SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 7, 1995
RAUCH INDUSTRIES, INC.
(Exact name of Registrant as Specified in Charter)
North Carolina 0-12130 56-0749456
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
6048 South York Road, P.O. Box 609, Gastonia, North Carolina 28053
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (704) 867-5333
N/A
(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events.
On December 7, 1995, Rauch Industries, Inc. (the "Company") entered
into an agreement and plan of merger with Syratech Corporation ("Syratech") and
SYR Acquisition, Inc., a wholly owned subsidiary of Syratech, pursuant to which
the Company will become a wholly-owned subsidiary of Syratech. The present
shareholders of the Company will receive $13 a share in cash for each share of
the Company's common stock now owned by them. The transaction is subject, among
other things, to approval of the plan of merger by the shareholders of the
Company, and to the receipt of necessary clearances under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976. It is expected that the plan of merger will
be voted upon by the stockholders of the Company by mid- February, 1996. The
affirmative vote of holders of a majority of the common stock is needed for
approval of the plan of merger.
Syratech is a leading producer and distributor of sterling silver
flatware, sterling and plated holloware and a wide variety of tabletop and gift
items.
For additional information concerning the proposed transaction,
reference is made to the agreement and plan of merger and to a press release
issued as of December 7, 1995, copies of which are attached as exhibits hereto.
<TABLE>
<CAPTION>
Exhibit Number Description
<S> <C>
99.1 Agreement by and among Syratech, SYR Acquisition,
Inc. and the Company dated December 7, 1995.
99.2 Press Release dated December 7, 1995
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RAUCH INDUSTRIES, INC.
Date: December 11, 1995 By: /s/ Donald G. Walser
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Donald G. Walser
Executive Vice President
and Treasurer
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Exhibit 99.1
AGREEMENT
AGREEMENT, dated as of December 7, 1995, among
SYRATECH CORPORATION, a Delaware corporation ("Parent"), SYR
ACQUISITION, INC., a North Carolina corporation and an indirect
wholly-owned subsidiary of Parent ("Mergersub"), and RAUCH
INDUSTRIES, INC., a North Carolina corporation (the "Company").
In consideration of the mutual covenants and
agreements set forth herein, Parent, Mergersub and the Company hereby
agree as follows:
ARTICLE I.
THE MERGER
1.1 The Merger. (a) Upon the terms and subject
to the conditions hereof, in accordance with the provisions of this
Agreement and the North Carolina Business Corporation Act (the "NCBCA"),
at the Effective Time (as defined in Section 1.5), Mergersub shall be
merged with and into the Company (the "Merger"), and the Company shall
be the surviving corporation (hereinafter sometimes called the
"Surviving Corporation") and shall continue its corporate existence
under the laws of North Carolina. At the Effective Time, the separate
existence of Mergersub shall cease.
(b) The Surviving Corporation shall
retain the name of the Company and shall possess all the rights,
privileges, immunities, powers and purposes of Mergersub and the Company
and shall by operation of law assume and be liable for all the
liabilities, obligations and penalties of the Company and Mergersub.
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1.2 Articles of Incorporation. The Articles of
Incorporation of Mergersub in effect immediately prior to the
Effective Time shall be the Articles of Incorporation of the Surviving
Corporation until thereafter amended in accordance with the provisions
thereof and the NCBCA.
1.3 By-Laws. The By-Laws of Mergersub in effect
immediately prior to the Effective Time shall be the By-Laws of the
Surviving Corporation until thereafter amended, altered or repealed in
accordance with the provisions thereof and the NCBCA. Following the
Effective Time, such By-Laws shall contain the provisions required by
Sec tion 5.8(a) hereof which shall not be amended, altered, repealed or
modified except as provided in said Section 5.8(a).
1.4 Directors and Officers. The directors of
Mergersub immediately prior to the Effective Time shall be the
directors of the Surviving Corporation, each to hold office in
accordance with the Articles of Incorporation and By-Laws of the
Surviving Corporation, and the officers of the Company immediately
prior to the Effective Time shall be the officers of the Surviving
Corporation, in each case until their respective successors are duly
elected and qualified.
1.5 Effective Time. The Merger shall become effective
at the time that Articles of Merger are filed with the Secretary of
State of North Carolina in accordance with the provisions of Section
55-11-05 of the NCBCA. The Articles of Merger shall be prepared,
executed and, on the Closing Date, filed in accordance with Section
55-11-05 of the NCBCA
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as soon as practicable after the Closing. The date and time when the
Merger shall become effective is herein referred to as the "Effective
Time."
ARTICLE II.
CONVERSION OF SHARES
2.1 Shares. (a) Each issued and outstanding share
of common stock, par value $1.00 per share (each, a "Share"; and
all such shares, collectively, the "Shares"), of the Company
immediately prior to the Effective Time (except for Dissenting Shares,
as hereinafter defined) shall, by virtue of the Merger and without
any action on the part of the holder thereof, be converted into
the right to receive $13.00, net to the holder, in cash (the "Merger
Consideration"), without interest thereon, upon surrender of the
certificate representing such Share. Each Share so converted shall
cease to be outstanding and shall be deemed canceled.
(b) Each Share held in the Company's
treasury immediately prior to the Effective Time shall, by virtue of
the Merger, be canceled and retired and cease to exist, without any
conversion thereof.
(c) The holders of the certificates
representing Shares shall cease to have any rights as shareholders of
the Company, except such rights, if any, as they may have pursuant to
the NCBCA, and, except as aforesaid, their sole right shall be the
right to receive the Merger Consideration as aforesaid.
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2.2 Dissenting Shares. Notwithstanding anything
in this Agreement to the contrary, Shares that are outstanding
immediately prior to the Effective Time and are held by shareholders
who shall have properly exercised rights of dissenting shareholders,
if any, with respect thereto under Sections 55-13-01 et seq of the NCBCA
("Dissenting Shares") shall not be converted into or be exchangeable
for the right to receive the Merger Consideration, but the holders
thereof shall be entitled to payment of the fair value of such Shares,
determined in accordance with the provisions of Sections 55-13-01 et
seq of the NCBCA; provided, however, that any Dissenting Shares held
by a shareholder who shall thereafter withdraw his or her demand to
be paid the fair value of such Shares or waive or lose his or her right
to such payment as provided in Sections 55-13-01 et seq of the NCBCA
shall be deemed converted, as of the Effective Time, into the Merger
Consideration without interest thereon; and in such event Parent shall
cause the Surviving Corporation to make payment of the Merger
Consideration to such shareholder.
2.3 Mergersub Stock. Each share of Common Stock,
par value $1.00 per share, of Mergersub issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger
and without any action on the part of the holder thereof, be converted
into and exchanged for one share of Common Stock, par value $1.00 per
share, of the Surviving Corporation (the "Surviving Corporation
Stock").
2.4 Exchange of Shares. (a) At the Closing,
Parent shall deposit in trust with Wachovia Bank and Trust Company,
N.A., Winston-Salem, North Carolina (the "Exchange Agent") an
unconditional irrevocable Letter of Credit drawn on NationsBank of
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Georgia, N.A. in favor of the Exchange Agent, as beneficiary, pursuant
to which the Exchange Agent will have the right to draw on demand,
as needed, an aggregate amount equal to the product of (i) the
number of Shares issued and outstanding at the Effective Time (other
than Dissenting Shares), and (ii) the Merger Consideration. The
Exchange Agent shall, pursuant to irrevocable instructions, make
the payments provided for in Section 2.1(a) of this Agreement from the
permitted drawings under the Letter of Credit.
(b) Promptly after the Effective Time the Exchange
Agent shall mail to each record holder of Shares as of the Effective
Time, a form of letter of transmittal (which shall be reasonably
acceptable to Mergersub and the Company and which shall, inter alia,
specify that delivery shall be effected, and risk of loss and title to
the Certificates (as defined below) shall pass, only upon proper
delivery of the Certificates to the Exchange Agent) and
instructions for use in effecting the surrender of the
certificates that immediately prior to the Effective Time
represented Shares (each a "Certificate"; and, collectively, the
"Certificates") in exchange for payment therefor. Upon surrender to
the Exchange Agent of a Certificate (or the satisfaction of the
prerequisites specified in the form of letter of transmittal for payment
in respect of lost, stolen or destroyed Certificates), together with
such letter of transmittal duly executed, the Exchange Agent shall
promptly send or deliver to the holder of such Certificate in exchange
therefor a check in an amount equal to the product of the number of
Shares represented by such Certificate and the Merger Consideration,
and such Certificate shall forth with be canceled. No interest will
be paid or accrued on the cash payable upon the surrender of the
Certificates. If payment is to be made to a person other than the
person in whose name
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the Certificate surrendered is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed
or otherwise be in proper form for transfer and that the person
requesting such payment shall pay any transfer or other taxes
required by reason of the payment to a person other than the registered
holder of the Certificate surrendered or establish to the satisfaction
of the Exchange Agent and the Surviving Corporation that such tax has
been paid or is not applicable. Until surrendered in accordance with the
provisions of this Section 2.4, each Certificate (other than
Certificates representing Dissenting Shares in respect of which
dissenting shareholders' rights are perfected) shall represent for all
purposes only the right to receive the Merger Consideration in cash
multiplied by the number of shares evidenced by such Certificate,
without any interest thereon.
(c) At the Effective Time the Company's
stock transfer books shall be closed and after the Effective Time there
shall be no transfers of the Shares on the stock transfer books of
the Surviving Corporation. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be
canceled and exchanged for the Merger Consideration as provided in this
Article II.
(d) No drawings on the Letter of Credit
will be permitted at any time after the 183rd day following the
Effective Time. Any shareholders of the Company who have not
theretofore complied with Section 2.4(b) shall thereafter look only to
the Surviving Corporation for payment of their claim for the Merger
Consideration per Share, without any interest thereon.
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2.5 Adjustments. If, between the date of this
Agreement and the Effective Time, the Shares shall have been changed
into a different number of shares or a different class by
reason of any reclassification, recapitalization, split-up,
combination, exchange of shares or readjustment, or a stock dividend
thereon shall be declared with a record date within such period,
the amount into which the Shares will be converted in the Merger shall
be correspondingly adjusted.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Parent and
Mergersub as follows:
3.1 Organization and Qualification. The Company
and each of its subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation and each has all requisite
corporate power and authority to own or lease and operate its
properties and to carry on its business as now being conducted on
the date hereof. Each of the Company and its material subsidiaries
(the "Material Subsidiaries") listed in Section 3.1 of the disclosure
schedule executed by the Company, Parent and Mergersub on the date
hereof (the "Disclosure Schedule") is duly qualified or licensed and
in good standing to do business in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except for such
jurisdictions where the failure to be so duly qualified or licensed and
in good standing will not have a material adverse effect on the
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business, operations or financial condition of the Company and its
subsidiaries taken as a whole. The Company has heretofore delivered
to Parent true and complete copies of its Articles of Incorporation
and By-Laws as currently in effect.
3.2 Capitalization. The authorized capital stock
of the Company consists of: (a) 10,000,000 Shares, of which, on
November 22, 1995, there were 3,695,563 Shares issued and outstanding,
202,500 Shares reserved for issuance under stock option plans, and
58,860 Shares held in the Company's treasury, and (b) 60,000 shares
of preferred stock, par value $10.00 per share, of which no shares are
issued or outstanding. All issued and outstanding Shares are duly
authorized, validly issued, fully paid, and non-assessable and are free
of preemptive rights. Except for the options listed in Section
3.2 of the Disclosure Schedule, being options to acquire not more
than 172,750 Shares pursuant to the Company's stock option plans,
all of which are presently outstanding, there are no existing
options, warrants, calls, subscriptions, or other rights or other
agreements or commitments whatsoever obligating the Company or any
of its subsidiaries to issue, transfer, deliver or sell or cause to be
issued, transferred, delivered or sold any additional shares of
capital stock of the Company or any of its subsidiaries, or obligating
the Company or any of its subsidiaries to grant, extend or enter into
any such agreement or commitment. Except for the 22,500 stock
appreciation rights held by Donald G. Walser as more fully described on
page 13 of the Company's 1995 Proxy Statement, there are no outstanding
stock appreciation rights, phantom stock rights or similar
arrangements that have been granted or issued by the Company to, or in
favor of, any other person. Since December 31, 1994, except as set
forth in Section 3.2 of the Disclosure
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Schedule, no options have been granted and, since December 31, 1994, no
capital stock of the Company has been issued except pursuant to the
exercise of options granted prior to December 31, 1994.
3.3 Authority. The Company has all requisite
corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly approved and validly
authorized and adopted by the Board of Directors of the Company, and
no other corporate proceedings on the part of the Company are
necessary to consummate the transactions so contemplated (other
than the approval and adoption of the Plan of Merger and the Merger by
the shareholders of the Company). This Agreement has been duly
executed, certified and acknowledged and delivered by the Company
and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except
that the Merger cannot be effected unless the Plan of Merger (as
hereinafter defined) is approved by the shareholders of the Company
in accordance with Section 55-11-03 of the NCBCA.
3.4 Filings and Reports. The Company has previously
delivered to Parent true and complete copies of (a) its Annual Reports
on Form 10-K (and each of its Annual Reports to Shareholders) for the
fiscal years ended December 31, 1994, 1993 and 1992, respectively, as
filed with the Securities and Exchange Commission (the "Commission"),
(b) proxy statements relating to all meetings of the Company's
shareholders (whether annual or special) during 1995, 1994 and 1993,
and (c) all other reports, statements and registration
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statements (including current reports on Form 8-K and quarterly reports
on Form 10-Q) filed by it with the Commission since January 1, 1992
(all of the items referred to in clauses (a), (b) and (c) of this
sentence being hereinafter sometimes collectively called the
"Company Reports"). As of their respective filing or mailing dates the
Company Reports did not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in light of
the circum stances under which they were made, not misleading. The
audited and unaudited consolidated financial statements of the
Company included in the Company Reports have all been prepared in
accordance with generally accepted accounting principles applied on
a consistent basis (except as stated in such financial statements) and
fairly present the financial position of the Company and its
consolidated subsidiaries as of the dates thereof and the results of
their operations and changes in financial position of the Company
and its consolidated subsidiaries for the periods then ended, subject,
in the case of the unaudited financial statements, to normal year-end
audit adjustments which for fiscal 1995 shall not be materially adverse.
3.5 Absence of Certain Changes or Events. Except as
has been previously disclosed in publicly available Commission
filings, the 1995 Proxy Statement or as set forth in Section 3.5 of
the Disclosure Schedule, since December 31, 1994 there has not
been any material adverse change in the businesses, properties,
financial condition or results of operations of the Company and its
subsidiaries taken as a whole which has affected, or is reasonably
likely to affect, materially and adversely the businesses, properties or
the financial condition or results of operations of the Company
and its subsidiaries taken as a whole; and
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the Company and its subsidiaries have conducted their respective
businesses only in the ordinary course consistent with past practice.
3.6 Information. The proxy or information
statement of the Company required to be mailed to the Company's
shareholders in connection with the Merger (the "Proxy Statement")
will comply as to form in all material respects with the applicable
requirements of the Exchange Act and the rules and regulations
thereunder and will not, at the time of first mailing thereof and the
meeting of shareholders to be held in connection with the Merger,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein, in order to make the
statements made therein, in light of the circumstances under which
they are made, not misleading, except that no representation is made
by the Company with respect to information supplied by Parent or
any affiliates of Parent for inclusion in the Proxy Statement.
3.7 Compensation; Employee Benefits. Except as
disclosed in the Company Reports or as otherwise disclosed in Section
3.7 of the Disclosure Schedule, there are no (i) material employment,
severance, consulting or other compensation agreements between the
Company or any of its subsidiaries and any officer, director or employee
of the Company or any of its subsidiaries, or (ii) bonus,
profit-sharing, severance, termination, stock option, pension,
retirement, deferred or contingent compensation or other employee
benefit agreements, trusts, plans or other arrangements for the benefit
of any director, officer or employee of the Company or any of its
subsidiaries.
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3.8 Consents and Approvals; No Violation.
Except for applicable requirements of the Exchange Act and the filing
and recordation of appropriate merger documents as required by the
NCBCA and the filings required under and in compliance with the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") and
filings under state securities, "Blue Sky" laws, to the best knowledge
of the Company, no filing with, and no permit, authorization, consent
or approval of, any governmental body is necessary for the consummation
by the Company of the transactions contemplated by this Agreement.
Except as disclosed in Section 3.8 of the Disclosure Schedule, the
execution and delivery by the Company of this Agreement, and the
performance by the Company of its obligations hereunder will not (a)
subject to the obtaining of the requisite approval by the Company's
shareholders of the Plan of Merger, conflict with or result in a breach
of any of the provisions of its Articles of Incorporation or By-Laws or
(b) subject to the obtaining of the governmental and other consents
referred to herein, and except with respect to the antitrust laws (as
to which each party has satisfied itself), contravene any law, rule or
regulation of any state or of the United States or any political
subdivision thereof or therein, or any order, writ, judgment,
injunction, decree, determination or award currently in effect, by
which the Company or its properties are bound, which, singly or in the
aggregate, would have a material adverse effect on the Company and its
subsidiaries taken as a whole.
3.9 Litigation. Except as heretofore disclosed
in the Company Reports, or as set forth in Section 3.9 of the Disclosure
Schedule, as of the date hereof, there are no claims, actions,
proceedings, or investigations pending or, to the best knowledge of the
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Company, threatened, involving or affecting the Company or any
of its subsidiaries or any of their properties or assets or, to
the best of the Company's knowledge, any employee, consultant, director
or officer in his or her capacity as such, of the Company or any of its
subsidiaries before any court or governmental or regulatory authority
or body which, if adversely decided, could materially and adversely
affect the financial condition, business, or operations of the Company
and its subsidiaries taken as a whole. As of the date hereof,
neither the Company nor any of its subsidiaries nor any property or
assets of any of them is subject to any order, judgment, injunction
or decree that materially and adversely affects the financial
condition, business, or operations of the Company and its
subsidiaries taken as a whole.
3.10 Environmental Matters. Except as disclosed in
Section 3.10 of the Disclosure Schedule, none of the properties or
facilities now or heretofore used by the Company or any of its
subsidiaries has been used to manufacture, treat, store or dispose
of any hazardous substance or toxic substance (as those terms or
terms similar thereto are used in Environmental Laws, as hereinafter
defined), and all such properties are free of all such substances.
Except as disclosed in Section 3.10 of the Disclosure Schedule, the
Company is in compliance with all laws, regulations and other federal,
state and local governmental requirements, and all applicable
judgments, orders, writs, motions, decrees, permits, licenses,
approvals, consents or injunctions relating (i) to the generation,
management, handling, transportation, treatment, disposal, storage,
delivery, discharge, release or emission of any waste, pollutant or
toxic or hazardous substance (including, without limitation,
asbestos,
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radioactive material and pesticides) utilized by the Company
and/or its subsidiaries in their respective businesses or (ii) to
any other actions, omissions or conditions affecting the environment
applicable to the Company or its subsidiaries or their respective
businesses as a result of any hazardous or toxic substance used by
the Company or any of its subsidiaries in their respective
businesses or otherwise placed upon or at any of the facilities now or
heretofore owned or operated by the Company or any of its
subsidiaries (collectively, "Environmental Laws"). Except as described
in Section 3.10 of the Disclosure Schedule, neither the Company nor
any of its subsidiaries (nor any officer, director or managerial or
supervisory employees of any of them) has received or been made aware
of any complaint, notice, order, or citation of any actual, threatened
or alleged noncompliance by the Company or any of its subsidiaries
with any of the Environmental Laws; and there is no proceeding, suit
or investigation pending (or, to the knowledge of the Company or any
such officer, director or managerial or supervisory employee,
threatened) against the Company or any of its subsidiaries, with
respect to any violation or alleged violation of any Environmental
Law, and neither the Company nor any of its subsidiaries (nor any
officer, director or managerial or supervisory employee of any thereof)
is aware of any reason for the institution of any such proceeding, suit
or investigation. Notwithstanding the foregoing provisions of this
Section 3.10, the Company shall not be, or be deemed to be, in
breach of the representations and warranties contained in this
Section 3.10 unless the aggregate exposure for costs, damages and
expenses that could be incurred by reason of the existence of facts
or conditions that are contrary to the representations and
warranties herein contained could reasonably be expected
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to exceed $250 thousand; and, moreover, a breach of the
representations and warranties contained in this Section 3.10 shall
not give rise to a claim for money damages.
3.11 Cramerton Fire Insurance Recovery. On October 19,
1994, a fire destroyed the Company's 677,000 square foot facility
located in Cramerton, North Carolina (the "Cramerton Fire"). The
maximum amount that the Company can recover from the insurance carrier
by reason of the Cramerton Fire is $63.015 million, i.e., the amount
that the Company contends is the policy limit. To date, the Company
has received $19.9 million from the insurance carrier and has settled
the inventory and equipment portions of the claim against its insurance
carrier. No other portion of its claim against the insurance carrier on
account of the Cramerton Fire has been settled, no advance payment
(other than an advance payment approximating $900 thousand) on account
of unsettled portions of the claim has been received, and no agreement
as to the terms of settlement of any unsettled portion of its claim
has been reached. Without limiting the generality of the foregoing,
neither the portion of its property damage claim for the destruction
of its 677,000 square foot building nor the portion of its claim based
on business interruption has been settled or is the subject of any
agreement or understanding as to the amounts that will be paid in
settlement thereof.
3.12 Prohibited Actions. Except as set forth in
Section 3.12 of the Disclosure Schedule, since January 1, 1995, the
Company has not taken or allowed others to take on its behalf, or
suffered to happen or exist, any action, inaction or condition that
would be inconsistent with the undertakings of the Company contained
in Section 5.1 of this Agreement if taken, allowed or suffered on or
after the date of this Agreement.
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3.13 Section 341(f) Election. Neither the Company
nor any of its subsidiaries has made an election under Section
341(f) of the Internal Revenue Code of 1986 (the "Code").
3.14 3.15 Broker's Fees. Neither the Company nor its
subsidiaries has employed any broker or finder or incurred any liability
for any broker's fees, commissions or finder's fees in connection
with any of the transactions contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGERSUB
Parent and Mergersub hereby jointly and severally
represent and warrant to the Company that:
4.1 Organization and Qualification.
(a) Parent is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware. Parent has the requisite corporate power and authority to
own or lease and operate its properties and assets and to carry on its
business as it is now being conducted, and is duly licensed or
qualified and in good standing in each jurisdiction in which the
nature of the business conducted by it or the character or location
of the properties owned, leased or operated by it, makes such
licensing or qualification necessary, except where the failure to be so
licensed or qualified would not have a material adverse effect on the
business, condition (financial or otherwise), properties, assets or
results of operations of Parent and its subsidiaries taken as a whole or
on the ability of
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Parent to consummate or cause the consummation of the transactions
contemplated by this Agreement.
(b) Mergersub is a corporation duly
organized, validly existing and in good standing under the laws of
North Carolina. Mergersub has not engaged, and prior to the Effective
Time, Mergersub will not have engaged, in any business since it
was incorporated other than in connection with the transactions
contemplated by this Agreement. Parent owns, indirectly (through a
wholly-owned subsidiary), all of the outstanding capital stock of
Mergersub.
4.2 Authority. Each of Parent and Mergersub has the
requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly approved by the
respective Boards of Directors of Parent and Mergersub and by Parent's
wholly-owned subsidiary as the sole stockholder of Mergersub and no
other corporate proceedings on the part of Parent (or its
wholly-owned subsidiary that is the sole stockholder of Mergersub) or
Mergersub are necessary to consummate the transactions so
contemplated. This Agreement has been duly executed and delivered by
each of Parent and Mergersub and constitutes a valid and binding
obligation of each of Parent and Mergersub, enforceable against
Parent and Mergersub in accordance with its terms.
4.3 Proxy Statement. None of the information
supplied or to be supplied by Parent or Mergersub expressly for
inclusion in the Proxy Statement or in any amendments
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thereof or supplements thereto will, at the time of (i) the first
mailing thereof and (ii) the meeting of shareholders to be held in
connection with the Merger, contain any untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading.
4.4 Broker's Fees. Neither Parent nor Mergersub
nor any of Parent's other direct or indirect subsidiaries or
affiliates has employed any broker or finder or incurred any liability
for any broker's fees, commissions or finder's fees in connection with
any of the transactions contemplated by this Agreement.
4.5 Consents and Approvals; No Violations. Except
for any applicable requirements of the Exchange Act and the filing and
recordation of appropriate merger docu ments as required by the NCBCA
and the filings required under and in compliance with the HSR Act and
filings under state securities or "Blue Sky" laws, to the best
knowledge of the Parent or the Mergersub, no filing with, and no
permit, authorization, consent or approval of, any governmental body
is necessary for the consummation by the Parent or the Mergersub of
the transactions contemplated by this Agreement. Except as disclosed in
Section 4.5 of the Disclosure Schedule, the execution and delivery by
Parent and Mergersub of this Agreement and the performance of the
transactions contemplated hereby will not (i) violate any
provision of the Certificate or Articles of Incorporation, as
applicable, or By-Laws of the Parent or Mergersub, (ii) violate any
statute, rule, regulation, order, writ, judgment, injunction,
decree, determination or award of any governmental body or authority
by which either the Parent or Mergersub or any of their respective
properties is bound, or (iii) result in a violation or breach
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of, or constitute (with or without due notice or lapse of time or
both) a default under, any license, franchise, permit, indenture,
agreement or other instrument to which either the Parent or Mergersub
is a party, or by which either of them or their respective properties
is bound.
ARTICLE V
COVENANTS
5.1 Conduct of Business of the Company. Except as
listed in Section 5.1 of the Disclosure Schedule or as contemplated by
this Agreement, during the period from the date of this Agreement to
the Effective Time, the Company and its subsidiaries will each
conduct its operations according to its ordinary and usual course of
business, consistent with past practice, and the Company and each of
its subsidiaries will each use its reasonable best efforts to preserve
intact its business organization, to keep available the services of its
officers and employees and to maintain satisfactory relationships
with licensors, licensees, suppliers, contractors, distributors,
customers and others having business relationships with it. Without
limiting the generality of the foregoing, and except as otherwise
expressly provided in this Agreement, prior to the Effective Time,
neither the Company nor any of its subsidiaries will, without the
prior written consent of the Parent:
(a) amend its Articles of Incorporation
or By-laws except as otherwise provided in Section 5.8 below;
(b) authorize for issuance, issue, sell,
deliver or agree or commit to issue, sell or deliver (whether through
the issuance or granting of additional options, warrants,
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commitments, subscriptions, rights to purchase or otherwise) any
stock of any class or any securities convertible into shares of stock
of any class, or any stock appreciation rights, shadow stock or similar
instruments;
(c) split, combine or reclassify any
shares of its capital stock, declare, set aside or pay any dividend or
other distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock (other than the
dividend of Two Cents per share declared on November 3, 1995 and payable
on December 15, 1995 to share holders of record as of the close of
business on December 1, 1995) or, except as otherwise provided in
Section 5.9, redeem or otherwise acquire any shares of its own capital
stock or that of any of its subsidiaries;
(d) except as disclosed in Section
5.1(d) of the Disclosure Schedule, as described in the Company
Reports or as contemplated by this Agreement (including, without
limitation, the provisions of paragraph (d) of Section 6.3 hereof), (i)
increase in any manner the compensation, bonus, profit-sharing, stock
option, pension, retirement, deferred compensation, employment or
other plan, agreement, trust, fund or arrangement for the benefit
of any of its directors, officers or other employees; (ii) pay or
agree to pay any pension, retirement allowance or other employee
benefit not required by any existing plan, agreement or arrangement
to any such director, officer or employee, whether past or present;
or (iii) commit itself to any additional pension, profit sharing,
bonus, incentive, deferred compensation, stock purchase, stock option,
stock appreciation right, group insurance, severance pay, retirement or
other employee benefit plan, agreement or arrangement, or to any
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employment or consulting agreement, or any guaranty of any such plan,
agreement or arrangement, with or for the benefit of any person or
persons (including, without limitation, the employment agreements
specifically referred to in Section 5.1(d) of the Disclosure Schedule,
subject, however, to the release of covenant provisions therein set
forth), or amend or agree to amend any of such plans or any of such
agreements or arrangements in existence on the date hereof;
(e) create, incur or assume any
short-term or long-term debt in excess of the amount of short-term or
long-term debt, as the case may be, currently outstanding, except in the
ordinary course of business;
(f) assume, guarantee, endorse or
otherwise become liable for the obligations of any other person (other
than wholly-owned subsidiaries of the Company) except (i) in the
ordinary course of business consistent with past practices, and (ii)
short-term loans to employees not exceeding $25 thousand in the
aggregate for all employees to whom such loans are made or $2.5 thousand
for any one employee;
(g) make any loans, advances or capital
contributions to, or investments in, any other person (other than
customary loans or advances to subsidiaries made in the ordinary
course of business consistent with past practices); provided, that
transactions resulting in trade payables in the ordinary course of
business consistent with past practice shall not be prohibited
hereby;
(h) purchase, lease or sell any
significant properties, assets or, except as otherwise provided in
Section 5.9, securities (including, without limitation, the purchase or
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lease of any properties, assets or securities to which specific
reference is made in Sec tion 5.1(h) of the Disclosure Schedule,
subject, however, to the release of covenant provisions therein set
forth) or make any other changes in their operations that would be
material to the Company and its subsidiaries taken as a whole;
(i) settle or reach any agreement or
understanding, whether written or oral, to settle any claim to which
reference is made in Section 5.1(i) of the Disclosure Schedule,
subject, however, to the release of covenant provisions therein set
forth; or
(j) agree to do any of the foregoing.
5.2 Access to Information.
(a) Between the date of this Agreement
and the Effective Time, the Company will give Parent and its authorized
representatives access during normal business hours to all plants,
offices, warehouses and other facilities and to all books and records
of the Company and its subsidiaries, will permit Parent to make such
inspections during normal business hours as it may require and will
cause its officers and those of its subsidiaries to furnish Parent
with such financial and operating data and other information with
respect to the business and properties of the Company and its
subsidiaries as Parent may from time to time request; provided,
however, that all such activities under this Section 5.2 shall be
conducted in such manner so as to avoid, to the extent practicable,
disruption of the business of the Company.
(b) Parent will hold and will cause its
consultants, advisors and subsidiaries to hold in strict confidence,
unless compelled to disclose by judicial or
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administrative process, or, in the opinion of its counsel, by other
requirements of law, all documents and information concerning
the Company and its subsidiaries furnished to Parent in
connection with the transactions contemplated by this Agreement
before or after the date hereof (except to the extent that such
information or documents were (i) generally available to the public
other than as a result of a disclosure by Parent or its
representatives, (ii) available to Parent on a non-confidential basis
prior to disclosure to Parent by the Company or its representatives,
or (iii) available to Parent on a non-confidential basis from a
source other than the Company or its representative, provided
that such source is not known, and by reasonable effort could not be
known, by Parent or its representatives to be bound by a
confidentiality agreement with the Company or its representatives or
otherwise prohibited from transmitting the information to Parent by a
contractual, legal or fiduciary obligation) and will not release or
disclose such information to any other person, except its auditors,
attorneys, financial advisors and other consultants and advisors who
reasonably require such information in connection with this Agreement,
provided that such person shall have first been advised of the
confidentiality provision of this Section 6.2. If the
transactions contemplated by this Agreement are not consummated, such
confidence shall be maintained, except to the extent such information
can be shown to have been (i) generally available to the public other
than as a result of a disclosure by Parent or its representative,
(ii) available to Parent on a non-confidential basis prior to
disclosure to Parent by the Company or its representatives, (iii)
available to Parent on a non-confidential basis from a source other
than the Company or its representatives, provided that such source is
not known, and by reasonable effort could not
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be known by Parent or its representatives to be bound by a
confidentiality agreement with the Company or its representatives or
otherwise prohibited from transmitting the information to Parent by
a contractual, legal or fiduciary obligation, and, if requested by
the Company, Parent will, and will cause its agents, representatives
and advisors to, return to the Company or destroy all copies of written
information furnished by the Company to Parent or such agents, auditors,
consultants, representatives or advisors.
5.3 Public Announcement. Parent, Mergersub and the
Company will consult with each other before issuing any press
release or otherwise making any public statements with respect to the
Merger and shall not issue any such press release or make any such
public statement prior to such consultation, except as may be required
by law or by obligations pursuant to any listing agreement with any
securities exchanges.
5.4 Shareholder Approval.
(a) As soon as practicable following the
execution of this Agreement, the Company shall file with the Commission
under the Exchange Act, and shall use its best efforts to have cleared
by the Commission, the Proxy Statement with respect to the meeting of
the Company's shareholders referred to in this Section 5.4.
(b) Promptly after clearance by the
Commission of the Proxy Statement referred to in Section 5.4(a) above,
the Company will take all action necessary in accordance with
applicable law to convene a meeting of its shareholders to consider
and vote upon the Plan of Merger.
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5.5 Certain Filings, Consents and Arrangements.
Parent, Mergersub and the Company shall (a) promptly make their
respective filings, and shall thereafter use their best efforts
to promptly make any required submissions, under the HSR Act with
respect to the Merger and the transactions contemplated by this
Agreement and (b) cooperate with one another in promptly (i)
determining whether any other filings are required to be made or
consents, approvals, permits or authorizations are required to be
obtained under any other federal, state or foreign law or regulation
or any consents, approvals or waivers are required to be obtained
from other parties to loan agreements or other contracts material
to the Company's business in connection with the consummation of the
Merger and the transactions contemplated by this Agreement and (ii)
making any such filings, furnishing information required in connection
therewith and otherwise using their best efforts to take all actions
and do all things necessary, proper or advisable to obtain in a
timely manner any such consents, permits, authorizations, approvals
or waivers including, without limitation, agreeing to divest such of
the Company's or Parent's assets or businesses as may be necessary
to comply with, or ameliorate the effect of, any applicable statute,
law, rule or regulation which would prohibit or restrict consummation
of the Merger. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes
of this Agreement, the proper officers and/or directors of Parent
and the Surviving Corporation shall take such necessary action.
5.6 Best Efforts. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use its
best efforts to take, or cause to be taken, all action, and
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to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to satisfy all
conditions requiring action by it and to consummate and make effective
the transactions contemplated by this Agreement. In case at any time
after the Effective Time any further action is necessary or desirable
to carry out the purposes of this Agreement, the proper officers and
directors of each corporation which is a party to this Agreement
shall take all such necessary action.
5.7 No Solicitation. Neither the Company nor
any of its subsidiaries, officers, directors, employees, agents
or representatives (including, without limitation, invest ment
bankers, attorneys and accountants) or any of the officers, directors,
employees, agents or representatives of any of the subsidiaries of the
Company shall, directly or indirectly, without the written consent of
Parent, (a) initiate contact with, solicit or encourage any inquiries
or proposals by (or authorize or permit anyone acting on its behalf so
to do), or (b) enter into any discussions or negotiations or agreements
with, or disclose directly or indirectly any information not
customarily disclosed concerning its business and properties to,
or afford any access to its properties, books and records to, any
corporation, partnership, person or other entity or group in
connection with any possible proposal (an "Acquisition Proposal")
regarding a sale of the Company's capital stock or a merger,
consolidation, or sale of all or a substantial portion of the
assets of the Company or any subsidiary of the Company which is
material to the Company and the Company's subsidiaries taken as a
whole, or any similar transaction; provided, however, that, if
after receipt of an inquiry or proposal not initiated, solicited
or encouraged in violation of clause (a) of this Section 5.7, the
Board of Directors,
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upon the advice of the Company's counsel, determines in good faith
that the fiduciary duties of the directors require them to take or
authorize the taking of any action that would otherwise be prohibited
by clause (b) of this Section 5.7, the Board of Directors shall have the
right to take or authorize the taking of such action, and the Company
shall be permitted to act consistent with such authorization; and
provided, moreover, that the Company's Board of Directors shall be
free to take any position with respect to a third party Acquisition
Proposal, which, upon the advice of the Company's counsel, is
required by applicable law. The Company will promptly communicate to
Parent the terms of any proposal or contact it may receive in respect
of any such transaction. The Company agrees not to release any
third party from any confidentiality or standstill agreement to
which the Company is a party.
5.8 Indemnification and Insurance.
(a) The by-laws of the Surviving
Corporation shall contain the provisions with respect to indemnification
set forth in Section 5 of Article IX of the By-Laws of the Company (as
in effect at all times since January 1, 1995 except that prior to the
Effective Time the By-Laws of the Company may be amended to permit
the Company to pay expenses incurred by a director in defending a
proceeding in advance of the final disposition of such proceeding as
authorized by, and subject to, the provisions of Section 55-8-53 of the
NCBCA), which provisions shall not be amended, altered, repealed or
otherwise modified for a period of three years from the Effective Time
in any manner that would adversely affect the rights thereunder of
individuals who at or prior to the Effective Time were employees,
agents, directors or officers of the Company, except if such amendment
is required by law.
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(b) Parent shall cause the Surviving
Corporation to indemnify and hold harmless the Company's directors
and officers (including, without limitation, for the reimbursement
of their expenses) pursuant and subject to the terms and conditions of
Section 5 of Article IX of the By-Laws of the Company as in effect at
all times since January 1, 1995 subject to the amendment permitted
pursuant to Section 5.8(a) above.
(c) For not less than three years from
the Effective Time, Parent shall cause the Surviving Corporation to
maintain in effect, if available, directors' and officers'
insurance covering those persons who are currently covered by the
Company's directors' and officers' insurance and which is
substantially equivalent in terms of coverage and amount as the
Company has in effect on the date hereof (the "Present Coverage");
provided, however, that Parent's only obligation under this
Section 5.8(c) shall be to cause the Surviving Corporation to obtain
and maintain in effect directors' and officers' insurance providing the
lesser of (a) the Present Coverage or (b) the greatest coverage
available from a reputable insurer at an annual cost not exceeding 150%
of the amount budgeted by the Company prior to January 1, 1995
for such insurance for its current fiscal year.
5.9 Company Stock Options. Prior to the Effective
Time, the Company shall make all necessary and appropriate adjustments
to, and shall use its best efforts to obtain all necessary consents
with respect to, all options to acquire Shares (the "Options") which
have been granted pursuant to the Company's option plans and are
outstanding immediately prior to the Effective Time and also all
outstanding Stock Appreciation Rights (each an "SAR") to provide
for the immediate full vesting, cancellation and settlement thereof
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immediately prior to the Effective Time, and the Company shall
thereupon make a cash payment to the holder of each such Option or SAR
in an amount equal to the difference between (i) the Merger
Consideration and the per Share exercise price of such Option,
multiplied by the number of Shares covered by such Option, and (ii) the
Merger Consideration and the per share strike price of each such SAR,
subject in each case to any required withholding of taxes.
5.10 Appraisal Rights. The Company shall not
settle or compromise any claim of dissenting shareholders in respect
of the Merger prior to the Effective Time without the prior written
consent of Parent.
5.11 Notice of Actions and Proceedings. The
Company shall promptly notify Parent and Purchaser of any claim,
actions, proceedings or investigations commenced or, to the best
of its knowledge, threatened in writing, involving or affecting the
Company or any of its subsidiaries or any of their property or assets,
or, to the best of its knowledge, any employee, consultant, director
or officer, in his or her capacity as such, of the Company or any of its
subsidiaries which, if pending on the date hereof, would have been
required to have been disclosed in Section 3.9 of the Disclosure
Schedule, or which relates to the consumma tion of the Merger.
5.12 Notification of Certain Other Matters. The
Company shall give prompt notice to Parent and Mergersub of (a) any
notice of, or other communication relating to, a default or event
which, with notice or lapse of time or both, would become a default,
received by the Company or any of its subsidiaries subsequent to the
date of this Agreement and prior
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to the Effective Time, under any agreement, indenture or instrument
material to the financial condition, properties, business or results
of operations of the Company and its subsidiaries taken as a whole to
which the Company or any of its subsidiaries is a party or is subject,
(b) any notice or other communication from any third party alleging
that the consent of such third party is or may be required in connection
with the transactions contemplated by this Agreement, (c) any notice or
other communication from any regulatory authority in connection with
the transactions contemplated hereby; and (d) any material adverse
change in the financial condition, properties, businesses or operations
of the Company and its subsidiaries taken as a whole.
ARTICLE VI
CONDITIONS TO CLOSING
6.1 Conditions to Obligations of the Company,
Parent and Mergersub. The obligations of the Company, Parent and
Mergersub to consummate the Merger are subject to the satisfaction, at
or prior to the Closing, of each of the following conditions:
(a) Wasserstein, Perella & Co. shall not
have withdrawn or modified its opinion that the cash consideration to
be received by the shareholders of the Company pursuant to the merger
is fair to such shareholders from a financial point of view;
(b) the shareholders of the Company
shall have duly approved the Merger in accordance with applicable law;
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(c) the consummation of the Merger shall
not be precluded by any order or injunction of a court of competent
jurisdiction (each party agreeing to use reasonable efforts to have any
such order reversed or injunction lifted);
(d) any applicable waiting period under
the HSR Act shall have expired or been terminated; and
(e) Holders of no more than 250,000
Shares shall have elected to exercise rights of dissenting shareholders
and not have voted in favor of the Plan of Merger.
6.2 Conditions to Obligation of the Company to
Effect the Merger. The obligation of the Company to effect the
Merger shall be subject to the fulfillment, at or prior to the
Closing, of the following additional conditions:
(a) Parent and Mergersub shall have
performed in all material respects their agreements contained in this
Agreement required to be performed at or prior to the Effective Time;
(b) the representations and warranties
of Parent and Mergersub set forth in this Agreement shall be true and
correct at and as of the date hereof and at and as of the Effective Time
as if made at and as of such date, except as otherwise contemplated or
permitted by this Agreement and except for any matters which, in the
aggregate, do not have a material adverse effect on the ability of
Parent and Mergersub to consummate the Merger; and
(c) Parent and Mergersub shall have
delivered to the Company a certificate, signed on behalf of each of
Parent and Mergersub by an executive officer thereof,
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to the effect set forth in paragraphs (a) and (b) of this Section
6.2 and attesting to the fact that the Letter of Credit referred to in
Section 2.4 has been issued and is available for deposit with the
Exchange Agent.
6.3 Conditions to Obligations of Parent and
Mergersub to Effect the Merger. The obligation of Parent and
Mergersub to effect the Merger shall be subject to the fulfillment,
at or prior to the Closing, of the following additional conditions:
(a) the Company shall have performed in
all material respects its agreements contained in this Agreement
required to be performed at or prior to the Effective Time, except for
any breaches which do not have a material adverse effect on the
Company's ability to meet its obligations under this Agreement taken
as a whole or do not have a material adverse effect on the
financial condition, properties, business or operations of the
Company and its subsidiaries taken as a whole;
(b) the representations and warranties
of the Company set forth in this Agreement shall have been true and
correct at and as of the date hereof and at and as of the Effective
Time as if made at and as of such date, except for any matters which,
in the aggregate, do not have a material adverse effect on the
financial condition, properties, business or operations of the Company
and its subsidi aries taken as a whole;
(c) the Company shall have delivered to
Parent and Mergersub a certificate signed on behalf of the Company by an
executive officer thereof to the effect set forth in paragraphs (a) and
(b) of this Section 6.3; and
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(d) the Company shall have entered into
employment and non- competition agreements with Marc F. Rauch, Marshall
A. Rauch, Peter D. Rauch and Donald G. Walser, such agreements to be in
the forms and have the terms more fully described in Section 6.3(d) of
the Disclosure Schedule.
ARTICLE VII
CLOSING
7.1 Time and Place. The closing of the Merger (the
"Closing") shall take place at the offices of Paul, Weiss, Rifkind,
Wharton & Garrison, 1285 Avenue of the Americas, New York, New
York, as soon as practicable following satisfaction of the closing
conditions set forth in Article VI. The date on which the Closing
actually occurs is herein referred to as the "Closing Date."
7.2 Filings at the Closing. At the Closing the
Parent, Mergersub and the Company shall cause the Articles of Merger
to be filed and recorded in accordance with the provisions of Section
55-11-05 of the NCBCA and shall take any and all other lawful actions
and do any and all other lawful things necessary to cause the Merger to
become effective.
ARTICLE VIII
TERMINATION AND ABANDONMENT
8.1 Termination. This Agreement may be
terminated and the Merger contemplated herein may be abandoned at any
time prior to the filing of the Articles of Merger by (a) the mutual
consents of Parent, Mergersub and the Company or (b) either
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Parent or the Company if (i) the Merger has not been consummated
prior to February 15, 1996 (unless the failure to consummate the
Merger by such date is due to a breach or violation of this
Agreement by the party seeking to terminate), (ii) any permanent
order, judgment, decree or injunction prohibiting consummation of the
transactions contemplated hereby shall have become final and
non-appealable, (iii) there has been a material breach by either the
Parent or Mergersub, on the one hand, or the Company on the other,
of any of their respective representations, warranties, covenants or
obligations set forth herein, but such termination shall not be
effective unless and until the non-breaching party has given written
notice to the breaching party of such breach and of its intention to
terminate this Agreement in accordance with the provisions hereof and
the breaching party fails to cure such breach within ten (10) calendar
days of such notice (a "Terminating Breach") or (iv) the Company shall
have received, or there shall have been publicly announced, an offer
or proposal by a person or entity other than Parent or Mergersub to
acquire the Company or its assets on terms that are stated or
expected to yield to the shareholders of the Company value in excess
of $13 per Share (an "Economically Superior Offer"), and the Company's
Board of Directors (A) shall have determined either to accept, or to
recommend to the Company's shareholders that they accept, such
Economically Superior Offer or (B) as a consequence of the actual or
anticipated receipt or announcement of such Economically Superior
Offer, shall cease to recommend to the shareholders that they
approve the Plan of Merger. Any action by the Company to terminate this
Agreement pursuant to this Section 8.1 shall be taken only by the
persons who are directors of the Company on the date hereof.
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8.2 Procedure and Effect of Termination. In the
event of termination and abandonment of the Merger by any party
pursuant to Section 8.1, written notice thereof shall forthwith be given
to the others and this Agreement shall terminate and the Merger shall be
abandoned, without further action by any of the parties hereto.
Mergersub agrees that any termination by the Parent shall be
conclusively binding upon it, whether given expressly on its behalf or
not, and the Company shall have no further obligation with respect to
Mergersub. If this Agreement is terminated as provided herein no
party hereto shall have any liability or further obligation to any other
party to this Agreement, except as otherwise provided in the second
sentence of Section 9.2, and except that any termination of this
Agreement pursuant to Section 8.1(iii) hereof shall be without
prejudice to the rights (including, without limitation, the right to
assert a claim for money damages) of the non-breaching party hereto
arising out of a Terminating Breach (other than a Terminating Breach of
the representations and warranties contained in Section 3.10, which
breach shall not give rise to a claim for money damages) and except
that the provisions of Section 5.2(b) shall survive.
ARTICLE IX
MISCELLANEOUS
9.1 No Survival of Representations and
Warranties. Each and every representation and warranty of the parties
herein shall expire with, and be terminated and extinguished by, the
Merger, or (except as otherwise provided in Section 8.1 and/or Section
8.2) the termination of the Merger pursuant to Section 8.1. This
Section 9.1 shall have no
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effect upon any other agreement, covenant or obligation of the
parties hereunder, whether to be performed before or after the Closing.
9.2 Expenses. In the event the Merger is not
consummated due to the failure by any party, despite its good faith
efforts, to satisfy all conditions to close, then all expenses
(including, without limitation, reasonable legal fees and
expenses, investment banking fees and fees and expenses of
accountants) incurred by them in connection with the transactions
contemplated hereby (the "Expenses") will be borne by the party
incurring such Expenses. In the event the Merger is not consummated
after receipt by the Company from, or public announcement by, an
Affected Offeror (as defined below) and/or one or more affiliates of an
Affected Offeror of an Economically Superior Offer pertaining to an
acquisition of the Company or a substantial portion of the assets of
the Company, and control of the Company or a substantial portion of
its assets is transferred to such Affected Offeror and/or one or
more affiliates of such Affected Offeror within twelve months of the
making of such offer, Parent shall be entitled to receive payment
from the Company of liquidated damages in the amount of $2.4
million. As used herein, the term "Affected Offeror" shall mean
any person or entity with whom or with which, directly or through
representatives, the Company shall, on or after the date of this
Agreement and prior to February 15, 1996, have had contacts, discussions
or negotiations (or to whom or to which the Company shall during such
period have provided information) looking toward the possible
acquisition of the Company (by merger or otherwise) or a substantial
portion of its assets, whether such contacts, discussions or
negotiations took
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place (or such information was provided) in violation of, or as
contemplated by, Section 5.7 of this Agreement, or otherwise.
9.3 All provisions of this Agreement (other
than the provisions of Articles I and II hereof (which together shall
constitute the Plan of Merger within the meaning of Article 11 of the
NCBCA)) are, and shall be, binding upon Parent, Mergersub and the
Company in accordance with their terms whether or not the Plan of
Merger is approved by the shareholders of the Company.
9.4 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if sent by
confirmed facsimile transmission or if delivered personally or by
courier or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice;
provided that notices of a change of address shall be effective only
upon receipt thereof):
(a) if to the Parent or Mergersub, to
Syratech Corporation
175 McClellan Highway
East Boston, Massachusetts 02128-9114
Attention: Chief Financial Officer
Fax: 617-561-0275
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with copies to
Faye A. Florence, Esq.
Vice President, Secretary and
General Counsel
Syratech Corporation
175 McClellan Highway
East Boston, Massachusetts 02128-9114
Fax: 617-568-1361
and
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: James L. Purcell, Esq.
Fax: 212-373-2145
(b) if to the Company, to
Rauch Industries, Inc.
6048 South York Road
Gastonia, North Carolina 28053-0609
Fax: 704-864-2081
with a copy to
Parker, Poe, Adams & Bernstein L.L.P.
2500 Charlotte Plaza
201 South College Street
Charlotte, North Carolina 28244
Attention: Mark R. Bernstein, Esq.
Fax: (704) 334-4706
9.5 Assignment; Parties in Interest. This
Agreement and all of the provisions hereof shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor
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any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto without the prior written consent
of the other parties.
9.6 Governing Law. All matters (including, but not
limited to, the construction, validity, interpretation and
enforcement of this Agreement) shall be governed by, and construed and
enforced in accordance with, the laws of the State of North Carolina
regardless of the laws that might otherwise govern under applicable
principles of conflicts of law, except that all parties agree that the
laws (including common law) of the State of Delaware shall govern the
validity and enforceability of the provisions of Section 9.2 of this
Agreement.
9.7 Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
9.8 Interpretation. The Article and Section headings
contained in this Agreement are solely for the purpose of reference,
are not part of the agreement of the parties and shall not in any
way affect the meaning or interpretation of this Agreement. As
used in this Agreement, (i) the term "person" shall mean and include
an individual, a partnership, a joint venture, a corporation, a trust,
an unincorporated organization and a government or any department or
agency thereof; (ii) the terms "affiliate" and "associate" shall have
the meanings set forth in Rule 12b-2 of the General Rules and
Regulations promulgated under the Exchange Act; and (iii) the term
"subsidiary" of any specified corporation shall mean any corporation of
which the
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outstanding securities having ordinary voting power to elect a
majority of the board of directors are directly or indirectly
owned by such specified corporation.
9.9 Entire Agreement. This Agreement, including the
exhibits and Disclosure Schedule hereto and the documents and
instruments referred to herein, embodies the entire agreement and
understanding of the parties hereto in respect of the subject matter
contained herein. There are no restrictions, promises,
representations, warranties, covenants, or undertakings, other than
those expressly set forth or referred to herein. This Agreement
supersedes all prior agreements (except for the confidentiality
agreement heretofore executed by the Parent and the Company) and the
understandings between the parties with respect to such subject matter.
9.10 Specific Performance. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly
agreed that the parties shall be entitled to injunctive relief to
prevent breaches of this Agreement and enforce specifically the
terms and provisions hereof in any United States District Court or any
state court in Delaware, New York or North Carolina having
jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
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IN WITNESS WHEREOF, the parties have caused this
Agreement to be signed by their respective duly authorized officers on
the date first above written.
SYRATECH CORPORATION
By: /s/ Leonard Florence
Chairman of the Board
SYR ACQUISITION, INC.
By: /s/ Leonard Florence
Chairman of the Board
RAUCH INDUSTRIES, INC.
By: /s/ Marshall A. Rauch
Chairman of the Board
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Exhibit 99.2
FOR IMMEDIATE RELEASE
East Boston, Massachusetts, December 7, 1995 - Leonard
Florence, Chairman of the Board and Chief Executive Officer of
Syratech Corporation (NYSE:SYR), and Marshall A. Rauch, Chairman of
the Board and Chief Executive Officer of Rauch Industries, Inc.
(ASE:RCH) announced today that their companies had entered into an
agreement and plan of merger pursuant to which Rauch will become a
wholly-owned subsidiary of Syratech and the present shareholders of
Rauch will receive $13 a share in cash for each share of Rauch common
stock now owned by them. The merger consideration represents a
premium of 35% over the closing price of Rauch Common Stock on December
6, 1995.
A Special Committee of the Board of Directors of Rauch,
which was appointed to consider the transaction, has received the
opinion of Wasserstein Perella & Co., Inc., its financial advisor, that,
subject to the assumptions and limitations set forth in such opinion,
the $13.00 per share cash consideration to be received by the
shareholders of Rauch pursuant to the merger is fair from a financial
point of view to such shareholders.
The transaction is subject to approval of the Plan of
Merger by the shareholders of Rauch and to the receipt of necessary
clearances under the Hart-Scott-Rodino Antitrust Improvements Act of
1976. It is expected that the Plan of Merger will be voted upon by
Rauch's shareholders (and if approved, that the acquisition will be
completed) by mid- February, 1996.
Mr. Florence and Mr. Rauch both expressed enthusiasm
for the transaction and the
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hope that it would be concluded quickly. Mr. Florence noted that
Syratech has already expanded greatly its Holiday Workshop line,
which Syratech plans to blend with the Rauch lines of Christmas
decorations. Mr. Rauch, in turn, expressed the view that the
combination of the two companies' holiday lines based, as planned,
at Rauch headquarters, coupled with access to Syratech's formidable
distribution capacity, would provide enhanced opportunities for
holiday marketing and be a boost for the economies for those
communities in which Rauch now has facilities. The affirmative vote
of holders of a majority of Rauch's outstanding common stock is needed
for approval of the Plan of Merger. Mr. Rauch and members of his
immediate family own in excess of 50% of the outstanding common stock
of Rauch. Syratech is a leading producer and distributor of sterling
silver flatware, sterling and plated holloware and a wide variety of
tabletop and gift items. Rauch is the leading domestic producer of
Christmas ornaments.
Contacts:
Leonard Florence
Chairman and Chief Executive
Officer
Syratech Corporation
617-561-2211
Marshall A. Rauch
Chairman and Chief Executive
Officer
Rauch Industries, Inc.
704-867-5333
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