EXHIBIT 2.1
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER (hereinafter sometimes referred to as the
"Agreement"), made and entered into as of the 24th day of March, 1997, by and
between CHAMPION INDUSTRIES, INC. ("Champion") and BLUE RIDGE PRINTING CO., INC.
("Company"), and its directors, or a majority of them, and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.,
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, G. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, all its
shareholders (collectively, the "Shareholders");
W I T N E S S E T H:
WHEREAS, Champion is a corporation duly organized and validly existing under
the laws of the State of West Virginia, with authorized capital stock consisting
of 10,000,000 common shares, $1.00 par value per share ("Champion Common
Stock"), of which 8,104,714 shares are currently outstanding; and
WHEREAS, Company is a corporation duly organized and validly existing under
the laws of the State of North Carolina with authorized capital stock consisting
of 10,000 common shares, of which 550 shares are currently outstanding, having a
charter-stated par value of $10.00 per share ("Company Stock"); and
WHEREAS, Champion and Company have agreed to the merger of Company with a
wholly-owned subsidiary of Champion, to be organized under the laws of the State
of North Carolina, so that upon consummation of the merger Company will be a
wholly-owned subsidiary of Champion; and
WHEREAS, the Board of Directors of Champion has approved this Agreement and
has authorized the execution hereof in counterparts; and
WHEREAS, the Board of Directors of Company has approved this Agreement,
authorized the execution hereof in counterparts, and directed that it be
submitted to its Shareholders for approval, ratification and confirmation; and
WHEREAS, Champion has agreed to cause a new North Carolina corporation to be
organized which shall be named BRP Acquisition Company, Inc. ("Interim
Company"), with its principal office and place of business to be located in the
City of Asheville, State of North Carolina, and all shares of its capital stock
to be owned by Champion; and
WHEREAS, Champion has agreed to cause Interim Company to approve this
Agreement and authorize the execution of an Adoption Agreement substantially in
the form attached hereto as "Exhibit A" which is incorporated herein by
reference.
NOW, THEREFORE, in consideration of the foregoing premises, which are not
mere recitals but an integral part hereof, and in consideration of the mutual
agreements hereinafter set forth, the parties hereto agree as follows:
SECTION 1. MERGER
1.1 GENERAL EFFECT OF MERGER; ASSETS. At the Effective Time
(hereinafter defined in Section 7.2) and subject to the terms and conditions
hereof and of the attendant Plan of Merger ("Plan of Merger") attached hereto
as "Exhibit B", Interim Company shall merge with and into Company (the
"Merger") under the charter of Company pursuant to the provisions of and with
the effect provided in NCGS Section 55-11-01. Company shall be (and is
hereinafter called when reference is made to it at and after the consummation
of the Merger) the Surviving Company and shall retain the name and title of
"Blue Ridge Printing Co., Inc.". At the Effective Time of the Merger, the
corporate existence of Interim Company shall, as provided in NCGS Section
55-11-01, be merged with and into Company and continued in the Surviving
Company and the separate existence of Interim Company shall cease. The
Surviving Company shall thereupon and thereafter possess all of the rights,
privileges, immunities and franchises, of a public as well as of a private
nature, of the Interim Company and Company; and all property, real, personal
and mixed, and all debts and liabilities due on whatever account, including
subscriptions to shares, if any, and all other choses in action, and all and
every other interest of or belonging to or due to the Interim Company and
Company, and each of them, shall be deemed to be transferred to and vested in
the Surviving Company without further act or deed; and the title to any real
estate, or any interest therein, vested in the Interim Company and Company
and each of them, before the Merger, shall not revert or in any way be
impaired by reason of the Merger.
1.2 LIABILITIES OF SURVIVING COMPANY. From and after the Effective Time
of the Merger, the Surviving Company shall be liable for all liabilities of
Company and Interim Company and all deposits, debts, liabilities, obligations
and contracts of Company and Interim Company, respectively, matured or
unmatured, whether accrued, absolute, contingent or otherwise, and whether or
not reflected or reserved against on balance sheets, books of account or
records of Company or Interim Company, as the case may be, shall be those of
and are hereby expressly assumed by the Surviving Company and shall not be
released or impaired by the Merger, and all rights of creditors and other
obligees and all liens on property of either Company or Interim Company shall
be preserved unimpaired, and the Surviving Company shall have all rights and
shall be liable for all obligations of Company under all employee benefit
plans and arrangements of Company and such plans and related trusts shall
continue in effect without any interruption or termination unless and until
changed as therein or by law provided or permitted or as mutually agreed to
by the parties hereto.
1.3 NAME, DIRECTORS AND OFFICERS OF SURVIVING COMPANY. From
and after the Effective Time, the name of the Surviving Company shall be
"Blue Ridge Printing Co., Inc.". The Articles of Incorporation and the
By-laws of Company in effect immediately prior to the Effective Time shall be
the Articles of Incorporation and By-laws of the Surviving Company until
changed as therein or by law provided. The directors and officers of the
Surviving Company at the Effective Time shall be those persons who are
directors and officers respectively of Interim Company immediately before the
Effective Time. The committees of the Board of Directors of the Surviving
Company at the Effective Time shall be the same as and shall be composed of
the same persons who are serving on committees appointed by the Board of
Directors of Interim Company as they exist immediately before the Effective
Time.
1.4 OFFICES, POLICIES OF SURVIVING COMPANY. From and after the
Effective Time, the business and location of the Surviving Company shall be
the same as that of Company. Unless contrary to law, all corporate acts,
plans, policies, applications, agreements, loan commitments, orders,
registrations, licenses, approvals and authorizations of Company and Interim
Company, their respective shareholders, boards of directors, committees
elected or appointed by their boards of directors, officers and agents, which
were valid and effective immediately before the Effective Time shall be taken
for all purposes at and after the Effective Time as the acts, plans,
policies, applications, agreements, orders, registrations, licenses,
approvals, and authorizations of Surviving Company and shall be effective and
binding thereon as the same were with respect to Company and Interim Company
immediately before the Effective Time.
1.5 CAPITAL STRUCTURE OF SURVIVING COMPANY. The capital structure of the
Surviving Company shall be the same as the capital structure of Company.
SECTION 2. CONVERSION, EXCHANGE AND CANCELLATION OF SHARES
2.1 GENERAL. The manner of converting and exchanging Company Stock, all of
which is represented by outstanding share certificates into Champion Common
Stock shall be as hereinafter provided in this Section 2.
2.2 (a) Conversion Rate. At the Effective Time, each of the shares of Company
Stock that shall be issued and outstanding immediately prior to the Effective
Time shall thereupon and without further action be converted into shares of
Champion Common Stock at the Exchange Rate which shall be calculated as set
forth in this Section 2; provided, however, that the number of shares of
Company Stock that shall be issued and outstanding immediately prior to the
Effective Time shall not be more than 550 shares. All shares of Champion
Common Stock into which the aforesaid Company Stock is so converted shall be
fully paid and non-assessable. Company's shareholders of record at the
Effective Time, for the shares of Company Stock then held by them,
respectively, shall be allocated and entitled to receive shares of
Champion Common Stock, which total number of shares of Champion Common
Stock shall have an aggregate Market Value as of the Valuation Date of Five
Million Two Hundred Fifty Thousand Dollars ($5,250,000.00). The Market Value
shall be determined by averaging the daily closing trade prices of Champion
Common Stock as reported on the Nasdaq National Market System ("NMS") during the
five (5) consecutive days on which shares of Champion Common Stock are traded on
the Nasdaq National Market System ("NMS") immediately prior to the Valuation
Date as reported in THE WALL STREET JOURNAL. The Valuation Date shall be the
Nasdaq NMS trading day immediately prior to the date of effectiveness of this
Agreement as to Champion and Company as provided in Section 12.13 hereof.
For purposes of establishing the Exchange Rate (the number of shares of
Champion Common Stock into which each share of Company Stock shall be converted
at the Effective Time), the Market Value of one (1) share of Champion Common
Stock shall be divided into the aggregate Market Value to establish to the
nearest whole share the aggregate number of shares of Champion Common Stock into
which all of the then issued and outstanding shares of Company Stock shall be
converted at the Effective Time. Such number of shares of Champion Common Stock
shall then be divided by the number of shares of Company Stock that shall be
issued and outstanding immediately prior to the Effective Time with the quotient
therefrom being the number of shares of Champion Common Stock into which each
share of Company Stock shall be converted at the effective time.
2.3 MANNER OF EXCHANGE. After the Effective Time of the Merger, except
for persons exercising their rights as dissenting shareholders of Company,
each holder of a certificate theretofore evidencing outstanding shares of
Company Stock, upon surrender of such certificate, accompanied by a Letter of
Transmittal and Investment Letter in the form attached hereto as Exhibit C,
to Champion shall be entitled to receive in exchange therefor a certificate
or certificates representing the number of full shares of Champion Common
Stock for which shares of Company Stock theretofore represented by the
certificate or certificates so surrendered shall have been exchanged as
provided in this Section 2. Until so surrendered, each outstanding
certificate which, prior to the Effective Time of the Merger, represented
Company Stock will be deemed to evidence the right to receive the number of
full shares of Champion Common Stock into which the shares of Company Stock
represented thereby may be converted, and will be deemed for all corporate
purposes of Champion to evidence ownership of the number of full shares of
Champion Common Stock into which the shares of Company Stock represented
thereby were converted. Until such outstanding certificates formerly
representing Company Stock are surrendered, no dividend payable to holders of
record of Champion Common Stock for any period as of any date subsequent to
the Effective Time of the Merger shall be paid to the holder of such
outstanding certificates in respect
thereof. After the Effective Time of the Merger there shall be no further
registry of transfers on the records of Company of shares of Company Stock.
Upon surrender of certificates of Company Stock for exchange for Champion
Common Stock, there shall be paid to the record holder of the certificates of
Champion Common Stock issued in exchange therefor (i) the amount of dividends
theretofore paid with respect to such full shares of Champion Common Stock as
of any date subsequent to the Effective Time of the Merger which have not yet
been paid to a public official pursuant to abandoned property laws and (ii)
at the appropriate payment date the amount of dividends with a record date
after the Effective Time of the Merger, but prior to surrender and a payment
date subsequent to surrender. No interest shall be payable with respect to
such dividends upon surrender of outstanding certificates.
2.4 (a) SHARES OF CHAMPION COMMON STOCK NOT REGISTERED. Company
acknowledges and agrees, and Company Shareholders will acknowledge and agree
in their Investment Letters that the Champion Common Stock will not be
registered under the Securities Act of 1933 or any state securities laws, and
must be held indefinitely unless such Champion Common Stock is subsequently
registered under the Securities Act of 1933 or under state securities acts,
or unless an exemption from such registration is available. Company further
acknowledges and agrees, and Company Shareholders will further acknowledge
and agree in their Investment Letters that Champion is under no obligation,
and shall assume no obligation, to cause such shares of Champion Common Stock
to be so registered, and that each certificate representing shares of
Champion Common Stock issued to Company shareholders shall be stamped or
otherwise imprinted with, or contain a legend in substantially the following
form:
"The securities represented by this instrument have not been
registered under the Federal Securities Act of 1933, or any state
securities statute and may not be sold, assigned, or transferred
unless (i) registered for resale or (ii) the issuer hereof has
received the written opinion of counsel for said issuer that after
investigation of relevant facts, such counsel is of the opinion
that such sale, assignment or transfer does not involve a
transaction requiring a registration of such securities under the
Federal Securities Act of 1933 or any applicable state securities
laws. The restrictions of this paragraph shall become null and void
and this paragraph shall have no effect on and after ________, 1999."
Company Shareholders shall further acknowledge in their Investment Letters
that Champion's issuance of such Champion Common Stock is made in reliance upon
an exemption from registration under the Federal Securities Act of 1933, which
registration is in part premised upon and relied upon as a result of the
representations made by each Shareholder in the Investment Letter attached
hereto as Exhibit C, and each Shareholder shall review and truthfully and
accurately complete and execute same and deliver same to Champion.
(b) PIGGYBACK REGISTRATION RIGHTS. If at any time or from time to time
prior to ____________, 1998 Champion shall determine to register any of its
securities, either for its own account or the account of a security holder or
holders, other than (i) a registration relating solely to employee benefit
plans, or (ii) a registration relating to a transaction of the type described
in Securities and Exchange Commission Rule 145, Champion will:
(i) promptly give to each holder of Champion Common Stock issued in
exchange for Company Stock (hereinafter referred to in this Section 2.4(b))
as "Holder") written notice thereof; and
(ii) include in such registration (and any related qualification
under blue sky laws or other compliance), and in any underwriting involved
therein, such of the Champion Common Stock issued in the Merger as specified
in a written request or requests, made within twenty (20) days after receipt
of such written notice from Champion, by any Holder.
If the registration of which Champion gives notice is for a registered
public offering involving an underwriting, Champion shall so advise the
Holders as a part of the written notice given pursuant to this Section
2.4(b). In such event the right of any Holder to registration pursuant to
this Section shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of his Champion Common Stock in the
underwriting to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with
Champion and the other holders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
managing underwriter selected for such underwriting by Champion. Champion
shall so advise all Holders and other holders distributing their securities
through such underwriting and the number of shares of Champion Common Stock
that may be included in the registration and underwriting shall be allocated
among all Holders and such other holders in proportion, as nearly as
practicable, to the respective amounts of Champion Common Stock held by such
Holders and such other holders at the time of filing the registration
statement. If any Holder or holder disapproves of the terms of any such
underwriting, he may elect to withdraw therefrom by written notice to
Champion and the managing underwriter. Any securities excluded or withdrawn
from such underwriting shall be withdrawn from such registration, and shall
not be transferred in a public distribution prior to 180 days after the
effective date of the registration statement relating thereto, or such other
shorter period of time as the underwriters may require.
Champion shall have the right to terminate or withdraw any registration
initiated by it under this Section 2.4(b) prior to the effectiveness of such
registration whether or not any Holder has elected to include securities in
such registration.
All reasonable expenses of registration and sale (other than the
underwriter's commissions) incurred in connection with any such registration
shall be borne by Champion.
The Holder or Holders of Champion Common Stock included in any
registration shall furnish to Champion such information regarding such Holder
or Holders, the Champion Common Stock held by them and the distribution
proposed by such Holder or Holders as Champion may request in writing and as
shall be required in connection with any registration referred to in this
Section 2.4(b).
Each Holder will, if Champion Common Stock held by such Holder is
included in the securities as to which such registration is being effected,
indemnify Champion, each of Champion's directors and officers, each
underwriter, if any, of Champion's securities covered by such registration
statement, each person who controls Champion or such underwriter within the
meaning of Section 15 of the Securities Act, and each other such Holder, each
of its officers and directors and each person controlling such Holder within
the meaning of Section 15 of the Securities Act, against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or
based on any untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse Champion, such
Holders, such directors, officers, persons, underwriter or control persons
for any legal or any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action,
in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information
furnished to Champion by an instrument duly executed by such Holder and
stated to be specifically for use therein. Notwithstanding the foregoing, the
liability of each Holder hereunder shall be limited in an amount equal to the
initial public offering price of the shares sold by such Holder, unless such
liability arises out of or is based on willful conduct by such Holder.
2.5 FRACTIONAL SHARES. Champion will not issue fractional shares or
fractional share certificates, but in lieu of the issuance of fractional shares
will pay cash, without interest, to any Company shareholder otherwise entitled
to receive such
fractional shares. The amount of such cash payment will be determined by
multiplying the fractional share interest to which a Company shareholder
would otherwise be entitled by the Market Value of Champion Common Stock
determined pursuant to Section 2.2. Payment for fractional shares will be
made with respect to each shareholder at the time such shareholder's
certificates of Company Stock are exchanged.
2.6 LOST CERTIFICATES. If a certificate evidencing outstanding shares
of Company Stock is lost, stolen or destroyed, the registered owner thereof
shall be entitled to receive the Champion certificate and cash to which he
would otherwise be entitled on exchange of such certificate, by notifying
Champion in writing of such lost, stolen or destroyed certificate and giving
Champion evidence of loss and a bond sufficient to indemnify Champion against
any claim that may be made against it on account of the alleged lost, stolen
and destroyed certificate and the issuance of the certificate and cash.
SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF CHAMPION
Except as disclosed in writing, Champion hereby represents and warrants to
and covenants with Company and Shareholders that:
3.1 ORGANIZATION, STANDING AND AUTHORITY. Champion is a corporation duly
organized, validly existing and in good standing under the laws of the State
of West Virginia. Champion has the corporate power to execute and deliver
this Agreement, and has taken all action required by law, its Articles of
Incorporation, its By-laws or otherwise, to authorize such execution and
delivery, the Merger and the consummation of the transactions contemplated
hereby, and this Agreement is a valid and binding agreement of Champion in
accordance with its terms. No action of Champion's shareholders is or will be
required to approve this Agreement or the Merger. At the Effective Time,
Champion will have corporate power to carry on its business as then to be
conducted and will be qualified to do business in every jurisdiction in which
the character and location of the assets to be owned by it or the nature of
the business to be transacted by it require qualification.
3.2 CAPITAL STRUCTURE. The authorized capital stock of Champion consists
of 10,000,000 shares of Champion Common Stock, of which 8,104,714 shares are
currently issued and outstanding. All of such shares are fully paid and
non-assessable. Champion does not have any other shares of Champion Common Stock
or any other capital stock issued or outstanding. Champion does not have any
outstanding subscriptions, options or other agreements or commitments obligating
it to issue shares of its capital stock except for its 1993 Stock Option Plan,
or as may be otherwise provided herein. The holders of Champion Common Stock
have no preemptive rights with respect to the issuance of additional authorized
shares of Champion Common Stock. Nothing in this
Agreement shall prohibit or impair the ability and right of Champion to
increase its authorized capital stock (a proposal to increase authorized
shares to 20,000,000 has been submitted to Champion shareholders for approval
at their annual meeting scheduled for March 17, 1997), or issue or agree to
commit to issue additional shares of its capital stock, and any increase in
authorized capital stock, or issuance, or agreement or commitment to issue,
additional shares of Champion Common Stock shall not alter or affect the
Conversion Rate set forth in Section 2.2 hereof. The shares of Champion
Common Stock into which shares of Company Stock are to be converted upon the
Effective Time will upon the Effective Time be duly authorized, and such
shares, when transferred to holders of Company Stock pursuant to the terms of
the Merger, will be validly issued, fully paid and nonassessable shares of
Champion Common Stock.
3.3 AUTHORITY. The execution and delivery of this Agreement do not, and
the consummation of the Merger and transactions contemplated hereby will not,
violate any provision of the Articles of Incorporation or By-laws of
Champion, or any provision of, or result in the acceleration of any
obligation under, any material mortgage, deed of trust, note, lien, lease,
franchise, license, permit, agreement, instrument, order, arbitration award,
judgment, injunction or decree, or result in the termination of any material
license, franchise, lease, or permit to which Champion is a party or by which
it is bound, and will not violate or conflict with any other material
restriction of any kind or character to which Champion is subject, except
that the prior consent to the Merger must be obtained from PNC Bank, N.A.,
pursuant to the terms of a Credit Agreement by and among Champion, certain
banks party thereto and PNC Bank, N.A., as Agent, dated March 31, 1997, which
consent Champion is reasonably confident of obtaining. Based upon the Company
Financial Statements hereinafter defined, the consummation of the Merger and
the transactions contemplated by this Agreement do not require any filings
under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976 or any
successor law, and regulations and rules issued pursuant thereto.
3.4 CHAMPION FINANCIAL STATEMENTS. Champion has delivered to Company
prior to the execution of this Agreement copies of the following financial
statements of Champion (which, together with all future financial statements
to be furnished are collectively referred to herein as the "Champion
Financial Statements"): the audited Consolidated Balance Sheets of Champion
as of October 31, 1996 and October 31, 1995, and the related Consolidated
Income Statements, Consolidated Statements of Changes in Shareholders' Equity
and Consolidated Statements of Cash Flows for the years then ended, and the
notes thereto. The Champion Financial Statements (as of the dates thereof and
for the periods covered thereby):
(a) are in accordance with the books and records of Champion, which are
complete and correct in all material respects
that are required by generally accepted accounting principles (except as
otherwise required or approved by applicable regulatory authorities or by
applicable law) and which have been maintained in accordance with good
business practices; and
(b) present fairly the financial position and results of operations and
changes in financial position of Champion as of the dates and for the periods
indicated, in accordance with generally accepted accounting principles
(except as otherwise required or approved by applicable regulatory
authorities or by applicable law), applied on a basis consistent with prior
years, and do not fail to disclose any material extraordinary or
out-of-period items.
3.5 ACCURACY OF ANNUAL REPORTS. The annual report of Champion to its
shareholders for the year 1996 heretofore delivered to Company does not
contain as of the date thereof any untrue statement of material fact or omit
to state any material fact necessary to make the statements therein not
misleading.
3.6 ABSENCE OF UNDISCLOSED LIABILITIES. At October 31, 1996, Champion
had no obligation or liability (contingent or otherwise) which was material,
or which when combined with all similar obligations or liabilities would have
been material, to Champion (i) except as disclosed in the Champion Financial
Statements or as disclosed to Company in writing; nor does there exist a set
of circumstances resulting from transactions effected or events occurring on
or prior to October 31, 1996, or from any action omitted to be taken during
such period that, to the knowledge of Champion, could reasonably be expected
to result in any such material obligation or liability, except as previously
disclosed to Company in writing, or as disclosed or provided for in the
Champion Financial Statements. The amounts set up as liabilities for taxes in
the Champion Financial Statements are sufficient for the payment of all
respective taxes (including, without limitation, federal, state, local and
foreign excise, franchise, property, payroll, income, capital stock and sales
and use taxes) accrued in accordance with generally accepted accounting
principles and unpaid at October 31, 1996. Since October 31, 1996, Champion
has not incurred or paid any obligation or liability which would be material
(on a consolidated basis) to Champion, except for obligations incurred or
paid in connection with transactions by it in the ordinary course of its
business consistent with generally accepted practices and except as disclosed
herein.
3.7 COMPLIANCE WITH LAWS. Champion:
(a) is in compliance with all laws, regulations, reporting and licensing
requirements and orders applicable to its business or any of its employees
(because of such employee's activities on behalf of it), the breach or violation
of which could have a material adverse effect on such business; and
(b) has received no notification (not previously disclosed to Company in
writing) from any agency or department of federal, state or local government
or regulatory authorities asserting that it is not in compliance with any of
the statutes, regulations, rules or ordinances which such governmental
authority or regulatory authority enforces, or threatening to revoke any
license, franchise, permit or governmental authorization, and is subject to
no agreement with any regulatory authorities with respect to its assets or
business.
3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since October 31, 1996,
Champion has not: (i) incurred any material liability, except in the ordinary
course of its business, and except as permitted pursuant to this Agreement or
as disclosed in the Champion Financial Statements; (ii) suffered any material
adverse change in its business, operations, assets or condition (financial or
other); or (iii) failed to operate its business consistent with generally
acceptable practice.
3.9 REPORTS. Since January 1, 1996, Champion has filed all reports and
statements, together with any amendments required to be made with respect
thereto, which it was required to file with: (i) the Securities and Exchange
Commission, including, but not limited to, Forms 10-K, Forms 10-Q, Forms 8-K
and proxy statements; (ii) any other governmental agency or regulatory
authority having jurisdiction over its operations. Each of such reports and
documents, including the financial statements, exhibits and schedules
thereto, and each other document delivered to Company by Champion does not
contain any statement which, at the time and in the light of the
circumstances under which it was made, is false or misleading with respect to
any material fact or which omits to state any material fact necessary in
order to make the statements contained therein not false or misleading.
3.10 INTERIM COMPANY FORMATION; ADOPTION AGREEMENT. Prior to the
Closing Date, Champion at its sole cost and expense shall cause to be
organized Interim Company as a North Carolina corporation and shall cause
Interim Company to execute and enter into an Adoption Agreement in
substantially the form attached hereto as "Exhibit A" and a Plan of Merger in
substantially the form annexed hereto as "Exhibit B" and cause Interim
Company to take such action as is provided in this Agreement or in said
Adoption Agreement or Plan of Merger upon Interim Company's part to be taken.
Immediately prior to the Effective Time, Champion will own all of the issued
and outstanding shares of Interim Company's capital stock.
3.11 BEST EFFORTS. On or prior to the Closing Date (hereinafter defined
in Section 7.1 hereof), Champion will, to the extent permitted by applicable
laws, rules and regulations, take such actions, and execute and deliver all
such agreements, documents, certificates or amendments to this Agreement as
may be necessary or desirable to effectuate the provisions and intent of this
Agreement.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF COMPANY
Company hereby represents and warrants to and covenants with Champion
that:
4.1 ORGANIZATION, STANDING AND AUTHORITY. Company is a corporation duly
organized, validly existing and in good standing under the laws of the State
of North Carolina. Company has the corporate power to execute and deliver
this Agreement, and has taken all action required by law, its Articles of
Incorporation, its By-laws or otherwise, to authorize such execution and
delivery, the Merger and the consummation of the transactions contemplated
hereby, and this Agreement is a valid and binding agreement of Company in
accordance with its terms, subject only to the requirement of ratification,
confirmation and approval by Company's shareholders. At the Effective Time,
Company will have corporate power to carry on its business as then to be
conducted and will be qualified to do business in every jurisdiction in which
the character and location of the assets to be owned by it or the nature of
the business to be transacted by it require qualification.
4.2 CAPITAL STRUCTURE. The authorized capital stock of Company consists
of 10,000 shares of Company Stock, par value of $10.00 per share, of which
550 shares are issued and outstanding and are fully paid and non-assessable.
Company does not have any subscriptions, options, warrants, calls, or other
agreements or commitments, of any kind relating to or obligating it to issue
any shares of its capital stock. Further, there are no securities outstanding
which are convertible into capital stock of Company. None of the shares of
Company Stock has been issued in violation of any preemptive rights of
shareholders.
4.3 NO SUBSIDIARIES. Company has no subsidiaries and Company will not
organize or acquire any subsidiaries prior to the Effective Time of the
Merger without the written consent of Champion.
4.4 AUTHORITY. Except as disclosed by Company in writing, the execution
and delivery of this Agreement do not, and the consummation of the Merger and
transactions contemplated hereby will not, violate any provision of the
Articles of Incorporation or By-laws of Company, or any provision of, or
result in the acceleration of any obligation under, any mortgage, deed of
trust, note, lien, lease, franchise, license, permit, agreement, instrument,
order, arbitration award, judgment, injunction or decree, or result in the
termination of any material license, franchise, lease, or permit to which
Company is a party or by which it is bound, and will not violate or conflict
with any other material restriction of any kind or character to which Company
is subject.
4.5 COMPANY FINANCIAL STATEMENTS. Company has delivered to Champion
prior to the execution of this Agreement copies of the following financial
statements of Company (which, together with all future financial statements
to be furnished are collectively referred to herein as the "Company Financial
Statements"): the compiled Balance Sheets of Company as of June 30, 1996,
June 30, 1995 and June 30, 1994, and the related Statement of Operations and
Retained Earnings and Statement of Cash Flows for the years then ended. The
Company Financial Statements (as of the dates thereof and for the periods
covered thereby):
(a) are in accordance with the books and records of Company, which are
maintained on the income tax basis of accounting, a method that, in part,
recognizes cash receipts and disbursements and accelerated methods of
depreciation but does not recognize items such as current expenses or the
accumulated liability for deferred executive compensation, obligations for
future compensated absences of employed personnel, reserve for bad debts and
other such non cash expenses that are not currently deductible for federal or
state income tax purposes, and are complete and correct in all material
respects that are required by such method and which have been maintained in
accordance with good business practice except that inventory quantity and
value accounts as contained in the Company's general ledger are recorded and
adjusted therein only at the end of each fiscal year; and
(b) present, on a compiled basis, consistent with prior years, the
financial position and results of operations and changes in financial
position of the Company as of the dates and for the periods indicated, in
accordance with the income tax basis of accounting, which, in part,
recognizes cash receipts and disbursements and accelerated methods of
depreciation but does not recognize items such as current expenses or the
accumulated liability for deferred executive compensation, obligations for
future compensated absences of employed personnel, reserve for bad debts and
such other non cash expenses that are not currently deductible for federal or
state income tax purposes, and which do not include all of the disclosures
required by generally accepted accounting principles that might influence
conclusions about the Company's financial position or results of operations
for those who are not informed about such internal matters of the Company,
and which contain certain income and expense modifications related to the
Company's income tax policy as described in the Company Memorandum (Comments
on 1995 and 1996 Financial Statements) from ▇▇▇▇▇ ▇▇▇▇▇▇ to ▇▇▇▇▇ ▇▇▇▇▇▇
dated January 13, 1997 (a copy of which has been previously provided to
Champion).
Company's Balance Sheet and the related Statement of Operations and Retained
Earnings and Statement of Cash Flows, and the notes thereto, for the fiscal
quarter ending September 30, 1996, and for each fiscal quarter thereafter until
the Effective Time, all of which Company shall deliver to Champion as soon as
practicable, will be prepared in accordance with the income tax basis of
accounting as described in (b) except that, since the
Company's accounting policy does not provide for interim adjustment of
inventory quantities and values, inventory values reflected therein have been
estimated.
4.6 ABSENCE OF UNDISCLOSED LIABILITIES. At June 30, 1996, the Company
had no obligation or liability (contingent or otherwise) which was material,
or which when combined with all similar obligations or liabilities would have
been material, to Company except as disclosed in the Company Financial
Statements or as previously disclosed to Champion in writing; nor does there
exist a set of circumstances resulting from transactions effected or events
occurring on or prior to June 30, 1996, or from any action omitted to be
taken during such period that, to the knowledge of Company, could reasonably
be expected to result in any such material obligation or liability, except as
previously disclosed to Champion in writing, or as disclosed or provided for
in the Company Financial Statements. The amounts set up as liabilities for
taxes in the Company Financial Statements are sufficient for the payment of
all respective taxes (including, without limitation, federal, state, local
and foreign excise, franchise, property, payroll, income, capital stock and
sales and use taxes) accrued in accordance with generally accepted accounting
principles and unpaid at June 30, 1996. Since June 30, 1996, the Company has
not incurred or paid any obligation or liability which would be material (on
a consolidated basis) to Company, except for obligations incurred or paid in
connection with transactions by it in the ordinary course of its business
consistent with generally accepted practices and except as disclosed herein.
4.7 TAX MATTERS.
(a) All federal, state, local and foreign tax returns, (including,
without limitation, estimated tax returns, withholding tax returns with
respect to employees, and FICA and FUTA returns) required to be filed by or
on behalf of Company have been timely filed or requests for extensions have
been timely filed, granted and have not expired and all returns filed are
complete and accurate to the best information and belief of Company
management. All taxes shown on filed returns have been paid. As of the date
hereof, and as of the Effective Time, there is and shall be no pending audit
examination, deficiency or refund litigation or matter in controversy with
respect to any taxes that might result in a determination adverse to Company,
except as reserved against in the Company Financial Statements, or as
previously disclosed to Champion in writing. All taxes, interest, additions
and penalties due with respect to completed and settled examinations or
concluded litigation have been paid.
(b) Except as previously disclosed to Champion in writing, the Company
has not executed an extension or waiver of any statute of limitations on the
assessment or collection of any tax due that is currently in effect.
(c) To the extent any federal, state, local or foreign taxes are due from
Company for the period or periods beginning July 1, 1996, or thereafter
through and including the Effective Time, adequate provision on an estimated
basis has been or will be made for the payment of such taxes by establishment
of appropriate tax liability accounts on the last monthly financial
statements of Company, prepared before the Effective Time.
(d) Since the Company's books and records and Financial Statements have
been maintained on the income tax basis of accounting, no deferred income
taxes have been recorded.
4.8 PROPERTIES. Except as previously disclosed to Champion in writing
or disclosed in Company Financial Statements, Company has good and marketable
title, free and clear of all liens, encumbrances, charges, defaults or
equities of whatever character, to all of the respective properties and
assets, tangible or intangible, whether real, personal or mixed, reflected in
the Company Financial Statements as being owned by it at June 30, 1996 or
acquired by it after June 30, 1996. All buildings, and all fixtures,
equipment and other property and assets which in the opinion of management
are material to its business, held under leases or subleases by Company are
held under valid instruments enforceable in accordance with their respective
terms (except as previously disclosed in writing to Champion and except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceedings may be brought). The
policies of fire, theft, liability and other insurance maintained with
respect to the assets or businesses of Company provide adequate coverage
against loss.
4.9 COMPLIANCE WITH LAWS. Except as previously disclosed in writing to
Champion, the Company:
(a) is in compliance with all laws, regulations, reporting and licensing
requirements and orders applicable to its business or any of its employees
(because of such employee's activities on behalf of it), the breach or
violation of which could have a material adverse effect on such business; and
(b) has received no notification (not previously disclosed to Champion in
writing) from any agency or department of federal, state or local government
or regulatory authorities or the staff thereof asserting that any such entity
is not in compliance with any of the statutes, regulations, rules or
ordinances which such governmental authority or regulatory authority
enforces, or threatening to revoke any license, franchise, permit or
governmental authorization, and is subject to no agreement with any
regulatory authorities with respect to its assets or business.
4.10 EMPLOYEE BENEFIT PLANS. Except as previously disclosed in writing
to Champion, with respect to any plan or arrangement of Company which
constitutes an employee benefit plan within the meaning of Section 3(3) of
The Employees Retirement Income Security Act of 1974 ("ERISA"):
(a) Except for liabilities to the Pension Benefit Guaranty Corporation
pursuant to Section 4007 of ERISA, all of which have been fully paid, and
except for liabilities to the Internal Revenue Service under Section 4971 of
the Internal Revenue Code of 1986, if any, all of which have been fully paid,
the Company has no liability to the Pension Benefit Guaranty Corporation or
to the Internal Revenue Service with respect to any pension plan qualified
under Section 401 of the Internal Revenue Code of 1986.
(b) All "employee benefit plans", as defined in Section 3(3) of ERISA,
which cover one or more employees employed by Company (each individually, a
"Plan", and collectively, the "Plan") comply in all material respects with
ERISA and, where applicable for tax-qualified or tax-favored treatment, with
the Internal Revenue Code of 1986. As of June 30, 1996, no material liability
exists under any Plan that has not been disclosed in writing to Champion.
Neither the Plans nor any trustee or administrator thereof has engaged in a
"prohibited transaction" within the meaning of Section 406 of ERISA or, where
applicable, Section 4975 of the Internal Revenue Code of 1986 for which no
exemption is applicable, nor have there been any "reportable events" within
the meaning of Section 4043 of ERISA for which the 30-day notice therefor has
not been waived.
(c) No litigation is pending against any plan or plan fiduciary seeking
the payment of benefits or alleging a breach of trust or fiduciary duty by
any plan fiduciary.
(d) Company is not a party to any multiemployer pension plan as defined
in Section 414(f) of the Code and Section 3(37) of ERISA.
4.11 COMMITMENTS AND CONTRACTS. Except as previously disclosed in
writing to Champion, the Company is not a party or subject to any of the
following (whether written or oral, express or implied):
(i) any employment contract or understanding (including any
understandings or obligations with respect to severance or termination pay
liabilities or fringe benefits) with any present or former officer, director,
employee or consultant (other than those which are terminable at will by
Company);
(ii) any plan, contract or understanding providing for bonuses, pensions,
options, deferred compensation, retirement payments, profit sharing or similar
understandings with respect to
any present or former officer, director or consultant;
(iii) any contract or agreement with any labor union;
(iv) any contract not made in the ordinary course of business containing
covenants limiting the freedom of Company to compete in any line of business
or with any person or involving any restriction of the area in which, or
method by which, Company will carry on its business (other than as may be
required by law or applicable authorities);
(v) any lease or other contract with annual rental payments or payments
aggregating $12,000.00 or more.
4.12 LABOR. No work stoppage involving Company is pending or, to the
best of Company's knowledge, threatened. Company is not involved in, or
threatened with or affected by, any labor dispute, arbitration, lawsuit or
administrative proceeding which could materially and adversely affect the
business of Company. Employees of Company are not represented by any labor
union nor are any collective bargaining agreements otherwise in effect with
respect to such employees.
4.13 MATERIAL CONTRACTS FURNISHED. Company has made available to
Champion true and complete copies of all material contracts, leases and other
agreements to which Company is a party or by which it is bound and of all
employment, pension, retirement, stock option, profit sharing, deferred
compensation, consultant, bonus, group insurance, or similar plans with
respect to any of the directors, officers, or other employees of Company.
4.14 MATERIAL CONTRACTS. Except as previously disclosed to Champion in
writing and except as is otherwise provided in this Agreement, neither the
Company or any of its respective assets, businesses or operations is, as of
the date hereof, a party to, or is bound or affected by, or receives benefits
under, (i) any material agreement, arrangement or commitment not cancellable
by it without penalty, other than agreements, arrangements or commitments
entered into in the ordinary course of its business and negotiated on an
arms-length basis, or (ii) any material agreement, arrangement or commitment
relating to the employment, election or retention in office of any director
or officer other than agreements, arrangements or commitments entered into in
the ordinary course of its business and negotiated on an arms-length basis.
4.15 MATERIAL CONTRACT DEFAULTS. Company is not in default in any material
respect under any contract, agreement, commitment, arrangement, lease, insurance
policy or other instrument to which it is a party or by which its respective
assets, business or operations may be bound or affected or under which it or its
respective assets, business or operations receive benefits, and there has not
occurred any event which with the lapse of time or the giving of notice or both
would constitute such a default,
except as previously disclosed to Champion in writing.
4.16 LEGAL PROCEEDINGS. Except as previously disclosed to Champion by
Company in writing, there are no actions, suits or proceedings instituted or
pending, or to the best knowledge of Company threatened (or unasserted but
considered probable of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome), including eminent domain
proceedings, against or relating to Company, or against any property, asset,
interest or right of Company, that could have a material and adverse effect
on the condition (financial or other, present or prospective), business,
properties, assets, operations, liabilities or prospects of Company, or that
threaten or would impede the consummation of the transactions contemplated by
this Agreement. The Company is not a party to any agreement or instrument or
subject to any charter or other corporate restriction or any judgment, order,
writ, injunction, stay, decree, rule, regulation, code or ordinance that
threatens or might impede the consummation of the transactions contemplated
by this Agreement.
4.17 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 30, 1996, the
Company has not: (i) incurred any material liability, except in the ordinary
course of its business, consistent with generally acceptable practice and
except as permitted pursuant to this Agreement; (ii) suffered any material
adverse change in its business, operations, assets or condition (financial or
other); or (iii) failed to operate its business consistent with generally
acceptable practice.
4.18 ACCOUNTS RECEIVABLE. All notes and accounts receivable of the
Company shown on the Company Financial Statements or thereafter acquired have
been collected or are current and collectible subject to returns and
allowances in the ordinary course of business (in the case of each note in
accordance with its terms, and in the case of each account within 30 days
after billing) at the aggregate recorded amounts thereof on the books of the
Company and are subject to no counterclaims or set-offs. On February 28,
1997, the aggregate amount of all such receivables is $708,847.02 of which
$87,554.26 has not been paid on the date due, and the aggregate amount of all
such accounts receivable which have not been paid for 60 days or more does
not exceed $8,229.15.
4.19 INVENTORIES. All inventories of the Company, whether or not
reflected in the Company Balance Sheet, are of a quality and quantity usable
and salable in the ordinary course of business, except for obsolete items and
items of below-standard quality, all of which, in the aggregate, are
immaterial in amount. Items included in such inventories are carried on the
books of the Company, and are valued on the Company Balance Sheet, at the
lower of cost or market and, in any event, at not greater than their net
realizable value, on an item by item basis, after appropriate deduction for
costs of completion, marketing costs, transportation expense, and allocation
of overhead.
4.20 PROPRIETARY RIGHTS. The Company owns or possesses adequate
licenses or other rights to use all patents, trademarks, trade names,
copyrights, inventions, formulae, methods and processes (all such items being
hereinafter referred to as "Intangible Property") currently used by it in the
conduct of its business, without any known conflict with the rights of
others. No royalties, honoraria or fees are payable by the Company to any
person by reason of the ownership or use of the Intangible Property. All
items of Intangible Property are valid and in good standing and are adequate
and sufficient to permit the Company to conduct its business as now operated,
and no other rights of the kinds enumerated are due or required by the
Company in its operations. There are no licenses, sublicenses or agreements
relating to their use now in effect, and none of the aforesaid are being
infringed by others in any material way. No claim is pending or threatened or
has been made within the past five years, to the effect that operation by the
Company of its business or the manufacture or sale of any of its products, or
any formula, method, process, part or material it employs, infringes or
conflicts in any way upon any rights of the type enumerated above owned or
claimed by others.
4.21 ENVIRONMENTAL MATTERS.
(a) The operations of the business of the Company and the buildings
in which it is conducted conform with all applicable Federal, state and local
laws, ordinances and regulations (including those relating to zoning and
environmental protection), and all buildings or operations of the Corporation
and the business that are subject to the Occupational Safety and Health Act
of 1970, as amended, comply with employee working conditions as prescribed by
such Act.
(b) The Company has no underground storage tanks, either empty or
containing any liquid, including but without limitation solvents, fuel or
waste oil, on any premises used in its business.
(c) The Company has obtained all permits, licenses and other
authorizations and filed all notices which are required to be obtained or
filed by Company for the operation of its business under Federal, state and
local laws relating to pollution, protection of the environment or waste
disposal ("Environmental Laws"). The Company is in compliance in all respects
(i) with all terms and conditions of all required permits, licenses and
authorizations; and (ii) all other applicable limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables contained in the Environmental Laws or contained in any law,
regulation, code, plan, order, decree, judgment, notice or demand letter
issued, entered, promulgated or approved thereunder. There are no past or
present events, conditions, circumstances, activities, practices, incidents,
actions or plans which may interfere with or prevent
continued compliance in all respects, or which may give rise to any common
law or statutory liability, or otherwise form the basis of any claim, action,
suit, proceeding, hearing or investigation, based on or related to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling, or the emission, discharge, release or threatened
release into the environment, of any pollutant, contaminant, waste or
hazardous or toxic material with respect to the Company or its businesses,
properties or plants.
(d) There are no actions, suits or proceedings, or demands, claims,
notices or investigations (including, without limitation, notices, demand
letters or requests for information from any environmental agency) instituted
or pending, or threatened relating to the liability of the Company or any of
its operations or buildings under any Environmental Law.
4.22 NO BROKER. The Company has incurred any liability for finder's,
agent's or brokerage fees, commissions or compensation in connection with
this Agreement or the transactions contemplated hereby.
4.23 BEST EFFORTS. On or prior to the Closing Date (hereinafter
defined), Company will, to the extent permitted by applicable laws, rules and
regulations, take such actions and execute and deliver all such agreements,
documents, certificates or amendments to this Agreement as may be necessary
or desirable to effectuate the provisions and intent of this Agreement.
4.24 CONDUCT OF BUSINESS--NEGATIVE COVENANTS OF COMPANY. Except as
otherwise contemplated hereby, between the date hereof and the Effective
Time, or the time when this Agreement terminates as provided herein, the
Company will not, without the prior written approval of the President of
Champion:
(a) Make any change in its authorized capital stock.
(b) Issue any shares of its capital stock, securities convertible
into its capital stock, or any long term debt securities.
(c) Issue or grant any options, warrants, or other rights to
purchase shares of its common stock.
(d) Declare or pay any dividends or other distributions on any
shares of common stock.
(e) Purchase or otherwise acquire or agree to acquire for a
consideration any share of Company Stock (other than in a fiduciary capacity).
(f) Enter into or amend any employment, pension, retirement, stock
option, profit sharing, deferred compensation, consultant, bonus, group
insurance, or similar plan in respect of
any of its directors, officers, or other employees, or increase the current
level of contributions to any such plan now in effect.
(g) Take any action materially and adversely affecting this
Agreement or the transactions contemplated hereby or the financial condition
(present or prospective), businesses, properties, or operations of Company.
(h) Acquire, consolidate or merge with any other company,
corporation, or association, or acquire, other than in the ordinary course of
business, any assets of any other company, corporation, or association.
(i) Mortgage, pledge, or subject to a lien or any other
encumbrance, any of its assets, dispose of any of its assets, incur or cancel
any debts or claims, or increase the current level of compensation or
benefits payable to its officers, employees or directors except in the
ordinary course of business as heretofore conducted or take any other action
not in the ordinary course of their business as heretofore conducted or incur
any material obligation or enter into any material contract.
(j) Amend its Articles of Incorporation, By-laws or Charter.
(k) Take any action to solicit, initiate, encourage, or authorize
any person, including directors, officers and other employees, to solicit
from any third party any inquiries or proposals relating to the disposition
of the business or assets of Company, or the acquisition of their Company
Stock, or the merger of Company with any person other than Champion, and
Company shall promptly notify Champion orally of all the relevant details
relating to all inquiries and proposals which it may receive relating to any
of such matters. Nothing herein shall be construed to limit or affect the
fiduciary obligation of Company's officers and directors to Company
shareholders.
4.25 CONDUCT OF BUSINESS--AFFIRMATIVE COVENANTS OF COMPANY. Company
covenants and agrees that:
(a) It will promptly advise Champion in writing of the name and
address of and number of shares of Company Stock held by each shareholder who
elects to exercise his, her or its rights to appraisal in connection with the
Merger pursuant to the North Carolina Corporation Act.
(b) Subsequent to the date of this Agreement and prior to the
Effective Time it will operate its business only in the normal course and
manner.
(c) From and after the execution of this Agreement, Company will
promptly advise Champion of any material adverse change in the financial
condition, assets, business operations or key personnel of Company and of any
material breach of any
representation or warranty made by Company in this Agreement.
(d) Immediately upon the execution of this Agreement, it will
direct its accountants to give Champion access to all information, documents
and working papers pertaining to Company.
(e) Subsequent to the date of this Agreement and prior to the
Effective Time, Company shall maintain in full force and effect adequate
fire, casualty, public liability, employee fidelity and other insurance
coverage in effect on the date of this Agreement in order to protect Company
against losses for which insurance protection can reasonably be obtained.
(f) Within ten days from the execution of this Agreement, Company
shall furnish to Champion a list, accurate as of the close of business on a
date not more than ten (10) days prior to the date on which such list is
furnished, containing the names and addresses of all holders of Company Stock
as the same appear on the stock registration books of Company and the number
of shares held by each. At the Effective Time, Company shall furnish to
Champion a list, true, correct and complete as of the close of business on
the preceding day, containing the names and addresses of all holders of
Company Stock as the same appear on Company's stock registration books and
the number of shares held by each.
(g) It will use its best efforts in good faith to take or cause to
be taken all action required under this Agreement on its part to be taken as
promptly as practicable so as to permit the consummation of the Merger and
the transactions contemplated hereby at the earliest possible date and
cooperate fully with Champion to that end.
Section 5. Indemnification and Confidentiality
----------------------------------------------
5.1 ACCESS AND INFORMATION. Company and Champion shall each afford to
the other, and to the other's accountants, counsel and other representatives,
full access during normal business hours throughout the period prior to the
Closing Date to all of its properties, books, contracts, commitments and
records (including but not limited to tax returns), and, during such period,
each shall furnish promptly to the other (i) a copy of each report, schedule
and other document filed or received by it pursuant to the requirements of
federal or state securities and banking laws and (ii) all other information
concerning its business, properties and personnel as such other party may
reasonably request, provided that no investigation pursuant to this Section
5.1 shall affect any representations or warranties or the conditions to the
obligations of the parties to consummate the Merger.
5.2 FURNISHING INFORMATION AND INDEMNIFICATION. Champion and the
Company have furnished or will furnish as soon as practicable after the date
of this Agreement, to each other all the information (including financial
statements, information and
schedules) concerning themselves required for inclusion in:
(a) any registration statement or other statement to be filed with
the Securities and Exchange Commission on behalf of Champion under the
Securities Act of 1933 in connection with the Merger and any proxy statement
to solicit the approval of Company shareholders to the Merger, and any
documents to be filed with the Securities and Exchange Commission in
connection therewith;
(b) any filings to be made by Champion with state securities
authorities in connection with the transactions contemplated hereunder; and
(c) any other request, application, statement, report or material
to be made or filed by any party to or with any regulatory authority or any
governmental agency, department or instrumentality in connection with the
transactions contemplated hereunder.
Champion represents and warrants to Company, and Company represents and
warrants to Champion, that all information so furnished for such requests,
statements, applications, reports and materials shall be true and correct in
all material respects without omission of any material fact required to be
stated to make the information therein not false or misleading. Champion will
indemnify and hold harmless Company, and Company will indemnify and hold
harmless Champion and each of their respective directors and officers, and
each person, if any, who controls such entities within the meaning of the
Securities Act of 1933, from and against any and all losses, damages,
expenses or liabilities to which such entity, or any such director, officer
or controlling person may become subject under applicable laws (including the
Securities Act of 1933 and the Securities Exchange Act of 1934) and rules and
regulations thereunder and will reimburse the other, and any such director,
officer or controlling person, for any legal or other expenses reasonably
incurred in connection with investigating or defending any actions, whether
or not resulting in liability, insofar as such losses, damages, expenses,
liabilities or actions arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in any such request,
statement, application, report or material or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to
be stated therein or necessary in order to make the statements therein not
misleading, but only insofar as any such statement or omission was made in
reliance upon and in conformity with information furnished in writing in
connection therewith by such indemnifying party for use therein.
5.3 CONFIDENTIALITY. It is hereby agreed that, except (i) as otherwise
required in the performance by the parties of their respective obligations
hereunder or under the Merger and (ii) as otherwise required by law, any
non-public information received from the other party during the course of the
investigation
contemplated pursuant hereto shall remain and be kept as confidential
information by it and all copies thereof will be returned promptly at the
request of the party furnishing such information in the event of the
termination of this Agreement and the Merger. Each of the parties may
disclose such information to its respective employees, affiliates, counsel,
accountants, representatives, professional advisors and consultants, and
shall require each of them to agree to keep all such information confidential.
5.4 UPDATES TO INFORMATION. At the reasonable request of any party hereto,
any other party will update by amendment or supplement any disclosure made in
writing by such party to the other party and each party hereby represents and
warrants that such written disclosures, as so amended or supplemented, shall be
true, correct and complete as of the date or dates thereof.
Section 6. Conditions Precedent
-------------------------------
The consummation of this Agreement and the Merger is conditioned upon the
following:
(a) SHAREHOLDER APPROVAL. The shareholders of Company and Interim
Company shall have ratified, confirmed and approved this Agreement and the
terms and conditions herein contained by the affirmative vote of shareholders
of each such corporation, owning at least a majority of its capital stock
outstanding, and final approval of this Agreement shall have taken place as
provided in Section 10 hereof, and all provisions of Section 10 shall have
been fully complied with.
(b) AFFILIATES. Company agrees to deliver to Champion a letter
identifying all persons whom it believes to be, at the time the Merger is
submitted to a vote of Company shareholders, "affiliates" of Company, for
purposes of Rule 145 or Rule 144 (as applicable) under the Securities Act of
1933, and shall use its best efforts to cause each person who is identified
as an "affiliate" in such letter to deliver to Champion prior to the Closing
Date an Investment Letter containing a written agreement providing that such
person will agree not to sell, pledge, transfer or otherwise dispose of the
shares of Champion Common Stock to be received by such person in the Merger
except in compliance with the applicable provisions of the Securities Act of
1933 and the rules and regulations thereunder. Further, if the Merger will
qualify for pooling of interests accounting treatment, each of the
aforementioned affiliates shall have delivered to Champion, at or prior to
the Closing Date, a written agreement providing that (i) such "affiliate" of
Company shall not dispose of any shares of Champion Common Stock for a period
commencing at least thirty (30) days prior to the Effective Time, and (ii)
that shares of Champion Common Stock issued to "affiliates" of Company in
exchange for Company Stock and any other shares of Champion Common Stock
owned by "affiliates" of Company shall not be transferrable until such time
as financial results covering at
least thirty (30) days of combined operations of Interim Company and Company
have been published within the meaning of Section 201.01 of the Securities
and Exchange Commission's Codification of Financial Reporting Policies.
(c) INVESTMENT LETTERS. Champion shall have received Investment
Letters in the form set forth in Exhibit C executed by all holders of Company
Stock.
(d) NO DIVESTITURE OR ADVERSE CONDITION. The consummation of the
Merger shall not have required the divestiture or cessation of any
significant part of the present operations conducted by Champion and shall
not have imposed any other condition, which divestiture, cessation or
condition Champion deems to be materially disadvantageous or burdensome.
(e) ACCURACY OF REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF
OBLIGATIONS AND COVENANTS -- CHAMPION. Unless waived by Company, the
representations and warranties of Champion contained in this Agreement shall
be correct on and as of the Closing Date and thereafter until the Effective
Time in all material respects with the same effect as though made on and as
of such Effective Time except for changes which are not in the aggregate
material and adverse to the financial condition, businesses, properties, or
operations of Champion and Champion shall have performed in all material
respects all of its obligations and agreements hereunder theretofore to be
performed by it and Company shall have received on the Closing Date an
appropriate certificate (in affidavit form) to the foregoing effect dated as
of the Closing Date and executed on behalf of Champion by one or more
appropriate executive officers of Champion.
(f) ACCURACY OF REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF
OBLIGATIONS AND COVENANTS -- COMPANY. Unless waived by Champion, the
representations and warranties of Company contained in this Agreement shall
be correct on and as of the Closing Date and thereafter until the Effective
Time with the same effect as though made on and as of such Effective Time
except for changes which are not in the aggregate material and adverse to the
financial condition, businesses, properties or operations of Company, and
Company shall have performed in all material respects all of its obligations
and agreements hereunder theretofore to be performed by it and Champion shall
have received on the Closing Date an appropriate certificate (in affidavit
form) to the foregoing effect dated as of the Closing Date and executed on
behalf of Company by one or more appropriate executive officers of Company.
(g) OPINION OF COUNSEL FOR COMPANY. Champion shall have received an
opinion of ▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.A., counsel for Company, dated the
Closing Date, with respect to such matters as Champion may reasonably request
and to the effect that:
(1) Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of North Carolina and is duly
authorized to own its properties and to conduct its business as then being
conducted.
(2) The authorized capitalization of Company is as set forth in
such opinion and the shares of Company Stock issued and outstanding or held
as treasury shares (as of a date specified in such opinion not more than 5
days prior to the date of such opinion) are as stated in such opinion. Such
issued and outstanding shares of stock are validly issued, fully paid and
non-assessable, and were not issued in violation of any preemptive rights of
the shareholders of Company. As of such date, there are, to the best of such
counsel's knowledge, no options, warrants, rights, commitments or convertible
securities outstanding or authorized on behalf of Company, calling for the
purchase from it of shares of unissued capital stock or capital stock held as
treasury shares.
(3) Company had the corporate power and authority to execute,
deliver and perform its obligations under this Agreement. This Agreement has
been duly authorized, executed and delivered by Company and constitutes the
legal, valid and binding obligation of Company, enforceable in accordance
with its terms.
(4) All necessary corporate proceedings of the board of directors
and the shareholders of Company, to the extent required by law, its Articles
of Incorporation and Bylaws or otherwise, to authorize the execution and
delivery of this Agreement by Company and the consummation of the Merger by
Company pursuant to this Agreement have been duly and validly taken. The
number of shares of stock of Company voted for and against the Merger are as
stated in such counsel's opinion; and the number of shares of such stock as
to which shareholders have perfected their rights to dissent and appraisal
under the North Carolina Corporation Act, are as stated in such counsel's
opinion.
(5) The consummation of the Merger will not violate or result in a
breach of, or constitute a default under, the Articles of Incorporation or
By-Laws of Company or constitute a breach or termination of, or default
under, any agreement or instrument of which such counsel has knowledge and
which would have a material adverse affect on the business of Company, and to
which Company is a party or by which it or any of its property is bound.
(6) Such counsel does not know of any breach of any warranty
contained in this Agreement on the part of Company or any failure on the part
of Company to perform any of the conditions precedent to the consummation of
the Merger imposed upon it herein.
(h) OPINION OF COUNSEL FOR CHAMPION. Company shall have received
the opinion of Huddleston, Bolen, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇, counsel for
Champion, dated the Closing Date, with respect
to such matters as Company may reasonably request and to the effect that:
(1) Champion is a corporation duly organized, validly existing and
in good standing under the laws of the State of West Virginia, and is duly
authorized to own its properties and to conduct its business as then being
conducted.
(2) The authorized capitalization of Champion is as set forth in
such opinion and the shares of Champion Common Stock issued and outstanding
(as of a date specified in such opinion not more than 5 days prior to the
date of such opinion) are as stated in such opinion. Such issued and
outstanding shares of stock are validly issued, fully paid and
non-assessable, and were not issued in violation of any preemptive rights of
the shareholders of Champion. As of such date, there are, to the best of such
counsel's knowledge, no options, warrants, rights, commitments or convertible
securities outstanding or authorized on behalf of Champion, calling for the
purchase from any of them of shares of unissued capital stock or capital
stock held as treasury shares, except as otherwise permitted by this
Agreement.
(3) All necessary corporate proceedings of the Boards of Directors
and the shareholders of Champion and Interim Company to the extent required
by law, their Articles of Incorporation or By-Laws or otherwise, to authorize
the execution and delivery of this Agreement or the Adoption Agreement and
the consummation of the Merger pursuant to this Agreement have been duly and
validly taken. Champion and Interim Company have the corporate power and
authority to execute, deliver and perform this Agreement or the Adoption
Agreement. This Agreement has been duly authorized, executed and delivered by
Champion and Interim Company (by virtue of the Adoption Agreement) and
constitutes the legal, valid and binding obligation of Champion and Interim
Company in accordance with its terms.
(4) The consummation of the Merger will not violate or result in a
breach of, or constitute a default under the Articles of Incorporation or
By-Laws of Champion or constitute a breach or termination of, or default
under, any agreement or instrument of which such counsel has knowledge and to
which Champion is a party or by which it or its property is bound.
(5) To the best of such counsel's knowledge, all approvals of
public authorities, federal, state or local, the granting of which is
necessary for the consummation of the Merger by Champion have been obtained.
(6) The shares of Champion Common Stock into which shares of
Company Stock are to be converted upon the Effective Time will upon the
Effective Time be duly authorized, and such shares, when transferred to
holders of Company Stock pursuant to the terms of the Merger, will be validly
issued, fully paid and nonassessable shares of Champion Common Stock.
(i) LESS THAN 10% DISSENTERS. Unless waived by Champion, the
holders of no more than 10% of the outstanding shares of Company Stock shall
have elected to exercise their statutory rights to appraisal in connection
with the transactions contemplated hereby, pursuant to the North Carolina
Corporation Act.
(j) COMFORT LETTER--COMPANY. Ernst & Young LLP or other Certified
Public Accountants satisfactory to Company shall have audited the financial
statements of Champion for the year ended October 31, 1996 and, based on such
review, Company shall have reasonably determined that such statements are
satisfactory to Company.
(k) COMFORT LETTER--CHAMPION. Ernst & Young LLP or other certified
public accountants satisfactory to Champion shall have audited the financial
statements of Company as of and for the year ended June 30, 1996 and, based
on such audit, Champion shall have reasonably determined that such statements
are satisfactory to Champion.
(l) POOLING OF INTERESTS ACCOUNTING TREATMENT. Champion shall have
received from Ernst & Young LLP or other Certified Public Accountants
satisfactory to it a letter to the effect that in the opinion of such
Certified Public Accountants, Champion may, for accounting purposes, treat
the Merger as a pooling of interests (and not as a purchase) in accordance
with generally accepted accounting principles, and the Securities and
Exchange Commission must not have objected to such treatment. A copy of such
letter shall be delivered by Champion to Shareholders.
(m) OPINION LETTER. Company shall have received an opinion of tax
counsel acceptable to it and Champion shall have received an opinion of tax
counsel acceptable to it, to the effect that:
(1) The Merger shall constitute and qualify as a reorganization
within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(E) of the Internal
Revenue Code and Company, Surviving Company and Champion will each qualify as
"a party to a reorganization" as that term is defined in the Internal Revenue
Code;
(2) No gain or loss will be recognized by Champion, Company, or
Surviving Company by reason of the Merger;
(3) Provided that the Company Stock is held as a capital asset at
the Effective Time, the holding period of Champion Common Stock received by
Company shareholders in exchange for Company Stock will include the holding
period of the shares of Company Stock so exchanged;
(4) No gain or loss will be recognized by the shareholders of
Company who exchange their Company Stock for Champion Common Stock pursuant
to the Merger; and
(5) The basis of the Champion Common Stock received by Company
shareholders will be the same as the basis of the Company Stock surrendered
in exchange therefor, decreased by the total of any cash received.
(n) The Non-Competition Agreements in all material respects
identical to the form attached hereto as Exhibits D and E shall have been
executed by each of ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇ ▇▇▇▇▇▇ and delivered to
Champion.
(o) All approvals and consents to the Merger shall have been
obtained in writing prior to, and shall be in full force and effect on the
Closing Date, from all entities whose consent is required, including, without
limitation, the following:
(i) Komori Financial Services pursuant to Master Lease Agreement
with the Company dated June 27, 1995;
(ii) Knoxville Printing Company or its successors, as
beneficiary under Deed of Trust and Security Agreement dated June 7, 1995
from Company to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee; and
(iii) The Bank/First Citizens Bank, as beneficiary under Deed of
Trust dated June 7, 1995 from Company to ▇▇▇▇▇ ▇. ▇▇▇▇, Trustee.
All such consents shall explicitly provide that the respective agreements
shall survive the Merger in full force and effect, without amendment. Such
consents shall not be conditioned or restricted in a manner which, in the
sole judgment of Champion, materially adversely affects the ability of
Champion to conduct the business of Company after the Merger.
(p) Absence of Material Adverse Changes--Champion. Unless waived by
Company at or before the Effective Time, there shall have been no material
adverse change in the financial condition, business or assets of Champion
since October 31, 1996, and there shall be no suit, action or proceeding
pending or threatened against Champion which, if successful, would have a
material adverse effect on Champion or the Surviving Company after the
consummation of the Merger.
(q) Absence of Material Adverse Changes--Company. Unless waived by
Champion at or before the Effective Time, there shall have been no material
adverse change in the financial condition, business or assets of Company
since June 30, 1996, and there shall be no suit, action or proceeding pending
or threatened against Company which if successful would have a material
adverse effect on Company or the Surviving Company after the consummation of
the Merger.
Section 7. Closing Date and Effective Time
------------------------------------------
7.1 CLOSING DATE. The closing shall be effected as soon as practicable
after all of the conditions contained herein shall have been satisfied. The
closing shall be held at the offices of Company in Asheville, North Carolina,
and the closing date ("Closing Date") shall be a mutually agreeable date,
but, in no event, later than forty-five (45) days following the date when all
such conditions are satisfied.
7.2 EFFECTIVE TIME. Subject to the terms and upon satisfaction on or
before the Closing Date of all conditions specified in this Agreement, the
Merger shall be effective at the time of filing articles of merger with and
acceptance thereof by the Secretary of State of North Carolina (such time herein
called "Effective Time").
Section 8. Termination of Agreement
-----------------------------------
8.1 GROUNDS FOR TERMINATION. This Agreement and the transactions
contemplated hereby may be terminated at any time prior to the Closing Date,
either before or after the meeting of the shareholders of Company:
(a) By mutual consent in writing of Company and Champion; or
(b) By Company by giving written notice thereof to Champion if (i) a
material adverse change shall have occurred in the financial condition,
results of operations or business of Champion since October 31, 1996, or (ii)
Champion has in any material respect breached any covenant, undertaking,
representation or warranty contained in this Agreement and such breach has
not been cured within thirty (30) days after the giving of such notice; or
(c) By Champion by giving written notice thereof to Company if (i) a
material adverse change shall have occurred in the financial condition,
results of operations or business of Company since June 30, 1996 or (ii)
Company has in any material respect breached any covenant, undertaking,
representation or warranty contained in this Agreement and such breach has
not been cured within thirty (30) days after the giving of such notice; or
(d) By either Company or Champion upon written notice to the other
if any regulatory agency whose approval of the transactions contemplated by
this Agreement is required denies such application for approval by final
order or ruling (which order or ruling shall not be considered final until
expiration or waiver of all periods for review or appeal); or
(e) By either Company or Champion upon written notice to the other
if any condition precedent to either party's
performance hereunder is not satisfied or fulfilled; or
(f) By either Company or Champion if the Merger shall violate any
non-appealable final order, decree or judgment of any court or governmental
body having competent jurisdiction; or
(g) By either Company or Champion upon the bankruptcy, insolvency or
assignment for the benefit of creditors of Company or Champion; or
(h) By either Company or Champion, if the shareholders of Company
shall fail to approve the Merger by the vote required under the North
Carolina Corporation Act and the Articles of Incorporation and Bylaws of
Company.
8.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement for any reason other than a breach thereof, neither party hereto
shall have any liability to the other of any nature whatsoever, including any
liability for loss, damages, or expenses suffered or claimed to be suffered
by reason thereof, except as provided in Section 8.3.
8.3. RETURN OF INFORMATION. In the event of the termination of this
Agreement for any reason, each party shall deliver to the other party, and
shall require each of its officers, agents, employees and independent
advisers (including legal, financial and accounting advisers) to deliver to
the other party all documents, work papers, and other material obtained from
such other party relating to the transactions contemplated hereby, whether
obtained before or after the execution hereof, including information obtained
pursuant to Section 5 hereof. Each party agrees that notwithstanding any
other provision contained in this Agreement, the undertakings and covenants
regarding confidentiality contained in Section 5 shall survive termination of
this Agreement.
Section 9. Waiver and Amendment
-------------------------------
Except with respect to required approvals of the applicable governmental
authorities and shareholders, Champion or Company by written instrument
signed by its President at any time (whether before or after approval of the
Agreement or the Merger by the shareholders of Company), may extend the time
for the performance of any of the obligations or other acts of the other and
may waive, with respect to the other: (i) any inaccuracies in the
representations or warranties contained in this Agreement or in any document
delivered pursuant hereto, (ii) compliance with any of the covenants,
undertakings or agreements, or satisfaction of any of the conditions to its
obligations, contained in this Agreement, and/or (iii) the performance
(including performance to the satisfaction of a party or its counsel) of any
obligations set out herein. This Agreement may be amended or supplemented at
any time by mutual agreement of the parties (except that they may not be
amended in any material respect after approval by the shareholders of the
parties without further approval by such
shareholders). Any waiver, amendment or supplement hereof shall be in
writing. Any waiver by Champion or Company of a condition to its obligation
to perform this Agreement and the subsequent Closing hereunder shall be
without prejudice to the rights or remedies it may have arising out of any
breach of any representation, warranty, covenant or other agreement hereunder.
Section 10. Meeting of Shareholders of Company
----------------------------------------------
Company shall take all steps necessary to call and hold a meeting of its
shareholders in accordance with applicable law and the Articles of
Incorporation and By-laws of Company as soon as practicable for the purpose
of submitting this Agreement to its shareholders for their ratification,
approval and confirmation.
Section 11. Rights of Dissenting Shareholders
---------------------------------------------
Any shareholder of Company who properly exercises his right to dissent
and perfects his appraisal rights under North Carolina law shall be entitled,
with respect to any shares as to which he or she shall so dissent, to the
fair value of such shares as of the day prior to the date on which the
shareholders of Company voted to approve the Merger, excluding any
appreciation or depreciation in anticipation of the Merger. The procedures to
be followed and the rights of such dissenting shareholders shall be those set
forth in Article 13, Chapter 55 of the North Carolina Corporation Act.
Section 12. Miscellaneous
-------------------------
12.1 PUBLIC ANNOUNCEMENTS. Prior to the Closing Date, each party shall
use its best efforts to consult with the other party with respect to any
prepared public announcement, statement or release to the press, or statement
to a competitor, customer or other third party (except to its consultants or
to the regulatory authorities in connection with any required applications
for governmental approvals or filings) with respect to this Agreement or the
Merger or the transactions contemplated hereby or thereby, except as may be
necessary, in the opinion of counsel, to comply with any law, governmental
order or regulation.
12.2 ACCOUNTING TREATMENT. Each of the parties undertakes and agrees to
use its best efforts to cause the Merger to qualify for pooling of interests
accounting treatment.
12.3 BROKERS AND FINDERS. Company and Champion represent each to the
other that this Agreement and the Merger contemplated hereby are the result
of direct negotiations between them and that neither Company nor Champion has
incurred any liability for any broker's, finder's or similar fees in
connection with this Agreement or the Merger.
12.4 DISCLOSED IN WRITING. As used in this Agreement, the phrase
"disclosed in writing" shall mean disclosed or delivered
prior to or within 20 days after, the date of this Agreement by means of a
writing describing in reasonable detail the matters contained therein and
delivered in accordance with Section 12.8 hereof. For purposes of this
Agreement, anything appearing, contained, disclosed or described (i) in any
Champion Financial Statement or Company Financial Statement (including the
notes thereto), (ii) in any periodic report or other document filed with the
Securities and Exchange Commission (including, but not limited to, Forms 8-K,
Forms 10-K, Forms 10-Q, Annual Reports, and proxy statements) by either of
Champion or Company, shall be deemed to be previously disclosed in writing.
12.5 ENTIRE AGREEMENT. This Agreement embodies the entire agreement among
the parties and there have been no agreements, representations, or warranties
among the parties other than those set forth herein or those provided for
herein.
12.6 COUNTERPARTS. This Agreement has been executed in a number of
identical counterparts, and each such counterpart shall be deemed to be an
original instrument, but in making proof of this Agreement, it shall not be
necessary to produce or account for more than one such counterpart.
12.7 INVALID PROVISIONS. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if such
invalid or unenforceable provision were omitted.
12.8 NOTICES. Any notices or other communication required or permitted
hereunder shall be sufficiently given if sent by registered or certified
mail, postage prepaid, addressed as follows:
TO COMPANY:
Blue Ridge Printing Co., Inc.
c/o ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇ Travel Agency, Inc.
Suite
BB&T Building
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇., Esquire
▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.A.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
P. O. Box 3180
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
TO CHAMPION:
Champion Industries, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
P. O. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President and
Chief Executive Officer
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Huddleston, Bolen, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
P. O. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
or such other addresses as shall be furnished in writing by either party to
the other party. Any such notice or communication shall be deemed to have
been given as of the date so mailed.
12.9 HEADINGS. The captions contained in this Agreement are inserted
solely for convenience of reference and shall not affect the meaning or
interpretation of this Agreement.
12.10 EXPENSES. Each of the parties hereto will pay its own fees and
expenses incurred in connection with the transactions contemplated by this
Agreement, except as otherwise specifically provided herein.
12.11 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina and the United States of
America.
12.12 NO ASSIGNMENT. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that this Agreement may not be assigned by either
party without the written consent of the other party.
12.13 EFFECTIVENESS OF AGREEMENT. This Agreement shall become effective
and binding as to Champion and Company when one or more counterparts shall
have been signed and delivered by Champion and Company, and shall become
effective and binding as to Interim Company when Interim Company has executed
an Adoption Agreement in substantially the form attached hereto as Exhibit
"A".
12.14 FURTHER ACTS. Champion and Company each agree to execute and
deliver on or before the Closing Date such other documents, certificates,
agreements, or other writings and to take such other actions as may be
necessary or desirable in order to consummate or implement expeditiously the
transactions contemplated by this Agreement.
12.15 CERTAIN REPRESENTATIONS AND WARRANTIES NOT TO SURVIVE. Except for
the representations, warranties and covenants contained in Sections 2.4, 4,
5, 8.3, 12.10, 12.16, 12.17 and in Exhibits C, D and E (which shall survive
the Closing Date and Effective Time and any investigation at any time made on
behalf of any party), the representations and warranties included or provided
in this Agreement shall not survive the Effective Time.
12.16 INDIVIDUAL DIRECTORS. The several Directors of Company who are
signatories to this Agreement have joined into this Agreement to evidence
their assent hereto, and for the express purpose of binding themselves, and
each of them, to the fulfillment of each of the terms and conditions hereof
by the respective parties and to the diligent, expeditious and good faith
pursuit, and timely consummation, of the transactions herein contemplated.
Each of the Directors hereby agrees to cooperate fully with the parties,
their assistants and agents, in consummating the Merger, to vote
appropriately upon all corporate resolutions toward that end, and to take no
action inconsistent with the purposes of this Agreement or the consummation
of the Merger. Nothing in this Agreement shall be construed to limit or
affect the fiduciary obligation of Company's officers and directors to
Company shareholders.
12.17 SHAREHOLDERS REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION. The
Shareholders of Company who are signatories to this Agreement have joined
into this Agreement after the vote of Shareholders required by Section 6(a)
of this Agreement for the express purpose of adopting and joining with the
Company in making the representations and warranties contained in Section 4
of this Agreement, and hereby expressly do so. Without limiting any other
right of indemnification or any other cause of action, Shareholders of the
Company shall jointly and severally defend, indemnify and hold Champion and
Surviving Company harmless from and against any and all losses, liabilities,
damages, costs, claims, judgments and expenses (including attorney's fees)
whatsoever arising out of or resulting from any material breach of warranty
or misrepresentation by Company or Shareholders contained herein, or from any
misrepresentation, omission or inaccuracy in any schedule, exhibit,
certificate, instrument or paper delivered or to be delivered by Company or
Shareholders hereunder in connection with the transactions herein
contemplated. For purposes of this Agreement, "material" shall mean any one
or more events or occurrences involving more than Fifteen Thousand Dollars
($15,000.00) singly or in the aggregate. Any Shareholder or Shareholders who
are an indemnifying party hereunder shall have the right to control the
defense of any claim or proceeding by any third party as to which it shall
have acknowledged its obligation to indemnify Champion or the Surviving
Company, and the indemnified party hereunder shall not settle or compromise
any such claim or proceeding without the written consent of the indemnifying
party, which consent shall not unreasonably be withheld or delayed. The
indemnified party may in any event participate in any such defense, with its
own counsel and at its own expense. The Shareholders of Company have joined
into this
Agreement for the express purpose of binding themselves to the fulfillment of
the terms and conditions of this Section 12.17.
IN WITNESS WHEREOF, Champion and Company have caused this Agreement to be
executed by their duly authorized officers and their corporate seals to be
hereunto affixed as of the date first above written, pursuant to resolutions
adopted by the boards of directors of Champion and Company, acting by a
majority thereof, and WITNESS also the signatures hereto of a majority of the
board of directors of Company, and all the Shareholders of Company.
CHAMPION INDUSTRIES, INC.
By _______________________________________
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President and
Chief Executive Officer
ATTEST:
______________________________
Secretary
BLUE RIDGE PRINTING CO., INC.
By _______________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., President
ATTEST:
______________________________
▇▇▇▇▇ ▇. ▇▇▇▇, Secretary
The following Directors of Blue Ridge Printing Co., Inc. do hereby join in
the foregoing Agreement to evidence their consent and agreement thereto:
___________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Director
___________________________________
▇▇▇▇▇ ▇▇▇▇▇▇, Director
___________________________________
G. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇., Director
The following Shareholders of Blue Ridge Printing Co., Inc. do hereby join in
the foregoing Agreement pursuant to Section 12.17 hereof.
___________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
___________________________________
▇▇▇▇▇ ▇▇▇▇▇▇
___________________________________
▇▇▇▇▇ ▇▇▇▇▇
___________________________________
G. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
___________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
EXHIBIT A
ADOPTION AGREEMENT
THIS ADOPTION AGREEMENT, made and entered into as of this day of
March, 1997, by and among BRP ACQUISITION COMPANY, INC. ("Interim Company"),
CHAMPION INDUSTRIES, INC. ("Champion"), and BLUE RIDGE PRINTING CO., INC.
("Company");
WHEREAS, Champion and Company have entered into an Agreement of Merger
dated as of the day of March, 1997 ("Agreement"), to which this
Adoption Agreement is attached, and which Agreement is incorporated herein by
reference; and
WHEREAS, it is provided in Section 3.10 of the Agreement that Champion
shall cause Interim Company to be organized and shall cause Interim Company
to execute and enter into an Adoption Agreement in substantially the form of
this Adoption Agreement so as to cause Interim Company to be bound by the
applicable terms and provisions of the Agreement; and
WHEREAS, Interim Company has been organized;
NOW, THEREFORE, in consideration of the foregoing premises which are not
mere recitals but an integral part hereof and in consideration of the mutual
agreements hereinafter set forth, the parties hereto agree as follows:
1. Interim Company hereby joins in and agrees to be bound by the terms
and conditions of the Agreement applicable to it to the same extent as if
Interim Company were an original party thereto.
2. Interim Company agrees that it shall use its best
efforts in good faith to take or cause to be taken as promptly as practicable
all actions on its part to be taken so as to permit the consummation of the
Agreement and the Merger (as defined in the Agreement) at the earliest
possible date, and that it shall cooperate fully with Champion and Company to
that end.
3. Interim Company represents and warrants to and covenants with Champion
and Company that:
3.1 Interim Company is a corporation, duly organized, validly existing
and in good standing under the laws of the State of North Carolina.
3.2 Interim Company has the corporate power to execute and deliver
this Adoption Agreement and to merge with Company pursuant to the Agreement
and has taken or will have taken at the Effective Time of the Merger all
action required by law, its Articles of Incorporation, its By-laws or
otherwise, to authorize such execution and delivery, the Merger and the
consummation of the transactions contemplated hereby; and this Adoption
Agreement and the Agreement are or at the Effective Time of the Merger will
be valid and binding agreements of Interim Company in accordance with their
terms.
IN WITNESS WHEREOF, Champion, Company and Interim Company have caused this
Agreement to be executed by their duly authorized officers as of the date first
above written, pursuant to resolutions adopted by the boards of directors of
Champion, Company and Interim Company, acting by a majority thereof.
CHAMPION INDUSTRIES, INC.
By
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
President and Chief Executive Officer
ATTEST
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ITS SECRETARY
BLUE RIDGE PRINTING CO., INC.
By
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------------------, President
ATTEST
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Its Secretary
BRP ACQUISITION COMPANY, INC.
By
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------------------, President
ATTEST
------------------------------
Its Secretary
EXHIBIT B
PLAN OF MERGER
OF
BLUE RIDGE PRINTING CO., INC.
AND
BRP ACQUISITION COMPANY, INC.
NAME OF EACH CORPORATION PLANNING TO MERGE; SURVIVING CORPORATION
1. The Parties. BRP Acquisition Company, Inc., a North Carolina corporation
("Interim Company") shall merge with and into Blue Ridge Printing Co., Inc., a
North Carolina corporation ("Company") (both corporations are sometimes
collectively referred to herein as the "Constituent Corporations") under the
articles of incorporation of Company. Company shall be (and is hereinafter
called when reference is made to it at and after the consummation of the Merger)
the Surviving Company and as such shall retain the name and title of "Blue Ridge
Printing Co., Inc.". The Merger shall become effective at the time when a
certificate of merger shall be issued by the Secretary of State of North
Carolina (the "Effective Time of the Merger").
2. Articles of Incorporation; Bylaws. At the Effective Time of the Merger,
the Articles of Incorporation and Bylaws of the Company in effect at the
Effective Time of the Merger shall be the Bylaws of the Surviving Company until
altered, amended or repealed in accordance with applicable law.
3. Assets and Rights. At the Effective Time of the Merger, the corporate
existence of Interim Company shall, as provided in the North Carolina
Business Corporation Act, be merged with and
into Company and continued in the Surviving Company. The Surviving Company
shall thereupon and thereafter possess all of the rights, privileges,
immunities and franchises, of a public as well as of a private nature, of the
Constituent Corporations; and all property, real, personal and mixed, and all
debts due on whatever account, including subscriptions to shares, if any, and
all other choses in action, and all and every other interest of or belonging
to or due to the Constituent Corporations, and each of them, shall be deemed
to be transferred to and vested in the Surviving Company without further act
or deed; and the title to any real estate, or any interest therein, vested in
the Constituent Corporations, and each of them, before the Merger, shall not
revert or in any way be impaired by reason of the Merger.
4. Liabilities and Obligations. At the Effective Time of the Merger, Company
as the Surviving Company shall henceforth be and remain responsible and liable
for all the liabilities and obligations of the Constituent Corporations; and
neither the rights of creditors nor any liens upon the property of either of the
Constituent Corporations shall be impaired by the Merger. Manner and Basis of
Converting Shares
5. CONVERSION, EXCHANGE AND CANCELLATION OF SHARES
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(a) Conversion Rates. At the Effective Time of the Merger each outstanding
share of Company Stock shall ipso facto, without any action on the part of the
holder thereof, become and be converted into shares of Champion Industries, Inc.
("Champion") Common Stock at the Exchange Rate which shall be calculated, as
provided hereinafter and in Section 2.2 of the Agreement of Merger
dated March , 1997 between Champion and Company (the "Agreement of
Merger"). All shares of Champion Common Stock into which the aforesaid
Company Stock is so convetred shall be fully paid and non-assessable.
Company's stockholders of record at the Effective Time of the Merger, for the
shares of Company Stock then held by them, respectively, shall be allocated
and entitled to receive shares of Champion Common Stock, which total number
of shares of Champion Common Stock shall have an aggregate Market Value as of
the Valuation Date of Five Million Two Hundred Fifty Thousand Dollars
($5,250,000.00). The Market Value shall be determined by averaging the daily
closing trade prices of Champion Common Stock as reported on the Nasdaq
National Market System ("NMS") during the five (5) consecutive days on which
shares of Champion Common Stock are traded on the Nasdaq National Market
System ("NMS") immediately prior to the Valuation Date as reported in The
Wall Street Journal. The Valuation Date shall be the Nasdaq NMS trading day
immediately prior to the date of effectiveness of the Agreement of Merger as
to Champion and Company as provided in Section 12.13 thereof.
For purposes of establishing the Exchange Rate (the number of shares of
Champion Common Stock into which each share of Company Stock shall be converted
at the Effective Time of the Merger), the Market Value of one (1) share of
Champion Common Stock shall be divided into the aggregate Market Value to
establish to the nearest whole share the aggregate number of shares of Champion
Common Stock into which all of the then issued and outstanding shares of Company
Stock shall be converted at the
Effective Time of the Merger. Such number of shares of Champion Common Stock
shall then be divided by the number of shares of Company Stock that shall be
issued and outstanding immediately prior to the Effective Time of the Merger
with the quotient therefrom being the number of shares of Champion Common
Stock into which each share of Company Stock shall be converted at the
Effective Time of the Merger. All shares of Company Stock held by Company as
treasury stock immediately prior to the Effective Time of the Merger shall be
cancelled and shall not be exchanged for shares of Champion Common Stock.
(b) Manner of Exchange. After the Effective Time of the Merger, except for
persons exercising their rights as dissenting shareholders of Company, each
shareholder of Company, upon surrender to Champion of certificates representing
Company Stock, accompanied by a Letter of Transmittal and Investment Letter in
the form attached as Exhibit C to the Agreement of Merger shall be entitled to
receive in exchange therefor a certificate or certificates representing the
number of full shares of Champion Common Stock for which shares of Company Stock
theretofore represented by the certificate or certificates so surrendered shall
have been exchanged as provided in this Section 5. After the Effective Time of
the Merger, each outstanding certificate which, prior to the Effective Time of
the Merger, represented Company Stock, will be deemed for all corporate purposes
of Champion to evidence ownership of the number of full shares of Champion
Common Stock into which the shares of Company Stock represented thereby were
converted. Until such outstanding
certificates formerly representing company Stock are surrendered, no dividend
payable to holders of record of Champion Common Stock for any period as of
any date subsequent to the Effective Time of the Merger shall be paid to the
holder of such outstanding certificates in respect thereof. After the
Effective Time of the Merger there shall be no further registry of transfers
on the records of Company of shares of Company Stock. Upon surrender of
certificates of Company Stock for exchange for Champion Common Stock, there
shall be paid to the record holder of the certificates of Champion Common
Stock issued in exchange therefor (i) the amount of dividends theretofore
paid with respect to such full shares of Champion Common Stock as of any date
subsequent to the Effective Time of the Merger which have not yet been paid
to a public official pursuant to abandoned property laws and (ii) at the
appropriate payment date the amount of dividends with a record date after the
Effective Time of the Merger, but prior to surrender and a payment date
subsequent to surrender. No interest shall be payable with respect to such
dividends upon surrender of outstanding certificates.
(c) Fractional Shares. Champion will not issue fractional shares or
fractional share certificates, but in lieu of the issuance of fractional shares
will pay cash, without interest, to any Company shareholder otherwise entitled
to receive such fractional shares. The amount of such cash payment will be
determined by multiplying the fractional share interest to which a Company
shareholder would otherwise be entitled by the Market Value of Champion Common
Stock as determined pursuant to Section
5(a). Payment for fractional shares will be made with respect to each
shareholder at the time such shareholder's certificates of Company Stock are
exchanged.
(d) Lost Certificates. If a certificate evidencing outstanding shares of
Company Stock is lost, stolen or destroyed, the registered owner thereof shall
be entitled to receive the Champion certificate and cash to which he would
otherwise be entitled on surrender of such certificate, by notifying Champion in
writing of such lost, stolen or destroyed certificate and giving Champion
evidence of loss and a bond sufficient to indemnify Champion against any claim
that may be made against it on account of the alleged lost, stolen and destroyed
certificate and the issuance of the certificate and cash.
TERMS AND CONDITIONS OF MERGER
6. Further Assurances. If at any time the Surviving Company shall consider
or be advised that any further assignments, conveyances or assurances are
necessary or desirable to vest, perfect or confirm in the Surviving Company the
title to any property or rights of Interim Company or Company or any subsidiary
thereof, or otherwise to carry out the provisions hereof, the proper officers
and directors of Interim Company or Company, as the case may be, as of the
Effective Time of the Merger, and thereafter the officers of the Surviving
Company acting on behalf of Interim Company or Company, as the case may be,
shall execute and deliver any and all proper assignments, conveyances and
assurances, and do all things necessary or desirable to vest, perfect
or confirm title to such property or rights in the Surviving Company and
otherwise carry out the provisions hereof.
7. Termination and Abandonment. This Plan of Merger may be terminated and
the Merger abandoned as provided in the Agreement of Merger. However, the filing
of this Plan of Merger with the North Carolina Secretary of State shall
constitute a conclusive presumption that the Merger has been consummated in
accordance with the terms hereof.
8. Other Terms and Conditions. All other terms and conditions to the Merger
are as provided in the Agreement of Merger.
IN WITNESS WHEREOF, each of the parties hereto has caused this Plan of
Merger to be executed on its behalf and its corporate seal to be hereunto
affixed and attested by its corporate officers thereunto duly authorized, all as
of the day and year first above written.
BLUE RIDGE PRINTING CO., INC.
a corporation
By
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President
ATTEST:
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ITS SECRETARY
BRP ACQUISITION COMPANY, INC.,
a corporation
By
----------------------------------
President
ATTEST:
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Its Secretary
EXHIBIT C (Per Sections 2.3, 2.4 and 6(b) and (c))
INVESTMENT LETTER
Champion Industries, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
RE: ISSUANCE OF SHARES OF COMMON STOCK OF CHAMPION INDUSTRIES, INC.
PURSUANT TO MERGER AGREEMENT DATED MARCH , 1997 WITH
RESPECT TO BLUE RIDGE PRINTING CO., INC.
Gentlemen:
The undersigned hereby represents, warrants, covenants and agrees as
follows:
Pursuant to that certain Agreement of Merger between Blue Ridge Printing
Co., Inc. ("Company") and Champion Industries, Inc. ("Champion"), dated as of
March , 1997 (hereinafter the "Agreement") (all capitalized terms not
defined herein having the meaning ascribed to them in the Agreement), to which
this Investment Letter is attached and incorporated as an exhibit, whereby the
Company will merge with a wholly owned subsidiary of Champion and the
outstanding shares of Company Stock shall be exchanged for shares of common
stock of Champion (hereinafter the "Restricted Shares"), the undersigned, the
holder of shares of the issued and outstanding Company Stock (the
"Shareholder") hereby represents, warrants, covenants and agrees as follows:
(1) The undersigned acknowledges that Champion has furnished to Company
and to the Shareholder the following:
(a) The information contained in its annual report on
Securities and Exchange Commission Form 10-K for fiscal year ended
October 31, 1996, together with exhibits and its proxy statement for
annual meeting of shareholders to be held March 17, 1997, portions
of which are incorporated by reference into such Form 10-K; and
(b) Copies of all reports filed by Champion under Sections 13(a), 14(a),
14(c) and 15(d) of the Securities Exchange Act of 1934 since the
filing of the annual report on Form 10-K described in subparagraph
(a) above.
(a) The undersigned is purchasing the Restricted Shares for investment, for
its or his own account only, and not for resale, fractionalization, subdivision,
or other disposition.
(b) Although I do not presently plan to resell the Restricted Shares, if
such sale should later be proposed, I agree that the Restricted Shares may be
resold only in a transaction or transactions in accordance with Rule 144 or
Rule 145 (if applicable) or any other exemption rule promulgated by the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, as the same may from time to time be in effect, and also only in
accordance with any regulations and interpretations under the securities laws
of North Carolina, or other applicable state laws. The undersigned
acknowledges that in the event of conflicting state and federal restrictions
on resale, the undersigned will be governed by the most restrictive
applicable rule or statute. This further reaffirms my obligation
originally set forth in Section 6(b) of the Agreement that I shall not
dispose of either (i) any shares of Champion Common Stock issued to me as
Restricted Shares in exchange for shares of Company Stock or (ii) any other
shares of Champion Common Stock I own until such time as financial results
covering at least thirty (30) days of combined, post-merger operations of
Champion and Company have been published. I further agree that a legend
relative to the application of the foregoing restriction may be placed upon
the certificates for any Restricted Shares issued to me, but that failure to
place such legend upon the certificates does not affect my undertakings made
herein.
(c) The undersigned acknowledges being informed by Champion that the
Restricted Shares delivered pursuant to the Agreement are not registered
under the Securities Act of 1933 and must be held indefinitely unless they
are subsequently registered under the Securities Act of 1933, or under state
securities acts, or unless an exemption from such registration is available.
The undersigned understands that any routine sale of Restricted Shares made
in reliance upon Rule 144 or Rule 145 promulgated under the Securities Act of
1933 can be made only in limited amounts, in accordance with the terms and
conditions of those Rules and that in the case of securities to which those
Rules are not applicable, public resale may require compliance with some
other disclosure or registration exemption under such statutes.
(d) Champion may, if it so desires, permit the transfer of the Restricted
Shares out of the name of the undersigned, only when the request for transfer is
accompanied by an opinion of
counsel for, or acceptable to, Champion (said counsel to be retained by and
the cost incurred therefor to be paid by the undersigned) that neither the
sale nor the proposed transfer results in violation of the North Carolina
Securities Law or the securities laws of another jurisdiction or of the
Federal Securities Act of 1933.
(e) Each certificate or any other instrument representing the Restricted
Shares now or hereafter issued pursuant to the Agreement may be stamped or
otherwise imprinted with, or contain, a legend in substantially the following
form:
"The securities represented by this instrument have not been registered
under the Federal Securities Act of 1933, or any state securities statute
and may not be sold, assigned, or transferred unless (i) registered for
resale or (ii) the issuer hereof has received the written opinion of
counsel for said issuer that after investigation of relevant facts, such
counsel is of the opinion that such sale, assignment, or transfer does not
involve a transaction requiring a registration of such securities under the
Federal Securities Act of 1933 or any applicable state securities laws. The
restrictions of this paragraph shall become null and void and this
paragraph shall have no effect on and after _______________________, 2000.
(f) The undersigned is: (Please initial the alternative that applies to
your particular investment situation. By so initialing, you acknowledge that
Champion is entitled to rely upon your representations hereunder).
__________ (i) An accredited investor as that term is defined in Rule 501 of
Regulation D promulgated under the Securities Act of 1933 (See
"Investor Suitability Standards" attached hereto); or
__________(ii) Not an accredited investor (as defined in (i) above) but hereby
represents and warrants that:
__________a. The undersigned has sufficient knowledge and
experience in financial and business matters to be
capable of evaluating the merits and risks of an
investment in the Restricted Shares; the
undersigned is not utilizing any other person as
his/her purchaser representative in connection with
evaluating such merits and risks. The undersigned
offers as evidence of knowledge and experience in
these matters the information set forth on this
questionnaire; or
__________b. The undersigned may not have sufficient knowledge
and experience in financial and business matters to
evaluate the merits hereof, and the undersigned
represents that the undersigned has retained a
purchaser representative(s) (as defined in Rule 506
of Regulation D promulgated under the Securities
Act of 1933) in connection with the evaluation of
the merits and risks of an investment in the
Restricted Shares as follows:
NAME: __________________________________________________________________________
FIRM: __________________________________________________________________________
PROFESSION: ____________________________________________________________________
ADDRESS: _______________________________________________________________________
If represented by a purchaser representative, please request a Purchaser
Representative Questionnaire from Champion and have it completed by your
representative and returned to Champion. The undersigned with the above-named
purchaser representative(s) has such knowledge and experience in financial and
business matters that they are capable of evaluating the merits and risks of an
investment in the Restricted Shares.
(a) The undersigned is presently a bona fide resident of the state indicated
below and the address and social security number set forth below are his true
and correct residence and correct social security number, and he has no present
intention of becom-
ing a resident of any other state or jurisdiction.
(b) The undersigned acknowledges that he has been furnished with a
package of information and disclosures described in paragraph 1 hereof, and
has been given access to all underlying documents in connection with this
transaction as well as such other information as he or his representative, if
retained, deems necessary or appropriate as a prudent and knowledgeable
investor in evaluating the purchase of the Restricted Shares. The undersigned
acknowledges that Champion or its authorized representatives have made
available to him or his purchaser representative, if retained, the
opportunity to obtain additional information to verify the accuracy of the
information contained in the above-mentioned materials furnished the
undersigned in connection with such nonpublic offering, and to evaluate the
merits and risks of this investment including, but not limited to, the
economic consequences of the investment. The undersigned acknowledges that he
or his purchaser representative, if retained, had the opportunity to ask
questions of and receive satisfactory answers from Champion or its authorized
representatives concerning the terms and conditions of the investment in the
Restricted Shares and information in the above-mentioned materials furnished
the undersigned in connection with such nonpublic offering. In reaching the
conclusion that he desires to acquire the Restricted Shares, the undersigned
has carefully evaluated his financial resources and investment position and
goals, and the risks associated with this investment and acknowledges that he
is able to bear the economic risks of the entire loss of this investment.
(c). The undersigned understands that he is purchasing the Restricted Shares
without being furnished any offering literature or prospectus other than the
documents and materials referred to in Paragraph 9 above, that the transaction
and that the materials furnished the undersigned have not been scrutinized or
approved by the United States Securities and Exchange Commission or by any state
securities regulatory agency, and that any such scrutiny or registration does
not imply approval or disapproval of the same.
(d) Because of the reliance by Champion on Section 3 (b) and Section 4(2) of
the Securities Act of 1933 and Regulation D as promulgated by the Securities and
Exchange Commission as well as provisions of applicable state securities laws
and rules covering the offering of such Restricted Shares, the undersigned
acknowledges and is aware of the following:
(i) There are substantial restrictions on the transferability of the
Restricted Shares. Accordingly, it may not be possible for the
undersigned to readily liquidate his investment in Champion.
(ii) The investor has been informed by Champion that the Restricted
Shares have not been registered under the Securities Act of 1933
and must be held indefinitely unless subsequently registered under
the 1933 Act or an exemption from such registration under the 1933
Act is made available; that Champion is not obligated to file a
notification under Regulation A of the 1933 Act or a registration
statement under the 1933 Act; and that Champion has not covenanted
to take any action necessary for qualification of a limited resale
of the Restricted Shares under applicable securities rules and
regulations.
(e) The undersigned is executing this letter and all other documents as an
inducement to Champion to issue the Restricted Shares to the undersigned, and
Champion may rely on such documents and the information contained herein or
furnished by the
undersigned to determine the qualifications of the undersigned to purchase
the Restricted Shares.
(f) This letter shall be binding upon the heirs, estate, legal
representatives, successors and assigns of the undersigned.
Date:__________________________ , 1997 _____________________________________
__________________________________
QUESTIONNAIRE
The purpose of this questionnaire is to assure Champion that each
investor will meet the standards imposed by Regulation D promulgated under
the Securities Act of 1933, as amended (the "Act"), and by applicable state
securities law since the Restricted Shares will not be registered under the
Act or under such state securities laws.
If the answer to any question is "None" or "Not Applicable", please so
state. Please answer each question.
Your answers will at all times be kept strictly confidential. However, by
signing this Questionnaire, you agree that Champion may present this
Questionnaire, with such confidentiality precautions as are possible under
the circumstances, to such parties as it deems appropriate if called upon
under law to establish the availability under the Act of an exemption from
registration of the private placement.
Please complete, sign and date this Questionnaire as part of the
Investment Letter.
1. Name _______________________________________________________________________
Residence Address___________________________________________________________
Mailing Address_____________________________________________________________
Date of Birth_______________________________________________________________
Residence Phone Number______________________________________________________
2. Occupation__________________________________________________________________
Business Address____________________________________________________________
____________________________________________________________________________
Business Phone Number_______________________________________________________
3. In which state, if any:
Do you hold a driver's license?_____________________________________________
Do you pay state income taxes?______________________________________________
Are you registered to vote?_________________________________________________
4. Bank Reference______________________________________________________________
Bank Office_________________________________________________________________
5. Business or Professional Education (college and post-college; if no college,
then give highest levels achieved):
SCHOOL MAJOR SUBJECT DEGREE
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
6. Please describe briefly the principal positions you have held during the
past ten years or since graduation from the schools listed in paragraph 5:
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
7. Other similar investment holdings of yours:
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
8. My estimated net worth (exclusive of residence, furnishings, and personal
automobiles) is in excess of $___________________.
9. My income for the year 1997 is estimated to be in excess of $______________;
my income for the years 1996 and 1995 was in excess of:
1996 1995
Individually __________ ___________
Jointly with my spouse __________ ___________
10. In the past tax year, the highest marginal federal income tax rate at which
some portion of my taxable income was taxed was__________percent.
11. Please indicate in the space provided below any additional information about
yourself which you think may be helpful in enabling the Purchaser to
determine that your knowledge and experience in financial and business
matters is sufficient to enable you to evaluate the merits and risks of
this investment:
____________________________________________________________________________
____________________________________________________________________________
To the best of my information and belief, the above and attached information
supplied by me is true and correct in all respects.
___________________________________________
Date:________________________ ___________________________________________
EXHIBIT D
NON-COMPETITION AGREEMENT
This agreement is made this day of , 1997, by and between
Blue Ridge Printing Co., Inc., a corporation, hereinafter referred to as
"Company", and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., hereinafter referred to as "▇▇▇▇▇▇".
WHEREAS, ▇▇▇▇▇▇ is a shareholder, principal officer and key manager of
company, whose efforts have been vital to the continuing success of the
company's business; and
WHEREAS, pursuant to an Agreement of Merger dated the day of March,
1997, Company will be merged with a wholly owned subsidiary of Champion
Industries, Inc. ("Champion"), a West Virginia corporation, with Company to
be the surviving corporation under said Merger Agreement; and
WHEREAS, consummation of such merger is contingent upon the execution of
this Non-competition Agreement; and
Whereas, as a material inducement to Champion to enter into and
consummate the aforesaid Agreement of Merger, ▇▇▇▇▇▇ is willing to execute
and perform this agreement and has herein further agreed not to compete with
Company after consummation of the merger.
NOW, THEREFORE, in consideration of the premises which are and shall be
construed to be an integral part hereof and not as mere recitals, for the
mutual covenants and agreements set forth in said Agreement of Merger and
this Agreement and the consideration flowing therefrom and herefrom, and for
other good and valuable consideration, the receipt and sufficiency of all of
which are
hereby acknowledged, it is agreed as follows:
1. ▇▇▇▇▇▇ recognizes and acknowledges that the list of the customers of
Company is a valuable, special and unique asset of the business of Company
and, therefore, he shall keep secret from every person, firm or corporation,
other than Champion or Company , and not use in any business or pursuits
related to the business of Champion or Company, the names of past, present
and prospective customers of Company, together with all knowledge concerning
the same which he may at any time have acquired during his employment or
association with Company.
2. ▇▇▇▇▇▇ shall not furnish to any person, firm or corporation or retain or
use any papers or other information of any nature whatsoever concerning the
customers of Company, or any other confidential business information of
Company, and shall not engage in, or participate in, any effort or act to
induce any customer of Company to take any steps which might result to the
disadvantage of or be detrimental to the interests of Company, and shall not
disclose, directly or indirectly, to any person, firm or corporation, any
process or trade secret which may have been acquired or developed by Company.
3. All of the terms and provisions of Sections 1 and 2 shall remain in
full force and effect for a period of two (2) years after the later of (a)
the execution of this Agreement, or (b) the termination of ▇▇▇▇▇▇'▇
employment with Company, if ▇▇▇▇▇▇ is employed by Company after the date of
this Agreement.
4. For a period of two (2) years after the later of (a) the execution of
this Agreement, or (b) the termination of ▇▇▇▇▇▇'▇
employment with Company, if ▇▇▇▇▇▇ is employed by Company after the date of
this Agreement, ▇▇▇▇▇▇ shall not enter into or engage directly or indirectly
in any business competitive with the business of Company or Champion, either
as an individual on his own account or as a partner or joint venturer or as
an employee, agent, consultant or salesman for any person, firm or
corporation or as an officer, director or stockholder of a corporation or
otherwise, in or within a radius of one hundred fifty (150) miles of the city
limits of the City of Asheville, North Carolina or Knoxville, Tennessee
without first having obtained the written consent of Company, which may be
arbitrarily withheld. The covenant and agreement of ▇▇▇▇▇▇ which is contained
in this section shall be construed as a covenant and agreement independent of
any other provision in this agreement and the existence of any claim or cause
of action of ▇▇▇▇▇▇, whether predicated on this agreement or otherwise, shall
not constitute a defense to the enforcement by Company of the aforesaid
covenant and agreement.
5. Any breach or evasion of any term of this agreement by ▇▇▇▇▇▇ will cause
immediate and irreparable injury to Company, its business and property;
therefore, in the event of any breach or evasion of any of the terms of this
agreement by ▇▇▇▇▇▇, Company shall be entitled to an immediate injunction
without the necessity of bond to restrain the violation thereof, or to
specific performance, or both, as well as to all other legal or equitable
remedies to which Company may be entitled hereunder or under applicable law,
including, but not limited to, the recovery of damages from ▇▇▇▇▇▇, as well
as any person, firm or corporation
which participates in such breach or evasion.
6. ▇▇▇▇▇▇ represents and admits that his experience and capabilities are such
that employment can be obtained by him in businesses which are of a different
nature and not competitive with the business of Company and Champion and that
the enjoining of any breach or evasion by him of the terms and provisions of
this agreement will not prevent him from earning a comfortable livelihood.
7. Notwithstanding anything in this agreement to the contrary, if ▇▇▇▇▇▇
shall have been found by a court of competent jurisdiction to have breached,
or evaded any of the provisions of Sections 1, 2 or 4, the two-year period
applicable to Sections 1, 2 and 4 shall commence on the date the court enters
a final order or decree enjoining or prohibiting ▇▇▇▇▇▇ from violating the
terms and provisions contained in the respective sections aforesaid.
8. This agreement may not be modified or terminated orally. No modification
or termination or attempted waiver shall be valid unless in writing signed by
the party against whom the same is sought to be enforced.
9. The provisions of this agreement shall be binding upon and inure to the
benefit of Company, its successors and assigns and ▇▇▇▇▇▇, his legal
representatives, heirs at law, distributees, devisees and legatees.
10. The invalidity or unenforceability of any particular provision of this
agreement shall not affect the other provisions hereof, and this agreement
shall be construed in all respects as if such invalid or unenforceable
provision were omitted.
11. Except for the Deferred Compensation Agreement dated July 1, 1993
between ▇▇▇▇▇▇ and Company, which shall survive the execution of this
agreement, this agreement supersedes all other oral or written agreements of
every nature whatsoever between Company and ▇▇▇▇▇▇ relating to the
non-competition by ▇▇▇▇▇▇ with Company and embodies the full and complete
understanding of Company and ▇▇▇▇▇▇ relating thereto.
12. In further consideration of the execution by ▇▇▇▇▇▇ of this
Non-Competition Agreement, the Company hereby covenants and agrees that it
shall not exercise its election to terminate either (i) the Deferred
Compensation Agreement dated July 1, 1993 between the Company as "Employer"
and ▇▇▇▇▇▇ as "Employee" or (ii) the Split Dollar Life Insurance Agreement
dated July 1, 1992 between the Company as "Employer" and ▇▇▇▇▇▇ as "Employee"
prior to December 31, 1999, whether or not ▇▇▇▇▇▇ is employed by Company
during such time period.
IN WITNESS WHEREOF, Company has executed this Agreement at Asheville,
North Carolina, on this day of , 1997, in the presence of the
undersigned competent witnesses.
WITNESSES: BLUE RIDGE PRINTING CO., INC.
_________________________________________ By___________________________
_________________________________________ Its__________________________
IN WITNESS WHEREOF, ▇▇▇▇▇▇ has executed this Agreement at Asheville,
North Carolina, on this day of , 1997, in the presence of the
undersigned competent witnesses.
WITNESSES: ------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
------------------------
------------------------
STATE OF NORTH CAROLINA,
COUNTY OF , TO-WIT:
The foregoing instrument was acknowledged before me this day of
, 1997 by , of Blue Ridge Printing Co., Inc., a
corporation, on behalf of said corporation.
My commission expires __________________________________________.
___________________________________________
NOTARY PUBLIC
[SEAL]
STATE OF NORTH CAROLINA,
COUNTY OF , TO-WIT:
The foregoing instrument was acknowledged before me this day of
, 1997, by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
My commission expires __________________________________________ .
___________________________________________
NOTARY PUBLIC
[SEAL]
EXHIBIT E
NON-COMPETITION AGREEMENT
This agreement is made this day of , 1997, by and between
Blue Ridge Printing Co., Inc., a corporation, hereinafter referred to as
"Company", and ▇▇▇▇▇ ▇▇▇▇▇▇, hereinafter referred to as "▇▇▇▇▇▇".
WHEREAS, ▇▇▇▇▇▇ is a shareholder, principal officer and key manager of
Company, active in the management and operations of the Company and whose
efforts have been vital to the continuing success of the Company's business;
and
WHEREAS, pursuant to an Agreement of Merger dated the day of March,
1997, Company will be merged with a wholly owned subsidiary of Champion
Industries, Inc. ("Champion"), a West Virginia corporation, with Company to
be the surviving corporation under said Merger Agreement; and
WHEREAS, consummation of such merger is contingent upon the execution of
this Non-Competition Agreement; and
WHEREAS, as a material inducement to Champion to enter into and
consummate the aforesaid Agreement of Merger, ▇▇▇▇▇▇ is willing to execute
and perform this agreement and has herein further agreed not to compete with
Company after consummation of the merger.
NOW, THEREFORE, in consideration of the premises which are and shall be
construed to be an integral part hereof and not as mere recitals, for the
mutual covenants and agreements set forth in said Agreement of Merger and
this Agreement and the consideration flowing therefrom and herefrom, and for
other good and valuable
consideration, the receipt and sufficiency of all of which are hereby
acknowledged, it is agreed as follows:
1. ▇▇▇▇▇▇ recognizes and acknowledges that the list of the customers of
Company is a valuable, special and unique asset of the business of Company
and, therefore, he shall keep secret from every person, firm or corporation,
other than Champion or Company , and not use in any business or pursuits
related to the business of Champion or Company, the names of past, present
and prospective customers of Company, together with all knowledge concerning
the same which he may at any time have acquired during his employment or
association with Company.
2. ▇▇▇▇▇▇ shall not furnish to any person, firm or corporation or retain
or use any papers or other information of any nature whatsoever concerning
the customers of Company, or any other confidential business information of
Company, and shall not engage in, or participate in, any effort or act to
induce any customer of Company to take any steps which might result to the
disadvantage of or be detrimental to the interests of Company, and shall not
disclose, directly or indirectly, to any person, firm or corporation, any
process or trade secret which may have been acquired or developed by Company.
3. All of the terms and provisions of Sections 1 and 2 shall remain in
full force and effect for a period of two (2) years after the later of (a)
the execution of this Agreement, or (b) the termination of ▇▇▇▇▇▇'▇
employment with Company, if ▇▇▇▇▇▇ is employed by Company after the date of
this Agreement.
4. For a period of two (2) years after the later of (a) the
execution of this Agreement, or (b) the termination of ▇▇▇▇▇▇'▇ employment
with Company, if ▇▇▇▇▇▇ is employed by Company after the date of this
Agreement, ▇▇▇▇▇▇ shall not enter into or engage directly or indirectly in
any business competitive with the business of Company or Champion, either as
an individual on his own account or as a partner or joint venturer or as an
employee, agent, consultant or salesman for any person, firm or corporation
or as an officer, director or stockholder of a corporation or otherwise, in
or within a radius of one hundred fifty (150) miles of the city limits of the
City of Asheville, North Carolina or Knoxville, Tennessee without first
having obtained the written consent of Company, which may be arbitrarily
withheld. The covenant and agreement of ▇▇▇▇▇▇ which is contained in this
section shall be construed as a covenant and agreement independent of any
other provision in this agreement and the existence of any claim or cause of
action of ▇▇▇▇▇▇, whether predicated on this agreement or otherwise, shall
not constitute a defense to the enforcement by Company of the aforesaid
covenant and agreement.
5. Any breach or evasion of any term of this agreement by ▇▇▇▇▇▇ will
cause immediate and irreparable injury to Company, its business and property;
therefore, in the event of any breach or evasion of any of the terms of this
agreement by ▇▇▇▇▇▇, Company shall be entitled to an immediate injunction
without the necessity of bond to restrain the violation thereof, or to
specific performance, or both, as well as to all other legal or equitable
remedies to which Company may be entitled hereunder or under applicable law,
including, but not limited to, the recovery of
damages from ▇▇▇▇▇▇, as well as any person, firm or corporation which
participates in such breach or evasion.
6. ▇▇▇▇▇▇ represents and admits that his experience and capabilities are
such that employment can be obtained by him in businesses which are of a
different nature and not competitive with the business of Company and
Champion and that the enjoining of any breach or evasion by him of the terms
and provisions of this agreement will not prevent him from earning a
comfortable livelihood.
7. Notwithstanding anything in this agreement to the contrary, if ▇▇▇▇▇▇
shall have been found by a court of competent jurisdiction to have breached,
or evaded any of the provisions of Sections 1, 2 or 4, the two-year period
applicable to Sections 1, 2 and 4 shall commence on the date the court enters
a final order or decree enjoining or prohibiting ▇▇▇▇▇▇ from violating the
terms and provisions contained in the respective sections aforesaid.
8. This agreement may not be modified or terminated orally. No
modification or termination or attempted waiver shall be valid unless in
writing signed by the party against whom the same is sought to be enforced.
9. The provisions of this agreement shall be binding upon and inure to
the benefit of Company, its successors and assigns and ▇▇▇▇▇▇, his legal
representatives, heirs at law, distributees, devisees and legatees.
10. The invalidity or unenforceability of any particular provision of
this agreement shall not affect the other provisions hereof, and this
agreement shall be construed in all respects as
if such invalid or unenforceable provision were omitted.
11. Except for the Deferred Compensation Agreement dated July 1, 1993
between ▇▇▇▇▇▇ and Company, which shall survive the execution of this
agreement, this agreement supersedes all other oral or written agreements of
every nature whatsoever between Company and ▇▇▇▇▇▇ relating to the
non-competition by ▇▇▇▇▇▇ with Company and embodies the full and complete
understanding of Company and ▇▇▇▇▇▇ relating thereto.
12. In further consideration of the execution by ▇▇▇▇▇▇ of this
Non-Competition Agreement, the Company hereby covenants and agrees that it
shall not exercise its election to terminate either (i) the Deferred
Compensation Agreement dated July 1, 1993 between the Company as "Employer"
and ▇▇▇▇▇▇ as "Employee" or (ii) the Split Dollar Life Insurance Agreement
dated July 1, 1992 between the Company as "Employer" and ▇▇▇▇▇▇ as "Employee"
prior to December 31, 1999.
IN WITNESS WHEREOF, Company has executed this Agreement at Asheville,
North Carolina, on this day of , 1997, in the presence of the
undersigned competent witnesses.
WITNESSES: BLUE RIDGE PRINTING CO., INC.
______________________________________ By____________________________
______________________________________ Its_____________________
IN WITNESS WHEREOF, ▇▇▇▇▇▇ has executed this Agreement at Asheville,
North Carolina, on this day of , 1997, in the presence of the
undersigned competent witnesses.
WITNESSES: ___________________________________
▇▇▇▇▇ ▇▇▇▇▇▇
_________________________
__________________________
STATE OF NORTH CAROLINA,
COUNTY OF _________, TO-WIT:
The foregoing instrument was acknowledged before me this day of
, 1997 by , of Blue Ridge Printing Co., Inc., a corporation, on
behalf of said corporation.
My commission expires __________________________________________ .
__________________________________________
NOTARY PUBLIC
[SEAL]
STATE OF NORTH CAROLINA,
COUNTY OF , TO-WIT:
The foregoing instrument was acknowledged before me this day of
, 1997, by ▇▇▇▇▇ ▇▇▇▇▇▇.
My commission expires __________________________________________ .
__________________________________________
NOTARY PUBLIC
[SEAL]
9