<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
SCHEDULE 14D-1/A
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 2)
----------
TRIANGLE PACIFIC CORP.
(Name of Subject Company)
SAPLING ACQUISITION, INC.
ARMSTRONG WORLD INDUSTRIES, INC.
(Bidders)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
895912 10 3
(Cusip Number of Class of Securities)
----------
DEBORAH K. OWEN
VICE PRESIDENT AND SECRETARY
SAPLING ACQUISITION, INC.
C/O ARMSTRONG WORLD INDUSTRIES, INC.
313 WEST LIBERTY STREET
P.O. BOX 3001
LANCASTER, PENNSYLVANIA 17604-3001
(717) 397-0611
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidders)
COPY TO:
ROBERT E. KING, JR., ESQ.
BONNIE A. BARSAMIAN, ESQ.
ROGERS & WELLS LLP
200 PARK AVENUE
NEW YORK, NEW YORK 10166
(212) 878-8000
----------
CALCULATION OF FILING FEE
================================================================================
Transaction Valuation*: $940,780,667 Amount of Filing Fee: $188,157
================================================================================
* For purposes of calculating the fee only. This amount assumes the purchase
of 16,951,003 shares of common stock, par value $.01 per share ("Shares")
of Triangle Pacific at a price per share of $55.50 in cash. Such number of
shares represents all the Shares outstanding as of June 9, 1998, determined
on a fully diluted basis. The amount of the filing fee, calculated in
accordance with Section 14(g)(3) and Rule 0-11(d) under the Securities
Exchange Act of 1934, as amended, equals 1/50th of one percent of the
aggregate of the cash offered by the bidders.
[X] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
Amount Previously Paid: $188,157 Filing Party: Armstrong World
Industries
Form or registration no.: Schedule 14D-1 Date Filed: June 19, 1998
================================================================================
(Continued on following pages)
(Page 1 of 5 pages)
<PAGE>
AMENDMENT NO. 2 TO SCHEDULE 14D
This Amendment No. 2 amends and supplements the Tender Offer Statement on
Schedule 14D-1 originally filed with the Commission on June 19, 1998, as amended
by Amendment No. 1 filed with the Commission on June 25, 1998 (the "Schedule
14D-1"), by Armstrong World Industries, Inc., a Pennsylvania corporation
("Parent"), and Sapling Acquisition, Inc. (the "Purchaser"), a Delaware
corporation and a wholly-owned subsidiary of Parent, relating to the tender
offer of the Purchaser to purchase all of the outstanding shares (the "Shares")
of common stock, par value $.01 per share (the "Common Stock"), of Triangle
Pacific Corp., a Delaware corporation, at a purchase price of $55.50 per Share,
net to the seller in cash, without interest thereon, upon the terms and subject
to the conditions set forth in the Offer to Purchase dated June 19, 1998 (the
"Offer to Purchase"), and in the related Letter of Transmittal (which, together
with any supplements or amendments, collectively constitute the "Offer").
Unless the context otherwise requires, capitalized terms used but not defined
herein have the meanings ascribed to them in the Schedule 14D-1 and the Offer to
Purchase.
The Schedule 14D-1 is hereby supplemented and/or amended as provided below:
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
Item 3 of the Schedule 14D-1 is amended and restated in its entirety as
follows:
(a)-(b) The information set forth in the Offer to Purchase in Section 9
("Certain Information Concerning the Purchaser and Parent"), in Section 11
("Background of the Offer, Contacts with the Company") and in Section 12
("Purpose of the Offer; Plans for the Company; The Merger Agreement; Stock
Tender Agreement") is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
Item 11 of the Schedule 14D-1 is amended by adding immediately after
Exhibit (a)(8) the following:
"(a)(9) First Supplement to the Offer to Purchase, dated July 1, 1998.
(b)(1) Bank Commitment Letter, dated June 5, 1998, by and among Parent,
Morgan Guaranty Trust Company of New York, Bank of America NT & SA,
The Chase Manhattan Bank, J.P. Morgan Securities Inc, Bancamerica
Robertson Stephens and Chase Securities, Inc."
OFFER TO PURCHASE
The Offer to Purchase, which is filed as Exhibit (a)(1) to the Schedule
14D-1, is hereby supplemented and/or amended as provided below (Section
references correspond to Sections in the Offer to Purchase):
"4. WITHDRAWAL RIGHTS."
The second sentence under this Section is amended and restated in its
entirety as follows:
"Shares tendered pursuant to the Offer may be withdrawn at any time prior
to the Expiration Date and, unless theretofore accepted for payment by the
Purchaser pursuant to the Offer, may also be withdrawn at any time after
August 18, 1998."
2
<PAGE>
"8. CERTAIN INFORMATION CONCERNING THE COMPANY - OTHER FINANCIAL
INFORMATION."
The seventh sentence of this Section is amended and restated in its
entirety as follows:
"None of Parent or the Purchaser or their respective advisors assumes any
responsibility for the validity, reasonableness, accuracy or completeness
of the estimates and the Company has made no representation to the
Purchaser or Parent regarding this information."
"12. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY; THE MERGER AGREEMENT;
STOCK TENDER AGREEMENT"
The first sentence of this Section is amended and restated in its entirety
as follows:
"The following is a summary of the material terms of the Stock Tender
Agreement, dated as of June 12, 1998, by and among Parent, the Purchaser,
TCW Special Credits Fund IIIb, a California limited partnership, TCW
Special Credits Trust, a California collective investment trust, TCW
Special Credits Trust IIIb, a California collective investment trust, TCW
Special Credits Fund V, a California limited partnership, Weyerhaeuser
Company Master Retirement Trust, a special account, The Common Fund for
Bond Investment, a special account and TCW Asset Management Company, a
California corporation."
"14. CERTAIN CONDITIONS TO THE OFFER"
Clause (iii) of the first paragraph under this Section is replaced with the
following:
"(iii) at any time on or after the date of this Offer to Purchase and
before the time of acceptance of Shares for payment pursuant to the Offer,
upon the Expiration Date, any of the following events shall have occurred:"
3
<PAGE>
SIGNATURE
After due 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.
Dated: July 1, 1998
SAPLING ACQUISITION, INC.
By: /s/ Deborah K. Owen
-------------------------------------
Deborah K. Owen
Vice President and Secretary
ARMSTRONG WORLD INDUSTRIES, INC.
By: /s/ Deborah K. Owen
-------------------------------------
Deborah K. Owen
Senior Vice President, Secretary and
General Counsel
4
<PAGE>
EXHIBIT INDEX
-------------
EXHIBIT NO. DESCRIPTION
----------- -----------
(a)(1)* Offer to Purchase, dated June 19, 1998.
(a)(2)* Letter of Transmittal.
(a)(3)* Notice of Guaranteed Delivery.
(a)(4)* Form of letter, dated June 19, 1998, to brokers, dealers,
commercial banks, trust companies and other nominees.
(a)(5)* Form of letter to be used by brokers, dealers, commercial banks,
trust companies and nominees to their clients.
(a)(6)* Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7)* Press release issued by the Purchaser on June 13, 1998.
(a)(8)* Form of Summary Advertisement, dated June 19, 1998.
(a)(9)** First Supplement to the Offer to Purchase, dated July 1, 1998.
(b)(1)** Bank Commitment Letter, dated June 5, 1998, by and among Parent,
Morgan Guaranty Trust Company of New York, Bank of America NT &
SA, The Chase Manhattan Bank, J.P. Morgan Securities Inc,
Bancamerica Robertson Stephens and Chase Securities, Inc.
(c)(1)* Agreement and Plan of Merger, dated as of June 12, 1998, by and
among the Company, the Purchaser and Parent.
(c)(2)* Stock Tender Agreement, dated as of June 12, 1998, by and among
certain stockholders, the Purchaser and Parent.
* Previously filed
** Filed herewith
5
<PAGE>
Exhibit (a)(9)
First Supplement to the Offer to Purchase dated June 19, 1998 with respect to
the
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
TRIANGLE PACIFIC CORP.
AT
$55.50 NET PER SHARE IN CASH
BY
SAPLING ACQUISITION, INC.
A WHOLLY OWNED SUBSIDIARY
OF
ARMSTRONG WORLD INDUSTRIES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON JULY 17, 1998, UNLESS THE OFFER IS EXTENDED.
THE DOCUMENT SUPPLEMENTS AND UPDATES THE OFFER TO PURCHASE, DATED JUNE 19,
1998, PREVIOUSLY SENT TO YOU. IT CONTAINS IMPORTANT INFORMATION THAT YOU
SHOULD READ CAREFULLY. CAPITALIZED TERMS USED BUT NOT DEFINED IN THIS DOCUMENT
HAVE THE SAME MEANINGS AS IN THE OFFER TO PURCHASE
PROCEDURES FOR TENDERING SHARES ARE SET FORTH IN SECTION 3 OF THE OFFER TO
PURCHASE. TENDERING STOCKHOLDERS MAY CONTINUE TO USE THE ORIGINAL LETTER OF
TRANSMITTAL PREVIOUSLY DELIVERED WITH THE OFFER TO PURCHASE AND SHOULD
CONTINUE TO FOLLOW THE PROCEDURES SPECIFIED THEREIN WITH RESPECT TO THE
DELIVERY OF SHARES.
July 2, 1998
<PAGE>
To the Holders of Shares of Common Stock of Triangle Pacific Corp.:
INTRODUCTION
This First Supplement to the Offer to Purchase dated June 19, 1998
supplements and amends certain information contained in the Offer to Purchase
previously delivered to you. Except as otherwise specified herein or in an
amendment to the Schedule 14D-1 filed by Parent or the Purchaser the terms of
the Offer have not been modified or amended in any respect. Questions and
requests for assistance may be directed to the Information Agent or the Dealer
Manager.
In addition to this First Supplement to the Offer to Purchase we are also
delivering to you herewith a copy of Amendment No. 2 to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9
SUPPLEMENTAL INFORMATION
CERTAIN INFORMATION CONCERNING THE COMPANY.
The fourth paragraph of Section 8. "Certain Information Concerning the
Company -Other Financial Information" of the Offer to Purchase is amended and
restated in its entirety as follows:
Other Financial Information. During the course of discussions between Parent
and the Company, the Company provided Parent with certain estimates showing
estimated earnings per share for the Company of $2.43, $3.68, $4.39 and $5.51
for the fiscal years 1998, 1999, 2000 and 2001, respectively. In addition, the
Company provided Parent with certain additional estimates of the Company's
projected results of operations through the Company's fiscal year 2001,
forecasting annual growth in net sales and operating income over the period to
be approximately 11% and 21%, respectively. The Company does not as a matter
of course make public any estimates as to future performance or earnings, and
the estimates set forth above are included in this Offer to Purchase only
because the information was provided to Parent. The estimates were not
prepared with a view to public disclosure or compliance with the published
guidelines of the Commission or the guidelines established by the American
Institute of Certified Public Accountants regarding projections or forecasts.
The foregoing information is "forward-looking" and inherently subject to
significant uncertainties and contingencies, many of which are beyond the
control of the Company, including industry performance, general business and
economic conditions, changing competition, adverse changes in applicable laws,
regulations or rules governing environmental, tax or accounting matters and
other matters. The estimates were based on a number of assumptions, some of
which inevitably will prove to be incorrect. None of Parent or the Purchaser
or their respective advisors assumes any responsibility for the validity,
reasonableness, accuracy or completeness of the estimates and the Company has
made no representation to the Purchaser or Parent regarding this information.
The inclusion of the foregoing estimates should not be regarded as an
indication that the Company, the Purchaser, Parent or any other person who
received such information considers it an accurate prediction of future
events. Neither the Company nor Parent intends to update, revise or correct
such estimates if they become inaccurate (even in the short term).
SOURCE AND AMOUNT OF FUNDS.
Section 10. "Source and Amount of Funds" of the Offer to Purchase is amended
and restated in its entirety as follows:
The Purchaser estimates that the total amount of funds required to acquire
the outstanding Shares pursuant to the Offer, consummate the Merger, and to
pay related fees and expenses will be approximately $908.1 million (or
approximately $1.18 billion including the repayment of approximately $269
million of the Company's outstanding indebtedness (including the amount
required to fund the Change of Control Offer (as defined below))). See
Sections 12 and 16. The Offer is not conditioned upon any financing
arrangements. Purchaser expects to obtain the funds required to consummate the
Offer through capital contributions or advances made by Parent.
S-2
<PAGE>
Parent expects to fund the Offer and the Merger through the use of a
combination of one or more of the following (i) internally generated funds,
including amounts that may be raised under a $300 million existing credit
facility (the "Existing Credit Facility") which secures commercial paper
issued under Parent's existing commercial paper program; (ii) the issuance of
commercial paper pursuant to a new commercial paper program (the "CP Program")
which will be secured by a new $1 billion credit facility (the "New Facility")
to be provided by Morgan Guaranty Trust Company of New York, Bank of America
NT&SA and The Chase Manhattan Bank (collectively, the "Lenders"); and (iii)
borrowings under either or both of the Existing Credit Facility and the New
Facility.
Existing Credit Facility. Pursuant to a $300 million Credit Agreement, dated
as of February 7, 1995, among Parent, Morgan Guaranty Trust Company of New
York, as Agent, and the other banks that are parties thereto, as amended (the
"Credit Agreement") Parent may borrow up to an aggregate of $300 million for
general corporate purposes on a revolving basis. As of June 16, 1998, Parent
had no outstanding indebtedness under the Credit Agreement, however,
approximately $137.4 million was outstanding under Parent's existing
commercial paper program. The Credit Agreement expires April 9, 2001. Loans
under the Credit Agreement generally bear interest on the unpaid principal at
a rate per annum equal to the higher of (i) the prime rate described therein
and (ii) the sum of 1/2 of 1% plus the federal funds rate. The covenants
contained in the Credit Agreement include a minimum consolidated net worth
test.
New Facility. Pursuant to a bank commitment letter dated June 5, 1998 among
Parent and the Lenders (the "Bank Commitment Letter"), the Lenders each have
committed (the "Commitments") to provide up to approximately $333 million
(and, collectively $1 billion in the aggregate) to fund the Offer and the
Merger and related expenses.
The Bank Commitment Letter provides that the New Facility will be
established as a 364-day fully revolving credit facility. Loans will bear
interest at rates based on the London interbank offered rate ("LIBOR") plus a
facility fee and LIBOR margin based fee on the total outstanding indebtedness
of Parent and its direct and indirect subsidiaries and the rating of Parent's
senior unsecured long-term debt (including the Company and including
indebtedness under the New Facility). The margin will range from 0.225% per
year to 0.55%.
The covenants will include a minimum consolidated net worth test. Parent has
agreed to pay underwriting, agency and other fees to J.P. Morgan Securities
Inc. ("JPMSI") and the Lenders or their affiliates and to pay certain other of
its and their expenses. Parent has also agreed to indemnify JPMSI and the
Lenders, their respective affiliates and their respective directors, officers
and employees against certain types of losses and liabilities arising out of
the commitment or the New Facility.
The Commitments made by the Lenders are subject to the satisfaction of
certain conditions including the following: (i) certain representations and
warranties from Parent; (ii) the continued credit rating of Parent following
the consummation of the transactions contemplated by the Merger Agreement;
(iii) absence of material adverse changes in the financial condition,
business, assets, results of operations or prospects of Parent or its
subsidiaries or the Company; (iv) Lenders' satisfaction that, except as
otherwise agreed, prior to and during any syndication of the New Facility
there shall be no competing offer, placement or arrangement of debt securities
or bank financing on behalf of Parent; (v) absence of adverse changes in the
syndicated loan markets generally or in the regulatory environment that in the
Lenders' reasonable judgment are likely to materially and adversely affect the
syndication of the New Facility; and (vi) the negotiation and execution of
definitive documentation with respect to the New Facility.
The foregoing summary description of the Bank Commitment Letter does not
purport to be complete. There is no assurance that the terms described below
will be contained in the definitive documentation for the New Facility, and
additional terms may be included. If for any reason the New Facility is not
finalized or does not become available, Parent would require alternative
funding which it would seek from other sources. Those sources might include
bank borrowings or sales of debt or equity securities in the capital markets.
S-3
<PAGE>
CP Program. Pursuant to Parent's CP Program, Parent intends to issue
commercial paper notes secured by lines of credit under the New Facility. The
commercial paper notes will have maturities of up to 270 days and are expected
to bear interest at rates between approximately 5.5% and 6.5%. Parent
currently anticipates that one or more of JPMSI, BancAmerica Robertson
Stephens, Chase Securities Inc. and Morgan Stanley & Co. Incorporated will act
as dealers under the CP Program.
It is anticipated that the indebtedness incurred by Parent in connection
with the Offer and the Merger will be repaid from funds generated internally
by Parent and its subsidiaries (including, after the Merger, if consummated,
funds generated by the surviving corporation and its subsidiaries), proceeds
of dispositions, through other sources which may include the proceeds of
future bank refinancings, dispositions or the public or private sale of debt
or equity securities, or through a combination of two or more such sources. No
final decisions have been made, however, concerning the method Parent will
employ to repay such indebtedness. Such decisions, when made, will be based on
Parent's review from time to time of the advisability of particular actions,
as well as on prevailing interest rates and financial and other economic
conditions.
CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
The first paragraph of Section 11. "Certain Legal Matters-- Stockholder
Litigation" is amended by adding the following information:
On June 23, 1998 an amended purported class action complaint was filed in
the Court of Chancery of Delaware by Pinna Yosevitz in full substitution of
the purported class action complaint filed by Pinna Yosevitz on June 15, 1998.
The purported class action was brought individually and on behalf of other
stockholders of the Company similarly situated against the Company, its
directors and Parent. The lawsuit is styled Pinna Yosevitz v. Floyd F. Sherman
et. al. (C.A.No.16447-NC) and seeks, among other things, a preliminary and
permanent injunction against the Offer and the Merger, rescission of the Offer
and the Merger if they are consummated, and compensatory damages. The
complaint asserts, among other things, that (i) the Company's stockholders
cannot determine, based on materials provided in the Offer, the intrinsic
value of their Shares and whether the acquisition by Parent is preferable over
other alternatives or is fair; (ii) the Company's stockholders are unable to
rely upon the integrity of the fairness opinion rendered by Salomon Smith
Barney ("Salomon"), the Company's financial advisor, in light of alleged
conflicts of interest; (iii) as a result of the receipt of consideration for
the cancellation of their outstanding options, certain of the individual
defendants have interests in the proposed transaction that conflict with those
of the public stockholders of the Company; (iv) the individual defendants have
not acted reasonably and in compliance with their fiduciary duties to the
Company's stockholders in a manner designed to obtain the highest possible
price for the Company's public stockholders; (v) the intrinsic value of the
Company is materially in excess of the Offer Price giving due consideration to
anticipated operating results, net asset value, cash flow and profitability of
the Company; (vi) the Offer Price is not the result of an appropriate
consideration of the value of the Company's business because the board of
directors of the Company approved the Merger without undertaking appropriate
steps to ascertain the Company's value; (vii) by entering into the agreement
with Parent, the individual defendants have allowed the price of the Company's
common stock to be capped, thereby depriving the stockholders of an
opportunity to realize any increase in the value of their Shares; and (viii)
the individual defendants did not appoint or retain any truly independent
person or entity to negotiate for or on behalf of the Company's public
stockholders to promote their best interests in the Merger. The complaint
alleges that the defendants' have participated in unfair dealing toward the
public stockholders and have engaged in and substantially aided and abetted
each other in breach of fiduciary duties owed by them to the stockholders. The
complaint further asserts that Parent has knowingly aided and abetted the
alleged breaches of fiduciary duty committed by the individual defendants.
In connection with the purported class action lawsuit, on June 19, 1998, the
plaintiff served defendants with a first request for production of documents.
The Company, Parent and the other defendants have negotiated a proposed
settlement with the plaintiffs in the purported class action lawsuit described
above. Pursuant to a memorandum of understanding entered into by
S-4
<PAGE>
counsel for the defendants and the plaintiff, (i) the Company agreed to
include in an amendment to its Schedule 14D-9, which amendment is being
delivered to the stockholders of the Company herewith, certain additional
information with regard to Salomon's relationship with Parent, (ii) Parent and
the Purchaser agreed to include in this First Supplement to the Offer to
Purchase, certain additional information with respect to estimates of the
Company's projected results of operations that had been furnished to Parent
set forth in "Certain Information Concerning the Company" above, and (iii) the
defendants agreed not to oppose an application for legal fees and expenses by
the plaintiff's attorneys in an amount of not more than $275,000 and $25,000,
respectively. Pursuant to the proposed settlement, the action will be
dismissed with prejudice and the defendants will be released from claims that
were or could have been asserted in such action. Because the action is a
putative class action, the proposed settlement is subject to reasonable
confirmatory discovery, certification of the plaintiff class of the Company's
stockholders, notice to the class and court approval.
S-5
<PAGE>
Exhibit (b)(1)
June 5, 1998
Edward R. Case
Treasurer
Armstrong World Industries, Inc.
313 West Liberty
Lancaster, PA 17603
Dear Ned:
You have requested J.P. Morgan Securities Inc. ("JPMSI") to act as Arranger of
financing in the amount of $1,000,000,000 for Armstrong World Industries, Inc.
("Armstrong" or the "Borrower") for the acquisition (the "Transaction") of
Triangle Pacific Corporation ("TPC") and general corporate purposes. You have
also requested BancAmerica Robertson Stephens and Chase Securities Inc. to act
as Co-Arrangers of such financing. Attached is an outline of the principal terms
and conditions of the proposed loans to be made by Morgan Guaranty Trust Company
of New York ("MGT"), Bank of America NT&SA("Bank of America"), and The Chase
Manhattan Bank ("Chase," and, together with MGT and Bank of America, the
"Underwriting Banks"), and other banks acceptable to MGT in consultation with
the Borrower (the Underwriting Banks and such other banks being herein called
the "Banks")), pursuant to loan documentation mutually acceptable to the Banks
and the Borrower.
Each Underwriting Bank hereby severally commits to lend $333,333,333.33 on the
attached terms and conditions (the "Commitments"). The Commitments are subject
to (i) representations by the Borrower to the Underwriting Banks of its
willingness to cooperate with the Underwriting Banks in structuring and promptly
syndicating an appropriate credit facility to a broader syndicate of banks,
including its willingness to make reasonable changes to the documents as
requested by participants; (ii) the Underwriting Banks' current understanding of
the proposed capital structure and the "BBB+" or better credit rating of the
Borrower after giving effect to the Transaction and the financing referred to
herein; (iii) the absence of material adverse changes in the financial
condition, business, assets, results of operations, or prospects of the Borrower
or its subsidiaries or TPC; (iv) the Undewriting Banks' satisfaction that prior
to and during any syndication of the credit facility there shall be no competing
offering, placement or arrangement of debt securities or bank financing on
behalf of the Borrower, provided, however, that the Borrower's offering of PEPS
securities will not be considered a competing financing; (v) the absence of
adverse changes in the syndicated loan markets generally or in the regulatory
environment that in the Underwriting Banks' reasonable judgment are likely to
materially and adversely affect the syndication of the proposed financing; it
being understood that there can be no assurance that such markets or regulatory
environment will not so change in the future; and (vi) the negotiation,
execution and delivery of mutully acceptabe definitive loan documentation (to be
prepared by the Underwriting Banks' counsel, Davis Polk & Wardwell) by July 31,
1998; provided, however, that in the instances contemplated in clauses (ii) and
(v) the Borrower and
<PAGE>
Underwriting Banks covenant to negotiate in good faith to reach an alternative
price and or alternative other terms on which the financing shall proceed.
By signing below, Armstrong acknowledges its obligation to pay to each
Underwriting Bank the following fees:
(i) a structuring and advisory fee (to be paid to and retained in its
entirety by such Underwriting Bank or its affiliates) of 11.5
basis points on such Underwriting Bank's Commitment, payable on
the date Armstrong accepts this letter;
(ii) a syndication fee (a portion of which will be paid to
participating banks, with any remainder to be retained by such
Underwriting Bank or its affiliates) of 10 basis points on such
Underwriting Bank's Commitment, payable on the date of signing
of definitive loan documentation; and
(iii) an incremental syndication fee of 5 basis points, due on the
amount, if any, of each Underwriting Bank's Commitment in excess
of $100 million immediately after general syndication. Such fee,
if any, is payable on the allocation date of such general
syndication.
Armstrong agrees that, once paid, the fees or any part thereof payable hereunder
shall not be refundable under any circumstances. All fees payable hereunder
shall be paid in immediately available funds.
By signing below Armstrong acknowledges its obligation to pay the reasonable
out-of-pocket costs and expenses of the Arranger, the Co-Arrangers and the
Underwriting Banks and the reasonable fees and disbursements of the Underwriting
Banks' counsel, Davis Polk & Wardwell, regardless of whether any loan documents
are agreed to and signed by the Banks and Armstrong, and regardless of whether
any loans are actually made. Armstrong also acknowledges its obligation to pay
JPMSI and MGT and fees referred to in the Supplemental Fee Letter dated as of
the date hereof. Fees payable to each Underwriting Bank hereunder shall be
allocated between it and its affiliates as they may mutually determine.
Armstrong acknowledges that each of the Underwriting Banks may be providing debt
financing, equity capital or other services (including financial advisory
services) to other companies in respect of which Armstrong may have conflicting
interests regarding the transactions described herein and otherwise.
The Borrower by signing below agrees to indemnify and defend the Arranger, the
Co-Arrangers, the Underwriting Banks and each other Bank, their respective
affiliates and the respective directors, officers, Underwriting Banks and
employees of the foregoing from, and hold each of them harmless against, any and
all losses, liabilities, claims, damages or expenses of any kind, including
without limitation the fees and disbursements of counsel, incurred by any of
them arising out of or by reason of their role hereunder or any investigation,
litigation or other proceeding brought or threatened relating to any loan made
or proposed to be made to the Borrower in connection with the matters herein
referred to
<PAGE>
(including, but without limitation, any use made or proposed to be made by the
Borrower or any of its affiliates of the proceeds of such loans, but excluding
any such losses, liabilities, claims, damages or expenses incurred by reason of
the gross negligence or willful misconduct of the indemnitee as determined by a
final judgment of a court of competent jurisdiction).
Upon acceptance of this letter, you agree that the commitment letters, dated
March 1998, between the Underwriting Banks and the Borrower are hereby
terminated.
If you accept and agree to this proposal, please so indicate by signing in the
space provided below and returning a copy of this letter to us. This proposal
will expire at the close of business on June 19, 1998 if not accepted by you in
writing by that time.
Very truly yours,
MORGAN GUARANTY TRUST J.P MORGAN SECURITIES INC.
COMPANY OF NEW YORK
By: /s/ John M. Mikolay By: /s/ Charles H. King
---------------------- ----------------------
Name: John M. Mikolay Name: Charles H. King
Title: Vice President Title: Vice President
60 Wall Street 60 Wall Street
New York, New York 10260-0060 New York, New York 10260-0060
Telephone: 212-648-6988 Telephone: 212-648-7138
Telecopier: 212-648-5018 Telecopier: 212-648-5336
BANK OF AMERICA NT&SA BANCAMERICA ROBERTSON
STEPHENS
By: /s/ Dale R. Mason By: /s/ Keith C. Barnish
---------------------- ----------------------
Name: Dale R. Mason Name: Keith C. Barnish
Title: Vice President Title: Sr. Managing Director
355 Madison Avenue 355 Madison Avenue
New York, New York 10017 New York, New York 10017
Telephone: 212-503-7939 Telephone:
Telecopier: 212-503-7066 Telecopier:
THE CHASE MANHATTAN BANK CHASE SECURITIES, INC.
By: /s/ Karen M. Sharf By:
---------------------- -----------------------
Name: Karen M. Sharf Name:
Title: Vice President Title:
270 Park Avenue 270 Park Avenue
New York, New York 10017 New York, New York 10017
Telephone 212-270-5659 Telephone:
Telecopier: 212-270-5120 Telecopier:
<PAGE>
SUMMARY OF TERMS AND CONDITIONS
FOR ARMSTRONG WORLD INDUSTRIES, INC.
Terms and conditions for this facility not mentioned below will be substantially
similar to those in the existing $300,000,000 Credit Agreement dated as of
February 7, 1995, and amended as of April 9, 1996 ("Existing Credit Agreement").
Borrower: Armstrong World Industries, Inc.
Total Facility Amount: $1,000,000,000.
Arranger: J.P. Morgan Securities Inc.
Co-Arrangers: BancAmerica Robertson Stephens and Chase
Securities Inc.
Administrative Agent: Morgan Guaranty Trust Company of New York
("Morgan").
Documentation Agent: Bank of America NT&SA.
Syndication Agent: Chase Securities, Inc.
Purpose: To provide financing for the acquisition of
Triangle Pacific Corporation by the Borrower
("TPC") and general corporate purposes.
Lenders: Syndicate of lenders acceptable to Morgan in
consultation with the Borrower (the "Banks").
Facility Description: A 364-day fully revolving credit facility.
Increase Option: None.
Money Market Option: None.
Mandatory Commitment The first $500 million of net proceeds from any
Reduction: issuance of equity or long term debt shall be
used to permanently reduce the Commitments,
excluding, however, the proceeds of the
Borrower's disposition of Dal-Tile stock or any
issuance of securites in conjunction with the
purchase of DLW A.G.
Facility Pricing: Pricing on the commitments and loans, expressed
in basis points per annum, will vary according
to the pricing level commensurate with credit
quality (see attached pricing Grid)
Page 1
<PAGE>
Conditions to Closing: Substantially similar to the Existing Credit
Agreement, including:
1. Negotiation and execution of
satisfactory closing documentation
including legal opinions satisfactory to
the Banks.
2. Deal-specific requirements, if any;
regulatory approvals, licenses, etc., if
any.
Condition to First Closing of purchase of TPC on terms
Borrowing: substantially similar to those outlined in the
purchase agreement (the terms of which the
Agents shall have approved.)
Conditions to all Borrowings: Substantially similar to the Existing Credit
Agreement.
Covenants: Substantially similar to the Existing Credit
Agreement. However, Section 5.07 shall be
amended to change $500,000,000 to $650,000,000.
Events of Default: Substantially similar to the Existing Credit
Agreement.
Transfers and Participations: Banks will have the right to transfer or sell
participations in their loans or commitments
with the transferability of voting rights in the
case of participations limited to changes in
principal, rate, fees and terms. Assignments
will be allowed with the consent (not to be
unreasonably withheld) of the Borrower and the
Administrative Agent, provided that no consent
shall be required for assignments within the
Bank group and the Banks' affiliates or where a
default is occurring.
Indemnification: The Borrower will indemnify the Banks against
all losses, liabilities, claims, damages, or
expenses relating to their loans, the Borrower's
use of loan proceeds or the commitments,
including but not limited to reasonable
attorneys' fees and settlement costs (except
such as result from the indemnitee's gross
negligence or willful misconduct).
Governing Law: State of New York.
<PAGE>
<TABLE>
<CAPTION>
PRICING GRID FOR
ARMSTRONG WORLD INDUSTRIES FACILITY
(basis points per amnum)
____________________________________________________________________________________________________________________________________
PRICING LEVEL LEVEL I LEVEL II LEVEL III LEVEL IV
____________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Basis for Pricing: If the Borrower's senior If the Borrower's senior If the Borrower's senior If Levels I,
unsecuried long-term debt is unsecured long-term debt is unsecured long-term debt is II, and III
rated A or above by S&P or rated A-by S&P or A3 by rated BBB+by S&P and do not apply
A2 or above by Moody's Moody's Baa1 by Moody's
____________________________________________________________________________________________________________________________________
Facility Fee /ii/ 5.0 6.5 8.0 10.0
____________________________________________________________________________________________________________________________________
LIBOR Margin less than 22.5 23.5 27.0 32.5
1/3rd Used
____________________________________________________________________________________________________________________________________
LIBOR Margin greater 30.0 33.5 37.0 45.0
than or equal to 1/3rd
Used /iii/
____________________________________________________________________________________________________________________________________
less than 1/3rd Used 27.5 30.0 35.0 42.5
LIBOR + (Facility Fee
+ LIBOR Margin)
____________________________________________________________________________________________________________________________________
greater than or equal 35.0 40.0 45.0 55.0
to 1/3rd Used LIBOR +
(Facility Fee +
LIBOR Margin)
____________________________________________________________________________________________________________________________________
</TABLE>
_______________________
i Pricing shall be at Level III until the Borrower's ratings are affirmed by
both S&P and Moody's.
ii After December 31, 1998, the Facility Fee on any Commitments in excess of
$500 million shall double (the "Refinancing Incentive Fee.")
iii On any date when the total amount of Loans equals or exceeds 33.3% of the
Commitments, this LIBOR Margin shall apply to all Loans.
<PAGE>
If the Borrower's rating are split by one notch, the higher of the two ratings
shall apply. If the Borrower's ratings are split by two or more notches, the
midpoint or the lower of the two midpoint ratings shall apply.
