<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996, OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES
EXCHANGE ACT OF 1934 for the transition period from ---- to ----.
Commission File No. 0-13805
AMERIWOOD INDUSTRIES INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
Michigan 38-0983610
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
171 Monroe Avenue, NW, Suite 600, Grand Rapids, Michigan, 49503
(Address of principal executive offices, zip code)
(616) 336-9400
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days.
Yes /X/ No / /
The number of shares outstanding of registrant's common stock, par value
$1.00 per share, at June 30, 1996 was 4,243,406.
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
AMERIWOOD INDUSTRIES INTERNATIONAL CORPORATION AND SUBSIDIARIES
June 30 December 31
1996 1995
----------- -----------
(Unaudited)
ASSETS
CURRENT ASSETS:
Accounts receivable, less allowances $15,972,600 $17,446,300
Inventories:
Raw material 6,877,100 5,849,900
Work in process 2,984,500 3,629,100
Finished goods 11,666,600 7,944,200
----------- -----------
21,528,200 17,423,200
Prepaid expenses and other current assets 2,240,200 2,149,500
----------- -----------
Total current assets 39,741,000 37,019,000
PROPERTY AND EQUIPMENT:
Land 231,900 231,900
Buildings and improvements 13,699,400 13,691,200
Machinery and equipment 29,757,300 29,172,000
Construction in progress 981,300 305,300
----------- -----------
44,669,900 43,400,400
Less accumulated depreciation (21,803,900) (20,233,000)
----------- -----------
22,866,000 23,167,400
OTHER ASSETS 166,500 178,700
----------- -----------
$62,773,500 $60,365,100
=========== ===========
<PAGE> 3
June 30 December 31
1996 1995
----------- -----------
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable 5,154,300 4,527,700
Payroll and related benefits 1,979,200 3,262,800
Accrued advertising 3,274,500 2,621,700
Other 2,495,300 3,260,100
----------- -----------
Total current liabilities 12,903,300 13,672,300
LONG-TERM DEBT 9,750,000 7,000,000
OTHER LONG-TERM LIABILITIES 2,536,000 2,482,200
SHAREHOLDERS' EQUITY:
Common Stock 4,243,400 4,188,400
Additional paid-in capital 20,833,300 20,622,300
Retained earnings 12,507,500 12,399,900
----------- -----------
37,584,200 37,210,600
----------- -----------
$62,773,500 $60,365,100
=========== ===========
See accompanying notes to condensed consolidated financial statements.
<PAGE> 4
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
AMERIWOOD INDUSTRIES INTERNATIONAL CORPORATION AND SUBSIDIARIES
Three Months Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
----------- ----------- ----------- -----------
Net sales $22,459,000 $23,524,700 $48,739,300 $49,288,500
Cost of sales 18,894,500 20,317,700 41,404,400 42,099,500
----------- ----------- ----------- -----------
Gross profit 3,564,500 3,207,000 7,334,900 7,189,000
Selling, general and
administrative 3,392,500 3,469,700 7,001,800 7,280,400
----------- ----------- ----------- -----------
Operating income (loss) 172,000 (262,700) 333,100 (91,400)
Other expense (income):
Interest expense 111,900 85,200 187,900 175,400
Interest income (1,200) (3,300) (2,300) (6,800)
Other, net (9,400) (2,900) (6,200) 18,200
----------- ------------ ----------- -----------
101,300 79,000 179,400 186,800
----------- ------------ ----------- -----------
Pretax income (loss) 70,700 (341,700) 153,700 (278,200)
Income taxes (benefit) 29,500 (114,100) 46,100 (94,600)
----------- ------------ ------------ -----------
NET INCOME (LOSS) $ 41,200 $ (227,600) $ 107,600 $ (183,600)
=========== ============ ============ ===========
Average number of common
and common equivalent
shares outstanding 4,266,200 4,211,000 4,231,900 4,215,200
========= ========= ========= =========
Earnings (loss) per share $ .01 $(.05) $.03 $(.04)
===== ===== ==== =====
See accompanying notes to condensed consolidated financial statements.
<PAGE> 5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
AMERIWOOD INDUSTRIES INTERNATIONAL CORPORATION AND SUBSIDIARIES
Six Months Ended
June 30
1996 1995
----------- -----------
CASH FLOWS FROM (USED IN)
OPERRATING ACTIVITIES $ (998,000) $ 1,261,300
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (1,434,200) (1,428,100)
Other 13,400 4,000
----------- -----------
Net cash used in investing activities (1,420,800) (1,424,100)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from note payable to bank 2,750,000 700,000
Repurchase of common stock (597,200) (299,300)
Issuance of common stock 266,000
----------- -----------
Net cash provided by
financing activities 2,418,800 400,700
----------- -----------
NET INCREASE IN CASH AND EQUIVALENTS 0 237,900
CASH AND EQUIVALENTS AT BEGINNING OF YEAR 0 0
----------- -----------
CASH AND EQUIVALENTS AT END OF PERIOD $ 0 $ 237,900
=========== ===========
Supplemental disclosures:
Cash transactions-
Interest paid, net of
amounts capitalized $ 158,400 $ 195,400
Income taxes paid (refunded) (98,200) 1,197,000
See accompanying notes to condensed consolidated financial statements.
<PAGE> 6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
AMERIWOOD INDUSTRIES INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTE 1--BASIS OF PRESENTATION
The condensed consolidated financial statements included herein have been
prepared by Ameriwood Industries International Corporation ("Ameriwood" or
the "Company"), without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the information
presented not misleading. It is suggested that these condensed
consolidated financial statements be read in conjunction with the
consolidated financial statements and notes thereto included in Ameriwood's
1995 annual report on Form 10-K.
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments necessary to
present fairly the financial position of the Company as of June 30, 1996
and the results of its operations and its cash flows for the three and six
month periods ended June 30, 1996 and 1995. All such adjustments are of a
normal and recurring nature.
NOTE 2-BORROWING ARRANGEMENTS
On August 2, 1996, the Company's $15 million unsecured bank revolving
credit facility was amended to extend the maturity date to July 15, 1999
and amend a financial covenant requiring cash flow from operations to
represent a certain percentage of outstanding indebtedness. At June 30,
1996, the Company was in compliance with all covenants specified in the
credit facility, as amended. All other terms and conditions of the amended
facility are substantially unchanged.
Although the original maturity date was January 13, 1998, the Company
previously classified outstanding borrowings under its revolving credit
facility as a current obligation on its balance sheet. Beginning with June
30, 1996, such borrowings have been more appropriately classified as long
term. The amount outstanding at December 31, 1995 has been reclassified to
conform with this presentation.
NOTE 3-CONTINGENCY
During 1989, the Company discovered environmental contamination at its
facility in Dowagiac, Michigan. The Company voluntarily reported the
matter to the Michigan Department of Environmental Quality ("MDEQ")and
began remediation procedures. Ameriwood identified Chrysler Corporation
and the United States Department of Defense ("DOD") as prior owners or
operators of this site. Chrysler has admitted successorship to a prior
owner of the site, but has not admitted liability. A suit has been filed
against Chrysler seeking recovery of costs for environmental investigation
and remediation at the site. Although the Company believes it has
sufficient basis to prevail, there is no assurance of recovery and no
recognition has been given in the financial statements for potential
recoveries from other parties.
In March 1996, the Company received a Remedial Investigation and
Feasibility Study from an independent engineering firm, acceptable to
Chrysler. A request for approval of the Company's feasibility study has
<PAGE> 7
been filed with the MDEQ. If the study is approved, a Remedial Action Plan
will be submitted for approval. It is the Company's policy to accrue
environmental cleanup costs if it is probable that a liability has been
incurred and an amount is reasonably estimable.
The Company recorded a reserve at December 31, 1995 of $2,030,500 to cover
costs including ongoing monitoring for up to 30 years and future
anticipated legal costs. The current portion, $516,900, is included in
Other Current Liabilities and the remainder is included in Other Long-Term
Liabilities. During the first six months of 1996, $175,800 has been paid
out against the accrual. Based on the opinion of the independent
engineering firm and legal counsel, the Company believes it will receive a
favorable ruling, and management believes any additional costs beyond the
amounts recorded will not be material to the Company's financial position
or results of operations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS-SECOND QUARTER 1996 COMPARED TO SECOND QUARTER 1995
Net sales for the three months ended June 30, were down 4.5% from the same
period in 1995. Furniture sales were relatively flat compared to the first
half of 1995. Revenues were negatively impacted by a delay in shipment of
a few significant orders from late June into early July.
In July 1996, the Company's OEM division was renamed "Custom Solutions" to
better reflect a new emphasis on the production of items that utilize
Ameriwood's core competencies of designing, laminating, and
manufacturing high-quality custom wood products. The expanded charter
of this division will allow us to grow and diversify this portion of the
business through entering new markets. Custom Solutions sales for the three
months ended June 30, 1996 decreased 18% and sales for the BIC branded
stereo speaker business decreased 5% from the same period in 1995. These
two product categories continue to be affected by retail softness in the
audio products industry.
Historically, the second quarter has been the Company's lowest volume
quarter during the year.
Gross margins for the quarter improved from 13.6% in the second quarter of
1995 to 15.9% for the second quarter of 1996. The improvement in gross
margins is due largely to productivity and efficiency gains realized from
actions taken earlier in the year and an increase in furniture orders which
aids in the absorption of overhead.
Selling, general, and administrative ("SG&A") expenses decreased slightly
compared to the same period in 1995. SG&A as a percentage of net sales
increased from 14.7% in the second quarter of 1995, to 15.1% in the current
year quarter which was primarily a result of the reduced level of
consolidated net sales. The decrease in total dollars spent is a result of
the management reorganization plan the Company began earlier this year to
reduce redundant staffing in order to lower fixed costs.
Interest expense was up for the quarter due to higher outstanding
borrowings on the Company's revolving credit facility.
The Company recorded net income of $41,200, or $.01 per share, for the
three months ended June 30, 1996, as compared to a loss of $227,600, or
$.05 per share, for the same period in 1995. The increase was the result
of the gross margin improvement discussed above.
<PAGE> 8
RESULTS OF OPERATIONS-SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO THE SIX
MONTHS ENDED JUNE 30, 1995
Year-to-date net sales through June 30 were relatively flat, down 1.1% from
the same period in 1995. Furniture sales were up 5.7%, but this increase
was offset by a decline in Custom Solutions sales of 19.8%, and a decline
of 16.8% for BIC America.
Order backlog for ready-to-assemble furniture at June 30, 1996 was up 21%
to $11.8 million, compared to prior year levels, due primarily to a 16%
increase in furniture orders through the first half of 1996. Although the
Company believes the backlog is firm, certain orders may be subject to
cancellation prior to shipment. Therefore, the backlog may not represent
actual future sales.
Gross margins for the six month period were 15%, up .5% from the first half
of 1995, and up a little over 1% compared to the full year of 1995. This
increase was due to productivity and efficiency gains realized from actions
taken during the year.
The higher gross margins discussed above, and a reduction in SG&A expenses
due to cost control, were the primary reasons for the improvement in
operating income. For the six months ended June 30, 1996, the Company
recorded net income of $107,600, or $.03 per share, as compared to a loss
of $183,600, or $.04 per share, for the same period in 1995
CAPITAL RESOURCES AND LIQUIDITY
Accounts receivable, net of reserves, of $15.9 million were down $1.5
million from year end levels of $17.4 million. Inventories of $21.5
million were up $4.1 million from $17.4 million at year end. Inventory
levels are being increased in preparation for the peak demand periods in
the third and fourth quarters.
Credit facility borrowings were $4.8 million, up from a year end level of
$2 million. These additional funds, along with cash flow from operations,
were used to finance working capital requirements, to purchase $1.4 million
of machinery and equipment, and to purchase $597,000 of Ameriwood stock to
fund the ESOP portion of the Company's ESOP/401(k) plan.
Capital expenditures for the first half of 1996 consisted mainly of
expenditures related to improving manufacturing efficiency and design
capabilities. Ameriwood currently anticipates capital expenditures for the
remainder of the year to be approximately $2.5 million, and will consist of
similar machinery and equipment purchases at the Company's Ohio and
Michigan manufacturing facilities.
Management believes the Company's present liquidity, combined with cash
flow from future operations and the Company's revolving credit facility,
will be adequate to fund operations and capital expenditures for the
remainder of 1996 and 1997. In the event more funds are required,
additional long-term borrowings are an alternative for meeting liquidity
and capital resource needs.
<PAGE> 9
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
See Item 3 of registrant's Annual Report on Form 10-K for the year ended
December 31, 1995, for information related to the Arthur Andersen
Litigation.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits. Reference is made to the Exhibit Index on Page 10 of this
Form 10-Q.
(b) Reports on Form 8-K. There were no reports on Form 8-K filed by the
Registrant during the three months ended June 30, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERIWOOD INDUSTRIES INTERNATIONAL CORPORATION
August 13, 1996 /s/ Charles R. Foley
----------------------
Charles R. Foley
Interim President and Chief
Executive Officer
(Principal Executive Officer)
August 13, 1996 /s/ Craig G. Wassenaar
----------------------
Craig G. Wassenaar
Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
<PAGE> 10
EXHIBIT INDEX
- ---------------------------------------------------------------------------
3(a) Restated Articles of Incorporation, as amended June 24,1993 (filed as
exhibit to Form 10-K for the year ended December 31, 1993 (Commission
File No. 0-13805) and incorporated herein by reference)
3(b) Bylaws, as amended through January 28, 1996 (filed as exhibit to
Form 10-K for the year ended December 31, 1995 (Commission File No.
0-13805) and incorporated herein by reference)
4(a) Indenture of Trust relating to $5,000,000 Michigan Strategic Fund
Industrial Development Revenue Bonds due in 2006, and related Loan
Agreement, Letter of Credit Agreement, Mortgage and Security Agreement
and Irrevocable Transferable Letter of Credit (filed as exhibits to Form
10-K for the year ended December 31, 1989 (Commission File No. 0-13805)
and incorporated herein by reference)
4(b) Second Amendment, dated June 19, 1992, to Letter of Credit with Harris
Trust and Savings Bank, dated November 1, 1986, relating to Letter of
Credit identified in Exhibit 4(a) (filed as exhibit to Form 10-Q for the
quarter ended June 30, 1992 (Commission File No. 0-13805) and
incorporated herein by reference)
4(c) Third Amendment, dated January 13, 1995, to Letter of Credit with Harris
Trust and Savings Bank, dated November 1, 1986, relating to Letter of
Credit identified in Exhibit 4(a)(filed as exhibit to Form 10-K for the
year ended December 31, 1994 (Commission File No. 0-13805) and
incorporated herein by reference)
4(d) Letter of Credit Agreement Waiver with Harris Trust and Savings Bank,
dated February 27, 1996, relating to the Letter of Credit and applicable
amendments in Exhibits 4(a), 4(b), and 4(c) (filed as exhibit to Form
10-K for the year ended December 31, 1995 (Commission File No. 0-13805)
and incorporated herein by reference)
4(e) Fourth Amendment, dated August 2, 1996, to Letter of Credit with Harris
Trust and Savings Bank, dated November 1, 1986, relating to Letter of
Credit identified in Exhibit 4(a)
4(f) Credit Agreement with Harris Trust and Savings Bank and The First
National Bank of Chicago, dated January 13, 1995 (filed as exhibit to
Form 10-K for the year ended December 31, 1994 (Commission File No.
0-13805) and incorporated herein by reference)
4(g) First Amendment to Credit Agreement and Waiver with Harris Trust and
Savings Bank, dated February 27, 1996, relating to Credit Agreement
identified in Exhibit 4(g) (filed as exhibit to Form 10-K for the year
ended December 31, 1995 (Commission File No. 0-13805) and incorporated
herein by reference)
4(h) Second Amendment to Credit Agreement with Harris Trust and Savings Bank,
dated August 2, 1996, relating to Credit Agreement identified in
Exhibit 4(g)
<PAGE> 11
EXHIBIT INDEX
- -----------------------------------------------------------------------------
4(i) Ameriwood Industries International Corporation common stock certificate
specimen (filed as exhibit to Form 10-Q for the quarter ended March 31,
1993 (Commission File No. 0-13805) and incorporated herein by reference)
4(j) Rights Agreement, dated April 4, 1996, between Ameriwood Industires
International Corporation and Harris Trust and Savings Bank, as
Rights Agent
The following material contracts identified with "*" preceding the exhibit
number are agreements or compensation plans with or relating to executive
officers, directors or related parties.
*10(a) 1984 Incentive Stock Option Plan, as amended (filed as exhibit to
Form 10-K for the year ended December 31, 1990 (Commission File No.
0-13805) and incorporated herein by reference)
*10(b) Ameriwood Industries 1992 Non-Employee Directors' Stock Option
Plan (filed as Exhibit A to the definitive proxy statement dated
June 26, 1992 relating to the Company's 1992 annual meeting
(Commission File No. 0-13805) and incorporated herein by reference)
*10(c) Ameriwood Industries 1995 Non-Employee Directors' Stock Option Plan
(filed as Exhibit A to the definitive proxy statement dated April 12,
1995 relating to the Company's 1995 annual meeting (Commission File No.
0-13805) and incorporated herein by reference)
*10(d) Ameriwood Industries 1993 Stock Incentive Plan (filed as Exhibit A to
the definitive proxy statement dated May 10, 1993 relating to the
Company's 1993 annual meeting (Commission File No. 0-13805) incorporated
herein by reference)
*10(e) Form of Stock Option Agreement dated February 14, 1991 with Neil L.
Diver (filed as exhibit to Form 10-K for the year ended December 31,
1990 (Commission File No. 0-13805) and incorporated herein by reference)
*10(f) Rospatch Corporation Annual Incentive Plan (filed as exhibit to Form
10-K for the year ended December 31, 1990 (Commission File No .0-13805)
and incorporated herein by reference)
*10(g) Description of non-employee directors consultation fee arrangements
(filed as exhibit to Form 10-K for the year ended December 31, 1992
(Commission File No. 0-13805) and incorporated herein by reference)
*10(h) Rospatch Corporation Irrevocable Indemnity Trust Agreement dated August
13, 1990 (filed as exhibit to Form 10-Q for the quarter ended June 30,
1990 (Commission File No. 0-13805) and incorporated herein by reference)
*10(i) First Amendment to Rospatch Corporation Irrevocable Indemnity Trust
Agreement (filed as exhibit to Form 10-K for the year ended December 31,
1991 (Commission File No. 0-13805) and incorporated herein by reference)
<PAGE 12>
EXHIBIT INDEX
- -----------------------------------------------------------------------------
*10(j) Form of Indemnity Agreement entered into between the registrant and
certain executive officers (filed as exhibit to Form 10-K for the year
ended December 31, 1994 (Commission File No. 0-13805) and incorporated
herein by reference)
*10(k) Form of Management Retention Agreement entered into between the
registrant and certain executive officers (filed as exhibit to
Form 10-K for the year ended December 31, 1992 (Commission File No.
0-13805) and incorporated herein by reference)
*10(l) Form of Variable Life Policy for certain executive officers of the
registrant (filed as exhibit to Form 10-K for the year ended
December 31, 1993 (Commission File No. 0-13805) and incorporated
herein by reference)
*10(m) Form of Split-Dollar Life Insurance Agreement entered into between the
registrant and certain executive officers (filed as exhibit to Form 10-K
for the year ended December 31, 1993 (Commission File No. 0-13805)
and incorporated herein by reference)
*10(n) Form of Collateral Assignment Agreement entered into between the
registrant and certain executive officers (filed as exhibit to Form 10-K
for the year ended December 31, 1993 (Commission File No. 0-13805)
and incorporated herein by reference)
*10(o) Form of Severance Compensation Agreement entered into between the
registrant and certain executive officers (filed as exhibit to Form 10-K
for the year ended December 31, 1993 (Commission File No. 0-13805) and
incorporated herein by reference)
*10(p) Employment Agreement dated April 20, 1990 with Joseph J. Miglore
(filed as exhibit to Form 10-K for the year ended December 31, 1990
(Commission File No. 0-13805) and incorporated herein by reference)
*10(q) Addendum To Employment Agreement between registrant and Joseph J.
Miglore (filed as exhibit to Form 10-K for the year ended December 31,
1992 (Commission File No. 0-13805) and incorporated herein by
reference)
*10(r) Management Retention Agreement dated as of November 20, 1992
between the registrant and Joseph J. Miglore (filed as exhibit
to Form 10-K for the year ended December 31, 1992 (Commission File
No. 0-13805) and incorporated herein by reference)
*10(s) Mutual Termination and Benefits Agreement dated as of January 18, 1996
between the registrant and Joseph J. Miglore (filed as exhibit to
Form 10-K for the year ended December 31, 1995 (Commission File No.
0-13805) and incorporated herein by reference)
*10(t) Letter agreement regarding duties as Interim President and CEO
dated February 22, 1996 between the registrant and Charles R. Foley
(filed as exhibit to Form 10-K for the year ended December 31, 1995
(Commission File No. 0-13805) and incorporated herein by reference)
*10(u) Severance Agreement dated April 10, 1996 between the registrant and
James Meier
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 16,586,200
<ALLOWANCES> 613,600
<INVENTORY> 21,528,200
<CURRENT-ASSETS> 39,741,000
<PP&E> 44,669,900
<DEPRECIATION> 21,803,900
<TOTAL-ASSETS> 62,773,500
<CURRENT-LIABILITIES> 12,903,300
<BONDS> 0
0
0
<COMMON> 4,243,400
<OTHER-SE> 33,340,800
<TOTAL-LIABILITY-AND-EQUITY> 62,773,500
<SALES> 48,739,300
<TOTAL-REVENUES> 48,739,300
<CGS> 41,404,400
<TOTAL-COSTS> 41,404,400
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 187,900
<INCOME-PRETAX> 153,700
<INCOME-TAX> 46,100
<INCOME-CONTINUING> 107,600
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 107,600
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
SIDE LETTER RE: SECTION 8.8
Ameriwood Industries
171 Monroe Street N.W. Suite 600
Grand Rapids, Michigan 49503
Ladies and Gentlemen:
Reference is made to that certain Letter of Credit Agreement dated as of
November 1, 1986 as amended (such Letter of Credit Agreement as so
amended being hereinafter referred to as the "Letter of Credit
Agreement"), currently in effect between Ameriwood Industries
International Corporation (the "Company") and the undersigned (the
"Bank"), relating to the $5,000,000 aggregate principal amount of
Variable/Fixed Rate Industrial Development Revenue Bonds, Series 1986
(Rospatch Corporation Project) of the Michigan Strategic Fund. Upon your
acceptance hereof in the space provided for that purpose below, this Side
Letter RE: Section 8.8 shall serve as an agreement between us with
respect to the Letter of Credit Agreement.
WHEREAS, the Company and the Bank have entered in to a Credit Agreement
dated as of January 13, 1995, as amended, by and among the Company and
the Bank, individually and as agent for itself and the other banks which
may from time to time become parties thereto; and
WHEREAS, the Company and the Bank have, in Section 5.3 of the Letter of
Credit Agreement, incorporated by reference, among other provisions, the
agreements, covenants, obligations and undertakings contained in the
provisions of Sections 8.1 to 8.16, inclusive, of the Credit Agreement;
and
WHEREAS, Section 5.3 o the Letter of Credit Agreement provides that any
amendments or modifications to the Credit Agreement shall not be
effective as to the Letter of Credit Agreement unless consented to in
writing by the Bank; and
WHEREAS, the Company and the Bank have amended the provisions of Section
8.8 of the Credit Agreement to be and to read as follows:
Section 8.8 Funds from Operations to Indebtedness for Borrowed Money.
As of the fiscal quarter ending on March 31, 1996 and June 30, 1996 the
Company shall have a ratio for the period of four calendar quarters then
ending of Funds from Operations to Indebtedness for Borrowed Money as of
such day of not less than .20 to 1.0, as of the fiscal quarter ending on
September 30, 1996 the Company shall have a ratio for the period of four
calendar quarters then ending of Funds from Operations to Indebtedness
for Borrowed Money as of such day of not less than .30 to 1.0 and as of
the last day of each calendar quarter thereafter the Company shall have a
ratio for the period of four calendar quarters then ending of Funds from
Operations to Indebtedness for Borrowed Money as of such day of not less
than .40 to 1.0;
NOW THEREFORE, for good and valuable consideration, the receipt whereof
is hereby acknowledged, the Company and the Bank agree that Section 5.3
of the Letter of Credit Agreement shall apply and refer to Section 8.8 of
the Credit Agreement as amended and described above.
This Side Letter Re: Section 8.8 may be executed in any number of
counterparts and by separate parties hereto on separate counterparts,
each of which when so executed shall be deemed an original and all of
which taken together shall constitute one and the same instrument. No
reference to this Side Letter Re: Section 8.8 need be made in any
instrument or document at any time referring to the Letter of Credit
Agreement. This Side Letter RE: Section 8.8 shall be construed and
governed by and in accordance with the laws of the State of Illinois.
Dates as of this 2nd day of August 1996
HARRIS TRUST AND SAVINGS BANK
By /s/ Peter Krawchuk
----------------------------------
Its Vice President
Accepted and agreed to as of the day and year last above written.
AMERIWOOD INDUSTRIES INTERNATIONAL CORP.
formerly known as Rospatch Corporation
By /s/ Craig G. Wassenaar
-------------------------
Its Chief Financial Officer
SECOND AMENDMENT TO CREDIT AGREEMENT
This Second Amendment to Credit Agreement, dated as of August 2, 1996, by
and among Ameriwood Industries International Corporation, a Michigan
corporation (the "Company"), Harris Trust and Savings Bank in its
capacity as agent for the Banks (the "Agent") and the Banks. Terms which
are defined in the Credit Agreement (as hereinafter defined) shall have
the same meaning herein as defined in the Credit Agreement except to the
extent that such definitions are amended by this Amendment.
Witnesseth that:
Whereas, the Company, the Banks and the Agent are party to that certain
Credit Agreement dated as of January 13, 1995 and that certain First
Amendment to Credit Agreement and Waiver dated as of February 27, 1996
(together with all exhibits, schedules, attachments and appendices
thereto, the "Credit Agreement");
Whereas, the Company has requested that the Credit Agreement be amended
to, among other things, modify certain covenants and other provisions of
the Credit Agreement and the Banks and the Agent are agreeable to such
request;
Now Therefore, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Banks and the Company
hereby agree as follows:
1. Amendments
(i) The phrase "10:00 a.m." appearing in Section 1.2 of the Credit
Agreement is hereby deleted and replaced by the following:
"1:00 p.m."
(ii) The definition of "LIBOR Margin" appearing in Section 2.1(c) of
the Credit Agreement is hereby amended in its entirety to be and to read
as follows:
"LIBOR Margin" shall mean, upon receipt of the financial
statements and the compliance certificate called for by Section 8.5(a)(ii)
hereof for the quarter ended June 30, 1996, the rate provided in Section 2.10
hereof.
(iii) The definition of "Bank" or "Banks" appearing in Section 5 of
the Credit Agreement is hereby amended in its entirety to be and to read
as follows:
"Bank" or "Banks" shall mean Harris Trust and Savings Bank.
(iv) The definition of "Required Banks" appearing in Section 5 of the
Credit Agreement is hereby amended in its entirety to be and to read as
follows:
"Required Banks" shall mean the Banks holding 66-2/3% or more of the
outstanding principal amount of the Notes. If no Loans are then
outstanding, the percentages referred to in this definition for
determining "Required Banks" shall refer to Banks with such
percentage or more of the Commitments.
(v) The definition of "Termination Date" appearing in Section 5 of
the Credit Agreement is hereby amended in its entirety to be and to read
as follows:
"Termination Date" shall mean July 15, 1999, as the same may be
extended pursuant to Section 11.14 hereof or such earlier date on
which the Commitment of the Banks expires pursuant to the terms of
Sections 3.5, 9.2 or 9.3 hereof.
(vi) Section 8.8 of the Credit Agreement is hereby amended in its
entirety to be and to read as follows:
Section 8.8. Funds from Operations to Indebtedness for Borrowed
Money. As of the fiscal quarters ending on March 31, 1996 and June 30,
1996 the Company shall have a ratio for the period of four calendar
quarters then ending of Funds from Operations to Indebtedness for
Borrowed Money as of such day of not less than .20 to 1.0, as of the
fiscal quarter ending on September 30, 1996 the Company shall have a
ratio for the period of four calendar quarters then ending of Funds
from Operations to Indebtedness for Borrowed Money as of such day of
not less than .30 to 1.0 and as of the last day of each calendar
quarter thereafter the Company shall have a ratio
for the period of four calendar quarters then ending of Funds from
Operations to Indebtedness for Borrowed Money as of such day of
not less than .40 to 1.0.
(vii) The phrase "each anniversary date of the date hereof" appearing
in Section 11.14 of the Credit Agreement is hereby deleted and replaced by the
following:
"each anniversary of the date of that certain Second Amendment
to Credit Agreement dated as of August 2, 1996 between the Company and
Harris Trust and Savings Bank in its capacity as agent for the Banks
and the Banks"
2. Miscellaneous
Except as expressly amended hereby, the Credit Agreement and all other
documents executed in connection therewith shall remain in full force and
effect in accordance with their respective terms. The Credit Agreement,
as amended hereby, and all rights and powers created thereby and
thereunder or under such other documents are in all respects ratified and
confirmed. From and after the date hereof, the Credit Agreement shall be
deemed to be amended and modified as herein provided, but, except as so
amended and modified, the Credit Agreement shall continue in full force
and effect in accordance with its terms and the Credit Agreement and this
Amendment shall be read, taken and construed as one and the same
instrument. On and after the date hereof the term "Agreement" as used in
the Credit Agreement and all other references to the Credit Agreement in
the Credit Agreement, the other documents executed in connection
therewith and/or herewith or any other instrument, document or writing
executed by the Company or any other person or furnished to the Agent or
the Banks by the Company, or any other person in connection herewith or
therewith shall mean the Credit Agreement as hereby amended.
On and as of the date hereof, the Company represents and warrants to
the Banks that:
(a) its representations and warranties contained in this Amendment and
the Credit Agreement are true and correct in all material respects, in each
case as though made on and as of such date, except to the extent such
representations and warranties relate solely to an earlier date (and then as of
such earlier date); and
(b) no Potential Default or Event of Default has occurred and is
continuing or would result from the execution and delivery of this Amendment or
any other document arising in connection with or pursuant to this Amendment;
and
(c) the Company is, and will be, in full compliance with all of the
material terms, conditions and all other provisions of this Amendment and
the Credit Agreement; and
(d) this Amendment has been duly authorized, executed and delivered on
its behalf, and both the Credit Agreement, both before being amended
and supplemented hereby and as amended and supplemented hereby, and
this Amendment constitutes its legal, valid and binding obligation
enforceable against it in accordance with its terms, except to the extent that
a remedy or default may be determined by a court of competent jurisdiction
to constitute a penalty and except to the extent that enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to creditors' rights or by general
principles of equity.
This Amendment may be signed in any number of counterparts, each of which
shall be deemed an original, but all of which together shall constitute
one and the same instrument.
Except as otherwise specified herein, this Amendment embodies the entire
agreement and understanding between the Company, the Agent and the Banks
with respect to the subject matter hereof and supersedes all prior
agreements, consents and understandings relating to such subject matter.
This Amendment shall be binding upon and inure to the benefit of the
Agent and the Banks and their successors and assigns and the Company and
its permitted successors and assigns.
This Amendment shall be construed in accordance with, and governed by,
the internal laws of the State of Illinois without regard to principles
of conflict of law.
In witness whereof, the Company, the Agent and the Banks have caused this
Amendment to be duly executed as of the date first hereinabove written.
(Corporate Seal) Ameriwood Industries International Corp.
By /s/ Charles R. Foley
------------------------
Its President
Attest:
/s/ Craig G. Wassenaar
- ----------------------
Its Secretary
Harris Trust and Savings Bank,
individually and as Agent
By /s/ Peter Krawchuk
---------------------
Its Vice President
*************************************************************************
This Note is issued in substitution and replacement for, and evidences in
part the indebtedness previously evidenced by, that certain Revolving
Credit Note of the Company dated January 13, 1995 payable to the order of
the Bank in the face principal amount of $10,000,000
AMERIWOOD INDUSTRIES INTERNATIONAL CORPORATION
REVOLVING CREDIT NOTE
Chicago, Illinois
$15,000,000
August 2, 1996
On the Termination Date, for value received, the undersigned, Ameriwood
Industries International Corporation, a Michigan corporation (the
"Company"), promises to pay to the order of Harris Trust and Savings Bank
(the "Bank"), at the principal office of the Agent in Chicago, Illinois,
the principal sum of (i) Fifteen Million Dollars ($15,000,000), or (ii)
such lesser amount as may at the time of the maturity hereof, whether by
acceleration or otherwise, be the aggregate unpaid principal amount of
all loans owing from the Company to the Bank under the Revolving Credit
provided for in the Credit Agreement hereinafter mentioned.
This Note evidences indebtedness loans constituting part of the "Domestic
Rate Portion" and "LIBOR Portions" as such terms are defined in that
certain Credit Agreement dated as of January 13, 1995 by and between the
Company, Harris Trust and Savings Bank individually and as Agent and
certain other banks which may from time to time become parties thereto
(such Credit Agreement as the same may from time to time be amended being
hereinafter referred to as the "Credit Agreement") made and to be made to
the Company by the Bank under the Revolving Credit provided for under the
Credit Agreement and the Company hereby promises to pay interest at the
office specified above on each loan evidenced hereby at the rates and
times specified therefor in the Credit Agreement.
Each loan made under the Revolving Credit provided for in the Credit
Agreement by the Bank to the Company against this Note, any repayment of
principal hereon, the principal balance from time to time outstanding,
the status of each such loan from time to time as part of the Domestic
Rate Portion or a LIBOR Portion and the interest rates and interest
periods applicable thereto shall be endorsed by the holder hereof on the
reverse side of this Note or recorded on the books and records of the
holder hereof (provided that such entries shall be endorsed on the
reverse side hereof prior to any negotiation hereof) and the Company
agrees that in any action or proceeding instituted to collect or enforce
collection of this Note, the entries so endorsed on the reverse side
hereof or recorded on the books and records of the Bank shall be prima
facie evidence of the unpaid balance of this Note and the status of each
loan from time to time as part of the Domestic Rate Portion or a LIBOR
Portion and the interest rates and interest periods applicable thereto;
provided, however, that the failure of the Bank to record any of the
foregoing shall not limit or otherwise affect the obligation of the
Company to repay all Portions created or effected by conversion under the
Revolving Credit together with accrued interest thereon.
This Note is one of the Notes referred to in and issued under the issued
Credit Agreement and this Note and the holder hereof are entitled to all
of the benefits provided for thereby or referred to therein, to which
Credit Agreement reference is hereby made for a statement thereof. All
defined terms used in this Note without definition shall have the same
meaning as such terms have in the Credit Agreement. This Note may be
declared to be, or be and become, due prior to its expressed maturity
upon the occurrence of an Event of Default specified in the Credit
Agreement, voluntary prepayments may be made hereon, and certain
prepayments are required to be made hereon, all in the events, on the
terms and with the effects provided in the Credit Agreement.
This Note shall be construed in accordance with, and governed by, the
internal laws of the State of Illinois without regard to principles of
conflict of law.
The Company hereby waives presentment for payment and demand, protest and
notice of any kind whatsoever.
Ameriwood Industries International
Corporation
By /s/ Charles R. Foley
------------------------
Its President
AMERIWOOD INDUSTRIES INTERNATIONAL CORPORATION
and
HARRIS TRUST AND SAVINGS BANK
Rights Agent
Rights Agreement
Dated as of April 4, 1996
TABLE OF CONTENTS
RIGHTS AGREEMENT
Section 1. Certain Definitions
Section 2. Appointment of Rights Agent
Section 3. Issue of Rights Certificates
Section 4. Form of Rights Certificates
Section 5. Countersignature and Registration
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights
Section 8. Cancellation and Destruction of Rights Certificates
Section 9. Reservation and Availability of Common Shares
Section 10. Common Shares Record Date
Section 11. Adjustment of Purchase Price, Number Shares or Number
Rights
Section 12. Certificate of Adjusted Purchase Price or Number of Shares
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power
Section 14. Fractional Rights and Fractional Shares
Section 15. Rights of Action
Section 16. Agreement of Right Holders
Section 17. Rights Certificate Holder Not Deemed a Shareholder
Section 18. Concerning the Rights Agent
Section 19. Merger or Consolidation or Change of Name of Rights Agent
Section 20. Duties of Rights Agent
Section 21. Change of Rights Agent
Section 22. Issuance of New Rights Certificates
Section 23. Redemption
Section 24. Notice of Certain Events
Section 25. Notices
Section 26. Supplements and Amendments
Section 27. Successors
Section 28. Determinations and Actions by the Board of Directors, etc
Section 29. Benefits of this Agreement
Section 30. Severability
Section 31. Governing Law
Section 32. Counterparts
Section 33. Descriptive Headings
EXHIBIT A - FORM OF RIGHTS CERTIFICATE
EXHIBIT B - SUMMARY OF RIGHTS TO PURCHASE COMMON SHARES<PAGE>
RIGHTS AGREEMENT
Rights Agreement (the "Agreement), dated as of April 4, 1996, made
between AMERIWOOD INDUSTRIES INTERNATIONAL CORPORATION, a Michigan
corporation (the "Company"), and HARRIS TRUST AND SAVINGS BANK, an
Illinois banking corporation (the "Rights Agent").
P R E A M B L E
The Board of Directors of the Company has authorized and declared a
dividend of one common share purchase right (the "Rights") on each share
of common stock, $1.00 par value, of the Company (the "Common Shares")
outstanding on May 21, 1996 (the "Record Date"), and has authorized the
issuance of one Right (as such number may be hereinafter adjusted
pursuant to Section 11(i) hereof) with respect to each Common Share that
shall become outstanding between May 21, 1996, and the earlier of the
Distribution Date or the Expiration Date (as such terms are defined in
Sections 3 and 7 hereof) and, in certain circumstances provided in
Section 22 hereof, after the Distribution Date, each Right representing
the right to purchase one Common Share upon the terms and subject to the
conditions hereinafter set forth.
ACCORDINGLY, in consideration of the premises and the mutual agreements
herein set forth, THE PARTIES HEREBY AGREE AS FOLLOWS:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person, shall
be the Beneficial owner (as such term is hereinafter defined) of 20% or
more of the Common Shares then outstanding, but shall not include the
Company, any wholly owned subsidiary of the Company or any employee
benefit plan of the Company or any subsidiary of the Company or an
entity holding Common Shares for or pursuant to the terms of any such
employee benefit plan.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date hereof.
(c) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether
such right is exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding (whether or not
in writing) or upon the exercise of conversion rights, exchange rights,
other rights, warrants or options, or otherwise; provided, however, that
a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," (A) securities tendered pursuant to a tender or
exchange offer made by such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for purchase or
exchange, or (B) securities issuable upon exercise of Rights at any time
prior to the occurrence of an event described in Section 11(a)(ii) or a
Section 13 Event, or (C) securities issuable upon exercise of Rights
from and after the occurrence of such an event which Rights were
acquired by such Person or any of such Person's Affiliates or Associates
prior to the Distribution Date or pursuant to Section 3(a) hereof or
Section 22 hereof (the "Original Rights") or pursuant to Section 11(i)
hereof in connection with an adjustment made with respect to any
Original Rights;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of
or "beneficial ownership" (as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Exchange Act) of (including
pursuant to any agreement, arrangement or understanding, whether or not
in writing); provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," any security under this
subparagraph (ii) as a result of an agreement, arrangement or
understanding to vote such security if such agreement, arrangement or
understanding (A) arises solely from a revocable proxy given in response
to a proxy or consent solicitation made pursuant to, and in accordance
with, the applicable provisions of the General Rules and Regulations
under the Exchange Act (the "Rules"), and (B) is not also then
reportable by such Person on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such
Person (or any of such Person's Affiliates or Associates) has any
agreement, arrangement or understanding (whether or not in writing), for
the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in the proviso to subparagraph (ii) of this
paragraph (c)) or disposing of any voting securities of the Company;
provided, however, that nothing in this paragraph (c) shall cause a
Person engaged in business as an underwriter of securities to be the
"Beneficial Owner" of, or to "beneficially own," any securities acquired
through such Person's participation in good faith in a firm commitment
underwriting until the expiration of 40 days after the date of such
acquisition.
Notwithstanding the foregoing, any communications or discussions among
two or more Persons with respect to any matter relating to the day-to-
day operation of the business of the Company, including discussing or
communicating a position with respect to any such matter with or to
other Persons, including shareholders of the Company, or to the Company,
shall not constitute an "agreement, arrangement or understanding" for
purposes of this Section 1(c).
(d) "Business Day" shall mean any day other than a Saturday, Sunday,
or a day on which banking institutions in the state of the principal
office of the Rights Agent are authorized or obligated by law or
executive order to close.
(e) "Close of business" on any given date shall mean 5:00 p.m., local
time in the city of the principal office of the Rights Agent, on such
date; provided, however, that if such date is not a Business Day, it
shall mean 5:00 p.m., local time in such state, on the next succeeding
Business Day.
(f) "Common Shares" when used with a reference to the Company shall
mean the Common Shares, $1.00 par value, of the Company. "Common
Shares" when used with reference to any Person other than the Company
shall mean the capital stock of such Person with the greatest voting
power, or the equity securities or other equity interest having power to
control or direct the management, of such Person.
(g) "Person" shall mean any individual, firm, corporation,
association, partnership, joint-venture, trust or other entity, and
shall include any successor (by merger or otherwise) of such entity.
(h) "Shares Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring
Person has become such (including the first date on which any filing
with any governmental authority disclosing that an Acquiring Person has
become such is made available to the public).
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the
Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date also be the holders of the Common Shares) in
accordance with the terms and conditions hereof, and the Rights Agent
hereby accepts such appointment. The Company may from time to time
appoint such Co-Rights Agents as it may deem necessary or desirable.
Section 3. Issue of Rights Certificates.
(a) Until the earlier of (i) the close of business on the tenth day
after the Shares Acquisition Date or (ii) the close of business on the
tenth Business Day (or such later date as the Board of Directors shall
determine) after the date that a tender or exchange offer by any Person
(other than the Company, any subsidiary of the Company, any employee
benefit plan of the Company or of any subsidiary of the Company or any
Person organized, appointed or established by the Company for or
pursuant to the terms of any such plan) is first published or sent or
given within the meaning of Rule 14d-2 (a) of the Rules, if upon
consummation thereof, such Person would be the Beneficial Owner of 20%
or more of the Common Shares then outstanding (the earlier of such dates
being herein referred to as the "Distribution Date"), (x) the Rights
will be evidenced (subject to the provisions of paragraph (b) of this
Section 3) by the certificates for Common Shares registered in the names
of the holders thereof (which certificates for Common Shares shall also
be deemed to be Rights Certificates) and not by separate Rights
Certificates, and (y) the right to receive Rights Certificates will be
transferable only in connection with the transfer of the underlying
Common Shares (including a transfer to the Company). As soon as
practicable after the Distribution Date, the Rights Agent will send, by
first-class, insured, postage prepaid mail, to each record holder of
Common Shares as of the close of business on the Distribution Date, at
the address of such holder shown on the records of the Company, a Rights
Certificate, in substantially the form of Exhibit A hereto (the "Rights
Certificate"), evidencing one Right for each Common Share so held,
subject to adjustment as provided herein. In the event that an
adjustment in the number of Rights per Common Share has been made
pursuant to Section 11(i) hereof, at the time of distribution of the
Rights Certificates, the Company shall make the necessary and
appropriate rounding adjustments (in accordance with Section 14(a)
hereof) so that Rights Certificates representing only whole numbers of
Rights are distributed and cash is paid in lieu of any fractional
Rights. As of the Distribution Date, the Rights will be evidenced
solely by such Rights Certificates.
(b) The Company will send a copy of a Summary of Rights to Purchase
Common Shares, in substantially the form attached hereto as Exhibit B
(the "Summary of Rights") with its 1995 Annual Report to Shareholders or
by first-class, postage prepaid mail, to each record holder of Common
Shares as of the close of business on May 21, 1996, at the address of
such holder shown on the records of the Company. With respect to
certificates for Common Shares outstanding as of May 21, 1996, until the
Distribution Date, the Rights will be evidenced by such certificates
(notwithstanding a reference to the Rights Agreement dated April 28,
1986, as amended) for Common Shares registered in the names of the
holders thereof. Until the Distribution Date (or, if earlier, the
Expiration Date), the surrender for transfer of any certificates for
Common Shares outstanding on May 21, 1996, shall also constitute the
transfer of the Rights associated with the Common Shares represented
thereby.
(c) Rights shall be issued in respect of all Common Shares which are
issued (whether originally issued or delivered from the Company's
treasury) after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date or, in certain circumstances
provided in Section 22 hereof, after the Distribution Date. Certificates
representing such Common Shares shall have impressed on, printed on,
written on or otherwise affixed to them the following legend or such
similar legend as the Company may deem appropriate and as is not
inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law with any rule or regulation
made pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between Ameriwood
Industries International Corporation (the "Company") and Harris Trust
and Savings Bank (the "Rights Agent") dated as of April 4, 1996, as from
time to time amended (the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of which is on file
at the principal executive offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be evidenced by
this certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement after receipt of a written
request therefor. Under certain circumstances, Rights issued to, or
held by, any Person who is, was or becomes an Acquiring Person (as such
terms are defined in the Rights Agreement) whether currently held by or
on behalf of such Person or by any subsequent holder, may become null
and void.
With respect to such certificates containing the foregoing legend, until
the earlier of (i) the Distribution Date or (ii) the Expiration Date,
the Right associated with the Common Shares represented by such
certificates shall be evidenced by such certificates alone and
registered holders of Common Shares shall be the registered holders of
the associated Rights, and the surrender for transfer of any such
certificate shall also constitute the transfer of the Rights associated
with the Common Shares represented thereby.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to purchase
and of assignment to be printed on the reverse thereof) shall each be
substantially in the form set forth in Exhibit A hereto and may have
such marks of identification or designation and such legends, summaries
or endorsements printed thereon as the Company may deem appropriate and
as are not inconsistent with the provisions of this Agreement, or as may
be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
stock exchange on which the Rights may from time to time be listed, or
to conform to usage. Subject to the provisions of Section 11 and
Section 22 hereof, the Rights Certificates, whenever distributed, shall
be dated as of the Record Date and on their face shall entitle the
holders thereof to purchase such number of Common Shares as shall be set
forth therein at the price set forth therein (the "Purchase Price"), but
the number and type of securities purchasable upon the exercise of each
Right and the Purchase Price thereof shall be subject to adjustment as
provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or Section
22 hereof that represents Rights beneficially owned by: (i) an Acquiring
Person or any Associate or Affiliate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes
such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests
in such Acquiring Person or to any Person with whom the Acquiring Person
has any continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board of Directors of the
Company has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect avoidance of Section 7(e)
hereof, and any Rights Certificate issued pursuant to Section 6 or
Section 11 hereof upon transfer, exchange, replacement or adjustment of
any other Rights Certificate referred to in this sentence, shall contain
(to the extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Rights Certificate
and the Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of such Agreement.
The absence of the foregoing legend on any Rights Certificate shall in
no way affect any of the other provisions of the Agreement, including,
without limitation, the provisions of Section 7(e) hereof.
Section 5. Countersignature and Registration. The Rights Certificates
shall be executed on behalf of the Company by its Chairman of the Board,
President or any Vice President, either manually or by facsimile
signature, and have affixed thereto the Company's seal or a facsimile
thereof which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature.
The Rights Certificates shall be manually countersigned by the Rights
Agent and shall not be valid for any purpose unless so countersigned.
In case any officer of the Company who shall have signed any of the
Rights Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the
Company, such Rights Certificates, nevertheless, may be countersigned by
the Rights Agent, and issued and delivered by the Company with the same
force and effect as though the person who signed such Rights
Certificates had not ceased to be such officer of the Company; and any
Rights Certificate may be signed on behalf of the Company by any person
who, at the actual date of the execution of such Rights Certificate,
shall be a proper officer of the Company to sign such Rights Certifi-
cate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause to
be kept, at it principal office or offices designated as the appropriate
place for surrender of Rights Certificates upon exercise or transfer,
books for registration and transfer of the Rights Certificates issued
hereunder. Such books shall show the names and addresses of the
respective holders of the Rights Certificates, each Rights Certificate's
number, the number of Rights evidenced on its face by each of the Rights
Certificates and the date of each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates.
(a) Subject to the provisions of Section 4(b), Section 7(e) and
Section 14 hereof, at any time after the close of business on the
Distribution Date, and at or prior to the close of business on the
Expiration Date, any Rights Certificate or Certificates may be
transferred, split up, combined or exchanged for another Rights
Certificate or Rights Certificates, entitling the registered holder to
purchase a like number of Common Shares (or, following an event
described in Section 11(a)(ii) or Section 13(a) hereof, Common Shares,
preferred stock, other securities, cash or other assets, as the case may
be) as the Rights Certificate or Rights Certificates surrendered then
entitled such holder to purchase (or former holder in the case of a
transfer). Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate or Rights Certificates shall
make such request in writing delivered to the Rights Agent, and shall
surrender the Rights Certificate or Rights Certificates to be
transferred, split up, combined or exchanged at the principal office of
the Rights Agent. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of
any such surrendered Rights Certificate until the registered holder
shall have completed and signed the certificate contained in the form of
assignment on the reverse side of such Rights Certificate and shall have
provided such additional evidence of the identity of the Beneficial
Owner (or former Beneficial owner) or Affiliates or Associates thereof
as the Company shall reasonably request. Thereupon the Rights Agent
shall, subject to Section 4(b), Section 7(e) and Section 14 hereof,
countersign and deliver to the Person entitled thereto a Rights
Certificate or Rights Certificates, as the case may be, as so requested.
The Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer,
split up, combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Rights Certificate, and, in case of loss, theft or
destruction, of indemnity or security (which may include a surety bond)
reasonably satisfactory to them, and at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Rights Certificate if mutilated, the Company will
make and deliver a new Rights Certificate of like tenor to the Rights
Agent for delivery to the registered owner in lieu of the Rights
Certificate so lost, stolen, destroyed, or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights. (a) Subject to Section 7(e) hereof, the registered holder of
any Rights Certificate may exercise the Rights evidenced thereby (except
as otherwise provided herein, including, without limitation, the
restrictions on exercisability set forth in Section 11(a)(iii) and
Section 23(a) hereof) in whole or in part at any time after the
Distribution Date upon surrender of the Rights Certificate, with the
form of election to purchase and the certificate on the reverse side
thereof duly executed, to the Rights Agent at the principal office of
the Rights Agent designated for such purpose, together with payment of
the Purchase Price for each Common Share as to which the Rights are
exercised, at or prior to the earlier of (i) the close of business on
May 20, 2006 (the "Final Expiration Date"), or (ii) the time at which
the Rights are redeemed as provided in Section 23 hereof (the earlier of
(i) and (ii) being herein referred to as the "Expiration Date").
(b) The Purchase Price for each Common Share pursuant to the exercise
of a Right initially shall be $80 subject to adjustment from time to
time as provided in Section 11 and Section 13 hereof and shall be
payable in lawful money of the United States of America in accordance
with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly
executed, accompanied by payment of the Purchase Price for the Common
Shares (or other shares, securities or property, as the case may be) to
be purchased and an amount equal to any applicable transfer tax in cash,
or by certified check or bank draft payable to the order of the Company,
the Rights Agent shall, (A) subject to Section 20(j) hereof, thereupon
promptly (i) requisition from any transfer agent of the Common Shares
(or make available, if the Rights Agent is the transfer agent)
certificates for the number of Common Shares to be purchased and the
Company hereby irrevocably authorizes its transfer agent to comply with
all such requests, or (B) if the Company shall have elected to deposit
the total number of Common Shares issuable upon exercise of the Rights
hereunder with a depositary agent, requisition from the depositary agent
depositary receipts representing such number of Common Shares as are to
be purchased (in which case certificates for the Common Shares
represented by such receipts shall be deposited by the transfer agent
with the depositary agent) and the Company will direct the depositary
agent to comply with such request, (ii) when appropriate, requisition
from the Company the amount of cash to be paid in lieu of issuance of
fractional shares in accordance with Section 14, (iii) promptly after
receipt of such certificates or depositary receipts, cause the same to
be delivered to or upon the order of the registered holder of such
Rights Certificate, registered in such name or names as may be
designated by such holder, and (iv) when appropriate, after receipt
promptly deliver such cash to or upon the order of the registered holder
of such Rights Certificate. In the event that the Company is obligated
to issue other securities of the Company, pay cash and/or distribute
other property pursuant to Section 11(a) hereof, the Company will make
all arrangements necessary so that such other securities, cash and/or
other property are available for distribution by the Rights Agent, if
and when appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to the
registered holder of such Rights Certificate or to his duly authorized
assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of an event described in Section
11(a)(ii), any Rights beneficially owned by (i) an Acquiring Person or
an Associate or Affiliate of an Acquiring Person, (ii) a transferee of
an Acquiring Person (or of any such Associate or Affiliate) who becomes
a transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person
or to any Person with whom the Acquiring Person has any continuing
agreement, arrangement or understanding regarding the transferred Rights
or (B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has as
a primary purpose or effect the avoidance of this Section 7(e), shall
become null and void without any further action and any holder of such
Rights shall thereupon have no rights whatsoever with respect to such
Rights, whether under any provision of this Agreement or otherwise. The
Company shall use all reasonable efforts to insure that the provisions
of this Section 7(e) and Section 4(b) hereof are complied with, but
shall have no liability to any holder of Rights Certificates or any
other Person as a result of its failure to make any determinations with
respect to an Acquiring Person or its Affiliates, Associates or
transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake
any action with respect to a registered holder upon the occurrence of
any purported exercise as set forth in this Section 7 unless such
registered holder shall have (i) completed and signed the certificate
contained in the form of election to purchase set forth on the reverse
side of the Rights Certificate surrendered for such exercise, and (ii)
provided such additional evidence of the identity of the Beneficial
Owner (or former Beneficial owner) or Affiliates or Associates thereof
as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to the Company
or to any of its agents, be delivered to the Rights Agent for cancella-
tion or in canceled form, or, if surrendered to the Rights Agent, shall
be cancelled by it, and no Rights Certificates shall be issued in lieu
thereof except as expressly permitted by any of the provisions of this
Rights Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the
Company other than upon the exercise thereof. The Rights Agent shall
deliver all cancelled Rights Certificates to the Company, or shall, at
the written request of the Company, destroy such cancelled Rights
Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.
Section 9. Reservation and Availability of Common Shares.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued Common
Shares (and, following the occurrence of an event described in Section
11(a)(ii) or a Section 13 Event, out of its authorized and unissued
Common Shares and/or other securities) or any authorized and issued
Common Shares held in its treasury, the number of Common Shares (and,
following the occurrence of an event described in Section 11(a)(ii) or a
Section 13 Event, out of its authorized and unissued Common Shares
and/or other securities) that will be sufficient to permit the exercise,
in full, of all outstanding Rights.
(b) If the Common Shares (and, following the occurrence of an event
described in Section 11(a)(ii) or a Section 13 Event, Common Shares
and/or other securities) issuable upon the exercise of Rights may be
listed on any national securities exchange or market, the Company shall
use its best efforts to cause, from and after such time as the Rights
become exercisable (but only to the extent that it is reasonably likely
that the Rights will be exercised), all shares reserved for such
issuance to be listed on such exchange or market upon official notice of
issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of an
event described in Section 11(a)(ii) on which the consideration to be
delivered by the Company upon exercise of the Rights has been determined
pursuant to this Agreement (including in accordance with Section
11(a)(iii) hereof), or as soon as is required by law following the
Distribution Date, as the case may be, a registration statement under
the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Common Shares or other securities purchasable upon
exercise of the Rights on an appropriate form, (ii) cause such
registration statement to become effective as soon as practicable after
such filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of
the Securities Act) until all of the securities issuable upon exercise
of Rights that have been validly exercised on or before the Expiration
Date have been issued. The Company will also take such action as may be
appropriate under, or to ensure compliance with, the securities or "blue
sky" laws of the various states in connection with the exercisability of
the Rights. The Company may temporarily suspend, for a period of time
not to exceed ninety (90) days after the date set forth in clause (i) of
the first sentence of this Section 9(c), the exercisability of the
Rights in order to prepare and file such registration statement and
permit it to become effective. Upon any such suspension, the Company
shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement
at such time as the suspension is no longer in effect. In addition, if
the Company shall determine that a registration statement is required
following the Distribution Date, the Company may temporarily suspend the
exercisability of the Rights until such time as a registration statement
has been declared effective. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction if the requisite qualification in such jurisdiction shall
not have been obtained or the exercise thereof shall not be permitted
under applicable law or a registration statement shall not have been
declared effective.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Common Shares (and,
following the occurrence of an event described in Section 11(a)(ii) or a
Section 13 Event, Common Shares and/or other securities) delivered upon
exercise of Rights shall, at the time of delivery of the certificates
for such shares (subject to payment of the Purchase Price), be duly and
validly authorized and issued and fully paid and nonassessable shares or
other securities.
(e) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the
Rights Certificates or of any Common Shares (or other securities, as the
case may be) upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Rights Certificates to a Person
other than, or the issuance or delivery of certificates for the Common
Shares (or other securities, as the case may be) in a name other than
that of, the registered holder of the Rights Certificate evidencing
Rights surrendered for exercise or to issue or deliver any certificates
for Common Shares (or the securities, as the case may be) upon the
exercise of any Rights until any such tax shall have been paid (any such
tax being payable by the holder of such Rights Certificate at the time
of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
Section 10. Common Shares Record Date. Each person in whose name any
certificate for Common Shares (or other securities, as the case may be)
is issued upon the exercise of Rights shall for all purposes be deemed
to have become the holder of record of the Common Shares (or other
securities, as the case may be) represented thereby on, and such
certificates shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase
Price (and any applicable transfer taxes) was made; provided, however,
that if the date of such surrender and payment is a date upon which the
Common Shares (or other securities, as the case may be) transfer books
of the Company are closed, such person shall be deemed to have become
the record holder of such shares on, and such certificate shall be
dated, the next succeeding Business Day on which the Common Shares (or
other securities, as the case may be) transfer books of the Company are
open. Prior to the exercise of the Rights evidenced thereby, the holder
of a Rights Certificate shall not be entitled to any rights of a
shareholder of the Company with respect to shares for which the Rights
shall be exercisable, including, without limitation, the right to vote,
to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of
any proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights. The Purchase Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a)(i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Common Shares payable in
Common Shares, (B) subdivide the outstanding Common Shares, (C) combine
the outstanding Common Shares into a smaller number of shares or (D)
issue any shares of its capital stock in a reclassification of the
Common Shares (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this Section
11(a) and Section 7(e) hereof, the Purchase Price in effect at the time
of the record date for such dividend or on the effective date of such
subdivision, combination or reclassification, and the number and kind of
shares of capital stock issuable on such date, shall be proportionately
adjusted so that the holder of any Right exercised after such time shall
be entitled to receive, upon payment of the Purchase Price then in
effect, the aggregate number and kind of shares of capital stock which,
if such Right had been exercised immediately prior to such date and at a
time when the Common Shares transfer books of the Company were open, he
would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification;
provided, however, that if the record date for any such dividend,
subdivision, combination or reclassification shall occur prior to the
Distribution Date, the Company shall make an appropriate adjustment to
the Purchase Price (taking into account any additional Rights which may
be issued as a result of such dividend, subdivision, combination or
reclassification), in lieu of adjusting (as described above) the number
of Common Shares (or other capital stock, as the case may be) issuable
upon exercise of the Rights and Section 11(i) hereof shall not be
applicable. If an event occurs which would require an adjustment under
both Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment
provided for in this Section 11(a)(i) shall be in addition to, and shall
be made prior to, any adjustment required pursuant to Section 11(a)(ii).
(ii) In the event any Person, at any time after the Record Date,
shall become an Acquiring Person (unless the event causing such Person
to become an Acquiring Person is a transaction set forth in Section
13(a) hereof, or is an acquisition of Common Shares pursuant to a tender
offer or exchange offer for all outstanding Common Shares at a price and
on terms determined by at least a majority of the members of the Board
of Directors who are not officers of the Company and who are not
representatives, nominees, Affiliates or Associates of an Acquiring
Person, after receiving advice from one or more investment banking
firms, to be (a) at a price which is fair to shareholders (taking into
account all factors which such members of the Board deem relevant,
including, without limitation, prices which could reasonably be achieved
if the Company or its assets were sold on an orderly basis designed to
realize maximum value) and (b) otherwise in the best interests of the
Company and its shareholders) then, promptly following the first
occurrence of the event described above in this subparagraph (ii),
proper provision shall be made so that each holder of a Rights
Certificate (except as provided below and in Section 7(e) hereof), shall
thereafter have a right to receive, upon exercise thereof at the then-
current Purchase Price in accordance with the terms of this Agreement,
such number of Common Shares of the Company as shall equal the result
obtained by (x) multiplying the then current Purchase Price by the
number of Common Shares for which a Rights Certificate is then
exercisable and (y) dividing that product by 50% of the current per
share market price of the Common Shares (determined pursuant to Section
11(d) ) on the earlier of the date of the occurrence or the date of the
first public announcement of the event described above in this
subparagraph (ii) (such number of shares being referred to as the
"Adjustment Shares"), provided, however, that if the adjustment is also
subject to the provisions of Section 13 hereof, then only the provisions
of Section 13 hereof shall apply and no adjustment shall be made
pursuant to this Section 11(a)(ii). Any Rights Certificate issued
pursuant to Section 3 hereof that represents Rights beneficially owned
by an Acquiring Person or any Associate or Affiliate thereof and any
Rights Certificate issued at any time upon the transfer of any Rights to
an Acquiring Person or any Associate or Affiliate thereof or to any
nominee of such Acquiring Person, Associate or Affiliate, and any Rights
Certificate issued pursuant to Section 6 or this Section 11 upon
transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain the legend set
forth in Section 4(b) hereof.
(iii) In the event that the number of Common Shares which are
authorized by the Company's articles of incorporation but not
outstanding or reserved for issuance for purposes other than upon
exercise of the Rights are not sufficient to permit the exercise in full
of the Rights in accordance with the foregoing subparagraph (ii) of this
Section 11(a), the Company shall: (A) determine the excess of (1) the
value of the Adjustment Shares issuable upon the exercise of a Right
(the "Current Value"), over (2) the Purchase Price (such excess, the
"Spread") and (B) with respect to each Right, make adequate provision to
substitute for the Adjustment Shares, upon payment of the applicable
Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3)
Common Shares or other equity securities of the Company (including,
without limitation, shares, or units of shares, of preferred stock which
the Board of Directors of the Company has deemed to have the same value
as Common Shares (such shares of preferred stock, "common share
equivalents")), (4) debt securities of the Company, (5) other assets, or
(6) any combination of the foregoing having an aggregate value equal to
the Current Value, where such aggregate value has been determined by the
Board of Directors of the Company based upon the advice of a recognized
expert selected by the Board of Directors of the Company; provided,
however, if the Company shall not have made adequate provision to
deliver value pursuant to clause (B) above within thirty (30) days
following the later of (x) the first occurrence of an event described in
Section 11(a)(ii) hereof or (y) the first date that the right to redeem
the Rights pursuant to Section 23 hereof, as such date may be amended
pursuant to Section 26 hereof, shall expire, then the Company shall be
obligated to deliver, upon the exercise of a Rights Certificate and
without requiring payment of the Purchase Price, Common Shares (to the
extent available) and then, if necessary, cash, securities and/or assets
that in the aggregate are equal to the Spread. If the Board of
Directors of the Company shall determine in good faith that it is likely
that sufficient additional Common Shares could be authorized for
issuance upon exercise in full of the Rights, the thirty (30) day period
set forth above may be extended to the extent necessary, but not more
than ninety (90) days following the first occurrence of an event
described in Section 11(a)(ii) hereof, in order that the Company may
seek shareholder approval for the authorization of such additional
shares (such period as it may be extended, the "Substitution Period").
To the extent that the Company determines that some action is to be
taken pursuant to the first and/or second sentences of this Section
11(a)(iii), the Company (x) shall provide, subject to Section 7(e)
hereof, that such action shall apply uniformly to all outstanding
Rights, and (y) may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek any authorization
of additional shares and/or to decide the appropriate form of distribu-
tion to be made pursuant to such first sentence and to determine the
value thereof. In the event of any such suspension, the Company shall
issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement
at such time as the suspension is no longer in effect. For purposes of
this Section 11(a)(iii), the value of the Common Shares shall be the
current per share market price of Common Shares (as determined pursuant
to Section 11(d) hereof) on the later of the date of the first
occurrence of an event described in Section 11(a)(ii) hereof and the
first date that the right to redeem the Rights pursuant to Section 23
hereof, as such date may be amended pursuant to Section 26 hereof, shall
expire and the value of any "common share equivalents" shall be deemed
to have the same value as the Common Shares on such date.
(b) In the event the Company shall fix a record date for the issuance
of rights (other than the Rights) or warrants to all holders of Common
Shares entitling them (for a period expiring within 45 calendar days
after such record date) to subscribe for or purchase Common Shares or
shares having the same rights, privileges and preferences as the Common
Shares ("equivalent common shares") (or securities convertible into
Common Shares or equivalent common shares) at a price per Common Share
or per equivalent common share (or having a conversion price per share,
if a security convertible into Common Shares or equivalent common
shares) less than the current per share market price of the Common
Shares (as defined in Section 11(d)) on such record date, the Purchase
Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of
Common Shares outstanding on such record date plus the number of Common
Shares which the aggregate offering price of the total number of Common
Shares and/or equivalent common shares so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to
be offered) would purchase at such current market price and the
denominator of which shall be the number of Common Shares outstanding on
such record date plus the number of additional Common Shares and/or
equivalent common shares to be offered for subscription or purchase (or
into which the convertible securities so to be offered are initially
convertible). In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash,
the value of such consideration shall be as determined in good faith by
the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent. Common Shares
owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is fixed; and in
the event that such rights or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(c) In the event the Company shall fix a record date for the making
of a distribution to all holders of the Common Shares (including any
such distribution made in connection with a consolidation or merger in
which the Company is the continuing or surviving corporation) of
evidences of indebtedness or assets (other than a regular periodic cash
dividend at a rate not in excess of 125% of the rate of the last regular
periodic cash dividend theretofore paid or a dividend payable in Common
Shares) or subscription rights or warrants (excluding those referred to
in Section 11(b)), the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of
which shall be the current per share market price of the Common Shares
(as defined in Section 11(d)) on such record date, less the fair market
value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed
with the Rights Agent and shall be binding on the Rights Agent and the
holders of the Rights) of the portion of the assets or evidences of in-
debtedness so to be distributed or of such subscription rights or
warrants applicable to one Common Share and the denominator of which
shall be such current per share market price of the Common Shares (as
defined in Section 11(d)). Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such distri-
bution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record date had
not been fixed.
(d) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) hereof, the "current
per share market price" of the Common Shares on any date shall be deemed
to be the average of the daily closing prices per Common Share for the
thirty (30) consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date, and for purposes of
computations made pursuant to Section 11(a)(iii) hereof, the "current
per share market price" of the Common Shares on any date shall be deemed
to be the average of the daily closing prices per Common Share for ten
(10) consecutive Trading Days (as such term is hereinafter defined)
immediately following such date; provided, however, that in the event
that the current per share market price of the Common Shares is
determined during a period following the announcement by the issuer of
such Common Shares of (i) a dividend or distribution on such Common
Shares payable in such Common Shares or securities convertible into such
Common Shares (other than the Rights which are the subject of this
Agreement) or (ii) any subdivision, combination or reclassification of
such Common Shares, and prior to the expiration of thirty (30) Trading
Days or ten (10) Trading Days, as set forth above, after the ex-dividend
date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each such
case, the "current per share market price" shall be appropriately
adjusted to take into account ex-dividend trading. The closing price
for each day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the
Common Shares are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which the Common Shares are listed or
admitted to trading or, if the Common Shares are not listed or admitted
to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices
in the over-the-counter market, as reported on the Nasdaq Stock Market
or such other system then in use, or, if on any such date the Common
Shares are not quoted on the Nasdaq Stock Market, the average of the
closing bid and asked prices as furnished by a professional market maker
making a market in the Common Shares selected by the Board of Directors
of the Company. If on any such date no market maker is making a market
in the Common Shares, the fair value of such shares on such date as
determined in good faith by the Board of Directors of the Company shall
be used. The term "Trading Day" shall mean a day on which the principal
national securities exchange on which the Common Shares are listed or
admitted to trading is open for the transaction of business or, if the
Common Shares are not listed or admitted to trading on any national
securities exchange, a Monday, Tuesday, Wednesday, Thursday or Friday on
which banking institutions in the State of Michigan are not authorized
or obligated by law or executive order to close. If the Common Shares
are not publicly held or not so listed or traded, "current per share
market price" shall mean the fair value per share as determined in good
faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent and shall
be conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in such Purchase Price;
provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest ten-thou-
sandth of a Common Share as the case may be. Notwithstanding the first
sentence of this Section 11(e), any adjustment required by this Section
11 shall be made no later than the earlier of (i) three years from the
date of the transaction which requires such adjustment or (ii) the date
of the expiration of the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section
11(a)(ii) or Section 13(a), the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock of the
Company other than Common Shares, thereafter the number of such other
shares so receivable upon exercise of any Right and the Purchase Price
thereof shall be subject to adjustment from time to time in a manner and
on terms as nearly equivalent as practicable to the provisions with
respect to the Common Shares contained in Section 11(a), (b), (c), (e),
(g), (h), (i), (j), (k), and (m), and the provisions of Sections 7, 9,
10, 13 and 14 hereof with respect to the Common Shares shall apply on
like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right
to purchase, at the adjusted Purchase Price, the number of Common Shares
purchasable from time to time hereunder upon exercise of the Rights, all
subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result
of the calculations made in Section 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase
Price, that number of shares (calculated to the nearest ten-thousandth)
obtained by (i) multiplying (x) the number of shares covered by a Right
immediately prior to this adjustment by (y) the Purchase Price in effect
immediately prior to such adjustments of the Purchase Price and (ii)
dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in substitution for
any adjustment in the number of Common Shares issuable upon the exercise
of a Right. Each of the Rights outstanding after such adjustment of the
number of Rights shall be exercisable for the number of Common Shares
for which a Right was exercisable immediately prior to such adjustment.
Each Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest one
ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase
Price in effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record
date may be the date on which the Purchase Price is adjusted or any day
thereafter, but, if the Rights Certificates have been issued, shall be
at least ten (10) days later than the date of the public announcement.
If Rights Certificates have been issued, upon each adjustment of the
number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of
Rights Certificates on such record date Rights Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the
option of the Company, shall cause to be distributed to such holders of
record in substitution and replacement for the Rights Certificates held
by such holders prior to the date of adjustment, and upon surrender
thereof, if required by the Company, new Rights Certificates evidencing
all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein (and may
bear, at the option of the Company, the adjusted Purchase Price) and
shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of Common Shares issuable upon the exercise of the Rights,
the Rights Certificates theretofore and thereafter issued may continue
to express the Purchase Price per share and the number of shares which
were expressed in the initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, of the Common
Shares issuable upon exercise of the Rights, the Company shall take any
corporate action which may, in the opinion of its counsel, be necessary
in order that the Company may validly and legally issue fully paid and
nonassessable Common Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer until the
occurrence of such event the issuing to the holder of any Right
exercised after such record date the Common Shares and other capital
stock or securities of the Company, if any, issuable upon such exercise
over and above the Common Shares and other capital stock or securities
of the Company, if any, issuable upon such exercise on the basis of the
Purchase Price in effect prior to such adjustment; provided, however,
that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such
additional shares and other capital stock or securities upon the
occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price,
in addition to those adjustments expressly required by this Section 11,
as and to the extent that in their good faith judgment the Board of
Directors of the Company shall determine to be advisable in order that
any (i) consolidation or subdivision of the Common Shares, (ii) issuance
wholly for cash of any Common Shares at less than current per share
market price, (iii) issuance wholly for cash of any of Common Shares or
securities which by their terms are convertible into or exchangeable for
Common Shares, (iv) stock dividends, or (v) issuance of rights, options
or warrants referred to hereinabove in this Section 11, hereafter made
by the Company to holders of its Common Shares shall not be taxable to
such shareholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person
(other than a subsidiary of the Company in a transaction which complies
with Section 11(o) hereof), (ii) merge with or into any other Person
(other than a subsidiary of the Company in a transaction which complies
with Section 11(o) hereof), or (iii) sell or transfer (or permit any
subsidiary to sell or transfer), in one transaction or a series of
related transactions, assets or earning power aggregating more than 25%
of the assets or earning power of the Company and its subsidiaries
(taken as a whole) to any other Person or Persons (other than the
Company and/or any of its subsidiaries in one or more transactions each
of which complies with Section 11(o) hereof), if (x) at the time of or
immediately after such consolidation, merger or sale there are any
rights, warrants or other instruments or securities outstanding or
agreements in effect which would substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights or (y)
prior to, simultaneously with or immediately after such consolidation,
merger or sale, the shareholders of the Person who constitutes, or would
constitute, the "Principal Party" for purposes of Section 13(a) hereof
shall have received a distribution of Rights previously owned by such
Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23 or Section 26
hereof, take (or permit any subsidiary to take) any action if at the
time such action is taken it is reasonably foreseeable that such action
will diminish substantially or otherwise eliminate the benefits intended
to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in
the event that the Company shall at anytime after the Record Date and
prior to the Distribution Date consolidate with, or merge with or into,
any other Person for the primary purpose of a change of domicile of the
Company, and, in connection with such consolidation or merger, all of
the outstanding Common Shares shall be changed into or exchanged for
shares of common stock of the surviving corporation of such
consolidation or merger (the "Surviving Corporation"), then proper
provision shall be made so that Rights shall be associated with each
share of common stock of the Surviving Corporation, except as provided
in Section 7(e) hereof, such that the number of Rights associated with
each share of common stock of the Surviving Corporation following any
such event shall equal the result obtained by multiplying the number of
Rights associated with each Common Share immediately prior to such event
by a fraction the numerator of which shall be the total number of Common
Shares outstanding immediately prior to the occurrence of the event and
the denominator of which shall be the total number of shares of common
stock of the Surviving Corporation which the Common Shares were changed
into or exchanged for pursuant to the consolidation or merger.
Following such a consolidation or merger, this Agreement shall remain in
effect and all references to the Company shall be deemed to be
references to the Surviving Corporation.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Sections 11 and
13 hereof, the Company shall (a) promptly prepare a certificate setting
forth such adjustment, and a brief statement of the facts accounting for
such adjustment, (b) promptly file with the Rights Agent and with each
transfer agent for the Common Shares a copy of such certificate, and (c)
mail a brief summary thereof to each holder of a Rights Certificate (or,
if prior to the Distribution Date, to each holder of a certificate
representing Common Shares) in accordance with Section 25 hereof.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, following the Shares Acquisition Date,
directly or indirectly, (x) the Company shall consolidate with, or merge
with and into, any other Person (other than a subsidiary of the Company
in a transaction which complies with Section 11(o) hereof) and the
Company shall not be the continuing or surviving corporation of such
consolidation or merger, (y) any Person (other than a subsidiary of the
Company in a transaction which complies with Section 11(o) hereof) shall
consolidate with, or merge with or into, the Company, and the Company
shall be the continuing or surviving corporation of such consolidation
or merger, and, in connection with such consolidation or merger all or
part of the outstanding Common Shares shall be changed into or exchanged
for stock or other securities of any other Person or cash or any other
property, or (z) the Company shall sell or otherwise transfer (or one or
more of its subsidiaries shall sell or otherwise transfer), in one
transaction or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company
and its subsidiaries (taken as a whole) to any Person or Persons (other
than the Company or any subsidiary of the Company in one or more
transactions each of which complies with Section 11(o) hereof), then,
and in each such case (except as may be contemplated by Section 13(d)
hereof), proper provision shall be made so that: (i) each holder of a
Rights Certificate, except as provided in Section 7(e) hereof, shall
thereafter have the right to receive, upon the exercise thereof at the
then current Purchase Price in accordance with the terms of this
Agreement, such number of validly authorized and issued, fully paid,
nonassessable and freely tradeable Common Shares of the Principal Party
(as such term is hereinafter defined), not subject to any liens,
encumbrances, rights of first refusal or other adverse claims, as shall
be equal to the result obtained by (1) multiplying the then current
Purchase Price by the number of Common Shares for which a Right is
exercisable immediately prior to the first occurrence of an event
described in clauses (x), (y) or (z) of this Section 13(a) (a "Section
13 Event") (or, if an event described in Section 11(a)(ii) has occurred
prior to the Section 13 Event, multiplying the number of such Common
Shares for which a Right was exercisable immediately prior to the first
occurrence of such an event described in Section 11(a)(ii) by the
Purchase Price in effect immediately prior to such first occurrence),
and (2) dividing that product (which, following the Section 13 Event,
shall be referred to as the "Purchase Price" for each Right and for all
purposes of this Agreement) by 50% of the current per share market price
(determined pursuant to Section 11(d)(i) hereof) per Common Share of
such Principal Party on the date of consummation of such Section 13
Event; (ii) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such Section 13 Event, all the obligations
and duties of the Company pursuant to this Agreement; (iii) the term
"Company" shall thereafter be deemed to refer to such Principal Party,
it being specifically intended that the provisions of Section 11 hereof
shall apply only to such Principal Party following the first occurrence
of a Section 13 Event, (iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number
of its Common Shares) in connection with the consummation of any such
transaction as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be, in
relation to its Common Shares thereafter deliverable upon the exercise
of the Rights; and (v) the provisions of Section 11(a)(ii) hereof shall
be of no effect following the first occurrence of any Section 13 Event.
(b)"Principal Party" shall mean
(i) in the case of any transaction described in clause (x) or (y)
of the first sentence of Section 13(a), the Person that is the issuer of
any securities into which Common Shares of the Company are converted in
such merger or consolidation, and if no securities are so issued, the
Person that is the other party to such merger or consolidation; and
(ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a), the Person that is the party receiving
the greatest portion of the assets or earning power transferred pursuant
to such transaction or transactions; provided, however, that in any such
case, (1) if the Common Shares of such Person are not at such time and
have not been continuously over the preceding twelve (12) month period
registered under Section 12 of the Exchange Act, and such Person is a
direct or indirect subsidiary of another Person the Common Shares of
which are and have been so registered, "Principal Party" shall refer to
such other Person; and (2) in case such Person is a subsidiary, directly
or indirectly, of more than one Person, the Common Shares of two or more
of which are and have been so registered, "Principal Party" shall refer
to whichever of such Persons is the issuer of the Common Shares having
the greatest aggregate market value.
(c) After the Shares Acquisition Date, the Company shall not
consummate any such consolidation, merger, sale or transfer unless the
Principal Party shall have a sufficient number of authorized Common
Shares which have not been issued or reserved for issuance to permit the
exercise in full of the Rights in accordance with this Section 13 and
unless prior thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this
Section 13 and further providing that, as soon as practicable after the
date of any consolidation, merger or sale of assets mentioned in
paragraph (a) of this Section 13, the Principal Party will
(i) prepare and file a registration statement under the Securities
Act, with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, and will use its best
efforts to cause such registration statement to (A) become effective as
soon as practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the Securities Act)
until the Expiration Date;
(ii) use its best efforts to qualify or register the Rights and the
securities purchasable upon exercise of the Rights under blue sky laws
of such jurisdiction, as may be necessary or appropriate; and
(iii) will deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form 10
under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. In the event
that a Section 13 Event shall occur at any time after the occurrence of
an event described in Section 11(a)(ii) hereof, the Rights which have
not theretofore been exercised shall thereafter become exercisable in
the manner described in Section 13(a).
(d) Notwithstanding anything in this Agreement to the contrary,
Section 13 shall not be applicable to a transaction described in
subparagraphs (x) and (y) of Section 13(a) if (i) such transaction is
consummated with a Person or Persons who acquired Common Shares pursuant
to a tender offer or exchange offer for all outstanding Common Shares
which complies with the provisions of Section 11(a)(ii) hereof (or a
wholly-owned subsidiary of any such Person or Persons), (ii) the price
per Common Share offered in such transaction is not less than the price
per Common Share paid to all holders of Common Shares whose shares were
purchased pursuant to such tender offer or exchange offer, and (iii) the
form of consideration being offered to the remaining holders of Common
Shares pursuant to such transaction is the same as the form of
consideration paid pursuant to such tender offer or exchange offer.
Upon consummation of any such transaction contemplated by this Section
13(d), all Rights hereunder shall expire.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights,
except prior to the Distribution Date as provided in Section 11(p)
hereof, or to distribute Rights Certificates which evidence fractional
Rights. In lieu of such fractional Rights, there shall be paid to the
registered holders of the Rights Certificates with regard to which such
fractional Rights that would otherwise be issuable, an amount in cash
equal to the same fraction of the current market value of a whole Right.
For the purpose of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have
been otherwise issuable. The closing price for any day shall be the
last sale price, regular way, or, in case no such sale takes place on
such day, the average or the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not listed
or admitted to trading on the New York Stock Exchange, as reported in
the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which
the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the
last quoted price, or, if not so quoted, the average of the high bid and
low asked prices in the over-the-counter market, as reported on the
Nasdaq Stock Market or, if on such date the Rights are not quoted on the
Nasdaq Stock Market, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Company. If on any such date
no such market maker is making a market in the Rights, the fair value of
the Rights on such date as determined in good faith by the Board of
Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of shares
upon exercise of the Rights or to distribute certificates which evidence
fractional shares. In lieu of fractional shares, the Company may pay to
the registered holders of Rights Certificates at the time such Rights
are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one Common Share. For purposes
of this Section 14(b), the current market value of a Common Share shall
be the closing price of a Common Share (as determined pursuant to the
second sentence of Section 11(d) hereof) for the Trading Day immediately
prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right, except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered
holders of the Common Shares); and any registered holder of any Rights
Certificates (or, prior to the Distribution Date, of the Common Shares),
without the consent of the Rights Agent or of the holder of any other
Rights Certificate (or, prior to the Distribution Date, of the Common
Shares), may, in his own behalf and for his own benefit, enforce, and
may institute and maintain any suit, action or proceeding against the
Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate in the manner
provided in such Rights Certificate and in this Agreement. Without
limiting the foregoing of any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights would
not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations hereunder
and will be entitled to injunctive relief against actual or threatened
violations of the obligations of any Person subject to this Agreement.
Section 16. Agreement of Right Holders. Every holder of the Rights by
accepting the same consents and agrees with the Company and the Rights
Agent and with every other holder of the Rights that:
(a) Prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Shares;
(b) After the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the principal office of the Rights Agent, duly endorsed
or accomplished by a proper instrument of transfer and with the
appropriate forms and certificates fully executed;
(c) Subject to Section 6(a) and Section 7(f) hereof, the Company and
the Rights Agent may deem and treat the person in whose name the Rights
Certificate (or, prior to the Distribution Date, the associated Common
Shares certificate) is registered as the absolute owner thereof and of
the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Rights Certificates or the associated Common Shares
certificate made by anyone other than the Company or the Rights Agent)
for all purposes whatsoever, and neither the Company nor the Rights
Agent, subject to the last sentence of Section 7(e) hereof, shall be
required to be affected by any notice to the contrary; and
(d) Notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any
holder of a Right or other Persons as a result of its inability to
perform any of its obligations under this Agreement by reason of any
preliminary or permanent injunction or other order, decree or ruling
issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority prohibiting or otherwise restraining performance of such
obligation; provided, however, the Company must use its best efforts to
have any such order, decree or ruling lifted or otherwise overturned as
soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Shareholder. No
holder, as such, of any Rights Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the Common
Shares or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Rights Certificate be construed to
confer upon the holder of any Rights Certificate, as such, any of the
rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at
any meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 24 hereof), or to receive
dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable com-
pensation for all services rendered by it hereunder and, from time to
time on demand of the Rights Agent, its reasonable expenses and counsel
fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its
duties hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability or expense,
incurred without negligence, bad faith or willful misconduct on the part
of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement,
including the costs and expenses of defending against any claim of
liability in the premises.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon
any Rights Certificate or certificate for the Common Shares or for other
securities of the Company, instrument of assignment or transfer, power
of attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent. (a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor Rights
Agent under the provisions of Section 21 hereof. In case at the time
such successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Rights Certificates shall have been countersigned
but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the
Rights Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Rights Certificate either in the name
of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates
shall not have been countersigned, the Rights Agent may countersign such
Rights Certificates either in its prior name or in its changed name; and
in all such cases such Rights Certificates shall have the full force
provided in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following
terms and conditions, by all of which the Company and the holders of
Rights Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring
Person and the determination of "current market price") be proved or
established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any one of the
Chairman of the Board, the President, a Vice President, the Treasurer or
the Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any
action taken or suffered in good faith by it under the provisions of
this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the
Rights Certificates (except as to its countersignature thereof) or be
required to verify the same, but all such statements and recitals are
and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of
the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by
the Company of any covenant or condition contained in this Agreement or
in any Rights Certificate; nor shall it be responsible for any
adjustment required under the provisions of Sections 11 or 13 hereof or
responsible for the manner, method or amount of any such adjustment or
the ascertaining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights evidenced by
Rights Certificates after actual notice of any such adjustment); nor
shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Common Shares to
be issued pursuant to this Agreement or any Rights Certificate or as to
whether any Common Shares will, when so issued, be validly authorized
and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder
from any one of the Chairman of the Board, the President, a Vice
President, the Secretary or the Treasurer of the Company, and to apply
to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered to
be taken by it in good faith in accordance with instructions by any such
officer.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights
or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract with
or lend money to the Company or otherwise act as fully and freely as
though it were not Rights Agent under this Agreement. Nothing herein
shall preclude the Rights Agent from acting in any other capacity for
the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not
be answerable or accountable for any act, default, neglect or misconduct
of any such attorneys or agents or for any loss to the Company resulting
from any such act, default, neglect or misconduct, provided reasonable
care was exercised in the selection and continued employment thereof.
(j) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the
form of assignment or form of election to purchase, as the case may be,
has either not been completed or indicates an affirmative response to
clause 1 and/or 2 thereof, the Rights Agent shall not take any further
action with respect to such requested exercise or transfer without first
consulting the Company.
(k) The Company hereby represents and warrants that the issuance of
the Rights has been validly authorized by all necessary corporate action
on the part of the Company, that upon issuance, the Rights will
constitute valid and binding obligations in accordance with and subject
to the terms of the Rights Agreement, and that upon issuance, the
Company will have complied with all requirements set forth in the
Securities Act and the Exchange Act, and all rules and regulations
promulgated thereunder, and the Rights Agent shall not be liable in the
event that the statements and recitals contained in this Section 20(k)
shall be deemed to be inaccurate or untrue.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this
Agreement upon thirty (30) days' notice in writing mailed to the Company
and to each transfer agent of the Common Shares by registered or
certified mail, and to the holders of the Rights Certificates by first-
class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon thirty (30) days' notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Shares by registered or certified mail, and
to the holders of the Rights Certificates by first-class mail. If the
Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights
Agent. If the Company shall fail to make such appointment within a
period of thirty (30) days after giving notice of such removal or after
it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Rights
Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by the Company), then the registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation
organized and doing business under the laws of the United States or of
the State of Michigan or Illinois (or of any other state of the United
States so long as such corporation is authorized to do business as a
banking institution in the State of Michigan or Illinois), in good
standing, having a principal office in the State of Michigan or Illinois
which is authorized under such laws to exercise corporate trust powers
and is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50 million. After
appointment, the successor Rights Agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor
Rights Agent shall deliver and transfer to the successor Rights Agent
any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such appointment the
Company shall file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the Common Shares, and mail a notice
thereof in writing to the registered holders of the Rights Certificates.
Failure to give any notice provided for in this Section 21, however, or
any defect therein, shall not affect the legality or validity of the
Rights, Rights Agreement or the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may
be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any
of the provisions of this Agreement or of the Rights Certificate to the
contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by its Board of
Directors to reflect any adjustment or change in the Purchase Price per
share and the number or kind or class of shares or other securities or
property purchasable under the Rights Certificates made in accordance
with the provisions of this Agreement. In addition, in connection with
the issuance or sale of Common Shares following the Distribution Date
and prior to the redemption or expiration of the Rights, the Company (a)
shall, with respect to Common Shares so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement,
granted or awarded as of the Distribution Date, or upon the exercise,
conversion or exchange of securities hereinafter issued by the Company,
and (b) may, in any other case, if deemed necessary or appropriate by
the Board of Directors of the Company, issue Rights Certificates
representing the appropriate number of Rights in connection with such
issuance or sale; provided, however, that (i) no such Rights Certificate
shall be issued if, and to the extent that, the Company shall be advised
by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or the Person to whom
such Rights Certificate would be issued, and (ii) no such Rights
Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance
thereof.
Section 23. Redemption.
(a) The Board of Directors of the Company may, at its option, at any
time prior to the earlier of (i) the close of business on the tenth day
following the Shares Acquisition Date, or (ii) the Final Expiration
Date, redeem all but not less than all the then outstanding Rights at a
redemption price of $.005 per Right, appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after
the date hereof (such redemption price being hereinafter referred to as
the "Redemption Price"). Notwithstanding anything contained in this
Agreement to the contrary, the Rights shall not be exercisable following
an adjustment made pursuant to Section 11(a)(ii) prior to the expiration
of the Company's right of redemption hereunder. Neither the Board of
Directors nor the Company shall have any liability to any Person as a
result of the redemption of Rights pursuant to the terms hereof, other
than the obligation of the Company to pay $.005 per Right upon
redemption. The Company may, at its option, pay the Redemption Price in
cash, Common Shares (based on the current market price of the Common
Shares at the time of redemption) or any other form of consideration
deemed appropriate by the Board of Directors.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, and without any further
action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall
be to receive the Redemption Price. Within 10 days after the action of
the Board of Directors ordering the redemption of the Rights, the
Company shall give notice of such redemption to the holders of the then
outstanding Rights by mailing such notice to all such holders at their
last addresses as they appear upon the registry books of the Rights
Agent or, prior to the Distribution Date, on the registry books of the
Transfer Agent for the Common Shares. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the
method by which the payment of the Redemption Price will be made.
Section 24. Notice of Certain Events.
(a) In case the Company shall propose, at any time after the Distri-
bution Date, (i) to pay any dividend payable in stock of any class to
the holders of Common Shares or to make any other distribution to the
holders of Common Shares (other than a regular periodic cash dividend at
a rate not in excess of 125% of the rate of the last regular periodic
cash dividend theretofore paid), or (ii) to offer to the holders of
Common Shares rights or warrants to subscribe for or to purchase any
additional Common Shares or shares of stock of any class or any other
securities, rights or options, or (iii) to effect any reclassification
of its Common Shares (other than a reclassification involving only the
subdivision of outstanding Common Shares), or (iv) to effect any
consolidation or merger into or with any other Person (other than a
subsidiary of the Company in a transaction which complies with Section
11(o) hereof), or to effect any sale or other transfer (or to permit one
or more of its subsidiaries to effect any sale or other transfer), in
one or more transactions, of more than 50% of the assets or earning
power of the Company and its subsidiaries (taken as a whole) to, any
other Person (other than the Company and/or any of its subsidiaries in
one or more transactions each of which complies with Section 11(o)
hereof), or (v) to effect the liquidation, dissolution or winding up of
the Company, then, in each such case, the Company shall give to each
holder of a Rights Certificate, to the extent feasible and in accordance
with Section 25 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend,
distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of
participation therein by the holders of the Common Shares, if any such
date is to be fixed, and such notice shall be so given in the case of
any action covered by clause (i) or (ii) above at least 20 days prior to
the record date for determining holders of the Common Shares for
purposes of such action, and in the case of any such other action, at
least 20 days prior to the date of the taking of such proposed action or
the date of participation therein by the holders of the Common Shares
whichever shall be the earlier.
(b) In case any of the events set forth in Section 11(a)(ii) of this
Agreement shall occur, then, in any such case, (i) the Company shall as
soon as practicable thereafter give to each holder of a Rights
Certificate, to the extent feasible and in accordance with Section 25
hereof, a notice of the occurrence of such event, which shall specify
the event and the consequences of the event to holders of Rights under
Section 11(a)(ii) hereof, and (ii) all references in the preceding
paragraph to Common Shares shall be deemed thereafter to refer to Common
Shares and/or other securities, if appropriate.
(c) Notwithstanding anything in this Agreement to the contrary, prior
to the Distribution Date a filing by the Company with the Securities and
Exchange Commission shall constitute sufficient notice to the holders of
securities of the Company, including the Rights, for purposes of this
Agreement and no other notice need be given.
Section 25. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Rights
Certificate to or on the Company shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Rights Agent) as follows:
Ameriwood Industries International Corporation
171 Monroe Avenue, N.W., Suite 600
Grand Rapids, Michigan 49503
Attention: Secretary
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by
the holder of any Rights Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company)
as follows:
Harris Trust and Savings Bank
311 West Monroe, 14th Floor
Chicago, Illinois 60690
Attention: Corporate Trust Department
Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to the holder of any Rights Certificate
(or, if prior to the Distribution Date, to the holder of certificates
representing Common Shares) shall be sufficiently given or made if sent
by first-class mail, postage prepaid, addressed to such holder at the
address of such holder as shown on the registry books of the Company.
Section 26. Supplements and Amendments. Prior to the Distribution Date
and subject to the penultimate sentence of this Section 26, the Company
may and the Rights Agent shall, if the Company so directs, supplement or
amend any provision of this Agreement without the approval of any
holders of certificates representing Common Shares and associated
Rights. From and after the Distribution Date and subject to the
penultimate sentence of this Section 26, the Company and the Rights
Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Rights Certificates in
order (i) to cure any ambiguity, (ii) to correct or supplement any
provision contained herein which may be defective or inconsistent with
any other provisions herein, (iii) to shorten or lengthen any time
period hereunder, or (iv) to change or supplement the provisions
hereunder in any manner which the Company may deem necessary or
desirable and which shall not adversely affect the interests of the
holders of Rights Certificates (other than an Acquiring Person or an
Affiliate or Associate of an Acquiring Person); provided, however, that
this Agreement may not be supplemented or amended to lengthen, pursuant
to clause (iii) of this sentence, (A) a time period relating to when the
Rights may be redeemed at such time as the Rights are not then
redeemable, or (B) any other time period unless such lengthening is for
the purpose of protecting, enhancing or clarifying the rights of, and/or
the benefits to, the holders of Rights (other than an Acquiring Person
and its Affiliates and Associates). Upon the delivery of a certificate
from an appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms of this
Section 26, the Rights Agent shall execute such supplement or amendment.
Notwithstanding anything contained in this Agreement to the contrary, no
supplement or amendment shall be made which changes the Redemption
Price, the Final Expiration Date, the Purchase Price or the number of
Common Shares for which a Right is exercisable. Prior to the
Distribution Date, the interests of the holders of Rights shall be
deemed coincident with the interests of the holders of Common Shares.
Section 27. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 28. Determinations and Actions by the Board of Directors,
etc. For all purposes of this Agreement, any calculation of the number
of Common Shares outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding
Common Shares of which any Person is the Beneficial Owner, shall be made
in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the
General Rules and Regulations under the Exchange Act as in effect as of
the date hereof. The Board of Directors of the Company shall have the
exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board, or the
Company, or as may be necessary or advisable in the administration of
this Agreement, including, without limitation, the right and power to
(i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of
this Agreement (including a determination to redeem or not redeem the
Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause
(y) below, all omissions with respect to the foregoing) which are done
or made by the Board in good faith, shall (x) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights
Certificates and all other parties, and (y) not subject the Board to any
liability to the holders of the Rights Certificates.
Section 29. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the
Rights Agent and the registered holders of the Rights Certificates (and,
prior to the Distribution Date, the Common Shares) any legal or equita-
ble right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the Rights
Agent and the registered holders of the Rights Certificates (and, prior
to the Distribution Date, the Common Shares).
Section 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in no way
be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such
term, provision, covenant or restriction is held by such court or
authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that
severing the invalid language from this Agreement would adversely affect
the purpose or effect of this Agreement, the right of redemption set
forth in Section 23 hereof shall be reinstated and shall not expire
until the close of business on the tenth day following the date of such
determination by the Board of Directors.
Section 31. Governing Law. This Agreement and each Rights Certificate
issued hereunder shall be deemed to be a contract made under the laws of
the State of Michigan and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to
contracts to be made and performed entirely within such State.
Section 32. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together con-
stitute but one and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the
provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunder
affixed and attested, all as of the day and year first above written.
ATTEST: AMERIWOOD INDUSTRIES
INTERNATIONAL CORPORATION
/s/ Cragi G. Wassenaar By /s/ Charles R. Foley
---------------------- -----------------------
Craig G. Wassenaar Charles R. Foley
Treasurer and Chief President and Chief
Accounting Officer Executive Officer
ATTEST: HARRIS TRUST AND SAVINGS BANK
/s/ Richard C. Carlson By /s/ Keith A. Bradley
---------------------- -----------------------
Richard C. Carlson Keith A. Bradley
Vice President Assistant Vice President
EXHIBIT A
[Form of Rights Certificate]
Certificate No. R- Rights
NOT EXERCISABLE AFTER MAY 20, 2006, OR EARLIER IF REDEEMED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.005 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND
ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE
RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY
OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE
OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]*
RIGHTS CERTIFICATE
AMERIWOOD INDUSTRIES INTERNATIONAL CORPORATION
This certifies that ------------, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and
conditions of the Amended and Restated Rights Agreement dated as of
April 4, 1996 (the "Rights Agreement") between AMERIWOOD INDUSTRIES
INTERNATIONAL CORPORATION, a Michigan corporation (the "Company"), and
HARRIS TRUST AND SAVINGS BANK (the "Rights Agent"), to purchase from the
Company at any time after the Distribution Date (as such term is defined
in the Rights Agreement)
The portion of the legend in brackets shall be inserted only if applicable.
and prior to 5:00 P.M. (Detroit time) on May 20, 2006, at the principal
office of the Rights Agent, or its successors as Rights Agent, one fully
paid, nonassessable share of common stock (the "Common Shares") of the
Company, at a purchase price of $80 per share (the "Purchase Price"),
upon presentation and surrender of this Rights Certificate with the Form
of Election to Purchase duly executed. The number of Rights evidenced
by this Rights Certificate (and the number of shares which may be
purchased upon exercise thereof) set forth above, and the Purchase Price
per share set forth above, are the number and Purchase Price as of April
4, 1996, based on the Common Shares as constituted at such date.
As provided in the Rights Agreement, the Purchase Price and the number
of Common Shares which may be purchased upon the exercise of the Rights
evidenced by this Rights Certificate are subject to modification and ad-
justment upon the happening of certain events.
Upon the occurrence of an event described in Section 11(a)(ii) of the
Rights Agreement, if the Rights evidenced by this Rights Certificate are
beneficially owned by (i) an Acquiring Person or an Affiliate or
Associate of any such Person (as such terms are defined in the Rights
Agreement), (ii) a transferee of any such Acquiring Person, Associate or
Affiliate, or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of a person who, concurrently with or after such
transfer, became an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, such Rights shall become null and void and no holder
hereof shall have any rights whatsoever with respect to such Rights from
and after the occurrence of such event described in Section 11(a)(ii) of
the Rights Agreement.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part
hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, and the obligations,
duties and immunities hereunder of the Rights Agent, the Company and the
holders of the Rights Certificates, which limitations of rights include
the temporary suspension of the exercisability of such Rights under the
specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the office of the Rights
Agent.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged
for another Rights Certificate or Rights Certificates of like tenor and
date evidencing Rights entitling the holder to purchase a like aggregate
number of Common Shares as the Rights evidenced by the Rights
Certificate or Rights Certificates surrendered shall have entitled such
holder to purchase. If this Rights Certificate shall be exercised in
part the holder shall be entitled to receive upon surrender hereof
another Rights Certificate or Rights Certificates for the number of
whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company at its option at the
redemption price of $.005 per Right.
No fractional Common Shares will be issued upon the exercise of any
Rights evidenced hereby, but in lieu thereof a cash payment will be
made, as provided in the Rights Agreement.
No holder, as such, of this Rights Certificate shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of the
Common Shares or of any other securities of the Company which may at any
time be issuable on the exercise hereof, nor shall anything contained in
the Rights Agreement or herein be construed to confer upon the holder
hereof, as such, any of the rights of a shareholder of the Company,
including the right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholders (except as provided in
the Rights Agreement), or to receive dividends or subscription rights,
or otherwise, until the Rights evidenced by this Rights Certificate
shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of --------- , 19--
ATTEST: AMERIWOOD INDUSTRIES INTERNATIONAL
CORPORATION
------------------ --------------------------
By
Secretary Its
Countersigned:
HARRIS TRUST AND SAVINGS BANK
--------------------------
By
Its
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED, ------------ hereby sells, assigns and transfer unto
-----------(please print name and address of transferee) the Rights
Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ------- Attorney, to
transfer the Rights Certificate on the books of the Company, with full
power of substitution.
Dated: ------------ , 19--
Signature
------------------
Signature Guaranteed:
------------------
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate ------ is ------is not being sold, assigned
or transferred by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as
such terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
------ did ------ not acquire the Rights evidenced by this Rights
Certificate from any person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Dated: ------ , 19-- ------------------------------
Signature
Signature Guaranteed:
---------------------
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or
any change whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Rights Certificate.)
To Ameriwood Industries International Corporation:
The undersigned hereby irrevocably elects to exercise ------ Rights
represented by this Rights Certificate to purchase the Common Shares (or
such other securities of the Company or of any other person that may be
issuable upon the exercise of the Rights) issuable upon the exercise of
such Rights and requests that certificates for such shares be issued in
the name of:
Please insert social security
or other identifying number:
------------------------------------------
------------------------------------------
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of
remaining Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying number:
------------------------------------------
------------------------------------------
(Please print name and address)
Dated: ------ , 19-- ------------------------------
Signature
Signature Guaranteed:
---------------------
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate ---- are ---- are
not being exercised by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Acquiring
Person (as such terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
---- did ---- did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person.
Dated: ------ , 19-- ------------------------------
Signature
Signature Guaranteed:
---------------------
NOTICE
The signature to the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or
any change whatsoever.
EXHIBIT B
SUMMARY OF RIGHTS TO PURCHASE COMMON SHARES
On April 4, 1996, the Board of Directors of Ameriwood Industries
International Corporation (the "Company") approved a Common Share
Purchase Rights Plan. Under the plan, one Common Share Purchase Right
will attach to each outstanding share of common stock, $1.00 par value
(the "Common Shares"), of the Company. Each Right entitles the regis-
tered holder to purchase from the Company one Common Share at a price of
$80 per share (the "Purchase Price"), subject to adjustment. The record
date for the Rights will be May 21, 1996. The description and terms of
the Rights are set forth in a Rights Agreement (the "Rights Agreement")
between the Company and Harris Trust and Savings Bank, as Rights Agent
(the "Rights Agent").
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons
(an "Acquiring Person") acquired, or obtained the right to acquire,
beneficial ownership of 20% or more of the outstanding Common Shares
(the date on which 20% or more of the outstanding Common Shares are
acquired being known as the "Shares Acquisition Date"), or (ii) 10 days
following the commencement or announcement of an intention to commence a
tender or exchange offer, the consummation of which would result in
beneficial ownership by a person of 20% or more of such outstanding
Common Shares (the earlier of such dates being called the "Distribution
Date"), the Rights will be evidenced with respect to any of the Common
Share certificates outstanding as of May 21, 1996, by such Common Share
certificates. The Rights Agreement provides that, until the
Distribution Date, the Rights will be transferred with and only with the
Common Shares. New Common Share certificates issued after May 21, 1996,
but prior to the Distribution Date (or, if earlier, the redemption or
expiration of the Rights) will contain a notation incorporating the
Rights Agreement by reference. Until the Distribution Date (or, if
earlier, the redemption or expiration of the Rights), the surrender for
transfer of any certificates for Common Shares will also constitute the
transfer of the Rights associated with the Common Shares represented by
such certificates. As soon as practicable after the Distribution Date,
separate certificates evidencing the Rights ("Rights Certificates") will
be mailed to holders of record of the Common Shares as of the close of
business on the Distribution Date and such separate Rights Certificates
alone will evidence the Rights. Except as otherwise determined by the
Board of Directors, only Common Shares issued prior to the Distribution
Date will be issued with Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on May 20, 2006, unless earlier redeemed by the Company as
described below.
The Purchase Price payable, and the number of Common Shares or other
securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification
of the Common Shares, (ii) upon the grant to holders of the Common
Shares of certain rights or warrants to subscribe for Common Shares or
convertible securities at less than the current market price of the
Common Shares or (iii) upon the distribution to holders of the Common
Shares of evidences of indebtedness or assets (excluding regular
periodic cash dividends out of earnings or retained earnings at a rate
not in excess of 125% of the rate of the last cash dividend theretofore
paid or dividends payable in Common Shares) or of subscription rights or
warrants (other than those referred to above).
In the event that, any time following the Shares Acquisition Date, the
Company were acquired in a merger or other business combination
transaction or in the event 50% or more of its assets or earning power
were sold, proper provision shall be made so that each holder of a Right
shall thereafter have the right to receive, upon the exercise thereof at
the then current exercise price of the Right, that number of shares of
common stock of the acquiring company which at the time of such trans-
action would have a market value of two times the exercise price of the
Right. Alternatively, in the event that a Person becomes an Acquiring
Person (except pursuant to an offer for all outstanding Common Shares
meeting certain requirements), or any time following the Distribution
Date, the Company were the surviving corporation in a merger and its
Common Shares were not changed or exchanged, or in the event that an
Acquiring Person engages in one of a number of self-dealing transactions
specified in the Rights Agreement, proper provision shall be made so
that each holder of a Right, other than the Acquiring Person (whose
Rights will thereafter be void), will thereafter have the right to
receive upon exercise that number of Common Shares having a market value
of two times the exercise price of the Right.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least
1% in such Purchase Price. No fractional shares will be issued and in
lieu thereof, an adjustment in cash will be made based on the market
price of the Common Shares on the last trading date prior to the date of
exercise.
At any time prior to the close of business on the thirtieth day after
the Shares Acquisition Date, the Company may redeem the Rights in whole,
but not in part, at a price of $.005 per Right (the "Redemption Price").
Under certain circumstances set forth in the Rights Agreement, the
decision to redeem shall require the concurrence of a majority of the
Disinterested Directors, which is defined to mean any member of the
Board of Directors who was a member of the Board prior to the date of
the Rights Agreement, and any person who is subsequently elected to the
Board if such person is recommended or approved by a majority of the
Disinterested Directors. Disinterested Directors do not include an
Acquiring Person, or an affiliate or associate of an Acquiring Person,
or any representative of the foregoing entities. After the redemption
period has expired, the right to redeem may be reinstated if an
Acquiring Person reduces his ownership of Common Shares to 10% or less
of the then outstanding Common Shares in one or more transactions not
involving the Company. Immediately upon the action of the Board of
Directors of the Company electing to redeem the Rights, the Company
shall make announcement thereof, and upon such election, the right to
exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation,
the right to vote or to receive dividends. While the distribution of
the Rights will not be taxable to the shareholders or to the Company,
shareholders will recognize taxable income if the Rights are redeemed
and may, depending on the circumstances, recognize taxable income when
the Rights become exercisable or are exercised.
Other than those provisions relating to the principal economic terms of
the Rights, any of the provisions of the Rights Agreement may be amended
by the Board of Directors of the Company prior to the Distribution Date.
After the Distribution Date, the provisions of the Rights Agreement may
be amended by the Board (in certain circumstances, with the concurrence
of the Disinterested Directors) in order to cure any ambiguity, to make
changes which do not adversely affect the interests of holders of
Rights, or to shorten or lengthen any time period under the Rights
Agreement, so long as no amendment to adjust the time period governing
redemption shall be made at a time when the Rights are not redeemable.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-
A. A copy of the Rights Agreement is available from the Company. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is
hereby incorporated herein by reference.
SEPARATION AGREEMENT
THIS AGREEMENT is entered into on the dates written below by and between
Ameriwood Industries International Corporation, a Michigan corporation with
headquarters at 171 Monroe, N.W., Grand Rapids, Michigan ("Ameriwood") and
James Meier, an individual residing in Grand Rapids, Michigan ("Meier").
In consideration of the mutual promises and covenants set forth below, the
parties agree as follows:
1. Meier's current position with Ameriwood, Corporate Vice President of
Sales and Marketing, is being eliminated pursuant to a corporate
reorganization and as a result, Meier's employment with Ameriwood will
terminate effective June 30, 1996. Meier will remain available for his
normal full-time employment, continue to receive his full salary and
applicable benefits, and remain subject to all other current terms and
conditions of employment with Ameriwood through that date, regardless of
the extent to which his services are actually required by Ameriwood.
Ameriwood's indemnification of Meier from liability in his current position
will continue to and after the date of termination, in accordance with the
terms of Meier's Indemnity Agreements and Amendments thereto. Meier's
participation in Ameriwood's Management Incentive Plan will terminate on
the date of Meier's employment termination.
2. Ameriwood shall continue to afford Meier the use of his Company-
provided automobile and cellular telephone through June 30, 1996, at which
time Meier will be required to return both to Ameriwood.
3. Meier's Management Retention Agreement, dated November 20, 1992, will
terminate June 30, 1996, and the parties agree that Meier's termination is
neither the result nor in anticipation of any "change in control," as that
term is defined in such Management Retention Agreement. For purposes of
Meier's Split Dollar Life Insurance Agreement, Severance Compensation
Agreement and Stock Option Agreements, December 31, 1996 shall be deemed
the date on which Meier's termination from employment occurs.
4. For the period July 1, 1996 through December 31, 1996, Meier will
receive the following:
A. payments equal to his current regular bi-weekly salary in normal bi-
weekly installments;
B. full health care, dental and vision care insurance coverages pursuant
to timely COBRA notice and election, the premiums for which will be paid by
Ameriwood unless and until Meier becomes re-employed and eligible for such
coverages with a subsequent employer;
C. either continued participation in Ameriwood's Group Life/AD&D policies
or Life/AD&D insurance coverage at identical levels from another carrier of
Ameriwood's choice, at Ameriwood's expense and subject to proof of
insurability, but with no limitation on Meier's choice of beneficiary;
D. a lump sum payment of eight thousand and no/100 dollars ($8,000.00)
toward job search expenses as Meier anticipates expenses related to re-
employment, payable to Meier on or within ten (10) days following June 30,
1996; and
E. lump sum payments as follows: $10,000.00 payable on or within ten
(10) days following June 30, 1996, provided Meier has performed his duties
and handled all customer relations responsibilities satisfactorily as
determined by Chuck Foley or, in his absence, Neil L. Diver; and an
additional $10,000.00, also payable on or within ten (10) days following
June 30, 1996, provided Ameriwood Furniture orders for the first two
calendar quarters of 1996 are equal to or greater than the levels set forth
in Ameriwood's Annual Operating Plan for 1996; and
F. on or within ten (10) days following the release of Ameriwood's audited
1996 financial results or March 31, 1997, whichever is earlier, payment of
an amount calculated as a percent of incremental net revenue, such revenue
to be defined as revenue from accounts not currently buying from Ameriwood
or additional stock keeping unit revenue from selected existing accounts,
as approved by Chuck Foley. The only accounts to which this incentive is
applicable are specified in this paragraph, below. The percentage payment
under this paragraph will be one percent (.01) of incremental net revenue
during 1996 for these accounts, up to a maximum of Thirty Thousand and
no/100 Dollars ($30,000.00). The accounts to which this incentive shall be
applicable are: Walmart, K-Mart, Sears, Steelcase, Staples, Rent-A-Center,
Sam's Club (incremental stock keeping units only) and Office Depot
(incremental stock keeping units only).
Meier's entitlement to payments and benefits listed in subparagraph F.,
above, shall be conditioned upon Meier's agreement, at all times between
the date this Agreement is executed and March 31, 1997, to refrain from any
employment or other activity whatsoever, whether for himself or for any
other person(s) or organization(s), in which he convinces any of
Ameriwood's customers listed in subparagraph F, above, to purchase products
that would displace those on sales of which the incremental net revenue in
subparagraph F., above, is computed.
5. All amounts paid to Meier as described in this Agreement will be
reported to appropriate governmental agencies as taxable income to the
extent required, and appropriate withholding will be made where necessary.
All such amounts are expressed as amounts prior to payment or withholding
of any taxes, and Ameriwood will not gross-up the amounts or otherwise
reimburse Meier for the taxes relating to such amounts. In addition, the
amounts payable to Meier under this Agreement shall be subject to set off
by or set off against any amounts to which Meier may become entitled under
his November 20, 1992 Management Retention Agreement.
6. In consideration of the foregoing, Meier hereby releases and forever
discharges Ameriwood, its officers, directors, shareholders, employees and
agents from all claims, demands, charges, obligations, damages and
liabilities of every kind and nature, and from all actions and causes of
action which he had, has or may now have or hereafter maintain against
Ameriwood, whether in law or in equity, known or unknown, arising in any
way from his employment or termination from employment with Ameriwood.
This release and discharge is given by Meier for himself, his family
members, heirs, successors and assigns and includes, but is not limited to,
any and all claims, including claims for attorney fees, arising under the
Civil Rights Act of 1964, the Employee Retirement Income Security Act, the
Age Discrimination In Employment Act, the Americans With Disabilities Act,
the Michigan Elliott-Larson Civil Rights Act, amendments to any of these
statutes and all other relevant or potentially applicable state and federal
statutes. This release and discharge also includes, but is not limited to,
claims founded upon breach of contract, express or implied, retaliation or
damage to Meier's person, reputation or well-being. Excluded from this
release and discharge are rights or claims which may arise after the
execution of this Agreement, as well as claims for any vested interest in a
retirement benefit plan or for workers compensation.
7. In executing this Agreement, Meier acknowledges and warrants the
following:
A. he was offered a period of twenty-one (21) days in which to consider
the terms and conditions of this Agreement and, in the event he has chosen
to execute this Agreement during such twenty-one (21) day period, his
decision to forego the full twenty-one (21) day period was knowing and
voluntary;
B. he was encouraged by Ameriwood to consult with an attorney or other
advisor of his choosing regarding the terms and conditions of this
Agreement;
C. he may revoke his acceptance of this Agreement and its terms at any
time within seven (7) days of the date he has executed this Agreement, by
delivering to Ameriwood written notice of such revocation;
D. he has read and understands each of the terms and conditions of this
Agreement; and
E. his actions are voluntary and free from coercion or duress by Ameriwood
or any of its representatives.
8. Separate and apart from the foregoing, Meier shall receive all
accrued, but unused vacation benefits on or before the date of termination
specified in paragraph 1, above. The parties agree that, as of the date
this Agreement is fully executed, Meier has six (6) weeks accrued, but
unused vacation entitlement.
9. Meier and Ameriwood agrees that neither the terms of this Agreement nor
any information specifically relating to it may be disclosed to anyone
other than a party or a party's immediate family, attorney(s) or
accountant(s), except for disclosure which may be required by subpoena or
lawful order of a governmental agency or court of law, or as otherwise
required by law or regulation. Meier hereby warrants that he has not, at
any time prior to his execution of this Agreement, disclosed or discussed
the terms of this Agreement or information regarding its negotiation with
anyone other than his attorney(s), accountant(s) or members of his
immediate family. Meier hereby agrees that the confidentiality commitment
made in this paragraph extends to and binds such attorney(s), accountant(s)
and family members.
10 In executing this Agreement, each party specifically denies any
wrongdoing as to the other party, and specifically disclaims any violation
of law, contract or public policy, or commission of any tort.
11. The parties mutually agree that neither will disparage or denigrate
the other or the other's reputation, name or goodwill in any
communication, verbal or written, with any third-party, either during or
after Meier's employment with Ameriwood and that this provision is of
essence to this Agreement. Ameriwood agrees to execute the letter of
reference for Meier that is attached to this Agreement as Exhibit A and
incorporated herein by reference.
12. Meier acknowledges that he will, by June 30, 1996, deliver to
Ameriwood all customer lists, price information, manuals, letters, notes,
notebooks, reports or copies thereof, as well as any other confidential or
proprietary information and any other materials, supplies or equipment that
he may have or have had in his possession or under his control which he
knows or has reason to know are the property of Ameriwood. Meier also
acknowledges his ongoing obligation, as a condition of this Agreement, to
refrain from disclosure of Ameriwood's confidential customer, market and
process information to any third party following termination of his
employment. Meier warrants that he has not, at any time in the past,
provided or transferred any such confidential items or information to any
third-party other than his attorney(s).
13. Meier agrees that he will, following his termination from employment,
cooperate with and lend all reasonable assistance to Ameriwood should
Ameriwood request such cooperation or assistance regarding any matter
relevant to Meier's duties while employed with Ameriwood. For its part,
Ameriwood agrees to reimburse Meier for all out-of-pocket expenses
reasonably and necessarily incurred in such cooperation and assistance.
14. Meier understands and agrees that if he should receive any
unemployment compensation benefits during the time he is receiving benefits
under this Agreement, such unemployment compensation benefits shall be an
off-set against any payments made pursuant to the terms of this Agreement.
Ameriwood agrees that it will not contest any claim by Meier for
unemployment compensation, absent conduct by Meier between the date of this
Agreement and June 30, 1996 that would materially change the nature of
Meier's separation from employment.
15. This Agreement shall be construed in accordance with and under the
laws of the State of Michigan. It shall be binding on and inure to the
benefit of Meier, Meier's spouse, heirs, successors and assigns, as well as
Ameriwood, its divisions, affiliated entities, predecessors, successors and
assigns.
16. This Agreement contains the entire understanding and agreement of the
parties and supersedes all previous verbal and written agreements, except
as otherwise expressly noted herein. The terms and conditions of this
Agreement cannot be modified except in a subsequent writing agreed to and
signed by Meier and the President and Chief Executive Officer of Ameriwood.
In executing this Agreement, Meier warrants that he has neither received
nor relied upon any promise or inducement from Ameriwood other than those
contained herein.
WHEREFORE, the parties have entered into this Agreement on the dates
written below.
Ameriwood Industries
Date: April 10, 1996
By: /s/ Charles R. Foley
- ------------------------
Charles R. Foley
Its: President and Chief
Executive Officer
Date: April 10, 1996
/s/ James Meier
- ------------------------
James Meier
