<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Larizza Industries, Inc.
(Name of Issuer)
Common Stock, no par value
(Title of Class of Securities)
517235 10 7
(CUSIP Number)
Elizabeth R. Philipp
Executive Vice President - Law
Collins & Aikman Products Co.
210 Madison Avenue
New York, NY 10016
212 578-1336
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
September 26, 1995
(Date of Event which Requires filing of this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject of
this Schedule 13D, and is filing this schedule because of Rule
13d-1(b) (3) or (4), check the following box [ ].
Check the following box if a fee is being paid with this
statement [x]. (A fee is not required only if the reporting
person: (1) has a previous statement on file reporting beneficial
ownership of more than five percent of the class of securities
described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of less than five percent
of such class. See Rule 13d-7.)
Index of Exhibits appears on Page 8
Page 1
<PAGE>
_________________________________________________________________
CUSIP NO. 517235 10 7 13D Page 2
_________________________________________________________________
(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
COLLINS & AIKMAN PRODUCTS CO.
13-0588710
_________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE
INSTRUCTIONS) (A) [ ]
(B) [ ]
_________________________________________________________________
(3) SEC USE ONLY
_________________________________________________________________
(4) SOURCE OF FUNDS (SEE INSTRUCTIONS)
BK
_________________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E)
[ ]
_________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
_________________________________________________________________
: (7) SOLE VOTING POWER
:
: 7,910,906
NUMBER OF SHARES : (8) SHARED VOTING POWER
BENEFICIALLY OWNED :
BY EACH REPORTING :
PERSON WITH : (9) SOLE DISPOSITIVE POWER
:
: 7,910,906
: (10) SHARED DISPOSITIVE POWER
:
_________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,910,906
(12) CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (SEE INSTRUCTIONS)
[ ]
_________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
35.8%
(14) TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
_________________________________________________________________
<PAGE>
_________________________________________________________________
CUSIP NO. 517235 10 7 13D Page 3
_________________________________________________________________
Item 1. Security and Issuer.
The title of the class of equity securities to which this
Statement relates is Common Stock, no par value ("Common Stock"),
of Larizza Industries, Inc., an Ohio corporation (the "Company").
The address of the Company's principal executive offices is 201
West Big Beaver Road, Suite 1040, Troy, Michigan 48084.
Item 2. Identity and Background.
This Statement is being filed by Collins & Aikman Products
Co., a Delaware corporation (the "Reporting Person"). The
principal businesses of the Reporting Person are the supply of
automotive interior trim products, residential upholstery
fabrics, commercial carpet and residential wallpaper. The
address of the Reporting Person's principal businesses and
principal office is 701 McCullough Drive, Charlotte, North
Carolina 28262.
Schedule I hereto, which is incorporated herein by this
reference, sets forth (i) the name, the state of organization,
the principal business and the address of the principal business
and the principal office of each corporation, general partnership
or limited partnership that may be deemed to control the
Reporting Person and (ii) the name, the business address, the
present principal occupation or employment (and the name,
principal business, and address of any corporation or other
organization in which such employment is conducted), and the
citizenship of (a) each executive officer and director of the
Reporting Person and any person that may be deemed to control the
Reporting Person that is a corporation and (b) each general
partner of any such controlling person that is a partnership.
Neither the Reporting Person nor to its knowledge any of the
persons identified in Schedule I hereto has, during the last five
years, (i) been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (ii) been a party
to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or
is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to,
Federal or state securities laws or finding any violation with
respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
The amount of funds to be used to acquire the shares of
Common Stock pursuant to the Merger Agreement (as defined in
response to Item 4) is approximately $144 million. In addition,
approximately $30 million will be required to prepay existing
indebtedness of the Company. The Reporting Person expects to
borrow from banks the funds for such purposes and to pay related
fees and expenses. The
<PAGE>
_________________________________________________________________
CUSIP NO. 517235 10 7 13D Page 4
_________________________________________________________________
Reporting Person 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
acquisition and related fees and expenses.
The foregoing response to this Item 3 is qualified in its
entirety by reference to the Commitment Letter, a copy of which
is filed as Exhibit 3 hereto and incorporated herein by
reference.
Item 4. Purpose of Transaction.
This statement is being filed to report that the Reporting
Person, LRI Acquisition Corp., a wholly-owned subsidiary of the
Reporting Person ("Merger Sub"), and the Company entered into an
Agreement and Plan of Merger, dated September 26, 1995 (the
"Merger Agreement") pursuant to which, on the terms and subject
to the conditions of the Merger Agreement (including the approval
of the Company's shareholders), Merger Sub will be merged into
the Company (the "Merger"). At the effective time of the Merger,
the Company's outstanding Common Stock will be converted into the
right to receive $6.50 per share in cash. Subject to the
fiduciary duties of the Company's Board of Directors, the Merger
Agreement generally requires the Company's Board of Directors to
recommend approval of the Merger Agreement by the Company's
shareholders, prohibits the Company from soliciting other
business combination transactions and requires the Company to pay
the Reporting Person up to $6,000,000 if the Merger Agreement is
terminated in connection with specified business combination
transactions. At the effective time of the Merger, the Company's
Articles of Incorporation and Code of Regulations will be amended
and restated and the officers and directors of Merger Sub will
become the officers and directors of the Company. It is also
expected that at the effective time of the Merger, the Common
Stock will be delisted from the American Stock Exchange, the
registration of the Common Stock under the Securities Exchange
Act of 1934 will be terminated and the Company's lenders under
its existing financing facilities will be repaid.
In consideration of the Reporting Person and Merger Sub
entering into the Merger Agreement, Ronald T. Larizza (the
Chairman of the Board of Directors and the Chief Executive
Officer of the Company) individually and as trustee under a Trust
Agreement dated July 20, 1989 (the "Revocable Trust"), entered
into a Stock Agreement, dated as of September 26, 1995, with the
Reporting Person (the "Option"). Subject to the terms and
conditions of the Option, Mr. Larizza granted the Reporting
Person the right to purchase, at $6.50 per share, the Common
Stock he owns individually and as trustee of the Revocable Trust
until February 29, 1996 or such other date upon which the parties
agree. The Reporting Person
<PAGE>
_________________________________________________________________
CUSIP NO. 517235 10 7 13D Page 5
_________________________________________________________________
must give Mr. Larizza between two business days and 60 calendar
days notice of the exercise of the option. Pursuant to the
Option, Mr. Larizza has agreed to vote all of the Common Stock
owned by him or the Revocable Trust and all of the Common Stock
he has the power to vote under the Amended and Restated Voting
Trust Agreement dated as of May 4, 1994, as amended (the "Voting
Trust") in favor of the Merger Agreement and the Merger at a
meeting of shareholders of the Company called to consider and
vote upon the Merger. Pursuant to the Option, Mr. Larizza has
also agreed, among other things, not to, except pursuant to the
Option or the Merger Agreement, (a) sell, pledge or otherwise
dispose of any shares of Common Stock owned by him or the
Revocable Trust 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. To the knowledge
of the Reporting Person, pursuant to the terms of the Voting
Trust, Mr. Larizza's consent is required for any sale, transfer,
pledge or other disposition of any Common Stock subject to the
Voting Trust.
The Reporting Person's principal purpose in entering into
the Merger Agreement is to acquire the Company. The Reporting
Person believes that the Merger is in the best interests of it
and its stockholders. The Reporting Person's principal purpose
in entering into the Option is to enhance the likelihood of the
Merger being consummated. Following the Merger or, if earlier,
the exercise of the Option, the Reporting Person intends to seek
to change the composition of the Company's Board of Directors and
thereby control the Company and to seek to cause one or more of
the executive officers of the Company to be replaced.
Other than as described above (including, without
limitation, in connection with the Merger Agreement and the
Option), neither the Reporting Person nor to its knowledge any of
the persons identified on Schedule I hereto has any current plans
or proposals which relate to or would result in (i) the
acquisition by any person of additional securities of the
Company, or the disposition of securities of the Company, (ii)
any extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any of
its subsidiaries, (iii) any sale or transfer of a material amount
of assets of the Company or any of its subsidiaries, (iv) any
change in the present board of directors or management of the
Company, including any plans or proposals to change the number or
term of directors or to fill any existing vacancies on the Board,
(v) any material change in the Company's present capitalization
or dividend policy, (vi) any other material change in the
Company's business or corporate structure, (vii) any changes in
the Company's Articles of Incorporation or Code of Regulations or
other actions which may impede the acquisition of control of the
Company by any person, (viii) causing Common Stock to be delisted
from the American Stock Exchange, (ix) causing any of the
Company's equity securities to become eligible for
<PAGE>
_________________________________________________________________
CUSIP NO. 517235 10 7 13D Page 6
_________________________________________________________________
termination of registration under the Securities Exchange Act of
1934, as amended, (except to the extent such equity securities
are already eligible for termination of registration), or (x) any
action similar to those listed above. The Reporting Person
reserves the right to determine in the future to take or cause to
be taken one or more of the foregoing actions.
The foregoing response to this Item 4 is qualified in its
entirety by reference to the Merger Agreement and the Option,
copies of which are filed as Exhibits 1 and 2 hereto and
incorporated herein by reference.
Item 5. Interest in Securities of the Issuer.
Based on information from the Company there were 22,088,107
shares of Common Stock outstanding on September 26, 1995. In
accordance with Rule 13d-3(d), the Reporting Person may be deemed
to have beneficial ownership of 7,910,906 shares of Common Stock
outstanding (or 35.8% of the total shares of Common Stock
outstanding) because the Reporting Person has the right to
acquire such shares within sixty days pursuant to the Option,
subject to the terms and conditions of the Option. In accordance
with Rule 13d-4, the Reporting Person expressly disclaims
beneficial ownership of such shares. To its knowledge, none of
the persons identified on Schedule I hereto beneficially owns any
shares of Common Stock.
The Reporting Person may be deemed to have sole voting power
and sole dispositive power with respect to 7,910,906 shares of
Common Stock because it has the right to acquire such shares
within 60 days pursuant to the Option, subject to the terms and
conditions of the Option. If the Reporting Person acquires such
shares, the Reporting Person is required to vote them in favor of
the Merger Agreement and the Merger.
The Reporting Person does not have sole or shared voting or
dispositive power with respect to any other shares of Common
Stock, although as described in Item 4 the Option contains
restrictions on Mr. Larizza with respect to the shares of Common
Stock held in the Voting Trust.
No transactions in the Common Stock have been effected in
the past sixty days by the Reporting Person or to its knowledge
any of the persons identified on Schedule I hereto.
The Company has covenanted in the Merger Agreement not to
without the prior written consent of the Reporting Person declare
or pay any dividend or other distribution with respect to the
Common Stock prior to the Merger.
<PAGE>
_________________________________________________________________
CUSIP NO. 517235 10 7 13D Page 7
_________________________________________________________________
In addition to the right of the Reporting Person to acquire
the 7,910,906 shares of Common Stock pursuant to the Option, only
the Revocable Trust, Mr. Ronald T. Larizza and certain pledgees
of Common Stock described below (after a default) are known to
have (subject to the terms of the Merger Agreement and the
Option) the right to receive, or the power to direct the receipt
of, dividends from, or the proceeds from the sale of, the
7,910,906 shares of Common Stock reported hereby. Mr. Larizza
has informed the Reporting Person that, to secure various
personal loans (none of which was obtained to purchase Common
Stock), Mr. Larizza, through the Revocable Trust, has pledged the
following shares of Common Stock to the person and banks listed
opposite such shares below:
Person or Bank Number of shares
Baybank Middlesex 1,000,000
Steven J. Lebowski 814,027
National City Bank, Akron 165,000
Prudential Securities Incorporated 490,500
The foregoing response to this Item 5 is qualified in its
entirety by reference to the Merger Agreement and the Option,
copies of which are filed as Exhibits 1 and 2 hereto and
incorporated herein by reference.
Item 6. Contracts, Arrangements, Understandings or Relationships
with Respect to Securities of the Issuer.
The responses to Items 3, 4 and 5 are incorporated herein by
reference.
Item 7. Material to be Filed as Exhibits.
The exhibits being filed with this Statement are listed on
page 8.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
believe, I certify that the information set forth in this
Statement is true, complete and correct.
Date: October 6, 1995
Thomas E. Hannah
______________________
Signature
Thomas E. Hannah
President and Chief Executive Officer
_____________________________________
Name/Title
<PAGE>
_________________________________________________________________
CUSIP NO. 517235 10 7 13D Page 8
_________________________________________________________________
Exhibit Index
Exhibit Description
1 Agreement and Plan of Merger among Collins &
Aikman Products Co., LRI Acquisition Corp. and
Larizza Industries, Inc., dated September 26,
1995.
2 Stock Agreement, dated as of September 26, 1995 by
and between Collins & Aikman Products Co. and
Ronald T. Larizza (individually and as trustee).
3 Commitment Letter dated September 15, 1995 between
Chemical Bank and Collins & Aikman Products Co.
<PAGE>
_________________________________________________________________
CUSIP NO. 517235 10 7 13D Page 9
_________________________________________________________________
SCHEDULE I
A. Collins & Aikman Products Co.
Each of the persons named below is a citizen of the United
States. Except as listed or referred to below, the principal
business address of each of the persons listed below is 701
McCullough Drive, Charlotte, N.C. 28262 and the principal
business of such person's employer is described under Item 2
above.
Principal Occupation or Employment,
Business Address and Principal
Name Business or Employer
Directors
David A. Stockman See Part C of Schedule I below
Randall J. Weisenburger See Part D of Schedule I below
Thomas E. Hannah President and Chief Executive Officer
Executive Officers
Thomas E. Hannah President and Chief Executive Officer
William J. Brucchieri President, Imperial Wallcoverings,
Inc.
John D. Moose President, Automotive Bodycloth
Division of Collins & Aikman
Products Co., 1803 North Main
Street, Roxboro, NC 27573
Harry F. Schoen President, Mastercraft Division of
Collins & Aikman Products Co., 210
Park Road, Spindale, NC 28160
J. Michael Stepp Executive Vice President and Chief
Financial Officer
Elizabeth R. Philipp Executive Vice President, General
Counsel & Secretary, Collins &
Aikman Corporation, 210 Madison
Avenue, New York, NY 10016
Collins & Aikman Corporation, a Delaware corporation, is a
publicly traded holding company that owns all of the outstanding
shares of stock of Collins & Aikman Products Co.
Imperial Wallcoverings, Inc. ("Imperial") is a wholly-owned
subsidiary of Collins & Aikman Products Co. whose address is
23645 Mercantile Road, Beachwood, Ohio 44122. Imperial produces
wallpaper and related products.
<PAGE>
_________________________________________________________________
CUSIP NO. 517235 10 7 13D Page 10
_________________________________________________________________
B. Collins & Aikman Corporation
Each of the persons named below is a citizen of the United
States. Except as listed or referred to below, the principal
business address of each of the persons named below is 701
McCullough Drive, Charlotte, NC 28262 and the principal business
of each person's employer is described under Item 2 above.
Principal Occupation or Employment,
Business Address and Principal
Name Business or Employer
Directors
David A. Stockman See Part C of Schedule I below
Randall J. Weisenburger See Part D of Schedule I below
Thomas E. Hannah See Part A of Schedule I above
Robert C. Clark Dean, Harvard Law School, Griswold
200, Cambridge, MA 02138
George L. Majoros, Jr. Director, Wasserstein Perella &
Co., Inc., 31 West 52nd Street, New
York, NY 10019
James J. Mossman See Part C of Schedule I below
Warren B. Rudman Partner, Paul, Weiss, Rifkind,
Wharton & Garrison (Law Firm), 1615
L Street, N.W., Washington, D.C.
20036-5694
Stephen A. Schwarzman See Part C of Schedule I below
W. Townsend Ziebold, Jr. See Part D of Schedule I below
Executive Officers
Thomas E. Hannah See Part A of Schule I above
William J. Brucchieri See Part A of Schedule I above
John D. Moose See Part A of Schedule I above
Harry F. Schoen See Part A of Schedule I above
J. Michael Stepp See Part A of Schedule I above
Elizabeth R. Philipp See Part A of Schedule I above
Wasserstein Perella & Co., Inc. ("WP&Co.") is an
international investment banking firm whose principal business
and principal office address is 31 West 52nd Street, New York, NY
10019. WP&Co. is a Delaware corporation.
<PAGE>
_________________________________________________________________
CUSIP NO. 517235 10 7 13D Page 11
_________________________________________________________________
C. Blackstone Capital Partners L.P. and Blackstone Management
Associates L.P.
Blackstone Capital Partners L.P. ("Blackstone Partners") is
a Delaware limited partnership with its principal executive
offices located at 118 North Bedford, Suite 300, Mount Kisco, NY
10549. Blackstone Partners was formed for the purpose of, among
other things, (i) committing capital to facilitate corporate
restructurings, leveraged buyouts, bridge financings and other
investments and (ii) capitalizing affiliates which will engage in
investment and merchant banking activities. The general partner
of Blackstone Partners is Blackstone Management Associates L.P.
("Blackstone Management").
The general partners of Blackstone Management are listed
below. Each of the persons named below is a citizen of the
United States of America. The principal business address of each
of the Blackstone Management general partners is 345 Park Avenue,
New York, NY 10154.
Principal Occupation or Employment,
Business Address and Principal
Name Business or Employer
General Partners
Peter G. Peterson
Stephen A. Schwarzman
J. Tomilson Hill
David A. Stockman
James J. Mossman
Arthur B. Newman
Anthony Grillo
Mark T. Gallogy
Jonathan E. Colby
Peter G. Peterson's principal occupation or employment is
serving as Chairman of The Blackstone Group L.P. ("TBG"), an
investment banking firm based in New York.
Stephan A. Schwarzman's principal occupation or employment
is serving as the President of TBG.
Messrs. Peterson and Schwarzman also serve as general
partners in each of Blackstone Group Holdings L.P. ("BGH") and
Blackstone Management. They are also regular members of
Blackstone Management Partners LLC ("BMP") and Blackstone
Management Associates II LLC ("BMA II").
All remaining individuals serve as general partners in each
of BGH and Blackstone Management; or regular members of BMP and
BMA II.
<PAGE>
_________________________________________________________________
CUSIP NO. 517235 10 7 13D Page 12
________________________________________________________________
D. Wasserstein Perella Partners, L.P. and Wasserstein Perella
Management Partners, Inc.
Wasserstein Perella Partners, L.P. ("WP Partners") is a
Delaware limited partnership with its principal executive offices
located at 31 West 52nd Street, New York, NY 10019. WP Partners
was formed for the purpose of participating in merchant banking
activities, including committing capital to the organization and
consummation of leveraged buyout transactions. The general
partner of WP Partners is Wasserstein Perella Management
Partners, Inc. ("WP Management"). WP Management is a Delaware
corporation with its principal executive offices located at 31
West 52nd Street, New York, NY 10019. The principal business of
WP Management is to act as general partner to certain investment
partnerships.
Each of the persons named below is a citizen of the United
States of America. For each person whose principal employment is
with WP Management, the principal business and address of such
person's employer is 31 West 52nd Street, New York, NY 10019.
Principal Occupation or Employment,
Business Address and Principal
Name Business or Employer
Directors
Bruce Wasserstein Chairman of the Board
Michael J. Biondi President and Chief Operating Officer
Randall J. Weisenburger Vice President
Executive Officers
Bruce Wasserstein Chairman of the Board
Michael J. Biondi President and Chief Operating Officer
Randall J. Weisenburger Vice President
W. Townsend Ziebold, Jr. Vice President
EXHIBIT 1
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>
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>
<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, Etc. . . . . . . . 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>
<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>
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
1
<PAGE>
Price 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>
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>
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>
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>
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>
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
7
<PAGE>
Delaware, neither the execution and delivery by Larizza of
this Agreement (including all agreements 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
8
<PAGE>
cash flows for the fiscal year then ended, in each case,
including the Notes to such financial 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
9
<PAGE>
reserved against in the Larizza Financial Statements or the
Larizza Interim Statements, (ii) have 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
10
<PAGE>
property, stamp, workers' compensation, severance,
environmental, transfer, payroll, withholding,
employment, unemployment and social security taxes, or
other taxes of the same or 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.
11
<PAGE>
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 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.
(Section Mark) (Section Mark) 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
12
<PAGE>
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.
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.
13
<PAGE>
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, 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
14
<PAGE>
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.
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;
15
<PAGE>
(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;
(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.
16
<PAGE>
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 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.
17
<PAGE>
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 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").
18
<PAGE>
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 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
19
<PAGE>
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 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;
20
<PAGE>
(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
(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);
21
<PAGE>
(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;
(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;
22
<PAGE>
(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.
(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
23
<PAGE>
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.
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,
24
<PAGE>
(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
(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
25
<PAGE>
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.
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
26
<PAGE>
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.
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
27
<PAGE>
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.
(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
28
<PAGE>
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 (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
29
<PAGE>
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 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:
30
<PAGE>
(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 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
31
<PAGE>
(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 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
32
<PAGE>
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. 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.
33
<PAGE>
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, 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
34
<PAGE>
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:
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.
35
<PAGE>
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 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
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
Word or Phrase Section
<S> <C>
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
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
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
Word or Phrase Section
<S> <C>
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>
38
<PAGE>
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 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
39
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE INDEX
Schedule Number Description
<S> <C> <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>
40
<PAGE>
<PAGE>
EXHIBIT 2
Stock Agreement
Stock Agreement (this "Agreement"), dated as of
September 26, 1995, by and between Collins & Aikman Products Co.,
a Delaware corporation ("Parent"), and Ronald T. Larizza,
individually and as trustee under the Trust Agreement (the "Trust
Agreement"), dated July 20, 1989 (in such capacities,
"Stockholder").
Recitals
A. Parent, LRI Acquisition Corp., a Delaware
corporation and wholly owned subsidiary of Parent ("Merger Sub"),
and Larizza Industries, Inc., an Ohio corporation (the
"Company"), have entered into an Agreement and Plan of Merger,
dated the date hereof (the "Merger Agreement"), pursuant to which
the parties thereto have agreed, on the terms and subject to the
conditions set forth therein, to merge Merger Sub with and into
the Company (the "Merger").
B. As of the date hereof, Stockholder is the record
and beneficial owner of, and has the sole right to vote and
dispose of, 7,910,906 shares (the "Owned Shares") of Common
Stock, no par value, of the Company ("Company Common Shares").
C. As of the date hereof, Stockholder is the Voting
Trustee pursuant to an Amended and Restated Voting Trust
Agreement, dated as of May 4, 1994, as amended, among
Stockholder, the Company, as depositary, and the shareholders set
forth on the signature pages thereto (the "Voting Trust
Agreement"), which vests in the Stockholder the power to vote
3,272,177 additional Company Common Shares as Voting Trustee (the
"Voting Trust Shares").
D. As a condition to its willingness to enter into
the Merger Agreement, Parent has required that, simultaneously
with the execution of the Merger Agreement, Stockholder agree to
the matters set forth herein.
E. In consideration of Parent and Merger Sub entering
into the Merger Agreement, Stockholder is willing to enter into
this Stock Agreement.
1. Option
1.1 Option. (a) Stockholder hereby grants to Parent
an irrevocable option (the "Option") to purchase, on the terms
and subject to the conditions set forth herein, all of the Owned
Shares, together with (i) any additional shares of capital stock
of the Company which Stockholder is or becomes entitled to
receive from the Company by reason of being a record holder of
the Owned Shares, (ii) any securities or other property into
which any such Owned Shares shall have been or shall be converted
or changed, whether by amendment to the Articles of Incorporation
of the Company, merger, consolidation, reorganization, capital
change or otherwise, (iii) any additional Company Common Shares
acquired by Stockholder as the result of Stockholder
<PAGE>
exercising an option, warrant or other right to acquire shares
of capital stock from the Company (all of the foregoing
hereinafter collectively referred to as the "Additional Owned
Shares"), and (iv) any shares of capital stock referred to in
clauses (i), (ii), and (iii) above that are issued or issuable
in respect of Additional Owned Shares (the Owned Shares, the
Additional Owned Shares and any securities referred to in
clause (iv) above hereinafter collectively referred to as the
"Option Shares").
(b) Subject to the conditions set forth in Section
1.1(f), the Option may be exercised in whole but not in part by
notice given by Parent to Stockholder at any time prior to the
Drop Dead Date (as defined in the Merger Agreement).
(c) In the event Parent wishes to exercise the Option,
Parent first will send a written notice to Stockholder specifying
a place, date (not less than two business days nor more than 60
calendar days from the date such notice is given) and time for
the closing of the purchase of the Option Shares (the "Closing").
(d) The total price payable to Stockholder upon
exercise of the Option will be equal to the product of (i) the
Merger Price (as defined in the Merger Agreement) and (ii) the
number of Option Shares.
(e) At the Closing, Stockholder will deliver to Parent
a certificate or certificates representing the Option Shares,
duly endorsed for transfer or accompanied by appropriate stock
powers, duly executed in blank, and Parent will deliver to
Stockholder the consideration to which Stockholder is entitled
pursuant to Section 1.1(d). Transfer taxes and similar charges
(but not income taxes), if any, imposed as a result of the
exercise of the Option will be paid by Parent.
(f) The obligations of Parent and Stockholder to
consummate the purchase and sale of the Option Shares pursuant to
this Section 1.1 will be subject to the fulfillment of the
following conditions:
(i) The expiration or termination of the waiting
period, if any, applicable to the consummation of such
transactions under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and
regulations thereunder (the "HSR Act"); and
(ii) Neither of the parties hereto shall be
subject to any order or injunction of a court of competent
jurisdiction which prohibits the consummation of such
transactions.
Each of the parties will promptly make all such filings and take
all such actions as may be reasonably required in order to permit
the lawful exercise of the Option, as promptly as possible,
including without limitation all filings and other actions
required by Section 1.1(f).
2
<PAGE>
(g) Notwithstanding any other provision hereof, Parent
may not exercise the Option unless, prior to or simultaneously
therewith, Parent waives all conditions to its obligations to
complete the Merger in Section 4.1 of the Merger Agreement,
except for the conditions set forth in Sections 4.1.4, 4.1.5 and
4.1.6.
1.2 Prohibited Transfers. Stockholder will not
during the term of the Option, except pursuant to this Agreement
or the Merger Agreement, (a) sell, pledge or otherwise dispose of
any Option Shares or any interest therein, (b) deposit any Option
Shares into a voting trust or enter into a voting agreement or
arrangement with respect to any Option Shares or grant any proxy
with respect thereto (other than to Parent or its affiliates or
to vote in favor of adoption of the Merger Agreement or the
approval of the Merger), or (c) enter into any contract, option
or other arrangement or undertaking with respect to the foregoing
or the direct or indirect acquisition or sale, assignment,
transfer or other disposition of any Company Common Shares or any
interest therein.
2. Representations and Warranties of Stockholder
Stockholder hereby represents and warrants to Parent as
follows:
2.1 Authorization, Validity and Effect of Agreement.
Stockholder has the requisite power and authority to execute and
deliver this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by Stockholder and constitutes the valid and binding
obligation of Stockholder, enforceable against Stockholder in
accordance with its terms, subject to bankruptcy, insolvency, so-
called fraudulent transfer and other terms affecting creditors'
rights generally and to general equitable principles (such
exception, the "Bankruptcy Exception").
2.2 No Conflict; Required Filings and Consents. (a)
The execution and delivery of this Agreement by Stockholder do
not, and the consummation by Stockholder of the transactions
contemplated hereby and thereby will not, (i) subject to making
the filings and obtaining the approvals identified in Section
2.2(b), conflict with or violate any order, judgment or decree
applicable to Stockholder or by which Stockholder or any Option
Shares is bound or affected, or (ii) result in any breach of or
constitute a default (or an event which with notice or lapse of
time or both would become a default) under, result in the loss of
a material benefit under, or give to others any right of purchase
or sale, or any right of termination, amendment, acceleration,
increased payments or cancellation of, or result in the creation
of a lien or other encumbrance on any Option Shares (other than
liens, changes or related agreements which will be fully
discharged prior to the Closing) pursuant to, any contract,
agreement or other instrument or obligation to which Stockholder
is a party or by which Stockholder or any property or asset of
Stockholder is bound or affected.
(b) The execution and delivery of this Agreement by
Stockholder do not, and the performance of this Agreement and the
consummation by Stockholder of
3
<PAGE>
the transactions contemplated hereby will not, require any
consent, approval, authorization or permit of, or filing with
or notification to, any governmental or regulatory authority,
domestic or foreign (each a "Governmental Entity"), except for
(i) applicable requirements, if any, of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and
(ii) the notification requirements under the HSR Act.
2.3 Ownership of Owned Shares. Stockholder is the
sole record and beneficial owner of the Owned Shares, and at the
Closing the Owned Shares will be so owned free and clear of any
security interests, liens, charges, encumbrances, equities,
claims, options (other than the Option), proxies, stockholder
agreements or limitations of whatever nature and free of any
other limitation or restriction (including any restriction on the
right to vote, sell or otherwise dispose of the Owned Shares or
any interest therein but excluding any restriction arising under
securities laws) except pursuant to this Agreement. The Owned
Shares and the Voting Trust Shares constitute all of the Company
Common Shares owned of record or beneficially (within the meaning
of Rule 13d-3 under the Exchange Act) by Stockholder.
2.4 No Brokers. Stockholder has not entered into any
contract, arrangement or understanding with any person or firm
which may result in the obligation of Parent to pay any finder's
fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby.
3. Representations and Warranties of Parent
Parent hereby represents and warrants to Stockholder as
follows:
3.1 Authorization, Validity and Effect of Agreement.
Parent has the requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by Parent and constitutes the valid and binding
obligation of Parent, enforceable against Parent in accordance
with its terms, subject to the Bankruptcy Exception.
3.2 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Parent do
not, and the consummation by Parent and of the transactions
contemplated hereby will not, (i) conflict with or violate the
certificate of incorporation or by-laws of Parent, (ii) subject
to making the filings and obtaining the approvals identified in
Section 3.2(b), conflict with or violate any regulation, order,
judgment or decree applicable to Parent or by which any property
or asset of Parent is bound or affected, or (iii) result in any
breach of or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, result in
the loss of a material benefit under, or give to others any right
of termination, amendment, acceleration, increased payments or
cancellation of, or result in
4
<PAGE>
the creation of a lien or other encumbrance on any property or
asset of Parent pursuant to, any contract, agreement or other
instrument or obligation to which Parent is a party or by
which Parent or any property or asset of Parent is bound or
affected.
(b) The execution and delivery of this Agreement by
Parent do not, and the performance of this Agreement and the
consummation by Parent of the transactions contemplated hereby
will not, require any consent, approval, authorization or permit
of, or filing with or notification to, any Governmental Entity,
except for (i) applicable requirements, if any, of the Exchange
Act and (ii) the notification requirements under the HSR Act.
3.3 Purchase Not for Distribution. The Option and the
securities to be acquired upon exercise of the Option (the
"Acquired Shares") are and will be acquired by Parent without a
view to the public distribution thereof and neither this Option
nor any Acquired Shares will be transferred or otherwise disposed
of except in a transaction registered or exempt from registration
under the Securities Act and in compliance with applicable state
securities laws.
3.4 No Brokers. Parent has not entered into any
contract, arrangement or understanding with any person or firm
which may result in the obligation of Stockholder to pay any
finder's fees, brokerage or agent's commissions or other like
payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated
hereby.
4. Certain Covenants
4.1 Voting of Shares. (a) Stockholder will, with
respect to (i) all Owned Shares, (ii) any other Option Shares
that he owns of record or beneficially on the record date for
voting at the meeting of stockholders called to consider and vote
upon the Merger (the "Stockholder Meeting"), and (iii) all Voting
Trust Shares, vote or cause to be voted such Option Shares and
Voting Trust Shares (or execute or cause to be executed written
consents with respect to such Option Shares and Voting Trust
Shares) (A) in favor of the adoption of the Merger Agreement and
approval of the Merger and the other transactions contemplated by
the Merger Agreement, (B) against any Alternative Proposal (as
defined in the Merger Agreement), and (C) in favor of any other
matter necessary for the consummation of the transactions
contemplated by the Merger Agreement and considered and voted
upon at the Stockholder Meeting. Stockholder acknowledges
receipt and review of a copy of the Merger Agreement, provided,
however, that nothing in this Section 4.1(a) will be deemed to
restrict or prohibit any action or failure to take action to the
extent taken or omitted to be taken by Stockholder in his
capacity as a director or the Company which is done or not done,
as the case may be, in conformity with the standards set forth in
the Merger Agreement.
(b) Following the acquisition of the Option Shares by
Parent upon the exercise of the Option, Parent will, with respect
to the Option Shares that it owns of
5
<PAGE>
record or beneficially on the record date for the Stockholder
Meeting, vote or cause to be voted such Option Shares (or
execute or cause to be executed written consents with respect
to such Option Shares) (i) in favor of the adoption of the
Merger Agreement and approval of the Merger and the other
transactions contemplated by the Merger Agreement, (ii)
against any Alternative Proposal, and (iii) in favor of any
other matter necessary for the consummation of the
transactions contemplated by the Merger Agreement and
considered and voted upon at the Stockholder Meeting.
4.2 No Solicitation. Prior to the Effective Time of
the Merger (as defined in the Merger Agreement), (a) Stockholder
will not, and will cause his agents or representatives
(including, without limitation, any investment banker, attorney
or accountant retained by him to represent him personally) not
to, initiate, solicit or encourage, directly or indirectly, any
inquiries or the making or implementation of any Alternative
Proposal or engage in any negotiations concerning, or provide any
confidential information or data to, or have any discussions
with, any person relating to an Alternative Proposal, or
otherwise facilitate any effort or attempt to make or implement
an Alternative Proposal, and (b) Stockholder 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, him,
provided, however, that nothing in this Section 4.2 will be
deemed to restrict or prohibit any action or failure to take
action to the extent taken or omitted to be taken by Stockholder
in his capacity as a director of the Company which is done or not
done, as the case may be, in conformity with the standards set
forth in the Merger Agreement.
4.3 Certain Indebtedness. Prior to the Effective Time
of the Merger, Stockholder will pay or prepay all indebtedness of
Stockholder or any trust or other entity that is an affiliate (as
the term "affiliate" is defined in Rule 405 under the Securities
Act of 1933, as amended) of Stockholder controlled by Stockholder
to the Company or any subsidiary of the Company.
4.4 Limitation on Competition. For a period of two
years from the Closing Date (as defined in the Merger Agreement),
Stockholder will not, and will cause each of his Affiliates not
to, directly or indirectly, own, manage, operate, finance, join,
control or participate in the ownership, management, operation,
financing or control of, or be associated as a director, partner
or representative in connection with, any profit or not-for-
profit business or enterprise that is engaged in the manufacture
or sale of plastic components or interior trim to the automotive
original equipment manufacturing industry (as currently conducted
by the Companies) in the United States, Canada or elsewhere.
Stockholder acknowledges that a breach of this Section 4.3 will
cause irreparable damage to the Surviving Corporation the exact
amount of which will be difficult or impossible to ascertain, and
that the Surviving Corporation's remedies at law for any such
breach will be inadequate. Accordingly, Stockholder agrees that
upon a breach of this Section 4.3, the Surviving Corporation will
be entitled to injunctive or other equitable relief.
6
<PAGE>
5. General Provisions
5.1 Notices. Any notice required to be given
hereunder will be sufficient if in writing, and sent by facsimile
transmission and by courier service (with proof of service), hand
delivery or certified or registered mail (return receipt
requested and first class postage prepaid), addressed as follows:
If to Parent, to: If to Stockholder, to:
Collins & Aikman Products Co. Ronald T. Larizza
701 McCullough Drive c/o Larizza Industries, Inc.
Charlotte, North Carolina 28232 201 West Big Beaver Road
Attention: Chief Executive Officer Suite 1040
Fax No.: (704) 548-2208 Troy, Michigan 48084
Fax No.: (801) 524-4996
With copies to: With copies to:
Collins & Aikman Products Co. Stephen J. Lebowski
210 Madison Avenue, 6th Floor 7125 Orchard Lake Road
New York, New York 10016 Suite 302
Attention: Elizabeth Philipp, Esq. West Bloomfield, Michigan 48322-3615
Fax No.: (212) 578-1269 Fax No.: (810) 626-0741
-and-
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Attention: Robert A. Profusek, Esq.
Fax No.: (212) 755-7306
or to such other address as any party shall specify by written
notice so given, and such notice will be deemed to have been
delivered as of the date so telecommunicated, personally
delivered or three days after having been mailed.
5.2 Assignment; Binding Effect. Neither this
Agreement nor any of the rights, interests or obligations
hereunder may be assigned or delegated by either of the parties
hereto (whether by operation of law or otherwise). This
Agreement will be binding upon and inure solely to the benefit of
each party hereto, and nothing in this Agreement, express or
implied, is intended to or will confer upon any person any right,
benefit or remedy of any nature whatsoever under or by reason of
this Agreement.
7
<PAGE>
5.3 Entire Agreement. This Agreement constitutes the
entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior agreements and
understandings between the parties with respect thereto.
5.4 Governing Law. This Agreement will be governed by
and construed in accordance with the laws of the State of
Delaware without regard to its rules of conflict of laws.
5.5 Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when
so executed and delivered will be an original, but all such
counterparts will together constitute one and the same
instrument. Each counterpart may consist of a number of copies
hereof each signed by less than both, but together signed by both
of the parties hereto.
5.6 Headings. Headings of the Articles and Sections
of this Agreement are for the convenience of the parties only,
and will be given no substantive or interpretive effect
whatsoever.
5.7 Interpretation. In this Agreement, unless the
context otherwise requires, words describing the singular number
will include the plural and vice versa, and words denoting any
gender will include all genders, and words denoting natural
persons will include corporations and partnerships and vice
versa.
5.8 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced
by any rule of law or public policy, all other conditions and
provisions of this Agreement will nevertheless remain in full
force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto will negotiate in good
faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible to the fullest
extent permitted by applicable law in an acceptable manner to the
end that the transactions contemplated hereby are fulfilled to
the extent possible.
5.9 Termination. If Parent has not theretofore
purchased the Option Shares pursuant to the Option or not then
given notice of its desire to exercise the Option pursuant to
Section 1.1(c), this Agreement will terminate automatically
immediately upon the occurrence of the Drop Dead Date (as defined
in the Merger Agreement).
8
<PAGE>
5.10 Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of
this Agreement were not performed in accordance with the terms
hereof and that the parties will be entitled to specific
performance of the terms hereof and other appropriate equitable
relief only (but excluding monetary damages). With respect to
any intentional breach, the parties will be entitled to any
remedy at law or in equity.
[Remainder of this page left intentionally blank.]
9
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
COLLINS & AIKMAN PRODUCTS CO.
By: /s/ Thomas E. Hannah
Name: Thomas E. Hannah
Title: President and Chief
Executive Officer
/s/ Ronald T. Larizza
Ronald T. Larizza,
Individually and as
Trustee of the Trust
Created by the Trust
Agreement
10
<PAGE>
Chemical Bank
270 Park Avenue
New York, New York 10017-2070
September 15, 1995
Collins & Aikman Products Co.
701 McCullough Drive
Charlotte, North Carolina 28232
Attention of Thomas Hannah,
Chief Executive Officer
J. Michael Stepp
Executive Vice President and Chief Financial Officer
$200 Million Senior Secured Acquisition Credit Facility
Commitment Letter
Ladies and Gentlemen:
You have advised Chemical Bank ("Chemical") and
Chemical Securities Inc. ("CSI") that Collins & Aikman Products
Co. (the "Borrower") desires to acquire (the "Acquisition") 100%
of the issued and outstanding capital stock of Larizza
Industries, Inc. ("Larizza") by means of a merger agreement
between Larizza and the Borrower (the "Merger Agreement")
providing for, among other things, (a) a newly formed wholly
owned subsidiary of the Borrower to merge (the "Merger") with and
into Larizza, (b) the shareholders of Larizza to approve the
Merger at a shareholders meeting called for such
<PAGE>
2
purpose and (c) the issued and outstanding shares of Larizza
being converted into the right to receive cash consideration
upon consummation of the Merger.
You have advised Chemical and CSI that, in order to
effect the Acquisition, the Borrower will obtain a senior secured
acquisition credit facility (the "Facility") as described below.
In connection with the foregoing, you have requested
that CSI arrange, and that Chemical commit to provide the entire
principal amount of, the Facility. The Facility will be
comprised of a Seven-Year Senior Secured Term Loan Facility in an
aggregate principal amount of up to U.S. $200,000,000 which will
be drawn in full on the date of the initial funding under the
Facility (the "Closing Date").
Chemical is pleased to advise you of its commitment to
provide (or cause one of its affiliates to provide) the entire
principal amount of the Facility, upon the terms and subject to
the conditions set forth or referred to in this commitment letter
(the "Commitment Letter") and in the Summary of Principal Terms
and Conditions attached hereto as Exhibit A (the "Term Sheet").
It is understood and agreed that Chemical will act as
the sole and exclusive administrative agent for the Facility and
will, in such capacity, perform the duties customarily associated
with the role of an administrative agent. CSI will act as the
sole arranger of the Facility and will, in such capacity, perform
the duties customarily associated with the role of an arranger,
including syndicating the Facility. Chemical will also act as
the collateral agent for the Facility and will, in such capacity,
perform the duties customarily associated with the role of a
collateral agent. It is further understood and agreed that no
additional agents or co-agents will be appointed without your
reasonable approval and the reasonable approval of CSI. It is
also understood and agreed that no Lender (as defined below) will
receive compensation outside the terms contained herein and in
the Fee Letter referred to below in order to obtain its
commitment to participate in the Facility.
Chemical reserves the right, prior to or after
execution of definitive documentation for the Facility, to
syndicate all or a portion of its commitment in respect of the
Facility to one or more financial institutions reasonably
acceptable to you that will become parties to the definitive
documentation for the Facility (such financial institutions, the
"Lenders"). You agree actively to assist CSI in achieving a
timely syndication that is satisfactory to CSI and you. This
will be accomplished by a variety of means, including direct
contact during the syndication (at times mutually agreed upon)
among the senior officers, representatives and advisors of the
Borrower, Holdings, Blackstone Capital Partners, L.P. ("BCP") and
Wasserstein Perella Partners, L.P. ("WP"), on the one hand, and
the proposed Lenders, on the other hand. Such assistance shall
also include BCP, WP, Holdings and the Borrower using their
reasonable efforts to have CSI's syndication efforts benefit from
Holdings, the Borrower's, BCP's and WP's lending relationships.
<PAGE>
3
All aspects of the strategy for the syndication of the
Facility shall be satisfactory at all times to Chemical, CSI and
you. The commitments of any bank or financial institution
received during such syndication and prior to the execution of
definitive documentation will reduce the commitment of Chemical
hereunder.
It is understood and agreed that CSI, in coordination
with you, will manage all aspects of the syndication, including
Lender selection (which Lenders shall be reasonably acceptable to
Chemical and CSI and reasonably acceptable to you), determination
of when CSI will approach potential Lenders, any naming rights
(including the naming of co-agents, subject to CSI's and your
reasonable approval) and the final allocations of the commitments
among the Lenders. It is also understood and agreed that the
amount and distribution of the participation fees among the
Lenders will be at CSI's sole discretion, after consultation with
you. CSI shall also consult with you regarding all other aspects
of the syndication process. To assist CSI in its syndication
efforts, you agree, upon CSI's reasonable request (a) promptly to
provide, and to cause your affiliates and advisors to provide,
financial and other information with respect to Collins & Aikman
Corporation ("Holdings") and its subsidiaries, the Acquisition
and any other transactions contemplated hereby reasonably deemed
necessary by CSI to complete successfully the syndication,
including but not limited to information and projections prepared
by you or your advisors on your behalf relating to the
transactions contemplated hereby, and (b) to assist, and to cause
your affiliates and advisors to assist, CSI upon its reasonable
request in the preparation of a Confidential Information
Memorandum and other marketing materials to be used in connection
with the syndication.
As consideration for Chemical's commitment hereunder
and Chemical's and CSI's agreement to manage, structure and
syndicate the Facility and to provide advisory services in
connection therewith, you agree to pay to Chemical the fees at
such times and as set forth in the Term Sheet and in the Fee
Letter dated the date hereof and delivered herewith (the "Fee
Letter"). Once paid, such fees shall not be refundable under any
circumstances.
Chemical's commitment hereunder is subject to (a)
Chemical's satisfaction that Holdings, the Borrower, Larizza and
their respective subsidiaries are not subject to material
contractual or other restrictions that would be violated by the
contemplated transactions, including the granting of security
interests and guarantees (to the extent contemplated by the Term
Sheet), (b) there not having occurred any material adverse change
in the assets, business, properties, financial condition or
results of operations of Holdings and its subsidiaries since
Janaury 31, 1995 or of Larizza and its subsidiaries since June
30, 1995, (c) there not having occurred and being continuing any
material disruption of, or material adverse change in, the
financial, banking or capital markets since the date hereof, (d)
Chemical having been afforded the opportunity to review the
Merger Agreement and being satisfied in all respects with the
Merger Agreement (including the schedules and exhibits thereto),
(e) Chemical's satisfaction that there shall be no competing
offering, placement or arrangement of any debt securities of
Holdings, Larizza or any subsidiary thereof prior to or during
the syndication of the Facility and
<PAGE>
4
until the date of execution of definitive documentation
relating to the Facility and (f) the other conditions set
forth herein and in the Term Sheet.
In addition, Chemical's commitment hereunder is subject
to the negotiation, execution and delivery of definitive
documentation with respect to the Facility satisfactory to
Chemical. Such documentation shall contain such indemnities,
covenants, representations and warranties, events of default (it
being agreed that the Change in Control event of default will be
identical in all material respects to the change of control event
of default in the Borrower's Credit Agreement dated as of June
22, 1994 (the "Existing Credit Agreement")), termination events,
conditions precedent, security arrangements and other terms and
conditions as shall be reasonably satisfactory to Chemical. The
terms and conditions of Chemical's commitment hereunder and of
the Facility are not limited to the terms and conditions set
forth herein or in the Term Sheet. Those matters that are not
covered by or made clear under the provisions hereof or of the
Term Sheet are subject to the approval and agreement of Chemical
and you (it being understood that the terms and conditions of the
definitive documentation with respect to the Facility shall not
be, unless otherwise agreed upon by Chemical and you,
inconsistent with the terms and conditions set forth herein or in
the Term Sheet).
By executing this Commitment Letter, you agree (a) to
indemnify and hold harmless Chemical and CSI and the other
Lenders and their respective officers, directors, employees,
affiliates, agents and controlling persons (each, an "Indemnified
Person") from and against any and all losses, claims, damages,
liabilities and expenses, joint or several, to which any such
Indemnified Person may become subject arising out of or in
connection with this Commitment Letter, the Fee Letter, the Term
Sheet, the Acquisition, the Facility or any related transaction
or any claim, litigation, investigation or proceeding relating to
any of the foregoing, regardless of whether any Indemnified
Person is a party thereto, and to reimburse each Indemnified
Person upon demand for any legal or other expenses incurred in
connection with investigating or defending any of the foregoing,
provided that the foregoing indemnity will not, as to any
Indemnified Person, apply to losses, claims, damages, liabilities
or related expenses to the extent they are found in a final
judgment of a court to have resulted primarily from the willful
misconduct or gross negligence of such Indemnified Person or its
agents or representatives, and (b) to reimburse Chemical and CSI
from time to time, upon presentation of a summary statement in
reasonable detail, for all reasonable out-of-pocket expenses
(including, without limitation, expenses of Chemical's and CSI's
due diligence investigation, consultants' fees (if such
consultants are engaged by Chemical or CSI with your consent),
syndication expenses, travel expenses and reasonable fees,
disbursements and other charges of counsel) incurred in
connection with the Facility and the preparation of this
Commitment Letter, the Term Sheet, the Fee Letter, the definitive
documentation for the Facility and the security arrangements in
connection therewith.
You shall be entitled to assume the defense of any
action for which indemnification is sought hereunder with counsel
of your choice at your expense (in which case you shall not
thereafter be responsible for the fees and expenses of any
<PAGE>
5
separate counsel retained by an Indemnified Person except as set
forth below); provided, however, that such counsel shall be
reasonably satisfactory to each such Indemnified Person.
Notwithstanding your election to assume the defense of such
action, each Indemnified Person shall have the right to employ
separate counsel and to participate in the defense of such
action, and you shall bear the reasonable fees, costs and
expenses of such separate counsel, if (a) the use of counsel
chosen by you to represent such Indemnified Person would present
such counsel with a conflict of interest; (b) the actual or
potential defendants in, or targets of, any such action include
both you and such Indemnified Person and such Indemnified Person
shall have reasonably concluded that there may be legal defenses
available to it that are different from or additional to those
available to you (in which case you shall not have the right to
assume the defense of such action on behalf of such Indemnified
Person); (c) you shall not have employed counsel reasonably
satisfactory to such Indemnified Person to represent it within a
reasonable time after notice of the institution of such action;
or (d) you shall authorize such Indemnified Person to employ
separate counsel at your expense. You will not be liable under
this Commitment Letter for any amount paid by an Indemnified
Person to settle any claims or actions if the settlement is
entered into without your consent, which may not be withheld
unless such settlement is unreasonable in light of such claims or
actions against, and defenses available to, such Indemnified
Person. The provisions contained in the immediately preceding
paragraph and this paragraph shall remain in full force and
effect regardless of whether definitive financing documentation
shall be executed and notwithstanding the termination of this
Commitment Letter or Chemical's commitment hereunder.
You agree that you will not disclose this Commitment
Letter, the Term Sheet, the Fee Letter, the contents of any of
the foregoing or Chemical's and CSI's activities pursuant hereto
or thereto to any person without the prior approval of Chemical
(which shall not be unreasonably withheld), except that (a) you
may disclose this Commitment Letter, the Term Sheet, the Fee
Letter and the contents hereof and thereof (i) to your respective
officers, employees, attorneys and advisors on a confidential and
need-to-know basis in connection with the transactions
contemplated hereby and (ii) as required by applicable law or
compulsory legal process, and (b) you may disclose this
Commitment Letter and the Term Sheet or the existence of
Chemical's commitment hereunder, the principal conditions to such
commitment and the principal terms and conditions of the Term
Sheet (but not the Fee Letter) to Larizza and its advisors in
connection with your proposal for the Acquisition or in
connection with any public filing to be made and in connection
with the Acquisition. The provisions contained in this paragraph
shall remain in full force and effect notwithstanding the
termination of this Commitment Letter or Chemical's commitment
hereunder. It is understood and agreed that Chemical Banking
Corporation and its subsidiaries (including, without limitation,
Chemical and CSI) may share and exchange with each other
information relating to Holdings and its subsidiaries on a
confidential basis for use solely in connection with the
transactions contemplated hereby.
This Commitment Letter and Chemical's commitment
hereunder shall not be assignable by you without the prior
written consent of Chemical, and any attempted
<PAGE>
6
assignment without Chemical's prior written consent shall be
void. This Commitment Letter may not be amended or any
provision hereof waived or modified except by an instrument in
writing signed by Chemical and you. This Commitment Letter
may be executed in any number of counterparts, each of which
shall be an original and all of which, when taken together,
shall constitute one agreement. Delivery of an executed
counterpart of a signature page of this Commitment Letter by
facsimile transmission shall be effective as delivery of a
manually executed counterpart of this Commitment Letter. This
Commitment Letter is intended to be solely for the benefit of
the parties hereto and is not intended to confer any benefits
upon, or create any rights in favor of, any person other than
the parties hereto. This Commitment Letter shall be governed
by, and construed in accordance with, the laws of the State of
New York. Chemical may perform certain of its duties or
activities described hereunder through any of its affiliates,
including, without limitation, CSI.
The obligations and representations of the Borrower
under this Commitment Letter, other than those arising under the
fifth, sixth, seventh, twelfth, thirteenth and fourteenth
paragraphs of this Commitment Letter, shall automatically
terminate and be superseded by the provisions of the definitive
documentation relating to the Facility upon the closing of the
Facility and the consummation of the Acquisition.
Please indicate your acceptance of the terms hereof and
of the Fee Letter by signing in the appropriate space below and
in the Fee Letter and returning to Chemical the enclosed
duplicate originals of this Commitment Letter and the Fee Letter
not later than 5:00 p.m., New York City time, on September 27,
1995, at which time Chemical's commitment hereunder will expire
in the event Chemical has not received such executed duplicate
originals. In the event that the initial extension of credit in
respect of the Facility does not occur on or before January 31,
1996, then this Commitment Letter and Chemical's commitment
hereunder shall terminate unless Chemical shall, in its
discretion, agree to an extension.
<PAGE>
7
Chemical is pleased to have been given the opportunity
to assist you in connection with the financing for the
Acquisition.
Very truly yours,
CHEMICAL BANK
By: /s/ Timothy J. Storms
Name:
Title:
Accepted and agreed to as of
the date first above written:
COLLINS & AIKMAN PRODUCTS CO.
By: /s/ J. Michael Stepp
Name: J. Michael Stepp
Title: Chief Finanical Officer
cc: David A. Stockman, Co-Chairman
Randall J. Weisenburger, Co-Chairman
<PAGE>
EXHIBIT A
$200 Million Senior Secured Acquisition Credit Facility
Summary of Principal Terms and Conditions
September 15, 1995
Borrower: Collins & Aikman Products Co., a
Delaware corporation (the "Borrower")
and a direct wholly-owned subsidiary of
Collins & Aikman Corporation, a
Delaware corporation ("Holdings").
Acquisition: The Borrower intends to acquire (the
"Acquisition") 100% of the issued and
outstanding capital stock of Larizza
Industries, Inc. ("Larizza") by means
of a merger agreement between Larizza
and the Borrower (the "Merger
Agreement") providing for, among other
things, (a) a newly formed wholly owned
subsidiary of the Borrower to merge
(the "Merger") with and into Larizza,
(b) the shareholders of Larizza to
approve the Merger at a shareholders
meeting called for such purpose and (c)
the issued and outstanding shares of
Larizza being converted into the right
to receive cash consideration upon
consummation of the Merger.
Facility: Seven-year Senior Secured Term Loan
Facility in an aggregate principal
amount of up to U.S. $200,000,000 (the
"Facility"), which will be drawn in
full on the date of the initial funding
of the Facility (the "Closing Date").
Administrative Agent: Chemical Bank ("Chemical") will act as
administrative agent (the
"Administrative Agent") for a syndicate
of financial institutions (the
"Lenders") reasonably satisfactory to
Chemical, CSI and the Borrower and will
perform the duties customarily
associated with the role of an
administrative agent. Chemical will
also act as the collateral agent for
the Facility (the "Collateral Agent")
pursuant to the Master Collateral and
Intercreditor Agreement, dated as of
July 13, 1994 (the "Intercreditor
Agreement") among Chemical, as
Collateral Agent, and the
Participating Creditors (including the
Lenders) named therein and will, in
such capacity, perform the duties
customarily performed by a collateral
agent.
<PAGE>
2
Arranger and Chemical Securities Inc. ("CSI"). In
Advisor: such capacity CSI will manage the
syndication of the Facility.
Purpose: The proceeds of the Facility will be
used by the Borrower solely (a) to pay
the consideration for the Merger and to
refinance outstanding indebtedness of
Larizza and (b) to pay fees and
expenses related to the Acquisition.
Availability: The full amount of the Facility to be
used by the Borrower must be drawn in a
single drawing on the Closing Date.
Amounts repaid under the Facility may
not be reborrowed.
Any portion of the commitments for the
Facility not drawn on the Closing Date
will automatically terminate.
Final Maturity and The Facility will mature on December
Amortization: 31, 2002. Loans under the Facility
will amortize on an equal quarterly
basis in annual amounts equal to (a)
$5,000,000 in the case of the first
year following the Closing Date, (b)
$10,000,000 in the case of the second
year following the Closing Date, (c)
$15,000,000 in the case of the third
year following the Closing Date, (d)
$20,000,000 in the case of the fourth
year following the Closing Date, (e)
$25,000,000 in the case of the fifth
year following the Closing Date,
(f) $25,000,000 in the case of the
sixth year following the Closing Date
and (g) $100,000,000 in the case of the
seventh year following the Closing
Date.
Guarantees: All obligations of the Borrower under
the Facility shall be unconditionally
guaranteed by Holdings and each
existing and each subsequently acquired
or organized United States subsidiary
of Holdings (other than the Borrower
and its unrestricted subsidiaries) on
an equal and ratable basis with the
obligations under the Borrower's
existing Credit Agreement dated as of
June 22, 1994 (the "Existing Credit
Agreement").
All the above-described guarantees
shall be on the terms and conditions of
the Guarantee Agreement,
<PAGE>
3
dated as of July 13, 1994 (the
"Guarantee Agreement"), made by
Holdings, the Borrower and the
Subsidiary Pledgors parties thereto
in favor of the Collateral Agent.
Security: The Facility and the Guarantees thereof
shall be secured pro-rata (and on an
equal and ratable basis with the
Existing Credit Agreement and the
Guarantees thereof) by the following
assets of Holdings, the Borrower and
each existing and each subsequently
acquired or organized restricted
subsidiary of the Borrower
(collectively, the "Collateral"): (a)
a first priority pledge of all the
capital stock of the Borrower and each
subsidiary of Borrower (or, in the case
of any foreign subsidiary, 65% of the
capital stock of such subsidiary) and
(b) any intercompany indebtedness in
excess of $10,000,000 owed to the
Borrower.
All the above-described pledges and
security interests shall be on the
terms and conditions of the Pledge
Agreement, dated as of July 13, 1994
(the "Pledge Agreement"), made by
Holdings, the Borrower and the
Subsidiary Pledgors parties thereto in
favor of the Collateral Agent, and none
of the Collateral shall be subject to
any other pledges, mortgages or
security interests.
Interest Rates and Fees: As set forth on Annex I hereto.
Default Rate: The applicable interest rate plus 2%
per annum.
Mandatory Prepayment: Loans under the Facility shall be
prepaid in an amount equal to 25% of
(i) the net cash proceeds (net of
selling expenses and taxes, including,
in the case of income taxes, estimated
income taxes) of all non-ordinary-
course asset sales or other
dispositions by the Borrower and its
restricted subsidiaries (including
insurance proceeds in excess of an
agreed-upon amount), subject to limited
exceptions to be agreed upon (including
exceptions for (A) sales of obsolete
inventories and (B) assets identified
on the date hereof as assets of
discontinued operations and other
exceptions substantially similar to the
Existing Credit Agreement), and except
to the extent such net cash proceeds
are reinvested (subject to limitations
<PAGE>
4
substantially similar to the Existing
Credit Agreement) in the Borrower's and
its subsidiaries' operating assets
within 12 months of such sale or
disposition, (ii) the net proceeds of
all sale/leaseback transactions by the
Borrower and its subsidiaries (subject
to limitations substantially similar to
the Existing Credit Agreement) and
(iii) the net proceeds of issuances of
debt obligations of Holdings or the
Borrower, subject to limited exceptions
substantially similar to the Existing
Credit Agreement (including an
exception for permitted subordinated
debt of Holdings or the Borrower if
certain performance tests substantially
similar to the Existing Credit
Agreement are satisfied).
The above-described mandatory
prepayments shall be applied to the
remaining installments of the Facility
on a pro rata basis. Any portion of
the Facility not drawn on the Closing
Date will be treated for purposes of
the amortization schedules as a
mandatory prepayment in the amount not
drawn.
Optional Prepayment: Loans may be prepaid in whole or in
part at any time without premium or
penalty. Any optional prepayment of
loans shall be subject to reimbursement
of redeployment costs in the case of
Adjusted LIBOR loans in the event such
prepayment occurs other than at the end
of an interest period.
Optional prepayments shall be applied
against the remaining installments
under the Facility in the direct order
of maturity.
Senior Credit Facility Usual for facilities and transactions
Documentation: of this type and acceptable to the
Lenders and their respective counsel.
The documentation for the Facility will
include, among other documents, a
single credit agreement, the Guarantee
Agreement, the Pledge Agreement and the
Intercreditor Agreement.
Representations and Usual for facilities and transactions
Warranties: of this type substantially similar to
the Existing Credit Agreement,
including but not limited to accuracy
of financial statements, no material
adverse change, absence of litigation,
no violation of agreements or
instruments, compliance with laws
(including ERISA
<PAGE>
5
and margin regulations), payment of taxes,
ownership of properties,
inapplicability of the Investment
Company Act, solvency, effectiveness of
regulatory approvals, labor matters,
environmental matters, accuracy of
information and validity, priority and
perfection of security interests.
Conditions Precedent to Usual for facilities and transactions
Initial Borrowing: of this type and reasonably acceptable
to the Borrower and its counsel,
Chemical and counsel for the Agent.
The Acquisition shall be consummated
simultaneously with the closing under
the Facility in accordance with
applicable law and the Merger Agreement
and all related documentation and
otherwise on terms reasonably
satisfactory to Chemical. The
conditions to the Merger set forth in
the Merger Agreement shall have been
satisfied without giving effect to
waivers or amendments not approved by
Chemical.
After giving effect to the Acquisition
and the other transactions contemplated
hereby, Holdings and its restricted
subsidiaries (including Larizza and its
subsidiaries) shall have outstanding no
indebtedness other than the Loans under
the Facility or loans under the
Existing Credit Agreement, and amounts
of other indebtedness to be agreed
upon.
Chemical shall have received
satisfactory pro forma consolidated and
consolidating balance sheets of each of
the Borrower and Larizza, together with
a certificate of the Borrower to the
effect that such statements fairly
present the pro forma financial
position of the Borrower or Larizza, as
the case may be, and its subsidiaries
in accordance with generally accepted
accounting principles, and Chemical
shall be reasonably satisfied that such
balance sheets and the transactions in
connection with the Acquisition and the
financing arrangements contemplated
hereby are not materially inconsistent
with the information or projections and
the financial model delivered to
Chemical prior to the date hereof. The
Borrower shall also have provided such
other information as Chemical may
reasonably request in connection with
the Acquisition.
<PAGE>
6
All requisite material governmental
authorities and all material third
parties shall have approved or
consented to the Acquisition to the
extent required and all applicable
appeal periods shall have expired.
Affirmative Covenants: Usual for facilities and transactions
of this type substantially similar to
the Existing Credit Agreement (with
customary qualifications and exceptions
to be agreed upon), including but not
limited to maintenance of corporate
existence and material rights;
performance of obligations; delivery of
financial statements, other financial
information and notices of default and
litigation; maintenance of properties
in good working order; maintenance of
satisfactory insurance (or self
insurance); compliance with laws;
inspection of books and properties;
further assurances; and payment of
taxes.
Negative Covenants: Usual for facilities and transactions
of this type substantially similar to
the Existing Credit Agreement (except
for limitations on asset sales) (with
customary qualifications and exceptions
to be agreed upon), including but not
limited to limitations on redemptions
and repurchases of capital stock;
limitations on prepayments, redemptions
and repurchases of debt; limitations on
liens and sale-leaseback transactions;
limitations on loans and investments;
limitations on capital expenditures;
limitations on mergers, acquisitions
and asset sales; limitations on
transactions with affiliates;
limitations on fundamental changes in
business conducted; and limitations on
amendment of debt and other material
agreements and licenses.
Dividends on capital stock of the
Borrower and Holdings, and redemptions
and repurchases of capital stock of
Holdings, will be permitted based on
performance tests substantially similar
to the Existing Credit Agreement. In
addition, dividends will be permitted
to allow Holdings to pay scheduled
liabilities in connection with
discontinued units and other limited
identified liabilities. No dividends
may be paid if a Default or Event of
Default is continuing or would result.
<PAGE>
7
Restricted subsidiaries of the Borrower
will not be permitted to incur any
debt, subject to limited exceptions
substantially similar to the Existing
Credit Agreement. The Borrower and
Holdings will not be permitted to incur
any debt except (i) subordinated debt
of Holdings or the Borrower having
maturities to be agreed upon, assuming
satisfaction of performance tests
substantially similar to the Existing
Credit Agreement, provided that the
other terms and conditions thereof are
satisfactory to the majority Lenders
and (ii) limited amounts and categories
of other debt substantially similar to
the Existing Credit Agreement,
In addition to the foregoing
limitations, it is understood that
(a) Holdings shall engage in no
activities other than continuing to own
all the common shares of the Borrower
and certain activities incidental
thereto and (b) Holdings shall have no
direct subsidiary other than the
Borrower and unrestricted subsidiaries.
Selected Financial The credit agreement relating to the
Covenants: Facility (the "Credit Agreement") will
contain financial covenants appropriate
in the context of the proposed
transaction substantially similar to
the Existing Credit Agreement based
upon the financial information provided
to Chemical, including, but not limited
to, minimum EBITDA (to be defined), an
interest coverage test, a leverage test
and a liquidity test.
Events of Default: Usual for facilities and transactions
of this type substantially similar to
the Existing Credit Agreement (with
customary qualifications and exceptions
to be agreed upon), including but not
limited to nonpayment of principal or
interest, violation of covenants,
incorrectness of representations and
warranties in any material respect,
cross default and cross acceleration,
bankruptcy, material undischarged
judgments, ERISA, actual or asserted
invalidity of security documents,
actual or asserted invalidity of
subordination provisions and Change in
Control.
The Credit Agreement shall contain such
other representations and warranties,
covenants and events of default, if
any, as shall be reasonably agreed by
<PAGE>
8
Chemical and the Borrower relating to
the business or assets of Larizza.
Cost and Yield Usual for facilities and transactions
Protection: of this type, including but not limited
to in respect of prepayments (which
shall include reimbursement of
redeployment costs in the case of
prepayments of Adjusted LIBOR loans
other than at the end of interest
periods), changes in capital adequacy
and capital requirements or their
interpretation (including protection
relating to compliance with the capital
adequacy guidelines approved by the
Federal Reserve Board on August 3,
1988), illegality, changes in
circumstances, changes in reserves (to
the extent not included in the interest
rates) and other situations reasonably
deemed necessary by Chemical or the
other Lenders to provide customary
protection for U.S. and non-U.S. banks.
Interest Rate Management: The Borrower shall (prior to a date
following the Closing Date reasonably
acceptable to Chemical) enter into and
maintain interest rate exchange
agreements and/or other appropriate
interest rate hedging transactions on
terms reasonably acceptable to Chemical
and with a counterparty reasonably
acceptable to Chemical covering at
least 40% of the projected outstanding
loans under the Facility for a period
of at least two years following the
Closing Date. The obligations of the
Borrower in respect of all such
agreements and transactions shall be
unsecured, except in the case of any
such agreement or transaction entered
into with a lender party to the
Existing Credit Agreement.
Assignments and The Lenders will be permitted to assign
Participations: loans, notes and commitments to other
financial institutions with the consent
of the Borrower (not to be unreasonably
withheld). The Administrative Agent
will receive a processing and
recordation fee of $3,500, payable by
the assignor and/or the assignee, with
each assignment. Assignments will be
by novation pursuant to arrangements to
be agreed upon.
The Lenders will be permitted to
participate loans, notes and
commitments without restriction to
other financial institutions. Voting
rights of participants
<PAGE>
9
shall be limited to matters in
respect of (a) reductions
of principal, interest or fees, (b)
extensions of scheduled final maturity
and (c) certain releases of collateral.
Participants will receive full cost and
yield protection, provided that
payments pursuant to such protection
shall be no greater than if the
applicable syndicate member had not
sold a participation.
Assignments and participations shall be
in minimum amounts of $10,000,000 of
loans and commitments (pro rated
downward as loans are permanently
repaid and commitments are permanently
reduced).
Voting: Amendments and waivers of the Credit
Agreement and the other definitive
credit documentation will require the
approval of Lenders holding a majority
of the loans under the Facility except
that the consent of all the effected
Lenders shall be required with respect
to (i) increases in commitments,
(ii) reductions of principal, interest
or fees, (iii) extensions of scheduled
final maturity and (iv) certain
releases of collateral and that the
consent of Lenders holding at least 80%
of outstanding loans will be required
for extensions of non-final payments.
Expenses Indemnification: All reasonable out-of-pocket expenses
(including but not limited to expenses
incurred in connection with due
diligence) of the Administrative Agent
and CSI associated with the syndication
of the Facility and with the
preparation, execution and delivery,
administration, waiver or modification
and enforcement of the Credit Agreement
and the other documentation
contemplated hereby and thereby
(including the reasonable fees,
disbursements and other charges of
counsel) are to be paid by the
Borrower. In addition, all reasonable
out-of-pocket expenses of the Lenders
for enforcement costs and documentary
taxes associated with the Facility are
to be paid by the Borrower.
The Borrower will indemnify the
Administrative Agent, CSI and the
Lenders (each, an "Indemnified Person")
and hold them harmless from and against
all costs, expenses (including
reasonable fees, disbursements and
other charges of counsel) and
<PAGE>
10
liabilities of each Indemnified Person
arising out of or relating to any claim
or any litigation or other proceedings
(regardless of whether such Indemnified
Person is a party thereto) that relate
to the proposed transactions, including
the financing contemplated hereby, the
Acquisition or any transactions
connected therewith, subject to the
provisions regarding assumption of
defense and settlement of claims
contained in the Existing Credit
Agreement, provided that no Indemnified
Person will be indemnified for its or
its agents' or representatives' gross
negligence or willful misconduct.
Governing Law: New York.
Administrative Agent's Simpson Thacher & Bartlett.
Counsel:
<PAGE>
ANNEX I TO
EXHIBIT A
Interest Rates: The interest rates applicable to the
Facility will be as follows:
Adjusted LIBOR plus 2.25% per
annum or
ABR plus 1.25% per annum.
The Borrower may elect interest periods
of 1, 2, 3, or 6 months for Adjusted
LIBOR borrowings.
Calculation of interest shall be on the
basis of actual days elapsed in a year
of 360 days (or 365 or 366 days, as the
case may be, in the case of ABR loans
based on the Prime Rate) and interest
shall be payable at the end of each
interest period and, in any event, at
least every 3 months.
ABR is the Alternate Base Rate, which
is the highest of Chemical Bank's Prime
Rate, the Federal Funds Effective Rate
plus 1/2 of 1% and the Base CD Rate
plus 1%.
Adjusted LIBOR and the Base CD Rate
will at all times include statutory
reserves (and, in the case of the Base
CD Rate, FDIC assessment rates).
<PAGE>
