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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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BIRD CORPORATION
(NAME OF SUBJECT COMPANY)
BIRD CORPORATION
(NAME OF PERSON FILING STATEMENT)
COMMON STOCK, $1 PAR VALUE
(TITLE OF CLASS OF SECURITIES)
090763103
(CUSIP NUMBER OF CLASS OF SECURITIES)
$1.85 CUMULATIVE CONVERTIBLE PREFERENCE STOCK
(TITLE OF CLASS OF SECURITIES)
090763301
(CUSIP NUMBER OF CLASS OF SECURITIES)
FRANK S. ANTHONY
VICE PRESIDENT
BIRD CORPORATION
1077 PLEASANT STREET
NORWOOD, MA 02062
(781) 551-0656
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF THE
PERSON FILING STATEMENT)
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LOGO
BIRD
Corporation
January 16, 1998
Dear Stockholder:
I am pleased to report that on January 12, 1998, Bird Corporation (the
"Company") entered into an Agreement and Plan of Merger (the "Merger
Agreement") with CertainTeed Corporation ("CertainTeed") and its wholly owned
subsidiary, BI Expansion II Corp. (the "Purchaser"), that provides for the
acquisition of the Company by CertainTeed through the acquisition by the
Purchaser of all the outstanding shares of the common stock, $1 par value per
share, of the Company (the "Common Shares") and all the outstanding shares of
the $1.85 Cumulative Convertible Preference Stock, $1 par value per share, of
the Company (the "Preference Shares", and together with the Common Shares, the
"Shares"). Pursuant to the Merger Agreement, the Purchaser has today commenced
a cash tender offer (the "Offer") for all outstanding Common Shares and
Preference Shares at a price of $5.50 per Common Share and $20 per Preference
Share, which amount will not be adjusted for any dividends accrued and unpaid
through the Expiration Date (as defined below). The Offer is currently
scheduled to expire at 12:00 midnight, New York City time, on February 13,
1998, unless the Offer is extended.
Following the successful completion of the Offer, upon approval by
stockholder vote, the Purchaser will be merged (the "Merger") with and into
the Company, and all Shares not purchased in the Offer will be converted into
the right to receive in cash $5.50 per Common Share and $20 per Preference
Share, which amount will not be adjusted for any dividends accrued and unpaid
through the Effective Date (as defined below).
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE OFFER AND THE MERGER
AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO AND IN
THE BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS. ACCORDINGLY, THE BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE
OFFER AND TENDER THEIR SHARES. EACH OF THE DIRECTORS HAS AGREED TO TENDER HIS
COMMON SHARES AND PREFERENCE SHARES IN THE OFFER. SUCH SHARES REPRESENT
APPROXIMATELY 40.2% OF THE COMMON SHARES AND 16.2% OF THE PREFERENCE SHARES.
In arriving at its recommendations, the Board of Directors gave
consideration to a number of factors. These factors included the opinion of
Lehman Brothers that, from a financial point of view, the consideration to be
paid by CertainTeed pursuant to the Offer and the Merger is fair to the
stockholders of the Company. All of the factors considered by the Board of
Directors are more fully described in the Solicitation/Recommendation
Statement on Schedule 14D-9 filed by the Company with the Securities and
Exchange Commission and enclosed with this letter. We urge you to read
carefully the Schedule 14D-9 in its entirety so that you will be fully
informed as to the Board's recommendations.
Also accompanying this letter is a copy of CertainTeed's and the Purchaser's
Offer to Purchase and related materials, including a Letter of Transmittal for
use in tendering Shares. These documents set forth the terms and conditions of
the Offer and provide instructions as to how to tender your Shares. We urge
you to read each of the enclosed materials carefully.
The Board of Directors and management of the Company thank you for the
support you have given the Company.
On behalf of the Board of Directors,
Sincerely,
/s/ Richard C. Maloof
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Richard C. Maloof
President
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ITEM 1. SECURITIES AND SUBJECT COMPANY.
The name of the subject company is Bird Corporation, a Massachusetts
corporation (the "Company"), and the address of its principal executive
offices is 1077 Pleasant Street, Norwood, Massachusetts 02062. The titles of
the classes of equity securities to which this statement relates are (i) the
common stock, par value $1 per share (the "Common Stock"), of the Company and
(ii) the $1.85 Cumulative Convertible Preference Stock, par value $1 per share
(the "Preference Stock"), of the Company.
ITEM 2. TENDER OFFER OF THE BIDDER.
This statement relates to the tender offer by BI Expansion II Corp., a
Massachusetts corporation (the "Purchaser"), which is a wholly owned
subsidiary of CertainTeed Corporation, a Delaware corporation ("CertainTeed"),
which is an indirect wholly owned subsidiary of Compagnie de Saint-Gobain, a
French corporation ("Saint-Gobain"), to purchase all outstanding shares of
Common Stock (the "Common Shares") at a price (the "Common Price") of $5.50
per Common Share net to the seller in cash without interest thereon, and all
outstanding shares of Preference Stock (the "Preference Shares", and, together
with the Common Shares, the "Shares") at a price (the "Preference Price") of
$20 per Preference Share, which amount shall not be adjusted for any dividends
accrued and unpaid through the Expiration Date (as defined below), net to the
seller in cash without interest thereon, as disclosed in the Tender Offer
Statement on Schedule 14D-1 (the "Schedule 14D-1") dated January 16, 1998
filed by the Purchaser, CertainTeed and Saint-Gobain with the Securities and
Exchange Commission (the "SEC"), upon the terms and subject to the conditions
set forth in the Offer to Purchase dated January 16, 1998 (the "Offer to
Purchase") and the related Letter of Transmittal (which together constitute
the "Offer" and are referred to collectively herein as the "Offer Documents").
A copy of the Offer to Purchase and the Letter of Transmittal are attached
hereto as Exhibit (a)(1) and Exhibit (a)(2), respectively.
The Offer to Purchase states that the principal executive offices of the
Purchaser and CertainTeed are located at 750 E. Swedesford Road, Valley Forge,
Pennsylvania 19482.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of January 12, 1998 (the "Merger Agreement"), among CertainTeed, the
Purchaser and the Company pursuant to which, as soon as practicable following
the consummation of the Offer and the satisfaction or waiver of certain
conditions, including approval of the Merger Agreement by the Company's
stockholders, the Purchaser will be merged with and into the Company (the
"Merger"), with the Company (the "Surviving Corporation") surviving the Merger
as a wholly owned subsidiary of CertainTeed. In the Merger, each Share
outstanding on the effective date of the Merger (the "Effective Date") (other
than Shares held by stockholders who perfect their appraisal rights under
Massachusetts law, Shares held in the Company's treasury and Shares held
directly by the Purchaser or CertainTeed) will be converted into the right to
receive $5.50 (in the case of Common Shares) and $20, which amount shall not
be adjusted for any dividends accrued and unpaid through the Effective Date
(in the case of Preference Shares), in each case in cash, without interest.
The Merger is subject to a number of conditions, including the approval and
adoption of the Merger Agreement by stockholders of the Company. See "The
Merger Agreement--Conditions to the Merger". The purpose of the Offer, the
Merger Agreement and the Merger is to enable CertainTeed, through the
Purchaser, to acquire control of, and the entire equity interest in, the
Company. The Offer, as the first step in the acquisition of the Company, is
intended to facilitate the acquisition of all the Shares. The Purchaser has
indicated that it intends, as soon as practicable following consummation of
the Offer, to hold a special meeting of stockholders (the "Special Meeting")
to approve the Merger and, as soon as practicable thereafter, to consummate
the Merger. The Merger Agreement is filed as Exhibit (c)(1) hereto and is
hereby incorporated herein by reference in its entirety.
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not withdrawn prior to the Expiration Date such number of Common
Shares that would constitute at least 66 2/3% of all outstanding Common Shares
(determined on a fully diluted basis on the Expiration Date), (ii) there being
validly tendered and not withdrawn prior to the Expiration Date such number of
Preference Shares that would constitute at least
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66 2/3% of all outstanding Preference Shares (clauses (i) and (ii) together
being the "Minimum Condition"), (iii) any waiting period under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended, and the regulations
thereunder (the "HSR Act") applicable to the purchase of Shares pursuant to
the Offer having expired or been terminated (the "HSR Condition") and (iv) all
consents, approvals, orders or authorizations of, or registrations,
declarations or filings with, any governmental authority required or necessary
in connection with the Offer, the Merger and the Merger Agreement referred to
herein and the transactions contemplated by the Merger Agreement having been
obtained and being in full force and effect (the "Required Consents
Condition"). The Purchaser has reserved the right (subject to obtaining the
consent of the Company, if required, and the applicable rules and regulations
of the SEC) to waive or reduce the Minimum Condition and to elect to purchase,
pursuant to the Offer, fewer than the minimum number of Shares necessary to
satisfy the Minimum Condition. The Purchaser has indicated that it presently
does not intend to waive the Minimum Condition. The conditions to the Offer
are more fully described herein under "The Merger Agreement--Certain
Conditions of the Offer" and in Sections 1 and 14 of the Offer to Purchase,
which is filed as Exhibit (a)(1) hereto, and incorporated herein by reference.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Friday, February 13, 1998, unless and until the Purchaser shall have extended
the period of time during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as
so extended by the Purchaser, will expire.
As of December 31, 1997, there were 4,159,877 Common Shares outstanding,
497,200 Common Shares authorized for issuance pursuant to the exercise of
outstanding options to purchase Common Shares ("Stock Options"), 731,955
Common Shares authorized for issuance pursuant to conversion of the Preference
Shares at $22.25 per Common Share (which is substantially above the Common
Price) and 814,300 Preference Shares outstanding. For purposes of the Offer,
Common Shares outstanding on a fully diluted basis will not include Common
Shares issuable upon conversion of Preference Shares that have been validly
tendered and not withdrawn prior to the Expiration Date or issuable upon the
exercise of any Stock Options to the extent holders of such Stock Options have
agreed not to exercise such Stock Options as long as the Merger Agreement is
in effect. Based upon the foregoing, the Purchaser has informed the Company
that approximately 2,898,000 Common Shares (assuming that all Preference
Shares are so validly tendered and not withdrawn and all holders of Stock
Options with an exercise price above the Common Price so agree) or
approximately 3,593,000 Common Shares (assuming conversion of all outstanding
Preference Shares and exercise of all outstanding Stock Options) and
approximately 542,900 Preference Shares (assuming no conversion or redemption
of any Preference Shares) must be validly tendered and not properly withdrawn
prior to the Expiration Date in order for the Minimum Condition to be
satisfied.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Company, which is the entity filing
this statement, are set forth in Item 1 above.
(b) Certain contracts, agreements, arrangements and understandings between
the Company and certain of its directors, executive officers and affiliates
are described in the Company's Information Statement (as defined below) in the
sections entitled "EXECUTIVE COMPENSATION" and "DIRECTORS' COMPENSATION". The
Company's Information Statement as mailed to the Company's stockholders on
January 16, 1998 (the "Information Statement") is attached hereto as Annex A,
filed as Exhibit (a)(3) hereto, and incorporated herein by reference. In
addition, certain contracts, agreements, arrangements and understandings
relating to the Company and/or the Company's directors, executive officers and
affiliates are contained in the Merger Agreement, filed as Exhibit (c)(1)
hereto and incorporated herein by reference, and are described below under
"The Merger Agreement" and "Additional Agreements, Arrangements and
Understandings."
THE MERGER AGREEMENT
The Merger Agreement. The Merger Agreement provides that following the
satisfaction or waiver of the conditions described below under "Conditions to
the Merger", the Purchaser will be merged with and into the
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Company, and each then outstanding Share (other than Shares held by
stockholders who perfect their appraisal rights under Massachusetts law,
Shares held in the Company's treasury and Shares held directly by the
Purchaser or CertainTeed) will be converted into the right to receive an
amount in cash equal to (in the case of Common Shares) $5.50 per Common Share
and (in the case of Preference Shares) $20 per Preference Share, which amount
shall not be adjusted for any dividends accrued and unpaid through the
Effective Date. All outstanding shares of the Company's 5% Cumulative
Preferred Stock, par value $100 per share (the "5% Stock"), will remain issued
and outstanding after the Merger and will be called for redemption and
retirement as soon as practicable following the Merger at a price equal to
$110 per share, plus all accrued and unpaid dividends thereon as of the date
of redemption and retirement.
(1) Vote Required to Approve Merger. If the Purchaser acquires, through the
Offer or otherwise (i) at least 66 2/3% of the outstanding Common Shares and
(ii) at least 66 2/3% of the outstanding Preference Shares, which would be the
case if the Minimum Condition were satisfied, it would have sufficient voting
power to effect the Merger without the vote of any other stockholder of the
Company.
(2) Conditions to the Merger.
(A) Conditions to the obligations of CertainTeed and the Purchaser. The
obligations of CertainTeed and the Purchaser under the Merger Agreement are
subject to the satisfaction, on or prior to the closing date of the Merger
(the "Closing Date"), of each of the following conditions, each of which may
be waived by CertainTeed and the Purchaser except as otherwise provided by
law, provided that upon the acceptance of any Common Shares and Preference
Shares, if any, by the Purchaser pursuant to the Offer (the "Consummation of
the Offer") each of the following conditions (other than the conditions set
forth in clauses (iii)(b), (iii)(d) and (iv)(b) below) shall be deemed waived
by the Purchaser and CertainTeed: (i) the representations and warranties of
the Company contained in the Merger Agreement (without regard to any
supplemental information provided after the date of the Merger Agreement) that
are qualified as to materiality shall be true and correct, and the
representations that are not so qualified shall be true and correct in all
material respects, in each case on and as of the date of the Merger Agreement
and on and as of the Effective Date, and between the date of the Merger
Agreement and the Effective Date there shall not have been any event or change
in circumstance causing or reasonably anticipated to cause in the future (a)
any material adverse effect on the business, assets, properties, condition
(financial or other) or results of operations of the Company and its
subsidiaries taken as a whole or the Surviving Corporation and its
subsidiaries taken as a whole or (b) any material adverse effect on the
ability of the Company to carry out the transactions contemplated by the
Merger Agreement without significant unanticipated delay or expense (clauses
(a) and (b) together being a "Material Adverse Effect"); (ii) each of the
obligations of the Company to be performed by it on or before the Closing Date
pursuant to the terms of the Merger Agreement shall have been duly performed
or complied with in all material respects by the Closing Date; (iii)(a) all
corporate action necessary by the Company to authorize the execution, delivery
and performance of the Merger Agreement and the consummation of the
transactions contemplated thereby (including the Offer and the Merger) shall
have been duly and validly taken, and the Company and the Purchaser shall have
full right and power to merge on the terms provided in the Merger Agreement;
(b) the holders of the Common Shares and the Preference Shares shall have duly
approved the Merger at the Special Meeting (other than if such approval shall
not have occurred solely due to the breach by CertainTeed or the Purchaser of
its obligation, upon consummation of the Offer, to vote its Common Shares and
Preference Shares in favor of the Merger); (c) all consents, approvals and
authorizations from third persons and governmental authorities identified in
the Schedules to the Merger Agreement required to consummate the transactions
contemplated by the Merger Agreement shall have been obtained; and (d) all
applicable waiting periods under the HSR Act shall have expired or been
terminated; (iv)(a) there shall not be any pending or threatened suit, action
or proceeding by any governmental authority (1) challenging the acquisition by
CertainTeed or the Purchaser of any Shares, seeking to restrain or prohibit
the consummation of the Merger or any of the other transactions contemplated
by the Merger Agreement that are material in relation to the Company and its
subsidiaries taken as a whole, (2) seeking to prohibit or limit the ownership
or operation by the Company, CertainTeed or any of their respective
subsidiaries of any material portion of the business or assets of the Company,
or any of their respective subsidiaries, or to compel the Company, CertainTeed
or any of
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their respective subsidiaries to dispose of or hold separate any material
portion of the business or assets of the Company, CertainTeed or any of their
respective subsidiaries, as a result of the Merger or any of the other
transactions contemplated by the Merger Agreement, (3) seeking to impose
limitations on the ability of CertainTeed or the Purchaser to acquire or hold,
or exercise full rights of ownership of, any shares of common stock of the
Surviving Corporation, (4) seeking to prohibit CertainTeed or any of its
subsidiaries from effectively controlling in any material respect the business
or operations of the Company or its subsidiaries or of CertainTeed and its
subsidiaries or (5) which otherwise is reasonably likely to have a Material
Adverse Effect, (b) no statute, rule, regulation, executive order, decree,
temporary restraining order, preliminary or permanent injunction or other
order or legal restraint or prohibition enacted, entered, promulgated,
enforced, issued or deemed applicable to the Merger or the transactions
contemplated thereby, or any other action shall be taken by any governmental
authority or court, in each case preventing the consummation of the Merger or
the transactions contemplated thereby, shall be in effect; (v) all directors
of the Company whose resignation is requested by CertainTeed at least five
days before the Closing Date will have submitted their resignations effective
as of the Closing Date; (vi) no more than ten percent of the issued and
outstanding shares of any class of equity securities of the Company entitled
to dissenters rights as of the Closing Date shall be dissenting shares
entitled to receive the fair value of such shares in accordance with Sections
85 through 98 inclusive of the Massachusetts Business Corporation Law (the
"MBCL"); (vii) each outstanding option (each a "Stock Option") issued under
the Company's 1982 Stock Option Plan, as amended (the "1982 Option Plan"), the
Company's 1992 Stock Option Plan, as amended (the "1992 Option Plan") and the
Company's 1992 Non-Employee Directors Stock Option Plan, as amended (the "Non-
Employee Directors Option Plan") shall have been amended to effect the
transactions contemplated by the Merger Agreement; and (viii) the Company
shall have furnished CertainTeed with such certificates of its officers and
others to evidence compliance with the conditions set forth in the Merger
Agreement as may be reasonably requested by CertainTeed, and the form and
substance of all opinions, certificates and other documents required by or
furnished pursuant to the Merger Agreement shall be satisfactory in all
reasonable respects to CertainTeed and its counsel.
(B) Conditions to the Obligations of the Company. The obligations of the
Company under the Merger Agreement are subject to the satisfaction, on or
prior to the Closing Date, of each of the following conditions, each of which
may be waived by the Company except as otherwise provided by law, provided
that, upon Consummation of the Offer, each of the following conditions (other
than the conditions set forth in clauses (iii) and (iv) below) shall be deemed
waived by the Company: (i) the representations and warranties of CertainTeed
and the Purchaser contained in the Merger Agreement that are qualified as to
materiality shall be true and correct, and the representations that are not so
qualified shall be true and correct in all material respects, in each case on
and as of the date of the Merger Agreement and on and as of the Effective
Date; (ii) each of the obligations of CertainTeed and the Purchaser to be
performed by them on or before the Closing Date pursuant to the terms of the
Merger Agreement shall have been duly performed and complied with in all
material respects by the Closing Date; (iii)(a) all corporate action necessary
by the Purchaser and CertainTeed to authorize the execution, delivery and
performance of the Merger Agreement and the consummation of the transactions
contemplated by the Merger Agreement shall have been duly and validly taken,
the Purchaser shall have full right and power to merge on the terms provided
in the Merger Agreement and the Company's stockholders shall have approved the
Merger at the Special Meeting called for that purpose; (b) all consents,
approvals and authorizations from third persons and governmental authorities
identified in the Schedules to the Merger Agreement required to consummate the
transactions contemplated by the Merger Agreement shall have been obtained;
and (c) all applicable waiting periods under the HSR Act shall have expired or
been terminated; (iv) no judicial, administrative or arbitration order, award,
judgment, writ, injunction or decree shall have been entered by a governmental
authority with proper jurisdiction and not revised prohibiting the Merger, and
no legal action shall have been instituted by any governmental authority
challenging the Merger which if successful would prohibit the consummation of
the Merger; and (v) CertainTeed and the Purchaser shall have furnished the
Company with such certificates of their respective officers and others to
evidence compliance with the conditions set forth in the Merger Agreement as
may be reasonably requested by the Company, and the form and substance of all
certificates and other documents required by or furnished pursuant to the
Merger Agreement shall be satisfactory in all reasonable respects to the
Company and its counsel.
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(3) Termination of the Merger Agreement. Unless the Consummation of the
Offer shall have occurred and Designated Directors (as defined below) shall
constitute at least a majority of the members of the Board of Directors of the
Company (the "Board"), the Merger Agreement shall be terminated, and the
Merger abandoned, if the requisite vote of the Company's stockholders with
respect to the Merger Agreement is not obtained as contemplated by the Merger
Agreement. Notwithstanding approval of the Merger Agreement and the
transactions contemplated thereby by the stockholders of the Company or by
CertainTeed, the Merger Agreement may be terminated, and the Offer and Merger
abandoned, at any time prior to the Effective Date:
(A) by mutual consent of CertainTeed, the Purchaser and the Company;
(B) unless the Consummation of the Offer shall have occurred and
Designated Directors shall constitute at least a majority of the members of
the Board of the Company, by CertainTeed, the Purchaser or the Company at
any time after June 30, 1998;
(C) by CertainTeed or the Purchaser if (a) the Offer terminates without
any Shares being accepted for payment due to (x) failure of the Minimum
Condition or (y) any of the other conditions to the Offer (other than
solely the condition described in Section (c) of numbered paragraph (14)
hereof) shall have become impossible to fulfill and shall not have been
waived (see "--Certain Conditions of the Offer"), (b) any of the conditions
to the obligations of CertainTeed and the Purchaser to consummate the
Merger becomes impossible to fulfill and shall not have been waived or
deemed waived in accordance with the Merger Agreement (it being understood
that with respect to any condition described in clause (iv) (b) of numbered
paragraph (2)(A) above, any condition described therein relating to an
order, injunction or judicial decree shall be deemed not to have become
impossible to fulfill until such order, injunction or decree shall have
become final and non-appealable), (c) the Board of the Company withdraws or
modifies its approval or recommendation of the Merger Agreement, the Offer
or the Merger or (d) unless the Consummation of the Offer shall have
occurred and Designated Directors shall constitute at least a majority of
the members of the Board of the Company, the Company fails to perform in
any material respect any of its obligations under the Merger Agreement or
breaches in any material respect any provision of the Merger Agreement, and
the Company has failed to perform such obligation or cure such breach
within 10 days of its receipt of written notice thereof from CertainTeed or
the Purchaser and such failure to perform shall not have been waived in
accordance with the terms of the Merger Agreement; or
(D) by the Company if (a) any of the conditions to the obligations of the
Company to consummate the Merger shall become impossible to fulfill and
shall not have been waived in accordance with the terms of the Merger
Agreement, (b) CertainTeed or the Purchaser fails to perform in any
material respect any of its obligations under the Merger Agreement or
breaches in any material respect any provision of the Merger Agreement, and
CertainTeed and the Purchaser have failed to perform such obligation or
cure such breach within 10 days of its receipt of written notice thereof
from the Company and such failure to perform shall not have been waived in
accordance with the terms of the Merger Agreement, (c)(i) the Board of the
Company withdraws or modifies its approval or recommendation of the Merger
Agreement, the Offer or the Merger and (ii) the Company pays CertainTeed in
cash all CertainTeed's Expenses and the Alternate Transaction Fee (each as
defined in the first paragraph under "Fees and Expenses" below) or (d) if
the Purchaser (i) shall have failed to commence the Offer within the time
required under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") or (ii) shall have failed to pay for any Shares accepted
for payment pursuant to the Offer and, in the case of clause (ii), the
Purchaser shall have failed to make such payment within three business days
of receipt of written notice thereof from the Company.
Notwithstanding any provisions to the contrary in the Merger Agreement, (i)
the sole remedy of CertainTeed or the Purchaser for a breach by the Company of
any representation or warranty set forth in the Merger Agreement shall be the
termination of the Merger Agreement (if permitted by the Merger Agreement)
unless such breach was made with the actual knowledge of the President of the
Company or the Vice President and General Counsel of the Company, after due
inquiry of other managerial employees of the Company who would be reasonably
expected to have knowledge as to the matter represented (a "Company Willful
Misrepresentation"), and (ii) the sole remedy of the Company for a breach by
CertainTeed or the Purchaser of
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any representation or warranty set forth in the Merger Agreement shall be the
termination of the Merger Agreement (if permitted by the Merger Agreement)
unless such breach was made with the actual knowledge of the President or
Executive Vice President of CertainTeed, after due inquiry of other managerial
employees of CertainTeed who would be reasonably expected to have knowledge as
to the matter represented (a "CertainTeed Willful Misrepresentation").
(4) Procedure for Termination and Amendment. The Merger Agreement provides
that the termination or amendment of the Merger Agreement pursuant to the
Merger Agreement requires, in the case of the Company, action by its Board or
the duly authorized designee of its Board in order to be effective. In the
event that the Purchaser's designees are appointed or elected to the Board of
the Company as provided in the Merger Agreement, after the Consummation of the
Offer and prior to the time the Merger becomes effective, the affirmative vote
of at least a majority of the Continuing Directors (as defined below) shall be
required for the Company to agree to amend, waive compliance with or terminate
the Merger Agreement.
(5) Takeover Proposals. The Merger Agreement provides that the Company shall
not, nor shall it permit any of its subsidiaries or affiliates to, nor shall
it authorize or permit any officer, director or employee of, or any investment
banker, attorney or other advisor or representative of the Company or any of
its subsidiaries to (a) solicit or initiate, or knowingly encourage the
submission of, any takeover proposal, (b) participate in any discussions or
negotiations regarding, or furnish to any person any information with respect
to, any takeover proposal (except for (i) non-confidential information, or
(ii) filings with the SEC); provided, however, that prior to the earlier of
the Consummation of the Offer or the Special Meeting, to the extent required
by the fiduciary obligations of the Board of the Company, as determined in
good faith by the Board of the Company based on the advice of counsel, the
Company may, (A) in response to an unsolicited request therefor, furnish
information with respect to the Company (pursuant to a confidentiality
agreement at least as restrictive (as determined by the Company's counsel) as
the Confidentiality Agreement dated April 13, 1994, as amended, between the
Company and Saint-Gobain Corporation, a Pennsylvania corporation and an
indirect wholly owned subsidiary of Saint-Gobain) to any person who has
indicated to the Company that it is interested in pursuing a qualified
takeover proposal and discuss such information (but not the terms of any
possible takeover proposal) with such person and (B) upon receipt by the
Company of a qualified takeover proposal, following the delivery to
CertainTeed of the notice required pursuant to the Merger Agreement,
participate in discussions or negotiations regarding such qualified takeover
proposal. Without limiting the foregoing, it is understood that any violation
of the restrictions described in the preceding sentence by any officer of the
Company or any of its subsidiaries or any investment banker, attorney or other
advisor or representative of the Company or its subsidiaries shall be deemed a
breach of the Merger Agreement by the Company. For purposes of this Section
under the heading "Takeover Proposals", "takeover proposal" means any proposal
for a merger or other business combination (regardless of legal form)
involving the Company or any subsidiary or any proposal or offer to acquire in
any manner, directly or indirectly, a substantial portion of the assets or
business of the Company or a substantial equity interest in, or any
substantial amount of voting securities of, the Company or any subsidiary, or
any other transaction outside the ordinary course of business and not
otherwise specifically permitted by the terms of the Merger Agreement the
consummation of which would impede or prevent the consummation of the Merger
pursuant to the terms of the Merger Agreement; and "qualified takeover
proposal" means a takeover proposal having terms which the Board of the
Company determines (based on, among other things, the advice of a financial
advisor of nationally recognized reputation) and after giving due
consideration to the Stockholder Agreement in its good faith reasonable
judgment to be more favorable to the holders of Common Shares than the Common
Price and to the holders of Preference Shares than the Preference Price and
likely to be fully financed and consummated.
The Merger Agreement provides further that, except as described below,
neither the Company's Board nor any committee thereof shall (i) withdraw or
modify or propose to withdraw or modify, in a manner adverse to CertainTeed or
the Purchaser, the approval or recommendation by such Board or any such
committee of the Merger Agreement, the Offer or the Merger, (ii) approve or
recommend, or propose to approve or recommend, any takeover proposal or (iii)
enter into any agreement with respect to any takeover proposal.
Notwithstanding the foregoing, in the event the Board of the Company receives
a qualified takeover proposal, the Board of the
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Company or any committee thereof or the Company may (subject to the
limitations described in the preceding paragraph) withdraw or modify its
approval or recommendation of the Merger Agreement, the Offer or the Merger at
any time after 48 hours following CertainTeed's receipt of written notice (a
"Notice of Qualified Takeover Proposal") advising CertainTeed that the Board
of the Company has received a qualified takeover proposal, specifying the
material terms and conditions of such qualified takeover proposal and
identifying the person making such qualified takeover proposal. The Company
may take any of the foregoing actions pursuant to the provision described in
the preceding sentence only until the earlier of the Consummation of the Offer
or the approval of the Merger at the Special Meeting. The Company shall not be
prohibited from taking and disclosing to its stockholders a position
contemplated by SEC Rule 14e-2(a) under the Exchange Act following
CertainTeed's receipt of a Notice of Qualified Takeover Proposal provided that
the Company does not withdraw or modify its position with respect to the
Merger or approve or recommend a takeover proposal.
In addition to the obligations of the Company described in the preceding
paragraphs, the Company shall promptly advise CertainTeed orally and in
writing of any request for information or of any takeover proposal, or any
inquiry with respect to any takeover proposal, the material terms and
conditions of such request, takeover proposal or inquiry and the identity of
the person making any such takeover proposal or inquiry. The Company shall
keep CertainTeed fully informed of the status and details of any such request,
takeover proposal or inquiry.
(6) Fees and Expenses. Except with respect to the circumstances described
below, the Merger Agreement provides that each of the Purchaser, CertainTeed
and the Company will bear its own costs, fees and expenses in connection with
the negotiation, execution, delivery and performance of the Merger Agreement
and the consummation of the Offer and the Merger.
The Merger Agreement provides that in the event that the Board of the
Company wishes to withdraw or adversely modify its approval or recommendation
of the Merger Agreement, the Offer or the Merger, prior to such withdrawal or
modification the Company shall pay in same day funds to CertainTeed (a) its
Expenses (defined below) incurred to date and thereafter shall pay in same day
funds to CertainTeed within one business day after demand therefor all
subsequently incurred Expenses, provided, that the Company shall not be
obligated to pay any such Expenses to the extent they exceed an aggregate of
$1 million, and (b) an alternate transaction fee of $1.5 million (the
"Alternate Transaction Fee"). In the event the Company receives a takeover
proposal from a person other than CertainTeed or one of its affiliates or a
takeover proposal is publicly disclosed prior to the Expiration Date (or in
the case of clauses (ii) and (iii), prior to the Special Meeting) or, if
earlier, termination of the Merger Agreement, and (i) at the Expiration Date a
sufficient number of Shares shall not have been tendered to satisfy the
Minimum Condition, (ii) at the Special Meeting the required approval of the
Merger by the Company's stockholders is not obtained, or (iii) the Merger
Agreement is terminated (other than by the Company if the Board of the Company
withdraws or modifies its approval or recommendation of the Merger Agreement
or the Merger) prior to a vote on the Merger at the Special Meeting unless the
Consummation of the Offer shall have occurred, the Company shall pay in same
day funds to CertainTeed within two business days after the earlier of such
Expiration Date, Special Meeting or termination of the Merger Agreement (a)
all Expenses incurred to date, and thereafter will pay in same day funds to
CertainTeed within one business day after demand therefor, all subsequently
incurred Expenses, provided, that the Company shall not be obligated to pay
any such Expenses to the extent they exceed an aggregate of $1 million, and
(b) the Alternate Transaction Fee. With regard to the immediately preceding
sentence, "Expenses" means all out-of-pocket fees and expenses (including
without limitation all travel expenses and all fees and expenses of counsel,
investment banking firms, accountants, experts and consultants to CertainTeed
or the Purchaser) incurred or paid by or on behalf of CertainTeed or the
Purchaser after January 1, 1996 in connection with or leading to the Merger
Agreement, the transactions contemplated thereby, and performing or securing
the performance of the obligations of the parties thereunder, including,
without limitation, such fees and expenses related to preparation and
negotiation of documentation and conducting due diligence. CertainTeed is
required within 36 hours after request therefor to advise the Company of an
estimate of its Expenses if the Company wishes to withdraw or modify its
approval or recommendation of the Merger Agreement, the Offer or the Merger
pursuant to the Merger Agreement.
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The Merger Agreement also provides that in the event that the Merger
Agreement is terminated, the Offer is terminated or the Merger does not occur
(i) solely due to a breach by CertainTeed or the Purchaser of any of its
covenants or obligations under the Merger Agreement or due to a CertainTeed
Willful Misrepresentation or (ii) solely due to a breach by the Company of any
of its covenants or obligations under the Merger Agreement or due to a Company
Willful Misrepresentation, then in the case of a termination pursuant to
clause (i) above, CertainTeed and the Purchaser shall promptly pay to the
Company, and in the case of termination pursuant to clause (ii) above, the
Company shall promptly pay to CertainTeed and the Purchaser, in same day funds
all Expenses (as defined below) incurred to date (after giving credit for any
reimbursement of expenses already made pursuant to the provisions described in
the immediately preceding paragraph) and thereafter shall pay in same day
funds within one business day after demand therefor all subsequently incurred
Expenses. For purposes of the provisions described in this paragraph,
"Expenses" means all out-of-pocket fees and expenses (including without
limitation all travel expenses and all fees and expenses of counsel,
investment banking firms, accountants, experts and consultants to CertainTeed
or the Company, as the case may be) incurred or paid by or on behalf of
CertainTeed, the Purchaser or the Company, as the case may be, after January
1, 1996 in connection with or leading to the Merger Agreement, the
transactions contemplated thereby, and performing or securing performance of
the obligations of the parties thereunder, including, without limitation, such
fees and expenses related to preparation and negotiation of documentation and
conducting due diligence. Nothing described in this or the immediately
preceding paragraph limits damages that would otherwise be recoverable for
breaches under the Merger Agreement.
(7) Conduct of Business by the Company. Pursuant to the Merger Agreement,
except as otherwise expressly contemplated or permitted by the Merger
Agreement or otherwise consented to or approved by an authorized officer of
CertainTeed, the Company has agreed that prior to the Effective Date (or, if
earlier, when a majority of the members of the Board of the Company are
designees of the Purchaser in accordance with the Merger Agreement) the
business of the Company and its subsidiaries shall be conducted in the
ordinary course consistent with past practice and: (a) no change will be made
in the respective articles or certificate of organization or incorporation or
by-laws of the Company or any of its subsidiaries; (b) no change shall be made
in the number of shares of the Company's authorized, issued or outstanding
capital stock; nor shall any conversion rights by which the Company or any
subsidiary is or may become bound to issue, transfer, sell, repurchase or
otherwise acquire or retire any shares of capital stock or other ownership
interest of the Company or any subsidiary, or any securities convertible into
or exchangeable or exercisable for any such shares or other ownership interest
be granted, made, redeemed or amended; nor will the Company or any subsidiary
issue, deliver, pledge or sell any such shares, securities or obligations
(except deliveries or pledges in favor of the Company's senior lenders);
provided, however, that the Company is permitted to issue shares or other
securities as contemplated by the Company's Employee's Savings and Profit
Sharing Plan (the "Savings Plan") as in effect on the date of the Merger
Agreement and is permitted to issue Common Shares in connection with the due
exercise of Stock Options issued pursuant to the 1982 Option Plan, the 1992
Option Plan, the Non-Employee Directors Option Plan or any other right or
convertible security outstanding as of the date of the Merger Agreement in
accordance with the existing terms thereof; (c) no dividend shall be declared
or paid or other distribution (whether in cash, stock, property or any
combination thereof) or payment declared or made in respect of the Common
Shares, 5% Stock, or Preference Shares or any other outstanding capital stock
of the Company, nor shall the Company or any subsidiary (i) purchase, acquire
or redeem any Common Shares, 5% Stock or Preference Shares or (ii) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock; (d) neither the Company nor any subsidiary
shall enter into any material contract, or except in the ordinary course of
business consistent with past practice any other agreement, commitment or
instrument; (e) the Company shall use and shall cause each subsidiary to use
its and their respective reasonable efforts to preserve its and their business
organization intact, to keep available the services of its and their officers
and present key employees and to preserve its and their properties and the
goodwill of its and their suppliers, customers and others with whom business
relationships exist; (f) the Company shall not take, agree to take or permit
any subsidiary to take any action or do or permit to be done anything in the
conduct of its business or that of any subsidiary which would be contrary to
or in breach of any of the terms or provisions of the Merger Agreement or
which would cause any
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of the representations of the Company contained in the Merger Agreement to be
or become untrue in any material respect; (g) neither the Company nor any of
its subsidiaries shall adopt or amend in any material respect or terminate any
benefit plan, except as required by law, or change any actuarial or other
assumption used to calculate funding obligations with respect to any Company
pension plan (except to the extent that failure to make such change would
result in noncompliance with generally accepted accounting principles
("GAAP"), the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or the Internal Revenue Code of 1986, as amended (the "Code"), or
change the manner in which contributions to any Company pension plan are made
or the basis on which such contributions are determined, except as required by
applicable law; (h) the Company shall not acquire or agree to acquire (x) by
merging or consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any corporation,
partnership, joint venture, association or other business organization or
division thereof or (y) any assets that are material, individually or in the
aggregate, to the Company and its subsidiaries taken as a whole, except
purchases of inventory, raw materials, supplies and similar materials in the
ordinary course of business consistent with past practice and capital
expenditures complying with clause (k) below; (i) the Company shall not sell,
lease, license, mortgage or otherwise encumber or subject to any lien (except
in favor of the Company's senior lenders or certain liens permitted under the
Merger Agreement) or otherwise dispose of any of its material properties or
assets, except bona fide sales of inventory in the ordinary course of business
consistent with past practice; (j) the Company shall not (i) incur any
indebtedness for borrowed money or guarantee any such indebtedness of another
person, issue or sell any debt securities or warrants or other rights to
acquire any debt securities of the Company or any of its subsidiaries,
guarantee any debt securities of another person, enter into any "keep well" or
other agreement to maintain any financial statement condition of another
person or enter into any arrangement having the economic effect of any of the
foregoing, except for short-term borrowings incurred in the ordinary course of
business consistent with past practice and routine endorsements in the process
of collection, or (ii) make any loans, advances or capital contributions to,
or investments in, any other person, other than to the Company or any direct
or indirect wholly owned subsidiary of the Company or routine travel and
similar advances to employees; (k) the Company shall not make or agree to make
any new capital expenditure or expenditures which, individually, is in excess
of $100,000 or, in the aggregate, are in excess of $250,000; (l) the Company
shall not make any tax election or settle or compromise any income tax
liability; provided that CertainTeed shall not unreasonably withhold any
consent or approval of any such tax election, settlement or compromise; (m)
the Company will not 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 consistent with past practice or in
accordance with their terms, of liabilities that are reflected or reserved
against in the Company's balance sheet as September 30, 1997, or incurred
since the date of such balance sheet in the ordinary course of business
consistent with past practice, or waive the benefits of, or agree to modify in
any manner, any confidentiality, standstill or similar agreement to which the
Company or any of its subsidiaries is a party, except as permitted by the
Merger Agreement; and (n) the Company shall not authorize any of, or commit or
agree to take any of, the foregoing actions.
In addition, without prior consent of an authorized officer of CertainTeed,
which consent shall not be unreasonably withheld, the Company shall not make
any election fixing the rate or rates payable under the Company's revolving
credit agreement for a term that could reasonably be expected to extend beyond
the Effective Date.
The Merger Agreement requires CertainTeed to respond within a reasonable
period of time to any request for consent or approval required to take any of
the actions described in the preceding paragraphs.
The Merger Agreement also requires that the Company promptly advise
CertainTeed orally and in writing of any change or event of which the Company
has knowledge having, or which, insofar as can reasonably be foreseen, would
have, a Material Adverse Effect.
(8) Directors. Subject to compliance with applicable law (including Section
14(f) of the Exchange Act), upon the acquisition by the Purchaser of at least
a majority of the outstanding Common Shares pursuant to the Offer, the
Purchaser shall be entitled to designate at least a majority of the members of
the Board of Directors of
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the Company, and the Company and its Board of Directors shall, at such time,
take any and all such action (including to increase the size of the Board of
Directors or to use their best efforts to cause directors to resign) needed to
cause a sufficient number of the Purchaser's designees to be appointed to the
Company's Board of Directors such that the designees shall constitute such
majority (any director so designated by the Purchaser, a "Designated
Director"). It is understood that immediately after the acquisition by the
Purchaser of at least a majority of the outstanding Common Shares pursuant to
the Offer (x) the Company's Board of Directors shall consist of seven members,
(y) the initial designees of the Purchaser to the Company's Board of Directors
are expected to be George B. Amoss, Gianpaolo Caccini, James E. Hilyard and
Bradford C. Mattson and (z) the remaining members of the Company's Board of
Directors are expected to be Frank Anthony, Antonio J. Lorusso, Jr. and
Richard C. Maloof. In the event that, after the acquisition by the Purchaser
of at least a majority of the outstanding Common Shares pursuant to the Offer
and prior to the Effective Time (as defined in the Merger Agreement), the
number of members of the Board of Directors increases (including pursuant to
the provisions of the Preference Shares and the 5% Stock), the Company and its
Board of Directors shall, at such time, take any and all such additional
action (including to increase the size of the Board of Directors, to use their
best efforts to cause additional directors to resign and to appoint additional
designees of the Purchaser) needed to cause a sufficient number of the
Purchaser's designees to be appointed to the Board of Directors such that the
designees shall then constitute at least a majority of the members of the
Board of Directors. The Company, CertainTeed and the Purchaser shall use their
respective best efforts to cause at least three members of the Company's Board
of Directors at all times prior to the Effective Time to be Continuing
Directors. "Continuing Director" means (a) any member of the Company's Board
of Directors on the date of the Merger Agreement, (b) any member of the
Company's Board of Directors who is not an employee or director or affiliate
of, and not a Designated Director or other nominee of, the Purchaser or
CertainTeed or their respective subsidiaries, and (c) any successor of a
Continuing Director who is (i) not an employee or director or affiliate of,
and not a Designated Director or other nominee of, the Purchaser or
CertainTeed or their respective subsidiaries and (ii) recommended to succeed
such Continuing Director by at least a majority of the then Continuing
Directors.
(9) Stock Options. The Merger Agreement provides that, with respect to
unexpired Stock Options, whether or not exercisable at the Effective Date,
including stock appreciation rights relating thereto, outstanding on the
Effective Date which have been issued pursuant to the 1982 Option Plan, the
1992 Option Plan or the Non-Employee Directors Option Plan, each such Stock
Option with an exercise price less than the Common Price (an "Eligible
Option") shall, by virtue of the Merger and without any action on the part of
the holder thereof, be converted into the right to receive, for each Common
Share subject thereto, a cash payment without interest equal to the Common
Price, less the per share exercise price of each such Stock Option. Such Stock
Options will be canceled upon such cash payment following the Merger. Any
Stock Option with an exercise price equal to or greater than the Common Price
(an "Ineligible Option") shall be canceled upon the Effective Date without
payment of any consideration. The Merger Agreement requires the Company to use
its best efforts to amend each outstanding Stock Option issued under the 1982
Option Plan, the 1992 Option Plan and the Non-Employee Directors Option Plan
to effect the transactions contemplated by the Merger Agreement, including the
cancellation of the Stock Options in connection with the Merger in accordance
with the foregoing. Each Common Share issued by the Company but not yet vested
pursuant to the Savings Plan shall, in connection with the Merger, become
vested in the person to whose account such Common Share was issued and
converted into the right to receive the Common Price pursuant to the Merger
Agreement.
The Company has informed the Purchaser that, as of January 12, 1998, there
were no Common Shares held in escrow pursuant to the Company's Long Term
Incentive Compensation Plan (the "LTIP"), and the LTIP has been terminated.
Immediately following the Effective Date, the Company's 1982 Option Plan, 1992
Option Plan and Non-Employee Directors Option Plan shall be terminated and no
further stock awards or stock options will be granted thereunder from and
after the date of the Merger Agreement.
(10) Indemnification and Insurance. In the Merger Agreement, CertainTeed and
the Purchaser have agreed that all rights to indemnification in existence as
of the date of the Merger Agreement in favor of the directors or officers of
the Company and its subsidiaries (the "Indemnified Parties") as currently
provided in
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their respective certificates or articles of incorporation or organization and
by-laws or in any agreements, contracts or arrangements with the Company or
any of its subsidiaries in effect as of the date of the Merger Agreement and
previously furnished to CertainTeed and to the extent not in violation of
applicable state law, shall survive the Merger and shall continue in full
force and effect for a period of five years from the Effective Date; provided
that, in the event any claim or claims are asserted or made within such five
year period, all rights to indemnification in respect of any such claim or
claims shall continue until the disposition of any and all such claims. In
addition, the Merger Agreement provides that, to the extent currently provided
in the certificates or articles of incorporation or organization and by-laws
of the Company and its subsidiaries and Massachusetts law, or agreements,
contracts or arrangements disclosed to CertainTeed with the Company or any of
the subsidiaries, in the event that any Indemnified Party becomes involved in
any capacity in any action, proceeding or investigation in connection with any
matter, including the transaction contemplated by the Merger Agreement,
occurring prior to, and including, the Effective Date, or otherwise relating
to or arising out of such matters, CertainTeed or the Surviving Corporation
will periodically advance to such Indemnified Party his or her legal and other
expenses (including the costs of any investigation and preparation incurred in
connection therewith).
The Merger Agreement provides that CertainTeed will use all reasonable
efforts to maintain in effect, or shall cause the Surviving Corporation to use
all reasonable efforts to maintain in effect, for two years after the
Effective Date, directors' and officers' liability insurance ("D&O Insurance")
covering those persons covered by the Company's directors' and officers'
liability insurance on the date of the Merger Agreement or the Effective Date
and which is substantially equivalent in terms of coverage and amount as the
Company has in effect on the Effective Date so long as such insurance is
available and the annual premium therefor would not be in excess of $166,000
(the "Maximum Premium"). If the existing D&O Insurance expires, is terminated
or canceled during such two-year period, CertainTeed shall use all reasonable
efforts to cause to be obtained as much D&O Insurance as can be obtained for
the remainder of such period for an annualized premium not in excess of the
Maximum Premium, on terms and conditions no less advantageous than the
existing D&O Insurance.
The Merger Agreement further provides that (a) any Indemnified Party wishing
to claim indemnification pursuant to the Merger Agreement, upon learning of
any legal action, suit, investigation, inquiry or proceeding by any
governmental authority or other person, shall promptly notify CertainTeed and
the Surviving Corporation with respect thereto, but the failure to so notify
shall not relieve CertainTeed or the Surviving Corporation of any liability it
may have to such Indemnified Party under the Merger Agreement except to the
extent that CertainTeed and the Surviving Corporation are materially
prejudiced thereby, (b) CertainTeed and the Surviving Corporation shall
periodically, as requested, advance to such Indemnified Party his, her or its
legal and other expenses (including the cost of investigation and preparation
incurred in connection therewith) to the extent such Indemnified Party is
indemnified pursuant to the Merger Agreement, unless it is ultimately
determined by a court of competent jurisdiction that such Indemnified Party is
not entitled to indemnification hereunder, and (c) CertainTeed and the
Surviving Corporation shall be subrogated to any rights any Indemnified Party
may have with respect to any amounts paid to or on behalf of such Indemnified
Party by CertainTeed and the Surviving Corporation pursuant to the Merger
Agreement.
(11) Representations and Warranties. The Merger Agreement contains various
customary representations and warranties. The Merger Agreement requires that
CertainTeed, the Purchaser and the Company shall each take such action as is
reasonably necessary to render their respective representations and warranties
accurate on and as of the Effective Date. Without limiting the foregoing, the
Merger Agreement provides that the Company shall take any action required by
CertainTeed to ensure the accuracy of its representations pertaining to
Massachusetts' anti-takeover laws.
(12) The Stockholder Agreement. Pursuant to the Stockholder Agreement, the
directors (the "Selling Stockholders") of the Company have unconditionally
agreed to tender into the Offer, and not to withdraw therefrom, the 1,670,657
Common Shares and 132,200 Preference Shares that they owned on January 12,
1998, together with any Shares they acquire after such time, including upon
the exercise of Stock Options. In addition, the Selling Stockholders have
agreed to sell to the Purchaser, and the Purchaser has agreed to purchase, the
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foregoing number of Common Shares at a price per Common Share of $5.50, or
such higher price per Common Share as may be offered by the Purchaser in the
Offer and Preference Shares at a price per Preference Share of $20.00, or such
higher price per Preference Share as may be offered by the Purchaser in the
Offer, provided that (i) such obligation to purchase is subject to (a) the
Purchaser having accepted Common Shares and Preference Shares for payment
under the Offer or (b) if the Offer has been terminated for failure to satisfy
the Minimum Condition, (i) all conditions to the Offer (other than the Minimum
Condition) having been satisfied and (ii) including all Common Shares and
Preference Shares tendered and not withdrawn at the time of termination of the
Offer and all Shares to be purchased pursuant to the Stockholder Agreement,
the Minimum Condition would have been satisfied. Notwithstanding the
foregoing, no Selling Stockholder shall be obligated to sell his or her Shares
after the scheduled final expiration time of the Offer unless (i) the Minimum
Condition was not satisfied, (ii) such Selling Stockholder did not tender such
Stockholder's Shares into the Offer or withdrew such Shares and (iii)
including all Common Shares and Preference Shares tendered and not withdrawn
at the time of termination of the Offer and all Shares to be purchased
pursuant to the Stockholder Agreement, the Minimum Condition would have been
satisfied. The Shares subject to the Stockholder Agreement represent
approximately 40.2% of the Common Shares and 16.2% of the Preference Shares.
Each of the Selling Stockholders has agreed not to: (i) sell, transfer,
pledge, assign or otherwise dispose of, or enter into any contract, option or
other arrangement (including any profit sharing arrangement) or understanding
with respect to the sale, transfer, pledge, assignment or other disposition
of, his or her Shares to any person other than the Purchaser or the
Purchaser's designee, (ii) enter into any voting arrangement, whether by
proxy, voting agreement, voting trust, power-of-attorney or otherwise, with
respect to his or her Shares or (iii) take any other action that would in any
way restrict, limit or interfere with the performance of its obligations
hereunder or the transactions contemplated hereby. Each of the Selling
Stockholders has also agreed not to solicit, initiate or encourage (including
by way of furnishing information) and not to participate in any discussions or
negotiations regarding any takeover proposal (as defined in the Merger
Agreement).
Under the Stockholder Agreement, each Selling Stockholder has granted an
irrevocable proxy with respect to the Shares subject to the Stockholder
Agreement to CertainTeed to vote such Shares against (i) any merger agreement
or merger (other than the Merger Agreement and the Merger), consolidation,
combination, sale of substantial assets, reorganization, joint venture,
recapitalization, dissolution, liquidation or winding up of or by the Company
and (ii) any amendment of the Company's articles of incorporation or its by-
laws, or other proposal or transactions (including any consent solicitation to
remove or elect any directors of the Company) involving the Company, which
amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify, or result in a breach of any covenant,
representation or warranty or any other obligation or agreement of the Company
under or with respect to, the Offer, the Merger, the Merger Agreement or any
of the transactions contemplated by the Merger Agreement.
The foregoing summary of the Stockholder Agreement is qualified in its
entirety by reference to the Stockholder Agreement, a copy of which is filed
as Exhibit (c)(2) to the Schedule 14D-9. The Stockholder Agreement should be
read in its entirety for a more complete description of the matters summarized
above.
Plans for the Company. Saint-Gobain and its affiliates currently intend that
the Company will continue its present manufacturing operations in
Massachusetts and will continue to operate under its present corporate name,
as a wholly owned subsidiary of CertainTeed. CertainTeed has had preliminary
discussions with Richard C. Maloof, the President of the Company, and Frank S.
Anthony, Vice President, General Counsel and Corporate Secretary of the
Company, regarding their continued employment with the Surviving Corporation
on terms which have yet to be decided, but these discussions have not yet
resulted in any commitments by any of the parties.
Except as otherwise described in the Offer to Purchase, none of the
Purchaser, CertainTeed or Saint-Gobain has any current plans or proposals that
relate to, or would result in, any extraordinary corporate transaction
involving the Company, such as a merger, reorganization or liquidation
involving, the Company or any of its subsidiaries to any unaffiliated third
party.
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Appraisal Rights. Holders of Shares do not have appraisal rights as a result
of the Offer. However, if the Merger is consummated, holders of outstanding
Common Shares, Preference Shares and 5% Stock on the Effective Date will have
certain rights pursuant to the provisions of Sections 85 through 98,
inclusive, of the MBCL to dissent and demand appraisal of their shares. Under
Sections 85 through 98, inclusive, of the MBCL, dissenting stockholders who
comply with the applicable statutory procedures will be entitled to receive a
judicial determination of the fair value of their shares (exclusive of any
element of value arising from the accomplishment or expectation of the Merger)
and to receive payment of such fair value in cash, together with a fair rate
of interest, if any. Any such judicial determination of the fair value of
shares could be based upon factors other than, or in addition to, the price
per share to be paid in the Merger or the market value of the shares. The
value so determined could be more or less than the price per share to be paid
in the Merger.
The foregoing summary of Sections 85 through 98, inclusive, of the MBCL does
not purport to be complete and is qualified in its entirety by reference to
Sections 85 through 98, inclusive, of the MBCL. Failure to follow the steps
required by Sections 85 through 98, inclusive, of the MBCL for perfecting
appraisal rights may result in the loss of such rights.
Going Private Transactions. The SEC has adopted Rule 13e-3 under the
Exchange Act which is applicable to certain "going private" transactions. The
Purchaser does not believe that Rule 13e-3 will be applicable to the Merger
unless the Merger is consummated more than one year after the termination of
the Offer. If applicable, Rule 13e-3 requires, among other things, that
certain financial information concerning the fairness of the Merger and the
consideration offered to minority stockholders in such transaction be filed
with the SEC and disclosed to stockholders prior to the consummation of the
Merger.
(13) Dividends and Distributions. Pursuant to the terms of the Merger
Agreement, the Company is prohibited from taking any of the actions described
in the two succeeding paragraphs, and nothing herein shall constitute a waiver
by the Purchaser or CertainTeed of any of its rights under the Merger
Agreement or a limitation of remedies available to the Purchaser or
CertainTeed for any breach of the Merger Agreement, including termination
thereof.
If, on or after January 12, 1998, the Company should (a) split, combine or
otherwise change the Shares or its capitalization, (b) acquire or otherwise
cause a reduction in the number of outstanding Shares or other securities
(other than as aforesaid) or (c) issue or sell additional Shares (other than
the issuance of Common Shares under option prior to January 12, 1998, in
accordance with the terms of such options as publicly disclosed prior to
January 12, 1998, shares of any other class of capital stock, other voting
securities or any securities convertible into, or rights, warrants or options,
conditional or otherwise, to acquire, any of the foregoing, then, subject to
the provisions of numbered paragraph (14), the Purchaser, in its sole
discretion, may make such adjustments as it deems appropriate in the Common
Price, the Preference Price and other terms of the Offer, including, without
limitation, the number or type of securities offered to be purchased.
If, on or after January 12, 1998, the Company should declare or pay any cash
dividend on the Common Shares or Preference Shares (including any accrued and
previously unpaid dividends) or other distribution on the Shares, or issue
with respect to the Shares or any additional Shares, shares of any other class
of capital stock, other voting securities or any securities convertible into,
or rights, warrants or options, conditional or otherwise, to acquire, any of
the foregoing, payable or distributable to stockholders of record on a date
prior to the transfer of the Shares purchased pursuant to the Offer to the
Purchaser or its nominee or transferee on the Company's stock transfer
records, then, subject to the provisions of numbered paragraph (14), (a) the
Common Price and/or the Preference Price may, in the sole discretion of the
Purchaser, be reduced by the amount of any such cash dividend or cash
distribution and (b) the whole of any such noncash dividend, distribution or
issuance to be received by the tendering stockholders will (i) be received and
held by the tendering stockholders for the account of the Purchaser and will
be required to be promptly remitted and transferred by each tendering
stockholder to the Depositary for the account of the Purchaser, accompanied by
appropriate documentation of transfer, or (ii) at the direction of the
Purchaser, be exercised for the benefit of the Purchaser, in which case the
proceeds of such exercise will promptly be remitted to the Purchaser. Pending
such remittance and subject to applicable law, the
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Purchaser will be entitled to all rights and privileges as owner of any such
noncash dividend, distribution, issuance or proceeds and may withhold the
entire Common Price and/or Preference Price or deduct from the Common Price
and/or the Preference Price the amount or value thereof, as determined by the
Purchaser in its sole discretion.
The Merger Agreement provides that the Company shall not declare and pay or
set apart for payment any accumulated dividends on the Common Shares, the 5%
Stock or the Preference Shares. Accordingly, the Company will not declare the
February 15, 1998 dividend on the Preference Shares or the March 1, 1998
dividend on the 5% Stock.
(14) Certain Conditions of the Offer. Notwithstanding any other term of the
Offer or the Merger Agreement, the Purchaser shall not be required to accept
for payment or, subject to any applicable rules and regulations of the SEC,
including Rule 14e-1(c) under the Exchange Act (relating to Purchaser's
obligation to pay for or return tendered Shares after the termination or
withdrawal of the Offer), to pay for any Shares tendered pursuant to the Offer
unless the Minimum Condition, the HSR Condition and the Required Consents
Condition shall all have been satisfied. Furthermore, notwithstanding any
other term of the Offer or the Merger Agreement, the Purchaser shall not be
required to accept for payment or, subject as aforesaid, to pay for any Shares
not theretofore accepted for payment or paid for, and may terminate the Offer
if, at any time on or after the date of the Merger Agreement and before the
Consummation of the Offer any of the following conditions exist:
(a) the representations and warranties of the Company contained in the
Merger Agreement (without regard to any supplemental information provided
pursuant to the Merger Agreement) that are qualified as to materiality
shall not be true and correct, and the representations that are not so
qualified shall not be true and correct in all material respects, in each
case on and as of the date of the Merger Agreement and on and as of the
Expiration Date;
(b) any of the obligations of the Company to be performed by it on or
before the Expiration Date pursuant to the terms of the Merger Agreement
shall not have been duly performed or complied with in all material
respects by that date;
(c) since September 30, 1997, there shall have occurred (or it shall be
reasonably expected that there will be) any event, change or circumstance
causing, or reasonably anticipated to cause in the future, any Material
Adverse Effect;
(d) any consents, approvals and authorizations from third persons and
governmental authorities identified in the Merger Agreement required to
consummate the transactions contemplated by the Merger Agreement shall not
have been obtained;
(e) there shall be pending or threatened any suit, action or proceeding
by any governmental authority (i) challenging the acquisition by
CertainTeed or the Purchaser of any Shares, seeking to restrain or prohibit
the consummation of the Offer, the Merger or any of the other transactions
contemplated by the Merger Agreement or seeking to obtain from the Company,
CertainTeed or the Purchaser any damages related to the Offer, the Merger
or any of the other transactions contemplated by the Merger Agreement that
are material in relation to the Company and its subsidiaries taken as a
whole, (ii) seeking to prohibit or limit the ownership or operation by the
Company, CertainTeed or any of their respective subsidiaries of any
material portion of the business or assets of the Company, CertainTeed or
any of their respective subsidiaries, or to compel the Company, CertainTeed
or any of their respective subsidiaries to dispose of or hold separate any
material portion of the business or assets of the Company, CertainTeed or
any of their respective subsidiaries, as a result of the Offer, the Merger
or any of the other transactions contemplated by the Merger Agreement,
(iii) seeking to impose limitations on the ability of CertainTeed or the
Purchaser to acquire or hold, or exercise full rights of ownership of, any
common stock of the Surviving Corporation, (iv) seeking to prohibit
CertainTeed or any of its subsidiaries from effectively controlling in any
material respect the business or operations of the Company or its
subsidiaries or of CertainTeed and its subsidiaries or (v) which otherwise
is reasonably likely to have a Material Adverse Effect;
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(f) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to
the Offer or the Merger, or any other action shall be taken by any
governmental authority or court, other than the application to the Offer or
the Merger of applicable waiting periods under the HSR Act, that is
reasonably likely to result, directly or indirectly, in any of the
consequences referred to in clauses (i) through (v) of paragraph (e) above;
(g) the Company's Board or any committee thereof shall have withdrawn or
modified in a manner adverse to CertainTeed its approval or recommendation
of the Offer, the Merger or the Merger Agreement or resolved to take any of
such actions; or
(h) the Merger Agreement shall have been terminated in accordance with
its terms.
The foregoing conditions are for the sole benefit of the Purchaser and
CertainTeed and may, subject to the terms of the Merger Agreement, be waived
by the Purchaser and CertainTeed in whole or in part at any time and from time
to time. The failure by CertainTeed or the Purchaser 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
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.
ADDITIONAL AGREEMENTS, ARRANGEMENTS AND UNDERSTANDINGS
Indemnification of Directors and Officers. Paragraph (d) of Article VI of
the Restated Articles of Organization (the "Restated Articles") of the Company
provides that no director of the Company shall be personally liable to the
Company or its stockholders for monetary damages for breach of fiduciary duty
as a director notwithstanding any provision of law imposing such liability.
Paragraph (d) provides further, however, that to the extent provided by
applicable law, it will not eliminate or limit the liability of a director (i)
for any breach of the director's duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for distributions
to one or more stockholders of the Company made in violation of the Restated
Articles or which are made when the Company is insolvent or which render it
insolvent, if such distributions are not repaid, (iv) for loans made to
officers or directors of the Company which are not repaid if the director has
voted for such loans and they have not been approved or ratified, as loans
reasonably expected to benefit the Company, by a majority of directors who are
not recipients of such loans or the holders of a majority of voting shares,
which holders are not recipients of such loans, or (v) for any transactions
from which the director derived an improper personal benefit.
Section 13(b)(1 1/2) of the MBCL authorizes the provisions of the Restated
Articles described above, subject to the limitations described above.
Section 1 of Article VI of the Company's By-laws provides that the Company
shall indemnify each of its directors, officers and agents, and persons who
serve at the Company's request as directors, officers or agents of another
organization in which the Company directly or indirectly owns shares or of
which the Company is a creditor, against all liabilities, costs and expenses
(including amounts paid in satisfaction of judgments or in compromise of
claims, penalties, counsel fees and legal costs) reasonably incurred by,
imposed upon or assessed to such person in connection with or resulting from
any action, suit or proceeding, to which such person is or may be made a party
by reason of such person's being or having been such a director, officer or
agent, except in relation to matters as to which such person shall have been
finally adjudicated in any proceeding either to be liable for actual
misconduct in the performance of that person's duties or not to have acted in
good faith in the reasonable belief that such person's action was in the best
interest of the Company.
As to any matter disposed of by a compromise payment by any such person,
pursuant to a consent decree or otherwise, Section 1 of Article VI of the
Company's By-laws provides that no indemnification shall be provided to such
person for such payment or for any other expenses unless such compromise has
been approved
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as in the best interests of the Company, after notice that it involves such
indemnification (i) by a majority of the disinterested directors then in
office or (ii) if there is not such majority of disinterested directors, by
independent legal counsel to whom the question may be referred by the Board of
Directors.
Section 1 of Article VI of the Company's By-laws provides further that a
majority of the directors then in office may authorize payment by the Company
of expenses incurred by any such person in defending any such action or
proceeding in advance of the final disposition thereof, upon receipt of an
undertaking by the person so indemnified to repay to the Company the amounts
so paid if such person is adjudicated to be not entitled to indemnification
under Section 1 of Article VI.
Section 2 of Article VI of the Company's By-laws gives the Board of
Directors of the Company the power to authorize the purchase and maintenance
of insurance on behalf of any person who is or was a director, officer or
agent of the Company, or who is or was serving at the request of the Company
as a director, officer or agent of another organization in which the Company
directly or indirectly owns shares or of which it is a creditor, against any
liability incurred by such person in any such capacity, or arising out of such
person's status as such director, officer or agent, whether or not such person
is entitled to indemnification by the Company pursuant to Section 1 of Article
VI of the Company's By-laws or otherwise and whether or not the Company would
have the power to indemnify the person against such liability. The Company
currently maintains insurance for the benefit and on behalf of its directors
and officers insuring against certain liabilities that may be incurred by any
such director or officer in or arising out of his capacity as a director,
officer or agent of the Company.
Section 67 of the MBCL authorizes the provisions of Article VI of the
Company's By-laws described above, subject to the limitations described above.
Section 65 of the MBCL provides that performance by a director, officer or
incorporator of that person's duties in good faith and in a manner reasonably
believed to be in the best interests of the corporation, and with such care as
an ordinarily prudent person in a like position would use under similar
circumstances, shall be a complete defense to any claim asserted against such
director, officer or incorporator, except as otherwise expressly provided by
statute, by reason of such person's being or having been a director, officer
or incorporator of the corporation.
Pursuant to the Merger Agreement, CertainTeed and the Purchaser have agreed
to keep such indemnification and insurance arrangements described above in
place for a designated period of time subsequent to the Effective Date. See
"The Merger Agreement--Indemnification and Insurance."
Discussions with Richard C. Maloof and Frank S. Anthony. CertainTeed has had
preliminary discussions with Richard C. Maloof, the President of the Company,
and Frank S. Anthony, Vice President, General Counsel and Corporate Secretary
of the Company, regarding their continued employment with the Surviving
Corporation on terms which have yet to be decided, but these discussions have
not yet resulted in any commitments by any of the parties.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) Recommendation of the Board of Directors. The Board has determined
unanimously that the Offer and the Merger are fair to and in the best
interests of the stockholders of the Company and recommends that all holders
of Common Shares and Preference Shares accept the Offer and tender all of
their Shares pursuant to the Offer. This recommendation is based in part upon
an opinion received from Lehman Brothers ("Lehman") that from a financial
point of view the consideration to be paid by CertainTeed pursuant to the
Offer and the Merger is fair to the stockholders of the Company. The full text
of the fairness opinion received by the Company from Lehman, which sets forth
the assumptions made, matters considered and limitations of the review
undertaken by Lehman, is filed herewith as Exhibit (a)(4) and attached hereto
as Annex B. Stockholders are urged to read such opinion in its entirety.
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As set forth in the Offer to Purchase, the Purchaser will purchase Shares
tendered prior to the Expiration Date if the Minimum Condition has been
satisfied (or waived under certain circumstances) by that time and if all
other conditions to the Offer have been satisfied (or waived under certain
circumstances). Stockholders considering not tendering their Shares in order
to wait for the Merger should note that the Purchaser is not obligated to
purchase any Shares, and can terminate the Offer and the Merger Agreement and
not proceed with the Merger, if the Minimum Condition is not satisfied or any
of the other conditions to the Offer are not satisfied. Under Massachusetts
law, the approval of the Board and the affirmative vote of the holders of at
least 66 2/3% of the issued and outstanding Common Shares and the affirmative
vote of at least 66 2/3% of the issued and outstanding Preference Shares, each
voting as a separate class, are required to approve and adopt the Merger
Agreement. Accordingly, if the Minimum Condition is satisfied and the Offer is
consummated, the Purchaser will have sufficient voting power to cause the
approval and adoption of the Merger Agreement and the transactions
contemplated thereby without the affirmative vote of any other stockholder.
The Offer is scheduled to expire at 12:00 Midnight, New York City time, on
Friday, February 13, 1998, unless the Purchaser, with the consent of the
Company under certain circumstances, elects to extend the period of time for
which the Offer is open. A copy of the press release issued jointly by the
Company and CertainTeed announcing the Offer and the Merger is filed as
Exhibit (a)(5) hereto and is incorporated herein by reference in its entirety.
(b) Background and Reasons for the Recommendation.
BACKGROUND
The Offer and the Merger represent the culmination of numerous steps
undertaken by the Company over the past several years in an effort to stem
continuing losses, to reduce debt and to find a strategic partner to invest in
the operations of the Company or a buyer to purchase all or a substantial part
of the Company.
In 1993, the Company experienced severe financial setbacks which caused the
Company to default in the performance of certain operating and other covenants
contained in its agreement with its lending banks and required the Company to
classify the related debt as current on its September 30, 1993 balance sheet.
In response to these problems, during 1993, the Company embarked on a program
which included refocusing the Company on its core business (i.e., its building
materials manufacturing businesses), the elimination of unrelated and
nonessential functions, the imposition of strict cost control measures and the
restructuring of its bank lines of credit.
In furtherance of this program, the Company, in the fourth quarter of 1993,
began to eliminate its non-core businesses by (i) withdrawing from its on-site
environmental remediation business pursuant to a series of minor asset sales
and winding down and closing the balance of such business (a process completed
in August 1994) and (ii) seeking a buyer for all of its building materials
distribution business. The sales effort resulted in the sale of the Company's
distribution business to two subsidiaries of Cameron Ashley, Inc. for an
aggregate purchase price of approximately $28,000,000 in two transactions
which closed in August and November of 1994, respectively.
In addition, and as part of its restructuring program, the Company
renegotiated its bank lines of credit, entering into further amendments to its
credit facilities in March of 1994. In its effort to focus on its core
business, the Company built a $5.5 million asphalt oxidizing plant at its
Norwood, Massachusetts roofing plant. The oxidizing plant is designed to (i)
reduce the Company's operating costs associated with obtaining processed
asphalt from suppliers in other states and (ii) provide the Company with a
convenient and reliable source of processed asphalt for use in the Company's
roofing manufacturing operations.
The deterioration of the Company's financial condition continued.
Consequently, in April of 1994, the Company expanded the scope of its
restructuring efforts by commencing an active search to find a buyer or merger
partner for the Company as a whole. The Company engaged a financial advisor to
assist in these efforts. In light of the intensive nature of these efforts, in
May of 1994 the Board formed the Strategic Planning
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Committee, a special committee of the Board, to supervise the Company's
efforts to attract a purchaser of the Company's stock or assets and to make
appropriate recommendations and reports to the full Board regarding such
process.
As the Company's efforts progressed, the Company's management, the Board,
the Strategic Planning Committee and the Company's financial and legal
advisors met together and individually on numerous occasions between May and
September 1994 to reevaluate the Company's alternatives, including the
possibility of a substantial downsizing of the Company through a sale of the
Company's vinyl business headquartered in Bardstown, Kentucky (the "Vinyl
Business") and the Company's interests in Kensington (as defined below; the
Vinyl Business and the Company's interests in Kensington and such entity's
business operations, taken as a whole, are referred to herein as the "Combined
Vinyl Business"). The sale of the Combined Vinyl Business was proposed to
enable the Company to achieve a significant reduction in, or the elimination
of, the Company's debt.
The Offer and Merger represent the culmination of a series of negotiations
between CertainTeed and the Company that began at the Company's initiation in
1994. During the spring and early summer of that year, management of the
Company and of CertainTeed undertook to negotiate a proposed merger at a cash
price of $13 per Common Share (plus a contingent purchase price of up to $1.25
per Common Share). That transaction would also have included the redemption of
the 5% Stock and the Preference Shares. In July of 1994, however, CertainTeed
informed the Company that because CertainTeed's only interest was in acquiring
the Company's roofing manufacturing business, CertainTeed was not prepared to
acquire the Company's assets and contingent liabilities unrelated to its core
roofing business. As a result, the Company and CertainTeed terminated their
negotiations. Shortly thereafter, CertainTeed indicated orally that it
remained interested in acquiring the Company's roofing plant or the entire
Company if all or a substantial portion of its non-roofing assets could be
divested prior to a CertainTeed acquisition of the Company. In September of
1994, the Company provided additional due diligence materials and suggested
continuing discussions.
During the next several months, the Company received various offers from
potential purchasers to acquire the entire Company, the Combined Vinyl
Business or the Company's roofing manufacturing business. The Board and the
Strategic Planning Committee met on several occasions with senior management
and the Company's financial advisor and independent legal counsel to discuss
the Company's options in light of the various offers presented.
After careful consideration of all available options, in March of 1995 the
Company sold (with prior stockholder approval) the Vinyl Business (the "Vinyl
Sale") to Jannock, Inc. ("Jannock") for $42.5 million plus the assumption by
Jannock of certain specified liabilities of the Vinyl Business. This
transaction also included a grant to Jannock of an option to purchase the
Company's interest in Kensington Partners ("Kensington"), a window fabrication
business. In June 1995 Jannock exercised the option and the Company was
required to pay approximately $1.4 million to divest Kensington.
During the summer of 1995, the Company and CertainTeed renewed discussions,
including a meeting at CertainTeed's headquarters in Valley Forge,
Pennsylvania, at which the status of the Company's asset disposition and
contingent liability management program was discussed. The Company indicated
that all material non-roofing assets, other than its interest in a San Leon,
Texas hydrocarbon waste recycling center, had been divested and that an effort
to sell this interest was underway. During the fall of 1995, CertainTeed
resumed its due diligence investigation of the Company. Discussions between
the parties regarding issues raised during CertainTeed's ongoing due diligence
effort continued on a regular basis through February of 1996.
On September 12, 1995, the Company received a notice (the "Notice") from a
prospective purchaser, indicating that it intended to purchase at least 50% of
the Company's Common Stock in open market or privately negotiated
transactions. The purchases contemplated by the Notice required compliance
with the HSR Act pre-merger filing requirements, which requirements were
subsequently satisfied. On March 12, 1996, the Company received a letter from
the Federal Trade Commission stating that its review of the proposed
transaction was closed but reserving the right to take such further action as
the public interest may require.
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In November of 1995, the Company caused Bird Environmental Technologies, Inc.
("BETI") to sell BETI's outstanding capital stock of Bird Environmental Gulf
Coast, Inc. ("BEGCI"), which owned the San Leon, Texas based hydrocarbon waste
recycling center, to GTS Duratek, Inc. for a purchase price of $1.00. In
addition, BETI (the 80% owner of BEGCI and an indirect wholly owned subsidiary
of the Company) agreed to pay the Purchaser the amount by which BEGCI's current
liabilities exceeded its current assets at August 31, 1995, which was
approximately $1.3 million. The sale of the recycling center completed the
Company's withdrawal from the environmental remediation and recycling industry.
During January 1996, another qualified prospective purchaser expressed an
interest in purchasing the Company. Pursuant to such expression of interest,
such party performed extensive due diligence of the Company, its assets and
liabilities but ultimately declined to make an offer due to the existence and
the threat of certain contingent liabilities relating to the Company's current
and prior roofing business.
In late February and early March of 1996, representatives of CertainTeed
spoke by telephone with representatives of the Company on a number of occasions
regarding the possibility of CertainTeed making a proposal to acquire the
Company. On March 4, 1996, CertainTeed indicated that (i) it was prepared to
propose an acquisition price of $7.50 per Common Share, subject to negotiation
of definitive agreements and agreement upon a satisfactory arrangement
regarding alternative transaction fees and expenses, and (ii) as in 1994, it
was prepared to cash out the Preference Shares at their liquidation value, plus
all accrued and unpaid dividends, as well as to redeem the 5% Stock in
accordance with its terms. Detailed negotiations ensued between the Company and
CertainTeed, culminating in the execution of a merger agreement (the "1996
Merger Agreement") on March 14, 1996.
On April 3, 1996, CertainTeed indicated it desired to acquire control of the
Company on the somewhat more accelerated timetable permitted by a cash tender
offer. The Board of the Company considered and approved CertainTeed's proposal
on April 5, 1996, and on April 12, 1996 a subsidiary of CertainTeed commenced a
cash tender offer (the "1996 Tender Offer") for all the outstanding Common
Shares and Preference Shares.
On May 2, 1996, CertainTeed informed the Company that CertainTeed had
concluded that certain conditions to the 1996 Tender Offer would not be
satisfied at the scheduled expiration of such offer, that CertainTeed would not
waive the conditions and that, accordingly, such offer would expire without the
CertainTeed subsidiary acquiring any Shares. On May 10, 1996, the 1996 Tender
Offer expired pursuant to its terms without the CertainTeed subsidiary
acquiring any Shares. Thereafter, the 1996 Merger Agreement was terminated.
In August 1996, Joseph D. Vecchiolla, the Company's Chairman at the time, and
Mr. Anthony met in New York City with representatives of a major U.S. roofing
manufacturer to discuss a possible combination, but no proposal was
forthcoming.
In December 1996, Messrs. Maloof and Anthony met in Norwood, Massachusetts
with a representative of a roofing manufacturer that had expressed an interest
in acquiring the Company. Extensive due diligence was performed, but in August
1997 the potential buyer stated over the telephone to Mr. Vecchiolla that it
would not make an offer because of its concerns with respect to possible
environmental liabilities and because the Company's earnings in 1997 had been
deteriorating.
On October 24, 1997, Messrs. Maloof, Anthony and Vecchiolla met with a
roofing manufacturer at its headquarters. After subsequent discussions and a
due diligence review, an acquisition proposal was delivered to the Company. The
Company decided not to pursue the proposal after reviewing its terms and
considering the December 1997 CertainTeed proposal.
In November 1997, Mr. Maloof spoke by telephone to the president of yet
another roofing manufacturer to discuss a possible combination. The
manufacturer delivered to the Company an acquisition proposal. Messrs. Maloof
and Anthony met with this potential acquirer at its offices in December 1997,
which resulted in the issuance of an amended proposal. The Company decided not
to pursue the amended proposal after reviewing its terms and considering the
December 1997 CertainTeed proposal.
During 1997, other roofing manufacturers and non-manufacturers expressed an
interest in combining with the Company. Each was sent detailed financial and
operational information about the Company. None expressed any interest in a
transaction with the Company.
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On December 11 and 12, 1997, Bradford C. Mattson, Executive Vice President,
Exterior Products Group, of CertainTeed, spoke by telephone with Mr. Maloof
regarding the possibility of a renewed interest by CertainTeed of making a
proposal to acquire the Company. During these conversations, Mr. Mattson was
informed that two other prospective purchasers were conducting investigations
of the Company and had or would likely submit acquisition proposals to the
Company. On December 14, 1997, Mr. Mattson had another telephone conversation
with Mr. Maloof to discuss, among other things, several environmental matters
relating to the Company. On December 15, 1997, John R. Mesher, Vice President
and General Counsel of CertainTeed, spoke by telephone with Mr. Anthony to
discuss the timetable and process for CertainTeed to explore acquiring the
Company. Mr. Mesher was advised that in order for CertainTeed to be involved
in the process, a meaningful, but non-binding, proposal would have to be
submitted on or prior to December 18, 1997. On the evening of December 15,
1997, representatives of CertainTeed (Mr. Mattson, Mickey Trapnell, Vice
President-Finance Controller, Roofing Products Group, and Rudy T. Lee, Vice
President-Sales, Roofing Products Group) had a dinner meeting with Messrs.
Maloof and Anthony. This dinner meeting was followed the next day by a tour of
the Company's facilities and properties and a review of the Company's
operations by Messrs. Mattson, Trapnell and Lee, as well as James E. Hilyard,
the President of CertainTeed's Roofing Products Group. In addition, over the
next several days, James J. Smith, CertainTeed's Director of Environmental
Affairs, discussed with Mr. Maloof several environmental issues relating to
the Company and its operations.
On December 18, 1997, CertainTeed submitted to the Company a non-binding
expression of interest confirming CertainTeed's interest in acquiring all of
the equity of the Company for an aggregate purchase price of about $39.5
million. Between December 20, 1997 and December 22, 1997, Messrs. Maloof
and/or Anthony spoke by telephone with Mr. Mesher and/or George B. Amoss,
CertainTeed's Vice President-Finance, to discuss questions that the Company's
management and Board had with respect to CertainTeed's expression of interest.
Detailed negotiations then ensued between the Company and CertainTeed,
culminating in agreement on the terms of the Merger Agreement. At a meeting on
January 12, 1998, the Board of the Company unanimously determined that the
Offer and the Merger are fair to, and in the best interests of, the Company
and the Company's stockholders and approved the Merger Agreement and
recommended that the holders of Shares tender their Shares pursuant to the
Offer and vote in favor of approval and adoption of the Merger Agreement. The
Merger Agreement was executed and delivered by the parties on January 12,
1998. On that same date, the Directors of the Company also executed the
Stockholder Agreement. The Company and CertainTeed issued a joint press
release regarding the Offer and Merger Agreement on January 13, 1998.
REASONS FOR THE RECOMMENDATION
In reaching its conclusions described in paragraph (a) above, the Board
considered, among other things, the following factors:
(1) The prospect of continuing to operate the Company's roofing plant at
Norwood, Massachusetts as a single plant roofing operation and the Board's
perception that current industry, economic and market conditions and trends
relative to the roofing industry are negative, as well as concerns about
the impact of increased competition resulting from industry consolidation,
and the Board's view of the Company's projected future value on a stand-
alone basis compared to the consideration available in the Offer and the
Merger. The Board took into account certain significant competitive
advantages enjoyed by competitors of the Company's roofing manufacturing
business, including, but not limited to, increased purchasing power for raw
materials, geographical diversity resulting in lower vulnerability to
seasonality due to weather, and stronger balance sheets which, among other
things, provide them with opportunities for growth in a capital intensive
industry, which opportunities are not available to the Company.
(2) The fact that following its extensive but unsuccessful negotiations
with certain interested parties in 1994, 1995, 1996 and 1997, it was
reasonably unlikely that the Company would receive, in the foreseeable
future, offers to engage in alternative transactions on terms more
favorable to the Company and its stockholders than those offered by
CertainTeed.
(3) The proposed terms and structure of the Merger and the terms and
conditions of the Merger Agreement and the Offer. In this regard, the Board
specifically considered the ability of the Company to
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<PAGE>
terminate the Merger Agreement, notwithstanding the non-solicitation
provisions contained therein, upon the occurrence or non-occurrence of
certain events (including upon the failure of the Company's stockholders to
approve the Merger), and the limited application of the provisions
contained in the Merger Agreement pertaining to the $1,500,000 Alternate
Transaction Fee, as described more fully under "The Merger Agreement."
(4) The effect of the Offer and the Merger on the stockholders of the
Company, as well as on the Company's employees.
(5) The written opinion dated January 12, 1998 (the "Opinion") delivered
by Lehman to the Board that, subject to the matters set forth therein, from
a financial point of view the consideration to be paid by CertainTeed
pursuant to the Offer and the Merger is fair to the stockholders of the
Company. A copy of the Opinion, which sets forth the assumptions made,
matters considered and limits of the review by Lehman in rendering the
Opinion, is attached as Annex B hereto and filed as Exhibit (a)(4) hereto.
Stockholders are urged to read the Opinion in its entirety.
(6) The experience, favorable reputation and perceived motivation of
CertainTeed and its executives and CertainTeed's financial condition and
strength, which factors demonstrated CertainTeed's financial ability and
underscored CertainTeed's earnest intent to consummate the Offer and the
Merger.
In light of the Board's uneasiness with operating a single plant roofing
business in an industry that has been consolidating with other participants
that are larger and financially stronger than the Company and the value
available in the Offer and the Merger, the Board determined that the Offer and
the Merger are in the best interest of the Company and its stockholders.
The Board analyzed and considered all of the foregoing factors in comparing
its alternatives to the Offer and the Merger and in evaluating the merits of
the Offer and the Merger, including the opinion of Lehman.
In view of the wide variety of factors considered in connection with its
evaluation of the Offer and the Merger, the Board did not find it practicable
to, and did not, quantify or otherwise attempt to assign relative weights to
the specific factors considered in reaching its respective determinations. For
purposes of the reviews described above, the Board adopted, as its own, the
analyses of Lehman.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Pursuant to its agreement with the Company, Lehman is entitled to a fee of
$250,000, which became payable at the time the Opinion of Lehman referred to
in Item 4 was delivered. In addition, whether or not the Offer or the Merger
is completed, the Company has agreed to reimburse Lehman for its reasonable
out-of-pocket expenses, including the fees and disbursements of its counsel,
and to indemnify Lehman against certain expenses and liabilities incurred in
connection with its engagement.
Except as set forth above, neither the Company nor any person acting on its
behalf has employed, retained or agreed to compensate any person to make
solicitations or recommendations to shareholders of the Company concerning the
Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) To the best of the Company's knowledge, during the past sixty days no
transaction in the Shares has been effected by the Company or any subsidiary
or, to the best of the Company's knowledge, by any executive officer,
director, affiliate or subsidiary of the Company.
(b) All of the Directors are party to the Stockholder Agreement and, to the
best of the Company's knowledge, currently intend to tender pursuant to the
Offer all Shares held of record or beneficially owned by them (other than
Shares issuable upon exercise of options).
21
<PAGE>
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as described in Item 3, no negotiation is being undertaken or is
underway by the Company 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 subsidiary of the Company, (ii) a
purchase, sale or transfer of a material amount of assets by the Company or
any subsidiary of the Company, (iii) a tender offer for or other acquisition
of securities by or of the Company or (iv) any material change in the present
capitalization or dividend policy of the Company.
(b) Except as described under Items 3 and 4, there are no transactions,
board resolutions, agreements in principle or signed contracts in response to
the Offer which relate to or would result in one or more of the matters
referred to in paragraph (a) of this Item 7.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
The Information Statement attached hereto as Annex A is being furnished in
connection with the possible designation by CertainTeed, pursuant to the
Merger Agreement, of certain persons to be appointed to the Board other than
at a meeting of the Company's stockholders.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C>
(a)(1) Offer to Purchase dated January 16, 1998.*
(a)(2) Letter of Transmittal.*
(a)(3) Information Statement.*
(a)(4) Fairness Opinion of Lehman dated January 12, 1998.*
(a)(5) Press release issued by the Company and CertainTeed on January 13, 1998.
(a)(6) Letter to shareholders dated January 16, 1998.*
(c)(1) Agreement and Plan of Merger dated as of January 12, 1998, among the Company, the
Purchaser and CertainTeed.
(c)(2) Stockholder Agreement dated as of January 12, 1998 among CertainTeed, the Purchaser
and certain stockholders of the Company.
</TABLE>
- --------
* Included in copies mailed to stockholders.
22
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Bird Corporation
By: _________________________________
/s/ Frank S. Anthony
Name: Frank S. Anthony
Title: Vice President
Date: January 16, 1998.
23
<PAGE>
EXHIBIT (A) (3)
BIRD CORPORATION
1077 PLEASANT STREET
NORWOOD, MA 02062
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 January 16, 1998 as
part of Bird Corporation's (the "Company") Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9") to the holders of record at
the close of business on January 14, 1998 of the Shares. Capitalized terms
used and not otherwise defined herein shall have the meaning ascribed to them
in the Schedule 14D-9. You are receiving this Information Statement in
connection with the possible election of persons to be designated by the
Purchaser to a majority of the seats on the Board of Directors of the Company
(the "Board"). Pursuant to the Merger Agreement, upon the acquisition by the
Purchaser of at least a majority of the outstanding Common Shares pursuant to
the Offer, the Purchaser shall be entitled to designate such number of
directors to be appointed to the Company's Board (the "Designated Directors")
as is required in order for the Designated Directors to constitute a majority
of the Board. At such time, the Company and the Board are required to take all
such action, including increasing the size of the Board or using their best
efforts to secure the resignations of incumbent directors, as needed to assure
that the Designated Directors constitute a majority of the Board. In addition,
in the event that after the acquisition by the Purchaser of at least a
majority of the outstanding Common Shares pursuant to the Offer and prior to
the Effective Date, the number of members of the Company's Board increases,
the Company and the Board are required at such time to take all such
additional action, including increasing the size of the Board, using their
best efforts to secure the resignation of incumbent directors or appointing
additional Designated Directors, as needed to assure that the Designated
Directors shall then constitute a majority of the Board. The parties to the
Merger Agreement have agreed to use their respective best efforts to ensure
that at least three members of the Board shall, at all times prior to the
Effective Date, be Continuing Directors.
This Information Statement is required by Section 14(f) of the Exchange Act,
and Rule 14f-1 thereunder. You are urged to read this Information Statement
carefully. However, you are not required to take any action.
The Purchaser commenced the Offer on January 16, 1998. The Offer is
scheduled to expire on February 13, 1998.
The information contained in this Information Statement (including
information listed in Schedule I to the Purchaser's Offer to Purchase and
information incorporated herein by reference) concerning CertainTeed, the
Purchaser and the Designated Directors has been furnished to the Company by
CertainTeed and the Purchaser, and the Company assumes no responsibility for
the accuracy or completeness of such information.
The Common Shares and the Preference Shares are the only classes of
securities of the Company outstanding which are entitled to vote upon adoption
of the Merger Agreement. Each Common Share and Preference Share has one vote
with respect thereto. As of January 14, 1998, there were 4,159,877 Common
Shares and 814,300 Preference Shares outstanding.
A-1
<PAGE>
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
GENERAL
The Board currently consists of seven members. The Board is divided into
three classes, with each class to hold office for a term of three years and
the term of office of one class to expire each year. Mr. Anthony was appointed
to the Board on January 12, 1998.
DESIGNATED DIRECTORS
Pursuant to the Merger Agreement, immediately after the acquisition by the
Purchaser of at least a majority of the outstanding Common Shares pursuant to
the Offer, the Board will consist of seven members, four of whom will be
Designated Directors and three of whom will be Continuing Directors. Upon the
acquisition by the Purchaser of at least a majority of the outstanding Common
Shares pursuant to the Offer, and during the period after such acquisition and
prior to the Effective Date, the Company and the Board are required to take
any and all such action, including increasing the size of the Board,
appointing Designated Directors and using their best efforts to secure the
resignations of incumbent directors, as needed to cause the Designated
Directors to constitute a majority of the Board.
The Purchaser has informed the Company that it currently intends to choose
the following Designated Directors 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 stockholders together with the Schedule 14D-9: Gianpaolo
Caccini, George B. Amoss, Bradford C. Mattson, and James E. Hilyard. The
Purchaser has informed the Company that each of the Designated Directors has
consented to act as a director. The information on such Schedule I is
incorporated herein by reference. None of the Designated Directors (i) is
currently a director of, or holds any position with, the Company, (ii) has a
familial relationship with any of the directors or executive officers of the
Company or (iii) to the best knowledge of the Purchaser, beneficially owns any
securities (or rights to acquire any securities) of the Company. The Company
has been advised by the Purchaser that, to the best of Purchaser's knowledge,
none of the Designated Directors has been involved in any transaction with the
Company or any of its directors, executive officers or affiliates which are
required to be disclosed pursuant to the rules and regulations of the SEC,
except as may be disclosed herein or in the Schedule 14D-9. The business
address of the Purchaser and CertainTeed is 750 E. Swedesford Road, Valley
Forge, Pennsylvania 19482.
It is expected that the Designated Directors will assume office at any time
following the acquisition by the Purchaser pursuant to the Offer of at least a
majority of the outstanding Common Shares, which acquisition cannot be earlier
than February 13, 1998, and that upon assuming office, the Designated
Directors will thereafter constitute at least a majority of the Board.
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The table below sets forth certain information with respect to the current
Board of Directors and executive officers of the Company.
A-2
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH THE COMPANY; EXPIRATION
PRINCIPAL OCCUPATION AND OF PRESENT
OTHER BUSINESS ELECTED OR TERM OF
NAME AND AGE AFFILIATIONS(1) APPOINTED(2) OFFICE
---------------------------- ---------------------------- ------------ ----------
<C> <S> <C> <C>
Frank S. Anthony, 51........ Director; Vice President, 1998 1998
General Counsel and
Corporate Secretary of the
Company since May 1984
Charles S. Bird, III, 72.... Director; Trustee of family 1962 1998
trusts
Herbert I. Corkin, 75....... Director; President, 1997 2000
Director and majority
shareholder, The Entwistle
Company, Hudson, MA;
Director, Citizen's Bank of
Rhode Island.
Antonio J. Lorusso, Jr., 50. Director; President, S.M. 1996 1999
Lorusso & Sons, Inc.
Richard C. Maloof, 52....... Director; President and 1994 1999
Chief Operating Officer of
the Company since April
1995; Vice President and
Chief Operating Officer of
the Company from April 1994
to April 1995; Vice
President of the Company and
President, Roofing and
Distribution Groups of the
Company for more than five
years prior thereto
Loren R. Watts, 63.......... Director; Retired Managing 1991 1998
Partner, Management
Consultant Services, Coopers
& Lybrand (certified public
accountants)
R. Keith Long, 50........... Director; sole shareholder, 1996 2000
Otter Creek Management,
Inc., a general partner of
Otter Creek Partners I, L.P.
</TABLE>
- --------
(1) Includes business experience during past five years.
(2) At the 1990 annual meeting, the stockholders approved a reorganization
pursuant to which the then stockholders of Bird Incorporated became
stockholders of Bird Corporation, a newly organized Massachusetts
corporation, and Bird Incorporated became a wholly owned subsidiary of
Bird Corporation. This column indicates the date as of which a person was
first elected a director of the Company or of Bird Incorporated.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the year ended December 31, 1997, the Board held seven (7) meetings.
Each of the directors attended more than seventy-five percent of the aggregate
of Board meetings and meetings of committees of the Board of which he is a
member.
The Audit Committee, which consisted during 1997 of Loren R. Watts
(Chairman), R. Keith Long, and Joseph Vecchiolla (until Mr. Vecchiolla's
resignation on December 11, 1997), meets periodically with the Company's
independent accountants to review the scope of the annual audit, to discuss
the adequacy of internal accounting controls and procedures and to perform
general oversight with respect to the accounting principles
A-3
<PAGE>
applied in the financial reporting of the Company. The Audit Committee also
meets with the Company's internal auditor and reviews the scope of the
internal audit plan and the results of audits performed thereunder. The Audit
Committee held three (3) meetings during 1997.
The function of the Stock Option, Compensation, and Organizational
Development Committee (the "Compensation Committee") is to administer the
Company's stock option plans, to recommend to the full Board the amount,
character, and method of payment of compensation of all executive officers and
certain other key employees of the Company, and to provide for organizational
development and succession planning. During 1997 the Compensation Committee
consisted of Antonio J. Lorusso (Chairman), Charles S. Bird, III, and Herbert
I. Corkin. The Compensation Committee held four (4) meetings in 1997.
The Company also has a Nominating Committee which, during 1997, consisted of
Charles S. Bird, III, Richard C. Maloof, and Joseph Vecchiolla (until Mr.
Vecchiolla's resignation on December 11, 1997). The Nominating Committee makes
recommendations to and otherwise assists the Board in connection with finding,
evaluating, and nominating directors of the Company. The Nominating Committee
held one (1) meeting during 1997.
A-4
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table lists the stockholders known to management to be the
beneficial owners of more than 5% of the outstanding Common Shares as of
December 31, 1997 (except as otherwise noted).
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF CLASS
------------------- ----------------- --------
<S> <C> <C>
The Entwistle Company................................ 548,639 shares(1) 13.2%
Bigelow Street
Hudson, MA 01749
S.M. Lorusso & Sons, Inc. ........................... 410,121 shares(2) 9.8%
Antonio J. Lorusso, Jr.
James B. Lorusso
Samuel A. Lorusso
331 West Street
Walpole, MA 02081
Mellon Bank Corporation and its Subsidiaries......... 309,000 shares(3) 7.5%
One Mellon Bank Center
Pittsburgh, PA 15258
Charles S. Bird, III................................. 315,358 shares(4) 7.5%
13 Proctor Street
Manchester, MA 01944
Dimensional Fund Advisors Inc. ...................... 218,500 shares(5) 5.3%
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
R. Keith Long........................................ 464,762 shares(6) 10.9%
Joan Greco and John Fyfe
Otter Creek Partners I L.P.
400 Royal Palm Way
Palm Beach, Florida 33480
East Ferry Investors, Inc............................ 248,400 shares(7) 6.0%
David G. Booth
15 Garden Place
Brooklyn, NY 11201
</TABLE>
- --------
(1) Based on information contained in an amended Schedule 13D filed with the
SEC on April 1, 1987. The Schedule 13D reports that The Entwistle Company
had sole voting and dispositive power with respect to all shares
beneficially owned, including 8,539 shares it had the right to acquire
upon conversion of the Company's Convertible Preference Stock, par value
$1 per share, (the "Preference Stock"). Also includes options for the
purchase of 2,500 Common Shares exercisable as of December 31, 1997 or
within 60 days thereafter or upon a change in control.
(2) Based on information contained in a Schedule 13D amended through June 6,
1996 filed with the SEC. The Schedule 13D reports that S.M. Lorusso &
Sons, Inc. ("Lorusso") had sole voting power and dispositive power with
respect to 230,121 shares. Antonio J. Lorusso, Jr., president, director
and a stockholder of Lorusso, had sole voting and dispositive power with
respect to 20,000 shares and had shared voting and
A-5
<PAGE>
dispositive power with respect to 79,500 shares and James B. Lorusso, an
officer, director, and a stockholder of Lorusso, had sole voting and
dispositive power over 1,000 shares; Samuel A. Lorusso, an officer,
director, and stockholder of Lorusso, had shared voting and dispositive
power with respect to 1,500 shares. Also includes options for the purchase
of 5,000 Common Shares exercisable as of December 31, 1997 or within 60
days thereafter or upon a change in control.
(3) Based on information contained in a Schedule 13G amended through February
10, 1997 filed with the SEC. The Schedule 13G reports that Mellon Bank
Corporation had sole voting and dispositive power with respect to 20,000
shares and, together with its subsidiaries, including Boston Safe Deposit
and Trust Company, had shared voting and dispositive power with respect to
289,000 shares, including 274,929 shares referred to in footnote (4),
below.
(4) Includes 274,929 shares held in a trust of which Boston Safe Deposit and
Trust Company and Charles S. Bird, III are co-trustees with shared voting
and dispositive power and 3,595 of Common Shares that he has a right to
acquire upon conversion of the Company's Preference Stock. Also includes
options for the purchase of 22,500 Common Shares exercisable as of
December 31, 1997 or within 60 days thereafter or upon a change in
control.
(5) Based on information contained in a Schedule 13G amended through February
12, 1997 filed with the SEC. The Schedule 13G reports that Dimensional
Fund Advisors Inc. had sole voting and dispositive power with respect to
160,400 shares and sole dispositive power with respect to an additional
58,100 shares.
(6) Based in part on information contained in a Schedule 13D amended through
June 3, 1997 filed with the SEC. The Schedule 13D was filed jointly by
Otter Creek Partners I, L.P. ("Otter Creek"), R. Keith Long and Joan Greco
and John Fyfe, joint tenants with rights of survivorship (together,
"Fyfe"). The Schedule 13D and its amendments report that Otter Creek
Management, Inc. ("OCM") is the sole general partner and investment
advisor of Otter Creek and Mr. Long is the sole executive officer, sole
director and sole shareholder of OCM. Mr. Long also managed discretionary
stock trading accounts for Fyfe. Otter Creek reported sole voting and
dispositive power with respect to 160,900 Common Shares. Fyfe reported
sole voting and dispositive power with respect to 87,300 Common Shares.
Mr. Long reported sole voting and dispositive power over 109,000 shares.
Includes an aggregate of 102,562 shares of Common Stock that Otter Creek,
Fyfe and Mr. Long have a right to acquire upon conversion of the Company's
Preference Stock. Also includes options held by Mr. Long for the purchase
of 5,000 Common Shares exercisable as of December 31, 1997 or within 60
days thereafter or upon a change in control.
(7) Based on information contained in a Schedule 13D filed with the SEC on
August 22, 1997, jointly by East Ferry Investors, Inc. ("East Ferry") and
David G. Booth. The Schedule 13D reports that Mr. Booth controls East
Ferry and is East Ferry's sole stockholder and sole executive officer. Mr.
Booth, with East Ferry, had shared voting power and shared dispositive
power with respect to 248,400 shares of Common Stock.
A-6
<PAGE>
The tables below set forth information provided by the individuals named
therein as to the amount of the Company's Common Shares, Preference Shares and
5% Cumulative Preferred Stock, par value $100 per share (the "5% Stock")
beneficially owned by the directors and executive officers of the Company,
individually, and the directors and executive officers as a group, all as of
December 31, 1997 except as otherwise noted. Unless otherwise indicated in the
footnotes, each of the named persons and members of the group has sole voting
and investment power with respect to the shares shown.
<TABLE>
<CAPTION>
COMMON
COMMON SHARES SHARES
BENEFICIALLY SUBJECT
OWNED (EXCLUDING TO STOCK PERCENT
NAME STOCK OPTIONS) OPTIONS(1) TOTAL OF CLASS
---- ---------------- ---------- --------- --------
<S> <C> <C> <C> <C>
Charles S. Bird, III............ 292,858(2) 22,500 315,358 7.5%
Herbert I. Corkin............... 546, 139(3) 2,500 548,639 13.2%
R. Keith Long................... 459,762(4) 5,000 464,762 10.9%
Antonio J. Lorusso, Jr. ........ 405,121(5) 5,000 410,121 9.8%
Loren R. Watts.................. 4,000 17,500 21,500 *
Frank S. Anthony................ 32,624(6) 34,000 66,624 1.6%
Richard C. Maloof............... 48,984(7) 155,000 203,984 4.7%
All directors and executive
officers as a group (seven
persons)....................... 1,787,488(8) 241,500 2,030,988 44.9%
</TABLE>
- --------
* Less than 1% of the outstanding Common Shares.
(1) Represents shares which the individual has a right to acquire by exercise
of stock options exercisable December 31, 1997 or within 60 days
thereafter, or which are exercisable upon a change in control.
(2) Includes 274,929 shares as to which Mr. Bird shares voting and dispositive
power and 3,595 shares which may be acquired upon conversion of Preference
Shares.
(3) The Entwistle Company has sole voting and dispositive power with respect
to all shares beneficially owned, including 8,539 shares it has the right
to acquire upon conversion of the Company's Preference Stock. Mr. Corkin
controls the Entwistle Company.
(4) Otter Creek Management, Inc. ("OCM") is the sole general partner and
investment advisor of Otter Creek Partners I L.P. ("Otter Creek"). Mr.
Long is the sole executive officer, sole director, and sole shareholder of
OCM. Mr. Long also managed discretionary stock trading accounts for Joan
Greco and John Fyfe, joint tenants with right of survivorship ("Fyfe").
Includes an aggregate of 102,562 shares of Common Stock that Otter Creek,
Mr. Long and Fyfe have a right to acquire upon conversion of the Company's
Preference Stock.
(5) S.M. Lorusso & Sons, Inc. ("Lorusso") has sole voting power and
dispositive power with respect to 230,121 shares. Antonio J. Lorusso, Jr.,
president, director and a stockholder of Lorusso, has sole voting and
dispositive power with respect to 20,000 shares and had shared voting and
dispositive power with respect to 79,500 shares and James B. Lorusso, an
officer, director, and a stockholder of Lorusso, has sole voting and
dispositive power over 1,000 shares; Samuel A. Lorusso, an officer,
director, and stockholder of Lorusso, has shared voting and dispositive
power with respect to 1,500 shares.
(6) Includes 3,048 shares allocated to Mr. Anthony's account under the Bird
Employees' Savings and Profit Sharing Plan (the "Savings Plan") as of
December 31, 1997.
(7) Includes 4,169 shares allocated to Mr. Maloof's account under the Savings
Plan as of December 31, 1997, 10,625 shares held jointly with members of
his family as to which he has shared voting and dispositive power and
2,337 shares of Common Stock which may be acquired upon conversion of the
Preference Stock.
(8) Includes 433,554 shares as to which persons included in the group have
shared voting and investment power, 118,831 shares which may be acquired
upon conversion of Preference Shares, and 7,217 shares allocated to the
accounts of officers under the Savings Plan as of December 31, 1997.
A-7
<PAGE>
<TABLE>
<CAPTION>
PREFERENCE
SHARES
BENEFICIALLY PERCENT
NAME OWNED OF CLASS
---- ------------ --------
<S> <C> <C>
Charles S. Bird, III.............................. 4,000 *
Herbert I. Corkin................................. 9,500 1.2%
Richard C. Maloof................................. 2,600 *
R. Keith Long..................................... 114,100 14.0%
A.J. Lorusso, Jr.................................. 2,000 *
All directors and executive officers as a group
(five persons)................................... 132,200 16.2%
</TABLE>
--------
* Less than 1% of the outstanding Preference Stock.
<TABLE>
<CAPTION>
SHARES OF
5% STOCK
BENEFICIALLY PERCENT
NAME OWNED OF CLASS
---- ------------ --------
<S> <C> <C>
Charles S. Bird, III.............................. 1,815 31%
All directors and executive officers as a group
(one person)..................................... 1,815 31%
</TABLE>
COMPLIANCE WITH SECTION 16(A) OF EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers and persons who hold more than 10% of the Company's Common
Shares to file with the SEC reports of ownership and changes in ownership of
the Company's equity securities. Based on reports received by the Company and
representations of certain reporting persons, the Company believes that all
filing requirements applicable to its officers, directors, and greater than
10% beneficial owners with respect to fiscal year 1997 have been met.
A-8
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation paid
or accrued for services in all capacities to the Company during each of the
last three fiscal years to each of the executive officers of the Company who
served as such during 1997. No one served as Chief Executive Officer during
1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------- ----------------------
SECURITIES
OTHER UNDERLYING ALL
ANNUAL RESTRICTED STOCK OTHER
NAME AND PRINCIPAL COMPEN- STOCK OPTIONS/SA LTIP COMPEN-
POSITION YEAR SALARY($) MCIP($) SATION($)(1) AWARDS RS(#) PAYOUTS(2) SATION($)
- ------------------ ---- --------- ------- ------------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Richard C. Maloof....... 1997 221,106 4,781 -- -- -- -- 7,843(3)
Vice President and 1996 216,154 129,844 -- -- 50,000 22,700 7,500(3)
Chief Operating
Officer(5) 1995 195,962 30,000 11,538 -- 50,000 81,938 7,500(3)
Frank S. Anthony........ 1997 142,490 2,311 -- -- -- -- 5,634(3)
Vice President and 1996 139,808 48,440 -- -- 15,000 13,617 296,682(4)
General Counsel(6) 6,864(3)
1995 135,000 12,540 -- -- -- 49,163 150,000(4)
10,545(3)
1994 135,000 30,000 22,444 -- -- 43,870 8,496(3)
</TABLE>
- --------
(1) Payment in lieu of vacation. Does not include certain perquisites and
other personal benefits, the cost of which to the Company was below the
disclosure thresholds established by the Securities and Exchange
Commission.
(2) In 1995 restrictions on all stock held in escrow pursuant to the Company's
Long Term Incentive Plan (the "LTIP") lapsed as a result of the Vinyl Sale
and shares were distributed to the persons named in the table. Represents
the value of Common Stock allocated to each officer on the date of
restriction lapse and reimbursement for withholding taxes arising from the
lapse of restrictions on restricted stock held by each officer in
accordance with provisions of the LTIP. The LTIP is terminated.
(3) Represents contributions by the Company to the Savings Plan.
(4) Represents severance payments received in connection with the change in
control which occurred pursuant to the Vinyl Sale and payment to a
separate trust established by the Company with a bank trustee to which
amounts otherwise payable to Mr. Anthony in excess of those permitted to
be contributed to the Savings Plan under limits imposed by the Internal
Revenue Code of 1986, as amended (the "Internal Revenue Code"), are
contributed.
(5) Mr. Maloof was elected Chief Operating Officer in April 1994, President in
April 1995 and to the Board of Directors in December 1994. Prior to that
time, he served as Vice President and President of the Company's Roofing
and Distribution Groups.
(6) Mr. Anthony was elected Vice President in 1984 and to the Board of
Directors in 1998.
A-9
<PAGE>
The following tables provide information concerning grants during 1997 to,
and exercises of stock options and stock appreciation rights ("SARs") during
1997 by, the executive officers named in the Summary Compensation Table above
and the value of unexercised stock options and SARs held by them at December
31, 1997.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
None
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT YEAR- IN-THE-MONEY OPTIONS/SARS
END(#) AT YEAR-END($)
------------------------- -------------------------
SHARES VALUE
ACQUIRED ON REALIZED
NAME EXERCISE(#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard C. Maloof....... 0 0 85,000 70,000 0 0
Frank S. Anthony........ 0 0 22,000 12,000 0 0
</TABLE>
- --------
(1) Based on the difference between the fair market value of the securities
underlying the options at date of exercise and the exercise price of the
options.
STOCK OPTION PLANS
Employee Stock Option Plans. The Company's executive officers currently
participate in the 1992 Option Plan. Prior to the approval of the 1992 Option
Plan by the Company's stockholders on May 27, 1993 the Company's executive
officers participated in the Company's 1982 Option Plan, which was terminated
by the Board on May 27, 1993. To the extent options or stock appreciation
rights granted under the 1982 Option Plan remain outstanding, such options and
stock appreciation rights are governed by the terms of the 1982 Option Plan.
The following is a general description of the 1992 Option Plan and the 1982
Option Plan (together, the "Plans").
The Plans permit the grant of options that qualify as incentive stock
options under Section 422 of the Internal Revenue Code, non-qualified stock
options and stock appreciation rights. Options and rights to purchase up to
450,000 Common Shares, plus any unused Common Shares under the 1982 Option
Plan, may be granted under the 1992 Option Plan. The 1982 Option Plan had
permitted the issuance of 900,000 Common Shares, as adjusted, pursuant to
options and rights granted under such plan. Any Common Shares subject to an
option or right granted under the 1992 Option Plan which expires or is
terminated without being exercised in full may again be subject to an option
or right.
The 1992 Option Plan is administered by a committee of non-employee members
of the Board (the "Committee"). Within specified guidelines, the Committee has
the authority under the 1992 Option Plan to determine the terms and conditions
under which options and rights may be granted and generally to interpret,
construe and implement the provisions of the 1992 Option Plan.
Options or rights under the 1992 Option Plan may be granted to officers and
other selected key employees of the Company and its subsidiaries and to any
other person who is determined by the Committee to contribute to the success
of the Company or any subsidiary.
The exercise price of any option granted under the Plans may not be less
than the fair market value of the Common Shares subject to the option on the
date the option is granted (or, in the case of an incentive stock option
granted to an employee who owns more than 10% of the outstanding Common
Shares, 110% of such fair market value). The maximum term of an option granted
under the 1992 Option Plan is 15 years, and the maximum term of an option
granted under the 1982 Option Plan is 10 years. Each optionee (except non-
employee director optionees under the 1982 Option Plan) must remain in the
continuous employ of the Company for one year after the date of grant of an
option under the Plans before exercising any part of the option.
A-10
<PAGE>
The Merger Agreement provides that immediately following the Effective Date,
the 1992 Option Plan will be terminated and that no further rights or options
may be granted under the 1992 Option Plan subsequent to the date of the Merger
Agreement.
Non-Employee Directors Option Plan. The Non-Employee Directors Option Plan
was approved by the Company's stockholders on May 27, 1993. The following is a
general description of the Non-Employee Directors Option Plan.
Options granted under the Non-Employee Directors Option Plan are non-
statutory options not intended to qualify under Section 422 of the Internal
Revenue Code. An aggregate of 100,000 Common Shares are available for grants
under the Non-Employee Directors Option Plan. Common Shares subject to options
which terminate unexercised will be available for future option grants.
The Non-Employee Directors Option Plan automatically provides annual grants
of options to each Director who is serving on the Board at the time of such
grant and who is not also an employee of the Company or any subsidiary. The
exercise price of options granted under the Non-Employee Directors Option Plan
are equal to the fair market value of Common Shares subject thereto on the
date of grant. Options are exercisable in full one year after the date of
grant.
The Merger Agreement provides that immediately following the Effective Date,
the Non-Employee Directors Option Plan will be terminated and that no further
options may be granted thereunder subsequent to the date of the Merger
Agreement.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
Employment Contracts
Mr. Anthony entered into a one-year employment contract with the Company,
commencing April 1, 1995, at the same annual rate of compensation ($135,000
plus a bonus of 35% of such amount if MICP targets are obtained) and with the
same fringe benefit package (participation in the Company's Savings Plan and
customary health insurance and life insurance benefits) as he received prior
to the Vinyl Sale. As a result of the "change in control" which was deemed to
have occurred as a result of the Vinyl Sale, Mr. Anthony became entitled to
severance benefits. Pursuant to the terms of his employment contract, Mr.
Anthony received $150,000 as a partial severance payment and agreed to defer
the payment of the balance thereof until the expiration of his employment
contract. Pursuant to the terms of his contract, the balance of Mr. Anthony's
severance payment, approximately $315,000, was paid on March 31, 1996.
On April 1, 1996 Mr. Anthony's employment contract automatically converted
to an oral employment agreement on the same terms, terminable by either party
upon 60 days' notice.
Termination of Employment and Change in Control Arrangements
The Company's 1982 Option Plan, 1992 Option Plan and 1992 Non-Employee
Directors Option Plan provide for accelerated benefits, and the Executive
Severance Contract (as defined below) provides for severance payments,
following the occurrence of a "change in control" of the Company. For purposes
of these plans and such contract, a "change in control" is deemed to have
occurred if, among other things, any person is or becomes the beneficial owner
of securities of the Company representing 30% or more of the combined voting
power of the securities of the Company then outstanding or in the event of a
merger or consolidation of the Company with another corporation resulting in
either (i) the stockholders of the Company, immediately prior to the merger or
consolidation, not beneficially owning, immediately after the merger or
consolidation, shares of the surviving entity representing 50% or more of the
combined voting power of the securities of the surviving entity then
outstanding or (ii) the members of the Board, immediately prior to the merger
or consolidation, not constituting, immediately after the merger or
consolidation, a majority of the Board of Directors of the surviving entity.
A-11
<PAGE>
Executive Severance Contract.
The Company has entered into a severance agreement with Richard C. Maloof,
the Company's President and Chief Operating Officer, dated as of October 14,
1984, as amended, April 1, 1986, May 24, 1990 and August 21, 1995, February
17, 1997, and January 12, 1998 (as so amended, the "Executive Severance
Contract") the terms of which provide for severance benefits to be paid to Mr.
Maloof in the event that his employment with the Company is terminated
subsequent to a "change in control" of the Company. Severance benefits are
payable if, after a "change in control," (i) the employment of Mr. Maloof is
terminated either by the Company (other than for "Disability" or "Cause") or
by Mr. Maloof for "Good Reason" (which term includes, but is not limited to a
substantial alteration in the nature of Mr. Maloof's responsibilities from
those in effect immediately prior to a "change in control") or (ii) Mr. Maloof
negotiates in good faith an employment agreement with a person to whom
substantially all of the Company's Common Shares are sold providing for his
employment commencing on the date of sale on such terms and conditions not
less generous than those on which he is then employed by the Company
(regardless of whether or not any such employment agreement is ever executed).
The Company has acknowledged that a "Change in Control" occurred under the
Executive Severance Contract as a result of the Vinyl Sale.
If the right to receive severance benefits is triggered under the Executive
Severance Contract, Mr. Maloof will be entitled to receive severance pay in
the amount of two times the sum of (i) Mr. Maloof's then current annual base
salary and (ii) the amount of any bonus paid (which for severance purposes,
includes any distributions made under the terms of the LTIP in 1995 and 1996
and bonuses awarded to Mr. Maloof by the Compensation Committee). Mr. Maloof
would also receive an amount equal to a pro rata portion of all contingent
bonus awards to which Mr. Maloof might be entitled in the year of termination.
Under no circumstances shall the amount be less than what Mr. Maloof would
have received had the calculation been made in 1996. The Company estimates
that if the right to receive severance benefits under the Executive Severance
Contract is triggered, Mr. Maloof would be entitled to receive approximately
$870,000, including the approximately $135,000 Mr. Maloof will receive
pursuant to the Incentive Compensation Program (discussed below).
Incentive Compensation Program
In the event that the Offer is consummated, Mr. Maloof will receive a bonus
of approximately $135,000 and Mr. Anthony will receive a bonus of
approximately $50,000 pursuant to the 1998 MICP Plan.
Stock Option Plans and Non-Employee Directors Option Plan.
Under the Plans, the vesting of all options to purchase Common Shares
outstanding but not yet exercisable will be accelerated upon a "change in
control." Each optionee will have, for a period of thirty (30) days after the
change in control occurs, the right (the "Cash-Out Right"), with respect to
all or a part of the shares subject to the options or stock appreciation
rights of such person, to receive an amount in cash in lieu of such optionee's
right to exercise all options in full, equal to the product of (i) the number
of shares as to which the employee exercises the Cash-Out Right and (ii) the
amount by which the purchase price of each such share under the applicable
option or stock appreciation right is exceeded by the greater of (x) the fair
market value of such shares on the date the employee exercises the Cash-Out
Right or (y) the highest purchase price paid or offered per share in any bona
fide transaction related to the "change in control" of the Company at any time
during the preceding 60-day period (as determined by the Compensation
Committee of the Board). In addition, if the employment of any employee
terminates after the expiration of the applicable waiting period for the
exercise of an option or right granted to such employee under the Plans, such
employee may for up to three months after the date of termination (or for up
to one year if termination is on account of long-term disability) exercise
such option or right. The Plans provide for a similar one-year period to
exercise options or rights subsequent to the death of an employee occurring
while in the employ of the Company or of any subsidiary or within any period
after termination of employment during which such employee has the right to
exercise such options or rights.
A-12
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For the fiscal year ended December 31, 1997, the Company paid fees and
disbursements in the amount of $1,707,393 to S. M. Lorusso & Sons, Inc., the
company that operates the Company's quarry located in Wrentham, Massachusetts.
Mr. Antonio J. Lorusso, Jr., is president, director, and a stockholder of S.
M. Lorusso & Sons, Inc. As of January 1, 1998, Mr. Lorusso is a member of a
group that is the beneficial owner of 9.8% of the Company's Common Stock.
LEGAL MATTERS
On or about April 18, 1996, Bird Incorporated, a subsidiary of the Company,
received a grand jury subpoena issued upon application of the United States
Department of Justice, Antitrust Division, for the production of certain
documents. In addition, Mr. Maloof and a senior manager of the Company
received grand jury subpoenas requiring the production of certain documents
and each of them to testify before the grand jury. The Department of Justice
informed the Company on October 8, 1996 that the investigation was closed on
September 27, 1996, without taking any action.
DIRECTORS' COMPENSATION
Mr. Vecchiolla received compensation from April 1, 1995 at the rate of
$100,000 per year for serving as Chairman of the Board and of the Executive
Committee. His compensation was voluntarily reduced to an annual rate of
$60,000 on January 1, 1996. On May 1, 1996, the Board reinstated his salary at
$100,000 per year. On May 23, 1996, Mr. Vecchiolla was granted a non-qualified
option to purchase up to 50,000 shares of Common Stock at an excise price of
$4.375. Mr. Vecchiolla's salary was reduced to $36,000 per year, starting June
1, 1997. Mr. Vecchiolla resigned as a Director on December 11, 1997, and all
payments to him as Director ceased as of December 31, 1997. During 1997, other
non-employee members of the Board received an annual retainer of $7,000, a fee
of $750 for each Board meeting attended ($375 for a telephonic Board meeting)
and a fee of $750 for each committee meeting attended ($375 for a telephonic
committee meeting). The chairmen of the Audit and Compensation Committees
received an annual retainer of $1,000. Expenses incurred in attending meetings
are reimbursed.
Effective October 1, 1997, Directors are paid an annual retainer of $7,000.
They no longer receive compensation for attending Board and Committee meetings
nor does the Chairman of the Compensation Committee or the Audit Committee
receive any additional fee.
Pursuant to the Non-Employee Directors Option Plan, non-employee directors
are also entitled to receive each year a non-qualified stock option to acquire
2,500 shares of the Company's Common Stock (provided that the maximum number
of shares subject to options granted to any director may not exceed 30,000
shares). Such options are granted on the date of the annual meeting each year
and become exercisable in full one year later. During 1997, each non-employee
director was granted such an option to purchase 2,500 Common Shares at an
exercise price of $4.50 per share.
A-13
<PAGE>
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for compensation decisions with
respect to senior management of the Company, as well as for organizational
development and succession planning within the Company.
The Compensation Committee's compensation philosophy and policies applicable
to executive officers emphasize pay for performance and increased stockholder
value within a framework of compensation levels comparable to companies of
similar size. Base salary, annual MICP awards, and long-term incentive awards
are structured to provide total compensation levels for executive officers
that are intended to be below competitive compensation amounts when operating
results are at or below acceptable levels and above average levels when
results are outstanding or other targets or personal goals are achieved. The
Compensation Committee has used outside consulting assistance for plan design
and consultant and independent survey data in setting compensation levels and
has relied, in the case of officers other than the Chief Executive Officer, on
recommendations of the Chief Executive Officer which are reviewed and modified
where appropriate by the Committee.
In recent years, long-term awards have primarily taken the form of stock
option grants, which are designed to align the interests of executives with
those of the stockholders and reward executives when stockholder value
increases. Stock options are granted at an exercise price equal to the market
price of the Company's Common Stock on the date of grant.
Salaries for the Chief Executive Officer and other executive officers are
based in part upon a range of salaries for each office developed from a survey
of compensation practices at competitive companies. During 1997, Mr. Maloof's
base salary was decreased from $225,000 annually to $208,125 annually and Mr.
Anthony's base salary was decreased from $145,000 annually to $134,125
annually. In December 1997, Messrs. Maloof's and Anthony's base salaries were
reinstated at $225,000 and $145,000, respectively.
One of the principal elements of variable compensation for senior executive
officers is found in the annual MICP awards. In 1997, the possible pay out for
1997 was set at 60% of base salary in the case of the President, 35% of base
salary in the case of the Vice President, and between 20% and 30% of base
salary in the case of other members of the corporate staff and other key
members of the Company. In 1997, awards to management were tied to achievement
of goals with respect to increased cash flow and profitability on an equal
50/50 basis.
The Committee believes that the combination of salary and bonus rewards was
appropriate based upon the task imposed upon management to simultaneously
operate the business in a very competitive environment and to entertain
prospective merger proposals.
Based on current compensation levels and the present structure of the
Company's executive compensation programs, the Committee believes that the
compensation payable to executives will not be subject to the limitation on
deductibility imposed by the Omnibus Budget Reconciliation Act of 1993. If
such limitation should become applicable in the future, the Committee and the
Company will determine whether any changes in the Company's compensation
programs are advisable.
Stock Option, Compensation,
andOrganizational
DevelopmentCommittee:
Herbert I. Corkin
Charles S. Bird, III
Antonio J. Lorusso, Jr., Chairman
A-14
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total return on the Common Stock
of the Company for the last five fiscal years with the cumulative total returns
of the Russell 2000 index and the Value Line Building Materials Industry Index,
assuming an investment of $100 in the Company's Common Stock and each index at
the close of trading on December 31, 1992 and the reinvestment of all
dividends. The total stockholder return data for the Russell 2000 Index and the
Value Line Building Materials Index is provided by Value Line Institutional
Services.
CHART
BIRD CORPORATION
Total Cumulative Shareholder Return for
Five-Year Period Ending December 31, 1997
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
December 31... 1992 1993 1994 1995 1996 1997
- ----------------------------------------------------------------------------------------
Bird Corporation 100.00 73.97 75.63 40.85 45.82 35.33
- ----------------------------------------------------------------------------------------
Russell 2000 100.00 118.91 116.55 149.70 174.30 213.00
- ----------------------------------------------------------------------------------------
VL Building Materials 100.00 129.20 96.42 134.25 150.44 178.86
- ----------------------------------------------------------------------------------------
</TABLE>
A-15
<PAGE>
EXHIBIT (A) (4)
LEHMAN BROTHERS
January 12, 1998
Bird Corporation
1077 Pleasant Street
Norwood, MA 02062
Members of the Board:
We understand that Bird Corporation ("Bird" or the "Company") proposes to
enter into a merger agreement with CertainTeed Corporation ("CertainTeed")
pursuant to which CertainTeed will acquire all of the capital stock of the
Company for aggregate consideration of $39.8 million in cash and assumption of
the Company's outstanding indebtedness, which as of September 30, 1997, was
approximately $3.5 million (the "Proposed Transaction"). The terms and
conditions of the Proposed Transaction are set forth in more detail in the
draft merger agreement dated January 9, 1998 among Bird, CertainTeed and BI
Expansion II Corp. (the "Agreement").
We have been requested by the Board of Directors of the Company to render
our opinion with respect to the fairness, from a financial point of view, to
the Company's stockholders of the consideration to be paid by CertainTeed in
the Proposed Transaction. Our opinion does not in any manner address: (i) the
Company's underlying business decision to proceed with or effect the Proposed
Transaction or (ii) consideration to be received by any class of stockholders
of the Company.
In arriving at our opinion, we reviewed and analyzed: (1) the Agreement and
the specific terms of the Proposed Transaction, (2) publicly available
information concerning the Company that we believe to be relevant to our
analysis, (3) financial and operating information with respect to the
business, operations and prospects of the Company furnished to us by the
Company (including without limitation the Company's recent financial results
in comparison to original budget), (4) a trading history of the Company's
capital stock from January 1995 to the present and a comparison of that
trading history with those of other companies that we deemed relevant, (5) a
comparison of the historical financial results and present financial condition
of the Company with those of other companies that we deemed relevant, and (6)
a comparison of the financial terms of the Proposed Transaction with the
financial terms of certain other transactions that we deemed relevant. In
addition, we have had discussions with management of the Company concerning
indications of interest received from, and discussions with, potential
strategic buyers of the Company with respect to an acquisition of the Company.
We also have had discussions with the management of the Company concerning its
business, operations, assets, financial condition and prospects and the
current competitive environment in its industry, and have undertaken such
other studies, analyses and investigations as we deemed appropriate.
In arriving at our opinion, we have assumed and relied upon the accuracy and
completeness of the financial and other information used by us without
assuming any responsibility for independent verification of such information
and have further relied upon the assurances of management of the Company that
they are not aware of any facts or circumstances that would make such
information inaccurate or misleading. With respect to the financial
projections of the Company, upon advice of the Company we have assumed that
such projections have been reasonably prepared on a basis reflecting the best
currently available estimates and judgments of the management of the Company
as to the future financial performance of the Company and we have relied upon
such projections in arriving at our opinion. In arriving at our opinion, we
have conducted only a limited physical inspection of the properties and
facilities of the Company and have not made or obtained any evaluations or
appraisals of the assets or liabilities of the Company. In addition, you have
not authorized us to solicit, and we have not solicited, any proposals from
any third party with respect to the purchase of all or a part of the Company's
business. Our opinion necessarily is based upon market, economic and other
conditions as they exist on, and can be evaluated as of, the date of this
letter.
<PAGE>
Based upon and subject to the foregoing, we are of the opinion as of the
date hereof that, from a financial point of view, the consideration to be paid
by CertainTeed in the Proposed Transaction is fair to the stockholders of the
Company.
We have acted as financial advisor to the Company in connection with the
Proposed Transaction and will receive a fee for the delivery of this opinion.
In addition, the Company has agreed to indemnify us for certain liabilities
that may arise out of the rendering of this opinion.
This opinion is for the use and benefit of the Board of Directors of the
Company and is rendered to the Board of Directors in connection with its
consideration of the Proposed Transaction. This opinion is not intended to be
and does not constitute a recommendation to any stockholder of the Company as
to whether to accept the consideration to be offered to such stockholder in
connection with the Proposed Transaction.
Very truly yours,
LEHMAN BROTHERS
<PAGE>
EXHIBIT (a) (1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
AND
ALL OUTSTANDING SHARES OF $1.85 CUMULATIVE CONVERTIBLE PREFERENCE STOCK
OF
BIRD CORPORATION
AT
$5.50 NET PER SHARE OF COMMON STOCK
AND
$20 (WHICH AMOUNT SHALL NOT BE ADJUSTED FOR ANY
DIVIDENDS ACCRUED AND UNPAID THROUGH THE
EXPIRATION DATE) NET PER SHARE OF $1.85
CUMULATIVE CONVERTIBLE PREFERENCE STOCK
BY
BI EXPANSION II CORP.
A Wholly Owned Subsidiary of
CERTAINTEED CORPORATION
An Indirect Wholly Owned Subsidiary of
COMPAGNIE DE SAINT-GOBAIN
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, FEBRUARY 13, 1998, UNLESS THE OFFER IS EXTENDED.
THE BOARD OF DIRECTORS OF BIRD CORPORATION (THE "COMPANY") HAS UNANIMOUSLY
APPROVED THE OFFER AND THE MERGER REFERRED TO HEREIN AND DETERMINED
THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN
THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY AND
RECOMMENDS THAT THE STOCKHOLDERS ACCEPT THE OFFER AND
TENDER THEIR SHARES (AS DEFINED HEREIN).
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (i) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER SUCH NUMBER OF
COMMON SHARES (AS DEFINED HEREIN) THAT WOULD CONSTITUTE AT LEAST 66 2/3% OF
ALL OUTSTANDING COMMON SHARES DETERMINED ON A FULLY DILUTED BASIS, (ii) THERE
BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER
SUCH NUMBER OF PREFERENCE SHARES (AS DEFINED HEREIN) THAT WOULD CONSTITUTE AT
LEAST 66 2/3% OF ALL OUTSTANDING PREFERENCE SHARES, (iii) ANY WAITING PERIOD
UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED,
AND THE REGULATIONS THEREUNDER APPLICABLE TO THE PURCHASE OF SHARES PURSUANT
TO THE OFFER HAVING BEEN EXPIRED OR TERMINATED AND (iv) ALL CONSENTS,
APPROVALS, ORDERS OR AUTHORIZATIONS OF, OR REGISTRATIONS, DECLARATIONS OR
FILINGS WITH ANY GOVERNMENTAL AUTHORITY REQUIRED OR NECESSARY IN CONNECTION
WITH THE OFFER, THE MERGER AND THE MERGER AGREEMENT REFERRED TO HEREIN AND THE
TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT SHALL HAVE BEEN OBTAINED AND
SHALL BE IN FULL FORCE AND EFFECT.
---------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (i) complete and sign the Letter of Transmittal (or a fax
thereof) in accordance with the instructions in the Letter of Transmittal,
have such stockholder's signature thereon guaranteed if required by
Instruction 1 to the Letter of Transmittal, mail or deliver the Letter of
Transmittal (or such fax), or, in the case of a book-entry transfer effected
pursuant to the procedure set forth in Section 2, an Agent's Message (as
defined herein), and any other required documents to the Depositary and either
deliver the certificates for such Shares to the Depositary along with the
Letter of Transmittal (or fax) or deliver such Shares pursuant to the
procedure for book-entry transfer set forth in Section 2 or (ii) request such
stockholder's broker, dealer, bank, trust company or other nominee to effect
the transaction for such stockholder. A stockholder having Shares registered
in the name of a broker, dealer, bank, trust company or other nominee must
contact such broker, dealer, bank, trust company or other nominee if such
stockholder desires to tender such Shares.
If a stockholder desires to tender Shares and such stockholder's
certificates for Shares are not immediately available or the procedure for
book-entry transfer cannot be completed on a timely basis, or time will not
permit all required documents to reach the Depositary prior to the expiration
of the Offer, such stockholder's tender may be effected by following the
procedure for guaranteed delivery set forth in Section 2.
Questions and requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery
may be directed to the Information Agent or to the Dealer Manager at their
respective addresses and telephone numbers set forth on the back cover of this
Offer to Purchase.
---------------
The Dealer Manager for the Offer is:
MCFARLAND DEWEY SECURITIES CO., L.P.
January 16, 1998
<PAGE>
To the Holders of Common Stock and $1.85 Cumulative Convertible Preference
Stock of Bird Corporation:
INTRODUCTION
BI Expansion II Corp., a Massachusetts corporation (the "Purchaser") and a
wholly owned subsidiary of CertainTeed Corporation, a Delaware corporation
("CertainTeed") which is an indirect wholly owned subsidiary of Compagnie de
Saint-Gobain, a French corporation ("Saint-Gobain"), hereby offers to purchase
all outstanding shares of Common Stock, par value $1.00 per share (the "Common
Shares"), of Bird Corporation, a Massachusetts corporation (the "Company"), at
$5.50 per Common Share (the "Common Price") and hereby offers to purchase all
outstanding shares of $1.85 Cumulative Convertible Preference Stock, par value
$1.00 per share (the "Preference Shares"), of the Company at $20, which amount
shall not be adjusted for any dividends accrued and unpaid through the
Expiration Date (as defined herein), per Preference Share (the "Preference
Price"), in each case net to the seller in cash, without interest thereon,
upon the terms and subject to the conditions set forth in this Offer to
Purchase and in the related Letter of Transmittal (which, together with any
amendments or supplements hereto or thereto, collectively constitute the
"Offer"). The Common Shares and the Preference Shares are collectively
sometimes referred to as "Shares".
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer.
The Purchaser will pay all fees and expenses of McFarland Dewey Securities
Co., L.P. ("McFarland Dewey"), which is acting as Dealer Manager (the "Dealer
Manager"), ChaseMellon Shareholder Services, L.L.C., which is acting as the
Depositary (the "Depositary"), and Georgeson & Company Inc., which is acting
as Information Agent (the "Information Agent"), incurred in connection with
the Offer. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY APPROVED
THE OFFER AND THE MERGER (AS DEFINED BELOW) AND DETERMINED THAT THE TERMS OF
THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
COMPANY'S STOCKHOLDERS AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT
THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. THE FACTORS
CONSIDERED BY THE BOARD OF DIRECTORS OF THE COMPANY IN ARRIVING AT ITS
DECISION TO APPROVE THE OFFER AND THE MERGER AND TO RECOMMEND THAT
STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES ARE
DESCRIBED IN THE COMPANY'S SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE
14D-9 (THE "SCHEDULE 14D-9"), WHICH IS BEING MAILED TO STOCKHOLDERS OF THE
COMPANY HEREWITH. EACH OF THE DIRECTORS OF THE COMPANY HAS AGREED TO TENDER
HIS COMMON SHARES AND PREFERENCE SHARES INTO THE OFFER; SUCH SHARES REPRESENT
APPROXIMATELY 40.2% OF THE COMMON SHARES AND 16.2% OF THE PREFERENCE SHARES.
THE COMPANY'S FINANCIAL ADVISOR, LEHMAN BROTHERS, HAS DELIVERED ITS OPINION
DATED JANUARY 12, 1998 THAT, AS OF SUCH DATE, AND SUBJECT TO THE CONDITIONS
AND LIMITATIONS SET FORTH THEREIN, THE CONSIDERATION TO BE RECEIVED BY HOLDERS
OF SHARES IN THE OFFER AND THE MERGER IS FAIR, FROM A FINANCIAL POINT OF VIEW.
SUCH OPINION IS SET FORTH IN FULL AS AN ANNEX TO THE SCHEDULE 14D-9.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER SUCH NUMBER OF
COMMON SHARES THAT WOULD CONSTITUTE AT LEAST 66 2/3% OF ALL OUTSTANDING COMMON
SHARES (DETERMINED ON A FULLY DILUTED BASIS ON THE EXPIRATION DATE), (II)
THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE
OFFER SUCH NUMBER OF PREFERENCE SHARES THAT WOULD CONSTITUTE AT LEAST 66 2/3%
OF ALL OUTSTANDING PREFERENCE SHARES (CLAUSES (I) AND (II) TOGETHER BEING THE
"MINIMUM CONDITION"), (III) ANY WAITING PERIOD UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE REGULATIONS THEREUNDER
(THE "HSR ACT") APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER
HAVING EXPIRED OR BEEN TERMINATED (THE "HSR CONDITION") AND (IV) ALL CONSENTS,
APPROVALS, ORDERS OR AUTHORIZATIONS OF, OR REGISTRATIONS, DECLARATIONS OR
FILINGS WITH, ANY GOVERNMENTAL AUTHORITY REQUIRED OR NECESSARY IN CONNECTION
WITH THE OFFER, THE MERGER AND THE MERGER AGREEMENT REFERRED TO HEREIN AND THE
TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT SHALL HAVE BEEN OBTAINED AND
SHALL BE IN FULL FORCE AND EFFECT (THE "REQUIRED CONSENTS CONDITION"). THE
PURCHASER RESERVES THE RIGHT (SUBJECT TO OBTAINING THE CONSENT OF THE COMPANY,
IF REQUIRED, AND THE APPLICABLE RULES AND REGULATIONS OF THE SECURITIES AND
EXCHANGE COMMISSION (THE
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"SEC")) TO WAIVE OR REDUCE THE MINIMUM CONDITION AND TO ELECT TO PURCHASE,
PURSUANT TO THE OFFER, FEWER THAN THE MINIMUM NUMBER OF SHARES NECESSARY TO
SATISFY THE MINIMUM CONDITION. THE PURCHASER CURRENTLY DOES NOT INTEND TO
WAIVE THE MINIMUM CONDITION. SEE SECTIONS 1 AND 14.
The Company has informed the Purchaser that, as of December 31, 1997, there
were 4,159,877 Common Shares outstanding, 497,200 Common Shares authorized for
issuance pursuant to the exercise of outstanding options to purchase Common
Shares ("Stock Options"), 731,955 Common Shares authorized for issuance
pursuant to conversion of the Preference Shares at $22.25 per Common Share
(which is substantially above the Common Price) and 814,300 Preference Shares
outstanding. For purposes of the Offer, Common Shares outstanding on a fully
diluted basis will not include Common Shares issuable upon conversion of
Preference Shares that have been validly tendered and not withdrawn prior to
the Expiration Date or issuable upon the exercise of any Stock Options to the
extent holders of such Stock Options have agreed not to exercise such Stock
Options as long as the Merger Agreement is in effect. Based upon the
foregoing, the Purchaser believes that approximately 2,898,000 Common Shares
(assuming all Preference Shares are so validly tendered and not withdrawn and
all holders of Stock Options with an exercise price above the Common Price so
agree) or approximately 3,593,000 Common Shares (assuming conversion of all
outstanding Preference Shares and exercise of all outstanding Stock Options)
and approximately 542,900 Preference Shares (assuming no conversion or
redemption of any Preference Shares) must be validly tendered and not properly
withdrawn prior to the Expiration Date in order for the Minimum Condition to
be satisfied. See Section 1.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of January 12, 1998 (the "Merger Agreement"), among CertainTeed, the
Purchaser and the Company pursuant to which, as soon as practicable following
the consummation of the Offer and the satisfaction or waiver of certain
conditions, including approval of the Merger Agreement by the Company's
stockholders, the Purchaser will be merged with and into the Company (the
"Merger"), with the Company (the "Surviving Corporation") surviving the Merger
as a wholly owned subsidiary of CertainTeed. In the Merger, each outstanding
Share (other than Shares held by stockholders who perfect their appraisal
rights under Massachusetts law, Shares held in the Company's treasury and
Shares held directly by the Purchaser or CertainTeed) will be converted into
the right to receive $5.50 (in the case of Common Shares) and $20, which
amount shall not be adjusted for any dividends accrued and unpaid through the
effective date of the Merger (the "Effective Date") (in the case of Preference
Shares), in each case in cash, without interest. The Merger is subject to a
number of conditions, including the approval and adoption of the Merger
Agreement by stockholders of the Company. Under Massachusetts law, the
approval of the Board of Directors of the Company and the affirmative vote of
the holders of at least 66 2/3% of the issued and outstanding Common Shares
and the affirmative vote of at least 66 2/3% of the issued and outstanding
Preference Shares, each voting as a separate class, are required to approve
and adopt the Merger Agreement. Accordingly, if the Minimum Condition is
satisfied, the Purchaser will have sufficient voting power to cause the
approval and adoption of the Merger Agreement and the transactions
contemplated thereby without the affirmative vote of any other stockholder.
See Section 12.
Certain Federal income tax consequences of the sale of Shares pursuant to
the Offer are described in Section 5.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
THE TENDER OFFER
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer, the Purchaser
will accept for payment and pay for all Shares validly tendered prior to the
Expiration Date and not theretofore withdrawn in accordance with Section 3.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Friday, February 13, 1998, unless and until the Purchaser shall have extended
the period of time during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as
so extended by the Purchaser, will expire.
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In the Merger Agreement, the Purchaser has agreed that it will not, without
the consent of the Company, waive the Minimum Condition. The Purchaser
expressly reserves the right to modify the terms of the Offer, except that,
without the consent of the Company, the Purchaser shall not (a) reduce the
number of Shares to be purchased in the Offer, (b) reduce the Common Price or
the Preference Price, (c) modify or add to the conditions to the Offer, (d)
except as provided in the next paragraph, extend the Offer, (e) change the
form of consideration payable in the Offer or (f) amend any other term of the
Offer in any manner adverse in any material respect to the holders of Shares.
Notwithstanding the foregoing, the Purchaser may, without the consent of the
Company, (a) extend the Offer beyond any scheduled Expiration Date for a
period not to exceed 20 business days, if at such scheduled Expiration Date,
any of the conditions to the Purchaser's obligation to accept for payment, and
pay for, Common Shares or Preference Shares are not satisfied or waived, until
such time as such conditions are satisfied or waived, (b) extend the Offer for
any period required by any rule, regulation, interpretation or position of the
SEC or the staff thereof applicable to the Offer and (c) terminate the Offer
if permitted by the Merger Agreement without prejudice to any of its and
CertainTeed's rights under the Merger Agreement, including to proceed with the
Merger in accordance with, and subject to the terms and conditions of, the
Merger Agreement. As used in this Offer to Purchase, "business day" has the
meaning set forth in Rule 14d-1 under the Securities Exchange Act of 1934 (the
"Exchange Act").
Subject to the terms of the Merger Agreement and applicable rules and
regulations of the SEC, the Purchaser reserves the right, in its sole
discretion, at any time and from time to time, and regardless of whether or
not any of the events or facts set forth in Section 14 hereof shall have
occurred, to (a) extend the period of time during which the Offer is open for
a period not to exceed 20 business days, and thereby delay acceptance for
payment of and the payment for any Shares, by giving oral or written notice of
such extension to the Depositary and (b) except as set forth above, amend the
Offer in any other respect by giving oral or written notice of such amendment
to the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE
PURCHASE PRICE FOR TENDERED SHARES, WHETHER OR NOT THE PURCHASER EXERCISES ITS
RIGHT TO EXTEND THE OFFER.
If by 12:00 Midnight, New York City time, on Friday, February 13, 1998 (or
any date or time then set as the Expiration Date), any or all of the
conditions to the Offer have not been satisfied or waived, the Purchaser
reserves the right (but shall not be obligated), subject to the applicable
rules and regulations of the SEC, to (a) terminate the Offer and not accept
for payment or pay for any Shares and return all tendered Shares to tendering
stockholders, (b) except as set forth above with respect to the Minimum
Condition, waive all the unsatisfied conditions and accept for payment and pay
for all Shares validly tendered prior to the Expiration Date and not
theretofore withdrawn, (c) extend the Offer and, subject to the right of
stockholders to withdraw Shares until the Expiration Date, retain the Shares
that have been tendered during the period or periods for which the Offer is
extended or (d) amend the Offer.
There can be no assurance that the Purchaser will exercise its right to
extend the Offer. Any extension, amendment or termination will be followed as
promptly as practicable by public announcement. In the case of an extension,
Rule 14e-l(d) under the Exchange Act requires that the announcement be issued
no later than 9:00 a.m., New York City time, on the next business day after
the previously scheduled Expiration Date in accordance with the public
announcement requirements of Rule 14d-4(c) under the Exchange Act. Subject to
applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act,
which require that any material change in the information published, sent or
given to stockholders in connection with the Offer be promptly disseminated to
stockholders in a manner reasonably designed to inform stockholders of such
change), and without limiting the manner in which the Purchaser may choose to
make any public announcement, the Purchaser will not have any obligation to
publish, advertise or otherwise communicate any such public announcement other
than by making a release to the Dow Jones News Service.
If the Purchaser extends the Offer or if the Purchaser is delayed in its
acceptance for payment of or payment for Shares (whether before or after its
acceptance for payment of Shares) or it is unable to pay for Shares pursuant
to the Offer for any reason, then, without prejudice to the Purchaser's rights
under the Offer, the Depositary may
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retain tendered Shares on behalf of the Purchaser, and such Shares may not be
withdrawn except to the extent tendering stockholders are entitled to
withdrawal rights as described in Section 3. However, the ability of the
Purchaser to delay payment for Shares that the Purchaser has accepted for
payment is limited by Rule 14e-1(c) under the Exchange Act, which requires
that a bidder pay the consideration offered or return the securities deposited
by or on behalf of holders of securities promptly after the termination or
withdrawal of such bidder's offer, and by the terms of the Merger Agreement,
which require that Purchaser pay for Shares accepted for payment as soon as
practicable after the Expiration Date.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer
(including a waiver of the Minimum Condition), the Purchaser will disseminate
additional tender offer materials and extend the Offer to the extent required
by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum
period during which an offer must remain open following material changes in
the terms of the Offer or information concerning the Offer, other than a
change in price or a change in the percentage of securities sought, will
depend upon the facts and circumstances then existing, including the relative
materiality of the changed terms or information. With respect to a change in
price or a change in the percentage of securities sought, a minimum period of
10 business days is generally required to allow for adequate dissemination to
stockholders.
The Company has provided the Purchaser with the Company's stockholder lists
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase, the related Letter of Transmittal
and other relevant materials will be mailed by the Purchaser to record holders
of Shares and will be furnished to brokers, dealers, banks, trust companies
and similar persons whose names, or the names of whose nominees, appear on the
stockholder lists, or, if applicable, who are listed as participants in a
clearing agency's security position listing, for subsequent transmittal to
beneficial owners of Shares.
2. PROCEDURE FOR TENDERING SHARES AND RIGHTS
Valid Tender. For a stockholder validly to tender Shares pursuant to the
Offer, either (a) a properly completed and duly executed Letter of Transmittal
(or fax thereof), together with any required signature guarantees and any
other required documents, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date and either certificates for tendered Shares must be received
by the Depositary at one of such addresses or such Shares must be delivered
pursuant to the procedures for book-entry transfer set forth below (and a
confirmation of such delivery, including an Agent's Message (as defined
below), must be received by the Depositary), in each case prior to the
Expiration Date or (b) the tendering stockholder must comply with the
guaranteed delivery procedures set forth below.
The Depositary will establish accounts with respect to the Shares at The
Depositary Trust Company and Philadelphia Depositary Trust Company (the "Book-
Entry Transfer Facilities") for purposes of the Offer within two business days
after the date of this Offer to Purchase. Any financial institution that is a
participant in any of the Book-Entry Transfer Facilities' systems may make
book-entry delivery of Shares by causing a Book-Entry Transfer Facility to
transfer such Shares into the Depositary's account in accordance with such
Book-Entry Transfer Facility's procedures for such transfer. However, although
delivery of Shares may be effected through book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility, the Letter of
Transmittal (or fax thereof), properly completed and duly executed, with any
required signature guarantees, or an Agent's Message, and any other required
documents, must, in any case, be transmitted to, and received by, the
Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase prior to the Expiration Date, or the tendering stockholder must
comply with the guaranteed delivery procedures described below. The
confirmation of a book-entry transfer of Shares into the Depositary's account
at a Book-Entry Transfer Facility as described above is referred to herein as
a "Book-Entry Confirmation." DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER
FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES
DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
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The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgement from the participant in such Book-
Entry Transfer Facility tendering the Shares that such participant has
received and agrees to be bound by the terms of the Letter of Transmittal and
that the Purchaser may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (a) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant
in any of the Book-Entry Transfer Facilities' systems whose name appears on a
security position listing as the owner of the Shares) of such Shares tendered
therewith and such registered holder has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal or (b) if such Shares are tendered
for the account of a financial institution (including most commercial banks,
savings and loan associations and brokerage houses) that is a member firm of a
national securities exchange registered with the SEC or of the National
Association of Securities Dealers, Inc. (the "NASD"), or a commercial bank or
trust company having an office or correspondent in the United States (an
"Eligible Institution"). In all other cases, all signatures on the Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instructions 1
and 5 to the Letter of Transmittal. If the certificates for Shares are
registered in the name of a person other than the signer of the Letter of
Transmittal, or if payment is to be made or certificates for Shares not
tendered or not accepted for payment are to be returned to a person other than
the registered holder of the certificates surrendered, the tendered
certificates must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name or names of the registered holders or
owners appear on the certificates, with the signatures on the certificates or
stock powers guaranteed in the manner described above. See Instructions 1 and
5 to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or the procedure for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such stockholder's tender may be
effected if all the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, is received
by the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation with respect to all such Shares),
together with a properly completed and duly executed Letter of Transmittal
(or fax), with any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message, and any other required documents
are received by the Depositary within three trading days after the date of
execution of such Notice of Guaranteed Delivery. A "trading day" is any day
on which the Nasdaq National Market (the "Nasdaq National Market") operated
by the NASD is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the Depositary
or transmitted by telegram, fax or mail to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in such Notice of
Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (a) certificates for (or a timely Book-Entry
Confirmation with respect to such Shares) such Shares, (b) a Letter of
Transmittal (or fax), properly completed
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and duly executed, with any required signature guarantees, or, in the case of
a book-entry transfer, an Agent's Message, and (c) any other documents
required by the Letter of Transmittal. Accordingly, tendering stockholders may
be paid at different times depending upon when certificates for Shares or
Book-Entry Confirmations with respect to such Shares are actually received by
the Depositary. UNDER NO CIRCUMSTANCES WILL ANY INTEREST BE PAID ON THE
PURCHASE PRICE OF THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY
DELAY IN MAKING SUCH PAYMENT.
The valid tender of Shares pursuant to one of the procedures described above
will constitute a binding agreement between the tendering stockholder and the
Purchaser upon the terms and subject to the conditions of the Offer.
Appointment. By executing a Letter of Transmittal as set forth above, the
tendering stockholder will irrevocably appoint designees of the Purchaser as
such stockholder's attorneys-in-fact and proxies in the manner set forth in
the Letter of Transmittal, each with full power of substitution, to the full
extent of such stockholder's rights with respect to the Shares tendered by
such stockholder and accepted for payment by the Purchaser and with respect to
any and all other Shares or other securities or rights issued or issuable in
respect of such Shares on or after January 12, 1998. All such proxies will be
considered coupled with an interest in the tendered Shares. Such appointment
will be effective when, and only to the extent that, the Purchaser accepts for
payment Shares tendered by such stockholder as provided herein. Upon such
appointment, all prior powers of attorney, proxies and consents given by such
stockholder with respect to such Shares or other securities or rights will,
without further action, be revoked and no subsequent powers of attorney,
proxies, consents or revocations may be given (and, if given, will not be
deemed effective). The designees of the Purchaser will thereby be empowered to
exercise all voting and other rights with respect to such Shares and other
securities or rights in respect of any annual, special or adjourned meeting of
the Company's stockholders, actions by written consent in lieu of any such
meeting or otherwise, as they in their sole discretion deem proper. The
Purchaser reserves the right to require that, in order for Shares to be deemed
validly tendered, immediately upon the Purchaser's acceptance for payment of
such Shares, the Purchaser must be able to exercise full voting, consent and
other rights with respect to such Shares and other securities or rights,
including voting at any meeting of stockholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by the Purchaser in its sole discretion, which
determination will be final and binding. The Purchaser reserves the absolute
right to reject any or all tenders determined by it not to be in proper form
or the acceptance for payment of or payment for which may, in the opinion of
the Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute
right to waive any defect or irregularity in the tender of any Shares of any
particular stockholder whether or not similar defects or irregularities are
waived in the case of other stockholders. No tender of Shares will be deemed
to have been validly made until all defects or irregularities relating thereto
have been cured or waived. None of the Purchaser, Saint-Gobain, CertainTeed,
the Depositary, the Information Agent, the Dealer Manager or any other person
will be under any duty to give notification of any defects or irregularities
in tenders or incur any liability for failure to give any such notification.
The Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions thereto) will be
final and binding.
Backup Withholding. In order to avoid "backup withholding" of Federal income
tax on payments of cash pursuant to the Offer and/or the Merger, a stockholder
surrendering Shares in the Offer and/or the Merger must, unless an exemption
applies, provide the Depositary with such stockholder's correct taxpayer
identification number ("TIN") on a Substitute Form W-9 and certify under
penalties of perjury that such TIN is correct and that such stockholder is not
subject to backup withholding. If a stockholder does not provide such
stockholder's correct TIN or fails to provide the certifications described
above, the Internal Revenue Service (the "IRS") may impose a penalty on such
stockholder and payment of cash to such stockholder pursuant to the Offer, the
Merger and/or the redemption of Preference Shares may be subject to backup
withholding of 31%. All stockholders surrendering Shares pursuant to the Offer
and/or the Merger should complete and sign the Substitute Form W-9 included as
part of the Letter of Transmittal to provide the information and certification
necessary to avoid backup withholding (unless an applicable exemption exists
and is proved in a manner satisfactory to the
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Purchaser and the Depositary). Certain stockholders (including, among others,
all corporations and certain foreign individuals and entities) are not subject
to backup withholding. Noncorporate foreign stockholders should complete and
sign a Form W-8, Certificate of Foreign Status, a copy of which may be
obtained from the Depositary, in order to avoid backup withholding. See
Instruction 9 to the Letter of Transmittal.
3. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, tenders of Shares are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant
to the procedures set forth below at any time prior to the Expiration Date
and, unless theretofore accepted for payment and paid for by the Purchaser
pursuant to the Offer, may also be withdrawn at any time after Monday, March
16, 1998.
For a withdrawal to be effective, a written, telegraphic or faxed notice of
withdrawal must be timely received by the Depositary at one of its addresses
set forth on the back cover of this Offer to Purchase and must specify the
name of the person having tendered the Shares to be withdrawn, the number of
Shares to be withdrawn and the name of the registered holder of the Shares to
be withdrawn, if different from the name of the person who tendered the
Shares. If certificates for Shares have been delivered or otherwise identified
to the Depositary, then, prior to the physical release of such certificates,
the serial numbers shown on such certificates must be submitted to the
Depositary and, unless such Shares have been tendered by an Eligible
Institution, the signatures on the notice of withdrawal must be guaranteed by
an Eligible Institution. If Shares have been delivered pursuant to the
procedure for book-entry transfer as set forth in Section 2, any notice of
withdrawal must also specify the name and number of the account at the
appropriate Book-Entry Transfer Facility to be credited with the withdrawn
Shares and otherwise comply with such Book-Entry Transfer Facility's
procedures. Withdrawals of tenders of Shares may not be rescinded, and any
Shares properly withdrawn will thereafter be deemed not validly tendered for
purposes of the Offer. However, withdrawn Shares may be retendered by again
following one of the procedures described in Section 2 at any time prior to
the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser in its sole
discretion, which determination will be final and binding. None of the
Purchaser, Saint-Gobain, CertainTeed, the Depositary, the Information Agent,
the Dealer Manager or any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and will pay for all
Shares validly tendered prior to the Expiration Date, and not properly
withdrawn in accordance with Section 3, promptly after the Expiration Date.
All questions as to the satisfaction of such terms and conditions will be
determined by the Purchaser in its sole discretion, which determination will
be final and binding. See Sections 1 and 14. The Purchaser expressly reserves
the right, in its sole discretion, to delay acceptance for payment of or
payment for Shares in order to comply in whole or in part with any applicable
law, including, without limitation, the HSR Act. Any such delays will be
effected in compliance with Rule 14e-l(c) under the Exchange Act, which
requires that a tender offeror pay the consideration offered or return the
tendered securities promptly after termination or withdrawal of a tender
offer.
Saint-Gobain filed a Notification and Report Form with respect to the Offer
under the HSR Act on
January 15, 1998. The waiting period under the HSR Act with respect to the
Offer will expire at 11:59 p.m., New York City time, on January 30, 1998,
unless early termination of the waiting period is granted. However, the
Antitrust Division of the Department of Justice (the "Antitrust Division") or
the Federal Trade Commission (the "FTC") may extend the waiting period by
requesting additional information or documentary material from Saint-Gobain.
If such a request is made, such waiting period will expire at 11:59 p.m., New
York City time, on the 10th day after substantial compliance by Saint-Gobain
with such request. See Section 15 hereof for additional information concerning
the HSR Act and the applicability of the antitrust laws to the Offer.
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In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (a) certificates
for (or a timely Book-Entry Confirmation with respect to) such Shares, (b) a
Letter of Transmittal (or fax thereof), properly completed and duly executed,
with any required signature guarantees, or, in the case of a book-entry
transfer, an Agent's Message, and (c) any other documents required by the
Letter of Transmittal. The per Common Share consideration and the per
Preference Share consideration paid to any stockholder pursuant to the Offer
will be the highest per Common Share consideration and per Preference Share
consideration, respectively, paid to any other holder of Common Shares or
Preference Shares, as the case may be, pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to the Purchaser and
not withdrawn as, if and when the Purchaser gives oral or written notice to
the Depositary of the Purchaser's acceptance for payment of such Shares.
Payment for Shares accepted for payment pursuant to the Offer will be made by
deposit of the purchase price therefor with the Depositary, which will act as
agent for tendering stockholders for the purpose of receiving payment from the
Purchaser and transmitting payment to tendering stockholders. UNDER NO
CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE OF ANY SHARES TO BE
PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY
IN MAKING SUCH PAYMENT.
If the Purchaser is delayed in its acceptance for payment of or payment for
Shares or is unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer (but subject to compliance with Rule 14e-1(c) under the Exchange
Act, which requires that a tender offeror pay the consideration offered or
return the tendered securities promptly after termination or withdrawal of a
tender offer, and the terms of the Merger Agreement), the Depositary may,
nevertheless, on behalf of the Purchaser, retain tendered Shares, and such
Shares, may not be withdrawn except to the extent tendering stockholders are
entitled to exercise, and duly exercise, withdrawal rights as described in
Section 3.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, certificates for any such Shares will be returned without expense to
the tendering stockholder (or, in the case of Shares delivered by book-entry
transfer of such Shares into the Depositary's account at a Book-Entry Transfer
Facility pursuant to the procedure set forth in Section 2, such Shares will be
credited to an account maintained at the appropriate Book-Entry Transfer
Facility) as promptly as practicable after the expiration or termination of
the Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to Saint-Gobain, or to one or more direct or indirect
wholly owned subsidiaries of Saint-Gobain, the right to purchase Shares
tendered pursuant to the Offer, but any such transfer or assignment will not
relieve the Purchaser of its obligations under the Offer and will in no way
prejudice the rights of tendering stockholders to receive payment for Shares
validly tendered and accepted for payment pursuant to the Offer.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The transfer of Shares pursuant to the Offer or the Merger will be a taxable
transaction for Federal income tax purposes under the Internal Revenue Code of
1986, as amended (the "Code"), and may also be a taxable transaction under
applicable state, local or foreign income or other tax laws. Generally, for
Federal income tax purposes, a stockholder will recognize gain or loss equal
to the difference between the amount of cash received by the stockholder
pursuant to the Offer or the Merger and the aggregate tax basis in the Shares
purchased pursuant to the Offer or the Merger, as the case may be. Gain or
loss will be calculated separately for each block of Shares tendered and
purchased pursuant to the Offer or in the Merger, as the case may be.
Gain (or loss) will be capital gain (or loss), assuming that such Shares are
held as a capital asset. Capital gains of individuals, estates and trusts
generally are subject to a maximum Federal income tax rate of (i) 39.6% if, at
the time the Company accepts the Shares for payment, the shareholder held the
Shares for not more than one year, (ii) 28% if the shareholder held such
Shares for more than one year but not more than 18 months at such time and
(iii) 20% if the shareholder held such Shares for more than 18 months at such
time. Capital gains of corporations generally are taxed at the Federal income
tax rates applicable to corporate ordinary income. In addition, under present
law, the ability to use capital losses to offset ordinary income is limited.
8
<PAGE>
A stockholder that tenders Shares pursuant to the Offer or surrenders Shares
pursuant to the Merger may be subject to 31% backup withholding unless the
stockholder provides its TIN and certifies that such number is correct or
properly certifies that it is awaiting a TIN, or unless an exemption applies.
A stockholder that does not furnish its TIN may be subject to a penalty
imposed by the IRS. See "--Backup Withholding" under Section 2.
If backup withholding applies to a stockholder, the Depositary is required
to withhold 31% from payments to such stockholder. Backup withholding is not
an additional tax. Rather, the amount of the backup withholding can be
credited against the Federal income tax liability of the person subject to the
backup withholding, provided that the required information is given to the
IRS. If backup withholding results in an overpayment of tax, a refund can be
obtained by the stockholder upon filing an income tax return.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO COMMON SHARES
RECEIVED PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS
COMPENSATION OR WITH RESPECT TO HOLDERS OF SHARES WHO ARE SUBJECT TO SPECIAL
TAX TREATMENT UNDER THE CODE, SUCH AS NON-U.S. PERSONS, LIFE INSURANCE
COMPANIES, TAX-EXEMPT ORGANIZATIONS AND FINANCIAL INSTITUTIONS, AND MAY NOT
APPLY TO A HOLDER OF SHARES IN LIGHT OF INDIVIDUAL CIRCUMSTANCES. STOCKHOLDERS
ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR TAX
CONSEQUENCES TO THEM (INCLUDING THE APPLICATION AND EFFECT OF ANY STATE, LOCAL
OR FOREIGN INCOME AND OTHER TAX LAWS) OF THE OFFER AND THE MERGER.
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE COMMON SHARES AND PREFERENCE
SHARES
The Common Shares are quoted on the Nasdaq National Market under the symbol
BIRD, and the Preference Shares are quoted on the Nasdaq SmallCap Market under
the symbol of BIRDP. The principal market for the Common Shares and Preference
Shares is the over-the-counter market.
The following table sets forth, for each of the periods indicated, the range
of high and low last sales prices per Common Share.
BIRD CORPORATION
<TABLE>
<CAPTION>
LAST SALES PRICES OF
COMMON SHARES
--------------------------
CALENDAR YEAR HIGH LOW
------------- ---------- ----------
<S> <C> <C>
1996
First Quarter............................. $ 7 5/8 $ 4 1/8
Second Quarter............................ 7 1/2 3 1/4
Third Quarter............................. 4 5/8 2 3/4
Fourth Quarter............................ 6 4 1/2
1997
First Quarter............................. 6 1/8 5 3/16
Second Quarter............................ 5 5/16 3 11/16
Third Quarter............................. 5 3 5/8
Fourth Quarter............................ 4 5/8 3 31/32
1998
First Quarter (through January 12, 1998).. 4 5/8 4
</TABLE>
On January 12, 1998, the last full trading day before the first public
announcement of the execution of the Merger Agreement, the last reported sale
price of the Common Shares on the Nasdaq National Market was $4 3/8 per Common
Share. On January 15, 1998, the last full trading day before the commencement
of the Offer, the last reported sales price of the Common Shares on the Nasdaq
National Market was $5 13/32 per Common Share.
The Company did not pay any cash dividends on the Common Shares in 1996 and
1997 and has not paid any cash dividends on the Common Shares in 1998 through
the date of this Offer to Purchase.
9
<PAGE>
The following table sets forth, for each of the periods indicated, the range
of high and low ask and bid quotations for the Preference Shares.
BIRD CORPORATION
<TABLE>
<CAPTION>
BID AND ASK PRICES OF PREFERENCE SHARES
---------------------------------------------------------
CALENDAR YEAR HIGH BID LOW BID HIGH ASK LOW ASK
- ------------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C>
1996
First Quarter......... $ 20 1/2 $ 16 $ 22 $ 17 1/2
Second Quarter........ 21 12 1/2 22 1/2 13 1/2
Third Quarter......... 14 12 3/4 15 1/2 14
Fourth Quarter........ 16 1/2 13 19 1/2 14
1997
First Quarter......... 16 1/4 14 1/4 19 17
Second Quarter........ 16 1/4 16 19 19
Third Quarter......... 16 1/2 15 1/4 19 17
Fourth Quarter........ 16 1/2 14 18 1/2 15
1998
First Quarter (through
January 12, 1998).... 14 14 17 17
</TABLE>
On January 12, 1998, the last full trading day before the public
announcement of the execution of the Merger Agreement, the last reported bid
quotation of the Preference Shares on the Nasdaq Small Cap Market was $14.00
per Preference Share. On January 15, 1998, the last full trading day before
the commencement of the Offer, the last reported bid quotation of the
Preference Shares on the Nasdaq SmallCap Market was $19.00 per Preference
Share.
Dividend payments, if declared, on the Preference Shares are made on
February 15, May 15, August 15 and November 15 of each year. The Company is
currently in arrears with respect to five dividend payments. In light of the
Offer, the Company does not intend to pay any dividend on the Preference
Shares on February 15, 1998. The aggregate amount of accrued and unpaid
dividends on the Preference Shares was $2.31 per Preference Share as of
November 15, 1997 and through February 13, 1998 will include an additional
$0.45 per Preference Share, and, after February 13, 1998, dividends on each
Preference Share will accrue at a rate of $0.0051 per day per Preference
Share.
STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE COMMON
SHARES AND PREFERENCE SHARES.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE COMMON SHARES AND PREFERENCE
SHARES; STOCK QUOTATION; EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS
Market for the Shares. The purchase of Shares pursuant to the Offer will
reduce the number of holders of Shares and the number of Shares that might
otherwise trade publicly and could adversely affect the liquidity and market
value of the remaining Shares held by the public.
Stock Quotation.
(1) Common Shares. Depending upon the number of Common Shares purchased
pursuant to the Offer, the Common Shares may no longer meet the requirements
of the NASD for continued inclusion in the Nasdaq National Market, which among
other things require that an issuer have at least 200,000 publicly held
shares, held by at least 400 stockholders or 300 stockholders of round lots,
with a market value of at least $1,000,000, and have net tangible assets of at
least $1,000,000, $2,000,000 or $4,000,000 depending on profitability levels
during the issuer's four most recent fiscal years. If these standards are not
met, the Common Shares might
10
<PAGE>
nevertheless continue to be included in the NASD's Nasdaq Stock Market (the
"Nasdaq Stock Market") with quotations published in the Nasdaq "additional
list" or in one of the "local lists", but if the number of holders of the
Common Shares were to fall below 300, or if the number of publicly held Common
Shares were to fall below 100,000 or there were not at least two registered
and active market makers for the Common Shares, the NASD's rules provide that
the Common Shares would no longer be "qualified" for Nasdaq Stock Market
reporting and the Nasdaq Stock Market would cease to provide any quotations.
Common Shares held directly or indirectly by directors, officers or beneficial
owners of more than 10% of the Common Shares are not considered as being
publicly held for this purpose. According to the Company, as of December 31,
1997, there were approximately 2,000 holders of record of Common Shares and
there were 4,159,877 Common Shares outstanding. If, as a result of the
purchase of Common Shares pursuant to the Offer or otherwise, the Common
Shares no longer meet the requirements of the NASD for continued inclusion in
the Nasdaq National Market or in any other tier of the Nasdaq Stock Market and
the Common Shares are no longer included in the Nasdaq National Market or in
any other tier of the Nasdaq Stock Market, as the case may be, the market for
Common Shares could be adversely affected.
In the event that the Common Shares no longer meet the requirements of the
NASD for continued inclusion in any tier of the Nasdaq Stock Market, it is
possible that the Common Shares would continue to trade in the over-the-
counter market and that price quotations would be reported by other sources.
The extent of the public market for the Common Shares and the availability of
such quotations would, however, depend upon the number of holders of Common
Shares remaining at such time, the interests in maintaining a market in Common
Shares on the part of securities firms, the possible termination of
registration of the Common Shares under the Exchange Act, as described below,
and other factors.
(2) Preference Shares. After the Offer, the reduced number of Preference
Shares available for trading may cause the Preference Shares to no longer meet
an additional qualification requirement of the NASD for continued inclusion in
the Nasdaq Stock Market that the issue have at least two registered and active
market makers. Accordingly, after the Offer, the Nasdaq Stock Market may cease
to provide any quotations. According to the Company, as of December 31, 1997,
there were approximately 130 holders of record of Preference Shares and
814,300 Preference Shares outstanding. Although Preference Shares have never
been registered under Section 12 of the Exchange Act and, as a result, do not
meet the qualification requirements of the NASD for inclusion in the Nasdaq
Stock Market, to date the Preference Shares have been so included.
Exchange Act Registration.
The Common Shares are currently registered under Section 12(g) of the
Exchange Act. Registration of the Common Shares under the Exchange Act may be
terminated upon application of the Company to the SEC if the Common Shares are
not listed on a national securities exchange, quoted on an automated inter-
dealer quotation system or held by 300 or more holders of record. Termination
of registration of the Common Shares under the Exchange Act would
substantially reduce the information required to be furnished by the Company
to its stockholders and to the SEC and would make certain provisions of the
Exchange Act no longer applicable to the Company, such as the short-swing
profit recovery provisions of Section 16(b) of the Exchange Act, the
requirement of furnishing a proxy statement pursuant to Section 14(a) of the
Exchange Act in connection with stockholders' meetings and the related
requirement of furnishing an annual report to stockholders and the
requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions. Furthermore, the ability of "affiliates" of the Company
and persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 or 144A promulgated under the Securities Act
of 1933, may be impaired or eliminated. The Purchaser intends to seek to cause
the Company to apply for termination of registration of the Common Shares
under the Exchange Act as soon after the completion of the Offer as the
requirements for such termination are met.
If public quotation and registration of the Common Shares and the Preference
Shares is not terminated prior to the Merger, then the Common Shares and the
Preference Shares will no longer be quoted and the registration of the Common
Shares under the Exchange Act will be terminated following the consummation of
the Merger.
11
<PAGE>
Margin Regulations.
(1) Common Shares. The Common Shares are currently "margin securities" under
the regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of
allowing brokers to extend credit on the collateral of the Common Shares.
Depending upon factors similar to those described above regarding listing and
market quotations, it is possible that, following the Offer, the Common Shares
would no longer constitute "margin securities" for the purposes of the margin
regulations of the Federal Reserve Board and therefore could no longer be used
as collateral for loans made by brokers. In any event, the Common Shares will
cease to be "margin securities" if registration of the Common Shares under the
Exchange Act is terminated.
(2) Preference Shares. The Preference Shares are not currently margin
securities.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Massachusetts corporation with its principal offices at
1077 Pleasant Street, Norwood, MA 02062-6714. The Company's current
manufacturing operation consists of one primary business unit engaged in
roofing manufacturing and marketing.
Set forth below is certain selected consolidated financial information with
respect to the Company and its subsidiaries excerpted from the information
contained in the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996 (the "Company 1996 10-K") and the Company's Quarterly
Reports on Form 10-Q for the three months ended March 31, 1997, June 30, 1997
and September 30, 1997, respectively (collectively, the "Company 1997 10-Qs").
More comprehensive financial information is included in the Company 1996 10-K,
the Company 1997 10-Qs and other documents filed by the Company with the SEC,
and the following summary is qualified in its entirety by reference to the
Company 1996 10-K, the Company 1997 10-Qs and such other documents and all the
financial information (including any related notes) contained therein. The
Company 1996 10-K, the Company 1997 10-Qs and such other documents should be
available for inspection and copies thereof should be obtainable in the manner
set forth below under "Available Information."
12
<PAGE>
BIRD CORPORATION
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
---------------- --------------------------
1997 1996 1996 1995 1994
------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
SUMMARY OF EARNINGS DATA:
Net sales........................ $34,438 $38,490 $51,956 $ 54,180 $167,886
Earnings (loss) from continuing
operations...................... 128 1,692 2,169 (797) 1,083
Earnings (loss) from discontinued
operations...................... -- 141 134 (11,252) (4,766)
------- ------- ------- -------- --------
Net earnings (loss) before
dividends....................... 128 1,833 2,303 (12,049) (3,683)
Net earnings (loss) applicable to
Common Shares................... (1,024) 681 767 (13,585) (5,219)
Net earnings (loss) per Common
Share........................... (0.25) 0.16 0.18 (3.31) (1.31)
BALANCE SHEET DATA (AT END OF PE-
RIOD):
Total assets..................... $39,536 $44,396 $39,669 $ 43,703 $ 85,705
Working capital.................. 3,102 4,480 3,375 5,978 5,627
Long-term debt, excluding current
portion......................... 0 1,510 255 4,869 12,504
Stockholders' equity............. 24,320 25,555 25,270 24,416 37,718
</TABLE>
Available Information. The Company is subject to the informational
requirements of the Exchange Act and, in accordance therewith, is required to
file reports relating to its business, financial condition and other matters.
Information as of particular dates concerning the Company's directors and
officers, their remuneration, stock options and other matters, the principal
holders of the Company's securities and any material interest of such persons
in transactions with the Company is required to be disclosed in proxy
statements distributed to the Company's stockholders and filed with the SEC.
Such reports, proxy statements and other information should be available for
inspection at the public reference facilities of the SEC at 450 Fifth Street,
N.W., Washington, DC 20549, and at the regional offices of the SEC located at
Seven World Trade Center, 13th Floor, New York, NY 10048 and Citicorp Center,
500 West Madison Street (Suite 1400), Chicago, IL 60661. Copies of such
information should be obtainable, by mail, upon payment of the SEC's customary
charges, by writing to the SEC's principal office at 450 Fifth Street, N.W.,
Washington, DC 20549. Such material should also be available for inspection at
the offices of Nasdaq Operations, 1735 K Street, N.W., Washington, DC 20006.
The SEC maintains a web site that contains reports, proxy and information
statements and other information regarding registrants that file
electronically with the SEC. Such reports, proxy and information statements
and other information may be found on the SEC's web site address,
http://www.sec.gov.
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or based upon
publicly available documents on file with the SEC and other publicly available
information. Although the Purchaser, CertainTeed and Saint-Gobain do not have
any knowledge that any such information is untrue, none of the Purchaser,
CertainTeed or Saint-Gobain takes any responsibility for the accuracy or
completeness of such information or for any failure by the Company to disclose
events that may have occurred and may affect the significance or accuracy of
any such information.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER, CERTAINTEED AND SAINT-GOBAIN
The Purchaser, a Massachusetts corporation and a wholly owned subsidiary of
CertainTeed, was organized to acquire the Company and has not conducted any
unrelated activities since its organization. The principal office of the
Purchaser is located at the principal office of CertainTeed. All outstanding
shares of capital stock of the Purchaser are owned by CertainTeed.
13
<PAGE>
The principal executive office of CertainTeed, a Delaware corporation and an
indirect wholly owned subsidiary of Saint-Gobain, is located at 750 East
Swedesford Road, Valley Forge, Pennsylvania 19482. The principal business of
CertainTeed is the manufacture of building materials (roofing, vinyl siding,
vinyl windows, ventilation products, vinyl fencing and railing, and piping
products) and fiber glass products (insulation and reinforcements).
Saint-Gobain, a French corporation, is a publicly owned holding company
whose shares are listed for trading on the monthly settlement market of the
Paris Stock Exchange and on the principal European stock exchanges. Its
principal executive office is located at Les Miroirs, 18 avenue d'Alsace,
92400 Courbevoie, France (Postal Address: Les Miroirs, 92096 Paris La Defense
Cedex). The principal business of Saint-Gobain is holding interests in other
companies. Saint-Gobain has worldwide interests in businesses involving the
manufacture of flat glass, fiber glass insulation and reinforcements, pipe,
glass containers, industrial ceramics and abrasives and the manufacture and
distribution of building materials.
The name, citizenship, business address, present principal occupation or
employment and five-year employment history of each of the directors and
executive officers of the Purchaser, CertainTeed, and Saint-Gobain is set
forth in Schedule I hereto and incorporated herein by reference.
Because the only consideration in the Offer and Merger is cash, and in view
of the relatively small amount of consideration payable in relation to the
financial capability of Saint-Gobain and its affiliates, the Purchaser
believes the financial condition of Saint-Gobain and its affiliates is not
material to a decision by a holder of Shares whether to sell, tender or hold
Shares pursuant to the Offer. The following selected consolidated financial
information relating to Saint-Gobain and its subsidiaries, taken or derived
from the audited consolidated financial statements of Saint-Gobain for the
years ended December 31, 1994, 1995 and 1996, is provided for supplemental
information purposes only and is neither intended nor required to comply with
the requirements of the Exchange Act. The following information was prepared
in accordance with accounting principles generally accepted in France and with
International Accounting Standards ("IAS") formulated by the International
Accounting Standards Committee. These principles, as applied to Saint-Gobain
and its subsidiaries, are similar to the accounting principles generally
accepted in the United States ("US GAAP"). There are, however, a few
differences between the accounting standards applied by Saint-Gobain and its
affiliates and US GAAP with respect to certain matters, including translation,
recognition and measurement criteria.
The consolidated financial statements of Saint-Gobain and its subsidiaries
are published in French francs ("FF").
SAINT-GOBAIN AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN MILLIONS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
1996
IN U.S.
DOLLARS(1) 1996 1995 1994
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales............................ $14,992 FF 91,384 FF 70,310 FF 74,494
Operating income..................... 1,543 9,406 7,783 7,295
Net income........................... 709 4,323 4,212 3,625
BALANCE SHEET DATA (AT END OF PERI-
OD):
Current assets....................... $ 7,639 FF 46,568 FF 40,980 FF 40,503
Total assets......................... 20,664 125,960 96,492 90,755
Long-term debt (including current
portion)............................ 2,038 12,424 9,173 12,297
Net equity of consolidated entities.. 9,773 59,575 46,028 42,126
</TABLE>
- --------
(1) French francs have been translated into U.S. dollars on the basis of the
noon buying rate (as defined below) on January 13, 1998.
14
<PAGE>
In October 1997, Saint-Gobain announced its operating results for the first
six months of 1997, including sales of 52.8 billion FF ($8.7 billion),
operating income of 5.1 billion FF ($0.8 billion) and net income of 3.3
billion FF ($541 million). (French francs have been translated into U.S.
dollars on the basis of the noon buying rate on January 13, 1998.)
The following table sets forth, for the periods and dates indicated, certain
information concerning the exchange rate for French francs into U.S. dollars
based upon the noon buying rate in New York City for cable transfers in
foreign currencies as determined by publicly available sources (the "noon
buying rate"):
(FF PER U.S. DOLLAR)
<TABLE>
<CAPTION>
AT YEAR AVERAGE
PERIOD END RATE HIGH LOW
------ --------- --------- --------- ---------
<S> <C> <C> <C> <C>
1994............................. FF 5.3445 FF 5.5459 FF 5.9785 FF 5.1120
1995............................. 4.8975 4.9864 5.3870 4.7755
1996............................. 5.1928 5.1159 5.2850 4.9025
1997............................. 6.0190 5.8386 6.3491 5.1932
1998 (through January 13, 1998).. 6.0957 6.0872 6.1070 6.0335
The noon buying rate on January 13, 1998 was
$1=FF 6.0957.
</TABLE>
In fiscal year 1996, CertainTeed had net sales of approximately $1.5
billion. At September 30, 1997, CertainTeed had $1.5 billion in total assets,
$300 million in total current assets, and $804 million in total stockholder's
equity. CertainTeed's financial statements are prepared in accordance with US
GAAP.
10. SOURCE AND AMOUNT OF FUNDS
The Purchaser estimates that the total amount of funds required to purchase
pursuant to the Offer the number of Shares that are outstanding on a fully
diluted basis and to pay fees and expenses related to the Offer will be
approximately $41 million. All funds needed for the Offer and the Merger will
be obtained from working capital of Saint-Gobain and its subsidiaries.
11. CONTACTS AND TRANSACTIONS WITH THE COMPANY; BACKGROUND OF THE OFFER
The Offer and Merger represent the culmination of a series of negotiations
between CertainTeed and the Company that began at the Company's initiation in
1994. During the spring and early summer of that year, management of the
Company and of CertainTeed undertook to negotiate a proposed merger at a cash
price of $13 per Common Share (plus a contingent purchase price of up to $1.25
per Common Share). That transaction would also have included the redemption of
the Company's 5% Cumulative Preferred Stock, par value $100 per share (the "5%
Stock"), and the Preference Shares. In July of 1994, however, CertainTeed
informed the Company that because CertainTeed's only interest was in acquiring
the Company's roofing manufacturing business, CertainTeed was not prepared to
acquire the Company's assets and contingent liabilities unrelated to its core
roofing business. As a result, the Company and CertainTeed terminated their
negotiations. Shortly thereafter, CertainTeed indicated orally that it
remained interested in acquiring the Company's roofing plant or the entire
Company if all or a substantial portion of its non-roofing assets could be
divested prior to a CertainTeed acquisition of the Company. In September of
1994, the Company provided additional due diligence materials and suggested
continuing discussions.
During the summer of 1995, the Company and CertainTeed renewed discussions,
including a meeting at CertainTeed's headquarters in Valley Forge,
Pennsylvania, at which the status of the Company's asset disposition and
contingent liability management program was discussed. The Company indicated
that all material non-roofing assets, other than its interest in a San Leon,
Texas hydrocarbon waste recycling center, had been divested and that an effort
to sell this interest was underway. During the fall of 1995, CertainTeed
resumed its due
15
<PAGE>
diligence investigation of the Company. Discussions between the parties
regarding issues raised during CertainTeed's ongoing due diligence effort
continued on a regular basis through February of 1996.
In late February and early March of 1996, representatives of CertainTeed
spoke by telephone with representatives of the Company on a number of
occasions regarding the possibility of CertainTeed making a proposal to
acquire the Company. On March 4, 1996, CertainTeed indicated that (i) it was
prepared to propose an acquisition price of $7.50 per Common Share, subject to
negotiation of definitive agreements and agreement upon a satisfactory
arrangement regarding alternative transaction fees and expenses, and (ii) as
in 1994, it was prepared to cash out the Preference Shares at their
liquidation value, plus all accrued and unpaid dividends, as well as to redeem
the 5% Stock in accordance with its terms. Detailed negotiations ensued
between the Company and CertainTeed, culminating in the execution of a merger
agreement (the "1996 Merger Agreement") on March 14, 1996.
On April 3, 1996, CertainTeed indicated it desired to acquire control of the
Company on the somewhat more accelerated timetable permitted by a cash tender
offer. The Board of the Company considered and approved CertainTeed's proposal
on April 5, 1996, and on April 12, 1996 a subsidiary of CertainTeed commenced
a cash tender offer (the "1996 Tender Offer") for all the outstanding Common
Shares and Preference Shares. On May 2, 1996, CertainTeed informed the Company
that CertainTeed had concluded that certain conditions to the 1996 Tender
Offer would not be satisfied at the scheduled expiration of such offer, that
CertainTeed would not waive the conditions and that, accordingly, such offer
would expire without the CertainTeed subsidiary acquiring any Shares. On May
10, 1996, the 1996 Tender Offer expired pursuant to its terms without the
CertainTeed subsidiary acquiring any Shares; thereafter, the 1996 Merger
Agreement was terminated.
On December 11 and 12, 1997, Bradford C. Mattson, Executive Vice President,
Exterior Products Group, of CertainTeed, spoke by telephone with Richard C.
Maloof, the Company's President, regarding the possibility of a renewed
interest by CertainTeed of making a proposal to acquire the Company. During
these conversations, Mr. Mattson was informed that two other prospective
purchasers were conducting investigations of the Company and would likely
submit acquisition proposals to the Company. On December 14, 1997, Mr. Mattson
had another telephone conversation with Mr. Maloof to discuss, among other
things, several environmental matters relating to the Company. On December 15,
1997, John R. Mesher, Vice President and General Counsel of CertainTeed, spoke
by telephone with Frank S. Anthony, the Company's General Counsel, to discuss
the timetable and process for CertainTeed to explore acquiring the Company.
Mr. Mesher was advised that in order for CertainTeed to be involved in the
process, a meaningful, but non-binding, proposal would have to be submitted on
or prior to December 18, 1997. On the evening of December 15, 1997,
representatives of CertainTeed (Mr. Mattson, Mickey Trapnell, Vice President-
Finance Controller, Roofing Products Group, and Rudy T. Lee, Vice President-
Sales, Roofing Products Group) had a dinner meeting with Messrs. Maloof and
Anthony. This dinner meeting was followed the next day by a tour of the
Company's facilities and properties and a review of the Company's operations
by Messrs. Mattson, Trapnell and Lee, as well as James E. Hilyard, the
President of CertainTeed's Roofing Products Group. In addition, over the next
several days, James J. Smith, CertainTeed's Director of Environmental Affairs,
discussed with Mr. Maloof several environmental issues relating to the Company
and its operations.
On December 18, 1997, CertainTeed submitted to the Company a non-binding
expression of interest confirming CertainTeed's interest in acquiring all of
the equity of the Company for an aggregate purchase price of about $39.5
million. Between December 20, 1997 and December 22, 1997, Messrs. Maloof
and/or Anthony spoke by telephone with Mr. Mesher and/or George B. Amoss,
CertainTeed's Vice President-Finance, to discuss questions that the Company's
management and Board of Directors had with respect to CertainTeed's expression
of interest. Detailed negotiations then ensued between the Company and
CertainTeed, culminating in agreement on the terms of the Merger Agreement. At
a meeting on January 12, 1998, the Board of Directors of the Company
unanimously determined that the Merger is fair to, and in the best interests
of, the Company and the Company's stockholders and approved the Merger
Agreement and recommended that the holders of Shares tender their Shares
pursuant to the Offer and vote in favor of approval and adoption of the Merger
Agreement. The Merger Agreement was executed and delivered by the parties on
January 12, 1998. On that same date, the Directors of
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the Company also executed a Stockholder Agreement which commits them to tender
their Shares to CertainTeed in connection with the Offer and to vote in favor
of the Merger. The Company and CertainTeed issued a joint press release
regarding the Offer and Merger Agreement on January 13, 1998.
Except as described in this Offer to Purchase, none of the Purchaser,
CertainTeed, Saint-Gobain or, to the best knowledge of the Purchaser,
CertainTeed and Saint-Gobain, any of the persons listed in Schedule I, or any
associate or majority-owned subsidiary of the Purchaser, CertainTeed, Saint-
Gobain or any of the persons so listed, beneficially owns or has the right to
acquire any equity security of the Company, and none of the Purchaser,
CertainTeed, Saint-Gobain or, to the best knowledge of the Purchaser,
CertainTeed and Saint-Gobain, any of the other persons referred to above, or
any of the respective directors, executive officers or subsidiaries of any of
the foregoing, has effected any transaction in any equity security of the
Company during the past 60 days. The Purchaser, CertainTeed and Saint-Gobain
disclaim beneficial ownership of any Shares owned by any pension plan of
Saint-Gobain or any affiliate of Saint-Gobain.
The Chairman, President and Chief Executive Officer of Mellon Bank
Corporation and Mellon Bank, N.A. is also a director of Saint-Gobain
Corporation, an indirect wholly owned subsidiary of Saint-Gobain and the U.S.
holding company of CertainTeed. Based on information contained in a Schedule
13G amended through February 10, 1997 filed with the SEC, Mellon Bank
Corporation, an affiliate of Mellon Bank, N.A., had beneficial ownership of
309,000 Common Shares representing 7.5% of the outstanding Common Shares,
including sole voting power and sole dispositive power with respect to 20,000
Common Shares and Mellon Bank Corporation together with its subsidiaries,
including Boston Safe Deposit and Trust Company and Mellon Bank, N.A., had
shared voting and dispositive power with respect to 289,000 Common Shares,
including 274,929 Common Shares held in a trust with Charles S. Bird, III as
co-trustee with shared voting and dispositive power.
Except as otherwise set forth in this Offer to Purchase, (1) there have not
been any contacts, transactions or negotiations between the Purchaser,
CertainTeed, Saint-Gobain, any of their respective subsidiaries or, to the
best knowledge of the Purchaser, CertainTeed and Saint-Gobain, any of the
persons listed in Schedule I, on the one hand, and the Company or any of its
directors, executive officers or affiliates, on the other hand, that are
required to be disclosed pursuant to the rules and regulations of the SEC, (2)
there are no present or proposed material contracts, arrangements,
understandings or relationships between the Purchaser, CertainTeed, Saint-
Gobain, their respective controlling persons or subsidiaries or, to the best
knowledge of the Purchaser, CertainTeed and Saint-Gobain, any of the persons
listed in Schedule I, on the one hand, and the Company or any of its
controlling persons, subsidiaries, executive officers or directors, on the
other hand, and (3) none of the Purchaser, CertainTeed, Saint-Gobain or, to
the best knowledge of the Purchaser, CertainTeed and Saint-Gobain, any of the
persons listed in Schedule I has any contract, arrangement, understanding or
relationship with any person with respect to any securities of the Company.
CertainTeed has had preliminary discussions with Richard C. Maloof, the
President of the Company, and Frank S. Anthony, Vice President, General
Counsel and Corporate Secretary of the Company, regarding their continued
employment with the Surviving Corporation on terms which have yet to be
decided, but these discussions have not yet resulted in any commitments by any
of the parties.
12. PURPOSE OF THE OFFER; THE MERGER AGREEMENT; THE STOCKHOLDER AGREEMENT;
PLANS FOR THE COMPANY
Purpose. The purpose of the Offer and the Merger is to enable CertainTeed,
through the Purchaser, to acquire control of, and the entire equity interest
in, the Company. The Offer, as the first step in the acquisition of the
Company, is intended to facilitate the acquisition of all the Shares. The
Purchaser currently intends, as soon as practicable following consummation of
the Offer, to hold a special meeting of stockholders to approve the Merger
(the "Special Meeting") and, as soon as practicable thereafter, to consummate
the Merger.
The Merger Agreement. The Merger Agreement provides that following the
satisfaction or waiver of the conditions described below under "Conditions to
the Merger", the Purchaser will be merged with and into the Company, and each
then outstanding Share (other than Shares held by stockholders who perfect
their appraisal rights under Massachusetts law, Shares held in the Company's
treasury and Shares held directly by the Purchaser
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or CertainTeed) will be converted into the right to receive an amount in cash
equal to (in the case of Common Shares) $5.50 per Common Share and (in the
case of Preference Shares) $20, which amount shall not be adjusted for any
accrued and unpaid dividends as of the Effective Date, per Preference Share.
All outstanding shares of the Company's 5% Stock will remain issued and
outstanding after the Merger and will be called for redemption and retirement
as soon as practicable following the Merger at a price equal to $110 per
share, plus all accrued and unpaid dividends thereon as of the date of
redemption and retirement.
(1) Vote Required to Approve Merger. If the Purchaser acquires, through the
Offer or otherwise (i) at least 66 2/3% of the outstanding Common Shares and
(ii) at least 66 2/3% of the outstanding Preference Shares, which would be the
case if the Minimum Condition were satisfied, it would have sufficient voting
power to effect the Merger without the vote of any other stockholder of the
Company.
(2) Conditions to the Merger.
(A) Conditions to the Obligations of CertainTeed and the Purchaser. The
obligations of CertainTeed and the Purchaser under the Merger Agreement are
subject to the satisfaction, on or prior to the closing date of the Merger
(the "Closing Date"), of each of the following conditions, each of which may
be waived by CertainTeed and the Purchaser except as otherwise provided by
law, provided that upon the acceptance of any Common Shares and Preference
Shares, if any, by the Purchaser pursuant to the Offer (the "Consummation of
the Offer") each of the following conditions (other than the conditions set
forth in clauses (iii)(b), (iii)(d) and (iv)(b) below) shall be deemed waived
by the Purchaser and CertainTeed: (i) the representations and warranties of
the Company contained in the Merger Agreement (without regard to any
supplemental information provided after the date of the Merger Agreement) that
are qualified as to materiality shall be true and correct, and the
representations that are not so qualified shall be true and correct in all
material respects, in each case on and as of the date of the Merger Agreement
and on and as of the effective date of the Merger (the "Effective Date"), and
between the date of the Merger Agreement and the Effective Date there shall
not have been any event or change in circumstance causing or reasonably
anticipated to cause in the future (a) any material adverse effect on the
business, assets, properties, condition (financial or other) or results of
operations of the Company and its subsidiaries taken as a whole or the
Surviving Corporation and its subsidiaries taken as a whole or (b) any
material adverse effect on the ability of the Company to carry out the
transactions contemplated by the Merger Agreement without significant
unanticipated delay or expense (clauses (a) and (b) together being a "Material
Adverse Effect"); (ii) each of the obligations of the Company to be performed
by it on or before the Closing Date pursuant to the terms of the Merger
Agreement shall have been duly performed or complied with in all material
respects by the Closing Date; (iii)(a) all corporate action necessary by the
Company to authorize the execution, delivery and performance of the Merger
Agreement and the consummation of the transactions contemplated thereby
(including the Offer and the Merger) shall have been duly and validly taken,
and the Company and the Purchaser shall have full right and power to merge on
the terms provided in the Merger Agreement; (b) the holders of the Common
Shares and the Preference Shares shall have duly approved the Merger at the
Special Meeting (other than if such approval shall not have occurred solely
due to the breach by CertainTeed or the Purchaser of its obligation, upon
consummation of the Offer, to vote its Common Shares and Preference Shares in
favor of the Merger); (c) all consents, approvals and authorizations from
third persons and governmental authorities identified in the Schedules to the
Merger Agreement required to consummate the transactions contemplated by the
Merger Agreement shall have been obtained; and (d) all applicable waiting
periods under the HSR Act shall have expired or been terminated; (iv)(a) there
shall not be any pending or threatened suit, action or proceeding by any
governmental authority (1) challenging the acquisition by CertainTeed or the
Purchaser of any Shares, seeking to restrain or prohibit the consummation of
the Merger or any of the other transactions contemplated by the Merger
Agreement that are material in relation to the Company and its subsidiaries
taken as a whole, (2) seeking to prohibit or limit the ownership or operation
by the Company, CertainTeed or any of their respective subsidiaries of any
material portion of the business or assets of the Company, or any of their
respective subsidiaries, or to compel the Company, CertainTeed or any of their
respective subsidiaries to dispose of or hold separate any material portion of
the business or assets of the Company, CertainTeed or any of their respective
subsidiaries, as a result of the Merger or any of the other transactions
contemplated by the Merger Agreement, (3) seeking to impose limitations on the
ability of
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CertainTeed or the Purchaser to acquire or hold, or exercise full rights of
ownership of, any shares of common stock of the Surviving Corporation, (4)
seeking to prohibit CertainTeed or any of its subsidiaries from effectively
controlling in any material respect the business or operations of the Company
or its subsidiaries or of CertainTeed and its subsidiaries or (5) which
otherwise is reasonably likely to have a Material Adverse Effect, (b) no
statute, rule, regulation, executive order, decree, temporary restraining
order, preliminary or permanent injunction or other order or legal restraint
or prohibition enacted, entered, promulgated, enforced, issued or deemed
applicable to the Merger or the transactions contemplated thereby, or any
other action shall be taken by any governmental authority or court, in each
case preventing the consummation of the Merger or the transactions
contemplated thereby, shall be in effect; (v) all directors of the Company
whose resignation is requested by CertainTeed at least five days before the
Closing Date will have submitted their resignations effective as of the
Closing Date; (vi) no more than ten percent of the issued and outstanding
shares of any class of equity securities of the Company entitled to dissenters
rights as of the Closing Date shall be dissenting shares entitled to receive
the fair value of such shares in accordance with Sections 85 through 98
inclusive of the Massachusetts Business Corporation Law (the "MBCL");
(vii) each outstanding option (each a "Stock Option") issued under the
Company's 1982 Stock Option Plan, as amended (the "1982 Stock Option Plan"),
the Company's 1992 Stock Option Plan, as amended (the "1992 Stock Option
Plan") and the Company's 1992 Non-Employee Directors Stock Option Plan, as
amended (the "Director Option Plan") shall have been amended to effect the
transactions contemplated by the Merger Agreement; and (viii) the Company
shall have furnished CertainTeed with such certificates of its officers and
others to evidence compliance with the conditions set forth in the Merger
Agreement as may be reasonably requested by CertainTeed, and the form and
substance of all opinions, certificates and other documents required by or
furnished pursuant to the Merger Agreement shall be satisfactory in all
reasonable respects to CertainTeed and its counsel.
(B) Conditions to the Obligations of the Company. The obligations of the
Company under the Merger Agreement are subject to the satisfaction, on or
prior to the Closing Date, of each of the following conditions, each of which
may be waived by the Company except as otherwise provided by law, provided
that, upon Consummation of the Offer, each of the following conditions (other
than the conditions set forth in clauses (iii) and (iv) below) shall be deemed
waived by the Company: (i) the representations and warranties of CertainTeed
and the Purchaser contained in the Merger Agreement that are qualified as to
materiality shall be true and correct, and the representations that are not so
qualified shall be true and correct in all material respects, in each case on
and as of the date of the Merger Agreement and on and as of the Effective
Date; (ii) each of the obligations of CertainTeed and the Purchaser to be
performed by them on or before the Closing Date pursuant to the terms of the
Merger Agreement shall have been duly performed and complied with in all
material respects by the Closing Date ; (iii)(a) all corporate action
necessary by the Purchaser and CertainTeed to authorize the execution,
delivery and performance of the Merger Agreement and the consummation of the
transactions contemplated by the Merger Agreement shall have been duly and
validly taken, the Purchaser shall have full right and power to merge on the
terms provided in the Merger Agreement and the Company's stockholders shall
have approved the Merger at the Special Meeting called for that purpose; (b)
all consents, approvals and authorizations from third persons and governmental
authorities identified in the Schedules to the Merger Agreement required to
consummate the transactions contemplated by the Merger Agreement shall have
been obtained; and (c) all applicable waiting periods under the HSR Act shall
have expired or been terminated; (iv) no judicial, administrative or
arbitration order, award, judgment, writ, injunction or decree shall have been
entered by a governmental authority with proper jurisdiction and not revised
prohibiting the Merger, and no legal action shall have been instituted by any
governmental authority challenging the Merger which if successful would
prohibit the consummation of the Merger; and (v) CertainTeed and the Purchaser
shall have furnished the Company with such certificates of their respective
officers and others to evidence compliance with the conditions set forth in
the Merger Agreement as may be reasonably requested by the Company, and the
form and substance of all certificates and other documents required by or
furnished pursuant to the Merger Agreement shall be satisfactory in all
reasonable respects to the Company and its counsel.
(3) Termination of the Merger Agreement. Unless the Consummation of the
Offer shall have occurred and Designated Directors (as defined below) shall
constitute at least a majority of the members of the Board of the Company, the
Merger Agreement shall be terminated, and the Merger abandoned, if the
requisite vote of the
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Company's stockholders with respect to the Merger Agreement is not obtained as
contemplated by the Merger Agreement. Notwithstanding approval of the Merger
Agreement and the transactions contemplated thereby by the stockholders of the
Company or by CertainTeed, the Merger Agreement may be terminated, and the
Offer and Merger abandoned, at any time prior to the Effective Date:
(A) by mutual consent of CertainTeed, the Purchaser and the Company;
(B) unless the Consummation of the Offer shall have occurred and
Designated Directors shall constitute at least a majority of the members of
the Board of the Company, by CertainTeed, the Purchaser or the Company at
any time after June 30, 1998;
(C) by CertainTeed or the Purchaser if (a) the Offer terminates without
any Shares being accepted for payment due to (x) failure of the Minimum
Condition or (y) any of the other conditions to the Offer (other than
solely the condition described in paragraph (c) of Section 14 "Certain
Conditions of the Offer") shall have become impossible to fulfill and shall
not have been waived (see Section 14), (b) any of the conditions to the
obligations of CertainTeed and the Purchaser to consummate the Merger
becomes impossible to fulfill and shall not have been waived or deemed
waived in accordance with the Merger Agreement (it being understood that
with respect to any condition described in clause (iv) (b) of paragraph
(2)(A) under The Merger Agreement above in this Section 12, any condition
described therein relating to an order, injunction or judicial decree shall
be deemed not to have become impossible to fulfill until such order,
injunction or decree shall have become final and non-appealable), (c) the
Board of the Company withdraws or modifies its approval or recommendation
of the Merger Agreement, the Offer or the Merger or (d) unless the
Consummation of the Offer shall have occurred and Designated Directors
shall constitute at least a majority of the members of the Board of the
Company, the Company fails to perform in any material respect any of its
obligations under the Merger Agreement or breaches in any material respect
any provision of the Merger Agreement, and the Company has failed to
perform such obligation or cure such breach within 10 days of its receipt
of written notice thereof from CertainTeed or the Purchaser, and such
failure to perform shall not have been waived in accordance with the terms
of the Merger Agreement; or
(D) by the Company if (a) any of the conditions to the obligations of the
Company to consummate the Merger shall become impossible to fulfill and
shall not have been waived in accordance with the terms of the Merger
Agreement, (b) CertainTeed or the Purchaser fails to perform in any
material respect any of its obligations under the Merger Agreement or
breaches in any material respect any provision of the Merger Agreement, and
CertainTeed and the Purchaser have failed to perform such obligation or
cure such breach within 10 days of receipt of written notice thereof from
the Company, and such failure to perform shall not have been waived in
accordance with the terms of the Merger Agreement, (c)(i) the Board of the
Company withdraws or modifies its approval or recommendation of the Merger
Agreement, the Offer or the Merger and (ii) the Company pays CertainTeed in
cash all CertainTeed's Expenses and the Alternate Transaction Fee (each as
defined in the first paragraph under "Fees and Expenses" below) or (d) if
the Purchaser (i) shall have failed to commence the Offer within the time
required under the Exchange Act or (ii) shall have failed to pay for any
Shares accepted for payment pursuant to the Offer and, in the case of
clause (ii), the Purchaser shall have failed to make such payment within
three business days of receipt of written notice thereof from the Company.
Notwithstanding any provisions to the contrary in the Merger Agreement, (i)
the sole remedy of CertainTeed or the Purchaser for a breach by the Company of
any representation or warranty set forth in the Merger Agreement shall be the
termination of the Merger Agreement (if permitted by the Merger Agreement)
unless such breach was made with the actual knowledge of the President of the
Company or the Vice President and General Counsel of the Company, after due
inquiry of other managerial employees of the Company who would be reasonably
expected to have knowledge as to the matter represented (a "Company Willful
Misrepresentation") and (ii) the sole remedy of the Company for a breach by
CertainTeed or the Purchaser of any representation or warranty set forth in
the Merger Agreement shall be the termination of the Merger Agreement (if
permitted by the Merger Agreement) unless such breach was made with the actual
knowledge of the President or Executive Vice President of CertainTeed, after
due inquiry of other managerial employees of
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CertainTeed who would be reasonably expected to have knowledge as to the
matter represented (a "CertainTeed Willful Misrepresentation").
(4) Procedure for Termination and Amendment. The Merger Agreement provides
that the termination or amendment of the Merger Agreement pursuant to the
Merger Agreement requires in the case of the Company action by its Board or
the duly authorized designee of its Board in order to be effective. In the
event that the Purchaser's designees are appointed or elected to the Board of
the Company as provided in the Merger Agreement, after the Consummation of the
Offer and prior to the time the Merger becomes effective, the affirmative vote
of at least a majority of the Continuing Directors shall be required for the
Company to agree to amend, waive compliance with or terminate the Merger
Agreement.
(5) Takeover Proposals. The Merger Agreement provides that the Company shall
not, nor shall it permit any of its subsidiaries or affiliates to, nor shall
it authorize or permit any officer, director or employee of, or any investment
banker, attorney or other advisor or representative of the Company or any of
its subsidiaries to (a) solicit or initiate, or knowingly encourage the
submission of, any takeover proposal, (b) participate in any discussions or
negotiations regarding, or furnish to any person any information with respect
to, any takeover proposal (except for (i) non-confidential information, or
(ii) filings with the SEC); provided, however, that prior to the earlier of
the Consummation of the Offer or the Special Meeting, to the extent required
by the fiduciary obligations of the Board of the Company, as determined in
good faith by the Board of the Company based on the advice of counsel, the
Company may, (A) in response to an unsolicited request therefor, furnish
information with respect to the Company (pursuant to a confidentiality
agreement at least as restrictive (as determined by the Company's counsel) as
the Confidentiality Agreement dated April 13, 1994, as amended, between the
Company and Saint-Gobain Corporation, a Pennsylvania corporation and an
indirect wholly owned subsidiary of Saint-Gobain) to any person who has
indicated to the Company that it is interested in pursuing a qualified
takeover proposal and discuss such information (but not the terms of any
possible takeover proposal) with such person and (B) upon receipt by the
Company of a qualified takeover proposal, following the delivery to
CertainTeed of the notice required pursuant to the Merger Agreement,
participate in discussions or negotiations regarding such qualified takeover
proposal. Without limiting the foregoing, it is understood that any violation
of the restrictions described in the preceding sentence by any officer of the
Company or any of its subsidiaries or any investment banker, attorney or other
advisor or representative of the Company or its subsidiaries shall be deemed a
breach of the Merger Agreement by the Company. For purposes of this Section
under the heading "Takeover Proposals", "takeover proposal" means any proposal
for a merger or other business combination (regardless of legal form)
involving the Company or any subsidiary or any proposal or offer to acquire in
any manner, directly or indirectly, a substantial portion of the assets or
business of the Company or a substantial equity interest in, or any
substantial amount of voting securities of, the Company or any subsidiary, or
any other transaction outside the ordinary course of business and not
otherwise specifically permitted by the terms of the Merger Agreement the
consummation of which would impede or prevent the consummation of the Merger
pursuant to the terms of the Merger Agreement; and "qualified takeover
proposal" means a takeover proposal having terms which the Board of the
Company determines (based on, among other things, the advice of a financial
advisor of nationally recognized reputation) and after giving due
consideration to the Stockholder Agreement in its good faith reasonable
judgment to be more favorable to the holders of Common Shares than the Common
Price and to the holders of Preference Shares than the Preference Price and
likely to be fully financed and consummated.
The Merger Agreement provides further that, except as described below,
neither the Company's Board nor any committee thereof shall (i) withdraw or
modify or propose to withdraw or modify, in a manner adverse to CertainTeed or
the Purchaser, the approval or recommendation by such Board or any such
committee of the Merger Agreement, the Offer or the Merger, (ii) approve or
recommend, or propose to approve or recommend, any takeover proposal or (iii)
enter into any agreement with respect to any takeover proposal.
Notwithstanding the foregoing, in the event the Board of the Company receives
a qualified takeover proposal, the Board of the Company or any committee
thereof or the Company may (subject to the limitations in the preceding
paragraph) withdraw or modify its approval or recommendation of the Merger
Agreement, the Offer or the Merger at any time after 48 hours following
CertainTeed's receipt of written notice (a "Notice of Qualified Takeover
Proposal") advising CertainTeed that the Board of the Company has received a
qualified takeover proposal, specifying the material terms and conditions of
such qualified takeover proposal and identifying the person
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making such qualified takeover proposal. The Company may take any of the
foregoing actions pursuant to the provision described in the preceding
sentence only until the earlier of the Consummation of the Offer or the
approval of the Merger at the Special Meeting. The Company shall not be
prohibited from taking and disclosing to its stockholders a position
contemplated by SEC Rule 14e-2(a) under the Exchange Act following
CertainTeed's receipt of a Notice of Qualified Takeover Proposal provided that
the Company does not withdraw or modify its position with respect to the
Merger or approve or recommend a takeover proposal.
In addition to the obligations of the Company described in the preceding
paragraphs, the Company shall promptly advise CertainTeed orally and in
writing of any request for information or of any takeover proposal, or any
inquiry with respect to any takeover proposal, the material terms and
conditions of such request, takeover proposal or inquiry and the identity of
the person making any such takeover proposal or inquiry. The Company shall
keep CertainTeed fully informed of the status and details of any such request,
takeover proposal or inquiry.
(6) Fees and Expenses. Except with respect to the circumstances described
below, the Merger Agreement provides that each of the Purchaser, CertainTeed
and the Company will bear its own costs, fees and expenses in connection with
the negotiation, execution, delivery and performance of the Merger Agreement
and the consummation of the Offer and the Merger.
The Merger Agreement provides that in the event that the Board of the
Company wishes to withdraw or adversely modify its approval or recommendation
of the Merger Agreement, the Offer or the Merger, prior to such withdrawal or
modification the Company shall pay in same day funds to CertainTeed (a) its
Expenses (defined below) incurred to date and thereafter shall pay in same day
funds to CertainTeed within one business day after demand therefor all
subsequently incurred Expenses, provided, that the Company shall not be
obligated to pay any such Expenses to the extent they exceed an aggregate of
$1 million, and (b) an alternate transaction fee of $1.5 million (the
"Alternate Transaction Fee"). In the event the Company receives a takeover
proposal from a person other than CertainTeed or one of its affiliates or a
takeover proposal is publicly disclosed prior to the Expiration Date (or in
the case of clauses (ii) and (iii), prior to the Special Meeting) or, if
earlier, termination of the Merger Agreement, and (i) at the Expiration Date a
sufficient number of Shares shall not have been tendered to satisfy the
Minimum Condition, (ii) at the Special Meeting the required approval of the
Merger by the Company's stockholders is not obtained, or (iii) the Merger
Agreement is terminated (other than by the Company if the Board of the Company
withdraws or modifies its approval or recommendation of the Merger Agreement
or the Merger) prior to a vote on the Merger at the Special Meeting unless the
Consummation of the Offer shall have occurred, the Company shall pay in same
day funds to CertainTeed within two business days after the earlier of such
Expiration Date, Special Meeting or termination of the Merger Agreement (a)
all Expenses incurred to date, and thereafter will pay in same day funds to
CertainTeed within one business day after demand therefor, all subsequently
incurred Expenses, provided, that the Company shall not be obligated to pay
any such Expenses to the extent they exceed an aggregate of $1 million, and
(b) the Alternate Transaction Fee. With regard to the immediately preceding
sentence, "Expenses" means all out-of-pocket fees and expenses (including
without limitation all travel expenses and all fees and expenses of counsel,
investment banking firms, accountants, experts and consultants to CertainTeed
or the Purchaser) incurred or paid by or on behalf of CertainTeed or the
Purchaser after January 1, 1996 in connection with or leading to the Merger
Agreement, the transactions contemplated thereby, and performing or securing
the performance of the obligations of the parties thereunder, including,
without limitation, such fees and expenses related to preparation and
negotiation of documentation and conducting due diligence. CertainTeed is
required within 36 hours after request therefor to advise the Company of an
estimate of its Expenses if the Company wishes to withdraw or modify its
approval or recommendation of the Merger Agreement, the Offer or the Merger
pursuant to the Merger Agreement.
The Merger Agreement also provides that in the event that the Merger
Agreement is terminated, the Offer is terminated or the Merger does not occur
(i) solely due to a breach by CertainTeed or the Purchaser of any of its
covenants or obligations under the Merger Agreement or due to a CertainTeed
Willful Misrepresentation or (ii) solely due to a breach by the Company of any
of its covenants or obligations under the Merger Agreement
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or due to a Company Willful Misrepresentation, then in the case of a
termination pursuant to clause (i) above, CertainTeed and the Purchaser shall
promptly pay to the Company, and in the case of termination pursuant to clause
(ii) above, the Company shall promptly pay to CertainTeed and the Purchaser,
in same day funds all Expenses (as defined below) incurred to date (after
giving credit for any reimbursement of expenses already made pursuant to the
provisions described in the immediately preceding paragraph) and thereafter
shall pay in same day funds within one business day after demand therefor all
subsequently incurred Expenses. With regard to the preceding sentence,
"Expenses" means all out-of-pocket fees and expenses (including without
limitation all travel expenses and all fees and expenses of counsel,
investment banking firms, accountants, experts and consultants to CertainTeed
or the Company, as the case may be) incurred or paid by or on behalf of
CertainTeed, the Purchaser or the Company, as the case may be, after January
1, 1996 in connection with or leading to the Merger Agreement, the
transactions contemplated thereby, and performing or securing performance of
the obligations of the parties thereunder, including, without limitation, such
fees and expenses related to preparation and negotiation of documentation and
conducting due diligence. Nothing described in this or the immediately
preceding paragraph limits damages that would otherwise be recoverable for
breaches under the Merger Agreement.
(7) Conduct of Business by the Company. Pursuant to the Merger Agreement,
except as otherwise expressly contemplated or permitted by the Merger
Agreement or otherwise consented to or approved by an authorized officer of
CertainTeed, the Company has agreed that prior to the Effective Date (or, if
earlier, when a majority of the members of the Board of the Company are
designees of the Purchaser in accordance with the Merger Agreement) the
business of the Company and its subsidiaries shall be conducted in the
ordinary course consistent with past practice and: (a) no change will be made
in the respective articles or certificate of organization or incorporation or
by-laws of the Company or any of its subsidiaries; (b) no change shall be made
in the number of shares of the Company's authorized, issued or outstanding
capital stock; nor shall any conversion rights by which the Company or any
subsidiary is or may become bound to issue, transfer, sell, repurchase or
otherwise acquire or retire any shares of capital stock or other ownership
interest of the Company or any subsidiary, or any securities convertible into
or exchangeable or exercisable for any such shares or other ownership interest
be granted, made, redeemed or amended; nor will the Company or any subsidiary
issue, deliver, pledge or sell any such shares, securities or obligations
(except deliveries or pledges in favor of the Company's senior lenders);
provided, however, that the Company is permitted to issue shares or other
securities as contemplated by the Company's Employee's Savings and Profit
Sharing Plan (the "Savings Plan") as in effect on the date of the Merger
Agreement and is permitted to issue Common Shares in connection with the due
exercise of Stock Options issued pursuant to the 1982 Stock Option Plan, the
1992 Stock Option Plan, the Director Option Plan or any other right or
convertible security outstanding as of the date of the Merger Agreement in
accordance with the existing terms thereof; (c) no dividend shall be declared
or paid or other distribution (whether in cash, stock, property or any
combination thereof) or payment declared or made in respect of the Common
Shares, 5% Stock or Preference Shares or any other outstanding capital stock
of the Company, nor shall the Company or any subsidiary (i) purchase, acquire
or redeem any Common Shares, 5% Stock or Preference Shares or (ii) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock; (d) neither the Company nor any subsidiary
shall enter into any material contract, or except in the ordinary course of
business consistent with past practice any other agreement, commitment or
instrument; (e) the Company shall use and shall cause each subsidiary to use
its and their respective reasonable efforts to preserve its and their business
organization intact, to keep available the services of its and their officers
and present key employees and to preserve its and their properties and the
goodwill of its and their suppliers, customers and others with whom business
relationships exist; (f) the Company shall not take, agree to take or permit
any subsidiary to take any action or do or permit to be done anything in the
conduct of its business or that of any subsidiary which would be contrary to
or in breach of any of the terms or provisions of the Merger Agreement or
which would cause any of the representations of the Company contained in the
Merger Agreement to be or become untrue in any material respect; (g) neither
the Company nor any of its subsidiaries shall adopt or amend in any material
respect or terminate any benefit plan, except as required by law, or change
any actuarial or other assumption used to calculate funding obligations with
respect to any Company pension plan (except to the extent that failure to make
such change would result in
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noncompliance with generally accepted accounting principles ("GAAP"), the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or the
Code, or change the manner in which contributions to any Company pension plan
are made or the basis on which such contributions are determined, except as
required by applicable law; (h) the Company shall not acquire or agree to
acquire (x) by merging or consolidating with, or by purchasing a substantial
portion of the assets of, or by any other manner, any business or any
corporation, partnership, joint venture, association or other business
organization or division thereof or (y) any assets that are material,
individually or in the aggregate, to the Company and its subsidiaries taken as
a whole, except purchases of inventory, raw materials, supplies and similar
materials in the ordinary course of business consistent with past practice and
capital expenditures complying with clause (k) below; (i) the Company shall
not sell, lease, license, mortgage or otherwise encumber or subject to any
lien (except in favor of the Company's senior lenders or certain liens
permitted under the Merger Agreement) or otherwise dispose of any of its
material properties or assets, except bona fide sales of inventory in the
ordinary course of business consistent with past practice; (j) the Company
shall not (i) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or warrants
or other rights to acquire any debt securities of the Company or any of its
subsidiaries, guarantee any debt securities of another person, enter into any
"keep well" or other agreement to maintain any financial statement condition
of another person or enter into any arrangement having the economic effect of
any of the foregoing, except for short-term borrowings incurred in the
ordinary course of business consistent with past practice and routine
endorsements in the process of collection, or (ii) make any loans, advances or
capital contributions to, or investments in, any other person, other than to
the Company or any direct or indirect wholly owned subsidiary of the Company
or routine travel and similar advances to employees; (k) the Company shall not
make or agree to make any new capital expenditure or expenditures which,
individually, is in excess of $100,000 or, in the aggregate, are in excess of
$250,000; (l) the Company shall not make any tax election or settle or
compromise any income tax liability; provided that CertainTeed shall not
unreasonably withhold any consent or approval of any such tax election,
settlement or compromise; (m) the Company shall not 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 consistent with past practice
or in accordance with their terms, of liabilities that are reflected or
reserved against in the Company's balance sheet as of September 30, 1997, or
incurred since the date of such balance sheet in the ordinary course of
business consistent with past practice, or waive the benefits of, or agree to
modify in any manner, any confidentiality, standstill or similar agreement to
which the Company or any of its subsidiaries is a party, except as permitted
by the Merger Agreement; and (n) the Company shall not authorize any of, or
commit or agree to take any of, the foregoing actions.
In addition, without the prior consent of an authorized officer of
CertainTeed, which consent shall not be unreasonably withheld, the Company
shall not make any election fixing the rate or rates payable under the
Company's revolving credit agreement for a term that could reasonably be
expected to extend beyond the Effective Date.
The Merger Agreement requires CertainTeed to respond within a reasonable
period of time to any request for consent or approval required to take any of
the actions described in the preceding paragraphs.
The Merger Agreement also requires that the Company promptly advise
CertainTeed orally and in writing of any change or event of which the Company
has knowledge having, or which, insofar as can reasonably be foreseen, would
have, a Material Adverse Effect.
(8) Directors. Subject to compliance with applicable law (including Section
14(f) of the Exchange Act), upon the acquisition by the Purchaser of at least
a majority of the outstanding Common Shares pursuant to the Offer, the
Purchaser shall be entitled to designate at least a majority of the members of
the Board of Directors of the Company, and the Company and its Board of
Directors shall, at such time, take any and all such action (including to
increase the size of the Board of Directors or to use their best efforts to
cause directors to resign) needed to cause a sufficient number of the
Purchaser's designees to be appointed to the Company's Board of Directors such
that the designees shall constitute such majority (any director so designated
by the Purchaser, a
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<PAGE>
"Designated Director"). It is understood that immediately after the
acquisition by the Purchaser of at least a majority of the outstanding Common
Shares pursuant to the Offer (x) the Company's Board of Directors shall
consist of seven members, (y) the initial designees of the Purchaser to the
Company's Board of Directors are expected to be George B. Amoss, Gianpaolo
Caccini, James E. Hilyard and Bradford C. Mattson and (z) the remaining
members of the Company's Board of Directors are expected to be Frank Anthony,
Antonio J. Lorusso, Jr. and Richard C. Maloof. In the event that, after the
acquisition by the Purchaser of at least a majority of the outstanding Common
Shares pursuant to the Offer and prior to the Effective Time (as defined in
the Merger Agreement), the number of members of the Board of Directors
increases (including pursuant to the provisions of the Preference Shares and
the 5% Stock), the Company and its Board of Directors shall, at such time,
take any and all such additional action (including to increase the size of the
Board of Directors, to use their best efforts to cause additional directors to
resign and to appoint additional designees of the Purchaser) needed to cause a
sufficient number of the Purchaser's designees to be appointed to the Board of
Directors such that the designees shall then constitute at least a majority of
the members of the Board of Directors. The Company, CertainTeed and the
Purchaser shall use their respective best efforts to cause at least three
members of the Company's Board of Directors at all times prior to the
Effective Time to be Continuing Directors. "Continuing Director" means (a) any
member of the Company's Board of Directors on the date of the Merger
Agreement, (b) any member of the Company's Board of Directors who is not an
employee or director or affiliate of, and not a Designated Director or other
nominee of, the Purchaser or CertainTeed or their respective subsidiaries, and
(c) any successor of a Continuing Director who is (i) not an employee or
director or affiliate of, and not a Designated Director or other nominee of,
the Purchaser or CertainTeed or their respective subsidiaries and (ii)
recommended to succeed such Continuing Director by at least a majority of the
then Continuing Directors.
(9) Stock Options. The Merger Agreement provides that, with respect to
unexpired Stock Options, whether or not exercisable at the Effective Date,
including stock appreciation rights relating thereto, outstanding on the
Effective Date which have been issued pursuant to the 1982 Stock Option Plan,
the 1992 Stock Option Plan, or the Director Option Plan, each such Stock
Option with an exercise price less than the Common Price (an "Eligible
Option") shall, by virtue of the Merger and without any action on the part of
the holder thereof, be converted into the right to receive, for each Common
Share subject thereto, a cash payment without interest equal to the Common
Price, less the per share exercise price of each such Stock Option. Such Stock
Options will be canceled upon such cash payment following the Merger. Any
Stock Option with an exercise price equal to or greater than the Common Price
(an "Ineligible Option") shall be canceled upon the Effective Date without
payment of any consideration. The Merger Agreement requires the Company to use
its best efforts to amend each outstanding Stock Option issued under the 1982
Stock Option Plan, the 1992 Stock Option Plan and the Director Option Plan to
effect the transactions contemplated by the Merger Agreement, including the
cancellation of the Stock Options in connection with the Merger in accordance
with the foregoing. Each Common Share issued by the Company but not yet vested
pursuant to the Savings Plan shall, in connection with the Merger, become
vested in the person to whose account such Common Share was issued and
converted into the right to receive the Common Price pursuant to the Merger
Agreement.
The Company has informed the Purchaser that, as of January 12, 1998, there
were no Common Shares held in escrow pursuant to the Company's former Long
Term Incentive Compensation Plan (the "LTIP"), and the LTIP has been
terminated. Immediately following the Effective Date, the Company's 1982
Option Plan, 1992 Option Plan and Director Option Plan shall be terminated and
no further stock awards or stock options will be granted thereunder from and
after the date of the Merger Agreement.
(10) Indemnification and Insurance. In the Merger Agreement, CertainTeed and
the Purchaser have agreed that all rights to indemnification in existence as
of the date of the Merger Agreement in favor of the directors or officers of
the Company and its subsidiaries (the "Indemnified Parties") as currently
provided in their respective certificates or articles of incorporation or
organization and by-laws or in any agreements, contracts or arrangements with
the Company or any of its subsidiaries in effect as of the date of the Merger
Agreement and previously furnished to CertainTeed and to the extent not in
violation of applicable state law, shall survive the Merger and shall continue
in full force and effect for a period of five years from the Effective Date;
provided
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that, in the event any claim or claims are asserted or made within such five
year period, all rights to indemnification in respect of any such claim or
claims shall continue until the disposition of any and all such claims. In
addition, the Merger Agreement provides that, to the extent currently provided
in the certificates or articles of incorporation or organization and by-laws
of the Company and its subsidiaries and Massachusetts law, or agreements,
contracts or arrangements disclosed to CertainTeed with the Company or any of
the subsidiaries, in the event that any Indemnified Party becomes involved in
any capacity in any action, proceeding or investigation in connection with any
matter, including the transaction contemplated by the Merger Agreement,
occurring prior to, and including, the Effective Date, or otherwise relating
to or arising out of such matters, CertainTeed or the Surviving Corporation
will periodically advance to such Indemnified Party his or her legal and other
expenses (including the costs of any investigation and preparation incurred in
connection therewith).
The Merger Agreement provides that CertainTeed will use all reasonable
efforts to maintain in effect, or shall cause the Surviving Corporation to use
all reasonable efforts to maintain in effect, for two years after the
Effective Date, directors' and officers' liability insurance ("D&O Insurance")
covering those persons covered by the Company's directors' and officers'
liability insurance on the date of the Merger Agreement or the Effective Date
and which is substantially equivalent in terms of coverage and amount as the
Company has in effect on the Effective Date so long as such insurance is
available and the annual premium therefor would not be in excess of $166,000
(the "Maximum Premium"). If the existing D&O Insurance expires, is terminated
or cancelled during such two-year period, CertainTeed shall use all reasonable
efforts to cause to be obtained as much D&O Insurance as can be obtained for
the remainder of such period for an annualized premium not in excess of the
Maximum Premium, on terms and conditions no less advantageous than the
existing D&O Insurance.
The Merger Agreement further provides that (a) any Indemnified Party wishing
to claim indemnification pursuant to the Merger Agreement, upon learning of
any legal action, suit, investigation, inquiry or proceeding by any
governmental authority or other person, shall promptly notify CertainTeed and
the Surviving Corporation with respect thereto, but the failure to so notify
shall not relieve CertainTeed or the Surviving Corporation of any liability it
may have to such Indemnified Party under the Merger Agreement except to the
extent that CertainTeed and the Surviving Corporation are materially
prejudiced thereby, (b) CertainTeed and the Surviving Corporation shall
periodically, as requested, advance to such Indemnified Party his, her or its
legal and other expenses (including the cost of investigation and preparation
incurred in connection therewith) to the extent such Indemnified Party is
indemnified pursuant to the Merger Agreement, unless it is ultimately
determined by a court of competent jurisdiction that such Indemnified Party is
not entitled to indemnification hereunder, and (c) CertainTeed and the
Surviving Corporation shall be subrogated to any rights any Indemnified Party
may have with respect to any amounts paid to or on behalf of such Indemnified
Party by CertainTeed and the Surviving Corporation pursuant to the Merger
Agreement.
(11) Representations and Warranties. The Merger Agreement contains various
customary representations and warranties. The Merger Agreement requires that
CertainTeed, the Purchaser and the Company shall each take such action as is
reasonably necessary to render their respective representations and warranties
accurate on and as of the Effective Date. Without limiting the foregoing, the
Merger Agreement provides that the Company shall take any action required by
CertainTeed to ensure the accuracy of its representations pertaining to
Massachusetts' anti-takeover laws.
The Stockholder Agreement
Pursuant to the Stockholder Agreement, the directors (the "Selling
Stockholders") of the Company have unconditionally agreed to tender into the
Offer, and not to withdraw therefrom, the 1,670,657 Common Shares and 132,200
Preference Shares that they owned on January 12, 1998, together with any
Shares they acquire after such time, including upon the exercise of Stock
Options. In addition, the Selling Stockholders have agreed to sell to the
Purchaser, and the Purchaser has agreed to purchase, the foregoing number of
Common Shares at a price per Common Share of $5.50, or such higher price per
Common Share as may be offered by the Purchaser in the Offer and Preference
Shares at a price per Preference Share of $20.00, or such higher price per
Preference
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Share as may be offered by the Purchaser in the Offer, provided that (i) such
obligation to purchase is subject to (a) the Purchaser having accepted Common
Shares and Preference Shares for payment under the Offer or (b) if the Offer
has been terminated for failure to satisfy the Minimum Condition, (i) all
conditions to the Offer (other than the Minimum Condition) having been
satisfied and (ii) including all Common Shares and Preference Shares tendered
and not withdrawn at the time of termination of the Offer and all Shares to be
purchased pursuant to the Stockholder Agreement, the Minimum Condition would
have been satisfied. Notwithstanding the foregoing, no Selling Stockholder
shall be obligated to sell his or her Shares after the scheduled final
expiration time of the Offer unless (i) the Minimum Condition was not
satisfied, (ii) such Selling Stockholder did not tender such Stockholder's
Shares into the Offer or withdrew such Shares and (iii) including all Common
Shares and Preference Shares tendered and not withdrawn at the time of
termination of the Offer and all Shares to be purchased pursuant to the
Stockholder Agreement, the Minimum Condition would have been satisfied. The
Shares subject to the Stockholder Agreement represent approximately 40.2% of
the Common Shares and 16.2% of the Preference Shares.
Each of the Selling Stockholders has agreed not to: (i) sell, transfer,
pledge, assign or otherwise dispose of, or enter into any contract, option or
other arrangement (including any profit sharing arrangement) or understanding
with respect to the sale, transfer, pledge, assignment or other disposition
of, his or her Shares to any person other than the Purchaser or the
Purchaser's designee, (ii) enter into any voting arrangement, whether by
proxy, voting agreement, voting trust, power-of-attorney or otherwise, with
respect to his or her Shares or (iii) take any other action that would in any
way restrict, limit or interfere with the performance of its obligations
hereunder or the transactions contemplated hereby. Each of the Selling
Stockholders has also agreed not to solicit, initiate or encourage (including
by way of furnishing information) and not to participate in any discussions or
negotiations regarding any takeover proposal (as defined in the Merger
Agreement).
Under the Stockholder Agreement, each Selling Stockholder has granted an
irrevocable proxy with respect to the Shares subject to the Stockholder
Agreement to CertainTeed to vote such Shares against (i) any merger agreement
or merger (other than the Merger Agreement and the Merger), consolidation,
combination, sale of substantial assets, reorganization, joint venture,
recapitalization, dissolution, liquidation or winding up of or by the Company
and (ii) any amendment of the Company's articles of incorporation or its by-
laws, or other proposal or transactions (including any consent solicitation to
remove or elect any directors of the Company) involving the Company, which
amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify, or result in a breach of any covenant,
representation or warranty or any other obligation or agreement of the Company
under or with respect to, the Offer, the Merger, the Merger Agreement or any
of the transactions contemplated by the Merger Agreement.
The foregoing summary of the Stockholder Agreement is qualified in its
entirety by reference to the Stockholder Agreement, a copy of which is filed
as Exhibit (c)(2) to the Schedule 14D-1. The Stockholder Agreement should be
read in its entirety for a more complete description of the matters summarized
above.
Plans for the Company. Saint-Gobain and its affiliates currently intend that
the Company will continue its present manufacturing operations in
Massachusetts and will continue to operate under its present corporate name,
as a wholly owned subsidiary of CertainTeed. CertainTeed has had preliminary
discussions with Richard C. Maloof, the President of the Company, and Frank S.
Anthony, Vice President, General Counsel and Corporate Secretary of the
Company, regarding their continued employment with the Surviving Corporation
on terms which have yet to be decided, but these discussions have not yet
resulted in any commitments by any of the parties.
Except as otherwise described in this Offer to Purchase, none of the
Purchaser, CertainTeed or Saint-Gobain has any current plans or proposals that
relate to, or would result in, any extraordinary corporate transaction
involving the Company, such as a merger, reorganization or liquidation
involving the Company or any of its subsidiaries to any unaffiliated third
party.
Appraisal Rights. Holders of Shares do not have appraisal rights as a result
of the Offer. However, if the Merger is consummated, holders of outstanding
Common Shares, Preference Shares and 5% Stock on the Effective Date will have
certain rights pursuant to the provisions of Sections 85 through 98,
inclusive, of the
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MBCL to dissent and demand appraisal of their shares. Under Sections 85
through 98, inclusive, of the MBCL, dissenting stockholders who comply with
the applicable statutory procedures will be entitled to receive a judicial
determination of the fair value of their shares (exclusive of any element of
value arising from the accomplishment or expectation of the Merger) and to
receive payment of such fair value in cash, together with a fair rate of
interest, if any. Any such judicial determination of the fair value of shares
could be based upon factors other than, or in addition to, the price per share
to be paid in the Merger or the market value of the shares. The value so
determined could be more or less than the price per share to be paid in the
Merger.
The foregoing summary of Sections 85 through 98, inclusive, of the MBCL does
not purport to be complete and is qualified in its entirety by reference to
Sections 85 through 98, inclusive, of the MBCL. Failure to follow the steps
required by Sections 85 through 98, inclusive, of the MBCL for perfecting
appraisal rights may result in the loss of such rights.
Going Private Transactions. The SEC has adopted Rule 13e-3 under the
Exchange Act which is applicable to certain "going private" transactions. The
Purchaser does not believe that Rule 13e-3 will be applicable to the Merger
unless the Merger is consummated more than one year after the termination of
the Offer. If applicable, Rule 13e-3 requires, among other things, that
certain financial information concerning the fairness of the Merger and the
consideration offered to minority stockholders in such transaction be filed
with the SEC and disclosed to stockholders prior to the consummation of the
Merger.
13. DIVIDENDS AND DISTRIBUTIONS
Pursuant to the terms of the Merger Agreement, the Company is prohibited
from taking any of the actions described in the two succeeding paragraphs, and
nothing herein shall constitute a waiver by the Purchaser or CertainTeed of
any of its rights under the Merger Agreement or a limitation of remedies
available to the Purchaser or CertainTeed for any breach of the Merger
Agreement, including termination thereof.
If, on or after January 12, 1998, the Company should (a) split, combine or
otherwise change the Shares or its capitalization, (b) acquire or otherwise
cause a reduction in the number of outstanding Shares or other securities
(other than as aforesaid) or (c) issue or sell additional Shares (other than
the issuance of Common Shares under option prior to January 12, 1998, in
accordance with the terms of such options as publicly disclosed prior to
January 12, 1998, shares of any other class of capital stock, other voting
securities or any securities convertible into, or rights, warrants or options,
conditional or otherwise, to acquire, any of the foregoing, then, subject to
the provisions of Section 14, the Purchaser, in its sole discretion, may make
such adjustments as it deems appropriate in the Common Price, the Preference
Price and other terms of the Offer, including, without limitation, the number
or type of securities offered to be purchased.
If, on or after January 12, 1998, the Company should declare or pay any cash
dividend on the Common Shares or Preference Shares (including any accrued and
previously unpaid dividends) or other distribution on the Shares, or issue
with respect to the Shares or any additional Shares, shares of any other class
of capital stock, other voting securities or any securities convertible into,
or rights, warrants or options, conditional or otherwise, to acquire, any of
the foregoing, payable or distributable to stockholders of record on a date
prior to the transfer of the Shares purchased pursuant to the Offer to the
Purchaser or its nominee or transferee on the Company's stock transfer
records, then, subject to the provisions of Section 14, (a) the Common Price
and/or the Preference Price may, in the sole discretion of the Purchaser, be
reduced by the amount of any such cash dividend or cash distribution and (b)
the whole of any such noncash dividend, distribution or issuance to be
received by the tendering stockholders will (i) be received and held by the
tendering stockholders for the account of the Purchaser and will be required
to be promptly remitted and transferred by each tendering stockholder to the
Depositary for the account of the Purchaser, accompanied by appropriate
documentation of transfer, or (ii) at the direction of the Purchaser, be
exercised for the benefit of the Purchaser, in which case the proceeds of such
exercise will promptly be remitted to the Purchaser. Pending such remittance
and subject to applicable law, the Purchaser will be entitled to all rights
and privileges as owner of any such noncash dividend, distribution, issuance
or proceeds and may withhold the entire Common Price and/or Preference Price
or deduct from the
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Common Price and/or the Preference Price the amount or value thereof, as
determined by the Purchaser in its sole discretion.
The Merger Agreement provides that the Company shall not declare and pay or
set apart for payment any accumulated dividends on the Common Shares, the 5%
Stock or the Preference Shares. Accordingly the Company will not declare the
February 15, 1998 dividend on the Preference Shares or the March 1, 1998
dividend on the 5% Stock.
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or the Merger Agreement, the
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act (relating to Purchaser's obligation to pay for or return tendered
Shares after the termination or withdrawal of the Offer), to pay for any
Shares tendered pursuant to the Offer unless the Minimum Condition, the HSR
Condition and the Required Consents Condition shall all have been satisfied.
Furthermore, notwithstanding any other term of the Offer or the Merger
Agreement, the Purchaser shall not be required to accept for payment or,
subject as aforesaid, to pay for any Shares not theretofore accepted for
payment or paid for, and may terminate the Offer if, at any time on or after
the date of the Merger Agreement and before the Consummation of the Offer any
of the following conditions exist:
(a) the representations and warranties of the Company contained in the
Merger Agreement (without regard to any supplemental information provided
pursuant to the Merger Agreement) that are qualified as to materiality
shall not be true and correct, and the representations that are not so
qualified shall not be true and correct in all material respects, in each
case on and as of the date of the Merger Agreement and on and as of the
Expiration Date;
(b) any of the obligations of the Company to be performed by it on or
before the Expiration Date pursuant to the terms of the Merger Agreement
shall not have been duly performed or complied with in all material
respects by that date;
(c) since September 30, 1997, there shall have occurred (or it shall be
reasonably expected that there will be) any event, change or circumstance
causing, or reasonably anticipated to cause in the future, any Material
Adverse Effect;
(d) any consents, approvals and authorizations from third persons and
governmental authorities identified in the Merger Agreement required to
consummate the transactions contemplated by the Merger Agreement shall not
have been obtained;
(e) there shall be pending or threatened any suit, action or proceeding
by any governmental authority (i) challenging the acquisition by
CertainTeed or the Purchaser of any Shares, seeking to restrain or prohibit
the consummation of the Offer, the Merger or any of the other transactions
contemplated by the Merger Agreement or seeking to obtain from the Company,
CertainTeed or the Purchaser any damages related to the Offer, the Merger
or any of the other transactions contemplated by the Merger Agreement that
are material in relation to the Company and its subsidiaries taken as a
whole, (ii) seeking to prohibit or limit the ownership or operation by the
Company, CertainTeed or any of their respective subsidiaries of any
material portion of the business or assets of the Company, CertainTeed or
any of their respective subsidiaries, or to compel the Company, CertainTeed
or any of their respective subsidiaries to dispose of or hold separate any
material portion of the business or assets of the Company, CertainTeed or
any of their respective subsidiaries, as a result of the Offer, the Merger
or any of the other transactions contemplated by the Merger Agreement,
(iii) seeking to impose limitations on the ability of CertainTeed or the
Purchaser to acquire or hold, or exercise full rights of ownership of, any
common stock of the Surviving Corporation, (iv) seeking to prohibit
CertainTeed or any of its subsidiaries from effectively controlling in any
material respect the business or operations of the Company or its
subsidiaries or of CertainTeed and its subsidiaries or (v) which otherwise
is reasonably likely to have a Material Adverse Effect;
(f) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to
the Offer or the Merger, or any other action shall be taken by any
governmental authority or court, other than the application to the Offer or
the Merger of applicable waiting
29
<PAGE>
periods under the HSR Act, that is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in clauses (i) through
(v) of paragraph (e) above;
(g) the Company's Board or any committee thereof shall have withdrawn or
modified in a manner adverse to CertainTeed its approval or recommendation
of the Offer, the Merger or the Merger Agreement or resolved to take any of
such actions; or
(h) the Merger Agreement shall have been terminated in accordance with
its terms.
The foregoing conditions are for the sole benefit of the Purchaser and
CertainTeed and may, subject to the terms of the Merger Agreement, be waived
by the Purchaser and CertainTeed in whole or in part at any time and from time
to time. The failure by CertainTeed or the Purchaser 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
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.
15. CERTAIN LEGAL MATTERS
Except as described in this Section 15, based on a review of publicly
available filings made by the Company with the SEC and other publicly
available information concerning the Company, none of the Purchaser,
CertainTeed or Saint-Gobain is aware of any license or regulatory permit that
appears to be material to the business of the Company and its subsidiaries,
taken as a whole, that might be adversely affected by the Purchaser's
acquisition of Shares (and the indirect acquisition of the stock of the
Company's subsidiaries) as contemplated herein or of any approval or other
action by any governmental entity that would be required or desirable for the
acquisition or ownership of Shares by the Purchaser as contemplated herein.
Should any such approval or other action be required or desirable, the
Purchaser, CertainTeed, and Saint-Gobain currently contemplate that such
approval or other action will be sought, except as described below under
"State Takeover Laws." While, except as otherwise expressly described in this
Section 15, the Purchaser does not presently intend to delay the acceptance
for payment of or payment for Shares tendered pursuant to the Offer pending
the outcome of any such matter, there can be no assurance that any such
approval or other action, if needed, would be obtained or would be obtained
without substantial conditions or that failure to obtain any such approval or
other action might not result in consequences adverse to the Company's
business or that certain parts of the Company's business might not have to be
disposed of if such approvals were not obtained or such other actions were not
taken or in order to obtain any such approval or other action. If certain
types of adverse action are taken with respect to the matters discussed below,
the Purchaser could decline to accept for payment or pay for any Shares
tendered. See Section 14 for certain conditions to the Offer.
State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable
to attempts to acquire securities of corporations that are incorporated or
have assets, stockholders, executive offices or places of business in such
states. In Edgar v. MITE Corp., the Supreme Court of the United States held
that the Illinois Business Takeover Act, which involved state securities laws
that made the takeover of certain corporations more difficult, imposed a
substantial burden on interstate commerce and therefore was unconstitutional.
In CTS Corp. v. Dynamics Corp. of America, however, the Supreme Court of the
United States held that a state may, as a matter of corporate law and, in
particular, those laws concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without prior approval of the remaining stockholders, provided
that such laws were applicable only under certain conditions. Subsequently, a
number of Federal courts ruled that various state takeover statutes were
unconstitutional insofar as they apply to corporations incorporated outside
the state of enactment.
Except as described herein, the Purchaser has not attempted to comply with
any state takeover statutes in connection with the Offer. The Purchaser
reserves the right to challenge the validity or applicability of any state law
allegedly applicable to the Offer and nothing in this Offer to Purchase nor
any action taken in connection herewith is intended as a waiver of that right.
In the event that any state takeover statute is found applicable to
30
<PAGE>
the Offer, the Purchaser might be unable to accept for payment or pay for
Shares tendered pursuant to the Offer or be delayed in continuing or
consummating the Offer. In such case, the Purchaser might not be obligated to
accept for payment or pay for any Shares tendered. See Section 14.
Massachusetts Statutes. Massachusetts has enacted a Business Combination
Statute that, in general, prohibits any business combination between a widely
held Massachusetts corporation and an interested stockholder for three years
after that person becomes an interested (i.e., 5%) stockholder unless: (a)
prior to the date that person becomes an interested stockholder, the board of
directors of the corporation approved either the transaction that made the
acquiror an interested stockholder or the proposed business combination; (b)
upon consummation of the transaction that made the acquiror an interested
stockholder, the acquiror owns at least 90 percent of the voting stock,
excluding shares held by directors, officers and employee stock plans in which
employee participants do not have the right to determine confidentially
whether shares held by the plan will be tendered; or (c) at or subsequent to
the time the acquiror becomes an interested stockholder, the board of
directors of the corporation and holders of two-thirds of the shares of voting
stock not held by interested stockholders approve the business combination.
Massachusetts has also enacted a Control Share Acquisition Statute that
provides, in general, that shares of a widely-held Massachusetts corporation
acquired in a Control Share Acquisition (as defined in the statute) will not
have voting rights unless, among other things, voting rights for such shares
are approved by a vote of stockholders of the corporation, not including those
holding such shares. Excluded from the definition of "Control Share
Acquisition" is, among other things, an acquisition by merger or tender offer
pursuant to a merger agreement to which the Massachusetts corporation is a
party. Massachusetts has also enacted a Take-Over Bid Statute that imposes
certain procedural requirements and prohibitions in connection with a Take-
Over Bid (as defined in the statute).
PURSUANT TO MASSACHUSETTS LAW, THE COMPANY HAS TAKEN ALL NECESSARY STEPS TO
RENDER THE MASSACHUSETTS BUSINESS COMBINATION STATUTE, CONTROL SHARE
ACQUISITION STATUTE AND TAKE-OVER BID STATUTE INAPPLICABLE TO THE ACQUISITION
OF SHARES IN THE OFFER OR THE MERGER.
Antitrust. Under the provisions of the HSR Act applicable to the Offer, the
acquisition of Shares under the Offer may be consummated following the
expiration of a 15-calendar day waiting period following the filing by Saint-
Gobain of a Notification and Report Form with respect to the Offer, unless
Saint-Gobain receives a request for additional information or documentary
material from the Antitrust Division or the FTC or unless early termination of
the waiting period is granted. Saint-Gobain made such filing on January 15,
1998. If, within the initial 15-day waiting period, either the Antitrust
Division or the FTC requests additional information or material from Saint-
Gobain concerning the Offer, the waiting period will be extended and would
expire at 11:59 p.m., New York City time, on the tenth calendar day after the
date of substantial compliance by Saint-Gobain with such request. Only one
extension of the waiting period pursuant to a request for additional
information is authorized by the HSR Act. Thereafter, such waiting period may
be extended only by court order or with the consent of Saint-Gobain. In
practice, complying with a request for additional information or material can
take a significant amount of time. In addition, if the Antitrust Division or
the FTC raises substantive issues in connection with a proposed transaction,
the parties frequently engage in negotiations with the relevant governmental
agency concerning possible means of addressing those issues and may agree to
delay consummation of the transaction while such negotiations continue.
Expiration or termination of the applicable waiting period under the HSR Act
is a condition to the Purchaser's obligation to accept for payment and pay for
Shares tendered pursuant to the Offer.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's proposed
acquisition of the Company. At any time before or after the Purchaser's
acquisition of Shares pursuant to the Offer, the Antitrust Division or the FTC
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or the consummation of the Merger or seeking the
divestiture of Shares acquired by the Purchaser or the divestiture of
substantial assets of the Company or its subsidiaries or Saint-Gobain or its
subsidiaries. Private parties may also bring legal action under the antitrust
laws under certain circumstances. There can be no assurance that a challenge
to the Offer on antitrust grounds will not be made or, if such a challenge is
made, of the result thereof.
31
<PAGE>
16. FEES AND EXPENSES
McFarland Dewey is acting as Dealer Manager in connection with the Offer and
is providing certain financial advisory services to CertainTeed in connection
with the Offer. CertainTeed has agreed to pay McFarland Dewey as compensation
for such services (i) financial advisory and other related fees aggregating
$400,000, which are payable or become payable upon the consummation of the
transactions contemplated by the Offer and (ii) a dealer manager fee of
$100,000 payable upon commencement of the Offer. CertainTeed has also agreed
to reimburse McFarland Dewey for its out-of-pocket expenses, including the
reasonable fees and expenses of its counsel and any other advisor retained by
McFarland Dewey, in connection with its engagement and to indemnify McFarland
Dewey and certain related persons against certain liabilities and expenses,
including certain liabilities and expenses under the Federal securities laws.
The Purchaser has retained Georgeson & Company Inc. to act as the
Information Agent and ChaseMellon Shareholder Services, L.L.C. to serve as the
Depositary in connection with the Offer. The Information Agent and the
Depositary each will receive reasonable and customary compensation for their
services, be reimbursed for certain reasonable out-of-pocket expenses and be
indemnified against certain liabilities and expenses in connection therewith,
including certain liabilities and expenses under the Federal securities laws.
None of the Purchaser, CertainTeed or Saint-Gobain will pay any fees or
commissions to any broker or dealer or other person (other than the Dealer
Manager and the Information Agent) in connection with the solicitation of
tenders of Shares pursuant to the Offer. Brokers, dealers, banks and trust
companies will be reimbursed by the Purchaser upon request for customary
mailing and handling expenses incurred by them in forwarding material to their
customers.
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of
such jurisdiction. None of the Purchaser, CertainTeed or Saint-Gobain is aware
of any jurisdiction in which the making of the Offer or the acceptance thereof
would not be in compliance with the laws of such jurisdiction. To the extent
the Purchaser, CertainTeed or Saint-Gobain becomes aware of any state law that
would limit the class of offerees in the Offer, the Purchaser will amend the
Offer and, depending on the timing of such amendment, if any, will extend the
Offer to provide adequate dissemination of such information to holders of
Shares prior to the expiration of the Offer. In any jurisdiction the
securities, blue sky or other laws of which require the Offer to be made by a
licensed broker or dealer, the Offer is being made on behalf of the Purchaser
by the Dealer Manager or one or more registered brokers or dealers licensed
under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER, CERTAINTEED OR SAINT-GOBAIN NOT
CONTAINED IN THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED.
The Purchaser, CertainTeed and Saint-Gobain have filed with the SEC a
Schedule 14D-1 pursuant to Rule 14d-3 under the Exchange Act, together with
exhibits, furnishing certain additional information with respect to the Offer,
and may file amendments thereto. In addition, the Company has filed the
Schedule 14D-9 pursuant to Rule 14d-9 under the Exchange Act, together with
exhibits setting forth its recommendation with respect to the Offer and the
reasons for such recommendation and furnishing such additional related
information. Such Schedules and any amendments thereto, including exhibits,
should be available for inspection and copies should be obtainable in the
manner set forth in Section 8 (except that such material will not be available
at the regional offices of the SEC).
BI EXPANSION II CORP.
January 16, 1998
32
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF SAINT-GOBAIN, CERTAINTEED AND THE
PURCHASER
DIRECTORS AND EXECUTIVE OFFICERS OF COMPAGNIE DE SAINT-GOBAIN
The following table sets forth the name, business address, and present
principal occupation or employment and five-year employment history of the
directors and executive officers of Compagnie de Saint-Gobain. All directors
and officers of Compagnie de Saint-Gobain listed below are citizens of France
except for Mr. Breuer, who is a citizen of Germany, Mr. Dachowski, who is a
citizen of the United Kingdom, and Messrs. Caccini and Caliari, who are
citizens of Italy. Directors are indicated by an asterisk.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
NAME AND EMPLOYMENT AND
BUSINESS ADDRESS FIVE-YEAR EMPLOYMENT HISTORY
---------------- -------------------------------
<S> <C>
Jean-Louis Beffa*........... Chairman and Chief Executive Officer of Compagnie
Compagnie de Saint-Gobain de Saint-Gobain (1992-present)
Les Miroirs
92096 La Defense Cedex
(France)
Claude Bebear*.............. Chairman of the Management Board of AXA-UAP (1997-
AXA-UAP present); Chairman and Chief Executive Officer of
23 rue Matignon AXA Group (1992-1997)
75008 Paris (France)
Dr. Rolf E. Breuer*......... Chairman of the Management Board of Deutsche Bank
Deutsche Bank (1997-present); Member of the Management Board of
Taunusanlage 12 Deutsche Bank (1992-present)
60262 Frankfurt (Germany)
Gilles de Cambronne*........ Deputy Manager at the Direction of the Legal and
Compagnie de Saint-Gobain Tax Departments of Compagnie de Saint-Gobain
Les Miroirs (1992-present)
92096 La Defense Cedex
(France)
Guy Dejouany*............... Honorary Chairman and Director of Compagnie
Compagnie Generale des Eaux Generale des Eaux (1996-present); Chairman and
52 rue d'Anjou Chief Executive Officer of Compagnie Generale des
75008 Paris (France) Eaux (1992-1996)
Bernard Esambert*........... Vice-Chairman of the Bollore Group (1992-present)
Groupe Bollore
51-52 quai de Dion-Bouton
92811 Puteaux (France)
Pierre Faurre*.............. Chairman and Chief Executive Officer of SAGEM
SAGEM (1992-present)
6 avenue d'Iena
75783 Paris Cedex (France)
Olivier Lecerf*............. Honorary Chairman of Societe Lafarge (1992-
Societe Lafarge (Retired) present); Director of Societe Lafarge (1992-
28 rue Emile Menier present)
75116 Paris (France)
Jacques-Louis Lions*........ Professor of the College de France (Paris) (1992-
College de France present); President of the French Academy of
3 rue d'Ulm Sciences (1996-present)
75005 Paris (France)
</TABLE>
S-1
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
NAME AND EMPLOYMENT AND
BUSINESS ADDRESS FIVE-YEAR EMPLOYMENT HISTORY
---------------- -------------------------------
<S> <C>
Jean-Maurice Malot*......... President of the Employees' and Former Employees'
Saint-Gobain Vitrage Shareholders Association of Compagnie de Saint-
BP 50 Gobain (1997-present); Manager of the French
33230 Coutras (France) Southern and Western subsidiaries of the Flat
Glass Division of Compagnie de Saint-Gobain (1992-
present)
Jean-Marie Messier*......... Chairman and Chief Executive Officer of Compagnie
Compagnie Generale des Eaux Generale des Eaux (1996-present); Chairman of the
52 rue d'Anjou Executive Committee of Compagnie Generale des Eaux
75008 Paris (France) (1994-1996); Managing Partner of Lazard Freres &
Cie (1992-1994)
Gerard Mestrallet*.......... Chairman of the Management Board of Suez/Lyonnaise
Suez/Lyonnaise des Eaux des Eaux (1997-present); Chairman and Chief
1 rue d'Astorg Executive Officer of Compagnie de Suez (1995-
75008 Paris (France) 1997); Executive Officer of Societe Generale de
Belgique (1992-1995)
Eric Monnier*............... Employee of Compagnie de Saint-Gobain (1992-
Compagnie de Saint-Gobain present)
Les Miroirs
92096 La Defense Cedex
(France)
Michael Pebereau*........... Chairman and Chief Executive Officer of Banque
Banque Nationale de Paris Nationale de Paris (1992-present)
16 boulevard des Italiens
75009 Paris (France)
Bruno Roger*................ Managing Director of Lazard Freres & Cie. (1992-
Lazard Freres & Cie. present);
121 boulevard Haussmann Managing Partner of Lazard Freres & Cie. (1992-
75008 Paris (France) present)
Eric d'Hautefeuille......... Senior Vice President of Compagnie de Saint-Gobain
Compagnie de Saint-Gobain (1996-present); President of the Flat Glass
Les Miroirs Division of Compagnie de Saint-Gobain (1992-1996)
92096 La Defense Cedex
(France)
Gianpaolo Caccini........... Vice Chairman, President and Chief Executive
Saint-Gobain Corporation Officer of Saint-Gobain Corporation (1996-
750 East Swedesford Road present); Chairman, President, Chief Executive
Valley Forge, Pennsylvania Officer and Director of CertainTeed Corporation
19482 (1996-present); Senior Vice President and General
Delegate for the United States and Canada of
Compagnie de Saint-Gobain (1996-present);
President of the Fiber Reinforcement Division of
Compagnie de Saint-Gobain (1993-1996); President
of the Insulation Division of Compagnie de Saint-
Gobain (1992-1993)
Jean-Gerard Claudon*........ Senior Vice President of Compagnie de Saint-Gobain
Poliet (1996-present); Chairman of the Supervisory Board
Les Miroirs of Poliet (1997-present); Chairman of the
92096 La Defense Cedex Management Board of Poliet (1992-1997)
(France)
Emile Francois.............. Senior Vice President of Compagnie de Saint-Gobain
Compagnie de Saint-Gobain (1997-present); Chairman of the Management Board
Les Miroirs of Poliet (1997-present); Chairman and Chief
92096 La Defense Cedex Executive Officer of Lapeyre (1997-present);
(France) President of the Industrial Ceramics Division of
Compagnie de Saint-Gobain (1992-1996)
</TABLE>
S-2
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
NAME AND EMPLOYMENT AND FIVE-YEAR
BUSINESS ADDRESS EMPLOYMENT HISTORY
---------------- -------------------------------
<S> <C>
Claude Picot................ Senior Vice President of Compagnie de Saint-Gobain
Saint-Gobain Emballage (1996-present); President of the Containers
Les Miroirs Division of Compagnie de Saint-Gobain (1992-
92096 La Defense Cedex present)
(France)
Jacques Aschenbroich........ President of the Flat Glass Division of Compagnie
Compagnie de Saint-Gobain de Saint-Gobain (1996-present); Chairman of the
Les Miroirs Management Board of Vegla GmbH (1992-1996)
92096 La Defense Cedex
(France)
Roberto Caliari............. President of the Reinforcement Division of
Compagnie de Saint-Gobain Compagnie de Saint-Gobain (1996-present); Manager
Les Miroirs of European and Korean Development of the Fiber
92096 La Defense Cedex Reinforcement Division of Compagnie de Saint-
(France) Gobain (1992-1996)
Pierre-Andre de Chalendar... President of the Abrasvies Division of Compagnie
Norton Company de Saint-Gobain (1996-present); Vice President of
1 New Bond Street Saint-Gobain Corporation (1996-present); General
Worcester, MA 01615 Manager of Abrasives Europe of Compagnie de Saint-
Gobain (1993-1996); Vice President and General
Manager of Abrasives Europe of Compagnie de Saint-
Gobain (1992-1993)
Gilles Colas................ President of the Building Materials Division of
Compagnie de Saint-Gobain Compagnie de Saint-Gobain (1997-present);
Les Miroirs Corporate Planning Director of Compagnie de Saint-
92096 La Defense Cedex Gobain (1992-1997)
(France)
Philippe Crouzet............ President of the Industrial Ceramics Division of
Compagnie de Saint-Gobain Compagnie de Saint-Gobain (1996-present); General
Les Miroirs Delegate for Spain and Portugal of Compagnie de
92096 La Defense Cedex Saint-Gobain (1992-1996)
(France)
Peter R. Dachowski.......... President of the Insulation Division of Compagnie
Compagnie de Saint-Gobain de Saint-Gobain (1996-present); Executive Vice
Les Miroirs President, Insulation of CertainTeed Corporation
92096 La Defense Cedex (1996-present); Executive Vice President of
(France) CertainTeed Corporation (1994-1996); Senior Vice
President of CertainTeed Corporation (1992-1994);
Vice President of Saint-Gobain Corporation (1992-
present)
Christian Streiff........... President of the Pipe Division of Compagnie de
Pont-a-Mousson SA Saint-Gobain (1997-present); Managing Director of
91 avenue de la Liberation Saint-Gobain Emballage (1993-1997); Managing
54000 Nancy (France) Director of VETRI (1992-1993)
Bernard Field............... Corporate Secretary and Secretary of the Board of
Compagnie de Saint-Gobain Directors of Compagnie de Saint-Gobain (1992-
Les Miroirs present)
92096 La Defense Cedex
(France)
Herve Gastinel.............. Corporate Planning Director of Compagnie de Saint-
Compagnie de Saint-Gobain Gobain (1998-present); Civil Services (1992-
Les Miroirs present)
92096 La Defense Cedex
(France)
</TABLE>
S-3
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
NAME AND EMPLOYMENT AND
BUSINESS ADDRESS FIVE-YEAR EMPLOYMENT HISTORY
---------------- -------------------------------
<S> <C>
Jean-Paul Gelly............. Human Resources Director of Compagnie de Saint-
Compagnie de Saint-Gobain Gobain (1998-present); Managing Director of Saint-
Les Miroirs Gobain Developpement (1992-1998)
92096 La Defense Cedex
(France)
Jean-Claude Lehman.......... Research Director of Compagnie de Saint-Gobain
Compagnie de Saint-Gobain (1992-present)
Les Miroirs
92096 La Defense Cedex
(France)
Jean-Francois Phelizon...... Finance Director of Compagnie de Saint-Gobain
Compagnie de Saint-Gobain (1992-present)
Les Miroirs
92096 La Defense Cedex
(France)
Pierre Tracol............... Director of International Development of Compagnie
Compagnie de Saint-Gobain de Saint-Gobain (1993-present); President of the
Les Miroirs Fiber Reinforcements Division of Compagnie de
92096 La Defense Cedex Saint-Gobain (1992-1993)
(France)
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS OF CERTAINTEED CORPORATION
The following table sets forth the name, present principal occupation or
employment and five-year employment history of the directors and executive
officers of CertainTeed Corporation. All directors and officers listed below
are citizens of the United States, except Mr. Caccini, who is a citizen of
Italy, and Mr. Dachowski, who is a citizen of the United Kingdom; and the
business address of each such person is 750 East Swedesford Road, Valley
Forge, Pennsylvania 19482, except where noted. Directors are indicated by an
asterisk.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
---- -------------------------------
<S> <C>
Gianpaolo Caccini*...... Vice Chairman, President and Chief Executive Officer of
Saint-Gobain Corporation (1996-present); Chairman,
President, Chief Executive Officer and Director of
CertainTeed Corporation (1996-present); Senior Vice
President and General Delegate for the United States and
Canada of Compagnie de Saint-Gobain (1996-present);
President of the Fiber Reinforcement Division of
Compagnie de Saint-Gobain (1993-1996); President of the
Insulation Division of Compagnie de Saint-Gobain (1992-
1993)
Peter R. Dachowski...... President of the Insulation Division of Compagnie de
Compagnie de Saint- Saint-Gobain (1996-present); Executive Vice President,
Gobain Insulation of CertainTeed Corporation (1996-present);
Les Miroirs Executive Vice President of CertainTeed Corporation
92096 La Defense Cedex (1994-1996); Senior Vice President of CertainTeed
(France) Corporation (1992-1994); Vice President of Saint-Gobain
Corporation (1992-present)
Lloyd C. Ambler......... President, Pipe & Plastics Group of CertainTeed
Corporation and Vice President of CertainTeed Corporation
(1992-present)
George B. Amoss*........ Vice President, Finance of Saint-Gobain Corporation and
CertainTeed Corporation (1994-present); Director of
CertainTeed Corporation (1997-present); Vice President
and Controller of Northern Telecom (1992-1994)
</TABLE>
S-4
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- ---- -------------------------------
<S> <C>
Dennis J. Baker......... Vice President of Saint-Gobain Corporation and
CertainTeed Corporation (1993-present); Vice President,
Human Resources of the Abrasives Division of Norton
Company (1992-present)
Bruce H. Cowgill........ Vice President of CertainTeed Corporation and President
of the Insulation Group of CertainTeed Corporation (1996-
present); Vice President and General Manager of the
Insulation Group of CertainTeed Corporation (1995-1996);
Vice President, Operations & Technology of the Insulation
Group of CertainTeed Corporation (1993-1995); Vice
President, Manufacturing of the Insulation Group of
CertainTeed Corporation (1992-1993)
Jean-Paul Dalle......... Vice President of CertainTeed Corporation (1996-present);
Vetrotex CertainTeed Director, President and Chief Operating Officer of
Corporation Vetrotex CertainTeed Corporation (1996-present); Vice
4515 Allendale Road President, Research and Development, Reinforcements
Wichita Falls, TX 76310 Branch of Compagnie de Saint-Gobain (1993-1996); Vice
President, Manufacturing, Vetrotex International, S.A.
(Compagnie de Saint-Gobain) (1992-1993)
F. Lee Faust............ Vice President, Tax of Saint-Gobain Corporation and
CertainTeed Corporation (1993-present); Tax Counsel of
Phillips Petroleum (1992-1993)
Robert W. Fenton........ Vice President and Controller of Saint-Gobain Corporation
and CertainTeed Corporation (1996-present); Financial
Controller of Compagnie de Saint-Gobain (1995-1996);
Assistant Controller and Director of Financial Analysis
of Saint-Gobain Corporation and CertainTeed Corporation
(1993-1995); Director of Financial Analysis of Saint-
Gobain Corporation and CertainTeed Corporation (1992-
1993)
James F. Harkins, Jr.... Vice President and Treasurer of Saint-Gobain Corporation
and CertainTeed Corporation (1995-present); Assistant
Treasurer of Saint-Gobain Corporation and CertainTeed
Corporation (1992-1995)
James E. Hilyard........ President, Roofing Products Group of CertainTeed
Corporation and Vice President of CertainTeed Corporation
(1992-present)
Thomas M. Landin........ Vice President of Saint-Gobain Corporation and
CertainTeed Corporation (1993-present); Vice President
and Director, U.S. Government and Public Affairs of
SmithKline Beacham Corporation (1992-1993)
Bradford C. Mattson..... Executive Vice President, Exterior Building Products of
CertainTeed Corporation (1996-present); Vice President of
Saint-Gobain Corporation (1995-present); President of
Vetrotex CertainTeed Corporation (1994-1996); President
of Bay Mills Limited (1992-1996); Vice President of
CertainTeed Corporation (1992-1996)
John R. Mesher.......... Vice President, General Counsel and Secretary of Saint-
Gobain Corporation and CertainTeed Corporation (1997-
present); Vice President, Deputy General Counsel and
Secretary of Saint-Gobain Corporation and CertainTeed
Corporation (1994-1997); Assistant Secretary and
Associate General Counsel of Saint-Gobain Corporation and
CertainTeed Corporation (1992-1994)
</TABLE>
S-5
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
---- -------------------------------
<S> <C>
John P. Mikulak...... President, Vinyl Building Products Group of CertainTeed
Corporation and Vice President of CertainTeed Corporation
(1992-present)
John J. Sweeney, Vice President of Saint-Gobain Corporation and
III................. CertainTeed Corporation (1995-present); Assistant
Treasurer of Saint-Gobain Corporation and CertainTeed
Corporation (1993-1995); Director of Benefit Investments
of Saint-Gobain Corporation and CertainTeed Corporation
(1992-1993)
Dorothy C. Vice President, Communications of Saint-Gobain
Wackerman........... Corporation and CertainTeed Corporation (1992-present)
Michael J. Walsh..... Vice President, Risk Management of Saint-Gobain
Corporation (1995-present); Vice President and Treasurer
of Saint-Gobain Corporation (1992-1995); Directeur des
Risques et Assurances of Compagnie de Saint-Gobain (1995-
present)
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS OF BI EXPANSION II CORP.
The following table sets forth the name, present principal occupation and
five-year employment history of the directors and executive officers of BI
Expansion II Corp. All directors and officers listed below are citizens of the
United States except for Mr. Caccini, who is a citizen of Italy and the
business address of each such person is 750 East Swedesford Road, Valley
Forge, Pennsylvania 19482. Directors are indicated by an asterisk.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
---- -------------------------------
<S> <C>
George B. Amoss*........ Vice President, Finance of Saint-Gobain Corporation and
CertainTeed Corporation (1994-present); Director of
CertainTeed Corporation (1997-present); Vice President
and Controller of Northern Telecom (1992-1994); Director
and Vice President of BI Expansion II Corp. (1997-
present)
Gianpaolo Caccini*...... Vice Chairman, President and Chief Executive Officer of
Saint-Gobain Corporation (1996-present); Chairman,
President and Chief Executive Officer and Director of
CertainTeed Corporation (1996-present); Senior Vice
President and General Delegate for the United States and
Canada of Compagnie de Saint-Gobain (1996-present);
President of the Fiber Reinforcements Divisions of
Compagnie de Saint-Gobain (1993-1996); President of the
Insulation Division of Compagnie de Saint-Gobain (1992-
1996); Director of BI Expansion II Corp. (1997-present)
F. Lee Faust............ Vice President, Tax of Saint-Gobain Corporation and
CertainTeed Corporation (1993-present); Tax Counsel of
Phillips Petroleum (1992-1993); Vice President of BI
Expansion II Corp. (1997-present)
James F. Harkins, Jr.... Vice President and Treasurer of Saint-Gobain Corporation
and CertainTeed Corporation (1995-present); Assistant
Treasurer of Saint-Gobain Corporation and CertainTeed
Corporation (1992-1995); Vice President and Treasurer of
BI Expansion II Corp. (1997-present)
James E. Hilyard........ President, Roofing Products Group of CertainTeed
Corporation and Vice President of CertainTeed Corporation
(1992-present); Vice President of BI Expansion II Corp.
(1997-present)
</TABLE>
S-6
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
---- -------------------------------
<S> <C>
Bradford C. Executive Vice President, Exterior Building Products of
Mattson*............ CertainTeed Corporation (1996-present); Vice President of
Saint-Gobain Corporation (1995-present); President of
Vetrotex CertainTeed Corporation (1994-1996); President
of Bay Mills Limited (1992-1996); Vice President of
CertainTeed Corporation (1992-1996); Director and
President of BI Expansion II Corp. (1997-present)
John R. Mesher....... Vice President, General Counsel and Secretary of Saint-
Gobain Corporation and CertainTeed Corporation (1997-
present); Vice President, Deputy General Counsel and
Secretary of Saint-Gobain Corporation and CertainTeed
Corporation (1994-1997); Assistant Secretary and
Associate General Counsel of Saint-Gobain Corporation and
CertainTeed Corporation (1992-1994); Vice President,
Secretary, Clerk and Assistant Treasurer of BI Expansion
II Corp. (1997-present)
</TABLE>
S-7
<PAGE>
EXHIBIT (a) (2)
Manually signed fax copies of the Letter of Transmittal will be accepted.
The Letter of Transmittal, certificates for Shares and any other required
documents should be sent or delivered by each stockholder of the Company or
such stockholder's broker, dealer, bank, trust company or other nominee to the
Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By Mail: By Overnight Delivery: By Hand:
P.O. Box 3305 85 Challenger Road 120 Broadway, 13th Floor
South Hackensack, NJ Mail Drop Reorg. Dept. New York, NY 10271
07606 Ridgefield Park, NJ 07660 Attention:
Attention: Reorganization
Reorganization Department
Department
By Fax Transmission:
(201) 329-8936
Confirm by Telephone:
(201) 296-4860
Questions and requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery
may be directed to the Information Agent or the Dealer Manager at their
respective telephone numbers and locations listed below. You may also contact
your broker, dealer, bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
GEORGESON
& COMPANY INC.
--------------
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll-Free: (800) 223-2064
The Dealer Manager for the Offer is:
MCFARLAND DEWEY SECURITIES CO., L.P.
230 Park Avenue
New York, New York 10169-1450
(212) 867-4949
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
AND $1.85 CUMULATIVE CONVERTIBLE PREFERENCE STOCK OF
BIRD CORPORATION
PURSUANT TO THE OFFER TO PURCHASE DATED JANUARY 16, 1998
BY
BI EXPANSION II CORP.
A Wholly Owned Subsidiary of
CERTAINTEED CORPORATION
An Indirect Wholly Owned Subsidiary of
COMPAGNIE DE SAINT-GOBAIN
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, FEBRUARY 13, 1998, UNLESS THE OFFER IS EXTENDED.
TO: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
BY MAIL: BY OVERNIGHT DELIVERY: BY HAND:
P.O. Box 3305 85 Challenger Road 120 Broadway-13th Floor
South Hackensack, NJ Mail Drop Reorg. Dept New York, NY 10271
07606 Ridgefield Park, NJ Attention:
Attention: 07660 Reorganization
Reorganization Department
Department
BY FAX:
(201) 329-8936
CONFIRM BY TELEPHONE:
(201) 296-4860
DESCRIPTION OF SHARES TENDERED
- --------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED SHARE CERTIFICATE(S) AND SHARE(S)
HOLDER(S) (PLEASE FILL IN, IF BLANK, TENDERED (ATTACH ADDITIONAL LIST IF
EXACTLY AS NAME(S) APPEAR(S) ON SHARE NECESSARY)
CERTIFICATE(S))
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS AND TOTAL
SERIES NUMBER
OF SHARES OF SHARES
SHARE REPRESENTED REPRESENTED NUMBER
CERTIFICATE BY SHARE BY SHARE OF SHARES
NUMBER(S)(/1/) CERTIFICATE(S) CERTIFICATE(S)(/1/) TENDERED(/2/)
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
<S> <C> <C> <C> <C>
TOTAL SHARES OF COMMON STOCK
--------------------------------------------------------------
TOTAL SHARES OF $1.85 CUMULATIVE CONVERTIBLE
PREFERENCE STOCK
</TABLE>
(1) Need not be completed by Book-Entry Stockholders.
(2) Unless otherwise indicated, it will be assumed that all Shares
described above are being tendered. See Instruction 4.
<PAGE>
---------------
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA A FAX NUMBER, OTHER THAN AS SET FORTH ABOVE DOES NOT
CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used either if certificates for Shares
(as defined below) are to be forwarded herewith or, unless an Agent's Message
(as defined in Section 2 of the Offer to Purchase (as defined below)) is
utilized, if delivery of Shares is to be made by book-entry transfer to an
account maintained by the Depositary at a Book-Entry Transfer Facility (as
defined in and pursuant to the procedures set forth in Section 2 of the Offer
to Purchase). Stockholders who deliver Shares by book-entry transfer are
referred to herein as "Book-Entry Stockholders" and other stockholders are
referred to herein as "Certificate Stockholders". Stockholders whose
certificates for Shares (as defined below) are not immediately available or
who cannot deliver either the certificates for, or a Book-Entry Confirmation
(as defined in Section 2 of the Offer to Purchase) with respect to, their
Shares and all other documents required hereby to the Depositary prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase) must tender
their Shares in accordance with the guaranteed delivery procedures set forth
in Section 2 of the Offer to Purchase. See Instruction 2. DELIVERY OF
DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY.
[_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution _______________________________________________
Check box of Book-Entry Transfer Facility:
[_] The Depository Trust Company
[_] Philadelphia Depository Trust Company
Account Number ______________________________________________________________
Transaction Code Number _____________________________________________________
[_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s) ______________________________________________
Date of Execution of Notice of Guaranteed Delivery __________________________
Name of Institution that Guaranteed Delivery ________________________________
If delivered by book-entry transfer check box:
[_] The Depository Trust Company
[_] Philadelphia Depository Trust Company
Account Number _____________________________________________________________
Transaction Code Number _____________________________________________________
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to BI Expansion II Corp., a Massachusetts
corporation (the "Purchaser") and a wholly owned subsidiary of CertainTeed
Corporation, a Delaware corporation which is an indirect wholly owned
subsidiary of Compagnie de Saint-Gobain, a French corporation ("Saint-
Gobain"), the above-described shares of Common Stock, par value $1.00 per
share (the "Common Shares"), of Bird Corporation, a Massachusetts corporation
(the "Company"), and hereby tenders to the Purchaser the above-described
shares of $1.85 Cumulative Convertible Preference Stock, par value $1.00 per
share (the "Preference Shares"), of the Company, upon the terms and subject to
the conditions set forth in the Purchaser's Offer to Purchase dated January
16, 1998 (the "Offer to Purchase"), and this Letter of Transmittal (which,
together with any amendments or supplements thereto or hereto, collectively
constitute the "Offer"), receipt of which is hereby acknowledged. The Common
Shares and the Preference Shares are collectively referred to as the "Shares".
Upon the terms of the Offer, subject to, and effective upon, acceptance for
payment of, and payment for, the Shares tendered herewith in accordance with
the terms of the Offer, the undersigned hereby sells, assigns and transfers
to, or upon the order of, the Purchaser all right, title and interest in and
to all the Shares that are being tendered hereby (and any and all other Shares
or other securities or rights issued or issuable in respect thereof on or
after January 12, 1998), and irrevocably constitutes and appoints ChaseMellon
Shareholder Services, L.L.C. (the "Depositary"), the true and lawful agent and
attorney-in-fact of the undersigned, with full power of substitution (such
power of attorney being deemed to be an irrevocable power coupled with an
interest), to the full extent of the undersigned's rights with respect to such
Shares (and any such other Shares or securities or rights), (a) to deliver
certificates for such Shares (and any such other Shares or securities or
rights) or transfer ownership of such Shares (and any such other Shares or
securities or rights) on the account books maintained by a Book-Entry Transfer
Facility together, in any such case, with all accompanying evidences of
transfer and authenticity to, or upon the order of, the Purchaser, (b) to
present such Shares (and any such other Shares or securities or rights) for
transfer on the Company's books and (c) to receive all benefits and otherwise
exercise all rights of beneficial ownership of such Shares (and any such other
Shares or securities or rights), all in accordance with the terms of the
Offer.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the tendered Shares
(and any and all other Shares or other securities or rights issued or issuable
in respect of such Shares on or after January 12, 1998) and, when the same are
accepted for payment by the Purchaser, the Purchaser will acquire good title
thereto, free and clear of all liens, restrictions, claims and encumbrances,
and the same will not be subject to any adverse claim. The undersigned will,
upon request, execute any additional documents deemed by the Depositary or the
Purchaser to be necessary or desirable to complete the sale, assignment and
transfer of the tendered Shares (and any and all such other Shares or
securities or rights).
All authority conferred or agreed to be conferred pursuant to this Letter of
Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned hereby irrevocably appoints George B. Amoss, Bradford C.
Mattson and John R. Mesher, and each of them, and any other designees of the
Purchaser, the attorneys-in-fact and proxies of the undersigned, each with
full power of substitution, to vote at any annual, special or adjourned
meeting of the Company's stockholders or otherwise in such manner as each such
attorney-in-fact and proxy or his or her substitute shall in his or her sole
discretion deem proper with respect to, to execute any written consent
concerning any matter as each such attorney-in-fact and proxy or his or her
substitute shall in his or her sole discretion deem proper with respect to,
and to otherwise act as each such attorney-in-fact and proxy or his or her
substitute shall in his or her sole discretion deem proper with respect to,
the Shares tendered hereby that have been accepted for payment by the
Purchaser prior to the time any such action is taken and with respect to which
the undersigned is entitled to vote (and any and all other Shares or other
securities or rights issued or issuable in respect of such Shares on or after
January 12, 1998). This appointment is effective when, and only to the extent
that, the Purchaser accepts for payment such Shares as provided in the Offer
to Purchase. This power of attorney and proxy are irrevocable and
<PAGE>
are granted in consideration of the acceptance for payment of such Shares in
accordance with the terms of the Offer. Upon such acceptance for payment, all
prior powers of attorney, proxies and consents given by the undersigned with
respect to such Shares (and any such other Shares or securities or rights)
will, without further action, be revoked and no subsequent powers of attorney,
proxies, consents or revocations may be given (and, if given, will not be
deemed effective) by the undersigned.
The undersigned understands that the valid tender of Shares pursuant to any
of the procedures described in Section 2 of the Offer to Purchase and in the
Instructions hereto will constitute a binding agreement between the
undersigned and the Purchaser upon the terms and subject to the conditions of
the Offer.
Unless otherwise indicated herein under "Special Payment Instructions",
please issue the check for the purchase price and/or return any certificates
for Shares not tendered or accepted for payment in the name(s) of the
registered holder(s) appearing under "Description of Shares Tendered".
Similarly, unless otherwise indicated under "Special Delivery Instructions",
please mail the check for the purchase price and/or return any certificates
for Shares not tendered or accepted for payment (and accompanying documents,
as appropriate) to the address(es) of the registered holder(s) appearing under
"Description of Shares Tendered". In the event that both "Special Delivery
Instructions" and "Special Payment Instructions" are completed, please issue
the check for the purchase price and/or return any certificates for Shares not
tendered or accepted for payment (and any accompanying documents, as
appropriate) in the name of, and deliver such check and/or return such
certificates (and any accompanying documents, as appropriate) to, the person
or persons so indicated. Please credit any Shares tendered herewith by book-
entry transfer that are not accepted for payment by crediting the account at
the Book-Entry Transfer Facility designated above. The undersigned recognizes
that the Purchaser has no obligation pursuant to "Special Payment
Instructions" to transfer any Shares from the name of the registered holder
thereof if the Purchaser does not accept for payment any of the Shares so
tendered.
<PAGE>
[_]CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
BEEN LOST OR DESTROYED AND SEE INSTRUCTION 11.
Number, class and series of Shares represented by the lost or destroyed
certificates:__________________________________________________________________
SPECIAL PAYMENT INSTRUCTIONS (SEE SPECIAL DELIVERY INSTRUCTIONS
INSTRUCTIONS 5, 6 AND 7) (SEE INSTRUCTIONS 5, 6 AND 7)
To be completed ONLY if certifi- To be completed ONLY if certifi-
cates for Shares not tendered or cates for Shares not tendered or
not accepted for payment and/or not accepted for payment and/or
the check for the purchase price the check for the purchase price
of Shares accepted for payment of Shares accepted for payment
are to be issued in the name of are to be sent to someone other
someone other than the under- than the undersigned, or to the
signed. undersigned at an address other
than that above.
Issue [_] Check
Mail [_] Check
[_] Certificate(s) to:
[_] Certificates to:
Name _____________________________ Name _____________________________
(PLEASE PRINT) (PLEASE PRINT)
Address __________________________ Address __________________________
__________________________________ __________________________________
(INCLUDE ZIP CODE) (INCLUDE ZIP CODE)
__________________________________ __________________________________
(EMPLOYER IDENTIFICATION OR (EMPLOYER IDENTIFICATION OR
SOCIAL SECURITY NUMBER) SOCIAL SECURITY NUMBER)
<PAGE>
SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
-------------------------------------------------------
-------------------------------------------------------
(SIGNATURE(S) OF STOCKHOLDER(S))
Dated: , 1998
(Must be signed by registered holder(s) as name(s) appear(s) on the
certificate(s) for the Shares or on a security position listing or by
person(s) authorized to become registered holder(s) by certificates and
documents transmitted herewith. If signature is by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, please provide the
following information and see Instruction 5.)
Name(s)________________________________________________
________________________________________________
(PLEASE PRINT)
Capacity (Full title) _________________________________
Address________________________________________________
________________________________________________
(INCLUDE ZIP CODE)
Daytime Area Code and Telephone No. ___________________
Employer Identification or
Social Security Number ________________________________
(SEE SUBSTITUTE FORM W-9)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND 5)
Authorized Signature __________________________________
Name __________________________________________________
(PLEASE PRINT)
Name of Firm __________________________________________
Address________________________________________________
________________________________________________
(INCLUDE ZIP CODE)
Daytime Area Code and Telephone No. ___________________
Dated: _________________________________________ , 1998
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Section, includes any
participant in any of the Book-Entry Transfer Facilities' systems whose name
appears on a security position listing as the owner of the Shares) of Shares
tendered herewith, unless such registered holder(s) has completed either the
box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" on this Letter of Transmittal or (b) if such Shares are
tendered for the account of a financial institution (including most commercial
banks, savings and loan associations and brokerage houses) that is a member
firm of a national securities exchange registered with the Securities and
Exchange Commission or the National Association of Securities Dealers, Inc.
(the "NASD"), or a commercial bank or trust company having an office or
correspondent in the United States (an "Eligible Institution"). In all other
cases, all signatures on this Letter of Transmittal must be guaranteed by an
Eligible Institution. See Instruction 5.
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed by
stockholders either if certificates are to be forwarded herewith or, unless an
Agent's Message (as defined below) is utilized, if delivery of Shares is to be
made pursuant to the procedures for book-entry transfer set forth in Section 2
of the Offer to Purchase. For a stockholder validly to tender Shares pursuant
to the Offer, either (a) a Letter of Transmittal (or fax thereof), properly
completed and duly executed, together with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message, and any other
required documents, must be received by the Depositary at one of its addresses
set forth herein prior to the Expiration Date (as defined in Section 1 of the
Offer to Purchase) and either certificates for tendered Shares must be
received by the Depositary at one of such addresses or Shares must be
delivered pursuant to the procedures for book-entry transfer set forth herein
(and a Book-Entry Confirmation (as defined in the Offer to Purchase) received
by the Depositary), in each case prior to the Expiration Date, or (b) the
tendering stockholder must comply with the guaranteed delivery procedures set
forth below and in Section 2 of the Offer to Purchase.
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver their certificates and all other required documents to the
Depositary or complete the procedures for book-entry transfer prior to the
Expiration Date may tender their Shares by properly completing and duly
executing the Notice of Guaranteed Delivery pursuant to the guaranteed
delivery procedures set forth in Section 2 of the Offer to Purchase. Pursuant
to such procedures, (a) such tender must be made by or through an Eligible
Institution, (b) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, must be
received by the Depositary prior to the Expiration Date and (c) the
certificates for all tendered Shares in proper form for transfer (or a Book-
Entry Confirmation with respect to all such Shares), together with a Letter of
Transmittal (or fax thereof), properly completed and duly executed, with any
required signature guarantees, or, in the case of a book-entry transfer, an
Agent's Message, and any other required documents, must be received by the
Depositary within three trading days after the date of execution of such
Notice of Guaranteed Delivery as provided in Section 2 of the Offer to
Purchase. A "trading day" is any day on which the Nasdaq National Market
operated by the NASD is open for business.
"Agent's Message" means a message transmitted by a Book-Entry Transfer
Facility to, and received by, the Depositary and forming a part of a Book-
Entry Confirmation that states that such Book-Entry Transfer Facility has
received an express acknowledgement from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against such participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution
of this Letter of Transmittal (or fax hereof), waive any right to receive any
notice of the acceptance of their Shares for payment.
<PAGE>
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
4. PARTIAL TENDERS (APPLICABLE TO CERTIFICATE STOCKHOLDERS ONLY). If fewer
than all the Shares evidenced by any certificate submitted are to be tendered,
fill in the number of Shares that are to be tendered in the box entitled
"Number of Shares Tendered". In any such case, new certificate(s) for the
remainder of the Shares that were evidenced by the old certificate(s) will be
sent to the registered holder, unless otherwise provided in the appropriate
box on this Letter of Transmittal, as soon as practicable after the acceptance
for payment of, and payment for, the Shares tendered herewith. All Shares
represented by certificates delivered to the Depositary will be deemed to have
been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder of the Shares
tendered hereby, the signature must correspond with the name as written on the
face of the certificate(s) without any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any certificates or stock powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity,
such persons should so indicate when signing, and proper evidence satisfactory
to the Purchaser of their authority so to act must be submitted.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to, or
certificates for Shares not tendered or accepted for payment are to be issued
to, a person other than the registered owner(s). Signatures on such
certificates or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the certificates listed, the certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or names of the registered owner or owners appear on the
certificates. Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution.
6. STOCK TRANSFER TAXES. Except as provided below, the Purchaser will pay
any stock transfer taxes with respect to the transfer and sale of Shares to it
or its order pursuant to the Offer. If, however, payment of the purchase price
is to be made to, or if certificates for Shares not tendered or accepted for
payment are to be registered in the name of, any person(s) other than the
registered owner(s), or if tendered certificates are registered in the name(s)
of any person(s) other than the person(s) signing this Letter of Transmittal,
the amount of any stock transfer taxes (whether imposed on the registered
owner(s) or such person(s)) payable on account of the transfer to such
person(s) will be deducted from the purchase price unless satisfactory
evidence of the payment of such taxes or exemption therefrom is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued in
the name of, and/or certificates for Shares not accepted for payment are to be
returned to, a person other than the signer of this Letter of Transmittal or
if a check is to be sent and/or such certificates are to be returned to a
person other than the signer of this Letter of Transmittal or to an address
other than that shown above, the appropriate boxes on this Letter of
Transmittal must be completed.
<PAGE>
8. WAIVER OF CONDITIONS. The Purchaser reserves the absolute right (subject
to the provisions of the Merger Agreement) in its sole discretion to waive any
of the specified conditions of the Offer, in whole or in part, in the case of
any Shares tendered.
9. 31% BACKUP WITHHOLDING. In order to avoid backup withholding of Federal
income tax on payments of cash pursuant to the Offer, a stockholder tendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such stockholder's correct taxpayer identification number (i.e., social
security number or employer identification number) ("TIN") on Substitute Form
W-9 below in this Letter of Transmittal and certify under penalties of perjury
that such TIN is correct and that such stockholder is not subject to backup
withholding. If a stockholder does not provide such stockholder's correct TIN
or fails to provide the certifications described above, the Internal Revenue
Service (the "IRS") may impose a $50 penalty on such stockholder and payment
of cash to such stockholder pursuant to the Offer may be subject to backup
withholding of 31%.
Backup withholding is not an additional income tax. Rather, the amount of
the backup withholding may be credited against the Federal income tax
liability of the person subject to the backup withholding, provided that the
required information is given to the IRS. If backup withholding results in an
overpayment of tax, a refund may be obtained by the stockholder upon filing an
income tax return.
The stockholder is required to give Depositary the TIN of the record holder
of the Shares. If the Shares are held in more than one name or are not in the
name of the actual owner, consult the enclosed "Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9" for additional
guidance on which number to report.
The box in Part 3 of Substitute Form W-9 may be checked if the tendering
stockholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future. If the box in Part 3 is checked, the
stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN
is provided to the Depositary. However, such amounts will be refunded to such
stockholder if a TIN is provided to the Depositary within 60 days.
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding.
Noncorporate foreign stockholders must complete and sign a Form W-8,
Certificate of Foreign Status, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See the enclosed "Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9"
for more instructions.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance or additional copies of the Offer to Purchase, this Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent or the Dealer Manager at their respective
addresses set forth below.
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate representing
Shares has been lost, destroyed or stolen, the stockholder should promptly
notify the Depositary by checking the box immediately preceding the special
payment/special delivery instructions and indicating the number of Shares so
lost, destroyed or stolen. The stockholder will then be instructed by the
Depository as to the steps that must be taken in order to replace the
certificate. This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost, destroyed or stolen
certificates have been followed.
<PAGE>
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FAX HEREOF), TOGETHER WITH ANY
REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER, AN
AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR TENDERED
SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES MUST BE DELIVERED PURSUANT
TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE PRIOR TO THE EXPIRATION
DATE, OR THE TENDERING STOCKHOLDER MUST COMPLY WITH THE PROCEDURES FOR
GUARANTEED DELIVERY.
PAYER'S NAME: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
- --------------------------------------------------------------------------------
PART 1--PLEASE PROVIDE YOUR TIN
SUBSTITUTE IN THE BOX AT RIGHT AND CERTIFY -------------------
FORM W-9 BY SIGNING AND DATING BELOW Social Security
Number(s)
OR
- --------------------------------------------------------------------------------
PART 2--Certification--Under
penalty of perjury, I certify -------------------
that: Employer
Identification
(1) the number shown on this
form is my correct Taxpayer Number(s)
Identification Number (or I am Part 3--
waiting for a number to be Awaiting TIN
issued to me) and [_]
(2) I am not subject to backup --------------------
withholding because (a) I am Part 4--
exempt from backup withholding Exempt TIN
or (b) I have not been [_]
notified by the Internal
Revenue Service ("IRS") that I
am subject to backup
withholding as a result of a
failure to report all interest
or dividends or (c) the IRS
has notified me that I am no
longer subject to backup
withholding.
- --------------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS--You must cross out item
(2) in Part 2 above if you have been notified by the
DEPARTMENT OF THE IRS that you are subject to backup withholding
TREASURY because of underreporting interest or dividends on
INTERNAL REVENUE your tax returns. However, if after being notified by
SERVICE the IRS that you were subject to backup withholding
you received another notification from the IRS
PAYER'S REQUEST stating that you are no longer subject to backup
FOR TAXPAYER withholding, do not cross out such item (2). If you
IDENTIFICATION are exempt from backup withholding, check the box in
NUMBER (TIN) Part 4 above.
SIGNATURE__________________________________________ DATE _____________, 1998
<PAGE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3
OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalty of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver an application in the near future. I
understand that, if I do not provide a taxpayer identification number to the
Depositary, 31% of all reportable payments made to me will be withheld, but
will be refunded if I provide a certified taxpayer identification number
within 60 days.
----------------------------------------- ________________________, 1998
Signature Date
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 WILL RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
INFORMATION.
The Information Agent for the Offer is:
GEORGESON
& COMPANY INC.
--------------
Wall Street Plaza
New York, NY 10005
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll-Free: (800) 223-2064
The Dealer Manager for the Offer is:
MCFARLAND DEWEY SECURITIES CO., L.P.
230 Park Avenue
New York, NY 10169-1450
(212) 867-4949
<PAGE>
EXHIBIT (A) (3)
BIRD CORPORATION
1077 PLEASANT STREET
NORWOOD, MA 02062
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 January 16, 1998 as
part of Bird Corporation's (the "Company") Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9") to the holders of record at
the close of business on January 14, 1998 of the Shares. Capitalized terms
used and not otherwise defined herein shall have the meaning ascribed to them
in the Schedule 14D-9. You are receiving this Information Statement in
connection with the possible election of persons to be designated by the
Purchaser to a majority of the seats on the Board of Directors of the Company
(the "Board"). Pursuant to the Merger Agreement, upon the acquisition by the
Purchaser of at least a majority of the outstanding Common Shares pursuant to
the Offer, the Purchaser shall be entitled to designate such number of
directors to be appointed to the Company's Board (the "Designated Directors")
as is required in order for the Designated Directors to constitute a majority
of the Board. At such time, the Company and the Board are required to take all
such action, including increasing the size of the Board or using their best
efforts to secure the resignations of incumbent directors, as needed to assure
that the Designated Directors constitute a majority of the Board. In addition,
in the event that after the acquisition by the Purchaser of at least a
majority of the outstanding Common Shares pursuant to the Offer and prior to
the Effective Date, the number of members of the Company's Board increases,
the Company and the Board are required at such time to take all such
additional action, including increasing the size of the Board, using their
best efforts to secure the resignation of incumbent directors or appointing
additional Designated Directors, as needed to assure that the Designated
Directors shall then constitute a majority of the Board. The parties to the
Merger Agreement have agreed to use their respective best efforts to ensure
that at least three members of the Board shall, at all times prior to the
Effective Date, be Continuing Directors.
This Information Statement is required by Section 14(f) of the Exchange Act,
and Rule 14f-1 thereunder. You are urged to read this Information Statement
carefully. However, you are not required to take any action.
The Purchaser commenced the Offer on January 16, 1998. The Offer is
scheduled to expire on February 13, 1998.
The information contained in this Information Statement (including
information listed in Schedule I to the Purchaser's Offer to Purchase and
information incorporated herein by reference) concerning CertainTeed, the
Purchaser and the Designated Directors has been furnished to the Company by
CertainTeed and the Purchaser, and the Company assumes no responsibility for
the accuracy or completeness of such information.
The Common Shares and the Preference Shares are the only classes of
securities of the Company outstanding which are entitled to vote upon adoption
of the Merger Agreement. Each Common Share and Preference Share has one vote
with respect thereto. As of January 14, 1998, there were 4,159,877 Common
Shares and 814,300 Preference Shares outstanding.
A-1
<PAGE>
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
GENERAL
The Board currently consists of seven members. The Board is divided into
three classes, with each class to hold office for a term of three years and
the term of office of one class to expire each year. Mr. Anthony was appointed
to the Board on January 12, 1998.
DESIGNATED DIRECTORS
Pursuant to the Merger Agreement, immediately after the acquisition by the
Purchaser of at least a majority of the outstanding Common Shares pursuant to
the Offer, the Board will consist of seven members, four of whom will be
Designated Directors and three of whom will be Continuing Directors. Upon the
acquisition by the Purchaser of at least a majority of the outstanding Common
Shares pursuant to the Offer, and during the period after such acquisition and
prior to the Effective Date, the Company and the Board are required to take
any and all such action, including increasing the size of the Board,
appointing Designated Directors and using their best efforts to secure the
resignations of incumbent directors, as needed to cause the Designated
Directors to constitute a majority of the Board.
The Purchaser has informed the Company that it currently intends to choose
the following Designated Directors 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 stockholders together with the Schedule 14D-9: Gianpaolo
Caccini, George B. Amoss, Bradford C. Mattson, and James E. Hilyard. The
Purchaser has informed the Company that each of the Designated Directors has
consented to act as a director. The information on such Schedule I is
incorporated herein by reference. None of the Designated Directors (i) is
currently a director of, or holds any position with, the Company, (ii) has a
familial relationship with any of the directors or executive officers of the
Company or (iii) to the best knowledge of the Purchaser, beneficially owns any
securities (or rights to acquire any securities) of the Company. The Company
has been advised by the Purchaser that, to the best of Purchaser's knowledge,
none of the Designated Directors has been involved in any transaction with the
Company or any of its directors, executive officers or affiliates which are
required to be disclosed pursuant to the rules and regulations of the SEC,
except as may be disclosed herein or in the Schedule 14D-9. The business
address of the Purchaser and CertainTeed is 750 E. Swedesford Road, Valley
Forge, Pennsylvania 19482.
It is expected that the Designated Directors will assume office at any time
following the acquisition by the Purchaser pursuant to the Offer of at least a
majority of the outstanding Common Shares, which acquisition cannot be earlier
than February 13, 1998, and that upon assuming office, the Designated
Directors will thereafter constitute at least a majority of the Board.
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The table below sets forth certain information with respect to the current
Board of Directors and executive officers of the Company.
A-2
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH THE COMPANY; EXPIRATION
PRINCIPAL OCCUPATION AND OF PRESENT
OTHER BUSINESS ELECTED OR TERM OF
NAME AND AGE AFFILIATIONS(1) APPOINTED(2) OFFICE
---------------------------- ---------------------------- ------------ ----------
<C> <S> <C> <C>
Frank S. Anthony, 51........ Director; Vice President, 1998 1998
General Counsel and
Corporate Secretary of the
Company since May 1984
Charles S. Bird, III, 72.... Director; Trustee of family 1962 1998
trusts
Herbert I. Corkin, 75....... Director; President, 1997 2000
Director and majority
shareholder, The Entwistle
Company, Hudson, MA;
Director, Citizen's Bank of
Rhode Island.
Antonio J. Lorusso, Jr., 50. Director; President, S.M. 1996 1999
Lorusso & Sons, Inc.
Richard C. Maloof, 52....... Director; President and 1994 1999
Chief Operating Officer of
the Company since April
1995; Vice President and
Chief Operating Officer of
the Company from April 1994
to April 1995; Vice
President of the Company and
President, Roofing and
Distribution Groups of the
Company for more than five
years prior thereto
Loren R. Watts, 63.......... Director; Retired Managing 1991 1998
Partner, Management
Consultant Services, Coopers
& Lybrand (certified public
accountants)
R. Keith Long, 50........... Director; sole shareholder, 1996 2000
Otter Creek Management,
Inc., a general partner of
Otter Creek Partners I, L.P.
</TABLE>
- --------
(1) Includes business experience during past five years.
(2) At the 1990 annual meeting, the stockholders approved a reorganization
pursuant to which the then stockholders of Bird Incorporated became
stockholders of Bird Corporation, a newly organized Massachusetts
corporation, and Bird Incorporated became a wholly owned subsidiary of
Bird Corporation. This column indicates the date as of which a person was
first elected a director of the Company or of Bird Incorporated.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the year ended December 31, 1997, the Board held seven (7) meetings.
Each of the directors attended more than seventy-five percent of the aggregate
of Board meetings and meetings of committees of the Board of which he is a
member.
The Audit Committee, which consisted during 1997 of Loren R. Watts
(Chairman), R. Keith Long, and Joseph Vecchiolla (until Mr. Vecchiolla's
resignation on December 11, 1997), meets periodically with the Company's
independent accountants to review the scope of the annual audit, to discuss
the adequacy of internal accounting controls and procedures and to perform
general oversight with respect to the accounting principles
A-3
<PAGE>
applied in the financial reporting of the Company. The Audit Committee also
meets with the Company's internal auditor and reviews the scope of the
internal audit plan and the results of audits performed thereunder. The Audit
Committee held three (3) meetings during 1997.
The function of the Stock Option, Compensation, and Organizational
Development Committee (the "Compensation Committee") is to administer the
Company's stock option plans, to recommend to the full Board the amount,
character, and method of payment of compensation of all executive officers and
certain other key employees of the Company, and to provide for organizational
development and succession planning. During 1997 the Compensation Committee
consisted of Antonio J. Lorusso (Chairman), Charles S. Bird, III, and Herbert
I. Corkin. The Compensation Committee held four (4) meetings in 1997.
The Company also has a Nominating Committee which, during 1997, consisted of
Charles S. Bird, III, Richard C. Maloof, and Joseph Vecchiolla (until Mr.
Vecchiolla's resignation on December 11, 1997). The Nominating Committee makes
recommendations to and otherwise assists the Board in connection with finding,
evaluating, and nominating directors of the Company. The Nominating Committee
held one (1) meeting during 1997.
A-4
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table lists the stockholders known to management to be the
beneficial owners of more than 5% of the outstanding Common Shares as of
December 31, 1997 (except as otherwise noted).
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF CLASS
------------------- ----------------- --------
<S> <C> <C>
The Entwistle Company................................ 548,639 shares(1) 13.2%
Bigelow Street
Hudson, MA 01749
S.M. Lorusso & Sons, Inc. ........................... 410,121 shares(2) 9.8%
Antonio J. Lorusso, Jr.
James B. Lorusso
Samuel A. Lorusso
331 West Street
Walpole, MA 02081
Mellon Bank Corporation and its Subsidiaries......... 309,000 shares(3) 7.5%
One Mellon Bank Center
Pittsburgh, PA 15258
Charles S. Bird, III................................. 315,358 shares(4) 7.5%
13 Proctor Street
Manchester, MA 01944
Dimensional Fund Advisors Inc. ...................... 218,500 shares(5) 5.3%
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
R. Keith Long........................................ 464,762 shares(6) 10.9%
Joan Greco and John Fyfe
Otter Creek Partners I L.P.
400 Royal Palm Way
Palm Beach, Florida 33480
East Ferry Investors, Inc............................ 248,400 shares(7) 6.0%
David G. Booth
15 Garden Place
Brooklyn, NY 11201
</TABLE>
- --------
(1) Based on information contained in an amended Schedule 13D filed with the
SEC on April 1, 1987. The Schedule 13D reports that The Entwistle Company
had sole voting and dispositive power with respect to all shares
beneficially owned, including 8,539 shares it had the right to acquire
upon conversion of the Company's Convertible Preference Stock, par value
$1 per share, (the "Preference Stock"). Also includes options for the
purchase of 2,500 Common Shares exercisable as of December 31, 1997 or
within 60 days thereafter or upon a change in control.
(2) Based on information contained in a Schedule 13D amended through June 6,
1996 filed with the SEC. The Schedule 13D reports that S.M. Lorusso &
Sons, Inc. ("Lorusso") had sole voting power and dispositive power with
respect to 230,121 shares. Antonio J. Lorusso, Jr., president, director
and a stockholder of Lorusso, had sole voting and dispositive power with
respect to 20,000 shares and had shared voting and
A-5
<PAGE>
dispositive power with respect to 79,500 shares and James B. Lorusso, an
officer, director, and a stockholder of Lorusso, had sole voting and
dispositive power over 1,000 shares; Samuel A. Lorusso, an officer,
director, and stockholder of Lorusso, had shared voting and dispositive
power with respect to 1,500 shares. Also includes options for the purchase
of 5,000 Common Shares exercisable as of December 31, 1997 or within 60
days thereafter or upon a change in control.
(3) Based on information contained in a Schedule 13G amended through February
10, 1997 filed with the SEC. The Schedule 13G reports that Mellon Bank
Corporation had sole voting and dispositive power with respect to 20,000
shares and, together with its subsidiaries, including Boston Safe Deposit
and Trust Company, had shared voting and dispositive power with respect to
289,000 shares, including 274,929 shares referred to in footnote (4),
below.
(4) Includes 274,929 shares held in a trust of which Boston Safe Deposit and
Trust Company and Charles S. Bird, III are co-trustees with shared voting
and dispositive power and 3,595 of Common Shares that he has a right to
acquire upon conversion of the Company's Preference Stock. Also includes
options for the purchase of 22,500 Common Shares exercisable as of
December 31, 1997 or within 60 days thereafter or upon a change in
control.
(5) Based on information contained in a Schedule 13G amended through February
12, 1997 filed with the SEC. The Schedule 13G reports that Dimensional
Fund Advisors Inc. had sole voting and dispositive power with respect to
160,400 shares and sole dispositive power with respect to an additional
58,100 shares.
(6) Based in part on information contained in a Schedule 13D amended through
June 3, 1997 filed with the SEC. The Schedule 13D was filed jointly by
Otter Creek Partners I, L.P. ("Otter Creek"), R. Keith Long and Joan Greco
and John Fyfe, joint tenants with rights of survivorship (together,
"Fyfe"). The Schedule 13D and its amendments report that Otter Creek
Management, Inc. ("OCM") is the sole general partner and investment
advisor of Otter Creek and Mr. Long is the sole executive officer, sole
director and sole shareholder of OCM. Mr. Long also managed discretionary
stock trading accounts for Fyfe. Otter Creek reported sole voting and
dispositive power with respect to 160,900 Common Shares. Fyfe reported
sole voting and dispositive power with respect to 87,300 Common Shares.
Mr. Long reported sole voting and dispositive power over 109,000 shares.
Includes an aggregate of 102,562 shares of Common Stock that Otter Creek,
Fyfe and Mr. Long have a right to acquire upon conversion of the Company's
Preference Stock. Also includes options held by Mr. Long for the purchase
of 5,000 Common Shares exercisable as of December 31, 1997 or within 60
days thereafter or upon a change in control.
(7) Based on information contained in a Schedule 13D filed with the SEC on
August 22, 1997, jointly by East Ferry Investors, Inc. ("East Ferry") and
David G. Booth. The Schedule 13D reports that Mr. Booth controls East
Ferry and is East Ferry's sole stockholder and sole executive officer. Mr.
Booth, with East Ferry, had shared voting power and shared dispositive
power with respect to 248,400 shares of Common Stock.
A-6
<PAGE>
The tables below set forth information provided by the individuals named
therein as to the amount of the Company's Common Shares, Preference Shares and
5% Cumulative Preferred Stock, par value $100 per share (the "5% Stock")
beneficially owned by the directors and executive officers of the Company,
individually, and the directors and executive officers as a group, all as of
December 31, 1997 except as otherwise noted. Unless otherwise indicated in the
footnotes, each of the named persons and members of the group has sole voting
and investment power with respect to the shares shown.
<TABLE>
<CAPTION>
COMMON
COMMON SHARES SHARES
BENEFICIALLY SUBJECT
OWNED (EXCLUDING TO STOCK PERCENT
NAME STOCK OPTIONS) OPTIONS(1) TOTAL OF CLASS
---- ---------------- ---------- --------- --------
<S> <C> <C> <C> <C>
Charles S. Bird, III............ 292,858(2) 22,500 315,358 7.5%
Herbert I. Corkin............... 546, 139(3) 2,500 548,639 13.2%
R. Keith Long................... 459,762(4) 5,000 464,762 10.9%
Antonio J. Lorusso, Jr. ........ 405,121(5) 5,000 410,121 9.8%
Loren R. Watts.................. 4,000 17,500 21,500 *
Frank S. Anthony................ 32,624(6) 34,000 66,624 1.6%
Richard C. Maloof............... 48,984(7) 155,000 203,984 4.7%
All directors and executive
officers as a group (seven
persons)....................... 1,787,488(8) 241,500 2,030,988 44.9%
</TABLE>
- --------
* Less than 1% of the outstanding Common Shares.
(1) Represents shares which the individual has a right to acquire by exercise
of stock options exercisable December 31, 1997 or within 60 days
thereafter, or which are exercisable upon a change in control.
(2) Includes 274,929 shares as to which Mr. Bird shares voting and dispositive
power and 3,595 shares which may be acquired upon conversion of Preference
Shares.
(3) The Entwistle Company has sole voting and dispositive power with respect
to all shares beneficially owned, including 8,539 shares it has the right
to acquire upon conversion of the Company's Preference Stock. Mr. Corkin
controls the Entwistle Company.
(4) Otter Creek Management, Inc. ("OCM") is the sole general partner and
investment advisor of Otter Creek Partners I L.P. ("Otter Creek"). Mr.
Long is the sole executive officer, sole director, and sole shareholder of
OCM. Mr. Long also managed discretionary stock trading accounts for Joan
Greco and John Fyfe, joint tenants with right of survivorship ("Fyfe").
Includes an aggregate of 102,562 shares of Common Stock that Otter Creek,
Mr. Long and Fyfe have a right to acquire upon conversion of the Company's
Preference Stock.
(5) S.M. Lorusso & Sons, Inc. ("Lorusso") has sole voting power and
dispositive power with respect to 230,121 shares. Antonio J. Lorusso, Jr.,
president, director and a stockholder of Lorusso, has sole voting and
dispositive power with respect to 20,000 shares and had shared voting and
dispositive power with respect to 79,500 shares and James B. Lorusso, an
officer, director, and a stockholder of Lorusso, has sole voting and
dispositive power over 1,000 shares; Samuel A. Lorusso, an officer,
director, and stockholder of Lorusso, has shared voting and dispositive
power with respect to 1,500 shares.
(6) Includes 3,048 shares allocated to Mr. Anthony's account under the Bird
Employees' Savings and Profit Sharing Plan (the "Savings Plan") as of
December 31, 1997.
(7) Includes 4,169 shares allocated to Mr. Maloof's account under the Savings
Plan as of December 31, 1997, 10,625 shares held jointly with members of
his family as to which he has shared voting and dispositive power and
2,337 shares of Common Stock which may be acquired upon conversion of the
Preference Stock.
(8) Includes 433,554 shares as to which persons included in the group have
shared voting and investment power, 118,831 shares which may be acquired
upon conversion of Preference Shares, and 7,217 shares allocated to the
accounts of officers under the Savings Plan as of December 31, 1997.
A-7
<PAGE>
<TABLE>
<CAPTION>
PREFERENCE
SHARES
BENEFICIALLY PERCENT
NAME OWNED OF CLASS
---- ------------ --------
<S> <C> <C>
Charles S. Bird, III.............................. 4,000 *
Herbert I. Corkin................................. 9,500 1.2%
Richard C. Maloof................................. 2,600 *
R. Keith Long..................................... 114,100 14.0%
A.J. Lorusso, Jr.................................. 2,000 *
All directors and executive officers as a group
(five persons)................................... 132,200 16.2%
</TABLE>
--------
* Less than 1% of the outstanding Preference Stock.
<TABLE>
<CAPTION>
SHARES OF
5% STOCK
BENEFICIALLY PERCENT
NAME OWNED OF CLASS
---- ------------ --------
<S> <C> <C>
Charles S. Bird, III.............................. 1,815 31%
All directors and executive officers as a group
(one person)..................................... 1,815 31%
</TABLE>
COMPLIANCE WITH SECTION 16(A) OF EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers and persons who hold more than 10% of the Company's Common
Shares to file with the SEC reports of ownership and changes in ownership of
the Company's equity securities. Based on reports received by the Company and
representations of certain reporting persons, the Company believes that all
filing requirements applicable to its officers, directors, and greater than
10% beneficial owners with respect to fiscal year 1997 have been met.
A-8
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation paid
or accrued for services in all capacities to the Company during each of the
last three fiscal years to each of the executive officers of the Company who
served as such during 1997. No one served as Chief Executive Officer during
1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------- ----------------------
SECURITIES
OTHER UNDERLYING ALL
ANNUAL RESTRICTED STOCK OTHER
NAME AND PRINCIPAL COMPEN- STOCK OPTIONS/SA LTIP COMPEN-
POSITION YEAR SALARY($) MCIP($) SATION($)(1) AWARDS RS(#) PAYOUTS(2) SATION($)
- ------------------ ---- --------- ------- ------------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Richard C. Maloof....... 1997 221,106 4,781 -- -- -- -- 7,843(3)
Vice President and 1996 216,154 129,844 -- -- 50,000 22,700 7,500(3)
Chief Operating
Officer(5) 1995 195,962 30,000 11,538 -- 50,000 81,938 7,500(3)
Frank S. Anthony........ 1997 142,490 2,311 -- -- -- -- 5,634(3)
Vice President and 1996 139,808 48,440 -- -- 15,000 13,617 296,682(4)
General Counsel(6) 6,864(3)
1995 135,000 12,540 -- -- -- 49,163 150,000(4)
10,545(3)
1994 135,000 30,000 22,444 -- -- 43,870 8,496(3)
</TABLE>
- --------
(1) Payment in lieu of vacation. Does not include certain perquisites and
other personal benefits, the cost of which to the Company was below the
disclosure thresholds established by the Securities and Exchange
Commission.
(2) In 1995 restrictions on all stock held in escrow pursuant to the Company's
Long Term Incentive Plan (the "LTIP") lapsed as a result of the Vinyl Sale
and shares were distributed to the persons named in the table. Represents
the value of Common Stock allocated to each officer on the date of
restriction lapse and reimbursement for withholding taxes arising from the
lapse of restrictions on restricted stock held by each officer in
accordance with provisions of the LTIP. The LTIP is terminated.
(3) Represents contributions by the Company to the Savings Plan.
(4) Represents severance payments received in connection with the change in
control which occurred pursuant to the Vinyl Sale and payment to a
separate trust established by the Company with a bank trustee to which
amounts otherwise payable to Mr. Anthony in excess of those permitted to
be contributed to the Savings Plan under limits imposed by the Internal
Revenue Code of 1986, as amended (the "Internal Revenue Code"), are
contributed.
(5) Mr. Maloof was elected Chief Operating Officer in April 1994, President in
April 1995 and to the Board of Directors in December 1994. Prior to that
time, he served as Vice President and President of the Company's Roofing
and Distribution Groups.
(6) Mr. Anthony was elected Vice President in 1984 and to the Board of
Directors in 1998.
A-9
<PAGE>
The following tables provide information concerning grants during 1997 to,
and exercises of stock options and stock appreciation rights ("SARs") during
1997 by, the executive officers named in the Summary Compensation Table above
and the value of unexercised stock options and SARs held by them at December
31, 1997.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
None
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT YEAR- IN-THE-MONEY OPTIONS/SARS
END(#) AT YEAR-END($)
------------------------- -------------------------
SHARES VALUE
ACQUIRED ON REALIZED
NAME EXERCISE(#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard C. Maloof....... 0 0 85,000 70,000 0 0
Frank S. Anthony........ 0 0 22,000 12,000 0 0
</TABLE>
- --------
(1) Based on the difference between the fair market value of the securities
underlying the options at date of exercise and the exercise price of the
options.
STOCK OPTION PLANS
Employee Stock Option Plans. The Company's executive officers currently
participate in the 1992 Option Plan. Prior to the approval of the 1992 Option
Plan by the Company's stockholders on May 27, 1993 the Company's executive
officers participated in the Company's 1982 Option Plan, which was terminated
by the Board on May 27, 1993. To the extent options or stock appreciation
rights granted under the 1982 Option Plan remain outstanding, such options and
stock appreciation rights are governed by the terms of the 1982 Option Plan.
The following is a general description of the 1992 Option Plan and the 1982
Option Plan (together, the "Plans").
The Plans permit the grant of options that qualify as incentive stock
options under Section 422 of the Internal Revenue Code, non-qualified stock
options and stock appreciation rights. Options and rights to purchase up to
450,000 Common Shares, plus any unused Common Shares under the 1982 Option
Plan, may be granted under the 1992 Option Plan. The 1982 Option Plan had
permitted the issuance of 900,000 Common Shares, as adjusted, pursuant to
options and rights granted under such plan. Any Common Shares subject to an
option or right granted under the 1992 Option Plan which expires or is
terminated without being exercised in full may again be subject to an option
or right.
The 1992 Option Plan is administered by a committee of non-employee members
of the Board (the "Committee"). Within specified guidelines, the Committee has
the authority under the 1992 Option Plan to determine the terms and conditions
under which options and rights may be granted and generally to interpret,
construe and implement the provisions of the 1992 Option Plan.
Options or rights under the 1992 Option Plan may be granted to officers and
other selected key employees of the Company and its subsidiaries and to any
other person who is determined by the Committee to contribute to the success
of the Company or any subsidiary.
The exercise price of any option granted under the Plans may not be less
than the fair market value of the Common Shares subject to the option on the
date the option is granted (or, in the case of an incentive stock option
granted to an employee who owns more than 10% of the outstanding Common
Shares, 110% of such fair market value). The maximum term of an option granted
under the 1992 Option Plan is 15 years, and the maximum term of an option
granted under the 1982 Option Plan is 10 years. Each optionee (except non-
employee director optionees under the 1982 Option Plan) must remain in the
continuous employ of the Company for one year after the date of grant of an
option under the Plans before exercising any part of the option.
A-10
<PAGE>
The Merger Agreement provides that immediately following the Effective Date,
the 1992 Option Plan will be terminated and that no further rights or options
may be granted under the 1992 Option Plan subsequent to the date of the Merger
Agreement.
Non-Employee Directors Option Plan. The Non-Employee Directors Option Plan
was approved by the Company's stockholders on May 27, 1993. The following is a
general description of the Non-Employee Directors Option Plan.
Options granted under the Non-Employee Directors Option Plan are non-
statutory options not intended to qualify under Section 422 of the Internal
Revenue Code. An aggregate of 100,000 Common Shares are available for grants
under the Non-Employee Directors Option Plan. Common Shares subject to options
which terminate unexercised will be available for future option grants.
The Non-Employee Directors Option Plan automatically provides annual grants
of options to each Director who is serving on the Board at the time of such
grant and who is not also an employee of the Company or any subsidiary. The
exercise price of options granted under the Non-Employee Directors Option Plan
are equal to the fair market value of Common Shares subject thereto on the
date of grant. Options are exercisable in full one year after the date of
grant.
The Merger Agreement provides that immediately following the Effective Date,
the Non-Employee Directors Option Plan will be terminated and that no further
options may be granted thereunder subsequent to the date of the Merger
Agreement.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
Employment Contracts
Mr. Anthony entered into a one-year employment contract with the Company,
commencing April 1, 1995, at the same annual rate of compensation ($135,000
plus a bonus of 35% of such amount if MICP targets are obtained) and with the
same fringe benefit package (participation in the Company's Savings Plan and
customary health insurance and life insurance benefits) as he received prior
to the Vinyl Sale. As a result of the "change in control" which was deemed to
have occurred as a result of the Vinyl Sale, Mr. Anthony became entitled to
severance benefits. Pursuant to the terms of his employment contract, Mr.
Anthony received $150,000 as a partial severance payment and agreed to defer
the payment of the balance thereof until the expiration of his employment
contract. Pursuant to the terms of his contract, the balance of Mr. Anthony's
severance payment, approximately $315,000, was paid on March 31, 1996.
On April 1, 1996 Mr. Anthony's employment contract automatically converted
to an oral employment agreement on the same terms, terminable by either party
upon 60 days' notice.
Termination of Employment and Change in Control Arrangements
The Company's 1982 Option Plan, 1992 Option Plan and 1992 Non-Employee
Directors Option Plan provide for accelerated benefits, and the Executive
Severance Contract (as defined below) provides for severance payments,
following the occurrence of a "change in control" of the Company. For purposes
of these plans and such contract, a "change in control" is deemed to have
occurred if, among other things, any person is or becomes the beneficial owner
of securities of the Company representing 30% or more of the combined voting
power of the securities of the Company then outstanding or in the event of a
merger or consolidation of the Company with another corporation resulting in
either (i) the stockholders of the Company, immediately prior to the merger or
consolidation, not beneficially owning, immediately after the merger or
consolidation, shares of the surviving entity representing 50% or more of the
combined voting power of the securities of the surviving entity then
outstanding or (ii) the members of the Board, immediately prior to the merger
or consolidation, not constituting, immediately after the merger or
consolidation, a majority of the Board of Directors of the surviving entity.
A-11
<PAGE>
Executive Severance Contract.
The Company has entered into a severance agreement with Richard C. Maloof,
the Company's President and Chief Operating Officer, dated as of October 14,
1984, as amended, April 1, 1986, May 24, 1990 and August 21, 1995, February
17, 1997, and January 12, 1998 (as so amended, the "Executive Severance
Contract") the terms of which provide for severance benefits to be paid to Mr.
Maloof in the event that his employment with the Company is terminated
subsequent to a "change in control" of the Company. Severance benefits are
payable if, after a "change in control," (i) the employment of Mr. Maloof is
terminated either by the Company (other than for "Disability" or "Cause") or
by Mr. Maloof for "Good Reason" (which term includes, but is not limited to a
substantial alteration in the nature of Mr. Maloof's responsibilities from
those in effect immediately prior to a "change in control") or (ii) Mr. Maloof
negotiates in good faith an employment agreement with a person to whom
substantially all of the Company's Common Shares are sold providing for his
employment commencing on the date of sale on such terms and conditions not
less generous than those on which he is then employed by the Company
(regardless of whether or not any such employment agreement is ever executed).
The Company has acknowledged that a "Change in Control" occurred under the
Executive Severance Contract as a result of the Vinyl Sale.
If the right to receive severance benefits is triggered under the Executive
Severance Contract, Mr. Maloof will be entitled to receive severance pay in
the amount of two times the sum of (i) Mr. Maloof's then current annual base
salary and (ii) the amount of any bonus paid (which for severance purposes,
includes any distributions made under the terms of the LTIP in 1995 and 1996
and bonuses awarded to Mr. Maloof by the Compensation Committee). Mr. Maloof
would also receive an amount equal to a pro rata portion of all contingent
bonus awards to which Mr. Maloof might be entitled in the year of termination.
Under no circumstances shall the amount be less than what Mr. Maloof would
have received had the calculation been made in 1996. The Company estimates
that if the right to receive severance benefits under the Executive Severance
Contract is triggered, Mr. Maloof would be entitled to receive approximately
$870,000, including the approximately $135,000 Mr. Maloof will receive
pursuant to the Incentive Compensation Program (discussed below).
Incentive Compensation Program
In the event that the Offer is consummated, Mr. Maloof will receive a bonus
of approximately $135,000 and Mr. Anthony will receive a bonus of
approximately $50,000 pursuant to the 1998 MICP Plan.
Stock Option Plans and Non-Employee Directors Option Plan.
Under the Plans, the vesting of all options to purchase Common Shares
outstanding but not yet exercisable will be accelerated upon a "change in
control." Each optionee will have, for a period of thirty (30) days after the
change in control occurs, the right (the "Cash-Out Right"), with respect to
all or a part of the shares subject to the options or stock appreciation
rights of such person, to receive an amount in cash in lieu of such optionee's
right to exercise all options in full, equal to the product of (i) the number
of shares as to which the employee exercises the Cash-Out Right and (ii) the
amount by which the purchase price of each such share under the applicable
option or stock appreciation right is exceeded by the greater of (x) the fair
market value of such shares on the date the employee exercises the Cash-Out
Right or (y) the highest purchase price paid or offered per share in any bona
fide transaction related to the "change in control" of the Company at any time
during the preceding 60-day period (as determined by the Compensation
Committee of the Board). In addition, if the employment of any employee
terminates after the expiration of the applicable waiting period for the
exercise of an option or right granted to such employee under the Plans, such
employee may for up to three months after the date of termination (or for up
to one year if termination is on account of long-term disability) exercise
such option or right. The Plans provide for a similar one-year period to
exercise options or rights subsequent to the death of an employee occurring
while in the employ of the Company or of any subsidiary or within any period
after termination of employment during which such employee has the right to
exercise such options or rights.
A-12
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For the fiscal year ended December 31, 1997, the Company paid fees and
disbursements in the amount of $1,707,393 to S. M. Lorusso & Sons, Inc., the
company that operates the Company's quarry located in Wrentham, Massachusetts.
Mr. Antonio J. Lorusso, Jr., is president, director, and a stockholder of S.
M. Lorusso & Sons, Inc. As of January 1, 1998, Mr. Lorusso is a member of a
group that is the beneficial owner of 9.8% of the Company's Common Stock.
LEGAL MATTERS
On or about April 18, 1996, Bird Incorporated, a subsidiary of the Company,
received a grand jury subpoena issued upon application of the United States
Department of Justice, Antitrust Division, for the production of certain
documents. In addition, Mr. Maloof and a senior manager of the Company
received grand jury subpoenas requiring the production of certain documents
and each of them to testify before the grand jury. The Department of Justice
informed the Company on October 8, 1996 that the investigation was closed on
September 27, 1996, without taking any action.
DIRECTORS' COMPENSATION
Mr. Vecchiolla received compensation from April 1, 1995 at the rate of
$100,000 per year for serving as Chairman of the Board and of the Executive
Committee. His compensation was voluntarily reduced to an annual rate of
$60,000 on January 1, 1996. On May 1, 1996, the Board reinstated his salary at
$100,000 per year. On May 23, 1996, Mr. Vecchiolla was granted a non-qualified
option to purchase up to 50,000 shares of Common Stock at an excise price of
$4.375. Mr. Vecchiolla's salary was reduced to $36,000 per year, starting June
1, 1997. Mr. Vecchiolla resigned as a Director on December 11, 1997, and all
payments to him as Director ceased as of December 31, 1997. During 1997, other
non-employee members of the Board received an annual retainer of $7,000, a fee
of $750 for each Board meeting attended ($375 for a telephonic Board meeting)
and a fee of $750 for each committee meeting attended ($375 for a telephonic
committee meeting). The chairmen of the Audit and Compensation Committees
received an annual retainer of $1,000. Expenses incurred in attending meetings
are reimbursed.
Effective October 1, 1997, Directors are paid an annual retainer of $7,000.
They no longer receive compensation for attending Board and Committee meetings
nor does the Chairman of the Compensation Committee or the Audit Committee
receive any additional fee.
Pursuant to the Non-Employee Directors Option Plan, non-employee directors
are also entitled to receive each year a non-qualified stock option to acquire
2,500 shares of the Company's Common Stock (provided that the maximum number
of shares subject to options granted to any director may not exceed 30,000
shares). Such options are granted on the date of the annual meeting each year
and become exercisable in full one year later. During 1997, each non-employee
director was granted such an option to purchase 2,500 Common Shares at an
exercise price of $4.50 per share.
A-13
<PAGE>
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for compensation decisions with
respect to senior management of the Company, as well as for organizational
development and succession planning within the Company.
The Compensation Committee's compensation philosophy and policies applicable
to executive officers emphasize pay for performance and increased stockholder
value within a framework of compensation levels comparable to companies of
similar size. Base salary, annual MICP awards, and long-term incentive awards
are structured to provide total compensation levels for executive officers
that are intended to be below competitive compensation amounts when operating
results are at or below acceptable levels and above average levels when
results are outstanding or other targets or personal goals are achieved. The
Compensation Committee has used outside consulting assistance for plan design
and consultant and independent survey data in setting compensation levels and
has relied, in the case of officers other than the Chief Executive Officer, on
recommendations of the Chief Executive Officer which are reviewed and modified
where appropriate by the Committee.
In recent years, long-term awards have primarily taken the form of stock
option grants, which are designed to align the interests of executives with
those of the stockholders and reward executives when stockholder value
increases. Stock options are granted at an exercise price equal to the market
price of the Company's Common Stock on the date of grant.
Salaries for the Chief Executive Officer and other executive officers are
based in part upon a range of salaries for each office developed from a survey
of compensation practices at competitive companies. During 1997, Mr. Maloof's
base salary was decreased from $225,000 annually to $208,125 annually and Mr.
Anthony's base salary was decreased from $145,000 annually to $134,125
annually. In December 1997, Messrs. Maloof's and Anthony's base salaries were
reinstated at $225,000 and $145,000, respectively.
One of the principal elements of variable compensation for senior executive
officers is found in the annual MICP awards. In 1997, the possible pay out for
1997 was set at 60% of base salary in the case of the President, 35% of base
salary in the case of the Vice President, and between 20% and 30% of base
salary in the case of other members of the corporate staff and other key
members of the Company. In 1997, awards to management were tied to achievement
of goals with respect to increased cash flow and profitability on an equal
50/50 basis.
The Committee believes that the combination of salary and bonus rewards was
appropriate based upon the task imposed upon management to simultaneously
operate the business in a very competitive environment and to entertain
prospective merger proposals.
Based on current compensation levels and the present structure of the
Company's executive compensation programs, the Committee believes that the
compensation payable to executives will not be subject to the limitation on
deductibility imposed by the Omnibus Budget Reconciliation Act of 1993. If
such limitation should become applicable in the future, the Committee and the
Company will determine whether any changes in the Company's compensation
programs are advisable.
Stock Option, Compensation,
andOrganizational
DevelopmentCommittee:
Herbert I. Corkin
Charles S. Bird, III
Antonio J. Lorusso, Jr., Chairman
A-14
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total return on the Common Stock
of the Company for the last five fiscal years with the cumulative total returns
of the Russell 2000 index and the Value Line Building Materials Industry Index,
assuming an investment of $100 in the Company's Common Stock and each index at
the close of trading on December 31, 1992 and the reinvestment of all
dividends. The total stockholder return data for the Russell 2000 Index and the
Value Line Building Materials Index is provided by Value Line Institutional
Services.
CHART
BIRD CORPORATION
Total Cumulative Shareholder Return for
Five-Year Period Ending December 31, 1997
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
December 31... 1992 1993 1994 1995 1996 1997
- ----------------------------------------------------------------------------------------
Bird Corporation 100.00 73.97 75.63 40.85 45.82 35.33
- ----------------------------------------------------------------------------------------
Russell 2000 100.00 118.91 116.55 149.70 174.30 213.00
- ----------------------------------------------------------------------------------------
VL Building Materials 100.00 129.20 96.42 134.25 150.44 178.86
- ----------------------------------------------------------------------------------------
</TABLE>
A-15
<PAGE>
EXHIBIT (A) (4)
LEHMAN BROTHERS
January 12, 1998
Bird Corporation
1077 Pleasant Street
Norwood, MA 02062
Members of the Board:
We understand that Bird Corporation ("Bird" or the "Company") proposes to
enter into a merger agreement with CertainTeed Corporation ("CertainTeed")
pursuant to which CertainTeed will acquire all of the capital stock of the
Company for aggregate consideration of $39.8 million in cash and assumption of
the Company's outstanding indebtedness, which as of September 30, 1997, was
approximately $3.5 million (the "Proposed Transaction"). The terms and
conditions of the Proposed Transaction are set forth in more detail in the
draft merger agreement dated January 9, 1998 among Bird, CertainTeed and BI
Expansion II Corp. (the "Agreement").
We have been requested by the Board of Directors of the Company to render
our opinion with respect to the fairness, from a financial point of view, to
the Company's stockholders of the consideration to be paid by CertainTeed in
the Proposed Transaction. Our opinion does not in any manner address: (i) the
Company's underlying business decision to proceed with or effect the Proposed
Transaction or (ii) consideration to be received by any class of stockholders
of the Company.
In arriving at our opinion, we reviewed and analyzed: (1) the Agreement and
the specific terms of the Proposed Transaction, (2) publicly available
information concerning the Company that we believe to be relevant to our
analysis, (3) financial and operating information with respect to the
business, operations and prospects of the Company furnished to us by the
Company (including without limitation the Company's recent financial results
in comparison to original budget), (4) a trading history of the Company's
capital stock from January 1995 to the present and a comparison of that
trading history with those of other companies that we deemed relevant, (5) a
comparison of the historical financial results and present financial condition
of the Company with those of other companies that we deemed relevant, and (6)
a comparison of the financial terms of the Proposed Transaction with the
financial terms of certain other transactions that we deemed relevant. In
addition, we have had discussions with management of the Company concerning
indications of interest received from, and discussions with, potential
strategic buyers of the Company with respect to an acquisition of the Company.
We also have had discussions with the management of the Company concerning its
business, operations, assets, financial condition and prospects and the
current competitive environment in its industry, and have undertaken such
other studies, analyses and investigations as we deemed appropriate.
In arriving at our opinion, we have assumed and relied upon the accuracy and
completeness of the financial and other information used by us without
assuming any responsibility for independent verification of such information
and have further relied upon the assurances of management of the Company that
they are not aware of any facts or circumstances that would make such
information inaccurate or misleading. With respect to the financial
projections of the Company, upon advice of the Company we have assumed that
such projections have been reasonably prepared on a basis reflecting the best
currently available estimates and judgments of the management of the Company
as to the future financial performance of the Company and we have relied upon
such projections in arriving at our opinion. In arriving at our opinion, we
have conducted only a limited physical inspection of the properties and
facilities of the Company and have not made or obtained any evaluations or
appraisals of the assets or liabilities of the Company. In addition, you have
not authorized us to solicit, and we have not solicited, any proposals from
any third party with respect to the purchase of all or a part of the Company's
business. Our opinion necessarily is based upon market, economic and other
conditions as they exist on, and can be evaluated as of, the date of this
letter.
<PAGE>
Based upon and subject to the foregoing, we are of the opinion as of the
date hereof that, from a financial point of view, the consideration to be paid
by CertainTeed in the Proposed Transaction is fair to the stockholders of the
Company.
We have acted as financial advisor to the Company in connection with the
Proposed Transaction and will receive a fee for the delivery of this opinion.
In addition, the Company has agreed to indemnify us for certain liabilities
that may arise out of the rendering of this opinion.
This opinion is for the use and benefit of the Board of Directors of the
Company and is rendered to the Board of Directors in connection with its
consideration of the Proposed Transaction. This opinion is not intended to be
and does not constitute a recommendation to any stockholder of the Company as
to whether to accept the consideration to be offered to such stockholder in
connection with the Proposed Transaction.
Very truly yours,
LEHMAN BROTHERS
<PAGE>
EXHIBIT (a) (5)
[Letterhead of Bird Corporation]
NEWS RELEASE
BIRD CORPORATION CERTAINTEED CORPORATION
1077 PLEASANT STREET 750 EAST SWEDESFORD ROAD
NORWOOD, MA 02062-6714 VALLEY FORGE, PA 19482
CONTACT: R. C. MALOOF CONTACT: DOROTHY C.
F. S. ANTHONY WACKERMAN
PHONE: (203) 651-0656 PHONE: (610) 341-7428
FOR IMMEDIATE RELEASE:
BIRD CORPORATION AGREES TO BE ACQUIRED
BY CERTAINTEED CORPORATION,
A SUBSIDIARY OF COMPAGNIE DE SAINT-GOBAIN
CASH TENDER OFFER TO BE FOLLOWED BY MERGER
January 13, 1998--Norwood, MA--Bird Corporation (NASDAQ:BIRD)--The Board of
Directors of Bird Corporation and CertainTeed Corporation, a subsidiary of
Compagnie de Saint-Gobain (Paris, France), today jointly announced the signing
of a definitive agreement providing for CertainTeed to acquire all of Bird's
outstanding common, preferred and preference shares in a two-step merger
transaction. The first step will be an all cash tender offer to purchase all
outstanding shares of Bird's common stock for $5.50 per share and Bird's $1.85
cumulative convertible preference stock for $20 per share (which amount shall
not be adjusted for any accrued and unpaid dividends thereon as of the
expiration of the offer). In anticipation of the cash tender offer, Bird will
not declare or pay any dividend on the preference stock on February 15, 1998,
the next scheduled dividend payment date. The directors of Bird have agreed to
tender their shares of common stock and preference stock to CertainTeed. Such
shares represent approximately 40% of the common stock and 15% of the preference
stock outstanding. As of December 31, 1997, there were approximately 4.2
million shares of Bird common stock outstanding and approximately 814,000 shares
of Bird preference stock outstanding.
The cash tender offer will commence by Tuesday, January 20, 1998 and will be
scheduled to expire 20 business days later. Although the offer is subject to
certain regulatory approvals and other customary conditions, it is expected to
be completed in the middle of February 1998. The transaction is not subject to
financing. Bird's Board of Directors has received a fairness opinion from
Lehman Brothers, its investment banker, regarding the acquisition by
CertainTeed.
<PAGE>
2
The second step of the transaction will be a merger of a subsidiary of
CertainTeed into Bird. As a result, CertainTeed will acquire all shares of
common stock not purchased in the offer for $5.50 per share and all outstanding
$1.85 cumulative convertible preference stock not purchased in the offer for $20
per share (which amount shall not be adjusted for any accrued and unpaid
dividends thereon as of the effective date of the merger). In addition, after
the merger CertainTeed will redeem at its liquidation preference all outstanding
shares of 5% cumulative preferred stock for $110.00 per share. The redemption
of the preferred stock will include any previously accrued but unpaid dividends.
In anticipation of such redemption, Bird will not declare or pay any dividend on
the cumulative preferred stock on March 1, 1998, the next scheduled dividend
payment date. Assuming consummation of the offer, the merger is anticipated to
be completed early in the second quarter following distribution of proxy
materials to Bird's shareholders and approval at a special meeting. The total
consideration for the transaction is approximately $40 million, including common
and preferred equity but excluding assumed indebtedness.
Commenting on today's announcement, Richard C. Maloof, Bird's President, stated
that, "Bird has enjoyed a rich and innovative history since its founding over
200 years ago. However, it became apparent that greater progress could be made
if Bird became part of a larger, financially strong organization with similar
goals and philosophies. The agreement reached with CertainTeed is the
culmination of negotiations with prospective candidates and meets our criteria.
There is an excellent fit between our organizations, as we are both producers of
high quality asphalt roofing products. Integrating Bird's resources with
CertainTeed will strengthen our core manufacturing operations.
Bird Corporation, founded in 1795, is primarily a manufacturer of asphalt
shingles and roll-roofing goods with annual sales of more than $50 million.
CertainTeed Corporation, headquartered in Valley Forge, Pennsylvania, is a
leading producer of fiber glass products (insulation and reinforcements) and
building materials (roofing, ventilation products, vinyl siding and windows,
vinyl fence and railing and piping products).
<PAGE>
EXHIBIT (a) (6)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
AND
ALL OUTSTANDING SHARES OF $1.85 CUMULATIVE CONVERTIBLE PREFERENCE STOCK
OF
BIRD CORPORATION
AT
$5.50 NET PER SHARE OF COMMON STOCK
AND
$20 (WHICH AMOUNT SHALL NOT BE ADJUSTED FOR ANY DIVIDENDS ACCRUED AND UNPAID
THROUGH THE EXPIRATION DATE) NET PER SHARE OF $1.85 CUMULATIVE CONVERTIBLE
PREFERENCE STOCK
BY
BI EXPANSION II CORP.
A Wholly Owned Subsidiary of
CERTAINTEED CORPORATION
An Indirect Wholly Owned Subsidiary of
COMPAGNIE DE SAINT-GOBAIN
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, FEBRUARY 13, 1998 UNLESS THE
OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated January 16,
1998 (the "Offer to Purchase"), and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute
the "Offer") relating to the offer by BI Expansion II Corp., a Massachusetts
corporation (the "Purchaser") and a wholly owned subsidiary of CertainTeed
Corporation, a Delaware corporation ("CertainTeed") which is an indirect
wholly owned subsidiary of Compagnie de Saint-Gobain, a French corporation
("Saint-Gobain"), to purchase for cash all outstanding shares of Common Stock,
par value $1.00 per share (the "Common Shares"), of Bird Corporation, a
Massachusetts corporation (the "Company"), and all outstanding shares of $1.85
Cumulative Convertible Preference Stock, par value $1.00 per share (the
"Preference Shares"), of the Company, upon the terms and subject to the
conditions set forth in the Offer. The Common Shares and the Preference Shares
are collectively referred to as "Shares". Also enclosed is the Letter to
Stockholders of the Company from the President of the Company accompanied by
the Company's Solicitation/Recommendation Statement on Schedule 14D-9.
WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER
OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO
YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
We request instructions as to whether you wish to tender any of or all the
Shares held by us for your account pursuant to the terms and conditions set
forth in the Offer.
<PAGE>
Your attention is directed to the following:
1. The offer price is $5.50 per Common Share and $20, which amount shall
not be adjusted for any dividends accrued and unpaid through the Expiration
Date (as defined below), per Preference Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions of
the Offer.
2. The Offer is being made for all outstanding Common Shares and
Preference Shares.
3. The Board of Directors of the Company has unanimously approved the
Offer and the Merger (as defined below) and determined that the terms of
the Offer and the Merger are fair to, and in the best interests of, the
stockholders of the Company and unanimously recommends that the
stockholders of the Company accept the Offer and tender their Common Shares
and Preference Shares.
4. The Offer is being made pursuant to the Agreement and Plan of Merger
dated as of January 12, 1998 (the "Merger Agreement"), among CertainTeed,
the Purchaser and the Company pursuant to which, following the consummation
of the Offer and the satisfaction or waiver of certain conditions, the
Purchaser will be merged with and into the Company, with the Company
surviving the merger as a wholly owned subsidiary of CertainTeed (the
"Merger"). In the Merger, each outstanding Share (other than Shares held by
stockholders who perfect their appraisal rights under Massachusetts law,
Shares held in the Company's treasury and Shares held directly by the
Purchaser or CertainTeed) will be converted into the right to receive in
the case of Common Shares $5.50 per Common Share and in the case of
Preference Shares $20, which amount shall not be adjusted for any dividends
accrued and unpaid through the effective date of the Merger, per Preference
Share, in each case net to the seller in cash, without interest thereon, as
set forth in the Merger Agreement and described in the Offer to Purchase.
5. THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, FEBRUARY 13, 1998 (THE "EXPIRATION DATE"), UNLESS THE
OFFER IS EXTENDED BY THE PURCHASER, IN WHICH EVENT THE TERM "EXPIRATION
DATE" SHALL MEAN THE LATEST TIME AT WHICH THE OFFER, AS SO EXTENDED BY THE
PURCHASER, WILL EXPIRE.
6. The Offer is conditioned upon, among other things, (1) there being
validly tendered and not withdrawn prior to the Expiration Date such number
of Common Shares that would constitute at least 66 2/3% of all outstanding
Common Shares (determined on a fully diluted basis), (2) there being
validly tendered and not withdrawn prior to the Expiration Date such number
of Preference Shares that would constitute at least 66 2/3% of all
outstanding Preference Shares, (3) any waiting period under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended, and the regulations
thereunder applicable to the purchase of Shares pursuant to the Offer
having expired or been terminated and (4) all consents, approvals, orders
or authorizations of, or registrations, declarations or filings with any
governmental authority required or necessary in connection with the Offer,
the Merger and the Merger Agreement and the transactions contemplated by
the Merger Agreement having been obtained and being in full force and
effect.
7. Any stock transfer taxes applicable to a sale of Shares to the
Purchaser will be borne by the Purchaser, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
Your instructions to us should be forwarded promptly to permit us to submit
a tender on your behalf prior to the Expiration Date.
If you wish to have us tender any of or all the Shares held by us for your
account, please so instruct us by completing, executing, detaching and
returning to us the instruction form on the detachable part hereof. An
envelope to return your instructions to us is enclosed. If you authorize the
tender of your Shares, all such Shares will be tendered unless otherwise
specified on the detachable part hereof. Your instructions should be forwarded
to us in ample time to permit us to submit a tender on your behalf prior to
the Expiration Date.
Payment for Shares accepted for payment pursuant to the Offer will in all
cases be made only after timely receipt by ChaseMellon Shareholder Services,
L.L.C. (the "Depositary") of (a) certificates for (or a timely Book-Entry
Confirmation (as defined in the Offer to Purchase) with respect to) such
Shares, (b) a Letter of Transmittal (or fax thereof), properly completed and
duly executed, with any required signature guarantees, or,
2
<PAGE>
in the case of a book-entry transfer effected pursuant to the procedure set
forth in Section 2 of the Offer to Purchase, an Agent's Message, and (c) any
other documents required by the Letter of Transmittal. Accordingly, tendering
stockholders may be paid at different times depending upon when certificates
for Shares or Book-Entry Confirmations with respect to Shares are actually
received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON
THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS OF
ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
The Offer is not being made to, nor will tenders be accepted from, or on
behalf of, holders of Shares in any jurisdiction in which the making or
acceptance of the Offer would not be in compliance with the laws of such
jurisdiction. None of the Purchaser, CertainTeed or Saint-Gobain is aware of
any jurisdiction in which the making of the Offer or the acceptance thereof
would not be in compliance with the laws of such jurisdiction. To the extent
the Purchaser, CertainTeed or Saint-Gobain becomes aware of any state law that
would limit the class of offerees in the Offer, the Purchaser will amend the
Offer and, depending on the timing of such amendment, if any, will extend the
Offer to provide adequate dissemination of such information to holders of
Shares prior to the expiration of the Offer. In any jurisdiction where the
securities, blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer is being made on behalf of the Purchaser by
McFarland Dewey Securities Co., L.P., the Dealer Manager for the Offer, or one
or more registered brokers or dealers that are licensed under the laws of such
jurisdiction.
3
<PAGE>
INSTRUCTIONS WITH RESPECT TO
THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
AND
ALL OUTSTANDING SHARES OF $1.85 CUMULATIVE CONVERTIBLE PREFERENCE STOCK
OF
BIRD CORPORATION
The undersigned acknowledge(s) receipt of your letter, the Offer to Purchase
of BI Expansion II Corp. dated January 16, 1998 (the "Offer to Purchase"), and
the related Letter of Transmittal relating to shares of Common Stock, par
value $1 per share (the "Common Shares"), and $1.85 Cumulative Convertible
Preference Stock, par value $1 per share (the "Preference Shares"), of Bird
Corporation, a Massachusetts corporation. The Common Shares and the Preference
Shares are collectively referred to as the "Shares".
This will instruct you to tender the number of Shares indicated below held
by you for the account of the undersigned, on the terms and subject to the
conditions set forth in the Offer to Purchase and related Letter of
Transmittal.
Number of Shares to be Tendered:* SIGN HERE
_____________________ Common Shares _____________________________________
_________________ Preference Shares _____________________________________
SIGNATURE(S)
_____________________________________
Daytime Area Code and Tel. No. ______ _____________________________________
(PLEASE PRINT NAME(S) AND
Taxpayer Identification No. or ADDRESS(ES))
Social Security No. _________________
- --------
Dated: _______________________ , 1998
* Unless otherwise indicated, it will be assumed that all your Shares are to
be tendered.
4
<PAGE>
EXHIBIT (c) (1)
EXECUTION COPY
================================================================================
AGREEMENT AND PLAN OF MERGER
by and among
CERTAINTEED CORPORATION,
BI EXPANSION II CORP.
and
BIRD CORPORATION
Dated as of January 12, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
The Offer and the Merger
------------------------
SECTION 1.01. The Offer................................... 1
SECTION 1.02. Company Actions............................. 3
SECTION 1.03. Surviving Corporation....................... 4
SECTION 1.04. Articles of Organization.................... 5
SECTION 1.05. By-Laws..................................... 5
SECTION 1.06. Directors................................... 5
SECTION 1.07. Officers.................................... 5
SECTION 1.08. Effective Date.............................. 5
SECTION 1.09. Additional Actions.......................... 5
SECTION 1.10. Company Common Stock, Preferred Stock and
Preference Stock............................ 6
SECTION 1.11. Conversion of Acquisition Sub Common Stock.. 7
SECTION 1.12. Dissenting Shares........................... 7
SECTION 1.13. Surrender of Shares......................... 8
SECTION 1.14. Certain Benefit Plans....................... 9
ARTICLE II
Representations and Warranties of the Company
---------------------------------------------
SECTION 2.01. Corporate Organization..................... 10
SECTION 2.02. Capitalization of the Company.............. 11
SECTION 2.03. Subsidiaries............................... 12
SECTION 2.04. Authorization.............................. 12
SECTION 2.05. Absence of Conflicts; Consents............. 13
SECTION 2.06. Compliance with Laws....................... 14
SECTION 2.07. Financial Statements....................... 15
SECTION 2.08. Absence of Material Changes................ 16
SECTION 2.09. Litigation................................. 16
SECTION 2.10. Patents and Trademarks..................... 17
SECTION 2.11. Material Contracts; Permits................ 17
<PAGE>
Contents, p. 2
Page
----
SECTION 2.12. Title to Properties and Related Matters.. 19
SECTION 2.13. Taxes.................................... 20
SECTION 2.14. Labor Agreements......................... 24
SECTION 2.15. Benefit Plans............................ 24
SECTION 2.16. Labor Disputes; Unfair Labor Practices... 28
SECTION 2.17. Product Warranties....................... 28
SECTION 2.18. Environmental Matters.................... 29
SECTION 2.19. Insurance................................ 31
SECTION 2.20. SEC Filings.............................. 31
SECTION 2.21. Brokers and Finders...................... 32
SECTION 2.22. Antitakeover............................. 32
SECTION 2.23. Opinion of Financial Advisor............. 32
SECTION 2.24. Asbestos Claims.......................... 32
SECTION 2.25. Revolving Credit and Security Agreement.. 33
ARTICLE III
Representations and Warranties of Parent
----------------------------------------
SECTION 3.01. Corporate Organization................... 33
SECTION 3.02. Authorization............................ 33
SECTION 3.03. Absence of Conflicts; Consents........... 34
SECTION 3.04. Litigation............................... 35
SECTION 3.05. Brokers and Finders...................... 35
ARTICLE IV
Representations and Warranties of Acquisition Sub
-------------------------------------------------
SECTION 4.01. Corporate Organization................... 35
SECTION 4.02. Authorization............................ 35
SECTION 4.03. Absence of Conflicts; Consents........... 36
SECTION 4.04. Litigation............................... 37
SECTION 4.05. Capitalization........................... 37
SECTION 4.06. Brokers and Finders...................... 37
<PAGE>
Contents, p.3
Page
----
ARTICLE V
Covenants
---------
SECTION 5.01. Access and Information................................... 37
SECTION 5.02. Proxy Statement.......................................... 38
SECTION 5.03. Stockholders' Meeting.................................... 39
SECTION 5.04. Supplemental Information................................. 39
SECTION 5.05. Further Assurances....................................... 39
SECTION 5.06. Conduct of Company Business Prior to the Effective Date.. 39
SECTION 5.07. Consents................................................. 42
SECTION 5.08. Filings.................................................. 43
SECTION 5.09. Filing of Articles of Merger............................. 43
SECTION 5.10. Interim Financial Statements............................. 43
SECTION 5.11. Public Announcements..................................... 44
SECTION 5.12. No Solicitation.......................................... 44
SECTION 5.13. Validity of Representations.............................. 46
SECTION 5.14. Employees; Benefits...................................... 46
SECTION 5.15. Indemnification and Insurance............................ 46
SECTION 5.16. Redemption of 5% Stock................................... 48
SECTION 5.17. Material Contracts....................................... 48
SECTION 5.18. Tax Matters.............................................. 48
SECTION 5.19. Dividend Payments........................................ 48
SECTION 5.20. Satisfaction of Conditions............................... 48
SECTION 5.21. Directors................................................ 49
ARTICLE VI
Conditions to the Obligations of Parent
---------------------------------------
and Acquisition Sub
-------------------
SECTION 6.01. Representations and Warranties True...................... 50
SECTION 6.02. Company's Performance.................................... 50
SECTION 6.03. Authorization of Merger.................................. 50
SECTION 6.04. Absence of Litigation.................................... 51
SECTION 6.05. Directors................................................ 51
SECTION 6.06. Dissenting Shares........................................ 51
SECTION 6.07. Options.................................................. 52
SECTION 6.08. Certificates............................................. 52
<PAGE>
Contents, p.4
Page
ARTICLE VII ----
Conditions to the Obligations of the Company
--------------------------------------------
SECTION 7.01. Representations and Warranties True..................... 52
SECTION 7.02. Parent's and Acquisition Sub's Performance.............. 52
SECTION 7.03. Authorization of Merger................................. 52
SECTION 7.04. Absence of Litigation................................... 53
SECTION 7.05. Certificates............................................ 53
ARTICLE VIII
Closing
-------
SECTION 8.01. Time and Place.......................................... 53
SECTION 8.02. Deliveries at the Closing............................... 54
ARTICLE IX
Termination and Abandonment of the Merger
-----------------------------------------
SECTION 9.01. Termination............................................. 54
SECTION 9.02. Effect of Termination................................... 56
SECTION 9.03. Procedure for Termination and Amendment................. 56
ARTICLE X
Miscellaneous
-------------
SECTION 10.01. Expenses; Alternate Transaction Fee..................... 57
SECTION 10.02. Non-Survival of Representations and Warranties.......... 58
SECTION 10.03. Headings................................................ 59
SECTION 10.04. Notices................................................. 59
SECTION 10.05. Assignment.............................................. 60
SECTION 10.06. Complete Agreement...................................... 60
SECTION 10.07. Amendments and Waivers.................................. 60
<PAGE>
Contents, p.5
Page
----
SECTION 10.08. Counterparts.................................... 61
SECTION 10.09. Governing Law................................... 61
SECTION 10.10. Accounting Terms................................ 61
SECTION 10.11. Parties......................................... 61
Exhibits
- --------
EXHIBIT A Conditions to the Offer
EXHIBIT B Articles of Merger
Schedules
- ---------
SCHEDULE 2.01 Foreign Jurisdictions
SCHEDULE 2.02 Capitalization
SCHEDULE 2.03 Subsidiaries
SCHEDULE 2.05 Conflicts, Consents, Approvals and Authorizations
SCHEDULE 2.07 Company Financial Statements
SCHEDULE 2.08 Absence of Material Changes
SCHEDULE 2.09 Litigation
SCHEDULE 2.10 Patents and Trademarks
SCHEDULE 2.11 Material Contracts
SCHEDULE 2.12 Real Property
SCHEDULE 2.13 Taxes
SCHEDULE 2.14 Labor Agreements
SCHEDULE 2.15 Benefit Plans
SCHEDULE 2.17 Product Warranties
SCHEDULE 2.18 Environmental Matters
SCHEDULE 2.19 Insurance
SCHEDULE 2.20 SEC Filings
SCHEDULE 5.06 Conduct of Business
<PAGE>
INDEX OF DEFINITIONS
Definition Section
- ---------- -------
"Acquisition Sub"........................ Introduction
"Acquisition Sub Common Stock"........... Section 1.11
"Alternate Transaction Fee".............. Section 10.01(b)
"Antitrust Division"..................... Section 2.05 (e)
"Applicable Laws"........................ Section 2.05 (d)
"Articles of Merger"..................... Section 1.08
"Balance Sheet".......................... Section 2.07(a)
"Balance Sheet Date"..................... Section 2.07(a)
"Benefit Plans".......................... Section 2.15(i)
"CERCLA"................................. Section 2.18
"Certificates"........................... Section 1.13(b)
"Closing"................................ Section 8.01
"Closing Date"........................... Section 8.01
"Code"................................... Section 2.13(a)
"Commonly Controlled Entity"............. Section 2.15(i)
"Company"................................ Introduction
"Common Stock Offer Price"............... Introduction
"Company Common Stock"................... Section 1.10(a)(i)
"Company Estimates"...................... Section 2.18(g)
"Company Financial Statements"........... Section 2.07(a)
"Company Pension Plan"................... Section 2.15(iii)
"Company Property"....................... Section 2.12(a)
"Company Willful Misrepresentation"...... Section 9.02(b)
"Consummation of the Offer".............. Section 5.02(e)
"Continuing Directors"................... Section 5.21
"Conversion Rights"...................... Section 2.02(c)
"Covered Taxes".......................... Section 2.13(c)
"Defined Benefit Plan"................... Section 2.15(vi)
"Designated Director".................... Section 5.21
"Director Option Plan"................... Section 1.14(a)(i)
"Dissenting Consideration"............... Section 1.12
"Dissenting Shares"...................... Section 1.12
"D&O Insurance".......................... Section 5.15(a)
"Effective Date"......................... Section 1.08
"Effective Time"......................... Section 1.08
"Eligible Option"........................ Section 1.14(a)(i)
"Environmental Laws"..................... Section 2.18
"ERISA".................................. Section 2.15(i)
<PAGE>
Definitions, p.2
Definition Section
- ---------- -------
"Exchange Act"........................... Section 1.01(b)
"Expenses"............................... Section 10.01(b)
"5% Stock"............................... Section 1.10(b)
"5% Stock Consideration"................. Section 1.10(b)
"French parcel".......................... Section 2.04(d)
"FTC".................................... Section 2.05(e)
"GAAP"................................... Section 2.07(a)
"Governmental Authority"................. Section 2.05(d)
"Hazardous Materials".................... Section 2.18
"HSR Act"................................ Section 2.05(e)
"Inactive Subsidiary".................... Section 2.03(a)
"Indemnified Parties".................... Section 5.15(a)
"Ineligible Option"...................... Section 1.14(a)(ii)
"Information Statement".................. Section 2.20(b)
"Judgment"............................... Section 2.05(d)
"Leased Real Property"................... Section 2.12(a)
"Legal Action"........................... Section 2.09
"Lien"................................... Section 2.05(b)
"LTIP"................................... Section 1.14(b)
"Material Adverse Effect"................ Section 2.01
"Material Contracts"..................... Section 2.11
"Maximum Premium"........................ Section 5.15(a)
"MBCL"................................... Section 1.03
"McFarland Dewey"........................ Section 3.05
"Merger"................................. Introduction
"MICP"................................... Section 2.15(xi)
"1982 Stock Option Plan"................. Section 1.14(a)(i)
"1992 Stock Option Plan"................. Section 1.14(a)(i)
"Notice of Qualified Takeover Proposal".. Section 5.12(b)
"Offer".................................. Introduction
"Offer Document"......................... Section 1.01(b)
"Options"................................ Section 1.14(a)(i)
"Owned Real Property".................... Section 2.12(a)
"Parent"................................. Introduction
"Parent Willful Misrepresentation"....... Section 9.02(c)
"Paying Agent"........................... Section 1.13
"PBGC"................................... Section 2.15(v)
"Pension Plan"........................... Section 2.15(i)
<PAGE>
Definitions, p.3
Definition Section
- ---------- -------
"Permits"................................ Section 2.06
"Permitted Liens"........................ Section 2.12(b)
"Person"................................. Section 2.05(c)
"Preference Stock"....................... Section 1.10(c)
"Preference Stock Consideration"......... Section 1.10(c)
"Preference Stock Offer Price"........... Introduction
"Proxy Statement"........................ Section 5.02(a)
"qualified takeover proposal"............ Section 5.12(a)
"Release"................................ Section 2.18
"Return" or "Returns".................... Section 2.13(a)
"Revolving Credit Agreement"............. Section 2.25
"Savings Plan"........................... Section 1.14(c)
"Schedule 14D-9"......................... Section 1.02(b)
"SEC".................................... Section 1.01(a)
"SEC Documents".......................... Section 2.20(a)
"Securities Act"......................... Section 2.20(a)
"Special Meeting"........................ Section 5.03(a)
"Subsidiary"............................. Section 2.01
"Surviving Corporation".................. Section 1.03
"Surviving Corporation Common Stock"..... Section 1.11
"takeover proposal"...................... Section 5.12(a)
"Tax" or "Taxes"......................... Section 2.13(a)
"Taxing Authority"....................... Section 2.13(a)
"Total Merger Consideration"............. Section 1.10(a)(i)
"Transmittal Letter"..................... Section 1.13(b)
"Welfare Plan"........................... Section 2.15(i)
<PAGE>
This AGREEMENT AND PLAN OF MERGER dated as of January 12,
1998, is entered into by and among CERTAINTEED CORPORATION, a
Delaware corporation ("Parent"), BI EXPANSION II CORP., a
Massachusetts corporation ("Acquisition Sub"), and BIRD
CORPORATION, a Massachusetts corporation (the "Company").
WHEREAS the respective Boards of Directors of Parent, Acquisition Sub
and the Company have approved the making by Acquisition Sub of a tender offer
from time to time (the "Offer") to purchase all outstanding shares of Company
Common Stock (as defined below) at a price per share equal to the Total Merger
Consideration (as defined below) (the "Common Stock Offer Price") and all
outstanding shares of Preference Stock (as defined below) at a price per share
equal to $20, which amount shall not be adjusted for any accrued and unpaid
dividends thereon as of, or any dividends paid prior to, the date of the
expiration of the Offer (the "Preference Stock Offer Price") along with the
merger of Acquisition Sub with and into the Company (the "Merger"), upon the
terms and subject to the conditions set forth herein, as a result of which the
Company will become a wholly owned subsidiary of Parent and the stockholders of
the Company (other than stockholders who perfect appraisal rights) will be
entitled to receive the consideration provided in this Agreement.
NOW, THEREFORE, in consideration of the mutual benefits to be derived
from this Agreement and of the representations, warranties, covenants and
agreements hereinafter contained, Parent, Acquisition Sub and the Company agree
as follows:
ARTICLE I
The Offer and the Merger
------------------------
SECTION 1.01. The Offer. (a) Subject to the provisions of this
----------
Agreement, as promptly as practicable, but in no event later than five business
days after the public announcement of the Offer, Acquisition Sub shall commence
the Offer. The obligation of Acquisition Sub to commence the Offer and accept
for payment, and pay for, any shares of Company Common Stock or Preference Stock
tendered pursuant to the Offer shall be subject to the conditions set forth in
Exhibit A (any of which may be waived in whole or in part by Acquisition Sub in
its sole discretion) and to the terms and conditions of this Agreement.
Acquisition Sub expressly reserves the right to modify the
<PAGE>
2
terms of the Offer, except that, without the consent of the Company, Acquisition
Sub shall not (i) reduce the number of shares of Company Common Stock or
Preference Stock to be purchased in the Offer, (ii) reduce the Common Stock
Offer Price or the Preference Stock Offer Price, (iii) modify or add to the
conditions set forth in Exhibit A, (iv) except as provided in the next sentence,
extend the Offer, (v) change the form of consideration payable in the Offer or
(vi) amend any other term of the Offer in a manner adverse in any material
respect to the holders of Company Common Stock or Preference Stock.
Notwithstanding the foregoing, Acquisition Sub may, without the consent of the
Company, (i) extend the Offer beyond any scheduled expiration date (the initial
scheduled expiration date being 20 business days following commencement of the
Offer) for a period not to exceed 20 business days, if at any scheduled
expiration date of the Offer, any of the conditions to Acquisition Sub's
obligation to accept for payment, and pay for, shares of Company Common Stock or
Preference Stock shall not be satisfied or waived, until such time as such
conditions are satisfied or waived, (ii) extend the Offer for any period
required by any rule, regulation, interpretation or position of the Securities
and Exchange Commission (the "SEC") or the staff thereof applicable to the Offer
and (iii) terminate the Offer without prejudice to any of its and Parent's
rights under this Agreement, including to proceed with the Merger in accordance
with, and subject to the terms and conditions of, this Agreement. Subject to
the terms and conditions of the Offer and this Agreement, Acquisition Sub shall
accept for payment, and pay for, all shares of Company Common Stock and
Preference Stock validly tendered and not withdrawn pursuant to the Offer that
Acquisition Sub becomes obligated to accept for payment, and pay for, pursuant
to the Offer as soon as practicable after expiration of the Offer, subject to
compliance with Rule 14e-1(c) under the Exchange Act (as defined below).
(b) On the date of commencement of the Offer, Parent and Acquisition
Sub shall file with the SEC a Tender Offer Statement on Schedule 14D-1 with
respect to the Offer, which shall contain an offer to purchase and a related
letter of transmittal and summary advertisement (such Schedule 14D-1 and the
documents included therein pursuant to which the Offer will be made, together
with any supplements or amendments thereto, the "Offer Documents"). Parent and
Acquisition Sub agree that the Offer Documents shall comply as to form in all
material respects with the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder (the "Exchange Act") and, on the
date first published, sent or given to the Company's stockholders, shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by Parent or Acquisition Sub
with respect to information regarding the Company or its subsidiaries or
provided by the Company for inclusion or incorporation by reference in the Offer
Documents. Each of Parent,
<PAGE>
3
Acquisition Sub and the Company agrees promptly to correct any information
provided by it for use in the Offer Documents if and to the extent that such
information shall have become false or misleading in any material respect, and
each of Parent and Acquisition Sub further agrees to take all steps necessary to
amend or supplement the Offer Documents and to cause the Offer Documents as so
amended or supplemented to be filed with the SEC and to be disseminated to the
Company's stockholders, in each case as and to the extent required by applicable
Federal securities laws. The Company and its counsel shall be given a
reasonable opportunity to review and comment upon the Offer Documents and all
amendments and supplements thereto prior to their filing with the SEC or
dissemination to stockholders of the Company. Parent and Acquisition Sub agree
to provide the Company and its counsel any comments or requests for additional
information Parent, Acquisition Sub or their counsel may receive from the SEC or
its staff with respect to the Offer Documents promptly after the receipt of such
comments and shall provide the Company and its counsel an opportunity to
participate, including by way of discussion with the SEC or its staff, in the
response of Parent and/or Acquisition Sub to such comments.
(c) Parent shall provide or cause to be provided to Acquisition Sub
on a timely basis the funds necessary to accept for payment, and pay for, any
shares of Company Common Stock and Preference Stock that Acquisition Sub accepts
for payment, and becomes obligated to pay for, pursuant to the Offer.
SECTION 1.02. Company Actions. (a) The Company hereby approves of
----------------
and consents to the Offer and represents that the Board of Directors of the
Company, at a meeting duly called and held, adopted resolutions approving this
Agreement, the Offer, the Merger and the transactions contemplated hereby,
determining that the terms of the Offer and the Merger are fair to, and in the
best interests of, the Company's stockholders and recommending that the
Company's stockholders approve and adopt this Agreement, accept the Offer and
tender their shares pursuant to the Offer and/or vote their shares of Company
Common Stock and Preference Stock in favor of the Merger.
(b) Not later than the date the Offer Documents are filed with the
SEC, the Company shall file with the SEC a Solicitation/Recommendation Statement
on Schedule 14D-9 (which shall include the information required by Section 14(f)
of the Exchange Act and Rule l4f-1 promulgated thereunder with respect to the
persons to be named directors of the Company pursuant to Section 5.21) with
respect to the Offer (such Schedule 14D-9, as amended from time to time, the
"Schedule 14D-9") containing the recommendation described in Section 1.02(a) and
shall mail the Schedule 14D-9 to the stockholders of the Company. The Schedule
14D-9 shall comply as to form in all material respects with the Exchange Act and
the rules and regulations promulgated thereunder and, on the date filed with the
SEC and on the date first published, sent or
<PAGE>
4
given to the Company's stockholders, shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by the Company with respect to information provided by
Parent or Acquisition Sub for inclusion or incorporation by reference in the
Schedule 14D-9. Each of the Company, Parent and Acquisition Sub agrees promptly
to correct any information provided by it for use in the Schedule 14D-9 if and
to the extent that such information shall have become false or misleading in any
material respect, and the Company further agrees to take all steps necessary to
amend or supplement the Schedule 14D-9 and to cause the Schedule 14D-9 as so
amended or supplemented to be filed with the SEC and disseminated to the
Company's stockholders, in each case as and to the extent required by applicable
Federal securities laws. Parent and its counsel shall be given a reasonable
opportunity to review and comment upon the Schedule 14D-9 and all amendments and
supplements thereto prior to their filing with the SEC or dissemination to
stockholders of the Company. The Company agrees to provide Parent and its
counsel in writing with any comments or requests for additional information the
Company or its counsel may receive from the SEC or its staff with respect to the
Schedule 14D-9 promptly after the receipt of such comments and shall provide
Parent and its counsel an opportunity to participate, including by way of
discussions with the SEC or its staff, in the response of the Company to such
comments.
(c) In connection with the Offer, the Company shall cause its
transfer agent to furnish Acquisition Sub promptly with mailing labels
containing the names and addresses of the record holders of Company Common Stock
and of the record holders of Preference Stock as of a recent date and of those
persons becoming record holders subsequent to such date, together with copies of
all lists of stockholders, security position listings and computer files and all
other information in the Company's possession or control regarding the
beneficial owners of Company Common Stock and the beneficial owners of
Preference Stock, and shall furnish to Acquisition Sub such information and
assistance (including updated lists of stockholders, security position listings
and computer files) as Parent may request in communicating the Offer to holders
of Company Common Stock and Preference Stock.
SECTION 1.03. Surviving Corporation. In accordance with the
----------------------
provisions of this Agreement and the Massachusetts Business Corporation Law, as
amended (the "MBCL"), at the Effective Date (as defined in Section 1.08),
Acquisition Sub shall be merged with and into the Company, and the Company shall
be the surviving corporation in the Merger (hereinafter sometimes called the
"Surviving Corporation"). At the Effective Date, the separate existence of
Acquisition Sub shall cease.
<PAGE>
5
SECTION 1.04. Articles of Organization. (a) The Articles of
-------------------------
Organization of the Company as amended pursuant to the Articles of Merger (as
defined in Section 1.08), shall be the Articles of Organization of the Surviving
Corporation.
(b) The purposes of the Surviving Corporation shall be as set forth
in the Articles of Organization of Acquisition Sub as in effect on the date
hereof until such time as such purposes may be amended as provided in the
Articles of Organization of the Surviving Corporation and by applicable law.
SECTION 1.05. By-Laws. The By-Laws of Acquisition Sub as in effect
--------
at the Effective Date shall be the By-Laws of the Surviving Corporation, until
thereafter amended or repealed as provided by law.
SECTION 1.06. Directors. The directors of Acquisition Sub at the
----------
Effective Date shall, from and after the Effective Date, be the directors of the
Surviving Corporation and shall hold office from the Effective Date until their
respective successors are duly elected or appointed and qualified in the manner
provided in the Articles of Organization and By-Laws of the Surviving
Corporation, or as otherwise provided by law.
SECTION 1.07. Officers. The officers of Acquisition Sub at the
---------
Effective Date shall, from and after the Effective Date, be the officers of the
Surviving Corporation and shall hold office from the Effective Date until their
respective successors are duly elected or appointed and qualified in the manner
provided in the Articles of Organization and By-Laws of the Surviving
Corporation, or as otherwise provided by law.
SECTION 1.08. Effective Date. The Merger shall become effective at
---------------
the time of filing of articles of merger (substantially in the form set forth in
Exhibit B annexed hereto) with the Secretary of State of the Commonwealth of
Massachusetts in accordance with the provisions of Section 78 of the MBCL (the
"Articles of Merger"). The Articles of Merger shall be filed with the Secretary
of State of the Commonwealth of Massachusetts on the Closing Date. The date and
time when the Merger becomes effective shall be herein referred to as the
"Effective Date" and the "Effective Time", respectively.
SECTION 1.09. Additional Actions. If, at any time after the
-------------------
Effective Date, the Surviving Corporation determines that any deeds, bills of
sale, assignments, assurances or any other acts or things are necessary or
desirable (a) to vest, perfect or confirm, of record or otherwise, in the
Surviving Corporation, its right, title or interest in, to or under any of the
rights, properties or assets of the Company or its Subsidiaries
<PAGE>
6
acquired or to be acquired by reason of, or as a result of, the Merger, or (b)
otherwise to carry out the purposes of this Agreement, the Surviving Corporation
and its proper officers and directors shall be authorized to execute and
deliver, in the name and on behalf of the Company and its Subsidiaries, all such
deeds, bills of sale, assignments and assurances and to do, in the name and on
behalf of the Company and its Subsidiaries, all such other acts and things
necessary or desirable to vest, perfect or confirm any and all right, title or
interest in, to or under such rights, properties or assets in the Surviving
Corporation or otherwise to carry out the purposes of this Agreement.
SECTION 1.10. Company Common Stock, Preferred Stock and Preference
----------------------------------------------------
Stock. (a) Company Common Stock. (i) Each share of Common Stock of the
- ------ ---------------------
Company, par value $1 per share (the "Company Common Stock") actually issued and
outstanding at the Effective Date (except for Dissenting Shares, as defined in
Section 1.12) shall, by virtue of the Merger and without any action on the part
of the holder thereof, be converted into the right to receive $5.50 (the "Total
Merger Consideration").
(ii) Each share of Company Common Stock held directly by Parent or
Acquisition Sub or in the Company's treasury at the Effective Date shall, by
virtue of the Merger, be canceled without payment of any consideration therefor
and without any conversion thereof.
(b) 5% Cumulative Preferred Stock. Each share of the Company's 5%
------------------------------
Cumulative Preferred Stock, par value $100 per share (the "5% Stock"), actually
issued and outstanding at the Effective Date, shall remain issued and
outstanding after the Merger and shall be called for redemption and retirement
as soon as practicable following the Merger (except for Dissenting Shares, as
defined in Section 1.12), in accordance with the terms of Section 5.16(a), at a
price equal to $110, plus all accrued and unpaid dividends thereon as of the
date of redemption and retirement (the "5% Stock Consideration"), in accordance
with the terms of the 5% Stock.
(c) $1.85 Cumulative Convertible Preference Stock. (i) Each share
----------------------------------------------
of the Company's $1.85 Cumulative Convertible Preference Stock, par value $1 per
share (the "Preference Stock"), actually issued and outstanding at the Effective
Date (except for Dissenting Shares, as defined in Section 1.12) shall, by virtue
of the Merger and without any action on the part of the holder thereof, be
converted into the right to receive $20, which amount shall not be adjusted for
any accrued and unpaid dividends thereon as of, or any dividends paid prior to,
the Effective Date (the "Preference Stock Consideration").
(ii) Each share of Preference Stock held directly by Parent or
Acquisition Sub or in the Company's treasury at the Effective Date shall, by
virtue of the Merger, be
<PAGE>
7
canceled without payment of any consideration therefor and without any
conversion thereof.
SECTION 1.11. Conversion of Acquisition Sub Common Stock. All issued
-------------------------------------------
and outstanding shares of Common Stock, par value $1 per share, of Acquisition
Sub (the "Acquisition Sub Common Stock") at the Effective Date shall, by virtue
of the Merger and without any action on the part of the holder thereof, be
converted into and exchangeable for, in the aggregate, 100 fully paid and
nonassessable shares of Common Stock, par value $1 per share, of the Surviving
Corporation (the "Surviving Corporation Common Stock"), which shall constitute
all the issued and outstanding shares of Surviving Corporation Common Stock.
From and after the Effective Date, each outstanding certificate theretofore
representing shares of Acquisition Sub Common Stock shall be deemed for all
purposes to evidence ownership of, and to represent the number of shares of,
Surviving Corporation Common Stock into which such shares of Acquisition Sub
Common Stock shall have been converted.
SECTION 1.12. Dissenting Shares. Notwithstanding anything in this
------------------
Agreement to the contrary, shares of Company Common Stock, 5% Stock and
Preference Stock issued and outstanding on the Effective Date which are held of
record by stockholders who shall not have voted such shares in favor of the
Merger, if applicable, and who shall have properly exercised rights to demand
payment of the fair value of such shares in accordance with Sections 86 through
98, inclusive, of the MBCL ("Dissenting Shares") shall not be converted into the
right to receive the consideration specified in Section 1.10(a), 1.10(b), or
1.10(c), respectively, but the holders thereof instead shall be entitled to
payment of the fair value of such shares in accordance with the provisions of
Sections 86 to 92, inclusive, of the MBCL (the "Dissenting Consideration");
provided, however, that (i) if such a holder fails to file a notice of election
- -------- -------
to dissent in accordance with Section 86 of the MBCL or, after filing such
notice of election, subsequently delivers an effective written withdrawal of
such notice or fails to establish his entitlement to appraisal rights as
provided in Sections 87 through 98, inclusive, of the MBCL, if he or she be so
required, or (ii) if a court shall determine that such holder is not entitled to
receive payment for his shares or such holder shall otherwise lose his or her
appraisal rights, then in either of such cases, each share of Company Common
Stock, 5% Stock or Preference Stock, respectively, held of record by such holder
or holders shall automatically be converted into and represent only the right to
receive the Total Merger Consideration, the 5% Stock Consideration or the
Preference Stock Consideration, respectively, upon the surrender of the
certificate or certificates representing such Dissenting Shares. The Company
shall give Parent prompt notice of any demands received by the Company for
payment of the fair value of such shares, and Parent shall have the right to
participate in all the negotiations and proceedings with respect to such
demands. The Company shall not, except with the prior written consent of
Parent, make
<PAGE>
8
any payment (except to the extent that any such payment is made pursuant to a
court order) with respect to, or settle or offer to settle, any such demands.
SECTION 1.13. Surrender of Shares. (a) At and after the Effective
--------------------
Date, Parent shall make available on a timely basis, by transferring to
ChaseMellon Shareholder Services, Inc. (the "Paying Agent") for the benefit of
former stockholders of the Company, such funds as and when necessary to make the
payments provided for in Section 1.10 herein with respect to the outstanding
shares of Company Common Stock and Preference Stock. The Paying Agent shall
agree to hold such funds in trust for the benefit of the former stockholders of
the Company and deliver such funds in accordance with the terms hereof and the
terms of a Paying Agency Agreement to be entered into by and between the Paying
Agent and Parent.
(b) Prior to or at the Effective Date, the Paying Agent shall mail or
cause to be mailed to each record holder of an outstanding certificate or
certificates which, immediately prior to the Effective Date, represented shares
of Company Common Stock or Preference Stock (the "Certificates"), a form 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 Paying Agent) (the "Transmittal Letter") and instructions
for use in effecting the surrender of the Certificates for payment therefor.
Upon surrender to the Paying Agent of a Certificate, together with such
Transmittal Letter duly executed, the holder of such Certificate shall be
entitled to receive in exchange for each share of Company Common Stock or
Preference Stock represented by such Certificate, the Total Merger Consideration
or Preference Stock Consideration, respectively, and such Certificate shall
forthwith be canceled upon receipt by the holder of such Certificate of the
Total Merger Consideration or Preference Stock Consideration, respectively. No
interest will be paid or accrued on the Total Merger Consideration or Preference
Stock Consideration payable upon the surrender of such Certificates.
(c) If payment is to be made to a person other than the person in
whose name the Certificate surrendered in exchange therefor is registered, it
shall be a condition of payment of the Total Merger Consideration or Preference
Stock Consideration, as the case may be, that the Certificate so surrendered be
properly endorsed or accompanied by appropriate stock powers, in either case
signed exactly as the name of the record holder appears on such Certificate, and
is otherwise in proper form for transfer, and that the Person requesting such
payment shall pay any transfer or other taxes required by law as a result of
such payment to a Person other than the record holder of the Certificate
surrendered, or shall establish to Parent's satisfaction that such tax has been
paid or is not applicable.
<PAGE>
9
(d) After the Effective Date, there shall be no further transfers on
the stock transfer books of the Surviving Corporation of the shares of Company
Common Stock or Preference Stock which are outstanding at the Effective Date.
If, after the Effective Date, Certificates are presented to the Surviving
Corporation or the Paying Agent for transfer, they shall be canceled and there
shall be issued to the transferee in exchange for each share of Company Common
Stock the Total Merger Consideration and in exchange for each share of
Preference Stock the Preference Stock Consideration in accordance with Section
1.10 hereof.
(e) The consideration payable upon the surrender for exchange of
Certificates in accordance with the terms of this Article I shall be deemed to
have been paid in full satisfaction of all rights pertaining to the shares of
Company Common Stock or Preference Stock theretofore represented by such
Certificates, and there shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of the shares of Company
Common Stock or Preference Stock which were outstanding immediately prior to the
Effective Date.
(f) None of Parent, Acquisition Sub, the Company or the Paying Agent
shall be liable to any person in respect of any cash 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 Date (or immediately prior to such earlier date on which any
payment pursuant to this Article I would otherwise escheat to or become the
property of any Governmental Authority), the payment 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 1.14. Certain Benefit Plans. (a) (i) With respect to
----------------------
unexpired options ("Options"), whether or not exercisable at the Effective Date,
including stock appreciation rights relating thereto, outstanding on the
Effective Date which have been issued pursuant to the Company's 1982 Stock
Option Plan, as amended (the "1982 Stock Option Plan"), the Company's 1992 Stock
Option Plan, as amended (the "1992 Stock Option Plan"), or the Company's 1992
Non-Employee Directors Stock Option Plan, as amended (the "Director Option
Plan"), each such Option with an exercise price less than the Total Merger
Consideration (an "Eligible Option") shall, by virtue of the Merger and without
any action on the part of the holder thereof, be converted into the right to
receive, for each share of Company Common Stock subject thereto, a cash payment
without interest equal to the Total Merger Consideration, less the per share
exercise price of each such Option. Such Options shall be canceled upon such
cash payment following the Merger.
<PAGE>
10
(ii) Any Option with an exercise price equal to or greater than the
Total Merger Consideration (an "Ineligible Option") shall be canceled upon the
Effective Date without payment of any consideration.
(iii) The Company shall use its best efforts to amend each
outstanding Option issued under the 1982 Stock Option Plan, the 1992 Stock
Option Plan and the Director Option Plan to effect the transactions contemplated
by this Agreement, including the cancellation of the Options in connection with
the Merger in accordance with this Section 1.14.
(b) There are no shares of Company Common Stock held in escrow
pursuant to the Company's former Long Term Incentive Compensation Plan (the
"LTIP"), and the LTIP has been terminated.
(c) Each share of Company Common Stock issued by the Company but not
yet vested pursuant to the Company's Employees' Savings and Profit Sharing Plan
(the "Savings Plan") shall, in connection with the Merger, become vested in the
Person to whose account such share of Company Common Stock was issued and
converted into the right to receive the Total Merger Consideration as provided
in Section 1.10(a).
(d) Immediately following the Effective Date, the Company's 1982
Stock Option Plan, 1992 Stock Option Plan and Director Option Plan shall be
terminated and no further stock awards or stock options shall be granted
thereunder from and after the date of this Agreement.
ARTICLE II
Representations and Warranties of the Company
---------------------------------------------
The Company hereby represents and warrants to Parent and Acquisition
Sub as follows with respect to the Company and its Subsidiaries:
SECTION 2.01. Corporate Organization. The Company is a corporation
-----------------------
duly incorporated, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts with all requisite corporate power and authority
to own, operate and lease its properties and to carry on its business as now
being conducted. The Company is qualified to do business and is in good standing
in each jurisdiction set forth in Schedule 2.01, which are the only
jurisdictions in which such qualification is necessary except where failure to
be qualified could not reasonably be expected to have a Material Adverse Effect.
For purposes of this Agreement, a "Material Adverse Effect" is
<PAGE>
11
(a) a material adverse effect on the business, assets, properties, condition
(financial or other) or results of operations of the Company and its
Subsidiaries taken as a whole or the Surviving Corporation and its Subsidiaries
taken as a whole or (b) a material adverse effect on the ability of the Company
to carry out the transactions contemplated by this Agreement without significant
unanticipated delay or expense. For purposes of this Agreement, a "Subsidiary"
of any Person is any corporation of which a majority of all outstanding shares
of capital stock (the holders of which are ordinarily and generally entitled to
vote in the election of a majority of the members of the board of directors
thereof) is owned, directly or indirectly, by such Person and/or other
Subsidiaries of such Person. The Company has delivered to Parent complete and
correct copies of its Articles of Organization and By-Laws, as amended to the
date hereof.
SECTION 2.02. Capitalization of the Company. (a) The authorized
------------------------------
capital stock of the Company consists of 15,000,000 shares of Company Common
Stock, 15,000 shares of 5% Stock and 1,500,000 shares of Preference Stock. As
of December 31, 1997, 4,159,985 shares of Company Common Stock, 5,795 shares of
5% Stock and 814,300 shares of Preference Stock were issued and are outstanding,
and 275,112 shares of Company Common Stock were held in the Company's treasury.
All issued and outstanding shares of Company Common Stock, 5% Stock and
Preference Stock are duly and validly issued and outstanding, fully paid and
nonassessable. As of the date hereof, the aggregate amount of accrued and
unpaid dividends on the 5% Stock is zero and on the Preference Stock is
$1,881,033.
(b) As of the date hereof, there are outstanding unexercised,
unexpired Options to purchase 497,200 shares of Company Common Stock, in each
case with the exercise or "strike" price and other terms as set forth on
Schedule 2.02 hereto.
(c) Except as set forth in this Section 2.02 or on Schedule 2.02
hereto, there are no other shares of capital stock of the Company, or securities
convertible into or exchangeable or exercisable for shares of capital stock of
the Company or any of its Subsidiaries, outstanding, and there are no
outstanding options, warrants, rights, contracts, commitments, understandings,
arrangements or claims of any character by which the Company or any Subsidiary
is or may become bound to issue, transfer, sell, repurchase or otherwise acquire
or retire any shares of capital stock or other ownership interest of the Company
or any Subsidiary, or any securities convertible into or exchangeable or
exercisable for any such shares or other ownership interest (all of the
foregoing being called "Conversion Rights") and, except as set forth in Section
2.02(a) and as reserved for issuance upon exercise of the Options described in
Section 2.02(b) or the other Conversion Rights described in Schedule 2.02, no
shares of capital stock of the Company are reserved for issuance. There are no
voting trusts or other agreements or understandings to which the Company is a
party with respect to the voting of the capital
<PAGE>
12
stock of the Company or any Subsidiary. Following consummation of the Merger no
holder or beneficiary of any Conversion Rights shall be entitled to receive any
securities of the Surviving Corporation or any other consideration not expressly
contemplated by this Agreement.
SECTION 2.03. Subsidiaries. (a) Schedule 2.03 hereto sets forth
-------------
each Subsidiary and the jurisdiction of incorporation of such Subsidiary.
Schedule 2.03 also sets forth each inactive Subsidiary (an "Inactive
Subsidiary") of the Company. No Inactive Subsidiary has any assets or
liabilities valued in excess of $5,000 or any business operations or real
property nor has any Inactive Subsidiary conducted any business during the two-
year period prior to the date of this Agreement. Except as disclosed on
Schedule 2.03 hereto, all of the outstanding shares of capital stock and other
ownership interest of the Company's Subsidiaries are owned, directly or
indirectly, by the Company. Except as disclosed on Schedule 2.03, none of the
shares or other ownership interests of the Subsidiaries owned or held by the
Company, directly or indirectly, is subject to any pledge, Lien (as defined
below) or claim of any kind.
(b) Each Subsidiary (excluding each Inactive Subsidiary) is duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of incorporation of each such Subsidiary, with all requisite
corporate power and authority to own, operate and lease its properties and to
carry on its business as now being conducted. Each Subsidiary (excluding each
Inactive Subsidiary) is also qualified to do business and is in good standing in
each jurisdiction in which such qualification is necessary, except where failure
to be so qualified would not have a Material Adverse Effect. The Company has
delivered to Parent complete and correct copies of the respective articles or
certificates of incorporation or organization or By-Laws, as amended to the date
hereof, of each of its Subsidiaries.
(c) Except for its Subsidiaries, the Company does not directly or
indirectly own any capital stock of or other equity interest in any corporation,
partnership or other person and neither the Company nor any of its Subsidiaries
is a member of or participant in any partnership, joint venture or similar
person.
SECTION 2.04. Authorization. (a) The Company has requisite
--------------
corporate power and authority to execute and deliver this Agreement, and subject
to the approval by the stockholders of the Company, to execute, deliver and file
the Articles of Merger and, subject to the satisfaction of the conditions set
forth herein and therein, to consummate the transactions contemplated hereby and
thereby.
(b) This Agreement, the Offer, the Merger and the other transactions
contemplated hereby have been approved by the Board of Directors of the Company
and,
<PAGE>
13
except for the approval of the Merger by the stockholders of the Company, no
other corporate proceeding on the part of the Company is necessary to authorize
this Agreement, the Offer, the Merger or the other transactions contemplated
hereby or to consummate the Offer, the Merger and the other transactions
contemplated hereby. The affirmative vote of the holders of (i) two-thirds of
the outstanding shares of Company Common Stock and (ii) two-thirds of the
outstanding shares of the Preference Stock, approving the Merger are the only
votes of the holders of any class or series of the Company's capital stock
necessary to approve any of the transactions contemplated by this Agreement.
(c) This Agreement has been duly and validly executed and delivered
by the Company and is a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, and the Articles of Merger
when executed and delivered pursuant hereto will be a valid and binding
agreement of the Company enforceable against the Company in accordance with its
terms, except in each case as such enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or similar laws in
effect now or hereafter in effect relating to creditors' rights generally, and
by equitable principles (whether considered in a proceeding at law or in
equity).
(d) The transfer of the Company's granule crushing equipment to the
Company's Wrentham and Franklin, MA quarry (at least with respect to the "French
parcel" of such quarry) and its operation at such location will not conflict
with, constitute a default under, result in the termination or in a right of
termination of, or violate or be in conflict with, provide a basis for increased
rights under, or result in a breach of any term or provision of, any term or
provision of any Material Contract.
SECTION 2.05. Absence of Conflicts; Consents. Except as set forth in
-------------------------------
Schedule 2.05, neither the execution and delivery by the Company of this
Agreement and the Articles of Merger nor the consummation by the Company of the
transactions contemplated hereby and thereby will:
(a) assuming the approvals set forth in Section 2.04(b) have been
obtained, conflict with or result in a breach of any provision of the
respective articles or certificate of incorporation or organization or By-
Laws of the Company or any Subsidiary;
(b) to the knowledge of the Company, result in the creation of any
lien, mortgage, agreement, right of way, charge, option, security interest,
claim, restriction, easement, covenant, lease or encumbrance ("Lien") upon
any of the properties of the Company or any of its Subsidiaries;
<PAGE>
14
(c) with or without giving of notice or the passage of time, or both,
violate, or conflict with, or constitute a default under, or result in the
termination or in a right of termination of, violate or be in conflict
with, result in a breach of any term or provision of, or constitute a
default under, or accelerate or permit the acceleration of the performance
required by, or give any other natural person, corporation, trust,
association, company, partnership, joint venture or other entity or any
government, governmental agency, instrumentality or political subdivision
("Person") a basis for increased rights or termination or nonperformance
under, or require any consent, authorization or approval under, any term or
provision of any material Lien or any Material Contract to which the
Company or any Subsidiary is a party or by which any of them are or their
respective properties are subject or bound;
(d) subject to the approval of the Merger by the Company's
stockholders, to the knowledge of the Company, violate any provision of,
or, except as set forth in Section 2.05(e), require any consent,
authorization or approval under, any statute, law, ordinance, or
administrative rule or regulation, Permit, order or license (collectively,
but excluding Environmental Laws, "Applicable Laws") of any governmental
agency, body or instrumentality (whether Federal, state, local or foreign)
("Governmental Authority"), or any judicial, administrative or arbitration
order, award, judgment, writ, injunction or decree (collectively,
"Judgment") in each case applicable to the Company or any Subsidiary; or
(e) require any consent, approval or authorization of, or declaration,
filing or registration with, any Governmental Authority, to be made or
obtained by or on behalf of the Company except (i) as required by the
Exchange Act, (ii) the filing of the Articles of Merger and other
appropriate merger documents, if any, as required by the MBCL, or in
connection with the maintenance of qualification to do business in other
jurisdictions, such other jurisdictions, and (iii) filings with the Federal
Trade Commission ("FTC") and with the Antitrust Division of the U.S.
Department of Justice (the "Antitrust Division") pursuant to Title II of
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and the rules and
regulations thereunder (the "HSR Act").
SECTION 2.06. Compliance with Laws. Neither the Company nor any
---------------------
Subsidiary has been or is presently in violation of any provision of their
respective certificates or articles of organization or incorporation or By-Laws,
or of any Applicable Law or Judgment that would have a Material Adverse Effect.
Except where the failure thereof would not cause a Material Adverse Effect, the
Company and its Subsidiaries possess, and are in compliance in all material
respects with the terms and provisions of all licenses, permits, certificates,
authorizations, rights and other approvals of
<PAGE>
15
Governmental Authorities ("Permits") necessary for the operation of the business
of the Company and its Subsidiaries. Except as set forth in Schedule 2.09 or
2.18, neither the Company nor any Subsidiary has been given written notice by
any Governmental Authority of, or to the knowledge of Company, is under
investigation by any Governmental Authority with respect to, any violation of
any Applicable Law, Judgment or Permit. This Section 2.06 does not relate to
environmental representations and warranties, which matters are exclusively the
subject of Section 2.18.
SECTION 2.07. Financial Statements. (a) Set forth on Schedule 2.07
---------------------
are the Forms 10-K and 10-Q filed with the SEC for the year ended December 31,
1996, and the period ended September 30, 1997, respectively, including the
consolidated balance sheets of Company and its Subsidiaries as at December 31,
1995, December 31, 1996, and September 30, 1997, and the related consolidated
statements of income, stockholders' equity and cash flows for the respective
years or, in the case of September 30, 1997, the nine month period, then ended,
including the notes thereto, and, other than in respect of the statements as at
and for the period ended September 30, 1997, the report thereon of Price
Waterhouse, independent certified public accountants ( the "Company Financial
Statements"). The Company Financial Statements present fairly in all material
respects the consolidated financial position and the results of operations of
the Company and its Subsidiaries as of the dates and for the periods indicated
in the Company Financial Statements, in each case in conformity with generally
accepted accounting principles ("GAAP"), consistently applied during such
periods other than, in the case of the statements as at and for the period ended
September 30, 1997, for the absence of required footnote disclosure and
customary year-end adjustments. Except as expressly contemplated or permitted
by this Agreement or disclosed in the Schedules hereto, to the knowledge of the
Company, the Company and its Subsidiaries do not have any material liabilities
of any nature (whether accrued, absolute, contingent, unasserted or otherwise)
except (1) as disclosed, reflected or reserved against in the balance sheet (the
"Balance Sheet") dated September 30, 1997 (the "Balance Sheet Date"), included
in the Company Financial Statements, and (2) as incurred in the ordinary course
of business consistent with past practice and not in violation of this
Agreement.
(b) The inventory of the Company and its Subsidiaries, whether
reflected on the Balance Sheet or subsequently acquired, is, and will be as of
the Effective Date, generally of a quality and quantity usable and saleable,
consistent in all material respects with past practice, in the ordinary course
of business. The inventory of the Company and its Subsidiaries is reflected on
the Balance Sheet and in their respective accounting records in accordance with
GAAP applied on a basis consistent with past practice.
(c) All accounts receivable of the Company and its Subsidiaries,
whether reflected on the Balance Sheet or subsequently created, have arisen from
bona fide
<PAGE>
16
transactions in the ordinary course of business. To the knowledge of the
Company, all accounts receivable reflected on the Balance Sheet are good and
collectible at the aggregate recorded amounts thereof, net of any applicable
reserves for doubtful accounts reflected on the Balance Sheet and all accounts
receivable created since the Balance Sheet Date are and will be as of the
Effective Date good and collectible at the aggregate recorded amounts thereof,
net of any applicable reserves for doubtful accounts reflected on the Balance
Sheet or subsequently created consistent with past practice and experience.
SECTION 2.08. Absence of Material Changes. Except as set forth in
----------------------------
Schedule 2.08 or as permitted by Section 5.06 or set forth in Schedule 5.06 or
as expressly contemplated or permitted by this Agreement, since the Balance
Sheet Date, each of the Company and its Subsidiaries has conducted its business
in the ordinary course, and there has not been (and it is not reasonably
expected there will be) (i) any event, change or circumstance causing, or
reasonably anticipated to cause in the future, any Material Adverse Effect,
except as otherwise disclosed to Parent in writing prior to the date of this
Agreement, (ii) any declaration, setting aside or payment of any dividend
(whether in cash, stock or property) with respect to any of the Company's
capital stock, other than the minimum required dividends declared on the 5%
Stock or the Preference Stock, (iii) (x) any granting by the Company or any of
its Subsidiaries to any executive officer or director of the Company or any of
its Subsidiaries of any increase in compensation, except as was required under
employment agreements in effect as of the Balance Sheet Date, (y) any granting
by the Company or any of its Subsidiaries to any such executive officer or
director of any increase in severance or termination pay, except as was required
under employment, severance or termination agreements in effect as of the
Balance Sheet Date or (z) any entry by the Company or any of its Subsidiaries
into any employment, severance or termination agreement with any such executive
officer or director, (iv) any damage, destruction or loss, whether or not
covered by insurance, that has or could have a Material Adverse Effect, (v) any
change in accounting methods, principles or practices by the Company materially
affecting its assets, liabilities or business, except insofar as may have been
required by a change in GAAP or (vi) any other action that would be prohibited
by Section 5.06 on and after the date of this Agreement. As of the date hereof,
the Company's reserves for potential liabilities have not been materially
reduced since the Balance Sheet Date and the Company believes that such reserves
are sufficient to cover the Company's liabilities.
SECTION 2.09. Litigation. Except as set forth in Schedule 2.09 and
-----------
other than routine warranty claims against the Company that do not in the
aggregate exceed in any material respect the level of such claims experienced
historically by the Company in the ordinary course, neither the Company nor any
Subsidiary is engaged in, and there is not to the knowledge of the Company
pending, nor has the Company or any
<PAGE>
17
Subsidiary received written notice of, any legal action, suit, investigation,
inquiry or proceeding by any Governmental Authority or other Person ("Legal
Action").
SECTION 2.10. Patents and Trademarks. To the knowledge of the
-----------------------
Company, the Company and its Subsidiaries own all patents, trademarks, service
marks, trade names, copyrights, trade secrets, information, proprietary rights
and processes necessary for their business as now conducted without any conflict
with or infringement of the rights of others. Except as set forth in Schedule
2.10, there are no outstanding options, licenses or agreements of any kind
relating to the foregoing, nor is the Company nor any Subsidiary bound by or a
party to any material options, licenses or agreements of any kind with respect
to the patents, trademarks, service marks, trade names, copyrights, trade
secrets, information, proprietary rights and processes of any other Person.
Except as set forth in Schedule 2.10 or relating to any matter that has been
resolved or that the Company reasonably believes has been abandoned, none of the
Company nor any Subsidiary has received any written communications alleging that
the Company or any Subsidiary has violated any of the patents, trademarks,
service marks, trade names, copyrights or trade secrets or other proprietary
rights of any other Person.
SECTION 2.11. Material Contracts; Permits. Schedule 2.11(a) sets
----------------------------
forth a complete and accurate list of any of the following to which the Company
or any Subsidiary is a party or by which Company or any Subsidiary is bound
(collectively, "Material Contracts"):
(a) all deeds, indentures, leases, subleases or other instruments by
which an ownership, leasehold or other interest in real property is held by
the Company or any Subsidiary;
(b) all contracts, commitments or agreements, including contracts or
licenses pertaining to the payment of royalties (but excluding customer
purchase orders, purchase orders for raw materials and warranties), to the
extent such agreements include provisions that do or could involve payments
or commitments (whether fixed or contingent) to or from the Company or any
Subsidiary (i) for an amount (or potential amount) in excess of $200,000 or
(ii) have a term longer than twelve (12) months in duration (except for
such contracts, commitments or agreements terminable by the Company or the
appropriate Subsidiary of the Company without penalty upon notice of 90
days or less);
(c) all written management, compensation or employment contracts or
contracts entered into with any executive officer or director of the
Company or any Subsidiary;
<PAGE>
18
(d) all contracts or agreements under which the Company or any
Subsidiary has any outstanding indebtedness, obligation or liability for
borrowed money or the deferred purchase price of property or has the right
or obligation to incur any such indebtedness, obligation or liability, in
each case in an amount greater than $200,000;
(e) all bonds or agreements of guarantee or indemnification in which
the Company or any Subsidiary acts as surety, guarantor or indemnitor with
respect to any obligation (fixed or contingent) in an amount or potential
amount greater than $200,000;
(f) all secrecy, noncompete or other agreements which (i) restrict the
right of the Company or any Subsidiary to engage in any business reasonably
related to its present activities or (ii) would restrict the right of
Parent to engage in any business after the consummation of the transactions
contemplated by this Agreement;
(g) all current bank accounts that contain balances and safe deposit
arrangements;
(h) all agreements relating to preemptive or other preferential rights
relating to capital stock, restrictions on the disposition of capital stock
and registration rights;
(i) all partnership and joint venture agreements;
(j) all agreements relating to material business acquisitions or
dispositions during the last five years, including any separate tax or
indemnification agreements; and
(k) all material customer and supply agreements and all material sales
representative, marketing, agency or distributorship agreements, to the
extent such agreements include provisions that do or could involve payments
or commitments (whether fixed or contingent) to or from the Company or any
Subsidiary (i) for an amount in excess of $200,000 or (ii) have a term
(including renewals that do not require the Company's or a Subsidiary's
consent) longer than twelve months in duration (except for such contracts,
commitments or agreements terminable by the Company or the appropriate
Subsidiary of the Company without penalty upon notice of 90 days or less).
<PAGE>
19
Except as set forth on Schedule 2.11(a), (i) neither the Company nor
any Subsidiary is in default under the terms of any Material Contract, which
default permits the other party to adversely alter or terminate any rights of
the Company or any Subsidiary or accelerate the obligations of the Company or
any Subsidiary under such Material Contract or to collect damages, (ii) to the
knowledge of the Company, no other party thereto is in default under the terms
of any Material Contract and (iii) each Material Contract is in full force and
effect.
In order for the Company or any Subsidiary to perform its payment
obligations noted under each of the Material Contracts set forth on Schedule
2.11 (b), the only required payment will be the payment of the outstanding
principal amount (and accrued interest thereon) owed by the Company under each
such Material Contract which as of the date of this Agreement is set forth on
Schedule 2.11 (b) for each such Material Contract, without the payment of any
premium or penalty, other than accrued interest or default interest. Upon the
making of such payment under each such Material Contract, the Company will have
no further obligation or liability under any such Material Contract, except for
immaterial expenses relating to the termination of such Material Contracts.
SECTION 2.12. Title to Properties and Related Matters. (a) Schedule
----------------------------------------
2.12(a) sets forth all of the real property owned by the Company and each
Subsidiary (the "Owned Real Property"). Schedule 2.12(b) sets forth all of the
real property and interests in real property leased by the Company and each
Subsidiary (the "Leased Real Property", and together with the Owned Real
Property, the "Company Property"). Each of the Company or its Subsidiaries, as
the case may be, has good and marketable fee title to the Owned Real Property,
subject only to Permitted Liens (as defined in Section 2.12(b) below). Each of
the Company or its Subsidiaries, as the case may be, has a valid and existing
leasehold interest in all Leased Real Property, subject only to Permitted Liens
(as defined in Section 2.12(b) below).
(b) All Company Property and personal properties owned by the Company
or any Subsidiary are owned free and clear of all Liens (other than mortgages
securing the Company's existing credit facility described in Schedule 2.11 (b))
or leased free and clear of all Liens, except for (A) Liens for taxes and
assessments or governmental charges or levies which are not at the time of
Closing due or payable, (B) Liens in respect of pledges or deposits under
workers' compensation laws or similar legislation, carriers', warehousemen's,
mechanics', laborers' and materialmen's and similar Liens, which have been
incurred in the ordinary course of business, so long as the obligations secured
by such Liens are not then delinquent, (C) Liens incidental to the conduct of
the business of the Company and its Subsidiaries (other than arising out of
claims of infringement) which were not incurred in connection with the borrowing
of
<PAGE>
20
money or the obtaining of advances or credits and which do not individually or
in the aggregate materially detract from the value or materially impair the use
and operation of the Company Property to which it relates or the value and
operation of the business of the Company as presently conducted, (D) covenants,
conditions, restrictions, easements and other similar matters of record existing
as of the Effective Date which do not, individually or in the aggregate, impair
the use and operation of the Company Property to which it relates in the
business of the Company as presently conducted and (E) Liens set forth on
Schedule 2.18 arising pursuant to Environmental Laws (the liens described in the
foregoing clauses (A), (B), (C), (D) and (E) being "Permitted Liens") and (ii)
the Owned Real Property and personal properties owned by the Company or any
Subsidiary are not subject to any Liens, building or use restrictions,
exceptions, variances, reservations or limitations of any nature whatsoever
which interfere with or are violated by the existence of the improvements
thereon or the current use and operation of each such Owned Real Property or
personal properties, respectively, to which it relates in the business of the
Company as currently conducted.
SECTION 2.13. Taxes. (a) For purposes of this Agreement, (A)
------
"Tax"or "Taxes" shall mean all Federal, state, provincial, county, local,
--- -----
municipal, foreign and other taxes, assessments, duties or similar charges of
any kind whatsoever, including all corporate franchise, income, sales (including
bulk sales), use, ad valorem, intangibles, receipts, value added, profits,
license, withholding, payroll, employment, excise, premium, real property,
personal property, customs, net worth, estimated, capital gains, transfer,
stamp, documentary, social security, alternative minimum, accumulated earnings,
goods and services, recapture, recording, severance, environmental (including
but not limited to, taxes under Section 59A of the Code), occupation and other
taxes, and including any interest, penalties and additions imposed with respect
to such amounts; (B) "Code" shall mean the Internal Revenue Code of 1986, as
----
amended, and reference to any Section of the Code shall refer to that Section in
effect at the date hereof; (C) "Taxing Authority" shall mean any domestic,
----------------
foreign, federal, national, state, provincial, county or municipal or other
local government, any subdivision, agency, commission or authority thereof, or
any quasi-governmental body exercising any taxing authority or any other
authority exercising Tax regulatory authority; and (D) "Return"or "Returns"
------ -------
shall mean all returns, declarations of estimated tax payments, reports,
estimates, information returns and statements, including any related or
supporting information filed with respect to any of the foregoing, maintained,
filed or to be filed with any Taxing Authority in connection with the
determination, assessment, collection or administration of any Taxes.
(b) Except as set forth on Schedule 2.13, the Company and each of the
Subsidiaries has timely filed or will timely file, as the case may be, with the
appropriate Taxing Authority all Returns required to be filed on or prior to the
date hereof or the
<PAGE>
21
Closing Date, as the case may be, and each such Return was or will be, as the
case may be, complete and correct in all material respects at the time of
filing.
(c) Except as set forth on Schedule 2.13, all Taxes (including Taxes
for which no Returns are required to be filed and including payroll and wage
withholding Taxes) of the Company and any of the Subsidiaries or for which the
Company or any of the Subsidiaries is or could otherwise be held liable, or
which are or could otherwise become chargeable as an encumbrance upon any
property or assets of the Company or any of the Subsidiaries ("Covered Taxes"),
have been duly and timely paid. The amount of "accrued Taxes" shown on the
Balance Sheet adequately reflects the liability for unpaid Taxes (including
deferred Taxes) of Company and the Subsidiaries as of the Balance Sheet Date.
(d) Except as set forth on Schedule 2.13, the Company has made
available for inspection by Parent (A) complete and correct copies of all
Returns of the Company and each of the Subsidiaries, with respect to Federal,
state, provincial, county, local, municipal, foreign and other income, profits,
corporate franchise, receipts, sales, excise, property, net worth and all other
material Taxes, that are or have been required to be filed (except as noted in
(b) above) for taxable periods ending with or within the last five calendar
years and for such longer period as Parent has requested not to exceed the
period of the relevant statute of limitations and (B) complete and correct
copies of all ruling requests, private letter rulings, revenue agent reports,
information document requests and responses thereto, notices of proposed
deficiencies, deficiency notices, applications for changes in method of
accounting, protests, petitions, closing agreements, settlement agreements, and
any similar documents submitted by, received by or agreed to by or on behalf of
the Company or any of the Subsidiaries and relating to material Covered Taxes.
(e) Except as set forth on Schedule 2.13, no liens for Taxes exist
with respect to any of the assets or properties of any of the Subsidiaries or
Company. The Returns of the Company and each of the Subsidiaries with respect
to Federal income Taxes have been examined by the Internal Revenue Service, or
the statute of limitations with respect to the relevant Tax liability has
expired, for all taxable periods through and including the year ended December
31, 1982. All Returns with respect to state, county, local, municipal,
provincial, foreign and other income, profits, corporate franchise, receipts,
sales, excise, property, net worth, and capital Taxes, and with respect to all
other material Taxes, have been examined by the appropriate Taxing Authority, or
the statute of limitations with respect to the relevant Tax liability has
expired, for all taxable periods through and including the taxable period listed
with respect to each such jurisdiction. Except as set forth on Schedule 2.13,
each deficiency resulting from any audit or examination relating to Covered
Taxes by any Taxing Authority has been paid
<PAGE>
22
and no material issues were raised in writing by the relevant Taxing Authority
during any such audit or examination that might apply to taxable periods other
than the taxable period to which such audit or examination related. Except as
set forth on Schedule 2.13, (A) no Returns with respect to Federal income Taxes
are currently under audit or examination by the Internal Revenue Service and any
other Taxing Authority, (B) no audit or examination relating to Covered Taxes is
currently being conducted by the Internal Revenue Service or any other Taxing
Authority and (C) neither the Internal Revenue Service nor any other Taxing
Authority has given notice in writing that it will commence any such audit or
examination.
(f) Except as set forth in Schedule 2.13, no Taxing Authority is now
asserting (in writing), or, to the knowledge of the Company or any of the
Subsidiaries, threatening to assert (in writing), any deficiency or claim for
Covered Taxes or any adjustment to any item of income, gain, deduction, loss,
credit, or tax basis entering into the computation of Covered Taxes and there is
no reasonable basis for any such assertion.
(g) Except as set forth in Schedule 2.13, (A) no person has made with
respect to the Company or any of the Subsidiaries, or with respect to any
property held by the Company or any of the Subsidiaries, any consent under
Section 341 of the Code, (B) no property of Company or any of the Subsidiaries
constitutes "tax-exempt use property" (as defined in Section 168(h) of the
Code), (C) neither the Company nor any of the Subsidiaries is a party to any
lease made pursuant to Section 168(f)(8) of the Internal Revenue Code of 1954,
as amended and in effect prior to the date of enactment of the Tax Equity and
Fiscal Responsibility Act of 1982 and (D) none of the assets of Company or any
of the Subsidiaries is subject to a lease under Section 7701(h) of the Code or
under any predecessor.
(h) There is no agreement or other document extending, or having the
effect of extending, the period of assessment or collection of any Covered Taxes
and no unrevoked power of attorney with respect to any Covered Taxes has been
executed or filed with the Internal Revenue Service or any other Taxing
Authority.
(i) The Company has never been a member of any affiliated,
consolidated, combined, unitary or aggregate group for purposes of filing
Returns or paying Taxes at any time.
(j) Except as set forth in Schedule 2.13, none of the Company or any
of the Subsidiaries is a party to or is bound by any Tax sharing agreements
(whether formal or informal) with any of its affiliates, or with any Taxing
Authority.
<PAGE>
23
(k) None of the Company or any of the Subsidiaries will be required
to include in a taxable period on or after the Closing Date taxable income
attributable to income that economically accrued in a taxable period ending on
or before the Closing Date, including, without limitation, as a result of the
installment method of accounting, the completed contract method of accounting or
the cash method of accounting.
(1) Except as set forth on Schedule 2.13, none of the Company or any
of the Subsidiaries will be required in a taxable period beginning on or after
the Closing Date to include any amount in income pursuant to Section 481 of the
Code (or any comparable provisions of state, local or foreign law), by reason of
a change in accounting methods or otherwise, as a result of actions taken prior
to the Closing Date.
(m) Schedule 2.13 lists each state, county, local, municipal or
foreign jurisdiction in which Company or any of the Subsidiaries files, has
filed, is required to file or has been required to file a Return or is or has
been liable for Tax on a "nexus" basis for the current and preceding five years.
(n) The Company is not, and has not been during the five-year period
ending on the date hereof or the Closing Date, as the case may be, a "United
States real property holding corporation" within the meaning of Section 897 of
the Code.
(o) Schedule 2.13 provides true and correct descriptions of the
following: items for which amounts for taxes have been reserved on the Balance
Sheet in excess of reserves necessary to currently pay its operating tax
liabilities. The Company has a consolidated net operating loss carryover for
regular Federal income tax purposes as of December 31, 1996, of approximately
$42 million. The Company has no material net operating loss carryovers in
states other than Massachusetts (in which it has a net operating loss carryover
of $58 million as of December 31, 1996). The Company has tax credit carry
forwards as of December 31, 1996, of approximately $1.1 million for regular
Federal income tax purposes, and no tax credit carryforwards for state tax
purposes. In addition, the Company had approximately $1.1 million of minimum
tax carryovers.
(p) Schedule 2.13 sets forth the Company's best estimates, made in
good faith, of the excess loss accounts for the Company and its Subsidiaries as
of December 31, 1996. The Company estimates in good faith that neither it nor
its Subsidiaries had positive balances in any deferred intercompany gain
accounts as of December 31, 1996.
(q) The schedules of the Company's best estimates, made in good
faith, of the temporary and permanent differences as of December 31, 1996,
previously submitted to the Company are true, correct and complete in all
material respects.
<PAGE>
24
(r) None of the Company, any of the Subsidiaries or any other
affiliate of the Company has made any election under Section 13261(g)(2) or
Section 13261(g)(3) of the Revenue Reconciliation Act of 1993.
(s) None of the Company, any of the Subsidiaries or any other
affiliate of the Company has available any foreign tax credits.
SECTION 2.14. Labor Agreements. Except as identified on Schedule
-----------------
2.14, neither the Company nor any Subsidiary is a party to any union, collective
bargaining, works council or similar agreement or arrangement.
SECTION 2.15. Benefit Plans. (i) Schedule 2.15 is a list of each
--------------
"employee pension benefit plan" (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) (hereinafter a
"Pension Plan"), "employee welfare benefit plan" (as defined in Section 3(l) of
ERISA, hereinafter a "Welfare Plan"), and each other plan, arrangement or policy
relating to stock options, stock purchases, compensation, deferred compensation,
severance, fringe benefits or other employee benefits, in each case maintained
or contributed to, or required to be maintained or contributed to, by the
Company and its Subsidiaries or any other person or entity that, together with
the Company, is treated as a single employer under Section 414(b), (c), (m) or
(o) of the Code (each a "Commonly Controlled Entity") for the benefit of any
present or former employees of the Company or any of its Subsidiaries (all the
foregoing being herein called "Benefit Plans"). The Company has made available
to Parent true, complete and correct copies of (1) each Benefit Plan, (2) the
most recent annual report on Form 5500 as filed with the Internal Revenue
Service with respect to each applicable Benefit Plan, (3) the most recent
summary plan description (or similar document) with respect to each applicable
Benefit Plan and (4) each trust agreement and insurance or annuity contract
relating to any Benefit Plan.
(ii) Except as disclosed in Schedule 2.15, to the knowledge of the
Company, each Benefit Plan has been administered in all material respects in
accordance with its terms. Except as disclosed in Schedule 2.15, to the
knowledge of the Company, the Company, its Subsidiaries and all the Benefit
Plans are in compliance in all material respects with the applicable provisions
of ERISA, the Code, and all other Applicable Laws. Except as disclosed in
Schedule 2.15, to the knowledge of the Company, there are no investigations by
any governmental agency, termination proceedings or other claims (except claims
for benefits payable in the normal operation of the Benefit Plans), suits or
proceedings against or involving any Benefit Plan or asserting any rights to or
claims for benefits under any Benefit Plan that could give rise to a Material
Adverse Effect, and to the knowledge of the Company, there are not any facts
that could give rise to a Material Adverse Effect in the event of any such
investigation, claim, suit or proceeding.
<PAGE>
25
(iii) Except as disclosed on Schedule 2.15, to the knowledge of the
Company: (1) all contributions to the Benefit Plans required to be made by the
Company or any of its Subsidiaries in accordance with the terms of the Benefit
Plans, any applicable collective bargaining agreement and, when applicable,
Section 302 of ERISA or Section 412 of the Code, have been timely made, (2)
there has been no application for or waiver of the minimum funding standards
imposed by Section 412 of the Code with respect to any Benefit Plan that is a
Pension Plan, excluding any Pension Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA (hereinafter a "Company Pension Plan")
and (3) no Company Pension Plan had an "accumulated funding deficiency" within
the meaning of Section 412(a) of the Code as of the end of the most recently
completed plan year. All such contributions to the Benefit Plans for any period
ending before the Balance Sheet Date are properly accrued and reflected in the
Balance Sheet and such contributions since such Balance Sheet Date will be
reflected on subsequent balance sheets.
(iv) Except as disclosed on Schedule 2.15, to the knowledge of the
Company, (1) each Company Pension Plan that is intended to be a tax-qualified
plan has been the subject of a determination letter from the Internal Revenue
Service to the effect that such Company Pension Plan and each related trust is
qualified and exempt from Federal income taxes under Sections 401(a) and 501(a),
respectively, of the Code, (2) no such determination letter has been revoked,
and revocation has not been threatened, (3) no event has occurred and no
circumstances exist that would adversely affect the tax-qualification of such
Company Pension Plan and (4) such Company Pension Plan has not been amended
since the effective date of its most recent determination letter in any respect
that might adversely affect its qualification, materially increase its cost or
require security under Section 307 of ERISA. The Company has made available to
Parent a copy of the most recent determination letter received with respect to
each Company Pension Plan for which such a letter has been issued, as well as a
copy of any pending application for a determination letter. The Company has
also provided to Parent a list of all Company Pension Plan amendments as to
which a favorable determination letter has not yet been received.
(v) Schedule 2.15 discloses whether: (1) to the knowledge of the
Company, any non-exempt "prohibited transaction" (as defined in Section 4975 of
the Code or Section 406 of ERISA) has occurred that involves the assets of any
Benefit Plan; (2) to the knowledge of the Company, any Company Pension Plan has
been terminated or has been the subject of a "reportable event" (as defined in
Section 4043 of ERISA and the regulations thereunder) for which the 30-day
notice requirement has not been waived by the Pension Benefit Guaranty
Corporation ("PBGC"); and (3) to the knowledge of the Company, the Company, any
of its Subsidiaries or any trustee, administrator or other fiduciary of any
Benefit Plan has engaged in any transaction or acted in a manner that
<PAGE>
26
could, or has failed to act so as to, subject the Company, any such Subsidiary
or any trustee, administrator or other fiduciary to any material liability for
breach of fiduciary duty under ERISA or any other applicable law.
(vi) Except as disclosed on Schedule 2.15, to the knowledge of the
Company, as of the most recent valuation date for each Company Pension Plan that
is a "defined benefit pension plan" (as defined in Section 3(35) of ERISA
(hereinafter a "Defined Benefit Plan")), there was not any amount of "unfunded
benefit liabilities" (as defined in Section 4001(a)(18) of ERISA) under such
Defined Benefit Plan, and the Company is not aware of any facts or circumstances
that would materially change the funded status of any such Defined Benefit Plan.
The Company has made available to Parent the most recent actuarial report or
valuation with respect to each Defined Benefit Plan.
(vii) Except as disclosed on Schedule 2.15, to the knowledge of the
Company, no Commonly Controlled Entity has incurred any liability to a Pension
Plan (other than for contributions not yet due) or to the PBGC (other than for
the payment of premiums not yet due) that, when aggregated with other such
liabilities, would result in a Material Adverse Effect to the Company, which
liability has not been fully paid as of the date hereof if due and payable.
(viii) No Commonly Controlled Entity has (a) engaged in a transaction
described in Section 4069 of ERISA that could subject the Company to a material
liability at any time after the date hereof or (b) acted in a manner that could,
or failed to act so as to, result in material fines, penalties, taxes or related
charges under (x) Section 502(c), (i) or (1) of ERISA, (y) Section 4071 of ERISA
or (z) Chapter 43 of the Code.
(ix) Except as disclosed in Schedule 2.15, to the knowledge of the
Company, no Commonly Controlled Entity has announced an intention to withdraw,
but has not yet completed withdrawal, from a "multiemployer plan" (as defined in
Section 4001(a)(3) of ERISA). Except as disclosed on Schedule 2.15, to the
knowledge of the Company, no action has been taken, and no circumstances exist,
that could result in either a partial or complete withdrawal from such a
multiemployer plan by any Commonly Controlled Entity. Schedule 2.15 also lists
for each Benefit Plan that is a multiemployer plan (excluding the multiemployer
plan in respect of the Company's former New York Building Products, Inc.
operations) the Company's best estimate, based upon the information supplied to
it by each multiemployer plan, of the amount of withdrawal liability that would
be incurred if each Commonly Controlled Entity were to make a complete
withdrawal from each such plan as of the dates specified in Schedule 2.15.
Schedule 2.15 also lists for each Benefit Plan that is a multiemployer
<PAGE>
27
plan (excluding the multiemployer plans in respect of the Company's former New
York Building Products, Inc., and Bardstown operations) the Company's best
estimate, based upon the information supplied to it by each multiemployer plan,
of the amount of "unfunded vested benefits" (within the meaning of Section 4211
of ERISA) as of the dates specified in Schedule 2.15. As of the most recent
valuation date for the multiemployer plan in respect of the Company's former New
York Building Products Inc. operations, to the knowledge of the Company, based
upon the information supplied to it by such multiemployer plan, there was not
any amount of "unfunded vested benefits" under such plan.
(x) The list of Welfare Plans in Schedule 2.15 discloses whether each
Welfare Plan is (i) unfunded, (ii) funded through a "welfare benefit fund", as
such term is defined in Section 419(e) of the Code, or other funding mechanism
or (iii) insured. Except as disclosed on Schedule 2.15, to the knowledge of the
Company, apart from the written provisions of the Welfare Plans disclosed to
Parent, there are no understandings, agreements or undertakings, written or
oral, that would prevent any such Welfare Plan from being amended or terminated
at any time after the Closing Date. The Company and its Subsidiaries comply
with the applicable requirements of Section 4980B(f) of the Code with respect to
each Benefit Plan that is a group health plan, as such term is defined in
Section 5000(b)(1) of the Code.
(xi) Except as provided in Section 1.14 with respect to the 1982
Stock Option Plan, the 1992 Stock Option Plan, the Director Option Plan, the
1998 Incentive Compensation Program (the "MICP") and the Savings Plan, and as
provided in the employment and severance agreements listed in Schedules 2.11 (a)
and 2.15, no employee of the Company or any of its Subsidiaries will be entitled
to any additional material benefits or any acceleration of the time of payment
or vesting of any material benefits under any Benefit Plan as a result of the
transactions contemplated by this Agreement.
(xii) During the period beginning on January 1, 1995, and ending on
the date of this Agreement, there has been no change (a) in any actuarial or
other assumption used to calculate funding obligations with respect to any
Company Pension Plan or (b) in the manner in which contributions to any Company
Pension Plan are made or the basis on which such contributions are determined.
(xiii) Except as disclosed on Schedule 2.15, to the knowledge of the
Company and based upon its best estimate, any amount that could be received
(whether in cash or property or the vesting of property) as a result of any of
the transactions contemplated by this Agreement by any employee, officer or
director of the Company or any of its affiliates who is a "disqualified
individual" (as such term is defined in proposed Treasury
<PAGE>
28
Regulation Section 1.280G-1) under any employment, severance or termination
agreement, other compensation arrangement or Benefit Plan currently in effect
would not be characterized as an "excess parachute payment" (as such term is
defined in Section 280G(B)(1) of the Code). Schedule 2.15 sets forth (i) the
Company's best estimate of the maximum amount that could be paid to each
executive officer of Company as a result of the transactions contemplated by
this Agreement under all employment, severance and termination agreements, other
compensation arrangements and Benefit Plans currently in effect and (ii) the
Company's best estimate of the "base amount" (as such term is defined in Section
280(b)(3) of the Code) for each such executive officer calculated as of the date
of this Agreement.
SECTION 2.16. Labor Disputes; Unfair Labor Practices. (a) There is
---------------------------------------
neither pending nor, to the knowledge of the Company, threatened any labor
dispute which could materially adversely affect the facility that is the subject
of such dispute, or any strike or work stoppage involving the Company or any
Subsidiary.
(b) There is not now pending or, to the knowledge of the Company,
threatened any charge or complaint against the Company or any Subsidiary by the
National Labor Relations Board, any state or local labor or employment agency or
any representative thereof.
SECTION 2.17. Product Warranties. (a) The standard forms of product
-------------------
warranties and guarantees used by the Company and each Subsidiary during the
past five (5) years are attached as Schedule 2.17 hereto. Neither the Company
nor any Subsidiary has authorized any product warranty or guaranty during such
period of time other than pursuant to such forms.
(b) Other than as set forth on Schedule 2.17 or relating to any
matter that has been resolved or that the Company reasonably believes has been
abandoned, as of date of this Agreement, the Company has not received written
notice of any product warranty or similar claims with an actual or alleged
liability to the Company or any Subsidiary other than routine warranty claims
against the Company that do not in the aggregate exceed in any material respect
the level of such claims historically experienced by the Company in the ordinary
course. The Company does not believe that the Assurance of Discontinuance dated
November 1995 between the Commonwealth of Massachusetts and Bird, Inc. will
result in an increase in liability for claims under product warranties over the
level historically experienced by the Company in the ordinary course.
<PAGE>
29
(c) The class action litigation captioned Lindholm et. al. v. Bird
------------------------
Incorporated, Mass. Superior Ct, C.A. No. 96-00788, in respect of certain
- ------------
company shingle products is being defended by the Company's insurers with
reservation of rights.
(d) Since the Balance Sheet Date, the Company has not modified its
policies or practices with respect to settlement of warranty claims.
SECTION 2.18. Environmental Matters. Except as disclosed in Schedule
----------------------
2.18, with respect to the business and operations of the Company and its
Subsidiaries (which terms for purposes of this Section 2.18 shall be deemed to
include all predecessors and former Subsidiaries) and to the Owned Real Property
and Leased Real Property:
(a) No Hazardous Material has been used, possessed, Released,
generated, manufactured or treated, on or under such Owned Real Property or
Leased Real Property, as the case may be, by the Company or any Subsidiary in
material violation of any Environmental Law.
(b) The Company and each Subsidiary, as the case may be, has through
the date hereof (i) secured and maintained compliance with all permits,
certificates, licenses, approvals, registrations or authorizations required for
the conduct of their respective businesses under Environmental Laws and (ii)
maintained such Owned Real Property or Leased Real Property and conducted their
respective business thereon in accordance in all material respects with all
Environmental Laws.
(c) No written notice, written request for information pursuant to
common law, law or regulation, citation, summons, complaint or order has been
received by the Company or any Subsidiary, and no penalty has been assessed and,
to the knowledge of the Company, no investigation or review is pending or
threatened by any Governmental Authority or other Person, with respect to the
business and operations of the Company and its Subsidiaries or to such Owned
Real Property or Leased Real Property, as the case may be, other than relating
to any matter that has been resolved or that the Company reasonably believes has
been abandoned, regarding (i) any alleged violation by the Company or any
Subsidiary of any Environmental Laws, (ii) any alleged failure by the Company or
any Subsidiary to have any environmental permit, certificate, license, approval,
registration or authorization required under any Environmental Law, or (iii) any
use, possession, spill, Release, threatened Release, storage, generation,
manufacture, treatment, deposit, discharge, transportation or disposal by or on
behalf of the Company or any Subsidiary of any Hazardous Material.
<PAGE>
30
(d) Neither the Company nor any Subsidiary has entered into or agreed
to any court decree or order nor are any of them subject to any judgment, decree
or order relating to compliance with any Environmental Law or to investigation
or cleanup under any Environmental Law.
(e) There are no aboveground or underground storage tanks on any such
Owned Real Property or Leased Real Property.
(f) Neither the Company nor any Subsidiary has received any written
notice of non-compliance with any applicable statutes, laws, ordinances, rules,
orders and regulations of any Governmental Authority that relate to occupational
health and safety, other than relating to any matter that has been resolved or
that the Company reasonably believes has been abandoned.
(g) The investigation, remediation, cleanup and other costs of the
Company relating to compliance with any Environmental Law will not exceed an
amount equal to $2.2 million (the "Company Estimates"). The Company has used
its best efforts in preparing the Company Estimates consistent with all
recognized best engineering practices.
As used in this Agreement, the term "Environmental Laws" means any and
all applicable treaties, laws, regulations, enforceable requirements, binding
determinations, orders, decrees, judgments, injunctions, permits, approvals,
authorizations, licenses or variances, promulgated or entered into by any
Governmental Authority, relating to the environment, conservation, preservation
or reclamation of natural resources, or to the management, Release or threatened
Release of Hazardous Materials, including without limitation the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, 42
U.S.C. (S)(S) 9601 et seq. ("CERCLA"), the Federal Water Pollution Control Act,
-- ----
as amended, 33 U.S.C. (S)(S) 1251 et seq., Clean Air Act of 1970, as amended, 42
-- ----
U.S.C. (S)(S) 7401 et seq., the Toxic Substances Control Act of 1976, 15 U.S.C.
-- ----
(S)(S) 2601 et seq., the Occupational Safety and Health Act of 1970, as amended,
-- ----
29 U.S.C. (S)(S) 651 et seq., the Emergency Planning and Community Right-to-Know
-- ----
Act of 1986, 42 U.S.C. (S)(S) 11001 et seq., the Safe Drinking Water Act of
-- ----
1974, as amended, 42 U.S.C. (S)(S) 300(f) et seq., the Hazardous Materials
-- ----
Transportation Act, 49 U.S.C. (S)(S) 1801 et seq., and any similar or
-- ----
implementing state or local law, and all amendments or regulations promulgated
thereunder.
As used in this Agreement, the term "Hazardous Materials" means all
explosive or regulated radioactive materials or substances, hazardous or toxic
substances, wastes or chemicals, petroleum (including crude oil or any fraction
thereof) or petroleum distillates, asbestos or asbestos containing materials,
including materials listed in
<PAGE>
31
49 C.F.R. (S) 172.101 and materials defined as hazardous substances pursuant to
Section 101(14) of the CERCLA.
As used in this Agreement, the term "Release" means any spilling,
emitting, leaking, pumping, pouring, emptying, injecting, depositing, disposing,
discharging, dispersing, leaching, emanating or migrating of any Hazardous
Materials in, into, onto, or though the environment (including ambient air,
surface water, groundwater, soils, land surface, subsurface strata, workplace or
structure).
SECTION 2.19. Insurance. The Company and each Subsidiary has been
----------
and is insured by financially sound and reputable insurers unaffiliated with the
Company with respect to its and their properties and the conduct of its and
their business in such amounts and against such risks as are consistent with
industry practice. The insurance coverage provided by such policies of
insurance will be continued through the Effective Date and will not terminate or
lapse by reason of the transactions contemplated by this Agreement. The Company
has provided to Parent copies of such policies of insurance. Except as set forth
in Schedule 2.19, neither the Company nor any Subsidiary has been denied
insurance coverage by any carrier in the last three years.
SECTION 2.20. SEC Filings. (a) Schedule 2.20 sets forth all of the
------------
documents filed since January 1, 1995, through the date of this Agreement by the
Company with the Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (the "Securities Act"), or the Exchange Act. The documents listed in
Schedule 2.20 (the "SEC Documents") are all the documents the Company was
required to file under the Securities Act or the Exchange Act since January 1,
1995, and at the time they were filed and when supplemented or amended, the SEC
Documents complied with the requirements of the Securities Act and the Exchange
Act, as applicable, and at such time, none of the SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in the SEC
Documents, at the time they were filed and when supplemented or amended,
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with GAAP (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present in all material respects the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods therein indicated (subject, in the case of unaudited statements,
to normal year-end audit adjustments).
<PAGE>
32
(b) None of the information supplied or to be supplied by the Company
for inclusion or incorporation by reference in (i) the Offer Documents or (ii)
the information to be filed by the Company in connection with the Offer pursuant
to Section 14(f) of the Exchange Act and Rule l4f-1 promulgated thereunder (the
"Information Statement"), will, at the respective times the Offer Documents and
the Information Statement are filed with the SEC and first published, sent or
given to holders of shares of Company Common Stock or Preference Stock, 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 Information Statement will comply as to form in all material
respects with the requirements of the Exchange Act and the rules and regulations
thereunder.
SECTION 2.21. Brokers and Finders. The Company has not employed any
--------------------
broker or finder or incurred any liability for any brokerage fees, commissions,
finders' fees or similar fees or expenses in connection with this Agreement or
the Merger contemplated herein except for Lehman Brothers Inc. The Company has
delivered to Parent a copy of its engagement letter with Lehman Brothers Inc.
The estimated investment banking and legal fees and expenses incurred and to be
incurred by the Company in connection with this Agreement and the Merger
contemplated by this Agreement have been disclosed to Parent in writing on the
date hereof.
SECTION 2.22. Antitakeover. The Company has taken or will take prior
-------------
to Closing all action necessary to approve the Offer and the Merger such that
the approval (along with the stockholder approval required pursuant to Section
6.03) is sufficient to render entirely inapplicable to the Offer and the Merger
or Parent or Acquisition Sub the provisions of Chapter 110C, 110D, 110E and 110F
of the Massachusetts General Laws. No other antitakeover or similar statute or
regulation applies or purports to apply to the transactions contemplated by this
Agreement.
SECTION 2.23. Opinion of Financial Advisor. The Company has received
-----------------------------
the opinion of Lehman Brothers Inc. to the effect that the consideration to be
received in the Offer and the Merger by the Company's stockholders is fair to
the Company's stockholders from a financial point of view, a copy of which
opinion has been delivered to Parent.
SECTION 2.24. Asbestos Claims. The Agreement of Settlement dated
----------------
March 8, 1993, between Employers Insurance of Wausau and the Company with
respect to insurance coverage for the Company's exposure for future asbestos
expenses and liabilities is in full force and effect, and the Company believes
it has defenses to any payment Employers Insurance of Wausau may assert it is
due under such agreement.
<PAGE>
33
SECTION 2.25. Revolving Credit and Security Agreement. The Revolving
----------------------------------------
Credit and Security Agreement (the "Revolving Credit Agreement") between the
Company and Fleet National Bank, dated as of July 8, 1997, may be terminated by
the Company at any time without any premium or penalty, except as set forth in
paragraph 2.17 of the Revolving Credit Agreement.
ARTICLE III
Representations and Warranties of Parent
----------------------------------------
Parent hereby represents and warrants to the Company as follows:
SECTION 3.01. Corporate Organization. Parent is a corporation duly
-----------------------
incorporated, validly existing and in good standing under the laws of Delaware
with all requisite power and authority to own, operate and lease its properties
and to carry on its business as now being conducted. Parent is qualified to do
business and is in good standing in each jurisdiction in which such
qualification is necessary, except where failure to be qualified would not
reasonably be expected to have a material adverse effect on the ability of
Parent to carry out the transactions contemplated hereby without significant
unanticipated delay.
SECTION 3.02. Authorization. (a) Parent has requisite corporate
--------------
power and authority to execute and deliver this Agreement and, subject to the
satisfaction of the conditions set forth herein and therein, to consummate the
transactions contemplated hereby and thereby.
(b) This Agreement has been approved by the Board of Directors of
Parent and upon such approval no other corporate proceeding on the part of
Parent is necessary to authorize this Agreement or to consummate the
transactions contemplated hereby.
(c) This Agreement has been duly and validly executed and delivered
by Parent and is a valid and binding agreement of Parent, enforceable against
Parent in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or similar laws in effect now or hereafter in effect relating to
creditors' rights generally and by equitable principles (whether considered in a
proceeding at law or in equity).
<PAGE>
34
SECTION 3.03. Absence of Conflicts; Consents. Neither the execution
-------------------------------
and delivery by Parent of this Agreement nor the consummation by Parent of the
transactions contemplated hereby will:
(a) conflict with or result in a breach of any provision of the
certificate of incorporation or By-laws of Parent which would have a
material adverse effect on the ability of Parent to carry out the
transactions contemplated hereby without significant unanticipated delay;
(b) result in the creation of any Lien upon any of the properties of
Parent which would have a material adverse effect on the ability of Parent
to carry out the transactions contemplated hereby without significant
unanticipated delay;
(c) with or without giving of notice or the passage of time, or both,
violate, or conflict with, or constitute a default under, or result in the
termination or in a right of termination of, violate or be in conflict
with, result in a breach of any term or provision of, or constitute a
default under, or accelerate or permit the acceleration of the performance
required by, or give any other Person a basis for accelerated or increased
rights or termination or nonperformance under, or require any consent,
authorization or approval under, any term or provision of any Lien, lease,
license or other agreement or instrument to which Parent or any of its
Subsidiaries is a party or by which it or they are bound, except to the
extent that such circumstance would not have a material adverse effect on
the ability of Parent to carry out the transactions contemplated hereby
without significant unanticipated delay;
(d) subject to the approval of the Merger by the Company's
stockholders, to the knowledge of Parent, violate any provision of, or
require any consent, authorization or approval under, any Applicable Laws
of any Governmental Authority, or any Judgment applicable to Parent or any
of its Subsidiaries, except to the extent that such circumstance would not
have a material adverse effect on the ability of Parent to carry out the
transactions contemplated hereby without significant unanticipated delay;
or
(e) require any consent, approval or authorization of, or declaration,
filing or registration with, any Governmental Authority, to be made or
obtained by or on behalf of Parent except (i) as required by the Exchange
Act, (ii) the filing of the Articles of Merger and other appropriate
merger documents, if any, as required by the laws of the Commonwealth of
Massachusetts or, in connection with the maintenance of qualification to do
business in other jurisdictions, such
<PAGE>
35
other jurisdictions and (iii) filings with the FTC and with the Antitrust
Division under the HSR Act.
SECTION 3.04. Litigation. Neither Parent nor any of its Subsidiaries
-----------
is engaged in, and there is not, to the knowledge of Parent, pending, nor has
Parent or any of its Subsidiaries received any written notice of, any Legal
Action which would prevent Parent from consummating the transactions
contemplated hereby.
SECTION 3.05. Brokers and Finders. Parent has not employed any broker
--------------------
or finder or incurred any liability for any brokerage fees, commissions,
finders' fees or similar fees or expenses in connection with this Agreement or
the transactions contemplated hereby except for McFarland Dewey Securities Co.,
L.P. ("McFarland Dewey"). In the event that the Company shall be obligated to
pay Parent's Expenses pursuant to Article X, Parent will deliver to the Company
a copy of its engagement letter with McFarland Dewey.
ARTICLE IV
Representations and Warranties of Acquisition Sub
-------------------------------------------------
Acquisition Sub hereby represents and warrants to the Company as
follows:
SECTION 4.01. Corporate Organization. Acquisition Sub is a
-----------------------
corporation duly incorporated, validly existing and in good standing under the
laws of the Commonwealth of Massachusetts and has not engaged in any operations
or incurred any obligations other than incident to its organization and the
performance of this Agreement.
SECTION 4.02. Authorization. (a) Acquisition Sub has all requisite
--------------
corporate power and authority, if necessary, to execute, deliver and file the
Articles of Merger and to execute and deliver this Agreement and, subject to the
satisfaction of the conditions set forth herein, to consummate the transactions
contemplated hereby. This Agreement has been approved by the Board of Directors
of Acquisition Sub, and no other corporate proceeding on the part of Acquisition
Sub is necessary to authorize this Agreement or to consummate the transactions
contemplated hereby without significant unanticipated delay.
(b) The Agreement has been duly and validly executed and delivered by
Acquisition Sub and is a valid and binding agreement of Acquisition Sub,
enforceable
<PAGE>
36
against Acquisition Sub in accordance with its terms, except in each case as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or similar laws in effect now or hereafter in
effect relating to creditors' rights generally and by equitable principles
(whether considered in a proceeding at law or in equity).
SECTION 4.03. Absence of Conflicts; Consents. Neither the execution
-------------------------------
and delivery by Acquisition Sub of this Agreement nor the consummation by
Acquisition Sub of the transactions contemplated hereby will:
(a) conflict with or result in a breach of any provision of the
Articles of Organization or By-laws of Acquisition Sub which would have a
material adverse effect on the ability of Acquisition Sub to carry out the
transactions contemplated hereby without significant unanticipated delay;
(b) result in the creation of any Lien upon any of the properties of
Acquisition Sub which would have a material adverse effect on the ability
of Acquisition Sub to carry out the transactions contemplated hereby
without significant unanticipated delay;
(c) with or without giving of notice or the passage of time, or both,
violate, or conflict with, or constitute a default under, or result in the
termination or in a right of termination of, violate or be in conflict
with, result in a breach of any term or provision of, or constitute a
default under, or accelerate or permit the acceleration of the performance
required by, or give any other Person a basis for accelerated or increased
rights or termination or nonperformance under, or require any consent,
authorization or approval under, any term or provision of any Lien, lease,
license or other agreement or instrument to which Acquisition Sub or any of
its Subsidiaries is a party or by which it or they are bound, unless such
circumstance would not have a material adverse effect on the ability of
Acquisition Sub to carry out the transactions contemplated hereby without
significant unanticipated delay;
(d) subject to the approval of the Merger by the Company's
stockholders, to the knowledge of Acquisition Sub, violate any provision
of, or require any consent, authorization or approval under, any Applicable
Laws of any Governmental Authority, or any Judgment applicable to
Acquisition Sub or any of its Subsidiaries, except to the extent that such
circumstance would not have a material adverse effect on the ability of
Acquisition Sub to carry out the transactions contemplated hereby without
significant unanticipated delay; or
<PAGE>
37
(e) require any consent, approval or authorization of, or declaration,
filing or registration with, any Governmental Authority, to be made or
obtained by or on behalf of Acquisition Sub except (i) as required by the
Exchange Act, (ii) the filing of the Articles of Merger and other
appropriate merger documents, if any, as required by the laws of the
Commonwealth of Massachusetts or, in connection with the maintenance of
qualification to do business in other jurisdictions, such other
jurisdictions and (iii) filings with the FTC and with the Antitrust
Division under the HSR Act.
SECTION 4.04. Litigation. Neither Acquisition Sub nor any of its
-----------
Subsidiaries is engaged in, and there is not, to the knowledge of Acquisition
Sub, pending, nor has Acquisition Sub received any written notice of, any Legal
Action which would prevent Acquisition Sub from consummating the transactions
contemplated hereby.
SECTION 4.05. Capitalization. The authorized capital stock of
---------------
Acquisition Sub consists of 200,000 shares of Common Stock, $1 par value, of
which 100 shares are issued and outstanding. All issued and outstanding shares
of Acquisition Sub Common Stock have been validly issued and are fully paid,
nonassessable and free of preemptive rights and all of such shares are owned,
beneficially and of record, by Parent. There are no outstanding securities
convertible into or exchangeable or exercisable for shares of capital stock of
Acquisition Sub.
SECTION 4.06. Brokers and Finders. Acquisition Sub has not employed
--------------------
any broker or finder or incurred any liability for any brokerage fees,
commissions, finders' fees or similar fees or expenses in connection with this
Agreement or the transactions contemplated hereby.
ARTICLE V
Covenants
---------
SECTION 5.01. Access and Information. From the date hereof until the
-----------------------
Effective Date or, if earlier, the date of termination of this Agreement
pursuant to Section 9.01, the Company shall, and shall cause its Subsidiaries
to, afford to Parent and to Parent's officers, employees, accountants, counsel
and other authorized representatives full access, upon reasonable notice to the
Company, to their plants, properties, books and records during normal business
hours for the purpose of making such investigations as Parent shall reasonably
desire in connection with the transactions contemplated hereby, at its expense
(except as otherwise contemplated by Section 10.01), and the Company shall
<PAGE>
38
use its reasonable efforts to cause its and its Subsidiaries' representatives to
furnish promptly to Parent such additional financial and operating data and
other information regarding the business and properties of the Company and its
Subsidiaries as Parent may from time to time reasonably request for such
purpose. In addition, the Company shall afford to Parent and to Parent's
officers, employees, accountants, counsel and other authorized representatives
the right to speak directly with the lenders of the Company and its Subsidiaries
in the presence of representatives of the Company selected by the President of
the Company, including without limitation, Fleet National Bank.
SECTION 5.02. Proxy Statement. (a) The Company shall prepare and
----------------
file with the SEC, as soon as reasonably practicable, the proxy statement to be
distributed to the Company's stockholders in connection with the Special Meeting
referred to in Section 5.03 (the "Proxy Statement"), and the Company shall use
all reasonable efforts to have such Proxy Statement cleared by the SEC. The
Proxy Statement shall comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder,
except that no representation is made by the Company with respect to statements
made or incorporated by reference therein based on information supplied or
required to be supplied by Parent or Acquisition Sub for inclusion or
incorporation by reference in the Proxy Statement.
(b) Parent shall cooperate with the Company in preparing the Proxy
Statement and making any filings required to be made pursuant to this Section
5.02, and the Company shall consult with Parent in that regard and keep Parent
fully informed of its progress with respect thereto and provide to Parent copies
of the Proxy Statement and all such filings for review and approval prior to the
finalization thereof.
(c) Parent and the Company shall furnish to each other, and each
other's counsel, all such information as may be required and requested in
connection with the preparation of the Proxy Statement and the filing of the
Proxy Statement with the SEC, and each represents and warrants to the other that
no written information furnished as provided for in this Section 5.02(c) which
has been prepared by the responsible party will contain any untrue statement of
a material fact or omit to state a material fact required to be stated in order
to make any information so furnished, in light of the circumstances under which
it is so furnished, not misleading.
(d) Parent and the Company shall each promptly notify the other if at
any time before the Effective Date it becomes aware that the Proxy Statement
contains any untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading. In such event, the Company shall prepare a supplement or amendment
to the Proxy Statement which corrects such
<PAGE>
39
misstatements or omissions and shall cause the same to be filed with the SEC and
distributed to the stockholders of the Company in accordance with the Exchange
Act.
(e) Upon the acceptance of any shares of Company Common Stock and
Preference Stock (if any) by Acquisition Sub pursuant to the Offer (the
"Consummation of the Offer"), Parent shall cause Acquisition Sub to vote all its
shares of Company Common Stock and Preference Stock in favor of the Merger.
SECTION 5.03. Stockholders' Meeting. (a) The Company shall call a
----------------------
special meeting of its stockholders ("Special Meeting") to consider and vote
upon the matters necessary for the consummation of the transactions contemplated
by this Agreement and shall recommend to its stockholders a vote "FOR" the
Merger; provided, however, that nothing contained in this Section 5.03(a) or any
-------- -------
other provision of this Agreement shall prohibit the Company or its Board of
Directors, or the representatives of either of them, from recommending to the
stockholders of the Company against, or withdrawing, modifying or changing its
recommendation to the stockholders with respect to, the Merger, if permitted by
Section 5.12 hereof.
(b) The date of the Special Meeting shall be determined jointly by
Parent and the Company, but shall occur as soon as practicable following the
SEC's approval of the Proxy Statement and related proxy materials.
SECTION 5.04. Supplemental Information. From time to time prior to
-------------------------
the Effective Date, the Company shall promptly advise Parent of any inaccuracy
of which it has knowledge in any Schedules which it has delivered pursuant to
this Agreement if any matter arises hereafter which, if existing or occurring at
the date of this Agreement, would have been required to be set forth or
described in any such Schedule. Such updating shall not cure any breach or
misrepresentation or failure of any closing condition that may exist based on
the Schedules originally delivered with this Agreement.
SECTION 5.05. Further Assurances. Consistent with the terms and
-------------------
conditions hereof, each party hereto shall execute and deliver such instruments
and take such other action as the other parties hereto may reasonably require in
order to carry out this Agreement and the transactions contemplated hereby.
SECTION 5.06. Conduct of Company Business Prior to the Effective
--------------------------------------------------
Date. (a) Except as set forth on Schedule 5.06 or any other Schedule hereto
- -----
with reference to this Section 5.06 or otherwise consented to or approved by an
authorized officer of Parent or as expressly contemplated or permitted by this
Agreement, the Company agrees that prior to the Effective Date (or, if earlier,
when a majority of the
<PAGE>
40
members of the Board of Directors of the Company are designees of Acquisition
Sub in accordance with Section 5.21) the business of the Company and its
Subsidiaries shall be conducted in the ordinary course consistent with past
practice and:
(i) no change shall be made in the respective articles or certificate
of organization or incorporation or By-Laws of the Company or any of its
Subsidiaries;
(ii) no change shall be made in the number of shares of the Company's
authorized, issued or outstanding capital stock; nor shall any Conversion
Rights be granted, made, redeemed or amended; nor shall the Company or any
Subsidiary issue, deliver, pledge or sell any such shares, securities or
obligations (except deliveries or pledges in favor of the Company's senior
lenders); provided, however, that the Company shall be permitted to issue
-------- -------
shares or other securities as contemplated by the Savings Plan as in effect
on the date hereof and shall be permitted to issue shares of Common Stock
in connection with the due exercise of Options under the 1982 Stock Option
Plan, the 1992 Stock Option Plan, the Director Option Plan or any other
right or convertible security outstanding as of the date of this Agreement
in accordance with the existing terms thereof;
(iii) no dividend shall be declared or paid or other distribution
(whether in cash, stock, property or any combination thereof) or payment
declared or made in respect of the Company Common Stock, 5% Stock,
Preference Stock or any other outstanding capital stock of the Company, nor
shall the Company or any Subsidiary (y) purchase, acquire or redeem any
shares of Company Common Stock, 5% Stock or Preference Stock or (z) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for, shares of its capital stock;
(iv) neither the Company nor any Subsidiary shall enter into any
Material Contract, or except in the ordinary course of business consistent
with past practice any other agreement, commitment or instrument;
(v) the Company shall use and shall cause each Subsidiary to use its
and their respective reasonable efforts to preserve its and their business
organization intact, to keep available the services of its and their
officers and present key employees and to preserve its and their properties
and the goodwill of its and their suppliers, customers and others with whom
business relationships exist;
(vi) the Company shall not take, agree to take or permit any
Subsidiary to take any action or do or permit to be done anything in the
conduct of its business
<PAGE>
41
or that of any Subsidiary which would be contrary to or in breach of any of
the terms or provisions of this Agreement or which would cause any of the
representations of the Company contained herein to be or become untrue in
any material respect;
(vii) neither the Company nor any of its Subsidiaries shall adopt or
amend in any material respect or terminate any Benefit Plan, except as
required by law, or change any actuarial or other assumption used to
calculate funding obligations with respect to any Company Pension Plan
(except to the extent that failure to make such change would result in
noncompliance with GAAP, ERISA or the Code), or change the manner in which
contributions to any Company Pension Plan are made or the basis on which
such contributions are determined, except as required by Applicable Law;
(viii) the Company shall not acquire or agree to acquire (x) by
merging or consolidating with, or by purchasing a substantial portion of
the assets of, or by any other manner, any business or any corporation,
partnership, joint venture, association or other business organization or
division thereof or (y) any assets that are material, individually or in
the aggregate, to the Company and its Subsidiaries taken as a whole, except
purchases of inventory, raw materials, supplies and similar materials in
the ordinary course of business consistent with past practice and capital
expenditures complying with clause (xi);
(ix) the Company shall not sell, lease, license, mortgage or otherwise
encumber or subject to any Lien (except in favor of the Company's senior
lenders or Permitted Liens) or otherwise dispose of any of its material
properties or assets, except bona fide sales of inventory in the ordinary
course of business consistent with past practice;
(x) the Company shall not (x) incur any indebtedness for borrowed
money or guarantee any such indebtedness of another person, issue or sell
any debt securities or warrants or other rights to acquire any debt
securities of the Company or any of its Subsidiaries, guarantee any debt
securities of another person, enter into any "keep well" or other agreement
to maintain any financial statement condition of another person or enter
into any arrangement having the economic effect of any of the foregoing,
except for short-term borrowings incurred in the ordinary course of
business consistent with past practice and routine endorsements in the
process of collection, or (y) make any loans, advances or capital
contributions to, or investments in, any other person, other than to the
Company or any direct or indirect wholly owned Subsidiary of the Company or
routine travel and similar advances to employees;
<PAGE>
42
(xi) the Company shall not make or agree to make any new capital
expenditure or expenditures which, individually, is in excess of $100,000
or, in the aggregate, are in excess of $250,000;
(xii) the Company shall not make any tax election or settle or
compromise any income tax liability; provided that Parent shall not
--------
unreasonably withhold any consent or approval of any such tax election,
settlement or compromise;
(xiii) the Company shall not 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 consistent with past
practice or in accordance with their terms, of liabilities that are
reflected or reserved against in, the Balance Sheet or incurred since the
date of the Balance Sheet in the ordinary course of business consistent
with past practice, or waive the benefits of, or agree to modify in any
manner, any confidentiality, standstill or similar agreement to which the
Company or any of its Subsidiaries is a party, except as permitted by
Section 5.12; and
(xiv) the Company shall not authorize any of, or commit or agree to
take any of, the foregoing actions.
(b) Without the prior consent of an authorized officer of Parent,
which consent shall not be unreasonably withheld, the Company shall not make
any election fixing the interest rate or rates payable under the Revolving
Credit Agreement for a term that could reasonably be expected to extend beyond
the Effective Date.
(c) Parent shall respond within a reasonable period of time to any
request for consent or approval required under Section 5.06.
(d) Advice of Changes. The Company shall promptly advise Parent
-------------------
orally and in writing of any change or event of which the Company has knowledge
having, or which, insofar as can reasonably be foreseen, would have, a Material
Adverse Effect.
SECTION 5.07. Consents. Each of the Company, Parent and Acquisition
---------
Sub shall, and shall cause each of their Subsidiaries to, use its and their
reasonable efforts to obtain prior to the Effective Date all approvals,
authorizations and consents of all third Persons identified on Schedule 2.05 and
all Permits which are necessary for (i) the consummation of the Offer, the
Merger and the other transactions contemplated hereby, (ii) the ownership or
leasing and operation by the Surviving Corporation and each of its
<PAGE>
43
Subsidiaries of all the properties and assets of the Company and its
Subsidiaries and (iii) the conduct by the Surviving Corporation and each of its
Subsidiaries of the business of the Company and its Subsidiaries as conducted by
such entities on the date hereof.
SECTION 5.08. Filings. The Company, Parent and Acquisition Sub shall
--------
use their reasonable efforts to respond as promptly as practicable to all
inquiries received from the FTC or the Antitrust Division for additional
information or documentation in connection with all notices, reports or other
documentation filed by Parent and the Company under the HSR Act. The Company,
Parent and Acquisition Sub shall take such reasonable action as may be necessary
under state and Federal securities laws applicable to or necessary for, and will
file all documents and notifications with the SEC and other Governmental
Authorities reasonably necessary for, the consummation of the Offer, the Merger
and the transactions contemplated hereby. Each party shall furnish the other
and the other's counsel with all information reasonably requested by such other
party pertaining to it and its subsidiaries and affiliates as may be required in
order to enable such other party to take all such actions as required by this
Section 5.08. Nothing in this Agreement shall require Parent to dispose of, or
make any change in, any portion of its or the Company's assets or business or to
pay any material amount or incur any other material burden in order to obtain
any consent, approval or authorization or satisfy any condition in connection
with the Closing.
SECTION 5.09. Filing of Articles of Merger. Subject to the terms and
-----------------------------
conditions of this Agreement, as soon as practicable following the approval of
the Merger by the stockholders of the Company contemplated by Section 5.03
hereof, the Company, Parent and Acquisition Sub will cause the Articles of
Merger to be filed with the Secretary of State of the Commonwealth of
Massachusetts.
SECTION 5.10. Interim Financial Statements. Until the Effective Date
-----------------------------
or, if earlier, the date of termination of this Agreement pursuant to Section
9.01, as soon as practicable but in no event later than 30 days after the end of
each month beginning with October 1997, the Company shall deliver to Parent
unaudited consolidated financial information for such month and the
corresponding month of the preceding year as prepared by the Company's
management for its own internal purposes. Until the Effective Date or, if
earlier, the date of termination of this Agreement pursuant to Section 9.01, the
Company shall deliver to Parent (a) its Form 10-K for the year ended December
31, 1997 prior to March 31, 1998 (but not later than the business day prior to
the date of filing of such Form 10-K with the SEC) and (b) its Form 10-Q for
each quarter within 45 days after the end of such quarter after the date of this
Agreement (but not later than the business day prior to the date of filing of
such Form 10-Q with the SEC). The financial statements contained therein shall
present fairly in all material respects the Company's consolidated financial
condition, results of operations and
<PAGE>
44
changes in financial position (on a consolidated basis) as at the date or for
the periods indicated in accordance with GAAP consistently applied, except as
otherwise indicated in such statements and except as to format and footnote
disclosure shall be prepared in conformity with the requirements of Rule 10-01
of Regulation S-X under the Exchange Act and Item 303 of Regulation S-K.
SECTION 5.11. Public Announcements. (a) The parties agree that the
---------------------
initial press release to be issued with respect to the transactions contemplated
by this Agreement shall be in the form heretofore agreed to by the parties.
Thereafter, unless required by Applicable Law or by the rules of any applicable
self-regulatory organizations, the Company, Parent and Acquisition Sub shall
not, and shall each cause their respective officers, employees and other
authorized representatives not to, prior to the Effective Date, issue any press
release or make any other public disclosure or announcement or otherwise make
any disclosure to any third Person (other than by way of the Offer Documents,
the Schedule 14D-9 and the Proxy Statement referred to in Section 5.02)
concerning the transactions contemplated by this Agreement or the terms and
provisions hereof.
(b) Should any press release or other public disclosure be required
to be made, then the party required to make such release or disclosure shall not
make such release or disclosure without first using its reasonable efforts to
obtain the prior written consent of the other parties hereto as to both the
timing and content of such press release or public disclosure, which consent
shall not be unreasonably withheld.
SECTION 5.12. No Solicitation. (a) The Company shall not, nor shall
----------------
it permit any of its Subsidiaries or affiliates to, nor shall it authorize or
permit any officer, director or employee of, or any investment banker, attorney
or other advisor or representative of, the Company or any of its Subsidiaries
to, (i) solicit or initiate, or knowingly encourage the submission of, any
takeover proposal, (ii) participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to any takeover
proposal (except for (1) non-confidential information, or (2) filings with the
SEC); provided, however, that prior to the earlier of (x) the Consummation of
-------- -------
the Offer or (y) the Special Meeting, to the extent required by the fiduciary
obligations of the Board of Directors of the Company, as determined in good
faith by the Board of Directors based on the advice of counsel, the Company may,
(A) in response to an unsolicited request therefor, furnish information with
respect to the Company (pursuant to a confidentiality agreement at least as
restrictive as the Confidentiality Agreement dated April 13, 1994 between the
Company and Saint-Gobain Corporation, as amended (as determined by the Company's
counsel)) to any person who has indicated to the Company that it is interested
in pursuing a qualified takeover proposal and discuss such information (but not
the terms of any possible takeover proposal) with such person and (B) upon
receipt by the Company of a qualified takeover proposal, following the delivery
to Parent of the notice required pursuant to Section 5.12(c), participate in
<PAGE>
45
discussions or negotiations regarding such qualified takeover proposal. Without
limiting the foregoing, it is understood that any violation of the restrictions
set forth in the preceding sentence by any officer of the Company or any of its
Subsidiaries or any investment banker, attorney or other advisor or
representative of the Company or any of its Subsidiaries, shall be deemed to be
a breach of this Section 5.12 by the Company. For purposes of this Agreement,
"takeover proposal" means any proposal for a merger or other business
combination (regardless of legal form) involving the Company or any Subsidiary
or any proposal or offer to acquire in any manner, directly or indirectly, a
substantial portion of the assets or business of the Company or a substantial
equity interest in, or any substantial amount of voting securities of, the
Company or any Subsidiary, or any other transaction outside the ordinary course
of business and not otherwise specifically permitted by the terms of this
Agreement the consummation of which would impede or prevent the consummation of
the Merger pursuant to the terms of this Agreement; and "qualified takeover
proposal" means a takeover proposal having terms which the Board of Directors of
the Company determines (based on, among other things, the advice of a financial
advisor of nationally recognized reputation and after giving due consideration
to the Stockholder Agreement dated the date hereof among Parent, Acquisition Sub
and the persons identified on Schedule A thereto) in its good faith reasonable
judgment to be more favorable to the holders of Company Common Stock than the
Total Merger Consideration and holders of Preference Stock than the Preference
Stock Consideration and likely to be fully financed and consummated.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall (i) withdraw or modify, or propose to withdraw or modify, in a
manner adverse to Parent or Acquisition Sub, the approval or recommendation by
such Board of Directors or any such committee of this Agreement, the Offer or
the Merger, (ii) approve or recommend, or propose to approve or recommend, any
takeover proposal or (iii) enter into any agreement with respect to any takeover
proposal. Notwithstanding the foregoing, in the event the Board of Directors of
the Company receives a qualified takeover proposal, the Board of Directors or
any committee thereof or the Company may (subject to the limitations contained
in this Section) withdraw or modify its approval or recommendation of this
Agreement, the Offer or the Merger at any time after 48 hours following Parent's
receipt of written notice (a "Notice of Qualified Takeover Proposal") advising
Parent that the Board of Directors has received a qualified takeover proposal,
specifying the material terms and conditions of such qualified takeover proposal
and identifying the person making such qualified takeover proposal. The Company
may take any of the foregoing actions pursuant to the preceding sentence only
until the earlier of (x) the Consummation of the Offer or (y) the approval of
the Merger at the Special Meeting. Nothing contained herein shall prohibit the
Company from taking and disclosing to its stockholders a position contemplated
by Rule 14e-2(a) following Parent's receipt of a Notice of Qualified Takeover
Proposal provided that the Company does not
<PAGE>
46
withdraw or modify its position with respect to the Merger or approve or
recommend a takeover proposal.
(c) In addition to the obligations of the Company set forth in
paragraph (b) of this Section, the Company shall promptly advise Parent orally
and in writing of any request for information or of any takeover proposal, or
any inquiry with respect to any takeover proposal, the material terms and
conditions of such request, takeover proposal or inquiry, and the identity of
the person making any such takeover proposal or inquiry. The Company shall keep
Parent fully informed of the status and details of any such request, takeover
proposal or inquiry.
SECTION 5.13. Validity of Representations. Parent, Acquisition Sub
----------------------------
and the Company shall each take such action as is reasonably necessary to render
their respective representations and warranties accurate on and as of the
Effective Date. Without limiting the foregoing, the Company shall take any
action required by Parent to ensure the accuracy of Section 2.22 if Parent
determines that would be desirable.
SECTION 5.14. Employees; Benefits. Parent and Acquisition Sub shall
--------------------
honor (i) all employment, severance or similar contractual arrangements in
accordance with their terms in existence on the date of this Agreement and
disclosed prior to the date of this Agreement to Parent and (ii) all legally
imposed obligations relating to employment matters. After the Closing Date,
Parent and Acquisition Sub shall comply with enforceable Applicable Law,
including without limitation the Worker Adjustment and Retraining Notification
Act, 29 U.S.C. (S) 2101 et seq. It is the current intention of Parent and
-- ----
Acquisition Sub to cause the Surviving Corporation to provide benefits to
employees of the Company and its Subsidiaries that are no less favorable in the
aggregate to such employees than those in effect on the date of this Agreement;
provided, however, that the foregoing shall not limit or restrict the right of
- -------- -------
the Surviving Corporation or its Subsidiaries to terminate the employment of
such employees or subsequently to modify the benefits or other terms of
employment of such employees, to the extent permitted by enforceable Applicable
Law.
SECTION 5.15. Indemnification and Insurance. (a) Parent and
------------------------------
Acquisition Sub hereby agree that all rights to indemnification now existing in
favor of the directors or officers of the Company and its Subsidiaries (the
"Indemnified Parties") as currently provided in their respective certificates or
articles of incorporation or organization and By-Laws or in any agreements,
contracts or arrangements with the Company or any of its Subsidiaries in effect
on the date hereof and previously furnished to Parent and to the extent not in
violation of applicable state law, shall survive the Merger and shall continue
in full force and effect for a period of five years from the Effective Date;
provided that, in the event any claim or claims are asserted or made
- --------
<PAGE>
47
within such five year period, all rights to indemnification in respect of any
such claim or claims shall continue until the disposition of any and all such
claims. Without limiting the foregoing, to the extent currently provided in the
certificates or articles of incorporation or organization and By-Laws of the
Company and its Subsidiaries and Massachusetts law, or agreements, contracts or
arrangements disclosed to Parent with the Company or any of the Subsidiaries, in
the event that any Indemnified Party becomes involved in any capacity in any
action, proceeding or investigation in connection with any matter, including the
transaction contemplated by this Agreement, occurring prior to, and including,
the Effective Date, or otherwise relating to or arising out of such matters,
Parent or the Surviving Corporation shall periodically advance to such
Indemnified Party his or her legal and other expenses (including the costs of
any investigation and preparation incurred in connection therewith). Parent
shall use all reasonable efforts to maintain in effect, or shall cause the
Surviving Corporation to use all reasonable efforts to maintain in effect, for
two years after the Effective Date, directors' and officers' liability insurance
("D&O Insurance") covering those persons covered by the Company's directors' and
officers' liability insurance on the date of this Agreement or the Effective
Date and which is substantially equivalent in terms of coverage and amount as
the Company has in effect on the Effective Date so long as such insurance is
available and the annual premium therefor would not be in excess of $166,000
(the "Maximum Premium"). If the existing D&O Insurance expires, is terminated
or cancelled during such two-year period, Parent will use all reasonable efforts
to cause to be obtained as much D&O Insurance as can be obtained for the
remainder of such period for an annualized premium not in excess of the Maximum
Premium, on terms and conditions no less advantageous than the existing D&O
Insurance.
(b) Any Indemnified Party wishing to claim indemnification hereunder,
upon learning of any such Legal Action, shall promptly notify Parent and the
Surviving Corporation with respect thereto, but the failure to so notify shall
not relieve Parent or the Surviving Corporation of any liability it may have to
such Indemnified Party hereunder except to the extent that Parent and the
Surviving Corporation are materially prejudiced thereby.
(c) Parent and the Surviving Corporation shall periodically, as
requested, advance to such Indemnified Party his, her or its legal and other
expenses (including the cost of investigation and preparation incurred in
connection therewith) to the extent such Indemnified Party is indemnified
pursuant to the terms of this Section 5.15, unless it is ultimately determined
by a court of competent jurisdiction that such Indemnified Party is not entitled
to indemnification hereunder.
<PAGE>
48
(d) Parent and the Surviving Corporation shall be subrogated to any
rights any Indemnified Party may have with respect to any amounts paid to or on
behalf of such Indemnified Party by Parent and the Surviving Corporation
hereunder.
SECTION 5.16. Redemption of 5% Stock. (a) In connection with the
-----------------------
Merger, the Company, Parent and Acquisition Sub hereby agree that the 5% Stock
shall be redeemed and retired, as soon as practicable following the Effective
Date for the 5% Stock Consideration in accordance with the Surviving
Corporation's Articles of Organization.
(b) Prior to the date specified in the call notice for the redemption
and retirement of the 5% Stock, the Surviving Corporation shall cause to be
deposited with an appropriate trust company or bank, for the credit of the
holders of the 5% Stock, sufficient funds to be paid to such holders for
redemption and retirement of all of such shares of 5% Stock as provided for
herein and in the Surviving Corporation's Articles of Organization.
SECTION 5.17. Material Contracts. The Company shall not enter into
-------------------
any material modification or amendment concerning any Material Contract listed
on Schedule 2.11(a) or 2.11(b) without the consent of Parent, which consent
shall not be unreasonably withheld. Immediately after the Closing, Parent shall
cause the Surviving Corporation to pay the outstanding principal amount (and
accrued interest thereon) owed by the Company under each Material Contract set
forth on Schedule 2.11(b).
SECTION 5.18. Tax Matters. Promptly after the request of Parent and
------------
in any event no later than three months from the date of such request, the
Company shall provide to Parent true, complete and correct (in all material
respects) copies of (a) a schedule setting forth the deferred intercompany gain
account, and the excess loss account of each of its Subsidiaries, and (b) a
schedule setting forth the Federal income tax basis for the stock of each of the
Subsidiaries except those Subsidiaries for which such information cannot be
obtained after due inquiry.
SECTION 5.19. Dividend Payments. The Company shall not declare or
------------------
pay or set apart for payment any accumulated dividends on the Preference Stock
or 5% Stock.
SECTION 5.20. Satisfaction of Conditions. The Company, Parent and
---------------------------
Acquisition Sub shall each take all reasonable actions that may be required to
satisfy the conditions set forth in Article VI and Article VII hereof,
respectively.
<PAGE>
49
SECTION 5.21. Directors. Subject to compliance with applicable law
----------
(including Section 14(f) of the Exchange Act), upon the acquisition by
Acquisition Sub of at least a majority of the outstanding Common Stock pursuant
to the Offer, Acquisition Sub shall be entitled to designate at least a majority
of the members of the Board of Directors of the Company, and the Company and its
Board of Directors shall, at such time, take any and all such action (including
to increase the size of the Board of Directors or to use its best efforts to
cause directors to resign) needed to cause a sufficient number of Acquisition
Sub's designees to be appointed to the Company's Board of Directors that such
designees shall constitute such majority (any director so designated by
Acquisition Sub, a "Designated Director"). It is understood that immediately
after the acquisition by Acquisition Sub of at least a majority of the
outstanding Common Stock pursuant to the Offer (x) the Company's Board of
Directors shall consist of seven members, (y) the initial designees of
Acquisition Sub to the Company's Board of Directors are expected to be George B.
Amoss, Gianpaolo Caccini, James E. Hilyard and Bradford C. Mattson and (z) the
remaining members of the Company's Board of Directors are expected to be Antonio
J. Lorusso, Jr., Richard C. Maloof and Frank Anthony. In the event that, after
the acquisition by Acquisition Sub of at least a majority of the outstanding
Common Stock pursuant to the Offer and prior to the Effective Time, the number
of members of the Board of Directors increases (including pursuant to the
provisions of the Preference Stock and the 5% Stock), the Company and its Board
of Directors shall, at such time, take any and all such additional action
(including to increase the size of the Board of Directors, to use its best
efforts to cause additional directors to resign and to appoint additional
designees of Acquisition Sub) needed to cause a sufficient number of Acquisition
Sub's designees to be appointed to the Board of Directors that such designees
shall then constitute at least a majority of the members of the Board of
Directors. The parties hereto shall use their respective best efforts to cause
at least three members of the Company's Board of Directors at all times prior to
the Effective Time to be Continuing Directors. "Continuing Director" means (a)
any member of the Company's Board of Directors on the date of this Agreement,
(b) any member of the Company's Board of Directors who is not an employee or
director or affiliate of, and not a Designated Director or other nominee of,
Acquisition Sub or Parent or their respective Subsidiaries, and (c) any
successor of a Continuing Director who is (i) not an employee or director or
affiliate of, and not a Designated Director or other nominee of, Acquisition Sub
or Parent or their respective Subsidiaries and (ii) recommended to succeed such
Continuing Director by at least a majority of the then Continuing Directors.
<PAGE>
50
ARTICLE VI
Conditions to the Obligations of Parent
---------------------------------------
and Acquisition Sub
-------------------
Each and every obligation of Parent and Acquisition Sub under this
Agreement shall be subject to the satisfaction, on or prior to the Closing Date,
of each of the following conditions, each of which may be waived by Parent and
Acquisition Sub except as otherwise provided by law, provided that, upon the
--------
Consummation of the Offer, each of the following conditions (other than the
conditions set forth in Section 6.03(b) and (d) and 6.04(b)) shall be deemed
waived by Parent and Acquisition Sub:
SECTION 6.01. Representations and Warranties True. The
------------------------------------
representations and warranties of the Company contained in this Agreement
(without regard to any information provided under Section 5.04) that are
qualified as to materiality shall be true and correct, and the representations
that are not so qualified shall be true and correct in all material respects, in
each case on and as of the date hereof and on and as of the Effective Date, and
between the date hereof and the Effective Date there shall not have been any
event or change in circumstance causing or reasonably anticipated to cause in
the future any Material Adverse Effect.
SECTION 6.02. Company's Performance. Each of the obligations of the
----------------------
Company to be performed by it on or before the Closing Date pursuant to the
terms of this Agreement shall have been duly performed or complied with in all
material respects by the Closing.
SECTION 6.03. Authorization of Merger. (a) All corporate action
------------------------
necessary by the Company to authorize the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby
(including the Offer and the Merger) shall have been duly and validly taken, and
the Company and Acquisition Sub shall have full right and power to merge on the
terms provided herein.
(b) The holders of the Company Common Stock and of the Preference
Stock shall have duly approved the Merger at the Special Meeting called for that
purpose (other than if such approval shall not have occurred solely due to the
breach by Parent or Acquisition Sub of Section 5.02(e)).
(c) All consents, approvals and authorizations from third Persons and
Governmental Authorities identified on Schedule 2.05 and Schedule 2. 11(b)
required to consummate the transactions contemplated by this Agreement shall
have been obtained.
<PAGE>
51
(d) All applicable waiting periods under the HSR Act shall have
expired or been terminated.
SECTION 6.04. Absence of Litigation. (a) There shall not be pending
----------------------
or threatened any suit, action or proceeding by any Governmental Authority (i)
challenging the acquisition by Parent or Acquisition Sub of any shares of
Company Common Stock or Preference Stock, seeking to restrain or prohibit the
consummation of the Merger or any of the other transactions contemplated by this
Agreement or seeking to obtain from the Company, Parent or Acquisition Sub any
damages related to the Merger or the other transactions contemplated hereby that
are material in relation to the Company and its Subsidiaries taken as a whole,
(ii) seeking to prohibit or limit the ownership or operation by the Company,
Parent or any of their respective Subsidiaries of any material portion of the
business or assets of the Company, Parent or any of their respective
Subsidiaries, or to compel the Company, Parent or any of their respective
Subsidiaries to dispose of or hold separate any material portion of the business
or assets of the Company, Parent or any of their respective Subsidiaries, as a
result of the Merger or any of the other transactions contemplated by this
Agreement, (iii) seeking to impose limitations on the ability of Parent or
Acquisition Sub to acquire or hold, or exercise full rights of ownership of, any
shares of Surviving Corporation Common Stock, (iv) seeking to prohibit Parent or
any of its Subsidiaries from effectively controlling in any material respect the
business or operations of the Company or its Subsidiaries or of Parent and its
Subsidiaries or (v) which otherwise is reasonably likely to have a Material
Adverse Effect.
(b) No statute, rule, regulation, executive order, decree, temporary
restraining order, preliminary or permanent injunction or other order or legal
restraint or prohibition enacted, entered, promulgated, enforced, issued or
deemed applicable to the Merger or the transactions contemplated thereby, or any
other action shall be taken by any Governmental Authority or court, in each case
preventing the consummation of the Merger or the transactions contemplated
thereby, shall be in effect.
SECTION 6.05. Directors. All directors of the Company whose
----------
resignation is requested by Parent at least five days before the Closing Date
will have submitted their resignations as directors effective as of the Closing
Date.
SECTION 6.06. Dissenting Shares. No more than ten percent of the
------------------
issued and outstanding shares of any class of equity securities of the Company
entitled to dissenters rights as of the Closing Date shall be Dissenting Shares
entitled to receive the Dissenting Consideration as provided in Section 1.12
hereof.
<PAGE>
52
SECTION 6.07. Options. Each outstanding Option issued under the 1982
--------
Stock Option Plan, the 1992 Stock Option Plan and the Director Option Plan shall
have been amended as contemplated by Section 1.14.
SECTION 6.08. Certificates. The Company shall have furnished Parent
-------------
with such certificates of its officers and others to evidence compliance with
the conditions set forth in this Article VI as may be reasonably requested by
Parent. The form and substance of all opinions, certificates and other
documents hereunder shall be satisfactory in all reasonable respects to Parent
and its counsel.
ARTICLE VII
Conditions to the Obligations of the Company
--------------------------------------------
Each and every obligation of Company under this Agreement shall be
subject to the satisfaction, on or prior to the Closing Date, of each of the
following conditions, each of which may be waived by the Company except as
otherwise provided by law, provided that, upon the Consummation of the Offer,
--------
each of the following conditions (other than the conditions set forth in
Sections 7.03 and 7.04) shall be deemed waived by the Company:
SECTION 7.01. Representations and Warranties True. The
------------------------------------
representations and warranties of Parent and Acquisition Sub contained in this
Agreement that are qualified as to materiality shall be true and correct, and
the representations that are not so qualified shall be true and correct in all
material respects, in each case on and as of the date hereof and on and as of
the Effective Date.
SECTION 7.02. Parent's and Acquisition Sub's Performance. Each of
-------------------------------------------
the obligations of Parent and Acquisition Sub to be performed by them on or
before the Closing Date pursuant to the terms hereof shall have been duly
performed and complied with in all material respects by the Closing.
SECTION 7.03. Authorization of Merger. (a) All corporate action
------------------------
necessary by Acquisition Sub and Parent to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby shall have been duly and validly taken, and Acquisition Sub
shall have full right and power to merge on the terms provided herein. The
Company's stockholders shall have approved the Merger at the Special Meeting
called for that purpose.
<PAGE>
53
(b) All consents, approvals and authorizations from third Persons and
Governmental Authorities identified on Schedule 2.05 required to consummate the
transactions contemplated by this Agreement shall have been obtained.
(c) All applicable waiting periods under the HSR Act shall have
expired or been terminated.
SECTION 7.04. Absence of Litigation. No Judgment shall have been
----------------------
entered by a Governmental Authority with proper jurisdiction and not revised
prohibiting the Merger, and no Legal Action shall have been instituted by any
Governmental Authority challenging the Merger which if successful would prohibit
the consummation of the Merger.
SECTION 7.05. Certificates. Parent and Acquisition Sub shall have
-------------
furnished Company with such certificates of their respective officers and others
to evidence compliance with the conditions set forth in this Article VII as may
be reasonably requested by Company. The form and substance of all certificates
and other documents hereunder shall be satisfactory in all reasonable respects
to Company and its counsel.
ARTICLE VIII
Closing
-------
SECTION 8.01. Time and Place. Subject to the provisions of Articles
---------------
VI, VII and IX hereof, the closing (the "Closing") of the Merger shall take
place at the offices of Cravath, Swaine & Moore, 825 Eighth Avenue, New York,
New York 10019 at 9:30 a.m., local time, on a date (the "Closing Date") which is
to be:
(a) as soon as practicable after the latest to occur of the date by
which the stockholders of the Company shall have approved the Merger
pursuant to Section 5.03, the date of expiration or termination of any
waiting period, including any extensions thereof, which may be applicable
to the Merger under the provisions of the HSR Act, or the date of
satisfaction of all other conditions to the Closing set forth herein the
satisfaction of which is not waived other than conditions that, by their
terms, are to be satisfied on the Closing Date; or
(b) such other place, at such other time, or on such other date as
Parent, Acquisition Sub and the Company may mutually agree upon for the
Closing to take place.
<PAGE>
54
The Closing Date shall be the Effective Date.
SECTION 8.02. Deliveries at the Closing. Subject to the provisions
--------------------------
of Articles VI, VII and IX hereof, at the Closing:
(a) If the Consummation of the Offer shall not have occurred, there
shall be delivered to Parent, Acquisition Sub and the Company the
certificates and other documents and instruments required to be delivered
under Articles VI and VII hereof.
(b) Parent, Acquisition Sub and Company shall cause the Articles of
Merger to be filed in accordance with the provisions of the MBCL and shall
take any and all other lawful actions and do any and all other lawful
things necessary to effect the Merger and to cause the Merger to become
effective.
ARTICLE IX
Termination and Abandonment of the Merger
-----------------------------------------
SECTION 9.01. Termination. (a) Unless the Consummation of the Offer
------------
shall have occurred and Designated Directors shall constitute at least a
majority of the members of the Board of Directors of the Company, this Agreement
shall be terminated, and the Merger abandoned, if the stockholders of the
Company fail to approve the Merger as contemplated by Section 5.03 hereof.
(b) Notwithstanding approval of this Agreement and the transactions
contemplated hereby by the stockholders of the Company or by the sole
stockholder of Acquisition Sub, this Agreement may be terminated, and the Offer
and the Merger abandoned, at any time prior to the Effective Date:
(i) by the mutual consent of Parent, Acquisition Sub and the Company;
or
(ii) unless the Consummation of the Offer shall have occurred and
Designated Directors shall constitute at least a majority of the members of
the Board of Directors of the Company, by Parent, Acquisition Sub or the
Company at any time after June 30, 1998; or
(iii) by Parent or Acquisition Sub, (A) if the Offer terminates
without any shares being accepted for payment due to (x) failure of the
Minimum Condition or (y) any of the other conditions set forth in Exhibit A
hereto (other than solely
<PAGE>
55
paragraph (c) thereto) shall have become impossible to fulfill and shall
not have been waived, (B) if any of the conditions set forth in Article VI
hereof shall become impossible to fulfill and shall not have been waived or
deemed waived in accordance with the terms of this Agreement (it being
understood that with respect to Section 6.04(b) any condition therein
relating to an order, injunction or judicial decree shall be deemed not to
have become impossible to fulfill until such order, injunction or decree
shall have become final and non-appealable) or (C) if the Board of
Directors pursuant to Section 5.12(b) withdraws or modifies its approval or
recommendation of this Agreement, the Offer or the Merger; or
(iv) by the Company, if any of the conditions set forth in Article VII
hereof shall become impossible to fulfill, and shall not have been waived
in accordance with the terms of this Agreement; or
(v) unless the Consummation of the Offer shall have occurred and
Designated Directors shall constitute at least a majority of the members of
the Board of Directors of the Company, by Parent or Acquisition Sub if the
Company fails to perform in any material respect any of its obligations
hereunder or breaches in any material respect any provision hereof, and the
Company has failed to perform such obligation or cure such breach, within
10 days of its receipt of written notice thereof from Parent or Acquisition
Sub, and such failure to perform shall not have been waived in accordance
with the terms of this Agreement;
(vi) by the Company if Parent or Acquisition Sub fails to perform in
any material respect any of its obligations hereunder or breaches in any
material respect any provision hereof, and Parent and Acquisition Sub have
failed to perform such obligation or cure such breach, within 10 days of
its receipt of written notice thereof from the Company, and such failure to
perform shall not have been waived in accordance with the terms of this
Agreement;
(vii) by the Company if (A) the Board of Directors pursuant to Section
5.12(b) withdraws or modifies its approval or recommendation of this
Agreement, the Offer or the Merger and (B) the Company pays Parent all
Expenses and the Alternate Transaction Fee in cash, in each case as
provided in Section 10.01(b); or
(viii) by the Company if Acquisition Sub (A) shall have failed to
commence the Offer within the time required under the Exchange Act or (B)
shall have failed to pay for any Company Common Stock or Preference Stock
accepted for payment pursuant to the Offer and, in the case of clause (B),
Acquisition Sub
<PAGE>
56
shall have failed to make such payment within three business days of
receipt of written notice thereof from the Company.
SECTION 9.02. Effect of Termination. (a) In the event of the
----------------------
termination and abandonment of this Agreement and the Merger:
(i) this Agreement shall become void and have no effect, without any
liability on the part of any party or its directors, officers or
stockholders, except as provided in Article X hereof; provided that, except
-------- ----
as provided in Sections 9.02(b) and 9.02(c), each party shall have the
right to bring suit against any other party for any breach of this
Agreement; and
(ii) upon written request, each party will redeliver all documents,
work papers and other material and all copies thereof of any other party
relating to the transactions contemplated hereby, whether so obtained
before or after the execution hereof, to the party furnishing the same and,
at the request of any other party, will destroy any analyses, compilations,
studies or other documents prepared using such furnished information.
(b) Notwithstanding any provisions to the contrary herein, the sole
remedy of Parent or Acquisition Sub for a breach by the Company of any
representation or warranty set forth in Article II of this Agreement shall be
the termination of this Agreement (if permitted by Section 9.01) unless such
breach was made with the actual knowledge of the President of the Company or the
Vice President and General Counsel of the Company, after due inquiry of other
managerial employees of the Company who would be reasonably expected to have
knowledge as to the matter represented (a "Company Willful Misrepresentation").
(c) Notwithstanding any provisions to the contrary herein, the sole
remedy of the Company for a breach by Parent or Acquisition Sub of any
representation or warranty set forth in Article III or IV, respectively, of this
Agreement shall be the termination of this Agreement (if permitted by Section
9.01) unless such breach was made with the actual knowledge of the President or
Executive Vice President of Parent, after due inquiry of other managerial
employees of Parent who would be reasonably expected to have knowledge as to the
matter represented (a "Parent Willful Misrepresentation").
SECTION 9.03. Procedure for Termination and Amendment. A termination
----------------------------------------
of this Agreement pursuant to Section 9.01 or an amendment of this Agreement in
accordance with Section 10.07 shall, in order to be effective, require in the
case of the Company action by its Board of Directors or the duly authorized
designee of
<PAGE>
57
its Board of Directors. In the event that Acquisition Sub's designees are
appointed or elected to the Board of Directors of the Company as provided in
Section 5.21, after the Consummation of the Offer and prior to the Effective
Time, the affirmative vote of at least a majority of the Continuing Directors
shall be required for the Company to agree to amend, waive compliance with or
terminate this Agreement.
ARTICLE X
Miscellaneous
-------------
SECTION 10.01. Expenses; Alternate Transaction Fee. (a) Except as
------------------------------------
provided by Section 10.01(b), (c) or (d) each of the parties hereto shall bear
its own costs, fees and expenses in connection with the negotiation,
preparation, execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, including, without
limitation, fees, commissions and expenses (including, without limitation, all
filing, printing, copying, mailing, telephone, transportation and delivery
charges) payable to brokers, finders, investment bankers, consultants, exchange
or transfer agents, attorneys, accountants and other professionals, whether or
not the Consummation of the Offer occurs or the Merger is consummated.
(b) If the Board of Directors of the Company pursuant to Section
5.12(b) wishes to withdraw or adversely modify its approval or recommendation of
this Agreement, the Offer or the Merger, prior to exercising its rights under
Section 5.12(b), the Company shall pay in same day funds to Parent: (i) its
Expenses incurred to date and thereafter shall pay in same day funds to Parent
within one business day after demand therefor all subsequently incurred
Expenses, provided that the Company shall not be obligated hereunder to pay any
--------
such Expenses to the extent they exceed an aggregate of $1 million and (ii) an
alternative transaction fee of $1.5 million (the "Alternate Transaction Fee").
For purposes of Sections 10.01(b) and (c), "Expenses" shall mean all out-of-
pocket fees and expenses (including without limitation all travel expenses and
all fees and expenses of counsel, investment banking firms, accountants, experts
and consultants to Parent or Acquisition Sub) incurred or paid by or on behalf
of Parent or Acquisition Sub after January 1, 1996, in connection with or
leading to this Agreement, the transactions contemplated hereby, and performing
or securing the performance of the obligations of the parties hereunder,
including, without limitation, such fees and expenses related to preparation and
negotiation of documentation and conducting due diligence. Parent shall within
36 hours after request therefor advise the Company of an estimate of its
Expenses if the Company wishes to exercise its rights under Section 5.12(b).
<PAGE>
58
(c) In the event a takeover proposal from a party other than Parent
or one of its affiliates is received by the Company or publicly disclosed prior
to the expiration of the Offer (or in the case of clauses (B) and (C), prior to
the Special Meeting) or, if earlier, termination of this Agreement, and (A) at
the scheduled expiration date of the Offer a sufficient number of shares of
Company Common Stock and Preference Stock shall not have been tendered to
satisfy the Minimum Condition, (B) at the Special Meeting the required approval
of the Merger by the Company's stockholders is not obtained, or (C) this
Agreement is terminated (other than by the Company pursuant to Section 9.01(vi))
prior to a vote on the Merger at the Special Meeting, unless the Consummation of
the Offer shall have occurred the Company shall pay in same day funds to Parent
within two business days after the earlier of such expiration date, Special
Meeting or termination of this Agreement (i) all Expenses incurred to date and
thereafter will pay in same day funds to Parent within one business day after
demand therefor all subsequently incurred Expenses, provided, that the Company
--------
shall not be obligated hereunder to pay any such Expenses to the extent they
exceed an aggregate of $1 million, and (ii) the Alternate Transaction Fee.
(d) In the event this Agreement is terminated, the Offer is terminated
or the Merger does not occur (i) solely due to a breach by Parent or Acquisition
Sub of any of its covenants or obligations hereunder or due to a Parent Willful
Misrepresentation or (ii) solely due to a breach by the Company of any of its
covenants or obligations hereunder or due to a Company Willful
Misrepresentation, then in the case of a termination pursuant to clause (i)
above, Parent and Acquisition Sub shall promptly pay to the Company, and in the
case of termination pursuant to clause (ii) above, the Company shall promptly
pay to Parent and Acquisition Sub, in same day funds all Expenses incurred to
date (after giving credit for any reimbursement already made under Section
10.01(b) or (c)) and thereafter shall pay in same day funds within one business
day after demand therefor all subsequently incurred Expenses. For purposes of
this paragraph 10.01(d) "Expenses" shall mean all out-of-pocket fees and
expenses (including without limitation all travel expenses and all fees and
expenses of counsel, investment banking firms, accountants, experts and
consultants to Parent or the Company, as the case may be) incurred or paid by or
on behalf of Parent, Acquisition Sub or the Company, as the case may be, after
January 1, 1996, in connection with or leading to this Agreement, the
transactions contemplated hereby, and performing or securing performance of the
obligations of the parties hereunder, including, without limitation, such fees
and expenses related to preparation and negotiation of documentation and
conducting due diligence. This Section shall not limit damages that would
otherwise be recoverable for breaches hereunder.
SECTION 10.02. Non-Survival of Representations and Warranties. The
-----------------------------------------------
respective representations and warranties, obligations, covenants and agreements
of the
<PAGE>
59
Company, Parent and Acquisition Sub contained herein or in any Schedule,
certificate or letter delivered pursuant hereto (other than those contained in
Section 10.01 hereof and those which by their terms extend beyond the Effective
Date or termination of this Agreement) shall expire with, and be terminated and
extinguished by the effectiveness of the Merger and shall not survive the
Effective Date or, if earlier, the date of termination of this Agreement
pursuant to Article IX hereof.
SECTION 10.03. Headings. The descriptive headings of the several
---------
Articles and Sections of this Agreement are inserted for convenience only and do
not constitute a part of this Agreement and shall not in any manner affect the
meaning or interpretation of the terms of this Agreement.
SECTION 10.04. Notices. (a) Any notices or other communications
--------
required or permitted hereunder shall be addressed as follows:
If to Parent or Acquisition Sub to:
CertainTeed Corporation
750 E. Swedesford Road
Valley Forge, Pennsylvania 19482
Attn: Bradford C. Mattson
Executive Vice President
Tel: (610) 341-7922
Fax: (610) 341-7112
Cravath, Swaine & Moore
825 Eighth Avenue
New York, New York 10019
Attn: Philip A. Gelston
Tel: (212) 474-1548
Fax: (212) 474-3700
If to the Company to:
Bird Corporation
1077 Pleasant Street
Norwood, Massachusetts 02062-6714
Attn: Richard C. Maloof
President
Tel: (781) 551-0656
Fax: (781) 769-0434
<PAGE>
60
Copy to:
Timothy B. Bancroft, Esq.
Warner & Stackpole LLP
75 State Street
Boston, Massachusetts 02109
Tel: (617) 951-9152
Fax: (617) 951-9151
or such other address as shall be furnished in writing by either party in
accordance with this Section 10.04, and any such notice or communication shall
be deemed to have been given as of the date so mailed.
(b) Notices or other communications shall be deemed given (i) if
delivered personally, upon delivery, (ii) if delivered by registered or
certified mail (return receipt requested), upon the earlier of actual delivery
or three business days after being mailed, (iii) if delivered by overnight
courier or similar service, upon delivery, or (iv) if given by fax, upon
confirmation of transmission by fax; provided that if such notice or other
communications would be otherwise deemed given on a day which is not a business
day, the delivery shall be deemed given the first business day following such
day.
SECTION 10.05. Assignment. This Agreement and all of the provisions
-----------
hereof shall be binding upon and to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests, or obligations hereunder shall be assigned by any of
the parties hereto, either in whole or in part, without the prior written
consent of the other parties hereto.
SECTION 10.06. Complete Agreement. This Agreement, including the
-------------------
Schedules, exhibits and other writings referred to herein or delivered pursuant
hereto, contains the entire understanding among the parties with respect to the
Offer, the Merger and the related transactions and supersedes all prior
arrangements or understandings with respect thereto, except for the
Confidentiality Agreement. There are no restrictions, agreements, promises,
warranties, covenants or undertakings other than those expressly set forth
herein.
SECTION 10.07. Amendments and Waivers. (a) Subject to the
-----------------------
provisions contained in Articles VI and VII hereof and subject to Section 9.03,
at any time prior to the Effective Date if authorized by their respective Boards
of Directors and to the extent permitted by law, the parties hereto may, by
written agreement, modify, amend, or supplement any term or provision of this
Agreement. Any written instrument
<PAGE>
61
or agreement referred to in this paragraph shall be validly and sufficiently
authorized for the purposes of this Agreement if signed on behalf of the
Company, Parent and Acquisition Sub by a person authorized to sign this
Agreement on their behalf.
(b) This Agreement may be amended at any time only by a written
instrument executed by the Company, Parent and Acquisition Sub. No delay on the
part of any party hereto in exercising any right hereunder shall operate as a
waiver of such right, nor shall any waiver, express or implied, by any party
hereto of any right hereunder or of any failure to provide and perform hereunder
or breach hereof by either party hereto constitute or be deemed to constitute a
waiver of any other failure to provide and perform hereunder or breach hereof by
any party hereto whether of a similar or dissimilar nature thereto.
SECTION 10.08. Counterparts. This Agreement may be executed in two
-------------
or more counterparts, all of which shall be considered one and the same
agreement and each of which shall be deemed an original.
SECTION 10.09. Governing Law. EXCEPT AS TO THE PROVISIONS OF
--------------
SECTIONS 1.03 THROUGH 1.14 (WHICH SHALL BE GOVERNED BY THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS), THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO ITS CONFLICT OF LAWS RULES) AS
TO ALL MATTERS, INCLUDING, BUT NOT LIMITED TO, MATTERS OF VALIDITY,
CONSTRUCTION, EFFECT AND PERFORMANCE.
SECTION 10.10. Accounting Terms. All accounting terms used herein
-----------------
that are not expressly defined in this Agreement shall have the meanings given
to them in accordance with GAAP.
SECTION 10.11. Parties. Nothing in this Agreement is intended to
--------
confer any rights or remedies under or by reason of this Agreement on any
persons or entities other than the parties hereto and their respective
successors and permitted assigns in accordance with Section 10.05 hereof, except
for the provisions of Section 5.15. Without limiting the foregoing, no third
Person shall be a beneficiary of any provision of this Agreement, except for the
provisions of Section 5.15.
<PAGE>
62
IN WITNESS WHEREOF, each of Parent, Acquisition Sub and the Company
has executed this Agreement, or has caused this Agreement to be executed on its
behalf by a representative duly authorized, all as of the day and year first
above written.
BIRD CORPORATION,
by /s/ Richard C. Maloof
------------------------------------
Name: Richard C. Maloof
Title: President
[Seal]
by /s/ Frank Anthony
--------------------------------------
Name: Frank Anthony
Title: Vice President
by /s/ Donald L. Sloper, Jr.
-------------------------------------
Name: Donald L. Sloper, Jr.
Title: Treasurer
CERTAINTEED CORPORATION,
by /s/ James E. Hilyard
--------------------------------------
Name: James E. Hilyard
Title: Vice President
BI EXPANSION II CORP.,
by /s/ James E. Hilyard
--------------------------------------
Name: James E. Hilyard
Title: Vice President
[Seal]
<PAGE>
63
by /s/ John R. Mesher
--------------------------------------
Name: John R. Mesher
Title: Assistant Treasurer
<PAGE>
EXHIBIT A
Conditions to the Offer
-----------------------
Notwithstanding any other term of the Offer or this Agreement,
Acquisition Sub shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, to pay for any shares of Company
Common Stock or Preference Stock tendered pursuant to the Offer unless, (i)
there shall have been validly tendered and not withdrawn prior to the expiration
of the Offer such number of shares of Company Common Stock that would constitute
at least 66-2/3% of the outstanding shares (determined on a fully diluted basis)
of Company Common Stock, (ii) there shall have been validly tendered and not
withdrawn prior to the expiration of the Offer such number of shares of
Preference Stock that would constitute at least 66-2/3 % of the outstanding
shares of Preference Stock (clauses (i) and (ii) together being the "Minimum
Condition"), (iii) any waiting period under the HSR Act applicable to the
purchase of shares of Company Common Stock and Preference Stock pursuant to the
Offer shall have expired or been terminated and (iv) all consents, approvals,
orders or authorizations of, or registrations, declarations or filings with, any
Governmental Authority required or necessary in connection with the Offer, the
Merger and this Agreement and the transactions contemplated by this Agreement
shall have been obtained and shall be in full force and effect. Furthermore,
notwithstanding any other term of the Offer or this Agreement, Acquisition Sub
shall not be required to accept for payment or, subject as aforesaid, to pay for
any shares of Company Common Stock or Preference Stock not theretofore accepted
for payment or paid for, and may terminate the Offer if, at any time on or after
the date of this Agreement and before the Consummation of the Offer, any of the
following conditions exist:
(a) The representations and warranties of the Company contained in
this Agreement (without regard to any information provided under Section 5.04)
that are qualified as to materiality shall not be true and correct, and the
representations that are not so qualified shall not be true and correct in all
material respects, in each case on and as of the date hereof and on and as of
the date of the scheduled expiration of the Offer.
(b) Any of the obligations of the Company to be performed by it on or
before the date of the scheduled expiration of the Offer pursuant to the terms
of this Agreement shall not have been duly performed or complied with in all
material respects by that date.
(c) Since the Balance Sheet Date, there shall have occurred (or it
shall be reasonably expected that there will be) any event, change or
circumstance causing, or reasonably anticipated to cause in the future, any
Material Adverse Effect.
A-1
<PAGE>
(d) Any consents, approvals and authorizations from third Persons and
Governmental Authorities identified on Schedule 2.05 and Schedule 2.11(b)
required to consummate the transactions contemplated by this Agreement shall not
have been obtained.
(e) There shall be pending or threatened any suit, action or
proceeding by any Governmental Authority (i) challenging the acquisition by
Parent or Acquisition Sub of any shares of Company Common Stock or Preference
Stock, seeking to restrain or prohibit the consummation of the Offer, the Merger
or any of the other transactions contemplated by this Agreement or seeking to
obtain from the Company, Parent or Acquisition Sub any damages related to the
Offer, the Merger or the other transactions contemplated hereby that are
material in relation to the Company and its Subsidiaries taken as a whole, (ii)
seeking to prohibit or limit the ownership or operation by the Company, Parent
or any of their respective Subsidiaries of any material portion of the business
or assets of the Company, Parent or any of their respective Subsidiaries, or to
compel the Company, Parent or any of their respective Subsidiaries to dispose of
or hold separate any material portion of the business or assets of the Company,
Parent or any of their respective Subsidiaries, as a result of the Offer, the
Merger or any of the other transactions contemplated by this Agreement, (iii)
seeking to impose limitations on the ability of Parent or Acquisition Sub to
acquire or hold, or exercise full rights of ownership of, any shares of
Surviving Corporation Common Stock, (iv) seeking to prohibit Parent or any of
its Subsidiaries from effectively controlling in any material respect the
business or operations of the Company or its Subsidiaries or of Parent and its
Subsidiaries or (v) which otherwise is reasonably likely to have a Material
Adverse Effect.
(f) There shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to the
Offer or the Merger, or any other action shall be taken by any Governmental
Authority or court, other than the application to the Offer or the Merger of
applicable waiting periods under the HSR Act, that is reasonably likely to
result, directly or indirectly, in any of the consequences referred to in
clauses (i) through (v) of paragraph (e) above.
(g) The Board of Directors of the Company or any committee thereof
shall have withdrawn or modified in a manner adverse to Parent its approval or
recommendation of the Offer, the Merger or this Agreement or resolved to take
any of such actions.
(h) The Agreement shall have been terminated in accordance with its
terms.
A-2
<PAGE>
The foregoing conditions are for the sole benefit of Acquisition Sub
and Parent and may, subject to the terms of the Agreement, be waived by
Acquisition Sub and Parent in whole or in part at any time and from time to time
in their sole discretion. The failure by Parent or Acquisition 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
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-3
<PAGE>
FEDERAL IDENTIFICATION FEDERAL IDENTIFICATION
Exhibit B NO. 23-2939207 NO. 04-30282903
--------- ---------------------- ----------------------
- -------- THE COMMONWEALTH OF MASSACHUSETTS
Examiner WILLIAM FRANCIS GALVIN
Secretary of the Commonwealth
One Ashburton Place, Boston, Massachusetts 02108-1512
ARTICLES OF *CONSOLIDATION / *MERGER
(GENERAL LAWS, CHAPTER 156B, SECTION 78)
*Consolidation / *merger of BI Expansion II Corp. and
--------------------------------------
Bird Corporation
--------------------------------------
--------------------------------------
--------------------------------------
,
--------------------------------------
the constituent corporations, into
Bird Corporation ,
--------------------------------------
*a new corporation / *one of the
constituent corporations.
The undersigned officers of each of the constituent corporations certify under
the penalties of perjury as follows:
1. An agreement of *consolidation / *merger has been duly adopted in compliance
with the requirements of General Laws, Chapter 156B, Section 78, and will be
kept as provided by Subsection (d) thereof. The *resulting / *surviving
corporation will furnish a copy of said agreement to any of its stockholders, or
to any person who was a stockholder of any constituent corporation, upon written
request and without charge.
2. The effective date of the *consolidation / *merger determined pursuant to
the agreement of *consolidation / *merger shall be the date approved and filed
by the Secretary of the Commonwealth. If a later effective date is desired,
specify such date which shall not be more than thirty days after the date of
filing:
3. (FOR A MERGER)
**The following amendments to the Articles of Organization of the surviving
corporation have been effected pursuant to the agreement of merger:
See Attachment 3A
C
P
M
R.A.
- --------------
P.C.
*Delete the inapplicable word. **If there are no provisions state "None".
NOTE: IF THE SPACE PROVIDED UNDER ANY ARTICLE OR ITEM ON THIS FORM IS
INSUFFICIENT, ADDITIONS SHALL BE SET FORTH ON SEPARATE 8 1/2 X 11 SHEETS OF
PAPER WITH A LEFT MARGIN OF AT LEAST 1 INCH. ADDITIONS TO MORE THAN ONE ARTICLE
MAY BE MADE ON A SINGLE SHEET AS LONG AS EACH ARTICLE REQUIRING EACH ADDITION IS
CLEARLY INDICATED.
<PAGE>
ATTACHMENT 3A
Article II of the Articles of Organization of Bird Corporation has been replaced
in its entirety by the following amendment:
The purpose of the corporation is to engage in the following business
activities:
To acquire, hold for investment, or sell securities of corporations and any
other type of real or personal property and to engage in and carry on any other
business or activity permitted to be conducted by a corporation organized under
Chapter 156B of Massachusetts General Laws.
In addition, each share of the corporation's Convertible Preference Stock (as
such term is defined in the Articles of Organization of Bird Corporation)
actually issued and outstanding at the effective date of the Merger (except for
shares as to which the holder thereof shall have exercised dissenters' rights
under Massachusetts General Laws) is, by virtue of the Merger and without any
action on the part of the holder thereof, being converted into the right to
receive $20, which amount shall not be adjusted for any accrued and unpaid
dividends thereon as of, or any dividends paid prior to, the effective date of
the Merger.
<PAGE>
(FOR A CONSOLIDATION)
(a) The purpose of the resulting corporation is to engage in the following
business activities:
N/A
(b) State the total number of shares and the par value, if any, of each class of
stock which the resulting corporation is authorized to issue.
N/A
- -----------------------------------------------------------------------
WITHOUT PAR VALUE WITH PAR VALUE
- -----------------------------------------------------------------------
TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE
- -----------------------------------------------------------------------
Common: Common:
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
Preferred: Preferred:
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
**(c) If more than one class of stock is authorized, state a distinguishing
designation for each class and provide a description of the preferences, voting
powers, qualifications, and special or relative rights or privileges of each
class and of each series then established.
N/A
**(d) The restrictions, if any, on the transfer of stock contained in the
agreement of consolidation are:
N/A
**(e) Other lawful provisions, if any, for the conduct and regulation of the
business and affairs of the corporation, for its voluntary dissolution, or for
limiting, defining, or regulating the powers of the corporation, or of its
directors or stockholders, or of any class of stockholders:
N/A
** If there are no provisions state "None".
<PAGE>
4. The information contained in Item 4 is not a permanent part of the Articles
of Organization of the *resulting / *surviving corporation.
(a) The street address of the *resulting / *surviving corporation in
Massachusetts is: (post office boxes are not acceptable) c/o CT Corporation
System, 2 Oliver Street, Boston, MA 02109
(b) The name, residential address, and post office address of each director and
officer of the *resulting / *surviving corporation is:
NAME RESIDENTIAL ADDRESS POST OFFICE ADDRESS
- -------------------------------------------------------------------------------
President: Bradford C. Mattson 1723 Thomas Road Same
Wayne, PA 19087
- -------------------------------------------------------------------------------
Treasurer: James F. Harkins, Jr. 27 Meadow Creek Lane Same
Glenmoore, PA 19343
- -------------------------------------------------------------------------------
Clerk: John R. Mesher 128 Aspen Drive Same
Downington, PA 19335
- -------------------------------------------------------------------------------
Directors:
- -------------------------------------------------------------------------------
George B. Amoss 15 McCarthy Road Same
Chadds Ford, PA 19317
- -------------------------------------------------------------------------------
Gianpaolo Caccini 1315 Wrenfield Way Same
Villanova, PA 19085
- -------------------------------------------------------------------------------
Bradford C. Mattson 1723 Thomas Road Same
Wayne, PA 19087
- -------------------------------------------------------------------------------
(c) The fiscal year (i.e. tax year) of the *resulting/ *surviving corporation
shall end on the last day of the month of:
December
(d) The name and business address of the resident agent, if any, of the
*resulting / *surviving corporation is: CT Corporation System, 2 Oliver
Street, Boston, MA 02109
The undersigned officers of the several constituent corporations listed above
further state under the penalties of perjury as to their respective corporations
that the agreement of *consolidation / *merger has been duly executed on behalf
of such corporation and duly approved by the stockholders of such corporation in
the manner required by General Laws, Chapter 156B, Section 78.
, *President / *Vice President,
- -------------------------------------------------
, *Clerk / *Assistant Clerk,
- -------------------------------------------------
of Bird Corporation .
-----------------------------------------------------------------------------
(Name of constituent corporation)
,*President / *Vice President,
- -------------------------------------------------
, *Clerk / *Assistant Clerk,
- -------------------------------------------------
of BI Expansion II Corp. .
---------------------------------------------------------------------------
(Name of constituent corporation)
*Delete the inapplicable words.
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF *CONSOLIDATION / *MERGER
(GENERAL LAWS, CHAPTER 156B, SECTION 78)
=============================================
I hereby approve the within Articles of *Consolidation / *Merger and,
the filing fee in the amount of $ ________________ , having been paid,
said articles are deemed to have been filed with me this ____________ day
of __________________________, 19 _______.
Effective date:______________________________________________________
WILLIAM FRANCIS GALVIN
Secretary of the Commonwealth
TO BE FILLED IN BY CORPORATION
PHOTOCOPY OF THE DOCUMENT TO BE SENT TO:
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
Telephone:___________________________________________________________
<PAGE>
EXHIBIT (c) (2)
EXECUTION COPY
STOCKHOLDER AGREEMENT, dated as of January 12, 1998, among
CERTAINTEED CORPORATION, a Delaware corporation ("Parent"), BI
EXPANSION II CORP., a Massachusetts corporation ("Sub"), and the
persons listed on Schedule A hereto (each a "Stockholder", and,
collectively, the "Stockholders").
WHEREAS, Parent, Sub and Bird Corporation, a Massachusetts corporation
(the "Company"), propose to enter into an Agreement and Plan of Merger of even
date herewith (as the same may be amended or supplemented, the "Merger
Agreement") providing for (i) the making of a cash tender offer (as such offer
may be amended from time to time as permitted under the Merger Agreement, the
"Offer") by Sub for (a) all outstanding shares of Common Stock, par value $1 per
share, of the Company (the "Company Common Stock") and (b) all outstanding
shares of $1.85 Cumulative Convertible Preference Stock, par value $1 per share,
of the Company (the "Company Preference Stock") and (ii) the merger of Sub with
the Company (the "Merger");
WHEREAS, each Stockholder is the record and beneficial owner of the
number of shares of Company Common Stock set forth opposite such Stockholder's
name on Schedule A hereto, which number excludes shares issuable upon the
exercise of Options (as such term is defined in the Merger Agreement) held by
such Stockholder; such shares of Company Common Stock, as such shares may be
adjusted by stock dividend, stock split, recapitalization, combination or
exchange of shares, merger, consolidation, reorganization or other change or
transaction of or by the Company, together with shares of Company Common Stock
which may be acquired after the date hereof by such Stockholder, including
shares of Company Common Stock issuable upon the exercise of Options (as the
same may be adjusted as aforesaid), being collectively referred to herein as the
"Common Shares"; and
WHEREAS, each Stockholder is the record and beneficial owner of the
number of shares of Company Preference Stock set forth opposite such
Stockholder's name on Schedule A hereto, which number excludes shares issuable
upon the exercise of Options held by such Stockholder; such shares of Company
Preference Stock, as such shares may be adjusted by stock dividend, stock split,
recapitalization, combination or exchange of shares, merger, consolidation,
reorganization or other change or transaction of or by the
<PAGE>
2
Company, together with shares of Company Preference Stock which may be acquired
after the date hereof by such Stockholder, including shares of Company
Preference Stock issuable upon the exercise of Options (as the same may be
adjusted as aforesaid), being collectively referred to herein as the "Preference
Shares" and, together with the Common Shares, the "Shares"; and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Sub have requested that the Stockholders enter into this
Agreement;
NOW, THEREFORE, to induce Parent and Sub to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Purchase and Sale of Shares.
----------------------------
(a) Each Stockholder hereby severally and not jointly agrees that it
shall tender its Shares into the Offer and that it shall not withdraw any
Shares so tendered (it being understood that the obligation contained in
this sentence is unconditional, subject to Section 8). In addition to, and
not in limitation of the foregoing obligation, each Stockholder hereby
severally and not jointly agrees to sell to Sub, and Sub hereby agrees to
purchase, all such Stockholder's Common Shares at a price per Common Share
equal to $5.50, or such higher price per share of Company Common Stock as
may be offered by Sub in the Offer, and all such Stockholder's Preference
Shares at a price per Preference Share equal to $20, or such higher price
per share of Company Preference Stock as may be offered by Sub in the
Offer. Sub's obligation to purchase is subject to the following conditions
(which may be waived in the sole discretion of Sub): (a) Sub having
accepted shares of Company Common Stock and Company Preference Stock for
payment under the Offer or (b) if the Offer has been terminated for failure
to satisfy the Minimum Condition (as defined in Exhibit A to the Merger
Agreement), (i) all conditions to the Offer set forth in Exhibit A to the
Merger Agreement (other than the Minimum Condition) having been satisfied
and (ii) including all shares of Company Common Stock and Company
Preference Stock tendered and not withdrawn at the time of termination of
the Offer and all Shares to
<PAGE>
3
be purchased pursuant to this Agreement, the Minimum Condition would have
been satisfied. Notwithstanding the foregoing, no Stockholder shall be
obligated to sell such Stockholder's Shares after the scheduled final
expiration time of the Offer unless (i) the Minimum Condition was not
satisfied, (ii) such Stockholder did not tender such Stockholder's Shares
into the Offer or withdrew such Shares and (iii) including all shares of
Company Common Stock and Company Preference Stock tendered and not
withdrawn at the time of termination of the Offer and all Shares to be
purchased pursuant to this Agreement, the Minimum Condition would have been
satisfied. Each Stockholder may tender such Stockholder's Shares into the
Offer and the purchase of such Shares pursuant to the Offer shall satisfy
such Stockholder's obligation to sell such Shares and Sub's obligation to
purchase such Shares under this Agreement. Subject to satisfaction or
waiver of the conditions set forth in the third sentence of this paragraph,
Sub shall, no later that three days in advance of such closing date,
specify the place, time and date (which shall not precede the final
expiration or termination of the Offer) for the closing of the purchase by
Sub of such Stockholder's Shares.
2. Representations and Warranties of the Stockholders. Each
---------------------------------------------------
Stockholder hereby, severally and not jointly, represents and warrants to Parent
and Sub as follows:
(a) Authority. The Stockholder has all requisite power and authority
----------
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by the Stockholder. This Agreement has been duly
executed and delivered by the Stockholder and constitutes a valid and
binding obligation of the Stockholder enforceable against the Stockholder
in accordance with its terms. Except for the expiration or termination of
the waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act") and informational filings with the
Securities and Exchange Commission, neither the execution, delivery or
performance of this Agreement by the Stockholder nor the consummation by
the Stockholder of the transactions contemplated hereby
<PAGE>
4
will (i) require any filing with, or permit, authorization, consent or
approval of, any federal, state or local government or any court, tribunal,
administrative agency or commission or other governmental or regulatory
authority or agency, domestic, foreign or supranational (a "Governmental
Entity"), (ii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default under, or give rise
to any right of termination, amendment, cancelation or acceleration under,
or result in the creation of any pledge, claim, lien, charge, encumbrance
or security interest of any kind or nature whatsoever (a "Lien") upon any
of the properties or assets of the Stockholder under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease,
license, permit, concession, franchise, contract, agreement or other
instrument or obligation (a "Contract") to which the Stockholder is a party
or by which the Stockholder or any of the Stockholder's properties or
assets, including the Stockholder's Shares, may be bound or (iii) violate
any judgment, order, writ, preliminary or permanent injunction or decree
(an "Order") or any statute, law, ordinance, rule or regulation of any
Governmental Entity (a "Law") applicable to the Stockholder or any of the
Stockholder's properties or assets, including the Stockholder's Shares.
(b) The Shares. The Stockholder's Shares and the certificates
-----------
representing such Shares are now and at all times during the term hereof
will be held by such Stockholder, or by a nominee or custodian for the
benefit of such Stockholder, and the Stockholder has good and marketable
title to such Shares, free and clear of any Liens, proxies, voting trusts
or agreements, understandings or arrangements, except for any such Liens or
proxies arising hereunder. The Stockholder owns of record or beneficially
no shares of Company Common Stock or Company Preference Stock other than
such Stockholder's Shares and shares of Company Common Stock or Company
Preference Stock issuable upon the exercise of Options.
(c) Brokers. No broker, investment banker, financial advisor or
--------
other person is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf
of such Stockholder.
<PAGE>
5
(d) Merger Agreement. The Stockholder understands and acknowledges
-----------------
that Parent is entering into, and causing Sub to enter into, the Merger
Agreement in reliance upon the Stockholder's execution and delivery of this
Agreement.
3. Representations and Warranties of Parent and Sub. Parent and Sub
-------------------------------------------------
hereby jointly and severally represent and warrant to the Stockholders as
follows:
(a) Authority. Parent and Sub have the requisite corporate power and
----------
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance
of this Agreement by Parent and Sub and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Parent and Sub. This Agreement has been
duly executed and delivered by Parent and Sub and constitutes a valid and
binding obligation of Parent and Sub enforceable in accordance with its
terms.
(b) Securities Act. The Shares will be acquired in compliance with,
---------------
and Sub will not offer to sell or otherwise dispose of any Shares so
acquired by it in violation of any of, the Securities Exchange Act of 1934,
as amended, or the registration requirements of the Securities Act of 1933,
as amended.
(c) Financing. Sub has, or will have at the time that any payment is
----------
required to be made to any Stockholder hereunder, the funds necessary to
make such payment to such Stockholder.
4. Covenants of the Stockholders. Each Stockholder severally and
------------------------------
not jointly agrees as follows:
(a) The Stockholder shall not, except as contemplated by the terms of
this Agreement, (i) sell, transfer, pledge, assign or otherwise dispose of,
or enter into any Contract, option or other arrangement (including any
profit sharing arrangement) or understanding with respect to the sale,
transfer, pledge, assignment or other disposition of, the Shares to any
person other than Sub or Sub's designee, (ii) enter into any voting
arrangement, whether by proxy, voting agreement, voting trust, power-of-
attorney or otherwise, with respect to the Shares or
<PAGE>
6
(iii) take any other action that would in any way restrict, limit or
interfere with the performance of its obligations hereunder or the
transactions contemplated hereby.
(b) Until the Merger is consummated or the Merger Agreement is
terminated, the Stockholder shall not, nor shall the Stockholder permit any
investment banker, financial adviser, attorney, accountant or other
representative or agent of the Stockholder to, directly or indirectly (i)
solicit, initiate or encourage (including by way of furnishing
information), or take any other action designed or reasonably likely to
facilitate, any inquiries or the making of any proposal which constitutes,
or may reasonably be expected to lead to, any takeover proposal (as defined
in the Merger Agreement) or (ii) participate in any discussions or
negotiations regarding any takeover proposal. Without limiting the
foregoing, it is understood that any violation of the restrictions set
forth in the preceding sentence by an investment banker, financial advisor,
attorney, accountant or other representative or agent of the Stockholder
shall be deemed to be a violation of this Section 4(b) by the Stockholder.
5. Grant of Irrevocable Proxy; Appointment of Proxy. (a) Each
-------------------------------------------------
Stockholder hereby irrevocably grants to, and appoints, George B. Amoss,
Bradford C. Mattson and John R. Mesher, and any other individual who shall
hereafter be designated by Parent, and each of them, such Stockholder's proxy
and attorney-in-fact (with full power of substitution), for and in the name,
place and stead of such Stockholder, to vote such Stockholder's Shares, or grant
a consent or approval in respect of such Shares, at any meeting of Stockholders
of the Company or at any adjournment thereof or in any other circumstances upon
which their vote, consent or other approval is sought, against (i) any merger
agreement or merger (other than the Merger Agreement and the Merger),
consolidation, combination, sale of substantial assets, reorganization, joint
venture, recapitalization, dissolution, liquidation or winding up of or by the
Company and (ii) any amendment of the Company's Articles of Organization or By-
Laws, or other proposal or transaction (including any consent solicitation to
remove or elect any directors of the Company) involving the Company which
amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify, or result in a breach of any covenant,
representation or warranty or any
<PAGE>
7
other obligation or agreement of the Company under or with respect to, the
Offer, the Merger, the Merger Agreement or any of the other transactions
contemplated by the Merger Agreement.
(b) Each Stockholder represents that any proxies heretofore given in
respect of such Stockholder's Shares are not irrevocable, and that any such
proxies are hereby revoked.
(c) Each Stockholder hereby affirms that the irrevocable proxy set
forth in this Section 5 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 such Stockholder under this Agreement. Such Stockholder hereby
further affirms that the irrevocable proxy is coupled with an interest and may
under no circumstances be revoked, subject to Section 8. Such Stockholder
hereby ratifies and confirms all that such irrevocable proxy may lawfully do or
cause to be done by virtue hereof. Such irrevocable proxy is executed and
intended to be irrevocable in accordance with the provisions of Section 41 of
the Massachusetts Business Corporation Law.
6. Further Assurances. Each Stockholder will, from time to time,
-------------------
execute and deliver, or cause to be executed and delivered, such additional or
further transfers, assignments, endorsements, consents and other instruments as
Parent or Sub may reasonably request for the purpose of effectively carrying out
the transactions contemplated by this Agreement and to vest the power to vote
such Stockholder's Shares as contemplated by Section 5. Parent and Sub jointly
and severally agree to use reasonable efforts to take, or cause to be taken, all
actions necessary to comply promptly with all legal requirements that may be
imposed with respect to the transactions contemplated by this Agreement
(including legal requirements of the HSR Act).
7. Assignment. Neither this Agreement nor any of the rights,
-----------
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Sub may
assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to Parent or to any direct or indirect wholly owned
subsidiary of Parent. 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 successors and assigns. Each Stockholder agrees
<PAGE>
8
that this Agreement and the obligations of such Stockholder hereunder shall
attach to such Stockholder's Shares and shall be binding upon any person or
entity to which legal or beneficial ownership of such Shares shall pass, whether
by operation of law or otherwise, including without limitation such
Stockholder's heirs, guardians, administrators or successors.
8. Termination. This Agreement, and all rights and obligations of
------------
the parties hereunder, shall terminate upon the earliest of (a) the date upon
which the Merger Agreement is terminated pursuant to Section 9.01(b)(i),
9,01(b)(vi) or 9.01(b)(vii) thereof, (b) the date that is 10 business days after
the later of (i) any other termination of the Merger Agreement or (ii) the
expiration of the Offer at any scheduled final expiration time without the
Minimum Condition being satisfied (provided that the failure to satisfy the
Minimum Condition did not result from any Stockholder's failure to comply with
this Agreement) and (c) the date that Parent or Sub shall have purchased and
paid for the Stockholders' Shares pursuant to Section 1. As soon as practicable
following any termination of this Agreement in accordance with the terms hereof,
any Stockholder's Shares held by or on behalf of Parent or Sub shall be returned
to the Stockholders.
9. Stop Transfer. The Company agrees with, and covenants to, Parent
--------------
and Sub that the Company shall not register the transfer of any certificate
representing any Stockholder's Shares unless such transfer is made in accordance
with the terms of this Agreement.
10. General Provisions.
-------------------
(a) Payments. All payments required to be made to any party to this
--------
Agreement shall be made by wire transfer of immediately available funds to
an account designated by such party at least one trading day prior to such
payment.
(b) Expenses. All costs and expenses incurred in connection with
---------
this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expense.
(c) Amendments. This Agreement may be amended at any time only by a
-----------
written instrument executed by each of the parties hereto.
<PAGE>
9
(d) Notice. Any notices and other communications required or
-------
permitted hereunder shall be in writing and shall be addressed as follows:
(i) if to Parent, to
CertainTeed Corporation
750 East Swedesford Road
Valley Forge, PA 19482
Attention: Bradford C. Mattson
Executive Vice President
Telephone: (610) 341-7927
Telecopy: (610) 341-7112
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019-7475
Attention: Philip A. Gelston, Esq.
Telephone: (212) 474-1548
Telecopy: (212) 474-3700
and
(ii) if to a Stockholder, to the address set forth under the name of
such Stockholder on Schedule A hereto
or such other address as shall be furnished in writing by either party in
accordance with this Section 10, and any such notice or communication shall
be deemed to have been given as of the date so mailed. Notices or other
communications shall be deemed given (i) if delivered personally, upon
delivery, (ii) if delivered by registered or certified mail (return receipt
requested), upon the earlier of actual delivery or three business days
after being mailed, (iii) if delivered by overnight courier or similar
service, upon delivery, or (iv) if given by fax, upon confirmation of
transmission by fax; provided that if such notice or other communications
would be otherwise deemed given on a day which is not a business day, the
delivery shall be deemed given the first business day following such day.
<PAGE>
10
(e) Interpretation. When a reference is made in this Agreement to a
---------------
Section, such reference shall be to a Section of this Agreement unless
otherwise indicated. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Wherever the words "include", "includes"
or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation".
(f) 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.
(g) Entire Agreement; No Third-Party Beneficiaries. This Agreement
-----------------------------------------------
(including the documents and instruments referred to herein) (i)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to
the subject matter hereof and (ii) is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF
--------------
THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO ITS CONFLICT OF LAWS RULES)
AS TO ALL MATTERS, INCLUDING BUT NOT LIMITED TO, MATTERS OF VALIDITY,
CONSTRUCTION, EFFECT AND PERFORMANCE.
(i) Publicity. Except as otherwise required by law, court process or
----------
the rules of a national securities exchange or the Nasdaq National Market
or as contemplated or provided in the Merger Agreement, for so long as this
Agreement is in effect, neither any Stockholder nor Parent shall issue or
cause the publication of any press release or other public announcement
with respect to the transactions contemplated by this Agreement or the
Merger Agreement without the consent of the other parties, which consent
shall not be unreasonably withheld.
11. Stockholder Capacity. No person executing this Agreement who is
---------------------
or becomes during the term hereof a director or officer of the Company makes any
agreement or
<PAGE>
11
understanding herein in his or her capacity as such director or officer. Each
Stockholder signs solely in his or her capacity as the record holder and
beneficial owner of, or the trustee of a trust whose beneficiaries are the
beneficial owners of, such Stockholder's Shares.
12. Performance by Sub. Parent covenants and agrees for the benefit
-------------------
of the Stockholders that it shall cause Sub to perform in full each obligation
of Sub set forth in this Agreement.
13. Enforcement. The parties agree that irreparable damage would
------------
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement, this being in addition to any other
remedy to which they are entitled at law or in equity. In addition, each of the
parties hereto waives any right to trial by jury with respect to any claim or
proceeding related to or arising out of this Agreement or any of the
transactions contemplated hereby.
IN WITNESS WHEREOF, each of Parent and Sub has caused this Agreement
to be signed by its officer thereunto duly authorized and each Stockholder has
signed this Agreement, all as of the date first written above.
CERTAINTEED CORPORATION
By /s/ John R. Mesher
----------------------------
Name: John R. Mesher
Title: Vice President
BI EXPANSION II CORP.
By /s/ John R. Mesher
----------------------------
Name: John R. Mesher
Title: Vice President
<PAGE>
12
STOCKHOLDERS
/s/ Frank S. Anthony
------------------------------
Frank S. Anthony
/s/ Charles S. Bird III
------------------------------
Charles S. Bird III
/s/ Herbert I. Corkin
------------------------------
Herbert I. Corkin
/s/ R. Keith Long
-------------------------------
R. Keith Long
/s/ Antonio J. Lorusso, Jr.
-------------------------------
Antonio J. Lorusso, Jr.
/s/ Richard C. Maloof
-------------------------------
Richard C. Maloof
/s/ Loren R. Watts
-------------------------------
Loren R. Watts
<PAGE>
13
ACKNOWLEDGED AND AGREED
TO AS TO SECTION 9:
BIRD CORPORATION
By /s/ Frank Anthony
-----------------------
Name: Frank Anthony
Title: Vice President
<PAGE>
14
Schedule A
----------
- -------------------------------------------------------------
Preference Common
---------- ------
Shares Shares
------ ------
Stockholder Common Preference (converted Underlying
----------- ------ ---------- ---------- ----------
Shares Shares to Common) Options
------ ------ ---------- -------
- ----------------------------------------------------------------------
Frank S. Anthony 32,624 0 0 34,000
- ----------------------------------------------------------------------
Charles S. Bird III 289,263 4,000 3,595 22,500
- ----------------------------------------------------------------------
Herbert I. Corkin 537,600 9,500 8,539 2,500
- ----------------------------------------------------------------------
R. Keith Long 357,200 114,100 102,562 5,000
- ----------------------------------------------------------------------
Antonio J. Lorusso, Jr. 403,323 2,000 1,798 5,000
- ----------------------------------------------------------------------
Richard C. Maloof 46,647 2,600 2,337 155,000
- ----------------------------------------------------------------------
Loren R. Watts 4,000 0 0 17,500
--------- ------- ------- -------
- ----------------------------------------------------------------------
Total: 1,670,657 132,200 118,831 241,500
========= ======= ======= =======
- -------------------------------------------------------------
Total Common Shares assuming all Preference Shares converted and all Options
exercised: 2,030,988
