-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TNubvvANpd+GknCZ8+1GbrY32W0xXZf80RP62pr597lAfIQzaZmZhOSpO6pJTkeF XznLW+nFY33xXPIpHM4Dqw== 0000950144-98-011619.txt : 19981022 0000950144-98-011619.hdr.sgml : 19981022 ACCESSION NUMBER: 0000950144-98-011619 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19981021 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19981021 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SHAW INDUSTRIES INC CENTRAL INDEX KEY: 0000089498 STANDARD INDUSTRIAL CLASSIFICATION: CARPETS AND RUGS [2273] IRS NUMBER: 581032521 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-06853 FILM NUMBER: 98728477 BUSINESS ADDRESS: STREET 1: 616 E WALNUT AVE STREET 2: P O DRAWER 2128 CITY: DALTON STATE: GA ZIP: 30722 BUSINESS PHONE: 7062783812 MAIL ADDRESS: STREET 1: 616 E WALNUT AVE STREET 2: P O DRAWER 2128 CITY: DALTON STATE: GA ZIP: 30720 8-K 1 SHAW INDUSTRIES, INC. 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of report (Date of earliest event reported): OCTOBER 21, 1998 ----------------------------- (OCTOBER 6, 1998) ----------------------------- SHAW INDUSTRIES, INC. - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) GEORGIA 1-6853 58-1032521 - ------------------------------------------------------------------------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 616 E. WALNUT AVENUE, DALTON, GEORGIA 30720 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (706) 275-3812 ----------------------------- NOT APPLICABLE - ------------------------------------------------------------------------------- (Former name or former address, if changed since last report.) 2 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On October 6, 1998, the Registrant completed the acquisition of Queen Carpet Corporation ("Queen") pursuant to the merger (the "Queen Merger") of Queen with and into the Registrant. The Queen Merger was effected pursuant to that certain Agreement and Plan of Merger, dated August 13, 1998 (the "Merger Agreement"), among the Registrant, its wholly-owned subsidiary, Chessman Acquisition Corp. ("Chessman"), Queen and the shareholders of Queen (the "Queen Shareholders"), as amended by the First Amendment thereto, dated October 6, 1998 (the "First Amendment"), among the Registrant, Chessman, Queen and the Queen Shareholders. Prior to the consummation of the Queen Merger, privately-held Queen was the fourth largest carpet manufacturer in the United States with annual sales of approximately $800 million. As consideration for their shares of Queen stock, in the Queen Merger the Queen Shareholders received from the Registrant (i) 3.15 million shares of the common stock of The Maxim Group, Inc.; (ii) 19,444,444 shares of the Registrant's common stock; and (iii) approximately $35.8 million in cash. In addition, in connection with the Queen Merger, the Registrant made executive retention incentive payments to certain key employees of Queen consisting of (a) an aggregate of 841,733 shares of the Registrant's common stock and (b) $12.1 million in cash. At the effective time of the Queen Merger, Queen had aggregate liabilities of approximately $220 million. The Registrant financed the cash portion of the purchase price paid in the Queen Merger, the cash portion of the executive retention incentive payments and the fees and expenses associated with the Queen Merger, through borrowings under its existing credit facility. In connection with the consummation of the Queen Merger, the Registrant amended its Amended and Restated Credit Agreement, as amended, on October 6, 1998, among other things, to allow the Registrant to assume certain guaranties and other indebtedness of Queen. -2- 3 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) Financial Statements of Businesses Acquired. The required financial information will be filed by amendment to this Report as soon as practicable but in no event later than December 21, 1998. (b) Pro Forma Financial Information. The required pro forma financial information will be filed by amendment to this Report as soon as practicable but in no event later than December 21, 1998. (c) Exhibits. 99.1 Agreement and Plan of Merger, dated August 13, 1998, among Shaw Industries, Inc., Chessman Acquisition Corp., Queen Carpet Corporation, Julian Saul, Linda Saul, Anita Saul Family Trust, Julian Saul Family Trust, and Linda Saul Schejola Family Trust. [Incorporated by reference to Exhibit 99.1 of the Registrant's Current Report on Form 8-K filed with the Commission on August 28, 1998 (File No. 1-6853).] 99.2 First Amendment to Agreement and Plan of Merger, dated October 6, 1998, among Shaw Industries, Inc., Chessman Acquisition Corp., Queen Carpet Corporation, Julian Saul, Linda Saul, Anita Saul Family Trust, Julian Saul Family Trust, and Linda Saul Schejola Family Trust. 99.3 First Amendment to the Amended and Restated Credit Agreement, dated August 7, 1998, among Shaw Industries, Inc., the lenders appearing on the signature pages thereto, NationsBank, N.A. and SunTrust Bank, Atlanta. 99.4 Second Amendment to the Amended and Restated Credit Agreement, dated October 6, 1998, among Shaw Industries, Inc., the lenders appearing on the signature pages thereto, NationsBank, N.A. and SunTrust Bank, Atlanta. 99.5 Third Amendment to the Amended and Restated Credit Agreement, dated October 15, 1998, among Shaw Industries, Inc., the lenders appearing on the signature pages thereto, NationsBank, N.A. and SunTrust Bank, Atlanta. -3- 4 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. SHAW INDUSTRIES, INC. By: /s/ Bennie M. Laughter ----------------------------------------- Bennie M. Laughter Vice President, Secretary and General Counsel Dated: October 19, 1998 -4- 5 EXHIBIT INDEX
Exhibit Number Description ------- ----------- 99.1 Agreement and Plan of Merger, dated August 13, 1998, among Shaw Industries, Inc., Chessman Acquisition Corp., Queen Carpet Corporation, Julian Saul, Linda Saul, Anita Saul Family Trust, Julian Saul Family Trust, and Linda Saul Schejola Family Trust. [Incorporated by reference to Exhibit 99.1 of the Registrant's Current Report on Form 8-K filed with the Commission on August 28, 1998 (File No. 1-6853).] 99.2 First Amendment to Agreement and Plan of Merger, dated October 6, 1998, among Shaw Industries, Inc., Chessman Acquisition Corp., Queen Carpet Corporation, Julian Saul, Linda Saul, Anita Saul Family Trust, Julian Saul Family Trust, and Linda Saul Schejola Family Trust. 99.3 First Amendment to the Amended and Restated Credit Agreement, dated August 7, 1998, among Shaw Industries, Inc., the lenders appearing on the signature pages thereto, NationsBank, N.A. and SunTrust Bank, Atlanta. 99.4 Second Amendment to the Amended and Restated Credit Agreement, dated October 6, 1998, among Shaw Industries, Inc., the lenders appearing on the signature pages thereto, NationsBank, N.A. and SunTrust Bank, Atlanta. 99.5 Third Amendment to the Amended and Restated Credit Agreement, dated October 15, 1998, among Shaw Industries, Inc., the lenders appearing on the signature pages thereto, NationsBank, N.A. and SunTrust Bank, Atlanta.
EX-99.2 2 FIRST AMENDMENT TO AGREEMENT 1 EXHIBIT 99.2 FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER THIS FIRST AMENDMENT (the "First Amendment") to that certain Agreement and Plan of Merger, dated as of August 13, 1998 (the "Agreement") among Shaw Industries, Inc. ("Parent"), Chessman Acquisition Corp. ("Subsidiary"), Queen Carpet Corporation ("Company") and Julian Saul, Linda Saul, Anita Saul Family Trust, Julian Saul Family Trust and Linda Saul Schejola Family Trust (collectively, "Shareholders") is entered into as of the 6th day of October, 1998, by and among PARENT, SUBSIDIARY, COMPANY and the SHAREHOLDERS in accordance with the provisions of the Agreement. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Agreement. WHEREAS, the Agreement contemplated that the Company would be merged with and into the Subsidiary, with the Subsidiary being the Surviving Corporation; WHEREAS, the parties hereto wish to amend the Agreement to provide that (i) the Company will be merged with and into Parent (instead of Subsidiary), with Parent being the Surviving Corporation, (ii) the Note to be delivered at Closing be substituted with shares of common capital stock of M Corp., and under certain circumstances, a cash payment, and (iii) certain other provisions be revised to reflect the current agreement of the Parties. NOW, THEREFORE, in consideration of the foregoing, the agreements set forth below and other good and valuable consideration, the receipt and sufficiency of which is acknowledged, the parties agree as follows: 1. The Agreement is hereby amended as follows: A. Section 2.1 shall be deleted in its entirety and the following shall be inserted in lieu thereof: 2.1 Merger. Subject to the terms and conditions of this Agreement, at the Effective Time, Company shall be merged with and into Parent in accordance with the provisions of Section 14-2-1101 et seq. of the GBCC and with the effect provided in Section 14-2-1106 of the GBCC (the "Merger"). Parent shall be the Surviving Corporation resulting from the Merger (the "Surviving Corporation") and shall continue to be governed by the laws of the State of Georgia. The Merger shall be consummated pursuant to the terms of this Agreement, which has been approved and adopted by the respective boards of directors of Company, Parent and Subsidiary, and has been approved by the Shareholders as all of the shareholders of Company, as required by applicable law. B. Section 3.1 shall be deleted in its entirety and the following shall be inserted in lieu thereof: 2 3.1 Charter. The Articles of Incorporation of Parent in effect immediately prior to the Effective Time shall be the Articles of Incorporation of the Surviving Corporation until duly amended or repealed. C. The word "Subsidiary" shall be deleted and the word "Parent" inserted in lieu thereof in each of the following: 1. RECITALS - third sentence 2. SECTION 1 (DEFINITIONS) "Contemplated Transactions" - subparagraph (d) 3. SECTION 3.2 (Bylaws) 4. SECTION 3.3 (Directors and Officers) 5. SECTION 4.1 (Conversion of Company Common Stock) Paragraph (c) (iii) 6. SECTION 4.9 (Taking of Necessary Action; Further Actions) 7. SECTION 6.2(a) (Authority; No Conflict) 8. SECTION 12.4 (Indemnification and Payment of Damages by Parent - Other Matters) 9. SECTION 13.3 (Section 1362(e)(3) Election) D. The fifth sentence of the recitals shall be deleted in its entirety and the following shall be inserted in lieu thereof: This Agreement also provides for the employment of Executive as Executive Vice President of the Parent and President of the Queen Carpet Division of the Parent and the appointment of Executive to the Board of Directors of Parent. E. The last sentence of Section 3.3 shall be deleted in its entirety and the following shall be inserted in lieu thereof: The officers of the Company at the Effective Time shall become divisional officers of the Queen Carpet Division of Parent with the same titles (together with such additional or different officers as Parent shall appoint from time to time), provided that Executive shall be elected Executive Vice President of Parent and President of the Queen Carpet Division of Parent. 2 3 F. Section 4.1(c)(i)(A) shall be deleted in its entirety and the following shall be inserted in lieu thereof: (A) The sum of $70,000,000 which shall be deemed delivered by means of the delivery by Parent of 3.15 million shares of the common capital stock ("M Corp. Stock") of The Maxim Group, Inc. ("M Corp."), freely transferable under applicable federal and state securities laws, and free of all Encumbrances, except restrictions on transfer of the M Corp. Stock at any time prior to December 31, 1998 under that certain Stock Purchase Option from the Parent in favor of M Corp., a copy of which is attached to this First Amendment as EXHIBIT A (the "M Corp. Option); provided that in the event the aggregate value of M Corp. Stock valued as of the Closing Date is less than $70,000,000, based on the closing price of M Corp. Stock on the Closing Date as reported by the Wall Street Journal published on the next business day, then in addition to the delivery of 3.15 million shares of M Corp. Stock, fifty percent (50%) of the amount by which $70,000,000 exceeds such aggregate value of M Corp. Stock shall be paid by Parent within two (2) business days following such determination in cash, by wire transfer or other immediately available funds; plus G. The last sentence of Section 4.1(c)(ii)(B) shall be deleted. H. Section 4.2(a)(ii) shall be amended to delete the reference to "Subsidiary". I. Section 4.2(b)(ii) shall be amended to delete the words "Subsidiary and". J. Section 5.13(l) is hereby amended by adding at the beginning of the subsection "Except as disclosed in Schedule 5.13(l), . . ." K. Section 5.13(m) is hereby amended by adding at the beginning of the subsection "Except as disclosed in Schedule 5.13(m)," L. Section 6.2(a) shall be deleted in its entirety and the following shall be inserted in lieu thereof: (a) This Agreement constitutes the legal, valid and binding obligation of Parent and Subsidiary, enforceable against Parent and Subsidiary in accordance with its terms. Upon execution and delivery by Parent of the Certificate of Merger, the Employment Agreement and the Real Property Agreements (collectively, the "Parent's Closing Documents"), the Parent's Closing Documents will constitute the legal, valid and binding obligations of Parent, enforceable against Parent in accordance with their respective terms. Parent and Subsidiary have the absolute and unrestricted right, power and authority to execute and deliver this Agreement and the Parent's Closing Documents and to perform their obligations under this Agreement and the Parent's Closing Documents. 3 4 M. Section 7.7(a) shall be deleted in its entirety and the following shall be inserted in lieu thereof: (a) Subject to the provisions of the GBCC, Company shall be entitled to make one or more distributions on Company Common Stock to its Shareholders in an aggregate amount of $131 million. Such distribution shall result in a reduction of Merger Consideration as provided in Section 4.1(c) of this Agreement. In addition, Company shall be entitled to make tax distributions as contemplated by Section 4.1(c)(ii)(A) in the amount of $18.625 million, which tax distribution shall not result in a reduction of Merger Consideration as provided in Section 4.1(c) of this Agreement. 2. With respect of the provisions of Section 4.1(c)(ii) of the Agreement, the Parties acknowledge and agree as follows: (A) With respect to the provisions of subparagraph (ii)(A), the reduction in the Merger Consideration as of the Closing Date for dividends and other distributions as contemplated by such subparagraph is in the aggregate amount of $131 million and the amount of dividends and distributions for estimated Tax payments which do not reduce Merger Consideration as contemplated by such paragraph is $18.625 million. (B) With respect to special bonuses contemplated by subparagraph (i)(B), the amount of special bonuses shall be $24,200,000 which shall be paid by Parent following the Effective Time, fifty percent (50%) in cash and fifty percent (50%) in shares of Parent Common Stock valued as determined pursuant to the Executive Incentive Agreements between the Company and the individual recipients of the bonuses, the form of which is set forth as Exhibit B attached to this First Amendment (the "Executive Incentive Agreements"). Special bonus payments shall be made net of any tax withholdings. It is acknowledged that the Board of Directors of the Company have designated the bonus pool of participants and has advised Parent of such designations and delivered originals of such Executive Incentive Agreements to Parent. 3. Pursuant to Section 9.4(c) of the Agreement, Shareholders shall deliver to Parent and M Corp. their written agreement as set forth in and as part of the M Corp. Option, pursuant to which the Shareholders agree to accept and be bound by all the terms and conditions of the M Corp. Option and agree that all such terms and conditions shall be binding upon the Shareholders and their successors, personal representatives and heirs to the same extent as if the Shareholders had originally been a party to the M Corp. Option. 4. Except as modified by Paragraphs 1 and 2 of this First Amendment, the Agreement shall remain in full force and effect. 5. This First Amendment shall be governed by the laws of the State of Georgia without regard to conflicts of laws principles. 6. This First Amendment may be executed in counterparts and shall be binding upon each party executing this or any counterpart. 4 5 IN WITNESS WHEREOF, this First Amendment has been executed as of the date and year first above written. SHAW INDUSTRIES, INC. By: /s/ Bennie M. Laughter ---------------------------------------- Name: Bennie M. Laughter -------------------------------------- Title: Vice President ------------------------------------- CHESSMAN ACQUISITION CORPORATION By: /s/ Bennie M. Laughter ---------------------------------------- Name: Bennie M. Laughter -------------------------------------- Title: Vice President ------------------------------------- QUEEN CARPET CORPORATION By: /s/ Gerald R. Embry ---------------------------------------- Name: Gerald R. Embry -------------------------------------- Title: Vice President Finance ------------------------------------- /s/ Julian Saul -------------------------------------------- JULIAN SAUL /s/ Linda Saul Schejola -------------------------------------------- LINDA SAUL SCHEJOLA ANITA SAUL FAMILY TRUST By: /s/ Anita Saul ---------------------------------------- Anita Saul, Trustee JULIAN SAUL FAMILY TRUST By: /s/ Julian Saul ---------------------------------------- Julian Saul, Trustee LINDA SAUL SCHEJOLA FAMILY TRUST By: /s/ Linda Saul Schejola ---------------------------------------- Linda Saul Schejola, Trustee 6 EXHIBIT A STOCK PURCHASE OPTION 3,150,000 SHARES OF COMMON STOCK DATED OCTOBER 6, 1998 OF THE MAXIM GROUP, INC. This certifies that, for value received, THE MAXIM GROUP, INC., a Delaware corporation (the "Holder"), its successors and assigns, is entitled, upon the due exercise hereof at any time during the period commencing on October 6, 1998 and terminating at 5:00 E.S.T. on December 31, 1998, to purchase from SHAW INDUSTRIES, INC., a Georgia corporation ("Shaw"), Three Million One Hundred and Fifty Thousand (3,150,000) shares of Common Stock, par value $.001 per share, of Maxim, such number of shares being subject to adjustment upon the occurrence of the contingencies set forth in this Option. The purchase price payable upon the exercise of this Option shall be $22.222 per share (hereinafter referred to as the "Exercise Price"), subject to adjustment upon the occurrence of the contingencies set forth in this Option. All references herein to "Maxim" shall mean The Maxim Group, Inc., a Delaware corporation. Shares of Common Stock of Maxim that are subject to purchase upon exercise of this Option are hereinafter referred to as the "Option Shares." Section 1. Duration and Exercise of Option. This Option shall expire on 5:00 p.m. Eastern Standard Time on December 31, 1998 (the "Expiration Date"). After the Expiration Date, any unexercised portion of this Option will be wholly void and of no value. This Option may be exercised by the Holder on any business day beginning on October 6, 1998 and on or prior to the Expiration Date. For purposes of this Option, the term "business day" means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in New York, New York are authorized or obligated by law or executive order to close. Subject to the provisions of this Option, the Holder shall have the right to purchase from Shaw (and Shaw shall as soon as practicable sell to such Holder) Three Million One Hundred and Fifty Thousand (3,150,000) fully paid and nonassessable Option Shares, including any shares of any class or series of stock into which such shares may hereafter be changed and subject to the adjustments contemplated by Section 3 hereof, at the Exercise Price, upon surrender to Shaw of this Option, with the Form of Exercise attached thereto duly filled in and executed by the Holder or its duly authorized agent and upon payment of the Exercise Price in lawful money of the United States of America in cash, or by wire transfer to Shaw's account (or the account of Shaw's successors, transferees or assigns) of immediately available funds. The number of Shares, and the amount and type of securities or other property purchasable upon exercise of this Option shall be subject to adjustment as provided in Section 3. Subject to Section 3, (i) upon such surrender of this Option and payment of the Exercise Price on or prior to the Expiration Date, Shaw shall deliver or cause to be delivered to the Holder certificates or other appropriate instruments for any other securities, and such other property issuable upon the exercise of this Option, in such name or names as the Holder shall designate on the Form of Exercise attached thereto; and (ii) such Option Shares, securities and other property shall be deemed to have been transferred to, and any person so designated therein shall be deemed to have become, the holder of record 7 of such Option Shares, securities or property as of the date of the surrender of this Option and payment of the Exercise Price. This Option shall be exercisable, at the election of the Holder, in whole but not in part. Section 2. Transfers and Exchanges. With the prior written consent of Shaw or its successors, transferees or assigns, which consent will not be unreasonably withheld, this Option shall be transferable by the Holder, in whole or in part, upon surrender of this Option at the office of Shaw, together with (i) a written assignment of this Option, duly executed by the Holder thereof or his duly authorized agent, and (ii) funds required to pay any transfer, documentary, stamp or other taxes or government charges payable in connection with such transfer and any other amounts required pursuant to this Option. Upon such surrender and payment, Shaw shall deliver a new Option, in the name of the assignee and in the permissible denomination or denominations specified in such instrument of assignment. If less than all of the Options are being transferred, Shaw shall deliver a new Option to the Holder for the portion of this Option not being transferred. Shaw shall cancel the Option surrendered. If this Option at any time becomes mutilated, lost, stolen or destroyed, Shaw will issue in exchange and substitution for and upon cancellation of the mutilated Option, or in lieu of and in substitution for the Option lost, stolen or destroyed, a new Option of like tenor and representing an equivalent Option, but only upon receipt of evidence satisfactory to Shaw of such loss, theft or destruction of such Option and indemnity reasonably satisfactory to Shaw. Section 3. Adjustment of Exercise Price and Number of Shares Purchasable Hereunder. The Exercise Price and the number of Option Shares purchasable upon the exercise of the Option are subject to adjustment from time to time upon the occurrence of the events enumerated in this Section 3. (a) In case Maxim shall at any time after the date of this Option (i) declare a dividend on the Common Stock payable in shares of its capital stock (whether shares of Common Stock or of capital stock of any other class), (ii) subdivide the outstanding Common Stock, (iii) combine the outstanding Common Stock into a smaller number of shares or (iv) issue any shares of its capital stock in a reclassification of the Common Stock (including any such reclassification in connection with a consolidation or merger in which Maxim is the continuing corporation), the Exercise Price in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination or reclassification, shall be proportionately adjusted so that the Holder of the Option exercised after such time shall be entitled to receive the aggregate number and kind of shares of capital stock which, if such Option had been exercised immediately prior to such date, it would have owned upon such exercise and been entitled to receive by virtue of such dividend, subdivision, combination or reclassification. Such adjustment shall be made successively whenever any event listed above shall occur. (b) No adjustment in the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least five cents ($.05) in such price; provided, however, that any adjustments which by reason of this Section 3(b) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. (c) In the event that at any time, as a result of an adjustment made pursuant to Section 3(a) the Holder shall become entitled to receive any shares of capital stock of Maxim other than -2- 8 shares of Common Stock, thereafter the number of such other shares so receivable upon exercise of the Option shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Stock purchasable pursuant to this Option. (d) Upon each adjustment of the Exercise Price as a result of the calculations made in Section 3(a), the Option outstanding immediately prior to the making of such adjustment shall thereafter evidence the right to purchase, at the adjusted Exercise Price, that number of Option Shares (calculated to the nearest hundredth) obtained by (A) multiplying the number of Option Shares purchasable upon exercise of the Option immediately prior to such adjustment of the number of Option Shares by the Exercise Price in effect immediately prior to such adjustment of the Exercise Price and (B) dividing the product so obtained by the Exercise Price in effect immediately after such adjustment of the Exercise Price. (e) In case of any capital reorganization of Maxim, or of any reclassification of the Common Stock (other than a change in par value, or from par value to no par value, or as a result of subdivision or combination), or in case of the consolidation of Maxim with or the merger of Maxim with any other corporation or association (other than a consolidation or merger in which (i) Maxim is the continuing corporation and (ii) the holders of Maxim's Common Stock immediately prior to such merger or consolidation continue as holders of Common Stock after such merger or consolidation) or of the sale of the properties and assets of Maxim as, or substantially as, an entirety to any other corporation or association, the Option shall after such reorganization, reclassification, consolidation, merger or sale be exercisable, upon the terms and conditions specified herein, for the number of shares of stock or other securities or property to which a holder of the number of Option Shares purchasable (at the time of such reorganization, reclassification, consolidation, merger or sale) upon exercise of such Option would have been entitled upon such reorganization, reclassification, consolidation, merger or sale; and in any such case, if necessary, the provisions set forth in this Section 3 with respect to the rights and interests thereafter of the holder of the Option shall be appropriately adjusted so as to be applicable, as nearly as may reasonably be, to any shares of stock or other securities or property thereafter deliverable on the exercise of the Option. The subdivision or combination of shares of Common Stock at any time outstanding into a greater or lesser number of shares shall not be deemed to be a reclassification of the Common Stock for the purposes of this Section 3(e). Section 4. No Rights as Stockholders. Nothing contained in this Option shall be construed as conferring upon the Holder the right to vote, receive dividends or to be deemed for any purpose the holder of Option Shares or of any other securities of Maxim that may at any time be issuable on the exercise of this Option, nor shall anything contained herein be construed to confer upon the Holder, as such, any of the rights of a stockholder of Maxim or any right to vote on matters submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issue of stock, reclassification of stock, change of par value, consolidation, merger, conveyance, or, without limitation, otherwise), or to receive notice of meetings, or to receive subscription rights or otherwise, until this Option shall have been exercised as provided herein. Section 5. Representations, Warranties and Covenants. (a) Shaw represents, warrants and agrees with the Holder that: -3- 9 (i) Shaw is a corporation duly organized, validly existing and in good standing under the laws of the its state of incorporation. Shaw has all requisite corporate power and authority to carry out and perform its obligations under this Option. (ii) This Option has been duly authorized, executed and delivered by Shaw and constitutes the valid and binding obligation of Shaw enforceable in accordance with its terms subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. (iii) No consent, approval, authorization or order of any court or governmental agency or body is required to be obtained by Shaw for the sale and issuance of this Option or the sale and issuance of the Option Shares issuable upon exercise of this Option. Upon exercise of this Option by a Holder thereof, good and valid title to the Option Shares shall be delivered to such holder free and clear of all liens, encumbrances, equities or claims and such shares will be fully paid and nonassessable. (b) Shaw agrees that it will not, without the prior written consent of Maxim, directly or indirectly, offer, sell, exchange, pledge, hypothecate, encumber, transfer, assign or otherwise dispose of (collectively, a "transfer") any Option Shares on or before the Expiration Date. Any attempt to transfer or encumber any Option Shares other than in accordance with the terms of this Option shall be null and void and neither Maxim nor any transfer agent of such securities shall give any effect to such attempted transfer or encumbrance in its stock records. Notwithstanding the foregoing and any provisions in that certain Shareholder's Agreement, dated August 9, 1998, by and between Shaw and Maxim, Maxim hereby consents to the transfer of the Option Shares to those shareholders of Queen Carpet Corporation set forth on the signature page of this Option (the "Queen Shareholders"); provided that each of the Queen Shareholders, on or prior to any such transfer, executes this Option. By their execution of this Option, each of the Queen Shareholders agrees that upon any such transfer to them of the Option Shares, they shall each be bound by all the terms and conditions of this Option applicable to Shaw, and that all such terms and conditions shall be binding upon the Queen Shareholders and their successors, personal representatives and heirs to the same extent as if the Queen Shareholders had originally been grantors of this Option to the Holder. Upon any such transfer of the Option Shares by Shaw, Shaw shall cease to have any rights under this Option. (c) Maxim has been advised by the Securities and Exchange Commission (the "SEC") that the Registration Statement on Form S-3 filed by Maxim with the with respect to the Option Shares (SEC Registration No. 333-62975) was declared effective by the SEC on October 2, 1998. Section 6. Legends. (a) Upon the execution of this Option, in addition to any other legend which is required under the Securities Act of 1933, as amended, and certain state securities laws, all certificates representing the Option Shares shall be endorsed as follows: THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE PROVISIONS OF A STOCK PURCHASE OPTION DATED AS OF OCTOBER 6, 1998, BETWEEN THE COMPANY AND THE REGISTERED HOLDER OF THIS -4- 10 CERTIFICATE AND, EXCEPT AS SET FORTH IN SUCH AGREEMENT, MAY NOT BE TRANSFERRED OR SOLD PRIOR TO 5:00 P.M. EASTERN STANDARD TIME ON DECEMBER 31, 1998. A COPY OF THE ABOVE REFERENCED OPTION IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY. Upon the execution of this Option, Shaw shall promptly deliver the Option Shares to Maxim so that the legend set forth above may be affixed thereto. (b) Upon the Expiration Date, the holder of any certificate representing the Option Shares shall be entitled to receive from Maxim, without expense, upon delivery to Maxim of the existing certificate representing such Option Shares, a new certificate not bearing the restrictive legend set forth in this Section 6. Section 7. Notices. All instructions, notices and other communications to be given to any party hereto shall be in writing and shall be personally delivered or sent by first class or certified mail, postage prepaid and return receipt requested, and shall be deemed to be given for purposes of this Option on the day when delivered to the intended party at its address specified below: (a) If to Shaw: 616 East Walnut Avenue Dalton, Georgia 30720 Attn: President or such other address as Shaw may designate from time to time by written notice to the Holder. (b) If to the Holder: 210 TownPark Drive Kennesaw, Georgia 30144 Attn: President or such other address as the Holder may designate from time to time by written notice to Shaw. (c) If to the Queen Shareholders: c/o Julian D. Saul 702 Mt. Sinai Road Dalton, Georgia 30720 or such other address as the Queen Shareholders may designate from time to time by written notice to the Holder. Section 8. Supplements and Amendments. This Option may be amended and supplemented in writing signed by Shaw or its successors or assigns and the Holder. Section 9. Successors. This Option shall be binding upon and inure to the benefit of the respective successors and permitted assigns hereunder of Shaw or any Holder. -5- 11 Section 10. Termination. This Option shall terminate at the close of business on the Expiration Date. Notwithstanding the foregoing, this Option will terminate on any earlier date when this Option has been exercised. Section 11. Governing Law. This Option shall be governed by and construed in accordance with the laws of the State of Georgia. Section 12. Benefits of this Agreement. Nothing in this Option shall be construed to give to any person or corporation other than Shaw and the Holder of this Option any legal or equitable right, remedy or claim under this Option, and this Option shall be for the sole and exclusive benefit of Shaw and the Holder hereof. Section 13. Severability. If any provision of this Option is held to be illegal, invalid or unenforceable under present or future laws effective during the term hereof, such provision shall be fully severable; this Option shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof; and the remaining provisions of this Option shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or its severance from this Option. Furthermore, in lieu of such illegal, invalid or unenforceable provision there shall be added automatically as a part of this Option a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable. Section 14. Specific Performance. Shaw stipulates that the remedies at law available to a Holder, or to a holder of Common Stock of Maxim issued pursuant to the exercise of this Option, in the event of any default or threatened default by Shaw in the performance of or compliance with any of the terms of this Option are not and will not be adequate. Therefore, Shaw agrees that the terms of this Option may be specifically enforced by a decree for the specific performance of any agreement or obligation contained herein or by an injunction prohibiting violation of any of the terms hereof or otherwise. Section 15. Headings. The section and subsection headings herein are for convenience only and shall not affect the construction hereof. Section 16. Counterparts. This Option may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. -6- 12 IN WITNESS WHEREOF, Shaw has caused this Option to be duly executed as of the day and year first above written. SHAW INDUSTRIES, INC. By: ---------------------------------------- Name: --------------------------------------- Title: ------------------------------------- ACCEPTED AND AGREED to this 6th day of October, 1998 THE MAXIM GROUP, INC. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- [Signatures continued on next page.] -7- 13 ACCEPTED AND AGREED to this 6th day of October, 1998 "QUEEN SHAREHOLDERS" - ---------------------------------------------- Julian D. Saul - ---------------------------------------------- Linda Saul Schejola JULIAN D. SAUL FAMILY TRUST By: ------------------------------------------- Name: -------------------------------------- Title: ----------------------------------- LINDA SAUL SCHEJOLA FAMILY TRUST By: ------------------------------------------- Name: -------------------------------------- Title: ----------------------------------- ANITA SAUL FAMILY TRUST By: ------------------------------------------- Name: -------------------------------------- Title: ----------------------------------- -8- 14 FORM OF EXERCISE [Form to be executed upon exercise of Option] The undersigned holder of the within Option hereby (1) purchases __________shares of Common Stock of The Maxim Group, Inc. which the undersigned is entitled to purchase under the terms of the within Option, (2) makes the Exercise Price payment therefor called for by the within Option, and (3) directs that the shares issuable upon exercise of said Option be issued as follows: ------------------------------- (Name) ------------------------------- (Address) Signature: --------------------- Dated: --------------------------- -9- 15 EXHIBIT B EXECUTIVE INCENTIVE AGREEMENT THIS AGREEMENT (this "Agreement") is entered into and executed on the day and date noted on the last page hereof by and between QUEEN CARPET CORPORATION, a Georgia corporation (the "Company"), and _______________________ (the "Executive"), a resident of the State of ________________________. W I T N E S S E T H: WHEREAS, the Company has entered into an Agreement and Plan of Merger, dated August 13, 1998 as amended by a First Amendment to Agreement and Plan of Merger to be dated as of the Closing Date (the "Merger Agreement"), pursuant to which the Company shall be acquired by Shaw Industries, Inc., a Georgia corporation ("Shaw"), through the merger of the Company with and into Shaw or Chessman Acquisition Corp., a wholly-owned subsidiary of Shaw; and WHEREAS, the Company desires to retain the Executive's services, which are highly valued and important to the operations of the Company, until the closing of the transactions contemplated under the Merger Agreement (the "Closing"), and also desires to retain the Executive's services to assist in effectuating the Closing and ensuring that the Closing actually occurs; WHEREAS, in order to retain the Executive's services and assistance during this process and to provide additional compensation to Executive for his past service to the Company, the Company desires to provide the Executive certain retention incentives; and WHEREAS, pursuant to Section 4.1(c)(ii)(B) of the Merger Agreement, the Incentive Amount (as defined below) payable hereunder will be paid 50% in Shaw Common Stock ("Shaw Stock") and 50% in cash; NOW, THEREFORE, the parties hereto agree as follows: 1. Incentive Amount. In consideration for the Executive remaining an employee of the Company through the Closing and to provide additional compensation to Executive for his past service to the Company, if the Executive remains employed by the Company through and until the Closing,, then, upon the completion of the Closing, the Company shall pay to Executive within five (5) business days immediately following the Closing, a single lump sum payment in the amount of ___________________________________________________ dollars ($_________________________) (the "Incentive Amount"), payable 50% in cash and 50% in Shaw Stock. The number of shares of Shaw Stock paid shall be determined based upon the closing price of a share of Shaw Stock on the New York Stock Exchange, Inc. on the date of the Closing, as reported by the Wall Street Journal, published on the next business day after the date of the Closing. Executive and the Company understand that no amount shall be payable to the Executive pursuant to this Agreement in the event that the Closing is never completed and effectuated or the Merger Agreement is terminated. 2. Payment of Incentive Amount. The Incentive Amount payable under this Agreement to the Executive shall be paid subject to and reduced by any applicable federal, state and/or local income and/or payroll tax withholding and reporting requirements. If for any reason the entire amount payable under this Agreement is not paid in full when due, then interest, at a per annum rate equal to the then "prime rate" of interest as reported in the Wall Street Journal on the day of Closing, plus _________________ percent (_________%), shall accrue with respect to any such unpaid amounts until such amounts are paid to the Executive. 16 3. Miscellaneous. A. EXECUTIVE AGREES TO HOLD THE TERMS OF THIS AGREEMENT, INCLUDING THE INCENTIVE AMOUNT, CONFIDENTIAL, AND NOT TO DISCLOSE THE TERMS OF THIS AGREEMENT TO ANY PERSON, FIRM OR CORPORATION THAT IS NOT A PARTY TO THIS AGREEMENT, EXCEPT (I) WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY, (II) TO EXECUTIVE'S ATTORNEYS, ACCOUNTANTS AND FINANCIAL ADVISORS FOR THE PURPOSE OF THEIR RENDERING SERVICES TO EXECUTIVE WITH RESPECT TO THIS AGREEMENT OR THE INCENTIVE AMOUNT, OR (III) AS MAY OTHERWISE BE REQUIRED BY LAW. EXECUTIVE SHALL REQUIRE THAT HIS ATTORNEYS, ACCOUNTANTS AND FINANCIAL ADVISORS HOLD THE TERMS OF THIS AGREEMENT, INCLUDING THE INCENTIVE AMOUNT, CONFIDENTIAL, AND NOT TO DISCLOSE THE TERMS OF THIS AGREEMENT TO ANY PERSON, FIRM OR CORPORATION THAT IS NOT A PARTY TO THIS AGREEMENT EXCEPT AS EXPRESSLY SET FORTH HEREIN. B. The parties agree that any dispute regarding the terms and provisions of this Agreement shall be subject to venue in the State of Georgia and shall be governed by the laws of the State of Georgia. C. The terms, conditions, and obligations of this Agreement shall inure to the benefit of and be binding upon the parties hereto and the respective successors and assigns thereof. D. This Agreement shall terminate on December 31, 1999, unless extended by written mutual agreement by the parties provided, however, that Section 3.A. hereof shall survive indefinitely. This Agreement may be amended or terminated only by a written instrument executed by each party hereto. E. This Agreement sets forth the entire agreement between the parties with respect to the subject matter contained herein and supersedes all prior agreements, arrangements or other communications, whether oral or written. F. The terms and provisions of this Agreement shall not require the Company to consummate the Closing, to pursue any particular transaction or structure of transaction, or to achieve any particular result or price in any transaction that the Company chooses to pursue. IN WITNESS WHEREOF, the parties hereto affixed their signatures as of the ________ day of September, 1998. COMPANY: QUEEN CARPET CORPORATION By: --------------------------------- Title: ------------------------------ EXECUTIVE: ------------------------------------- Name: -------------------------------- EX-99.3 3 1ST AMENDMENT TO AMENDED AND RESTATED CREDIT AGMT 1 FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (the "First Amendment") dated as of August 7, 1998 by and among SHAW INDUSTRIES, INC., a corporation organized under the laws of the State of Georgia (the "Borrower"), the Lenders appearing on the signature pages hereof (the "Lenders"), NATIONSBANK, N.A., as Issuing Bank and Administrative Agent and SUNTRUST BANK, ATLANTA, as Documentation Agent. WHEREAS, the Borrower, the Lenders, the Issuing Bank and the Agents entered into that certain Amended and Restated Credit Agreement dated as of March 16, 1998 (the "Credit Agreement"), pursuant to which the Lenders made certain financial accommodations available to the Borrower; WHEREAS, pursuant to that certain Agreement and Plan of Merger dated as of June 23, 1998 (the "Merger Agreement") among The Maxim Group, Inc. ("Maxim"), CMAX Acquisition, Inc., the Borrower and Shaw Carpet Showplace, Inc. (the "Guarantor"), the Borrower will, among other things, sell all of its interest in and to the Guarantor to Maxim on the terms and conditions therein; WHEREAS, in connection with the Merger Agreement the Borrower has requested that (a) the Lenders, the Issuing Bank and the Agents release the Guarantor from its obligations under its Guaranty and (b) amend the Credit Agreement so as to permit certain of the transactions contemplated by the Merger Agreement, all on the terms and conditions set forth herein; and WHEREAS, the Lenders, the Issuing Bank and the Agents are willing to so amend the Credit Agreement and release the Guarantor on the terms and conditions set forth herein. NOW, THEREFORE, for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties, the parties hereto agree as follows: SECTION 1. SPECIFIC AMENDMENT TO CREDIT AGREEMENT. The Credit Agreement is hereby amended deleting the "." at the end of Section 10.3 and substituting in lieu thereof the following new clause (ix): "; and (ix) Investments in The Maxim Group, Inc. ("Maxim") in the form of: (A) 3,150,000 shares of common stock of Maxim and (B) a certain Subordinated Promissory Note in the principal amount of $18,048,000 executed by Maxim in favor of the Borrower." 2 SECTION 2. RELEASE OF GUARANTOR. Upon the effectiveness of this First Amendment, the Lenders, the Issuing Bank and the Agents hereby release the Guarantor from its obligations under the Guaranty to which it is a party and acknowledge and agree that the Guarantor shall no longer be a "Guarantor" under and as defined in the Credit Agreement. SECTION 3. AFFILIATE TRANSACTION. The Lenders, the Issuing Bank and the Agents further acknowledge and agree that the transactions contemplated by the Merger Agreement shall not contravene or violate Section 10.8 of the Credit Agreement. SECTION 4. EFFECTIVENESS OF AMENDMENT. This First Amendment, and the amendments and releases effected hereby, shall be effective only upon the satisfaction of each of the following conditions precedent to effectiveness: (a) this First Amendment shall be executed and delivered by the Borrower, the Issuing Bank, the Agents and the Requisite Lenders; (b) the "Merger" under and as defined in the Merger Agreement shall have been consummated in accordance with the terms and conditions thereof; (c) a Reaffirmation of Guaranty shall have been duly executed and delivered by Shaw Contract Flooring Services, Inc.; and (d) the Administrative Agent shall have received a certificate dated the date hereof from the Senior Vice President of Finance or the Treasurer of the Borrower certifying that, after giving effect to the amendment contemplated hereby, no Default or Event of Default under the Credit Agreement exists. SECTION 1. REPRESENTATIONS AND WARRANTIES. (a) In order to induce the Issuing Bank, the Agents and the Lenders to enter into this First Amendment, the Borrower hereby reaffirms each of the representations and warranties of the Borrower contained in the Credit Agreement as of the date hereof except for either: (i) the occurrence of any event that would render such representations or warranties untrue, but that is expressly permitted by the terms of the Credit Agreement or which would not cause an Event of Default under the Credit Agreement or (ii) the occurrence of any event that would render such representations or warranties untrue but that previously has been disclosed in writing to the Lenders. (b) The Borrower represents and warrants to the Issuing Bank, the Agents and the Lenders that, after giving effect to the amendment set forth herein and the consummation of the transactions contemplated by the Merger Agreement, no Default or Event of Default shall have occurred and be continuing under the Credit Agreement. -2- 3 (c) The execution, delivery and performance of this First Amendment by the Borrower does not require the consent of any other Person under any document, instrument or agreement to which the Borrower is a party or under which the Borrower is bound. SECTION 1. REFERENCES TO THE CREDIT AGREEMENT. Each reference to the Credit Agreement in any of the Loan Documents shall be deemed to be a reference to the Credit Agreement, as amended by this First Amendment, and as the same may be further amended, restated, supplemented or otherwise modified from time to time in accordance with Section 13.6 of the Credit Agreement. SECTION 2. BENEFITS. This First Amendment shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective successors and assigns. SECTION 3. GOVERNING LAW. THIS FIRST AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA. SECTION 4. EFFECT. Except as expressly herein amended, the terms and conditions of the Credit Agreement shall remain in full force and effect without amendment or modification, express or implied. SECTION 5. COUNTERPARTS. This First Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original and shall be binding upon all parties, their successors and assigns. SECTION 6. DEFINITIONS. All capitalized terms which are used herein and not otherwise defined herein shall have the meanings given such terms as set forth in the Credit Agreement. [SIGNATURES CONTAINED ON FOLLOWING PAGE] -3- 4 [SIGNATURE PAGE TO FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT DATED AS OF AUGUST 7, 1998 WITH SHAW INDUSTRIES, INC.] IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to Amended and Restated Credit Agreement to be executed under seal by their duly authorized officers as of the date first above written. THE BORROWER: SHAW INDUSTRIES, INC. By: /s/ ------------------------------------------ Title: ------------------------------------ THE ADMINISTRATIVE AGENT: NATIONSBANK, N.A., as Administrative Agent By: /s/ ------------------------------------------ Title: ------------------------------------ THE ISSUING BANK: NATIONSBANK, N.A., as Issuing Bank By: /s/ ------------------------------------------ Title: ------------------------------------ THE DOCUMENTATION AGENT: SUNTRUST BANK, ATLANTA, as Documentation Agent By: /s/ ------------------------------------------ Title: ------------------------------------ -4- 5 [SIGNATURE PAGE TO FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT DATED AS OF AUGUST 7, 1998 WITH SHAW INDUSTRIES, INC.] THE LENDERS: NATIONSBANK, N.A., as a Lender and Swing Line Lender By: /s/ ----------------------------------------- Title: ---------------------------------- SUNTRUST BANK, ATLANTA By: /s/ ----------------------------------------- Title: ---------------------------------- WACHOVIA BANK, N.A. By: /s/ ----------------------------------------- Title: ---------------------------------- FIRST UNION NATIONAL BANK By: /s/ ----------------------------------------- Title: ---------------------------------- THE FIRST NATIONAL BANK OF CHICAGO By: /s/ ----------------------------------------- Title: ---------------------------------- -5- 6 [SIGNATURE PAGE TO FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT DATED AS OF AUGUST 7, 1998 WITH SHAW INDUSTRIES, INC.] THE FUJI BANK, LIMITED, ATLANTA AGENCY By: /s/ --- ------------------------------------- Title: ---------------------------------- SOUTHTRUST BANK, N.A. By: /s/ --- ------------------------------------- Title: ---------------------------------- THE BANK OF TOKYO-MITSUBISHI, LTD. By: /s/ --- ------------------------------------- Title: ---------------------------------- BANQUE NATIONALE DE PARIS, HOUSTON AGENCY By: /s/ --- ------------------------------------- Title: ---------------------------------- THE LONG-TERM CREDIT BANK OF JAPAN, LTD. By: /s/ --- ------------------------------------- Title: ---------------------------------- -6- 7 [SIGNATURE PAGE TO FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT DATED AS OF AUGUST 7, 1998 WITH SHAW INDUSTRIES, INC.] THE INDUSTRIAL BANK OF JAPAN, LIMITED, ATLANTA AGENCY By: /s/ --- ------------------------------------- Title: ---------------------------------- -7- EX-99.4 4 2ND AMENDMENT TO AMENDED AND RESTATED CREDIT AGMT 1 SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT THIS SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (the "Second Amendment") dated as of October 6, 1998 by and among SHAW INDUSTRIES, INC., a corporation organized under the laws of the State of Georgia (the "Borrower"), the Lenders appearing on the signature pages hereof (the "Lenders"), NATIONSBANK, N.A., as Issuing Bank and Administrative Agent and SUNTRUST BANK, ATLANTA, as Documentation Agent. WHEREAS, the Borrower, the Lenders, the Issuing Bank and the Agents entered into that certain Amended and Restated Credit Agreement dated as of March 16, 1998, as amended by that certain First Amendment to Amended and Restated Credit Agreement dated as of August 7, 1998 (as so amended, the "Credit Agreement"), pursuant to which the Lenders made certain financial accommodations available to the Borrower, WHEREAS, the Borrower has requested that the Lenders, the Issuing Bank and the Agents amend the Credit Agreement on the terms and conditions set forth herein; and WHEREAS, the Lenders, the Issuing Bank and the Agents are willing to so amend the Credit Agreement on the terms and conditions set forth herein. NOW, THEREFORE, for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties, the parties hereto agree as follows: SECTION 1. SPECIFIC AMENDMENTS TO CREDIT AGREEMENT. (a) The Credit Agreement is hereby amended by deleting subsection (f) of Section 10.2 thereof and substituting in lieu thereof the following: "(f) (i) Consolidated Funded Debt incurred by the Borrower after the Effective Date and (ii) Indebtedness owing by Nylon Polymer Company, L.L.C., a Georgia limited liability company ("Nylon Polymer") to SunTrust Bank, Atlanta, N.A. and Wachovia Bank, N.A., as lenders (the "Nylon Polymers Lenders"), in the original principal amounts of $22,500,000 ("Nylon Polymer Term Loan A") and $7,500,000 ("Nylon Polymer Term Loan B"), respectively, pursuant to that certain Term Loan Agreement dated as of September 12, 1997, as amended from time to time, by and among Nylon Polymer, as borrower, the Nylon Polymer Lenders and SunTrust Bank, Atlanta, as Agent; provided, however that the amount of Indebtedness permitted under this subsection (f) shall not (1) at any time exceed $50,000,000 outstanding in the aggregate and (2) be secured by a Lien on any property or other asset of the Borrower or any of its Subsidiaries;" (b) The Credit Agreement is hereby further amended by deleting subsection (h) of Section 10.2 thereof and substituting in lieu thereof the following: 2 "(h) (i) Guaranties in existence as of the Agreement Date and disclosed on Schedule 1.1(a) hereof; (ii) Guaranties by the Borrower (and in the case of Nylon Polymer Term Loan A, also by Shaw Contract Flooring Services, Inc. "Shaw Contract")) of any of the foregoing Indebtedness; provided that such Guaranteed Indebtedness is permitted under this Section 10.2; and (iii) Guaranties by the Borrower and Shaw Contract of Indebtedness of La Mirada Realty, L.L.C., a Georgia limited liability company ("La Mirada") pursuant to that certain Amended and Restated Guaranty Agreement dated as of October 6, 1998 (the "La Mirada Guaranty"), executed by the Borrower and Shaw Contract, relating to a term loan facility in the maximum principal amount of $12,200,000, made pursuant to that certain Term Loan Agreement dated as of October 8, 1997, as amended from time to time (provided that the principal amount thereof is not increased), by and among La Mirada, as borrower, SunTrust Bank, Atlanta, and Wachovia Bank, N.A., as lenders, and SunTrust Bank, Atlanta, as Agent; provided, however, that amount of Indebtedness so Guaranteed pursuant to this clause (iii) and then outstanding shall reduce (in an equal amount) the amount of Indebtedness permitted to be incurred and outstanding under subsection (f) above;" (c) The Credit Agreement is hereby amended by deleting subsection (b) of Section 10.4 thereof and substituting in lieu thereof the following: "(b) Enter into or assume any agreement (other than (i) any Loan Document; (ii) the La Mirada Guaranty (as defined in Section 10.2(h)); (iii) the Guaranties by the Borrower and Shaw Contract of the Indebtedness described in Section 10.2(f)(ii); and (iv) that certain Reimbursement and Security Agreement dated as of November 1, 1991, as amended from time to time, between the Borrower (successor to Queen Carpet Corporation) and Wachovia, N.A. (f/k/a Wachovia Bank of Georgia, N.A.)), or permit any Subsidiary (other than a Receivables Subsidiary) to enter into or assume any agreement (other than (i) any Loan Document; (ii) the La Mirada Guaranty (as defined in Section 10.2(h)); (iii) the Guaranties by the Borrower and Shaw Contract of the Indebtedness described in Section 10.2(f)(ii); and (iv) that certain Reimbursement and Security Agreement dated as of November 1, 1991, as amended from time to time, between the Borrower (successor to Queen Carpet Corporation) and Wachovia, N.A. (f/k/a Wachovia Bank of Georgia, N.A.)), prohibiting the creation or assumption of any Lien upon its properties, whether now owned or hereafter acquired; or" SECTION 2. EFFECTIVENESS OF AMENDMENT. This Second Amendment, and the amendments effected hereby, shall be effective only upon the satisfaction of each of the following conditions precedent to effectiveness: (a) this Second Amendment shall be executed and delivered by each of the Borrower, the Issuing Bank, the Agents and the Requisite Lenders; and (b) the Administrative Agent shall have received a certificate dated the date hereof from the Senior Vice President of Finance or the Treasurer of the Borrower certifying that, -2- 3 immediately prior to and after giving effect to the amendment contemplated hereby, no Default or Event of Default under the Credit Agreement exists. SECTION 3. REPRESENTATIONS AND WARRANTIES. (a) In order to induce the Issuing Bank, the Agents and the Lenders to enter into this Second Amendment, the Borrower hereby reaffirms each of the representations and warranties of the Borrower contained in the Credit Agreement as of the date hereof except for either: (i) the occurrence of any event that would render such representations or warranties untrue, but that is expressly permitted by the terms of the Credit Agreement or which would not cause an Event of Default under the Credit Agreement or (ii) the occurrence of any event that would render such representations or warranties untrue but that previously has been disclosed in writing to the Lenders. (b) The execution, delivery and performance of this Second Amendment by the Borrower does not require the consent of any other Person under any document, instrument or agreement to which the Borrower is a party or under which the Borrower is bound. SECTION 4. REFERENCES TO THE CREDIT AGREEMENT. Each reference to the Credit Agreement in any of the Loan Documents shall be deemed to be a reference to the Credit Agreement, as amended by this Second Amendment, and as the same may be further amended, restated, supplemented or otherwise modified from time to time in accordance with Section 13.6 of the Credit Agreement. SECTION 5. BENEFITS. This Second Amendment shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective successors and assigns. SECTION 6. GOVERNING LAW. THIS SECOND AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA. SECTION 7. EFFECT. Except as expressly herein amended, the terms and conditions of the Credit Agreement shall remain in full force and effect without amendment or modification, express or implied. SECTION 8. COUNTERPARTS. This Second Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original and shall be binding upon all parties, their successors and assigns. SECTION 9. DEFINITIONS. All capitalized terms which are used herein and not otherwise defined herein shall have the meanings given such terms as set forth in the Credit Agreement. [SIGNATURES CONTAINED ON FOLLOWING PAGE] -3- 4 [SIGNATURE PAGE TO SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT DATED AS OF OCTOBER 6, 1998 WITH SHAW INDUSTRIES, INC.] IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to Amended and Restated Credit Agreement to be executed under seal by their duly authorized officers as of the date first above written. THE BORROWER: SHAW INDUSTRIES, INC. By: /s/ ------------------------------------ Title: ------------------------------------ THE ADMINISTRATIVE AGENT: NATIONSBANK, N.A., as Administrative Agent By: /s/ ------------------------------------ Title: ------------------------------------ THE ISSUING BANK: NATIONSBANK, N.A., as Issuing Bank By: /s/ ------------------------------------ Title: ------------------------------------ THE DOCUMENTATION AGENT: SUNTRUST BANK, ATLANTA, as Documentation Agent By: /s/ ------------------------------------ Title: ------------------------------------ -4- 5 [SIGNATURE PAGE TO SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT DATED AS OF OCTOBER 6, 1998 WITH SHAW INDUSTRIES, INC.] THE LENDERS: NATIONSBANK, N.A., as a Lender and Swing Line Lender By: /s/ ------------------------------------ Title: ------------------------------------ SUNTRUST BANK, ATLANTA By: /s/ ------------------------------------ Title: ------------------------------------ WACHOVIA BANK, N.A. By: /s/ ------------------------------------ Title: ------------------------------------ FIRST UNION NATIONAL BANK By: /s/ ------------------------------------ Title: ------------------------------------ THE FIRST NATIONAL BANK OF CHICAGO By: /s/ ------------------------------------ Title: ------------------------------------ -5- 6 [SIGNATURE PAGE TO SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT DATED AS OF OCTOBER 6, 1998 WITH SHAW INDUSTRIES, INC.] THE FUJI BANK, LIMITED, ATLANTA AGENCY By: /s/ ------------------------------------ Title: ------------------------------------ SOUTHTRUST BANK, N.A. By: /s/ ------------------------------------ Title: ------------------------------------ THE BANK OF TOKYO-MITSUBISHI, LTD. By: /s/ ------------------------------------ Title: ------------------------------------ BANQUE NATIONALE DE PARIS, HOUSTON AGENCY By: /s/ ------------------------------------ Title: ------------------------------------ THE LONG-TERM CREDIT BANK OF JAPAN, LTD. By: /s/ ------------------------------------ Title: ------------------------------------ -6- 7 [SIGNATURE PAGE TO SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT DATED AS OF OCTOBER 6, 1998 WITH SHAW INDUSTRIES, INC.] THE INDUSTRIAL BANK OF JAPAN, LIMITED, ATLANTA AGENCY By: /s/ ------------------------------------ Title: ------------------------------------ -7- EX-99.5 5 3RD AMENDMENT TO AMENDED AND RESTATED CREDIT AGMT 1 EXHIBIT 99.5 THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT THIS THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT ("Third Amendment") dated as of October 15, 1998 by and among SHAW INDUSTRIES, INC., a corporation organized under the laws of the State of Georgia (the "Borrower"), the Lenders appearing on the signature pages hereof (the "Lenders"), NATIONSBANK, N.A., as Issuing Bank and Administrative Agent and SUNTRUST BANK, ATLANTA, as Documentation Agent. WHEREAS, the Borrower, the Lenders, the Issuing Bank and the Agents entered into that certain Amended and Restated Credit Agreement dated as of March 16, 1998, as amended by that certain First Amendment to Amended and Restated Credit Agreement dated as of August 7, 1998, and that certain Second Amendment to Amended and Restated Credit Agreement dated as of October 6, 1998 (as so amended, the "Credit Agreement"), pursuant to which the Lenders made certain financial accommodations available to the Borrower; WHEREAS, the Borrower has requested that the Lenders, the Issuing Bank and the Agents amend the Credit Agreement on the terms and conditions set forth herein; and WHEREAS, the Lenders, the Issuing Bank and the Agents are willing to so amend the Credit Agreement on the terms and conditions set forth herein. NOW, THEREFORE, for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties, the parties hereto agree as follows: Section 1. Specific Amendments to Credit Agreement. (a) The Credit Agreement is hereby amended deleting the defined term "Consolidated EBITDA " contained in Section 1.1 thereof and substituting in lieu thereof the following: " `Consolidated EBITDA' means, with respect to the Borrower and its Subsidiaries for any period of computation thereof, the sum of, without duplication, (a) Consolidated EBIT for such period plus (b) to the extent deducted in determining Consolidated Net Income (i) amortization expense of the Borrower and its Subsidiaries for such period plus (ii) depreciation expense of the Borrower and its Subsidiaries for such period, all in accordance with GAAP; provided, however, that for purposes of calculating Consolidated EBITDA of the Borrower and its Subsidiaries for any period, the Consolidated EBITDA of any Person acquired by, or merged into or consolidated with, the Borrower or its Subsidiaries during such period shall be included on a pro forma basis for such period 2 (assuming for purposes of such calculation that the consummation of such acquisition, merger or consolidation in connection therewith occurred on the first day of such period)." (b) The Credit Agreement is hereby further amended by adding the following new defined term to Section 1.1 thereof in the appropriate alphabetic order: " `Total Assets' means, at any time of determination, the total consolidated assets of the Borrower and its Subsidiaries, as shown on the consolidated balance sheet of the Borrower most recently delivered to the Administrative Agent and the Lenders pursuant to Section 9.1 or 9.2, as applicable; provided, however, that, for purposes of calculating `Total Assets' at any time prior to the delivery to the Agent and the Lenders of the financial statements of the Borrower for the annual fiscal period ending January 2, 1999, `Total Assets' include the assets (including without limitation any related goodwill) acquired by (and at the time of determination owned by) the Borrower pursuant to that certain Agreement and Plan of Merger dated as of August 13, 1998, as amended by a First Amendment to Agreement and Plan of Merger dated as of October 6, 1998, among the Borrower, Queen Carpet Corporation, Chessman Acquisition Corp. and the other parties named therein." (c) The Credit Agreement is hereby further amended by deleting the defined term "Restricted Payment" contained in Section 1.1 thereof. (d) The Credit Agreement is hereby further amended by deleting the text "Sections 10.5. and" contained in the last line of Section 8.8 thereof and substituting in lieu thereof the word "Section". (e) The Credit Agreement is hereby further amended by deleting the subsection (b) contained in Section 10.1 thereof and substituting in lieu thereof the following: "(b) Minimum Net Worth. Permit as at the end of each fiscal quarter of the Borrower, its Consolidated Net Worth to be less than the sum of: (i) $510,000,000 plus (ii) 50% of the cumulative positive Consolidated Net Income of the Borrower earned after January 3, 1998 plus (iii) the aggregate net proceeds received by the Borrower and its Subsidiaries from any sale or issuance of any shares, interests, warrants, participations or other equity instruments of the Borrower or its Subsidiaries occurring after January 3, 1998 minus (iv) the aggregate amount of all cash and non-cash consideration paid by the Borrower and its Subsidiaries in connection with any purchase, redemption, retirement or other acquisition of any shares, interests, warrants, participations or other equity instruments of the Borrower and its Subsidiaries occurring after January 3, 1998 in an amount up to, but not to exceed, $150,000,000; it -2- 3 being understood that (1) any equity issuance net proceeds received by, or purchase, redemption, retirement or other acquisition consideration paid to, a Subsidiary from the Borrower or vice-versa shall not be included in determining the amounts described in items (iii) and (iv) above; and (2) for purposes of determining the amount of non-cash consideration paid by Borrower and its Subsidiaries in connection with any purchase, redemption, retirement or other acquisition of any equity instruments, the fair market value of such consideration shall be used or, if such non-cash consideration is in the form of a note or other debt security, the amount of non-cash consideration shall be deemed to be the original principal amount of the note or debt security." (e) The Credit Agreement is hereby further amended by deleting subsection (f) contained in Section 10.2 thereof and substituting in lieu thereof the following: "(f) (i) Consolidated Funded Debt incurred by the Borrower after the Effective Date and (ii) Indebtedness owing by Nylon Polymer Company, L.L.C., a Georgia limited liability company ("Nylon Polymer") to SunTrust Bank, Atlanta, N.A. and Wachovia Bank, N.A., as lenders (the "Nylon Polymers Lenders"), in the original principal amounts of $22,500,000 ("Nylon Polymer Term Loan A") and $7,500,000 ("Nylon Polymer Term Loan B"), respectively, pursuant to that certain Term Loan Agreement dated as of September 12, 1997, as amended from time to time, by and among Nylon Polymer, as borrower, the Nylon Polymer Lenders and SunTrust Bank, Atlanta, as Agent; provided, however that the amount of Indebtedness permitted under this subsection (f) shall not (1) at any time exceed 20% of Total Assets and (2) be secured by a Lien on any property or other asset of the Borrower or any of its Subsidiaries;" (f) The Credit Agreement is hereby further amended by deleting subsection (j) contained in Section 10.2 thereof and substituting in lieu thereof the following: "(j) Sold Receivables Indebtedness in an aggregate amount at any time outstanding not to exceed $325,000,000." (g) The Credit Agreement is hereby further amended by adding the following at the end of clause (vi) contained in Section 10.3 thereof: "provided, however, that, in the event the fair market value of the assets, properties, Business Unit or capital stock so purchased or acquired exceeds $100,000,000, the Borrower shall provide the Administrative Agent, at the time of such purchase or acquisition, a certificate executed by the chief financial officer of the Borrower certifying that each of the foregoing conditions in this clause (vi) have been satisfied;" -3- 4 (h) The Credit Agreement is hereby further amended by deleting subsection (b) of Section 10.4 thereof and substituting in lieu thereof the following: "(b) Enter into or assume any agreement (other than any Loan Document), or permit any Subsidiary (other than a Receivables Subsidiary) to enter into or assume any agreement (other than any Loan Document), prohibiting the creation or assumption of any Lien upon its properties, whether now owned or hereafter acquired; or" (i) The Credit Agreement is hereby further amended by deleting Section 10.5 thereof in its entirety and substituting in lieu thereof the following: "Section 10.5. [Reserved]." (j) The Credit Agreement is hereby further amended by deleting the "." at the end of clause (viii) contained in Section 10.6 thereof and substituting in lieu thereof the following: "; (D) the Board of Directors (or other similar management body) of the Person to be merged or consolidated with or into the Borrower recommends to its shareholders (or other similar equity holders) that such shareholders (or other similar equity holders) approve such merger or consolidation; and (E) immediately after giving effect to such merger or consolidation, the Borrower would, on a pro forma basis, be in compliance with the financial covenants set forth in Section 10.1; provided, further, that, in the event the fair market value of the assets of the Person to be merged or consolidated with or into the Borrower exceeds $100,000,000, the Borrower shall provide the Administrative Agent, at the time of such merger or consolidation, a certificate executed by the chief financial officer of the Borrower certifying that each of the foregoing conditions in this clause (viii) have been satisfied;" (k) The Credit Agreement is hereby further amended by deleting Exhibit J thereto in its entirety and substituting in lieu thereof the Exhibit J attached hereto. Section 2. Effectiveness of Amendment. This Third Amendment, and the amendments effected hereby, shall be effective only upon the satisfaction of each of the following conditions precedent to effectiveness: (a) this Third Amendment shall be executed and delivered by each of the Borrower, the Issuing Bank, the Agents and the Requisite Lenders; and (b) the Administrative Agent shall have received a certificate dated the date hereof from the Chief Financial Officer or the Treasurer of the Borrower certifying that, immediately -4- 5 prior to and after giving effect to the amendment contemplated hereby, no Default or Event of Default under the Credit Agreement exists. Section 3. Representations and Warranties. (a) In order to induce the Issuing Bank, the Agents and the Lenders to enter into this Third Amendment, the Borrower hereby reaffirms each of the representations and warranties of the Borrower contained in the Credit Agreement as of the date hereof except for either: (i) the occurrence of any event that would render such representations or warranties untrue, but that is expressly permitted by the terms of the Credit Agreement or which would not cause an Event of Default under the Credit Agreement or (ii) the occurrence of any event that would render such representations or warranties untrue but that previously has been disclosed in writing to the Lenders. (b) The execution, delivery and performance of this Third Amendment by the Borrower does not require the consent of any other Person under any document, instrument or agreement to which the Borrower is a party or under which the Borrower is bound. Section 4. References to the Credit Agreement. Each reference to the Credit Agreement in any of the Loan Documents shall be deemed to be a reference to the Credit Agreement, as amended by this Third Amendment, and as the same may be further amended, restated, supplemented or otherwise modified from time to time in accordance with Section 13.6 of the Credit Agreement. Section 5. Benefits. This Third Amendment shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective successors and assigns. Section 6. GOVERNING LAW. THIS THIRD AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA. Section 7. Effect. Except as expressly herein amended, the terms and conditions of the Credit Agreement shall remain in full force and effect without amendment or modification, express or implied. Section 8. Counterparts. This Third Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original and shall be binding upon all parties, their successors and assigns. -5- 6 Section 9. Definitions. All capitalized terms which are used herein and not otherwise defined herein shall have the meanings given such terms as set forth in the Credit Agreement. [Signatures Contained on Following Page] -6- 7 [Signature Page to Third Amendment to Amended and Restated Credit Agreement dated as of October 15, 1998 with Shaw Industries, Inc.] IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to Amended and Restated Credit Agreement to be executed under seal by their duly authorized officers as of the date first above written. THE BORROWER: SHAW INDUSTRIES, INC. By: /s/ ------------------------------------- Title: ------------------------------------- THE ADMINISTRATIVE AGENT: NATIONSBANK, N.A., as Administrative Agent By: /s/ ------------------------------------- Title: ------------------------------------- THE ISSUING BANK: NATIONSBANK, N.A., as Issuing Bank By: /s/ ------------------------------------- Title: ------------------------------------- THE DOCUMENTATION AGENT: SUNTRUST BANK, ATLANTA, as Documentation Agent By: /s/ ------------------------------------- Title: ------------------------------------- -7- 8 [Signature Page to Third Amendment to Amended and Restated Credit Agreement dated as of October 15, 1998 with Shaw Industries, Inc.] THE LENDERS: NATIONSBANK, N.A., as a Lender and Swing Line Lender By: /s/ ------------------------------------- Title: ------------------------------------- SUNTRUST BANK, ATLANTA By: /s/ ------------------------------------- Title: ------------------------------------- WACHOVIA BANK, N.A. By: /s/ ------------------------------------- Title: ------------------------------------- FIRST UNION NATIONAL BANK By: /s/ ------------------------------------- Title: ------------------------------------- THE FIRST NATIONAL BANK OF CHICAGO By: /s/ ------------------------------------- Title: ------------------------------------- -8- 9 [Signature Page to Third Amendment to Amended and Restated Credit Agreement dated as of October 15, 1998 with Shaw Industries, Inc.] THE FUJI BANK, LIMITED, ATLANTA AGENCY By: /s/ ------------------------------------- Title: ------------------------------------- SOUTHTRUST BANK, N.A. By: /s/ ------------------------------------- Title: ------------------------------------- THE BANK OF TOKYO-MITSUBISHI, LTD. By: /s/ ------------------------------------- Title: ------------------------------------- BANQUE NATIONALE DE PARIS, HOUSTON AGENCY By: /s/ ------------------------------------- Title: ------------------------------------- THE LONG-TERM CREDIT BANK OF JAPAN, LTD. By: /s/ ------------------------------------- Title: ------------------------------------- -9- 10 [Signature Page to Third Amendment to Amended and Restated Credit Agreement dated as of October 15, 1998 with Shaw Industries, Inc.] THE INDUSTRIAL BANK OF JAPAN, LIMITED, ATLANTA AGENCY By: /s/ ------------------------------------- Title: ------------------------------------- -10- 11 EXHIBIT J FORM OF COMPLIANCE CERTIFICATE For the quarter ending _________, _____ NationsBank, N.A., as Administrative Agent Independence Center 101 North Tryon Street, 15th Floor Charlotte, North Carolina 28255-0001 Attention: Margaret Rhodes, Agency Services Each of the Lenders a party to the Credit Agreement (defined below) Ladies and Gentlemen: Reference is made to that certain Amended and Restated Credit Agreement dated as of March 16, 1998 (as amended, modified, restated or supplemented from time to time, the "Credit Agreement"; capitalized terms used herein, and not otherwise defined herein, shall have their respective defined meanings as set forth in the Credit Agreement) among Shaw Industries, Inc. (the "Borrower"), the Lenders named therein, NationsBank, N.A., as Issuing Bank and Administrative Agent (the "Administrative Agent") and Suntrust Bank, Atlanta, as Documentation Agent. Pursuant to Section 9.3 of the Credit Agreement, the undersigned hereby certifies to the Administrative Agent, the Issuing Bank and the Lenders as follows: (1) The undersigned is the [Treasurer/Chief Financial Officer/independent public accountant] of the Borrower. (2) The undersigned has examined the books and records of the Borrower and has conducted such other examinations and investigations as are reasonably necessary to provide this Compliance Certificate. (3) The Borrower is in compliance with Articles 9 and 10 of the Credit Agreement and no Default or Event of Default has occurred and is continuing [for Compliance Certificate delivered by Treasurer or Chief Financial Officer only]. The undersigned hereby further certifies to the Administrative Agent, the Issuing Bank and the Lenders that the following financial information of the Borrower is true and correct as of the date hereof: 12 I. EBIT to Interest Ratio (ss.10.1(a))1 A. Consolidated EBIT for Four-Quarter Period: Consolidated Net Income $ plus, to the extent deducted in ----------------- determining Consolidated Net Income: Consolidated Interest Expense $ ----------------- Income Taxes $ ----------------- Consolidated EBIT: $ ================= B. Consolidated Interest Expense for Four-Quarter Period: $ ----------------- C. EBIT to Interest Ratio (A divided by B): :1:00 minimum ratio required: 2.25 to 1.00 --------- II. Minimum Net Worth (ss.10.1(b)) A. $510,000,000 B. Cumulative Positive Consolidated Net Income since January 3, 1998: $ ----------------- C. 50% of Item B $ ----------------- D. Aggregate net proceeds from equity issuances after January 3, 1998: $ ----------------- E. Aggregate consideration paid for equity repurchases, etc. after January 3, 1998: $ (2) ----------------- F. Sum of Item A plus C plus D minus E: $ ----------------- G. Consolidated Net Worth $ ================= H. Test - Item G must be greater than Item F: yes no ----- ----
- -------------------------- (1) Section references contained herein are references to the section of the Credit Agreement requesting the respective financial data. (2) Up to maximum amount of $150,000,000. J-2 13 III. Consolidated Funded Debt to EBITDA (ss.10.1(c)) A. Consolidated Funded Debt Outstanding: $ --------- B. Consolidated EBITDA for Four-Quarter Period: Consolidated Net Income $ plus, to the extent deducted in --------- determining Consolidated Net Income Consolidated Interest Expense, plus $ --------- Income Taxes, plus $ --------- Depreciation, plus $ --------- Amortization $ --------- Consolidated EBITDA: $ ========= C. Consolidated Funded Debt to EBITDA Ratio (A _____:1:00 maximum ratio divided by B): permitted: 4.00 to 1.00 IV. Indebtedness (ss.10.2) A. Capital Lease Debt/Purchase Money Debt Outstanding: $ --------- maximum allowed: $50,000,000 B. Consolidated Funded Debt incurred after Effective Date plus Indebtedness related to $ Nylon Polymer (ss.10.2(f)(iii)): --------- maximum allowed: [20% of Total Assets] C. Sold Receivables Indebtedness: $ --------- maximum allowed: $325,000,000 V. Year-end Certificate only - Operating Leases (ss.10.9) Aggregate amount of all rents paid under operating leases during fiscal year: $ --------- maximum allowed: $100,000,000 VI. Year-end Certificate only - Investments (ss.10.3(vii)) Aggregate amount of all non-acquisition related investments during fiscal year: $ --------- maximum allowed: $50,000,000
J-3 14 Based on the Consolidated Funded Debt to EBITDA Ratio described above in item III.C. above, the undersigned hereby confirms that the facility fee percentage payable pursuant to Section 5.14 of the Credit Agreement for the quarterly period described herein is _____% and the Applicable Margin for LIBOR Loans for such period is ______%.
----------------------------------------------------------------------- Consolidated Funded Facility Fee Applicable Margin Debt/EBITDA Ratio Percentage for LIBOR Loans ----------------------------------------------------------------------- Greater than 3.50 to 1.00 .25% 0.75% ----------------------------------------------------------------------- Less than or equal to 3.50 to 1.00 but greater than 3.00 to 1.00 .20% 0.55% ----------------------------------------------------------------------- Less than or equal to 3.00 to 1.00 but greater than 2.50 to 1.00 .175% 0.45% ----------------------------------------------------------------------- Less than or equal to 2.50 to 1.00 but greater than 2.00 to 1.00 .15% 0.35% ----------------------------------------------------------------------- Less than or equal to 2.00 to 1.00 .10% 0.22% -----------------------------------------------------------------------
IN WITNESS WHEREOF, the undersigned has executed this certificate as of the day of __________, ____. By: ------------------------------------ Title: ------------------------------ J-4 -----END PRIVACY-ENHANCED MESSAGE-----