<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
----------------
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, ESQ.
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.
[_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: Filing Party:
Form or registration no.: Date Filed:
- -------------------------------------------------------------------------------
(Continued on following pages)
(Page 1 of 8 pages)
<PAGE>
CUSIP NO. 89512 10 3 PAGE 2
14D-1
1. Name of Reporting Persons S.S. or I.R.S. Identification Nos. of Above
Persons
SAPLING ACQUISITION, INC.
- --------------------------------------------------------------------------------
2.Check the Appropriate Box if a Member of a Group
(a) [_]
(b) [_]
- --------------------------------------------------------------------------------
3.SEC Use Only
- --------------------------------------------------------------------------------
4.Sources of Funds
AF
- --------------------------------------------------------------------------------
5.Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(e) or 2(f)
[_]
- --------------------------------------------------------------------------------
6.Citizenship or Place of Organization
DELAWARE
- --------------------------------------------------------------------------------
7.Aggregate Amount Beneficially Owned by Each Reporting Person
0
- --------------------------------------------------------------------------------
8.Check if the Aggregate Amount in Row 7 Excludes Certain Shares
[_]
- --------------------------------------------------------------------------------
9.Percent of Class Represented by Amount in Row 7
N/A
- --------------------------------------------------------------------------------
10.Type of Reporting Person
CO
<PAGE>
CUSIP NO. 89512 10 3 PAGE 3
14D-1
1. Name of Reporting Persons S.S. or I.R.S. Identification Nos. of Above
Persons
ARMSTRONG WORLD INDUSTRIES, INC.
- --------------------------------------------------------------------------------
2.Check the Appropriate Box if a Member of a Group
(a) [_]
(b) [_]
- --------------------------------------------------------------------------------
3.SEC Use Only
- --------------------------------------------------------------------------------
4.Sources of Funds
BK
- --------------------------------------------------------------------------------
5.Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(e) or 2(f)
[_]
- --------------------------------------------------------------------------------
6.Citizenship or Place of Organization
PENNSYLVANIA
- --------------------------------------------------------------------------------
7.Aggregate Amount Beneficially Owned by Each Reporting Person
0
- --------------------------------------------------------------------------------
8.Check if the Aggregate Amount in Row 7 Excludes Certain Shares
[_]
- --------------------------------------------------------------------------------
9.Percent of Class Represented by Amount in Row 7
N/A
- --------------------------------------------------------------------------------
10.Type of Reporting Person
CO
<PAGE>
SCHEDULE 14D
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Triangle Pacific Corp., a Delaware
corporation (the "Company"). The address of the Company's principal executive
offices is 16803 Dallas Parkway, Dallas, Texas 75248.
(b) This Statement relates to the offer by Sapling Acquisition, Inc., a
Delaware corporation (the "Purchaser"), to purchase all the outstanding shares
of common stock, par value $.01 per share (the "Shares") of the Company at a
purchase price of $55.50 per Share, net to the seller in cash, upon the terms
and subject to the conditions set forth in the Offer to Purchase, dated June
19, 1998 (the "Offer to Purchase") and the related Letter of Transmittal
(which, together with any supplements or amendments, collectively constitute
the "Offer"), copies of which are filed as Exhibits (a)(1) and (a)(2) hereto,
respectively. The information set forth in the Offer to Purchase under
"Introduction" is incorporated herein by reference.
(c) The information set forth in the Offer to Purchase in Section 6 ("Price
Range of Shares; Dividends") is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d), (g) This Statement is being filed by the Purchaser and Armstrong
World Industries, Inc. ("Parent"), a Pennsylvania corporation (collectively,
the "Bidders"). The Purchaser is a wholly-owned subsidiary of Parent. The
information set forth in the Offer to Purchase under "Introduction," in
Section 9 ("Certain Information Concerning the Purchaser and Parent") and in
Schedule I to the Offer to Purchase is incorporated herein by reference.
(e)-(f) During the last five years, none of the Bidders nor, to the best of
their knowledge, any of the persons listed in Schedule I to the Offer to
Purchase (i) has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) was a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction and as a result
of such proceeding was or is subject to a judgment, decree or final order
enjoining further violations of, or prohibiting activities subject to, federal
or state securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Offer to Purchase 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 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in the Offer to Purchase in Section 10
("Source and Amount of Funds") is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in the Offer to Purchase in Section 12
("Purpose of the Offer; Plans for the Company; The Merger Agreement; Stock
Tender Agreement") is incorporated herein by reference.
(f)-(g) The information set forth in the Offer to Purchase in Section 7
("Effect of the Offer on the Market for the Shares; Exchange Act Registration;
Margin Regulations") is incorporated herein by reference.
4
<PAGE>
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Offer to Purchase under
"Introduction," Section 9 ("Certain Information Concerning the Purchaser and
Parent") and Section 12 ("Purpose of the Offer; Plans for the Company; The
Merger Agreement; Stock Tender Agreement") is incorporated herein by
reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT
COMPANY'S SECURITIES.
The information set forth in the Offer to Purchase under "Introduction," in
Section 9 ("Certain Information Concerning the Purchaser and Parent"), Section
11 ("Background of the Offer; Contacts with the Company") and Section 12
("Purpose of the Offer; Plans for the Company; The Merger Agreement; Stock
Tender Agreement") is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Offer to Purchase under "Introduction" and
in Section 16 ("Fees and Expenses") is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in the Offer to Purchase in Section 9 ("Certain
Information Concerning the Purchaser and the Parent") is incorporated herein
by reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in the Offer to Purchase in Section 12
("Background of the Offer; Plans for the Company; The Merger Agreement; Stock
Tender Agreement") is incorporated by reference.
(b)-(c) The information set forth in the Offer to Purchase in Section 15
("Certain Legal Matters; Regulatory Approvals") is incorporated herein by
reference.
(d) The information set forth in the Offer to Purchase in Section 7 ("Effect
of the Offer on the Market for the Shares; Exchange Act Registration; Margin
Regulations") is incorporated herein by reference.
(e) The information set forth in the Offer to Purchase in Section 15
("Certain Legal Matters; Regulatory Approvals") is incorporated herein by
reference.
(f) The information set forth in the Offer to Purchase, the Letter of
Transmittal, the Agreement and Plan of Merger, dated as of June 12, 1998, by
and among the Purchaser, Parent and the Company and the Stock Tender
Agreement, dated as of June 12, 1998, by and among the Purchaser, Parent and
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, copies of
which are filed as Exhibits (a)(1), (a)(2), (c)(1) and (c)(2) hereto,
respectively, is incorporated herein by reference in its entirety.
5
<PAGE>
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<C> <S>
(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.
(b) Not applicable.
(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 of the Company, the Purchaser and Parent.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
</TABLE>
6
<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: June 19, 1998
SAPLING ACQUISITION, INC.
/s/ Deborah K. Owen
By: _________________________________
Deborah K. Owen
Vice President and Secretary
ARMSTRONG WORLD INDUSTRIES, INC.
/s/ Deborah K. Owen
By: _________________________________
Deborah K. Owen
Senior Vice President, Secretary
and General Counsel
7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
(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.
(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 of the Company, the Purchaser and Parent.
</TABLE>
8
<PAGE>
EXHIBIT (A)(1)
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 FRIDAY, JULY 17, 1998, UNLESS THE OFFER IS EXTENDED.
THE BOARD OF DIRECTORS OF TRIANGLE PACIFIC CORP. (THE "COMPANY") HAS
UNANIMOUSLY (WITH ONE MEMBER BEING ABSENT) APPROVED THE OFFER, THE MERGER AND
THE MERGER AGREEMENT AND DETERMINED THAT THE TERMS OF EACH OF THE OFFER AND
THE MERGER REFERRED TO HEREIN AND THE RELATED MERGER AGREEMENT ARE FAIR TO,
AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY AND RECOMMENDS
THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES
PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES REPRESENTING AT LEAST A MAJORITY OF THE TOTAL NUMBER OF OUTSTANDING
SHARES OF THE COMPANY ON A FULLY DILUTED BASIS ON THE DATE OF PURCHASE. THE
OFFER IS ALSO SUBJECT TO CERTAIN OTHER TERMS AND CONDITIONS. SEE INTRODUCTION
AND SECTIONS 1 AND 14.
SAPLING ACQUISITION, INC. (THE "PURCHASER") AND ARMSTRONG WORLD INDUSTRIES,
INC. ("PARENT") HAVE ENTERED INTO A STOCK TENDER AGREEMENT WITH CERTAIN
STOCKHOLDERS OF THE COMPANY PURSUANT TO WHICH, AMONG OTHER THINGS, SUCH
STOCKHOLDERS HAVE AGREED TO TENDER IN THE OFFER, UPON THE TERMS AND SUBJECT TO
THE CONDITIONS OF THE STOCK TENDER AGREEMENT, ALL SHARES OWNED BY SUCH
STOCKHOLDERS (APPROXIMATELY 35% OF THE COMPANY'S OUTSTANDING SHARES CALCULATED
ON A FULLY DILUTED BASIS). SEE SECTION 12.
---------------
IMPORTANT
---------------
Any stockholder desiring to tender all or any portion of such stockholder's
shares ("Shares") of common stock, par value $.01 per share (the "Common
Stock"), of the Company should either (i) complete and sign the Letter of
Transmittal (or a facsimile thereof) in accordance with the instructions set
forth in the Letter of Transmittal and (A) mail or deliver it, together with
the certificate(s) representing tendered Shares (the "Share Certificates") and
any other required documents to the Depositary (as defined herein) or (B)
tender such Shares pursuant to the procedures for book-entry transfer set
forth in Section 3 or (ii) request such stockholder's broker, dealer,
commercial bank, trust company or other nominee to effect the transaction for
such stockholder. A stockholder whose Shares are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee must contact
such broker, dealer, commercial bank, trust company or other nominee if such
stockholder desires to tender such Shares.
A stockholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available, or who cannot comply
with the procedures for book-entry transfer described in this Offer to
Purchase on a timely basis, may tender such Shares by following the procedures
for guaranteed delivery set forth herein.
Questions and requests for assistance, or for additional copies of this
Offer to Purchase, the Letter of Transmittal or other tender offer materials,
may be directed to the Information Agent or the Dealer Manager (as such terms
are defined herein) at their respective addresses and telephone numbers set
forth on the back cover of this Offer to Purchase. Holders of Shares may also
contact brokers, dealers, commercial banks and trust companies for additional
copies of this Offer to Purchase, the Letter of Transmittal or other tender
offer materials.
---------------
The Dealer Manager for the Offer is:
J.P. MORGAN & CO.
---------------
June 19, 1998
<PAGE>
TABLE OF CONTENTS
INTRODUCTION.................................................................. 1
THE TENDER OFFER.............................................................. 4
1. TERMS OF THE OFFER; EXPIRATION DATE....................................... 4
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. ........................... 6
3. PROCEDURES FOR TENDERING SHARES........................................... 7
4. WITHDRAWAL RIGHTS......................................................... 9
5. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.................... 10
6. PRICE RANGE OF SHARES; DIVIDENDS......................................... 11
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; EXCHANGE ACT
REGISTRATION; MARGIN REGULATIONS......................................... 12
8. CERTAIN INFORMATION CONCERNING THE COMPANY............................... 13
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT.................. 15
10. SOURCE AND AMOUNT OF FUNDS............................................... 17
11. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY....................... 18
12. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY; THE MERGER AGREEMENT;
STOCK TENDER AGREEMENT................................................... 20
13. DIVIDENDS AND DISTRIBUTIONS.............................................. 28
14. CERTAIN CONDITIONS OF THE OFFER.......................................... 29
15. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.............................. 31
16. FEES AND EXPENSES........................................................ 34
17. MISCELLANEOUS............................................................ 34
Schedule I--Information Concerning the Directors and Executive Officers of
Parent and the Purchaser.....................................................I-1
i
<PAGE>
To the Holders of Shares of Common Stock of Triangle Pacific Corp.:
INTRODUCTION
THE OFFER
Sapling Acquisition, Inc. (the "Purchaser"), a Delaware corporation and a
wholly owned subsidiary of Armstrong World Industries, Inc., a Pennsylvania
corporation ("Parent"), hereby offers to purchase all outstanding shares (the
"Shares") of common stock, par value $.01 per share (the "Common Stock"), of
Triangle Pacific Corp., a Delaware corporation (the "Company"), at a price of
$55.50 per Share, net to the seller in cash, without interest thereon (the
"Offer Price"), upon the terms and subject to the conditions set forth in this
Offer to Purchase and in the related Letter of Transmittal (which, as amended
from time to time, together constitute the "Offer").
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, stock transfer taxes on the purchase of Shares pursuant to the
Offer. However, any tendering stockholder or other payee who fails to complete
and sign the Substitute Form W-9 included in the Letter of Transmittal may be
subject to a required backup federal income tax withholding of 31% of the
gross proceeds payable to such stockholder or other payee pursuant to the
Offer. See Section 3. The Purchaser will pay all charges and expenses of J.P.
Morgan Securities Inc., as Dealer Manager (in such capacity, the "Dealer
Manager"), ChaseMellon Shareholder Services, L.L.C., as Depositary (the
"Depositary"), and Morrow & Co., Inc., as Information Agent (the "Information
Agent"), incurred in connection with the Offer. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED (WITH ONE
MEMBER BEING ABSENT) EACH OF THE OFFER, THE MERGER (AS DEFINED HEREIN) AND THE
MERGER AGREEMENT (AS DEFINED HEREIN), HAS DETERMINED THAT EACH OF THE OFFER,
THE MERGER AND THE MERGER AGREEMENT IS FAIR TO, AND IN THE BEST INTERESTS OF,
THE COMPANY'S STOCKHOLDERS AND RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER
AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
The Company's financial advisor, Salomon Smith Barney ("Salomon"), has
delivered to the Company's Board of Directors its written opinion, dated June
12, 1998, to the effect that, as of the date of such opinion, the $55.50 per
Share cash consideration to be received by the holders of Shares in the Offer
and the Merger is fair to such holders from a financial point of view. The
full text of the opinion, which sets forth the factors considered and the
assumptions made by such financial advisor, are contained in the Company's
Solicitation/ Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-
9"), which is being mailed to stockholders herewith. STOCKHOLDERS ARE URGED
TO, AND SHOULD, READ SUCH OPINION CAREFULLY IN ITS ENTIRETY.
The Offer is conditioned upon, among other things, (1) there being validly
tendered and not withdrawn prior to the Expiration Date (as defined in Section
1) such number of shares that would constitute a majority of the outstanding
Shares (determined on a fully diluted basis) (the "Minimum Condition"), (2)
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 (3) the satisfaction or waiver of certain other
conditions to the obligations of the Purchaser and the Company to consummate
the Offer and the transactions contemplated by the Merger Agreement as
described in Section 14. The Purchaser reserves the right (subject to
obtaining the consent of the Company and the applicable rules and regulations
of the Securities and Exchange Commission (the "Commission")), which it
presently has no intention of exercising, to waive or amend the Minimum
Condition and to elect to purchase, pursuant to the Offer, less than the
Minimum Number of Shares (as defined herein). In addition, the Purchaser
reserves the right, subject only to the applicable rules and regulations of
the Commission,
<PAGE>
to waive each of the other conditions (other than the Minimum Condition) to
the obligations of the Purchaser to consummate the Offer and the transactions
contemplated by the Merger Agreement. See Sections 1 and 14.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of June 12, 1998 (the "Merger Agreement"), by and among Parent, the
Purchaser and the Company pursuant to which, following the consummation of the
Offer and the satisfaction or waiver of the conditions set forth in the Merger
Agreement, the Purchaser will be merged with and into the Company (the
"Merger"). Following consummation of the Merger, the Company will continue as
the surviving corporation (the "Surviving Corporation") of the Merger and will
be a wholly owned subsidiary of Parent. In the Merger, each Share issued and
outstanding (other than shares of Common Stock held directly or indirectly by
the Company (whether as treasury stock or otherwise), Parent, Purchaser or any
other wholly owned subsidiary of Parent and other than Shares owned by
stockholders who have properly exercised rights of appraisal (if any) under
Section 262 of the General Corporation Law of the State of Delaware (the
"DGCL") will be converted into the right to receive the Offer Price, without
interest (the "Merger Consideration"). The Merger Agreement is more fully
described in Section 12.
The Merger Agreement provides that, promptly upon the purchase of and
payment for Shares by Parent or any of its subsidiaries of greater than 50% of
the outstanding Shares (on a fully diluted basis) pursuant to the Offer,
Parent shall be entitled to designate such number of directors, rounded up to
the next whole number, on the Board of Directors as will give the Parent
representation on the Board of Directors equal to the product of the total
number of directors on the Board of Directors multiplied by the percentage
that the aggregate number of Shares then beneficially owned by the Purchaser,
Parent and any of their affiliates following such purchase bears to the total
number of Shares then outstanding. In the Merger Agreement, the Company has
agreed to take any and all actions within the Company's power which are
necessary to cause the Purchaser's designees to be appointed to the Board of
Directors of the Company, including by increasing the size of the Board of
Directors or using its best efforts to cause incumbent directors to resign or
both. In addition, the Company has agreed to use its best efforts to cause
persons designated by Parent to constitute the same percentage of each
committee of the Board of Directors, each board of directors of each
subsidiary of the Company and each committee of each such board as such
persons represent on the Board of Directors of the Company. See Section 12.
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including, if required by law, the approval and adoption
of the Merger Agreement by the requisite vote of the stockholders of the
Company. Under the Company's Certificate of Incorporation and the DGCL, except
as otherwise described below, the affirmative vote of the holders of a
majority of the outstanding Shares is required to approve and adopt the Merger
Agreement and the Merger. Consequently, if the Purchaser acquires (pursuant to
the Offer or otherwise) at least a majority of the then outstanding Shares,
calculated on a fully-diluted basis, the Purchaser will have sufficient voting
power to approve and adopt the Merger Agreement and the Merger without the
vote of any other stockholder. See Section 12.
Under the DGCL, if the Purchaser acquires, pursuant to the Offer or
otherwise, at least 90% of the then outstanding Shares, the Purchaser will be
able to approve and adopt the Merger Agreement and the transactions
contemplated thereby, including the Merger, without a vote of the Company's
stockholders. In such event, Parent and the Purchaser intend to take all
necessary and appropriate action to cause the Merger to become effective as
soon as practicable after such acquisition, without a meeting of the Company's
stockholders. If, however, the Purchaser does not acquire at least 90% of the
then outstanding Shares pursuant to the Offer or otherwise and a vote of the
Company's stockholders is required under Delaware Law, a longer period of time
will be required to effect the Merger. See Section 12.
As an inducement to Parent and the Purchaser to enter into the Merger
Agreement described below, 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 (collectively, the "Stock Tender Parties"), each
entered into a Stock Tender Agreement (the "Stock
2
<PAGE>
Tender Agreement"), dated as of June 12, 1998, with Parent and the Purchaser.
The Stock Tender Parties collectively own 5,909,184 Shares, or approximately
35% of the outstanding Shares calculated on a fully diluted basis as of June
9, 1998. Pursuant to the Stock Tender Agreement, the Stock Tender Parties have
agreed, so long as the Board of Directors of the Company, Parent or the
Purchaser has not terminated the Merger Agreement, validly to tender pursuant
to the Offer, and not withdraw, all Shares which are owned of record or
beneficially by them prior to the Expiration Date (as defined herein). The
Stock Tender Agreement is more fully described in Section 12.
The Company has informed the Purchaser that as of the close of business on
June 9, 1998, there were 14,766,575 Shares issued and outstanding and
2,510,021 Shares reserved for issuance upon the exercise of outstanding
options, warrants or other rights to acquire Shares, of which 2,184,428 Shares
are covered by options, warrants or other rights to acquire Shares that are or
will be vested. Based upon the foregoing, the Purchaser believes that the
Minimum Condition will be satisfied if at least 8,475,502 Shares (the "Minimum
Number of Shares") are validly tendered and not withdrawn prior to the
Expiration Date (including those Shares tendered pursuant to the Stock Tender
Agreement). If the Minimum Condition is satisfied and the Purchaser accepts
for payment Shares tendered pursuant to the Offer, the Purchaser will be able
to elect a majority of the members of the Company's Board of Directors and to
effect the Merger without the affirmative vote of any other stockholder of the
Company.
* * *
The Merger Agreement is more fully described in Section 12. Certain Federal
income tax consequences of the sale of Shares pursuant to the Offer and the
exchange of Shares for the Merger consideration pursuant to the Merger are
described in Section 5.
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
3
<PAGE>
THE TENDER OFFER
1. TERMS OF THE OFFER; EXPIRATION DATE. 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 extension or amendment), the Purchaser will accept
for payment and pay for all Shares validly tendered prior to the Expiration
Date and not withdrawn in accordance with Section 4. The term "Expiration
Date" means 12:00 midnight, New York City time, on Friday, July 17, 1998,
unless and until the Purchaser, in accordance with the terms of the Merger
Agreement, 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, shall expire.
Consummation of the Offer is conditioned upon, among other things,
satisfaction of each of the Minimum Condition and the HSR Condition. The Offer
also is subject to certain other conditions set forth in Section 14 (together
with the Minimum Condition and the HSR Condition, the "Offer Conditions"). If
any of the Offer Conditions are not satisfied prior to the Expiration Date,
the Purchaser reserves the right (but shall not be obligated) to (i) decline
to purchase any or all of the Shares tendered and terminate the Offer, and
return all such tendered Shares to tendering stockholders, (ii) waive or
reduce the Minimum Condition (only with the consent of the Company) or waive
any or all other Offer Conditions and, subject to complying with applicable
rules and regulations of the Commission, purchase all Shares validly tendered,
(iii) subject to the terms of the Merger Agreement, extend the Offer and,
subject to the right of stockholders to withdraw Shares until the Expiration
Date, retain the Shares which have been tendered during the period or periods
for which the Offer is extended or (iv) subject to the terms of the Merger
Agreement, otherwise amend the Offer.
Subject to the terms of the Merger Agreement and the applicable rules and
regulations of the Commission, except as described below, the Purchaser
expressly reserves the right, in its sole discretion, at any time and from
time to time, and regardless of the occurrence of any of the events specified
in Section 14, by giving oral or written notice to the Depositary, as
described below, to (i) extend the period of time during which the Offer is
open, and thereby delay acceptance of such payment of, and the payment for any
Shares and (ii) amend the Offer in any other respect. 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. During any such extension, all Shares previously tendered and
not withdrawn will remain subject to the Offer, subject to the rights of a
tendering stockholder to withdraw any tendered Shares. See Section 4.
There can be no assurance that the Purchaser will exercise its right to
extend the Offer (other than as required by the Merger Agreement). Any
extension, waiver, amendment or termination will be followed as promptly as
practicable by public announcement. In the case of an extension, Rule 14e-1(d)
under the Securities Exchange Act of 1934, as amended (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.
In the Merger Agreement the Purchaser has agreed that it will not, without
the prior consent of the Company, extend the Offer, except that the Purchaser
may, without the consent of the Company, (i) extend the Offer on one or more
occasions for an aggregate period of not more than 20 days, if at the
scheduled or extended Expiration Date of the Offer, the Minimum Condition
shall not be satisfied, (ii) extend the Offer from time to
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time until the earlier to occur of (x) the satisfaction or waiver of all Offer
Conditions or (y) August 31, 1998, if at the scheduled or extended Expiration
Date any of the Offer Conditions (other than the Minimum Condition) which are
reasonably capable of being satisfied shall not be satisfied or waived;
provided, however, that notwithstanding the foregoing, if all Offer Conditions
other than the HSR Condition have been satisfied or waived, and the HSR
Condition is reasonably capable of being satisfied, the Purchaser may extend
the Offer without the consent of the Company until October 31, 1998 (either
such date, as applicable, being the "Extension Date"), (iii) extend the Offer
for any period required by any rule, regulation, interpretation or position of
the Commission or the staff thereof applicable to the Offer and (iv) extend
the Offer on one or more occasions for an aggregate period of not more than 10
business days beyond the latest Expiration Date that would otherwise be
permitted under clause (i), (ii) or (iii) of this sentence, if on such
Expiration Date there shall not have been tendered at least 90% of the
outstanding Shares on a fully diluted basis; provided, however, that, if the
Offer is extended pursuant to this clause (iv), certain of the Offer
Conditions shall be deemed satisfied at all times thereafter. The Merger
Agreement further provides that if all of the Offer Conditions have not been
satisfied or waived on any scheduled Expiration Date of the Offer then,
provided that all such Offer Conditions are reasonably capable of being
satisfied, Purchaser, at the request of the Company, will extend the Offer
from time to time until the earlier to occur of (i) the satisfaction or waiver
of such Offer Conditions or (ii) the Extension Date. As used in this Offer to
Purchase, "business day" has the meaning set forth in Rule 14d-1 under the
Exchange Act.
In addition, the Purchaser has agreed in the Merger Agreement that it will
not without the consent of the Company, (i) amend or waive the Minimum
Condition, (ii) decrease the Offer Price, (iii) decrease the number of Shares
subject to the Offer, (iv) amend any other term or condition of the Offer in
any manner adverse to the holders of the Shares, or (iv) extend the Offer,
except as provided above.
If the Purchaser extends the Offer or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its acceptance for
payment of or payment for 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 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 4.
However, the ability of the Purchaser to delay the payment for shares that the
Purchaser has accepted for payment is limited by Rule 14e-1 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.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or if it waives a material Offer Condition
(including, with the Company's consent, 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 relative
materiality of the change 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 generally is 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 the Shares. This Offer to Purchaser, the related Letter of
Transmittal and other relevant materials will be mailed by the Purchaser to
record holders of Shares and will be furnished by the Purchaser 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.
5
<PAGE>
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. 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 purchase, by accepting for payment, and will pay for, all
Shares validly tendered prior to the Expiration Date (and not properly
withdrawn in accordance with Section 4) as soon as practicable after the
Expiration Date. Any determination concerning the satisfaction of such terms
and conditions shall be within the sole discretion of the Purchaser. See
Section 4. Subject to the terms of the Merger Agreement, the Purchaser
expressly reserves the right, in its sole discretion, to delay acceptance for
payment of, or, subject to the applicable rules of the Commission, payment
for, Shares in order to comply in whole or in part with any applicable law,
including without limitation, the HSR Act. See Section 15. Any such delays
will be effected in compliance with Rule 14e-1(c) under the Exchange Act
(relating to the Purchaser's obligation to pay for or return tendered Shares
promptly after the termination or withdrawal of the Offer).
Parent has filed a Notification and Report Form with respect to the Offer
under the HSR Act. The waiting period under the HSR Act with respect to the
Offer will expire at 11:59 p.m., New York City time, on the 15th day after the
date such form was filed, unless early termination of the waiting period is
granted. In addition, the Antitrust Division of the United States Department
of Justice (the "Antitrust Division") or the United States Federal Trade
Commission (the "FTC") may extend the waiting period by requesting additional
information or documentary material from Parent. 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 Parent with such request. See Section 15
hereof for additional information concerning the HSR Act and the applicability
of the antitrust laws to the Offer.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i)
the certificate(s) representing tendered Shares (the "Share Certificates") or
timely confirmation of a book-entry transfer (a "Book-Entry Confirmation") of
such Shares (if such procedure is available) into the Depositary's account at
The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to
the procedures set forth in Section 3, (ii) the Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, or an Agent's
Message (as defined herein) in connection with a book-entry transfer, and
(iii) any other documents required by the Letter of Transmittal.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility
has received an express acknowledgment from the participant in the 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.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, tendered Shares if, as and when the Purchaser
gives oral or written notice to the Depositary of the Purchaser's acceptance
of such Shares for payment. Payment for Shares accepted pursuant to the Offer
will be made by deposit of the aggregate 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 such
tendering stockholders. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE OFFER
PRICE FOR SHARES BE PAID BY THE PURCHASER BY REASON OF ANY DELAY IN MAKING
SUCH PAYMENT. Upon the deposit of funds with the Depositary for the purpose of
making payments to tendering stockholders, the Purchaser's obligation to make
such payment shall be satisfied and tendering stockholders must thereafter
look solely to the Depositary for payment of amounts owed to them by reason of
the acceptance for payment of Shares pursuant to the Offer. If, for any reason
whatsoever, acceptance for payment of or payment for any Shares tendered
pursuant to the Offer is delayed, or the Purchaser is unable to accept for
payment or pay for Shares tendered pursuant to the Offer, then, without
prejudice to the Purchaser's rights set forth herein, the Depositary may,
nevertheless, on behalf of the Purchaser and subject to Rule 14e-1(c) under
the Exchange Act, retain tendered Shares and such Shares may not be withdrawn
except to the extent that the tendering stockholder is entitled to and duly
exercises withdrawal rights as described in Section 4.
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If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer or if Share Certificates are
submitted evidencing more Shares than are tendered, Share Certificates
evidencing unpurchased or untendered Shares will be returned, without expense
to the tendering stockholder (or, in the case of Shares tendered by book-entry
transfer into the Depositary's account at the Book-Entry Transfer Facility
pursuant to the procedure set forth in Section 3, such Shares will be credited
to an account maintained at the Book-Entry Transfer Facility), as promptly as
practicable following the expiration or termination of the Offer.
If, prior to the Expiration Date, the Purchaser increases the consideration
offered to stockholders pursuant to the Offer, such increased consideration
will be paid to all stockholders whose Shares are purchased pursuant to the
Offer, regardless of whether those Shares were tendered prior to the increase
in consideration.
Subject to the provisions of the Merger Agreement, the Purchaser reserves
the right to transfer or assign, in whole at any time or in part from time to
time, to Parent or one or more of their affiliates the right to purchase all
or any portion of the 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.
3. PROCEDURES FOR TENDERING SHARES
Valid Tender of Shares. Except as set forth below, in order for Shares to be
validly tendered pursuant to the Offer, the Letter of Transmittal or a
facsimile thereof, properly completed and duly executed, with any required
signature guarantees, or an Agent's Message in connection with a book-entry
delivery of Shares 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 (i) the Share Certificates
evidencing tendered Shares must be received by the Depositary along with the
Letter of Transmittal, (ii) Shares must be tendered pursuant to the procedure
for book-entry transfer described below and a Book-Entry Confirmation must be
received by the Depositary, in each case, prior to the Expiration Date, or
(iii) the tendering stockholder must comply with the guaranteed delivery
procedures described below.
If Share Certificates are forwarded to the Depositary in multiple
deliveries, a properly completed and duly executed Letter of Transmittal (or a
facsimile thereof) must accompany each delivery. No alternative, conditional
or contingent tenders will be accepted and no fractional Shares will be
purchased.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND
THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY. 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.
Book-Entry Transfer. The Depositary will make a request to establish an
account with respect to the Shares at the Book-Entry Transfer Facility for
purposes of the Offer within two business days after the date of this Offer to
Purchase, and any financial institution that is a participant in the Book-
Entry Transfer Facility's system may make book-entry delivery of Shares by
causing the Book-Entry Transfer Facility to transfer such Shares into the
Depositary's account at the Book-Entry Transfer Facility in accordance with
the Book-Entry Transfer Facility's procedures for transfer. Although delivery
of Shares may be effected through book-entry transfer at the Book-Entry
Transfer Facility, the Letter of Transmittal or a facsimile thereof, with any
required signature guarantees, or an Agent's Message in connection with a
book-entry delivery of Shares, 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 guaranteed delivery procedures described below must be complied
with.
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REQUIRED DOCUMENTS MUST BE TRANSMITTED TO AND RECEIVED BY THE DEPOSITARY AT
ONE OF ITS ADDRESSES SET FORTH ON THE BACK COVER PAGE OF THIS OFFER TO
PURCHASE. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN
ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal if the Shares tendered thereby are tendered (i) by a registered
holder of Shares who has not completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on
the Letter of Transmittal or (ii) for the account of a bank, broker, dealer,
credit union, savings association or other entity that is a member in good
standing of the Securities Transfer Agents Medallion Program (each, an
"Eligible Institution"). In all other cases, all signatures on the Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instruction 1
of the Letter of Transmittal.
If a Share Certificate is registered in the name of a person other than the
signer of the Letter of Transmittal or if payment is to be made, or a Share
Certificate not accepted for payment or not tendered is to be returned, to a
person other than the registered holder(s), then the Share Certificate must be
endorsed or accompanied by appropriate stock powers, in either case, signed
exactly as the name(s) of the registered holder(s) appear on the Share
Certificate, with the signature(s) on such Share Certificate or stock powers
guaranteed as described above. See Instructions 1 and 5 of the Letter of
Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Share Certificates are not immediately
available or time will not permit all required documents to reach the
Depositary prior to the Expiration Date or the procedure for book-entry
transfer cannot be completed on a timely basis, such Shares may nevertheless
be tendered if all the following conditions are satisfied:
(i) the 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 herewith, is
received by the Depositary as provided below prior to the Expiration Date;
and
(iii) the Share Certificates (or a Book-Entry Confirmation) representing
all tendered Shares in proper form for transfer together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof),
with any required signature guarantees (or, in the case of a book-entry
transfer, an Agent's Message) and any other documents required by the
Letter of Transmittal are received by the Depositary within three Nasdaq
trading days after the date of execution of such Notice of Guaranteed
Delivery.
Any Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile transmission or mail to the Depositary and must include a guarantee
by an Eligible Institution in the form set forth in the Notice of Guaranteed
Delivery.
Notwithstanding any other provisions 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 Share Certificates for, or of Book-Entry
Confirmation with respect to, such Shares, a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), together with any
required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message) and any other documents required by the Letter of
Transmittal. Accordingly, payment might not be made to all tendering
stockholders at the same time and will depend upon when Share Certificates are
received by the Depositary or Book-Entry Confirmations with respect to such
Shares are received into the Depositary's account at the Book-Entry Transfer
Facility.
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.
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Appointment as Proxy. By executing a Letter of Transmittal as set forth
above, a tendering stockholder irrevocably appoints 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 any and all
non-cash dividends, distributions, rights or other securities issued or
issuable in respect of such Shares on or after June 12, 1998). All such
proxies shall be considered coupled with an interest in the tendered Shares.
This appointment will be effective if, when and only to the extent that the
Purchaser accepts such Shares for payment pursuant to the Offer. Upon such
acceptance for payment, all prior proxies given by such stockholder with
respect to such Shares and other securities will, without further action, be
revoked, and no subsequent proxies may be given. The designees of the
Purchaser will, with respect to the Shares and other securities for which the
appointment is effective, be empowered to exercise all voting and other rights
of such stockholder as they, in their sole discretion, may deem proper at any
annual, special, adjourned or postponed meeting of the Company's stockholders,
or otherwise, and the Purchaser reserves the right to require that in order
for Shares or other securities 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 rights with respect to such Shares.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tendered Shares pursuant to any of the procedures described above will be
determined by the Purchaser, in its sole discretion, whose determination will
be final and binding on all parties. The Purchaser reserves the absolute right
to reject any or all tenders of Shares determined by it not to be in proper
form or if the acceptance for payment of, or payment for, such Shares may, in
the opinion of the Purchaser's counsel, be unlawful. The Purchaser also
reserves the absolute right, in its sole discretion, to waive any of the Offer
Conditions (subject to restrictions in the Merger Agreement) or any defect or
irregularity in any tender with respect to 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 and irregularities have been cured or
waived.
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. None of Parent, the Purchaser, the Dealer Manager, the
Depositary, the Information Agent or any other person will be under any duty
to give notification of any defects or irregularities in tenders or will incur
any liability for failure to give any such notification.
Backup Withholding. In order to avoid "backup withholding" of Federal income
tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer 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 penalty of perjury that such TIN is
correct and that such stockholder is not subject to backup withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding. If a
stockholder does not provide its correct TIN or fails to provide the
certifications described above, the Internal Revenue Service ("IRS") may
impose a penalty on such stockholder and payment of cash to such stockholder
pursuant to the Offer may be subject to backup withholding of 31% of the
amount payable to such stockholder. All stockholders surrendering Shares
pursuant to the Offer should complete and sign the main signature form and 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 proven in a manner satisfactory
to the Purchaser and the Depositary). Noncorporate foreign stockholders should
complete and sign the main signature form and 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 10 to the Letter of Transmittal.
4. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section 4,
tenders of Shares made pursuant to the Offer are irrevocable. 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 the Extension Date.
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<PAGE>
If the Purchaser extends the Offer, is delayed in its acceptance for payment
of Shares or is unable to accept Shares for payment pursuant to the Offer for
any reason, then, without prejudice to the Purchaser's rights under the Offer,
the Depositary may, nevertheless, on behalf of the Purchaser, retain tendered
Shares, and such Shares may not be withdrawn except to the extent that
tendering stockholders are entitled to withdrawal rights as described in this
Section 4; subject, however, to the Purchaser's obligation, pursuant to Rule
14e-1(c) under the Exchange Act, to pay for the tendered Shares or return
those Shares promptly after termination or withdrawal of the Offer. Any such
delay will be accompanied by an extension of the Offer to the extent required
by law.
For a withdrawal to be effective, a written or facsimile transmission 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. Any such
notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and (if Share
Certificates have been tendered) the name of the registered holder, if
different from that of the person who tendered such Shares. If Share
Certificates evidencing Shares to be withdrawn have been delivered or
otherwise identified to the Depositary, then prior to the release of such
Share Certificates, the serial numbers shown on the particular Share
Certificates to be withdrawn must be submitted to the Depositary, and the
signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution, unless such Shares have been tendered for the account of an
Eligible Institution. If Shares have been tendered pursuant to the procedure
for book-entry transfer as set forth in Section 3, any notice of withdrawal
must also specify the name and number of the account at the Book-Entry
Transfer Facility to be credited with the withdrawn Shares, in which case a
notice of withdrawal will be effective if delivered to the Depositary by any
method of delivery described in the first sentence of this paragraph.
Withdrawals of Shares may not be rescinded.
All questions as to the form and validity (including, without limitation,
time of receipt) of notices of withdrawal will be determined by the Purchaser,
in its sole discretion, the determination of which will be final and binding.
None of Parent, the Purchaser, the Dealer Manager, the Depositary, the
Information Agent 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.
Any Shares properly withdrawn will thereafter be deemed to not have been
validly tendered for purposes of the Offer. However, withdrawn Shares may be
retendered at any time prior to the Expiration Date by following one of the
procedures described in Section 3.
5. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES. Sales of Shares
pursuant to the Offer (and the receipt of the right to receive cash by
stockholders of the Company pursuant to the Merger) will be taxable
transactions for Federal income tax purposes under the Internal Revenue Code
of 1986, as amended (the "Code"), and may also be taxable transactions under
applicable state, local, foreign and other tax laws, For Federal income tax
purposes, a tendering stockholder will generally recognize gain or loss equal
to the difference between the amount of cash received by the stockholder
pursuant to the Offer (or to be received pursuant to the Merger) and the
aggregate tax basis in the Shares tendered by the stockholder and purchased
pursuant to the Offer (or cancelled pursuant to the Merger). Gain or loss will
be calculated separately for each block of Shares tendered and purchased
pursuant to the Offer (or cancelled pursuant to the Merger). If tendered
Shares are held by a tendering stockholder as capital assets, gain or loss
recognized by the tendering stockholder will be capital gain or loss, which
will be long-term capital gain or loss if the tendering stockholder's holding
period for the Shares exceeds one year. However, for favorable long-term
capital gains tax treatment generally such tendering stockholder must have
held such Shares for in excess of 18 months.
A stockholder (other than certain exempt stockholders including, among
others, all corporations and certain foreign individuals) that tenders Shares
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. A stockholder that does not furnish its TIN may be subject to
a penalty imposed by the IRS. Each stockholder should complete and sign the
Substitute Form W-9 included as part of the Letter of Transmittal so as to
provide the information and certification necessary to avoid backup
withholding.
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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 OF UNITED STATES FEDERAL INCOME TAX CONSEQUENCES IS
FOR GENERAL INFORMATION ONLY AND IS BASED ON EXISTING LAW AS OF THE DATE OF
THIS OFFER TO PURCHASE. THIS DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO
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.
STOCKHOLDERS OF THE COMPANY ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO
DETERMINE THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE OFFER AND THE MERGER
(INCLUDING THE APPLICABILITY AND EFFECT OF FEDERAL, STATE, LOCAL, FOREIGN AND
OTHER TAX LAWS, AND POSSIBLE CHANGES IN SUCH TAX LAWS, WHICH MAY HAVE
RETROACTIVE EFFECT).
6. PRICE RANGE OF SHARES; DIVIDENDS. The Shares are traded on the Nasdaq
National Market under the symbol "TRIP." The following table sets forth, for
the periods indicated, the high and low sales prices per Share on the Nasdaq
National Market as reported by the Nasdaq National Market and the Dow Jones
News Retrieval Service:
<TABLE>
<CAPTION>
SALES PRICE
---------------
YEAR HIGH LOW
---- ---- ---
<S> <C> <C>
1996
First Quarter............................................ $18.125 $15.750
Second Quarter........................................... 21.375 16.375
Third Quarter............................................ 22.750 19.000
Fourth Quarter........................................... 24.875 19.750
1997
First Quarter............................................ 29.750 23.063
Second Quarter........................................... 33.000 24.500
Third Quarter............................................ 36.500 28.438
Fourth Quarter........................................... 35.500 30.250
1998
First Quarter............................................ 38.500 31.500
Second Quarter (through June 17, 1998).....................55.000 38.750
</TABLE>
On June 12, 1998, the last full trading day prior to the announcement of the
execution of the Merger Agreement, the last reported sales price of the Shares
on the Nasdaq National Market was $43.750 per Share. On June 17, 1998, the
last reported sales price of the Shares on the Nasdaq National Market was
$54.813 per Share. STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION
FOR THE SHARES.
The Company has not declared or paid any cash dividends on the Shares to
date and does not plan to pay cash dividends to its stockholders in the
future. Both the Company's existing bank facility and the indenture relating
to the Company's 10 1/2% Senior Notes due 2003 restrict the Company from
paying cash dividends to its stockholders, and there are also restrictions on
the ability of the Company's operating subsidiaries to pay dividends to the
Company. In addition, under the terms of the Merger Agreement, the Company is
not permitted to declare or pay dividends with respect to the Shares without
the prior written consent of Parent.
11
<PAGE>
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; 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.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the standards of the National Association of
Securities Dealers, Inc. (the "NASD") for continued inclusion in the Nasdaq
National Market (the top tier market of the Nasdaq Stock Market), which
require that an issuer have at least 200,000 publicly held shares with a
market value of $1 million held by at least 400 stockholders (or 300
stockholders holding round lots) and having net tangible assets of at least $1
million, $2 million or $4 million depending on profitability levels during the
issuer's four most recent fiscal years. If these standards are not met, the
Shares might nevertheless continue to be included in the NASD's Nasdaq
National Market with quotations published in the Nasdaq "additional list" or
in one of the "local lists." However, if the number of holders of Shares falls
below 300, or if the number of publicly held Shares falls below 100,000, or if
there are not at least two market makers for Shares, NASD rules provide that
the Shares would no longer be "qualified" for Nasdaq Stock Market reporting,
and the Nasdaq Stock Market would cease to provide any quotations. Shares held
directly or indirectly by an officer or director of the Company, or by any
beneficial owner of more than 10% of the Shares, ordinarily will not be
considered as being publicly held for this purpose. According to the Company,
as of June 9, 1998, there were approximately 2,400 holders of record of Shares
and approximately 14,766,575 Shares were outstanding. If, as a result of the
purchase of Shares pursuant to the Offer or otherwise, the Shares no longer
meet the NASD requirements for continued inclusion in any tier of the Nasdaq
National Market or in any other tier of the Nasdaq Stock Market, and the
Shares are no longer included in any tier of the Nasdaq National Market, the
market for such Shares could be adversely affected.
In the event the Common Stock no longer meets the requirements of the NASD
for inclusion in any tier of the Nasdaq Stock Market, quotations might still
be available from other sources. The extent of the public market for Common
Stock and availability of such quotations would depend, however, upon the
number of holders of Common Stock remaining at such time, the interest in
maintaining a market in the Common Stock on the part of securities firms, the
possible termination of registration under the Exchange Act, as described
below, and other factors.
Exchange Act Registration. The Shares currently are registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
neither listed on a national securities exchange nor held by 300 or more
holders of record. Termination of registration of the Shares under the
Exchange Act would substantially reduce the information required to be
furnished by the Company to its stockholders and to the Commission 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, as amended, may be impaired or eliminated. If registration of the
Shares under the Exchange Act were terminated, the Shares would no longer be
"margin securities" or be eligible for Nasdaq reporting. The Purchaser intends
to seek to cause the Company to apply for termination of registration of the
Common Stock under the Exchange Act as soon after the completion of the Offer
as the requirements for such termination are met.
If registration of the Common Stock is not terminated prior to the Merger,
then the Common Stock will be delisted from all stock exchanges and the
registration of the Common Stock under the Exchange Act will be terminated
following the consummation of the proposed Merger.
12
<PAGE>
Margin Regulations. The 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 Shares. Depending
upon factors similar to those described above regarding listing and market
quotations, it is possible that, following the Offer, shares of the Common
Stock 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.
8. CERTAIN INFORMATION CONCERNING THE COMPANY. Unless otherwise indicated,
the information concerning the Company contained in this Offer to Purchase,
including financial information (except the information described below under
"Other Financial Information") has been taken from or is based upon publicly
available documents and records on file with the Commission and other public
sources. None of Parent, the Purchaser, the Dealer Manager or the Information
Agent assumes any responsibility for the accuracy or completeness of the
information concerning the Company contained in such documents and records or
for any failure by the Company to disclose events which may have occurred or
may affect the significance or accuracy of any such information but which are
unknown to Parent, the Purchaser, the Dealer Manager or the Information Agent.
General. The Company's operations are conducted through a single business
segment which consists of the manufacture and distribution of building
products. The Company manufactures and sells hardwood flooring and other
flooring and related products and manufactures and distributes kitchen and
bathroom cabinets. The Company's products are used primarily in residential
new construction and remodeling. The Company's products are also used for
commercial applications such as retail stores and restaurants. The Company's
business is seasonal, with demand for its products generally highest between
April and November. The Company is a Delaware corporation incorporated in 1986
and its principal executive offices are located at 16803 Dallas Parkway,
Dallas, Texas 75248.
Financial Information. Set forth below is a summary of certain selected
consolidated financial information with respect to the Company, excerpted or
derived from the audited financial information of the Company contained in the
Company's Annual Report on Form 10-K for the fiscal year ended January 2, 1998
and unaudited information of the Company contained in the Quarterly Report on
Form 10-Q of the Company for the quarterly period ended April 3, 1998. More
comprehensive financial information is included in such reports and other
documents filed with the Commission, and the following summary is qualified in
its entirety by reference to such reports and other documents, including the
financial information and related notes contained therein. Such reports and
other documents may be inspected and copies may be obtained from the offices
of the Commission or the Nasdaq National Market in the manner set forth below
under "Available Information."
13
<PAGE>
TRIANGLE PACIFIC CORP.
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS ENDED
------------------------------------------------------------ ------------------
JANUARY 2, JANUARY 3, DECEMBER 29, DECEMBER 30, DECEMBER 31, APRIL 3, APRIL 4,
1998 1997 1995 1994 1993 1998 1997
---------- ---------- ------------ ------------ ------------ --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING INFORMATION
Net Sales............... $652,866 $534,261 $458,868 $410,159 $346,296 $ 173,442 $ 145,205
Net Income.............. 31,759 25,624 22,005 18,802 (4,104) 6,834 5,859
Net Income Per Share ... 2.07 1.71 1.49 -- -- .44 .38
Weighted Common Shares
Outstanding ........... 15,321 15,005 14,815 -- -- 15,502 15,274
<CAPTION>
AT AT AT AT AT AT AT
JANUARY 2, JANUARY 3, DECEMBER 29, DECEMBER 30, DECEMBER 31, APRIL 3, APRIL 4,
1998 1997 1995 1994 1993 1998 1997
---------- ---------- ------------ ------------ ------------ --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET INFORMA-
TION
Current Assets.......... $207,738 $177,683 $162,294 $143,043 $108,584 $ 233,121 $ 192,162
Total Assets............ 543,221 449,963 399,815 363,451 326,545 575,768 515,842
Current Liabilities..... 80,257 63,174 48,897 48,689 34,502 77,881 71,705
Long-term Debt.......... 232,241 190,604 183,044 168,388 162,897 261,139 240,191
Total Liabilities....... 356,309 295,326 270,914 256,557 238,498 381,901 354,958
Total Stockholders'
Investment............. 186,912 154,637 128,901 106,894 88,047 193,867 160,884
</TABLE>
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 $2.18, $3.68, $4.39 and $5.31
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 revenues and net income through the Company's fiscal year 2001. 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
the Company, the Purchaser or Parent or their respective advisers assumes any
responsibility for the accuracy of any of the estimates. 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).
Available Information. The Shares are registered under the Exchange Act.
Accordingly, the Company is subject to the informational and reporting
requirements of the Exchange Act and is required to file reports and other
information with the Commission 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 granted to
them, the principal holders of the Company's securities, any material
interests of such persons in transactions with the Company and other matters
is required to be disclosed in proxy statements distributed to the Company's
stockholders and filed with the Commission. These reports, proxy statements
and other information should be available for inspection at the public
reference facilities of the Commission located in Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and also should be available for
inspection and copying at prescribed rates at the following regional offices
of the Commission: Seven World Trade Center,
14
<PAGE>
New York, New York 10048; and Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of this material may also be obtained by
mail, upon payment of the Commission's customary fees, from the Commission's
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. The
Commission also maintains an Internet site on the world wide web at
http://www.sec.gov that contains reports, proxy statements and other
information. Reports, proxy statements and other information concerning the
Company should also be available for inspection at the offices of the Nasdaq
Stock Market, Reports Section at 1953 K Street, Washington, D.C. 20006.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT.
The Purchaser. The Purchaser is a newly incorporated Delaware corporation
organized in connection with the Offer and the Merger and has not carried on
any unrelated activities since its organization. The principal executive
offices of the Purchaser are located at c/o Armstrong World Industries, Inc.,
313 West Liberty Street, P.O. Box 3001, Lancaster, Pennsylvania, 17604. The
Purchaser is a wholly-owned subsidiary of Parent.
Parent. Parent is a Pennsylvania corporation incorporated in 1891. Parent is
a manufacturer of interior furnishings, including floor coverings, and
building products which are sold primarily for use in the furnishing,
refurbishing, repair, modernization and construction of residential,
commercial and institutional buildings. It also manufactures various
industrial and other products. Parent's Common Stock, par value $1.00 per
share, is listed on the New York Stock Exchange under the symbol "ACK."
The principal executive offices of Parent are located at 313 West Liberty
Street, P.O. Box 3001, Lancaster, Pennsylvania 17604.
Financial Information. Set forth below is a summary of certain consolidated
financial data with respect to Parent and its subsidiaries, excerpted or
derived from audited financial information presented in Parent's Annual Report
on Form 10-K for the fiscal year ended December 31, 1997 (the "Parent 1997 10-
K"), and the unaudited financial information contained in Parent's Quarterly
Report on Form 10-Q for the quarterly period ended March 31, 1998 (the "Parent
10-Q"). The financial information summary set forth below is qualified in its
entirety by reference to the Parent 1997 10-K and the Parent 10-Q and the
other documents, financial information and related notes contained therein
which have been filed with the Commission, which are hereby incorporated
herein by reference. Such reports and other documents may be inspected and
copies may be obtained from the Commission, or the New York Stock Exchange,
Inc. in the manner set forth below under "Available Information."
15
<PAGE>
ARMSTRONG WORLD INDUSTRIES, INC.
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED DECEMBER 31, ENDED MARCH 31,
-------------------------------------------- -----------------
1997 1996 1995 1994 1993 1998 1997
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING INFORMATION:
Net Sales............... $2,198.7 $2,156.4 $2,325.0 $2,226.0 $2,075.7 $ 543.1 $ 518.3
Operating Income........ 322.0 255.9 44.1 294.6 98.5 77.1 74.8
Net Earnings............ 185.0 155.9 123.3 210.4 63.5 46.5 45.5
Net Earnings applicable
to Common Stock........ 185.0 149.1 109.0 196.3 49.6 46.5 45.5
Earnings per Share-
Diluted................ 4.50 3.61 2.68 4.62 1.27 1.15 1.10
Weighted Average Shares
Outstanding............ 40.6 39.1 37.1 37.5 37.2 39.8 40.9
<CAPTION>
AT DECEMBER 31, AT MARCH 31,
-------------------------------------------- -----------------
1997 1996 1995 1994 1993 1998 1997
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET
INFORMATION
Current Assets.......... $ 600.0 $ 564.5 $ 722.7 $ 549.5 $ 511.5 $ 618.1 $ 607.8
Total Assets............ 2,375.5 2,135.6 2,149.8 2,159.0 1,869.2 2,408.6 2,191.0
Current Liabilities..... 471.5 321.0 375.9 347.2 407.6 512.1 375.7
Long-term Debt.......... 223.1 219.4 188.3 237.2 256.8 223.8 228.9
Shareholders' Equity.... 810.6 790.0 775.0 735.1 569.5 830.0 781.1
</TABLE>
The name, citizenship, business address, principal occupation or employment
and five-year employment history for each of the directors and executive
officers of the Purchaser and Parent are set forth in Schedule I hereto.
Except as described in this Offer to Purchase, none of Parent or Purchaser
or, to the best knowledge of Parent or the Purchaser, any of the persons
listed in Schedule I hereto or any associate or majority owned subsidiary of
Parent, the Purchaser or such persons beneficially owns any equity security of
the Company, and none of Parent or the Purchaser or, to the best knowledge of
Parent or the Purchaser, any of the 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.
Except as described in this Offer to Purchase, none of Parent or the
Purchaser or, to the best knowledge of Parent or the Purchaser, any of the
persons listed in Schedule I hereto has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Company, including, without limitation, any contract,
arrangement, understanding or relationship concerning the transfer or the
voting of any securities of the Company, joint ventures, loan or option
arrangements, puts or calls, guarantees of loans, guarantees against loss or
the giving or withholding of proxies. Except as described in this Offer to
Purchase, none of Parent, or the Purchaser or, to the best knowledge of Parent
or the Purchaser, any of the persons listed in Schedule I hereto has had any
transactions with the Company or any of its executive officers, directors or
affiliates that would require reporting under the rules of the Commission.
Except with respect to the transactions contemplated by the Merger
Agreement, the Stock Tender Agreement and as described in this Offer to
Purchase, there have been no contacts, negotiations or transactions between
Parent or the Purchaser, or their respective subsidiaries, or to the best
knowledge of Parent or the Purchaser, any of the persons listed in Schedule I
hereto, on the one hand, and the Company or its executive officers, directors
or affiliates, on the other hand, concerning a merger, consolidation or
acquisition, tender offer or other acquisition of securities, election of
directors or a sale or other transfer of a material amount of assets.
Available Information. Parent is subject to the informational and reporting
requirements of the Exchange Act and Parent is required to file reports and
other information with the Commission relating to its business,
16
<PAGE>
financial condition and other matters. Information, as of particular dates,
concerning Parent's directors and officers, their remuneration, stock options
granted to them, the principal holders of Parent's securities, any material
interests of such persons in transactions with Parent, and other matters are
required to be disclosed in proxy statements distributed to Parent's
respective stockholders and filed with the Commission. These reports, proxy
statements and other information should be available for inspection and copies
may be obtained in the same manner as set forth for the Company under
"Available Information" in Section 8. Parent's Common Stock, par value $1.00
per share, is listed on the New York Stock Exchange, and reports, proxy
statements and other information concerning Parent should be available for
inspection at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
10. SOURCE AND AMOUNT OF FUNDS. 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.
Parent expects to fund the Offer and the Merger through the use of a
combination of (i) internally generated funds and (ii) borrowings under (x) a
$300 million existing credit facility (the "Existing Credit Facility") and (y)
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").
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. 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, and for general corporate purposes.
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 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
17
<PAGE>
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.
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.
11. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY.
Parent and its affiliates have followed the business activities of the
Company for some time, and at various times over the past few years senior
executives of Parent have had discussions with the Company's senior executives
and representatives of principal stockholders regarding Parent's interest in
exploring a possible purchase of the Company.
In February 1996, Frank A. Riddick, Parent's Senior Vice President and Chief
Financial Officer, contacted representatives of Oaktree Capital Management LLC
("Oaktree"), which represents certain entities holding approximately 35% (on a
fully-diluted basis) of the Company's outstanding capital stock, with a view
to discussing Parent's interest in the Company. Representatives of Oaktree
expressed that it was not interested at that time in exploring a sale of the
Company.
On May 15, 1996, Mr. Riddick met with representatives of Oaktree. The
purpose of the meeting was to express Parent's interest in exploring a
possible purchase of the Company and to discuss valuations of the Company. Mr.
Riddick expressed Parent's willingness to pay $25 per share for the Company's
Common Stock. Oaktree indicated its belief that, as a result of business
opportunities that the Company was in the process of exploring, a per share
price in the $40 range would be more appropriate. No further discussions took
place.
In January 1997, George A. Lorch, Parent's Chairman and Chief Executive
Officer called Floyd F. Sherman, the Company's Chairman and Chief Executive
Officer and met with him to discuss the possibility of a business combination
transaction.
By letter dated January 29, 1997, Parent engaged J.P. Morgan Securities Inc.
("J.P. Morgan") to act as Parent's financial advisor with respect to the
possible acquisition by Parent of the Company.
On March 20, 1997, Messrs. Lorch and Riddick and Robert J. Shannon,
President of Parent's Worldwide Floor Products Operations, met with Mr.
Sherman, M. Joseph McHugh (the Company's President and Chief Operating
Officer) and Robert Symon (the Company's Chief Financial Officer at that
time). The purpose of the meeting was to discuss the Company's business and
gather information with a view to making a potential offer for the Company.
Mr. Sherman expressed that if Parent wanted to make an offer, the Board of the
Company would consider it.
18
<PAGE>
By letter dated March 26, 1997 from Mr. Lorch to Mr. Sherman, Parent
submitted a preliminary non-binding proposal with respect to the acquisition
of all of the common stock of the Company at a price of $32.00 per share
through an all cash tender offer that would not be contingent upon financing.
By letter dated April 7, 1997 from Mr. Sherman to Mr. Lorch, Mr. Sherman
advised that Parent's unsolicited proposal was discussed with the directors of
the Company, that the Company was not for sale at that time and that the Board
had no interest in pursuing Parent's proposal.
In late March or early April of 1998, a representative from Salomon, the
Company's financial advisor, called Parent to say that the Company would
likely be put up for sale through an auction process and that an invitation to
participate would be forthcoming.
By letter dated March 25, 1998, Parent reaffirmed its engagement of J.P.
Morgan as its financial advisor with respect to the acquisition by Parent of
the Company.
By letter dated April 6, 1998, Parent received an invitation from Salomon to
participate in a bidding process and to submit a preliminary indication of
interest relating to the acquisition of the Company. At that time Parent
received general information about the Company. In addition, on April 6, 1998,
Parent executed a confidentiality agreement with respect to the information to
be received regarding the Company.
By letter dated April 24, 1998 to Salomon, Parent submitted a preliminary
non-binding indication of interest with respect to a possible purchase of the
Company.
In early May, Salomon notified Parent by telephone that Parent would be
included as one of the bidders in the auction process and Parent was invited
to conduct due diligence in late May.
During May, Parent submitted due diligence requests for and received
information regarding the Company. On May 20 and May 21, 1998, Parent and its
financial and legal advisors conducted business and financial due diligence at
the offices of Salomon in New York, New York. During these due diligence
sessions, various documentary due diligence was conducted and members of the
Company's senior management team made presentations to prospective bidders.
By letter dated May 22, 1998, Parent received bid instructions, as well as a
draft of the Merger Agreement.
From May 26, 1998 through June 8, 1998, members of Parent's financial and
legal due diligence team conducted additional due diligence, including at the
offices of the Company's external auditors and legal advisors in Dallas,
Texas. In addition, during this period, members of Parent's senior management
and members of Parent's Board of Directors met with a representative of J.P.
Morgan, financial advisor to Parent, to discuss, among other things, valuation
of the Company, a possible merger and the conditions to the transaction.
On June 3, 1998, the Board of Directors of Parent authorized and approved
the submission of a bid by Parent with respect to the Offer and the Merger,
approved and adopted, and authorized the execution and delivery of, the form
of Merger Agreement with such changes as necessary and appropriate and the
Stock Tender Agreement, and authorized and directed negotiations with respect
thereto.
On June 5, 1998, Parent submitted its proposal to acquire Shares of the
Company's common stock at a price of $55.00 per Share in cash, subject to the
execution and delivery of the Stock Tender Agreement and the retention of
certain key employees of the Company. Parent's comments to the draft Merger
Agreement accompanied Parent's proposal.
On June 8, 1998, Parent and J.P. Morgan were notified by representatives of
Salomon that Parent would be given an opportunity to conduct plant tours and
to meet with counsel to the Company to discuss the Merger Agreement.
On June 9, 1998 meetings among the representatives of the Company, Parent
and the Purchaser were held during which negotiations on the Merger Agreement
were conducted and additional legal and financial due diligence regarding the
Company was conducted by Purchaser. Negotiations with respect to the Merger
Agreement addressed, among other things, the circumstances under which the
termination fee would be payable,
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the amount of the termination fee, provisions imposing restrictions on the
Company's ability to enter into a competing transaction, representations and
warranties and the conditions to the Offer. On June 9 and 10, 1998, members of
Parent's due diligence team conducted additional due diligence at several of
the Company's plants.
Parent was advised that the Board of Directors of the Company would analyze
various offers submitted by bidders with respect to the Company on June 10,
1998. On the morning of June 10, Parent had discussions with Messrs. Sherman
and McHugh and reached a general understanding regarding their respective
roles with the Company following consummation of the Merger. After the
Company's Board meeting, Salomon contacted J.P. Morgan to seek from Parent a
higher price and certain other modifications to the Merger Agreement.
On June 11, 1998, members of senior management of Parent and the Company and
representatives of J.P. Morgan and Salomon had various discussions regarding
pricing and termination fees. At the end of such discussions Parent increased
its proposed per Share offer price to $55.50. Simultaneously with such
discussions, the negotiation of the Merger Agreement continued.
On June 12, 1998, the Board of Directors of the Company unanimously (with
one member absent) approved the Offer, the Merger and the Merger Agreement
(subject to modifications by the appropriate officers of the Company), and
determined that the terms of the Offer, the Merger and the Merger Agreement
are fair to, and in the best interests of, the stockholders of the Company. In
addition, the Board of Directors of the Company determined to recommend that
stockholders of the Company accept the proposed Offer and tender their Shares
pursuant to the Offer. On June 12, 1998, Salomon delivered to the Board of
Directors of the Company its written opinion to the effect that, as of the
date thereof, the consideration to be received by the stockholders of the
Company in the Offer and the Merger, is fair, from a financial point of view,
to such stockholders.
On June 12, 1998, the Company entered into the Merger Agreement and the
Stock Tender Parties entered into the Stock Tender Agreement with the
Purchaser and Parent.
12. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY; THE MERGER AGREEMENT; STOCK
TENDER AGREEMENT.
Purpose. The purpose of the Offer is to enable Parent to acquire control of,
and the entire equity interest in, the Company. Following the Offer, Parent
and the Purchaser intend to acquire any remaining equity interests in the
Company not acquired in the Offer by consummating the Merger. Upon
consummation of the Merger, the Company will become a wholly-owned subsidiary
of Parent. Accordingly, the Shares will cease to be publicly traded and will
no longer be quoted on the Nasdaq National Market.
Plans for the Company. It is expected that, initially following the Merger,
the business and operations of the Company will continue without substantial
change. Parent will continue to evaluate the business and operations of the
Company during the pendency of the Offer and after the consummation of the
Offer and the Merger, and will take such further actions as it deems
appropriate under the circumstances then existing. Such actions could include
changes in the Company's business, corporate structure, certificate of
incorporation, by-laws, capitalization, Board of Directors, management or
dividend policy, although, except as disclosed in this Offer to Purchase,
Parent has no current plans with respect to any of such matters.
The Merger Agreement provides that, commencing upon the purchase of Shares
pursuant to the Offer, and from time to time thereafter, Parent will be
entitled to designate directors to serve on the Board of Directors of the
Company as described below under "Merger Agreement--The Company's Board of
Directors." The Merger Agreement also provides that the directors of the
Purchaser at the Effective Time of the Merger will, from and after the
Effective Time, be the initial directors of the Company after the Merger.
Upon consummation of the Merger, Parent may amend and restate the Company's
Certificate of Incorporation and by-laws to, among other things, provide for a
non-staggered board of directors and to otherwise amend or delete provisions
that will no longer be appropriate for a privately-held company.
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Simultaneously with or following the Merger, Parent may or may cause the
Company to refinance or repay approximately $269 million of outstanding
indebtedness under its existing credit facility (including amounts required
for the Change of Control Offer described below).
Pursuant to the Indenture dated as of August 1, 1993 between the Company, as
issuer, and First Trust National Association, as trustee, relating to the
Company's 10 1/2% Senior Notes due 2003 (the "Senior Notes"), following the
acquisition by Parent or the Purchaser of beneficial ownership of more than
50% of the Shares, the Company will be required to make an offer (the "Change
of Control Offer") to holders of such Senior Notes to repurchase the Senior
Notes at a purchase price in cash in an amount equal to 101% of the principal
amount of such Senior Notes, plus accrued and unpaid interest thereon, if any,
to the purchase date thereof and to repurchase such Senior Notes within 40
business days after the acquisition of such Shares.
George A. Lorch, Chairman and Chief Executive Officer of Armstrong and Frank
A. Riddick, Chief Financial Officer of Armstrong, have had discussions with
Floyd F. Sherman, Chairman of the Board and Chief Executive Officer of the
Company, and Joseph McHugh, President of the Company, concerning the roles
Messrs. Sherman and McHugh will play following the consummation of the offer.
They have reached an understanding that, following receipt of certain payments
due to them upon a voluntary termination following a change of control,
Messrs. Sherman and McHugh will remain with the Company, for a one-year
period, most likely in their current or similar positions and will not compete
with or select employees for a one-year period after their employment. It is
anticipated that Mr. Sherman also will become President of Parent's wood
flooring and cabinet operations. Mr. McHugh expects to retire approximately
one year after the transaction.
Merger Agreement. The following is a summary of certain provisions of the
Merger Agreement. The summary is qualified in its entirety by reference to the
Merger Agreement which is incorporated herein by reference and a copy of which
has been filed with the Commission as an exhibit to the Schedule 14D-1. The
Merger Agreement may be examined and copies may be obtained at the place and
in the manner set forth in Section 8, "Available Information," of this Offer
to Purchase.
The Offer. The Merger Agreement provides that the Purchaser will commence
the Offer and that, upon the terms and subject to the prior satisfaction or
waiver of the Offer Conditions (which are set forth in Section 14), the
Purchaser will purchase all Shares validly tendered pursuant to the Offer. The
Merger Agreement provides that the Purchaser may modify and extend the terms
of the Offer as described in Section 1. Subject to the terms and conditions of
the Offer, the Purchaser shall pay, as soon as reasonably practicable after it
is permitted to do so under applicable law, for all Shares validly tendered
and not withdrawn. See Section 4.
The Merger. The Merger Agreement provides that, subject to the terms and
conditions thereof, and in accordance with Delaware law, the Purchaser will be
merged with and into the Company as soon as practicable after satisfaction or
waiver of the conditions set forth in the Merger Agreement (the "Effective
Time"), with the Company continuing as the surviving corporation in the Merger
(the "Surviving Corporation"). In the Merger, each issued and outstanding
Share (other than Shares owned directly or indirectly by the Parent, Purchaser
or any of their subsidiaries or by the Company as treasury stock and Shares
the holder of which has perfected appraisal rights under the DGCL) will be
converted into the right to receive $55.50 per Share, without interest.
The Merger Agreement provides that the certificate of incorporation and
bylaws of the Company at the Effective Time will be the certificate of
incorporation and bylaws of the Surviving Corporation until thereafter amended
as provided by law. The Merger Agreement provides that the directors of the
Purchaser at the Effective Time will be the directors of the Surviving
Corporation, and the officers of the Company at the Effective Time will be the
officers of the Surviving Corporation.
The Company's Board of Directors. The Merger Agreement provides that,
commencing upon the purchase of Shares pursuant to the Offer, and from time to
time thereafter, Parent will be entitled to designate such number of
directors, rounded up to the next whole number, on the Board of Directors of
the Company as is equal to the product of (i) the total number of directors on
the Board (giving effect to any directors elected as described in
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this sentence) and (ii) the percentage that (A) the aggregate number of shares
of Common Stock beneficially owned by Purchaser or any of its affiliates
(including Shares accepted for payment in the Offer, provided funds therefor
have been deposited with the Depositary) is to (B) the total number of Shares
then outstanding. The Company has agreed to take any and all actions within
the Company's power necessary to cause the Purchaser's designees to be
appointed to the Company's Board of Directors (including by increasing the
size of such Board using its best efforts to cause incumbent directors to
resign). The Company also has agreed to use its best efforts to cause persons
designated by the Purchaser to constitute the same percentage of each
committee of the Board of Directors of the Company, each board of directors of
each subsidiary of the Company and each committee of each such board as such
persons represent on the Board of Directors of the Company. In the Merger
Agreement, the Company has agreed to mail to the Company's stockholders an
Information Statement containing the information required by Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder, and, if necessary,
seeking the resignation of one or more existing directors. However, the Merger
Agreement further provides that until the Effective Time, the Company will
retain as members of its Board of Directors at least two directors who are
directors of the Company at the date of the Merger Agreement ("Company
Designees"). The Merger Agreement also provides that following the time that
the Purchaser's designees to the Company's Board of Directors constitute a
majority of the Board, any amendment of the Merger Agreement, any termination
of the Merger Agreement by the Company, any extension of time for performance
of any of the obligations of the Purchaser or Parent under the Merger
Agreement, any waiver of any condition to the obligations of the Company or of
any of the Company's rights under the Merger Agreement or other action by the
Company under the Merger Agreement may be effected only by the action of a
majority of the Company Designees, provided that if there shall be no such
Company Designees, such actions may be effected by unanimous vote of the
entire Board of Directors.
Company Stock Options. Pursuant to the Merger Agreement, all outstanding
options held by all current and former employees and directors of the Company
to purchase Common Stock (the "Company Stock Options") granted under any
employee stock option or compensation plan or arrangement of the Company (the
"Company Stock Plans"), whether or not then exercisable, will be made fully
vested and exercisable and cancelled by the Company immediately before the
earlier of (i) the consummation of the Offer or (ii) the Effective Time, and
thereafter, each holder's sole right shall be to, and each holder will, be
paid by the Company for each Share subject to such Company Stock Option an
amount in cash (subject to any applicable withholding taxes) equal to the
difference between the Offer Price and the exercise price per share of such
Company Stock Option, which amount shall be paid by the Company at the time
such Company Stock Option is cancelled. The Company will use its best efforts
to obtain any necessary consents and make any amendments to the terms of the
Company Stock Plans to the extent such consents or amendments are necessary to
give effect to the foregoing. Prior to the Effective Time the Company Stock
Plans will be terminated and provisions in any other benefit plan providing
for the issuance or grant of any other interest in respect of the Company's
capital stock or any subsidiary shall be deleted. In addition, upon
consummation of the Offer, Parent has agreed to make a loan to the Company, on
commercially reasonable terms, in an amount sufficient for the Company to make
payments to the holders of the Company Stock Options, or, if such amount
cannot be borrowed by the Company for any reason, to contribute such amount to
the Company.
Warrants. Pursuant to the Merger Agreement, all outstanding Warrants of the
Company (other than the Bank Warrants (as defined below) which shall be
treated as described herein, and Warrants owned by Parent, the Purchaser or
any other direct or indirect subsidiary of Parent, which Warrants shall be
cancelled and extinguished at the Effective Time, with no payment being made
with respect to such Warrants) shall, following the Effective Time, be
exercisable only for an amount in cash equal to the product of (i) the number
of Shares issuable upon exercise of such Warrant and (ii) the difference
between the Offer Price and the per Share exercise price per Warrant, without
interest, which amount shall be paid from and after the Effective Time upon
surrender to the paying agent for the Offering of the warrant certificates for
cancellation. The Company has agreed to take all actions necessary to ensure
that following the Effective Time the Warrants shall represent only the right
to receive the consideration specified in the preceding sentence, all
agreements with respect to the Warrants shall be terminated and cancelled and
no party to such Warrant agreements shall have the right to acquire any
capital
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stock of the Company, Parent, the Surviving Corporation or any of their
respective subsidiaries. In addition, with respect to certain rights held by
certain banks and other financial institutions (the "Bank Warrants") entitling
them to receive an aggregate of not more than 4,858 Shares (upon payment of
$.01 per Share) upon the exercise of the Warrants described above, the Company
has agreed to use its best efforts to (i) obtain prior to the Effective Time,
consents or waivers from each bank and financial institution whereby such
institutions agree to receive, upon presentment of their Bank Warrants, cash
equal to the product of (x) the number of Shares issuable upon exercise of
such Bank Warrant and (y) the difference between the Offer Price and the per
Share exercise price per Bank Warrant, without interest, (ii) ensure that
following the Effective Time (A) the Bank Warrants shall represent only the
right to receive cash in an amount equal to the per share Offer Price less
$.01 per Share, (B) the agreement with respect to the Bank Warrants is
terminated and cancelled and (C) no party to such agreements shall have the
right to acquire any capital stock of the Company, Parent, the Surviving
Corporation or any of their respective subsidiaries.
Approval Required; Stockholders Meeting. The DGCL requires, among other
things, that the adoption of any plan of merger or consolidation of the
Company must be approved by the Board of Directors of the Company and, if the
"short form" merger procedure described below is not available, by the holders
of a majority of the Company's outstanding Shares. The Board of Directors of
the Company has approved the Offer, the Merger and the Merger Agreement;
consequently, the only additional action of the Company that may be necessary
to effect the Merger is approval by such stockholders if the "short-form"
merger procedure described below is not available. Under the DGCL, the
affirmative vote of holders of a majority of the outstanding Shares (including
any Shares owned by the Purchaser), is generally required to approve the
Merger. If the Purchaser acquires, through the Offer or otherwise, voting
power with respect to at least a majority of the outstanding shares, it would
have sufficient voting power to effect the Merger without the vote of any
other stockholder of the Company. However, the DGCL also provides that if a
parent company owns at least 90% of each class of stock of a subsidiary, the
parent company can effect a short-form merger with that subsidiary without the
action of the other stockholders of the subsidiary. Accordingly, if, as a
result of the Offer or otherwise, the Purchaser acquires or controls the
voting power of at least 90% of the outstanding Shares, the Purchaser could
(and, under the Merger Agreement, is required to) effect the Merger using the
"short-form" merger procedures without prior notice to, or any action by, any
other stockholder of the Company.
Pursuant to the Merger Agreement, the Company will, if required by
applicable law in order to consummate the Merger, duly call and hold a special
meeting of its stockholders (the "Special Meeting") as soon as practicable
following the consummation of the Offer, for the purpose of voting upon the
Merger and the adoption of the Merger Agreement. The Merger Agreement provides
that in connection with the Special Meeting, the Company will (i) as soon as
reasonably practicable after the consummation of the Offer, prepare and file
with the Commission a proxy statement and other proxy materials relating to
the Merger and the Merger Agreement and (ii) use its best efforts to have such
proxy statement and any supplement or amendment thereto cleared by the
Commission. If the Purchaser acquires at least a majority of the outstanding
Shares, the Purchaser will have sufficient voting power to approve the Merger,
even if no other stockholder votes in favor of the Merger. The Company has
agreed, subject to its fiduciary duties under applicable law, to include in
the proxy statement the recommendation of the Board of Directors that
stockholders of the Company vote in favor of the approval of the Merger and
the adoption of the Merger Agreement.
Interim Operations. The Company has agreed that during the period from the
date of the Merger Agreement until the Effective Time (except as expressly
permitted by the Merger Agreement or as otherwise indicated, or as required by
a governmental entity or agreed to in writing by Parent) the business of the
Company and its subsidiaries shall be conducted only in the ordinary course in
all material respects, in substantially the same manner as previously
conducted and the Company and its subsidiaries will use reasonable efforts to
preserve intact their present lines of business and keep available the
services of their current officers and employees and preserve their
relationships with customers, suppliers, licensors, licensees, distributors,
and others
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having business dealings with them. In addition, subject to the exceptions
described above, each of the Company and its subsidiaries will not:
(i) (x) declare or pay any dividends on, or make any other distributions
(whether in stock, cash or property) in respect of, any of its capital
stock, except dividends by a wholly owned direct or indirect subsidiary of
the Company to such subsidiary's parent, (y) split, combine or reclassify
any of its capital stock or issue or authorize or propose the issuance of
any other securities in respect of, in lieu of or in substitution for,
shares of its capital stock, except for any such transaction by a wholly
owned subsidiary of the Company which remains a wholly owned subsidiary
after consummation of such transaction, or (z) repurchase, redeem or
otherwise acquire any shares of capital stock or any securities convertible
into or exercisable for any shares of its capital stock except to the
extent required under the Company's employment agreements;
(ii) issue, deliver, sell, pledge or otherwise encumber any shares of its
capital stock or authorize or propose the issuance, delivery, sale, pledge
or encumbrance of, any shares of its capital stock of any class, any
Company voting debt instruments (collectively, "Company Voting Debt"), or
any securities convertible into or exercisable for, or any rights, warrants
or options to acquire, any such shares or Company Voting Debt, or enter
into any agreement with respect to the foregoing, other than (A) the
issuance of Common Stock upon the exercise of stock options of the Company
outstanding on the date of the Merger Agreement in accordance with their
present terms or upon the exercise of Warrants or (B) issuances by a wholly
owned subsidiary of the Company of capital stock to such subsidiary's
parent;
(iii) except to the extent required to comply with its obligations under
the Merger Agreement, required by law or required by the rules and
regulations of the Nasdaq National Market, amend their respective
certificates of incorporation, bylaws or other governing documents;
(iv) acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in or substantial portion of the
assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof
or otherwise acquire or agree to acquire any assets (other than the
acquisition of assets used in the operations of the business of the Company
and its subsidiaries in the ordinary course); provided, however, that the
foregoing shall not prohibit (A) internal reorganizations or consolidations
involving existing wholly owned subsidiaries of the Company or (B) the
creation of new subsidiaries of the Company organized to conduct or
continue activities otherwise permitted by the Merger Agreement that in the
case of clause (A) or (B) would not otherwise be prohibited by or result in
a breach of these provisions. Other than (x) internal reorganizations or
consolidations involving existing wholly owned subsidiaries of the Company
and (y) as may be required by or in conformance with law or regulation in
order to permit or facilitate the transactions contemplated by the Merger
Agreement, the Company shall not, and shall not permit any wholly owned
subsidiary of the Company to, sell, lease, encumber or otherwise dispose
of, or agree to sell, lease, encumber or otherwise dispose of, any of its
assets (including capital stock of wholly owned subsidiaries of the
Company) which are material, individually or in the aggregate, to the
Company other than sales of inventory in the ordinary course of business.
(v) (A) create, assume or incur any indebtedness, guarantee or endorse
any such indebtedness of another person, issue any debt securities,
warrants or other rights to acquire any debt securities of the Company or
any of its Subsidiaries, or guarantee any debt securities of another
person, other than indebtedness incurred under the Company's existing
credit agreement or other indebtedness in an aggregate amount not to exceed
$500,000, (B) except in the ordinary course of business consistent with
past practice make any loans, advances or capital contributions to, or
investments in, any other person, other than by the Company or a wholly
owned subsidiary of the Company to or in the Company or any wholly owned
subsidiary of the Company or (C) except in the ordinary course of business
consistent with past practice pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), provided, however, that the Company may refinance
indebtedness under its existing credit agreement;
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(vi) other than in accordance with the provisions of the Merger Agreement
and unless required by law or to maintain the tax qualification of any
Company benefit plan, (A) increase any employee benefits provided to, or,
except in the ordinary course of business consistent with past practices,
increase the compensation or fringe benefits payable to, any employee or
former employee of the Company or any subsidiary of the Company, (B) adopt,
enter into, terminate or amend in any material respect any employment
contract, collective bargaining agreement or Company benefit plan; (C) pay
any benefit not provided for under any Company benefit plan or any other
benefit plan or arrangement of the Company and its subsidiaries; or (D)
increase in any manner the severance or termination pay of any officer or
employee;
(vii) change its methods of accounting in effect as December 31, 1997,
except as required by changes in U.S. generally accepted accounting
principles as concurred in by the Company's independent auditors;
(viii) enter into any agreement of a nature that would be required to be
filed as an exhibit to Form 10-K under the Exchange Act, other than
contracts for the sale of the Company's or its subsidiaries' products in
the ordinary course of business; or
(ix) knowingly take any actions that would make any representation or
warranty of the Company contained in the Merger Agreement untrue or
incorrect in any material respect as of the date when made or as of the
closing date of the Merger;
(x) authorize any of, or commit to agree to take any of the foregoing
actions.
Employee Benefits. Parent has agreed to cause the Surviving Corporation to
maintain until December 31, 1999 employee benefit plans or policies (other
than those based on shares of Common Stock) for the benefit of the employees
of the Company and its subsidiaries (other than those employees who are
employed pursuant to a collective bargaining agreement or who are members of a
collective bargaining unit or labor union) which are substantially comparable
in the aggregate to the employee benefit plans of the Company in effect on the
date of the Merger Agreement (other than stock-based plans or stock-based
provisions in the plans). The Company's employees shall be given credit, for
purposes of any service requirements for participation in the Parent employee
benefit plans for which they become eligible, if any, for their period of
service with the Company prior to the Effective Time. Parent has acknowledged
that the transactions contemplated by the Merger Agreement will constitute a
change of control under certain employment agreements and accordingly require
certain payments thereunder.
No Solicitations. In the Merger Agreement, the Company has agreed that,
except as provided below, until the earlier of the termination of the Merger
Agreement or the Effective Date, neither the Company nor any of its
subsidiaries shall, and that it shall direct and use its reasonable best
efforts to cause its and its subsidiaries' directors, officers, employees,
agents and representatives (including any investment banker, attorney or
accountant retained by it or any of its subsidiaries) not to, directly or
indirectly, initiate, solicit, encourage or knowingly facilitate (including by
way of furnishing information) any inquiries or the making of any proposal or
offer with respect to a merger, reorganization, share exchange, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving, or any purchase or sale of all or a significant portion
of the assets of it or any of its subsidiaries or any purchase or sale of more
than 25% of the equity securities of the Company or any equity securities of
any Significant Subsidiary (as that term is defined in Rule 405 under the
Securities Act of 1933, as amended) (any such proposal or offer whether or not
in writing or in sufficient detail to be accepted and whether or not
conditional (other than a proposal or offer made by Parent or an affiliate
thereof) being hereinafter referred to as an "Acquisition Proposal"). In
addition, the Company agreed that neither it nor any of its subsidiaries
shall, and that it shall direct and use its reasonable best efforts to cause
its and its subsidiaries' directors, officers, employees, agents and
representatives (including any investment banker, attorney or accountant
retained by it or any of its subsidiaries) not to, directly or indirectly,
have any discussion with or provide any confidential information or data to
any person relating to an Acquisition Proposal, or engage in any negotiations
concerning an Acquisition Proposal, or knowingly facilitate any effort or
attempt
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to make or implement an Acquisition Proposal or accept an Acquisition
Proposal. Notwithstanding the foregoing, the Company or its Board of Directors
is permitted to, at any time prior to the acceptance for payment of the Shares
pursuant to the Offer, (i) engage in discussions or negotiations with, or
provide information to, any person in response to an unsolicited Acquisition
Proposal by such person if (A) the Board of Directors of the Company concludes
in good faith that such Acquisition Proposal constitutes or could reasonably
be expected to lead to a Superior Proposal (as defined below) and (B), before
providing any information to such person, the Board of Directors receives from
such person an executed confidentiality agreement; and (ii) if the Board of
Directors concludes in good faith that such unsolicited Acquisition Proposal
constitutes a Superior Proposal (x) recommend approval of such Superior
Proposal, (y) in response to such Superior Proposal, withdraw or modify in an
adverse manner the approval of the Company's Board of Directors, or (z) enter
into an agreement in principle or a definitive agreement with respect to such
Superior Proposal, provided, however, that, in the case of either (i) or (ii)
the Board of Directors of the Company determines in good faith after
consultation with outside counsel that it should take such action consistent
with its fiduciary duties under applicable law. The Company has agreed to (i)
notify Parent promptly after receipt of any Acquisition Proposal (or any
indication that any person is considering making an Acquisition Proposal) or
any decision to provide non-public information relating to the Company or any
of its subsidiaries to any person that may be considering making, or has made,
an Acquisition Proposal, including a description of the material terms
thereof. For the purposes hereof, a "Superior Proposal" means a bona fide
unsolicited Acquisition Proposal which the Company's Board of Directors
concludes in good faith (after consultation with its financial advisors and
legal counsel), taking into account all legal, financial, regulatory and other
aspects of the proposal and the person making the proposal, provides for a
transaction that, taking into account its likelihood of completion, is more
favorable to the Company's stockholders (in their capacity as stockholders),
than the transactions contemplated by the Merger Agreement.
Directors' and Officers' Insurance; Indemnification. The Merger Agreement
provides that until the expiration of all applicable statutes of limitations,
from and after the consummation of the Offer, the Company shall and Parent
shall cause the Company to, and from and after the Effective Time, Parent and
Surviving Corporation (each, an "Indemnifying Party") shall indemnify, defend
and hold harmless the present and former officers and directors of the Company
and its subsidiaries ("Indemnified Parties") against all losses, claims,
damages, liabilities, fees, penalties and expenses (including reasonable fees
and disbursements of counsel and judgments, fines, losses, claims, liabilities
and amounts paid in settlement arising out of actions or omissions occurring
at or before the consummation of the Offer) (including losses incurred in
connection with such person's serving as a trustee or other fiduciary in any
entity if such service was at the request or for the benefit of the Company or
any of its subsidiaries), to the fullest extent permitted by Delaware law,
such right to include the right to advancement of expenses incurred in the
defense of any action or suit promptly after statements therefor are received
to the fullest extent permitted by law; provided that the Indemnified Party to
whom expenses are advanced provides an undertaking to repay such advance if it
is ultimately determined that such party is not entitled to indemnification.
Notwithstanding the foregoing, an Indemnifying Party shall not be liable for
any settlement of any claim effected without such Indemnifying Party's written
consent, which consent shall not be unreasonably withheld.
The Merger Agreement also provides that the Surviving Corporation shall
until the sixth anniversary of the Effective Time, cause to be maintained in
effect, to the extent available, the policies of directors' and officers'
liability insurance maintained by the Company and its subsidiaries as of the
date of the Merger Agreement (or policies of at least the same coverage and
amounts containing terms that are no less favorable to the insured parties),
in each case including for claims arising from facts or events that occurred
at or before the consummation of the Offer. In addition, the Merger Agreement
provides that the provisions relating to indemnification contained in the
Company's certificate of incorporation and bylaws (and following the Effective
Time, the Surviving Corporation) will not for a period of ten years following
the Effective Time, be amended, repealed or otherwise modified in any manner
that would adversely affect the rights thereunder of individuals who on or
before the consummation of the Offer were entitled to advances,
indemnification or exculpation thereunder.
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Conditions to the Merger. The Merger Agreement provides that the respective
obligations of the Company, Parent and the Purchaser to consummate the Merger
are subject to the satisfaction or waiver of the following conditions: (i) no
laws shall have been adopted or promulgated, and no temporary restraining
order, preliminary or permanent injunction or other order issued by a court or
governmental entity of competent jurisdiction shall be in effect, having the
effect of making the Merger illegal or otherwise prohibiting consummation of
the Merger; (ii) any applicable waiting period (and any extension thereof)
under the HSR Act relating to the Merger shall have expired or been
terminated; (iii) Parent, the Purchaser or their affiliates shall have
purchased Shares pursuant to the Offer; and (iv) the Merger Agreement having
been adopted by the requisite vote of the stockholders of the Company, if
required by applicable law, in order to consummate the Merger. In addition,
the obligations of (A) Parent and the Purchaser to consummate the Merger are
subject to the satisfaction or waiver of the following additional conditions:
(x) each of the representations and warranties of the Company contained in the
Merger Agreement being true and correct on the closing date of the Merger; and
(y) performance or compliance in all material respects with all agreements and
covenants required to be performed by the Company under the Merger Agreement
at or before the closing of the Merger and (B) the Company to consummate the
Merger are subject to the satisfaction or waiver of the following additional
conditions: (1) each of the representations and warranties of Parent and the
Purchaser contained in the Merger Agreement being true and correct on the
closing date of the Merger and (2) performance or compliance in all material
respects with all agreements and covenants required to be performed by Parent
and the Purchaser under the Merger Agreement at or before the closing of the
Merger.
Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and the Purchaser with
respect to, among other things, its organization, capitalization, financial
statements, public filings, conduct of business, compliance with laws,
litigation, title to property, non-contravention, consents and approvals,
opinions of financial advisors, undisclosed liabilities and the absence of
certain changes with respect to the Company since January 2, 1998.
Termination; Fees. The Merger Agreement may be terminated at any time prior
to the Effective Time, whether before or after approval by the stockholders of
the Company: (i) by the mutual written consent of the Company and Parent, by
action of their respective boards of directors; (ii) by either of the Company,
on the one hand, or Parent and Merger Sub, on the other hand (A) if Shares
shall not have been purchased pursuant to the Offer on or before the Extension
Date, (B) if any governmental entity shall have issued an order, decree or
ruling or taken any other action (which order, decree, ruling or other action
the parties shall use their respective reasonable best efforts to lift), in
each case permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by the Merger Agreement, and such order, decree,
ruling or other action shall have become final and nonappealable, (C) if, due
to the failure of one of the Offer Conditions (other than the condition set
forth in paragraph (g) of Section 14) to occur, Parent, the Purchaser or any
of their affiliates shall have failed to commence the Offer on or before five
business days following the date of the initial public announcement of the
Offer or (D) if, due to a failure of any of the Offer Conditions, the Offer is
terminated or expires in accordance with its terms and the terms of the Merger
Agreement without Parent or Merger Sub, as the case may be, purchasing any
Shares thereunder; (iii) by the Company (A) if, before the purchase of Shares
pursuant to the Offer, the Board of Directors either shall (x) have entered
into an agreement with respect to a Superior Proposal, (y) have recommended a
Superior Proposal or (z) have withdrawn or modified in an adverse manner to
Parent or the Purchaser its approval or recommendation of the Offer, this
Agreement or the Merger (or the Board of Directors resolves to do any of the
foregoing) or (B) if Parent or the Purchaser shall have terminated the Offer,
or the Offer shall have expired in accordance with its terms and the terms of
the Merger Agreement without Parent or the Purchaser, as the case may be,
purchasing any Shares pursuant thereto; (iv) by Parent and the Purchaser if,
before the purchase of Shares pursuant to the Offer, the Board of Directors of
the Company shall (A) have recommended an Acquisition Proposal, (B) have
withdrawn or modified in a manner adverse to Parent or Merger Sub its approval
or recommendation of the Offer, the Merger Agreement or the Merger or (C) have
executed an agreement in principle or definitive agreement relating to an
Acquisition Proposal or similar business combination with a person other than
Parent, the Purchaser or their affiliates (or the Board of Directors of the
Company resolves to do any of the foregoing).
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In the event that (i) the Company terminates the Merger Agreement pursuant
to clause (iii)(A) of the previous paragraph, or if Parent terminates the
Merger Agreement pursuant to clause (iv) of the previous paragraph or (ii) the
Merger Agreement is terminated for any other reason (other than the breach of
this Agreement by Parent or the Purchaser and other than by mutual agreement
of the parties thereto) and, in the case of this clause (ii) only, (A) at the
time of such termination there was pending an Acquisition Proposal from a
third party and (B) the transactions contemplated by such Acquisition Proposal
with such third party are consummated with such third party within one year
after such termination, then the Company shall pay to Parent a termination fee
in an amount equal to $28 million.
Credit Agreement. In connection with the Credit Agreement, the Company has
agreed to use its best efforts to obtain all necessary waivers and consents
prior to the consummation of the Offer so that the transactions contemplated
by the Merger Agreement will not result in or constitute a default under the
Credit Agreement. In the event that (i) such waivers and consents are not
obtained; (ii) the transactions contemplated by the Merger Agreement result in
a default under the Credit Agreement and the lenders thereunder accelerate the
payment of outstanding indebtedness thereunder; and (iii) the Company, after
using its best efforts, is unable to refinance or repay such indebtedness,
then, Parent has agreed following the consummation of the Offer, to make a
loan to the Company in an amount sufficient for the Company to repay the
outstanding indebtedness under the Credit Agreement and any other obligations
under the Credit Agreement, or, if such amount cannot be borrowed by the
Company for any reason, to contribute such amount to the Company.
Fees and Expenses. The Merger Agreement provides that, except as provided
above under "Termination; Fees", all expenses incurred in connection with the
Merger Agreement and the transactions contemplated thereby will be paid by the
party incurring such expenses, except (i) if the Merger is consummated, the
Surviving Corporation shall pay, or cause to be paid, any and all property or
transfer taxes imposed on the Company or its subsidiaries; (ii) expenses
incurred in connection with the filing, printing and mailing of the Offer
materials, the Schedule 14D-9 and, if required, the Proxy Statement, which
shall be shared equally by Parent and the Company; and (iii) amounts loaned or
contributed by Parent to the Company as described herein, shall be repaid by
the Company or the Surviving Corporation, as the case may be, on commercially
reasonable terms.
Stock Tender Agreement. The following is a summary of the material terms of
the Stock Tender Agreement. This summary is qualified in its entirety by
reference to the Stock Tender Agreement which is incorporated herein by
reference, a copy of which has been filed with the Commission as an exhibit to
the Schedule 14D-1. The Stock Tender Agreement may be examined and copies may
be obtained at the place and in the manner as set forth in Section 8 of this
Offer to Purchase.
After the execution of the Merger Agreement, the Purchaser, Parent and the
Stock Tender Parties entered into the Stock Tender Agreement. Pursuant to such
Agreement, so long as the Company, Parent or the Purchaser has not terminated
the Merger Agreement, the Stock Tender Parties have agreed to validly tender
(and not thereafter withdraw) the Shares owned by them pursuant to and in
accordance with the terms of the Offer. As of June 9, 1998, the Stock Tender
Parties owned a total of 5,909,184 Shares, representing approximately 35% of
the outstanding Shares calculated on a fully diluted basis.
In connection with the Stock Tender Agreement, the Stock Tender Parties have
made certain customary representations, warranties and covenants, including
with respect to (i) ownership of the Shares, (ii) the Stock Tender Parties'
authority to enter into and perform their respective obligations under the
Stock Tender Agreement, (iii) the ability of the Stock Tender Parties to enter
into the Stock Tender Agreement without violating other agreements to which
they are party, (iv) the absence of liens and encumbrances on and in respect
of the Stock Tender Parties' Shares and (v) restrictions on the transfer of
the Stock Tender Parties' Shares.
13. DIVIDENDS AND DISTRIBUTIONS. As described above, the Merger Agreement
provides that, prior to the Effective Time, the Company and each of its
subsidiaries will not (i) declare or pay any dividend on or make other
distributions (whether in stock, cash or property) in respect of any of its
capital stock, except dividends by a wholly owned direct or indirect
subsidiary of the Company to such subsidiary's parent, (ii) split, combine or
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reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for, shares of its capital stock, except for any such transaction by a wholly
owned subsidiary of the Company which remains a wholly owned subsidiary after
consummation of such transaction, or (iii) repurchase, redeem or otherwise
acquire any shares of capital stock or any securities convertible into or
exercisable for any shares of its capital stock.
If, on or after the date of the Merger Agreement, the Company should (i)
split, combine or otherwise change the Shares or its capitalization, (ii)
issue or sell, or enter into any arrangement or contract with respect to the
issuance or sale of, any additional securities (including rights, options or
warrants, conditional or otherwise) of the Company or otherwise cause an
increase in the number of outstanding securities (including rights, options or
warrants, conditional or otherwise) of the Company, or (iii) acquire currently
outstanding Shares or otherwise cause a reduction in the number of outstanding
Shares, then, subject to the provisions of Section 14, the Purchaser, in its
sole judgment, may make such adjustments in the Offer Price and the other
terms of the Offer as it deems appropriate in the Offer Price and other terms
of the Offer (including, without limitation, the number and type of securities
offered to be purchased, the amounts payable therefor and the fees payable
hereunder).
If, on or after the date of the Merger Agreement, the Company should declare
or pay any cash or stock dividend or other distribution (including the
issuance of any securities) on or issue any rights with respect to the Shares
payable or distributable to stockholders of record on a date before the
transfer to the name of the Purchaser or its nominee or transferee on the
Company's stock transfer records of the Shares accepted for payment pursuant
to the Offer, then, subject to the provisions of Section 14, (i) the Offer
Price payable by the Purchaser pursuant to the Offer may, in the sole
discretion of the Purchaser, be reduced by the amount of any such cash
dividend or cash distribution and (ii) the whole of any such non-cash
dividend, distribution or right (a) will be received and held by the tendering
stockholder for the account of the Purchaser and shall 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 and (b) at the direction of the Purchaser, will be
exercised for the benefit of the Purchaser, in which case the proceeds of such
exercise will be remitted promptly 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 non-cash dividend, distribution or right
and may withhold the entire purchase price or deduct from the purchase price
the amount or value thereof, as determined by the Purchaser, in its sole
discretion.
Pursuant to the terms of the Merger Agreement, the Company is prohibited
from taking any of the actions described in the preceding paragraphs and
nothing herein shall constitute a waiver by the Purchaser or Parent of any of
its rights under the Merger Agreement or a limitation of remedies available to
the Purchase or Parent for any breach of the Merger Agreement, including
termination thereof.
14. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provisions of
the Offer, and in addition to (and not in limitation of) the Purchaser's
rights pursuant to the Merger Agreement to extend and amend the Offer at any
time, in its sole discretion, the Purchaser shall not be required to accept
for payment or, subject to any applicable rules and regulations of the
Commission, including Rule 14e-1(c) under the Exchange Act (relating to the
Purchaser's obligation to pay for or return tendered Shares promptly after
termination or withdrawal of the Offer), pay for, and may delay the acceptance
for payment of or, subject to the restriction referred to above, the payment
for, any tendered Shares, and may terminate the Offer, if, in the sole
judgment of the Purchaser (i) any applicable waiting period under the HSR Act
has not expired or been terminated, (ii) the Minimum Condition has not been
satisfied or (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,
any of the following events shall occur:
(a) there shall have been any statute, rule, regulation, judgment,
decision, action, order or injunction promulgated, entered, enforced,
enacted or issued applicable to the Offer or the Merger by any federal or
state governmental regulatory or administrative agency or authority or
court or legislative body or commission that (1) prohibits the consummation
of the Offer or the Merger, (2) prohibits Parent's or the
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Purchaser's ownership or operation of all or a majority of the Company's
businesses or assets, or imposes any material limitations on Parent's or
the Purchaser's ownership or operation of all or a majority of the
Company's businesses or assets or would have a material adverse effect on
the Company and its subsidiaries taken as a whole or (3) imposes material
limitations on the ability of Parent or Merger Sub to acquire or hold, or
exercise full rights of ownership of, any Shares to be accepted for payment
pursuant to the Offer including, without limitation, the right to vote such
Shares on all matters properly presented to the stockholders of the Company
or any federal or state governmental regulatory or administrative agency or
authority shall have commenced or threatened to commence litigation or
another proceeding intended to achieve the results set forth in clauses (1)
through (3) above; provided, that the parties shall have used their
reasonable best efforts to cause any such statute, rule, regulation,
judgment, order or injunction to be vacated or lifted;
(b) (1) the representations and warranties of the Company set forth in
the Merger Agreement shall not be true and accurate as of the date of the
Merger Agreement and at the scheduled or extended expiration of the Offer
(except for those representations and warranties that address matters only
as of a particular date or only with respect to a specified period of time
which need only be true and accurate as of such date or with respect to
such time period), except where the failure of such representations or
warranties to be true and accurate, individually or in the aggregate, does
not have a material adverse effect on the Company and its subsidiaries
taken as a whole or (2) the Company shall have breached or failed to
perform or comply in any material respect with any covenant required by the
Merger Agreement to be performed or complied with by it;
(c) the Merger Agreement shall have been terminated in accordance with
its terms;
(d) it shall have been publicly disclosed that any person, entity or
"group" (as defined in Section 13(d)(3) of the Exchange Act) shall have
acquired beneficial ownership (as determined pursuant to Rule 13d-3
promulgated under the Exchange Act) of more than a majority of the then-
outstanding Shares, through the acquisition of stock, the formation of a
group or otherwise;
(e) the Board of Directors of the Company (or any committee thereof)
shall have withdrawn or modified in a manner adverse to Parent or Merger
Sub its approval or recommendation of the Offer or the Merger or the
adoption of the Merger Agreement or recommended an Acquisition Proposal
other than the one contemplated by the Merger Agreement, or shall have
executed an agreement in principle or a definitive agreement relating to
such an Acquisition Proposal or similar business combination with a person
or entity other than Parent, the Purchaser or their affiliates, or the
Board of Directors of the Company shall have adopted a resolution to do the
foregoing;
(f) there shall have occurred and be continuing (1) any general
suspension of trading of securities on any national securities exchange or
in the over-the-counter market, (2) the declaration of a banking moratorium
or any suspension of payments in respect of banks in the United States
(whether or not mandatory) or (3) any limitation (whether or not mandatory)
by a United States governmental authority or agency on the extension of
credit by banks or other financial institutions which in the reasonable
judgment of Parent or the Purchaser, in any such case, makes it inadvisable
to proceed with the Offer or with such acceptance for payment or payments;
(g) all consents, registrations, approvals, permits, authorizations,
notices, reports or other filings required to be obtained or made by the
Company, Parent or the Purchaser with or from any governmental entity in
connection with the execution, delivery and performance of the Merger
Agreement, the Offer and the consummation of the transactions contemplated
by the Merger Agreement shall not have been made or obtained and such
failure is reasonably likely to have a material adverse effect on the
Company and its subsidiaries taken as a whole or; or
(h) any change shall have occurred since the date of the Merger Agreement
that individually or in the aggregate constitutes a material adverse effect
on the Company and its subsidiaries taken as a whole.
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The Merger Agreement provides that the foregoing conditions are for the sole
benefit of the Purchaser and Parent and may be asserted by Parent and the
Purchaser, in their sole discretion, regardless of the circumstances
(including any action or omission by Parent or the Purchaser) giving rise to
any such conditions and (except for the Minimum Condition, which may be waived
only with the consent of the Company) may be waived by Parent or the
Purchaser, in their sole discretion, in whole or in part, at any time and from
time to time, subject to the terms of the Merger Agreement. The failure by the
Parent or the Purchaser at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right and each such right shall be
deemed an ongoing right which may be asserted at any time and from time to
time. Any determination by the Purchaser concerning any condition or event
described in this Section 14 shall be final and binding upon all parties.
15. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
Stockholder Litigation. On June 15, 1998, a purported class action lawsuit
was initiated in the Court of Chancery of Delaware by Pinna Yosevitz, who
purports to bring the action 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.164474-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 terms of the proposed Merger and
Offer were not the result of an auction process or active market check and
were arrived at without a full and thorough investigation by the individual
defendants and are intrinsically unfair and inadequate from the stand point of
the Company's stockholders; (ii) the individual defendants failed to make an
informed decision , as no market check of the Company's value was obtained;
(iii) the individual defendants have violated their fiduciary duties owed to
the public stockholders of the Company; (iv) the stockholders of the Company
have not received and will not receive their fair proportion of the value of
the Company's assets and business, and will be prevented from obtaining fair
and adequate consideration for their Shares; and (v) the intrinsic value of
the Company is materially in excess of the Offer Price giving due
consideration to the anticipated operating results, net asset value, cash flow
and profitability of the Company. The complaint also alleges that the
individual defendants' fiduciary obligations under these circumstances require
them to (i) undertake an appropriate evaluation of the Company's net worth as
a merger/acquisition candidate; and (ii) engage in a meaningful auction with
third parties in an attempt to obtain the best value for the Company's public
stockholders.
General. Except as otherwise disclosed herein, based on a review of publicly
available filings by the Company with the Commission, neither Parent nor the
Purchaser is aware of (i) 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 acquisition of Shares by the
Purchaser pursuant to the Offer or the Merger or (ii) any approval or other
action by any governmental, administrative or regulatory agency or authority,
domestic or foreign, that would be required for the acquisition or ownership
of Shares by the Purchaser as contemplated herein. Should any such approval or
other action be required, the Purchaser currently contemplates that such
approval or action would be sought, except as described below under "State
Takeover Statutes." While the Purchaser does not currently intend to delay the
acceptance for payment of Shares tendered pursuant to the Offer pending the
outcome of any such matter, there can be no assurance that any such approval
or action, if needed, would be obtained or would be obtained without
substantial conditions or that adverse consequences might not result to the
business of the Company, the Purchaser or that certain parts of the businesses
of the Company or the Purchaser might not have to be disposed of in the event
that such approvals were not obtained or any other actions were not taken. The
Purchaser's obligation under the Offer to accept for payment and pay for
Shares is subject to certain conditions. See Section 14.
Antitrust Compliance. Under the HSR Act, and the rules that have been
promulgated by the FTC and the Antitrust Division, certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division and the FTC and certain waiting period
requirements have been satisfied. The acquisition of Shares pursuant to the
Offer is subject to such requirements.
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A Notification and Report Form with respect to the Offer has been filed, and
the waiting period with respect to the Offer under the HSR Act will expire at
11:59 p.m., New York City time, on the fifteenth calendar day after such
filing, unless terminated prior thereto. Before such time, however, either the
FTC or the Antitrust Division may extend the waiting period by requesting
additional information or material from the Purchaser. If such request is
made, the waiting period will expire at 11:59 p.m., New York City time, on the
tenth calendar day after the Purchaser has substantially complied with such
request. Thereafter, the waiting period may be extended only by court order or
with the Purchaser's consent. The Purchaser will not accept for payment Shares
tendered pursuant to the Offer unless and until the waiting period
requirements imposed by the HSR Act with respect to the Offer have been
satisfied.
The Merger would not require an additional filing under the HSR Act if the
Purchaser owns 50% or more of the outstanding Shares at the time of the Merger
or if the Merger occurs within one year after the HSR Act waiting period
applicable to the Offer expires or is terminated. However, if the Offer is
withdrawn or if the filing relating to the Offer is withdrawn prior to the
expiration or termination of the 15-day waiting period relating to the Offer,
the Merger may not be consummated until 30 calendar days after receipt by the
Antitrust Division and the FTC of the Notification and Report Forms of both
Parent and the Company unless the 30-day period is earlier terminated by the
Antitrust Division and the FTC. Within such 30-day period, the Antitrust
Division or the FTC may request additional information or documentary
materials from Parent and/or the Company, in which event, the Merger may not
be consummated until 20 days after such requests are substantially complied
with by both Parent and the Company. Thereafter, the waiting periods may be
extended only by court order or by consent.
The FTC and the Antitrust Division frequently review the legality under the
antitrust laws of transactions such as the proposed acquisition of Shares by
the Purchaser pursuant to the Offer. At any time before or after the purchase
of Shares pursuant to the Offer by the Purchaser, the FTC or the Antitrust
Division 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 purchased by the Purchaser or the divestiture of
substantial assets of Parent, the Company or their respective subsidiaries.
Private parties and state attorneys general may also bring legal action under
federal or state antitrust laws under certain circumstances. Based upon an
examination of information available to the Purchaser relating to the
businesses in which Parent, the Purchaser, the Company and their respective
subsidiaries are engaged, the Purchaser believes that the Offer will not
violate the antitrust laws. Nevertheless, 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, what the result would be. See Section 14 for certain
conditions to the Offer.
State Takeover Statutes. The Company is incorporated under the laws of
Delaware. Section 203 of the DGCL limits ability of a Delaware corporation to
engage in business combinations with "interested stockholders" (defined
generally as any beneficial owner of 15% or more of the outstanding voting
stock of the corporation) unless, among other things, the corporation's board
of directors has given its prior approval to either the business combination
or the transaction which resulted in the stockholder becoming an "interested
stockholder." Prior to the execution of the Merger Agreement, the Company's
Board of Directors approved the Stock Tender Agreement, Merger Agreement and
the Purchaser's acquisition of Shares pursuant to the Offer and, therefore,
Section 203 of the DGCL is inapplicable to the Stock Tender Agreements, the
Offer and the Merger.
A number of other 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 or 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. However, in CTS
Corp. v. Dynamics Corp. of America, the Supreme Court of the United States
held that a state may, as a matter of corporate law, and, in particular, those
laws concerning
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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.
Based on information supplied by the Company, the Purchaser does not believe
that any state takeover statutes outside of Delaware purport to apply to the
Offer or the Merger. Neither the Purchaser nor Parent has currently complied
with any other state takeover statute or regulation. The Purchaser reserves
the right to challenge the applicability or validity of any state law
purportedly applicable to the Offer or the Merger and nothing in this Offer to
Purchase or any action taken in connection with the Offer or the Merger is
intended as a waiver of such right. If it is asserted that any state takeover
statute is applicable to the Offer or the Merger and if an appropriate court
does not determine that it is inapplicable or invalid as applied to the Offer
or the Merger, the Purchaser might be required to file certain information
with, or to receive approvals from, the relevant state authorities, and the
Purchaser might be unable to accept for payment or pay for Shares tendered
pursuant to the offer, or be delayed in consummating the Offer or the Merger.
In such case, the Purchaser may not be obliged to accept for payment or pay
for any Shares tendered pursuant to the Offer.
Appraisal Rights. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, stockholders will have certain
rights under Delaware law to dissent and demand appraisal of, and to receive
payment in cash of the fair value of, their Shares. Such rights to dissent, if
the statutory procedures are complied with, could lead to a judicial
determination of the fair value of the Shares, as of the day prior to the date
on which the stockholders vote was taken approving the Merger or similar
business combination (excluding any element of value arising from the
accomplishment or expectation of the Merger), required to be paid in cash to
such dissenting holders for their Shares. In addition, such dissenting
stockholders would be entitled to receive payment of a fair rate of interest
from the date of consummation of the Merger on the amount determined to be the
fair value of their Shares. In determining the fair value of the Shares, the
court is required to take into account all relevant factors. Accordingly, such
determination could be based upon considerations other than, or in addition
to, the market value of the Shares, including, among other things, asset
values and earning capacity. In Weinberger v. UOP, Inc., the Delaware Supreme
Court stated, among other things, that proof of value by any techniques or
methods which are generally considered acceptable in the financial community
and otherwise admissible in court should be considered in an appraisal
proceeding. Therefore, the value so determined in any appraisal proceeding
could be the same, more or less than the purchase price per Share in the Offer
or the Merger Consideration.
In addition, several decisions by Delaware courts have held that, in certain
circumstances, a controlling stockholder of a company involved in a merger has
a fiduciary duty to other stockholders which requires that the merger be fair
to such other stockholders. In determining whether a merger is fair to
minority stockholders, Delaware courts have considered, among other things,
the type and amount of consideration to be received by the stockholders and
whether there was fair dealing among the parties. The Delaware Supreme Court
stated in Weinberger and Rabkin v. Philip A. Hunt Chemical Corp. that the
remedy ordinarily available to minority stockholders in a cash-out merger is
the right to appraisal described above. However, a damages remedy or
injunctive relief may be available if a merger is found to be the product of
procedural unfairness, including fraud, misrepresentation or other misconduct.
"Going Private" Transactions. The Commission has adopted Rule 13e-3 under
the Exchange Act which is applicable to certain "going private" transactions
and which may under certain circumstances be applicable to the Merger or
another business combination following the purchase of Shares pursuant to the
Offer in which Purchaser seeks to acquire the remaining Shares not held by it.
Purchaser believes, however, that Rule 13e-3 will not be applicable to the
Merger. Rule 13e-3 requires, among other things, that certain financial
information concerning the Company and certain information relating to the
fairness of the proposed transaction and the consideration offered to minority
stockholders in such transaction, be filed with the SEC and disclosed to
stockholders prior to consummation of the transaction.
33
<PAGE>
Margin Credit Regulations. It is possible that, following the Offer, shares
of the Common Stock 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. See Section
7.
16. FEES AND EXPENSES. Except as set forth below, neither Parent nor the
Purchaser will pay any fees or commissions to any broker, dealer or other
person for soliciting tenders of Shares pursuant to the Offer.
JP Morgan is acting as the Dealer Manager in connection with the Offer and
is acting as financial advisor to Parent in connection with its effort to
acquire the Company. In connection with the Offer, Parent has agreed to pay
J.P. Morgan $4 million if Parent completes the acquisition of 100% of the
Shares of the Company; provided that in the event Parent ultimately acquires
less than 100% of the Shares of the Company such fee will be reduced
proportionately. Parent has also agreed to reimburse JP Morgan (in its
capacity as Dealer Manager and financial advisor) for its reasonable out-of-
pocket expenses, including the reasonable fees and expenses of its legal
counsel, incurred in connection with its engagement, provided that any
expenses in the aggregate which exceed $10,000 must be approved in advance in
writing by Parent, and to indemnify JP Morgan and certain related persons
against certain liabilities and expenses in connection with their engagement,
including certain liabilities under the federal securities laws. JP Morgan
renders various investment banking and other advisory services to Parent and
its affiliates and is expected to continue to render such services, for which
it has received and will continue to receive customary compensation from
Parent and its affiliates.
The Purchaser has retained Morrow & Co. to act as the Information Agent in
connection with the Offer. The Information Agent may contact holders of Shares
by mail, telephone, facsimile, telegraph and personal interviews and may
request brokers, dealers and other nominee stockholders to forward materials
relating to the Offer to beneficial owners of Shares. The Information Agent
will receive reasonable and customary compensation together with reimbursement
for its reasonable out-of-pocket expenses and will be indemnified against
certain liabilities and expenses, including certain liabilities under the
federal securities laws.
In addition, ChaseMellon Shareholders Services, L.L.C. has been retained as
the Depositary. The Depositary has not been retained to make solicitations or
recommendations in its role as Depositary. The Depositary will receive
reasonable and customary compensation for its services, will be reimbursed for
certain reasonable out-of-pocket expenses and will be indemnified against
certain liabilities and expenses in connection therewith. Brokers, dealers,
commercial banks and trust companies will be reimbursed by the Purchaser for
customary mailing and handling expenses incurred by them in forwarding
offering 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 or Parent is aware
of any jurisdiction in which the making of the Offer or the tender of Shares
in connection therewith would not be in compliance with the laws of such
jurisdiction. To the extent the Purchaser or Parent 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.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER 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.
Parent and the Purchaser have filed with the Commission a Tender Offer
Statement on Schedule 14D-1 (the "Schedule 14D-1"), together with exhibits,
pursuant to Rule 14d-3 of the General Rules and Regulations under
34
<PAGE>
the Exchange Act, furnishing certain additional information with respect to
the Offer and may file amendments thereto. In addition, the Company has filed
with the Commission the Schedule 14D-9 pursuant to Rule 14d-9 under the
Exchange Act setting forth its recommendation with respect to the Offer and
the reasons for such recommendation and furnishing certain additional related
information. The Schedule 14D-9 is enclosed herewith and the Schedule 14D-1
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 they will not be available at the regional offices of the
Commission).
Sapling Acquisition, Inc.
June 19, 1998
35
<PAGE>
SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND
EXECUTIVE OFFICERS OF THE PURCHASER AND PARENT
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. Set forth in the table below
are the name and the present principal occupations or employment and the name,
principal business and address of any corporation or other organization in
which such occupation or employment is conducted, and the five-year employment
history of each of the directors and executive officers of Parent. Unless
otherwise indicated, each person identified below is employed by Parent and is
a United States citizen. The principal business address of Parent and, unless
otherwise indicated, the business address of each person identified below is
313 West Liberty Street, P.O. Box 3001, Lancaster, Pennsylvania 17604.
Directors of Parent are identified by an asterisk.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
---- -------------------------------------------------------
<C> <S>
Marc R. Olivie.......... Age 44; President, Worldwide Building Products
Operations since October 15, 1996; and the following
positions with Sara Lee Corporation (branded consumer
products): President, Sara Lee Champion Europe, Inc.
(Italy) March 1994-October 1996; Vice President,
Corporate Development, Sara Lee/DE (Netherlands)
September 1993-March 1994; Executive Director,
Corporate Development, Sara Lee Corporation (Chicago,
Illinois/France) April 1990-September 1993. Mr. Olivie
is a Belgian citizen.
Robert J. Shannon, Jr... Age 50; President, Worldwide Floor Products Operations
since February 1, 1997; President Floor Products
Operations International February 1, 1996, through
February 1, 1997; President American Olean Tile
Company, Inc. March 1, 1992 through December 29, 1995.
Stephen E. Stockwell ... Age 52; President, Corporate Retail Accounts Division
since November 22, 1994; Vice President, Corporate
Retail Accounts July 1, 1994, through November 22,
1994; General Manager, Residential Sales, Floor
Division January 26, 1994 through July 1, 1994; Field
Sales Manager, Floor Division, 1988-1994.
Ulrich J. Weimer........ Age 53; President, Armstrong Insulation Products since
February 1, 1996; Geschaftsfuhrer, Armstrong World
Industries G.m.b.H. since December 11, 1995; General
Manager, Worldwide Insulation Products Operations
February 1, 1993 through June 1, 1995. Mr. Weimer is a
German citizen.
Douglas L. Boles........ Age 40; Senior Vice President, Human Resources since
March 1, 1996; and the following positions with PepsiCo
(consumer products): Vice President of Human Resources,
Pepsi Foods International Europe Group (U.K.) June
1995-February 1996; Vice President of Human Resources,
Walkers Snack Foods (U.K.) March 1994-June 1995; Vice
President of Human Resources, Snack Ventures Europe
(Netherlands) September 1992-March 1994.
Deborah K. Owen......... Age 46; Senior Vice President, Secretary and General
Counsel since January 1, 1998; Attorney, Law Offices of
Deborah K. Owen, Columbia, MD, September 1996-September
1997; Partner, Arent Fox Kintner Poltkin & Kahn law
firm, Washington DC, August 1994-August 1996;
Commissioner, Federal Trade Commission, Washington, DC,
October 1989-August 1994.
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
---- -------------------------------------------------------
<C> <S>
Frank A. Riddick, III... Age 41; Senior Vice President, Finance and Chief
Financial Officer since April 1995; and the following
positions with FMC Corporation, Chicago, IL (chemicals,
machinery): Controller May 1993-March 1995; Treasurer
December 1990-May 1993. Mr. Riddick has also acted as
interim Treasurer since April 27, 1998.
Edward R. Case.......... Age 51; Vice President and Controller since April 27,
1998; Prior to such date Mr. Case had served as Vice
President and Treasurer since May 8, 1996; and the
following positions with Campbell Soup Company (branded
food products): Director, Corporate Development October
1994-May 1996; Director, Financial Planning, U.S. Soup
May 1993-September 1994; Deputy Treasurer September
1991-April 1993.
John A. Krol*........... Age 61; Director since February 1998; Mr. Krol is a
graduate of Tufts University where he also received a
master's degree in chemistry. In 1997, he became
Chairman of the Board of E.I. du Pont de Nemours and
Company ("DuPont") (chemicals, fibers, petroleum, life
sciences and diversified businesses), which he joined
in 1963, and where he has also served as Chief
Executive Officer (1995-1998), President (1995-1997),
Vice Chairman (1992-1995), and Senior Vice President of
DuPont Fibers (1990-1992). He is a director of Mead
Corporation, J.P. Morgan & Co., the National
Association of Manufacturers, the Delaware Art Museum,
and Catalyst. Mr. Krol also serves on the Boards of
Trustees of the Tufts University and the University of
Delaware and is a member of The Business Council.
David W. Raisbeck*...... Age 48; Director since July 1997; Mr. Raisbeck is a
graduate of Iowa State University and the executive MBA
program at the University of Southern California. He
joined Cargill, Incorporated (agricultural trading and
processing businesses), in 1971 and has held a variety
of merchandising and management positions focused
primarily in the commodity and the financial trading
businesses. Mr. Raisbeck was elected President of
Cargill's Trading Sector in June 1993, a director of
Cargill's Board in August 1994 and Executive Vice
President in August 1995. He is also executive
supervisor of Cargill Human Resources and a member of
the Executive Committee and Human Resources Committee
of the Cargill Board. Mr. Raisbeck is a member of the
Chicago Mercantile Exchange and the Commodity Marketing
Exchange in New York City. He is a governor of the Iowa
State University Foundation.
David M. LeVan*......... Age 52; Director since February 1998; Mr. LeVan is a
graduate of Gettysburg College and the Harvard
University Advanced Management Program. Since May 1996,
he has served as Chairman, President and Chief
Executive Officer of Conrail, Inc. (rail freight
transportation), which he joined in 1978, and where he
has also served as Chief Operating Officer (1994-1996),
Executive Vice President (1993-1994), and in various
Senior Vice President positions (1990-1993). He is a
Certified Public Accountant. Mr. LeVan is a member of
the Board of Trustees of Gettysburg College and a
member of the Board of Education for the School
District of Philadelphia.
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
---- -------------------------------------------------------
<C> <S>
James E. Marley*........ Age 62; Director since November 1988; Mr. Marley is a
graduate of Pennsylvania State University and earned a
master's degree in mechanical engineering from Drexel
University. Since 1993, he has served as Chairman of
the Board of AMP Incorporated (electrical/electronic
connection devices), which he joined in 1963 where he
served as President and Chief Operating Officer (1990-
1992) and President (1986-1990). He also serves on the
Boards of Harsco Corporation, The Pinnacle Health
System and the Manufacturers' Alliance for Productivity
and Innovation.
Jerre L. Stead*......... Age 55; Director since April 1992; Mr. Stead is a
graduate of the University of Iowa and was a
participant in the Advanced Management Program, Harvard
Business School. On September 1, 1996, he became
Chairman and Chief Executive Officer of Ingram Micro,
Inc. (technology products and services). He served as
Chairman, President and Chief Executive Officer of
Legent Corporation (integrated product and service
software solutions) January-August 1995. He was
Executive Vice President, American Telephone and
Telegraph Company (telecommunications) and Chief
Executive Officer of AT&T Global Information Solutions
(computers and communicating), formerly NCR Corp.
(1993-1994). He was President of AT&T Global Business
Communications Systems (communications) (1991-1993). He
serves on the Board of Garrett Evangelical Seminary and
the University of Iowa Board of Visitors. He is also a
Director TBG Holdings N.V., TJ International, Inc., and
American Precision Industries, Inc.
H. Jesse Arnelle*....... Age 64; Director since July 1995; Mr. Arnelle is Of
Counsel with the law firm of Womble, Carlyle, Sandridge
& Rice since October 1997 and former senior partner and
co-founder of Arnelle, Hastie, McGee, Willis & Greene,
a San Francisco-based corporate law firm (1984-1997).
He is a graduate of Pennsylvania State University and
the Dickinson School of Law. Mr. Arnelle served as
Vice-Chairman (1993-1995) and Chairman (1996-1997) of
the Board of Trustees of the Pennsylvania State
University. He serves on the Boards of Wells Fargo &
Company and subsidiary Wells Fargo Bank, Waste
Management, Inc., FPL Group, Inc., Eastman Chemical
Company, Textron Corporation and Union Pacific
Resources.
Donald C. Clark*........ Age 66; Director since April 1996; Mr. Clark is a
graduate of Clarkson University and Northwestern
University where he earned his MBA degree. He joined
Household International, Inc. (consumer financial
services), in 1955 and, after holding a number of
managerial and executive positions, was elected Chief
Executive Officer in 1982 and Chairman of the Board in
1984. In 1994, he relinquished the title of Chief
Executive Officer and retired as a Director and
Chairman of the Board in May 1996, as a result of
reaching Household's mandatory retirement age for
employee directors. Mr. Clark is a Director of
Ripplewood Holdings L.L.C., a trustee of Northwestern
University, and Chairman of the Board of Trustees of
Clarkson University. He is also a Director of Warner-
Lambert Company, Ameritech Corporation, Scotsman
Industries, Inc., and PMI Group, Inc.
</TABLE>
I-3
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
---- -------------------------------------------------------
<C> <S>
George A. Lorch*........ Age 56; Director since March 1988; Mr. Lorch is a
graduate of Virginia Polytechnic Institute. He began
his Armstrong association in 1963. He has served as the
Company's Chairman of the Board since April 1994. Prior
to his election as President and Chief Executive
Officer in September 1993, he served as Executive Vice
President from 1988. After various assignments in
marketing (1963-1983) with Armstrong and an Armstrong
subsidiary, he served as Group Vice President for
Carpet Operations during the period 1983 to 1988. Mr.
Lorch is also a Director of Household International,
Inc., R.R. Donnelley & Sons Company and Warner-Lambert
Company. He is a member of The Policy Committee of the
Business Roundtable and a member of the Conference
Board and The Pennsylvania Business Roundtable.
Van C. Campbell*........ Age 59; Director since March 1991; Mr. Campbell
graduated from Cornell University and holds an MBA
degree from Harvard University. He is Vice Chairman of
Corning Incorporated (glass and ceramic products) and
is a member of its Board of Directors. He also serves
on the Boards of Dow Corning Corporation, General
Signal Corporation, Covance Inc., and Quest Diagnostics
Incorporated. Mr. Campbell is a Trustee of the Corning
Foundation, the Rockwell Museum and the Corning Museum
of Glass.
</TABLE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER. Set forth in the table
below are the name and the present principal occupations or employment and the
name, principal business and address of any corporation or other organization
in which such occupation or employment is conducted, and the five-year
employment history of each of the directors and executive officers of the
Purchaser. Unless otherwise indicated, each person identified below is
employed by the Purchaser and is a United States citizen. The principal
business address of the Purchaser and, unless otherwise indicated, the
business address of each person identified below is c/o Armstrong World
Industries, Inc., 313 West Liberty Street, P.O. Box 3001, Lancaster,
Pennsylvania 17604. Directors of the Purchaser are identified by an asterisk.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
---- ----------------------------------------------------
<C> <S>
George A. Lorch*........ Schedule I
Frank A. Riddick, III*.. Schedule I
Joseph R. DeSanto*...... Age 37; Director since June 1998; Director, Taxes,
Armstrong World Industries, Inc. since May 1996; Tax
Planner, Mobil Corporation October 1991-May 1996.
Edward R. Case*......... Schedule I
David D. Wilson*........ Age 57; Assistant Secretary and Associate General
Counsel, Armstrong World Industries, Inc. since July
1992.
Deborah K. Owen*........ Schedule I
Robert J. Shannon, Jr.*. Schedule I
</TABLE>
I-4
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, 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 his broker, dealer, commercial bank, trust
company or other nominee to the Depositary at one of its addresses set forth
below:
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDERS SERVICES, L.L.C.
<TABLE>
<CAPTION>
By Mail: By Hand: By Overnight Delivery:
<S> <C> <C>
ChaseMellon Shareholder Services, L.L.C. ChaseMellon Shareholder Services, L.L.C. ChaseMellon Shareholder Services, L.L.C.
Post Office Box 3301 120 Broadway, 13th Floor 85 Challenger Rd-Mail Drop-Reorg.
South Hackensack, NJ 07606 New York, NY 10271 Ridgefield Park, NJ 07660
Attn: Reorganization Department Attn: Reorganization Department Attn: Reorganization Department
By Facsimile Transmission: Confirm Receipt of Facsimile
(For Eligible Institutions Only) by Telephone:
(201) 329-8936 (201) 296-4860
</TABLE>
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone
numbers listed below. Additional copies of this Offer to Purchase, the Letter
of Transmittal and other tender offer materials may be obtained from the
Information Agent as set forth below, and will be furnished promptly at the
Purchaser's expense. You may also contact your broker, dealer, commercial
bank, trust company or other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
MORROW & CO.
909 Third Avenue
20th Floor
New York, NY 10022
(212) 754-8000
Toll Free (800) 566-9061
Banks and Brokerage Firms
Please call:
(800) 662-5200
The Dealer Manager for the Offer is:
J.P. MORGAN & CO.
60 Wall Street
New York, New York 10260
(877) 712-7078
<PAGE>
EXHIBIT (A)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
TRIANGLE PACIFIC CORP.
PURSUANT TO THE OFFER TO PURCHASE
DATED JUNE 19, 1998, 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 FRIDAY, JULY 17, 1998, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<CAPTION>
By Mail: By Hand: By Overnight Delivery:
<S> <C> <C>
ChaseMellon Shareholder ChaseMellon Shareholder Services, ChaseMellon Shareholder Services,
Services, L.L.C. L.L.C. L.L.C.
Post Office Box 3301 120 Broadway, 13th Floor 85 Challenger Rd-Mail Drop-Reorg.
South Hackensack, NJ 07606 New York, NY 10271 Ridgefield Park, NJ 07660
Attn: Reorganization Department Attn: Reorganization Department Attn: Reorganization Department
</TABLE>
<TABLE>
<S> <C>
By Facsimile Transmission: Confirm Receipt of Facsimile
(For Eligible Institutions Only) by Telephone:
(201) 329-8936 (201) 296-4860
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSIONS OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
DESCRIPTION OF TENDERED SHARES
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NAME(S) AND
ADDRESS(ES) OF
REGISTERED
HOLDER(S)
(PLEASE FILL IN
EXACTLY AS
NAME(S)
APPEAR(S) ON SHARE CERTIFICATE(S) TENDERED
CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
- ----------------------------------------------------------------------
TOTAL NUMBER OF NUMBER
CERTIFICATE SHARES REPRESENTED OF SHARES
NUMBER(S)(1) BY CERTIFICATE(S)(1) TENDERED(2)
<S> <C> <C> <C>
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
TOTAL SHARES
</TABLE>
- -------------------------------------------------------------------------------
(1)Need not be completed by Book-Entry Stockholders.
(2)Unless otherwise indicated, it will be assumed that all Shares
Certificates delivered to the Depositary are being tendered. See
Instruction 4.
<PAGE>
This Letter of Transmittal is to be completed by stockholders either if
certificates for Shares (as defined below) are to be forwarded herewith or,
unless an Agent's Message (as defined in the Offer to Purchase, dated June 19,
1998 (the "Offer to Purchase")) is utilized, if delivery of Shares is to be
made by book-entry transfer to an account maintained by the Depositary at the
Book-Entry Transfer Facility (as defined in Section 2 of the Offer to
Purchase) pursuant to the procedures set forth in Section 3 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
as "Certificate Stockholders." DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY
FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES
DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
This Letter of Transmittal must be accompanied by certificates for Shares
(the "Share Certificates") unless the holder complies with the procedures for
guaranteed delivery. Holders whose Share Certificates are not immediately
available or who cannot deliver their Share Certificates and all other
required documents to the Depositary on or prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase) or who cannot complete the
procedures for book-entry transfer on a timely basis, must tender their Shares
according to the guaranteed delivery procedures set forth in Section 3 of the
Offer to Purchase. See Instruction 2.
[_] CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN
ACCOUNT MAINTAINED BY THE DEPOSITARY AT THE BOOK-ENTRY TRANSFER FACILITY AND
COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER
FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution: ________________________________________________
Account Number: _______________________________________________________________
Transaction Code Number: ______________________________________________________
[_] CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING. PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY.
Name(s) of Registered Holder(s): ______________________________________________
Window Ticket Number (if any): ________________________________________________
Date of Execution of Notice of Guaranteed Delivery: ___________________________
Name of Institution which Guaranteed Delivery: ________________________________
If delivered by Book-Entry Transfer check box [_]
Account Number: _______________________________________________________________
Transaction Code Number: ______________________________________________________
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to Sapling Acquisition, Inc., a Delaware
corporation (the "Purchaser") and a wholly-owned subsidiary of Armstrong World
Industries, Inc., a Pennsylvania corporation ("Parent"), the above described
shares of common stock, par value $.01 per share (the "Shares"), of Triangle
Pacific Corp., a Delaware corporation (the "Company"), 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 this Letter of Transmittal (which together with the Offer
to Purchase constitute the "Offer") receipt of which is hereby acknowledged.
The undersigned understands that the Purchaser reserves the right to transfer
or assign, in whole or from time to time in part, to one or more of its
subsidiaries or affiliates the right to purchase all or any portion of the
Shares tendered pursuant to the Offer.
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 of 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 June 12, 1998) and constitutes and irrevocably appoints ChaseMellon
Shareholder Services, L.L.C. (the "Depositary") the true and lawful agent,
attorney-in-fact and proxy of the undersigned to the full extent of the
undersigned's rights with respect to such Shares with full power of
substitution (such power of attorney and proxy being deemed to be an
irrevocable power coupled with an interest), to (a) deliver Share Certificates
(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 the Book-Entry Transfer Facility, together in either such
case with all accompanying evidences of transfer and authenticity, to or upon
the order of the Purchaser, upon receipt by the Depositary, as the
undersigned's agent, of the purchase price, (b) present such Shares (and any
such other Shares or securities or rights) for transfer on the books of the
Company and (c) 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 irrevocably appoints Deborah K. Owen and David D.
Wilson, and each of them, and any other designees of the Purchaser as the
attorneys-in-fact and proxies of the undersigned, each with full power of
substitution, to vote in such manner as each such attorney and proxy or his
substitute shall, in his sole discretion, deem proper, and otherwise act
(including pursuant to written consent) with respect to all of the Shares
tendered hereby (and any and all other Shares or other securities or rights
issued or issuable in respect thereof on or after June 12, 1998) which have
been accepted for payment by the Purchaser prior to the time of such vote or
action which the undersigned is entitled to vote at any meeting of
stockholders (whether annual or special and whether or not an adjourned
meeting) of the Company, or by written consent in lieu of such meeting, or
otherwise. This power of attorney and proxy is coupled with an interest in the
Company and in the Shares and is irrevocable and is granted in consideration
of, and is effective upon, the acceptance for payment of such Shares by the
Purchaser in accordance with the terms of the Offer. Such acceptance for
payment shall revoke, without further action, any other power of attorney or
proxy granted by the undersigned at any time with respect to such Shares and
no subsequent powers of attorney or proxies will be given (and if given will
be deemed not to be effective) with respect thereto by the undersigned. The
undersigned understands that 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 is able to
exercise full voting rights with respect to such Shares and other securities,
including voting at any meeting of stockholders.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby (and any and all other Shares or other securities or rights issued or
issuable in respect thereof on or after June 12, 1998) and that, when the same
are accepted for payment by the Purchaser, the Purchaser will acquire good,
marketable and unencumbered title thereto, free and clear of
3
<PAGE>
all liens, restrictions, charges and encumbrances and the same will not be
subject to any adverse claim. The undersigned, upon request, will execute and
deliver any additional documents deemed by the Depositary or the Purchaser to
be necessary or desirable to complete the sale, assignment and transfer of the
Shares tendered hereby (and any such other Shares or securities or rights).
All authority herein conferred or herein agreed to be conferred shall not be
affected by, and shall survive, the death or incapacity of the undersigned and
any obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, legal representatives, successors and assigns of
the undersigned. Except as stated in the Offer to Purchase, this tender is
irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 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 Share
Certificates not tendered or accepted for payment in the name(s) of the
undersigned. Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail the check for the purchase price and/or return any
Share Certificates not tendered or accepted for payment (and any accompanying
documents, as appropriate) to the undersigned at the address shown below the
undersigned's signature. In the event that both the "Special Delivery
Instructions" and the "Special Payment Instructions" are completed, please
issue the check for the purchase price and/or return any Share Certificates
not tendered or accepted for payment in the name(s) of, and deliver said check
and/or return certificates to, the person or persons so indicated.
Stockholders tendering Shares by book-entry transfer may request that any
Shares not accepted for payment be returned by crediting such account
maintained at such Book-Entry Transfer Facility as such stockholder may
designate by making an appropriate entry under "Special Payment Instructions."
The undersigned recognizes that the Purchaser has no obligation pursuant to
the "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.
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Share To be completed ONLY if Share
Certificates not tendered or not Certificates are not tendered or
purchased and/or the check for the not purchased and/or the check for
purchase price of Shares purchased the purchase price of Shares
are to be issued in the name of purchased are to be sent to someone
someone other than the undersigned, other than the undersigned, or to
or if Shares tendered by book-entry the undersigned at an address other
transfer which are not purchased than that shown on the front cover.
are to be returned by credit to an Mail check and/or certificates to:
account maintained at a Book-Entry
Transfer Facility other than that
designated on the front cover. Is-
sue check and/or certificates to:
Name________________________________
(Please Print)
Address_____________________________
Name________________________________ ____________________________________
(Please Print) ____________________________________
(Include Zip Code)
Address_____________________________ ____________________________________
____________________________________ (Taxpayer Identification or Social
____________________________________ Security No.)
(Include Zip Code)
____________________________________ (See Substitute Form W-9 on Back
(Taxpayer Identification or Social Cover)
Security No.)
(See Substitute Form W-9 on Back
Cover)
4
<PAGE>
SIGN HERE
(Also Complete Substitute Form W-9 Below)
____________________________________________________________________________
____________________________________________________________________________
Signature(s) of Owner(s)
DATED: _______________________________________________________________, 1998
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on
the Stock Certificate(s) 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
necessary information. See Instruction 5.)
Name(s): ___________________________________________________________________
____________________________________________________________________________
(Please Print)
Capacity (Full Title): _____________________________________________________
Address: ___________________________________________________________________
____________________________________________________________________________
(Include Zip Code)
Area Code and Telephone Number: ____________________________________________
Tax Identification or Social Security No.: _________________________________
(See Substitute Form W-9)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
Authorized Signature: ______________________________________________________
Name: ______________________________________________________________________
Name of Firm: ______________________________________________________________
Address: ___________________________________________________________________
____________________________________________________________________________
Area Code and Telephone Number: ____________________________________________
Dated: _______________________________________________________________, 1998
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required (i) if this Letter of Transmittal is signed by the
registered holder (which term, for purposes of this document, shall include
any participant in a Book-Entry Transfer Facility whose name appears on a
security position listing as the owner of Shares) of the Shares tendered
herewith, unless such holder has completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on
this Letter of Transmittal or (ii) if such Shares are tendered for the account
of a firm that is a bank, broker, dealer, credit union, savings association or
other entity which is a member in good standing of the Securities Transfer
Agent's Medallion Program (each, an "Eligible Institution"). In all other
cases, all signatures on this Letter of Transmittal must be guaranteed by an
Eligible Institution. See Instruction 5.
5
<PAGE>
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be used either if Share Certificates are to be forwarded
herewith or, unless an Agent's Message (as defined below) is utilized, if
tenders are to be made pursuant to the procedures for tender by book-entry
transfer set forth in Section 3 of the Offer to Purchase. Share Certificates,
or timely confirmation (a "Book-Entry Confirmation") of a book-entry transfer
of such Shares into the Depositary's account at a Book-Entry Transfer
Facility, as well as this Letter of Transmittal (or a facsimile hereof),
properly completed and duly executed, with any required signature guarantees,
or an Agent's Message in the case of a book-entry delivery, and any other
documents required by this Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth herein prior to the Expiration
Date. Stockholders whose Share Certificates are not immediately available or
who cannot deliver their Share Certificates and all other required documents
to the Depositary prior to the Expiration Date or who cannot complete the
procedures for delivery by book-entry transfer on a timely basis may tender
their Shares by properly completing and duly executing a Notice of Guaranteed
Delivery pursuant to the guaranteed delivery procedures set forth in Section 3
of the Offer to Purchase. Pursuant to such procedure (i) such tender must be
made by or through an Eligible Institution; (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form made
available by the Purchaser, must be received by the Depositary on or prior to
the Expiration Date; and (iii) the Share Certificates (or a Book-Entry
Confirmation) representing all tendered Shares, in proper form for transfer,
together with a Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees (or, in
the case of a book-entry delivery, an Agent's Message) and any other documents
required by this Letter of Transmittal, must be received by the Depositary
within three NASDAQ National Market System ("NASDAQ") trading days after the
date of execution of such Notice of Guaranteed Delivery, as provided in
Section 3 of the Offer to Purchase. If Share Certificates are forwarded
separately to the Depositary, a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) must accompany each such delivery.
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 acknowledgment 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, THIS LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND SOLE RISK OF THE TENDERING STOCKHOLDER AND THE
DELIVERY WILL BE DEEMED MADE 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 facsimile thereof, waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares and any other required
information should be listed on a separate schedule attached hereto and
separately signed on each page thereof in the same manner as this Letter of
Transmittal is signed.
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 which are to be tendered in the box entitled
"Number of Shares Tendered." In such case, new Share Certificate(s) for the
remainder of the Shares that were evidenced by the old Share Certificate(s)
will be sent to the registered holder, unless otherwise provided in the
appropriate box marked "Special Payment Instructions" and/or "Special Delivery
6
<PAGE>
Instructions" 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(s) of the Shares
tendered hereby, the signature(s) must correspond exactly with the name(s) as
written on the face of the Share Certificate(s) without alteration,
enlargement or 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 Share
Certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of Share
Certificates.
If this Letter of Transmittal or any Share 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 should submit
proper evidence satisfactory to the Purchaser of their authority to so act.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and transmitted hereby, no endorsements of Share Certificates or
separate stock powers are required unless payment is to be made to, or Share
Certificates for Shares not tendered or purchased are to be issued in, the
name of a person other than the registered owner(s). Signatures on such Share
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 Shares listed, the Share Certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or names of the registered owner(s) appear(s) on the Share
Certificates. Signatures on such Share Certificates or stock powers must be
guaranteed by an Eligible Institution.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, the
Purchaser will pay or cause to be paid any stock transfer taxes with respect
to the transfer and sale of purchased Shares to it or its order pursuant to
the Offer. If, however, payment of the purchase price is to be made to, or if
Share Certificates not tendered or purchased are to be registered in the name
of, any person other than the registered holder, or if tendered Share
Certificates are registered in the name of any person other than the person(s)
signing this Letter of Transmittal, the amount of any stock transfer taxes
(whether imposed on the registered holder or such person) payable on account
of the transfer to such person 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 Share Certificates for unpurchased Shares 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 Share Certificates are to be returned to
someone other than the signer of this Letter of Transmittal or to an address
other than that shown on the front cover hereof, the appropriate boxes on this
Letter of Transmittal should be completed. Stockholders tendering Shares by
book-entry transfer may request that Shares not purchased be credited to such
account maintained at such Book-Entry Transfer Facility as such stockholder
may designate hereon. If no such instructions are given, such Shares not
purchased will be returned by crediting the account at the Book-Entry Transfer
Facility designated above. See Instruction 1.
7
<PAGE>
8. WAIVER OF CONDITIONS. The Purchaser reserves the absolute right 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. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance or additional copies of the Offer to Purchase and 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 at its address set forth below.
10. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under U.S. Federal income
tax law, a stockholder whose tendered Shares are accepted for payment is
required to provide the Depositary with such stockholder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 below. If the Depositary
is not provided with the correct TIN, the Internal Revenue Service (the "IRS")
may subject the stockholder or other payee to a $50 penalty. In addition,
payments that are made to such stockholder or other payee with respect to
Shares purchased pursuant to the Offer may be subject to 31% backup
withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, the stockholder must submit a Form W-8, signed under penalties of
perjury, attesting to that individual's exempt status. A Form W-8 can be
obtained from the Depositary. See the enclosed "Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9" for more
instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any such payments made to the stockholder or other payee. Backup withholding
is not an additional tax. Rather, the tax liability of persons subject to
backup withholding will be reduced by the amount of tax withheld. If
withholding results in an overpayment of taxes, a refund may be obtained from
the IRS.
The box in Part 3 of the 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% of all payments made prior to the time a properly certified TIN
is provided to the Depositary.
The stockholder is required to give the Depositary the TIN (e.g., social
security number or employer identification number) of the record owner of the
Shares or of the last transferee appearing on the transfers attached to, or
endorsed on, the Shares. If the Shares are 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.
11. LOST, DESTROYED OR STOLEN SHARE CERTIFICATES. If any Share
Certificate(s) has been lost, destroyed or stolen, the stockholder should
promptly notify the Depositary. The stockholder will then be instructed as to
the steps that must be taken in order to replace the Share Certificate(s).
This Letter of Transmittal and related documents cannot be processed until the
procedures for replacing lost or destroyed Share Certificates have been
followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE COPY THEREOF), 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 ON OR 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.
8
<PAGE>
PART 1 -- PLEASE PROVIDE YOUR
NAME, ADDRESS AND TIN IN THE ---------------------------
BOX AT RIGHT AND CERTIFY BY Name
SIGNING AND DATING BELOW.
---------------------------
SUBSTITUTE Address
FORM W-9
DEPARTMENT OF ---------------------------
THE TREASURY Social Security or Employer
INTERNAL Identification Number
REVENUE
SERVICE PART 2 -- CERTIFICATION -- UNDER PENALTIES OF PERJURY, I
CERTIFY THAT:
(1)The number shown on this form is my correct Taxpayer
Identification Number (or I am waiting for a number to be
issued to me) and
PAYER'S REQUEST
FOR TAXPAYER (2)I am not subject to backup withholding because: (a) I
IDENTIFICATION am exempt from backup withholding, or (b) I have not been
NUMBER (TIN) notified by the Internal Revenue Service (the "IRS") that
I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS -- YOU MUST CROSS OUT ITEM (2)
ABOVE IF YOU HAVE BEEN NOTIFIED BY THE IRS THAT YOU ARE
CURRENTLY SUBJECT TO BACKUP WITHHOLDING BECAUSE OF UNDER-
REPORTING INTEREST OR DIVIDENDS ON YOU TAX RETURN.
HOWEVER, IF AFTER BEING NOTIFIED BY THE IRS THAT YOU WERE
SUBJECT TO BACKUP WITHHOLDING, DO NOT CROSS OUT SUCH ITEM
(2).
------------------------------------------------------------
PART 3 [_] CHECK THIS BOX IF YOU HAVE NOT BEEN ISSUED A
TIN AND HAVE APPLIED FOR ONE OR INTEND TO APPLY FOR ONE
IN THE NEAR FUTURE.
SIGNATURE ___________________________ DATE ______________
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY 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 DETAILS. 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 penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) 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
(2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of payment, 31% of all payments made to me will be withheld, but that
such amounts will be refunded to me if I then provide a Taxpayer
Identification Number within sixty (60) days.
SIGNATURE ________________________________________________ DATE ____________
9
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, Share Certificates and
any other required documents should be sent or delivered by each stockholder
of the Company or his broker, dealer, commercial 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.
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Delivery:
ChaseMellon Shareholder
Services, L.L.C.
Post Office Box 3301 ChaseMellon Shareholder Services, L.L.C. ChaseMellon Shareholder Services, L.L.C.
South Hackensack, NJ 07606 120 Broadway, 13th Floor 85 Challenger Rd-Mail Drop-Reorg.
Attn: Reorganization De- New York, NY 10271 Ridgefield Park, NJ 07660
partment Attn: Reorganization Department Attn: Reorganization Department
</TABLE>
<TABLE>
<S> <C>
By Facsimile Transmission: Confirm Receipt of Facsimile
(For Eligible Institutions Only) by Telephone:
(201) 329-8936 (201) 296-4860
</TABLE>
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone
numbers listed below. Additional copies of this Offer to Purchase, the Letter
of Transmittal and other tender offer materials may be obtained from the
Information Agent as set forth below, and will be furnished promptly at the
Purchaser's expense. You may also contact your broker, dealer, commercial
bank, trust company or other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
MORROW & CO.
909 Third Avenue
20th Floor
New York, NY 10022
(212) 754-8000
Toll Free (800) 566-9061
Banks and Brokerage Firms
Please call:
(800) 662-5200
The Dealer Manager for the Offer is:
J.P. MORGAN & CO.
60 Wall Street
New York, New York 10260
(877) 712-7078
<PAGE>
EXHIBIT (A)(3)
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. IF YOU ARE
IN ANY DOUBT AS TO THE ACTION TO BE TAKEN, YOU SHOULD SEEK YOUR OWN FINANCIAL
ADVICE IMMEDIATELY FROM YOUR OWN APPROPRIATELY AUTHORIZED INDEPENDENT
FINANCIAL ADVISOR.
IF YOU HAVE SOLD OR TRANSFERRED ALL OF YOUR REGISTERED HOLDINGS OF COMMON
STOCK OF TRIANGLE PACIFIC CORP., PLEASE FORWARD THIS DOCUMENT AND ALL
ACCOMPANYING DOCUMENTS TO THE STOCKBROKER, BANK OR OTHER AGENT THROUGH WHOM
THE SALE OR TRANSFER WAS EFFECTED, FOR SUBMISSION TO THE PURCHASER OR
TRANSFEREE.
NOTICE OF GUARANTEED DELIVERY
TO
TENDER SHARES OF COMMON STOCK
OF
TRIANGLE PACIFIC CORP.
PURSUANT TO THE OFFER TO PURCHASE
DATED JUNE 19, 1998
BY
SAPLING ACQUISITION, INC.
A WHOLLY OWNED SUBSIDIARY OF
ARMSTRONG WORLD INDUSTRIES, INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or one substantially equivalent hereto,
must be used to accept the Offer (as defined below) if certificates
representing shares of common stock, par value $.01 per share (the "Shares"),
of Triangle Pacific Corp., a Delaware corporation (the "Company"), are not
immediately available or time will not permit all required documents to reach
ChaseMellon Shareholder Services, L.L.C. (the "Depositary") on or prior to the
Expiration Date (as defined in the Offer to Purchase), or the procedures for
delivery by book-entry transfer cannot be completed on a timely basis. This
Notice of Guaranteed Delivery may be delivered by hand or sent by facsimile
transmission or mail to the Depositary. See Section 3 of the Offer to
Purchase.
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Delivery:
ChaseMellon Shareholder
Services, L.L.C.
Post Office Box 3301 ChaseMellon Shareholder Services, L.L.C. ChaseMellon Shareholder Services, L.L.C.
South Hackensack, NJ 07606 120 Broadway, 13th Floor 85 Challenger Rd-Mail Drop-Reorg.
Attn: Reorganization De- New York, NY 10271 Ridgefield Park, NJ 07660
partment Attn: Reorganization Department Attn: Reorganization Department
</TABLE>
<TABLE>
<S> <C>
By Facsimile Transmission: Confirm Receipt of Facsimile
(For Eligible Institutions Only) by Telephone:
(201) 329-8936 (201) 296-4860
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION
TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an Eligible Institution under the Instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
Shares may not be tendered pursuant to the Guaranteed Delivery Procedures.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Sapling Acquisition, Inc., a Delaware
corporation (the "Purchaser") and a wholly-owned subsidiary of Armstrong World
Industries, Inc., a Pennsylvania corporation ("Parent"), 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 thereto, collectively
constitute the "Offer"), receipt of each of which is hereby acknowledged, the
number of Shares indicated below pursuant to the guaranteed delivery
procedures set forth in Section 3 of the Offer to Purchase.
Number of Shares: ___________________ Name(s) of Record Holder(s): ________
Certificates No(s). (if available): _ _____________________________________
_____________________________________ Address(es): ________________________
_____________________________________ _____________________________________
Check box if Share(s) will be Area Code and Telephone Number(s): __
tendered by Book-Entry Transfer _____________________________________
[_] The Depository Trust Company Signature: __________________________
Dated: ______________________________
Account Number: _____________________
Date: _______________________________
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED
2
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, an Eligible Institution (as defined in the Offer to
Purchase), hereby guarantees delivery to the Depositary, at one of its
addresses set forth above, certificates ("Share Certificates") evidencing the
tendered Shares hereby, in proper form for transfer, or confirmation of book-
entry transfer of such Shares into the Depositary's account at the Depositary
Trust Company with delivery of a Letter of Transmittal (or facsimile thereof)
properly completed and duly executed, or an Agent's Message (as defined in the
Offer to Purchase) in the case of a book-entry delivery, and any other
required documents, all within three days on which the National Association of
Securities Dealers Automated Quotation System, Inc. is open for business after
the date hereof.
The Eligible Institution that completes this form must communicate this
guarantee to the Depositary and must deliver the Letter of Transmittal and
Share Certificates to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible
Institution.
Name of Firm: _______________________ ___________________________________
Address: ____________________________ (AUTHORIZED SIGNATURE)
_____________________________________ Name: _____________________________
_____________________________________ (PLEASE TYPE OR PRINT)
_____________________________________ Title: ____________________________
(ZIP CODE)
Area Code and Telephone Number: _____ Date: _____________________________
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED
DELIVERY. CERTIFICATES FOR SHARES SHOULD BE SENT WITH YOUR LETTER OF
TRANSMITTAL.
3
<PAGE>
EXHIBIT (A)(4)
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 FRIDAY, JULY 17, 1998, UNLESS THE OFFER IS EXTENDED.
June 19, 1998
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by Sapling Acquisition, Inc., a Delaware corporation
(the "Purchaser") and a wholly-owned subsidiary of Armstrong World Industries,
Inc., a Pennsylvania corporation ("Parent"), to act as financial advisor and
Dealer Manager in connection with the Purchaser's offer to purchase all
outstanding shares of common stock, par value $.01 per share (the "Shares"),
of Triangle Pacific Corp., a Delaware corporation (the "Company"), 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 the related Letter of Transmittal (which, together with any
supplements or amendments thereto, collectively constitute the "Offer")
enclosed herewith. The Offer is being made pursuant to the Agreement and Plan
of Merger, dated as of June 12, 1998 (the "Merger Agreement"), by and among
Parent, the Purchaser and the Company pursuant to which, following the
consummation of the Offer and the satisfaction or waiver of certain
conditions, Purchaser will be merged with and into the Company, with the
Company surviving the merger as a wholly-owned subsidiary of Parent (the
"Merger"). Please furnish copies of the enclosed materials to those of your
clients for whom you hold Shares registered in your name or in the name of
your nominee.
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not withdrawn prior to the expiration of the Offer (together with
any Shares tendered to the Purchaser pursuant to the Stock Tender Agreement
(as defined in the Offer to Purchase)) such number of Shares, which would
constitute at least a majority of the outstanding Shares of the Company
(determined on a fully diluted basis), (ii) the expiration or termination of
all waiting periods imposed by the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the regulations thereunder, and (iii) the
satisfaction or waiver of certain conditions to the obligations of the
Purchaser and the Company to consummate the Offer and the transactions
contemplated by the Merger Agreement.
Enclosed herewith for your information and for forwarding to your clients
are copies of the following documents:
1. The Offer to Purchase, dated June 19, 1998;
2. The Letter of Transmittal to be used by stockholders of the Company
accepting the Offer;
<PAGE>
3. The Letter to Stockholders of the Company from the Chairman and Chief
Executive Officer of the Company, accompanied by the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission by the Company;
4. The Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares are not immediately available, or if such
certificates and all other required documents cannot be delivered to
ChaseMellon Shareholder Services, L.L.C. (the "Depositary") by the
Expiration Date (as defined in the Offer to Purchase), or if the procedure
for book-entry transfer cannot be completed by the Expiration Date;
5. A printed form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. A return envelope addressed to the Depositary.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JULY 17, 1998, UNLESS
THE OFFER IS EXTENDED.
The Board of Directors of the Company has unanimously (with one member being
absent) 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
stockholders of the Company and unanimously recommends that stockholders of
the Company accept the Offer and tender their Shares.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (a) certificates
representing Shares (or a timely Book-Entry Confirmation (as defined in the
Offer to Purchase) with respect to such Shares) into the account maintained by
the Depositary at the Depository Trust Company, (the "Book-Entry Transfer
Facility"), pursuant to the procedures set forth in Section 3 of the Offer to
Purchase, (b) the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees or an
Agent's Message (as defined in the Offer to Purchase), in connection with a
book-entry delivery, and (c) any other documents required by the Letter of
Transmittal. Accordingly, payment may not be made to all tendering
stockholders at the same time depending upon when certificates for or Book
Entry Confirmations into the Depositary's account at the Book-Entry Transfer
Facility 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.
If holders of Shares wish to tender shares, but it is impracticable for them
to forward their Share certificates or other required documents on or prior to
the Expiration Date (as defined in the Offer to Purchase) or to comply with
the book-entry transfer procedures on a timely basis, a tender may be effected
by following the guaranteed delivery procedures specified in Section 3 of the
Offer to Purchase.
Neither the Purchaser nor the Parent will pay any commissions or fees to any
broker, dealer or other person (other than the Dealer Manager and the
Information Agent, as described in the Offer to Purchase) for soliciting
tenders of Shares pursuant to the Offer. The Purchaser will, however, upon
request, reimburse you for customary clerical and mailing expenses incurred by
you in forwarding any of the enclosed materials to your clients. The Purchaser
will pay or cause to be paid any stock transfer taxes payable on the transfer
of Shares to it, except as otherwise provided in Instruction 6 of the Letter
of Transmittal.
2
<PAGE>
Any inquiries you may have with respect to the Offer should be addressed to,
and additional copies of the enclosed materials may be obtained from, the
Dealer Manager or the Information Agent, at their respective addresses and
telephone numbers set forth on the back cover of the Offer to Purchase.
Very truly yours,
J.P. MORGAN & CO.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON THE AGENT OF THE PURCHASER, THE DEALER MANAGER, THE COMPANY,
THE DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THEM, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED
DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
3
<PAGE>
EXHIBIT (A)(5)
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 FRIDAY, JULY 17, 1998, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration is an Offer to Purchase, dated June 19, 1998
(the "Offer to Purchase"), and a related Letter of Transmittal (which,
together with any supplements or amendments thereto, collectively constitute
the "Offer") relating to the offer by Sapling Acquisition, Inc., a Delaware
corporation (the "Purchaser") and a wholly-owned subsidiary of Armstrong World
Industries, Inc., a Pennsylvania corporation ("Parent"), to purchase all
outstanding shares of common stock, par value $.01 per share (the "Shares"),
of Triangle Pacific Corp., a Delaware corporation (the "Company"), at a 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 and
in the related Letter of Transmittal. Also enclosed is the Letter to
Stockholders of the Company from the Chairman and Chief Executive Officer 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 AND RIGHTS 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 BY YOU TO TENDER SHARES AND
RIGHTS HELD BY US FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
tender, on your behalf, any or all Shares held by us for your account pursuant
to the terms and conditions set forth in the Offer.
Please note the following:
1. The tender price is $55.50 per Share, net to you in cash without
interest thereon, upon the terms and subject to the conditions set forth in
the Offer.
2. The Board of Directors of the Company has unanimously (with one member
being absent) 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 Shares.
3. The Offer is being made for all outstanding Shares.
4. The Offer is being made pursuant to the Agreement and Plan of Merger,
dated as of June 12, 1998 (the "Merger Agreement"), among Parent, 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 Parent (the "Merger").
In the Merger, each issued and outstanding Share (other than Shares owned
<PAGE>
directly or indirectly by the Parent, Purchaser or any of their
subsidiaries or by the Company as treasury stock, or by stockholders, if
any, who are entitled to and who properly exercise rights of appraisal (if
any) under Delaware law) will be converted into the right to receive $55.50
per Share, without interest, as set forth in the Merger Agreement and
described in the Offer to Purchase.
5. The Offer is conditioned upon, among other things, (1) there being
validly tendered and not withdrawn prior to the expiration of the Offer
such number of Shares, which would constitute at least a majority of the
outstanding Shares of the Company (determined on a fully diluted basis),
(2) the expiration or termination of all waiting periods imposed by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
regulations thereunder, and (3) the satisfaction or waiver of certain
conditions to the obligations of the Purchaser and the Company to
consummate the Offer and the transactions contemplated by the Merger
Agreement.
6. Parent and the Purchaser have entered into a Stock Tender Agreement,
dated as of June 12, 1998 with certain principal stockholders of the
Company (the "Stockholders"), pursuant to which each Stockholder has agreed
to tender into the Offer all the Shares that such Stockholder owns, so long
as the Board of Directors of the Company, Parent or Purchaser has not
terminated the Merger Agreement. These Shares represent approximately 35%
of the outstanding Shares (determined on a fully-diluted basis) as of June
9, 1998.
7. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter
of Transmittal, stock transfer taxes on the purchase of Shares by the
Purchaser pursuant to the Offer.
8. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Friday, July 17, 1998, unless the Offer is extended in
accordance with the terms of the Merger Agreement.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing, detaching and
returning to us the instruction form set forth below. If you authorize the
tender of your Shares, all such Shares will be tendered unless otherwise
specified below. An envelope to return your instructions to us is enclosed.
Your instructions should be forwarded to us in ample time to permit us to
submit a tender on your behalf prior to the expiration of the Offer.
For purposes of the Offer, the Purchaser shall be deemed to have accepted
for payment, and thereby purchased, tendered Shares, if, as and when the
Purchaser gives oral or written notice to the Depositary of the Purchaser's
acceptance of such Shares for payment. Upon the terms and subject to the
conditions of the Offer, payment for Shares purchased 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) Share Certificates (or a timely
Book-Entry Confirmation (as defined in the Offer to Purchase) with respect to
such Shares) into the account maintained by the Depositary at the Depository
Trust Company (the "Book-Entry Transfer Facility"), pursuant to the procedures
set forth in Section 3 of the Offer to Purchase, (b) the Letter of Transmittal
(or a facsimile thereof), properly completed and duly executed, with any
required signature guarantees or an Agent's Message (as defined in the Offer
to Purchase), in connection with a book-entry delivery, and (c) any other
documents required by the Letter of Transmittal. Accordingly, payment may not
be made to all tendering stockholders at the same time depending upon when
certificates for or Book Entry Confirmations into the Depositary's account at
the Book-Entry Transfer Facility 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 residing 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. In any jurisdiction where securities, blue-sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of the Purchaser by J.P. Morgan
Securities Inc., the Dealer Manager for the Offer, or one or more registered
brokers or dealers that are licensed under the laws of such jurisdiction.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE
FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK
OF
TRIANGLE PACIFIC CORP.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated June 19, 1998, and the related Letter of Transmittal in
connection with the offer by Sapling Acquisition, Inc., a Delaware corporation
(the "Purchaser") and a wholly-owned subsidiary of Armstrong World Industries,
Inc., a Pennsylvania corporation ("Parent"), to purchase all outstanding
shares of common stock, par value $.01 per share (the "Shares"), of Triangle
Pacific Corp., a Delaware corporation (the "Company").
This will instruct you to tender to the Purchaser the number of Shares
indicated below (or if no number is indicated below, all Shares) which are
held by you for the account of the undersigned, upon the terms and subject to
the conditions set forth in the Offer.
Number of Shares to Be Tendered: Date:____________________________________
SIGN HERE
Signature(s)___________________________________________________________________
Print Name(s)__________________________________________________________________
Print Address(es)______________________________________________________________
Area Code and Telephone Numbers________________________________________________
Telephone Number(s)____________________________________________________________
Taxpayer Identification________________________________________________________
or Social Security Number(s)___________________________________________________
3
<PAGE>
EXHIBIT (A)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER. -
- - Social Security numbers have nine digits separated by two hyphens, e.g., 000-
00-0000. Employer identification numbers have nine digits separated by only one
hyphen, e.g., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
========================================================== =================================================================
GIVE THE SOCIAL GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: SECURITY NUMBER OF -- FOR THIS TYPE OF ACCOUNT: IDENTIFICATION NUMBER OF --
- ---------------------------------------------------------- -----------------------------------------------------------------
<S> <C> <C> <C>
1. An individual's account The individual 8. Sole proprietorship account The owner(4)
2. Two or more The actual owner of the 9. A valid trust, estate or The legal entity (do not
individuals (joint account or, if combined pension furnish the identifying
account) funds, the first individual number of the personal
on the account(1) representative or trustee
unless the legal entity
itself is not designated in
the account title)(5)
3. Custodian account of a The minor(2) 10. Corporate account The corporation
minor (Uniform Gift to
Minors Act) 11. Religious, charitable or The organization
educational organization
account
4. Custodian account of a The minor(2) 12. Partnership account held The partnership
minor (Uniform Gift to in the name of the business
Minors Act)
5. Adult and minor (joint The adult or, if the minor 13. Association, club, or The organization
account) is the only contributor, the other tax exempt
minor(1) organization
6. Account in the name of The ward, minor, or 14. A broker or registered The broker or nominee
guardian or committee incompetent person(3) nominee
for a designated ward,
minor, or incompetent
person
7. a. A revocable The actual owner(1) 15. Account with the The public entity
savings trust Department of Agriculture
account (in which in the name of a public
grantor is also entity (such as a State
trustee) or local government, school
b. Any "trust" account The actual owner(1) district, or prison) that
that is not a legal receives agricultural
or valid trust under program payments
State law
- ------------------------------------------------------------------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's Social Security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such person's social security number.
(4) Show the name of the owner. If the owner does not have an employer identification number, furnish the owner's social
security number.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: IF NO NAME IS CIRCLED WHEN THERE IS MORE THAN ONE NAME, THE NUMBER WILL BE CONSIDERED TO BE THAT OF THE FIRST NAME
LISTED.
</TABLE>
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain form SS-5, Application for a Social Security Number Card (for
resident individuals), Form SS-4, Application for Employer Identification Number
(for businesses and all other entities), or Form W-7 for International Taxpayer
Identification Number (for alien individuals required to file U.S. tax returns),
at an office of the Social Security Administration or the Internal Revenue
Service.
To complete Substitute Form W-9, if you do not have a taxpayer identification
number, write "Applied For" in the space for the taxpayer identification number
in Part I, sign and date the Form, and give it to the requester. Generally, you
will then have 60 days to obtain a taxpayer identification number and furnish it
to the requester. If the requester does not receive your taxpayer
identification number within 60 days, backup withholding, if applicable, will
begin and will continue until you furnish your taxpayer identification number to
the requester.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:*
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual
retirement plan, or a custodial account under section 403(b)(7).
. The United States or any agency or instrumentality thereof.
. A state, the District of Columbia, a possession of the United States, or any
political subdivision or instrumentality thereof.
. A foreign government or a political subdivision, agency or instrumentality
thereof.
. An international organization or any agency or instrumentality thereof.
. A registered dealer in securities or commodities registered in the United
States or a possession of the United States.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a).
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
. An entity registered at all times during the tax year under the Investment
Company Act of 1940.
. A foreign central bank of issue.
_____________________________
* Unless otherwise noted herein, all references below to section numbers or to
regulations are references to the Internal Revenue Code and the regulations
promulgated thereunder.
EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE A SUBSTITUTE FORM W-9 TO AVOID
POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER, FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM,
SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
Certain payments other than interest, dividends and patronage dividends that are
not subject to information reporting are also not subject to backup withholding.
For details, see the regulations under sections 6041, 6041A(a), 6045, and 6050A.
PRIVACY ACT NOTICES. Section 6109 requires most recipients of dividends,
interest or other payments to give taxpayer identification numbers to payers who
must report the payments to the IRS. The IRS uses the numbers for
identification purposes and to help verify the accuracy of your tax return.
Payers must be given the numbers whether or not recipients are required to file
tax returns. Payers must generally withhold 31% of taxable interest, dividends,
and certain other payments to a payee who does not furnish a taxpayer
identification number to a payer. Certain penalties may also apply.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. NOTE: You may be
subject to backup withholding if (i) this interest is $600 or more, and (ii)
the interest is paid in the course of the payer's trade or business and (iii)
you have not provided your correct taxpayer identification number to the
payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to non-resident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you
fail to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE STATEMENTS WITH RESPECT TO WITHHOLDING. -- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- If you falsify
certifications or affirmations, you are subject to criminal penalties including
fines and/or imprisonment.
(4) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS. -- If you fail to
include any portion of an includible payment for interest, dividends or
patronage dividends in gross income and such failure is due to negligence, a
penalty of 20% is imposed on any portion of any underpayment attributable to the
failure.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
EXHIBIT (A)(7)
ARMSTRONG WORLD INDUSTRIES TO ACQUIRE TRIANGLE PACIFIC CORP. FOR $55.50 PER
SHARE IN TRANSACTION VALUED AT $890 MILLION
- --Transaction Will Make Armstrong the World Leader in Wood Flooring--
LANCASTER, PA, AND DALLAS, TX, JUNE 13, 1998 -- Armstrong World Industries,
Inc., (NYSE:ACK) and Triangle Pacific Corporation (NASDAQ:TRIP) announced today
that they have signed a definitive merger agreement for Armstrong to acquire all
the outstanding shares of Triangle Pacific Corporation at a price of $55.50 per
share, or a total of approximately $890 million in cash on a fully diluted
basis. Triangle Pacific is the leading manufacturer of hardwood flooring
products and a substantial manufacturer of kitchen and bathroom cabinets.
Including the assumption of Triangle Pacific's net debt of about $260 million,
the total value of the transaction will be $1,150 million.
Following the combination and the completion of the pending acquisition of DLW,
Armstrong will become the world's leading manufacturer of hard surface flooring.
The transaction has been unanimously approved by the Boards of Directors of both
companies. Armstrong will commence a cash tender offer for all outstanding
Triangle Pacific shares for $55.50 per share within five business days. The
offer is contingent upon a majority of the shares on a fully diluted basis being
tendered and other customary conditions. Certain principal stockholders of
Triangle Pacific have agreed to tender their shares into the offer (representing
approximately 35% of Triangle Pacific's outstanding common stock on a fully
diluted basis). The tender will be followed by a merger in which any untendered
shares will be converted into the right to receive the same price in cash. The
agreement is not subject to any financing condition, and Armstrong has already
received bank commitments from J.P. Morgan, Chase Manhattan, and Bank of
America.
George A. Lorch, Chairman and Chief Executive Officer of Armstrong, said,
"Triangle Pacific is one of the best companies in the building materials
industry, and this acquisition will mark a major addition to Armstrong's core
flooring business. Together with the announcement just last week of our
agreement to acquire DLW, the third largest flooring manufacturer in Europe,
Triangle Pacific will make Armstrong the preeminent manufacturer of flooring
products worldwide. Importantly, both announcements reaffirm our commitment to
be a major force in the consolidating global building materials industry.
"Hardwood flooring comprises 7 percent of the U.S. flooring market and is one of
the most rapidly growing segments. Hardwood flooring is increasingly being
chosen by residential purchasers willing to spend more in order to obtain wood
flooring's beauty and durability. Triangle Pacific is clearly the leader in
this area, with its highly regarded brands, outstanding manufacturing
technology, low cost producer status, broad and innovative product line, and its
excellent reputation for value and service."
Triangle Pacific sells three types of flooring products--solid hardwood,
engineered hardwood, and laminate--which together account for approximately 72%
of its revenues. Its brands include Bruce, the leading name in hardwood
flooring, as well as Hartco, Robbins, Premier, and Traffic Zone. In total,
Triangle Pacific accounts for approximately 46% of the U.S. hardwood flooring
1 of 3
<PAGE>
segment. Triangle Pacific is also a substantial manufacturer of cabinets for
kitchens and bathrooms, targeted primarily toward the relatively higher-end,
single-family and multi-family markets. Cabinets account for approximately 28%
of Triangle Pacific's revenues.
Lorch said, "Triangle Pacific has also been guided by an outstanding management
team, led by Floyd Sherman, and we are pleased that they will join the combined
company."
Mr. Sherman, current Chairman and CEO of Triangle Pacific, will play an
important role in developing and implementing the growth plan, and will become
President, Wood Flooring and Cabinet Operations at Armstrong, reporting directly
to Armstrong's Chairman and CEO.
Lorch continued, "The combination of Armstrong's and Triangle Pacific's
strengths will provide an excellent strategic platform for additional profitable
growth. Armstrong will support Triangle Pacific's future growth consistent with
their current plans. In addition, significant new growth opportunities exist in
the commercial and international markets, and we expect to capitalize on
Armstrong's existing presence in these markets. Internationally, for example,
particularly in Europe, Canada and Japan, wood generally commands a much higher
share of the flooring market than in the U.S.
"In addition to the sales opportunities, we will also be able to achieve
significant cost savings in logistics and marketing in the combined company.
Armstrong plans to invest in brand development, capacity, technology, and new
products and systems to support the growth of wood flooring around the world,"
Lorch said. While a coordinated approach to marketing wood and vinyl products
is envisioned, there are no plans to eliminate or change any brands or
distribution systems.
Floyd Sherman, Chairman of Triangle Pacific, said, "We are very pleased to have
entered into this agreement. For our shareholders, it offers excellent value
and an attractive premium for their shares. For Triangle employees, customers
and suppliers, it provides a strong future as part of the preeminent name in the
flooring industry, under a management that has been squarely focused on how to
make their company efficient, innovative and customer-driven."
Armstrong expects that the two recently announced acquisitions, Triangle Pacific
and DLW, will be modestly dilutive to earnings in 1998, but accretive beginning
in 1999. The company also expects to earn in excess of its cost of capital on
both investments.
"We continue to transform Armstrong into a growth and results-oriented,
financially strong and highly efficient manufacturer and marketer of name
brands, offering around the globe the kinds of products and values that
customers want," Lorch concluded. Upon completion of the two transactions,
Armstrong will have total flooring sales of $2.1 billion, with about 57% in
vinyl, 23% in hardwood, 14% in European carpet, and 6% in linoleum. Consolidated
sales will be approximately $3.5 billion with about 60% in floor products.
In fiscal year 1997, Triangle Pacific had total revenues of $652.9 million.
Headquartered in Dallas, Texas, it has a total of 5,400 employees. Flooring
products accounted for $469.1 million of 1997 sales, and have grown at a
compounded annual rate of 26% since 1991. Net income in 1997 of $31.8 million
has grown at a compounded annual rate of 19% since 1994. Triangle Pacific
manufactures all of its flooring products in the U.S. in 15 plants in 11
geographically diverse locations, except for its Coastal Woodlands branded
products which are imported from Indonesia, Traffic Zone laminate products which
are imported from Germany, and a very limited amount of teak parquet imported
from Thailand. Imported products accounted for around 3% of total units sold in
1997.
Triangle Pacific's kitchen and bathroom cabinets are manufactured in
approximately 100 different styles and colors and marketed under the Bruce and
IXL brand names. The company operates four cabinet manufacturing plants
throughout the U.S. Sales in 1997 were $183.8 million, for a U.S. market share
of approximately 3%.
J.P. Morgan acted as financial advisor for Armstrong and Salomon Smith Barney
acted as financial advisor to Triangle Pacific in this transaction.
Armstrong World Industries is a global leader in the design, innovation and
manufacture of interior finishing solutions, most notably floors and ceilings.
It is also a world leader in the innovation and manufacture of pipe insulation,
gasket material and textile machine parts. Based in Lancaster, PA, Armstrong
has approximately 10,600 employees worldwide. In 1997 its net sales totaled
$2.2 billion.
Note: Safe Harbor Statement under the Private Securities Litigation Reform Act
- -----
of 1995:
1 of 2
<PAGE>
This press release contains forward-looking statements regarding Armstrong World
Industries, Inc.'s results and trends in its business. These statements are
based largely on the company's expectations and are subject to a number of risks
and uncertainties, many of which are beyond the company's control. Such risks
include the successful consummation of the tender offer, managements' ability to
integrate the company's flooring operations with Triangle Pacific, the company's
ability to achieve the anticipated economies of scale and profitability margins
and employee satisfaction with the transactions, among others. These risks and
uncertainties could cause actual results to differ materially from those in the
forward-looking statements. We also refer to the company's filings with the
Securities and Exchange Commission, which include descriptions of additional
risks and uncertainties.
SOURCE Armstrong World Industries
1 of 3
<PAGE>
EXHIBIT (A)(8)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase dated June 19,
1998, and the related Letter of Transmittal and 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.
NOTICE OF 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.
Sapling Acquisition, Inc., a Delaware corporation (the "Purchaser") and a
wholly-owned subsidiary of Armstrong World Industries, Inc., a Pennsylvania
corporation ("Parent"), is offering to purchase all outstanding shares of common
stock, par value $.01 per share (the "Shares"), of Triangle Pacific Corp., a
Delaware corporation (the "Company"), at a 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 thereto, collectively constitute the "Offer").
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
Shares, which would constitute at least a majority of the outstanding Shares of
the Company (determined on a fully-diluted basis), (ii) the expiration or
termination of all waiting periods imposed by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the regulations thereunder, and (iii)
the satisfaction or waiver of certain conditions to the obligations of the
Purchaser and the Company to consummate the Offer and the transactions
contemplated by the Merger Agreement (as defined below).
The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of
June 12, 1998 (the "Merger Agreement"), by and among Parent, the Purchaser and
the Company pursuant to which, following the consummation of the Offer, the
Purchaser will be merged with and into the Company, with the Company surviving
the merger as a wholly-owned subsidiary of Parent (the "Merger"). On the
effective date of the Merger, each outstanding Share (other than Shares owned
directly or indirectly by the Parent, Purchaser, or any of their subsidiaries or
by the Company as treasury stock, or by stockholders, if any, who are entitled
to and who properly exercise dissenter's rights under Delaware Law) will be
converted into the right to receive $55.50 in cash, without interest.
Parent and Purchaser have also entered into a Stock Tender Agreement dated as of
June 12, 1998, with certain principal stockholders of the Company (the
"Stockholders"), pursuant to which each Stockholder has agreed to tender into
the Offer all the Shares that such Stockholder owns. These shares represent
approximately 35% of the outstanding Shares (determined on a fully-diluted
basis) as of June 9, 1998.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY (WITH ONE
MEMBER BEING ABSENT) 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
STOCKHOLDERS OF THE COMPANY, AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS OF THE
COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES.
<PAGE>
For purposes of the Offer, the Purchaser shall be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to the Purchaser and
not properly withdrawn as, if and when Purchaser gives oral or written notice to
ChaseMellon Shareholder Services, L.L.C. (the "Depositary") of the Purchaser's
acceptance for payment of such Shares. Upon the terms and subject to the
conditions of the Offer, payment for Shares purchased pursuant to the Offer will
be made by deposit of the purchase price therefor with the Depositary, which
will act as agent for tendering shareholders for the purpose of receiving the
payment from the Purchaser and transmitting payment to tendering stockholders
whose Shares have been accepted for payment. In all cases, payment for Shares
purchased pursuant to the Offer will be made only after timely receipt by the
Depositary of (a) certificates representing shares (or a timely Book-Entry
Confirmation (as defined in the Offer to Purchase) with respect to such Shares)
into the account maintained by the Depositary at the Depositary Trust Company
(the "Book-Entry Transfer Facility"), pursuant to the procedures set forth in
Section 3 of the Offer to Purchase, (b) the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees or an Agent's Message (as defined in the Purchase), in
connection with a book-entry delivery, and (c) any other documents required by
the Letter of Transmittal. Accordingly, payment may not be made to all tendering
stockholders at the same time depending upon when certificates for or Book-Entry
Confirmations into the Depositary's account at the Book-Entry Transfer Facility
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 term "Expiration Date" means 12:00 midnight, New York City time, on Friday,
July 17, 1998, unless and until the Purchaser, in its sole discretion but
subject to the terms of the Merger Agreement, 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 on which the Offer, as so extended by the
Purchaser, shall expire. The Purchaser expressly reserves the right, in its sole
discretion (but subject to the terms of the Merger Agreement), at any time or
from time to time, and regardless of whether or not any of the events set forth
in Section 14 of the Offer to Purchase shall have occurred, (i) to extend the
period of time during which the Offer is open 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 (ii) to amend the Offer in any other
respect by giving oral or written notice of such amendment to the Depositary.
The Purchaser shall not have any obligation to pay interest on the purchase
price for tendered Shares, whether or not the Purchaser exercises its right to
extend the Offer. There can be no assurance that the Purchaser will exercise the
right to extend the Offer. Any such extension will be followed by a public
announcement thereof no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. During any such
extension, all Shares previously tendered and not withdrawn will remain subject
to the Offer, subject to the right of a tendering stockholder to withdraw such
stockholder's Shares.
Except as otherwise provided below, tenders of Shares are irrevocable. Shares
tendered pursuant to the Offer may be withdrawn 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 the
Expiration Date. For a withdrawal to be effective, a written or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of the 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 (as defined in Section 3 of the Offer to Purchase), the signature on
the notice of withdrawal must be guaranteed by an Eligible Institution. If
Shares have been delivered pursuant to the procedures for book-entry transfer as
set forth in Section 3 of the Offer to Purchase, any notice of withdrawal must
also specify the name and number of the account at a the Book-Entry Transfer
Facility to be credited with the withdrawn Shares and otherwise comply with such
Book-Entry Transfer Facilitly'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 3 of
the Offer to Purchase 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 is sole discretion, whose determination
will be final and binding.
The Offer to Purchase and the related Letter of Transmittal and other relevant
materials will be mailed to record holders of Shares and 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.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
Securities Exchange Act of 1934, as amended, is contained in the Offer to
Purchase and is incorporated herein by reference.
THE OFFER TO PURCHASE AND LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION
WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER.
Requests for copies of the Offer to Purchase, the Letter of Transmittal and
other tender offer materials may be directed to the Information Agent as set
forth below, and copies will be furnished promptly at Purchaser's expense.
The Information Agent for the Offer is:
MORROW & CO., INC.
909 Third Avenue
20th Floor
New York, New York 10022
(212) 754-8000
Banks and Brokerage Firms please call:
(800) 662-5200
<PAGE>
TOLL FREE: (800) 566-9061
The Dealer Manager for the Offer is:
J. P. MORGAN & CO.
60 Wall Street
New York, New York 10260
(877) 712-7078
June 19, 1998
<PAGE>
EXHIBIT (C)(1)
AGREEMENT AND PLAN OF MERGER
DATED AS OF JUNE 12, 1998
AMONG
TRIANGLE PACIFIC CORP.,
ARMSTRONG WORLD INDUSTRIES, INC.
AND
SAPLING ACQUISITION, INC.
<PAGE>
LIST OF EXHIBITS
Schedule Title
- -------- -----
1.2(a) Officers and Directors Tendering
5.5(a) Employment Agreements
5.5(b) Severance Plans
5.5(c) Employee Benefit Plans
-i-
<PAGE>
Table of Defined Terms
Definition Location of Definition
- ---------- ----------------------
Acquisition Proposal...........................................Section 5.4
Additional Conditions.......................................Section 1.1(a)
Agreement.........................................................Preamble
Bank Warrants...............................................Section 2.5(b)
Blue Sky Laws............................................Section 3.1(c)(v)
Board of Directors.........................................Section 8.13(b)
Business Day...............................................Section 8.13(c)
Certificate.................................................Section 2.2(b)
Certificate of Merger..........................................Section 1.6
Certificates................................................Section 2.2(b)
Closing........................................................Section 1.5
Closing Date...................................................Section 1.5
Company...........................................................Preamble
Company Benefit Plans....................................Section 3.1(b)(i)
Company Board Approval......................................Section 3.1(f)
Company Common Stock........................................Section 1.1(a)
Company Designees..............................................Section 1.3
Company Disclosure Schedule....................................Section 3.1
Company Material Adverse Effect.............................Section 3.1(a)
Company SEC Reports.........................................Section 3.1(d)
Company Stockholders Meeting................................Section 5.1(a)
Company Stock Options..........................................Section 2.4
Company Termination Fee.....................................Section 7.2(b)
Company Voting Debt.....................................Section 3.1(b)(ii)
Confidentiality Agreement...................................Section 5.2(b)
Credit Agreement..............................................Section 5.10
dated hereof...............................................Section 8.13(a)
D&O Insurance...............................................Section 5.7(b)
DGCL...........................................................Section 1.2
Dissenting Shares..............................................Section 2.3
DOJ.........................................................Section 5.3(b)
Effective Time.................................................Section 1.6
Employment Agreements.......................................Section 5.5(a)
ERISA....................................................Section 3.1(b)(i)
ESJ Warrants................................................Section 2.5(a)
Exchange Act................................................Section 1.1(a)
Expenses.......................................................Section 5.6
Extension Date..............................................Section 1.1(a)
Financial Advisor...........................................Section 3.1(h)
GAAP........................................................Section 3.1(d)
-ii-
<PAGE>
Governmental Entity....................................Section 3.1(c)(iii)
HSR Act..................................................Section 3.1(c)(v)
Indebtedness...............................................Section 8.13(d)
Indemnified Party...........................................Section 5.7(a)
Indenture......................................................Section 5.9
Lien...................................................Section 3.1(b)(iii)
Merger............................................................Recitals
Merger Consideration........................................Section 2.1(c)
Merger Sub........................................................Preamble
Merger Sub Common Stock........................................Section 2.1
Minimum Condition...........................................Section 1.1(a)
Offer.......................................................Section 1.1(a)
Offer Documents.............................................Section 1.1(b)
Offer Price.................................................Section 1.1(a)
Offer to Purchase...........................................Section 1.1(a)
Options..................................................Section 3.1(b)(i)
Parent............................................................Preamble
Parent Disclosure Schedule.....................................Section 3.2
Parent Material Adverse Effect..............................Section 3.2(a)
Paying Agent................................................Section 2.2(a)
Permitted Lien.............................................Section 8.13(g)
Person.....................................................Section 8.13(f)
Preferred Stock.........................................Section 3.1.(b)(i)
Proxy Statement.............................................Section 5.1(b)
Regulatory Law..............................................Section 5.3(b)
Required Company Vote.......................................Section 3.l(g)
Required Consents........................................Section 3.1(c)(v)
Schedule 14D-1..............................................Section 1.1(b)
Schedule 14D-9..............................................Section 1.2(b)
SEC.........................................................Section 1.1(a)
Securities Act...........................................Section 3.1(c)(v)
Share.......................................................Section 1.1(a)
Shares......................................................Section 1.1(a)
Senior Notes...................................................Section 5.9
Stock Tender Agreement.....................................Section 8.13(h)
Subsidiary.................................................Section 8.13(j)
Superior Proposal..............................................Section 5.4
Surviving Corporation..........................................Section 1.4
the other party............................................Section 8.13(e)
Transactions................................................Section 1.2(a)
Trustee........................................................Section 5.9
Violation...............................................Section 3.1(c)(ii)
Warrants....................................................Section 2.5(b)
Warrant Consideration.......................................Section 2.5(c)
-iii-
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 12, 1998 (this
"AGREEMENT"), among TRIANGLE PACIFIC CORP., a Delaware corporation (the
"COMPANY"), ARMSTRONG WORLD INDUSTRIES, INC., a Pennsylvania corporation
("PARENT"), and SAPLING ACQUISITION, INC., a Delaware corporation and a direct
wholly owned subsidiary of Parent ("MERGER SUB").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of the Company, Parent and
Merger Sub have each approved, and deem it advisable and in the best interests
of their respective stockholders to consummate, the acquisition of the Company
by Parent and Merger Sub pursuant to the Offer (as defined herein) and the
merger of Merger Sub with and into the Company (the "MERGER") upon the terms and
subject to the conditions set forth herein; and
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with the
transactions contemplated hereby and also to prescribe various conditions to the
transactions contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
THE OFFER AND MERGER
1.1 THE OFFER. (a) Provided that this Agreement shall not have been
---------
terminated in accordance with Section 7.1 and none of the events set forth in
Annex A hereto (other than the events set forth in clause (g) thereof) shall
have occurred or be continuing, as promptly as practicable (but in no event
later than five business days from the public announcement of the execution
hereof), Merger Sub shall commence (within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")) an offer (the
"OFFER") to purchase for cash all of the issued and outstanding shares of Common
Stock, par value $.01 per share (each a "SHARE" and, collectively, the "SHARES"
or the "COMPANY COMMON STOCK"), of the Company, at a price of $55.50 per Share,
net to the seller in cash (such price, or such higher price per Share as may be
paid in the Offer, the "OFFER PRICE"). Merger Sub shall, on the terms and
subject only to the prior satisfaction or waiver of the conditions of the Offer
set forth in Annex A hereto (except that the Minimum Condition (as defined
herein) may not be waived by Parent or Merger Sub without the consent of the
1
<PAGE>
Company), accept for payment and pay for Shares tendered as soon as it is
legally permitted to do so under applicable law. The obligations of Merger Sub
to accept for payment and to pay for any and all Shares validly tendered on or
before the expiration of the Offer and not withdrawn shall be subject only to
(i) there being validly tendered and not withdrawn before the expiration of the
Offer, that number of Shares which, together with any Shares beneficially owned
by Parent or Merger Sub, represent at least a majority of the Shares outstanding
on a fully diluted basis (the "MINIMUM CONDITION") and (ii) the other conditions
set forth in Annex A hereto (the "ADDITIONAL CONDITIONS" and, together with the
Minimum Condition, the "OFFER CONDITIONS"). The Offer shall be made by means of
an offer to purchase (the "OFFER TO PURCHASE") containing the terms set forth in
this Agreement and the Offer Conditions. Merger Sub shall not amend or waive
the Minimum Condition and shall not decrease the Offer Price or decrease the
number of Shares sought, or amend any other term or condition of the Offer in
any manner adverse to the holders of the Shares or, except as provided in the
next two sentences, extend the expiration date of the Offer without the prior
written consent of the Company. Notwithstanding the foregoing, Merger Sub may,
without the consent of the Company, (i) extend the Offer on one or more
occasions for an aggregate period of not more than 20 days, if at the scheduled
or extended expiration date of the Offer, the Minimum Condition shall not be
satisfied, (ii) extend the Offer from time to time until the earlier to occur of
(x) the satisfaction or waiver of all Offer Conditions or (y) August 31, 1998;
provided, however, that notwithstanding the foregoing, if all Offer Conditions
- -------- -------
other than the HSR Condition (as defined in Annex A hereto) have been satisfied
or waived, Merger Sub may, if such HSR Condition is reasonably capable of being
satisfied, extend the Offer without the consent of the Company until October 31,
1998 (either such date, as applicable, being the "EXTENSION DATE"), if at the
scheduled or extended expiration date of the Offer any of the Offer Conditions
(other than the Minimum Condition) which are reasonably capable of being
satisfied shall not be satisfied or waived, (iii) extend the Offer for any
period required by any rule, regulation, interpretation or position of the
United States Securities and Exchange Commission (the "SEC") or the staff
thereof applicable to the Offer and (iv) extend the Offer on one or more
occasions for an aggregate period of not more than 10 Business Days beyond the
latest expiration date that would otherwise be permitted under clause (i), (ii)
or (iii) of this sentence, if on such expiration date there shall not have been
tendered at least 90% of the outstanding Shares on a fully diluted basis;
provided, however, that if the Offer is extended pursuant to this clause (iv)
- -------- -------
hereof, the conditions to the Offer set forth in clauses (b), (f) or (h) of
Annex A hereto shall be deemed satisfied at all times thereafter.
Notwithstanding the foregoing, if requested by the Company, Merger Sub shall,
and Parent agrees to cause Merger Sub to, extend the Offer from time to time
until the earlier to occur of (x) the satisfaction or waiver of all Offer
Conditions or (y) the Extension Date if, and to the extent that, at the initial
expiration date of the Offer, or any extension thereof, all Offer Conditions
have not been satisfied or waived and all such conditions are reasonably capable
of being satisfied. In addition, the Offer Price may be increased and the Offer
may be extended to the extent required by law in connection with such increase,
in each case without the consent of the Company.
(b) As soon as practicable on the date the Offer is commenced, Parent
and Merger Sub shall file with the SEC a Tender Offer Statement on Schedule 14D-
1 with respect to the Offer (together with all amendments and supplements
thereto and including the
2
<PAGE>
exhibits thereto, the "SCHEDULE 14D-1"). The Schedule 14D-1 will include, as
exhibits, the Offer to Purchase and a form of letter of transmittal and summary
advertisement (collectively, together with any amendments and supplements
thereto, the "OFFER DOCUMENTS"). The Offer Documents will comply in all
material respects with the provisions of applicable federal securities laws and,
on the date filed with the SEC 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 Merger Sub with respect to information supplied by the Company
or any of its stockholders in writing for inclusion or incorporation by
reference in the Offer Documents. Each of Parent and Merger Sub further agrees
to take all steps necessary to cause the Offer Documents to be filed with the
SEC and to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. Each of Parent and
Merger Sub, on the one hand, and the Company, on the other hand, agrees promptly
to correct any information provided by it for use in the Offer Documents if and
to the extent that it shall have become false or misleading in any material
respect, and Merger Sub further agrees to take all steps necessary to cause the
Offer Documents as so corrected to be filed with the SEC and to be disseminated
to holders of Shares, in each case as and to the extent required by applicable
federal securities laws. The Company and its counsel shall be given a
reasonable opportunity to review the initial Schedule 14D-1 before it is filed
with the SEC. In addition, Parent and Merger Sub agree to provide the Company
and its counsel in writing with any comments or other communications that
Parent, Merger Sub or their counsel may receive from time to time from the SEC
or its staff with respect to the Offer Documents promptly after the receipt of
such comments or other communications.
(c) Parent shall provide or cause to be provided to Merger Sub all of
the funds necessary to purchase any shares of Company Common Stock that Merger
Sub becomes obligated to purchase pursuant to the Offer.
(d) Upon the consummation of the Offer, Parent agrees to make a loan
to the Company, on commercially reasonable terms, in an amount sufficient for
the Company to make payments to holders of Company Stock Options as set forth in
Section 2.4 hereof, or, if such amount cannot be borrowed by the Company for any
reason, to contribute such amount to the Company.
1.2 COMPANY ACTIONS. (a) The Company hereby approves of and
---------------
consents to the Offer and represents that the Board of Directors (as defined in
Section 8.13(b)), at a meeting duly called and held, has duly and unanimously
(i) approved this Agreement and the transactions contemplated hereby, including
the Offer and the Merger (as defined in the Recitals hereto) (collectively, the
"TRANSACTIONS") and (ii) determined, as of the date of such resolutions, that
the terms of the Offer and the Merger are fair to, and in the best interests of
the Company's stockholders, and resolved to recommend that the stockholders of
the Company accept the Offer, tender their Shares thereunder to Merger Sub and
approve and adopt this Agreement and the Merger (if required) and (iv) taken all
necessary steps to render Section 203 of the Delaware General Corporation Law
(the "DGCL") inapplicable to the Merger (it being understood that
3
<PAGE>
(x) nothing in this Agreement shall prevent or prohibit the Company from
complying with Rule 14d-9 and Rule 14(e)(2) under the Exchange Act with respect
to an Acquisition Proposal and (y) such recommendation may be withdrawn,
modified or amended as provided in Section 5.4 hereof). The Company has been
advised by each of its directors and executive officers listed on Schedule
--------
1.2(a) annexed hereto that each such person currently intends to tender all
- ------
Shares beneficially owned by such person pursuant to the Offer.
(b) As promptly as practicable following the commencement of the Offer
and in all events not later than 10 business days following such commencement,
the Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all amendments and supplements thereto and
including the exhibits thereto, the "SCHEDULE 14D-9") which shall, subject to
the provisions of this Agreement, contain the recommendation referred to in
clause (ii) of Section 1.2(a) hereof. The Schedule 14D-9 will comply in all
material respects with the provisions of applicable federal securities laws and,
on the date filed with the SEC 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 the Company with respect to information supplied by Parent or Merger Sub
in writing for inclusion in the Schedule 14D-9. The Company further agrees to
take all steps necessary to amend or supplement the Schedule 14D-9 and to cause
the Schedule 14D-9 to be filed with the SEC and to be disseminated to holders of
Shares, in each case as and to the extent required by applicable federal
securities laws. Each of the Company, on the one hand, and Parent and Merger
Sub, on the other hand, agrees promptly to correct any information provided by
it for use in the Schedule 14D-9 if and to the extent that it shall have become
false or misleading in any material respect, and the Company further agrees to
take all steps necessary to cause the Schedule 14D-9 as corrected to be filed
with the SEC and to be disseminated to holders of the Shares, 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 the initial
Schedule 14D-9 before it is filed with the SEC. In addition, the Company agrees
to provide Parent, Merger Sub and their counsel in writing with any comments or
other communications that the Company or its counsel may receive from time to
time from the SEC or its staff with respect to the Schedule 14D-9 promptly after
the receipt of such comments or other communications.
(c) In connection with the Offer and the Merger, the Company will
promptly furnish or cause to be furnished to Merger Sub mailing labels, security
position listings and any available listing or computer file containing the
names and addresses of the record holders of the Shares as of a recent date, and
shall furnish Merger Sub with such additional information (including updated
lists of holders of Shares and their addresses, mailing labels and lists of
security positions) and such other assistance as Merger Sub or its agents may
reasonably request in communicating the Offer to the record and beneficial
stockholders of the Company. Except for such steps as are necessary to
disseminate the Offer Documents and as required by applicable law, each of
Parent and Merger Sub shall hold in confidence the information contained in any
of such labels and lists and the additional information referred to in the
4
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preceding sentence, will use such information only in connection with the Offer
and the Merger, and, if this Agreement is terminated, will upon request of the
Company deliver, and use its reasonable best efforts to cause its agents and
representatives to deliver to the Company all copies of such information then in
its possession or the possession of its agents or representatives.
1.3 DIRECTORS. (a) Promptly upon the purchase of and payment
---------
for Shares by Parent or any of its Subsidiaries (as defined in Section 8.13(j))
pursuant to the Offer, Parent shall be entitled to designate such number of
directors, rounded up to the next whole number, on the Board of Directors of the
Company as is equal to the product of the total number of directors on such
Board (giving effect to the directors designated by Parent pursuant to this
sentence) multiplied by the percentage that the aggregate number of Shares
beneficially owned by Merger Sub, Parent and any of their affiliates bears to
the total number of shares of Company Common Stock then outstanding. The
Company shall, upon request of Merger Sub take any and all actions within the
Company's power which are necessary to cause Parent's designees to be appointed
to the Board of Directors (including by increasing the size of the Board of
Directors or using its best efforts to cause incumbent directors to resign). At
such time, the Company shall use its best efforts to cause persons designated by
Parent to constitute the same percentage of each committee of the Board of
Directors, each board of directors of each Subsidiary and each committee of each
such board as such persons represent on the Board of Directors. Notwithstanding
the foregoing, until the Effective Time (as defined in Section 1.6 hereof), the
Company shall retain as members of its Board of Directors at least two directors
who are directors of the Company on the date hereof (the "COMPANY DESIGNEES").
The Company's obligations under this Section 1.3(a) shall be subject to Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. The Company
shall promptly take all actions required pursuant to such Section 14(f) and Rule
14f-1 in order to fulfill its obligations under this Section 1.3(a), including
mailing to stockholders the information required to by such Section 14(f) and
Rule 14f-1 as is necessary to enable Parent's designees to be elected to the
Company's Board of Directors. Parent or Merger Sub will supply the Company any
information with respect to either of them and their nominees, officers,
directors and affiliates required by such Section 14(f) and Rule 14f-1.
(b) From and after the time, if any, that Parent's designees
constitute a majority of the Board of Directors and until the Effective Time any
amendment of this Agreement, any termination of this Agreement by the Company,
any extension of time for performance of any of the obligations of Parent of
Merger Sub hereunder, any waiver of any condition or any of the Company's rights
hereunder or other action by the Company hereunder may be effected only by the
action of a majority of the directors of the Company then in office who are
Company Designees, which action shall be deemed to constitute the action of the
full Board of Directors; provided, that if there shall be no such directors
(other than in breach hereof), such actions may be effected by unanimous vote of
the entire Board of Directors of the Company.
1.4 THE MERGER. Upon the terms and subject to the conditions set
----------
forth in this Agreement, and in accordance with the Delaware General Corporation
Law (the "DGCL"),
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Merger Sub shall be merged with and into the Company at the Effective Time.
Following the Merger, the separate corporate existence of Merger Sub shall
cease, and the Company shall continue as the surviving corporation (the
"SURVIVING CORPORATION") under the name "Triangle Pacific Corp."
1.5 CLOSING. The closing of the Merger (the "CLOSING") will take
-------
place on the fifth Business Day after the satisfaction or waiver (subject to
applicable law) of the conditions (excluding conditions that, by their terms,
cannot be satisfied until the Closing Date) set forth in Article VI (the
"CLOSING DATE"), unless another time or date is agreed to in writing by the
parties hereto. The Closing shall be held at the offices of O'Melveny & Myers
LLP, 153 East 53rd Street, New York, NY 10022, unless another place is agreed to
in writing by the parties hereto.
1.6 EFFECTIVE TIME. As soon as practicable following the Closing,
--------------
the parties shall (i) file a certificate of merger (the "CERTIFICATE OF MERGER")
in such form as is required by and executed in accordance with the relevant
provisions of the DGCL and (ii) make all other filings or recordings required
under the DGCL. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Delaware Secretary of State or at
such subsequent time as the Company and Parent shall agree and be specified in
the Certificate of Merger (the date and time the Merger becomes effective being
the "EFFECTIVE TIME").
1.7 EFFECTS OF THE MERGER. At and after the Effective Time, the
---------------------
Merger will have the effects set forth in the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all the
property, rights, privileges, powers and franchises of the Company and Merger
Sub shall be vested in the Surviving Corporation, and all debts, liabilities and
duties of the Company and Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation.
1.8 CERTIFICATE OF INCORPORATION. The certificate of incorporation
----------------------------
of the Company, as in effect immediately before the Effective Time, shall be the
certificate of incorporation of the Surviving Corporation, until thereafter
changed or amended as provided therein or by applicable law.
1.9 BYLAWS. The bylaws of the Company as in effect at the Effective
------
Time shall be the bylaws of the Surviving Corporation until thereafter changed
or amended as provided therein or by applicable law.
1.10 OFFICERS AND DIRECTORS OF SURVIVING CORPORATION. The officers of
-----------------------------------------------
the Company as of the Effective Time shall be the officers of the Surviving
Corporation, until the earlier of their resignation or removal or otherwise
ceasing to be an officer or until their respective successors are duly elected
and qualified, as the case may be. The directors of Merger Sub as of the
Effective Time shall be the directors of the Surviving Corporation until the
earlier of their resignation or removal or otherwise ceasing to be a director or
until their respective successors are duly elected and qualified.
6
<PAGE>
1.11 VOTE TO APPROVE MERGER. Parent agrees that it will vote, or
----------------------
cause to be voted, all of the Shares then owned by it, Merger Sub or any of its
other Subsidiaries and affiliates in favor of the approval of the Merger and the
adoption of this Agreement.
1.12 MERGER WITHOUT MEETING OF STOCKHOLDERS. If permitted by the
--------------------------------------
DGCL, in the event that Parent, Merger Sub or any other Subsidiary of Parent
shall acquire at least 90% of the outstanding shares of each class of capital
stock of the Company, pursuant to the Offer or otherwise, the parties hereto
agree to take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after such acquisition, without a meeting of
stockholders of the Company.
ARTICLE II
CONVERSION OF SECURITIES
2.1 CONVERSION OF CAPITAL STOCK. As of the Effective Time, by virtue
---------------------------
of the Merger and without any action on the part of the holders of any shares of
Company Common Stock or common stock of Merger Sub (the "MERGER SUB COMMON
STOCK"):
(a) Merger Sub Common Stock. Each issued and outstanding share of
-----------------------
Merger Sub Common Stock shall be converted into and become one fully paid and
nonassessable share of common stock, par value $.01 per share, of the Surviving
Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each share
-----------------------------------------------------
of Company Common Stock owned by the Company or any Subsidiary of the Company
and each share of Company Common Stock owned by Parent, Merger Sub or any other
wholly owned Subsidiary of Parent shall be cancelled and retired and shall cease
to exist and no consideration shall be delivered in exchange therefor.
(c) Exchange of Shares. Each issued and outstanding share of Company
------------------
Common Stock (other than Shares to be cancelled in accordance with Section
2.1(b) hereof and any Dissenting Shares (as defined in Section 2.3 hereof, if
applicable)), shall be converted into the right to receive the Offer Price,
payable to the holder thereof, without interest (the "MERGER CONSIDERATION"),
upon surrender of the certificate formerly representing such share of Company
Common Stock in the manner provided in Section 2.2 hereof. All such shares of
Company Common Stock, when so converted, shall no longer be outstanding and
shall automatically be cancelled and retired and shall cease to exist, and each
holder of a certificate representing any such shares shall cease to have any
rights with respect thereto, except the right to receive the Merger
Consideration therefor upon the surrender of such certificate in accordance with
Section 2.2 hereof, without interest, or to perfect any rights of appraisal as a
holder of Dissenting Shares that such holder may have pursuant to Section 262 of
the DGCL.
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<PAGE>
2.2 EXCHANGE OF CERTIFICATES.
------------------------
(a) Paying Agent. Parent shall designate a bank or trust company
------------
reasonably acceptable to the Company to act as agent in order for the holders of
shares of Company Common Stock and the holders of Warrants in connection with
the Merger (the "PAYING AGENT") to receive the funds to which all such holders
shall become entitled pursuant to Section 2.1(c) or 2.5 hereof. Before the
Effective Time, Parent shall deposit or cause to be deposited with the Paying
Agent such funds for timely payment hereunder. Such funds shall be invested by
the Paying Agent as directed by Parent or the Surviving Corporation.
(b) Exchange Procedures. Parent shall instruct the Paying Agent to,
-------------------
as soon as reasonably practicable after the Effective Time but in no event more
than three business days thereafter, mail to each holder of record of a
certificate, which immediately before the Effective Time represented outstanding
shares of Company Common Stock (a "CERTIFICATE," or, collectively, the
"CERTIFICATES"), whose shares were converted pursuant to Section 2.1 hereto into
the right to receive the Merger Consideration (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent and shall be in such form and have such other provisions as Parent may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for payment of the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Paying Agent or to such other
agent or agents as may be appointed by Parent, together with such letter of
transmittal, duly executed, the holder of such Certificate shall be entitled to
receive in exchange therefor the Merger Consideration payable for each share of
Company Common Stock formerly represented by such Certificate and the
Certificate so surrendered shall forthwith be cancelled. If payment of the
Merger Consideration is to be made to a person other than the person in whose
name the surrendered Certificate is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed or shall
be otherwise in proper form for transfer and that the person requesting such
payment shall have paid any transfer and other taxes required by reason of the
payment of the Merger Consideration to a person other than the registered holder
of the Certificate surrendered or shall have established to the satisfaction of
the Surviving Corporation that such tax either has been paid or is not
applicable. Until surrendered as contemplated by this Section 2.2, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive the Merger Consideration in cash as contemplated by
this Section 2.2. No interest will be paid or accrue on the cash payable upon
the surrender of any Certificate.
(c) Transfer Books; No Further Ownership Rights in Company Common
-------------------------------------------------------------
Stock. At the Effective Time, the stock transfer books of the Company shall be
- -----
closed and thereafter there shall be no further registration of transfers of
shares of Company Common Stock on the records of the Company. From and after
the Effective Time, the holders of Certificates evidencing ownership of shares
of Company Common Stock outstanding immediately before the Effective Time shall
cease to have any rights with respect to such Shares, except as otherwise
provided for herein or by applicable law. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be cancelled and exchanged as provided in this Article II.
8
<PAGE>
(d) Termination of Fund; No Liability. At any time following one year
---------------------------------
after the Effective Time, the Surviving Corporation shall be entitled to require
the Paying Agent to deliver to it any funds (including any interest received
with respect thereto) which had been made available to the Paying Agent and
which have not been disbursed to holders of Certificates, and thereafter such
holders shall be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) only as general creditors
thereof with respect to the Merger Consideration payable upon due surrender of
their Certificates, without any interest thereon. Notwithstanding the
foregoing, neither the Surviving Corporation nor the Paying Agent shall be
liable to any holder of a Certificate for Merger Consideration delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
2.3 DISSENTING SHARES. Notwithstanding anything in this Agreement to
-----------------
the contrary, Shares outstanding immediately before the Effective Time and held
by a holder who has not voted in favor of the Merger or consented thereto in
writing and who has demanded appraisal for such Shares in accordance with the
DGCL ("DISSENTING SHARES") shall not be converted into a right to receive the
Merger Consideration, unless such holder fails to perfect or withdraws or
otherwise loses his or her right to appraisal. A holder of Dissenting Shares
shall be entitled to receive payment of the appraised value of such Shares held
by him or her in accordance with the provisions of Section 262 of the DGCL,
unless, after the Effective Time, such holder fails to perfect or withdraws or
loses his or her right to appraisal, in which case such Shares shall be treated
as if they had been converted as of the Effective Time into a right to receive
the Merger Consideration, without interest thereon. The Company shall give
Parent (i) prompt notice of any demands for appraisal of Shares received by the
Company and (ii) the opportunity to participate in and direct all negotiations
and proceedings with respect to any such demands. The Company shall not,
without the prior written consent of Parent, make any payment with respect to,
or settle, offer to settle or otherwise negotiate, any such demands.
2.4 COMPANY OPTION PLANS.
--------------------
(a) All outstanding options to purchase Company Common Stock held by
all current and former employees and directors of the Company ("COMPANY STOCK
OPTIONS") granted to such employees and directors under any Company Benefit Plan
(as defined in Section 3.1(b)(i)), whether or not then exercisable, shall be
made fully vested and exercisable and canceled by the Company immediately before
the earlier of (x) the consummation of the Offer or (y) the Effective Time, and
thereafter, the holders' sole right shall be to, and the holders thereof shall,
receive from the Company, for each Share subject to such Company Stock Option,
an amount in cash equal to the difference between the Offer Price and the
exercise price per share of such Company Stock Option, which amount shall be
paid by the Company at the time such Company Stock Option is canceled. The
Company will use its best efforts to obtain any necessary consents and make any
amendments to the terms of the Company Benefit Plans to the extent such consents
or amendments are necessary to give effect to the foregoing. All applicable
withholding taxes attributable to the payments made hereunder shall be deducted
from the amounts payable under this Section 2.4.
9
<PAGE>
(b) Prior to the Effective Time, the Company's employee stock benefit
plans shall be terminated and the provisions in any other Company Benefit Plan
providing for the issuance or grant of any other interest in respect of the
capital stock of the Company or any Subsidiary shall be deleted. The Company
shall take all actions necessary to ensure that following the Effective Time no
holder of a Company Stock Option or any participant in any Company Benefit Plan
shall have the right thereunder to acquire any capital stock of the Company,
Parent, the Surviving Corporation or any of their respective Subsidiaries,
except as provided in this Section 2.4.
2.5 WARRANTS.
--------
(a) In accordance with the terms of the ESJ Exchange Agreement dated
as of June 5, 1992 among the ESJ Entities, TPC Holding Corp. and the Company and
the warrant certificates issued thereunder (the "Warrant Certificates"), all
outstanding warrants of the Company issued pursuant thereto (the "ESJ WARRANTS")
(other than ESJ Warrants owned by Parent, Merger Sub or any other direct or
indirect subsidiary of Parent, which ESJ Warrants shall be canceled and
extinguished at the Effective Time, with no payment being made with respect to
such ESJ Warrants) shall, following the Effective Time, be exercisable only for
an amount of cash equal to the Offer Price and the holders of such ESJ Warrants
shall be entitled to receive, upon surrender to the Paying Agent of the warrant
certificates for cancellation, cash in an amount equal to the Warrant
Consideration. The Company shall take all actions necessary to ensure that
following the Effective Time (i) the ESJ Warrants shall represent only the right
to receive the Warrant Consideration in lieu of Shares issuable upon exercise
thereof, (ii) all warrant agreements shall be terminated and cancelled and
(iii) no party to such warrant agreements shall have the right to acquire any
capital stock of the Company, Parent, the Surviving Corporation or any of their
respective subsidiaries.
(b) In accordance with the terms of the Lenders' Equity Agreement
dated as of June 5, 1992 between the Company and certain banks and other
financial institutions (the "Banks"), the Banks hold certain rights (the "BANK
WARRANTS" and, collectively with the ESJ Warrants, the "WARRANTS") entitling
them to receive an aggregate of 4,858 Shares (upon payment of $.01 per Share)
upon the exercise of the ESJ Warrants by the holders thereof. The Company
agrees to use its best efforts to (i) obtain, prior to the Effective Time,
consents or waivers from each Bank whereby such Bank agrees to receive the
Warrant Consideration in lieu of Shares issuable upon the exercise of the Bank
Warrants and (ii) ensure that following the Effective Times (x) the Bank
Warrants shall represent only the right to receive cash in an amount equal to
the per share Offer Price less $.01 per share, (y) the Lenders' Equity Agreement
shall be terminated and cancelled and (z) no party to such Lenders' Equity
Agreement shall have the right to acquire any capital stock of the Company,
Parent, the Surviving Corporation or any of their respective Subsidiaries..
(c) As used herein "WARRANT CONSIDERATION" shall mean an amount per
Warrant equal to the product of (i) the number of Shares issuable upon exercise
of such Warrant and (ii) the difference between the Offer Price and the per
Share exercise price per Warrant, without interest, which amount shall be paid
from and after the Effective Time.
10
<PAGE>
2.6 LOST CERTIFICATES. If any Certificate or Warrant Certificate
-----------------
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the Person claiming such Certificate or Warrant Certificate to be
lost, stolen or destroyed and, if required by the Surviving Corporation, the
posting by such Person of a bond in such reasonable amount as the Surviving
Corporation may direct as indemnity against any claim that may be made against
it with respect to such Certificate or Warrant Certificate, the Paying Agent
will deliver in exchange for such lost, stolen or destroyed Certificate or
Warrant Certificate the applicable Merger Consideration or Warrant
Consideration, as the case may be, with respect to the shares of Company Common
Stock or Warrants formerly represented thereby.
2.7 WITHHOLDING RIGHTS. Each of the Surviving Corporation and Parent
------------------
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of shares of Company Common
Stock or Warrants such amounts as it is required to deduct and withhold with
respect to the making of such payment under the Internal Revenue Code of 1986,
as amended, and the regulations promulgated thereunder and the rules and
regulations promulgated thereunder, or any provision of state, local or foreign
tax law. To the extent that amounts are so withheld by the Surviving Corporation
or Parent, as the case may be, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the shares of
Company Common Stock or Warrants in respect of which such deduction and
withholding was made by the Surviving Corporation or Parent, as the case may be.
2.8 FURTHER ASSURANCES. At and after the Effective Time, the
------------------
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger Sub, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Merger Sub, any other actions and things to
vest, perfect or confirm of record or otherwise in the Surviving Corporation any
and all right, title and interest in, to and under any of the rights, properties
or assets acquired or to be acquired by the Surviving Corporation as a result
of, or in connection with, the Merger.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set
---------------------------------------------
forth in the Company SEC Reports (as defined in Section 3.1(d)) filed prior to
the date hereof or in the Company Disclosure Schedule delivered by the Company
to Parent before the execution of this Agreement (the "COMPANY DISCLOSURE
SCHEDULE"), the Company represents and warrants to Parent and Merger Sub as
follows:
(a) Organization, Standing and Power. Each of the Company and its
--------------------------------
Subsidiaries (1) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, (2) has all necessary power
and authority required to own, lease, license or use its assets and properties
now owned, leased, licensed or used and to carry on its
11
<PAGE>
business as now conducted and (3) is duly qualified as a foreign corporation,
limited liability company or limited partnership, as the case may be, under the
laws of each jurisdiction in which qualification is required either to own,
lease, license or use its properties now owned, leased, licensed and used or to
carry on its business as now conducted, except where the failure to effect or
obtain such qualification, individually or in the aggregate, would not
constitute a Company Material Adverse Effect. "COMPANY MATERIAL ADVERSE EFFECT"
means, with respect to the Company, any adverse change, circumstance or effect
that is reasonably likely to be materially adverse to the business, financial
condition or results of operations of the Company and its Subsidiaries taken as
a whole or on transactions contemplated hereby, other than any change,
circumstance or effect (i) relating to the economy or securities markets in
general, (ii) relating to the industries in which the Company operates and not
specifically relating to the Company or (iii) resulting from the execution of
this Agreement, the announcement of this Agreement and the Transactions
contemplated hereby or any change in the value of the Company relating to such
execution or announcement. The copies of the certificate of incorporation and
bylaws of the Company, which were previously furnished to Parent, are complete
copies of such documents as in effect on the date of this Agreement.
(b) Capital Structure.
-----------------
(i) The authorized capital stock of the Company consists solely
of 30,000,000 shares of Company Common Stock and 10,000,000 shares of
preferred stock, par value $.01 per share (the "PREFERRED STOCK"). As of
June 9, 1998, 14,766,575 shares of Company Common Stock were issued and
outstanding, no shares of Preferred Stock were issued and outstanding, no
shares of capital stock were held in the treasury of the Company and
2,510,021 shares of Company Common Stock were reserved for issuance
pursuant to the Company Benefit Plans and Warrants of the Company. Since
such date, there have been no issuances of shares of the capital stock of
the Company or any other securities of the Company other than issuances of
shares pursuant to options or rights outstanding as of such date under the
Company Benefit Plans. All issued and outstanding shares of the capital
stock of the Company are and all shares reserved for issuance will be, when
issued in accordance with the terms specified in the commitments or
agreements pursuant to which they are issuable, duly authorized, validly
issued, fully paid and nonassessable, and no class of capital stock is
entitled to preemptive rights. As of June 9, 1998 except for (i) options
representing in the aggregate the right to purchase 1,375,414 shares of
Company Common Stock under the Company Benefit Plans and (ii) 809,014
Warrants validly issued and currently exercisable for 809,014 shares of
Company Common Stock in the aggregate, there were no, and at the Effective
Time (except pursuant to this Agreement) there will not be any, outstanding
securities, options, subscriptions, warrants, calls, rights (including
"phantom" stock rights), preemptive rights or other contracts, commitments,
understandings or arrangements, including any right of conversion or
exchange under any outstanding security, instrument or agreement (together,
"OPTIONS") obligating the Company or any of its Subsidiaries to issue,
deliver or sell or cause to be issued, delivered or sold any shares of
capital stock of the Company or to issue, grant, extend or enter into any
Option with respect thereto or to repurchase, redeem or otherwise acquire
any share of capital stock of the Company. The
12
<PAGE>
Company is not a party to any voting agreement with respect to the voting
of any of its securities. "COMPANY BENEFIT PLANS" means each employee
benefit plan, program, arrangement and contract (including but not limited
to any "employee benefit plan," as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") , whether or
not subject to ERISA and any bonus, deferred compensation, incentive, stock
appreciation right, phantom stock, stock bonus, stock purchase, restricted
stock, stock option, employment, termination, stay agreement or bonus,
change in control, severance or other compensatory plan, program,
arrangement and contract) all of the foregoing in effect on the date of
this Agreement and, in the case of a Company Benefit Plan which is subject
to Part 3 of Title I of ERISA, Section 412 of the Code or Title IV of
ERISA, at any time during the five-year period preceding the date of this
Agreement, to which the Company is a party, which is maintained or
contributed to by the Company or a Subsidiary, or with respect to which the
Company could incur material liability or which otherwise benefits any
employees and directors of the Company or its Subsidiaries. No options or
warrants or other rights to acquire capital stock from the Company have
been issued or granted since June 9, 1998.
(ii) No bonds, debentures, notes or other indebtedness of the
Company having the right to vote (or convertible or exchangeable into or
exercisable for securities having the right to vote) on matters on which
stockholders of the Company or any of its Subsidiaries may vote ("COMPANY
VOTING DEBT") are authorized, issued or outstanding.
(iii) All of the outstanding shares of capital stock of each
Subsidiary of the Company are duly authorized, validly issued, fully paid
and nonassessable and are owned, beneficially and of record, by the Company
or a Subsidiary wholly-owned, directly or indirectly, by the Company, free
and clear of any liens, claims, mortgages, encumbrances, pledges, security
interests, equities and charges of any kind (each, a "LIEN"), other than
Permitted Liens described in clauses (i) and (ii) of the definition
thereof. Except for interests in its Subsidiaries, neither the Company nor
any of its Subsidiaries owns directly or indirectly any interest or
investment (whether equity or debt) in any corporation, partnership, joint
venture, limited liability company, trust or other entity. There are no
outstanding Options obligating the Company or any of its Subsidiaries to
issue, deliver or sell or cause to be issued, delivered or sold any shares
of capital stock of any Subsidiary of the Company or to issue, grant,
extend or enter into any Option with respect thereto, or to repurchase,
redeem or otherwise acquire any shares of capital stock of any Subsidiary
of the Company.
(c) Authority; No Conflicts.
-----------------------
(i) The Company has all requisite corporate power and authority
to enter into this Agreement and to consummate the Transactions
contemplated hereby, subject in the case of the consummation of the Merger
to the adoption of this Agreement by the Required Company Vote (as defined
in Section 3.1(g)), if required by law. The execution and delivery of this
Agreement and the consummation of the Transactions contemplated hereby have
been duly authorized by all necessary corporate action on the
13
<PAGE>
part of the Company, subject in the case of the consummation of the Merger
to the adoption of this Agreement by the Required Company Vote. This
Agreement has been duly executed and delivered by the Company and
constitutes a valid and binding agreement of the Company, enforceable
against it in accordance with its terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium and
similar laws relating to or affecting creditors generally, by general
equity principles (regardless of whether such enforceability is considered
in a proceeding in equity or at law).
(ii) The execution and delivery of this Agreement does not and
the consummation of the Merger and the other Transactions contemplated
hereby will not conflict with, result in any violation of, constitute a
default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, amendment, cancellation or acceleration of
any obligation or the loss of a material benefit under, or the creation of
a Lien on any assets of the Company or any of its Subsidiaries (any such
conflict, violation, default, right of termination, amendment, cancellation
or acceleration, loss or creation, a "VIOLATION") pursuant to: (A) any
provision of the certificate of incorporation or bylaws of the Company or
any of its Subsidiaries, or (B) except as would not, individually or in the
aggregate, constitute a Company Material Adverse Effect and, subject to
obtaining or making the Required Consents (as defined in Section
3.1(c)(iv)), any loan or credit agreement, note, mortgage, bond, indenture,
lease, benefit plan or other agreement, obligation, instrument, permit,
franchise, license, judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to the Company or any Subsidiary of the Company or
their respective properties or assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any national, state, municipal or
local government, any instrumentality, subdivision, court, administrative
agency or commission or other authority thereof, or any quasi-governmental
or private body exercising any regulatory, taxing, importing or other
governmental or quasi-governmental authority (a "GOVERNMENTAL ENTITY"), is
required by or with respect to the Company or any of its Subsidiaries in
connection with the execution and delivery of this Agreement by the Company
or the consummation of the Merger and the other Transactions contemplated
hereby, except for the Required Consents and such other consents,
approvals, orders, authorizations, registrations, declarations and filings
the failure of which to make or obtain would not, individually or in the
aggregate, constitute a Company Material Adverse Effect.
(iv) The Company and its Subsidiaries are not in violation of any
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or any Subsidiary of the Company or their
respective properties or assets except for violations which, individually
or in the aggregate, do not constitute a Company Material Adverse Effect.
14
<PAGE>
(v) As used herein, "REQUIRED CONSENTS" shall mean consents,
approvals, orders, authorizations, registrations, declarations and filings
required under or in relation to (A) the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR ACT"), (B) state securities
or "blue sky" laws (the "BLUE SKY LAWS"), (C) the Securities Act of 1933,
as amended (the "SECURITIES ACT"), (D) the Exchange Act, (E) the filing of
the Certificate of Merger under the DGCL, (F) rules and regulations of
NASDAQ, (G) antitrust or other competition laws of other jurisdictions and
(H) consents set forth on the Company Disclosure Schedule.
(d) Reports and Financial Statements. The Company and each of its
--------------------------------
wholly owned Subsidiaries required to file reports under Sections 13 or 15(d) of
the Exchange Act has filed all required reports, schedules, forms, statements
and other documents required to be filed by it with the SEC since January 1,
1995 (collectively, including all exhibits thereto, and together with such other
reports, schedules, forms, statements and other documents, filed by the Company
or any Subsidiary with the SEC under the Exchange Act and the Securities Act,
including all exhibits thereto, the "COMPANY SEC REPORTS"). None of the Company
SEC Reports, as of their respective dates, contained or will contain any untrue
statement of a material fact or omitted or will omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. Each of
the financial statements (including the related notes) included in the Company
SEC Reports presents fairly, in all material respects, the consolidated
financial position and consolidated results of operations and cash flows of the
Company and its Subsidiaries as of the respective dates or for the respective
periods set forth therein, and were prepared in conformity with United States
generally accepted accounting principles ("GAAP") consistently applied during
the periods involved except as otherwise noted therein, and subject, in the case
of the unaudited interim financial statements, to normal and recurring year-end
adjustments that have not been and are not expected to be material in amount.
All of the Company SEC Reports, as of their respective dates (and as of the date
of any amendment to the respective Company SEC Report), complied as to form in
all material respects with the applicable requirements of the Securities Act and
the Exchange Act and the rules and regulations promulgated thereunder. Except
for matters reflected or reserved against in the balance sheet for the period
ended April 3, 1998 included in the financial statements contained in the
Company's most recent Form 10-Q, neither the Company nor any of its Subsidiaries
has incurred since that date any liabilities or obligations of any nature
(whether accrued, absolute, contingent, fixed or otherwise) which would be
required under GAAP to be set forth on a consolidated balance sheet of the
Company and its consolidated Subsidiaries, except liabilities and obligations
which were incurred in the ordinary course of business consistent with past
practice since such date.
(e) Information Supplied.
--------------------
(i) None of the information supplied or to be supplied by the
Company for inclusion or incorporation by reference in the Offer Documents,
the Schedule 14D-9 or the Proxy Statement, if required, including any
amendments or supplements thereto, will, at the respective times the Offer
Documents, the Schedule 14D-9 and the Proxy
15
<PAGE>
Statement, as the case may be, are filed with the SEC or first published,
sent or given to the Company's stockholders or at the time of the Company
Stockholders Meeting contain any untrue statement of 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 false or misleading. The Schedule 14D-9 and the
Proxy Statement, if required, will comply as to form in all material
respects with the requirements of the Exchange Act and the Securities Act
and the rules and regulations thereunder.
(ii) Notwithstanding the foregoing provisions of this Section
3.1(e), no representation or warranty is made by the Company with respect
to statements made or incorporated by reference in the Offer Documents, the
Schedule 14D-9 or, if required, the Proxy Statement based on information
supplied by Parent for inclusion or incorporation by reference therein.
(f) Board Approval. The Board of Directors of the Company, by
--------------
resolutions duly adopted at a meeting duly called and held and not subsequently
rescinded or modified (the "COMPANY BOARD APPROVAL"), has duly and unanimously
(i) determined that this Agreement and the terms of the Offer and the Merger are
fair to, in the best interests of the Company and its stockholders, (ii)
approved this Agreement, the Offer and the Merger, (iii) determined to recommend
that the stockholders of the Company accept the Offer, tender their Shares
thereunder to Merger Sub and approve and adopt this Agreement and the
Transactions, and (iv) approved the transactions contemplated by the Stock
Tender Agreement prior to the execution and delivery of such Stock Tender
Agreement and this Agreement. The Company Board Approval constitutes approval
by and on behalf of the Company of this Agreement and the Merger for purposes of
Section 251 of the DGCL and Section 203 of the DGCL and the provisions of
Section 203 of the DGCL will not, before the termination of this Agreement,
apply to this Agreement, the Offer, the Merger or the other transactions
contemplated hereby.
(g) Vote Required. The affirmative vote of the holders of a majority
-------------
of the outstanding shares of Company Common Stock, voting together as a single
class, to approve the Merger (the "REQUIRED COMPANY VOTE"), if required by
applicable law, is the only vote of the holders of any class or series of the
Company capital stock or Company Voting Debt necessary to adopt this Agreement
and approve the Transactions contemplated hereby.
(h) Brokers or Finders. No agent, broker, investment banker,
------------------
financial advisor or other firm or Person is or will be entitled to any broker's
or finder's fee or any other similar commission or fee in connection with any of
the Transactions contemplated by this Agreement, except Salomon Smith Barney
(the "FINANCIAL ADVISOR"), whose fees and expenses will be paid by the Company
in accordance with the Company's agreement with such firm, which has been
disclosed to Parent.
(i) Opinion of the Financial Advisor. The Company has received the
--------------------------------
opinion of the Financial Advisor, dated the date hereof, to the effect that, as
of such date, the Offer Price and the Merger Consideration is fair, from a
financial point of view, to the holders of
16
<PAGE>
Company Common Stock, a true and complete copy of which has been delivered to
Parent prior to the execution of this Agreement.
(j) Absence of Certain Changes or Events. Except for the process
------------------------------------
culminating in the execution of this Agreement and as contemplated by this
Agreement, since January 2, 1998 (i) there has not been any change, event or
development constituting, individually or in the aggregate, a Company Material
Adverse Effect; (ii) the businesses of the Company and its Subsidiaries have
been conducted only in the ordinary course consistent with past practice; (iii)
the Company has not set aside or declared any dividend or other distribution
with respect to its capital stock; and (iv) the Company has not changed, in any
material way, its accounting principles, practices or methods.
(k) Title to Properties; Entire Business. The Company and its
------------------------------------
Subsidiaries have good title or a valid and subsisting leasehold interest in and
to or a valid and enforceable license to use all material assets, properties and
rights owned, used or held for use by them in the conduct of their respective
businesses, in each case, free and clear of any Liens other than Permitted
Liens. The Company and its Subsidiaries own or have sufficient right to use all
assets and properties necessary to conduct their businesses in the manner in
which they are currently conducted.
(l) Litigation. As of the date hereof, there is no suit, action or
----------
proceeding pending or, to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries that, individually or in the aggregate,
constitutes a Company Material Adverse Effect.
3.2 REPRESENTATIONS AND WARRANTIES OF PARENT. Except as set forth in
----------------------------------------
the Parent Disclosure Schedule delivered by Parent to the Company before the
execution of this Agreement (the "PARENT DISCLOSURE SCHEDULE"), Parent
represents and warrants to the Company hereof as follows:
(a) Organization, Standing and Power. Each of Parent and its
--------------------------------
Subsidiaries (1) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, (2) has all necessary power
and authority and all material licenses, authorizations, consents and approvals
required to own, lease, license or use its properties now owned, leased,
licensed or used and to carry on its business as now conducted and (3) is duly
qualified as a foreign corporation, limited liability company or limited
partnership, as the case may be, under the laws of each jurisdiction in which
qualification is required either to own, lease, license or use its properties
now owned, leased, licensed and used or to carry on its business as now
conducted, except where the failure to effect or obtain such qualification,
individually or in the aggregate, would not constitute a Parent Material Adverse
Effect. "PARENT MATERIAL ADVERSE EFFECT" means, with respect to Parent, any
adverse change, circumstance or effect that is reasonably likely to be
materially adverse to the business, financial condition or results of operations
of Parent and its Subsidiaries taken as a whole or on the transactions
contemplated hereby, other than any change, circumstance or effect (i) relating
to the economy or securities markets in general, or (ii) relating to the
industries in which Parent and its Subsidiaries operate
17
<PAGE>
and not specifically relating to Parent and its Subsidiaries. The copies of the
certificate of incorporation and bylaws of Parent, which were previously
furnished to the Company, are complete copies of such documents as in effect on
the date of this Agreement.
(b) Authority; No Conflicts.
-----------------------
(i) Parent has all requisite corporate power and authority to
enter into this Agreement and to consummate the Transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation
of the Transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Parent. This Agreement has been
duly executed and delivered by Parent and constitutes a valid and binding
agreement of Parent, enforceable against it in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws relating to or affecting
creditors generally, by general equity principles (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
(ii) The execution and delivery of this Agreement does not or
will not, as the case may be, and the consummation of the Merger and the
other Transactions contemplated hereby will not, conflict with, or result
in a Violation pursuant to: (A) any provision of the certificate of
incorporation or bylaws of Parent or any Subsidiary of Parent, (B) except
as would not, individually or in the aggregate, constitute a Parent
Material Adverse Effect and, subject to obtaining or making the consents,
approvals, orders, authorizations, registrations, declarations and filings
referred to in paragraph (iii) below, any loan or credit agreement, note,
mortgage, bond, indenture, lease, benefit plan or other agreement,
obligation, instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to
Parent or any Subsidiary of Parent or their respective properties or
assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is
required by or with respect to Parent or any Subsidiary of Parent in
connection with the execution and delivery of this Agreement by Parent or
the consummation of the Merger and the other Transactions contemplated
hereby, except for the Required Consents and such consents, approvals,
orders, authorizations, registrations, declarations and filings the failure
of which to make or obtain would not, individually or in the aggregate,
constitute a Parent Material Adverse Effect.
(c) Information Supplied.
--------------------
(i) None of the information supplied or to be supplied by Parent
for inclusion or incorporation by reference in (A) the Offer Documents or
the Schedule 14D-9, including any amendments or supplements thereto, will,
at the respective times the Offer Documents and the Schedule 14D-9 are
filed with the SEC or first published or given to the Company's
stockholders contain any untrue statement of material fact, or
18
<PAGE>
omit to state any material fact required to be stated herein or necessary
in order to make the statements therein in light of the circumstances under
which they were made not false or misleading, and (B) if required, the
Proxy Statement will, on the date it is first mailed to Company
stockholders or at the time of the Company Stockholders Meeting, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(ii) Notwithstanding the foregoing provisions of this Section
3.2(c), no representation or warranty is made by Parent with respect to
statements made or incorporated by reference in the Offer Documents, the
Schedule 14D-9, or the Proxy Statement, if required, based on information
supplied by the Company for inclusion or incorporation by reference
therein.
(d) Board Approval. The Board of Directors of Parent, by resolutions
--------------
duly adopted at a meeting duly called and held and not subsequently rescinded or
modified in any way, has duly and unanimously (i) determined that this Agreement
and the Merger are fair to and in the best interests of Parent and its
stockholders and (ii) approved this Agreement and the Merger.
(e) Brokers or Finders. No agent, broker, investment banker,
------------------
financial advisor or other firm or Person is or will be entitled to any broker's
or finder's fee or any other similar commission or fee in connection with any of
the Transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Parent, except J.P. Morgan & Company and Bain & Company, whose
fees and expenses will be paid by Parent in accordance with Parent's agreement
with such firm based upon arrangements made by or on behalf of Parent and
previously disclosed to the Company.
3.3 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB. Parent
-------------------------------------------------------
and Merger Sub represent and warrant to the Company as follows:
(a) Organization and Corporate Power. Merger Sub is a corporation
--------------------------------
duly incorporated, validly existing and in good standing under the laws of
Delaware. Merger Sub is a direct wholly owned subsidiary of Parent. The copies
of the certificate of incorporation and bylaws of Merger Sub, which were
previously furnished to the Company, are complete copies of such documents as in
effect on the date of this Agreement.
(b) Corporate Authorization. Merger Sub has all requisite corporate
-----------------------
power and authority to enter into this Agreement and to consummate the
Transactions contemplated hereby. The execution, delivery and performance by
Merger Sub of this Agreement and the consummation by Merger Sub of the
Transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Merger Sub. This Agreement has been duly
executed and delivered by Merger Sub and constitutes a valid and binding
agreement of Merger Sub, enforceable against it in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws
19
<PAGE>
relating to or affecting creditors generally, by general equity principles
(regardless or whether such enforceability is considered in a proceeding in
equity or at law) or by an implied covenant of good faith and fair dealing.
(c) No Conflicts. The execution, delivery and performance by Merger
------------
Sub of this Agreement and the consummation by Merger Sub of the Transactions
contemplated hereby do not and will not contravene or conflict with the
certificate of incorporation or bylaws of Merger Sub.
(d) No Business Activities. Merger Sub has not conducted any
----------------------
activities other than in connection with the organization of Merger Sub, the
negotiation and execution of this Agreement and the consummation of the
Transactions contemplated hereby. Merger Sub has no Subsidiaries.
(e) Sufficient Funds. Either Parent or Merger Sub has sufficient
----------------
funds available to purchase all of the Shares outstanding on a fully diluted
basis pursuant to the Offer, to perform their respective obligations under this
Agreement including, without limitation, making the loans and/or contributions
to the Company as set forth in Section 1.1(d), 5.9 and 5.10 hereof and to pay
all fees and expenses related to the Transactions contemplated by this Agreement
to be paid by them.
(f) Share Ownership. Except as contemplated by the Stock Tender
---------------
Agreement, none of Parent, Merger Sub or any of their respective "affiliates" or
"associates" (as those terms are defined in Rule 12b-2 under the Exchange Act)
beneficially owns any Shares.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 COVENANTS OF THE COMPANY. During the period from the date of
------------------------
this Agreement and continuing until the Effective Time, the Company agrees as to
itself and its Subsidiaries that (except as expressly contemplated or permitted
by this Agreement or as otherwise indicated on the Company Disclosure Schedule
or as required by a Governmental Entity or to the extent that Parent shall
otherwise consent in writing, such consent not to be unreasonably withheld):
(a) Ordinary Course. The Company and its Subsidiaries shall carry on
---------------
their respective businesses in the usual, regular and ordinary course in all
material respects, in substantially the same manner as heretofore conducted, and
shall use all reasonable efforts to preserve intact their present lines of
business and keep available the services of their current officers and employees
and preserve their relationships with customers, suppliers, licensors,
licensees, distributors and others having business dealings with them; provided,
--------
however, that no action by the Company or its Subsidiaries covered by any other
- -------
provision of this Section 4.1
20
<PAGE>
shall be deemed a breach of this Section 4.1(a) unless such action would also
constitute a breach of one or more of such other provisions.
(b) Dividends; Changes in Share Capital. The Company shall not, and
-----------------------------------
shall not permit any of its Subsidiaries to, (i) declare or pay any dividends on
or make other distributions (whether in stock, cash or property) in respect of
any of its capital stock, except dividends by a wholly owned direct or indirect
Subsidiary of the Company to such Subsidiary's parent, (ii) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for, shares of its capital stock, except for any such transaction by a wholly
owned Subsidiary of the Company which remains a wholly owned Subsidiary after
consummation of such transaction, or (iii) repurchase, redeem or otherwise
acquire any shares of its capital stock or any securities convertible into or
exercisable for any shares of its capital stock except to the extent required by
the Employment Agreements.
(c) Issuance of Securities. The Company shall not, and shall not
----------------------
permit any of its Subsidiaries to, issue, deliver, sell, pledge or otherwise
encumber (except for Permitted Liens described in clauses (i) and (ii) of the
definition thereof), any shares of its capital stock or authorize or propose the
issuance, delivery, sale, pledge or encumbrance (except for Permitted Liens
described in clauses (i) and (ii) of the definition thereof), of, any shares of
its capital stock of any class, any Company Voting Debt or any securities
convertible into or exercisable for, or any rights, warrants or options to
acquire, any such shares or Company Voting Debt, or enter into any agreement
with respect to any of the foregoing, other than (i) the issuance of Company
Common Stock upon the exercise of Company Stock Options outstanding on the date
hereof in accordance with their present terms or upon the exercise of the
Warrants, or (ii) issuances by a wholly owned Subsidiary of the Company of
capital stock to such Subsidiary's parent.
(d) Governing Documents. Except to the extent required to comply with
-------------------
their respective obligations hereunder, required by law or required by the rules
and regulations of the NASDAQ, the Company and its wholly owned Subsidiaries
shall not amend their respective certificates of incorporation, bylaws or other
governing documents.
(e) Acquisitions and Divestitures. The Company shall not, and shall
-----------------------------
not permit any of its Subsidiaries to, acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, association or other business organization or
division thereof or otherwise acquire or agree to acquire any assets (other than
the acquisition of assets used in the operations of the business of the Company
and its Subsidiaries in the ordinary course); provided, however, that the
foregoing shall not prohibit (x) internal reorganizations or consolidations
involving existing wholly owned Subsidiaries of the Company or (y) the creation
of new Subsidiaries of the Company organized to conduct or continue activities
otherwise permitted by this Agreement that in the case of clause (x) and (y)
would not otherwise be prohibited by or result in a breach of any other
provision of this Section 4.1. Other than (i) internal reorganizations or
consolidations involving existing wholly owned
21
<PAGE>
Subsidiaries of the Company and (ii) as may be required by or in conformance
with law or regulation in order to permit or facilitate the consummation of the
Transactions contemplated hereby, the Company shall not, and shall not permit
any wholly owned Subsidiary of the Company to, sell, lease, encumber or
otherwise dispose of, or agree to sell, lease, encumber or otherwise dispose of,
any of its assets (including capital stock of wholly owned Subsidiaries of the
Company) which are material, individually or in the aggregate, to the Company
other than sales of inventory in the ordinary course of business.
(f) Indebtedness. The Company shall not, and shall not permit any of
------------
its wholly owned Subsidiaries to, (i) create, assume or incur any Indebtedness
or issue any debt securities, warrants or other rights to acquire any debt
securities of the Company or any of its Subsidiaries, other than Indebtedness
incurred under the Credit Agreement or other Indebtedness in an aggregate amount
not to exceed $500,000, (ii) except in the ordinary course of business
consistent with past practice, make any loans, advances or capital contributions
to, or investments in, any other Person, other than by the Company or a wholly
owned Subsidiary of the Company to or in the Company or any wholly owned
Subsidiary of the Company or (iii) except in the ordinary course of business
consistent with past practice, pay, discharge or satisfy any claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise); provided however, that the Company may refinance Indebtedness under
--------
the Credit Agreement.
(g) Compensation. Other than in accordance with the provisions of
------------
this Agreement, the Company shall not, and shall not permit any of its
Subsidiaries to, unless required by law or to maintain the tax qualification of
any Company Benefit Plan, to (i) increase any employee benefits provided to, or,
except in the ordinary course of business consistent with past practices,
increase the compensation or fringe benefits payable to, any employee or former
employee of the Company or any Subsidiary of the Company; (ii) adopt, enter
into, terminate or amend in any material respect any employment contract,
collective bargaining agreement or Company Benefit Plan; (iii) pay any benefit
not provided for under any Company Benefit Plan or any other benefit plan or
arrangement of the Company and its Subsidiaries; or (iv) increase in any manner
the severance or termination pay of any officer or employee.
(h) Accounting Methods; Income Tax Elections. Except as disclosed in
----------------------------------------
Company SEC Reports filed before the date of this Agreement, or as required by a
Governmental Entity, the Company shall not change its methods of accounting in
effect at December 31, 1997, except as required by changes in GAAP as concurred
in by the Company's independent auditors. The Company shall not (i) change its
fiscal year or (ii) make any material tax election, other than in the ordinary
course of business consistent with past practice, without consultation with
Parent.
(i) Material Agreements. The Company shall not, and shall not permit
-------------------
any of its Subsidiaries to, enter into any agreement of a nature that would be
required to be filed as an exhibit to Form 10-K under the Exchange Act, other
than contracts for the sale of the Company's or its Subsidiaries' products in
the ordinary course of business.
22
<PAGE>
(j) Representations and Warranties. The Company shall not knowingly
------------------------------
take, and shall not permit any of its Subsidiaries knowingly to take, any
actions that would make any representation or warranty of the Company contained
in this Agreement untrue or incorrect in any material respect as of the date
when made or as of the Closing Date.
(k) Agreements or Commitments. The Company shall not, and shall not
-------------------------
permit any of its Subsidiaries to, authorize any of, or commit or agree to take
any of, the foregoing actions.
4.2 ADVICE OF CHANGES; GOVERNMENTAL FILINGS. Each party shall (a)
---------------------------------------
confer on a regular and frequent basis with the other and (b) report (to the
extent permitted by law or regulation or any applicable confidentiality
agreement) on operational matters. The Company and Parent shall file all
reports required to be filed by each of them with the SEC (and all other
Governmental Entities) between the date of this Agreement and the Effective Time
and shall (to the extent permitted by law or regulation or any applicable
confidentiality agreement) deliver to the other party copies of all such
reports, announcements and publications promptly after the same are filed.
Subject to applicable laws relating to the exchange of information, each of the
Company and Parent shall have the right to review in advance, and will consult
with the other with respect to, all the information relating to the other party
and each of their respective wholly owned Subsidiaries, which appears in any
filings, announcements or publications made with, or written materials submitted
to, any third party or any Governmental Entity in connection with the
Transactions contemplated by this Agreement. In exercising the foregoing right,
each of the parties hereto agrees to act reasonably and as promptly as
practicable. Each party agrees that, to the extent practicable and as timely as
practicable, it will consult with, and provide all appropriate and necessary
assistance to, the other party with respect to the obtaining of all permits,
consents, approvals and authorizations of all third parties and Governmental
Entities necessary or advisable to consummate the Transactions contemplated by
this Agreement and each party will keep the other party apprised of the status
of matters relating to completion of the Transactions contemplated hereby.
4.3 CONTROL OF THE COMPANY'S BUSINESS. Nothing contained in this
---------------------------------
Agreement shall give Parent, directly or indirectly, the right to control or
direct the Company's operations before the consummation of the Offer. Before
the consummation of the Offer, each of the Company and Parent shall exercise,
consistent with the terms and conditions of this Agreement, complete control and
supervision over its respective operations.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 STOCKHOLDERS MEETING; PREPARATION OF PROXY STATEMENT. If
----------------------------------------------------
required by applicable law in order to consummate the Merger, the Company
(acting through its Board of Directors in the case of clauses (a) and (b))
shall, as soon as practicable following the
23
<PAGE>
consummation of the Offer in accordance with applicable law, its certificate of
incorporation and its bylaws:
(a) duly call, give notice of, convene and hold a special meeting of
its stockholders as soon as practicable following the consummation of the Offer
for the purpose of considering and taking action upon this Agreement (the
"COMPANY STOCKHOLDERS MEETING").
(b) subject to its fiduciary duties under applicable law, include in
the proxy statement or information statement prepared by the Company for
distribution to stockholders of the Company in advance of the Company
Stockholders Meeting in accordance with Regulation 14A or Regulation 14C
promulgated under the Exchange Act (the "PROXY STATEMENT") so much of the
recommendation of its Board of Directors referred to in Section 1.2(a) hereof as
is relevant to the Merger; and
(c) (i) prepare and file a preliminary and definitive Proxy Statement
with the SEC, (ii) use its best efforts to, after consultation with Parent,
respond promptly to any comments made by the SEC with respect to the Proxy
Statement and any preliminary version thereof and cause the Proxy Statement to
be mailed to its stockholders following the consummation of the Offer and (iii)
take all actions necessary to obtain the necessary approvals of this Agreement
by its stockholders.
(d) if there shall occur any event that should be set forth in an
amendment or supplement to the Proxy Statement, promptly prepare and mail to its
stockholders such an amendment or supplement.
Parent will provide the Company with the information concerning Parent and
Merger Sub required to be included in the Proxy Statement and will vote, or
cause to be voted, all Shares owned by it or its Subsidiaries in favor of
approval and adoption of this Agreement.
5.2 ACCESS TO INFORMATION.
---------------------
(a) Upon reasonable notice, the Company shall (and shall cause its
Subsidiaries to) (i) afford to the officers, employees, accountants, counsel,
financial advisors and other representatives of Parent reasonable access during
normal business hours, during the period before the consummation of the Offer,
to all its officers, key employees, properties, books, contracts, commitments
and records and, during such period, the Company shall (and shall cause its
Subsidiaries to) furnish promptly to Parent, consistent with its legal
obligations, all information concerning its business, properties and personnel
as Parent may reasonably request and (ii) make available to Parent a copy of
each report, schedule, registration statement and other document filed or
received by it during such period pursuant to the requirements of the federal or
state securities laws or the federal tax laws and all other information
concerning its business, properties and personnel as Parent may reasonably
request; provided, however, that the Company may restrict the foregoing access
to the extent that (i) a Governmental Entity requires the Company or any of its
Subsidiaries to restrict access to any properties or information reasonably
related to any such contract on the basis of applicable laws and
24
<PAGE>
regulations with respect to national security matters or (ii) any law, treaty,
rule or regulation of any Governmental Entity applicable to the Company requires
the Company or its Subsidiaries to restrict access to any properties or
information.
(b) The parties will hold any such information that is nonpublic in
confidence to the extent required by, and in accordance with, the provisions of
the letter dated April 6, 1998 between the Company and Parent (the
"CONFIDENTIALITY AGREEMENT").
5.3 BEST EFFORTS.
------------
(a) Subject to the terms and conditions of this Agreement, each party
will use its reasonable best efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate the Offer, the Merger and the
other Transactions contemplated by this Agreement as soon as practicable after
the date hereof. In furtherance and not in limitation of the foregoing, each
party hereto agrees to make, to the extent it has not already done so, an
appropriate filing of a Notification and Report Form pursuant to the HSR Act
with respect to the Transactions contemplated hereby as promptly as practicable
and to supply as promptly as practicable any additional information and
documentary material that may be requested pursuant to the HSR Act and to take
all other actions necessary to cause the expiration or termination of the
applicable waiting periods under the HSR Act as soon as practicable.
(b) Each of the Company and Parent shall, in connection with the
efforts referenced in Section 5.3(a) to obtain all requisite approvals and
authorizations for the Transactions contemplated by this Merger Agreement under
the HSR Act or any other Regulatory Law (as defined below), use its reasonable
best efforts to (i) cooperate in all respects with each other in connection with
any filing or submission and in connection with any investigation or other
inquiry, including any proceeding initiated by a private party, (ii) promptly
inform the other party of any communication received by such party from, or
given by such party to, the Antitrust Division of the Department of Justice (the
"DOJ") or any other Governmental Entity and of any material communication
received or given in connection with any proceeding by a private party, in each
case regarding any of the Transactions contemplated hereby, and (iii) permit the
other party to review any communication given by it to, and consult with each
other in advance of any meeting or conference with, the DOJ or any such other
Governmental Entity or, in connection with any proceeding by a private party,
with any other Person, and to the extent permitted by the DOJ or such other
applicable Governmental Entity or other Person, give the other party the
opportunity to attend and participate in such meetings and conferences. For
purposes of this Agreement, "REGULATORY LAW" means the Sherman Act, as amended,
the Clayton Act, as amended, the HSR Act, the Federal Trade Commission Act, as
amended, and all other federal, state and foreign, if any, statutes, rules,
regulations, orders, decrees, administrative and judicial doctrines and other
laws that are designed or intended to prohibit, restrict or regulate actions
having the purpose or effect of monopolization or restraint of trade or
lessening of competition through merger or acquisition.
25
<PAGE>
(c) In furtherance and not in limitation of the covenants of the
parties contained in Sections 5.3(a) and 5.3(b), if any administrative or
judicial action or proceeding, including any proceeding by a private party, is
instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any Regulatory Law, each of the
Company and Parent shall cooperate in all respects with each other and use its
respective reasonable best efforts to contest and resist any such action or
proceeding and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
consummation of the Transactions contemplated by this Agreement.
Notwithstanding the foregoing or any other provision of this Agreement, nothing
in this Section 5.3 shall limit a party's right to terminate this Agreement
pursuant to Section 7.1(b)(ii) so long as such party has complied in all
material respects with its obligations under this Section 5.3.
5.4 ACQUISITION PROPOSALS. The Company agrees that neither it nor
---------------------
any of its Subsidiaries shall, and that it shall direct and use its reasonable
best efforts to cause its and its Subsidiaries' directors, officers, employees,
agents and representatives (including any investment banker, attorney or
accountant retained by it or any of its Subsidiaries) not to, directly or
indirectly, initiate, solicit, encourage or knowingly facilitate (including by
way of furnishing information) any inquiries or the making of any proposal or
offer with respect to a merger, reorganization, share exchange, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving, or any purchase or sale of all or any significant portion
of the assets of, it or any of its Subsidiaries or any purchase or sale of more
than 25% of the equity securities of the Company or any equity securities of any
Significant Subsidiary (as that term is defined in Rule 405 under the Securities
Act) (any such proposal or offer whether or not in writing or in sufficient
detail to be accepted and whether or not conditional (other than a proposal or
offer made by Parent or an affiliate thereof) being hereinafter referred to as
an "ACQUISITION PROPOSAL"). The Company further agrees that neither it nor any
of its Subsidiaries shall, and that it shall direct and use its best efforts to
cause its and its Subsidiaries' directors, officers, employees, agents and
representatives (including any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) not to, directly or indirectly, have
any discussion with or provide any confidential information or data to any
Person relating to an Acquisition Proposal, or engage in any negotiations
concerning an Acquisition Proposal, or knowingly facilitate any effort or
attempt to make or implement an Acquisition Proposal or accept an Acquisition
Proposal. Notwithstanding the foregoing, the Company or its Board of Directors
shall be permitted, at any time prior to the acceptance for payment of the
Shares pursuant to the Offer, to (A) engage in discussions or negotiations with,
or provide information to, any Person in response to an unsolicited Acquisition
Proposal by such Person if (x) the Board of Directors of the Company concludes
in good faith that such Acquisition Proposal constitutes or could reasonably be
expected to lead to a Superior Proposal and (y), before providing any
information to such Person, the Board of Directors receives from such Person an
executed confidentiality agreement containing confidentiality provisions
substantially similar to those contained in the Confidentiality Agreement; and
(B) if the Board of Directors concludes in good faith that such Acquisition
Proposal constitutes a Superior Proposal (i) recommend approval of such Superior
Proposal, (ii) in response to such Superior Proposal, withdraw or modify in an
adverse manner the Company Board Approval, or (iii) enter into an agreement in
principle or
26
<PAGE>
a definitive agreement with respect to such Superior Proposal, provided,
--------
however, that, in the case of either (A) or (B) the Board of Directors of the
- -------
Company determines in good faith after consultation with outside counsel that it
should take such action consistent with its fiduciary duties under applicable
law. In the event the Company shall determine to provide any information as
described above, or shall receive any Acquisition Proposal, it shall promptly
inform Parent as to the fact that information is to be provided or that an
Acquisition Proposal has been received and shall furnish to Parent a description
of the material terms thereof. As used in this Agreement, "SUPERIOR PROPOSAL"
means a bona fide Acquisition Proposal which the Company Board of Directors
concludes in good faith (after consultation with its financial advisors and
legal counsel), taking into account all legal, financial, regulatory and other
aspects of the proposal and the Person making the proposal, provides for a
transaction that, taking into account its likelihood of completion, is more
favorable to the Company's stockholders (in their capacities as stockholders),
than the Transactions contemplated by this Agreement.
5.5 EMPLOYEE BENEFITS.
-----------------
(a) Employment Agreements. Parent has reviewed and is familiar with
---------------------
the terms and provisions of the employment agreements set forth on Schedule
5.5(a) (the "EMPLOYMENT AGREEMENTS") and understands and agrees that such
Employment Agreements are in full force and effect and constitute valid and
binding agreements of the Company and/or its Subsidiaries. Parent acknowledges
that the transactions contemplated by this Agreement will constitute a change of
control under such Employment Agreements and that, upon such change of control,
and upon any termination of employment of any employee covered by such
Employment Agreements following such change of control, the pertinent employee
will be entitled to the payments due under the relevant Employment Agreement to
such employee upon a change of control, in the first case, and to the payments
due thereunder upon a termination following a change of control, in the second
case. Parent will cause the Company to comply with and make the payments due
under the Employment Agreements.
(b) Severance Agreements. Parent has reviewed and is familiar with
--------------------
the terms and provisions of the severance plan described on Schedule 5.5(b).
Parent acknowledges that the transactions contemplated by this Agreement will
constitute a "transaction change" for purposes of such severance plan and that,
in consequence, the severance provisions there set forth will be applicable
following the consummation of the Offer.
(c) Benefit Plans. Until December 31, 1999, Parent agrees that it
-------------
shall, or it shall cause the Company and the Surviving Corporation to, maintain
employee benefit plans, policies or arrangements (other than stock-based plans
or stock-based provisions in plans) for the benefit of employees of the Company
and its Subsidiaries (other than those employees who are employed pursuant to a
collective bargaining agreement or who are members of a collective bargaining
unit or labor union) which are substantially comparable in the aggregate to the
employee benefit plans, policies or arrangements of the Company in effect on the
date hereof (other than stock-based plans or stock-based provisions in the
plans) set forth on Schedule 5.5(c).
27
<PAGE>
(d) Benefit Plan Eligibility. Parent agrees that it shall, or it
------------------------
shall cause the Company and the Surviving Corporation to, give employees of the
Company and/or any of its Subsidiaries full credit for service for purposes of
eligibility, vesting and satisfaction of waiting periods under any employee
benefit plans, policies or arrangements maintained by the Company, Parent or the
Surviving Corporation in which such employees are entitled to participate.
Employees of the Company and/or any of its Subsidiaries shall not be subject to
any pre-existing condition exclusions or limitations under Parent's or the
Surviving Corporation's benefit plans (except to the extent that such exclusions
presently apply to an employee under the Company's and/or any of such
Subsidiaries' benefit plans).
5.6 FEES AND EXPENSES. Whether or not the Offer is consummated, all
-----------------
Expenses incurred in connection with this Agreement and the Transactions
contemplated hereby shall be paid by the party incurring such Expenses, except
(a) if the Merger is consummated, the Surviving Corporation shall pay, or cause
to be paid, any and all property or transfer taxes imposed on the Company or its
Subsidiaries, (b) Expenses incurred in connection with the filing, printing and
mailing of the Offer Documents, Schedule 14D-9 and, if required, the Proxy
Statement, which shall be shared equally by Parent and the Company (c) amounts
loaned or contributed by Parent to the Company pursuant to Section 1.1(d) or
5.10 shall be repaid by the Company or the Surviving Corporation, as the case
may be, on commercially reasonable terms and (d) as provided in Section 7.2. As
used in this Agreement, "EXPENSES" includes all out-of-pocket expenses
(including all fees and expenses of counsel, accountants, investment bankers,
experts and consultants to a party hereto and its affiliates) incurred by a
party or on its behalf in connection with or related to the authorization,
preparation, negotiation, execution and performance of this Agreement and the
Transactions contemplated hereby, including the preparation, printing, filing
and mailing of the Offer Documents, Schedule 14D-9, the Proxy Statement, if
required, and the solicitation of stockholder approvals, if required, and all
other matters related to the Transactions contemplated hereby.
5.7 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE.
------------------------------------------------------
(a) Until the expiration of all applicable statutes of limitations,
from and after the consummation of the Offer, the Company shall and Parent shall
cause the Company (or any successor to the Company) to, and from and after the
Effective Time, Parent and Surviving Corporation shall, indemnify, defend and
hold harmless the present and former officers and directors of the Company and
its Subsidiaries (each an "INDEMNIFIED PARTY") against all losses, claims,
damages, liabilities, fees, penalties and expenses (including reasonable fees
and disbursements of counsel and judgments, fines, losses, claims, liabilities
and amounts paid in settlement arising out of actions or omissions occurring at
or before the consummation of the Offer) (including losses incurred in
connection with such person's serving as a trustee or other fiduciary in any
entity if such service was at the request or for the benefit of the Company or
any of its subsidiaries) to the full extent permitted by the DGCL, such right to
include the right to advancement of expenses incurred in the defense of any
action or suit promptly after statements therefor are received to the fullest
extent permitted by law; provided that the Indemnified Party to whom expenses
are advanced provides an undertaking to repay such advance if it is ultimately
determined that such party is not entitled to indemnification.
28
<PAGE>
Notwithstanding the foregoing, an Indemnifying Party shall not be liable for any
settlement of any claim effected without such Indemnifying Party's written
consent, which consent shall not be unreasonably withheld. Parent will
cooperate in the defense of any such matter.
(b) Parent or the Surviving Corporation shall maintain the Company's
existing directors' and officers' liability insurance on behalf of the
Indemnified Parties, including any such insurance maintained on behalf of any
such Indemnified Party serving as a director or officer of any Subsidiary of the
Company, including coverage with respect to claims arising from facts or events
which occurred at or before the consummation of the Offer ("D&O INSURANCE") for
a period of not less than six years after the consummation of the Offer;
provided, however, that Parent may substitute therefor policies of substantially
similar coverage with a face amount not less that the existing D&O Insurance and
containing terms no less favorable to such Indemnified Parties; provided,
further, if the existing D&O Insurance expires, is terminated or cancelled
during such period, Parent or the Surviving Corporation will obtain
substantially similar D&O Insurance.
(c) The certificate of incorporation and the bylaws of the Company
and, after the Effective Time, the Surviving Corporation shall contain the
provisions with respect to advancement of expenses, indemnification and
exculpation from liability set forth in the certificate of incorporation and
bylaws of the Company on the date of this Agreement, which provisions shall not
for a period of ten years following the Effective Time be amended, repealed or
otherwise modified in any manner that would adversely affect the rights
thereunder of individuals who on or before the consummation of the Offer were
entitled to advances, indemnification or exculpation thereunder, including any
individuals serving as directors or officers of any Subsidiary of the Company at
the Company's request, it being acknowledged by the parties hereto that each
director or officer of the Company that is currently serving as a director or
officer of a Subsidiary of the Company is doing so at the request of the
Company.
(d) In the event Parent or the Surviving Corporation or any of their
respective successors or assigns (i) consolidates with or merges into any other
Person and shall not be the continuing or surviving corporation or entity in
such consolidation or merger or (ii) transfers all of substantially all its
properties and assets to any Person, then, and in each case, proper provision
shall be made so that the successors and assigns of Parent or the Surviving
Corporation, as the case may be, honor the indemnification obligations set forth
in this Section 5.7.
(e) The obligations of the Company, Parent and the Surviving
Corporation under this Section 5.7 shall not be terminated, modified or assigned
in such a manner as to materially adversely affect any Indemnified Party without
the consent of such Indemnified Party (it being expressly agreed that the
Indemnified Parties shall be third-party beneficiaries of this Section 5.7).
5.8 PUBLIC ANNOUNCEMENTS. The Company and Parent shall use all
--------------------
reasonable efforts to develop a joint communications plan, and each party shall
use all reasonable efforts (i) to ensure that all press releases and other
public statements with respect to the Transactions
29
<PAGE>
contemplated hereby shall be consistent with such joint communications plan, and
(ii) unless otherwise required by applicable law or by obligations pursuant to
any listing agreement with or rules of any securities exchange, to consult with
each other before issuing any press release or otherwise making any public
statement with respect to this Agreement or the Transactions contemplated
hereby.
5.9 SENIOR NOTES. In accordance with the terms of the Indenture,
------------
dated as of August 1, 1993 (the "INDENTURE"), between the Company, as issuer,
and First Trust National Association, as trustee (the "TRUSTEE"), with respect
to the 10 1/2% Senior Notes due 2003 (the "SENIOR NOTES"), within five days
following the acquisition by Parent or Merger Sub of beneficial ownership,
directly or indirectly, of more than 50% of the Common Stock, the Company shall,
in accordance with the Indenture, notify the Trustee and, the Company or the
Surviving Corporation, as the case may be, within 20 business days prior to the
Final Change of Control Put Date (as defined in the Indenture), give written
notice to each holder of the Senior Notes, stating, among other things, (i) that
a Change of Control (as defined in the Indenture) has occurred, (ii) that each
holder of the Senior Notes has the right to require the Company to repurchase
such holder's Senior Notes at a purchase price in cash in an amount equal to
101% of the principal amount of such Senior Notes, plus accrued and unpaid
interest thereon, if any, to the purchase date thereof and (iii) the date on
which such Senior Notes shall be purchased which shall be a business day no
later than 40 business days after the occurrence of or Change of Control.
Parent shall lend or contribute to the Company an amount in cash necessary to
repurchase all such Senior Notes.
5.10 CREDIT AGREEMENT. The Company shall use its best efforts to
----------------
obtain all necessary waivers and consents prior to the consummation of the Offer
so that the transactions contemplated hereby will not result in or constitute a
default under that certain Credit Agreement dated as of August 4, 1993, as
amended, by and among the Company, Lenders, Bank of America NT & SA, as Co-Agent
for Lenders and The Bank of Nova Scotia, as the Agent for Lenders (the "CREDIT
AGREEMENT"). In the event that (i) such waiver and consent is not obtained,
(ii) the transactions contemplated hereby result in a default and the Lenders
under the Credit Agreement accelerate the payment of outstanding indebtedness
thereunder, and (iii) the Company, after using its best efforts, is unable to
refinance or repay such indebtedness, then, following the consummation of the
Offer, Parent agrees to make a loan to the Company in an amount sufficient for
the Company to repay the outstanding Indebtedness and any other obligations
under the Credit Agreement, or, if such amount cannot be borrowed by the Company
for any reason, to contribute such amount to the Company.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
----------------------------------------------------------
obligations of the Company, Parent and Merger Sub to effect the Merger are
subject to the satisfaction or waiver on or before the Closing Date of the
following conditions:
30
<PAGE>
(a) No Injunctions or Restraints, Illegality. No Laws shall have been
----------------------------------------
adopted or promulgated, and no temporary restraining order, preliminary or
permanent injunction or other order issued by a court or other Governmental
Entity of competent jurisdiction shall be in effect, having the effect of making
the Merger illegal or otherwise prohibiting consummation of the Merger;
provided, however, that the provisions of this Section 6.1(a) shall not be
available to any party whose failure to fulfill its obligations pursuant to
Section 5.3 shall have been the cause of, or shall have resulted in, such order
or injunction.
(b) HSR Act. The waiting period (and any extension thereof)
-------
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired.
(c) Purchase of Shares. Parent, Merger Sub or their affiliates shall
------------------
have purchased Shares of Company Common Stock pursuant to the Offer.
(d) Company Stockholder Approval. If required by applicable law, the
----------------------------
Company shall have obtained the Required Company Vote in connection with the
adoption of this Agreement by the stockholders of the Company.
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUB.
-------------------------------------------------------------
The obligations of Parent and Merger Sub to effect the Merger are subject to the
satisfaction, or waiver by Parent, on or before the Closing Date, of the
following conditions:
(a) Representations and Warranties. Each of the representations and
------------------------------
warranties of the Company set forth in this Agreement shall be true and correct
on the Closing Date as though made on and as of the Closing Date, or in the case
of representations and warranties made as of a specified date earlier than the
Closing Date, on and as of such earlier date, except to the extent that failure
to be true and correct does not constitute a Company Material Adverse Effect,
and Parent shall have received a certificate of the Company, executed on its
behalf by its chief executive officer and chief financial officer to such
effect.
(b) Performance of Obligations of the Company. The Company shall have
-----------------------------------------
performed or complied in all material respects with all agreements and covenants
required to be performed by it under this Agreement at or before the Closing
Date, and Parent shall have received a certificate of the Company, executed on
its behalf by its chief executive officer and chief financial officer to such
effect.
The conditions set forth in Section 6.2 hereof shall cease to be conditions to
the obligations of the parties if Merger Sub shall have accepted for payment and
paid for Shares validly tendered pursuant to the Offer.
6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
---------------------------------------------------
obligations of the Company to effect the Merger are subject to the satisfaction,
or waiver by the Company, on or before the Closing Date, of the following
additional conditions:
31
<PAGE>
(a) Representations and Warranties. Each of the representations and
------------------------------
warranties of Parent and Merger Sub set forth in this Agreement shall be true
and correct on the Closing Date as though made on and as of the Closing Date, or
in the case of representations and warranties made as of a specified date
earlier than the Closing Date, on and as of such earlier date, except to the
extent that failure to be true and correct does not constitute a Parent Material
Adverse Effect, and the Company shall have received a certificate of Parent,
executed on its behalf by its chief executive officer and chief financial
officer to such effect.
(b) Performance of Obligations of Parent. Parent shall have performed
------------------------------------
or complied in all material respects with all agreements and covenants required
to be performed by it under this Agreement at or before the Closing Date, and
the Company shall have received a certificate of Parent, executed on its behalf
by its chief executive officer and chief financial officer to such effect.
The conditions set forth in Section 6.3 hereof shall cease to be conditions to
the obligations of the parties if Merger Sub shall have accepted for payment and
paid for Shares validly tendered pursuant to the Offer.
ARTICLE VII
TERMINATION
7.1 TERMINATION. This Agreement may be terminated at any time before
-----------
the Effective Time, by action taken or authorized by the Board of Directors of
the terminating party or parties, and except as provided below, whether before
or after approval of the matters presented in connection with the Merger by the
stockholders of the Company:
(a) By mutual written consent of Parent and the Company, by action of
their respective Boards of Directors;
(b) By either of the Company, on the one hand, or Parent and Merger
Sub, on the other hand:
(i) if shares of Company Common Stock shall not have been
purchased pursuant to the Offer on or before the Extension Date; or
(ii) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action (which order, decree, ruling or
other action the parties hereto shall use their respective reasonable best
efforts to lift), in each case permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement, and
such order, decree, ruling or other action shall have become final and
nonappealable; or
32
<PAGE>
(iii) if, due to the occurrence of one of the events set forth
on Annex A hereto (other than the event set forth in clause (g) thereof),
-------
Parent, Merger Sub or any of their affiliates shall have failed to commence
the Offer on or before five business days following the date of the initial
public announcement of the Offer; or
(iv) if, due to a failure of any of the conditions set forth in
Annex A hereto to be satisfied, the Offer is terminated or expires in
-------
accordance with its terms and the terms of this Agreement without Parent or
Merger Sub, as the case may be, purchasing any shares of Company Common
Stock thereunder.
(c) By the Company:
(i) if, before the purchase of shares of Company Common Stock
pursuant to the Offer, the Board of Directors either shall (A) have entered
into an Agreement with respect to a Superior Proposal pursuant to clause
(B)(iii) of Section 5.4, (B) have recommended a Superior Proposal, or (C)
have withdrawn or modified in an adverse manner to Parent or Merger Sub its
approval or recommendation of the Offer, this Agreement or the Merger (or
the Board of Directors resolves to do any of the foregoing); or
(ii) if Parent or Merger Sub shall have terminated the Offer, or
the Offer shall have expired in accordance with its terms and the terms of
this Agreement, without Parent or Merger Sub, as the case may be,
purchasing any shares of Company Common Stock pursuant thereto.
(d) By Parent and Merger Sub:
(i) if, before the purchase of shares of Company Common Stock
pursuant to the Offer, the Board of Directors of the Company shall (A) have
recommended an Acquisition Proposal, (B) have withdrawn or modified in a
manner adverse to Parent or Merger Sub its approval or recommendation of
the Offer, this Agreement or the Merger or (C) have executed an agreement
in principle or definitive agreement relating to an Acquisition Proposal or
similar business combination with a Person other than Parent, Merger Sub or
their affiliates (or the Board of Directors of the Company resolves to do
any of the foregoing).
Notwithstanding anything else contained in this Agreement, the right to
terminate this Agreement under this Section 7.1 shall not be available to any
party (a) that is in material breach of its obligations hereunder or (b) whose
failure to fulfill its obligations or to comply with its covenants under this
Agreement has been the cause of, or resulted in, the failure to satisfy any
condition to the obligations of either party hereunder.
33
<PAGE>
7.2 EFFECT OF TERMINATION.
---------------------
(a) In the event of termination of this Agreement by either the
Company or Parent as provided in Section 7.1, this Agreement shall forthwith
become void and there shall be no liability or obligation on the part of Parent,
Merger Sub or the Company or their respective officers or directors except with
respect to Section 3.1(h), Section 3.2(e), Section 5.2(b), Section 5.6, this
Section 7.2 and Article VIII. Nothing in this Section 7.2 shall relieve any
party hereto for breach of any covenant or other agreement in this Agreement
before termination.
(b) Parent and the Company agree that (i) if the Company shall
terminate this Agreement pursuant to Section 7.1(c)(i), or if Parent shall
terminate this Agreement pursuant to Section 7.1(d)(i), or (ii) this Agreement
is terminated for any other reason (other than the breach of this Agreement by
Parent or Merger Sub and other than pursuant to Section 7.1(a)) and, in the case
of this clause (ii) only, (x) at the time of such termination there was pending
an Acquisition Proposal from a third party and (y) the transactions contemplated
by such Acquisition Proposal with such third party are consummated with such
third party within one year after such termination, then the Company shall pay
to Parent an amount equal to $28 million (the "COMPANY TERMINATION FEE").
(c) Any payment required to be made pursuant to Section 7.2(b) shall
be made to Parent not later than three Business Days after the termination of
this Agreement or in the case of Section 7.2(b)(ii), three Business Days after
the consummation of, an Acquisition Proposal, as applicable. All payments under
this Section 7.2 shall be made by wire transfer of immediately available funds
to an account designated by the party entitled to receive payment.
ARTICLE VIII
GENERAL PROVISIONS
8.1 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. None
---------------------------------------------------------
of the representations, warranties, covenants and other agreements in this
Agreement or in any instrument delivered pursuant to this Agreement, including
any rights arising out of any breach of such representations, warranties,
covenants and other agreements, shall survive the consummation of the Offer,
except for (x) those representations, warranties and covenants which are
conditions to the Merger, which, for purposes of Section 6, shall survive until
the Effective time, (y) those covenants and agreements contained herein and
therein that by their terms apply or are to be performed in whole or in part
after the consummation of the Offer and (z) this Article VIII.
8.2 NOTICES. All notices and other communications hereunder shall be
-------
in writing and shall be deemed duly given (a) on the date of delivery if
delivered personally, or by telecopy or telefacsimile, upon confirmation of
receipt, (b) on the first Business Day following the date of dispatch if
delivered by a recognized next-day courier service or (c) on the tenth
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<PAGE>
Business Day following the date of mailing if delivered by registered or
certified mail, return receipt requested, postage prepaid. All notices
hereunder shall be delivered as set forth below, or pursuant to such other
instructions as may be designated in writing by the party to receive such
notice:
(a) if to the Company to:
Triangle Pacific Corp.
16803 Dallas Parkway
Dallas, Texas 75248
Telephone: (214) 887-2300
Facsimile: (214) 887-2428
Attention: Paul L. Barrett, Esq.
with a copy to:
O'Melveny & Myers LLP
153 E. 53rd Street
New York, New York 10022
Telephone: (212) 326-2000
Facsimile: (212) 326-2061
Attention: Jeffrey J. Rosen, Esq.
(b) if to Parent or Merger Sub, to:
Armstrong World Industries, Inc.
313 West Liberty Street
Lancaster, Pennsylvania 17604
Telephone: (717) 397-0611
Facsimile: (717) 396-2983
Attention: Deborah K. Owen, Esq.
with a copy to:
Rogers & Wells LLP
200 Park Avenue
New York, New York
Telephone: (212) 878-8000
Facsimile: (212) 878-8375
Attention: Robert E. King, Jr., Esq.
Bonnie A. Barsamian, Esq.
35
<PAGE>
8.3 INTERPRETATION. When a reference is made in this Agreement to
--------------
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents, glossary and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include", "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation". The words "hereof", "herein" and "herewith" and words of
similar import shall, unless otherwise stated, be construed to refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
article, section, paragraph, exhibit and schedule references are to the
articles, sections, paragraphs, exhibits and schedules of this Agreement unless
otherwise specified. The words describing the singular number shall include the
plural and vice versa, and words denoting any gender shall include all genders
and words denoting natural persons shall include corporations and partnerships
and vice versa. The phrase "made available" in this Agreement shall mean that
the information referred to has been made available if requested by the party to
who such information is to be made available. As used in this Agreement, the
term "affiliate(s)" shall have the meaning set forth in Rule 12b-2 of the
Exchange Act. The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
8.4 COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that both
parties need not sign the same counterpart.
8.5 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES.
----------------------------------------------
(a) This Agreement and the Confidentiality Agreement constitute the
entire agreement and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof,
other than the Confidentiality Agreement, which shall survive the execution and
delivery of this Agreement.
(b) This Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, express or implied,
is intended to or shall confer upon any other Person any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement, other than
Sections 5.5(a) and 5.7 (which are intended to be for the benefit of the Persons
covered thereby and may be enforced by such Persons).
8.6 GOVERNING LAW. This Agreement shall be governed and construed in
-------------
accordance with the laws of the State of Delaware.
8.7 SEVERABILITY. If any term or other provision of this Agreement
------------
is invalid, illegal or incapable of being enforced by any law or public policy,
all other terms and provisions
36
<PAGE>
of this Agreement shall nevertheless remain in full force and effect so long as
the economic or legal substance of the Transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the Transactions contemplated
hereby are consummated as originally contemplated to the greatest extent
possible.
8.8 ASSIGNMENT. Neither this Agreement nor any of the rights,
----------
interests or obligations hereunder shall be assigned by any of the parties
hereto, in whole or in part (whether by operation of law or otherwise), without
the prior written consent of the other party, and any attempt to make any such
assignment without such consent shall be null and void. 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.
8.9 SUBMISSION TO JURISDICTION; WAIVERS. Each of the Company and
-----------------------------------
Parent irrevocably agrees that any legal action or proceeding with respect to
this Agreement or for recognition and enforcement of any judgment in respect
hereof brought by the other party hereto or its successors or assigns may be
brought and determined in the Chancery or other Courts of the State of Delaware,
and each of the Company and Parent hereby irrevocably submits with regard to any
such action or proceeding for itself and in respect to its property, generally
and unconditionally, to the nonexclusive jurisdiction of the aforesaid courts.
Each of the Company and Parent hereby irrevocably waives, and agrees not to
assert, by way of motion, as a defense, counterclaim or otherwise, in any action
or proceeding with respect to this Agreement, (a) the defense of sovereign
immunity, (b) any claim that it is not personally subject to the jurisdiction of
the above-named courts for any reason other than the failure to serve process in
accordance with this Section 8.9, (c) that it or its property is exempt or
immune from jurisdiction of any such court or from any legal process commenced
in such courts (whether through service of notice, attachment before judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise)
and (d) to the fullest extent permitted by applicable law, that (i) the suit,
action or proceeding in any such court is brought in an inconvenient forum, (ii)
the venue of such suit, action or proceeding is improper and (iii) this
Agreement, or the subject matter hereof, may not be enforced in or by such
courts.
8.10 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. It is accordingly agreed
that the parties shall be entitled to specific performance of the terms hereof,
this being in addition to any other remedy to which they are entitled at law or
in equity.
8.11 AMENDMENT. This Agreement may be amended by the parties hereto,
---------
by action taken or authorized by their respective Boards of Directors, at any
time before or after approval of the matters presented in connection with the
Merger by the stockholders of the Company and Parent, but, after any such
approval, no amendment shall be made which by law or in accordance with the
rules of any relevant stock exchange requires further approval by such
37
<PAGE>
stockholders without such further approval; and provided, however, that after
-------- -------
the approval of this Agreement by the shareholders of the Company, no such
amendment, modification or supplement shall reduce or change the Merger
Consideration or adversely affect the rights of the Company's shareholders
hereunder without the approval of such shareholders. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
8.12 EXTENSION; WAIVER. At any time before the Effective Time, the
-----------------
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party. The failure
of any party to this Agreement to assert any of its rights under this Agreement
or otherwise shall not constitute a waiver of those rights.
8.13 DEFINITIONS. As used in this Agreement:
-----------
(a) "DATE HEREOF" means June 12, 1998.
(b) "BOARD OF DIRECTORS" means the Board of Directors of any specified
Person and any committees thereof.
(c) "BUSINESS DAY" means any day on which banks are not required or
authorized to close in the City of New York.
(d) "INDEBTEDNESS" of any person means all obligations of such person
(i) for borrowed money, (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) for the deferred purchase price of goods or services (other
than trade payables or accruals incurred in the ordinary course of business),
(iv) under capital leases and (v) in the nature of guarantees of the obligations
described in clauses (i) through (iv) above of any other person.
(e) "THE OTHER PARTY" means, with respect to the Company, Parent and
Merger Sub and means, with respect to Parent, the Company.
(f) "PERSON" means an individual, corporation, limited liability
company, partnership, association, trust, unincorporated organization, other
entity or group (as defined in the Exchange Act).
(g) "PERMITTED LIEN" means any Lien that:
(i) is a lien of a landlord, carrier, warehouseman, mechanic, materialman,
or any other statutory lien arising in the ordinary course of business;
38
<PAGE>
(ii) is a lien for Taxes not yet due or being contested in good faith;
(iii) with respect to the right of Seller to use any property leased to
Seller, arises by the terms of the applicable lease;
(iv) is a purchase money security interest arising in the ordinary course
of business;
(v) is a lien granted prior to the date hereof pursuant to the Credit
Agreement; or
(vi) does not materially detract from the value of the encumbered property
or assets or materially detract from or interfere with the use of the
encumbered property or assets in the ordinary course of business.
(h) "STOCK TENDER AGREEMENT" means that certain stock tender agreement
dated as of the date hereof by and between Parent or Merger Sub and the other
parties thereto.
(j) "SUBSIDIARY" when used with respect to any party means any
corporation or other organization, whether incorporated or unincorporated, (i)
of which such party or any other Subsidiary of such party is a general partner
(excluding partnerships, the general partnership interests of which held by such
party or any Subsidiary of such party do not have a majority of the voting
interests in such partnership) or (ii) at least a majority of the securities or
other interests of which having by their terms ordinary voting power to elect a
majority of the Board of Directors or others performing similar functions with
respect to such corporation or other organization is directly or indirectly
owned or controlled by such party or by any one or more of its Subsidiaries, or
by such party and one or more of its Subsidiaries.
8.14 OTHER AGREEMENTS. The parties hereto acknowledge and agree that,
----------------
except as otherwise expressly set forth in this Agreement, the rights and
obligations of the Company and Parent under any other agreement between the
parties shall not be affected by any provision of this Agreement.
39
<PAGE>
IN WITNESS WHEREOF, Parent, the Company and Merger Sub have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first above written.
TRIANGLE PACIFIC CORP.
By: /s/ Floyd F. Sherman
-------------------------------------
Title: Chairman of the Board
and Chief Executive Officer
---------------------------------
ARMSTRONG WORLD INDUSTRIES, INC.
By: /s/ George A. Lorch
-------------------------------------
Title: Chairman of the Board, President
and Chief Executive Officer
---------------------------------
SAPLING ACQUISITION, INC.
By: /s/ George A. Lorch
-------------------------------------
Title: President and Chairman of the
Board of Directors
---------------------------------
S-1
<PAGE>
ANNEX A
-------
CONDITIONS TO THE OFFER
-----------------------
Notwithstanding any other provision of the Offer, subject to the
provisions of the Merger Agreement, Merger Sub 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 Merger Sub's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for, and may delay the acceptance for payment of
or, subject to the restriction referred to above, the payment for, any tendered
Shares, and may not accept for payment any tendered Shares if (i) any applicable
waiting period under the HSR Act has not expired or been terminated prior to the
expiration of the Offer, (ii) the Minimum Condition has not been satisfied or
(iii) at any time on or after June 12, 1998, and before the time of acceptance
of Shares for payment pursuant to the Offer, any of the following events shall
occur:
(a) there shall have been any statute, rule, regulation, judgment,
decision, action, order or injunction promulgated, entered, enforced, enacted or
issued applicable to the Offer or the Merger by any federal or state
governmental regulatory or administrative agency or authority or court or
legislative body or commission that (1) prohibits the consummation of the Offer
or the Merger, (2) prohibits Parent's or Merger Sub's ownership or operation of
all or a majority of the Company's businesses or assets, or imposes any material
limitations on Parent's or Merger Sub's ownership or operation of all or a
majority of the Company's businesses or assets or constitutes a Company Material
Adverse Effect or a Parent Material Adverse Effect, (3) imposes material
limitations on the ability of Parent or Merger Sub to acquire or hold, or
exercise full rights of ownership of, any Shares to be accepted for payment
pursuant to the Offer including, without limitation, the right to vote such
Shares on all matters properly presented to the stockholders of the Company, or
any federal or state governmental regulatory or administrative agency or
authority shall have commenced or threatened to commence litigation or another
proceeding intended to achieve the results set forth in clauses (1)-(3) above;
provided, that the parties shall have used their reasonable best efforts to
- --------
cause any such statute, rule, regulation, judgment, order or injunction to be
vacated or lifted;
(b) (i) the representations and warranties of the Company set forth in
the Merger Agreement (without giving effect in any such representation or
warranty to any materiality or Company Material Adverse Effect standard,
qualification or exception contained therein) shall not be true and accurate as
of the date of the Merger Agreement and at the scheduled or extended expiration
of the Offer (except for those representations and warranties that address
matters only as of a particular date or only with respect to a specific period
of time which need only be true and accurate as of such date or with respect to
such period), except where the failure of such representations or warranties to
be true and accurate, individually or in the aggregate, does not constitute a
Company Material Adverse Effect, or (ii) the Company shall have breached or
failed to perform or comply in any material respect with any covenant required
by the Merger Agreement to be performed or complied with by it except, in the
case
A-1
<PAGE>
of covenants set forth in Sections 4.1(a) and (j), where the failure to perform
or comply with such covenants does not constitute a Company Material Adverse
Effect.
(c) the Merger Agreement shall have been terminated in accordance with
its terms;
(d) it shall have been publicly disclosed that any Person, entity or
"group" (as defined in Section 13(d)(3) of the Exchange Act) shall have acquired
beneficial ownership (as determined pursuant to Rule 13d-3 promulgated under the
Exchange Act) of more than a majority of the then-outstanding Shares, through
the acquisition of stock, the formation of a group or otherwise;
(e) the Board of Directors of the Company shall or any Committee
thereof have withdrawn or modified in a manner adverse to Parent or Merger Sub
its approval or recommendation of the Offer or the Merger or the adoption of the
Agreement or recommended an Acquisition Proposal other than the one contemplated
by the Merger Agreement, or shall have executed an agreement in principle a
definitive agreement relating to such an Acquisition Proposal or similar
business combination with a Person or entity other than Parent, Merger Sub or
their affiliates, or the Board of Directors of the Company shall have adopted a
resolution to do the foregoing; or
(f) there shall have occurred and be continuing (i) any general
suspension of trading in securities on any national securities exchange or in
the over-the-counter market, (ii) the declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States (whether or not
mandatory) or (iii) any limitation (whether or not mandatory) by an United
States governmental authority or agency on the extension of credit by banks or
other financial institutions which in the reasonable judgment of Parent or
Merger Sub, in any such case, makes it inadvisable to proceed with the Offer or
with such acceptance for payment or payments;
(g) all consents, registrations, approvals, permits, authorizations,
notices, reports or other filings required to be obtained or made by the
Company, Parent or Merger Sub with or from any Governmental Entity in connection
with the execution, delivery and performance of the Merger Agreement, the Offer
and the consummation of the transactions contemplated by the Merger Agreement
shall not have been made or obtained and such failure could reasonably be
expected to have a Company Material Adverse Effect; or
(h) any change shall have occurred since the date of the Merger
Agreement that individually or in the aggregate constitutes a Company Material
Adverse Effect.
The foregoing conditions are for the sole benefit of Merger Sub and
Parent and, subject to the terms of the Merger Agreement, may be asserted by
either of them or may be waived by Parent or Merger Sub, in whole or in part at
any time and from time to time in the sole discretion of Parent or Merger Sub.
The failure by Parent or Merger Sub at any time to
A-2
<PAGE>
exercise any such rights shall not be deemed a waiver of any right and each
right shall be deemed an ongoing right that may be asserted at any time and from
time to time.
A-3
<PAGE>
EXHIBIT (C)(2)
STOCK TENDER AGREEMENT
STOCK TENDER AGREEMENT (this "Agreement"), dated June 12, 1998, by and
---------
among Armstrong World Industries, Inc., a Pennsylvania corporation ("Parent"),
------
Sapling Acquisition, Inc., a Delaware corporation ("Purchaser") and a wholly-
---------
owned subsidiary of Parent, and each of the parties listed on the signature
pages hereto (each a "Stockholder", and collectively, the "Stockholders").
----------- ------------
WHEREAS, each of the Stockholders is, as of the date hereof, the record and
beneficial owner of the shares of common stock, par value $.01 per share (the
"Common Stock"), of Triangle Pacific Corp., a Delaware corporation (the
- -------------
"Company"), set forth opposite its name on Annex I hereto;
-------
WHEREAS, Parent, Purchaser and the Company concurrently herewith are
entering into an Agreement and Plan of Merger, dated as of the date hereof (the
"Merger Agreement"), which provides, among other things, for the acquisition of
----------------
the Company by Parent by means of a cash tender offer (the "Offer") by Purchaser
-----
for all of the outstanding shares of Common Stock and for the subsequent merger
(the "Merger") of Purchaser with and into the Company upon the terms and subject
------
to the conditions set forth in the Merger Agreement; and
WHEREAS, as a condition to the willingness of Parent and Purchaser to enter
into the Merger Agreement, and in order to induce Parent and Purchaser to enter
into the Merger Agreement, the Stockholders have agreed to enter into this
Agreement.
NOW, THEREFORE, in consideration of the execution and delivery by Parent
and Purchaser of the Merger Agreement and the mutual representations,
warranties, covenants and agreements set forth herein and therein, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Representations and Warranties of the Stockholder. Each of the
-------------------------------------------------
Stockholders hereby represents and warrants to Parent and Purchaser, severally
and not jointly, as follows:
(a) Such Stockholder is the beneficial owner of the shares of Common Stock
(as may be adjusted from time to time pursuant to Section 6 hereof, the
"Shares") set forth opposite its name on Annex I to this Agreement. Such Shares
------
are held of record, in each case, by the custodian of such Stockholder. On the
date hereof, the Shares opposite such Stockholder's name constitute all of the
Shares owned by such Stockholder. Such Stockholder has the exclusive right to
vote or dispose of (or exercise the voting or disposition of) such Shares.
<PAGE>
(b) Such Stockholder is a corporation, general partnership, limited
partnership, collective investment trust or separate account, as the case may
be, duly organized, validly existing and in good standing under the laws of its
respective jurisdiction of organization, and such Stockholder has all requisite
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby and has taken all corporate, partnership or
other action necessary to authorize the execution, delivery and performance of
this Agreement.
(c) This Agreement has been duly authorized, validly executed and delivered
by such Stockholder and constitutes the legal, valid and binding obligation of
such Stockholder, enforceable against such Stockholder in accordance with its
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting enforcement of creditors' rights generally
and by general equitable principles (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
(d) The execution and delivery of this Agreement by such Stockholder do
not, and the performance by such Stockholder of its obligations hereunder will
not, (i) conflict with, result in a violation or breach of, constitute (with or
without notice or lapse of time or both) a default under, result in or give to
any person any right of termination, cancellation, modification or acceleration
of, or result in the creation or imposition of any Lien upon any of the assets
or properties of such Stockholder under, any of the terms, conditions or
provisions of (A) the certificates of articles of incorporation or by laws (or
other comparable charter documents) of such Stockholder or (B) (x) any Law or
Order of any Governmental or Regulatory Authority applicable to such Stockholder
or any of its respective assets or properties, or (y) any Contract to which such
Stockholder is a party or by which such Stockholder or any of its respective
assets or properties is bound, excluding from the foregoing clauses (x) and (y)
conflicts, violations, breaches, defaults, terminations, modifications,
accelerations and creations and impositions of Liens which, individually or in
the aggregate, could not be reasonably expected to have a material adverse
effect on the ability of such Stockholder to consummate the transactions
contemplated by this Agreement, or (ii) require any filing by such Stockholder
with, or any permit, authorization, consent or approval of, any Governmental or
Regulatory Authority or any third party other than an amendment to Schedule 13D
and Form 4 and/or Form 5. There is no beneficiary or holder of a voting trust
certificate or other interest of any trust of which such Stockholder is a
trustee whose consent is required for the execution and delivery of this
Agreement or the consummation by such Stockholder of the transactions
contemplated hereby.
(e) The Shares and the certificates representing the Shares owned by such
Stockholder 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,
free and clear of all Liens, proxies, voting trusts or agreements or
understandings or arrangements whatsoever, except for any such liens or proxies
arising hereunder, and not subject to any preemptive rights.
SECTION 2. Representations and Warranties of Parent and Purchaser. Each
------------------------------------------------------
of Parent and Purchaser hereby represents and warrants to the Stockholders as
follows:
2
<PAGE>
(a) Parent and Purchaser are corporations duly organized, validly existing
and in good standing under the laws of their respective jurisdictions of
incorporation, and each of Parent and Purchaser has full corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby and has taken all necessary corporate action to authorize
the execution, delivery and performance of this Agreement.
(b) This Agreement has been duly authorized, executed and delivered by each
of Parent and Purchaser and constitutes the legal, valid and binding obligation
of each of Parent and Purchaser, enforceable against each of them in accordance
with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting enforcement of
creditors' rights generally and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
(c) The execution and delivery of this Agreement by Parent and Purchaser do
not, and the performance by Parent and Purchaser of their obligations hereunder
and the consummation of the transactions contemplated hereby will not, (i)
conflict with, result in a violation or breach of, constitute (with or without
notice or lapse of time or both) a default under, result in or give to any
person any right of termination, cancellation, modification or acceleration of,
or result in the creation or imposition of any Lien upon any of the assets or
properties of Parent or Purchaser under, any of the terms, conditions or
provisions of (A) the certificates or articles of incorporation or bylaws of
Parent or Purchaser or (B) (x) any Law or Order of any Governmental or
Regulatory Authority applicable to Parent or Purchaser or any of their
respective assets or properties, or (y) any Contract to which Parent or
Purchaser is a party or by which Parent or Purchaser or any of their respective
assets or properties is bound, excluding from the foregoing clauses (x) and (y)
conflicts, violations, breaches, defaults, terminations, modifications,
accelerations and creations and impositions of Liens which, individually or in
the aggregate, could not be reasonably expected to have a material adverse
effect on the ability of Parent and Purchaser to consummate the transactions
contemplated by this Agreement, or (ii) require any filing by Parent or
Purchaser with, or any permit, authorization, consent or approval of, any
Governmental or Regulatory Authority.
SECTION 3. Purchase and Sale of the Shares. Each of the Stockholders
-------------------------------
hereby agrees to tender the Shares set forth opposite its name on Annex I to
this Agreement into the Offer promptly, and in any event no later than the fifth
business day following the commencement of the Offer pursuant to Section 1.1 of
the Merger Agreement and not to withdraw any Shares so tendered unless the Offer
is terminated or has expired; provided that if such Stockholder shall thereafter
acquire shares of Common Stock, then any such Shares shall be tendered on the
next succeeding business day after such acquisition. Purchaser hereby agrees to
purchase all the Shares so tendered at a price per Share equal to $55.50 per
Share or any higher price that may be paid in the Offer; provided, however, that
-------- -------
Purchaser's obligation to accept for payment and pay for the Shares in the Offer
is subject to all the terms and conditions of the Offer set forth in the Merger
Agreement and Annex A thereto.
SECTION 4. Transfer of the Shares; Proxies and Non-Interference. Prior to
----------------------------------------------------
the termination of this Agreement, except as otherwise provided herein, none of
the Stockholders
3
<PAGE>
shall, directly or indirectly, (i) offer for sale, sell, transfer, tender,
pledge, encumber, assign, or otherwise dispose of, any or all of the Shares;
(ii) enter into any Contract, option or understanding with respect to any
transfer of any or all of the Shares or any interest therein; (iii) except as
provided herein, grant any proxy, power-of-attorney or other authorization or
consent in or with respect to the Shares; (iv) deposit the Shares into a voting
trust or enter into a voting agreement or arrangement with respect to the
Shares; or (v) take any other action that would in any way restrict, limit or
interfere with the performance of such Stockholder's obligations hereunder or
the transactions contemplated hereby.
SECTION 5. Stockholder Capacity. No person executing this Agreement who
--------------------
is or becomes during the term hereof a director of the Company makes any
agreement or understanding herein in his or her capacity as such director. Each
Shareholder signs solely in his or her capacity as the owner of, or the trustee
of a trust whose beneficiaries are the owners of, such Shareholder Shares.
SECTION 6. Certain Events. In the event of any stock split, stock
--------------
dividend, merger, reorganization, recapitalization or other change in the
capital structure of the Company affecting the Common Stock or the acquisition
of additional shares of Common Stock or other securities or rights of the
Company by any Stockholder, the number of Shares shall be adjusted
appropriately, and this Agreement and the rights and obligations hereunder shall
attach to any additional shares of Common Stock or other securities or rights of
the Company issued to or acquired by any such Stockholder.
SECTION 7. Certain Other Agreements. From the date of this Agreement
------------------------
until the earlier of the termination of this Agreement or the Effective Time,
none of the Stockholders shall, and none of the Stockholders shall permit or
authorize any advisor or representative retained by or acting for or on behalf
of any such Stockholder to, directly or indirectly, (i) take any action to
initiate, solicit, continue, encourage or facilitate (including by way of
furnishing or disclosing non-public information) any inquiries or the making of
any offer or proposal with respect to a merger, reorganization, share exchange,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Company or any of its subsidiaries or any
proposal or offer to acquire in any manner, directly or indirectly, 15% or more
of the shares of any class of voting securities of the Company or any of its
subsidiaries or a substantial portion of the assets of the Company or any of its
subsidiaries, other than the transactions contemplated by the Merger Agreement
or by this Agreement (any of the foregoing being referred to as an "Acquisition
-----------
Proposal"), or (ii) engage in negotiations, discussions or communications
- --------
regarding or disclose any information relating to the Company or any of its
subsidiaries or afford access to the properties, books or records of the Company
or any of its subsidiaries to any person, corporation, partnership or other
entity or group (a "Potential Acquiror") that may be considering making, or has
------------------
made, an Acquisition Proposal or knowingly facilitate any effort or attempt to
make or implement an Acquisition Proposal or accept an Acquisition Proposal.
Each of the Stockholders shall (i) notify Parent promptly (and in any event
within one business day) after receipt of any Acquisition Proposal (or any
indication that any person is considering making an Acquisition Proposal) or any
request for non-public information relating to the Company or any of its
subsidiaries or for access to the properties,
4
<PAGE>
books or records of the Company or any of its subsidiaries by any person that
may be considering making, or has made, an Acquisition Proposal, (ii) notify
Parent promptly of any material change to any such Acquisition Proposal,
indication or request and (iii) upon reasonable request by Parent, provide
Parent with all material information about any such Acquisition Proposal,
indication or request.
SECTION 8. Further Assurances. Each of the Stockholders shall, upon
------------------
request of Parent or Purchaser, take such further actions as may reasonably be
necessary or desirable to carry out the provisions hereof, provided that the
Stockholders shall not be required to incur any additional costs or expenses or
receive less-than the agreed price without their consent.
SECTION 9. Termination. Except as otherwise provided in this Agreement,
-----------
this Agreement, and all rights and obligations of the parties hereunder, shall
terminate immediately upon the earlier of (i) the acquisition by Parent, through
Purchaser or otherwise, of all the Shares, (ii) the termination of the Merger
Agreement in accordance with its terms or (iii) the Effective Time; provided,
--------
however, that Sections 8 and 10 shall survive any termination of this Agreement.
- -------
SECTION 10. Expenses. All fees and expenses incurred by any one party
--------
hereto shall be borne by the party incurring such fees and expenses.
SECTION 11. Public Announcements. Each of the Stockholders, Parent and
--------------------
Purchaser agrees that it will not issue any press release or otherwise make any
public statement with respect to this Agreement or the transactions contemplated
hereby without the prior consent of the other party, which consent shall not be
unreasonably withheld or delayed; provided, however, that such disclosure can be
-------- -------
made without obtaining such prior consent if (i) the disclosure is required by
law, and (ii) the party making such disclosure has first used its best efforts
to consult with the other party about the form and substance of such disclosure.
SECTION 12. Definitions. As used in this Agreement, the following terms
-----------
shall
have the meanings indicated below:
"Contract" means any agreement, lease, evidence of indebtedness, mortgage,
--------
indenture, security agreement or other contract (whether written or oral).
"Law" means any law, statute, rule, regulation, ordinance and other
---
pronouncement having the effect of law of the United States, any foreign country
or any domestic or foreign state, county, city or other political subdivision or
of any Governmental or Regulatory Authority.
"Liens" means any mortgage, pledge, assessment, security interest, lease,
-----
lien, adverse claim, levy, charge or other encumbrance of any kind, or any
conditional sale Contract, title retention Contract or other Contract to give
any of the foregoing.
5
<PAGE>
"Governmental or Regulatory Authority" means any court, tribunal,
------------------------------------
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state, county,
city or other political subdivision.
"Order" means any writ, judgment, decree, injunction or similar order of
-----
any Governmental or Regulatory Authority (in each such case whether preliminary
or final).
SECTION 13. Miscellaneous.
-------------
(a) All notices, requests and other communications hereunder must be in
writing and will be deemed to have been duly given only if delivered personally
or by facsimile transmission or mailed (first class postage prepaid) to the
parties at the following addresses or facsimile numbers:
(A) if to any or all the Stockholders, to:
Oaktree Capital Management LLC
550 South Hope Street, 22nd Floor
Los Angeles, California 90071
Telephone: (213) 694-1522
Facsimile: (213) 533-5022
Attention: Kenneth Liang
with copies to:
Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, New York 10166-0193
Telephone: (212) 351-3850
Facsimile: (212) 351-5247
Attention: Conor D. Reilly
6
<PAGE>
and
(B) if to Parent or Purchaser, to:
Armstrong World Industries, Inc.
313 West Liberty Street
P.O. Box 3001
Lancaster, Pennsylvania
17604-3001
Telephone: (717) 396-0611
Facsimile: (717) 396-2983
Attention: Deborah K. Owen
Senior Vice President,
Secretary and General Counsel
with a copy to:
Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
Telephone: (212) 878-8000
Facsimile: (212) 878-8375
Attention: Robert E. King, Jr., Esq.
Bonnie A. Barsamian, Esq.
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt, and (iii) if delivered
by mail in the manner described above to the address as provided in this
Section, be deemed given upon receipt (in each case regardless of whether such
notice, request or other communication is received by any other person to whom a
copy of such notice is to be delivered pursuant to this Section). Any party
from time to time may change its address, facsimile number or other information
for the purpose of notices to that party by giving notice specifying such change
to the other parties hereto.
(b) 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.
(c) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall be considered one and
the same agreement.
(d) This Agreement constitutes the entire agreement, and supersedes all
prior agreements and understandings, whether written and oral, among the parties
hereto with respect to the subject matter hereof.
7
<PAGE>
(e) This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Delaware without giving effect to the principles of
conflicts of laws thereof.
(f) Each party hereby irrevocably submits to the exclusive jurisdiction of
the Court of Chancery in the State of Delaware or the United States District
Court for the Southern District of New York or any court of the State of New
York located in the City of New York in any action, suit or proceeding arising
in connection with this Agreement, and agrees that any such action, suit or
proceeding shall be brought only in such court (and waives any objection based
on forum non conveniens or any other objection to venue therein); provided,
however, that such consent to jurisdiction is solely for the purpose referred to
in this paragraph (f) and shall not be deemed to be a general submission to the
jurisdiction of said Courts or in the States of Delaware or New York other than
for such purposes. Each party hereto hereby waives any right to a trial by jury
in connection with any such action, suit or proceeding.
(g) Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of the other parties, and
any such purported assignment shall be null and void; provided, however,
-------- -------
Purchaser or Parent may, without the prior written consent of any Stockholder
assign its rights and obligations to any of its direct or indirect wholly owned
subsidiaries. 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, and the provisions of this Agreement are not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder.
(h) If any term, provision, covenant or restriction herein is held by a
court of competent jurisdiction or other authority to be invalid, void or
unenforceable or against its regulatory policy, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
(i) Each of the parties hereto acknowledge and agrees that in the event of
any breach of this Agreement, each non-breaching party would be irreparably and
immediately harmed and could not be made whole by monetary damages. It is
accordingly agreed that the parties hereto (i) will waive, in any action for
specific performance, the defense of adequacy of a remedy at law and (ii) shall
be entitled, in addition to any other remedy to which they may be entitled at
law or in equity, to compel specific performance of this Agreement.
(j) No amendment, modification or waiver in respect to this Agreement shall
be effective unless it shall be in writing and signed by each party hereto;
provided that Annex I hereto may be supplemented by Parent by adding the name
-------
and other relevant information concerning any stockholder of the Company who
agrees to be bound by the terms of this Agreement without the agreement of any
other party hereto, and thereafter such added stockholder shall be treated as a
"Stockholder" for all purposes of this Agreement.
8
<PAGE>
IN WITNESS WHEREOF, each of Parent, the Purchaser and the Stockholders have
caused this Agreement to be duly executed and delivered as of the date first
written above.
ARMSTRONG WORLD INDUSTRIES, INC.
By: /s/ George A. Lorch
-------------------------------------
Name: George A. Lorch
Title: Chairman of the Board, President
and Chief Executive Officer
---------------------------------
SAPLING ACQUISITION, INC.
By: /s/ George A. Lorch
-------------------------------------
Name: George A. Lorch
Title: President and Chairman of
the Board
---------------------------------
TCW SPECIAL CREDITS FUND IIIb
By: TCW SPECIAL CREDITS, its general partner
By: TCW ASSET MANAGEMENT COMPANY, its
Managing General Partner
By:/s/ Matthew S. Barrett
----------------------
Name: Matthew S. Barrett
Title:
By:/s/ Kenneth Liang
-----------------
Name: Kenneth Liang
Title:
TCW SPECIAL CREDITS TRUST
By: TRUST COMPANY OF THE WEST, as Trustee
By:/s/ Matthew S. Barrett
----------------------
9
<PAGE>
Name: Mathew S. Barrett
Title: Authorized Signatory
By:/s/ Kenneth Liang
-----------------
Name: Kenneth Liang
Title: Authorized Signatory
TCW SPECIAL CREDITS TRUST IIIb
By: TRUST COMPANY OF THE WEST, as Trustee
By:/s/ Matthew S. Barrett
----------------------
Name: Matthew S. Barrett
Title: Authorized Signatory
By:/s/ Kenneth Liang
-----------------
Name: Kenneth Liang
Title: Authorized Signatory
WEYERHAEUSER COMPANY MASTER RETIREMENT TRUST
By: TCW SPECIAL CREDITS, its investment manager
By: TCW ASSET MANAGEMENT COMPANY, its
Managing General Partner
By:/s/ Matthew S. Barrett
----------------------
Name: Matthew S. Barrett
Title: Authorized Signatory
By:/s/ Kenneth Liang
-----------------
Name: Kenneth Liang
Title: Authorized Signatory
THE COMMON FUND FOR BOND INVESTMENTS
10
<PAGE>
By: TCW SPECIAL CREDITS, as investment manager
By: TCW ASSET MANAGEMENT COMPANY, its
Managing General Partner
By:/s/ Matthew S. Barrett
----------------------
Name: Matthew S. Barrett
Title: Authorized Signatory
By:/s/ Kenneth Liang
-----------------
Name: Kenneth Liang
Title: Authorized Signatory
TCW SPECIAL CREDITS FUND V - THE PRINCIPAL FUND
By: TCW ASSET MANAGEMENT COMPANY, its General
Partner
By:/s/ Stephen A. Kaplan
---------------------
Name: Stephen A. Kaplan
Title: Authorized Signatory
By:/s/ Kenneth Liang
-----------------
Name: Kenneth Liang
Title: Authorized Signatory
TCW ASSET MANAGEMENT COMPANY
By: /s/ Marc I. Stern
---------------------------------
Name: Marc I. Stern
Title: Vice Chairman
By: /s/ Michael Cahill
---------------------------------
Name: Michael Cahill
Title: Managing Director
11
<PAGE>
ANNEX I
Ownership of Company Common Stock
Number of Shares
-----------------
TCW Special Credits Fund IIIb........................ 339,709
TCW Special Credits Trust............................ 337,717
TCW Special Credits Trust IIIb....................... 144,815
TCW Special Credits Fund V........................... 4,250,085
TCW Asset Management Company......................... 339,053
Weyerhaeuser Company Master
Retirement Trust (separate account).................. 198,801
Common Fund For Bond Investments (separate account).. 299,004
12
