<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(E)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
SHAW INDUSTRIES, INC.
(NAME OF ISSUER)
SHAW INDUSTRIES, INC.
(NAME OF PERSON FILING STATEMENT)
COMMON STOCK
SERIES A PARTICIPATING PREFERRED STOCK RIGHTS
(Title of Class of Securities)
8202-86-102
(Cusip Number of Class of Securities)
BENNIE M. LAUGHTER, ESQ.
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
SHAW INDUSTRIES, INC.
616 EAST WALNUT AVENUE
P.O. DRAWER 2128
DALTON, GEORGIA 30720
TELEPHONE (706) 278-3812
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Person Filing Statement)
WITH A COPY TO:
GABRIEL DUMITRESCU, ESQ.
POWELL, GOLDSTEIN, FRAZER & MURPHY LLP
191 PEACHTREE STREET NE
SIXTEENTH FLOOR
ATLANTA, GEORGIA 30303
(404) 572-6600
FEBRUARY 9, 1998
(Date Tender Offer First Published,
Sent or Given to Security Holders)
---------------------
CALCULATION OF FILING FEE
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TRANSACTION VALUE AMOUNT OF FILING FEE
- --------------------------------------------------- ---------------------------------------------------
$112,000,000* $22,400
- -------------------------------------------------------------------------------------------------------
</TABLE>
* Calculated solely for the purpose of determining the filing fee, based upon
the purchase of 8,000,000 shares at $14.00 per share.
[ ] 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.
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AMOUNT PREVIOUSLY PAID: FILING PARTY:
- --------------------------------------------------- ---------------------------------------------------
N/A N/A
FORM OR REGISTRATION NO.: DATE FILED:
- --------------------------------------------------- ---------------------------------------------------
N/A N/A
</TABLE>
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<PAGE> 2
ITEM 1. SECURITY AND ISSUER.
(a) The issuer of the securities to which this Schedule 13E-4 relates is
Shaw Industries, Inc., a Georgia corporation (the "Company"), and the address of
its principal executive office is 616 East Walnut Avenue, P.O. Drawer 2128,
Dalton, Georgia 30722.
(b) This Schedule 13E-4 relates to the offer by the Company to purchase
8,000,000 shares (or such lesser number of shares as are properly tendered) of
its Common Stock (the "Common Stock"), including the associated rights to
purchase Series A Participating Preferred Stock (the "Rights") issued pursuant
to the Rights Agreement between the Company and NationsBank, N.A., as successor
to Citizens and Southern Trust Company (Georgia), N.A. (together, the Common
Stock and the Rights are referred to as the "Shares"), 131,118,065 of which
Shares were outstanding as of January 30, 1998, at a price not in excess of
$14.00 nor less than $11.00 net per Share in cash upon the terms and subject to
the conditions set forth in the Offer to Purchase, dated February 9, 1998 (the
"Offer to Purchase"), and in the related Letter of Transmittal, which together
constitute the "Offer," copies of which are attached as Exhibit 9(a)(1) and
9(a)(2), respectively, and incorporated herein by reference. Executive officers
and directors of the Company may participate in the Offer on the same basis as
the Company's other shareholders, although the Company has been advised that no
director or executive officer of the Company intends to tender any Shares
pursuant to the Offer. The information set forth in "Introduction" and "The
Offer -- Section 1, Number of Shares; Proration" of the Offer to Purchase is
incorporated herein by reference.
(c) The information set forth in "Introduction" and the "The
Offer -- Section 8, Price Range of Shares; Dividends" of the Offer to Purchase
is incorporated herein by reference.
(d) Not applicable.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in "The Offer -- Section 9, Source and
Amount of Funds" of the Offer to Purchase is incorporated herein by reference.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
(a)-(j) The information set forth in "Introduction" and "The
Offer -- Section 9, Source and Amount of Funds," "The Offer -- Section 2,
Purpose of the Offer; Certain Effects of the Offer," "The Offer -- Section 10,
Certain Information Concerning the Company," "The Offer -- Section 11, Interest
of Directors and Officers; Transactions and Arrangements Concerning Shares," and
"The Offer -- Section 12, Effects of the Offer on the Market for Shares;
Registration under the Exchange Act" of the Offer to Purchase is incorporated
herein by reference.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
The information set forth in "The Offer -- Section 11, Interest of
Directors and Officers; Transactions and Arrangements Concerning Shares" of the
Offer to Purchase is incorporated herein by reference.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE ISSUER'S SECURITIES.
The information set forth in "Introduction" and "The Offer -- Section 11,
Interest of Directors and Officers; Transactions and Arrangements Concerning
Shares" of the Offer to Purchase is incorporated herein by reference.
ITEM 6. PERSONS RETAINED, EMPLOYED, OR TO BE COMPENSATED.
The information set forth in "Introduction" and "The Offer -- Section 16,
Fees and Expenses" of the Offer to Purchase is incorporated herein by reference.
<PAGE> 3
ITEM 7. FINANCIAL INFORMATION.
(a)-(b) The information set forth in "The Offer -- Section 10, Certain
Information Concerning the Company" of the Offer to Purchase is incorporated
herein by reference. The information set forth in the Consolidated Financial
Statements of the Company and Notes thereto and in Management's Discussion and
Analysis of Financial Condition and Results of Operations, incorporated by
reference in, and filed as Exhibit 13 to the Company's Annual Report on Form
10-K for the year ended December 28, 1996, and Items 2 and 1, respectively, of
the Company's Quarterly Report on Form 10-Q for the Period Ended September 27,
1997, are incorporated herein by reference.
ITEM 8. ADDITIONAL INFORMATION.
(a) Not applicable.
(b) The information set forth in "The Offer -- Section 13, Certain Legal
Matters; Regulatory Approvals" of the Offer to Purchase is incorporated herein
by reference.
(c) The information set forth in "The Offer -- Section 12, Effects of the
Offer on the Market for Shares; Registration under the Exchange Act" of the
Offer to Purchase is incorporated herein by reference.
(d) Not applicable.
(e) The information set forth in the Offer to Purchase and Letter of
Transmittal is incorporated herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Form of Offer to Purchase, dated February 9, 1998.
(2) Form of Letter of Transmittal (including Certification of Taxpayer
Identification Number on Substitute Form W-9).
(3) Form of Notice of Guaranteed Delivery.
(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees.
(5) Form of Letter to Clients for Use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(6) Text of Press Release issued by the Company, dated January 29, 1998
(incorporated by reference to Exhibit 99.1 to the Company's Current Report on
Form 8-K filed with the Commission on February 2, 1998).
(7) Text of Press Release issued by the Company, dated February 9, 1998.
(8) Form of Summary Advertisement, dated February 9, 1998.
(9) Form of Letter to Shareholders of the Company, dated February 9, 1998,
from Robert E. Shaw, Chairman of the Board and Chief Executive Officer of the
Company.
(10) Form of Letter to Participants for use by the Trustee of the
Retirement Savings Plan.
(11) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(b)(1) Commitment Letter dated February 4, 1998 from NationsBank, N.A. and
SunTrust Bank, Atlanta.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
<PAGE> 4
(g)(1) Management's Discussion and Analysis of Financial Condition and
Results of Operations (incorporated by reference to Exhibit 13 the Company's
Annual Report on Form 10-K for the Year Ended December 28, 1996). *
(2) Management's Discussion and Analysis of Financial Condition and Results
of Operations (incorporated by reference to Item 2 of the Company's Quarterly
Report on Form 10-Q for the Period Ended September 27, 1997). *
(3) Consolidated Financial Statements of the Company and Notes thereto
(incorporated by reference to Exhibit 13 to the Company's Annual Report on Form
10-K for the Year Ended December 28, 1996). *
(4) Condensed Consolidated Financial Statements of the Company and Notes
thereto (incorporated by reference to Item 1 of the Company's Quarterly Report
on Form 10-Q for the Period Ended September 27, 1997). *
- ---------------
* The Company's Commission File Number is 1-06853.
<PAGE> 5
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Schedule 13E-4 is true, complete and
correct.
SHAW INDUSTRIES, INC.
By: /s/ BENNIE M. LAUGHTER
------------------------------------
Name: Bennie M. Laughter
Title: Vice President, Secretary
and General Counsel
February 9, 1998
<PAGE> 6
EXHIBIT INDEX
<TABLE>
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EXHIBIT
NUMBER DESCRIPTION
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<C> <C> <S>
(a)(1) -- Form of Offer to Purchase, dated February 9, 1998.
(2) -- Form of Letter of Transmittal (including Certification of
Taxpayer Identification Number on Substitute Form W-9).
(3) -- Form of Notice of Guaranteed Delivery.
(4) -- Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(5) -- Form of Letter to Clients for Use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees.
(6) -- Text of Press Release issued by the Company, dated January
29, 1998 (incorporated by reference to Exhibit 99.1 to the
Company's Current Report on Form 8-K filed with the
Commission on February 2, 1998).
(7) -- Text of Press Release issued by the Company, dated February
9, 1998.
(8) -- Form of Summary Advertisement, dated February 9, 1998.
(9) -- Form of Letter to Shareholders of the Company, dated
February 9, 1998, from Robert E. Shaw, Chairman of the Board
and Chief Executive Officer of the Company.
(10) -- Form of Letter to Participants for use by the Trustee of the
Retirement Savings Plan.
(11) -- Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(b)(1) -- Commitment Letter dated February 4, 1998 from NationsBank,
N.A. and SunTrust Bank, Atlanta.
(c) -- Not applicable.
(d) -- Not applicable.
(e) -- Not applicable.
(f) -- Not applicable.
(g)(1) -- Management's Discussion and Analysis of Financial Condition
and Results of Operations (incorporated by reference to
Exhibit 13 the Company's Annual Report on Form 10-K for the
Year Ended December 28, 1996).*
(2) -- Management's Discussion and Analysis of Financial Condition
and Results of Operations (incorporated by reference to Item
2 of the Company's Quarterly Report on Form 10-Q for the
Period Ended September 27, 1997).*
(3) -- Consolidated Financial Statements of the Company and Notes
thereto (incorporated by reference to Exhibit 13 to the
Company's Annual Report on Form 10-K for the Year Ended
December 28, 1996).*
-- Condensed Consolidated Financial Statements of the Company
and Notes thereto (incorporated by reference to Item 1 of
the Company's Quarterly Report on Form 10-Q for the Period
Ended September 27, 1997).*
</TABLE>
- ---------------
* The Company's Commission File Number is 1-06853.
<PAGE> 1
EXHIBIT 99(A)(1)
SHAW INDUSTRIES, INC.
OFFER TO PURCHASE FOR CASH UP TO 8,000,000 SHARES OF ITS COMMON STOCK
(INCLUDING ASSOCIATED SERIES A PARTICIPATING PREFERRED STOCK PURCHASE RIGHTS)
AT A PURCHASE PRICE NOT IN EXCESS OF $14.00
NOR LESS THAN $11.00 PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, MARCH 9, 1998, UNLESS THE OFFER
IS EXTENDED.
Shaw Industries, Inc., a Georgia corporation ("Shaw" or the "Company"),
hereby invites its shareholders to tender shares of its Common Stock (the
"Common Stock"), including the associated rights to purchase Series A
Participating Preferred Stock (the "Rights") issued pursuant to the Rights
Agreement between the Company and NationsBank, N.A., as successor to Citizens
and Southern Trust Company (Georgia), N.A. (together, the Common Stock and the
Rights are referred to as the "Shares"), to the Company at a price not in excess
of $14.00 nor less than $11.00 per Share in cash, as specified by shareholders
tendering their Shares, upon the terms and subject to the conditions set forth
herein and in the related Letter of Transmittal which together constitute the
"Offer." The Company will determine a single price per Share, not in excess of
$14.00 nor less than $11.00 per Share, net to the seller in cash (the "Purchase
Price"), that it will pay for Shares properly tendered and not withdrawn
pursuant to the Offer, taking into account the number of Shares so tendered and
the prices specified by tendering shareholders. The Company will select the
lowest Purchase Price that will allow it to purchase up to 8,000,000 Shares (or
such lesser number of Shares as are properly tendered and not withdrawn) at a
price not in excess of $14.00 nor less than $11.00 per Share. All Shares
properly tendered at prices at or below the Purchase Price and not withdrawn
will be purchased at the Purchase Price, upon the terms and subject to the
conditions of the Offer, including the proration, odd lot tender provisions and
conditional tender provisions. All Shares acquired in the Offer will be acquired
at the Purchase Price. The Company reserves the right, in its sole discretion,
to purchase more than 8,000,000 Shares pursuant to the Offer. See Section 15. No
separate consideration will be paid for the Rights.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED. THE
OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 7.
The Shares are listed and traded on the New York Stock Exchange (the "NYSE")
and the Pacific Stock Exchange (the "PSE"), under the symbol "SHX." On January
29, 1998, the last trading day on the NYSE prior to the announcement of the
terms of the Offer, the closing per Share sales price as reported by The Wall
Street Journal was $11 15/16. Shareholders are urged to obtain current market
quotations for the Shares. See Section 8.
THE BOARD OF DIRECTORS OF THE COMPANY HAS AUTHORIZED THE OFFER. HOWEVER,
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
SHAREHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES OR
AS TO THE PURCHASE PRICE OF ANY TENDER. EACH SHAREHOLDER MUST MAKE SUCH
SHAREHOLDER'S OWN DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES
AND AT WHAT PRICE OR PRICES SHARES SHOULD BE TENDERED. THE COMPANY HAS BEEN
ADVISED THAT NONE OF ITS DIRECTORS OR EXECUTIVE OFFICERS INTEND TO TENDER ANY
SHARES PURSUANT TO THE OFFER.
---------------------
IMPORTANT
Any shareholder desiring to tender all or any part of such shareholder's
Shares should either (a) complete and sign a Letter of Transmittal in accordance
with the instructions in the Letter of Transmittal and either mail or deliver it
with any required signature guarantee and any other required documents to
Wachovia Bank, N.A. (the "Depositary"), and either mail or deliver the stock
certificates for such Shares to the Depositary (with all such other documents)
or tender such Shares pursuant to the procedures for book-entry transfer set
forth in Section 3, or (b) request such shareholder's broker, dealer, commercial
bank, trust company or other nominee (each of the foregoing, a "Custodian") to
effect the transaction for such shareholder. Holders of Shares registered in the
name of a Custodian should contact such Custodian if they desire to tender their
Shares. Any shareholder who desires to tender Shares and whose certificates for
such Shares are not immediately available or who cannot comply in a timely
manner with the procedures for book-entry transfer by the expiration of the
Offer must tender such Shares pursuant to the guaranteed delivery procedure set
forth in Section 3. SHAREHOLDERS MUST PROPERLY COMPLETE THE LETTER OF
TRANSMITTAL INCLUDING THE SECTION OF THE LETTER OF TRANSMITTAL RELATING TO THE
PURCHASE PRICE AT WHICH SUCH SHAREHOLDERS ARE TENDERING SHARES IN ORDER TO
EFFECT A VALID TENDER OF THEIR SHARES.
---------------------
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at the telephone numbers and addresses set forth on
the back cover of this Offer to Purchase. Additional copies of this Offer to
Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery may be
obtained from the Information Agent at its address and telephone number set
forth on the back cover of this Offer to Purchase.
The Dealer Manager for the Offer is:
MERRILL LYNCH & CO.
February 9, 1998
<PAGE> 2
THE COMPANY HAS NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON
BEHALF OF THE COMPANY AS TO WHETHER SHAREHOLDERS SHOULD TENDER OR REFRAIN FROM
TENDERING SHARES PURSUANT TO THE OFFER OR AS TO THE PURCHASE PRICE OF ANY
TENDER. THE COMPANY HAS NOT AUTHORIZED ANY PERSON TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATION IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED
HEREIN OR IN THE RELATED LETTER OF TRANSMITTAL. IF GIVEN OR MADE, ANY SUCH
RECOMMENDATION OR ANY SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE COMPANY.
---------------------
TABLE OF CONTENTS
<TABLE>
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SECTION PAGE
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<S> <C> <C>
SUMMARY.......................................................... iii
INTRODUCTION..................................................... 1
THE OFFER........................................................ 2
1. Number of Shares; Proration................................. 2
2. Purpose of the Offer; Certain Effects of the Offer.......... 4
3. Procedures for Tendering Shares............................. 5
4. Withdrawal Rights........................................... 9
5. Purchase of Shares and Payment of Purchase Price............ 10
6. Conditional Tender of Shares................................ 11
7. Certain Conditions of the Offer............................. 11
8. Price Range of Shares; Dividends............................ 13
9. Source and Amount of Funds.................................. 13
10. Certain Information Concerning the Company.................. 14
11. Interest of Directors and Officers; Transactions and
Arrangements Concerning Shares.............................. 22
12. Effects of the Offer on the Market for Shares; Registration
under the Exchange Act...................................... 22
13. Certain Legal Matters; Regulatory Approvals................. 23
14. Certain Federal Income Tax Consequences..................... 23
15. Extension of Offer; Termination; Amendment.................. 25
16. Fees and Expenses........................................... 26
17. Miscellaneous............................................... 27
</TABLE>
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FORWARD LOOKING STATEMENTS
This Offer to Purchase, including the discussions in Section 1 and in
Section 2, contain certain "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, which involve a number of risks and
uncertainties. The Company cautions that a number of important factors could,
individually or in the aggregate, cause actual results to differ materially from
those referred to or reflected in the forward-looking statements, including, but
not limited to, the following: market conditions in the carpet industry; raw
material prices; timing and level of capital expenditures; adverse results of
litigation; the Company's ability to integrate acquisitions successfully; the
Company's ability to introduce new products successfully; and other risks and
uncertainties identified from time to time in the Company's reports filed with
the Securities and Exchange Commission and in public announcements.
ii
<PAGE> 3
SUMMARY
The following summary is solely for the convenience of the Company's
shareholders and is qualified in its entirety by reference to the full text of,
and more specific details contained in, this Offer to Purchase.
Purchase Price............. The Company will determine a single Purchase Price
not in excess of $14.00 nor less than $11.00 per
Share, net to the seller in cash, that it will pay
for Shares properly tendered and not withdrawn
pursuant to the Offer, taking into account the
number of Shares so tendered and the prices
specified by tendering shareholders. All Shares
properly tendered at prices at or below the
Purchase Price and not withdrawn will be purchased
at the Purchase Price, upon the terms and subject
to the conditions of the Offer, including the
proration, odd lot provisions and conditional
tender provisions. Each shareholder desiring to
tender Shares must specify in the Letter of
Transmittal the price (not in excess of $14.00 nor
less than $11.00 per Share) at which such
shareholder is willing to have such shareholder's
Shares purchased by the Company.
Number of Shares to be
Purchased................ Up to 8,000,000 Shares (or such lesser number of
Shares as are properly tendered and not withdrawn).
The Company reserves the right, in its sole
discretion, to purchase more than 8,000,000 Shares
pursuant to the Offer. See Section 15.
Proration.................. If more than 8,000,000 Shares have been properly
tendered at prices at or below the Purchase Price
and not withdrawn prior to the Expiration Date, the
Company will purchase properly tendered Shares on a
pro rata basis, after the purchase of odd lot
Shares. See Section 1.
How to Tender Shares....... See Section 3. For further information, call the
Information Agent, the Dealer Manager or consult
your broker for assistance.
Brokerage Commissions...... None. A tendering shareholder who holds Shares with
such shareholder's Custodian may be required by
such Custodian to pay a service charge or other
fee.
Stock Transfer Tax......... None, if payment is made to the registered
shareholder.
Expiration Date............ 12:00 Midnight, New York City time, on Monday,
March 9, 1998, unless extended by the Company.
Payment Date............... As soon as practicable after the termination of the
Offer.
Position of the Company and
its Directors.............. Neither the Company nor its Board of Directors
makes any recommendation to any shareholder as to
whether to tender or refrain from tendering Shares
or as to the purchase price of any tender. The
Company has been advised that none of its directors
or executive officers intends to tender any Shares
pursuant to the Offer.
Withdrawal Rights.......... Tendered Shares may be withdrawn at any time until
12:00 Midnight, New York City time, on Monday,
March 9, 1998, unless the Offer is extended by the
Company, and, unless accepted for payment by the
Company, after 12:00 Midnight, New York City time,
on Monday, April 6, 1998. See Section 4.
Odd Lots................... There will be no proration of Shares tendered by
any shareholder owning beneficially less than 100
Shares who tenders all such Shares at or below the
Purchase Price prior to the Expiration Date (as
defined below) and
iii
<PAGE> 4
who completes the "Odd Lots" box in the Letter of
Transmittal. See Section 1.
Dividends.................. All shareholders of record at the close of business
on Monday, February 16, 1998, will be entitled to a
first quarter dividend of $0.075 per Share to be
paid on Friday, February 27, 1998, regardless of
whether such shareholders tender their Shares
pursuant to the Offer either before or after the
record date. In addition, the Board of Directors
has determined that no further dividends shall be
paid this fiscal year.
iv
<PAGE> 5
To the Holders of Common Stock of Shaw Industries, Inc.:
INTRODUCTION
The Company invites its shareholders to tender Shares, including the
Rights, at a price not in excess of $14.00 nor less than $11.00 per Share, as
specified by shareholders tendering their Shares, upon the terms and subject to
the conditions set forth in the Offer. The Company will determine a single
Purchase Price, not in excess of $14.00 nor less than $11.00 per Share, net to
the seller in cash, that it will pay for Shares properly tendered and not
withdrawn pursuant to the Offer, taking into account the number of Shares so
tendered and the prices specified by tendering shareholders. The Company will
select the lowest Purchase Price that will allow it to purchase up to 8,000,000
Shares (or such lesser number of Shares as are properly tendered and not
withdrawn) at a price not in excess of $14.00 nor less than $11.00 per Share.
All Shares acquired in the Offer will be acquired at the Purchase Price. All
Shares properly tendered at prices at or below the Purchase Price and not
withdrawn will be purchased at the Purchase Price, upon the terms and subject to
the conditions of the Offer, including the proration, odd lot tender provisions
and conditional tender provisions. Shares tendered at prices in excess of the
Purchase Price and Shares not purchased because of proration or conditional
tenders will be returned to the tendering shareholders. The Company reserves the
right, in its sole discretion, to purchase more than 8,000,000 Shares pursuant
to the Offer. See Section 15.
THIS OFFER IS NOT CONDITIONED UPON THE TENDER OF ANY MINIMUM NUMBER OF
SHARES BUT IS SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 7.
THE BOARD OF DIRECTORS OF THE COMPANY HAS AUTHORIZED THE MAKING OF THE
OFFER. HOWEVER, NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY
RECOMMENDATION TO SHAREHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING
THEIR SHARES OR AS TO THE PURCHASE PRICE OF ANY TENDER. EACH SHAREHOLDER MUST
MAKE THEIR OWN DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES AND
AT WHAT PRICE OR PRICES SHARES SHOULD BE TENDERED. THE COMPANY HAS BEEN ADVISED
THAT NONE OF ITS DIRECTORS OR EXECUTIVE OFFICERS INTENDS TO TENDER ANY SHARES
PURSUANT TO THE OFFER.
Upon the terms and subject to the conditions of the Offer, if at the
expiration of the Offer more than 8,000,000 Shares are properly tendered and not
withdrawn at or below the Purchase Price, the Company will accept Shares for
purchase first from all Odd Lot Holders (as defined in Section 1) who properly
tendered all of their Shares at or below the Purchase Price and then on a pro
rata basis from all other shareholders whose Shares are properly tendered at or
below the Purchase Price and not withdrawn. See Section 1. All Shares not
purchased pursuant to the Offer, including Shares tendered at prices greater
than the Purchase Price and not withdrawn and Shares not purchased because of
proration or conditional tenders, will be returned at the Company's expense
promptly after the Expiration Date.
The Purchase Price will be paid net to the tendering shareholder in cash
for all Shares purchased. Tendering shareholders will not be obligated to pay
brokerage commissions, solicitation fees or, subject to Instruction 7 of the
Letter of Transmittal, stock transfer taxes on the purchase of Shares by the
Company. A tendering shareholder who holds Shares with such shareholder's
Custodian may be required by such Custodian to pay a service charge or other
fee. HOWEVER, ANY TENDERING SHAREHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE,
SIGN AND RETURN TO THE DEPOSITARY THE SUBSTITUTE FORM W-9 THAT IS INCLUDED IN
THE LETTER OF TRANSMITTAL MAY BE SUBJECT TO REQUIRED BACKUP FEDERAL INCOME TAX
WITHHOLDING OF 31% OF THE GROSS PROCEEDS PAYABLE TO SUCH SHAREHOLDER OR OTHER
PAYEE PURSUANT TO THE OFFER. SEE SECTION 3. The Company will pay all fees and
expenses of Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"
or the "Dealer Manager"), the Depositary and Corporate Investor Communications,
Inc. (the "Information Agent") incurred in connection with the Offer. See
Section 16.
Shareholders who are tendering Shares and are participants in the Company's
Dividend Reinvestment and Stock Purchase Plan (the "Dividend Reinvestment Plan")
may instruct the administrator of such plan to tender all or part of the Shares
credited to such participant's account in the Dividend Reinvestment Plan by
following the instructions set forth in "Procedure for Tendering
Shares -- Dividend Reinvestment Plan" in Section 3.
1
<PAGE> 6
As of January 30, 1998, the Company had issued and outstanding 131,118,065
Shares. The 8,000,000 Shares that the Company is offering to purchase pursuant
to the Offer represent approximately 6.1% of the Shares outstanding as of
January 30, 1998. The Shares are listed and traded on the NYSE and the PSE under
the symbol "SHX." On January 29, 1998, the last trading day on the NYSE prior to
the announcement of the terms of the Offer, the closing per Share sales price as
reported by The Wall Street Journal was $11 15/16. SHAREHOLDERS ARE URGED TO
OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES. See Section 8.
THE OFFER
1. NUMBER OF SHARES; PRORATION.
Upon the terms and subject to the conditions of the Offer, the Company will
purchase up to 8,000,000 Shares or such lesser number of Shares as are properly
tendered (and not withdrawn in accordance with Section 4) prior to the
Expiration Date at a price (determined in the manner set forth below) not in
excess of $14.00 nor less than $11.00 per Share, net to the seller in cash. The
term "Expiration Date" means 12:00 Midnight, New York City time, on Monday,
March 9, 1998, unless and until the Company, in its sole discretion, shall have
extended the time and date during which the Offer will remain open, in which
event the term "Expiration Date" shall refer to the latest time and date at
which the Offer, as so extended by the Company, shall expire. For a description
of the Company's right to extend, delay, terminate or amend the Offer, see
Section 15. The Company reserves the right to purchase more than 8,000,000
Shares pursuant to the Offer. In accordance with applicable regulations of the
Securities and Exchange Commission (the "Commission"), the Company may purchase
pursuant to the Offer an additional amount of Shares not to exceed 2% of the
outstanding Shares without amending or extending the Offer. See Section 15. If
the Offer is oversubscribed, Shares tendered at or below the Purchase Price
prior to the Expiration Date will be subject to proration, except for odd lots
as described below.
In accordance with Instruction 5 of the Letter of Transmittal, shareholders
desiring to tender Shares must specify the price, not in excess of $14.00 nor
less than $11.00 per Share, at which such shareholders are willing to sell their
Shares to the Company. The Company will, upon the terms and subject to the
conditions of the Offer, determine a single Purchase Price that it will pay for
Shares properly tendered and not withdrawn pursuant to the Offer, taking into
account the number of Shares tendered and the prices specified by tendering
shareholders. The Company will select the lowest Purchase Price, not in excess
of $14.00 nor less than $11.00 net per Share in cash, that will allow it to
purchase up to 8,000,000 Shares (or such lesser number of Shares as are properly
tendered and not withdrawn) pursuant to the Offer. No separate consideration
will be paid for the Rights. Shares properly tendered pursuant to the Offer at
or below the Purchase Price and not withdrawn will be purchased at the Purchase
Price, upon the terms and subject to the conditions of the Offer, including the
proration, odd lot provisions and conditional tender provisions. All Shares
tendered and not purchased pursuant to the Offer, including Shares tendered at
prices in excess of the Purchase Price and not withdrawn and Shares not
purchased because of proration or conditional tenders, will be returned to the
tendering shareholders at the Company's expense as promptly as practicable
following the Expiration Date.
This Offer to Purchase and the related Letter of Transmittal will be mailed
to record holders of Shares and will be furnished to Custodians whose names, or
the names of whose nominees, appear on the Company's shareholder list or, if
applicable, who are listed as participants in a clearing agency's security
position listing for subsequent transmittal to beneficial owners of Shares.
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Priority of Purchases. Upon the terms and subject to the conditions of the
Offer, if more than 8,000,000 Shares have been properly tendered at prices at or
below the Purchase Price and not withdrawn prior to the Expiration Date, the
Company will accept for purchase properly tendered Shares in the following order
of priority:
(a) First, all Shares properly tendered and not withdrawn prior to the
Expiration Date by any Odd Lot Holder who:
(1) tenders all Shares beneficially owned by such Odd Lot Holder at
a price at or below the Purchase Price (tenders of less than all Shares
owned by such shareholder will not qualify for this preference); and
(2) completes the box captioned "Odd Lots" on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed Delivery;
and
(b) Second, after purchase of all of the foregoing Shares, all Shares
conditionally tendered in accordance with Section 6, for which the
condition was satisfied without regard to the procedure set forth in clause
(c) below, and all other Shares tendered properly and unconditionally, in
each case, at prices at or below the Purchase Price and not withdrawn prior
to the Expiration Date, on a pro rata basis (with adjustments to avoid
purchases of fractional Shares) as described below; and
(c) Third, if necessary to permit the Company to purchase up to
8,000,000 Shares, Shares conditionally tendered, for which the condition
was not initially satisfied, at or below the Purchase Price and not
withdrawn prior to the Expiration Date, selected by random lot in
accordance with Section 6.
Odd Lots. For purposes of the Offer, the term "odd lots" shall mean all
Shares properly tendered prior to the Expiration Date at prices at or below the
Purchase Price and not withdrawn by or on behalf of any shareholder who owned,
beneficially or of record, an aggregate of fewer than 100 Shares (an "Odd Lot
Holder") including any Shares held in the Dividend Reinvestment Plan and so
certified in the appropriate place on the Letter of Transmittal and, if
applicable, on the Notice of Guaranteed Delivery. In order to qualify for this
preference, an Odd Lot Holder must properly tender all Shares beneficially owned
by such shareholder in accordance with the procedures described in Section 3. As
set forth above, odd lots will be accepted for payment before proration, if any,
of the purchase of other tendered Shares. This preference is not available to
partial tenders or to beneficial or record holders of an aggregate of 100 or
more Shares, even if such holders have separate accounts or certificates
representing fewer than 100 Shares. By accepting the Offer, an Odd Lot Holder
will not only avoid the payment of brokerage commissions but also will avoid any
applicable odd lot discounts in a sale of such holder's Shares. However, a
tendering shareholder who holds Shares with such shareholder's Custodian may be
required by such Custodian to pay a service charge or other fee. Any shareholder
wishing to tender all of such shareholder's Shares pursuant to the odd lot
provisions should complete the box captioned "Odd Lots" on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed Delivery.
The Company also reserves the right, but will not be obligated, to purchase
all Shares duly tendered by any shareholder who tendered all Shares owned,
beneficially or of record, at or below the Purchase Price and who, as a result
of proration, would then own, beneficially or of record, an aggregate of fewer
than 100 Shares. If the Company exercises this right, it will increase the
number of Shares that it is offering to purchase by the number of Shares
purchased through the exercise of the right.
Proration. In the event that proration of tendered Shares is required, the
Company will determine the final proration factor promptly following the
Expiration Date. Proration for each shareholder tendering Shares, other than Odd
Lot Holders, shall be based on the ratio of the number of Shares tendered by
such shareholder to the total number of Shares tendered by all shareholders,
other than Odd Lot Holders, at or below the Purchase Price, subject to the
conditional tender provisions described in Section 6. Due to the difficulty in
determining the number of Shares properly tendered (including Shares tendered by
guaranteed delivery procedures, as described in Section 3) and not withdrawn,
and because of the odd lot provisions, the Company does not expect that it will
be able to announce the final proration factor or commence payment for any
Shares purchased pursuant to the Offer until approximately five NYSE trading
days after the Expiration Date. The
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<PAGE> 8
preliminary results of any proration will be announced by press release as
promptly as practicable after the Expiration Date. Shareholders may obtain such
preliminary information from the Information Agent or the Dealer Manager and may
be able to obtain such information from their brokers.
Pursuant to the provisions of the Rights Agreement between the Company and
NationsBank, N.A., as successor to Citizens and Southern Trust Company
(Georgia), N.A., each Share represents, in addition to the Common Stock, one
Right. Upon becoming exercisable, but prior to the occurrence of certain events,
each Right entitles the registered holder to purchase one one-hundredth of a
share of Series A Participating Preferred Stock at a price of $12.50 per share.
If a person or group acquires or makes a tender or exchange offer to acquire 20
percent or more of the Company's Common Stock without the consent of the Company
(an "Acquiring Shareholder"), the Rights will become exercisable and each Right
will entitle each shareholder, other than the Acquiring Shareholder, to receive,
upon payment of the purchase price, in lieu of preferred stock, a number of
shares of Common Stock having a market value equal to twice the purchase price.
The Rights are not currently exercisable and trade together with the associated
Common Stock. The Rights will not become exercisable or separately tradeable as
a result of the Offer. Absent circumstances causing the Rights to become
exercisable or separately tradeable prior to the Expiration Date, the tender of
any Shares pursuant to the Offer will include the tender of the associated
Rights. No separate consideration will be paid for such Rights, and sellers of
Shares pursuant to the Offer will no longer own the Rights associated with such
Shares.
As described in Section 14, the number of Shares that the Company will
purchase from a shareholder may affect the United States federal income tax
consequences to the shareholder of such purchase and therefore may be relevant
to a shareholder's decision whether to tender Shares. The Letter of Transmittal
affords each tendering shareholder the opportunity to designate the order of
priority in which Shares tendered are to be purchased in the event of proration.
2. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER.
The Company is making the Offer because the Board of Directors believes
that, given the current market price of the Shares and the Company's financial
condition and outlook, the purchase of Shares at this time is a prudent use of
its financial resources, taking into account the increased interest expense
associated with the borrowing required in connection with the Offer. In the view
of the Board of Directors, the Offer represents an increase in and an
acceleration of what would have been a continuing share repurchase program
intended to enhance shareholder value both in the near and long term. Prior to
the announcement of the Offer, the Company repurchased Shares pursuant to its
share repurchase program in the open market and in privately-negotiated
transactions. During 1997, the Company repurchased an aggregate of 3,820,000
Shares at an average purchase price of approximately $12.06 per Share under its
share repurchase program at a cost of approximately $46,062,000.
Concurrently with the announcement of the Offer, the Company announced that
the Board of Directors intends to discontinue the quarterly cash dividend on the
Shares effective following the payment of the first quarter dividend scheduled
to be paid on Friday, February 27, 1998 to shareholders of record on Monday,
February 16, 1998. Shareholders of record will be entitled to the quarterly
$0.075 per Share dividend, regardless of whether they tender Shares either
before or after the record date for the dividend. The Company believes that
discontinuing the dividend improves the Company's financial flexibility and that
the Offer is potentially a more tax efficient manner to distribute profits to
its shareholders. The Company intends to utilize the increase in cash flow
resulting from discontinuing the dividend for debt service and general corporate
purposes.
The Offer provides shareholders who are considering a sale of all or a
portion of their Shares with the opportunity to determine the price or prices
(not in excess of $14.00 nor less than $11.00 per Share) at which such
shareholders may tender their Shares and, upon the terms and subject to
conditions of the Offer, to sell those Shares for cash without the usual
transaction costs associated with market sales. In addition, shareholders owning
fewer than 100 Shares whose Shares are purchased pursuant to the Offer not only
will avoid the payment of brokerage commissions but also will avoid any
applicable odd lot discounts payable on a
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<PAGE> 9
sale of their Shares in a transaction executed on a securities exchange. To the
extent that the purchase of Shares in the Offer results in a reduction in the
number of shareholders of record, the Company's cost for shareholder services
may be reduced. Shareholders who determine not to accept the Offer will realize
a proportionate increase in their relative equity interest in the Company, and
thus in the Company's future earnings and assets, subject to the Company's right
to issue additional Shares and other equity securities in the future.
In consideration of the Offer, the Board of Directors also took into
account the expected financial impact of the Offer, including the Company's
increased debt as a result of the Offer and the resulting increased interest
expense. See the information under the caption "Summary Unaudited Consolidated
Pro Forma Financial Data" in Section 10. The Company believes that, following
completion of the Offer, its cash, short-term investments and access to credit
facilities, together with its anticipated cash flow from operations, will be
adequate for its needs for the foreseeable future. However, the Company's actual
experience may differ from the expectations set forth in the preceding sentence.
Future events, such as unexpected operating losses or capital or other
expenditures, might have the effect of reducing the Company's available cash
balances or might reduce or eliminate the availability of external financial
resources.
Following the completion of the Offer, the Company will have approximately
3,900,000 Shares remaining authorized for repurchase under its share repurchase
program. Although the Company has no current plans to acquire additional Shares
other than through the Offer, the Company may in the future purchase additional
Shares in the open market, in privately-negotiated transactions, through tender
offers or otherwise. Any such purchase may be on the same terms or on terms
which are more or less favorable to shareholders than the terms of the Offer.
However, Rule 13e-4(f)(6) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), prohibits the Company and its affiliates from purchasing
any Shares, other than pursuant to the Offer, until at least ten business days
after the Expiration Date. Any possible future purchases by the Company will
depend on many factors, including the market price of the Shares, the results of
the Offer, the Company's business and financial position and general economic
and market conditions.
Shares the Company acquires pursuant to the Offer will be retained as
treasury shares or will be cancelled and returned to the status of authorized
but unissued shares and will be available for the Company to issue without
further shareholder action (except as required by applicable law or the rules of
the NYSE or any other securities exchange on which the Shares are listed) for
purposes including, but not limited to, the acquisition of other businesses, the
raising of additional capital for use in the Company's business and the
satisfaction of obligations under existing or future employee benefit plans.
Except for the issuance of Shares under current employee benefit plans, the
Company has no current plans for the reissuance of the Shares repurchased
pursuant to the Offer or for the issuance of any other authorized but unissued
shares of Common Stock.
See Section 12 for information regarding certain effects of the Offer on
the market for the Shares and on their registration under the Exchange Act.
3. PROCEDURES FOR TENDERING SHARES.
Proper Tender of Shares. For Shares to be tendered properly pursuant to
the Offer, (a) the certificates for such Shares (or confirmation of receipt of
such Shares pursuant to the procedures for book-entry transfer set forth below),
together with a properly completed and duly executed Letter of Transmittal
including any required signature guarantees and any other documents required by
the Letter of Transmittal, must be received prior to the Expiration Date by the
Depositary at its address set forth on the back cover of this Offer to Purchase
or (b) the tendering shareholder must comply with the guaranteed delivery
procedure set forth below. IN ACCORDANCE WITH INSTRUCTION 5 OF THE LETTER OF
TRANSMITTAL, SHAREHOLDERS DESIRING TO TENDER SHARES PURSUANT TO THE OFFER MUST
PROPERLY INDICATE, IN THE SECTION CAPTIONED "PRICE (IN DOLLARS) PER SHARE AT
WHICH SHARES ARE BEING TENDERED" ON THE LETTER OF TRANSMITTAL, THE PRICE (IN
MULTIPLES OF $0.25) AT WHICH THEIR SHARES ARE BEING TENDERED. Shareholders who
desire to tender Shares at more than one price must complete a separate Letter
of Transmittal for each price at which Shares are tendered, provided that the
same Shares cannot be tendered (unless previously properly withdrawn in
accordance with the terms of the Offer)
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<PAGE> 10
at more than one price. IN ORDER TO PROPERLY TENDER SHARES, ONE AND ONLY ONE
PRICE BOX MUST BE CHECKED IN THE APPROPRIATE SECTION ON EACH LETTER OF
TRANSMITTAL.
In addition, Odd Lot Holders who tender all of their Shares must complete
the box captioned "Odd Lots" on the Letter of Transmittal and, if applicable, on
the Notice of Guaranteed Delivery, in order to qualify for the preferential
treatment available to Odd Lot Holders as set forth in Section 1.
Book-Entry Delivery. The Depositary will establish an account with respect
to the Shares for purposes of the Offer at each of the Book-Entry Transfer
Facilities (as defined below) within two business days after the date of this
Offer to Purchase, and any financial institution that is a participant in a
Book-Entry Transfer Facility's system may make book-entry delivery of the Shares
by causing such facility to transfer Shares into the Depositary's account in
accordance with the Book-Entry Transfer Facility's procedures for transfer.
Although delivery of Shares may be effected through a book-entry transfer into
the Depositary's account at one of the Book-Entry Transfer Facilities, either
(i) a properly completed and duly executed Letter of Transmittal with any
required signature guarantees and any other required documents must be
transmitted to and received by the Depositary at its address set forth on the
back cover of this Offer to Purchase prior to the Expiration Date, or (ii) the
guaranteed delivery procedure described below must be followed. DELIVERY OF
DOCUMENTS TO ONE OF THE BOOK-ENTRY TRANSFER FACILITIES DOES NOT CONSTITUTE
DELIVERY TO THE DEPOSITARY.
Signature Guarantees and Method of Delivery. No signature guarantee is
required on the Letter of Transmittal (i) if the Letter of Transmittal is signed
by the registered holder of the Shares (which term, for purposes of this Section
3, shall include any participant in The Depository Trust Company or Philadelphia
Depository Trust Company (the "Book-Entry Transfer Facilities") whose name
appears on a security position listing as the owner of the Shares) tendered
therewith and such holder has not completed either the box entitled "Special
Payment Instructions" or the box entitled "Special Delivery Instructions" on the
Letter of Transmittal; or (ii) if Shares are tendered for the account of a
member firm of a registered national securities exchange, a member of the
National Association of Securities Dealers, Inc. or a commercial bank or trust
company (not a savings bank or a savings and loan association) having an office,
branch or agency in the United States (each such entity being hereinafter
referred to as an "Eligible Institution"). See Instruction 1 of the Letter of
Transmittal. If a certificate for Shares is registered in the name of a person
other than the person executing a Letter of Transmittal, or if payment is to be
made, or Shares not purchased or tendered are to be issued, to a person other
than the registered holder, then the certificate must be endorsed or accompanied
by an appropriate stock power, in either case, signed exactly as the name of the
registered holder appears on the certificate, with the signature(s) on the
certificate or stock power guaranteed by an Eligible Institution.
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
certificates for such Shares (or a timely confirmation of a book-entry transfer
of such Shares into the Depositary's account at a Book-Entry Transfer Facility
as described above), a properly completed and duly executed Letter of
Transmittal and any other documents required by the Letter of Transmittal. THE
METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES, THE
LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, IS AT THE ELECTION AND
RISK OF THE TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL, THEN REGISTERED MAIL
WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
If any Shares tendered and not withdrawn are not purchased, or if less than
all Shares evidenced by a shareholder's certificates are tendered, certificates
for unpurchased Shares will be returned as promptly as practicable after the
expiration or termination of the Offer or, in the case of Shares tendered by
book-entry transfer at a Book-Entry Transfer Facility, such Shares will be
credited to the appropriate account maintained by the tendering shareholder at
the appropriate Book-Entry Transfer Facility, in each case without expense to
such shareholder.
Backup Federal Income Tax Withholding. Under the federal income tax backup
withholding rules, unless an exemption applies under the applicable law and
regulations, 31% of the gross proceeds payable to a shareholder or other payee
pursuant to the Offer must be withheld and remitted to the United States
Treasury,
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<PAGE> 11
unless the shareholder or other payee provides such shareholder's taxpayer
identification number (employer identification number or social security number)
to the Depositary and certifies that such number is correct. Therefore, each
tendering shareholder 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, unless such shareholder
otherwise establishes to the satisfaction of the Depositary that such
shareholder is not subject to backup withholding. Certain shareholders
(including, among others, all corporations and certain foreign shareholders (in
addition to foreign corporations)) are not subject to these backup withholding
and reporting requirements. In order for a foreign shareholder to qualify as an
exempt recipient, that shareholder must submit an IRS Form W-8 or a Substitute
Form W-8, signed under penalties of perjury, attesting to that shareholder's
exempt status. Such statements can be obtained from the Depositary. See
Instruction 14 of the Letter of Transmittal.
TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING EQUAL TO 31% OF THE GROSS
PAYMENTS MADE TO SHAREHOLDERS FOR SHARES PURCHASED PURSUANT TO THE OFFER, EACH
SHAREHOLDER WHO DOES NOT OTHERWISE ESTABLISH AN EXEMPTION FROM SUCH WITHHOLDING
MUST PROVIDE THE DEPOSITARY WITH THE SHAREHOLDER'S CORRECT TAXPAYER
IDENTIFICATION NUMBER AND PROVIDE CERTAIN OTHER INFORMATION BY COMPLETING THE
SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL.
For a discussion of certain federal income tax consequences to tendering
shareholders, see Section 14.
Withholding for Foreign Shareholders. Even if a foreign shareholder has
provided the required certification to avoid backup withholding, the Depositary
will withhold federal income taxes equal to 30% of the gross payments payable to
a foreign shareholder or his or her agent unless the Depositary determines that
a reduced rate of withholding is available pursuant to a tax treaty or that an
exemption from withholding is applicable because such gross proceeds are
effectively connected with the conduct of a trade or business within the United
States. For this purpose, a foreign shareholder is any shareholder that is not
(i) a citizen or resident of the United States, (ii) a corporation, partnership,
or other entity created or organized in or under the laws of the United States,
any State or any political subdivision thereof, (iii) an estate the income of
which is subject to United States federal income taxation regardless of the
source of such income, or (iv) any trust if a court within the United States is
able to exercise primary supervision over the administration of the trust and
one or more United States persons have the authority to control all substantial
decisions relating to the trust. In order to obtain a reduced rate of
withholding pursuant to a tax treaty, a foreign shareholder must deliver to the
Depositary before the payment a properly completed and executed IRS Form 1001.
In order to obtain an exemption from withholding on the grounds that the gross
proceeds paid pursuant to the Offer are effectively connected with the conduct
of a trade or business within the United States, a foreign shareholder must
deliver to the Depositary a properly completed and executed IRS Form 4224. The
Depositary will determine a shareholder's status as a foreign shareholder and
eligibility for a reduced rate of, or exemption from, withholding by reference
to any outstanding certificates or statements concerning eligibility for a
reduced rate of, or exemption from, withholding (e.g., IRS Form 1001 or IRS Form
4224) unless facts and circumstances indicate that such reliance is not
warranted. A foreign shareholder may be eligible to obtain a refund of all or a
portion of any tax withheld if such shareholder meets the "complete redemption,"
"substantially disproportionate" or "not essentially equivalent to a dividend"
test described in Section 14 or is otherwise able to establish that no tax or a
reduced amount of tax is due. Backup withholding generally will not apply to
amounts subject to the 30% or a treaty-reduced rate of withholding. Foreign
shareholders are urged to consult their own tax advisors regarding the
application of federal income tax withholding, including eligibility for a
withholding tax reduction or exemption, and the refund procedure. See
Instruction 15 of the Letter of Transmittal.
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<PAGE> 12
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder cannot deliver certificates for such Shares to
the Depositary prior to the Expiration Date (or the procedures for book-entry
transfer cannot be completed on a timely basis) or time will not permit all
required documents to reach the Depositary prior to the Expiration Date, such
Shares may nevertheless be tendered, provided that all of the following
conditions are satisfied:
(a) such tender is made by or through an Eligible Institution;
(b) the Depositary receives by hand or mail, prior to the Expiration
Date, a properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form the Company has provided with this Offer to
Purchase (specifying the price at which the Shares are being tendered),
including (where required) a signature guarantee by an Eligible
Institution; and
(c) the certificates for all tendered Shares, in proper form for
transfer (or confirmation of a book-entry transfer of such Shares into the
Depositary's account at a Book-Entry Facility), together with a properly
completed and duly executed Letter of Transmittal and any required
signature guarantees or other documents required by the Letter of
Transmittal, are received by the Depositary within three NYSE trading days
after the date of receipt by the Depositary of such Notice of Guaranteed
Delivery.
Determination of Validity; Rejection of Shares; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions as to the number of Shares
to be accepted, the Purchase Price to be paid for Shares accepted and the
validity, form, eligibility (including time of receipt) and acceptance of any
tender of Shares will be determined by the Company, in its sole discretion, and
its determination shall be final and binding on all parties. The Company
reserves the absolute right to reject any or all tenders of any Shares that it
determines are not in proper form or the acceptance for payment of or payment
for which may be unlawful. The Company also reserves the absolute right to waive
any of the conditions of the Offer or any defect or irregularity in any tender
of Shares, and the Company's interpretation of the terms of the Offer (including
the instructions in the Letter of Transmittal) will be final and binding on all
parties. No tender of Shares will be deemed to have been properly made until all
defects or irregularities have been cured by the tendering shareholder or waived
by the Company. None of the Company, the Dealer Manager, the Depositary, the
Information Agent or any other person shall be obligated to give notice of any
defects or irregularities in tenders, nor shall any of them incur any liability
for failure to give any such notice.
Dividend Reinvestment Plan. Shares credited to participants' accounts
under the Dividend Reinvestment Plan will be tendered by Wachovia Bank, N.A., as
administrator, according to instructions provided to the administrator from
participants in the Dividend Reinvestment Plan. Shares for which the
administrator has not received timely instructions from participants will not be
tendered. The Dividend Reinvestment Plan is available only to shareholders of
record. Accordingly, the participants in the Dividend Reinvestment Plan will
receive all documents furnished to shareholders generally in connection with the
Offer. Since the Depositary for the Offer also acts as administrator of the
Dividend Reinvestment Plan, participants in the Dividend Reinvestment Plan may
use the Letter of Transmittal to instruct the administrator regarding the Offer
by completing the box entitled "Dividend Reinvestment Plan Shares." Each
participant may direct that all, some or none of the Shares credited to the
participant's account under the Dividend Reinvestment Plan be tendered and the
price at which such participant's Shares are to be tendered. Participants in the
Dividend Reinvestment Plan are urged to read the Letter of Transmittal and
related materials carefully.
Retirement Savings Plan Beneficiaries. If a shareholder desires to tender
such shareholder's Shaw Industries, Inc. Retirement Savings Plan ("Retirement
Savings Plan") Shares pursuant to the Offer, such shareholder must instruct the
Trustee of the Retirement Savings Plan to tender such Shares by properly
completing, duly executing and returning to the Trustee the Instruction Form
sent to such shareholder by the Trustee. The Trustee will aggregate all such
tenders and execute the requisite number of Letters of Transmittal on behalf of
all beneficiaries. DELIVERY OF A LETTER OF TRANSMITTAL BY A SHAREHOLDER OF
RETIREMENT SAVINGS PLAN SHARES DOES NOT CONSTITUTE PROPER TENDER OF RETIREMENT
SAVINGS PLAN SHARES. PROPER TENDER OF RETIREMENT SAVINGS PLAN SHARES CAN ONLY BE
MADE BY THE TRUSTEE, WHO IS THE RECORD OWNER OF SUCH SHARES.
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If a shareholder desires to tender non-Retirement Savings Plan Shares, as
well as Retirement Savings Plan Shares, such shareholder must properly complete
and duly execute a Letter of Transmittal for the non-Retirement Savings Plan
Shares and deliver such Letter of Transmittal directly to the Depositary as well
as following the directions above for tendering Retirement Savings Plan Shares.
The Trustee cannot include non-Retirement Savings Shares in its Letter(s) of
Transmittal.
Tendering Shareholder's Representation and Warranty; Company's Acceptance
Constitutes an Agreement. A tender of Shares pursuant to any of the procedures
described above will constitute the tendering shareholder's acceptance of the
terms and conditions of the Offer, as well as the tendering shareholder's
representation and warranty to the Company that (a) such shareholder has a net
long position in the Shares being tendered within the meaning of Rule 14e-4
promulgated by the Commission under the Exchange Act and (b) the tender of such
Shares complies with Rule 14e-4. It is a violation of Rule 14e-4 for a person,
directly or indirectly, to tender Shares for such person's own account unless,
at the time of tender and at the end of the proration period or period during
which Shares are accepted by lot (including any extensions thereof), the person
so tendering (i) has a net long position equal to or greater than the amount of
(x) Shares tendered or (y) other securities convertible into or exchangeable or
exercisable for the Shares tendered and will acquire such Shares for tender by
conversion, exchange or exercise and (ii) will deliver or cause to be delivered
such Shares in accordance with the terms of the Offer. Rule 14e-4 provides a
similar restriction applicable to the tender or guarantee of a tender on behalf
of another person. The Company's acceptance for payment of Shares tendered
pursuant to the Offer will constitute a binding agreement between the tendering
shareholder and the Company upon the terms and subject to the conditions of the
Offer.
Lost or Destroyed Certificates. Shareholders whose certificates for part
or all of their Shares have been lost, stolen, misplaced or destroyed must so
indicate in the box entitled "Description of Shares Tendered" in the Letter of
Transmittal. Such shareholders may alternatively make such notification to
Wachovia Bank, N.A., as transfer agent, at the following address: 301 North
Church Street, P.O. Box 3001 (27102), Winston-Salem, North Carolina 27101;
Attention: Shareholder Relations Group (telephone number: (800) 633-4236; fax
number: (910) 770-4832) and you will be instructed as to the documents which may
be required to be submitted by you together with the Letter of Transmittal in
order to receive the stock certificate(s) representing the Shares.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of Shares 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 Company pursuant to the Offer, may also be withdrawn
at any time after 12:00 Midnight, New York City time, on Monday, April 6, 1998.
For a withdrawal to be effective, a notice of withdrawal must be in written
form and must be received in a timely manner by the Depositary at its address
set forth on the back cover of this Offer to Purchase. Any such notice of
withdrawal must specify the name of the tendering shareholder, the name of the
registered holder, if different from that of the person who tendered such
Shares, the number of Shares tendered and the number of Shares to be withdrawn.
If the certificates for Shares to be withdrawn have been delivered or otherwise
identified to the Depositary, then, prior to the release of such certificates,
the tendering shareholder must also submit the serial numbers shown on the
particular certificates for Shares to be withdrawn and the signature on the
notice of withdrawal must be guaranteed by an Eligible Institution (except in
the case of Shares tendered by an Eligible Institution). If Shares have been
tendered pursuant to the procedure for book-entry transfer set forth in Section
3, the notice of withdrawal also must specify the name and the number of the
account at the applicable Book-Entry Transfer Facility to be credited with the
withdrawn Shares and otherwise comply with the procedures of such facility. None
of the Company, the Dealer Manager, the Depositary, the Information Agent or any
other person shall be obligated to give notice of any defects or irregularities
in any notice of withdrawal nor shall any of them incur liability for failure to
give any such notice. All questions as to the form and validity (including time
of receipt) of notices of withdrawal will be determined by the Company, in its
sole discretion, which determination shall be final and binding.
9
<PAGE> 14
Withdrawals may not be rescinded and any Shares withdrawn will thereafter
be deemed not properly tendered for purposes of the Offer unless such withdrawn
Shares are properly re-tendered prior to the Expiration Date by again following
one of the procedures described in Section 3.
If the Company extends the Offer, is delayed in its purchase of Shares or
is unable to purchase Shares pursuant to the Offer for any reason, then, without
prejudice to the Company's rights under the Offer, the Depositary may, subject
to applicable law, retain tendered Shares on behalf of the Company, and such
Shares may not be withdrawn except to the extent tendering shareholders are
entitled to withdrawal rights as described in this Section 4.
5. PURCHASE OF SHARES AND PAYMENT OF PURCHASE PRICE.
Upon the terms and subject to the conditions of the Offer, as promptly as
practicable following the Expiration Date, the Company will (i) determine a
single Purchase Price it will pay for the Shares properly tendered and not
withdrawn prior to the Expiration Date, taking into account the number of Shares
so tendered and the prices specified by tendering shareholders, and (ii) accept
for payment and pay for (and thereby purchase) Shares properly tendered at
prices at or below the Purchase Price and not withdrawn prior to the Expiration
Date (subject to the proration, odd lot provisions and conditional tender
provisions of the Offer). For purposes of the Offer, the Company will be deemed
to have accepted for payment (and therefore purchased) Shares that are tendered
at or below the Purchase Price and not withdrawn (subject to the proration, odd
lot provisions and conditional tender provisions of the Offer) only when, as and
if it gives oral or written notice to the Depositary of its acceptance of such
Shares for payment pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer, promptly
following the Expiration Date the Company will accept for payment and pay a
single Purchase Price per Share for up to 8,000,000 Shares (subject to increase
or decrease as provided in Section 15) or such lesser number of Shares as are
properly tendered at prices not in excess of $14.00 nor less than $11.00 per
Share and not withdrawn as permitted in Section 4.
The Company will pay for Shares purchased pursuant to the Offer by
depositing the aggregate Purchase Price therefor with the Depositary, which will
act as agent for tendering shareholders for the purpose of receiving payment
from the Company and transmitting payment to the tendering shareholders.
In the event of proration, the Company will determine the final proration
factor and pay for those Shares tendered and accepted for payment as soon as
practicable after the Expiration Date; however, the Company does not expect to
be able to announce the final results of any proration and commence the payment
for Shares purchased until approximately five NYSE trading days after the
Expiration Date. Certificates for all Shares tendered and not purchased,
including all Shares tendered at prices in excess of the Purchase Price and
Shares not purchased due to proration or conditional tenders, will be returned
(or, in the case of Shares tendered by book-entry transfer, such Shares will be
credited to the account maintained with the Book-Entry Transfer Facility by the
participant therein who so delivered such Shares) to the tendering shareholder
at the Company's expense as promptly as practicable after the Expiration Date.
Under no circumstances will interest on the Purchase Price be paid by the
Company by reason of any delay in making payment. In addition, if certain events
occur, the Company may not be obligated to purchase Shares pursuant to the
Offer. See Section 7.
The Company will pay all stock transfer taxes, if any, payable on the
transfer to it of Shares purchased pursuant to the Offer. If, however, payment
of the Purchase Price is to be made to, or (in the circumstances permitted by
the Offer) if unpurchased Shares are to be registered in the name of, any person
other than the registered holder, or if tendered certificates are registered in
the name of any person other than the person signing the Letter of Transmittal,
the amount of all stock transfer taxes, if any (whether imposed on the
registered holder or such other person), payable on account of the transfer to
such person will be deducted from the Purchase Price unless satisfactory
evidence of the payment of the stock transfer taxes, or exemption therefrom, is
submitted. See Instruction 7 of the Letter of Transmittal.
10
<PAGE> 15
ANY TENDERING SHAREHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE FULLY, SIGN
AND RETURN TO THE DEPOSITARY THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF
TRANSMITTAL MAY BE SUBJECT TO REQUIRED BACKUP FEDERAL INCOME TAX WITHHOLDING OF
31% OF THE GROSS PROCEEDS PAID TO SUCH SHAREHOLDER OR OTHER PAYEE PURSUANT TO
THE OFFER. SEE SECTION 3. ALSO SEE SECTION 3 REGARDING FEDERAL INCOME TAX
CONSEQUENCES FOR FOREIGN SHAREHOLDERS.
6. CONDITIONAL TENDER OF SHARES.
Under certain circumstances set forth in Section 1 above, the Company may
prorate the number of Shares purchased pursuant to the Offer. As discussed in
Section 14, the number of Shares to be purchased from a particular shareholder
might affect the tax consequences to such shareholder of such purchase and such
shareholder's decision whether to tender. Accordingly, a shareholder may tender
Shares subject to the condition that a specified minimum number, if any, must be
purchased, and any shareholder wishing to make such a conditional tender should
so indicate in the box captioned "Conditional Tender" on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed Delivery. The
conditional tender alternative is made available so that a shareholder may seek
to structure the purchase of Shares from the shareholder pursuant to the Offer
in such a manner that it will be treated as a sale of such shares by the
shareholder, rather than the payment of a dividend to the shareholder, for
federal income tax purposes. It is the tendering shareholder's responsibility to
calculate such minimum number of Shares and each shareholder is urged to consult
such shareholder's own tax advisor. If the effect of accepting tenders on a pro
rata basis is to reduce the number of Shares to be purchased from any
shareholder below the minimum number so specified, such tender will
automatically be deemed withdrawn, except as provided in the next paragraph, and
Shares tendered by such shareholder will be returned as soon as practicable
after the Expiration Date.
However, if so many conditional tenders would be deemed withdrawn that the
total number of Shares to be purchased falls below 8,000,000 Shares, then, to
the extent feasible, the Company will select enough of such conditional tenders,
which would otherwise have been deemed withdrawn, to purchase such desired
number of Shares. In selecting among such conditional tenders, the Company will
select by random lot and will limit its purchase in each case to the designated
minimum number of Shares to be purchased. Conditional tenders will be selected
by lot only from shareholders who tender all of their Shares.
IN THE EVENT OF PRORATION, ANY SHARES TENDERED PURSUANT TO A CONDITIONAL
TENDER FOR WHICH THE MINIMUM REQUIREMENTS ARE NOT SATISFIED MAY NOT BE ACCEPTED
(EXCEPT AS PROVIDED ABOVE) AND WILL THEREBY BE DEEMED WITHDRAWN.
7. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer, the Company shall not be
required to accept for payment, purchase or pay for any Shares tendered, and may
terminate or amend the Offer or may postpone the acceptance for payment of, or
the purchase of and the payment for Shares tendered, subject to the rules under
the Exchange Act, if at any time on or after February 9, 1998 and prior to the
Expiration Date (whether any Shares have theretofore been accepted for payment,
purchased or paid for pursuant to the Offer) any of the following events shall
have occurred (or shall have been determined by the Company to have occurred)
that, in the Company's reasonable judgment in any such case and regardless of
the circumstances giving rise thereto (including any action or omission to act
by the Company), makes it inadvisable to proceed with the Offer or with such
acceptance for payment or payment:
(a) there shall have been threatened, instituted or pending any action
or proceeding by any government or governmental, regulatory or
administrative agency, authority or tribunal or any other person, domestic
or foreign, before any court, authority, agency or tribunal that directly
or indirectly (i) challenges the making of the Offer, the acquisition of
some or all of the Shares pursuant to the Offer or otherwise relates in any
manner to the Offer, or (ii) in the Company's reasonable judgment, could
11
<PAGE> 16
materially and adversely affect the business, condition (financial or
other), income, operations or prospects of the Company and its
subsidiaries, taken as a whole, or otherwise materially impair in any way
the contemplated future conduct of the business of the Company or any of
its subsidiaries or materially impair the contemplated benefits of the
Offer to the Company;
(b) there shall have been any action threatened, pending or taken, or
approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced or deemed to be applicable to the Offer or the Company or
any of its subsidiaries, by any court or any authority, agency or tribunal
that, in the Company's reasonable judgment, would or might directly or
indirectly (i) make the acceptance for payment of, or payment for, some or
all of the Shares illegal or otherwise restrict or prohibit consummation of
the Offer; (ii) delay or restrict the ability of the Company, or render the
Company unable, to accept for payment or pay for some or all of the Shares;
(iii) materially impair the contemplated benefits of the Offer to the
Company; or (iv) materially and adversely affect the business, condition
(financial or other), income, operations or prospects of the Company and
its subsidiaries, taken as a whole, or otherwise materially impair in any
way the contemplated future conduct of the business of the Company or any
of its subsidiaries;
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, 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; (iii) the commencement of a war, armed hostilities or other
international or national calamity directly or indirectly involving the
United States; (iv) any limitation (whether or not mandatory) by any
governmental, regulatory or administrative agency or authority on, or any
event that, in the Company's reasonable judgment, might affect, the
extension of credit by banks or other lending institutions in the United
States; (v) any significant decrease in the market price of the Shares or
any change in the general political, market, economic or financial
conditions in the United States or abroad that could, in the sole judgment
of the Company, have a material adverse effect on the Company's business,
operations or prospects or the trading in the Shares; (vi) in the case of
any of the foregoing existing at the time of the commencement of the Offer,
a material acceleration or worsening thereof; or (vii) any decline in
either the Dow Jones Industrial Average or the Standard and Poor's Index of
500 Industrial Companies by an amount in excess of 10% measured from the
close of business on February 6, 1998;
(d) a tender or exchange offer with respect to some or all of the
Shares (other than the Offer), or a merger or acquisition proposal for the
Company, shall have been proposed, announced or made by another person or
shall have been publicly disclosed, or the Company shall have learned after
the date of this Offer that (i) any person or "group" (within the meaning
of Section 13(d)(3) of the Exchange Act) shall have acquired or proposed to
acquire beneficial ownership of more than 5% of the outstanding Shares, or
any new group shall have been formed that beneficially owns more than 5% of
the outstanding Shares; or
(e) any change or changes shall have occurred in the business,
financial condition, assets, income, operations, prospects or stock
ownership of the Company or its subsidiaries that, in the Company's
reasonable judgment, is or may be material to the Company or its
subsidiaries.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances (including any action or
inaction by the Company) giving rise to any such condition, and may be waived by
the Company, in whole or in part, at any time and from time to time in its
reasonable discretion. The Company's failure 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 Company concerning the events
described above will be final and binding.
12
<PAGE> 17
8. PRICE RANGE OF SHARES; DIVIDENDS.
The Shares are listed and traded on the NYSE and on the PSE under the
symbol "SHX." The following table sets forth, for the periods indicated, the
high and low per Share sales prices as reported by The Wall Street Journal and
the cash dividends paid per Share in each such fiscal quarter:
<TABLE>
<CAPTION>
HIGH LOW DIVIDENDS
------- ------- ---------
<S> <C> <C> <C> <C> <C>
1996:
1st Quarter................................................. $14 7/8 $10 3/4 $0.075
2nd Quarter................................................. 13 3/4 11 1/8 0.075
3rd Quarter................................................. 15 3/8 11 1/2 0.075
4th Quarter................................................. 13 3/8 11 0.075
1997:
1st Quarter................................................. $14 1/2 $11 5/8 $0.075
2nd Quarter................................................. 13 1/8 10 7/16 0.075
3rd Quarter................................................. 12 15/16 10 3/8 0.075
4th Quarter................................................. 13 1/2 10 7/8 0.075
1998:
1st Quarter (through February 5, 1998)...................... $11 1/4 $10 13/16 $0.075*
</TABLE>
- ---------------
* Payable on February 27, 1998 to shareholders of record as of the close of
business on February 16, 1998, regardless of whether or not Shares are
tendered in the Offer. On January 29, 1998, the Company announced that the
Board of Directors determined to discontinue the payment of cash dividends for
the remainder of fiscal 1998.
On January 29, 1998, the last trading day on the NYSE prior to the
announcement of the terms of the Offer, the closing per Share sales price as
reported by The Wall Street Journal was $11 15/16. SHAREHOLDERS ARE URGED TO
OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
9. SOURCE AND AMOUNT OF FUNDS.
Assuming the Company purchases 8,000,000 Shares pursuant to the Offer at a
purchase price of $14.00 per Share, the Company expects the maximum aggregate
cost to be approximately $113.0 million (including estimated fees and expenses).
It is anticipated that the Company will fund the purchase of Shares pursuant to
the Offer and the payment of related fees and expenses with internally generated
funds and borrowings under a new credit facility the Company expects to
establish with NationsBank, N.A. ("NationsBank") and SunTrust Bank, Atlanta
("SunTrust"), on or prior to the Expiration Date pursuant to a commitment letter
dated February 4, 1998 (the "Commitment Letter"). NationsBank and SunTrust
intend to syndicate a portion of their commitments to one or more financial
institutions.
The new credit facility, which will replace the Company's existing domestic
credit facility, will have a term of five years and will provide for borrowings
of up to $1.0 billion. Loans under the new credit facility will bear interest at
floating rates based, at the option of the Company, on (i) the higher of the
federal funds rate plus 0.5% and the NationsBank prime rate, or (ii) LIBOR plus
applicable margins (including applicable facility fees) ranging from 0.32% to
1.0% depending on the Company's ratio of funded debt to EBITDA.
The Commitment Letter provides that the definitive agreement for the credit
facility will contain certain financial covenants related to the Company's ratio
of EBIT to interest, minimum net worth and ratio of funded debt to EBITDA. The
Commitment Letter also provides that the definitive credit agreement will
contain usual and customary affirmative and negative covenants, including
limitations on liens, debt, sale leaseback transactions, loans and investments,
mergers, acquisitions and asset sales and limitations on transactions with
affiliates, and customary events of default.
The Company intends to repay borrowings under the credit facility with its
operating cash flow.
13
<PAGE> 18
The Company currently is a party to two interest rate swap agreements with
an aggregate notional amount of $300.0 million pursuant to which the Company
agreed to pay interest at an effective fixed rate of 5.83% plus an applicable
margin, currently 0.63%, determined based on the Company's financial results,
with respect to the notional amounts of such agreements. As a result, the
interest rate on $300.0 million of the Company's credit facility borrowings has
been fixed. The existing interest rate swap agreements expire on March 31, 2002.
The counterparty to such agreements has a one-time right to cancel them
effective March 31, 2000.
The consummation of the Offer is not contingent upon the Company entering
into the new credit facility pursuant to the Commitment Letter.
10. CERTAIN INFORMATION CONCERNING THE COMPANY.
GENERAL
The Company is the world's largest carpet manufacturer based on both
revenue and volume of production. The Company designs and manufactures
approximately 2,500 styles of tufted and woven carpet for residential and
commercial use under the PHILADELPHIA, TRUSTMARK, CABIN CRAFTS, SHAW COMMERCIAL
CARPETS, STRATTON, NETWORX, SHAWMARK, EVANS BLACK, SALEM, SUTTON, REDBOOK,
MINSTER and INVICTA trade names and under certain private labels. The Company's
manufacturing operations are fully integrated from the processing of yarns
through the finishing of carpet. The Company's carpet is sold in a broad range
of prices, patterns, colors and textures with the majority of its sales in the
medium to high retail price range. The Company sells its wholesale products to
retailers, distributors and commercial users throughout the United States,
Canada, Mexico, Australia and the United Kingdom; through its own residential
retail and commercial contract distribution channels to various residential and
commercial and end users in the United States; and to a lesser degree, exports
to additional overseas markets.
Substantially all carpet manufactured by the Company is tufted carpet made
from nylon, polypropylene yarn and wool. In the tufting process, yarn is
inserted by multiple needles into a synthetic backing, forming loops which may
be cut or left uncut, depending on the desired texture or construction.
According to industry estimates, tufted carpet accounted for 91.6% of unit
volume shipments of carpet manufactured in the United States during 1996.
Substantially all carpet manufactured in the United States is made from
synthetic fibers, with nylon accounting for 62.3% of the total, polypropylene
31.5%, polyester 5.8% and wool 0.4%. During 1996, the Company processed
approximately 96% of its requirements for carpet yarn in its own yarn processing
facilities.
The Company believes that its significant investment in modern,
state-of-the-art equipment has been an important factor in achieving and
maintaining its leadership position in the marketplace. During the five fiscal
years ended December 28, 1996, the Company has invested approximately $824
million (including acquisitions) in property additions. The Company continually
seeks opportunities for increasing its sales volume and market share. For
example, the Company continues to expand its product lines of carpet
manufactured from polypropylene fiber, including fibers produced by the
Company's own extrusion equipment. The Company also has a manufacturing facility
for the production of carpet tiles for the commercial market which has recently
been expanded to facilitate the Company's growing demand for its tile products.
The overall level of sales for the Company and the carpet industry is
influenced by a number of factors, including consumer confidence and spending
for durable goods, interest rates, turnover in housing, the condition of the
residential construction industry and the overall strength of the economy. The
Company's international operations are also impacted by the markets in which
they operate.
The marketing of carpet is influenced significantly by current trends in
style and fashion, principally color trends. The Company believes it has been a
leader in the development of color technology in the carpet industry and that
its dyeing facilities are among the most modern and versatile in the industry.
The Company maintains an in-house product development department to identify
developing color and style trends which are expected to affect its customers'
buying decisions. This department is strengthened by the Company's
14
<PAGE> 19
Research and Development Center. This state-of-the-art complex includes a 75,000
square foot pilot plant featuring sample extrusion, yarn processing, tufting,
dyeing, coating and shearing equipment, and three fiber and dye development
laboratories.
RECENT DEVELOPMENTS
Store Closings. On December 29, 1997, the Company announced its plans to
close about 100 redundant and under-performing retail stores. The stores
intended to be closed had sales of approximately $90,000,000 in fiscal 1997 and
contributed negatively to the Company's profitability for that year.
Settlement of Litigation. On January 14, 1998, the Company announced the
settlement of patent and copyright litigation with Interface, Inc.
("Interface"). The settlement consists of two agreements. The first resolved
claims of past infringement, on terms which were not disclosed. The second is a
Copyright Arbitration Agreement which deals with future copyright issues. Under
the terms of this Arbitration Agreement, both companies affirmed that they will
not duplicate the copyrightable product designs of the other, and agreed to
submit any copyright infringement claims that may arise to binding arbitration.
The Arbitration Agreement is believed to be the first of its type between
parties in the commercial carpet market.
Agreement in Principle to Sell U.K. Assets. On January 27, 1998, the
Company announced that it had reached an agreement in principle to sell Carpets
International, PLC (the Company's wholly owned U.K. subsidiary) to an Atlanta
venture capital firm and members of the subsidiary's management. The closing is
expected to occur before the end of the Company's first quarter of fiscal 1998.
The Company anticipates a reduction of approximately $85,000,000 in its
consolidated debt as a result of this asset disposition and an income tax
benefit of approximately $55,000,000 from such transaction.
Earnings Release. On January 29, 1998, the Company reported unaudited
results for the three and twelve month periods ended January 3, 1998.
Sales for the quarter increased 6.0% to $928,892,000, up from $875,981,000
during the same period last year. Net earnings before store closing costs and
reduction in the value of assets in the United Kingdom were $10,762,000, or
$0.08 per Share. Net earnings before restructuring costs for the same period
last year were $21,501,000, or $0.16 per Share.
During the quarter, the Company recorded store closing costs of $36,349,000
($22,817,000 after income taxes, or $0.17 per Share) related to the closing of
approximately 100 of its residential retail stores. In addition, the Company
wrote down the carrying value of the assets of Carpets International, PLC by
$47,952,000 ($20,300,000 net of income taxes, or $0.15 per Share) as the result
of the agreement in principle to sell the wholly owned U.K. subsidiary. After
recording these costs, the Company had a net loss for the quarter of
$32,355,000, or $0.24 per Share. Net earnings per Share data is the same on both
a basic and diluted basis.
Sales for the twelve months increased 11.7% to $3,575,774,000, up from
$3,201,554,000 last year. Net earnings before store closing costs and reduction
in the value of assets in the United Kingdom for the twelve months were
$72,076,000, or $0.54 per Share, compared to net earnings before nonrecurring
charges and restructuring costs of $84,714,000, or $0.62 Share, for the same
period last year. After recording the store closing costs of $22,817,000 (net of
income taxes), and the reduction of assets in the United Kingdom of $20,300,000
(net of income taxes), the Company had net earnings of $28,959,000 for the
twelve months, or $0.22 per Share, compared to $34,023,000, or $0.25 per Share,
for the same period last year. Net earnings per Share data is the same on both a
basic and diluted basis.
15
<PAGE> 20
The following chart describes the effect of the store closing costs and the
reduction of U.K. assets on the results of the fourth quarter of 1997 compared
to 1996:
<TABLE>
<CAPTION>
4TH QUARTER 1997 4TH QUARTER 1996
------------------------ ------------------------
EARNINGS (LOSS) EPS EARNINGS (LOSS) EPS
--------------- ------ --------------- ------
<S> <C> <C> <C> <C>
Net earnings before other charges......... $ 10,762,000 $ 0.08 $ 21,501,000 $ 0.16
Store closing costs, net of income
taxes................................... (22,817,000) (0.17) -- --
Reduction in U.K. assets, net of income
taxes................................... (20,300,000) (0.15) -- --
Restructuring costs, net of income
taxes................................... -- -- (24,172,000) (0.18)
------------ ------ ------------ ------
Net (loss)...................... $(32,355,000) $(0.24) $ (2,671,000) $(0.02)
============ ====== ============ ======
</TABLE>
The following chart describes the effect of the store closing costs and the
reduction of U.K. assets on the results of the twelve months of 1997 compared to
1996:
<TABLE>
<CAPTION>
12 MONTHS ENDED 12 MONTHS ENDED
JANUARY 3, 1998 DECEMBER 28, 1996
------------------------ ------------------------
EARNINGS (LOSS) EPS EARNINGS (LOSS) EPS
--------------- ------ --------------- ------
<S> <C> <C> <C> <C>
Net earnings before other charges......... $ 72,076,000 $ 0.54 $ 84,714,000 $ 0.62
Store closing costs, net of income
taxes................................... (22,817,000) (0.17) -- --
Reduction in U.K. assets, net of income
taxes................................... (20,300,000) (0.15) -- --
Nonrecurring charges, net of income
taxes -- Adoption of SFAS 121........... -- -- (26,519,000) (0.19)
Restructuring costs, net of income
taxes................................... -- -- (24,172,000) (0.18)
------------ ------ ------------ ------
Net earnings.................... $ 28,959,000 $ 0.22 $ 34,023,000 $ 0.25
============ ====== ============ ======
</TABLE>
16
<PAGE> 21
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------
JANUARY 3, DECEMBER 28,
1998(1) 1996
------------ ------------
<S> <C> <C>
Net sales................................................... $928,892,000 $875,981,000
Cost of sales............................................... 706,907,000 669,538,000
------------ ------------
Gross margin................................................ 221,985,000 206,443,000
Selling, general and administrative expenses................ 193,655,000 168,649,000
Pre-opening expenses, retail operations..................... 432,000 8,432,000
Store closing costs......................................... 36,349,000 --
Restructuring costs......................................... -- 19,963,000
Reduction of U.K. assets.................................... 47,952,000 --
------------ ------------
Operating (loss) income..................................... (56,403,000) 9,399,000
Interest expense, net....................................... 15,904,000 12,396,000
Other (income), net......................................... (1,777,000) (1,251,000)
------------ ------------
(Loss) before income taxes.................................. (70,530,000) (1,746,000)
(Benefit) provision for income taxes........................ (36,484,000) 2,442,000
------------ ------------
(Loss) before equity in income of joint venture............. (34,046,000) (4,188,000)
Equity in income of joint venture........................... 1,691,000 1,517,000
------------ ------------
Net (loss)........................................ $(32,355,000) $ (2,671,000)
============ ============
Earnings per common share:
On a basic and diluted basis.............................. $ (0.24) $ (0.02)
============ ============
Weighted average shares:
Basic..................................................... 132,766,761 134,266,754
============ ============
Diluted................................................... 133,059,098 134,266,754
============ ============
</TABLE>
- ---------------
(1) Fourteen weeks.
Note: Certain 1996 amounts have been reclassified to conform to the 1997
presentation.
17
<PAGE> 22
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
-------------------------------
JANUARY 3, DECEMBER 28,
1998(1) 1996
-------------- --------------
<S> <C> <C>
Net sales................................................... $3,575,774,000 $3,201,554,000
Cost of sales............................................... 2,680,472,000 2,485,068,000
-------------- --------------
Gross margin................................................ 895,302,000 716,486,000
Selling, general and administrative expenses................ 722,590,000 541,338,000
Pre-opening expenses, retail operations..................... 3,953,000 13,595,000
Store closing costs......................................... 36,787,000 --
Restructuring costs......................................... -- 19,963,000
Reduction of U.K. assets.................................... 47,952,000
Nonrecurring charges........................................ -- 29,139,000
-------------- --------------
Operating income............................................ 84,020,000 112,451,000
Interest expense, net....................................... 60,769,000 42,442,000
Other (income), net......................................... (7,032,000) (3,609,000)
-------------- --------------
Income before income taxes.................................. 30,283,000 73,618,000
Provision for income taxes.................................. 5,586,000 43,463,000
-------------- --------------
Income before equity in income of joint venture............. 24,697,000 30,155,000
Equity in income of joint venture........................... 4,262,000 3,868,000
-------------- --------------
Net income........................................ $ 28,959,000 $ 34,023,000
============== ==============
Earnings per common share:
On a basic and diluted basis --........................... $ 0.22 $ 0.25
============== ==============
Weighted average shares:
Basic..................................................... 133,523,380 135,731,360
============== ==============
Diluted................................................... 133,714,496 135,915,308
============== ==============
</TABLE>
- ---------------
(1) Fifty-three weeks.
Note: Certain 1996 amounts have been reclassified to conform to the 1997
presentation.
18
<PAGE> 23
CONDENSED CONSOLIDATED BALANCE SHEET DATA
(UNAUDITED)
<TABLE>
<CAPTION>
JANUARY 3, DECEMBER 28,
1998 1996
---------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 43,571,000 $ 49,581,000
Accounts receivable, net.................................. 374,516,000 393,983,000
Inventories............................................... 530,059,000 556,785,000
Other current assets...................................... 118,267,000 81,056,000
-------------- --------------
Total current assets.............................. 1,066,413,000 1,081,405,000
Property, plant and equipment, net.......................... 624,379,000 655,141,000
Other assets................................................ 276,822,000 247,852,000
-------------- --------------
$1,967,614,000 $1,984,398,000
============== ==============
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current liabilities:
Notes payable............................................. $ 10,000 $ 35,084,000
Current maturities of long-term debt...................... 2,752,000 17,431,000
Accounts payable and accrued liabilities.................. 322,692,000 358,546,000
-------------- --------------
Total current liabilities......................... 325,454,000 411,061,000
Long-term debt, less current maturities..................... 930,424,000 825,280,000
Deferred income taxes and other liabilities................. 74,202,000 76,346,000
-------------- --------------
Total liabilities................................. 1,330,080,000 1,312,687,000
Total shareholders' investment.............................. 637,534,000 671,711,000
-------------- --------------
$1,967,614,000 $1,984,398,000
============== ==============
</TABLE>
19
<PAGE> 24
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
Set forth below is certain summary historical consolidated financial
information of the Company and its subsidiaries. The historical financial
information (other than the ratios of earnings to fixed charges) for the nine
months ended September 27, 1997 and September 28, 1996 was derived from the
unaudited condensed consolidated financial statements of the Company filed as
part of the Company's Current Reports on Form 10-Q for such periods, which are
incorporated herein by reference, but, in the opinion of the Company's
management, include all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation thereof. The historical financial
information (other than the ratios of earnings to fixed charges) for the twelve
month periods ended December 28, 1996 and December 30, 1995 was derived from the
audited consolidated financial statements of the Company filed as exhibits to,
and incorporated by reference into, the Company's Annual Report on Form 10-K for
the year ended December 28, 1996 (the "Company's 1996 Annual Report"), which is
incorporated herein by reference, and other information and data contained in
such report. More comprehensive financial information is included or
incorporated by reference in the Company's reports on Form 10-Q and Form 10-K
referred to above and the financial information which follows is qualified in
its entirety by reference to such reports, and all of the financial statements
and related notes contained or incorporated by reference therein, copies of
which may be obtained as set forth below under the caption "-- Additional
Information."
<TABLE>
<CAPTION>
NINE MONTHS ENDED TWELVE MONTHS ENDED
----------------------------- ---------------------------
SEPTEMBER 27, SEPTEMBER 28, DECEMBER 28, DECEMBER 30,
1997 1996 1996 1995
------------- ------------- ------------ ------------
(IN THOUSANDS, EXCEPT RATIOS AND PER SHARE DATA)
(UNAUDITED)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales..................................... $2,646,882 $2,325,593 $3,201,554 $2,869,828
Income before income taxes.................... 100,813 75,364 73,618 106,755
Net income.................................... 61,314 36,694 34,023 52,304
Earnings per common share:
Basic and diluted(1)........................ 0.46 0.27 0.25 0.38
Cash dividends per share...................... 0.23 0.23 0.30 0.30
Weighted average shares Outstanding:
Basic....................................... 133,795 136,220 135,731 135,872
Diluted..................................... 133,941 136,414 135,915 136,378
Ratio of earnings to fixed charges(2)......... 3.24x 3.45x 2.69x 3.45x
BALANCE SHEET DATA (AS OF END OF INDICATED
PERIOD):
Working capital............................... $ 778,756 $ 659,612 $ 670,344 $ 641,445
Property, plant and equipment, net............ 659,977 644,529 655,141 631,990
Total assets.................................. 2,120,159 1,945,157 1,984,398 1,662,783
Total long-term debt.......................... 940,771 706,527 825,280 627,130
Shareholders' investment...................... 723,695 731,890 671,711 710,189
Book value per common share(3)................ 5.38 5.34 5.06 5.22
</TABLE>
- ---------------
(1) Restated to conform to the requirements of Statement of Financial Accounting
Standards No. 128.
(2) The ratio of earnings to fixed charges has been calculated by dividing
income before income taxes, non-distributed equity in income of joint
venture and fixed charges, by the fixed charges. The fixed charges consist
of interest expense.
(3) Book value per share has been calculated by dividing shareholders'
investment by the number of common shares outstanding at the end of each of
the periods presented.
20
<PAGE> 25
SUMMARY UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL DATA
The following summary unaudited consolidated pro forma financial data gives
effect to the purchase of Shares pursuant to the Offer, based on certain
assumptions described in the Notes to Summary Unaudited Consolidated Pro Forma
Financial Data, and gives effect to the purchase of Shares pursuant to the Offer
as if it had occurred at the beginning of each period presented, with respect to
income statement data, and on December 28, 1996 and September 27, 1997,
respectively, with respect to balance sheet data. The summary unaudited
consolidated pro forma financial data should be read in conjunction with the
summary consolidated historical financial information and do not purport to be
indicative of the results that would actually have been obtained, or results
that may be obtained in the future, or the financial condition that would have
resulted had the purchase of the Shares pursuant to the Offer been completed at
the dates indicated.
<TABLE>
<CAPTION>
NINE MONTHS ENDED TWELVE MONTHS ENDED
SEPTEMBER 27, 1997 DECEMBER 28, 1996
------------------------- -------------------------
HISTORICAL PRO FORMA(1) HISTORICAL PRO FORMA(1)
---------- ------------ ---------- ------------
(IN THOUSANDS, EXCEPT RATIOS AND PER SHARE DATA)
(UNAUDITED)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales..................................... $2,646,882 $2,646,882 $3,201,554 $3,201,554
Income before income taxes.................... 100,813 95,128 73,618 66,032
Net income.................................... 61,314 57,897 34,023 29,441
Earnings per common share:
Basic and diluted(2)........................ 0.46 0.46 0.25 0.23
Weighted average shares
outstanding:
Basic....................................... 133,795 125,795 135,731 127,731
Diluted..................................... 133,941 125,941 135,915 127,915
Ratio of earnings to fixed charges(3)......... 3.24x 2.88x 2.69x 2.29x
BALANCE SHEET DATA (AS OF END OF INDICATED
PERIOD):
Working capital............................... $ 778,756 776,506 $ 670,344 668,094
Total assets.................................. 2,120,159 2,120,159 1,984,398 1,984,398
Total long-term debt.......................... 940,771 1,053,771 825,280 938,280
Shareholders' investment...................... 723,695 610,695 671,711 558,711
Book value per common share(4)................ 5.38 4.82 5.06 4.48
</TABLE>
- ---------------
(1) The following assumptions were made in developing the summary unaudited
consolidated pro forma financial data presented above:
(a) a total of 8,000,000 Shares are purchased at the maximum offer price of
$14.00 per Share;
(b) expenses related to the Offer total $1,000,000;
(c) the aggregate Purchase Price and Offer expenses are financed through
additional borrowings under the Company's new credit facility at an
average interest rate of 6.31% per annum; and
(d) marginal tax rates of 39.9% and 39.6% for the nine months ended
September 27, 1997 and the fiscal year ended December 28, 1996,
respectively.
(2) Restated to conform to the requirements of Statement of Financial Accounting
Standards No. 128.
(3) The ratio of earnings to fixed charges has been calculated by dividing
income before income taxes, non-distributed equity in income of joint
venture and fixed charges, by the fixed charges. The fixed charges consist
of interest expense.
(4) Book value per share has been calculated by dividing shareholders'
investment by the number of common shares and pro forma common shares
outstanding at the end of each of the periods presented.
ADDITIONAL INFORMATION.
The Company is subject to the informational filing requirements of the
Exchange Act and, in accordance therewith, is obligated 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
21
<PAGE> 26
and officers, their remuneration, options granted to them, the principal holders
of the Company's securities and any material interest of such persons in
transactions with the Company is required to be disclosed in proxy statements
distributed to the Company's shareholders and filed with the Commission. Such
reports, proxy statements and other information can be inspected and copied at
the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Room 2120, Washington, D.C. 20549; at its regional offices located
at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and 7
World Trade Center, New York, New York 10048. Copies of such material may also
be obtained by mail, upon payment of the Commission's customary charges, from
the Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549. The Commission also maintains a Web site
on the World Wide Web at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. The Shares are listed for trading on the
NYSE and PSE and reports, proxy statements and other information concerning the
Company also can be inspected at the offices of the NYSE, 20 Broad Street, New
York, New York 10005, and the PSE, 301 Pine Street, San Francisco, California
94104.
11. INTEREST OF DIRECTORS AND OFFICERS; TRANSACTIONS AND ARRANGEMENTS
CONCERNING SHARES.
As of January 30, 1998, the Company had issued and outstanding 131,118,065
Shares. The 8,000,000 Shares that the Company is offering to purchase represent
approximately 6.1% of the Shares then outstanding. As of January 30, 1998, the
Company's directors and executive officers as a group (15 persons) beneficially
owned an aggregate of 21,892,461 Shares, representing approximately 16.7% of the
outstanding Shares, assuming the exercise by such persons of their options
exercisable within 60 days of such date. Each of the Company's executive
officers and directors has advised the Company that he or she does not intend to
tender any Shares pursuant to the Offer. If the Company purchases 8,000,000
Shares pursuant to the Offer, then after the purchase of Shares pursuant to the
Offer, the Company's executive officers and directors as a group would own
beneficially approximately 17.8% of the outstanding Shares immediately after the
Offer, assuming the exercise by such persons of their options exercisable within
60 days of January 30, 1998.
Neither the Company, nor any subsidiary of the Company nor, to the best of
the Company's knowledge, any of the Company's directors or executive officers,
nor any associate or subsidiary of any of the foregoing, had any transactions
involving the Shares during the 40 business days prior to the date hereof except
that (i) executive officers of the Company purchased an aggregate of 192 Shares
pursuant to the Retirement Savings Plan and (ii) Mr. J.C. Shaw made a gift of
58,409 Shares on December 19, 1997.
Except for outstanding options to purchase Shares granted from time to time
to certain employees (including executive officers) of the Company pursuant to
the Company's stock option plans and except as otherwise described herein,
neither the Company nor, to the best of the Company's knowledge, any of its
affiliates, directors (including a nominee) or executive officers, is a party to
any contract, arrangement, understanding or relationship with any other person
relating, directly or indirectly, to the Offer with respect to any securities of
the Company including, but not limited to, any contract, arrangement,
understanding or relationship concerning the transfer or the voting of any such
securities, joint ventures, loan or option arrangements, puts or calls,
guaranties of loans, guaranties against loss or the giving or withholding of
proxies, consents or authorizations.
12. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; REGISTRATION UNDER THE
EXCHANGE ACT.
The Company's purchase of Shares pursuant to the Offer will reduce the
number of Shares that might otherwise be traded publicly and may reduce the
number of shareholders. Nonetheless, the Company anticipates that there will be
a sufficient number of Shares outstanding and publicly traded following
consummation of the Offer to ensure a continued trading market for the Shares.
Based upon published guidelines of the NYSE and the PSE, the Company does not
believe that its purchase of Shares pursuant to the Offer will cause the
Company's remaining Shares to be delisted from the NYSE or the PSE.
The Shares are currently "margin securities" under the rules of the Federal
Reserve Board. This has the effect, among other things, of allowing brokers to
extend credit to their customers using such Shares as
22
<PAGE> 27
collateral. The Company believes that, following the purchase of Shares pursuant
to the Offer, the Shares will continue to be "margin securities" for purposes of
the Federal Reserve Board's margin regulations.
The Shares are registered under the Exchange Act, which requires, among
other things, that the Company furnish certain information to its shareholders
and the Commission and comply with the Commission's proxy rules in connection
with meetings of the Company's shareholders. The Company believes that its
purchase of Shares pursuant to the Offer will not result in the Shares becoming
eligible for deregistration under the Exchange Act.
13. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
The Company is not aware of any license or regulatory permit that appears
to be material to the Company's business that might be adversely affected by the
Company's acquisition of Shares as contemplated herein or of any approval or
other action by any government or governmental, administrative or regulatory
authority or agency, domestic or foreign, that would be required for the
acquisition or ownership of Shares by the Company as contemplated herein. Should
any such approval or other action be required, the Company presently
contemplates that such approval or other action will be sought. The Company is
unable to predict whether it may determine that it is required to delay the
acceptance for payment of or payment for Shares tendered pursuant to the Offer
pending the outcome of any such matter. There can be no assurance that any such
approval or other action, if needed, would be obtained or would be obtained
without substantial conditions or that the failure to obtain any such approval
or other action might not result in adverse consequences to the Company's
business. The Company's obligations under the Offer to accept for payment and
pay for Shares are subject to certain conditions. See Section 7.
14. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following summary describes certain United States federal income tax
consequences relevant to the Offer. The discussion contained in this summary is
based upon the Internal Revenue Code of 1986, as amended to the date hereof (the
"Code"), existing and proposed Treasury regulations promulgated thereunder,
administrative pronouncements and judicial decisions, changes to which could
materially affect the tax consequences described herein and could be made on a
retroactive basis.
This summary discusses only Shares held as capital assets, within the
meaning of Section 1221 of the Code, and does not address all of the tax
consequences that may be relevant to particular shareholders in light of their
personal circumstances, or to certain types of shareholders (such as certain
financial institutions, dealers in securities or commodities, insurance
companies, tax-exempt organizations or persons who hold Shares as a position in
a straddle). In addition, the discussion of the consequences of an exchange of
Shares for cash pursuant to the Offer applies only to a United States
shareholder (herein, a "Holder"). For purposes of this summary, a "United States
shareholder" is (i) a citizen or resident of the United States, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States, any State or any political subdivision thereof, (iii)
an estate the income of which is subject to United States federal income
taxation regardless of source, or (iv) any trust if a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more United States person have the authority to control all
substantial decisions relating to the trust. The summary may not be applicable
with respect to Shares acquired as compensation (including Shares acquired upon
the exercise of options or which were or are subject to forfeiture
restrictions). The summary also does not address the state, local, or foreign
tax consequences of participating in the Offer. Each Holder should consult such
Holder's tax advisor as to the particular consequences to such Holder's
participation in the Offer.
Consequences to Tendering Shareholders of Exchange of Shares for Cash
Pursuant to the Offer. An exchange of Shares for cash in the Offer by a Holder
will be a taxable transaction for United States federal income tax purposes. As
a consequence of the exchange, the Holder will, depending on such Holder's
particular circumstances, be treated either as recognizing gain or loss from the
disposition of the Shares or as receiving a dividend distribution from the
Company.
23
<PAGE> 28
Under Section 302 of the Code, a Holder will recognize gain or loss from
the disposition of Shares exchanged for cash if the exchange (i) results in a
"complete termination" of all such Holder's equity interest in the Company, (ii)
results in a "substantially disproportionate" redemption with respect to such
Holder, or (iii) is "not essentially equivalent to a dividend" with respect to
such Holder. In applying each of the Section 302 tests, a Holder in general is
deemed to own constructively the Shares actually owned by certain related
individuals and entities. For example, an individual Holder is generally
considered to own the Shares owned directly or indirectly by or for his or her
spouse, his or her children, grandchildren and parents. In addition, a Holder is
considered to own a proportionate number of the Shares owned by trusts or
estates in which the Holder has a beneficial interest, by partnerships in which
the Holder is a partner, and by corporations in which the Holder owns, directly
or indirectly, 50% or more in value of the stock. Similarly, Shares directly or
indirectly owned by beneficiaries of estates or trusts, by partners of
partnerships and, under certain circumstances, by shareholders of corporations
may be considered owned by these entities. A Holder, generally, also will be
deemed to own Shares which the Holder has the right to acquire by exercise of an
option.
A Holder that exchanges all Shares actually or constructively owned by such
Holder for cash pursuant to the Offer will be regarded as having completely
terminated such Holder's equity interest in the Company. A Holder that exchanges
all Shares actually owned for cash pursuant to the Offer, but is not treated as
having disposed of all Shares constructively owned pursuant to the Offer because
of the application of the family attribution rules described above, may
nevertheless be able to qualify his or her exchange as a "complete termination"
of his or her interest in the Company if certain technical requirements are met.
Among other requirements, a Holder must include a statement with his or her 1998
federal income tax return notifying the Internal Revenue Service (the "IRS")
that he or she has elected to waive the family attribution rules and agreeing to
provide certain information in the future, and must not have any interest in the
Company immediately after the disposition (including an interest as an officer,
director or employee), other than an interest as a creditor. A Holder wishing to
satisfy the "complete termination" test through waiver of the family attribution
rules should consult his or her tax advisor.
An exchange of Shares for cash will be a "substantially disproportionate"
redemption with respect to a Holder if the percentage of the then outstanding
Shares owned by such Holder immediately after the exchange is less than 80% of
the percentage of the Shares owned by such Holder immediately before the
exchange. If an exchange of Shares for cash fails to satisfy the "substantially
disproportionate" test, the Holder may nonetheless satisfy the "not essentially
equivalent to a dividend" test.
A Holder who wishes to satisfy (or avoid) the "not essentially equivalent
to a dividend" test is urged to consult such Holder's tax advisor because this
test will be met only if the reduction in such Holder's proportionate interest
in the Company constitutes a "meaningful reduction" given such Holder's
particular facts and circumstances. The IRS has indicated in published rulings
that any reduction in the percentage interest of a shareholder whose relative
stock interest in a publicly held corporation is minimal (an interest of less
than 1% should satisfy this requirement) and who exercises no control over
corporate affairs should constitute such a "meaningful reduction."
If a Holder sells Shares to persons other than the Company at or about the
time such Holder also sells shares to the Company pursuant to the Offer, and the
various sales effected by the Holder are part of an overall plan to reduce or
terminate such Holder's proportionate interest in the Company, then the sales to
persons other than the Company may, for federal income tax purposes, be
integrated with the Holder's sale of Shares pursuant to the Offer and, if
integrated, may be taken into account in determining whether the Holder
satisfies any of the three tests described above. A Holder should consult his or
her tax advisor regarding the treatment of other exchanges of Shares for cash
which may be integrated with such Holder's sale of Shares to the Company
pursuant to the Offer.
If a Holder is treated as recognizing gain or loss from the disposition of
Shares for cash, such gain or loss will be equal to the difference between the
amount of cash received and such Holder's tax basis in the Shares exchanged
therefor. Any such gain or loss will be capital gain or loss and will be
long-term capital gain or loss if the holding period of the Shares exceeds one
year as of the date of the exchange. Capital gain recognized as
24
<PAGE> 29
a result of the sale of a capital asset that has been held for more than one
year (but not more than eighteen months) is eligible for capital gains taxation
at a maximum rate of 28%. In order to be taxed at the more favorable capital
gains rate of 20% (10% if the taxpayer is an individual that is subject to tax
at the 15% ordinary income rate), the Shares being exchanged must have been held
for more than eighteen months.
Gain or loss must be determined separately for each block of Shares (that
is, Shares acquired at the same cost in a single transaction) that is exchanged
for cash. A Holder may be able to designate (generally through such Holder's
broker) which blocks of Shares are tendered pursuant to the Offer if less than
all of such Holder's Shares are tendered, and the order in which different
blocks would be exchanged for cash, in the event of proration pursuant to the
Offer. Each Holder should consult such Holder's tax advisor concerning the
mechanics and desirability of such a designation.
If a Holder is not treated under the Section 302 tests as recognizing gain
or loss from the disposition of Shares exchanged for cash, the entire amount of
cash received by such Holder in such exchange will be treated as a dividend to
the extent of the Company's current and accumulated earnings and profits (which
the Company believes it has). Such a dividend will be includible in the Holder's
gross income as ordinary income in its entirety, without reduction for the tax
basis of the Shares exchanged, and no loss will be recognized. The Holder's tax
basis in the Shares exchanged, however, will be added to such Holder's tax basis
in the remaining Shares that such Holder owns. To the extent that cash received
in exchange for Shares is treated as a dividend to a corporate Holder, it will
be eligible for a dividends-received deduction equal to 70% of the dividend
(subject to (i) applicable holding period requirements with respect to the
Shares and (ii) Shares with respect to which such Holder has incurred
indebtedness). If a dividends-received deduction is available, it is expected
that the dividend will constitute an "extraordinary dividend" under Section 1059
of the Code. As a result, a corporate Holder generally will be required to
reduce its tax basis in its Shares (but not below zero) by the extent of the
non-taxed portion of the dividend (i.e. the dividends-received deduction). If
the non-taxed portion of the dividend exceeds the corporate Holder's tax basis
in the Shares, the excess will be treated as gain resulting from the sale of the
Shares. A corporate Holder should consult its tax advisor concerning the
availability of the dividends-received deduction and the application of the
"extraordinary dividend" provisions of the Code.
The Company cannot predict whether or the extent to which the Offer will be
oversubscribed. If the Offer is oversubscribed, proration of tenders pursuant to
the Offer will cause the Company to accept fewer Shares than are tendered.
Therefore, a Holder can be given no assurance that a sufficient number of such
Holder's Shares will be purchased pursuant to the Offer to ensure that such
purchase will be treated as a sale or exchange, rather than as a dividend, for
federal income tax purposes pursuant to the rules discussed above. However, see
Section 6 regarding a Holder's right to tender Shares subject to the condition
that a specified minimum number of such Shares must be purchased (if any are
purchased).
Consequences to Shareholders Who do not Tender Pursuant to the
Offer. Shareholders who do not accept the Company's Offer to tender their
Shares will not incur any tax liability as a result of the consummation of the
Offer.
See Section 3 with respect to the application of backup withholding on
payments made to all shareholders and federal income tax withholding to payments
made to foreign shareholders.
THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION
ONLY. EACH SHAREHOLDER IS URGED TO CONSULT SUCH HOLDER'S OWN TAX ADVISOR TO
DETERMINE THE PARTICULAR TAX CONSEQUENCES TO HIM OR HER OF THE OFFER, INCLUDING
THE APPLICABILITY AND EFFECT OF STATE, LOCAL AND FOREIGN TAX LAWS.
15. EXTENSION OF OFFER; TERMINATION; AMENDMENT.
The Company expressly reserves the right, in its sole discretion, at any
time and from time to time, and regardless of whether or not any of the events
set forth in Section 7 shall have occurred or shall be deemed by the Company to
have occurred, to extend the period of time during which the Offer is open and
thereby delay acceptance for payment of, and payment for, any Shares by giving
oral or written notice of such extension to
25
<PAGE> 30
the Depositary and making a public announcement thereof. The Company also
expressly reserves the right, in its sole discretion, to terminate the Offer and
not accept for payment or pay for any Shares not theretofore accepted for
payment or paid for or, subject to applicable law, to postpone payment for
Shares upon the occurrence of any of the conditions specified in Section 7
hereof by giving oral or written notice of such termination or postponement to
the Depositary and making a public announcement thereof. The Company's
reservation of the right to delay payment for Shares which it has accepted for
payment is limited by rules promulgated under the Exchange Act, which require
that the Company must pay the consideration offered or return the Shares
tendered promptly after termination or withdrawal of a tender offer. Subject to
compliance with applicable law, the Company further reserves the right, in its
sole discretion, and regardless of whether any of the events set forth in
Section 7 shall have occurred or shall be deemed by the Company to have
occurred, to amend the Offer in any respect (including, without limitation, by
decreasing or increasing the consideration offered in the Offer to holders of
Shares or by decreasing or increasing the number of Shares being sought in the
Offer). Amendments to the Offer may be made at any time and from time to time
effected by public announcement thereof, such announcement, in the case of an
extension, to be issued no later than 9:00 a.m., New York City time, on the next
business day after the last previously scheduled or announced Expiration Date.
Any public announcement made pursuant to the Offer will be disseminated promptly
to shareholders in a manner reasonably designed to inform shareholders of such
change. Without limiting the manner in which the Company may choose to make a
public announcement, except as required by applicable law, the Company shall
have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by making a release to the Dow Jones News
Service.
If the Company materially changes the terms of the Offer or the information
concerning the Offer, or if it waives a material condition of the Offer, the
Company will extend the Offer to the extent required by rules promulgated under
the Exchange Act. These rules require that 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
percentage of securities sought) will depend on the facts and circumstances,
including the relative materiality of such terms or information. If (i) the
Company increases or decreases the price range provided in this Offer or the
number of Shares being sought in the Offer and, in the event of an increase in
the number of Shares being sought, such increase exceeds 2% of the outstanding
Shares, and (ii) the Offer is scheduled to expire at any time earlier than the
expiration of a period ending on the tenth business day from, and including, the
date that such notice of an increase or decrease is first published, sent or
given in the manner specified in this Section 15, then in each case the Offer
will be extended until the expiration of such period of ten business days.
16. FEES AND EXPENSES.
The Company has retained Merrill Lynch to act as financial advisor and
Dealer Manager in connection with the Offer. Merrill Lynch will receive an
advisory fee for its services of $100,000 plus $0.06 for each Share purchased by
the Company pursuant to the Offer. The Company also has agreed to reimburse
Merrill Lynch for certain out-of-pocket expenses incurred in connection with the
Offer, and to indemnify Merrill Lynch against certain liabilities in connection
with the Offer, including liabilities under the federal securities laws. Merrill
Lynch has been retained by the Company to render, and in the past has rendered,
various investment banking and other advisory services to the Company, for which
it has received compensation, and may render similar services to the Company in
the future.
The Company has retained Corporate Investor Communications, Inc. to act as
Information Agent and Wachovia Bank, N.A. to act as Depositary in connection
with the Offer. The Information Agent may contact holders of Shares by mail,
telephone, telegraph and personal interviews and may request brokers, dealers
and other nominee shareholders to forward materials relating to the Offer to
beneficial owners. The Information Agent and the Depositary will each receive
reasonable and customary compensation for their respective services, will be
reimbursed by the Company for certain reasonable out-of-pocket expenses and will
be indemnified against certain liabilities in connection with the Offer,
including certain liabilities under the federal securities laws.
26
<PAGE> 31
No fees or commissions will be payable to brokers, dealers or other persons
(other than fees to the Dealer Manager, the Information Agent and the Depositary
as described above) for soliciting tenders of Shares pursuant to the Offer. The
Company, however, upon request, will reimburse brokers, dealers and commercial
banks for customary mailing and handling expenses incurred by such persons in
forwarding the Offer and related materials to the beneficial owners of Shares
held by any such person as a nominee or in a fiduciary capacity. No broker,
dealer, commercial bank or trust company has been authorized to act as the agent
of the Company, the Dealer Manager, the Information Agent or the Depositary for
purposes of the Offer. The Company will pay or cause to be paid all stock
transfer taxes, if any, on its purchase of Shares except as otherwise provided
in Instruction 7 in the Letter of Transmittal.
17. MISCELLANEOUS
The Company is not aware of any jurisdiction where the making of the Offer
is not in compliance with applicable law. If the Company becomes aware of any
jurisdiction where the making of the Offer is not in compliance with any valid
applicable law, the Company will make a good faith effort to comply with such
law. If, after such good faith effort, the Company cannot comply with such law,
the Offer will not be made to (nor will tenders be accepted from or on behalf
of) the holders of Shares residing in such jurisdiction. In any jurisdiction the
securities or blue sky laws of which require the Offer to be made by a licensed
broker or dealer, the Offer is being made on the Company's behalf by the Dealer
Manager or one or more registered brokers or dealers licensed under the laws of
such jurisdiction.
Pursuant to Rule 13e-4 of the General Rules and Regulations under the
Exchange Act, the Company has filed with the Commission an Issuer Tender Offer
Statement on Schedule 13E-4 which contains additional information with respect
to the Offer. Such Schedule 13E-4, including the exhibits and any amendments
thereto, may be examined, and copies may be obtained, at the same places and in
the same manner as is set forth in Section 10 with respect to information
concerning the Company.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE COMPANY OR THE DEALER MANAGER IN CONNECTION WITH
THE OFFER OTHER THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE RELATED
LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE DEALER
MANAGER.
SHAW INDUSTRIES, INC.
27
<PAGE> 32
The Letter of Transmittal and certificates for Shares and any other
required documents should be sent or delivered by each shareholder or such
shareholder's 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:
WACHOVIA BANK, N.A.
<TABLE>
<S> <C> <C> <C>
By Registered or Certified Mail: By Overnight Courier: By Hand Delivery: By New York Drop:
Wachovia Bank, Wachovia Bank, Wachovia Bank, Wachovia Bank,
Exchange Agent Exchange Agent Exchange Agent Exchange Agent
Corporate Reorganizations Corporate Reorganizations Shareholder Services c/o Boston Equiserve, L.P.
P.O. Box 9061 70 Campanelli Drive Department Corporate Reorganizations
Boston, MA 02205 Braintree, MA 02184 Wachovia East Building, 3rd Floor
2nd Floor 55 Broadway
301 North Church Street New York, NY 10006
Winston-Salem, NC 27101
</TABLE>
Any questions or requests for assistance or additional copies of the Offer
to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery may
be directed to the Information Agent or the Dealer Manager at the telephone
numbers and locations listed below. Shareholders may also contact their local
broker, dealer, commercial bank, trust company or nominee for assistance
concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
CORPORATE INVESTOR COMMUNICATIONS, INC.
111 Commerce Road
Carlstadt, NJ 07072
Call Toll Free: (888) 203-8862
Banks and Brokerage Firms,
Please Call: (201) 896-1900
THE DEALER MANAGER FOR THE OFFER IS:
MERRILL LYNCH & CO.
World Financial Center
North Tower
New York, New York 10281
(212) 449-8971 (call collect)
<PAGE> 1
EXHIBIT 99(A)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING ASSOCIATED SERIES A PARTICIPATING
PREFERRED STOCK PURCHASE RIGHTS)
OF
SHAW INDUSTRIES, INC.
PURSUANT TO THE OFFER TO PURCHASE DATED FEBRUARY 9, 1998
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, MARCH 9, 1998, UNLESS THE OFFER IS EXTENDED.
TO: WACHOVIA BANK, N.A., DEPOSITARY
<TABLE>
<S> <C> <C> <C>
By Registered or Certified Mail: By Overnight Courier: By Hand Delivery: By New York Drop:
Wachovia Bank, Wachovia Bank, Wachovia Bank, Wachovia Bank,
Exchange Agent Exchange Agent Exchange Agent Exchange Agent
Corporate Reorganizations Corporate Reorganizations Shareholder Services Department c/o Boston Equiserve, L.P.
P.O. Box 9061 70 Campanelli Drive Wachovia East Building, Corporate Reorganizations
Boston, MA 02205 Braintree, MA 02184 2nd Floor 3rd Floor
301 North Church Street 55 Broadway
Winston-Salem, NC 27101 New York, NY 10006
</TABLE>
DELIVERY OF THIS INSTRUMENT AND ALL OTHER DOCUMENTS TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
PLEASE READ THE ENTIRE LETTER OR TRANSMITTAL, INCLUDING THE ACCOMPANYING
INSTRUCTIONS, CAREFULLY BEFORE CHECKING ANY BOX BELOW.
This Letter of Transmittal is to be used only if (a) certificates for
Shares (as defined below) are to be forwarded herewith or (b) a tender of Shares
is being made concurrently by book-entry transfer to the account maintained by
Wachovia Bank, N.A. (the "Depositary") at The Depository Trust Company or
Philadelphia Depository Trust Company (the "Book-Entry Transfer Facilities")
pursuant to Section 3 of the Offer to Purchase. See Instruction 2.
<PAGE> 2
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
(SEE INSTRUCTIONS 3 AND 4)
- ----------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE USE PRE-ADDRESSED LABEL OR FILL IN EXACTLY AS TENDERED CERTIFICATES
NAME(S) APPEAR(S) ON CERTIFICATE(S)) (ATTACHED SIGNED ADDITIONAL LIST IF NECESSARY)
- ----------------------------------------------------------------------------------------------------------------------
NUMBER OF
CERTIFICATE NUMBER SHARES
NUMBER(S)* OF SHARES TENDERED**
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
[ ] Please check here if certificate(s) for part or all TOTAL SHARES
of your Shares have been lost, stolen, misplaced or TENDERED
destroyed. See Instruction 2.
- ----------------------------------------------------------------------------------------------------------------------
Indicate in this box the order (by certificate number) in which Shares are to be purchased in event of proration.
(Attach signed additional list if necessary.)*** See Instruction 10.
1st: 2nd: 3rd: 4th: 5th:
- ----------------------------------------------------------------------------------------------------------------------
* DOES NOT need to be completed if Shares are tendered by book entry-transfer.
** If you desire to tender fewer than all Shares evidenced by any certificates listed above, please indicate in this
column the number of shares you wish to tender. Otherwise, all Shares evidenced by such certificates will be
deemed to have been tendered. See Instruction 4.
*** In the event less than all Shares tendered are purchased due to proration, Shares will be selected for purchase
by the Depositary (unless you otherwise designate).
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
IF YOU ARE A PARTICIPANT IN THE DIVIDEND REINVESTMENT PLAN, THE NUMBER OF SHARES
ON THE LABEL AFFIXED TO THIS LETTER OF TRANSMITTAL INCLUDES SHARES HELD BY YOU
IN THE DIVIDEND REINVESTMENT PLAN, IF ANY. IN ORDER TO TENDER ANY SHARES IN THE
DIVIDEND REINVESTMENT PLAN, YOU MUST FILL OUT THE BOX BELOW.
DIVIDEND REINVESTMENT PLAN SHARES
(SEE INSTRUCTION 16)
This section is to be completed ONLY by participants in the Dividend
Reinvestment Plan who wish to tender Shares held in the Dividend Reinvestment
Plan.
[ ] Check here to instruct the Depositary to tender on behalf of the undersigned
all the Shares credited to the Dividend Reinvestment Plan account of the
undersigned at the Purchase Price per Share indicated below in the box
entitled "Price (In Dollars) Per Share At Which Shares Are Being Tendered."
[ ] Check here to instruct the Depositary to tender on behalf of the undersigned
the following number of Shares credited to the Dividend Reinvestment Plan
account of the undersigned at the Purchase Price per Share indicated below
in the box entitled "Price (In Dollars) Per Share At Which Shares Are Being
Tendered:"
Shares:
-----------------------------------------------------------
2
<PAGE> 3
Shareholders who desire to tender Shares pursuant to the Offer (as defined
below) and who cannot deliver their certificates for their Shares (or who are
unable to comply with the procedures for book-entry transfer on a timely basis)
and all other documents required by this Letter of Transmittal to the Depositary
at or before the Expiration Date (as defined in the Offer to Purchase) may
tender their Shares according to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase. See Instruction 2. Delivery of documents to
one of the Book-Entry Transfer Facilities does not constitute delivery to the
Depositary.
- --------------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH ONE OF THE BOOK-ENTRY TRANSFER
FACILITIES AND COMPLETE THE FOLLOWING:
NAME OF TENDERING INSTITUTION:
-----------------------------------------------------------------------------
CHECK BOX OF APPLICATION BOOK-ENTRY TRANSFER FACILITY:
[ ] THE DEPOSITORY TRUST COMPANY [ ] PHILADELPHIA DEPOSITORY TRUST COMPANY
ACCOUNT NUMBER:
-----------------------------------------------------------------------------
TRANSACTION CODE NUMBER:
-----------------------------------------------------------------------------
[ ] CHECK HERE IF CERTIFICATES FOR TENDERED SHARES ARE BEING DELIVERED PURSUANT
TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND
COMPLETE THE FOLLOWING:
NAME(S) OF REGISTERED OWNER(S):
------------------------------------------------------------------------------
DATE OF EXECUTION OF NOTICE OF GUARANTEED DELIVERY:
-------------------------------------------------------------------
NAME OF INSTITUTION THAT GUARANTEED DELIVERY:
--------------------------------------------------------------------------
CHECK BOX OF APPLICABLE BOOK-ENTRY TRANSFER FACILITY AND GIVE ACCOUNT NUMBER
IF DELIVERED BY BOOK-ENTRY TRANSFER.
[ ] THE DEPOSITORY TRUST COMPANY [ ] PHILADELPHIA DEPOSITORY TRUST COMPANY
ACCOUNT NUMBER:
------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONDITIONAL TENDER
(SEE INSTRUCTION 9)
[ ] Check here if tender of Shares is conditional on the Company purchasing all
or a minimum number of the tendered Shares and complete the following:
Minimum number of Shares to be sold:
-----------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3
<PAGE> 4
NOTE: SIGNATURE MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
LADIES AND GENTLEMEN:
The undersigned hereby tenders to Shaw Industries, Inc., a Georgia
corporation (the "Company"), the above described shares of the Company's Common
Stock (the "Common Stock"), including the associated rights to purchase Series A
Participating Preferred Stock (the "Rights") issued pursuant to the Rights
Agreement between the Company and NationsBank, N.A. as successor to Citizens and
Southern Trust Company (Georgia), N.A. (together, the Common Stock and the
Rights are referred to as the "Shares"), at the price per Share indicated in
this Letter of Transmittal, net to the seller in cash, upon the terms and
subject to the conditions set forth in the Company's Offer to Purchase, dated
February 9, 1998 (the "Offer to Purchase"), receipt of which is hereby
acknowledged, and in this Letter of Transmittal (which together constitute the
"Offer").
Subject to and effective upon acceptance for payment of the Shares tendered
hereby in accordance with the terms and subject to the conditions of the Offer
(including, if the Offer is extended or amended, the terms and conditions of
such extension or amendment), the undersigned hereby sells, assigns and
transfers to, or upon the order of, the Company all right, title and interest in
and to all the Shares that are being tendered hereby under the registration of
all such Shares if tendered by book entry transfer and hereby irrevocably
constitutes and appoints the Depositary as the true and lawful agent and
attorney-in-fact of the undersigned (with full knowledge that said Depositary
also acts as the agent of the Company) with respect to such Shares with full
power of substitution (such power of attorney being deemed to be an irrevocable
power coupled with an interest), to:
(a) deliver certificate(s) for such Shares or transfer ownership of
such Shares on the account books maintained by any of the Book-Entry
Transfer Facilities, together in either such case with all accompanying
evidences of transfer and authenticity, to, or upon the order of, the
Company upon receipt by the Depositary, as the undersigned's agent, of the
aggregate Purchase Price (as defined below) with respect to such Shares;
(b) present certificates for such Shares for cancellation and transfer
on the Company's books; and
(c) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares, subject to the next paragraph, all in
accordance with the terms of the Offer.
The undersigned hereby represents and warrants to the Company that:
(a) 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 the undersigned's acceptance of
the terms and conditions of the Offer, including the undersigned's
representation and warranty that:
(i) The undersigned has a net long position in Shares or equivalent
securities at least equal to the Shares tendered within the meaning of
Rule 14e-4 under the Securities Exchange Act of 1934, as amended, and
(ii) such tender of Shares complies with Rule 14e-4;
(b) then and to the extent the Company accepts such Shares for
purchase, the Company will acquire good, marketable and unencumbered title
to them, free and clear of all security interests, liens, charges,
encumbrances, conditional sales agreements or other obligations relating to
their sale or transfer, and not subject to any adverse claim;
(c) on request, the undersigned will execute and deliver any
additional documents the Depositary or the Company deems necessary or
desirable to complete the assignment, transfer and purchase of the Shares
tendered hereby; and
(d) the undersigned has read and agrees to all of the terms of the
Offer.
4
<PAGE> 5
All authorities conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned, and any
obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, executors, administrators, successors, assigns,
trustees in bankruptcy, and legal representatives of the undersigned. Except as
stated in the Offer to Purchase, this tender is irrevocable.
The name(s) and address(es) of the registered holder(s) should be printed
above, if they are not already printed above, exactly as they appear on the
certificates representing Shares tendered hereby. The certificate numbers, the
number of Shares represented by such certificates and the number of Shares that
the undersigned wishes to tender, should be set forth in the appropriate boxes
above. The price at which such Shares are being tendered should be indicated
below by checking ONE of the boxes listed under the item "Price (In Dollars) Per
Share At Which Shares Are Being Tendered."
The undersigned understands that the Company will, upon the terms and
subject to the conditions of the Offer, determine a single price per Share (not
in excess of $14.00 nor less than $11.00 per Share) net to the seller in cash
(the "Purchase Price") that it will pay for Shares properly tendered and not
withdrawn prior to the Expiration Date pursuant to the Offer, taking into
account the number of Shares so tendered and the prices (in multiples of $0.25)
specified by tendering Shareholders. The undersigned understands that the
Company will select the lowest Purchase Price that will allow it to purchase up
to 8,000,000 shares (or such lesser number of Shares as are properly tendered
and not withdrawn) at a price not in excess of $14.00 nor less than $11.00 per
Share. The undersigned understands that all Shares properly tendered at prices
at or below the Purchase Price and not withdrawn prior to the Expiration Date
will be purchased at the Purchase Price, upon the terms and subject to the
conditions of the Offer, including the proration, odd lot provisions and
conditional tender provisions. The Company will return all Shares not purchased
pursuant to the Offer, including Shares tendered at prices greater than the
Purchase Price and not withdrawn prior to the Expiration Date and Shares not
purchased because of proration or conditional tenders.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, the Company may terminate or amend the Offer or may
postpone the acceptance for payment of, or the payment for, Shares tendered or
may accept for payment fewer than all of the Shares tendered hereby. In any such
event, the undersigned understands that certificate(s) for any Shares delivered
herewith but not tendered or not purchased will be returned to the undersigned
at the address indicated above, unless otherwise indicated under the "Special
Payment Instructions" or "Special Delivery Instructions" below. The undersigned
recognizes that the Company has no obligation, pursuant to the Special Payment
Instructions, to transfer any certificate for Shares from the name of its
registered holder, or to order the registration or transfer of Shares tendered
by book-entry transfer, if the Company purchases none of the Shares represented
by such certificate or tendered by such book-entry transfer.
The undersigned understands that acceptance of Shares by the Company for
payment will constitute a binding agreement between the undersigned and the
Company upon the terms and subject to the conditions of the Offer.
The check for the aggregate Purchase Price for such of the Shares tendered
hereby as are purchased will be issued to the order of the undersigned and
mailed to the address indicated above, unless otherwise indicated under the
Special Payment Instructions or the Special Delivery Instructions below.
5
<PAGE> 6
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
- --------------------------------------------------------------------------------
ODD LOTS
(SEE INSTRUCTION 8)
To be completed ONLY if the Shares are being tendered by or on behalf of a
person owning beneficially or of record an aggregate of fewer than 100 Shares,
including any Shares held in the Dividend Reinvestment Plan. The undersigned
either (check one box):
[ ] is the beneficial or record owner of an aggregate of fewer than 100 Shares,
all of which are being tendered;
OR
[ ] is a broker dealer, commercial bank, trust company, or other nominee that
(a) is tendering for the beneficial owner(s) thereof, Shares with respect
to which it is the record holder and (b) believes, based upon
representations made to it by such beneficial owner(s), that each such
person is the beneficial owner of an aggregate of fewer than 100 Shares and
is tendering all of such Shares.
In addition, the undersigned is tendering Shares either (check one box):
[ ] at the Purchase Price (defined below), as the same shall be determined by
the Company in accordance with the terms of the Offer (persons checking
this box need not indicate the price per Share below);
OR
[ ] at the price per Share indicated below under "Price (in Dollars) Per Share
At Which Shares Are Being Tendered."
ODD LOT SHARES CANNOT BE CONDITIONALLY TENDERED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
(SEE INSTRUCTION 5)
- ---------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
CHECK ONLY ONE BOX.
IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES
(Shareholders who desire to tender Shares at more than one price must complete a separate
Letter of Transmittal for each price at which Shares are tendered.)
- ---------------------------------------------------------------------------------------------------------------
[ ] $11.00 [ ] $11.50 [ ] $12.00 [ ] $12.50 [ ] $13.00 [ ] $13.50 [ ] $14.00
- ---------------------------------------------------------------------------------------------------------------
[ ] $11.25 [ ] $11.75 [ ] $12.25 [ ] $12.75 [ ] $13.25 [ ] $13.75
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 7
---------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 4, 6, 7 AND 11)
To be completed ONLY if certificates for Shares not tendered or not
purchased and/or any check for the aggregate Purchase Price of Shares
purchased are to be issued in the name of someone other than the
undersigned, or if Shares delivered by book-entry transfer that are not
purchased are to be returned by credit to an account maintained by a
Book-Entry Transfer Facility.
Issue [ ] Check to:
[ ] Certificates to:
Names:
--------------------------------------------------------------------
PLEASE TYPE OR PRINT
Address:
--------------------------------------------------------------------
--------------------------------------------------------------------
(INCLUDE ZIP CODE)
--------------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
[ ] Credit unpurchased Shares tendered by book-entry transfer and not
purchased to the account set forth below:
Name of Account Party:
--------------------------------------------------------------------
Account Number:
--------------------------------------------------------------------
at: [ ] The Depositary Trust Company
[ ] Philadelphia Depositary Trust Company
--------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 4, 6, 7 AND 11)
To be completed ONLY if certificates for Shares not tendered or not
purchased and/or any check for the Purchase Price of Shares purchased,
issued in the name of the undersigned, are to be mailed to someone other
than the undersigned or to the undersigned at an address other than that
shown above.
Mail [ ] Check to:
[ ] Certificates to:
Name:
--------------------------------------------------------------------
PLEASE TYPE OR PRINT
Address:
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
(INCLUDE ZIP CODE)
--------------------------------------------------------------------
7
<PAGE> 8
IMPORTANT
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL SHAREHOLDERS)
(PLEASE COMPLETE AND RETURN THE SUBSTITUTE FORM W-9)
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on
certificate(s) or on a security position listing or by person(s) authorized to
become registered holder(s) by certificate(s) and documents transmitted with
this Letter of Transmittal. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or another
person acting in a fiduciary or representative capacity, please set forth full
title and see Instruction 6.)
Signature(s) of Registered Holder(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dated: , 1998
- ---------------------------
Name(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code(s) and Daytime Telephone Number(s):
- --------------------------------------------------------------------------------
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 6)
Name of Firm:
- --------------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Authorized Signature:
- --------------------------------------------------------------------------------
Title:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code(s) and Daytime Telephone Number(s):
- --------------------------------------------------------------------------------
Dated: , 1998
- ---------------------------
8
<PAGE> 9
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Medallion Guarantee of Signatures. No signature guarantee is required
if either:
(a) This Letter of Transmittal is signed by the registered holder of
the Shares (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 such Shares) exactly as the name
of the registered holder appears on the certificate tendered with this
Letter of Transmittal and payment and delivery are to be made directly to
such owner unless such owner has completed either the box entitled "Special
Payment Instructions" or "Special Delivery Instructions" above; or
(b) Such Shares are tendered for the account of a member firm of a
registered national securities exchange, a member of the National
Association of Securities Dealers, Inc. or a commercial bank or trust
company (not a savings bank or savings and loan association) having an
office, branch or agency in the United States, any of which is a
participant in an approved Signature Guarantee Medallion Program (each such
entity, an "Eligible Institution").
In all other cases, all signatures on this Letter of Transmittal must be
guaranteed by an Eligible Institution. See Instruction 6.
2. Delivery of Letter Of Transmittal And Certificates; Guaranteed Delivery
Procedures; Lost or Destroyed Certificates. This Letter of Transmittal is to be
used only if certificates for Shares are delivered with it to the Depositary (or
such certificates will be delivered pursuant to a Notice of Guaranteed Delivery
previously sent to the Depositary) or if a tender for Shares is being made
concurrently pursuant to the procedure for tender by book-entry transfer set
forth in Section 3 of the Offer to Purchase. Certificates for all physically
tendered Shares, confirmation of a book-entry transfer into the Depositary's
account at a Book-Entry Transfer Facility of Shares tendered electronically,
together in each case with a properly completed and duly executed Letter of
Transmittal, and any other documents required by this Letter of Transmittal,
should be mailed or delivered to the Depositary at the appropriate address set
forth herein and must be delivered to the Depositary on or before the Expiration
Date (as defined in the Offer to Purchase). DELIVERY OF DOCUMENTS TO ONE OF THE
BOOK-ENTRY TRANSFER FACILITIES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Shareholders whose certificates are not immediately available or who cannot
deliver certificates for their Shares and all other required documents to the
Depositary prior to the Expiration Date, or whose Shares cannot be delivered on
a timely basis pursuant to the procedures for book-entry transfer, must, in any
such case, tender their Shares by or through any Eligible Institution by
properly completing and duly executing and delivering a Notice of Guaranteed
Delivery and by otherwise complying with the guaranteed delivery procedure set
forth in Section 3 of the Offer to Purchase. Pursuant to such procedure,
certificates for all physically tendered Shares or book-entry confirmations, as
the case may be, as well as a properly completed and duly executed Letter of
Transmittal and all other documents required by this Letter of Transmittal, must
be received by the Depositary within three New York Stock Exchange trading days
after receipt by the Depositary of such Notice of Guaranteed Delivery, all as
provided in Section 3 of the Offer to Purchase.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, facsimile transmission or mail to the Depositary and must include a
Medallion signature guarantee by an Eligible Institution in the form set forth
in such Notice. For Shares to be validly tendered pursuant to the guaranteed
delivery procedure, the Depositary must receive the Notice of Guaranteed
Delivery on or before the Expiration Date.
Shareholders whose certificates for part or all of their Shares have been
lost, stolen, misplaced or destroyed must so indicate in the box entitled
"Description of Shares Tendered." Such shareholders may alternatively make such
notification to Wachovia Bank, N.A. as transfer agent, at the following address:
301 North Church Street, P.O. Box 3001(27102), Winston-Salem, North Carolina
27101; Attention: Shareholder Relations Group (telephone number: (800) 633-4236;
fax number: (910) 770-4832) and you will be instructed as to the documents which
may be required to be submitted by you together with the Letter of Transmittal
in order to receive the stock certificate(s) representing the Shares.
9
<PAGE> 10
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES,
IS AT THE OPTION AND RISK OF TITLE OF THE TENDERING SHAREHOLDER. IF DELIVERY IS
BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY.
The Company will not accept any alternative, conditional or contingent
tenders, nor will it purchase any fractional Shares, except as expressly
provided in the Offer to Purchase. All tendering Shareholders, by execution of
this Letter of Transmittal, waive any right to receive any notice of the
acceptance of their tender.
3. Inadequate Space. If the space provided under the item "Description of
Shares Tendered" is inadequate, the certificate numbers and/or the number of
Shares should be listed on a separate signed schedule and attached to this
Letter of Transmittal.
4. Partial Tenders and Unpurchased Shares. (Not applicable to
Shareholders who tender by book-entry transfer.) If fewer than all of the Shares
evidenced by any certificate are to be tendered, shareholders should fill in the
number of Shares that are to be tendered in the column entitled "Number of
Shares Tendered," under the item "Description of Shares Tendered." In such case,
if any tendered Shares are purchased, a new certificate for the remainder of the
Shares (including any Shares not purchased) evidenced by the old certificate(s)
will be issued and sent to the registered holder(s), unless otherwise specified
above under either "Special Payment Instructions" or "Special Delivery
Instructions," as soon as practicable after the Expiration Date. Unless
otherwise indicated, all Shares represented by the certificate(s) listed and
delivered to the Depositary will be deemed to have been tendered.
5. Indication of Price at Which Shares are Being Tendered. For Shares to
be properly tendered, the shareholder MUST check the box indicating the price
per Share at which such shareholder is tendering Shares under the item "Price
(In Dollars) Per Share at Which Shares Are Being Tendered." ONLY ONE BOX MAY BE
CHECKED. IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED, THERE IS NO
PROPER TENDER OF SHARES. A shareholder wishing to tender portions of such
shareholder's Share holdings at different prices must complete a separate Letter
of Transmittal for each price at which such shareholder wishes to tender each
such portion of such shareholder's Shares. The same Shares cannot be tendered
(unless previously properly withdrawn as provided in Section 4 of the Offer to
Purchase) at more than one price.
6. Signatures on Letter of Transmittal, Stock Powers and Endorsements.
(a) 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 certificate(s)
without any change whatsoever.
(b) If the Shares are registered in the name of two or more joint
holders, each such holder must sign this Letter of Transmittal.
(c) If any tendered Shares are registered in different names on
several certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different certificates.
(d) When this Letter of Transmittal is signed by the registered
holder(s) of the Shares listed and transmitted hereby, no endorsement(s) of
certificate(s) representing such Shares or separate stock power(s) are
required unless payment is to be made or the certificate(s) for Shares not
tendered or not purchased are to be issued to a person other than the
registered holder(s). SIGNATURE(S) ON SUCH CERTIFICATE(S) MUST BE MEDALLION
GUARANTEED BY AN ELIGIBLE INSTITUTION. If this Letter of Transmittal is
signed by a person other than the registered holder(s) of the
certificate(s) listed, or if payment is to be made or the certificate(s)
for Shares not tendered or not purchased are to be issued to a person other
than the registered holder(s), the certificate(s) must be endorsed or
accompanied by appropriate stock power(s), in either case signed exactly as
the name(s) of the registered holder(s) appears on the certificate(s), and
the signature(s) on such certificate(s) or stock power(s) must be
guaranteed by an Eligible Institution. See Instruction 1.
10
<PAGE> 11
(e) If this Letter of Transmittal or any certificate(s) or stock
power(s) 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 must submit proper evidence satisfactory to the Company of their
authority so to act.
7. Stock Transfer Taxes. Except as provided in this Instruction 7, no
stock transfer tax stamps or funds to cover such stamps need accompany this
Letter of Transmittal. The Company will pay or cause to be paid any stock
transfer taxes payable on the transfer to it of Shares purchased pursuant to the
Offer. If, however:
(a) Payment of the aggregate Purchase Price for Shares tendered hereby
and accepted for purchase is to be made to any person other than the
registered holder(s);
(b) Shares not tendered or not accepted for purchase are to be
registered in the name(s) of any person(s) other than the registered
holder(s); or
(c) Tendered certificates are registered in the name(s) of any
person(s) other than the person(s) signing this Letter of Transmittal;
then the Depositary will deduct from such aggregate Purchase Price the amount of
any stock transfer taxes (whether imposed on the registered holder, such other
person or otherwise) payable on account of the transfer to such person, unless
satisfactory evidence of the payment of such taxes or any exemption from them is
submitted.
8. Odd Lots. As described in Section 1 of the Offer to Purchase, if the
Company is to purchase fewer than all Shares tendered before the Expiration Date
and not withdrawn, the Shares purchased first will consist of all Shares
tendered by any shareholder who owns of record or owns beneficially an aggregate
of fewer than 100 Shares, including any Shares held in the Dividend Reinvestment
Plan, and who tenders all of such shareholder's Shares at or below the Purchase
Price (an "Odd Lot Holder"). This preference will not be available unless the
box captioned "Odd Lots" is completed.
9. Conditional Tenders. As described in Sections 1 and 6 of the Offer to
Purchase, Shareholders may condition their tenders on all or a minimum number of
their tendered Shares being purchased (a "Conditional Tender"). If the Company
is to purchase less than all Shares tendered and not withdrawn prior to the
Expiration Date, the Depositary will perform a preliminary proration, and any
Shares tendered at or below the Purchase Price pursuant to a Conditional Tender
for which the condition was not satisfied shall be deemed withdrawn, subject to
reinstatement if such Conditional Tender is subsequently selected by random lot
for purchase subject to Sections 1 and 6 of the Offer to Purchase. Conditional
Tenders will be selected by lot only from Shareholders who tender all of their
Shares. All tendered Shares shall be deemed unconditionally tendered unless the
item "Conditional Tender" is completed. The Conditional Tender alternative is
made available so that a shareholder may seek to structure the purchase of
Shares from the shareholder pursuant to the Offer in such a manner that it will
be treated as a sale of such Shares by the shareholder, rather than the payment
of a dividend to the shareholder, for federal income tax purposes. Odd Lot
Shares, which will not be subject to proration, cannot be conditionally
tendered. It is the tendering shareholder's responsibility to calculate the
minimum number of Shares that must be purchased from the shareholder in order
for the shareholder to qualify for sale (rather than dividend) treatment, and
each shareholder is urged to consult such shareholder's own tax advisor.
IN THE EVENT OF PRORATION, ANY SHARES TENDERED PURSUANT TO A CONDITIONAL
TENDER FOR WHICH THE MINIMUM REQUIREMENTS ARE NOT SATISFIED MAY NOT BE ACCEPTED
AND WILL THEREBY BE DEEMED WITHDRAWN.
10. Order of Purchase in Event of Proration. As described in Section 1 of
the Offer to Purchase, Shareholders may designate the order in which their
Shares are to be purchased in the event of proration. The order of purchase may
have an effect on the federal income tax treatment of the Purchase Price for the
Shares purchased. See Sections 1 and 14 of the Offer to Purchase.
11. Special Payment and Delivery Instructions. If certificate(s) for
Shares not tendered or not purchased and/or check(s) are to be issued in the
name of a person other than the signer of the Letter of Transmittal or if such
certificates and/or checks are to be sent to someone other than the person
signing the
11
<PAGE> 12
Letter of Transmittal or to the signer at a different address, the above items
"Special Payment Instructions" and/or "Special Delivery Instructions" should be
completed as applicable and signatures must be guaranteed as described in
Instruction 1.
12. Determination of Validity; Rejection of Shares; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions as to the number of Shares
to be accepted, the Purchase Price to be paid for Shares accepted and the
validity, form, eligibility (including time of receipt) and acceptance of any
tender of Shares will be determined by the Company, in its sole discretion, and
its determination shall be final and binding on all parties. The Company
reserves the absolute right to reject any or all tenders of any Shares that it
determines are not in proper form or the acceptance for payment of or payment
for which may be unlawful. The Company also reserves the absolute right to waive
any of the conditions of the Offer or any defect or irregularity in any tender
of Shares, and the Company's interpretation of the terms of the Offer (including
the instructions in the Letter of Transmittal) will be final and binding on all
parties. No tender of Shares will be deemed to have been properly made until all
defects or irregularities have been cured by the tendering shareholder or waived
by the Company. None of the Company, the Dealer Manager, the Depositary, the
Information Agent or any other person shall be obligated to give notice of any
defects or irregularities in tenders, nor shall any of them incur any liability
for failure to give any such notice.
13. Questions and Requests for Assistance and Additional
Copies. Questions and requests for assistance may be directed to, or additional
copies of the Offer to Purchase, the Notice of Guaranteed Delivery and this
Letter of Transmittal may be obtained from, the Information Agent or the Dealer
Manager at their addresses and telephone numbers set forth at the end of this
Letter of Transmittal or from your broker, dealer, commercial bank or trust
company.
14. IRS Form W-9 and IRS Form W-8. Under the federal income tax backup
withholding rules, unless an exemption applies under the applicable law and
regulations, 31% of the gross proceeds payable to a shareholder or other payee
pursuant to the Offer must be withheld and remitted to the United States
Treasury, unless the shareholder or other payee provides such shareholder's
taxpayer identification number (employer identification number or social
security number) to the Depositary and certifies that such number is correct.
Therefore, each tendering shareholder should complete and sign the Substitute
Form W-9 included as part of this Letter of Transmittal so as to provide the
information and certification necessary to avoid backup withholding, unless such
shareholder otherwise establishes to the satisfaction of the Depositary that it
is not subject to backup withholding. Certain shareholders (including, among
others, all corporations and certain foreign shareholders (in addition to
foreign corporations)) are not subject to these backup withholding and reporting
requirements. In order for a foreign shareholder to qualify as an exempt
recipient, that shareholder must submit an IRS Form W-8 or a Substitute Form
W-8, signed under penalties of perjury, attesting to that shareholder's exempt
status. Such statements can be obtained from the Depositary.
15. Withholding for Foreign Shareholders. Even if a foreign shareholder
has provided the required certification to avoid backup withholding, the
Depositary will withhold federal income taxes equal to 30% of the gross payments
payable to a foreign shareholder or his or her agent unless the Depositary
determines that a reduced rate of withholding is available pursuant to a tax
treaty or that an exemption from withholding is applicable because such gross
proceeds are effectively connected with the conduct of a trade or business
within the United States. For this purpose, a foreign shareholder is any
shareholder that is not (i) a citizen or resident of the United States, (ii) a
corporation, partnership, or other entity created or organized in or under the
laws of the United States, any State or any political subdivision thereof, (iii)
an estate the income of which is subject to United States federal income
taxation regardless of the source of such income, or (iv) any trust if a court
within the United States is able to exercise primary supervision over the
administration of the trust and one or more United States fiduciaries have the
authority to control all substantial decisions relating to the trust. In order
to obtain a reduced rate of withholding pursuant to a tax treaty, a foreign
shareholder must deliver to the Depositary before the payment a properly
completed and executed IRS Form 1001. In order to obtain an exemption from
withholding on the grounds that the gross proceeds paid pursuant to the Offer
are effectively connected with the conduct of a trade or business within the
United States, a foreign shareholder must deliver to the Depositary a properly
completed and executed IRS Form 4224. The Depositary will determine a
shareholder's status as a foreign shareholder and eligibility for a reduced rate
of, or exemption from, withholding by reference to any outstanding certificates
or statements concerning eligibility for a
12
<PAGE> 13
reduced rate of, or exemption from, withholding (e.g., IRS Form 1001 or IRS Form
4224) unless facts and circumstances indicate that such reliance is not
warranted. A foreign shareholder may be eligible to obtain a refund of all or a
portion of any tax withheld if such shareholder meets the "complete redemption,"
"substantially disproportionate" or "not essentially equivalent to a dividend"
test described in Section 14 or is otherwise able to establish that no tax or a
reduced amount of tax is due. Backup withholding generally will not apply to
amounts subject to the 30% or a treaty-reduced rate of withholding. Foreign
shareholders are urged to consult their own tax advisors regarding the
application of federal income tax withholding, including eligibility for a
withholding tax reduction or exemption, and the refund procedure.
16. Dividend Reinvestment Plan. If a shareholder desires to tender Shares
credited to the shareholder's account under the Dividend Reinvestment Plan, the
box entitled "Dividend Reinvestment Plan Shares" should be completed. A
participant in the Dividend Reinvestment Plan may complete such box on only one
Letter of Transmittal submitted by such participant. If a participant submits
more than one Letter of Transmittal and completes such box on more than one
Letter of Transmittal, the participant will be deemed to have elected to tender
all Shares credited to the shareholder's account under the Dividend Reinvestment
Plan at the lowest price specified in such Letters of Transmittal.
If a shareholder tenders Shares held in the Dividend Reinvestment Plan, all
such Shares credited to such shareholder's account(s), including fractional
Shares, will be tendered, unless otherwise specified above in the box entitled
"Dividend Reinvestment Plan Shares." In the event that the item "Dividend
Reinvestment Plan Shares" is not completed, no Shares held in the tendering
shareholder's account will be tendered.
PAYER'S NAME: WACHOVIA BANK, N.A.
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE ---------------------
FORM W-9 PART 1: PLEASE PROVIDE YOUR CORRECT TIN IN THE BOX AT SOCIAL SECURITY NUMBER
RIGHT AND CERTIFY BY SIGNING AND DATING BELOW: OR EMPLOYER
IDENTIFICATION NUMBER
----------------------------------------------------------------------------------------
PAYER'S REQUEST FOR ----------------------------------------------------- PART 3
TAXPAYER NAME (PLEASE PRINT) AWAITING [ ]
IDENTIFICATION NUMBER (TIN) TIN
-----------------------------------------------------
ADDRESS
-----------------------------------------------------
CITY STATE ZIP CODE
----------------------------------------------------------------------------------------
PART 2: FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING, SEE THE ENCLOSED GUIDELINES
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE IRS FORM W-9 COMPLETE
AS INSTRUCTED THEREIN.
PART 3: CERTIFICATION -- UNDER THE 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 EITHER (A) I HAVE MAILED OR AN
APPLICATION TO RECEIVE A TAXPAYER IDENTIFICATION NUMBER TO THE IRS CENTER OR SOCIAL
SECURITY ADMINISTRATION OFFICE OR (B) I TO MAIL OR DELIVER AN APPLICATION IN THE NEAR
FUTURE) AND (2) I AM NOT TO BACKUP WITHHOLDING BECAUSE: (A) I AM EXEMPT FROM BACKUP;
OR (B) I HAVE NOT BEEN NOTIFIED BY THE IRS THAT I AM SUBJECT TO WITHHOLDING AS A
RESULT OF A FAILURE TO REPORT ALL INTEREST OR; OR (C) THE IRS HAS NOTIFIED ME THAT I
AM NO LONGER SUBJECT TO WITHHOLDING. CERTIFICATION INSTRUCTION -- YOU MUST CROSS OUT
ITEM (2) IF YOU HAVE BEEN NOTIFIED BY THE IRS THAT YOU ARE CURRENTLY SUBJECT TO
WITHHOLDING BECAUSE OF UNDERREPORTING INTEREST OR DIVIDENDS OR YOUR TAX.
SIGNATURE __________ DATE __________, 1998
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
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.
13
<PAGE> 14
IMPORTANT: This Letter of Transmittal (together with certificates for the Shares
being tendered and all other required documents), or a Notice of Guaranteed
Delivery must be received prior to the Expiration Date. SHAREHOLDERS ARE
ENCOURAGED TO COMPLETE THE SUBSTITUTE IRS FORM W-9 AS PART OF THEIR LETTER OF
TRANSMITTAL.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE
BOX IN PART 2 OF SUBSTITUTE FORM W-9
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
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 (A) I HAVE MAILED OR DELIVERED AN APPLICATION TO RECEIVE A TAXPAYER IDENTIFICATION NUMBER TO THE
APPROPRIATE INTERNAL REVENUE SERVICE CENTER OR SOCIAL SECURITY ADMINISTRATION OFFICE OR (B) I INTEND TO MAIL
OR DELIVER AN APPLICATION IN THE NEAR FUTURE. I UNDERSTAND THAT IF I DO NOT PROVIDE A TAXPAYER IDENTIFICATION
NUMBER WITHIN SIXTY (60) DAYS, 31% OF ALL REPORTABLE PAYMENTS MADE TO ME THEREAFTER WILL BE WITHHELD UNTIL I
PROVIDE A NUMBER.
, 1998
------------------------------------------------------------------- ------------------------------
Signature Date
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE> 15
The Information Agent for the Offer is:
CORPORATE INVESTOR COMMUNICATIONS, INC.
111 Commerce Road
Carlstadt, NJ 07072
Call Toll Free: (888) 203-8862
Banks and Brokerage Firms,
Please Call: (201) 896-1900
The Dealer Manager for the Offer is:
MERRILL LYNCH & CO.
World Financial Center
North Tower
New York, New York 10281
(212) 449-8971 (call collect)
<PAGE> 1
EXHIBIT 99(A)(3)
SHAW INDUSTRIES, INC.
NOTICE OF GUARANTEED DELIVERY OF SHARES OF COMMON STOCK
(INCLUDING ASSOCIATED SERIES A PARTICIPATING
PREFERRED STOCK PURCHASE RIGHTS)
This form or a facsimile hereof must be used to accept the Offer (as
defined below) if:
(a) certificates for shares of common stock, (the "Common Stock"),
including the associated rights to purchase Series A Participating
Preferred Stock (the "Rights") issued pursuant to the Rights Agreement
between the Company and NationsBank, N.A., as successor to Citizens and
Southern Trust Company (Georgia), N.A. (together, the Common Stock and the
Rights are referred to as the "Shares"), of Shaw Industries, Inc., a
Georgia corporation (the "Company"), cannot be delivered to the Depositary
prior to the Expiration Date (as defined in the Company's Offer to Purchase
dated February 9, 1998 (the "Offer to Purchase")); or
(b) the procedure for book-entry transfer (set forth in Section 3 of
the Offer to Purchase) cannot be completed on a timely basis; or
(c) the Letter of Transmittal and all other required documents cannot
be delivered to the Depositary prior to the Expiration Date.
This form, properly completed and duly executed, may be delivered by hand,
mail or facsimile transmission to the Depositary. See Section 3 of the Offer to
Purchase.
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH BELOW OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH
BELOW DOES NOT CONSTITUTE A VALID DELIVERY.
DEPOSITARY: WACHOVIA BANK, N.A.
(4)
<TABLE>
<S> <C> <C> <C>
By Registered or Certified Mail: By Overnight Courier: By Hand Delivery: By New York Drop:
Wachovia Bank, Wachovia Bank, Wachovia Bank, Wachovia Bank,
Exchange Agent Exchange Agent Exchange Agent Exchange Agent
Corporate Reorganizations Corporate Reorganizations Shareholder Services Department c/o Boston Equiserve, L.P.
P.O. Box 9061 70 Campanelli Drive Wachovia East Building, Corporate Reorganizations
Boston, MA 02205 Braintree, MA 02184 2nd Floor 3rd Floor
301 North Church Street 55 Broadway
Winston-Salem, NC 27101 New York, NY 10006
</TABLE>
By Facsimile Transmission:
(781)794-6333
Confirm by Telephone:
(781)794-6388
THIS FORM 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.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to the Company at the price per Share
indicated in this Notice of Guaranteed Delivery, upon the terms and subject to
the conditions set forth in the Offer to Purchase and the related Letter of
Transmittal (which together constitute the "Offer"), receipt of both of which is
hereby acknowledged, Shares pursuant to the guaranteed delivery procedure set
forth in Section 3 of the Offer to Purchase.
- --------------------------------------------------------------------------------
CONDITIONAL TENDER
(SEE INSTRUCTION 9 OF THE LETTER OF TRANSMITTAL)
[ ] check here if tender of Shares is conditional on the Company purchasing
all or a minimum number of the tendered Shares and complete the
following:
Minimum number of Shares to be sold:
- --------------------------------------------------------------------------------
ODD LOTS
To be completed ONLY if the Shares are being tendered by or on behalf
of a person owning beneficially or of record an aggregate of fewer than 100
Shares.
The undersigned either (check one box):
[ ] is the beneficial or record owner of an aggregate of fewer than
100 Shares, all of which are being tendered; or
[ ] is a broker, dealer, commercial bank, trust company, or other
nominee that (a) is tendering for the beneficial owner(s)
thereof, Shares with respect to which it is the record holder,
and (b) believes, based upon representations made to it by such
beneficial owner(s), that each such person is the beneficial
owner of an aggregate of fewer than 100 Shares and is tendering
all of such Shares.
In addition, the undersigned is tendering Shares either (check one
box):
[ ] at the Purchase Price, as the same shall be determined by the
Company in accordance with the terms of the Offer (persons
checking this box need not indicate the price per Share below);
or
[ ] at the price per Share indicated below under "Price (In Dollars)
Per Share At Which Shares Are Being Tendered."
ODD LOT SHARES CANNOT BE CONDITIONALLY TENDERED
- --------------------------------------------------------------------------------
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
CHECK ONLY ONE BOX.
IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES
(Shareholders who desire to tender Shares at more than one price must complete a
separate Letter of Transmittal for each price at which Shares are tendered.)
[ ] $11.00 [ ] $11.75 [ ] $12.50 [ ] $13.25 [ ] $14.00
[ ] $11.25 [ ] $12.00 [ ] $12.75 [ ] $13.50
[ ] $11.50 [ ] $12.25 [ ] $13.00 [ ] $13.75
- --------------------------------------------------------------------------------
2
<PAGE> 3
(PLEASE TYPE OR PRINT)
CERTIFICATE NOS. (IF AVAILABLE)
- ------------------------------------------------------
- ------------------------------------------------------
NAME(S)
- ------------------------------------------------------
ADDRESS(ES)
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
AREA CODE(S) AND TELEPHONE NUMBER(S)
SIGN HERE
- ------------------------------------------------------
SIGNATURE(S)
Dated , 1998
------------------------------------
If Shares will be tendered by book-entry
transfer check one box:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number:
- ------------------------------------------------------
3
<PAGE> 4
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned is a member firm of a registered national securities
exchange, a member of the National Association of Securities Dealers, Inc., or a
commercial bank or trust company having an office, branch, or agency in the
United States and represents that: (a) the above-named person(s) "own(s)" the
Shares tendered hereby within the meaning of Rule 14e-4 promulgated under the
Securities Exchange Act of 1934, as amended, and (b) such tender of Shares
complies with such Rule 14e-4, and guarantees that the Depositary will receive
(i) certificates representing the Shares tendered hereby in proper form for
transfer, or (ii) confirmation that the Shares tendered hereby have been
delivered pursuant to the procedure for book-entry transfer (set forth in
Section 3 of the Offer to Purchase) into the Depositary's account at The
Depository Trust Company or Philadelphia Depository Trust Company, as the case
may be, together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) and any other documents required by the
Letter of Transmittal, all within three New York Stock Exchange trading days
after the date the Depositary receives this Notice of Guaranteed Delivery.
- ------------------------------------------------------
AUTHORIZED SIGNATURE
- ------------------------------------------------------
(NAME PLEASE PRINT)
- ------------------------------------------------------
(TITLE)
- ------------------------------------------------------
NAME OF FIRM
- ------------------------------------------------------
ADDRESS
- ------------------------------------------------------
- ------------------------------------------------------
(INCLUDING ZIP CODE)
- ------------------------------------------------------
AREA CODE AND TELEPHONE NUMBER
Date: 1998
--------------------------------------------
DO NOT SEND CERTIFICATES WITH THIS FORM. YOUR STOCK CERTIFICATES
MUST BE SENT WITH THE LETTER OF TRANSMITTAL.
4
<PAGE> 1
EXHIBIT 99(A)(4)
MERRILL LYNCH & CO.
WORLD FINANCIAL CENTER
NORTH TOWER
NEW YORK, NEW YORK 10281
SHAW INDUSTRIES, INC.
OFFER TO PURCHASE FOR CASH UP TO 8,000,000 SHARES OF ITS COMMON STOCK
(INCLUDING ASSOCIATED SERIES A PARTICIPATING PREFERRED STOCK PURCHASE RIGHTS)
AT A PURCHASE PRICE NOT IN EXCESS OF $14.00
NOR LESS THAN $11.00 PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON MONDAY, MARCH 9, 1998, UNLESS THE OFFER IS EXTENDED.
To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:
Shaw Industries, Inc., a Georgia corporation (the "Company"), has appointed
us to act as Dealer Manager in connection with its offer to purchase for cash up
to 8,000,000 shares (or such lesser number of shares as are properly tendered)
of its Common Stock (the "Common Stock"), including the associated rights to
purchase Series A Participating Preferred Stock (the "Rights") issued pursuant
to the Rights Agreement between the Company and NationsBank, N.A., as successor
to Citizens and Southern Trust Company (Georgia), N.A. (together, the Common
Stock and the Rights are referred to as the "Shares"), at a price not in excess
of $14.00 nor less than $11.00 per Share, specified by tendering shareholders,
upon the terms and subject to the conditions set forth in its Offer to Purchase,
dated February 9, 1998, and in the related Letter of Transmittal (which together
constitute the "Offer").
The Company will determine a single price per Share, not in excess of
$14.00 nor less than $11.00 per Share, net to the seller in cash (the "Purchase
Price"), that it will pay for Shares properly tendered and not withdrawn
pursuant to the Offer, taking into account the number of Shares so tendered and
the prices specified by tendering Shareholders. The Company will select the
lowest Purchase Price that will allow it to purchase up to 8,000,000 Shares (or
such lesser number of Shares as are properly tendered and not withdrawn) at a
price not in excess of $14.00 nor less than $11.00 per Share. All Shares
properly tendered at prices at or below the Purchase Price and not withdrawn
will be purchased at the Purchase Price, upon the terms and subject to the
conditions of the Offer, including the proration, odd lot provisions and
conditional tender provisions. Shares tendered at prices in excess of the
Purchase Price and Shares not purchased because of proration will be returned.
All Shares acquired in the Offer will be acquired at the Purchase Price. The
Company reserves the right, in its sole discretion, to purchase more than
8,000,000 Shares pursuant to the Offer. See Sections 1 and 15 of the Offer to
Purchase.
If, prior to the Expiration Date (as defined in the Offer to Purchase),
more than 8,000,000 Shares (or such greater number of Shares as the Company may
elect to purchase) are properly tendered and not withdrawn, the Company will,
upon the terms and subject to the conditions of the Offer, accept Shares for
purchase first from Odd Lot Holders (as defined in the Offer to Purchase) who
properly tender their Shares at or below the Purchase Price and then on a pro
rata basis from all other shareholders whose Shares are properly tendered at or
below the Purchase Price and not withdrawn. If any shareholder tenders Shares
and does not wish to have such Shares purchased subject to proration, such
shareholder may tender Shares subject to the condition that a specified minimum
number of Shares (which may be represented by designated stock certificates) be
purchased. See Sections 1, 3 and 6 of the Offer to Purchase.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 7 OF THE OFFER TO PURCHASE.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are enclosing
the following documents:
1. Offer to Purchase, dated February 9, 1998;
2. Letter to Clients 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;
3. Letter, dated February 9, 1998, from Robert E. Shaw, Chairman of
the Board and Chief Executive Officer of the Company, to Shareholders of
the Company;
<PAGE> 2
4. Letter of Transmittal for your use and for the information of your
clients (including a Substitute Form W-9); and
5. Notice of Guaranteed Delivery to be used to accept the Offer if the
Share certificates and all other required documents cannot be delivered to
the depositary by the Expiration Date or if the procedure for book-entry
transfer cannot be completed on a timely basis.
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 providing information relating to back up federal
income tax withholding.
7. A return envelope addressed to Wachovia Bank, N.A., the Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. THE OFFER,
PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, MARCH 9, 1998, UNLESS THE OFFER IS EXTENDED.
No fees or commissions will be payable to brokers, dealers or any person
for soliciting tenders of Shares pursuant to the Offer other than fees paid to
the Dealer Manager, the Information Agent or the Depositary as described in the
Offer to Purchase. However, a tendering shareholder who holds Shares with such
shareholder's Custodian (as defined in the Offer to Purchase) may be required by
such Custodian to pay a service charge or other fee. The Company will, however,
upon request, reimburse you for customary mailing and handling expenses incurred
by you in forwarding any of the enclosed materials to the beneficial owners of
Shares held by you as a nominee or in a fiduciary capacity. The Company will pay
or cause to be paid any stock transfer taxes applicable to its purchase of
Shares, except as otherwise provided in Instruction 7 of the Letter of
Transmittal.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal and any other required documents should be sent
to the Depositary with either certificate(s) representing the tendered Shares or
confirmation of their book-entry transfer all in accordance with the
instructions set forth in the Letter of Transmittal and the Offer to Purchase.
As described in Section 3, "The Offer-Procedures for Tendering Shares," of
the Offer to Purchase, tenders may be made without the concurrent deposit of
stock certificates or concurrent compliance with the procedure for book-entry
transfer, if such tenders are made by or through a broker or dealer which is a
member firm of a registered national securities exchange, or a member of the
National Association of Securities Dealers, Inc. or a commercial bank or trust
company having an office, branch or agency in the United States. Certificates
for Shares so tendered (or a confirmation of a book-entry transfer of such
Shares into the Depositary's account at one of the "Book-Entry Transfer
Facilities" described in the Offer to Purchase), together with a properly
completed and duly executed Letter of Transmittal and any other documents
required by the Letter of Transmittal, must be received by the Depositary within
three New York Stock Exchange trading days after timely receipt by the
Depositary of a properly completed and duly executed Notice of Guaranteed
Delivery.
Any inquiries you may have with respect to the Offer should be addressed to
Merrill Lynch & Co. or to the Information Agent at their respective addresses
and telephone numbers set forth on the back cover page of the Offer to Purchase.
Additional copies of the enclosed material may be obtained from the
undersigned, telephone: (212) 449-8971 (call collect) or from the Information
Agent, (201) 896-1900 (for banks and brokerage firms) and (888) 203-8862 (for
all others).
Very truly yours,
MERRILL LYNCH & CO.
Enclosures
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON AS AN AGENT OF THE COMPANY OR ANY OF ITS AFFILIATES, THE DEALER
MANAGER, THE INFORMATION AGENT OR THE DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER
PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN
CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE
STATEMENTS CONTAINED THEREIN.
2
<PAGE> 1
EXHIBIT 99(A)(5)
SHAW INDUSTRIES, INC.
OFFER TO PURCHASE FOR CASH UP TO 8,000,000 SHARES OF ITS COMMON STOCK
(INCLUDING ASSOCIATED SERIES A PARTICIPATING PREFERRED STOCK PURCHASE RIGHTS)
AT A PURCHASE PRICE NOT IN EXCESS OF $14.00
NOR LESS THAN $11.00 PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON MONDAY, MARCH 9, 1998, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated February
9, 1998, and the related Letter of Transmittal (which together constitute the
"Offer") in connection with the Offer by Shaw Industries, Inc., a Georgia
corporation (the "Company"), to purchase up to 8,000,000 shares (or such lesser
number of shares as are properly tendered) of its Common Stock, (the "Common
Stock"), including the associated rights to purchase Series A Participating
Preferred Stock (the "Rights") issued pursuant to the Rights Agreement between
the Company and NationsBank, N.A. as successor to Citizens and Southern Trust
Company (Georgia), N.A. (together, the Common Stock and the Rights are referred
to as the "Shares"), at a price not in excess of $14.00 nor less than $11.00 per
Share, specified by tendering shareholders, upon the terms and subject to the
conditions set forth in the Offer.
The Company will determine a single price per Share, not in excess of
$14.00 nor less than $11.00 per Share, net to the seller in cash (the "Purchase
Price"), that it will pay for Shares properly tendered and not withdrawn
pursuant to the Offer, taking into account the number of Shares so tendered and
the prices specified by tendering Shareholders. The Company will select the
lowest Purchase Price that will allow it to purchase 8,000,000 Shares (or such
lesser number of Shares as are properly tendered and not withdrawn) at a price
not in excess of $14.00 nor less than $11.00 per Share. All Shares properly
tendered at prices at or below the Purchase Price and not withdrawn will be
purchased at the Purchase Price, upon the terms and subject to the conditions of
the Offer, including the proration, odd lot provisions and conditional tender
provisions. Shares tendered at prices in excess of the Purchase Price and Shares
not purchased because of proration will be returned. All Shares acquired in the
Offer will be acquired at the Purchase Price. The Company reserves the right, in
its sole discretion, to purchase more than 8,000,000 Shares pursuant to the
Offer. See Sections 1 and 15 of the Offer to Purchase.
If, prior to the Expiration Date (as defined in the Offer to Purchase),
more than 8,000,000 Shares (or such greater number of Shares as the Company may
elect to purchase) are properly tendered and not withdrawn, the Company will,
upon the terms and subject to the conditions of the Offer, accept Shares for
purchase first from Odd Lot Holders (as defined in the Offer to Purchase) who
properly tender their Shares at or below the Purchase Price and then on a pro
rata basis from all other shareholders whose Shares are properly tendered at or
below the Purchase Price and not withdrawn. If any shareholder tenders Shares
and does not wish to have such Shares purchased subject to proration, such
shareholder may tender Shares subject to the condition that a specified minimum
number of Shares (which may be represented by designated stock certificates) be
purchased. See Sections 1, 3 and 6 of the Offer to Purchase.
We are the owner of record of Shares held for your account. As such, we are
the only ones who can tender your Shares, and then only pursuant to your
instructions. WE ARE SENDING YOU THE LETTER OF TRANSMITTAL FOR YOUR INFORMATION
ONLY; YOU CANNOT USE IT TO TENDER SHARES WE HOLD FOR YOUR ACCOUNT.
Please instruct us as to whether you wish us to tender any or all of the
Shares we hold for your account on the terms and subject to the conditions of
the Offer.
<PAGE> 2
We call your attention to the following:
1. You may tender Shares at prices not in excess of $14.00 nor less
than $11.00 per Share as indicated in the attached Instruction Form, net to
you in cash.
2. You may condition your tender of Shares on the Company purchasing
all or a minimum number of your Shares.
3. You may designate the priority in which your Shares shall be
purchased in the event of proration.
4. The Offer is not conditioned upon any minimum number of Shares
being tendered.
5. The Offer, proration period and withdrawal rights will expire at
12:00 Midnight, New York City time, on Monday, March 9, 1998, unless the
Company extends the Offer.
6. The Offer is for up to 8,000,000 Shares, constituting approximately
6.1% of the Shares outstanding as of January 30, 1998.
7. Tendering Shareholders will not be obligated to pay any brokerage
commissions, solicitation fees, or, subject to Instruction 7 of the Letter
of Transmittal, stock transfer taxes on the Company's purchase of Shares
pursuant to the Offer. However, a tendering shareholder who holds Shares
with such shareholder's Custodian (as defined in the Offer to Purchase) may
be required by such Custodian to pay a service charge or other fee.
8. If you beneficially own an aggregate of fewer than 100 Shares, and
you instruct us to tender on your behalf all such Shares at or below the
Purchase Price prior to the Expiration Date (as defined in the Offer to
Purchase) and complete the item captioned "Odd Lots" in the attached
Instruction Form, the Company, upon the terms and subject to the conditions
of the Offer, will accept all such Shares for purchase before proration, if
any, of the purchase of other Shares properly tendered at or below the
Purchase Price.
9. If you wish to tender portions of your Shares at different prices,
you must complete a separate Instruction Form for each price at which you
wish to tender each such portion of your Shares. We must submit separate
Letters of Transmittal on your behalf for each price you will accept.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the attached Instruction Form.
An envelope to return your Instruction Form to us is enclosed. If you authorize
us to tender your Shares, we will tender all such Shares unless you specify
otherwise on the attached Instruction Form.
YOUR INSTRUCTION FORM SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US
TO SUBMIT A TENDER ON YOUR BEHALF ON OR BEFORE THE EXPIRATION DATE OF THE OFFER.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON MONDAY, MARCH 9, 1998, UNLESS THE COMPANY EXTENDS THE OFFER.
As described in Section 1 of the Offer to Purchase, if more than 8,000,000
Shares have been properly tendered at prices at or below the Purchase Price and
not withdrawn prior to the Expiration Date (as defined in the Offer to
Purchase), the Company will purchase properly tendered Shares in the following
order of priority:
(a) First, all Shares properly tendered and not withdrawn prior to the
Expiration Date by any Odd Lot Holder who:
(1) tenders all Shares beneficially owned by such Odd Lot Holder at
a price at or below the Purchase Price (tenders of less than all Shares
owned by such shareholder will not qualify for this preference); and
(2) completes the box captioned "Odd Lots" on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed Delivery;
and
2
<PAGE> 3
(b) Second, after purchase of all of the foregoing Shares, all Shares
conditionally tendered in accordance with Section 6, for which the
condition was satisfied without regard to the procedure set forth in clause
(c) below, and all other Shares tendered properly and unconditionally, in
each case, at prices at or below the Purchase Price and not withdrawn prior
to the Expiration Date, on a pro rata basis (with adjustments to avoid
purchases of fractional Shares) as described below; and
(c) Third, if necessary to permit the Company to purchase up to
8,000,000 Shares, Shares conditionally tendered, for which the condition
was not initially satisfied, at or below the Purchase Price and not
withdrawn prior to the Expiration Date, selected by random lot in
accordance with Section 6.
You may condition your tender on the Company purchasing a minimum number of
your tendered Shares. In such case, if as a result of the preliminary proration
provisions in the Offer to Purchase the Company would purchase less than such
minimum number of your Shares, then the Company will not purchase any of your
Shares, except as provided in the next sentence. In such case, if as a result of
Shares conditionally tendered not being purchased the total number of Shares
that would have been purchased is less than 8,000,000, the Company will select,
by random lot, Shares for purchase from shareholders who conditionally tendered
Shares for which the condition, based on a preliminary proration, has not been
satisfied. See Section 1 of the Offer to Purchase.
The Offer is being made to all holders of Shares. The Company is not aware
of any state where the making of the Offer is prohibited by administrative or
judicial action pursuant to a valid state statute. If the Company becomes aware
of any valid state statute prohibiting the making of the Offer, the Company will
make a good faith effort to comply with such statute. If, after such good faith
effort, the Company cannot comply with such statute, the Offer will not be made
to, nor will tenders be accepted from or on behalf of, holders of Shares in such
state. In those jurisdictions whose 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 Company by the Dealer Manager or one or more
registered brokers or dealers licensed under the laws of such jurisdictions.
3
<PAGE> 4
INSTRUCTION FORM
FOR TENDER OF SHARES OF
SHAW INDUSTRIES, INC.
Please tender to Shaw Industries, Inc. (the "Company"), on (our) (my)
behalf, the number of Shares indicated below, which are beneficially owned by
(us) (me) and registered in your name, upon the terms and subject to the
conditions contained in the Offer to Purchase of the Company dated February 9,
1998, and the related Letter of Transmittal, the receipt of both of which is
acknowledged.
NUMBER OF SHARES TO BE TENDERED:
------------------------- SHARES
CONDITIONAL TENDER
[ ] Check here if tender of Shares is conditional on the Company
purchasing all or a minimum number of the tendered Shares and
complete the following: Minimum number of Shares to be sold:
-------------------------------------------------------------------.
ODD LOTS
(SEE INSTRUCTION 8 OF LETTER OF TRANSMITTAL)
By checking this box the undersigned represents that the undersigned
owns, beneficially or of record, an aggregate of fewer than 100 Shares
and is tendering all of such Shares. In addition, the undersigned is
tendering Shares either (check one box):
[ ] at the Purchase Price, as the same shall be determined by the
Company in accordance with the terms of the Offer (persons
checking this box need not indicate the price per Share below); or
[ ] at the price per Share indicated below under "Price (In Dollars)
Per Share At Which Shares Are Being Tendered."
ODD LOT SHARES CANNOT BE CONDITIONALLY TENDERED
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
CHECK ONLY ONE BOX.
IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES
(Shareholders who desire to tender Shares at more than one price must complete a
separate Instruction Form for each price at which Shares are tendered.)
[ ] $11.00 [ ] $11.75 [ ] $12.50 [ ] $13.25 [ ] $14.00
[ ] $11.25 [ ] $12.00 [ ] $12.75 [ ] $13.50
[ ] $11.50 [ ] $12.25 [ ] $13.00 [ ] $13.75
THE METHOD OF DELIVERY OF THIS DOCUMENT IS AT THE OPTION AND RISK OF THE
TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ASSURE DELIVERY.
<PAGE> 5
THE BOARD OF DIRECTORS OF THE COMPANY HAS AUTHORIZED THE OFFER. HOWEVER, NEITHER
THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO SHAREHOLDERS
AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES OR AS TO THE
PURCHASE PRICE OF ANY TENDER. EACH SHAREHOLDER MUST MAKE HIS OR HER OWN DECISION
WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES AND AT WHAT PRICE OR PRICES
SHARES SHOULD BE TENDERED.
------------------------------------------------------
------------------------------------------------------
SIGNATURE(S)
------------------------------------------------------
PLEASE TYPE OR PRINT NAME(S)
------------------------------------------------------
------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
------------------------------------------------------
------------------------------------------------------
ADDRESS
------------------------------------------------------
(INCLUDING ZIP CODE)
------------------------------------------------------
AREA CODE AND TELEPHONE NUMBER
Date: , 1998
------------------------------------------
<PAGE> 1
EXHIBIT 99(a)(7)
FOR: SHAW INDUSTRIES, INC.
DALTON, GA 30722-2128
FROM: SHAW INDUSTRIES, INC.
P.O. DRAWER 2128
DALTON, GA 30722-2128
TELEPHONE (706) 275-3126
FAX (706) 275-3735
CONTACT: JULIUS SHAW
FOR IMMEDIATE RELEASE
---------------------
DALTON, GEORGIA, February 9, 1998. Shaw Industries, Inc. (NYSE) today announced
that it has commenced a "Dutch Auction" tender offer for up to 8,000,000 shares
of its common stock, representing approximately 6.1% of its currently
outstanding shares. Under the terms of the offer, the Company will invite
shareholders to tender their shares at prices specified by the tendering
shareholders at a purchase price not in excess of $14.00 nor less than $11.00
per share.
The tender offer is being commenced today, February 9, 1998, and will expire at
12:00 Midnight, New York City time, on March 9, 1998, unless extended by the
Company.
Based upon the number of shares tendered and the prices specified by the
tendering shareholders, Shaw Industries will select a single per-share purchase
price within the price range to be paid for shares which have been tendered at
or below the selected price. If the offer is over-subscribed, shares will be
purchased first from shareholders owning fewer than 100 shares and tendering
all of such shares at or below the purchase price determined by the Company and
then from all the shares tendered at or below such purchase price on a pro rata
basis. The Company reserves the right to purchase more than 8,000,000 shares.
The tender offer will not be conditioned on any minimum number of shares being
tendered.
Neither the Company nor its Board of Directors is making any recommendation to
shareholders as to whether to tender or refrain from tendering their shares or
as to the purchase price of any tender. Each shareholder must make their own
decision whether to tender shares and, if so, how many shares and at what price
or prices shares should be tendered. The Company has been advised that none of
its directors or executive officers intend to tender any shares pursuant to
the offer. Merrill Lynch will act as Dealer Manager and Corporate Investor
Communications, Inc. will act as Information Agent.
Safe Harbor Statement: Except for historical information contained herein, the
matters set forth in this press release are forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and are
subject to the safe harbor provisions of that Act. The forward-looking
statements set forth above involve a number of risks and uncertainties that
could cause actual results to differ materially from any such statement. These
risks and uncertainties, and assumptions concerning the Company's future
operations and performance, could prove inaccurate and, therefore, there can be
no assurance that the forward-looking statements will prove to be accurate.
Shaw Industries, Inc. with its corporate offices in Dalton, Georgia,
manufactures and sells carpeting and rugs throughout the United States, the
United Kingdom, Australia and Mexico, and exports to Canada and many other
countries. Through its retail stores and commercial dealers, the Company also
sells other flooring products and provides installation and other services.
<PAGE> 1
EXHIBIT 99(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 and
the related letter of transmittal which are being mailed to shareholders of
Shaw Industries, Inc. on or about February 9, 1998. While the offer is being
made to all shareholders of the company, lenders will not be accepted from or
on behalf of the shareholders in any jurisdiction in which the acceptance
thereof would not be in compliance with the laws of such jurisdiction. In
those jurisdictions whose 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 company
by Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") or one
or more registered brokers or dealers licensed under the laws of such
jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
BY
SHAW INDUSTRIES, INC.
UP TO 8,000,000 SHARES OF ITS COMMON STOCK
(INCLUDING THE ASSOCIATED SERIES A PARTICIPATING
PREFERRED STOCK PURCHASE RIGHTS)
AT A PURCHASE PRICE NOT IN EXCESS OF
$14.00 NOR LESS THAN $11.00 PER SHARE
Shaw Industries, Inc., a Georgia corporation (the "Company"), invites
its shareholders to tender shares of its Common Stock (the "Common Stock"),
including the associated rights to purchase Series A Participating Preferred
Stock (the "Rights") issued pursuant to the Rights Agreement between the
Company and NationsBank, N.A., as successor to Citizens and Southern Trust
Company (Georgia), N.A. (together, the Common Stock and the Rights are referred
to as the "Shares"), to the Company at a price not in excess of $14.00 nor less
than $11.00 per Share in cash, as specified by shareholders tendering their
Shares upon the terms and subject to the conditions set forth in the Offer to
Purchase dated February 9, 1998 and in the related Letter of Transmittal (which
together constitute the "Offer").
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, MARCH 9, 1998, UNLESS THE
OFFER IS EXTENDED.
The Offer is not conditioned on any minimum number of Shares being
tendered. The Offer, however, is subject to certain other conditions set forth
in the Offer to Purchase.
THE BOARD OF DIRECTORS OF THE COMPANY HAS AUTHORIZED THE OFFER.
HOWEVER, NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY
RECOMMENDATION TO SHAREHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM
TENDERING THEIR SHARES OR AS TO THE PURCHASE PRICE OF ANY TENDER. EACH
SHAREHOLDER MUST MAKE THEIR OWN DECISION WHETHER TO TENDER SHARES AND, IF SO,
HOW MANY SHARES AND AT WHAT PRICE OR PRICES SHARES SHOULD BE TENDERED. THE
COMPANY HAS BEEN ADVISED THAT NONE OF ITS DIRECTORS OR EXECUTIVE OFFICERS
INTENDS TO TENDER ANY SHARES PURSUANT TO THE OFFER.
As promptly as practicable following the Expiration Date (ad defined
below), the Company will purchase up to 8,000,000 Shares or such lesser number
of Shares as are properly tendered (and not withdrawn in accordance with
Section 4 of the Offer to Purchase) prior to the Expiration Date at a price
(determined in the manner set forth below) not in excess of $14.00 nor less
than $11.00 per Share net to the seller in cash. The term "Expiration Date"
means 12:00 Midnight, New York City time, on Monday, March 9, 1998, unless and
until the Company, in its sole discretion, shall have extended the time and
date during which the Offer will remain open, in which event the term
"Expiration Date" shall refer to the latest time and date at which the Offer,
as so extended by the Company, shall expire.
The Company will select the lowest purchase price (the "Purchase
Price") that will allow it to purchase up to 8,000,000 Shares (or such lesser
number of Shares as are properly tendered and not withdrawn) at a price not in
excess of $14.00 nor less than $11.00 per Share. All Shares properly tendered
at prices at or below the Purchase Price and not withdrawn will be purchased at
the Purchase Price, upon the terms and subject to the conditions of the Offer,
including the proration, odd lot provisions and conditional tender provisions.
For purposes of the Offer, the Company will be deemed to have accepted for
payment (and thereby purchased) Shares properly tendered at or below the
Purchase Price and not withdrawn (subject only to proration, odd lot provisions
and conditional tender provisions of the Offer) only when, as and if the
Company gives oral or written notice to the Depositary of its acceptance of such
Shares for payment pursuant to the Offer. Payment for Shares tendered and
accepted for payment pursuant to the Offer will be made only after timely
receipt by the Depositary of certificates for such shares (or a timely
confirmation of a book-entry transfer of such Shares into the Depositary's
account at a Book-Entry Transfer Facility (as defined in the Offer to
Purchase)), a properly completed and duly executed Letter of Transmittal and
any other documents required by the Letter of Transmittal.
The Company is making the Offer because the Board of Directors
believes that, given the current market price of the Shares and the Company's
financial condition and outlook, the purchase of Shares at this time is a
prudent use of its financial resources, taking into account the increased
interest expense associated with the borrowing required in connection with the
Offer. In the view of the Board of Directors, the Offer represents an increase
in and an acceleration of what would have been a continuing share repurchase
program intended to enhance shareholder value both in the near and long term.
Concurrently with the announcement of the Offer, the Company announced
that the Board of Directors intends to discontinue the quarterly cash dividend
on the Common Stock effective following the payment of the first quarter
dividend scheduled to be paid on Friday, February 27, 1998 to shareholders of
record on Monday, February 16, 1998. Shareholders of record will be entitled
to the quarterly $0.075 per Share dividend, regardless of whether they tender
Shares either before or after the record date for the dividend. The Company
believes that discontinuing the dividend improves the Company's financial
flexibility and that the Offer is potentially a more tax efficient manner to
distribute profits to its shareholders. The Company intends to utilize the
increase in cash flow resulting form discontinuing the dividend for debt
service and general corporate purposes.
Upon the terms and subject to the conditions of the Offer, if more
than 8,000,000 Shares have been properly tendered at prices at or below the
Purchase Price and not withdrawn prior to the Expiration Date, the Company will
accept for purchase properly tendered Shares in the following order of
priority: (a) first, all Shares properly tendered and not withdrawn prior to
the Expiration Date by any Odd Lot Holder (as defined in the Offer to Purchase)
who: (1) tenders all Shares beneficially owned by such Odd Lot Holder at a
price at or below the Purchase Price (tenders of less than all Shares will not
qualify for this preference); and (2) completes the item captioned "Odd Lots"
on the Letter of Transmittal and, if applicable, on the Notice of Guaranteed
Delivery; and (b) second, after purchase of all of the foregoing Shares, all
Shares conditionally tendered in accordance with Section 6 of the Offer to
Purchase, for which the condition was satisfied without regard to the procedure
set forth in clause (c) below, and all other Shares tendered properly and
unconditionally at prices at or below the Purchase Price and not withdrawn
prior to the Expiration Date, on a pro rata basis (with adjustments to avoid
purchases of fractional Shares) as described below; and (c) third, if necessary
to permit the Company to purchase up to 8,000,000 Shares, Shares conditionally
tendered, for which the condition was not initially satisfied, at or below the
Purchase Price and not withdrawn prior to the Expiration Date, selected by
random lot in accordance with Section 6 of the Offer to Purchase. The Company
also reserves the right, but will not be obligated, to purchase all Shares duly
tendered by any shareholder who tendered all Shares owned, beneficially or of
record, at or below the Purchase Price and who, as a result of proration, would
then own, beneficially or of record, an aggregate of fewer than 100 Shares. If
the Company exercises this right, it will increase the number of Shares that it
is offering to purchase by the number of Shares purchased through the exercise
of the right.
The Company expressly reserves the right, in its sole discretion, at
any time and from time to time to extend the period of time during which the
Offer is open and thereby delay acceptance for payment of, and payment for, any
Shares by giving oral or written notice of such extension to Wachovia Bank,
N.A. (the "Depositary") and making a public announcement thereof.
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 Company pursuant to the Offer, may also be withdrawn at any time after
12:00 Midnight, New York City time, on Monday, April 6, 1998. See Section 4 of
the Offer to Purchase.
THE OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY TENDERS ARE MADE. The
information required to be disclosed by Rule 13e-4(d)(1) under 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 the related Letter
of Transmittal are being mailed to record holders of Shares and are being
furnished to brokers, banks and similar persons whose names, or the names of
whose nominees, appear on the Company's stockholder list or, if applicable, who
are listed as participants in a clearing agency's security position listing for
subsequent transmittal to beneficial owners of Shares.
Additional copies of the Offer to Purchase and the Letter of
Transmittal may be obtained from the Information Agent or the Dealer Manager
and will be furnished promptly at the Company's expense.
The Information Agent for the Offer is:
CORPORATE INVESTOR COMMUNICATIONS, INC.
111 Commerce Road
Carlstadt, New Jersey 07072
CALL TOLL FREE: (888) 203-8862
BANKS AND BROKERAGE FIRMS
PLEASE CALL: (201) 896-1900
The Dealer Manager for the Offer is:
MERRILL LYNCH & CO.
World Financial Center
North Tower
New York, New York 10281
(212) 449-8971 (call collect)
February 9, 1998
<PAGE> 1
EXHIBIT 99(A)(9)
SHAW INDUSTRIES, INC. LOGO
FEBRUARY 9, 1998
To Our Shareholders:
Shaw Industries, Inc. is offering to purchase up to 8,000,000 shares of its
Common Stock (the "Common Stock") including the associated rights to purchase
Series A Participating Preferred Stock (the "Rights") issued under the Company's
Shareholder Rights Plan (together, the Common Stock and the Rights are referred
to as the "Shares"), or approximately 6.1% of the currently outstanding Shares,
from existing shareholders. The price will not be in excess of $14.00 nor less
than $11.00 per Share. Shaw is conducting the tender offer through a procedure
commonly referred to as a "Dutch Auction." This allows you to select the price
within the specified price range at which you are interested in selling your
Shares to Shaw. At the conclusion of the offer and receipt of tenders, Shaw will
determine the lowest price within the price range that will enable it to
purchase up to 8,000,000 Shares. The same purchase price will be paid for all
Shares purchased in the offer.
On January 29, 1998, the last trading day prior to the announcement of the
terms of the offer, the closing price per Share on the New York Stock Exchange
was $11 15/16. Any shareholder whose Shares are purchased in the offer will
receive the total purchase price in cash and will not incur the usual
transaction costs associated with open market sales. Any shareholders owning an
aggregate of less than 100 Shares whose Shares are purchased pursuant to the
offer will avoid the applicable odd lot discounts payable on sales of odd lots
on the securities exchanges.
The offer is explained in detail in the enclosed Offer to Purchase and
Letter of Transmittal. I encourage you to read these materials carefully before
making any decision with respect to the offer. If you desire to tender your
Shares, the instructions on how to tender Shares are also explained in detail in
the accompanying materials.
Neither Shaw nor its Board of Directors makes any recommendation to any
shareholder as to whether to tender or refrain from tendering their Shares or as
to the purchase price of any tender. Each shareholder must make such
shareholder's own decision whether to tender Shares and, if so, how many Shares
and at what price or prices Shares should be tendered. The Company has been
advised that none of its directors or executive officers intends to tender any
Shares pursuant to the offer.
Sincerely,
Robert E. Shaw
Robert E. Shaw
Chairman of the Board and
Chief Executive Officer
<PAGE> 1
EXHIBIT 99(A)(10)
SHAW INDUSTRIES, INC.
OFFER TO PURCHASE FOR CASH UP TO 8,000,000 SHARES OF ITS COMMON STOCK
(INCLUDING THE ASSOCIATED SERIES A PARTICIPATING PREFERRED STOCK PURCHASE
RIGHTS)
AT A PURCHASE PRICE NOT IN EXCESS OF $14.00
NOR LESS THAN $11.00 PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, MARCH 9, 1998, UNLESS THE OFFER IS EXTENDED.
To the Participants in the Shaw Industries, Inc.
Retirement Savings Plan (the "Retirement Savings Plan"):
Enclosed for your consideration are the Offer to Purchase, dated February
9, 1998, and the related Letter of Transmittal (which together constitute the
"Offer") in connection with the Offer by Shaw Industries, Inc., a Georgia
corporation (the "Company"), to purchase up to 8,000,000 shares of its Common
Stock (the "Common Stock"), including the associated rights to purchase Series A
Participating Preferred Stock (the "Rights") issued pursuant to the Rights
Agreement between the Company and NationsBank, N.A., as successor to Citizens
and Southern Trust Company (Georgia), N.A. (together, the Common Stock and the
Rights are referred to as the "Shares"), at a price not in excess of $14.00 nor
less than $11.00 per Share, as specified by tendering shareholders, upon the
terms and conditions set forth in the Offer.
Price Per Share. The Company will determine a single price per Share, not
in excess of $14.00 nor less than $11.00 per Share, net to the Seller in cash
(the "Purchase Price"), that it will pay for Shares properly tendered pursuant
to the Offer, taking into account the number of Shares so tendered and the
prices specified by tendering shareholders. The Company will purchase up to
8,000,000 Shares (or such lesser number of Shares as are properly tendered at or
below the Purchase Price). All Shares properly tendered at prices at or below
the Purchase Price and not withdrawn will be purchased at the Purchase Price,
upon the terms and subject to the conditions of the Offer, including the
proration, odd lot provisions and conditional tender provisions. The Company
will return all other Shares, including Shares tendered at prices greater than
the Purchase Price and Shares not purchased because of proration or conditional
tenders. See Section 1 of the Offer to Purchase.
Priority of Purchase of Shares. As described in Section 1 of the Offer to
Purchase, if more than 8,000,000 Shares have been validly tendered at prices at
or below the Purchase Price and not withdrawn on or prior to the Expiration Date
(as defined in the Offer to Purchase), the Company will purchase properly
tendered Shares in the following order of priority:
(a) First, all Shares properly tendered and not withdrawn prior to the
Expiration Date by any Odd Lot Holder who:
(1) tenders all Shares beneficially owned by such Odd Lot Holder at
a price at or below the Purchase Price (tenders of less than all Shares
owned by such shareholder will not qualify for this preference); and
(2) completes the box captioned "Odd Lots" on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed Delivery;
and
(b) Second, after purchase of all of the foregoing Shares, all Shares
conditionally tendered in accordance with Section 6, for which the
condition was satisfied without regard to the procedure set forth in clause
(c) below, and all other Shares tendered properly and unconditionally, in
each case, at prices at or below the Purchase Price and not withdrawn prior
to the Expiration Date, on a pro rata basis (with adjustments to avoid
purchases of fractional Shares) as described below; and
(c) Third, if necessary to permit the Company to purchase up to
8,000,000 Shares, Shares conditionally tendered, for which the condition
was not initially satisfied, at or below the Purchase Price and not
withdrawn prior to the Expiration Date, selected by random lot in
accordance with Section 6.
<PAGE> 2
Shares Held in the Retirement Savings Plan. The Trustee of the Retirement
Savings Plan, State Street Bank and Trust Company, is the owner of record of the
Shares held for your account in the Retirement Savings Plan. As such, it is the
only one who can tender your Shares, and then only pursuant to your
instructions. We are sending you the Letter of Transmittal for your information;
however, you cannot use it to tender Shares the Trustee holds in your account
under the Retirement Savings Plan. As discussed below, the Letter of Transmittal
may be used for Shares you hold separately from those Shares in your account
under the Retirement Savings Plan.
WE CALL YOUR ATTENTION TO THE FOLLOWING:
1. You may tender Shares at prices (in multiples of $0.25) not in
excess of $14.00 nor less than $11.00 per Share as indicated in the
attached Instruction Form.
2. You may tender your Shares conditioned upon the Company's
purchasing all or a minimum number of your Shares.
3. The Offer is not conditioned on any minimum number of Shares being
tendered pursuant to the Offer. The Offer is, however, subject to certain
conditions. See Section 5 of the Offer to Purchase.
4. The Offer, proration period and withdrawal rights will expire at
Midnight, New York City time, on Monday, March 9, 1998, unless the Company
extends the Offer. Participants in the Retirement Savings Plan must forward
the attached Instruction Form to an independent fiduciary to be appointed
by the Company (the "Independent Fiduciary"). This Instruction Form must be
forwarded to the Independent Fiduciary at the address listed on the
Instruction Form by Wednesday, March 4, 1998 in order to provide ample time
to permit the Independent Fiduciary to instruct the Trustee to submit a
tender on your behalf.
5. The Offer is for up to 8,000,000 Shares, constituting approximately
6.1% of the Shares outstanding as of January 30, 1998.
6. Tendering shareholders will not be obligated to pay any brokerage
commissions, solicitation fees or, subject to Instruction 7 of the Letter
of Transmittal, stock transfer taxes on the Company's purchase of Shares
pursuant to the Offer.
7. If you beneficially held, on the date of tender, an aggregate of
fewer than 100 Shares and you instruct the Independent Fiduciary to
instruct the Trustee to tender on your behalf all such Shares at or below
the Purchase Price before the expiration of the Offer and complete the box
captioned "Odd Lots" in the attached Instruction Form, the Company will
accept all such Shares for purchase before proration, if any, of the
purchase of other Shares validly tendered at or below the Purchase Price.
8. If you are the beneficial owner of Shares that you do not want to
be subject to proration, if any, if purchased pursuant to the Offer, you
may direct the Independent Fiduciary to instruct the Trustee to tender such
Shares on your behalf subject to the condition that at least a designated
minimum or none of the Shares be purchased, by completing the box captioned
"Conditional Tenders." It is the beneficial owner's responsibility to
determine the minimum number of Shares to be tendered.
9. If you wish to tender portions of your Shares at different prices,
you must complete a separate Instruction Form for each price at which you
wish to tender each such portion of your Shares.
Tendering Your Shares in the Retirement Savings Plan. If you wish to have
the Trustee tender any or all of your Shares in the Retirement Savings Plan,
please so instruct the Independent Fiduciary accordingly by completing,
executing and returning to the Independent Fiduciary the attached Instruction
Form. The Independent Fiduciary will then instruct the Trustee to tender your
shares in accordance with your instructions. An envelope addressed to the
Independent Fiduciary to return your Instruction Form is enclosed. Do not return
the Instruction Form to the Company. The Instruction Form must be returned to
the Independent Fiduciary who has been appointed as an independent fiduciary to
keep your instructions confidential. If you authorize the Independent Fiduciary
to instruct the Trustee to tender your Shares in the Retirement Savings Plan,
the Trustee will tender all such Shares unless you specify otherwise on the
attached
2
<PAGE> 3
Instruction Form. The Independent Fiduciary will aggregate all such tenders and
accordingly instruct the Trustee to execute the Letters of Transmittal on behalf
of all participants.
DELIVERY OF A LETTER OF TRANSMITTAL BY A RETIREMENT SAVINGS PLAN
PARTICIPANT OF RETIREMENT SAVINGS PLAN SHARES DOES NOT CONSTITUTE PROPER TENDER
OF RETIREMENT SAVINGS PLAN SHARES. PROPER TENDER OF RETIREMENT SAVINGS PLAN
SHARES CAN ONLY BE MADE BY THE TRUSTEE, WHO IS THE RECORD OWNER OF SUCH SHARES.
YOUR INSTRUCTION FORM SHOULD BE FORWARDED TO THE INDEPENDENT FIDUCIARY BY
WEDNESDAY, MARCH 4, 1998, IN ORDER TO PROVIDE AMPLE TIME TO PERMIT THE
INDEPENDENT FIDUCIARY TO INSTRUCT THE TRUSTEE TO SUBMIT A TENDER ON YOUR BEHALF
ON OR BEFORE THE EXPIRATION DATE OF THE OFFER. THE OFFER, PRORATION PERIOD AND
WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, MARCH
9, 1998, UNLESS THE OFFER IS EXTENDED.
Keeping Your Shares in the Retirement Savings Plan. If you do not wish to
tender your Shares held in the Retirement Savings Plan, you do not need to take
any action.
Tendering Shares NOT Held in the Retirement Savings Plan. If you desire to
tender Shares, other than Retirement Savings Plan Shares, you must properly
complete and duly execute a Letter of Transmittal for such Shares and deliver
such Letter of Transmittal to the Depositary. THE TRUSTEE CANNOT INCLUDE
NON-RETIREMENT SAVINGS PLAN SHARES IN ITS LETTERS OF TRANSMITTAL.
THE COMPANY IS NOT MAKING THE OFFER TO, NOR WILL ACCEPT TENDERS FROM OR ON
BEHALF OF, OWNERS OF SHARES IN ANY JURISDICTION IN WHICH THE OFFER OR ITS
ACCEPTANCE WOULD VIOLATE THE SECURITIES, BLUE SKY OR OTHER LAWS OF SUCH
JURISDICTION. IN ANY JURISDICTION THE SECURITIES OR BLUE SKY LAWS OF WHICH
REQUIRE THE OFFER TO BE MADE BY A LICENSED BROKER OR DEALER, THE OFFER IS BEING
MADE ON THE COMPANY'S BEHALF BY A REGISTERED BROKER OR DEALER LICENSED UNDER THE
LAWS OF SUCH JURISDICTION.
SHAW INDUSTRIES, INC.
Plan Administrator, Shaw Industries,
Inc. Retirement Savings Plan
3
<PAGE> 4
INSTRUCTION FORM
SHAW INDUSTRIES, INC.
RETIREMENT SAVINGS PLAN
WITH RESPECT TO THE OFFER TO PURCHASE
FOR CASH UP TO 8,000,000 SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED SERIES A PARTICIPATING
PREFERRED STOCK PURCHASE RIGHTS)
OF SHAW INDUSTRIES, INC. AT A PURCHASE PRICE NOT IN
EXCESS OF $14.00 NOR LESS THAN $11.00 PER SHARE
BEFORE COMPLETING THIS FORM, PLEASE READ CAREFULLY THE ACCOMPANYING OFFER
TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL AND ALL OTHER ENCLOSED
MATERIALS.
<TABLE>
<S> <C> <C>
To: INDEPENDENT FIDUCIARY
RETIREMENT SAVINGS PLAN
CORPORATE REORGANIZATIONS
P.O. BOX 9573
BOSTON, MA 02205-9573
From: -------------------------------------, Social Security
Retirement Savings Plan Number:
Participant ------------
Participant's
Address:
-------------------------------------
-------------------------------------
-------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
The undersigned acknowledges receipt of your letter, and the enclosed Offer
to Purchase, dated February 9, 1998, and the related Letter of Transmittal
(which together constitute the "Offer"), in connection with the offer by Shaw
Industries, Inc., a Georgia corporation (the "Company"), to purchase for cash up
to 8,000,000 shares of its Common Stock (the "Common Stock"), including the
associated rights to purchase Series A Participating Preferred Stock (the
"Rights") issued pursuant to the Rights Agreement between the Company and
NationsBank, N.A. as successor to Citizens and Southern Trust Company (Georgia),
N.A. (together, the Common Stock and the Rights are referred to as the
"Shares"), at a price not in excess of $14.00 nor less than $11.00 per Share, on
terms and subject to conditions of the Offer.
The Company will determine a single price per Share (not in excess of
$14.00 nor less than $11.00 per Share) that it will pay for the Shares properly
tendered pursuant to the Offer (the "Purchase Price"), taking into account the
number of Shares so tendered and the prices specified by tendering shareholders.
The Company will purchase up to 8,000,000 Shares (or such lesser number of
Shares as are properly tendered at or below the Purchase Price) pursuant to the
Offer.
I hereby instruct the Independent Fiduciary appointed by the Company to
instruct State Street Bank and Trust Company, as Trustee (the "Trustee") of the
Shaw Industries, Inc. Retirement Savings Plan (the "Retirement Savings Plan"),
to tender to the Company, in accordance with the terms and subject to the
conditions set forth in the Offer to Purchase, dated February 9, 1998, and the
related Letter of Transmittal, a copy of which I have received and read, the
indicated number of Shares or, if no number is indicated, all Shares for the
account of the undersigned, of the Company's Common Stock allocated to my
Retirement Savings Plan account at a price per Share indicated below, and
subject to the condition, if any, indicated in the box marked "Conditional
Tender," below upon the terms of the Offer. I understand that my instructions
will be kept confidential from the Company. The Company will return Shares
tendered at prices greater than the Purchase Price, any Shares not purchased
because of proration and any Shares not purchased because they were
conditionally tendered.
<PAGE> 5
<TABLE>
<S> <C> <C>
- -------------------------------------------------
SIGNATURE BOX
Signature:
---------------------------------------
Dated:
---------------------------------------
Name and Address
(Please Print):
---------------------------------------
---------------------------------------
---------------------------------------
Area Code and
Telephone Number:
---------------------------------------
Social Security Number:
---------------------------------------
- -------------------------------------------------
</TABLE>
- ------------------------------------------------------
AGGREGATE NUMBER OF SHARES
TO BE TENDERED:(1)
---------------------------------
PRICE (IN DOLLARS) PER SHARE AT
WHICH SHARES ARE BEING TENDERED
<TABLE>
<S> <C> <C> <C> <C> <C>
CHECK ONLY ONE BOX
[ ] $11.00 [ ] $12.75
[ ] $11.25 [ ] $13.00
[ ] $11.50 [ ] $13.25
[ ] $11.75 [ ] $13.50
[ ] $12.00 [ ] $13.75
[ ] $12.25 [ ] $14.00
[ ] $12.50
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
<TABLE>
<S> <C> <C>
[ ] CONDITIONAL TENDER
UNLESS THIS BOX HAS BEEN COMPLETED AND
A MINIMUM SPECIFIED, THE TENDER WILL BE
DEEMED UNCONDITIONAL (SEE SECTIONS 1
AND 2 OF THE OFFER TO PURCHASE)
Minimum number of Shares that must be
purchased if any are purchased:
Shares
------------------
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
<TABLE>
<S> <C> <C>
[ ] ODD LOTS
By checking this box, the undersigned
represents that the undersigned, on the
date of tender, beneficially owns an
aggregate of fewer than 100 Shares and
is instructing the holder to tender all
such Shares.
</TABLE>
- ------------------------------------------------------
- ---------------
(1) Unless otherwise indicated, it will be assumed that all of the Shares held
for the account of the undersigned are to be tendered.
<PAGE> 1
EXHIBIT 99(A)(11)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE IRS FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER. -- Social security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e. 00-0000000. The table below will help determine the number
to give the payer.
<TABLE>
<CAPTION>
- -----------------------------------------------------------
GIVE THE TAXPAYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- -----------------------------------------------------------
<C> <S> <C>
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, any
one of the
individuals(1)
3. Husband and wife (joint The actual owner of
account) the account or, if
joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint The adult or, if the
account) minor is the only
contributor, the
minor(1)
6. Account in the name of The ward, minor, or
guardian or committee for a incompetent person(3)
designated ward, minor, or
incompetent person
7. a. The usual revocable savings The grantor-trustee(1)
trust account (grantor is
also trustee)
b. So-called trust account The actual owner(1)
that is not a legal or valid
trust under State law
8. Sole proprietorship account The owner(4)
- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------
GIVE THE TAXPAYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- -----------------------------------------------------------
<C> <S> <C>
9. A valid trust, estate or The legal entity (Do
pension trust not furnish the
identifying number of
the personal
representative or
trustee unless the
legal entity itself is
not designated in the
account title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held in The partnership
the name of the business
13. Association, club, or other The organization
tax-exempt organization
14. A broker or registered nominee The broker or nominee
15. Account with the Department of The public entity
Agriculture in the name of a
public entity such as a State
or local government, school
district, or prison) that
receives agricultural program
payments
- -----------------------------------------------------------
</TABLE>
(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.
(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.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE IRS 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, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- An organization exempt from tax under section 501(a), or an individual
retirement arrangement (IRA) or custodial account under section 403(b)(7).
- The United States or any of its agencies or instrumentalities.
- A state, the District of Columbia, a possession of the United States, or any
political subdivisions or instrumentalities.
- A foreign government, or any of its political subdivisions, agencies or
instrumentalities.
- An international organization or any of its agencies or instrumentalities.
- A foreign central bank of issue.
- A dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- A futures commission merchant registered with the Commodity Futures Trading
Commission.
- A real estate investment trust.
- An entity registered at all times during the tax year under the Investment
Company Act of 1940.
- A common trust fund operated by a bank under section 584(a).
- A financial institution.
- A middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List.
- A trust exempt from tax under section 664 or described in section 4947.
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 U.S. 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 this interest is $600 or more and is paid
in the course of the payer's trade or business and 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.
Exempt payees described above should file 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, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
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),
6042, 6045, 6049, 6050A, and 6050N.
PRIVACY ACT NOTICE -- Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. The IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish a
taxpayer identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTIES 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 INFORMATION 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. -- Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE.
<PAGE> 1
EXHIBIT 99(b)(1)
February 4, 1998
Mr. Kenneth G. Jackson
Vice President and Chief Financial Officer
Shaw Industries, Inc.
616 East Walnut Avenue
Dalton, Georgia 30720
Re: $1,000,000,000 Revolving Credit Facility
Dear Ken:
NationsBank, N.A. ("NationsBank") is pleased to offer to be the administrative
agent (in such capacity, the "Administrative Agent") and SunTrust Bank, Atlanta
("SunTrust") is pleased to offer to be the documentation agent (in such
capacity, the "Documentation Agent") for a $1,000,000,000 Revolving Credit
Facility (the "Credit Facility") to Shaw Industries, Inc. (the "Borrower"), and
together offer their commitments to equally and jointly underwrite the entire
amount of the Credit Facility, upon and subject to the terms and conditions of
this letter and the Summary of Terms and Conditions attached hereto as Annex I
(the "Term Sheet"). All capitalized terms used and not otherwise defined herein
shall have the meanings set forth in the Term Sheet. NationsBanc Montgomery
Securities, LLC ("NationsBanc Montgomery Securities") is pleased to advise you
of its commitment, as Arranger and Co-Syndication Agent, and SunTrust Equitable
Securities Corporation ("SunTrust Equitable Securities") is pleased to advise
you of its commitment, as Co-Arranger and Co-Syndication Agent for the Credit
Facility, to form a syndicate of financial institutions (the "Lenders")
reasonably acceptable to you for the Credit Facility.
The commitments of NationsBank, NationsBanc Montgomery Securities, SunTrust, and
SunTrust Equitable Securities hereunder are subject to the satisfaction of each
of the following conditions precedent in a manner acceptable to NationsBank,
NationsBanc Montgomery Securities, SunTrust, and SunTrust Equitable Securities
in their sole discretion:
(a) each of the terms and conditions set forth herein;
(b) each of the terms and conditions set forth in the Term Sheet;
(c) execution of the fee letter among the Borrower, NationsBank,
NationsBanc Montgomery Securities, SunTrust, and SunTrust Equitable
Securities prior to or concurrently with the acceptance of this letter by
the Borrower;
(d) execution of the administrative agency fee letter among the Borrower
and NationsBank prior to or concurrently with the acceptance of this letter
by the Borrower;
(e) the negotiation, execution and delivery of definitive documentation
with respect to the Credit Facility consistent with the Term Sheet and
otherwise satisfactory to NationsBank, NationsBanc Montgomery Securities,
SunTrust, and SunTrust Equitable Securities; and
<PAGE> 2
(f) there not having occurred and being continuing since the date hereof a
material adverse change in the market for syndicated bank credit Facility
or a material disruption of, or a material adverse change in, financial,
banking or capital market conditions, in each case as determined by
NationsBank, NationsBanc Montgomery Securities, SunTrust and SunTrust
Equitable Securities in their sole discretion.
NationsBank will act as Administrative Agent for the Credit Facility, SunTrust
will act as Documentation Agent for the Credit Facility, NationsBanc Montgomery
Securities will act as Arranger and Co-Syndication Agent for the Credit
Facility, and SunTrust Equitable Securities will act as Co-Arranger and
Co-Syndication Agent for the Credit Facility. No additional agents will be
appointed without the prior approval of NationsBank, NationsBanc Montgomery
Securities, SunTrust, and SunTrust Equitable Securities.
Furthermore, the commitments of NationsBank, NationsBanc Montgomery Securities,
SunTrust, and SunTrust Equitable Securities hereunder are based upon the
financial and other information regarding the Borrower and its subsidiaries
previously provided to NationsBank, NationsBanc Montgomery Securities,
SunTrust, and SunTrust Equitable Securities and are subject to the condition,
among others, that there shall not have occurred after the date of such
information, in the opinion of NationsBank, NationsBanc Montgomery Securities,
SunTrust, and SunTrust Equitable Securities, any material adverse change in the
business, assets, liabilities (actual or contingent), operations, condition
(financial or otherwise) or prospects of the Borrower and its subsidiaries
taken as a whole. If the continuing review by NationsBank, NationsBanc
Montgomery Securities, SunTrust, and SunTrust Equitable Securities of the
Borrower discloses information relating to conditions or events not previously
disclosed to NationsBank, NationsBanc Montgomery Securities, SunTrust, and
SunTrust Equitable Securities or relating to new information or additional
developments concerning conditions or events previously disclosed to
NationsBank, NationsBanc Montgomery Securities, SunTrust, and SunTrust
Equitable Securities which NationsBank, NationsBanc Montgomery Securities,
SunTrust, and SunTrust Equitable Securities in their sole discretion believe
may have a material adverse effect on the condition (financial or otherwise),
assets, properties, business, operations or prospects of the Borrower and its
subsidiaries taken as a whole, NationsBank, NationsBanc Montgomery Securities,
SunTrust, and SunTrust Equitable Securities may, in their sole discretion,
suggest alternative financing amounts or structures that ensure adequate
protection for the Lenders or decline to participate in the Credit Facility.
You agree to actively assist NationsBank, NationsBanc Montgomery Securities,
SunTrust, and SunTrust Equitable Securities in achieving a syndication of the
Credit Facility that is satisfactory to NationsBank, NationsBanc Montgomery
Securities, SunTrust, SunTrust Equitable Securities and you. In the event that
such syndication cannot be achieved in a manner satisfactory to NationsBank,
NationsBanc Montgomery Securities, SunTrust, and SunTrust Equitable Securities
under the structure outlined in the Term Sheet you agree to cooperate with
NationsBank, NationsBanc Montgomery Securities, SunTrust, and SunTrust
Equitable Securities in developing an alternative structure that will permit a
satisfactory syndication of the Credit Facility. Syndication of the Credit
Facility will be accomplished by a variety of means, including direct contact
during the syndication between senior management and advisors of the Borrower
and the proposed Lenders. To assist NationsBank, NationsBanc Montgomery
Securities, SunTrust, and SunTrust Equitable Securities in the syndication
efforts, you hereby agree to (a) provide and cause your advisors to provide
NationsBank, NationsBanc Montgomery Securities, SunTrust, and SunTrust
Equitable Securities and the other Lenders upon request with all information
reasonably deemed necessary by NationsBank, NationsBanc Montgomery Securities,
SunTrust, and SunTrust Equitable Securities to complete syndication, (b) assist
NationsBank, NationsBanc Montgomery Securities, SunTrust, and SunTrust
Equitable Securities upon their reasonable
<PAGE> 3
request in the preparation of an Offering Memorandum to be used in connection
with the syndication of the Credit Facility and (c) otherwise assist
NationsBank, NationsBanc Montgomery Securities, SunTrust, and SunTrust
Equitable Securities in their syndication efforts, including by making
available officers and advisors of the Borrower and its subsidiaries from time
to time to attend and make presentations regarding the business and prospects
of the Borrower and its subsidiaries, as appropriate, at a meeting or meetings
of prospective Lenders. You further agree to refrain from engaging in any
additional financings for the Borrower and its subsidiaries during such
syndication process unless otherwise agreed to by NationsBank, NationsBanc
Montgomery Securities, SunTrust, and SunTrust Equitable Securities.
It is understood and agreed that NationsBank, NationsBanc Montgomery
Securities, SunTrust, and SunTrust Equitable Securities, after consultation
with you, will manage and control all aspects of the syndication, including
decisions as to the selection of proposed Lenders and any titles offered to
proposed Lenders, when commitments will be accepted and the final allocations
of the commitments among the Lenders. It is understood that no Lender
participating in the Credit Facility will receive compensation from you outside
the terms contained herein and in the Term Sheet in order to obtain its
commitment. It is also understood and agreed that the amount and distribution
of the fees among the Lenders will be at the sole discretion of NationsBank,
NationsBanc Montgomery Securities, SunTrust, and SunTrust Equitable Securities
and that any syndication prior to execution of definitive documentation will
reduce the commitments of NationsBank and SunTrust.
You hereby represent, warrant and convenant that (i) all information, other
than the Projections (as defined below), which has been or is hereafter made
available to NationsBank, NationsBanc Montgomery Securities, SunTrust, and
SunTrust Equitable Securities or the Lenders by you or any of your
representatives in connection with the transacations contemplated hereby
("Information") is and will be complete and correct in all material respects
and does not and will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements contained
therein not misleading and (ii) all financial projections concerning the
Borrower that have been or are hereafter made available to NationsBank,
NationsBanc Montgomery Securities, SunTrust, and SunTrust Equitable Securities
or the Lenders by you or any of your representatives (the "Projections") have
been or will be prepared in good faith based upon reasonable assumptions. You
agree to furnish us with such Information and Projections as we may reasonably
request and to supplement the Information and the Projections from time to time
until the closing date for the Credit Facility so that the representation and
warranty in the preceding sentence is correct on such date. In arranging and
syndicating the Credit Facility, NationsBank, NationsBanc Montgomery
Securities, SunTrust, and SunTrust Equitable Securities will be using and
relying on the Information and the Projections without independent verification
thereof.
By acceptance of this offer, the Borrower agrees to pay all reasonable
out-of-pocket fees and expenses (including reasonable attorneys' fees and
expenses and expenses of due diligence) incurred before or after the date
hereof by the Administrative Agent, Documentation Agent, NationsBanc Montgomery
Securities or SunTrust Equitable Securities in connection with the Credit
Facility and the syndication thereof, regardless of whether or not the Credit
Facility is closed.
In the event that NationsBank, NationsBanc Montgomery Securities, SunTrust, or
SunTrust Equitable Securities becomes involved in any capacity in any action,
proceeding or investigation in connection with any matter contemplated by this
letter, the Borrower will reimburse NationsBank, NationsBanc Montgomery
Securities, SunTrust, and SunTrust Equitable Securities for their legal and
other expenses (including the cost of any
<PAGE> 4
investigation and preparation) as they are incurred by NationsBank, NationsBanc
Montgomery Securities, SunTrust, or SunTrust Equitable Securities. The Borrower
also agrees to indemnify and hold harmless NationsBank, NationsBanc Montgomery
Securities, SunTrust, and SunTrust Equitable Securities and their affiliates
and their respective directors, officers, employees and agents (the
"Indemnified Parties") from and against any and all losses, claims, damages and
liabilities, joint or several, related to or arising out of any matters
contemplated by this letter, unless and only to the extent that it shall be
finally judicially determined that such losses, claims, damages or liabilities
resulting primarily from the gross negligence or willful misconduct of
NationsBank, NationsBanc Montgomery Securities, SunTrust, or SunTrust Equitable
Securities.
The provisions of the immediately preceding two paragraphs shall remain in full
force and effect regardless of whether definitive financing documentation for
the Credit Facility shall be executed and delivered and notwithstanding the
termination of this letter or the commitments of NationsBank, NationsBanc
Montgomery Securities, SunTrust, and SunTrust Equitable Securities hereunder.
Neither this offer nor the undertaking and commitment contained herein may be
disclosed to or relied upon by any other person or entity other than your
accountants, attorneys and other advisors, without the prior written consent of
NationsBank, NationsBanc Montgomery Securities, SunTrust, and SunTrust
Equitable Securities, except that following your acceptance hereof you may
make public disclosure hereof as required by law.
As described herein and in the Term Sheet, NationsBanc Montgomery Securities
will act as Arranger and Co-Syndication Agent for the Credit Facility and
SunTrust Equitable Securities will act as Co-Arranger and Co-Syndication Agent
for the Credit Facility. NationsBank and SunTrust reserve the right to
allocate, in whole or in part, to NationsBanc Montgomery Securities or SunTrust
Equitable Securities respectively certain fees payable to NationsBank and
SunTrust in such manner as NationsBank, NationsBanc Montgomery Securities,
SunTrust, and SunTrust Equitable Securities agree in their sole discretion. You
acknowledge and agree that NationsBank and SunTrust may share with any of their
affiliates (including specifically NationsBanc Montgomery Securities and
SunTrust Equitable Securities) any information relating to the Credit Facility,
the Borrower and its subsidiaries and affiliates.
This letter shall be governed by the laws of the State of Georgia without
regard to its principles of conflicts of laws. This letter may be modified or
amended only in writing. This letter is not assignable by the Borrower without
the prior written consent of NationsBank, NationsBanc Montgomery Securities,
SunTrust, and SunTrust Equitable Securities. This letter supersedes and
replaces any and all proposals or commitment letters previously delivered by
NationsBank, NationsBanc Montgomery Securities, SunTrust, and SunTrust
Equitable Securities to the Borrower relating to the Credit Facility.
This offer will expire at 12:00 noon time on February 6, 1998 unless the
Borrower executes this letter and returns it to the Administrative Agent prior
to that time (which may be by facsimile transmission), whereupon this letter
shall become a binding agreement. Thereafter, this undertaking and commitment
will expire at 12:00 noon time on March 31, 1998 unless definitive
documentation for the Credit Facility is executed and delivered prior to that
time.
Very truly yours,
<PAGE> 5
NATIONSBANK, N.A.,
Individually and as Administrative Agent
By:
-------------------------------
Title:
NATIONSBANC MONTGOMERY SECURITIES LLC
By:
-------------------------------
Title:
SUNTRUST BANK, ATLANTA,
Individually and as Documentation Agent
By:
-------------------------------
Title:
By:
-------------------------------
Title:
SUNTRUST EQUITABLE SECURITIES CORPORATION
By:
-------------------------------
Title:
SHAW INDUSTRIES, INC.
Accepted and Agreed To:
By:
-------------------------------
Title:
SUMMARY TERMS AND CONDITIONS
BORROWER: Shaw Industries, Inc. ("Shaw" or the "Borrower")
GUARANTOR: All material subsidiaries of the Borrower (the "Guarantors")
ARRANGER: NationsBanc Montgomery Securities LLC
CO-ARRANGER: SunTrust Equitable Securities Corporation
ADMINISTRATIVE
AGENT: NationsBank, N.A., ("NationsBank" or the "Administrative
Agent").
CO-SYNDICATION
AGENTS: NationsBanc Montgomery Securities LLC and SunTrust Equitable
Securities Corporation
DOCUMENTATION
AGENT: SunTrust Bank ("SunTrust" or the "Documentation Agent"),
and together with the Administrative Agent, the "Agents"
LENDERS: A group of financial institutions, including NationsBank
and SunTrust, acceptable to the Borrower and the Agents
("the Lenders")
FACILITY: $1.0 Billion revolving credit facility (the "Credit
Facility"). The Credit Facility will contain a $50 Million
swingline sublimit for short term borrowings from the
Administrative Agent, and a $25 million sublimit for letters
of credit.
COMPETITIVE BID
OPTION: Borrower will have the option of inviting Lenders to bid
for advances for requested maturities of 7 to 180 days, in
which case each Lender can bid at its discretion. Each
borrowing under the competitive bid option shall be in an
amount not less than $5,000,000 and integral multiples of
$1,000,000.
PURPOSE: To provide working capital, to finance capital
expenditures, to repurchase stock, to refinance existing
indebtedness, and for non-hostile acquisitions.
MATURITY: Five years from closing.
SECURITY: Unsecured. Negative pledge on all material assets of the
Company.
FACILITY FEE: A per annum fee payable quarterly in arrears on the
Commitment Amount of the Facility determined in accordance
with the pricing matrix below. The Facility Fee will be
calculated on the basis of an actual number of days elapsed
in a year of 360 days.
INTEREST RATES: Borrower will have the option of:
1. Base Rate Option:
The Base Rate is the higher of (i) the Federal Funds
Rate plus 1/8 of 1% or (ii) the NationsBank Prime
Lending Rate. Interest shall be calculated on the basis
of actual days elapsed in a year of 360 days, payable
quarterly in arrears.
2. Eurodollar Option:
The Eurodollar Option is the Eurodollar Rate plus an
Applicable Margin. The Eurodollar Option is available
for Interest Periods of one, two, three or six months at
the election of the Borrower. The Interest Rate for each
Interest Period shall be set as the corresponding
Eurodollar Rate at the beginning of the Interest Period
plus the Applicable Margin as determined by the
ratings-based pricing grid set forth below. Interest
will be paid at the end of the Interest Period and at
intervals of three months for Interest Periods of six
months, and will be calculated on the basis of the
actual number of days elapsed in a year of 360 days. The
Eurodollar Rate will be adjusted for Regulation D
reserve requirements, if any.
PRICING GRID: The LIBOR margin and Facility Fee is set forth in the
performance pricing matrix below:
<TABLE>
<CAPTION>
Funded Facility LIBOR All in
Debt/EBITDA* Fee Spread Drawn
<S> <C> <C> <C>
<=4.0 25.0 75.0 100.0
<=3.5 20.0 55.0 75.0
<=3.0 17.5 45.0 62.5
<=2.5 15.0 35.0 50.0
<=2.0 10.0 22.0 32.0
</TABLE>
* rolling four quarter calculation
A penalty rate shall apply on all loans upon the occurrence
of an Event of Default at a rate per annum of 2% above the
then applicable interest rate.
LETTER OF CREDIT
FEE: A Letter of Credit Fee equal to the Applicable Margin,
based on the Company's ratio of Funded Debt to EBITDA as
designated in the Pricing Grid shown above, shall be
payable quarterly in advance on all issued and outstanding
Letters of Credit under the Facility. In addition, since
the L/C Issuing Bank will act as the facing bank on all
issued Letters of Credit, a fronting fee shall be payable
by the Company to the L/C Issuing Bank.
OPTIONAL
PREPAYMENT: LIBOR loans may be prepaid at the end of the applicable
Interest Period without penalty. Payment of LIBOR Loans
prior to the end of the applicable Interest Period will
require compensation for breakage costs.
REPRESENTATIONS
AND WARRANTIES: Usual and customary for facilities and transactions of this
type and such additional representations and warranties as
may be required by the Agents, including but not limited to
no Default or Event of Default, absence of material adverse
change, accuracy of financial statements (including pro
forma financial statements), absence of undisclosed
liabilities, compliance with laws (including environmental
laws and ERISA), solvency, no conflicts with laws, charter
documents or agreements, good standing, inapplicability of
the Investment Company Act of 1940, payment of taxes, and
ownership of properties. Representations and warranties
shall be substantially in accordance with those contained
in the $900 Million Credit Agreement dated as of March 26,
1997.
CONDITIONS
PRECEDENT TO
THE FACILITY: The Lenders shall not be obligated to make the initial
disbursement of loan proceeds under the Facility until the
following conditions have been satisfied:
The Borrower shall have paid all required fees and expenses
including all amounts due to the Agents, the Arranger, the
Co-Arranger and the Lenders;
There shall not have occurred any adverse change with
respect to the condition (financial or otherwise),
operations, business or assets of Borrower or Guarantor and
its subsidiaries taken as a whole, since December 28, 1996;
and execution and delivery of definitive documentation
acceptable in form and substance to the Agents, delivery of
legal opinions, accuracy of representations and warranties,
absence of defaults, evidence of authority, governmental
and other necessary approvals, compliance with laws and
adequate insurance.
AFFIRMATIVE
COVENANTS: Usual and customary for facilities and transactions of this
type and such additional covenants as may be required by
the Agents, which shall be applicable to Borrower and its
subsidiaries, including but not limited to maintenance of
corporate existence and rights; compliance with laws;
performance of obligations; maintenance of properties in
good repair; maintenance of appropriate and adequate
insurance; inspection of books and properties; payment of
taxes and other liabilities; notice of defaults, litigation
and other adverse action; delivery of financial statements
and compliance certificates on a quarterly basis.
NEGATIVE
COVENANTS: Usual and customary for facilities and transactions of this
type and such others as may be required by the Agents,
which shall be applicable to Borrower and its subsidiaries,
including but not limited to limitations on liens, debt and
sale leaseback transactions; limitations on operating
leases; limitations on loans and investments; standard
limitations on mergers, acquisitions and asset sales;
limitations on transactions between subsidiaries and with
affiliates.
Limitation on additional indebtedness, liens and asset sales
to exclude "Receivables Program" of up to $250 million
under terms satisfactory to the Administrative Agent.
Financial Covenants:
1. EBIT to Interest: minimum of 2.25 to 1.0 on a rolling
four quarters basis. (Calculation includes financing
costs associated with Receivables Program.)
2. Minimum Net Worth: 80% of 1/3/98 net worth, plus 50% of
positive net income plus net proceeds from equity
issuances minus 100% of stock repurchases up to $150
million subsequent to 1/3/98.
3. Funded Debt to EBITDA: maximum of 4.0X. (Indebtedness to
include outstandings under the Receivables Program.)
EVENTS OF
DEFAULT: Usual and customary for transactions and facilities of this
type in the jurisdictions in which the Borrower operates,
including cross default provisions to the $125 Million
Credit Agreement to Carpets International, U.K. guaranteed
by Shaw Industries dated as of September 13, 1996.
ASSIGNMENTS AND
PARTICIPATIONS: Each Lender will be permitted to make assignments to be
approved by Borrower and the Administrative Agent, which
approval shall not be unreasonably withheld. Such
assignments will be in the minimum amount of $10 million.
Lenders will be permitted to sell participations with
voting rights limited to significant matters such as
changes in amount, rate, security and maturity date. An
assignment fee of $3,500 is payable to the Administrative
Agent upon any assignment occurring (including, but not
limited to an assignment by a Lender to another Lender).
INCREASED COSTS/
CHANGE OF
CIRCUMSTANCES: The credit agreement will contain customary provisions
protecting the Lenders in the event of unavailability of
funding, illegality, capital adequacy requirements,
increased costs, withholding taxes and funding losses.
EXPENSES AND
INDEMNIFICATION: All reasonable out-of-pocket expenses of the Agents
associated with the preparation, execution and delivery,
waiver or modification, and enforcement of the credit
agreement and syndication of the Facility and the other
documentation contemplated hereby (including the reasonable
out-of-pocket expenses of counsel for the Agents) are to be
paid by Borrower.
Borrower will indemnify NationsBank, its affiliates and the
Lenders and hold them harmless from and against all costs,
expenses (including reasonable fees and disbursements of
counsel) and liabilities arising out of or relating to any
litigation or other proceedings (regardless of whether any
such indemnified party is a party thereto) which relate to
the financing contemplated hereby, except as any such
costs, expenses and liabilities are incurred by reason of
the gross negligence or willful misconduct of NationsBank,
it affiliates or any Lender.
GOVERNING LAW: Georgia law.
CLOSING DATE: On or before March 31, 1998.
OTHER: This Summary of Terms and Conditions is intended as an
outline only and does not purport to summarize all the
conditions, covenants, representations, warranties and
other provisions which will be contained in definitive
legal documentation for the Facility contemplated hereby.
