<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
SCHEDULE 14D-9
---------------------------
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
---------------------------
AMERIWOOD INDUSTRIES INTERNATIONAL CORPORATION
(Name of Subject Company)
AMERIWOOD INDUSTRIES INTERNATIONAL CORPORATION
(Names of Person Filing Statement)
COMMON STOCK, PAR VALUE $1.00 PER SHARE
(INCLUDING THE ASSOCIATED COMMON SHARE PURCHASE RIGHTS)
(Title of Class of Securities)
03070M 10 0
(Cusip Number of Class of Securities)
---------------------------
CHARLES R. FOLEY
PRESIDENT AND CHIEF EXECUTIVE OFFICER
AMERIWOOD INDUSTRIES INTERNATIONAL CORPORATION
168 LOUIS CAMPAU PROMENADE, SUITE 400
GRAND RAPIDS, MICHIGAN 49503
(616) 336-9400
(Name, address and telephone number of person authorized to
receive notices and communications on behalf of the person(s) filing statement)
---------------------------
With a Copy to:
WILLIAM R. KUNKEL, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS)
333 WEST WACKER DRIVE
CHICAGO, ILLINOIS 60606
(312) 407-0700
================================================================================
<PAGE> 2
ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Ameriwood Industries International
Corporation, a Michigan corporation (the "Company"). The address of the
principal executive offices of the Company is 168 Louis Campau Promenade, Suite
400, Grand Rapids, Michigan 49503. The title of the class of equity securities
to which this Statement relates is the common stock, par value $1.00 per share
(the "Common Stock"), of the Company.
ITEM 2. TENDER OFFER OF THE BIDDER.
This Statement relates to the tender offer by Horizon Acquisition, Inc.
("Purchaser"), a Delaware corporation and a wholly-owned subsidiary of Dorel
Industries Inc., a Quebec, Canada corporation ("Parent"), as disclosed in a
Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1"), dated April 3,
1998, to purchase all outstanding shares of Common Stock, including the
associated common share purchase rights (the "Rights" and, together with such
shares of Common Stock, the "Shares"), issued pursuant to the Rights Agreement,
dated as of April 4, 1996, as amended as of March 27, 1998 (the "Rights
Agreement"), between the Company and Harris Trust and Savings Bank, as Rights
Agent, at a price of $9.625 per Share (such amount or any greater amount per
Share paid pursuant to the Offer, being hereinafter referred to as the "Offer
Price"), net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated April 3,
1998 (the "Offer to Purchase"), and the related Letter of Transmittal (which
together constitute the "Offer").
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of March 27, 1998 (the "Merger Agreement"), by and among Parent, Purchaser
and the Company. The Merger Agreement provides, among other things, that as soon
as practicable after the consummation of the Offer and satisfaction or waiver of
all conditions to the Merger, Purchaser will be merged with and into the Company
(the "Merger"), and the Company will continue as the surviving corporation (the
"Surviving Corporation"). A copy of the Merger Agreement has been filed as
Exhibit 1 to this Statement and is incorporated herein by reference.
Based on the information in the Schedule 14D-1, the address of the
principal executive offices of Purchaser and Parent is 4750 Boulevard des
Grandes Prairies, St. Leonard, Quebec, Canada H1R 1A3.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Company, which is the person
filing this Statement, are set forth in Item 1 above.
(b) Each material contract, agreement, arrangement and understanding
between the Company or its affiliates and its executive officers, directors or
affiliates is described in the attached Schedule I or set forth below.
Stock Options and Stock Appreciation Rights. Pursuant to the terms of the
1983 Non-Qualified Incentive Stock Option Plan, the 1984 Incentive Stock Option
Plan, the Ameriwood Industries 1993 Stock Incentive Plan, the 1992 Ameriwood
Industries Non-Employee Director's Stock Option Plan and the 1995 Non-Employee
Director Stock Option Plan (collectively, the "Company Option Plans"), all
outstanding stock options under the Company Option Plans ("Company Options"),
whether or not such Company Options would otherwise then be exercisable, will
become immediately exercisable upon the acquisition of the Company by another
corporation, the merger into or consolidation with another corporation, which
would occur upon completion of the Merger. Pursuant to the Merger Agreement,
each Company Option held by an employee, officer or director of the Company and
other eligible holders that is outstanding immediately prior to the Merger,
whether or not then vested or exercisable, shall, simultaneously with the
Merger, be cancelled in exchange for a single lump sum cash payment equal to the
product of (1) the number of shares of Common Stock subject to such Company
Option and (2) the excess, if any, of the Offer Price over the exercise price
per share of such Company Option, subject to any required withholding of taxes.
Each stock appreciation right held by an employee, officer or director of the
Company (an "SAR") that is outstanding immediately prior to the Merger, whether
or not then vested or exercisable, shall, simultaneously with the Merger, be
cancelled in
2
<PAGE> 3
exchange for a single lump sum cash payment equal to the product of (1) the
number of SAR's held by such employee, officer or director and (2) the excess,
if any, of the Offer Price over $4.00, the fair market value on the date the
SAR's were granted.
Management Retention Agreements. In July of 1997, the Company entered into
Management Retention Agreements with each of Charles Foley, Marlan Smith, Ronald
Myers, William Maddox, Scott Kearney, Leon Dodd and Richard Compton, which
provide for certain payments to be made to the executive if a "change in
control," as defined in the Management Retention Agreements, of the Company has
occurred and for certain additional payments to be made to such executive if his
employment with the Company is terminated by the Company without Cause or by the
executive for Good Reason (as such terms are defined in the Management Retention
Agreements) within two years of a change in control of the Company. A change in
control of the Company would occur upon completion of the Offer. See Schedule I
hereto.
Contingent Supplemental Executive Retirement Plan. In July of 1997, the
Company adopted a Contingent Supplemental Executive Retirement Plan (the "SERP")
for each of Charles Foley, Marlan Smith and William Maddox. Rights under the
SERP arise upon a "change in control," as defined in the SERP. Upon a change in
control, the Company must deposit in a trust an amount equal to the actuarial
equivalent present value of the amount of benefits accrued under the SERP at the
time of the change in control. A change in control of the Company would occur
upon completion of the Offer. See Schedule I hereto.
ACTUAL AND POTENTIAL CONFLICTS OF INTEREST
Indemnification of Officers and Directors. The Company's Restated Articles
of Incorporation provide that directors and executive officers of the Company
shall be indemnified as of right to the fullest extent now or hereafter
permitted by law in connection with any actual or threatened civil, criminal,
administrative or investigative action, suit or proceeding (whether brought by
or in the name of the Company, a subsidiary or otherwise) arising out of their
service to the Company or a subsidiary, or to another organization at the
request of the Company or a subsidiary. In addition, the Company may purchase
and maintain insurance to protect itself and any such director, officer or other
person against any liability asserted against him and incurred by him in respect
of such service whether or not the Company would have the power to indemnify him
against such liability by law or under the provisions of this paragraph.
The Merger Agreement provides that subsequent to the Effective Time, the
Surviving Corporation shall indemnify, defend and hold harmless any person who
is now, or has been at any time prior to the date hereof, or who becomes prior
to the Effective Time, an officer, director, employee and agent (the
"Indemnified Party") of the Company and its subsidiaries against all losses,
claims, damages, liabilities, costs and expenses (including attorney's fees and
expenses), judgments, fines, losses, and amounts paid in settlement in
connection with any actual or threatened action, suit, claim, proceeding or
investigation (each a "Claim") to the extent that any such Claim is based on, or
arises out of, (i) the fact that such person is or was a director, officer,
employee or agent of the Company or any of its subsidiaries or is or was serving
at the request of the Company or any of its subsidiaries as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, or (ii) the Merger Agreement, or any of the transactions
contemplated hereby, in each case to the extent that any such Claim pertains to
any matter or fact arising, existing, or occurring prior to or at the Effective
Time, regardless of whether such Claim is asserted or claimed prior to, at or
after the Effective Time, to the full extent permitted under Michigan law or the
Company's Restated Articles of Incorporation, By-laws or indemnification
agreements in effect at the date thereof, including provisions relating to
advancement of expenses incurred in the defense of any action or suit; provided,
however, that the Surviving Corporation shall not be liable for any settlement
effected without its written consent (which consent shall not be unreasonably
withheld). Without limiting the foregoing, in the event any Indemnified Party
becomes involved in any capacity in any Claim, then from and after the Effective
Time, the Surviving Corporation shall periodically advance to such Indemnified
Party its legal and other expenses (including the cost of any investigation and
preparation incurred in connection therewith), subject to the provision by such
Indemnified Party of an undertaking to reimburse the amounts so advanced in the
event of a final non-appealable determination by a court of competent
jurisdiction that such Indemnified Party is not entitled thereto. The
Indemnified Parties as a group may retain only one law firm with respect to each
related
3
<PAGE> 4
matter except to the extent there is or is reasonably likely to be, in the
opinion of counsel to the Indemnified Party, under applicable standards of
professional conduct, a conflict on any significant issue between positions of
any two or more Indemnified Parties. Pursuant to the Merger Agreement, the
Company has agreed that all rights to indemnification and all limitations or
liability existing in favor of the Indemnified Party as provided in the
Company's Restated Articles of Incorporation and By-laws as in effect as of
March 27, 1998 shall continue in full force and effect, without any amendment
thereto; provided that any determination required to be made with respect to
whether an Indemnified Party's conduct complies with the standards set forth
under Michigan law, the Company's Restated Articles of Incorporation or By-laws
or such agreements, as the case may be, shall be made by independent legal
counsel selected by the Indemnified Party and reasonably acceptable to Company;
and provided further, that nothing in this paragraph shall impair any rights or
obligations of any present or former directors or officers of the Company. The
Merger Agreement provides that in the event the Company or any of its successors
or assigns (i) consolidates with or merges into any other person and shall not
be the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its properties
and assets to any person, then, and in each such case, to the extent necessary
to effectuate the purposes of this paragraph, proper provision shall be made so
that the successors and assigns of the Company assume the obligations set forth
in this paragraph and none of the actions described in clauses (i) or (ii) shall
be taken until such provision is made.
The Merger Agreement also provides that the Surviving Corporation shall
maintain the Company's existing officers' and directors' liability insurance
policy ("D&O Insurance") for a period of not less than six years after the
Effective Time; provided, however, that in no event shall the Surviving
Corporation be required to expend in any one year an amount in excess of 150% of
the last annual premium paid by the Company for such insurance and if the annual
premiums exceed such amount, the Surviving Corporation shall be obligated to
obtain a policy with the greatest coverages available for a cost not exceeding
such amount; provided further the Surviving Corporation may substitute therefor
policies of substantially similar coverage and amounts containing terms no less
advantageous to such former directors or officers with respect to acts or
omissions occurring prior to the Effective Time or individual coverage and
provided that such substitution shall not result in any gaps or lapses in
coverage with respect to acts or omissions occurring prior to the Effective
Time; provided further, if the existing D&O Insurance expires, is terminated or
cancelled during such period, the Surviving Corporation will use its best
efforts to obtain substantially similar D&O Insurance.
THE MERGER AGREEMENT
The following is a summary of certain provisions of the Merger Agreement.
The summary is qualified in its entirety by reference to the Merger Agreement
which is attached hereto as Exhibit 1 and incorporated herein by reference.
Capitalized terms used but not defined in this summary of the Merger Agreement
have the meanings given to such terms in the Merger Agreement.
The Offer. The Merger Agreement provides that the Purchaser will commence
the Offer and that, upon the terms and subject to the prior satisfaction or
waiver of the conditions of the Offer, the Purchaser will purchase all Shares
validly tendered and not properly withdrawn pursuant to the Offer as soon as
legally permitted after the expiration date of the Offer. The Merger Agreement
provides that, without the prior written consent of the Company, neither the
Purchaser nor Parent may decrease the price per Share, decrease the number of
Shares sought to be purchased in the Offer, or amend any other condition of the
Offer in any manner adverse to the holders of the Shares. The Purchaser shall,
on the terms and subject to the prior satisfaction or waiver of the conditions
of the Offer, accept for payment and pay for the Shares validly tendered as soon
as practicable after it is legally permitted to do so under applicable law;
provided, however, that if, immediately prior to the initial expiration date of
the Offer (as it may be extended), the Shares tendered and not withdrawn
pursuant to the Offer, when added to Shares already owned by the Purchaser and
Parent, equals less than 90% of the outstanding Shares, the Purchaser may extend
the Offer one time for a period not to exceed twenty business days,
notwithstanding that all conditions to the Offer are satisfied as of such
expiration date of the Offer.
Board of Directors. Promptly upon the purchase of Shares by the Purchaser
and from time to time thereafter, the Purchaser shall be entitled to designate
up to such number of directors, rounded up to the next
4
<PAGE> 5
whole number, on the Board as is equal to the number of directors which is the
product of (i) the total number of directors on the Board (giving effect to the
directors designated by the Purchaser pursuant to this sentence) multiplied by
(ii) the percentage that the aggregate number of Shares beneficially owned by
the Purchaser or any affiliate of the Purchaser following such purchase bears to
the total number of Shares then outstanding. In furtherance thereof, the Company
shall, at such time, promptly take all actions necessary to cause Purchaser's
designees to be elected as directors of the Company including increasing the
size of its Board or securing the resignations of such number of its incumbent
directors, or both. At such time, the Company shall use its best efforts to
cause persons designated by the Purchaser to constitute at least the same
percentage (rounded up to the next whole number) as is on the Board of each
committee of the Board, each board of directors of each of the Company's
subsidiaries and each committee of such board, in each case to the extent
permitted by law. Notwithstanding the foregoing, the Company shall have at least
one independent director until the Effective Time. In the Merger Agreement, the
Company has agreed to promptly take all actions required pursuant to Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order to
fulfill its obligations under the Merger Agreement, including mailing to
shareholders the information required by such Section 14(f) and Rule 14f-1 as is
necessary to enable the Purchaser's designees to be elected to the Board. The
Purchaser or Parent will supply the Company and be solely responsible for any
information with respect to either of them and their nominees, officers,
directors and affiliates required by such Section 14(f) and Rule 14f-1.
The Merger. The Merger Agreement provides that, subject to the terms and
conditions thereof and in accordance with the MBCA and the DGCL, at the
Effective Time, the Purchaser will be merged with and into the Company.
Following the Merger, the separate corporate existence of the Purchaser will
cease and the Company will continue as the surviving corporation (the "Surviving
Corporation"). The Merger shall be effected by the filing at the time of Closing
of properly executed Articles of Merger or Certificate of Merger, as
appropriate, or other appropriate documents with the Corporation, Securities and
Land Development Bureau of the Michigan Department of Corporations and
Industries Services and the Secretary of State of the State of Delaware.
The Merger Agreement provides that, at the Effective Time, by virtue of the
Merger and without any action on the part of Parent, the Purchaser, the Company
or the holders thereof the Shares will be converted into the right to receive
the Offer Price in cash, without interest thereon, as soon as is reasonably
practicable upon surrender of the certificate(s) formerly representing such
Shares (other than any Shares owned by the Purchaser or by any affiliate of the
Purchaser or Shares in the treasury of the Company, or in the treasury of any
wholly-owned subsidiary of the Company, which Shares, by virtue of the Merger
and without any action on the part of the holder thereof, shall be cancelled and
retired and shall cease to exist with no payment being made with respect
thereto). At the Effective Time, each share of common stock, par value $.01 per
share, of the Purchaser issued and outstanding immediately prior to the
Effective Time will, by virtue of the Merger and without any action on the part
of the holder thereof, be converted into and become one validly issued, fully
paid and nonassessable share of common stock, par value $1.00 per share, of the
Surviving Corporation.
The Merger Agreement provides that the Articles of Incorporation of the
Purchaser, as in effect immediately prior to the Effective Time, will be the
Articles of Incorporation of the Surviving Corporation, until thereafter amended
in accordance with the provisions thereof and applicable law. The By-Laws of the
Purchaser in effect at the Effective Time will be the By-Laws of the Surviving
Corporation, until thereafter amended in accordance with the provisions thereof
and applicable law.
Vote Required to Approve the Merger. Pursuant to the Merger Agreement, the
Company will, if required by applicable law in order to consummate the Merger,
duly call, give notice of, convene and hold a special meeting of its
shareholders (the "Special Meeting") as soon as practicable following the
acceptance for payment and purchase of Shares by Parent or its affiliates
pursuant to the Offer for the purpose of considering and taking action upon the
Merger Agreement. The Merger Agreement provides that the Company will, if
required by applicable law in order to consummate the Merger, prepare and file
with the Commission a definitive proxy statement (the "Proxy Statement")
relating to the Merger and the Merger Agreement and cause such Proxy Statement
to be mailed to its shareholders, provided that no amendment or supplement to
the Proxy Statement will be made by the Company without consultation with Parent
and its counsel. If the
5
<PAGE> 6
Purchaser acquires at least a majority of the outstanding Shares, the Purchaser
will have sufficient voting power to approve the Merger, even if no other
shareholder votes in favor of the Merger.
The Merger Agreement provides that in the event that the Purchaser acquires
at least 90% of the outstanding Shares pursuant to the Offer, the Tender
Agreements (as defined below) or otherwise, the Purchaser and the Company will
take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after such acquisition, without a meeting of
shareholders of the Company, in accordance with the MBCA and the DGCL.
Conditions to the Merger. The respective obligations of Parent, the
Purchaser and the Company to consummate the Merger and the transactions
contemplated thereby are subject to the satisfaction, at or before the Effective
Time, of certain conditions, including: (i) if required, the shareholders of the
Company shall have duly approved the transactions contemplated by the Merger
Agreement; (ii) any waiting period applicable to the Merger under the HSR Act
shall have expired or been terminated; (iii) the consummation of the Merger
shall not be restrained, enjoined or prohibited by any order, judgment, decree,
injunction or ruling of a court of competent jurisdiction or any governmental
entity and there shall not have been any statute, rule or regulation enacted,
promulgated or deemed applicable to the Merger by any governmental entity which
prevents the consummation of the Merger; (iv) all authorizations, approvals or
consents required to permit the Merger shall have been obtained; and (v) the
Purchaser or its permitted assignee shall have purchased all Shares validly
tendered and not withdrawn pursuant to the Offer (however, this condition is not
applicable to the obligations of Parent or the Purchaser if the Purchaser fails
to purchase Shares tendered pursuant to the Offer in violation of the terms of
the Merger Agreement or the Offer).
Representations and Warranties. The Merger Agreement contains various
representations of the parties thereto, including representations by the Company
as to, among other things, (i) organization; (ii) capitalization; (iii)
authorization and validity of the Merger Agreement and necessary action; (iv)
consents and approvals; (v) SEC reports and financial statements; (vi)
undisclosed liabilities; (vii) absence of certain changes; (viii) disclosure
documents; (ix) employee benefit plans and ERISA; (x) litigation; (xi)
compliance with existing laws; (xii) taxes; (xiii) real property; (xiv)
intellectual property; (xv) contracts; (xvi) environmental laws and regulations;
(xvii) labor matters; (xviii) brokers or finders; (xix) opinion of financial
advisors; (xx) Board recommendation; (xxi) insurance; and (xxii) permits.
Covenants. Pursuant to the Merger Agreement, the Company has covenanted and
agreed that unless Parent shall otherwise agree in writing, the Company shall,
and shall cause each of its subsidiaries to, conduct its operations in the
ordinary and usual course of business consistent with past practice and use all
reasonable efforts to preserve intact their respective business organizations'
goodwill, keep available the services of their respective present officers and
key employees, and preserve the goodwill and business relationships with
suppliers, distributors, customers and others having business relationships with
them. Without limiting the generality of the foregoing, and except as otherwise
permitted by the Merger Agreement or as required by applicable law, rule or
regulation prior to the Effective Time, without the consent of Parent, which
consent shall not be unreasonably withheld, the Company will not, and will cause
each of its subsidiaries not to: (a) amend or propose to amend their respective
charters or bylaws; or split, combine or reclassify their outstanding capital
stock or declare, set aside or pay any dividend or distribution in respect of
any capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for, shares of its
capital stock, except for cash dividends and cash distributions paid by
subsidiaries to other subsidiaries or to the Company; (b) (i) issue or authorize
or propose the issuance of, sell, pledge or dispose of, or agree to issue or
authorize or propose the issuance of, sell, pledge or dispose of, any additional
shares of, or any options, warrants or rights of any kind to acquire any shares
of, their capital stock of any class, any debt or equity securities convertible
into or exchangeable for such capital stock or any other equity related right
(including any phantom stock or stock appreciation rights ("SARs")), other than
any such issuance pursuant to options, warrants, rights or convertible
securities outstanding as of the date of the Merger Agreement; (ii) acquire or
agree to acquire by merging or consolidating with, or by purchasing a
substantial equity interest in or a substantial portion of the assets of, or by
any other manner, any business or any corporation, partnership, association or
other business organization or division thereof or otherwise acquire or agree to
acquire any assets, in each case which are material, individually or in the
aggregate, to the Company and its
6
<PAGE> 7
subsidiaries taken as a whole; (iii) sell (including by sale-leaseback), lease,
pledge, dispose of or encumber any assets or interests therein, which are
material, individually or in the aggregate, to the Company and its subsidiaries
taken as a whole, other than in the ordinary course of business and consistent
with past practice; (iv) incur or become contingently liable with respect to any
material indebtedness for borrowed money or guarantee any such indebtedness or
issue any debt securities or otherwise incur any material obligation or
liability (absolute or contingent) other than short-term indebtedness in the
ordinary course of business and consistent with past practice; (v) redeem,
purchase, acquire or offer to purchase or acquire any (x) shares of its capital
stock or (y) long-term debt other than as required by governing instruments
relating thereto; (vi) other than in the ordinary course of business, neither
the Company nor any Company subsidiary shall modify, amend or terminate any
material contract or agreement to which the Company or any Company subsidiary is
a party or waive, release or assign any material rights or claims; or (vii)
enter into any contract, agreement, commitment or arrangement with respect to
any of the foregoing; (c) enter into or amend any employment, severance, special
pay arrangement with respect to termination of employment or other arrangements
or agreements with any directors, officers or key employees except for (i)
normal salary increases and merit bonuses, (ii) arrangements in connection with
employee transfers or (iii) agreements with new employees, in each case, in the
ordinary course of business and consistent with past practice; (d) adopt, enter
into or amend any, or become obligated under any new bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation,
healthcare, employment or other employee benefit plan, agreement, trust, fund or
arrangement for the benefit or welfare of any employee or retiree, except as
required to comply with changes in applicable law occurring after the date
hereof; (e) except as may be required as a result of a change in law or in
generally accepted accounting principles after the date hereof, change any of
the accounting principles or practices used by it; (f) pay, discharge or satisfy
any material claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction in the ordinary course of business of liabilities reflected or
reserved against in, or contemplated by, the financial statements (or the notes
thereto) of the Company incurred in the ordinary course of business consistent
with past practice; (g) authorize, commit to or make any equipment purchases or
capital expenditures other than in the ordinary course of business and
consistent with past practice (provided, that such purchases and/or expenditures
shall, in the aggregate, be no more than $250,000) or as set forth in the Merger
Agreement; or (h) take or agree to take any of the foregoing actions or any
action that would, or is reasonably likely to, result in any of its
representations and warranties set forth in the Merger Agreement becoming
untrue, or in any of the conditions to the Merger Agreement set forth in the
Merger Agreement not being satisfied.
No Solicitations. The Company has agreed that it will not, and will cause
any officers, directors, employees and investment bankers, attorneys or other
agents retained by the Company or any of its subsidiaries not to, (i) directly
or indirectly solicit, initiate or knowingly encourage (including by way of
furnishing non-public information), or take any other action knowingly to
facilitate any inquiries or the making of any Acquisition Proposal (as
hereinafter defined), or (ii) except as permitted below, engage in negotiations
or discussions with, or furnish any information or data to any third party
relating to, or that may be reasonably be expected to lead to, an Acquisition
Proposal (other than the transactions contemplated hereby). Notwithstanding
anything to the contrary contained in the Merger Agreement, the Company, and its
officers, directors, investment bankers, attorneys or agents, may: (a)
participate in discussions or negotiations (including, as a part thereof, making
any counterproposal) with or furnish information to any third party making an
unsolicited Acquisition Proposal (a "Potential Acquiror") if: (1) the Board
determines in good faith, after consultation with ABN AMRO or another financial
advisor of nationally recognized standing, that such third party is reasonably
likely to submit an Acquisition Proposal, which is a Superior Proposal (as
hereinafter defined), and (2) the Board determines in good faith, based upon
advice of outside legal counsel, that the failure to participate in such
discussions or negotiations or to furnish such information is reasonably likely
to be inconsistent with the Board's fiduciary duties under applicable law, or
(b) following receipt of an Acquisition Proposal, disclose to its shareholders
the Company's position contemplated by Rules 14d-9 and 14e-2 under the Exchange
Act or otherwise make any other necessary disclosure to its shareholders related
to an Acquisition Proposal.
7
<PAGE> 8
The Company has agreed that, as of March 27, 1998, it shall immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any parties (other than the Purchaser and Parent conducted
heretofore with respect to any of the foregoing). The Company has agreed not to
release any third party from any confidentiality or standstill agreement to
which the Company is a party. The Company also has agreed that any non-public
information furnished to a Potential Acquiror will be pursuant to a
confidentiality agreement substantially similar to the confidentiality
provisions of the confidentiality agreement entered into between the Company and
Parent. The Company further has agreed that in the event that the Company shall
receive any Acquisition Proposal, it shall promptly inform Parent in writing as
to the terms of such Acquisition Proposal, and if the Acquisition Proposal is in
writing the Company shall provide the Parent a true and complete copy thereof,
and will keep Parent reasonably informed of the status (including amendments or
proposed amendments) of any such Acquisition Proposal, except to the extent that
the Board determines in good faith, after consultation with its outside legal
counsel, that any such action with respect to a Superior Proposal that by its
terms expressly prohibits any disclosure of the terms of such Superior Proposal
and described in this sentence is reasonably likely to be inconsistent with the
Board's fiduciary duties under applicable law. As used herein, "Acquisition
Proposal" shall mean any bona fide proposal made by a third party to acquire (i)
beneficial ownership (as defined under Rule 13(d) of the Exchange Act) of a 15%
or greater equity interest in the Company pursuant to a merger, consolidation or
other business combination, sale of shares of capital stock, tender offer or
exchange offer or similar transaction involving the Company including, without
limitation, any single or multi-step transaction or series of related
transactions which is structured in good faith to permit such third party to
acquire beneficial ownership of a 15% or greater equity interest in the Company
or (ii) all or a substantial part of the business or assets or any equity
interest in, or voting securities of, of the Company (other than the
transactions contemplated by the Merger Agreement). As used herein, "Superior
Proposal" means any Acquisition Proposal which the Board determines in good
faith, after consultation with ABN AMRO or another financial advisor of
nationally recognized standing, to be more favorable to such party and its
shareholders than the transactions contemplated by the Merger Agreement.
Termination; Fees and Expenses. The Merger Agreement provides that it may
be terminated and the Merger and the other transactions contemplated thereby may
be abandoned at any time prior to the Effective Time, notwithstanding any
requisite approval and adoption of the Merger Agreement and the transactions
contemplated thereby by the shareholders of the Company: (a) by mutual written
consent of the Company, Parent and the Purchaser; (b) by either of the Company,
on the one hand, or Parent and the Purchaser, on the other hand: (i) if the
Effective Time shall not have occurred on or prior to September 30, 1998;
provided, however, that the right to terminate the Merger Agreement under
Section 8.1(b)(i) of the Merger Agreement shall not be available to any party
whose failure to fulfill any obligation under the Merger Agreement has been the
cause of, or resulted in, the failure of the Merger to occur on or prior to such
date; (ii) if there shall have been issued an order, decree or ruling or taken
any other action (which order, decree ruling or other action the parties hereto
shall use their respective best efforts to lift), in each case permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated by
the Merger Agreement and such order, decree, ruling or other action shall have
become final and non-appealable; provided, however, if the party seeking
termination is Parent, Parent shall have complied fully with its obligations
under Section 6.9 of the Merger Agreement, or (iii) if, at the Special Meeting
(including any adjournment or postponement thereof) called pursuant to the
Merger Agreement, the requisite vote of the shareholders of the Company for the
Merger shall not have been obtained; (c) by the Company: (i) upon two days prior
written notice if the Board shall have (A) withdrawn, modified or changed in a
manner adverse to Parent its approval or recommendation of the Merger Agreement,
the Offer or the Merger or resolved to do any of the foregoing and (B) (x)
determined in good faith, after consultation with a ABN AMRO or another
financial advisor of nationally recognized standing, that a third party has
submitted to the Company an Acquisition Proposal which is a Superior Proposal,
and (y) determined in good faith, upon the advice of outside legal counsel, that
the failure to take such action as set forth in the preceding clause (A) is
reasonably likely to be inconsistent with the Board's fiduciary duties under
applicable law; (ii) if Parent or the Purchaser (x) breaches or fails in any
material respect to perform or comply with any of its material covenants and
agreements contained herein or (y) breaches its representations and warranties
in any material respect and such breach would have a Parent
8
<PAGE> 9
Material Adverse Effect (as hereinafter defined), in each case such that the
conditions set forth in the Merger Agreement would not be satisfied; provided,
however, that if any such breach is curable by Parent or the Purchaser through
the exercise of Parent's or the Purchaser's best efforts and for so long as
Parent or the Purchaser shall be so using its best efforts to cure such breach,
the Company may not terminate the Merger Agreement pursuant to the Merger
Agreement; (iii) upon approval of the Board, if due to an occurrence or
circumstance that would result in a failure to satisfy any of the conditions set
forth in Annex A to the Merger Agreement, Merger Sub shall have failed to
commence the Offer on or prior to five days following the date of initial public
announcement of the Merger Agreement; provided, however, the Company may not
terminate the Merger Agreement if the Company is at such time in breach of its
obligations under the Merger Agreement; (d) by Parent and the Purchaser: (i) if
the Company (x) breaches or fails in any material respect to perform or comply
with any of its material covenants and agreements contained in the Merger
Agreement or (y) breaches its representations and warranties in any material
respect and such breach would have a Company Material Adverse Effect (as
hereinafter defined), in each case such that the conditions set forth in the
Merger Agreement would not be satisfied; provided, however, that if any such
breach is curable by the Company through the exercise of the Company's best
efforts and for so long as the Company shall be so using its best efforts to
cure such breach, Parent and the Purchaser may not terminate the Merger
Agreement pursuant to the Merger Agreement; (ii) if the Board shall have
withdrawn, modified or changed in a manner adverse to Parent its approval or
recommendation of the Merger Agreement, the Offer or the Merger or shall have
recommended an Acquisition Proposal involving the Company or shall have executed
an agreement in principal or definitive agreement relating to an Acquisition
Proposal involving the Company or similar business combination with a person or
entity other than Parent or its affiliates (or the Board resolves to do any of
the foregoing); or (iii) if due to an occurrence or circumstance that would
result in a failure to satisfy any condition set forth in Annex A to the Merger
Agreement, the Purchaser shall have failed to commence the Offer on or prior to
five days following the initial public announcement of the Merger Agreement;
provided, however, Parent and the Purchaser may not terminate the Merger
Agreement pursuant to the Merger Agreement if Parent or the Purchaser is at such
time in breach of its obligations under the Merger Agreement. As used herein,
"Company Material Adverse Effect" and "Parent Material Adverse Effect" mean any
material adverse change in or effect on the business, financial condition or
results of operations of the Company and its subsidiaries taken as a whole, with
respect to "Company Adverse Material Effect", or of Parent and its subsidiaries
taken as a whole, with respect to "Parent Material Adverse Effect"; provided,
however, that the effects of changes that are generally applicable to (i) the
North American RTA furniture industry, (ii) the United States economy, or (iii)
the United States securities markets shall in each case be excluded from such
determination; and provided, further that any adverse effect on the Company and
its subsidiaries, or Parent and its subsidiaries, as the case may be, resulting
from the execution of the Merger Agreement and the announcement of the Merger
Agreement and the transactions contemplated thereby shall also be excluded from
such determination.
In the event of the termination of the Merger Agreement, written notice
thereof shall forthwith be given to the other party or parties specifying the
provision thereof pursuant to which such termination is made, and the Merger
Agreement shall forthwith become null and void, and there shall be no liability
on the part of Parent, the Purchaser or the Company or their respective
directors, officers, employees, shareholders, representatives, agents or
advisors other than, with respect to Parent, the Purchaser and the Company, the
obligations pursuant to the Merger Agreement. Nothing contained in the Merger
Agreement shall relieve Parent, the Purchaser or the Company from liability for
willful breach of the Merger Agreement.
If the Merger Agreement is terminated: (A) by either the Parent and the
Purchaser or the Company pursuant to clause (b)(iii) above or by Parent and the
Purchaser pursuant to clause (d)(i) above and any person (other than Parent or
any of its affiliates) shall have made a bona fide Acquisition Proposal to the
Company that becomes disclosed to the public prior to the Special Meeting, and
within one year after the effective date of such termination the Company is the
subject of a Third Party Acquisition Event with such person, (B) by the Company
pursuant to clause (c)(i) above or (C) by Parent and the Purchaser pursuant to
clause (d)(ii) above, then at the time of termination with respect to (B) or (C)
above or the time of execution of a definitive agreement regarding such a Third
Party Acquisition Event with respect to (A) above, the Company shall pay to
Parent a fee of $1,500,000 in cash (the "Fee") and reimburse the Parent for
9
<PAGE> 10
reasonable out-of-pocket costs incurred by Parent or on behalf of Parent in
connection with the Merger Agreement and the transactions contemplated hereby up
to an amount not to exceed $1,500,000. The Company has agreed not to enter into
any agreement with respect to any Third Party Acquisition Event which does not,
as a condition precedent to the execution of such agreement, require such
reimbursement of expenses and the Fee to be paid to Parent upon such execution.
As used herein, the term "Third Party Acquisition Event" means either of the
following: (A) the Company shall agree to, consummate, or announce its intention
to enter into any agreement relating to an Acquisition Proposal; or (B) any
person (other than the Company, Parent or the Purchaser or any affiliate
thereof) shall have acquired beneficial ownership (as such term is defined in
Rule 13d-3 under the Exchange Act) or the right to acquire beneficial ownership
of, or a new group has been formed which beneficially owns or has the right to
acquire beneficial ownership of, 15% or more of the outstanding Common Stock.
Employee Benefits. The Merger Agreement provides that as of the Effective
Time, the Company's Employee Stock Ownership and Savings Plan and Trust
Agreement (the "Company ESOP") will be amended to provide that the Company ESOP
will be frozen with respect to participation and benefit accrual in the part of
the Company ESOP that is an employee stock ownership plan and that no further
contributions will be made to or distributions will be made from such portion of
the Company ESOP; provided, however, that immediately prior to the Effective
Time, the Company shall make a pro rata contribution to the Company ESOP in
respect of the plan year, which plan year shall be deemed to have ended at the
Effective Time, in accordance with the terms of the Company ESOP and applicable
law. The amendment to the Company ESOP shall further provide that following the
Effective Time, each participant in the Company ESOP will be entitled to direct
the investment of the balance in his or her Company ESOP account into one or
more of the investment alternatives provided under the 401(k) portion of the
Company ESOP (other than Shares), in accordance with the terms of the Company
ESOP and applicable law.
The Merger Agreement further provides that as of the Effective Time and for
a two-year period thereafter, the Company and any of its subsidiaries and
successors shall provide their employees with employment benefits substantially
similar in the aggregate to the benefits they received prior to the Effective
Time. Any employment agreements between the Company, its subsidiaries and their
employees will continue to be honored after the Effective Time.
Indemnification; Directors' and Officers' Insurance. From and after the
Effective Time, the Surviving Corporation shall indemnify, defend and hold
harmless any person who is now, or has been at any time prior to the date
hereof, or who becomes prior to the Effective Time, an officer, director,
employee and agent (the "Indemnified Party") of the Company and its subsidiaries
against all losses, claims, damages, liabilities, costs and expenses (including
attorney's fees and expenses), judgments, fines, losses, and amounts paid in
settlement in connection with any actual or threatened action, suit, claim,
proceeding or investigation (each a "Claim") to the extent that any such Claim
is based on, or arises out of, (i) the fact that such person is or was a
director, officer, employee or agent of the Company or any of its subsidiaries
or is or was serving at the request of the Company or any of its subsidiaries as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, or (ii) the Merger Agreement, or any
of the transactions contemplated thereby, in each case to the extent that any
such Claim pertains to any matter or fact arising, existing, or occurring prior
to or at the Effective Time, regardless of whether such Claim is asserted or
claimed prior to, at or after the Effective Time, to the full extent permitted
under Michigan law or the Company's Articles of Incorporation, By-laws or
indemnification agreements in effect at the date hereof, including provisions
relating to advancement of expenses incurred in the defense of any action or
suit; provided, however, that the Surviving Corporation shall not be liable for
any settlement effected without its written consent (which consent shall not be
unreasonably withheld). Without limiting the foregoing, in the event any
Indemnified Party becomes involved in any capacity in any Claim, then from and
after the Effective Time, the Surviving Corporation shall periodically advance
to such Indemnified Party its legal and other expenses (including the cost of
any investigation and preparation incurred in connection therewith), subject to
the provision by such Indemnified Party of an undertaking to reimburse the
amounts so advanced in the event of a final non-appealable determination by a
court of competent jurisdiction that such Indemnified Party is not entitled
thereto. The Indemnified Parties as a group may retain only one law firm with
respect to each related
10
<PAGE> 11
matter except to the extent there is or is reasonably likely to be, in the
opinion of counsel to the Indemnified Party, under applicable standards of
professional conduct, a conflict on any significant issue between positions of
any two or more Indemnified Parties.
The Merger Agreement provides that the Surviving Corporation shall maintain
the Company's existing officers' and directors' liability insurance policy ("D&O
Insurance") for a period of not less than six years after the Effective Time;
provided, however, that in no event shall the Surviving Corporation be required
to expend in any one year an amount in excess of 150% of the last annual premium
paid by the Company for such insurance and if the annual premiums exceed such
amount, the Surviving Corporation shall be obligated to obtain a policy with the
greatest coverages available for a cost not exceeding such amount; provided,
further, the Surviving Corporation may substitute therefor policies of
substantially similar coverage and amounts containing terms no less advantageous
to such former directors or officers with respect to acts or omissions occurring
prior to the Effective Time or individual coverage and provided, that such
substitution shall not result in any gaps or lapses in coverage with respect to
acts or omissions occurring prior to the Effective Time; provided, further, if
the existing D&O Insurance expires, is terminated or cancelled during such
period, the Surviving Corporation will use its best efforts to obtain
substantially similar D&O Insurance.
Parent, the Purchaser and the Company have also agreed that in the event
the Company or the Surviving Corporation or any of their respective successors
or assigns (i) consolidates with or merges into any other person and shall not
be the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers or conveys all or substantially all of its properties
and assets to any person, then and in each such case, proper provision shall be
made so that the successors and assigns of the Company, shall assume the
foregoing indemnity obligations and none of the actions described in clauses (i)
or (ii) shall be taken until such provision is made.
Access to Information. The Company has agreed that, upon reasonable notice,
the Company shall (and shall cause each of its subsidiaries to) afford to Parent
and its officers, employees, accountants, counsel, financing sources and other
representatives, access, during normal business hours during the period prior to
the earlier of the Effective Time or the date of termination of the Merger
Agreement, to all its properties, books, contracts, commitments and records and,
during such period, the Company shall (and shall cause each of its subsidiaries
to) furnish promptly to Parent (a) a copy of each report, schedule, registration
statement and other documents filed or received by it during such period
pursuant to the requirements of federal securities laws and (b) all other
information concerning its business, properties and personnel as Parent may
reasonably request; provided, however, that nothing herein shall require the
Company or any of its subsidiaries to disclose any information to Parent if such
disclosure would be in violation of applicable laws or regulations of any
Governmental Entity or the provisions of any confidentiality agreement to which
the Company is a party.
Options; Stock Plans. The Merger Agreement provides that the Company will
not issue any additional options or SARs. Each option held by an employee,
officer or director of the Company and other eligible holders to acquire Shares
that is outstanding immediately prior to the Merger, whether or not then vested
or exercisable, shall, simultaneously with the Merger, be cancelled in exchange
for a single lump sum cash payment equal to the product of (1) the number of
Shares subject to such Company Option and (2) the excess, if any, of the Offer
Price over the exercise price per share of such Company Option, subject to any
required withholding of taxes. Each SAR held by an employee, officer or director
of the Company that is outstanding immediately prior to the Merger, whether or
not then vested or exercisable, shall, simultaneously with the Merger, shall be
cancelled in exchange for a single lump sum cash payment equal to the product of
(1) the number of SARs held by such employee, officer or director and (2) the
excess, if any, of the Offer Price over $4.00, the fair market value on the date
the SARs were granted. Prior to the Effective Time, if necessary, the Company
has agreed to use all reasonable efforts to (i) obtain consents from appropriate
holders of Options and SARs and (ii) make any amendments to the terms of such
Company Options, SARs, or the compensation plans or arrangements related thereto
that are necessary to give effect to the transactions contemplated above.
Notwithstanding any foregoing provision, payment may be withheld in respect of
any Company Option or SAR until necessary or appropriate consents are obtained.
11
<PAGE> 12
TENDER AND OPTION AGREEMENTS
The following is a summary of the material terms of the Tender and Option
Agreements (the "Tender Agreements") by and among Parent, Purchaser and each of
Neil L. Diver, Chairman of the Board of Directors of the Company, and Kevin K.
Coyne and Edwin Wachtel, each a member of the Board of Directors (the "Director
Shareholders"), with respect to 129,000, 71,281 and 55,436 Shares owned of
record by Mr. Diver, Mr. Coyne and Mr. Wachtel, respectively. This summary is
qualified in its entirety by reference to the form of Tender Agreement, a copy
of which has been filed as Exhibit 2 to this Statement and is incorporated
herein by reference.
Tender of Shares. On the terms and subject to the conditions set forth in
the Tender Agreements, each of the Director Shareholders will (i) tender the
Shares owned by him into the Offer promptly, and in any event no later than the
fifth business day following the commencement of the Offer, or, if the
Shareholder has not received the offer documents by such time, within two
business days following receipt of such documents, and (ii) not withdraw any
Shares so tendered (except in the event the Stock Option (as defined herein) is
exercised). The Director Shareholders will receive the same price per Share
received by other shareholders of the Company in the Offer with respect to
Shares tendered by them in the Offer.
Grant of Stock Option. On the terms and subject to the conditions set forth
in the Tender Agreements, each Director Shareholder has granted to Parent an
irrevocable option (the "Stock Option") to purchase the Shares owned by such
Director Shareholder at a price per Share equal to the Offer Price (subject to
additional payments in certain limited circumstances as described below),
exercisable at any time, in whole only, if on or after March 27, 1998: (i) any
corporation, partnership, individual, trust, unincorporated association, or
other entity or "person" (as defined in Section 13(d)(3) of the Exchange Act)
other than Parent or any of its "affiliates" (as defined in the Exchange Act) (a
"Third Party"), will have (A) commenced or announced an intention to commence a
bona fide tender offer or exchange offer for any shares of Common Stock, the
consummation of which would result in "beneficial ownership" (as defined in the
Exchange Act) by such Third Party (together with all such Third Party's
affiliates and "associates" (as defined in the Exchange Act)) of 35% or more of
the then outstanding voting equity of the Company (either on a primary or a
fully diluted basis), (B) acquired beneficial ownership of shares of Common
Stock that, when aggregated with any shares of Common Stock already owned by
such Third Party, its affiliates and associates, would result in the aggregate
beneficial ownership by such Third Party, its affiliates and associates of 15%
or more of the then outstanding voting equity of the Company (either on a
primary or a fully diluted basis), provided, however, that "Third Party" for
purposes of this clause (B) does not include any corporation, partnership,
person, other entity or group that beneficially owns more than 15% of the
outstanding voting equity of the Company (either on a primary or a fully diluted
basis) as of the date hereof and that does not, after the date hereof, increase
such ownership percentage by more than an additional 1% of the outstanding
voting equity of the Company (either on a primary or a fully diluted basis), (C)
acquired assets constituting 15% or more of the total assets or earning power of
the Company taken as a whole or (D) entered into an agreement with the Company
that contemplates the acquisition of (1) assets constituting 15% or more of the
total assets or earning power of the Company taken as a whole or (2) beneficial
ownership of 15% or more of the outstanding voting equity of the Company; or
(ii) the Board of Directors of the Company shall have withdrawn, or modified or
changed in a manner adverse to Parent its approval or recommendation of the
Merger Agreement under certain circumstances that would allow the Company to
terminate the Merger Agreement (after the passage of the applicable notice
period but without the necessity of the Company having terminated the Merger
Agreement).
In the event that Parent or Purchaser exercises the Stock Option and
subsequent to such exercise either (i) Parent or Purchaser pays consideration in
excess of the Offer Price for the Shares pursuant to the Merger (a "Higher
Price"), or (ii) (A) a third party commences a bona-fide tender offer or
exchange offer for Shares for consideration in excess of the Offer Price (the
"Excess Consideration"), (B) the Company terminates the Merger Agreement under
certain circumstances where the Board of Directors shall have withdrawn, or
modified or changed in a manner adverse to Parent its approval or recommendation
of the Merger Agreement, (C) prior to such termination, but after receiving
notice of the Company's intention to so terminate, Parent or Purchaser exercises
the Stock Option and (D) Parent or Purchaser tenders the Shares it received upon
the exercise of the Stock Option in such tender offer or exchange offer and
receives Excess Consideration with
12
<PAGE> 13
respect to such Shares, then, in the case of clause (i) above, Parent or
Purchaser shall pay to each Director Shareholder in cash, within five days after
Parent or Purchaser pays the Higher Price to holders of Shares, an amount equal
to the applicable number of Shares multiplied by the difference between the
Higher Price and the Offer Price, and, in the case of clause (ii) above, Parent
or Purchaser shall pay to each Director Shareholder in cash, within five days
after Parent or Purchaser receives the Excess Consideration, an amount equal to
the applicable number of Shares multiplied by the difference between the Excess
Consideration and the Offer Price.
Conditions to Closing. Each Director Shareholder's obligation to sell the
Shares owned by him upon exercise of the Stock Option and such Shareholder's
obligations under the provisions described in the following paragraph are
subject (at such Director Shareholder's election) to the further conditions that
there will have been no material breach of the representations, warranties,
covenants or agreements of Parent or Purchaser contained in the applicable
Tender Agreement or contained in the Merger Agreement, which breach has not been
cured within ten business days of the receipt of written notice thereof from the
Director Shareholder.
Voting Agreement; Proxy. Pursuant to the Tender Agreements, each of the
Director Shareholders agreed that, so long as such Tender Agreements are in
effect, at any meeting (whether annual or special and whether or not an
adjourned or postponed meeting) of the holders of Common Stock, however called,
or in connection with any written consent of the holders of Common Stock, such
Director Shareholder will appear at the meeting or otherwise cause the Shares
owned by such Director Shareholder to be counted as present thereat for purposes
of establishing a quorum and vote or consent (or cause to be voted or consented)
such Shares (i) in favor of the Merger and (ii) against any action or agreement
that would impede, interfere with or prevent the Merger, including any other
extraordinary corporate transaction, such as a merger, reorganization or
liquidation involving the Company and a third party or any other proposal of a
third party to acquire the Company and (iii) if requested by Parent, in favor of
a shareholder resolution proposed by Parent in accordance with applicable
provisions of the MBCA the purpose of which is to cause the Offer and the Merger
to be consummated and which does not relate to the election of directors. Each
of the Director Shareholders irrevocably granted to, and appointed, Parent and
any nominee thereof, his proxy and attorney-in-fact (with full power of
substitution) during the term of the applicable Tender Agreement, for and in the
name, place and stead of such Director Shareholder, to vote the Shares owned by
such Director Shareholder, or grant a consent or approval in respect of such
Shares, in connection with any meeting of the shareholders of the Company (i) in
favor of the Merger and (ii) against any action or agreement that would impede,
interfere with or prevent the Merger, including any other extraordinary
corporate transaction, such as a merger, reorganization or liquidation involving
the Company and a third party or any other proposal of a third party to acquire
the Company. Such proxy and power of attorney is irrevocable and coupled with an
interest and is intended to be irrevocable in accordance with the provisions of
Section 422 of the MBCA and Section 212 of the DGCL. Pursuant to the applicable
Tender Agreement, each Director Shareholder also represented that all proxies
theretofore given by such Director Shareholder in respect of the Director
Shareholder's Shares, if any, are not irrevocable, and revoked all such proxies
given with respect to such Shares.
Certain Representations and Warranties. In connection with the Tender
Agreements, the Director Shareholders each made certain customary
representations and warranties, including with respect to (i) ownership of the
Director Shareholder's Shares and the absence of encumbrances on and in respect
of such Shares, (ii) the Director Shareholder's authority to enter into and
perform his obligations under the applicable Tender Agreement, (iii) the absence
of conflicts and requisite governmental consents and approvals, and (iv) the
absence of any broker, finder or investment banker relationship with respect to
the transactions contemplated by the applicable Tender Agreement. In connection
with the Tender Agreements, each of Parent and Purchaser made certain customary
representations and warranties to the Director Shareholders, including with
respect to (i) authority to enter into and perform its obligations under the
applicable Tender Agreement, (ii) absence of conflicts and requisite
governmental consents and approvals, and (iii) the absence of any broker, finder
or investment banker relationship with respect to the transactions contemplated
by the Tender Agreements.
13
<PAGE> 14
Certain Covenants. Pursuant to the Tender Agreements, each Director
Shareholder covenanted and agreed that, except as contemplated by such Agreement
and except pursuant to the Offer, the Director Shareholder will not offer to
sell, sell, pledge or otherwise dispose of or transfer any interest in or
encumber with any lien any of the Shares owned by such Director Shareholder, and
will not (i) enter into any contract, option or other agreement or understanding
with respect to any transfer of any or all of such Shares or any interest
therein, (ii) grant any proxy, power-of-attorney or other authorization or
consent in or with respect to such Shares, (iii) deposit such Shares into a
voting trust or enter into a voting agreement or arrangement with respect to
such Shares or (iv) take any other action with respect to such Shares that would
in any way restrict, limit or interfere with the performance of the Director
Shareholder's obligations under the applicable Tender Agreement. Pursuant to the
Tender Agreements, each Director Shareholder also agreed that he will notify
Parent immediately if any proposals are received by, any information is
requested from, or any negotiations or discussions are sought to be initiated or
continued with the Director Shareholder or his attorneys, accountants or other
agents (each of such actions, an "Interest"), in each case in connection with
any Acquisition Proposal indicating, in connection with such notice, the name of
the person indicating such Interest and the terms and conditions of any related
proposals or offers. The Director Shareholders also agreed to cease immediately
and cause to be terminated immediately any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any
Acquisition Proposal. In addition, each Director Shareholder agreed to keep
Parent informed, on a current basis, of the status and terms of any Acquisition
Proposal and to use his best efforts to ensure that his attorneys, accountants
and other agents do not, directly or indirectly: (i) initiate, solicit or
encourage, or take any action to facilitate the making of, any offer or proposal
that constitutes or is reasonably likely to lead to any Acquisition Proposal,
(ii) enter into any agreement with respect to any Acquisition Proposal or (iii)
in the event of an unsolicited written proposal in respect of an Acquisition
Proposal, engage in negotiations or discussions with, or provide any information
or data to, any person (other than Parent, any of its affiliates or
representatives and except for information that has been previously publicly
disseminated by the Company) relating to any Acquisition Proposal. Nothing in
the Tender Agreements shall be construed to prohibit any Director Shareholder
from taking any action solely in his capacity as a member of the Board of
Directors of the Company to the extent specifically permitted by the Merger
Agreement or as required by applicable law.
Termination. Except as otherwise specifically provided therein, all
obligations under the Tender Agreements terminate on the earliest of (a) the
date the Merger Agreement is terminated in accordance with its terms or the date
the Offer is terminated by Parent or Purchaser as a result of any failure of a
condition of the Offer; provided, however, that the provisions relating to the
Stock Option shall not terminate until 60 days thereafter (or such later time as
permitted by such provisions) if the Merger Agreement was terminated pursuant to
Section 8.1(c)(i) thereof, (b) the purchase of all the Shares subject to the
Stock Option pursuant to the Offer or pursuant to the Stock Option, or (c) on
September 30, 1998.
Except as described herein or incorporated herein by reference, to the
knowledge of the Company as of the date hereof, there are no material contracts,
agreements, arrangements or understandings or any actual or potential conflicts
of interest between the Company or its affiliates and Purchaser, its executive
officers, directors or affiliates.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
Recommendation of the Board of Directors. The Board of Directors of the
Company has unanimously approved the Merger Agreement, the Offer and the Merger,
and has determined that each of the Offer and the Merger is fair to and in the
best interests of the Company and its shareholders. The Board unanimously
recommends that all shareholders of the Company accept the Offer and tender
their Shares pursuant to the Offer.
Background; Reasons for the Recommendation. The ready-to-assemble ("RTA")
furniture industry, while exhibiting growth above the general economy, is very
competitive and in recent years has experienced intensified competition. There
has been consolidation of both industry participants and customers, and in
addition, there have been technological advances in production allowing for
greater production efficiencies and expanded capabilities. The largest industry
participants significantly influence the competitiveness of the
14
<PAGE> 15
industry by their manufacturing capacity and efficiency as well as their
economies of scale in servicing customers. In view of this industry environment,
in September 1996, management of the Company began work on a three year
strategic plan (the "Plan") which was then presented to the Board of Directors
in November 1996. Following review of the Plan, the Board of Directors decided
that a further study of the Company's capital expenditure needs was required and
a consultant for such study was retained. The consultant rendered a preliminary
report in February 1997 and, at the meeting of the Board of Directors in April
1997, the final report was submitted and reviewed. Also at the meeting,
management of the Company reported on recent developments in the industry and
the Company's position in the industry.
From May 1997 through August 1997, management of the Company and the Board
of Directors commenced a thorough reexamination of the Company's Plan and its
implementation. The reexamination of the Plan indicated that while the Company
had made progress in increasing its manufacturing capabilities and raising
productivity, the Company's long-term competitive position was nonetheless
subject to substantial risks. In particular, substantial capital expenditures
would be required to keep the Company competitive in an environment of
significantly larger industry participants, with greater financial resources
than the Company, pursuing a consolidating customer base. As a result, the Board
of Directors and the Company's management determined that the Company should
conduct a systematic review of its strategic alternatives, including
alternatives to remaining an independent company, in order to increase
shareholder value.
At the Board meeting held in August, the Board of Directors authorized
senior management to contact outside financial advisors with respect to the
consideration and implementation of possible strategic alternatives for the
Company. In October 1997, ABN AMRO Incorporated ("AAI") was retained. During the
period from October through November 1997, AAI approached a number of companies
on a confidential basis to discuss their interest in entering into a strategic
transaction with the Company. Certain of these companies, including Parent,
entered into confidentiality and standstill agreements with the Company and
received financial and other information regarding the Company in order to
conduct a due diligence review.
In December 1997, the Company's senior management and representatives of
AAI reported to the Board the results of their preliminary discussions with
potential strategic partners, including preliminary indications of interest in
pursuing a transaction from three of these potential strategic partners.
From January through February 1998, these three potential strategic
partners continued to conduct their due diligence review, which included tours
of Company facilities and presentations by senior management of the Company.
During this period, AAI was notified by one of the parties that it no longer was
interested in pursuing a strategic relationship with the Company. On February
12, 1998, the Board of Directors held a special meeting to explore further the
Company's strategic and financial alternatives. The Company's senior management
and representatives of AAI reported to the Board the status of discussions with
the remaining two potential strategic partners.
During the last two weeks of February 1998 and the first two weeks of March
1998, the two potential strategic partners and their respective representatives
and legal advisors reviewed due diligence documents and had numerous discussions
with senior management of the Company.
During the week of March 9, 1998, representatives of AAI indicated to each
of the potential strategic partners that, although no determination had been
made to sell the Company, the Company was willing to consider proposals related
to potential transactions with the Company and requested that proposals be
submitted on March 12, 1998. On March 12, 1998, the Company received and
initially evaluated proposals from the two parties. After the Company further
reviewed the proposals with its legal and financial advisors at a Board meeting
on March 13, 1998, the Company's financial and legal advisors contacted the
parties to clarify and discuss their proposals and resolve due diligence items
which remained open. On March 23, 1998, AAI contacted the two parties to solicit
revised proposals on March 24, 1998. After receiving and evaluating revised
proposals on March 24, 1998, AAI contacted the interested parties to solicit
their best proposals by March 26, 1998.
On March 26, 1998, a meeting of the Board of Directors was held in Chicago.
After a presentation by AAI to the Board of Directors, the terms of the proposed
transactions and related merger agreements were
15
<PAGE> 16
presented to and reviewed by the Board. The Board of Directors analyzed and
discussed the proposed transactions and agreements. Following the meeting, the
Company's financial advisors contacted each of the interested parties to confirm
that both parties had submitted their best and final proposals. Parent later
submitted a revised proposal and the other interested party advised
representatives of AAI that its previous proposal constituted its best and final
proposal. Negotiations with Parent continued, culminating in the Company and
Parent agreeing upon a form of definitive agreement to be presented for review
by the Board of Directors at a meeting scheduled for March 27, 1998.
On March 27, 1998, at a meeting of the Board of Directors, the terms of the
proposed transaction with Parent and the Merger Agreement were presented to and
reviewed by the Board. AAI made a presentation to the Board of Directors and
delivered its opinion as to the fairness of the $9.625 per Share cash
consideration to be received in the Offer and the Merger by the holders of
outstanding Shares. The Board of Directors analyzed and discussed the Offer, the
Merger Agreement and the Merger and reviewed proposed resolutions related to the
transaction. After discussion and further analysis, the Board of Directors
unanimously recommended that all holders of Shares accept the Offer and tender
their Shares pursuant to the Offer. With respect to the Merger, the Board of
Directors unanimously recommended that, if a shareholder vote is required by
applicable law, the shareholders of the Company vote in favor of approval and
adoption of the Merger Agreement and the Merger. A copy of a press release
announcing the transaction is attached hereto as Exhibit 3 and incorporated
herein by reference. A copy of a letter to shareholders of the Company, which
accompanies this Statement, is attached hereto as Exhibit 4 and incorporated
herein by reference.
In approving the Merger Agreement and the transactions contemplated thereby
and recommending that all holders of Shares tender their Shares pursuant to the
Offer, the Board of Directors considered a number of factors including:
(i) the terms of the Merger Agreement;
(ii) presentations by the President and Chief Executive Officer of the
Company and the Company's financial advisors (at such meeting and at
previous Board of Directors' meetings) regarding the financial condition,
results of operations, capital expenditure needs and business and prospects
of the Company, including the prospects if the Company were to remain
independent;
(iii) the results of the process undertaken to identify and solicit
indications of interest from third parties to enter into a strategic
transaction with the Company;
(iv) the trading price of the Shares over the last three years and
that the $9.625 per Share Offer price represents a premium of approximately
50% over the closing sales price for the Shares on the Nasdaq National
Market on March 26, 1998, the last trading day prior to the date of
execution of the Merger Agreement;
(v) the presentation of AAI at the March 26 and March 27, 1998 Board
of Directors' meetings and the opinion of AAI to the effect that, as of the
date of the opinion, the $9.625 per Share cash consideration to be received
by the holders of the Shares in the Offer and the Merger is fair to such
holders, from a financial point of view. A copy of the opinion of AAI,
which accompanies this Statement, is attached hereto as Exhibit 5 and
incorporated herein by reference. SHAREHOLDERS ARE URGED TO READ THE
OPINION OF AAI CAREFULLY IN ITS ENTIRETY;
(vi) that the Merger Agreement permits the Company to furnish
nonpublic information and access in response to unsolicited proposals by
third parties pursuant to confidentiality agreements, and to participate in
discussions and negotiations with any third party making a proposal to
submit an Acquisition Proposal to the Company, if the Board of Directors
determines in good faith, after consultation with AAI or another financial
adviser of nationally recognized standing, that such third party is
reasonably likely to submit an Acquisition Proposal which is a Superior
Proposal and determines in good faith, based upon advice of outside legal
counsel, that the failure to take any of such actions is reasonably likely
to be inconsistent with the Board's fiduciary duties under applicable law;
16
<PAGE> 17
(vii) the termination provisions of the Merger Agreement, which were a
condition to Parent's proposal, providing that Parent could be entitled to
(x) a fee of $1.5 million and (y) reimbursement of expenses up to $1.5
million upon the termination of the Merger Agreement under certain
circumstances, including the modification or withdrawal of the Board of
Directors' recommendation to the shareholders with respect to the Offer and
the Merger; and
(viii) the Board's belief, based in part on the factors referred to
above, including the significant changes that have occurred in the RTA
furniture industry, that the combined company would have the economies of
scale to make the capital expenditures and achieve the operating
efficiencies required to respond effectively to the needs of customers and
markets and the increased competitiveness of the RTA furniture industry.
The foregoing discussion of the information and factors considered and
given weight by the Board is not intended to be exhaustive. In view of the
variety of factors considered in connection with its evaluation of the Offer,
the Board did not find it practicable to and did not quantify or otherwise
assign relative weights to the specific factors considered in reaching its
determinations and recommendation. In addition, individual members of the Board
may have given different weight to different factors. The Board viewed its
position and recommendation as being based on the totality of the information
presented to and considered by it.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Pursuant to an engagement letter agreement (the "Engagement Letter") dated
October 1, 1997, between the Company and AAI, formerly known as ABN AMRO Chicago
Corporation, AAI agreed to provide the Company with financial advisory services
in connection with a review of financial and strategic alternatives to maximize
value for shareholders of the Company and, if requested, to render an opinion
regarding the terms of any proposed Transaction (as defined in the Engagement
Letter) from a financial point of view.
Pursuant to the Engagement Letter, the Company will pay AAI for its
services in connection with the Merger (i) a non-refundable retainer of $50,000
per quarter, commencing upon execution of the Engagement Letter; (ii) a fee of
$200,000 upon delivery of the opinion rendered by AAI in connection with the
Merger and (iii) a fee in an amount equal to 1.5% of the Transaction Value (as
defined in the Engagement Letter) (which fee is expected to equal approximately
$700,000), less any amounts paid by the Company pursuant to clauses (i) and (ii)
above. In addition, the Company agreed to reimburse AAI for reasonable
out-of-pocket expenses (including the reasonable fees and expenses of its legal
counsel) incurred by AAI in connection with the Engagement Letter and to
indemnify AAI and its affiliates against certain liabilities and expenses,
including liabilities under the federal securities laws.
AAI has provided certain investment banking services to the Company from
time to time for which AAI has received customary compensation. In the ordinary
course of its business, AAI and its affiliates may actively trade the equity
securities of both the Company and Parent for their own accounts and for the
accounts of customers and, accordingly, may at any time hold a long or short
position in such securities.
Except as set forth above, neither the Company nor any person acting on its
behalf has employed, retained or compensated any persons to make solicitations
or recommendations to shareholders with respect to the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) Except for (i) awards of Shares pursuant to the Company's employee
benefit plans described under the headings "Compensation of Directors" and
"Executive Compensation" of Schedule I hereto and (ii) an aggregate 10,387 of
Shares that were purchased at an average price of $6.82 per Share by the
trustees under the Ameriwood Industries Employee Stock Ownership and Savings
Plan and Trust Agreement, no transactions in the Shares have been effected
during the past 60 days by the Company or, to the best of the Company's
knowledge, by any executive officer, director, affiliate or subsidiary of the
Company.
(b) To the best of the Company's knowledge, all of its executive officers,
directors, affiliates and subsidiaries currently intend to tender, pursuant to
the Offer, all Shares which are held of record or are
17
<PAGE> 18
beneficially owned by such persons or to otherwise sell any such Shares (other
than Shares issuable upon the exercise of stock options and Shares, if any,
which if tendered could cause such persons to incur liability under the
provisions of Section 16(b) of the Exchange Act).
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as described in this Schedule 14D-9, the Company is not engaged
in any negotiation in response to the Offer which relates to or would result in
(i) an extraordinary transaction, such as a merger or reorganization involving
the Company or any of its subsidiaries, (ii) a purchase, sale or transfer of a
material amount of the assets of the Company or any of its subsidiaries, (iii) a
tender offer for or other acquisition of securities by or of the Company or (iv)
a material change in the present capitalization or dividend policy of the
Company.
(b) Except as described in this Schedule 14D-9, there are no transactions,
board resolutions, agreements in principle or signed contracts, in response to
the Offer that relate to or would result in one or more of the events referred
to in Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
(a) Rights Agreement. On April 4, 1996, the Company's Board of Directors
approved a Shareholder Protection Rights Plan (the "Rights Plan"). The Rights
Plan provides that one right (a "Right") to purchase a share of the Company's
common stock, par value $1.00 (the "Common Shares"), will attach to each
outstanding Common Share. The purchase price payable upon exercise of a Right is
$80.00, subject to adjustment (the "Purchase Price"). The distribution was
payable to the shareholders of record at the close of business on May 21, 1996
(the "Record Date") and with respect to all Common Shares that are issued after
the Record Date and prior to the earliest of the Distribution Date (as defined
below), the redemption of the Rights, the exchange of the Rights and the
expiration of the Rights (and in certain cases, following the Distribution
Date).
The description of the Rights Plan and terms of the Rights are set forth in
a Rights Agreement, dated as of April 4, 1996 (the "Rights Agreement"), by and
between the Company and Harris Trust and Savings Bank, as Rights Agent (the
"Rights Agent"). This summary of the Rights is qualified in its entirety by
reference to the Rights Agreement, filed as an exhibit to the Company's Form
8-A, dated as of April 4, 1996, and the Company's Current Report on Form 8-K,
dated as of April 4, 1996, each as filed with the Commission. Capitalized terms
used but not defined in this summary of the Rights have the meanings given to
such terms in the Rights Agreement.
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 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.
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.
Pursuant to the Rights Agreement, in the event that, at 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 transaction would
18
<PAGE> 19
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.
In connection with the Merger Agreement, the Company has entered into an
Amendment No. 1 to the Rights Agreement ("Amendment No. 1"). Amendment No. 1
amends Sections 1(a), 1(h), 3(a) and 15 of the Rights Agreement to provide,
among other things, that the consummation of the Offer or the execution of the
Merger Agreement, and any amendments thereto, and the Tender Agreements or the
consummation of the transactions contemplated thereby (including, without
limitation, the Offer and the Merger) will not (i) cause Parent, Purchaser or
any of their respective Affiliates or Associates to become an Acquiring Person,
(ii) give rise to a Distribution Date or (iii) trigger certain other events
specified in the Rights Agreement. The preceding summary of Amendment No. 1 is
qualified in its entirety by reference to the full text of Amendment No. 1,
which is attached hereto as Exhibit 6 and incorporated herein by reference.
(b) By-laws Amendment. Effective as of March 27, 1998, the Company amended
its By-laws, pursuant to Section 784 of the MBCA, to provide that Chapter 7B of
the MBCA shall not apply to "control share acquisitions" (as defined in the
MBCA) of shares of the Company. The full text of such amendment to the Company's
By-laws is attached hereto filed as Exhibit 7 and incorporated herein by
reference.
(c) Company ESOP. The Merger Agreement provides that, as of the Effective
Time, the Ameriwood Industries Employee Stock Ownership and Savings Plan and
Trust Agreement (the "Company ESOP") will be amended to provide that the Company
ESOP will be frozen with respect to participation and benefit accrual in the
part of the Company ESOP that is an employee stock ownership plan and that no
further contributions will be made to or distributions will be made from such
portion of the Company ESOP; provided, however, that immediately prior to the
Effective Time, the Company shall make a pro rata contribution to the Company
ESOP in respect of the plan year, which plan year shall be deemed to have ended
at the Effective Time, in accordance with the terms of the Company ESOP and
applicable law. The amendment to the Company ESOP will further provide that
following the Effective Time, each participant in the Company ESOP will be
entitled to direct the investment of the balance in his or her Company ESOP
account into one or more of the investment alternatives provided under the
401(k) portion of the Company ESOP (other than Shares), in accordance with the
terms of the Company ESOP and applicable law.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
The following Exhibits are filed herewith:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S>
Exhibit 1 Agreement and Plan of Merger, dated as of March 27, 1998, by
and among Dorel Industries Inc., Horizon Acquisition, Inc.
and Ameriwood Industries International Corporation.
Exhibit 2 Form of Tender and Option Agreement by and among Dorel
Industries Inc., Horizon Acquisition, Inc. and each Director
Shareholder.
Exhibit 3 Joint Press Release issued by the Company and Parent on
March 30, 1998.
*Exhibit 4 Letter to shareholders of the Company dated April 3, 1998.
*Exhibit 5 Opinion of ABN AMRO Incorporated, dated March 27, 1998.
Exhibit 6 Amendment No. 1 to Rights Agreement, dated as of March 27,
1998, by and between Ameriwood Industries International
Corporation and Harris Trust and Savings Bank.
Exhibit 7 Text of Amendment to By-laws of Ameriwood Industries
International Corporation, effective as of March 27, 1998.
</TABLE>
- -------------------------
* Included with the Schedule 14D-9 mailed to shareholders.
19
<PAGE> 20
SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
AMERIWOOD INDUSTRIES
INTERNATIONAL CORPORATION
By: /s/ CHARLES R. FOLEY
------------------------------------
Name: Charles R. Foley
Title: President and Chief Executive
Officer
Dated: April 3, 1998
<PAGE> 21
SCHEDULE I
AMERIWOOD INDUSTRIES INTERNATIONAL CORPORATION
168 LOUIS CAMPAU PROMENADE, SUITE 400
GRAND RAPIDS, MICHIGAN 49503
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
-------------------------
This Information Statement is being mailed on or about April 3, 1998 as a
part of the Company's Solicitation/Recommendation Statement on Schedule 14D-9
(the "Schedule 14D-9") to the holders of record of the Shares at the close of
business on or about April 3, 1998. You are receiving this Information Statement
in connection with the possible election of persons designated by the Purchaser
to a majority of the seats on the Board of Directors of the Company. The Merger
Agreement requires the Company to cause the Purchaser's designees to be elected
to the Board of Directors under the circumstances described therein. This
Information Statement is required by Section 14(f) of the Exchange Act and Rule
14f-1 thereunder. See "Board of Directors and Executive Officers -- Right to
Designate Directors; The Purchaser Designees."
You are urged to read this Information Statement carefully. You are not,
however, required to take any action. Capitalized terms used herein and not
otherwise defined herein shall have the meaning set forth in the Schedule 14D-9.
Pursuant to the Merger Agreement, the Purchaser commenced the Offer on
April 3, 1998. The Offer is scheduled to expire at 12:00 midnight, New York City
time, on Thursday, April 30, 1998, unless the Offer is extended.
The information contained in this Information Statement, or incorporated
herein by reference, concerning the Purchaser has been furnished to the Company
by the Purchaser, and the Company assumes no responsibility for the accuracy or
completeness of such information.
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
GENERAL
The Shares are the only class of voting securities of the Company
outstanding. Each Share has one vote. As of March 27, 1998, there were 4,315,196
Shares outstanding. The Board of Directors currently consists of five members
divided into three classes. The current directors are Charles R. Foley, Neil L.
Diver, Richard Pigott, Kevin K. Coyne and Edwin Wachtel. Each director holds
office until such director's successor is elected and qualified or until such
director's earlier resignation or removal.
RIGHT TO DESIGNATE DIRECTORS; THE PURCHASER DESIGNEES
Pursuant to the Merger Agreement, promptly upon the purchase by Purchaser
of Shares pursuant to the Offer, and from time to time thereafter, Purchaser
shall be entitled to designate up to such number of directors (the "Purchaser
Designees"), rounded up to the next whole number, on the Company Board as shall
give Purchaser representation on the Company Board equal to the product of the
total number of directors on the Company Board (giving effect to the directors
elected pursuant to this sentence) multiplied by the percentage that the
aggregate number of Shares beneficially owned by Purchaser or any affiliate of
Purchaser following such purchase bears to the total number of Shares then
outstanding (the "Purchaser Designees"), and the Company shall, at such time,
promptly take all actions necessary to cause Purchaser's designees to be elected
as directors of the Company, including increasing the size of the Company Board
or securing the resignations of incumbent directors or both. At such times, the
Company shall use its best efforts to cause persons designated by Purchaser to
constitute the same percentage as is on the Company's Board of (i) each
I-1
<PAGE> 22
committee of the Company Board, (ii) each board of directors of each Company
Subsidiary and (iii) each committee of each such board, in each case only to the
extent permitted by applicable law. Notwithstanding the foregoing, until the
earlier of (i) the time Purchaser acquires a majority of the then outstanding
Shares on a fully diluted basis and (ii) the Effective Time, the Company shall
use its best efforts to ensure that all the members of the Company Board and
each committee of the Company Board and such boards and committees of the
Subsidiaries as of March 27, 1998 who are not employees of the Company shall
remain members of the Company Board and of such boards and committees; provided
however, the Company shall maintain at least one non-employee director until the
Effective Time.
Purchaser has informed the Company that it will choose the Purchaser
Designees from the directors and executive officers listed in Schedule I to the
Offer to Purchase, a copy of which is being mailed to the Company's shareholders
together with this Schedule 14D-9. Purchaser has informed the Company that each
of the directors and executive officers listed in Schedule I to the Offer to
Purchase has consented to act as a director, if so designated. The information
on such Schedule I is incorporated herein by reference.
It is expected that the Purchaser Designees may assume office at any time
following the purchase by Purchaser of a specified minimum number of Shares
pursuant to the Offer, which purchase cannot be earlier than May 1, 1998, and
that, upon assuming office, the Purchaser Designees will thereafter constitute
at least a majority of the Board of Directors.
DIRECTORS AND EXECUTIVE OFFICERS
Background information concerning each director and executive officer of
Ameriwood is presented below, based on the most recent information provided by
such person. Unless otherwise indicated, the principal occupation reported for
each person has been the same for at least the past five years.
Charles R. Foley (age 51) was named President and Chief Executive Officer
of Ameriwood in January 1997, after serving as Interim President and Chief
Executive Officer since January 1996. Prior to that, Mr. Foley was Vice
President of Finance and Chief Financial Officer from August 1995 until January
1996, and was Corporate Vice President of Planning and Control from June 1993
until August 1995. Before joining Ameriwood, he was a consultant with Arthur
Andersen & Co. L.L.P., a public accounting firm, from June 1990 to June 1993.
Richard Pigott (age 57) has been an Ameriwood director since February 1995.
He is a consultant, private investor and attorney.
Kevin K. Coyne (age 49) has been an Ameriwood director since September
1990. Mr. Coyne is a private investor. He was President of CMB Industries Corp.,
a manufacturer of water valves, from February 1992 until December 1995.
Neil L. Diver (age 60) has been an Ameriwood director and its Chairman of
the Board since September 1990. He is an administrator of private investments
and a director of several privately held companies.
Edwin Wachtel (age 66) has been an Ameriwood director since May 1990. Mr.
Wachtel, who is retired, was Chairman and Chief Executive Officer of Europe
Craft Imports, Inc., an apparel marketer from February 1992 until September
1995.
NON-DIRECTOR EXECUTIVE OFFICERS
Leon J. Dodd (age 59) was named Vice President of Manufacturing in April
1996. Prior to that, he was Furniture Division Vice President of Operations from
June 1985 until April 1996, and has been with the Company since 1973.
T. Scott Kearney (age 37) was named Vice President of Sales and Marketing,
Furniture Division in July 1996. He joined Ameriwood in November 1993 as
Director of Marketing, Furniture. Prior to that, he was Sales Manager for
Schmidt Industrial Services, Inc., a woodworking machinery sales and consulting
company from January to November 1993.
I-2
<PAGE> 23
Ronald J. Myers (age 46) became Vice President of Sales and Marketing,
Custom Solutions in December 1984 and has been with Ameriwood since 1972.
William J. Maddox (age 50) was named Senior Vice President of Operations in
April 1997. Before joining the Company, he was a consulting partner with Crowe
Chizak L.L.P., a public accounting firm, since October 1995, and was Director of
Business Integration at Haworth from July 1992 until October 1995.
Marlan R. Smith (age 54) was named Vice President, Chief Financial Officer
and Secretary in July 1997. Prior to that, he served as Treasurer (Principal
Financial and Accounting Officer) of Great Dane Holdings, Inc., since January
1994. From March 1988 until December 1996 he was Vice President and Treasurer of
Checker Motors Corporation.
PRINCIPAL OWNERS
At the close of business on March 27, 1998, 4,315,196 shares of the
Company's Common Stock were issued and outstanding.
The following table shows, as of March 31, 1998, the beneficial ownership
of shares of Ameriwood's common stock by the only shareholders, to the best of
the Company's knowledge, to be beneficial owners of more than 5% of its Common
Stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES % OF CLASS ISSUED
OF BENEFICIAL OWNER BENEFICIALLY OWNED AND OUTSTANDING
------------------- ------------------ -----------------
<S> <C> <C>
Ameriwood Industries Employee Stock
Ownership and Savings Plan(1)............................. 831,461 19.27
c/o Huntington Bank, Trustee
101 E. Main St., Zeeland, MI 49464
Franklin Resources, Inc.(2)................................. 400,000 9.27
The Group of Jacob C. Mol, NorDruk Investment Company
Limited Partnership, Peter Douglas Wierenga, Gary Kaiser,
David S. Lundeen, Paul C. Drueke, Phillip D. Miller and
John F. Northway, Jr.(3).................................. 348,213 8.07
Dimensional Fund Advisors, Inc.(4).......................... 238,464 5.53
1299 Ocean Ave., Santa Monica, CA 9040
Neil L. Diver(5)............................................ 225,000 5.21
1988 Jackson St., San Francisco, CA 94109
Turkey Vulture Fund XIII, Ltd.(6)........................... 221,500 5.13
</TABLE>
- -------------------------
(1) Based on information set forth in a Schedule 13G dated February 13, 1998.
This plan (the "Company ESOP") is a combined ESOP and 401(k) plan. An
administrative committee of officers and employees has shared investment
power over Ameriwood stock held in trust under the ESOP portion of the plan.
Each participant for whom Ameriwood stock is held in the 401(k) portion has
sole investment power with respect to the shares allocated to his/her
account. Under both portions of the plan, voting power is passed through to
individual participants with respect to the number of shares allocated to
their accounts. The current members of the administrative committee are
Richard Compton, Leon Dodd, Jerald Donaldson, John Grega, Scott LaBarge,
John Malbone, Marlan Smith, and John Steeb and each disclaims beneficial
ownership of the shares shown above, except for shares allocated to his/her
plan account.
(2) Based on information set forth in a Schedule 13G dated January 16, 1998.
Franklin Resources, Inc. ("FRI") disclaims beneficial ownership of all such
shares. The shares reported are held by one or more investment companies
which are advised by FRI.
(3) Based on information set forth in a Schedule 13D dated September 29, 1997.
Each member of the Group disclaims voting and dispositive power over shares
beneficially owned by each other member of the
I-3
<PAGE> 24
Group, except that Mr. Drueke and Mr. Northway acknowledge shared voting and
dispositive power over shares held by NorDruk. Mr. Drueke has sole voting
and investment power over 4,600 shares of the Common Stock and shares voting
and investment power with Mr. Northway over NorDruk's 40,000 shares. Mr.
Kaiser has sole voting and dispositive power over 28,000 shares of the
Common Stock and shares voting and dispositive power over 1,000 shares with
Evelyn M. Kaiser. Mr. Lundeen has sole voting and dispositive power over,
and is deemed to beneficially own, 25,300 shares of Common Stock Mr. Miller
has sole voting and dispositive power over 59,000 shares of Common Stock.
Mr. Mol has sole voting and dispositive power over 157,113 shares of Common
Stock. All decisions regarding voting and disposition of NorDruk's 40,000
shares are made jointly by the general partners of NorDruk, Mr. Drueke and
Mr. Northway. Mr. Northway has sole voting and investment power over 900
shares of Common Stock and shares voting and investment power with Mr.
Drueke over NorDruk's 40,000 shares. Mr. Wierenga has sole voting and
dispositive power over 31,100 shares of Common Stock and shares voting and
dispositive power over 1,200 shares of Common Stock with Irene Wierenga.
(4) Based on information set forth in a Schedule 13G dated February 6, 1998,
Dimensional Fund Advisors, Inc. ("Dimensional") has sole voting and
investment power with respect to all such shares. The shares are held in
portfolios of which Dimensional serves as investment manager. Dimensional
disclaims beneficial ownership of all such shares.
(5) Mr. Diver is Chairman of the Company's Board of Directors. The shares listed
include share subject to stock options exercisable within 60 days following
March 31, 1998 to purchase 40,000 shares.
(6) Based on information set forth in a Schedule 13D dated October 13, 1997.
Turkey Vulture Fund XIII, Ltd. has sole voting and investment power with
respect to all such shares.
BOARD OF DIRECTORS AND STANDING COMMITTEES OF THE BOARD
The Company's Board of Directors currently consists of five persons and is
divided into three classes. One class of directors is elected each year for a
term of three years and until their successors have been elected.
The Company's Board of Directors has three standing committees: the Audit
Committee, the Human Resources Committee, and the Finance and Strategy
Committee. The full Board is responsible for the nomination of individuals for
election or reelection to the Board of Directors; there is not a nominating
committee as such.
The Audit Committee reviews audit plans and activities, reviews the
Company's financial controls, and recommends the annual selection of auditors to
the Board of Directors. It reviews with representatives of the Company's
independent public accounting firm the audit fees, the scope of the accountants'
examination of accounting records, results of those audits, and any problems the
auditors may have identified regarding internal accounting controls, together
with their recommendations. Mr. Coyne (chairman), Mr. Diver and Mr. Pigott
currently serve on this committee. The Audit Committee met one time during 1997.
The Human Resources Committee met one time during 1997. Mr. Pigott
(chairman), Mr. Diver and Mr. Wachtel are currently serving on this committee.
The Finance and Strategy Committee considers and makes recommendations to
the Board of Directors concerning issues such as long-term strategic growth
(including mergers and acquisitions, capital requirements, and enhancement of
shareholder value), international expansion, and new products. Members of this
committee are Mr. Wachtel (chairman), Mr. Coyne, and Mr. Diver. This committee
met two times in 1997.
The Board of Directors of the Company met fourteen times during 1997. Each
director attended 100% of the aggregate number of meetings of the Board of
Directors and committees of the Board on which they served during the year.
The Company pays its Chairman of the Board an annual retainer of $14,000,
and each of its other non-employee directors an annual retainer of $10,000. Each
committee chairman receives an annual retainer of $5,000. In addition, the
Company pays each director a fee of $500 for each Board or Committee meeting in
which the director participates.
I-4
<PAGE> 25
Under the 1995 Non-Employee Director Stock Option Plan, each newly elected
non-employee director is granted an option to purchase 5,000 shares at the time
of election. In addition, annual options to acquire 5,000 shares are granted to
all non-employee directors on each anniversary date of the plan. All options are
Non-Qualified Stock Options at exercise prices equal to the "fair market value"
(as defined by the Plan) at the date of grant and may not be exercised for a
period of three years after the date of grant.
Ameriwood compensates non-employee directors for consulting services
provided to the Company, as well as for reimbursement of documented expenses
incurred in rendering such services. With respect to this arrangement, during
1997 Mr. Diver and Mr. Pigott received aggregate consulting fees of $62,875 and
$6,940, respectively, and reimbursement of expenses of $7,330 and $820,
respectively, incurred in connection with litigation support, investor relations
and strategic planning issues.
SECURITY OWNERSHIP OF MANAGEMENT
The following table provides information as of March 31, 1998 concerning
beneficial ownership of the Company's Common Stock by each director and
executive officer of the Company, and by all directors and executive officers as
a group. The information is to the best of the Company's knowledge and is based
on information provided to the Company by or on behalf of such persons.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
--------------------------------------------------------
SOLE SHARED PERCENT OF
VOTING AND VOTING OR CLASS
INVESTMENT INVESTMENT STOCK ISSUED AND
NAME POWER POWER(1) OPTIONS(2) TOTAL OUTSTANDING(3)
---- ---------- ---------- ---------- ----- --------------
<S> <C> <C> <C> <C> <C>
Kevin K. Coyne.................... 71,281 31,038 20,000 122,319 2.8%
Neil L. Diver..................... 129,000 56,000 40,000 225,000 5.2%
Richard Pigott.................... 10,000 3,200 20,000 33,200 0.8%
Edwin Wachtel..................... 55,436 20,000 20,000 95,436 2.2%
Leon J. Dodd...................... 1,852 6,606 5,000 13,458 0.3%
Charles R. Foley.................. 3,600 5,056 7,000 15,656 0.4%
T. Scott Kearney.................. 0 1,314 5,000 6,314 0.1%
William J. Maddox................. 1,000 0 0 1,000 0.0%
Marlan R. Smith................... 2,500 0 0 2,500 0.1%
All Directors and Executive
Officers as a group............. 274,669 123,214 137,000 534,883 12.4%
</TABLE>
- -------------------------
(1) Of the shares listed for Mr. Coyne under "Shared Voting or Investment
Power," 16,702 are owned of record by his minor children and 14,336 are held
in trust for his brother's children to which Mr. Coyne is the trustee, but
as to which he has no monetary interest. Mr. Coyne disclaims beneficial
ownership of all of these shares. This total also includes, for Mr. Foley,
Mr. Dodd and Mr. Kearney, 4,496, 6,606 and 1,314 shares, respectively, held
by the Ameriwood Industries Employee Stock Ownership and Savings Plan and
allocated to the accounts of such officers as of December 31, 1997. The
remaining shares listed represent shares held in self-directed individual
retirement accounts.
(2) Represents vested options for which the Offer Price exceeds the exercise
price.
(3) For purposes of computing the percentage of beneficial ownership, all
options shown under "Stock Options" are treated as issued and outstanding.
I-5
<PAGE> 26
EXECUTIVE COMPENSATION
The following table provides, for the last three fiscal years, information
concerning the compensation of the Chief Executive Officer and each of the other
individuals who were serving as executive officers at the end of fiscal 1997
whose total salary and incentive bonus for that year exceeded $100,000 (the
"named executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL ------------
COMPENSATION(1) OTHER OPTIONS
------------------ ANNUAL /SARS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(2) (# SHARES) COMPENSATION(3)
- --------------------------- ---- ------ ----- --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Leon J. Dodd............... 1997 $110,000 0 * 4,500 $ 7,833
Vice President of 1996 99,100 $27,750(5) * 5,500 $ 8,246
Manufacturing(4)
Charles R. Foley........... 1997 $220,000 0 * 20,000 16,151
President, Chief 1996 150,000 74,500(6) * 20,000 14,953
Executive Officer 1995 122,800 0 $16,414 7,000 11,785
T. Scott Kearney........... 1997 114,400 0 * 4,500 6,714
Vice President Sales,
Furniture
William J. Maddox.......... 1997 150,000 0 * 7,500 4,378
Senior Vice President
Operations(4)
Marlan R. Smith............ 1997 145,000 7,500 * 7,500 3,155
Vice President,
Chief Financial
Officer(4)
</TABLE>
- -------------------------
(1) Includes amounts deferred under the 401(k) portion of the Company ESOP.
(2) An "*" indicates that the dollar value of perquisites provided to the named
executive did not exceed 10% of the executive's aggregate salary and bonus.
Where the amount did exceed 10%, the cost to lease an automobile for the
named executive represented more than 25% of total perquisites and other
personal benefits.
(3) Includes Company 401(k) matching contributions for the Company ESOP,
contributions under the ESOP portion of the plan, and annual premiums under
the Supplemental Executive Retirement Program ("SERP") described later in
this Information Statement.
<TABLE>
<CAPTION>
YEAR DESCRIPTION DODD FOLEY KEARNEY MADDOX SMITH
---- ----------- ---- ----- ------- ------ -----
<C> <S> <C> <C> <C> <C> <C>
1997 401(k) match.............................. $4,413 $5,610 $4,154 $3,254 $1,562
ESOP contribution......................... 3,420 4,800 2,560 n/a n/a
SERP premium.............................. n/a 5,741 n/a 1,124 1,593
1996 401(k) match.............................. $4,440 $6,650 n/a n/a n/a
ESOP contribution......................... 3,806 4,500 n/a n/a n/a
SERP premium.............................. n/a 3,803 n/a n/a n/a
1995 401(k) match.............................. n/a 4,298 n/a n/a n/a
ESOP contribution......................... n/a 3,684 n/a n/a n/a
SERP premium.............................. n/a 3,803 n/a n/a n/a
</TABLE>
(4) Mr. Dodd was promoted to Corporate Vice President of Manufacturing in April
1996 after serving as Furniture Division Vice President of Operations since
June 1985. Mr. Maddox joined Ameriwood in April 1997, and Mr. Smith joined
Ameriwood in July 1997.
(5) Bonus amounts paid to Mr. Dodd were in recognition of meeting certain
operating objectives and for his assumption of additional responsibilities
for managing both of the Company's manufacturing facilities.
I-6
<PAGE> 27
(6) Represents bonus paid to Mr. Foley for successfully meeting certain
established performance objectives after assuming the role of Interim
President and CEO in January 1996.
RETENTION AGREEMENTS
Ameriwood has entered into Management Retention Agreements with certain key
management employees to reinforce and encourage their continued attention and
dedication when faced with potentially disturbing circumstances which could
arise from the possibility of a change in control of the Company. Each agreement
remains in force for the term of the pertinent person's employment; however no
benefits are payable under any agreement unless a "change in control" should
occur (as therein defined).
Under each agreement, if a change in control occurs, and within 24 months
thereafter, the covered employee terminates his employment for "good reason," or
employment is terminated for reasons other than death, "disability," voluntary
"retirement" or "cause" (as defined therein), he would become entitled to (1)
continuation of fringe benefits for one year (two years for three key
executives) and (2) lump-sum cash severance payments in the following amounts:
the total of base compensation, target incentive compensation, and 9.5% of
salary and target incentive compensation (two times these amounts for three key
executives). The agreements provide that the covered employees are entitled to
reasonable legal fees and expenses incurred as a result of termination, not to
exceed $50,000. Upon a change in control (i) restrictions on options and stock
appreciation rights lapse and become vested and (ii) the Company is required to
pay a portion of the annual target incentive compensation pro-rated to the date
of the change in control (the balance of the annual target incentive
compensation is to be paid at the end of the year in which the change in control
occurred).
The Management Retention Agreements entered with three key executives allow
them to voluntarily terminate their employment during a 30 day window period
beginning on the first anniversary date of the change in control. If the covered
employee terminates in this "window period" he would become entitled to (1)
continuation of fringe benefits for one year and (2) lump-sum cash severance
payments in the following amounts: the total of base compensation, target
incentive compensation, and 9.5% of salary and target incentive compensation.
These payments and benefits are subject to the signing and delivery of a
release by the covered employee. If the Company terminates the covered employees
other than for cause or he terminates employment for good reason prior to a
change in control, should a change in control occur within nine months
thereafter, he would be entitled to the benefits and payments described above as
if termination had occurred on the first business day following the change in
control.
CONTINGENT SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Company adopted a Contingent Supplemental Executive Retirement Plan
(the "SERP") for three key executives as of July 15, 1997. Rights under the SERP
arise upon a "change in control," as defined in the Plan.
The SERP provides for the payment of a retirement benefit to each
participant whose employment terminates after he has reached age 62. The normal
retirement benefit is equal to 2.5% of the participant's "average monthly
compensation," as defined in the SERP, multiplied by his years of service, but
not more than 50% of his average monthly compensation, reduced by (i) one-half
of the participant's monthly primary social security benefit and (ii) an
actuarial equivalent monthly benefit available from the Company ESOP account and
matching account balances.
Early retirement benefits are payable under the SERP for any participant
whose employment terminates after he has reached age 55 and completed six years
of service, as defined in the SERP. If payment of benefits begins before the
participant is age 62, the benefits are reduced according to a schedule set
forth in the SERP.
A deferred vested benefit is payable under the SERP to any participant
whose employment is terminated after he has three years of service. The benefits
are the participant's normal retirement benefit reduced by 20% for each service
year less than five credited to the participant under the SERP. No deferred
vested benefit is payable until the participant has three years of service. The
deferred benefit is payable on the participant's
I-7
<PAGE> 28
normal retirement date, or if he qualifies for early retirement benefits, on the
date he so qualified (but reduced according to the schedule for early
retirement).
Upon a change in control of the Company, the SERP requires the Company to
deposit in a trust an amount equal to the actuarial equivalent present value of
the benefits accrued under the SERP at the time of the change in control. If a
participant terminates his employment for "good reason," or he is terminated for
reasons other than death, "disability," voluntary "retirement" or "cause" within
two years following a change in control or by the participant within the thirty
day period beginning on the first anniversary date of the change in control,
such participant is credited with an additional two years of service, and the
Company is required to deposit into the trust an additional amount of the
benefit accrued since the change in control (reduced to the actuarial equivalent
present value).
The SERP provides that the Company will not merge or consolidate with any
other organization, or permit its business activities to be taken over by any
other organization, unless that organization agrees to assume the obligations
under this program.
STOCK OPTIONS
The following tables provide information concerning options to purchase
Common Stock and stock appreciation rights ("SARs") granted to the named
executives during 1997 and unexercised options held by the named executives at
year-end.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
% OF REALIZABLE VALUE
OPTIONS/ AT ASSUMED ANNUAL
SARS RATES OF STOCK
# OF GRANTED APPRECIATION FOR
OPTIONS/ TO EMPLOYEES EXERCISE OPTION TERM
SARS IN FISCAL PRICE EXPIRATION -----------------------
NAME GRANTED YEAR ($/SHARE) DATE 5% 10%
---- -------- ------------ --------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Leon J. Dodd................... 4,500 5.2% $9.50 2/13/07 $ 26,885 $ 68,132
Charles R. Foley............... 20,000 23.3% $9.50 2/13/07 $119,490 $302,811
T. Scott Kearney............... 4,500 5.2% $9.50 2/13/07 $ 26,885 $ 68,132
William J. Maddox.............. 7,500 8.7% $7.63 4/25/07 $ 35,988 $ 91,202
Marlan R. Smith................ 7,500 8.7% $7.06 7/22/07 $ 33,300 $ 84,389
</TABLE>
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT YEAR-END OPTIONS/SARS AT YEAR-END(1)
------------------------- ---------------------------------
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------------------- -------------------------
<S> <C> <C>
Leon J. Dodd.............................. 7,250/4,500 $ 4,375/$0
Charles R. Foley.......................... 34,000/20,000 $17,600/$0
T. Scott Kearney.......................... 5,200/4,500 $ 4,376/$0
William J. Maddox......................... 0/7,500 $0/$0
Marlan R. Smith........................... 0/7,500 $0/$0
</TABLE>
- -------------------------
(1) In-the-Money options are those for which, at year-end, the fair market value
of the underlying security exceeded the market price.
I-8
<PAGE> 29
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As previously noted, Neil Diver, who served on the Human Resources
Committee throughout 1997, is the chairman of the Board of Ameriwood. However,
neither Mr. Diver, nor any other director serving on the Human Resources
Committee during 1997, is, or has ever been, an employee or officer of Ameriwood
or any of its subsidiaries.
Ameriwood compensates non-employee directors for consulting services
provided to the Company, as well as for reimbursement of documented expenses
incurred in rendering such services. With respect to this arrangement, in 1997
Mr. Diver and Mr. Pigott received aggregate consulting fees of $62,875 and
$6,940, respectively, and reimbursement of expenses of $7,330 and $820,
respectively, incurred in connection with litigation support, investor relations
and strategic planning issues.
SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers ("Reporting Persons") to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of the Company's equity securities. To the Company's
knowledge, based solely on its review of the copies of such reports furnished to
the Company with respect to the most recent fiscal year, and written
representations that no other reports were required, all Section 16(a) filing
requirements applicable to Reporting Persons were complied with except for the
following. Marlan R. Smith, Vice President and Chief Financial Officer, was late
in filing a Form 4 to report acquisition of the Company's securities in August
1997. This form was filed in October 1997. William J. Maddox, Senior Vice
President of Operations, was late in filing a Form 4 to report acquisition of
the Company's securities in August 1997. This form was filed in September 1997.
I-9
<PAGE> 1
EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
DOREL INDUSTRIES INC.
HORIZON ACQUISITION, INC.
AND
AMERIWOOD INDUSTRIES INTERNATIONAL CORPORATION
MARCH 27, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I
THE OFFER...................................................................... 1
Section 1.1 The Offer................................................... 1
Section 1.2 Company Action.............................................. 2
ARTICLE II
THE MERGER..................................................................... 3
Section 2.1 The Merger.................................................. 3
Section 2.2 Effective Time.............................................. 3
Section 2.3 Effects of the Merger....................................... 3
Articles of Incorporation and By-Laws of the Surviving
Section 2.4 Corporation................................................. 3
Section 2.5 Directors and Officers...................................... 4
Section 2.6 Closing..................................................... 4
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS...... 4
Section 3.1 Effect on Capital Stock..................................... 4
Section 3.2 Options; Stock Plans........................................ 4
Section 3.3 Exchange and Retention of Common Stock...................... 5
Section 3.4 Distributions with Respect to Unexchanged Shares............ 5
Section 3.5 No Liability................................................ 6
Section 3.6 Lost Certificates........................................... 6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................................. 6
Section 4.1 Organization................................................ 6
Section 4.2 Capitalization.............................................. 7
Section 4.3 Authorization; Validity of Agreement; Necessary Action...... 7
Section 4.4 Consents and Approvals; No Violations....................... 7
Section 4.5 SEC Reports and Financial Statements........................ 8
Section 4.6 No Undisclosed Liabilities.................................. 8
Section 4.7 Absence of Certain Changes.................................. 8
Section 4.8 Disclosure Documents........................................ 9
Section 4.9 Employee Benefit Plans; ERISA............................... 9
Section 4.10 Litigation.................................................. 10
Section 4.11 Compliance with Applicable Laws............................. 10
Section 4.12 Taxes....................................................... 10
Section 4.13 Real Property............................................... 11
Section 4.14 Intellectual Property....................................... 11
Section 4.15 Contracts................................................... 11
Section 4.16 Environmental Laws and Regulations.......................... 11
Section 4.17 Labor Matters............................................... 12
Section 4.18 Brokers or Finders.......................................... 12
Section 4.19 Opinion of Financial Advisors............................... 12
Section 4.20 Board Recommendation........................................ 12
Section 4.21 Insurance................................................... 12
Section 4.22 Permits..................................................... 12
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND THE MERGER SUB.................. 12
Section 5.1 Organization................................................ 12
Section 5.2 Authorization; Validity of Agreement; Necessary Action...... 13
Section 5.3 Consents and Approvals; No Violations....................... 13
Section 5.4 Brokers or Finders.......................................... 13
Section 5.5 Interim Operations of the Merger Sub........................ 14
Capitalization of the Merger Sub; Interests in the
Section 5.6 Company..................................................... 14
Section 5.7 Disclosure Documents........................................ 14
ARTICLE VI
COVENANTS...................................................................... 14
Section 6.1 Interim Operations of the Company........................... 14
Section 6.2 Access to Information....................................... 15
Section 6.3 Employee Benefit Matters.................................... 16
Section 6.4 No Solicitation............................................. 17
Section 6.5 Publicity................................................... 18
Section 6.6 Directors' and Officers' Insurance and Indemnification...... 18
Section 6.7 Proxy Statement............................................. 19
Section 6.8 Shareholders' Meetings...................................... 19
Section 6.9 Approvals and Consents; Cooperation......................... 20
Section 6.10 Further Assurances.......................................... 20
Section 6.11 Rights Agreement............................................ 20
Section 6.12 Company Board Representation; Section 14(f)................. 20
ARTICLE VII
CONDITIONS..................................................................... 21
Section 7.1 Conditions to Each Party's Obligations...................... 21
ARTICLE VIII
TERMINATION.................................................................... 22
Section 8.1 Termination................................................. 22
Section 8.2 Effect of Termination....................................... 23
ARTICLE IX
MISCELLANEOUS.................................................................. 24
Section 9.1 Amendment and Modification.................................. 24
Section 9.2 Nonsurvival of Representations and Warranties............... 24
Section 9.3 Notices..................................................... 24
Section 9.4 Interpretation.............................................. 25
Section 9.5 Counterparts................................................ 25
Section 9.6 Entire Agreement; Third Party Beneficiaries................. 25
Section 9.7 Severability................................................ 26
Section 9.8 Governing Law............................................... 26
Section 9.9 Specific Performance........................................ 26
Section 9.10 Assignment.................................................. 26
Section 9.11 Expenses.................................................... 26
Section 9.12 Headings.................................................... 26
Section 9.13 Waivers..................................................... 26
</TABLE>
ii
<PAGE> 4
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (collectively, this "Agreement"), dated as of
March 27, 1998, by and among Dorel Industries Inc., a Quebec corporation
("Acquiror"), Horizon Acquisition, Inc., a Delaware corporation and a wholly
owned subsidiary of Acquiror ( the "Merger Sub"), and Ameriwood Industries
International Corporation, a Michigan corporation (the "Company").
WHEREAS, the respective Boards of Directors of the Merger Sub and the
Company have approved the Offer and the Merger (each as hereinafter defined), in
accordance with the Michigan Business Corporation Act (the "MBCA") and the
General Corporation Law of the State of Delaware (the "DGCL") and upon the terms
and subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance thereof, it is proposed that the Merger Sub shall
make a cash tender offer (the "Offer") to acquire all the issued and outstanding
shares of common stock, par value $1.00 per share (the "Common Stock"), of the
Company (such shares of Common Stock, including the associated Rights (as
hereinafter defined), being hereinafter collectively referred to as "Shares")
for $9.625 per Share (such amount, or any greater amount per Share paid pursuant
to the Offer, being hereinafter referred to as the "Per Share Amount") net to
the seller in cash, upon the terms and subject to the conditions of this
Agreement and the Offer;
WHEREAS, the Board of Directors of the Company (the "Company Board") has,
in light of and subject to the terms and conditions set forth herein, (i)
determined that each of the Offer and the Merger is in the best interests of the
Company and its shareholders, and (ii) approved and adopted this Agreement and
the transactions contemplated hereby and resolved to recommend that shareholders
of the Company accept the Offer, tender their Shares pursuant to the Offer and
approve and adopt this Agreement and the Merger;
WHEREAS, Acquiror, the Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger, and also to set forth various conditions to the Merger;
WHEREAS, Acquiror, the Merger Sub and each of Neil L. Diver, Kevin K. Coyne
and Edwin Wachtel (each a "Director Shareholder") have entered into a Tender and
Option Agreement, dated as of the date hereof (each a "Tender and Option
Agreement" and, collectively, the "Tender and Option Agreements"), obligating
each Director Shareholder to tender his Shares pursuant to the Offer and
granting Acquiror an option with respect to such Shares, substantially in the
form of Exhibit 1 attached hereto;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein,
Acquiror, the Merger Sub and the Company agree as follows:
ARTICLE I
THE OFFER
Section 1.1 The Offer.
(a) Provided that this Agreement shall not have been terminated in
accordance with Section 8.1 and none of the events set forth in Annex A
hereto shall have occurred or be existing, the Merger Sub shall commence
the Offer as promptly as reasonably practicable after the date hereof, but
in no event later than five business days after the initial public
announcement of the Merger Sub's intention to commence the Offer. The
obligation of the Merger Sub to accept for payment and pay for Shares
tendered pursuant to the Offer shall be subject to the condition (the
"Minimum Condition") that at least the number of Shares that, when added to
the Shares already owned by Acquiror, shall constitute a majority of the
then outstanding Shares on a fully diluted basis (including, without
limitation, all Shares issuable upon the conversion of any convertible
securities or upon the exercise of any outstanding options, warrants or
rights) shall have been validly tendered and not withdrawn prior to the
expiration of the Offer, which shall be 20 business days after the date the
Offer is commenced, and also shall be subject to the satisfaction of the
other conditions set forth in Annex A hereto. The Merger Sub expressly
reserves
<PAGE> 5
the right to waive any such condition, to increase the price per Share
payable in the Offer, and to make any other changes in the terms and
conditions of the Offer; provided, however, that no change may be made
which decreases the price per Share payable in the Offer, which reduces the
minimum number of Shares to be purchased in the Offer or, which amends or
imposes conditions to the Offer in addition to those set forth in Annex A
hereto. The Per Share Amount shall, subject to applicable withholding of
taxes, be net to the seller in cash, upon the terms and subject to the
conditions of the Offer. Subject to the terms and conditions of the Offer
(including, without limitation, the Minimum Condition), the Merger Sub
shall pay, as soon as practicable after it is legally permitted to do so
under applicable law after expiration of the Offer, for all Shares validly
tendered and not withdrawn; provided, however, that if, immediately prior
to the expiration date of the Offer, the Shares tendered and not withdrawn
pursuant to the Offer, when added to the Shares already owned by Acquiror,
equal less than 90% of the then outstanding Shares, the Merger Sub may
extend the Offer one time for a period not to exceed 20 business days,
notwithstanding that all conditions to the Offer are satisfied as of such
expiration date of the Offer.
(b) As soon as reasonably practicable on the date of commencement of
the Offer, the Merger Sub shall file with the Securities and Exchange
Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 (together
with all amendments and supplements thereto, the "Schedule 14D-1") with
respect to the Offer. The Schedule 14D-1 shall contain or shall incorporate
by reference an offer to purchase (the "Offer to Purchase") and forms of
the related letter of transmittal and any related summary advertisement
(the Schedule 14D-1, the Offer to Purchase and such other documents,
together with all supplements and amendments thereto, being referred to
herein collectively as the "Offer Documents"). Acquiror, the Merger Sub and
the Company agree to correct promptly any information provided by any of
them for use in the Offer Documents which shall have become false or
misleading, and Acquiror and the Merger Sub further agree to take all steps
necessary to cause the Schedule 14D-1 as so corrected to be filed with the
SEC and the other Offer Documents as so corrected to be disseminated to
holders of Shares, in each case as and to the extent required by applicable
federal securities laws. The Company and its counsel shall be given the
opportunity to review the Schedule 14D-1 before it is filed with the SEC.
In addition, Acquiror and the Merger Sub will provide the Company and its
counsel in writing with any comments, whether written or oral, Acquiror,
the Merger Sub or their counsel may receive from time to time from the SEC
or its staff with respect to the Offer Documents promptly after the receipt
of such comments.
Section 1.2 Company Action.
(a) The Company hereby approves of and consents to the Offer and
represents that (i) the Company Board, at a meeting duly called and held on
March 27, 1998, has unanimously (A) determined that this Agreement and the
transactions contemplated hereby, including each of the Offer and the
Merger, are fair to and in the best interests of the holders of Shares, (B)
approved and adopted this Agreement and the transactions contemplated
hereby and (C) resolved to recommend that the stockholders of the Company
accept the Offer and approve and adopt this Agreement and the transactions
contemplated hereby; provided, that such recommendation may be withdrawn,
modified or amended if, in the good faith opinion of the Company's Board,
based upon the receipt of advice from outside independent legal counsel,
failure to withdraw, modify or amend such recommendation is reasonably
likely to result in the Company's Board violating its fiduciary duties to
the Company's shareholders under applicable law and (ii) ABN-AMRO
Incorporated, formerly known as ABN-AMRO Chicago Corporation ("ABN-AMRO"),
has delivered to the Company Board a written opinion that the consideration
to be received by the holders of Shares pursuant to each of the Offer and
the Merger is fair to the holders of Shares from a financial point of view.
The Company hereby consents to the inclusion in the Offer Documents of the
recommendation of the Board described in the immediately preceding
sentence. On or before the date hereof, the Company will use its reasonable
best efforts to obtain and deliver to Acquiror the Tender and Option
Agreements, in the form attached as Exhibit 1 hereto, executed by the
Director Shareholders.
(b) As soon as reasonably practicable on the date of commencement of
the Offer, the Company shall file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
2
<PAGE> 6
amendments and supplements thereto, the "Schedule 14D-9") containing,
subject to the fiduciary duties of the Company Board under applicable law
as advised in writing by independent counsel, the recommendation of the
Company Board described in Section 1.2(a) and shall disseminate the
Schedule 14D-9 to the extent required by Rule 14d-9 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and any
other applicable federal securities laws. The Company, Acquiror and the
Merger Sub agree to correct promptly any information provided by any of
them for use in the Schedule 14D-9 which shall have become false or
misleading, and the Company further agrees to take all steps necessary to
cause the Schedule 14D-9 as so corrected to be filed with the SEC and
disseminated to holders of Shares, in each case as and to the extent
required by applicable federal securities laws. Acquiror and its counsel
shall be given the opportunity to review the Schedule 14D-9 before it is
filed with the SEC. In addition, the Company agrees to provide Acquiror,
the Merger Sub and their counsel with any comments, whether written or
oral, that the Company or its counsel may receive from time to time from
the SEC or its staff with respect to the Schedule 14D-9 promptly after the
receipt of such comments or other communications.
(c) The Company shall promptly furnish the Merger Sub with mailing
labels containing the names and addresses of all record holders of Shares
and with security position listings of Shares held in stock depositories,
each as of a recent date, together with all other available listings and
computer files containing names, addresses and security position listings
of record holders and beneficial owners of Shares. The Company shall
furnish the Merger Sub with such additional information, including, without
limitation, updated listings and computer files of stockholders, mailing
labels and security position listings, and such other assistance as
Acquiror, the Merger Sub or their agents may reasonably request. Subject to
the requirements of applicable law, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents
necessary to consummate the Offer or the Merger, Acquiror and the Merger
Sub shall hold in confidence the information contained in such labels,
listings and files, shall use such information only in connection with the
Offer and the Merger, and, if this Agreement shall be terminated in
accordance with Section 8.1, shall deliver to the Company all copies of
such information then in their possession.
ARTICLE II
THE MERGER
Section 2.1 The Merger. Upon the terms and subject to the satisfaction or
waiver of the conditions hereof, and in accordance with the applicable
provisions of this Agreement, the DGCL and the MBCA, at the Effective Time the
Merger Sub shall be merged with and into the Company (the "Merger"). Following
the Merger, the separate corporate existence of the Merger Sub shall cease and
the Company shall continue as the surviving corporation (the "Surviving
Corporation").
Section 2.2 Effective Time. On the Closing Date (as defined) the Company
shall execute, in the manner required by the MBCA and the DGCL, and deliver to
the Corporation, Securities and Land Development Bureau of the Michigan
Department of Corporations and Industries Services and the Secretary of State of
the State of Delaware, Articles of Merger or a Certificate of Merger, as
appropriate (collectively, the "Certificate of Merger"), duly executed and
verified by the appropriate parties hereto, and the parties shall take such
other and further actions as may be required by law to make the Merger
effective. The time the Merger becomes effective in accordance with applicable
law is referred to herein as the "Effective Time."
Section 2.3 Effects of the Merger. The Merger shall have the effects set
forth in the applicable provisions of the MBCA and the DGCL and as set forth
herein. Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time, all the properties, rights, privileges, powers and
franchises of the Company and the Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and the Merger
Sub shall become the debts, liabilities and duties of the Surviving Corporation.
Section 2.4 Articles of Incorporation and By-Laws of the Surviving
Corporation.
(a) The Certificate of Incorporation of the Merger Sub, as in effect
immediately prior to the Effective Time, shall be the Articles of
Incorporation of the Surviving Corporation until thereafter
3
<PAGE> 7
amended in accordance with the provisions thereof and hereof and applicable
law, or as otherwise contemplated hereby.
(b) The By-Laws of the Merger Sub in effect at the Effective Time
shall be the By-Laws of the Surviving Corporation until thereafter amended,
in accordance with the provisions thereof, hereof and applicable law.
Section 2.5 Directors and Officers. Subject to applicable law, the
directors of the Merger Sub shall be the initial directors of the Surviving
Corporation and the officers of the Company shall be the initial officers of the
Surviving Corporation and each shall hold office until their respective
successors are duly elected and qualified, or their earlier death, resignation
or removal.
Section 2.6 Closing. The closing of the Merger (the "Closing") shall take
place at 10:00 a.m. on a date to be specified by the parties, which shall be no
later than the second business day after satisfaction or waiver of all of the
conditions set forth in Article VI (the "Closing Date"), at the offices of
Skadden, Arps, Slate, Meagher & Flom (Illinois), 333 West Wacker Drive, Chicago,
Illinois 60606, unless another date or place is agreed to in writing by the
parties hereto.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS
Section 3.1 Effect on Capital Stock. As of the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any shares of
Common Stock or any shares of capital stock of the Merger Sub:
(a) Common Stock of the Merger Sub. All of the shares of common stock,
par value $.01 per share, of the Merger Sub (the "Merger Sub Common
Stock"), issued and outstanding immediately prior to the Effective Time
shall be converted into 1000 shares of Common Stock of the Surviving
Corporation.
(b) Cancellation of Treasury Stock. Each share of Common Stock that is
owned by any affiliate of the Merger Sub, the Company or by any wholly
owned subsidiary of the Company shall automatically be cancelled and
retired and shall cease to exist, and no cash or other consideration shall
be delivered or deliverable in exchange therefor.
(c) Retention or Exchange of Shares of Common Stock. Except as
otherwise provided herein, each share of Common Stock issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder thereof, be
converted into the right to receive $9.625 in cash per share (the "Cash
Consideration").
Section 3.2 Options; Stock Plans.
(a) Each option held by an employee, officer or director of the
Company and other eligible holders to acquire shares of Common Stock
("Company Option") that is outstanding immediately prior to the Merger,
whether or not then vested or exercisable, shall, simultaneously with the
Merger, be cancelled in exchange for a single lump sum cash payment equal
to the product of (1) the number of shares of Common Stock subject to such
Company Option and (2) the excess, if any, of the Cash Consideration over
the exercise price per share of such Company Option, subject to any
required withholding of taxes.
(b) Each stock appreciation right held by an employee, officer or
director of the Company (an "SAR") that is outstanding immediately prior to
the Merger, whether or not then vested or exercisable, shall,
simultaneously with the Merger, be cancelled in exchange for a single lump
sum cash payment equal to the product of (1) the number of SAR's held by
such employee, officer or director and (2) the excess, if any, of the Cash
Consideration over $4.00, the fair market value on the date the SAR's were
granted.
4
<PAGE> 8
(c) Prior to the Effective Time, if necessary, the Company shall use
all reasonable efforts to (i) obtain consents from appropriate holders of
Company Options and SAR's and (ii) make any amendments to the terms of such
Company Options, SAR's, or the compensation plans or arrangements related
thereto that are necessary to give effect to the transactions contemplated
by Sections 3.2 (a) and 3.2(b). Notwithstanding any other provision of this
Section, payment pursuant to this Section 3.2 may be withheld in respect of
any employee stock option or SAR until necessary or appropriate consents
are obtained.
Section 3.3 Exchange and Retention of Common Stock.
(a) Immediately following the Effective Time, Acquiror and the Merger
Sub shall take all steps necessary to cause to be deposited on a timely
basis with the bank or trust company as shall be mutually acceptable to the
Merger Sub and the Company, acting as the exchange agent (the "Exchange
Agent") in an account (the "Exchange Fund") the aggregate Cash
Consideration to which holders of shares of Common Stock shall be entitled
at the Effective Time pursuant to Section 3.1(c).
(b) Promptly after the Effective Time, Acquiror shall cause the
Exchange Agent to mail to each record holder of certificates (the
"Certificates") that immediately prior to the Effective Time represented
shares of Common Stock a form of letter of transmittal which shall specify
that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to
the Exchange Agent and instructions for use in surrendering such
Certificates and receiving the Cash Consideration in respect thereof.
(c) In effecting the payment of the Cash Consideration in respect of
shares of Common Stock represented by Certificates entitled to payment of
the Cash Consideration pursuant to Section 3.1(c), upon the surrender of
each such Certificate, the Exchange Agent at the time of such surrender
shall pay the holder of such Certificate the Cash Consideration multiplied
by the number of shares of Common Stock represented by such Certificate, in
consideration therefor. Upon such payment, such Certificate shall forthwith
be cancelled.
(d) Until surrendered in accordance with paragraph (c) above, each
Certificate (other than Certificates representing shares of Common Stock
held by any affiliate of the Merger Sub, in the treasury of the Company or
by any wholly owned subsidiary of the Company) shall represent solely the
right to receive the aggregate Cash Consideration relating thereto. No
interest shall be paid or accrued on the Cash Consideration. If the Cash
Consideration (or any portion thereof) is to be delivered to any person
other than the person in whose name the Certificate formerly representing
shares of Common Stock surrendered therefor is registered, it shall be a
condition to such right to receive such Cash Consideration that the
Certificate so surrendered shall be properly endorsed or otherwise be in
proper form for transfer and that the person surrendering such shares of
Common Stock shall pay to the Exchange Agent any transfer or other taxes
required by reason of the payment of the Cash Consideration to a person
other than the registered holder of the Certificate surrendered, or shall
establish to the satisfaction of the Exchange Agent that such tax has been
paid or is not applicable.
(e) Promptly following the date which is six months after the
Effective Time, the Exchange Agent shall deliver to the Surviving
Corporation all cash and other documents in its possession relating to the
transactions described in this Agreement, and the Exchange Agent's duties
shall terminate. Thereafter, each holder of a Certificate formerly
representing a share of Common Stock entitled to the payment of Cash
Consideration may surrender such Certificate to the Surviving Corporation
and (subject to applicable abandoned property, escheat and similar laws)
receive in consideration therefor the applicable aggregate Cash
Consideration relating thereto, without any interest thereon.
(f) After the Effective Time, there shall be no transfers on the stock
transfer books of the Surviving Corporation of any shares of Common Stock
which were outstanding immediately prior to the Effective Time and which
are entitled to the payment of Cash Consideration.
Section 3.4 Distributions with Respect to Unexchanged Shares. No dividends
or other distributions with respect to shares of Common Stock entitled to the
payment of Cash Consideration with a record date after the
5
<PAGE> 9
Effective Time shall be paid to the holder of any such unsurrendered Certificate
with respect to the shares of Common Stock represented thereby. Subject to the
effect of applicable laws, following surrender of any such Certificate, there
shall be paid to the holder of the certificate representing whole shares of
Common Stock issued in exchange therefor, without interest, at the time of such
surrender, the Cash Consideration.
Section 3.5 No Liability. None of the Merger Sub, Acquiror, the Company,
the Surviving Corporation or the Exchange Agent shall be liable to any person in
respect of any Cash Consideration delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. If any Certificates shall
not have been surrendered prior to seven years after the Effective Time (or
immediately prior to such earlier date on which the Cash Consideration would
otherwise escheat to or become the property of any Governmental Entity (as
hereinafter defined)) any such distributions or cash in respect of such
Certificate shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any person previously entitled thereto.
Section 3.6 Lost Certificates. In the event any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Company or the Surviving Corporation, the posting by such person
of a bond in such reasonable amount as the Company or the Surviving Corporation,
as the case may be, may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent shall issue in
exchange for such lost, stolen or destroyed Certificate the amount to which such
person is entitled pursuant to this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as otherwise disclosed to the Merger Sub in a letter delivered to it
at or prior to the execution of this Agreement (the "Company Disclosure
Letter"), the Company represents and warrants to the Merger Sub as follows:
Section 4.1 Organization.
(a) Each of the Company and the Company Subsidiaries (as defined in
Section 4.1(b)) is a corporation or other entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
business as it is now being conducted, except where failure to be in good
standing or to have such power and authority would not, individually or in
the aggregate, have a Company Material Adverse Effect (as defined in this
Section 4.1). Each of the Company and the Company Subsidiaries is duly
qualified or licensed to do business as a foreign corporation and is in
good standing in each jurisdiction in which the nature of the business
conducted by it makes such qualification or licensing necessary, except
where the failure to be so duly qualified, licensed and in good standing
would not, individually or in the aggregate, have a Company Material
Adverse Effect. The Company has heretofore delivered to Acquiror a complete
and correct copy of each of its articles of incorporation and By-Laws, as
currently in effect. As used in this Agreement, "Company Material Adverse
Effect" means any material adverse change in or effect on the business,
financial condition or results of operations of the Company and its
subsidiaries taken as a whole; provided, however, that the effects of
changes that are generally applicable to (i) the North American ready-to-
assemble furniture industry (the "Industry"), (ii) the United States
economy, or (iii) the United States securities markets shall be excluded
from such determination; and provided, further that any adverse effect on
the Company and its subsidiaries resulting from the execution of this
Agreement and the announcement of this Agreement and the transactions
contemplated hereby shall also be excluded from such determination.
(b) Section 4.1 to the Company Disclosure Letter lists all
subsidiaries of the Company (individually, a "Company Subsidiary," and
collectively, the "Company Subsidiaries") and their states of
incorporation. Except as set forth in Section 4.1 to the Company Disclosure
Letter, the Company does
6
<PAGE> 10
not own an equity interest in or control, directly or indirectly, any other
corporation, association, partnership or business organization other than
the Company Subsidiaries.
Section 4.2 Capitalization.
(a) As of the date hereof, the authorized capital stock of the Company
consists of 20,000,000 shares of Common Stock and 5,000,000 shares of
preferred stock, no par value per share (the "Preferred Stock"). As of
March 27, 1998, (i) 4,349,606 shares of Common Stock were issued and
outstanding, (ii) no shares of Common Stock were issued and held in the
treasury of the Company, and (iii) no shares of Preferred Stock were issued
and outstanding. Since such date, no additional shares of capital stock
have been issued except shares issued upon the exercise of the Company
Options pursuant to the Company's stock option and employee stock purchase
plans, pension plans and other similar employee benefit plans, all as
described in the Company Disclosure Letter (the "Company Stock Plans"). All
the outstanding shares of the Company's capital stock are duly authorized,
validly issued, fully paid, non-assessable and free of preemptive rights.
Section 4.2(a) of the Company Disclosure Letter sets forth (i) the number
of outstanding Company Options and SARs on the date hereof pursuant to the
Company Stock Plans, (ii) the identity of the holders of such Company
Options or SARs, and (iii) the vesting schedules and the exercise prices
for such Company Options and SARs. Except as provided herein or as
disclosed in Section 4.2(a) of the Company Disclosure Letter and, except
for the Company Stock Plans as of the date hereof, there are no existing
(i) options, warrants, calls, subscriptions or other rights, convertible
securities, agreements or commitments of any character obligating the
Company or any of its subsidiaries to issue, transfer or sell any shares of
capital stock or other equity interest in, the Company or any of its
subsidiaries or securities convertible into or exchangeable for such shares
or equity interests, (ii) contractual obligations of the Company or any of
its subsidiaries to repurchase, redeem or otherwise acquire any capital
stock of the Company or any of its subsidiaries of the Company or (iii)
voting trusts or similar agreements to which the Company is a party with
respect to the voting of the capital stock of the Company.
(b) Except as disclosed in Section 4.2(b) of the Company Disclosure
Letter, all of the outstanding shares of capital stock (or equivalent
equity interests of entities other than corporations) of each of the
Company Subsidiaries are beneficially owned, directly or indirectly, by the
Company, free and clear of all liens, pledge, security interests, claims or
other encumbrances.
Section 4.3 Authorization; Validity of Agreement; Necessary Action. The
Company has the requisite corporate power and authority to execute and deliver
this Agreement and, subject to obtaining the necessary approval of its
shareholders, to consummate the transactions contemplated hereby. The execution,
delivery and performance by the Company of this Agreement, and the consummation
by it of the transactions contemplated hereby, have been duly authorized by the
Company Board and no other corporate action no the part of the Company is
necessary to authorize the execution and delivery by the Company of this
Agreement and the consummation by it of the transactions contemplated hereby
(other than, with respect to the Merger, the affirmative vote by holders of a
majority of the issued and outstanding shares of Common Stock). This Agreement
has been duly executed and delivered by the Company and, assuming due and valid
authorization, execution and delivery hereof by Acquiror and the Merger Sub, is
a valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except that (i) such enforcement may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws, now or hereafter in effect, affecting creditors' rights generally, and
(ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
Section 4.4 Consents and Approvals; No Violations. Except as disclosed in
Section 4.4 of the Company Disclosure Letter and except for (a) filings pursuant
to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), (b) applicable requirements under the Securities Act of 1933, as
amended ("Securities Act") and the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), (c) the filing of the Certificate of Merger, (d)
applicable requirements under corporation or "blue sky" laws of various states
or (e) as contemplated by this Agreement, neither the execution, delivery or
performance of this
7
<PAGE> 11
Agreement by the Company nor the consummation by the Company of the transactions
contemplated hereby will (i) violate any provision of the Articles of
Incorporation or By-Laws of the Company, (ii) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, or result in the creation of a lien or other encumbrance on any property
or asset of the Company or any Company Subsidiary, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which any of them or any of their properties or
assets may be bound (the "Company Agreements"), (iii) violate any order, writ,
judgment, injunction, decree, law, statute, rule or regulation applicable to the
Company, any of the Company Subsidiaries or any of their properties or assets,
or (iv) require on the part of the Company any filing or registration with,
notification to, or authorization, consent or approval of, any court,
legislative, executive or regulatory authority or agency (a "Governmental
Entity"); except in the case of clauses (ii), (iii) or (iv) for such violations,
breaches or defaults which, or filings, registrations, notifications,
authorizations, consents or approvals the failure of which to obtain, (A) would
not, individually or in the aggregate, have a Company Material Adverse Effect
and would not, individually or in the aggregate, materially adversely affect the
ability of the Company to consummate the transactions contemplated by this
Agreement, or (B) would become applicable solely as a result of any acts or
omissions by, or the status of any facts pertaining to, Acquiror or the Merger
Sub.
Section 4.5 SEC Reports and Financial Statements. The Company has filed all
reports required to be filed by it with the SEC pursuant to the Exchange Act and
the Securities Act since January 1, 1995 (as such documents have been amended
since the date of their filing, collectively, the "Company SEC Documents"). The
Company SEC Documents, as of their respective filing dates, or if amended, as of
the date of the last such amendment, (i) complied in all material respects at
the time filed with the requirements of the Securities Act or the Exchange Act,
as applicable and (ii) did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. Each of the consolidated balance sheets
(including the related notes) included in the Company SEC Documents and the
Company Balance Sheet (as defined below) fairly presents in all material
respects the financial position of the Company and its consolidated subsidiaries
as of the respective dates thereof, and the other related statements (including
the related notes) included therein fairly present in all material respects the
results of operations and cash flows of the Company and its consolidated
subsidiaries for the respective periods or as of the respective dates set forth
therein. Each of the financial statements (including the related notes) included
in the Company SEC Documents has been prepared in all material respects in
accordance with GAAP applied on a consistent basis during the periods involved,
except as otherwise noted therein and subject, in the case of unaudited interim
financial statements, to normal year-end adjustments. The consolidated balance
sheet of the Company at December 31, 1997, included in the Annual Report on Form
10-K for the fiscal year ended December 31, 1997 of the Company, is herein
sometimes referred to as the "Company Balance Sheet."
Section 4.6 No Undisclosed Liabilities. Except (a) for liabilities incurred
in the ordinary course of business and consistent with past practice since
December 31, 1997, (b) for liabilities disclosed in the Company Balance Sheet or
specifically disclosed in the Company SEC Documents, (c) for liabilities
incurred in connection with the Merger or otherwise as contemplated by this
Agreement and (d) as disclosed in Section 4.6 of the Company Disclosure Letter,
since December 31, 1997, neither the Company nor any of the Company Subsidiaries
has incurred any liabilities that would be required to be reflected or reserved
against in a consolidated balance sheet of the Company and its consolidated
subsidiaries prepared in accordance with GAAP as applied in preparing the
consolidated balance sheet of the Company and its consolidated subsidiaries as
of December 31, 1997, except for liabilities that would not have a Company
Material Adverse Effect.
Section 4.7 Absence of Certain Changes. Except as (a) specifically
disclosed in the Company SEC Documents, (b) disclosed in Section 4.7 of the
Company Disclosure Letter or (c) contemplated by this Agreement, since December
31, 1997, the Company has conducted its business only in the ordinary course
8
<PAGE> 12
and in a manner consistent with past practice and has not suffered any change or
changes constituting, individually or in the aggregate, a Company Material
Adverse Effect.
Section 4.8 Disclosure Documents. Neither the Schedule 14D-9 nor any
information supplied by the Company for inclusion in the Offer Documents shall,
at the respective times the Schedule 14D-9, the Offer Documents or any
amendments or supplements thereto are filed with the SEC or are first published,
sent or given to stockholders of the Company, as the case may be, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements made therein,
in the light of the circumstances under which they are made, not misleading.
None of the information supplied or to be supplied by the Company for inclusion
in the proxy statement relating to the meeting of the Company's shareholders
(the "Special Meeting") to be held in connection with the Merger, as the same
may be amended or supplemented from time to time (the "Proxy Statement"), if
such Proxy Statement is required by law to be filed, will, either at the time of
mailing of the Proxy Statement to shareholders of the Company or at the time of
the Special Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. The Proxy Statement, if any, and Schedule 14D-9 will
comply as to form in all material respects with the provisions of the Exchange
Act, except that no representation or warranty is made by the Company with
respect to information supplied in writing for inclusion in the Proxy Statement
or the Schedule 14D-9 by Acquiror or the Merger Sub.
Section 4.9 Employee Benefit Plans; ERISA.
(a) Section 4.9 of the Company Disclosure Letter sets forth a list of
all material employee benefit plans (including but not limited to plans
described in section 3 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) maintained by the Company or by any trade or
business, whether or not incorporated (an "ERISA Affiliate"), which
together with the Company would be deemed a "single employer" within the
meaning of section 4001(b)(15) of ERISA ("Benefit Plans") and all material
employment and severance agreements with employees of the Company
("Employee Agreements"). True and complete copies of all Benefit Plans and
Employee Agreements, including all amendments to date, have been made
available to Acquiror or its representatives by the Company.
(b) With respect to each Benefit Plan, except as otherwise disclosed
to Acquiror: (i) if intended to qualify under section 401(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), such plan has
received a determination letter from the Internal Revenue Service stating
that it so qualifies and that its trust is exempt from taxation under
section 501(a) of the Code; (ii) such plan has been administered in all
material respects in accordance with its terms and applicable law; (iii) no
breaches of fiduciary duty have occurred which might reasonably be expected
to give rise to material liability on the part of the Company; (iv) no
disputes are pending, or, to the knowledge of the Company, threatened that
might reasonably be expected to give rise to material liability on the part
of the Company (other than routine claims for benefits); (v) no prohibited
transaction (within the meaning of section 406 of ERISA) has occurred that
might reasonably be expected to give rise to material liability on the part
of the Company; and (vi) all contributions required to be made to such plan
as of the date hereof (taking into account any extensions for the making of
such contributions) have been made in full.
(c) No Benefit Plan is a "multiemployer pension plan," as defined in
section 3(37) of ERISA, nor is any Benefit Plan a plan described in section
4063(a) of ERISA.
(d) No liability under Title IV of ERISA has been incurred by the
Company or any ERISA Affiliate that has not been satisfied in full, and no
condition exists that presents a material risk to the Company or any ERISA
Affiliate of incurring a material liability under such Title.
(e) No Benefit Plan has incurred an accumulated funding deficiency, as
defined in section 302 of ERISA or section 412 of the Code, whether or not
waived.
(f) With respect to each Benefit Plan that is a "welfare plan" (as
defined in section 3(1) of ERISA), no such plan provides medical or death
benefits with respect to current or former employees of
9
<PAGE> 13
the Company or any of its Significant Subsidiaries beyond their termination
of employment (other than to the extent required by applicable law).
Section 4.10 Litigation. Except as disclosed in Section 4.10 of the Company
Disclosure Letter or as specifically disclosed in the Company SEC Documents, as
of the date hereof, there is no action, suit, proceeding or, to the best
knowledge of the Company, investigation pending or, to the best knowledge of the
Company, action, suit, proceeding, audit or investigation threatened, involving
the Company or any of its subsidiaries, by or before any court, governmental or
regulatory authority or by any third party that (i) individually or in the
aggregate, would have a Company Material Adverse Effect or (ii) seeks to delay
or prevent the consummation of the transactions contemplated by this Agreement.
Except as disclosed in Section 4.10 of the Company Disclosure Letter, neither
the Company nor any of the Company Subsidiaries is subject to any continuing
order of, consent decree, settlement agreement or other similar written
agreement with any court, governmental or regulatory authority, or any order,
writ, judgment, injunction, decree, determination or award of any court,
governmental or regulatory authority or arbitrator having, individually or in
the aggregate, a Company Material Adverse Effect.
Section 4.11 Compliance with Applicable Laws. Neither the Company nor any
of the Company Subsidiaries is in default or violation of any term, condition or
provision of any statute, law, rule, regulation, judgment, decree, order,
concession, grant, franchise, permit or license or other governmental
authorization or approval applicable to the Company or any of the Company
Subsidiaries, excluding defaults or violations which would not, individually or
in the aggregate, have a Company Material Adverse Effect or which become
applicable as a result of any acts or omissions by, or the status of any facts
pertaining to, Acquiror or the Merger Sub.
Section 4.12 Taxes.
(a) Except as disclosed in Section 4.12 of the Company Disclosure
Letter, the Company and each of its subsidiaries has (i) timely filed all
material Tax Returns required to be filed by any of them for tax years
ended prior to the date of this Agreement or requests for extensions have
been timely filed and any such request shall have been granted and not
expired and all such returns are complete in all material respects, (ii)
have paid or accrued all Taxes shown to be due and payable on such returns
other than such Taxes as are being contested in good faith by the Company
or its subsidiaries, and (iii) have properly accrued in all material
respects all such Taxes for such periods subsequent to the periods covered
by such returns, except in the case of the foregoing clauses (i), (ii) and
(iii) where any such failure would not have a Company Material Adverse
Effect.
(b) Except as disclosed in Section 4.12 of the Company Disclosure
Letter, there are no ongoing federal, state or local audits or examinations
of any Tax Return of the Company or its subsidiaries.
(c) Except as disclosed in Section 4.12 of the Company Disclosure
Letter, there are no outstanding written requests, agreements, consents or
waivers to extend the statutory period of limitations applicable to the
assessment of any material Taxes or deficiencies against the Company or any
of its subsidiaries, and no power of attorney granted by either the Company
or any of its subsidiaries with respect to any Taxes is currently in force.
(d) Except as disclosed in Section 4.12 of the Company Disclosure
Letter, neither the Company nor any of its subsidiaries is a party to any
agreement providing for the allocation or sharing of Taxes.
(e) "Taxes" shall mean any and all taxes, charges, fees, levies or
other assessments, including, without limitation, income, gross receipts,
excise, real or personal property, sales, withholding, social security,
occupation, use, service, service use, license, net worth, payroll,
franchise, transfer and recording taxes, fees and charges, imposed by the
United States Internal Revenue Service or any taxing authority (whether
domestic or foreign including, without limitation, any state, county, local
or foreign government or any subdivision or taxing agency thereof
(including a United States possession)), whether computed on a separate,
consolidated, unitary, combined or any other basis; and such term shall
include any interest, penalties or additional amounts attributable to, or
imposed upon, or with respect to, any such taxes, charges, fees, levies or
other assessments. "Tax Return" shall mean any report, return, document,
10
<PAGE> 14
declaration or other information or filing required to be supplied to any
taxing authority or jurisdiction (foreign or domestic) with respect to
Taxes.
Section 4.13 Real Property. The Company (including, as applicable, the
Company Subsidiaries) owns all of the real and personal property included in the
Company Balance Sheet (except assets recorded under capital lease obligations
and such property as has been disposed of during the ordinary course of the
Company's business since the date of the Company Balance Sheet), free and clear
of any liens, claims, charges, exceptions or encumbrances, except for those (i)
if any, which in the aggregate are not material and which do not materially
affect continued use of such property, or (ii) which are set forth in Section
4.13 to the Company Disclosure Letter or in the Company SEC Documents.
Section 4.14 Intellectual Property. Except as disclosed in Section 4.14 of
the Company Disclosure Letter or as specifically disclosed in the Company SEC
Documents, and except for such claims which would not, individually or in the
aggregate, have a Company Material Adverse Effect, as of the date hereof, there
are no pending or threatened claims of which the Company or any of the Company
Subsidiaries is aware, to the best of its knowledge, by any person against their
use of any trademarks, trade names, service marks, service names, mark
registrations, logos, assumed names and copyright registrations, patents and all
applications therefor which are owned by the Company or the Company Subsidiaries
or used in their respective operations as currently conducted (collectively, the
"Company Intellectual Property"). The Company and the Company Subsidiaries have
such ownership of or such rights by license, lease or other agreement to the
Company Intellectual Property as are necessary to permit them to conduct their
respective operations as currently conducted, except where the failure to have
such rights would not, individually or in the aggregate, have a Company Material
Adverse Effect.
Section 4.15 Contracts. Except as set forth in Section 4.15 of the Company
Disclosure Letter, each Company Agreement is in full force and effect except
where the failure to be in full force and effect would not, individually or in
the aggregate, have a Company Material Adverse Effect and, to the knowledge of
the Company, is valid and enforceable by the Company or a subsidiary of the
Company, as the case may be, in accordance with its terms except that (i) such
enforcement may be subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws, now or hereafter in effect, affecting
creditors' rights generally, and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought. Except as set forth in Section 4.15 of the Company Disclosure
Letter, neither the Company nor any of its subsidiaries is in default in the
observance or the performance of any term or obligation to be performed by it
under any Company Agreement except for such defaults the effect of which would
not, individually or in the aggregate, have a Company Material Adverse Effect.
To the knowledge of the Company, no other person is in material default in the
observance or the performance of any term or obligation to be performed by it
under any Company Agreement.
Section 4.16 Environmental Laws and Regulations. Except as set forth in
Section 4.16 of the Company Disclosure Letter, (a) the Company and each of its
subsidiaries is in compliance with all applicable federal, state, local and
foreign laws and regulations relating to protection of the environment
(collectively, "Environmental Laws"), except for non-compliance which would not,
individually or in the aggregate, have a Company Material Adverse Effect, which
compliance includes, but is not limited to, the possession by the Company and
its subsidiaries of material permits and other governmental authorizations
required under applicable Environmental Laws, and compliance with the terms and
conditions thereof; (b) neither the Company nor any of its subsidiaries has
received notice of, or to the knowledge of the Company, is the subject of, any
actions, causes of action, claims, investigations, demands, or notices by any
Person alleging liability under or non-compliance with any Environmental Law
("Environmental Claims") which would, individually or in the aggregate, have a
Company Material Adverse Effect; and (c) the Company is not aware of and has not
received notice of any event, condition, circumstance, activity, practice,
incident, action or plan which is reasonably likely to interfere with or prevent
continued compliance with or which would give rise to any common law or
statutory liability, or otherwise form the basis of any claim, action, suit or
proceeding under any Environmental Laws, except where the interference or
failure to comply with common law or statutes or
11
<PAGE> 15
other claim, action, suit or proceeding under Environmental Law would not,
individually or in the aggregate, have a Company Material Adverse Effect.
Section 4.17 Labor Matters. Except as set forth in Section 4.17 of the
Company Disclosure Letter or as specifically disclosed in the Company SEC
Documents, (a) neither the Company nor any of the Company Subsidiaries is a
party to, or bound by, any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization, and (b)
there is no unfair labor practice or labor arbitration proceedings pending or,
to the knowledge of the Company, threatened against the Company or the Company
Subsidiaries, except for any such proceeding which would not, individually or in
the aggregate, have a Company Material Adverse Effect.
Section 4.18 Brokers or Finders. The Company represents, as to itself, the
Company Subsidiaries and its affiliates, that no agent, broker, investment
banker, financial advisor or other firm or person is or will be entitled to any
brokers' or finder's fee or any other commission or similar fee in connection
with any of the transactions contemplated by this Agreement, except ABN-AMRO,
whose fees and expenses will be paid by the Company. The Company has heretofore
made available to Acquiror a complete and correct copy of all agreements between
the Company and ABN-AMRO pursuant to which such firm would be entitled to any
payment relating to the transaction.
Section 4.19 Opinion of Financial Advisors. The Company has received the
opinion of ABN-AMRO to the effect that, as of the date hereof, the Cash
Consideration is fair, from a financial point of view, to the shareholders of
the Company.
Section 4.20 Board Recommendation. The Company Board, at a meeting duly
called and held, has (a) determined that this Agreement and the transactions
contemplated hereby, taken together, are advisable and in the best interests of
the Company and its shareholders, and (b) resolved to recommend that the holders
of the shares of Common Stock approve this Agreement and the transactions
contemplated hereby, including the Merger.
Section 4.21 Insurance. The Company and the Company Subsidiaries have
obtained and maintained in full force and effect insurance with responsible and
reputable insurance companies or associations in such amounts, on such terms and
covering such risks, as is customarily carried by reasonably prudent persons
conducting businesses or owning or leasing assets similar to those conducted,
owned or leased by the Company or any of the Company Subsidiaries, except where
the failure to obtain or maintain such insurance would not, individually or in
the aggregate, have a Company Material Adverse Effect.
Section 4.22 Permits. The Company and the Company Subsidiaries are in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exceptions, consents, certificates, approvals and orders
of any court, governmental or regulatory authority necessary for the Company and
its subsidiaries to own, lease and operate its properties or to carry on its
business as it is now being conducted (the "Company Permits"), except where the
failure to have any of the Company Permits would not, individually or in the
aggregate, have a Company Material Adverse Effect, and, as of the date hereof,
no suspension or cancellation of any of the Company Permits is pending or, to
the knowledge of the Company threatened, except where the suspension or
cancellation of any of the Company Permits would not, individually or in the
aggregate, have a Company Material Adverse Effect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
AND THE MERGER SUB
Acquiror and the Merger Sub represent and warrant to the Company as
follows:
Section 5.1 Organization. Each of Acquiror and the Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted, except where the failure to be so organized,
existing and in good standing or to have such power
12
<PAGE> 16
and authority would not have an Acquiror Material Adverse Effect (as defined in
this Section 5.1). Each of Acquiror and the Merger Sub is duly qualified or
licensed to do business and in good standing in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except where the failure
to be so duly qualified or licensed and in good standing would not have an
Acquiror Material Adverse Effect. Acquiror has heretofore delivered to Company a
complete and correct copy of each of its certificate of incorporation and
by-laws, as currently in effect. As used in this Agreement, "Acquiror Material
Adverse Effect" means any material adverse change in or effect on the business,
financial condition or results of operations of Acquiror and its subsidiaries,
taken as a whole; provided, however, that the effects of changes that are
generally applicable to (i) the United States economy or (ii) the United States
securities markets shall be excluded from such determination; and provided,
further that any adverse effect on Acquiror or the Merger Sub resulting from the
execution of this Agreement and the transactions contemplated hereby shall also
be excluded from such determination.
Section 5.2 Authorization; Validity of Agreement; Necessary Action. Each of
Acquiror and the Merger Sub has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery and performance by Acquiror and the Merger Sub
of this Agreement, and the consummation of the transactions contemplated hereby,
have been duly authorized by their respective board of directors and no other
corporate action on the part of Acquiror or the Merger Sub is necessary to
authorize the execution and delivery by Acquiror or the Merger Sub of this
Agreement and the consummation by it of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Acquiror and the Merger
Sub and, assuming due and valid authorization, execution and delivery hereof by
the Company, is a valid and binding obligation of each of Acquiror and the
Merger Sub, enforceable against them in accordance with its terms, except that
(i) such enforcement may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws, now or hereafter in effect,
affecting creditors' rights generally, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
Section 5.3 Consents and Approvals; No Violations. Except for (a) filings
pursuant to the HSR Act, (b) applicable requirements under the Securities Act
and the Exchange Act, (c) the filing of the Certificate of Merger, (d)
applicable requirements under corporation or "blue sky" laws of various states
or (e) as contemplated by this Agreement, neither the execution, delivery or
performance of this Agreement by either Acquiror or the Merger Sub nor the
consummation by either Acquiror or the Merger Sub of the transactions
contemplated hereby will (i) violate any provision of the certificate of
incorporation or articles of incorporation, as the case may be, or by-laws of
either Acquiror or the Merger Sub, (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration) under, any
of the terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to which
either Acquiror or the Merger Sub is a party or by which it or any of its
properties or assets may be bound (the "Acquiror Agreements"), (iii) to the best
knowledge of either Acquiror or the Merger Sub, violate any order, writ,
judgment, injunction, decree, law, statute, rule or regulation applicable to
either Acquiror or the Merger Sub or any of their respective properties or
assets, or (iv) require on the part of either Acquiror or the Merger Sub any
filing or registration with, notification to, or authorization, consent or
approval of, any Governmental Entity; except in the case of clauses (ii), (iii)
or (iv) for such violations, breaches or defaults which, or filings,
registrations, notifications, authorizations, consents or approvals the failure
of which to obtain, (A) would not have an Acquiror Material Adverse Effect and
would not materially adversely affect the ability of either Acquiror or the
Merger Sub to consummate the transactions contemplated by this Agreement, or (B)
become applicable as a result of any acts or omissions by, or the status of any
facts pertaining to, the Company.
Section 5.4 Brokers or Finders. Each of Acquiror and the Merger Sub
represents, as to itself and its affiliates, that no agent, broker, investment
banker, financial advisor or other firm or person is or will be entitled to any
brokers' or finders' fee or any other commission or similar fee in connection
with any of the transactions contemplated by this Agreement.
13
<PAGE> 17
Section 5.5 Interim Operations of the Merger Sub. The Merger Sub was formed
solely for the purpose of engaging in the transactions contemplated hereby, has
engaged in no other business activities and has conducted its operations only as
contemplated hereby.
Section 5.6 Capitalization of the Merger Sub; Interests in the Company. The
authorized capital stock of the Merger Sub consists of the Merger Sub Common
Stock. As of the close of business on March 27, 1998, 1,000 shares of the Merger
Sub Common Stock were issued and outstanding, all of which are entitled to vote,
and no shares of the Merger Sub Common Stock were held in the Merger Sub's
treasury. All the outstanding shares of the Merger Sub's capital stock are duly
authorized, validly issued, fully paid and non-assessable. Except as set forth
above, there will be, at the Effective Time, (a) no shares of capital stock or
other voting securities of the Merger Sub, (b) no securities of the Merger Sub
convertible into or exchangeable for shares of capital stock or voting
securities of the Merger Sub and (c) no options or other rights to acquire from
the Merger Sub, and no obligation of the Merger Sub to issue any capital stock,
voting securities or securities convertible into or exchangeable for capital
stock or voting securities of the Merger Sub (the items referred to in clauses
(a), (b) and (c) being referred to collectively as the "Merger Sub Securities").
There are no outstanding obligations of the Merger Sub to repurchase, redeem or
otherwise acquire any the Merger Sub Securities. As of the date hereof, Acquiror
and the Merger Sub do not beneficially hold any shares of Common Stock.
Section 5.7 Disclosure Documents. The Offer Documents will not, at the time
the Offer Documents are filed with the SEC or are first published, sent or given
to stockholders of the Company, as the case may be, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements made therein, in the light
of the circumstances under which they are made, not misleading. Notwithstanding
the foregoing, Acquiror and the Merger Sub make no representation or warranty
with respect to any information supplied by the Company or any of its
representatives in writing, expressly for inclusion in the Offer Documents,
which is contained in any of the foregoing documents or the Offer Documents. The
Offer Documents shall comply in all material respects as to form with the
requirements of the Exchange Act and the rules and regulations thereunder. None
of the information supplied or to be supplied by Acquiror for inclusion in the
Proxy Statement will, either at the time of mailing of the Proxy Statement to
shareholders of the Company, or at the time of the Special Meeting, contain any
untrue statement of a material fact or will omit to state any material fact
required to be stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
ARTICLE VI
COVENANTS
Section 6.1 Interim Operations of the Company. The Company covenants and
agrees that the Company shall, and shall cause each of its subsidiaries to,
conduct its operations in the ordinary and usual course of business consistent
with past practice and use all reasonable efforts to preserve intact their
respective business organizations' goodwill, keep available the services of
their respective present officers and key employees, and preserve the goodwill
and business relationships with suppliers, distributors, customers and others
having business relationships with them. Without limiting the generality of the
foregoing, and except as otherwise permitted by this Agreement or as
specifically contemplated by the Company Disclosure Letter, or as required by
applicable law, rule or regulation prior to the Effective Time, without the
consent of Acquiror, which consent shall not be unreasonably withheld, the
Company will not, and will cause each of its subsidiaries not to:
(a) amend or propose to amend their respective charters or bylaws; or
split, combine or reclassify their outstanding capital stock or declare,
set aside or pay any dividend or distribution in respect of any capital
stock or issue or authorize or propose the issuance of any other securities
in respect of, in lieu of or in substitution for, shares of its capital
stock, except for cash dividends and cash distributions paid by
subsidiaries to other subsidiaries or to the Company;
14
<PAGE> 18
(b) (i) issue or authorize or propose the issuance of, sell, pledge or
dispose of, or agree to issue or authorize or propose the issuance of,
sell, pledge or dispose of, any additional shares of, or any options,
warrants or rights of any kind to acquire any shares of, their capital
stock of any class, any debt or equity securities convertible into or
exchangeable for such capital stock or any other equity related right
(including any phantom stock or SAR rights), other than any such issuance
pursuant to options, warrants, rights or convertible securities outstanding
as of the date hereof; (ii) acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business
or any corporation, partnership, association or other business organization
or division thereof or otherwise acquire or agree to acquire any assets in
each case which are material, individually or in the aggregate, to the
Company and its subsidiaries taken as a whole; (iii) sell (including by
sale-leaseback), lease, pledge, dispose of or encumber any assets or
interests therein, which are material, individually or in the aggregate, to
the Company and its subsidiaries taken as a whole, other than in the
ordinary course of business and consistent with past practice; (iv) incur
or become contingently liable with respect to any material indebtedness for
borrowed money or guarantee any such indebtedness or issue any debt
securities or otherwise incur any material obligation or liability
(absolute or contingent) other than short-term indebtedness in the ordinary
course of business and consistent with past practice; (v) redeem, purchase,
acquire or offer to purchase or acquire any (x) shares of its capital stock
or (y) long-term debt other than as required by governing instruments
relating thereto; (vi) other than in the ordinary course of business,
neither the Company nor any Company Subsidiary shall modify, amend or
terminate any material contract or agreement to which the Company or any
Company Subsidiary is a party or waive, release or assign any material
rights or claims; or (vii) enter into any contract, agreement, commitment
or arrangement with respect to any of the foregoing;
(c) enter into or amend any employment, severance, special pay
arrangement with respect to termination of employment or other arrangements
or agreements with any directors, officers or key employees except for (i)
normal salary increases and merit bonuses, (ii) arrangements in connection
with employee transfers or (iii) agreements with new employees, in each
case, in the ordinary course of business consistent with past practice;
(d) adopt, enter into or amend any, or become obligated under any new
bonus, profit sharing, compensation, stock option, pension, retirement,
deferred compensation, healthcare, employment or other employee benefit
plan, agreement, trust, fund or arrangement for the benefit or welfare of
any employee or retiree, except as required to comply with changes in
applicable law occurring after the date hereof; provided, however, the
Company shall not be prevented from amending the Company ESOP (as defined
in Section 6.3(c) hereof) as contemplated by Section 6.3(c) hereof;
(e) except as may be required as a result of a change in law or in
GAAP after the date hereof, change any of the accounting principles or
practices used by it;
(f) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business of liabilities reflected or reserved against
in, or contemplated by, the financial statements (or the notes thereto) of
the Company incurred in the ordinary course of business consistent with
past practice;
(g) authorize, commit to or make any equipment purchases or capital
expenditures other than in the ordinary course of business and consistent
with past practice (provided, that such purchases and/or expenditures
shall, in the aggregate, be no more than $250,000) or as shown on Schedule
6.1(g); or
(h) take or agree to take any of the foregoing actions or any action
that would, or is reasonably likely to, result in any of its
representations and warranties set forth in this Agreement becoming untrue,
or in any of the conditions to the Merger set forth in Article VII not
being satisfied.
Section 6.2 Access to Information. Upon reasonable notice, the Company
shall (and shall cause each of its subsidiaries to) afford to Acquiror and its
officers, employees, accountants, counsel, financing sources and other
representatives, access, during normal business hours during the period prior to
the earlier of the
15
<PAGE> 19
Effective Time or the date of termination of this Agreement, to all its
properties, books, contracts, commitments and records and, during such period,
the Company shall (and shall cause each of the Company Subsidiaries to) furnish
promptly to Acquiror (a) a copy of each report, schedule, registration statement
and other document filed or received by it during such period pursuant to the
requirements of federal securities laws and (b) all other information concerning
its business, properties and personnel as Acquiror may reasonably request;
provided, however, that nothing herein shall require the Company or any of its
subsidiaries to disclose any information to Acquiror if such disclosure would be
in violation of applicable laws or regulations of any Governmental Entity or the
provisions of any confidentiality agreement to which the Company is a party.
Unless otherwise required by law and until the Effective Time Acquiror and its
representatives will hold any such information which is non-public in confidence
in accordance with the provisions of the Confidentiality Agreements between the
Company and Acquiror, dated as of November 19 and November 25, 1998 (the
"Confidentiality Agreements").
Section 6.3 Employee Benefit Matters.
(a) Effective as of the Effective Time and for a two-year period
thereafter, the Company and the Company Subsidiaries and successors shall
(i) provide those Persons who, immediately prior to the Effective Time,
were employees ("Company Employees") of the Company or the Company
Subsidiaries on the Closing Date with employee benefits that are
substantially similar in the aggregate as those provided to such Company
Employees pursuant to the Benefit Plans immediately prior to the Effective
Time.
(b) Following the Effective Time, the Company will continue to honor,
pursuant to the terms thereof, all Employee Agreements for the benefit of
any employees and former employees of the Company or any Company
Subsidiary, including, without limitation, those Employee Agreements set
forth in Section 6.3(b) of the Company Disclosure Letter.
(c) As of the Effective Time, the Ameriwood Industries Employee Stock
Ownership and Savings Plan and Trust Agreement (the "Company ESOP") will be
amended to provide that the Company ESOP will be frozen with respect to
participation and benefit accrual in the part of the Company ESOP that is
an employee stock ownership plan and that no further contributions will be
made to or distributions will be made from such portion of the Company
ESOP; provided, however, that immediately prior to the Effective Time, the
Company shall make a pro rata contribution to the Company ESOP in respect
of the plan year, which plan year shall be deemed to have ended at the
Effective Time, in accordance with the terms of the Company ESOP and
applicable law. The amendment to the Company ESOP will further provide that
following the Effective Time, each participant in the Company ESOP will be
entitled to direct the investment of the balance in his or her Company ESOP
account into one or more of the investment alternatives provided under the
401(k) portion of the Company ESOP (other than Shares), in accordance with
the terms of the Company ESOP and applicable law.
(d) For purposes of this Section 6.3, the term "Company Employees"
shall mean all employees of the Company and the Company Subsidiaries
immediately prior to the Effective Time, including those on disability or
leave of absence, paid or unpaid.
(e) The Company shall pay all bonuses earned for fiscal year 1997 in
accordance with the Company's past practice.
(f) In the event the Company or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its
properties and assets to any person, then, and in each such case, to the
extent necessary to effectuate the purposes of this Section 6.3, proper
provision shall be made so that the successors and assigns of Company,
assume the obligations set forth in this Section 6.3 and none of the
actions described in clauses (i) or (ii) of this Section 6.3(f) shall be
taken until such provision is made.
16
<PAGE> 20
Section 6.4 No Solicitation.
(a) The Company will not, and will cause any officers, directors,
employees and investment bankers, attorneys or other agents retained by the
Company or any of its subsidiaries not to, (i) directly or indirectly
solicit, initiate or knowingly encourage (including by way of furnishing
non-public information), or take any other action knowingly to facilitate
any inquiries or the making of any Acquisition Proposal (as hereinafter
defined), or (ii) except as permitted below, engage in negotiations or
discussions with, or furnish any information or data to any third party
relating to, or that may reasonably be expected to lead to, an Acquisition
Proposal (other than the transactions contemplated hereby). Notwithstanding
anything to the contrary contained in this Section 6.4 or in any other
provision of this Agreement, the Company, and its officers, directors,
investment bankers, attorneys or agents, may:
(i) participate in discussions or negotiations (including, as a
part thereof, making any counterproposal) with or furnish information to
any third party making an unsolicited Acquisition Proposal (a "Potential
Acquiror") if: (A) the Company Board determines in good faith, after
consultation with ABN-AMRO or another financial advisor of nationally
recognized standing, that such third party is reasonably likely to
submit an Acquisition Proposal which is a Superior Proposal (as
hereinafter defined), and (B) the Company Board determines in good
faith, based upon advice of outside legal counsel, that the failure to
participate in such discussions or negotiations or to furnish such
information is reasonably likely to be inconsistent with the Company
Board's fiduciary duties under applicable law, or
(ii) following receipt of an Acquisition Proposal, disclose to its
shareholders the Company's position contemplated by Rules 14d-9 and
14e-2 under the Exchange Act or otherwise make any other necessary
disclosure to its shareholders related to an Acquisition Proposal.
The Company agrees that any non-public information furnished to a Potential
Acquiror will be pursuant to a confidentiality agreement substantially similar
to the confidentiality provisions of the confidentiality agreement entered into
between the Company and Acquiror. In the event that the Company shall receive
any Acquisition Proposal, it shall promptly inform Acquiror in writing as to the
terms of such Acquisition Proposal, and if the Acquisition Proposal is in
writing the Company shall provide the Acquiror a true and complete copy thereof,
and will keep Acquiror reasonably informed of the status (including amendments
or proposed amendments) of any such Acquisition Proposal, except to the extent
that the Company Board determines in good faith, after consultation with its
outside legal counsel, that any such action with respect to a Superior Proposal
that by its terms expressly prohibits any disclosure of the terms of such
Superior Proposal and described in this sentence is reasonably likely to be
inconsistent with Company Board's fiduciary duties under applicable law.
(b) For purposes of this Agreement, "Acquisition Proposal" shall mean
any bona fide proposal made by a third party to acquire (i) beneficial
ownership (as defined under Rule 13(d) of the Exchange Act) of a 15% or
greater equity interest in the Company pursuant to a merger, consolidation
or other business combination, sale of shares of capital stock, tender
offer or exchange offer or similar transaction involving the Company
including, without limitation, any single or multi-step transaction or
series of related transactions which is structured in good faith to permit
such third party to acquire beneficial ownership of a 15% or greater equity
interest in the Company or (ii) all or a substantial part of the business
or assets or any equity interest in, or voting securities of, of the
Company (other than the transactions contemplated by this Agreement).
(c) The term "Superior Proposal" shall mean any Acquisition Proposal
which the Company Board, determines in good faith, after consultation with
ABN-AMRO or another financial advisor of nationally recognized standing, to
be more favorable to such party and its shareholders than the transactions
contemplated hereby.
(d) The Company shall immediately cease and cause to be terminated any
discussions or negotiations existing as of the date hereof with any parties
(other than the Acquiror and the Merger Sub)
17
<PAGE> 21
conducted heretofore with respect to any of the foregoing. The Company
agrees not to release any third party from any confidentiality or
standstill agreement to which the Company is a party.
Section 6.5 Publicity. The initial press release with respect to the
execution of this Agreement shall be a joint press release acceptable to
Acquiror and the Company. Thereafter, so long as this Agreement is in effect,
neither the Company, Acquiror nor any of their respective affiliates shall issue
or cause the publication of any press release or other announcement with respect
to the Merger, this Agreement or the other transactions contemplated hereby
without the prior consultation of the other party, except as may be required by
law or by any listing agreement with a national securities exchange.
Section 6.6 Directors' and Officers' Insurance and Indemnification.
(a) From and after the Effective Time, the Surviving Corporation shall
indemnify, defend and hold harmless any person who is now, or has been at
any time prior to the date hereof, or who becomes prior to the Effective
Time, an officer, director, employee and agent (the "Indemnified Party") of
the Company and its subsidiaries against all losses, claims, damages,
liabilities, costs and expenses (including attorney's fees and expenses),
judgments, fines, losses, and amounts paid in settlement in connection with
any actual or threatened action, suit, claim, proceeding or investigation
(each a "Claim") to the extent that any such Claim is based on, or arises
out of, (i) the fact that such person is or was a director, officer,
employee or agent of the Company or any of its subsidiaries or is or was
serving at the request of the Company or any of its subsidiaries as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, or (ii) this Agreement, or any of
the transactions contemplated hereby, in each case to the extent that any
such Claim pertains to any matter or fact arising, existing, or occurring
prior to or at the Effective Time, regardless of whether such Claim is
asserted or claimed prior to, at or after the Effective Time, to the full
extent permitted under Michigan law or the Company's Articles of
Incorporation, By-laws or indemnification agreements in effect at the date
hereof, including provisions relating to advancement of expenses incurred
in the defense of any action or suit; provided, however, that the Surviving
Corporation shall not be liable for any settlement effected without its
written consent (which consent shall not be unreasonably withheld). Without
limiting the foregoing, in the event any Indemnified Party becomes involved
in any capacity in any Claim, then from and after the Effective Time, the
Surviving Corporation shall periodically advance to such Indemnified Party
its legal and other expenses (including the cost of any investigation and
preparation incurred in connection therewith), subject to the provision by
such Indemnified Party of an undertaking to reimburse the amounts so
advanced in the event of a final non-appealable determination by a court of
competent jurisdiction that such Indemnified Party is not entitled thereto.
The Indemnified Parties as a group may retain only one law firm with
respect to each related matter except to the extent there is or is
reasonably likely to be, in the opinion of counsel to the Indemnified
Party, under applicable standards of professional conduct, a conflict on
any significant issue between positions of any two or more Indemnified
Parties.
(b) The Company agrees that all rights to indemnification and all
limitations or liability existing in favor of the Indemnified Party as
provided in the Company's Articles of Incorporation and By-laws as in
effect as of the date hereof shall continue in full force and effect,
without any amendment thereto; provided that any determination required to
be made with respect to whether an Indemnified Party's conduct complies
with the standards set forth under Michigan law, the Company's Articles of
Incorporation or By-laws or such agreements, as the case may be, shall be
made by independent legal counsel selected by the Indemnified Party and
reasonably acceptable to Company; and provided further, that nothing in
this Section 6.6 shall impair any rights or obligations of any present or
former directors or officers of the Company.
(c) In the event the Company or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its
properties and assets to any person, then, and in each such case, to the
extent necessary to effectuate the purposes of this Section 6.6, proper
provision shall be made so that the successors and assigns of the Company
assume the obligations set
18
<PAGE> 22
forth in this Section 6.6 and none of the actions described in clauses (i)
or (ii) shall be taken until such provision is made.
(d) The Surviving Corporation shall maintain the Company's existing
officers' and directors' liability insurance policy ("D&O Insurance") for a
period of not less than six years after the Effective Time; provided,
however, that in no event shall the Surviving Corporation be required to
expend in any one year an amount in excess of 150% of the last annual
premium paid by the Company for such insurance and if the annual premiums
exceed such amount, the Surviving Corporation shall be obligated to obtain
a policy with the greatest coverages available for a cost not exceeding
such amount; provided further the Surviving Corporation may substitute
therefor policies of substantially similar coverage and amounts containing
terms no less advantageous to such former directors or officers with
respect to acts or omissions occurring prior to the Effective Time or
individual coverage and provided that such substitution shall not result in
any gaps or lapses in coverage with respect to acts or omissions occurring
prior to the Effective Time; provided further, if the existing D&O
Insurance expires, is terminated or cancelled during such period, the
Surviving Corporation will use its best efforts to obtain substantially
similar D&O Insurance.
Section 6.7 Proxy Statement.
(a) If required by applicable law, the Company shall prepare as soon
as practicable, following the date of this Agreement, and shall file with
the SEC the Proxy Statement. The Company will cause the Proxy Statement to
comply as to form in all material respects with the applicable provisions
of the Exchange Act and the rules and regulations thereunder.
(b) The Proxy Statement will be mailed to the shareholders of the
Company as promptly as practicable after the effectiveness of this
Agreement. The Company shall include in the Proxy Statement the
recommendation of the Company Board that its shareholders vote in favor of
the approval of the Merger and the adoption of this Agreement; provided,
however, that the Company Board may withdraw, modify or change such
recommendation to the extent that the Company Board determines in good
faith, upon advice of outside legal counsel, that the failure to withdraw,
modify or change such recommendation is reasonably likely to be
inconsistent with the Company Board's fiduciary duties under applicable
law.
(c) (i) The information supplied by the Company for inclusion in the
Proxy Statement shall not, at the time that the Proxy Statement is mailed
to the shareholders of the Company, include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(ii) The information supplied in writing by the Acquiror or the
Merger Sub for inclusion in the Proxy Statement shall not, at the time
that the Proxy Statement is mailed to the shareholders of the Company,
include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
(d) No amendment or supplement to the Proxy Statement will be made
without the approval of each of the Company and Acquiror, which approval
will not be unreasonably withheld or delayed.
Section 6.8 Shareholders' Meetings.
(a) As soon as practicable after the consummation of the Offer, the
Company, acting through the Company Board, shall, in accordance with
applicable law and its Articles of Incorporation, and for the purpose of
approving this Agreement and the transactions contemplated hereby, duly
call, give notice of, convene and hold a special meeting of the
shareholders of the Company.
(b) Notwithstanding the foregoing, in the event that the Merger Sub
shall acquire at least 90% of the then outstanding Shares, the parties
hereto agree, at the request of the Merger Sub, subject to Article VII, to
take all necessary and appropriate action to cause the Merger to become
effective, in
19
<PAGE> 23
accordance with Section 253 of the DGCL and Section 711 of the MBCA, as
soon as reasonably practicable after such acquisition, without a meeting of
the stockholders of the Company.
Section 6.9 Approvals and Consents; Cooperation.
(a) The parties hereto shall use all reasonable efforts, and cooperate
with each other, to obtain as promptly as practicable all governmental and
third party authorizations, approvals, consents or waivers, including,
without limitation, pursuant to the HSR Act, required in order to
consummate the transactions contemplated by this Agreement, including,
without limitation, the Merger.
(b) The Company and Acquiror shall take all actions necessary to file
as soon as practicable all notifications, filings and other documents
required to obtain all governmental authorizations, approvals, consents or
waivers, including, without limitation, under the HSR Act, and to respond
as promptly as practicable to any inquiries and requests received from the
Federal Trade Commission, the Antitrust Division of the Department of
Justice and any other Governmental Entity for additional information or
documentation in connection therewith.
(c) The Company shall give prompt notice to Acquiror of the occurrence
of any Company Material Adverse Effect, and Acquiror shall give prompt
notice to the Company of the occurrence of any Acquiror Material Adverse
Effect. Each of the Company and Acquiror shall give prompt notice to the
other of the occurrence or failure to occur of an event that would, or,
with the lapse of time would, cause any condition contained in Article VII
not to be satisfied.
Section 6.10 Further Assurances. Each of the parties hereto agrees to use
its reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement, including, without limitation, the Offer and the
Merger, which efforts shall include, without limitation, (a) Company, Acquiror
and the Merger Sub using their reasonable efforts to prevent any preliminary or
permanent injunction or other order by a court of competent jurisdiction or
Governmental Entity relating to consummating the transactions contemplated by
this Agreement, including, without limitation, under the antitrust laws, and, if
issued, to appeal any such injunction or order through the appellate court or
body for the relevant jurisdiction and (b) Company, Acquiror and the Merger Sub
using their reasonable efforts to satisfy any objections of, and accept any
conditions imposed by, any Governmental Entity, except where such objection or
condition would have a Company or Acquiror Material Adverse Effect. If at any
time after the Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement, the parties hereto shall take or cause
to be taken all such necessary action, including, without limitation, the
execution and delivery of such further instruments and documents as may be
reasonably requested by the other party for such purposes or otherwise to
consummate and make effective the transactions contemplated hereby.
Section 6.11 Rights Agreement. The Company shall take all necessary action
prior to the Effective Time to cause the dilution provisions of the Rights
Agreement, dated April 4, 1996, between the Company and Harris Trust and Savings
Bank (the "Company Rights Agreement") to be inapplicable to the transactions
contemplated by this Agreement, without any payment to holders of common share
purchase rights ("Rights") issued pursuant to such Company Rights Agreement.
Section 6.12 Company Board Representation; Section 14(f). (a) Promptly upon
the purchase by the Merger Sub of Shares pursuant to the Offer, and from time to
time thereafter, the Merger Sub shall be entitled to designate up to such number
of directors, rounded up to the next whole number, on the Company Board as shall
give the Merger Sub representation on the Company Board equal to the product of
the total number of directors on the Company Board (giving effect to the
directors elected pursuant to this sentence) multiplied by the percentage that
the aggregate number of Shares beneficially owned by the Merger Sub or any
affiliate of the Merger Sub following such purchase bears to the total number of
Shares then outstanding, and the Company shall, at such time, promptly take all
actions necessary to cause the Merger Sub's designees to be elected as directors
of the Company, including increasing the size of the Company Board or securing
the resignations of incumbent directors or both. At such times, the Company
shall use its best efforts to cause
20
<PAGE> 24
persons designated by the Merger Sub to constitute the same percentage as is on
the Company's Board of (i) each committee of the Company Board, (ii) each board
of directors of each Company Subsidiary and (iii) each committee of each such
board, in each case only to the extent permitted by applicable law.
Notwithstanding the foregoing, until the earlier of (i) the time the Merger Sub
acquires a majority of the then outstanding Shares on a fully diluted basis and
(ii) the Effective Time, the Company shall use its best efforts to ensure that
all the members of the Company Board and each committee of the Company Board and
such boards and committees of the Subsidiaries as of the date hereof who are not
employees of the Company shall remain members of the Company Board and of such
boards and committees; provided however, the Company shall maintain at least one
non-employee director until the Effective Time.
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order
to fulfill its obligations under this Section 6.12 and shall include in the
Schedule 14D-9 such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 to fulfill such
obligations. Acquiror or the Merger Sub shall supply to the Company and be
solely responsible for any information with respect to either of them and their
nominees, officers, directors and affiliates required by such Section 14(f) and
Rule 14f-1.
(c) Following the election of designees of the Merger Sub pursuant to this
Section 6.12, prior to the Effective Time, any amendment of this Agreement or
the Articles of Incorporation or By-laws of the Company, any termination of this
Agreement by the Company, any extension by the Company of the time for the
performance of any of the obligations or other acts of Acquiror or the Merger
Sub or waiver of any of the Company's rights hereunder shall require the
concurrence of a majority of the directors of the Company then in office who
neither were designated by the Merger Sub nor are employees of the Company.
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligations. The respective
obligation of each party to effect the Merger shall be subject to the
satisfaction (or, if permissible, waiver by the party for whose benefit such
conditions exist) at or prior to the Effective Time of the following conditions:
(a) this Agreement, the Merger and the transactions contemplated
hereby shall, if necessary, have been approved and adopted by the requisite
vote of the shareholders of the Company in accordance with applicable law
and regulatory requirements and the Company's Articles of Incorporation;
(b) any waiting period applicable to the Merger under the HSR Act
shall have expired or been terminated;
(c) no order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Merger or any of the other transactions
contemplated by this Agreement shall be in effect, and no statute, rule,
regulation, order, injunction or decree shall have been enacted, entered,
promulgated or enforced by any Governmental Entity which prohibits,
restricts or makes illegal the consummation of the Merger, provided,
however, that the parties shall have used reasonable efforts to prevent any
such rule, regulation, injunction, decree or other order, and to appeal as
promptly as possible any injunction, decree or other order that may be
entered;
(d) all authorizations, approvals or consents required to permit the
consummation of the Merger shall have been obtained and be in full force
and effect, except where the failure to have obtained any such
authorizations, approvals or consents would not have a Company Material
Adverse Effect; and.
(e) The Merger Sub or its permitted assignee shall have purchased all
Shares validly tendered and not withdrawn pursuant to the Offer; provided,
however, that this condition shall not be applicable to the obligations of
Acquiror or the Merger Sub if, in breach of this Agreement or the terms of
the Offer, the Merger Sub fails to purchase any Shares validly tendered and
not withdrawn pursuant to the Offer.
21
<PAGE> 25
ARTICLE VIII
TERMINATION
Section 8.1 Termination. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and the Merger contemplated
herein may be abandoned at any time prior to the Effective Time, whether before
or after stockholder approval thereof:
(a) By the mutual consent of the Company, Acquiror and the Merger Sub.
(b) By either of the Company, on the one hand, or Acquiror and the
Merger Sub, on the other hand:
(i) if the Effective Time shall not have occurred on or prior to
September 30, 1998; provided, however, that the right to terminate this
Agreement under this Section 8.1(b)(i) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has
been the cause of, or resulted in, the failure of the Merger to occur on
or prior to such date;
(ii) if there shall have been issued an order, decree or ruling or
taken any other action (which order, decree, ruling or other action the
parties hereto shall use their respective best efforts to lift), in each
case permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree,
ruling or other action shall have become final and non-appealable;
provided, however, if the party seeking termination is Acquiror,
Acquiror shall have complied fully with its obligations under Section
6.9; or
(iii) if, at the Special Meeting (including any adjournment or
postponement thereof) called pursuant to Section 6.8, the requisite vote
of the shareholders of the Company for the Merger shall not have been
obtained.
(c) By the Company:
(i) upon two days prior written notice if the Company Board shall
have (A) withdrawn, or modified or changed in a manner adverse to
Acquiror its approval or recommendation of this Agreement, the Offer or
the Merger, or resolved to do any of the foregoing, and (B) (x)
determined in good faith, after consultation with ABN-AMRO or another
financial advisor of nationally recognized standing, that a third party
has submitted to the Company an Acquisition Proposal which is a Superior
Proposal, and (y) determined in good faith, upon the advice of outside
legal counsel, that the failure to take such action as set forth in the
preceding clause (A) is reasonably likely to be inconsistent with the
Company Board's fiduciary duties under applicable law;
(ii) if Acquiror or the Merger Sub (x) breaches or fails in any
material respect to perform or comply with any of its material covenants
and agreements contained herein or (y) breaches its representations and
warranties in any material respect and such breach would have a Acquiror
Material Adverse Effect, in each case such that the conditions set forth
in Section 7.1 or Section 7.2 would not be satisfied; provided, however,
that if any such breach is curable by the breaching party through the
exercise of the breaching party's best efforts and for so long as the
breaching party shall be so using its best efforts to cure such breach,
the Company may not terminate this Agreement pursuant to this Section
8.1(c)(ii); or
(iii) upon approval of the Company Board, if due to an occurrence
or circumstance that would result in a failure to satisfy any of the
conditions set forth in Annex A hereto, the Merger Sub shall have failed
to commence the Offer on or prior to five days following the date of
initial public announcement of this Agreement; provided, however, the
Company may not terminate this Agreement pursuant to Section 8.1(c)(iii)
if the Company is at such time in breach of its obligations under this
Agreement.
22
<PAGE> 26
(d) By Acquiror and the Merger Sub:
(i) if the Company (x) breaches or fails in any material respect to
perform or comply with any of its material covenants and agreements
contained herein or (y) breaches its representations and warranties in
any material respect and such breach would have a Company Material
Adverse Effect, in each case such that the conditions set forth in
Section 7.1 or Section 7.3 would not be satisfied; provided, however,
that if any such breach is curable by the Company through the exercise
of the Company's best efforts and for so long as the Company shall be so
using its best efforts to cure such breach, Acquiror may not terminate
this Agreement pursuant to this Section 8.1(d)(i);
(ii) if the Company Board shall have withdrawn, modified or changed
in a manner adverse to Acquiror its approval or recommendation of this
Agreement, the Offer or the Merger or shall have recommended an
Acquisition Proposal involving the Company or shall have executed an
agreement in principle or definitive agreement relating to an
Acquisition Proposal involving the Company or similar business
combination with a person or entity other than Acquiror or its
affiliates (or the Company Board resolves to do any of the foregoing);
or
(iii) if due to an occurrence or circumstance that would result in
a failure to satisfy any condition set forth in Annex A hereto, the
Merger Sub shall have failed to commence the Offer on or prior to five
days following the initial public announcement of this Agreement;
provided, however, Acquiror and the Merger Sub may not terminate this
Agreement pursuant to Section 8.1(d)(iii) if the Acquiror or the Merger
Sub is at such time in breach of its obligations under this Agreement.
Section 8.2 Effect of Termination.
(a) In the event of the termination of this Agreement as provided in
Section 8.1, written notice thereof shall forthwith be given to the other
party or parties specifying the provision hereof pursuant to which such
termination is made, and this Agreement shall forthwith become null and
void, and there shall be no liability on the part of Acquiror or the
Company or their respective directors, officers, employees, shareholders,
representatives, agents or advisors other than, with respect to Acquiror
and the Company, the obligations pursuant to this Section 8.2, and the last
sentence of Section 6.2. Nothing contained in this Section 8.2 shall
relieve Acquiror or the Company from liability for willful breach of this
Agreement.
(b) If this Agreement is terminated:
(A) by either the Acquiror or the Company pursuant to Section
8.1(b)(iii) or by the Acquiror pursuant to Section 8.1(d)(i) and any
person (other than Acquiror or any of its affiliates) shall have made a
bona fide Acquisition Proposal to the Company that becomes disclosed to
the public prior to the Special Meeting, and within one year after the
effective date of such termination the Company is the subject of a Third
Party Acquisition Event (as defined below) with such person,
(B) by the Company pursuant to Section 8.1(c)(i), or
(C) by Acquiror pursuant to Section 8.1(d)(ii),
then at the time of termination with respect to (B) or (C) above or the
time of execution of a definitive agreement regarding such a Third Party
Acquisition Event with respect to (A) above, the Company shall pay to the
Acquiror a fee of $1,500,000 in cash (the "Fee") and reimburse the Acquiror
for its reasonable out-of-pocket costs incurred by Acquiror or on behalf of
Acquiror in connection with this Agreement and the transactions
contemplated hereby up to an amount not to exceed $1,500,000. The Company
shall not enter into any agreement with respect to any Third Party
Acquisition Event which does not, as a condition precedent to the execution
of such agreement, require such reimbursement of expenses and the Fee to be
paid to Acquiror upon such execution.
(c) As used herein, the term "Third Party Acquisition Event" shall
mean either of the following:
(i) the Company shall agree to, consummate, or announce its
intention to enter into any agreement relating to an Acquisition
Proposal; or
23
<PAGE> 27
(ii) any person (other than a party hereto or its affiliates) shall
have acquired beneficial ownership (as such term is defined in Rule
13d-3 under the Exchange Act) or the right to acquire beneficial
ownership of, or a new group has been formed which beneficially owns or
has the right to acquire beneficial ownership of, 15% or more of the
outstanding Common Stock.
(d) The obligations of the Company and Acquiror under this Section 8.2
shall survive any termination of this Agreement. In the event of an
occurrence pursuant to Sections 8.2(b)(A), 8.2(b)(B), or 8.2(b)(C) which
shall give rise to the payment of the Fee and expenses pursuant to Section
8.2(b), the payment of the Fee and any such expenses shall be the sole and
exclusive remedy of Acquiror.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified and supplemented in any and all respects,
whether before or after any vote of the shareholders of the Company contemplated
hereby, by written agreement of the parties hereto, by action taken by their
respective Boards of Directors, at any time prior to the Closing Date with
respect to any of the terms contained herein; provided, however, that after the
approval of this Agreement by the shareholders of the Company, no such
amendment, modification or supplement shall reduce or change the Cash
Consideration or adversely affect the rights of the Company's shareholders
hereunder without the approval of such shareholders.
Section 9.2 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any schedule, instrument
or other document delivered pursuant to this Agreement shall survive the
Effective Time or the termination of this Agreement. This Section 9.2 shall not
limit any covenant or agreement contained in this Agreement which by its terms
contemplates performance after the Effective Time or termination.
Section 9.3 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, telecopied
(which is confirmed) or sent by an overnight courier service, such as Federal
Express, to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
(a) if to Acquiror or the Merger Sub, to:
Dorel Industries Inc.
4750 Boulevard des Grande Prairies
St. Leonard, Quebec H1R 1A3
Telephone No.: (514) 323-5701
Telecopy No.: (514) 323-9621
Attention: Martin Schwartz
with a copy to:
Shearman & Sterling
Commerce Court West, Suite 4405
Toronto, Ontario M5L 1E8
Telephone No.: (416) 360-8484
Telecopy No.: (416) 360-2958
Attention: Bruce Czachor, Esq.
and
24
<PAGE> 28
(b) if to the Company, to:
Ameriwood Industries
International Corporation
168 Louis Campau Promenade
Suite 400
Grand Rapids, Michigan 49503
Telephone No.: (616) 336-9400
Telecopy No.: (616) 336-9401
Attention: Charles R. Foley
with a copy to:
Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 West Wacker Drive
Chicago, Illinois 60606
Telephone No.: (312) 407-0700
Telecopy No.: (312) 407-0411
Attention: William R. Kunkel, Esq.
Section 9.4 Interpretation. The words "hereof", "herein" and "herewith" and
words of similar import shall, unless otherwise stated, be construed to refer to
this Agreement as a whole and not to any particular provision of this Agreement,
and article, section, paragraph, exhibit and schedule references are to the
articles, sections, paragraphs, exhibits and schedules of this Agreement unless
otherwise specified. The word "or" shall be construed to refer to "and/or."
Whenever the words "include", "includes" or "including" are used in this
Agreement they shall be deemed to be followed by the words "without limitation".
The words describing the singular number shall include the plural and vice
versa, and words denoting any gender shall include all genders and words
denoting natural persons shall include corporations and partnerships and vice
versa. The phrase "to the best knowledge of" or any similar phrase shall mean
such facts and other information which as of the date of this Agreement are
actually known to any executive officer of the referenced party. The phrase
"made available" in this Agreement shall mean that the information referred to
has been made available if requested by the party to whom such information is to
be made available. The phrases "the date of this Agreement", "the date hereof"
and terms of similar import, unless the context otherwise requires, shall be
deemed to refer to March 27, 1998. As used in this Agreement, the term
"affiliate(s)" shall have the meaning set forth in Rule 12b-2 of the Exchange
Act. The parties have participated jointly in the negotiation and drafting of
this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
Section 9.5 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
Section 9.6 Entire Agreement; Third Party Beneficiaries. This Agreement,
the Tender and Option Agreements and the Confidentiality Agreements (including
the documents and the instruments referred to herein and therein) constitute the
entire agreement and supersede all prior agreements and understandings,
including, without limitation, all representations and warranties made by the
parties in connection herewith, both written and oral, among the parties with
respect to the subject matter hereof. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended or shall confer upon any other person any right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement,
other than (i) Section 6.6 (which is intended to be for the benefit of the
directors and officers of the Company and Indemnified Parties, as applicable,
and may be enforced by such directors, officers and Indemnified Parties) and
(ii) Sections 3.2 and 6.3 (which are intended to be for the benefit of the
directors, officers and employees of the Company and its subsidiaries and may be
enforced by such persons).
25
<PAGE> 29
Section 9.7 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, unenforceable or against its regulatory policy,
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.
Section 9.8 Governing Law.
(a) This Agreement shall be governed and construed in accordance with
the laws of the State of Delaware without giving effect to the principles
of conflicts of law thereof or of any other jurisdiction.
(b) Each of the parties hereto (i) consents to submit itself to the
personal jurisdiction of any Federal court located in the State of Delaware
or any Delaware state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated hereby, (ii) agrees that
it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and (iii) agrees that it
will not bring any action relating to this Agreement or any of the
transactions contemplated hereby in any court other than a Federal or state
court sitting in the State of Delaware.
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH
PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER, (ii) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY MAKES THIS WAIVER
VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 9.8.
Section 9.9 Specific Performance. Each of the parties hereto acknowledges
and agrees that in the event of any breach of this Agreement, each non-breaching
party would be irreparably and immediately harmed and could not be made whole by
monetary damages. It is accordingly agreed that the parties hereto (a) will
waive, in any action for specific performance, the defense of adequacy of a
remedy at law and (b) shall be entitled, in addition to any other remedy to
which they may be entitled at law or in equity, to compel specific performance
of this Agreement in any action instituted in a court of competent jurisdiction.
Section 9.10 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective permitted successors and assigns.
Section 9.11 Expenses. Except as set forth in Section 8.2, all costs and
expenses incurred in connection with this Agreement and the consummation of the
transactions contemplated hereby shall be paid by the party incurring such costs
and expenses, whether or not any of the transactions contemplated hereby is
consummated.
Section 9.12 Headings. Headings of the Articles and Sections of this
Agreement are for convenience of the parties only, and shall be given no
substantive or interpretative effect whatsoever.
Section 9.13 Waivers. Except as otherwise provided in this Agreement, any
failure of any of the parties to comply with any obligation, covenant, agreement
or condition herein may be waived by the party or parties entitled to the
benefits thereof only by a written instrument signed by the party granting such
waiver, but such
26
<PAGE> 30
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure.
IN WITNESS WHEREOF, Acquiror, the Merger Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
AMERIWOOD INDUSTRIES
INTERNATIONAL CORPORATION
By: /s/ NEIL L. DIVER
------------------------------------
Name: Neil L. Diver
Title: Chairman of the Board
DOREL INDUSTRIES INC.
By: /s/ MARTIN SCHWARTZ
------------------------------------
Name: Martin Schwartz
Title: President and Chief Executive
Officer
HORIZON ACQUISITION, INC.
By: /s/ MARTIN SCHWARTZ
------------------------------------
Name: Martin Schwartz
Title: President
27
<PAGE> 31
ANNEX A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, the Merger Sub shall not
be required to accept for payment or pay for any Shares tendered pursuant to the
Offer, and may terminate or amend the Offer and may postpone the acceptance for
payment of and payment for Shares tendered, if (i) the Minimum Condition shall
not have been satisfied, (ii) any applicable waiting period under the HSR Act
shall not have expired or been terminated prior to the expiration of the Offer,
or (iii) at any time on or after the date of this Agreement, and prior to the
acceptance for payment of Shares, any of the following conditions shall exist:
(a) there shall have been instituted or be pending any action or
proceeding before any court or governmental, administrative or regulatory
authority or agency, domestic or foreign, (i) challenging or seeking to
make illegal, materially delay or otherwise directly or indirectly restrain
or prohibit or make materially more costly the making of the Offer, the
acceptance for payment of, or payment for, any Shares by Acquiror, the
Merger Sub or any other affiliate of Acquiror or the consummation of any
other transaction contemplated hereby or thereby, or seeking to obtain
material damages in connection with any transaction contemplated hereby or
thereby; (ii) seeking to prohibit or limit materially the ownership or
operation by the Company, Acquiror or any of their subsidiaries of all or
any material portion of the business or assets of the Company, Acquiror or
any of their subsidiaries, or to compel the Company, Acquiror or any of
their subsidiaries to dispose of or hold separate all or any material
portion of the business or assets of the Company, Acquiror or any of their
subsidiaries, as a result of the transactions contemplated hereby; (iii)
seeking to impose or confirm limitations on the ability of Acquiror, the
Merger Sub or any other affiliate of Acquiror to exercise effectively full
rights of ownership of any Shares, including, without limitation, the right
to vote any Shares acquired by the Merger Sub pursuant to the Offer or
otherwise on all matters properly presented to the Company's stockholders,
including, without limitation, the approval and adoption of this Agreement
and the transactions contemplated hereby; (iv) seeking to require
divestiture by Acquiror, the Merger Sub or any other affiliate of Acquiror
of any Shares; or (v) which otherwise has an Acquiror Material Adverse
Effect;
(b) there shall have been any action taken, or any statute, rule,
regulation, legislation, interpretation, judgment, order or injunction
enacted, entered, enforced, promulgated, amended, issued or deemed
applicable to (i) Acquiror, the Company or any subsidiary or affiliate of
Acquiror or the Company or (ii) any transaction contemplated hereby, by any
legislative body, court, government or governmental, administrative or
regulatory authority or agency, domestic or foreign, other than the routine
application of the waiting period provisions of the HSR Act to the Offer or
the Merger, which is reasonably likely to result, directly or indirectly,
in any of the consequences referred to in clauses (i) through (v) of
paragraph (a) above;
(c) there shall have occurred any change, condition, event or
development that has a Company Material Adverse Effect, provided, however,
that no event, change or effect that primarily results from this Agreement,
the Merger, the Offer and the transactions contemplated thereby or the
announcement thereof shall be deemed to cause either individually or in the
aggregate a Company Material Adverse Effect;
(d) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on NASDAQ for the Company
for a period in excess of 24 hours (excluding suspensions or limitations
resulting solely from physical damage or interference with such exchange
not related to market conditions), (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States or Canada, (iii) any limitation (whether or not mandatory) by any
government or governmental, administrative or regulatory authority or
agency, domestic or foreign, on, or other event that, in the reasonable
judgment of the Merger Sub, might affect, the extension of credit by banks
or other lending institutions, (iv) a commencement of a war or armed
hostilities or other national or international calamity directly or
indirectly involving the United States or Canada or (v) in the case of any
of the foregoing existing on the date hereof, a material acceleration or
worsening thereof;
A-1
<PAGE> 32
(e) (i) it shall have been publicly disclosed or the Merger Sub shall
have otherwise learned that beneficial ownership (determined for the
purposes of this paragraph as set forth in Rule 13d-3 promulgated under the
Exchange Act) of 15% or more of the then outstanding Shares has been
acquired by any person, other than Acquiror or any of its affiliates or
(ii) the Company Board shall have withdrawn or modified in an manner
adverse to Acquiror or the Merger Sub the approval or recommendation of the
Offer, the Merger or this Agreement, or approved or recommended any
takeover proposal or any other acquisition of Shares other than the Offer
and the Merger (or resolved to do any of the foregoing);
(f) any representation or warranty of the Company in this Agreement
which is qualified as to materiality shall not be true and correct or any
such representation or warranty that is not so qualified shall not be true
and correct in any material respect, in each case as if such representation
or warranty was made as of such time on or after the date of this Agreement
(except for a representation or warranty which references a particular
date);
(g) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under this
Agreement;
(h) this Agreement shall have been terminated in accordance with its
terms; or
(i) The Merger Sub and the Company shall have agreed in writing that
the Merger Sub shall terminate the Offer or postpone the acceptance for
payment of or payment for Shares thereunder;
which, in the sole judgment of the Merger Sub in any such case, and regardless
of the circumstances (including any action or inaction by Acquiror or any of its
affiliates) giving rise to any such condition, makes it inadvisable to proceed
with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of the Merger Sub and
Acquiror and may be asserted by the Merger Sub or Acquiror regardless of the
circumstances giving rise to any such condition or may be waived by the Merger
Sub or Acquiror in whole or in part at any time and from time to time in their
sole discretion. The failure by Acquiror or the Merger Sub at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right; the waiver of any such right with respect to particular facts and other
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances; and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
A-2
<PAGE> 33
DEFINED TERMS INDEX
The following defined terms have the meaning defined in the indicated
Section of the Agreement and Plan of Merger:
<TABLE>
<CAPTION>
DEFINED TERM SECTION
------------ -------
<S> <C>
Acquisition Proposal........................................ 6.5(a)
ABN-AMRO.................................................... 1.2
Acquiror.................................................... Preamble
Acquiror Material Adverse Effect............................ 5.1
Acquiror Agreements......................................... 5.3
Articles of Incorporation................................... 2.4(a)
Agreement................................................... Preamble
Benefit Plans............................................... 4.9(a)
Cash Consideration.......................................... 3.1(c)
Certificates................................................ 3.3(b)
Claim....................................................... 6.7(a)
Closing..................................................... 2.6
Closing Date................................................ 2.6
Code........................................................ 4.9(b)
Common Stock................................................ Preamble
Company..................................................... Preamble
Company Affiliates.......................................... 6.8
Company Agreements.......................................... 4.4
Company Balance Sheet....................................... 4.5
Company Board............................................... Preamble
Company Disclosure Letter................................... Article IV
Company Employees........................................... 6.4(a), 6.4(d)
Company Intellectual Property............................... 4.14
Company LLC(s).............................................. 4.1(c)
Company Material Adverse Effect............................. 4.1(a)
Company Option.............................................. 3.2(a)
Company Partnership(s)...................................... 4.1(c)
Company Rights Agreement.................................... 6.11
Company SEC Documents....................................... 4.5
Company Stock Plans......................................... 4.2(a)
Company Subsidiaries........................................ 4.1(b)
Company Subsidiary.......................................... 4.1(b)
Confidentiality Agreement................................... 6.2
D&O Insurance............................................... 6.8(d)
Director Shareholders....................................... Preamble
Effective Time.............................................. 2.2
Employee Agreements......................................... 4.9(a)
Environmental Claims........................................ 4.16
Environmental Laws.......................................... 4.16
ERISA....................................................... 4.9(a)
ERISA Affiliate............................................. 4.9(a)
Exchange Act................................................ 1.2
Exchange Agent.............................................. 3.3(a)
Exchange Fund............................................... 3.3(a)
Fair Market Value........................................... 3.2(b)
GAAP........................................................ 4.1(a)
Governmental Entity......................................... 4.4
</TABLE>
1
<PAGE> 34
<TABLE>
<CAPTION>
DEFINED TERM SECTION
------------ -------
<S> <C>
HSR Act..................................................... 4.4
Indemnified Party........................................... 6.7(a)
Industry.................................................... 4.1(a)
MBCA........................................................ Preamble
Merger...................................................... 2.1
Merger Sub.................................................. Preamble
Merger Sub Common Stock..................................... 3.1(a)
Merger Sub Disclosure Letter................................ Article IV
Merger Sub Securities....................................... 5.6
Minimum Condition........................................... 1.1
NASDAQ...................................................... 3.2(b)
Offer....................................................... Preamble
Offer to Purchase........................................... 1.1
Per Share Amount............................................ Preamble
Potential Acquiror.......................................... 6.5(a)(i)
Preferred Stock............................................. 4.2(a)
Proxy Statement............................................. 4.8
Rights...................................................... 6.11
SAR......................................................... 3.2(b)
Schedule 14D-1.............................................. 1.1
SEC......................................................... 1.1
Securities Act.............................................. 4.4
Significant Subsidiary...................................... 4.1(a)
Special Meeting............................................. 4.8
Superior Proposal........................................... 6.5(c)
Surviving Corporation....................................... 2.1
Tax Return.................................................. 4.12(e)
Taxes....................................................... 4.12(e)
Tender and Option Agreements................................ Preamble
Third Party Acquisition Event............................... 8.2(d)
</TABLE>
2
<PAGE> 1
EXHIBIT 2
FORM OF TENDER AND OPTION AGREEMENT
TENDER AND OPTION AGREEMENT, dated as of March 27, 1998 (the "Agreement"),
by and among Dorel Industries Inc., a Quebec corporation ("Acquiror"), Horizon
Acquisition, Inc., a Delaware corporation and a wholly-owned subsidiary of
Acquiror ("Merger Sub"), and [ ] (the "Shareholder").
WHEREAS, the Shareholder is the owner of [ ] shares (the
"Shares") of Common Stock, par value $1.00 per share (the "Common Stock"), of
Ameriwood Industries International Corporation (the "Company");
WHEREAS, the Acquiror, Merger Sub and the Company have entered into an
Agreement and Plan of Merger, dated as of the date hereof (as amended from time
to time, the "Merger Agreement"), which provides, among other things, that, upon
the terms and subject to the conditions therein, Merger Sub will make a cash
tender offer (the "Offer") for all of the outstanding shares of Common Stock and
after expiration of the Offer will merge with and into the Company (the
"Merger"); and
WHEREAS, as a condition to the willingness of Acquiror and Merger Sub to
enter into the Merger Agreement, Acquiror has requested that the Shareholder
agree, and in order to induce Acquiror and Merger Sub to enter into the Merger
Agreement, the Shareholder has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and subject to the terms and conditions set forth herein,
the parties hereto hereby agree as follows:
1. Representations and Warranties of the Shareholder. The Shareholder
represents and warrants to the Acquiror as follows:
a. The Shareholder is the sole record and beneficial owner (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of the Shares and, there exist no liens, claims, security
interests, options, proxies, voting agreements, charges, obligations,
understandings, arrangements or other encumbrances of any nature
whatsoever, except for restrictions applicable thereto under federal and
state securities laws ("Liens"), affecting the Shares.
b. The Shares and the certificates representing the Shares are now and
at all times during the term hereof will be held by the Shareholder, or by
a nominee or custodian for the benefit of the Shareholder free and clear of
all Liens, except for the Liens described in (a) above and Liens arising
hereunder. Upon transfer to Acquiror by the Shareholder of the Shares
hereunder, Acquiror will have good and marketable title to the Shares, free
and clear of all Liens.
c. This Agreement has been duly and validly executed and delivered by
the Shareholder and, assuming due authorization, execution and delivery by
Acquiror and Merger Sub, constitutes a valid and binding agreement of the
Shareholder, enforceable against the Shareholder in accordance with its
terms, except to the extent that enforceability may be limited by
applicable bankruptcy or other laws affecting the enforcement of creditors'
rights generally and by general principles of equity, regardless of whether
such enforceability is considered in a proceeding in equity or at law.
d. The execution and delivery of this Agreement by the Shareholder
does not, and the performance by the Shareholder of its obligations
hereunder will not, constitute a violation of, conflict with, result in a
default (or an event which, with notice or lapse of time or both, would
result in a default) under, or result in the creation of any Lien on any
Shares under, (i) any contract, commitment, agreement, partnership
agreement, understanding, arrangement or restriction of any kind to which
the Shareholder is a party or by which the Shareholder is bound, (ii) any
judgment, writ, decree, order or ruling applicable to the Shareholder or
(iii) any law applicable to the Shareholder.
<PAGE> 2
e. To the Shareholder's knowledge, neither the execution and delivery
of this Agreement nor the performance by the Shareholder of its obligations
hereunder will require any consent, authorization or approval of, filing
with or notice to, any court, administrative agency or other governmental
body or authority, other than any required notices or filings pursuant to
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
the rules and regulations promulgated thereunder (the "HSR Act"), state
antitrust laws or the federal securities laws.
2. Representations and Warranties of Acquiror and Merger Sub. Acquiror and
Merger Sub jointly and severally represent and warrant to the Shareholder as
follows:
a. Each of Acquiror and Merger Sub is duly organized and validly
existing and in good standing under the laws of its jurisdiction of
incorporation, has the requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby, and has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement. This Agreement has
been duly and validly executed and delivered by each of Acquiror and Merger
Sub and constitutes the legal, valid and binding obligation of each of
Acquiror and Merger Sub, enforceable against each of Acquiror and Merger
Sub in accordance with its terms, except to the extent that enforceability
may be limited by applicable bankruptcy, reorganization, insolvency,
moratorium or other laws affecting the enforcement of creditors' rights
generally and by general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
b. The execution and delivery of this Agreement by each of Acquiror
and Merger Sub does not, and the performance by each of Acquiror and Merger
Sub of its obligations hereunder will not, constitute a violation of,
conflict with, or result in a default (or an event which, with notice or
lapse of time or both, would result in a default) under, its charter or
bylaws or any contract, commitment, agreement, understanding, arrangement
or restriction of any kind to which Acquiror or Merger Sub is a party or by
which Acquiror or Merger Sub is bound or any judgment, writ, decree, order
or ruling applicable to Acquiror or Merger Sub.
c. Neither the execution and delivery of this Agreement nor the
performance by each of Acquiror and Merger Sub of its obligations hereunder
will violate any order, writ, injunction, judgment, law, decree, statute,
rule or regulation applicable to Acquiror or Merger Sub or require any
consent, authorization or approval of, filing with, or notice to, any
court, administrative agency or other governmental body or authority, other
than any required notices or filings pursuant to the HSR Act, state
antitrust laws or the federal securities laws.
3. Tender of Shares.
a. Acquiror and Merger Sub jointly and severally agree:
i. subject to the conditions of the Offer set forth in Annex A to
the Merger Agreement and the other terms and conditions of the Merger
Agreement, that Merger Sub will purchase all shares of Common Stock
tendered pursuant to the Offer as promptly as practicable following
commencement of the Offer and that Merger Sub will consummate the Merger
in accordance with the terms of the Merger Agreement;
ii. not to decrease the price per share to be paid to the Company's
shareholders in the Offer below $9.625 per share (the "Tender Offer
Price"); and
iii. to deliver, or to cause to be delivered, the Offer Documents
to the Shareholder. The provisions of Sections 3(a)(i) and 3(a)(ii)
shall survive the termination of this Agreement.
b. The Shareholder will (i) tender the Shares into the Offer promptly,
and in any event no later than the fifth business day following the
commencement of the Offer, or, if the Shareholder has not received the
Offer Documents by such time, within two business days following receipt of
such documents, and (ii) not withdraw any Shares so tendered (except in the
event the Stock Option is exercised). Upon the purchase of all the Shares
pursuant to the Offer in accordance with this Section 3, this Agreement
will terminate. The Shareholder will receive the same price per Share
received by other shareholders of the
2
<PAGE> 3
Company in the Offer with respect to Shares tendered by it in the Offer. In
the event that, notwithstanding the provisions of the first sentence of
this Section 3(b), any Shares are for any reason withdrawn from the Offer
or are not purchased pursuant to the Offer, such Shares will remain subject
to the terms of this Agreement. The Shareholder acknowledges that Merger
Sub's obligation to accept for payment and pay for the Shares in the Offer
is subject to all the terms and conditions of the Offer. On the date the
Shares are accepted for payment and purchased by Merger Sub pursuant to the
Offer, Merger Sub or Acquiror, as the case may be, shall make payment by
wire transfer or other method (as agreed by Merger Sub and the Shareholder)
to the Shareholder of the purchase price for such Shares to an account
designated by the Shareholder.
c. The Shareholder hereby agrees to permit Acquiror to publish and
disclose in the Offer Documents and, if approval of the shareholders of the
Company is required under applicable law, the Proxy Statement, its identity
and ownership of Common Stock and the nature of its commitments,
arrangements and understandings under this Agreement.
4. Option to Purchase.
a. The Shareholder hereby grants to Acquiror, subject to the terms and
conditions hereof, an irrevocable option (the "Stock Option") to purchase
the Shares at a purchase price per share of $9.625 per Share (the "Exercise
Price") in cash, in the manner set forth in this Section 4. At any time
prior to the termination of the Stock Option hereunder, Acquiror (or a
wholly owned subsidiary of Acquiror) may exercise the Stock Option, in
whole only, if on or after the date hereof:
i. any corporation, partnership, individual, trust, unincorporated
association, or other entity or "person" (as defined in Section 13(d)(3)
of the Exchange Act) other than Acquiror or any of its "affiliates" (as
defined in the Exchange Act) (a "Third Party"), will have:
A. commenced or announced an intention to commence a bona fide
tender offer or exchange offer for any shares of Common Stock, the
consummation of which would result in "beneficial ownership" (as
defined in the Exchange Act) by such Third Party (together with all
such Third Party's affiliates and "associates" (as defined in the
Exchange Act)) of 35% or more of the then outstanding voting equity
of the Company (either on a primary or a fully diluted basis);
B. acquired beneficial ownership of shares of Common Stock that,
when aggregated with any shares of Common Stock already owned by such
Third Party, its affiliates and associates, would result in the
aggregate beneficial ownership by such Third Party, its affiliates
and associates of 15% or more of the then outstanding voting equity
of the Company (either on a primary or a fully diluted basis);
provided, however, that "Third Party" for purposes of this clause (B)
does not include any corporation, partnership, person, other entity
or group that beneficially owns more than 15% of the outstanding
voting equity of the Company (either on a primary or a fully diluted
basis) as of the date hereof and that does not, after the date
hereof, increase such ownership percentage by more than an additional
1% of the outstanding voting equity of the Company (either on a
primary or a fully diluted basis);
C. acquired assets constituting 15% or more of the total assets
or earning power of the Company taken as a whole;
D. entered into an agreement with the Company that contemplates
the acquisition of (x) assets constituting 15% or more of the total
assets or earning power of the Company taken as a whole or (y)
beneficial ownership of 15% or more of the outstanding voting equity
of the Company; or
ii. any of the events described in Section 8.1(c)(i) of the Merger
Agreement that would allow the Company to terminate the Merger Agreement
has occurred (after the passage of any time periods set forth in such
sections but without the necessity of the Company having terminated the
Merger Agreement).
3
<PAGE> 4
In the event that Acquiror wishes to exercise the Stock Option,
Acquiror shall give written notice (the "Option Notice", with the date
of the Option Notice being hereinafter called the "Notice Date") to the
Shareholder specifying the place and date (not earlier than three nor
later than ten Business Days from the Notice Date) for closing such
purchase (a "Closing"). Acquiror's obligation to purchase the Shares
upon any exercise of the Stock Option and the Shareholder's obligation
to sell the Shares upon any exercise of the Stock Option are subject (at
the election of Acquiror and the Shareholder, respectively,) to the
conditions that (i) no preliminary or permanent injunction or other
order prohibiting the purchase, issuance or delivery of the Shares
issued by any Governmental Authority will be in effect and (ii) any
applicable waiting period required for the purchase of Shares under the
HSR Act will have expired or been terminated or clearance from the
appropriate agencies shares have been obtained, provided that if such
injunction or other order has become final and nonappealable, the Stock
Option shall terminate; and provided further, that if the Stock Option
is not exercisable because either of the circumstances described in the
immediately foregoing clause (i) or (ii) exist, then the Stock Option
shall be exercisable for the ten business day period commencing on the
date that the circumstances set forth in clause (i) or (ii), as
applicable, cease to exist, but in no event shall the Stock Option be
exercisable after the date set forth in Section 9(c). Acquiror's
obligation to purchase the Shares upon exercise of the Stock Option is
further subject (at Acquiror's election) to the condition that there
will have been no material breach of the representations, warranties,
covenants or agreements of the Shareholder contained in this Agreement
or of the Company contained in the Merger Agreement which breach has not
been cured within ten business days of the receipt of written notice
thereof from the Acquiror. The Shareholder's obligation to sell the
Shares upon exercise of the Stock Option and the Shareholder's
obligations under Section 7 are subject (at the Shareholder's election)
to the further conditions that there will have been no material breach
of the representations, warranties, covenants or agreements of Acquiror
or Merger Sub contained in this Agreement or contained in the Merger
Agreement, which breach has not been cured within ten business days of
the receipt of written notice thereof from the Shareholder.
b. At the Closing, (i) the Shareholder shall deliver to Acquiror the
certificate or certificates representing the Shares in proper form for
transfer upon exercise of the Stock Option in the denominations designated
by Acquiror in the Option Notice and (ii) Acquiror shall pay the aggregate
purchase price for the Shares by wire transfer of immediately available
funds to an account designated by the Shareholder in writing to Acquiror in
the amount equal to the product of the Exercise Price and the number of the
Shares.
c. In the event that Acquiror or Merger Sub pays a price higher than
$9.625 per share for Shares tendered into the Offer, the Exercise Price
shall be increased to equal such higher price.
d. In the event that Acquiror or Merger Sub exercise the Stock Option
and subsequent to such exercise either (i) Acquiror or Merger Sub pays
consideration in excess of the Exercise Price for the Common Stock pursuant
to the Merger (a "Higher Price"), or (ii) (A) a Third Party commences a
bona-fide tender offer or exchange offer for Common Stock for consideration
in excess of the Exercise Price (the "Excess Consideration"), (B) the
Company terminates the Merger Agreement in accordance with the provisions
of Section 8.1(c)(i) thereof, (C) prior to such termination, but after
receiving notice of the Company's intention to so terminate, Acquiror or
Merger Sub exercises the Stock Option and (D) Acquiror or Merger Sub
tenders the Shares it received upon the exercise of the Stock Option in
such tender offer or exchange offer and receives Excess Consideration with
respect to such Shares, then, in the case of (i) above, Acquiror or Merger
Sub shall pay to the Shareholder in cash, within five days after Acquiror
or Merger Sub pays the Higher Price to holders of Common Stock, an amount
equal to the number of Shares multiplied by the difference between the
Higher Price and the Exercise Price, and in the case of (ii) above,
Acquiror or Merger Sub shall pay to the Shareholder in cash, within five
days after Acquiror or Merger Sub receives the Excess Consideration to
holders of Common Stock, an amount equal to the number of Shares multiplied
by the difference between the Excess Consideration and the Exercise Price.
4
<PAGE> 5
e. The Shareholder has granted the Stock Option to Acquiror in order
to induce Acquiror to enter into and consummate the transactions
contemplated by the Merger Agreement. Acquiror and Merger Sub covenant and
agree that they will perform their respective obligations under the Merger
Agreement. The provisions of this Section 4(e) are intended both for the
benefit of the Shareholder and for the benefit of the Company and may not
be modified, waived or amended without the consent of the Company.
5. Transfer of the Shares.
a. During the term of this Agreement, the Shareholder will not (i)
offer to sell, sell, pledge or otherwise dispose of or transfer any
interest in or encumber with any Lien any of the Shares, (ii) enter into
any contract, option or other agreement or understanding with respect to
any transfer of any or all of the Shares or any interest therein; (iii)
grant any proxy, power-of-attorney or other authorization or consent in or
with respect to the Shares; (iv) deposit the Shares into a voting trust or
enter into a voting agreement or arrangement with respect to the Shares; or
(v) take any other action with respect to the Shares that would in any way
restrict, limit or interfere with the performance of its obligations
hereunder.
b. The Shareholder agrees to place the following legend on any and all
certificates evidencing the Shares:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO CERTAIN RESTRICTIONS ON TRANSFER PURSUANT TO THAT CERTAIN TENDER AND
OPTION AGREEMENT, DATED AS OF MARCH 27, 1998, BY AND BETWEEN DOREL
INDUSTRIES INC., HORIZON ACQUISITION, INC. AND [ ]. ANY
TRANSFER OF SUCH SHARES OF COMMON STOCK IN VIOLATION OF THE TERMS OF
SUCH AGREEMENT SHALL BE NULL AND VOID AND OF NO EFFECT WHATSOEVER.
6. Certain Other Agreements. The Shareholder shall notify Acquiror
immediately if any proposals are received by, any information is requested from,
or any negotiations or discussions are sought to be initiated or continued with
the Shareholder or his attorneys, accountants or other agents (each of such
actions, an "Interest"), in each case in connection with any Acquisition
Proposal indicating, in connection with such notice, the name of the person
indicating such Interest and the terms and conditions of any related proposals
or offers. The Shareholder agrees to cease immediately and cause to be
terminated immediately any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any Acquisition Proposal. In
addition, the Shareholder agrees to keep Acquiror informed, on a current basis,
of the status and terms of any Acquisition Proposal. The Shareholder furthermore
agrees not to, and will use his best efforts to ensure that his attorneys,
accountants and other agents do not, directly or indirectly: (i) initiate,
solicit or encourage, or take any action to facilitate the making of, any offer
or proposal that constitutes or is reasonably likely to lead to any Acquisition
Proposal, (ii) enter into any agreement with respect to any Acquisition Proposal
or (iii) in the event of an unsolicited written proposal in respect of an
Acquisition Proposal, engage in negotiations or discussions with, or provide any
information or data to, any person (other than Acquiror, any of its affiliates
or representatives and except for information that has been previously publicly
disseminated by the Company) relating to any Acquisition Proposal. The
obligations provided for in this Section 6 shall become effective immediately
following the execution and delivery of this Agreement by the parties hereto.
7. Voting of Shares; Grant of Irrevocable Proxy; Appointment of Proxy.
a. The Shareholder hereby agrees that, during the term of this
Agreement, at any meeting (whether annual or special and whether or not an
adjourned or postponed meeting) of the holders of Common Stock, however
called, or in connection with any written consent of the holders of Common
Stock, the Shareholder will appear at the meeting or otherwise cause the
Shares to be counted as present thereat for purposes of establishing a
quorum and vote or consent (or cause to be voted or consented) the Shares
(i) in favor of the Merger and (ii) against any action or agreement that
would impede, interfere with or prevent the Merger, including any other
extraordinary corporate transaction, such as a merger, reorganization or
liquidation involving the Company and a third party or any other proposal
of a third party to acquire the Company and (iii) if requested by Acquiror,
in favor of a shareholder resolution proposed by Acquiror in accordance
with applicable provisions of the Michigan Business Corporation Act
5
<PAGE> 6
(the "MBCA") the purpose of which is to cause the Offer and the Merger to
be consummated and which does not relate to the election of directors.
b. The Shareholder hereby irrevocably grants to, and appoints,
Acquiror and any nominee thereof, its proxy and attorney-in-fact (with full
power of substitution) during the term of this Agreement, for and in the
name, place and stead of the Shareholder, to vote the Shares, or grant a
consent or approval in respect of the Shares, in connection with any
meeting of the shareholders of the Company (i) in favor of the Merger and
(ii) against any action or agreement that would impede, interfere with or
prevent the Merger, including any other extraordinary corporate
transaction, such as a merger, reorganization or liquidation involving the
Company and a third party or any other proposal of a third party to acquire
the Company.
c. The Shareholder represents that all proxies heretofore given in
respect of the Shares, if any, are not irrevocable, and hereby revokes all
such proxies given with respect to the Shares.
d. The Shareholder hereby affirms that the irrevocable proxy set forth
in this Section 7 is given in connection with the execution of the Merger
Agreement and that such irrevocable proxy is given to secure the
performance of the duties of the Shareholder under this Agreement. The
Shareholder hereby further affirms that the irrevocable proxy set forth in
this Section 7 is coupled with an interest and is intended to be
irrevocable in accordance with the provisions of Section 212 of the
Delaware General Corporation Law and Section 422 of the MBCA.
8. Adjustments. The number and types of securities subject to this
Agreement will be appropriately adjusted in the event of any stock dividends,
stock splits, recapitalization, combinations, exchanges of shares or the like or
any other action that would have the effect of changing the Shareholder's
ownership of the Company's capital stock.
9. Termination. Except as otherwise specifically provided herein, all
obligations under this Agreement will terminate on the earliest of (a) the date
the Merger Agreement is terminated in accordance with its terms or the date the
Offer is terminated by Acquiror or Merger Sub as a result of any failure of a
condition of the Offer; provided, however, that the provisions of Sections 4(a)
shall not terminate until sixty (60) days thereafter (or such later time as
permitted by Section 4(a)) if the Merger Agreement was terminated pursuant to
Section 8.1(c)(i) thereof, (b) the purchase of all the Shares pursuant to the
Offer in accordance with Section 3 or pursuant to the Stock Option, or (c) on
September 30, 1998. The provisions of Section 13 shall survive any termination
of this Agreement.
10. Effectiveness. This Agreement shall not be effective unless and until
the Merger Agreement shall have been approved by the Company's Board of
Directors.
11. Brokerage. Acquiror, Merger Sub and the Shareholder represent and
warrant to the other that the negotiations relevant to this Agreement have been
carried on by Acquiror and Merger Sub, on the one hand, and the Shareholder, on
the other hand, directly with the other, and that there are no claims for
finder's fees or brokerage commissions or other like payments in connection with
this Agreement or the transactions contemplated hereby. Acquiror and Merger Sub,
on the one hand, and Shareholder, on the other hand, will indemnify and hold
harmless the other from and against any and all claims or liabilities for
finder's fees or brokerage commissions or other like payments incurred by reason
of action taken by him, it or any of them, as the case may be.
12. Miscellaneous.
a. Except for the representations and warranties set forth in Section
1(a) and l(b), all representations and warranties contained herein will
terminate upon the termination of this Agreement.
b. Any provisions of this Agreement may be waived at any time by the
party that is entitled to the benefits thereof. No such waiver, amendment
or supplement will be effective unless in writing and is signed by the
party or parties sought to be bound thereby. Any waiver by any party of a
breach of any provision of this Agreement will not operate as or be
construed to be a waiver of any other breach of such provisions or of any
breach of any other provision of this Agreement. The failure of a party to
insist upon
6
<PAGE> 7
strict adherence to any term of this Agreement or one or more sections
hereof will not be considered a waiver or deprive that party of the right
thereafter to insist upon strict adherence to that term or any other term
of this Agreement.
c. This Agreement contains the entire agreement among the parties in
respect to the subject matter hereof, and supersedes all prior agreements
among the parties with respect to such matters. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified, except upon
the delivery of a written agreement executed by the parties hereto.
d. This Agreement will be governed by and construed in accordance with
the laws of the State of Delaware applicable to contracts made and
performed in that state. Each of the parties hereto acknowledges and agrees
that in the event of any breach of this Agreement, each non-breaching party
would be irreparably and immediately harmed and could not be made whole by
monetary damages. It is accordingly agreed that the parties hereto (i) will
waive, in any action for specific performance, the defense of adequacy of a
remedy at law and (ii) will be entitled, in addition to any other remedy to
which they may be entitled at law or in equity, to compel specific
performance of this Agreement in any action instituted in any state or
federal court sitting in Wilmington, Delaware. Capitalized terms used and
not otherwise defined herein shall have the meanings set forth in the
Merger Agreement.
e. The descriptive headings contained herein are for convenience and
reference only and will not affect in any way the meaning or interpretation
of this Agreement.
f. All communications or notices required or permitted by this
Agreement shall be in writing and shall be deemed to have been given at the
earlier of the date personally delivered or sent by telephonic facsimile
transmission (with a copy via regular mail) or one day after sending via
nationally recognized overnight courier or five days after deposit in the
United States mail, certified or registered mail, postage prepaid, return
receipt requested, and addressed as follows, unless and until any of such
parties notifies the others in accordance with this Section of a change of
address:
If to Shareholder to:
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
with a copy to:
Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 West Wacker
Suite 2100
Chicago, IL 60606
Telephone: (312) 407-0700
Telecopy: (312) 407-0411
Attention: William R. Kunkel, Esq.
If to Acquiror or Merger Sub to:
[ ]
[ ]
[ ]
with a copy to:
[ ]
[ ]
[ ]
7
<PAGE> 8
or to such other address as any party may have furnished to the other parties in
writing in accordance herewith.
g. This Agreement may be executed in any number of counterparts, each
of which will be deemed to be an original, but all of which together will
constitute one agreement.
h. This Agreement is binding upon and is solely for the benefit of the
parties hereto and their respective successors, legal representatives and
assigns. Neither this Agreement nor any of the rights, interests or
obligations under this Agreement may be assigned by any of the parties
hereto without the prior written consent of the other parties.
i. If any term or other provision of this Agreement is determined to
be invalid, illegal or incapable of being enforced by any rule of law or
public policy, all other terms and provisions of this Agreement will
nevertheless remain in full force and effect as long as the economic or
legal substance of the transactions contemplated hereby is not affected in
any manner adverse to any party hereto. Upon any such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto will negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that the transactions
contemplated by this Agreement are consummated to the extent possible.
j. All rights, powers and remedies provided under this Agreement or
otherwise available in respect hereof at law or in equity will be
cumulative and not alternative, and the exercise of any thereof by either
party will not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party.
13. Expenses. Except as provided in Section 4 hereof, all fees and expenses
incurred by any one party hereto shall be borne by the party incurring such fees
and expenses.
14. Further Assurances; Shareholder Capacity.
a. The Shareholder shall, upon request of Acquiror or Merger Sub,
execute and deliver any additional documents and take such further actions
as may reasonably be deemed by Acquiror or Merger Sub to be necessary or
desirable to carry out the provisions hereof and to vest the power to vote
the Shares as contemplated by Section 7 hereof in Acquiror.
b. Nothing in this Agreement shall be construed to prohibit any
affiliate of the Shareholder who is a member of the Board of Directors of
the Company from taking any action solely in his capacity as a member of
the Board of Directors of the Company to the extent specifically permitted
by the Merger Agreement or as required by applicable law.
8
<PAGE> 9
IN WITNESS WHEREOF, the Acquiror, Merger Sub and the Shareholder have
caused this Agreement to be signed by their respective officers or
representatives thereunto duly authorized, all as of the date first written
above.
DOREL INDUSTRIES INC.
By:
-----------------------------------
Name:
Title:
HORIZON ACQUISITION, INC.
By:
-----------------------------------
Name:
Title:
-----------------------------------
[ ], as Shareholder
9
<PAGE> 1
EXHIBIT 3
DOREL BIDS FOR U.S. RTA MANUFACTURER
AMERIWOOD BOARD RECOMMENDS ACCEPTANCE
MONTREAL, CANADA March 30, 1998--Dorel Industries Inc. (ME/TSE: DII.A;
DII.B) ("Dorel") and Ameriwood Industries International Corporation
(NASDAQ/NMS:AWII) ("Ameriwood") today jointly announced that the two companies
have entered into a definitive merger agreement for the acquisition of Ameriwood
by Dorel. Upon completion of the merger, Ameriwood will become a subsidiary of
Charleswood Corporation, a wholly-owned subsidiary of Dorel.
Under the terms of agreement, Dorel will commence a tender offer no later
than April 3, 1998, to acquire all of the outstanding shares of Ameriwood for
U.S. $9.625 per share in cash. Following the completion of the tender offer,
Dorel will, if necessary, consummate a second step merger in which all
remaining Ameriwood shareholders will also receive U.S. $9.625 per share in
cash. The total purchase price will be approximately U.S. $41.1 million.
The Board of Directors of Ameriwood has approved the transaction and
recommends that Ameriwood shareholders tender their shares in Dorel's offer. In
addition, certain of the directors of Ameriwood, controlling shares representing
approximately 10% on a fully diluted basis of the outstanding shares of
Ameriwood, have agreed to tender their shares in Dorel's offer. Completion of
the tender offer and merger are subject to customary conditions, including the
tender of a majority of Ameriwood's shares and termination of the waiting period
under U.S. anti-trust laws. The tender offer will be made pursuant to definitive
documents to be filed with the Securities and Exchange Commission.
In fiscal 1997, Ameriwood registered sales of U.S. $94.6 million, or
Cdn. $131 million, while Dorel's revenues were U.S. $384.1 million, or Cdn.
$531.7 million.
Charles R. Foley, Ameriwood's President and CEO, said, "We are confident
that becoming part of Dorel Industries will enhance Ameriwood's ability to serve
our customers in providing outstanding products and service. Dorel's financial
success demonstrates its strong operational and cost effectiveness. We are also
enthusiastic about the opportunities this combination provides for our dedicated
associates."
Neil L. Diver, Ameriwood's Chairman, also remarked, "We are very pleased
that Ameriwood and its employees will join the successful Dorel
ready-to-assemble ("RTA") companies. We have been particularly impressed with
Dorel's relationships with the mass merchants and we are confident that our
skills will be complementary."
Dorel President and CEO, Martin Schwartz said the offer is yet another
example of the company's disciplined acquisition strategy. "We have been careful
to stick to the areas we know best. Similar past purchases have served the
corporation well. Since RTA is the major contributor to Dorel's profitability
and because of the excellent relationships we enjoy with the mass merchants, we
feel confident this additional market share will further add to our
profitability."
Dorel is a vertically-integrated consumer products manufacturer and
distributor specializing in three product areas: ready-to-assemble ("RTA")
furniture; juvenile furniture and accessories; and home furnishings. Dorel's
products include a wide variety of RTA furniture for home and office use;
juvenile furniture and accessories; and home furnishings as well as a mid-market
line of case goods.
Dorel employs more than 2,900 people in nine countries. Major facilities
include the corporate head office, Dorel Home Products and the Leadra Design
division in Montreal, Quebec; Ridgewood in Cornwall, Ontario; Cosco, Inc. in
Columbus, Indiana; Infantino in San Diego, California and Charleswood
Corporation in Wright City, Missouri. European operations include Dorel (U.K.)
Limited in the United Kingdom and Maxi-Miliaan B.V. in the Netherlands.
Ameriwood is one of the leading U.S. manufacturers of quality RTA. Products
for the home and office account for some 75% of sales. The balance is derived
from custom-manufactured products for customers in the audio, contract furniture
and other specialty businesses. The company owns two major, fully equipped,
<PAGE> 2
modern factories; a 535,000 square foot complex in Tiffin, Ohio as well as a
500,000 square foot facility in Dowagiac, Michigan. Ameriwood employs over 700
people.
(Statements contained in this press release which are not historical facts
are forward-looking statements. Such forward-looking statements are necessary
estimates reflecting the best judgement of the party making such statements
based upon current information and involve a number of risks and uncertainties.
Forward-looking statements contained in this press release or in other public
statements of the parties should be considered in light of those factors. There
can be no assurance that such factors or other factors will not affect the
accuracy of such forward-looking statements.)
Ameriwood press contacts: Neil Diver
(415) 721-5511
Seyforth and Associates (Steve Poole)
(616) 776-3511
<PAGE> 1
EXHIBIT 4
[AMERIWOOD INDUSTRIES INTERNATIONAL CORPORATION LOGO]
To Our Shareholders:
I am pleased to inform you that, on March 27, 1998, Ameriwood Industries
International Corporation (the "Company") entered into an Agreement and Plan of
Merger (the "Agreement") with Horizon Acquisition, Inc. ("Purchaser"), a
wholly-owned subsidiary of Dorel Industries Inc. ("Parent"), pursuant to which
Purchaser has commenced a cash tender offer (the "Offer") to purchase all of the
Company's outstanding shares of common stock, including the associated common
share purchase rights (the "Shares"), at a price of $9.625 per Share, net to the
seller in cash, without interest. Under the Agreement, the Offer will be
followed by a merger (the "Merger") in which any remaining Shares of the
Company's common stock will be converted into the right to receive the same cash
consideration per Share as is paid to shareholders in the Offer.
The Board of Directors of the Company has unanimously approved the
Agreement, the Offer and the Merger, and has determined that each of the Offer
and the Merger is fair to, and in the best interests of, the Company and its
shareholders. The Board unanimously recommends that all shareholders of the
Company accept the Offer and tender their Shares pursuant to the Offer.
In arriving at its determination and recommendation, the Board gave careful
consideration to a number of factors which are described in the enclosed
Schedule 14D-9, including the opinion, dated March 27, 1998, of ABN AMRO
Incorporated, the Company's financial advisor, that, as of such date, the $9.625
per Share cash consideration to be received by the holders of the Shares in the
Offer and the Merger is fair to such holders, from a financial point of view.
Additional information with respect to the Board's decision and its actions
is contained in the enclosed Schedule 14D-9. In addition, enclosed is the Offer
to Purchase dated April 3, 1998, together with related materials, including a
Letter of Transmittal, to be used for tendering your Shares pursuant to the
Offer. These documents state the terms and conditions of the Offer and the
Merger, provide detailed information about the transactions and include
instructions as to how to tender your Shares. We urge you to read these
documents carefully.
I appreciate very much the opportunity I have had to serve as the Chairman
of the Board of Directors of the Company. I hope you are as pleased as I am that
your investment in the Company has led to the opportunity afforded by the Offer.
Sincerely,
/s/ NEIL L. DIVER
Neil L. Diver
Chairman of the Board
Ameriwood Industries
International Corporation
168 Louis Campau Promenade, Suite 400 Grand Rapids, MI 49503 616 - 336 - 9400
FAX: 616 - 336 - 9401
<PAGE> 1
EXHIBIT 5
ABN AMRO LETTERHEAD
March 27, 1998
The Board of Directors
Ameriwood Industries International Corporation
168 Louis Campau Promenade, Suite 400
Grand Rapids, MI 49503
Gentlemen:
We understand that Ameriwood Industries International Corporation (the
"Company"), Dorel Industries Inc. (the "Acquiror") and Horizon Acquisition,
Inc., a wholly owned subsidiary of the Acquiror (the "Merger Sub"), propose to
enter into an Agreement and Plan of Merger dated March 27, 1998 (the
"Agreement") which provides for the commencement of a cash tender offer (the
"Offer") by Merger Sub to acquire all of the issued and outstanding shares of
the Company's common stock, par value $1.00 per share (the "Common Stock"), at
$9.625 per share, net to the seller in cash (the "Per Share Amount"), and for
the subsequent merger of Merger Sub with and into the Company, pursuant to which
each outstanding share of Common Stock not purchased in the Offer will be
converted into the right to receive a cash amount equal to $9.625 (the "Cash
Consideration") (the "Merger" and together with the Offer, the "Transaction").
The Per Share Amount and the Cash Consideration to be received by holders of
Common Stock pursuant to the Transaction are collectively referred to herein as
the "Consideration."
You have asked us whether, in our opinion, the Consideration to be received
by the holders of Common Stock is fair to such stockholders from a financial
point of view.
In connection with this opinion, we have reviewed the Agreement and certain
related documents and held discussions with certain senior officers and other
representatives and advisors of the Company concerning the business, operations
and prospects of the Company. We have examined certain publicly available
business and financial information relating to the Company as well as certain
financial data and other data for the Company which were provided to or
otherwise discussed with us by certain senior officers of the Company. We
reviewed the financial terms of the Transaction as set forth in the Agreement in
relation to the current and historical market prices and trading volumes of the
Common Stock, the Company's financial and other operating data, and the
capitalization and financial condition of the Company. We also considered, to
the extent publicly available, the financial terms of certain other business
combinations recently effected which we considered relevant in evaluating the
Transaction and analyzed certain financial, stock market and other publicly
available information relating to the businesses of other companies whose
operations we considered relevant in evaluating those of the Company. In
connection with our engagement we identified, approached and held discussions
with certain third parties to solicit indications of interest in a possible
acquisition of the Company.
In rendering our opinion, we have assumed and relied upon the accuracy and
completeness of the financial and other information reviewed by us and we have
not made or obtained or assumed any responsibility for independent verification
of such information. In addition, we have not made an independent evaluation or
appraisal of the assets and liabilities of the Company or any of its
subsidiaries. With respect to the projected financial data, we have assumed that
it has been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the management and the Company as to the future
financial performance of the Company. We have assumed that the Transaction will
be consummated in accordance with the terms of the Agreement.
ABN AMRO Incorporated ("AAI"), as part of its investment banking business,
is continually engaged in the valuation of businesses in connection with mergers
and acquisitions, as well as public offerings and secondary market transactions
of securities and valuations for other purposes. We have acted as financial
<PAGE> 2
advisor to the Board of Directors of the Company in connection with this
transaction and will receive a fee for rendering our services, including this
opinion, a significant portion of which is contingent upon the consummation of
the Transaction. In the ordinary course of our business, AAI and its affiliates
may actively trade securities of the Company for their own account and for the
accounts of customers and, accordingly, may at any time hold a long or short
position in such securities.
It is understood that this letter is for the benefit and use of the Board
of Directors of the Company in its consideration of the Transaction and may not
be used for any other purpose or reproduced, disseminated, quoted or referred to
at any time, in any manner or for any purpose without our prior consent, except
that the Company is authorized to include this letter in its entirety in the
Offer documents, the Schedule 14D-9 and, if applicable, the proxy materials
contemplated by the Agreement. This letter does not address the Company's
underlying business decision to enter into the Transaction or constitute a
recommendation to any stockholder as to whether such stockholder should tender
their shares or how such stockholder should vote with respect to the proposed
Transaction. In addition, we express no opinion relative to terms on which
certain stockholders have entered into Tender and Option Agreements. Finally,
our opinion is necessarily based on economic, monetary, market and other
conditions as in effect on, and the information made available to us as of, the
date hereof, and we assume no responsibility to update or revise our opinion
based upon circumstances or events occurring after the date hereof.
Based upon and subject to the foregoing, we are of the opinion that, as of
the date hereof, the Consideration is fair from a financial point of view to the
stockholders of the Company.
Very truly yours,
ABN AMRO Incorporated
<PAGE> 1
EXHIBIT 6
AMENDMENT NO. 1 TO RIGHTS AGREEMENT
This Amendment No. 1 (this "Amendment"), dated as of March 27, 1998, is
entered into between Ameriwood Industries International Corporation, a Michigan
corporation (the "Company"), and Harris Trust and Savings Bank, an Illinois
banking corporation, as Rights Agent (the "Rights Agent").
WHEREAS, the Company and the Rights Agent have entered into a Rights
Agreement, dated as of April 4, 1996 (the "Rights Agreement");
WHEREAS, the Company intends to enter into an Agreement and Plan of Merger,
dated as of March 27, 1998 (as it may be amended from time to time, the "Merger
Agreement"), among the Company, Dorel Industries Inc., a Quebec corporation
("Parent"), and Horizon Acquisition, Inc., a Delaware corporation and a
wholly-owned subsidiary of Parent ("Acquisition Sub"), pursuant to which
Acquisition Sub has agreed to make a cash tender offer (the "Offer") for all
outstanding shares of common stock, including the associated common share
purchase rights (the "Shares"), of the Company, to be followed by a merger of
Acquisition Sub with and into the Company (the "Merger");
WHEREAS, in connection with the execution of the Merger Agreement, Parent
and Acquisition Sub intend to enter into a Tender and Option Agreement, dated as
of March 27, 1998 (each a "Tender Agreement" and collectively the "Tender
Agreements"), with certain shareholders of the Company, pursuant to which such
shareholders will, among other things, agree to validly tender all Shares owned
by them pursuant to the Offer on the terms and subject to the conditions set
forth therein;
WHEREAS, the Board of Directors of the Company believes that it is in the
best interests of the Company and its shareholders that the Offer and Merger be
consummated on the terms set forth in the Merger Agreement;
WHEREAS, the Board of Directors of the Company desires to amend the Rights
Agreement such that the execution of the Merger Agreement and the Tender
Agreements and the consummation of the transactions contemplated thereby will
not cause (i) Parent and/or Acquisition Sub or their respective Affiliates or
Associates to become an Acquiring Person (as such terms are defined in the
Rights Agreement) so long as the Merger Agreement or the Tender Agreements are
in effect or (ii) a Distribution Date or a Shares Acquisition Date (as such
terms are defined in the Rights Agreement) to occur, irrespective of the number
of Shares acquired pursuant to the Offer and the Merger;
WHEREAS, the Board of Directors of the Company believes that it is in the
best interests of the Company and its shareholders that the Rights Agreement be
amended as set forth herein; and
WHEREAS, Section 26 of the Rights Agreement authorizes the Board of
Directors of the Company and the Rights Agent to adopt the proposed amendment
without the approval of the Company's shareholders;
NOW, THEREFORE, in consideration of the recitals (which are deemed to be a
part of this Amendment) and agreements contained herein, the parties hereto
agree to amend the Rights Agreement as follows:
1. Section 1(a) of the Rights Agreement is hereby amended by inserting
"(i)" between the word "include" and "the" and by inserting the following
after the word "plan" at the end of such Section 1(a):
and (ii) Dorel Industries Inc., a Quebec corporation ("Dorel"), or
Horizon Acquisition, Inc., a Delaware corporation and a wholly-owned
subsidiary of Dorel (collectively with Dorel, the "Acquirors"), and
their respective Affiliates and Associates, from and after the execution
of the Merger Agreement or the Tender Agreements; provided that, in the
case of clause (ii) above, if the tender offer contemplated by the
Merger Agreement is not consummated, then the Acquirors and their
respective Affiliates and Associates shall not be deemed to be excluded
from this definition of Acquiring Person at any time after the Merger
Agreement and the Tender Agreements have terminated in accordance with
their respective terms.
<PAGE> 2
2. Section 1(h) of the Rights Agreement is hereby modified and amended
by adding the following sentence at the end thereof:
Notwithstanding any provision of this Agreement to the contrary, neither
the execution and delivery of the Merger Agreement or the Tender
Agreements nor consummation of the transactions contemplated by the
Merger Agreement or the Tender Agreements shall be deemed to cause a
Shares Acquisition Date.
3. Section 3(a) of the Rights Agreement is hereby modified and amended
by adding the following sentence at the end thereof:
Notwithstanding any provision of this Agreement to the contrary, neither
the execution and delivery of the Merger Agreement or the Tender
Agreements nor consummation of the transactions contemplated by the
Merger Agreement or the Tender Agreements shall cause a Distribution
Date.
4. Section 15 of the Rights Agreement is hereby modified and amended
to add the following sentence at the end thereof:
Nothing in this Agreement shall be construed to give any holder of
Rights or any other Person any legal or equitable rights, remedy or
claim under this Agreement in connection with any transactions
contemplated by the Merger Agreement or the Tender Agreements.
5. Capitalized terms used but not defined herein shall have the
meaning assigned to such terms in the Rights Agreement.
6. Except as expressly amended hereby, the Rights Agreement remains in
full force and effect.
7. This Amendment 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
made and performed entirely within such State.
8. This Amendment 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 constitute but one and
the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.
AMERIWOOD INDUSTRIES INTERNATIONAL
CORPORATION
By: /s/ CHARLES R. FOLEY
--------------------------------------
Name: Charles R. Foley
Title: President and Chief Executive
Offices
HARRIS TRUST AND SAVINGS BANK
By: /S/ PALMER HAFFNER
--------------------------------------
Name: /s/ Palmer Haffner
Title: Vice President
2
<PAGE> 1
EXHIBIT 7
AMENDMENT TO THE BYLAWS OF
AMERIWOOD INDUSTRIES INTERNATIONAL CORPORATION
The full text of the language inserted in Article VII of the Company's
By-Laws is as follows:
Section 7. Pursuant to Section 794 of the Michigan Business Corporation
Act (the "MBCA"), Chapter 7B of the MBCA shall not apply to "control
share acquisitions" (as defined in the MBCA) of shares of the
corporation.
