335 326
Total Current Assets 13,372 13,057
Net Property and Equipment 21,679 20,795
Other Assets 568 515
$ 35,619 $ 34,367
LIABILITIES AND EQUITY SUBJECT TO REDEMPTION
Current Liabilities:
Accounts Payable $ 4,929 $ 6,397
Current Portion of Long Term Debt 2,325 2,686
Accrued Liabilities (Note 7) 3,214 1,962
Total current liabilities 10,468 11,045
Long Term Debt
Long Term Notes Payable 6,784 6,457
Long Term Notes Payable to Shareholders 1,161 1,288
Obligations under long term capital leases 6,725 6,349
Less Current Portion (2,325) (2,686)
Long Term Debt 12,345 11,408
Deferred Taxes 140 140
Total Long Term Liabilities 12,485 11,548
Equity Subject to Redemption (Notes 4 and 5)
Common stock (Notes 6 and 9):
Class A, without par value - shares authorized,
500,000; issued 262,252 262 .262
Class B, without par value - shares authorized,
500,000; issued 72,678 73 .73
Retained Earnings 13,774 12,882
Less Treasury Stock at cost, 37,600 shares
of Class A common stock (1,443) (1,443)
Total Equity Subject to Redemption 12,666 11,774
Total Liabilities and Equity Subject to Redemption $ 35,619 $ 34,367
Commitments (Note 4)
See accompanying notes to unaudited financial statements.
F-19
ENGLAND/CORSAIR, INC.
INCOME STATEMENTS (UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE DATA)
Six Months Ended
December 31, December 31,
1994 1993
-------- ---------
Net Sales $ 50,127 $ 50,524
Cost of Sales 41,183 41,609
Gross Profit 8,944 8,915
Selling, general and administrative
expenses 6,094 6,686
Operating Profit 2,850 2,229
Interest Expense (948) (590)
Interest Income 32 34
Miscellaneous Income 38 11
Income before taxes 1,972 1,684
Income Taxes 81 67
Net Income $ 1,891 $ 1,617
Pro forma income taxes $ 727 $ 620
Pro forma net income $ 1,245 $ 1,064
Average Shares 297 298
Pro forma net income
Per Share $ 4.19 $ 3.57
Dividends Per Share $ 3.36 $ 5.92
See accompanying notes to unaudited financial statements.
F-20
ENGLAND/CORSAIR, INC.
STATEMENT OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
Six Months Ended
December 31, December 31,
1994 1993
Cash flows from operating activities:
Cash received from customers $ 49,368 $50,897
Cash paid to suppliers and employees (46,265) (47,410)
Interest paid (944) (596)
Interest received 32 34
Income taxes paid (6) (2)
Other receipts 38 11
Net cash provided by operating activities 2,223 2,934
Cash flows from investing activities:
Distributions to stockholders (143) (1,763)
Capital expenditures (1,014) (641)
Increase in cash surrender value of insurance (5) (54)
Net cash used in investing activities (1,162) (2,458)
Cash flows from financing activities:
Proceeds from issuance of long-term debt 2,960 806
Principal payments on long term debt (2,760) (677)
Principal payments under capital lease obligations (1,194) (691)
Net cash used in financing activities (994) (562)
Net increase in cash 67 (86)
Cash, beginning of year 218 109
Cash, end of year $ 285 $ 23
Reconciliation of net income to net cash provided by
operating activities
Net income $1,891 $ 1,617
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,699 1,245
Change in assets and liabilities:
Decrease (increase) in accounts receivable (759) 373
Decrease (increase) in inventories 520 (260)
Decrease (increase) in prepaid expenses and
other assets (57) (249)
Increase (decrease) in payables and accrued
expenses (1,071) 208
Total adjustments 332 1,317
Net cash provided by operating activities $2,223 $2,934
See accompanying notes to unaudited financial statements.
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
December 31, 1994 and the results of operations and cash flows
for the six months ended December 31, 1994 and December 31, 1993.
Note 2 - The results of operations for the six months ended December 31, 1994
are not necessarily indicative of the results to be expected for the full year.
Note 3 - Inventories are summarized as follows:
(in Thousands)
December 31, 1994 June 30, 1994
Finished products, including tables $ 3,026 $2,784
Work-in-process 419 516
Raw materials 5,586 6,251
Total Inventories $9,031 $9,551
Note 4 - The Company has agreements with its stockholders whereby the Company
agrees to purchase all shares of a stockholder upon death at an amount estab-
lished 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%. As a result of the potential redemptions, what
would otherwise be classified as stockholders' equity is presented as equity
subject to redemption in the accompanying balance sheets.
Note 5 - 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 La-Z-Boy'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 La-Z-Boy'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.
Note 6 - During the six months ended December 31, 1994 and 1993, capital lease
obligations of approximately $1,570,000 and $3,009,000 respectively, were
incurred when E/C entered into leases for delivery vehicles.
Note 7 - The pro-forma balance sheet reflects dividends totaling approximately
$856 declared but not paid as of December 31, 1994. In February E/C received
life insurance proceeds totaling $850 on key man policies covering the former
chairman of the board, Dwight England, who died in January, 1995. On
February 23, 1995 E/C distributed 50% of these proceeds or $1.43 per share to
its shareholders in accordance with the provisions of the Reorganization
Agreement. See "The Merger and Related Transactions - Distributions Prior to
Closing." Dividends will be distributed for the period January through the
effective date of the merger based on 60% of the taxable income earned during
this period.
