<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
(Amendment No. __)
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Larizza Industries, Inc.
____________________________________________________________________
(Name of Registrant as Specified in its Charter)
____________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy
pursuant to Exchange Act Rule 14a-6(i)(3).
[x] Fee computed on table below per
Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
Common Stock, no par value
(2) Aggregate number of securities to which transaction applies:
22,088,107 shares
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
$6.50 per share (cash merger consideration)
(4) Proposed maximum aggregate value of transaction:
$143,572,695.50
(5) Total fee paid:
$28,714.54
[x] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by the registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
__________
(2) Form, Schedule or Registration Statement No.:
__________
(3) Filing Party:
__________
(4) Date Filed:
__________
<PAGE> 2
[LARIZZA INDUSTRIES LOGO]
LARIZZA INDUSTRIES, INC.
201 West Big Beaver Road
Suite 1040
Troy, Michigan 48084
(810) 689-5800
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders (the
"Special Meeting") of Larizza Industries, Inc. (the "Company") to be held at the
Ritz-Carlton, Dearborn, Fairlane Town Center, 300 Town Center Drive, Dearborn,
Michigan 48126, on December 1, 1995 at 10:00 A.M., Eastern Standard Time. The
official Notice of the Special Meeting, Proxy Statement and form of proxy are
enclosed with this letter. You are urged to read them carefully.
The only proposal to be acted upon at the Special Meeting is the approval
and adoption of the Agreement and Plan of Merger, dated as of September 26, 1995
(included as Appendix A to, and described in, the attached Proxy Statement),
among the Company, Collins & Aikman Products Co. ("Parent") and LRI Acquisition
Corp. ("Acquisition"), a wholly-owned subsidiary of Parent. Pursuant to the
Agreement and Plan of Merger, Acquisition will be merged with and into the
Company (the "Merger"), the Company will become a wholly-owned subsidiary of
Parent and each outstanding share of Common Stock, no par value, of the Company
will be converted into the right to receive $6.50 in cash, all as more
particularly described in the attached Proxy Statement. THE BOARD OF DIRECTORS
BELIEVES THAT THE MERGER IS IN THE BEST INTERESTS OF THE COMPANY AND ITS
SHAREHOLDERS AND, HAVING RECEIVED THE RECOMMENDATION OF THE SPECIAL COMMITTEE OF
THE BOARD OF DIRECTORS, UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL AND ADOPTION
OF THE AGREEMENT AND PLAN OF MERGER. The Company is not aware of any other
matters to be brought before the Special Meeting.
Please read carefully the accompanying Notice of Special Meeting of
Shareholders and Proxy Statement for additional information regarding the Merger
and related matters.
Pursuant to the Stock Agreement described in the accompanying Proxy
Statement, the beneficial owner of a majority of the outstanding Common Stock
has agreed to vote such shares in favor of the approval and adoption of the
Merger Agreement and has granted to Parent an option to purchase a portion of
such shares. Accordingly, the approval and adoption of the Merger Agreement by
the requisite vote of the shareholders is expected to occur irrespective of
whether, or the manner in which, other shareholders vote their shares.
Whether or not you plan to attend the Special Meeting, please complete,
sign and date the enclosed proxy card and return it promptly in the enclosed,
postage prepaid envelope. If you attend the Special Meeting, you may vote in
person if you wish, even though you have previously returned your proxy card.
Your prompt cooperation will be greatly appreciated.
Please do not send your stock certificates with your proxy card. Following
the approval and adoption of the Merger Agreement and the satisfaction or waiver
of all other conditions to the Merger, you will receive a transmittal form and
instructions for the surrender and exchange of your share certificates.
On behalf of the Board of Directors and management of the Company, thank
you for your cooperation and continued support.
Sincerely,
RONALD T. LARIZZA
Chairman of the Board and
Chief Executive Officer
November 1, 1995
<PAGE> 3
LARIZZA INDUSTRIES, INC.
201 West Big Beaver Road
Suite 1040
Troy, Michigan 48084
(810) 689-5800
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 1, 1995
To the Shareholders of Larizza Industries, Inc.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of
Larizza Industries, Inc., an Ohio corporation (the "Company"), will be held at
the Ritz-Carlton, Dearborn, Fairlane Town Center, 300 Town Center Drive,
Dearborn, Michigan 48126, on Friday, December 1, 1995 at 10:00 A.M., Eastern
Standard Time. The purpose of the Special Meeting will be to approve and adopt
the Agreement and Plan of Merger, dated as of September 26, 1995 (included as
Appendix A to, and described in, the attached Proxy Statement), among the
Company, Collins & Aikman Products Co. ("Parent") and LRI Acquisition Corp.
("Acquisition"), a wholly-owned subsidiary of Parent. Pursuant to the
Agreement and Plan of Merger, Acquisition will be merged with and into the
Company, the Company will become a wholly-owned subsidiary of Parent and each
outstanding share of common stock, no par value, of the Company will be
converted into the right to receive $6.50 in cash, all as more particularly
described in the attached Proxy Statement. The Company is not aware of any
matters to be brought before the Special Meeting except for those set forth
above in this Notice of Special Meeting of Shareholders.
Shareholders of record at the close of business on October 30, 1995
will be entitled to notice of, and to vote at, the Special Meeting and any
adjournment thereof.
All shareholders are cordially invited to attend the Special Meeting.
However, the Company urges you to assure your representation at the Special
Meeting by signing and returning the enclosed proxy in the postage prepaid
envelope provided as promptly as possible. The giving of this proxy does not
affect your right to vote in person if you attend the Special Meeting.
Under Ohio law, shareholders are entitled to appraisal rights as a
result of the Merger. However, in order for shareholders to exercise appraisal
rights, they must strictly follow the procedures prescribed by Ohio law, which
are summarized in "The Merger--Appraisal Rights" in the accompanying Proxy
Statement.
BY ORDER OF THE BOARD OF
DIRECTORS
RONALD T. LARIZZA
Chairman of the Board and
Chief Executive Officer
PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY CARD WHETHER OR NOT YOU INTEND TO
BE PRESENT AT THE SPECIAL MEETING.
November 1, 1995
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Special Meeting . . . . . . . . . . . . . . . . . . . . . 1
The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . 2
The Parties . . . . . . . . . . . . . . . . . . . . . . . . . 7
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . 8
PURPOSE OF THE SPECIAL MEETING . . . . . . . . . . . . . . . . . . . . 8
VOTING, PROXIES AND REVOCABILITY . . . . . . . . . . . . . . . . . . . 9
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Background of the Merger . . . . . . . . . . . . . . . . . . . 10
Recommendation of the Board of Directors of the Company. . . . 12
Certain Financial Projections of the Company . . . . . . . . . 13
Opinion of Financial Advisor . . . . . . . . . . . . . . . . . 14
Required Vote . . . . . . . . . . . . . . . . . . . . . . . . 18
Terms of the Merger . . . . . . . . . . . . . . . . . . . . . 18
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . 19
Exchange of Stock Certificates . . . . . . . . . . . . . . . . 19
Source and Amount of Funds . . . . . . . . . . . . . . . . . . 20
Representations and Warranties; Covenants; Conditions. . . . . 20
Modification; Termination . . . . . . . . . . . . . . . . . . 22
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Appraisal Rights . . . . . . . . . . . . . . . . . . . . . . . 23
Federal Income Tax Consequences to the Company's Shareholders. 26
Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . 26
INTERESTS OF CERTAIN PERSONS IN THE MERGER . . . . . . . . . . . . . . 27
Stock Agreement . . . . . . . . . . . . . . . . . . . . . . . 27
Agreements with Management . . . . . . . . . . . . . . . . . . 28
Other Interests . . . . . . . . . . . . . . . . . . . . . . . 31
INFORMATION ABOUT PARENT AND ACQUISITION . . . . . . . . . . . . . . . 32
CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY . . . . . . . . . . 34
INFORMATION ABOUT THE COMPANY . . . . . . . . . . . . . . . . . . . . . 37
</TABLE>
i
<PAGE> 5
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
PAGE
<S> <C>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . 37
INDEPENDENT PUBLIC ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SHAREHOLDER PROPOSAL DEADLINE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
OTHER BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
</TABLE>
ii
<PAGE> 6
LARIZZA INDUSTRIES, INC.
201 West Big Beaver Road
Suite 1040
Troy, Michigan 48084
(810) 689-5800
___________________
PROXY STATEMENT
___________________
SPECIAL MEETING OF SHAREHOLDERS
DECEMBER 1, 1995
SUMMARY
The following is only a summary of certain information contained
elsewhere in this Proxy Statement and does not purport to be complete. All
statements in the following summary are qualified by, and are made subject to,
the more detailed information contained elsewhere in this Proxy Statement and
the Appendices to this Proxy Statement. The Appendices to this Proxy Statement
constitute a part of this Proxy Statement and should be considered as such.
Shareholders are urged to read this Proxy Statement in its entirety. The full
text of the Merger Agreement is attached as Appendix A and should be read in
its entirety. All references in this Proxy Statement to the Merger Agreement
and the transactions to be effected pursuant to the Merger Agreement are
qualified in their entirety by reference to the actual text of the Merger
Agreement.
THE SPECIAL MEETING
Date, Time and Place. The Special Meeting of Shareholders of the
Company will be held at the Ritz-Carlton, Dearborn, Fairlane Town Center, 300
Town Center Drive, Dearborn, Michigan 48126, on Friday, December 1, 1995 at
10:00 A.M., Eastern Standard Time. See "General Information".
Record Date; Shares Entitled to Vote. Holders of record of the
Company's Common Stock at the close of business on October 30, 1995 are
entitled to notice of, and to vote at, the Special Meeting and at any
adjournment thereof. On such date, there were 22,088,107 shares of Common
Stock outstanding, each of which will be entitled to one vote. See "Voting,
Proxies and Revocability".
Purpose of the Special Meeting. The purpose of the Special Meeting is
to vote on the approval and adoption of the Agreement and Plan of Merger, dated
as of September 26, 1995, among Parent, Acquisition and the Company (the
"Merger Agreement"). A copy of the Merger Agreement is attached to this Proxy
Statement as Appendix A. Upon consummation of the
<PAGE> 7
Merger, Acquisition will be merged into the Company, the Company will become a
wholly-owned subsidiary of Parent, and each outstanding share of the Company's
Common Stock (other than shares of Common Stock held by shareholders who
perfect their appraisal rights under Ohio law) will be converted into the right
to receive $6.50 in cash.
Vote Required. Under Ohio law and the Company's Articles of
Incorporation, the affirmative vote of holders of not less than a majority of
the outstanding shares of the Company's Common Stock is required for approval
and adoption of the Merger Agreement. Pursuant to a Stock Agreement, dated
September 26, 1995 (the "Stock Agreement"), between Parent and Ronald T.
Larizza, individually and as trustee under the Trust Agreement dated July 29,
1989 ("Larizza"), Larizza agreed to vote an aggregate of approximately 50.6% of
the Company's outstanding shares of Common Stock (either owned by Larizza or
which Larizza has the power to vote under a voting trust agreement) in favor of
the acquisition of the Company by Parent pursuant to the Merger Agreement.
Accordingly, the approval and adoption of the Merger Agreement by the requisite
vote of the Company's shareholders is expected to occur irrespective of
whether, or the manner in which, any other shareholders of the Company vote
their shares. Also pursuant to the Stock Agreement, Larizza granted Parent the
right to purchase, at $6.50 per share, in whole and not in part, an aggregate
of 7,910,906 shares of Common Stock (or 35.8% of the total shares of Common
Stock outstanding) until February 29, 1996 or such other date upon which the
parties agree. See "Voting, Proxies and Revocability" and "Interests of
Certain Persons in the Merger."
Security Ownership of Management and Certain Other Persons. As of
September 26, 1995, directors and executive officers of the Company
beneficially owned approximately 51.9% of the outstanding Common Stock, and
Ronald T. Larizza had voting control over approximately 50.6% of the
outstanding Common Stock. Ronald T. Larizza has agreed in the Stock Agreement
to vote or direct the vote of all shares of Common Stock over which he has
voting control for approval and adoption of the Merger Agreement. See
"Interests of Certain Persons in the Merger".
THE MERGER
Principal Effects of the Merger. The Merger Agreement provides that,
except for holders of Common Stock who duly perfect appraisal rights (see "The
Merger -- Appraisal Rights"), when the Merger becomes effective, each
outstanding share of the Company's Common Stock will be cancelled and retired
and will cease to exist, and each such share will be converted into the right
to receive $6.50 in cash, without interest. Any shares of Common Stock held in
the Company's treasury immediately before the effective time of the Merger will
be cancelled and retired and cease to exist. In addition, each right to
receive or convert into Common Stock then existing will, by virtue of the
Merger and without any action on the part of the holder thereof, no longer be
outstanding and will be cancelled and retired and cease to exist and will not
be converted into the right to receive any shares of stock or any cash or other
consideration in lieu thereof.
2
<PAGE> 8
As a result of the Merger, the 1,000 outstanding shares of Acquisition
common stock owned by Parent will be converted into shares of Common Stock of
the Company, and the Company will, therefore, become a wholly-owned subsidiary
of Parent. As of the effective time of the Merger, the Company's Common Stock
is expected to be delisted from the American Stock Exchange, and shares of the
Company's Common Stock will no longer be traded on the American Stock Exchange.
In addition, the registration of the Company's Common Stock under the
Securities Exchange Act of 1934 will be terminated.
Effective Time of the Merger. If the Merger Agreement is approved by
the shareholders of the Company and if all of the conditions to its
consummation are satisfied or waived, the Merger will become effective upon the
filing of a Certificates of Merger with the Secretaries of State of Ohio and
Delaware. Assuming such approval and satisfaction or waiver of such conditions
are obtained, it is expected that these filings will be made and the Merger
will become effective as soon as is practicable after the Special Meeting;
provided, that the Company may extend the closing of the Merger to January 3,
1996, or to such other day as Acquisition, Parent and the Company shall
mutually agree upon, by written notice to Parent and Acquisition. The Board of
Directors of Acquisition, Parent or Company may terminate the Merger Agreement
if the Merger does not occur by February 29, 1996 (unless such failure to occur
is due to such party's failure to fulfill or perform a condition). See "The
Merger -- Effective Date" and "The Merger -- Modification; Termination".
Opinion of Financial Advisor. The Company engaged Merrill Lynch & Co.
("Merrill Lynch") to act as its financial advisor in connection with the Merger
and related matters. On September 26, 1995, Merrill Lynch delivered its
opinion to the Non-Management Committee of the Board of Directors (the
"Committee") to the effect that, as of such date, the proposed consideration to
be received by the holders of Common Stock in the Merger ($6.50 per share in
cash) is fair to such shareholders from a financial point of view. The opinion
of Merrill Lynch will not be updated and is limited to the facts and
circumstances on September 26, 1995, the date on which the opinion was
delivered to the Committee. See "The Merger -- Opinion of Financial Advisor".
A copy of the Merrill Lynch opinion is attached as Appendix B and incorporated
in this Proxy Statement by reference. Shareholders of the Company are urged to
read carefully in its entirety the opinion of Merrill Lynch, which sets forth
the assumptions made, matters considered and limits on the review undertaken.
Certain Federal Income Tax Consequences. The receipt of cash for
shares of the Company's Common Stock pursuant to the Merger will be a taxable
transaction for federal income tax purposes to the shareholders receiving such
cash (and may be a taxable transaction for state, local and foreign tax
purposes as well). A holder of the Company's Common Stock will realize gain or
loss measured by the difference between such shareholder's adjusted tax basis
for the shares of the Company's Common Stock owned by the shareholder at the
time of the Merger and the amount of cash received for such shares. In
general, such gain or loss will be capital gain or loss if the shares of the
Company's Common Stock are capital assets in the hands of such shareholder; any
such gain or loss realized will constitute long-term or short-term capital gain
or loss depending on the shareholder's holding period for such shares and the
date such
3
<PAGE> 9
shares were acquired. See "The Merger -- Federal Income Tax Consequences to
the Company's Shareholders".
The foregoing is only a general description of certain of the federal
income tax consequences of the Merger to holders of the Company's Common Stock,
without giving consideration to the particular facts and circumstances of each
shareholder's situation, and is based on present law. Shareholders are urged
to consult their personal tax advisors with respect to the tax consequences of
the transaction, including the federal, state, local and foreign tax
consequences of the Merger.
Dissenter's Rights. Under Section 1701.84(B) of the Ohio General
Corporation Law, the Company's shareholders are entitled to relief as
dissenting shareholders under Section 1701.85 ("Section 1701.85"), in lieu of
accepting the payment to be made pursuant to the Merger. If the Company is
required to pay the fair value of its Common Stock held by a dissenting
shareholder ("Larizza Dissenting Shares") and if agreement cannot be reached
between the dissenting shareholder and the Company as to the fair cash value of
such Larizza Dissenting Shares, the dissenting shareholder may seek to have
such value determined by an Ohio court. Fair cash value will be determined as
of the day before the Special Meeting, and will be the amount that a willing
seller, under no compulsion to sell, would be willing to accept, and that a
willing buyer, under no compulsion to purchase, would be willing to pay,
excluding any appreciation or depreciation in market value resulting from the
Merger proposal and in no event more than the amount demanded by the dissenting
shareholder. A shareholder electing to demand an appraisal must not vote their
Common Stock in favor of approval and adoption of the Merger Agreement. In
addition, not later than 10 days after the date on which the vote is taken on
the approval and adoption of the Merger Agreement, the dissenting shareholder
must deliver to the Company a written demand for payment of the fair cash value
of the Company's Common Stock as to which he or she seeks relief. The Company
will not notify the dissenting shareholder of the deadline for this demand, and
a proxy or vote against the approval and adoption of the Agreement of Merger or
an abstention or broker non-vote will not satisfy this demand requirement.
Interests of Certain Persons in the Merger. As of the Record Date,
directors and executive officers of the Company beneficially owned an aggregate
of 11,471,958 shares of Common Stock. In connection with the execution of the
Merger Agreement, at the request of Parent, Parent and Larizza entered into the
Stock Agreement. Mr. Larizza is the Chairman of the Board and Chief Executive
Officer of the Company. Pursuant to the Stock Agreement, Larizza granted
Parent the right to purchase, in certain circumstances, the 7,910,906 shares of
the Company's Common Stock he owns at $6.50 per share (the same price available
to all holders of shares of the Company's Common Stock under the terms of the
Merger Agreement) at any time before February 29, 1996 or such other date as
the parties to the Merger Agreement otherwise agree. Pursuant to the Stock
Agreement, Larizza also agreed to vote all shares over which he has voting
control (approximately 11,183,083 shares of the Company's Common Stock) in
favor of approval and adoption of the Merger Agreement and against proposals by
others to acquire the Company. See "Interests of Certain Persons in the Merger
- -- Stock Agreement".
4
<PAGE> 10
The Company and Ronald T. Larizza entered into an Employment Agreement
dated as of April 21, 1994. Parent expects to cause the Company to terminate
Mr. Larizza's employment under this agreement in connection with the Merger.
If Mr. Larizza's employment is terminated by notice from the Company, Mr.
Larizza will be entitled to receive an amount equal to $1 less than three times
his average annual salary and bonus over the prior five years (estimated to be
approximately $1,463,000 (discounted lump sum) if such termination were to
occur in 1996), paid at the times it would have otherwise been paid or in a
discounted lump sum, at Mr. Larizza's discretion. See "Interests of Certain
Persons in the Merger -- Agreements with Management".
At the effective time of the Merger, Parent and Ronald T. Larizza
expect to enter into a two-year consulting agreement. Pursuant to the
consulting agreement, Parent is expected to hire Mr. Larizza as a consultant to
Parent in the areas of Parent's business in which Mr. Larizza has expertise.
Parent is expected to agree to pay Mr. Larizza $150,000 for the first year of
such services and $75,000 for the second year of such services. These payments
would be in addition to any payments under Mr. Larizza's Employment Agreement.
See "Interests of Certain Persons in the Merger -- Agreements with Management".
The Company and Mr. Larizza entered into an agreement dated as of
April 22, 1993, pursuant to which the Company will pay the premiums relating to
specified life insurance policies and an amount necessary to pay the income
taxes incurred by Mr. Larizza and the trust owning the policy as a result of
the Company's payments under the agreement. Such payments will continue after
the term of the agreement, at Mr. Larizza's request. The Company's right to
recover the premiums it has paid from the cash surrender proceeds or the death
or maturity benefit proceeds of the policies, if any, lapses on the third
anniversary date of the agreement if Mr. Larizza provides substantial services
to the Company until Mr. Larizza's involuntary termination of employment for a
reason other than cause. The Company will pay to Mr. Larizza and the trust
owning the policy an amount sufficient to cover income taxes incurred as a
result of such lapse and such payment. As described above, Parent expects to
cause the Company to terminate Mr. Larizza's employment under this agreement in
connection with the Merger. See "Interests of Certain Persons in the Merger --
Agreements with Management".
Mr. Larizza and Mr. Sawyer, who are both directors, executive officers
and principal shareholders of the Company, have notes payable to the Company.
As of October 31, 1995, the aggregate amount outstanding under these New Notes
was approximately $1,633,910 and $742,243 for Mr. Larizza and Mr. Sawyer,
respectively. It is a condition to Parent's and Acquisition's obligations
under the Merger Agreement that both of these notes be repaid in full before
the effective time of the Merger. See "Interests of Certain Persons in the
Merger -- Agreements with Management".
The Company and The Edgewater Group, Inc. ("Edgewater") entered into a
Finders Agreement, dated June 15, 1994. Pursuant to the Finders Agreement,
Edgewater was engaged to act as the Company's financial advisor in connection
with the sale of its wholly-owned subsidiary General Nuclear Corp. ("General
Nuclear"). In exchange for such services, the Company paid Edgewater $110,000
as a non-refundable finder's fee and has agreed to pay
5
<PAGE> 11
Edgewater an additional $110,000 on June 30, 1997 as a result of the sale of
General Nuclear on June 1, 1995. It is not a condition to Parent's and
Acquisition's obligations under the Merger Agreement that this finder's
agreement be terminated. See "Interests of Certain Persons in the Merger --
Agreements with Management".
The Company and Edgewater have also entered into a Consulting
Agreement, dated June 15, 1994. Pursuant to the Consulting Agreement, the
Company hired Edgewater as a consultant to the Company in the areas of the
Company's business in which Edgewater has expertise. The term of the agreement
began January 1, 1994 and ends December 31, 1996. The Company has agreed to
pay Edgewater $15,000 a month for its consulting services and has agreed to
reimburse Edgewater for its reasonable out-of-pocket expenses incurred in
connection with the Company's business. Mr. Sawyer is a director and the
President and sole shareholder of Edgewater. It is not a condition to Parent's
and Acquisition's obligations under the Merger Agreement that this consulting
agreement be terminated. See "Interests of Certain Persons in the Merger --
Agreements with Management".
The Company has an oral consulting arrangement with Edward L. Sawyer,
Jr., an officer, director and principal shareholder of the Company. The
Company has agreed to pay Mr. Sawyer $50,000 a year for his consulting
services. Parent expects to terminate this arrangement in connection with the
Merger. See "Interests of Certain Persons in the Merger -- Agreements with
Management".
The Company has also entered into Split-Dollar Agreements, dated as of
April 22, 1993 and effective as of January 29, 1993, with Edward W. Wells, the
Company's President and Chief Operating Officer, and Terence C. Seikel, the
Company's Vice President, Finance, pursuant to which the Company will pay the
premiums relating to specified life insurance policies. During the term of the
agreements, the Company will pay each premium on the insurance policies and an
amount necessary to pay the taxes incurred by Messrs. Wells and Seikel,
respectively, as a result of the Company's payments under the agreement. The
Company is entitled to receive $300,000 and $250,000 from the death proceeds of
the policies if Mr. Wells or Mr. Seikel, respectively, dies while the agreement
is in force. In addition, if the policies are surrendered during the term of
the agreements, the Company would receive (i) 100% of the policy's surrender
value, if the policy is surrendered within two years of the effective date of
the agreement, (ii) 50% of the policy's surrender value, if the policy is
surrendered before three years after the effective date of the agreement, (iii)
25% of the policy's surrender value, if the policy is surrendered before four
years after the effective date of the agreement, and (iv) none of the policy's
surrender value, if the policy is surrendered at least four years after the
effective date of the agreement.
Either agreement will terminate on the earliest of (i) termination of
Mr. Wells' or Mr. Seikel's respective employment for cause, but (if the Merger
is consummated) not upon a voluntary termination of employment by the employee,
(ii) the date of Mr. Wells' or Mr. Seikel's respective death, and (iii) eleven
years after the effective date of the agreement. After the
6
<PAGE> 12
Merger, voluntary termination of employment by Mr. Wells or Mr. Seikel will not
terminate these agreements. See "Interests of Certain Persons in the Merger --
Agreements with Management".
Effective June 15, 1995, the Company entered into Letter Agreements
with Edward W. Wells, the Company's President and Chief Operating Officer, and
Terence C. Seikel, the Company's Vice President, Finance. The Letter
Agreements provide these employees with severance benefits if (i) before June
15, 1997 Ronald T. Larizza sells Common Stock of the Company resulting in his
loss of management control of the Company ("Stock Sale"), and (ii) the
employee's employment terminates during the period beginning 90 days before and
ending two years after a Stock Sale. The severance benefits are a continuation
of salary, bonus and medical, dental, life, disability and prescription drug
coverage from the date of the Stock Sale (or the date of termination , if
later) until the earlier of (i) two years (one year if termination occurs more
than one year after the Stock Sale) after termination, and (ii) the date such
person works for a competitor. During this period (or for one year after
termination, if shorter), the employee will also retain the automobile provided
to the employee during his employment. Either Parent's exercise of its option
to purchase Larizza's Common Stock pursuant to the Stock Agreement or the
consummation of the Merger appear to constitute Stock Sales pursuant to these
agreements. See "Interests of Certain Persons in the Merger -- Agreements with
Management".
Pursuant to the terms of the Merger Agreement, the surviving
corporation and Parent, jointly and severally, will indemnify and hold
harmless, each present and former employee, agent, director or officer of the
Company or its subsidiaries and Larizza from and against any and all claims
arising out of, or in connection with, activities in such capacity (including
as a party to the Stock Agreement), or on behalf of, or at the request of, the
Company (including the Merger, the transactions related to the Merger or the
Stock Agreement) to the fullest extent permitted by applicable law. In
addition, the indemnification and expense advancement provisions in the
applicable Articles of Incorporation, Code of Regulations and Bylaws will be
continued for a period of at least six years. See "Interests of Certain
Persons in the Merger -- Other Interests".
Sources and Amount of Funds. The amount of funds to be used to
acquire the shares of Common Stock pursuant to the Merger Agreement is
approximately $144 million. In addition, approximately $30 million will be
required to prepay existing indebtedness of the Company. See "The Merger --
Representations and Warranties; Covenants; Conditions". The Company has been
informed by Parent that Parent expects to borrow from banks the funds for such
purposes and to pay related fees and expenses. Parent has received a
commitment letter, dated September 15, 1995, from Chemical Bank (the
"Commitment Letter") pursuant to which Chemical Bank has committed, subject to
the terms and conditions set forth in the Commitment Letter, to provide a
seven-year senior secured term loan of up to $200 million for the Merger and
related fees and expenses. See "The Merger -- Source and Amount of Funds".
THE PARTIES
The Company. The Company designs and manufactures high-quality,
plastic-based components and systems used in the interiors of automobiles,
light trucks, sport utility vehicles
7
<PAGE> 13
and mini-vans. The Company's product line ranges from injection molded plastic
components, such as sidewall trim, air outlet assemblies and cupholders, to
highly complex systems, such as complete instrument panels and door panels.
The Company has eight automotive parts manufacturing facilities, of which five
are in Michigan and three are in Ontario, Canada. Larizza Industries, Inc. was
incorporated under the laws of the State of Ohio in November 1982. Unless the
context otherwise requires, all reference to the Company in this Proxy
Statement refer to Larizza Industries, Inc. and its consolidated subsidiaries.
See "Information About the Company".
Parent. Parent is a wholly-owned subsidiary of Collins & Aikman
Corporation ("C&A Corp."), a leader in each of its three business segments. In
Automotive Products, it is the largest supplier of its five basic interior trim
products to the North American auto industry. In Interior Furnishings, it is
the largest manufacturer of residential upholstery fabrics and six-foot
commercial carpet in the United States. In Wallcoverings, it is the largest
United States producer of residential wallpaper. Parent was incorporated in
Delaware on July 8, 1927.
Acquisition. Acquisition is a Delaware corporation which is 100%
owned by Parent. Acquisition was recently formed in preparation for the Merger
and has not conducted any business.
GENERAL INFORMATION
This Proxy Statement is being furnished in connection with the
solicitation of proxies by and on behalf of the Board of Directors of Larizza
Industries, Inc. (the "Company") for use at the Special Meeting of Shareholders
to be held at the Ritz-Carlton, Dearborn, Fairlane Town Center, 300 Town Center
Drive, Dearborn, Michigan 48126, on Friday, December 1, 1995 at 10:00 A.M.
Eastern Standard Time or any adjournment thereof for the purposes set forth
below and in the accompanying Notice of Special Meeting of Shareholders. The
merger of LRI Acquisition Corp. ("Acquisition"), a wholly-owned subsidiary of
Collins & Aikman Products Co. ("Parent"), with and into the Company is referred
to in this Proxy Statement as the "Merger". This Proxy Statement and the
accompanying form of proxy are being first mailed on or about November 1, 1995
to shareholders of record at the close of business on October 30, 1995 (the
"Record Date"). A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE
YEAR ENDED DECEMBER 31, 1994 AND A COPY OF THE COMPANY'S QUARTERLY REPORT ON
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995 ACCOMPANY THIS PROXY
STATEMENT. The Company will pay the cost of soliciting proxies, including
expenses for preparing and mailing proxy solicitation materials. In addition
to use of the mails, proxies may be solicited by certain officers, directors
and regular employees of the Company, without extra compensation, by telephone,
telegraph or personal interview.
PURPOSE OF THE SPECIAL MEETING
At the Special Meeting, the shareholders of the Company will vote on
whether to approve the Merger in accordance with the Agreement and Plan of
Merger, dated as of September 26, 1995, among Parent, Acquisition and the
Company (the "Merger Agreement"). A copy of the
8
<PAGE> 14
Merger Agreement is attached to this Proxy Statement as Appendix A. Upon
consummation of the Merger, Acquisition will be merged into the Company, the
Company will become a wholly-owned subsidiary of Parent, and each outstanding
share of the Company's common stock will be converted into the right to receive
$6.50 in cash.
THE TRANSACTION TO BE CONSIDERED AT THIS SPECIAL MEETING INVOLVES A
MATTER OF GREAT IMPORTANCE TO THE SHAREHOLDERS. IF THE MERGER IS APPROVED,
UPON THE CONSUMMATION OF THE MERGER, THE SHAREHOLDERS WILL HAVE NO FURTHER
RIGHTS AS SHAREHOLDERS OF THE COMPANY, SUBJECT TO APPRAISAL RIGHTS UNDER OHIO
LAW, AND, SUBJECT TO APPRAISAL RIGHTS, WILL HAVE ONLY THE RIGHT TO RECEIVE A
PAYMENT OF $6.50 PER SHARE IN CASH. SEE "THE MERGER -- APPRAISAL RIGHTS" AND
APPENDIX C FOR A DISCUSSION OF APPRAISAL RIGHTS. ACCORDINGLY, SHAREHOLDERS ARE
URGED TO READ AND CONSIDER CAREFULLY THE INFORMATION PRESENTED IN THIS PROXY
STATEMENT.
VOTING, PROXIES AND REVOCABILITY
October 30, 1995 has been fixed as the Record Date for determining
shareholders of the Company entitled to notice of, and to vote at, the Special
Meeting. At the Special Meeting, Shareholders of record at the close of
business on the Record Date will be entitled to one vote for each share of the
Company's common stock, no par value ("Common Stock"), held. As of the close
of business on October 30, 1995 the Company had 22,088,107 shares of Common
Stock outstanding.
A majority, or 11,044,054 shares of the Company's Common Stock, must
be represented at the Special Meeting in person or by proxy in order to
constitute a quorum for the transaction of business.
Under Ohio law and the Company's Articles of Incorporation, the
affirmative vote of holders of not less than a majority of the outstanding
shares of the Company's Common Stock is required for approval of the Merger
Agreement. Pursuant to a Stock Agreement, dated September 26, 1995 (the "Stock
Agreement"), between Parent and Ronald T. Larizza, individually and as trustee
under the Trust Agreement dated July 29, 1989 ("Larizza"), Larizza agreed to
vote an aggregate of approximately 50.6% of the Company's outstanding shares of
Common Stock (either owned by Larizza or which Larizza has the power to vote
under a voting trust agreement) in favor of the acquisition of the Company by
Parent pursuant to the Merger Agreement. Accordingly, the approval of the
Merger Agreement by the requisite vote of the Company's shareholders is
expected to occur irrespective of whether, or the manner in which, any other
shareholders of the Company vote their shares. Also pursuant to the Stock
Agreement, Larizza granted Parent the right to purchase, at $6.50 per share, in
whole and not in part, an aggregate of 7,910,906 shares of Common Stock (or
35.8% of the total shares of Common Stock outstanding) until February 29, 1996
or such other date upon which the parties agree. See "Interests of Certain
Persons in the Merger."
9
<PAGE> 15
Proxies in the enclosed form which are returned in time for the
Special Meeting and executed in accordance with the instructions thereon will
be voted as specified therein. If no specification is made, the proxies will
be voted FOR approval and adoption of the Merger Agreement. Ronald T. Larizza,
the Company's Chairman of the Board and Chief Executive Officer, currently has
voting control over 50.6% of the Company's outstanding Common Stock as of
October 30, 1995. Mr. Larizza is required and intends to attend the Special
Meeting and vote these shares FOR approval and adoption of the Merger
Agreement, thus, a quorum and approval of the Merger Agreement at the Special
Meeting are assured.
A shareholder giving a proxy has the power to revoke it at any time
before it is exercised by filing with the Secretary of the Company at the
Company's principal executive offices, 201 West Big Beaver Road, Troy, Michigan
48084, either an instrument revoking the proxy or a duly executed proxy bearing
a later date. A proxy will be revoked automatically if the shareholder who
executed it is present at the Special Meeting and votes in person.
The Special Meeting may be adjourned, and additional proxies
solicited, if at the time of the Special Meeting the votes necessary to approve
the Merger Agreement have not been obtained. Any adjournment of the Special
Meeting will require the affirmative vote of a majority of the Common Stock
represented at the Special Meeting, in person or by proxy, even if less than a
quorum.
THE MANAGEMENT AND THE BOARD OF DIRECTORS OF THE COMPANY HAVE
DETERMINED THAT THE MERGER IS IN THE BEST INTERESTS OF THE COMPANY AND ITS
SHAREHOLDERS AND RECOMMEND THAT SHAREHOLDERS VOTE FOR APPROVAL AND ADOPTION OF
THE MERGER AGREEMENT.
THE MERGER
BACKGROUND OF THE MERGER
On March 11, 1994, the Company's lenders converted $47,000,000 of
principal and $9,254,000 of accrued interest into 8,283,040 shares of Common
Stock, or approximately 37.5% of the Company's outstanding Common Stock. The
Company filed a registration statement in March 1994 to facilitate the resale
of these shares by such lenders, but the price at which the shares could be
sold was not acceptable to such lenders and the shares were de-registered in
May 1994.
In addition, automotive original equipment manufacturers have
frequently upgraded standards applicable to their suppliers as a result of
competitive pressures in the automobile industry. The automotive original
equipment manufacturers have been requiring their suppliers to meet
increasingly stringent standards for quality, cost and full-service
capabilities, including design, engineering, product management support and the
ability to provide complete systems, rather than individual components. The
automotive original equipment manufacturers have also begun to prefer suppliers
that are able to supply them globally. The continuation of these trends
10
<PAGE> 16
has resulted in reducing the number of suppliers and consolidation in the
automobile original equipment supplier industry. The Company was faced with
the decision whether to attempt to meet these challenges on its own or to
attempt to survive and grow by combining with a larger supplier.
These factors led the Board of Directors to form a special committee
of the non-management members of the Board (the "Committee"). The Committee
was charged with the responsibility of exploring and evaluating various
alternatives to maximize shareholder value. These alternatives included
possible sales to strategic (those already in the automobile original equipment
supplier business) domestic and foreign companies and potential transactions
with financial buyers, including the possibility of a management led buyout
group. The Committee evaluated several investment bankers to assist it in
performing its task and in April, 1995 it decided to engage Merrill Lynch to
advise and assist it in exploring the Company's strategic alternatives and in
evaluating the financial aspects, structure and fairness of the process of
potentially selling the Company and of any proposed transaction. With the
Company's assistance, Merrill Lynch identified approximately 44 potential
purchasers, which included financial and strategic, domestic and foreign
companies.
After discussions with each of these companies, circulating a
confidential memorandum to some of these potential purchasers and conducting
further discussions with some of them, Merrill Lynch requested indications of
interest from certain of these companies. Upon receiving the indications of
interest, the group of potential acquirors was narrowed further and the
remaining suitors were permitted to conduct additional due diligence, meet with
the management of the Company and conduct plant tours. The Company and Merrill
Lynch then requested from the remaining interested parties the submission of
final bids and comments on the form of merger agreement proposed by the
Company.
Based upon the Committee's and Merrill Lynch's review, Parent's
proposal was the most acceptable of all the alternatives. The Committee
concluded that the cash price of $6.50 was the highest value offered, and the
Parent's financing commitment and conditions and its comments on the proposed
Merger Agreement were generally acceptable to the Company. In addition, in the
opinion of the Company's management, Parent presented the most definite
proposal and had the best financial capacity to consummate the transaction.
After exchanging information and pursuant to arms-length negotiations with
Parent, on September 26, 1995, the Company, Parent and Acquisition entered into
the Merger Agreement with respect to the acquisition of the Company by Parent.
In the course of negotiations, Parent requested certain contractual
protections in the Merger Agreement to increase the likelihood that the Merger
would be consummated. In particular, subject to the terms thereof, the Merger
Agreement prohibits the Company from soliciting certain business combination
transactions involving the Company and requires the Company to pay Parent a
break-up fee of $4.3 million and to reimburse Parent for up to $1.7 million of
expenses if the Merger Agreement is terminated in connection with specified
business combination transactions. See "Representations and Warranties;
Covenants; Conditions" and
11
<PAGE> 17
"Modification; Termination". The Board of Directors of the Company approved
these provisions in light of, among other factors, the other terms of the
Merger Agreement and the efforts which had been undertaken by the Company, with
the assistance of Merrill Lynch, to maximize shareholder value.
On Friday, September 22, 1995, the last full day of trading before the
announcement of the Merger Agreement, the high and low sales prices of the
Company's Common Stock on the American Stock Exchange were $4.625 and $4.375,
respectively. On Monday, September 25, 1995, the high and low sale prices for
the Company's Common Stock on the American Stock Exchange before trading in the
Common Stock was halted (pending the public announcement of the Merger
Agreement, which the Company made on the next day) were $5.875 and $4.50,
respectively. Shareholders should obtain current market quotations for the
Common Stock.
In connection with the execution of the Merger Agreement, Larizza
(owning 7,910,906 shares of the Company's Common Stock and having the right to
vote an additional 3,272,177 shares of the Common Stock, aggregating
approximately 50.6% of the outstanding Common Stock over which Larizza
exercises voting control) entered into the Stock Agreement. Parent required
Larizza to enter into the Stock Agreement as a condition to Parent entering
into the Merger Agreement to enhance the likelihood of the Merger being
consummated. Pursuant to the Stock Agreement, Larizza (i) granted Parent the
right to purchase, in certain circumstances, the Company's Common Stock Larizza
owns at $6.50 a share at any time until February 29, 1996 or such other date as
the parties to the Merger Agreement otherwise agree, and (ii) agreed to vote
all shares over which Larizza has voting control in favor of adoption and
approval of the Merger Agreement and against proposals by others to acquire the
Company. Larizza is required and intends to vote these shares in favor of the
approval and adoption of the Merger Agreement and such shares are sufficient to
approve and adopt the Merger Agreement without the affirmative vote of any
other shareholder. See "Required Vote" and "Interests of Certain Persons in
the Merger". Also pursuant to the Stock Agreement, Larizza agreed, among other
things, not to (a) sell, pledge or otherwise dispose of any shares of Common
Stock owned by Larizza or (b) enter into any contract, option or other
arrangement or undertaking with respect to the direct or indirect acquisition
or sale, assignment, transfer or other disposition of shares of Common Stock or
any interest therein, except pursuant to the Stock Agreement or the Merger
Agreement.
RECOMMENDATION OF THE BOARD OF DIRECTORS OF THE COMPANY
The Board of Directors of the Company has unanimously approved the
Merger Agreement and directed that it be submitted to the shareholders for
their approval and adoption. The terms of the Merger, including the conversion
rate of $6.50 in cash for each outstanding share of the Company's Common Stock,
are the result of arms-length negotiations between representatives of the
Company and of Parent.
The Board of Directors, having received the recommendation of the
Committee, recommends the approval of the Merger Agreement by the shareholders
of the Company in the belief that the Merger is in the best interests of the
Company and its shareholders. In making
12
<PAGE> 18
this determination, the Board of Directors considered, among other factors, the
following: (i) the purchase price of $6.50 a share ($143,572,695.50 in the
aggregate) reflects a premium over the market value (without giving effect to
any increase in market price attributable to the Merger) of the Company's
Common Stock, (ii) the belief of the Board of Directors that the Merger will
permit the Company's shareholders to realize more for their shares than they
could otherwise reasonably expect to receive in the near future, (iii) the
belief of the Board of Directors that the proposed Merger was the best proposal
received by the Company after its solicitation process, (iv) the belief of the
Board of Directors that no other bidder at a higher price would be forthcoming,
(v) the recommendation of the Committee and management that the Merger
Agreement be approved, (vi) the past earnings of the Company and its future
prospects, (vii) historical market prices for the Company's Common Stock,
(viii) the Company's book value per share as of June 30, 1995 of approximately
$0.91, (ix) potential differences between the book value and the fair value of
the assets of the Company, (x) the prices received by other automotive
suppliers in other business combinations, and (xi) the opinion of Merrill
Lynch, the Company's financial advisor, that the proposed cash consideration to
be received by the holders of the Shares pursuant to the Merger is fair to such
shareholders from a financial point of view. The Board did not assign relative
weights to the foregoing factors or determine that any factor was of greater
importance. Rather, the Board viewed its position and recommendations as being
based on the totality of the information presented to it and considered by it.
See "Selected Consolidated Financial Data of the Company" and "Capitalization".
For a description of Merrill Lynch's opinion and fee in connection with the
Merger, see "Opinion of Financial Advisor" and "Expenses".
Accordingly, the Board of Directors of the Company believes that under
all the circumstances, the purchase price of $6.50 a share is in the best
interests of the Company's shareholders. The Board, therefore, recommends that
the Merger Agreement be approved and adopted by the shareholders of the
Company.
See "Interests of Certain Persons in the Merger" concerning interests
of various persons in the Merger.
CERTAIN FINANCIAL PROJECTIONS OF THE COMPANY
During the course of discussions between the Parent and the Company
that led to the execution of the Merger Agreement, the Company provided the
Parent with certain non-public business and financial information about the
Company, including then current projections of future results of operations for
the fiscal years ending December 31, 1995, 1996, 1997, 1998 and 1999.
Projections of net sales (dollars in thousands) for such fiscal years were
$185,757, $217,703, $271,344, $325,633 and $349,480, respectively; operating
income (dollars in thousands) projections were $22,712, $24,169, $36,141,
$41,971 and $42,036, respectively; and projections of net income (dollars in
thousands) for such fiscal years were $13,647 (before extraordinary items),
$15,105, $23,137, $25,498 and $26,720, respectively. These projections did not
give effect to the Merger or the financing thereof or the potential combined
operations of the Parent and the Company after consummation of such
transactions.
13
<PAGE> 19
The Company does not as a matter of course make public any projections
as to future performance or earnings, and the projections set forth above are
included in this Proxy Statement only because the information was provided to
the Parent. The projections were not prepared with a view to public disclosure
or compliance with the published guidelines of the Securities and Exchange
Commission or the guidelines established by the American Institute of Certified
Public Accountants regarding projections or forecasts. The Company's internal
operating projections (upon which the projections provided to the Parent were
based in part) are, in general, prepared solely for internal use and capital
budgeting and other management decisions and are subjective in many respects
and thus susceptible to various interpretations and periodic revisions based on
actual experience and business developments. The projections were based on a
number of assumptions that are beyond the control of the Company or the Parent
or their respective financial advisors. Many of the assumptions upon which the
projections were based are dependent upon economic forecasting (both general
and specific to the Company's business), which is inherently uncertain and
subjective. Accordingly, there can be no assurance that the projected results
would be realized or that actual results would not be significantly higher or
lower than those projected. None of the Company, the Parent or their
respective financial advisors assumes any responsibility for the accuracy of
any of the projections.
OPINION OF FINANCIAL ADVISOR
On September 26, 1995, Merrill Lynch delivered its opinion to the
Committee to the effect that, as of such date, the proposed consideration to be
received by the holders of Common Stock in the Merger is fair to such
shareholders from a financial point of view. A copy of the Merrill Lynch
opinion is attached as Appendix B and incorporated in this Proxy Statement by
reference. Merrill Lynch's opinion to the Committee addresses only the
fairness from a financial point of view of the consideration to be received by
such shareholders pursuant to the Merger Agreement and does not constitute a
recommendation to any shareholder of the Company with respect to the approval
of the transactions contemplated by the Merger Agreement. SHAREHOLDERS OF THE
COMPANY ARE URGED TO READ CAREFULLY IN ITS ENTIRETY THE OPINION OF MERRILL
LYNCH, WHICH SETS FORTH THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITS OF
THE REVIEW UNDERTAKEN. THE SUMMARY OF THE MERRILL LYNCH OPINION SET FORTH IN
THIS PROXY STATEMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT
OF SUCH OPINION.
In arriving at its opinion, Merrill Lynch, among other things (i)
reviewed the Company's Annual Reports, Forms 10-K and related financial
information for the five fiscal years ended December 31, 1994 and the Company's
Forms 10-Q and the related unaudited financial information for the quarterly
periods ended March 31, and June 30, 1995; (ii) reviewed certain information,
including financial forecasts, relating to the business, earnings, cash flow,
assets and prospects of the Company, furnished to Merrill Lynch by the Company;
(iii) conducted discussions with members of senior management of the Company
concerning its business and prospects; (iv) reviewed the historical market
prices and trading activity for the Common Stock
14
<PAGE> 20
and compared them with those of certain publicly-traded companies which Merrill
Lynch deemed to be reasonably similar to the Company; (v) compared the results
of operations of the Company with those of certain companies which Merrill
Lynch deemed to be reasonably similar to the Company; (vi) compared the
proposed financial terms of the transactions contemplated by the Merger
Agreement with the financial terms of certain other mergers and acquisitions
which Merrill Lynch deemed to be relevant; (vii) reviewed the Merger Agreement;
(viii) reviewed the Stock Agreement; and (ix) reviewed such other financial
studies and analyses and performed such other investigations and took into
account such other matters as Merrill Lynch deemed appropriate, including
Merrill Lynch's assessment of general economic, market, monetary and other
conditions existing on the date the fairness opinion was delivered to the
Non-Management Committee of the Board.
In preparing its opinion, Merrill Lynch assumed and relied upon the
accuracy and completeness of all information that was supplied or otherwise
made available to it by the Company, and Merrill Lynch assumed no
responsibility for independent verification of such information or any
independent valuation or appraisal of any of the assets of the Company. With
respect to the financial forecasts furnished by the Company, Merrill Lynch
assumed that they were reasonably prepared and reflected the best currently
available estimates and judgment of the Company's management as to the expected
future financial performance of the Company.
The following is a summary of certain analyses performed by Merrill
Lynch in connection with its opinion dated September 26, 1995, which it
discussed with the Company's Board. In connection with such opinion, Merrill
Lynch performed certain procedures, including each of the financial analyses
described below, and reviewed with the Company's management the assumptions
upon which such analyses were based and other factors, including the current
financial results of and future prospects for the Company. Merrill Lynch did
not assign relative weights to any of its analyses in preparing its opinion.
Discounted Cash Flow Analysis. Merrill Lynch calculated ranges of
equity value for the Company on a stand-alone basis based upon the value,
discounted to the present, of estimates of projected financial performance over
an eleven-year period from 1995 to 2005 and the Company's fiscal year 2005
terminal value based upon a range of perpetuity growth rates. In conducting
its analysis, Merrill Lynch utilized (i) financial projections provided by the
Company's management for fiscal years 1995 through 1999, which were based upon
financial projections previously prepared by the Company and provided to the
Parent (see "The Merger -- Projections"), revised to reflect the Company's
management's most recent estimates of anticipated results, and (ii) financial
projections derived by Merrill Lynch (and adopted by the Company) for fiscal
years 2000 through 2005 based, in part, upon additional information provided by
the Company. These financial projections served as the basis for each of the
Management Base Case and the Management Conservative Case described below. The
Management Conservative Case represents a more conservative forecast than the
Management Base Case and reflects lower sales growth due to a more conservative
perspective on the timing and productions levels of certain new vehicle
platforms and lower margins. The Management Conservative Case assumed no
adjustment to the Management Base Case projections for 1995
15
<PAGE> 21
since those projections had recently been updated by Company management.
Merrill Lynch applied discount rates ranging from 11% to 13% and perpetuity
growth rates ranging from 0% to 2%, Based upon this analysis, Merrill Lynch
calculated implied per share equity values for the Company on a fully diluted
basis ranging from $6.50 to $8.50 utilizing the Management Base Case, and from
$5.00 to $7.00 utilizing the Management Conservative Case.
Leveraged Buyout Analysis. Merrill Lynch also calculated ranges of
equity value for the Company based upon the value that may have been realized
in a leveraged buyout ("LBO") of the Company. Such calculations were based on
both the Management Base Case and Management Conservative Case projections.
The calculations were based upon certain assumptions, including required (i)
returns on equity, (ii) earnings before interest, taxes, depreciation and
amortization ("EBITDA") to interest payments ratios and (iii) EBITDA less
capital expenditures to interest payments ratios. In addition, Merrill Lynch
assumed the ability to borrow between 67% and 72% of the purchase price at
interest rates between 8.5% and 13.25%. Based upon this analysis, Merrill
Lynch calculated implied per share equity values for the Company on a fully
diluted basis ranging from $5.00 to $5.50 utilizing the Management Base Case
and $4.50 to $5.00 utilizing the Management Conservative Case.
Comparable Acquisitions Analysis. Merrill Lynch also reviewed and
analyzed certain publicly available financial terms of thirty-four selected
acquisitions in the automotive OEM supplier industry since 1988 (the
"Acquisition Comparables") including Lear Seating's acquisition of Automotive
Industries, Inc. ("Lear Seating"). Merrill Lynch analyzed offer value as a
multiple of latest 12-month ("LTM") net income and last fiscal quarter ("LFQ")
equity, and transaction value as a multiple of LTM EBITDA, LTM earnings before
interest and taxes ("EBIT") and LTM sales. Merrill Lynch calculated the
aggregate imputed equity value range for the Company by applying the mean and
median multiples of LTM EBITDA, LTM EBIT and LTM sales for the Acquisition
Comparables derived from the foregoing analysis to the Company's LTM results.
Based on this analysis, Merrill Lynch calculated implied per share equity
values for the Company on a fully diluted basis ranging from $6.00 to $8.00.
In addition, Merrill Lynch calculated the Lear Seating transaction value as a
multiple of (i) 1994 sales, EBIT, EBITDA and net income, (ii) LTM sales, EBIT,
EBITDA and net income, (iii) estimated 1995 sales, EBIT, EBITDA and net income
and (iv) estimated 1996 sales, EBIT, EBITDA and net income. Merrill Lynch then
applied such derived multiples to the Company's corresponding results or
projections. Based upon this analysis, Merrill Lynch calculated implied per
share equity values for the Company on a fully diluted basis ranging from $5.50
to $6.25.
Comparable Trading Analysis. Merrill Lynch also compared certain
historical and projected operating and financial information for the Company to
the corresponding publicly available operating and financial information for
eleven publicly traded North American automotive OEM suppliers that Merrill
Lynch considered reasonably comparable to the Company for purposes of its
analysis (the "Comparable Companies"). With respect to each of the Comparable
Companies, Merrill Lynch analyzed, among other things, market value, market
capitalization and certain historical and forecasted operating and financial
data for each of the Comparable Companies, including: (i) LTM earnings per
share; (ii) 1995 and 1996 earnings per
16
<PAGE> 22
share estimates; (iii) LFQ equity; (iv) LTM EBITDA; (v) LTM EBIT; and (vi) LTM
sales. Estimated results for the Comparable Companies were based on recent
equity analyst reports and compilations of analysts' earnings estimates.
Merrill Lynch then calculated the aggregate imputed equity value ranges for the
Company by applying the maximum, mean, median and minimum adjusted multiples of
LTM earnings, 1995 and 1996 earnings estimates, LFQ equity, LTM EBITDA, LTM
EBIT and LTM sales of the Comparable Companies derived from the analysis
described above to the Company's actual and forecasted financial results.
Based upon this analysis, Merrill Lynch calculated implied per share equity
values for the Company on a fully diluted basis ranging from $5.00 to $6.00.
The summary set forth above does not purport to be a complete
description of the analyses conducted by Merrill Lynch. Merrill Lynch believes
that its analyses must be considered as a whole and that selecting portions of
its analyses and the factors considered by it, without considering all factors
and analyses, could create an incomplete view of the process underlying its
opinion. The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. In
performing its analyses, Merrill Lynch made numerous macroeconomic, operating
and financial assumptions with respect to industry performance, general
business and economic conditions and other matters, many of which are beyond
the control of the Company. Any estimates contained in the analyses performed
by Merrill Lynch are not necessarily indicative of actual values or actual
future results, which may be significantly more or less favorable than
suggested by such analyses. In addition, analyses relating to the value of a
company do not purport to be appraisals or to reflect the prices at which a
company may actually be sold. Because such estimates are inherently subject to
uncertainty, none of the Company, Merrill Lynch or any other person assumes
responsibility for their accuracy.
The Merrill Lynch opinion does not present a discussion of the
relative merits of the Merger as compared to any other business plan or
opportunity that might be presented to the Company, or the effect of any other
arrangement in which the Company might engage.
Pursuant to a letter agreement, dated as of April 18, 1995, between
the Company and Merrill Lynch, the Company paid Merrill Lynch a fee of $100,000
upon execution of such letter agreement. The Company also agreed to pay
Merrill Lynch upon closing of the Merger a fee equal to 1% of the aggregate
consideration paid to the shareholders of the Company in connection with the
Merger (less $100,000). Assuming a closing of the Merger, Merrill Lynch will
receive fees aggregating approximately $1,436,000. The Company has also agreed
to indemnify and hold harmless Merrill Lynch and its affiliates and their
respective directors, officers, employees and controlling persons against
certain liabilities, including liabilities under the federal securities laws,
arising out of or in connection with its rendering of services under such
letter. If such indemnification is not available, the Company agreed to
contribute to the losses, claims, damages and liabilities involved in the
proportion that the relevant financial benefit to the Company and its
shareholders bears to Merrill Lynch's relevant financial benefit. The Company
has also agreed to reimburse Merrill Lynch for certain out-of-pocket expenses.
17
<PAGE> 23
Merrill Lynch has, in the past, provided financial advisory and
financing services to Parent and certain affiliates of Parent on unrelated
matters and has received fees for the rendering of such services. In the
ordinary course of its business, Merrill Lynch and its affiliates may actively
trade in the securities of the Company and Parent for its own or their own
accounts and for the accounts of customers and, accordingly, may at any time
hold a long or short position in such securities.
Merrill Lynch is an internationally recognized investment banking firm
and is continually engaged in the valuation of businesses and their securities
in connection with mergers and acquisitions, leveraged buyouts, negotiated
underwritings, secondary distributions of listed and unlisted securities and
private placements.
REQUIRED VOTE
Approval and adoption of the Merger Agreement requires the affirmative
vote of a majority of the outstanding shares of the Company's Common Stock.
Abstentions and broker non-votes will be counted for purposes of determining
whether a quorum is present at the Special Meeting, but they will have the
effect of a "no" vote with respect to the approval and adoption of the Merger
Agreement, because such approval and adoption requires the affirmative vote of
a majority of the outstanding shares of Common Stock. Larizza has agreed to
vote all shares over which he has voting control in favor of adoption and
approval of the Merger Agreement and against proposals by others to acquire the
Company. Larizza is required and intends to vote these shares in favor of the
Merger. These shares are sufficient to approve and adopt the Merger Agreement
without the affirmative vote of any other shareholder. See "Interests of
Certain Persons in the Merger--Stock Agreement".
TERMS OF THE MERGER
A copy of the Merger Agreement is attached to this Proxy Statement as
Appendix A and all references in this Proxy Statement to the Merger Agreement
and the transactions to be effected pursuant to the Merger Agreement are
qualified in their entirety by reference to the actual text of the Merger
Agreement. The Merger Agreement provides for the merger of Acquisition, a
wholly-owned subsidiary of Parent, into the Company. After consummation of the
Merger, the Articles of Incorporation and the Code of Regulations of the
Company, which will be amended and restated at the effective time of the
Merger, will be the Articles of Incorporation and Code of Regulations of the
surviving corporation, and the officers and directors of Acquisition will be
the officers and directors of the surviving corporation. The Merger Agreement
further provides that, except for holders of Common Stock who duly perfect
appraisal rights (see "-- Appraisal Rights"), when the Merger becomes
effective, each outstanding share of the Company's Common Stock will be
cancelled and retired and will cease to exist, and each such share will be
converted into the right to receive $6.50 in cash, without interest. Any
shares of Common Stock held in the Company's treasury immediately before the
effective time of the Merger will be cancelled and retired and cease to exist.
In addition, each right to receive or convert into Common Stock then existing
will, by virtue of the Merger and without any action on the part of the holder
18
<PAGE> 24
thereof, no longer be outstanding and will be cancelled and retired and cease
to exist and will not be converted into the right to receive any shares of
stock or any cash or other consideration in lieu thereof.
On the effective date of the Merger, Acquisition will cease to exist
and the Company will automatically assume all liabilities and obligations of
Acquisition. As a result of the Merger, the 1,000 outstanding shares of
Acquisition common stock owned by Parent will be converted into shares of
Common Stock of the Company, and the Company will, therefore, become a
wholly-owned subsidiary of Parent. As of the effective time of the Merger, the
Company's Common Stock is expected to be delisted from the American Stock
Exchange, and shares of the Company's Common Stock will not longer be traded on
the American Stock Exchange. In addition, the registration of the Company's
Common Stock under the Securities Exchange Act of 1934 will be terminated.
EFFECTIVE DATE
If the Merger Agreement is approved by the shareholders of the Company
and if all of the conditions to its consummation are satisfied or waived, the
Merger will become effective upon the filing of a Certificates of Merger with
the Secretaries of State of Ohio and Delaware. Assuming such approval and
satisfaction or waiver of such conditions are obtained, it is expected that
these filings will be made and the Merger will become effective as soon as is
practicable after the Special Meeting; provided, that the Company may extend
the closing of the Merger to January 3, 1996, or to such other day as
Acquisition, Parent and the Company shall mutually agree upon, by written
notice to Parent and Acquisition. The Board of Directors of Acquisition,
Parent or Company may terminate the Merger Agreement if the Merger does not
occur by February 29, 1996 (unless such failure to occur is due to such party's
failure to fulfill or perform a condition). See "Modification; Termination".
EXCHANGE OF STOCK CERTIFICATES
At the effective date of the Merger, certificates representing shares
of the Company's Common Stock will be deemed to represent solely the right to
receive cash in the amount of $6.50 per share, subject to the appraisal rights
described below under the caption "Appraisal Rights". Promptly after the
effective time of the Merger, a letter will be forwarded to the Company's
shareholders of record by Chemical Bank or another bank mutually acceptable to
the Company and Parent (the "Exchange Agent"), giving them instructions
concerning the exchange of their stock certificates for payment. HOLDERS OF
THE COMPANY'S COMMON STOCK SHOULD NOT FORWARD THEIR STOCK CERTIFICATES UNTIL
RECEIPT OF THE LETTER OF INSTRUCTIONS.
Upon surrender to the Exchange Agent of certificates representing
their shares of the Company's Common Stock and of the letter described above,
properly endorsed, shareholders will be entitled to receive $6.50 in cash per
share of the Company's Common Stock.
19
<PAGE> 25
SOURCE AND AMOUNT OF FUNDS
The amount of funds to be used to acquire the shares of Common Stock
pursuant to the Merger Agreement is approximately $144 million. In addition,
approximately $30 million will be required to prepay existing indebtedness of
the Company. See "Representations and Warranties; Covenants; Conditions". The
Company has been informed by Parent that Parent expects to borrow from banks
the funds for such purposes and to pay related fees and expenses. Parent has
received a commitment letter, dated September 15, 1995, from Chemical Bank (the
"Commitment Letter") pursuant to which Chemical Bank has committed, subject to
the terms and conditions set forth in the Commitment Letter, to provide a
seven-year senior secured term loan of up to $200 million for the Merger and
related fees and expenses.
REPRESENTATIONS AND WARRANTIES; COVENANTS; CONDITIONS
The Company, Acquisition and Parent have made certain representations
and warranties to, and agreed to certain covenants with, one another in the
Merger Agreement. The representations and warranties of the Company concern,
among other things, the Company's subsidiaries, the Company's outstanding
capital stock, the absence of certain violations or breaches caused by the
Merger, consents and approvals required, compliance with laws (including
securities, tax and other laws), financial condition, results of operations and
cash flows, absence of certain changes or events between June 30, 1995 and the
effective date of the Merger, ownership of, and encumbrances on, the Company's
assets, liabilities (including tax and environmental matters), legal
proceedings, employee benefit plans, licenses, insurance coverage, customers,
broker's fees, corporate records, intellectual property, contracts, labor
matters, related party transactions, state takeover laws, fairness opinions and
confidentiality of the other parties' confidential information. The
representations and warranties of Parent and Acquisition concern, among other
things, their organization and qualification, authority relative to the Merger
Agreement, consents and approvals required, broker's fees and taking actions
with respect to the Merger. Also, the Company has agreed that the Company's
Board of Directors will recommend to the Company's shareholders the approval
and adoption of the Merger Agreement, subject to the fiduciary duties of the
Company's directors. In addition, the Company has agreed not to solicit,
directly or indirectly, any tender offer, exchange offer, merger,
consolidation, business combination, sale of substantial assets, sale of
securities, liquidation, dissolution or similar transaction involving the
Company or any of its subsidiaries or divisions ("Alternative Proposals") or,
subject to the fiduciary duties of the Company's Board of Directors, furnish
information or engage in discussions or negotiations with any person or entity
concerning an Alternative Proposal and to pay Parent up to $6,000,000 if the
Merger Agreement is terminated in connection with a bona fide offer by any
person or entity on or before the effective time of the Merger which the
Company's Board of Directors determines to be more favorable to the Company's
shareholders than the Merger or a withdrawal, modification or change of the
Board's recommendation relating to the Merger in a manner adverse to Parent or
a recommendation of the Company's Board of Directors to the shareholders of the
Company that they accept or approve an Alternative Proposal. See
"Modification; Termination". The Company has also covenanted in the Merger
Agreement not to declare or pay any dividend or other distribution with
20
<PAGE> 26
respect to the Common Stock before the Merger, without the prior written
consent of Parent. If the Merger is consummated, all representations,
warranties and covenants in the Merger Agreement automatically terminate,
except for the covenant to pay the merger price for the Company's Common Stock,
the covenant to indemnify the Company's officers and directors (see "Interests
of Certain Persons in the Merger") and specified confidentiality obligations of
the parties.
The consummation of the Merger is subject to a number of conditions,
including the following: (i) the representations and warranties of each party
in the Merger Agreement shall be true, accurate and correct as of the closing
date unless the untruth, inaccuracy or incorrectness does not (A) have a
Material Adverse Effect (as defined in the Merger Agreement and generally
including any material adverse effect on the Company's assets, business,
properties, financial condition or results of operations, except as a result of
the seasonal and cyclical nature of the Company's business, or any material
adverse change in financial, banking or capital markets) or a Parent MAE (as
defined in the Merger Agreement and generally including any material adverse
effect on the business, financial condition or results of operations of Parent
and its subsidiaries), or (B) render the Merger invalid, cause any material
provision of the Merger Agreement to be unenforceable or materially impinge on
Parent's ownership of the surviving corporation's shares after the Merger, (ii)
all material actions, undertakings, covenants or agreements required to be
performed by a party at or before the closing date shall have been so performed
or complied with, in all material respects, on or before the closing date,
including, among other things the delivery of legal opinions and specified
certificates of officers, (iii) the Company shall have obtained all necessary
approvals and consents required by the Merger Agreement, to the extent that a
failure to obtain them would have a Material Adverse Effect, (iv) the statutory
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, shall have terminated without any conditions being imposed that are
not reasonably acceptable to the parties (the parties have made the applicable
filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, but the
waiting period has not yet expired), (v) the Merger Agreement shall have been
approved by the requisite vote of holders of the Company's Common Stock, (vi)
no action or proceeding shall have been instituted, threatened or concluded by
any person before any court or agency to prevent or materially restrict the
Merger Agreement or delay the consummation of the Merger, (vii) the Company
shall have delivered the documents it is required to deliver pursuant to the
Merger Agreement and Acquisition shall have deposited the cash purchase price
with the exchange agent, (viii) there shall have been no development having a
Material Adverse Effect on the Company, and (ix) all amounts due to the Company
from any shareholder of the Company shall have been fully paid.
The Merger Agreement provides that whichever is the party whose
obligation to proceed is subject to the satisfaction of such condition, may
waive the satisfaction of any such condition in writing. This provision would
not allow the parties to waive the requirement that the Company's shareholders
approve and adopt the Merger Agreement.
21
<PAGE> 27
In addition, the Company's existing credit facility prohibits the
Company from being a party to any merger. Parent has informed the Company that
it expects to repay the Company's entire indebtedness under its existing credit
facility at the effective time of the merger.
MODIFICATION; TERMINATION
At any time before the effective time of the Merger, the Company,
Acquisition and Parent may, by written agreement, extend the time for the
performance of any obligation or other act of the parties under the Merger
Agreement, waive compliance with any agreements or conditions, or,
notwithstanding any shareholder approval, amend the Merger Agreement; provided,
that after approval and adoption of the Merger Agreement by the Company's
shareholders, no amendment may be made that decreases the consideration to
which the Company's shareholders are entitled or otherwise materially adversely
affects the Company's shareholders without further shareholder approval.
The Merger Agreement may be terminated and the Merger abandoned,
notwithstanding shareholder approval and adoption of the Merger Agreement, at
any time before the effective time of the Merger (i) by mutual action of the
Boards of Directors of the Company, Acquisition and Parent, (ii) by the Boards
of Directors of Acquisition and Parent if the conditions precedent to their
obligations set forth in the Merger Agreement shall not have been complied with
or performed in any material respect and such non-compliance or non-performance
shall not have been cured or eliminated after 30 days written notice (or by its
nature cannot be cured or eliminated) on or before February 29, 1996 (the "Drop
Dead Date"), (iii) by the Board of Directors of the Company if the conditions
precedent to its obligations set forth in the Merger Agreement shall not have
been complied with or performed in any material respect and such non-compliance
or non-performance shall not have been cured or eliminated after 30 days
written notice (or by its nature cannot be cured or eliminated) on or before
the Drop Dead Date, (iv) by the Board of Directors of the Company, Acquisition
or Parent if the effective time of the Merger does not occur by the Drop Dead
Date (except that a party whose failure to fulfill an obligation under the
Merger Agreement causes the effective time of the Merger not to occur by the
Drop Dead Date may not terminate the Merger Agreement based on this provision),
(v) by any party if any party is precluded by any action of a court or other
governmental entity from consummating the Merger or any such action of a court
or other governmental entity makes the acquisition of the Company by Parent
illegal and all appeals have been finally exhausted, (vi) by the Board of
Directors of the Company if (A) any person or entity making an unsolicited
request for information and access (a "New Bidder") makes a bona fide offer on
or before the effective time of the Merger to acquire the Company, (B) the
Company's Board of Directors determines in its good faith judgment, based as to
legal matters on a written opinion of legal counsel, and in the exercise of its
fiduciary duties that such offer is more favorable to the Company's
shareholders than the Merger and (C) the Company gives Parent at least 10 days
prior written notice of its intent to terminate the Merger Agreement and Parent
does not notify the Company that it intends to match the offer, and (vii) by
the Board of Directors of Parent or Acquisition if (A) the Company's Board of
Directors shall withdraw or change its recommendation relating to the Merger in
a manner adverse to Parent or (B) the Company's Board of Directors recommends
22
<PAGE> 28
to the Company's shareholders that they approve, or the Company agreed to
accept, an Alternative Proposal.
Except for an intentional breach of the Merger Agreement and except for
a termination described in clauses (vi) and (vii) above or with respect to the
confidentiality agreement between the parties, if the Merger Agreement is
terminated and the Merger is abandoned, the Merger Agreement will have no
effect and none of the parties shall have any liability to the other parties
with respect to the Merger Agreement or the Merger, and each party will bear
its own expenses. If the Merger Agreement is terminated and the Merger is
abandoned as described in clause (vi) or (vii) above, the Company must pay
Parent $4,300,000, plus its costs and expenses relating to the Merger Agreement
and related transactions, not to exceed an additional $1,700,000 (collectively,
the "Topping Fee"). The Company may not terminate the Merger Agreement as
described in clause (vi) above until the Topping Fee is paid. If there is an
intentional breach of the Merger Agreement and the Merger is not consummated,
the Merger Agreement does not prohibit any party from suing any other party to
recover its damages resulting from such intentional breach.
EXPENSES
Except for the Topping Fee described above and a provision awarding
attorneys' fees to the prevailing party in any action under the Merger
Agreement, each party to the Merger Agreement will pay its own costs and
expenses incident to the Merger Agreement and the related transactions. The
Company has entered into an agreement with Merrill Lynch, who has acted as
financial advisor for the Company in connection with the Merger. The Company
will pay Merrill Lynch a fee of approximately $1,436,000 plus Merrill Lynch's
reasonable out-of-pocket expenses for its services if the Merger is consummated
within a certain time. See "Opinion of Financial Advisor". Parent is
responsible for any of its own broker's fees in connection with the Merger.
APPRAISAL RIGHTS
Under Section 1701.84(B) of the Ohio General Corporation Law, in the
case of a merger into a domestic corporation, shareholders of the surviving
corporation who under Section 1701.78 are entitled to vote on the adoption of
the agreement of merger are entitled to relief as dissenting shareholders under
Section 1701.85 ("Section 1701.85"), but only as to the shares entitling them
to vote. If the Company is required to pay the fair value of its Common Stock
held by a dissenting shareholder ("Larizza Dissenting Shares") and if agreement
cannot be reached between the dissenting shareholder and the Company as to the
fair cash value of such Larizza Dissenting Shares, the dissenting shareholder
may seek to have such value determined by an Ohio court. Fair cash value will
be determined as of the day before the Special Meeting, and will be the amount
that a willing seller, under no compulsion to sell, would be willing to accept,
and that a willing buyer, under no compulsion to purchase, would be willing to
pay, excluding any appreciation or depreciation in market value resulting from
the Merger proposal and in no event more than the amount demanded by the
dissenting shareholder.
23
<PAGE> 29
Any shareholder contemplating the exercise of dissenters' rights is
urged to review carefully the provisions of Section 1701.85, a copy of which is
included as Appendix C to this Proxy Statement. Failure by a holder of the
Company's Common Stock to follow precisely all of the steps required by Section
1701.85 for perfecting dissenters' rights will result in the loss of those
rights. The following is a summary of certain of the provisions of Section
1701.85 and is qualified in its entirety by reference to, and should be read in
conjunction with, the full text of Section 1701.85, a copy of which is attached
to this Proxy Statement as Appendix C.
1. No Vote For the Approval and Adoption of the Merger Agreement at
the Special Meeting. Only holders of the Company's Common Stock of record
on the Record Date who do not vote their Common Stock in favor of approval
and adoption of the Merger Agreement may be entitled to relief as a
dissenting shareholder with regard to their Company Common Stock. A
dissenter who fails to comply with this requirement shall not acquire any
right to payment of the fair cash value of his or her shares.
2. Demand for Payment. Not later than 10 days after the date on which
the vote is taken on the approval and adoption of the Merger Agreement at
the Special Meeting, the dissenting shareholder must deliver to the Company
a written demand for payment of the fair cash value of the Company's Common
Stock as to which he or she seeks relief. The Company will not notify
dissenting shareholders of the deadline for this demand, although such
deadline will be December 11, 1995 if the Merger Agreement is approved and
adopted on December 1, 1995. The demand must state his or her address, the
number of such shares of Company Common Stock and the amount claimed by him
or her as the fair cash value of the shares. A proxy or vote against the
approval and adoption of the Agreement of Merger or an abstention or broker
non-vote will not satisfy this demand requirement.
3. Deposit of Certificates. If the Company sends to the dissenting
shareholder a request for the certificates representing the shares as to
which he or she seeks relief, within 15 days from the date of the sending
of such request, the shareholder must deliver to the Company the requested
certificates. The Company may endorse a legend on the certificates that
demand for the fair cash value of such shares has been made. The Company
must promptly return the certificates to the shareholder. If the
dissenting shareholder fails to deliver such certificates, his or her
rights as a dissenting shareholder terminate, at the Company's option,
exercised by written notice to the shareholder within 20 days after the
lapse of the 15-day period, unless a court otherwise directs.
4. Court Appraisal. Unless the Company and the dissenting shareholder
agree on the fair cash value per share of the Company's Common Stock, the
Company or the dissenting shareholder may file a complaint in the court of
common pleas of Cuyahoga County within three months after the service of
the demand by the dissenting shareholder. Other dissenting shareholders
may be joined as plaintiffs, within the period of three months, or as
defendants. The court will make a finding as to the fair cash value of a
share of the Company's Common Stock and will render judgment against the
Company
24
<PAGE> 30
for the payment of it with interest at such rate and from such date as
the court deems equitable. The costs of the proceeding will be assessed or
apportioned as the court considers equitable. The appraisal proceeding
will be stayed if another proceeding has been instituted to prevent the
consummation of the Merger.
5. Payment. The fair cash value of shares of the Company's Common
Stock must be paid within 30 days after the later of the date of final
determination of such value or the consummation of the Merger, but only
upon and simultaneously with the surrender to the Company of the
certificates representing the shares of the Company's Common Stock for
which such payment is made.
6. Termination of Dissenters Rights. The right and obligation of a
dissenting shareholder to receive fair cash value and to sell the shares of
the Company's Common Stock as to which he or she seeks relief, and the
right and obligation of the Company to purchase such shares and to pay fair
cash value of them, terminates if (i) the shareholder has not complied with
Section 1701.85, unless the Company, by its directors, waives such failure,
(ii) the Company abandons, or is finally enjoined or prevented from
carrying out, the Merger, or the shareholders rescind their adoption and
approval of the Merger Agreement, (iii) the shareholder withdraws his or
her demand, with the Company's consent by its directors, or (iv) the
Company and the dissenting shareholder shall not have come to an agreement
as to the fair cash value per share of the Company's Common Stock, and
neither the shareholder nor the Company shall have filed or joined in a
complaint as described in Item 4 above, within the period provided.
7. Suspension of Shareholder Rights. From the time of giving the
demand until the termination of the rights and obligations arising from it
or the purchase of the shares by the Company, all other rights accruing
from such shares, including voting, dividend and distribution rights, are
suspended. Cash dividends, distributions or interest paid during the
suspension which would have been received by the shareholder shall be paid
to the holder of record as a credit on the fair cash value of the shares.
If the right to receive fair cash value is terminated other than by
purchase of the shares, all rights of the holder will be restored and all
distributions which would have been made shall be made to the holder of
record at the time of termination.
The Company has agreed in the Merger Agreement to give Parent prompt
written notice of any demands for appraisal and withdrawals of demands for
appraisal. Parent will have the right to control the defense of any such
proceeding and the Company will not voluntarily make any payment with respect
to any demands for appraisal and will not, except with the prior written
consent of Parent, settle or offer to settle any such demands.
25
<PAGE> 31
FEDERAL INCOME TAX CONSEQUENCES TO THE COMPANY'S SHAREHOLDERS
The receipt of cash for shares of the Company's Common Stock pursuant
to the Merger will be a taxable transaction for federal income tax purposes to
the shareholders receiving such cash (and may be a taxable transaction for
state, local and foreign tax purposes as well). A holder of the Company's
Common Stock will realize gain or loss measured by the difference between such
shareholder's adjusted tax basis for the shares of the Company's Common Stock
owned by the shareholder at the time of the Merger and the amount of cash
received for such shares. In general, such gain or loss will be capital gain
or loss if the shares of the Company's Common Stock are capital assets in the
hands of such shareholder; any such gain or loss realized will constitute
long-term or short-term capital gain or loss depending on the shareholder's
holding period for such shares and the date such shares were acquired. Under
current federal law, a non-corporate shareholder will be taxed at a maximum
rate of 28% on long-term capital gain.
No ruling has been or will be requested from the Internal Revenue
Service as to any of the tax effects of the transactions discussed in this
Proxy Statement.
The foregoing is only a general description of certain of the federal
income tax consequences of the Merger to holders of the Company's Common Stock,
without giving consideration to the particular facts and circumstances of each
shareholder's situation, and is based on present law. Shareholders are urged
to consult their personal tax advisors with respect to the tax consequences of
the transaction, including the federal, state, local and foreign tax
consequences of the Merger.
REGULATORY MATTERS
Antitrust Matters. Title II of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended ("HSR Act") provides that certain
acquisition transactions may not be consummated until certain information has
been furnished to the Antitrust Division of the Department of Justice (the
"Antitrust Division") and the Federal Trade Commission (the "FTC") and the
waiting period under the HSR Act has expired or been terminated. The Company
and Parent have made the requisite initial filings under the HSR Act in
connection with the Merger and the Stock Agreement and the initial waiting
period with respect to such filings is presently scheduled to expire on
November 29, 1995, although a request has been made for early termination of
such waiting period.
Transactions such as the Merger may be investigated by the Antitrust
Division or the FTC. Notwithstanding the termination or expiration of the
waiting period applicable to the Merger under the HSR Act., before or after the
consummation of the Merger, the Antitrust Division or the FTC could take such
action under the antitrust laws as it deems necessary or desirable in the
public interest, including seeking to enjoin the transaction or seeking
divestiture of the shares so acquired or divestiture of substantial assets of
Parent and/or the Company. Private parties may also bring legal action under
antitrust laws under certain circumstances. It is a condition to Parent's,
Acquisition's and the Company's obligations under the Merger Agreement that the
26
<PAGE> 32
statutory waiting period under the HSR Act shall have terminated and no
condition shall have been imposed with respect thereto which is not reasonably
acceptable to Parent, in its discretion, and with respect to the Company no
condition shall have been imposed with respect thereto (except for conditions
on the Parent or the surviving corporation only) which is not reasonably
acceptable to the Company, in its discretion.
Other Governmental Approvals. Other than the issuance of certificates
of merger by the Secretaries of State of Delaware and Ohio, the Company is
aware of no federal or state regulatory requirements that must be complied with
or approvals that must be obtained before the consummation of the Merger to
permit such consummation.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
STOCK AGREEMENT
In connection with the execution of the Merger Agreement, at the
request of Parent, Parent and Larizza entered into the Stock Agreement. Mr.
Larizza is the Chairman of the Board and Chief Executive Officer of the
Company. Pursuant to the Stock Agreement, Larizza granted Parent the right to
purchase, subject to certain conditions, the 7,910,906 shares of the Company's
Common Stock Larizza owns at $6.50 per share (the same price available to all
holders of shares of the Company's Common Stock under the terms of the Merger
Agreement) at any time before February 29, 1996 or such other date as the
parties to the Merger Agreement otherwise agree.
Pursuant to the Stock Agreement, Larizza also agreed to vote all shares
over which he has voting control (approximately 11,183,083 shares of the
Company's Common Stock) in favor of adoption and approval of the Merger
Agreement and against proposals by others to acquire the Company. As of the
record date for the Special Meeting, 22,088,107 shares of the Company's Common
Stock were outstanding. Thus, the 11,183,083 shares that Larizza has agreed to
vote in favor of the adoption and approval of the Merger Agreement constitute
approximately 50.6% of the outstanding shares of the Company's Common Stock.
Larizza is required by the Stock Agreement to, and intends to, vote these
shares in favor of the Merger, and such vote alone will be sufficient to
approve and adopt the Merger Agreement without the affirmative vote of any
other shareholder. See "Required Vote".
Also, pursuant to the Stock Agreement, Mr. Larizza agreed not to
compete in the manufacture or sale of plastic components or interior trim to
the automotive original equipment manufacturing industry, as currently
conducted by the Company and its subsidiaries, for a period ending two years
after the effective time of the Merger. Mr. Larizza also agreed not to solicit
any Alternative Proposals for a business combination involving the Company.
27
<PAGE> 33
AGREEMENTS WITH MANAGEMENT
Larizza Employment Agreement. The Company and Ronald T. Larizza
entered into an Employment Agreement dated as of April 21, 1994. Pursuant to
the agreement, Mr. Larizza is employed as the President and Chief Executive
Officer of the Company, reporting to the Company's Board of Directors, for a
term of five years, unless earlier terminated as a result of Mr. Larizza's
death or disability or by either party upon thirty days notice. The term will
be automatically continuously renewed such that the remaining term of the
agreement will always be five years, unless earlier terminated as described
above.
Mr. Larizza's annual salary under the agreement is currently $525,000,
and such amount will be increased on January 1 each year during the term by the
greater of five percent and an amount determined by the Company's Compensation
Committee. Mr. Larizza will also receive a bonus each year in an amount equal
to the greater of one percent of the Company's consolidated operating income or
an amount determined by the Company's Compensation Committee. Mr. Larizza is
entitled to various fringe benefits under the agreement to the extent
applicable to similar executive officers of the Company. In addition, the
Company has also agreed to nominate, recommend and otherwise support Mr.
Larizza for election as a director of the Company at each shareholders' meeting
during the term of the agreement, and, if the agreement is terminated by the
Company or Mr. Larizza, during the five years after such termination (the
"Period").
If Mr. Larizza's employment is terminated as a result of Mr. Larizza's
death or disability, Mr. Larizza will be entitled to receive an amount equal to
the lesser of five years of his then current salary or $1 less than three times
his average annual salary and bonus over the prior five years, paid at the
times it would have otherwise been paid or in a discounted lump sum, at Mr.
Larizza's or his personal representative's discretion. If Mr. Larizza's
employment is terminated by notice from the Company or if Mr. Larizza
terminates his employment because the Company fails to comply with any term or
provision of the agreement, Mr. Larizza will be entitled to receive an amount
equal to $1 less than three times his average annual salary and bonus over the
prior five years (estimated to be approximately $1,463,000 (discounted lump
sum) if such termination were to occur as in 1996), paid at the times it would
have otherwise been paid or in a discounted lump sum, at Mr. Larizza's
discretion. If Mr. Larizza's employment is terminated by Mr. Larizza other than
as a result of the Company's failure to comply with any term or provision of
the agreement, Mr. Larizza will not be entitled to receive any amount under the
agreement as a result of such termination. Parent expects to cause the Company
to terminate Mr. Larizza's employment under this agreement in connection with
the Merger. Such termination would entitle Mr. Larizza to the benefits
described above in the event his employment is terminated by notice from the
Company.
Larizza Consulting Agreement. At the effective time of the Merger,
Parent and Mr. Larizza expect to enter into a two-year consulting agreement.
Pursuant to the consulting agreement, Parent is expected to hire Mr. Larizza as
a consultant to Parent in the areas of Parent's business in which Mr. Larizza
has expertise. Parent is expected to agree to pay
28
<PAGE> 34
Mr. Larizza $150,000 for the first year of such services and $75,000 for the
second year of such services.
Larizza Split-Dollar Agreement. The Company and Mr. Larizza entered
into an agreement dated as of April 22, 1993, pursuant to which the Company
will pay the premiums relating to specified life insurance policies. During
the three-year term of the agreement, the Company will pay each premium on the
insurance policies and an amount necessary to pay the income taxes incurred by
Mr. Larizza and the trust owning the policy as a result of the Company's
payments under the agreement. Such payments will continue after the term of
the agreement, at Mr. Larizza's request. Such payments will terminate if Mr.
Larizza's employment is terminated for cause.
During the term of the agreement, the Company has the right to recover
the premiums it has paid from the cash surrender proceeds or the death or
maturity benefit proceeds of the policies, if any. The Company's right to
recover such premiums lapses on the third anniversary date of the agreement if
Mr. Larizza provides substantial services to the Company until the earlier of
(i) the third anniversary of the agreement, (ii) Mr. Larizza's incapacity,
(iii) Mr. Larizza's involuntary termination of employment for a reason other
than cause, or (iv) termination of Mr. Larizza's employment because the Company
does not comply with any agreed upon terms or conditions of Mr. Larizza's
employment. The Company will pay to Mr. Larizza and the trust owning the policy
an amount sufficient to cover income taxes incurred as a result of such lapse
and such payment.
Notes Receivable From Messrs. Larizza and Sawyer. Mr. Larizza and Mr.
Sawyer, who are both directors, executive officers and principal shareholders
of the Company, have notes payable to the Company. These notes were originally
given by Mr. Larizza and Mr. Sawyer when they were the sole shareholders of the
Company to repay amounts advanced by the Company to Mr. Larizza, Mr. Sawyer and
Trident Coatings, Inc. ("Trident"), a corporation wholly-owned by Mr. Larizza
and Mr. Sawyer, at various times prior to the Company's 1987 initial public
offering. The Company made these advances in order to induce Trident to
continue to provide manufacturing services to a former subsidiary of the
Company. During 1990 and 1991, the Company made certain non-interest bearing
personal loans (the "Loans") to Mr. Larizza and Mr. Sawyer. During 1992, the
Company made additional advances to Mr. Larizza and Mr. Sawyer, which totalled
$70,106 and $35,158, to pay certain of their personal loan obligations.
As of December 31, 1993, the Company, Mr. Larizza and Mr. Sawyer
replaced the then existing notes with new notes (the "New Notes"). Mr.
Larizza's and Mr. Sawyer's New Notes are in the principal amounts of $1,468,827
and $667,250, respectively, (the outstanding balances of their notes as of
December 31, 1993, including the Loans and advances made to Mr. Larizza and Mr.
Sawyer plus accrued interest through December 31, 1993), bear interest at
5.97% a year, and are payable in yearly installments of $143,455.66 and
$65,168.19, respectively, from December 31, 1996 through December 31, 2005,
with approximately $1,120,472 and $509,001, respectively, in balloon payments
due December 31, 2006, assuming no prepayments. The maximum amount of
indebtedness outstanding under the New Notes through October 31, 1995
29
<PAGE> 35
was approximately $2,376,153. As of October 31, 1995, the aggregate amount
outstanding under these New Notes was approximately $1,633,910 and $742,243 for
Mr. Larizza and Mr. Sawyer, respectively. It is a condition to Parent's and
Acquisition's obligations under the Merger Agreement that both of these notes
be repaid in full before the effective time of the Merger. In addition, Mr.
Larizza agreed in the Stock Agreement to pay or prepay prior to the effective
time of the Merger all indebtedness of Mr. Larizza (or any trust or other
entity that is an affiliate of Mr. Larizza controlled by Mr. Larizza) to the
Company or any subsidiary of the Company.
Finder's Agreement with The Edgewater Group, Inc. The Company and The
Edgewater Group, Inc. ("Edgewater") entered into a Finders Agreement, dated
June 15, 1994. Pursuant to the Finders Agreement, Edgewater was engaged to act
as the Company's financial advisor in connection with the sale of its
wholly-owned subsidiary General Nuclear Corp. ("General Nuclear"). In exchange
for such services, the Company paid Edgewater $110,000 as a non-refundable
finder's fee and has agreed to pay Edgewater an additional $110,000 on June 30,
1997 as a result of the sale of General Nuclear on June 1, 1995. The Company
also paid Edgewater's reasonable out of pocket expenses incurred in connection
with its engagement under the Finders Agreement. Mr. Sawyer is a director and
the President and sole shareholder of Edgewater. It is not a condition to
Parent's and Acquisition's obligations under the Merger Agreement that this
finder's agreement be terminated.
Consulting Agreement with The Edgewater Group, Inc. The Company and
Edgewater have also entered into a Consulting Agreement, dated June 15, 1994.
Pursuant to the Consulting Agreement, the Company hired Edgewater as a
consultant to the Company in the areas of the Company's business in which
Edgewater has expertise. The term of the agreement began January 1, 1994 and
ends December 31, 1996. The Company has agreed to pay Edgewater $15,000 a
month for its consulting services and has agreed to reimburse Edgewater for its
reasonable out-of-pocket expenses incurred in connection with the Company's
business. Mr. Sawyer is a director and the President and sole shareholder of
Edgewater. It is not a condition to Parent's and Acquisition's obligations
under the Merger Agreement that this consulting agreement be terminated.
Consulting Arrangement with Mr. Sawyer. The Company has an oral
consulting arrangement with Edward L. Sawyer, Jr., an officer, director and
principal shareholder of the Company. Pursuant to the arrangement, Mr. Sawyer
provides consulting services to the Company in the areas of the Company's
business in which he has expertise. The current arrangement has been renewed
through December 31, 1995. The Company has agreed to pay Mr. Sawyer $50,000 a
year for his consulting services. The Company paid Mr. Sawyer $50,000 for such
services in 1994. Parent expects to terminate this arrangement in connection
with the Merger.
Wells and Seikel Split-Dollar Agreements. The Company has also entered
into Split-Dollar Agreements, dated as of April 22, 1993 and effective as of
January 29, 1993, with Messrs. Wells and Seikel, the Company's Chief Operating
Officer and Chief Financial Officer, respectively, pursuant to which the
Company will pay the premiums relating to specified life insurance policies.
During the term of the agreements, the Company will pay each premium on
30
<PAGE> 36
the insurance policies and an amount necessary to pay the taxes incurred by
Messrs. Wells and Seikel, respectively, as a result of the Company's payments
under the agreement. The Company is entitled to receive $300,000 and $250,000
from the death proceeds of the policies if Mr. Wells or Mr. Seikel,
respectively, dies while the agreement is in force. In addition, if the
policies are surrendered during the term of the agreements, the Company would
receive (i) 100% of the policy's surrender value, if the policy is surrendered
within two years of the effective date of the agreement, (ii) 50% of the
policy's surrender value, if the policy is surrendered before three years after
the effective date of the agreement, (iii) 25% of the policy's surrender value,
if the policy is surrendered before four years after the effective date of the
agreement, and (iv) none of the policy's surrender value, if the policy is
surrendered at least four years after the effective date of the agreement.
Either agreement will terminate on the earliest of (i) termination of
Mr. Wells' or Mr. Seikel's respective employment for cause, (ii) the date Mr.
Wells' or Mr. Seikel's respective employment is voluntarily terminated by the
employee, except after Mr. Larizza ceases to have a majority of the voting
power in the election of the Company's directors or as a result of the
employee's disability, (iii) the date of Mr. Wells' or Mr. Seikel's respective
death, and (iv) eleven years after the effective date of the agreement. After
the Merger, voluntary termination of employment by Mr. Wells or Mr. Seikel will
not terminate these agreements.
Severance Arrangements. Effective June 15, 1995, the Company entered
into Letter Agreements with Edward W. Wells, the Company's President and Chief
Operating Officer, and Terence C. Seikel, the Company's Vice President,
Finance. The Letter Agreements provide these employees with severance benefits
if (i) before June 15, 1997 Ronald T. Larizza sells Common Stock of the Company
resulting in his loss of management control of the Company ("Stock Sale"), and
(ii) the employee's employment terminates during the period beginning 90 days
before and ending two years after a Stock Sale. The severance benefits are a
continuation of salary, bonus and medical, dental, life, disability and
prescription drug coverage from the date of the Stock Sale (or the date of
termination , if later) until the earlier of (i) two years (one year if
termination occurs more than one year after the Stock Sale) after termination,
and (ii) the date such person works for a competitor. During this period (or
for one year after termination, if shorter), the employee will also retain the
automobile provided to the employee during his employment. Either Parent's
exercise of its option to purchase Larizza's Common Stock pursuant to the Stock
Agreement or the consummation of the Merger appear to constitute Stock Sales
pursuant to these agreements.
OTHER INTERESTS
Pursuant to the terms of the Merger Agreement, the surviving
corporation and Parent, jointly and severally, will indemnify and hold
harmless, each present and former employee, agent, director or officer of the
Company or its subsidiaries and Larizza from and against any and all claims
arising out of, or in connection with, activities in such capacity (including
as a party to the Stock Agreement), or on behalf of, or at the request of, the
Company (including the Merger, the transactions related to the Merger or the
Stock Agreement) to the fullest extent permitted by
31
<PAGE> 37
applicable law. In addition, the indemnification and expense advancement
provisions in the applicable Articles of Incorporation, Code of Regulations and
Bylaws will be continued for a period of at least six years.
INFORMATION ABOUT PARENT AND ACQUISITION
Parent is a wholly-owned subsidiary of Collins & Aikman Corporation
("C&A Corp."), a leader in each of its three business segments. In Automotive
Products, it is the largest supplier of its five basic interior trim products
to the North American auto industry. In Interior Furnishings, it is the
largest manufacturer of residential upholstery fabrics and six-foot commercial
carpet in the United States. In Wallcoverings, it is the largest United States
producer of residential wallpaper.
Parent was incorporated in Delaware on July 8, 1927. Parent's
principal executive offices are located at 701 McCullough Drive, Charlotte,
North Carolina 28262, and its telephone number is (704) 547-8500.
C&A Corp. is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy and information statements
and other information filed by C&A Corp. can be inspected and copied at the
public reference facilities maintained by the Commission in Washington, D.C. at
450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the
Commission's Regional Offices in New York (75 Park Place, Room 1228, New York,
New York 10007) and Chicago (Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60621-2511). Copies of such material can
be obtained at prescribed rates from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. C&A Corp.'s
common stock is listed on the New York Stock Exchange. Reports, proxy and
information statements and other information concerning C&A Corp. can be
inspected at such exchange.
Acquisition is a Delaware corporation which is 100% owned by Parent.
Acquisition was recently formed in preparation for the Merger and has not
conducted any business.
32
<PAGE> 38
CAPITALIZATION
The following table sets forth unaudited information relating to the
capitalization of the Company as of September 30, 1995. This table should be
read in conjunction with the Company's Consolidated Financial Statements and
Notes to Consolidated Financial Statements included elsewhere in this Proxy
Statement.
<TABLE>
<CAPTION>
September 30, 1995
------------------
(In thousands, except per share data)
<S> <C>
Long-Term Liabilities:
Long-term debt, excluding current installments . . . . . . . . . . . . . . . . . $ 34,150
Capitalized lease obligation, excluding current installments . . . . . . . . . . 335
Deferred Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 726
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,938
--------
Total Long-Term Liabilities . . . . . . . . . . . . . . . . . . . . . . . . $ 37,149
========
Shareholders' equity:
Preferred Stock, no par value; authorized 10,000,000 shares,
no shares issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $-0-
Common stock, no par value; authorized 50,000,000 shares,
issued and outstanding 22,088,107 shares . . . . . . . . . . . . . . . . . . . 76,780
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,551
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (56,950)
Foreign currency translation adjustment . . . . . . . . . . . . . . . . . . . . . (3,597)
--------
Total shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . $ 21,784
========
Total capitalization . . . . . . . . . . . . . . . . . . . . . . . . . $ 58,933
========
</TABLE>
The book value per share of the Company's Common Stock as of September
30, 1995 was $0.99.
33
<PAGE> 39
SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY
The following selected consolidated financial data relating to the
Company for the five years ended December 31, 1994, have been derived from the
audited Consolidated Financial Statements of the Company. The following
selected financial data for the nine months ended September 30, 1995 and 1994,
have been derived from the Company's unaudited condensed financial statements,
and in the opinion of management includes all adjustments (consisting only or
normal recurring accruals) necessary for a fair presentation of such
information for such periods on a consistent basis. Such selected financial
data should be read in conjunction with the Consolidated Financial Statements
and unaudited Consolidated Financial Statements and the Notes relating to such
statements included elsewhere, or incorporated by reference, in this Proxy
Statement.
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Years Ended December 31,
------------- -------------------------------------------------
1995 1994 1994(1) 1993 1992 1991(2) 1990(3)
---- ---- ------- ---- ---- ------ ------
(unaudited)
(Amounts in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Net sales $149,131 121,513 169,336 148,257 111,307 85,951 96,739
Cost of goods sold 123,111 95,356 133,870 115,660 92,036 73,955 86,254
------- ------- ------- ------- ------- ------ ------
Gross profit 26,020 26,157 35,466 32,597 19,271 11,996 10,485
Selling, general and administrative
expenses 11,088 10,067 13,434 11,500 10,935 8,261 10,506
Nonrecurring operating expenses - - - - - 4,033 12,522
------- ------- ------- ------- ------- ------ ------
Operating income (loss) 14,932 16,090 22,032 21,097 8,336 (298) (12,543)
Other expense, net (2,275) (2,023) (2,948) (6,640) (6,855) (11,023) (12,682)
------- ------- ------- ------- ------- ------ ------
Income (loss) from continuing operations,
before income taxes and extraordinary gain 12,657 14,067 19,084 14,457 1,481 (11,321) (25,225)
Income tax provision 2,925 3,550 5,100 2,070 - 1,594 50
------ ------- ------- ------- ------- ------ ------
Income (loss) from continuing operations,
before extraordinary gain 9,732 10,517 13,984 12,387 1,481 (12,915) (25,275)
Discontinued operations 802 - - - - (3,900) (19,455)
----- ------- ------- ------- ------- ------ ------
</TABLE>
34
<PAGE> 40
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Years Ended December 31,
------------- ------------------------------------------------------
1995 1994 1994(1) 1993 1992 1991(2) 1990(3)
---- ---- ------- ---- ---- ------- -------
(unaudited)
(Amounts in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Income (loss) before extraordinary gain 10,534 10,517 13,984 12,387 1,481 (16,815) (44,730)
Extraordinary gain on extinguishment
of debt - - - - 711 - -
Extraordinary gain on refinancing of debt - 2,405 2,405 - - - -
------- ------ ------ ------ ------ ------ ------
Net income (loss) $10,534 12,922 16,389 12,387 2,192 (16,815) (44,730)
======= ====== ====== ====== ===== ======= ======
SHARE AND PER SHARE DATA:
Income (loss) per common share:
Primary:
Income (loss) from continuing
operations before extraordinary gain $0.44 0.53 0.68 0.90 0.11 (0.94) (1.83)
===== ==== ==== ==== ==== ==== ====
Net income (loss) 0.48 0.65 0.80 0.90 0.16 (1.22) (3.24)
===== ==== ==== ==== ==== ==== ====
Fully diluted:
Income from continuing operations
before extraordinary gain 0.51 0.66 0.72
==== ==== ====
Net income 0.62 0.77 0.72
==== ==== ====
Weighted average number of shares
of common stock outstanding
Primary 22,088 19,995 20,522 13,805 13,805 13,805 13,805
Fully diluted 22,088 22,088 22,088
</TABLE>
35
<PAGE> 41
<TABLE>
<CAPTION>
As of September 30, December 31,
------------------- ----------------------------------------------------
1995 1994 1994(1) 1993 1992 1991(2) 1990(3)
---- ---- ------- ---- ---- ------ ------
(unaudited)
(Amounts in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficiency) $15,353 5,741 3,648 4,279 5,964 1,943 (95,884)
Total assets 92,898 72,558 83,454 63,854 62,657 60,150 82,149
Long-term obligations, excluding current
installments 37,149 30,589 32,756 93,426 106,987 102,464 2,432
Shareholders' equity (deficit) 21,784 7,403 10,181 (64,073) (75,182) (74,616) (57,835)
</TABLE>
__________________________________
(1) On March 11, 1994, the Company's lenders converted $47,000,000 of
principal and $9,254,000 of accrued interest into 8,283,040 shares of
common stock (the "Conversion"). The Conversion reduced long-term
debt, accrued interest and deferred gain on debt restructure on the
Company's balance sheet as of the date of the Conversion by
$47,000,000, $9,254,000 and $3,324,000, respectively, and increased
shareholders' equity by $59,578,000. On October 20, 1994, the Company
acquired Hughes Plastics, Inc.
(2) The Company sold the majority of its Defense Group and its Automotive
Electrical Division in 1991. These businesses had been accounted for
as discontinued operations
(3) The Company sold its Plating operations and closed its automotive
harness assembly operations and its Ann Arbor plant in 1990. The
plating and automotive harness assembly operations accounted for $9.9
million of the Company's sales in 1990.
(4) The book value per share of the Company's common stock as of September
30, 1995 was $0.99.
The Company has not declared or paid any cash dividends between
January 1, 1990 and the date of this Proxy Statement.
36
<PAGE> 42
INFORMATION ABOUT THE COMPANY
The Company designs and manufactures high-quality, plastic-based
components and systems used in the interiors of automobiles, light trucks,
sport utility vehicles and mini-vans. The Company's product line ranges from
injection molded plastic components, such as sidewall trim, air outlet
assemblies and cupholders, to highly complex systems, such as complete
instrument panels and door panels. The Company has eight automotive parts
manufacturing facilities, of which five are in Michigan and three are in
Ontario, Canada.
Larizza Industries, Inc. was incorporated under the laws of the State
of Ohio in November 1982. Unless the context otherwise requires, all reference
to the Company in this Proxy Statement refer to Larizza Industries, Inc. and
its consolidated subsidiaries. The Company's executive offices are located at
201 West Big Beaver Road, Columbia Center, Suite 1040, Troy, Michigan 48084,
and its telephone number is (313) 689-5800.
The Company is subject to the information requirements of the Exchange
Act and, in accordance therewith, files reports and other information with the
Commission. Such reports, proxy and information statements and other
information filed by the Company can be inspected and copied at the public
reference facilities maintained by the Commission in Washington, D.C. at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the Commission's
Regional Offices in New York (75 Park Place, Room 1228, New York, New York
10007) and Chicago (Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60621-2511). Copies of such material can be obtained
at prescribed rates from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549. The Company's Common Stock is
listed on the American Stock Exchange. Reports, proxy and information
statements and other information concerning the Company can be inspected at
such exchange.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of September 26,
1995, regarding the beneficial ownership of the Company's Common Stock by each
director of the Company, each person known to the Company to own beneficially
more than 5% of the Company's outstanding Common Stock, each executive officer
of the Company named in the Summary Compensation Table set forth in the
Company's Proxy Statement in connection with the 1995 Annual Meeting of
Shareholders, held on May 30, 1995, and all directors and executive officers as
a group:
<TABLE>
<CAPTION>
Percent of
Name of Number of Shares Outstanding
Beneficial Owner Beneficially Owned Common Stock
----------------- ------------------ ------------
<S> <C> <C>
Ronald T. Larizza (1) . . . . . . . . . . . . . . . . . . . . . . 11,183,083 (2)(3) 50.6%
</TABLE>
37
<PAGE> 43
<TABLE>
<CAPTION>
Percent of
Name of Number of Shares Outstanding
Beneficial Owner Beneficially Owned Common Stock
----------------- ------------------ ------------
<S> <C> <C> <C>
Internationale Nederlanden (U.S.)
Capital Corporation (4) . . . . . . . . . . . . . . . . . . . . 5,176,900 (4) 23.4%
Oppenheimer & Co., Inc. (5) . . . . . . . . . . . . . . . . . . . 47,242 (5) *
Oppenheimer Horizon Management, L.P. (6) . . . . . . . . . . . . 1,429,752 (6) 6.5%
Oppenheimer Institutional Horizon
Management, L.P. (7) . . . . . . . . . . . . . . . . . . . . . 1,386,468 (7) 6.3%
Oppenheimer International Horizon
Fund, Ltd. (8) . . . . . . . . . . . . . . . . . . . . . . . . 139,981 (8) *
The & Trust (9) . . . . . . . . . . . . . . . . . . . . . . . . . 102,697 (9) *
Edward L. Sawyer, Jr. (10) . . . . . . . . . . . . . . . . . . . 2,022,838 (3)(11) 9.2%
Edward W. Wells . . . . . . . . . . . . . . . . . . . . . . . . . 272,750 (3)(12) 1.2%
Terence C. Seikel . . . . . . . . . . . . . . . . . . . . . . . . 205,000 (3)(13) *
Steven J. Lebowski . . . . . . . . . . . . . . . . . . . . . . . 82,825 *
Frank E. Blazey, Jr. . . . . . . . . . . . . . . . . . . . . . . 2,800 (14) *
Arthur L. Wiseley . . . . . . . . . . . . . . . . . . . . . . . . 0 *
All Directors and Executive Officers
as a Group (7 Persons) . . . . . . . . . . . . . . . . . . . . 11,471,958 51.9%
</TABLE>
- -------------------------
* Indicates an amount less than 1%.
(1) Business address is Larizza Industries, Inc., 201 West Big Beaver
Road, Suite 1040, Troy, Michigan 48084.
(2) Includes 7,743,406 shares owned by a trust; Mr. Larizza has the power
to vote these shares and to dispose of them.
(3) Includes 3,272,177 shares held by a voting trust (the "Voting Trust")
under the Amended and Restated Voting Trust Agreement, dated as of May
4, 1994, among Mr. Larizza, Mr. Sawyer, The Alexander Sawyer Trust
under an Irrevocable Trust Agreement dated July 21, 1987 (the
"Alexander Sawyer Trust"), Mr. Sawyer's ex-wife, Mr. Wells, Mr.
Seikel, various other employees of the Company and the Company. Mr.
Sawyer, the Alexander Sawyer Trust, Mr. Sawyer's ex-wife, Mr. Wells,
Mr. Seikel and various other employees of the Company contributed
1,819,838, 200,000, 619,839, 172,500, 105,000 and 355,000 shares,
respectively, to the Voting Trust. Mr. Larizza has the sole right to
vote the shares held in the Voting Trust and he must consent to any
sale, transfer, pledge or other disposition of such shares, subject to
the Merger Agreement and the Stock Agreement. See "The
Merger--Background of the Merger" and "Interests of Certain
38
<PAGE> 44
Persons in the Merger--Stock Agreement". The Voting Trust expires
December 31, 1998, and its business address is Larizza Industries,
Inc., 201 West Big Beaver Road, Suite 1040, Troy, Michigan 48084.
(4) Includes 5,176,900 shares that Internationale Nederlanden (U.S.)
Capital Corporation ("ING Capital") acquired as a result of the
conversion of term loans and the related accrued interest into shares
on March 11, 1994 (the "Conversion"). ING Capital is a wholly-owned
subsidiary of Internationale Nederlanden (U.S.) Capital Holdings
Corporation ("U.S. Holdings"), which is a wholly-owned subsidiary of
Internationale Nederlanden Bank N.V. ("INB"), which is a wholly-owned
subsidiary of Internationale Nederlanden Groep N.V. ("Groep"); all of
the foregoing may be deemed the beneficial owner of the shares owned
by ING Capital. ING Capital's and U.S. Holdings' business address is
135 East 57th Street, New York, New York 10022, INB's business address
is De Amsterdamse Poort, 1102 MG, Amsterdam Zuid-Oost, The
Netherlands, and Groep's business address is Princes Irenstraat 5 g
1077 Wv Amsterdam, The Netherlands. The foregoing information is
based on a Schedule 13D Report, dated January 27, 1994, filed with the
Securities and Exchange Commission by ING Capital.
(5) Includes 47,242 shares that Oppenheimer & Co., Inc. ("Oppenheimer")
acquired as a result of the Conversion. Oppenheimer, a Delaware
corporation, is a wholly-owned subsidiary of Oppenheimer Holdings,
Inc. ("Holdings"), which is an indirect wholly-owned subsidiary of
Oppenheimer Group, Inc. ("Group"), which is an 83.39%-owned subsidiary
of Oppenheimer & Co., L.P. ("Oppenheimer L.P."), the partnership
interests of which are owned by employees of Oppenheimer and its
affiliates, 16.61% of Group's capital stock is owned by Oppenheimer LP
warrant holders. All of the foregoing may be deemed the beneficial
owner of the shares owned by Oppenheimer. Oppenheimer disclaims
beneficial ownership of shares held by its affiliates. Oppenheimer's,
Holdings', Group's, Oppenheimer L.P.'s and Oppenheimer's officers' and
employees' business address is Oppenheimer Tower, World Financial
Center, New York, New York 10281. The foregoing information is based
on a Schedule 13G Report, dated February 13, 1995, filed with the
Securities and Exchange Commission by Group, Oppenheimer and Horizon.
(6) Includes 1,429,752 shares that Oppenheimer Horizon Management, L.P., a
Delaware limited partnership ("Horizon"), acquired as a result of the
Conversion. Horizon is a registered investment adviser whose general
partner is Holdings. Horizon's business address is c/o Oppenheimer &
Co., Inc., Oppenheimer Tower, World Financial Center, New York, New
York 10281. Horizon disclaims beneficial ownership of shares held by
its affiliates. The foregoing is based on a Schedule 13G Report,
dated February 13, 1995, filed with the Securities and Exchange
Commission by Group, Oppenheimer and Horizon.
(7) Includes 1,386,468 shares that Oppenheimer Institutional Horizon
Management, L.P., a Delaware limited partnership ("Institutional"),
acquired as a result of the Conversion. Institutional is a registered
investment adviser whose general partner is Holdings. Institutional's
business address is c/o Oppenheimer & Co., Inc., Oppenheimer Tower,
39
<PAGE> 45
World Financial Center, New York, New York 10281. Institutional
disclaims beneficial ownership of shares held by its affiliates. The
foregoing is based on a Schedule 13G Report, dated February 13, 1995,
filed with the Securities and Exchange Commission by Group,
Oppenheimer and Horizon.
(8) Includes 139,981 shares that Oppenheimer International Horizon Fund,
Ltd., a British Virgin Islands corporation ("International"), acquired
as a result of the Conversion. International's investment advisor is
an affiliate of Oppenheimer. International's business address is c/o
CITCO, CITCO Building, Wickhams Cay, P.O. Box 662, Road Town, Tortola,
B.V.I. International disclaims beneficial ownership of shares held by
its affiliates. The foregoing is based on a Schedule 13G Report,
dated February 13, 1995, filed with the Securities and Exchange
Commission by Group, Oppenheimer and Horizon.
(9) Includes 102,697 shares that The & Trust, a charitable remainder trust
(the "Trust"), acquired as a result of the Conversion. The Trust
maintains a managed account at Oppenheimer, for which account
Oppenheimer is the investment advisor. The Trust's account address is
c/o Oppenheimer & Co., Inc., Oppenheimer Tower, One World Financial
Center, New York, New York 10281. The Trust disclaims beneficial
ownership of shares held by Oppenheimer and its affiliates. The
foregoing is based on a Schedule 13G Report, dated February 13, 1995,
filed with the Securities and Exchange Commission by Group,
Oppenheimer and Horizon.
(10) Business address is 1375 East 9th Street, Suite 2000, Cleveland, Ohio
44114.
(11) Includes 1,822,838 shares owned by Mr. Sawyer directly and 200,000
shares owned by the Alexander Sawyer Trust. Mr. Sawyer has the power
to approve or disapprove of any proposed transaction by the trustee of
the Alexander Sawyer Trust. 2,019,838 of these shares have been
transferred to the Voting Trust described in note 3.
(12) Includes 272,500 shares owned by Mr. Wells and his spouse as joint
tenants for which voting and investment powers are shared, and 250
shares owned by Mr. Wells's wife's individual retirement account.
172,500 of these shares have been transferred to the Voting Trust
described in note 3.
(13) Includes 67,540 shares owned by a trust, and 137,460 shares held in an
individual retirement account; Mr. Seikel has the power to vote these
shares and to dispose of them. 105,000 of these shares have been
transferred to the Voting Trust described in note 3.
(14) Includes 500 shares owned by Mr. Blazey and his spouse as joint
tenants for which voting and investment powers are shared, and 2,000
shares owned by Mr. Blazey's wife.
40
<PAGE> 46
INDEPENDENT PUBLIC ACCOUNTANTS
KPMG Peat Marwick LLP ("Peat Marwick") were the Company's independent
public accountants for the fiscal year ended December 31, 1994. The Company
has not yet completed its review of its accountants, and consequently no
selection of independent public accountants for the fiscal year ended December
31, 1995 has yet been made. A representative of Peat Marwick is expected to be
present at the Special Meeting and will have the opportunity to make a
statement if he desires to do so. The representative will also be available to
respond to appropriate questions from shareholders.
SHAREHOLDER PROPOSAL DEADLINE
A shareholder proposal intended to be presented at the 1996 Annual
Meeting, if such a meeting is held, must be received by the Company on or
before December 19, 1995 to be considered for inclusion in the Company's proxy
statement and form of proxy relating to that meeting, if any. Such proposal
should be addressed to Secretary, Larizza Industries, Inc.
OTHER BUSINESS
The Company is not aware of any matters to be brought before the
Special Meeting except those set forth in the attached Notice of Special
Meeting of Shareholders. However, if any other matters are properly presented
at the Special Meeting for action to be taken thereon, it is the intention of
the proxy holders named in the enclosed form of proxy and acting thereunder to
vote on such matters in their discretion in accordance with their best
judgment.
Shareholders are urged to specify their choice on the matters to be
voted on at the Special Meeting and to date, sign and return the enclosed proxy
in the envelope provided. A prompt response is helpful and your cooperation
will be appreciated.
ADDITIONAL INFORMATION
The Company is subject to the informational requirements of the
Exchange Act, and, in accordance therewith, files reports and other information
with the Commission. Such reports, proxy and information statements and other
information filed by the Company can be inspected and copied at the public
reference facilities maintained by the Commission in Washington, D.C. at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the Commission's
Regional Offices in New York (75 Park Place, Room 1228, New York, New York
10007) and Chicago (Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60621-2511). Copies of such material can be obtained
at prescribed rates from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549. The Company's Common Stock is
listed on the American Stock Exchange. Reports, proxy and information
statements and other information concerning the Company can be inspected at
such exchange. After the Merger, registration of the Company's Common Stock
under the Exchange
41
<PAGE> 47
Act and the listing of the Company's Common Stock on the American Stock
Exchange are expected to be terminated.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents are hereby specifically incorporated by
reference into this Proxy Statement: (i) the Company's Annual Report on Form
10-K for the year ended December 31, 1994, filed with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934, (ii) the
Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1995,
June 30, 1995 and September 30, 1995, filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934, and (iii) all other
reports filed pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 since December 31, 1994.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Proxy Statement is delivered, upon written or
oral request of such person, by first class mail or other equally prompt means,
within one business day of receipt of such request, a copy of any and all of
the information that has been incorporated by reference in this Proxy Statement
(not including exhibits to the information that is incorporated by reference
unless such exhibits are specifically incorporated by reference into the
information that this Proxy Statement incorporates). Requests for such copies
should be addressed to Larizza Industries, Inc., 201 West Big Beaver Road,
Suite 1040, Troy, Michigan 48084, Attention: Chief Financial Officer, (810)
689-5800.
By order of the Board of Directors
RONALD T. LARIZZA
Chairman of the Board and
Chief Executive Officer
Troy, Michigan
November 1, 1995
42
<PAGE> 48
APPENDIX A
AGREEMENT AND PLAN OF MERGER
AMONG
LARIZZA INDUSTRIES, INC.,
AN OHIO CORPORATION,
LRI ACQUISITION CORP.,
A DELAWARE CORPORATION,
AND
COLLINS & AIKMAN PRODUCTS CO.,
A DELAWARE CORPORATION,
DATED SEPTEMBER 26, 1995
<PAGE> 49
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Number Description Page Number
- -------------- ----------- -----------
<S> <C> <C>
1 THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Effect on Entities, Articles, Regulations, Officers and Directors . . . . . . . . . . . . . . . 2
1.2 Effect on Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Effects on Property, Rights and Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.4 Surrender of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.4.1 Larizza Common Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.4.2 No Registration of Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.4.3 Full Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.4.4 Termination of the Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.4.5 Lost, Stolen, Mutilated or Destroyed Certificates . . . . . . . . . . . . . . . . . . . 5
1.4.6 Options, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.4.7 Appraisal Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.5 Shareholders' Meeting of Larizza . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1 Representation and Warranties of Larizza . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1.4 Authority Relative to This Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1.5 Consents and Approvals; No Violation . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1.6 SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.1.7 Proxy Statement in Connection with the Merger . . . . . . . . . . . . . . . . . . . . . 8
2.1.8 Larizza Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.1.9 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.1.10 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.1.11 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.1.12 Tax Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.1.13 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.1.14 Pension and Benefit Plans and Compliance with ERISA . . . . . . . . . . . . . . . . . . 11
2.1.15 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.1.16 Licenses and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.1.17 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.1.18 Conduct of Business Since June 30, 1995 . . . . . . . . . . . . . . . . . . . . . . . . 13
2.1.19 Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.1.20 Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.1.21 Books and Records of the Companies . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.1.22 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.1.23 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
-i-
<PAGE> 50
<TABLE>
<CAPTION>
Section Number Description Page Number
- -------------- ----------- -----------
<S> <C> <C>
2.1.24 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.1.25 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.1.26 Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.1.27 State Takeover Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.1.28 Opinion of Financial Advisor, Et . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.2 Representations and Warranties of Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.2.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.2.2 Authority Relative to This Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.2.3 Consents and Approvals; No Violation . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.2.4 SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.2.5 Proxy Statement in Connection with the Merger . . . . . . . . . . . . . . . . . . . . . 19
2.2.6 Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.2.7 Parent Merger Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3 COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.1 Access for Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.2 Operation of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.3 Approval of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.4 Exchange Agent Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.5 Updated Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.6 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.7 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.8 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.9 Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.10 Resignations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.11 Acquisition Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.12 Notice of Actions and Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.13 Notification of Certain Other Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4 CONDITIONS TO CLOSING AND CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.1 Conditions to Acquisition's and Parent's Obligations . . . . . . . . . . . . . . . . . . . . . . 26
4.1.1 Accuracy of Larizza's Representations and Warranties . . . . . . . . . . . . . . . . . 26
4.1.2 Compliance with Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.1.3 Certificate of Larizza Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.1.4 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.1.5 Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.1.6 No Material Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.1.7 Delivery of Other Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.1.8 No Material Change in Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
-ii-
<PAGE> 51
<TABLE>
<CAPTION>
Section Number Description Page Number
- -------------- ----------- -----------
<S> <C> <C>
4.1.9 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.1.10 No Material Change in the Business of the Companies . . . . . . . . . . . . . . . . . . 28
4.1.11 Stockholder Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.2 Conditions to Larizza's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.2.1 Accuracy of Acquisition's and Parent's Representations and Warranties . . . . . . . . . 28
4.2.2 Compliance with Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.2.3 Certificate of Acquisition's Officers . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.2.4 HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.2.5 Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.2.6 No Material Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.2.7 Delivery of the Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.2.8 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.3 The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5 TERMINATION AND ABANDONMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.1 Termination and Abandonment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.3 Topping Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.1 Non-Survival of Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . . 32
6.2 Continuation of Directors' and Officers' Indemnification . . . . . . . . . . . . . . . . . . . . 32
6.3 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.4 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.5 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.6 Binding Effect; Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.7 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.9 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.10 Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.11 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.12 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.13 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.14 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7 GLOSSARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
</TABLE>
-iii-
<PAGE> 52
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is made as of
September 26, 1995 by and among LARIZZA INDUSTRIES, INC., an Ohio corporation
("Larizza"), LRI ACQUISITION CORP., a Delaware corporation ("Acquisition"), and
COLLINS & AIKMAN PRODUCTS CO., a Delaware corporation and the owner of all of
the outstanding capital stock of Acquisition ("Parent").
RECITALS
A. Larizza and its wholly-owned subsidiaries, Manchester
Plastics, Ltd, an Ontario corporation ("Manchester"), and Hughes Plastics,
Inc., a Michigan corporation ("Hughes", and together with Manchester, the
"Subsidiaries"), are engaged in the business of designing and manufacturing
high-quality, plastic-based components and systems used in the interiors of
automobiles, light trucks, sport utility vehicles and mini-vans (the
"Business").
B. The authorized capital stock of Larizza consists of 50,000,000
shares of Common Stock, no par value (the "Larizza Common Shares"), and
10,000,000 shares of Preferred Stock, no par value (the "Larizza Preferred
Shares"), of which 22,088,107 Larizza Common Shares and no Larizza Preferred
Shares are issued and outstanding. The Larizza Common Shares are entitled to
one vote per share. The number of Larizza Common Shares outstanding is subject
to change before the "Effective Time of the Merger" (as defined in Section 4.3)
if (i) options are granted under the Larizza Stock Incentive Plan for Key
Employees and such options are exercised (provided, however, that nothing in
this Recital B will affect the parties' relative rights and obligations under
Section 3.2), or (ii) the Subordinated Note, dated October 20, 1994, in the
principal amount of $1,200,000, is converted into Larizza Common Shares.
C. The authorized capital stock of Acquisition consists of 1,000
Common Shares, par value $.01 a share (the "Acquisition Shares"), all of which
are issued and outstanding and entitled to one vote per share.
D. The respective boards of directors of Larizza and Acquisition
and Parent, as the sole shareholder of Acquisition, have approved the
acquisition of Larizza by Parent through a merger of Acquisition with and into
Larizza (the "Merger") under the Ohio General Corporation Law (the "OGCL") and
the Delaware General Corporation Law (the "DGCL") in accordance with the
provisions of this Agreement.
E. As a condition to its willingness to enter into this
Agreement, Parent has required that, simultaneously with the execution hereof,
Ronald T. Larizza, individually and as trustee of a revocable trust under a
Trust Agreement, dated July 20, 1989 ("Stockholder"), enter into the Stock
Agreement, dated the date hereof (the "Stock Agreement"), with Parent, pursuant
to which, among other things, Stockholder granted to Parent an option (the
"Option") at the Merger Price
1
<PAGE> 53
per share to purchase all of the Larizza Common Shares owned by Stockholder,
subject to the terms of the Stock Agreement.
THEREFORE, the parties agree as follows:
1 THE MERGER.
1.1 Effect on Entities, Articles, Regulations, Officers and
Directors. Upon the terms and subject to the conditions set forth in this
Agreement, pursuant to the OGCL and the DGCL, at the "Effective Time of the
Merger" (as defined in Section 4.3):
(a) Acquisition will be merged with and into Larizza,
which shall be, and is sometimes referred to in this Agreement as, the
"Surviving Corporation".
(b) The Articles of Incorporation of Larizza, as in
effect immediately before the Effective Time of the Merger, shall be
the Articles of Incorporation of the Surviving Corporation and shall
thereafter continue to be its Articles of Incorporation until duly
altered, amended or repealed, except that, at the Effective Time of
the Merger, such Articles of Incorporation shall be amended and
restated as set forth in the attached Schedule 1.1(b).
(c) The Code of Regulations of Larizza, as amended and as
in effect immediately before the Effective Time of the Merger, shall
be the Code of Regulations of the Surviving Corporation and shall
thereafter continue to be its Code of Regulations until duly altered,
amended or repealed, except that, at the Effective Time of the Merger,
such Code of Regulations shall be amended and restated as set forth in
the attached Schedule 1.1(c).
(d) The directors of Acquisition at the Effective Time of
the Merger shall be the directors of the Surviving Corporation, and
shall hold office from the Effective Time of the Merger until their
respective successors are duly elected or appointed and qualified in
the manner provided by the Articles of Incorporation and Code of
Regulations of the Surviving Corporation, or as otherwise provided by
law.
(e) The officers of Acquisition at the Effective Time of
the Merger shall be the officers of the Surviving Corporation, and
shall hold office from the Effective Time of the Merger until their
respective successors are duly elected or appointed and qualified in
the manner provided by the Code of Regulations of the Surviving
Corporation, or as otherwise provided by law.
1.2 Effect on Stock. At the Effective Time of the Merger:
(a) Except as otherwise provided in Sections 1.2(b) and
1.2(c), each Larizza Common Share issued and outstanding at the
Effective Time of the Merger, by virtue of
2
<PAGE> 54
the Merger and without any action on the part of the holder of such
Larizza Common Share, shall no longer be outstanding and shall be
cancelled and retired and cease to exist, and shall be converted into
the right to receive, upon surrender of the certificate or
certificates representing such shares, $6.50 in cash per Larizza
Common Share, without interest (the "Merger Price"). Subject to
Section 1.2(b), outstanding certificates which immediately before the
Effective Time of the Merger represented issued and outstanding
Larizza Common Shares ("Stock Certificates") shall after the Effective
Time of the Merger no longer represent Larizza Common Shares, but
instead shall represent for all purposes the right to receive the
Merger Price multiplied by the number of shares evidenced by such
Stock Certificates.
(b) Notwithstanding anything in this Agreement to the
contrary, any Larizza Common Shares as to which the holder of such
shares shall have duly perfected appraisal rights pursuant to the
applicable provisions of the OGCL ("Dissenting Shares") shall be
cancelled at the Effective Time of the Merger and automatically (by
virtue of the Merger and without any action on the part of the holder
of such Larizza Common Shares) be converted into the right to receive
the consideration required to be paid to such holder pursuant to the
OGCL.
(c) Each Larizza Common Share held in the treasury of
Larizza immediately before the Effective Time of the Merger shall, by
virtue of the merger and without any action on the part of the holder
of such Larizza Common Share, be cancelled and retired and cease to
exist and shall not be converted into stock of the Surviving
Corporation or of Parent, or the right to receive cash or any other
consideration.
(d) Each right to receive or convert into Larizza Common
Shares then existing shall, by virtue of the Merger and without any
action on the part of the holder thereof, no longer be outstanding and
shall be cancelled and retired and cease to exist and shall not be
converted into the right to receive or convert into stock of the
Surviving Corporation or of Parent, or the right to receive cash or
any other consideration in lieu of such Larizza Common Shares.
(e) Each Acquisition Share issued and outstanding shall,
by virtue of the Merger and without any action on the part of the
holder of such Acquisition Share, be converted into one fully paid and
non-assessable share of Common Stock, no par value, of the Surviving
Corporation, and Parent shall become, at the Effective Time of the
Merger, the sole shareholder of the Surviving Corporation.
(f) All shares of common stock of the Surviving
Corporation into which Acquisition Shares are converted, shall be
validly issued, fully paid and non-assessable.
1.3 Effects on Property, Rights and Liabilities. At the Effective
Time of the Merger, the separate corporate existence of Acquisition will cease
(except as may be continued by operation of law), and Acquisition shall be
merged into Larizza, which, as the Surviving
3
<PAGE> 55
Corporation, shall have all of the rights, privileges, immunities and
franchises, of a public as well as of a private nature, and shall be subject to
all of the restrictions, disabilities, duties and liabilities, of each of
Larizza and Acquisition as provided in the OGCL and the DGCL, to the extent
applicable. If at any time the Surviving Corporation shall consider or be
advised that any further assignment or assurances or any other documents are
reasonably necessary or desirable to vest in the Surviving Corporation,
according to the terms of this Agreement, the title of any property or rights
of Acquisition and Larizza, at the direction of the Surviving Corporation, the
last acting officers and directors of Larizza (without any cost or expense to
them) and Acquisition, as the case may be, or the corresponding officers and
directors of the Surviving Corporation will execute and make all such proper
assignments and assurances and do all things necessary or proper and reasonably
within their power and authority to vest title in such property or rights in
the Surviving Corporation. No failure by any officer or director to comply
with the provisions of this Section 1.3 shall have any effect on the validity
of the Merger.
1.4 Surrender of Certificates.
1.4.1 Larizza Common Shares. On or before the Effective
Time of the Merger, Parent or the Surviving Corporation shall deposit with
Chemical Bank or another bank mutually acceptable to Larizza and Parent (the
"Exchange Agent"), as Exchange Agent, such amount as may be required to pay the
Merger Price multiplied by the aggregate outstanding Larizza Common Shares
pursuant to this Agreement (the "Fund"). Pending payment of the monies held in
the Fund to the holders of outstanding Stock Certificates, the Fund shall be
held and invested by the Exchange Agent as Parent directs. Any net profit
resulting from, or interest or income produced by, such investments will be
payable to the Surviving Corporation or Parent, as Parent directs. Parent will
promptly replace any monies lost through any investment made pursuant to this
Section 1.4. As soon as is practicable after the Effective Time of the Merger,
the Exchange Agent shall forward to each record holder of Stock Certificates a
form of letter of transmittal and instructions, in form customary for use in
effecting the surrender of stock certificates for payment in a cash merger.
Subject to Section 1.2(b), upon surrender to the Exchange Agent of such Stock
Certificates, together with such letter of transmittal and instructions for use
in effecting the surrender of such Stock Certificates, duly executed, the
Exchange Agent shall promptly cancel such Stock Certificates and pay to the
persons entitled thereto, in cash or cash equivalent, the amount to which such
persons are entitled. No interest will be paid or accrued on the cash payable
upon the surrender of the Stock Certificates. If payment is to be made to a
person other than the one in whose name the Stock Certificate surrendered is
registered, it shall be a condition of payment that the Stock Certificate so
surrendered shall be properly endorsed or otherwise 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 Stock Certificate surrendered or establish to the satisfaction of
the Surviving Corporation that such tax has been paid or is not applicable.
1.4.2 No Registration of Transfers. After the Effective
Time of the Merger, there shall be no further registration of transfers on the
records of Larizza of outstanding Stock
4
<PAGE> 56
Certificates. If a Stock Certificate is presented to Larizza or Parent, it
shall be forwarded to the Exchange Agent for cancellation and payment as
provided in this Section 1.4.
1.4.3 Full Payment. The consideration provided in this
Section 1.4 paid upon the surrender of Stock Certificates in accordance with
the terms and conditions of this Section 1.4 shall be deemed to be in full
satisfaction of all rights pertaining to such Larizza Common Shares to which
such Stock Certificates relate, and no dividend or distribution payable to
holders of record of the Surviving Corporation's capital stock shall be paid to
any holder of Stock Certificates.
1.4.4 Termination of the Fund. Any portion of the Fund
(including the proceeds of any investments of the Fund) that remains unclaimed
by the holders of Stock Certificates for 6 months after the Effective Time of
the Merger shall be returned or repaid to the Surviving Corporation. Any
holders of Stock Certificates who have not complied with this Section 1.4
before 6 months after the Effective Time of the Merger shall thereafter look
only to the Surviving Corporation for the Merger Price multiplied by the
holder's Larizza Common Shares, in each case without any interest on such
consideration. If outstanding Stock Certificates are not surrendered or the
payment for them not claimed before the date on which such consideration would
otherwise escheat to or become the property of any governmental unit or agency,
the unclaimed consideration shall, to the extent not prohibited by abandoned
property or any other applicable law, become the property of the Surviving
Corporation (and to the extent not in its possession shall be paid over to it),
free and clear of all claims or interest of any person previously entitled to
such claims. Notwithstanding the foregoing, none of Parent, Larizza, the
Exchange Agent or any other person or entity shall be liable to any former
holder of Larizza Common Shares for any amount delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
1.4.5 Lost, Stolen, Mutilated or Destroyed Certificates.
If any Stock Certificate has been lost, stolen, mutilated or destroyed, and if
the holder makes an affidavit of that fact and otherwise complies with the
requirements of this Section 1.4, the Exchange Agent shall pay to such holder
the consideration required pursuant to this Agreement; provided, however, that
the Exchange Agent, Parent or the Surviving Corporation, in its discretion, may
require the owner of such lost, stolen, mutilated or destroyed certificate to
deliver a bond in such sum as it may direct as indemnity against any claim that
may be made against any of them or any other party with respect to the Stock
Certificate alleged to have been lost, stolen, mutilated or destroyed.
1.4.6 Options, Etc. Larizza represents and warrants that,
as of the Effective Time of the Merger, there will be no outstanding rights to
acquire equity securities of Larizza, except as referenced in Recital B(ii),
provision for which has been made in Section 1.2(d).
1.4.7 Appraisal Rights. Larizza will give Parent prompt
written notice of any written demands for appraisal and withdrawals of demands
for appraisal. Parent will have the right to control the defense of any such
proceeding, and Larizza will not voluntarily make any
5
<PAGE> 57
payment with respect to any demands for appraisal and will not, except with the
prior written consent of Parent, settle or offer to settle any such demands.
1.5 Shareholders' Meeting of Larizza. Larizza will take all
action necessary in accordance with applicable law and its Articles of
Incorporation and Code of Regulations to convene a meeting of its shareholders
as promptly as reasonably practicable following the date hereof to consider and
vote upon the adoption of this Agreement and the approval of the Merger. At
any such meeting, all Larizza Common Shares then owned by Parent, Acquisition
or any other direct or indirect subsidiary of Parent will be voted in favor of
adoption of this Agreement and the approval of the Merger. Subject to its
fiduciary duties under applicable law, the Directors of Larizza will recommend
that Larizza's shareholders approve adoption of this Agreement and the approval
of the Merger if such shareholder action is required.
2 REPRESENTATIONS AND WARRANTIES.
2.1 Representation and Warranties of Larizza. Larizza represents
and warrants to Acquisition and Parent the following as of the date of this
Agreement and as of the Effective Time of the Merger:
2.1.1 Organization and Qualification. Larizza and each of
the Subsidiaries (collectively, the "Companies") is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and each has all requisite corporate power and
authority to own or lease its properties and to carry on its Business as now
being conducted or proposed to be conducted. Larizza has furnished Parent true
and correct copies of the Articles of Incorporation and Code of Regulations (or
other governing instruments), as amended to the date hereof, of Larizza and the
Subsidiaries. Larizza's and each Subsidiary's Articles of Incorporation and
Code of Regulations (or other governing instruments) as so delivered are in
full force and effect. Each of the Companies is qualified and in good standing
as a foreign corporation to do business in each other jurisdiction in which the
conduct of its Business or the character of its properties (owned or leased)
makes such qualification necessary and where a failure to be so qualified has a
Material Adverse Effect (as defined in Section 2.1.9). The attached Schedule
2.1.1 lists all the jurisdictions in which the Companies are qualified to do
business as a foreign corporation.
2.1.2 Subsidiaries. Neither Larizza nor either of the
Subsidiaries has any direct or indirect subsidiaries and no controlling stock
or other equity or ownership interests in any corporation, association,
partnership, joint venture, or other entity, except for the Subsidiaries. All
shares of capital stock of each of the Subsidiaries are owned by Larizza free
and clear of any adverse claim, as defined in the applicable Uniform Commercial
Code, except for a pledge of such shares to Bank of America, Illinois pursuant
to the Credit Agreement described in Schedule 2.1.5.
2.1.3 Capitalization. The authorized capital stock and the
outstanding capital stock of each of the Companies are as listed on the
attached Schedule 2.1.3. Each Larizza
6
<PAGE> 58
Common Share is entitled to one vote. All issued and outstanding Larizza
Common Shares and capital stock of the Subsidiaries were validly issued and are
fully paid, nonassessable and free of exercisable preemptive rights. Except as
set forth in the attached Schedule 2.1.3, there are not now, and at the
Effective Time of the Merger there will not be, any outstanding subscriptions,
options, warrants, rights or convertible securities relating to the issued or
unissued capital stock or other securities of the Companies obligating the
Companies to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock of the Companies or obligating the Companies
to grant, extend or enter into any subscription, option, warrant, right,
convertible security or other similar agreement or commitment. Since December
31, 1994, Larizza has not declared or paid any dividend or other distribution
of assets to the holders of Larizza Common Shares, nor has it repurchased any
Larizza Common Shares. Except for the Amended and Restated Voting Trust
Agreement, dated as of May 4, 1994, as amended, among Larizza, Ronald T.
Larizza and the shareholders listed on the signature pages of the agreement
(the "Voting Trust Agreement"), and except for provisions in employee plans
relating to the pass-through of voting rights, there are not now, and at the
Effective Time of the Merger there will not be, any voting trusts or other
agreements or understandings to which Larizza or any of the Subsidiaries is a
party or is bound with respect to the voting of the capital stock of Larizza.
2.1.4 Authority Relative to This Agreement. Larizza has
all requisite corporate power to execute, deliver and comply with its
obligations under this Agreement, subject to approval of its shareholders. The
affirmative vote of a majority of the issued and outstanding Larizza Common
Shares is the only corporate action not previously taken required in connection
with the Merger, this Agreement or the transactions contemplated hereby or
thereby. Execution, delivery and performance by Larizza of this Agreement have
been duly authorized by all necessary corporate action on the part of Larizza,
subject to approval of its shareholders. This Agreement has been duly and
validly executed and delivered by Larizza and constitutes a valid and binding
obligation of Larizza, enforceable against Larizza in accordance with its
terms, except as it may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally, and except that it may be limited by
general principles of equity, regardless of whether such enforceability is
considered in a proceeding at law or in equity.
2.1.5 Consents and Approvals; No Violation. Except as set
forth in the attached Schedule 2.1.5, except for consents or approvals which,
if not obtained, or violations, breaches or defaults which, would not have a
Material Adverse Effect, and except for (i) the approval of the Merger by
Larizza's shareholders under the provisions of the OGCL, (ii) filings made
pursuant to the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the "Exchange Act") in connection with the
Merger, (iii) the filing of pre-merger notification reports with the United
States Federal Trade Commission and the Department of Justice and the
expiration or early termination of the waiting period required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and (iv) compliance with the OGCL and the DGCL requirements in
connection with the Merger, including the filing of a Certificate of Merger
with the Secretaries of State of Ohio and Delaware, neither the execution and
delivery by Larizza of this Agreement (including all agreements
7
<PAGE> 59
provided for in this Agreement) nor the performance by Larizza of its
obligations under this Agreement (including all agreements provided for in this
Agreement) (a) will require any consent or approval of or filing with any
governmental agency or third party, (b) will violate any provision of the
Articles of Incorporation, Code of Regulations or Bylaws of any of the
Companies, (c) will breach, constitute a default (or an event which, with the
giving of notice, the passage of time or both, would constitute a default)
under, result in the creation of any lien or security interest on any of the
Companies' properties under, accelerate the performance required by, or result
in the termination of, any agreement to which any of the Companies is a party,
or by which any of its properties may be bound, or (d) will violate any
statute, rule or regulation or any order, writ, injunction or decree of any
court or governmental authority applicable to any of the Companies or any of
their respective properties.
2.1.6 SEC Reports. Larizza has furnished Parent and
Acquisition with true and correct copies (with exhibits) of (a) its Annual
Report on Form 10-K for the fiscal year ended December 31, 1994, as filed with
the Securities and Exchange Commission (the "SEC"), (b) its Quarterly Reports
on Form 10-Q for the quarters ended March 31, 1995 and June 30, 1995 as filed
with the SEC, and (c) its definitive proxy statement relating to the 1995
Annual Meeting of Shareholders of Larizza held on May 30, 1995 (collectively,
the "Larizza SEC Filings"). As of their respective dates, the Larizza SEC
Filings did not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading, except any statement
or omission therein which has been corrected or otherwise disclosed or updated
in a subsequent filing with the SEC prior to the date hereof. Since December
31, 1991, Larizza has filed with the SEC all reports and registration
statements and all other filings required to be filed with the SEC under the
rules and regulations of the SEC.
2.1.7 Proxy Statement in Connection with the Merger. When
the proxy statement to be distributed to Larizza shareholders in connection
with the Merger (the "Proxy Statement") shall be first mailed to such
shareholders (the "Mailing Date") and at the date of the meeting of the Larizza
shareholders in connection with the Merger, the information with respect to
Larizza set forth in the Proxy Statement, as ultimately amended and
supplemented by all amendments and supplements thereto, (i) will comply in all
material respects with all applicable requirements of the Exchange Act and the
SEC's rules and regulations under the Exchange Act, and (ii) will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated in the Proxy Statement or necessary to make the statement
contained in the Proxy Statement, in light of the circumstances under which
they are made, not misleading, except that no representation is made by Larizza
with respect to information supplied by or on behalf of Acquisition or Parent
which relates to Acquisition, Parent or any affiliate or associate of
Acquisition or Parent.
2.1.8 Larizza Financial Statements. Larizza has delivered
to Parent and Acquisition a copy of the audited consolidated balance sheet of
Larizza as at December 31, 1994 and the related audited consolidated statements
of operations, shareholders' equity (deficit) and cash flows for the fiscal
year then ended, in each case, including the Notes to such financial
8
<PAGE> 60
statements (the "Larizza Financial Statements"). The Larizza Financial
Statements have been prepared in accordance with generally accepted accounting
principles on a basis consistent with such statements for prior periods and
fairly present, in all material respects, the financial position, results of
operations and cash flows of Larizza as of and for the fiscal year then ended.
Larizza has also delivered to Parent and Acquisition a copy of the unaudited
consolidated balance sheet of Larizza as at June 30, 1995 and the related
statements of operations and cash flows for the 6 months then ended (the
"Larizza Interim Statements"). The Larizza Interim Statements fairly present,
in all material respects, the financial position, results of operations and
cash flows of Larizza as of, and for the 6 months then ended.
2.1.9 No Material Adverse Change. Except as set forth in
the attached Schedule 2.1.9, since June 30, 1995, except for reasonable
expenses for legal and financial advisory services incurred in connection with
the transactions contemplated by this Agreement, there has been no material
adverse change that has had a "Material Adverse Effect" (as defined below) on
the Company or is reasonably likely to have a Material Adverse Effect on the
Company. For purposes of this Agreement, a "Material Adverse Effect" means (i)
a material adverse effect on the assets, Business, properties, financial
condition or results of operations of Larizza and the Subsidiaries taken as a
whole except as a result of the seasonal and cyclical nature of Larizza's
business and the automotive supplier industry, or (ii) the occurrence and
continuance of any material disruption of, or material adverse change in, the
financial, banking or capital markets since the date of this Agreement.
2.1.10 Assets. Except as otherwise explicitly provided in
this Agreement, Parent and Acquisition acknowledge and agree that the
Companies' properties and assets are "AS IS" and "WHERE IS". The Companies
have good title to, or a valid leasehold or other possessory interest in, the
properties and assets currently owned or used by them, shown on the Larizza
Interim Statements or acquired after June 30, 1995, free and clear of any
liens, charges, encumbrances or adverse claims ("Liens") except as set forth on
Schedule 2.1.10 ("Permitted Liens") and for properties and assets disposed of
in the ordinary course of business since June 30, 1995. The operation of the
properties and Business of the Companies in the manner in which they are
currently operated does not violate any zoning ordinances, municipal
regulations or other rules, regulations or laws, except for violations not
reasonably likely to have a Material Adverse Effect. No covenants, easements,
rights-of-way or regulations impair in any material respect the uses of the
Companies' assets for the purposes for which they are now operated. There are
no pending or, to Larizza's actual knowledge, threatened condemnation or
similar proceedings or assessments affecting the Companies' assets which would
reasonably be expected to have a Material Adverse Effect. No lease of a
material item of personal property or asset is subject to termination or
modification as a result of the transactions contemplated hereby.
2.1.11 Absence of Undisclosed Liabilities. The Companies do
not have any obligations or liabilities, absolute or contingent, including,
without limitation, mortgages or security interests ("Liabilities"), except for
those Liabilities which (i) have been reflected or reserved against in the
Larizza Financial Statements or the Larizza Interim Statements, (ii) have
9
<PAGE> 61
been incurred in the ordinary course of business, (iii) are not reasonably
likely to have a Material Adverse Effect, or (iv) are described on the attached
Schedule 2.1.11.
2.1.12 Tax Liabilities.
(a) The Companies have timely filed all federal, foreign,
state, county and local Tax Returns of every nature required to be
filed by them, except where the failure so to file would not
reasonably be likely to have a Material Adverse Effect. All such Tax
Returns are complete and correct in all material respects. The
Companies have duly paid or adequately accrued in the Larizza
Financial Statements or the Larizza Interim Statements all Taxes to
the extent such amounts have become due and payable, except to the
extent that the failure to do so would not have a Material Adverse
Effect. The Companies have not executed any presently effective
waiver or extension of any statute of limitations relating to the
payment of Taxes. (For purposes of the preceding sentence, the term
"Companies" shall include former subsidiaries of any of the Companies
for the periods during which any such corporations were owned,
directly or indirectly, by any of the Companies.) Except as set forth
in the attached Schedule 2.1.12, there are no pending or, to Larizza's
actual knowledge, threatened claims, assessments, notices, proposals
to assess, deficiencies, adjustments or audits with respect to any
such Taxes owed or allegedly owed by any of the Companies which remain
unpaid, except those for which adequate provision has been made in the
Larizza Financial Statements or the Larizza Interim Statements (to the
extent required by generally accepted accounting principles) and which
are not reasonably likely to have a Material Adverse Effect. To
Larizza's actual knowledge, each of the Companies has withheld and
paid all Taxes required to have been withheld and paid in connection
with amounts paid or owing to any employee, creditor, independent
contractor or other third party. No claim has been made by a
governmental entity or other tax authority in a jurisdiction where any
of the Companies does not currently file Tax Returns to the effect
that any of the Companies is or may be subject to Taxes imposed by the
jurisdiction. There are no liens for Taxes upon the assets of any of
the Companies, except liens for Taxes not yet delinquent. Except as
set forth in the attached Schedule 2.1.12, none of the Companies is a
party to a Tax allocation or Tax sharing arrangement with another of
the Companies. No property of Larizza or Hughes is, (i) property that
would be required to be treated as owned by another person pursuant to
the safe harbor leasing provisions (now repealed) of the Code, (ii)
tax-exempt use property within the meaning of Section 168(h) of the
Code, or (iii) tax-exempt bond financed property within the meaning of
Section 168(h)(5) of the Code.
(b) For purposes of this Agreement, (i) "Tax" or "Taxes"
includes all federal, state, local, foreign and other taxes,
assessments, or governmental charges of any kind whatsoever including,
without limitation, income, franchise, capital stock, excise,
property, sales, use, service, service use, leasing, leasing use,
gross receipts, value added, single business, alternative or add-on
minimum, occupation; real and personal property, stamp, workers'
compensation, severance, environmental, transfer, payroll,
withholding, employment, unemployment and social security taxes, or
other taxes of the same or
10
<PAGE> 62
similar nature, together with any interest, penalties or additions
thereon and estimated payments thereof, whether disputed or not, (ii)
"Tax Returns" includes all returns, reports, information returns,
forms, declarations, claims for refund, statements and other documents
(including any amendments thereto and including any schedule or
attachment thereto) in connection with Taxes that are required to be
filed with a government entity or other tax authority, or sent or
provided to another party under applicable law, and (iii) "Code" means
the Internal Revenue Code of 1986, as amended.
2.1.13 Litigation. There are no claims, actions, suits,
proceedings or investigations pending or, to Larizza's actual knowledge,
threatened against any of the Companies before or by any court or any municipal
or other governmental department, commission, board, agency or instrumentality,
except (a) as set forth on Schedule 2.1.13, (b) as set forth in any of
Larizza's filings with the SEC prior to the date hereof or in the notes to the
Larizza Financial Statements or the Larizza Interim Statements, or (c) for
those which could not reasonably be expected to have a Material Adverse Effect.
No inquiry, action, or proceeding has been instituted, or, to Larizza's actual
knowledge, threatened to restrain or prohibit the transactions contemplated by
this Agreement or seeking damages on account thereof.
2.1.14 Pension and Benefit Plans and Compliance with ERISA.
None of the Companies has any "employee welfare benefit plan" (as defined in
Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) or any "employee pension benefit plan" (as defined in Section 3(2)
of ERISA and not exempted under Section 4(b) or 201 of ERISA) other than as set
forth in Schedule 2.1.14 (the "Plans"). None of the Companies has incurred any
obligation to contribute to any multi-employer plan, as defined in ERISA, nor
has any of them incurred any material liability under Title IV of ERISA arising
in connection with the termination of, or complete or partial withdrawal from,
any Plan covered or previously covered by Title IV of ERISA. Each Plan of the
Companies that is intended to be qualified under Section 401 of the Code, is so
qualified, and each trust forming a part thereof is exempt from tax pursuant to
Section 501 of the Code. Each such Plan has been maintained in compliance with
its terms and with the requirements prescribed by all statutes, orders, rules
and regulations, including, but not limited to, ERISA and the Code, which are
applicable to such Plans, except for any such non-compliance which is not
reasonably likely to have a Material Adverse Effect. There does not exist any
accumulated funding deficiency violating Section 412 of the Code (nor would
there exist such a deficiency but for an election by any such plan of an
alternate minimum funding standard), nor has there been issued either a
variance or waiver of the minimum funding standards imposed by the Code with
respect to any such Plan, nor are there any excise taxes due or, to Larizza's
actual knowledge, hereafter to become due under the Code with respect to the
funding of any such Plan for any Plan year or other fiscal period ending before
the date of this Agreement. There exists no unfulfilled obligation to
contribute to any such Plan with respect to any Plan year ending on or before
the Effective Time of the Merger, except as shown in the Larizza Financial
Statements or the Larizza Interim Statements.
2.1.15 Environmental Matters. Except in connection with the
matters described in the attached Schedule 2.1.15 or Schedule 2.1.13, none of
the Companies has received any
11
<PAGE> 63
request for information or notice, claim, assessment, proposed assessment or
demand for abatement notifying any of the Companies that they may have any
liability in respect of environmental matters or alleging a violation of any
law, ordinance or other governmental regulation regarding the environment or
the disposal of hazardous substances, the violation of, or failure to comply
with, which could reasonably be expected to have a Material Adverse Effect.
Except in connection with the matters described in the attached Schedule
2.1.15, none of the Companies has spilled, generated, disposed of or stored any
toxic or hazardous substances in any manner that violates any presently
existing federal, state or local law or regulation governing or pertaining to
such substances nor have any of the Companies failed to comply in any material
respect with any reporting or other requirements of or under such laws,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act (including any disposal or transportation of
hazardous substances at or to any location that is listed or, to the actual
knowledge of Larizza, is proposed for listing or investigation as a National
Priorities List site under such Act or is the subject of federal, state or
local enforcement actions or other investigations which may lead to claims
against the Companies for clean-up costs, remedial work, damages to natural
resources or other property or personal injury claims, including, but not
limited to, claims under such Act) and the Resource Conservation and Recovery
Act, the violation of which could reasonably be expected to have a Material
Adverse Effect. Except as set forth in the attached Schedule 2.1.15, to the
actual knowledge of Larizza, no polychlorinated biphenyls, asbestos or urea
formaldehyde insulation is present at any of the Owned Real Property or the
Leased Real Property, and there are no underground storage tanks, active or
abandoned, at any of the Owned Real Property or the Leased Real Property. The
Companies have complied in all material respects with the Occupational Safety
and Health Act, as amended (29 U.S.C. Sections 651, et seq.), except to
the extent any failure could not reasonably be expected to have a Material
Adverse Effect.
2.1.16 Licenses and Permits. The Companies have, and at all
relevant times have had, all federal, state and local governmental licenses,
permits, authorizations and other rights (the "Permits") required by the
Companies for the lawful conduct of their businesses, except to the extent that
the failure to have any such Permit could not reasonably be expected to have a
Material Adverse Effect. The Companies have complied, and are complying, in
all material respects with the terms and conditions of all such Permits, and no
material violation of any such Permits or the laws or rules governing their
issuance or continued validity has occurred. No claim has been made by any
governmental authority that any Permit in addition to those held by the
Companies is necessary with respect to the Business conducted by the Companies.
2.1.17 Insurance. Larizza has provided to Acquisition and
Parent an accurate and complete list of all material policies of insurance held
by any of the Companies. All such policies are in full force and effect, and
no notice of cancellation has been received or, to Larizza's actual knowledge,
has been sent by the insurer. In Larizza's judgment, the policies are in
amounts and against such risks as are adequate in relation to the Business of
the Companies. All current premiums under such insurance have been paid.
12
<PAGE> 64
2.1.18 Conduct of Business Since June 30, 1995. Since June
30, 1995, the Companies have conducted their Business only in the ordinary
course, except (a) as contemplated by this Agreement, any of the Schedules to
this Agreement, any of the documents referred to in this Agreement or the
Schedules, any of Larizza's filings with the SEC prior to the date hereof, or
any of the Larizza Financial Statements or the Larizza Interim Statements, (b)
in connection with the transactions contemplated by this Agreement, or (c)
where the failure to do so would not reasonably be expected to have a Material
Adverse Effect. Except as set forth in the attached Schedule 2.1.18, since
June 30, 1995, there has not been, (i) any declaration, setting aside or
payment of any dividend or other distribution with respect to its capital
stock, (ii) any change by Larizza in accounting principles used for purposes of
financial reporting, (iii) any entry into any agreement or understanding,
whether written or (if enforceable) oral, between Larizza or any of the
Subsidiaries providing for the employment of any senior executive of Larizza or
the Subsidiaries (collectively, "Senior Executives") or any severance or
termination benefits payable or to become payable by Larizza or any Subsidiary
to any Senior Executive, or (iv) except as permitted by this Agreement, any
increase (including any increase effective in the future) in (A) the
compensation, severance or termination benefits payable or to become payable by
Larizza or any Subsidiary to any Senior Executive (or any increase in benefits
under any change in control severance arrangement applicable to employees of
Larizza and its subsidiaries, generally) or (B) any bonus, insurance, pension
or other employee benefits (including, without limitation, the granting of
stock options, stock appreciation rights or restricted stock awards) made to,
for or with any Senior Executive, except for normal increases associated with
regular annual performance evaluations in the ordinary course of business or
normal accruals of benefits under the terms of any such plan or arrangement.
2.1.19 Customers. To Larizza's actual knowledge, none of
the Companies has received a notice that any customer of any of the Companies
will cease or otherwise refuse to do business with any of the Companies in the
same manner as such business has been previously conducted with the Companies
as a result of the Merger.
2.1.20 Brokers and Finders. Larizza has not caused any
liability to be incurred to any finder, broker, or sales agent in connection
with the execution, delivery or performance of, or the transactions
contemplated by, this Agreement, except for fees to its financial advisor,
Merrill Lynch & Co., Inc., for which Larizza will be responsible, pursuant to
the engagement letter attached Schedule 2.1.20 (the "Merrill Letter").
2.1.21 Books and Records of the Companies. Larizza has made
available to Parent, Acquisition and their directors, officers, attorneys,
accountants and representatives, true and correct copies of all agreements,
documents and other items listed on the schedules to this Agreement and all
books and records of the Companies. The books and records of the Companies
accurately reflect in all material respects the transactions to which any of
the Companies is a party or by which their properties are bound.
2.1.22 Compliance with Laws. Except as otherwise disclosed
in this Agreement, Larizza and the Subsidiaries are in compliance with, and
have complied with, all federal, state,
13
<PAGE> 65
local and foreign laws, regulations and orders applicable to the Business of
the Companies to the extent that non-compliance could reasonably be expected to
have a Material Adverse Effect. Except as set forth in Schedule 2.1.13, no
investigation or review by any governmental entity concerning any possible
violations of such laws, regulations and orders by Larizza or any of the
Subsidiaries is pending or, to the actual knowledge of Larizza, threatened, nor
has any governmental entity indicated an intention to conduct the same in each
case other than those the outcome of which could not reasonably be expected to
have a Material Adverse Effect.
2.1.23 Intellectual Property. Schedule 2.1.23 lists or
describes all material patents, trademarks, trade names, service marks,
registered copyrights and registrations and applications therefor used in or
necessary for the conduct of the Business of the Companies as of the date
hereof and all licenses pertaining to any of the foregoing (collectively, the
"Scheduled IP", and, together with all material trade dress, trade secrets and
unregistered copyrights used in or necessary for the conduct of the Business of
the Companies as of the date hereof, collectively, the "Intellectual
Property"). No material Intellectual Property is used by the Companies
pursuant to a license from a third party or is licensed by the Companies to a
third party except pursuant to a license listed on Schedule 2.1.23. Except as
set forth on Schedule 2.1.23, Larizza or one of the Subsidiaries (a) owns free
and clear of all Liens all of the Scheduled IP (other than the Scheduled IP
that is used pursuant to a license disclosed on Schedule 2.1.23), (b) has the
legal right to use all of the Scheduled IP that is used pursuant to a license,
and (c) owns free and clear of all Liens, or has the legal right to use, all of
the other Intellectual Property as it is used as of the date hereof. Except as
set forth on Schedule 2.1.23, neither Larizza nor any Subsidiary has received
any written notice (that has not been subsequently satisfied or withdrawn) nor,
to the actual knowledge of Larizza, has there been any assertion against the
Companies of any infringement, dilution, unfair competition or material
conflict with the asserted rights of others in connection with the use by the
Companies of any of the Intellectual Property in the conduct of the Business of
the Companies. To the actual knowledge of Larizza, all of the material
patents, copyright registrations and trademark and service mark registrations
listed in Schedule 2.1.23 are valid and in full force and effect, are held of
record in Larizza's name or one of the Subsidiary's names, and, except as set
forth in Schedule 2.1.23, clear of any Liens, and, except as set forth in
Schedule 2.1.23, are not subject to any pending cancellation or reexamination
proceeding or other proceeding or written claim challenging their extent or
validity. With respect to the Scheduled IP, except as described on Schedule
2.1.23, Larizza or one of the Subsidiaries is the applicant of record in all
pending patent applications and all applications for trademark, service mark or
copyright registration, and no action of opposition or interference or final
refusal is pending or, to the actual knowledge of Larizza, threatened in
connection with any such application. Except as disclosed on Schedule 2.1.23,
no judgment, decree, rule or order has been rendered by any governmental entity
in any legal proceeding in which any of the Companies was or is a party
relating to the Intellectual Property that would have a Material Adverse
Effect, and neither Larizza nor any Subsidiary is a party to or, to the actual
knowledge of Larizza, is bound by any contract that limits the use by Larizza
or any Subsidiary of any of its Intellectual Property, except for licensed
Intellectual Property, to the extent such restriction would have a Material
Adverse Effect.
14
<PAGE> 66
2.1.24 Material Contracts. Listed on Schedule 2.1.24 are
all material contracts of the Companies other than those described on one of
the other Schedules or as filed as an exhibit to Larizza's SEC Filings filed
prior to the date hereof. Except as listed or described on Schedule 2.1.24 or
one of the other Schedules or as filed as an exhibit to Larizza's SEC Filings
filed prior to the date hereof, as of the date hereof, neither Larizza nor any
Subsidiary is a party to or bound by any lease, agreement or other contract or
legally binding contractual rights or obligation (collectively, "Contracts")
that is of a type described below:
(a) Any employment, severance or consulting Contract with
an Employee or Former Employee (as hereafter defined) that is not
terminable at will and without cost by Larizza or any Subsidiary
(other than any Contract for the employment of any such Employee or
Former Employee implied in law) and which will either require the
payment of amounts by Larizza or any Subsidiary after the date hereof
in excess of $100,000 per annum under any such individual Contract or
$500,000 for all such Contracts;
(b) Any union or collective bargaining agreement with any
collective bargaining group or labor union;
(c) Any Contract or series of related Contracts for
capital expenditures or the acquisition or construction of fixed
assets which requires or require aggregate future payments or
expenditures in excess of $500,000;
(d) Any Contract relating to cleanup, abatement or other
actions in connection with environmental liabilities;
(e) Any Contract granting to any person a first-refusal,
first-offer or other right to purchase or acquire any of the Larizza
Common Shares or any other capital stock or other securities of
Larizza or any Subsidiary;
(f) Any license or royalty Contract, or other Contract
with respect to Intellectual Property, which pursuant to the terms
thereof requires future payments to or by Larizza or any Subsidiary;
(g) Any indenture, mortgage, loan or credit Contract
under which Larizza or any Subsidiary has borrowed any money or issued
any note, bond, indenture or other evidence of indebtedness for
borrowed money, or guaranteed indebtedness for money borrowed by
others, other than such of the foregoing under which neither Larizza
nor any Subsidiary has any current or future obligation or liability;
(h) Any Contract with any manufacturer's representative
or other sales agent or relating to distribution or commission
arrangements having a remaining term in excess of one year and which
is not terminable without penalty on 30 calendar days' or less notice;
15
<PAGE> 67
(i) Any Contract under which Larizza or any Subsidiary
is, (i) a lessee of real property, (ii) a lessee of, or holds or uses,
any machinery, equipment, vehicle or other tangible personal property
owned by a third person or entity, (iii) a lessor of real property, or
(iv) a lessor of, or makes available for use by any third person or
entity, any tangible personal property owned by Larizza or any
Subsidiary, in any such case if the individual Contract or lease
requires annual payments in excess of $100,000;
(j) Any Contract under which any payment would be
classified as a "parachute payment" under Section 280G of the Code;
(k) Any Contract with respect to a joint venture or
partnership arrangement;
(l) Any Contract granting a power of attorney other than
such of the foregoing granted pursuant to customs forms executed by
Larizza or any Subsidiary;
(m) Any Contract with respect to letters of credit,
surety or other bonds or pursuant to which any of Larizza's or the
Subsidiaries' assets or properties are or are to be subjected to a
lien other than a Permitted Lien;
(n) Any Contract limiting or restricting the ability of
Larizza or any Subsidiary from entering into or engaging in any market
or line of business;
(o) Any guarantee, indemnity, retroactive or
retrospective premium adjustment or similar Contract pursuant to which
Larizza or any Subsidiary could (whether or not subject to
contingencies) be required to make payments with respect to or as a
result of losses, costs or expenses paid or incurred by another person
or entity providing insurance coverage where the amount could
reasonably be expected to exceed $100,000;
(p) Any Contract to which, (i) Larizza or any Subsidiary
and (ii) any officers, directors or Larizza's stockholders or any of
its or Larizza's other affiliates (other than Larizza or such
Subsidiary) are parties;
(q) Any Contract regarding the filing of Tax Returns or
relating, in whole or in part, to the sharing of tax benefits or
liabilities (including tax indemnities); and
(r) Any Contract which, (i) involves aggregate future
payments by or to Larizza or any Subsidiary in excess of $250,000
other than a purchase or sales order or other Contract entered into in
the ordinary course of the conduct of the Business of the Companies,
or (ii) is reasonably likely to result in a Material Adverse Effect.
Except as set forth on Schedule 2.1.24, each Contract listed or described on
Schedule 2.1.24 or one of the other Schedules is a valid and binding obligation
of Larizza and any Subsidiary that is a party thereto and is in full force and
effect. Except as set forth on Schedule 2.1.24, Larizza and any Subsidiary
that is a party thereto has performed in all material respects the obligations
16
<PAGE> 68
required to be performed by it through the date hereof under each of such
Contracts and Larizza and the Subsidiaries are not (with or without the lapse
of time or the giving of notice, or both) in breach or default in any material
respect thereunder, and as of the Closing will have performed in all material
respects all obligations required to be performed by it through the Closing
Date under each of such Contracts and not be in such breach or default. Except
as described on Schedule 2.1.24, to the actual knowledge of Larizza, each party
to any such Contract, other than Larizza or any Subsidiary, is not (with or
without the lapse of time or the giving of notice, or both) in breach or
default in any material respect under any such Contract.
2.1.25 Labor Matters. Except as set forth in Schedule
2.1.25 or Schedule 2.1.13,
(a) none of the Companies is a party to an unexpired
collective bargaining agreement or other unexpired material contract
or agreement with any labor organization or other representative or
employees nor is any such contract being negotiated,
(b) there is no material unfair labor practices charge or
complaint pending nor, to the knowledge of Larizza, threatened, with
regard to employees of any of the Companies,
(c) there is no labor strike, material organized
slowdown, material organized work stoppage or other material organized
labor controversy in effect or, to the knowledge of Larizza,
threatened against any of the Companies,
(d) as of the date hereof, to the knowledge of Larizza,
no representation question exists and no campaigns are being conducted
to solicit cards from the employees of any of the Companies to
authorize representation by any labor organization,
(e) neither Larizza nor any Subsidiary is a party to, or
is otherwise bound by, any consent decree with any governmental
authority relating to employees or employment practices of Larizza or
any Subsidiary which is material to Larizza and its Subsidiaries taken
as a whole, and
(f) the Companies are in compliance with all applicable
agreements, Contracts and policies relating to employment, employment
practices, wages, hours and terms and conditions of employment of the
employees except where failure to be in compliance with each such
agreement, Contract and policy is not, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect.
2.1.26 Related Party Transactions. Except as set forth on
Schedule 2.1.26, since January 1, 1995, there have been no Contracts,
transactions or payments by or between Larizza and any of its Subsidiaries, on
the one hand, and Stockholder or any director, officer, employee, shareholder
or affiliate of any of the foregoing on the other hand, other than (i) with
respect to persons who are not officers or directors of Larizza, those in the
ordinary course of Larizza's
17
<PAGE> 69
business, and (ii) those disclosed in the exhibits to Larizza's SEC Filings
filed prior to the date hereof.
2.1.27 State Takeover Statutes. None of this Agreement, the
Merger, the Stock Agreement, the Option or the transactions contemplated hereby
or thereby are subject to the provisions of (a) Section 1701.831 of the OGCL,
(b) Chapter 1704 of the OGCL, (c) Section 1707.043 of the OGCL, or (iv)
Articles IVB and IVC of the Articles of Incorporation of Larizza. No other
"fair price", "merger moratorium", "control share acquisition" or other
anti-takeover statute or similar statute or regulation applies or purports to
apply to the Merger, this Agreement, the Stock Agreement, the Option or any of
the transactions contemplated hereby or thereby.
2.1.28 Opinion of Financial Advisor, Etc. Larizza has
received the opinion of Merrill Lynch Pierce Fenner & Smith to the effect that,
as of the date hereof, the consideration to be received by the holders of the
Larizza Common Shares in the Merger is fair to such holders from a financial
point of view. Prior to the date hereof, Larizza or its representatives
contacted all persons or entities that they believed might be realistic
acquirors of the Company ("Other Potential Bidders" and, together with Parent
and Acquisition, "Bidders") and offered to furnish to them substantially the
same information furnished to Parent and to submit a proposal to acquire the
Company on substantially the same terms and conditions made available to
Parent. All Bidders were treated substantially equally in connection with the
transaction giving rise to this Agreement.
2.2 Representations and Warranties of Acquisition and Parent.
Acquisition and Parent, jointly and severally, represent and warrant to Larizza
the following as of the date of this Agreement and as of the Effective Time of
the Merger:
2.2.1 Organization and Qualification. Acquisition and
Parent are each corporations, duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and each has all
requisite corporate power and authority to own or lease its properties and to
carry on its business as now being conducted or proposed to be conducted.
Parent and Acquisition have furnished Larizza true and correct copies of their
Certificates of Incorporation and Bylaws, as amended to date, and such
Certificates of Incorporation and Bylaws as so delivered are in full force and
effect. Each of Acquisition and Parent is qualified and in good standing as a
foreign corporation to do business in each other jurisdiction in which the
conduct of its business or the character of its properties (owned or leased)
makes such qualification necessary and where a failure to be so qualified has a
material adverse effect on the business, financial condition or results of
operations of Parent and its Subsidiaries, taken as a whole (a "Parent MAE").
2.2.2 Authority Relative to This Agreement. Each of
Acquisition and Parent has all requisite corporate power to execute, deliver
and comply with its obligations under this Agreement. Execution, delivery and
performance by each of Acquisition and Parent of this Agreement have been duly
authorized by all necessary corporate action on the part of Acquisition
18
<PAGE> 70
and Parent and do not require the approval of Parent's shareholders. This
Agreement has been duly and validly executed and delivered by Acquisition and
Parent and constitutes a valid and binding obligation of Acquisition and
Parent, enforceable against Acquisition and Parent in accordance with its
terms, except as it may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally, and except that it may be limited by
general principles of equity, regardless of whether such enforceability is
considered in a proceeding at law or in equity.
2.2.3 Consents and Approvals; No Violation. Except as set
forth in the attached Schedule 2.2.3, except for consents or approvals which,
if not obtained, or violations, breaches or defaults which, would not have a
Parent MAE, and except for (i) filings made pursuant to the Exchange Act in
connection with the Merger, (ii) the filing of pre-merger notification reports
with the United States Federal Trade Commission and the Department of Justice
and the expiration or early termination of the waiting period required under
the HSR Act, and (iii) compliance with the OGCL and the DGCL requirements in
connection with the Merger, including the filing of a Certificate of Merger
with the Secretaries of State of Ohio and Delaware, neither the execution and
the delivery by Acquisition or Parent of this Agreement (including all
agreements provided for in this Agreement) nor the performance by Acquisition
and Parent of their obligations under this Agreement (including all agreements
provided for in this Agreement) (a) will require any consent or approval of or
filing with any governmental agency or third party, (b) will violate any
provision of the Certificate of Incorporation or Bylaws of Acquisition or
Parent, (c) will breach, constitute a default (or an event which, with the
giving of notice, the passage of time or both, would constitute a default)
under, result in the creation of any lien or security interest on Acquisition's
or Parent's properties under, accelerate the performance required by, or result
in the termination of, any agreement to which Acquisition or Parent is a party,
or by which any of their properties may be bound, or (d) will violate any
statute, rule or regulation or any order, writ, injunction or decree of any
court or governmental authority applicable to Acquisition or Parent or any of
their respective properties.
2.2.4 SEC Reports. Parent has furnished Larizza with true
and correct copies (with exhibits) of (a) its Annual Report on Form 10-K for
the fiscal year ended January 29, 1995, as filed with the SEC, (b) its
Quarterly Reports on Form 10-Q for the first two fiscal quarters of its current
fiscal year, as filed with the SEC, and (c) its definitive proxy statement
relating to the 1995 Annual Meeting of Shareholders of Parent (collectively,
the "Parent SEC Filings"). As of their respective dates, the Parent SEC
Filings did not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading, except any statement
or omission therein which has been corrected or otherwise disclosed or updated
in a subsequent filing with the SEC prior to the date hereof. Since December
31, 1991, Parent has filed with the SEC all reports and registration statements
and all other filings required to be filed with the SEC under the rules and
regulations of the SEC.
2.2.5 Proxy Statement in Connection with the Merger. The
information supplied in writing by or on behalf of Acquisition or Parent which
relates to Acquisition, Parent or any
19
<PAGE> 71
affiliate or associate of Acquisition or Parent expressly for inclusion in the
Proxy Statement, as ultimately amended and supplemented by all amendments and
supplements thereto, at the Mailing Date and at the date of the meeting of the
Larizza shareholders in connection with the Merger, (i) will comply in all
material respects with all applicable requirements of the Exchange Act and the
SEC's rules and regulations under the Exchange Act, and (ii) will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated in the Proxy Statement or necessary to make the statement
contained in the Proxy Statement, in light of the circumstances under which
they are made, not misleading.
2.2.6 Brokers and Finders. Neither Acquisition nor Parent
has caused any liability be incurred by Larizza or any of its Affiliates to any
finder, broker, or sales agent in connection with the execution, delivery, or
performance of, or the transactions contemplated by, this Agreement.
2.2.7 Parent Merger Action. Subject to the terms hereof,
Parent, as the parent corporation of Acquisition, will cause Acquisition to
take all actions and to do, or cause to be done, all things necessary, proper
or advisable to consummate and make effective as promptly as possible the
transactions contemplated by this Agreement.
3 COVENANTS.
3.1 Access for Audit. Between the date of this Agreement and the
Effective Time of the Merger, Larizza shall, and shall cause the Subsidiaries
and its and their respective officers, directors, employees and agents to, give
Parent and Acquisition and their respective officers, directors, employees,
counsel, accountants, agents, designees and other authorized representatives
full access during normal business hours to all of the facilities, assets,
properties, books of account, leases, agreements, commitments, records and
personnel of the Companies and to furnish the other parties or their
representatives with all such information concerning the Companies as Parent or
Acquisition may request so that Parent and Acquisition may have a full
opportunity to make a full business, financial, accounting and legal audit of
the Companies' assets, liabilities and business and affairs and to assure
compliance by Larizza with all of its covenants, representations and warranties
under this Agreement or to facilitate Parent's financing of the transactions
contemplated hereby. Such audit shall not materially disrupt or interfere with
Larizza's normal business operations. This audit may include, among other
things:
(a) review and copying of books, records, contracts,
financial statements, tax returns and other material documents of the
Companies;
(b) physical inspection of each of the assets and
facilities of each of the Companies;
(c) an audit of all contracts of each of the Companies;
and
20
<PAGE> 72
(d) discussions with governmental agencies, customers,
vendors, and creditors of each of the Companies.
3.2 Operation of Business. Between the date of this Agreement and
the Effective Time of the Merger, except as otherwise expressly consented to in
writing by the other parties or otherwise disclosed in this Agreement:
(a) The Companies will carry on their businesses
generally and in all material respects in the regular and ordinary
course, consistent with past practice, except in connection with the
transactions contemplated by this Agreement or in connection with any
other offer to acquire the Larizza Common Shares or the assets of any
of the Companies to the extent not prohibited by this Agreement, and,
subject to the foregoing exceptions, will use reasonable efforts to
preserve intact their present business organizations. Without
limiting the foregoing, none of the Companies will, directly or
indirectly, without the prior written consent of Parent, except in
connection with the transactions contemplated by this Agreement:
(i) sell, dispose of or encumber any of its
assets, except for sales to customers in the ordinary course
of business, dispositions of assets in the ordinary course of
business and encumbrances pursuant to existing loan
arrangements;
(ii) declare or pay any dividend or other
distribution in respect of its capital stock;
(iii) (A) change its Articles of Incorporation,
Code of Regulations, Bylaws, or authorized or issued capital
stock or rights to acquire its capital stock, (B) issue, sell
or deliver any shares of capital stock or any other securities
of any of them, (C) issue any securities convertible into or
exchangeable for, or options, warrants to purchase, scrip,
rights to subscribe for, calls or commitments of any character
whatsoever relating to, or enter into any contract with
respect to the issuance of, any shares of capital stock or any
other securities of any of them, or (D) purchase or otherwise
acquire or enter into any contract with respect to the
purchase or voting of shares of their capital stock, except
that Larizza may issue Larizza Common Shares in accordance
with currently outstanding convertible indebtedness;
(iv) incur any indebtedness for borrowed money or
issue any debt securities (other than in the ordinary course
of business);
(v) enter into or modify any material contract,
except in the ordinary course of business, unless to do so
would not reasonably be expected to have a Material Adverse
Effect or pay any finder's or advisory fees in connection with
the Merger except as provided in the Merrill Letter;
21
<PAGE> 73
(vi) terminate, modify, assign, waive, release or
relinquish any material contract rights or amend any material
rights or claims, except as contemplated by this Agreement,
unless to do so would not reasonably be expected to have a
Material Adverse Effect;
(vii) except as required by state and federal
minimum wage laws, except for the bonuses described in
Schedule 2.1.18 and except pursuant to existing plans or
policies, agreements, or budgets, (i) increase any salary or
grant any bonus or perquisite to any director, officer or
employee, or (ii) adopt or amend any plan or any compensation
plan for, enter into any employment agreement or severance
arrangement with, make any loan to, or enter into any material
transaction of any other nature with, any officer, director or
(except in the ordinary course of business) employee; provided
that Larizza may terminate existing compensation and loan
arrangements on terms acceptable to Parent and Acquisition;
(viii) make any material capital expenditures, other
than in the ordinary course of business or pursuant to
existing budgets;
(ix) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently
or otherwise) for the obligations or liabilities of any other
person or entity;
(x) make any loans, advances or capital
contributions to or investments in any person or entity, other
than to or in (A) any existing Subsidiary, (B) any supplier or
customer as an extension of credit in the ordinary course of
business, consistent with past practice, (C) Larizza, (D) to
employees, other than officers and directors, in the ordinary
course of business, and (E) Ronald T. Larizza and Edward L.
Sawyer, Jr. as described in Schedule 4.1.11;
(xi) sell, dispose, license, fail to keep in
effect or otherwise dispose of any material Intellectual
Property;
(xii) make any change in any method of accounting
or accounting practice except as may be required by law or by
generally accepted accounting principles;
(xiii) make, change, revoke or permit to be made
changed or revoked, any material election with respect to
Taxes;
(xiv) enter into, or permit to be entered into, any
closing or other agreement or settlement with respect to
Taxes; or
(xv) enter into any contract, agreement,
commitment or arrangement to do any of the foregoing, other
than in the ordinary course of business.
22
<PAGE> 74
(b) The Companies will use reasonable commercial efforts
to maintain their relationships with suppliers and customers, preserve
their respective business organizations intact, and to keep available
the services of their present employees.
3.3 Approval of the Merger. As soon as reasonably practicable
after the date of this Agreement, Larizza will take all action necessary in
accordance with the Exchange Act, the OGCL and its Articles of Incorporation
and Code of Regulations to call, give notice of, and convene a meeting (the
"Meeting") of Larizza shareholders to consider and vote upon the approval and
adoption of this Agreement and the Merger. As of the date of this Agreement,
the Board of Directors of Larizza has determined, based in part upon the
financial analysis performed by its financial advisors, that the Merger is
advisable and in the best interests of the shareholders of Larizza and, subject
to the fiduciary duties of Larizza's directors (as determined in good faith by
a majority of Larizza's directors, based as to legal matters on a written
opinion of legal counsel), shall recommend that Larizza's shareholders approve
and adopt this Agreement and any other matters to be submitted to Larizza's
shareholders in connection therewith. Larizza shall use reasonable efforts to
solicit and secure from its shareholders such approval and adoption, subject to
the fiduciary duties of the directors of Larizza (as determined in good faith
by a majority of Larizza's directors, based as to legal matters on a written
opinion of legal counsel). Acquisition shall cause its Board of Directors and
shareholders, and Parent shall cause its Board of Directors, to approve this
Agreement and the Merger contemplated by this Agreement and shall provide
evidence of such approvals to Larizza at the Closing.
3.4 Exchange Agent Agreement. Larizza, Acquisition and Parent
shall execute an exchange agent agreement with the Exchange Agent in customary
form for a cash merger and deliver it to the other parties to such agreement at
the Closing.
3.5 Updated Schedules. Between the date of this Agreement and the
period ending two business days before the Effective Time of the Merger,
Larizza, Acquisition and Parent shall update the Schedules to this Agreement to
the extent necessary to make their representations and warranties contained in
this Agreement true and accurate as of the Effective Time of the Merger and
shall provide such updated Schedules to the other parties at or before the
Effective Time of the Merger; provided, however, that the furnishing of any
such updated Schedule will not operate to cure any prior breach of any
representation, warranty or covenant herein except and only to the extent
agreed to in writing by Parent in its sole discretion.
3.6 Consents. At or before the Effective Time of the Merger,
Larizza shall use its reasonable efforts to obtain all of the consents and
approvals required to be set forth in Section 2.1.5 or Schedule 2.1.5 and
Acquisition and Parent shall use their reasonable efforts to obtain all of the
consents and approvals required to be set forth in Section 2.2.3 or Schedule
2.2.3, including, without limitation, any consents required from the Larizza's
lenders; provided that the foregoing shall not require Larizza, Acquisition or
Parent to agree to make any divestiture of a significant asset in order to
obtain any consent or approval. Each party shall deliver evidence of such
consents to the other parties at or before the Effective Time of the Merger.
23
<PAGE> 75
3.7 Confidentiality. Between the date of this Agreement and the
earlier of the Closing Date or the termination of this Agreement, Larizza,
Acquisition and Parent will hold in confidence all confidential and proprietary
information and trade secrets of the other parties that are marked as such and
that are disclosed to them in connection with their investigation of any of the
other parties and this Agreement, subject to any legal requirement that any of
such parties disclose such information. None of Larizza, Acquisition or Parent
will make any oral or written public disclosure or publicity release concerning
the existence or subject matter of this Agreement or the transactions
contemplated by this Agreement without first making a good faith attempt to
obtain the prior approval of, or concurrence in, the contents of such statement
by the other parties, which approval or concurrence will not be unreasonably
withheld or delayed; provided that nothing in this Agreement will prevent any
party from commenting on prior public announcements or from making any
statement it determines in good faith may be required by law (including
securities laws) or the rules or policies of any securities exchange on which
its stock is listed.
3.8 Further Assurances. Subject to the terms and conditions of
this Agreement and to the fiduciary duties of the directors of Larizza (as
determined in good faith by a majority of Larizza's directors, based as to
legal matters on a written opinion of legal counsel), each of Larizza,
Acquisition and Parent will use its reasonable efforts promptly to prepare,
execute and deliver to the other parties such lists, instruments and documents
and to cooperate with the other parties in such other respects as any other
party or parties may from time to time, before or after the Closing, reasonably
request in order to carry out the intent and the purposes of this Agreement.
Larizza and Parent shall make such filings as are required to cause the
applicable waiting period under the HSR Act to commence and expire as soon as
practicable and to notify the other parties promptly of its receipt of any
request or communication by the Federal Trade Commission or the Antitrust
Division of the Department of Justice relating to such filings; provided that
the foregoing shall not require Larizza, Acquisition or Parent to agree to make
any divestiture of a significant asset in order to obtain any waiver, consent
or approval. Each party shall supply all information, execute all instruments
and documents, make all proper assurances and do all things reasonably
necessary or proper to permit or assist the other parties to perform the acts
contemplated by this Agreement, including, without limitation, the preparation
of the HSR Act filings and responses to requests for additional information and
the Proxy Statement.
3.9 Related Party Transactions. Between the date of this
Agreement and the Effective Time of the Merger,
(a) none of the Companies will enter into any
transactions between the Companies and Stockholder or other Affiliates
of Larizza with respect to the Business of the Companies,
(b) none of the Companies will acquire ownership
interest, directly or indirectly, in any supplier or customer of the
Companies with respect to the Business of the Companies, and
24
<PAGE> 76
(c) none of the Companies will incur any obligations or
liabilities that will exist at the Effective Time of the Merger to any
Subsidiary or other affiliate of Larizza other than obligations and
liabilities that arise in the ordinary course of business on an
arm's-length basis.
3.10 Resignations. Effective as of the Effective Date of the
Merger, Larizza will deliver to Acquisition and Parent the written resignations
of such of the Companies' directors and officers and of the trustees, plan
administrators and fiduciaries of the Plans, as Acquisition or Parent may
request.
3.11 Acquisition Proposals. Between the date of this Agreement and
the Effective Time of the Merger,
(a) neither Larizza nor any of the Subsidiaries may,
directly or indirectly, and each will instruct and otherwise cause
Stockholder and its other Affiliates that are controlled by Larizza,
and the officers, directors, employees, agents or advisors or other
representatives or consultants of Larizza not to, encourage, solicit,
initiate, engage or participate in discussions or negotiations with,
or provide information to, any person or entity (other than Parent,
Acquisition or subsidiaries, affiliates or representatives of any of
the foregoing) in connection with any tender offer, exchange offer,
merger, consolidation, business combination, sale of substantial
assets, sale of securities, liquidation, dissolution or similar
transaction involving Larizza or any of its subsidiaries or divisions,
including, without limitation, Manchester (any such proposal, offer or
other transaction being hereinafter referred to as an "Alternative
Proposal"), and
(b) Larizza will notify Parent immediately if any such
inquiries or proposals are received by, any such information is
requested from, or any such negotiations or discussions are sought to
be initiated or continued with, it;
provided, however, that nothing contained in this Section 3.11 will prohibit
the Board of Directors of Larizza from, directly or indirectly, to the extent
applicable, (i) complying with Rule 14e-2 promulgated under the Exchange Act
with regard to an Alternative Proposal, or (ii) furnishing information and
access to any person or entity making an unsolicited request therefor (a "New
Bidder"), and may engage in and participate in discussions and negotiations
with such person or entity concerning an Alternate Proposal involving Larizza
or any of its Subsidiaries or divisions, if and solely to the extent that
Larizza's Board of Directors determines in its good faith judgment, based as to
legal matters on a written opinion of legal counsel, that the failure to
furnish such information to the New Bidder would constitute a breach of
fiduciary duty by the Larizza Board of Directors. Nothing in this Section 3.11
alone will (x) permit Larizza to terminate this Agreement, (y) permit Larizza
to enter into any agreement with respect to an Alternative Proposal for as long
as this Agreement remains in effect (it being agreed that for as long as this
Agreement remains in effect, Larizza will not enter into any agreement with any
person for an Alternative Proposal), or (z) affect any other obligation of
Larizza under this Agreement.
25
<PAGE> 77
3.12 Notice of Actions and Proceedings. Larizza will promptly
notify Parent of any actions, suits, claims, investigations or proceedings
commenced or, to the knowledge of Larizza, threatened in writing against,
relating to or involving or otherwise affecting Larizza or any of the
Subsidiaries which, if pending on the date hereof, would have been required to
have been disclosed in writing pursuant to any Schedule required hereby or
which relates to the consummation of the Offer or the Merger.
3.13 Notification of Certain Other Matters. Without limiting the
generality or effect of any other provision hereof, Larizza will promptly
notify Parent of:
(a) any written notice or other written 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;
(b) any written notice or other written communication
from any governmental entity in connection with the transactions
contemplated hereby;
(c) any fact, event, development, occurrence, condition
or act that constitutes a Material Adverse Effect or is reasonably
expected to result in such an effect; and
(d) any lawsuit filed against Larizza, or any of its
directors or officers, or any appraisal proceeding, relating to the
Merger.
4 CONDITIONS TO CLOSING AND CLOSING.
4.1 Conditions to Acquisition's and Parent's Obligations. The
obligations of Acquisition and Parent under this Agreement are subject to the
satisfaction of each of the following conditions at or before the Closing;
provided that Acquisition and Parent may waive the satisfaction of any such
condition pursuant to a writing signed by Acquisition and Parent:
4.1.1 Accuracy of Larizza's Representations and Warranties.
The representations and warranties of Larizza in this Agreement, including,
without limitation, the representations and warranties in Section 2.1, shall be
true, accurate and correct at and as of the Closing Date, with the same force
and effect as though such representations and warranties had been made at and
as of the Closing Date; provided, that this condition shall not apply to any
untruth, inaccuracy or incorrectness of any representation or warranty that
does not (i) have a Material Adverse Effect, or (ii) renders the Merger
invalid, causes any material provision of this Agreement to be unenforceable or
materially impinges on Parent's ownership of the shares of the Surviving
Corporation after giving effect to the Merger.
4.1.2 Compliance with Covenants. All material actions,
undertakings, covenants or agreements required to be performed by Larizza at or
before the Closing shall have been so performed or complied with, in all
material respects, on or before the Closing Date.
26
<PAGE> 78
4.1.3 Certificate of Larizza Officers. Larizza shall have
delivered to Acquisition and Parent a Certificate, dated as of the Closing
Date, signed by the chief executive and principal financial officers of Larizza
on behalf of Larizza (without any personal liability of such officers)
certifying as to the fulfillment of the conditions specified in Sections 4.1.1
and 4.1.2.
4.1.4 Consents. Larizza shall have obtained the approvals
and consents to the transactions contemplated by this Agreement required to be
set forth in Section 2.1.5 or Schedule 2.1.5 to the extent that the failure to
obtain any such approval or consent would have a Material Adverse Effect. The
required statutory waiting period under the HSR Act shall have terminated and
no condition shall have been imposed with respect thereto which is not
reasonably acceptable to Parent, in its discretion.
4.1.5 Shareholder Approval. This Agreement shall have been
approved and adopted by the requisite vote of the holders of Larizza Common
Shares in accordance with the OGCL and Larizza's Articles of Incorporation and
Code of Regulations.
4.1.6 No Material Litigation. No action or proceeding
shall have been instituted, threatened or concluded by any governmental
instrumentality, agency or other person before any court or governmental agency
to restrain, prevent or materially restrict this Agreement or delay the
consummation of the transactions contemplated by this Agreement.
4.1.7 Delivery of Other Documents. Larizza shall have
delivered the documents required to be delivered by Larizza pursuant to this
Agreement.
4.1.8 No Material Change in Schedules. There shall have
been no material adverse change in the information required to be contained in
the Schedules to this Agreement.
4.1.9 Opinion of Counsel. Acquisition and Parent shall
have received the favorable opinion of counsel to Larizza, dated the Closing
Date, substantially to the effect that:
(a) Each Company is duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation,
and is duly qualified under the laws of the State of Michigan to
transact business in such State. Larizza has all requisite corporate
power and authority to execute, deliver and comply with its
obligations under the terms of this Agreement. Execution, delivery
and performance of this Agreement have been duly authorized by all
necessary corporate action on the part of the Larizza.
(b) This Agreement constitutes the valid and binding
obligation of Larizza, enforceable against Larizza in accordance with
its terms, except as may be limited by bankruptcy, reorganization,
insolvency, moratorium, so-called fraudulent transfer or other similar
laws relating to or affecting the enforcement of creditors' rights
generally, and subject to general principles of equity, regardless of
whether such enforceability is considered in a proceeding at law or in
equity.
27
<PAGE> 79
(c) Larizza's execution and delivery of this Agreement
and its performance and compliance with the terms thereof do not
violate (i) the Articles of Incorporation or the Code of Regulations
of Larizza or (ii) any laws known to such counsel to be applicable to
Larizza where such violation would reasonably be expected to have a
material adverse effect upon the validity, performance or
enforceability of any of the terms of this Agreement applicable to
Larizza.
(d) No consent, approval, authorization or order of, or
registration or filing with, any governmental agency or body of the
United States of America or the State of Michigan is legally required
as a condition to the execution and delivery by Larizza of this
Agreement, other than the approval of Larizza's shareholders in
accordance with the with the OGCL, filings with respect to the Merger
pursuant to the OGCL, and any of the foregoing under the HSR Act or
the Exchange Act.
4.1.10 No Material Change in the Business of the Companies.
There shall have been no fact, event, development, occurrence, condition or
act that constitutes a Material Adverse Effect or is reasonably expected to
result in such an effect.
4.1.11 Stockholder Receivables. All amounts due to Larizza
(including, without limitation in respect of the receivables listed on Schedule
4.1.11) from any stockholder of Larizza shall have been fully paid.
4.2 Conditions to Larizza's Obligations. The obligations of
Larizza under this Agreement are subject to the satisfaction of each of the
following conditions at or before the Closing; provided that Larizza may waive
the satisfaction of any such condition pursuant to a writing signed by Larizza:
4.2.1 Accuracy of Acquisition's and Parent's
Representations and Warranties. The representations and warranties of
Acquisition and Parent in this Agreement, including, without limitation, the
representations and warranties in Section 2.2, shall be true, accurate and
correct at and as of the Closing Date, with the same force and effect as though
such representations and warranties had been made at and as of the Closing
Date; provided, that this condition shall not apply to any untruth, inaccuracy
or incorrectness of any representation or warranty that does not (i) have a
Parent MAE, or (ii) renders the Merger invalid or causes any material provision
of this Agreement to be unenforceable.
4.2.2 Compliance with Covenants. All actions,
undertakings, covenants, or agreements required to be performed by Acquisition,
Parent or both at or before the Closing, including, without limitation, the
covenants of Acquisition and Parent in Section 3, shall have been performed or
complied with, in all material respects, on or prior to the Closing Date.
4.2.3 Certificate of Acquisition's Officers. Acquisition
and Parent shall have delivered to the Larizza a Certificate, dated as of the
Closing Date, signed by the chief executive and chief financial officers of
Acquisition and of Parent on behalf of Acquisition and Parent
28
<PAGE> 80
(without any personal liability of such officers), certifying as to the
fulfillment of the conditions specified in Sections 4.2.1 and 4.2.2;
4.2.4 HSR Act. The required statutory waiting period under
the HSR Act shall have terminated and no condition shall have been imposed with
respect thereto which is not reasonably acceptable to Parent in its discretion,
and (except for conditions on the Parent or the Surviving Corporation only) to
Larizza in its discretion.
4.2.5 Shareholder Approval. This Agreement shall have been
approved and adopted by the requisite vote of the holders of Larizza Common
Shares in accordance with the OGCL and Larizza's Articles of Incorporation and
Code of Regulations.
4.2.6 No Material Litigation. No temporary restraining
order or preliminary or permanent injunction shall be issued and in effect
which enjoins the Merger.
4.2.7 Delivery of the Fund. Acquisition shall have
deposited the Fund with the Exchange Agent.
4.2.8 Opinion of Counsel. Larizza shall have received the
favorable opinion of counsel to Acquisition and Parent, dated the Closing Date,
substantially to the effect that:
(a) Acquisition and Parent are each validly existing and
in good standing under the laws of the state of their incorporation.
Acquisition and Parent have all requisite corporate power and
authority to execute, deliver and comply with their obligations under
the terms of this Agreement. Execution, delivery and performance of
this Agreement have been duly authorized by all necessary corporate
action on the part of Acquisition and Parent.
(b) This Agreement constitutes a valid and binding
obligation of Acquisition and of Parent, enforceable against
Acquisition and Parent in accordance with their terms, except as may
be limited by bankruptcy, reorganization, insolvency, moratorium,
so-called fraudulent transfer or other similar laws relating to or
affecting the enforcement of creditors' rights generally, and is
subject to general principles of equity, regardless of whether such
enforceability is considered in a proceeding at law or in equity.
(c) Acquisition's and Parent's execution and delivery of
this Agreement and their performance and compliance with the terms
thereof do not violate (i) the Certificate of Incorporation or the
Bylaws of Acquisition or Parent or (ii) any laws known to such counsel
to be applicable to Acquisition or Parent where such violation would
reasonably be expected to have a material adverse effect upon the
validity, performance or enforceability of any of the terms of this
Agreement applicable to Acquisition or Parent.
(d) No consent, approval, authorization or order of, or
registration or filing with, any governmental agency or body of the
United States of America or the State of
29
<PAGE> 81
Delaware is legally required as a condition to the execution and
delivery by Acquisition or Parent of this Agreement, other than
filings with respect to the Merger pursuant to the DGCL, and any of
the foregoing under the HSR Act or the Exchange Act.
4.3 The Closing. Subject to the terms and conditions of this
Agreement, the Closing under this Agreement shall be held at 10:00 a.m. local
time at the offices of Jones, Day, Reavis & Pogue, 599 Lexington Avenue, New
York, New York as soon as practicable after the satisfaction or waiver of the
conditions precedent to the Closing or on such other day and time as
Acquisition, the Parent and Larizza shall mutually agree upon (or failing such
agreement, not later than five business days after such satisfaction or waiver
of such conditions); provided that Larizza may extend the Closing Date to
January 3, 1996, or to such other day as Acquisition, Parent and Larizza shall
mutually agree upon, by written notice to Parent and Acquisition. The
consummation of the transactions contemplated by this Agreement at such place
and time are sometimes referred to in this Agreement as the "Closing", and such
date is sometimes referred to as the "Closing Date". On the Closing Date, or
as soon thereafter as practicable, the parties will execute and file with the
Secretaries of State of the State of Ohio and Delaware Certificates of Merger
in accordance with the OGCL and the DGCL, and the parties will take such other
and further actions in connection with the actions required by this Section 4.3
as may be required by Delaware or Ohio law to make the Merger effective as soon
as practicable after the time of such filing. The Merger will become effective
upon the filing of the last of the Certificates of Merger with the Secretaries
of State of Ohio and Delaware in accordance with the OGCL and the DGCL, unless
a later date is specified in the Certificates of Merger, in which case the
Merger shall become effective at such later date (the "Effective Time of the
Merger"). At the Effective Time of the Merger, Acquisition will be merged
with and into Larizza.
5 TERMINATION AND ABANDONMENT.
5.1 Termination and Abandonment. Regardless of whether this
Agreement or the Merger has been approved by Larizza's shareholders, this
Agreement may be terminated and the Merger may be abandoned at any time before
the Effective Time of the Merger:
(a) by mutual action of the Boards of Directors of
Larizza, Acquisition, and Parent; or
(b) by the Boards of Directors of Acquisition and Parent
if the conditions set forth in Section 4.1 shall not have been
complied with or performed in any material respect and such
noncompliance or nonperformance shall not have been cured or
eliminated, after 30 days written notice (or by its nature cannot be
cured or eliminated), on or before February 29, 1996 (the "Drop Dead
Date"); or
(c) by the Board of Directors of Larizza if the
conditions set forth in Section 4.2 shall not have been complied with
or performed in any material respect and such noncompliance or
nonperformance shall not have been cured or eliminated, after 30
30
<PAGE> 82
days written notice (or by its nature cannot be cured or eliminated),
on or before the Drop Dead Date; or
(d) by the Board of Directors of Larizza, Acquisition or
Parent if the Effective Time of the Merger does not occur on or before
the Drop Dead Date; provided, however, that the right to terminate
this Agreement under this Section 5.1(d) will not be available to any
party whose failure to fulfill any obligation under this Agreement has
been the cause of, or resulted in, the failure of the Effective Time
of the Merger to occur on or before the Drop Dead Date; or
(e) by either Parent and Acquisition, on the one hand, or
Larizza, on the other hand, if either one (or any permitted assignee
hereunder) is restrained, enjoined or otherwise precluded by an order,
decree, ruling, injunction or other action (other than an order or
injunction issued on a temporary or preliminary basis) of a court,
domestic or foreign, of competent jurisdiction or other governmental
entity from consummating the Merger or making the acquisition or
holding by Parent or its subsidiaries of the Stock Certificates or
shares of common stock of the Surviving Corporation illegal and all
means of appeal and all appeals from such order, decree, ruling,
injunction or other action have been finally exhausted; or
(f) by the Board of Directors of Larizza if (i) a New
Bidder makes a bona fide offer on or before the Effective Time of the
Merger, (ii) Larizza's Board of Directors determines in its good faith
judgment, based as to legal matters on a written opinion of legal
counsel, and in the exercise of its fiduciary duties that such offer
is more favorable to Larizza's shareholders than the Merger, and (iii)
Larizza gives Parent at least 10 calendar days prior written notice of
its intent to terminate this Agreement under this Section 5.1(f);
provided, however, that the termination right provided in this Section
5.1(f) will terminate if, within such 10-day period, Parent notifies
Larizza that it will match, in all material respects, the terms and
provisions of such other offer (whereupon the parties will execute an
appropriate amendment hereto); or
(g) by the Board of Directors of Parent or Acquisition,
if (i) the Board of Directors of Larizza shall not have recommended or
shall withdraw, modify or change its recommendation relating to the
Merger in a manner adverse to Parent or shall have resolved to do any
of the foregoing, or (ii) the Board of Directors of Larizza shall have
recommended to the stockholders of Larizza that they accept or
approve, or Larizza or any of its Subsidiaries shall have agreed to
accept an Alternative Proposal.
5.2 Effect of Termination. Except as provided in Section 5.3 with
respect to the Topping Fee or in Section 6.3 with respect to the
confidentiality agreement, and except for an intentional breach of this
Agreement (provided that no claim for intentional breach of this Agreement
shall survive the Closing), if this Agreement is terminated and the Merger is
abandoned, this Agreement shall be void and have no effect, and no party to
this Agreement shall have any liability to any other party or its shareholders,
directors, officers, employees or agents
31
<PAGE> 83
with respect to this Agreement or the Merger, and each party shall be
responsible for its own expenses.
5.3 Topping Fee. If the Board of Directors of Larizza terminates
this Agreement and abandons the Merger pursuant to Section 5.1(f), or if the
Board of Directors of Parent or Acquisition terminates this Agreement and
abandons the Merger pursuant to Section 5.1(g)(i) or (ii), then Parent shall
receive from Larizza the sum (the "Topping Fee") of (i) $4,300,000 and (ii) the
amount, not to exceed $1,700,000, of all costs and expenses incurred by Parent
and Acquisition relating to this Agreement, the transactions contemplated
hereby and the financing therefor, including without limitation, the fees,
disbursements and charges of counsel to Parent, Acquisition and any financing
source for which Parent or any of its affiliates is responsible, financial
advisory fees (not in excess of customary financial advisory fees if payable to
affiliated entities), accounting fees and expenses, due diligence costs, and
all other out-of-pocket fees, costs and expenses. Notwithstanding any other
provision hereof, Larizza will not have the right to terminate this Agreement
under Section 5.1(f) unless the Topping Fee has been paid in full prior
thereto.
6 MISCELLANEOUS.
6.1 Non-Survival of Representations, Warranties and Covenants.
Except as provided in Section 1.4 with respect to the payment for the Larizza
Common Shares, in Section 6.2 with respect to directors' and officers'
indemnification and insurance or in Section 6.3 with respect to the
confidentiality agreement, regardless of any investigation at any time made by
or on behalf of any party to this Agreement or of any information any party may
have in respect thereof, notwithstanding any other term or condition of this
Agreement, all representations, warranties, covenants and agreements contained
in this Agreement or made pursuant to, or in connection with, this Agreement,
the Merger or the transactions contemplated by this Agreement (including,
without limitation, any certificates, instruments, opinions or other documents
delivered at the Closing by or on behalf of the parties or any of their
directors, officers, employees, agents, accountants or attorneys) shall
automatically terminate (without further action) at and upon the Closing and
they shall have no effect after the Closing and no claim whatsoever may be
brought after the Closing alleging a breach of any representation or warranty
or any other failure to comply with the terms and provisions of this Agreement
or any of such other documents.
6.2 Continuation of Directors' and Officers' Indemnification.
Larizza will indemnify and hold harmless, and after the Closing Date, the
Surviving Corporation and Parent, jointly and severally, will indemnify and
hold harmless, each present and former employee, agent, director or officer of
Larizza or of the Subsidiaries and the Stockholder party to the Stock Agreement
(the "Directors and Officers") from and against any and all claims arising out
of or in connection with activities in such capacity, or on behalf of, or at
the request of, Larizza (including, without limitation, the Merger and the
other transactions and performance provided for, or required by, this Agreement
or the Stock Agreement), to the fullest extent permitted under applicable law
and, in addition (if not prohibited by applicable law), to the fullest extent
provided in the applicable Articles of Incorporation, Code of Regulations and
Bylaws in effect at the date of this Agreement.
32
<PAGE> 84
The Surviving Corporation and Parent, jointly and severally, will continue the
indemnification, advancement of expenses and limitation of liability provisions
currently provided by the applicable Articles of Incorporation, Code of
Regulations and Bylaws for a period of not less than six years after the
Closing Date. If any claim or claims are asserted or made within such six year
period, all rights to indemnification in respect of any such claim or claims
shall continue until disposition of any and all such claims. Without limiting
the foregoing, Larizza, and after the Closing Date, the Surviving Corporation
and Parent, jointly and severally, will advance expenses incurred with respect
to the foregoing, as they are incurred, to the fullest extent permitted under
applicable law, if the person on whose behalf the expenses are advanced
provides an undertaking (which need not be secured) to repay such advances if
it is ultimately determined in a final, non-appealable judicial proceeding that
such person is not entitled to indemnification.
6.3 Entire Agreement. This Agreement, including the Schedules,
agreements, documents, certificates and instruments referred to in this
Agreement, embodies the entire agreement and understanding of the parties to
this Agreement with respect to the subject matter of this Agreement. There are
no restrictions, promises, representations, warranties, covenants or
undertakings, other than those expressly set forth or referred to in this
Agreement. This Agreement supersedes all prior agreements, commitments and
understandings, written or oral, between the parties with respect to such
subject matter, and any such prior agreements or understandings are merged into
this Agreement; provided, however, that the Confidentiality Agreement
previously entered into by Larizza and Parent shall survive the execution,
delivery and termination of this Agreement.
6.4 Amendments. This Agreement may be amended only by a written
instrument signed by the parties to this Agreement; provided, that after
approval of the Merger by the shareholders of Larizza, no amendment may be made
that decreases the consideration to which Larizza's shareholders are entitled
pursuant to this Agreement or otherwise materially adversely affects the
shareholders of Larizza without the further approval of Larizza's shareholders.
6.5 Waivers. At any time before the Effective Time of the Merger,
regardless of whether this Agreement has been approved by Larizza's
shareholders, (i) Acquisition and Parent may extend the time for the
performance of any of the obligations or other acts of Larizza or, subject to
the provisions of Section 6.4, waive compliance with any of the agreements of
Larizza or with any conditions to the obligations of Acquisition or Parent, or
(ii) Larizza may extend the time for the performance of any of the obligations
or other acts of Acquisition or Parent or, subject to the provisions of Section
6.4, waive compliance with any of the agreements of Acquisition or Parent or
with any conditions to the obligations of Larizza. Any agreement on the part
of a party to this Agreement concerning any such extension or waiver shall be
valid if set forth in an instrument in writing signed on behalf of such party
by a duly authorized officer. No failure or delay on the part of any party in
exercising any right, power or privilege under this Agreement or under the
documents delivered in connection with this Agreement shall operate as a waiver
of such right, power or privilege, nor shall any waiver on the part of any
party of any right, power or privilege under this Agreement, nor any single or
partial exercise of any right, power or privilege under this Agreement,
preclude any other or further exercise of such right,
33
<PAGE> 85
power or privilege under this Agreement or the exercise of any other right,
power or privilege. The rights and remedies under this Agreement are
cumulative and are not exclusive of any rights or remedies which any party may
otherwise have at law or in equity.
6.6 Binding Effect; Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of the parties to this Agreement and
their respective permitted successors and assigns. None of Larizza,
Acquisition or Parent may assign or transfer any of their rights or delegate
any of their obligations under this Agreement without the prior written consent
of the other parties, and any purported assignment or transfer by any of them
shall be void; provided that Acquisition will have the right to assign to
Parent or any direct or indirect wholly-owned subsidiary of Parent any and all
rights and obligations of Acquisition under this Agreement, including, without
limitation, the right to substitute in its place Parent or such a subsidiary as
one of the constituent corporations in the Merger (such subsidiary assuming all
of the obligations of Acquisition in connection with the Merger); provided that
any such assignment will not relieve Parent or Acquisition from any of its
obligations hereunder. Except for Section 6.2 (which is intended to be for the
benefit of directors, officers, agents and employees to the extent contemplated
thereby and their beneficiaries, and may be enforced by such persons or
entities), this Agreement is not intended to, nor will it confer upon any other
person or entity (other than the parties hereto) any rights or remedies.
Except as otherwise expressly provided herein, this Agreement is binding upon
and is solely for the benefit of the parties hereto and their respective
successors, legal representatives and assigns.
6.7 Expenses. Except as provided in Section 5.3 or Section 6.12
(if applicable), each party to this Agreement shall pay its own costs and
expenses incident to this Agreement and the transactions contemplated in this
Agreement, including, without limitation, attorneys' fees, brokerage, finder or
financial advisor fees and accounting fees.
6.8 Severability. If any provision of this Agreement is held to
be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall have no effect on the other provisions of this
Agreement, which shall remain valid, operative and enforceable. In addition,
in lieu of such illegal, invalid or unenforceable provision, there shall be
added automatically as a part of this Agreement a provision as similar in terms
to such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
6.9 Notices. Any notice or other communication required or which
may be given under this Agreement shall be in writing and either delivered
personally to the addressee, telegraphed, telecopied or telexed to the
addressee, sent by overnight courier to the addressee or mailed, certified or
registered mail, postage prepaid, and shall be deemed given when so delivered
personally, telegraphed, telecopied or telexed to the addressee, or, if sent by
overnight courier, one business day after the date so sent, or, if mailed,
three business days after the date of mailing, as follows:
34
<PAGE> 86
If to Larizza: Larizza Industries, Inc.
201 West Big Beaver Road, Suite 1040
Troy, Michigan 48084
Fax: (810) 524-4996
Attention: Ronald T. Larizza
With Copies To: Patrick T. Duerr, Esq.
Honigman Miller Schwartz and Cohn
2290 First National Building
Detroit, Michigan 48226-3583
Fax: (313) 962-0176
If to Acquisition or Parent: Collins & Aikman Products Co.
701 McCullough Drive
Charlotte, North Carolina 28232
Attention: Chief Executive Officer
Fax: (704) 548-2208
With Copies To: Collins & Aikman Products Co.
210 Madison Avenue, 6th Floor
New York, New York 10016
Attention: Elizabeth Philipp, Esq.
Fax: (212) 578-1269
And: Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Attention: Robert A. Profusek, Esq.
Fax: (212) 755-7306
Any or the foregoing may change its address for notices by notice to the other
parties.
6.10 Knowledge. When used in this Agreement, the term "knowledge"
or "actual knowledge" (or any variation of knowledge) of Larizza shall refer to
the actual conscious awareness of Ronald T. Larizza, Edward W. Wells, Terence
C. Seikel or Vincent L. Donovan.
6.11 Governing Law. Except to the extent that Ohio law is
mandatorily applicable to the Merger or the rights of the shareholders of
Larizza, this Agreement shall be governed by, and construed in accordance with,
the laws of the State of Delaware (regardless of the laws that might otherwise
govern under applicable Michigan principles of conflicts of law) as to all
matters, including, but not limited to, matters of validity, construction,
effect, performance and remedies.
6.12 Attorneys' Fees. If any party commences an action against any
other party to enforce any of the terms, covenants, conditions or provisions of
this Agreement or because of a
35
<PAGE> 87
default by a party under this Agreement, the prevailing party in any such
action shall be entitled to recover its reasonable attorneys' fees, costs and
expenses incurred in connection with the prosecution or defense of such action
from the losing party.
6.13 Interpretation. The 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. All references to "Sections" and "Schedules" in this Agreement are,
unless specifically indicated otherwise, references to sections of, and
Schedules to, this Agreement. Whenever the singular is used, the same shall
include the plural and vice versa, where appropriate. Words of any gender
shall include each other gender where appropriate. The Schedules to this
Agreement are a part of this Agreement as if set forth in full in this
Agreement.
6.14 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. This Agreement may be
executed by facsimile signatures.
7 GLOSSARY. The following words and phrases are defined in the
following Sections of this Agreement:
<TABLE>
<CAPTION>
Word or Phrase Section
-------------- -------
<S> <C>
Acquisition . . . . . . . . . . . . . . . . . . . . . . . Introductory Paragraph
Acquisition Shares . . . . . . . . . . . . . . . . . . . . Recital C
Actual Knowledge . . . . . . . . . . . . . . . . . . . . . Section 6.10
Agreement . . . . . . . . . . . . . . . . . . . . . . . . Introductory Paragraph
Alternative Proposal . . . . . . . . . . . . . . . . . . . Section 3.11(a)
Bidders . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.1.28
Business . . . . . . . . . . . . . . . . . . . . . . . . . Recital A
Closing . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.3
Closing Date . . . . . . . . . . . . . . . . . . . . . . . Section 4.3
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.1.12(b)
Companies . . . . . . . . . . . . . . . . . . . . . . . . Section 2.1.1
Contracts . . . . . . . . . . . . . . . . . . . . . . . . Section 2.1.24
DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . Recital D
Directors and Officers . . . . . . . . . . . . . . . . . . Section 6.2
Dissenting Shares . . . . . . . . . . . . . . . . . . . . Section 1.2(b)
Drop Dead Date . . . . . . . . . . . . . . . . . . . . . . Section 5.1(b)
Effective Time of the Merger . . . . . . . . . . . . . . . Section 4.3
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.1.14
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . Section 2.1.5
Exchange Agent . . . . . . . . . . . . . . . . . . . . . . Section 1.4.1
Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.4.1
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.1.5
</TABLE>
36
<PAGE> 88
<TABLE>
<CAPTION>
Word or Phrase Section
-------------- -------
<S> <C>
Hughes . . . . . . . . . . . . . . . . . . . . . . . . . . Recital A
Intellectual Property . . . . . . . . . . . . . . . . . . Section 2.1.23
Knowledge . . . . . . . . . . . . . . . . . . . . . . . . Section 6.10
Larizza . . . . . . . . . . . . . . . . . . . . . . . . . Introductory Paragraph
Larizza Common Shares . . . . . . . . . . . . . . . . . . Recital B
Larizza Financial Statements . . . . . . . . . . . . . . . Section 2.1.8
Larizza Interim Statements . . . . . . . . . . . . . . . . Section 2.1.8
Larizza Preferred Shares . . . . . . . . . . . . . . . . . Recital B
Larizza SEC Filings . . . . . . . . . . . . . . . . . . . Section 2.1.6
Liabilities . . . . . . . . . . . . . . . . . . . . . . . Section 2.1.11
Liens . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.1.10
Mailing Date . . . . . . . . . . . . . . . . . . . . . . . Section 2.1.7
Manchester . . . . . . . . . . . . . . . . . . . . . . . . Recital A
Material Adverse Effect . . . . . . . . . . . . . . . . . Section 2.1.9
Meeting . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.3
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . Recital D
Merger Price . . . . . . . . . . . . . . . . . . . . . . . Section 1.2(a)
Merrill Letter . . . . . . . . . . . . . . . . . . . . . . Section 2.1.20
New Bidder . . . . . . . . . . . . . . . . . . . . . . . . Section 3.11
OGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . Recital D
Option . . . . . . . . . . . . . . . . . . . . . . . . . . Recital E
Other Potential Bidders . . . . . . . . . . . . . . . . . Section 2.1.28
Parent . . . . . . . . . . . . . . . . . . . . . . . . . . Introductory Paragraph
Parent MAE . . . . . . . . . . . . . . . . . . . . . . . . Section 2.2.1
Parent SEC Filings . . . . . . . . . . . . . . . . . . . . Section 2.2.4
Permits . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.1.16
Permitted Liens . . . . . . . . . . . . . . . . . . . . . Section 2.1.10
Plans . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.1.14
Proxy Statement . . . . . . . . . . . . . . . . . . . . . Section 2.1.7
Scheduled IP . . . . . . . . . . . . . . . . . . . . . . . Section 2.1.23
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.1.6
Senior Executives . . . . . . . . . . . . . . . . . . . . Section 2.1.18
Stock Agreement . . . . . . . . . . . . . . . . . . . . . Recital E
Stock Certificates . . . . . . . . . . . . . . . . . . . . Section 1.2(a)
Stockholder . . . . . . . . . . . . . . . . . . . . . . . Recital E
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . Recital A
Surviving Corporation . . . . . . . . . . . . . . . . . . Section 1.1(a)
Tax Returns . . . . . . . . . . . . . . . . . . . . . . . Section 2.1.12(b)
Tax/Taxes . . . . . . . . . . . . . . . . . . . . . . . . Section 2.1.12(b)
Topping Fee . . . . . . . . . . . . . . . . . . . . . . . Section 5.3
Voting Trust Agreement . . . . . . . . . . . . . . . . . . Section 2.1.3
</TABLE>
37
<PAGE> 89
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth in the introductory paragraph of this Agreement.
ACQUISITION: LRI ACQUISITION CORP.
By: /S/ ELIZABETH R. PHILIPP
------------------------
Its: Director
----------------------
LARIZZA: LARIZZA INDUSTRIES, INC.
-----------------------
By: /S/ RONALD T. LARIZZA
-----------------------
Its: CEO
----------------------
PARENT: COLLINS & AIKMAN PRODUCTS CO.
By: /S/ THOMAS E. HANNAH
------------------------
Its: President and Chief
Executive Officer
-----------------------
38
<PAGE> 90
SCHEDULE INDEX
<TABLE>
<CAPTION>
Schedule Number Description
- --------------- -----------
<S> <C>
1.1(b) Form of Restated Articles of Incorporation
1.1(c) Form of Restated Code of Regulations
2.1.1 States In Which Qualified
2.1.3 The Companies' Authorized and Outstanding Stock and Options
2.1.5 Larizza Consents and Approvals
2.1.9 Larizza Changes Since June 30, 1995
2.1.10 Larizza Permitted Liens
2.1.11 Larizza Undisclosed Liabilities
2.1.12 Larizza Tax Audits
2.1.13 Larizza Litigation
2.1.14 Larizza ERISA Plans
2.1.15 Larizza Environmental Matters
2.1.18 Larizza Changes Since June 30, 1995
2.1.20 Merrill Lynch Letter
2.1.23 Larizza Intellectual Property
2.1.24 Larizza Contracts
2.1.25 Larizza Labor Matters
2.1.26 Larizza Related Party Transactions
2.2.3 Acquisition and Parent Consents and Approvals
4.1.11 Larizza Related Party Receivables to be paid
</TABLE>
39
<PAGE> 91
APPENDIX B
[LETTERHEAD OF MERRILL LYNCH]
September 26, 1995
Non-Management Committee of the Board of Directors
Larizza Industries, Inc.
201 West Big Beaver Road, Suite 1040
Troy, Michigan 48084
Gentlemen:
Larizza Industries, Inc. (the "Company") and Collins & Aikman Products
Co. (the "Acquiror") have entered into an Agreement and Plan of Merger, dated
the date hereof (the "Agreement"). Pursuant to the Agreement, the Company will
become a wholly owned subsidiary of the Acquiror in a transaction (the
"Merger") in which each outstanding share of the Company's common stock (the
"Shares") not held as treasury shares of the Company or which have become
Dissenting Shares (as defined in the Agreement) will be converted into the
right to receive $6.50 in cash. In connection with the Agreement, the Acquiror
and Mr. Ronald T. Larizza, the Chairman and Chief Executive Officer of the
Company, have entered into an agreement (the "Stock Agreement") pursuant to
which Mr. Larizza has granted the Acquiror an option to acquire the 7,910,906
Shares owned by Mr. Larizza and has agreed to vote such shares as well as the
additional 3,272,177 shares over which he has voting control (together, the
"Majority Shareholder Shares") in favor of the Merger at a special
shareholders' meeting which is expected to be held in December 1995. The
Majority Shareholder Shares represent approximately 50.6% of the total Shares
outstanding. The Merger is expected to be consummated on or shortly after the
date of the special shareholders' meeting.
You have asked us whether, in our opinion, the proposed cash
consideration to be received by the holders of the Shares in the Merger is fair
to such shareholders from a financial point of view.
In arriving at the opinion set forth below, we have, among other
things:
(1) Reviewed the Company's Annual Reports, Forms 10-K and related
financial information for the five fiscal years ended December 31,
1994 and the Company's Forms 10-Q and the related unaudited financial
information for the quarterly periods ending March 31, 1995 and June
30, 1995;
(2) Reviewed certain information, including financial forecasts,
relating to the business, earnings, cash flow, assets and prospects of
the Company, furnished to us by the Company;
(3) Conducted discussions with members of senior management of the
Company concerning its businesses and prospects;
(4) Reviewed the historical market prices and trading activity
for the Shares and compared them with that of certain publicly
traded companies which we deemed to be reasonably similar to the
Company;
(5) Compared the results of operations of the Company with that of
certain companies which we deemed to be reasonably similar to the
Company;
(6) Compared the proposed financial terms of the transactions
contemplated by the Agreement with the financial terms of certain
other mergers and acquisitions which we deemed to be relevant;
<PAGE> 92
(7) Reviewed the Agreement dated September 26, 1995;
(8) Reviewed the Stock Agreement dated September 26, 1995; and
(9) Reviewed such other financial studies and analyses and
performed such other investigations and took into account such other
matters as we deemed appropriate, including our assessment of general
economic, market, monetary and other conditions as they exist on the
date hereof.
In preparing our opinion, we have relied on and assumed the accuracy
and completeness of all information supplied or otherwise made available to us
by the Company. We have not assumed any responsibility for independent
verification of such information or any independent appraisal of the assets of
the Company. With respect to the financial forecasts furnished by the Company,
we have assumed that they have been reasonably prepared and reflect the best
currently available estimates and judgment of the Company's management as to
the expected future financial performance of the Company.
In connection with our providing financial advice to the Company
regarding the matters set forth in this opinion, we have, at the Company's
request, had contacts with several financial and strategic potential
purchasers, both domestic and foreign, with respect to an acquisition of the
Company.
Our opinion set forth below is directed to the Non-Management
Committee of the Board of Directors of the Company and does not constitute a
recommendation to any shareholder of the Company with respect to the approval
of the transactions contemplated by the Agreement. This letter is for the
information of the Non-Management Committee of the Board of Directors of the
Company only in connection with its consideration of the Agreement and is not
to be quoted or referred to, in whole or in part, in any proxy statement or
other document prepared in connection with the transactions contemplated by the
Agreement, nor shall this letter be used for any other purposes or publicly
disclosed, without our prior written consent; provided, however, the Company is
authorized to include this letter in its entirety in the proxy materials
contemplated by the Agreement.
We have acted as financial advisor to the Non-Management Committee of
the Board of Directors of the Company in connection with the transactions
contemplated by the Agreement and will receive a fee for our services, a
substantial portion of which is contingent upon consummation of the
transactions contemplated by the Agreement. In the ordinary course of our
business, we and our affiliates may actively trade the securities of the
Company and the Acquiror for our or their own accounts and for the accounts of
our customers and, accordingly, may at any time hold a long or short position
in such securities. We have, in the past, provided financial advisory and
financing services to the Acquiror and certain affiliates of the Acquiror and
have received fees for the rendering of such services.
On the basis of, and subject to the foregoing, we are of the opinion
that the proposed cash consideration to be received by the holders of the
Shares pursuant to the Merger is fair to such shareholders from a financial
point of view.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
By /s/ Daniel M. Dickinson
-----------------------------
Director
Investment Banking Group
<PAGE> 93
APPENDIX C
1701.85 RELIEF FOR DISSENTING SHAREHOLDERS; QUALIFICATION; PROCEDURES. --
(A)(1) A shareholder of a domestic corporation is entitled to relief as a
dissenting shareholder in respect of the proposals in sections 1701.74,
1701.76, and 1701.84 of the Revised Code, only in compliance with this section.
(2) If the proposal must be submitted to the shareholders of the
corporation involved, the dissenting shareholder shall be a record holder of
the shares of the corporation as to which he seeks relief as of the date fixed
for the determination of shareholders entitled to notice of a meeting of the
shareholders at which the proposal is to be submitted, and such shares shall
not have been voted in favor of the proposal. Not later than ten days after
the date on which the vote on such proposal was taken at the meeting of the
shareholders, the shareholder shall deliver to the corporation a written demand
for payment to him of the fair cash value of the shares as to which he seeks
relief, stating his address, the number and class of such shares, and the
amount claimed by him as the fair cash value of the shares.
(3) The dissenting shareholder entitled to relief under division
(C) of section 1701.84 of the Revised Code in the case of a merger pursuant to
section 1701.80 of the Revised Code and a dissenting shareholder entitled to
relief under division (E) of section 1701.84 of the Revised Code in the case of
a merger pursuant to section 1701.801 of the Revised Code shall be a record
holder of the shares of the corporation as to which he seeks relief as of the
date on which the agreement of merger was adopted by the directors of that
corporation. Within twenty days after he has been sent the notice provided in
section 1701.80 or 1701.801 of the Revised Code, the shareholder shall deliver
to the corporation a written demand for payment with the same information as
that provided for in division (A)(2) of this section.
(4) In the case of a merger or consolidation, a demand served on
the constituent corporation involved constitutes service on the surviving or
the new corporation, whether served before, on, or after the effective date of
the merger or consolidation.
(5) If the corporation sends to the dissenting shareholder, at the
address specified in his demand, a request for the certificates representing
the shares as to which he seeks relief, he, within fifteen days from the date
of the sending of such request, shall deliver to the corporation the
certificates requested, in order that the corporation may forthwith endorse on
them a legend to the effect that demand for the fair cash value of such shares
has been made. The corporation promptly shall return such endorsed
certificates to the shareholder. Failure on the part of the shareholder to
deliver such certificates terminates his rights as a dissenting shareholder, at
the option of the corporation, exercised by written notice sent to him within
twenty days after the lapse of the fifteen-day period, unless a court for good
cause shown otherwise directs. If shares represented by a certificate on which
such a legend has been endorsed are transferred, each new certificate issued
for them shall bear a similar legend, together with the name of the original
dissenting holder of such shares. Upon receiving a demand for payment from a
dissenting shareholder who is the record holder of uncertificated securities,
the corporation shall make an appropriate notation of the demand for payment in
its shareholder records. If uncertificated shares for which payment has been
demanded are to be transferred, any new certificate issued for the shares shall
bear the legend required for certificated securities as provided in this
paragraph. A transferee of the shares so endorsed, or of uncertificated
securities where such notation has been made, acquires only such rights in the
corporation as the original dissenting holder of such
<PAGE> 94
shares had immediately after the service of a demand for payment of the fair
cash value of the shares. Such request by the corporation is not an admission
by the corporation that the shareholder is entitled to relief under this
section.
(B) Unless the corporation and the dissenting shareholder shall
have come to an agreement on the fair cash value per share of the shares as to
which he seeks relief, the shareholder or the corporation, which in case of a
merger or consolidation may be the surviving or the new corporation, within
three months after the service of the demand by the shareholder, may file a
complaint in the court of common pleas of the county in which the principal
office of the corporation which issued such shares is located, or was located
at the time when the proposal was adopted by the shareholders of the
corporation, or, if the proposal was not required to be submitted to the
shareholders, was approved by the directors. Other dissenting shareholders,
within the period of three months may join as plaintiffs, or may be joined as
defendants in any such proceeding, and any two or more such proceedings may be
consolidated. The complaint shall contain a brief statement of the facts,
including the vote and the facts entitling the dissenting shareholder to the
relief demanded. No answer to such complaint is required. Upon the filing of
the complaint, the court, on motion of the petitioner, shall enter an order
fixing a date for a hearing on the complaint, and requiring that a copy of the
complaint and a notice of the filing and of the date for hearing be given to
the respondent or defendant in the manner in which summons is required to be
served or substituted service is required to be made in other cases. On the
day fixed for the hearing on the complaint or any adjournment of it, the court
shall determine from the complaint and from such evidence as is submitted by
either party whether the shareholder is entitled to be paid the fair cash value
of any shares and, if so, the number and class of such shares. If the court
finds that the shareholder is so entitled, the court may appoint one or more
persons as appraisers to receive evidence and to recommend a decision on the
amount of the fair cash value. The appraisers have such power and authority
specified in the order of their appointment. The court thereupon shall make a
finding as to the fair cash value of a share, and shall render judgment against
the corporation for the payment of it, with interest at such rate and from such
date as the court considers equitable. The costs of the proceeding, including
reasonable compensation to the appraisers to be fixed by the court, shall be
assessed or apportioned as the court considers equitable. The proceeding is a
special proceeding, and final orders in it may be vacated, modified, or
reversed on appeal pursuant to the Rules of Appellate Procedure and, to the
extent not in conflict with those rules, Chapter 2505. of the Revised Code.
If, during the pendency of any proceeding instituted under this section, a suit
or proceeding is or has been instituted to enjoin or otherwise to prevent the
carrying out of the action as to which the shareholder has dissented, the
proceeding instituted under this section shall be stayed until the final
determination of the other suit or proceeding. Unless any provision in
division (D) of this section is applicable, the fair cash value of the shares
as agreed upon by the parties or as fixed under this section shall be paid
within thirty days after the date of final determination of such value under
this division, the effective date of the amendment to the articles, or the
consummation of the other action involved, whichever occurs last. Upon the
occurrence of the last such event, payment shall be made immediately to a
holder of uncertificated securities entitled to such payment. In the case of
holders of shares represented by certificates, payment shall be made only upon
and simultaneously with the surrender to the corporation of the certificates
representing the shares for which such payment is made.
(C) If the proposal was required to be submitted to the
shareholders of the corporation, fair cash value as to those shareholders shall
be determined as of the day prior to that on which
<PAGE> 95
the vote by the shareholders was taken, and, in the case of a merger pursuant
to section 1701.80 or 1701.801 of the Revised Code, fair cash value as to
shareholders of a constituent subsidiary corporation shall be determined as of
the day before the adoption of the agreement of merger by the directors of the
particular subsidiary corporation. The fair cash value of a share for the
purposes of this section is the amount that a willing seller, under no
compulsion to sell, would be willing to accept, and that a willing buyer, under
no compulsion to purchase, would be willing to pay, but in no event shall the
fair cash value of it exceed the amount specified in the demand of the
particular shareholder. In computing such fair cash value, any appreciation or
depreciation in market value resulting from the proposal submitted to the
directors or to the shareholders shall be excluded.
(D) The right and obligation of a dissenting shareholder to
receive such fair cash value and to sell such shares as to which he seeks
relief, and the right and obligation of the corporation to purchase such shares
and to pay fair cash value of them terminates if:
(1) Such shareholder has not complied with this section, unless
the corporation by its directors waives such failure;
(2) The corporation abandons, or is finally enjoined or prevented
from carrying out, or the shareholders rescind their adoption, of the action
involved;
(3) The shareholder withdraws his demand, with the consent of the
corporation by its directors;
(4) The corporation and the dissenting shareholder shall not have
come to an agreement as to the fair cash value per share, and neither the
shareholder nor the corporation shall have filed or joined in a complaint under
division (B) of this section within the period provided.
(E) From the time of giving the demand, until either the
termination of the rights and obligations arising from it or the purchase of
the shares by the corporation, all other rights accruing from such shares,
including voting and dividend or distribution rights, are suspended. If during
the suspension, any dividend or distribution is paid in money upon shares of
such class, or any dividend, distribution, or interest is paid in money upon
any securities issued in extinguishment of or in substitution for such shares,
an amount equal to the dividend, distribution, or interest which, except for
the suspension, would have been payable upon such shares or securities, shall
be paid to the holder of record as a credit upon the fair cash value of the
shares. If the right to receive fair cash value is terminated otherwise than
by the purchase of the shares by the corporation, all rights of the holder
shall be restored and all distributions which, except for the suspension, would
have been made shall be made to the holder of record of the shares at the time
of termination. (Last amended by Sub. H.B. 708, L. '88, eff. 4-19-88.)
<PAGE> 96
Independent Auditor's Report
The Shareholders and Board of Directors
Larizza Industries, Inc.:
We have audited the accompanying consolidated balance sheets of Larizza
Industries, Inc. and subsidiaries as of December 31, 1994 and 1993, and the
related consolidated statements of operations, shareholders' equity (deficit),
and cash flows for each of the years in the three-year period ended December
31, 1994. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatements. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Larizza Industries,
Inc. and subsidiaries at December 31, 1994 and 1993, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1994, in conformity with generally accepted accounting
principles.
As discussed in notes 1 and 8 to the consolidated financial statements, the
Company changed its method of accounting for income taxes in 1993 to adopt the
provisions of the Financial Accounting Standards Board's Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes.
KPMG Peat Marwick LLP
Detroit, Michigan
February 9, 1995
-21-
<PAGE> 97
LARIZZA INDUSTRIES, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE SPECIAL MEETING OF SHAREHOLDERS, TO BE HELD ON
DECEMBER 1, 1995 AND ANY ADJOURNMENT OR POSTPONEMENT THEREOF
The undersigned hereby appoints Ronald T. Larizza, Edward L. Sawyer, Jr. and
Terence C. Seikel, or any of them, as Proxies, each with the power to act alone
and the power of substitution and resubstitution, to vote all shares of common
stock, no par value, which the undersigned would be entitled to vote at the
Special Meeting of Shareholders to be held on December 1, 1995 or any
adjournment or postponement thereof as specified below on the matters described
in the Company's Proxy Statement dated November 1, 1995.
<TABLE>
<S> <C>
1. The approval and adoption of the Agreement and Plan of Merger, dated (change of address)
as of September 26, 1995 (included as Appendix A to, and described in,
the Proxy Statement relating to this Special Meeting), among Larizza ______________________________________
Industries, Inc. (the "Company"), Collins & Aikman Products Co. ______________________________________
("Parent") and LRI Acquisition Corp. ("Acquisition"), a wholly-owned ______________________________________
subsidiary of Parent, pursuant to which Acquisition will be merged ______________________________________
with and into the Company, the Company will become a wholly-owned (If you have written in the above space,
subsidiary of Parent and each outstanding share of common stock, no please mark the corresponding box on
par value, of the Company will be converted into the right to receive the reverse side of this card)
$6.50 in cash.
2. In their discretion with respect to any other matters that may
properly come before the meeting. [SEE REVERSE
SIDE]
</TABLE>
SHARES IN YOUR NAME
PLEASE MARK YOUR
[X] VOTES AS IN THIS
EXAMPLE
<TABLE>
<S> <C>
1. Approval and
Adoption of [ ] FOR [ ] AGAINST [ ] ABSTAIN
Agreement
and Plan of
Merger
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
CHANGE WILL BE VOTED FOR THE APPROVAL AND ADOPTION OF THE AGREEMENT AND PLAN OF MERGER
OF [ ] AND THE RELATED MERGER. IF ANY OTHER MATTERS ARE PROPERLY PRESENTED AT THE
ADDRESS SPECIAL MEETING FOR ACTION TO BE TAKEN THEREON, THIS PROXY WILL BE VOTED ON
SUCH MATTERS BY THE PERSONS NAMED AS PROXIES HEREIN IN ACCORDANCE WITH THEIR
ATTEND BEST JUDGMENT. THE UNDERSIGNED HEREBY RATIFIES AND CONFIRMS ALL THAT THE
MEETING [ ] PERSONS NAMED AS PROXIES HEREIN MAY DO BY VIRTUE HEREOF AND HEREBY ACKNOWLEDGES
RECEIPT OF THE NOTICE OF SPECIAL MEETING OF SHAREHOLDERS AND THE PROXY
STATEMENT.
</TABLE>
<TABLE>
<S> <C>
SIGNATURE(S) ____________________________________ DATE _______________
PLEASE MARK, SIGN, DATE AND
SIGNATURE(S) ____________________________________ DATE _______________ RETURN THIS PROXY PROMPTLY USING
THE ENCLOSED ENVELOPE
(IMPORTANT: PLEASE SIGN NAME EXACTLY AS IT APPEARS HEREON INDICATING,
WHERE PROPER, OFFICIAL POSITION OR REPRESENTATIVE CAPACITY.
IN CASE OF JOINT HOLDERS, BOTH SHOULD SIGN.)
</TABLE>
