{"id":43082,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/agreement-and-plan-of-merger-ladd-furniture-inc-and-la-z-boy2.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"agreement-and-plan-of-merger-ladd-furniture-inc-and-la-z-boy2","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/planning\/agreement-and-plan-of-merger-ladd-furniture-inc-and-la-z-boy2.html","title":{"rendered":"Agreement and Plan of Merger &#8211; Ladd Furniture Inc. and La-Z-Boy Inc."},"content":{"rendered":"<pre>\n                          AGREEMENT AND PLAN OF MERGER\n\n                                   dated as of\n\n                               September 28, 1999\n\n                                      among\n\n                              LADD FURNITURE, INC.\n\n                                       and\n\n                              LA-Z-BOY INCORPORATED\n\n                                       and\n\n                              LZB ACQUISITION CORP.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n                                TABLE OF CONTENTS\n\n                                                                            Page\n\n\nARTICLE 1 THE MERGER.........................................................1\nSECTION 1.01. The Merger.....................................................1\nSECTION 1.02. Conversion of Shares...........................................1\nSECTION 1.03. Surrender and Payment..........................................2\nSECTION 1.04. Stock Options..................................................3\nSECTION 1.05. Adjustments....................................................4\nSECTION 1.06. Fractional Shares..............................................4\nSECTION 1.07. Withholding Rights.............................................5\nSECTION 1.08. Lost Certificates..............................................5\nSECTION 1.09. Shares Held by Company Affiliates..............................5\nSECTION 1.10. Dissenter's Rights.............................................5\nARTICLE 2 CERTAIN GOVERNANCE MATTERS.........................................5\nSECTION 2.01. Articles of Incorporation of the Surviving Corporation.........5\nSECTION 2.02. Bylaws of the Surviving Corporation............................5\nSECTION 2.03. Directors and Officers of the Surviving Corporation............6\nARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................6\nSECTION 3.01. Corporate Existence and Power..................................6\nSECTION 3.02. Corporate Authorization........................................6\nSECTION 3.03. Governmental Authorization.....................................6\nSECTION 3.04. Non-Contravention..............................................7\nSECTION 3.05. Capitalization of the Company..................................7\nSECTION 3.06. Subsidiaries...................................................8\nSECTION 3.07. SEC Filings....................................................8\nSECTION 3.08. Financial Statements...........................................9\nSECTION 3.09. Disclosure Documents...........................................9\nSECTION 3.10. Absence of Certain Changes.....................................9\n\n                                      -i-\n\n\n\n\n                                TABLE OF CONTENTS\n                                   (continued)\n\n\nSECTION 3.11. No Undisclosed Material Liabilities...........................10\nSECTION 3.12. Litigation....................................................10\nSECTION 3.13. Taxes.........................................................11\nSECTION 3.14. Employee Benefit Plans........................................11\nSECTION 3.15. Compliance with Laws..........................................12\nSECTION 3.16. Finders' or Advisors' Fees....................................12\nSECTION 3.17. Environmental Matters.........................................12\nSECTION 3.18. Opinion of Financial Advisor..................................13\nSECTION 3.19. Tax Treatment.................................................13\nSECTION 3.20. Takeover Statutes.............................................13\nARTICLE 4 REPRESENTATIONS AND WARRANTIES OF ACQUIROR........................13\nSECTION 4.01................................................................13\nSECTION 4.02. Corporate Authorization.......................................13\nSECTION 4.03. Governmental Authorization....................................14\nSECTION 4.04. Non-Contravention.............................................14\nSECTION 4.05. Capitalization................................................14\nSECTION 4.06. Subsidiaries..................................................15\nSECTION 4.07. SEC Filings...................................................15\nSECTION 4.08. Financial Statements..........................................16\nSECTION 4.09. Disclosure Documents..........................................16\nSECTION 4.10. Absence of Certain Changes....................................17\nSECTION 4.11. No Undisclosed Material Liabilities...........................17\nSECTION 4.12. Litigation....................................................17\nSECTION 4.13. Taxes.........................................................17\nSECTION 4.14. Employee Benefit Plans........................................18\nSECTION 4.15. Compliance with Laws..........................................18\nSECTION 4.16. Finders' or Advisors' Fees....................................18\n\n                                      -ii-\n\n\n\n                                TABLE OF CONTENTS\n                                   (continued)\n\n\n\nSECTION 4.17. Environmental Matters.........................................19\nSECTION 4.18. Tax Treatment.................................................19\nARTICLE 5 COVENANTS OF THE COMPANY..........................................19\nSECTION 5.01. Conduct of the Company........................................19\nSECTION 5.02. Company Stockholder Meeting; Proxy Material...................21\nSECTION 5.03. Other Offers..................................................21\nARTICLE 6 COVENANTS OF ACQUIROR.............................................23\nSECTION 6.01. Conduct of Acquiror...........................................23\nSECTION 6.02. Obligations of Merger Subsidiary..............................23\nSECTION 6.03. Form S-4......................................................23\nSECTION 6.04. Stock Exchange Listing........................................23\nARTICLE 7 COVENANTS OF ACQUIROR AND THE COMPANY.............................26\nSECTION 7.01. Reasonable Best Efforts.......................................26\nSECTION 7.02. Certain Filings...............................................26\nSECTION 7.03. Access to Information.........................................26\nSECTION 7.04. Public Announcements..........................................26\nSECTION 7.05. Further Assurances............................................27\nSECTION 7.06. Notices of Certain Events.....................................27\nSECTION 7.07. Affiliates....................................................27\nSECTION 7.08. Tax Treatment.................................................27\nARTICLE 8 CONDITIONS TO THE MERGER..........................................28\nSECTION 8.01. Conditions to the Obligations of Each Party...................28\nSECTION  8.02.  Conditions  to the  Obligations  of Acquiror  and Merger\n      Subsidiary............................................................28\nSECTION 8.03. Conditions to the Obligations of the Company..................29\nARTICLE 9 TERMINATION.......................................................30\nSECTION 9.01. Termination...................................................30\n\n                                     -iii-\n\n\n\n\n                                TABLE OF CONTENTS\n                                   (continued)\n\n\nSECTION 9.02. Effect of Termination.........................................31\nARTICLE 10 MISCELLANEOUS....................................................31\nSECTION 10.01. Notices......................................................31\nSECTION 10.02. Non-Survival of Representations and Warranties...............32\nSECTION 10.03. Amendments; No Waivers.......................................32\nSECTION 10.04. Expenses.....................................................32\nSECTION 10.05. Successors and Assigns.......................................33\nSECTION 10.06. Governing Law................................................33\nSECTION 10.07. Jurisdiction.................................................33\nSECTION 10.08. Waiver of Jury Trial.........................................34\nSECTION 10.09. Counterparts; Effectiveness..................................34\nSECTION 10.10. Entire Agreement.............................................34\nSECTION 10.11. Captions; Construction of Certain Contract Provisions........34\nSECTION 10.12. Severability.................................................34\n\n\n\n\n\n\n\n\n\n                                      -iv-\n\n\n\n \n\n                          AGREEMENT AND PLAN OF MERGER\n\n      AGREEMENT AND PLAN OF MERGER dated as of September 28, 1999 among LADD\nFURNITURE, INC., a North Carolina corporation (the \"Company\"), LA-Z-BOY\nINCORPORATED, a Michigan corporation (\"Acquiror\"), and LZB ACQUISITION CORP., a\nnewly-formed Michigan corporation and a wholly-owned first-tier subsidiary of\nAcquiror (\"Merger Subsidiary\").\n\n      WHEREAS, the respective Boards of Directors of Acquiror, Merger Subsidiary\nand the Company have approved this Agreement, and deem it advisable and in the\nbest interests of their respective stockholders to consummate the merger of\nMerger Subsidiary with and into the Company on the terms and conditions set\nforth herein;\n\n      WHEREAS, for United States federal income tax purposes, it is intended\nthat the Merger contemplated by this Agreement qualify as a \"reorganization\"\nwithin the meaning of Section 368 of the Internal Revenue Code of 1986, as\namended (the \"Code\"), and the rules and regulations promulgated thereunder;\n\n      NOW, THEREFORE, in consideration of the promises and the respective\nrepresentations, warranties, covenants, and agreements set forth herein, the\nparties hereto agree as follows:\n\n\n                                    ARTICLE 1\n                                   THE MERGER\n\n      SECTION 1.01. The Merger. (a) At the Effective Time, Merger Subsidiary\nshall be merged (the \"Merger\") with and into the Company in accordance with the\nrequirements of the laws of the States of North Carolina and Michigan, whereupon\nthe separate existence of Merger Subsidiary shall cease, and the Company shall\nbe the surviving corporation in the Merger (the \"Surviving Corporation\").\n\n      (b) As soon as practicable after satisfaction or, to the extent permitted\nhereunder, waiver of all conditions to the Merger, the Company and Merger\nSubsidiary will file a certificate of merger with the appropriate officials and\noffices of the States of North Carolina and Michigan and make all other filings\nor recordings required by law in connection with the Merger. The Merger shall\nbecome effective at such time as the certificate of merger is duly filed or at\nsuch later time as is specified in the certificate of merger (the \"Effective\nTime\").\n\n      (c) From and after the Effective Time, the Surviving Corporation shall\npossess all the rights, privileges, powers and franchises and be subject to all\nof the restrictions, disabilities and duties of the Company and Merger\nSubsidiary, all as provided under applicable law.\n\n      (d) The closing of the Merger (the \"Closing\") shall take place (i) at the\noffices of Miller, Canfield, Paddock and Stone, p.l.c., 150 West Jefferson,\nSuite 2500, Detroit, Michigan, as soon as practicable, but in any event within\nthree business days after the day on which the last to be fulfilled or waived of\nthe conditions set forth in Article 8 (other than those conditions that by their\nnature are to be fulfilled at the Closing, but subject to the fulfillment or\nwaiver of such conditions) shall be fulfilled or waived in accordance with this\nAgreement or (ii) at such other place and time or on such other date as the\nCompany and Acquiror may agree in writing (the \"Closing Date\").\n\n      SECTION 1.02.  Conversion of Shares. (a) At the Effective Time by virtue\nof the Merger and without any action on the part of the holder thereof:\n\n\n\n\n\n            (i) each share of common stock, par value $0.30 per share, of the\n      Company (the \"Shares\") held by the Company as treasury stock or owned by\n      Acquiror or any subsidiary of Acquiror immediately prior to the Effective\n      Time shall be canceled, and no payment shall be made with respect thereto;\n\n            (ii) each share of common stock of Merger Subsidiary outstanding\n      immediately prior to the Effective Time shall be converted into and become\n      one share of common stock of the Surviving Corporation with the same\n      rights, powers and privileges as the shares so converted and shall\n      constitute the only outstanding shares of capital stock of the Surviving\n      Corporation;\n\n            (iii) each Share outstanding immediately prior to the Effective Time\n      shall, except as otherwise provided in Section 1.02(a)(i), and except for\n      those shares as to which the holders thereof had properly exercised\n      dissenters' rights under applicable North Carolina law (the \"Dissenters'\n      Shares\"), be converted into the right to receive 1.18 (the \"Exchange\n      Ratio\") shares of fully paid and nonassessable common stock, $1.00 par\n      value, of Acquiror (\"Acquiror Common Stock\").\n\n      (b) All Acquiror Common Stock issued as provided in this Section 1.02\nshall be of the same class and shall have the same terms as the currently\noutstanding Acquiror Common Stock.\n\n      (c) From and after the Effective Time, all Shares converted in accordance\nwith Section 1.02(a)(iii) shall no longer be outstanding and shall automatically\nbe canceled and retired and shall cease to exist, and each holder of a\ncertificate representing any such Shares shall cease to have any rights with\nrespect thereto, except the right to receive the Merger Consideration (as\ndefined below), as applicable, and any dividends payable pursuant to Section\n1.03(f) and except that the holders of Dissenters' Shares shall have such rights\nas they may be entitled to under applicable North Carolina law. From and after\nthe Effective Time, all certificates representing the common stock of Merger\nSubsidiary shall be deemed for all purposes to represent the number of shares of\ncommon stock of the Surviving Corporation into which they were converted in\naccordance with Section 1.02(a)(ii).\n\n      (d) The Acquiror Common Stock to be received as consideration pursuant to\nthe Merger by each holder of Shares (together with cash in lieu of fractional\nshares of Acquiror Common Stock as specified below) is referred to herein as the\n\"Merger Consideration.\"\n\n      (e) For purposes of this Agreement, the word \"Subsidiary\" when used with\nrespect to any Person means any other Person, whether incorporated or\nunincorporated, of which (i) more than fifty percent of the securities or other\nownership interests or (ii) securities or other interests having by their terms\nordinary voting power to elect more than fifty percent of the board of directors\nor others performing similar functions with respect to such corporation or other\norganization, is directly owned or controlled by such Person or by any one or\nmore of its Subsidiaries. For purposes of this Agreement, \"Person\" means an\nindividual, a corporation, a limited liability company, a partnership, an\nassociation, a trust or any other entity or organization, including a government\nor political subdivision or any agency or instrumentality thereof.\n\n      SECTION 1.03. Surrender and Payment. (a) Prior to the Effective Time,\nAcquiror shall appoint an agent reasonably acceptable to the Company (the\n\"Exchange Agent\") for the purpose of exchanging certificates representing Shares\n(the \"Certificates\") for the Merger Consideration. Acquiror will make available\nto the Exchange Agent, as needed, the Merger Consideration to be paid in respect\nof the Shares. Promptly after the Effective Time, Acquiror will send, or will\ncause the Exchange Agent to send, to each holder of record at the Effective Time\nof Shares, a letter of transmittal for use in such\n\n                                       2\n\n\n\n\nexchange (which shall specify that the delivery shall be effected, and risk of \nloss and title shall pass, only upon proper delivery of the Certificates to the\nExchange Agent) in such form as the Company and Acquiror may reasonably agree, \nfor use in effecting delivery of Shares to the Exchange Agent.\n\n      (b) Each holder of Shares that have been converted into a right to receive\nthe Merger Consideration, upon surrender to the Exchange Agent of a Certificate,\ntogether with a properly completed letter of transmittal, will be entitled to\nreceive the Merger Consideration in respect of the Shares represented by such\nCertificate. Until so surrendered, each such Certificate shall, after the\nEffective Time, represent for all purposes only the right to receive such Merger\nConsideration.\n\n      (c) If any portion of the Merger Consideration is to be paid to a Person\nother than the Person in whose name the Certificate is registered, it shall be a\ncondition to such payment that the Certificate so surrendered shall be properly\nendorsed or otherwise be in proper form for transfer and that the Person\nrequesting such payment shall pay to the Exchange Agent any transfer or other\ntaxes required as a result of such payment to a Person other than the registered\nholder of such Certificate or establish to the satisfaction of the Exchange\nAgent that such tax has been paid or is not payable.\n\n      (d) After the Effective Time, there shall be no further registration of\ntransfers of Shares. If, after the Effective Time, Certificates are presented to\nthe Surviving Corporation, they shall be canceled and exchanged for the\nconsideration provided for, and in accordance with the procedures set forth, in\nthis Article 1.\n\n      (e) Any portion of the Merger Consideration made available to the Exchange\nAgent pursuant to Section 1.03(a) that remains unclaimed by the holders of\nShares one year after the Effective Time shall be returned to Acquiror, upon\ndemand, and any such holder who has not exchanged his Shares for the Merger\nConsideration in accordance with this Section prior to that time shall\nthereafter look only to Acquiror for payment of the Merger Consideration in\nrespect of his Shares. Notwithstanding the foregoing, Acquiror shall not be\nliable to any holder of Shares for any amount paid to a public official pursuant\nto applicable abandoned property laws. Any amounts remaining unclaimed by\nholders of Shares three years after the Effective Time (or such earlier date\nimmediately prior to such time as such amounts would otherwise escheat to or\nbecome property of any governmental entity) shall, to the extent permitted by\napplicable law, become the property of Acquiror free and clear of any claims or\ninterest of any Person previously entitled thereto.\n\n      (f) No dividends or other distributions with respect to Acquiror Common\nStock issued in the Merger shall be paid to the holder of any unsurrendered\nCertificates until such Certificates are surrendered as provided in this\nSection. Subject to the effect of applicable laws, following such surrender,\nthere shall be paid, without interest, to the record holder of the Acquiror\nCommon Stock issued in exchange therefor (i) at the time of such surrender, all\ndividends and other distributions payable in respect of such Acquiror Common\nStock with a record date after the Effective Time and a payment date on or prior\nto the date of such surrender and not previously paid and (ii) at the\nappropriate payment date, the dividends or other distributions payable with\nrespect to such Acquiror Common Stock with a record date after the Effective\nTime but with a payment date subsequent to such surrender. For purposes of\ndividends or other distributions in respect of Acquiror Common Stock, all\nAcquiror Common Stock to be issued pursuant to the Merger (but not options\ntherefor issued pursuant to Section 1.04 unless actually exercised at the\nEffective Time) shall be entitled to dividends pursuant to the immediately\npreceding sentence as if issued and outstanding as of the Effective Time.\n\n      SECTION 1.04. Stock Options. (a) At the Effective Time, each outstanding\noption to purchase Shares (a \"Company Stock Option\") granted under the Company's\nplans identified in Schedule 1.04 (collectively, the \"Company Stock Option\nPlans\"), whether vested or not vested, shall be deemed \n\n                                       3\n\n\n\nassumed by Acquiror and shall thereafter be deemed to constitute an option to \nacquire, on the same terms and conditions as were applicable under such Company\nStock Option prior to the Effective Time, the number (rounded up to the nearest\nwhole number) of shares of Acquiror Common Stock determined by multiplying \n(x) the number of Shares subject to such Company Stock Option immediately prior\nto the Effective Time by (y) the Exchange Ratio, at a price per share of \nAcquiror Common Stock (rounded up to the nearest whole cent) equal to \n(A) the exercise price per Share otherwise purchasable pursuant to such Company\nStock Option divided by (B) the Exchange Ratio. In addition, prior to the \nEffective Time, the Company will make any amendments to the terms of such stock\noption or compensation plans or arrangements that are necessary to give effect \nto the transactions contemplated by this Section. The Company represents that no\nconsents are necessary to give effect to the transactions contemplated by this \nSection.\n\n      (b) Acquiror shall take all corporate action necessary to reserve for\nissuance a sufficient number of shares of Acquiror Common Stock for delivery\npursuant to the terms set forth in this Section 1.04.\n\n      (c) At the Effective Time, each award or account (including stock\nequivalents and stock units, but excluding Company Stock Options) outstanding as\nof the date hereof (\"Company Award\") that has been established, made or granted\nunder any employee incentive or benefit plans, programs or arrangements and\nnon-employee director plans maintained by the Company on or prior to the date\nhereof which provide for grants of equity-based awards or equity-based accounts\nshall be amended or converted into a similar instrument of Acquiror, in each\ncase with such adjustments to the terms and conditions of such Company Awards as\nare appropriate to preserve the value inherent in such Company Awards with no\ndetrimental effects on the holders thereof. The other terms and conditions of\neach Company Award, and the plans or agreements under which they were issued,\nshall continue to apply in accordance with their terms and conditions, including\nany provisions for acceleration or vesting. The Company represents that there\nare no Company Awards or Company Stock Options other than those reflected in\nSection 3.05.\n\n      (d) At the Effective Time, Acquiror shall file with the Securities and\nExchange Commission (the \"SEC\") a registration statement on an appropriate form\nor a post-effective amendment to a previously filed registration statement under\nthe Securities Act of 1933, as amended (the \"1933 Act\"), with respect to the\nAcquiror Common Stock subject to options and other equity-based awards issued\npursuant to this Section 1.04, and shall use its reasonable best efforts to\nmaintain the current status of the prospectus contained therein, as well as\ncomply with any applicable state securities or \"blue sky\" laws, for so long as\nsuch options or other equity-based awards remain outstanding.\n\n      (e) Acquiror shall take such actions as may be necessary so that, from and\nafter the Effective Time, each option on Acquiror Common Stock issued pursuant\nto this Section 1.04 in respect of a Company Stock Option that was issued under\nthe Company's stock option plan for non-employee directors will be subject to a\nplan that provides the holder of such option with substantially the same rights\nand benefits as he had under the Company's plan. Such actions may include\namending an existing Acquiror stock option plan or adopting a new stock option\nplan to accommodate such options.\n\n      SECTION 1.05. Adjustments. If at any time during the period between the\ndate of this Agreement and the Effective Time, any change in the outstanding\nshares of capital stock of Acquiror or the Company shall occur by reason of any\nreclassification, recapitalization, stock split or combination, exchange or\nreadjustment of shares, or any similar transaction, or any stock dividend\nthereon with a record date during such period, the Merger Consideration shall be\nappropriately adjusted to provide the holders of Shares with the same economic\neffect as contemplated by this Agreement prior to such event.\n\n      SECTION 1.06. Fractional Shares. No fractional shares of Acquiror Common\nStock shall be issued in the Merger, but in lieu thereof each holder of Shares\notherwise entitled to a fractional share of \n\n                                       4\n\n\n\nAcquiror Common Stock will be entitled to receive, from the Exchange Agent in \naccordance with the provisions of this Section 1.06, a cash payment, without \ninterest, in lieu of such fractional share of Acquiror Common Stock (after \ntaking into account all Certificates delivered by such holder) in an amount \nequal to such fractional part of a share of Acquiror Common Stock multiplied by\nthe average of the closing prices of Acquiror's Common Stock on the New York \nStock Exchange (the \"NYSE\") on the five business days immediately preceding the\nClosing Date.\n\n      SECTION 1.07. Withholding Rights. Each of the Surviving Corporation and\nAcquiror shall be entitled to deduct and withhold from the consideration\notherwise payable to any person pursuant to this Article such amounts as it is\nrequired to deduct and withhold with respect to the making of such payment under\nany provision of federal, state, local or foreign tax law. To the extent that\namounts are so withheld by the Surviving Corporation or Acquiror, as the case\nmay be, such withheld amounts shall be treated for all purposes of this\nAgreement as having been paid to the holder of the Shares in respect of which\nsuch deduction and withholding was made by the Surviving Corporation or\nAcquiror, as the case may be.\n\n      SECTION 1.08. Lost Certificates. If any Certificate shall have been lost,\nstolen or destroyed, upon the making of an affidavit of that fact by the person\nclaiming such Certificate to be lost, stolen or destroyed and, if required by\nthe Surviving Corporation, the posting by such person of a bond, in such\nreasonable amount as the Surviving Corporation may direct, as indemnity against\nany claim that may be made against it with respect to such Certificate, the\nExchange Agent will issue in exchange for such lost, stolen or destroyed\nCertificate the Merger Consideration to be paid in respect of the Shares\nrepresented by such Certificates as contemplated by this Article.\n\n      SECTION 1.09. Shares Held by Company Affiliates. Anything to the contrary\nherein notwithstanding, any shares of Acquiror Common Stock (or certificates\ntherefor) issued to affiliates of the Company pursuant to Section 1.03 shall be\nsubject to the restrictions described in Exhibit A, and such shares (or\ncertificates therefor) shall bear a legend describing such restrictions.\n\n      SECTION 1.10. Dissenter's Rights. Notwithstanding anything in this\nAgreement to the contrary, any Dissenters' Shares shall not be converted into\nthe right to receive the Merger Consideration, unless and until such holder\nfails to perfect or effectively withdraws or otherwise loses his right to\nappraisal and payment under North Carolina law. If, after the Effective Time,\nany such holder fails to perfect or effectively withdraws or loses his right to\nappraisal, such Dissenters' Shares shall thereupon be treated as if they had\nbeen converted as of the Effective Time into the right to receive the Merger\nConsideration to which such holder is entitled, without interest or dividends\nthereon. Any amounts paid to holders of Dissenters' Shares in an appraisal\nproceeding will be paid by the Surviving Corporation out of its own funds and\nwill not be paid, directly or indirectly, by Acquiror.\n\n\n                                    ARTICLE 2\n                           CERTAIN GOVERNANCE MATTERS\n\n      SECTION 2.01. Articles of Incorporation of the Surviving Corporation. The\narticles of incorporation of the Company in effect at the Effective Time shall\nbe the articles of incorporation of the Surviving Corporation until amended in\naccordance with applicable law.\n\n      SECTION 2.02. Bylaws of the Surviving Corporation. The bylaws of Merger\nSubsidiary in effect at the Effective Time shall be the bylaws of the Surviving\nCorporation until amended in accordance with applicable law.\n\n                                       5\n\n\n\n\n      SECTION 2.03. Directors and Officers of the Surviving Corporation. From\nand after the Effective Time, until successors are duly elected or appointed and\nqualified in accordance with applicable law, (a) the directors of Merger\nSubsidiary at the Effective Time shall be the directors of the Surviving\nCorporation, and (b) the officers of the Company at the Effective Time shall be\nthe officers of the Surviving Corporation.\n\n\n                                    ARTICLE 3\n                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY\n\n      The Company represents and warrants to Acquiror that:\n\n      SECTION 3.01. Corporate Existence and Power. The Company is a corporation\nduly incorporated, validly existing and in good standing under the laws of the\nState of North Carolina, and has all corporate powers and all governmental\nlicenses, authorizations, consents and approvals required to carry on its\nbusiness as now conducted, except for those the absence of which would not,\nindividually or in the aggregate, have a Material Adverse Effect on the Company.\nThe Company is duly qualified to do business as a foreign corporation and is in\ngood standing in each jurisdiction where the character of the property owned or\nleased by it or the nature of its activities makes such qualification necessary,\nexcept for those jurisdictions where the failure to be so qualified would not,\nindividually or in the aggregate, have a Material Adverse Effect on the Company.\nFor purposes of this Agreement, a \"Material Adverse Effect\" with respect to any\nPerson means a material adverse effect on the financial condition, business,\nliabilities, properties, assets or results of operations, taken as a whole, of\nsuch Person and its Subsidiaries, taken as a whole, but excluding the effects of\nany events or states of facts relating to the furniture industry in general and\nnot relating specifically to the business of the Company or Acquiror, as the\ncase may be. The Company has heretofore delivered to Acquiror true and complete\ncopies of the Company's certificate of incorporation and bylaws as currently in\neffect.\n\n      SECTION 3.02. Corporate Authorization. (a) The execution, delivery and\nperformance by the Company of this Agreement and the consummation by the Company\nof the transactions contemplated hereby are within the Company's corporate\npowers and, except for any required approval by the Company's stockholders in\nconnection with the consummation of the Merger, have been duly authorized by all\nnecessary corporate action. The affirmative vote of holders of the outstanding\nShares having votes representing a majority of the votes of all Shares is the\nonly vote of the holders of any of the Company's capital stock necessary in\nconnection with consummation of the Merger. Assuming due authorization,\nexecution and delivery of this Agreement by Acquiror and Merger Subsidiary, this\nAgreement constitutes a valid and binding agreement of the Company enforceable\nagainst the Company in accordance with its terms, subject to bankruptcy,\ninsolvency, fraudulent transfer, reorganization, moratorium and similar laws of\ngeneral applicability relating to or affecting creditors' rights and to general\nequity principles.\n\n      (b) The Company's Board of Directors, at a meeting duly called and held,\nhas (i) determined that this Agreement and the transactions contemplated hereby\n(including the Merger) are fair to and in the best interests of the Company's\nstockholders, (ii) approved and adopted this Agreement and approved the\nconsummation by the Company of the transactions contemplated hereby (including\nthe Merger), and (iii) resolved (subject to Section 5.02) to recommend approval\nand adoption of this Agreement and approval of the Merger by its stockholders.\n\n      SECTION 3.03. Governmental Authorization. The execution, delivery and\nperformance by the Company of this Agreement and the consummation of the Merger\nby the Company require no action by or in respect of, or filing with, any\ngovernmental body, agency, official or authority other than (a) the filing of a\ncertificate of merger in accordance with North Carolina law and Michigan law,\n(b) compliance\n\n                                       6\n\n\n\nwith any applicable requirements of the Hart-Scott-Rodino Antitrust Improvements\nAct of 1976 (the \"HSR Act\"), (c) compliance with any applicable requirements of \nthe Securities Exchange Act of 1934, as amended, and the rules and regulations \npromulgated thereunder (the \"Exchange Act\"), (d) compliance with any applicable \nrequirements of the 1933 Act and (e) other actions or filings which if not taken\nor made would not, individually or in the aggregate, have a Material Adverse \nEffect on the Company.  \n\n      SECTION 3.04. Non-Contravention. Except as set forth in Schedule 3.04, the\nexecution, delivery and performance by the Company of this Agreement and the\nconsummation by the Company of the transactions contemplated hereby do not and\nwill not (a) assuming compliance with the matters referred to in Section 3.02,\ncontravene or conflict with the certificate of incorporation or bylaws of the\nCompany, (b) assuming compliance with the matters referred to in Section 3.03,\ncontravene or conflict with or constitute a violation of any provision of any\nlaw, regulation, judgment, injunction, order or decree binding upon or\napplicable to the Company or any of its Subsidiaries, (c) constitute a default\nunder or give rise to a right of termination, cancellation or acceleration of\nany right or obligation of the Company or any of its Subsidiaries or to a loss\nof any benefit to which the Company or any of its Subsidiaries is entitled under\nany provision of any material agreement, contract or other instrument binding\nupon the Company or any of its Subsidiaries or any license, franchise, permit or\nother similar authorization held by the Company or any of its Subsidiaries, or\n(d) result in the creation or imposition of any Lien on any asset of the Company\nor any of its Subsidiaries. For purposes of this Agreement, \"Lien\" means, with\nrespect to any asset, any mortgage, lien, pledge, charge, security interest or\nencumbrance of any kind in respect of such asset other than any such mortgage,\nlien, pledge, charge, security interest or encumbrance (i) for Taxes (as defined\nin Section 3.13) not yet due or being contested in good faith (and for which\nadequate accruals or reserves have been established on the Acquiror Balance\nSheet or the Company Balance Sheet, as the case may be) or (ii) which is a\ncarriers', warehousemen's, mechanics', materialmen's, repairmen's or other like\nlien arising in the ordinary course of business. Except as disclosed in Schedule\n3.04, neither the Company nor any Subsidiary of the Company is a party to any\nagreement that expressly limits the ability of the Company or any Subsidiary of\nthe Company, or would limit Acquiror or any Subsidiary of Acquiror after the\nEffective Time, to compete in or conduct any line of business or compete with\nany Person or in any geographic area or during any period of time.\n\n      SECTION 3.05. Capitalization of the Company. The authorized capital stock\nof the Company consists of 50,000,000 Shares and 500,000 shares of $100 par\nvalue preferred stock (the \"Company Preferred Stock\"). As of the close of\nbusiness on July 3, 1999, there were outstanding 7,825,783 Shares, and employee\nstock options to purchase an aggregate of 903,252 Shares (of which options to\npurchase an aggregate of 434,950 Shares were exercisable) and Company Awards\n(other than outstanding restricted stock) with respect to an aggregate of\n4,762.0383 Shares, and no shares of Company Preferred Stock nor options with\nrespect thereto were outstanding. The Shares are the only class of the Company's\ncapital stock entitled to vote. The number of outstanding Shares is subject to\nchange before the Effective Time through the exercise of currently outstanding\nstock options. All outstanding shares of capital stock of the Company have been\nduly authorized and validly issued and are fully paid and nonassessable. Except\nas set forth in this Section and except for changes since the close of business\non July 3, 1999 resulting from the exercise of employee stock options\noutstanding on such date or options or stock-based awards granted as permitted\nby Section 5.01, there are outstanding (a) no shares of capital stock or other\nvoting securities of the Company, (b) no securities of the Company convertible\ninto or exchangeable for shares of capital stock or voting securities of the\nCompany, and (c) except for its obligations to make matching contributions under\nthe terms of its 401(k) plan, no options, warrants or other rights to acquire\nfrom the Company, and no preemptive or similar rights, subscription or other\nrights, convertible securities, agreements, arrangements or commitments of any\ncharacter, relating to the capital stock of the Company, obligating the Company\nto issue, transfer or sell, any capital stock, voting securities or securities\nconvertible into or exchangeable for capital stock or voting securities of the\nCompany or obligating the Company to grant, extend or enter into any such\noption, warrant, subscription or other right, convertible\n\n                                       7\n\n\n\nsecurity, agreement, arrangement or commitment (the items in clauses 3.05(a), \n3.05(b) and 3.05(c) being referred to collectively as the \"Company Securities\").\nThere are no outstanding obligations of the Company or any of its Subsidiaries \nto repurchase, redeem or otherwise acquire any Company Securities.\n\n      SECTION 3.06. Subsidiaries. (a) Each Subsidiary of the Company is duly\norganized, validly existing and in good standing under the laws of its\njurisdiction of organization, has all powers and all governmental licenses,\nauthorizations, consents and approvals required to carry on its business as now\nconducted, except for those the absence of which would not, individually or in\nthe aggregate, reasonably be expected to have a Material Adverse Effect on the\nCompany. Each Subsidiary of the Company is duly qualified to do business and is\nin good standing in each jurisdiction where the character of the property owned\nor leased by it or the nature of its activities makes such qualification\nnecessary, except for those jurisdictions where failure to be so qualified would\nnot, individually or in the aggregate, have a Material Adverse Effect on the\nCompany. All \"significant subsidiaries,\" as such term is defined in Section 1-02\nof Regulation S-X under the Exchange Act (each, a \"Significant Subsidiary\") of\nthe Company and their respective jurisdictions of incorporation are identified\nin the Company's annual report on Form 10-K for the fiscal year ended January 2,\n1999 (the \"Company 10-K\") or in Schedule 3.06(a).\n\n      (b) Except as set forth in the Company 10-K, all of the outstanding\ncapital stock of, or other ownership interests in, each Significant Subsidiary\nof the Company is owned by the Company, directly or indirectly, free and clear\n(except as set forth in Schedule 3.06(b)) of any material Lien and free of any\nother material limitation or restriction (including any restriction on the right\nto vote, sell or otherwise dispose of such capital stock or other ownership\ninterests). There are no outstanding (i) securities of the Company or any of its\nSubsidiaries convertible into or exchangeable for shares of capital stock or\nother voting securities or ownership interests in any Significant Subsidiary of\nthe Company or (ii) options, warrants or other rights to acquire from the\nCompany or any of its Significant Subsidiaries, and no preemptive or similar\nrights, subscription or other rights, convertible securities, agreements,\narrangements or commitments of any character, relating to the capital stock of\nany Significant Subsidiary of the Company, obligating the Company or any of its\nSignificant Subsidiaries to issue, transfer or sell, any capital stock, voting\nsecurities or other ownership interests in, or any securities convertible into\nor exchangeable for any capital stock, voting securities or ownership interests\nin, any Significant Subsidiary of the Company or obligating the Company or any\nSignificant Subsidiary of the Company to grant, extend or enter into any such\noption, warrant, subscription or other right, convertible security, agreement,\narrangement or commitment except, in any such case under clause (i) or (ii), to\nthe extent relating to an insignificant equity interest in any Significant\nSubsidiary (the items in clauses 3.06(b)(i) and 3.06(b)(ii) being referred to\ncollectively as the \"Company Subsidiary Securities\"). Except as set forth on\nSchedule 3.06(b), there are no outstanding obligations of the Company or any of\nits Subsidiaries to repurchase, redeem or otherwise acquire any outstanding\nCompany Subsidiary Securities.\n\n      SECTION 3.07. SEC Filings. (a) The Company has delivered to Acquiror (i)\nits annual reports on Form 10-K for its fiscal years ended December 28, 1996,\nJanuary 3, 1998 and January 2, 1999, (ii) its quarterly reports on Form 10-Q for\nits fiscal quarters ended after January 2, 1999, (iii) its proxy or information\nstatements relating to meetings of, or actions taken without a meeting by, the\nstockholders of the Company held since January 2, 1999, and (iv) all of its\nother reports, statements, schedules and registration statements filed with the\nSEC since January 2, 1999 (the documents referred to in this Section 3.07(a)\nbeing referred to collectively as the \"Company SEC Documents\").\n\n      (b) As of its filing date, each Company SEC Document complied as to form\nin all material respects with the applicable requirements of the Exchange Act\nand the 1933 Act.\n\n      (c) As of its filing date, each Company SEC Document filed pursuant to the\nExchange Act did not contain any untrue statement of a material fact or omit to\nstate any material fact necessary in order to\n\n                                       8\n\n\n\nmake the statements made therein, in the light of the circumstances under which\nthey were made, not misleading.\n\n      (d) Each such registration statement, as amended or supplemented, if\napplicable, filed pursuant to the 1933 Act as of the date such statement or\namendment became effective did not contain any untrue statement of a material\nfact or omit to state any material fact required to be stated therein or\nnecessary to make the statements therein not misleading.\n\n      SECTION 3.08. Financial Statements. The audited consolidated financial\nstatements and unaudited consolidated interim financial statements of the\nCompany (including any related notes and schedules) included in its annual\nreports on Form 10-K and the quarterly reports on Form 10-Q referred to in\nSection 3.07 fairly present in all material respects, in conformity with\ngenerally accepted accounting principles applied on a consistent basis (except\nas may be indicated in the notes thereto), the consolidated financial position\nof the Company and its consolidated Subsidiaries as of the dates thereof and\ntheir consolidated results of operations and cash flows for the periods then\nended (subject to normal year-end adjustments and the absence of notes in the\ncase of any unaudited interim financial statements). For purposes of this\nAgreement, \"Company Balance Sheet\" means the consolidated balance sheet of the\nCompany as of January 2, 1999 set forth in the Company 10-K and \"Company Balance\nSheet Date\" means January 2, 1999.\n\n      SECTION 3.09. Disclosure Documents. (a) Neither the proxy statement of the\nCompany (the \"Company Proxy Statement\") to be filed with the SEC in connection\nwith the Merger, nor any amendment or supplement thereto, will, at the date the\nCompany Proxy Statement or any such amendment or supplement is first mailed to\nstockholders of the Company or at the time such stockholders vote on the\nadoption and approval of this Agreement and the transactions contemplated\nhereby, contain any untrue statement of a material fact or omit to state any\nmaterial fact necessary in order to make the statements therein, in light of the\ncircumstances under which they were made, not misleading. The Company Proxy\nStatement will, when filed, comply as to form in all material respects with the\nrequirements of the Exchange Act. No representation or warranty is made by the\nCompany in this Section 3.09 with respect to statements made or incorporated by\nreference therein based on information supplied by Acquiror or Merger Subsidiary\nfor inclusion or incorporation by reference in the Company Proxy Statement.\n\n      (b) None of the information supplied or to be supplied by Company for\ninclusion or incorporation by reference in the Form S-4 (as defined in Section\n4.09) or any amendment or supplement thereto will at the time the Form S-4 or\nany such amendment or supplement becomes effective under the 1933 Act or at the\nEffective Time, as the case may be, contain any untrue statement of a material\nfact or omit to state a material fact necessary in order to make the statements\ntherein, in light of the circumstances under which they were made, not\nmisleading.\n\n      SECTION 3.10. Absence of Certain Changes. Except as set forth in Schedule\n3.10, since the Company Balance Sheet Date, the Company and its Subsidiaries\nhave conducted their business in the ordinary course consistent with past\npractice and there has not been:\n\n      (a) any event, occurrence or development of a state of circumstances or\nfacts which has had or reasonably would be expected to have, individually or in\nthe aggregate, a Material Adverse Effect on the Company;\n\n      (b) any declaration, setting aside or payment of any dividend or other\ndistribution with respect to any shares of capital stock of the Company or any\nrepurchase, redemption or other acquisition by the \n\n                                       9\n\n\n\nCompany or any of its Subsidiaries of any outstanding shares of capital stock or\nother securities of, or other ownership interests in, the Company or any of its \nSubsidiaries;\n\n      (c) any amendment of any material term of any outstanding security of the\nCompany or any of its Subsidiaries;\n\n      (d) any transaction or commitment made, or any contract, agreement or\nsettlement entered into, by (or judgment, order or decree affecting) the Company\nor any of its Subsidiaries relating to its assets or business (including the\nacquisition or disposition of any assets) or any relinquishment by the Company\nor any of its Subsidiaries of any contract or other right, in either case,\nmaterial to the Company and its Subsidiaries taken as a whole, other than\ntransactions, commitments, contracts, agreements or settlements (including\nwithout limitation settlements of litigation and tax proceedings) in the\nordinary course of business consistent with past practice, those contemplated by\nthis Agreement, or as agreed to in writing by Acquiror;\n\n      (e) any change in any method of accounting or accounting practice by the\nCompany or any of its Subsidiaries, except for any such change which is not\nsignificant or which is required by reason of a concurrent change in United\nStates generally accepted accounting principles (\"GAAP\"); or\n\n      (f) any (i) grant of any severance or termination pay to (or amendment to\nany such existing arrangement with) any director or officer of the Company or\nany of its Subsidiaries, (ii) entering into of any employment, deferred\ncompensation or other similar agreement (or any amendment to any such existing\nagreement) with any director or officer of the Company or any of its\nSubsidiaries, (iii) increase in benefits payable under any existing severance or\ntermination pay policies or employment agreements or (iv) increase in (or\namendments to the terms of) compensation, bonus or other benefits payable to\ndirectors or officers of the Company or any of its Subsidiaries, other than as\npermitted by this Agreement, or as agreed to in writing by Acquiror.\n\n      SECTION 3.11. No Undisclosed Material Liabilities. There are no\nliabilities of the Company or any Subsidiary of the Company of any kind\nwhatsoever, whether accrued, contingent, absolute, determined, determinable or\notherwise, other than:\n\n      (a)  liabilities  disclosed or provided for in the Company Balance Sheet\nor in the notes thereto;\n\n      (b) liabilities incurred since the date of the Company Balance Sheet in\nthe ordinary course of business;\n\n      (c) liabilities disclosed in the Company SEC Documents filed prior to the\ndate hereof or set forth in Schedule 3.11(c);\n\n      (d) liabilities under this Agreement; and\n\n      (e) liabilities which, individually or in the aggregate, would not have a\nMaterial Adverse Effect on the Company\n\n      SECTION 3.12. Litigation. Except as disclosed in the Company SEC Documents\nfiled prior to the date hereof, or as otherwise set forth in Schedule 3.12,\nthere is no action, suit, investigation or proceeding pending against, or to the\nknowledge of the Company threatened against or affecting, the Company or any of\nits Subsidiaries or any of their respective properties before any court or\narbitrator or any governmental body, agency or official which would reasonably\nbe expected to have, individually or in the aggregate, a Material Adverse Effect\non the Company.\n\n                                       10\n\n\n\n      SECTION 3.13. Taxes. Except as set forth in the Company Balance Sheet\n(including the notes thereto) or as otherwise set forth in Schedule 3.13, (i)\nall Company Tax Returns required to be filed with any taxing authority by, or\nwith respect to, the Company and its Subsidiaries have been filed in accordance\nwith all applicable laws; (ii) the Company and its Subsidiaries have timely paid\nall Taxes shown as due and payable on the Company Tax Returns that have been so\nfiled, and, as of the time of filing, the Company Tax Returns correctly\nreflected the facts regarding the income, business, assets, operations,\nactivities and the status of the Company and its Subsidiaries (other than Taxes\nwhich are being contested in good faith and for which adequate reserves are\nreflected on the Company Balance Sheet); (iii) the Company and its Subsidiaries\nhave made provision for all Taxes payable by the Company and its Subsidiaries\nfor which no Company Tax Return has yet been filed; (iv) the charges, accruals\nand reserves for Taxes with respect to the Company and its Subsidiaries\nreflected on the Company Balance Sheet are adequate under GAAP to cover the Tax\nliabilities accruing through the date thereof; (v) there is no action, suit,\nproceeding, audit or claim now proposed or pending against or with respect to\nthe Company or any of its Subsidiaries in respect of any Tax where there is a\nreasonable possibility of a material adverse determination; and (vi) to the best\nof the Company's knowledge and belief, neither the Company nor any of its\nSubsidiaries is liable for any Tax imposed on any entity other than such Person,\nexcept as the result of the application of Treas. Reg. Section 1.1502-6 (and any\ncomparable provision of the tax laws of any state, local or foreign\njurisdiction) to the affiliated group of which the Company is the common parent.\nFor purposes of this Agreement, \"Taxes\" shall mean any and all taxes, charges,\nfees, levies or other assessments, including, without limitation, all net\nincome, gross income, gross receipts, excise, stamp, real or personal property,\nad valorem, withholding, social security (or similar), unemployment, occupation,\nuse, service, service use, license, net worth, payroll, franchise, severance,\ntransfer, recording, employment, premium, windfall profits, customs duties,\ncapital stock, profits, disability, sales, registration, value added,\nalternative or add-on minimum, estimated or other taxes, assessments or charges\nimposed by any federal, state, local or foreign governmental entity and any\ninterest, penalties, or additions to tax attributable thereto. For purposes of\nthis Agreement, \"Tax Returns\" shall mean any return, report, form or similar\nstatement required to be filed with respect to any Tax (including any attached\nschedules), including, without limitation, any information return, claim for\nrefund, amended return or declaration of estimated Tax.\n\n      SECTION 3.14. Employee Benefit Plans. (a) Prior to the date hereof, the\nCompany has provided Acquiror with a list (set forth on Schedule 3.14)\nidentifying each material \"employee benefit plan,\" as defined in Section 3(3) of\nthe Employee Retirement Income Security Act of 1974 (\"ERISA\"), each material\nemployment, severance or similar contract, plan, arrangement or policy\napplicable to any director, former director, employee or former employee of the\nCompany and each material plan or arrangement (written or oral), providing for\ncompensation, bonuses, profit-sharing, stock option or other stock related\nrights or other forms of incentive or deferred compensation, vacation benefits,\ninsurance coverage (including any self-insured arrangements), health or medical\nbenefits, disability benefits, workers' compensation, supplemental unemployment\nbenefits, severance benefits and post-employment or retirement benefits\n(including compensation, pension, health, medical or life insurance benefits)\nwhich is maintained, administered or contributed to by the Company and covers\nany employee or director or former employee or director of the Company, or under\nwhich the Company has any liability. Such plans (excluding any such plan that is\na \"multiemployer plan,\" as defined in Section 3(37) of ERISA) are referred to\ncollectively herein as the \"Company Employee Plans.\"\n\n      (b) Each Company Employee Plan has been maintained in compliance with its\nterms and with the requirements prescribed by any and all statutes, orders,\nrules and regulations (including but not limited to ERISA and the Code) which\nare applicable to such Plan, except where failure to so comply would not,\nindividually or in the aggregate, have a Material Adverse Effect on the Company.\n\n                                       11\n\n\n\n      (c) Except as scheduled on Schedule 3.14 with respect to multiemployer\nplans, neither the Company nor any affiliate of the Company has incurred a\nliability under Title IV of ERISA that has not been satisfied in full, and no\ncondition exists that presents a material risk to the Company or any affiliate\nof the Company of incurring any such liability other than liability for premiums\ndue the Pension Benefit Guaranty Corporation (which premiums have been paid when\ndue).\n\n      (d) Each Company Employee Plan which is intended to be qualified under\nSection 401(a) of the Code is so qualified and has been so qualified during the\nperiod from its adoption to date, and each trust forming a part thereof is\nexempt from federal income tax pursuant to Section 501(a) of the Code.\n\n      (e) Except as set forth in Schedule 3.14, no director or officer or other\nemployee of the Company or any of its Subsidiaries will become entitled to any\nretirement, severance or similar benefit or enhanced or accelerated benefit\n(including any acceleration of vesting or lapse of repurchase rights or\nobligations with respect to any employee stock option or other benefit under any\nstock option plan or compensation plan or arrangement of the Company) solely as\na result of the transactions contemplated hereby.\n\n      (f) Except as set forth in Schedule 3.14, no Company Employee Plan\nprovides post-retirement health and medical, life or other insurance benefits\nfor retired employees of the Company or any of its Subsidiaries.\n\n      (g) Except as set forth in Schedule 3.14, there has been no amendment to,\nwritten interpretation or announcement (whether or not written) by the Company\nor any of its affiliates relating to, or change in employee participation or\ncoverage under, any Company Employee Plan which would increase materially the\nexpense of maintaining such Company Employee Plan above the level of the expense\nincurred in respect thereof for the 12 months ended on the Company Balance Sheet\nDate.\n\n      SECTION 3.15. Compliance with Laws. To the best of the knowledge of any of\nMessrs. KC, WC, MH, DM, and FS (the \"Executives\"), neither the Company nor any\nof its Subsidiaries is in violation of, or has since January 2, 1999 violated,\nany applicable provisions of any laws, statutes, ordinances or regulations,\nexcept for any violations that, individually or in the aggregate, would not\nreasonably be expected to have a Material Adverse Effect on the Company.\n\n      SECTION 3.16. Finders' or Advisors' Fees. Except for Mann, Armistead &amp; Epperson, Ltd. a copy of whose engagement agreement has been provided to\nAcquiror, there is no investment banker, broker, finder or other intermediary\nwhich has been retained by or is authorized to act on behalf of the Company or\nany of its Subsidiaries who might be entitled to any fee or commission in\nconnection with the transactions contemplated by this Agreement.\n\n      SECTION 3.17. Environmental Matters. (a) Except as set forth in the\nCompany SEC Documents filed prior to the date hereof or as set forth on Schedule\n3.17, (i) the Company has delivered to Acquiror copies of each written notice,\nnotification, demand, request for information, citation, summons, complaint or\norder that, to the best knowledge of its Vice President of Risk and Facilities\nEngineering after reasonable inquiry, the Company has received in the last\ntwelve months; (ii) to the best knowledge of the Company's Vice President of\nRisk and Facilities Engineering after reasonable inquiry, there is no\ninvestigation, action, claim, suit, proceeding or review pending or, to the\nknowledge of the Company or any of its Subsidiaries, threatened by any Person\nagainst, the Company or any of its Subsidiaries, and during the past twelve\nmonths no penalty has been assessed against the Company or any of its\nSubsidiaries that has not been disclosed to Acquiror in writing, in each case,\nwith respect to any matters relating to or arising out of any Environmental Law;\n(iii) the Company and its Subsidiaries are and have been in material compliance\nwith all Environmental Laws; (iv) there are no material liabilities of or\nrelating to the Company or any of its Subsidiaries relating to or arising out of\nany Environmental Law\n\n                                       12\n\n\n\nof any kind whatsoever, whether accrued, contingent, absolute, determined, \ndeterminable or otherwise, and there is no existing condition, situation or set\nof circumstances which could reasonably be expected to result in such a \nliability; and (v) since December 31, 1995, there has been no environmental \ninvestigation, study, audit, test, review or other analysis commonly referred to\nas a \"Phase I\" or \"Phase II\" report of which any of the Executives or the Vice \nPresident of Risk and Facility Engineering of the Company has knowledge in \nrelation to the current or prior business of the Company or any of its \nSubsidiaries or any property or facility now or previously owned, leased\nor operated by the Company or any of its Subsidiaries which is in the possession\nof the Company and which was not delivered to Acquiror prior to the date hereof.\n\n      (b) For purposes of this Section 3.17 and Section 4.17, the term\n\"Environmental Laws\" means any federal, state, local and foreign statutes, laws\n(including, without limitation, common law), judicial decisions, regulations,\nordinances, rules, judgments, orders, codes, injunctions, permits, governmental\nagreements or governmental restrictions relating to human health and safety, the\nenvironment or to pollutants, contaminants, wastes, or chemicals.\n\n      SECTION 3.18. Opinion of Financial Advisor. The Company has received the\nopinion of Mann, Armistead &amp; Epperson, Ltd. to the effect that, as of the date\nof such opinion, the Merger is fair from a financial point of view to the\nholders of Shares (other than Acquiror or any of its Subsidiaries or\naffiliates), and, as of the date hereof, such opinion has not been withdrawn.\n\n      SECTION 3.19. Tax Treatment. Neither the Company nor any of its affiliates\nhas taken or agreed to take any action or is aware of any fact or circumstance\nthat would prevent the Merger from qualifying as a reorganization within the\nmeaning of Section 368 of the Code (a \"368 Reorganization\").\n\n      SECTION 3.20. Takeover Statutes. The Board of Directors of the Company has\ntaken the necessary action to make inapplicable the application of Article 9 and\nArticle 9A of the North Carolina law, any other applicable antitakeover or\nsimilar statute, regulation or the provision of the Company's certificate of\nincorporation or bylaws to this Agreement and the transactions contemplated\nhereby.\n\n                                    ARTICLE 4\n                  REPRESENTATIONS AND WARRANTIES OF ACQUIROR\n\n      Acquiror represents and warrants to the Company that:\n\n      SECTION 4.01. Corporate Existence and Power. Each of Acquiror and Merger\nSubsidiary is a corporation duly incorporated, validly existing and in good\nstanding under the laws of its jurisdiction of incorporation and has all\ncorporate powers and all governmental licenses, authorizations, consents and\napprovals required to carry on its business as now conducted, except for those\nthe absence of which would not, individually or in the aggregate, have a\nMaterial Adverse Effect on Acquiror. Acquiror is duly qualified to do business\nas a foreign corporation and is in good standing in each jurisdiction where the\ncharacter of the property owned or leased by it or the nature of its activities\nmakes such qualification necessary, except for those jurisdictions where the\nfailure to be so qualified would not, individually or in the aggregate, have a\nMaterial Adverse Effect on Acquiror. Since the date of its incorporation, Merger\nSubsidiary has not engaged in any activities other than in connection with or as\ncontemplated by this Agreement. Acquiror has heretofore delivered to the Company\ntrue and complete copies of Acquiror's and Merger Subsidiary's certificate of\nincorporation and bylaws as currently in effect.\n\n      SECTION 4.02. Corporate Authorization. (a) The execution, delivery and\nperformance by Acquiror and Merger Subsidiary of this Agreement, and the\nconsummation by Acquiror and Merger Subsidiary of the transactions contemplated\nhereby are within the corporate powers of Acquiror and\n\n                                       13\n\n\n\nMerger Subsidiary and have been duly authorized by all necessary corporate \naction. Assuming due authorization, execution and delivery of this Agreement by \nthe Company, this Agreement constitutes a valid and binding agreement of each of\nAcquiror and Merger Subsidiary, enforceable against such party in accordance \nwith its terms, subject to bankruptcy, insolvency, fraudulent transfer, \nreorganization, moratorium and similar laws of general applicability relating to\nor affecting creditors' rights and to general equity principles. The shares of \nAcquiror Common Stock issued pursuant to the Merger, when issued in accordance \nwith the terms hereof, will be duly authorized, validly issued, fully paid and\nnonassessable and not subject to preemptive rights.\n\n      (b) Acquiror's Board of Directors, at a meeting duly called and held, has\napproved this Agreement and the transactions contemplated hereby (including the\nMerger).\n\n      SECTION 4.03. Governmental Authorization. The execution, delivery and\nperformance by Acquiror and Merger Subsidiary of this Agreement and the\nconsummation by Acquiror and Merger Subsidiary of the transactions contemplated\nhereby require no action by or in respect of, or filing with, any governmental\nbody, agency, official or authority other than (a) the filing of a certificate\nof merger in accordance with North Carolina law and Michigan law, (b) compliance\nwith any applicable requirements of the HSR Act, (c) compliance with any\napplicable requirements of the Exchange Act, (d) compliance with any applicable\nrequirements of the 1933 Act and (e) other actions or filings which if not taken\nor made would not, individually or in the aggregate, have a Material Adverse\nEffect on Acquiror.\n\n      SECTION 4.04. Non-Contravention. The execution, delivery and performance\nby Acquiror and Merger Subsidiary of this Agreement and the consummation by\nAcquiror and Merger Subsidiary of the transactions contemplated hereby do not\nand will not (a) assuming compliance with the matters referred to in Section\n4.02, contravene or conflict with the certificate of incorporation or bylaws of\nAcquiror or Merger Subsidiary, (b) assuming compliance with the matters referred\nto in Section 4.03, contravene or conflict with any provision of any law,\nregulation, judgment, injunction, order or decree binding upon or applicable to\nAcquiror or any of its Subsidiaries, (c) constitute a default under or give rise\nto any right of termination, cancellation or acceleration of any right or\nobligation of Acquiror or any of its Subsidiaries or to a loss of any benefit to\nwhich Acquiror or any of its Subsidiaries is entitled under any provision of any\nmaterial agreement, contract or other instrument binding upon Acquiror or any of\nits Subsidiaries or any license, franchise, permit or other similar\nauthorization held by Acquiror or any of its Subsidiaries or (d) result in the\ncreation or imposition of any Lien on any asset of Acquiror or any of its\nSubsidiaries. Neither Acquiror nor any Subsidiary of Acquiror is a party to any\nagreement that expressly limits the ability of Acquiror or any Subsidiary of\nAcquiror to compete in or conduct any line of business or compete with any\nPerson or in any geographic area or during any period of time.\n\n      SECTION 4.05. Capitalization. (a) The authorized capital stock of Acquiror\nconsists of 150,000,000 shares of Acquiror Common Stock and 5,000,000 shares of\npreferred stock (the \"Acquiror Preferred Stock\"). As of the close of business on\nJuly 24, 1999, there were outstanding 52,233,696 shares of Acquiror Common\nStock, and employee stock options to purchase an aggregate of 1,298,226 shares\nof Acquiror Common Stock (of which options to purchase an aggregate of 415,985\nshares of Acquiror Common Stock were exercisable), and no shares of Acquiror\nPreferred Stock nor options with respect thereto were outstanding. All\noutstanding shares of capital stock of Acquiror have been duly authorized and\nvalidly issued and are fully paid and nonassessable. Except as set forth in this\nSection and except for changes since the close of business on July 24, 1999\nresulting from the exercise of employee stock options outstanding on such date\nor options or other stock-based awards and except for the shares to be issued in\nconnection with the Merger, as of the date hereof there are outstanding (a) no\nshares of capital stock or other voting securities of Acquiror, (b) no\nsecurities of Acquiror convertible into or exchangeable for shares of capital\nstock or voting securities of Acquiror, and (c) except for its obligations to\nmake matching contributions under the terms of its 401(k) plan, no options,\nwarrants or other rights to acquire\n\n                                       14\n\n\n\nfrom Acquiror, and no preemptive or similar rights, subscription or other \nrights, convertible securities, agreements, arrangements, or commitments of any \ncharacter, relating to the capital stock of Acquiror, obligating Acquiror to \nissue, transfer or sell any capital stock, voting security or securities \nconvertible into or exchangeable for capital stock or voting securities of \nAcquiror or obligating Acquiror to grant, extend or enter into any such option,\nwarrant, subscription or other right, convertible security, agreement, \narrangement or commitment (the items in clauses 4.05(a), 4.05(b) and 4.05(c) \nbeing referred to collectively as the \"Acquiror Securities\"). There are no \noutstanding obligations of Acquiror or any of its Subsidiaries to repurchase, \nredeem or otherwise acquire any Acquiror Securities other than pursuant to the \nterms of its stock-based compensation plans. \n\n      (b) The authorized capital stock of Merger Subsidiary consists of 60,000\nshares of common stock, of which 1,000 shares are outstanding. Merger\nSubsidiary's common stock is the only class of its capital stock entitled to\nvote. The number of shares of Merger Subsidiary's common stock is not subject to\nchange before the Effective Time. All outstanding shares of capital stock of\nMerger Subsidiary have been duly authorized and validly issued and are fully\npaid and nonassessable.\n\n      SECTION 4.06. Subsidiaries. (a) Each Subsidiary of Acquiror is duly\norganized, validly existing and in good standing under the laws of its\njurisdiction of organization, has all powers and all governmental licenses,\nauthorizations, permits, consents and approvals required to carry on its\nbusiness as now conducted, except for those the absence of which would not,\nindividually or in the aggregate, reasonably be expected to have a Material\nAdverse Effect on Acquiror. Each Subsidiary of Acquiror is duly qualified to do\nbusiness and is in good standing in each jurisdiction where the character of the\nproperty owned or leased by it or the nature of its activities makes such\nqualifications necessary, except for those jurisdictions where failure to be so\nqualified would not, individually or in the aggregate, have a Material Adverse\nEffect on Acquiror. All Significant Subsidiaries of Acquiror as of the date\nhereof and their respective jurisdictions of incorporation are identified in\nAcquiror's annual report on Form 10-K for the fiscal year ended April 24, 1999,\nas amended (\"Acquiror 10-K\").\n\n      (b) Except for directors' qualifying shares and except as set forth in the\nAcquiror 10-K, all of the outstanding capital stock of, or other ownership\ninterests in, each Significant Subsidiary of Acquiror is owned by Acquiror,\ndirectly or indirectly, free and clear of any material Lien and free of any\nother material limitation or restriction (including any restriction on the right\nto vote, sell or otherwise dispose of such capital stock or other ownership\ninterests). There are no outstanding (i) securities of Acquiror or any of its\nSubsidiaries convertible into or exchangeable for shares of capital stock or\nother voting securities or ownership interests in any Significant Subsidiary of\nAcquiror, and (ii) options, warrants or other rights to acquire from Acquiror or\nany of its Significant Subsidiaries, and no preemptive or similar rights,\nsubscriptions or other rights, convertible securities, agreements, arrangements\nor commitments of any character, relating to the capital stock of any\nSignificant Subsidiary of Acquiror, obligating Acquiror or any of its\nSignificant Subsidiaries to issue, transfer or sell, any capital stock, voting\nsecurities or other ownership interests in, or any securities convertible into\nor exchangeable for any capital stock, voting securities or ownership interests\nin, any Significant Subsidiary of Acquiror or obligating Acquiror or any\nSignificant Subsidiary of Acquiror to grant, extend or enter into any such\noption, warrant, subscription or other right, convertible security, agreement,\narrangement or commitment except, in any such case under clause (i) or (ii), to\nthe extent relating to an insignificant equity interest in any Significant\nSubsidiary (items in clauses 4.06(b)(i) and 4.06(b)(ii) being referred to\ncollectively as the \"Acquiror Subsidiary Securities\"). There are no outstanding\nobligations of Acquiror or any of its Subsidiaries to repurchase, redeem or\notherwise acquire any outstanding Acquiror Subsidiary Securities.\n\n      SECTION 4.07. SEC Filings. (a) Acquiror has delivered to the Company (i)\nits annual reports on Form 10-K for its fiscal years ended April 26, 1997, April\n25, 1998 and April 24, 1999, (ii) its proxy or information statements relating\nto meetings, of, or actions taken without a meeting by, the stockholders \n\n                                       15\n\n\n\nof Acquiror held since December 31, 1998, and (iii) all of its other reports,\nstatements, schedules and registration statements filed with the SEC since April\n24, 1999 (the documents referred to in this Section 4.07(a) being referred to\ncollectively as the \"Acquiror SEC Documents\").\n\n      (b) As of its filing date (or if later amended, as of the date of the\namendment), each Acquiror SEC Document complied as to form in all material\nrespects with the applicable requirements of the Exchange Act and the 1933 Act.\n\n      (c) As of its filing date, each Acquiror SEC Document filed pursuant to\nthe Exchange Act did not contain any untrue statement of a material fact or omit\nto state any material fact necessary in order to make the statements made\ntherein, in the light of the circumstances under which they were made, not\nmisleading.\n\n      (d) Each such registration statement as amended or supplemented, if\napplicable, filed pursuant to the 1933 Act as of the date such statement or\namendment became effective did not contain any untrue statement of a material\nfact or omit to state any material fact required to be stated therein or\nnecessary to make the statements therein not misleading.\n\n      SECTION 4.08. Financial Statements. The audited consolidated financial\nstatements and unaudited consolidated interim financial statements of Acquiror\n(including any related notes and schedules) included in the annual reports on\nForm 10-K and the quarterly reports on Form 10-Q referred to in Section 4.07\nfairly present in all material respects, in conformity with generally accepted\naccounting principles applied on a consistent basis (except as may be indicated\nin the notes thereto), the consolidated financial position of Acquiror and its\nconsolidated Subsidiaries as of the dates thereof and their consolidated results\nof operations and cash flows for the periods then ended (subject to normal\nyear-end adjustments and the absence of notes in the case of any unaudited\ninterim financial statements). For purposes of this Agreement, \"Acquiror Balance\nSheet\" means the consolidated balance sheet of Acquiror as of April 24, 1999 set\nforth in the Acquiror 10-K and \"Acquiror Balance Sheet Date\" means April 24,\n1999.\n\n      SECTION 4.09. Disclosure Documents. (a) The Registration Statement on Form\nS-4 of Acquiror (the \"Form S-4\") to be filed under the 1933 Act relating to the\nissuance of Acquiror Common Stock in the Merger, required to be filed with the\nSEC in connection with the issuance of shares of Acquiror Common Stock pursuant\nto the Merger and any amendments or supplements thereto, will, when filed,\nsubject to the last sentence of Section 4.09(b), comply as to form in all\nmaterial respects with the applicable requirements of the 1933 Act.\n\n      (b) Neither the Form S-4 nor any amendment or supplement thereto will at\nthe time it becomes effective under the 1933 Act or at the Effective Time\ncontain any untrue statement of a material fact or omit to state a material fact\nrequired to be stated therein or necessary to make the statements therein not\nmisleading. No representation or warranty is made by Acquiror in this Section\n4.09 with respect to statements made or incorporated by reference therein based\non information supplied by the Company for inclusion or incorporation by\nreference in the Form S-4.\n\n      (c) None of the information supplied or to be supplied by Acquiror for\ninclusion or incorporation by reference in the Company Proxy Statement or any\namendment or supplement thereto will, at the date the Company Proxy Statement or\nany amendment or supplement thereto is first mailed to stockholders of Company\nor at the time such stockholders vote on the adoption and approval of this\nAgreement and the transactions contemplated hereby, contain any untrue statement\nof a material fact or omit to state any material fact necessary in order to make\nthe statements therein, in light of the circumstances under which they were\nmade, not misleading.\n\n                                       16\n\n\n\n      SECTION 4.10. Absence of Certain Changes. Since the Acquiror Balance Sheet\nDate, Acquiror and its Subsidiaries have conducted their business in the\nordinary course consistent with past practice and there has not been:\n\n      (a) any event, occurrence or development of a state of circumstances or\nfacts which has had or reasonably would be expected to have, individually or in\nthe aggregate, a Material Adverse Effect on Acquiror;\n\n      (b) any declaration, setting aside or payment of any dividend or other\ndistribution with respect to any shares of capital stock of Acquiror (other than\nquarterly cash dividends payable by Acquiror consistent with past practice or\nany repurchase, redemption or other acquisition by Acquiror or any of its\nSubsidiaries of any outstanding shares of capital stock or other equity\nsecurities of, or other ownership interests in, Acquiror (other than any such\nrepurchases prior to the date hereof pursuant to Acquiror's publicly announced\nstock buyback program); or\n\n      (c) any change prior to the date hereof in any method of accounting or\naccounting practice (other than any change for tax purposes) by Acquiror or any\nof its Subsidiaries, except for any such change which is not significant or\nwhich is required by reason of a concurrent change in GAAP.\n\n      SECTION 4.11. No Undisclosed Material Liabilities. There are no\nliabilities of the Acquiror or any Subsidiary of the Acquiror of any kind\nwhatsoever, whether accrued, contingent, absolute, determined, determinable or\notherwise, other than:\n\n      (a) liabilities  disclosed or provided for in the Acquiror Balance Sheet\nor in the notes thereto;\n\n      (b) liabilities incurred since the date of the Acquiror Balance Sheet in\nthe ordinary course of business;\n\n      (c) liabilities disclosed in the Acquiror SEC Documents filed prior to the\ndate hereof or set forth in Schedule 4.11(c);\n\n      (d) liabilities under this Agreement; and\n\n      (e) liabilities which, individually or in the aggregate, would not have a\nMaterial Adverse Effect on the Acquiror.\n\n      SECTION 4.12. Litigation. Except as disclosed in the Acquiror SEC\nDocuments filed prior to the date hereof, or in Schedule 4.12, there is no\naction, suit, investigation or proceeding pending against, or to the knowledge\nof Acquiror threatened against or affecting, Acquiror or any of its Subsidiaries\nor any of their respective properties before any court or arbitrator or any\ngovernmental body, agency or official which would reasonably be expected to\nhave, individually or in the aggregate, a Material Adverse Effect on the\nAcquiror.\n\n      SECTION 4.13. Taxes. Except as set forth in the Acquiror Balance Sheet\n(including the notes thereto) or as otherwise set forth on Schedule 4.13 (i) all\nAcquiror Tax Returns required to be filed with any taxing authority by, or with\nrespect to, Acquiror and its Subsidiaries have been filed in accordance with all\napplicable laws; (ii) Acquiror and its Subsidiaries have timely paid all Taxes\nshown as due and payable on Acquiror Tax Returns that have been so filed, and,\nas of the time of filing, Acquiror Tax Returns correctly reflected the facts\nregarding the income, business, assets, operations, activities and the status of\nAcquiror and its Subsidiaries (other than Taxes which are being contested in\ngood faith and for \n\n                                       17\n\n\n\nwhich adequate reserves are reflected on the Acquiror Balance Sheet); \n(iii) Acquiror and its Subsidiaries have made provision for all Taxes\npayable by Acquiror and its Subsidiaries for which no Acquiror Tax Return has\nyet been filed; (iv) the charges, accruals and reserves for Taxes with respect\nto Acquiror and its Subsidiaries reflected on the Acquiror Balance Sheet are\nadequate under GAAP to cover the Tax liabilities accruing through the date\nthereof; (v) there is no action, suit, proceeding, audit or claim now proposed\nor pending against or with respect to Acquiror or any of its Subsidiaries in\nrespect of any Tax where there is a reasonable possibility of a material adverse\ndetermination; and (vi) to the best of Acquiror's knowledge and belief, neither\nAcquiror nor any of its Subsidiaries is liable for any Tax imposed on any entity\nother than such Person, except as the result of the application of Treas. Reg.\nSection 1.1502-6 (and any comparable provision of the tax laws of any state,\nlocal or foreign jurisdiction) to the affiliated group of which Acquiror is the\ncommon parent.\n\n      SECTION 4.14. Employee Benefit Plans. (a) Prior to the date hereof,\nAcquiror has provided the Company with a list (set forth on Schedule 4.14)\nidentifying each material \"employee benefit plan,\" as defined in Section 3(3) of\nERISA, each material employment, severance or similar contract, plan,\narrangement or policy applicable to any director, or employee of Acquiror and\neach material plan or arrangement (written or oral), providing for compensation,\nbonuses, profit-sharing, stock option or other stock related rights or other\nforms of incentive or deferred compensation, vacation benefits, insurance\ncoverage (including any self-insured arrangements), health or medical benefits,\ndisability benefits, workers' compensation, supplemental unemployment benefits,\nseverance benefits and post-employment or retirement benefits (including\ncompensation, pension, health, medical or life insurance benefits) which is\nmaintained, administered or contributed to by Acquiror and covers any employee\nor director of Acquiror. Such plans (excluding any such plan that is a\nmultiemployer plan) are referred to collectively herein as the \"Acquiror\nEmployee Plans.\"\n\n      (b) Each Acquiror Employee Plan has been maintained in compliance with its\nterms and with the requirements prescribed by any and all statutes, orders,\nrules and regulations (including but not limited to ERISA and the Code) which\nare applicable to such Plan, except where failure to so comply would not,\nindividually or in the aggregate, have a Material Adverse Effect on the\nAcquiror.\n\n      (c) Neither the Acquiror nor any affiliate of the Acquiror has incurred a\nliability under Title IV of ERISA that has not been satisfied in full, and no\ncondition exists that presents a material risk to the Acquiror or any affiliate\nof the Acquiror of incurring any such liability other than liability for\npremiums due the Pension Benefit Guaranty Corporation (which premiums have been\npaid when due).\n\n      (d) Each Acquiror Employee Plan which is intended to be qualified under\nSection 401(a) of the Code is so qualified and has been so qualified during the\nperiod from its adoption to date, and each trust forming a part thereof is\nexempt from federal income tax pursuant to Section 501(a) of the Code.\n\n      SECTION 4.15. Compliance with Laws. To the best of the knowledge of any of\nAcquiror's Chairman, Chief Operating Officer, or Chief Financial Officer,\nneither Acquiror nor any of its Subsidiaries is in violation of, or has since\nJanuary 1, 1999 violated, any applicable provisions of any laws, statutes,\nordinances or regulations except for any violations that, individually or in the\naggregate, would not reasonably be expected to have a Material Adverse Effect on\nAcquiror.\n\n      SECTION 4.16. Finders' or Advisors' Fees. Except for Merrill Lynch &amp; Co.,\nwhose fees will be paid by Acquiror, there is no investment banker, broker,\nfinder or other intermediary which has been retained by or is authorized to act\non behalf of Acquiror or any of its Subsidiaries who might be entitled to any\nfee or commission in connection with the transactions contemplated by this\nAgreement.\n\n                                       18\n\n\n\n      SECTION 4.17. Environmental Matters. Except as set forth in the Acquiror\nSEC Documents filed prior to the date hereof and with such exceptions as,\nindividually or in the aggregate, have not had, and would not reasonably be\nexpected to have, a Material Adverse Effect on Acquiror, (i) no written notice,\nnotification, demand, request for information, citation, summons, complaint or\norder has been received by, and no investigation, action, claim, suit,\nproceeding or review is pending or, to the knowledge of Acquiror or any of its\nSubsidiaries, threatened by any Person against, Acquiror or any of its\nSubsidiaries, and no penalty has been assessed against Acquiror or any of its\nSubsidiaries, in each case, with respect to any matters relating to or arising\nout of any Environmental Law; (ii) Acquiror and its Subsidiaries are and have\nbeen in compliance with all Environmental Laws; and (iii) there are no\nliabilities of or relating to Acquiror or any of its Subsidiaries relating to or\narising out of any Environmental Law of any kind whatsoever, whether accrued,\ncontingent, absolute, determined, determinable or otherwise, and there is no\nexisting condition, situation or set of circumstances which could reasonably be\nexpected to result in such a liability.\n\n      SECTION 4.18. Tax Treatment. Neither Acquiror nor any of its affiliates\nhas taken or agreed to take any action or is aware of any fact or circumstance\nthat would prevent the Merger from qualifying as a 368 Reorganization.\n\n\n                                    ARTICLE 5\n                            COVENANTS OF THE COMPANY\n\n      The Company agrees that:\n\n      SECTION 5.01. Conduct of the Company. From the date hereof until the\nEffective Time, the Company and its Subsidiaries shall conduct their business in\nthe ordinary course consistent with past practice and shall use their reasonable\nbest efforts to preserve intact their business organizations and relationships\nwith third parties. Without limiting the generality of the foregoing, except\nwith the prior written consent of Acquiror (which consent shall not be\nunreasonably withheld or delayed) or as contemplated by this Agreement, from the\ndate hereof until the Effective Time:\n\n      (a) the Company will not, and will not permit any of its Subsidiaries to,\nadopt or propose any change in its certificate of incorporation or bylaws;\n\n      (b) the Company will not, and will not permit any Subsidiary of the\nCompany to, adopt a plan or agreement of complete or partial liquidation,\ndissolution, merger, consolidation, restructuring, recapitalization or other\nmaterial reorganization of the Company or any of its Significant Subsidiaries\n(other than a merger or consolidation between its wholly-owned Subsidiaries);\n\n      (c) the Company will not, and will not permit any Subsidiary of the\nCompany to, issue, sell, transfer, pledge, dispose of or encumber any shares of,\nor securities convertible into or exchangeable for, or options, warrants, calls,\ncommitments or rights of any kind to acquire, any shares of capital stock of any\nclass or series of the Company or its Subsidiaries other than (i) issuances\npursuant to the exercise of convertible securities outstanding on the date\nhereof or issuances pursuant to stock based awards or options that are\noutstanding on the date hereof and are reflected in Section 3.05 or are granted\nin accordance with clause (ii) below and (ii) additional options or stock-based\nawards to acquire Shares granted under the terms of any Company Stock Option\nPlan as in effect on the date hereof in the ordinary course consistent with past\npractice, but in no event covering more than 20,000 Shares in the aggregate;\n\n      (d) the Company will not, and will not permit any Subsidiary of the\nCompany to, (i) split, combine, subdivide or reclassify its outstanding shares\nof capital stock, or (ii) declare, set aside or pay any \n\n                                       19\n\n\n\ndividend or other distribution payable in cash, stock or property with respect \nto its capital stock other than dividends paid by any Subsidiary of the Company \nto the Company or any wholly-owned Subsidiary of the Company;\n\n      (e) the Company will not, and will not permit any Subsidiary of the\nCompany to, redeem, purchase or otherwise acquire directly or indirectly any of\nthe Company's capital stock, except for repurchases, redemptions or acquisitions\n(x) required by the terms of its capital stock or any securities outstanding on\nthe date hereof, (y) required by or in connection with the respective terms, as\nof the date hereof, of any Company Employee Plan or any dividend reinvestment\nplan as in effect on the date hereof in the ordinary course of the operations of\nsuch plan consistent with past practice or (z) effected in the ordinary course\nconsistent with past practice;\n\n      (f) the Company will not amend the terms (including the terms relating to\naccelerating the vesting or lapse of repurchase rights or obligations) of any\noutstanding options to purchase Shares, suspend or terminate or amend the terms\nof any existing Company Employee Plan, or adopt any new Company Employee Plan,\nexcept that the Company shall, on or before the Closing Date:\n\n            (1) amend the 1999 Management Incentive Plan (the \"MIP\") and the\n      Company's Long-Term Incentive Plans for the periods 1997-1999 (the \"1997\n      LTIP\"), 1998-2000 (the \"1998 LTIP\"), and 1999-2001 (the \"1999 LTIP\")\n      (collectively, the \"LTIPs\") so that the provisions thereof governing time\n      of payment will permit the Company to pay out all amounts payable\n      thereunder on or before the Closing Date; provided, however, that the\n      Company covenants that if the Closing Date is not on or before December\n      31, 1999, it will not make any payments under the MIP or any of the LTIPs\n      on or before December 31, 1999 without Acquiror's prior written consent;\n      and\n\n            (2) amend its Management Deferred Compensation Plan to provide that\n      (A) from and after the Effective Time, no subaccount shall be maintained\n      thereunder that is denominated in or the amount of which is computed by\n      reference to notional shares of any class of equity securities of the\n      Company or Acquiror, and (B) effective as of the Effective Time, the\n      balance in any such subaccount shall be computed in dollars (giving effect\n      to Section 1.04 of this Agreement and valuing the resulting notional\n      Acquiror Common Stock at the average of the closing prices of Acquiror's\n      Common Stock on the NYSE on the five business days immediately preceding\n      the Closing Date) and transferred to the other subaccount maintained\n      thereunder (i.e., the subaccount the amount of which is computed by\n      reference to the prime rate of interest);\n\n      (g) the Company will not, and will not permit any Subsidiary of the\nCompany to, make or commit to make any capital expenditure other than those set\nforth on the schedule of planned capital expenditures previously delivered to\nthe Acquiror by the Company;\n\n      (h) except as disclosed in Schedule 5.01, the Company will not, and will\nnot permit any Subsidiary of the Company to, increase the compensation or\nbenefits of any director, officer or employee, except for normal increases in\nthe ordinary course of business consistent with past practice or as required\nunder applicable law or any existing agreement or commitment;\n\n      (i) the Company will not, and will not permit any of its Subsidiaries to,\nacquire (by purchase or lease) a material amount of assets (as measured with\nrespect to the consolidated assets of the Company and its Subsidiaries taken as\na whole) of any other Person except for capital expenditures permitted under\nSection 5.01(g);\n\n                                       20\n\n\n\n      (j) the Company will not, and will not permit any of its Subsidiaries to,\nsell, lease, license or otherwise dispose of any material assets or property\nexcept pursuant to existing contracts or commitments;\n\n      (k) except for any such change which is required by reason of a concurrent\nchange in GAAP or a rule or release promulgated by the SEC, the Company will\nnot, and will not permit any Subsidiary of the Company to, change any method of\naccounting or accounting practice (other than any change for tax purposes) used\nby it;\n\n      (l) the Company will not, and will not permit any Subsidiary of the\nCompany to, enter into any joint venture, partnership or other similar\narrangement;\n\n      (m) the Company will not, and will not permit any of its Subsidiaries to,\ntake any action that would make any representation or warranty of the Company\nhereunder inaccurate in any respect at, or as of any time prior to, the\nEffective Time; and\n\n      (n) the Company will not, and will not permit any of its Subsidiaries to,\nagree or commit to do any of the foregoing.\n\n      SECTION 5.02. Company Stockholder Meeting; Proxy Material. The Company\nshall cause a meeting of its stockholders (the \"Company Stockholder Meeting\") to\nbe duly called and held as soon as reasonably practicable, on a date reasonably\nacceptable to Acquiror, for the purpose of voting on the approval and adoption\nof this Agreement and the Merger (the \"Company Stockholder Approval\"). Except as\nprovided in the next sentence, the Board of Directors of the Company shall\nrecommend approval and adoption of this Agreement by the Company's stockholders.\nThe Board of Directors of the Company shall be permitted to (i) not recommend to\nthe Company's stockholders that they give the Company Stockholder Approval or\n(ii) withdraw or modify in a manner adverse to Acquiror its recommendation to\nthe Company's stockholders that they give the Company Stockholder Approval, only\n(x) if the Board of Directors of the Company determines in its good faith\njudgment that it is necessary to so withdraw or modify its recommendation to\ncomply with its fiduciary duty to stockholders under applicable law, after\nreceiving the advice of outside legal counsel, and (y) if the Company and the\nsenior officers and directors of the Company have complied with their\nobligations set forth in Section 5.03. In connection with the Company\nStockholder Meeting, the Company (x) will promptly prepare and file with the\nSEC, will use its reasonable best efforts to have cleared by the SEC and will\nthereafter mail to its stockholders as promptly as practicable the Company Proxy\nStatement and all other proxy materials for the Company Stockholder Meeting, (y)\nwill use its reasonable best efforts, subject to the immediately preceding\nsentence, to obtain the Company Stockholder Approval and (z) will otherwise\ncomply with all legal requirements applicable to the Company Stockholder\nMeeting.\n\n      SECTION 5.03. Other Offers. The Company and its Subsidiaries will not, and\nwill not permit any of its subsidiaries, or any of its or their officers,\ndirectors, management employees, or consultants or any investment banker,\nattorney or accountant retained by the Company or any of its Subsidiaries\n(collectively, \"Representatives\") to, directly or indirectly, take any action to\nsolicit, initiate, encourage or facilitate the making of any Acquisition\nProposal (as defined below) or any inquiry with respect thereto or engage in\ndiscussions or negotiations with any Person with respect thereto, or disclose\nany non-public information relating to the Company or any Subsidiary of the\nCompany or afford access to the properties, books or records of the Company or\nany Subsidiary of the Company to, any Person that has made, or that the Company,\nany of its Subsidiaries or any of its or any of its Subsidiaries'\nRepresentatives has reason to believe, is considering making, any Acquisition\nProposal; provided that nothing contained in this Section 5.03 shall prohibit\nthe Board of Directors of the Company from furnishing information to, or\nentering into discussions or negotiations with, or affording access to the\nproperties, books or records of the Company \n\n                                       21\n\n\n\nor its Subsidiaries to, any Person in connection with an unsolicited bona fide \nAcquisition Proposal received from such Person so long as prior to furnishing \ninformation to, or entering into discussions or negotiations with, such Person,\n(i) the Board of Directors of the Company determines in its good faith judgment\nthat it is necessary to do so to comply with its fiduciary duty to stockholders\nunder applicable law, after receiving the advice of outside legal counsel, and \n(ii) the Company receives from such Person an executed confidentiality agreement\nwith terms no less favorable to the Company than those contained in the \nConfidentiality Agreement (as defined in Section 7.03). Nothing contained in \nthis Agreement shall prevent the Board of Directors of the Company from \ncomplying with Rule 14e-2 under the Exchange Act with regard to an Acquisition \nProposal; provided that the Board of Directors of the Company shall not \nrecommend that the stockholders of the Company tender their shares in connection\nwith a tender offer except to the extent the Board of Directors of the Company \ndetermines in its good faith judgment (after consultation with its financial \nadvisors and receiving the advice of outside legal counsel) that such a \nrecommendation is required to comply with the fiduciary duties of the Board of \nDirectors of the Company to the Company's stockholders under applicable law. The\nCompany will (a) promptly (and in no event later than 24 hours after receipt of\nany Acquisition Proposal) notify (which notice shall be provided orally and in \nwriting and shall identify the Person making such Acquisition Proposal and set \nforth the material terms thereof) Acquiror after receipt of any Acquisition \nProposal, of any indication giving the Company any of its Subsidiaries or any of\nits or any of its Subsidiaries' Representatives that any Person is considering \nmaking an Acquisition Proposal and any request for non-public information \nrelating to the Company or any Subsidiary of the Company or for access to the \nproperties, books or records of the Company or any Subsidiary of the Company by \nany Person that has made, or that the Company, any of its Subsidiaries or any of\nits or any of its Subsidiaries' Representatives has reason to believe may be \nconsidering making, an Acquisition Proposal, and (b) will keep Acquiror informed\nof the status and material terms of any such Acquisition Proposal or request. \nThe Company will, and will cause its Subsidiaries and its and their \nRepresentatives to, immediately cease and cause to be terminated all discussions\nand negotiations, if any, that have taken place prior to the date hereof with \nany Persons (other than Acquiror and its affiliates) with respect to any \nAcquisition Proposal.\n\n      For purposes of this Agreement, \"Acquisition Proposal\" means any offer or\nproposal for, or any indication of interest in, any (i) direct or indirect\nacquisition or purchase of a business or assets that constitute 10% or more of\nthe net revenues, net income or the assets of the Company and its Subsidiaries,\ntaken as a whole, (ii) direct or indirect acquisition or purchase of 10% or more\nof any class of equity securities of the Company or any of its Subsidiaries\nwhose business constitutes 10% or more of the net revenues, net income,\noperating income (before taxes) or assets of the Company and its Subsidiaries,\ntaken as a whole, (iii) tender offer or exchange offer that if consummated would\nresult in any person beneficially owning 10% or more of any class of equity\nsecurities of the Company or any of its Subsidiaries whose business constitutes\n10% or more the net revenues, net income, operating income (before taxes) or\nassets of the Company and its Subsidiaries, taken as a whole, or (iv) merger,\nconsolidation, business combination, recapitalization, liquidation, dissolution\nor similar transaction involving the Company or any of its Subsidiaries whose\nbusiness constitutes 10% or more of the net revenue, net income, operating\nincome (before taxes) or assets of the Company and its Subsidiaries, taken as a\nwhole, other than the transactions contemplated by this Agreement. For purposes\nof this Agreement, \"Superior Proposal\" means any bona fide Acquisition Proposal\nfor or in respect of at least a majority of the outstanding Shares on terms that\nthe Board of Directors of the Company determines in its good faith judgment\n(after consultation with a financial advisor of nationally recognized\nreputation, taking into account all the terms and conditions of the Acquisition\nProposal, including any break-up fees, expense reimbursement provisions and\nconditions to consummation) are more favorable to all of the Company's\nstockholders than the Merger.\n\n                                       22\n\n\n\n                                    ARTICLE 6\n                              COVENANTS OF ACQUIROR\n\n      Acquiror agrees that:\n\n      SECTION 6.01. Conduct of Acquiror. From the date hereof until the\nEffective Time, Acquiror and its Subsidiaries shall conduct their business in\nthe ordinary course consistent with past practice and shall use their reasonable\nbest efforts to preserve intact their business organizations and relationships\nwith third parties. Without limiting the generality of the foregoing, and except\nwith the prior written consent of the Company (which consents shall not be\nunreasonably withheld or delayed) or as contemplated by this Agreement, from the\ndate hereof until the Effective Time:\n\n      (a) Acquiror will not adopt a plan or agreement of complete or partial\nliquidation, dissolution, restructuring, recapitalization or other material\nreorganization of Acquiror;\n\n      (b) Acquiror will not, and will not permit any Subsidiary of the Acquiror\nto, redeem, purchase or otherwise acquire directly or indirectly any of the\nAcquiror's capital stock, except for repurchases, redemptions or acquisitions\n(x) required by the terms of its capital stock or any securities outstanding on\nthe date hereof, (y) required by or in connection with the respective terms, as\nof the date hereof, of any Acquiror Employee Plan, or any dividend reinvestment\nplan as in effect on the date hereof in the ordinary course of the operations of\nsuch plan consistent with past practice or (z) effected in the ordinary course\nconsistent with past practice;\n\n      (c) except for any such change which is required by reason of a concurrent\nchange in GAAP or a rule or release promulgated by the SEC, the Acquiror will\nnot, and will not permit any Subsidiary of the Acquiror to, change any method of\naccounting or accounting practice (other than any change for tax purposes) used\nby it;\n\n      (d) Acquiror will not, and will not permit any of its Subsidiaries to,\ntake any action that would make any representation or warranty of Acquiror\nhereunder inaccurate in any respect at, or as of any time prior to, the\nEffective Time; and\n\n      (e) Acquiror will not, and will not permit any of its Subsidiaries to,\nagree or commit to do any of the foregoing.\n\n      SECTION 6.02. Obligations of Merger Subsidiary. Acquiror will take all\naction necessary to cause Merger Subsidiary to perform its obligations under\nthis Agreement and to consummate the Merger on the terms and conditions set\nforth in this Agreement.\n\n      SECTION 6.03. Form S-4. Subject to the terms and conditions of this\nAgreement Acquiror shall prepare and file with the SEC under the 1933 Act the\nForm S-4, and shall use its reasonable best efforts to cause the Form S-4 to be\ndeclared effective by the SEC as promptly as practicable. Acquiror shall\npromptly take any action required to be taken under foreign or state securities\nor Blue Sky laws in connection with the issuance of Acquiror Common Stock in\nconnection with the Merger.\n\n      SECTION 6.04. Stock Exchange Listing. Acquiror shall use its reasonable\nbest efforts to cause the shares of Acquiror Common Stock to be issued in\nconnection with the Merger to be listed on the NYSE, subject to official notice\nof issuance.\n\n      SECTION 6.05. Director, Officer and Employee Liability. (a) For six years\nafter the Effective Time, Acquiror shall indemnify and hold harmless the\nindividuals who on or prior to the Effective Time \n\n                                       23\n\n\n\nwere officers, directors and employees of the Company or its Subsidiaries \n(collectively, the \"Indemnitees\") with respect to all acts or omissions by them \nin their capacities as such or taken at the request the Company or any of its \nSubsidiaries at any time prior to the Effective Time to the extent provided \nunder the Company's certificate of incorporation and bylaws in effect on the \ndate hereof. Acquiror shall cause the Surviving Corporation to honor all \nindemnification agreements with Indemnitees (including under the Company's \nbylaws) in effect as of the date hereof in accordance with the terms thereof. \nTo the best knowledge of the Company, the Company has disclosed to Acquiror all\nsuch indemnification agreements prior to the date hereof.\n\n      (b) For six years after the Effective Time, Acquiror shall procure the\nprovision of officers' and directors' liability insurance and employee practices\ninsurance in respect of acts or omissions occurring prior to the Effective Time\ncovering each such Person currently covered by the Company's officers' and\ndirectors' liability insurance policy and employee practices insurance policy on\nterms with respect to coverage and in amounts no less favorable than those of\nsuch policies in effect on the date hereof; provided, that if the aggregate\nannual premiums for such insurance at any time during such period shall exceed\n200% of the per annum rate of premium paid by the Company and its Subsidiaries\nas of the date hereof for such insurance, then Acquiror shall, or shall cause\nits Subsidiaries to, provide only such coverage as shall then be available at an\nannual premium equal to 200% of such rate.\n\n      (c) The obligations of Acquiror under this Section 6.05 shall not be\nterminated or modified in such a manner as to adversely affect any Indemnitee to\nwhom this Section 6.05 applies without the consent of such affected Indemnitee\n(it being expressly agreed that the Indemnitees to whom this Section 6.05\napplies shall be third party beneficiaries of this Section 6.05).\n\n      SECTION 6.06. Employee Benefits. (a) From and after the Effective Time,\nAcquiror shall cause the Surviving Corporation to honor in accordance with their\nterms all benefits and obligations under the LADD Furniture, Inc. Executive\nRetirement Plan (the \"ERP\"), the Management Deferred Compensation Plan and the\nemployment agreements between the Company and certain Executives and, subject to\nSection 6.06(b), the other Company Employee Plans, each as in effect on the date\nhereof (or as amended as permitted by Section 5.01(f) or with the prior written\nconsent of Acquiror, which consent shall not be unreasonably withheld or\ndelayed), to the extent that entitlements or rights exist in respect thereof as\nof the Effective Time. Acquiror and the Company hereby agree that the\nconsummation of the Merger shall constitute a \"Change in Control\" for purposes\nof the Company Option Plans, the employment agreements between the Company and\ncertain Executives, and the Supplemental Retirement Income Plan for Salaried\nEmployees of LADD Furniture, Inc. (the \"SERP\"), pursuant to the terms of such\nplans in effect on the date hereof. Except as provided in Section 6.06(f), no\nprovision of this Section 6.06(a) shall be construed as a limitation on the\nright of Acquiror to amend or terminate any Company Employee Plans which the\nCompany would otherwise have under the terms of such Company Employee Plan, and\nno provision of this Section 6.06(a) shall be construed to create a right in any\nemployee or beneficiary of such employee under a Company Employee Plan that such\nemployee or beneficiary would not otherwise have under the terms of such Company\nEmployee Plan.\n\n      (b) Except for any changes required by law or initiated by insurance\ncarriers, for one year following the Effective Time, Acquiror shall continue to\nprovide to individuals who are employed by the Company and its Subsidiaries as\nof the Effective Time who remain employed with Acquiror or any Subsidiary of\nAcquiror (\"Affected Employees\"), for so long as such Affected Employees remain\nemployed by Acquiror or any Subsidiary of Acquiror, employee benefits (other\nthan salary or incentive compensation) which, in the aggregate, are no less\nfavorable than those provided to employees of the Company prior to the Effective\nTime pursuant to the Company Employee Plans as provided to such employees\nimmediately prior to the Effective Time.\n\n                                       24\n\n\n\n      (c) Acquiror will, or will cause the Surviving Corporation to, give\nAffected Employees full credit for purposes of eligibility, vesting, benefit\naccrual (including benefits accrued under any defined benefit pension plans) and\ndetermination of the level of benefits under any employee benefit plans or\narrangements maintained by Acquiror or any Subsidiary of Acquiror for such\nAffected Employees' service with the Company or any Subsidiary of the Company to\nthe same extent recognized by the Company immediately prior to the Effective\nTime; provided, however, that (i) in the case of a qualified defined benefit\nplan maintained by Acquiror or its Subsidiaries, service prior to 1997 shall not\nbe recognized; (ii) in the case of a non-qualified defined benefit plan of\nAcquiror or any of its Subsidiaries, pre-Effective Time service of an Affected\nEmployee with the Company or any of its Subsidiaries for benefit accrual\npurposes for such period of time as an Affected Employee is credited with\nservice for benefit accrual purposes under the ERP, as in effect on the date\nhereof, shall not be recognized; and (iii) in the case of a qualified or\nnon-qualified defined contribution plan of Acquiror or any of its Subsidiaries,\nAcquiror shall be required only to recognize pre-Effective Time participation of\nan Affected Employee in a qualified or non-qualified defined contribution plan\nof the Company or any of its Subsidiaries for purposes of determining\neligibility for matching or other contributions and the level of such\ncontributions.\n\n      (d) Acquiror will, or will cause the Surviving Corporation to, (i) waive\nall limitations as to pre-existing conditions, exclusions and waiting periods\nwith respect to participation and coverage requirements applicable to the\nAffected Employees under any welfare benefit plans that such employees may be\neligible to participate in after the Effective Time, other than limitations or\nwaiting periods that are already in effect with respect to such employees and\nthat have not been satisfied as of the Effective Time under any welfare plan\nmaintained for the Affected Employees immediately prior to the Effective Time,\nand (ii) provide each Affected Employee with credit for any co-payments and\ndeductibles paid prior to the Effective Time in satisfying any applicable\ndeductible or out-of-pocket requirements under any welfare plans that such\nemployees are eligible to participate in after the Effective Time.\n\n      (e) Acquiror agrees to cause the benefits payable pursuant to the terms of\nthe SERP to be paid to the beneficiaries of the SERP promptly following the\nEffective Time.\n\n      (f) Acquiror agrees that the ERP and the Management Deferred Compensation\nPlan shall be administered in accordance with the past practices and\ninterpretations of the Company's Board of Directors and the Corporate Benefits\nCommittee (the \"Committee\") (including those past practices and interpretations\npreviously disclosed by the Company to Acquiror) with respect to eligibility,\nvesting, term and payment, among other matters. Any question regarding the past\npractices and interpretations of the Company's Board of Directors and the\nCommittee and the application thereof to the type of facts and circumstances in\na given case shall be referred to the Committee for a final decision with\nrespect thereto, which decision shall not be inconsistent with the intention of\nthis Agreement and the Merger.\n\n      (g) If it is determined that any payment or distribution of any type to or\nfor the benefit of an Affected Employee or any participant in a Company Employee\nPlan (the \"Recipient\") made by the Company, the Acquiror, or any Subsidiary of\nthe Company or the Acquiror, or by any affiliate of such Person, whether paid or\npayable or distributed or distributable pursuant to the terms of a Company\nEmployee Plan or otherwise (the \"Total Payments\"), would be subject to the\nexcise tax imposed by Section 4999 of the Code or any interest or penalty with\nrespect to such excise tax (such excise tax, together with any such interest or\npenalty, are collectively referred to as the \"Excise Tax\"), then the Recipient\nshall be entitled to receive an additional payment (an \"Excise Tax Restoration\nPayment\") in an amount that shall fund the payment by the Recipient of any\nExcise Tax on the total payments, as well as all income taxes imposed on the\nExcise Tax Restoration Payment, any excise tax imposed on the Excise Tax\nRestoration Payment, and any interest or penalties imposed with respect to taxes\non the Excise Tax Restoration or any Excise Tax.\n\n                                       25\n\n\n\n                                    ARTICLE 7\n                      COVENANTS OF ACQUIROR AND THE COMPANY\n\n      The parties hereto agree that:\n\n      SECTION 7.01. Reasonable Best Efforts. The Company and Acquiror shall each\ncooperate with the other and use (and shall use reasonable best efforts to cause\ntheir respective Subsidiaries to use) their respective reasonable best efforts\nto promptly (i) take or cause to be taken all actions, and do or cause to be\ndone all things, necessary, proper or advisable under this Agreement and\napplicable laws to consummate and make effective the Merger and the other\ntransactions contemplated by this Agreement as soon as practicable, including,\nwithout limitation, preparing and filing as promptly as practicable all\ndocumentation to effect all necessary filings, notices, petitions, statements,\nregistrations, submissions of information, applications and other documents and\n(ii) obtain all approvals, consents, registrations, permits, authorizations and\nother confirmations required to be obtained from any third party necessary,\nproper or advisable to consummate the Merger and the other transactions\ncontemplated by this Agreement. Subject to applicable laws relating to the\nexchange of information, the Company and Acquiror shall have the right to review\nin advance, and to the extent practicable each will consult the other on, all\nthe information relating to the Company and its Subsidiaries or Acquiror and its\nSubsidiaries, as the case may be, that appears in any filing made with, or\nwritten materials submitted to, any third party and\/or any governmental\nauthority in connection with the Merger and the other transactions contemplated\nby this Agreement.\n\n      SECTION 7.02. Certain Filings. The Company and Acquiror shall cooperate\nwith one another (a) in connection with the preparation of the Company Proxy\nStatement and the Form S-4, (b) in determining whether any action by or in\nrespect of, or filing with, any governmental body, agency or official, or\nauthority is required, or any actions, consents, approvals or waivers are\nrequired to be obtained from parties to any material contracts, in connection\nwith the consummation of the transactions contemplated by this Agreement and (c)\nin seeking any such actions, consents, approvals or waivers or making any such\nfilings, furnishing information required in connection therewith or with the\nCompany Proxy Statement or the Form S-4 and seeking timely to obtain any such\nactions, consents, approvals or waivers.\n\n      SECTION 7.03. Access to Information. From the date hereof until the\nEffective Time, to the extent permitted by applicable law, the Company and\nAcquiror will give the other party, its counsel, financial advisors, auditors\nand other authorized representatives reasonable access to the offices,\nproperties, books and records of such party and its Subsidiaries during normal\nbusiness hours, furnish to the other party, its counsel, financial advisors,\nauditors and other authorized representatives such financial and operating data\nand other information as such Persons may reasonably request and will instruct\nits own employees, counsel and financial advisors to cooperate with the other\nparty in its investigation of the business of the Company or Acquiror, as the\ncase may be; provided that no investigation of the other party's business shall\naffect any representation or warranty given by either party hereunder. All\ninformation obtained by Acquiror or the Company pursuant to this Section shall\nbe kept confidential in accordance with, and shall otherwise be subject to the\nterms of, the Confidentiality Agreement dated June 17, 1999 between Acquiror and\nthe Company (the \"Confidentiality Agreement\").\n\n      SECTION 7.04. Public Announcements. Acquiror and the Company will consult\nwith each other before issuing any press release or making any public statement\nwith respect to this Agreement and the transactions contemplated hereby and\nshall not issue any such press release or make any such public statement without\nthe prior consent of the other party, which consent shall not be unreasonably\nwithheld or delayed. Notwithstanding the foregoing, any such press release or\npublic statement as may be required\n\n                                       26\n\n\nby applicable law or any listing agreement with any national securities exchange\nmay be issued prior to such consultation, if the party making such release or \nstatement has used its reasonable efforts to consult with the other party.\n\n      SECTION 7.05. Further Assurances. At and after the Effective Time, the\nofficers and directors of the Surviving Corporation will be authorized to\nexecute and deliver, in the name and on behalf of the Company or Merger\nSubsidiary, any deeds, bills of sale, assignments or assurances and to take and\ndo, in the name and on behalf of the Company or Merger Subsidiary, any other\nactions and things to vest, perfect or confirm of record or otherwise in the\nSurviving Corporation any and all right, title and interest in, to and under any\nof the rights, properties or assets of the Company acquired or to be acquired by\nthe Surviving Corporation as a result of, or in connection with, the Merger.\n\n      SECTION  7.06.  Notices of Certain  Events.  (a) Each of the Company and\nAcquiror shall promptly notify the other party of:\n\n      (i) any notice or other communication from any Person alleging that the\nconsent of such Person is or may be required in connection with the transactions\ncontemplated by this Agreement; and\n\n      (ii) any notice or other communication from any governmental or regulatory\nagency or authority in connection with the transactions contemplated by this\nAgreement.\n\n      (b) The Company and Acquiror shall promptly notify the other party of any\nactions, suits, claims, investigations or proceedings commenced or, to the best\nof its knowledge threatened against, relating to or involving or otherwise\naffecting such party or any of its Subsidiaries which relate to the consummation\nof the transactions contemplated by this Agreement.\n\n      SECTION 7.07. Affiliates. (a) The Company shall use its reasonable best\nefforts to deliver to Acquiror, within 15 days of the date hereof, a letter\nagreement substantially in the form of Exhibit A hereto executed by each Person\nlisted on Schedule 7.07(a).\n\n      (b) Prior to the Effective Time, the Company shall cause to be delivered\nto Acquiror a letter identifying, to the best of the Company's knowledge, all\nPersons who are, at the time of the Company Stockholder Meeting, \"affiliates\" of\nthe Company for purposes of Rule 145 under the 1933 Act. The Company shall\nfurnish such information and documents as Acquiror may reasonably request for\nthe purpose of reviewing such list. The Company shall use its reasonable best\nefforts to cause each Person who is so identified as an affiliate to deliver to\nAcquiror on or prior to the Effective Time a letter agreement substantially in\nthe form of Exhibit A to this Agreement.\n\n      SECTION 7.08. Tax Treatment. (a) Each of Acquiror and the Company shall\nnot take any action and shall not fail to take any action which action or\nfailure to act would prevent, or would be reasonably likely to prevent, the\nMerger from qualifying as a 368 Reorganization.\n\n      (b) Acquiror shall use its reasonable best efforts to provide to Miller,\nCanfield, Paddock and Stone, p.l.c. and to Kilpatrick Stockton llp a certificate\nsubstantially in the form attached hereto as Exhibit B-1. The Company shall use\nits reasonable best efforts to provide to Miller, Canfield, Paddock and Stone,\np.l.c. and to Kilpatrick Stockton llp a certificate substantially in the form\nattached hereto as Exhibit B-2.\n\n                                       27\n\n\n\n                                    ARTICLE 8\n                            CONDITIONS TO THE MERGER\n\n      SECTION 8.01. Conditions to the Obligations of Each Party. The obligations\nof the Company, Acquiror and Merger Subsidiary to consummate the Merger are\nsubject to the satisfaction (or, to the extent legally permissible, waiver) of\nthe following conditions:\n\n      (a) this Agreement and the Merger shall have been approved by the\nstockholders of the Company in accordance with North Carolina law;\n\n      (b) any applicable waiting period under the HSR Act relating to the Merger\nshall have expired or been terminated;\n\n      (c) no provision of any applicable law or regulation and no judgment,\ninjunction, order or decree shall prohibit or enjoin the consummation of the\nMerger;\n\n       (d) the Form S-4 shall have been declared effective under the 1933 Act\nand no stop order suspending the effectiveness of the Form S-4 shall be in\neffect and no proceedings for such purpose shall be pending before or threatened\nby the SEC; and\n\n      (e) the shares of Acquiror Common Stock to be issued in the Merger shall\nhave been approved for listing on the NYSE, subject to official notice of\nissuance.\n\n      SECTION 8.02. Conditions to the Obligations of Acquiror and Merger\nSubsidiary. The obligations of Acquiror and Merger Subsidiary to consummate the\nMerger are subject to the satisfaction (or, to the extent legally permissible,\nwaiver) of the following further conditions:\n\n      (a) (i) the Company shall have performed in all material respects all of\nits obligations hereunder required to be performed by it at or prior to the\nEffective Time, (ii) the representations and warranties of the Company contained\nin this Agreement and in any certificate or other writing delivered by the\nCompany pursuant hereto shall be true and correct (without giving effect to any\nlimitation as to \"materiality\" or \"Material Adverse Effect\" set forth therein)\nat and as of the Effective Time as if made at and as of such time (except to the\nextent expressly made as of an earlier date), except where the failure of such\nrepresentations and warranties to be true and correct (without giving effect to\nany limitation as to \"materiality\" or \"Material Adverse Effect\" set forth\ntherein) would not, individually or in the aggregate, have a Material Adverse\nEffect on the Company and (iii) Acquiror shall have received a certificate\nsigned by a the Chief Executive Officer and the Chief Financial Officer of the\nCompany to the foregoing effect;\n\n      (b) there shall not be instituted or pending any action or proceeding by\nany governmental authority (whether domestic, foreign or supranational) before\nany court or governmental authority or agency, domestic, foreign or\nsupranational, (i) seeking to restrain, prohibit or otherwise interfere with the\nownership or operation by Acquiror or any Subsidiary of Acquiror of all or any\nportion of the business of the Company or any of its Subsidiaries or of Acquiror\nor any of its Subsidiaries or to compel Acquiror or any Subsidiary of Acquiror\nto dispose of or hold separate all or any portion of the business or assets of\nthe Company or any of its Subsidiaries or of Acquiror or any of its\nSubsidiaries, (ii) seeking to impose or confirm limitations on the ability of\nAcquiror or any Subsidiary of Acquiror effectively to exercise full rights of\nownership of the Shares (or shares of stock of the Surviving Corporation)\nincluding, without limitation, the right to vote any Shares (or shares of stock\nof the Surviving Corporation) on any matters properly presented to stockholders\nor (iii) seeking to require divestiture by Acquiror or any Subsidiary of\nAcquiror of any Shares (or shares of stock of the Surviving Corporation) if any\nsuch matter referred to in clause (i), (ii) or (iii) hereof could reasonably be\nexpected to result in a substantial detriment to the\n\n                                       28\n\n\n\nAcquiror and its Subsidiaries (including the Company and its Subsidiaries), \ntaken as a whole (any such substantial detriment being referred to in this \nAgreement as a \"Substantial Detriment\");\n\n      (c) there shall not be any statute, rule, regulation, injunction, order or\ndecree, enacted, enforced, promulgated, entered, issued or deemed applicable to\nthe Merger and the other transactions contemplated hereby (or in the case of any\nstatute, rule or regulation, awaiting signature or reasonably expected to become\nlaw), by any court, government or governmental authority or agency or\nlegislative body, domestic, foreign or supranational, that is reasonably likely,\ndirectly or indirectly, to result in a Substantial Detriment;\n\n      (d) (i) all required approvals or consents of any governmental authority\n(whether domestic, foreign or supranational) in connection with the Merger and\nthe consummation of the other transactions contemplated hereby shall have been\nobtained (and all relevant statutory, regulatory or other governmental waiting\nperiods, whether domestic, foreign or supranational, shall have expired) unless\nthe failure to receive any such approval or consent would not be reasonably\nlikely, directly or indirectly, to result in a Substantial Detriment and (ii)\nall such approvals and consents which have been obtained shall be on terms that\nare not reasonably likely, directly or indirectly, to result in a Substantial\nDetriment;\n\n      (e) Acquiror shall have received an opinion of Miller, Canfield, Paddock\nand Stone, p.l.c. in form and substance satisfactory to Acquiror, dated the\nClosing Date, to the effect that, on the basis of certain facts, representations\nand assumptions set forth in the opinion, the Merger will be treated for federal\nincome tax purposes as a reorganization qualifying under the provisions of\nSection 368(a) of the Code and each of Acquiror, Merger Subsidiary and the\nCompany will be a party to the reorganization within the meaning of Section\n368(b) of the Code. In rendering such opinion, such counsel shall be entitled to\nrely upon certain representations of officers of Acquiror and the Company\nreasonably requested by counsel, including without limitation those contained in\ncertificates substantially in the form attached as Exhibits B-1 and B-2;\n\n      (f) since the date of this Agreement, there shall not have been any event,\noccurrence, development or state of circumstances which, individually or in the\naggregate, has had or would reasonably be expected to have a Material Adverse\nEffect on the Company.\n\n      (g) the parties shall have received all required approvals and third party\nconsents listed on Schedule 8.02(e);\n\n      (h) Affiliate Agreements in form of Exhibit A, executed by each Person who\ncould reasonably be deemed to be an \"affiliate\" of the Company (as that term is\nused in Rule 145 under the 1933 Act), shall have been delivered to Acquiror and\nshall be in full force and effect.\n\n      SECTION 8.03. Conditions to the Obligations of the Company. The obligation\nof the Company to consummate the Merger is subject to the satisfaction (or, to\nthe extent legally permissible, waiver) of the following further conditions:\n\n      (a) (i) Acquiror shall have performed in all material respects all of its\nobligations hereunder required to be performed by it at or prior to the\nEffective Time, (ii) the representations and warranties of Acquiror contained in\nthis Agreement and in any certificate or other writing delivered by Acquiror\npursuant hereto shall be true and correct (without giving effect to any\nlimitation as to \"materiality\" or \"Material Adverse Effect\" set forth therein)\nat and as of the Effective Time as if made at and as of such time (except to the\nextent expressly made as of an earlier date), except where the failure of such\nrepresentations and warranties to be true and correct (without giving effect to\nany limitation as to \"materiality\" or \"Material Adverse Effect\" set forth\ntherein) would not, individually or in the aggregate, \n\n                                       29\n\n\n\nhave a Material Adverse Effect on the Acquiror and (iii) the Company shall have \nreceived a certificate signed by an executive officer of Acquiror to the \nforegoing effect; \n\n      (b) the Company shall have received an opinion of Kilpatrick Stockton llp\nin form and substance satisfactory to the Company, dated the Closing Date, to\nthe effect that, on the basis of certain facts, representations and assumptions\nset forth in the opinion, the Merger will be treated for federal income tax\npurposes as a reorganization qualifying under the provisions of Section 368(a)\nof the Code and each of Acquiror, Merger Subsidiary and the Company will be a\nparty to the reorganization within the meaning of Section 368(b) of the Code. In\nrendering such opinion, such counsel shall be entitled to rely upon certain\nrepresentations of officers of Acquiror and the Company reasonably requested by\ncounsel, including without limitation those contained in certificates\nsubstantially in the form attached as Exhibits B-1 and B-2. In the event that\nsuch counsel does not render such opinion, this condition shall nevertheless be\nsatisfied if the same opinion delivered to the Acquiror pursuant to Section\n8.02(e) above shall be delivered to the Company and shall be reasonably\nsatisfactory to the Company in form and substance; and\n\n      (c) since the date of this Agreement, there shall not have been any event,\noccurrence, development or state of circumstances which, individually or in the\naggregate, has had or would reasonably be expected to have a Material Adverse\nEffect on Acquiror.\n\n\n                                    ARTICLE 9\n                                   TERMINATION\n\n      SECTION 9.01.  Termination.  This  Agreement  may be terminated  and the\nMerger  may  be   abandoned   at  any  time  prior  to  the   Effective   Time\n(notwithstanding  any approval of this  Agreement by the  stockholders  of the\nCompany):\n\n      (a) by mutual written consent of the Company and Acquiror;\n\n      (b) by either the Company or Acquiror,\n\n            (i) if the Merger has not been consummated by March 31, 2000 (the\n      \"End Date\"); provided that if (x) the Effective Time has not occurred by\n      such date by reason of non-satisfaction of any of the conditions set forth\n      in Sections 8.01(b), 8.01(d), 8.02(b), 8.02(c) or 8.02(d) and (y) all\n      other conditions in Article 8 have theretofore been satisfied or (to the\n      extent legally permissible) waived or are then capable of being satisfied,\n      the End Date will be June 30, 2000; provided further that the right to\n      terminate this Agreement under this Section 9.01(b)(i) shall not be\n      available to any party whose failure to fulfill in any material respect\n      any obligation under this Agreement has caused or resulted in the failure\n      of the Effective Time to occur on or before the End Date; or\n\n            (ii) if the Company Stockholder Approval shall not have been\n      obtained by reason of the failure to obtain the required vote at a duly\n      held meeting of stockholders or any adjournment thereof.\n\n       (c) by either the Company or Acquiror, if there shall be any law or\nregulation that makes consummation of the Merger illegal or otherwise prohibited\nor if any judgment, injunction, order or decree enjoining Acquiror or the\nCompany from consummating the Merger is entered and such judgment, injunction,\norder or decree shall become final and nonappealable;\n\n                                       30\n\n\n\n\n      (d) by Acquiror, if the Board of Directors of the Company shall have\nfailed to recommend or withdrawn or modified or changed in a manner adverse to\nAcquiror its approval or recommendation of this Agreement or the Merger or shall\nhave failed to call the Company Stockholder Meeting in accordance with Section\n5.02, or shall have recommended a Superior Proposal (or the Board of Directors\nof the Company resolves to do any of the foregoing);\n\n       (e) by the Company, if (i) the Board of Directors of the Company\nauthorizes the Company, subject to complying with the terms of this Agreement,\nto enter into a binding written agreement concerning a transaction that\nconstitutes a Superior Proposal and the Company notifies Acquiror in writing\nthat it intends to enter into such an agreement, attaching the most current\nversion of such agreement (or a description of all material terms and conditions\nthereof) to such notice, (ii) Acquiror does not make, within three business days\nof receipt of the Company's written notification of its intention to enter into\na binding agreement for a Superior Proposal, an offer that the Board of\nDirectors of the Company determines, in good faith after consultation with its\nfinancial advisors, is at least as favorable to the stockholders of the Company\nas the Superior Proposal, it being understood that the Company shall not enter\ninto any such binding agreement during such three-day period and (iii) the\nCompany prior to such termination pursuant to this clause (e) pays to Acquiror\nin immediately available funds the fees required to be paid pursuant to Section\n10.04. The Company agrees to notify Acquiror promptly if its intention to enter\ninto a written agreement referred to in its notification shall change at any\ntime after giving such notification or\n\n\n      The party desiring to terminate this Agreement pursuant to clause (b),\n(c), (d) or (e) of this Section 9.01 shall give written notice of such\ntermination to the other party in accordance with Section 10.01, specifying the\nprovision hereof pursuant to which such termination is effected.\n\n      SECTION 9.02. Effect of Termination. If this Agreement is terminated\npursuant to Section 9.01, this Agreement shall become void and of no effect with\nno liability on the part of any party hereto, except that (a) the agreements\ncontained in this Section 9.02, in Section 10.04, and in the Confidentiality\nAgreement shall survive the termination hereof and (b) no such termination shall\nrelieve any party of any liability or damages resulting from any willful breach\nby that party of this Agreement.\n\n\n                                   ARTICLE 10\n                                  MISCELLANEOUS\n\n      SECTION 10.01.  Notices. All notices,  requests and other communications\nto any party  hereunder  shall be in writing  (including  facsimile or similar\nwriting) and shall be given,\n\n      if to Acquiror or Merger Subsidiary, to:\n\n      La-Z-Boy Incorporated\n      1284 North Telegraph Road\n      Monroe, Michigan 48162\n      Attention: President\n      Fax: 734-457-2005\n\n      with a copy to:\n\n\n\n\n                                       31\n\n\n\n\n      Miller, Canfield, Paddock and Stone, p.l.c.\n      150 West Jefferson Avenue, Suite 2500\n      Detroit, Michigan 48226\n      Attention: David D. Joswick\n      Fax: 313-496-8451\n\n      if to the Company, to:\n\n      LADD Furniture, Inc.\n      4620 Grandover Parkway\n      Greensboro, North Carolina 27407\n      Attention: President\n      Fax: 336-315-4399\n\n      with a copy to:\n\n      Kilpatrick Stockton llp\n      1001 West Fourth Street\n      Winston-Salem, North Carolina 27101\n      Attention: Robert E. Esleeck\n      Fax: 336-607-7505\n\nor such other address or facsimile number as such party may hereafter specify\nfor the purpose by notice to the other parties hereto. Each such notice, request\nor other communication shall be effective (a) if given by facsimile, when such\nfacsimile is transmitted to the facsimile number specified in this Section and\nthe appropriate facsimile confirmation is received or (b) if given by any other\nmeans, when delivered at the address specified in this Section.\n\n      SECTION 10.02. Non-Survival of Representations and Warranties. The\nrepresentations and warranties contained herein and in any certificate or other\nwriting delivered pursuant hereto shall not survive the Effective Time or the\ntermination of this Agreement.\n\n      SECTION 10.03. Amendments; No Waivers. (a) Any provision of this Agreement\n(including the Exhibits and Schedules hereto) may be amended or waived prior to\nthe Effective Time if, and only if, such amendment or waiver is in writing and\nsigned, in the case of an amendment, by the Company, Acquiror and Merger\nSubsidiary, or in the case of a waiver, by the party against whom the waiver is\nto be effective; provided that after the adoption of this Agreement by the\nstockholders of the Company, no such amendment or waiver shall, without the\nfurther approval of such stockholders, alter or change (i) the amount or kind of\nconsideration to be received in exchange for any shares of capital stock of the\nCompany, (ii) any term of the certificate of incorporation of the Surviving\nCorporation or (iii) any of the terms or conditions of this Agreement if such\nalteration or change would adversely affect the holders of any shares of capital\nstock of the Company.\n\n      (b) No failure or delay by any party in exercising any right, power or\nprivilege hereunder shall operate as a waiver thereof nor shall any single or\npartial exercise thereof preclude any other or further exercise thereof or the\nexercise of any other right, power or privilege. The rights and remedies herein\nprovided shall be cumulative and not exclusive of any rights or remedies\nprovided by law.\n\n      SECTION 10.04. Expenses. (a) Except as otherwise specified in this Section\n10.04 or agreed in writing by the parties, all costs and expenses incurred in\nconnection with this Agreement and the transactions contemplated by this\nAgreement shall be paid by the party incurring such cost or expense; \n\n                                       32\n\n\n\nprovided, however, that if this Agreement is terminated by Acquiror without \nconsummation of the Merger pursuant to Section 9.01(d) or as a result of any \nwillful breach by the Company of its obligations under this Agreement, or \nAcquiror becomes entitled to the fees provided for in Section 10.04(b)(ii), \nthen all costs and expenses incurred by Acquiror shall be paid by the Company.\n\n      (b) If:\n\n            (i) Acquiror shall terminate this Agreement pursuant to Section\n      9.01(d), unless at the time of such failure to recommend, withdrawal or\n      adverse modification or change, failure to call the Company Stockholder\n      Meeting or recommendation of a Superior Proposal any of the conditions set\n      forth in Section 8.03(a) or 8.03(c) would not have been satisfied as of\n      such date and would not be reasonably capable of being satisfied,\n\n            (ii) either the Company or Acquiror shall terminate this Agreement\n      pursuant to Section 9.01(b)(ii) in circumstances where the Company\n      Stockholder Approval has not been obtained and prior to the Company\n      Stockholder Meeting an Acquisition Proposal is made by any Person and if\n      the Company enters into a definitive agreement within twelve months after\n      termination of this Agreement either (1) in respect of any Acquisition\n      Proposal with such Person or any of its affiliates or (2) in respect of\n      any Acquisition Proposal with any other Person (other than Acquiror or any\n      affiliate of Acquiror) providing, in the case of this clause (2), greater\n      value per Share than an amount equal to the product of the Exchange Ratio\n      and the average of the closing prices per share of Acquiror Common Stock\n      on the NYSE on the five business days immediately preceding the date of\n      this Agreement, or\n\n            (iii) the Company shall terminate this Agreement pursuant to Section\n      9.01(e),\n\nthen in any case as described in clause (i), (ii) or (iii) (each such case of\ntermination being referred to as a \"Trigger Event\") the Company shall pay to\nAcquiror (by wire transfer of immediately available funds not later than the\ndate of termination of this Agreement or, in the case of clause (ii), the date\nof such definitive agreement) an amount equal to $7,000,000. Acceptance by\nAcquiror of the payment referred to in the foregoing sentence shall constitute\nconclusive evidence that this Agreement has been validly terminated and upon\nacceptance of payment of such amount the Company shall be fully released and\ndischarged from any liability or obligation resulting from or under this\nAgreement other than as provided in Sections 9.02 and 10.04.\n\n      SECTION 10.05. Successors and Assigns. The provisions of this Agreement\nshall be binding upon and inure to the benefit of the parties hereto and their\nrespective successors and assigns; provided that no party may assign, delegate\nor otherwise transfer any of its rights or obligations under this Agreement\nwithout the consent of the other parties hereto except that Merger Subsidiary\nmay transfer or assign, in whole or from time to time in part, to one or more of\nits affiliates, its rights under this Agreement, but any such transfer or\nassignment will not relieve Merger Subsidiary of its obligations hereunder.\n\n      SECTION  10.06.  Governing  Law.  This  Agreement  shall be construed in\naccordance  with and  governed  by the law of the State of  Michigan,  without\nregard to principles of conflicts of law.\n\n      SECTION 10.07. Jurisdiction. Any suit, action or proceeding seeking to\nenforce any provision of, or based on any matter arising out of or in connection\nwith, this Agreement or the transactions contemplated hereby may be brought in\nany federal or state court located in the State of Michigan, and each of the\nparties hereby consents to the jurisdiction of such courts (and of the\nappropriate appellate courts therefrom) in any such suit, action or proceeding\nand irrevocably waives, to the fullest extent \n\n                                       33\n\n\n\npermitted by law, any objection which it may now or hereafter have to the laying\nof the venue of any such suit, action or proceeding in any such court or that \nany such suit, action or proceeding which is brought in any such court has been \nbrought in an inconvenient forum. Process in any such suit, action or proceeding\nmay be served on any party anywhere in the world, whether within or without the \njurisdiction of any such court. Without limiting the foregoing, each party \nagrees that service of process on such party as provided in Section 10.01 shall \nbe deemed effective service of process on such party.\n\n      SECTION 10.08. Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY\nIRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING\nARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED\nHEREBY.\n\n      SECTION 10.09. Counterparts; Effectiveness. This Agreement may be signed\nin any number of counterparts, each of which shall be an original, with the same\neffect as if the signatures thereto and hereto were upon the same instrument.\nThis Agreement shall become effective when each party hereto shall have received\ncounterparts hereof signed by all of the other parties hereto.\n\n      SECTION 10.10. Entire Agreement. This Agreement (including the Exhibits\nand Schedules hereto) and the Confidentiality Agreement constitute the entire\nagreement between the parties with respect to the subject matter of this\nAgreement and supersede all prior agreements and understandings, both oral and\nwritten, between the parties with respect to the subject matter hereof and\nthereof. This Agreement shall be binding upon and inure solely to the benefit of\neach party hereto and nothing in this Agreement, express or implied, is intended\nto confer upon any other Person any rights or remedies of any nature whatsoever\nunder this Agreement. Notwithstanding the foregoing and any other provision of\nthis Agreement to the contrary, any of the Indemnitees (as defined in Section\n6.05 hereof) and the Executives and Company's officers pursuant to Section 6.06\nshall be entitled to enforce the provisions of Sections 6.05 or 6.06 hereof.\nAcquiror shall pay, at the time they are incurred, all reasonable costs, fees\nand expenses of one firm of counsel of the Indemnitees, the Executives or the\nCompany's officers incurred in connection with the assertion of any rights on\nbehalf of the Person set forth above pursuant to this Section 10.10.\n\n      SECTION 10.11. Captions; Construction of Certain Contract Provisions. The\ncaptions herein are included for convenience of reference only and shall be\nignored in the construction or interpretation hereof. For purposes of this\nAgreement, the parties agree that: (a) any provision of any contract to which\nthe Company or any Subsidiary is a party to the effect that the contract may not\nbe assigned by the Company or Subsidiary without the other party's consent shall\nbe construed not to require such consent in connection with the consummation of\nthe Merger, unless the provision specifically requires consent in connection\nwith a merger; and (b) any provision of any contract to which any Subsidiary of\nthe Company is a party that provides for termination or a change in its terms\nupon the occurrence of a change of control of the Subsidiary shall be construed\nnot to require such consent in connection with the consummation of the Merger.\n\n      SECTION 10.12. Severability. If any term, provision, covenant or\nrestriction of this Agreement is held by a court of competent jurisdiction or\nother authority to be invalid, void or unenforceable, the remainder of the\nterms, provisions, covenants and restrictions of this Agreement shall remain in\nfull force and effect and shall in no way be affected, impaired or invalidated\nso long as the economic or legal substance of the transactions contemplated\nhereby is not affected in any manner materially adverse to any party. Upon such\na determination, the parties shall negotiate in good faith to modify this\nAgreement so as to effect the original intent of the parties as closely as\npossible in an acceptable manner in order that the transactions contemplated\nhereby be consummated as originally contemplated to the fullest extent possible.\n\n                                       34\n\n\n\n      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be\nduly executed by their respective authorized officers as of the day and year\nfirst above written.\n\n\n                              LADD FURNITURE, INC.\n\n\n                              By _______________________________________\n\n                                    Its ________________________________\n\n\n\n\n                              LA-Z-BOY INCORPORATED\n\n\n                              By _______________________________________\n\n                                    Its ________________________________\n\n\n\n\n                              LZB ACQUISITION CORP.\n\n\n                              By _______________________________________\n\n                                    Its ________________________________\n\n\n\n\n\n\n\n\n\n\n                                       35\n\n\n\n\n\n\n\n\n\n                                    Exhibit A\n\n\n                               AFFILIATE'S LETTER\n                             (LADD Furniture, Inc.)\n\n\n                                     [Date]\n\nLa-Z-Boy Incorporated\n1284 North Telegraph Road\nMonroe, Michigan 48162\n\nLADD Furniture, Inc.\n4620 Grandover Parkway\nGreensboro, North Carolina 27407\n\nLadies and Gentlemen:\n\n      The undersigned has been advised that as of the date of this letter the\nundersigned may be deemed to be an \"affiliate\" of LADD Furniture, Inc., a North\nCarolina corporation (the \"Company\"), as the term \"affiliate\" is defined for\npurposes of paragraphs (c) and (d) of Rule 145 of the rules and regulations (the\n\"Rules and Regulations\") of the Securities and Exchange Commission (the\n\"Commission\") under the Securities Act of 1933, as amended (the \"Act\"). Pursuant\nto the terms of the Agreement and Plan of Merger dated as of September 28, 1999\n(the \"Agreement\") among the Company, La-Z-Boy Incorporated, a Michigan\ncorporation (\"Acquiror\"), and LZB Acquisition Corp., a Michigan corporation and\na wholly-owned subsidiary of Acquiror (\"Merger Subsidiary\"), Merger Subsidiary\nwill be merged with and into the Company with the Company to be the surviving\ncorporation in the merger (the \"Merger\").\n\n      As a result of the Merger, the undersigned will receive shares of common\nstock, $1.00 par value, of Acquiror (the \"Acquiror Common Stock\") in exchange\nfor shares owned by the undersigned of common stock, par value $0.30 per share,\nof the Company (the \"Company Common Stock\").\n\n      The undersigned represents, warrants and covenants to Acquiror and the\nCompany that as of the date the undersigned receives any Acquiror Common Stock\nas a result of the Merger:\n\n      A. The undersigned shall not make any sale, transfer or other disposition\nof the Acquiror Common Stock in violation of the Act or the Rules and\nRegulations.\n\n      B. The undersigned has carefully read this letter and the Agreement and\ndiscussed the requirements of such documents and other applicable limitations\nupon the undersigned's ability to sell, transfer or otherwise dispose of the\nAcquiror Common Stock to the extent the undersigned felt necessary with the\nundersigned's counsel or counsel for the Company.\n\n      C. The undersigned has been advised that the issuance of Acquiror Common\nStock to the undersigned pursuant to the Merger will be registered with the\nCommission under the Act on a Registration Statement on Form S-4. However, the\nundersigned has also been advised that, because at the time the Merger is\nsubmitted for a vote of the stockholders of the Company, the undersigned may be\ndeemed to be an affiliate of the Company, the undersigned may not sell, transfer\nor otherwise dispose of the Acquiror Common Stock issued to the undersigned in\nthe Merger unless (i) such sale, transfer or other disposition has been\nregistered under the Act, (ii) such sale, transfer or other disposition is made\nin \n\n\n                                      A-1\n\n\n\nconformity with Rule 145 promulgated by the Commission under the Act, or\n(iii) in the opinion of counsel reasonably acceptable to Acquiror, or pursuant\nto a \"no action\" letter obtained by the undersigned from the staff of the\nCommission, such sale, transfer or other disposition is otherwise exempt from\nregistration under the Act.\n\n      D. The undersigned understands that Acquiror is under no obligation to\nregister the sale, transfer or other disposition of the Acquiror Common Stock by\nthe undersigned or on the undersigned's behalf under the Act or to take any\nother action necessary in order to enable such sale, transfer or other\ndisposition by the undersigned to be made in compliance with an exemption from\nsuch registration.\n\n      E. The undersigned also understands that there will be placed on any\ncertificates for the Acquiror Common Stock issued to the undersigned a legend\nstating in substance:\n\n \"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A TRANSACTION\n TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933 APPLIES. THE\n    SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE SOLD, TRANSFERRED OR\nOTHERWISE DISPOSED OF ONLY IN ACCORDANCE WITH THE TERMS OF A LETTER AGREEMENT\n   BETWEEN THE REGISTERED HOLDER HEREOF AND LADD FURNITURE, INC., A COPY OF\n WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF LADD FURNITURE, INC.\"\n\n      F. The undersigned also understands that unless a sale or transfer by the\nundersigned of the undersigned's Acquiror Common Stock has been registered under\nthe Act or is a sale made in conformity with the provisions of Rule 145 under\nthe Act, Acquiror reserves the right to put the following legend on the\ncertificates issued to the undersigned's transferee:\n\n   \"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED\nUNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO RECEIVED\n   SUCH SECURITIES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE\n SECURITIES ACT OF 1933 APPLIES. THE SECURITIES HAVE NOT BEEN ACQUIRED BY THE\n  HOLDER WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION\nTHEREOF WITHIN THE MEANING OF THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD,\n     TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE\n      REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN EXEMPTION FROM THE\n          REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933.\"\n\n      It is understood and agreed that the legends set forth in paragraphs E and\nF above shall be removed by delivery of substitute certificates without such\nlegend if (i) the securities represented thereby have been registered for sale\nby the undersigned under the Act or (ii) Acquiror has received either an opinion\nof counsel, which opinion and counsel shall be reasonably satisfactory to\nAcquiror, or a \"no-action\" letter obtained by the undersigned from the staff of\nthe Commission, to the effect that the restrictions imposed by Rule 145 under\nthe Act no longer apply to the undersigned.\n\n      G. The undersigned further understands and agrees that the\nrepresentations, warranties, covenants and agreements of the undersigned set\nforth herein are for the benefit of Acquiror, the Company and the Surviving\nCorporation (as defined in the Merger Agreement) and will be relied upon by such\nentities and their respective counsel and accountants.\n\n\n                                      A-2\n\n\n\n\n      H. The undersigned understands and agrees that this letter agreement shall\napply to all shares of the capital stock of Acquiror and the Company that are\ndeemed to be beneficially owned by the undersigned pursuant to applicable\nfederal securities laws.\n\n      Execution of this letter should not be considered an admission on the part\nof the undersigned that the undersigned is an \"affiliate\" of the Company as\ndescribed in the first paragraph of this letter or as a waiver of any rights the\nundersigned may have to object to any claim that the undersigned is such an\naffiliate on or after the date of this letter.\n\n\n                                Very truly yours,\n\n\n\n                              By _____________________________\n                                 Name:\n\n\n\n\n\nAccepted this _____ day of\n\n________________, _______.\n\n\nLADD FURNITURE, INC.\n\n\n\nBy: _________________________________\n   Name:\n   Title:\n\n\n\n\n\n\n\n\n                                      A-3\n\n\n\n                                   Exhibit B-1\n\n                 LA-Z-BOY INCORPORATED REPRESENTATION LETTER\n\n\n                                     [Date]\n\nMiller, Canfield, Paddock and Stone, p.l.c.\n150 West Jefferson Avenue, Suite 2500\nDetroit, Michigan 48226\n\nKilpatrick Stockton llp\n1001 West Fourth Street\nWinston-Salem, North Carolina 27101\n\nLadies and Gentlemen:\n\n      In connection with the opinions to be delivered pursuant to Sections\n8.02(e) and 8.03(b) of the Agreement and Plan of Merger (the \"Agreement\")* dated\nas of September 28, 1999, among LADD Furniture, Inc., a North Carolina\ncorporation (\"Company\"), La-Z-Boy Incorporated, a Michigan corporation\n(\"Parent\"), and LZB Acquisition Corp., a Michigan corporation and a wholly-owned\nsubsidiary of Parent (\"Merger Subsidiary\"), and the opinions which, pursuant to\nthe requirements of Item 601(b)(8) of Regulation S-K under the Securities Act of\n1933, as amended, will be included in the Registration Statement on Form S-4,\nthe undersigned officers of Parent and Merger Subsidiary hereby certify and\nrepresent as to Parent and Merger Subsidiary that the facts relating to the\nmerger (the \"Merger\") of Merger Subsidiary with and into Company pursuant to the\nAgreement, and as described in the Joint Proxy Statement\/Prospectus of Parent\nand Company relating to the Merger (the \"Proxy Statement\"), are true, correct\nand complete in all respects as of the date hereof and will be true, correct and\ncomplete in all respects at the Effective Time and that:\n\n      1. The Merger Consideration to be received in the Merger by holders of\ncommon stock of Company (\"Company Stock\") was determined by arm's length\nnegotiations between the managements of Parent and Company and will be\napproximately equal to the fair market value of the Company Stock surrendered in\nexchange. In connection with the Merger, no holder of Company Stock, other than\nany such holders who dissent in the Merger and perfect their right to appraisal\nand payment, will receive in exchange for such stock, directly or indirectly,\nany consideration other than common stock of Parent (\"Parent Stock\") and, in\nlieu of fractional shares of Parent Stock, cash.\n\n      2. Other than cash paid in lieu of fractional shares of Parent Stock, none\nof\n\n            (i) Parent (or any successor corporation),\n\n            (ii) a corporation that, immediately before or immediately after\n      such purchase, exchange, redemption, or other acquisition, is a member of\n      an Affiliated Group (as defined herein) of which Parent (or any successor\n      corporation) is a member, or\n\n\n\n\n---------------------------\n* References contained in this Certificate to the Agreement include, unless the\ncontext otherwise requires, each document attached as an exhibit or schedule.  \nAll defined terms used herein and not otherwise defined have the meaning \nascribed to them in the Agreement.\n\n\n                                      B-1-1\n\n\n\n            (iii) a corporation in which Parent (or any successor corporation)\n      owns, or which owns with respect to Parent (or any successor corporation),\n      directly or indirectly, immediately before or immediately after such\n      purchase, exchange, redemption, or other acquisition, at least 50% of the\n      total combined voting power of all classes of stock entitled to vote or at\n      least 50% of the total value of shares of all classes of stock, taking\n      into account for purposes of this clause (iii)\n\n      -     any stock owned by 5% or greater stockholders of Parent (or any\n               successor) or such corporation,\n\n      -     a proportionate share of the stock owned by entities in which Parent\n               (or any successor) or such corporation owns an interest, and\n\n      -     any stock which may be acquired pursuant to the exercise of options\n\n      (a \"Parent Related Person\") has any current plan or intention to redeem,\n      purchase, exchange or otherwise reacquire any of the Parent Stock to be\n      issued in the Merger. Parent will implement its stock repurchase plan\n      consistent with the resolution adopted by the Board of Parent on\n      ___________, 19__. Parent intends that all stock repurchases made pursuant\n      to this stock repurchase plan, or any other stock repurchase plan adopted\n      by Parent,\n\n            (a) shall be undertaken for a corporate business purpose,\n\n            (b) shall be made in the open market for stock of the Parent which\n      is widely held and publicly traded, except that Parent may acquire stock\n      in block trades made directly with an entity that is not known to Parent\n      to have acquired such stock in the Merger, and any redemptions or\n      repurchases of stock issued in the Merger that occur shall be incidental\n      to the operation of such stock repurchase plan, and\n\n            (c) shall be limited to, in the aggregate, a small percentage of\n      each class of stock of Parent outstanding at the time of the redemption or\n      repurchase.\n\n      In addition, Parent will cause all Parent Related Persons and any person\nacting as an agent of Parent not to redeem, purchase, exchange or otherwise\nacquire (including by derivative transactions such as an equity swap which would\nhave the economic effect of an acquisition), directly or indirectly (including\nthrough partnerships or through third parties in connection with a plan to so\nacquire), a number of shares of Parent Stock to be received by Company\nshareholders in connection with the Merger that would reduce the Company\nshareholders' ownership of Parent Stock to a number of shares having a value, as\nof the Effective Time, of less than 50% of the total value of Company Stock\nimmediately prior to the Effective Time.\n\n      For purposes of this representation, shares of Company Stock exchanged for\ncash in lieu of fractional shares of Parent Stock are treated as outstanding\nshares of Company Stock at the Effective Time. Moreover, shares of Company Stock\nthat are redeemed or sold or otherwise transferred to Company, Parent, or any\nperson related to Company or Parent prior to the Merger and in contemplation of\nor as part of the Merger will be taken into account for purposes of this\nrepresentation.\n\n      For purposes of this Certificate, \"Affiliated Group\" shall mean one or\nmore chains of corporations connected through stock ownership with a common\nparent corporation, but only if\n\n\n                                      B-1-2\n\n\n\n\n            (x) the common parent owns directly stock that possesses at least\n      80% of the total voting power, and has a value at least equal to 80% of\n      the total value, of the stock in at least one of the other corporations,\n      and\n\n            (y) stock possessing at least 80% of the total voting power, and\n      having a value at least equal to 80% of the total value, of the stock in\n      each corporation (except the common parent) is owned directly by one or\n      more of the other corporations.\n\n      For purposes of the preceding sentence, \"stock\" does not include any\nstock which\n\n            (a) is not entitled to vote,\n\n            (b) is limited and preferred as to dividends and does not\n      participate in corporate growth to any significant extent,\n\n            (c) has redemption and liquidation rights which do not exceed the\n      issue price of such stock (except for a reasonable redemption or\n      liquidation premium), and\n\n            (d) is not convertible into another class of stock.\n\n      3. After the Merger, Company will hold at least 90% of the fair market\nvalue of the net assets and at least 70% of the fair market value of the gross\nassets held by Merger Subsidiary immediately prior to the Merger, and at least\n90% of the fair market value of the net assets and at least 70% of the fair\nmarket value of the gross assets held by Company immediately prior to the\nMerger. For purposes of this representation, assets of Merger Subsidiary or\nCompany held immediately prior to the Merger include amounts paid or incurred by\nMerger Subsidiary or Company in connection with the Merger, including amounts\nused to pay reorganization expenses or dissenting shareholders or to make\npayments to shareholders who receive cash or other property (including cash in\nlieu of fractional shares) and all payments, redemptions and distributions\n(except for regular, normal dividends, if any) made in contemplation or as part\nof the Merger.\n\n      4. Prior to and at the Effective Time of the Merger, Parent will be in\nControl of Merger Subsidiary. Merger Subsidiary is wholly and directly owned by\nParent and has been newly formed solely in order to consummate the Merger, and\nat no time has or will Merger Subsidiary conduct any business activities or\nother operations of any kind other than the issuance of its stock to Parent\nprior to the Effective Time. For purposes of this Certificate, \"Control\" with\nrespect to a corporation shall mean ownership of at least 80% of the total\ncombined voting power of all classes of stock entitled to vote and at least 80%\nof the total number of shares of each other class of stock of the corporation.\n\n      5. Following the Merger, Parent has no plan or intention to cause Company\nto issue additional shares of stock, or any plan or intention to take any\naction, that could result in Parent losing Control of Company.\n\n      6. Parent has no plan or intention to liquidate Company, to merge Company\nwith or into another corporation, to sell, exchange, transfer or otherwise\ndispose of any stock of Company or to cause Company to sell, exchange, transfer\nor otherwise dispose of any of its assets or of any assets acquired from Merger\nSubsidiary in the Merger, except for (i) dispositions made in the ordinary\ncourse of business, (ii) transfers or successive transfers if in each case the\ntransferor is in Control of the transferee, or (iii) arm's length dispositions\nto unrelated persons other than dispositions which would result in Parent\nceasing to use a significant portion of the Company's historic business assets\nin a business.\n\n\n                                      B-1-3\n\n\n\n\n      7. In the Merger, Merger Subsidiary will have no liabilities assumed by\nCompany and will not transfer to Company any assets subject to liabilities.\n\n      8. Following the Merger, Parent will cause Company to continue its\nhistoric business or use a significant portion of its historic business assets\nin a business. For this purpose, Parent will be treated as holding all of the\nbusinesses and assets of its Qualified Group and Parent will be treated as\nowning its proportionate share of the Company business assets used in a business\nof any partnership in which members of Parent's Qualified Group either own a\nsignificant interest or have active and substantial management functions as a\npartner with respect to that partnership business. A Qualified Group is one or\nmore chains of corporations connected through stock ownership with Parent but\nonly if Parent is in Control of at least one other corporation and each of the\ncorporations (other than Parent) is Controlled directly by one of the other\ncorporations.\n\n      9. Except as provided below, Parent, Merger Subsidiary, Company and the\nCompany shareholders each will bear its or their own expenses, if any, incurred\nin connection with or as part of the Merger or related transactions. However, to\nthe extent any expenses related to the Merger are to be funded directly or\nindirectly by a party other than the incurring party, such expenses are solely\nand directly related to the Merger, and do not include expenses incurred for\ninvestment or estate planning advice, or expenses incurred by an individual\nshareholder or group of shareholders for legal, accounting or investment advice\nor counsel relating to the merger. Neither Parent nor Merger Subsidiary has paid\nor will pay, directly or indirectly, any expenses (including transfer taxes)\nincurred or to be incurred by any holder of Company Stock in connection with or\nas part of the Merger or any related transactions; provided that any stamp\nduties and stamp duty reserve taxes in connection with the issuance and creation\nof Parent Stock in the Merger will be paid by Parent. Neither Parent nor Merger\nSubsidiary has agreed to assume, nor will it directly or indirectly assume, any\nother expense or other liability, whether fixed or contingent, of any holder of\nCompany Stock. To the extent that any transfer tax or other expense is a\nliability of a shareholder of Company, such liability will be paid by Company or\nsuch shareholder, but in no event by Parent.\n\n      10. There is no intercorporate indebtedness existing between Parent and\nCompany or between Merger Subsidiary and Company that was issued, acquired or\nwill be settled at a discount.\n\n      11. All shares of Parent Stock into which shares of Company Stock will be\nconverted pursuant to the Merger will be newly issued shares, and will be issued\nby Parent directly to record holders of Company Stock pursuant to the Merger.\n\n      12. In the Merger, shares of Company Stock representing Control of Company\nwill be exchanged solely for voting stock of Parent and cash in lieu of\nfractional shares. Under the Agreement, all shares of Company Stock as to which\ndissenters' rights are not perfected will be exchanged in the Merger for voting\nstock of Parent and cash in lieu of fractional shares. For purposes of this\nrepresentation, if any stock of Company is exchanged for cash or other property\noriginating with Parent, such stock will be treated as outstanding stock of\nCompany acquired by Parent at the Effective Time. The payment of cash in lieu of\nfractional shares of Parent Stock to holders of Company Stock is solely for the\npurpose of avoiding the expense and inconvenience to Parent of issuing\nfractional shares and does not represent separately bargained for consideration.\nTo the best knowledge of the management of Parent, the total cash consideration\nthat will be paid in the Merger to holders of Company Stock instead of issuing\nfractional shares of Parent Stock will not exceed one percent of the total\nconsideration that will be issued to the holders of Company Stock in the Merger.\n\n      13. In the Merger, no liabilities of shareholders of Company will be\nassumed by Parent, and Parent will not assume any liabilities relating to any\nCompany Stock acquired by Parent in the Merger.\n\n\n                                      B-1-4\n\n\n\n\nFurthermore, there is no plan or intention for Parent to assume any liabilities\nof Company except to the extent that liabilities of Company are guaranteed by \nParent in the Merger Agreement.\n\n      14. In the event that any holders of Company Stock do not vote in favor of\nthe Merger and perfect their right to appraisal and payment, any amounts paid to\nsuch holders in an appraisal proceeding will be paid by Company out of its own\nfunds. No funds will be supplied for such payments, directly or indirectly, by\nParent, nor will Parent directly or indirectly reimburse Company for any such\npayments.\n\n      15. Neither Parent nor Merger Subsidiary is a regulated investment\ncompany, a real estate investment trust, or a corporation fifty percent (50%) or\nmore of the value of whose assets are stock and securities and eighty percent\n(80%) or more of the value of whose total assets are assets held for investment\n(each, an \"Investment Company\"). For purposes of this representation, in making\nthe 50% and 80% determinations under the preceding sentence, (i) stock and\nsecurities in any subsidiary corporation shall be disregarded and the parent\ncorporation shall be deemed to own its ratable share of the subsidiary's assets,\nand (ii) a corporation shall be considered a subsidiary if the parent owns 50%\nor more of the combined voting power of all classes of stock entitled to vote or\n50% or more of the total value of shares of all classes of stock outstanding. In\ndetermining total assets there shall be excluded cash and cash items (including\nreceivables), government securities, and assets acquired (through incurring\nindebtedness or otherwise) for purposes of ceasing to be an Investment Company.\n\n      16. None of the employee compensation received or to be received by any\nshareholder-employee of Company is or will be separate consideration for, or\nallocable to, any of his shares of Company Stock to be surrendered in the\nMerger. None of the shares of Parent Stock to be received by any\nshareholder-employee of Company in the Merger is or will be separate\nconsideration for, or allocable to, any employment, consulting or similar\narrangement. Any compensation paid or to be paid to any shareholder of Company,\nwho will be an employee of or perform advisory services for Parent, Company, or\nany affiliate thereof after the Merger, will be determined by bargaining at\narm's length.\n\n      17. At the Effective Time, neither Parent nor any Parent Related Person\nwill own more than 100 any class of stock of Company or any securities of\nCompany or any instrument giving the holder the right to acquire any such stock\nor securities.\n\n      18. The Merger is being effected for bona fide business reasons and will\nbe carried out strictly in accordance with the Agreement, and as described in\nthe Proxy Statement, and none of the material terms and conditions therein have\nbeen or will be waived or modified.\n\n      19. The Agreement and the documents described in the Agreement, the Proxy\nStatement and the Form S-4 represent the entire understanding between or among\n(i) Parent and its subsidiaries and (ii) Company and its subsidiaries and, to\nthe best knowledge of the management of Parent, between or among such entities\nand the affiliates and shareholders of Parent and Company with respect to the\nMerger and there are no written or oral agreements regarding the Merger other\nthan those expressly referred to in the Agreement, the Proxy Statement and the\nForm S-4.\n\n      20. None of Parent, Merger Subsidiary or, after the Merger, Company will\ntake any position on any Federal, state, or local income or franchise tax\nreturn, or take any other tax reporting position, that is inconsistent with the\ntreatment of the Merger as a tax-free reorganization or any of the foregoing\nrepresentations, unless otherwise required by a decision by the Tax Court or a\njudgment, decree, or other order by any court of competent jurisdiction, which\nhas become final, or by applicable state or local income or franchise tax law.\n\n\n                                      B-1-5\n\n\n\n\n\n      We understand that Miller, Canfield, Paddock and Stone, p.l.c. and\nKilpatrick Stockton llp will rely, without further inquiry, on this Certificate\nin rendering their opinions as to certain United States Federal income tax\nconsequences of the Merger, and we will promptly and timely inform them if,\nafter signing this Certificate, we have reason to believe that any of the facts\ndescribed herein or in the Proxy Statement or any of the representations made in\nthis Certificate are or have become untrue, incorrect or incomplete in any\nrespect.\n\nVery truly yours,\n\nLA-Z-BOY INCORPORATED\n\nBy _______________________\n\nTitle: ___________________\n\nLZB ACQUISITION CORP.\n\nBy: _______________________\n\nTitle: ____________________\n\n\n\n                                      B-1-6\n\n\n\n\n\n                                   Exhibit B-2\n\n                  LADD FURNITURE, INC. REPRESENTATION LETTER\n\n\n                                     [Date]\n\nMiller, Canfield, Paddock and Stone, p.l.c.\n150 W. Jefferson Avenue, Suite 2500\nDetroit, Michigan 48226\n\nKilpatrick Stockton llp\n1001 West Fourth Street\nWinston-Salem, North Carolina 27101\n\nLadies and Gentlemen:\n\n      In connection with the opinions to be delivered pursuant to Sections\n8.02(e) and 8.03(b) of the Agreement and Plan of Merger (the \"Agreement\")* dated\nas of September 28, 1999, among LADD Furniture, Inc., a North Carolina\ncorporation (\"Company\"), La-Z-Boy Incorporated, a Michigan corporation\n(\"Parent\"), and LZB Acquisition Corp., a Michigan corporation and a wholly-owned\nsubsidiary of Parent (\"Merger Subsidiary\"), and the opinions which, pursuant to\nthe requirements of Item 601(b)(8) of Regulation S-K under the Securities Act of\n1933, as amended, will be included in the Registration Statement on Form S-4,\nthe undersigned officer of Company hereby certifies and represents as to Company\nthat the facts relating to the merger (the \"Merger\") of Merger Subsidiary with\nand into Company pursuant to the Agreement and as described in the Joint Proxy\nStatement\/Prospectus of Parent and Company relating to the Merger (the \"Proxy\nStatement\") are true, correct and complete in all respects as of the date hereof\nand will be true, correct and complete in all respects at the Effective Time and\nthat:\n\n      1. The Merger Consideration to be received in the Merger by holders of\ncommon stock of the Company (\"Company Stock\") was determined by arm's length\nnegotiations between the managements of Parent and Company and will be\napproximately equal to the fair market value of the Company Stock surrendered in\nexchange. In connection with the Merger, no holder of Company Stock, other than\nany such holders who dissent in the Merger and perfect their right to appraisal\nand payment, will receive in exchange for such stock, directly or indirectly,\nany consideration other than common stock of Parent (\"Parent Stock\") and, in\nlieu of fractional shares of Parent Stock, cash.\n\n      2. To the best knowledge of the management of Company, there is no plan or\nintention on the part of holders of Company Stock to sell, exchange or otherwise\ntransfer ownership (including by derivative transactions such as a an equity\nswap which would have the economic effect of a transfer of ownership) to Parent,\nCompany or any Related Person (as defined herein) with respect to either of\nthem, directly or indirectly (including through partnerships or through third\nparties in connection with a plan to so transfer ownership), of a number of\nshares of Parent Stock to be received by Company shareholders in connection with\nthe Merger that would reduce the Company shareholders' ownership of Parent Stock\nto a number of shares having a value, as of the Effective Time, of less than 50%\nof the total value of all of the formerly outstanding stock of Company\nimmediately prior to the Effective Time. For purposes of this representation,\nshares of Company Stock exchanged for cash in lieu of fractional shares of\nParent Stock\n\n\n---------------------------\n* References contained in this Certificate to the Agreement include, unless the\ncontext otherwise requires, each document attached as an exhibit or schedule.  \nAll defined terms used herein and not otherwise defined have the meaning \nascribed to them in the Agreement.\n\n\n\n\n                                      B-2-1\n\n\n\nand shares of Company Stock redeemed pursuant to the perfection of the \nholder's appraisal rights are treated as outstanding shares of Company Stock\nat the Effective Time. Moreover, shares of Company Stock and Parent Stock held\nby shareholders of Company that are redeemed or sold or otherwise transferred to\nCompany, Parent, or any Related Person of either prior or subsequent to the\nMerger and in contemplation of or as part of the Merger will be taken into\naccount for purposes of this representation.\n\n      For purposes of this Certificate, a Related Person with respect to either\nParent or Company shall mean\n\n            (i) a corporation that, immediately before or immediately after such\n      purchase, exchange, redemption, or other acquisition, is a member of an\n      Affiliated Group (as defined herein) of which Parent or Company, as the\n      case may be, or any successor corporation of Parent or Company, as the\n      case may be, is a member, or\n\n            (ii) a corporation in which Parent or Company, as the case may be,\n      or any successor corporation of Parent or Company, as the case may be,\n      owns, or which owns with respect to Parent or Company (or any such\n      successor corporation), as the case may be, directly or indirectly,\n      immediately before or immediately after such purchase, exchange,\n      redemption, or other acquisition, at least 50% of the total combined\n      voting power of all classes of stock entitled to vote or at least 50% of\n      the total value of shares of all classes of stock, taking into account for\n      purposes of this clause (ii) any stock owned by 5% or greater stockholders\n      of Parent or Company (or any such successor), as the case may be, or such\n      corporation, a proportionate share of the stock owned by entities in which\n      Parent or Company (or any such successor), as the case may be, or such\n      corporation owns an interest, and any stock which may be acquired pursuant\n      to the exercise of options.\n\nFor purposes of this Certificate, \"Affiliated Group\" shall mean one or more\nchains of corporations connected through stock ownership with a common parent\ncorporation, but only if\n\n            (x) the common parent owns directly stock that possesses at least\n      80% of the total voting power, and has a value at least equal to 80% of\n      the total value, of the stock in at least one of the other corporations,\n      and\n\n            (y) stock possessing at least 80% of the total voting power, and\n      having a value at least equal to 80% of the total value, of the stock in\n      each corporation (except the common parent) is owned directly by one or\n      more of the other corporations.\n\nFor purposes of the preceding sentence, \"stock\" does not include any stock which\n(a) is not entitled to vote, (b) is limited and preferred as to dividends and\ndoes not participate in corporate growth to any significant extent, (c) has\nredemption and liquidation rights which do not exceed the issue price of such\nstock (except for a reasonable redemption or liquidation premium), and (d) is\nnot convertible into another class of stock.\n\n      3. After the Merger, to the knowledge of the management of Company,\nCompany will hold at least 90% of the fair market value of the net assets and at\nleast 70% of the fair market value of the gross assets held by Merger Subsidiary\nimmediately prior to the Merger and at least 90% of the fair market value of the\nnet assets and at least 70% of the fair market value of the gross assets held by\nCompany immediately prior to the Merger. For purposes of this representation,\nassets of Merger Subsidiary or Company held immediately prior to the Merger\ninclude amounts paid or incurred by Merger Subsidiary or Company in connection\nwith the Merger, including amounts used to pay Company's reorganization expenses\nor dissenting shareholders or to make payments to shareholders who receive cash\nor other property (including cash in lieu of fractional shares) and all\npayments, redemptions and distributions\n\n\n                                      B-2-2\n\n\n\n(except for regular, normal dividends, if any) made in contemplation or as part\nof the Merger. Any dispositions in contemplation or as part of the Merger of \nassets held by Company prior to the Merger will be for fair market value, \nand the proceeds thereof will be retained by the Company.\n\n      4. The Company has no plan or intention to issue additional shares of its\nstock that would result in Parent losing Control of the Company. For purposes of\nthis Certificate, \"Control\" with respect to a corporation shall mean ownership\nof at least 80% of the total combined voting power of all classes of stock\nentitled to vote and at least 80% of the total number of shares of each other\nclass of stock of the corporation.\n\n      5. In the Merger, to the knowledge of the management of Company, Merger\nSubsidiary will have no liabilities assumed by the Company and will not transfer\nto Company any assets subject to liabilities.\n\n      6. No assets of Company have been sold, transferred or otherwise disposed\nof which would prevent Parent from continuing the historic business of Company\nor from using a significant portion of Company's historic business assets in a\nbusiness following the Merger, and Company intends to continue its historic\nbusiness or use a significant portion of its historic business assets in a\nbusiness.\n\n      7. Except as specified below, Parent, Merger Subsidiary, Company and the\nCompany shareholders each will bear its or their own expenses, if any, incurred\nin connection with or as part of the Merger or related transactions. However, to\nthe extent any expenses related to the Merger are to be funded directly or\nindirectly by a party other than the incurring party, such expenses are solely\nand directly related to the Merger, and do not include expenses incurred for\ninvestment or estate planning advice, or expenses incurred by an individual\nshareholder or group of shareholders for legal, accounting or investment advice\nor counsel relating to the merger. Company has not paid or will not pay,\ndirectly or indirectly, any expenses incurred by any shareholder of Company in\nconnection with or as part of the Merger or any related transactions; provided\nthat all liability for transfer taxes (except for stamp duties and stamp duty\nreserve taxes to be paid by Parent in connection with the issuance and creation\nof Parent Stock in the Merger) incurred by the holders of Company Stock will be\npaid by Company or the Company shareholders and in no event by Parent. Company\nhas not agreed to assume, nor will it directly or indirectly assume, any other\nexpense or other liability, whether fixed or contingent, of any holder of\nCompany Stock.\n\n      8. There is no intercorporate indebtedness existing between Parent and\nCompany or between Merger Subsidiary and Company that was issued, acquired or\nwill be settled at a discount.\n\n      9. Company has no authorized stock other than common stock par value $0.30\nper share, and preferred stock, par value $100 per share. At the date hereof,\nthe only capital stock of Company issued and outstanding is Company Stock.\n\n      10. In the Merger, Company Stock representing Control of Company will be\nexchanged solely for voting stock of Parent other than cash in lieu of\nfractional shares. For purposes of this representation, stock of Company\nexchanged for cash or other property originating with Parent, if any, will be\ntreated as outstanding stock of Company acquired by Parent at the Effective\nTime. The payment of cash in lieu of fractional shares of Parent stock to\nholders of Company Stock is solely for the purpose of avoiding the expense and\ninconvenience to Parent of issuing fractional shares and does not represent\nseparately bargained for consideration. To the best knowledge of the management\nof Company, the total cash consideration that will be paid in the Merger to\nholders of Company Stock instead of issuing fractional shares of Parent Stock\nwill not exceed one percent of the total consideration that will be issued to\nthe holders of Company Stock in the Merger. To the best knowledge of the\nmanagement of Company, the total cash consideration that will be paid in the\nMerger to holders of Company Stock instead of issuing\n\n\n                                      B-2-3\n\n\n\nfractional shares of Parent Stock will not exceed once percent of the total \nconsideration that will be issued to the holders of Company Stock in the Merger.\n\n      11. There exist no options, warrants, convertible securities,\nequity-linked securities or other rights to acquire Company Stock (whether\nsettled in stock or cash) other than as described in the Agreement, and even if\nsuch rights were exercised or converted, it would not affect the acquisition or\nretention of Control of Company.\n\n      12. To the knowledge of the management of Company, in the Merger, no\nliabilities of shareholders of Company will be assumed by Parent, and Parent\nwill not assume any liabilities relating to any Company Stock acquired by Parent\nin the Merger. Furthermore, to the knowledge of the management of Company, there\nis no plan or intention for Parent to assume any liabilities of Company, except\nto the extent that liabilities of Company are guaranteed by Parent in the Merger\nAgreement.\n\n      13. In the event that any holders of Company Stock do not vote in favor of\nthe Merger and perfect their right to appraisal and payment, any amounts paid to\nsuch holders in an appraisal proceeding will be paid by Company out of its own\nfunds. No funds will be supplied for such payments, directly or indirectly, by\nParent, nor will Parent directly or indirectly reimburse Company for any such\npayments.\n\n      14. Company is not a regulated investment company, a real estate\ninvestment trust, or a corporation fifty percent (50%) or more of the value of\nwhose assets are stock and securities and eighty percent (80%) or more of the\nvalue of whose total assets are assets held for investment (each, an \"Investment\nCompany\"). For purposes of this representation, in making the 50% and 80%\ndeterminations under the preceding sentence, (i) stock and securities in any\nsubsidiary corporation shall be disregarded and the parent corporation shall be\ndeemed to own its ratable share of the subsidiary's assets, and (ii) a\ncorporation shall be considered a subsidiary if the parent owns 50% or more of\nthe combined voting power of all classes of stock entitled to vote or 50% or\nmore of the total value of shares of all classes of stock outstanding. In\ndetermining total assets there shall be excluded cash and cash items (including\nreceivables), government securities, and assets acquired (through incurring\nindebtedness or otherwise) for purposes of ceasing to be an Investment Company.\n\n      15. None of the employee compensation received or to be received by any\nshareholder-employee of Company is or will be separate consideration for, or\nallocable to, any of his shares of Company Stock to be surrendered in the\nMerger. None of the shares of Parent Stock to be received by any\nshareholder-employee of Company in the Merger is or will be separate\nconsideration for, or allocable to, any employment, consulting or similar\narrangement. Any compensation paid or to be paid to any shareholder of Company\nwho will be an employee of or perform advisory services for Parent, Company, or\nany affiliate thereof after the Merger, will be determined by bargaining at\narm's length.\n\n      16. Since the date of the Agreement, except for the issuance of Company\nStock pursuant to the rights described in paragraph 11 hereof, Company has not\nissued any additional shares of Company Stock.\n\n      17. Prior to and in connection with the Merger no Company Stock has been\n(i) redeemed by Company, (ii) acquired by a Related Person with respect to\nCompany (except that for the purposes of this representation, clause (i) of the\ndefinition of Related Person shall not apply) with consideration other than\nstock of Company or Parent or (iii) the subject of any extraordinary\ndistribution by Company.\n\n      18. Company has not redeemed any of its stock, made any distributions with\nrespect to its stock, or disposed of any of its assets in contemplation or as\npart of the Merger, excluding for purposes of this representation regular,\nnormal dividends and Company Stock acquired in the ordinary course of business\n\n\n                                      B-2-4\n\n\n\n\n\nin connection with employee incentive and benefit programs, or other programs or\narrangements in existence on the date hereof.\n\n      19. The Merger is being effected for bona fide business reasons and will\nbe carried out strictly in accordance with the Agreement, and as described in\nthe Proxy Statement, and none of the material terms and conditions therein has\nbeen or will be waived or modified.\n\n      20. The Agreement and the documents described in the Agreement, the Proxy\nStatement and the Form S-4 represent the entire understanding between or among\n(i) Parent and its subsidiaries and (ii) Company and its subsidiaries and, to\nthe best knowledge of the management of Company, between or among such entities\nand the affiliates and shareholders of Parent and Company with respect to the\nMerger and there are no other written or oral agreements regarding the Merger\nother than those expressly referred to in the Agreement, the Proxy Statement and\nthe Form S-4.\n\n      21. At the Effective Time, the fair market value of the assets of Company\nwill exceed the sum of its liabilities, plus the amount of liabilities, if any,\nto which those assets are subject.\n\n      22. Company is not and at the Effective Time will not be under the\njurisdiction of a federal or state court in a Title 11 case or in a\nreceivership, foreclosure or similar proceeding.\n\n      23. None of Parent, Merger Subsidiary or, after the Merger, Company will\ntake any position on any Federal, state, or local income or franchise tax\nreturn, or take any other tax reporting position, that is inconsistent with the\ntreatment of the Merger as a tax-free reorganization or any of the foregoing\nrepresentations, unless otherwise required by a decision by the Tax Court or a\njudgment, decree, or other order by any court of competent jurisdiction, which\nhas become final, or by applicable state or local income or franchise tax law.\n\n      The Company understands that Miller, Canfield, Paddock and Stone, p.l.c.\nand Kilpatrick Stockton llp will rely, without further inquiry, on this\nCertificate in rendering their opinions as to certain United States Federal\nincome tax consequences of the Merger and will promptly and timely inform them\nif, after this Certificate is signed, the Company has reason to believe that any\nof the facts described herein or in the Proxy Statement or any of the\nrepresentations made in this Certificate are or have become untrue, incorrect or\nincomplete in any respect.\n\nVery truly yours,\n\nLADD Furniture, Inc.\n\nBy: ________________________\n\nName: ______________\n\nTitle: ______________\n\n\n\n\n\n\n\n\n                                      B-2-5\n\n\n                            List of Omitted Schedules\n                         to Agreement and Plan of Merger\n\n\n1.04      Concerning LADD stock option plan and including information concerning\n          related plans and agreements\n\n3.04      Concerning effect of Agreement and Merger with respect to certain LADD\n          contracts and leases\n\n3.06(a)   Listing LADD subsidiaries\n\n3.06(b)   Concerning liens on shares of LADD subsidiaries\n\n3.10      Concerning certain changes since end of LADD's  last fiscal year\n\n3.11(d)   Concerning certain liabilities relating to LADD\n\n3.12      Concerning certain litigation relating to LADD\n\n3.13      Concerning certain tax matters relating to LADD\n\n3.14      Concerning LADD employee benefit plans and certain related matters\n\n3.17      Concerning certain environmental matters relating to LADD\n\n4.11(c)   Reporting no information\n\n4.12      Reporting no information\n\n4.13      Concerning certain tax matters relating to La-Z-Boy\n\n4.14      Identifying La-Z-Boy employee benefit plans\n\n7.07(a)   Listing certain affiliates of LADD\n\n \n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[8011],"corporate_contracts_industries":[9399],"corporate_contracts_types":[9622,9626],"class_list":["post-43082","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-la-z-boy-inc","corporate_contracts_industries-consumer__furniture","corporate_contracts_types-planning","corporate_contracts_types-planning__merger"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43082","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43082"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43082"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43082"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43082"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}