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FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): OCTOBER 21, 1998
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(OCTOBER 6, 1998)
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SHAW INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
GEORGIA 1-6853 58-1032521
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
616 E. WALNUT AVENUE, DALTON, GEORGIA 30720
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (706) 275-3812
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NOT APPLICABLE
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(Former name or former address, if changed since last report.)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On October 6, 1998, the Registrant completed the acquisition of Queen
Carpet Corporation ("Queen") pursuant to the merger (the "Queen Merger") of
Queen with and into the Registrant. The Queen Merger was effected pursuant to
that certain Agreement and Plan of Merger, dated August 13, 1998 (the "Merger
Agreement"), among the Registrant, its wholly-owned subsidiary, Chessman
Acquisition Corp. ("Chessman"), Queen and the shareholders of Queen (the "Queen
Shareholders"), as amended by the First Amendment thereto, dated October 6,
1998 (the "First Amendment"), among the Registrant, Chessman, Queen and the
Queen Shareholders. Prior to the consummation of the Queen Merger,
privately-held Queen was the fourth largest carpet manufacturer in the United
States with annual sales of approximately $800 million. As consideration for
their shares of Queen stock, in the Queen Merger the Queen Shareholders
received from the Registrant (i) 3.15 million shares of the common stock of The
Maxim Group, Inc.; (ii) 19,444,444 shares of the Registrant's common stock; and
(iii) approximately $35.8 million in cash. In addition, in connection with the
Queen Merger, the Registrant made executive retention incentive payments to
certain key employees of Queen consisting of (a) an aggregate of 841,733 shares
of the Registrant's common stock and (b) $12.1 million in cash. At the
effective time of the Queen Merger, Queen had aggregate liabilities of
approximately $220 million.
The Registrant financed the cash portion of the purchase price paid in
the Queen Merger, the cash portion of the executive retention incentive
payments and the fees and expenses associated with the Queen Merger, through
borrowings under its existing credit facility. In connection with the
consummation of the Queen Merger, the Registrant amended its Amended and
Restated Credit Agreement, as amended, on October 6, 1998, among other things,
to allow the Registrant to assume certain guaranties and other indebtedness of
Queen.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
The required financial information will be filed by
amendment to this Report as soon as practicable but in no
event later than December 21, 1998.
(b) Pro Forma Financial Information.
The required pro forma financial information will be filed by
amendment to this Report as soon as practicable but in no
event later than December 21, 1998.
(c) Exhibits.
99.1 Agreement and Plan of Merger, dated August
13, 1998, among Shaw Industries, Inc.,
Chessman Acquisition Corp., Queen Carpet
Corporation, Julian Saul, Linda Saul, Anita
Saul Family Trust, Julian Saul Family
Trust, and Linda Saul Schejola Family
Trust. [Incorporated by reference to
Exhibit 99.1 of the Registrant's Current
Report on Form 8-K filed with the
Commission on August 28, 1998 (File No.
1-6853).]
99.2 First Amendment to Agreement and Plan of
Merger, dated October 6, 1998, among Shaw
Industries, Inc., Chessman Acquisition
Corp., Queen Carpet Corporation, Julian
Saul, Linda Saul, Anita Saul Family Trust,
Julian Saul Family Trust, and Linda Saul
Schejola Family Trust.
99.3 First Amendment to the Amended and Restated
Credit Agreement, dated August 7, 1998,
among Shaw Industries, Inc., the lenders
appearing on the signature pages thereto,
NationsBank, N.A. and SunTrust Bank,
Atlanta.
99.4 Second Amendment to the Amended and
Restated Credit Agreement, dated October 6,
1998, among Shaw Industries, Inc., the
lenders appearing on the signature pages
thereto, NationsBank, N.A. and SunTrust
Bank, Atlanta.
99.5 Third Amendment to the Amended and Restated
Credit Agreement, dated October 15, 1998,
among Shaw Industries, Inc., the lenders
appearing on the signature pages thereto,
NationsBank, N.A. and SunTrust Bank,
Atlanta.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SHAW INDUSTRIES, INC.
By: /s/ Bennie M. Laughter
-----------------------------------------
Bennie M. Laughter
Vice President, Secretary and
General Counsel
Dated: October 19, 1998
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
99.1 Agreement and Plan of Merger, dated August 13, 1998, among
Shaw Industries, Inc., Chessman Acquisition Corp., Queen
Carpet Corporation, Julian Saul, Linda Saul, Anita Saul
Family Trust, Julian Saul Family Trust, and Linda Saul
Schejola Family Trust. [Incorporated by reference to Exhibit
99.1 of the Registrant's Current Report on Form 8-K filed
with the Commission on August 28, 1998 (File No. 1-6853).]
99.2 First Amendment to Agreement and Plan of Merger, dated October
6, 1998, among Shaw Industries, Inc., Chessman Acquisition
Corp., Queen Carpet Corporation, Julian Saul, Linda Saul,
Anita Saul Family Trust, Julian Saul Family Trust, and Linda
Saul Schejola Family Trust.
99.3 First Amendment to the Amended and Restated Credit Agreement,
dated August 7, 1998, among Shaw Industries, Inc., the
lenders appearing on the signature pages thereto,
NationsBank, N.A. and SunTrust Bank, Atlanta.
99.4 Second Amendment to the Amended and Restated Credit Agreement,
dated October 6, 1998, among Shaw Industries, Inc., the
lenders appearing on the signature pages thereto,
NationsBank, N.A. and SunTrust Bank, Atlanta.
99.5 Third Amendment to the Amended and Restated Credit Agreement,
dated October 15, 1998, among Shaw Industries, Inc., the
lenders appearing on the signature pages thereto,
NationsBank, N.A. and SunTrust Bank, Atlanta.
</TABLE>
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EXHIBIT 99.2
FIRST AMENDMENT TO
AGREEMENT AND PLAN OF MERGER
THIS FIRST AMENDMENT (the "First Amendment") to that certain Agreement
and Plan of Merger, dated as of August 13, 1998 (the "Agreement") among Shaw
Industries, Inc. ("Parent"), Chessman Acquisition Corp. ("Subsidiary"), Queen
Carpet Corporation ("Company") and Julian Saul, Linda Saul, Anita Saul Family
Trust, Julian Saul Family Trust and Linda Saul Schejola Family Trust
(collectively, "Shareholders") is entered into as of the 6th day of October,
1998, by and among PARENT, SUBSIDIARY, COMPANY and the SHAREHOLDERS in
accordance with the provisions of the Agreement. Capitalized terms used but not
defined herein shall have the meanings ascribed to them in the Agreement.
WHEREAS, the Agreement contemplated that the Company would be merged
with and into the Subsidiary, with the Subsidiary being the Surviving
Corporation;
WHEREAS, the parties hereto wish to amend the Agreement to provide that
(i) the Company will be merged with and into Parent (instead of Subsidiary),
with Parent being the Surviving Corporation, (ii) the Note to be delivered at
Closing be substituted with shares of common capital stock of M Corp., and under
certain circumstances, a cash payment, and (iii) certain other provisions be
revised to reflect the current agreement of the Parties.
NOW, THEREFORE, in consideration of the foregoing, the agreements set
forth below and other good and valuable consideration, the receipt and
sufficiency of which is acknowledged, the parties agree as follows:
1. The Agreement is hereby amended as follows:
A. Section 2.1 shall be deleted in its entirety and the
following shall be inserted in lieu thereof:
2.1 Merger.
Subject to the terms and conditions of this
Agreement, at the Effective Time, Company shall be merged with
and into Parent in accordance with the provisions of Section
14-2-1101 et seq. of the GBCC and with the effect provided in
Section 14-2-1106 of the GBCC (the "Merger"). Parent shall be
the Surviving Corporation resulting from the Merger (the
"Surviving Corporation") and shall continue to be governed by
the laws of the State of Georgia. The Merger shall be
consummated pursuant to the terms of this Agreement, which has
been approved and adopted by the respective boards of
directors of Company, Parent and Subsidiary, and has been
approved by the Shareholders as all of the shareholders of
Company, as required by applicable law.
B. Section 3.1 shall be deleted in its entirety and the
following shall be inserted in lieu thereof:
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3.1 Charter.
The Articles of Incorporation of Parent in effect
immediately prior to the Effective Time shall be the Articles
of Incorporation of the Surviving Corporation until duly
amended or repealed.
C. The word "Subsidiary" shall be deleted and the word
"Parent" inserted in lieu thereof in each of the following:
1. RECITALS - third sentence
2. SECTION 1 (DEFINITIONS)
"Contemplated Transactions" - subparagraph (d)
3. SECTION 3.2 (Bylaws)
4. SECTION 3.3 (Directors and Officers)
5. SECTION 4.1 (Conversion of Company Common Stock)
Paragraph (c) (iii)
6. SECTION 4.9 (Taking of Necessary Action; Further
Actions)
7. SECTION 6.2(a) (Authority; No Conflict)
8. SECTION 12.4 (Indemnification and Payment of Damages
by Parent - Other Matters)
9. SECTION 13.3 (Section 1362(e)(3) Election)
D. The fifth sentence of the recitals shall be deleted
in its entirety and the following shall be inserted in lieu thereof:
This Agreement also provides for the employment of Executive
as Executive Vice President of the Parent and President of the
Queen Carpet Division of the Parent and the appointment of
Executive to the Board of Directors of Parent.
E. The last sentence of Section 3.3 shall be deleted in
its entirety and the following shall be inserted in lieu thereof:
The officers of the Company at the Effective Time shall become
divisional officers of the Queen Carpet Division of Parent
with the same titles (together with such additional or
different officers as Parent shall appoint from time to time),
provided that Executive shall be elected Executive Vice
President of Parent and President of the Queen Carpet Division
of Parent.
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F. Section 4.1(c)(i)(A) shall be deleted in its entirety
and the following shall be inserted in lieu thereof:
(A) The sum of $70,000,000 which shall be deemed
delivered by means of the delivery by Parent of 3.15 million
shares of the common capital stock ("M Corp. Stock") of The
Maxim Group, Inc. ("M Corp."), freely transferable under
applicable federal and state securities laws, and free of all
Encumbrances, except restrictions on transfer of the M Corp.
Stock at any time prior to December 31, 1998 under that
certain Stock Purchase Option from the Parent in favor of M
Corp., a copy of which is attached to this First Amendment as
EXHIBIT A (the "M Corp. Option); provided that in the event
the aggregate value of M Corp. Stock valued as of the Closing
Date is less than $70,000,000, based on the closing price of M
Corp. Stock on the Closing Date as reported by the Wall Street
Journal published on the next business day, then in addition
to the delivery of 3.15 million shares of M Corp. Stock, fifty
percent (50%) of the amount by which $70,000,000 exceeds such
aggregate value of M Corp. Stock shall be paid by Parent
within two (2) business days following such determination in
cash, by wire transfer or other immediately available funds;
plus
G. The last sentence of Section 4.1(c)(ii)(B) shall be
deleted.
H. Section 4.2(a)(ii) shall be amended to delete the
reference to "Subsidiary".
I. Section 4.2(b)(ii) shall be amended to delete the
words "Subsidiary and".
J. Section 5.13(l) is hereby amended by adding at the
beginning of the subsection "Except as disclosed in Schedule 5.13(l), . . ."
K. Section 5.13(m) is hereby amended by adding at the
beginning of the subsection "Except as disclosed in Schedule 5.13(m),"
L. Section 6.2(a) shall be deleted in its entirety and
the following shall be inserted in lieu thereof:
(a) This Agreement constitutes the legal, valid and
binding obligation of Parent and Subsidiary, enforceable
against Parent and Subsidiary in accordance with its terms.
Upon execution and delivery by Parent of the Certificate of
Merger, the Employment Agreement and the Real Property
Agreements (collectively, the "Parent's Closing Documents"),
the Parent's Closing Documents will constitute the legal,
valid and binding obligations of Parent, enforceable against
Parent in accordance with their respective terms. Parent and
Subsidiary have the absolute and unrestricted right, power and
authority to execute and deliver this Agreement and the
Parent's Closing Documents and to perform their obligations
under this Agreement and the Parent's Closing Documents.
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M. Section 7.7(a) shall be deleted in its entirety and
the following shall be inserted in lieu thereof:
(a) Subject to the provisions of the GBCC, Company shall
be entitled to make one or more distributions on Company
Common Stock to its Shareholders in an aggregate amount of
$131 million. Such distribution shall result in a reduction of
Merger Consideration as provided in Section 4.1(c) of this
Agreement. In addition, Company shall be entitled to make tax
distributions as contemplated by Section 4.1(c)(ii)(A) in the
amount of $18.625 million, which tax distribution shall not
result in a reduction of Merger Consideration as provided in
Section 4.1(c) of this Agreement.
2. With respect of the provisions of Section 4.1(c)(ii) of the
Agreement, the Parties acknowledge and agree as follows:
(A) With respect to the provisions of subparagraph
(ii)(A), the reduction in the Merger Consideration as of the
Closing Date for dividends and other distributions as
contemplated by such subparagraph is in the aggregate amount
of $131 million and the amount of dividends and distributions
for estimated Tax payments which do not reduce Merger
Consideration as contemplated by such paragraph is $18.625
million.
(B) With respect to special bonuses contemplated by
subparagraph (i)(B), the amount of special bonuses shall be
$24,200,000 which shall be paid by Parent following the
Effective Time, fifty percent (50%) in cash and fifty percent
(50%) in shares of Parent Common Stock valued as determined
pursuant to the Executive Incentive Agreements between the
Company and the individual recipients of the bonuses, the form
of which is set forth as Exhibit B attached to this First
Amendment (the "Executive Incentive Agreements"). Special
bonus payments shall be made net of any tax withholdings. It
is acknowledged that the Board of Directors of the Company
have designated the bonus pool of participants and has advised
Parent of such designations and delivered originals of such
Executive Incentive Agreements to Parent.
3. Pursuant to Section 9.4(c) of the Agreement, Shareholders
shall deliver to Parent and M Corp. their written agreement as set forth in and
as part of the M Corp. Option, pursuant to which the Shareholders agree to
accept and be bound by all the terms and conditions of the M Corp. Option and
agree that all such terms and conditions shall be binding upon the Shareholders
and their successors, personal representatives and heirs to the same extent as
if the Shareholders had originally been a party to the M Corp. Option.
4. Except as modified by Paragraphs 1 and 2 of this First
Amendment, the Agreement shall remain in full force and effect.
5. This First Amendment shall be governed by the laws of the
State of Georgia without regard to conflicts of laws principles.
6. This First Amendment may be executed in counterparts and shall
be binding upon each party executing this or any counterpart.
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IN WITNESS WHEREOF, this First Amendment has been executed as of the
date and year first above written.
SHAW INDUSTRIES, INC.
By: /s/ Bennie M. Laughter
----------------------------------------
Name: Bennie M. Laughter
--------------------------------------
Title: Vice President
-------------------------------------
CHESSMAN ACQUISITION CORPORATION
By: /s/ Bennie M. Laughter
----------------------------------------
Name: Bennie M. Laughter
--------------------------------------
Title: Vice President
-------------------------------------
QUEEN CARPET CORPORATION
By: /s/ Gerald R. Embry
----------------------------------------
Name: Gerald R. Embry
--------------------------------------
Title: Vice President Finance
-------------------------------------
/s/ Julian Saul
--------------------------------------------
JULIAN SAUL
/s/ Linda Saul Schejola
--------------------------------------------
LINDA SAUL SCHEJOLA
ANITA SAUL FAMILY TRUST
By: /s/ Anita Saul
----------------------------------------
Anita Saul, Trustee
JULIAN SAUL FAMILY TRUST
By: /s/ Julian Saul
----------------------------------------
Julian Saul, Trustee
LINDA SAUL SCHEJOLA FAMILY TRUST
By: /s/ Linda Saul Schejola
----------------------------------------
Linda Saul Schejola, Trustee
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EXHIBIT A
STOCK PURCHASE OPTION
3,150,000 SHARES OF COMMON STOCK DATED OCTOBER 6, 1998
OF THE MAXIM GROUP, INC.
This certifies that, for value received, THE MAXIM GROUP, INC., a
Delaware corporation (the "Holder"), its successors and assigns, is entitled,
upon the due exercise hereof at any time during the period commencing on
October 6, 1998 and terminating at 5:00 E.S.T. on December 31, 1998, to
purchase from SHAW INDUSTRIES, INC., a Georgia corporation ("Shaw"), Three
Million One Hundred and Fifty Thousand (3,150,000) shares of Common Stock, par
value $.001 per share, of Maxim, such number of shares being subject to
adjustment upon the occurrence of the contingencies set forth in this Option.
The purchase price payable upon the exercise of this Option shall be $22.222
per share (hereinafter referred to as the "Exercise Price"), subject to
adjustment upon the occurrence of the contingencies set forth in this Option.
All references herein to "Maxim" shall mean The Maxim Group, Inc., a Delaware
corporation. Shares of Common Stock of Maxim that are subject to purchase upon
exercise of this Option are hereinafter referred to as the "Option Shares."
Section 1. Duration and Exercise of Option. This Option shall
expire on 5:00 p.m. Eastern Standard Time on December 31, 1998 (the "Expiration
Date"). After the Expiration Date, any unexercised portion of this Option will
be wholly void and of no value. This Option may be exercised by the Holder on
any business day beginning on October 6, 1998 and on or prior to the Expiration
Date. For purposes of this Option, the term "business day" means each Monday,
Tuesday, Wednesday, Thursday and Friday which is not a day on which banking
institutions in New York, New York are authorized or obligated by law or
executive order to close.
Subject to the provisions of this Option, the Holder shall have the
right to purchase from Shaw (and Shaw shall as soon as practicable sell to such
Holder) Three Million One Hundred and Fifty Thousand (3,150,000) fully paid and
nonassessable Option Shares, including any shares of any class or series of
stock into which such shares may hereafter be changed and subject to the
adjustments contemplated by Section 3 hereof, at the Exercise Price, upon
surrender to Shaw of this Option, with the Form of Exercise attached thereto
duly filled in and executed by the Holder or its duly authorized agent and upon
payment of the Exercise Price in lawful money of the United States of America
in cash, or by wire transfer to Shaw's account (or the account of Shaw's
successors, transferees or assigns) of immediately available funds. The number
of Shares, and the amount and type of securities or other property purchasable
upon exercise of this Option shall be subject to adjustment as provided in
Section 3.
Subject to Section 3, (i) upon such surrender of this Option and
payment of the Exercise Price on or prior to the Expiration Date, Shaw shall
deliver or cause to be delivered to the Holder certificates or other
appropriate instruments for any other securities, and such other property
issuable upon the exercise of this Option, in such name or names as the Holder
shall designate on the Form of Exercise attached thereto; and (ii) such Option
Shares, securities and other property shall be deemed to have been transferred
to, and any person so designated therein shall be deemed to have become, the
holder of record
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of such Option Shares, securities or property as of the date of the surrender
of this Option and payment of the Exercise Price.
This Option shall be exercisable, at the election of the Holder, in
whole but not in part.
Section 2. Transfers and Exchanges. With the prior written consent
of Shaw or its successors, transferees or assigns, which consent will not be
unreasonably withheld, this Option shall be transferable by the Holder, in
whole or in part, upon surrender of this Option at the office of Shaw, together
with (i) a written assignment of this Option, duly executed by the Holder
thereof or his duly authorized agent, and (ii) funds required to pay any
transfer, documentary, stamp or other taxes or government charges payable in
connection with such transfer and any other amounts required pursuant to this
Option. Upon such surrender and payment, Shaw shall deliver a new Option, in
the name of the assignee and in the permissible denomination or denominations
specified in such instrument of assignment. If less than all of the Options are
being transferred, Shaw shall deliver a new Option to the Holder for the
portion of this Option not being transferred. Shaw shall cancel the Option
surrendered.
If this Option at any time becomes mutilated, lost, stolen or
destroyed, Shaw will issue in exchange and substitution for and upon
cancellation of the mutilated Option, or in lieu of and in substitution for the
Option lost, stolen or destroyed, a new Option of like tenor and representing
an equivalent Option, but only upon receipt of evidence satisfactory to Shaw of
such loss, theft or destruction of such Option and indemnity reasonably
satisfactory to Shaw.
Section 3. Adjustment of Exercise Price and Number of Shares
Purchasable Hereunder. The Exercise Price and the number of Option Shares
purchasable upon the exercise of the Option are subject to adjustment from time
to time upon the occurrence of the events enumerated in this Section 3.
(a) In case Maxim shall at any time after the date of this
Option (i) declare a dividend on the Common Stock payable in shares of its
capital stock (whether shares of Common Stock or of capital stock of any other
class), (ii) subdivide the outstanding Common Stock, (iii) combine the
outstanding Common Stock into a smaller number of shares or (iv) issue any
shares of its capital stock in a reclassification of the Common Stock
(including any such reclassification in connection with a consolidation or
merger in which Maxim is the continuing corporation), the Exercise Price in
effect at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification, shall be
proportionately adjusted so that the Holder of the Option exercised after such
time shall be entitled to receive the aggregate number and kind of shares of
capital stock which, if such Option had been exercised immediately prior to
such date, it would have owned upon such exercise and been entitled to receive
by virtue of such dividend, subdivision, combination or reclassification. Such
adjustment shall be made successively whenever any event listed above shall
occur.
(b) No adjustment in the Exercise Price shall be required
unless such adjustment would require an increase or decrease of at least five
cents ($.05) in such price; provided, however, that any adjustments which by
reason of this Section 3(b) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment.
(c) In the event that at any time, as a result of an
adjustment made pursuant to Section 3(a) the Holder shall become entitled to
receive any shares of capital stock of Maxim other than
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shares of Common Stock, thereafter the number of such other shares so receivable
upon exercise of the Option shall be subject to adjustment from time to time in
a manner and on terms as nearly equivalent as practicable to the provisions
with respect to the Common Stock purchasable pursuant to this Option.
(d) Upon each adjustment of the Exercise Price as a result
of the calculations made in Section 3(a), the Option outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Exercise Price, that number of Option Shares
(calculated to the nearest hundredth) obtained by (A) multiplying the number of
Option Shares purchasable upon exercise of the Option immediately prior to such
adjustment of the number of Option Shares by the Exercise Price in effect
immediately prior to such adjustment of the Exercise Price and (B) dividing the
product so obtained by the Exercise Price in effect immediately after such
adjustment of the Exercise Price.
(e) In case of any capital reorganization of Maxim, or of
any reclassification of the Common Stock (other than a change in par value, or
from par value to no par value, or as a result of subdivision or combination),
or in case of the consolidation of Maxim with or the merger of Maxim with any
other corporation or association (other than a consolidation or merger in which
(i) Maxim is the continuing corporation and (ii) the holders of Maxim's Common
Stock immediately prior to such merger or consolidation continue as holders of
Common Stock after such merger or consolidation) or of the sale of the
properties and assets of Maxim as, or substantially as, an entirety to any
other corporation or association, the Option shall after such reorganization,
reclassification, consolidation, merger or sale be exercisable, upon the terms
and conditions specified herein, for the number of shares of stock or other
securities or property to which a holder of the number of Option Shares
purchasable (at the time of such reorganization, reclassification,
consolidation, merger or sale) upon exercise of such Option would have been
entitled upon such reorganization, reclassification, consolidation, merger or
sale; and in any such case, if necessary, the provisions set forth in this
Section 3 with respect to the rights and interests thereafter of the holder of
the Option shall be appropriately adjusted so as to be applicable, as nearly as
may reasonably be, to any shares of stock or other securities or property
thereafter deliverable on the exercise of the Option. The subdivision or
combination of shares of Common Stock at any time outstanding into a greater or
lesser number of shares shall not be deemed to be a reclassification of the
Common Stock for the purposes of this Section 3(e).
Section 4. No Rights as Stockholders. Nothing contained in this
Option shall be construed as conferring upon the Holder the right to vote,
receive dividends or to be deemed for any purpose the holder of Option Shares
or of any other securities of Maxim that may at any time be issuable on the
exercise of this Option, nor shall anything contained herein be construed to
confer upon the Holder, as such, any of the rights of a stockholder of Maxim or
any right to vote on matters submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issue of stock, reclassification of stock, change of par
value, consolidation, merger, conveyance, or, without limitation, otherwise),
or to receive notice of meetings, or to receive subscription rights or
otherwise, until this Option shall have been exercised as provided herein.
Section 5. Representations, Warranties and Covenants. (a) Shaw
represents, warrants and agrees with the Holder that:
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(i) Shaw is a corporation duly organized, validly
existing and in good standing under the laws of the its state of incorporation.
Shaw has all requisite corporate power and authority to carry out and perform
its obligations under this Option.
(ii) This Option has been duly authorized, executed
and delivered by Shaw and constitutes the valid and binding obligation of Shaw
enforceable in accordance with its terms subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
(iii) No consent, approval, authorization or order
of any court or governmental agency or body is required to be obtained by Shaw
for the sale and issuance of this Option or the sale and issuance of the Option
Shares issuable upon exercise of this Option. Upon exercise of this Option by a
Holder thereof, good and valid title to the Option Shares shall be delivered to
such holder free and clear of all liens, encumbrances, equities or claims and
such shares will be fully paid and nonassessable.
(b) Shaw agrees that it will not, without the prior written
consent of Maxim, directly or indirectly, offer, sell, exchange, pledge,
hypothecate, encumber, transfer, assign or otherwise dispose of (collectively,
a "transfer") any Option Shares on or before the Expiration Date. Any attempt
to transfer or encumber any Option Shares other than in accordance with the
terms of this Option shall be null and void and neither Maxim nor any transfer
agent of such securities shall give any effect to such attempted transfer or
encumbrance in its stock records.
Notwithstanding the foregoing and any provisions in that certain
Shareholder's Agreement, dated August 9, 1998, by and between Shaw and Maxim,
Maxim hereby consents to the transfer of the Option Shares to those
shareholders of Queen Carpet Corporation set forth on the signature page of
this Option (the "Queen Shareholders"); provided that each of the Queen
Shareholders, on or prior to any such transfer, executes this Option. By their
execution of this Option, each of the Queen Shareholders agrees that upon any
such transfer to them of the Option Shares, they shall each be bound by all the
terms and conditions of this Option applicable to Shaw, and that all such terms
and conditions shall be binding upon the Queen Shareholders and their
successors, personal representatives and heirs to the same extent as if the
Queen Shareholders had originally been grantors of this Option to the Holder.
Upon any such transfer of the Option Shares by Shaw, Shaw shall cease to have
any rights under this Option.
(c) Maxim has been advised by the Securities and Exchange
Commission (the "SEC") that the Registration Statement on Form S-3 filed by
Maxim with the with respect to the Option Shares (SEC Registration No.
333-62975) was declared effective by the SEC on October 2, 1998.
Section 6. Legends. (a) Upon the execution of this Option, in addition
to any other legend which is required under the Securities Act of 1933, as
amended, and certain state securities laws, all certificates representing the
Option Shares shall be endorsed as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE PROVISIONS OF A STOCK PURCHASE OPTION DATED AS OF OCTOBER
6, 1998, BETWEEN THE COMPANY AND THE REGISTERED HOLDER OF
THIS
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<PAGE> 10
CERTIFICATE AND, EXCEPT AS SET FORTH IN SUCH AGREEMENT,
MAY NOT BE TRANSFERRED OR SOLD PRIOR TO 5:00 P.M. EASTERN
STANDARD TIME ON DECEMBER 31, 1998. A COPY OF THE ABOVE
REFERENCED OPTION IS ON FILE AT THE PRINCIPAL OFFICE OF THE
COMPANY.
Upon the execution of this Option, Shaw shall promptly deliver the Option
Shares to Maxim so that the legend set forth above may be affixed thereto.
(b) Upon the Expiration Date, the holder of any certificate
representing the Option Shares shall be entitled to receive from Maxim, without
expense, upon delivery to Maxim of the existing certificate representing such
Option Shares, a new certificate not bearing the restrictive legend set forth
in this Section 6.
Section 7. Notices. All instructions, notices and other
communications to be given to any party hereto shall be in writing and shall be
personally delivered or sent by first class or certified mail, postage prepaid
and return receipt requested, and shall be deemed to be given for purposes of
this Option on the day when delivered to the intended party at its address
specified below:
(a) If to Shaw:
616 East Walnut Avenue
Dalton, Georgia 30720
Attn: President
or such other address as Shaw may designate from time to time by written notice
to the Holder.
(b) If to the Holder:
210 TownPark Drive
Kennesaw, Georgia 30144
Attn: President
or such other address as the Holder may designate from time to time by written
notice to Shaw.
(c) If to the Queen Shareholders:
c/o Julian D. Saul
702 Mt. Sinai Road
Dalton, Georgia 30720
or such other address as the Queen Shareholders may designate from time to time
by written notice to the Holder.
Section 8. Supplements and Amendments. This Option may be amended
and supplemented in writing signed by Shaw or its successors or assigns and the
Holder.
Section 9. Successors. This Option shall be binding upon and inure
to the benefit of the respective successors and permitted assigns hereunder of
Shaw or any Holder.
-5-
<PAGE> 11
Section 10. Termination. This Option shall terminate at the close of
business on the Expiration Date. Notwithstanding the foregoing, this Option
will terminate on any earlier date when this Option has been exercised.
Section 11. Governing Law. This Option shall be governed by and
construed in accordance with the laws of the State of Georgia.
Section 12. Benefits of this Agreement. Nothing in this Option shall
be construed to give to any person or corporation other than Shaw and the
Holder of this Option any legal or equitable right, remedy or claim under this
Option, and this Option shall be for the sole and exclusive benefit of Shaw and
the Holder hereof.
Section 13. Severability. If any provision of this Option is held to
be illegal, invalid or unenforceable under present or future laws effective
during the term hereof, such provision shall be fully severable; this Option
shall be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part hereof; and the remaining provisions of
this Option shall remain in full force and effect and shall not be affected by
the illegal, invalid or unenforceable provision or its severance from this
Option. Furthermore, in lieu of such illegal, invalid or unenforceable
provision there shall be added automatically as a part of this Option a
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.
Section 14. Specific Performance. Shaw stipulates that the remedies
at law available to a Holder, or to a holder of Common Stock of Maxim issued
pursuant to the exercise of this Option, in the event of any default or
threatened default by Shaw in the performance of or compliance with any of the
terms of this Option are not and will not be adequate. Therefore, Shaw agrees
that the terms of this Option may be specifically enforced by a decree for the
specific performance of any agreement or obligation contained herein or by an
injunction prohibiting violation of any of the terms hereof or otherwise.
Section 15. Headings. The section and subsection headings herein are
for convenience only and shall not affect the construction hereof.
Section 16. Counterparts. This Option may be executed in any number
of counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
-6-
<PAGE> 12
IN WITNESS WHEREOF, Shaw has caused this Option to be duly executed as
of the day and year first above written.
SHAW INDUSTRIES, INC.
By:
----------------------------------------
Name:
---------------------------------------
Title:
-------------------------------------
ACCEPTED AND AGREED to
this 6th day of October, 1998
THE MAXIM GROUP, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
[Signatures continued on next page.]
-7-
<PAGE> 13
ACCEPTED AND AGREED to
this 6th day of October, 1998
"QUEEN SHAREHOLDERS"
- ----------------------------------------------
Julian D. Saul
- ----------------------------------------------
Linda Saul Schejola
JULIAN D. SAUL FAMILY TRUST
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-----------------------------------
LINDA SAUL SCHEJOLA FAMILY TRUST
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-----------------------------------
ANITA SAUL FAMILY TRUST
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-----------------------------------
-8-
<PAGE> 14
FORM OF EXERCISE
[Form to be executed upon exercise of Option]
The undersigned holder of the within Option hereby (1) purchases
__________shares of Common Stock of The Maxim Group, Inc. which the undersigned
is entitled to purchase under the terms of the within Option, (2) makes the
Exercise Price payment therefor called for by the within Option, and (3)
directs that the shares issuable upon exercise of said Option be issued as
follows:
-------------------------------
(Name)
-------------------------------
(Address)
Signature:
---------------------
Dated:
---------------------------
-9-
<PAGE> 15
EXHIBIT B
EXECUTIVE INCENTIVE AGREEMENT
THIS AGREEMENT (this "Agreement") is entered into and executed on the
day and date noted on the last page hereof by and between QUEEN CARPET
CORPORATION, a Georgia corporation (the "Company"), and _______________________
(the "Executive"), a resident of the State of ________________________.
W I T N E S S E T H:
WHEREAS, the Company has entered into an Agreement and Plan of Merger,
dated August 13, 1998 as amended by a First Amendment to Agreement and Plan of
Merger to be dated as of the Closing Date (the "Merger Agreement"), pursuant to
which the Company shall be acquired by Shaw Industries, Inc., a Georgia
corporation ("Shaw"), through the merger of the Company with and into Shaw or
Chessman Acquisition Corp., a wholly-owned subsidiary of Shaw; and
WHEREAS, the Company desires to retain the Executive's services, which
are highly valued and important to the operations of the Company, until the
closing of the transactions contemplated under the Merger Agreement (the
"Closing"), and also desires to retain the Executive's services to assist in
effectuating the Closing and ensuring that the Closing actually occurs;
WHEREAS, in order to retain the Executive's services and assistance
during this process and to provide additional compensation to Executive for his
past service to the Company, the Company desires to provide the Executive
certain retention incentives; and
WHEREAS, pursuant to Section 4.1(c)(ii)(B) of the Merger Agreement,
the Incentive Amount (as defined below) payable hereunder will be paid 50% in
Shaw Common Stock ("Shaw Stock") and 50% in cash;
NOW, THEREFORE, the parties hereto agree as follows:
1. Incentive Amount. In consideration for the Executive remaining an
employee of the Company through the Closing and to provide additional
compensation to Executive for his past service to the Company, if the Executive
remains employed by the Company through and until the Closing,, then, upon the
completion of the Closing, the Company shall pay to Executive within five (5)
business days immediately following the Closing, a single lump sum payment in
the amount of ___________________________________________________ dollars
($_________________________) (the "Incentive Amount"), payable 50% in cash and
50% in Shaw Stock. The number of shares of Shaw Stock paid shall be determined
based upon the closing price of a share of Shaw Stock on the New York Stock
Exchange, Inc. on the date of the Closing, as reported by the Wall Street
Journal, published on the next business day after the date of the Closing.
Executive and the Company understand that no amount shall be payable to the
Executive pursuant to this Agreement in the event that the Closing is never
completed and effectuated or the Merger Agreement is terminated.
2. Payment of Incentive Amount. The Incentive Amount payable under
this Agreement to the Executive shall be paid subject to and reduced by any
applicable federal, state and/or local income and/or payroll tax withholding
and reporting requirements. If for any reason the entire amount payable under
this Agreement is not paid in full when due, then interest, at a per annum rate
equal to the then "prime rate" of interest as reported in the Wall Street
Journal on the day of Closing, plus _________________ percent (_________%),
shall accrue with respect to any such unpaid amounts until such amounts are
paid to the Executive.
<PAGE> 16
3. Miscellaneous.
A. EXECUTIVE AGREES TO HOLD THE TERMS OF THIS AGREEMENT,
INCLUDING THE INCENTIVE AMOUNT, CONFIDENTIAL, AND NOT TO DISCLOSE THE TERMS OF
THIS AGREEMENT TO ANY PERSON, FIRM OR CORPORATION THAT IS NOT A PARTY TO THIS
AGREEMENT, EXCEPT (I) WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY, (II) TO
EXECUTIVE'S ATTORNEYS, ACCOUNTANTS AND FINANCIAL ADVISORS FOR THE PURPOSE OF
THEIR RENDERING SERVICES TO EXECUTIVE WITH RESPECT TO THIS AGREEMENT OR THE
INCENTIVE AMOUNT, OR (III) AS MAY OTHERWISE BE REQUIRED BY LAW. EXECUTIVE SHALL
REQUIRE THAT HIS ATTORNEYS, ACCOUNTANTS AND FINANCIAL ADVISORS HOLD THE TERMS
OF THIS AGREEMENT, INCLUDING THE INCENTIVE AMOUNT, CONFIDENTIAL, AND NOT TO
DISCLOSE THE TERMS OF THIS AGREEMENT TO ANY PERSON, FIRM OR CORPORATION THAT IS
NOT A PARTY TO THIS AGREEMENT EXCEPT AS EXPRESSLY SET FORTH HEREIN.
B. The parties agree that any dispute regarding the terms and
provisions of this Agreement shall be subject to venue in the State of Georgia
and shall be governed by the laws of the State of Georgia.
C. The terms, conditions, and obligations of this Agreement shall
inure to the benefit of and be binding upon the parties hereto and the
respective successors and assigns thereof.
D. This Agreement shall terminate on December 31, 1999, unless
extended by written mutual agreement by the parties provided, however, that
Section 3.A. hereof shall survive indefinitely. This Agreement may be amended
or terminated only by a written instrument executed by each party hereto.
E. This Agreement sets forth the entire agreement between the
parties with respect to the subject matter contained herein and supersedes all
prior agreements, arrangements or other communications, whether oral or
written.
F. The terms and provisions of this Agreement shall not require
the Company to consummate the Closing, to pursue any particular transaction or
structure of transaction, or to achieve any particular result or price in any
transaction that the Company chooses to pursue.
IN WITNESS WHEREOF, the parties hereto affixed their signatures as of
the ________ day of September, 1998.
COMPANY:
QUEEN CARPET CORPORATION
By:
---------------------------------
Title:
------------------------------
EXECUTIVE:
-------------------------------------
Name:
--------------------------------
<PAGE> 1
FIRST AMENDMENT TO AMENDED AND
RESTATED CREDIT AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (the
"First Amendment") dated as of August 7, 1998 by and among SHAW INDUSTRIES,
INC., a corporation organized under the laws of the State of Georgia (the
"Borrower"), the Lenders appearing on the signature pages hereof (the
"Lenders"), NATIONSBANK, N.A., as Issuing Bank and Administrative Agent and
SUNTRUST BANK, ATLANTA, as Documentation Agent.
WHEREAS, the Borrower, the Lenders, the Issuing Bank and the Agents
entered into that certain Amended and Restated Credit Agreement dated as of
March 16, 1998 (the "Credit Agreement"), pursuant to which the Lenders made
certain financial accommodations available to the Borrower;
WHEREAS, pursuant to that certain Agreement and Plan of Merger dated
as of June 23, 1998 (the "Merger Agreement") among The Maxim Group, Inc.
("Maxim"), CMAX Acquisition, Inc., the Borrower and Shaw Carpet Showplace, Inc.
(the "Guarantor"), the Borrower will, among other things, sell all of its
interest in and to the Guarantor to Maxim on the terms and conditions therein;
WHEREAS, in connection with the Merger Agreement the Borrower has
requested that (a) the Lenders, the Issuing Bank and the Agents release the
Guarantor from its obligations under its Guaranty and (b) amend the Credit
Agreement so as to permit certain of the transactions contemplated by the
Merger Agreement, all on the terms and conditions set forth herein; and
WHEREAS, the Lenders, the Issuing Bank and the Agents are willing to
so amend the Credit Agreement and release the Guarantor on the terms and
conditions set forth herein.
NOW, THEREFORE, for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged by the parties, the parties
hereto agree as follows:
SECTION 1. SPECIFIC AMENDMENT TO CREDIT AGREEMENT. The Credit
Agreement is hereby amended deleting the "." at the end of Section 10.3 and
substituting in lieu thereof the following new clause (ix):
"; and
(ix) Investments in The Maxim Group, Inc. ("Maxim") in the
form of: (A) 3,150,000 shares of common stock of Maxim and
(B) a certain Subordinated Promissory Note in the principal
amount of $18,048,000 executed by Maxim in favor of the
Borrower."
<PAGE> 2
SECTION 2. RELEASE OF GUARANTOR. Upon the effectiveness of this
First Amendment, the Lenders, the Issuing Bank and the Agents hereby release
the Guarantor from its obligations under the Guaranty to which it is a party
and acknowledge and agree that the Guarantor shall no longer be a "Guarantor"
under and as defined in the Credit Agreement.
SECTION 3. AFFILIATE TRANSACTION. The Lenders, the Issuing Bank and
the Agents further acknowledge and agree that the transactions contemplated by
the Merger Agreement shall not contravene or violate Section 10.8 of the Credit
Agreement.
SECTION 4. EFFECTIVENESS OF AMENDMENT. This First Amendment, and
the amendments and releases effected hereby, shall be effective only upon the
satisfaction of each of the following conditions precedent to effectiveness:
(a) this First Amendment shall be executed and delivered by the
Borrower, the Issuing Bank, the Agents and the Requisite Lenders;
(b) the "Merger" under and as defined in the Merger Agreement
shall have been consummated in accordance with the terms and conditions
thereof;
(c) a Reaffirmation of Guaranty shall have been duly executed and
delivered by Shaw Contract Flooring Services, Inc.; and
(d) the Administrative Agent shall have received a certificate
dated the date hereof from the Senior Vice President of Finance or the
Treasurer of the Borrower certifying that, after giving effect to the amendment
contemplated hereby, no Default or Event of Default under the Credit Agreement
exists.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) In order to induce the Issuing Bank, the Agents and the
Lenders to enter into this First Amendment, the Borrower hereby reaffirms each
of the representations and warranties of the Borrower contained in the Credit
Agreement as of the date hereof except for either: (i) the occurrence of any
event that would render such representations or warranties untrue, but that is
expressly permitted by the terms of the Credit Agreement or which would not
cause an Event of Default under the Credit Agreement or (ii) the occurrence of
any event that would render such representations or warranties untrue but that
previously has been disclosed in writing to the Lenders.
(b) The Borrower represents and warrants to the Issuing Bank, the
Agents and the Lenders that, after giving effect to the amendment set forth
herein and the consummation of the transactions contemplated by the Merger
Agreement, no Default or Event of Default shall have occurred and be continuing
under the Credit Agreement.
-2-
<PAGE> 3
(c) The execution, delivery and performance of this First Amendment by
the Borrower does not require the consent of any other Person under any
document, instrument or agreement to which the Borrower is a party or under
which the Borrower is bound.
SECTION 1. REFERENCES TO THE CREDIT AGREEMENT. Each reference to
the Credit Agreement in any of the Loan Documents shall be deemed to be a
reference to the Credit Agreement, as amended by this First Amendment, and as
the same may be further amended, restated, supplemented or otherwise modified
from time to time in accordance with Section 13.6 of the Credit Agreement.
SECTION 2. BENEFITS. This First Amendment shall be binding upon,
and shall inure to the benefit of, the parties hereto and their respective
successors and assigns.
SECTION 3. GOVERNING LAW. THIS FIRST AMENDMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA.
SECTION 4. EFFECT. Except as expressly herein amended, the terms
and conditions of the Credit Agreement shall remain in full force and effect
without amendment or modification, express or implied.
SECTION 5. COUNTERPARTS. This First Amendment may be executed in
any number of counterparts, each of which shall be deemed to be an original and
shall be binding upon all parties, their successors and assigns.
SECTION 6. DEFINITIONS. All capitalized terms which are used herein
and not otherwise defined herein shall have the meanings given such terms as
set forth in the Credit Agreement.
[SIGNATURES CONTAINED ON FOLLOWING PAGE]
-3-
<PAGE> 4
[SIGNATURE PAGE TO FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF AUGUST 7, 1998 WITH SHAW INDUSTRIES, INC.]
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to Amended and Restated Credit Agreement to be executed under seal by
their duly authorized officers as of the date first above written.
THE BORROWER:
SHAW INDUSTRIES, INC.
By: /s/
------------------------------------------
Title:
------------------------------------
THE ADMINISTRATIVE AGENT:
NATIONSBANK, N.A., as Administrative Agent
By: /s/
------------------------------------------
Title:
------------------------------------
THE ISSUING BANK:
NATIONSBANK, N.A., as Issuing Bank
By: /s/
------------------------------------------
Title:
------------------------------------
THE DOCUMENTATION AGENT:
SUNTRUST BANK, ATLANTA, as Documentation Agent
By: /s/
------------------------------------------
Title:
------------------------------------
-4-
<PAGE> 5
[SIGNATURE PAGE TO FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF AUGUST 7, 1998 WITH SHAW INDUSTRIES, INC.]
THE LENDERS:
NATIONSBANK, N.A., as a Lender and Swing
Line Lender
By: /s/
-----------------------------------------
Title:
----------------------------------
SUNTRUST BANK, ATLANTA
By: /s/
-----------------------------------------
Title:
----------------------------------
WACHOVIA BANK, N.A.
By: /s/
-----------------------------------------
Title:
----------------------------------
FIRST UNION NATIONAL BANK
By: /s/
-----------------------------------------
Title:
----------------------------------
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/
-----------------------------------------
Title:
----------------------------------
-5-
<PAGE> 6
[SIGNATURE PAGE TO FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF AUGUST 7, 1998 WITH SHAW INDUSTRIES, INC.]
THE FUJI BANK, LIMITED, ATLANTA
AGENCY
By: /s/
--- -------------------------------------
Title:
----------------------------------
SOUTHTRUST BANK, N.A.
By: /s/
--- -------------------------------------
Title:
----------------------------------
THE BANK OF TOKYO-MITSUBISHI, LTD.
By: /s/
--- -------------------------------------
Title:
----------------------------------
BANQUE NATIONALE DE PARIS, HOUSTON AGENCY
By: /s/
--- -------------------------------------
Title:
----------------------------------
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
By: /s/
--- -------------------------------------
Title:
----------------------------------
-6-
<PAGE> 7
[SIGNATURE PAGE TO FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF AUGUST 7, 1998 WITH SHAW INDUSTRIES, INC.]
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
ATLANTA AGENCY
By: /s/
--- -------------------------------------
Title:
----------------------------------
-7-
<PAGE> 1
SECOND AMENDMENT TO AMENDED AND
RESTATED CREDIT AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (the
"Second Amendment") dated as of October 6, 1998 by and among SHAW INDUSTRIES,
INC., a corporation organized under the laws of the State of Georgia (the
"Borrower"), the Lenders appearing on the signature pages hereof (the
"Lenders"), NATIONSBANK, N.A., as Issuing Bank and Administrative Agent and
SUNTRUST BANK, ATLANTA, as Documentation Agent.
WHEREAS, the Borrower, the Lenders, the Issuing Bank and the Agents
entered into that certain Amended and Restated Credit Agreement dated as of
March 16, 1998, as amended by that certain First Amendment to Amended and
Restated Credit Agreement dated as of August 7, 1998 (as so amended, the
"Credit Agreement"), pursuant to which the Lenders made certain financial
accommodations available to the Borrower,
WHEREAS, the Borrower has requested that the Lenders, the Issuing Bank
and the Agents amend the Credit Agreement on the terms and conditions set forth
herein; and
WHEREAS, the Lenders, the Issuing Bank and the Agents are willing to
so amend the Credit Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged by the parties, the parties
hereto agree as follows:
SECTION 1. SPECIFIC AMENDMENTS TO CREDIT AGREEMENT.
(a) The Credit Agreement is hereby amended by deleting subsection
(f) of Section 10.2 thereof and substituting in lieu thereof the following:
"(f) (i) Consolidated Funded Debt incurred by the Borrower
after the Effective Date and (ii) Indebtedness owing by Nylon Polymer
Company, L.L.C., a Georgia limited liability company ("Nylon Polymer")
to SunTrust Bank, Atlanta, N.A. and Wachovia Bank, N.A., as lenders
(the "Nylon Polymers Lenders"), in the original principal amounts of
$22,500,000 ("Nylon Polymer Term Loan A") and $7,500,000 ("Nylon
Polymer Term Loan B"), respectively, pursuant to that certain Term
Loan Agreement dated as of September 12, 1997, as amended from time to
time, by and among Nylon Polymer, as borrower, the Nylon Polymer
Lenders and SunTrust Bank, Atlanta, as Agent; provided, however that
the amount of Indebtedness permitted under this subsection (f) shall
not (1) at any time exceed $50,000,000 outstanding in the aggregate
and (2) be secured by a Lien on any property or other asset of the
Borrower or any of its Subsidiaries;"
(b) The Credit Agreement is hereby further amended by deleting
subsection (h) of Section 10.2 thereof and substituting in lieu thereof the
following:
<PAGE> 2
"(h) (i) Guaranties in existence as of the Agreement Date
and disclosed on Schedule 1.1(a) hereof; (ii) Guaranties by the
Borrower (and in the case of Nylon Polymer Term Loan A, also by Shaw
Contract Flooring Services, Inc. "Shaw Contract")) of any of the
foregoing Indebtedness; provided that such Guaranteed Indebtedness is
permitted under this Section 10.2; and (iii) Guaranties by the
Borrower and Shaw Contract of Indebtedness of La Mirada Realty,
L.L.C., a Georgia limited liability company ("La Mirada") pursuant to
that certain Amended and Restated Guaranty Agreement dated as of
October 6, 1998 (the "La Mirada Guaranty"), executed by the Borrower
and Shaw Contract, relating to a term loan facility in the maximum
principal amount of $12,200,000, made pursuant to that certain Term
Loan Agreement dated as of October 8, 1997, as amended from time to
time (provided that the principal amount thereof is not increased), by
and among La Mirada, as borrower, SunTrust Bank, Atlanta, and Wachovia
Bank, N.A., as lenders, and SunTrust Bank, Atlanta, as Agent;
provided, however, that amount of Indebtedness so Guaranteed pursuant
to this clause (iii) and then outstanding shall reduce (in an equal
amount) the amount of Indebtedness permitted to be incurred and
outstanding under subsection (f) above;"
(c) The Credit Agreement is hereby amended by deleting subsection
(b) of Section 10.4 thereof and substituting in lieu thereof the following:
"(b) Enter into or assume any agreement (other than (i)
any Loan Document; (ii) the La Mirada Guaranty (as defined in Section
10.2(h)); (iii) the Guaranties by the Borrower and Shaw Contract of
the Indebtedness described in Section 10.2(f)(ii); and (iv) that
certain Reimbursement and Security Agreement dated as of November 1,
1991, as amended from time to time, between the Borrower (successor to
Queen Carpet Corporation) and Wachovia, N.A. (f/k/a Wachovia Bank of
Georgia, N.A.)), or permit any Subsidiary (other than a Receivables
Subsidiary) to enter into or assume any agreement (other than (i) any
Loan Document; (ii) the La Mirada Guaranty (as defined in Section
10.2(h)); (iii) the Guaranties by the Borrower and Shaw Contract of
the Indebtedness described in Section 10.2(f)(ii); and (iv) that
certain Reimbursement and Security Agreement dated as of November 1,
1991, as amended from time to time, between the Borrower (successor to
Queen Carpet Corporation) and Wachovia, N.A. (f/k/a Wachovia Bank of
Georgia, N.A.)), prohibiting the creation or assumption of any Lien
upon its properties, whether now owned or hereafter acquired; or"
SECTION 2. EFFECTIVENESS OF AMENDMENT. This Second Amendment, and
the amendments effected hereby, shall be effective only upon the satisfaction
of each of the following conditions precedent to effectiveness:
(a) this Second Amendment shall be executed and delivered by each
of the Borrower, the Issuing Bank, the Agents and the Requisite Lenders; and
(b) the Administrative Agent shall have received a certificate
dated the date hereof from the Senior Vice President of Finance or the
Treasurer of the Borrower certifying that,
-2-
<PAGE> 3
immediately prior to and after giving effect to the amendment contemplated
hereby, no Default or Event of Default under the Credit Agreement exists.
SECTION 3. REPRESENTATIONS AND WARRANTIES.
(a) In order to induce the Issuing Bank, the Agents and the
Lenders to enter into this Second Amendment, the Borrower hereby reaffirms each
of the representations and warranties of the Borrower contained in the Credit
Agreement as of the date hereof except for either: (i) the occurrence of any
event that would render such representations or warranties untrue, but that is
expressly permitted by the terms of the Credit Agreement or which would not
cause an Event of Default under the Credit Agreement or (ii) the occurrence of
any event that would render such representations or warranties untrue but that
previously has been disclosed in writing to the Lenders.
(b) The execution, delivery and performance of this Second
Amendment by the Borrower does not require the consent of any other Person
under any document, instrument or agreement to which the Borrower is a party or
under which the Borrower is bound.
SECTION 4. REFERENCES TO THE CREDIT AGREEMENT. Each reference to the
Credit Agreement in any of the Loan Documents shall be deemed to be a reference
to the Credit Agreement, as amended by this Second Amendment, and as the same
may be further amended, restated, supplemented or otherwise modified from time
to time in accordance with Section 13.6 of the Credit Agreement.
SECTION 5. BENEFITS. This Second Amendment shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective
successors and assigns.
SECTION 6. GOVERNING LAW. THIS SECOND AMENDMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA.
SECTION 7. EFFECT. Except as expressly herein amended, the terms and
conditions of the Credit Agreement shall remain in full force and effect
without amendment or modification, express or implied.
SECTION 8. COUNTERPARTS. This Second Amendment may be executed in any
number of counterparts, each of which shall be deemed to be an original and
shall be binding upon all parties, their successors and assigns.
SECTION 9. DEFINITIONS. All capitalized terms which are used herein
and not otherwise defined herein shall have the meanings given such terms as
set forth in the Credit Agreement.
[SIGNATURES CONTAINED ON FOLLOWING PAGE]
-3-
<PAGE> 4
[SIGNATURE PAGE TO SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF OCTOBER 6, 1998 WITH SHAW INDUSTRIES, INC.]
IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to Amended and Restated Credit Agreement to be executed under seal by
their duly authorized officers as of the date first above written.
THE BORROWER:
SHAW INDUSTRIES, INC.
By: /s/
------------------------------------
Title:
------------------------------------
THE ADMINISTRATIVE AGENT:
NATIONSBANK, N.A., as Administrative Agent
By: /s/
------------------------------------
Title:
------------------------------------
THE ISSUING BANK:
NATIONSBANK, N.A., as Issuing Bank
By: /s/
------------------------------------
Title:
------------------------------------
THE DOCUMENTATION AGENT:
SUNTRUST BANK, ATLANTA,
as Documentation Agent
By: /s/
------------------------------------
Title:
------------------------------------
-4-
<PAGE> 5
[SIGNATURE PAGE TO SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF OCTOBER 6, 1998 WITH SHAW INDUSTRIES, INC.]
THE LENDERS:
NATIONSBANK, N.A., as a Lender and Swing
Line Lender
By: /s/
------------------------------------
Title:
------------------------------------
SUNTRUST BANK, ATLANTA
By: /s/
------------------------------------
Title:
------------------------------------
WACHOVIA BANK, N.A.
By: /s/
------------------------------------
Title:
------------------------------------
FIRST UNION NATIONAL BANK
By: /s/
------------------------------------
Title:
------------------------------------
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/
------------------------------------
Title:
------------------------------------
-5-
<PAGE> 6
[SIGNATURE PAGE TO SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF OCTOBER 6, 1998 WITH SHAW INDUSTRIES, INC.]
THE FUJI BANK, LIMITED, ATLANTA
AGENCY
By: /s/
------------------------------------
Title:
------------------------------------
SOUTHTRUST BANK, N.A.
By: /s/
------------------------------------
Title:
------------------------------------
THE BANK OF TOKYO-MITSUBISHI, LTD.
By: /s/
------------------------------------
Title:
------------------------------------
BANQUE NATIONALE DE PARIS, HOUSTON
AGENCY
By: /s/
------------------------------------
Title:
------------------------------------
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
By: /s/
------------------------------------
Title:
------------------------------------
-6-
<PAGE> 7
[SIGNATURE PAGE TO SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF OCTOBER 6, 1998 WITH SHAW INDUSTRIES, INC.]
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, ATLANTA AGENCY
By: /s/
------------------------------------
Title:
------------------------------------
-7-
<PAGE> 1
EXHIBIT 99.5
THIRD AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
THIS THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT ("Third
Amendment") dated as of October 15, 1998 by and among SHAW INDUSTRIES, INC., a
corporation organized under the laws of the State of Georgia (the "Borrower"),
the Lenders appearing on the signature pages hereof (the "Lenders"),
NATIONSBANK, N.A., as Issuing Bank and Administrative Agent and SUNTRUST BANK,
ATLANTA, as Documentation Agent.
WHEREAS, the Borrower, the Lenders, the Issuing Bank and the Agents
entered into that certain Amended and Restated Credit Agreement dated as of
March 16, 1998, as amended by that certain First Amendment to Amended and
Restated Credit Agreement dated as of August 7, 1998, and that certain Second
Amendment to Amended and Restated Credit Agreement dated as of October 6, 1998
(as so amended, the "Credit Agreement"), pursuant to which the Lenders made
certain financial accommodations available to the Borrower;
WHEREAS, the Borrower has requested that the Lenders, the Issuing Bank
and the Agents amend the Credit Agreement on the terms and conditions set forth
herein; and
WHEREAS, the Lenders, the Issuing Bank and the Agents are willing to so
amend the Credit Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged by the parties, the parties
hereto agree as follows:
Section 1. Specific Amendments to Credit Agreement.
(a) The Credit Agreement is hereby amended deleting the defined
term "Consolidated EBITDA " contained in Section 1.1 thereof and substituting in
lieu thereof the following:
" `Consolidated EBITDA' means, with respect to the Borrower
and its Subsidiaries for any period of computation thereof, the sum of,
without duplication, (a) Consolidated EBIT for such period plus (b) to
the extent deducted in determining Consolidated Net Income (i)
amortization expense of the Borrower and its Subsidiaries for such
period plus (ii) depreciation expense of the Borrower and its
Subsidiaries for such period, all in accordance with GAAP; provided,
however, that for purposes of calculating Consolidated EBITDA of the
Borrower and its Subsidiaries for any period, the Consolidated EBITDA
of any Person acquired by, or merged into or consolidated with, the
Borrower or its Subsidiaries during such period shall be included on a
pro forma basis for such period
<PAGE> 2
(assuming for purposes of such calculation that the consummation of
such acquisition, merger or consolidation in connection therewith
occurred on the first day of such period)."
(b) The Credit Agreement is hereby further amended by adding the
following new defined term to Section 1.1 thereof in the appropriate alphabetic
order:
" `Total Assets' means, at any time of determination, the
total consolidated assets of the Borrower and its Subsidiaries, as
shown on the consolidated balance sheet of the Borrower most recently
delivered to the Administrative Agent and the Lenders pursuant to
Section 9.1 or 9.2, as applicable; provided, however, that, for
purposes of calculating `Total Assets' at any time prior to the
delivery to the Agent and the Lenders of the financial statements of
the Borrower for the annual fiscal period ending January 2, 1999,
`Total Assets' include the assets (including without limitation any
related goodwill) acquired by (and at the time of determination owned
by) the Borrower pursuant to that certain Agreement and Plan of Merger
dated as of August 13, 1998, as amended by a First Amendment to
Agreement and Plan of Merger dated as of October 6, 1998, among the
Borrower, Queen Carpet Corporation, Chessman Acquisition Corp. and the
other parties named therein."
(c) The Credit Agreement is hereby further amended by deleting the
defined term "Restricted Payment" contained in Section 1.1 thereof.
(d) The Credit Agreement is hereby further amended by deleting the
text "Sections 10.5. and" contained in the last line of Section 8.8 thereof and
substituting in lieu thereof the word "Section".
(e) The Credit Agreement is hereby further amended by deleting the
subsection (b) contained in Section 10.1 thereof and substituting in lieu
thereof the following:
"(b) Minimum Net Worth. Permit as at the end of each fiscal
quarter of the Borrower, its Consolidated Net Worth to be less than the
sum of: (i) $510,000,000 plus (ii) 50% of the cumulative positive
Consolidated Net Income of the Borrower earned after January 3, 1998
plus (iii) the aggregate net proceeds received by the Borrower and its
Subsidiaries from any sale or issuance of any shares, interests,
warrants, participations or other equity instruments of the Borrower or
its Subsidiaries occurring after January 3, 1998 minus (iv) the
aggregate amount of all cash and non-cash consideration paid by the
Borrower and its Subsidiaries in connection with any purchase,
redemption, retirement or other acquisition of any shares, interests,
warrants, participations or other equity instruments of the Borrower
and its Subsidiaries occurring after January 3, 1998 in an amount up
to, but not to exceed, $150,000,000; it
-2-
<PAGE> 3
being understood that (1) any equity issuance net proceeds received by,
or purchase, redemption, retirement or other acquisition consideration
paid to, a Subsidiary from the Borrower or vice-versa shall not be
included in determining the amounts described in items (iii) and (iv)
above; and (2) for purposes of determining the amount of non-cash
consideration paid by Borrower and its Subsidiaries in connection with
any purchase, redemption, retirement or other acquisition of any equity
instruments, the fair market value of such consideration shall be used
or, if such non-cash consideration is in the form of a note or other
debt security, the amount of non-cash consideration shall be deemed to
be the original principal amount of the note or debt security."
(e) The Credit Agreement is hereby further amended by deleting
subsection (f) contained in Section 10.2 thereof and substituting in lieu
thereof the following:
"(f) (i) Consolidated Funded Debt incurred by the Borrower
after the Effective Date and (ii) Indebtedness owing by Nylon Polymer
Company, L.L.C., a Georgia limited liability company ("Nylon Polymer")
to SunTrust Bank, Atlanta, N.A. and Wachovia Bank, N.A., as lenders
(the "Nylon Polymers Lenders"), in the original principal amounts of
$22,500,000 ("Nylon Polymer Term Loan A") and $7,500,000 ("Nylon
Polymer Term Loan B"), respectively, pursuant to that certain Term Loan
Agreement dated as of September 12, 1997, as amended from time to time,
by and among Nylon Polymer, as borrower, the Nylon Polymer Lenders and
SunTrust Bank, Atlanta, as Agent; provided, however that the amount of
Indebtedness permitted under this subsection (f) shall not (1) at any
time exceed 20% of Total Assets and (2) be secured by a Lien on any
property or other asset of the Borrower or any of its Subsidiaries;"
(f) The Credit Agreement is hereby further amended by deleting
subsection (j) contained in Section 10.2 thereof and substituting in lieu
thereof the following:
"(j) Sold Receivables Indebtedness in an aggregate amount
at any time outstanding not to exceed $325,000,000."
(g) The Credit Agreement is hereby further amended by adding the
following at the end of clause (vi) contained in Section 10.3 thereof:
"provided, however, that, in the event the fair market value of the
assets, properties, Business Unit or capital stock so purchased or
acquired exceeds $100,000,000, the Borrower shall provide the
Administrative Agent, at the time of such purchase or acquisition, a
certificate executed by the chief financial officer of the Borrower
certifying that each of the foregoing conditions in this clause (vi)
have been satisfied;"
-3-
<PAGE> 4
(h) The Credit Agreement is hereby further amended by deleting
subsection (b) of Section 10.4 thereof and substituting in lieu thereof the
following:
"(b) Enter into or assume any agreement (other than any Loan
Document), or permit any Subsidiary (other than a Receivables
Subsidiary) to enter into or assume any agreement (other than any Loan
Document), prohibiting the creation or assumption of any Lien upon its
properties, whether now owned or hereafter acquired; or"
(i) The Credit Agreement is hereby further amended by deleting
Section 10.5 thereof in its entirety and substituting in lieu thereof the
following:
"Section 10.5. [Reserved]."
(j) The Credit Agreement is hereby further amended by deleting the
"." at the end of clause (viii) contained in Section 10.6 thereof and
substituting in lieu thereof the following:
"; (D) the Board of Directors (or other similar management body) of the
Person to be merged or consolidated with or into the Borrower
recommends to its shareholders (or other similar equity holders) that
such shareholders (or other similar equity holders) approve such merger
or consolidation; and (E) immediately after giving effect to such
merger or consolidation, the Borrower would, on a pro forma basis, be
in compliance with the financial covenants set forth in Section 10.1;
provided, further, that, in the event the fair market value of the
assets of the Person to be merged or consolidated with or into the
Borrower exceeds $100,000,000, the Borrower shall provide the
Administrative Agent, at the time of such merger or consolidation, a
certificate executed by the chief financial officer of the Borrower
certifying that each of the foregoing conditions in this clause (viii)
have been satisfied;"
(k) The Credit Agreement is hereby further amended by deleting
Exhibit J thereto in its entirety and substituting in lieu thereof the Exhibit J
attached hereto.
Section 2. Effectiveness of Amendment.
This Third Amendment, and the amendments effected hereby, shall be
effective only upon the satisfaction of each of the following conditions
precedent to effectiveness:
(a) this Third Amendment shall be executed and delivered by each
of the Borrower, the Issuing Bank, the Agents and the Requisite Lenders; and
(b) the Administrative Agent shall have received a certificate
dated the date hereof from the Chief Financial Officer or the Treasurer of the
Borrower certifying that, immediately
-4-
<PAGE> 5
prior to and after giving effect to the amendment contemplated hereby, no
Default or Event of Default under the Credit Agreement exists.
Section 3. Representations and Warranties.
(a) In order to induce the Issuing Bank, the Agents and the
Lenders to enter into this Third Amendment, the Borrower hereby reaffirms each
of the representations and warranties of the Borrower contained in the Credit
Agreement as of the date hereof except for either: (i) the occurrence of any
event that would render such representations or warranties untrue, but that is
expressly permitted by the terms of the Credit Agreement or which would not
cause an Event of Default under the Credit Agreement or (ii) the occurrence of
any event that would render such representations or warranties untrue but that
previously has been disclosed in writing to the Lenders.
(b) The execution, delivery and performance of this Third
Amendment by the Borrower does not require the consent of any other Person under
any document, instrument or agreement to which the Borrower is a party or under
which the Borrower is bound.
Section 4. References to the Credit Agreement.
Each reference to the Credit Agreement in any of the Loan Documents
shall be deemed to be a reference to the Credit Agreement, as amended by this
Third Amendment, and as the same may be further amended, restated, supplemented
or otherwise modified from time to time in accordance with Section 13.6 of the
Credit Agreement.
Section 5. Benefits.
This Third Amendment shall be binding upon, and shall inure to the
benefit of, the parties hereto and their respective successors and assigns.
Section 6. GOVERNING LAW.
THIS THIRD AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF GEORGIA.
Section 7. Effect.
Except as expressly herein amended, the terms and conditions of the
Credit Agreement shall remain in full force and effect without amendment or
modification, express or implied.
Section 8. Counterparts.
This Third Amendment may be executed in any number of counterparts,
each of which shall be deemed to be an original and shall be binding upon all
parties, their successors and assigns.
-5-
<PAGE> 6
Section 9. Definitions.
All capitalized terms which are used herein and not otherwise defined
herein shall have the meanings given such terms as set forth in the Credit
Agreement.
[Signatures Contained on Following Page]
-6-
<PAGE> 7
[Signature Page to Third Amendment to Amended and Restated Credit Agreement
dated as of October 15, 1998 with Shaw Industries, Inc.]
IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment
to Amended and Restated Credit Agreement to be executed under seal by their duly
authorized officers as of the date first above written.
THE BORROWER:
SHAW INDUSTRIES, INC.
By: /s/
-------------------------------------
Title:
-------------------------------------
THE ADMINISTRATIVE AGENT:
NATIONSBANK, N.A., as Administrative Agent
By: /s/
-------------------------------------
Title:
-------------------------------------
THE ISSUING BANK:
NATIONSBANK, N.A., as Issuing Bank
By: /s/
-------------------------------------
Title:
-------------------------------------
THE DOCUMENTATION AGENT:
SUNTRUST BANK, ATLANTA, as
Documentation Agent
By: /s/
-------------------------------------
Title:
-------------------------------------
-7-
<PAGE> 8
[Signature Page to Third Amendment to Amended and Restated Credit Agreement
dated as of October 15, 1998 with Shaw Industries, Inc.]
THE LENDERS:
NATIONSBANK, N.A., as a Lender and Swing
Line Lender
By: /s/
-------------------------------------
Title:
-------------------------------------
SUNTRUST BANK, ATLANTA
By: /s/
-------------------------------------
Title:
-------------------------------------
WACHOVIA BANK, N.A.
By: /s/
-------------------------------------
Title:
-------------------------------------
FIRST UNION NATIONAL BANK
By: /s/
-------------------------------------
Title:
-------------------------------------
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/
-------------------------------------
Title:
-------------------------------------
-8-
<PAGE> 9
[Signature Page to Third Amendment to Amended and Restated Credit Agreement
dated as of October 15, 1998 with Shaw Industries, Inc.]
THE FUJI BANK, LIMITED, ATLANTA AGENCY
By: /s/
-------------------------------------
Title:
-------------------------------------
SOUTHTRUST BANK, N.A.
By: /s/
-------------------------------------
Title:
-------------------------------------
THE BANK OF TOKYO-MITSUBISHI, LTD.
By: /s/
-------------------------------------
Title:
-------------------------------------
BANQUE NATIONALE DE PARIS, HOUSTON AGENCY
By: /s/
-------------------------------------
Title:
-------------------------------------
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
By: /s/
-------------------------------------
Title:
-------------------------------------
-9-
<PAGE> 10
[Signature Page to Third Amendment to Amended and Restated Credit Agreement
dated as of October 15, 1998 with Shaw Industries, Inc.]
THE INDUSTRIAL BANK OF JAPAN, LIMITED, ATLANTA
AGENCY
By: /s/
-------------------------------------
Title:
-------------------------------------
-10-
<PAGE> 11
EXHIBIT J
FORM OF COMPLIANCE CERTIFICATE
For the quarter ending _________, _____
NationsBank, N.A., as Administrative Agent
Independence Center
101 North Tryon Street, 15th Floor
Charlotte, North Carolina 28255-0001
Attention: Margaret Rhodes, Agency Services
Each of the Lenders a party to
the Credit Agreement (defined below)
Ladies and Gentlemen:
Reference is made to that certain Amended and Restated Credit Agreement
dated as of March 16, 1998 (as amended, modified, restated or supplemented from
time to time, the "Credit Agreement"; capitalized terms used herein, and not
otherwise defined herein, shall have their respective defined meanings as set
forth in the Credit Agreement) among Shaw Industries, Inc. (the "Borrower"), the
Lenders named therein, NationsBank, N.A., as Issuing Bank and Administrative
Agent (the "Administrative Agent") and Suntrust Bank, Atlanta, as Documentation
Agent.
Pursuant to Section 9.3 of the Credit Agreement, the undersigned hereby
certifies to the Administrative Agent, the Issuing Bank and the Lenders as
follows:
(1) The undersigned is the [Treasurer/Chief Financial
Officer/independent public accountant] of the Borrower.
(2) The undersigned has examined the books and records of the
Borrower and has conducted such other examinations and investigations as are
reasonably necessary to provide this Compliance Certificate.
(3) The Borrower is in compliance with Articles 9 and 10 of the
Credit Agreement and no Default or Event of Default has occurred and is
continuing [for Compliance Certificate delivered by Treasurer or Chief Financial
Officer only].
The undersigned hereby further certifies to the Administrative Agent,
the Issuing Bank and the Lenders that the following financial information of the
Borrower is true and correct as of the date hereof:
<PAGE> 12
<TABLE>
<S> <C> <C> <C>
I. EBIT to Interest Ratio (ss.10.1(a))1
A. Consolidated EBIT for Four-Quarter Period:
Consolidated Net Income $
plus, to the extent deducted in -----------------
determining Consolidated Net Income:
Consolidated Interest Expense $
-----------------
Income Taxes $
-----------------
Consolidated EBIT: $
=================
B. Consolidated Interest Expense for
Four-Quarter Period: $
-----------------
C. EBIT to Interest Ratio (A divided by B): :1:00 minimum ratio required: 2.25 to 1.00
---------
II. Minimum Net Worth (ss.10.1(b))
A. $510,000,000
B. Cumulative Positive Consolidated Net Income
since January 3, 1998: $
-----------------
C. 50% of Item B $
-----------------
D. Aggregate net proceeds from equity
issuances after January 3, 1998: $
-----------------
E. Aggregate consideration paid for equity
repurchases, etc. after January 3, 1998: $ (2)
-----------------
F. Sum of Item A plus C plus D minus E: $
-----------------
G. Consolidated Net Worth $
=================
H. Test - Item G must be greater than
Item F: yes no
----- ----
</TABLE>
- --------------------------
(1) Section references contained herein are references to the section of the
Credit Agreement requesting the respective financial data.
(2) Up to maximum amount of $150,000,000.
J-2
<PAGE> 13
<TABLE>
<S> <C> <C>
III. Consolidated Funded Debt to EBITDA (ss.10.1(c))
A. Consolidated Funded Debt Outstanding: $
---------
B. Consolidated EBITDA for Four-Quarter Period:
Consolidated Net Income $
plus, to the extent deducted in ---------
determining Consolidated Net Income
Consolidated Interest Expense, plus $
---------
Income Taxes, plus $
---------
Depreciation, plus $
---------
Amortization $
---------
Consolidated EBITDA: $
=========
C. Consolidated Funded Debt to EBITDA Ratio (A _____:1:00 maximum ratio
divided by B): permitted:
4.00 to 1.00
IV. Indebtedness (ss.10.2)
A. Capital Lease Debt/Purchase Money Debt
Outstanding: $
--------- maximum
allowed:
$50,000,000
B. Consolidated Funded Debt incurred after
Effective Date plus Indebtedness related to $
Nylon Polymer (ss.10.2(f)(iii)): --------- maximum
allowed:
[20% of
Total Assets]
C. Sold Receivables Indebtedness: $
--------- maximum
allowed:
$325,000,000
V. Year-end Certificate only - Operating Leases
(ss.10.9)
Aggregate amount of all rents paid under
operating leases during fiscal year: $
--------- maximum
allowed:
$100,000,000
VI. Year-end Certificate only - Investments
(ss.10.3(vii))
Aggregate amount of all non-acquisition
related investments during fiscal year: $
--------- maximum
allowed:
$50,000,000
</TABLE>
J-3
<PAGE> 14
Based on the Consolidated Funded Debt to EBITDA Ratio described above
in item III.C. above, the undersigned hereby confirms that the facility fee
percentage payable pursuant to Section 5.14 of the Credit Agreement for the
quarterly period described herein is _____% and the Applicable Margin for LIBOR
Loans for such period is ______%.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
Consolidated Funded Facility Fee Applicable Margin
Debt/EBITDA Ratio Percentage for LIBOR Loans
-----------------------------------------------------------------------
<S> <C> <C>
Greater than 3.50 to 1.00 .25% 0.75%
-----------------------------------------------------------------------
Less than or equal to 3.50 to 1.00
but greater than 3.00 to 1.00 .20% 0.55%
-----------------------------------------------------------------------
Less than or equal to 3.00 to 1.00
but greater than 2.50 to 1.00 .175% 0.45%
-----------------------------------------------------------------------
Less than or equal to 2.50 to 1.00
but greater than 2.00 to 1.00 .15% 0.35%
-----------------------------------------------------------------------
Less than or equal to 2.00 to 1.00 .10% 0.22%
-----------------------------------------------------------------------
</TABLE>
IN WITNESS WHEREOF, the undersigned has executed this certificate as of
the day of __________, ____.
By:
------------------------------------
Title:
------------------------------
J-4
